Case No. VSO-0240, 27 DOE ¶ 82,790 (H.O. Mann February 1, 1999)

For full history of this case, and links to other cases, click here.

* 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 XXXXXXX’s.

February 1, 1999

DEPARTMENT OF ENERGY

OFFICE OF HEARINGS AND APPEALS

Hearing Officer's Opinion

Name of Case: Personnel Security Hearing

Date of Filing: October 6, 1998

Case Number: VSO-0240

This Opinion concerns the eligibility of XXXXXXXXX (hereinafter referred to as "the individual") to hold an access authorization (also called a security clearance). The individual's access authorization was suspended under the Department of Energy (DOE) regulations set forth at 10 C.F.R. Part 710, Subpart A, entitled "Criteria and Procedures for Determining Eligibility for Access to Classified Matter or Special Nuclear Material." As explained below, I recommend against restoring the individual’s access authorization.

Background

The individual is employed by a subcontractor at a DOE facility and she held an access authorization for several years before it was suspended. The local DOE security office issued a Notification Letter to the individual on September 4, 1998. The Notification Letter alleges under 10 C.F.R. § 710.8(l) that the individual “has engaged in unusual conduct or is subject to circumstances which tend to show that she is not honest, reliable or trustworthy; or which furnishes reason to believe that she may be subject to pressure, coercion, exploitation or duress which may cause her to act contrary to the best interests of the national security.” The bases for this allegation include criminal charges of fraud and forgery for writing bad checks, the misuse of a business credit card issued to the individual by the management and operating ("M&O") contractor where she works, a pattern of financial irresponsibility that culminated in the individual's filing for personal bankruptcy, and the individual's failure to pay her state and federal income taxes for the 1996 tax year.

Because of these security concerns, the case was referred for administrative review. The individual filed a request for a hearing on the charges in the Notification Letter. DOE transmitted the individual's hearing request to the Office of Hearings and Appeals (OHA), the OHA Director appointed me as Hearing Officer in this case, and I convened a hearing.

At the hearing, the DOE Counsel called three witnesses, including the individual, the DOE personnel security specialist who conducted three 1998 Personnel Security Interviews (PSIs) with the individual, and the project manager for the individual's employer. The individual testified on her own behalf, and called four other witnesses, including the person in the local District Attorney's office who is responsible for the individual's "preprosecution diversion program"(1), two co-workers from the DOE facility, and the individual's mother. The DOE submitted 19 written exhibits, and the individual submitted two written exhibits.

During the hearing, the individual requested an opportunity to submit a letter from her tax preparer regarding her intention to pay the balances due on her 1996 state and federal income taxes, and a current financial statement. I granted both requests. Shortly after the hearing, the individual submitted copies of amended Federal and state tax returns she had just filed for the 1996 tax year, including copies of checks she had written to pay the principal amounts of tax due. In addition, she submitted copies of a credit report dated one week after the hearing that showed her accounts to be current. I then closed the record.

Standard of Review

The applicable DOE 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). In resolving questions about the individual’s eligibility for access authorization, I must consider the relevant factors and circumstances connected with the individual’s conduct. These factors are set out in § 710.7(c):

the nature, extent, and seriousness of the conduct, to include knowledgeable participation; the frequency and recency of the conduct; the voluntariness of participation; the age and maturity of the individual at the time of the conduct; the absence or presence of rehabilitation or reformation and other pertinent behavioral changes; the motivation for the conduct; the potential for pressure, coercion, exploitation, or duress; and the likelihood of continuation or recurrence.

A DOE administrative review proceeding under 10 C.F.R. Part 710 is authorized when the existence of derogatory information leaves unresolved questions about an individual’s eligibility for access authorization. A hearing is “for the purpose of affording the individual an opportunity of supporting his eligibility for access authorization.” 10 C.F.R. § 710.21(b)(6). The individual must come forward with evidence to convince the DOE that restoring her 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). See Personnel Security Hearing (Case No. VSO-0013), 24 DOE ¶ 82,752 at 85,511 (1995) and cases cited therein. For the reasons discussed below, I am not convinced that this individual's access authorization should be restored.

Findings of Fact and Analysis

Undisputed Facts

The individual admits the facts alleged in the Notification Letter, and the hearing focused on her assertion that mitigating circumstances exist that warrant restoration of her access authorization. Before turning to the issue of mitigation, it would be helpful to give a detailed description of the charges in the Notification Letter. (The factual bases for the charges recited in the Notification Letter are not organized in chronological order.)

