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ISCR Case 16-02154.h1 — CASE

ISCR Case 16-02154.h1denied

Case Headnote

ISCR Case No. 16-02154.h1

deniedJul 1, 2016· Hon. Edward W. Loughran· hearing

Summary

This security clearance application was denied due to concerns under Guideline F (Financial Considerations), despite the government not establishing allegations under Guideline E (Personal Conduct). The applicant, a 54-year-old defense contractor employee, had a history of financial difficulties, including a Chapter 7 bankruptcy and multiple delinquent debts.

Specific disqualifying conditions raised under Guideline F included F.19.a, F.19.b, and F.19.c. While the applicant claimed not to be responsible for one debt, asserting she was only an authorized user, this did not mitigate the broader financial concerns.

The denial was based on the applicant's failure to provide sufficient evidence of a plan to address her financial issues or demonstrate responsible financial behavior. Her stated intentions to pay off debts were not supported by a track record of repayment or adequate documentation. Consequently, the security clearance was denied.

Why the Applicant Was Denied

The applicant has a history of financial problems, including a Chapter 7 bankruptcy and multiple delinquent debts.
The applicant did not provide sufficient evidence of a plan to address her financial issues or demonstrate responsible financial behavior.
The applicant's intentions to pay off debts were not supported by a track record of repayment or documentation.

Conditions Referenced

Disqualifying

F.19.araisedInability to Satisfy Debts
F.19.braisedUnwillingness to Satisfy Debts Regardless of the Ability to Do So
F.19.craisedA History of Not Meeting Financial Obligations

Key Rule Quoted

“Any doubt concerning personnel being considered for national security eligibility will be resolved in favor of the national security.”

Procedural Posture

SOR issuedSep 30, 2016
Answer filedOct 20, 2016Applicant elected to have the case decided on the written record.
Hearing held—No hearing; case decided on written record.
Decision dateOct 6, 2017

Cite For

Failure to Mitigate Financial Considerations Under Guideline F
Insufficient Evidence of Responsible Financial Behavior
Lack of Documentation to Support Claims of Financial Distress

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 E (Personal Conduct) · descriptive summary of a decided case

Posture: Decision on RecordDecided: denied

The judge found that the government did not establish the facts alleged under the personal conduct guideline. The applicant was found to have not intentionally falsified information on the security questionnaire, leading to a favorable ruling on the personal conduct allegations. Overall, the applicant's eligibility for a security clearance was denied due to unresolved financial concerns.

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
2.a	specific text not stated in this decision	For Applicant	Unspecified Personal Conduct	—	Unknown	—	—	—

Descriptive standardized rendering of a decided public case (Guideline E). The verbatim source decision is shown in full below.

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 a history of delinquent debts and a Chapter 7 bankruptcy. Despite some debts being mitigated due to being duplicates or not the applicant's responsibility, the overall financial issues were deemed unresolved, leading to a denial of the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a–1.p	16 sub-charges — specific text not stated in this decision (against the applicant).	Against Applicant			—	—	—
1.q	not responsible for the debt as she is only an authorized user on the account	For Applicant	Unspecified Financial	Unknown	—	—	—
1.r–1.y	8 sub-charges — specific text not stated in this decision (3 against, 3 for the applicant).	Mixed			—	—	—

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. 16-02154 ) Applicant for Security Clearance )

For Government: Douglas Velvel, Esq., Department Counsel For Applicant: Pro se

10/06/2017 ______________

STATEMENT OF CASE

______________

LOUGHRAN, Edward W., Administrative Judge:

The Government did not establish the facts alleged under the personal conduct guideline. Applicant did not mitigate the financial considerations security concerns. Eligibility for access to classified information is denied.

Statement of the Case

On September 30, 2016, the Department of Defense (DOD) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guidelines E (personal conduct) and F (financial considerations). Applicant responded to the SOR on October 20, 2016, and elected to have the case decided on the written record in lieu of a hearing.

The Government’s written case was submitted on November 2, 2016. A complete copy of the file of relevant material (FORM) was provided to Applicant, who was afforded an opportunity to file objections and submit material to refute, extenuate, or mitigate the security concerns. Applicant received the FORM on November 16, 2016. As of January 25, 2017, she had not responded. The case was assigned to me on October 1, 2017. The Government exhibits included in the FORM are admitted in evidence.

