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ISCR Case 17-00718.h1 — CASE

ISCR Case 17-00718.h1granted

Case Headnote

ISCR Case No. 17-00718.h1

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

Summary

A 59-year-old defense contractor employee was granted a security clearance despite initial concerns under Guideline F, Financial Considerations. The Statement of Reasons detailed several financial issues, including a mortgage loan modification in process with Creditor A, and payment plans established with Creditor B for a $6,059 debt and Creditor D for a $1,890 debt, both initiated with a $631 good-faith payment. A payment plan was also set up with Creditor J for a $993 debt, beginning with a $200 payment.

Additionally, the applicant had resolved several smaller debts. She paid past-due medical debts totaling about $85 to Creditor E and approximately $475 to Creditor H. A debt of about $28 to Creditor G was also paid. Furthermore, a past-due debt of about $5,033 to Creditor C was written off as a business tax write-off by the creditor.

The clearance was granted because the applicant successfully demonstrated a good-faith effort to resolve all outstanding financial issues. Her financial difficulties were attributed to unemployment following an unethical termination. The applicant's consistent employment history and positive recommendations further supported the decision to grant her security clearance.

Why the Applicant Prevailed

The applicant addressed all past-due debts and demonstrated a good-faith effort to resolve financial issues.
Her financial difficulties were largely due to being fired for refusing to engage in unethical conduct.
The applicant's history of employment and positive recommendations supported her reliability and trustworthiness.

Conditions Referenced

Disqualifying

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

Mitigating

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

Key Rule Quoted

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

Procedural Posture

SOR issuedMay 1, 2017
Answer filedMay 15, 2017
Hearing heldJun 13, 2017
Decision dateJul 13, 2017

Cite For

Mitigation of Financial Issues Under Guideline F
Good-faith Efforts to Resolve Debts
Impact of Unethical Termination on Financial Stability

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 significant past-due debts but demonstrated a good-faith effort to address them, leading to a favorable decision. The applicant's financial issues were attributed to a prior period of unemployment and unethical treatment by an employer, and the judge concluded that future financial problems were unlikely.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant is in the process of getting a loan modification of her mortgage payments with Creditor A.	For Applicant	Mortgage or Home Loan Debt	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—
1.b	Applicant has set up a payment plan with Creditor B by which she made an initial, good-faith payment of $631, and monthly payments of $140 towards her $6,059 past due debt. $6,059	For Applicant	Credit Card Debt	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—
1.c	Applicant’s past-due debt to Creditor C, in the amount of about $5,033, was written-off as a business tax write-off by Creditor C. $5,033	For Applicant	Unspecified Financial	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—
1.d	Applicant has set up a payment plan with Creditor D by which she made an initial, good-faith payment of $631, and monthly payments of $75 towards her $1,890 past due debt. $1,890	For Applicant	Credit Card Debt	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—
1.e	Applicant has paid her past-due medical debts with Creditor E totaling about $85. $85	For Applicant	Medical Debt	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—
1.f	specific text not stated in this decision	For Applicant	Unspecified Financial	Unknown	—	—	—
1.g	Applicant has paid her past-due debt with Creditor G for about $28. $28	For Applicant	Unspecified Financial	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—
1.h	Applicant has paid her past-due medical debts with Creditor H for about $475. $475	For Applicant	Medical Debt	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—
1.i	specific text not stated in this decision	For Applicant	Unspecified Financial	Unknown	—	—	—
1.j	Applicant has set up a payment plan with Creditor J by which she made an initial, good-faith payment of $200, and monthly payments of $100 towards her past-due debts totaling about $993. $993	For Applicant	Credit Card Debt	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—
1.k–1.l	2 sub-charges — specific text not stated in this decision (for the applicant). (low confidence)	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. 17-00718 ) ) Applicant for Security Clearance )

For Government: Jeff Nagel, Esq., Department Counsel For Applicant: Pro se

July 13, 2017 ______________

STATEMENT OF CASE

______________

CEFOLA, Richard A., Administrative Judge:

Statement of the Case

On May 1, 2017, in accordance with DoD Directive 5220.6, as amended (Directive), the Department of Defense issued Applicant a Statement of Reasons (SOR) alleging facts that raise 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 May 15, 2017, and requested a hearing before an administrative judge. (Answer.) The case was assigned to me on June 6, 2017. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on June 6, 2017, scheduling the hearing for June 13, 2017. The hearing was convened as scheduled. The Government offered Exhibits (GXs) 1 through 8, which were admitted without objection. Applicant testified on her own behalf and called her fiancé as a witness. Applicant presented two packets of documents, which I marked Applicant’s Exhibits (AppXs) A and B and admitted into the record without objection. The record was left open until June 30th, for receipt of additional documentation. Applicant submitted a post-hearing closing statement on June 19, 2017. DOHA received the transcript of the hearing (TR) on June 21, 2017.

