PSH-11-0037

* 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: December 14, 2011 )
) Case No.: PSH-11-0037
)
__________________________________________)
Issued: April 19, 2012
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Hearing Officer Decision
_______________
Steven L. Fine, Hearing Officer:
This decision concerns the eligibility of XXXXXX (hereinafter referred to as "the Individual")
to obtain a security clearance under the regulations set forth at 10 C.F.R. Part 710, entitled
“Criteria and Procedures for Determining Eligibility for Access to Classified Matter or Special
Nuclear Material.” For the reasons set forth below, I conclude that the Individual’s security
clearance should not be restored.
I. BACKGROUND
This case involves an Individual with a pattern of failing to meet his financial obligations dating
back to 1993. A Local Security Office (LSO) has been monitoring the Individual’s financial
situation since his original application for a security clearance in 2000. In 2006, the LSO
received information indicating that the Individual had a large number of delinquent debts. The
LSO subsequently conducted a series of five Personal Security Interviews (PSI) of the
Individual, the most recent on September 29, 2011.
Unable to resolve the security concerns raised by the Individual’s continuing financial issues,
and by the sometimes inconsistent and contradictory information provided by the Individual, the
LSO initiated administrative review proceedings by issuing a letter (Notification Letter) advising
the Individual that it possessed reliable information that created a substantial doubt regarding his
eligibility to hold a security clearance. In the Notification Letter, the LSO set forth the
derogatory information at issue and advised that the derogatory information fell within the
purview of potentially disqualifying criteria set forth in the security regulations at 10 C.F.R.
2
§ 710.8, subsection (l).1
The Notification Letter informed the Individual that he was entitled to a hearing before a Hearing
Officer in order to resolve the substantial doubt regarding his eligibility for access authorization.
The Individual requested a hearing, and the LSO forwarded his request to the Office of Hearings
and Appeals (OHA). The Director of OHA appointed me as the Hearing Officer in this matter
on December 19, 2011.
At the hearing I convened pursuant to 10 C.F.R. § 710.25(e) and (g), I took testimony from the
Individual, his spouse, his daughter, his coworker, and a family friend. See Transcript of
Hearing, Case No. PSH-11-0037 (hereinafter cited as “Tr.”). The LSO submitted 34 exhibits,
marked as Exhibits 1 through 34, and the Individual submitted five exhibits, marked as Exhibits
A through E.
II. STANDARD OF REVIEW
The Hearing Officer's role in this proceeding is to evaluate the evidence presented by the agency
and the Individual and to render a decision based on that evidence. See 10 C.F.R. § 710.27(a).
The regulations state that “[t]he decision as to access authorization is a comprehensive,
common-sense judgment, made after consideration of all relevant information, favorable or
unfavorable, as to whether the granting or continuation of 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 have considered the following factors in rendering this decision: the nature, extent,
and seriousness of the conduct; the circumstances surrounding the conduct, including
knowledgeable participation; the frequency and recency of the conduct; the Individual's age and
maturity at the time of the conduct; the voluntariness of the Individual's 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. See 10 C.F.R.
§§ 710.7(c), 710.27(a). The discussion below reflects my application of these factors to the
testimony and exhibits presented by both sides in this case.
1 Specifically, the Notification Letter alleges that the Individual has:
Engaged 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. Such conduct or circumstances include, but are
not limited to, criminal behavior, a pattern of financial irresponsibility, conflicting
allegiances, or violation of any commitment or promise upon which DOE
previously relied to favorably resolve an issue of access authorization eligibility.
10 C.F. R. § 710.8(l)
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III. FINDINGS OF FACT
The Individual has exhibited a longstanding pattern of financial distress dating back to at least
1993, when he declared Bankruptcy. In his responses to a Letter of Interrogatory (LOI) the
Individual stated that he declared Bankruptcy in 1993 after falling behind on his credit card
payments. Exhibit 22 at 1. The Individual’s responses to the LOI contained contradictory
information. He initially claimed: “All my accounts are paid on time and above the minimum
payment that is due,” yet he subsequently admitted that he was behind on some medical
payments (which he claimed should have been paid by his insurance) and child support payments
(which he claimed were incorrectly accessed). Id. at 3-5. He also admitted that his wages had
been garnished, in 1998, in order to pay child support. Id. at 5.
