B-146638, NOVEMBER 3, 1961, 41 COMP. GEN. 285

B-146638, NOVEMBER 3, 1961, 41 COMP. GEN. 285

FRAUD - FALSE CLAIMS - FORFEITURE - PAID CLAIMS, VOUCHERS, ETC.--- DISBURSING OFFICERS - ACCOUNTS - FALSE, ETC., CLAIMS--- TRANSPORTATION DEPENDENTS - MILITARY PERSONNEL - DISLOCATION ALLOWANCE - FALSE TRANSPORTATION CLAIM EFFECT--- FRAUD - FALSE CLAIMS - FRAUDULENT ITEMS AS VITIATING WHOLE VOUCHER--- DISBURSING OFFICERS - ACCOUNTS - FALSE, ETC., CLAIMS--- DISBURSING OFFICERS - ACCOUNTS - FALSE, ETC., CLAIMS--- DISBURSING OFFICERS - ACCOUNTS - FALSE, ETC., CLAIMS--- CLAIMS - DOUBTFUL - ACCOUNTING OFFICERS RULE THE FORFEITURE PROVISIONS IN THE FRAUDULENT CLAIMS STATUTE, 28 U.S.C. 2514, HAVE REFERENCE TO CLAIMS FILED IN THE COURT OF CLAIMS OF THE UNITED STATES AND HAVE NO APPLICATION TO CLAIMS WHICH HAVE BEEN PAID. IN THE AUDIT OF VOUCHERS COVERING MORE THAN ONE ITEM OF PAY OR ALLOWANCES PAID TO A MEMBER OF THE UNIFORMED SERVICES ON THE BASIS OF FALSE OR FRAUDULENT STATEMENTS OF FACT BY THE MEMBER, ACTION SHOULD BE TAKEN ON THE BASIS OF WHETHER, UNDER APPLICABLE LAWS AND REGULATIONS, THE MEMBER WAS ENTITLED TO THE PAYMENT FOR ANY OF THE PARTICULAR ITEMS AND A PAYMENT IS WRONGFULLY OBTAINED, WHETHER THROUGH FRAUD, MISREPRESENTATION OR OTHERWISE, IS AN ERRONEOUS PAYMENT FOR RECOUPMENT WITHOUT REGARD TO WHETHER THE MEMBER IS SUBJECTED TO CRIMINAL PROSECUTION FOR FRAUD IN CONNECTION WITH THE PAYMENT. A DISLOCATION ALLOWANCE WHICH WAS PAID TO A MEMBER OF THE UNIFORMED SERVICES ON THE BASIS OF A VOUCHER INCLUDING AN ITEM FOR DEPENDENTS' TRAVEL WHICH WAS SUPPORTED BY A SUBSEQUENTLY DISCOVERED FALSE STATEMENT BY THE MEMBER CONCERNING THE TRAVEL PERFORMED BY THE DEPENDENTS WAS A PROPER PAYMENT BECAUSE THERE WAS AN ACTUAL MOVEMENT OF THE DEPENDENTS TO ENTITLE THE MEMBER TO THE DISLOCATION ALLOWANCE. WHERE A MEMBER OF THE UNIFORMED SERVICES INCIDENT TO A PERMANENT CHANGE OF STATION HAS BEEN REIMBURSED ON ONE VOUCHER FOR TRAVEL, TEMPORARY DUTY TRAVEL AND PER DIEM ALLOWANCE AND SUBSEQUENTLY IT IS DISCOVERED THAT ONE ITEM WAS SUPPORTED BY A FRAUDULENT STATEMENT, THAT ITEM ONLY WOULD BE SUBJECT TO QUESTION, AND ACTION TO RECOVER THE AMOUNT