PSH-21-0102

*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: August 23, 2021 ) Case No.: PSH-21-0102
)
__________________________________________)
Issued: January 31, 2022
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Administrative Judge Decision
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Janet R. H. Fishman, Administrative Judge:
This Decision concerns the eligibility of XXXXXXXXXXXX (the Individual) to hold an access
authorization under the United States Department of Energy’s (DOE) regulations, set forth at 10
C.F.R. Part 710, “Procedures for Determining Eligibility for Access to Classified Matter and
Special Nuclear Material.”1 As discussed below, after carefully considering the record before me
in light of the relevant regulations and the National Security Adjudicative Guidelines for
Determining Eligibility for Access to Classified Information or Eligibility to Hold a Sensitive
Position (June 8, 2017) (Adjudicative Guidelines), I conclude that the Individual’s security
clearance should be granted.
I. BACKGROUND
The Individual is employed by the DOE in a position that requires him to hold a security clearance.
On October 1, 2019, the Individual completed a Questionnaire for National Security Positions
(QNSP). Ex. 9. The Individual disclosed on the QNSP that he filed Chapter 11 bankruptcy in
January 2016, for a company he owned. Ex. 9 at 191. He further reported that he had not paid his
state or federal taxes for several years. Subsequently, the Local Security Office (LSO) asked him
to complete a Letter of Interrogatory (LOI) regarding his failure to pay outstanding federal and
state taxes, and other outstanding debts including unresolved collection accounts, charge off
accounts, and repossession accounts. Ex. 6. The Individual’s response to the LOI did not resolve
the security concerns, and the LSO informed the Individual, in a letter dated January 19, 2021
(Notification Letter), that it possessed reliable information that created substantial doubt regarding
the Individual’s eligibility to hold a security clearance. In an attachment to the letter titled
1 The regulations define access authorization as “an administrative determination that an individual is eligible for access
to classified matter or is eligible for access to, or control over, special nuclear material.” 10 C.F.R. § 710.5(a). This
Decision will refer to such authorization as access authorization or security clearance.
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“Statement of Security Concerns” (SSC), the LSO explained that the derogatory information raised
security concerns under Guideline F of the Adjudicative Guidelines. Ex. 1.
The Individual exercised his right to request an administrative review hearing pursuant to 10
C.F.R. Part 710. Ex. 2. The Director of the Office of Hearings and Appeals (OHA) appointed me
as the Administrative Judge in this matter, and I subsequently conducted an administrative review
hearing. The LSO submitted ten numbered exhibits, marked Exhibits 1 through 10, into the
record.2 The Individual submitted ten exhibits, marked as Exhibits A through J, and presented the
testimony of five witnesses, including his own testimony.3
II. THE NOTIFICATION LETTER AND THE ASSOCIATED SECURITY CONCERNS
The LSO cited Guideline F (Financial Considerations) of the Adjudicative Guidelines as the basis
for denying the Individual a security clearance. Ex. 1 at 5. Guideline F provides that an individual’s
failure 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 or
sensitive information.” Guideline F at ¶ 18.
Under Guideline F, the SSC cited the following information: the Individual has five outstanding
collection accounts totaling $10,648; the Individual has three unpaid charge-off accounts totaling
$71,984; the Individual has three repossession accounts totaling $311,777; the Individual has a
November 2014 court-ordered judgment against him for $1.3 million owed to his ex-wife for
nonpayment of his marital settlement agreement, and he admitted in his Letter of Interrogatory
(LOI) dated April 2020 that he will never have the ability to pay the debt; the Individual owes
$40,000 in an unpaid court-ordered judgment for business debts related to his company; and the
Individual admitted that he owes $13,000 for delinquent child support payments. Ex. 1 at 5–6. The
SSC also cited the following information: in 2016, the Internal Revenue Service (IRS) filed a lien
against the Individual for an unknown amount of money not exceeding $1 million for unpaid taxes;
the Individual owes a total of approximately $500,000 to the IRS for unpaid payroll taxes for tax
years 2014, 2015, 2016, and 2017; the Individual owes $9,013.55 to the IRS for unpaid personal
income taxes for tax year 2018; the Individual owes approximately $298,000 to the state tax
authority (the State) for business taxes for tax years 2014, 2015, 2016, and 2017; the Individual
owes $4,200 to the State for unpaid personal income taxes for tax year 2018; and the Individual
admitted in August 2019, that he moved to another state to avoid repaying his debts. Id. at 6–7.
