IN THE CASE OF:	  

		BOARD DATE:	  5 April 2011

		DOCKET NUMBER:  AR20100013194 


THE BOARD CONSIDERED THE FOLLOWING EVIDENCE:

1.  Application for correction of military records (with supporting documents provided, if any).

2.  Military Personnel Records and advisory opinions (if any).


THE APPLICANT'S REQUEST, STATEMENT, AND EVIDENCE:

1.  The applicant requests that he be relieved of the financial liability imposed against him in the amount of $4,722.90 as a result of Financial Liability Investigation of Property Loss (FLIPL), W*****-09-0***, initiated on 
12 February 2009.  He also requests that the money that has been collected be refunded to him.

2.  The applicant describes the sequence of events that led to the discovery of the shortages of equipment and the details of the investigation.  These include:

   a.  A private first class (PFC), school trained supply clerk signed for various equipment from the Central Issue Facility (CIF) while he was on leave in August 2008.  He was aware that the company was in possession of the equipment but, he was not aware that the equipment was transferred to his hand receipt.  In November 2008, a second lieutenant became his executive officer (XO).  In December 2008, the supply clerk was reduced in rank and he was being transferred for fraternization.
   
   b.  Therefore, the applicant directed the XO and the supply clerk to inventory all of the hand receipted equipment and the XO was taking over the responsibility and signing the hand receipts.  The applicant states that he spot checked their results, but he did not think it was necessary to verify that 100% of the property had been signed over.
   
   
   c.  In early February 2009, the CIF instructed him to update and sign the company hand receipt as part of the normal process.  This is when he learned the company was signed for missing equipment.  An inventory was conducted and the equipment was identified.  
   
   d.  The XO and the supply clerk contradicted each other about whether an inventory of the missing property had been conducted.
   
   e.  The investigating officer (IO) suggested that he failed to correct deficiencies noted during an October 2008 supply award inspection.
   
   f.  An examination of the facts show the proximate cause of the loss lay with the supply clerk and the XO, due to their failure to properly inventory and account for the missing property while it was their responsibility.  However, the approving authority claimed that he failed to properly supervise his subordinates which led to an inevitable and foreseeable loss of property.  However, the approval authority and the appeal authority failed to take into account the overwhelming number of priorities that demanded his attention. 
   
   g.  He believes he provided the correct amount of supervision and guidance to his subordinates in order to safeguard Government property.
   
   h.  Legal reviews claimed he was required to personally conduct and inventory the property when it changed hands from the supply clerk to the XO.  However, Department of the Army Pamphlet 710-2-1 (Using Unit Supply Systems (Manual Procedures)) only suggests that a 100 percent inventory be taken, not that the commanding officer should do so.  Furthermore, this pamphlet rather than the governing regulation seems to have been relied upon to fix full responsibility upon him.
   
   i.  Holding him responsible for the loss in the absence of actual negligence contradicts the proximate cause standard prescribed in Army Regulation 735-5 (Policies and Procedures for Property Accountability).  
   
   j.  The first investigation was ultimately found legally insufficient.  A second IO found the applicant, the XO and the supply clerk to be financially liable but the approval authority held the applicant solely liable.  Following a third investigation he was found solely liable and his request for reconsideration was denied.  

3.  The applicant provides and lists copies of all of the documents pertinent to the loss, investigation, reviews and appeals. 


CONSIDERATION OF EVIDENCE:

1.  The applicant's military records show he was commissioned as a second lieutenant and entered active duty in June 2003.  He was promoted to captain on 1 July 2006.  He commanded Company E, 309th Military Intelligence Battalion at Fort Huachuca, AZ.  The company consisted of 13 cadre and several hundred initial entry and military occupational specialty (MOS) trained students.  On 
26 November 2009, the applicant left active duty and he is currently employed as a Department of the Army Civilian. 

2.  A memorandum from the Commander, 309th Military Intelligence Battalion, dated 18 February 2009, shows an IO was appointed for a FLIPL.  The IO was given applicable guidance and provided 15 days to complete his investigation and submit his findings.

3.  The IO completed the investigation and recommended that only the applicant be held responsible for the amount of $4,722.90.

4.  A legal review, dated 12 March 2009, found that the recommendation could not be supported by the evidence and pointed out that liability must rest on a finding of negligence that was the proximate cause of the loss.

5.  The investigation was redone by a different IO, a GS-13 civilian, who again recommended that the applicant be held liable for $4,722.90 for property loss.

6.  The applicant rebutted the new IO's finding and recommendation by noting that he failed to obtain a statement from or summarize conversations with 2LT M____, the outgoing XO and the last person known to have physical custody of the hand receipts.  The applicant also noted the IO failed to properly investigate the possibility that F Company had some or all of the missing items.  Instead of obtaining a statement from F Company's supply sergeant the IO merely accepted his assertion that "they had what they were supposed to have."  The applicant maintained that the new IO had not conducted the investigation properly within the guidance of Army Regulation 735-5 and he had not met the Government's burden of showing the applicant's negligence was the proximate cause of the loss.

