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ISCR Case 17-00244.h1 — CASE

ISCR Case 17-00244.h1denied

Case Headnote

ISCR Case No. 17-00244.h1

deniedOct 11, 2017· Hon. Paul J. Mason· hearing

Summary

A 30-year-old sheet metal worker was denied a security clearance due to concerns under Guideline E (Personal Conduct) and Guideline F (Financial Considerations). The denial stemmed from significant unresolved debts totaling $14,651 and a history of falsifying financial information on her e-QIP.

Specifically, the applicant falsified her e-QIP on September 23, 2015, by answering "no" to all financial questions in Section 26. Her debts included a federal tax lien of $7,890 filed by the IRS in June 2013 for tax years 2011-2013, an $1,835 apartment lease balance from a breach of lease, and seven other delinquent debts, including a $38 medical debt. The applicant had previously filed for Chapter 7 bankruptcy in April 2013, discharging $68,164 in liabilities in August 2013, which she attributed to youth and financial irresponsibility.

The judge found that the applicant failed to provide credible evidence of resolving her delinquent debts, and her promises of future financial counseling and debt repayment were unsubstantiated. Her admission to falsifying the e-QIP further raised concerns about her reliability and trustworthiness, leading to the determination that she did not mitigate the security concerns.

Why the Applicant Was Denied

The applicant failed to provide credible evidence of resolving her delinquent debts.
The applicant admitted to falsifying her e-QIP regarding her financial history, which raised concerns about her reliability and trustworthiness.
The applicant's promises to take future actions regarding her debts were deemed insufficient and unsubstantiated.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(c)raisedHistory of Not Meeting Financial Obligations
AG ¶ 16(a)raisedDeliberate Omission, Concealment or Falsification of Relevant Facts

Key Rule Quoted

“The ultimate goal is to reach a fair and impartial decision that is based on sound and prudent judgment.”

Procedural Posture

SOR issuedMar 13, 2017
Answer filedApr 4, 2017
Hearing held—Applicant appeared pro se.
Decision dateOct 11, 2017

Cite For

Insufficient Evidence of Debt Resolution Under Guideline F
Falsification of Financial Information Under Guideline E
Credibility Issues Regarding Applicant's Claims of Future Financial Responsibility

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 E (Personal Conduct) · descriptive summary of a decided case

Posture: Decision on RecordDecided: denied

The judge found against the applicant on the personal conduct concerns, specifically regarding the falsification of her e-QIP. The applicant admitted to answering 'no' to financial questions, including bankruptcy, but contended it was an honest mistake. The judge concluded that the applicant's explanations were not credible and did not mitigate the concerns. Eligibility for access to classified information is denied.

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
2.a	Applicant falsified her e-QIP on September 23, 2015, by answering 'no' to all the financial questions under Section 26 of the security form.	Against Applicant	Falsification Security FormFOUND DELIBERATE	Financial	Admitted	(a) deliberate omission, concealment, or falsification on a security form	—	—

Descriptive standardized rendering of a decided public case (Guideline E). The verbatim source decision is shown in full below.

Standardized Decision Profile

SEAD-4 Guideline F · descriptive summary of a decided case

Posture: Decision on RecordDecided: denied

The judge found multiple financial concerns under Guideline F, including a federal tax lien and various unresolved debts totaling $14,651. Despite the applicant's claims of working on her debts and intentions to seek financial counseling, the judge determined that these efforts were not credible and did not mitigate the security concerns, resulting in a decision against the applicant.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	The second largest listed debt of $1,835 represents an apartment lease balance that Applicant owes for breach of a lease. $1,835	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b–1.g	6 sub-charges — specific text not stated in this decision (against the applicant). (low confidence)	Against Applicant			—	—	—
1.h	The other seven delinquent debts listed in the SOR, including a medical debt for $38. $38	Against Applicant	Medical Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.i	the federal tax lien (the largest delinquent debt) amounting to $7,890 was filed by the Internal Revenue Service (IRS) in June 2013 to recover delinquent taxes that Applicant owes for federal tax years 2011, 2012, and 2013. $7,890	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.j	Applicant explained that her youth and financial irresponsibility led to her filing a Chapter 7 bankruptcy petition in April 2013, and having $68,164 in liabilities discharged in August 2013. $68,164	Against Applicant	Bankruptcy Filing	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—

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. 17-00244 ) ) Applicant for Security Clearance )

For Government: Robert B. Blazewick, Esq., Department Counsel For Applicant: Pro se

10/11/2017 ______________

STATEMENT OF CASE

______________

MASON, Paul J., Administrative Judge:

Applicant’s unsupported statements that she is working on her debts, that she plans to take out a loan from her retirement account, and that she intends to enroll in financial counseling in the future does not mitigate the security concerns presented by the financial considerations guideline. She has not overcome the personal conduct concerns either. Eligibility for access to classified information is denied.

