PSH-12-0027

* 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 28, 2011 )
) Case No.: PSH-12-0027
__________________________________________)
Issued: August 1, 2012
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Hearing Officer Decision
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Richard A. Cronin, Jr., Hearing Officer:
This Decision concerns the eligibility of XXXXXXXXXXXXXX (“the Individual”), an
employee at a DOE facility, to hold a Department of Energy (DOE) access authorization.1 This
Decision will consider whether, based on the testimony and other evidence presented in this
proceeding, the Individual’s suspended DOE access authorization should be restored. For the
reasons detailed below, I find that the DOE should not restore the Individual’s access
authorization at this time.
I. BACKGROUND
In October 2011, pursuant to an investigation, the Local Security Office obtained the
Individual’s credit report. The credit report indicated that the Individual had a number of
accounts either in collection or which were charged off. Exhibit (Ex.) 13 at 1-6. Consequently,
the DOE facility’s Local Security Office (LSO) conducted a personnel security interview (PSI)
with the Individual in January 2012. Ex. 19. The 2012 PSI failed to resolve the security concerns
due to the Individual’s excessive indebtedness. Consequently, the LSO, in a February 2012
notification letter (Notification Letter) informed the Individual as to the derogatory information
that raised security concerns under 10 C.F.R. § 710.8 (l) (Criterion L). Ex. 1. The Notification
Letter also informed the Individual that his security clearance was suspended and that he was
entitled to a hearing before a Hearing Officer in order to resolve the security concerns. Id.
1 Access authorization, also known as a security clearance, is an administrative determination that an individual is
eligible for access to classified matter or special nuclear material. 10 C.F.R. § 710.5.
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The Individual requested a hearing on this matter. At the hearing, the DOE counsel introduced
23 exhibits into the record (Exs. 1-23). The Individual presented his own testimony, as well as
the testimony of three co-workers. See Transcript of Hearing, Case No. PSH-12-0021
(hereinafter cited as “Tr”). The Individual additionally submitted four exhibits (Exs. A-D) into
the record.
II. REGULATORY STANDARD
The regulations governing the Individual’s eligibility for access authorization are set forth at
10 C.F.R. Part 710, “Criteria and Procedures for Determining Eligibility for Access to Classified
Matter or Special Nuclear Material.” The regulations identify certain types of derogatory
information that may raise a question concerning an individual’s access authorization eligibility.
10 C.F.R. § 710.10(a). Once a security concern is raised, the individual has the burden of
bringing forward sufficient evidence to resolve the concern.
In determining whether an individual has resolved a security concern, the Hearing Officer
considers relevant factors, including the nature of the conduct at issue, the frequency or recency
of the conduct, the absence or presence of reformation or rehabilitation, and the impact of the
foregoing on the relevant security concerns. 10 C.F.R. § 710.7(c). In considering these factors,
the Hearing Officer also consults adjudicative guidelines that set forth a more comprehensive
listing of relevant factors. See 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).
Ultimately, the decision concerning eligibility is a comprehensive, common-sense judgment
based on a consideration of all relevant information, favorable and unfavorable. 10 C.F.R.
§ 710.7(a). In order to reach a favorable decision, the Hearing Officer must find that “the grant or
restoration of access authorization to the individual would not endanger the common defense and
security and would be clearly consistent with the national interest.” 10 C.F.R. § 710.27(a). “Any
doubt as to an individual’s access authorization eligibility shall be resolved in favor of the
national security.” Id. See generally Dep’t of the Navy v. Egan, 484 U.S. 518, 531 (1988) (Egan)
(the “clearly consistent with the interests of national security” test indicates that “security
clearance determinations should err, if they must, on the side of denials”).
