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ISCR Case 17-01008.h1 — CASE

ISCR Case 17-01008.h1denied

Case Headnote

ISCR Case No. 17-01008.h1

deniedNov 19, 2018· Hon. Richard A. Cefola· hearing

Summary

A 37-year-old divorced applicant with two children was denied a security clearance under Guideline F (Financial Considerations) due to significant financial difficulties. The Statement of Reasons detailed multiple past-due debts, supported by government credit reports. These included a past-due mortgage of approximately $277,990 and a second past-due mortgage of about $20,125.

Additional allegations included a past-due car loan of about $902, a repossessed car with an outstanding balance of approximately $11,902, and various other past-due debts. These included about $385 owed to Creditor E, a past-due cell phone bill of about $2,487, and another cell phone bill placed for collection totaling about $2,119. The applicant also had a past-due debt of about $451 to Creditor H and a past-due debt of about $5,655 to Creditor I, as noted in a February 2016 credit report.

The denial was based on the applicant's significant unaddressed past-due debt and failure to provide evidence of a good-faith effort to repay or resolve these obligations. The judge concluded that the applicant's financial issues were not under control, raising concerns about judgment and reliability.

Why the Applicant Was Denied

The applicant has significant past-due debt that he has yet to address.
The applicant failed to provide evidence of a good-faith effort to repay overdue creditors or resolve debts.
The applicant's financial issues are not under control, raising doubts about his judgment and reliability.

Conditions Referenced

Disqualifying

AG ¶ 19(a)appliedInability to Satisfy Debts
AG ¶ 19(b)appliedUnwillingness to Satisfy Debts Regardless of the Ability to Do So
AG ¶ 19(c)appliedHistory of Not Meeting Financial Obligations

Key Rule Quoted

“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 issuedMay 22, 2017
Answer filedJun 9, 2017Considered denied due to lack of formal admission or denial.
Hearing held—Decided on the written record without a hearing.
Decision dateNov 19, 2018

Cite For

Financial Considerations Under Guideline F
Impact of Unresolved Debts on Security Clearance Eligibility
Burden of Proof on Applicant to Mitigate Financial Concerns

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, including multiple past-due debts and a foreclosure. The applicant's failure to provide sufficient evidence to mitigate these concerns led to a decision against granting security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	It is alleged, and supported by the Government’s most recent credit report, that Applicant has a past-due mortgage in the amount of about $277,990. $277,990	Against Applicant	Mortgage or Home 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	It is alleged, and supported by the Government’s most recent credit report, that Applicant has a past-due second mortgage in the amount of about $20,125. $20,125	Against Applicant	Mortgage or Home Loan Debt	Denied	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.c	It is alleged, and supported by the Government’s most recent credit report, that Applicant has a past-due car loan in the amount of about $902. $902	Against Applicant	Auto Loan Debt	Denied	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.d	It is alleged, and supported by the Government’s most recent credit report, that Applicant had a car repossessed, with about $11,902 remaining on the auto loan. $11,902	Against Applicant	Auto Loan Debt	Denied	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.e	It is alleged, and supported by the Government’s most recent credit report, that Applicant has a past-due debt to Creditor E in the amount of about $385. $385	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.f	It is alleged, and supported by the Government’s most recent credit report, that Applicant has a past-due “cell phone bill” in the amount of about $2,487. $2,487	Against Applicant	Utility or Phone Debt	Denied	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.g	It is alleged, and supported by the Government’s most recent credit report, that Applicant has a “cell phone bill” placed for collection in the amount of about $2,119. $2,119	Against Applicant	Utility or Phone Debt	Denied	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.h	It is alleged, and supported by the Government’s most recent credit report, that Applicant has a past-due debt to Creditor H in the amount of about $451. $451	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.i	It is alleged, and supported by the Government’s credit report from February of 2016, that Applicant has a past-due debt to Creditor I in the amount of about $5,655. $5,655	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (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: ) ) ) ISCR Case: 17-01008 ) Applicant for Security Clearance )

For Government: Nicole A. Smith, Esquire, Department Counsel For Applicant: Pro se

November 19, 2018

______________

STATEMENT OF CASE

______________

CEFOLA, Richard A., Administrative Judge:

On January 7, 2016, Applicant submitted a security clearance application (SF- 86). On May 22, 2017, the Department of Defense Consolidated Adjudications Facility (DoD CAF) issued Applicant a Statement of Reasons (SOR), detailing security concerns under Guideline F, Financial Considerations. (Item 1.) The action was taken under Executive Order (EO) 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 Adjudicative Guidelines for Determining Eligibility for Access to Classified Information, effective within the DoD after September 1, 2006.

Applicant answered the SOR (Answer) on June 9, 2017. He neither formally admitted nor denied the SOR allegations; and as such, they will considered denied. Applicant requested that his case be decided by an administrative judge on the written record without a hearing. On July 20, 2017, Department Counsel submitted the Government’s written case. A complete copy of the File of Relevant Material (FORM), containing six Items, was mailed to Applicant on July 21, 2017, and received by him on September 10, 2017. The FORM notified Applicant that he had an opportunity to file objections and submit material in refutation, extenuation, or mitigation within 30 days of his receipt of the FORM. Applicant submitted nothing in response to the FORM.

The SOR in this case was issued under the adjudicative guidelines that came into effect within the DoD on September 1, 2006. Security Executive Agent Directive (SEAD) 4, National Security Adjudicative Guidelines, implements new adjudicative guidelines, effective June 8, 2017. All national security eligibility decisions issued on or after June 8, 2017, are to be decided using the new National Security Adjudicative Guidelines for Determining Eligibility for Access to Classified Information or Eligibility to Hold a Sensitive Position (AG), as implemented by SEAD 4. I considered the previous adjudicative guidelines, effective September 1, 2006, as well as the new AG, effective June 8, 2017, in adjudicating Applicant’s national security eligibility. My decision would be the same under either set of guidelines, although this decision is issued pursuant to the new AG.

