B-163064, JAN. 12, 1968

B-163064: Jan 12, 1968

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FORMER EMPLOYEES WHO ARE INDEBTED FOR EMBEZZLING COINS AND METALS MAY HAVE AMOUNTS THAT WERE WITHHELD IN SALARY AND OTHER PAYMENTS APPLIED TO THE DEBTS WHEN SUBSTANTIAL EVIDENCE ESTABLISHES THE ACTUAL DEBTS OF THE EMPLOYEES. HE SHOULD BE PAID BALANCE AFTER DEBT IS SET OFF. THE DIRECTOR OF THE MINT REQUESTED OUR DECISION WITH REGARD TO THE RECOVERY OF THE VALUE OF CERTAIN COINS AND METALS WHICH WERE EMBEZZLED FROM THE UNITED STATES ASSAY OFFICE. THE AMOUNT OF THE LOSS IS COVERED BY A BLANKET POSITION SURETY BOND ISSUED BY THE UNITED BONDING INSURANCE COMPANY FOR THE PERIOD JANUARY 1. THE BONDING COMPANY ADMITS ITS LIABILITY FOR THE AMOUNT THE GOVERNMENT HAS LOST BUT CLAIMS THAT THE AMOUNT OF THE SHORTAGE IN COINS AND METALS AS ESTABLISHED BY AN AUDIT OF THE ASSAY OFFICE SHOULD BE REDUCED BY THE AMOUNT THE GOVERNMENT IS HOLDING IN SALARY AND OTHER PAYMENTS DUE FIVE FORMER EMPLOYEES WHO WERE INVOLVED IN THE EMBEZZLEMENTS.

B-163064, JAN. 12, 1968

DEBT COLLECTION - SURETY LIABILITY DECISION TO SECRETARY OF THE TREASURY CONCERNING RECOVERY OF VALUE OF COINS AND METALS EMBEZZLED FROM U.S. ASSAY OFFICE BY EMPLOYEES, COVERED BY BLANKET SURETY BOND. FORMER EMPLOYEES WHO ARE INDEBTED FOR EMBEZZLING COINS AND METALS MAY HAVE AMOUNTS THAT WERE WITHHELD IN SALARY AND OTHER PAYMENTS APPLIED TO THE DEBTS WHEN SUBSTANTIAL EVIDENCE ESTABLISHES THE ACTUAL DEBTS OF THE EMPLOYEES. EVIDENCE USED AS A BASIS FOR SET OFF SHOULD BE THE TYPE THAT COULD BE PRESENTED IN COURT. TO THE EXTENT THAT EVIDENCE DOES NOT EXIST TO ESTABLISH THAT THE EMPLOYEE EMBEZZLED AS MUCH AS THE AMOUNT DUE HIM, HE SHOULD BE PAID BALANCE AFTER DEBT IS SET OFF. THE CLAIM AGAINST THE BONDING COMPANY SHOULD BE REDUCED BY THE AMOUNTS SET OFF.

TO MR. SECRETARY:

ON DECEMBER 5, 1967, THE DIRECTOR OF THE MINT REQUESTED OUR DECISION WITH REGARD TO THE RECOVERY OF THE VALUE OF CERTAIN COINS AND METALS WHICH WERE EMBEZZLED FROM THE UNITED STATES ASSAY OFFICE, SAN FRANCISCO, CALIFORNIA, BUREAU OF THE MINT BY EMPLOYEES OF THAT OFFICE.

