CASE · Clearance Adjudication Search EngineCASE

Loading case…

ISCR Case 16-01847.h1 — CASE

ISCR Case 16-01847.h1granted

Case Headnote

ISCR Case No. 16-01847.h1

grantedSep 22, 2017· Hon. Noreen A. Lynch· hearing

Summary

A 33-year-old warehouse technician and U.S. military veteran was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The Statement of Reasons (SOR) alleged approximately $77,000 in nine delinquent debts, including collection and charged-off accounts. Specific allegations included an unpaid medical bill of $450 and another account for $668, both of which the applicant subsequently paid and documented.

The applicant successfully resolved his significant delinquent debts through a Chapter 7 bankruptcy, which was discharged in January 2017. This action addressed the primary financial concerns.

Following the bankruptcy, the applicant demonstrated a commitment to financial responsibility. He obtained financial counseling, completed FDIC financial courses, and provided evidence of a stable income and a budget. Crucially, no new delinquent debts have arisen since his bankruptcy discharge. These mitigating actions and the resolution of past debts led to the granting of his security clearance.

Why the Applicant Prevailed

The applicant resolved his delinquent debts through a Chapter 7 bankruptcy, which was discharged in January 2017.
He demonstrated financial responsibility by obtaining financial counseling and completing FDIC financial courses.
The applicant provided evidence of a stable income and a budget, with no new delinquent debts since the bankruptcy.

Conditions Referenced

Disqualifying

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

Mitigating

AG ¶ 20(b)appliedConditions Largely Beyond Control
AG ¶ 20(c)appliedReceived Financial Counseling
AG ¶ 20(d)appliedGood-faith Effort to Resolve Debts

Key Rule Quoted

“The protection of the national security is the paramount consideration.”

Procedural Posture

SOR issuedSep 16, 2016
Answer filed—
Hearing heldAug 15, 2017
Decision dateSep 22, 2017

Cite For

Resolution of Delinquent Debts Through Bankruptcy Under Guideline F
Demonstrating Financial Responsibility Post-bankruptcy
Impact of Personal Circumstances on Financial Issues

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: granted

The judge found that the applicant had nine delinquent debts totaling approximately $77,000, which were resolved through a Chapter 7 bankruptcy filed in November 2016. The applicant demonstrated responsible behavior by paying off some debts and obtaining financial counseling, leading to a decision in favor of granting the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	The SOR alleges that Applicant has nine delinquent debts, which total approximately $77,000. The delinquent debts include collection accounts, and charged-off accounts. $77,000	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	—
1.b	As to SOR ¶ 1.b, Applicant paid this medical bill in the amount of $450 and provided documentation. $450	For Applicant	Medical Debt	Admitted	—	—	Documented Debt Paid in Full
1.c	He also paid the account in SOR 1.c for $668. $668	For Applicant	Unspecified Financial	Admitted	—	—	Documented Debt Paid in Full
1.d–1.i	6 sub-charges — specific text not stated in this decision (for the applicant). (low confidence)	For Applicant			—	—	—

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.16-01847 ) ` ) Applicant for Security Clearance )

For Government: Nicole Smith, Esq. Department Counsel For Applicant: Leon Schachter, Esq.

09/22/2017 ______________

STATEMENT OF CASE

______________

LYNCH, Noreen, A., Administrative Judge:

On September 16, 2016, The Department of Defense (DOD) issued a Statement of Reasons (SOR) to Applicant alleging security concerns arising under Guideline F (Financial Considerations). The action was taken under Executive Order (EO) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; DOD 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the Adjudicative Guidelines (AG) implemented in September 2006. Revised Adjudicative Guidelines were issued on December 10, 2016, and became effective on June 8, 2017.1

Applicant timely answered the SOR and requested a hearing. The case was assigned to me on April 7, 2017. A notice of hearing, dated May 18, 2017, scheduled the hearing for August 15, 2017. Government Exhibits (GX) 1-3 were admitted into evidence without objection. Applicant testified, submitted Applicant Exhibits (AX A-X) and presented one witness. The transcript was received on August 22, 2017. Based on a review of the pleadings, testimony, and exhibits, eligibility for access to classified information is granted.

