Case No. VSA-0048, 25 DOE ¶ 83,010 (OHA Apr. 12, 1996)

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* 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 XXXXX's.

DECISION AND ORDER

OF THE DEPARTMENT OF ENERGY

Opinion of the Director

Case Name: Personnel Security Review

Date Filed: November 21, 1995

Case Number: VSA-0048

This Opinion concerns a Request for Review filed by XXXXX (the "Respondent") concerning his eligibility to hold a level "L" access authorization under the regulations set forth at 10 C.F.R. Part 710.<1> On October 27, 1995, a Hearing Officer from the Office of Hearings and Appeals (OHA) of the Department of Energy (DOE) issued an opinion recommending against restoring the Respondent's access authorization. In this Opinion, I will consider the appropriate disposition of the Respondent's access authorization, based on the regulations and the record before me.

I. Background

The Respondent has been employed by the government-owned, contractor-operated XXXXX since 1973. At that time, the Respondent received an access authorization enabling him to work at the facility. In 1994, the DOE's XXXXX Office (XXXXX) began a standard five-year reinvestigation into the individual's background. As part of this reinvestigation, the DOE conducted a credit check on the Respondent. Information from the credit check revealed that the Respondent had two tax liens pending against him and also had several delinquent accounts. To resolve questions concerning the Respondent's financial affairs, the DOE conducted three personnel security interviews (PSIs) with the Respondent. Questions regarding the individual's eligibility for access authorization remained unresolved after the three PSIs. As a consequence, the XXXXX's Manager suspended the Respondent's level "L" access authorization and obtained authority from the Director of the Office of Safeguards and Security to initiate an administrative review proceeding.

The XXXXX commenced the administrative review proceeding on June 23, 1995 by issuing a Notification Letter to the Respondent advising him that the DOE possessed information which created a substantial doubt concerning his eligibility to maintain a security clearance (Notification Letter). Specifically, the Notification Letter states that the DOE uncovered derogatory information which indicates that the Respondent has engaged in unusual conduct or is subject to circumstances tending to show that the Respondent is not honest, reliable, or trustworthy, including conduct or circumstances involving a pattern of financial irresponsibility. According to the Notification Letter, the XXXXX reached this determination based on the following information: (I) the Respondent failed to file Federal income tax returns for the tax years 1989 through 1993; (ii) the Respondent failed to file State income tax returns for the years 1989 through 1994; (iii) the Respondent has been delinquent in paying his county property taxes from 1991 through 1993; (iv) the Respondent has been delinquent in paying his Area School District taxes since October 31, 1994; (v) the Respondent has been delinquent in paying his City wage taxes since 1989; (vi) the Respondent was delinquent on a mortgage beginning in 1982 and made only one payment of $427 on a delinquent amount of $11,585 (the mortgage was written off in the amount of $23,404 on December 1, 1992); (vii) a Borough filed two tax liens totaling $1,000 against the Respondent for the tax years 1993 and 1994; (viii) a Borough assessed the Respondent $4,000 to cover the cost of razing a house; (ix) the Respondent wrote two checks on an account without sufficient funds to cover those checks; and (x) the Respondent has loaned family and friends substantial amounts of money while neglecting to pay income, wage and property taxes and other financial obligations. The XXXXX concluded that the information set forth above came within the purview of potentially disqualifying criteria set forth at 10 C.F.R.§ 710.8(l).

After receiving the Notification Letter, the Respondent requested a hearing to respond to the DOE's allegations. The XXXXX's Manager transmitted the Respondent's Request for a Hearing to the Office of Hearings and Appeals (OHA) on July 18, 1995. I appointed Warren Gray as Hearing Officer in this case on July 21, 1995. Mr. Gray convened a hearing in this matter on XXXXXXXXXXXXXXXXX in XXXXXXXXXXXXXXXXXXXXXXXX.

