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ISCR Case 19-03403 — CASE

ISCR Case 19-03403denied

Case Headnote

ISCR Case No. 19-03403

deniedJun 23, 2020· Hon. Edward W. Loughran· hearing

Summary

A 26-year-old defense contractor employee was denied a security clearance under Guideline F, Financial Considerations, due to approximately $40,000 in unresolved financial issues. The Statement of Reasons (SOR) detailed a history of financial problems, including two charged-off vehicle loans, a delinquent medical debt, and unpaid rent. The applicant admitted owing all the debts listed in the SOR.

However, the applicant had not made any payments toward these debts and failed to demonstrate a good-faith effort to repay them. The judge noted that the financial issues were recent and ongoing, raising concerns about the applicant's reliability and trustworthiness.

Disqualifying conditions under Guideline F were raised, specifically regarding a history of not meeting financial obligations and an inability or unwillingness to satisfy debts. While a mitigating condition was applied, it was insufficient to overcome the concerns. Ultimately, the judge concluded that the applicant did not meet the necessary criteria for a security clearance, leading to the denial.

Why the Applicant Was Denied

The applicant has a history of financial problems, including two charged-off vehicle loans, a delinquent medical debt, and unpaid rent.
The applicant did not make any payments toward the debts alleged in the SOR and failed to demonstrate a good-faith effort to repay them.
The applicant's financial issues are recent and ongoing, casting doubt on his reliability and trustworthiness.

Conditions Referenced

Disqualifying

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

Mitigating

AG ¶ 20(d)rejectedGood-faith Effort to Repay Overdue CreditorsThe applicant's intentions to resolve debts in the future are not a substitute for a track record of debt repayment.

Key Rule Quoted

“Intentions to resolve debts in the future are not a substitute for a track record of debt repayment or other responsible approaches.”
— ISCR Case No. 11-14570 at 3 (App. Bd. Oct. 23, 2013)

Procedural Posture

SOR issuedFeb 4, 2020
Answer filed—Applicant requested a decision on the written record.
Hearing held—Decision made based on written record.
Decision dateJun 23, 2020

Cite For

Denial of Security Clearance Due to Unresolved Financial Issues Under Guideline F
Lack of Good-faith Effort to Repay Debts as a Basis for Denial
Ongoing Financial Distress Impacting Reliability and Trustworthiness

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 has a history of financial problems, including charged-off vehicle loans, a delinquent medical debt, and unpaid rent totaling about $40,000. The applicant admitted to owing these debts but did not provide sufficient evidence to mitigate the financial concerns, leading to a decision against the applicant.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant has a history of financial problems, including two charged-off vehicle loans, a delinquent medical debt, and unpaid rent totaling about $40,000. $40,000	Against Applicant	Auto Loan Debt	Admitted	—	—	—
1.b	Applicant admitted owing all the debts listed in the SOR.	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.c	Applicant has not made any payments toward the debts alleged in the SOR.	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.d	Applicant's financial issues are recent and ongoing, casting doubt on his reliability and trustworthiness.	Against Applicant	Unspecified Financial	Unknown	—	—	—

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. 19-03403

) Applicant for Security Clearance )

For Government: Jeff A. Nagel, Esq., Department Counsel For Applicant: Pro se

06/23/2020 ______________

STATEMENT OF CASE

______________

LOUGHRAN, Edward W., Administrative Judge:

Applicant did not mitigate the financial considerations security concerns. Eligibility for access to classified information is denied.

Statement of the Case

On February 4, 2020, the Department of Defense (DOD) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guideline F, financial considerations. Applicant responded to the SOR on an indeterminate date, and requested a decision on the written record in lieu of a hearing.

The Government’s written case was submitted on March 25, 2020. A complete copy of the file of relevant material (FORM) was provided to Applicant, who was afforded an opportunity to file objections and submit material to refute, extenuate, or mitigate the security concerns. Applicant received the FORM on April 21, 2020. As of June 2, 2020, he had not responded. The case was assigned to me on June 12, 2020. The Government exhibits included in the FORM are admitted in evidence.

