B-220737, B-220981, DEC 10, 1985, OFFICE OF GENERAL COUNSEL

B-220737, B-220981, DEC 10, 1985, OFFICE OF GENERAL COUNSEL

ACCOUNTABLE OFFICERS - RELIEF - ILLEGAL OR ERRONEOUS PAYMENTS - WITHOUT FAULT OR NEGLIGENCE DIGEST: U.S. ARMY FINANCE AND ACCOUNTING OFFICERS ARE RELIEVED OF LIABILITY FOR IMPROPER PAYMENTS MADE BY THEIR RESPECTIVE SUBORDINATE CASHIERS BECAUSE THEY EACH MAINTAINED AND SUPERVISED AN ADEQUATE SYSTEM OF PROCEDURES TO PREVENT IMPROPER PAYMENTS. ALL OF THE CASHIERS ARE ALSO RELIEVED BECAUSE THEY FOLLOWED ALL PRESCRIBED PROCEDURES FOR CASHING CHECKS NOTWITHSTANDING THAT THE PAYEE CIRCUMVENTED THOSE PROCEDURES WITH A CRIMINAL SCHEME.

MR. CLYDE E. JEFFCOAT:

PRINCIPAL DEPUTY DIRECTOR COMMANDER

U.S. ARMY FINANCE AND ACCOUNTING CENTER

INDIANAPOLIS, INDIANA 46249

THIS IS IN RESPONSE TO YOUR REQUESTS THAT RELIEF BE GRANTED UNDER 31 U.S.C. SEC. 3527(C) FOR IMPROPER PAYMENTS TOTALING $3,500 CHARGEABLE TO THE ACCOUNT OF MAJOR JEFFREY C. ROGERS, FINANCE AND ACCOUNTING OFFICER, 106TH AREA FINANCE SUPPORT CENTER, AND FOR AN IMPROPER PAYMENT OF $400 CHARGEABLE TO THE ACCOUNT OF MAJOR G.B. MORTON, FINANCE AND ACCOUNTING OFFICER, 17TH AREA FINANCE SUPPORT CENTER. FOR THE REASONS STATED BELOW, WE GRANT THE REQUESTED RELIEF. IN ADDITION, WE ALSO RELIEVE THE CASHIERS, SP5 ROSENDO G. BARNACHEA, SP4 JIMMY W. COBB, SP4 ALARIC SOTO, AND SP5 ROBERT W. UDOVICH, WHO ACTUALLY MADE THE IMPROPER PAYMENTS IN THESE CASES.

THE LOSSES RESULTED FROM A SERIES OF BAD CHECKS CASHED IN GERMANY DURING THE FALL OF 1984, APPARENTLY BY ONE PERSON AS PART OF A SCHEME TO DEFRAUD THE GOVERNMENT. EIGHT PERSONAL CHECKS WERE CASHED AT THE 106TH AREA FINANCE SUPPORT CENTER BETWEEN OCTOBER 26 AND NOVEMBER 26, 1984, AND ONE PERSONAL CHECK WAS CASHED AT THE 17TH AREA FINANCE SUPPORT CENTER ON OR ABOUT NOVEMBER 1, 1984. THE CHECKS WERE DRAWN ON FIVE DIFFERENT ACCOUNTS WITH THE AMERICAN EXPRESS INTERNATIONAL BANKING CORPORATION (AMEXCO). SOON AFTER THE RETURN OF THE DISHONORED CHECKS BY AMEXCO, IT WAS DISCOVERED THAT THE ACCOUNTS ON WHICH ALL NINE CHECKS WERE WRITTEN HAD BEEN FRAUDULENTLY ESTABLISHED. A CRIMINAL INVESTIGATION DIVISION INQUIRY DISCLOSED THAT AN UNIDENTIFIED MALE OBTAINED NEW AND USED ACTIVE DUTY MILITARY IDENTIFICATION CARDS, AFFIXED HIS OWN PHOTOGRAPH ONTO THE CARDS, AND OPENED CHECKING ACCOUNTS AT VARIOUS AMEXCO FACILITIES IN THE NAMES OF PRIVATE FIRST CLASS DALE E. POWELL, PRIVATE FIRST CLASS TYRONE R. PLIES, SPECIALIST FOUR ROBERT W. THOMPSON, SPECIALIST FOUR MICHAEL E. VAN RIPER, AND SERGEANT PAUL E. WHATLEY. THE UNIDENTIFIED MALE THEN PROCEEDED TO CASH EIGHT CHECKS AT THE 106TH AREA FINANCE SUPPORT CENTER AND ONE CHECK AT THE 17TH AREA FINANCE SUPPORT CENTER IN AMOUNTS EXCEEDING THE FRAUDULENTLY ESTABLISHED ACCOUNTS' BALANCES.

