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ISCR Case 16-03442.h1 — CASE

ISCR Case 16-03442.h1granted

Case Headnote

ISCR Case No. 16-03442.h1

grantedOct 16, 2017· Hon. Juan J. Rivera· hearing

Summary

This case concerns a 44-year-old former Air Force officer whose security clearance was granted despite initial concerns under Guideline F (Financial Considerations). Disqualifying conditions were raised regarding his financial history, specifically AG ¶ 19(a) and AG ¶ 19(c).

The applicant's financial difficulties stemmed primarily from significant medical expenses and multiple family deaths, circumstances largely beyond his control. He demonstrated responsible financial behavior by actively working to resolve his debts, including settling and paying off several delinquent accounts. Furthermore, he fully disclosed his financial issues in his 2015 security clearance application.

The judge applied mitigating conditions AG ¶ 20(b), AG ¶ 20(d), and AG ¶ 20(e), finding that the applicant's financial problems were due to circumstances beyond his control and were being resolved. Consequently, the security clearance was granted.

Why the Applicant Prevailed

Applicant established that circumstances beyond his control contributed to his financial problems.
He disclosed his financial issues in his 2015 security clearance application.
The applicant demonstrated responsible financial behavior by settling and paying off several delinquent accounts.

Conditions Referenced

Disqualifying

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

Mitigating

AG ¶ 20(b)appliedConditions Largely Beyond the Person's Control
AG ¶ 20(d)appliedGood-faith Effort to Repay Overdue Creditors
AG ¶ 20(e)appliedReasonable Basis to Dispute Legitimacy of Past-due Debt

Key Rule Quoted

“Eligibility for access to classified information may be granted "only upon a finding that it is clearly consistent with the national interest to do so."”
— Exec. Or. 10865, § 2.

Procedural Posture

SOR issuedDec 23, 2016
Answer filedJan 24, 2017Requested decision based on written record.
Hearing held—Pro se representation.
Decision dateOct 16, 2017

Cite For

Mitigating Conditions Under Guideline F Due to Circumstances Beyond Control
Demonstrating Responsible Financial Behavior in Security Clearance Cases
The Importance of Full Disclosure in Security Clearance Applications

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 problems were largely due to circumstances beyond his control, including medical issues and family deaths. The applicant demonstrated responsible behavior in addressing his debts, leading to a decision to grant his security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a–1.m	13 sub-charges — specific text not stated in this decision (for the applicant).	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. 16-03442 ) ) Applicant for Security Clearance

For Government: Chris Morin, Esq., Department Counsel For Applicant: Pro se

10/16/2017 __________

STATEMENT OF CASE

__________

RIVERA, Juan J., Administrative Judge:

Applicant established that circumstances beyond his control contributed to his financial problems and that he was financially responsible under the circumstances. He disclosed his financial problems in his 2015 security clearance application (SCA). His financial problems are being resolved. Clearance granted.

Statement of the Case

Applicant submitted a SCA on January 20, 2015. After reviewing it and the information gathered during a background investigation, the Department of Defense (DOD) on December 23, 2016, issued him a Statement of Reasons (SOR), alleging security concerns under Guideline F (financial considerations). Applicant answered the SOR on January 24, 2017, and requested a decision based on the written record in lieu of a hearing.

A copy of the Government’s file of relevant material (FORM), submitting the evidence prompting the security concerns, was provided to Applicant by letter dated February 10, 2017. Applicant received the FORM on March 8, 2017. He was allowed 30 days to submit any objections to the FORM and to provide material to refute, extenuate, and mitigate the concerns. Applicant timely responded to the FORM with a statement, a copy of his answer to the SOR, and a 2017 combined credit report, which are now part of the record. The case was assigned to me on October 1, 2017.