At the hearing, the Respondent admitted that he had engaged in a pattern of financial irresponsibility. Transcript of XXXXXXXXXXXXXXXXX Hearing at 150 (hereinafter cited as "Hearing Tr."). He attributed his financial problems, however, to "misplaced generosity" or "just being a kind person." Id. Regarding his failure to comply with federal and state tax laws, the Respondent claimed that he prepared his tax returns, but that his father or brother secretly failed to mail them in order to cause trouble for him. Hearing Tr. at 122-124. In addition, the Respondent argued that he stopped paying property taxes because the property he purchased did not meet his expectations and he thought of returning it to the seller. Id. at 132-33.

II. The Hearing Officer Opinion

After considering all the relevant information, the Hearing Officer issued an Opinion on October 27, 1995, in which he found that the Respondent had not mitigated his admitted pattern of financial irresponsibility by showing his generosity and kindness. Personnel Security Hearing, 25 DOE ¶ 85,678 at 82,776 (1995). In addition, the Hearing Officer opined that the Respondent's excuses for failing to pay his mortgage and taxes and file tax returns were inadequate to overcome the legitimate security concerns raised by the XXXXX. Id. The Hearing Officer concluded that the Respondent's access authorization should not be restored since he was unable to conclude that such restoration would not endanger the common defense and security and would be clearly consistent with the national interest.

III. The Request for Review

On November 21, 1995, the Respondent filed his Request for Review with this Office. The Respondent submitted a statement on December 13, 1995 requesting that I focus my review in this case on the two issues, his tax problems and the repayment of loans he made to others. The Respondent provided me with some new evidence in the case on January 29, 1996 and March 6, 1996. The Office of Security Affairs declined the opportunity to respond to the Respondent's evidentiary submissions. On March 6, 1996, I closed the administrative record in this proceeding.

IV. Analysis

Under 10 C.F.R. § 710.28(a), either the Office of Security Affairs or the individual involved may file a request for review of a Hearing Officer's opinion with the Director of the Office of Hearings and Appeals. The regulations provide that (I) the party seeking review must file a statement with the OHA identifying the particular issues on which it wishes me to focus my review and (ii) the other party may file a response to that statement. 10 C.F.R.§§ 710.28(a) and (b). The regulations also permit me to accept submissions that are relevant to my review from either the individual or the Office of Security Affairs. 10 C.F.R. § 710.28(c).

In considering requests for review, I will generally confine my inquiry to those issues raised in the statement or response. The regulations provide that I may consider additional information which was not before the Hearing Officer. 10 C.F.R. § 710.28(c); 10 C.F.R. § 710.29(2). In the present case, the Respondent has provided me two evidentiary submissions, neither of which was considered by the Hearing Officer. One submission concerns repayment of loans by family members to the Respondent and the other submission relates to the potential satisfaction of a mortgage encumbering property owned by the Respondent. As previously noted, the Respondent has requested that I review two issues in this case, taxes and repayment of loans. Accordingly, my present opinion will be limited to these two issues.

A. Whether the Respondent's Failure to File State and Federal Income Taxes and Pay Miscellaneous Local Taxes Raises a Legitimate Security Concern.

The Respondent asks that I review the Hearing Officer's findings regarding his failure to file and pay taxes to various state, federal, and local taxing authorities. The Respondent has advanced no reasons, however, to suggest that the Hearing Officer erred in opining that the Respondent's excuses for failing to pay his taxes and file tax returns are inadequate. In fact, the Respondent has presented no arguments at all to suggest that a review of the tax issues is warranted. Notwithstanding these deficiencies, OHA contacted the Respondent and inquired what, if anything, he had done to remedy his problems with various taxing authorities. See Record of Telephone Conversation between Ann Augustyn, OHA Senior Attorney, and the Respondent (February 27, 1996). The Respondent reported that he is paying $50 per month towards his outstanding county property taxes, $50 per month to reduce his outstanding area school taxes, and $100 per month for outstanding city wage taxes. Id. The Respondent admitted under questioning that he has not established a repayment plan with any of the three taxing entities to which he is making monthly payments. Rather, the Respondent claims that he is making repayment at his own pace, stating he might increase the amount he will pay if his monthly cash flow increases. Id. With respect to filing state and federal taxes for the years in question, the Respondent claims he has filed all back Federal tax forms but has not yet done so for the State because he is having difficulty obtaining the forms. Id. Finally, regarding the two pending tax liens totaling $1,000, the Respondent stated he has no information regarding this matter. Id. <2>

