Case No. VSO-0041, 25 DOE ¶ 82,775 (H.O. Hochstadt Oct. 27, 1995)

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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.

DEPARTMENT OF ENERGY

OFFICE OF HEARINGS AND APPEALS

Hearing Officer's Opinion

Case Name: Personnel Security Hearing

Date of Filing: June 15, 1995

Case Number: VSO-0041

This Opinion concerns the eligibility of XXXXX (hereinafter referred to as "the Individual") to retain his 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>On April 12, 1995, the Manager of the Department of Energy's XXXXX Office (XXXXX) suspended the Individual's access authorization pursuant to the provisions of Part 710. In this Opinion, I will consider whether, based upon the record before me, the Individual's access authorization should be reinstated. As indicated below, I am of the opinion that it should not be reinstated.

I. BACKGROUND

The Individual has been employed at the government-owned, contractor-operated XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX since January 1990. In late 1989, the Individual received an access authorization enabling him to work at the facility. This administrative review proceeding results from a reinvestigation of the Individual's eligibility to retain that security clearance. As part of that reinvestigation, the Individual was required to complete a Standard Form 86, Questionnaire for Sensitive Positions (QSP), in November 1994. As a result of information obtained from a credit report on the Individual, a full field background investigation, and personnel security interviews held on February 16 and April 12, 1995 (the "February PSI" and the "April PSI"), the XXXXX Manager suspended the Individual's security clearance on April 12, 1995. The present administrative review proceeding was commenced by the issuance of a letter on May 8, 1995, in which the XXXXX Manager notified the Individual that information possessed by the DOE created a substantial doubt concerning his continued eligibility for access authorization ("Notification Letter").

The Notification Letter specifies two areas of derogatory information described in 10 C.F.R. § 710.8. First, under Criterion F (10 C.F.R. § 710.8(f)), XXXXX alleges that the Individual "deliberately misrepresented, falsified, or omitted significant information from a Personal Security Questionnaire, a personnel security interview, [or] written or oral statements made in response to official inquiry on a matter that is relevant to a determination regarding eligibility for DOE access authorization . . . . " Notification Letter at 1. The Notification Letter specifies six occasions in which the Individual is alleged to have deliberately omitted or falsified significant information in written or oral statements made during the course of the reinvestigation.

Second, in eleven enumerated paragraphs, the Notification Letter presents allegations under Criterion L (10 C.F.R. § 710.8(l)). That criterion consists of derogatory information to the effect that an 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. . . .

10 C.F.R. § 710.8(l). The specific conduct or circumstances referred to in the Notification Letter involves the Individual's alleged financial irresponsibility.

In a letter dated June 6, 1995, the Individual's attorney requested a hearing without filing a separate written response to the allegations in the Notification Letter. Under the regulations, such a request for a hearing is deemed a general denial of all of the reported information listed in the Notification Letter. 10 C.F.R. § 710.21(b)(5). The request for a hearing, together with a copy of the Notification Letter, was forwarded by XXXXX to the Office of Hearings and Appeals (OHA), which received the submission on June 15, 1995. I was appointed the Hearing Officer in this matter on June 26, 1995. In accordance with a schedule determined by the Hearing Officer, the DOE Counsel filed seven documents with the OHA on July 10, 1995. These documents included the QSP, signed and dated by the Individual on November 21, 1994, the transcripts of the February and April PSIs (hereinafter cited as the "2/95 PSI Tr." and the "4/95 PSI Tr.," respectively), and a Personal Financial Statement dated 2/21/95. In a filing dated August 3, 1995, the Individual's attorney submitted a settlement agreement, executed on August 23, 1993, by the Individual and XXXXX. In accordance with OHA practice, all of these submissions became part of the record of this proceeding upon filing with OHA.

On XXXXXXXXXXXXXXX, a prehearing telephone conference was held pursuant to 10 C.F.R. § 710.25(f). During that conference, the attorneys for the parties agreed upon certain stipulations, which were subsequently placed in the record at the hearing. They will be referred to in the Findings of Fact section later in this Opinion. On that same date, the DOE Counsel submitted for the record a 6-page Offense Report from the XXXXX, Pennsylvania, Police Department (hereinafter "Police Report") for the purpose of identifying the amounts of money taken from the victims of an armed robbery at the Individual's home in May 1993 ("the May 1993 robbery").

The hearing in this matter was held at XXXXXX on XXXXXXXXXXXXXXX. See Transcript of Hearing, Case No. VSO-0041 (hereinafter cited as "Hearing Tr."). At the hearing, DOE Counsel presented two witnesses: the DOE Security Specialist who had conducted the PSIs and XXXXX.<2> The Individual testified on his own behalf, but did not present any witnesses. At the conclusion of the hearing, I granted the request of the Individual's counsel to submit a post-hearing statement one week after his receipt of the transcript of the hearing. Hearing Tr. at 167. I also directed the Individual to submit through his counsel a statement itemizing his expenditure of approximately $16,000 that he received from his pension fund in January 1995. On October 3, 1995, the itemization was received by OHA together with a statement from the Individual's attorney indicating that he did not intend to supplement his closing remarks at the hearing. The record was therefore closed as of that date.

II. FINDINGS OF FACT

A. Chronology of Relevant Events

At the hearing, both DOE Counsel and the Individual referred to events in the Individual's personal life over the past several years as support for their respective positions. The following chronology, which is based on the entire record and is essentially undisputed by the parties, will be helpful in understanding the discussion below:

January 1990: The Individual is hired by XXXXXX after having been granted an "L" access authorization.

September 1990: The Individual marries.

March 1991: The Individual starts operating the XXXXX restaurant. His first child is born.

February 1992: The Individual's second child is born.

April 1992: The Individual borrows $9,900 from XXX Bank to purchase a 1988 XXXXXXXXXXXXX.

