CASE · Clearance Adjudication Search EngineCASE

Loading case…

ISCR Case 17-00196.h1 — CASE

ISCR Case 17-00196.h1granted

Case Headnote

ISCR Case No. 17-00196.h1

grantedSep 28, 2017· Hon. LeRoy F. Foreman· hearing

Summary

A 40-year-old project manager for a federal contractor was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The applicant faced allegations regarding approximately $21,733 in delinquent debts, including a motor vehicle loan, child support arrearages, and various utility and service bills. Specific debts included a $6,579 motor vehicle loan settled for $2,700 in May 2017, a $4,683 child support arrearage satisfied in July 2017, and a $1,816 cellphone bill settled for $908. Other debts involved a $422 cable bill settled for $274, a $1,300 charge for unreturned cable equipment from February 2013, a $1,715 electric bill, a $1,139 satellite television service debt, and a $572 fitness club membership debt.

Disqualifying conditions under Adjudicative Guidelines (AG) ¶ 19(a) and AG ¶ 19(c) were raised. However, the applicant successfully applied mitigating conditions under AG ¶ 20(b), AG ¶ 20(d), and AG ¶ 20(e).

The decision to grant the clearance was based on the applicant's demonstrated significant financial improvement after securing a higher-paying job. This allowed him to meet his financial obligations, resolve several delinquent debts through settlements and timely payments, and successfully dispute other debts that no longer appeared on recent credit reports.

Why the Applicant Prevailed

The applicant's financial situation improved significantly after obtaining a higher-paying job, allowing him to meet his financial obligations.
The applicant resolved several delinquent debts through settlements and timely payments, demonstrating responsible financial behavior.
The applicant successfully disputed certain debts, which were not reflected in recent credit reports, indicating resolution in his favor.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(c)raisedA History 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 a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines.”
— Exec. Or. 10865 § 2.

Procedural Posture

SOR issuedApr 24, 2017
Answer filedMay 15, 2017
Hearing heldSep 6, 2017
Decision dateSep 28, 2017

Cite For

Mitigation of Financial Issues Under Guideline F
Impact of Employment Changes on Financial Stability
Resolution of Debts Through Settlements and Disputes

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 several delinquent debts but resolved them through various means, including settlements and payments. Ultimately, the judge ruled in favor of the applicant, concluding that the financial issues were mitigated and consistent with national security interests.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	This debt is a delinquent motor vehicle loan ($6,579) that Applicant settled for $2,700 in May 2017. $6,579	For Applicant	Auto Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.b	This is a child-support arrearage ($4,683) that was satisfied in July 2017. $4,683	For Applicant	Child Support Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.c	This is a delinquent cellphone bill ($1,816) that Applicant settled for $908. $1,816	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.d	This is a delinquent cable bill ($422). Applicant settled it for $274, using funds from a checking account. $422	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.e	This is the same debt as SOR ¶ 1.b. $4,683	For Applicant	Child Support Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.f	This debt is for unreturned cable-service equipment ($1,300). It was charged off in February 2013. $1,300	For Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (e) reasonable, documented basis to dispute the debt	Claimed Debt Disputed with Creditor
1.g	This debt is a delinquent electric bill ($1,715). $1,715	For Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (e) reasonable, documented basis to dispute the debt	Claimed Debt Disputed with Creditor
1.h	This debt is for satellite television service ($1,139). $1,139	For Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (e) reasonable, documented basis to dispute the debt	Claimed Debt Disputed with Creditor
1.i	This debt is for a fitness club membership ($572). $572	For Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (e) reasonable, documented basis to dispute the debt	Claimed Debt Disputed with Creditor

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. 17-00196 ) Applicant for Security Clearance )

For Government: Alison O’Connell, Esq., Department Counsel For Applicant: Pro se

09/28/2017 ______________

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 February 19, 2016. On April 24, 2017, 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, 2006.1 Applicant answered the SOR on May 15, 2017, and requested a hearing before an administrative judge. Department Counsel was ready to proceed on June 2, 2017, and the case was assigned to me on July 17, 2017. On July 25, 2017, the Defense Office of Hearings and Appeals (DOHA) notified Applicant that the hearing was scheduled for September 6, 2017. I convened the hearing as scheduled. Government Exhibits (GX) 1 through 3 were admitted in evidence without objection. Applicant testified, presented the testimony of one witness, and submitted Applicant’s Exhibits (AX) A through F, which were admitted without objection. I kept the record open until September 22, 2017, to enable him to submit additional evidence. He timely submitted AX G through L, which were admitted without objection. Department Counsel’s comments regarding AX G through L are attached to the record as a hearing exhibit. DOHA received the transcript (Tr.) on September 14, 2017.

