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ISCR Case 17-00468.h1 — CASE

ISCR Case 17-00468.h1denied

Case Headnote

ISCR Case No. 17-00468.h1

deniedJan 2, 2018· Hon. Francisco Mendez· hearing

Summary

A 54-year-old military veteran was denied a security clearance under Guideline F (Financial Considerations) due to significant unresolved financial issues. The applicant accumulated approximately $75,000 in delinquent debt after a Chapter 7 bankruptcy discharge in 2006, including $60,000 in student loans and about $15,000 in other past-due obligations. In 2012, a creditor secured a $7,800 judgment and wage garnishment against him, which was the only debt resolved, and only through court action.

The applicant's financial problems began around 2011 after leaving employment as a security guard under adverse circumstances, leading to unemployment until December 2014. Despite being employed since January 2015, he failed to demonstrate responsible financial management or make good-faith efforts to resolve his outstanding debts, receiving numerous collection notices.

The denial was based on the accumulation of substantial delinquent debt post-bankruptcy, the failure to take responsible action to address these debts despite current employment, and the lack of sufficient evidence to establish any mitigating conditions. These factors raised concerns about the applicant's reliability, judgment, and ability to follow rules and regulations for safeguarding classified information.

Why the Applicant Was Denied

The applicant accumulated a substantial amount of delinquent debt after receiving a Chapter 7 bankruptcy discharge in 2006.
Despite gainful employment since January 2015, the applicant has not taken responsible action to address his past-due debts.
The applicant did not provide sufficient evidence to establish any mitigating conditions regarding his financial situation.

Conditions Referenced

Disqualifying

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

Key Rule Quoted

“Individuals applying for a security clearance are not required to be debt free.”

Procedural Posture

SOR issuedMar 21, 2017
Answer filedMay 22, 2017Applicant requested a determination on the administrative record.
Hearing held—Decision based on written record.
Decision dateJan 2, 2018

Cite For

Failure to Mitigate Financial Issues Under Guideline F
Impact of Unresolved Debts on Security Clearance Eligibility
Burden of Proof on Applicants to Demonstrate 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 F · descriptive summary of a decided case

Posture: Decision on RecordDecided: denied

The judge found that the applicant had accumulated a significant amount of delinquent debt, including approximately $60,000 in student loans, after receiving a Chapter 7 bankruptcy discharge in 2006. Despite being employed since January 2015, the applicant failed to take responsible action to address his financial obligations, leading to a denial of his security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant accumulated a substantial amount of past-due debt, including $60,000 in delinquent student loans. $60,000	Against Applicant	Student Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	Applicant incurred approximately $75,000 of delinquent debt after receiving a Chapter 7 discharge in 2006. $75,000	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	Applicant defaulted on a significant amount of delinquent debt, including about $15,000 in other delinquent debt. $15,000	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	In 2012, one of Applicant’s creditors secured a $7,800 judgment and wage garnishment against him. $7,800	Against Applicant	Judgment Against Applicant	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	Applicant has yet to take responsible action to address and resolve his past-due debts.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	Applicant received collection notices from many of the creditors for the delinquent accounts listed on the SOR.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.g	Applicant's only resolved debt is one where the creditor was forced to seek a court order.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.h	Applicant's financial problems began in approximately 2011, when he left his employment as a security guard at an airport under adverse circumstances.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.i	Applicant was unemployed from approximately October 2011 to about December 2014.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.j	Applicant did not provide sufficient evidence to establish any of the mitigating conditions.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.k	Applicant's inability or unwillingness to responsibly address his delinquent accounts raises unmitigated security concerns.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.l	Applicant's financial obligations leave doubts and concerns about his ability and willingness to follow rules and regulations for the proper handling and safeguarding of classified information.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.m	Applicant's financial situation raises questions about his reliability, trustworthiness, and ability to protect classified or sensitive information.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.n	Applicant's 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.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.o	The conditions that resulted in the financial problem were largely beyond the person's control and the individual acted responsibly under the circumstances.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.p	The individual has received or is receiving financial counseling for the problem and there are clear indications that the problem is being resolved or is under control.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.q	The individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts.	Against Applicant	Unspecified Financial	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: ) ) REDACTED ) ISCR Case No. 17-00468 ) ) Applicant for Security Clearance

For Government: Tara R. Koroian, Esq., Department Counsel For Applicant: Pro se

01/02/2018 ______________

STATEMENT OF CASE

______________

MENDEZ, Francisco, Administrative Judge:

Applicant did not present sufficient evidence to mitigate security concerns raised by his financial situation. After receiving a Chapter 7 bankruptcy discharge in 2006, Applicant accumulated a substantial amount of past-due debt, including $60,000 in delinquent student loans. Despite gainful employment since January 2015, he has yet to take responsible action to address and resolve his past-due debts. Clearance is denied.

