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ISCR Case 16-01912.h1 — CASE

ISCR Case 16-01912.h1denied

Case Headnote

ISCR Case No. 16-01912.h1

deniedMar 7, 2017· Hon. LeRoy F. Foreman· hearing

Summary

A 30-year-old ship refueler, employed by a defense contractor, was denied a security clearance due to concerns under Guideline F (Financial Considerations). The Statement of Reasons detailed multiple delinquent debts, including a $7,412 charged-off auto loan from February 2013, an unsecured personal loan of $1,783 referred for collection in October 2010, and automotive electronics purchases totaling $775 charged off in March 2012.

Further financial issues included a $425 unsecured loan charged off in September 2012, two medical bills referred for collection in February 2013 and January 2014 for $368 each, and a $75 installment account referred for collection in August 2010. Additionally, a state tax lien for $997 was filed in May 2012, and a judgment for delinquent rent totaling $3,066 was filed in December 2010.

Despite resolving some of these debts, the applicant's security clearance was denied. The decision cited a long history of financial irresponsibility and a failure to take significant steps to resolve delinquent debts until faced with the Statement of Reasons, raising concerns about his reliability and trustworthiness.

Why the Applicant Was Denied

The applicant has a long history of financial irresponsibility.
He did not take significant steps to resolve his delinquent debts until he received the SOR.
The applicant's financial issues raise concerns about his reliability and trustworthiness.

Conditions Referenced

Disqualifying

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

Mitigating

AG ¶ 20(a)rejectedBehavior Happened so Long Ago, Was Infrequent, or Unlikely to RecurApplicant's debts are numerous, recent, and not unlikely to recur.
AG ¶ 20(b)rejectedConditions Largely Beyond the Person's ControlWhile some debts were incurred during unemployment, others were due to immaturity and bad judgment.
AG ¶ 20(c)notedReceived or Receiving Counseling
AG ¶ 20(d)rejectedGood-faith Effort to Repay DebtsApplicant did not show good faith as he only resolved debts under pressure of the SOR.
AG ¶ 20(e)notedReasonable Basis to Dispute Debts

Key Rule Quoted

“Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines.”

Procedural Posture

SOR issuedAug 29, 2016
Answer filedSep 12, 2016
Hearing heldDec 7, 2016
Decision dateMar 7, 2017

Cite For

Denial Based on Financial Irresponsibility Under Guideline F
Importance of Timely Debt Resolution in Security Clearance Cases
Evaluation of Whole-person Concept in Clearance Decisions

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 multiple financial concerns under Guideline F, including several delinquent debts that the applicant admitted. Despite some debts being resolved, the applicant's overall financial irresponsibility and failure to act until faced with security clearance jeopardy led to a denial of eligibility for access to classified information.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	delinquent auto loan charged off in February 2013 for $7,412 $7,412	Against Applicant	Auto Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	unsecured personal loan referred for collection in October 2010 for $1,783 $1,783	Against Applicant	Personal Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	automotive electronics purchases charged off in March 2012 for $775 $775	Against Applicant	Personal Loan Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	unsecured loan charged off in September 2012 for $425 $425	Against Applicant	Personal Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	medical bill referred for collection in February 2013 for $368 $368	Against Applicant	Medical Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	installment account referred for collection in August 2010 for $75 $75	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.g	state tax lien filed in May 2012 for $997 $997	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.h	judgment for delinquent rent filed in December 2010 for $3,066 $3,066	Against Applicant	Judgment Against Applicant	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.i	medical bill referred for collection in January 2014 for $368 $368	Against Applicant	Medical 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: ) ) [Redacted] ) ISCR Case No. 16-01912 ) Applicant for Security Clearance )

For Government: Benjamin R. Dorsey, Esq., Department Counsel For Applicant: Pro se

03/07/2017 ______________

STATEMENT OF CASE

______________

FOREMAN, LeRoy F., 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 October 24, 2013. On August 29, 2016, the Department of Defense Consolidated Adjudications Facility (DOD CAF) sent him a Statement of Reasons (SOR) alleging security concerns under Guideline F. 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. The adjudicative guidelines are codified in 32 C.F.R. § 154, Appendix H (2006), and they replace the guidelines in Enclosure 2 to the Directive.

Applicant answered the SOR on September 12, 2016, and requested a hearing before an administrative judge. Department Counsel was ready to proceed on October 20, 2016, and the case was assigned to me on November 10, 2016. On November 15, 2016, the Defense Office of Hearings and Appeals (DOHA) notified Applicant that the hearing was scheduled for December 7, 2016. I convened the hearing as scheduled. Government Exhibits (GX) 1 through 8 were admitted in evidence without objection. Applicant testified and submitted Applicant’s Exhibits (AX) A through G, which were admitted without objection. I kept the record open until January 6, 2017 to enable him to submit additional documentary evidence. He timely submitted AX H and AX I, which were admitted without objection. DOHA received the transcript (Tr.) on December 16, 2016.

