PSH-14-0048

*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: May 6, 2014 ) Case No.: PSH-14-0048
____________________________________)
Issued: July 17, 2014
______________________
Administrative Judge Decision
______________________
Shiwali G. Patel, Administrative Judge:
This Decision concerns the eligibility of XXXXXXXXXX (hereinafter referred to as “the
individual”) for 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.”1 For the reasons set forth below, I conclude that the DOE should not grant the
individual’s access authorization at this time.2
I. BACKGROUND
The individual is an employee of the Department of Energy and is an applicant for access
authorization. A Local Security Office (LSO) summoned the individual for a Personnel Security
Interview (PSI), with a personnel security specialist on January 30, 2014, in order to address issues
concerning his outstanding debt obligations and alleged misrepresentation on his SF-86
(Questionnaire for National Security Position or QNSP) that he submitted on April 2, 2012, and
November 7, 2013. After the PSI, the LSO determined that there was derogatory information that
cast into doubt the individual’s eligibility for access authorization. The LSO informed the individual
of this determination in a letter that set forth the DOE’s security concerns and the reasons for those
1 An access authorization is an administrative determination that an individual is eligible for access to classified matter or
special nuclear material. 10 C.F.R. § 710.5. Such authorization will be referred to in this Decision as access authorization
or a security clearance.
2 Decisions issued by the Office of Hearings and Appeals (OHA) are available on the OHA website located at
http://www.energy.gov/oha.
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concerns. DOE Exhibit (Ex.) 1. The Notification Letter also informed the individual that he was
entitled to a hearing before an Administrative Judge in order to resolve the substantial doubt
concerning his eligibility for an access authorization.
The individual requested a hearing in this matter. The LSO forwarded this request to OHA, and the
OHA Director appointed me the Administrative Judge. The DOE introduced 13 exhibits (Exs. 1-13)
into the record of this proceeding. The individual introduced 12 exhibits (Exs. A-L) and presented
only his testimony at the hearing. See Transcript of Hearing, Case No. PSH-14-0048 [hereinafter
cited as “Tr.”]. Furthermore, after the hearing, the individual filed several post-hearing submissions,
including his budget and documentation of payments towards his debts.
II. REGULATORY STANDARDS
The criteria for determining eligibility for security clearances set forth at 10 C.F.R. Part 710 dictate
that in these proceedings, an Administrative Judge must undertake a careful review of all of the
relevant facts and circumstances, and make a “common-sense judgment . . . after consideration of all
relevant information.” 10 C.F.R. § 710.7(a). I must therefore consider all information, favorable and
unfavorable, that has a bearing on the question of whether restoring the individual’s security
clearance would compromise national security concerns. Specifically, the regulations compel me to
consider the nature, extent, and seriousness of the individual’s conduct; the circumstances
surrounding the conduct; the frequency and recency of the conduct; the age and maturity of the
individual at the time of the conduct; the absence or presence of rehabilitation or reformation and
other pertinent behavioral changes; the likelihood of continuation or recurrence of the conduct; and
any other relevant and material factors. 10 C.F.R. § 710.7(c).
A DOE administrative proceeding under 10 C.F.R. Part 710 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). Once the DOE has made a showing of derogatory information raising
security concerns, the burden is on the individual to produce evidence sufficient to convince the
DOE that granting or restoring 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
regulations further instruct me to resolve any doubts concerning the individual’s eligibility for access
authorization in favor of the national security. 10 C.F.R. § 710.7(a).
III. NOTIFICATION LETTER AND ASSOCIATED SECURITY CONCERNS
The Notification Letter cites information pertaining to subsection (l) of the criteria for eligibility for
access to classified matter or special nuclear material set forth at 10 C.F.R. § 710.8. Ex. 1. In its
Notification Letter, the LSO cites the following: 1) the individual’s federal delinquent tax debt for
the years 2000, 2001, 2002, 2004, 2005, 2006 and 2012, totaling $40,950.45; 2) the individual’s
seven collection accounts totaling $52,949.63; 3) the individual’s account that is 60 days past due for
$305; 4) the individual’s statements during his PSIs in August 2012 and September 2008, and a
previous administrative hearing in February 2013, that he intended to resolve his outstanding debts,
but during his PSI on January 30, 2014, he admitted that he did not resolve his debts; and 5) the
individual’s failure to disclose on his QNSPs a federal tax lien for 2006. Ex. 1.