First, the Notification Letter recites that the individual was charged with four counts of Fraud and four counts of Forgery for writing bad checks, cashing them and depositing most of those funds into her accounts with a local bank and credit union. It goes on to point out that when confronted by the police, the individual initially denied forging the checks and cashing them. Only after the police told her that she was observed on bank video tapes conducting these transactions did the individual admit guilt. Second, the Notification Letter states that the individual's family, friends and employer are not aware that she has committed fraud, and that the friend whose name she signed on the bad checks does not know about the forgery. Third, the Notification Letter observes that the individual blamed her filing Chapter 7 bankruptcy for over $30,000 on her former boyfriend. In a PSI conducted on July 9, 1998, the individual stated that the reason she filed for bankruptcy was "a stupid one. I had a boyfriend that I gave him everything he wanted, so I let my bills get behind." The individual admits providing him with funds for gambling by drawing over $8,000 in cash advances on a business credit card issued to her by the M&O contractor. This credit card was to be used for official business only, and the debt was never repaid. Fourth, the Notification Letter alleges that the individual wrote bad checks to a casino for nearly $5,000 to provide her boyfriend with gambling money. She never repaid the money owed to the casino. Fifth, the Notification Letter recites that the individual obtained a consolidation loan from a local bank for $3,500 to pay off some accounts. She quit making payments on the loan when she realized she was "way over [her] head" and this debt was never fully repaid. Sixth, the Notification Letter recites several more instances where the individual wrote bad checks to other stores and businesses when she knew she did not have sufficient funds in her account. These debts were pursued civilly by referral to collection agencies. All of these debts were discharged, i.e. canceled, by the bankruptcy court in June 1998. Seventh, the Notification Letter points out that the individual obtained two new credit cards after filing for bankruptcy, one of which she plans to use to pay for a vacation trip to the Bahamas. Finally, the Notification Letter indicates that the individual admits failing (in 1997 and 1998) to pay over $220 which she owes for her 1996 state and federal income taxes.

Mitigating Evidence Submitted on Behalf of the Individual

At the hearing, the individual claimed that she has reformed her behavior, that she is obeying the law, and that she is no longer acting in a financially irresponsible manner. Hearing Transcript (hereinafter cited as "Tr.") at 102, 114. According to the individual, through her successful participation in the District Attorney's preprosecution diversion program, she has completed making restitution of $300 to one of two banks where she passed forged checks, and is about to begin paying back $1,300 to the second bank. Tr. at 91. These restitutionary payments were confirmed by the Director of the preprosecution diversion program, who testified on behalf of the individual at the hearing. Tr. at 11-44. In addition, the individual claims that since her debts were discharged in bankruptcy in the summer of 1998, she has been living within her means and managing her finances properly to avoid getting into debt again. Tr. at 102, 114. She testified that the new credit card mentioned in the Notification Letter requires that she prepay at least $450 before she can charge a vacation trip of that value. Tr. at 107-08. However, the individual testified that even though she has been paying money into her account for that new card, she is now unlikely to use it for a vacation. Id. Instead, she intends to use the new card to re-establish her credit. Id. The individual attributes her financial problems in part to the bad influence of a former boyfriend, whose gambling she admits financing with cash advances drawn on her M&O contractor's business credit card. Tr. at 116, 117. She claims that she has permanently severed that relationship. Tr. at 115. The individual states that she feels remorseful for her actions, and insists that she has learned her lesson. Tr. at 113, 139. Two co-workers testified that they knew about the individual's legal and financial problems, and that they trusted the individual despite her mistakes. Both character witnesses attributed some of the individual's problems to her former boyfriend. Tr. at 75-76, 83-85. The individual's project manager testified that her personnel file indicated she was a good worker. Tr. at 51. The individual's mother also testified on her daughter's behalf. She, too, stated that she knew about the individual's legal and financial problems, and explained why she believed the individual had reformed her spending habits: "[W]hen it's time for her to pay bills..., she has a system now that she marks everything down, I even look at it..., and I know that she's paying her bills....if she's going to buy something, she has to make sure she...has the money and stuff." Tr. at 125. The individual's mother attributes her daughter's problems to her relative youth, to her former boyfriend ("he's nothing but a user...") and believes "she would not do it again, because I know she's learned a hard lesson on what she's gone through." Tr. at 127.

