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ISCR Case 16-02303.h1 — CASE

ISCR Case 16-02303.h1denied

Case Headnote

ISCR Case No. 16-02303.h1

deniedOct 5, 2017· Hon. Noreen A. Lynch· hearing

Summary

A 38-year-old contractor and former U.S. Marine was denied a security clearance under Guideline F, Financial Considerations, due to unresolved financial issues. The Statement of Reasons detailed several allegations, including numerous accounts in collection, charged off, or in foreclosure, totaling approximately $27,768. Specific issues included a home foreclosure in 2013, as well as delinquent debts and a property repossession spanning several years.

Further concerns arose because the applicant did not disclose these delinquent debts on his security clearance application and had not taken action to address them. The judge identified disqualifying conditions under Adjudicative Guidelines Paragraphs 19(a), 19(b), and 19(c).

The denial was based on the applicant's admission of multiple delinquent debts exceeding $27,000, his failure to disclose these debts on his application, and the absence of evidence demonstrating efforts to resolve his financial problems. The judge concluded that the applicant failed to mitigate the security concerns, which indicated poor judgment and self-control.

Why the Applicant Was Denied

Applicant admitted to having multiple delinquent debts totaling over $27,000.
Applicant did not disclose these debts on his security clearance application.
No evidence was presented to show that the applicant was taking steps to resolve his financial issues.

Conditions Referenced

Disqualifying

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

Key Rule Quoted

“A security clearance adjudication is not a debt collection process. Instead, an administrative judge examines the way an applicant handles his or her personal financial obligations to assess how they may handle their security responsibilities.”

Procedural Posture

SOR issuedNov 4, 2016
Answer filedNov 29, 2016Requested determination on the administrative record.
Hearing held—Applicant did not respond to the FORM.
Decision dateOct 5, 2017

Cite For

Failure to Mitigate Financial Issues Under Guideline F
Importance of Disclosing Financial Obligations on Security Clearance Applications
Consideration of the Whole-person Concept in Security 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 that the applicant had multiple unresolved debts totaling over $27,000, including a foreclosure, which raised significant security concerns under Guideline F. The applicant admitted to these debts but failed to provide sufficient evidence to mitigate the concerns, leading to a denial of the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant has numerous accounts that were in collection, charged off, or in foreclosure totaling about $27,768. $27,768	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.b	Applicant's home was in foreclosure in 2013.	Against Applicant	Mortgage or Home Loan Debt	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.c	Applicant has delinquent debts, property repossession, and a home foreclosure going back several years.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.d	Applicant did not disclose the delinquent debts on his security clearance application.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.e	Applicant has yet to take action to address the delinquent debts.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (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. 16-02303 ) Applicant for Security Clearance )

For Government: Erin P. Thompson, Esq., Department Counsel For Applicant: Pro se

10/05/2017 ______________

STATEMENT OF CASE

______________

LYNCH, Noreen A., Administrative Judge:

Applicant did not present sufficient evidence to mitigate security concerns raised by his financial circumstances. Clearance is denied.

Statement of the Case

On November 4, 2016, the Department of Defense (DoD) Consolidated Adjudications Facility (CAF) sent Applicant a Statement of Reasons (SOR) alleging security concerns under the financial considerations guideline.1 On November 29, 2016, Applicant answered the SOR (Answer) and requested a determination on the administrative (written) record. He admitted the delinquent debts listed on the SOR.

On January 30, 2017, Department Counsel sent Applicant the Government’s written case, known as a file of relevant material (FORM). With the FORM, Department Counsel forwarded to Applicant six exhibits (Items 1 – 6) that the Government offers for admission into the record. Applicant did not respond to the FORM. On October 1, 2017, I was assigned Applicant’s case.

Procedural Issue

On December 10, 2016, the Director of National Intelligence issued Security Executive Agent Directive 4 (SEAD-4), establishing a “single, common adjudicative criteria for all covered individuals who require initial or continued eligibility for access to classified information or eligibility to hold a sensitive position.”2 The National Security Adjudicative Guidelines (hereinafter “adjudicative guidelines” or “AG”), which are found in Appendix A to SEAD-4, are to be used in all security clearance decisions issued on or after June 8, 2017.3 Accordingly, I have applied the current version of the adjudicative guidelines.4 ISCR Case No. 02-00305 at 3 (App. Bd. Feb. 12, 2003) (security clearance decisions must be based on current DoD policy and standards).

