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ISCR Case 16-02653.h1 — CASE

ISCR Case 16-02653.h1granted

Case Headnote

ISCR Case No. 16-02653.h1

grantedApr 27, 2017· Hon. LeRoy F. Foreman· hearing

Summary

A 36-year-old engineering technician was granted a security clearance despite initial concerns under Guideline F (Financial Considerations) related to delinquent student loans. The Statement of Reasons cited two sets of student loans, totaling approximately $25,405, which were referred for collection in February 2015. These debts raised disqualifying conditions under Adjudicative Guidelines Paragraphs 19(a) and 19(c).

However, the applicant demonstrated substantial mitigating efforts. He entered a rehabilitation agreement for his student loans and consistently made timely payments, indicating a good-faith effort to resolve his financial issues. This proactive approach satisfied mitigating condition Adjudicative Guidelines Paragraph 20(d).

The judge determined that the applicant's significant actions to repay his overdue creditors, coupled with his stable income from current employment, effectively mitigated the security concerns. Consequently, the applicant was granted eligibility for access to classified information.

Why the Applicant Prevailed

The applicant demonstrated a good-faith effort to repay overdue creditors by entering a rehabilitation agreement for his student loans.
He made timely payments under the rehabilitation plan, showing significant actions to resolve his financial issues.
The applicant's current employment provides a stable income, allowing him to manage his financial obligations.

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)appliedThe Individual Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts

Key Rule Quoted

“Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines.”

Procedural Posture

SOR issuedNov 3, 2016
Answer filedUndated
Hearing heldMar 20, 2017
Decision dateApr 27, 2017

Cite For

Mitigation of Financial Issues Under Guideline F
Good-faith Efforts to Resolve Debts
Whole-person Analysis in Security Clearance Determinations

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 had two delinquent student loans totaling $26,200, which raised security concerns under Guideline F. However, the applicant demonstrated a good-faith effort to resolve these debts through a rehabilitation agreement, leading to a decision in favor of the applicant.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Two delinquent student loans referred for collection in February 2015 for $15,242 $15,242	For Applicant	Student Loan 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	Claimed Debt Paid in Full
1.b	Two delinquent student loans referred for collection in February 2015 for $10,958 $10,958	For Applicant	Student Loan 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	Claimed Debt Paid in Full

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: ) ) [Redacted] ) ISCR Case No. 16-02653 ) Applicant for Security Clearance )

For Government: Nicole A. Smith, Esq., Department Counsel For Applicant: Pro se

04/27/2017 ______________

STATEMENT OF CASE

______________

FOREMAN, LeRoy F., Administrative Judge:

This case involves security concerns raised under Guideline F (Financial Considerations). Eligibility for access to classified information is granted.

Statement of the Case

Applicant submitted a security clearance application on October 16, 2015. On November 3, 2016, the Department of Defense Consolidated Adjudications Facility (DOD CAF) sent him a Statement of Reasons (SOR) alleging security concerns under Guideline F. The DOD CAF acted under Executive Order (Exec. Or.) 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. The adjudicative guidelines are codified in 32 C.F.R. § 154, Appendix H (2006), and they replaced the guidelines in Enclosure 2 to the Directive.

Applicant answered the SOR in an undated document and requested a hearing before an administrative judge. Department Counsel was ready to proceed on January 31, 2017, and the case was assigned to me on February 15, 2017. On March 3, 2017, the Defense Office of Hearings and Appeals (DOHA) notified Applicant that the hearing was scheduled for March 20, 2017. I convened the hearing as scheduled. Government Exhibits (GX) 1 through 4 were admitted in evidence without objection. Applicant testified and submitted Applicant’s Exhibit (AX) A, which was admitted without objection. I kept the record open until March 30, 2017, to enable him to submit additional documentary evidence. He timely submitted AX B through H, which were admitted without objection. DOHA received the transcript (Tr.) on March 29, 2017.

Findings of Fact1

In his answer to the SOR, Applicant admitted the two delinquent debts alleged in SOR ¶¶ 1.a and 1.b. His admissions in his answer and at the hearing are incorporated in my findings of fact.

Applicant is a 36-year-old engineering technician employed by a federal contractor since October 2015. He was employed by a federal contractor as an armed security guard from November 2011 to September 2013 and as a parts manager for an automobile dealership from September 2013 until he began his current job. He has never held a security clearance.