FINDINGS OF FACT

Applicant is a 54-year-old employee of a defense contractor. She has worked for her current employer since November 2014. She has a bachelor’s degree and a master’s degree, and as of October 2016, she was attending post-graduate school in pursuit of a doctorate. She is married with five children between the ages of 33 and 21, and three adult stepchildren.1

Applicant has a history of financial problems. She filed a Chapter 7 bankruptcy case in August 2007, and her debts were discharged in January 2008. She continued to have financial difficulties after the bankruptcy discharge.2

The SOR alleges the bankruptcy and 24 delinquent debts. However, SOR ¶¶ 1.dand 1.q, are duplicate accounts representing the same debt. SOR ¶¶ 1.cand 1.tare duplicate medical debts, as are SOR ¶¶ 1.gand 1.u. The SOR also alleges a debt that Applicant is not responsible for because she is only an authorized user on the account (SOR ¶ 1.r). The non-duplicate allegations include 2 charged-off auto loans totaling $16,567; 12 medical debts totaling $2,689; and 6 miscellaneous delinquent debts totaling $5,446. The debts are established through Applicant’s admissions and credit reports.3

Applicant admitted owing all the debts with the exception of the $1,393 debt alleged in SOR ¶ 1.b. She indicated the company did not finish their job and damaged her home. She stated that the charged-off auto loan alleged in SOR ¶ 1.nresulted after the company sold her a bad car that stopped in the middle of the highway.4

Applicant has a large family. There is no information in the record about the cause of Applicant’s financial problems, or even if it was related to having a large family. She wrote in her response to the SOR that she was paying a $595 doctor bill, which she had reduced to $270. She did not submit any supporting documentation. She wrote that it was her “clear intent to continue on this path so that [she] can eliminate all past debts.” She is current on a $28,400 auto loan with $485 monthly payments, which she incurred in March 2016. She has $107,000 in deferred student loans.5 Because she did not respond to the FORM, little is known about how Applicant intends to address her financial issues. Applicant submitted a Questionnaire for National Security Positions (SF 86) in December 2014.6 She answered “No” to all of the financial questions under Section 26, which included the following:

In the past seven (7) years, you possessions or property voluntarily or involuntarily repossessed or foreclosed? (Include financial obligations for which you were the sole debtor, as well as those for which you were a cosigner or guarantor).7

In the past seven (7) years, you defaulted on any type of loan. (Include financial obligations for which you were the sole debtor, as well as those for which you were a cosigner or guarantor).8

In the past seven (7) years, you had bills or debts turned over to a collection agency? (Include financial obligations for which you were the sole debtor, as well as those for which you were a cosigner or guarantor).

In the past seven (7) years, you any account or credit card suspended, charged off, or cancelled for failing to pay as agreed? (Include financial obligations for which you were the sole debtor, as well as those for which you were a cosigner or guarantor).

In the past seven (7) years, you have been over 120 days delinquent on any debt not previously entered? (Include financial obligations for which you were the sole debtor, as well as those for which you were a cosigner or guarantor).9

You are currently over 120 days delinquent on any debt? (Include financial obligations for which you were the sole debtor, as well as those for which you were a cosigner or guarantor)10

Applicant had at least one car repossessed. She knew she had defaulted on loans and that she was more than 120 days delinquent on debts. However, I am not convinced that she knew that a debt was turned over to a collection agency or that she had an “account or credit card suspended, charged off, or cancelled for failing to pay as agreed,” which are the only two questions alleged in the SOR. I find there is insufficient evidence that Applicant intentionally falsified the specific questions alleged in the SOR.

POLICIES

This case is adjudicated under Executive Order (EO) 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), which became effective on June 8, 2017.

When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which are to be used in evaluating an applicant’s eligibility for access to classified information.

These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, administrative judges apply the guidelines in conjunction with the factors listed in the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶ 2(a), the entire process is a conscientious scrutiny of a number of variables known as the “whole-person concept.” The 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 the national security.”

Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, the applicant is responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by the applicant or proven by Department Counsel.” The applicant has the ultimate burden of persuasion to obtain a favorable security decision.

A person who seeks access to classified information enters into a fiduciary relationship with the Government predicated upon 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 safeguard 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 adverse 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.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information).

ANALYSIS

Guideline F, Financial Considerations

The security concern for financial considerations is set out in AG ¶ 18, as follows:

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.

The guideline notes several conditions that could raise security concerns under AG ¶ 19. The following are potentially applicable in this case:

(a) inability to satisfy debts.