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The above information adequately justifies the DOE’s invocation of criterion (l), and raises
significant security concerns. The 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. See Revised Adjudicative Guidelines for
Determining Eligibility for Access to Classified Information, The White House, Guideline F
(December 19, 2005) [hereinafter Adjudicative Guidelines]. Moreover, the failure to provide truthful
and candid answers during a security clearance process also raises questions about an individual’s
reliability, trustworthiness and ability to protect classified information. Id., Guideline E.
IV. FINDINGS OF FACT AND ANALYSIS
The individual is 54 years old and is an applicant for a security clearance. Ex. 8. He previously had
a security clearance but, after concerns were identified regarding his financial delinquencies during
his re-investigation, his clearance was suspended in October 2012. In February 2013, the
individual’s security clearance was terminated due to his extended leave of absence. Ex. 3. He has
several outstanding tax debts and collection accounts, some of which were previously addressed in
the prior administrative review proceeding before OHA regarding his previous clearance suspension
and during his PSIs on January 30, 2014, August 27, 2012, and September 10, 2008. In November
2013, a request for reinstatement of the individual’s access authorization was submitted.
A. Delinquent Debts
At the hearing, the individual explained how he fell behind on paying his bills and got into debt. In
1999, he started a business with two other individuals and lost money from that business. Tr. at 19.
In order to avoid paying taxes so that they could pay their business expenses, he and his business
partners filed a 1099 tax form. Tr. at 19. They expected their business to become successful so that
they could eventually pay off their taxes; however, they lost money from that business while accruing
tax debt at the same time. Tr. at 19. Thus, in April 2002, they sold their business to a company that
the individual later sued for not paying him the full amount from the buyout plan, which was
approximately $71,500. Ex. 11 at 13-22. Furthermore, the individual stated that he lost $20,000
from his wife’s income when she left him in 2000, and that he has struggled financially ever since
she left. Tr. at 19; Ex. 11 at 28. In order to pay off his debts and to be current on his mortgage, the
individual began withdrawing money from his 401(k) account in 2002. Tr. at 20. However, since he
did not pay taxes for his withdrawals from his 401(k) account, he ended up owing taxes to the
Internal Revenue Service (IRS). Ex. 9 at 81. The individual also stated that in 2005, foreclosure
proceedings were initiated against him, but he withdrew money from his 401(k) to pay his mortgage
and prevent the foreclosure. Tr. at 21. He also used that money to take care of his children, and pay
for food, utilities and insurance. Tr. at 20; 45. During that time, his taxes accrued and he fell behind
in paying his expenses and debt.
The individual was diagnosed with a serious illness in November 2012, for which he had to take time
off from work and undergo treatment for ten months, or until September 2013. Tr. at 9-10. During
this time, his financial situation worsened as he paid a premium of $250 a month for his health
insurance, which, after six months, increased to $1,080 a month. Tr. at 9. Moreover, the individual’s
pending lawsuit against the company that bought out his business in 2002, through which he
anticipated receiving a large enough award to pay off his remaining debt, was dismissed on
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February 21, 2013.3 Ex. 2; Tr. at 29. Finally, the individual testified that he also fell behind on
paying his debts because he did not receive timely disability payments, which he started receiving on
December 24, 2012, more than a month after he submitted his paperwork on November 14, 2012.
