ISCR Case 19-00582

Case Headnote

ISCR Case No. 19-00582

deniedFeb 24, 2020· Hon. John Bayard Glendon· hearing

Summary

A 45-year-old engineer was denied a security clearance under Guideline F (Financial Considerations) due to significant financial difficulties, including multiple debts and foreclosures. The applicant admitted to some allegations and claimed efforts to resolve his debts, but the judge found insufficient evidence to mitigate the security concerns.

Specific issues included a 2014 mortgage refinance of $296,989, which led to a 2014 investment property purchase and subsequent foreclosure on both properties, with one resulting in a $57,096 deficiency. Other debts included a $22,693 charged-off car loan, a $2,851 bank debt, a $758 bank collection, a $468 cable bill, a $300 collection for a returned check, a $101 charged-off credit card, and two communications accounts for $584 and $1,513, respectively. While some debts were disputed or claimed paid, documentation was often lacking.

The applicant's strategy of disputing debts, often with the help of a credit-repair firm, rather than directly addressing them with creditors, was deemed insufficient to demonstrate responsible financial behavior. Ultimately, the applicant failed to provide adequate evidence to mitigate the financial concerns, leading to the denial of his security clearance.

Why the Applicant Was Denied

The applicant failed to provide sufficient evidence to mitigate the financial concerns raised by his history of unpaid debts and foreclosures.
The applicant's strategy of disputing debts rather than addressing them with creditors was deemed insufficient to demonstrate responsible financial behavior.

Conditions Referenced

Disqualifying

AG ¶ 19(c)raisedHistory of Not Meeting Financial Obligations
AG ¶ 19(c)appliedHistory of Not Meeting Financial Obligations

Mitigating

AG ¶ 20(b)appliedConditions Largely Beyond the Person's ControlThe applicant's periods of unemployment were circumstances beyond his control.
AG ¶ 20(c)rejectedReceived Financial CounselingThe applicant's counseling did not result in resolution of his debts.
AG ¶ 20(d)rejectedGood-faith Effort to Repay DebtsThe applicant did not demonstrate a plan to address his debts.

Key Rule Quoted

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

Procedural Posture

SOR issuedMar 18, 2019
Answer filedApr 17, 2019
Hearing heldOct 24, 2019Rescheduled twice.
Decision dateFeb 24, 2020

Cite For

Insufficient Evidence to Mitigate Financial Concerns Under Guideline F
Impact of Financial Irresponsibility on Security Clearance Eligibility
Criteria for Evaluating Financial Considerations 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.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Mortgage Loan Account Foreclosed – In approximately 2000, Applicant purchased a home for about $145,000. In 2007, he refinanced his mortgage loan with a new loan in the amount of $296,989. In 2014, he used some of the additional funds to purchase an investment property from a family member. In late 2014, he began to experience financial difficulties, in part because he lost his tenant for the inve	Against Applicant	Unspecified Financial	Unknown	(c) a history of not meeting financial obligations	—	—
1.b	Car Loan Account Charged-Off in the Amount of $22,693 – Applicant opened this account in 2014 to purchase a car for his former fiancée. When she ended their relationship in 2015, she took the car. He defaulted on the loan in about September 2017. The lender repossessed the car. He hired a credit-repair firm, which disputed the debt. Applicant provided evidence that the dispute was successful. He a $22,693	Against Applicant	Auto Loan Debt	Admitted	(c) a history of not meeting financial obligations	—	—
1.c	Bank Debt Placed for Collection in the Amount of $2,851 – In his March 2018 background interview, Applicant told the interviewer that he did not recognize this debt, which was owed to a collection agency. He disputed this debt, presumably with the help of his credit-repair firm, and denied this allegation in his SOR answer. The debt appeared on the Government’s initial investigatory credit report, $2,851	Against Applicant	Unspecified Financial	Denied	(c) a history of not meeting financial obligations	—	—
1.d	Account with Bank Placed for Collection in the Amount of $758 – The Government’s credit reports identify the bank and its collection agency. Applicant recognized the name of this bank and claims that this debt has been paid. He testified that he does not have a receipt for his payment because he paid this debt some time ago. In February 2018, his credit-repair firm disputed the debt. The debt rema $758	Against Applicant	Unspecified Financial	Unknown	(c) a history of not meeting financial obligations	—	—
1.e	Cable Account Placed for Collection in the Amount of $468 – This bill is for cable service at an address vacated by Applicant in December 2016. He testified that he has paid it, though he did not have a document at the hearing to substantiate his claim. Post-hearing, he provided a copy of a receipt from the creditor reflecting that this debt was paid in full on January 18, 2019. This debt has been $468	For Applicant	Utility or Phone Debt	Unknown	—	—	—
1.f	Account Placed for Collection in the Amount of $300 – Applicant did not recognize this debt, which is presently with a collection agency. GE 4 reflects that this debt relates to a returned check. He disputed this debt through his credit-repair firm, but as of the hearing date, he had not received a response to his dispute. After the hearing, he provided a copy of the April 2018 dispute letter. The $300	Against Applicant	Unspecified Financial	Denied	(c) a history of not meeting financial obligations	—	—
1.g	Credit-Card Account Charged-Off in the Amount of $101 – Applicant recognized this debt and testified that he paid it three months prior to the hearing. He did not provide a document evidencing this payment. Applicant’s evidence does not support a finding that this debt has been resolved. $101	Against Applicant	Credit Card Debt	Unknown	(c) a history of not meeting financial obligations	—	—
1.h	Mortgage-Loan Account Foreclosed with a Deficiency of $57,096 – As noted, Applicant purchased an investment property from a relative in 2014 using funds he borrowed against the equity in his home. He initially testified that the purchase price was $110,000. He subsequently testified that he paid $90,000 for the house. He made a $35,000 or $40,000 down payment. He borrowed an additional $57,000 fro $57,096	Against Applicant	Unspecified Financial	Unknown	(c) a history of not meeting financial obligations	—	—
1.i	Communications Account Placed for Collection in the Amount of $584 – Applicant opened this account in 2009 and defaulted on it in 2017. He testified that he paid this bill and that it was erroneously included on his credit report. He was unable to locate any documentation to prove that he paid this bill. His credit-repair firm disputed the bill, and it was removed from his credit report on January $584	For Applicant	Utility or Phone Debt	Unknown	—	—	—
1.j	Communications Account Placed for Collection in the Amount of $1,513 – This account belonged to his former fiancée. He closed the account, and in 2017, it became delinquent and was referred to a collection agency. He is disputing the amount of the debt, although he does not claim that he paid this debt. It was removed from his credit report in January 2018 and does not appear in GE 3. The evidence $1,513	Against Applicant	Unspecified Financial	Unknown	(c) a history of not meeting financial obligations	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