FINDINGS OF FACT

Applicant admitted to the allegations in SOR ¶¶ 1.a., 1.b., 1.d., 1.k., and 1.l. She denied SOR allegations ¶¶ 1.c., and 1.e.~1.j. After a thorough and careful review of the pleadings, exhibits, and testimony, I make the following findings of fact.

Applicant is a fifty-nine-year-old employee of a defense contractor. (GX 1 at pages 5 and 12.) She has been employed with the defense contractor “since April of 2000.” (TR at page 26 lines 23–25.) She has held a security clearance, off and on, since April of 2000. (TR at page 26 line 23 to page 27 line 5.) She is a single mother, and has five adult children, two of whom are veterans of the U.S. military. (TR at page 24 line 16 to page 26 line 12.)

Guideline F – Financial Considerations

Applicant attributes her past, alleged, financial difficulties to a period of unemployment beginning in November of 2014 and continuing until February of 2015. (TR at page 28 line 16 to page 31 line 18, and GX 1 at pages 12–15.) Her then employer asked her to participate in unethical conduct. When Applicant refused, she was fired. (Id.) She has now addressed all of the alleged past-due debts.

1.a. Applicant is in the process of getting a loan modification of her mortgage payments with Creditor A. (TR at page 32 line 3 to page 36 line 3, and AppX A at pages 1–2.) She has paid the modified rate as agreed to for three months; and as a result, this rate will soon be finalized as the permanent fixed rate. (Id.) Her loan modification is evidenced by documentation from Creditor A. (AppX A at pages 1–2.) Applicant has about $200,000 of equity in her house. (TR at page 35 line 20 to page 36 line 2.) I find that Applicant is making a good-faith effort to address this mortgage debt.

1.b. Applicant has set up a payment plan with Creditor B by which she made an initial, good-faith payment of $631, and monthly payments of $140 towards her $6,059 past due debt. (TR at page 36 line 4 to page 38 line 10, and AppX A at pages 3–4.) This is evidenced by financial documentation. (AppX A at pages 3–4 and 6.) I find that Applicant is making a good-faith effort to address this credit card debt.

1.c. Applicant’s past-due debt to Creditor C, in the amount of about $5,033, was written-off as a business tax write-off by Creditor C. (TR at page 38 line 11 to page 40 line 21.) As a result, Applicant declared this write-off as income on her 2016 Federal Income Tax return, as evidenced by that return, and by an Internal Revenue Service Form 1099A. (Answer at pages 6–7.) I find that Applicant has made a good-faith effort to address this debt.

1.d. Applicant has set up a payment plan with Creditor D by which she made an initial, good-faith payment of $631, and monthly payments of $75 towards her $1,890 past due debt. (TR at page 40 line 22 to page 42 line 18, Answer at page 8, and AppX A at pages 7.) This is evidenced by financial documentation. (Answer at page 8, and AppX A at page 7.) I find that Applicant is making a good-faith effort to address this credit card debt.

1.e. and 1.f. Applicant has paid her past-due medical debts with Creditor E totaling about $85. (TR page 42 line 19 to page 43 line 16.) This is evidenced by documentation from Creditor E’s “Debt Collection Agency.” (AppX A at pages 8–10.)

1.g. Applicant has paid her past-due debt with Creditor G for about $28. (TR page 43 line 17 to page 45 line 3.) This is evidenced by documentation from Creditor G. (Answer at page 9.)

1.h. and 1.i. Applicant has paid her past-due medical debts with Creditor H for about $475. (TR page 45 line 4 to page 46 line 8.) This is evidenced by documentation from Creditor H. (Answer at pages 10–16.)

1.j.~1.l. Applicant has set up a payment plan with Creditor J by which she made an initial, good-faith payment of $200, and monthly payments of $100 towards her past- due debts totaling about $993. (TR at page 46 line 9 to page 48 line 1, at page 60 line 15 to page 62 line 4, and Answer at page 17.) This is evidenced by correspondence from Creditor J. (Answer at page 17.) I find that Applicant is making a good-faith effort to address this credit card debt.

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 Executive Order (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 indebtedness. 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:

(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, a death, divorce or separation, clear victimization by predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances; 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 the result of her being fired when she refused to participate in unethical business practices. She has addressed all of her alleged delinquencies. She has demonstrated that future financial problems are unlikely. Mitigation under AG ¶¶ 20(a), 20(b) and 20(c) have 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. Applicant has a distinguished history of working in the defense industry, as shown by seven laudatory letters of recommendation. She obviously performs well at her job.

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.l.: 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

1 I considered the previous Adjudicative Guidelines, effective September 1, 2006, as well as the new 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.