Guideline F specifically states that an “inability to satisfy debts,” an “unwillingness to satisfy debts
regardless of the ability to do so,” “a history of not meeting financial obligations,” and, a “failure
to file . . . federal, state, or local income tax returns or failure to pay [them] as required” are all
potentially disqualifying conditions. Guideline F at ¶ 19(a)–(c), (f). Accordingly, the LSO’s
security concerns under Guideline F are justified.
2 The LSO’s exhibits were combined and submitted in a single, 378-page PDF workbook. Many of the exhibits are
marked with page numbering that is inconsistent with their location in the combined workbook. This Decision will
cite to the LSO’s exhibits by reference to the exhibit and page number within the combined workbook.
3 The Individual’s Exhibits A through G were combined and submitted in a single, 118-page PDF workbook. This
Decision will cite to these exhibits by reference to the exhibit and page number within the combined workbook.
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III. REGULATORY STANDARDS
A DOE administrative review proceeding under Part 710 requires me, as the Administrative Judge,
to issue a Decision that reflects my comprehensive, common-sense judgment, made after
consideration of all the relevant evidence, favorable and unfavorable, as to whether the granting
or continuation of a person’s 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). The entire process
is a conscientious scrutiny of several variables known as the “whole person concept.” Adjudicative
Guidelines ¶ 2(a). The protection of the national security is the paramount consideration. The
regulatory standard implies that there is a presumption against granting or restoring a security
clearance. See Department of Navy v. Egan, 484 U.S. 518, 531 (1988) (“clearly consistent with
the national interest” standard for granting 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).
The Individual must come forward at the hearing with evidence 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 Individual is afforded a
full opportunity to present evidence supporting his eligibility for an access authorization. The
Part 710 regulations are drafted to permit the introduction of a very broad range of evidence at
personnel security hearings. Even appropriate hearsay evidence may be admitted. 10 C.F.R.
§ 710.26(h). Hence, an individual is afforded the utmost latitude in the presentation of evidence
to mitigate the security concerns at issue.
IV. FINDINGS OF FACT
As stated above, the Individual disclosed on his QNSP that he had previously filed Chapter 11
bankruptcy in January 2016. Ex. 9 at 191. He further reported that he owed outstanding federal
and state taxes for tax years 2014, 2015, 2017, and 2018. Id. at 193–196. He also reported that he
had “written-off his ex-wife’s $1.3 million judgment so that she could not seize the company or
take …further legal action after [their divorce].” Id. at 192.
In his LOI response dated April 30, 2020, the Individual stated that he owed a total of $10,648 in
collections which were comprised of five outstanding accounts. Ex. 6 at 48, 51–53. He further
stated that he owed a total of $71, 984 from three charge-off accounts. Id. at 50–51. He also
reported three outstanding repossession accounts with unpaid debts totaling $311,777 and stated
that he planned to address those debts by filing personal bankruptcy. Id. at 54–55. He
acknowledged that he still owed a debt of $1.3 million to his ex-wife due to a court-ordered
judgment. Id. at 56. Additionally, he reported that he owed $13,000 in delinquent child support
that is now subject to a payment agreement on which he is current. Id. at 57. Further, the Individual
stated that he sought advice from an attorney on how to address his many delinquent debts, and he
stated that he was advised to move to State X because that state’s laws prohibit wage garnishments
for debts unrelated to child support and outstanding taxes. Id.
