B-131299, MAR. 27, 1958

B-131299, MAR. 27, 1958

TO THE HONORABLE WARREN OLNEY, III, DIRECTOR, ADMINISTRATIVE OFFICE OF THE UNITED STATES COURTS:

THE LETTER OF FEBRUARY 3, 1958, WITH ENCLOSURES, FROM THE ASSISTANT DIRECTOR, PRESENTED FOR OUR CONSIDERATION SEVERAL QUESTIONS ARISING FROM A SHORTAGE IN THE ACCOUNTS OF MR. WILLIAM ROBINETT, JR., FORMERLY CLERK OF COURT IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO.

THE RECORD BEFORE US INDICATES THAT MR. ROBINETT IS RESPONSIBLE FOR A SHORTAGE TOTALING $3,968.38 DUE TO EMBEZZLEMENT BY HIM OF FUNDS RECEIVED IN HIS OFFICIAL CAPACITY. THIS SUM HAS BEEN REDUCED TO $3,308.38 BY APPLICATION OF SUMS PAID BY TWO SURETIES ON THEIR BONDS. DEMAND FOR $3,308.38 HAS BEEN MADE UPON THE RESPONSIBLE SURETY, BUCKEYE UNION CASUALTY COMPANY OF COLUMBUS, OHIO. ON OCTOBER 24, 1957,MR. ROBINETT WAS FOUND GUILTY OF A VIOLATION OF 18 U.S.C. 646, AND ON DECEMBER 16, 1957, HE WAS PLACED ON PROBATION FOR A PERIOD OF FIVE YEARS. IT IS ALSO REPORTED THAT A CIVIL SUIT TO RECOVER THE BALANCE OF $3,308.38 RESULTED IN A DEFAULT JUDGMENT BEING TAKEN AGAINST HIM ON NOVEMBER 29, 1957. THE LETTER OF FEBRUARY 3, 1958, STATES THAT CERTAIN SUMS BUT FOR HIS INDEBTEDNESS ARE DUE MR. ROBINETT AND OUR INSTRUCTIONS AS TO THEIR PROPER DISPOSITION ARE REQUESTED.

IT MAY BE STATED GENERALLY, THAT ALL ASSETS OF A DEFAULTING OFFICER OR EMPLOYEE OF THE UNITED STATES IN THE POSSESSION OF THE UNITED STATES AND AVAILABLE FOR SETOFF SHOULD BE APPLIED TOWARDS LIQUIDATION OF HIS INDEBTEDNESS BEFORE RESORTING TO THE SURETY UNDER HIS BOND. WE STATED IN 27 COMP. GEN. 703 THAT:

"IT IS WELL SETTLED THAT "IT IS LEGAL AND PROPER FOR THE GOVERNMENT, THROUGH ADMINISTRATIVE OFFICES, TO FIRST APPLY ALL AVAILABLE ASSETS IN ITS POSSESSION, INCLUDING BOTH UNPAID SALARY AND AMOUNT IN THE RETIREMENT FUND, BELONGING TO A DEFAULTING OFFICER OR EMPLOYEE, TOWARD LIQUIDATION OF THE INDEBTEDNESS, BEFORE RESORTING TO ITS REMEDY UNDER THE BOND OF THE OFFICER OR EMPLOYEE"--- QUOTING FROM THE SYLLABUS OF 7 COMP. GEN. 305. SEE, ALSO, UNITED STATES V. UNITED STATES FIDELITY AND GUARANTY CO., 35 F.SUPP. 959.