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

Applicant filed a Chapter 7 bankruptcy case in August 2007, and her debts were discharged in January 2008. She had delinquent debts that she was unable or unwilling to pay. The evidence is sufficient to raise the above disqualifying conditions.

Applicant is only an authorized user on the account alleged in SOR ¶ 1.rand not responsible for the debt. SOR ¶ 1.ris concluded for Applicant.

The following are duplicate accounts: SOR ¶¶ 1.dand 1.q; SOR ¶¶ 1.cand 1.t; and SOR ¶¶ 1.gand 1.u. When the same conduct is alleged twice in the SOR under the same guideline, one of the duplicative allegations should be resolved in Applicant’s favor. See ISCR Case No. 03-04704 (App. Bd. Sep. 21, 2005) at 3. SOR ¶¶ 1.q, 1.t, and 1.u are concluded for Applicant.

Conditions that could mitigate the financial considerations security concerns are provided under AG ¶ 20. The following 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; (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.

There is no information in the record about the cause of Applicant’s financial problems, or even if it was related to having a large family. She wrote, without supporting documentation, that she was paying a $595 doctor bill, which she had reduced to $270. She is current on a $28,400 auto loan with $485 monthly payments, which she incurred in March 2016, and she owes $107,000 in deferred student loans. She wrote that it was her “clear intent to continue on this path so that [she] can eliminate all past debts.” The Appeal Board has held that “intentions to pay off debts in the future are not a substitute for a track record of debt repayment or other responsible approaches.” See ISCR Case No. 11-14570 at 3 (App. Bd. Oct. 23, 2013) (quoting ISCR Case No. 08-08440 at 2 (App. Bd. Sep. 11, 2009)). Because she did not respond to the FORM, little is known about how Applicant intends to address her financial issues, particularly in light of the student loans that will eventually come out of deferment.

There is insufficient evidence for a determination that Applicant’s financial problems will be resolved within a reasonable period. I am unable to find that she acted responsibly under the circumstances or that she made a good-faith effort to pay her debts. Her financial issues are recent and ongoing. They continue to cast doubt on her current reliability, trustworthiness, and good judgment. AG ¶¶ 20(a), 20(b), 20(c), and 20(d) are not applicable. Applicant indicated that she was justified in not paying one debt because the company did not finish their job and damaged her home, but she did not provide documented proof to substantiate the basis of the dispute or evidence of actions to resolve the issue. AG ¶ 20(e) is not applicable. Guideline E, Personal Conduct

The security concern for personal conduct is set out in AG ¶ 15, as follows:

Conduct involving questionable judgment, lack of candor, dishonesty, or unwillingness to comply with rules and regulations can raise questions about an individual’s reliability, trustworthiness and ability to protect classified or sensitive information. Of special interest is any failure to cooperate or provide truthful and candid answers during national security clearance investigative or adjudicative processes.

AG ¶ 16 describes conditions that could raise a security concern and may be disqualifying. The following disqualifying condition is potentially applicable:

(a) deliberate omission, concealment, or falsification of relevant facts from any personnel security questionnaire, personal history statement, or similar form used to conduct investigations, determine employment qualifications, award benefits or status, determine national security eligibility or trustworthiness, or award fiduciary responsibilities.

There is insufficient evidence that Applicant intentionally falsified the specific questions alleged in the SOR. AG ¶ 16(a) is not applicable. SOR ¶ 2.a is concluded for Applicant.

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):

(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.

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 Guidelines E and F in my whole-person analysis. Overall, the record evidence leaves me with questions and doubts about Applicant’s eligibility and suitability for a security clearance. I conclude the Government did not establish the facts alleged under the personal conduct guideline, and Applicant did not mitigate the financial considerations security concerns.

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.p: Against Applicant Subparagraphs 1.q-1.r: For Applicant Subparagraph 1.s: Against Applicant Subparagraphs 1.t-1.u: For Applicant Subparagraphs 1.v-1.y: Against Applicant

Paragraph 2, Guideline E: For Applicant

Subparagraph 2.a: For Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is not clearly consistent with the national interest to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is denied.

________________________ Edward W. Loughran Administrative Judge

FOOTNOTES

1 Item 2. 2 Item 1, 3, 4. 3 Items 1, 3, 4. 4 Items 1, 3, 4. 5 Items 1-4. 6 Item 2. 7 The SOR did not allege that Applicant falsified this question. 8 The SOR did not allege that Applicant falsified this question. 9 The SOR did not allege that Applicant falsified this question. 10 The SOR did not allege that Applicant falsified this question.