Case No. VSO-0081, 25 DOE ¶ 82,805 (H.O. Lipton May 3, 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.

DEPARTMENT OF ENERGY

OFFICE OF HEARINGS AND APPEALS

Hearing Officer's Opinion

Case Name: Personnel Security Hearing

Date of Filing: January 26, 1996

Case Number: VSO-0081

This Opinion concerns the eligibility of XXXXX (hereinafter "the individual") for an "L" access authorization. The regulations governing the individual's eligibility are set forth at 10 C.F.R. Part 710, "Criteria and Procedures for Determining Eligibility for Access to Classified Matter or Special Nuclear Material." This Opinion will consider whether, based on the record testimony and other evidence presented in this proceeding, the individual's suspended access authorization should be restored.

I. BACKGROUND

In a letter of December 4, 1995, the Manager of the XXXXX Office (XXXXX) of the Department of Energy (DOE) informed the individual that his access authorization was suspended pending resolution of substantial doubts concerning the individual's financial situation and his reliability and trustworthiness. On January 3, 1996, the Manager of the XXXXX issued a Notification Letter to the individual, stating that the XXXXX was in possession of derogatory information that created a substantial doubt concerning his continued eligibility for his "L" access authorization. In accordance with 10 C.F.R. §710.21, the Notification Letter included a

detailed statement of the derogatory information. It specified a concern that the individual engaged in unusual conduct or is subject to any circumstances which tend to show that he is not honest, reliable, or trustworthy; or which furnishes reason to believe that he may be subject to pressure, coercion, exploitation, or duress which may cause him to act contrary to the best interests of the national security. Such conduct or circumstances include a pattern of financial irresponsibility. Section 710.8(l) [Criterion (l)].

The concerns are based on the individual's admission that he has a number of credit card accounts and loans with large delinquencies. The Notification Letter set forth in detail the loans and other delinquent accounts forming the basis for the Criterion (l) charge.

The Notification Letter informed the individual that he was entitled to a hearing before a Hearing Officer in order to respond to the information contained in that letter. On January 26, 1996, the individual requested a hearing. The individual's request for a hearing was forwarded by the XXXXX to the Office of Hearings and Appeals (OHA). On January 30, 1996, I was appointed the Hearing Officer in this matter. In accordance with 10 C.F.R. Section 710.25(e) and (g), the hearing was convened in XXXXXXXXXXXXXXXXXXXXXXXXXX, on XXXXXXXXXXXXX.

At the hearing, the individual represented himself and testified on his own behalf. The XXXXX presented the testimony of a security specialist, XXXXXXXXXXXXXXXXXXXX. There were no other witnesses.

II. FINDINGS OF FACT

The facts in this case are not in dispute. The individual is a XXXXX year old XXXXXXXXXXXXXXXXX, employed by a contractor of the XXXXX. In March 1995, the individual completed a security questionnaire for the purpose of updating his DOE security clearance. On the questionnaire, the individual indicated that he had delinquent accounts and loans that were over 180 days old. This prompted the DOE to conduct a Personnel Security Interview with the individual on May 31, 1995 (May 31 PSI).

During that interview, the individual and the DOE Security Specialist, Mr. XXXXXXXXX, discussed the individual's financial status. The individual admitted that he had balances totaling nearly $12,500 on two AT&T Universal credit cards, a Chemical Bank Mastercard balance of $6,648, which Chemical Bank charged as a loss, a Citibank Visa card with a total unpaid balance of $2,448, which was also charged as a loss, a $698 unpaid balance with Sears Roebuck & Company, and a First USA Bank card with a total unpaid amount of $2,692. Two of the accounts had been turned over to collection agencies. May 31 PSI at 5-6. The individual also indicated that a car that he had purchased through a bank loan had been repossessed for failure to make payments, and that he owed approximately $6,000 to the bank for the repossessed automobile. May 31 PSI at 7-8. The individual stated that he owed $1,064 for a XXXXX Guaranteed Student Loan, which had also been turned over to a collection agency. May 31 PSI at 8. The individual further indicated that he owed some money for both state and federal income taxes, but that he expected to pay both of these obligations within a week. May 31 PSI at 16.

