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ISCR Case 16-01582.h1 — CASE

ISCR Case 16-01582.h1denied

Case Headnote

ISCR Case No. 16-01582.h1

deniedAug 22, 2017· Hon. Matthew E. Malone· hearing

Summary

A 43-year-old defense contractor employee and veteran was denied a security clearance under Guideline F, Financial Considerations, due to significant and unresolved financial issues. The Statement of Reasons cited several concerns, including a delinquent student loan debt of $69,856 and seven other delinquent or past-due debts totaling $73,034. Additionally, the applicant filed for Chapter 7 bankruptcy in March 2012, with dischargeable debts relieved in June 2012.

The denial was based on the applicant's ongoing financial problems and the substantial amount of delinquent debt. The judge found that the applicant failed to provide sufficient information to mitigate these security concerns.

Ultimately, the applicant's history of financial irresponsibility and lack of demonstrated effort to address the outstanding debts raised serious doubts about his reliability and trustworthiness, leading to the denial of his security clearance.

Why the Applicant Was Denied

The applicant has ongoing financial problems with significant delinquent debts totaling $73,034.
The applicant did not provide sufficient information to mitigate the security concerns regarding his financial situation.
The applicant's history of financial irresponsibility and failure to address debts raised doubts about his reliability and trustworthiness.

Conditions Referenced

Disqualifying

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

Key Rule Quoted

“A person who has access to such information enters into a fiduciary relationship with the Government based on trust and confidence.”
— Department of the Navy v. Egan, 484 U.S. 518 (1988)

Procedural Posture

SOR issuedJun 17, 2016
Answer filed07/2016Applicant requested a decision without a hearing.
Hearing held—No hearing was conducted.
Decision dateAug 22, 2017

Cite For

Denial of Security Clearance Due to Unresolved Financial Obligations
Impact of Financial Irresponsibility on Security Clearance Eligibility
Insufficient Evidence of Rehabilitation in Financial Matters

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 has significant financial problems, including a large student loan debt and a history of not meeting financial obligations. Despite some efforts to address his debts, the applicant did not provide sufficient evidence to mitigate the security concerns, leading to a denial of his security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant owes $69,856 for a delinquent student loan debt. $69,856	For Applicant	Student Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	Applicant owes $73,034 for seven delinquent or past-due debts. $73,034	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c–1.g	5 sub-charges — specific text not stated in this decision (for the applicant). (low confidence)	For Applicant			—	—	—
1.h	Applicant filed a Chapter 7 bankruptcy petition in March 2012 and was relieved of his dischargeable debts in June 2012.	For Applicant	Bankruptcy Filing	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: ) ) ) [NAME REDACTED] ) ISCR Case No. 16-01582 ) ) ) Applicant for Security Clearance

For Government: Aubrey M. De Angelis, Esq., Department Counsel For Applicant: Pro se

08/22/2017 ______________

STATEMENT OF CASE

______________

MALONE, Matthew E., Administrative Judge:

Applicant has had financial problems for several years. He did not submit sufficient information to overcome the security concerns engendered by his ongoing debts. His request for eligibility for access to classified information is denied.

Statement of the Case

On August 17, 2015, Applicant submitted an Electronic Questionnaire for Investigations Processing (e-QIP) to obtain eligibility for access to classified information as required for his job with a defense contractor. After reviewing the completed background investigation, Department of Defense (DOD) adjudicators could not determine that it is clearly consistent with the interests of national security for Applicant to have access to classified information.1 On June 17, 2016, DOD issued a Statement of Reasons (SOR) alleging facts that raise security concerns addressed under Guideline F (Financial Considerations).2 At the time the SOR was written, the DOD CAF applied the adjudicative guidelines (AG) implemented by the DOD on September 1, 2006. On December 10, 2016, the Director of National Intelligence (DNI) issued a new set of AGs, effective for all security clearance adjudications conducted on or after June 8, 2017. I have based my recommended decision in this case on the June 8, 2017 AGs.3

Applicant timely responded to the SOR (Answer) and requested a decision without a hearing. On September 7, 2016, Department Counsel for the Defense Office of Hearings and Appeals (DOHA) issued a File of Relevant Material (FORM)4 in support of the SOR. Applicant received the FORM on September 13, 2016, and had 30 days from the date of receipt to object to the use of the information included in the FORM and to submit additional information in response to the FORM.5 Applicant did not provide any additional information in response to the FORM. I received the case on July 3, 2017.

