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ISCR Case 16-03691.h1 — CASE

ISCR Case 16-03691.h1granted

Case Headnote

ISCR Case No. 16-03691.h1

grantedJul 1, 2016· Hon. Philip J. Katauskas· hearing

Summary

A 38-year-old defense contractor successfully contested the Department of Defense's intent to deny his security clearance under Guideline F, Financial Considerations. The Statement of Reasons (SOR) alleged multiple financial issues, including several debts that had been enrolled in a debt consolidation program. Disqualifying conditions under Adjudicative Guidelines (AG) ¶ 19(a) and AG ¶ 19(c) were initially raised.

The applicant demonstrated significant progress in addressing his financial history. He provided documentation showing he was current on payment plans for some debts and had fully paid off others. Additionally, he established that one alleged debt was a duplicate. The judge applied mitigating conditions AG ¶ 20(c) and AG ¶ 20(d), acknowledging the applicant's active efforts to resolve his financial obligations.

Ultimately, the judge determined that the applicant's financial issues were under control and did not pose a security risk. The applicant's security clearance was GRANTED.

Why the Applicant Prevailed

Applicant enrolled several debts in a debt consolidation program and documented consistent payments.
He is current on payment plans for other debts and has paid off some debts entirely.
The judge found that the applicant's financial issues were under control and did not raise doubts about his reliability.

Conditions Referenced

Disqualifying

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

Mitigating

AG ¶ 20(c)appliedReceived Financial Counseling From a Legitimate Source
AG ¶ 20(d)appliedGood-faith Effort to Repay Overdue Creditors

Key Rule Quoted

“The overall concern is: 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.”

Procedural Posture

SOR issuedDec 30, 2016
Answer filedFeb 2, 2017
Hearing held—Decision based on written record without a hearing.
Decision dateOct 1, 2017

Cite For

Mitigation of Financial Issues Under Guideline F
Evidence of Good-faith Efforts to Resolve Debts
Impact of Financial Counseling 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: granted

The judge found that the applicant mitigated the financial concerns raised under Guideline F by demonstrating a commitment to addressing his debts. The applicant has enrolled in a debt consolidation program, is current on payment plans, and has paid off several debts, leading to a favorable decision for the applicant.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant has enrolled four SOR debts in a debt consolidation program.	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	Documented Financial Counseling Documented Debt Paid in Full
1.b	Applicant documented that he is current on payment plans for the debts alleged in SOR ¶ 1.b.	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.c	Applicant has enrolled four SOR debts in a debt consolidation program.	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	Documented Financial Counseling Documented Debt Paid in Full
1.d	Applicant has enrolled four SOR debts in a debt consolidation program.	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	Documented Financial Counseling Documented Debt Paid in Full
1.e	Applicant documented that he has paid off the debts alleged in SOR ¶ 1.e.	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.f	Applicant documented that he has paid off the debts alleged in SOR ¶ 1.f.	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.g	Applicant documented that he is current on payment plans for the debts alleged in SOR ¶ 1.g.	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.h	specific text not stated in this decision	For Applicant	Unspecified Financial	Unknown	—	—	—
1.i	Applicant established that the debt alleged in SOR ¶ 1.i is a duplicate of the debt alleged in SOR ¶ 1.b. (low confidence)	For Applicant	Unspecified Financial	Unknown	—	—	—
1.j	Applicant has enrolled four SOR debts in a debt consolidation program.	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	Documented Financial Counseling Documented Debt Paid in Full
1.k	Applicant documented that he paid off the debt alleged in SOR ¶ 1.k.	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(c) received/receiving counseling; problem being resolved (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. 16-03691 ) Applicant for Security Clearance )

For Government: Andre M. Gregorian, Esq., Department Counsel For Applicant: Pro se

11/02/2017 ______________

STATEMENT OF CASE

______________

KATAUSKAS, Philip J., Administrative Judge:

Applicant contests the Defense Department’s intent to deny his eligibility for access to classified information. Applicant mitigated security concerns raised by his problematic financial history. Accordingly, this case is decided for Applicant.

Statement of the Case

Applicant completed and submitted a Questionnaire for National Security Positions (SF 86 format) on June 12, 2015. This document is commonly known as a security clearance application. On December 30, 2016, after reviewing the application and the information gathered during a background investigation, the Department of Defense Consolidated Adjudications Facility sent Applicant a statement of reasons (SOR), explaining it was unable to find it was clearly consistent with the national interest to grant him eligibility for access to classified information.1 It detailed the factual reasons for the action under the security guideline known as Guideline F for financial considerations. Applicant answered the SOR on February 2, 2017, and requested a decision based on the written record without a hearing.

