PSH-11-0015

* The original of this document contains information which is subject to withholding
from disclosure under 5 U.S.C. 552. Such material has been deleted from this copy and
replaced with XXXXXX’s.
United States Department of Energy
Office of Hearings and Appeals
In the Matter of: Personnel Security Hearing )
)
Filing Date: November 4, 2011 )
) Case No.: PSH-11-0015
__________________________________________)
Issued : February 9, 2012
______________________
Hearing Officer Decision
______________________
William M. Schwartz, Hearing Officer:
This Decision concerns the eligibility of XXXXXXXXXXXXX (hereinafter referred to
as “the individual”) to hold an access authorization1 under the Department of Energy’s
(DOE) regulations set forth at 10 C.F.R. Part 710, Subpart A, entitled, “General Criteria
and Procedures for Determining Eligibility for Access to Classified Matter or Special
Nuclear Material.” As fully discussed below, after carefully considering the record before
me in light of the relevant regulations and Adjudicative Guidelines, I have determined
that the individual’s access authorization should not be restored at this time.
I. Background
The individual is employed by a DOE contractor in a position that requires him to hold a
DOE security clearance. For almost 20 years, the individual has experienced financial
difficulties which resulted in the Local Security Office (LSO) conducting four personnel
security interviews with him.
In September 2011, the LSO sent a letter (Notification Letter) to the individual advising
him that it possessed reliable information that created a substantial doubt regarding his
1 Access authorization is defined as “an administrative determination that an individual is eligible for
access to classified matter or is eligible for access to, or control over, special nuclear material.” 10 C.F.R.
§ 710.5(a). Such authorization will be referred to variously in this Decision as access authorization or
security clearance.
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eligibility to hold a security clearance. In an attachment to the Notification Letter, the
LSO explained that the derogatory information fell within the purview of one potentially
disqualifying criterion set forth in the security regulations at 10 C.F.R. § 710.8,
subsection (l) (hereinafter referred to as Criterion L).2
Upon his receipt of the Notification Letter, the individual exercised his right under the
Part 710 regulations by requesting an administrative review hearing. The Director of the
Office of Hearings and Appeals (OHA) appointed me the Hearing Officer in the case and
I subsequently conducted an administrative hearing in the matter. At the hearing, the LSO
presented the testimony of a personnel security specialist; the individual presented his
own testimony and that of his wife. In addition to the testimonial evidence, the LSO
submitted 14 exhibits into the record; the individual tendered one exhibit. The exhibits
will be cited in this Decision as “Ex.” followed by the appropriate numeric or alphabetic
designation. The hearing transcript in the case will be cited as “Tr.” followed by the
relevant page number.3
II. Regulatory Standard
A. Individual’s Burden
A DOE administrative review proceeding under Part 710 is not a criminal matter, where
the government has the burden of proving the defendant guilty beyond a reasonable
doubt. Rather, the standard in this proceeding places the burden on the individual because
it is designed to protect national security interests. This is not an easy burden for the
individual to sustain. The regulatory standard implies that there is a presumption against
granting or restoring a security clearance. See Department of Navy v. Egan, 484 U.S.
518, 531 (1988) (“clearly consistent with the national interest” standard for granting
security clearances indicates “that security determinations should err, if they must, on the
side of denials”); Dorfmont v. Brown, 913 F.2d 1399, 1403 (9th Cir. 1990), cert. denied,
499 U.S. 905 (1991) (strong presumption against the issuance of a security clearance).
The individual must come forward with evidence to convince the DOE that restoring his
access authorization “will not endanger the common defense and security and will be
clearly consistent with the national interest.” 10 C.F.R. § 710.27(d). The individual is
afforded a full opportunity to present evidence supporting his eligibility for an access
authorization. The Part 710 regulations are drafted so as to permit the introduction of a
very broad range of evidence at personnel security hearings. Even appropriate hearsay
evidence may be admitted. 10 C.F.R. § 710.26(h). Thus, an individual is afforded the
utmost latitude in the presentation of evidence to mitigate the security concerns at issue.
2
Criterion L relates to information that a person has “[e]ngaged in any unusual conduct or is subject to any
circumstances which tend to show that the individual is not honest, reliable, or trustworthy; or which
furnishes reason to believe that the individual may be subject to pressure, coercion, exploitation, or duress
which may cause the individual to act contrary to the best interests of the national security . . .” 10 C.F.R.
