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ISCR Case 17-00881.h1 — CASE

ISCR Case 17-00881.h1denied

Case Headnote

ISCR Case No. 17-00881.h1

deniedMar 1, 2018· Hon. Robert E. Coacher· hearing

Summary

A 61-year-old defense contractor with a Ph.D. was denied a security clearance under Guideline F, Financial Considerations, due to unresolved financial issues. The Statement of Reasons detailed several delinquent and charged-off debts, each totaling approximately $44,166, including a mortgage loan, a student loan, two credit card accounts, and a medical account. Additionally, a Chapter 13 bankruptcy filing was dismissed.

The judge identified disqualifying conditions F.1.a and F.1.c. The denial was based on the applicant's failure to resolve the delinquent debts, which collectively amounted to approximately $44,166. The Chapter 13 bankruptcy was dismissed because the applicant did not file a payment plan.

Crucially, the applicant did not provide sufficient documentation to substantiate claims of debt resolution or dispute. Consequently, the judge determined that the applicant failed to mitigate the financial concerns, leading to the denial of the security clearance.

Why the Applicant Was Denied

The applicant has unresolved delinquent debts totaling approximately $44,166.
The applicant's Chapter 13 bankruptcy was dismissed due to failure to file a payment plan.
The applicant did not provide sufficient documentation to support claims of debt resolution or dispute.

Conditions Referenced

Disqualifying

F.1.araisedInability to Satisfy Debts
F.1.craisedA History of Not Meeting Financial Obligations

Key Rule Quoted

“The protection of the national security is the paramount consideration.”

Procedural Posture

SOR issuedJun 22, 2017
Answer filedJul 20, 2017Applicant elected to have the case decided on the written record.
Hearing held—No hearing; decision based on written record.
Decision dateMar 1, 2018

Cite For

Failure to Mitigate Financial Considerations Under Guideline F
Impact of Unresolved Debts on Security Clearance Eligibility
Dismissal of Bankruptcy Affecting Financial Responsibility Assessment

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 unresolved financial issues, including delinquent debts and a dismissed Chapter 13 bankruptcy, which raised security concerns under Guideline F. The applicant's claims of debt resolution were not substantiated with sufficient documentation, leading to a decision against the applicant on all financial allegations.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Delinquent mortgage loan debt totaling approximately $44,166.	Against Applicant	Mortgage or Home Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	Charged-off student loan account totaling approximately $44,166.	Against Applicant	Student Loan Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	Charged-off credit card account totaling approximately $44,166.	Against Applicant	Credit Card Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	Charged-off credit card account totaling approximately $44,166.	Against Applicant	Credit Card Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	Delinquent medical account totaling approximately $44,166.	Against Applicant	Medical Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	Dismissed Chapter 13 bankruptcy.	Against Applicant	Bankruptcy Filing	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.g	specific text not stated in this decision	Against Applicant	Unspecified Financial	Unknown	—	—	—

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. 17-00881 ) ) Applicant for Security Clearance )

For Government: Erin P. Thompson, Esq., Department Counsel For Applicant: Pro se

03/01/2018 ______________

STATEMENT OF CASE

______________

COACHER, Robert E., Administrative Judge:

Applicant has not mitigated the financial considerations security concerns. Eligibility for access to classified information is denied.

Statement of the Case

On June 22, 2017, the Department of Defense Consolidated Adjudications Facility (DOD CAF) issued Applicant a Statement of Reasons (SOR) detailing security concerns under Guideline F. The DOD CAF acted under Executive Order (EO) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; DOD 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG).

Applicant answered the SOR on July 20, 2017, and elected to have his case decided on the written record in lieu of a hearing. Department Counsel submitted the Government’s File of Relevant Material (FORM) on September 14, 2017. The evidence included in the FORM is identified as Items 3-7 (Items 1 and 2 include pleadings and transmittal information). The FORM was mailed to Applicant, who received it on October 5, 2017. Applicant was given an opportunity to file objections and submit material in refutation, extenuation, or mitigation. Applicant did not file objections nor did he submit any exhibits. Items 3-7 are admitted into evidence without objection. The case was assigned to me on February 23, 2018.

FINDINGS OF FACT

Applicant admitted some of the allegations and denied others in his answer to the SOR. The admissions are adopted as findings of fact. After a careful review of the pleadings and evidence, I make the following additional findings of fact.