FINDINGS OF FACT

In his answer to the SOR, Applicant admitted the allegation at SOR ¶¶ 1.a through 1.i. He also provided explanations with his responses.

Applicant is a 33-year-old warehouse technician for a defense contractor. He is married and has four children. He graduated from high school in 2003, and obtained an associate’s degree in 2015. He served in the U.S. military on active duty from November 2003 to October 2013, receiving an honorable discharge. He served in combat tours abroad. He was injured and receives a disability pension from the VA. (AX D) He has been with his current employer for two years. He completed his security clearance application (SCA) in November 2015. He has previously held a security clearance. (GX 1)

Financial Considerations

The SOR alleges that Applicant has nine delinquent debts, which total approximately $77,000. The delinquent debts include collection accounts, and charged- off accounts.

Applicant’s answer provided reasons for the delinquent accounts. He was single when he served in the military and met his expenses. The 2015 credit report confirms that his accounts were paid as agreed for all accounts prior to 2013. (GX 2) He married in 2009, and his wife had two children. Applicant and his wife had two more children. (Tr. 23) When Applicant left the military to transfer to the civilian work force, he could not find steady full-time employment, in part due to his service connected disability. (Tr. 52) He was unemployed on various occasions in 2013, and almost all of 2014. He found seasonal part-time work that paid poorly, but he took the job so he could support his family. (Tr. 28) He incurred medical bills that he believed would be covered by the military, but they were not. (Tr. 27) He went to school while he was unemployed to better his job skills by using the GI bill benefits. At one point, Applicant obtained a consolidation loan with his credit union, but he could not keep up with the payments. (Tr. 58) He and his wife and children lived in a two-bedroom apartment because he could not afford a larger apartment. (Tr. 30) He used credit cards while unemployed to pay his bills and support his family. He did not find steady full-time employment until his present job in 2015.

The SOR debts that are alleged were resolved in a Chapter 7 bankruptcy filed in November 2016. The debts were discharged in January 2017. (AX A-C) Applicant received financial counseling as a part of the bankruptcy process. He also enrolled in and completed nine FDIC financial courses in 2017. (AX F-O) It is to be noted that the bankruptcy was a joint one. His wife had to stop working when she was pregnant with their first child. She was on bed rest for six months. Some of the loans that belonged to Applicant’s wife were included in the bankruptcy. (Tr. 72)

As to SOR ¶ 1.b, Applicant paid this medical bill in the amount of $450 and provided documentation. He also paid the account in SOR 1.cfor $668. (AX V, O)

Applicant’s salary is $42,000 a year. He also received $1,800 a month for his military disability. Applicant has paid his bankruptcy lawyer and his counsel for handling this case. This amount was in the thousands. (Tr. 79) He does not have any new delinquent debts. His wife is working and earning an income. He saves as much money as he is able to. He uses a monthly budget. (AX U)

Applicant submitted four affidavits from colleagues who are aware of the security concerns in the case. Each attests to his work ethic, character, willingness to protect classified information, dedication and trustworthiness. He is recommended for a security clearance based on his excellent work performance. (AX P-T, X)

At the hearing, Applicant’s witness testified that he has known Applicant for two years and sees him daily at work. They have discussed the security concerns in the case. The witness sees Applicant as a frugal family man who provides for his family. He recommends him for a security clearance.

POLICIES

When evaluating an applicant’s suitability for a security clearance, an 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. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, they are applied in conjunction with the factors listed in the adjudicative process. An administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. Under AG ¶ 2(c), this process is a conscientious scrutiny of a number of variables known as the “whole-person concept.” An 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 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. Likewise, I have avoided drawing inferences grounded on mere speculation or conjecture.

The Government must present evidence to establish controverted facts alleged in the SOR. An applicant is responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by applicant or proven by Department Counsel. . . .” The burden of proof is something less than a preponderance of evidence. The ultimate burden of persuasion is on the applicant.

A person seeking access to classified information enters into a fiduciary relationship with the Government based on 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 classified information. Such decisions entail a certain degree of legally permissible extrapolation of potential, rather than actual, risk of compromise of classified information.