On August 6, 2006, during his five-year reinvestigation, the Individual reported 14 delinquent
accounts, totaling $60,112, as 180 days past due. Exhibit 13 at 1-2. This derogatory information
led the LSO to investigate the Individual’s finances, a process that ultimately culminated in the
present proceeding.
From January 17, 2007, onward, a pattern became apparent where the Individual, under repeated
questioning about his finances by the LSO, would always claim that his financial situation would
be resolved in the near future when he would file for Bankruptcy. This pattern was often
accompanied by the Individual’s prevarications. During a January 17, 2007, PSI, the Individual
stated that he had been working with an attorney since November 2005 in order to resolve his
financial issues by filing for Bankruptcy in the near future. Exhibit 33 at 9, 60, 100. During a
February 10, 2009, PSI, the Individual was asked about the status of his second Bankruptcy
proceeding. The Individual responded by stating that his attorney had recommended that he
delay filing until his daughter’s ongoing medical issues were resolved. Exhibit 32 at 10-11.2
However, over a year and a half later, during a September 29, 2010, PSI, the Individual admitted
that he had not yet filed for Bankruptcy. Exhibit 31 at 8. The Individual then stated that he had
delayed filing for Bankruptcy until after he received an insurance settlement for his wife’s car
accident. Id. at 27. The Individual stated that he would proceed with the Bankruptcy in the near
future since he had received the settlement. Id. at 28. Over a year later, during a September 26,
2011, PSI, the Individual again explained that he delayed filing for Bankruptcy because he knew
he was going to receive an insurance payment for the loss of his first home. Exhibit 30 at 127.
The Individual indicated that his attorney advised him to wait for two years after receiving
settlements before filing for Bankruptcy. Id. at 130. However, the record shows that the
Individual had received the insurance payment for the loss of his first house by February 2007.
Tr. at 52.
At the March 14, 2012, hearing, the DOE Counsel asked the Individual to explain why he had
not yet filed for Bankruptcy, despite having stated his intention to do so beginning in 2007. The
Individual explained that he was following his attorney’s advice to delay filing for Bankruptcy.
Tr. at 93. The Individual testified that his attorney advised him to delay filing in order to ensure
2 The Individual did present the interviewer with a letter from his attorney indicating that he
intended to file a Bankruptcy Petition on behalf of the Individual in April 2009. Exhibit 33 at
36.
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that he and his daughter could retain proceeds from two insurance settlements totaling $88,000.
Id. The attorney advised the Individual that if he were to file for Bankruptcy too soon, the
Individual’s creditors would receive the $88,000 in insurance settlements. Id. The Individual
testified that he has now filed for Bankruptcy and was going to court “to get it finalized.” Id. at
101.
Initially, during the January 17, 2007, PSI, the Individual specifically denied that any of his
children were experiencing serious medical issues. Exhibit 33 at 31. Instead, the Individual
attributed most of his debt to a number of other factors: his construction company business,
medical and dental bills, and a reduction in the number of hours worked by his wife. Id. at 39-
49. The Individual also stated that his financial situation had worsened when his Human
Reliability Program (HRP) certification was suspended in October 2006. Id. at 87-88.
However, during a February 10, 2009, PSI, the Individual attributed his financial problems to his
daughter’s illness and the suspension of his HRP certification. Exhibit 32 at 60. The Individual
stated that his daughter had been undergoing medical treatment, which required at least two
surgeries and frequent out-of-town travel. Id. at 10. The Individual indicated that his daughter’s
health issues had began about three years before this PSI. Id. at 33. The Individual further stated
that his wife had been in a serious car accident which had kept her from working for four
months. Id.
