B-217947, B-226384, MAR 27, 1987, OFFICE OF GENERAL COUNSEL

B-217947, B-226384, MAR 27, 1987, OFFICE OF GENERAL COUNSEL

APPROPRIATIONS/FINANCIAL MANAGEMENT - ACCOUNTABLE OFFICERS - DISBURSING OFFICERS - RELIEF - ILLEGAL/IMPROPER PAYMENTS - SUBSTITUTE CHECKS DIGEST: RELIEF IS GRANTED ARMY DISBURSING OFFICIALS AND THEIR DEPUTIES UNDER 31 U.S.C. SEC. 3527(C) FROM LIABILITY FOR THREE IMPROPER PAYMENTS RESULTING FROM PAYEE'S NEGOTIATION OF BOTH ORIGINAL AND SUBSTITUTE MILITARY CHECKS. PROPER PROCEDURES WERE FOLLOWED IN THE ISSUANCE OF THE SUBSTITUTE CHECK, THERE WAS NO INDICATION OF BAD FAITH ON THE PART OF THE DISBURSING OFFICIALS AND THEIR DEPUTIES AND SUBSEQUENT COLLECTION ATTEMPTS ARE BEING PURSUED. HOWEVER, WE THINK THAT THE ARMY SHOULD DEVELOP GUIDELINES FOR HANDLING MULTIPLE REQUESTS BY THE SAME PAYEE FOR SUBSTITUTE PAYMENTS. ADDITION, FOR CASES INVOLVING NOTICES OF LOSSES RECEIVED AFTER JUNE 1, 1986, WE WILL DENY RELIEF IF ARMY DELAYS MORE THAN 3 MONTHS IN FORWARDING THE DEBT TO ARMY'S COLLECTION DIVISION.

BRIGADIER GENERAL B. W. HALL:

DEPUTY COMMANDER FOR OPERATIONS

THIS RESPONDS TO YOUR REQUEST OF FEBRUARY 13 AND MARCH 4, 1987, THAT WE RELIEVE LIEUTENANT COLONELS (LTC) W. C. BIENEMAN AND W. A. MULLEN, FINANCE CORPS, DSSN 5009, FINANCE AND ACCOUNTING OFFICERS, U.S. ARMY TRAINING CENTER AND FORT DIX, FORT DIX, NEW JERSEY, AND THEIR DEPUTIES MS. J. A. WOODARD AND FIRST LIEUTENANT K. A. LARSEN, UNDER 31 U.S.C. SEC. 3527(C), FOR THREE IMPROPER PAYMENTS TOTALING $1,078.33 PAYABLE TO MR. ROBERT L. ROBINSON. FOR THE REASONS STATED BELOW, RELIEF IS GRANTED.

THE LOSSES IN THESE CASES RESULTED WHEN THE SAME PAYEE NEGOTIATED BOTH THE ORIGINAL AND A SUBSTITUTE CHECK ON THREE SEPARATE OCCASIONS. /1/ IN EACH CASE, BOTH CHECKS WERE IN THE SAME AMOUNT. THE SUBSTITUTE CHECKS WERE ISSUED ON THE BASIS OF THE PAYEE'S ALLEGATIONS THAT THE ORIGINAL CHECKS HAD NOT BEEN RECEIVED AND REQUESTS FOR STOP PAYMENT HAD BEEN MADE. ALL OF THE CHECKS WERE ISSUED BY THE ARMY UNDER AUTHORITY DELEGATED BY THE DEPARTMENT OF THE TREASURY. 31 C.F.R. SEC. 245.8.

IT APPEARS THAT THE REQUEST FOR STOP PAYMENT AND THE ISSUANCE OF THE SUBSTITUTE CHECKS IN THESE CASES WERE WITHIN THE BOUNDS OF DUE CARE AS ESTABLISHED BY ARMY REGULATIONS. SEE AR 37-103, PARAS. 4-161, 4-162 AND 4 -164. THERE WAS NO INDICATION OF BAD FAITH ON THE PART OF THE DISBURSING OFFICERS OR THEIR DEPUTIES AND IT APPEARS THAT ADEQUATE COLLECTION EFFORTS ARE NOW BEING MADE. ACCORDINGLY, WE GRANT RELIEF.

ALTHOUGH WE HAVE GRANTED RELIEF TO THE DISBURSING OFFICERS AND THEIR DEPUTIES, WE ARE NEVERTHELESS CONCERNED THAT FOUR SUBSTITUTE CHECKS WERE ISSUED TO THE SAME PAYEE WITHIN A 1-YEAR PERIOD. THE THIRD AND FOURTH CHECKS WERE ISSUED WITHOUT VERIFYING THE STATUS OF THE PREVIOUSLY ISSUED CHECKS. IT ALSO APPEARS THAT MR. ROBINSON WAS NOT COUNSELED TO HAVE HIS PAY DEPOSITED DIRECTLY INTO A FINANCIAL INSTITUTION WHERE ITS RECEIPT COULD BE VERIFIED.