July 1992: The Individual borrows $13,800 from XXX Bank to purchase a 1989 XXXXXXXXXXXXX automobile. He purchases a home on XXXXX Ave., but cannot yet move there because substantial repairs are necessary.

August 1992: The Individual and a partner start operating the XXXXX restaurant. The Individual borrows $14,500 from XXXXXXXXXXXXXXXXXXXXX to purchase a 1990 XXXXX. Subsequently, he gives the car to his sister-in-law, who makes the payments.

October 1992: The Individual closes the XXXXX restaurant.

March 1993: The Individual borrows $7,500 from XXXXXXXX to purchase an XXXXXXXXXXXXX. Subsequently, he gives the car to his brother-in-law, who makes the payments.

Spring 1993: The Individual and his family move into the house at XXXXX Avenue.<3>

May 1993: An armed robbery occurs during a poker game at the Individual's home.

July 1993: The Individual's XXXXXXXX automobile is repossessed. The Individual ceases to operate the XXXXX restaurant and his landlord, XXXXX, obtains a judgment against him for approximately $54,000.

August 1993: The Individual enters into a Settlement Agreement with XXXXX in which he agrees, inter alia, to pay the firm $4,500 in full satisfaction of the judgment.

November-December 1993: The Individual operates the XXXXX Restaurant for two months.

January 1994: The Individual's third and fourth children (twins) are born.

July 1994: The Individual enters into a Payment Agreement with XXXXXXXXXXXXXXXXXXXXXXXXXXXXX in order to pay off a judgment of $2,442.35 pertaining to the unpaid electric bill of the XXXXX restaurant.

January 1995. The Individual withdraws $15,518.79 from his pension fund.

August 21, 1995: The Individual files for bankruptcy under Chapter 7 of the Bankruptcy Code.

B. Criterion F

As indicated above, the Notification Letter lists six items of derogatory information in support of XXXXX's allegation concerning Criterion F. It is important to note at the outset that this criterion does not apply to all misstatements and omissions, but only those that are deliberate and involve significant information. At the prehearing conference, DOE Counsel stipulated that the omission of information referred to in item 5 of the Notification Letter was not significant, and withdrew that charge. See Hearing Tr. at 7. I will now discuss the remaining five items, as numbered in the Notification Letter.

Item 1. XXXXX's first allegation under Criterion F is that the Individual omitted from his answer to Question 11 of the November 21, 1994 QSP information about the three restaurants that he operated.

The instructions for QSP Question 11 state in pertinent part:

Fill in your employment activities, beginning with the present ([box]#1) and working backward 15 years. INCLUDE:

·all full-time work·all paid work·self-employment

·all part-time work·active military work·all periods of unemployment

The Individual completed two boxes in response to this question. In box #1, he listed his employment at Bettis from January 1990 to the present and in box #2 he listed a period of unemployment from November 1989 to January 1990.<4> He did not list his self-employment at any of the three restaurants.

The Individual has asserted that these omissions were not deliberate, but were the result of his not reading the question carefully. Hearing Tr. at 111; 4/95 PSI Tr. at 27. In support of his assertion of non-deliberateness, and also apparently to minimize the substantiality of the omissions, he stated that many people knew about his self-employment, including his supervisor at Bettis, and that the government knew about it as a result of his filing tax returns. Hearing Tr. at 111-112; 4/95 PSI Tr. at 28. He also indicated that he was confused because the employment question was worded differently on the form that he had filled out in 1989. Hearing Tr. at 90-91, 111-12; 4/95 PSI Tr. at 27.

I find that these omissions were deliberate and substantial. First, as indicated above, the instructions to Question 11 clearly specified that self-employment was to be included in the response to that question. Those same instructions also specified that periods of unemployment were to be listed and the Individual listed one such period. Since unemployment would not generally be considered an "employment activity," it is reasonable to assume that the Individual included a period of unemployment from five years previously only because he read the instructions. In fact, the Individual correctly followed the instructions by inserting the numeral 7 (the code number for unemployment) in the appropriate box and entering the name of someone who could verify his unemployment. I cannot accept as credible the Individual's statement that he was unaware that he had to list his self-employment when that category of employment activity was specified in those same instructions. In addition, as indicated by my findings with respect to items 3 and 4, infra, the omission of this information appears to have been part of a deliberate attempt by the Individual to prevent the DOE from learning about his financial difficulties. Finally, the Individual's statement that his self-employment was common knowledge is a disingenuous after-the-fact attempt to justify the omissions. While the Internal Revenue Service may have had information about his restaurants, the DOE certainly did not. Moreover, the Individual (properly) provided in the QSP other information which he knew was available to the DOE, e.g., his employment at Bettis.

Item 2. XXXXX claims that the Individual omitted from his answer to Question 19 of the November 1994 QSP the names of two naturalized United States citizens who lived at his residence; namely, Mr. XXXXX.

QSP Question 19 asks the person completing the form whether any "citizen of another country, or a United States citizen by other than birth, live[s] at your residence." The Individual answered in the negative. At the hearing, the Security Specialist indicated that, because the question is worded in the present tense ("live"), it applies only to persons who are residing with an individual on the date he completes the form. Hearing Tr. at 63-64. Mr. XXXXX, who is foreign-born, was called by the DOE to testify in support of the allegation in item 2. However, he stated under oath that neither he nor his wife, XXXXX, who is also foreign-born, lived at the Individual's XXXXX. residence on November 21, 1994, the date the Individual signed the QSP. Hearing Tr. at 31. The Individual also testified that Mr. XXXXX and Ms. XXXXX did not reside with him in November 1994, id. at 105-06, and was prepared to present two witnesses and documentary evidence to support his testimony. However, since Mr. XXXXX testimony was unchallenged, no additional evidence was necessary on this issue.<5> In view of the uncontested sworn testimony of Mr. XXXXX and the Individual, I find that the Individual did not falsely answer QSP Question 19.