Section 7 of EO 10865 provides that 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.” “The clearly consistent standard indicates that security clearance determinations should err, if they must, on the side of denials.” Any reasonable doubt about whether an applicant should be allowed access to sensitive information must be resolved in favor of protecting such information. The decision to deny an individual a security clearance does not necessarily reflect badly on an applicant’s character. It is merely an indication that the applicant has not met the strict guidelines the President and the Secretary of Defense established for issuing a clearance.

ANALYSIS

Guideline F, Financial Considerations

AG ¶ 18 expresses the security concern pertaining to financial considerations:

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 over-extended is at a 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.

AG ¶ 19 describes conditions that could raise a security concern and may be disqualifying:

(a) inability to satisfy debts;

(b) unwillingness to satisfy debts regardless of the ability to do so; and

The Government produced credible evidence to establish the delinquent debts that were resolved in a Chapter 7 bankruptcy. Consequently, the evidence is sufficient to raise disqualifying conditions. ¶¶ 19(a) and 19(c).

AG ¶ 20 provides conditions that could mitigate the security concerns:

(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, or a death, divorce or separation, clear victimization by predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances;

(c) the person has received or is receiving 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

(g) the individual has made arrangements with the appropriate tax authority to file or pay the amount owed and is in compliance with those arrangements.

Applicant served on active duty in combat zones. He was financially sound until he married. His wife had two children and they now have four. When Applicant left his military career due to an injury, he could not find steady full-time employment. He tried to pay his bills. He used the GI bill to go to school to better his job skills. He lived in a small apartment with his family. His lack of employment and his four children resulted in delinquent debts. He tried a consolidation loan, but he could not meet the payments. On legal advice, he and his wife filed for joint Chapter 7 bankruptcy. The debts were discharged in January 2017. He paid accounts that he could. His credit report shows a majority of accounts pays as agreed from 2006 until about 2013. He has encountered many challenges to provide for his children. However, he resolved his delinquent debts through a legal means of bankruptcy and has a steady full-time job. His wife works also. He has obtained financial counseling and obtained FDIC certificates. AG ¶¶ 20 (a), (b), (c), and (d) apply. He has met his burden to alleviate the security concerns under the financial considerations guideline.

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 an applicant’s conduct and all the 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. As noted above, the ultimate burden of persuasion is on the applicant seeking a security clearance.

I considered the potentially disqualifying and mitigating conditions in light of all the facts and circumstances surrounding this case, as well as the whole-person factors.

Applicant is 33 years old. He served in the U.S. military on active duty in combat zones from 2003 to 2013 and received an honorable discharge. He was injured and receives a disability pension. Until about 2011, he had no pressing financial issues. When he left the service, he could not find employment. He spent about one year (2014) unemployed and went to school to better his job skills. He married in 2009 and he and his wife have four children. He provided for his family, but he incurred delinquent debt. He tried a consolidation loan, but he could not meet the payments. He had medical bills which he thought the VA would cover, but did not. He paid whatever bills he could. Upon legal advice, he and his wife filed a joint Chapter 7 bankruptcy. His debts were discharged in January 2017. He provided documentation to show he has rectified his financial problems. He now has a steady full-time position. His wife also works. He obtained financial counseling. He follows a budget. He has met his burden in this case.

After weighing the disqualifying and mitigating conditions under Guideline F, and evaluating all the record evidence in the context of the whole person, I conclude that he has carried his burden of showing that it is clearly consistent with the national interest to grant him 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: FOR APPLICANT

Subparagraphs 1.a-1.i: For Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is clearly consistent with the national interest to grant Applicant a security clearance. Clearance is granted.

NOREEN A. LYNCH Administrative Judge

FOOTNOTES

In this case, the SOR was issued under Adjudicative Guidelines effective within the Defense Department on September 1, 2006. Revised Adjudicative Guidelines became effective June 8, 2017. My decision and formal findings under the revised Guideline F would not be different under the 2006 Guidelines. See also ISCR Case No. 94-1075 at 3-4 (App. Bd. Aug. 10, 1995). Department of the Navy v. Egan, 484 U.S. 518, 531 (1988). ISCR Case No. 93-1390 at 7-8 (App. Bd. Jan. 27, 1995). See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information), and EO 10865 § 7. ISCR Case No. 93-1390 at 7-8 (App. Bd. Jan. 27, 1995). Id.