PSH-12-0042

* 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: April 24, 2012 )
) Case No.: PSH-12-0042
__________________________________________)
Issued: July 31, 2012
_______________
Hearing Officer Decision
_______________
Steven L. Fine, Hearing Officer:
This decision concerns the eligibility of XXXXXXXXXXX (hereinafter referred to as "the
Individual") to maintain 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 be restored.
I. BACKGROUND
This case involves an Individual who failed to meet his financial obligations during the final
years of his first marriage. The Individual reported the repossession of his motor vehicle and a
home foreclosure to the Local Security Office (LSO) in 2008. The LSO subsequently conducted
a series of three Personal Security Interviews (PSI) of the Individual, the most recent on
February 1, 2012.
Unable to resolve the security concerns raised by the Individual’s failure to resolve his financial
issues, 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. § 710.8, subsection (l).1
1 Specifically, the Notification Letter alleges that the Individual has:
2
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 April 25, 2012.
At the hearing I convened pursuant to 10 C.F.R. § 710.25(e) and (g), I took testimony from the
Individual, his ex-spouse, his current spouse, his friend/coworker, and an expert on Bankruptcy
law. See Transcript of Hearing, Case No. PSH-12-0042 (hereinafter cited as “Tr.”). The LSO
submitted eight exhibits, marked as Exhibits 1 through 8, and the Individual submitted 11
exhibits, marked as Exhibits A through K.
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.
III. FINDINGS OF FACT
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)
3
The Individual experienced a discrete period of financial distress during the period beginning in
2006 and concluding in 2008. During the first years of their marriage, the Individual and his first
wife were financially comfortable. The Individual was employed by a DOE contractor and his
first wife was employed as a bank manager. In 2005, however, the couple purchased a new
home, at a time very near to the crest of a real estate bubble. The couple used a mortgage to
finance the purchase of this home. That mortgage had a very low fixed interest rate for the first
year. After the first year, the interest rate became an adjustable rate mortgage, and the interest
rate was set by market conditions. Shortly after purchasing a new home in 2005, the Individual
left his employment with a DOE contractor to work for another DOE contractor for considerably
less pay. Exhibit 6 at 48. The new employer offered benefits and a chance for upward mobility.
Tr. at 89-90. In 2005, the Individual’s first wife left her job in order to stay home with their
newborn son. Tr. at 15; Exhibit 6 at 61. In 2006, the couple’s mortgage reset and their payment
increased by “$1,200 or $1,300” a month. Tr. at 13. Because of the drastic reversal of the real
estate market, the couple found themselves unable to refinance their home. Moreover, they
could not pay their mortgage by selling their home, because its value had declined too steeply.
Exhibit 8 at 18.
In 2006, the Individual’s truck was repossessed. According to the Individual, this was the first
time that he became aware of his financial difficulties. Tr. at 95. The Individual testified that he
had always entrusted his financial affairs to his first wife and assumed that she was managing
them competently. Tr. at 90- 91, 97-99, 101-103. During his February 16, 2010, and
February 1, 2012, PSIs, the Individual stated that his first wife had also opened a number of
credit accounts, spent large sums of money, and had incurred substantial debt, all without his
knowledge. Exhibit 6 at 10, 15, 62, 102; Exhibit 7 at 20, 34, 39, 40. The Individual’s first wife
testified that she managed the couple’s financial affairs and concealed the true magnitude of the
couple’s financial problems from the Individual. Tr. at 16-21, 30-31. In July of 2008, the
Individual and his first wife separated. Tr. at 144. Their divorce became final in 2010. At the
time of the Individual’s separation from his first wife in July 2008, the Individual and his wife
had incurred over $47,000 in unpaid debts.
The Individual has managed his own financial affairs since he separated from his first wife. In
July 2008, the Individual created a series of computer spreadsheets to manage his finances.
Exhibits B and C. He has used these spreadsheets to monitor his accounts receivable, his
accounts payable and his current assets. Tr. at 108-110, 112. The Individual testified that he had
not incurred any unpaid debts since he separated from his first wife, even though his income has
undergone a significant reduction. Tr. at 110, 145. However, a significant portion of the unpaid
debts incurred by the Individual and his first wife prior to their separation was not repaid. The
Individual remarried in 2010, and he and his current wife are in constant communication about
their finances. Tr. at 115.
On January 19, 2009, the Individual and his first wife retained an attorney (the Bankruptcy
Attorney) with the understanding that he would file a Bankruptcy Petition on behalf of the
Individual and his first wife that would discharge the debts that remained at the time of their
separation. The Individual paid this attorney a total of $1,300 to cover attorney fees and filing
costs during November and December 2009. The Chapter 7 Bankruptcy Petition was not filed
4
until March 30, 2012. Exhibit A at 1. The Bankruptcy Court discharged the Individual’s debts
on July 9, 2012.
During PSIs conducted on April 21, 2008, and February 16, 2010, the Individual was asked
about his future intentions concerning his unpaid debt. During the April 21, 2008, PSI, the
Individual stated his intention to resolve these debts, either by repaying them, reaching a
settlement with his creditors, or by declaring Bankruptcy. Exhibit 8 at 36, 51. The Individual
further indicated his intention of resolving his debts. Exhibit 8 at 51. During the April 21, 2008,
PSI, the Individual was warned that failure to resolve these debts could result in the loss of his
clearance. Exhibit 8 at 42. During the February 16, 2010, PSI, the Individual stated that he had
retained the Bankruptcy Attorney in order to obtain the discharge of his outstanding debts.