Statement of the Case

On March 21, 2017, the Department of Defense (DoD) sent Applicant a Statement of Reasons (SOR) alleging security concerns under the financial considerations guideline. Specifically, the SOR alleges that Applicant incurred approximately $75,000 of delinquent debt after receiving a Chapter 7 discharge in 2006.

On May 22, 2017, Applicant answered the SOR. He admitted the SOR allegations and requested a determination on the administrative (written) record.

On June 30, 2017, Department Counsel sent Applicant a file of (allegedly) relevant material (FORM). With the FORM, Department Counsel forwarded to Applicant six exhibits, which were pre-marked Items 1 – 6, that the Government offers for admission into the record. Applicant submitted a Response to the FORM. With his Response, Applicant submitted a number of documents for the record. Applicant’s Response and the accompanying documents were collectively marked Item 7. The exhibits offered by the parties, Items 1 – 7, are admitted into the record without objection.

On November 3, 2017, I was assigned the case. Subsequently, I received written confirmation that Applicant remains sponsored for a security clearance.1 Accordingly, I have jurisdiction to issue a decision. ISCR Case No. 14-03753 (App. Bd. Sep. 23, 2016).

FINDINGS OF FACT

Applicant, 54, served in the U.S. military from 1990 – 1999. He served in Operation Desert Shield / Desert Storm. He received awards for his military service and was promoted to sergeant before being honorably discharged in 1999. After leaving the military, Applicant earned an associate’s and then a bachelor’s degree. He attended graduate school from 2013 – 2015, but, as of the date of the submission of his security clearance application (SCA) in June 2015, had not been conferred another degree.

Applicant is on his fourth marriage. He and his current wife married in 2012 and together they have five children. Applicant received a Chapter 7 bankruptcy discharge in February 2006. His current financial problems began in approximately 2011, when he left his employment as a security guard at an airport under adverse circumstances. In his SCA, Applicant states that he left “for making a mistake in company policies and procedures.”2 He subsequently explained to a security clearance investigator that he gave his wife, who had just started working at the same location, his badge to get into the employee parking lot since she had not yet received her own employee badge. He knew it was a violation of company policy to give or loan anyone his badge. His wife was fired for the incident and he was given the option to voluntarily leave or be fired. He left and was unemployed from approximately October 2011 to about December 2014.3

While unemployed, Applicant returned to school to improve his job prospects. Also, during this period, Applicant defaulted on a significant amount of delinquent debt. Notably, Applicant defaulted on his student loans, which total approximately $60,000. He also accrued about $15,000 in other delinquent debt. In 2012, one of Applicant’s creditors secured a $7,800 judgment and wage garnishment against him. The creditor recently made a business decision to close the account. This debt is referenced in SOR 1.l. It is the only debt, of the 16 SOR debts, that has been resolved. Applicant was made aware of the SOR debts during his September 2016 security clearance interview.4

In January 2015, Applicant was hired by his current employer and a few months later submitted an SCA in connection with the job. In response to questions regarding his financial history, Applicant reported the debt in 1.land his delinquent student loans. He claimed that his student loans totaled about $11,000.5 A subsequent credit check revealed that Applicant’s delinquent student loans totaled about $60,000. The credit check also disclosed a number of other delinquent accounts.6

In September 2016, Applicant discussed his delinquent accounts with a security clearance investigator. He told the investigator that he had received collection notices from many of the creditors for the delinquent accounts listed on the SOR, including notices about his student loans. These collection notices informed Applicant that his delinquent student loans totaled about $60,000. Applicant also told the investigator that he tried to resolve his student loan delinquency, but the creditor was unwilling to work out a reasonable payment schedule.7

Applicant submitted reference letters from community members, coworkers, and supervisors. These references state that Applicant is hardworking, reliable, and trustworthy.

Law, Policies, and Regulations

This case is decided under Executive Order (E.O.) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; DoD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the National Security Adjudicative Guidelines (AG), which became effective on June 8, 2017. ISCR Case No. 02-00305 at 3 (App. Bd. Feb. 12, 2003) (security clearance decisions must be based on current DoD policy and standards).8

“[N]o one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). Instead, persons are only eligible for access to classified information “upon a finding that it is clearly consistent with the national interest” to authorize such access. E.O. 10865 § 2.

When evaluating an applicant’s eligibility for a security clearance, an administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations, the guidelines list potentially disqualifying and mitigating conditions. The guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, an administrative judge applies the guidelines in a commonsense manner, considering all available and reliable information, in arriving at a fair and impartial decision. AG ¶ 2. Department Counsel must present evidence to establish controverted facts alleged in the SOR. Directive ¶ E3.1.14. Applicants are responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by the applicant or proven . . . and has the ultimate burden of persuasion as to obtaining a favorable clearance decision.” Directive ¶ E3.1.15.

Administrative Judges must remain fair and impartial, and carefully balance the needs for the expedient resolution of a case with the demands of due process. Therefore, an administrative judge will ensure that an applicant: (a) receives fair notice of the issues, (b) has a reasonable opportunity to address those issues, and (c) is not subjected to unfair surprise. Directive, ¶ E3.1.10; ISCR Case No. 12-01266 at 3 (App. Bd. Apr. 4, 2014).

