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ISCR Case 18-01604 — CASE

ISCR Case 18-01604denied

Case Headnote

ISCR Case No. 18-01604

deniedFeb 28, 2019· Hon. Robert E. Coacher· hearing

Summary

A 52-year-old government contractor was denied a security clearance under Guideline F (Financial Considerations) due to unresolved financial issues. The Statement of Reasons (SOR) alleged 20 delinquent debts, totaling approximately $30,000, which included charged-off and collections accounts such as an automobile repossession deficiency, credit cards, consumer debts, telecommunication debts, and a medical debt.

The applicant attributed her financial problems to underemployment following the loss of a major defense contract by her employer in 2015. Her income significantly decreased from approximately $98,000 in 2015 to $24,567 in 2016, and further to $3,797 in 2017. Although she contacted an attorney to file for bankruptcy, no case had been filed as of September 2018, and her debts remained unresolved.

The denial was based on the applicant's 20 unresolved delinquent debts and her failure to provide sufficient evidence of mitigation efforts, such as contacting creditors or establishing payment plans. The decision concluded that granting clearance would not align with national interest.

Why the Applicant Was Denied

The applicant has 20 delinquent debts totaling approximately $30,000 that remain unresolved.
The applicant did not provide sufficient evidence of efforts to mitigate her financial issues, such as contacting creditors or establishing payment plans.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(c)raisedA History of Not Meeting Financial Obligations

Procedural Posture

SOR issuedJul 3, 2018
Answer filedAug 2, 2018Applicant elected to have the case decided on the written record.
Hearing held—No hearing; decision based on written record.
Decision dateFeb 28, 2019

Cite For

Denial of Security Clearance Due to Unresolved Financial Issues Under Guideline F
Failure to Demonstrate Sufficient Mitigation Efforts for Financial Concerns
Impact of Financial Distress on Security Clearance Eligibility

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 against the applicant on multiple financial allegations, citing a total of 20 delinquent debts amounting to approximately $30,000. The applicant's financial issues were attributed to underemployment, but she failed to demonstrate sufficient efforts to resolve her debts, leading to a denial of her security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	The SOR alleged 20 delinquent debts totaling approximately $30,000. $30,000	Against Applicant	Unspecified Financial	Unknown	—	—	—
1.b	The debts are comprised of charged-off and collections accounts (automobile repossession deficiency, credit cards, consumer debts, telecommunication debts, and a medical debt).	Against Applicant	Unspecified Financial	Unknown	—	—	—
1.c	Applicant attributes her financial problems to her underemployment resulting from the loss of a major defense contract by her employer in 2015.	Against Applicant	Unspecified Financial	Unknown	—	—	Claimed Financial Event Outside Control
1.d	Her income was reduced from approximately $98,000 in 2015 to $24,567 in 2016, and to $3,797 in 2017.	Against Applicant	Unspecified Financial	Unknown	—	—	—
1.e	Applicant contacted an attorney to file a bankruptcy case, but as of September 2018, no case had been filed.	Against Applicant	Unspecified Financial	Unknown	—	—	—
1.f	Aside from using the bankruptcy process to have her debts discharged, Applicant has taken no other action to pay or otherwise resolve the SOR debts.	Against Applicant	Unspecified Financial	Unknown	—	—	—
1.g	Applicant’s debts remain unresolved.	Against Applicant	Unspecified Financial	Unknown	—	—	—
1.h–1.t	13 sub-charges — specific text not stated in this decision (against the applicant).	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: ) ) ) ISCR Case No. 18-01604 ) ) Applicant for Security Clearance ) Appearances For Government: Rhett Petcher, Esq., Department Counsel For Applicant: Pro se ______________

STATEMENT OF CASE

______________ COACHER, Robert E., Administrative Judge: Applicant has not mitigated the financial considerations security concerns. Eligibility for access to classified information is denied. Statement of the Case On July 3, 2018, the Department of Defense Consolidated Adjudications Facility (DOD CAF) issued Applicant a Statement of Reasons (SOR) detailing security concerns under Guideline F, financial considerations. The DOD CAF acted under Executive Order (EO) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; DOD 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines effective June 8, 2017 (AG). Applicant answered the SOR on August 2, 2018, and elected to have her case decided on the written record in lieu of a hearing. Department Counsel submitted the Government’s File of Relevant Material (FORM) on September 17, 2018. The evidence 02/28/2019

included in the FORM is identified as Items 2-6 (Item 1 includes pleadings and transmittal information). The FORM was mailed to Applicant, who received it on October 1, 2018. Applicant was given an opportunity to file objections and submit material in refutation, extenuation, or mitigation. She submitted a one-page document in reply to the FORM, which I marked as exhibit (AE) A. She did not file objections to the Government’s evidence. Items 2-6 and AE A are admitted into evidence without objections. The case was assigned to me on February 8, 2018.

FINDINGS OF FACT

Applicant admitted all of the SOR allegations except for ¶¶ 1.m – 1.p, which she denied. The admissions are adopted as findings of fact. After a careful review of the pleadings and evidence, I make the following additional findings of fact.