Item 3. XXXXX next alleges that the Individual omitted from his answer to QSP Question 27a information about the judgments filed against him by XXXXX and XXXXX.

The Individual does not deny the existence of these judgments, evidence of which has been entered into the record. However, he argues that these omissions were not deliberate. Primarily, he indicates that he did not believe that he had to list the judgments since he never appeared in court. See 4/95 PSI Tr. at 9; Hearing Tr. at 98. He also testified that he entered into a Settlement Agreement with XXXXX and a Payment Agreement with XXXXX shortly after the entry of the judgments, Hearing Tr. at 96-98, thus implicitly questioning the substantiality of the omissions.<6>

I find that these omissions were deliberate and substantial. Question 27a does not mention anything about court appearances. It asks: "In the last 5 years, have you, or a company over which you exercised some control, . . . had a legal judgment rendered against you for a debt? If ?Yes,' provide date of initial action and other information requested below." In response to the question, the Individual answered "No." Regardless of whether he knew the precise meaning of the word "judgment," he cannot credibly claim that he was unaware of the judgments. Paragraph 1 of the Settlement Agreement with XXXXX, which the Individual signed on August 23, 1993, states in pertinent part: "In or about July of 1993, a Confession of Judgment was entered against [the Individual] . . . ." Similarly, Paragraph 1 of the Payment Agreement with XXXXX, which the Individual signed on July 13, 1994, four months before he completed the QSP, begins as follows: "Plaintiff has entered a judgment against the Defendant, [the Individual] . . . ." Finally, there is nothing in Question 27a from which the Individual could reasonably conclude that he could answer the question in the negative because the matter was subsequently resolved.<7>

Item 4. XXXXX next alleges that the Individual omitted from his answer to QSP Question 27b information about eight delinquent financial obligations.

At the prehearing conference, DOE Counsel stipulated that, as of the date the QSP was signed by the Individual, five of the debts had not been delinquent for over 180 days, the period specified in question 27b. See Hearing Tr. at 6-7. The three accounts that had been delinquent for over 180 days, according to DOE Counsel, were the XXXXXXXX Student Assistance Commission, XXXXXXXX's Department Store, and XXXXX Bank. Although the Notification Letter does not specify the amount of these accounts at the time the Individual completed the QSP in November 1994, it does indicate that they totalled $13,177 in the credit report that was obtained by XXXXX prior to the February PSI. Notification Letter at 3.

The Individual does not dispute that the three accounts were delinquent for the requisite amount of time, but he asserts that the Bettis personnel office clerk referred to in note 6, supra, informed him that he did not have to list his debts if he was making payments on them. Hearing Tr. at 94, 125. I am not, however, persuaded that these omissions were unintentional. First, as was the case with Question 27a, the Individual did not merely omit information, but incorrectly answered a specific question. In this case the question was: "Are you now over 180 days delinquent on any loan or financial obligation?" The Individual answered, "No," despite the fact that the three stipulated debts were not just slightly delinquent, but were more than six months delinquent. Moreover, even assuming that the failure to list delinquent debts could be deemed to be unintentional if done in reliance on a clerk's advice, I fail to see how the Individual's response to Question 27b was consistent with the clerk's advice. According to the Individual, the clerk told him that he did not have to report debts if he was making payments on them. Id. at 94 (" ?As long as you keep up with it, you are paying it. . .' "). However, there is no evidence in the record documenting that the Individual made any payments on the three specified delinquent accounts during the six months prior to his completing the QSP. Further, any isolated, partial payment that might have been made would not constitute "keep[ing] up" with the debts. Finally, the omission of this significant derogatory financial information fits into a pattern with the other omissions discussed above in that it prevented the DOE from learning anything about the Individual's financial difficulties. Accordingly, I find that the omission of these delinquent debts was deliberate and substantial.

Item 6. XXXXX alleges that the Individual made a false statement in the February PSI when he informed the Security Specialist that he called the police to report the May 1993 robbery.

It is undisputed that in the first PSI the Individual stated that, "I called [the] police," 2/95 PSI Tr. at 38, and that in the second PSI, he acknowledged that the call was made by a next door neighbor. 4/95 PSI Tr. at 52-53. At the hearing, the Individual indicated that at first he had not remembered who had called the police since the event occurred almost two years before the PSIs. Hearing Tr. at 102. He also noted that even though he had not summoned the police, he reported the incident to them once they arrived at his home. Id.

At the hearing, the Security Specialist testified that, in his opinion, the misstatement in the first PSI was deliberate. In support of this contention, he noted that the Individual repeated the misstatement in the second PSI and only acknowledged that a neighbor called the police after the accuracy of his prior statements was challenged. Id. at 54-55; see also 4/95 PSI Tr. at 48, 50, 52. The Security Specialist also suggested that the reason the Individual made the misstatement was because he was "trying to hide police involvement in the robbery," i.e., that the police had been called. Hearing Tr. at 55.

Contrary to the supposed motivation for the misstatement suggested by the Security Specialist, the Individual did not hide the fact that the police had been called to investigate the robbery. Accordingly, I am unwilling to find that his misstatement, which was made in passing at the end of the interview, was a deliberate attempt to cover up the incident. I therefore find that the misstatement in the February PSI does not constitute derogatory information under Criterion F.

