A-87161, AUGUST 26, 1937, 17 COMP. GEN. 189

A-87161: Aug 26, 1937

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VETERANS' ADMINISTRATION - ADJUSTED COMPENSATION - ERRONEOUS PAYMENTS - VETERANS' LIABILITY WHERE DUPLICATE ADJUSTED SERVICE CERTIFICATE WAS ISSUED ON THE BASIS OF VETERAN'S AFFIDAVIT THAT THE ORIGINAL WAS LOST AND UPON THE FURNISHING OF ADEQUATE INDEMNITY BOND. FRAUDULENT LOAN ON SECURITY OF THE ORIGINAL CERTIFICATE WAS MADE POSSIBLE BY THE VETERAN'S VOLUNTARY DELIVERY OF THE SAID CERTIFICATE TO A PERSON APPARENTLY IDENTIFIED AS THE BENEFICIARY NAMED THEREIN AND BY HIS FAILURE TO MAKE INQUIRY CONCERNING THE CERTIFICATE UNTIL FIVE YEARS AFTER SUCH DELIVERY. IT APPEARS THE VETERAN WAS NOT ACTING IN GOOD FAITH IN APPLYING FOR THE DUPLICATE CERTIFICATE AND THE MATTER MAY BE ADJUSTED BY CHARGING THE AMOUNT OF THE FRAUDULENT LOAN AGAINST THE CERTIFICATE OF THE VETERAN RATHER THAN BY RECLAMATION PROCEEDINGS.

A-87161, AUGUST 26, 1937, 17 COMP. GEN. 189

VETERANS' ADMINISTRATION - ADJUSTED COMPENSATION - ERRONEOUS PAYMENTS - VETERANS' LIABILITY WHERE DUPLICATE ADJUSTED SERVICE CERTIFICATE WAS ISSUED ON THE BASIS OF VETERAN'S AFFIDAVIT THAT THE ORIGINAL WAS LOST AND UPON THE FURNISHING OF ADEQUATE INDEMNITY BOND, AND FRAUDULENT LOAN ON SECURITY OF THE ORIGINAL CERTIFICATE WAS MADE POSSIBLE BY THE VETERAN'S VOLUNTARY DELIVERY OF THE SAID CERTIFICATE TO A PERSON APPARENTLY IDENTIFIED AS THE BENEFICIARY NAMED THEREIN AND BY HIS FAILURE TO MAKE INQUIRY CONCERNING THE CERTIFICATE UNTIL FIVE YEARS AFTER SUCH DELIVERY, IT APPEARS THE VETERAN WAS NOT ACTING IN GOOD FAITH IN APPLYING FOR THE DUPLICATE CERTIFICATE AND THE MATTER MAY BE ADJUSTED BY CHARGING THE AMOUNT OF THE FRAUDULENT LOAN AGAINST THE CERTIFICATE OF THE VETERAN RATHER THAN BY RECLAMATION PROCEEDINGS.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, AUGUST 26, 1937:

BY LETTER OF FEBRUARY 10, 1937, THERE WAS REFERRED TO THIS OFFICE BY G. F. ALLEN, CHIEF DISBURSING OFFICER, DIVISION OF DISBURSEMENT, TREASURY DEPARTMENT, YOUR UNDATED LETTER CONCERNING HENRY LARSON, A 3794857, AS FOLLOWS:

ADJUSTED SERVICE CERTIFICATE NO. 2983257 WAS ISSUED TO THE ABOVE CAPTIONED VETERAN IN THE AMOUNT OF $1,258.00 ON FEBRUARY 1, 1926. DECEMBER 15, 1930, AND AGAIN ON OCTOBER 29, 1931, THE VETERAN SUBMITTED AFFIDAVIT (FORM 6920) STATING HIS ORIGINAL CERTIFICATE WAS LOST. UPON THE SUBMISSION OF AN ADEQUATE BOND OF INDEMNITY THE VETERAN WAS ISSUED DUPLICATE CERTIFICATE NO. 3838290 WHICH CERTIFICATE WAS PLEDGED WITH THE FIRST NATIONAL BANK, ST. PAUL, MINNESOTA, ON ARPIL 14, 1932, AS SECURITY FOR A LOAN OF $629.00. THIS ADMINISTRATION REDEEMED THE CERTIFICATE FROM SAID BANK OCTOBER 5, 1936, BY PAYMENT OF $740.88 WHICH WAS IN SETTLEMENT OF THE NOTE FOR $629.00 PLUS ACCRUED INTEREST OF $111.88.