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The Individual submitted a final brief (hereinafter “brief”) prior to the hearing. Ex. J. At the
hearing, the Individual testified under oath that the factual statements made in his brief are true
and accurate. Transcript (Tr.) at 10. In his brief, the Individual explained that he was “a former
millionaire who ended up on food stamps and Medicaid.” Ex. J at 7. He stated that in 2005, he
started his own company and within a year he was earning $20,000, per month. Id. He provided a
chart that showed his income was at an all-time high of $5 million for January 2013 through
January 2014. Id. at 9. In the summer of 2013, he was “blindsided” when his then-wife (“ex-wife”)
left him. Id. at 7. He indicated that his divorce was still looming in the Fall of 2014, and since he
was unable to reach an amicable resolution, he wanted to sell his company before finalizing his
divorce. Id. at 8. By the Fall of 2014, he had successfully negotiated a purchase price of $12.8
million for the sale of his company to a group of investors. Id. at 8. However, a few weeks later,
there was a global crash of energy commodities which dissuaded the investors from purchasing
the Individual’s company. Id. Under advice from a bankruptcy attorney, his company filed for
Chapter 11 bankruptcy on January 19, 2016. Id. at 9. His company went out of business in 2018.
Id. at 10.
In his brief, the Individual also stated that by April 2018, most of his business debts were paid,
excepting those related to the company’s vehicles and credit cards he used for operating expenses.
Id. at 10. He indicated that his remaining debts that he was unable to pay were the ones listed in
the SSC. Id. He tried to obtain work in 2018 through the first half of 2019, but after only securing
temporary jobs, he reported that he was forced to file for food stamps and Medicaid to provide for
the basic needs of his second wife and children. Id. at 10. In September 2019, he was hired by his
current employer, a DOE contractor, which provided a stable salary that allowed him to resolve
all his IRS debts and many of his past due accounts. Id. at 11.
Regarding his decision to file for personal bankruptcy, the Individual stated that initially he did
not qualify for Chapter 13 because the Chapter 13 debt limit is $1.2 million, but the Individual’s
ex-wife’s Marital Settlement Agreement (MSA) for $1.37 million put him over the legal
maximum. Ex. J at 13. However, the Individual asserted that his bankruptcy counsel determined
that the statute of limitations on the MSA expired due to non-payment, such that his debt from the
MSA would be considered zero, which meant that he could qualify for Chapter 13 reorganization.
Id. The Individual stated that his bankruptcy counsel obtained “the blessing of the U.S. Bankruptcy
Trustee to file a successful reorganization under Chapter 13 on July 8, 2021.” Id.
V. HEARING TESTIMONY
At the hearing, the Individual presented the testimony of his colleague, his coworker, his
supervisor, his current wife, as well as his own testimony. The colleague testified that he previously
met the Individual when they attended the same college but had not kept in touch with him since
then, until the last two years when they both started working for their current employer. Id. at 12–
13. The colleague asserted that the Individual is a critical part of the design group where they work
together. Id. at 14. He indicated that the Individual is a valuable employee and his design group
“desperately needs” the Individual due to the high caliber of his work, his high productivity level,
and his experience. Id. at 15. The colleague asserted that he has no concerns about the Individual’s
trustworthiness or honesty. Id. at 16–17. He testified that the Individual has been open and honest
with him in disclosing the LSO’s concerns and why he has not obtained his security clearance. Id.
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at 18. The colleague stated that like the Individual, he, too had previously owned his own business
so he and the Individual have discussed their shared experiences of enduring a high stress toll and
dealing with volatile economic markets. Id. at 19. As such, the colleague asserted that he is aware
that the Individual wants to maintain his current position long-term because he wants a stable job
that provides him with a steady income and higher quality of family life. Id.
The coworker testified that he has worked with the Individual for almost one year, and that the
Individual’s many work projects have benefitted their employer. Id. at 25–27. He was aware of the
LSO’s concerns alleged in the SSC. Id. at 30–31. The coworker asserted that he has no concerns
regarding the Individual’s reliability, judgment or honesty. Id. at 27. He stated that he is very
selective about who he spends time with outside of work and asserted that he trusts the Individual
to such an extent that has actually given the Individual a key to his home. Id. at 27–29. He testified
that they spend time together outside of work by collaborating on projects related to their hobbies,
and he has never known the Individual to demonstrate behavior that is fiscally irresponsible. Id. at
27–29.