FINDINGS OF FACT

The Government alleged in the SOR that Applicant owes $73,034 for seven delinquent or past-due debts (SOR 1.a – 1.g). The $69,856 student loan debt at SOR 1.a represents about 95 percent of the total debt at issue. The Government also alleged that Applicant filed a Chapter 7 bankruptcy petition in March 2012 and was relieved of his dischargeable debts in June 2012 (SOR 1.h). Applicant admitted all of the SOR allegations, averring that the creditor for his student loan debt is garnishing 15 percent of Applicant’s pay, and that he was repaying the SOR 1.fdebt. Applicant did not provide any documents with his Answer. In addition to the facts established by Applicant’s admissions, I make the following findings of fact.

Applicant is a 43-year-old employee of a defense contractor for whom he has worked since December 2012. He served in the United States Army between June 1992 and June 1995. From October 2002 until June 2004, he served in the Army National Guard. Applicant returned to the active duty Army in June 2004, but left for medical reasons under honorable conditions in September 2009. He receives a monthly $598 disability benefit from the Department of Veterans Affairs (VA). Applicant held a security clearance while in the military. (FORM, Items 4 and 7) Applicant and his wife have been married since April 2004. They have two children, ages 12 and 4. In addition to raising their children, his wife works outside the home and earns about $900 monthly. (FORM, Items 4 and 7)

After Applicant left the Army in 1995, he attended college and received an associate’s degree in February 2000. He also took college courses at two different schools between October 2009 and October 2011 without earning a degree. Applicant incurred the debt at SOR 1.a to finance his education. Applicant contacted the creditor for his student loans in April 2016 seeking to establish an affordable repayment plan. However, there is no indication that he has been making any payments on that debt. Although he claimed his pay has been garnished for this debt, the only paystub in this record does not reflect any such deductions. (FORM, Items 4 and 7)

Applicant’s financial problems began when he had trouble finding work after leaving the Army in 1995. He also acknowledged irresponsible use of personal credit. During a previous background investigation in 2003, he discussed numerous debts he owed at the time. He also claimed he had consolidated several of his debts and was paying them as a single payment. Applicant provided a personal financial statement in 2003 that showed he had $655 remaining each month after expenses, which included partial payments on several debts. (FORM, Item 5)

In 2012, Applicant filed a Chapter 7 bankruptcy petition. He declared $4,550 in assets against $86,113 in liabilities. Most of his debt, then as now, consisted of student loans, which were not dischargeable. (FORM, Item 6)

The DOD CAF issued financial interrogatories to Applicant on December 29, 2015. As presented in the FORM, there were no questions or specific requests for information. Applicant’s notarized response6 to whatever questions may have been posed in the interrogatories contained numerous documents. An undated PFS shows that Applicant has about $26 remaining after monthly expenses. Also presented was an account statement showing Applicant pays $93 monthly for five consolidated debts, and that he has been paying other debts. Applicant further showed that he has changed apartments to reduce expenses, such as high electric bills at his old apartment.

In his July 2016 response to the SOR, Applicant cited his efforts to cut costs and his plans to repay his debts after two car loans are paid off in November 2016. He also averred that he is taking other actions to resolve his debts. The deadline for responding to the FORM was in October 2016; however, Applicant did not provide any additional information or documentation to update whatever efforts he making in this regard.

POLICIES

Each security clearance decision must be a fair, impartial, and commonsense determination based on examination of all available relevant and material information,7 and consideration of the pertinent criteria and adjudication policy in the adjudicative guidelines. Decisions must also reflect consideration of the factors listed in ¶ 2(d) of the new guidelines. Commonly referred to as the “whole-person” concept, those factors are:

(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.