On February 27, 2017, Department Counsel submitted a file of relevant material (FORM).2 The FORM was mailed to Applicant on March 6, 2017, and he received it on March 9, 2017. He was given 30 days to file objections and submit material to refute, extenuate, or mitigate the Government’s evidence.3 Applicant responded to the FORM on April 7, 2017, and submitted documents that I have marked as Applicant’s Exhibit A (AE A) (pages 1 through 14). They are admitted into evidence without objection. The case was assigned to me on October 1, 2017.

PROCEDURAL MATTERS

Included in the FORM were five items of evidence, which are marked as Government Exhibits (GE) 1 through 4.4 Exhibits 1, 3, and 4 are admitted into evidence. Exhibit 2 is a report of investigation (ROI) summarizing Applicant’s interview that took place during the August 2015 background investigation. The ROI is not authenticated, as required under ¶ E3.1.20 of the Directive.5 Department Counsel’s written brief includes a footnote advising Applicant that the summary was not authenticated and that failure to object may constitute a waiver of the authentication requirement. The footnote is prominently prefaced with a bolded, upper-case notice to Applicant and flagging for Applicant the importance of the footnote, which then explains the concepts of authentication and waiver. In a case such as this, where Applicant has responded to the FORM, it is fair to conclude that Applicant read the footnote, understood it, and chose not to object to the ROI. The ROI (GE 2) is, therefore, admitted into evidence.

FINDINGS OF FACT

Applicant is 38 years old, married with two children, ages 5 and 16. He is a high school graduate with some college credits. Since December 2015, he has been employed by a defense contractor.6

The SOR alleged 11 delinquent debts totaling $37,234. Applicant has admitted seven of those debts but denied four of them. His answer to the SOR and his response to the FORM explain the status of each debt and how he is addressing them.

Applicant has enrolled four SOR debts in a debt consolidation program.7 Those debts are SOR ¶¶ 1.a, 1.c, 1.d, and 1.j. Applicant documented that: (1) those four debts were enrolled; (2) that he has opened a bank account dedicated solely to making automatic monthly payments on those debts; and (3) he has a track record of those payments being made.8

Applicant documented that he is current on payment plans for the debts alleged in SOR ¶¶ 1.band 1.g.9 He also documented that he has paid off the debts alleged in SOR ¶¶ 1e. and 1.f.10

Applicant established that the debt alleged in SOR ¶ 1.i is a duplicate of the debt alleged in SOR ¶ b., which is already under a payment plan.11 Finally, Applicant documented that he paid off the debt alleged in SOR ¶ 1.k.12

In sum, Applicant has paid off or is paying off all of the non-duplicative debts alleged in the SOR. Law and Policies

It is well-established law that no one has a right to a security clearance.13 As noted by the Supreme Court in Department of the Navy v. Egan, “the clearly consistent standard indicates that security clearance determinations should err, if they must, on the side of denials.”14 Under Egan, Executive Order 10865, and the Directive, any doubt about whether an applicant should be allowed access to classified information will be resolved in favor of protecting national security.

A favorable clearance decision establishes eligibility of an applicant to be granted a security clearance for access to confidential, secret, or top-secret information. An unfavorable clearance decision (1) denies any application, (2) revokes any existing security clearance, and (3) prevents access to classified information at any level.15

There is no presumption in favor of granting, renewing, or continuing eligibility for access to classified information.16 The Government has the burden of presenting evidence to establish facts alleged in the SOR that have been controverted.17 An applicant is responsible for presenting evidence to refute, explain, extenuate, or mitigate facts that have been admitted or proven.18 In addition, an applicant has the ultimate burden of persuasion to obtain a favorable clearance decision.19

In Egan, the Supreme Court stated that the burden of proof is less than a preponderance of evidence.20 The Appeal Board has followed the Court’s reasoning, and a judge’s findings of fact are reviewed under the substantial-evidence standard.21

DISCUSSION

Guideline F - Financial Considerations

Under Guideline F for financial considerations,22 the suitability of an applicant may be questioned or put into doubt when that applicant has a history of excessive indebtedness or financial problems or difficulties. The overall concern is:

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.23

The concern is broader than the possibility that a person might knowingly compromise classified information to obtain money or something else of value. It encompasses concerns about a person’s self-control, judgment, and other important qualities. A person who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information.

In analyzing the facts of this case, I considered the following disqualifying and mitigating conditions or factors:

AG ¶ 19(a) inability to satisfy debts;

AG ¶ 19(c) a history of not meeting financial obligations;

AG ¶ 20(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,

AG ¶ 20(d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts.