The Individual’s supervisor testified that he has a strictly professional relationship with the
Individual, talks to him daily, and sees him every other day. Id. at 34. He stated that the Individual
is a fantastic employee who is very reliable, and genuinely cares about doing an excellent job. Id.
The supervisor asserted that his entire work group would welcome the Individual into a classified
position because he has demonstrated that he will make a significant impact on the employer’s
mission and will improve the way they operate and do business. Id. at 35–36. The supervisor
testified that the Individual has been very forthcoming and honest with him about the LSO’s
concerns regarding his security clearance, and the supervisor believes that the Individual has done
everything that he can to cooperate with the requirements of his investigation process and mitigate
the security concerns. Id. at 37.
The Individual’s second wife (“the wife”) testified that she has been married to the Individual since
2016, and she had worked for his company as a bookkeeper and office manager including when
his business downturn began. Tr. at 41–42. She stated that she often worked for no compensation
so that the Individual’s company could instead make payroll or other business debt payments. Id.
at 43–44. She saw firsthand the daily stress the Individual experienced including because of the
bills that were piling up as his business began to fail. Id. at 45. The wife asserted that from the day
that she met him, the Individual has diligently tried to find a way to meet his financial obligations,
until he could no longer do so. Id. at 45. She testified that when he became unemployed, it took
him a year and a half to find his current job, so they received government assistance to pay for
their basic needs. Id. at 59. The wife indicated that the Individual’s decision to file Chapter 13
bankruptcy was emotionally difficult as he did not want to pursue this option but determined that
it was the only way to address and resolve their remaining debts. Id. at 62–63.
The Individual’s wife also testified that she and the Individual are actively participating in a debt
management program informally through program lectures which the wife obtained through
podcasts. Id. at 46–48. She asserted that she and the Individual regularly discussed the lessons they
have learned from the program, and they have implemented several of its strategies to decrease
their debts. Id. at 47. For instance, they contacted every creditor that they owed money to and made
efforts to either settle the debt or establish monthly payments plans to repay overdue bills. Id. at
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48. They have also implemented significant cost cutting measures to adopt a more frugal lifestyle.
Id. at 47. The Individual currently has a much smaller, used vehicle that he can barely fit into but
which he drives because it has a low monthly payment of $120, and the wife traded in her new
vehicle for a significantly older car. Id. at 47, 51, 57–58. The wife stated that they also downsized
their housing by renting a house from her aunt which is essentially her aunt’s storage shed. Id. at
49. Their decision regarding their current housing allowed them to live within their means and
make progress in resolving their debts. Id. at 50. The wife also testified regarding their family
budget, which was submitted into evidence. She asserted that she and the Individual have been
following this budget consistently since 2019. Id. at 64; Ex. G. She stated that the credit card
payments that are reflected in the budget are strictly her credit card debts which are not part of the
Individual’s bankruptcy, and which they had incurred to pay for their basic living expenses during
the time the Individual was unemployed. Id. at 65–66. She testified that those accounts are current
and their plan is to have them paid off within the next six months. Id. at 66. The wife also asserted
that the amount of income made by the Individual is sufficient to cover their current living
expenses and the payments to the trustee for the Individual’s Chapter 13 bankruptcy. Id. at 61–62.
Moreover, she testified that the Individual also works at a second job that is seasonal and
supplements his income so they can meet their financial goals. Id. at 54–55.
The wife indicated that the Individual has learned difficult but important lessons about being in
business for himself versus the benefits of having good, steady employment that allows him to
provide financially for his family while improving the quality of their family life with significantly
less stress than when he owned his own company. Id. at 61. The wife stated that the Individual has
“loved [his current job] since day one” and asserted that maintaining his current job is definitely
part of his long-term goals. Id. at 60.
