PSH-16-0018

*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 15, 2016 )
_________________________________________ ) Case No.: PSH-16-0018
Issued: June 23, 2016
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Administrative Judge Decision
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Steven L. Fine, Administrative Judge:
This Decision concerns the eligibility of XXX X. XXX (hereinafter referred to as “the
Individual”) for access authorization under the Department of Energy’s (DOE) regulations set
forth at 10 C.F.R. Part 710, Subpart A, entitled, “Criteria and Procedures for Determining
Eligibility for Access to Classified Matter or Special Nuclear Material.”1 For the reasons set
forth below, after carefully considering the record before me in light of the relevant regulations
and the Adjudicative Guidelines, I conclude that the Individual’s security clearance should not be
restored.2
I. BACKGROUND
A Local Security Office (LSO) obtained information that raised security concerns about the
Individual. In order to address those concerns, the LSO conducted a Personnel Security
Interview (PSI) of the Individual on September 16, 2015. Because the PSI did not resolve these
concerns, the LSO began the present administrative review proceeding by issuing a Notification
Letter to the Individual informing him that he was entitled to a hearing before an Administrative
Judge in order to resolve the substantial doubt regarding his eligibility for a security clearance.
See 10 C.F.R. § 710.21. The Individual requested a hearing and the LSO forwarded the
Individual’s request to the OHA. The Director of OHA appointed me as the Administrative
Judge in this matter on April 15, 2016.
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 also be referred to in this Decision as
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.
**This document contains information which is subject to withholding from disclosure under 5 U.S.C. §
552.**
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At the hearing I convened pursuant to 10 C.F.R. § 710.25(e) and (g), I took testimony from the
Individual. See Transcript of Hearing, Case No. PSH-16-0018 (hereinafter cited as “Tr.”). The
LSO submitted five exhibits, marked as Exhibits 1 through 5. The Individual submitted three
exhibits, marked as Exhibits A though C.
II. THE NOTIFICATION LETTER AND THE ASSOCIATED SECURITY CONCERNS
As indicated above, the Notification Letter informed the Individual that information in the
possession of the DOE created a substantial doubt concerning his eligibility for a security
clearance. That information pertains to paragraph (l)3 of the criteria for eligibility for access to
classified matter or special nuclear material set forth at 10 C.F.R. § 710.8 (Criterion L).
To justify its reliance on Criterion L, the LSO alleged that the Individual was $16,941 past due
on his primary mortgage, had an outstanding collection account that was $98 past due, had
admitted during a September 16, 2015, PSI that his financial difficulties were the result of being
financially irresponsible, by overspending and not living within his means, and had admitted that
he had not made any payments on his outstanding second mortgage for seven months.
The Individual’s pattern of financial irresponsibility, as alleged, adequately justifies the LSO’s
invocation of Criterion L, and raises significant security concerns. The 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) . . . 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; . . . 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, (Adjudicative Guidelines) at ¶¶ 18, 19. The
Adjudicative Guidelines are not inflexible rules of law. Instead, recognizing the complexities of
3 Criterion L refers to information indicating 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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human nature, Administrative Judges apply the guidelines in conjunction with the information
available in the adjudicative process. The Administrative Judge’s overarching adjudicative goal
is a fair, impartial, and commonsense decision.
III. REGULATORY STANDARDS
The Administrative Judge'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 the relevant
information, favorable and unfavorable, as to whether the granting of 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). In rendering this opinion, I have considered the following
factors: 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.
IV. FINDINGS OF FACT
On March 10, 2015, the LSO obtained a credit report for the Individual which showed that the
Individual was past due on his primary and second mortgages, and had a number of other past
due accounts.
On September 16, 2015, the LSO conducted a PSI of the Individual where he was questioned
about his financial issues. The Individual reported that he had refinanced his home mortgage on
a number of occasions, over a period of 25 years, in order to obtain cash to pay off debts. Ex. 5
at 19-46. The Individual reported that he and his wife had fallen behind on their bills because of
“too much spending,” were “not living within our means like 90 percent of the people in the
world,” and that his family was spending more than he and his wife were making. Ex. 5 at 26,
35-36, 72, 81-83. The Individual reported that he fell “a month or two behind” on his primary
mortgage and began to incur late fees, in the 2012 to 2014 time frame. Ex. 5 at 47-51, 54-55, 65-
66. He estimated that he owed from $10,000 to $20,000 in late fees at one point. Ex. 5 at 58,
70-71. The Individual subsequently reported that he may have fallen s behind in his primary
mortgage payments on three or four occasions. Ex. 5 at 57. The Individual reported that he
entered into a loan modification agreement with his primary lender, which waived his late fees
and allowed him to catch up on his payments. Ex. 5 at 47-48, 51, 60, 73-78, 127. As a result,
the Individual reported, he is now current on his primary mortgage. Ex. 5 at 48, 124-135, 146.