C. Criterion L

At the prehearing conference, the Individual's attorney stipulated that the Individual had displayed a pattern of financial irresponsibility. See Hearing Tr. at 7. However, he asserted that there were mitigating factors and that, because of these factors, restoring the Individual's security clearance would not be detrimental to the national security. He also did not stipulate to the accuracy of any of the specific items of derogatory information listed in the Notification Letter in support of the Criterion L allegation. Accordingly, I will make findings of fact regarding the 11 items of derogatory information concerning financial irresponsibility before discussing the Individual's eligibility for a security clearance in light of the derogatory information that has been established and the mitigating factors presented.

Item 1. In this section of the Notification Letter, XXXXX refers to the XXXXX and XXXXXXXX in support of its allegation of financial irresponsibility.

As indicated in the previous section of this Opinion, the Individual does not dispute the existence of these judgments. However, he has submitted the Settlement Agreement in the XXXXX case under which the $54,083 judgment would be satisfied when the Individual fulfilled his agreement to pay XXXXX $4,500 in three installments. As indicated in note 7, supra, the Individual made the required payments.

According to a July 13, 1994 Payment Agreement between XXXXXXXX and the Individual, submitted into the record by DOE, the judgment entered against the Individual was in the amount of $2,442.35 plus interest from April 29, 1994. As part of this agreement, the Individual agreed to make monthly payments of $100 for six months beginning June 15, 1994, and to negotiate a higher payment amount thereafter. However, the Individual did not make any payments under this agreement until February 1995. See supra note 7.

Items 2 and 3. Item 2 enumerates nine financial obligations that were listed as delinquent in a credit report that was obtained prior to the February PSI. The outstanding balances on those accounts allegedly totaled $30,502. Item 3 states that of the nine accounts listed in item 2, six were listed as delinquent as of the date of the May 8, 1995 Notification Letter. The outstanding balances of these accounts totaled $26,828.

At the hearing, the Individual largely accepted XXXXX's specification of the outstanding balances on the enumerated delinquent financial obligations. <8>Hearing Tr. at 163-64 (referring to Notification Letter at 3). The Individual was able to reduce his delinquent debts by almost four thousand dollars during the period from about January to early May as a result of his having withdrawn $15,518.79 from his pension in January 1995.<9>

Items 4 and 5. Item 4 refers to a loan of $6,000 or $7,000 from XXXXX at an annual interest rate of 24% and Item 5 refers to a $2,000 or $3,000 loan from XXXXX for which the Individual used his wife's jewelry as collateral. The Notification Letter alleges that both loans were obtained by the Individual "unconventional means."

The Individual does not dispute that he obtained these loans from a friend, XXXXX, and her brother, XXXXX. According to the Individual, the former loan was needed for his restaurant business and the latter loan was need to help his father-in-law, whose business was experiencing temporary financial difficulties. Hearing Tr. at 137-39; 4/15/95 PSI Tr. at 68. The Individual has stated that both loans were repaid, id., and this was not disputed by XXXXX. See, e.g., Hearing Tr. at 76-78 (testimony of Security Specialist).

Items 6-8. Item 6 refers to four loans, totaling, $45,700, which the Individual obtained to purchase four used cars during the period from April 1992 through March 1993. The Notification Letter indicates that one of the vehicles, a 1989 XXXXXXXXXXXXX, was repossessed in July 1993 after the loan was placed in collection. Item 7 states that the Individual gave two of the vehicles to two of his in-laws, who took over the monthly installment payments on the loans because he could not afford to make the payments. According to item 8, the Individual in the February PSI indicated that he had leased the XXXXXXXXXXXXX, but the credit report indicated that the Individual obtained a 48-month loan to purchase the vehicle.

The allegations in items 6 and 7 are not disputed by the Individual. He also stated at the hearing that he made down payments of $6,800 on the XXXXXXXXXXXXX and $3,000 each on the XXXXXa and XXXXX. Hearing Tr. at 153-54. The Individual further indicated that his sister-in-law and brother-in-law had not repaid him for the down payments for the XXXXX and XXXXX and that he was still the responsible party under the installment loans. Id.

With respect to item 8, the Security Specialist explained at the hearing that this allegation supported the derogatory financial information under Criterion L because the Individual's financial obligation under a loan was more substantial than under a lease. Hearing Tr. at 79-80. However, the Individual has never really disputed the fact that he obtained the XXXXXXXXXXXXX through an installment loan.<10>Thus the allegation in item 8 does not add anything to the issue of the Individual's alleged financial irresponsibility.

Item 9. This item alleges that the natural gas service account for the Individual's home was set up in the name of another person, Mr. XXXXX, and remained in his name from 1992 until April 1995. According to XXXXX, this account, which is not included with the accounts listed in items 2 and 3, had a past due balance of $1,496.82 at the time of the Notification Letter.

The Individual does not dispute that he owes Mr. XXXXX for payments that the latter made to XXXXXXXXX Gas during the period specified above. Hearing Tr. at 126-27. According to Mr. XXXXX, the Individual at one point paid $500 towards the arrears, but still owed $1,500 as of the date of the hearing. Id. at 26-27.

Items 10 and 11. According to item 10, in the April PSI the Individual admitted to holding and participating in an illegal gambling activity, viz., a card game, in his home in May 1993. The Notification Letter further alleges that the persons at the card game were robbed of $10,000 in cash and $12,000 in jewelry. In item 11, XXXXX alleges that reliable information in its possession indicated that the Individual regularly participated in illegal gambling in the form of high stakes card games.

In support of these allegations, DOE Counsel submitted the Police Report which itemized the theft of jewelry and more than $10,000 in cash from the Individual and others playing poker at the time of the May 1993 robbery. Moreover, in the April PSI, the Security Specialist indicated to the Individual that, according to the background investigation, the Individual played poker games in which the ante (which the Security Specialist incorrectly referred to as the "opening bid") was as high as $1,000. 4/95 PSI Tr. at 65. While the Individual admitted to playing poker for money on the night of the May 1993 robbery and on other occasions prior to that night, he denied playing frequent, high stakes poker as alleged by XXXXX. 4/95 PSI Tr. at 62-65. The Individual also testified that he had not played poker for money since the night of the robbery. Hearing Tr. at 142-43. Finally, the Individual asserted that none of his financial difficulties were caused by gambling losses. Id. at 72.