Tr. at 43; Ex. 2. He received a total of $37,244.56 from December 2012 through September 18,
2013, from his disability payments. Ex. 3. The individual also testified that he applied for loans for
financial assistance, but was denied because of his low credit score. Tr. at 24. Furthermore,
foreclosure proceedings were again initiated against him, but he withdrew money from his 401(k)
account in January 2014 to pay his mortgage. Tr. at 20-21, 23. Now, the individual is working and
is current on his mortgage payments. Tr. at 17, 20.
In regard to his tax debt, the individual provided a letter, dated June 6, 2014, from a tax professional
stating that he owes the IRS $13,745.09 plus interest and penalties for 2004, 2005, 2006 and 2011,
instead of $40,950.45, as cited by the LSO in its Notification Letter. Ex. A; Tr. at 15. The tax
professional stated that the individual is on a voluntary payment plan with the IRS, and that his status
is “currently non collectible.” Ex A. After the hearing, the individual submitted a copy of a check
to the United States Treasury for $11,000, dated June 25, 2014, and a copy of a proof of delivery
from the IRS, dated July 14, 2014. He also submitted a print out of a Payoff Calculator from the
IRS’s online Account Management Service indicating that his total debt as of July 14, 2014, was
$13,281.57 for the tax periods ending in 2005, 2006 and 2011, which, presumably, was before the
IRS applied his $11,000 payment towards the balance.4 At the hearing, the individual stated that as
long has does not withdraw money from his 401(k) and he pays his taxes, he does not anticipate
having to owe taxes in the future. Tr. at 24-25. However, it appears that in order to pay the IRS, the
individual again borrowed $11,000 from his 401(k) account. In a post-hearing submission, the
individual provided a copy of a Distribution Statement indicating that on July 7, 2014, he took a 60-
month loan out for $11,000 from his 401(k) account. The individual now claims that his balance
with the IRS is $2,254.35 and he asserts that he will pay off his tax debt within the next month from
working overtime.
At the hearing, the individual stated that he had not paid into any of the outstanding collection
accounts as he focused on first paying off his car in May 2014. Tr. at 26-27. However, after the
hearing, the individual paid off the debt listed in paragraph B.1.d. of the Summary of Security
Concerns for $132 and he paid $177.30 towards the debt for $496 listed in paragraph B.1.a. He also
provided a bank statement showing that withdrawals were made from his account towards the
creditors listed in paragraphs B.1.b ($692.36) and B.1.c. ($300). Moreover, he is also now current on
the account that was past due for $305 for his second mortgage, listed in paragraph B.2., as indicated
by the credit report he submitted into the record. Ex. L; Tr. at 28; 42. The individual disputes the
$15,892 credit card debt in paragraph B.1.f. Tr. at 28, 40. However, he has not presented any proof
that he filed a dispute regarding that debt. Moreover, he has not paid towards the $28,916.63 debt
3 It appears that the matter was dismissed by a court order granting a motion for summary judgment or adjudication
against the individual. Ex. 2. However, at the hearing, the individual explained that there was a court hearing scheduled
in December 2012, which he missed because he was receiving treatment for his illness, and that consequently, his case
was dismissed. Tr. at 29. Regardless of the reason, the record demonstrates that the individual’s case against the
company was dismissed, and therefore, he can no longer rely on the receiving any award from his lawsuit to pay off his
debt.
4 The individual also provided documents from the IRS indicating that he overpaid his taxes for 2013 and that resultantly,
$2,156 was applied towards his 2004 taxes and that $387.01 of his overpayment for his 2004 taxes was applied towards
his 2005 taxes. Exs. E and F.
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listed in paragraph B.1.g., claiming that he will dispute that debt by filing a lawsuit against the
individual to whom he is indebted that amount. Finally, the individual has also not paid towards the
debt listed in paragraph B.1.e. for $6,459, stating that the creditor offered him a settlement of that
debt for approximately $1,900. Yet, he has not presented any proof of that settlement amount.