7.  The Staff Judge Advocate determined the FLIPL findings and recommendations were legally sufficient.

8.  A letter, dated 15 May 2009, from the brigade commander notified the applicant of the approved financial liability and of his rights including his right to request legal advice, request reconsideration, cancellation, remission, and/or negotiating installment payments.  The applicant requested reconsideration and faulted the IO for assuming facts not in evidence and drawing conclusions based upon such assumed facts. 

9.  A legal review of the FLIPL and the applicant's rebuttal concluded the recommendation was not supported and the FLIPL was insufficient for further processing.  The legal officer explained that the IO had not demonstrated either proximate cause or liability.  The legal officer further pointed out that since the original investigation and recommendation had been found legally insufficient the only additional piece of evidence was a sworn statement from the applicant concerning the actions he had taken to ensure accountability of the items in the company's care.  This evidence was not prejudicial to the applicant and he was uncontroverted.  The lawyer concluded that the findings and recommendation of financial liability were still unfounded. 

10.  On 19 June 2009, the brigade commander appointed yet another IO, directed him to consult with the Staff Judge Advocate prior to commencing, and required that the findings and recommendations be completed by 10 July 2009.

11.  The appointment of this third IO led to a gear lay-out by the entire brigade.  Although the immediate result of the lay-out was nil, shortly thereafter some of the missing gear was recovered.  This reduced the dollar amount from $12,589.74 to $7,567.20 and ultimately to $6,810.48.

12.  The third IO also re-interviewed the XO, the former XO, the applicant, and the available documentation.  The IO recommended that the applicant be held responsible for $3,200.93, the former XO $2,315.56 and the former supply clerk $1,293.99.  He found the applicant's "failure to comply with existing regulations and procedures (a shortfall in accountability) as the proximate cause of the loss of Government property."  This included:

	a.  Failure to meet command responsibility with respect to the requirements set forth in Department of the Army Pamphlet 735-5, chapter 2-1b(1)(c).  

   b.  Failure to take corrective action on the deficiencies noted in the "Tony Burns" logistics inspection.

   c.  Failure to comply with the requirements by failing to direct a 100 percent inventory upon relief of the supply clerk.  

   d.  Failure to comply with key control procedures prescribed in the appropriate regulation.  [The keys had been in the possession of the supply clerk, the XO or the applicant].
13.  The applicant rebutted the findings and recommendation by stating he accepted responsibility.  But no failure on his part had been shown to be the proximate cause of the loss.  He requested reconsideration and pointed out:

   a.  That he had not received the results of the "Tony Burns" competition.  The brigade logistics office had promised to work directly with his company supply clerk.  He submitted a sworn statement and emails from other officers stating that they had never been provided the results.
   
   b.  He directed the former XO to conduct a 100 percent hand receipt inventory with the supply clerk and provided a copy of the email in which he did so.  The former XO's statement indicated the requirement had been understood.  The applicant submitted an email directive to the XO directing him to sign for all property assigned to the supply clerk.
   
   c.  There was no indication that the supply room key procedures had any relevance to the loss.  The keys were in the possession of a responsible individual. 
   
   d.  He had commanded a training company that reached a total of 440 Soldiers and he had only 11 cadre to accomplish the mission.  The battalion directed the transfer of his supply clerk and instead of providing a trained replacement he "encouraged the use of ‘holdunder’ Lieutenants." 

14.  The commander approved the findings and recommendation and informed the applicant of his rights.  The applicant requested reconsideration and again laid out his rationale.  A legal review by the staff judge advocate supported the IO's findings and recommendation and found the applicant liable for the loss equal to one month's pay ($4,722.90).

15.  On 27 October 2009, the brigade commander approved the findings and recommendation and denied any request for further reconsideration.

16.  The following documents reflect the applicant's performance at the time of the subject incident.  These include:

	a.  An Officer Evaluation Report (OER) for the period June 2008-February 2009 show the applicant was a company commander.  The applicant was marked in the top block for all items in Part IV Performance Evaluation, Part V Performance and Potential.  No discrepancies or deficiencies were noted.  The rater's comments included comments such as, "excelled in all aspects of company command… a great officer…possessing rare leadership talent…He is an inspirational leader who successfully blends common sense, professional expertise and command presence…"  No deficiencies were noted.  The senior rater marked him as Best Qualified and described him as, "truly an outstanding officer.  Providing exceptional leadership, he made a significant and lasting impact on mission accomplishment…"

	b.  An OER for the period March 2009-October 2009 shows he was an instructor/doctrine writer.  This was a release from active duty evaluation.  Neither discrepancies nor deficiencies were noted.  The rater's comments included comments such as "Superb performance… taught and supervised the instruction of 464 students…pass rate of 99% while ensuring every student met rigorous standards…an exceptional leader and manager…"   The senior rater marked him as Best Qualified and described him as "impressive, exceptionally talented…in top 10% of all Officers in my Battalion…technical expertise and leadership." 