The Individual testified that he has paid all the debts from his collection accounts that were listed
on the SSC. Tr. at 72–73. In support of his testimony, he provided payment receipts and an updated
credit report dated December 20, 2021, which reflects that his collection accounts are paid in full
and resolved. Ex. B at 9; Ex. H at 28–29; Ex. 8 at 100. He also explained the problems that led to
his inability to pay the debt he owed to his ex-wife from the marital settlement agreement (MSA).
He testified that his divorce was finalized in November 2014, prior to the finalization of the sale
of his company. Id. at 81, 83, 84; see Ex. J at 8. The amount determined in the MSA was based
on the value of his ex-wife’s estimated share of his company’s assets, and what his profits were
for that year. Id. at 84. However, shortly after his divorce finalization, the price of energy
commodities decreased so severely that it eliminated all the Individual’s profits and led to the
collapse of the sale of his company. Id. at 81–82; see Ex. J at 8. In support of his testimony, the
Individual submitted a chart reflecting the price fluctuations of energy commodities and a chart
that reflected its effect on his income during the time periods from 2013 through 2019. Ex. J at 9.
The Individual asserted that he continued to make payments on the MSA debt and paid his ex-wife
nearly $200,000 until he filed a Chapter 11 bankruptcy reorganization of his company to reduce
his business debts. Id. at 93. He stated that the bankruptcy judge gave him leniency in that he did
not have to make any MSA payments during the time he was in Chapter 11 bankruptcy so that he
could focus on the financial health of his company and its employees. Id. at 83. The Individual
testified that if his ex-wife’s proof of claim related to the MSA is later validated by the court in
the future, he has saved enough funds to re-file a Chapter 11 bankruptcy, which would still allow
him to address and resolve his debts. Id. at 80–81.
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The Individual also testified that he filed a Chapter 13 bankruptcy restructuring plan with the
Bankruptcy Court on August 30, 2021. Id. at 74. He asserted that he has made five monthly
payments to the trustee since September 2021. Id. at 74–75. He testified that according to Chapter
13 bankruptcy, the creditors that filed a claim are included in the payment that the Individual is
making to the trustee, and those creditors will be paid over a five-year period. Id. at 95–96. The
Individual stated that he served notice of his Chapter 13 bankruptcy plan to his outstanding
creditors, including his repossession accounts, and for those creditors that chose not to file claims
after they received notice, the bankruptcy court essentially “wiped those debts clean.” Id. at 96. In
support of his testimony, the Individual submitted a copy of his “Debtor’s Chapter 13 Plan” which
reflected a list of priority creditors, and unsecured creditors, and scheduled payments amounts
including payment terms. Ex. F at 105,109. The Chapter 13 Plan also included a Certificate of
Service that listed all the creditors who were served notice of the Individual’s Chapter 13 Plan. Id.
at 116. The Individual testified that the debts of his three charge-off accounts were addressed
through his Chapter 13 bankruptcy. Id. at 73. In support of his testimony, he provided an updated
credit report dated December 20, 2021, that reflected that one charge off account was current, the
other account was closed because it was paid satisfactorily, and the third account was discharged
through Chapter 13 Bankruptcy. Ex. H at 3–5. Moreover, the Individual asserted that his
repossession accounts were also addressed through the bankruptcy, and his updated credit report
supports his assertions as to those accounts. Tr. at 85; Ex. H at 15, 21.
Regarding his unpaid child support debt, the Individual testified that he has been on a court ordered
payment plan since 2019 that automatically deducts child support payments from every paycheck.
Id. at 76–79. He provided a copy of his pay stub covering the pay period from November 29, 2021,
through December 12, 2021, which reflects a $375 deduction per pay period. Ex. I at 1. The year-
to-date deduction on his pay stub shows the Individual has thus far paid $9,396.75 in child support.
Regarding his outstanding tax debts, the Individual asserted that the IRS approved his offer in
compromise (“IRS offer”) to settle all his outstanding federal tax debts listed in the SSC. Id. at 88.
He stated that the IRS calculated his required payment and required that he pay the calculated
amount within six months and if he complied, his outstanding tax would be “considered settled.”