Findings of Fact2

In Applicant’s answer to the SOR, he admitted the allegations in SOR ¶¶ 1.a-1.e and denied the allegations in SOR ¶¶ 1.f-1.i. His admissions in his answer and at the hearing are incorporated in my findings of fact.

Applicant is a 40-year-old project manager employed by a federal contractor. He has a high-school education. He was employed by the same federal contractor as a heating, ventilation, and cooling (HVAC) technician from January 2016 until he was promoted to his current position in March 2017. He has never held a security clearance.

Before Applicant was hired by his current employer, he worked part time as a manager for a pool service company. He left this job because there was insufficient work, he was making less than $50,000 per year, and he was falling behind on his debt payments. After he was hired by his current employer, his salary has more than doubled, and he is able to pay all his financial obligations. (GX 1 at 12; Tr. 22.) As an HVAC technician, he earned about $46,000 per year; he now earns about $100,000 per year. (AX J; Tr. 28.)

Applicant married in January 1999, divorced in July 2004, married again in October 2006, and divorced in August 2013. He has lived with a cohabitant since August 2013. He has four children, two of whom were born during his first marriage and for whom he was obligated to pay child support. His two youngest children, ages two and a newborn, live with him. (Tr. 24.)

Applicant and his second wife divorced by mutual agreement, without the assistance of lawyers. They informally agreed that his wife would pay the debts alleged in SOR ¶¶ 1.f-1.i. Instead, she obtained a Chapter 7 bankruptcy discharge, and the creditors sought payment from Applicant. (GX 3; Tr. 29-30.) The SOR alleges nine delinquent debts totaling about $21,733, which are reflected in a credit report from February 2016. The evidence concerning the debts alleged in the SOR is summarized below.

SOR ¶ 1.a: This debt is a delinquent motor vehicle loan ($6,579) that Applicant settled for $2,700 in May 2017. (AX B.) This debt was incurred when Applicant’s cohabitant (now his fiancée) became pregnant with their now two-year-old daughter. The pregnancy and related expenses were unexpected. To relieve the financial stress of the pregnancy, Applicant surrendered his vehicle and incurred a deficiency after the voluntary repossession and sale. (Tr. 31-32.) He settled the debt with a financial gift from his fiancée’s mother, with no obligation to repay it. (Tr. 33.)

SOR ¶ 1.b: This is a child-support arrearage ($4,683) that was satisfied in July 2017. Applicant’s current obligation is $775 per month, and it is current. (AX A.) The payments are automatically deducted from his pay. (AX E; Tr. 21.) The arrearage was incurred because the child-support obligation was back-dated ten months to the date when his ex-wife petitioned the court to increase the amount of child support. (Tr. 34-35.) He paid the arrearage by charging a total of $1,000 to two credit cards, selling some personal property, and depleting his savings account. The credit-card debt he incurred to pay this debt has since been paid. (Tr. 35-36.)

SOR ¶ 1.c: This is a delinquent cellphone bill ($1,816) that Applicant settled for $908. (AX D; AX H.) The debt was for Applicant’s cellphone, his ex-wife’s cellphone, and his daughter’s cellphone. He paid the debt by withdrawing money from his savings account. (Tr. 37.)

SOR ¶ 1.d: This is a delinquent cable bill ($422). Applicant settled it for $274, using funds from a checking account. (AX C; AX I; Tr. 38.)

SOR ¶ 1.e: This is the same debt as SOR ¶ 1.b.

SOR ¶ 1.f: This debt is for unreturned cable-service equipment ($1,300). It was charged off in February 2013. In his answer to the SOR, Applicant denied this debt on the ground that his ex-wife agreed to pay it and then filed a bankruptcy petition. Around February 2016, Applicant hired a law firm to dispute this debt. (AX K; Tr. 39-40.) It is reflected as disputed in the February 2016 credit report and is not reflected in the credit reports from January and May 2017.

SOR ¶ 1.g: This debt is a delinquent electric bill ($1,715). Applicant denied this debt for the same reason as SOR ¶ 1.f. It was referred for collection in November 2013. Applicant’s law firm disputed this debt. It is reflected as disputed in the February 2016 credit report and is not reflected in the credit reports from January and May 2017.

SOR ¶ 1.h: This debt is for satellite television service ($1,139). Applicant denied it for the same reason as SOR ¶ 1.f. It was referred for collection in April 2015, and Applicant’s law firm disputed it. It is reflected as disputed in the February 2016 credit report and is not reflected in the credit reports from January and May 2017.

