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ISCR Case 16-02648.h1 — CASE

ISCR Case 16-02648.h1granted

Case Headnote

ISCR Case No. 16-02648.h1

grantedAug 29, 2017· Hon. Erin C. Hogan· hearing

Summary

A Department of Defense contractor with a bachelor's degree was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The Statement of Reasons cited a $65,591 second mortgage charge-off, a $495 credit card account placed for collection, and a past-due mortgage payment of $838 on a $277,561 balance. These issues raised disqualifying conditions under AG ¶ 19(a) and AG ¶ 19(c).

However, the judge found that the applicant's financial difficulties were largely beyond her control, stemming primarily from her husband's unemployment and medical issues. The applicant demonstrated responsible actions to resolve these problems.

She successfully completed a debt consolidation program, provided evidence that her mortgage is now current, and confirmed that previous debts were paid off. These mitigating conditions, specifically AG ¶ 20(a), AG ¶ 20(b), AG ¶ 20(c), AG ¶ 20(d), and AG ¶ 20(e), led to the favorable decision, and the security clearance was granted.

Why the Applicant Prevailed

The applicant successfully completed a debt consolidation program, resolving her financial issues.
She provided evidence that her mortgage is now current and that previous debts were paid off.
The financial difficulties were largely due to circumstances beyond her control, including her husband's unemployment and medical issues.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(c)raisedHistory of Not Meeting Financial Obligations

Mitigating

AG ¶ 20(a)appliedBehavior Occurred Under Circumstances Unlikely to Recur
AG ¶ 20(b)appliedConditions Largely Beyond the Person's Control
AG ¶ 20(c)appliedReceived Financial Counseling
AG ¶ 20(d)appliedGood-faith Effort to Repay Debts
AG ¶ 20(e)appliedReasonable Basis to Dispute Legitimacy of Debt

Key Rule Quoted

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

Procedural Posture

SOR issuedOct 25, 2016
Answer filedNov 9, 2016
Hearing heldAug 29, 2017
Decision dateAug 29, 2017

Cite For

Mitigation of Financial Issues Under Guideline F Due to Unforeseen Circumstances
Successful Completion of Debt Counseling as a Mitigating Factor
Current Status of Debts as a Basis for Granting Security Clearance

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's financial difficulties were primarily due to circumstances beyond her control, including her husband's unemployment and medical issues. The applicant successfully addressed her debts through financial counseling and has since brought her mortgage current, leading to a favorable decision regarding her security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	a second mortgage had been charged off in the amount of $65,591 $65,591	For Applicant	Mortgage or Home Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur (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 Documented Financial Counseling Claimed Other
1.b	a $495 credit card account that was placed for collection $495	For Applicant	Credit Card Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur (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 (e) reasonable, documented basis to dispute the debt	Documented Debt Paid in Full Claimed Other
1.c	that Applicant was past due on her mortgage in the amount of $838, with a mortgage balance of $277,561 $838	For Applicant	Mortgage or Home Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur (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 Documented Financial Counseling Claimed Other

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. 16-02648 ) ) Applicant for Security Clearance )

For Government: Andrea M. Corrales, Esquire, Department Counsel For Applicant: Pro se

08/29/2017 ______________

STATEMENT OF CASE

______________

HOGAN, Erin C., Administrative Judge:

On October 25, 2016, the Department of Defense Consolidated Adjudications Facility (DOD CAF) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guideline F, Financial Considerations. The action was initially taken under Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) implemented within the Department of Defense on September 1, 2006. On June 8, 2017, the AGs were updated and cancelled the AGs effective September 1, 2006. This decision will be decided based on the new AGs effective on June 8, 2017. If I were to consider this case under the AGs effective September 1, 2006, it would result in the same outcome.

On November 9, 2016, Applicant answered the SOR and requested a decision on the record. Department Counsel issued a File of Relevant Material (FORM) on December 5, 2016. On February 15, 2017, Applicant responded to the FORM and provided additional documents. Her response to the FORM and attached documents are admitted as Item 7. Department Counsel indicated no objection to Applicant’s Response to FORM on April 20, 2017. (Item 8) On February 15, 2017, the FORM was forwarded to the Hearing Office and assigned to me on August 25, 2017. Based upon a review of the pleadings, exhibits, and testimony, eligibility for access to classified information is granted.