Analysis of Mitigating Evidence

Some of the evidence at the hearing does tend to support the individual’s claim that she is taking positive steps to reform her behavior, and that is certainly commendable. For example, she has completed making restitution of $300 to one of the banks where she cashed a fraudulent check, and shortly after the hearing she paid the principal amounts due for her 1996 federal and state income taxes. See Personnel Security Hearing (Case No. VSO-0069), 25 DOE ¶ 82,795 (1996) (filing of overdue tax returns viewed as evidence of reformation by individual). The individual testified that she is using a new credit card to re-establish her credit, and that she is unlikely to use it for a vacation trip. She explained that the issuer of this new credit card requires the individual to make payments totaling $450 before the card can be used for any charges. It is also evident that the individual feels some degree of remorse for getting into debt, writing bad checks, and breaking the law. Finally, her character witnesses claim that they still trust the individual, despite knowing that she was charged with crimes for passing bad checks and that she avoided repayment of her personal debts through bankruptcy. The fact that other people now know about the individual's bankruptcy and legal problems makes her less susceptible to blackmail.

However, based on my consideration of all the evidence in the record, I find that the individual has not yet finished the process she started of straightening out her financial affairs and making amends for her misdeeds of the past several years. Previous opinions issued by OHA Hearing Officers have held that once there is a pattern of financial irresponsibility, the individual must demonstrate a sustained, new pattern of financial responsibility for a period of time that is sufficient to demonstrate that a recurrence of the past pattern is unlikely. Personnel Security Hearing (Case No. VSO-0108), 26 DOE ¶ 82,764 at 85,699 (1996). Even though this individual may be succeeding in living within the law and the limitations of her personal financial resources, such a short time has passed since she got into serious financial and legal trouble that the individual has not yet convinced me she has established a new pattern and can be trusted. Thus, I cannot recommend that her clearance be restored at this time.

The preprosecution diversion program Director pointed out some of the reasons why it is too soon after the individual's legal and financial troubles in 1997 and 1998 for me to conclude that her clearance should be restored. The individual has not been completely candid about her financial problems. Although the individual had told the Director that she had filed for personal bankruptcy, he did not know how many other worthless checks she had written which were pursued civilly instead of criminally, or the actual extent of her indebtedness, until the DOE Counsel had him read the Notification Letter at the hearing. Tr. at 18, 19, 22, 32. The Director thought that the individual's youth and naivete contributed to her problems, and that the banks in particular tend to "enable" the kind of irresponsible behavior that she exhibited. Id. at 24-26. He was also concerned that the individual was still not living within her means because she had purchased an expensive truck in August 1997, a time when she had extensive debts, and even though those debts later were discharged in bankruptcy, she chose to keep the new truck. Id. at 30. He wondered if "that is not in her means, then maybe the truck needs to be sold, traded in for something a little bit more reasonable." Id.

This truck figured prominently in the individual's downfall. In a PSI conducted on January 15, 1998, the individual explained how it was her lack of funds to cover the down payment and insurance for the purchase of the truck in August 1997 that motivated her to write the fraudulent checks that led to the criminal charges against her. She took a "starter" check she received when she opened a new account at a first bank, wrote it to herself, and signed her friend's name on it. "It looked like my friend had written me the $800 check." January 15, 1998 PSI Tr. at 9. The individual then cashed the bogus check, and deposited the money into her credit union account. She "knew what I was doing was wrong," but she "needed the money for the insurance to get...the truck covered." Id. at 10. Then, the individual wrote another bogus check on an account at a second bank that she also cashed and deposited. When this second bank called to tell her that her account was delinquent, she told them she had not written any checks. "I went in and told them that...someone had stolen the checks from my purse in my office because that's where I had the checks." Id. at 13. She repeated this same ruse when confronted by the first bank, and told them that someone had stolen her checkbooks from the second bank. Id. Finally, she tried to fool the police, "I went in trying to pull it off that someone had stolen the checks," but confessed when the police told her she had been recorded by a bank camera cashing two of the checks. Id. at 14.

