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ISCR Case 16-03319.h1 — CASE

ISCR Case 16-03319.h1denied

Case Headnote

ISCR Case No. 16-03319.h1

deniedMar 15, 2018· Hon. Richard A. Cefola· hearing

Summary

A 58-year-old defense contractor employee was denied a security clearance under Guideline F (Financial Considerations) due to significant delinquent student loans. The applicant admitted to owing approximately $79,000 in student loans, with specific allegations also noting past-due debts to Creditor C ranging from about $971 to $1,149.

The applicant attributed his financial difficulties to unemployment and a medical emergency. However, he only began to address these debts after receiving the Statement of Reasons. The judge found that the applicant's financial problems, particularly the past-due student loans, had gone unaddressed for about 20 years.

This prolonged inaction indicated a lack of good-faith effort to repay overdue creditors. Despite the application of mitigating conditions, the judge determined there was insufficient evidence of the applicant's commitment to resolving his debts, leading to the denial of the security clearance.

Why the Applicant Was Denied

The applicant has significant delinquent student loans totaling about $79,000, which he only began to address after receiving the SOR.
The applicant's financial problems, particularly his past-due student loans, went unaddressed for about 20 years, indicating a lack of good-faith effort to repay overdue creditors.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(b)raisedUnwillingness to Satisfy Debts Regardless of the Ability to Do So
AG ¶ 19(c)raisedHistory of Not Meeting Financial Obligations

Mitigating

AG ¶ 20(a)rejectedBehavior Happened Long Ago or Unlikely to RecurThe applicant's financial issues are recent and ongoing.
AG ¶ 20(b)rejectedConditions Largely Beyond the Person's ControlWhile the applicant cited unemployment and a medical emergency, he did not address debts for many years.
AG ¶ 20(d)rejectedGood-faith Effort to Repay Overdue CreditorsThe applicant only began addressing debts after receiving the SOR.

Key Rule Quoted

“Any doubt concerning personnel being considered for national security eligibility will be resolved in favor of national security.”

Procedural Posture

SOR issuedDec 5, 2016
Answer filedFeb 13, 2017
Hearing heldApr 18, 2017
Decision dateMar 15, 2018

Cite For

Denial of Security Clearance Due to Unresolved Financial Obligations Under Guideline F
Lack of Good-faith Effort to Address Significant Debts
Impact of Long-term Financial Issues on Security Clearance Eligibility

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: denied

The judge found significant financial concerns under Guideline F due to the applicant's substantial past-due student loans totaling approximately $79,000, which had gone unaddressed for about 20 years. Although the applicant settled two smaller debts, the overall financial situation was deemed insufficiently mitigated, leading to a denial of the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant admits that he has delinquent student loans totaling about $79,000. $79,000	Against 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	—	—
1.b	Applicant admits that he has delinquent student loans totaling about $79,000. $79,000	Against 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	—	—
1.c	These allegations are one and the same alleged past-due debt to Creditor C for about $971~$1,149. $1,000	For Applicant	Unspecified Financial	Denied	—	—	Documented Debt Paid in Full
1.d	These allegations are one and the same alleged past-due debt to Creditor C for about $971~$1,149. $1,000	For Applicant	Unspecified Financial	Denied	—	—	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. 16-03319 ) ) Applicant for Security Clearance )

For Government: Andrew Henderson, Esq., Department Counsel For Applicant: Pro se

March 15, 2018 ______________

STATEMENT OF CASE

______________

CEFOLA, Richard A., Administrative Judge:

Statement of the Case

On December 5, 2016, 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 February 13, 2017, and requested a hearing before an administrative judge. (Answer.) The case was assigned to me on March 16, 2017. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on March 16, 2017, scheduling the hearing for April 18, 2017. The hearing was convened as scheduled. The Government offered Exhibits (GXs) 1 through 5, which were admitted into evidence. Applicant testified on his own behalf and presented documents, which I marked Applicant’s Exhibits (AppXs) A through P, and admitted into evidence. The record was left open until May 25, 2017, for receipt of additional documentation. On May 25, 2017, Applicant offered AppXs Q~CC, which were also admitted into evidence. DOHA received the transcript of the hearing (TR) on April 26, 2017.

FINDINGS OF FACT

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

Applicant is a 58-year-old employee of a defense contractor. (GX 1 at page 5.) He has been employed with the defense contractor since November of 2014. (GX 1 at pages 12–13.)

Guideline F – Financial Considerations

1.a. and 1.b. Applicant admits that he has delinquent student loans totaling about $79,000. (AppX B at page 1.) These student loans were incurred about 20 years ago, when Applicant attended college from 1994–1997. (TR at pages 19 line 24 to page 20 line 13, at page 24 line 24 to page 37 line 18, at page 38 line 11 to page 50 line 5, and GX 1 at pages 11–12.) He attributes this delinquency to periods of unemployment or underemployment from the time of his graduation until his current employment in 2014, and to a hospitalization in November of 2016. (Id., and AppX M at page 4.) However, despite being gainfully employed since 2014, Applicant did not start to address his student loans until after receipt of the SOR. (AppXs A, B and O.) As of May 2017, Applicant paid $1,878 towards the debt, $1,569 of which were the result of “IRS Offset(s).” I do not find this to be a good-faith effort to address this substantial past-due indebtedness. These allegations are found against Applicant.

1.c. and 1.d. These allegations are one and the same alleged past-due debt to Creditor C for about $971~$1,149. (TR at page 20 line 14 to page 24 line 23, and AppX C and D.) Applicant has settled and paid this debt, as evidenced by documentation from Creditor C and by Applicant’s bank records. (AppX C.) These allegations are found for Applicant.

POLICIES

When evaluating an applicant’s national security eligibility, 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 national security eligibility. 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 national security eligibility 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. Directive ¶ E3.1.15 states 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. Three are potentially applicable in this case:

(a) inability to satisfy debts;

(b) unwillingness to satisfy debts regardless of the ability to do so; and

Applicant had significant past-due student-loan debts that he has only recently begun to address. 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;

(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;

(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;

(f) the affluence resulted from a legal source of income; 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.

Although Applicant can attribute his very substantial past-due indebtedness to employment difficulties and an unexpected medical emergency; his financial problems, particularly his past-due student loans, went unaddressed for about 20 years. Only after receipt of the SOR did Applicant decide to address them. This is not a good-faith effort to repay overdue creditors. Mitigation under AG ¶¶ 20(a)~20(d) has not 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.

I considered the potentially disqualifying and mitigating conditions in light of all facts and circumstances surrounding this case. I have incorporated my comments under Guideline F in my whole-person analysis. It is noted that Applicant is well respected in the workplace. (AppXs X~CC.)

Overall, the record evidence leaves me with questions and doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant failed to mitigate 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: AGAINST APPLICANT

Subparagraph 1.a: Against Applicant Subparagraph 1.b: Against Applicant Subparagraph 1.c: For Applicant Subparagraph 1.d: For Applicant

CONCLUSION

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

________________________ 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.