ISCR Case No. 22-00666

______________ ______________ DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 22-00666 ) Applicant for Security Clearance ) Appearances For Government: Gatha Manns, Esquire, Department Counsel For Applicant: Pro se 12/12/2022

GALES, Robert Robinson, Administrative Judge: Applicant failed to mitigate the security concerns regarding financial considerations. Eligibility for a security clearance is denied. Statement of the Case On July 28, 2021, Applicant applied for a security clearance and submitted a Questionnaire for National Security Positions (SF 86). On May 5, 2022, the Defense Counterintelligence and Security Agency (DCSA) Consolidated Adjudications Services (CAS), previously known as the Department of Defense Consolidated Adjudications Facility (DOD CAF), issued a Statement of Reasons (SOR) to him under Executive Order (Exec. Or.) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended and modified; DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended and modified (Directive); and Directive 4 of the Security Executive Agent (SEAD 4), National Security Adjudicative Guidelines (December 10, 2016) (AG), effective June 8, 2017. The SOR alleged security concerns under Guideline F (Financial Considerations) and detailed reasons why the DCSA CAS adjudicators were unable to find that it is clearly

consistent with the national interest to grant or continue a security clearance for Applicant. The SOR recommended referral to an administrative judge to determine whether a clearance should be granted, continued, denied, or revoked. On June 3, 2022, Applicant responded to the SOR and elected to have his case decided on the written record in lieu of a hearing. (Item 2) A complete copy of the Government’s file of relevant material (FORM) was mailed to Applicant by the Defense Office of Hearings and Appeals (DOHA) on August 19, 2022, and he was afforded an opportunity after receipt of the FORM to file objections and submit material in refutation, extenuation, or mitigation. In addition to the FORM, Applicant was furnished a copy of the Directive as well as the Adjudicative Guidelines applicable to his case. He received the FORM on September 12, 2022. His response was due on October 12, 2022. He timely responded to the FORM and submitted one document that was marked and admitted without objection as Applicant Exhibit (AE) A. The case was assigned to me on December 2, 2022. The record closed on October 12, 2022.

In his response to the SOR, Applicant admitted, with brief comments, all of the SOR allegations. (SOR ¶¶ 1.a. through 1.g.). His admissions and comments are incorporated herein. After a complete and thorough review of the evidence in the record, and upon due consideration of same, I make the following findings of fact: Background Applicant is a 30-year-old employee of a defense contractor. He has been serving as a senior consultant in purchasing and quality since December 2019. He was previously employed by other employers as a buyer (November 2019 – December 2019), a part- time head physical therapist aide and purchasing specialist (September 2016 – September 2019), and part-time barista (June 2013 – September 2013). It is unclear if he is a high school graduate. He received a bachelor’s degree in 2015 and received additional graduate credits for three months in 2018 and four months in 2019, but no other degree. He has never served in the U.S. military. He never held a security clearance. He has never been married. Financial Considerations General source information pertaining to the financial accounts discussed below can be found in the following exhibits: Item 2 (Answer to the SOR, dated June 3, 2022; Item 3 (SF 86, dated July 28, 2021); Item 4 (Combined Experian, TransUnion, and Equifax Credit Report, dated August 19, 2021); Item 5 (Equifax Credit Report, dated April 27, 2022); Item 6 (Enhanced Subject Interview (ESI), dated August 30, 2021); and AE A (Response to the FORM, dated October 3, 2022). In his SF 86, Applicant acknowledged having some financial issues associated with his delinquent student loans estimated to be approximately $142,000. He indicated

