PSH-12-0020

* 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: March 7, 2012 )
) Case No.: PSH-12-0020
)
___________________________________ )
Issued: June 11, 2012
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Hearing Officer Decision
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Kent S. Woods, Hearing Officer:
This Decision considers the eligibility of XXXXXXX XXXXXXX (hereinafter referred to as
“the individual”) to hold an access authorization 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.” As explained below, it is my decision that the individual’s access
authorization should not be restored at this time.
I. BACKGROUND
The individual is employed by a DOE contractor, and has held a DOE access authorization for
several years. Based on financial issues contained in the individual’s security file, the Local
Security Office (LSO) issued letters of interrogatory (LOI) to the individual in August 2009 and
June 2011. DOE Exs. 18 and 16. The LSO also conducted Personnel Security Interviews (PSIs)
with the individual in December 2010, November 2011 and December 2011. DOE Exs. 20, 21
and 22.
In January 2012, the LSO issued the individual a Notification Letter, together with a Summary of
Security Concerns (Enclosure 2) setting forth the information that created a substantial doubt
about his eligibility to hold a DOE security clearance. (DOE Ex. 1). Specifically, the LSO
alleges that the individual has current delinquent debts totaling more than $185,000. In addition,
the letter states that the individual has exhibited financial irresponsibility, including an
established pattern of an unwillingness or inability to satisfy his delinquent debts, and that he has
not acted on assurances that he provided to the LSO that he would resolve these debts. These
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alleged actions by the individual raise security concerns under the provisions of 10 C.F.R.
§ 710.8(l) (Criterion L). Id.
In February 2012, the individual requested a hearing (hereinafter “the hearing”) to respond to the
concerns raised in the Notification Letter. DOE Ex. 2. On March 9, 2012, the Office of
Hearings and Appeals Director appointed me the Hearing Officer in this case. At the hearing I
convened in this matter, I received testimony from five witnesses. The individual, who was
represented by counsel, testified and presented the testimony of his wife, a neighbor/co-worker, a
military co-worker, and his current bankruptcy attorney.1 Testimony at the hearing focused on
the circumstances that contributed to the individual’s financial problems, and the efforts he has
made to resolve his delinquent debts.
II. APPLICABLE STANDARDS
A DOE administrative review proceeding under this Part is not a criminal case, in which the
burden is on the government to prove the defendant guilty beyond a reasonable doubt. In this
type of case, we apply a different standard, which is designed to protect national security
interests. A hearing is “for the purpose of affording the individual an opportunity of supporting
his eligibility for access authorization.” 10 C.F.R. § 710.21(b)(6). The burden is on the
individual to come forward at the hearing with evidence to convince the DOE that granting or
restoring his access authorization “would not endanger the common defense and security and
would be clearly consistent with the national interest.” 10 C.F.R. § 710.27(d). This standard
reflects a presumption against granting or restoring a security clearance. See Dep’t of Navy v.
Egan, 484 U.S. 518, 531 (1988) (the “clearly consistent with the interests of national security
test” for the granting of 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).
III. FINDINGS OF FACT AND ANALYSIS
A. The Individual Has Raised Security Concerns Involving Financial Irresponsibility
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 states that, in his 2009 LOI,
the individual acknowledged responsibility for $162,532 in delinquent debts and stated his
intentions to settle all his delinquent debts and take charge of his bills. 2009 LOI, DOE Ex. 18.
Despite his stated intentions, a credit report dated November 29, 2010, showed that he still owed
$162,807 in collection and charged off accounts. DOE Ex. 17. At his December 2010 PSI, the
individual again stated his intentions to resolve his delinquent debts. However, at his November
2011 PSI, the individual admitted that since the December 2010 PSI, he had not taken any action
to resolve his delinquent finances, and his October 2011 credit report (DOE Ex. 15) indicated a
total of $185,459 in collection accounts and charged off accounts. Based on these facts, the LSO
1 The individual’s current bankruptcy attorney has extensive experience in chapter 7 and 13 bankruptcy.
See Individual’s Exhibit B; Hearing Transcript (TR) at 36-37.
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concludes that the individual has demonstrated financial irresponsibility including an established
pattern of an unwillingness or inability to satisfy his debts. Enclosure 2, DOE Ex. 1.
The individual’s failure to satisfy his debts and to 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.