FINDINGS OF FACT

Applicant admitted the 13 SOR allegations (SOR ¶¶ 1.a through 1.m). His admissions to the SOR and in his response to the FORM are incorporated herein as findings of fact. After a thorough review of the record evidence, I make the following additional findings of fact:

Applicant is a 44-year-old employee of a large federal contractor. He has been married three times and divorced twice. His first marriage ended after five years in 1997. He married his second wife in 1998 and divorced in 2005. He married his current wife in September 2005. He has four children of these marriages, ages 9, 12, 17, and 23, and two stepchildren ages 15 and 24. Applicant completed his bachelor’s degree in 2002.

Applicant served in the U.S. Air Force as an enlisted airman between December 1993 and February 2003. He was honorably discharged, and then commissioned as an Air Force officer. He served as an officer from February 2003 to December 2013. He was honorably retired with the rank of captain (O-3). While in the Air Force, Applicant possessed a secret clearance. There is no evidence that his clearance was ever suspended or that there were any issues of concern.

Shortly after Applicant’s retirement, his current employer, a federal contractor, hired him as a systems administrator. Applicant disclosed in his January 2015 SCA his financial problems, which included 18 delinquent accounts, some of which are alleged in the SOR. He explained that his financial problems resulted from circumstances beyond his control. In October 2008, his daughter was born with a genetic defect that required a prolonged stay at the hospital, multiple procedures, and a couple of surgeries. In March 2009, his wife’s mother was diagnosed with ALS, and after some treatments, she passed away in October 2009. Applicant assumed the cost of her burial expenses. In March 2010, his father-in-law was diagnosed with lung cancer, and after some medical treatment, he passed away in June 2011. Applicant took an Air Force Aid loan to pay for the family travel, lodging, and burial expenses. In November 2010, Applicant’s father was diagnosed with ALS, and he passed away in March 2012. Again, Applicant assumed some of the burial expenses.

Applicant explained that he incurred numerous medical expenses, travel and lodging expenses for him and his family to visit and care for sick family members during extended periods, and he paid for their burial expenses. All these factors placed an extreme financial hardship on him. He used his credit and took loans to pay for these extraordinary expenses.

After the death of his father in March 2012, Applicant retained the services of a debt consolidation company to help him repay his debts. He stated that he made monthly payments of $1,008, until April 2013, when the Air Force notified him he was not selected for promotion and would be pending mandatory retirement in December 2013. He stopped making payments on his repayment plan. After his current employer hired him, he relocated to another state where the higher cost of living and his reduced income from his civilian job prevented him from continuing his debt consolidation program. Applicant continued to work with various creditors on his own to repay his debts.

The file has evidence showing that Applicant acted responsibly under the circumstances. The 2015 credit report shows Applicant disputed 10 accounts and later went on to settle and pay 7 of the disputed accounts. (GE 4) The 2016 credit report shows Applicant disputed 5 accounts and later settled and paid 1 of the disputed accounts. He also paid five accounts, for less than what he owed, after they were charged off. (GE 5) Applicant’s 2017 credit report shows 15 open accounts in good standing. In the “closed accounts section,” the 2017 credit report shows 32 accounts in good standing, five of which were paid and moved from the negative category to the good standing category, and he had 13 negative accounts remaining.

When Applicant submitted his 2015 SCA he disclosed 18 accounts delinquent. As of the March 2017, he had paid or resolved 9 delinquent accounts, and had 10 delinquent accounts remaining. He acknowledged that he still had too many delinquent accounts, but believed that his actions so far showed a good faith effort to meet and fulfill his financial obligations.

The SOR alleged and Applicant admitted to 13 delinquent accounts. Concerning SOR ¶¶ 1.a through 1.e, 1.g, 1.h, and 1.m, Applicant stated he tried to contact the creditors, but the accounts had been sold to collectors. He could not identify the legal owner of some of the delinquent accounts. He attempted to correspond with some of the collectors without results.

SOR ¶ 1.falleges a delinquent medical account for ambulatory service provided to Applicant’s daughter. Applicant explained the insurance did not pay the account because the creditor submitted the wrong account number. He resubmitted the claim to the insurance company with the correct account number and he expects it to be paid.