The Individual admitted that, in September of 2006, he had voluntarily allowed a 2001 Chevy
Suburban to be repossessed, because after making payments on it for five years, he still owed
more than it was worth. Exhibit 33 at 22-29, 63-65. During a February 10, 2009, PSI, the
Individual stated that he had the 2001 Chevy Suburban voluntarily repossessed because after
making payments on it for five and a half years, he still owed $32,000 for it, even though he had
purchased it for $34,000. Exhibit 32 at 16-17. In another instance when the Individual’s story
appears to have changed over time, the Individual initially claimed that at the time of the
voluntary repossession, he only had six more months of payments left before the loan on the car
was paid off.3 Id. at 17. At the hearing, however, the Individual testified that he had been
making payments on the 2001 Chevy Suburban for four and half years before having it
voluntarily repossessed.
The Individual moved his family from his first home (the first home), but left his eldest daughter
living in it with the understanding that she would reimburse her parents (the Individual and his
wife) for the monthly mortgage, utility, and insurance payments for the first home. Tr. at 50, 55-
57; Exhibit 33 at 37. The mortgage and the property title remained in the Individual’s and his
wife’s name. Exhibit 30 at 67, 123; Tr. at 57. The first home then burned down. Exhibit 30 at
68. After the first home burned down, the Individual received an insurance payment of $70,000
for the first home in 2006 or early 2007. Exhibit 30 at 68, 131; Tr. at 50, 54. The Individual
transferred that money into joint bank account shared by him, his spouse, their eldest daughter,
and her husband. Tr. at 51. While $24,000 of the insurance money was used to pay off the
mortgage on the first home, the remainder of the $70,000 was used to pay off his eldest
daughter’s vehicles and to purchase and to remodel a new home for her (the fourth house) in
3 A copy of the Individual’s credit report dated December 10, 2008, indicates that the 2001
Chevy Suburban was financed on an 84-month note. Exhibit 20 at 4.
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February of 2007. Exhibit 29 at 15-16.; Tr. at 51-53. Tr. at 133. The Individual stated that he
gave his eldest daughter the entire $70,000 because he considered the first home to be her house.
Exhibit 30 at 68, 131.4 When the first home burned down, the Individual’s eldest daughter had
been making payments for approximately a year. Exhibit 30 at 68. The Individual indicated that
he had previously been making payments on the first home for ten years. Id. at 68-69.
The Individual failed to adequately explain the circumstances surrounding the foreclosure of his
second home. During his January 17, 2007, PSI, the Individual stated that he had “skipped” the
previous month’s mortgage payment on the second home. Exhibit 33 at 82. The Individual
claimed that the lender had agreed to let him make this payment at a later date. Id. at 33 at 83.
By the time of his February 10, 2009, PSI, the Individual had moved his family out of the second
home and was now living in a third home (the third home), which he rents. Exhibit 32 at 13.
The Individual provided a difficult-to-believe account of the circumstances resulting in the
second home’s foreclosure. The Individual noted that one reason he was having difficulty
making payments on the second home was that its electric bills were higher than expected. The
Individual stated that he had purchased the second home with the understanding that he would
receive a discount on electricity. Exhibit 32 at 11. However, the Individual stated that his
electric bills at his second home averaged $500 a month. Id. at 12. During his September 26,
2011, PSI, the Individual asserted that his electric bill at the second home had increased to $500
a month from $250 a month. Exhibit 30 at 18. The Individual’s credibility was further damaged
when he initially stated that he had fallen five or six months behind on his mortgage payments
for the second home, but subsequently stated that he had fallen three months behind on his
mortgage payments on the second home. Id. at 19, 26. In an attempt to explain his apparent
inaction in the face of mounting financial issues, the Individual claimed that the lender for the
second home had initially agreed to allow the Individual to move the delinquent payments “to
the back of the loan,” if the Individual was able to make three mortgage payments in a timely
manner. Id. The Individual claimed he subsequently received a telephone call from the lender
demanding a payment of $25,000 in order to avoid foreclosure proceedings. Id. at 20. The
Individual claimed he then decided to abandon the second home and moved his family to the
third home. Id. at 22-26.