ON JUNE 30, 1932, THE VETERAN'S ORIGINAL ADJUSTED SERVICE CERTIFICATE NO. 2983257 WAS PLEDGED WITH THE VETERAN'S ADMINISTRATION, KANSAS CITY, MISSOURI, AS LOAN COLLATERAL AND THE FOLLOWING DESCRIBED CHECK WAS ISSUED IN PAYMENT THEREOF:

CHECK NO. 81876; DATE, JUNE 30, 1932; AMOUNT, $629.00; DISBURSING OFFICER, L. GREEN; SYMBOL, 99127.

THE VETERAN CONTENDS IN HIS AFFIDAVIT DATED AUGUST 7, 1936, THAT HE DID NOT RECEIVE THE ABOVE DESCRIBED CHECK ISSUED IN PAYMENT OF THE LOAN GRANTED ON THE SECURITY OF ADJUSTED SERVICE CERTIFICATE NO. 2983257. THE CASE, IS, THEREFORE, BEING REFERRED FOR INVESTIGATION AND REPORT.

IN THE EVENT RECLAMATION IS ACCOMPLISHED FROM THE ENDORSERS OF CHECK NO. 81876 THE AMOUNT SO RECOVERED SHOULD BE DEPOSITED TO THE RECLAMATION SUSPENSE ACCOUNT OF THE TREASURER OF THE UNITED STATES PENDING THE ASCERTAINMENT OF ALL FACTS IN CONNECTION THEREWITH AS A RESULT OF THE SECRET SERVICE INVESTIGATION.

THERE ARE ENCLOSED FOR YOUR USE PHOTOSTATIC COPIES OF THE VETERAN'S APPLICATION FOR ADJUSTED COMPENSATION, AFFIDAVIT (FORM 6920) NOTES (FORM 1185) COVERING THE LOANS MADE ON BOTH THE ORIGINAL AND DUPLICATE CERTIFICATES, APPLICATION (FORM 1701) EXECUTED BY THE VETERAN FOR SETTLEMENT UNDER THE ADJUSTED COMPENSATION PAYMENT ACT, 1936, AND HIS AFFIDAVIT DATED AUGUST 7, 1936.

THERE HAVE BEEN RECEIVED ALSO SECRET SERVICE DIVISION, TREASURY DEPARTMENT, REPORTS DATED MARCH 16, APRIL 1, AND APRIL 16, 1937, COVERING THE INVESTIGATION MADE IN THE CASE.

IT APPEARS FROM THE RECORD THAT IN APPLYING FOR A DUPLICATE CERTIFICATE THE VETERAN, THEN RESIDING IN ST. PAUL, MINN., STATED IN HIS AFFIDAVIT OF OCTOBER 29, 1931, THAT 6 YEARS PRIOR THERETO HE HAD LEFT HIS ORIGINAL CERTIFICATE WITH MR. AND MRS. ANTHONY F. THOMAS, 606 1/2 PIKE STREET, SEATTLE, WASH., FOR SAFEKEEPING AS HE WAS MOVING AROUND SO MUCH HE THOUGHT HE MIGHT LOSE IT. IN HIS AFFIDAVIT OF AUGUST 7, 1936, HE STATED THAT HE LEFT SEATTLE, WASH., IN APRIL 1926, RETURNING TO ST. PAUL, MINN., WHERE HE HAS SINCE MAINTAINED CONTINUOUSLY HIS RESIDENCE, AND THAT IN 1931 WHEN THE LAW WAS PASSED PERMITTING A LOAN OF 50 PERCENT OF THE FACE VALUE OF ADJUSTED SERVICE CERTIFICATES, HE WROTE TO MRS. THOMAS REQUESTING HER TO FORWARD HIS CERTIFICATE TO HIM BUT RECEIVED NO REPLY.

