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ISCR Case 21-02241 — CASE

ISCR Case 21-02241denied

Case Headnote

ISCR Case No. 21-02241

deniedJun 30, 2022· Hon. Richard A. Cefola· hearing

Summary

A 36-year-old defense contractor employee was denied a security clearance under Guideline F, Financial Considerations, due to significant and ongoing past-due debts. The Statement of Reasons detailed several financial issues, including an admitted past-due debt of approximately $15,541 to Creditor A resulting from a voluntary vehicle repossession. While a separate $2,094 debt to Creditor C was satisfied, the applicant admitted to a second past-due debt of about $1,748 with the same creditor.

The administrative judge identified disqualifying conditions under Adjudicative Guidelines paragraphs 19(a), 19(b), and 19(c). The denial was based on the applicant's admission of multiple past-due debts totaling approximately $28,360, largely stemming from vehicle repossessions.

Crucially, the applicant did not provide evidence of financial counseling or a concrete plan to resolve these outstanding debts. The judge concluded that the applicant's persistent financial difficulties and demonstrated lack of responsible financial management were inconsistent with national security interests, leading to the denial of the security clearance.

Why the Applicant Was Denied

The applicant admitted to multiple past-due debts totaling approximately $28,360, primarily from vehicle repossessions.
The applicant failed to provide evidence of financial counseling or a plan to resolve his debts.
The applicant's financial problems were ongoing and demonstrated a lack of responsible financial management.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(b)raisedUnwillingness to Satisfy Debts Regardless of the Ability to Do So
AG ¶ 19(c)raisedHistory of Not Meeting Financial Obligations

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 issuedNov 20, 2021
Answer filedNov 22, 2021
Hearing heldMar 22, 2022
Decision dateJun 30, 2022

Cite For

Denial of Security Clearance Due to Significant Financial Distress Under Guideline F
Failure to Mitigate Financial Obligations as a Security Concern
Importance of Demonstrating Responsible Financial Management for 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: HearingDecided: denied

The applicant has multiple past-due debts, primarily related to vehicle repossessions, which raised financial concerns under Guideline F. The judge found that the applicant failed to mitigate these concerns, ruling against him on most allegations but in his favor for one satisfied debt.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant admits that he has a past-due debt to Creditor A in the amount of about $15,541, as the result of a voluntary vehicle repossession. $15,541	Against Applicant	Auto Loan Debt	Admitted	—	—	—
1.c	Applicant has satisfied his admitted past-due debt to Creditor C in the amount of $2,094. $2,094	For Applicant	Unspecified Financial	Admitted	—	—	—
1.d	Applicant admits that he has a second past-due debt to Creditor C in the amount of about $1,748. $1,748	Against Applicant	Unspecified Financial	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. 21-02241 ) ) Applicant for Security Clearance ) Appearances For Government: Jeff Nagel, Esq., Department Counsel For Applicant: Pro se June 30, 2022

STATEMENT OF CASE

CEFOLA, Richard A., Administrative Judge: Statement of the Case On November 20, 2021, in accordance with DoD Directive 5220.6, as amended (Directive), the Department of Defense issued Applicant a Statement of Reasons (SOR) alleging facts that raise security concerns under Guideline F. The SOR further informed Applicant that, based on information available to the government, DoD adjudicators could not make the preliminary affirmative finding it is clearly consistent with the national interest to grant or continue Applicant’s security clearance. Applicant answered the SOR on November 22, 2021, and requested a hearing before an administrative judge. (Answer.) The case was assigned to me on January 20, 2022. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on January 27, 2022, scheduling the hearing for March 22, 2022. The hearing was convened as scheduled. The Government offered Exhibits (GXs) 1 through 6, which were admitted into evidence. Applicant testified on his own behalf and offered three documents, which I marked Applicant’s Exhibits (AppXs) A through C, and admitted into evidence. The record was left open until April 22, 2022, for receipt of additional

documentation. Applicant offered nothing further on his behalf. DOHA received the transcript of the hearing (TR) on March 31, 2022.

FINDINGS OF FACT

Applicant admitted to all the allegations in the SOR. After a thorough and careful review of the pleadings, exhibits, and testimony, I make the following findings of fact. Applicant is a 36-year-old employee of a defense contractor. He has been employed with the defense contractor since about December of 2021. He does not hold a security clearance. Applicant is married, and has one child. (TR at page 22 line 7 to page 23 line 7, and GX 1 at page 7.) Applicant attributes his current financial difficulties to extended periods of unemployment, from about 2012–2016, and again from about 2017 until the start of his current employment. (TR at page 38 lines 7–18.) Guideline F - Financial Considerations 1.a. Applicant admits that he has a past-due debt to Creditor A in the amount of about $15,541, as the result of a voluntary vehicle repossession. (TR at page 24 line 12 to page 27 line 1.) He has submitted nothing further in this regard. 1.b. Applicant admits that he has a past-due debt to Creditor B in the amount of about $18,400, as the result of a second, voluntary vehicle repossession. (TR at page 27 line 2 to page 29 line 14.) He has submitted nothing further in this regard. 1.c Applicant has satisfied his admitted past-due debt to Creditor C in the amount of $2,094. (TR at page 23 line 17 to page 24 line 11.) This averment is supported by documentation from a fiscal intermediary. (AppX A at page 1.) This allegation is found for Applicant. 1.d. Applicant admits that he has a second past-due debt to Creditor C in the amount of about $1,748. (TR at page 29 line 15 to page 31 line 19.) He has submitted nothing further in this regard. 1.e. Applicant admits that he has an admitted past-due debt to Creditor E in the amount of about $577. (TR at page 31 line 20 to page 32 line 24.) He has submitted nothing further in this regard.

POLICIES

When evaluating an applicant’s national security eligibility, the administrative judge must consider the adjudicative guidelines (AG). 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 national security eligibility.

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 AG ¶ 2 describing 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. Directive ¶ E3.1.15 states 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 applies for access to classified information seeks to enter 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 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 information. Section 7 of Executive Order (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 relating to the guideline 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. 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 under AG ¶ 19. Three are potentially applicable in this case: (a) inability to satisfy debts; (b) unwillingness to satisfy debts regardless of the ability to do so; and (c) a history of not meeting financial obligations. Applicant has significant past-due indebtedness. The evidence is sufficient to raise these disqualifying conditions. AG ¶ 20 provides conditions that could mitigate security concerns. I considered all of the mitigating conditions under AG ¶ 20 including: (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; and (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. Applicant’s financial problems are ongoing. He has a long history of delinquencies. Applicant still has about $28,360 in past-due indebtedness. He has not demonstrated that future financial problems are unlikely. Mitigation under AG ¶ 20 has not been established. Financial Consideration is found against Applicant.

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 facts and circumstances surrounding this case. I have incorporated my comments under Guideline F in my whole-person analysis. Applicant appears to be doing well at his present employment. (AppX B.) However, 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 Financial Considerations security concerns.

FORMAL FINDINGS

Formal findings for or against Applicant on the allegations set forth in the SOR, as required by ¶ E3.1.25 of the Directive, are: Paragraph 1, Guideline F: AGAINST APPLICANT Subparagraphs 1.a. and 1.b: Against Applicant Subparagraph 1.c: For Applicant Subparagraphs 1.d. and 1.e.: 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 national security eligibility for a security clearance. Eligibility for access to classified information is denied. Richard A. Cefola Administrative Judge