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ISCR Case 16-02838.h1 — CASE

ISCR Case 16-02838.h1granted

Case Headnote

ISCR Case No. 16-02838.h1

grantedJun 13, 2017· Hon. Richard A. Cefola· hearing

Summary

A 47-year-old university professor was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). These concerns arose from financial difficulties, including a Chapter 7 bankruptcy filed in September 2014, which discharged all debts except student loans. Disqualifying conditions F.19(a) and F.19(c) were initially raised.

The applicant successfully mitigated these issues by demonstrating that his financial problems stemmed largely from job loss due to sequestration, a circumstance beyond his control. He settled all outstanding student loan debts with a financial gift from his father-in-law.

Furthermore, the applicant established responsible financial management practices, resulting in a positive monthly cash flow exceeding $1,000. The judge applied mitigating conditions F.20(b), F.20(c), and F.20(d), concluding that the applicant had taken significant steps to rectify his financial situation. Consequently, the security clearance was granted.

Why the Applicant Prevailed

The applicant's financial difficulties were primarily due to job loss from sequestration, which was beyond his control.
He successfully settled all student loan debts with a financial gift from his father-in-law.
The applicant demonstrated responsible financial management and a positive monthly cash flow of over $1,000.

Conditions Referenced

Disqualifying

F.19(a)raisedInability to Satisfy Debts
F.19(c)raisedHistory of Not Meeting Financial Obligations

Mitigating

F.20(b)appliedConditions Beyond Control
F.20(c)appliedReceiving Financial Counseling
F.20(d)appliedGood-faith Effort to Repay Debts

Key Rule Quoted

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

Procedural Posture

SOR issuedOct 24, 2016
Answer filedNov 6, 2016
Hearing heldMay 10, 2017
Decision dateJun 13, 2017

Cite For

Mitigation of Financial Issues Under Guideline F Due to Job Loss
Impact of Financial Counseling on Security Clearance Eligibility
Whole-person Analysis 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: granted

The judge found that the applicant had previously faced significant financial difficulties, including a Chapter 7 bankruptcy and substantial student loan debt. However, due to a financial gift and successful financial counseling, the applicant has resolved these issues and demonstrated a positive cash flow, leading to a decision in favor of the applicant under Guideline F.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	As the result of a financial gift from his father-in-law, Applicant has settled all of his student loan debts to the satisfaction of the creditor.	For Applicant	Student Loan Debt	Admitted	—	(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–1.d	3 sub-charges — specific text not stated in this decision (for the applicant). (low confidence)	For Applicant			—	—	—
1.e	Applicant filed for the protection of a Chapter 7 bankruptcy in September of 2014. All but his student loan debts were discharged as a result of this bankruptcy.	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 Financial Counseling Documented Chapter 7 Bankruptcy

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. 16-02838 ) ) Applicant for Security Clearance )

For Government: Jeff Nagel, Esq., Department Counsel For Applicant: Catie E. Young, Esq., Applicant’s Counsel

June 13, 2017 ______________

STATEMENT OF CASE

______________

CEFOLA, Richard A., Administrative Judge:

Statement of the Case

On October 24, 2016, in accordance with DoD Directive 5220.6, as amended (Directive), the Department of Defense issued Applicant a Statement of Reasons (SOR) alleging facts that raised security concerns under Guideline F.1 The SOR further informed Applicant that, based on information available to the government, DoD adjudicators could not make the preliminary affirmative finding it is clearly consistent with the national interest to grant or continue Applicant’s security clearance.