Statement of the Case

On September 23, 2015, Applicant signed and certified an Electronic Questionnaires for Investigations Processing (e-QIP). (Item 3) She was interviewed by an investigator from the Office of Personnel Management (OPM) on June 23, 2016. (PSI) (Item 6) A second telephone interview of Applicant was conducted on September 20, 2016. (item 6) On March 13, 2017, the Department of Defense (DOD) issued a Statement of Reasons (SOR) detailing security concerns under financial considerations (Guideline F). The action was taken under Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) dated June 8, 2017.

Applicant furnished her notarized answer to the SOR on April 4, 2017. A copy of the Government’s File of Relevant Material (FORM), the Government’s evidence in support of the allegations of the SOR, was sent to Applicant on May 17, 2017. She received the FORM on May 24, 2017, and was instructed to file objections or submit additional information within 30 days of receiving the FORM. On June 15, 2017, Applicant’s handwritten response was forwarded to me without objection, and has been entered into evidence.

Evidentiary Rulings

In a footnote on the second page of the FORM, Applicant was advised she could make corrections to the June 2016 PSI to improve the exhibit’s clarity and accuracy. Alternatively, she was advised that since the entire PSI was unauthenticated, she could object to the exhibit and it would not be admitted into evidence. Applicant did not object, and the June 2016 PSI is entered into the evidence.

FINDINGS OF FACT

The SOR alleges nine debts and a Chapter 7 bankruptcy discharge under the financial considerations guideline. The debts total $14,651. The debts became delinquent between June 2013 and October 2015. Applicant admitted the listed debts and the bankruptcy discharge. The SOR alleges under the personal conduct guideline that she falsified her e-QIP on September 23, 2015, by answering “no” to all the financial questions under Section 26 of the security form. Applicant admitted the falsification, but then contended she made an honest mistake. Next, she indicated that she knew the company was going to check and learn about the bankruptcy. The listed debts in the SOR are based on a credit report dated October 2016, Applicant’s June 2016 PSI, her answer to the SOR, and her response to the FORM, admitting all the listed debts and the August 2013 bankruptcy discharge.

Applicant is 30 years old. She married in March 2016. She has a four-year-old daughter. Since February 2007, she has been employed as a sheet metal worker for a defense contractor. She took some college courses in 2011, but did not receive a degree.

Financial Considerations

In her June 2013 PSI, Applicant explained that her youth and financial irresponsibility led to her filing a Chapter 7 bankruptcy petition in April 2013, and having $68,164 in liabilities discharged in August 2013. (SOR ¶ 1.j) The accounts discharged included credit cards, “payday loans,” an installment car loan, and a car rental account. Applicant’s parents paid for the bankruptcy in order for her to get a fresh start on her finances. Applicant intended to research the delinquent accounts that were not discharged in the 2013 bankruptcy and pay the balances due. Though Applicant indicated she never had financial or credit counseling, based on familiarity with the United States Bankruptcy Code, some kind of financial counseling is mandated by the Code in order to file bankruptcy. (Item 5, 6)

In her June 2016 PSI, she explained that the federal tax lien (the largest delinquent debt) amounting to $7,890 (SOR ¶ 1.i) was filed by the Internal Revenue Service (IRS) in June 2013 to recover delinquent taxes that Applicant owes for federal tax years 2011, 2012, and 2013. She claimed she was making plan payments of $158 a month to the IRS. However, she indicated that she was unaware that a federal tax lien was filed against her. In her June 2017 response to the FORM, and as discussed below, she stated that she was trying to arrange a payment plan with the IRS. (Item 6) Without documentary support verifying a payment plan, I find the lien is not being resolved.

