the job could not be worked with the equipment at hand which was built around the amount of money available in the job UNDER THE CONDITION THEY COULD NOT ALLOW US THE REASONABLE REQUEST FOR INCREASED COST OF SCRAP. The capitalized statement is not included in his letter but you will find it in the correspondence which we sent you. So, in view of the facts above, we do not believe it unjust to state that Admiral Young's letter could be considered somewhat one-sided, and not as inclusive of all the facts on both sides as has been our correspondence with them. Yours very truly, WINONA MACHINE & FOUNDRY CO., By R. G. LEICHT, Secretary-Treasurer. NAVY DEPARTMENT, OFFICE OF THE JUDGE ADVOCATE GENERAL, The Honorable EMANUEL CELLER, Chairman of the Committee on the Judiciary, House of Representatives. DEAR MR. CHAIRMAN. Your request for comments on H. R. 2224, "for the relief of the Winona Machine & Foundry Co., a corporation of Winona, Minn.," has been referred to me by the Secretary of the Navy for reply. This request contained a note to the effect that your committee had received information that the objections of the Navy Department to H. R. 1779, Eightieth Congress, which was vetoed by the President, had been withdrawn and that a supplementary report was therefore requested. The purpose of the proposed legislation is to release the Winona Machine & Foundry Co., a corporation of Winona, Minn., from liability to the United States arising out of the termination by the Navy Department of contract NOs-74270, dated June 11, 1940, and a purchase by the Navy Department, against the account of that corporation. The bill directs the Comptroller General to cancel and remove from the records of the General Accounting Office the debt which has been raised therein against the Winona Machine & Foundry Co. in the sum of $7,148.77, with interest and any other charges arising out of the aforesaid termination of contract and connected purchase. The first attempt at legislative relief was made in 1943 when H. R. 2646 and S. 1092 were introduced in favor of the Winona Machine & Foundry Co. These bills failed of enactment and a later bill, H. R. 1779, introduced in 1948 was passed by the Congress but was not approved by the President. The facts which led to these attempts for relief are fully stated in the Secretary of the Navy's letter of June 14, 1943, to the Chairman of the Committee on Claims of the House of Representatives, which letter is contained in the House of Representatives Report No. 1631 of the second session of the 80th Congress. The Navy Department refrains from making any recommendation as to the merits of H. R. 2224 at this time. The Navy Department has been advised by the Bureau of the Budget that there is no objection to the submission of this report to the Congress. For the Secretary of the Navy. Respectfully yours, G. L. RUSSELL, Rear Admiral, United States Navy, О 81ST CONGRESS HOUSE OF REPRESENTATIVES 1st Session { REPORT No. 666 LESTER B. MCALISTER, JESSE W. BEEMAN, AND WILLIS H. COATES MAY 24, 1949.-Committed to the Committee of the Whole House and ordered to be printed Mr. BRYNE, of New York, from the Committee on the Judiciary, submitted the following REPORT [To accompany H. R. 3461] The Committee on the Judiciary, to whom was referred the bill (H. R. 3461) for the relief of Lester B. McAlister, Jesse W. Beeman, and Willis H. Coates, having considered the same, report favorably thereon with amendment and recommend that the bill do pass. The amendment is as follows: Line 12, after the period insert: That the Secretary of the Treasury be, and he is hereby, authorized and directed to pay, out of any money in the Treasury not otherwise appropriated, such amounts which have been refunded by Jesse W. Beeman and Willis H. Coates. The purpose of the proposed legislation is to authorize the Comptroller General of the United States to credit the account of Lester B. McAllister, former postmaster at Oak Park, Ill., with the sum of $11,165.20, and the account of Jesse W. Beeman balance due on the apportionment of $2,791.30; to refund to Jesse W. Beeman and Willis H. Coates the amounts paid to the Government on their apportionment of the total sum embezzled by Kenneth T. Barber, a special clerk employed at said office. STATEMENT OF FACTS The circumstances under which the embezzlement occurred are as follows: The postmaster states that his job was to act as a buffer between the Postal Department and the public. That during his term of office he carried on no other business and kept regular office hours. He made it a practice to take care of all complaints personally and to meet any of the public that came in on any matter relating to the post office. He did not keep the books nor did he do the banking. He required monthly audits which he checked carefully. Barber's default could not be ascertained from these statements. His office was thoroughly checked at least once every 6 months by the postal inspectors. The only criticism which he at any time received was that his system of requiring monthly audits was unnecessary and expensive to the Government. Although the postal inspectors themselves made a thorough audit of all the books and accounts at least twice and probably three times during the priod of Barber's defalcation, they did not discover the same, nor did they criticize in any way his manner of handling the postal-savings accounts. The bookkeeper took care of all the accounts and the assistant postmaster did all the banking. The foregoing statement should not, however, be construed as inferring in any way that either the assistant postmaster or the bookkeeper were at fault in the matter. Both of these individuals were also civil-service employees. The defalcations were never caught by an investigation of books. After the bank crisis passed, the rate of deposit decreased rapidly. Barber found it increasingly hard to cover up his shortage. Finally one noon while he was at lunch a customer presented a receipt and asked for certificate. The assistant postmaster became suspicious when he was unable to locate this, and started an investigation which led to disclosing the situation. The postmaster states that he had no way of catching the defalcations, and feels that it is most unjust to hold him on this claim. Prior