BNUMBER:  B-266001
DATE:  May 1, 1996
TITLE:  [Letter]

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B-266001

May 1, 1996

Mr. John Nabil
Director, Denver Center
Defense Finance and Accounting Service
6760 E. Irvington Place
Denver, CO  80279

Dear Mr. Nabil:

This responds to your request that this Office grant relief from 
pecuniary liability under 31 U.S.C.  sec.  3527(c) to Maj. Michael Mason, 
Defense Accounting Officer, Davis-Monthan Air Force Base, Arizona, for 
an improper payment that resulted from a fraud perpetrated on the Air 
Force on November 25, 1992, by someone purporting to be Darrell J. 
Joslyn.  As explained below, we grant relief to Major Mason.

BACKGROUND

When this loss occurred, Major Mason commanded the Finance and 
Accounting Office of Davis-Monthan Air Force Base.  He was also its 
disbursing officer.  Among other things, Major Mason and his staff 
were responsible for making disbursements on all travel vouchers 
approved for payment by the base's Traffic Management Office (TMO).  
On December 15, 1992, Major Mason's staff received and paid a voucher 
submitted by TMO on behalf of its contractor, the Schedule Airline 
Ticket Office (SATO), for the cost of travel arrangements they made 
for someone identified as Darrell J. Joslyn.[1]  According to the 
voucher, Joslyn was a member of the Army Reserve who was ordered to 
duty by the Tucson Army Reserve Center (TUCARC).  

Major Mason's staff detected nothing unusual or otherwise amiss in the 
voucher for Joslyn and paid SATO for it.  After paying it, Major 
Mason's staff forwarded SATO's bill to the Army Finance and Accounting 
Center in Indianapolis for reimbursement on behalf of TUCARC.  In a 
letter dated September 16, 1993, the Indianapolis center declined to 
make reimbursement for Joslyn's travel arrangements because it 
concluded that the travel arrangements provided to Darrell Joslyn by 
TMO and SATO were fraudulently procured.  At your request, an 
investigation was commissioned by the Air Force to determine how this 
loss occurred.   

To appreciate how this loss occurred, it is important to know several 
things about TMO.  By regulation, TMO is responsible for arranging 
travel for personnel and freight on behalf of Davis-Monthan Air Force 
Base.  Air Force Instruction (AFI) No. 24-101,  para.  1.19.12; AFI No. 
24-201,  para.  1.2.  In addition, TMO regularly makes travel arrangements 
for other Defense Department entities in that region, including 
TUCARC.  It forwards the vouchers for those arrangements (along with 
the vouchers for travel by Davis-Monthan personnel) to Major Mason's 
staff for payment, subject to reimbursement by the other Defense 
entities.[2]  AFI No. 24-101,  para.  3.6.1.  TMO is not subject to the 
command or supervision of Major Mason. 

The investigative report concluded that either the night before or the 
morning of November 25, 1992, TMO received a request from TUCARC for 
approval of airline tickets for Darrell Joslyn.  The tickets requested 
by TUCARC were to transport Joslyn on a combination of flights 
operated by the Alaska, American, and Wings West Airlines from Yakima, 
Washington to Fresno, California.  Joslyn's travel was to commence at 
6:50 that morning.  Apparently, the request indicated that, while 
documentation confirming Joslyn's official status and travel orders 
would be sent by facsimile transmission to TMO, it could not be done 
before the flight was due to lift off.  Moreover, Joslyn would be 
unable to pick up the tickets at Davis-Monthan, as he was in Yakima.  
For this reason, the tickets would have to be issued to Alaska Airline 
as "prepaids" to be picked up by Joslyn at the Yakima airport that 
morning.[3]

The TMO staff told the investigator that it had made similar 
arrangements occasionally in the past, based on facsimile 
transmissions or telephone conversations with TUCARC officials.  
Usually TMO staff would save the facsimile or create a paper record of 
such conversations, as well as require receipt of the traveler's 
orders before arranging and approving the travel.  In this case, TMO 
has no facsimile or other documentation of the initial request from 
TUCARC, and no one interviewed by the investigator recalls discussing 
or receiving it.  Nevertheless, TMO did authorize SATO to issue the 
prepaid tickets to Alaska Airlines to be picked up by Joslyn at the 
Yakima airport, and it did so in advance of receiving Joslyn's 
official travel orders.  About four and one-half hours later, TMO did 
receive a facsimile transmission of Joslyn's orders from TUCARC.  On 
November 29, 1992, in the normal course of business, SATO billed TMO 
for Joslyn's tickets.  TMO passed the bill on to Major Mason's staff 
which, in turn, billed the Army for reimbursement of Joslyn's travel 
arrangements.