Similarly, the individual’s failure to file his 2010 tax returns in a timely manner, and his failure
to correctly report and calculate his tax liability on his 2008 returns may indicate a lack of ability
or willingness to comply with laws, rules and regulations in the future. See Personnel Security
Hearing, Case No. TSO-0457 (2007).2 Accordingly, I conclude that the allegations raised by the
LSO raise valid concerns regarding the individual’s eligibility for access authorization. The
burden is with the individual to come forward with evidence to mitigate those concerns.
B. The Individual’s Contentions at the Hearing
At the hearing, the individual contended that his overdue debt was incurred during a period prior
to August 2009 when his wife was managing the family finances. He stated that his wife acted
without his knowledge when she incurred extensive credit card debt, and when she failed to
make payments on their home mortgage loan and their home equity line of credit. He stated that,
as a result, their house was foreclosed in December 2009, and they were required to move to a
rental property. He stated that he took complete control of the family finances in about August
2009, and that his family has lived within a budget and not incurred additional debt since that
time. With regard to his existing overdue debt, he asserted that in 2010 and 2011, he and his
wife consulted with bankruptcy attorneys but had difficulty agreeing on how to proceed. He
stated that in 2012 they filed a petition for Chapter 7 bankruptcy which will resolve their existing
debts.
I have carefully considered the record of this proceeding, including the testimony of the
witnesses presented at the hearing. In resolving the question of the individual’s eligibility for
access authorization, I have been guided by the applicable factors prescribed in 10
C.F.R. § 710.7(c)3 and the Adjudicative Guidelines. As discussed below, I conclude that the
individual’s access authorization should not be restored at this time.
2 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.
3 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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1. The Individual’s Financial Problem Arose from Circumstances Outside his Control
The Adjudicative Guidelines indicate that security concerns relating to failure to meet financial
obligations can be mitigated by showing that the conditions that resulted in the financial problem
were largely beyond the person’s control and that the individual acted responsibly under the
circumstances. See Adjudicative Guidelines, Guideline F, ¶ 20(b). The individual asserted that
he managed his finances in a responsible manner prior to his marriage in 2004. TR at 240. The
individual’s current bankruptcy attorney testified that she reviewed the individual’s credit record
for the last decade to verify that he was not a serial filer of chapter 7 bankruptcy petitions. She
testified that the individual’s earlier credit reports show his accounts as paid or “no balance” with
available credit. TR at 126.
The individual testified that his wife took over management of the family finances when he had
deployments with the military overseas in 2004 and 2005. He stated that on his return in 2005,
he was counseled by the military that he should not disturb his spouse’s household management
by asserting authority over financial matters. TR at 243-246. He presented the testimony of a
military co-worker who recalled that they received this counseling from the military. TR at 31.
The individual testified that his wife assured him that she was managing their financial affairs
responsibly. TR at 249. His wife testified that when she began to lose control of credit accounts
in 2007, 2008 and 2009, and that she kept this information from her husband. She stated that she
had the only key to the family’s mailbox in their residential complex, and that she made certain
that the individual never saw credit statements with overdue balances. TR at 182-186. The
individual’s neighbor/co-worker testified that she observed the individual’s wife during this
period engaged in apparent efforts to hide her purchases from the individual. TR at 25-26. The
individual stated that it was not until the summer of 2009, when he accessed his credit report,
that he discovered the overdue credit card, home equity loan, and mortgage debt. TR at 249-252.
Based on this testimony, I find that the individual’s debts incurred in 2007, 2008 and 2009 were
not attributable to the individual’s poor self-control, lack of judgment concerning financial
expenditures, or unwillingness to abide by rules and regulations regarding the payment of
financial obligations. The evidence indicates that the individual reasonably relied on his wife’s
assurances that she was adequately managing the family’s finances, and that this reliance was
misplaced. As discussed further below, the individual has demonstrated that he can take control
of his family’s finances and manage their living expenses appropriately. He testified that he
intends to remain in control of the family finances. Accordingly, I find that the individual has
mitigated the concerns arising from his accumulation of overdue debt during the period from
2007 until 2009. However, the individual also must show that he has acted responsibly to
resolve his financial problem.