There is no evidence in the record upon which I can find the exact extent and magnitude of the gambling activities alluded to by the Security Specialist in his questioning of the Individual in the April PSI. Nevertheless, there is sufficient evidence for me to conclude that during the period up until the May 1993 robbery the Individual engaged in what I would consider to be high stakes gambling on routine basis.<11> In the April PSI, the Individual attempted to minimize the extent of his gambling as indicated by the following interchange between the Security Specialist ("S") and the Individual ("I") concerning the May 1993 robbery:

S: . . . And there was gambling involved?

I: Well, yeah. Gambling, how would you define gambling, Ray? I play. . .

S: Playing a game for money.

I: Yeah.

S: Did you put money into a pot in this game?

I: Yes.

S: That's gambling.

I: You don't define how much.

S: No.

I: It's considered gambling even if I play at home with my wife and we put out 50 cents . . . 25 cents that's considered gambling[?]

S: It's gambling. How much was in the pot that night when you were robbed?

I: In the pot usually . . . I don't know. When you say the pot, the outside money[?]

S: The money involved in the game at that time.

I: The total money on the table [?]

S: Yeah.

I: About probably talking about . . . nine people . . . probably $1,000.

4/95 PSI Tr. at 57-58 (all but the first ellipsis are in the transcript).

At the hearing, too, the Individual attempted to minimize the amount of money involved in the poker game the night of the robbery, but finally confirmed that about $1,000, or $100 per player, was in the game at that time. Hearing Tr. at 136-37. While this clearly would not support a finding of a $1,000 ante, as alluded to by the Security Specialist in the April PSI, the amount on the table plus the thousands of dollars in the possession of the card players (until they were robbed) clearly demonstrates that this was not a 25 and 50 cent game.

I also find that prior to the May 1993 robbery the Individual engaged in such high stakes poker games on a regular basis, though perhaps not "frequently," as alleged in the Notification Letter. The only evidence in the record regarding the frequency of such games is the Individual's statement in the April PSI that "we do it occasionally." 4/95 PSI Tr. at 59; see also id. at 62 ("about a couple times a year"). However, in view of the Individual's attempts to minimize the amount of money involved in his poker games, I think it is likely that he has also attempted to minimize the frequency of such games.

III. ANALYSIS

The Hearing Officer's role in this proceeding is to evaluate the evidence presented by the agency and the Individual, and to render an opinion 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 or 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). Among the factors I have considered in rendering this Opinion concerning the Individual's eligibility for access authorization are the following: the nature, extent, and seriousness of his conduct; the circumstances surrounding the conduct, including knowledgeable participation; the frequency and recency of the conduct; his age and maturity at the time of the conduct; the voluntariness of his participation; the absence or presence of rehabilitation or reformation and other pertinent behavioral changes; the motivation for his 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 criteria to the information presented by the XXXXX in this case and to the testimony and exhibits submitted by the Individual. As discussed below, after carefully considering the entire record in view of the standards set forth in 10 C.F.R. Part 710, I find that the derogatory information presented by XXXXX raises legitimate security concerns. I further find that the Individual has failed to present sufficient evidence of rehabilitation, reformation or other mitigating factors.

A. Criterion F

1. Derogatory Information

As indicated above, I have found that the Individual deliberately omitted significant information in his response to three questions in the November 1994 QSP. At the hearing, the Security Specialist stated that these omissions presented a security concern to the agency because they raised a question as to the Individual's honesty, trustworthiness, reliability and judgment. Hearing Tr. at 48-50. In response, the Individual's attorney minimized the extent and seriousness of the omissions. He also suggested that the DOE would not have been concerned about these omissions if the Security Specialist had not also thought that the Individual failed to identify foreign-born persons residing with him. Hearing Tr. at 181-82.

After considering the evidence and testimony concerning the information that the Individual omitted from the QSP in light of the DOE's security concerns as stated by the Security Specialist, it is my opinion that the Individual's failure to provide that information reflects a lack of truthfulness, good judgment and trustworthiness. It thus creates a doubt as to whether the Individual can be trusted to safeguard classified information or uphold security regulations. Contrary to the suggestion of the Individual's attorney, it is clear from the Security Specialist's questions during the PSIs and his testimony at the hearing that he believed that the Individual's failure to respond accurately to QSP Questions 11, 27a and 27b constituted a pattern of omission of significant employment and financial information. I therefore find that the individual's misrepresentations by omission raise a legitimate security concern.

2. Mitigating Factors

At the hearing, the Individual testified as to two types of mitigating factors. The first involves the circumstances surrounding his completion of the QSP and the second pertains to his asserted rehabilitation or reformation. In connection with the former, the Individual raised essentially the same contentions that I considered in finding that the omissions were deliberate. He further stated that he had a short period of time in which to complete and return the form, and that much of that limited time was spent trying to familiarize himself with the new computer program used for completing the form. Hearing Tr. 90-92. Finally, his counsel argued that Criterion F applies to the entire investigation process and not to any one particular facet such as the QSP. Id. at 180-81. According to this argument, because the Individual truthfully answered questions in the PSIs about the omitted information, there has not been a deliberate and significant misrepresentation. Id.