Id. The Individual asserted that he paid off the balance in accordance with the IRS offer. Id. The
record contains a copy of a letter from the IRS dated July 29, 2020, which confirms that the IRS
accepted the offer in compromise that the Individual submitted on December 21, 2018, and which
was modified on May 1, 2020. Ex. 8 at 101–103. As for his unpaid State taxes, the Individual
asserted that he had been trying to set up a payment plan with his state tax authority (“the State”)
since 2020, but due to delays related to the pandemic, the State had yet to verify that his company
was legitimately out of business, so he could not get a payment plan through the State. Id. at 89–
90. However, the Individual asserted that he has since been able to secure a court supervised
payment plan through the trustee of his Chapter 13 bankruptcy. Id. at 90. He also asserted that a
large portion of the $298,000 business tax debts for tax years 2014 through 2017, was not legally
transferrable from corporation to individual, which has decreased his state tax debt to
approximately $40,000 in payroll taxes and an estimated $4200 in personal tax. Id. at 89, 91–92.
The Individual’s testimony is supported by his Chapter 13 bankruptcy restructuring plan which
reflects scheduled payments to the trustee for the State tax authority in the amount of $4500 plus
$45,000 total. Ex. F at 109.
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Regarding the SSC allegation that he moved out of state to avoid repaying his debts, the Individual
asserted that his statements in his LOI were taken out of context. Tr. at 92. He testified that he was
searching for a job and had been unemployed until he found a job in State X. Id. Further, as he
explained in his brief, he had been searching for employment throughout several states during
2018 and 2019, until September 2019, when he found a job in State X working for a DOE
contractor. Ex. J at 11. As he explained, he would have moved wherever he had been able to obtain
stable employment. Id. at 3. He acknowledged his awareness that there are legal advantages to
living in the state where he currently resides as the laws regarding garnishment have allowed him
to successfully resolve his debts while being able to access money to support his family. Id.
VI. ANALYSIS
An individual may mitigate security concerns under Guideline F, in relevant part, if:
(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, a death, divorce or separation, clear victimization by predatory
lending practices, or identity theft), and the individual acted responsibly under the
circumstances;
(c) the individual has received or is receiving financial counseling for the problem
from a legitimate and credible source, such as a non-profit credit counseling
service, and there are clear indications that the problem is being resolved or is under
control;
(d) the individual initiated and is adhering to a good-faith effort to repay overdue
creditors or otherwise resolve debts;
(g) the individual has made arrangements with the appropriate tax authority to file
or pay the amount owed and is in compliance with those arrangements.
Adjudicative Guidelines at ¶ 20(a)-(d), (g).4
I find that the Individual has put forth sufficient evidence to apply the mitigating condition
described under ¶ 20(a). His past behavior of not being able to satisfy debts arose from a downturn
of business which severely impacted his company. This behavior is unlikely to recur for multiple
reasons. First, the Individual’s company is no longer in business as of 2018, and the Individual has
been gainfully employed by a DOE contractor in a stable position since 2019. As such, he no
longer incurs debts associated with self-employment including business taxes and other business
expenses, which comprised the majority of his outstanding debts listed in the SSC. Also, the
Individual has testified as to his commitment and ability to meet all his financial obligations while
4 The additional mitigating factors for Guideline F are not applicable in this case.
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simultaneously working towards becoming debt free. I find his testimony on this issue to be
credible. His monthly budget and current paystub support his assertions that he continues to live
within his means, and his automatic deductions (including for child support payments) show he is
actively resolving his debts. Moreover, his assertion that he has been saving funds in case his ex-
wife’s MSA claim becomes ratified by the court, is supported by his budget which reflects his
monthly surplus of $1300. In addition, by his subsequent actions, he has consistently made fiscally
responsible decisions which do not cast doubt on his reliability, trustworthiness, or good judgment.
His decision to retain the services of a bankruptcy attorney and successfully file a Chapter 13
bankruptcy restructuring plan with the U.S. Bankruptcy Court shows that he exercised good
judgment by developing a successful plan to resolve his debts. Moreover, he has demonstrated
reliability by having paid off his collection accounts and complying with his Chapter 13
bankruptcy restructuring plan to satisfy his remaining creditors including the State tax authority.