PAID INCIDENT TO THE FRAUDULENT ITEMS IS PROPER. WHERE AN ENLISTED MEMBER OF THE UNIFORMED SERVICES WAS ASSIGNED TO A FINANCE OFFICE AND CHARGED WITH THE DUTY OF PREPARING REGULAR MONTHLY PAY VOUCHERS AND ON HIS OWN MILITARY PAY VOUCHER, A VOUCHER WHICH REFLECTS ALL ITEMS OF PAY AND ALLOWANCES FOR A PARTICULAR PERIOD, THE MEMBER FRAUDULENTLY ENTERED SUBSISTENCE ALLOWANCE, QUARTERS ALLOWANCE, AND A CLASS Q ALLOTMENT, ACTION TO RECOVER ONLY THE AMOUNTS INCIDENT TO THE FRAUDULENT ITEMS WAS PROPER ON THE BASIS THAT EACH SEPARATE ITEM OF PAY AND ALLOWANCES IS A SEPARATE CLAIM AND THAT THE FACT THAT SEVERAL ITEMS ARE INCLUDED IN A SINGLE VOUCHER DOES NOT WARRANT THE CONCLUSION THAT SUCH ITEMS HAVE LOST THEIR CHARACTER AS SEPARATE CLAIMS. IN CASES IN WHICH THE ENTIRE AMOUNT PAID TO A MEMBER OF THE UNIFORMED SERVICES ON A SINGLE VOUCHER HAS BEEN RECOUPED BECAUSE PAYMENT OF ONE OR MORE OF THE ITEMS ON THE VOUCHER WAS OBTAINED BY FRAUD OR MISREPRESENTATION, THE PORTION OF THE AMOUNT PAID FOR ITEMS AS TO WHICH THERE WAS NO FRAUD OR MISREPRESENTATION MAY BE RECREDITED TO THE MEMBER'S PAY ACCOUNT IF THERE OTHERWISE IS NO QUESTION OF ENTITLEMENT TO SUCH AMOUNTS. ALTHOUGH THE FRAUDULENT CLAIMS STATUTE, 28 U.S.C. 2514, HAS NO DIRECT APPLICATION IN THE AUDIT OF DISBURSING OFFICER ACCOUNTS, A DISBURSING OFFICER WHO SUSPECTS FRAUD IN CONNECTION WITH AN ACCOUNT SHOULD REGARD THE CLAIM AS ONE OF DOUBTFUL VALIDITY AND DENY PAYMENT, LEAVING THE PAYEE UNDER THE PRINCIPLES OF LONGWILL V. UNITED STATES, 17 CT.1CL. 288, AND CHARLES V. UNITED STATES, 19 ID, 316, TO SEEK RELIEF, IF ANY, IN THE COURT OF CLAIMS. ALTHOUGH THE FRAUDULENT CLAIMS STATUTE, 28 U.S.C. 2514, HAS NO APPLICATION TO PAID VOUCHERS, ITS PURPOSE IS SALUTARY AND TO FULLY SERVE SUCH PURPOSE A RECLAIM FOR ANY PORTION OR ALL OF AN AMOUNT RECOUPED FROM A MEMBER OF THE UNIFORMED SERVICES BECAUSE OF AN ERRONEOUS PAYMENT OF ANY ITEM ON A VOUCHER OBTAINED THROUGH FRAUD OR MISREPRESENTATION IS TO BE VIEWED AS A DOUBTFUL CLAIM AND THE PAYEE SHOULD BE LEFT TO OBTAIN FINAL RESOLUTION IN THE COURT OF CLAIMS EVEN THOUGH THE RECLAIM DOES NOT INVOLVE ANY APPARENT FRAUD OR MISREPRESENTATION.

