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ISCR Case 16-02527.h1 — CASE

ISCR Case 16-02527.h1denied

Case Headnote

ISCR Case No. 16-02527.h1

deniedMay 31, 2017· Hon. Eric H. Borgstrom· hearing

Summary

A 45-year-old engineer was denied a security clearance under Guideline F (Financial Considerations) due to unresolved financial issues. The Statement of Reasons cited multiple unpaid judgments, including amounts of approximately $9,189, $5,041, and $15,651. Additionally, two delinquent utility accounts, for approximately $1,692 and $103, were noted. These issues raised Disqualifying Conditions AG ¶ 19(a) and AG ¶ 19(c).

While some debts were settled, the applicant did not provide sufficient documentary evidence of a comprehensive debt-resolution plan for the remaining obligations. The applicant's financial struggles were identified as dating back to 2011 and were ongoing, leading to concerns about his judgment and financial responsibility.

Despite the application of Mitigating Condition AG ¶ 20(d), the applicant's confusion regarding the unpaid judgments and a lack of proactive debt management ultimately contributed to the denial. The decision highlighted the absence of a clear plan to address the outstanding financial commitments.

Why the Applicant Was Denied

Applicant did not provide documentary evidence of a debt-resolution plan for remaining debts.
Financial struggles date back to 2011 and are ongoing, raising concerns about good judgment and financial responsibility.
Applicant's confusion regarding unpaid judgments and lack of proactive debt management contributed to the denial.

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(d)appliedGood-faith Effort to Repay Overdue CreditorsApplicant settled two debts after the issuance of the SOR.

Key Rule Quoted

“Any doubt concerning personnel being considered for access to classified information will be resolved in favor of national security.”

Procedural Posture

SOR issuedSep 6, 2016
Answer filedSep 30, 2016
Hearing heldMar 8, 2017
Decision dateMay 31, 2017

Cite For

Failure to Provide a Comprehensive Debt-resolution Plan Under Guideline F
Ongoing Financial Struggles as a Basis for Security Clearance Denial
Good-faith Efforts in Debt Repayment Not Sufficient to Mitigate Security Concerns.

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 financial issues, including unpaid judgments and delinquent utility accounts, which raised significant security concerns under Guideline F. Although the applicant settled some debts, the judge concluded that the applicant did not sufficiently mitigate the financial concerns, resulting in a denial of the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	unpaid judgment in the approximate amount of $9,189 $9,189	Against Applicant	Judgment Against Applicant	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	unpaid judgment in the approximate amount of $5,041 $5,041	For Applicant	Judgment Against Applicant	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(d) good-faith effort to repay or otherwise resolve debts	Credited Debt Paid in Full
1.c	delinquent utility account in the approximate amount of $1,692 $1,692	For Applicant	Utility or Phone Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(d) good-faith effort to repay or otherwise resolve debts	Credited Debt Paid in Full
1.d	unpaid judgment in the approximate amount of $15,651 $15,651	Against Applicant	Judgment Against Applicant	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	delinquent utility account in the approximate amount of $103 $103	Against Applicant	Utility or Phone Debt	Denied	(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: ) ) [NAME REDACTED] ) ISCR Case No. 16-02527 ) ) Applicant for Security Clearance

For Government: Carroll Connelley, Esq., Department Counsel For Applicant: Pro se

05/31/2017 ______________

STATEMENT OF CASE

______________

BORGSTROM, Eric H., Administrative Judge:

Applicant did not mitigate the security concerns stemming from his financial problems. Eligibility for access to classified information is denied.

Statement of the Case

On September 6, 2016, the Department of Defense (DOD) issued a Statement of Reasons (SOR) to Applicant detailing security concerns 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 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.

Applicant responded to the SOR on September 30, 2016, and he requested a hearing before an administrative judge. The case was assigned to me on January 25, 2017. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing, scheduling the hearing for March 8, 2017. I convened the hearing as scheduled. Government Exhibits (GE) 1-5 were admitted without objection. Applicant testified and presented documents, and the record remained open until April 10, 2017.1 Applicant submitted 17 documents, which were admitted into evidence as Applicant’s Exhibits (AE) A-Q, without objection.2 I received the hearing transcript (Tr.) on March 27, 2017.