He has also timely filed his 2020 taxes for which he received a refund, thereby complying with the
terms of his IRS offer and compromise by remaining current on his taxes. Accordingly, I find that
the Individual has demonstrated his current reliability, trustworthiness, and good judgment through
these corrective actions that have resolved his tax issues and other financial problems.
The circumstances set forth in ¶ 20(b) are also present in the instant case. The Individual has
provided supporting evidence showing how the unexpected, severe decrease in commodity prices
that affected his industry ultimately led to his company going out of business. The conditions that
resulted in the Individual’s financial problem were largely beyond his control because the business
downturn was caused by global economic events that negatively affected the valuation of certain
raw materials. The decrease in commodity prices also led to the failure of the Individual’s
impending sale of his company to investors. This caused him to struggle to pay off debts including
the large debt from his MSA agreement, an amount that was based on the estimation of how much
the company was worth at the time of his divorce. Because his divorce finalization preceded the
decrease in commodities prices, the value of his company was much higher and as such, his ex-
wife’s MSA agreement of $1.3 million reflected her estimated share of the company at the time of
the divorce. Although these circumstances were largely beyond the Individual’s control, he
provided sufficient evidence to show that he acted responsibly under the circumstances.
Specifically, he paid as much of the MSA as he could afford to pay, while using his only remaining
funds from his accounts receivables to pay the maximum that he could afford on his payroll taxes,
and his business sales taxes. He then acted responsibility by filing a Chapter 11 reorganization of
his company to reduce the debts and succeeded in obtaining court orders to temporarily suspend
his payment on the MSA and reduce the payments for his company’s debts.
Regarding the mitigating condition described under ¶ 20(c), the Individual and his wife have been
studying debt relief strategies through a debt management program and have been implementing
several of the strategies recommended in this program. For example, the Individual and his wife
both have much older, used vehicles which has significantly decreased their monthly car payments.
They also downsized their housing by renting a house from a relative instead of paying a mortgage.
Additionally, the Individual negotiated with his creditors to settle several of his outstanding debts,
and his budget reflects that he and his wife are living within their means, meeting their financial
obligations, and maintaining a sufficient monthly surplus that is conducive to achieving their goal
of becoming debt free. Accordingly, I find that there are clear indications that the Individual’s
financial problems are under control.
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I also find that the circumstances set forth in ¶ 20(d) are present in the instant case. The Individual
has paid off his outstanding collection accounts, has filed a Chapter 13 restructuring plan and is
complying with the plan to satisfy his remaining creditors.
I further find that the circumstances set forth in ¶ 20(g) are also present in the instant case. The
Individual has shown that the IRS has accepted his offer in compromise so that his outstanding
federal payroll taxes for tax years 2014 through 2017 have been resolved with compromised
payment and his agreement to remain current on taxes for five years. Similarly, because the IRS
accepted the Individual’s offer in compromise, he has also resolved his unpaid personal income
taxes for tax year 2018. Regarding the Individual’s state tax debts, the Individual’s Chapter 13
restructuring plan supports his testimony that a large portion of the unpaid business taxes was not
transferrable from his company to his individual taxes, so that his state tax debt was largely
resolved. The remainder of his outstanding state tax debts are subject to his Chapter 13 court
supervised payment plan through the Trustee.
For these reasons, I find the Individual has presented sufficient evidence to satisfy the mitigating
conditions under ¶ 20(a)-(d), (g).
VI. CONCLUSION
In the above analysis, I found that there was sufficient derogatory information in the possession of
the DOE that raised security concerns under Guideline F of the Adjudicative Guidelines. 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
find that the Individual has brought forth sufficient evidence to resolve the security concerns set
forth in the Summary of Security Concerns. Accordingly, I have determined that the Individual’s
access authorization should be granted. The parties may seek review of this Decision by an Appeal
Panel, under the regulation set forth at 10 C.F.R. § 710.28.
Janet R. H. Fishman
Administrative Judge
Office of Hearings and Appeals