to his appointment as postmaster he was engaged in business in Oak Park for a number of years. He considered his job as postmaster was largely administrative and left the detective work to the postal inspectors, who had far more experience in that line. None of the inspectors found any evidence of the defalcation, nor was the method of handling the postal savings criticized. He states that these statements are not to be construed as any criticism of the methods used by the postal inspectors. His point is only that if these men, with their experience and training, did not discover the situation, it is both unfair and unreasonable to impute any fault on a man in his position. It is the opinion of your committee that Mr. McAllister should be relieved of this liability and that Mr. Beeman and Mr. Coates should be refunded the amounts paid to the Government on the total sum charged to them and relieved of further liabilities, and recommends favorable consideration to the bill. Appended hereto are the reports of the Post Office Department and Comptroller General, together with other pertinent evidence. Hon. DAN R. McGEHEE, OFFICE OF THE POSTMASTER GENERAL, Chairman, Committee on Claims, House of Representatives. MY DEAR MR. MCGEHEE: Reference is made to your request for a report upon H. R. 1313, a bill for the relief of Lester B. McAllister and others. On February 20, 1945, Kenneth J. Barber, special clerk at the Oak Park, Ill., post office, confessed to the embezzlement of postal-savings funds to the amount of $18,285.75. Three thousand dollars, the amount of Barber's bond, was collected from the surety company, $35.20 was deducted from his salary, and $847.45 from the retirement fund, leaving a balance of $14,403.10. The inspector to whom this case was assigned made a very careful investigation of the whole financial set-up in the Oak Park post office, at which time it was ascertained that there was very lax supervision on the part of Lester B. McAllister who was at that time postmaster; Jesse W. Beeman, assistant postmaster; and William H. Coates, bookkeeper. It was the opinion of this Department that this shortage was made possible by laxity upon the part of these officials, and a post-office inspector was instructed to make demand upon them and their sureties for the following amounts: Lester B. McAllister, $11,165.20; Jesse W. Beeman, $2,791.30; William H. Coates, $446.60. While it is our belief that negligence upon the part of these claimants facilitated the embezzlement by Kenneth J. Barber, nevertheless we would have no objection to the enactment of this bill should it be the judgment of Congress that the respective liabilities assessed against these claimants constitute too heavy a penalty for their failure to exercise proper care. It has been ascertained from the Bureau of the Budget that this report is in accord with the program of the President. Very truly yours, FRANK C. WALKER, Postmaster General. COMPTROLLER GENERAL OF THE UNITED STATES, Hon. DAN R. McGEHEE, Chairman, Committee on Claims, House of Representatives. MY DEAR MR. CHAIRMAN: Reference is made to your letter of October 7, 1943, acknowledged October 8, requesting a report on H. R. 3401, Seventy-eight Congress, entitled "a bill for the relief of Lester B. McAllister, and others," which bill provides as follows: "That the Comptroller General of the United States be, and he is hereby, authorized and directed to credit the account of Lester B. McAllister, former postmaster at. Oak Park, Illinois, with the sum of $11,165.20; and the account of Jesse W. Beeman, assistant postmaster, with the sum of $2,791.30; and the account of Willis H. Coates, bookkeeper, with the sum of $446.60, lost by reason of theft by a special clerk, an employee of the said office." It appears that Kenneth T. Barber, a special clerk assigned to the postal-savings window in the post office at Oak, Ill., surrendered on February 20, 1935, to the office of the postal inspector in charge, Chicago, Ill., and confessed to embezzlement of postal-savings funds which he accomplished by appropriating cash from postal-savings funds, by treating as paid postal-savings certificates surrendered to him for the purchase of bonds, and by failing to issue postal-savings certificates upon checks deposited with him for that purpose. Mr. Barber pleaded guilty to the charge of embezzlement and was sentenced April 18, 1935, to be imprisoned for a term of 3 years. The embezzlement was investigated by postal inspectors and made the subject of several preliminary reports. The report of Inspector W. C. Baumgardner dated August 22, 1935, sets forth the facts in the case at length. That report is summarized as follows: In the early part of the year 1933 numerous persons presented their checks to the post office, Oak Park, Ill., for deposit of the proceeds thereof into postalsavings accounts. Because of the unsound financial condition of many banks at that time the checks were accepted by the post office with the understanding that postal-savings certificates therefor would not be issued until a sufficient time had elapsed after receipt of the checks for them to pass through the respective banks on which drawn. The depositors were given receipts for their checks by Mr. Barber. No attempt was made, however, to keep any account of the receipt forms in the possession of Mr. Barber and under the system in effect there was no way to check the amount he received from the depositors. Willis H. Coates, bookkeeper, checked the postal-savings accounts once a month and inspected the certificates for which depositors had given checks but had not received. The certificates appeared to be proper but the bookkeeper had no means of ascertaining under the system in effect how many checks had been received for which certificates had not been issued. Thus the opportunity was presented to misappropriate funds. Mr. Barber issued receipts for checks but would not issue the postal savings certificates until the depositors called for them at which time the certificates would be issued and the money placed in the cash drawer from the proceeds of checks received that day. The checks received were turned into the money-order department and Mr. Barber received in return a check payable to the postmaster at Chicago drawn on |