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ISCR Case 17-01988 — CASE

ISCR Case 17-01988denied

Case Headnote

ISCR Case No. 17-01988

deniedFeb 8, 2019· Hon. LeRoy F. Foreman· hearing

Summary

A 56-year-old electrical designer was denied a security clearance under Guideline F (Financial Considerations) due to a history of financial irresponsibility. The applicant admitted to all allegations, which included filing for Chapter 7 bankruptcy in April 2005, discharged in August 2005, and accumulating 11 delinquent debts totaling approximately $13,000.

The applicant attributed his financial difficulties to the cost of adding an in-law suite to his home to accommodate his cohabitant’s ailing mother. However, the administrative judge found that the applicant did not provide sufficient evidence to mitigate the concerns raised by his financial history.

Specifically, the applicant failed to demonstrate responsible conduct in resolving his debts. Despite the application of several mitigating conditions, the persistent pattern of delinquent debts and the lack of demonstrated resolution led to the denial of his security clearance.

Why the Applicant Was Denied

The applicant admitted to all allegations of financial irresponsibility.
He has a history of delinquent debts totaling approximately $13,000.
The applicant failed to demonstrate responsible conduct in resolving his debts.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(b)raisedUnwillingness to Satisfy Debts Regardless of the Ability to Do So
AG ¶ 19(c)raisedA History of Not Meeting Financial Obligations

Mitigating

AG ¶ 20(a)appliedBehavior Happened Long Ago or InfrequentlyThe 2005 bankruptcy was mitigated by the passage of time.
AG ¶ 20(b)appliedConditions Beyond ControlThe applicant's previous unemployment contributed to the bankruptcy.
AG ¶ 20(c)rejectedFinancial CounselingThe applicant presented no evidence of financial counseling.
AG ¶ 20(d)rejectedGood-faith Effort to Repay DebtsThe applicant provided no evidence of efforts to resolve debts.
AG ¶ 20(e)rejectedDispute Legitimacy of DebtsThe applicant did not dispute any of the debts alleged.

Key Rule Quoted

“Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines.”

Procedural Posture

SOR issuedJun 26, 2017
Answer filedJun 26, 2017
Hearing held—Decision made on the written record.
Decision dateFeb 8, 2019

Cite For

Denial of Security Clearance Due to Financial Irresponsibility Under Guideline F
Failure to Mitigate Financial Concerns Despite a History of Bankruptcy
Importance of Demonstrating Efforts to Resolve Delinquent Debts in Security Clearance Cases.

Editorial summary generated for research. Not legal advice; not a prediction. Verify against the full decision before relying on any quoted language.

Standardized Decision Profile

SEAD-4 Guideline F · descriptive summary of a decided case

Posture: Decision on RecordDecided: denied

The judge found significant financial concerns under Guideline F, including 11 delinquent debts totaling approximately $13,000 and a history of bankruptcy. Despite the applicant's admission of these debts and the circumstances surrounding them, the judge ruled against the applicant, citing a lack of responsible conduct in resolving the debts.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant filed a Chapter 7 bankruptcy in April 2005 and received a discharge in August 2005.	For Applicant	Bankruptcy Filing	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	—
1.b	Applicant has accumulated 11 delinquent debts totaling about $13,000. $13,000	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.c	Applicant attributed his current financial situation to the expense of adding an in-law suite to his home to accommodate his cohabitant’s ailing mother.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.d–1.l	9 sub-charges — specific text not stated in this decision (against the applicant). (low confidence)	Against Applicant			—	—	—

Descriptive standardized rendering of a decided public case (Guideline F). The verbatim source decision is shown in full below.

Full decision

The complete, official text — footnotes and signatures included — is in the original PDF.

Decision text, by section

DEFENSE OFFICE OF HEARINGS AND APPEALS

HEARING

APPEARANCES

DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) [Redacted] ) ISCR Case No. 17-01988 ) Applicant for Security Clearance ) Appearances For Government: Nicholas T. Temple, Esq., Department Counsel For Applicant: Pro se ______________

STATEMENT OF CASE

______________ FOREMAN, LeRoy F., Administrative Judge: This case involves security concerns raised under Guideline F (Financial Considerations). Eligibility for access to classified information is denied. Statement of the Case Applicant submitted a security clearance application on August 26, 2016. On June 26, 2017, the Department of Defense Consolidated Adjudications Facility (DOD CAF) sent him a Statement of Reasons (SOR) alleging security concerns under Guideline F. The DOD CAF acted under Executive Order (Exec. Or.) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) promulgated in Security Executive Agent Directive 4, National Security Adjudicative Guidelines (December 10, 2016), for all adjudicative decisions on or after June 8, 2017. Applicant answered the SOR on June 26, 2017, and requested a decision on the written record without a hearing. Department Counsel submitted the Government’s 02/08/2019

written case on September 10, 2018, and sent a complete copy of the file of relevant material (FORM) to Applicant, who was given an opportunity to file objections and submit material to refute, extenuate, or mitigate the Government’s evidence. He did not respond to the FORM. The case was assigned to me on January 17, 2019.

