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ISCR Case 17-00183.h1 — CASE

ISCR Case 17-00183.h1granted

Case Headnote

ISCR Case No. 17-00183.h1

grantedAug 1, 2017· Hon. Robert J. Kilmartin· hearing

Summary

A 50-year-old carpenter sought a security clearance, which was initially challenged under Guideline F (Financial Considerations) due to several delinquent debts totaling approximately $25,000. The Statement of Reasons (SOR) detailed five specific allegations: an $18,134 delinquent student loan, a $590 delinquent credit card account, a $370 charged-off cable company account, $2,802 in delinquent state taxes for tax year 2009, and another $3,263 delinquent student loan.

The applicant successfully mitigated these concerns. He resolved most of the delinquent debts prior to the hearing and provided evidence of consistent payments on the remaining obligations. The judge noted that the applicant's financial difficulties were largely attributable to sporadic employment, a factor beyond his control.

Ultimately, the judge found that the applicant had demonstrated responsible financial behavior and mitigated the security concerns. The security clearance was granted.

Why the Applicant Prevailed

Applicant resolved most of the delinquent debts before the hearing.
He provided evidence of consistent payments on remaining debts, demonstrating responsible financial behavior.
The applicant's financial issues were largely due to sporadic employment, which was beyond his control.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(b)raisedUnwillingness to Satisfy Debts
AG ¶ 19(c)raisedHistory of Not Meeting Financial Obligations
AG ¶ 19(f)raisedFailure to File or Pay Taxes

Mitigating

AG ¶ 20(a)appliedBehavior Unlikely to Recur
AG ¶ 20(b)appliedConditions Largely Beyond Control
AG ¶ 20(d)appliedGood-faith Effort to Repay Debts
AG ¶ 20(g)appliedArrangements with Tax Authority

Key Rule Quoted

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

Procedural Posture

SOR issuedMar 1, 2017
Answer filedMar 7, 2017
Hearing heldJun 21, 2017
Decision dateAug 1, 2017

Cite For

Mitigation of Financial Issues Under Guideline F
Evidence of Consistent Debt Repayment as a Mitigating Factor
Consideration of Circumstances Beyond the Applicant's Control in Financial Matters

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 mitigated the financial concerns under Guideline F, as most of the delinquent debts were resolved and the applicant demonstrated responsible financial behavior. The applicant's eligibility for access to classified information was granted based on the evidence presented.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant is indebted to the Department of Education for a delinquent student loan in the approximate amount of $18,134. $18,134	For Applicant	Student Loan Debt	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	(d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.b	Applicant is indebted to a creditor on a delinquent credit card account placed for collection in the amount of $590. $590	For Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	(d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.c	SOR ¶ 1.c is a delinquent debt for a charged-off account in the approximate amount of $370 from a cable company. $370	For Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	(d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.d	SOR (as amended) ¶ 1.d alleged delinquent taxes owed to a state in the amount of $2,802 for tax year 2009. $2,802	For Applicant	Tax Unpaid	Denied	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations (f) failure to file / fraudulent filing of tax returns or unpaid tax	(g) arrangements made with the tax authority; in compliance	Documented Debt Paid in Full
1.e	SOR ¶ 1.e is another student loan account placed for collection by the Department of Education in the amount of $3,263. $3,263	For Applicant	Student Loan Debt	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	(d) good-faith effort to repay or otherwise resolve debts	Documented 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: ) ) ) ISCR Case No. 17-00183 ) Applicant for Security Clearance )

For Government: Carroll Connelley, Esq., Department Counsel For Applicant: Thomas Albin, Esq. 08/01/2017 ______________

STATEMENT OF CASE

______________

KILMARTIN, Robert J., Administrative Judge:

Applicant mitigated the security concerns under Guideline F, financial considerations. Applicant’s eligibility for access to classified information is granted.

Statement of the Case

Applicant submitted a security clearance application (SCA) on February 2, 2016. On March 1, 2017, the Department of Defense Consolidated Adjudications Facility (DOD CAF) issued Applicant a Statement of Reasons (SOR) detailing security concerns under Guideline F, financial considerations. The DOD CAF acted under Executive Order (EO) 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 (AGs) implemented by DOD on September 1, 2006. On December 10, 2016, the Director of National Intelligence signed Security Executive Agent Directive 4 (SEAD 4), implementing new AGs effective within the DOD on June 8, 2017. Accordingly, I have applied the June 8, 2017 AGs in this decision.1

Applicant answered the SOR on March 7, 2017, admitting all of the SOR allegations except for the allegation in SOR ¶ 1.d, which he denied stating it was paid in full. Applicant also requested a hearing before an administrative judge. Department Counsel was ready to proceed on April 13, 2017. The case was assigned to me on May 2, 2017. On May 19, 2017, the Defense Office of Hearings and Appeals (DOHA) notified Applicant that the hearing was scheduled for June 21, 2017. I convened the hearing as scheduled.