WE RECOGNIZE THAT THERE ARE NO ARMY REGULATIONS REQUIRING THAT FINANCE OFFICERS DELAY ISSUING A SUBSTITUTE CHECK TO A PAYEE WHO HAD, IN THE PAST, CLAIMED NON-RECEIPT, OR THAT REQUIRE FINANCE OFFICERS TO VERIFY THE STATUS OF PREVIOUSLY ISSUED CHECKS. NOR DO ARMY REGULATIONS REQUIRE THAT THE FINANCE OFFICER COUNSEL PAYEES TO HAVE THEIR PAY DEPOSITED IN A FINANCIAL INSTITUTION. HOWEVER, AS WE STATED IN B-220500, SEPTEMBER 12, 1986 AND AGAIN IN B-226017, JANUARY 14, 1987, WE THINK THAT ARMY SHOULD DEVELOP GUIDELINES FOR MULTIPLE REQUESTS BY THE SAME PAYEE FOR SUBSTITUTE PAYMENTS. THE CONTEXT OF SUCH GUIDANCE WOULD, OF COURSE, BE UP TO THE ARMY TO DETERMINE. HOWEVER, AS WE PREVIOUSLY STATED, WE BELIEVE THAT AFTER THE PAYEE HAS MADE THE SECOND REQUEST FOR STOP PAYMENT WITHIN A 6- MONTH PERIOD, HE OR SHE SHOULD BE COUNSELED TO HAVE CHECKS SENT DIRECTLY TO A FINANCIAL INSTITUTION. THIS WAY THE ARMY CAN ASCERTAIN IF THE ORIGINAL CHECKS ARE BEING RECEIVED. IN ADDITION, WE THINK THAT AFTER A SUBSTITUTE CHECK HAS BEEN ISSUED ON TWO PREVIOUS OCCASIONS, STEPS SHOULD BE TAKEN IMMEDIATELY TO VERIFY THE STATUS OF THE PRIOR ISSUED CHECKS BEFORE ISSUING ANOTHER ONE. WE UNDERSTAND THAT ABOUT 30 DAYS AFTER A STOP PAYMENT REQUEST IS MADE, A FINANCE OFFICER CAN CALL THE DEPARTMENT OF THE TREASURY'S DIVISION OF CHECK CLAIMS AND FIND OUT IF THE CHECK HAS BEEN NEGOTIATED. INFORMATION FROM TREASURY THAT BOTH ORIGINAL AND SUBSTITUTE CHECKS HAVE BEEN CASHED ON EITHER OF THE TWO PREVIOUS OCCASIONS WOULD PROVIDE A BASIS FOR REFUSING TO ISSUE FUTURE SUBSTITUTE CHECKS. IT WOULD ALSO ALLOW COLLECTION OF THE OVERPAYMENTS WHILE THE PAYEE IS STILL EMPLOYED. ID.

WE ALSO NOTE THAT THE FIRST DEBIT VOUCHER FROM TREASURY INVOLVING MR. ROBINSON WAS RECEIVED IN AUGUST 1984. THE FINANCE OFFICER DID NOT VERIFY THE STATUS OF THE OTHER CHECKS ISSUED TO MR. ROBINSON AT THAT TIME. ALTHOUGH THE LOSSES HAD ALREADY OCCURRED, HAD THE FINANCE OFFICER CHECKED WITH TREASURY HE WOULD HAVE BEEN ABLE TO INSTITUTE COLLECTION ACTION ON ALL OF THE CHECKS AT THIS POINT.

AGAIN, AS IN B-220500, SEPTEMBER 12, 1986, WE ASK THAT YOUR RELIEF REQUESTS INCLUDE INFORMATION ON WHETHER THE PAYEE HAS AT ANY TIME RECEIVED A SUBSTITUTE CHECK AND IF SO WHAT THE STATUS OF THE CHECKS ARE. YOUR FIRST REQUEST INVOLVING AN OVERPAYMENT MADE TO MR. ROBINSON WAS ON APRIL 2, 1985 (RELIEF GRANTED, B-217947, APRIL 16, 1985). AT THAT TIME, THE FINANCE OFFICE HAD ALREADY RECEIVED A DEBIT VOUCHER ON ANOTHER OVERPAYMENT TO MR. ROBINSON. HOWEVER, YOUR SUBMISSION DID NOT MENTION THIS OR THAT MR. ROBINSON HAD ON FOUR SEPARATE OCCASIONS RECEIVED SUBSTITUTE CHECKS. THE OTHER TWO SUBMISSIONS, ALSO INVOLVING MR. ROBINSON, DID NOT CROSS- REFERENCE ALL FOUR SUBSTITUTE CHECKS.

FINALLY, WE ARE ALSO CONCERNED WITH THE COLLECTION ACTION TAKEN FOLLOWING THESE THREE OVERPAYMENTS. ONCE THE DEBIT VOUCHERS WERE RECEIVED FROM TREASURY IT WAS ALMOST 17 MONTHS IN ONE INSTANCE, OVER 18 MONTHS IN ANOTHER, AND 28 MONTHS IN THE THIRD CASE, BEFORE THE LOSSES WERE REFERRED TO YOUR COLLECTION DIVISION. AS WE PREVIOUSLY INDICATED TO YOU, FOR CASES INVOLVING NOTICES OF LOSSES RECEIVED AFTER JUNE 1, 1986, WHERE THE PAYEE HAS LEFT THE ARMY OR ITS EMPLOY, WE WILL NO LONGER GRANT RELIEF IF ARMY DELAYS MORE THAN 3 MONTHS IN FORWARDING THE DEBT TO YOUR COLLECTION DIVISION. HOWEVER, SINCE THE DEBIT VOUCHERS INVOLVED IN THESE CASES WERE RECEIVED PRIOR TO THAT DATE, WE WILL NOT DENY RELIEF HERE.

/1/ WE HAVE PREVIOUSLY GRANTED RELIEF TO LTC MULLEN FOR AN IMPROPER PAYMENT MADE TO MR. ROBINSON INVOLVING ANOTHER DUPLICATE PAYMENT. B-217947, APRIL 16, 1985.