FINDINGS OF FACT

In her response to the SOR, Applicant admits the allegations in SOR ¶¶ 1.a and 1.c, and denies the allegation in SOR ¶ 1.b. (Item 1)

Applicant is an employee of a DOD contractor seeking to maintain her security clearance. She has worked for her current employer since December 2008. She has a bachelor’s degree and is studying for her Master’s degree. She is married and has no children. (Item 3)

On November 2, 2015, Applicant submitted an Electronic Questionnaire for Investigation Processing (e-QIP). In response to Section 26 – Delinquency Involving Routine Accounts, Applicant listed that she and her husband were behind on some credit card bills. She noted on the e-QIP:

Due to financial hardships stemming from my husband’s recent heart surgery, we have fallen behind on some credit cards and bills. Additionally, our second mortgage is “charged-off” stemming from my husband’s layoff in 2008.

Applicant also indicated on her e-QIP application that her husband was laid off in 2008 and unable to find work for two years. She indicated that they were behind on their second mortgage. Applicant said that they working to resolve the second mortgage and all of their debts. They worked with the mortgage company as long as they could. They entered into an agreement with a debt consolidation company and have successfully completed the program. (Item 3, section 26, at 31-32)

A subsequent background investigation revealed the following delinquent accounts: a second mortgage had been charged off in the amount of $65,591 (SOR ¶ 1.a: Item 5 at 4); a $495 credit card account that was placed for collection (SOR ¶ 1.b: Item 5 at 4); and that Applicant was past due on her mortgage in the amount of $838, with a mortgage balance of $277,561. (SOR ¶ 1.c: Item 5 at 6).

In her Answer to the SOR, Applicant stated that in the 2008-2009 timeframe, her family was directly impacted by the housing crisis. Her husband was laid off for about two years during this same time. In 2010, they entered into a loan modification with their original mortgagor. They were advised not to make payments on the second mortgage during the modification process. Applicant claims that the modification process successfully combined the two loans. The second mortgage is listed as a “Deferred Principal Balance” that will be deferred until the maturity of their loan. Their mortgage will mature in 2035. At that time, Applicant and her husband will pay a balloon payment of $132,763 as well as the Deferred Principal balance of $65,709 for a total of $198,473. After the modification was complete, they paid their mortgage payments to their original mortgagor. The loan was purchased by the current mortgagor that is listed in the SOR. (Item 2 at 1-3)

Applicant denies the credit card debt alleged in SOR ¶ 1.b. She states that both she and her husband had credit card accounts with the credit card company, but they paid both credit cards off when they attended Consumer Credit Counseling to help with the debt incurred while her husband was unemployed. She claims neither of them have owned a credit card with the alleged credit card company in over five years. A credit report, dated December 1, 2016, indicates that Applicant had two accounts with the credit card company and that both are paid and closed. (Item 4 at 3-5)

Applicant admits that she and her husband were behind on their mortgage as alleged in SOR ¶ 1.c. Applicant says that she and her husband are making regular payments on their mortgage. They fell a month behind in their mortgage payment when her husband had surgery in May 2015 and was out of work for a few months while recuperating. They made arrangements to bring the mortgage current. She provided what appears to be an undated portion of her credit report indicating that her mortgage is now current. (Item 2 at 2, 4)

Applicant states that she is a dedicated, hard working and trustworthy employee. Her financial difficulties were caused by unforeseen and unplanned circumstances beyond her control. (Item 2 at 2)

In her response to the FORM, Applicant provided further documentation that she is current on her mortgage. (Item 7 at 5-7). She also provided a statement indicating the second mortgage account alleged in SOR ¶ 1.a is closed. (Item 7 at 8). She also provided a statement that the credit card account alleged in SOR ¶ 1.bwas paid and closed. (Item 7 at 9)

Applicant says that her famiy is working very hard to get back on track with all of their bills. They intend to meet their current and future financial obligations. (Item 7 at 4)

POLICIES

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

These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, these guidelines are applied 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 national security eligibility will be resolved in favor of the national security.” In reaching this decision, I have drawn only those conclusions that are reasonable, logical, and based on the evidence contained in the record.