that the issue was created because of “career pursuit” and “developing career to make more money.” (Item 3 at 32-34) He did not fully explain either comment. An investigator with the U.S. Office of Personnel Management (OPM) interviewed him on August 30, 2021. During that interview, he disclosed and described the delinquent student loans that were co-signed by his father (now deceased). There were six loans generated through government sources and one large loan from a credit union. The loans were deferred until September 2016 while he was a student, and his payments were to commence at that time. However, claiming financial hardship, he obtained an economic hardship waiver and the loans were again deferred until August 2018. Payments estimated to be “a few hundred dollars” per month were to commence at that time. Because he had insufficient wages to pay both his normal bills and his student loans, he focused on his bills, essentially ignoring his student loans. He made no effort to address his student loans from August 2018 until March 2021. Because of his failure make any timely payments, after a period of about 90 days, Applicant’s six student loans were returned by the loan servicer and assigned to the U.S. Department of Education (DOE), eventually designated as defaulted loans, and placed for collection. The one remaining student loan was charged off by the lender. He claimed that since he now had a good full- time job, he would start paying his delinquent loans. (Item 6 at 3-5) The investigator gave him the opportunity to provide documentation regarding the student loans both during the interview and after the interview, but Applicant failed to do so. (Item 6 at 5) In his June 2022 Answer to the SOR, Applicant acknowledged having made attempts to create a payment plan for the six defaulted student loans by contacting the DOE. (Item 2) He submitted a letter from the DOE, dated May 20, 2022, and the information in the letter set forth the required steps to rehabilitate his student loans. That letter also referred to the CARES Act. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act – the original coronavirus emergency relief bill – temporarily paused payments and involuntary collections on most federally held student loans through September 30, 2020. The pause was subsequently extended until December 31, 2022. (DOE Press Release, August 24, 2022) On April 6, 2022, the DOE announced an initiative called “Fresh Start” to help eligible borrowers whose loans were in default. Among the benefits of the new program were that the CARES relief pause would continue, collection efforts would cease, and wages would not be garnished. In Applicant’s Response to the FORM, he contended that since May 2021 he has made repeated attempts with the DOE to rehabilitate his six defaulted student loans and exchanged documentation including his income tax information. He claimed that in October 2022, he was told that he was eligible to start repayments through either a consolidation or a repayment plan. He has made no efforts to address the one remaining student loan with the credit union because the loan has been charged off. (AE A) He failed to submit any documentation to verify any of the claims he has made regarding the efforts he purportedly made with the DOE.

Applicant expanded on the factors that attributed to his inability to timely pay his student loans. Initially, it was because he was not making enough money to pay back the loans because his only career option was in physical therapy, and he was only making $17,000 a year. Midway through preparing to become a physical therapist, he realized that the field was no longer viable for him and he made a career change. (AE A) The SOR alleged six still-delinquent student-loan accounts with the DOE totaling approximately $48,582, plus the one credit union charged off student loan totaling $101,988, for a combined total of approximately $150,570 as set forth below: SOR ¶ 1.a. refers to a student-loan account with an unpaid balance of $7,036 that was placed for collection. (Item 4 at 6; Item 5 at 4) As of the date the SOR was issued, the account remained delinquent. Although Applicant apparently has taken some recent unverified steps to rehabilitate it, the account has not been resolved. SOR ¶ 1.b. refers to a student-loan account with an unpaid balance of $9,640 that was placed for collection. (Item 4 at 5; Item 5 at 4) As of the date the SOR was issued, the account remained delinquent. Although Applicant apparently has taken some recent unverified steps to rehabilitate it, the account has not been resolved. SOR ¶ 1.c. refers to a student-loan account with an unpaid balance of $10,803 that was placed for collection. (Item 4 at 5; Item 5 at 5) As of the date the SOR was issued, the account remained delinquent. Although Applicant apparently has taken some recent unverified steps to rehabilitate it, the account has not been resolved. SOR ¶ 1.d. refers to a student-loan account with an unpaid balance of $5,620 that was placed for collection. (Item 4 at 6; Item 5 at 5) As of the date the SOR was issued, the account remained delinquent. Although Applicant apparently has taken some recent unverified steps to rehabilitate it, the account has not been resolved. SOR ¶ 1.e. refers to a student-loan account with an unpaid balance of $3,740 that was placed for collection. (Item 4 at 6; Item 5 at 5) As of the date the SOR was issued, the account remained delinquent. Although Applicant apparently has taken some recent unverified steps to rehabilitate it, the account has not been resolved. SOR ¶ 1.f. refers to a student-loan account with an unpaid balance of $11,743 that was placed for collection. (Item 4 at 5; Item 5 at 6) As of the date the SOR was issued, the account remained delinquent. Although Applicant apparently has taken some recent unverified steps to rehabilitate it, the account has not been resolved. SOR ¶ 1.g. refers to a student-loan account with an unpaid balance of $101,988 that was placed for collection and charge off. (Item 4 at 7; Item 5 at 9) As of the date the SOR was issued, the account remained delinquent. Applicant has made no efforts to address the loan to rehabilitate it. The account has not been resolved.