"ACCORDINGLY, IN ORDER THAT THE INTERESTS OF THE UNITED STATES MAY BE FULLY PROTECTED, AN INDEBTEDNESS DUE THE GOVERNMENT ARISING FROM A LOSS COVERED BY THE EMPLOYEES' BOND SHOULD BE REPORTED TO THE CIVIL SERVICE COMMISSION FOR SET-OFF AGAINST THE RETIREMENT AND DISABILITY FUND WITHOUT AWAITING FINAL ADJUDICATION OF THE GOVERNMENT'S CLAIM AGAINST THE SURETY. THUS, IF THE AMOUNT TO THE EMPLOYEE'S CREDIT IN THE RETIREMENT FUND IS IMMEDIATELY AVAILABLE FOR SET-OFF, AND IF SET OFF ACTUALLY IS ACCOMPLISHED BY THE CIVIL SERVICE COMMISSION, SUBSEQUENT COLLECTION FROM THE SURETY UNDER THE BOND PROPERLY WOULD BE REDUCIBLE IN THE AMOUNT SO RECOVERED. OTHER WORDS, THE TWO REMEDIES AVAILABLE TO THE GOVERNMENT IN SUCH CASES SHOULD BE EXERCISED CONCURRENTLY AND THE LIABILITY OF THE SURETY IN ANY EVENT IS THE UNRECOVERED PORTION OF THE GOVERNMENT'S LOSS AT THE TIME OF FINAL SETTLEMENT UNDER THE BOND.'

THE LETTER OF FEBRUARY 3, 1958, INDICATES THAT MR. ROBINETT IS ENTITLED TO FINAL SALARY FOR THE PERIOD APRIL 22, 1956, THROUGH MAY 2, 1956, AS FOLLOWS:

TABLE

GROSS $283.52 (GS-13 $9,205.00 P.A. - 64 HOURS)

RETIREMENT 17.01 (6 PERCENT RETIREMENT)

FEDERAL TAX 14.40

LIFE INSURANCE 2.50

NET 249.61

THE AVAILABILITY OF AN EMPLOYEE'S FINAL SALARY PAYMENT FOR SETOFF AGAINST HIS INDEBTEDNESS TO THE UNITED STATES IS SO WELL ESTABLISHED AS TO RENDER DISCUSSION HERE UNNECESSARY. HOWEVER, WE HAVE HELD THAT ITEMS WHICH ARE REQUIRED BY LAW TO BE WITHHELD OR DEDUCTED FROM AN EMPLOYEE'S SALARY--- SUCH AS FEDERAL INCOME TAX WITHHOLDING AND CIVIL SERVICE RETIREMENT DEDUCTIONS--- SHOULD BE SO WITHHELD OR DEDUCTED FROM HIS FINAL SALARY PAYMENT PRIOR TO CONSIDERATION OF HIS OTHER INDEBTEDNESS TO THE GOVERNMENT. SEE 24 COMP. GEN. 334. THE PROVISIONS OF 5 U.S.C. 2094 (A) REQUIRE THE WITHHOLDING OF THE PREMIUM FOR THE FEDERAL EMPLOYEES' GROUP LIFE INSURANCE FROM AN EMPLOYEE'S SALARY DURING ANY PERIOD IN WHICH THE EMPLOYEE (IF UNDER AGE 65) IS INSURED THEREUNDER. IT APPEARS MR. ROBINETT WAS SO INSURED DURING THE PERIOD FOR WHICH FINAL SALARY IS DUE AND THERE IS NO SHOWING THAT HE WAS 65 YEARS OR OVER AT THAT TIME, HIS LIFE INSURANCE PREMIUM DEDUCTION LIKEWISE FALLS IN THAT CATEGORY. HENCE, HIS FINAL SALARY PAYMENT MUST BE APPLIED AS FOLLOWS: (1) RETIREMENT DEDUCTION; (2) FEDERAL WITHHOLDING TAX; (3) LIFE INSURANCE PREMIUM; AND (4) THE BALANCE OF $249.61 TO BE SET OFF AGAINST HIS INDEBTEDNESS TO THE UNITED STATES.

IT IS FURTHER STATED IN THE LETTER OF FEBRUARY 3 THAT MR. ROBINETT HAS TO HIS CREDIT IN THE CIVIL SERVICE RETIREMENT FUND APPROXIMATELY $3,514.06, PLUS INTEREST (INCLUDING THE $17.01 TO BE DEPOSITED FROM HIS FINAL SALARY PAYMENT AS INDICATED ABOVE). THE LETTER INDICATES THAT MR. ROBINETT HAS NOT FILED A CLAIM FOR REFUND OR FOR RETIREMENT BENEFITS WITH THE ADMINISTRATIVE OFFICE OF THE UNITED STATES COURTS, ALTHOUGH HE HAS INQUIRED THROUGH HIS ATTORNEY AS TO THE PROCEDURE INVOLVED.