III. FINDINGS OF FACT AND ANALYSIS
A. Whether the LSO Properly Invoked Criterion L
1. Failure to File Tax Returns and Delinquent Accounts
The facts of this case are essentially undisputed. Tr. at 41-42, 54-56, 58-59, 67-70. During a
1989 PSI, the Individual confirmed that he had filed for bankruptcy in 1980. Ex. 22 at 39-41.
Later, the Individual, in a September 1999 “letter of interrogatory” (LOI) reported that he had
filed a Chapter 13 bankruptcy in January 1999. Ex. 16. In two other PSIs, conducted in 2006 and
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2008, the LSO informed the Individual as to DOE’s concerns regarding financial irresponsibility.
The Individual assured the LSO interviewers that he would resolve various outstanding financial
issues he was experiencing at the time of the PSIs. Ex. 21 at 134, 150-51; Ex. 20 at 48-49; Ex. 6
at 3
The Individual’s 2011 credit report revealed that the Individual had nine credit accounts that had
defaulted into collection accounts totaling $22,392 as well as two credit accounts which had been
charged off by the debt holders totaling $1,968. Ex. 13. In a Questionnaire for National Security
Positions (QNSP) completed by the Individual in October 2011, the Individual admitted that he
owed the Internal Revenue Service (IRS) $63,000 for delinquent federal income taxes for the
years 2007 through 2010. Ex. 17 at 2.
During the 2012 PSI, the Individual confirmed the debts outlined in the October 2011 credit
report and QNSP. Ex. 19 at 91-111, 116-18, 120-23, 130-32, 213-14. Additionally, the
Individual revealed that he had two automobiles which were repossessed for failure to make the
required payments on a credit balance of totaling $17,031 for both automobiles. Ex. 19 at 143-
47. The Individual also revealed that, as of the date of the 2011 PSI, he had not made any
payments on his tax debt since August 2011. Ex. 19 at 119.
2. The Associated Security Concerns
Criterion L concerns circumstances tending to show that an 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). Unwillingness to abide by rules and
regulations, such as the requirement to file income tax returns, can raise questions about an
individual’s reliability, trustworthiness and ability to protect classified information. Adjudicative
Guidelines Guideline F, ¶ 19(g); Personnel Security Hearing, Case No. TSO-1072 (October 17,
2011). Additionally, failure to honor debts may indicate a questionable judgment and reliability.
Adjudicative Guidelines Guideline F, ¶ 18; Personnel Security Hearing, Case No. PSH-12-0010
(March 5, 2012). Given the information indicating that the Individual has a history of financial
delinquencies and has failed to file federal tax income returns for a number of years, the LSO
had sufficient grounds to invoke Criterion L.
B. Whether the Individual Has Mitigated the Security Concerns
At the hearing, the Individual presented his own testimony and that of three co-workers to
establish that he is now addressing his tax and financial problems and that he has consistently
demonstrated good judgment and reliability. This testimony is summarized below.
The Individual attributed his 1980 bankruptcy to expenses from his then-wife’s serious illness.2
Tr. at 41, 44; see Ex. 21 at 6. The 1999 bankruptcy resulted from expenses arising from his
2 In a 2006 PSI, the Individual stated that this bankruptcy was caused, in part, from expenses arising from the
divorce of his then-wife and financial obligations, such as child support, that resulted from the divorce. Ex. 21 at 6-
7.
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daughter’s illness and excessive purchases made by his wife and daughter. These debts caused
the Individual to file his 1999 bankruptcy.3 Tr. at 42-43; see Ex. 21 at 8. As for his current
indebtedness, the Individual noted that in 2005 he was beginning to experience financial
difficulties. Tr. at 47, 67. This financial difficulty was aggravated by the Individual’s intermittent
financially support of a number of his family members - his daughter and her husband and
children, the Individual’s son and his children beginning in 2007. Tr. at 44-45, 49. As many as
10 family members have lived in the Individual’s house at times from 2007 through 2009. Tr. at
45-46, 49. During this time, the Individual was also paying his daughter’s medical expenses. Tr.
at 47-49. Additionally, unknown to the Individual until recently, his wife was diverting money to
pay for her gambling expenses.4 Tr. at 49, 63.