As noted above, although Applicant made an unverified claim that he had submitted to the DOE an extract of his income tax form for an unspecified tax year as part of his recent effort to seek student loan rehabilitation, he did not submit any such information as part of this security clearance eligibility review process. He did not submit a budget reflecting a monthly income, total monthly expenses, or any funds available for savings or spending. There is no evidence of financial counseling. There is a paucity of evidence to indicate if Applicant is currently in a better position financially than he had been.

The U.S. Supreme Court has recognized the substantial discretion of the Executive Branch in regulating access to information pertaining to national security emphasizing, “no one has a ‘right’ to a security clearance.” (Department of the Navy v. Egan, 484 U.S. 518, 528 (1988)) As Commander in Chief, the President has the authority to control access to information bearing on national security and to determine whether an individual is sufficiently trustworthy to have access to such information. The President has authorized the Secretary of Defense or his designee to grant an applicant eligibility for access to classified information “only upon a finding that it is clearly consistent with the national interest to do so.” (Exec. Or. 10865, Safeguarding Classified Information within Industry § 2 (Feb. 20, 1960), as amended and modified.) When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the guidelines in SEAD 4. In addition to brief introductory explanations for each guideline, the guidelines list potentially disqualifying conditions and mitigating conditions, which are used in evaluating an applicant’s eligibility for access to classified information. An administrative judge need not view the guidelines as inflexible, ironclad rules of law. Instead, acknowledging the complexities of human behavior, these guidelines are applied in conjunction with the factors listed in 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 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 meaningful decision. In the decision-making process, facts must be established by “substantial evidence.” “Substantial evidence [is] such relevant evidence as a reasonable mind might accept as adequate to support a conclusion in light of all contrary evidence in the record.” (ISCR Case No. 04-11463 at 2 (App. Bd. Aug. 4, 2006) (citing Directive ¶ E3.1.32.1)) “Substantial evidence” is “more than a scintilla but less than a preponderance.” (See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994)) The Government initially has the burden of producing evidence to establish a potentially disqualifying condition under the Directive, and has the burden of establishing controverted facts alleged in the SOR. Once the Government has produced substantial

evidence of a disqualifying condition, under Directive ¶ E3.1.15, the applicant has the burden of persuasion to present evidence in refutation, explanation, extenuation or mitigation, sufficient to overcome the doubts raised by the Government’s case. The burden of disproving a mitigating condition never shifts to the Government. (See ISCR Case No. 02-31154 at 5 (App. Bd. Sept. 22, 2005)) 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 as well. It is because of this special relationship that the Government must be able to repose a high degree of trust and confidence in those 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 as to potential, rather than actual, risk of compromise of classified information. Furthermore, “security clearance determinations should err, if they must, on the side of denials.” (Egan, 484 U.S. at 531) Clearance decisions must be “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” (See Exec. Or. 10865 § 7) Thus, nothing in this decision should be construed to suggest that I have based this decision, in whole or in part, on any express or implied determination as to Applicant’s allegiance, loyalty, or patriotism. It is merely an indication the Applicant has or has not met the strict guidelines the President and the Secretary of Defense have established for issuing a clearance. In reaching this decision, I have drawn only those conclusions that are reasonable, logical, and based on the evidence contained in the record. Likewise, I have avoided drawing inferences grounded on mere speculation or conjecture.

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: (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. The SOR alleged six still-delinquent student-loan accounts with the DOE totaling approximately $48,582, plus the one credit union charged off student loan totaling $101,988, for a combined total of approximately $150,570 On its face, without any background information, Applicant’s history of still-delinquent debts appears to present either an inability to satisfy debts, or a history of not meeting financial obligations. He acknowledged that he chose to pay his normal bills to the exclusion of his student loans, even after December 2019, when he obtained his current position. His apparent disinterest or inability in focusing on his student-loan accounts between August 2018 and March 2021, when the CARES Act temporarily paused payments and involuntary collections on most federally held student loans, supports a conclusion that he also had a reluctance or unwillingness to satisfy those debts regardless of the ability to do so. AG ¶¶ 19(a), 19(b), and 19(c) have been established. The guideline also includes examples of conditions that could mitigate security concerns arising from financial difficulties under AG ¶ 20: (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; (d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts; and (e) the individual has a reasonable basis to dispute the legitimacy of the past-due debt which is the cause of the problem and provides documented

