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ISCR Case 18-01692 — CASE

ISCR Case 18-01692denied

Case Headnote

ISCR Case No. 18-01692

deniedMar 15, 2019· Hon. Roger C. Wesley· hearing

Summary

A 47-year-old quality inspector was denied a security clearance under Guideline F (Financial Considerations) due to unresolved financial issues. The Statement of Reasons detailed six delinquent debts totaling over $8,000 and multiple Chapter 13 bankruptcy filings. Specifically, the applicant filed for bankruptcy in August 2016, which was dismissed in February 2018, and again in March 2018, with an undetermined disposition.

The decision cited Disqualifying Conditions ¶ 19(a) and ¶ 19(c) due to the significant number and amount of delinquent debts, as well as the repeated bankruptcy filings. While the applicant admitted most allegations and presented extenuating circumstances, the provided documentation was deemed insufficient to demonstrate financial stability.

Although Mitigating Condition ¶ 20(b) was considered, the applicant's failure to provide adequate evidence to resolve the financial concerns ultimately led to the denial of the security clearance.

Why the Applicant Was Denied

The applicant had six delinquent debts exceeding $8,000, raising significant security concerns.
The applicant filed for Chapter 13 bankruptcy multiple times, with one petition dismissed at her request.
The applicant did not provide sufficient documentation to support claims of financial stability.

Conditions Referenced

Disqualifying

DC ¶ 19(a)appliedInability to Satisfy Debts
DC ¶ 19(c)appliedA History of Not Meeting Financial Obligations

Mitigating

MC ¶ 20(b)rejectedConditions That Resulted in the Financial Problem Were Largely Beyond the Person’s ControlThe applicant failed to provide documented proof of addressing her debts after returning to full-time employment.

Key Rule Quoted

“Eligibility for access to classified information is denied.”

Procedural Posture

SOR issuedJul 2, 2018
Answer filedJul 16, 2018Applicant elected to proceed pro se.
Hearing held—Decided on the written record.
Decision dateMar 15, 2019

Cite For

Denial of Security Clearance Due to Unresolved Financial Issues Under Guideline F
Importance of Providing Documentation to Support Claims of Financial Stability
Rejection of Mitigating Conditions When Evidence of Debt Resolution Is Lacking

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 that the applicant had accumulated six delinquent debts exceeding $8,000 and had filed for Chapter 13 bankruptcy relief twice, with the first petition dismissed and the second's disposition undetermined. Ultimately, the judge ruled against the applicant, concluding that the financial issues raised were not consistent with the national interest for holding a security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	accumulated six delinquent debts exceeding $8,000 $8,000	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.b	filed for Chapter 13 bankruptcy relief in August 2016 (dismissed in February 2018) and March 2018 (disposition undetermined)	Against Applicant	Bankruptcy Filing	Admitted	—	—	—

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. 18-01692 ) ) Applicant for Security Clearance ) Appearances For Government: Mary Margaret Foreman, Esq., Department Counsel For Applicant: Pro se _____________

STATEMENT OF CASE

______________ WESLEY, Roger C., Administrative Judge: Based upon a review of the pleadings and exhibits, I conclude that Applicant failed to mitigate the security concerns regarding her financial considerations. Eligibility for access to classified information is denied. Statement of Case On July 2, 2018, the Department of Defense (DoD) Consolidated Adjudications Facility (CAF) issued Applicant a Statement of Reasons (SOR) detailing reasons why DOD adjudicators could not make the affirmative determination of eligibility for a security clearance, and recommended referral to an administrative judge to determine whether a security clearance should be granted, continued, denied, or revoked. The action was taken 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 Security Executive Agent Directive 4, National Adjudicative Guidelines (SEAD 4), effective June 8, 2017. 03/15/2019 Applicant responded to the SOR on July 16, 2018, and elected to have her case decided on the basis of the written record. Applicant received the File of Relevant Material (FORM) on August 28, 2018, interposed no objections to the materials in the FORM, and did not supplement the FORM. The case was assigned to me on January 2, 2019. Summary of Pleadings Under Guideline F, Applicant allegedly (a) accumulated six delinquent debts exceeding $8,000 and (b) filed for Chapter 13 bankruptcy relief in August 2016 (dismissed in February 2018) and March 2018 (disposition undetermined). Allegedly, the debts owing have not been resolved and remain outstanding.