As for any of his debts that are more than ten years old, the individual claims that they should not be
listed in his credit report as they would not be actionable under a court of law because of the statute
of limitations. Tr. at 33. While he has not yet done so, he intends to meet with a credit counseling
company to have those debts removed because of the statute of limitations. Tr. at 33. The individual
stated that his main concerns are keeping his home and ensuring his children are taken care of, and
then paying off the IRS. Tr. at 39. The individual testified that he lives within his means, and
submitted a copy of his budget, indicating that his monthly expenses are $4,698.11 and his monthly
income is $5,636.12. Tr. at 48.
As stated in the LSO’s Notification Letter, the individual claimed during his PSIs in 2008 and 2012
that he would pay off his debts, yet failed to do so. At his PSI on August 27, 2012, the individual
stated that he would first take care of his tax debt before paying off his other debt. Ex. 11 at 62, 81,
129. While his PSI in August 2012 was just a few months before he began his ten-month treatment
for his illness that contributed to his failure to pay off his debts, he had previously made similar
representations to the DOE that he would pay his debts, but did not follow through. Specifically, at
his PSI on September 10, 2008, the individual stated that he would settle his tax debt within the next
year, and that if necessary, he would take money out of his 401(k) to make the payments. Ex. 13 at
15. He also then stated that he intended to resolve his debts. Ex. 13 at 37. However, as indicated in
the administrative record, the individual waited until recently to take care of these debts.
While I appreciate the financial difficulties that the individual faced since 2000 with his wife leaving
him, the loss of income from his business, and more recently, his illness, I cannot conclude that the
individual acted responsibly under the circumstances so as to sufficiently mitigate the DOE’s
concerns. See Adjudicative Guideline F, Paragraph 20(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”). Although he made a good-faith effort to pay off some
of his debts, the majority of the debts have not been paid off, and the individual had years to resolve
those debts or to dispute them, if necessary. Further, though he made payments towards his tax debt
and some of his other debts, he only began to do so recently. He has had several years to begin
paying off these debts. Indeed, based on his statements in his previous PSIs, the individual has
known about some of these debts and certainly his tax debt as early as 2008, or six years ago, but
only recently began to pay them off.
Moreover, even though he disputes some of the debts listed in the Notification Letter, the individual
has not provided any documentation to substantiate the basis for his dispute or of his efforts to
resolve them with the creditors. See Adjudicative Guideline F, Paragraph 20(e). As stated above,
the burden is on the individual to provide sufficient evidence to mitigate the concerns of the LSO.
Furthermore, the individual has not sufficiently convinced me that the problems associated with his
debts will be resolved. The individual has had financial challenges over the last ten years, and has
continued to increase his tax debts by withdrawing from his 401(k) in order to pay off his expenses.
In fact, he recently withdrew $11,000 from his 401(k) to pay his tax debt. As the individual has the
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burden to demonstrate that he has mitigated the concerns with regard to his outstanding debt, I
cannot find that he has presented sufficient evidence to have successfully done so.
In prior cases involving financial considerations, Administrative Judges 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, e.g., Personnel Security Hearing, Case No. TSO-
1078 (2011); Personnel Security Hearing, Case No. TSO-0878 (2010); Personnel Security Hearing,
Case No. TSO-0746 (2009). Based upon my evaluation of the record and the testimony at the
hearing, it is simply too soon to find that the individual has established a sustained pattern of
financial responsibility. Given the recency of his payments to the IRS and of some of his debts, and
that he is still has not paid the majority of his outstanding debts and continues to borrow from his
401(k), I cannot conclude that the concerns raised by his outstanding debt have not been resolved.
See 10 C.F.R. § 710.7(c).
B. Honesty, Reliability and Trustworthiness
In its Notification Letter, the LSO stated the individual failed to disclose in his QNSPs, which he
submitted in April 2012 (2012 QNSP) and November 2013 (2013 QNSP), that he had a tax lien for
his 2006 taxes. Ex. 1. According to the Notification Letter, the individual previously admitted that he
had a tax lien of $3,166.91 for his delinquent 2006 federal taxes. Ex. 1.