A thorough review of the record before the Hearing Officer reveals that he correctly concluded that the Respondent's pattern of failing to file tax returns and pay income, wage and property taxes as well as other financial obligations presented a legitimate security concern within the purview of 10 C.F.R. § 710.8(l). The Respondent's repeated acts of financial irresponsibility coupled with his failure to take any corrective action regarding the issues raised in the Notification Letter constituted reasonable bases for the Hearing Officer's recommendation against the restoration of the Respondent's access authorization.

Regarding the Respondent's recent attempts to rectify his numerous tax problems, I cannot conclude that the Respondent has reformed from his repeated failure over the last several years to fulfill his tax obligations. Of note in this regard is that the Respondent has not established a formal repayment plan with any of the three taxing entities that he currently claims to be paying. I have no assurance based on the Respondent's past behavior that he will faithfully tender payments on his own. Also significant is that the Respondent has not yet obtained forms from the XXXXXXXXXXXXXXXXXXXXXXXXXXXXX to file tax returns for the five-year period, 1989 through 1994. The Respondent has been on notice since June 1995 when the XXXXX issued the Notification Letter that the DOE was concerned that the Respondent had taken no corrective action with respect to his tax problems. The fact the Respondent did not act expeditiously to resolve all his outstanding tax questions underscores the XXXXX'a concerns about the Respondent's judgment and reliability. In sum, even construing the record in the most favorable light, I must concur with the Hearing Officer that the Respondent's habitual irresponsibility with respect to his finances raises a serious doubt about his ability to handle classified material responsibly and follow security regulations. Accordingly, after reviewing the record regarding the Respondent's tax situation and considering the Respondent's purported efforts to take corrective action with respect to some of his tax liabilities, I find no reason to disturb the Hearing Officer's opinion.

B. Whether Promises to Repay Loans to the Respondent and the Respondent's Opportunity to Satisfy His Mortgage Mitigate Some of the DOE's Security Concerns Set Forth in the Notification Letter.

On January 29, 1996, the Respondent submitted a letter signed by three of his siblings, XXXXX, XXXXX and XXXXX. In the letter, the three siblings state the reasons why they borrowed money from their brother and note their intentions to repay the money when they are in a financial position to do so. The three advise that they are grateful to the Respondent for assisting them financially during difficult times. They conclude the letter by urging me to reconsider the recommendation to revoke their brother's access authorization.

The record reflects that the Respondent was the only steady wage earner in a family of 16 for a number of years. That the Respondent elected to assist his parents and 14 brothers and sisters in a time of need is to be commended not condemned in most circumstances. Here, however, the Respondent was making discretionary loans of substantial amounts of money to relatives and friends at a time when he was neglecting his legal obligations to pay taxes and meet other financial responsibilities. It is not relevant at this time whether the Respondent required his family and friends to repay the money he lent or gave them. Nor is it important that the Respondent's motives were lofty and his generosity and kindness appreciated by family and friends. Rather, the focus is on the Respondent's judgment on those numerous occasions when he elected to demonstrate his benevolence at the expense of fulfilling his legal obligations. I observe that the Respondent has not even argued, let alone demonstrated, that he would act differently or make different choices if confronted with a similar set of circumstances in the future. Based on all the foregoing considerations, I agree with the Hearing Officer that the irresponsible behavior exhibited by the Respondent in loaning or giving tens of thousands of dollars to family and friends while neglecting financial obligations poses an unacceptably high security risk for the DOE. Cf. Personnel Security Hearing, VSO-0001, 24 DOE ¶ 82,751 at 85,506 (1995) (legitimate security concern arises when an individual has demonstrated a pattern of placing her own private interests above the law).

