CASE · Clearance Adjudication Search EngineCASE

Loading case…

ISCR Case 17-01372.h1 — CASE

ISCR Case 17-01372.h1granted

Case Headnote

ISCR Case No. 17-01372.h1

grantedJul 1, 2017· Hon. Shari Dam· hearing

Summary

A 55-year-old HVAC worker was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The applicant had accumulated over $35,000 in delinquent debts across 34 separate accounts, which raised disqualifying conditions related to financial irresponsibility. These debts were attributed to medical issues, family obligations, and employment instability.

To mitigate these concerns, the applicant demonstrated a good-faith effort to resolve his financial issues. He successfully paid or established payment plans for 33 of the 34 outstanding debts. Furthermore, he provided a budget showing sufficient income to continue managing his financial obligations.

The decision to grant the clearance was based on the applicant's demonstrated commitment to financial responsibility, the external circumstances contributing to his past difficulties, and his current ability to manage his debts.

Why the Applicant Prevailed

The applicant resolved or is resolving 33 of 34 delinquent debts, demonstrating a commitment to financial responsibility.
The financial difficulties were largely due to circumstances beyond the applicant's control, including medical issues and family obligations.
The applicant provided evidence of a budget showing sufficient income to continue making payments on his debts.

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)raisedA History of Not Meeting Financial Obligations

Mitigating

AG ¶ 20(b)appliedConditions Beyond the Person's Control
AG ¶ 20(c)notedReceiving Financial Counseling
AG ¶ 20(d)appliedGood-faith Effort to Repay Debts

Key Rule Quoted

“In evaluating Guideline F cases, the Board has previously noted that the concept of ‘meaningful track record’ necessarily includes evidence of actual debt reduction through payment of debts.”
— ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008)

Procedural Posture

SOR issuedMay 17, 2017
Answer filedJun 5, 2017
Hearing heldApr 17, 2018via MS Teams
Decision dateJun 4, 2018

Cite For

Mitigation of Financial Concerns Under Guideline F
Impact of Personal Circumstances on Financial Stability
Evidence of Good-faith Efforts in Debt Resolution

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 financial concerns related to delinquent debts, which totaled over $35,000. The applicant demonstrated a commitment to resolving these debts, with most being paid or in payment plans, leading to a favorable decision for security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	$3,636 debt $3,636	For Applicant	Unspecified Financial	Unknown	—	(b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	—
1.b	$1,148 debt $1,148	For Applicant	Unspecified Financial	Unknown	—	—	—
1.c	$1,111 debt $1,111	For Applicant	Unspecified Financial	Unknown	—	—	—
1.d	$848 debt $848	For Applicant	Unspecified Financial	Unknown	—	—	—
1.e	$749 debt $749	For Applicant	Unspecified Financial	Unknown	—	—	—
1.f	$744 debt $744	For Applicant	Unspecified Financial	Unknown	—	—	—
1.g	$663 debt $663	For Applicant	Unspecified Financial	Unknown	—	—	—
1.h	$525 debt $525	For Applicant	Unspecified Financial	Unknown	—	—	—
1.i	$513 debt $513	For Applicant	Unspecified Financial	Unknown	—	—	—
1.j	$511 debt $511	For Applicant	Unspecified Financial	Unknown	—	—	—
1.k	$509 debt $509	For Applicant	Unspecified Financial	Unknown	—	—	—
1.l	$163 debt $163	For Applicant	Unspecified Financial	Unknown	—	—	—
1.m	$6,100 debt $6,100	For Applicant	Child Support Debt	Unknown	—	—	—
1.n	$2,345 debt $2,345	For Applicant	Unspecified Financial	Unknown	—	—	—
1.o	$945 debt $945	For Applicant	Unspecified Financial	Unknown	—	—	—
1.p	$845 debt $845	For Applicant	Unspecified Financial	Unknown	—	—	—
1.q	$834 debt $834	For Applicant	Unspecified Financial	Unknown	—	—	—
1.r	$777 debt $777	For Applicant	Unspecified Financial	Unknown	—	—	—
1.s	$522 debt $522	For Applicant	Unspecified Financial	Unknown	—	—	—
1.t	$513 debt $513	For Applicant	Unspecified Financial	Unknown	—	—	—
1.u	$509 debt $509	For Applicant	Unspecified Financial	Unknown	—	—	—
1.v	$5,388 debt $5,388	For Applicant	Unspecified Financial	Unknown	—	—	—
1.w	$1,920 debt $1,920	For Applicant	Unspecified Financial	Unknown	—	—	—
1.x	$990 debt $990	For Applicant	Unspecified Financial	Unknown	—	—	—
1.y	$652 debt $652	For Applicant	Unspecified Financial	Unknown	—	—	—
1.z	$421 debt $421	For Applicant	Unspecified Financial	Unknown	—	—	—
1.aa	$352 debt $352	For Applicant	Unspecified Financial	Unknown	—	—	—
1.bb	$275 debt $275	For Applicant	Unspecified Financial	Unknown	—	—	—
1.cc	$225 debt $225	For Applicant	Unspecified Financial	Unknown	—	—	—
1.dd	$204 debt $204	For Applicant	Unspecified Financial	Unknown	—	—	—
1.ee	$171 debt $171	For Applicant	Unspecified Financial	Unknown	—	—	—
1.ff	$149 debt $149	For Applicant	Unspecified Financial	Unknown	—	—	—
1.gg	$126 debt $126	For Applicant	Unspecified Financial	Unknown	—	—	—
1.hh	$111 debt $111	For 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. 17-01372 ) ) ) Applicant for Security Clearance