Exhibit 7 at 14.
A credit report obtained by the LSO indicated that the Individual’s local government had filed a
tax lien against him in the amount of $871. Exhibit 4 at 3. During the February 1, 2012, PSI, the
Individual claimed that he was unaware of this tax lien.2 Exhibit 6 at 31-38, 117-120. An
attorney representing the Individual contacted the County Treasurer and Tax Collector. She was
informed that it was unlikely that the Individual received notice of the original tax bill or of the
subsequent tax lien. The original tax bill was delivered to the foreclosed property and was
returned to the County Treasurer and Tax Collector’s office. Exhibit I at ¶ 5. The County
Treasurer and Tax Collector’s office did not have a forwarding address to send the Individual his
original tax bill or notice of the tax lien. Id. On June 18, 2012, the Individual paid the full
amount due to the local County Treasurer and Tax Collector. Exhibit H.
IV. ANALYSIS
The record shows that the Individual has a history of failing to meet his financial obligations and
has exercised poor judgment by overextending himself financially and by being inadequately
proactive when faced with a dilatory legal representative. The 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
2 The Statement of Charges incorrectly identifies this lien as “a Federal tax filed in 2006.” Statement of Charges at
¶ A.1.
5
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.
As the discussion above illustrates, several of the financial conditions that could raise security
concerns identified by the Adjudicative Guidelines apply to the Individual. The Individual
purchased an expensive new home and incurred a large mortgage, in the same time period that
his spouse stopped working, and he accepted a position with a new employer resulting in a
significantly lower income. While the Individual and his ex-wife have testified that he, like
many spouses, let his then wife handle his family’s financial affairs, when faced with important
life altering financial decisions such as purchasing a new home, forgoing one spouse’s income,
and accepting a significant reduction in his income, the Individual should have made the effort to
verify and understand his financial circumstances before making these decisions. However, his
now ex-wife’s conduct was a major factor contributing to his financial predicament. Once the
Individual’s financial affairs were separated from those of his first wife, he no longer incurred
debts that he was unable to pay.
The Individual failed to fully resolve the unpaid debts incurred during his first marriage until
July 9, 2012, when the Bankruptcy Court granted him a discharge. In most circumstances, OHA
Hearing Officers find that a pattern of financial responsibly does not begin until an Individual’s
debts are discharged. However, special circumstances exist in the present case. Evidence
submitted by the Individual shows that the attorney he retained to file a Bankruptcy Petition on
his behalf was dilatory in his representation of the Individual. He waited over three years before
filing the Individual’s Bankruptcy Petition. The Individual’s ex-wife testified that she repeatedly
contacted the attorney’s office attempting to expedite the filing of the Bankruptcy Petition. Tr. at
24-28. The Individual submitted Exhibit E, which is chronology of the ex-wife’s contacts with
the attorney’s office in which she tried to expedite the filing of the Bankruptcy Petition. The
Individual testified that he and his first wife met with employees of the Bankruptcy Attorney in
hopes of expediting the process. Tr. at 117. The Individual also submitted the sworn affidavit of
one of the attorneys representing him in the present proceeding. That Affidavit claims that the
Bankruptcy Attorney stated that he delayed filing the Individual’s Bankruptcy Petition because
his “office was very busy during 2010-2011.” Exhibit I at ¶ 11.
As for possible mitigating factors, I find that the Individual has met several of the conditions set
forth at ¶ 20(a) of Guideline F.3 The Individual’s financial irresponsibility is limited to a discrete
3 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;
6
set of circumstances only partially under his control. He is now debt free. Most importantly, by
paying all of his debts in a timely manner since July 2008, when he separated from his ex-wife,
the Individual has shown that he is able to manage his financial affairs in a manner consistent
with the exercise of good judgment and therefore has established a four year pattern of financial
responsibility.4 The Individual testified that his present wife has educated him about financial
matters. Tr. at 120. The Individual testified that he recognized that his previous “hands off
approach” to his financial matters caused his past problems, and that he has learned from his
mistake. Id. at 121-122.
The Individual has received a discharge of his debts by the Bankruptcy Court. Exhibit J. The
discharge resolves the debts remaining from the Individual’s first marriage. The Individual’s
demonstrated ability to avoid incurring any additional unpaid debts since July 2008, establishes a
substantial pattern of acting in a financially responsible manner. Moreover, after receiving a
discharge of his debts from the Bankruptcy Court, the Individual is now debt-free and is
therefore no longer vulnerable to extortion or coercion.
Accordingly, I find that the security concerns raised by the Individual’s financial irresponsibility
have been mitigated and are therefore resolved.
V. CONCLUSION
For the reasons set forth above, after carefully considering the evidence before me, I find that the
Individual has resolved the security concerns raised under Criterion L. Therefore, the Individual
has 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 be restored. The DOE 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: July 31, 2012
(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
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.
4 The Individual testified that he was advised to discontinue any payments to those creditors
whose debts were to be discharged. Tr. at 111.