In her response to the SOR, Applicant admitted all but one of the allegations and did so with explanations, denying only the allegations covered by SOR ¶ 1.h. She claimed she stopped making payments on her 2016 Chapter 13 petition when she went on medical leave, which resulted in a dismissal of her petition. She claimed she is currently making payments on her 2018 Chapter 13 petition. And she claimed the 2015 judgment (covered by SOR ¶ 1.h) has been satisfied. Applicant did not provide any documentation to support any of her claims. Finding s of Fact Applicant is a 47-year-old quality inspector for a defense contractor who seeks a security clearance. The allegations covered in the SOR and admitted by Applicant are incorporated and adopted as relevant and material findings. Additional findings follow. Background Applicant married her first spouse in November 1991 and divorced in January 1995. (Item 3) She has one child and one stepchild from this marriage. (Items 3-4) She remarried in June 1999 and has four children and one stepchild from this marriage. (Items 3-4) She earned a high school diploma in May 1990. (Item 4). She attended a local community college between January 2007 and August 2009, but earned no degree or diploma. (Items 3-4) Applicant reported no military service. She has been employed by her current employer since October 1999 and has held a security clearance since April 2010. (Item 3) Applicant’s finances Applicant filed for Chapter 13 bankruptcy protection in 1999, 2003, 2016, and 2018. (Items Records confirm that her 1999 and 2003 petitions were discharged in January 2000 and March 2009, respectively. (Items 9-10). Bankruptcy records confirm that her 2016 petition was dismissed in February 2018 at Applicant’s request. (Item 8) She cited medical leave as a consideration, but provided no documentation. (Item 2) Applicant’s latest Chapter 13 petition remains pending without any reported status or disposition. (Item 7) Between March 2016 and June 2016, Applicant took out three loans with the same lender, totaling in excess of $5,000. (Item 4) Two of the loans became over 120 days past due in November 2016, and the third loan became more than 90 days past due in November 2016. (Item 4) Other delinquent debts revealed in her credit reports are a medical debt for $178 (SOR ¶ 1.e) and an entered judgment in 2015 for $1,261. (Items 4- 5) Whether Applicant included these debts in his 2018 Chapter 13 petition is unclear. Without documented Chapter 13 schedules to review, answers cannot be learned. (Items 5-7) Applicant attributed her debt delinquencies to both her husband’s illness and loss of employment and her own loss of earnings stemming from a lengthy medical leave. (Items 2 and 4) While her husband’s condition and circumstances, as well her own medical issues, are potentially extenuating, they are not corroborated and substantiated by documented support for her claims. To date, Applicant has not provided any updates as to what steps she has taken to resolve the delinquent debts covered in the SOR. Conceivably, these debts are scheduled in her 2018 Chapter 13 petition and are being addressed. Without more information from Applicant on debts included in her Chapter 13 petition and how they are being administered in her Chapter 13 petition, no inferences can be drawn as to how she is resolving these debts. (Items 4–6) Applicant provided no budgets or evidence of financial counseling. Nor did she provide character references from colleagues at work and in her community who know her well and can attest to her honesty, trustworthiness, and good judgment, or .personnel evaluations.

POLICIES

The SEAD 4, App. A lists guidelines to be used by administrative judges in the decision-making process covering security clearance cases. These guidelines take into account factors that could create a potential conflict of interest for the individual applicant, as well as considerations that could affect the individual’s reliability, trustworthiness, and ability to protect classified information. These guidelines include conditions that could raise a security concern and may be disqualifying (disqualifying conditions), if any, and many of the conditions that could mitigate security concerns. These guidelines must be considered before deciding whether or not a security clearance should be granted, continued, or denied. The guidelines do not require administrative judges to place exclusive reliance on the enumerated disqualifying and mitigating conditions in the guidelines in arriving at a decision. Each of the guidelines is to be evaluated in the context of the whole person in accordance with AG ¶ 2(c). In addition to the relevant AGs, administrative judges must take into account the pertinent considerations for assessing extenuation and mitigation set forth in AG ¶ 2(d) of the AGs, which are intended to assist the judges in reaching a fair and impartial commonsense decision based upon a careful consideration of the pertinent guidelines within the context of the whole person. The adjudicative process is designed to examine a sufficient period of an applicant’s life to enable predictive judgments to be made about whether the applicant is an acceptable security risk. The following App A, AG ¶ 2(d) factors are pertinent: (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 chances; (7) the motivation for the conduct; (8) the potential for pressure, coercion, exploitation, or duress; and (9) the likelihood of continuation or recurrence. Viewing the issues raised and evidence as a whole, the following individual guidelines are pertinent in this case: Financial Considerations The Concern: Failure or inability 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 of dependence. An individual who is financially overextended is at greater risk of having to engage in illegal acts or otherwise questionable acts to generate funds. . . . AG ¶ 18. Burden of Proof By virtue of the principles and policies framed by the AGs, a decision to grant or continue an applicant's security clearance may be made only upon a threshold finding that to do so is clearly consistent with the national interest. Because the Directive requires administrative judges to make a commonsense appraisal of the evidence accumulated in the record, the ultimate determination of an applicant's eligibility for a security clearance depends, in large part, on the relevance and materiality of that evidence. See United States, v. Gaudin, 515 U.S. 506, 509-511 (1995). As with all adversarial proceedings, the judge may draw only those inferences which have a reasonable and logical basis from the evidence of record. Conversely, the judge cannot draw factual inferences that are grounded on speculation or conjecture. The Government's initial burden is twofold: (1) it must prove by substantial evidence any controverted facts alleged in the SOR, and (2) it must demonstrate that the facts proven have a material bearing to the applicant's eligibility to obtain or maintain a security clearance. The required materiality showing, however, does not require the Government to affirmatively demonstrate that the applicant has actually mishandled or abused classified information before it can deny or revoke a security clearance. Rather, the judge must consider and weigh the cognizable risks that an applicant may deliberately or inadvertently fail to safeguard classified information. Once the Government meets its initial burden of proof of establishing admitted or controverted facts, the evidentiary burden shifts to the applicant for the purpose of establishing his or her security worthiness through evidence of refutation, extenuation, or mitigation. Based on the requirement of Exec. Or. 10865 that all security clearances be clearly consistent with the national interest, the applicant has the ultimate burden of demonstrating his or her clearance eligibility. “[S]ecurity-clearance determinations should err, if they must, on the side of denials.” See Department of the Navy v. Egan, 484 U.S. 518, 531 (1988).