Findings of Fact1

In his answer to the SOR, Applicant admitted the allegations in SOR ¶¶ 1.a, 1.b, and 1.d-1.i. He denied SOR ¶ 1.c. His admissions in his answer and at the hearing are incorporated in my findings of fact.

Applicant is a 30-year-old ship refueler employed by a defense contractor since October 2013. He served on active duty in the U.S. Navy from September 2004 to January 2012 and received an honorable discharge. He did not have a security clearance while he was in the Navy. (Tr. 61.) He received a security clearance in February 2014, after beginning his current job. (Tr. 31.)

Applicant was unemployed from January 2012 to January 2013, worked for three months as a security guard, and was unemployed from April 2013 until he began his current job. He has never married and has no children.

Applicant attended a community college from January 2012 to October 2013 but did not receive a degree. His educational expenses were covered by the GI Bill. When he was hired for his current job, he stopped attending classes and was overpaid for educational benefits. His pay was garnished in October 2014 to collect the overpayment of about $2,525. The garnishment triggered an incident report filed in the Joint Personnel Adjudication System (JPAS) and an inquiry into his eligibility to continue his clearance. (GX 5, 6, and 7; Tr. 28-30.) A second garnishment was filed in February 2015 for a debt to an electronics store and also reported in JPAS. 2 (GX 7.) When Applicant submitted his SCA in response to the JPAS incident reports, he disclosed several delinquent debts. The SOR alleges nine delinquent debts, all of which are reflected in Applicant’s credit bureau reports (CBRs) from November 2013, October 2015, and May 2016 (GX 2, 3, and 4.) The status of these debts is summarized below.

SOR ¶ 1.a: delinquent auto loan charged off in February 2013 for $7,412. Applicant testified that this debt first became delinquent in 2011. He made no payments until it was settled for $3,710 in November 2016. (Tr. 40-41; AX E.)

SOR ¶ 1.b: unsecured personal loan referred for collection in October 2010 for $1,783. Applicant testified that he contacted the creditor about two months before the hearing, hoping to negotiate a payment agreement. He testified that, as of the date of the hearing, the creditor had not responded to his follow-up calls. (Tr. 26.) He provided no written documentation of his efforts to resolve the debt. It is not resolved.

SOR ¶ 1.c: automotive electronics purchases charged off in March 2012 for $775. This debt was paid in full in March 2015. (AX A.)

SOR ¶ 1.d: unsecured loan charged off in September 2012 for $425. Applicant’s November 2013 CBR reflects that the amount charged off was $372. (GX 2 at 4.) He paid this debt in November 2016. (AX H.)

SOR ¶ 1.e: medical bill referred for collection in February 2013 for $368. This debt was paid in November 2016. (AX B.)

SOR ¶ 1.f: installment account referred for collection in August 2010 for $75. Applicant testified that he contacted the creditor and was informed that they have no record of the debt. (Tr. 27.) However, it is reflected in his May 2016 CBR. (GX 4 at 2.) It is not resolved.

SOR ¶ 1.g: state tax lien filed in May 2012 for $997. In November 2016, Applicant made a payment agreement providing for payment of $191 per month for 12 months. (AX F.) He made a $200 payment on December 1, 2016. (AX G.)

SOR ¶ 1.h: judgment for delinquent rent filed in December 2010 for $3,066. This judgment was satisfied in September 2016. (AX C; AX D.) The debt arose when Applicant’s two roommates did not pay their share of the rent. (Tr. 56.)

SOR ¶ 1.i: medical bill referred for collection in January 2014 for $368. Applicant’s October 2015 CBR reflects that the amount referred for collection was $295. (GX 3 at 10.) He paid the debt on December 2, 2016. (AX I.)

Applicant testified that the debts incurred while he was in the Navy were the result of immaturity and bad judgment. After he was discharged from the Navy and unemployed, he could not afford to pay them. (Tr. 41-42.) After he began his current job, his wages were garnished to collect the overpayment of his GI Bill educational benefits, making him unable to address his old delinquent debts. (Tr. 46.)

Applicant’s weekly take home pay is about $600, without overtime. He frequently works overtime. During the past year, he worked more than 440 hours of overtime, which equated to about $17,000 in overtime pay. He also receives a housing allowance of $1,300 under the GI Bill. He has never received financial counseling. He estimates that his net monthly remainder after paying all his living expenses is about $2,000. (Tr.33-36.)

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. 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 ¶ 2(b).