The second largest listed debt of $1,835 represents an apartment lease balance that Applicant owes for breach of a lease (SOR ¶ 1.a). In December 2013, Applicant broke the apartment lease and moved to her sister-in-law’s residence to take advantage of reduced rent. She claimed that two days before the PSI, the landlord-creditor proposed a payment plan of $200 a month which she agreed to pay, but had not notified the landlord. She did not know when the plan was to begin. (Item 6) The account is unresolved.

The other seven delinquent debts listed in the SOR, including a medical debt for $38 (SOR ¶ 1.h), are unresolved. Applicant’s repeated statements in her answer of working to pay the debts off are not credible because they are not supported by documentation showing she paid the debt or made a payment under payment plan toward satisfaction of the debt. Similarly, her statements in her June 2017 response to the FORM that she has accepted or will accept settlement offers, are not credible either.

On the second page of Applicant’s June 2017 response to the FORM, she stated an intention to withdraw a loan from her retirement account in 2018 to pay off all the listed debts. She intends to enroll in a financial counseling program. Her claim that she was negotiating a payment plan with the IRS contradicts her June 2016 and April 2017 statements that she was already participating in a payment plan.

Personal Conduct

Applicant certified an e-QIP on September 23, 2015. She answered “no” to all financial questions under Section 26 - Financial Record, including bankruptcy in the last seven years. In her September 2016 telephone PSI, she claimed that she answered “yes” to the bankruptcy question and did not know why a “no” answer appeared next to the question. In her April 2017 answer to the SOR, she admitted the falsification, but believed it was an honest mistake and contended that she must have “accidentally checked no.” In the next sentence, Applicant explained that she was fully aware that an ensuing investigation would confirm the bankruptcy. She did not explain why she did not disclose the 2013 tax lien (SOR ¶ 1.i) or SOR ¶¶ 1.a, 1.g, and 1.h. The other listed debts do not apply to the personal conduct allegation as they became delinquent on or after September 23, 2015, the date Applicant certified and signed her e-QIP. (Answer to SOR)

POLICIES

When evaluating an applicant's suitability for a security clearance, the administrative judge must consider the guidelines in the AG. Each guideline lists potentially disqualifying conditions and mitigating conditions that are useful in evaluating an applicant's eligibility for access to classified information.

The administrative judge's ultimate goal is to reach a fair and impartial decision that is based on sound and prudent judgment. The decision should also include a careful, thorough evaluation of a number of general factors known as the "whole-person concept" that brings together all available, reliable information about the person, past and present, favorable and unfavorable, in making a decision. 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 the potential, rather than actual, risk of compromise of classified information.

Under Directive ¶ E3.l.14., the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.l.l5., the applicant is responsible for presenting "witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by applicant or proven by Department Counsel. . . ." The applicant bears the ultimate burden of persuasion in demonstrating that he warrants a favorable security clearance decision.

ANALYSIS

Financial Considerations

The security concern for financial considerations is set forth in AG ¶ 18:

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. 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.

A person who holds a security clearance has a fiduciary responsibility to comply with all rules and regulations associated with the safeguarding of classified information. This fiduciary duty extends to an applicant’s management of her finances. Common sense and sound judgment should motivate a person seeking a security clearance to responsibly manage her financial obligations by regularly paying voluntarily incurred debts as they become due. When she encounters financial problems, she should seek assistance from her employer or an outside financial counseling organization.

The disqualifying conditions under AG ¶ 19 are:

(a) inability to satisfy debts; and

(c) a history of not meeting financial obligations. Based on delinquent debt information derived from the Government 2016 credit report, Applicant’s answer to the SOR and her response to the FORM, Applicant incurred delinquent debts between June 2013 and October 2015. When the SOR was issued in March 2017, Applicant owed $14,651 and still owes that amount. Her history of financial problems is accentuated by a Chapter 7 bankruptcy discharge in August 2013, followed by accrual of additional delinquent debt. AG ¶¶ 19(a) and 19(c) apply

Four mitigating conditions under AG ¶ 20 are potentially pertinent:

(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 reliability, trustworthiness, and 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 identify 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; and

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

After carefully considering the potential mitigating conditions, I conclude that none apply. All of Applicant’s listed debts are still delinquent. The FORM contains no evidence of unanticipated circumstances causing or contributing to Applicant’s financial problems. While she received mandated financial counseling, there is no indication that the counseling was beneficial as Applicant has accumulated more delinquent debt after receiving a Chapter 7 discharge of more than $68,000 in liabilities in August 2013. Her promise to participate in additional financial counseling in the future is not mitigating. She provided no evidence to support a conclusion that she is making a good-faith effort to resolve her debts. Her promise to take out a loan from her retirement account in the future, just like her promise to take financial counseling, represent promises to act in the future and do not mitigate her overall inaction heretofore. AG ¶¶ 20(a)-20(d) do not apply.