	c.  The DA Form 638 (Recommendation for Award) and the citation for the Meritorious Service Medal for the period 3 November 2006 through 26 November 2009 show he was cited for "exceptionally meritorious service while assigned…as Company Commander…Captain [the applicant's] enthusiastic efforts and professionalism…his dedicated leadership and commitment to excellence…"

17.  During the processing of this case, an advisory opinion was obtained from the Office of Supply and Maintenance, Office of the Deputy Chief of Staff, G-4.  This office recommended that financial liability in the amount of $4,722.90 be assessed against the applicant because the applicant had command responsibility for the equipment and he failed to account and safeguard it. 

18.  The advisory opinion was forwarded to the applicant for comment and/or rebuttal.  The applicant responded by requesting full relief from the recommended financial assessment and reiterated those points he previously made.  In summary he again contends that those in charge were simply equating command responsibility with financial liability.

19.  Army Regulation 735-5 prescribes basic policies and procedures in accounting for Army property and accounting for lost, damaged, or destroyed (LDD) Army property.  Paragraph 13-29 of the regulation states that an IO’s responsibility is to determine the cause and value of the LDD listed on the FLIPL, and to determine if assessment of financial liability is warranted.  That determination must be based on the facts developed during a thorough and impartial investigation.  However, before beginning the investigation the IO must have an understanding of the terms "responsibility, culpability, proximate cause, and loss"; each term impacts upon a determination of financial liability.  Individuals may be held financially liable for the LDD of Government property if they were negligent or have committed willful misconduct, and their negligence or willful misconduct is the proximate cause of that LDD.  The following terms are addressed in order to assist the IO in evaluating financial liability: 

   a.  Responsibility.

       (1)  General.  The type of responsibility a person has for property determines the obligations incurred by that individual for the property.  Department of the Army Pamphlet 735-5 (Financial Liability Officer’s Guide) presents specific issues the IO must consider before recommending financial liability. 
	
       (2)  Command responsibility is the obligation of a commander to ensure all 
Government property within his or her command is properly used and cared for, and that proper custody, safekeeping, and disposition of Government property are provided.  Command responsibility is inherent in command and cannot be delegated.  It is evidenced by assignment to command at any level and includes ensuring the security of all property within the command, whether in use or in storage; observing subordinates to ensure their activities contribute to the proper custody, care, use, safekeeping, and disposition of all property within the command; enforcing all security, safety, and accounting requirements; and taking administrative or disciplinary action when necessary.

       (3)  Supervisory responsibility is the obligation of a supervisor to ensure all 
Government property issued to, or used by his or her subordinates, is properly used and cared for, and that proper custody, safekeeping, and disposition of the property are provided.  It is inherent in all supervisory positions and it is not contingent upon signed receipts or responsibility statements.  It arises because of assignment to a specific position and includes providing proper guidance and direction, enforcing all security, safety, and accounting requirements, and maintaining a supervisory climate that will facilitate and ensure the proper care and use of Government property. 

       (4)  Direct responsibility is the obligation of a person to ensure all
Government property for which he or she has receipted is properly used and cared for, and that proper custody, safekeeping, and disposition are provided. Direct responsibility results from an assignment as an accountable officer, receipt of formal written delegation, or acceptance of the property on a hand receipt from an accountable officer. 
   


       (5)  Custodial responsibility is the obligation of an individual for property in 
storage awaiting issue or turn-in to exercise reasonable and prudent actions to properly care for, and ensure proper custody, safekeeping, and disposition of the property are provided.  Custodial responsibility results from assignment as a supply sergeant, supply custodian, supply clerk, or warehouse person.  Personnel with custodial responsibility are rated by and answerable directly to an accountable officer or the individual having direct responsibility for the property.  Responsibilities include:

           (a)  Ensuring the security of all property stored within the 
supply room and storage annexes belonging to the supply room or supply support activity is adequate.

           (b)  Observing subordinates to ensure their activities contribute to 
the proper custody, care, safekeeping and disposition of all property within the supply room and storage annexes belonging to the supply room or supply support activity.

           (c)  Enforcing all security, safety, and accounting requirements.
 
           (d)  When unable to enforce any of these, reporting the problem(s) to their immediate supervisor. 

       (6)  Personal responsibility is the obligation of a person to exercise 
reasonable and prudent actions to properly use, care for, safeguard and dispose of all Government property in his or her physical possession.  It applies to all Government property issued for, acquired for, or converted to a person's exclusive use, with or without receipt. 

   b.  Culpability. 