AS THE DISBURSING OFFICERS OFFICIALLY RESPONSIBLE FOR THE ACCOUNTS, MAJOR ROGERS AND MAJOR MORTON ARE BOTH PERSONALLY LIABLE FOR DEFICIENCIES IN THEIR RESPECTIVE ACCOUNTS CAUSED BY IMPROPER PAYMENTS MADE BY THEIR SUBORDINATES. SEE 62 COMP.GEN. 476 (1983). NEVERTHELESS, UNDER 31 U.S.C. SEC. 3527(C), THIS OFFICE IS AUTHORIZED TO GRANT RELIEF FROM LIABILITY UPON A DETERMINATION THAT THE PAYMENTS WERE NOT THE RESULT OF BAD FAITH OR LACK OF REASONABLE CARE BY THE OFFICIAL. SEE GENERALLY 54 COMP.GEN. 112 (1974).

IN CASES WHERE SUBORDINATES RATHER THAN THE DISBURSING OFFICER ACTUALLY DISBURSE 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 INSURE THE SYSTEM'S IMPLEMENTATION AND EFFECTIVENESS. E.G., 62 COMP.GEN. AT 480.

ACCORDING TO YOUR LETTERS AND SUPPORTING DOCUMENTS, MAJOR ROGERS AND MAJOR MORTON HAD ESTABLISHED AND MAINTAINED AN ADEQUATE SYSTEM OF CONTROLS TO SAFEGUARD THE FUNDS FOR WHICH EACH WAS ACCOUNTABLE. THE IMPROPER PAYMENTS IN THESE CASES WERE THE RESULT OF CRIMINAL ACTIVITY-- PRESENTING FALSE IDENTIFICATION AND NEGOTIATING CHECKS ON PHONY BANK ACCOUNTS-- OVER WHICH MAJOR ROGERS AND MAJOR MORTON HAD NO CONTROL. EVEN THE MOST CAREFULLY ESTABLISHED AND EFFECTIVELY SUPERVISED SYSTEM CANNOT PREVENT EVERY CONCEIVABLE FORM OF CRIMINAL ACTIVITY. SEE, E.G., B-213874, SEPT. 6, 1984. SINCE THERE IS NO INDICATION THAT THE IMPROPER PAYMENTS WERE THE PROXIMATE RESULT OF BAD FAITH OR LACK OF REASONABLE CARE ON THEIR PART, RELIEF IS GRANTED TO MAJOR ROGERS AND TO MAJOR MORTON.

THE CASHIERS, SP5 BARNACHEA, SP4 COBB, SP4 SOTO, AND SP5 UDOVICH ARE ALSO ACCOUNTABLE OFFICERS IN THESE CASES RESPONSIBLE FOR THE LOSSES RESULTING FROM CASHING THE FRAUDULENT CHECKS. SEE 59 COMP.GEN. 113, 114 (1979). WHERE A CASHIER APPEARS TO HAVE BEEN IN FULL COMPLIANCE WITH EXISTING DIRECTIVES AND NOTHING IN THE RECORD SUGGESTS A LACK OF DUE CARE, THIS OFFICE MAY GRANT HIM OR HER RELIEF UNDER THE PROVISIONS OF 31 U.S.C. SEC. 3527(C). B-209717.2, JULY 1, 1983. HERE, THE RECORD INDICATES THAT ALL OF THE CASHIERS FOLLOWED THE PRESCRIBED PROCEDURES FOR CASHING CHECKS, INCLUDING EXAMINING THE "BAD CHECK LIST" AND VERIFYING THE SIGNATURES AND PHOTOGRAPHS ON THE MILITARY IDENTIFICATION CARDS. NOTHING IN THE RECORD SUGGESTS THAT ANY OF THE CASHIERS SHOULD HAVE BEEN SUSPICIOUS OF THE FRAUDULENT NATURE OF THE TRANSACTIONS. ACCORDINGLY, WE CONCLUDE THAT THE IMPROPER PAYMENTS WERE NOT THE RESULT OF BAD FAITH OR A LACK OF REASONABLE CARE ON THE PART OF ANY OF THE CASHIERS.

FINALLY, WE NOTE THAT COLLECTION ACTION HAS NOT BEEN ATTEMPTED IN THESE CASES BECAUSE THE ARMY HAS CONCLUDED THAT THERE IS INSUFFICIENT EVIDENCE TO IDENTIFY THE PERPETRATOR OF THE FRAUD WITH ANY DEGREE OF CERTAINTY AT THE PRESENT TIME. HOWEVER, A SUSPECT MAY HAVE BEEN ARRESTED BY THE GERMAN POLICE WHO HAVE ASSUMED INVESTIGATIVE JURISDICTION OF THIS MATTER. THE ARMY SHOULD DILIGENTLY PURSUE COLLECTION AGAINST THIS PERSON IF THIS IS CONFIRMED. 31 U.S.C. SEC. 3527(D)(2)(B).

IN CONCLUSION, BOTH MAJOR ROGERS AND MAJOR MORTON AND THE CASHIERS, SP5 BARNACHEA, SP4 COBB, SP4 SOTO, AND SP5 UDOVICH, ARE ALL ABSOLVED FROM LIABILITY FOR THE IMPROPER PAYMENTS OF $3,500 AND $400.