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

07/19/2018 ______________

STATEMENT OF CASE

______________

DAM, Shari, Administrative Judge:

Applicant mitigated the Guideline F, Financial Considerations, security concerns arising from his delinquent debts. National security eligibility for access to classified information is granted.

History of Case

On January 8, 2016, Applicant submitted a security clearance application (SF 86). On May 17, 2017, the Department of Defense Consolidated Adjudications Facility (DOD CAF) issued Applicant a Statement of Reasons (SOR) alleging security concerns under Guideline F (Financial Considerations). The action was taken under Executive Order 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 (AG), effective within the DOD after September 1, 2006. On June 8, 2017, new AG were implemented and are effective for decisions issued after that date.1

Applicant answered the SOR in writing on June 5, 2017 (Answer), and requested a hearing before an administrative judge. The Defense Office of Hearings and Appeals (DOHA) assigned the case to me on February 21, 2018. DOHA issued a Notice of Hearing on March 13, 2018, setting the hearing for April 17, 2018. Department Counsel offered Government Exhibits (GE) 1 through 5 into evidence. Applicant testified, and offered Exhibits (AE) A through M into evidence. All exhibits were admitted without objection. DOHA received the hearing transcript (Tr.) on May 3, 2018. The record remained open until June 4, 2018, to permit submission of additional evidence. Applicant timely submitted a revised AE A-1 and B-1. He submitted another document that he marked as AE M. In order to avoid confusion with the previously admitted AE M, I marked that exhibit as AE M-1. He also submitted AE N through W. All post-hearing exhibits are admitted without objection.

FINDINGS OF FACT

Applicant is 55 years old and divorced from his third wife. He has an 18-year-old daughter from his second marriage. He enlisted into the Navy after high school but received a medical honorable discharge during boot camp. He works in the field of heating, ventilation, and air conditioning (HVAC). He started his current position with a federal contractor in October 2015. He was unemployed for six months prior to that. (Tr. 29-32; GE 1)

Applicant attributed his financial problems to four factors: (1) In November 2013, Applicant was diagnosed with a cardiac problem. Subsequently, he was hospitalized for periods of time, including three week in January 2014, and then later. He lost his medical insurance at some point and was unable to pay for his medication. (2) Around the same time his father was sick, and Applicant cared for him until he died and then paid the funeral expenses. (3) In April 2014, Applicant’s employer died, and the business was sold. Subsequently the new owner went through a divorce, which affected the business and Applicant’s income. (4) In May 2014, Applicant’s girlfriend moved out of their apartment and took all of the household furnishings, unbeknownst to him, and left him with the bills. (Tr. 33-38; Answer)

Applicant’s sister and brother-in-law helped him during this difficult two years and loaned him money to pay his car loan. Applicant said that since obtaining a full-time position in October 2015, he has been paying delinquent debts and improving his financial situation. (Tr. 38-40; AE A)

In October 2017, Applicant was diagnosed with a tumor in his jaw. He has dental insurance, but it did not cover many of the costs associated with extractions and

1 I considered the previous AG, effective September 1, 2006, as well as the new AG, effective June 8, surgeries. He has paid about $8,000 for those services. He used his federal and state tax refunds from 2017 to pay some of the dental bills. He said he works overtime when available to earn more money. (Tr. 40-41, 66)

Based on credit bureau reports (CBR) from February 2016, April 2017, and July 2017, the SOR alleged 34 delinquent debts that accumulated between 2013 and 2015, and totaled over $35,000. They included 13 medical debts, unpaid child support, credit card debts, and miscellaneous debts. All of the debts have been resolved or are being resolved, except the $171 debt listed in SOR ¶ 1.ee, which Applicant is unable to locate the creditor. (Tr. 39; GE 3, 4, 5; AE A-1)

