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ISCR Case 21-01683 — CASE

ISCR Case 21-01683granted

Case Headnote

ISCR Case No. 21-01683

grantedJan 31, 2022· Hon. Wilford H. Ross· hearing

Summary

A 26-year-old machinist was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The applicant faced allegations regarding three past-due debts totaling $21,545, including a credit card debt of approximately $3,775 and a charged-off debt of $643. These issues raised questions about his financial reliability and potential vulnerability.

The applicant admitted to the debts, which stemmed from a job loss in 2017. However, he successfully resolved all outstanding obligations through payment arrangements. The administrative judge noted that the applicant demonstrated a stable financial situation and a current ability to manage his finances responsibly.

Ultimately, the judge determined that the applicant's past financial difficulties were directly linked to his unemployment and did not reflect his current reliability. Given that all debts were resolved and a stable financial situation was established, the mitigating conditions were applied, and the security clearance was granted.

Why the Applicant Prevailed

The applicant resolved all past-due debts through payment arrangements.
He demonstrated a stable financial situation and ability to manage current debts.
The applicant's previous financial issues were linked to a job loss and were not indicative of current reliability.

Conditions Referenced

Disqualifying

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

Mitigating

AG ¶ 20(a)appliedBehavior Happened so Long Ago, Was Infrequent, or Unlikely to Recur
AG ¶ 20(b)appliedConditions Largely Beyond the Person's Control
AG ¶ 20(d)appliedGood-faith Effort to Repay Overdue Creditors

Key Rule Quoted

“Any doubt concerning personnel being considered for national security eligibility will be resolved in favor of the national security.”

Procedural Posture

SOR issuedJul 26, 2021
Answer filedJul 29, 2021
Hearing heldOct 25, 2021
Decision dateJan 31, 2022

Cite For

Mitigation of Financial Concerns Under Guideline F
Resolution of Debts as a Factor in Security Clearance Decisions
Impact of Job Loss on Financial Reliability Assessments

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: HearingDecided: granted

The judge found that the applicant had three past-due debts, including a repossession and two credit card debts, all of which were resolved prior to the decision. The applicant's current financial situation was deemed stable, leading to a favorable outcome for the applicant regarding financial considerations under Guideline F.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant is ineligible for clearance because he is financially overextended and therefore potentially unreliable, untrustworthy, or at risk of having to engage in illegal acts to generate funds. $18,000	For Applicant	Auto Loan Debt	Admitted	—	(b) conditions largely beyond the person’s control; acted responsibly	Documented Debt Paid in Full
1.b	Applicant admitted owing a past-due credit card debt in the amount of approximately $3,775. $3,775	For Applicant	Credit Card Debt	Admitted	—	(b) conditions largely beyond the person’s control; acted responsibly	Documented Debt Paid in Full
1.c	Applicant admitted owing a creditor $643 for a charged-off debt. $643	For Applicant	Unspecified Financial	Admitted	—	(b) conditions largely beyond the person’s control; acted responsibly	Documented Debt Paid in Full

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. 21-01683 ) ) Applicant for Security Clearance ) Appearances For Government: Jeff Nagel, Esquire, Department Counsel For Applicant: Pro se January 31, 2022

STATEMENT OF CASE

ROSS, Wilford H., Administrative Judge: Statement of the Case Applicant submitted his most recent Electronic Questionnaire for Investigations Processing (e-QIP) on September 9, 2019. (Government Exhibit 1.) On July 26, 2021, the Department of Defense Consolidated Adjudications Facility (DoD CAF) issued a Statement of Reasons (SOR) to Applicant, detailing security concerns under Guideline F (Financial Considerations). The action was taken under Executive Order 10865, Safeguarding Classified Information Within Industry (February 20, 1960), as amended; Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the Adjudicative Guidelines effective within the Department of Defense after June 8, 2017.

Applicant answered the SOR in writing (Answer) on July 29, 2021, and requested a hearing before an administrative judge. Department Counsel was prepared to proceed on September 9, 2021. The case was assigned to me on September 21, 2021. The Defense Office of Hearings and Appeals (DOHA) issued a Notice of Hearing on September 23, 2021. The case was heard on October 25, 2021. DOHA received the transcript of the hearing on November 2, 2021. The Government offered Government Exhibits 1 through 6, which were admitted without objection. Applicant testified on his own behalf. He asked that the record remain open for the receipt of additional documentation. Applicant timely submitted Applicant Exhibits A through D, which were also admitted without objection, and the record closed on November 2, 2021.

FINDINGS OF FACT

Applicant is 26 years old and married with two children. He has a high school education, and is currently attending college. Applicant is employed by a defense contractor as a Machinist and is trying to obtain a security clearance in relation to his employment. Applicant has not previously held a security clearance. (Tr. 5-8, 17-19; Government Exhibit 1 at Sections 12, 13A, 17, and 25.) Paragraph 1 (Guideline F, Financial Considerations) The Government alleges in this paragraph that Applicant is ineligible for clearance because he is financially overextended and therefore potentially unreliable, untrustworthy, or at risk of having to engage in illegal acts to generate funds. The SOR alleged that Applicant had three past-due debts, including an automobile repossession, totaling $21,545 (SOR 1.a through 1.c). Applicant admitted all the allegations in the SOR. The existence and amounts of these debts is supported by credit reports dated September 7, 2019; February 4, 2020; April 28, 2021; and September 9, 2021. (Government Exhibits 3, 4, 5, and 6.) Applicant stated that these debts all arose in the 2017 time-frame. He was fired from a job and found himself unable to keep up with those particular debts at that time. (Government Exhibit 1 at Section 26; Government Exhibit 2; Tr. 23-28.) The current status of the allegations in the SOR is as follows: 1.a. Applicant admitted having an automobile repossessed in approximately 2017. He stated that he could afford the car when he bought it, but after he was fired, it was impossible to keep up payments. Eventually he let the car go to repossession. After the automobile was sold at auction Applicant owed $18,000. Subsequent to the hearing

