BNUMBER:  B-271017
DATE:  August 12, 1996
TITLE:  [Letter]

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B-271017

August 12, 1996

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

Dear Mr. Nabil:

This responds to your January 29, 1996, request for relief of 
liability for four accountable officers for two improper payments 
totalling $5,513.74.  The improper payments were made on two separate 
occasions at Moody Air Force Base Defense Accounting Office, Georgia, 
based on fraudulent "Do It Yourself Move" (DITY) papers.  For the 
reasons discussed below, we grant the requested relief.

The first improper payment occurred on August 1, 1994, when Sergeant 
First Class (SFC) Robert J. Lamb went to the 347th Comptroller 
Squadron, Moody Air Force Base Traffic Management Office (TMO) and 
requested paperwork for a DITY move.  Based upon fraudulent orders 
presented by SFC Lamb calling him to active duty, Ms. Nancy Yates, 
personal property counselor at TMO, assisted SFC Lamb in the 
preparation of DD Form 2278, Application for Do-It-Yourself Move.  The 
orders presented appeared to be authentic and valid.  Upon completion 
of the form with the proper signatures, SFC Lamb went to the Moody Air 
Force Base finance office and gave the DD Form 2278, along with a copy 
of his orders, to Ms. Maureen Frazier, a travel pay technician.  Ms. 
Frazier reviewed the form and orders checking for the requisite 
signatures and fund citations.  The appropriate information was 
entered in the Integrated Automated Travel System (IATS) and the 
voucher authorizing payment was forwarded to Ms. Maureen Corpus, the 
cashier in Paying and Collecting, for payment.  Ms. Corpus verified 
SFC Lamb's military identification and his signature and paid SFC Lamb 
the advance cash payment of $3,613.74.

The second improper payment was on September 28, 1994, when SFC Lamb 
again went to the Moody Air Force Base finance office and presented 
what appeared to be valid travel orders calling him to active duty and 
a completed DD Form 2278.  This DD Form 2278 was not completed by TMO 
personnel and the signature on the form was forged.  Travel pay 
personnel entered the appropriate information in the IATS and 
forwarded the voucher authorizing payment to Ms. Nancy Harrell, 
alternate cashier in Paying and Collecting, for payment.  The DD Form 
2278 allowed for a payment of $3,613.74, just as the first DD Form 
2278 had, but SFC Lamb requested a reduced payment of $1,900.  Ms. 
Harrell verified SFC Lamb's identification and signature and paid him 
the advance cash payment of $1,900.

On December 19, 1994, the Defense Accounting and Finance Service, 
Denver, Colorado, sent out a fraud alert warning the field offices of 
SFC Lamb.  The warning read: "Member is AWOL from the Army 1265th 
Ordinance Maintenance Unit.  SFC Lamb has received fraudulent travel 
payments from several Air Force, Army, and Navy bases in the Florida 
area using what appears to be valid guard-to-active duty orders . . . 
Request widest dissemination of the above information to include all 
disbursing facilities (paying and collecting and travel/military pay 
customer service), exchange and commissary stores.  Under no 
circumstances should this person receive any payments."  This message 
was circulated through the 347th Comptroller's read files.  Ms. Joyce 
Moore, an accounting technician in Travel Accounting, read the alert 
and ran an inquiry on SFC Lamb's social security number in the 
Automated Travel Accounting System.  The system identified two 
previous payments for DITY advances totaling $5,513.74 to SFC Lamb.  
Ms. Moore reported this information to the Defense Accounting Officer, 
Mr. Gordon Armstrong, who then alerted the U.S. Air Force Office of 
Special Investigations (OSI) through proper channels.  No payments 
were made to SFC Lamb after the receipt of the above message.  SFC 
Lamb was arrested in December, 1994, in Orlando by OSI agents.   

Under 31 U.S.C.  sec.  3527(c), this Office has authority to relieve 
accountable officers from liability when the record indicates that the 
officer acted with due care and there is no indication of bad faith on 
the part of the accountable officer.  Section 3527(c) also provides 
that we may deny relief if we find that diligent collection efforts 
have not been made.