Applicant settled the accounts alleged in SOR ¶¶ 1.i, 1.j, and 1.k. His 2017 credit report shows the accounts have a “0” balance. Also, the SOR alleged the same delinquent account in both SOR ¶¶ 1.jand 1.k. Applicant also settled the account in SOR ¶ 1.l.

Applicant has learned his lesson the hard way. Leaving the military was a difficult transition for him that forced him to move to another state with a higher cost of living and lower income from his new job. He believes circumstances beyond his control contributed to his financial problems. He noted his military service while possessing a clearance without any security incidents. He hopes that his actions to pay his delinquent debs would show that he is working hard to reestablish his credit worthiness, reliability, and good judgment. Applicant also noted that he has not missed a financial payment in over three years, while at the same time, he has been reducing the number of delinquent accounts. Applicant promised to continue paying his legal debts and to resolve his financial problems.

POLICIES

The SOR was issued 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 (Directive) (January 2, 1992), as amended; and the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information (AG), implemented by the DOD on September 1, 2006.

While the case was pending a decision, the Security Executive Agent implemented Security Executive Agent Directive (SEAD) 4, National Security Adjudicative Guidelines (AG), effective 8 June 2017, which replaced the 2006 AG. I decided this case under the AGs implemented by SEAD 4.

Eligibility for access to classified information may be granted “only upon a finding that it is clearly consistent with the national interest to do so.” Exec. Or. 10865, § 2. The U.S. Supreme Court has recognized the substantial discretion of the Executive Branch in regulating access to information pertaining to national security, emphasizing that “no one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988).

The AG list disqualifying and mitigating conditions for evaluating a person’s suitability for access to classified information. Any one disqualifying or mitigating condition is not, by itself, conclusive. However, the AG should be followed where a case can be measured against them, as they represent policy guidance governing access to classified information. Each decision must reflect a fair, impartial, and commonsense consideration of the whole person and the factors listed in SEAD 4, App. A ¶¶ 2(d) and 2(f). All available, reliable information about the person, past and present, favorable and unfavorable, must be considered.

Security clearance decisions resolve whether it is clearly consistent with the national interest to grant or continue an applicant’s security clearance. The Government must prove, by substantial evidence, controverted facts alleged in the SOR. If it does, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. The applicant bears the heavy burden of demonstrating that it is clearly consistent with the national interest to grant or continue his or her security clearance.

Persons with access to classified information enter into a fiduciary relationship with the Government based on trust and confidence. Thus, the Government has a compelling interest in ensuring each applicant possesses the requisite judgment, reliability, and trustworthiness of those who must protect national interest as their own. The “clearly consistent with the national interest” standard compels resolution of any reasonable doubt about an applicant’s suitability for access in favor of the Government. “[S]ecurity clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531; SEAD 4, ¶ E(4); SEAD 4, App. A, ¶¶ 1(d) and 2(b). Clearance decisions are not a determination of the loyalty of the applicant concerned. They are merely an indication that the applicant has or has not met the strict guidelines the Government has established for issuing a clearance.

ANALYSIS

Financial Considerations

AG ¶ 18 articulates the security concern relating to financial problems:

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. 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.

Applicant’s history of financial problems is documented in the record. Between October 2008 and March 2012, Applicant acquired debts beyond his financial means, many of which remain delinquent. AG ¶ 19 provides two disqualifying conditions that could raise a security concern and may be disqualifying in this case: “(a) inability to satisfy debts;” and “(c) a history of not meeting financial obligations.” The record established the disqualifying conditions, requiring additional inquiry about the possible applicability of mitigating conditions.

Five mitigating conditions under AG ¶ 20 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, clear victimization by predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances; (c) the person has received or is receiving 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;1 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.

