BNUMBER:  B-270442.2
DATE:  February 12, 1996
TITLE:  [Letter]

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B-270442.2

February 12, 1996

Steve E. Turner
Acting Director
Defense Finance and Accounting Service
Kansas City Center
Kansas City, Missouri  64197-0001

Dear Mr. Turner:

This responds to your request, dated January 23, 1996,[1] that we 
relieve Major Steven H. Czaikoski and his predecessor Major Lawrence 
T. Mullin, U.S. Marine Corps Combat Development Command (Command), 
Quantico, Virginia, from liability for improper payments made pursuant 
to fraudulent travel orders.  For the reasons stated below, we 
conclude that the liability of Major Czaikoski and his predecessor has 
been settled by operation of law because the applicable statute of 
limitations has expired.[2]

The improper payments resulted from the Command making $31,827.09 in 
travel advances and settlements on fraudulent travel orders issued by 
Marine Helicopter Squadron-1 (HMX-1).  Two civilian employees of the 
Command conspired to obtain travel advancement and travel settlement 
checks for members of HMX-1.  This was accomplished by stealing checks 
issued to marines for legitimate travel, by obtaining travel advances 
on fraudulently issued travel orders for HMX-1 members, and by 
submitting false travel claims in the names of HMX-1 members and 
receiving and negotiating the checks.

The fraudulent scheme was discovered as a result of changes made by 
HMX-1 in procedures for obtaining Temporary Additional Duty orders and 
travel advances.  Discrepancies were almost immediately noted and a 
Marine Corps member was assigned to investigate and resolve the 
discrepancies.  The two civilian employees responsible for the scheme, 
in an attempt to thwart the investigation, murdered the member 
conducting the investigation.  As a result of the murder and the 
ensuing investigation, the fraudulent activities of the two civilian 
employees were discovered.  The two employees were found guilty of the 
murder of the member and are currently serving 30-year prison terms.

As accountable officers, Major Czaikoski and Major Mullin are strictly 
liable for the deficiency in their accounts resulting from the 
improper payments.  62 Comp.   Gen. 476, 479-80 (1983).  Under 31 
U.S.C.  sec.  3527(c), we may relieve a disbursing official from liability 
for a deficiency resulting from an improper payment if we determine 
that the payment was not the result of bad faith or lack of reasonable 
care by the disbursing official, and that diligent collection efforts 
were made.  B-239122, Feb. 21, 1991.  However, our authority to grant 
relief expires "3 years after the date the Comptroller General 
receives the account," except when the loss is due to fraud or 
criminality by the accountable officer.  31 U.S.C.  sec.  3526(c).  The 
settlement of an account is conclusive on the Comptroller General at 
that time.  Id.

We consider the Comptroller General to have "received" the account at 
the end of the period of accountability when the agency's accounts are 
substantially complete for audit purposes, i.e., when the various 
documents supporting the applicable statement of accountability are 
available to the agency and GAO for audit.  B-239802, Apr. 3, 1991.  
If the loss is due to fraud, as is the case here, the 3-year period 
begins when the loss is discovered and reported to the appropriate 
agency officials.  GAO, Policy and Procedures Manual for the Guidance 
of Federal Agencies, tit. 7,  sec.  8.7 (May 1993).

The Marine Corps became aware of the fraud on or about March 1990, if 
not earlier, when the two murder suspects admitted to the murder and 
stated that their motive was the cover-up of the HMX-1 embezzlement 
scheme; consequently, the 3-year limitation period expired in March 
1993.  Thus, since we find no evidence of fraud or criminality by 
Major Czaikoski or Major Mullin, their accounts are settled by 
operation of law and they are not responsible for the improper 
payments.

Sincerely yours,

Gary L. Kepplinger
Associate General Counsel

B-270442.2

February 12, 1996

DIGEST

Request for relief received after the running of the 3-year statute of 
limitations,    31 U.S.C.  sec.  3526(c), cannot be considered by our 
Office as the accountable officers' account is settled by operation of 
law and the officers are no longer liable for any deficiency in the 
account.

1. We were advised that the request for relief was originally 
submitted in a timely fashion.  However, we have been unable to locate 
any evidence that it was ever received by this Office.  The January 
23, 1996, request resulted from your Office's follow-up action. 

2. The improper payments occurred during the period of August 1989 
through January  1990.  On October 1, 1989, Major Czaikoski took over 
as head of the Disbursing Branch of the Command from Major Mullin.