Government Exhibits (GE) 1 through 4 were admitted into evidence without objection. At the hearing, Applicant presented testimony from his wife, and he testified and submitted Applicant’s Exhibits (AE) A through F, which were admitted without objection. DOHA received the transcript (Tr.) on June 29, 2017. At the hearing, department counsel moved to amend the SOR by deleting the date “2012” from the allegation contained in SOR ¶ 1.dand inserting the date “2009” in its place, in reference to the tax year in question. This motion was granted. It did not alter Applicant’s denial of this allegation.

Findings of Fact2

Applicant is 50 years old. He graduated from high school in 1984. Applicant was employed as a carpenter by a federal contractor intermittently since January 1997. He lost his full-time job as a carpenter in 2000, and became a self-employed carpenter after that. He worked only sporadically from 2000 to present. He reported no military service and he has been married since 1994. Applicant has two children, ages 20, and 22. One graduated college and the other is currently attending college. Applicant attended college for a few years and obtained a certificate in 1992. He reports no previous security clearances. He reported no delinquent debts or financial problems in section 26 of his February 2016 SCA.

The SOR alleged five delinquent debts totaling approximately $25,000, including student loans and taxes owed to a state. The SOR alleged in ¶ 1.a that Applicant is indebted to the Department of Education for a delinquent student loan in the approximate amount of $18,134. Applicant admitted this allegation in his Answer to the SOR and stated “I am making regular payments on this account.” At the hearing, Applicant testified that this and the debt in SOR 1.e are two separate student loans that he consolidated for payments of $143 each month as indicated in AE A.3 He produced evidence in AE A that he was making consistent payments to a collection agency for the creditor in the amount of $143 a month. The schedule of payments submitted as AE A reflects that these consolidated student loans should be completely paid off in 2020. Additionally, bank statements admitted as AE B, corroborated Applicant’s testimony that he has been consistently making these payments on this student loan for several months before the hearing including April, May and June 2017.

The SOR alleges in ¶ 1.bthat Applicant is indebted to a creditor on a delinquent credit card account placed for collection in the amount of $590. Applicant admitted this allegation in his Answer to the SOR and stated “I am currently arranging to repay this and this should be resolved shortly.” At the hearing, he produced evidence in the form of a letter from a law firm that represents the creditor at AE C, confirming payment to resolve this debt of $589. This corroborated Applicant’s wife’s testimony that he has now paid this debt off.4 She also testified that she was the primary breadwinner in the family of four, all living together. She handled the family finances.

SOR ¶ 1.cis a delinquent debt for a charged-off account in the approximate amount of $370 from a cable company. Applicant testified that he forgot to turn in the cable equipment because that company never sent a box as promised. He has since turned in the equipment and paid this off.5 Applicant produced an April 2017 bank statement at the hearing at AE D to show that he paid $370 to the creditor to resolve this delinquent debt.6 It has been resolved.

SOR (as amended) ¶ 1.dalleged delinquent taxes owed to a state in the amount of $2,802 for tax year 2009. Applicant denied this debt in his Answer to the SOR, claiming it was paid in full. Applicant’s wife testified at the hearing that this tax lien was actually paid in full in 2012 when her pay was attached,7 well before the SOR issued, but not released by the state until recently. Correspondence was admitted as AE E showing her correspondence with the state. It has been resolved.

SOR ¶ 1.e is another student loan account placed for collection by the Department of Education in the amount of $3,263. Applicant admitted this in his Answer to the SOR and stated “I am making regular payments on this account, which is related to the debt alleged at subparagraph a above.” This student loan was consolidated with the aforementioned student loan and Applicant submitted exhibits AE A and AE B showing consistent payments of $143 a month to settle these. Applicant needs a security clearance for his carpenter job. Applicant’s monthly take-home pay is presently $487 a week in unemployment compensation.8 His wife testified that she earns $83,000 a year, plus possible bonuses.9 He expects to have the two consolidated student loans paid off completely by 2020. They have the means to do so, and they are making payments on a plan. The other three SOR allegations have been resolved. He testified that he worked for a federal contractor for ten months before his interim security clearance was revoked and Applicant was laid off in March 2017.10 Applicant testified credibly that his debts arose from sporadic employment and he loves his job and wants to return to full time employment. Applicant’s direct supervisor provided a letter of recommendation that was admitted as AE F, and it attests to his work ethic, ability and honesty.