ORDINARILY, WHEN A FEDERAL EMPLOYEE SUBJECT TO THE CIVIL SERVICE RETIREMENT ACT, WHO HAS COMPLETED AT LEAST FIVE YEARS OF SERVICE LEAVES THE FEDERAL SERVICE PRIOR TO RETIREMENT AGE, HE HAS A VESTED RIGHT TO A FUTURE ANNUITY, 5 U.S.C. 2258, WITH AN OPTION OF CLAIMING AND DRAWING OUT THE AMOUNT TO HIS CREDIT IN THE RETIREMENT FUND, 5 U.S.C. 2261. THUS, THE AMOUNT TO HIS CREDIT IS REQUIRED BY LAW TO REMAIN IN THE FUND WHEN HE LEAVES THE FEDERAL SERVICE AND IS NOT DUE HIM UNLESS AND UNTIL HE EXERCISES HIS OPTION. UNDER SUCH CONDITIONS, THE AMOUNT TO HIS CREDIT IS NOT AVAILABLE FOR SET OFF AGAINST ANY INDEBTEDNESS TO THE GOVERNMENT IN THE ABSENCE OF A CLAIM FOR SUCH AMOUNT FROM THE FORMER EMPLOYEE, WHICH RENDERS THE SUM DUE AND HENCE SUSCEPTIBLE TO SETOFF. OF COURSE, IF AND WHEN HIS ANNUITY PAYMENTS START, SUCH PAYMENTS MAY BE APPLIED AGAINST HIS INDEBTEDNESS AS THEY BECOME DUE. SEE 21 COMP. GEN. 100. HOWEVER, IN THE PRESENT CASE, MR. ROBINETT HAS BEEN CONVICTED OF EMBEZZLING FUNDS RECEIVED AS AN OFFICER OF A COURT OF THE UNITED STATES UNDER 18 U.S.C. 646, WHICH PROVIDES FOR A FINE OF NOT MORE THAN THE AMOUNT EMBEZZLED OR IMPRISONMENT FOR NOT MORE THAN 10 YEARS, OR BOTH. SECTION 1 (1) OF TITLE 18 OF THE UNITED STATES CODE PROVIDES THAT ANY OFFENSE PUNISHABLE BY DEATH OR IMPRISONMENT FOR A TERM EXCEEDING ONE YEAR IS A FELONY.

SECTION 740C OF TITLE 5, U.S.C. PROVIDES IN PERTINENT PART AS FOLLOWS:

"THERE SHALL NOT BE PAID TO ANY PERSON CONVICTED PRIOR TO, ON, OR AFTER SEPTEMBER 1, 1954, OF ANY OF THE FOLLOWING OFFENSES DESCRIBED IN THIS SECTION, OR TO THE SURVIVOR OR BENEFICIARY OF SUCH PERSON SO CONVICTED, FOR ANY PERIOD SUBSEQUENT TO THE DATE OF SUCH CONVICTION OR SEPTEMBER 1, 1954, WHICHEVER IS LATER, ANY ANNUITY OR RETIRED PAY ON THE BASIS OF THE SERVICE OF SUCH PERSON AS AN OFFICER OR EMPLOYEE OF THE GOVERNMENT:

"/2) ANY OFFENSE (NOT INCLUDING ANY OFFENSE WITHIN THE PURVIEW OF SECTION 13 OF TITLE 18) WHICH IS A FELONY UNDER THE LAWS OF THE UNITED STATES OR OF THE DISTRICT OF COLUMBIA (A) COMMITTED IN THE EXERCISE OF HIS AUTHORITY, INFLUENCE, POWER, OR PRIVILEGES AS AN OFFICER OR EMPLOYEE OF THE GOVERNMENT, * * *.'

