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ISCR Case 16-01471.h1 — CASE

ISCR Case 16-01471.h1denied

Case Headnote

ISCR Case No. 16-01471.h1

deniedJul 5, 2017· Hon. Gregg A. Cervi· hearing

Summary

A 31-year-old electronics maintenance support technician was denied a security clearance under Guideline F (Financial Considerations) due to numerous delinquent debts totaling nearly $15,000. Disqualifying conditions included the applicant's history of not meeting financial obligations and an inability to live within his means.

The Statement of Reasons specifically cited an unpaid car loan. While the applicant made some efforts to resolve other debts after receiving the Statement of Reasons, he failed to adequately address his largest debt, the car loan, which remained unpaid after two months of payments.

Mitigating conditions considered included the applicant's good-faith efforts to resolve some debts and the fact that the financial problems were not recent. However, these were insufficient to overcome concerns about his ongoing financial instability, anticipated job loss, and additional delinquent accounts. The applicant's security clearance was ultimately denied.

Why the Applicant Was Denied

The applicant had numerous delinquent debts totaling nearly $15,000, including a significant unresolved car loan.
He failed to demonstrate financial stability or the ability to resolve his largest debt, which remained unpaid after two months of payments.
The applicant's financial situation was precarious, with anticipated job loss and additional delinquent accounts.

Conditions Referenced

Disqualifying

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

Mitigating

AG ¶ 20(b)rejectedConditions Largely Beyond the Person's ControlWhile the applicant cited a car accident as a cause for his debts, he did not resolve them in the years following the incident.
AG ¶ 20(d)rejectedGood-faith Effort to Repay DebtsThe applicant made some payments but failed to maintain them due to lack of funds.
AG ¶ 20(e)rejectedDispute of Legitimacy of Past-due DebtThe applicant did not provide sufficient evidence to substantiate the legitimacy of the disputed debt.

Key Rule Quoted

“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)

Procedural Posture

SOR issuedJul 8, 2016
Answer filedAug 22, 2016
Hearing heldFeb 2, 2017Applicant testified and submitted exhibits.
Decision dateJul 5, 2017

Cite For

Denial of Security Clearance Due to Unresolved Financial Obligations
Impact of Financial Instability on Security Clearance Eligibility
Evaluation of Mitigating Conditions 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 multiple delinquent debts totaling nearly $15,000, including a significant unresolved car loan. Although the applicant made efforts to pay off some debts after receiving the Statement of Reasons, he failed to resolve his largest debt, leading to a denial of his security clearance due to ongoing financial instability.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.b	The debt in SOR ¶ 1.b is a car loan that Applicant could not pay. $8,500	Against Applicant	Auto Loan Debt	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. 16-01471 ) Applicant for Security Clearance )

For Government: Charles C. Hale, Esq., Department Counsel For Applicant: Pro se

07/05/2017 ______________

STATEMENT OF CASE

______________

CERVI, Gregg A., 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 August 13, 2015. On July 8, 2016, the Department of Defense Consolidated Adjudications Facility (DOD CAF) sent him a Statement of Reasons (SOR) alleging security concerns under Guideline F.1 Applicant responded to the SOR on August 22, 2016, and requested a hearing before an administrative judge. The Defense Office of Hearings and Appeals issued a notice of hearing on December 13, 2016, and the hearing was convened on February 2, 2017. Government Exhibits (GE) 1 through 5 were admitted in evidence without objection. Applicant testified and submitted exhibits (AE) A and B. DOHA received the hearing transcript (Tr.) on February 13, 2017.

FINDINGS OF FACT

Applicant is a 31-year-old electronics maintenance support technician employed by a defense contractor since February 2014. He graduated from high school in 2003 and served in the Army National Guard from 2005 to June 2013. He deployed to Iraq in 2008- 2009, and was honorably discharged as an E-4. He was previously employed from 2011 to 2012 as a government contractor where he volunteered for an overseas assignment. He was most recently unemployed from July to October 2014, and from November 2010 to August 2011. He married in 2008 and has a two-year-old child. He has held a security clearance since 2005.

The SOR alleges 12 delinquent debts totaling nearly $15,000, including a judgment and an $8,500 defaulted car loan. Applicant admitted all of the allegations except SOR ¶ 1.i, and provided explanations and documents with his answer to the SOR. Applicant claims that his delinquent debts resulted from an auto accident in 2010, and three months of lost income due to the accident.2 Applicant negotiated and paid all of the debts in 2016 after receiving the SOR, except the car loan delinquency alleged in SOR ¶ 1.b, and a disputed medical debt listed as SOR ¶ 1.i. The debt in SOR ¶ 1.bis a car loan that Applicant could not pay. He voluntarily returned the car, and believed that it would resolve the balance due on the loan. After discovering otherwise as a result of his security clearance process, he negotiated a payment plan and made two payments in August and September 2016. However he stopped making payments after two months for lack of funds. The debt remains unresolved.