TO THE SECRETARY OF DEFENSE, NOVEMBER 3, 1961:

REFERENCE IS MADE TO LETTER OF AUGUST 3, 1961, FROM THE ASSISTANT SECRETARY OF DEFENSE ( COMPTROLLER) REQUESTING DECISION ON THREE QUESTIONS, AS FOLLOWS:

1. MAY THE FORFEITURE PROVISIONS OF 28 U.S.C. 2514 BE APPLIED IN THE CASE OF A PAID CLAIM?

2. IF THE REPLY TO QUESTION NO. 1 IS IN THE AFFIRMATIVE, MAY THAT PART OF A PAID CLAIM WHICH IS NOT TAINTED WITH FRAUD BE SEVERED FROM THAT PART WHICH IS FRAUDULENT?

3. IF THE REPLY TO QUESTIONS NO. 1 AND 2 ARE IN THE AFFIRMATIVE, MAY A PAID CLAIM FOR A REGULAR MONTH'S PAY AND ALLOWANCES (MILITARY PAY VOUCHER TYPE CLAIM) BE BROKEN DOWN SO AS TO CAUSE FORFEITURE OF ONLY SO MUCH AS IS TAINTED WITH FRAUD?

SUCH QUESTIONS ARE PRESENTED AND DISCUSSED IN COMMITTEE ACTION NO. 290 OF THE MILITARY PAY AND ALLOWANCE COMMITTEE, DEPARTMENT OF DEFENSE. IT IS STATED THAT THE QUESTIONS CONCERN WHETHER OR NOT THE PROVISIONS OF 28 U.S.C. 2514 MAY BE APPLIED AFTER A CLAIM HAS BEEN PAID WHICH CLAIM IS BASED ENTIRELY, OR IN PART, ON FALSE OR FRAUDULENT STATEMENTS OF FACT.

THE ACT OF JUNE 25, 1948, 28 U.S.C. 2514, PROVIDES THAT A CLAIM AGAINST THE UNITED STATES SHALL BE FORFEITED TO THE UNITED STATES BY ANY PERSON WHO CORRUPTLY PRACTICES OR ATTEMPTS TO PRACTICE ANY FRAUD AGAINST THE UNITED STATES IN THE PROOF, STATEMENT, ESTABLISHMENT, OR ALLOWANCE THEREOF. THE STATUTE FURTHER PROVIDES THAT IN SUCH CASES THE COURT OF CLAIMS SHALL SPECIFICALLY FIND SUCH FRAUD OR ATTEMPT AND RENDER JUDGMENT OF FORFEITURE. THOSE PROVISIONS WERE PRECEDED BY SIMILAR FORFEITURE PROVISIONS IN SECTION 1086, REVISED STATUTES, AND SECTION 172 OF THE ACT OF MARCH 3, 1911, 28 U.S.C. 279 (1946 USED.).

IN DECISION B-145920, DATED SEPTEMBER 21, 1961, 41 COMP. GEN. 206, TO YOU, WE POINTED OUT THAT 28 U.S.C. 2514 BY ITS OWN TERMS HAS REFERENCE TO CLAIMS FILED IN THE COURT OF CLAIMS OF THE UNITED STATES. WE HELD THAT THE STATUTE HAS NO APPLICATION TO A CLAIM WHICH HAS BEEN SETTLED BY PAYMENT, AND THAT IT DOES NOT AFFECT THE RECOVERY OF MONEYS PAID OUT AS A RESULT OF FRAUD, CITING BLUME V. UNITED STATES, 81 CT.1CL. 210; GLOBE INDEMNITY COMPANY V. UNITED STATES, 84 CT.1CL. 587; CROVO V. UNITED STATES, 100 CT.1CL. 368. ACCORDINGLY, YOUR FIRST QUESTION IS ANSWERED IN THE NEGATIVE.

IN VIEW OF THE ANSWER TO QUESTION 1, NO ANSWERS APPEAR REQUIRED TO QUESTIONS 2 AND 3. IN VIEW OF THE FOLLOWING DISCUSSION IN COMMITTEE ACTION NO. 290, HOWEVER, A FURTHER STATEMENT OF OUR VIEWS APPEARS APPROPRIATE.

A. MEMBER SETTLES CLAIM FOR DEPENDENT'S TRAVEL AND DISLOCATION ALLOWANCE ON SAME VOUCHER. THE STATEMENT SUPPORTING THE VOUCHER IS FALSE, BUT THIS IS NOT DISCOVERED UNTIL AFTER PAYMENT IS ACCOMPLISHED. MAY THE DISLOCATION ALLOWANCE CLAIM BE SEVERED FROM THE DEPENDENT TRAVEL CLAIM EVEN THOUGH PAID ON THE SAME VOUCHER? MAY THE MEMBER BE ENTITLED TO RETAIN A DISLOCATION ALLOWANCE PAYMENT EVEN THOUGH IT IS SUPPORTED BY THE SAME FALSE STATEMENT UNDER EACH OF THE FOLLOWING CIRCUMSTANCES?

(1) ONE OR MORE OF THE MEMBER'S DEPENDENTS DO NOT PERFORM THE TRAVEL AS CLAIMED.

(2) THE CHILDREN AND A WOMAN OTHER THAN THE MEMBER'S LAWFUL WIFE PERFORM THE TRAVEL.

(3) THE TRAVEL IS ACTUALLY PERFORMED, BUT TO A POINT OTHER THAN CLAIMED.

(4) THE TRAVEL IS PERFORMED BUT SOMETIME AFTER THE TRAVEL IS ALLEGED TO HAVE BEEN PERFORMED AND PAYMENT HAS ALREADY BEEN MADE.