After considering these arguments in light of the factors set forth in section 710.7(c), I am unable to find any mitigation of the agency's security concerns. Although I recognize that the Individual was unfamiliar with the software program that he was required to use to complete the QSP, this has no bearing on the type of information that he was required to provide. Further, there was not just one isolated omission. The record reveals the following omissions: three periods of self-employment, all of which ended because of financial difficulties; two judgments, one of which had not been satisfied as of the date the QSP was completed; and three delinquent financial obligations which totaled in excess of $13,000. Moreover, these omissions occurred recently, when the Individual was in his late 20s. As an adult, the Individual must be held accountable for his conduct, particularly for behavior which reflects a pattern of misrepresentation by omission. In addition, as indicated in the Findings of Fact section, the Individual did not simply omit information with respect to Questions 27a and 27b; he expressly denied that there were any judgments or delinquent debts. Finally, I reject counsel's novel argument that a misrepresentation on a QSP can never form the basis for a finding under Criterion F if the statement is subsequently corrected during the investigation process. The information about the judgments and delinquent accounts was obtained not from the Individual but through the credit check performed by DOE Security. And while the Individual disclosed in the first PSI that he operated restaurants, this was done in response to questions that the Security Specialist asked in connection with the Individual's failure to disclose the XXXXX judgment. See 2/95 PSI Tr. at 2-3.

Moreover, I am unable to find that there has been rehabilitation or reformation. From my reading of the PSIs and the testimony at the hearing, there is no basis upon which I could find that the Individual would in the future voluntarily disclose all significant information in response to DOE queries. Contrary to the contention of the Individual's attorney that the Individual has "been forthright and straightforward with the government throughout the investigation," Hearing Tr. at 182, in the February PSI the Individual failed to reveal the XXXXX judgment, after specifically being asked whether there were any other judgments against him. 2/95 PSI Tr. at 25. Moreover, in that PSI the Individual initially denied that he had operated any other restaurant after the XXXXX restaurant closed down in July 1993. Id. at 4. It was only after further prodding by the Security Specialist that he admitted having "forgot" about another restaurant that he opened up after the XXXXX. Id. at 25. Finally, in the April PSI, the Individual was evasive on the subject of his gambling, as evidenced by his interchange with the Security Specialist quoted in the previous section of this Opinion.

In sum, I find the Individual's deliberate omission of significant financial and employment information to be a very serious matter. Further, I am not persuaded that there are any significant mitigating factors or any evidence of rehabilitation or reformation in this case. An individual's trustworthiness is essential to DOE's security program. Falsification (even if by omission) by an employee with an access authorization raises serious, legitimate doubts about whether he should be entrusted with responsibility for safeguarding classified materials. In this case, moreover, the falsification concerns financial irresponsibility, which raises a security concern in its own right. I therefore conclude that the DOE properly relied upon Criterion F in suspending the Individual's security clearance.

B. Financial Irresponsibility

1. Derogatory Information

At the time of the Notification Letter, the Individual's delinquent financial obligations, $30,628, exceeded his annual net salary.<12> This large amount of outstanding debt raised serious security concerns since XXXXX could reasonably believe that it might cause the Individual to be subject to pressure, coercion, exploitation, or duress. However, a change in circumstances occurred a week before the hearing when the Individual and his wife filed for bankruptcy under Chapter 7 of the Bankruptcy Code. It is the Individual's position that, as a result of the expected discharge of most of his debts, he will not be subject to the types of pressure that raise a security concern. See Hearing Tr. at 178 (closing statement). At the hearing, the Security Specialist contended that, despite the bankruptcy filing, the DOE still had security concerns as a result of the Individual's recent history of financial irresponsibility. Id. at 79. It was his position that the Individual had not demonstrated that there had been a change in the "pattern of irresponsibility" that had led to the bankruptcy. Id.

While the bankruptcy filing reduces the likelihood that the Individual will be subjected to undue pressure because of his debts, I am not persuaded that it completely resolves the agency's concerns regarding his financial irresponsibility. It appears from the Individual's testimony that at least one of the installment loans on the automobiles he transferred to his in-laws was not listed in the bankruptcy petition. See Hearing Tr. at 153. While this loan is apparently being paid off by his sister-in-law, and the lender retains a security interest in the vehicle, the Individual is still legally responsible on the note and would be responsible for any deficiency if the vehicle were repossessed. <13>The Individual also indicated that he still intended to pay the $1,500 he owes Mr. XXXXX for his residential gas service. Id. at 127. In addition, the Individual testified that he owed about $1,400 in property taxes, id. at 165, which are generally not dischargeable. See 11 U.S.C. § 523(a)(1). Finally, it is possible that one of the Individual's largest outstanding obligations, the approximately $10,000 that he owes to the XXXXX Student Assistance Commission for student loans, will not be discharged.<14>

I also find that the loans from XXXXX and her brother, XXXXX, though repaid, raise the security concerns set forth in 10 C.F.R. § 710.8(l). Although a clearance holder's indebtedness to friends or acquaintances may not always raise such concerns, in this case it shows how vulnerable the Individual was to pressure, coercion, exploitation or duress because of his financial irresponsibility. For example, while the Individual stated that XXXXX was a "good friend" who returned the collateral before her loan was repaid, Hearing Tr. at 138; 4/95 PSI Tr. at 69, he also stated that she threatened to take one of his sons -- and presumably hold him for ransom -- after she was robbed at his home in May 1993. Hearing Tr. at 103-04; 4/95 PSI Tr. at 50-52. Although her loan was paid off by the Individual's father-in-law, while it was unpaid the Individual was clearly at risk of coercion. The high interest (24%) loan which the Individual had to obtain from XXXXX because he was unable to use his credit card or other conventional sources of financing vividly illustrates the extent and seriousness of his financial difficulties.