Applicant is 61 years old. He has worked for a defense contractor since 2014. He was unemployed from January 2014 to March 2014, and from April 2012 to December 2012. He served in the Marine Corps from 1980 to 1989 in both an active duty and reserve status. He is married and has two adult children. He has a Ph.D.1

The SOR alleged six delinquent debts totaling approximately $44,166 and a dismissed Chapter 13 bankruptcy. One debt is a past-due mortgage loan. Two are charged-off student loan accounts. Two are charged-off credit card accounts and one is a delinquent medical account.2

In Applicant’s answer he claimed the mortgage debt was settled through a short sale. The debt remains on Applicant’s most recent credit report. He provided no documentation supporting a short-sale transaction. This debt remains unresolved. Concerning the student loan debt, Applicant claims it is his son’s debt, but he cosigned the loan and is responsible since his son defaulted. He provided a document showing a collection firm contacted Applicant’s wife offering to set up a payment plan for some of the student loan debt. There is no documentary evidence showing Applicant (or his wife) accepted the offer and started making payments. The student loan debts are unresolved. Applicant claimed that the two credit card debts were resolved during the short sale of his residence. He failed to provide documentation supporting his assertion. These debts are unresolved. He denied the medical debt, but failed to provide documentation establishing his dispute of the debt. This debt is unresolved. Applicant filed a Chapter 13 bankruptcy petition in January 2014. That petition was dismissed in February 2014 for failing to file and distribute a Chapter 13 payment plan.3

Applicant provided letters of recommendation from a friend, a work supervisor, and project a manger. They consider Applicant trustworthy, honest, loyal, and possessing good judgment. Applicant also documented his receipt of unemployment benefits in 2013. He did not provide any information about his current financial situation or a budget. There is no evidence of financial counseling.4

POLICIES

When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which are used in evaluating an applicant’s eligibility for access to classified information.

These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, these guidelines are applied in conjunction with the factors listed in 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 the 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. Under Directive ¶ E3.1.15, an “applicant is responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by applicant or proven by Department Counsel, and has the ultimate burden of persuasion to obtain a favorable security decision.”

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 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 that an 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.

Section 7 of EO 10865 provides that 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

AG ¶ 18 expresses the security concern for 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. 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. I have considered all of them under AG ¶ 19 and the following potentially apply:

(a) inability to satisfy debts; and

Applicant has delinquent debts that remain unpaid or unresolved because of his inability to pay them. His Chapter 13 bankruptcy was dismissed for failure to file a payment plan. I find both disqualifying conditions are raised.

The guideline also includes conditions that could mitigate security concerns arising from financial difficulties. I have considered all of the mitigating conditions under AG ¶ 20 and the following potentially apply:

(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’s debts are recent and remain unresolved. He did not provide sufficient evidence to show that his financial problems are unlikely to recur. AG ¶ 20(a) does not apply. Although Applicant experienced periods of unemployment that were beyond his control, he failed to take responsible actions to address his debts. AG ¶ 20(b) partially applies. Aside from the offer to settle some student loan accounts, Applicant failed to provide documentation showing any efforts to agree to the settlement and begin making payments. He failed to provide documentation showing the resolution of his mortgage debt and credit card debts through a short-sale transaction. He failed to provide documentation supporting his dispute of the listed medical debt. There is no evidence of financial counseling. AG ¶¶ 20(c), 20(d), and 20(e) do not apply.

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 the 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 guideline and the whole-person concept. I considered the potentially disqualifying and mitigating conditions in light of all the facts and circumstances surrounding this case. I considered his military service and his civilian employment, but I also considered his lack of progress in resolving his debts. Applicant has not established a track record of financial stability.

Overall, the record evidence leaves me with questions and doubts as to Applicant’s eligibility and suitability for a security clearance because of his financial status. For all these reasons, I conclude Applicant failed to mitigate the security concerns arising under Guideline F, financial considerations.

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: AGAINST APPLICANT

Subparagraphs 1.a – 1.g: Against 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 eligibility for a security clearance. Eligibility for access to classified information is denied.

_____________________________ Robert E. Coacher Administrative Judge

FOOTNOTES

1 Items 3-4. 2 Items 1-2, 5-7. 3 Items 2, 5-7. 4 Item 2.