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ISCR Case 16-02237.h1 — CASE

ISCR Case 16-02237.h1granted

Case Headnote

ISCR Case No. 16-02237.h1

grantedDec 5, 2017· Hon. Gregg A. Cervi· hearing

Summary

A 50-year-old systems engineer, employed by a defense contractor, was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The applicant had accumulated approximately $16,000 in delinquent debts, with six accounts placed in collection. Two significant debts accounted for about $15,600 of this total.

These financial difficulties stemmed from a job loss in March 2013 due to federal budget cuts affecting government contractors. During this period, his home was sold in a short-sale, and he relinquished his vehicle to repossession. He subsequently entered a payment agreement with the credit union for the repossessed vehicle, making regular monthly payments since June 2016. Additionally, a large tuition debt to a truck driving school was settled and paid in full in February 2017.

The clearance was granted because the applicant successfully resolved all delinquent debts through payments or negotiated plans. He has maintained employment since January 2016, demonstrating a positive cash flow and financial stability. Sufficient time has passed without new delinquencies, indicating he has established control over his finances.

Why the Applicant Prevailed

The applicant resolved all delinquent debts through payments or negotiated plans.
He has been employed since January 2016 and has a positive cash flow.
Sufficient time has passed without new delinquencies, indicating control over his finances.

Conditions Referenced

Disqualifying

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

Mitigating

AG ¶ 20(a)appliedBehavior Happened Long Ago or Infrequently
AG ¶ 20(b)appliedConditions Largely Beyond the Person's Control
AG ¶ 20(d)appliedGood-faith Effort to Repay Overdue Creditors

Key Rule Quoted

“An administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision.”

Procedural Posture

SOR issuedSep 15, 2016
Answer filedSep 28, 2016
Hearing heldApr 5, 2017
Decision dateDec 5, 2017

Cite For

Resolution of Financial Delinquencies Under Guideline F
Demonstrating Financial Stability After Job Loss
Application of Whole-person Concept in Security Clearance Decisions

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 resolved all delinquent debts and demonstrated satisfactory control of his finances, leading to a decision to grant eligibility for access to classified information. The applicant's past financial issues were deemed unlikely to recur, and he was considered financially sound at the time of the decision.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	delinquent on six debts, all of which were placed in collection	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(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	Documented Debt Paid in Full
1.b	two debts were significant, totaling about $15,600 out of approximately $16,000 in total delinquencies $15,600	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(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	Documented Debt Paid in Full
1.c	lost his job in March 2013 due to federal budget cuts which impacted federal government contractors	For Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability	(b) conditions largely beyond the person’s control; acted responsibly	Documented Financial Event Outside Control
1.d	his home was sold in a short-sale in lieu of foreclosure, and he relinquished his vehicle to repossession	For Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability	(b) conditions largely beyond the person’s control; acted responsibly	Documented Financial Event Outside Control
1.e	he agreed to a payment schedule to the credit union that repossessed his vehicle, and has been repaying the amount owed through regular monthly payments since June 2016	For Applicant	Unspecified Financial	Admitted	—	(d) good-faith effort to repay or otherwise resolve debts	Documented Payment Plan with Creditor
1.f	his other large debt was for tuition owed to a truck driving school. He settled the debt in February 2017 and paid the agreed settlement in full	For Applicant	Unspecified Financial	Admitted	—	(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. 16-02237 ) Applicant for Security Clearance )

For Government: Ross Hyams, Esq., Department Counsel For Applicant: Pro se

12/05/2017 ______________

STATEMENT OF CASE

______________

CERVI, Gregg A., 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 completed a Questionnaire for National Security Positions (SF 86)1 on January 4, 2016. On September 15, 2016, the Department of Defense Consolidated Adjudications Facility (DOD CAF) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guideline F, financial considerations.2 Applicant responded to the SOR on September 28, 2016, and requested a hearing before an administrative judge. The Defense Office of Hearings and Appeals issued a notice of hearing on March 9, 2017, and the hearing was convened on April 5, 2017. Government Exhibits (GE) 1 through 5 were admitted in evidence without objection.3 Applicant testified and submitted Applicant’s exhibits (AE) A through C. Post-hearing, Applicant Exhibits (AE) D was admitted without objection. DOHA received the hearing transcript (Tr.) on April 14, 2017.