FINDINGS OF FACT

Applicant, 38, is currently working as a contractor supporting the U.S. Government. He graduated from high school in 1997. He is divorced and has two minor children. He served on active duty in the U.S. Marine Corps from 1997 to 2005. He completed his security clearance application in December 2014. (Item 3)

Applicant was initially granted a security clearance in 1997, while serving in the U.S. military. He submitted a security clearance application in connection with his current job as a federal contractor in December 2014. In response to questions about his financial record, Applicant asserted that he had no delinquent accounts or other negative financial information to report. He certified the accuracy and truthfulness of his responses. A few days later, background investigators accessed Applicant’s credit report. The credit report reveals that Applicant had numerous accounts that were in collection, (including child support) charged off, or in foreclosure.5

In March 2015, a security clearance investigator asked Applicant if he had any delinquent debts or accounts in collection status. He denied having any such debts. The investigator then confronted Applicant with the negative information from his credit reports. These credit reports reflect numerous debts that were in collection, charged off, or seriously past due totaling about $27,768. Applicant admitted that his home was in foreclosure in 2013.6 He stated that he knew nothing of the other delinquent accounts.

Many of the negative accounts Applicant discussed with the investigator over three years ago are listed on the SOR. As of the close of the record, the SOR debt remain unresolved.

Applicant gave no reasons for the delinquent debts when he answered the allegations on the SOR. He reports no unemployment. He provided no information concerning any payments made or payment plans. There are delinquent debts, property repossession, and a home foreclosure going back several years. There is no information concerning his income.

POLICIES

“[N]o one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). Individuals are eligible for access to classified information “only upon a finding that it is clearly consistent with the national interest” to authorize such access. E.O. 10865 § 2; SEAD-4, ¶ E.4.

When evaluating an applicant’s eligibility for a security clearance, an administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations, the guidelines list potentially disqualifying and mitigating conditions. The guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, an administrative judge applies the guidelines in a commonsense manner, considering all available and reliable information, in arriving at a fair and impartial decision. AG ¶ 2.

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

Administrative Judges make certain that applicants: (a) receive fair notice of the issues, (b) have a reasonable opportunity to address those issues, and (c) are not subjected to unfair surprise. Directive, ¶ E3.1.10; ISCR Case No. 12-01266 at 3 (App. Bd. Apr. 4, 2014). In deciding a case, a judge must resolve any doubt raised by the evidence in favor of the national security. AG ¶ 2(b). See also SEAD-4, ¶ E.4. Moreover, the Supreme Court has held that officials making “security clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531.

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. 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 an 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.

ANALYSIS

Guideline F, 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. . . .7

Guideline F is not limited to a consideration of whether a person with financial issues might be tempted to compromise classified information or engage in other illegality to pay their debts. It also addresses the extent to which the circumstances giving rise to delinquent debt cast doubt upon a person’s judgment, self-control, and other qualities essential to protecting classified information.8

In assessing Applicant’s case, I considered all the disqualifying and mitigating conditions under Guideline F, including the following:

AG ¶ 19(a): inability to satisfy debts;

AG ¶ 19(b): unwillingness to satisfy debts . . .;

AG ¶ 19(c): a history of not meeting financial obligations;

AG ¶ 20(a): the behavior happened so long ago, . . . 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 . . . and the individual acted responsibly under the circumstances;

AG ¶ 20(c): the individual has received or is receiving financial counseling for the problem . . . and there are clear indications that the problem is being resolved or is under control; AG ¶ 20(d): the individual initiated and is adhering to 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.

A security clearance adjudication is not a debt collection process. Instead, an administrative judge examines the way an applicant handles his or her personal financial obligations to assess how they may handle their security responsibilities.9 Moreover, the resolution of past financial issues alone without evidence of true reform and rehabilitation is of limited probative value in the security clearance context.10

Applicant admits he accumulated the five debts totaling over $27,000. He did not disclose them on his security clearance application. Applicant has yet to take action to address the delinquent debts. The only SOR debt that he believes is resolved is the foreclosure, but there is no evidence to support his assertion. AG ¶¶ 19(a) – 19(c) apply. None of the mitigating conditions fully apply.

