CASE · Clearance Adjudication Search EngineCASE

Loading case…

ISCR Case 23-01340 — CASE

ISCR Case 23-01340denied

Case Headnote

ISCR Case No. 23-01340

deniedJan 11, 2024· Hon. Charles C. Hale· hearing

Summary

A 35-year-old former U.S. Navy service member was denied a security clearance due to significant financial concerns under Guideline F. The applicant faced allegations regarding two delinquent debts totaling $33,912. These included a charged-off car loan for $18,147 and a past-due timeshare account with an approximate balance of $1,981, which was also in foreclosure with a total loan balance of $15,765.

The administrative judge determined that the applicant did not mitigate these financial concerns. Disqualifying conditions were raised under Adjudicative Guideline Paragraphs 19(a) and 19(c). The denial was based on the applicant's admission to these two substantial delinquent debts without providing any evidence of their resolution or mitigation.

Ultimately, the applicant's financial issues were found to be ongoing and unresolved, indicating a lack of responsible action to address them. Consequently, eligibility for access to classified information was denied.

Why the Applicant Was Denied

The applicant admitted to two significant delinquent debts totaling $33,912 without providing evidence of resolution or mitigation.
The applicant's financial issues were ongoing and unresolved, demonstrating a lack of responsible action to address them.

Conditions Referenced

Disqualifying

AG ¶ 19(a)appliedInability to Satisfy Debts
AG ¶ 19(c)appliedHistory of Not Meeting Financial Obligations

Key Rule Quoted

“[N]o one has a ‘right’ to a security clearance.”
— Department of the Navy v. Egan, 484 U.S. 518, 528 (1988)

Procedural Posture

SOR issuedJul 11, 2023
Answer filedJul 15, 2023
Hearing heldJan 11, 2024Decision rendered by Administrative Judge Charles C. Hale.
Decision dateJan 11, 2024

Cite For

Denial of Security Clearance Due to Unresolved Financial Obligations
Impact of Financial Irresponsibility on Security Clearance Eligibility
Lack of Evidence to Mitigate Financial Concerns Under Guideline F

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 had two delinquent debts totaling $33,912, which raised significant financial concerns under Guideline F. The applicant's claims regarding his financial situation were not sufficient to mitigate the concerns, leading to a decision against the applicant.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	car loan charged off in the amount of $18,147. $18,147	Against Applicant	Auto Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	A timeshare account that is past due in the approximate amount of $1,981, which is in foreclosure status with a total loan balance of $15,765. $1,981	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—

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. 23-01340 ) Applicant for Security Clearance ) Appearances For Government: Alison P. O’Connell, Esq., Department Counsel For Applicant: Pro se 01/11/2024

STATEMENT OF CASE

HALE, Charles C., Administrative Judge: This case involves security concerns raised under Guideline F (Financial Considerations). Eligibility for access to classified information is denied. Statement of the Case Applicant submitted a security clearance application (SCA) on July 3, 2018. On July 11, 2023, the Department of Defense (DoD) sent him a Statement of Reasons (SOR) alleging security concerns under Guideline F. The DoD acted under Executive Order (Exec. Or.) 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) promulgated in Security Executive Agent Directive 4, National Security Adjudicative Guidelines (December 10, 2016). Applicant answered the SOR on July 15, 2023, and requested a decision on the written record without a hearing. Department Counsel submitted the Government’s file of relevant material (FORM) on September 6, 2023. On September 7, 2023, a complete copy of the FORM was sent to Applicant. He received the FORM on September 13, 2023.

He did not submit a response to the FORM, object to the Government’s evidence, and did not submit documents. The case was assigned to me on January 3, 2024. The SOR and the Answer are the pleadings in the case. FORM Items 5 through 9 are admitted into evidence without objection.

FINDINGS OF FACT

Applicant admitted both allegations without explanation. His admissions are incorporated into the findings of fact. After a thorough and careful review of the pleadings and exhibits submitted, I make the following additional findings of fact. Applicant is 35 years old. After serving honorably in the U.S. Navy from November 2008 until August 2014, he was hired by a federal contractor immediately after leaving active duty. He worked for four years in state C before moving in 2018 to state Z to take his current position. He earned his high school diploma in June 2008. He married in May 2008 and has two school-age children. (Item 5 at 10-16,19, 22.) The SOR alleges two delinquent debts totaling $33,912. The debts are reflected in two credit reports, from January 2023 (Item 7 at 2) and July 2021 (Item 8 at 4-5). SOR ¶ 1.a: car loan charged off in the amount of $18,147. Applicant admits the debt. He states he could not afford the car on a single income. The loan amount was for $46,883. (Item 7 at 2.) He turned over the vehicle after about 18 months when he could not afford to make the payments. He was not aware of the outstanding balance until confronted during his December 2021 security clearance interview. (Item 7 at 2; Item 8 at 4; Item 9 at 2-3.) SOR ¶ 1.b: A timeshare account that is past due in the approximate amount of $1,981, which is in foreclosure status with a total loan balance of $15,765. Applicant admits the debt. He was not aware of its status until confronted during his security clearance interview. (Item 9 at 2-3.) He told the investigator that he and his wife signed a timeshare contract while on vacation. He sought to terminate the contract after returning from the vacation and was told he was not allowed to cancel the contract. He elected to not make any payments. (Item 9 at 2-3.) Both credit reports show the account opened in March 2018 and reported delinquent in April 2019. (Item 7 at 2; Item 8 at 5.) In response to government interrogatories, in the personal financial statement portion, Applicant did not list any details concerning his monthly income and provided one item in his monthly expenses (utilities). He did list four debts and their monthly payments, which total $2,450. (Item 6 at 6.) During his security clearance interview he did offer that he would contact the creditors to work out a payment plan. (Item 9.)