THE AMOUNT OF THE LOSS IS COVERED BY A BLANKET POSITION SURETY BOND ISSUED BY THE UNITED BONDING INSURANCE COMPANY FOR THE PERIOD JANUARY 1, 1966 THROUGH DECEMBER 31, 1967. THE BONDING COMPANY ADMITS ITS LIABILITY FOR THE AMOUNT THE GOVERNMENT HAS LOST BUT CLAIMS THAT THE AMOUNT OF THE SHORTAGE IN COINS AND METALS AS ESTABLISHED BY AN AUDIT OF THE ASSAY OFFICE SHOULD BE REDUCED BY THE AMOUNT THE GOVERNMENT IS HOLDING IN SALARY AND OTHER PAYMENTS DUE FIVE FORMER EMPLOYEES WHO WERE INVOLVED IN THE EMBEZZLEMENTS. THE DIRECTOR OF THE MINT QUESTIONS WHETHER THE FULL AMOUNTS DUE THE FORMER EMPLOYEES MAY BE PROPERLY WITHHELD. THE RECORD INDICATES THAT IN CONNECTION WITH CRIMINAL ACTION AGAINST THE FIVE EMPLOYEES INVOLVED EACH ONE ADMITTED TAKING SOME COINS OR METALS BELONGING TO THE UNITED STATES. THOSE AMOUNTS, HOWEVER, DO NOT EQUAL THE SUMS DUE THE FORMER EMPLOYEES AT THE TIMES THEY WERE SEPARATED. APPARENTLY, AT LEAST SOME OF THE FIVE FORMER EMPLOYEES EMBEZZLED MORE THAN THEY HAVE ADMITTED. ALSO, OTHER EMPLOYEES OF THE SAN FRANCISCO ASSAY OFFICE WHO HAVE NOT BEEN IDENTIFIED MAY HAVE BEEN GUILTY OF EMBEZZLEMENT DURING THE PERIOD FOR WHICH THE SHORTAGE WAS DISCOVERED.

UNDER THE DECISIONS 39 COMP. GEN. 203 AND 27 ID. 703, IT APPEARS THAT THE BONDING COMPANY IS ENTITLED TO HAVE ITS LIABILITY REDUCED BY THE AMOUNTS WHICH MAY BE RECOVERED AS DEBTS DUE THE UNITED STATES FROM THE FORMER EMPLOYEES INVOLVED.

THE ACTUAL DEBTS OF THE FORMER EMPLOYEES MUST BE ESTABLISHED ADMINISTRATIVELY ON THE BASIS OF ALL THE INFORMATION AVAILABLE. IF THERE IS SUBSTANTIAL EVIDENCE -- EITHER DIRECT OR CIRCUMSTANTIAL -- TO SHOW THAT ANY OF THE FORMER EMPLOYEES DID TAKE AN AMOUNT EQUAL TO OR EXCEEDING THE AMOUNT DUE HIM FROM THE GOVERNMENT, THEN SUCH AMOUNT DUE HIM SHOULD BE APPLIED TO HIS INDEBTEDNESS. EVIDENCE USED AS A BASIS FOR WITHHOLDING PAYMENT SHOULD BE OF THE TYPE WHICH COULD BE PRESENTED IN COURT SHOULD ANY OF THE EMPLOYEES BRING ACTION AGAINST THE UNITED STATES FOR THE AMOUNTS WITHHELD. TO THE EXTENT THAT EVIDENCE DOES NOT EXIST TO ESTABLISH THAT A FORMER EMPLOYEE EMBEZZLED AS MUCH AS THE AMOUNT DUE HIM, HE SHOULD BE PAID THE BALANCE OF SUCH AMOUNT AFTER THE ESTABLISHED INDEBTEDNESS HAS BEEN DEDUCTED.

THE GOVERNMENT'S CLAIM AGAINST THE BONDING COMPANY SHOULD BE REDUCED BY THE AMOUNTS WITHHELD UNDER THE PRECEDING PARAGRAPH. HOWEVER, THE BONDING COMPANY SHOULD BE ADVISED THAT THE GOVERNMENT RETAINS THE RIGHT TO MAKE SUPPLEMENTARY CLAIMS SHOULD ANY OF THE FORMER EMPLOYEES INVOLVED OBTAIN A JUDGMENT AGAINST THE GOVERNMENT FOR ANY AMOUNT SO WITHHELD.