Individuals applying for a security clearance are not required to be debt free. They are also not required to resolve all past-due debts simultaneously or even resolve the delinquent debts listed in the SOR first. However, they are expected to present evidence to refute, explain, or mitigate security concerns raised by their circumstances, to include the accumulation of delinquent debt. Moreover, they bear the burden of showing that they manage their finances in a manner expected of those granted access to classified information.11 Applicant failed to meet his burden of proof and persuasion. His financial situation continues to raise a security concern.

WHOLE PERSON CONCEPT

An administrative judge must make a commonsense judgment about a person’s security clearance suitability after considering all available, reliable and relevant information. This is referred to as the whole-person concept.12 A judge’s assessment in these cases is informed by the guidelines, as well as the non-exclusive factors set forth in AG ¶¶ 2(d) and 2(f). I hereby incorporate my above analysis and highlight some additional whole-person factors.

Applicant served in the U.S. military from 1997 to 2005. He has worked overseas to support U.S. missions. However, he has yet to take the necessary responsible steps to put his financial house in order. This is despite being aware for some time that his delinquent debts placed his clearance eligibility (and his likely continued employment as a federal contractor) in jeopardy. He may in the future be able to re-establish his eligibility by demonstrating that he is responsibly managing his personal finances in the manner expected of all clearance holders. At present, however, the questions and doubts about his eligibility, which were raised by his financial situation, remain. Overall, the record evidence leaves me with doubts as to Applicant’s eligibility for continued access to classified information.13

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 (Financial Considerations): AGAINST APPLICANT

Subparagraphs 1.a – 1.e: Against Applicant

CONCLUSION

In light of the circumstances presented by the record in this case, it is not clearly consistent with the interest of national security to continue Applicant’s access to classified information. Applicant’s request for a security clearance is denied.

____________________ Noreen Lynch Administrative Judge

SEAD-4, ¶ E.3 and AG ¶ 2(h); contrast with ISCR Case No. 10-03646 at 2 (App. Bd. Dec. 28, 2011)

FOOTNOTES

1 The CAF took this action under Executive Order (E.O.) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended, and DoD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive). The CAF adjudicated this case using the previous version of the adjudicative guidelines, which were applicable for all cases falling under the jurisdiction of the Directive between September 1, 2006 and June 7, 2017. 2 SEAD-4, ¶ B, Purpose.

3 SEAD-4, ¶ C, Applicability.

4 Nonetheless, I have considered the previous version of the adjudicative guidelines and my ultimate decision in this case would have been the same.

5 Items 5 ,6. 6 Items 1, 3, 4, 6. Applicant’s apparent lack of candor about his finances was not alleged in the SOR and is only being considered, if at all, in assessing mitigation, credibility, and the whole-person concept. 7 AG ¶ 18.

8 ISCR Case No. 11-05365 at 3 (App. Bd. May. 1, 2012). 9 See generally ISCR Case No. ISCR Case No. 12-09719 at 2-3 (App. Bd. Apr. 6, 2016).

10 Compare, ISCR Case No. 12-04806 (App. Bd. July 3, 2014) (despite the presence of unresolved debt, Board affirmed judge’s grant of a clearance because clear evidence of reform and rehabilitation), with, ISCR Case No. 15-03481 (App. Bd. Sep. 27, 2016) (applicant’s resolution of alleged financial issue (filed overdue tax returns) was insufficient to mitigate security concerns, because no extenuating circumstances to explain financial issue and no evidence of financial reform).

11 ISCR Case 07-10310 at 2 (App. Bd. Jul. 30, 2008). See also ISCR Case No. 15-02585 (App. Bd. Dec. 20, 2016) (reasonable for judge to expect an applicant to present documentary evidence).

12 See generally AG ¶ 2. See also SEAD-4, ¶ E.4; Directive, ¶ 6.3. 13 I considered the exceptions listed in Appendix C to SEAD-4, and do not find that any are warranted in this case. Notably, in light of Applicant’s repeated unkept promises to provide proof that he is repaying his past-due debts, continuing his clearance upon condition of proof of repayment and maintenance of financial stability would not be appropriate in this case. Furthermore, Applicant’s apparent lack of candor during the security clearance investigation also weighs against exercising this discretionary authority. See

(under previous version of the guidelines, judges had “no authority to grant an interim, conditional or probationary clearance.”)