FINDINGS OF FACT

The SOR alleges three unpaid judgments (SOR ¶¶ 1.a., 1.b., and 1.d.) and two delinquent utility accounts (SOR ¶¶ 1.c. and 1.e.). Applicant admitted the debts in SOR ¶¶ 1.a.-1.d., and he denied the debt alleged in SOR ¶ 1.e. After a thorough and careful review of the pleadings and exhibits, I make the following findings of fact:

Applicant is 45 years old. He graduated from high school and has taken several undergraduate-level courses. From April 2003 to August 2015, he worked full time as an engineer for multiple companies. He was unemployed from August 2015 to January 2016. Since January 2016, he has been employed full time by a DOD contractor. He married in July 2006, and he has four children – ages 13, 21, 22, and 24.3

Applicant’s November 2015 and July 2016 credit reports establish all five alleged debts. The judgment in SOR ¶ 1.a. was entered in June 2011 against Applicant in the approximate amount of $9,189. He explained that this judgment originated from one or more credit cards that he had used for his wedding expenses. He claimed to have paid approximately $3,700 to settle this account, but he provided no documentation to corroborate his claim. Rather, he transposed the alleged judgment with another un- alleged account with the same creditor.4

The judgment in SOR ¶ 1.b. was entered in January 2014 against Applicant in the approximate amount of $5,041. After the hearing, he settled this debt for approximately $4,700 in March 2017.5

The utility bill in SOR ¶ 1.c. was placed for collection in the approximate amount of $1,692. Applicant settled this debt for approximately $800 in January 2017, and Department Counsel stipulated that this debt was resolved.6 The judgment in SOR ¶ 1.d. was entered in January 2014 against Applicant in the approximate amount of $15,651. There is no documentary evidence of any payments or debt-resolution efforts on this judgment.

The utility bill in SOR ¶ 1.e. was placed for collection in the approximate amount of $103. Applicant denied this debt and denied having an account with this utility during the timeframe he inferred from the credit reports. He disputed the debt because it had since fallen off his credit report. There is no documentary evidence to show that he has disputed this debt with the alleged creditor or has taken steps to resolve this debt.7

In February 2016, Applicant hired a debt-consolidation service to assist him in resolving his delinquent debts. He used this service to settle the debt in SOR ¶ 1.c., but he has not arranged any other debt-repayment plans with this service.8

Applicant attributed his financial delinquencies to roof repairs in 2005, his wedding expenses in 2006, his father’s funeral expenses in 2014, and his unemployment in 2015. However, he only provided documentation for some of his wedding expenses. He provided no explanation as to what precipitated his financial delinquencies in about 2011. His spouse was unemployed from 2000 to 2015. His current monthly budget reflects a net monthly remainder of approximately $1,100, with no scheduled debt repayments.9

Applicant’s character and work performance are well-regarded by his supervisor and co-workers. There is no evidence of any employment disciplinary actions or security infractions filed against Applicant.10

POLICIES

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(c), 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 access to classified information will be resolved in favor of 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 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.

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

(a) inability or unwillingness to satisfy debts; and (c) a history of not meeting financial obligations.

Applicant’s five delinquent debts total approximately $31,676. These debts became delinquent between 2011 and 2014. The Government produced substantial evidence to raise the disqualifying conditions in AG ¶¶ 19(a) and 19(c), thereby shifting the burden to Applicant to produce evidence to rebut, explain, extenuate, or mitigate the facts.11 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, or a death, divorce or separation), and the individual acted responsibly under the circumstances;

(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;

(d) the individual initiated 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

Applicant’s financial struggles date from 2011 and are ongoing. He settled two debts (SOR ¶¶ 1.b. and 1.c.) after the issuance of the SOR, but there is no documentary evidence of any further debt-resolution efforts on the remaining three debts. Because there is no documentary evidence of any debt-resolution payments prior to January 2017, doubts remain as to Applicant’s good judgment and financial responsibility. AG ¶ 20(a) does not apply.