Applicant married in September 2008. (GX 2 at 3.) He and his wife have a seven- year-old daughter. He did not graduate from high school, but he received a general educational development (GED) certificate on a date not reflected in the record. (GX 2 at 2.) He attended a technical college from August 2006 to August 2007 but did not receive a degree. He incurred student loans, but he was unable to pay them after the period of deferment ended in 2009. His income at the automobile dealership was uncertain because it was based on commissions. (GX 2 at 5.)

A credit bureau report (CBR) from November 2015 reflected delinquent student loans totaling about $25,405 and payments totaling $1,892 that were past due more than 120 days. It also reflected a credit-card account that was charged off and sold to another lender in May 2011, two credit-card accounts referred for collection and sold to other lenders in December 2010 and August 2011, seven closed credit-card accounts on which the payments had been current, a home mortgage loan that was current, an automobile loan that was current, and several paid-off automobile loans. (GX 3.)

Applicant refinanced the delinquent student loans through a private lending institution in September 2015 after he learned that his wages were about to be garnished. However, he made only three $250 payments and then fell behind because of “irresponsible choices.” (Tr. 31-32.) Applicant was interviewed by a security investigator in January 2016. He told the investigator that his financial situation had improved after he was able to pay off other delinquent debts, and his wife found full-time employment. They paid off a $3,100 balance on his wife’s student loans with a credit card that is interest free for 24 months, and Applicant paid off the loan on his 16-year-old vehicle. (GX 2 at 5; Tr. 24-26, 34, 39.) His wife has a 10-year-old vehicle on which they are still making monthly payments. (Tr. 34, 42.) He and his wife have about $8,600 in credit-card debt, including the debt incurred to pay off his wife’s student loans. (Tr. 39.)

A CBR from dated July 7, 2016, reflected two delinquent student loans referred for collection in February 2015 for $15,242 and $10,958, and they are alleged in SOR ¶¶ 1.a and 1.b. (GX 4 at 2.) It reflected two credit-card accounts that were charged off in 2010 and 2011, but no collection accounts other than the student loans. It also reflected five credit-card accounts that were current when they were closed, and one automobile loan that was current.

In November 2016, shortly after receiving the SOR, Applicant entered into a rehabilitation agreement for his student loans that obligated him to make nine monthly $25 payments. (AX A; Tr. 38.) As of the date of the hearing, he had made the required payments for November 2016 through March 2017 by automatic debits from his checking account. (AX B through F; Tr. 40.)

Based on Applicant’s discussions with the lender for his student loans, he anticipates that his monthly payments on his student loans will be about $183 per month after the loan is rehabilitated. (Tr. 38-39.) He anticipates no problem in making the payments, because his current net monthly remainder is about $1,000 after paying his living expenses and debt obligations. (Tr. 28.)

Applicant was embarrassed, remorseful, nervous, and somewhat frightened at the hearing. He testified that he was embarrassed when he had to explain to his supervisor why he had to attend the hearing. He recognizes that he has not acted responsibly and that his job is at risk. (Tr. 26-27.)

Applicant’s current supervisor, a deputy program manager, has known him for about 17 months. He considers Applicant a person of high integrity, responsibility, and ambition. He regards Applicant as a “highly dependable team player.” (AX G.) Applicant’s neighbor, a practicing attorney, describes Applicant as “an exceptional neighbor and friend who actively contributes to the well-being of our community,” especially with his contributions to a local Girl Scout troop. (AX H.)

POLICIES

“[N]o one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). As Commander in Chief, the President has the authority to “control access to information bearing on national security and to determine whether an individual is sufficiently trustworthy to have access to such information.” Id. at 527. The President has authorized the Secretary of Defense or his designee to grant applicants eligibility for access to classified information “only upon a finding that it is clearly consistent with the national interest to do so.” Exec. Or. 10865 § 2.

Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, an administrative judge applies these guidelines in conjunction with an evaluation of the whole person. An administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. An administrative judge must consider all available and reliable information about the person, past and present, favorable and unfavorable.

The Government reposes a high degree of trust and confidence in persons with access to classified information. This relationship transcends normal duty hours and endures throughout off-duty hours. Decisions include, by necessity, consideration of the possible risk that the applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation about potential, rather than actual, risk of compromise of classified information.

Clearance decisions must be made “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” Exec. Or. 10865 § 7. Thus, a decision to deny a security clearance is merely an indication the applicant has not met the strict guidelines the President and the Secretary of Defense have established for issuing a clearance.