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 applicant or proven by Department Counsel. . . .” The applicant has the ultimate burden of persuasion as to obtaining 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 protect or safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation as to potential, rather than actual, risk of compromise of classified information.

Section 7 of Executive Order 10865 provides that 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 relating to the guideline 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 information. Financial distress can also be cause 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 risk of having to engage in illegal or otherwise questionable acts to generate funds. Affluence that cannot be explained by known sources of income is also a security concern insofar as it may result from criminal activity, including espionage.

The guideline notes several disqualifying conditions that could raise security concerns. I find AG ¶19(a) (an inability to satisfy debts) and AG ¶19(c) (a history of not meeting financial obligations) apply to Applicant’s case. Applicant encountered financial problems in 2008 during the real estate crisis which caused her and husband to get behind in their mortgage.

An individual who is financially irresponsible may also be irresponsible, unconcerned, or careless in their obligations to protect classified information. Behaving irresponsibly in one aspect of life provides an indication of how a person may behave in other aspects of life. A person’s relationship with her creditors is a private matter until evidence is uncovered demonstrating an inability or unwillingness to pay debts under agreed terms. Absent evidence of strong extenuating or mitigating circumstances, an applicant with a history of serious or recurring financial difficulties is in a situation of risk inconsistent with the holding of a security clearance. An applicant is not required to be debt free, but is required to manage her finances in such a way as to meet her financial obligations.

The Government’s substantial evidence and Applicant’s admissions raise security concerns under Guideline F. The burden shifted to Applicant to produce evidence to rebut, explain, extenuate, or mitigate the security concerns. (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. Sept. 22, 2005))

The guideline also includes examples of conditions that could mitigate security concerns arising from financial difficulties. The following mitigating conditions potentially apply:

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, a death, divorce or separation, clear victimization by predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances); AG ¶ 20(c) (the person 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);

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).

AG ¶ 20(a) and AG ¶ 20(b) apply because Applicant’s financial problems occurred under unusual circumstances and are unlikely to recur. Circumstances beyond Applicant’s control contributed to the financial problems. Applicant’s husband was unemployed for two years, which made it difficult to meet their bills including their mortgage. The 2008 mortgage crisis also contributed to the problem. Applicant was able to successfully apply for a mortgage modification. After the mortgage modification, she and her husband fell behind on the mortgage payment in 2015, as a result of her husband’s unanticipated surgery. He was unable to work for two months. Applicant demonstrated proof that her mortgage is now current. Applicant acted responsibly under the circumstances that she was facing when she encountered financial problems.

AG ¶ 20(c) applies. Applicant states that she and her husband sought help from Consumer Credit Counseling with their bills when they were having financial problems and that they resolved some of their debts with the help of Consumer Credit Counseling. While she did not provide a copy of the agreement, her success with financial counseling is indicated by the lack of delinquent debt that was alleged in the SOR. Numerous credit report entries not alleged in the SOR indicated accounts were closed and paid. Applicant took the initiative to resolve her financial situation and her financial problems are now under control.

AG ¶ 20(d) applies. Applicant provided proof that her mortgage account is now current. She has taken the initiative well before her security clearance background investigation to resolve her debts. Her good-faith efforts and adherence to payment plans resulted in her resolving several accounts that were not alleged in the SOR.

AG ¶ 20(e) applies with respect to the debt alleged in SOR ¶ 1.b. Applicant disputed this $495 credit card account placed for collection. Government Exhibit 5, a credit report dated December 1, 2016, indicates that this account was paid. Applicant also provided an excerpt from her credit report in her response to the FORM, which indicated that this debt was paid.

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 the 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.

Applicant encountered problems in 2008 because of her husband’s two-year period of unemployment and the mortgage crisis. She took the initiative with her debts and consulted Consumer Credit Counseling Service. She resolved her delinquent accounts. She and her husband obtained a loan modification on their mortgage. They are current on their mortgage payments. There was one instance where they became behind on the mortgage payment because of her husband’s surgery. The mortgage is now current. Applicant mitigated the concerns raised under financial considerations.

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.c: 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.

_________________ ERIN C. HOGAN Administrative Judge