B. MAY A TRAVEL VOUCHER WHEREON THE MEMBER HAS BEEN REIMBURSED FOR PERMANENT CHANGE OF STATION TRAVEL, TEMPORARY DUTY TRAVEL AND PER DIEM ALLOWANCE BE SEPARATED SO AS TO APPLY 28 U.S.C. 2514 TO ONLY THAT ITEM OF REIMBURSEMENT WHICH IS SUPPORTED BY A FRAUDULENT STATEMENT?

IN CONNECTION WITH QUESTION NO. 3, IT IS BELIEVED THAT ANY ITEM OF PAY OR ALLOWANCE WHICH MAY BE CLAIMED INDEPENDENTLY OF OTHER ITEMS (AND IT IS USUALLY PROVIDED THAT SUCH ITEMS BE SETTLED INDIVIDUALLY) MAY BE SEVERED ON A CLAIM, EITHER PAID OR UNPAID, WHEREON ONE OR MORE OF THE OTHER ITEMS IS SUPPORTED BY A FALSE OR FRAUDULENT STATEMENT. THIS BELIEF IS MOST DIFFICULT TO APPLY IN THE CASE OF FRAUD COMMITTED UNDER THE NEW MILITARY PAY VOUCHER SYSTEM OF PAYMENT USED BY THE DEPARTMENT OF THE ARMY. UNDER THIS SYSTEM, ALL ITEMS OF PAY AND ALLOWANCES ARE ENTERED ON ONE VOUCHER WHICH IS IN REALITY A CLAIM BY THE MEMBER FOR HIS PAY AND ALLOWANCES FOR THAT PERIOD COVERED BY THE VOUCHER. UNDER THE FOLLOWING CIRCUMSTANCE, IT WOULD APPEAR THAT THE MEMBER'S FRAUDULENT ACTIONS DESTROY HIS RIGHTS TO THE ENTIRE CLAIM (MILITARY PAY VOUCHER); HOWEVER, THE MATTER IS TOO CLOUDED SO AS TO BE FREE FROM DOUBT.

AN ENLISTED MEMBER, WHO WAS ASSIGNED TO A FINANCE OFFICE, WAS CHARGED WITH THE DUTY OF PREPARING THE REGULAR MONTHLY PAY VOUCHERS OF PERSONNEL WORKING IN THE FINANCE OFFICE. FOR A PERIOD OF MANY MONTHS, HE FRAUDULENTLY ENTERED ON HIS OWN MPV SUBSISTENCE ALLOWANCE, QUARTERS ALLOWANCE, AND A CLASS Q ALLOTMENT. HE ALSO INITIATED THE DOCUMENTS TO CAUSE A CLASS Q ALLOTMENT TO BE PAID TO HIS SISTER. WHEN HIS ACTIONS WERE DISCOVERED, IN ADDITION TO COURT-MARTIAL, ACTION WAS TAKEN TO RECOVER ONLY THE ITEMS OF THE FRAUDULENT ALLOWANCES.

SINCE 28 U.S.C. 2514 HAS NO APPLICATION IN THE AUDIT OF PAID VOUCHERS, THE QUESTION OF WHETHER EACH SEPARATE ITEM INCLUDED IN A PAID VOUCHER OR THE PAID VOUCHER ITSELF IS TO BE VIEWED AS A CLAIM FOR PURPOSES OF THE STATUTE IS IMMATERIAL. IN SUCH CASES AUDIT ACTION IS TO BE TAKEN ON THE BASIS OF WHETHER, UNDER APPLICABLE LAW AND REGULATIONS, THE MEMBER WAS ENTITLED TO THE PAYMENT MADE FOR ANY OF THE ITEMS. IN ANY CASE WHERE PAYMENT OF AN ITEM OF PAY AND ALLOWANCES IS WRONGFULLY OBTAINED, WHETHER THROUGH FRAUD, MISREPRESENTATION OR OTHERWISE, SUCH PAYMENT IS PURELY AND SIMPLY AN ERRONEOUS PAYMENT FOR RECOUPMENT AS SUCH. THE RESULT WOULD BE THE SAME WHETHER OR NOT THE MEMBER IS SUBJECTED TO CRIMINAL PROSECUTION FOR FRAUD IN CONNECTION WITH THE PAYMENT.

