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ISCR 16-01627.h1: Guideline F security clearance hearing, denied (2017) · CASE

ISCR Case 16-01627.h1denied

Case headnote

ISCR Case No. 16-01627.h1

deniedNov 6, 2017· Hon. Matthew E. Malone· hearing

Summary

A 45-year-old executive secretary was denied a security clearance under Guideline F, Financial Considerations, due to unresolved delinquent debts totaling $18,030 across nine separate accounts. The Statement of Reasons specifically cited these nine past-due debts as the basis for concern.

Disqualifying conditions under Guideline F, specifically AG ¶ 19(a) and AG ¶ 19(c), were raised. While mitigating conditions AG ¶ 20(b), AG ¶ 20(c), and AG ¶ 20(d) were considered, they were not sufficient to overcome the security concerns.

The denial was based on the applicant's failure to establish a sufficient record of corrective action. Despite being aware of the government's concerns, the applicant did not contact creditors to resolve her debts, and her financial counseling efforts were deemed nascent and had not yet shown results. The applicant's good work reputation was noted but did not outweigh the financial concerns.

Why the applicant was denied

The applicant did not establish a sufficient record of corrective action regarding her financial problems.
The applicant failed to contact creditors to resolve her debts despite being aware of the government's concerns.
The applicant's financial counseling efforts were nascent and had not yet shown results.

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 ControlThe applicant's debts arose from circumstances beyond her control, but she did not act responsibly under the circumstances.
AG ¶ 20(c)rejectedReceiving Financial CounselingThe applicant's financial counseling efforts were not yet effective.
AG ¶ 20(d)rejectedGood-faith Effort to Repay DebtsThe applicant's payments were only in response to collection efforts and did not demonstrate a reliable record of action.

Key rule quoted

“A person who has access to classified information enters into a fiduciary relationship with the Government based on trust and confidence.”
Department of the Navy v. Egan, 484 U.S. 518 (1988)

Procedural posture

SOR issuedOct 7, 2016
Answer filed—Timely response to SOR.
Hearing heldJun 14, 2017Hearing conducted with both parties present.
Decision dateNov 6, 2017

Cite for

Insufficient Corrective Action Regarding Financial Issues Under Guideline F
Impact of Unresolved Debts on Security Clearance Eligibility
Importance of Demonstrating Financial Stability for Clearance Approval

Editorial summary generated for research. Not legal advice; not a prediction. Verify against the full decision before relying on any quoted language.

From the decision

Facts this decision states, each with the exact sentence it comes from. Descriptive of the record, not an assessment.

Age at decision: 45: “Applicant is 45 years old and works as an executive secretary for the military customer of a defense contractor.”
Tenure: ~3 years: “She has held that position since July 2014 and has a superb reputation in the workplace.”
Delinquent debt cited: $18,030 (on a payment plan): “Under Guideline F, the Government alleged that Applicant owed $18,030 for nine delinquent or past-due debts (SOR 1.a - 1.i).”

Standardized Decision Profile

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

Posture: Decision on RecordDecided: denied

The judge found that the applicant had significant financial issues, including multiple delinquent debts totaling $18,030, which she had not adequately addressed. As a result, the judge ruled against the applicant on all allegations under Guideline F, concluding that the applicant did not mitigate the security concerns related to her financial situation.

The sub-allegation breakdown is part of the Professional plan. See what it includes.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation

Descriptive standardized rendering of a decided public case. 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: ) ) ) [NAME REDACTED] ) ISCR Case No. 16-01627 ) ) ) Applicant for Security Clearance

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

11/06/2017 ______________

STATEMENT OF CASE

______________

MALONE, Matthew E., Administrative Judge:

Applicant has not yet established a sufficient record of corrective action and financial stability in response to her financial problems. Accordingly, she has not mitigated the security concerns about her debts, and her request for a security clearance is denied.

Statement of the Case

On July 22, 2015, Applicant submitted a Questionnaire for National Security Positions (QNSP) to obtain a security clearance required for her employment with a defense contractor. Based on the results of the ensuing background investigation, Department of Defense (DOD) adjudicators could not determine that it is clearly consistent with the interests of national security for Applicant to have a security clearance.1

On October 7, 2016, DOD issued a Statement of Reasons (SOR) alleging facts that raise security concerns under the adjudicative guideline2 for financial considerations (Guideline F). Applicant timely responded to the SOR (Answer) and requested a hearing. I received the case on March 21, 2017, and I convened the requested hearing on June 14, 2017. Department Counsel proffered three items identified as Government Exhibits (Gx.) 1 – 3. Applicant and one witness testified. Applicant also proffered two items identified as Applicant Exhibits (Ax.) A and B.3 I also held the record open after the hearing to allow Applicant to submit additional information. The record closed on June 30, 2017, when I received documents identified as Ax. C – F.4 I admitted into evidence all of the proffered exhibits from both parties, without objection. I received a transcript of the hearing (Tr.) on June 26, 2017.