Because of the Individual’s financial difficulties, including his daughter’s medical expenses, the
Individual cashed in his retirement plan savings, when offered the opportunity following a
change of employment in 2008. Tr. at 47, 69. Because of the tax liability from the cashing-in of
his retirement plan, the Individual incurred a large tax liability in 2008 which he was unable to
pay.5 Tr. at 47, 69-71, 75-77. As for his failure to file his tax returns in 2007 and 2009, the
Individual testified that he gave his wife money to pay the expected taxes for those years but she
did not file the returns. Tr. at 69-70. The Individual delayed addressing the problem, in part,
because of his realization that he could not pay the accumulated back taxes. Tr. at 71-72, 75. In
April 2012, the Individual testified that he employed a firm to resolve his tax problems.6 Tr. at
50-52; Ex. A, B, C. The Individual has now filed tax returns for each of the years in question. Tr.
at 69. With regard to his potential tax liability, the Individual believes that, with penalties, his
liability might be as much as $80,000. Tr. at 55. The firm representing him before the Internal
Revenue Service (IRS) has informed him that it will negotiate a payment plan with the IRS to
resolve his tax liability. Tr. at 57; Ex. C.
The Individual testified that, in May 2012, he employed another firm to negotiate with his
current creditors. The firm is trying to resolve these debts by establishing a regular payment plan
for his creditors. Tr. at 57, 60-62. The Individual did not try to seek professional help sooner
because he attempted to work out his financial problems with his wife with professional
counseling. Tr. at 64.
The co-workers testified as to the Individual’s excellent work record and the fact that the
Individual did not have any disciplinary actions taken against him as an employee. Tr. at 12, 26,
31. The co-workers also testified as to the Individual’s good character. Tr. at 14, 25, 36. Further,
3 The Individual, in a 2006 PSI, stated that his 1999 bankruptcy also originated from his wife’s and daughter’s
excessive spending. Ex. 21 at 8.
4 As of the time of the hearing, the Individual is in the process of divorcing his wife. Tr. at 62, 74; Ex. D.
5 The Individual also testified that he had requested his former employer withhold money for the retirement account
to pay taxes. Tr. at 72. However, the Individual did not take into account his regular employment income and so he
did not have sufficient funds to pay the tax liability. Tr. at 72.
6 In February 2012 the Individual contacted another firm to help him resolve his tax difficulties but eventually
decided that he could not afford the firm’s fees. Tr. at 74.
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the co-workers believed that the Individual’s judgment and reliability were excellent. Tr. at 14,
25, 35-36.
In deciding whether an individual has mitigated the security concerns associated with his
financial issues and failure to file taxes, a Hearing Officer must consider all relevant factors
having a bearing on an individual’s fitness to obtain or retain a security clearance. See 10 C.F.R.
§ 710.7(c). According to the Adjudicative Guidelines, among the factors that may serve to
mitigate security concerns raised by an individual’s financial problems or his failure to file
required tax returns, are that the conduct happened long ago or was infrequent; the financial
problems were largely beyond the person’s control and the individual acted responsibly under
the circumstances; or that an individual has initiated a good faith effort to repay his or her
outstanding creditors. Adjudicative Guidelines, Guideline F, ¶ 20; see Personnel Security
Hearing, Case No. TSO-0971 (March 1, 2011) (individual filed tax returns once he received
necessary information from bankruptcy trustee); Personnel Security Hearing, Case No. TSO-
1072 (October 17, 2011).
I find, as mitigation, that the Individual has taken initial steps to resolve his financial problems
with the employment of two firms to negotiate with his creditors and create a payment plan to
resolve his debts and tax liability. Further, the testimony indicates that the Individual is a capable
worker. Nonetheless, after examining all of the testimony and other evidence presented in this
case I cannot find that the Individual has resolved the security concerns raised by his financial
indebtedness and his failure to file tax returns.
At the hearing, the Individual has attributed many causes to his financial problems over the years
– illness of family members, the need to support a significant number of family members, his
wife and daughter’s excessive spending and his wife’s diversion of money for gambling.
Nonetheless, I find that the Individual’s failure to effectively monitor his finances for significant
periods of time and his failure to take prompt measures to address financial concerns are key
factors that have resulted in bankruptcies in 1980 and 1999 and his current financial difficulties.