Eventually, the Individual obtained a second mortgage on his home for approximately $40,000 to
$45,000, in order to utilize some of the equity he had gained from its appreciation in value to pay
his outstanding bills, and to make some home improvements. Ex. 5 at 31, 33, 37-40. The
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Individual estimated that the payments for the second mortgage were $640 to $680 a month. Ex.
5 at 41. In approximately 2012, the Individual began having problems making the payments on
the second mortgage. Ex. 5 at 81. During the period from 2012 to 2015, the Individual missed
several payments on the second mortgage. Ex. 5 at 95. As a result he has incurred late fees on
the second mortgage. Ex. 5 at 83-5. The Individual estimated that he now owes $40,000 in late
fees on his second mortgage. Ex. 5 at 84-85. The Individual further reported that he has not
made a payment on his second mortgage for at least 180 days, indicating that the last payment on
the second mortgage occurred in January, February, or March of 2015. Ex. 5 at 86-88, 93, 107,
149. The Individual estimated that during the past 18 months (since mid-2014) he had only
made five or six payments on the second mortgage. Ex. 5 at 108-109. The Individual reported
that the holder of the second mortgage had initiated foreclosure proceedings. Ex. 5 at 90, 93.
The Individual further reported that he had begun settlement talks with the holder of the second
mortgage. Ex. 5 at 94.
The Individual indicated that he intends to refinance both mortgages, combining them into a
single loan. Ex. 5 at 120, 152, 162-163. The Individual stated that first, he would have to
improve his credit score so that he would be eligible for the new loan. Ex. 5 at 121. The
Individual stated that if he cannot refinance the house on terms he can handle, he will sell his
home, using the estimated $207,000 in equity to pay his outstanding debts. Ex. 5 at 121-122,
154. The Individual stated that he had learned some financial lessons the “hard way” and had
closed all of his credit card accounts. Ex. 5 at 223.
V. ANALYSIS
The Statement of Charges (SSC) cites three specific alleged debts for its conclusion that the
Individual has been financially irresponsible: (1) the primary mortgage on the Individual’s home
which the SSC alleged was $16,941 past due, and over 180 days past due (in January 2015); (2)
an outstanding collection account with a furniture store which was $98 past due; and (3) the
secondary mortgage for which the Individual had not made a payment since February 2015. SSC
at ¶¶ A.1 and 2, ¶ B.1. The SSC also cites the Individual’s admissions during the PSI that his
financial difficulties were a result of being financially irresponsible, by overspending and not
living within his means. SSC at ¶ B.2.
As an initial matter I note that during the September 16, 2015, PSI, the Individual repeatedly
asserted to an apparently unbelieving interviewer, that he had entered into a loan modification
agreement with the holder of his primary mortgage. Moreover, the Case Evaluation Sheet
prepared by an LSO analyst corroborates the Individual’s assertion that he was no longer past
due on his primary mortgage, it reports that: “On 9/17/1215, [the Individual] provided a copy of
account information for [the holder of the primary mortgage note] that reflects a principle [sic]
balance of $224,834.87 and that a payment of $1,567.13 was made on 9/03/2015. No past due
amount is reflected for the account.” Ex. 3 at 2. The Individual submitted Exhibit A, a record
allegedly from the primary mortgage holder dated April 17, 2016. This document indicates that
the mortgage to which it pertains was current to that date. However, Exhibit A is incomplete, (it
only consist of two pages of a four-page document) and does not include any identifying
information that indicates that it pertains to the Individual. At the hearing, I suggested that the
Individual submit a recent credit report in order to resolve this concern. Tr. at 46. The
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Individual did not do so. Accordingly, I find that the security concerns raised by the Individual’s
failure to stay current on his primary mortgage remain unresolved.
The Individual has also submitted Ex. B, a copy of a personal check to the furniture store for
$140. The Individual testified at the hearing that this check paid his debt on the furniture store
account in full. Tr. at 14, 18. This evidence resolves any concerns arising from the outstanding
collection account cited in the SSC concerning the furniture store debt.
Accordingly, that leaves two remaining areas of concern: the Individual’s past due status for his
second mortgage, and the security concerns raised by the Individuals demonstrated inability to
manage his finances responsibly.
