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ISCR Case 16-02356.h1 — CASE

ISCR Case 16-02356.h1granted

Case Headnote

ISCR Case No. 16-02356.h1

grantedOct 17, 2017· Hon. Edward W. Loughran· hearing

Summary

This DOHA security clearance case involved a 38-year-old defense contractor employee whose eligibility was reviewed under Guideline F (Financial Considerations). The Statement of Reasons cited several financial concerns, including a Chapter 13 bankruptcy petition, a $34,817 mortgage loan debt, a $243 state tax lien, and a $761 judgment to a medical creditor. Additionally, the applicant had 12 medical debts totaling $2,385 and 4 miscellaneous debts totaling $3,316.

Disqualifying conditions under AG ¶ 19(a), (b), (c), and (f) were raised. However, the judge applied mitigating conditions under AG ¶ 20(a), (b), (c), (d), and (g), finding that the applicant had made significant progress in addressing her financial issues.

The decision to grant the clearance was based on the applicant's demonstrated good-faith efforts to resolve her debts, including paying off some obligations and actively working with creditors. Her financial difficulties were largely attributed to circumstances beyond her control, such as unemployment and divorce. Furthermore, the applicant sought financial counseling and showed clear indications of resolving her financial problems. As a result, the security clearance was GRANTED.

Why the Applicant Prevailed

The applicant demonstrated a good-faith effort to resolve her financial issues by paying off debts and working with creditors.
The applicant's financial problems were largely due to circumstances beyond her control, including unemployment and divorce.
The applicant received financial counseling and showed clear indications of resolving her financial problems.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(b)raisedUnwillingness to Satisfy Debts
AG ¶ 19(c)raisedHistory of Not Meeting Financial Obligations
AG ¶ 19(f)raisedFailure to File or Fraudulently Filing Tax Returns

Mitigating

AG ¶ 20(a)appliedBehavior Occurred Long Ago or Infrequently
AG ¶ 20(b)appliedConditions Largely Beyond the Person's Control
AG ¶ 20(c)appliedReceived Financial Counseling
AG ¶ 20(d)appliedGood-faith Effort to Repay Creditors
AG ¶ 20(g)appliedArrangements with Tax Authority

Key Rule Quoted

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

Procedural Posture

SOR issuedOct 4, 2016
Answer filedNov 7, 2016Applicant elected to proceed without a hearing.
Hearing held—Case decided on written record.
Decision dateOct 17, 2017

Cite For

Mitigation of Financial Issues Under Guideline F
Consideration of Circumstances Beyond the Applicant's Control
Good-faith Efforts to Resolve Debts as a Mitigating Factor

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 mitigated the financial considerations security concerns, as she had taken significant steps to resolve her debts, including paying off some debts and working with creditors. Ultimately, the applicant was granted eligibility for access to classified information.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Chapter 13 bankruptcy petition	For Applicant	Bankruptcy Filing	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(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	Documented Debt Paid in Full
1.b	$34,817 owed on a mortgage loan $34,817	For Applicant	Mortgage or Home Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(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	Documented Debt Paid in Full
1.c	$243 state tax lien $243	For Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(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 (g) arrangements made with the tax authority; in compliance	Documented Debt Paid in Full
1.d	$761 judgment to a medical creditor $761	For Applicant	Judgment Against Applicant	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(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	Documented Debt Paid in Full
1.e	12 medical debts totaling $2,385 $2,385	For Applicant	Medical Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(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	Claimed Debt Settlement
1.f	4 miscellaneous debts totaling $3,316 $3,316	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(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	Claimed Debt Settlement
1.g–1.t	14 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. 16-02356 ) Applicant for Security Clearance )

For Government: David F. Hayes, Esq., Department Counsel For Applicant: Pro se

10/17/2017 ______________

STATEMENT OF CASE

______________

LOUGHRAN, Edward W., Administrative Judge:

Applicant mitigated the financial considerations security concerns. Eligibility for access to classified information is granted.

Statement of the Case

On October 4, 2016, the Department of Defense (DOD) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guideline F, financial considerations. Applicant responded to the SOR on November 7, 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 December 6, 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 December 22, 2016. She responded to the FORM with documents that I have marked as Applicant’s Exhibits (AE) A through D. The case was assigned to me on October 1, 2017. The Government exhibits included in the FORM and AE A through D are admitted in evidence without objection.