§710.8(l).
3 OHA decisions are available on the OHA website at www.oha.doe.gov. A decision may be accessed by
entering the case number in the search engine at www.oha.gov/search.htm.
3
B. Basis for the Hearing Officer’s Decision
In personnel security cases arising under Part 710, it is my role as the Hearing Officer to
issue a Decision that reflects my comprehensive, common-sense judgment, made after
consideration of all the relevant evidence, favorable and unfavorable, as to whether the
granting or continuation of a person’s access authorization will not endanger the common
defense and security and is clearly consistent with the national interest. 10 C.F.R.
§ 710.7(a). I am instructed by the regulations to resolve any doubt as to a person’s access
authorization eligibility in favor of the national security. Id.
III. The Notification Letter and the Security Concerns at Issue
As previously noted, the LSO cites one criterion as the basis for suspending the
individual’s security clearance, Criterion L. To support its allegations, the LSO
chronicles the events which led to the individual’s two bankruptcy filings (one in 1995
and the other in 2011),4 including impulsive purchases and imprudent and unnecessary
expenses, and debt-based court judgments. The LSO alleges that these events
demonstrate a continuing pattern of fiscal irresponsibility and that the individual has not
learned from his prior mistakes. In addition, the LSO alleges that the individual willingly
provided false information about his financial status in order to reaffirm his home and
travel trailer through his recent bankruptcy proceeding.
The individual’s failure to live within his means, to satisfy his debts and meet his
financial obligations raises a security concern under Criterion L because his actions may
indicate “poor self-control, lack of judgment, or unwillingness to abide by rules and
regulations,” all of which can raise questions about the individual’s reliability,
trustworthiness and ability to protect classified information. See Guideline F of the
Revised Adjudicative Guidelines for Determining Eligibility for Access to Classified
Information, issued on December 29, 2005, by the Assistant to the President for National
Security Affairs, The White House. (Adjudicative Guidelines). Moreover, a person who
is financially overextended is at risk of having to engage in illegal acts to generate funds.
Id. The individual’s lack of candor regarding his finances raises additional questions
about his reliability, trustworthiness, and ability to protect classified information. See
Adjudicative Guidelines at Guideline E.
IV. Findings of Fact
In 1990, the individual’s wife inherited $100,000, with which they purchased new
vehicles and a boat, renovated their house, traveled, and treated their children, including
supporting their involvement in BMX racing. They grew accustomed to having money
4 A security concern does not arise from the bankruptcy filing, per se, but rather, as here, from the
circumstances surrounding the bankruptcy and the attendant financial problems. See Personnel Security
Hearing, Case No. TSO-1048 (2011); Personnel Security Hearing, Case No. TSO-1018 (2011); Personnel
Security Hearing, Case No. TSO-0692 (2009); Personnel Security Hearing, Case No. TSO-0288 (2006);
Personnel Security Hearing, Case No. TSO-0217 (2005); Personnel Security Hearing Case No. VSO-0509
(2002).
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and continued to maintain their lifestyle even after the money had been spent. By 1994
or 1995, they had sold their boat and consolidated their debts. They ultimately stopped
paying their debts and, with about $20,000 in debts, filed for bankruptcy in 1997
(Bankruptcy #1). Ex. 10 (Summary of March 18, 1998, Personnel Security Interview
(PSI #1)). In the bankruptcy proceedings, they reaffirmed the mortgage on their house,
the loan on a truck, and the debt on some of their credit cards. Ex. 14 (Transcript of
July 25, 2001, PSI (PSI #2)) at 7-10; Ex. 9 (Transcript of August 28, 2002, PSI (PSI #3))
at 10. After the bankruptcy, they acquired more credit cards, but by 2001 had closed the
accounts to prevent overspending. Ex. 14 at 16, 18. By that point, however, they had
incurred significant debt and were unable to meet their mortgage obligations. The house
was foreclosed upon, and the family moved to a rental property. Id. at 7, 15.
Contributing to this debt were unanticipated medical expenses, for injuries both children
sustained while BMX racing, and for medical procedures both parents required. Id. at 6,
11, 13. The individual’s and his wife’s combined income should have been sufficient to
meet their expenses, but they had not budgeted for medical expenses. Id. at 11, 13. In
fact, the family had no budget at all. Id. at 25.