The individual indicated that these debts arose because he lost two concurrently-held jobs, and, beginning in September 1993, was unemployed for a seven-month period. May 31 PSI at 9-10. He stated that he was unable to make any payments on his monthly credit card balances and loans during the period of unemployment. Therefore, although he did not continue to make purchases by credit card during that period, the amounts he owed accumulated quickly due to interest accrual.

The individual indicated that even after he found work at XXXXX in April 1994, he did not correct this financial problem. He stated that after he began his new job, his child support payments increased from $50 per month to $220 per month, which made it difficult for him to begin to make payments on his credit card debts. May 31 PSI at 13. He also indicated that he obtained some information about claiming bankruptcy and discussed his options with the Consumer Credit Association in XXXXXXXXXX. May 31 PSI at 14.

After this PSI, the DOE postponed making a decision regarding the individual's security clearance, to allow him some time to resolve these financial issues. The DOE decided that it would obtain a credit report at a later date and re-interview the individual before making a final decision regarding his security clearance. Testimony of XXXXXXXXXXXXXXXX, Transcript of April 9, 1996 Hearing (hereinafter Tr.) at 28.

On November 14, 1995, the XXXXX conducted another PSI with the individual. The individual admitted that he had taken no significant action to reduce any of the debts referred to in the prior PSI. He stated that he had decided to claim bankruptcy. November 14 PSI at 3. However, he indicated that he had not begun the bankruptcy process because that would cost between $700 and $1,000. He stated that he needed to save up for such an expenditure. November 14 PSI at 9. He also stated that he has been making payments "off and on" to repay delinquent federal income taxes, but that he had not made any payments for approximately 18 months. November 14 PSI at 14-15. Thus, during the six-month period between the two PSIs, the individual took no positive steps towards resolving his financial problems. On December 4, 1995, the XXXXX Manager suspended his clearance. December 4, 1995 Letter from XXXXX.

III. ANALYSIS

The Hearing Officer's role in this proceeding is to evaluate the information presented by the XXXXX and the individual, and to render an opinion based on that evidence. The 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. See 10 C.F.R. §710.7(a).

A. Derogatory Information

As I stated above, there is no dispute as to the existence of the debts accrued by this individual.<1> At the hearing and during the PSIs, the Security Specialist described the security concerns associated with such debts. As he stated, one concern is the potential for blackmail or coercion of employees who have amassed significant overdue debts. Such employees might succumb to bribery and sell information or material in order to pay off their debts. May 31 PSI at 22; November 14 PSI at 16.

Secondly, he noted that there is a security concern as to the judgment and reliability of an employee who fails to meet his financial obligations. The security specialist indicated that an individual whose judgment is impaired may be unable to handle classified and confidential information. Tr. at 33.

There is a very serious security concern associated with an employee who has engaged in conduct showing a pattern of financial irresponsibility. See Personnel Security Hearing, VSO-0073, 25 DOE ¶ 82,794 (1996). I find in this case, based on the record of this individual's continued unpaid debts, that a security concern exists regarding his reliability and trustworthiness, and the possibility that this individual may be subject to coercion, pressure or bribery resulting from these debts.

B. Mitigating Factors

In rendering my judgment in this case, I must consider whether there are factors present to mitigate the DOE's security concerns. 10 C.F.R. §710.7(c); §710.27(a). Among the factors I am to consider 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. 10 C.F.R. § 710.7(c).

At the hearing, the security specialist provided some general information regarding the types of actions an employee might take to mitigate DOE's security concerns stemming from a pattern of financial irresponsibility. In this case, he stated that "the individual should recognize the problem exists, take steps on his own initiative to resolve the financial crisis, showing some commitment, some remorse, as well as trying to achieve a settlement." Tr. at 33. After reviewing the record I find that the individual has not taken any serious steps toward resolution of this problem, shows no real commitment to doing so, and exhibits no remorse about his mismanaged finances, except to the extent that his position with XXXXX has been adversely affected.

The individual has offered the following explanations and additional facts in an attempt to mitigate these concerns. As indicated above, he states that the reason for these large unpaid obligations is that he lost two jobs, and was therefore unable to continue to make regular payments on his debts.