The application of AG ¶ 20(b) requires both that (1) Applicant’s financial indebtedness resulted from circumstances beyond his control, and (2) Applicant acted responsibly under the circumstances. Applicant and his wife experienced periods of unemployment, their house needed repairs, and Applicant’s father passed away. These events may constitute circumstances beyond his control in the context of AG ¶ 20(b). AG ¶ 20(b) also requires that an applicant act responsibly under the circumstances.12 Applicant very recently settled two of the alleged debts, but there is no documentary evidence of a debt-resolution plan for the remaining debts or steps taken in furtherance of that plan. AG ¶ 20(b) does not apply.

Applicant engaged the services of a debt-consolidation company. There is no evidence of any financial counseling or credit counseling. Applicant’s monthly budget reflects a significant monthly remainder ($1,100), but it omits any scheduled debt repayments. AG ¶ 20(c) does not apply.

The concept of good faith Arequires a showing that a person acts in a way that shows reasonableness, prudence, honesty, and adherence to duty or obligation.”13 AG ¶ 20(d) applies as to the two debts settled by Applicant (SOR ¶¶ 1.b. and 1.c.).

Applicant denied the debt alleged in SOR ¶ 1.c. due to its absence on his credit report. The removal or deletion of an account from a credit report is not evidence of debt payment or resolution.14 Applicant has not provided documented proof to substantiate his dispute or evidence of actions to resolve this debt. AG ¶ 20(e) does not apply.

After his January 2016 security interview, Applicant engaged the services of a debt-consolidation company, but there is no documentary evidence of any debt repayments until after the issuance of the SOR. This inaction raises concerns about his financial responsibility. He has settled two debts very recently, though he has developed no plan to resolve the remaining debts nor taken steps in furtherance of this plan. I find that security concerns about Applicant’s financial problems remain.

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(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.

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 and the factors in AG ¶ 2(c) in this whole-person analysis.

Applicant is well-regarded by his co-workers and supervisors for his work performance and character, and he very recently has taken some steps to address the alleged delinquent debts. His past inaction in addressing his delinquent debts, his failure to develop a plan to resolve the remaining debts, and his confusion as to the remaining unpaid judgments, leaves me with questions and doubts as to his financial responsibility and suitability for a security clearance. I conclude 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

Subparagraph 1.a.: Against Applicant

Subparagraphs 1.b.-1.c.: For Applicant

Subparagraphs 1.d.-1.e.: Against 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.

________________________ Eric H. Borgstrom Administrative Judge

FOOTNOTES

1 Applicant’s request for an extension of time to submit post-hearing documents and my grant of that request are included in the record as Administrative Exhibit (AX) I.

2 Applicant’s post-hearing submissions included a cover letter (AE H) and seven attachments pre-marked as AE A-G.

3 GE 1; AE A.

4 GE3; GE 5; AE K; Tr. 28-29.

5 GE 3; GE 5; AE G; AE Q. At hearing, Applicant confused the alleged judgment (SOR ¶ 1.b.) with a different judgment (AE G) entered in favor of the same creditor in January 2017.

6 GE 3; AE I; Tr. 36. 7 GE 3; Tr. 41-42.

8 Tr. 36, 63.

9 AE B; AE M; AE P; Tr. 26, 42-47.

10 AE J; AE O. 11 Directive ¶ E3.1.15. See ISCR Case No. 02-31154 at 5 (App. Bd. Sep. 22, 2005) (An applicant has the burden of proving a mitigating condition, and the burden of disproving it never shifts to the Government.). 12 See ISCR Case No. 08-06567 at 3 (App. Bd. Oct. 29, 2009) (“All that is required is that an applicant act responsibly given his circumstances and develop a reasonable plan for repayment, accompanied by ‘concomitant conduct,’ that is, actions which evidence a serious intent to effectuate the plan.”).

13 See ISCR Case No. 08-12184 at 10 (App. Bd. Jan. 7, 2010) (Good-faith effort to resolve debts must be evidenced by a meaningful track record of repayment).

14 See ISCR Case No. 02-14950 at 4 (App. Bd. May 15, 2003) (“The removal of those debts from his credit report does not make them disappear as if they never existed or preclude the Judge from considering other record evidence that shows those debts exist. The security significance of Applicant’s financial history doesn’t turn on whether Applicant’s debts could or could not be legally listed on a credit report after the passage of seven years.”).