Rogue operations at the Kansas City ‘caves’ shake the confidence of stamp collectors

Editor’s Insights — By Donna Houseman 

On March 2, Linn’s Washington correspondent Bill McAllister reported on a rogue stamp operation run by Khalid M. Hussain, the longtime manager of the United States Postal Service’s Stamp Fulfillment Services center in Kansas City, Mo.

McAllister cites a 42-page report of the USPS Office of Inspector General. The document was released to Linn’s under a Freedom of Information Act request.

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The heavily redacted report uncovers an operation while Hussain was manager of Stamp Fulfillment Services, whereby Harry Potter stamps and possibly others were sold to Great Britain’s Royal Mail at deep discounts and without a contract, and an unauthorized “showroom” that existed at the underground SFS facility stocked with unsold philatelic items from post offices throughout the country. These items also were sold at deep discounts or given away.

The report states that these questionable activities were done without approval of U.S. Postal Service headquarters in Washington, D.C.

Also while Hussain was manager, SFS gave away three of the valuable upright $2 Jenny Invert stamp panes to three customers who had placed previous orders with SFS. Just 100 upright Jenny Invert panes were intentionally printed by the USPS.

All of these issues diminish the level of confidence and trust of stamp collectors who purchase stamps and philatelic products from SFS.

For example, collectors trusted that the upright $2 Jenny Invert panes were randomly distributed to post offices throughout the country.

This trust was violated when Linn’s reported that three of the upright panes were given away.

We also learned through an earlier July 15, 2015, report from the inspector general that 70 upright panes were given to postal retail units for sale “in the top 50 markets based on total stamp sales.” That’s hardly a random distribution.

Collectors feel betrayed, and rightly so.

Linn’s has asked Postal Service officials what steps have been taken to prevent these violations from happening again, and what steps are being taken to regain the trust of stamp collectors and to restore the confidence of collectors.

We also have asked the Postal Service what actions will be taken to resolve the issues raised by the investigation into the activities at SFS.

We have been told that Postal Service managers are held accountable “for oversight, management, and protection of postal assets and compliance with Postal policies.”

However, we have received no details on what steps, if any, have been taken.

What we do know is that Hussain is no longer manager of SFS. His employment with the Postal Service ended in 2016. Paul Fagan, a 35-year employee with USPS, is currently acting manager of the underground federal facility in Kansas City, known as “the caves.”