Initially, the Government must establish, by substantial evidence, conditions in the personal or professional history of the applicant that may disqualify the applicant from being eligible for access to classified information. The Government has the burden of establishing controverted facts alleged in the SOR. See Egan, 484 U.S. at 531. “Substantial evidence” is “more than a scintilla but less than a preponderance.” See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). The guidelines presume a nexus or rational connection between proven conduct under any of the criteria listed therein and an applicant’s security suitability. See ISCR Case No. 92-1106 at 3, 1993 WL 545051 at *3 (App. Bd. Oct. 7, 1993).

Once the Government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. 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. Sep. 22, 2005).

An applicant “has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue his security clearance.” ISCR Case No. 01-20700 at 3 (App. Bd. Dec. 19, 2002). “[S]ecurity clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531; see AG ¶ 2(b).

ANALYSIS

Guideline F, Financial Considerations

The concern under this guideline 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.

This concern is broader than the possibility that a person might knowingly compromise classified information to raise money. It encompasses concerns about a person’s self-control, judgment, and other qualities essential to protecting classified information. A person who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information. See ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012).

Applicant’s admissions, corroborated by his CBRs, establish two disqualifying conditions under this guideline: AG ¶ 19(a) (“inability or unwillingness to satisfy debts”) and AG ¶ 19(c) (“a history of not meeting financial obligations”).

The following mitigating conditions under this guideline are potentially applicable:

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, or a death, divorce or separation), and the individual acted responsibly under the circumstances;

AG ¶ 20(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; and

AG ¶ 20(d): the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts. AG ¶ 20(a) is not established. Applicant’s delinquent student loans are not yet resolved, and they were not incurred under circumstances making them unlikely to recur.

AG ¶ 20(b) is not fully established. Applicant’s unpredictable income while employed by the automobile dealership was a condition beyond his control. He acted responsibly regarding his home mortgage, automobile loans, and some of his credit- card accounts, but he paid no attention to his student loans until he faced garnishment of his wages, and he did not begin his rehabilitation program until he received the SOR.

AG ¶ 20(c) is not established. Applicant submitted no evidence of financial counseling, and he has not yet completed the rehabilitation program for his student loans.

AG ¶ 20(d) is established. Applicant’s income was unpredictable until he began his current job, his wife had not found employment, and they both had delinquent student loans. Until he was threatened with garnishment in 2015, Applicant concentrated on his other debts. However, the adjudicative guidelines do not require that an individual make payments on all delinquent debts simultaneously, pay the debts alleged in the SOR first, or establish resolution of every debt alleged in the SOR. He or she need only establish a plan to resolve financial problems and take significant actions to implement the plan. See ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008). Applicant has a plan for resolving his delinquent student loans. His timely payments of the first five of the required nine payments, constitute “significant actions” to resolve them.

WHOLE PERSON CONCEPT

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. In applying the whole- person concept, an 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. An 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. I have incorporated my comments under Guideline F in my whole-person analysis. Some of the factors in AG ¶ 2(a) were addressed under that guideline, but some warrant additional comment.

Applicant was remorseful, candid, sincere, and credible at the hearing. He ignored his student loans for many years, but the SOR was a “wake-up call.” He has limited formal education. His current job was his first meaningful job that offered benefits and a stable income. Faced with the prospect of losing his job, he took positive and significant steps to begin resolving his delinquent student loans. He has impressed his supervisor with his dependability, and sense of responsibility.

After weighing the disqualifying and mitigating conditions under Guideline F, and evaluating all the evidence in the context of the whole person, I conclude Applicant has mitigated the security concerns raised by his delinquent student loans. Accordingly, I conclude he has carried his burden of showing that it is clearly consistent with the national interest to grant him eligibility for access to classified information.2

FORMAL FINDINGS

I make the following formal findings on the allegations in the SOR:

Paragraph 1, Guideline F (Financial Considerations): FOR APPLICANT

Subparagraphs 1.a and 1.b: For Applicant

CONCLUSION

I conclude that it is clearly consistent with the national interest to grant Applicant eligibility for access to classified information. Clearance is granted.

LeRoy F. Foreman Administrative Judge

FOOTNOTES

1 Applicant’s personal information is extracted from his security clearance application (GX 1) unless otherwise indicated by a parenthetical citation to the record. 2 Administrative judges do not have authority to grant conditional clearances. ISCR Case No. 01-24328, 2003 WL 21979745 at *2 (App. Bd. May 23, 2003). However, “[t]he Government has the right to reconsider the security significance of past conduct or circumstances in light of more recent conduct having negative security significance.” ISCR Case No. 10-06943 at 4 (App. Bd. Feb. 17, 2012). If Applicant does not follow through with his plan to resolve his student loans, or if he incurs any additional delinquent debt, it may result in a future revocation of his security clearance.