APPLYING THE FOREGOING TO THE CASES SET OUT IN "A.' OF THE COMMITTEE ACTION DISCUSSION, SUBJECT TO SECRETARIAL REGULATIONS A DISLOCATION ALLOWANCE IS PAYABLE WHEN A MEMBER'S DEPENDENTS ARE AUTHORIZED TO MOVE AND DO MOVE INCIDENT TO A PERMANENT CHANGE OF STATION. SINCE IN EACH CASE THERE WAS A MOVEMENT OF DEPENDENTS THE DISLOCATION ALLOWANCE PAYMENTS WOULD NOT BE SUBJECT TO QUESTION IF OTHERWISE PROPER UNDER THE GOVERNING REGULATIONS. AS TO "B.' ONLY THE AMOUNT PAID ON THE BASIS OF THE FRAUDULENT STATEMENT WOULD BE SUBJECT TO QUESTION ON THE VOUCHER. CONCERNING THE COMMENT REGARDING QUESTION NO. 3, THE ACTION TAKEN TO RECOVER ONLY THE ITEMS OF THE FRAUDULENT ALLOWANCES WAS PROPER.

IT FOLLOWS THAT WHERE, IN PAST CASES, THE ENTIRE AMOUNT PAID ON A VOUCHER HAS BEEN RECOUPED BECAUSE PAYMENT OF ONE OR MORE OF ITEMS COVERED BY THE VOUCHER WAS OBTAINED BY FRAUD OR MISREPRESENTATION, THE PORTION OF THE AMOUNT PAID FOR ITEMS AS TO WHICH THERE WAS NO FRAUD OR MISREPRESENTATION MAY BE RECREDITED TO THE MEMBER'S PAY ACCOUNT IF THERE OTHERWISE IS NO QUESTION OF ENTITLEMENT.

IT SHOULD BE EMPHASIZED THAT WHAT IS SAID ABOVE RELATES ONLY TO ACTION IN CONNECTION WITH PAID VOUCHERS. AS WE STATED IN DECISION OF SEPTEMBER 21, 1961, 41 COMP. GEN. 206, TO YOU, THE FACT THAT THE FALSE CLAIMS STATUTE RELATES TO CLAIMS BEFORE THE COURT OF CLAIMS AND HAS NO DIRECT APPLICATION IN THE AUDIT OF DISBURSING OFFICERS' ACCOUNTS DOES NOT MEAN THAT IT WOULD BE PROPER FOR A DISBURSING OFFICER TO PAY OR FOR THIS OFFICE TO ALLOW A CLAIM THOUGHT TO BE FRAUDULENT AND THAT IF FRAUD IS SUSPECTED THE CLAIM OBVIOUSLY IS OF DOUBTFUL VALIDITY AND UNDER THE PRINCIPLES OF LONGWILL V. UNITED STATES, 17 CT.1CL. 288, AND CHARLES V. UNITED STATES, 19 CT.1CL. 316, THE CLAIMANT IN SUCH CASES SHOULD BE LEFT TO HIS REMEDY IN THE COURT OF CLAIMS. IN THIS REGARD WE AGREE WITH THE VIEWS EXPRESSED IN THE COMMITTEE ACTION DISCUSSION PERTAINING TO QUESTION NO. 3 THAT EACH SEPARATE ITEM OF PAY AND ALLOWANCES IS TO BE VIEWED AS A SEPARATE CLAIM AND WE DO NOT BELIEVE THAT THE FACT THAT SEVERAL SUCH ITEMS MAY BE INCLUDED IN A SINGLE VOUCHER FOR PURPOSES OF PAYMENT AFFORDS SUFFICIENT BASIS FOR CONCLUDING THAT THEY HAVE LOST THEIR CHARACTER AS SEPARATE CLAIMS.

WHILE THE FRAUDULENT CLAIMS STATUTE HAS NO APPLICATION TO PAID VOUCHERS, ITS PURPOSE IS SALUTARY AND IF SUCH PURPOSE IS TO BE FULLY SERVED WE BELIEVE THAT A CLAIM IN THE FORM OF A RECLAIM FOR ANY OR ALL THE AMOUNT RECOUPED BECAUSE OF AN ERRONEOUS PAYMENT OF ANY VOUCHER ITEM OBTAINED BY FRAUD OR MISREPRESENTATION IS TO BE VIEWED AS A MATTER WHICH SHOULD BE LEFT TO THE COURT OF CLAIMS FOR FINAL RESOLUTION EVEN THOUGH THE RECLAIM INVOLVES NO APPARENT FRAUD OR MISREPRESENTATION. COMPARE KAMEN SOAP PRODUCTS COMPANY, INC. V. UNITED STATES, 129 CT.1CL. 619. ..END :