On March 6, 1996, the Respondent transmitted to OHA a letter dated January 24, 1996 from XXXXX Savings and Loan Association regarding a mortgage that institution holds on the Respondent's property. The letter states in relevant part as follows:

". . . XXXXX will satisfy our mortgage encumbering the property referenced above upon payment of $20,000. It is agreed and understood that the payment of these funds will be made within 120 days from receipt of this letter. . ."

While the Respondent does not explain how the new information relates to any issue before me, I speculate that he has submitted the information to demonstrate that the property at issue in the letter was not the subject of foreclosure proceedings, as the Hearing Officer found in his Opinion. Based on the new evidence, it is possible that no foreclosure occurred with respect to the Respondent's property since the mortgagee is permitting the mortgagor to satisfy the debt by paying $20,000. The pivotal issue here is not, in my opinion, whether the lending institution foreclosed upon the subject property or not. Rather, the issue is whether the Respondent's inability or unwillingness to make regular mortgage payments over a period of 13 years poses a legitimate security concern to the DOE. On this issue, common sense dictates that such a concern is a valid one. At the time the Hearing Officer rendered his Opinion, there was no evidence that the Respondent had established a payment plan with the lending institution to address the issue of his delinquent mortgage during those 13 years. Based on this fact, I find the Hearing Officer correctly concluded that the Respondent was acting in a financially irresponsible manner by failing to pay or take any corrective action with respect to his mortgage liability.

As to whether the new evidence mitigates the security concern attached to the Respondent's past mortgage delinquencies, I note that the Respondent has not represented that he is able to fulfill the terms of the lending institution's requirements for satisfying his mortgage debt. Moreover, there is no indication in the record that the lending institution will accept anything less than $20,000, permit the Respondent to make installment payments on that amount, or extend the payment deadline beyond the 120 days. As a result of these uncertainties, I simply cannot find that the new evidence tendered by the Respondent regarding his attempt to redress his mortgage problems mitigates the DOE's security concerns concerning the Respondent's judgment in managing his financial affairs. See generally Personnel Security Hearing, 25 DOE ¶ 82,751 (1995).

V. Conclusion

I have carefully considered the record of this proceeding, the Opinion of the Hearing Officer and the matters raised by the Respondent in his Request for Review. After due deliberation, I find that the Opinion reflects "a comprehensive, common-sense judgment, made after consideration of all relevant information" and accordingly should not be disturbed. I find further that the two new evidentiary submissions tendered by the Respondent do not mitigate the DOE's security concerns set forth in the Notification Letter. It is therefore my opinion that the Respondent's access authorization should not be restored since I am unable to conclude that such restoration would not endanger the common defense and security and would be clearly consistent with the national interest. 10 C.F.R.§ 710.27(a).

George B. Breznay

Director

Office of Hearings and Appeals

Date:

* * * * *

[On May 29, 1996, a final determination was made by the Director, Office of Security Affairs, to revoke the individual's Department of Energy access authorization.]

<1>/ Access authorization (also referred to as a security clearance) is an administrative determination that an individual is eligible for access to classified matter or special nuclear material. 10 C.F.R.§ 710.5.

<2>/ I will assume for purposes of this review that the Respondent has tendered payments to the various taxing authorities and filed the appropriate tax forms as he has orally represented. Previous attempts to obtain written materials from the Respondent in a timely fashion during the pendency of this review have been difficult. Therefore, in the interest of expediency, I elected not to require written confirmation of the representations the Respondent made during the February 27, 1996 telephone conversation. If I believed that the Respondent's alleged efforts at remedying his tax problems could have caused me to render a favorable opinion concerning his access authorization, I would have required written confirmation of the facts he orally represented.