ANALYSIS

Guideline F, Financial Considerations

The concern under this guideline is set out in AG ¶ 18:

Failure or inability 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 information. An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds.

This concern is broader than the possibility that a person might knowingly compromise classified information to raise money. It encompasses concerns about a person’s self-control, judgment, and other qualities essential to protecting classified information. A person who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information. See ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012).

Applicant’s admissions, corroborated by his CBRs, establish two disqualifying conditions under this guideline: AG ¶ 19(a) (“inability or unwillingness to satisfy debts”) and AG ¶ 19(c) (“a history of not meeting financial obligations”).

The following mitigating conditions under this guideline are potentially applicable:

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;

AG ¶ 20(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), and the individual acted responsibly under the circumstances;

AG ¶ 20(c): the person has received or is receiving counseling for the problem and/or there are clear indications that the problem is being resolved or is under control;

AG ¶ 20(d): the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts; and

AG ¶ 20(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.

AG ¶ 20(a) is not established. Applicant’s debts are numerous, recent, and were not incurred under circumstances making them unlikely to recur.

AG ¶ 20(b) is not established. Applicant’s unemployment from January 2012 to January 2013 and from April to October 2013 were circumstances beyond his control. However, the debts alleged in SOR ¶¶ 1.a, 1.b, 1.f, and 1.hwere incurred while he was still on active duty and preceded his unemployment. He admitted that they were caused by immaturity and bad judgment. The judgment for unpaid rent in SOR ¶ 1.hwas caused in part by the failure of his roommates to pay their share of the rent, which was a condition beyond his control. The record does not reflect whether the medical debts in SOR ¶¶ 1.e and 1.i were routine medical care or due to circumstances beyond his control. With respect to the debts incurred due to conditions beyond his control, Applicant has not acted responsibly. Except for the debt for automotive electronics in SOR ¶ 1.c, he took no action to resolve his delinquent debts until he received the SOR in August 2016.

AG ¶ 20(c) is partially established. Applicant has not sought or received financial counseling, but he has resolved all the debts in the SOR except SOR ¶ 1.b, 1.f, and 1.g. He has begun a payment plan for the debt in SOR ¶ 1.gbut had made only one payment as of the date the record closed, and he has not yet established a track record of compliance with his payment agreement.

AG ¶ 20(d) is not established. This mitigating condition requires a showing of good faith. Good faith means acting in a way that shows reasonableness, prudence, honesty, and adherence to duty or obligation. ISCR Case No. 99-0201, 1999 WL 1442346 at *4 (App. Bd. Oct. 12, 1999). Evidence of past irresponsibility is not mitigated by payment of debts only under pressure of qualifying for a security clearance. Applicant did not satisfy the debt in SOR ¶ 1.cuntil a year and a half had passed after he submitted his SCA. He did not satisfy any of the other debts alleged in the SOR until after he received the SOR in August 2016 and realized that his security clearance was in jeopardy.

AG ¶ 20(d) is not established. Applicant has not disputed any of the debts alleged in the SOR.

WHOLE PERSON CONCEPT

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. 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(a):

(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 have incorporated my comments under Guideline F in my whole-person analysis and I have considered the factors in AG ¶ 2(a). I have considered that Applicant has resolved or is resolving all but two of the debts alleged in the SOR. However, a security clearance adjudication is an evaluation of an individual’s judgment, reliability, and trustworthiness. It is not a debt-collection procedure. ISCR Case No. 09- 02160 (App. Bd. Jun. 21, 2010). Applicant has a long history of financial irresponsibility. He has been gainfully employed since October 2013, and he has a significant net remainder after paying his living expenses. Nevertheless, he has not acted responsibly, because he took no significant steps to resolve his delinquent debts until he received the SOR and realized that his security clearance was in jeopardy.

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. Accordingly, I conclude he has not carried his burden of showing that it is clearly consistent with the national interest to continue his eligibility for access to classified information.

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.i: Against Applicant

CONCLUSION

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

LeRoy F. Foreman Administrative Judge

FOOTNOTES

1 Applicant’s personal information is extracted from his security clearance application (GX 1) unless otherwise indicated by a parenthetical citation to the record.

2 The debts underlying the two garnishments were not alleged in the SOR and may not be an independent basis for revoking Applicant’s security clearance. However, conduct not alleged in the SOR may be considered to assess an applicant's credibility; to decide whether a particular adjudicative guideline is applicable; to evaluate evidence of extenuation, mitigation, or changed circumstances; to consider whether an applicant has demonstrated successful rehabilitation; or as part of a whole-person analysis. ISCR Case No. 03-20327 at 4 (App. Bd. Oct. 26, 2006). I have consider the unalleged debts for these limited purposes.