POLICIES

“[N]o 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.” Id. at 527. The President has authorized the Secretary of Defense or his designee to grant applicants 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 § 2. Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, an administrative judge applies these guidelines in conjunction with an evaluation of the whole person. An administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. An administrative judge must consider all available and reliable information about the person, past and present, favorable and unfavorable. The Government reposes a high degree of trust and confidence in persons with access to classified information. This relationship transcends normal duty hours and endures throughout off-duty hours. Decisions include, by necessity, consideration of the possible risk that the applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation about potential, rather than actual, risk of compromise of classified information. Clearance decisions must be made “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” Exec. Or. 10865 § 7. Thus, a decision to deny a security clearance is merely an indication the applicant has not met the strict guidelines the President and the Secretary of Defense have established for issuing a clearance. Initially, the Government must establish, by substantial evidence, conditions in the personal or professional history of the applicant that may disqualify the applicant from being eligible for access to classified information. The Government has the burden of establishing controverted facts alleged in the SOR. See Egan, 484 U.S. at 531. “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 guidelines presume a nexus or rational connection between proven conduct under any of the criteria listed therein and an applicant’s security suitability. See ISCR Case No. 15-01253 at 3 (App. Bd. Apr. 20, 2016). Once the Government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. Directive ¶ E3.1.15. An applicant has the burden of proving a mitigating condition, and the burden of disproving it never shifts to the Government. See ISCR Case No. 02- 31154 at 5 (App. Bd. Sep. 22, 2005).

An applicant “has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue his security clearance.” ISCR Case No. 01- 20700 at 3 (App. Bd. Dec. 19, 2002). “[S]ecurity clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531.

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. This concern is broader than the possibility that an individual might knowingly compromise classified information in order to raise money. It encompasses concerns about an individual’s self-control, judgment, and other qualities essential to protecting classified information. An individual who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handing and safeguarding classified information. See ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012) Applicant accrued delinquent debts. His admissions and the evidence in the FORM establish two disqualifying conditions under this guideline: AG ¶ 19(a): inability to satisfy debts; and AG ¶ 19(c): a history of not meeting financial obligations. The following mitigating conditions under AG ¶ 20 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; and (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. AG ¶ 20(a) does not apply. Applicant’s financial delinquencies are ongoing and unresolved. He was employed immediately after leaving active duty in 2014. He offered no evidence for consideration in deciding whether his overall reliability, trustworthiness, or good judgment should mitigate these financial problems. Applicant attributes his debts to having a single income. The first prong of AG ¶ 20(b) therefore applies. For full consideration under AG ¶ 20(b), however, Applicant must establish that he acted responsibly under the circumstances. He has not done so. He completed his SCA in July 2018 and was interviewed in December 2021. The most recent record evidence (January 2023 credit report) shows no actions. An applicant who waits until his clearance is in jeopardy before resolving debts may be lacking in the judgment expected of those with access to classified information. See ISCR Case No. 16-01211 (App. Bd. May 30, 2018) citing ISCR Case No. 15-03208 at 5 (App. Bd. Mar. 7, 2017). He did not provide any evidence that he acted responsibly under the circumstances to resolve them. AG ¶ 20(b) does not apply.

WHOLE PERSON CONCEPT

Under AG ¶ 2(c), the ultimate determination of whether to grant eligibility for a security clearance must be an overall common sense judgment based upon careful consideration of the guidelines and the whole-person concept. In applying the whole- person concept, an 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. An 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. 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. Because Applicant requested a determination on the record without a hearing, I had no opportunity to evaluate his credibility and sincerity based on demeanor. See ISCR Case No. 01-12350 at 3-4 (App. Bd. Jul. 23, 2003). After weighing the disqualifying and mitigating conditions under Guideline F and evaluating all the evidence in the context of the whole person, I conclude Applicant has not mitigated the security concerns raised by his delinquent debts.

FORMAL FINDINGS

I make the following formal findings on the allegations in the SOR: Paragraph 1, Guideline F (Financial Considerations): AGAINST APPLICANT Subparagraphs 1.a-1.b: Against Applicant

CONCLUSION

In light of all of the circumstances, it is not clearly consistent with the interests of national security to grant Applicant a security clearance. Eligibility for access to classified information is denied. Charles C. Hale Administrative Judge