POLICIES

When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which are 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, 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, Appendix A, ¶ 2(a), the adjudicative process is an examination of a sufficient period and a careful weighing of a number of variables of an individual’s life to make an affirmative determination that the individual is an acceptable security risk. This is 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, Appendix A, ¶ 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. Likewise, I have avoided drawing inferences grounded on mere speculation or conjecture.

Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, an “applicant is responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by applicant or proven by Department Counsel, and 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 that an applicant may deliberately or inadvertently fail to 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 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.”

ANALYSIS

Guideline F, Financial Considerations

The security concern relating to 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 abuse, 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 an individual might knowingly compromise classified information in order to raise money. It encompasses concerns about an individual’s self-control, judgment, and other qualities essential to protecting classified information. An individual who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information.

AG ¶ 19 provides conditions that could raise security concerns. The following apply here:

(a) inability to satisfy debts;

(b) unwillingness to satisfy debts regardless of the ability to do so; (c) a history of not meeting financial obligations; and

(f) failure to file or fraudulently filing annual Federal, state or local income tax returns or failure to pay annual Federal, state or local income tax as required.

Applicant’s delinquent debts alleged in the SOR are confirmed by his credit reports, clearance interview and answer to the SOR. The Government produced substantial evidence to support the disqualifying conditions in AG ¶¶ 19(a), 19(b), 19(c) and 19(f), thereby shifting the burden to Applicant to produce evidence to rebut, explain, extenuate, or mitigate the facts.11 Applicant has met that burden. Most of the delinquent debts have been resolved.

The guideline also includes conditions that could mitigate security concerns arising from financial difficulties. The following 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 . . ., 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 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;

(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; and

(g) the individual has made arrangements with the appropriate tax authority to file or pay the amount owed and is in compliance with those arrangements. Applicant was laid off from full-time employment in 2000. Since then, he has been self-employed and sporadically works as a carpenter. Arguably, these conditions were beyond his control. He has now produced relevant and responsive documentation, demonstrating that he acted responsibly under the circumstances. Applicant has met his burden to provide sufficient evidence to show that his financial problems are under control, and that his debts were incurred under circumstances making them unlikely to recur. He has either paid off, or has made consistent payments pursuant to a plan, most of his delinquent debts. Through counsel, he produced letters and bank statements to confirm that three out of the five delinquencies alleged in his SOR have been completely resolved. The other two (consolidated student loans) are being resolved by consistent monthly payments pursuant to a plan. The mitigating conditions enumerated above apply.

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, Appendix A, ¶ 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, Appendix A, ¶ 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 the 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, Appendix A, ¶ 2(d) were addressed under that guideline. Applicant has been married for 23 years, put one child through college, and has a second attending college. He has struggled to stay employed consistently, and his supervisor holds Applicant in the highest regard. Applicant and his wife testified credibly and persuasively that their finances are now under control. Most important, Applicant has addressed the specific allegations in the SOR and taken affirmative measures to resolve them. He has met his burden of production.

Applicant’s finances no longer remain a security concern. There is sufficient evidence to conclude that Applicant’s financial problems are under control. He is gainfully employed and managing his financial affairs. The record evidence leaves me with no questions or doubts as to Applicant’s suitability for a security clearance. For all these reasons, I conclude Applicant has mitigated the security concerns arising under Guideline F, 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 through 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 interests of national security to grant Applicant a security clearance. Eligibility for access to classified information is granted.

________________________ Robert J. Kilmartin Administrative Judge

FOOTNOTES

1 Although I have decided this case under the adjudicative guidelines (AG) effective June 8, 2017, I also considered the case under the former AG effective on September 1, 2006, and my decision would be the same under either AG. 2 Unless stated otherwise, the source of the information in this section is Applicant’s February 2, 2016 Security Clearance Application (SCA) and the summary of his security clearance interview on March 23, 2016. 3 Tr. at 29, 38. 4 Tr. at 30. 5 Tr. at 60. 6 AE D, and Tr. at 60,61. 7 Tr. at 24. 8 Tr. at 52. 9 Tr. at 22. 10 Tr. at 12. 11 Directive ¶ E3.1.15. See ISCR Case No. 02-31154 at 5 (App. Bd. Sep 22, 2005) (An applicant has the burden of proving a mitigating condition, and the burden of disproving it never shifts to the Government).