from: http://www.azcentral.com/news/articles/1204postalsecurity.html

U.S. probe finds lax postal security
Phoenix heist led to look at deposits

Billy House
Republic Washington Bureau
Dec. 4, 2002 12:00 AM

WASHINGTON - A congressional investigation prompted by last year's $3.2 million theft at a Phoenix postal facility has concluded that $65 billion in annual U.S. Postal Service deposits nationwide may remain vulnerable to "mishandling, loss and theft."

A report released Tuesday by the General Accounting Office also notes that 13 months after postal worker Louis Malcolm Holley pulled off his theft of $3.2 million in cash, checks and money orders at the Phoenix facility in June 2001, investigators still were finding lax security at Arizona postal installations and elsewhere.

"This is a primary concern, to know that over a year later some poor practices were continuing," Rep. J.D. Hayworth, R-Ariz., said in an interview.

Hayworth, who requested the GAO report, said Congress needs to exercise tighter oversight to assure the Postal Service fixes its security problems.

Ending security and procedural breaches is important because losses of postal service assets and related safety concerns for employees could result in increased costs to the public and disruptions of service, he said.

"We are well on the way to implementing many of the recommendations in the GAO report to address deficiencies identified," said Alan Wald, a Postal Service spokesman for the region that includes Arizona, reading from a statement issued from Postal Service headquarters in Washington.

The report notes that postal authorities have responded in writing to the GAO's findings and agreed to take corrective actions.

Before 1997, local post offices deposited their daily remittances of coin, cash and checks in accounts with local banks.

As a cost-cutting measure, however, the Postal Service started moving those deposits by armed courier to central locations, and then making deposits to a smaller number of commercial banks.

But on June 2, 2001, more than $3.2 million disappeared from one of these central locations, the Postal Service's Phoenix Processing and Distribution Center at 48th and Van Buren streets.

On Aug. 17, 2001, Holley, a 28-year postal veteran, was arrested at a motel in Lynnwood, Wash., near Seattle.

With Holley's arrest, about $1.7 million in cash was recovered, and prosecutors said he destroyed some checks and money orders. Holley, now 54, was convicted and sentenced to three years and five months in prison.

Tuesday's GAO report states that if warnings in 2000 from the Postal Inspection Service had been heeded by the manager of the Phoenix facility regarding security issues, that theft might have been prevented.

The report says the Phoenix site did not have security cameras; a key to a cage where valuables were stored was left in the lock and all employees in that area had access to it; and deposits stored and left in that cage through succeeding shifts were not properly recorded.

More recently, the GAO says its investigators visited postal facilities at six locations: three in Arizona, one in Texas, one in Maryland and one in Washington, D.C.

But the report states that despite the 2001 theft in Phoenix, "Service employees carried out a number of practices that are inconsistent with service policies and procedures for controlling and screening remittances (deposits)."

An employee at a postal station in the mid-Atlantic region was found to have left deposits in a 24-hour lobby after the post office had closed. That employee was not disciplined.