FINDINGS OF FACT

Under Guideline F, the Government alleged that Applicant owed $18,030 for nine delinquent or past-due debts (SOR 1.a - 1.i). The debts alleged at SOR 1.c – 1.fare for student loans. Applicant admitted all of the SOR allegations. (Answer) In addition to any facts thus established, I make the following additional findings of fact.

Applicant is 45 years old and works as an executive secretary for the military customer of a defense contractor. She has held that position since July 2014 and has a superb reputation in the workplace. Her superiors and peers provided letters of recommendation that extol Applicant’s work ethic, trustworthiness, and reliability. A close friend of the past two years regards her as honest and frugal. (Gx. 1; Ax. A; Ax. F; Tr. 63 - 68)

Applicant grew up in State A. After graduating from high school in 1990, she went to college for a few years, and then worked a variety of jobs before finding a good- paying job at a local factory from 2000 until April 2009. At that time, she left the factory job and was eligible for a two-year re-education program, whereby the state agreed to pay unemployment benefits for two years as long as she studied in a qualified program. In August 2009, Applicant moved to State B, her current state of residence, and returned to school in January 2010 to obtain her associate’s degree in business management. She completed her studies in May 2012. She supported herself and her son5 through State A unemployment benefits and personal savings. Applicant’s unemployment benefits expired in November 2011, much earlier than she expected. (Gx. 1; Tr. 30, 57 - 61)

Applicant began to use credit cards to make ends meet. In 2012, she also withdrew funds from her 401(k) account to make ends meet. By doing so, she incurred a tax penalty which resulted in a tax bill in 2013 she could not afford. Applicant established a repayment plan with federal and state authorities, and completed paying off a state tax debt of about $1,000 in late 2016. She has been paying the IRS $70 monthly since October 2015. As of the hearing, Applicant had not yet filed her federal and state income tax returns for the 2015 and 2016 tax years because she knows she will be unable to pay the anticipated tax bills. Those obligations have arisen through a combination of additional 401(k) withdrawals since 2012 and Applicant’s tax status as a single taxpayer with no deductions or other downward adjustments in her gross income. (Ax. E; Tr. 37 - 45)

Applicant is repaying the debt alleged at SOR 1.bthrough an agreement with the law firm hired to collect the debt. Applicant consented to a plan to pay $100 each month, starting in November 2016. She took that action in response to an aggressive collection effort by the law firm. (Answer; Ax. D; Tr. 29, 33)

Applicant attended a four-year college for a few semesters after graduating from high school in 1990. She obtained the student loan debts alleged in SOR 1.c – 1.fbetween 1990 and 1992. She paid those loans as required until 2012. Applicant has not contacted the creditors holding those accounts. (Gx. 1 – 3; Tr. 30, 34 – 35, 57)

The debts alleged at SOR 1.a and 1.i are for credit card accounts on which Applicant relied to make ends meet. They have been delinquent since 2013 and 2012, respectively. The debt at SOR 1.gwas incurred for dental work in 2011 and has been delinquent since 2013. The debt at SOR 1.hrepresents an unpaid cable television account from 2015. Applicant has not contacted any of the creditors to try to resolve these accounts, despite being interviewed about them by a government investigator in early 2016. (Gx. 1 – 3; Tr. 28 – 29, 35 - 36)

When Applicant moved to State B in 2009, her rent was about $750 a month. The following year it increased to about $1,000. Applicant has moved twice since 2014 to cheaper housing. Since 2015, her monthly rent has been about $650. (Gx. 1; Tr. 24, 52 – 53)

Applicant is able to meet her current monthly obligations (e.g., rent, car note, utilities, etc.), as well as the monthly payments to the IRS and the SOR 1.bcreditor. Applicant also has a medical condition that requires constant medications, but her medical insurance only covers 80 percent of those expenses. A friend occasionally helps pay for Applicant’s food and medications. Applicant has also held a part-time job to supplement her income since July 2013. Applicant estimates she has about $100 remaining each month. At the time of her hearing, Applicant was making $12.42 an hour at her full-time job, but had just received a raise to $16.44 an hour, which will provide her about $640 more each month in gross pay. (Tr. 24, 27, 45 – 53)

Applicant started working with a financial counselor just before her hearing. That person is providing assistance in budgeting, establishing a plan for contacting creditors, and setting up a savings account. (Ax. B; Ax. C; Tr. 56 - 57)

POLICIES

Each security clearance decision must be a fair, impartial, and commonsense determination based on examination of all available relevant and material information,6 and consideration of the pertinent criteria and adjudication policy in the adjudicative guidelines (AG). Decisions must also reflect consideration of the factors listed in ¶ 2(d) of the guidelines. Commonly referred to as the “whole-person” concept, those 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.