This might be a factor in the individual's favor if, after he began working again, he had resumed making payments on his obligations. However, the individual admittedly did virtually nothing to regain financial stability once he began working for XXXXX. He continued to let the debts mount and made no effort even to repay interest. He stated that he "got in the routine of not being able to make payments. And once I did have to make some sort of payment towards these places, I realized that all I would be doing is knocking off interest forever." November 14 PSI at 11. He also stated "I'm not truthfully concerned about paying these people off." November 14 PSI at 16. It was "complacency on my part....you get into a habit of just cutting [creditors] off." Tr. at 39. This unwillingness to take responsibility for his obligations indicates unreliability and untrustworthiness.

The individual also stated that he attempted to resolve the financial problem through consumer counseling. Such a step, if followed up by participation in an appropriate repayment program, might also tend to mitigate security concerns. The consumer credit association that he contacted offered him a program in which he could make a single monthly payment to that organization, which, in turn, would make a disbursement to all of his creditors. This program would have the benefit of suspending interest accrual.

The individual recognized that there were long-term benefits to this option. Nevertheless, he decided not to enter this program because "short-term which is what I was concerned about they weren't really going to save me anything as far as monthly totals go." May 31 PSI at 14. He indicated that "the minimum monthly balance was going to be the same whether I'm paying all these people separately or whether I'm paying through credit counseling. The only difference would be that there would not be interest accumulated....it's looking to me [as though] the only option is bankruptcy." November 14 PSI at 8.

The individual thus expressed little concern with satisfying his financial obligations. See Personnel Security Hearing, VSO-0065, 25 DOE ¶ 82,795 (1996)(clearance restored after individual took steps towards to organize financial records, retained assistance to file overdue tax returns and filed those returns before the hearing). He was not even willing to follow a program that would provide him the significant benefit of halting interest accrual. Moreover, the individual did not persuade me that he was unable to make monthly payments at some level. His apparent concern was simply to avoid repayment. I find this attitude to be a further indication of untrustworthiness.

The individual has also indicated that he intends to file for bankruptcy. He believes that once his debts have been discharged through bankruptcy, the DOE's concerns that he may be subject to coercion or pressure will be mitigated.

The DOE recognizes that bankruptcy is a legal means for resolution of financial problems. When reviewing the security clearance of an individual that has filed for bankruptcy, the DOE's interest is in how that individual reached the point at which it became necessary for his debts to be discharged. The DOE's concern is whether there is a legitimate financial hardship or whether the bankruptcy resulted from irresponsible behavior. Thus, filing for bankruptcy may not necessarily allay security concerns about an individual's trustworthiness and reliability, if an employee has exhibited financial behavior that is irresponsible, and which shows an unwillingness to fulfill his financial obligations. See Personnel Security Hearing, VSO-0041, 25 DOE ¶ 82,775 (1995)(filing for bankruptcy does not completely resolve agency's concerns regarding financial irresponsibility)(request for review denied, Case No. VSA-0041, 25 DOE ¶ 83,005 (1996)).

The individual's declarations regarding his plan to file for bankruptcy are unconvincing. As an initial matter, at the time of the first PSI in May 1995, the individual stated that he had already considered filing for bankruptcy. May 31 PSI at 15. He indicated, however, that he had not "been able to commit to it one way or another." Id. By the time of the November 14 PSI, he continued to entertain this option, but still had taken no positive steps to initiate the process, and had no date in mind as to when he might begin. November 14 PSI at 9. At the April 9 Hearing, the individual presented a letter from an attorney indicating that the individual had contacted her regarding his financial status. Letter of April 3, 1996, from XXXXXXXXXXXXXXXXXXX. The individual stated that she would represent him in his bankruptcy proceeding, which would be instituted once this administrative review process is complete. However, the individual has not yet paid her any fee, and has still taken no formal steps toward filing a bankruptcy claim. Tr. at 36-37. The individual's statement that he intends to file for bankruptcy is not credible, given his year-long procrastination on this issue. I am not convinced that the individual will actually follow through on this plan.<2>

In any event, even if the individual does file for bankruptcy, a security concern would still exist regarding his pattern of behavior. In reviewing the behavior leading the individual to the point of needing to file for bankruptcy, I find, as stated above, a pattern of serious financial irresponsibility. Accordingly, I am not convinced that filing for bankruptcy would mitigate security concerns regarding this individual's judgment and trustworthiness.