FINDINGS OF FACT

Applicant is a 26-year-old employee of a defense contractor. He has worked for his current employer since August 2018. He is applying for a security clearance for the first time. He has a General Educational Development (GED) high school equivalency diploma. The most recent information available indicates that he has never married and he has no children. (Items 2, 3)

Applicant has a history of financial problems. The SOR alleges four delinquent debts totaling about $40,000. The debts include two charged-off vehicle loans ($28,464 and $6,464), a medical debt ($2,355), and unpaid rent ($3,354). Applicant admitted owing all the debts.

Applicant stated that he cosigned with his mother for the $28,464 vehicle loan and for her rent, and she did not pay the accounts. He asserted that his mother’s car was stolen and “insurance didn’t want to pay out.” None of the credit reports in evidence list the debts as joint accounts. The $6,464 vehicle loan resulted from a motorcycle accident. Insurance did not pay the full amount of the loan, and Applicant chose not to pay the deficiency balance because he felt that his credit was already ruined by his mother’s failure to pay the auto loan. The medical debt was incurred when he did not have health insurance. (Items 2-6)

Applicant indicated during his background interview in March 2019 that he did not have the means to pay the debts at that time, but he planned to consolidate the debts in the following year to pay the debts. He also stated that he will not cosign any more loans. He asserted that he was living within his means, that he planned to rebuild his credit, and that he will pay all his future debts. There is no evidence of any payments toward the debts alleged in the SOR. (Items 2-6)

POLICIES

This case is adjudicated under Executive Order (EO) 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), which became effective on June 8, 2017.

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 to be used in evaluating an applicant’s eligibility for access to classified information.

These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, administrative judges apply the guidelines 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(c), 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.”

Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, the applicant is responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by the applicant or proven by Department Counsel.” The applicant 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 the applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation of potential, rather than actual, risk of compromise of classified information.

Section 7 of EO 10865 provides that adverse 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

The security concern for financial considerations 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. 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.

The guideline notes several conditions that could raise security concerns under AG ¶ 19. The following are potentially applicable in this case:

(a) inability to satisfy debts; and

Applicant has a history of financial problems, including two charged-off vehicle loans, a delinquent medical debt, and unpaid rent. The evidence is sufficient to raise the above disqualifying conditions.

Conditions that could mitigate the financial considerations security concerns are provided under AG ¶ 20. The following are potentially applicable:

(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 stated that he cosigned with his mother for the $28,464 vehicle loan and for her rent, and she did not pay the accounts. He asserted that his mother’s car was stolen and “insurance didn’t want to pay out.” None of the credit reports in evidence list the debts as joint accounts. The $6,464 vehicle loan resulted from a motorcycle accident. Insurance did not pay the full amount of the loan, and Applicant chose not to pay the remainder because he felt that his credit was already ruined by his mother’s failure to pay the auto loan. The medical debt was incurred when he did not have health insurance. Some of those conditions were beyond his control. Notwithstanding, the evidence is insufficient for the applicability of the above mitigating conditions.

Applicant has not made any payments toward the debts alleged in the SOR. He asserted he planned to consolidate the debts and pay them. However, intentions to resolve debts in the future are not a substitute for a track record of debt repayment or

other responsible approaches. See ISCR Case No. 11-14570 at 3 (App. Bd. Oct. 23, 2013).

There is insufficient evidence for a determination that Applicant’s financial problems will be resolved within a reasonable period. I am unable to find that he acted responsibly under the circumstances or that he made a good-faith effort to pay his debts. His financial issues are recent and ongoing. They continue to cast doubt on his current reliability, trustworthiness, and good judgment. I find that the security concerns arising out of Applicant’s delinquent debts are not mitigated.

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 relevant 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 guidelines 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 have incorporated my comments under Guideline F in my whole-person analysis.

Overall, the record evidence leaves me with questions and doubts about Applicant’s eligibility and suitability for a security clearance. I conclude Applicant did not mitigate the financial considerations security concerns.

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.d:

Against Applicant

CONCLUSION

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.

________________________ Edward W. Loughran Administrative Judge