The Army returned the bill unpaid after it determined that Joslyn's 
travel orders were "fraudulent" as they were originally issued to 
someone else and had been illegally modified.  Apparently, the poor 
quality of the TUCARC facsimile transmission precluded immediate 
detection of the physical modification of Joslyn's orders.  However, 
using alphanumeric codes imbedded within the orders themselves, the 
Army determined that those orders had originally been issued to a 
member named Christopher Miller.  The Army concluded that a photocopy 
of Miller's orders had been altered to show the name, social security 
number, and address data for Joslyn.  When Miller was contacted, he 
recalled meeting a person named Joslyn in Yakima who identified 
himself as a reservist from California.  Miller added that he did not 
otherwise know that person or how his name came to be included on a 
copy of Miller's travel orders.  

Neither the Air Force nor the Army has any record of a member named 
Darrell Joslyn, nor anyone whose social security number matches the 
one included on the altered orders.  A collection letter sent by the 
Air Force to Joslyn at the address shown on the altered orders was 
returned unopened, bearing notations that the address and addressee 
were unknown to the Postal Service.  Air Force inquiries to Alaska 
Airline revealed that the tickets had indeed been used, but only after 
being re-issued by the airline for a different destination, at the 
traveler's request.  There was no indication of what (if any) form of 
identification was presented by the traveler to the airline.

You advise that Major Mason, as the responsible military disbursing 
officer, is liable for the value of the tickets paid for Darrell 
Joslyn.  You conclude, however, that Major Mason and his staff 
exercised due care and acted without bad faith.  Based on this, you 
request that this Office grant Major Mason relief from pecuniary 
liability for this loss under 31 U.S.C.  sec.  3527(c).

DISCUSSION

As you know, 31 U.S.C.  sec.  3527(c) allows this Office to relieve a 
disbursing officer from pecuniary liability for an illegal or improper 
payment when we conclude that "the payment was not the result of bad 
faith or lack of reasonable care by the official."  It also states 
that we may deny relief when it appears to us that the agency "did not 
carry out diligently collection action."  We agree that the record in 
this case supports the conclusion that Major Mason and his staff are 
liable for this  loss; that they acted reasonably and without bad 
faith; and that the Air Force has carried out diligent collection 
efforts to date. 

The authority and responsibilities of military accountable officers 
differ from those generally applicable to other accountable officers 
within the government.  Most significantly, the laws which distinguish 
and separate the functions and authorities of disbursing and 
certifying officers in the rest of the government generally do not 
apply to the military.  See 31 U.S.C.  sec.  3325(b), 3528(d).  Because of 
this difference, military disbursing officers generally are liable, 
automatically and strictly, for improper payments such as occurred 
here, without regard for whether the loss arose from an error in the 
certification or the disbursement process.  E.g., B-227410, Aug. 18, 
1987.  Cf. B-236141.2, Feb. 23, 1990 (discussing disparate duties of 
non-military certifying and disbursing officers).  The responsibility 
and status of Air Force disbursing officers, such as Major Mason, are 
specifically discussed in paragraph 6-13(c) of Defense Finance and 
Accounting Service-Denver Center Regulation (DFAS-DER) No. 177-101 
(formerly Air Force Regulation No. 177-101): 

     "(1) .  .  .  Air Force AFOs [Accounting and Finance Officers] 
     (unlike Treasury DOs [disbursing officers]) are legally 
     responsible for the:

        (a) Existence and correctness of information stated in a 
        certification, on a voucher, or on supporting documents.

        (b) Legality of a proposed payment under the appropriation or 
        fund involved.

        (c) Correctness of computations on a voucher or supporting 
        documents."

The Air Force has administratively assigned "document certification 
functions"      to individuals known as "document certification 
officers", who are responsible, under Air Force regulations, for the 
validity and accuracy of their certifications.  DFAS-DER No. 177-101,  para.  
6-13(c)(2).  In those same regulations, it also imposed pecuniary 
liability on those document certification officers.  DFAS-DER No. 
177-101, 6-2  para.  8.  With regard to the payment at issue here, TMO 
executed the document certification, and the loss resulted from TMO's 
improper certification of the voucher, without having in hand 
authorized travel orders for Joslyn.  TMO's failure in this regard did 
not, however, alter Major Mason's pecuniary liability as disbursing 
officer.  Except where such is specifically provided by law, the 
liability of a disbursing officer may not be transferred away from 
that officer to another person, including a certifying officer.  
B-236141.2, Feb. 23, 1990.

