B-270480 January 18, 1996

B-270480: Jan 18, 1996

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Ohio 44199-2055 Dear Cornrnander Schnittger: This is in response to your letter dated November 1. Are responsible for the funds entrusted to them and are personally liable when those funds are lost See. Both the accountable officer in whose name the account is held in this case Mr. In this case the Deputy Disbursing Officer at the Gulfport PSAD are liable as disbursing officers for the amount of the improper payments. 62 Comp. We will address that officer's liability nonetheless. Upon determining that the payment was not the result of bad faith or lack of reasonable care by the disbursing officer and that a diligent effort has been made to collect the payment. We conclude that those statutory requirements have been met.

B-270480 January 18, 1996

Paul Schnittger Commander, SC, USN Director for held Support Defense Finance and Accounting Service 1240 East Ninth Street Cleveland, Ohio 44199-2055

Dear Cornrnander Schnittger:

This is in response to your letter dated November 1, 1995 (DFAS-CL/FFA) requesting relief on behalf of Mr. R. Longen, Disbursing Officer at the Navy Personnel Support Activity Detachment (PSAD) in Pensacola, Florida, from personal liability for improper payments in the amount of $4,094. For the reasons set forth below, we grant relief to Mr. Longen pursuant to 31 U.S.C. Sec. 2527(c). In addition, we also relieve Mr. Longen's subordinate, the Deputy Disbursing Officer at the PSAD in Gulfport, Mississippi, who made the improper payments in question. /1/

BACKGROUND

Your submission indicates that the improper payments here in question resulted from fraud on two occasions by Robert L. Boyd, purportedly a former Marine. On June 14, 1993, Boyd, using the alias "Randy Boyd," applied for advance transportation allowances at the Gulfport PSAD, presenting fraudulent permanent change of station orders and producing a fraudulent identification card. Boyd received a check for $2,613, which he successfully negotiated. Apparently, the Deputy Disbursing Officer did not deal with Boyd face-to-face, but rather made the payment upon review of the relevant (fraudulent) documentation.

On August 25, 1994, Boyd, using the alias "Jason D. Pugh," again applied for advance transportation allowances at the Gulfport FSAD, again presenting fraudulent permanent change of station orders and producing a fraudulent identification card. In this case, the Deputy Disbursing Officer dealt with Boyd personally. Boyd received a check for $1,481, which he successfully negotiated.

DISCUSSION

"A special trust responsibility exists with regard to public monies and with this special trust goes personal financial responsibility." B-16l457, October 30, 1969. Accordingly, disbursing officers, like all accountable officers of the government, are responsible for the funds entrusted to them and are personally liable when those funds are lost See, e.g. 65 Comp. Gen. 858 (1986). In circumstances such as those here under review, both the accountable officer in whose name the account is held in this case Mr. R. Longen, and the subordinate accountable officer who actually made the payment, in this case the Deputy Disbursing Officer at the Gulfport PSAD are liable as disbursing officers for the amount of the improper payments. 62 Comp. Gen. 476, 47980 (1983); B-240280, May 22, 1991. Accordingly, although your letter does not request relief on behalf of the Deputy Disbursing Officer, we will address that officer's liability nonetheless. See. e.g., B-247164, March 20, 1992.

Under 31 U.S.C. Sec. 3527(c) (1994), this Office may relieve a disbursing officer from liability for a deficiency in his or her account resulting from an illegal, improper, or incorrect payment, upon determining that the payment was not the result of bad faith or lack of reasonable care by the disbursing officer and that a diligent effort has been made to collect the payment. See. e.g., 70 Comp. Gen. 298 (1991); B-255237, February 8, 1994. In the instant case, we conclude that those statutory requirements have been met.

Relief of Mr. R. Longen

Where, as here, the improper payments were made by a subordinate of the disbursing officer in whose name the account is held, we generally will find that the supervising disbursing officer acted with reasonable care for purposes of 31 U.S.C. Sec. 3527(c) upon a showing that he or she properly supervised subordinate employees. Proper supervision is demonstrated by evidence that the supervisor maintained an adequate system of procedures and controls to avoid errors and that appropriate steps were taken to ensure the system's implementation and effectiveness. 62 Comp. Gen. 476, 480 (1983).

Here, the supporting documents indicate that Mr. Longen established an adequate system of controls for paying advance transportation allowances, in accordance with agency-wide guidance. The improper payments resulted from the presentation of fraudulent orders and identification cards. Even an adequate and effectively supervised system of procedures and controls cannot always prevent improper payments resulting from criminal activity. B-248532, October 26, 1992. Accordingly, since there is no indication of bad faith or lack of due care on the part of Mr. Longen, we grant him relief under 31 U.S.C. Sec. 3527(c) from liability for the improper payments.

Relief of the Gulfport Deputy Disbursing Officer

In order to relieve a disbursing officer for an improper payment actually made by him or her, the record must show the good faith and reasonable care required by 31 U.S.C. Sec. 3527(c) by evidence that the disbursing officer complied with established procedures and that nothing occurred which should have made him or her suspicious of criminal activity. B-24188O, August 14,1991.

In the instant case, the record indicates that the conduct of the Deputy Disbursing Officer at the Gulfport PSAD satisfied this standard for relief. The Deputy Disbursing Officer followed proper procedures, but-those procedures were defeated by well-conceived criminal scheme. There is no indication in the record that the Deputy Disbursing Officer should have recognized that the documents presented by Boyd were fraudulent or otherwise subject to suspicion. There is, therefore, no indication of bad faith of lack of due care on the part of the Deputy Disbursing Officer and, pursuant to 31 U.S.C. Sec. 3527(c), we grant that disbursing officer relief from liability for the improper payments.

Collection Action

As indicated above, 31 U.S.C. Sec. 3527(c) permits us to deny relief in cases in which the agency has not taken diligent collection action. To satisfy this statutory requirement, a disbursing officer must demonstrate the agency's compliance with the Federal Claims Collection Standards, 4 C.F.R. Parts 101-105 (1995). B-249888, Januazy 28, 1993. Here, the record indicates that this requirement has been satisfied. Boyd has been apprehended, has admitted to the frauds and has expressed willingness to rnake restitution. Mr. Longen reports that he intends to "vigorously pursue collection action."

Accordingly, we grant relief to Mr. Longen and to the Deputy Disbursing Officer at the Gulfport PSAD.

Sincerely yours,

Gary L. Kepplinger Associate General Counsel

1. Although the record is unclear, that Deputy Disbursing Officer was apparently Ms. Pam J. Goza.