Applicant answered the SOR on November 6, 2016 (Answer), and supplemented that answer through Counsel on March 14, 2017 (Answer2). He also requested a hearing before an administrative judge. The case was assigned to me on April 27, 2017. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on

1 I considered the previous Adjudicative Guidelines, effective September 1, 2006, as well as the new April 28, 2017, scheduling the hearing for May 10, 2017. The hearing was convened as scheduled. The Government offered Exhibits (GXs) 1 through 7, which were admitted without objection. Applicant testified on his own behalf. He offered eight documents, which I marked Applicant’s Exhibits (AppXs) A through H, and admitted without objection. The record was left open until May 31, 2017, for receipt of additional documentation. On May 31, 2017, Applicant offered two additional documents, which are marked as AppXs I and J, and admitted without objection. DOHA received the transcript of the hearing (TR) on May 19, 2017.

FINDINGS OF FACT

Applicant admitted all five allegations in the SOR. After a thorough and careful review of the pleadings, exhibits, and testimony, I make the following findings of fact.

Guideline F – Financial Considerations

Applicant is a 47-year-old university professor. (GX 1 at pages 5 and 14.) Previously, he had been employed with a defense contractor until 2013, when Applicant lost his job due to sequestration. (TR at page 23 lines 16–23.) This caused Applicant financial distress as his annual income was reduced from $70,000 to $45,000. (TR at page 25 lines 12–18, and at page 28 line 21 to page 30 line 2.) He is married, and has five children. (TR at page 28 line 5–20.)

1.e. Applicant filed for the protection of a Chapter 7 bankruptcy in September of 2014. (TR at page 33 line 13 to page 38 line 5.) All but his student loan debts were discharged as a result of this bankruptcy. (Id., and AppX C.) As a result of his bankruptcy, Applicant also took required credit counseling, which taught him how to budget. (TR at page 41 line 23 to page 43 line 5, and AppX B.)

1.a.~1.d. As the result of a financial gift from his father-in-law, Applicant has settled all of his student loan debts to the satisfaction of the creditor. (TR at page 30 line 3 to page 32 line 14, and at page 50 line 2 to page 55 line 12.) This evidenced by documentation from this creditor. (AppX I.)

Applicant’s wife is a nurse, and with their combined income they are now able to save over $1,000 each month. (TR at page 38 line 23 to page 43 line 7, and AppX D at page 3.)

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 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 AG ¶ 2 describing 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 access to classified information will be resolved in favor of 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 the applicant or proven by Department Counsel, and has the ultimate burden of persuasion as to obtaining a favorable clearance decision.”

A person who applies for access to classified information seeks to enter 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 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 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 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. 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 conditions that could raise security concerns under AG ¶ 19. Two are potentially applicable in this case:

(a) inability to satisfy debts; and

Applicant had significant past-due debt discharged through a bankruptcy, and had over $100,000 in student loans that were not dischargeable. The evidence is sufficient to raise these disqualifying conditions.

AG ¶ 20 provides conditions that could mitigate security concerns. I considered all of the mitigating conditions under AG ¶ 20 including:

(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; and

(d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts.

Applicant’s financial problems were directly related to his loss of employment due to Federal sequestration. Through the auspices of a bankruptcy and a gift from his father-in-law, Applicant has no past due indebtedness. He has taken his financial counseling to heart and has a positive monthly cash flow of over $1,000. Applicant has demonstrated that future financial problems are unlikely. Mitigation under AG ¶¶ 20(b), 20(c) and 20(d) has been established.

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 facts and circumstances surrounding this case. I have incorporated my comments under Guideline F in my whole-person analysis. Some of the factors in AG ¶ 2(d) were addressed under those guidelines, but some warrant additional comment. Applicant is highly respected in both academia, and in the defense industry. (AppXs E and I.)

Overall, the record evidence leaves me without questions or doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, 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 ¶ E3.1.25 of the Directive, are:

Paragraph 1, Guideline F: FOR APPLICANT

Subparagraphs 1.a.~1.e.: 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.

________________________ Richard A. Cefola Administrative Judge

FOOTNOTES

Adjudicative Guidelines, effective June 8, 2017. My decision would be the same if the case was considered under the previous Adjudicative Guidelines, effective September 1, 2006.