In his 2013 QNSP, the individual listed three accounts involving tax debt, and ten accounts involving
routine accounts. Ex. 7. The federal tax liens that he listed in his 2013 QNSP were for $27,466,
$4,616 and $5,246 of tax debt. Id. In his 2012 QNSP, he listed the tax liens for $27,466 and $4,616.
Ex. 8. At the hearing, the individual explained that he listed the federal tax lien debts that were listed
in his credit report, and stated that the $3,166.91 amount listed by the LSO in the Notification Letter
for 2006 was not in his credit report. Tr. at 30. Indeed, the individual provided a copy of his credit
report, dated May 2, 2014, where only three tax liens are listed, two of which appear to be
duplicative. Ex. L. One of the liens is for a tax debt from 2013, which is listed twice, and the other
is from 2007; neither is for 2006. Id. Furthermore, in the credit reports contained in the DOE’s
exhibits, there is no listing of a tax lien for a 2006 tax debt.5 Ex. 5. Accordingly, while the LSO
states that the individual failed to list a 2006 tax lien, the record does not support that such a lien
ever existed.6 Also significant is that the individual listed numerous other tax debts that were far
higher than what he purportedly owed for his 2006 taxes. Hence, I conclude that the individual did
not deliberately omit information regarding his purported 2006 tax lien in his QNSPs and that he was
not trying to mislead the DOE, particularly has he provided information on his other debts and liens
that were much greater in amount.
5 In his April 2012 credit report, three liens for $27,466 from 2003 are listed, and one for $4,616 from 2007 is listed.
Similarly, in the February 2007 credit report, only three tax liens are listed, all of which appear to refer to the same lien
for the 2003 federal tax debt for $27,467.
6 The transcripts of the PSIs do not indicate that the individual actually stated he had a lien that arose from his 2006 debt.
During his PSI in January 2014, he did not clearly express that he had a tax lien for 2006, but rather, that he obtained
information on his outstanding debt from his credit report. Ex. 10 at 32-33. At his PSI in August 2012, he stated that the
IRS garnished his wages for his 2006 tax debt, which he appears to have confused with a lien; however, he later stated
that his account was levied for the 2006 tax debt. Ex. 11 at 34, 46. Finally, at the previous administrative review
hearing, the individual was asked about the 2006 tax lien, but did not definitely state that such a lien existed. Ex. 9 at 97.
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In further support of the individual’s character as trustworthy and reliable, several individuals
testified that he is an honest person who exercises good judgment.7 His close friend for over 36
years stated that the individual has integrity and is reliable. 2013 Tr. at 14, 19. His former foreman,
employer, and colleagues also testified that the individual exercises good judgment, has good work
ethic, “would not take short cuts,” and has set a good example for other employees. 2013 Tr. at 25-
55. Two of his ex-wives also testified that the individual is very honest and that he “plays by the
rules.” 2013 Tr. at 111-118. Hence, for all these reasons, I find that the individual has not intended
to misrepresent any information regarding his debts during the personnel security clearance process,
and therefore, he has sufficiently mitigated the concerns associated with his representations on the
purported 2006 tax lien debt.
V. 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 all of the security concerns at issue. I
therefore cannot find that granting 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 should not be granted access authorization. The parties may seek review of this
Decision by an Appeal Panel under the regulations set forth at 10 C.F.R. § 710.28.
Shiwali G. Patel
Administrative Judge
Office of Hearings and Appeals
Date: July 17, 2014
7 The DOE Counsel stipulated that the witnesses who testified as to the individual’s character in an earlier OHA
Administrative Hearing, OHA Case No. PSH-12-0141, would be providing the same testimony in the instant hearing and
therefore, need not re-testify. Tr. At 4. Accordingly, their testimony will be briefly summarized in this portion of my
decision regarding the individual’s honesty, reliability and trustworthiness, and the transcript from that hearing will be
cited as “2013 Tr.”.