FINDINGS OF FACT

Applicant is a 38-year-old employee of a defense contractor. She has worked for her current employer since October 2014. She has two associate’s degrees, which were awarded in 2004 and 2010. The most recent information available indicated that she was in the process of going through a divorce or divorced. She has a 16-year-old child.1

Applicant has had several periods of unemployment and underemployment over the last 12 years, including unemployment from August 2010 to November 2010 and from April 2011 to April 2012. Applicant and her husband filed a Chapter 13 bankruptcy case in July 2008. Her home was valued at $124,000, with $113,861 owed on the mortgage loan and $973 monthly payments. Under Schedule D, Creditors Holding Secured Claims, the petition listed $167,360 in claims. There were no claims under Schedule E, Creditors Holding Unsecured Priority Claims. Under Schedule F, Creditors Holding Unsecured Nonpriority Claims, the petition listed debts totaling $49,435.2

The bankruptcy plan called for $1,600 monthly payments to the trustee. Applicant and her husband were unable to maintain the payments during her periods of unemployment, and the case was dismissed in December 2011.3

The SOR alleges the Chapter 13 bankruptcy petition; $34,817 owed on a mortgage loan; a $243 state tax lien; a $761 judgment to a medical creditor; 12 medical debts totaling $2,385; and 4 miscellaneous debts totaling $3,316. Applicant admitted owing all the debts at one point, but she stated and the evidence substantiates that several of the debts have been paid, settled, or otherwise resolved. All of the debts are listed on at least one credit report, except for the $156 debt alleged in SOR ¶ 1.t, which is not listed on any credit report.4

Applicant’s home was sold in a short sale. The August 2015 credit report lists the loan as $21,339 past due with a $34,817 balance. The July 2016 credit report lists the loan with a $0 balance. Applicant satisfied the $761 medical judgment in August 2011. She paid the state taxes, and the $243 state tax lien was released in November 2015.5

Applicant received financial counseling as a requirement of her bankruptcy. She reached out to the remaining creditors in an attempt to resolve her debts. She heard from a few of them and was working with them to arrive at a reasonable settlement or payment plan. She indicated that she will do the same with any creditors that respond to her.6

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:

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;

(f) failure to file or fraudulently filing annual Federal, state, or local income tax returns or failure to pay annual Federal, state, or local income tax as required.

Applicant has a history of financial problems, including a Chapter 13 bankruptcy case; a defaulted mortgage loan, resulting in a foreclosure; a judgment; delinquent debts; and unpaid state taxes, resulting in a tax lien. The evidence is sufficient to raise the above disqualifying conditions.

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

(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’s financial problems resulted from unemployment and under- employment, followed by the dissolution of her marriage. Applicant and her husband were not attempting to avoid paying their debts when they filed a Chapter 13 bankruptcy case; they were attempting to pay their debts in a systematic plan approved by the court. Their $1,600 monthly payments were more than enough to pay the $973 mortgage loan and other debts. Their “wage earner” case was dismissed after more than two years when Applicant lost her job. Since then, the mortgage loan was resolved through a short sale, the $761 medical judgment was satisfied in August 2011, and the state taxes were paid in November 2015.

Applicant has reached out to the remaining creditors (12 medical debts totaling $2,385 and 4 miscellaneous debts totaling $3,316) attempting to resolve her debts. She heard from a few of them and was working with them to arrive at a reasonable settlement or payment plan. She indicated that she will do the same with any creditors that respond to her. Applicant established that she has a plan to resolve her financial problems, and she took significant action to implement that plan. Her financial issues are mitigated.

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 Guideline F in my whole-person analysis.

Overall, the record evidence leaves me without questions or doubts about Applicant’s eligibility and suitability for a security clearance. I conclude Applicant mitigated 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: For Applicant

Subparagraphs 1.a-1.t: 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 eligibility for a security clearance. Eligibility for access to classified information is granted.

________________________ Edward W. Loughran Administrative Judge

FOOTNOTES

1 Items 1-3. 2 Items 1-3, 5, 6. 3 Items 1, 3, 5, 6. 4 Items 1-3, 5, 6. 5 Items 1-3, 5, 6. 6 Items 1, 3; AE A-D.