B-225939, FEB 9, 1987, OFFICE OF GENERAL COUNSEL

B-225939, FEB 9, 1987, OFFICE OF GENERAL COUNSEL

APPROPRIATIONS/FINANCIAL MANAGEMENT - ACCOUNTABLE OFFICERS - DISBURSING OFFICERS - RELIEF - ILLEGAL/IMPROPER PAYMENTS - FORGERIES DIGEST: U.S. ARMY FINANCE AND ACCOUNTING OFFICER IS RELIEVED OF LIABILITY FOR IMPROPER PAYMENT MADE BY UNIDENTIFIED SUBORDINATE CASHIER BECAUSE HE MAINTAINED AND SUPERVISED AN ADEQUATE SYSTEM OF PROCEDURES TO PREVENT IMPROPER PAYMENTS.

BRIGADIER GENERAL B. W. HALL:

THIS IS IN RESPONSE TO YOUR REQUEST OF DECEMBER 19, 1986, THAT WE RELIEVE LIEUTENANT COLONEL (LTC) D. J. BEYER, FINANCE CORPS, DSSN 6333, FINANCE AND ACCOUNTING OFFICE, 266TH THEATER FINANCE CENTER (EUROPE), UNDER 31 U.S.C. SEC. 3527(C) FOR AN IMPROPER PAYMENT IN THE AMOUNT OF $400. FOR THE REASONS STATED BELOW, RELIEF IS GRANTED.

ACCORDING TO YOUR SUBMISSION, THE IMPROPER PAYMENT OCCURRED ON APRIL 29, 1985, WHEN AN INDIVIDUAL CARRYING A MILITARY IDENTIFICATION CARD IN THE NAME OF "DAVID L. PETERSON" CASHED A PERSONAL CHECK FOR $400 AT THE TOMPKINS BARRACKS FINANCE OFFICE. THE CHECK WAS RETURNED TO THE FINANCE OFFICE BECAUSE OF INSUFFICIENT FUNDS. IT WAS LATER DISCOVERED THAT THE CHECK WAS PART OF A LARGER CHECK CASHING SCHEME PERPETRATED BY AN INDIVIDUAL IDENTIFIED BY THE CRIMINAL INVESTIGATION DIVISION (CID) AS SPECIALIST FIVE (SP5) HENRY R. DAVIS. SP5 DAVIS WAS TRIED ON NOVEMBER 1, 1985, AND CONVICTED BY GENERAL COURT MARTIAL FOR HIS WRONGFUL ACTS. /1/

ALTHOUGH THE CHECK WAS PROPERLY ANNOTATED WITH "DAVID L. PETERSON'S" ID CARD NUMBER AND INITIALED BY THE CASHIER, THE INVESTIGATION FAILED TO ESTABLISH THE IDENTITY OF THE CASHIER RESPONSIBLE FOR CASHING THE CHECK IN QUESTION. THIS APPEARS DUE TO THE FACT THAT THE INITIALS WERE WRITTEN IN PENCIL AND NOT CLEARLY MADE. IN ADDITION, NOT ALL THE CASHIERS WHO WERE ON DUTY AT THE FINANCE OFFICE ON APRIL 29, 1985, WERE AVAILABLE AT THE TIME OF THE INVESTIGATION TO REVIEW THE RETURNED CHECK. HOWEVER, THE RECORD CLEARLY ESTABLISHES THAT ALL OF THE APPOINTED CASHIERS ON APRIL 29, 1985, WERE QUALIFIED AND COMPETENT INDIVIDUALS WHO UNDERSTOOD AND FOLLOWED STANDARD OPERATING PROCEDURES THEN IN EFFECT.