In 2005, the individual and his wife had acquired seven credit cards and had cashed out
$54,000 from his retirement fund. Ex. 8 (2011 Bankruptcy Petition) at Schedule E; Ex. 4
(Transcript of May 3, 2011 PSI (PSI #4)) at 18-19. His wife had surgery in the same
year. Id. at 14. In June 2008, they purchased the house they had been renting; the
monthly mortgage payment exceeding the rent by about $400. Id. at 5-6. Very shortly
thereafter, they purchased a travel trailer, securing a loan with a monthly payment of
$372. Id. at 8; Ex. 8 at Schedule J. The individual then took out a loan of $5000 to
$6000 from his retirement account. Ex. 4 at 17-18. By May 2009, a collection agency
had obtained a judgment against the individual. Id. at 35-36. In early 2010, the
individual and his wife each had serious medical procedures; the wife was unable to
return to work. Id. at 12.
In February 2011, the individual and his wife filed for bankruptcy a second time
(Bankruptcy #2). They reported in their bankruptcy petition that they were paying
nothing for food and clothing, Ex. 8 at Schedule J. However, when he completed
another Personal Financial Statement for the LSO in April 2011, he indicated that his
food and clothing costs were $580 per month. Ex. 6. When questioned at a May 2011
PSI (PSI #4), he could not explain the discrepancy, but stated that his children were
buying groceries for them. Ex. 4 at 45-46, 50. Nor could he respond to many of the
LSO’s other questions about his financial situation. For example, he was not sure
whether his home or his trailer was to be reaffirmed through Bankruptcy #2. Id. at 41,
48-51.
V. Analysis
I have thoroughly considered the record of this proceeding, including the submissions
tendered in this case and the testimony of the witnesses presented at the hearing. In
resolving the question of the individual’s eligibility for access authorization, I have been
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guided by the applicable factors prescribed in 10 C.F.R. § 710.7(c)5 and the Adjudicative
Guidelines. After due deliberation, I have determined that the individual’s access
authorization should not be restored. I cannot find that restoring the individual’s DOE
security clearance will not endanger the common defense and security and is clearly
consistent with the national interest. 10 C.F.R. § 710.27(a). The specific findings that I
make in support of this decision are discussed below.
A. Testimonial Evidence
The personnel security specialist testified that she conducted four PSIs with the
individual. In each PSI, she discussed the LSO’s concerns about his financial
irresponsibility. Until her most recent review of his file, following his report of
Bankruptcy #2, she found that the individual had resolved the LSO’s concerns. Tr. at 19,
23. Nevertheless, by the third PSI, in 2002, she determined that the individual was not
yet in financial difficulties, but expressed her concern to the individual that she was
seeing a pattern of acquiring debt through credit card use. Id. at 25. She also noted that
the individual had failed to report to the LSO two debt judgments against him, one from
2004 and a second from 2009. Id. at 26-28. The individual’s Bankruptcy #2 raised new
concerns for her. When he bought his home and the travel trailer in 2008, his expenses
doubled from $700 in rent to an $1100 mortgage payment and a $372 loan payment.
Moreover, despite his family’s history of medical needs, the individual had not budgeted
for emergency or medical expenses. Id. at 30. In addition, although he was $18,000 in
arrears on his mortgage at the time of Bankruptcy #2, he continued to pay for cable,
internet, cell phones and lawn care. Id. at 37-38.
In their testimony, the individual and his wife both drew a distinction between their two
bankruptcies. They both testified that Bankruptcy #1 had been caused by overspending:
they had grown accustomed to a lifestyle that was beyond their means once the
inheritance was spent. Id. at 50, 127. On the other hand, Bankruptcy #2, they each
contended, was the result of medical expenses for which they had not planned. Id. at 72,
167. While both testified that they used their many credit cards to pay for medical
expenses, neither produced evidence of how much of their credit card debt could be
accounted for in this manner. Id. at 61-62, 98. The individual admitted that they had
difficulties paying for their house, trailer and vehicles soon after they bought them, and
before their substantial medical expenses in 2010. Id. at 169. They have now sold all but
one truck, which is more efficient than their previous vehicles, and committed to not
using credit cards in the future. Id. at 67-70, 75. The wife stated that, beginning in
January 2012, their son will assume half the monthly loan payment on the travel trailer,
thereby reducing the amount of their payment. Id. at 92. They also testified that their
children no longer require any financial support from them. Id. at 93-94, 108. Finally,
5 Those factors include the following: the nature, extent, and seriousness of the conduct, the circumstances
surrounding the conduct, to include knowledgeable participation, the frequency and recency of the conduct,
the age and maturity at the time of the conduct, the voluntariness of his participation, the absence or
presence of rehabilitation or reformation and other pertinent behavioral changes, the motivation for the
conduct, the potential for pressure, coercion, exploitation, or duress, the likelihood of continuation or
recurrence, and other relevant and material factors.