The statements made by Individual during a discussion of his outstanding tax liabilities further
eroded his credibility. During his September 26, 2011, PSI, he stated that he owed the Internal
Revenue Service (IRS) $1,100 because of an alleged mistake that his wife’s employer’s
accountant had made. Exhibit 30 at 81-82. The Individual claimed he had agreed to a payment
plan with the IRS. Id. at 86. The interviewer asked the Individual if he had a written copy of
that plan. The Individual claimed that he had not received it yet. Id. at 86-87.
IV. ANALYSIS
The record shows that the Individual has engaged in a pattern of financial irresponsibility. The
4 The Individual still owns the property where the first home once stood. Tr. at 59. The
Individual testified that he was advised not to sell this property because of the Bankruptcy.
Exhibit 30 at 134.
6
Individual’s pattern of financial irresponsibility raises significant security concerns under
Criterion L. The Revised Adjudicative Guidelines state in pertinent part:
Failure or inability to live within one's means, satisfy debts, and meet financial
obligations may indicate poor self-control, lack of judgment, or unwillingness to abide
by rules and regulations, all of which can raise questions about an individual's
reliability, trustworthiness and ability to protect classified information. An individual
who is financially overextended is at risk of having to engage in illegal acts to generate
funds . . . . Conditions that could raise a security concern and may be disqualifying
include: (a) inability or unwillingness to satisfy debts; (b) indebtedness caused by
frivolous or irresponsible spending and the absence of any evidence of willingness or
intent to pay the debt or establish a realistic plan to pay the debt; (c) a history of not
meeting financial obligations; (d) deceptive or illegal financial practices such as . . .
intentional financial breaches of trust; [and] (e) consistent spending beyond one's
means, which may be indicated by excessive indebtedness, significant negative cash
flow, high debt-to-income ratio, and/or other financial analysis. . . .
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) at ¶¶ 18, 19. In addition, the inconsistencies in the
information provided by the Individual, in his LOI, PSIs, and at the hearing, raise questions
about the Individual’s honesty, candor and trustworthiness. The Adjudicative Guidelines state in
pertinent part:
Conduct involving questionable judgment, lack of candor, dishonesty, or
unwillingness to comply with rules and regulations can raise questions about an
individual's reliability, trustworthiness and ability to protect classified
information. Of special interest is any failure to provide truthful and candid
answers during the security clearance process or any other failure to cooperate
with the security clearance process.
Adjudicative Guidelines at ¶ 15. As the discussion above illustrates, several of the financial
conditions that could raise security concerns identified by the Adjudicative Guidelines apply to
the Individual. As for possible mitigating factors, I find that the Individual has not met any of
the conditions set forth at ¶ 20(a) of Guideline F. 5 His failure to exercise good judgment,
5 Conditions that could mitigate security concerns arising from financial irresponsibility include:
(a) the behavior happened so long ago, was so infrequent, or occurred under such
circumstances that it is unlikely to recur and does not cast doubt on the individual's current
reliability, trustworthiness, or good judgment;
(b) the conditions that resulted in the financial problem were largely beyond the person's
control (e.g. loss of employment, a business downturn, unexpected medical emergency, or a
death, divorce or separation), and the individual acted responsibly under the circumstances;
(c) the person has received or is receiving counseling for the problem and/or there are clear
indications that the problem is being resolved or is under control;
(d) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve
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honesty and reliability in his financial affairs has been a long-term problem dating back to at
least 1993, and has not been resolved. The manner in which the Individual has conducted his
financial affairs casts doubt on his current reliability, trustworthiness, and judgment. I also find
that the Individual has not met the conditions set forth at ¶ 20(b) of Guideline F. While the
Individual testified that his financial setbacks have resulted, in part, from the serious illnesses of
his spouse and daughter, the pattern of failing to meet his financial obligations began before his
spouse and daughter’s illnesses.6 Moreover, the irresponsible manner in which the Individual
has reportedly failed to respond to his financial set-backs has raised significant security concerns.