SOR ¶ 1.i: This debt is for a fitness club membership ($572). Applicant denied it for the same reason as SOR ¶ 1.f. The February 2016 credit report does not reflect when it was referred for collection. Applicant testified that his law firm disputed this debt, but the February 2016 credit report does not reflect it as disputed. However, it is not reflected in the credit reports from January and May 2017.

All the debts in the SOR became delinquent after Applicant’s divorce in 2013. They were not required by the Fair Credit Reporting Act3 to be deleted from the credit reports. The fact that the debts in SOR ¶¶ 1.f-1.i are not reflected in the more recent credit reports indicates that the disputes were resolved in Applicant’s favor.

Applicant’s manager submitted three statements and testified at the hearing. He testified that Applicant has saved the U.S. Government close to $100,000 by his careful oversight of construction contracts. He testified that he interacts daily with Applicant, who “has shown nothing but integrity, honesty, innovation, and hard work in helping the government start up, operate, maintain, and manage a half-billion construction project we’re on right now.” (Tr. 52-55.) The manager’s three statements and a statement from Applicant’s systems administrator contain similar descriptions of Applicant’s performance and personal integrity. (AX F.)

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.

ANALYSIS

Guideline F, Financial Considerations

The security concern under this guideline 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. . . .

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).

The debts alleged in SOR ¶¶ 1.band 1.e are the same debt. When the same conduct is alleged twice in the SOR under the same guideline, one of the duplicative allegations should be resolved in Applicant's favor. See ISCR Case No. 03-04704 (App. Bd. Sep. 21, 2005) at 3 (same debt alleged twice). Accordingly, I have resolved the debt alleged in SOR ¶ 1.bfor Applicant.

Applicant’s admissions and the documentary evidence submitted at the hearing are sufficient to establish the debts alleged in SOR ¶¶ 1.a-1.dand 1.f-1.i and raise two disqualifying conditions under this guideline: AG ¶ 19(a) (“inability to satisfy debts”) and AG ¶ 19(c) (“a history of not meeting financial obligations”). The following mitigating conditions are potentially relevant:

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 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;

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) is not established. Applicant’s delinquent debts are numerous, recent, and were not incurred under circumstances making them unlikely to recur.

AG ¶ 20(b) is established. Applicant’s underemployment before being hired by his current employer, his marital breakups, and his second wife’s failure to comply with her informal promise to resolve the debts in SOR ¶¶ 1.f-1.i were conditions largely beyond his control. He has acted responsibly by resolving the debts alleged in SOR ¶¶ 1.a-1.e, hiring a law firm, and successfully disputing the debts alleged in SOR ¶¶ 1.f-1.i.

AG ¶ 20(c) is not established. Applicant hired a law firm to challenge the debts alleged in SOR ¶¶ 1.f-1.i, but there is no evidence that the law firm is “a legitimate and credible source” of the financial counseling contemplated by this mitigating condition.

AG ¶ 20(d) is established for the debts alleged in SOR ¶¶ 1.a-1.e. All these debts have been paid or settled.

AG ¶ 20(e) is established for the debts alleged in SOR ¶¶ 1.f-1.i. The basis for disputing these debts is not fully documented, but the documentary evidence of Applicant’s contract with the law firm and the recent credit reports reflecting the deletion of these debts establish that they have been resolved in Applicant’s favor.

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 and applying the adjudicative factors in AG ¶ 2(d).4

I have incorporated my comments under Guideline F in my whole-person analysis, and I have considered the factors in AG ¶ 2(d). Applicant has limited education, is financially unsophisticated, and was unfamiliar with the significance of his delinquent debts until he submitted his application for a security clearance. I found his testimony plausible, sincere, and credible. 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 debts.

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-1.i: For Applicant

CONCLUSION

I conclude that it is clearly consistent with the national security interests of the United States to grant Applicant eligibility for access to classified information. Clearance is granted.

LeRoy F. Foreman Administrative Judge

FOOTNOTES

1 Security Executive Agent Directive 4 (SEAD 4) was issued on December 10, 2016, revising the 2006 adjudicative guidelines for all adjudicative decisions issued on or after June 8, 2017. SEAD 4 applies to all executive agencies. The changes resulting from issuance of SEAD 4 did not affect my decision in this case. 2 Applicant’s personal information is extracted from his security clearance application (GX 1) unless otherwise indicated by a parenthetical citation to the record. 3 Under the Fair Credit Reporting Act, a credit report may not list accounts placed for collection, charged off debts, or civil judgments that antedate the credit report by more than seven years, or until the statute of limitations has run, whichever is longer. The exceptions to this prohibition do not apply to these debts. 10 U.S.C. § 1681c. 4 The factors are: (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.