2. The Individual Has Not Incurred Significant Additional Overdue Debt in the Last Two Years
The individual testified that following his discovery of his family’s indebtedness in August 2009,
his wife continued to make efforts to obtain a refinancing of the family’s home mortgage. He
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stated that these efforts ended in failure, and that he was shocked when he arrived home in
December 2009 to find an eviction notice placed on his front door. TR at 253, 265. His wife
confirmed this account, stating that she reassured the individual that she was working on
refinancing the mortgage. TR at 187. The individual testified that following his family’s move
to a rental property in January 2010, he has exercised complete control over his family’s
finances. He testified that no one in his family currently is using credit cards, and that he is
insistent that his family follow the advice of their bankruptcy attorney and live frugally. His
bankruptcy attorney testified that the family has adopted a lower cost telephone plan, and has
curtailed some expensive educational programs for their children. TR at 163. The current
income and current expenditure schedules attached to the individual’s Petition for Bankruptcy
indicate that the individual’s family income and expenses are evenly balanced at the present
time. The individual testified that he is considering eliminating his older child’s school tuition
expenses by sending her to public school, but that this decision is difficult because his child has a
learning disability. TR at 228-229.
The documentary evidence indicates that the individual and his family have not incurred
significant additional indebtedness since January 2010.4 The individual’s April 2012 credit
report shows no new debts originating since January 2010. DOE Ex. 24. While the individual’s
overdue debt increased from $162,807 reflected on his November 2010 credit report (DOE Ex.
17) to $185,459 on his October 2011 credit report (DOE Ex. 15), the individual’s bankruptcy
attorney testified that this increase appeared to be attributable to additional fees attached to the
old debts, and to double reporting of some of the credit card debt by both the original lender and
the collection agency. TR at 63-64.
Based on the individual’s explanations and evidence, I find that he has mitigated the concerns
that his extensive indebtedness indicates that he cannot responsibly manage his family’s
finances. His financial record from January 2010 to the present indicates that, under his financial
management, his family has acted responsibly to avoid incurring additional debt, is living within
its means, and that the individual is open to additional measures to reduce his family’s living
expenses. I therefore conclude that the situation resulting in his substantial overdue indebtedness
is “unlikely to recur in the future” and “does not cast doubt on [his] current reliability,
trustworthiness, or good judgment.” See Adjudicative Guidelines, Guideline F, ¶ 20.
3. The Individual Has Made Sporadic Efforts Since 2009 to Resolve His Extensive Overdue
Debt
However, in order to mitigate the LSO’s concerns, the individual must show that he is capable
not only of responsibly managing his family’s current finances, but also of resolving his
substantial overdue indebtedness. As noted above, the Statement of Concerns asserts that the
individual repeatedly assured the LSO in 2009, 2010 and 2011 that he was making efforts to
resolve his indebtedness, while his credit reports indicated no progress towards this objective. At
the hearing, the individual asserted that after he learned of his overdue debt, he contacted a
4 The individual’s 2012 credit report indicates that two collection accounts were opened in 2011, one for $422 and
one for $194. 2012 credit report at 1, DOE Ex. 24. The individual’s bankruptcy attorney testified that the debts for
these collection accounts could have been incurred up to four years prior to the collection account being opened.
TR at 105-108.
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financial counseling law firm to obtain advice on how to resolve his overdue debt, and was
advised not to pay any of his charged-off debts if he intended to file for bankruptcy. TR at 286-
287. In a post-hearing clarification, the individual’s counsel stated that a letter from this firm
indicates only that the individual and his wife met with an attorney from that firm on
September 28, 2009. See April 27, 2012, letter from the financial counseling firm attached to
individual’s counsel’s May 3, 2012, letter. According to his counsel, the individual and his wife
are confident that they communicated with this attorney on several additional occasions
following the initial consultation. The individual’s counsel notes in his May 3, 2012, letter that,
as late as December 2009, the individual assured the LSO that this attorney would soon file a
petition for the reorganization of the individual’s debt in chapter 13 bankruptcy. See May 3,
2012, letter at 2 citing individual’s January 2010 QNSP at 21, DOE Ex. 19. The individual’s
wife testified that their former bankruptcy attorney seemed unsure as to whether they would
qualify for either chapter 13 or chapter 7 bankruptcy. TR at 206. She stated that she and her
husband finally decided not to proceed with that attorney because of the warnings he gave them
about the financial strain that chapter 13 bankruptcy would place on them, and because they did
not believe that they could afford the cost of filing the petition. She testified that they later
realized that the individual had legal insurance through his employer that would cover the cost of
filing for bankruptcy. After speaking with friends at his workplace, the individual first contacted
their current bankruptcy attorney in late 2010. TR at 205-209.