ALSO, 5 U.S.C. 740E PROVIDES THAT:

"ANY AMOUNTS CONTRIBUTED BY ANY SUCH PERSON TOWARD THE ANNUITY THE BENEFITS OF WHICH ARE DENIED UNDER SECTIONS 740B--- 740I OF THIS TITLE AND SECTION 3282 OF TITLE 18, LESS ANY SUMS PREVIOUSLY REFUNDED OR PAID AS ANNUITY BENEFITS, SHALL BE RETURNED TO SUCH PERSON, UPON APPROPRIATE APPLICATION THEREFOR, WITH INTEREST TO THE DATE OF HIS CONVICTION OF ANY OFFENSE DESCRIBED IN SECTION 740C OF THIS TITLE * * *.'

SINCE MR. ROBINETT WAS CONVICTED OF A "FELONY UNDER THE LAWS OF THE UNITED STATES * * * COMMITTED IN THE EXERCISE OF HIS AUTHORITY, INFLUENCE, POWER, OR PRIVILEGES AS AN OFFICER OR EMPLOYEE OF THE GOVERNMENT" AS CONTEMPLATED BY THE QUOTED PORTION OF 740C, IT APPEARS HE HAS LOST HIS RIGHTS TO AN ANNUITY AND THE AMOUNT TO HIS CREDIT IN THE RETIREMENT FUND (BUT FOR HIS INDEBTEDNESS) IS PRESENTLY RETURNABLE TO HIM UPON APPLICATION THEREFOR. THUS, THE AMOUNT TO MR. ROBINETT'S CREDIT IN THE FUND IS NOT REQUIRED TO REMAIN THEREIN PENDING HIS REACHING RETIREMENT AGE OR EXERCISING AN OPTION TO DRAW OUT, BUT IS LEGALLY NOW DUE HIM. WE HELD IN 16 COMP. GEN. 962, QUOTING FROM THE SYLLABUS, THAT:

"THE EXERCISING OF THE COMMON-LAW RIGHT OF THE GOVERNMENT TO APPLY MONEYS DUE A DEBTOR FROM THE GOVERNMENT IN LIQUIDATION OF A GOVERNMENT INDEBTEDNESS IS NOT DEPENDENT UPON THE DEBTOR FILING A CLAIM FOR THE MONEYS OTHERWISE DUE, AND, SHOULD THE DEBTOR'S FINAL SALARY AS A FORMER GOVERNMENT EMPLOYEE NOT BE SUFFICIENT TO COMPLETE LIQUIDATION, REQUEST SHOULD BE MADE UPON THE CIVIL SERVICE COMMISSION FOR APPLICATION OF THE AMOUNT TO HIS CREDIT IN THE RETIREMENT FUND, IN WHOLE OR IN PART AS THE CASE MIGHT BE, IN FURTHER LIQUIDATION OF THE INDEBTEDNESS.'

HENCE, IT IS OUR VIEW THAT THE AMOUNT TO MR. ROBINETT'S CREDIT IN THE RETIREMENT FUND IS PRESENTLY AVAILABLE FOR SETOFF AGAINST HIS INDEBTEDNESS TO THE UNITED STATES REGARDLESS OF WHETHER OR NOT HE HAS APPLIED FOR REFUND THEREOF. SEE 35 COMP. GEN. 126. YOUR OFFICE SHOULD THEREFORE IMMEDIATELY FILE WITH THE CIVIL SERVICE COMMISSION A CLAIM OR REQUEST FOR APPLICATION OF SO MUCH OF THE AMOUNT DUE MR. ROBINETT AS IS REQUIRED TO LIQUIDATE THE BALANCE OF HIS INDEBTEDNESS (THE AMOUNT OF THE DEFAULT JUDGMENT PLUS ANY INTEREST PROVIDED FOR THEREIN) REMAINING UNSATISFIED AFTER APPLICATION OF HIS FINAL SALARY PAYMENT AS INDICATED.

ON THE BASIS OF THE INFORMATION FURNISHED BY THE LETTER OF FEBRUARY 3, 1958, AND THE SUBSEQUENT LETTER OF MARCH 11 FROM MR. V. A. CLEMENTS, CHIEF AUDITOR, NO PAYMENT FOR ACCUMULATED ANNUAL LEAVE WOULD APPEAR TO BE WARRANTED SINCE THERE IS NO EVIDENCE PRESENTED FROM WHICH A DETERMINATION