	    	(1)  Before a person can be held financially liable, the facts must show that he or she, through negligence or willful misconduct, violated a particular duty involving the care of the property. 

	    (2)  Simple negligence is the absence of due care, by an act or omission of a person which lacks that degree of care for the property that a reasonably prudent person would have taken under similar circumstances, to avoid the LDD of Government property.
 


	    (3)  Gross negligence is an extreme departure from due care resulting from an act or omission of a person accountable or responsible for Government 
property which falls far short of that degree of care for the property that a reasonably prudent person would have taken under similar circumstances.  It is accompanied by a reckless, deliberate, or wanton disregard for the foreseeable loss or damage to the property. 

	    (4)  Whether a person's acts or omissions constitute negligence depends 
on the circumstances of each case [EMPHASIS ADDED].  Negligence under some circumstances may not reflect negligence under other circumstances.  
	    
       (5)  Willful misconduct is any intentional wrongful or unlawful act or omission relating to Government property. 

	    (6)  A retired military member or civilian employee can be held financially liable for the LDD of Government property that can be attributed to their negligence while on active duty or employed by the Department of the Army. 

	c.  Proximate cause.  Before holding a person financially liable for a loss to the Government, the facts must clearly show that the person's conduct was the "proximate" cause of the LDD.  That is, the person's acts or omissions were the cause that, in a natural and continuous sequence, unbroken by a new cause, produced the LDD, and without which the LDD would not have occurred. 

	d.  Loss.  Before holding a person financially liable, the facts must show that a loss to the Government occurred.  "Loss" means loss of, damage to, or destruction of property of the U.S. Government.  Loss includes a loss from accountability.  Property is considered lost when it cannot be found or accounted for by the last responsible person in the audit trail. 

20.  Army Regulation 735-5, paragraph 13-38, provides that upon receiving a FLIPL of property loss on which the approving authority believes financial liability is appropriate, the approving authority will obtain a legal opinion as to its legal sufficiency prior to determining whether to assess financial liability.  A legal advisor will provide a written opinion as to the legal sufficiency of the financial liability investigation of property loss.  If, in the legal advisor's opinion, the financial liability investigation of property loss is not legally sufficient, the opinion will state the reasons why and make appropriate recommendations.  The opinion will be attached to the FLIPL prior to the approving authority's review and decision.  The approving authority should ensure corrective actions are taken before taking final action to assess financial liability.  A lawyer other than the one who advised the respondent in the preparation of the respondent's rebuttal statement must perform the legal review required by the approving authority. 
21.  Army Regulation 735-5, paragraph 13-44, provides that the approving authority, upon receipt of a request for reconsideration, will review any new evidence offered, and make a decision to either reverse the previous decision assessing financial liability against the individual or recommend the continuation of the assessment of financial liability.  A request for reconsideration will be reviewed only on the basis of legal error (that is, the request must establish that the facts of the case do not support an assessment of financial liability). 

DISCUSSION AND CONCLUSIONS:

1.  The applicant contends that holding him responsible for the loss in the absence of actual negligence contradicts the proximate cause standard prescribed in Army Regulation 735-5.

2.  The applicant required his XO to sign hand receipts upon the departure of the supply clerk.  It was not done and accountability was lost at that point.  The applicant may have been derelict in his duties by failing to ensure that the hand receipts had been executed but this did not cause the loss.

3.  This case turns on the extent a commander is held responsible for losses.  Commanders are responsible for Government property within their commands.  However, commanders must be able to rely upon management controls and subordinates to account for property. 

4.  The record reflects the applicant executed command actions to ensure the safeguarding of Government property.  The loss was proximately caused by inappropriate actions of other individuals.  Command responsibility does not imply a strict liability standard. 

5.  In view of the foregoing findings and conclusions, it would be appropriate to rectify this injustice by correcting the applicant’s records as recommended below.

BOARD VOTE:

____X____  ____X____  ____X____  GRANT FULL RELIEF 

________  ________  ________  GRANT PARTIAL RELIEF 

________  ________  ________  GRANT FORMAL HEARING

________  ________  ________  DENY APPLICATION


BOARD DETERMINATION/RECOMMENDATION:

The Board determined that the evidence presented was sufficient to warrant a recommendation for relief.  As a result, the Board recommends that all Department of the Army records of the individual concerned be corrected by showing he was not liable for the loss of property in the amount of $4,722.90 covered in FLIPL W*****-09-0***.  The Defense Finance and Accounting Service should return any monies the individual previously paid.




      _______ _   _X______   ___
               CHAIRPERSON
      
I certify that herein is recorded the true and complete record of the proceedings of the Army Board for Correction of Military Records in this case.

ABCMR Record of Proceedings (cont)                                         AR20100013194



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ABCMR Record of Proceedings (cont)                                         AR20100013194



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