Applicant is 52 years old. She has worked for a government contractor since February 2016. From 1996 to 2015 she worked full time for a different federal contractor. She is married for the second time and has two step-children.1

The SOR alleged 20 delinquent debts totaling approximately $30,000. The debts are comprised of charged-off and collections accounts (automobile repossession deficiency, credit cards, consumer debts, telecommunication debts, and a medical debt). The debts are supported by credit reports from September 2016 and May 2018, her statement to an investigator in January 2018, and her SOR admissions in her answer from August 2018.2

Applicant attributes her financial problems to her underemployment resulting from the loss of a major defense contract by her employer in 2015. Her income was reduced from approximately $98,000 in 2015 to $24,567 in 2016, and to $3,797 in 2017. Applicant contacted an attorney to file a bankruptcy case, but as of September 2018, no case had been filed. Aside from using the bankruptcy process to have her debts discharged, Applicant has taken no other action to pay or otherwise resolve the SOR debts. Applicant’s debts remain unresolved.3

POLICIES

When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which are used in evaluating an applicant’s eligibility for access to classified information.

1 Items 2-3.

2 Items 1, 3-5.

3 Items 1, 6; AE A.

These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, these guidelines are applied in conjunction with the factors listed in the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶ 2(a), the entire process is a conscientious scrutiny of a number of variables known as the “whole-person concept.” The administrative judge must consider all available, reliable information about the person, past and present, favorable and unfavorable, in making a decision.

The protection of the national security is the paramount consideration. AG ¶ 2(b) requires that “[a]ny doubt concerning personnel being considered for national security eligibility will be resolved in favor of the national security.” In reaching this decision, I have drawn only those conclusions that are reasonable, logical, and based on the evidence contained in the record.

Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, an “applicant is responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by applicant or proven by Department Counsel, and has the ultimate burden of persuasion to obtain a favorable security decision.”

A person who seeks access to classified information enters into a fiduciary relationship with the Government predicated upon trust and confidence. This relationship transcends normal duty hours and endures throughout off-duty hours. The Government reposes a high degree of trust and confidence in individuals to whom it grants access to classified information. Decisions include, by necessity, consideration of the possible risk that an 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.

Section 7 of EO 10865 provides that decisions shall be “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information).

ANALYSIS

Guideline F, Financial Considerations

AG ¶ 18 expresses the security concern for financial considerations:

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. Financial distress can also be caused or exacerbated by, and thus can be a possible indicator of, other issues of personnel security concern such as excessive gambling, mental health conditions, substance misuse, or alcohol abuse or dependence. An individual who is financially overextended is at greater risk of having to engage in illegal or otherwise questionable acts to generate funds. Affluence that cannot be explained by known sources of income is also a security concern insofar as it may result from criminal activity, including espionage.

The guideline notes several conditions that could raise security concerns. I have considered all of them under AG ¶ 19 and the following potentially apply:

(a) inability to satisfy debts; and

Applicant’s delinquent debts remain unpaid or unresolved. I find the above disqualifying conditions are raised.

The guideline also includes conditions that could mitigate security concerns arising from financial difficulties. I have considered all of the mitigating conditions under AG ¶ 20 and the following potentially apply:

(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;

(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;

(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; and

(d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts.

Applicant’s debts are recent and remain unresolved. She did not provide sufficient evidence to show that her financial problems are unlikely to recur. AG ¶ 20(a) does not apply. Applicant presented some evidence that the debts were due to

circumstances beyond her control (underemployment due to loss of government contract). She did not show that she took responsible action to attempt to resolve her debts. I find AG ¶ 20(b) does not fully apply. Applicant’s only efforts to resolve her debts was to inquire into the bankruptcy process by hiring an attorney. She documented no further action by her since then. She failed to provide documentation showing any efforts to contact the creditors, set up payment plans, or make payments on the listed debts. There is no evidence she obtained financial counseling. AG ¶¶ 20(c) and 20(d) do not apply.

WHOLE PERSON CONCEPT

Under the whole-person concept, the administrative judge must evaluate an applicant’s eligibility for a security clearance by considering the totality of the applicant’s conduct and all the circumstances. The administrative judge should consider the nine adjudicative process factors listed at AG ¶ 2(d):

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

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 guideline and the whole-person concept.

I considered the potentially disqualifying and mitigating conditions in light of all the facts and circumstances surrounding this case. I considered Applicant’s period of underemployment. However, she also failed to present documentation addressing her debt. Applicant has not established a track record of financial stability.

Overall, the record evidence leaves me with questions and doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant failed to mitigate the security concerns arising under Guideline F, financial considerations.

FORMAL FINDINGS

Formal findings for or against Applicant on the allegations set forth in the SOR, as required by section E3.1.25 of Enclosure 3 of the Directive, are:

Paragraph 1, Guideline F:

AGAINST APPLICANT

Subparagraphs 1.a–1.t:

Against Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is not clearly consistent with the national interest to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is denied.

_____________________________ Robert E. Coacher Administrative Judge