In cases similar to this one where a subordinate disbursed the funds, 
a supervisory accountable officer demonstrates due care upon a showing 
that he or she maintained an adequate system of procedures and 
controls to avoid errors and that appropriate steps were taken to 
ensure the system was effective.  62 Comp. Gen. 476 (1983).  The 
supervisory accountable officers involved in this case are Mr. 
Armstrong, Defense Accounting Officer, in whose name the account is 
officially held, and Ms. Cathy Tilley, Chief of Paying and Collecting, 
the direct supervisor of the two cashiers.  Your letter and supporting 
documents provide the procedures in effect at the time of the payments 
and show that both cashiers complied with the procedures.  We 
therefore conclude that both Mr. Armstrong and Ms. Tilley maintained 
an adequate system of procedures and controls to avoid this loss and 
that appropriate steps were taken to ensure that those controls were 
implemented.  The improper payments in this case were the result of 
criminal activity over which Mr. Armstrong or Ms. Tilley 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.  We see no indication 
that the improper payments were the proximate result of bad faith or 
lack of reasonable care on the part of either Mr. Armstrong or Ms. 
Tilley.

The cashiers, Ms. Corpus and Ms. Harrell, are also accountable 
officers in this case.  62 Comp. Gen. at 479.  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 
relief under 31 U.S.C.  sec.  3527(c).  B-209717.2, July 1, 1983.  Here, 
the record indicates that both cashiers followed the prescribed 
procedures for redeeming vouchers.  A cashier who is presented a 
properly certified document, as occured here, is under no obligation 
to investigate the circumstances which led to the certification.  Cf. 
B-213550, Apr. 6, 1984.  Of course, the cashier should not make a 
payment based on a certified document until the payee has properly 
identified himself and the voucher is inspected for unauthorized 
alterations.  Id.  Both cashiers were provided SFC Lamb's orders and a 
signed DD Form 2278.  Both cashiers verified SFC Lamb's 
identification, signature and voucher, and paid SFC Lamb no more than 
his operating allowance noted on the form.  Nothing in the record 
suggests that either cashier 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 either cashier.    

Since we conclude that the improper payments were not the result of 
bad faith or the lack of reasonable care by any of the accountable 
officers, the final issue is whether the Air Force undertook diligent 
collection action as specified by 31 U.S.C.  sec.  3527(c).  In order to 
show that such effort has been made, a relief request must demonstrate 
compliance with the Federal Claims Collection Standards issued jointly 
by the General Accounting Office and the Department of Justice.  62 
Comp. Gen. at 478. 

The Federal Claims Collection Standards require that "any claim as to 
which there is an indication of fraud" should be promptly referred to 
the Department of Justice.  4 C.F.R.  sec.  101.3.  The Department of 
Justice may then, in its discretion, return the matter to the agency 
for handling in accordance with the standards.  Id.  The record in 
this case does not show whether the evidence of SFC Lamb's fraud 
against the United States was referred directly to the Department of 
Justice.  However, the record does show that Mr. Armstrong alerted the 
OSI through proper channels of the fraud soon after he was aware of 
it, and a Memorandum of Understanding between the Department of 
Defense and the Department of Justice requires the OSI to confer with 
the Department of Justice when the OSI identifies a fraud against the 
Department of Defense that would warrant federal prosecution.  
Enclosure 1 to Department of Defense Directive 5525.7, January 22, 
1985.  Since the OSI was required to confer with the Department of 
Justice when it was informed of the fraud perpetrated by SFC Lamb, we 
view Mr. Armstrong's referral of the fraud to the OSI as consistent 
with the Federal Claims Collection Standards.  Thus, at least so far 
as this request for relief is concerned, we are of the view that the 
Air Force has diligently initiated collection action in this case.  
Nonetheless, the Air Force should review this matter to identify 
opportunities to recover taxpayer funds fraudulently obtained by SFC 
Lamb.  B-234962, Sept. 28, 1989.  

Sincerely, 

Gary L. Kepplinger
Associate General Counsel
B-271017

August 12, 1996

DIGEST

1.  We may relieve accountable officers for improper payments where 
the payments were not the result of bad faith or lack or reasonable 
care.  Where, as here, supervisory accountable officers maintain and 
supervise an adequate system of procedures to prevent improper 
payments, we will relieve them of liability for two improper payments 
for travel advances made by their subordinate cashiers.  We will 
relieve cashiers who processed fraudulent travel vouchers where they 
followed all prescribed procedures for cashing travel vouchers. 

2.  The Comptroller General is authorized to deny relief to 
accountable officers where the Comptroller General concludes that the 
agency did not diligently carry out collection action under procedures 
the Comptroller General prescribes.  We assess the adequacy of agency 
collection activities in light of the Federal Claims Collection 
Standards, 4 C.F.R. Part 101 (1996).  The prompt referral of this 
matter by the accountable officer to the Air Force's Office of Special 
Investigations conforms to the requirements of the Federal Claims 
Collection Standards and internal DOD Directives.