The Appeal Board concisely explained Applicant’s responsibility for proving the applicability of mitigating conditions as follows:

Once a concern arises regarding an Applicant’s security clearance eligibility, there is a strong presumption against the grant or maintenance of a security clearance. See Dorfmont v. Brown, 913 F. 2d 1399, 1401 (9th Cir. 1990), cert. denied, 499 U.S. 905 (1991). After the Government presents evidence raising security concerns, the burden shifts to the applicant to rebut or mitigate those concerns. See Directive ¶ E3.1.15. The standard applicable in security clearance decisions is that articulated in Egan, supra. “Any doubt concerning personnel being considered for access to classified information will be resolved in favor of the national security.” Directive, Enclosure 2 ¶ 2(b).

ISCR Case No. 10-04641 at 4 (App. Bd. Sept. 24, 2013).

Applicant’s financial problems are ongoing and recent. However, his financial problems could be attributed to, or were aggravated by, circumstances beyond his control – the birth of his disabled daughter in 2008, the terminal illness and death of three immediate family members between 2009 and 2012, his mandatory retirement from the Air Force in 2013, the move to a higher cost-of-living state, and his reduced earnings. Considering the evidence as a whole, it shows that his financial problems occurred under circumstances unlikely to recur.

The analysis of whether Applicant acted responsibly under the circumstances would have been easier if Applicant had submitted documentary evidence of his efforts to remain in contact with his creditors, participation in debt-consolidation programs, payments made, payment arrangements established, and the legal basis for the dispute of some of his debts. Notwithstanding, the file has substantial evidence to show that Applicant acted responsibly under the circumstances. The credit reports in evidence show numerous accounts paid and in good standing. They also show Applicant disputed some accounts, that he paid some accounts after they were disputed, and that he paid accounts after they were charged off. These transactions are clear evidence that Applicant remained in contact with his creditors, took efforts to resolve his financial problems, and paid many of his delinquent financial obligations. Applicant’s actions are evidence of his responsible efforts to resolve his financial situation.

In sum, Applicant’s evidence is sufficient to establish that circumstances beyond his control caused the financial hardship and prevented him from paying the debts. He acted responsibly under the circumstances. He disclosed his financial problems in his 2015 SCA. He is paying his delinquent debts and his current financial situation is improving. I find that there are clear indications that his financial problem is being resolved or is under control.

WHOLE PERSON CONCEPT

I considered the potentially disqualifying and mitigating conditions in light of all the facts and circumstances surrounding this case, and under the whole-person concept. SEAD 4, App. A, ¶¶ 2(a), 2(d) and 2(f). I have incorporated my comments under Guideline F in my whole-person analysis. Some of these factors were addressed under that guideline, but some warrant additional comment.

Applicant is a 44-year-old employee of a federal contractor. He retired from the Air Force after 20 years of honorable service. During his service, he held a clearance and there is no evidence of any issues of security concern. He presented sufficient information to show that circumstances beyond his control contributed to or aggravated his financial problems. He presented sufficient information to establish that he was financially responsible under the circumstances and that his financial problems are being resolved or are under control. The financial considerations security concerns are mitigated.

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.m: For Applicant

CONCLUSION

In light of all the circumstances presented by the record in this case, it is clearly consistent with the national security interests of the United States to grant eligibility for a security clearance to Applicant. Clearance is granted.

____________________________ JUAN J. RIVERA Administrative Judge

FOOTNOTES

1 The Appeal Board has previously explained what constitutes a “good faith” effort to repay overdue creditors or otherwise resolve debts:

In order to qualify for application of [the “good faith” mitigating condition], an applicant must present evidence showing either a good-faith effort to repay overdue creditors or some other good-faith action aimed at resolving the applicant’s debts. The Directive does not define the term “good-faith.” However, the Board has indicated that the concept of good-faith “requires a showing that a person acts in a way that shows reasonableness, prudence, honesty, and adherence to duty or obligation.” Accordingly, an applicant must do more than merely show that he or she relied on a legally available option (such as bankruptcy) in order to claim the benefit of [the “good faith” mitigating condition].

(internal citation and footnote omitted) ISCR Case No. 02-30304 at 3 (App. Bd. Apr. 20, 2004) (quoting ISCR Case No. 99-9020 at 5-6 (App. Bd. June 4, 2001)).