The presence or absence of a disqualifying or mitigating condition is not determinative of a conclusion for or against an applicant. However, specific applicable guidelines should be followed whenever a case can be measured against them as they represent policy guidance governing the grant or denial of access to classified information. A security clearance decision is intended only to resolve whether it is clearly consistent with the national interest8 for an applicant to either receive or continue to have access to classified information. Department Counsel must produce sufficient reliable information on which DOD based its preliminary decision to deny or revoke a security clearance for an applicant. Additionally, Department Counsel must prove controverted facts alleged in the SOR.9 If the Government meets its burden, it then falls to the applicant to refute, extenuate, or mitigate the case for disqualification.10

Because no one is entitled to a security clearance, applicants bear a heavy burden of persuasion to establish that it is clearly consistent with the national interest for them to have access to protected information.11 A person who has access to such information enters into a fiduciary relationship with the Government based on trust and confidence. Thus, there is a compelling need to ensure each applicant possesses the requisite judgment, reliability, and trustworthiness of one who will protect the nation’s interests as his or her own. The “clearly consistent with the national interest” standard compels resolution of any reasonable doubt about an applicant’s suitability for access to classified information in favor of the Government.12

ANALYSIS

Financial Considerations

The Government’s information about Applicant’s debts reasonably raised the security concern expressed at 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.

Applicant has been experiencing significant financial problems since the mid- 1990s. Despite being relieved of dischargeable debts in 2012, he has accrued new unpaid debts and has still not addressed his student loans apart from writing to the lender in 2016. He has not provided information showing that he has reached any agreement with his student loans lender aside from his claim the student loan creditor is garnishing Applicant’s pay. This information requires application of the disqualifying condition at AG ¶¶ 19(a) (inability to satisfy debts); and 19(c) (a history of not meeting financial obligations).

I have also considered whether the record supports application of any of the AG ¶ 20 mitigating conditions. I conclude it does not. Applicant’s debts did not arise from circumstances beyond his control, and the record does not inspire confidence that he will avoid financial problems in the future. It appears he is making efforts regarding other debts, but his current finances are tenuous given his minimal monthly cash flow, and he did not sufficiently corroborate his cost reduction efforts. In short, given Applicant’s long record of financial problems, it was incumbent on Applicant to provide more and current information regarding his finances in order to mitigate the Government’s security concerns.

In addition to my evaluation of the facts and application of the appropriate adjudicative factors under Guideline F, I have reviewed the record before me in the context of the whole-person factors listed in AG ¶ 2(d). I have taken due note of Applicant’s honorable military service and his efforts to resolve some of his debts. Nonetheless, doubts about his suitability remain because of Applicant’s longstanding financial problems and the fact that he has not corroborated his stated plans to repay his debts. Because protection of the interests of national security is the principal focus of these adjudications, any remaining doubts must be resolved against the granting of access to classified information.

FORMAL FINDINGS

Formal findings 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.h: For Applicant

CONCLUSION

In light of all available information, it is not clearly consistent with the interests of national security for Applicant to have access to classified information. Applicant’s request for security clearance eligibility is denied.

MATTHEW E. MALONE Administrative Judge

FOOTNOTES

1 Required by Executive Order 10865, as amended, and by the Directive. 2 See Directive, Enclosure 2. 3 My decision in this case would have been the same under either version of the adjudicative guidelines. 4 See Directive, Enclosure 3, Section E3.1.7. In the FORM, Department Counsel relies on nine enclosed exhibits (Items 1 - 9). 5 See Directive, Enclosure 3, Section E3.1.7. 6 Applicant’s dated his response as “April 4, 2015.” I must assume that this is typographical error, and that he responded to the interrogatories in April 2016. 7 Directive. 6.3. 8 See Department of the Navy v. Egan, 484 U.S. 518 (1988). 9 Directive, E3.1.14. 10 Directive, E3.1.15. 11 See Egan, 484 U.S. at 528, 531. 12 See Egan; Adjudicative Guidelines, ¶ 2(b).