In evaluating the evidence, a judge applies a “substantial evidence” standard, which is something less than a preponderance of the evidence. Specifically, substantial evidence is defined as “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion in light of all the contrary evidence in the same record.” Directive, ¶ E3.1.32.1.9

Any doubt raised by the evidence must be resolved in favor of the national security. AG ¶ 2(b). See also Security Executive Agent Directive 4 (SEAD-4), ¶ E.4. Additionally, the Supreme Court has held that responsible officials making “security clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531.

A person who seeks access to classified information enters into a fiduciary relationship with the Government predicated upon trust and confidence. This relationship transcends normal 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 an applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation of potential, rather than actual, risk of compromise of classified information.

ANALYSIS

Guideline F, Financial Considerations

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.10

The security concern here is not limited to a consideration of whether a person with financial issues might be tempted to compromise classified information or engage in other illegality to pay their debts. It also addresses the extent to which the circumstances giving rise to delinquent debt cast doubt upon a person’s judgment, self-control, and other qualities essential to protecting classified information.11

In assessing Applicant’s case, I considered the disqualifying and mitigating conditions listed under Guideline F, including the following:

AG ¶ 19(a): inability to satisfy debts;

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

AG ¶ 20(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;

AG ¶ 20(b): the conditions that resulted in the financial problem were largely beyond the person's control . . . and the individual acted responsibly under the circumstances;

AG ¶ 20(c): the individual has received or is receiving financial counseling for the problem . . . 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.

Individuals applying for a security clearance are not required to be debt free. They are also not required to resolve all past-due debts simultaneously or even resolve the delinquent debts listed in the SOR first. However, they are expected to present evidence to refute, explain, or mitigate security concerns raised by their circumstances, to include the accumulation of delinquent debt. Moreover, they bear the burden of showing that they manage their finances in a manner expected of those granted access to classified information.12 Applicant failed to meet his burden of proof and persuasion. Applicant accumulated a sizeable amount of delinquent debt after receiving a Chapter 7 discharge in 2006. The disqualifying conditions listed at AG ¶¶ 19(a) and 19(c) apply. Applicant did not provide sufficient evidence to establish any of the mitigating conditions. Notably, notwithstanding gainful employment since January 2015, the only SOR debt that has been resolved is one where the creditor was forced to seek a court order. Applicant’s inability or unwillingness to responsibly address his delinquent accounts and take control of his financial affairs raises unmitigated security concerns that I must resolve in favor of protecting national security. Overall, the record evidence regarding the manner in which Applicant handles his personal financial obligations leaves me with doubts and concerns about his ability and willingness to follow rules and regulations for the proper handling and safeguarding of classified information.13

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 (Financial Considerations): AGAINST APPLICANT

Subparagraphs 1.a –1.q: Against Applicant

CONCLUSION

In light of the record evidence, it is not clearly consistent with the interests of national security to grant Applicant initial or continued eligibility for access to classified information. Applicant’s request for a security clearance is denied.

____________________ Francisco Mendez Administrative Judge

FOOTNOTES

1 Appellate Exhibit I.

2 Item 3 at 13.

3 Item 3 at 12; Item 6 at 6.

4 Item 3; Item 5 – Item 7. 5 Item 3 at 42.

6 Item 5.

7 Item 6 at 5, 13.

8 Nonetheless, I have considered the previous version of the adjudicative guidelines and my ultimate decision in this case would have been the same. 9 However, a judge’s mere disbelief of an applicant’s testimony, without actual evidence of disqualifying conduct or admission by an applicant to the disqualifying conduct, is not enough to sustain an unfavorable finding. ISCR Case No. 15-05565 (App. Bd. Aug. 2, 2017); ISCR Case No. 02-24452 (App. Bd. Aug. 4, 2004). Furthermore, an unfavorable decision cannot be based on solely non-alleged conduct. ISCR Case No. 14-05986 (App. Bd. May 26, 2017). Unless an applicant is provided notice that unalleged conduct raises a security concern, it can only be used for specific limited purposes, such as assessing mitigation and credibility. ISCR Case No. 16-02877 at 3 (App. Bd. Oct. 2, 2017). 10 AG ¶ 18.

11 ISCR Case No. 11-05365 at 3 (App. Bd. May. 1, 2012).

12 ISCR Case 07-10310 at 2 (App. Bd. Jul. 30, 2008). See also ISCR Case No. 15-02585 at 2 (App. Bd. Dec. 20, 2016) (“It is reasonable for Judges to expect applicants to present documentation about the satisfaction of individual debts.”) 13 In reaching this adverse decision, I considered the whole-person concept. See generally AG ¶ 2. I also considered the exceptions listed in SEAD-4, Appendix C, but none are warranted in this case.