The FORM included Item 4, a summary of a personal subject interview (PSI) conducted on March 8, 2017. The PSI summary was not authenticated as required by Directive ¶ E3.1.20. Department Counsel informed Applicant that he was entitled to comment on the accuracy of the PSI summary; make any corrections, additions, deletions or updates; or object to consideration of the PSI summary on the ground that it was not authenticated. I conclude that he waived any objections to the PSI summary by failing to respond to the FORM. “Although pro se applicants are not expected to act like lawyers, they are expected to take timely and reasonable steps to protect their rights under the Directive.” ISCR Case No. 12-10810 at 2 (App. Bd. Jul. 12, 2016).

Findings of Fact1

In Applicant’s answer to the SOR, he admitted all the allegations. His admissions are incorporated in my findings of fact.

Applicant is a 56-year-old electrical designer employed by a defense contractor since February 2005. He graduated from high school and attended college from September 1981 to May 1985 but did not receive a degree. He has never married, but he has lived with a cohabitant for 16 years. He and his cohabitant have resided in their jointly owned home since June 2000. He has no children. He has never held a security clearance.

Applicant filed a Chapter 7 bankruptcy in April 2005 and received a discharge in August 2005. In his answer to the SOR, he attributed his Chapter 7 bankruptcy to a period of unemployment. Since receiving a discharge, he has accumulated 11 delinquent debts totaling about $13,000 that are reflected in credit reports from April 2017 (Item 5) and September 2015 (Item 6). In his answer to the SOR, he attributed his current financial situation to the expense of adding an in-law suite to his home to accommodate his cohabitant’s ailing mother. His cohabitant’s mother provided funds for the construction until his cohabitant’s sister stopped the funding, under circumstances not reflected in the record. Applicant completed the construction by using credit cards and cash advances. The delinquent debts alleged in SOR ¶¶ 1.b-1.mare credit-card accounts and loans. The debt alleged in SOR ¶ 1.mis a medical bill. Applicant provided no information about the circumstances in which the medical bill was incurred.

In the March 2017 PSI and his answer to the SOR, Applicant declared his intention to file another petition for bankruptcy. As of the date the record closed, he had

1 Applicant’s personal information is extracted from his security clearance application (GX 1) unless otherwise indicated by a parenthetical citation to the record.

not done so. He has submitted no evidence of efforts to resolve the debts alleged in the SOR.

POLICIES

“[N]o one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). As Commander in Chief, the President has the authority to “control access to information bearing on national security and to determine whether an individual is sufficiently trustworthy to have access to such information.” Id. at 527. The President has authorized the Secretary of Defense or his designee to grant applicants eligibility for access to classified information “only upon a finding that it is clearly consistent with the national interest to do so.” Exec. Or. 10865 § 2.

Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, an administrative judge applies these guidelines in conjunction with an evaluation of the whole person. An administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. An administrative judge must consider all available and reliable information about the person, past and present, favorable and unfavorable.

The Government reposes a high degree of trust and confidence in persons with access to classified information. This relationship transcends normal duty hours and endures throughout off-duty hours. Decisions include, by necessity, consideration of the possible risk that the applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation about potential, rather than actual, risk of compromise of classified information.

Clearance decisions must be made “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” Exec. Or. 10865 § 7. Thus, a decision to deny a security clearance is merely an indication the applicant has not met the strict guidelines the President and the Secretary of Defense have established for issuing a clearance.

Initially, the Government must establish, by substantial evidence, conditions in the personal or professional history of the applicant that may disqualify the applicant from being eligible for access to classified information. The Government has the burden of establishing controverted facts alleged in the SOR. See Egan, 484 U.S. at 531. “Substantial evidence” is “more than a scintilla but less than a preponderance.” See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). The guidelines presume a nexus or rational connection between proven conduct under any of the criteria listed therein and an applicant’s security suitability. See ISCR Case No. 15- 01253 at 3 (App. Bd. Apr.20, 2016).

Once the Government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. Directive ¶ E3.1.15. An applicant has the burden of proving a mitigating condition, and the burden of disproving it never shifts to the Government. See ISCR Case No. 02- 31154 at 5 (App. Bd. Sep. 22, 2005).

An applicant “has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue his security clearance.” ISCR Case No. 01-20700 at 3 (App. Bd. Dec. 19, 2002). “[S]ecurity clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531.