During the security clearance process, evidence was developed that showed Applicant had a problematic financial history. That history raised security concerns under AG ¶¶ 19(a) and (c). The next inquiry is whether any potentially mitigating conditions apply.

In his responses to the SOR and the FORM, Applicant demonstrated that he has paid or is in the process of paying his SOR debts. AG ¶¶ 20(c) and (d) apply. The evidence of Applicant’s current financial condition does not raise doubts about his reliability, trustworthiness, good judgment, and ability to protect classified information. In reaching this conclusion, I weighed the evidence as a whole and considered if the favorable evidence outweighed the unfavorable evidence or vice versa. I also gave due consideration to the whole-person concept.24 Accordingly, I conclude that Applicant has met his ultimate burden of persuasion to show that it is clearly consistent with the national interest to grant him eligibility for access to classified information.25

FORMAL FINDINGS

As required by section E3.1.25 of Enclosure 3 of the Directive, I make the following formal findings on the SOR allegations:

Paragraph 1, Guideline F: For Applicant

Subparagraphs 1.a-1.k: For Applicant

CONCLUSION

In light of the record as a whole, it is clearly consistent with the national interest to grant Applicant access to classified information.

Philip J. Katauskas Administrative Judge

FOOTNOTES

1 This action was taken under Executive Order (E.O.) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended, as well as Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive). In addition, the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information (AG), effective within the Defense Department on June 8, 2017, apply here. The AG were published in the Federal Register and codified in 32 C.F.R. § 154, Appendix H (2016). In this case, the SOR was issued under Adjudicative Guidelines effective within the Defense Department on September 1, 2006. Revised Adjudicative Guidelines were issued on December 10, 2016, and became effective on June 8, 2017. My decision and formal findings are made under the revised Guideline F. 2 The file of relevant material consists of Department Counsel’s written brief and supporting documentation, some of which are identified as evidentiary exhibits in this decision. 3 The Defense Office of Hearings and Appeals’ (DOHA) transmittal letter is dated March 6, 2017, and Applicant’s receipt is dated March 9, 2017. The DOHA transmittal letter informed Applicant that he had 30 days after receiving it to submit information. 4 The first item in the FORM is the SOR and Applicant’s Answer. Because the SOR and the Answer are the pleadings in this case, they are not marked as Exhibits. Items 2 through 5 are marked as GE 1 through 4. 5 See generally ISCR Case No. 12-10933 (App. Bd. Jun. 29, 2016) (In a concurring opinion, Judge Ra’anan notes the historical concern about reports of investigation in that they were considered by some to present a heightened problem in providing due process in security clearance cases. Judge Ra’anan raises a number of pertinent questions about using an unauthenticated ROI in a non-hearing case with a pro se applicant.). 6 GE 1; GE 2. 7 That program includes credit counseling. Answer, pp. 7-11. 8 Answer ¶¶ 1.a, 1.c, 1.d, 1.jand pp. 14, 22, and 28; AE A, pp. 7-8. Applicant contends that SOR ¶ 1.a is a duplicate of SOR ¶ 1.h. The record supports his contention. GE 3 shows the debt owed to the original creditor in the same amount as is later owed to the collection agent. GE 4. The amount alleged in SOR ¶ 1.his the high credit, but there is no balance due. GE 4. 9 Answer ¶¶ 1.band 1.gand pp. 23-27; AE A, p. 5. 10 Answer ¶¶ 1.e and 1.fand pp. 28, 23-27, 38; AE A, p. 5. 11 Answer ¶ 1.i. GE 3 and 4. 12 Answer ¶ 1.kand p. 41. 13 Department of Navy v. Egan, 484 U.S. 518, 528 (1988) (“it should be obvious that no one has a ‘right’ to a security clearance”); Duane v. Department of Defense, 275 F.3d 988, 994 (10th Cir. 2002) (no right to a security clearance). 14 484 U.S. at 531. 15 Directive, ¶ 3.2. 16 ISCR Case No. 02-18663 (App. Bd. Mar. 23, 2004). 17 Directive, ¶ E3.1.14. 18 Directive, Enclosure 3, ¶ E3.1.15. 19 Directive, Enclosure 3, ¶ E3.1.15. 20 Egan, 484 U.S. at 531. 21 ISCR Case No. 01-20700 (App. Bd. Dec. 19, 2002) (citations omitted). 22 AG ¶¶ 18, 19, and 20 (setting forth the concern and the disqualifying and mitigating conditions). 23 AG ¶ 18. 24 AG ¶¶ 2(d)(1)-(9) and 2(f)(1)-(6).