Furthermore, the mere declaration of intent to file for bankruptcy does nothing to alleviate concerns regarding the possibility of pressure or coercion. The individual stated that the DOE should not be concerned that he might be subject to pressure or duress due to these debts. He asserted that he would not endanger his career or his pension for a "quick fix" solution to his financial problems, thus implying that he would not be subject to bribery to solve his financial crisis. May 31 PSI at 23; November 14 PSI at 16.

I am not reassured by these glib declarations. As I pointed out above, the individual clearly indicated in connection with seeking credit counseling that he was not particularly interested in a long-term solution. In rejecting the proposal of the consumer credit bureau, he focused especially on the fact that this program would not give him the short term solution he was seeking. There is good reason to believe that this individual is opportunistic and tends to seek the expedient outcome, to the point of unreliability. He might well be subject to pressure in connection with the resolution of his financial crisis.

IV. CONCLUSION

The mitigating factors presented by the individual are far from sufficient to allay the stated security concerns of the DOE. This individual is well aware of the types of actions he could have taken that might mitigate those concerns.<3> He considered bankruptcy, which might alleviate certain types of security concerns expressed by the DOE. He explored on his own the possibility of consumer counseling and debt consolidation. He also realized that he could have made minimum payments on his credit card obligations. He discussed his situation directly with several of the credit card companies.

Nevertheless, the individual has made virtually no payments on his debts in the two years since he began his employment with XXXXX.<4> He took no serious steps to alleviate the financial crisis. See, VSO-0073, 25 DOE at 85,798. The individual gave no credible explanation for rejecting all of the possible options for reducing his debts.

His statements at the two PSIs, as well as his testimony and demeanor at the April 9 Hearing lead me to believe that he does not take his financial commitments seriously, and from this I conclude that he is not reliable or trustworthy. Through his conduct and statements, I am further concerned that he may be subject to pressure and coercion. In encountering financial difficulties, this individual has been uncooperative and has demonstrated no regard for fulfilling his obligations. Although it is true that the individual has been candid about his financial crisis, I find that in dealing with that crisis, the individual has been irresponsible, unreliable, and untrustworthy. See Personnel Security Hearing, VSO-0048, 25 DOE ¶ 82,776 (1995)(request for review pending, Case No. VSA-0048).

Finally, as stated above, one of the debts involved in the instant case is owed to the Federal government, in the form of personal income tax. The individual's failure to bring himself into compliance with federal tax requirements in and of itself gives rise to a security concern under Criterion (l). The willingness to follow laws and regulations is essential to maintaining security of classified documents and materials. Personnel Security Hearing (VSO-0061), 25 DOE ¶ 82,791 (1996)(request for review pending, Case No. VSA-0061).

I therefore find that the XXXXX properly invoked 10 C.F.R. Section 710.8(l) in connection with this individual's unpaid financial obligations. In view of the record before me, I am not persuaded 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, I find that the individual's "L" access authorization should not be restored.

The regulations set forth at 10 C.F.R. Section 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.

Virginia A. Lipton

Hearing Officer

Office of Hearings and Appeals

<1>/ As of the hearing date, the total amount owed by the individual was approximately $32,000. Tr. at 8.

<2>/ In this regard, the individual has also not followed through with other stated intentions. For example, as indicated above, in the May 31 PSI, he stated that he planned to satisfy overdue federal and state income tax obligations within one week. May 31 PSI at 16. As of the date of the hearing, he still had taken no steps towards that end. Tr. at 44. This gives rise to further questions about his overall veracity and reliability.

<3>/ The individual asked at the hearing and in his response to the Notification Letter that the DOE tell him what steps to take to insure the restoration of his clearance. The DOE cannot provide him with a guarantee in this regard, and a hearing for the purpose of determining eligibility for access authorization is certainly not the proper forum for such an inquiry. Nevertheless, as I find above, the individual seems well aware of the types of things that he needs to do in order to restore confidence in his judgment and reliability. He has simply procrastinated and resisted taking any of those steps, difficult as they may be.

<4>/ The individual indicated that several weeks prior to the hearing he made one payment of $50 towards his $1,000 student loan debt. Tr. at 43.