Mortgage Loan Account Foreclosed – In approximately 2000, Applicant purchased a home for about $145,000. In 2007, he refinanced his mortgage loan with a new loan in the amount of $296,989. In 2014, he used some of the additional funds to purchase an investment property from a family member. In late 2014, he began to experience financial difficulties, in part because he lost his tenant for the inve

Against Applicant

Unspecified Financial

Unknown

(c) a history of not meeting financial obligations

—

1.b

Car Loan Account Charged-Off in the Amount of $22,693 – Applicant opened this account in 2014 to purchase a car for his former fiancée. When she ended their relationship in 2015, she took the car. He defaulted on the loan in about September 2017. The lender repossessed the car. He hired a credit-repair firm, which disputed the debt. Applicant provided evidence that the dispute was successful. He a

$22,693

Against Applicant

Auto Loan Debt

Admitted

(c) a history of not meeting financial obligations

—

1.c

Bank Debt Placed for Collection in the Amount of $2,851 – In his March 2018 background interview, Applicant told the interviewer that he did not recognize this debt, which was owed to a collection agency. He disputed this debt, presumably with the help of his credit-repair firm, and denied this allegation in his SOR answer. The debt appeared on the Government’s initial investigatory credit report,

$2,851

Against Applicant

Unspecified Financial

Denied

(c) a history of not meeting financial obligations

—

1.d

Account with Bank Placed for Collection in the Amount of $758 – The Government’s credit reports identify the bank and its collection agency. Applicant recognized the name of this bank and claims that this debt has been paid. He testified that he does not have a receipt for his payment because he paid this debt some time ago. In February 2018, his credit-repair firm disputed the debt. The debt rema

$758

Against Applicant

Unspecified Financial

Unknown

(c) a history of not meeting financial obligations

—

1.e

Cable Account Placed for Collection in the Amount of $468 – This bill is for cable service at an address vacated by Applicant in December 2016. He testified that he has paid it, though he did not have a document at the hearing to substantiate his claim. Post-hearing, he provided a copy of a receipt from the creditor reflecting that this debt was paid in full on January 18, 2019. This debt has been

$468

For Applicant

Utility or Phone Debt

Unknown

—

1.f

Account Placed for Collection in the Amount of $300 – Applicant did not recognize this debt, which is presently with a collection agency. GE 4 reflects that this debt relates to a returned check. He disputed this debt through his credit-repair firm, but as of the hearing date, he had not received a response to his dispute. After the hearing, he provided a copy of the April 2018 dispute letter. The

$300

Against Applicant

Unspecified Financial

Denied

(c) a history of not meeting financial obligations

—

1.g

Credit-Card Account Charged-Off in the Amount of $101 – Applicant recognized this debt and testified that he paid it three months prior to the hearing. He did not provide a document evidencing this payment. Applicant’s evidence does not support a finding that this debt has been resolved.

$101

Against Applicant

Credit Card Debt

Unknown

(c) a history of not meeting financial obligations

—

1.h

Mortgage-Loan Account Foreclosed with a Deficiency of $57,096 – As noted, Applicant purchased an investment property from a relative in 2014 using funds he borrowed against the equity in his home. He initially testified that the purchase price was $110,000. He subsequently testified that he paid $90,000 for the house. He made a $35,000 or $40,000 down payment. He borrowed an additional $57,000 fro

$57,096

Against Applicant

Unspecified Financial

Unknown

(c) a history of not meeting financial obligations

—

1.i

Communications Account Placed for Collection in the Amount of $584 – Applicant opened this account in 2009 and defaulted on it in 2017. He testified that he paid this bill and that it was erroneously included on his credit report. He was unable to locate any documentation to prove that he paid this bill. His credit-repair firm disputed the bill, and it was removed from his credit report on January

$584

For Applicant

Utility or Phone Debt

Unknown

—

1.j

Communications Account Placed for Collection in the Amount of $1,513 – This account belonged to his former fiancée. He closed the account, and in 2017, it became delinquent and was referred to a collection agency. He is disputing the amount of the debt, although he does not claim that he paid this debt. It was removed from his credit report in January 2018 and does not appear in GE 3. The evidence

$1,513

Against Applicant

Unspecified Financial

Unknown

(c) a history of not meeting financial obligations

—

Loading case…

Case Profile

Summary

Why the Applicant Was Denied

Conditions Referenced

Key Rule Quoted

Procedural Posture

Cite For

Full decision

DEFENSE OFFICE OF HEARINGS AND APPEALS

HEARING

APPEARANCES

STATEMENT OF CASE

FINDINGS OF FACT

POLICIES

ANALYSIS

WHOLE PERSON ANALYSIS

FORMAL FINDINGS

CONCLUSION