The Individual's four automobile purchases also demonstrate the extent of his pattern of financial irresponsibility. During the 12-month period in which the Individual made substantial down payments on these vehicles, and obligated himself to substantial installment payments, he was having difficulties meeting his financial obligations to support his growing family and his restaurant businesses: the XXXXX, which opened in March 1991 and closed in July 1993 after a long period of financial difficulties; and the XXXXX, which opened in August 1992, the same month in which the Mazda was purchased, and closed two months later, with a total loss to the Individual and his partner in excess of $10,000. Thus, these transactions exacerbated the Individual's financial difficulties. Furthermore, the Mercedes, Mazda and Isuzu were not purchased because the Individual's family or businesses needed them, but because, in his words, "Well, sometimes you like cars. That's why - - - some people like cars and some people like - - - it's their hobby." Hearing Tr. at 150 (hyphens in transcript). I thus find that these transactions, which occurred only a few years ago, support XXXXX's allegations under Criterion L.

I also find that the Individual's gambling, when considered in light of his financial difficulties, confirms the security concerns raised by XXXXX. While there is nothing in the record upon which I could find that the Individual's financial difficulties were caused by his gambling, any gambling losses clearly contributed to those difficulties. The Individual did not indicate how much he had lost at gambling during recent years.<15>When pressed by the Security Specialist in the April PSI, the Individual stated that the maximum amount he usually had in his pocket when playing poker was $200, and that $200 is the most he recalled losing at cards in one night. 4/95 PSI Tr. at 64. However, ten times that amount, or $2,000, was stolen from the Individual on the night of the robbery, and large amounts were stolen from the other players as well. Police Report at 2. In light of the Individual's consistent minimization of the extent of his gambling, I can reasonably assume that he may have lost considerably more than $200 in recent years. Moreover, regardless of how frequently the Individual gambled and how much he lost, his gambling activities placed him at risk, as evidenced by his testimony on cross examination concerning the night of the May 1993 robbery:

Q. Why were you hesitant initially, when the police came?

A. Well, there's a lot of threats on me. They said that I was the mastermind of setting up the ---

Q. Who is saying this?

A. XXXXX, everybody.

Q. The people at the party?

A. Yes.

Q. Okay. And these people are your associates, you know, friends in the community?

A. Friends, very good friends, right. They are very good friends.

Q. All right. Okay. And what else did they say? Anything else?

A. And then --- you know, these people, they don't know them. They are not --- I don't know how to say it. They don't know too much about the law.

Q. Okay.

A. Not too much.

Q. They don't know anything about the law?

A. When they threaten me, very scary.

Q. All right.

A. One guy say, "I'm going to get a gun and come back and look for you." The other lady, "I'm going to get your son, until you pay it back to me."

Q. So, you are telling us that these people don't have, I guess sort of an idea or even respect for the law, they think that it is sort of like a cowboy justice?

A. Right. That's right.

Hearing Tr. at 103-04 (hyphens in transcript indicating sentence not completed). As this testimony confirms, the Individual's gambling activity is precisely the type of conduct or circumstance 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 national security." See 10 C.F.R. § 710.8(l).

2. Mitigating Factors.

The Individual has presented a number of allegedly mitigating factors in support of his claim that restoring his security clearance would not threaten national security. First, he argues that his financial difficulties were the result of family responsibilities, including the birth of four children between March 1991 and January 1994, and business failures. He also asserts that he did not ignore his financial problem, but attempted to cope with it by paying off certain debts and seeking counseling. At the hearing, he also stated that in January 1995 when he had the first opportunity to withdraw money from his pension after it vested, he withdrew over $15,000 and paid off various debts. Finally, he asserts that his filing for bankruptcy should be viewed as evidence of rehabilitation since it shows his desire to wipe the slate clean and deal with his financial responsibilities in a responsible manner.

After reviewing the entire record, I am not persuaded that any mitigating factors that are present are sufficient to overcome the legitimate security concerns presented by the Individual's pattern of financial irresponsibility. The Individual's poor judgment is clearly a major factor in his financial difficulties. This is most dramatically evidenced during the period from July 1992 through March 1993 when he purchased three automobiles that he did not need. During that period, the Individual had insufficient funds to make his newly purchased house suitable for occupancy and was losing money in two restaurant businesses.

There is also insufficient evidence of rehabilitation or reformation upon which I could find that the Individual would not be financially irresponsible in the future. First, I am not persuaded that the Individual's attempts to cope with his debts demonstrate rehabilitation. While it is true that he made payments from time to time and went for some credit counseling, the payments do not appear to have been pursuant to any plan and the Individual did not follow through with credit counseling, claiming that he could make his own payment plan. See Hearing Tr. at 94-95; 2/95 PSI Tr. at 30-31. In fact, he did not make a plan for systematically paying off his creditors until the Security Specialist asked him to prepare a Personal Financial Statement at the conclusion of the February PSI. While the Individual testified that he had made some of the payments called for under this plan, see Hearing Tr. at 144-46, he also stated that he stopped making payments in April 1995 when his security clearance was suspended and he realized that he might lose his job. Id. I understand why the Individual ceased making payments on his debts under those circumstances, but I cannot find that the few payments that he made after preparing that plan constitute credible evidence of rehabilitation.<16> Similarly, the Individual's bankruptcy filing, while no doubt reasonable under the circumstances, does not lead me to find rehabilitation. There is simply nothing in the record upon which I can find that the Individual will be financially responsible in the future as a result of the "clean slate" provided by the very recent bankruptcy filing. Moreover, as indicated above, the Individual will likely still be responsible for a number of significant debts. Finally, even assuming that the Individual has not played poker since the May 1993 robbery, as he testified to at the hearing, he has in fact gambled more recently than that. Specifically, in the April PSI, he indicated that he had played cards for money in Atlantic City at around Thanksgiving or Christmas of 1994. 4/95 PSI Tr. at 71. For all of these reasons, the security concerns raised by the Individual's pattern of financial irresponsibility remain.