In addition, the Individual has not met the conditions set forth at ¶ 20(c) of Guideline F. While
the Individual has sought credit counseling assistance, he has not shown that such counseling has
been effective. At the hearing, the Individual admitted that he has only recently implemented a
family budget or a financial plan which could reasonably be expected to resolve his financial
issues. I was not convinced that the budget presented by the Individual at the hearing and the
Individual’s filing of a petition for Chapter 7 Bankruptcy would resolve his financial issues
going forward. The Individual has presented insufficient evidence to allow me to conclude that
he is able to exert and maintain control over his finances. The Individual has similarly failed to
meet conditions set forth at ¶ 20(d) of Guideline F, since the Individual has only recently
declared bankruptcy. Finally, the Individual has not met the conditions set forth at ¶ 20(e) of
Guideline F. He has not shown that he has any reasonable basis to dispute the legitimacy of his
past-due debts and has not provided documented proof to substantiate that he has taken sufficient
action to resolve his financial issues.
Moreover, the Individual’s provision of less than credible information in his LOI and PSIs raises
doubts that he cannot be trusted to provide truthful information to DOE security officials. The
Individual’s lack of candor continued at the hearing, showing that he continues to exhibit poor
judgment, and cannot be relied upon or trusted. I was especially concerned about evidence in the
record showing that the Individual and his spouse received $88,000 in insurance settlements in
2007 and 2010 and, for the most part, did not use that money to satisfy outstanding debts, but
rather used a substantial portion of those funds to purchase and renovate a new residence for
their adult daughter. In addition, since 2006, the Individual has been repeatedly assuring LSO
officials that he intended to file for Bankruptcy in the near future. The Individual has only
recently done so. Moreover, the Individual has admittedly avoided filing for Bankruptcy in order
to prevent his insurance settlements from being included in the Bankruptcy estate and therefore
being distributed to his creditors.
The DOE security program is based on trust. Personnel Security Hearing, Case No. TSO-0920
debts;
(e) the individual has a reasonable basis to dispute the legitimacy of the past-due debt which
is the cause of the problem and provides documented proof to substantiate the basis of the
dispute or provides evidence of actions to resolve the issue. . . .
Guideline F at ¶ 20.
6 As of August 6, 2006, the Individual had $60,112 in debt that was at least 180 days past due.
Exhibit 13. In his January 17, 2007, PSI, the Individual stated that none of his children had been
having serious medical problems. Exhibit 33 at 31.
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(2010).7 If the DOE cannot fully trust an individual, then it cannot allow them access to
classified information or special nuclear materials. Accordingly, I find that the security concerns
under Criterion L raised by the Individual’s inconsistent statements and financial conduct remain
unresolved.
V. CONCLUSION
For the reasons set forth above, after carefully considering the evidence before me, I find that the
Individual has not resolved the security concerns raised under Criterion L. Therefore, the
Individual has not demonstrated that restoring his security clearance would not endanger the
common defense and would be clearly consistent with the national interest. Accordingly, I find
that the Individual’s security clearance should not be restored. The Individual may seek review
of this Decision by an Appeal Panel under the procedures set forth at 10 C.F.R. Part 710.28.
Steven L. Fine
Hearing Officer
Office of Hearings and Appeals
Date: April 19, 2012
7 Decisions issued by the Office of Hearings and Appeals (OHA) are available on the OHA
website located at http://www.oha.doe.gov. The text of a cited decision may be accessed by
entering the case number of the decision in the search engine located at
http://www.oha.doe.gov/search.htm.