Applicant’s spouse won about $28,000 (after taxes) in a state lottery. She purchased a wedding ring with some of the money, but Applicant convinced her to return it for a refund and apply some of the lottery windfall to pay-off debts. During the hearing, Applicant stated he was going to lose his job at the end of February 2017 because his company’s contract was to expire. At that time, he was at least 80 days past-due on two car loans and a consumer credit card account.3 He has no savings or investments, and $50 in his checking account, but expected a tax refund. He has not received any financial counseling. He intended to move his family to another state after February to seek new employment. Applicant submitted a character statement from a supervisor who generally described him as honest and trustworthy. His testimony was credible and sincere.

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.

National security eligibility 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 a person’s stability, trustworthiness, reliability, discretion, character, honesty, and judgment. AG ¶ 1(b).

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. 92-1106 at 3, 1993 WL 545051 at *3 (App. Bd. Oct. 7, 1993). 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; see AG ¶ 1(d).

ANALYSIS

Financial Considerations

The security concern under this guideline 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. . . .

The relevant disqualifying conditions under AG ¶ 19 include:

(a) inability to satisfy debts; and

Applicant’s admissions and the documentary evidence are sufficient to establish the disqualifying conditions.

The following mitigating conditions under AG ¶ 20 are potentially relevant:

(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.

Applicant’s delinquent debts are recent and numerous, and there is insufficient evidence to determine that they were incurred under circumstances making them unlikely to recur. Applicant does not have sufficient income to pay his debts. He lost three months of income due to a car accident in 2010, however he did not show why he did not resolve his debts in the years following his accident. His debts remained unpaid until after he received the SOR. He used a fortuitous lottery windfall to pay the smaller SOR debts, but he failed to make more than two payments on the largest debt for lack of funds. At the time of the hearing, he had incurred three additional delinquent accounts, and had virtually no money to pay anything but daily living expenses. He has not received financial counseling and his financial condition is precarious. In addition, he unfortunately expected to lose his job by the end of February 2017, which would seriously damage his already untenable financial status.

Despite a relatively steady employment history since 2014 and a reallocation of unpredictably available resources, he did not significantly address his debts until after they raised a security concern, and failed to show an ability to fully resolve his largest debt. His financial situation after September 2016 did not improve, and he testified that he has virtually no money and was to lose his job by the end of February 2017. I find that the mitigating conditions under AG ¶ 20(b), (d), and (e) partially apply to acknowledge the debts paid or disputed, however they do not fully apply as Applicant did not resolve the largest debt, his overall financial condition is concerning, and additional delinquencies have accrued and are likely to continue. His finances are in a precarious position due to a lack of funds and anticipated job loss, and his financial stability raises significant concerns.

WHOLE PERSON CONCEPT

Under AG ¶¶ 2(a), 2(c), and 2(d), the ultimate determination of whether to grant national security eligibility must be an overall commonsense judgment based upon careful consideration of the guidelines and the 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). I considered all of the potentially disqualifying and mitigating conditions in light of all the facts and circumstances surrounding this case. I have incorporated my findings of fact and comments under Guideline F in my whole-person analysis.

Although Applicant made efforts to resolve a significant number of debts, he did so only after receiving the SOR and using an unlikely windfall. He was unable to resolve the largest debt for lack of funds. Applicant has not shown that he is now financially stable and able to adequately address his past and unalleged financial delinquencies, and his financial condition is precarious. Accordingly, I conclude he has not carried his burden of showing that it is clearly consistent with the national security interests of the United States to continue his eligibility for access to classified information.

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.c – 1.l: For Applicant

Subparagraph 1.b: Against Applicant

CONCLUSION

I conclude that it is not clearly consistent with the national security interests of the United States to continue Applicant’s eligibility for access to classified information. Clearance is denied.

_______________________ Gregg A. Cervi Administrative Judge

FOOTNOTES

1 The DOD CAF 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) implemented by the DOD on September 1, 2006. Security Executive Agent Directive 4 (SEAD 4), was issued on December 10, 2016, revising the 2006 adjudicative guidelines. The SEAD 4 guidelines apply to all adjudicative decisions issued on or after June 8, 2017. My decision is based on the guidelines in SEAD 4, referred to in this decision as “AG.” The changes resulting from issuance of SEAD 4 did not affect my decision in this case. 2 Tr. 51; GE 2. Presumably, his periods of unemployment also contributed to his delinquent debts.

3 This evidence will not be used for disqualifying purposes, but may be used when applying mitigation and in the whole-person analysis.