ANALYSIS

Guideline F, Financial Considerations

The security concern under this guideline is set out in AG ¶ 18:

Failure to live within one's means, satisfy debts, and meet financial obligations may indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which can raise questions about an individual's reliability, trustworthiness, and ability to protect classified or sensitive information. . . . An individual who is financially overextended is at greater risk of having to engage in illegal or otherwise questionable acts to generate funds. . . .

This concern is broader than the possibility that a person might knowingly compromise classified information to raise money. It encompasses concerns about a person’s self-control, judgment, and other qualities essential to protecting classified information. A person who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information. See ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012).

Applicant’s admissions and the documentary evidence in the FORM establish the following disqualifying conditions: AG ¶ 19(a) (“inability to satisfy debts”); AG ¶ 19(b) (“unwillingness to satisfy debts regardless of the ability to do so”); and AG ¶ 19(c) (“a history of not meeting financial obligations”). The following mitigating conditions are potentially applicable:

AG ¶ 20(a): the behavior happened so long ago, was so infrequent, or occurred under such circumstances that it is unlikely to recur and does not cast doubt on the individual's current reliability, trustworthiness, or good judgment;

AG ¶ 20(b): the conditions that resulted in the financial problem were largely beyond the person's control (e.g., loss of employment, a business downturn, unexpected medical emergency, a death, divorce or separation,

clear victimization by predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances;

AG ¶ 20(c): the individual has received or is receiving financial counseling for the problem from a legitimate and credible source, such as a non-profit credit counseling service, and there are clear indications that the problem is being resolved or is under control;

AG ¶ 20(d): the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts; and

AG ¶ 20(e): the individual has a reasonable basis to dispute the legitimacy of the past-due debt which is the cause of the problem and provides documented proof to substantiate the basis of the dispute or provides evidence of actions to resolve the issue;

AG ¶ 20(a) is established for the 2005 bankruptcy, which is mitigated by the passage of time. It is not established for the debts alleged in SOR ¶¶ 1.b-1.l, which are recent, numerous, and were not incurred under circumstances making recurrence unlikely.

AG ¶ 20(b) is established for the bankruptcy. Applicant’s loss of employment was a circumstance beyond his control, and bankruptcy was a legal and prudent course of action. The loss of funding for the in-law suite was a condition beyond his control, but he has not demonstrated responsible conduct in resolving the debts alleged in SOR ¶¶ 1.b- 1.l.

AG ¶ 20(c), 20(d), and 20(e) are not established. Applicant presented no evidence of financial counseling beyond what would have been required for the bankruptcy in 2005. He presented no evidence of contacts with creditors, payments, or payment plans for his delinquent debts. He has not disputed any of the debts alleged in the SOR.

WHOLE PERSON CONCEPT

Under AG ¶ 2(c), the ultimate determination of whether to grant eligibility for a security clearance must be an overall commonsense judgment based upon careful consideration of the guidelines and the whole-person concept. In applying the whole- person concept, an administrative judge must evaluate an applicant’s eligibility for a security clearance by considering the totality of the applicant’s conduct and all relevant circumstances and applying the adjudicative factors in AG ¶ 2(d).2

2 The factors are: (1) the nature, extent, and seriousness of the conduct; (2) the circumstances surrounding the conduct, to include knowledgeable participation; (3) the frequency and recency of the conduct; (4) the individual’s age and maturity at the time of the conduct; (5) the extent to which participation is voluntary; (6) the presence or absence of rehabilitation and other permanent behavioral

I have incorporated my comments under Guideline F in my whole-person analysis and applied the adjudicative factors in AG ¶ 2(d). Because Applicant requested a determination on the record without a hearing, I had no opportunity to evaluate his credibility and sincerity based on demeanor. See ISCR Case No. 01-12350 at 3-4 (App. Bd. Jul. 23, 2003). After weighing the disqualifying and mitigating conditions under Guideline F, and evaluating all the evidence in the context of the whole person, I conclude Applicant has not mitigated the security concerns raised by his delinquent debts.

FORMAL FINDINGS

I make the following formal findings on the allegations in the SOR:

Paragraph 1, Guideline F (Financial Considerations): AGAINST APPLICANT

Subparagraph 1.a:

For Applicant

Subparagraphs 1.b-1.l:

Against Applicant

CONCLUSION

I conclude that it is not clearly consistent with the national security interests of the United States to grant Applicant eligibility for access to classified information. Clearance is denied.

LeRoy F. Foreman Administrative Judge

changes; (7) the motivation for the conduct; (8) the potential for pressure, coercion, exploitation, or duress; and (9) the likelihood of continuation or recurrence.