The individual’s bankruptcy attorney testified that she had several telephone conversations with
the individual and his wife beginning in early 2011, and finally had a formal meeting with them
in December 2011. TR at 41. She stated that initial consultations often take a year or more
because couples have to evaluate all of the options and reach agreement on their approach. She
testified that the individual was prepared to go forward, but that the individual’s wife was
opposed, so she suggested couple counseling to help them resolve their differences. She stated
that over several months, the individual and his wife made good progress in reaching agreement
concerning their present chapter 7 bankruptcy filing. TR at 42-44. She stated that having a joint
petition was important because, in their state, creditors could seek to collect the debt from a non-
filing spouse. TR at 40.
Based on this record, I find that while the individual has been engaged in efforts to resolve his
indebtedness through most of the period from August 2009 to the present, he has been dilatory in
committing himself to a course of action to resolve his debts. The individual admits that the
resolution of his debts through bankruptcy has taken “longer than it should have” and “longer
than necessary at some points.” TR at 272. However, I also accept the current bankruptcy
attorney’s testimony that couples need time to evaluate options, and reach agreement on a
financially viable resolution to their debt. Under these circumstances, I conclude that the
individual’s efforts over this period and his recent bankruptcy filing have mitigated the concern
that his failure to take decisive action to resolve his overdue debts until early 2012 indicates a
willful pattern of financial irresponsibility.
4. The Completion of the Individual’s Bankruptcy Will Resolve his Overdue Debt
The individual asserts that the filing of his chapter 7 bankruptcy proceeding resolves the issue of
his outstanding debt. The individual’s bankruptcy attorney testified that she recommended that
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the individual and his wife file a chapter 7 bankruptcy petition because she concluded that the
individual’s wages were not so high that he could fund a chapter 13 plan, and because the
individual had had a second mortgage on his home that had not been discharged by the
foreclosure. TR at 46-47. She stated that in January 2012, she filed a petition for a chapter 7
bankruptcy for the individual and his wife. She stated that after this filing, she had two weeks to
provide all required documentation. TR at 100. She testified that although the individual was
“pretty responsive” in providing this documentation, but that she was not absolutely certain of all
of the dollar amounts, so she withdrew that petition. TR at 101. His bankruptcy attorney
testified that a second fully documented petition was filed in April 2012 that is now pending
before the court. She testified that the individual’s creditors will be notified and have an
opportunity to meet with the individual, his wife and the bankruptcy trustee. This meeting is
followed by a statutory period where the creditors have an opportunity to object. Once that time
period has expired, the court can discharge the debts. She stated that if there are no objections,
the court could discharge the debts by mid-August 2012. TR at 101-103.
I find that completion of the chapter 7 bankruptcy will resolve the individual’s substantial
overdue debt and mitigate the concerns arising from his indebtedness. See Adjudicative
Guideline F, ¶ 20(d). Resolving these debts is important in that it means the individual will not
be, due to his financial situation, “subject to pressure, coercion, exploitation, or duress” which
may cause the individual “to act contrary to the best interests of national security.” 10 C.F.R.
§ 710.8(l). Moreover, the circumstances surrounding the individual’s decision to file for
bankruptcy protection in the present case compare favorably to the kind of abuse of the system
demonstrated in other cases before this office. See, e.g., Personnel Security Hearing, Case No.
VSO-0386 (2000) (credible testimony that the individual, after planning to file for bankruptcy,
went on to accumulate significantly more debt in anticipation of having the additional debt
eventually discharged). However, the court has not taken action to discharge the individual’s
debts, so I cannot find at this time that the concerns arising from the individual’s substantial
overdue debt have been resolved. The testimony of the individual’s bankruptcy attorney
indicates that the individual’s creditors may submit objections to the court concerning the
discharge of these debts.
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-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). However, in the present case, the individual has shown that the circumstances leading
to his indebtedness were largely outside his control. Moreover, he has demonstrated two years
of financial responsibility with regard to his management of his family’s finances. Accordingly,
I conclude that once the bankruptcy court has discharged the individual’s overdue debts, the
individual will have mitigated the LSO’s Criterion L security concerns.
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IV. 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 of 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 at this time. 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.
Kent S. Woods
Hearing Officer
Office of Hearings and Appeals
Date: June 11, 2012