AS THE DISBURSING OFFICER OFFICIALLY RESPONSIBLE FOR THE ACCOUNTS, LTC BEYER IS PERSONALLY LIABLE FOR DEFICIENCIES IN HIS ACCOUNTS CAUSED BY IMPROPER PAYMENTS MADE BY HIS SUBORDINATES. THIS OFFICE IS AUTHORIZED TO GRANT RELIEF FROM LIABILITY UNDER 31 U.S.C. SEC. 3527(C) UPON A DETERMINATION THAT AN IMPROPER PAYMENT WAS NOT THE RESULT OF BAD FAITH OR LACK OF REASONABLE CARE BY THE OFFICIAL AND THAT DILIGENT COLLECTION EFFORTS ARE BEING MADE. IN CASES WHERE SUBORDINATES OF THE OFFICIAL ACTUALLY DISBURSED THE FUNDS, WE HAVE GRANTED RELIEF UPON A SHOWING THAT THE FINANCE OFFICER PROPERLY SUPERVISED HIS SUBORDINATES BY MAINTAINING AN ADEQUATE SYSTEM OF PROCEDURES AND CONTROLS TO SAFEGUARD THE FUNDS AND TOOK STEPS TO ENSURE THE IMPLEMENTATION AND EFFECTIVENESS OF THE SYSTEM. SEE 62 COMP.GEN. 476 (1983).

ACCORDING TO YOUR LETTER AND SUPPORTING DOCUMENTS, LTC BEYER HAD ESTABLISHED AND MAINTAINED AN ADEQUATE SYSTEM OF CONTROLS TO SAFEGUARD THE FUNDS FOR WHICH HE WAS RESPONSIBLE.

ACCORDINGLY, RELIEF IS GRANTED TO LTC BEYER. THE IMPROPER PAYMENT IN THIS CASE WAS, ACCORDING TO YOUR SUBMISSION, LARGELY THE RESULT OF CRIMINAL ACTIVITY OVER WHICH LTC BEYER HAD NO CONTROL. THERE IS NO INDICATION THAT THE PAYMENT MAY BE THE UNIDENTIFIED CASHIER WAS THE RESULT OF BAD FAITH OR LACK OF REASONABLE CARE. WE HAVE FREQUENTLY NOTED THAT EVEN THE MOST CAREFULLY ESTABLISHED AND EFFECTIVELY SUPERVISED SYSTEM CANNOT PREVENT EVERY CONCEIVABLE FORM OF CRIMINAL ACTIVITY. SEE, E.G. B-221395, MARCH 26, 1986.

WE NOTE THAT YOUR REQUEST FOR COLLECTION ACTION AGAINST SP5 DAVIS HAS BEEN REFERRED TO FORT LEAVENWORTH, KANSAS, WHERE HE IS PRESENTLY INCARCERATED. HOWEVER, WE ARE INFORMALLY ADVISED THAT SP5 DAVIS HAS NO ASSETS AT THIS TIME FROM WHICH TO PAY HIS OUTSTANDING DEBT. WE UNDERSTAND THAT YOUR DESIGNATED COLLECTION OFFICE DOES NOT BECOME INVOLVED IN CASES INVOLVING SERVICE MEMBERS. HOWEVER, IT MAY BE HELPFUL, PRIOR TO SP5 DAVIS' RELEASE FROM CONFINEMENT AND THE SERVICE, IF THE FINANCE OFFICE AT FORT LEAVENWORTH, KANSAS, REFERS THIS CASE TO YOUR COLLECTION DIVISION SO THAT APPROPRIATE FOLLOW-UP COLLECTION ACTION CAN BE TAKEN.

FINALLY, WHILE WE AGREE THAT LTC BEYER HAD ESTABLISHED AND MAINTAINED AN ADEQUATE SYSTEM OF CONTROLS, WE BELIEVE THE ABILITY TO IDENTIFY CASHIERS INVOLVED IN QUESTIONABLE TRANSACTIONS WOULD BE INCREASED IF CASHIERS WERE REQUIRED TO USE INK PENS WHEN ANNOTATING AND INITIALING NEGOTIABLE INSTRUMENTS AND IF A SAMPLE OF EACH CASHIER'S INITIALS WERE KEPT ON FILE.

/1/ THE RECORD SHOWS THAT SP5 DAVIS WAS SENTENCED TO A DISHONORABLE DISCHARGE, TOTAL FORFEITURE OF ALL PAY AND ALLOWANCES, 33 MONTHS CONFINEMENT AT HARD LABOR AT FORT LEAVENWORTH, KANSAS, AND REDUCTION IN GRADE TO A PRIVATE.