IV. CONCLUSION

For the reasons set forth above, I am of the opinion that XXXXX properly invoked 10 C.F.R. § 710.8(f) and (l) in suspending the Individual's access authorization. I also find insufficient evidence of rehabilitation, reformation or any other mitigating factor. During the hearing, the Individual testified that he has not done anything to harm national security. Hearing Tr. at 110. However, that is not the issue. XXXXX has alleged, and I find, only that the Individual presents an unacceptable risk to national security. In view of the record before me, including the security concerns testified to by the Security Specialist, I cannot find that restoring the Individual's access authorization would not endanger the common defense and security and would be clearly consistent with the national interest. Accordingly, it is my opinion that the Individual's access authorization should not be restored.

The regulations set forth at 10 C.F.R. § 710.28(a) provide that the Office of Security Affairs or the Individual may file a request for review of this Hearing Officer Opinion within 30 calendar days of receipt of the Opinion. Any such request must be filed with the Director, Office of Hearings and Appeals, 1000 Independence Ave., S.W., Washington, D.C. 20585-0107, and served on the other party. If either party elects to seek review of the Opinion, that party must file a statement identifying the issues on which it wishes the OHA Director to focus. This statement must be filed within 15 calendar days after the party files its request for review. The party seeking review must serve a copy of its statement on the other party, who may file a response with 20 days of receipt of the statement. The address to which submissions must be sent for purposes of serving the Office of Security Affairs is:

Director

Office of Safeguards and Security

Office of Security Affairs

U.S. Department of Energy

19901 Germantown Road

Germantown, MD 20874-1290

Ted Hochstadt

Hearing Officer

Office of Hearings and Appeals

<1>/ An "access authorization" is an administrative determination that an individual is eligible for access to classified matter or special nuclear material. See 10 C.F.R. § 710.5. Such authorization will also be referred to in this Opinion as a "security clearance."

<2>/ In the April PSI, the Individual referred to Mr. XXXXX as his "adopted brother-in-law." E.g., 4/95 PSI Tr. at 100. Mr. XXXXX was adopted by the Individual's parents-in-law as an adult. Hearing Tr. at 105.

<3>/ In response to QSP Question 9, the Individual stated that he began living at the XXXXX Avenue address in September 1992. However, during the April PSI and at the hearing, he stated that he was not able to move into the house until the spring of 1993. 4/95 Tr. at 43; Hearing Tr. at 155-56.

<4>/ In his response to this and other questions, the Individual did not provide any information for the period prior to November 1989, i.e., information that was presumably included in his prior QSP. XXXXX has not suggested that the omission of this earlier information was in any way erroneous.

<5>/ The Security Specialist had testified that the background investigation indicated that the Individual and his wife were residing with the Individual in November 1994. Hearing Tr. at 64. However, no details of that investigation were presented.

<6>/ In the first PSI, the Individual stated that a clerk in the Bettis personnel office advised

him that he did not have to report judgments that were settled. 2/95 PSI Tr. at 38. However, in the hearing, he stated that while she advised him on answering other questions, he did not talk to her about his judgments. Hearing Tr. at 96, 120.

<7>/ While the Individual had satisfied the XXXXX judgment at the time he completed the QSP, Hearing Tr. at 123-24, he did not make any payments to XXXXX until February 21, 1995, five days after the first PSI. Id. at 121-22.

<8>/ DOE Counsel stipulated that one of the debts, $298 owed to XXXXXXXX, was not delinquent. Hearing Tr. at 163. (This was separate and apart from the amount owed to XXXXXXXX on the judgment.) The Individual also stated that as a result of a payment to XXX Bank, he owed only approximately $400 and not $866. Id. This payment was reflected in the listing of delinquent accounts in item 3.

<9>/ In a post hearing submission, the Individual accounted for all payments made from the pension withdrawal. The balance of the payments went for other, non-delinquent debts.

<10>/ During the course of the interchange between the Security Specialist and the Individual in which the latter used the term "lease," he also clearly indicated that the XXXXXXXXXXXXX was financed by one of two auto loans he obtained from XXX Bank. 2/95 PSI Tr. at 18.

<11>/ Although the Notification Letter refers to "illegal" gambling, it does not allege that the Individual engaged in "criminal behavior" as that term is used in 10 C.F.R. § 710.8(l). It is therefore not necessary for me to make a finding as to whether the Individual's gambling activities were illegal under XXXXXXXXXXXX law.

<12>/ I have included in the amount of delinquent debt not only the $26,828 listed in item 3 of the Criterion L allegations in the Notification Letter, but also the approximately $2,300 owed on the $2,442.35 (plus interest) XXXXXXXX judgment, see Personal Financial Statement dated 2/21/95, and the $1,500 owed to Mr. XXXXX. On his Personal Financial Statement, the Individual indicated that his net salary was $2,410.46 per month or $28,926 per year.

<13>/ One of the delinquent financial obligations specified in the Notification Letter was the balance of the amount that he owed PNC Bank on the XXXXXXXX auto loan after that car was repossessed and sold at auction.

<14>/ Section 523(a)(8) of the Bankruptcy Code exempts from discharge governmentally insured or guaranteed educational loans except if (A) they first became due more than seven

years before the filing of the bankruptcy petition, or (B) "excepting such debt from discharge ... will impose an undue hardship on the debtor and his dependents." 11 U.S.C. § 523(a)(8).

<15>/ At no time during the PSIs or the hearing did the Individual claim that his winnings exceeded his losses.

<16>/ While the payment plan in the Personal Financial Statement envisioned that the payments would be made from the Individual's salary, it appears that they were made from the $15,518.79 that he obtained from his pension plan in January 1995. Since those funds were completely expended by the end of March, I have no reason to believe that the Individual would have continued to make payments to reduce his debts even if his security clearance had not been suspended.