The presence or absence of a disqualifying or mitigating condition is not determinative of a conclusion for or against an applicant. However, specific applicable guidelines should be followed whenever a case can be measured against them as they represent policy guidance governing the grant or denial of access to classified information. A security clearance decision is intended only to resolve whether it is clearly consistent with the national interest7 for an applicant to either receive or continue to have access to classified information. The Government bears the initial burden of producing admissible information on which it based the preliminary decision to deny or revoke a security clearance for an applicant. Additionally, the Government must be able to prove controverted facts alleged in the SOR. If the Government meets its burden, it then falls to the applicant to refute, extenuate or mitigate the Government’s case. Because no one has a “right” to a security clearance, an applicant bears a heavy burden of persuasion.8

A person who has access to classified information enters into a fiduciary relationship with the Government based on trust and confidence. Thus, the Government has a compelling interest in ensuring each applicant possesses the requisite judgment, reliability and trustworthiness of one who will protect the national interests as his or her own. The “clearly consistent with the national interest” standard compels resolution of any reasonable doubt about an applicant’s suitability for access in favor of the Government.9

ANALYSIS

Financial Considerations

The Government’s information reasonably raised a security concern about Applicant’s finances. That concern appears at AG ¶ 18, as follows:

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.

More specifically, the record as a whole requires application of the disqualifying conditions at AG ¶¶ 19(a) (inability to satisfy debts) and 19(c) (a history of not meeting financial obligations). Available information documented the SOR allegations that Applicant owes a significant level of past-due or delinquent debt. As of the hearing, Applicant had not addressed most of those debts. I have also considered the following pertinent AG ¶ 20 mitigating conditions:

(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;

(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; and

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

The mitigating condition at AG ¶ 20(a) does not apply. Applicant’s debts are recent and ongoing.

The mitigating condition at AG ¶ 20(b) only partially applies. Applicant’s debts arose from circumstances beyond her control. The benefits on which she relied ceased unexpectedly and Applicant had to make decisions she thought necessary to support her and her son. Nonetheless, AG ¶ 20(b) also requires a demonstration that Applicant acted responsibly under the circumstances. Here, the only action Applicant has taken was responsive; that is, she was obliged to respond to a law firm’s aggressive collection efforts and started a monthly payment plan. In addition, the IRS presented Applicant with a non-negotiable requirement to pay her back taxes. As of the hearing, Applicant had not yet contacted any of her other creditors despite having discussed her debts with an investigator in early 2016. At that point, she was reasonably on notice that the government was concerned about her finances. Applicant did not satisfy the second prong of AG ¶ 20(b).

As to the mitigating condition at AG ¶ 20(c), Applicant has begun working on a plan of actions and milestones with a financial counselor. However, this nascent effort has yet to show results. AG ¶ 20(c) does not apply here.

The mitigating condition at AG ¶ 20(d) also does not apply. As noted in my discussion of AG ¶ 20(b), the only payments Applicant has made regarding the debts listed in the SOR have been in response to IRS and law firm collection efforts. Applicant had not contacted any of her other creditors as of the hearing, and she has yet to establish a reliable record of action to resolve her financial problems. On balance, Applicant did not mitigate the security concerns raised by the Government’s information.

I also have evaluated this record in the context of the whole-person factors listed in AG ¶ 2(d). Applicant’s actions to resolve her debts are not yet sufficient to resolve the doubts about her suitability for access to classified information that have been raised by her financial problems. Because protection of the interests of national security is the principal focus of these adjudications, any remaining doubts must be resolved against the Applicant.

FORMAL FINDINGS

Formal findings 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.i: Against Applicant

CONCLUSION

In light of all of the foregoing, it is not clearly consistent with the interests of national security for Applicant to have access to classified information. Applicant’s request for a security clearance is denied.

MATTHEW E. MALONE Administrative Judge

FOOTNOTES

1 Required by Executive Order 10865, as amended, and by DOD Directive 5220.6 (Directive), as amended.

2 At the time they issued the SOR, DOD adjudicators applied the adjudicative guidelines implemented by the Department of Defense on September 1, 2006. On December 10, 2016, the Director of National Intelligence issued a new version of the adjudicative guidelines, to be effective for all adjudications on or after June 8, 2017. In this decision, I have considered and applied the new adjudicative guidelines. My decision in this case would have been the same under either version.

3 A copy of Department Counsel’s “discovery letter” and a list of the Government’s exhibits also are included as Hearing Exhibits (Hx.) I and II, respectively.

4 Ax. C consists of four pages of information from the financial counseling service used by Applicant; Ax. D consists of six pages of information related to the debt alleged at SOR 1.b; Ax. E consists of three pages of information pertaining to an unalleged tax debt; Ax. F consists of eight pages of character references and job performance information. 5 Applicant is a single mother of a now 22-year-old son. 6 See Directive. 6.3. 7 See Department of the Navy v. Egan, 484 U.S. 518 (1988). 8 See Egan, 484 U.S. at 528, 531.

9 See Egan; AG ¶ 2(b).