proof to substantiate the basis of the dispute or provides evidence of actions to resolve the issue None of the conditions apply. Six of Applicant’s student loans were assigned to the DOE, eventually designated as defaulted loans, and placed for collection. One student loan with the credit union – for over $100,000 – was charged off. The loans were deferred until September 2016 while he was a student, and his payments were to commence at that time. However, claiming financial hardship, he obtained an economic hardship waiver and the loans were again deferred until August 2018. Payments estimated to be “a few hundred dollars” per month were to commence at that time. Because he had insufficient wages to pay both his normal bills and his student loans, he focused on his bills, essentially ignoring his student loans. He made no effort to address his student loans from August 2018 until March 2021. He obtained his current position in December 2019, but made no efforts to address his delinquent student loans. He claimed to the OPM investigator in August 2021 that since he now had a good full-time job, he would start paying his delinquent loans, but he had made no such efforts between December 2019 and some unverified date in 2021. A debt that became delinquent several years ago is still considered recent because “an applicant’s ongoing, unpaid debts evidence a continuing course of conduct and, therefore, can be viewed as recent for purposes of the Guideline F mitigating conditions.” (ISCR Case No. 15-06532 at 3 (App. Bd. Feb. 16, 2017) (citing ISCR Case No. 15-01690 at 2 (App. Bd. Sept. 13, 2016)). Based on the evidence, it is clear that Applicant intentionally ignored his delinquent student-loan accounts for a substantial multi-year period, even after receiving deferments. The overwhelming evidence leads to the conclusion that his financial problems were not under control, and that the initial unverifiable efforts to fix his problem did not start until sometime in 2021. He acted irresponsibly by failing to address his delinquent student- loan accounts and by failing to make limited, if any, verified efforts of working with his loan servicers or DOE creditors before he submitted his SF 86. The Appeal Board has previously commented on such a situation: Even if Applicant’s financial difficulties initially arose, in whole or in part, due to circumstances outside his [or her] control, the Judge could still consider whether Applicant has since acted in a reasonable manner when dealing with those financial difficulties. ISCR Case No. 05-11366 at 4 n.9 (App. Bd. Jan. 12, 2007) (citing ISCR Case No. 99-0462 at 4 (App. Bd. May 25, 2000); ISCR Case No. 99-0012 at 4 (App. Bd. Dec. 1, 1999); ISCR Case No. 03- 13096 at 4 (App. Bd. Nov. 29, 2005)). A component is whether he or she maintained contact with creditors and attempted to negotiate partial payments to keep debts current. An applicant who begins to resolve his or her financial problems only after being placed on notice that his or her security clearance is in jeopardy may be lacking in the judgment and self-discipline to follow rules and regulations over time or when there is no immediate threat to his or her own interests. (See, e.g., ISCR Case No. 17-01213 at 5

(App. Bd. Jun. 29, 2018); ISCR Case No. 17-00569 at 3-4 (App. Bd. Sept. 18, 2018) In this instance, Applicant has failed to offer any evidence that he began making such efforts until he submitted his SF 86. Clearance decisions are aimed at evaluating an applicant’s judgment, reliability, and trustworthiness. They are not a debt-collection procedure. The guidelines do not require an applicant to establish resolution of every debt or issue alleged in the SOR. An applicant needs only to establish a plan to resolve financial problems and take significant actions to implement the plan. There is no requirement that an applicant immediately resolve issues or make payments on all delinquent debts simultaneously, nor is there a requirement that the debts or issues alleged in an SOR be resolved first. Rather, a reasonable plan and concomitant conduct may provide for the payment of such debts, or resolution of such issues, one at a time. Mere promises to pay debts in the future, without further confirmed action, are insufficient. In this instance, Applicant clearly stated that no such efforts regarding the DOE loans were made until 2021, and no efforts have still been made with the credit union that charged off $101,988. The Appeal Board has previously explained what constitutes a good-faith effort to repay overdue creditors or otherwise resolve debts: In order to qualify for application of [the “good-faith” mitigating condition], an applicant must present evidence showing either a good-faith effort to repay overdue creditors or some other good-faith action aimed at resolving the applicant’s debts. The Directive does not define the term “good-faith.” However, the Board has indicated that the concept of good-faith “requires a showing that a person acts in a way that shows reasonableness, prudence, honesty, and adherence to duty or obligation.” (internal citation and footnote omitted) ISCR Case No. 02-30304 at 3 (App. Bd. Apr. 20, 2004) (quoting ISCR Case No. 99-9020 at 5-6 (App. Bd. Jun. 4, 2001)). There is no verifiable evidence of financial counseling. Despite his very recent purported efforts to start rehabilitating six of his seven delinquent student-loan accounts after several years of inaction, Applicant’s inaction under the circumstances casts doubt on his current reliability, trustworthiness, and good judgment. See ISCR Case No. 09- 08533 at 3-4 (App. Bd. Oct. 6, 2010).