These events happened scarcely over a year ago. They were the consequence and part of a pattern of several years of financial irresponsibility and bad judgment. The individual intentionally committed criminal acts, even though she knew they were wrong, and then she tried to lie her way out of trouble, not once but three times (to each of the two banks and then to the police), when the web of suspicion began to tighten around her. These crimes involve deception, and they directly impugn her honesty, reliability and trustworthiness. They make me leery of the individual's claim that she has reformed her behavior. As the DOE personnel security specialist stated at the hearing,"based on the recency of [the individual's] actions...how does the DOE know that it's not going to recur?" Tr. at 66-67. It is too early for me to be certain that the individual has learned her lesson. For example, she has not yet finished making restitution to the banks for the fraudulent checks. As of the hearing, she had finished paying back $300 to the first bank, and was about to start paying back the $1,300 she owed to the second bank. Tr. at 13. It is also troubling that she has chosen to keep the truck, even while she canceled over $30,000 in debts in her bankruptcy.

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 or her debts to be discharged. The DOE's concern is whether there is a legitimate financial hardship or whether the bankruptcy resulted from irresponsible behavior. See Personnel Security Hearing (Case No. VSO- 0041, 25 DOE ¶ 82,775 (1995), aff'd, (Case No. VSA-0041), 25 DOE ¶ 83,005 (1996). In my view, the individual made a choice to cancel her debts through the bankruptcy in order to keep a truck that a person in her financial position should never have purchased. Under the circumstances, this choice had the effect of making the individual's other creditors bear the cost of her truck. Her failure to make a more responsible choice is another reason why the individual has not convinced me that her actions should be excused merely because her debts have been discharged in bankruptcy.

I also find the nature of the individual's actions disturbing. The individual misused her official business credit card to charge over $8,000 in unauthorized personal expenses, mostly to finance her former boyfriend's gambling. The individual even gave her ex-boyfriend the PIN number to enable him to withdraw money with this card. Tr. at 136. These charges were never repaid, and her obligation to repay them was wiped out by her subsequent bankruptcy. This amounts to the unauthorized taking of money, and avoiding responsibility for making restitution. It forcefully demonstrates that the individual has not been honest and trustworthy. It also shows that the individual was too easily influenced by her former boyfriend to violate the rules governing the use of her official credit card. The security program is based on trust, and once an individual has breached that trust, a serious question arises as to whether that individual can be trusted to comply with the security regulations. Personnel Security Hearing (Case No. VSO-0013), 25 DOE ¶ 82,752 at 85,515 (1995). At this point in time, so soon after the individual's misuse of her official credit card, I am not convinced that she can be trusted to resist the influence of people who might attempt to pressure her to act contrary to the best interests of the national security.

In considering the factors enumerated in 10 C.F. R. § 710.7(c), I note that the individual was a young adult at the time of the series of events that are described above, and there is some evidence which would lead me to conclude that her financial problems began when she was naive and inexperienced. Like the Director of the preprosecution diversion program, I see some favorable early signs that the individual may not repeat her pattern of irresponsible spending and illegal acts. But I also agree with the DOE personnel security specialist that based on her overall behavior pattern during the past several years, it is too early to make the judgment that the individual can be trusted to obey the rules governing the protection of classified information. In a case involving similar facts, another OHA Hearing Officer recommended against restoring the clearance because only a short time had passed since the individual was charged with fraud for writing bad checks. Personnel Security Hearing (Case No. VSO-0001), 24 DOE ¶ 82,751 (1994). The same result is warranted in the present case.

Based on the entire record in this proceeding, I conclude that the individual has engaged in conduct which tends to show that she is not honest, reliable or trustworthy, and that she may be subject to pressure, coercion, exploitation or duress which may cause her to act contrary to the best interests of the national security. I find that she has not resolved all of the security concerns raised under 10 C.F.R. § 710.8(l).

For the reasons explained in this Opinion, I find that the individual has failed to show that restoring her access authorization would not endanger the common defense and security and would be clearly consistent with the national interest. Accordingly, I recommend that the individual's access authorization 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's 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 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 within 20 days of receipt of the statement. 10 C.F.R. § 710.28(b). The address to which submissions must be sent for purposes of serving them on the Office of Security Affairs is as follows:

Director

Office of Safeguards and Security, NN-51

Office of Security Affairs

U.S. Department of Energy

19901 Germantown Road

Germantown, MD 20874

Thomas O. Mann

Hearing Officer

Office of Hearings and Appeals

Date: February 1, 1999

(1)This program gives first offenders (persons with no prior criminal record) who have committed non-violent, "white-collar" crimes, the chance to receive counseling, make restitution and/or perform community service. The charges against them are held in abeyance while they are in the program. If a participant successfully completes the program, no charges are filed and that person will avoid having a felony conviction.