FINDINGS OF FACT

Guideline F – Financial Considerations

Applicant is 37 years old. (Item 1 at page 5.) He is divorced and provides child support for two children. (Answer, and Item 1 at pages 27–28.)

1.a. It is alleged, and supported by the Government’s most recent credit report, that Applicant has a past-due mortgage in the amount of about $277,990. (Item 5 at page 1.) Applicant admits that “we [Applicant and his former spouse] allowed it to go to foreclosure,” but has submitted nothing further in this regard. (Answer.) This allegation is found against Applicant.

1.b. It is alleged, and supported by the Government’s most recent credit report, that Applicant has a past-due second mortgage in the amount of about $20,125. (Item 5 at page 2.) Applicant avers that “I have since made a payment arrangement for this loan and am paying (roughly [$]300) a month to catch this bill up,” but has submitted nothing further in this regard. (Answer.) This allegation is also found against Applicant.

1.c. It is alleged, and supported by the Government’s most recent credit report, that Applicant has a past-due car loan in the amount of about $902. (Item 5 at page 2.) Applicant avers that “this bill . . . has since been caught up,” but has submitted nothing further in this regard. (Answer.) This allegation is found against Applicant.

1.d. It is alleged, and supported by the Government’s most recent credit report, that Applicant had a car repossessed, with about $11,902 remaining on the auto loan. (Item 5 at page 2.) Applicant avers that his former spouse “is working [out] a payment plan with them,” but has submitted nothing further in this regard. (Answer.) This allegation is found against Applicant.

1.e. . It is alleged, and supported by the Government’s most recent credit report, that Applicant has a past-due debt to Creditor E in the amount of about $385. (Item 5 at page 2.) Applicant avers nothing in this regard. This allegation is found against Applicant.

1.f. It is alleged, and supported by the Government’s most recent credit report, that Applicant has a past-due “cell phone bill” in the amount of about $2,487. (Item 5 at page 2.) Applicant avers that he is “disputing” this bill, but has submitted nothing further in this regard. (Answer.) This allegation is found against Applicant.

1.g. It is alleged, and supported by the Government’s most recent credit report, that Applicant has a “cell phone bill” placed for collection in the amount of about $2,119. (Item 5 at page 2.) Applicant avers that his former spouse “has a payment arrangement” with this creditor, but has submitted nothing further in this regard. (Answer.) This allegation is found against Applicant.

1.h. It is alleged, and supported by the Government’s most recent credit report, that Applicant has a past-due debt to Creditor H in the amount of about $451. (Item 5 at page 2.) Applicant avers that it is his “plan to pay off my debt to them in the next 60 days,” but has submitted nothing further in this regard. (Answer.) This allegation is found against Applicant.

1.i. It is alleged, and supported by the Government’s credit report from February of 2016, that Applicant has a past-due debt to Creditor I in the amount of about $5,655. (Item 6 at page 3.) Applicant avers that it is his plan “to pay off my debt to them in the next 60 days,” but has submitted nothing further in this regard. (Answer.) This allegation is found against Applicant.

POLICIES

When evaluating an applicant’s suitability for national security eligibility, the administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations for each guideline, the adjudicative guidelines (AG) 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, these guidelines are applied 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. The entire process is a conscientious scrutiny of applicable guidelines in the context 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. I have not drawn inferences based on mere speculation or conjecture.

Directive ¶ E3.1.14, requires the Government to 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 the applicant or proven by Department Counsel, and has the ultimate burden of persuasion as to obtaining a favorable clearance decision.”

A person applying for national security eligibility 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 national security eligibility. 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 or sensitive information. Finally, as emphasized in Section 7 of EO 10865, “[a]ny determination under this order adverse to an applicant shall be a determination 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 concerns relating to the guideline for financial considerations are set out in AG ¶ 18, which reads in pertinent part:

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. . . .

AG ¶ 19 describes three conditions that could raise security concerns and may be disqualifying in this case:

(a) inability to satisfy debts;

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

Applicant has significant past-due debt that he has yet to address. These facts establish prima facie support for the foregoing disqualifying conditions, and shift the burden to Applicant to mitigate those concerns.

The guideline includes four conditions in AG ¶ 20 that could mitigate the security concerns arising from Applicant’s alleged financial difficulties:

(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;

(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.

None of these apply. Although Applicant may attribute his financial difficulties to his divorce, it is that his financial issues are not under control.

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.

According to AG ¶ 2(c), the ultimate determination of whether to grant national security eligibility must be an overall commonsense judgment based upon careful consideration of the applicable guidelines and the whole-person concept.

I considered the potentially disqualifying and mitigating conditions in light of all pertinent facts and circumstances surrounding this case. Overall, the record evidence leaves me with questions and doubts as to Applicant’s judgment, eligibility, and suitability for a security clearance. He has failed to meet his burden to mitigate the security concerns arising under the guideline for financial considerations.

FORMAL FINDINGS

Formal findings for or against Applicant on the allegations set forth in the SOR, as required by ¶ E3.1.25 of Enclosure 3 of the Directive, are:

Paragraph 1, Guideline F: AGAINST APPLICANT

Subparagraphs 1.a through1.i: 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 national security eligibility and a security clearance. National security eligibility is denied.

Richard A. Cefola Administrative Judge