Personal Conduct

The security concern for personal conduct is set forth in AG ¶ 15:

Conduct involving questionable judgment, lack of candor, dishonesty, or unwillingness to comply with rules and regulations can raise questions about an individual’s reliability, trustworthiness and ability to protect classified information. Of special interest is any failure to provide truthful and candid answers during the national security investigative or adjudicative processes. The following will normally result in an unfavorable national security eligibility determination, security clearance action, or cancellation of further processing for national security eligibility: (15(a)and (b)) omitted. The disqualifying condition under AG ¶ 16 is:

(a) deliberate omission, concealment or falsification of relevant facts from any personnel security questionnaire, personal history statement, or similar form used to conduct investigations, determine employment qualifications, award benefits or status, determine security clearance eligibility or trustworthiness, or award fiduciary responsibilities.

When Applicant completed the e-QIP in September 2015, she did not disclose her 2013 bankruptcy, her 2013 federal tax lien, or her two medical debts. While she may have forgotten about the smaller medical debts, her array of contradictory explanations for omitting the bankruptcy and federal tax lien are not credible. AG ¶ 16(a) applies.

The mitigating conditions under AG ¶ 17 are:

(a) the individual made prompt good-faith efforts to correct the omission, concealment, or falsification before being confronted with the facts;

(c) the offense was so minor, or so much time has passed, or the behavior is so infrequent, or it happened under such unique circumstances that it is unlikely to recur and does not cast doubt on the individual’s reliability, trustworthiness, or good judgment; and

(d) the individual has acknowledged the behavior and obtained counseling to change the behavior or taken other positive steps to alleviate stressors, circumstances, or factors that caused untrustworthy, unreliable or other inappropriate behavior, and such behavior is unlikely to recur.

None of the mitigating conditions apply. Applicant never voluntarily informed the Government about her 2013 bankruptcy and federal tax problems until confronted with them by the OPM investigator. Her falsification of the 2013 federal lien ($7,890) was significant. The 2013 Chapter 7 bankruptcy discharge, which eliminated more than $68,000 in liabilities, was a substantial event, giving Applicant a fresh start on her finances. While she admitted the falsification, her explanations attempt to minimize her intent to hide relevant information from the Government about her financial history. An applicant seeking a security clearance is required to be candid during all phases of the security investigation.

WHOLE PERSON CONCEPT

I have examined the evidence under the disqualifying and mitigating conditions of the financial considerations and personal conduct guidelines. I have also weighed the circumstances within the context of nine variables of the whole-person concept. In evaluating the relevance of an individual's conduct, the administrative judge should consider the following factors listed in 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 the participation was 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). The final security clearance decision must be an overall commonsense judgment based upon careful consideration of the specific guidelines, each of which is to be evaluated in the context of the whole person. (AG ¶ 2(c))

In June 2013, a federal tax lien was filed against Applicant. In August 2013, she received a Chapter 7 discharge of more than $68,000 in liabilities. After her 2013 discharge, Applicant incurred more delinquent debt. She has presented no evidence of paying the federal tax lien or the other debts listed in the SOR. Her deliberate concealment of her bankruptcy and federal tax lien, shows poor judgment and untrustworthiness. Having weighed all the evidence in light of the specific conditions and the whole-person concept, Applicant has not mitigated the security concerns arising from the guidelines for financial considerations and personal conduct. See AG ¶ 2(a)(1) through AG ¶ 2(a)(9).

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): AGAINST APPLICANT

Subparagraphs 1.a-1.j: Against Applicant

Paragraph 2 (Guideline E): AGAINST APPLICANT

Subparagraph 2.a: Against Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is not clearly consistent with national interest to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is denied.

Paul J. Mason Administrative Judge

FOOTNOTES

This case was decided using the new guidelines which became effective on June 8, 2017. These guidelines superseded the former guidelines which had been in effect since September 1, 2006. My decision in this case would be the same under the 2006 or 2017 guidelines.