THE SECRET SERVICE REPORTS SHOW THAT IN DECEMBER 1925 LARSON WENT FROM NORTH DAKOTA TO SEATTLE, WASH., AND RESIDED AT THE SATHER HOTEL, 606 1/2 PIKE STREET UNTIL APRIL 1926, WHEN HE RETURNED TO ST. PAUL, MINN., WHERE HE MARRIED HIS PRESENT WIFE; THAT HIS ADJUSTED SERVICE CERTIFICATE WAS ISSUED TO HIM WHILE HE WAS RESIDING AT THE SATHER HOTEL; THAT THE MRS. THOMAS WITH WHOM HE CLAIMS TO HAVE LEFT HIS CERTIFICATE WAS EMPLOYED IN 1926 AS A WAITRESS AT THE SATHER HOTEL AND WAS KNOWN TO HIM AS VIOLA, BUT WAS ALSO KNOWN AS FLORENCE AND FLORENCE SMITH; THAT LARSON HAD NEVER SEEN MR. THOMAS AS THOMAS WAS CONFINED TO A PENAL INSTITUTION DURING THE TIME LARSON WAS LIVING IN SEATTLE AT 606 1/2 PIKE STREET. IN 1926 IN MAKING APPLICATION FOR HIS ADJUSTED SERVICE CERTIFICATE THE VETERAN NAMED AS HIS BENEFICIARY MRS. FLORENCE VIOLA LARSON, WIFE, 606 1/2 PIKE STREET, SEATTLE, WASH.

IN REPORT DATED APRIL 16, 1937, THE SECRET SERVICE AGENT STATES HE WAS UNABLE TO FIND AN ANTHONY F. THOMAS IN SEATTLE, WASH., BUT DID FIND MR. AND MRS. ALTON F. THOMAS WHO CLAIMED THEY HAD NEVER HEARD OF HENRYLARSON.

FROM THE RECORD IN THE CASE AS THUS SUMMARIZED IT APPEARS THAT MRS. THOMAS, WITH WHOM THE VETERAN CLAIMS TO HAVE LEFT HIS ADJUSTED SERVICE CERTIFICATE UPON HIS DEPARTURE FROM SEATTLE, SH., IN APRIL 1926, AND MRS. FLORENCE VIOLA LARSON, WHOM HE NAMED AS HIS BENEFICIARY, WITH THE RELATIONSHIP OF WIFE, IN HIS APPLICATION FOR AN ADJUSTED-SERVICE CERTIFICATE, FILED IN 1926, ARE ONE AND THE SAME PERSON AND THAT AFTER LEAVING HIS CERTIFICATE IN THE POSSESSION OF MRS. THOMAS IN 1926 HE MADE NO FURTHER INQUIRY CONCERNING ITS WHEREABOUTS UNTIL AFTER THE ENACTMENT OF THE ACT OF FEBRUARY 27, 1931, 46 STAT. 1429, PERMITTING A LOAN OF 50 PERCENT OF THE FACE VALUE OF THE CERTIFICATE.

SINCE THE VETERAN HAS FURNISHED AN ADEQUATE BOND OF INDEMNITY TO PROTECT THE UNITED STATES FROM ANY LOSS ARISING OUT OF THE ISSUANCE OF THE ORIGINAL CERTIFICATE (14 COMP. GEN. 770; 16 ID. 334), AND SINCE IT APPEARS THAT NOT ONLY WAS THE FRAUDULENT LOAN MADE POSSIBLE BY THE ACT OF THE VETERAN IN LEAVING HIS CERTIFICATE IN SEATTLE, WASH., WHEN HE RETURNED TO ST. PAUL, MINN. (14 COMP. GEN. 692; 16 ID. 996), BUT ALSO THAT HE WAS NOT ACTING WHOLLY IN GOOD FAITH IN APPLYING FOR A DUPLICATE CERTIFICATE AFTER HE HAD LEFT HIS ORIGINAL CERTIFICATE IN THE POSSESSION OF MRS. THOMAS UNDER THE CONDITIONS INDICATED BY THE RECORD, THE MATTER MAY BE ADJUSTED BY CHARGING THE AMOUNT OF THE LOAN AGAINST THE VETERAN'S ADJUSTED-SERVICE CERTIFICATE, THE AMOUNT IN QUESTION APPEARING AS A LIEN AGAINST THE ADJUSTED-SERVICE CERTIFICATE WITHIN THE MEANING OF SECTION 7 OF THE ADJUSTED COMPENSATION PAYMENT ACT, 1936, 49 STAT. 1101.

UPON THE BASIS OF THE PRESENT RECORD, RECLAMATION PROCEEDINGS ON THE INVOLVED CHECK WILL NOT BE DIRECTED BY THIS OFFICE.