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 the circumstances. The administrative judge should consider the nine adjudicative process factors listed at SEAD 4, App. A, ¶ 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 SEAD 4, App. A, ¶ 2(c), the ultimate determination of whether to grant a security clearance must be an overall commonsense judgment based upon careful consideration of the guidelines and the whole-person concept. Moreover, I have evaluated the various aspects of this case in light of the totality of the record evidence and have not merely performed a piecemeal analysis. See U.S. v. Bottone, 365 F.2d 389, 392 (2d Cir. 1966); see also ISCR Case No. 03-22861 at 2-3 (App. Bd. Jun. 2, 2006). There is some evidence in favor of mitigating Applicant’s financial considerations. He is a 30-year-old employee of a defense contractor. He has been serving as a senior consultant in purchasing and quality since December 2019. He was previously employed by other employers as a buyer, a part-time head physical therapist aide and purchasing specialist, and part-time barista. He received a bachelor’s degree in 2015 and received additional graduate credits for three months in 2018 and four months in 2019, but no other degree. The disqualifying evidence under the whole-person concept is simply more substantial and compelling. Applicant has six still-delinquent student-loan accounts with the DOE totaling approximately $48,582, plus the one credit union charged off student loan totaling $101,988, for a combined total of approximately $150,570. He acknowledged that he chose to pay his normal bills to the exclusion of his student loans, even after December 2019, when he obtained his current position. He claimed to the OPM investigator in August 2021 that since he now had a good full-time job, he would start paying his delinquent loans, but he had made no such efforts between December 2019 and some unverified date in 2021. His apparent disinterest or inability in focusing on his student-loan accounts between August 2018 and March 2021, when the CARES Act temporarily paused payments and involuntary collections on most federally held student loans, supports a conclusion that he also had a reluctance or unwillingness to satisfy those debts regardless of the ability to do so. In light of his disinterest to take any such actions until he submitted his SF 86, there are lingering questions if Applicant is currently in a better position financially than he had been, as well as continuing doubt about his current reliability, trustworthiness, and good judgment. In ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008), the Appeal Board addressed a key element in the whole-person analysis in financial cases stating: In evaluating Guideline F cases, the Board has previously noted that the concept of “meaningful track record” necessarily includes evidence of actual debt reduction through payment of debts. However, an applicant is not required, as a matter of law, to establish that he [or she] has paid off each and every debt listed in the SOR. All that is required is that an applicant demonstrate that he [or she] has “. . . established a plan to resolve his [or

________________________ her] financial problems and taken significant actions to implement that plan.” The Judge can reasonably consider the entirety of an applicant’s financial situation and his [or her] actions in evaluating the extent to which that applicant’s plan for the reduction of his outstanding indebtedness is credible and realistic. See Directive ¶ E2.2(a) (“Available, reliable information about the person, past and present, favorable and unfavorable, should be considered in reaching a determination.”) There is no requirement that a plan provide for payments on all outstanding debts simultaneously. Rather, a reasonable plan (and concomitant conduct) may provide for the payment of such debts one at a time. Likewise, there is no requirement that the first debts actually paid in furtherance of a reasonable debt plan be the ones listed in the SOR. Applicant’s track record of nearly zero claimed or verifiable efforts to resolve the seven delinquent student-loan debts and the lengthy period of non-contact with his creditors, is negative and disappointing. Overall, the evidence leaves me with substantial questions and doubts as to his eligibility and suitability for a security clearance. Accordingly, I conclude he has failed to mitigate the security concerns arising from his financial considerations. See SEAD 4, App. A, ¶¶ 2(d) (1) through AG 2(d) (9).

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.b. through 1.g.: Against Applicant

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 eligibility for a security clearance. Eligibility for access to classified information is denied. ROBERT ROBINSON GALES Administrative Judge