Despite this heavy burden, the Air Force did not expect Major Mason or 
his staff to routinely "look behind" the facial validity of each and 
every TMO voucher presented for disbursement.  In this regard, 
DFAS-DER No. 177-101,  para.  6-13(c)(3) states: 

     "The AFO is not expected to repeat functions performed by 
     subordinates and document certification officers.  However, the 
     AFO must verify that assigned functions are properly performed, 
     that is, approving/certification signatures are present .  .  .  
     and valid, all required supporting documentation is attached, no 
     obvious arithmetical errors exist, totals on supporting documents 
     are properly stated on disbursing documents, and the 
     appropriation or fund cited is valid and appropriate to the 
     transaction cited on the disbursement voucher.  The AFO may 
     request any additional evidence or action necessary to establish 
     that a claim is just and proper for payment."[4] 

Consequently, Major Mason and his staff were expected to verify that 
the TMO/SATO voucher for Joslyn's travel contained valid and 
appropriate certifications, had no obvious mathematical errors, cited 
TUCARC's appropriation account as the source of the payment, and was 
accompanied by appropriate documentation.   Major Mason's staff 
satisfied these requirements.  The voucher for Joslyn's travel bore 
all the appropriate certifications, there were no mathematical errors, 
and it cited TUCARC's account.  For supporting documentation, the 
voucher was accompanied by a copy of what purported to be Joslyn's 
official travel orders.    
We found nothing in the record to suggest that Major Mason and his 
staff should have questioned the voucher or the accompanying travel 
order.  The loss resulted when TMO authorized payment of Joslyn's 
plane ticket prior to its receipt of Joslyn's travel orders; TMO 
missed an opportunity to mitigate the loss when it failed to detect 
the fraudulent physical modification of the travel orders submitted to 
it in Joslyn's behalf.[5]  TMO departed from its usual practices by 
(1) approving the issuance of prepaid tickets in advance of the 
receipt of official orders and (2) failing to hold the confirming 
conversations which might have alerted it to the existence of the 
fraudulent scheme.  There was nothing in the materials submitted to 
Major Mason's staff that could or should have alerted them to the 
improprieties in TMO's handling of the tickets issued for Darrell 
Joslyn and nothing that Major Mason could have done to prevent this 
loss.  

For the foregoing reasons, we grant relief to Major Mason for this 
loss.

Sincerely yours,

Gary L. Kepplinger
Associate General Counsel

B-266001

May 1, 1996

DIGEST

GAO grants relief from pecuniary liability to an Air Force Finance and 
Accounting Officer (FAO) for an improper payment that his staff 
certified in reliance upon the certification of an Air Force Travel 
Management Office (not under the FAO's supervision) which obligated 
the government to pay for "prepaid" travel arrangements without first 
examining and verifying travel orders that later proved to have been 
fraudulently altered.

1. In some parts of the Air Force record, this individual is 
alternatively identified as "Darryl Joslyn."

2. Cf., e.g., B-200309-O.M., Apr. 3, 1981 (agencies may enter into 
agreements to obtain/provide accountable officer services when 
consistent with the Economy Act, 31 U.S.C.  sec.  1535, or other applicable 
legal authority).

3. Prepaid status meant that the airline, rather than SATO, would 
release the tickets to the traveler as if they had already been paid 
for by the government.

4. Paragraph 6-33 of DFAS-DER No. 177-101 similarly states that:

            "Although the AFO has the ultimate responsibility for 
            determining propriety of fund usage, the highly technical 
            and complex nature of many contractual documents imposes 
            an extra burden on A&F [Accounting and Finance] personnel.  
            In many cases they simply do not have the technical 
            expertise to make the required determinations .  .  .  .  
            Therefore, AFOs must use the expertise of these personnel 
            to supplement the expertise available within the AFO."

5. The record indicates that, upon learning how to interpret the 
Army's alphanumeric codes, Major Mason's staff incorporated that 
information into their routine review of Army ticket payment requests.  
Major Mason is to be commended for his action in this regard.  
Nevertheless, such review could not have prevented this loss from 
occurring:  Major Mason's staff received the voucher weeks after the 
travel had already taken place and the government had been obligated 
by TMO to pay for it.  Only TMO had a reasonable chance to use those 
codes to prevent this loss.  There is no indication whether the TMO 
staff knew how to interpret these codes before this loss, or gained 
and incorporated that knowledge into their procedures in its 
aftermath.