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the individual has now become involved in the decision making process with regard to
finances, something that had not previously occurred. Id. at 102. They now work together
to plan how to spend the income they receive. Id. at 106. Previously, the wife made all
but the major purchase and payment decisions without consulting the individual. Id. at
105-06.
The individual and his wife also testified regarding the discrepancies between their
expenses as reported in the petition for Bankruptcy #2 and those reported on the Personal
Financial Statement they prepared for the LSO in April 2011. They explained that during
that period, and at the time of the hearing as well, their children and their church were
providing them with food. Id. at 49, 178. For that reason, they indicated that they had no
food or clothing costs in the bankruptcy petition, and their attorney advised them to do
so. Id. at 180. As for the Personal Financial Statement, they decided that the LSO was
interested in how much they would have to spend for food and clothing, rather than what
their actual costs were, and provided those figures. Id. at 87, 179. Each testified that
they did not intend to mislead the LSO with their responses. Id. at 87, 194.
With respect to the fact that the individual failed to report to the LSO two judgments
against him, the individual’s testimony was sparse. At the hearing, the individual stated
that he could not recall knowing about the judgment in 2002. Id. at 195. He did,
however, recall that he learned about the 2009 judgment as he was filing for bankruptcy,
and that his bankruptcy attorney advised him that he need not report it as it would be
taken care of in the bankruptcy proceeding. Id.
B. Hearing Officer Evaluation of Evidence
In considering the evidence before me, I first looked to the Adjudicative Guidelines. As
an initial matter, I find that the individual was living beyond his means from the time at
which his wife’s inheritance had been spent (approximately 1992) until the hearing, as
evidenced by two bankruptcies, a foreclosure, high credit card debt, and a large number
of medical creditors. As for the second bankruptcy filing, I am not convinced that his
financial plight at that time was beyond his control. Although the individual attributes the
bankruptcy to unforeseen medical expenses, it appears that he was living beyond his
means even before his medical expenses arose. Because he had never developed a
budget, his approach was to make expenditures he wanted if he “felt comfortable.” Ex. 4
at 23, 30 (purchased travel trailer in 2008 while living “from paycheck to paycheck” with
no savings or emergency fund, because “wanted it so bad”). Moreover, while medical
bills mounted, the individual kept current on his travel trailer payments, and continued to
pay for cable, cell phones and lawn care. Based on these findings, I cannot mitigate the
individual’s financial issues under Guideline F at ¶ 20(b), i.e. the conditions that resulted
in the financial problems were largely beyond the person’s control.
Second, I cannot mitigate the security concerns at issue here under Guideline F at ¶ 20(a)
because the behavior happened recently and repeatedly. Furthermore, as explained more
fully below, I cannot find at this point that the financial problems will not occur again.
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Third, the individual has not sought or received any financial counseling since before
Bankruptcy #1 in 1997, nor has he yet developed a family budget. He submitted into the
record a financial statement for the month of December 2011, which demonstrates that
the monthly expenses far exceed their current income (his unemployment benefits and his
wife’s disability payment). Ex. A. Were the individual to receive his usual paycheck,
this exhibit indicates that he would be able to meet all expenses and start saving a small
amount monthly for emergencies, assuming his medical creditors will wait up to two
years to be paid in full. Id. Based on the record before me, I cannot find for purposes of
Guideline F at ¶ 20(c) that there are clear indications that the financial problem is under
control. The individual has not convinced me that he will be able to maintain the financial
discipline to adhere to the rigors imposed in this financial statement, given his history of
yielding to desires beyond his means.