ANALYSIS

Security concerns are raised over Applicant’s history of multiple filings of Chapter 13 bankruptcy petitions seeking to address her finances (two discharged, one dismissed at her request, and a fourth still pending) and more recently, accumulating delinquent debts exceeding $8,000. Applicant’s recurrent Chapter 13 petitions and debt delinquencies warrant the application of two of the disqualifying conditions (DC) of the Guidelines: DC ¶¶ 19(a), “inability to satisfy debts”; and 19(c), “a history of not meeting financial obligations.” Applicant’s admitted delinquent debts and foreclosures negate the need for any independent proof. See Directive 5220.6 at E3.1.14; McCormick on Evidence, § 262 (6th ed. 2006). Each of Applicant’s admitted state tax lien, home equity loan deficiency, and two foreclosures are fully documented and create some judgment issues. See ISCR Case 03-01059 at 3 (App. Bd. Sept. 24, 2004). Financial stability in a person cleared to protect classified information is required precisely to inspire trust and confidence in the holder of a security clearance that entitles him to access classified information. While the principal concern of a security clearance holder’s demonstrated financial difficulties is vulnerability to coercion and influence, judgment and trust concerns are implicit in cases involving tax filing lapses and debt delinquencies. Historically, the timing of addressing delinquent debts is critical to an assessment of an applicant’s trustworthiness, reliability, and good judgment in following rules and guidelines necessary for those seeking access to classified information or to holding a sensitive position. See ISCR Case No. 14-06808 at 3 (App. Bd. Nov. 23, 2016); ISCR Case No. 14-01894 at 5 (App. Bd. Aug. 18, 2015). Applicant’s cited extenuating circumstances (i.e., medical issues and associated unemployment of her husband and her own medical issues that necessitated considerable medical leave) provide some mitigation credit for her accumulating delinquent debt. The cited circumstances she attributes to her debt delinquencies are enough to entitle her to some extenuating benefits from MC ¶ 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, or a death, divorce or separation), and the individual acted responsibly under the circumstances.” But her failure to provide documented proof of her addressing her debts after she returned to full-time employment status precludes her from taking advantage of the “acted responsibly” prong of MC ¶ 20(b) In evaluating Guideline F cases, the Appeal Board has stressed the importance of a “meaningful track record” that includes evidence of actual debt reduction through voluntary payment of debts, and implicitly where applicable, the timely resolution of federal and state tax debts. ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008) In Applicant’s case, her failures to provide documented proof of her addressing her delinquent debts in any probative way preludes favorable findings and conclusions with respect to raised security concerns over the state of her finances. Whole-Person Assessment Whole-person assessment is unfavorable to Applicant. She has shown insufficient progress to date in addressing her delinquent debts to merit enough positive overall credit to mitigate financial concerns. Overall, Applicant’s actions to date in addressing her finances reflect too little evidence of restored financial responsibility and judgment to overcome reasonable doubts about her trustworthiness, reliability, and ability to protect classified information. See AG ¶ 18. Conclusions are warranted that her finances are not sufficiently stabilized at this time to meet minimum eligibility requirements for holding a security clearance. Eligibility to hold a security clearance under the facts and circumstances of this case is inconsistent with the national interest.

FORMAL FINDINGS

In reviewing the allegations of the SOR and ensuing conclusions reached in the context of the findings of fact, conclusions, conditions, and the factors listed above, I make the following formal findings: GUIDELINE F (FINANCIAL CONSIDERATIONS): AGAINST APPLICANT Subparagraphs 1.a-1.h: Against Applicant

CONCLUSION

In light of all the circumstances presented by the record in this case, it is not clearly consistent with the national interest to grant or continue Applicant’s eligibility to hold a security clearance. Clearance is denied.

Roger C. Wesley Administrative Judge