Applicant reached a payment arrangement with the original creditor. He paid the reduced amount on October 26, 2021, as confirmed by documentation from the creditor. This debt is resolved. (Government Exhibit 1 at Section 26; Applicant Exhibit B; Tr. 29-33, 36-38.) 1.b. Applicant admitted owing a past-due credit card debt in the amount of approximately $3,775. This debt also arose in the 2017 time-frame. Subsequent to the hearing Applicant paid this creditor the full amount owed on October 26, 2021, as confirmed by documentation from the creditor. This debt is resolved. (Applicant Exhibit D; Tr. 36-38.) 1.c. Applicant admitted owing a creditor $643 for a charged-off debt. This debt also arose in the 2017 time-frame. Subsequent to the hearing Applicant paid this creditor the full amount owed on October 26, 2021, as confirmed by documentation from the creditor. This debt is resolved. (Applicant Exhibit C; Tr. 36-38.) Applicant stated that his current financial situation is stable. He is able to pay his current debts and also has a rainy-day fund. He stated, “I strongly believe that I have learned from my mistakes and believe that allowing accounts to become neglected & delinquent is a thing of the past.” The credit reports in the record confirm that fact. Applicant also pointed to the fact that the period of delinquency was limited, and he has had no past-due debts since that time. Finally, Applicant stated that his failure to resolve these debts earlier “was pure immaturity and misguidance from people that are close to me.” (Government Exhibits 3, 4, 5, and 6; Applicant Exhibit A; Tr. 33-34.)

POLICIES

When evaluating an applicant’s suitability for national security eligibility, the administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations for each guideline, the adjudicative guidelines (AG) list potentially disqualifying conditions and mitigating conditions, which are to be used in evaluating an applicant’s national security eligibility. 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 AG ¶ 2 describing the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. The entire process is a conscientious scrutiny of applicable guidelines in the context 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, “Any 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. I have not drawn inferences based on mere speculation or conjecture. Directive ¶ E3.1.14, requires the Government to 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, and has the ultimate burden of persuasion as to obtaining a favorable clearance 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 national security eligibility. Decisions include, by necessity, consideration of the possible risk the applicant may deliberately or inadvertently fail to protect or safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation as to potential, rather than actual, risk of compromise of classified or sensitive information. Finally, as emphasized in Section 7 of Executive Order 10865, “Any determination under this order adverse to an applicant shall be a determination in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See also Executive Order 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information.)

ANALYSIS

Paragraph 1 (Guideline F, Financial Considerations) The security concerns relating to the guideline for financial considerations are set out in AG ¶ 18, which reads in pertinent part: 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 personal 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.

AG ¶ 19 describes two conditions that could raise security concerns and may be disqualifying in this case: (a) inability to satisfy debts; and (c) a history of not meeting financial obligations. Applicant owed approximately $21,000 for two past-due debts and one automobile repossession as of the date the SOR was issued. These facts establish prima facie support for the foregoing disqualifying conditions, and shift the burden to Applicant to mitigate those concerns. The guideline includes three conditions in AG ¶ 20 that could mitigate the security concerns arising from Applicant’s alleged financial difficulties: (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, or a death, divorce or separation, clear victimization by predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances; and (d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts. Applicant’s current financial situation is stable. He is paying everyday debts. The debts in the SOR arose in 2017 after Applicant lost his job. Applicant indicated some initial reluctance to resolve those three debts. However, as shown, he has resolved the three debts set forth in the SOR to the satisfaction of the creditors. Applicant has behaved responsibly in resolving his debts. He has the knowledge and ability that will allow him to stay on a proper financial footing. He has fully mitigated all the financial concern allegations in the SOR. Paragraph 1 is found for Applicant.

WHOLE PERSON CONCEPT

Under the whole-person concept, the administrative judge must evaluate an applicant’s eligibility for national security eligibility 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 national security 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 pertinent facts and circumstances surrounding this case. Applicant has mitigated the concerns regarding his financial situation by resolving his debts in a responsible manner, which does not evince poor judgment or unreliability. He has minimized the potential for pressure, coercion, or duress, as well as the likelihood of recurrence. Overall, the record evidence does not create substantial doubt as to Applicant’s present suitability for national security eligibility and a security clearance.

FORMAL FINDINGS

Formal findings for or against Applicant on the allegations set forth in the SOR, as required by ¶ E3.1.25 of Enclosure 3 of the Directive, are: Paragraph 1, Guideline F: FOR APPLICANT Subparagraphs 1.a through 1.c: For Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is clearly consistent with the national interest to grant or continue Applicant’s national security eligibility for a security clearance. Eligibility for access to classified information is granted. WILFORD H. ROSS Administrative Judge