See Tr. at 75-76 (Individual’s work hours and long commute prevented financial discussions
with his family); Tr. at 70 (Individual failed to monitor incoming mail); Ex. 20 at 40, 43
(Individual admitting that in regard to financial matters, he should have been “more aware” and
was “probably not paying attention as I should”). Despite his testimony that he knew about his
family’s current financial problems in 2005, the Individual did not undertake effective steps to
address his financial problems until 2012. Tr. at 64. I also note that the Individual admitted at the
hearing that he has at times assumed financial burdens when he was under financial stress and
for which he had no legal responsibility to do so. Tr. at 92. The Individual’s failure to balance his
financial commitments with his own financial resources also contributes to the security concerns
raised by his current financial situation.
The Individual’s lack of judgment regarding financial issues is highlighted by the fact that the
Individual was informed in two separate PSIs (conducted in 2006 and 2008) as to the DOE’s
concern with his financial indebtedness. Tr. at 80; Ex. 21 at 150-51; Ex. 20 at 48-49; Ex. 6 at 3.
Despite commitments to resolve his financial situation made in the 2006 and 2008 PSIs, the
Individual did not fulfill his intention to resolve his debts. Ex. 21 at 134.
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These significant concerns have not been resolved by the Individual’s very recent and
preliminary attempts to address his financial problems. Further, the Individual has not
demonstrated a recent period of successful financial management. Given the Individual’s
significant history of financial problems, his lack of a demonstrated period of successful
financial management, and the preliminary stage of his attempts to resolve his debts, I cannot
find that the security concerns raised by his indebtedness have been resolved.
I also find that the Individual has not resolved the security concern raised by his failure to file
federal tax returns. The Individual has demonstrated several mitigating factors on his behalf – his
employment of a firm to negotiate with the IRS, his attempts to establish a payment plan with the
IRS, and his filing of the tax returns in question. However, even if I were to accept the
Individual’s assertion that his wife was responsible for failing to file several of the returns in
question, the significant number of years where tax returns were not filed lead me to conclude
that the Individual failed to exercise reasonable supervision as to his legal obligation to file
federal tax returns. Further, the Individual exercised a significant lack of judgment in not
addressing his 2008 tax liability immediately. The Individual has not yet begun a payment plan
to pay off his back taxes and the exact amount of his tax liability has not yet been established.
Given the factors outlined above, I cannot conclude that, as of the date of the hearing, the
Individual has provided sufficient mitigation to resolve the concerns raised by the failure to file
timely federal income tax returns from 2007 through 2010.
The record indicates that the Individual is a dedicated employee who performs his job
responsibilities well. Nonetheless, the Individual has only recently begun to remedy his tax
issues and to address his financial problems. Absent a longer period where the Individual
demonstrates compliance with his federal tax and financial responsibilities, I cannot find, as of
the date of the hearing, that the Criterion L concerns have been resolved. See Personnel Security
Hearing, Case No. PSH-12-0044 (July 20, 2012) (despite individual’s excellent work,
individual’s recent repeated failure to file tax returns and resolve his financial indebtedness
requires non-restoration of clearance).
IV. CONCLUSION
Upon consideration of the entire record in this case, I find that there was sufficient evidence to
raise doubts regarding the Individual’s eligibility for a security clearance under Criterion L of the
Part 710 regulations. I also find that the Individual has not presented sufficient information to
resolve the concerns raised by the Criterion L derogatory information. Therefore, I cannot
conclude that restoring the Individual’s suspended access authorization “would not endanger the
common defense and security and would be clearly consistent with the national interest.”
10 C.F.R. § 710.7(a). Accordingly, I find that the DOE should not restore the Individual’s
suspended access authorization at this time.
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The parties may seek review of this Decision by an Appeal Panel, under the regulation set forth
at 10 C.F.R. § 710.28.
Richard A. Cronin, Jr.
Hearing Officer
Office of Hearings and Appeals
Date: August 12, 2012