While I found the testimony of the individual and his wife credible that they both intend
to act in a fiscally conservative manner in the future, I am concerned that the individual
has made similar representations to the LSO on three other occasions in the past and has
not had the resolve or discipline to monitor his finances. For example, in PSI #1, the
individual stated that he had no plans to establish future credit. In PSI #2, he reported
that he had closed all the credit cards he had opened after Bankruptcy #1, and had
resolved never to have credit cards again. In PSI #3, he stated that he intended to use
cash only in the future and to live within his means. And in PSI #4, he told the LSO that
his “needs and wants are more than I can handle, and I don’t know finances well enough
. . .” Ex. 4 at 73.
Moreover, I am not convinced that the individual’s good intentions will be sustainable in
the long term. Currently, the individual is receiving unemployment benefits significantly
less than the income he received while fully employed, and his children and his church
are paying for expenses beyond his current means. His employment income, when he
begins to receive it again, combined with his wife’s disability income, appears sufficient
to cover their current expenses, although they still have outstanding debts to medical
providers. My concern lies with their longstanding history of buying what they desire
when they “feel comfortable.” Fulfilling those desires—purchasing a house and a travel
trailer, which doubled their monthly housing costs when they were just making ends
meet, for example—has contributed significantly over the years to their financial
instability. At this point, I cannot look at a lengthy record of fiscally responsible
behavior following Bankruptcy #2. The individual testified that “only time is going to
prove” whether their most recent efforts will succeed. Tr. at 197.
In prior cases involving financial irresponsibility, Hearing Officers have held that “[o]nce
an individual has demonstrated a pattern of financial irresponsibility, he or she must
demonstrate a new, sustained pattern of financial responsibility for a period of time that is
sufficient to demonstrate that a recurrence of the past pattern is unlikely.” See Personnel
Security Hearing, Case No. TSO-1048 (2011); Personnel Security Hearing, Case No.
TSO-1078 (2011); Personnel Security Hearing, Case No. TSO-0878 (2010); Personnel
Security Hearing, Case No. TSO-0746 (2009); Personnel Security Hearing, Case No.
TSO-0732 (2009). At this point, it is simply too early for me to find that the individual
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has demonstrated a sustained pattern of financial responsibility for a significant period of
time relative to his lengthy past period of financial irresponsibility.
With regard to the LSO’s concerns for the individual’s truthfulness in providing
information about his finances, I also looked to the Adjudicative Guidelines, in this case,
Guideline E. Because there is no evidence that the individual willfully withheld the
existence of his 1992 judgment from the LSO, and because he did not report the 2009
judgment on the advice of his bankruptcy attorney, I find that the individual did not
deliberately conceal relevant facts from a security official or that, taken together, his
failure to report on two occasions demonstrate a pattern of intentional deception under
the circumstances. Adjudicative Guidelines at Guideline E, ¶ 17(b) (omission caused by
improper advice of legal counsel can mitigate concern). The discrepancies between the
financial statements provided in the Bankruptcy #2 petition and to the LSO in April 2011
raise some concern, because the LSO contends that, by reporting no food or clothing
expenses to the bankruptcy court, the individual intentionally overstated his financial
health, in order to obtain approval of his request to reaffirm his debts on his house and
travel trailer. Tr. at 36. I cannot find that the individual deliberately engaged in such
deception on the basis of the evidence presented, which indicates more accurately that he
has little sophistication in the workings of bankruptcy, despite his two experiences with
it, and appeared not to know at PSI #4 whether those debts were to be reaffirmed. I
therefore conclude that the individual did not engage in conduct that raises concerns
under Guideline E of the Adjudicative Guidelines.
Based on the foregoing, I find that the individual has not mitigated the security concerns
associated with Criterion L.
C. Conclusion
In the above analysis, I have found that there was sufficient derogatory information in the
possession of the DOE that raises serious security concerns under Criterion L. After
considering all the relevant information, favorable and unfavorable, in a comprehensive
common-sense manner, including weighing all the testimony and other evidence
presented at the hearing, I have found that the individual has not brought forth sufficient
evidence to mitigate the security concerns associated with Criterion L. I therefore cannot
find that restoring the individual’s access authorization will not endanger the common
defense and is clearly consistent with the national interest. Accordingly, I have
determined that the individual’s access authorization should not be restored. The parties
may seek review of this Decision by an Appeal Panel under the regulations set forth at
10 C.F.R. § 710.28.
William M. Schwartz
Hearing Officer
Office of Hearings and Appeals
Date: February 9, 2012