FINDINGS OF FACT

Applicant is a 50-year-old systems engineer employed by a defense contractor since January 2016. He is a high school graduate and has had some college studies. He was married in 1990 and divorced in 2001. He has two children that live in another state with his ex-spouse.

The SOR alleges Applicant is delinquent on six debts, all of which were placed in collection. Only two debts were significant, totaling about $15,600 out of approximately $16,000 in total delinquencies. He admitted the SOR allegations and provided some explanations.

Applicant lost his job in March 2013 due to federal budget cuts which impacted federal government contractors. He was not rehired until January 2016. During this period, his home was sold in a short-sale in lieu of foreclosure, and he relinquished his vehicle to repossession and incurred some other debts due to an inability to meet his financial obligations. Once he recovered his job, he agreed to a payment schedule to the credit union that repossessed his vehicle, and has been repaying the amount owed through regular monthly payments since June 2016. His other large debt was for tuition owed to a truck driving school. He settled the debt in February 2017 and paid the agreed settlement in full. The remaining SOR debts have been resolved through payments.

Applicant has about $1,200 in a monthly net remainder after paying monthly expenses, and has savings of about $5,700.

Law and Policies

The Director of National Intelligence (DNI) issued revised adjudicative guidelines (AG) in a Security Executive Agent Directive, effective on June 8, 2017. These AGs are applicable to this decision.

“[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.

National security eligibility 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 a person’s stability, trustworthiness, reliability, discretion, character, honesty, and judgment. AG ¶ 1(b).

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; see AG ¶ 1(d).

ANALYSIS

Financial Considerations

The security concern 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.

The guideline notes several conditions that could raise security concerns under AG ¶ 19. The relevant disqualifying conditions under AG ¶ 19 include:

(a) inability to satisfy debts; and

Applicant’s admissions and the documentary evidence supporting the SOR allegations are sufficient to establish the disqualifying conditions.

Conditions that could mitigate the financial considerations security concerns are provided under AG ¶ 20. The following mitigating conditions are potentially relevant:

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

(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.

Applicant incurred delinquent debts after losing his job. After being rehired, he resolved all of the SOR debts through payments or a negotiated plan with regular payments. He has been employed in his current position since January 2016, and took sufficient action to resolve his debts. He has a positive cash flow and has been accumulating a savings account buffer. Sufficient time has passed with no new delinquencies to suggest that he has satisfactory control of his finances and that additional delinquencies are unlikely to recur. AG ¶¶ 20 (a), (b), and (d) apply.

Applicant’s resolved debts and current financial status leave me without doubts about his overall financial condition and ability to face his financial responsibilities. His past financial delinquencies no longer cast doubt on his current reliability, trustworthiness, and good judgment.

WHOLE PERSON CONCEPT

Under AG ¶¶ 2(a), 2(c), and 2(d), the ultimate determination of whether to grant national security eligibility must be an overall commonsense judgment based upon careful consideration of the guidelines and the 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). Although adverse information concerning a single criterion may not be sufficient for an unfavorable eligibility determination, the individual may be found ineligible if available information reflects a recent or recurring pattern of questionable judgment, irresponsibility, or unstable behavior. AG ¶ 2(e).

I considered all of the potentially disqualifying and mitigating conditions in light of all the facts and circumstances surrounding this case. I have incorporated my findings of fact and comments under Guideline F in my whole-person analysis. Applicant has taken sufficient action to resolve his financial delinquencies, and is currently financially sound.

Accordingly, I conclude he has carried his burden of showing that it is clearly consistent with the national security interests of the United States to grant him eligibility for access to classified information.

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 – 1.f: 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.

_______________________ Gregg A. Cervi Administrative Judge

FOOTNOTES

1 Also known as a Security Clearance Application (SCA).

2 The action was taken 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 (Directive) (January 2, 1992), as amended; and the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information (AG), implemented by the DOD on September 1, 2006. 3 DC submitted the “discovery letter” dated June 15, 2016 and sent to Applicant, which was admitted as Hearing Exhibit (HE) 1.