At the hearing, the Individual attempted to resolve or mitigate the security concerns about his
financial responsibility, judgment, reliability, and trustworthiness raised by the information set forth
in the SSC.
The Individual testified that he is still past due on the second mortgage. Tr. at 16. The
Individual further acknowledged that he is in default on this loan, and that he is unable to afford
the monthly payments on this loan at this time. Tr. at 16, 19. However, the Individual contends
that he has a realistic plan to address his secondary mortgage delinquency. Specifically, the
Individual testified that he intends to use the alleged equity in his home to refinance his home in
order to pay off both the primary and secondary mortgages and substitute them with one loan at a
more favorable interest rate. Tr. at 15-23. The Individual testified that he believes his home is
worth “around $550,000,” that he owes a total of $224,00 on his primary mortgage, $85,000 on
his second mortgage and that he has about $200,000 worth of equity in his home. Tr. at 16, 25-
27. He testified that he bases his estimate of his home’s worth on what other houses in his
neighborhood have been selling for. Tr. at 27. He also testified that interest rates have fallen.
Tr. at 20, 23. The Individual testified that he has “complete documentation” that there is a
“financial institution that supposedly says they can help us.” Tr. at 17-18. He testified that he is
actively seeking to refinance and was getting ready to submit paperwork to two potential lenders.
Tr. at 19-20. The Individual never submitted the proffered documentation that he was nearing an
agreement to resolve his outstanding secondary mortgage debt. Therefore, the security concerns
arising from this debt remain unresolved.
The Individual has also submitted a proposed budget, Exhibit C, to show that he has a realistic
plan for his finances going forward. However, I find that Exhibit C does not support this
contention. First, some the information supplied in Exhibit C conflicts with other information in
the record. For example, Exhibit C indicates that the Individual and his spouse’s combined
monthly take home pay is $2,712.4 Tr. at 28. During the PSI, the Individual estimated that he
and his spouse’s monthly take home pay was $5,400. Ex. 5 at 191-192. During the PSI, the
Individual estimated that his monthly grocery bill was $700. Ex. 5 at 197. Exhibit C estimates
that his monthly grocery bill is $100. Moreover, Exhibit C does not have any money budgeted
4 The Individual testified that he and his spouse’s annual incomes totaled $93,000 before his recent pay increase. Tr.
at 29.
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for heating or electricity. Most importantly, Exhibit C shows that the Individual and his spouse’s
monthly take home income totals $2,712, while his monthly expenses total $3,393. Tr. at 30-31.
The Individual also attempted to address the concerns about his judgement and reliability raised
by his past financial conduct, by arguing that his admissions, during the PSI, that his financial
problems were caused by his living beyond his means and overspending, were taken out of
context. Tr. at 15, 20-21. Instead, the Individual argued that his financial problems were caused
by “carelessness” and “bad decision-making.” Tr. at 19. I found this line of reasoning contrary
to prior testimony, since my reading of the PSI transcript clearly indicates that the Individual
attributed his financial problems to his families’ over spending and living above his means.
When reading his PSI, I found his willingness to acknowledge the cause of his financial
circumstances to be a positive sign that he might be on the right path going forward. When the
Individual tried to deflect blame away from his own decisions during the hearing, however, he
exhibited a lack of judgment and perhaps candor as well.
At the hearing, I repeatedly asked the Individual to document a number of his assertions. Tr. at
23-24, 36, 39-41, 46. The Individual assured me that he would do so within five to seven days.
Tr. at 41. I made it clear that the Individual needed to submit this requested documentation
before I received the hearing transcript, and that I would likely receive such transcript within a
couple of weeks after the hearing. Tr. at 41, 45. Nevertheless, I did not receive any post hearing
documentation from the Individual.
For the reasons stated above, I find that the Individual has not provided sufficient mitigation to
resolve the security concerns raised by his outstanding debts and past financial conduct.5
VI. CONCLUSION
For the reasons set forth above, I conclude that the LSO properly invoked Criterion L. After
considering all the evidence, both favorable and unfavorable, in a common sense manner, I find
that Individual has not sufficiently mitigated all of the Criterion L security concerns.
Accordingly, 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.
Therefore, 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. § 710.28.
Steven L. Fine
Administrative Judge
Office of Hearings and Appeals
Date: June 23, 2016
5 The Adjudicative Guidelines set forth a number of conditions that could mitigate security concerns arising from an
individual’s financial difficulties. See Adjudicative Guideline F at ¶ 20. However, none of these conditions are
present in the instant case.