The following 25 SOR alleged debts are paid: 1.bfor $1,148; 1.cfor $1,111; 1.dfor $848; 1.e for $749; 1.ffor $744; 1.gfor $663; 1.hfor $525; 1.i for $513; 1.jfor $511; 1.kfor $5092; 1.lfor $163; 1.mfor $6,1003; 1.o for $945; 1.pfor $845; 1.qfor $834; 1.rfor $777; 1.sfor $522; 1.tfor $513; 1.u for $509; 1.yfor $652; 1.bb for $275; 1.cc for $225; 1.dd for $204; 1.gg for $126; and 1.hh for $111. These debts total $20,122 and were paid between March 2017 and May 2018, as noted on AE A-1, which references attached supporting documents. (AE A-1)

The following eight SOR alleged debts are being resolved through payment plans which Applicant recently established: 1.a for $3,636; 1.nfor $2,345; 1.vfor $5,388; 1.wfor $1,920; 1.xfor $990 (now $4,700); 1.zfor $421; 1.aa for $352; and 1.ff for $149. These debts total $14,211. As of May 2018, Applicant paid $1,531 on the plans, as noted on AE A-1, which references attached supporting documents. (AE-1)

Applicant submitted a budget. His net monthly income is $3,605. After paying expenses, he has about $740 remaining for his repayment plans and other expenses. (AE M)

Applicant’s sister testified. She is aware of the circumstances surrounding her brother’s delinquent debts. She said he works 10 to 12 hour days, six days a week, trying to recover from his financial difficulties and delinquent debts. She believed that he has shown great progress toward that issue and managing his health problems. (Tr. 73-74)

Applicant’s supervisor submitted a letter of recommendation. He has known Applicant for over two years. He stated that Applicant is highly qualified for his position, holding certifications that other employees do not have. He considers Applicant to be a trustworthy and valued member of his team. (AE W)

2 SOR ¶ 1.kand ¶ 1.u are duplicate debts. (Tr. 59)

3 This debt was for unpaid child support. (Tr. 43)

POLICIES

When evaluating an applicant’s suitability for national security eligibility, the administrative judge must consider the AG. In addition to brief introductory explanations for each guideline, the 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. Directive ¶ E3.1.15 states that 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 Executive Order 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 Executive Order 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 personal 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 conditions that could raise security concerns. Three 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’s numerous delinquent debts began arising in 2013 and continued into 2015, as documented by his admissions and the CBRs. He has been unable or unwilling to satisfy or resolve those debts until early 2017. These facts established prima facie evidence for the foregoing disqualifying conditions, and shift the burden to Applicant to mitigate the resulting security concerns.

The guideline includes conditions in AG ¶ 20 that could mitigate the security concerns arising from Applicant’s alleged financial difficulties. The following may potentially apply:

(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, or 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; and

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

The series of circumstances that occurred between 2013 and 2015 and resulted in Applicant’s financial problems were beyond his control, and included serious and unexpected medical problems, employment issues, a family illness and death, and a personal relationship termination. When Applicant began working full-time and was no longer sick, he started addressing his debts and documenting that he acted responsibly under the circumstances. The evidence establishes mitigation under AG ¶ 20(b). Applicant did not provide evidence that he participated in credit or financial counseling; however, he presented evidence that he has resolved or is resolving 33 of the 34 alleged delinquent debts and they are coming under control. He established mitigation under AG ¶ 20(c), and also under AG ¶ 20(d) as he made good-faith efforts to resolve his debts.

WHOLE PERSON CONCEPT

Under the whole-person concept, the administrative judge must evaluate an applicant’s national security eligibility 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. I have incorporated my comments under Guideline F in my whole-person analysis. Some of the factors in AG ¶ 2(d) were addressed under those guidelines, but some warrant additional comment.

Applicant is a mature individual who encountered serious personal issues that resulted in financial difficulties for a couple years. Subsequent to finding full employment in late 2015 and regaining his health, he slowly began addressing some debts in March 2017, which was prior to the issuance of the SOR. Since then, he has satisfactorily resolved or is resolving all of the alleged delinquent debts, except one small one because he cannot locate the creditor.

The Appeal Board has addressed a key element in the whole-person analysis in financial cases, stating:

In evaluating Guideline F cases, the Board has previously noted that the concept of ‘meaningful track record’ necessarily includes evidence of actual debt reduction through payment of debts. However, an applicant is not required, as a matter of law, to establish that he has paid off each and every debt listed in the SOR. All that is required is that an applicant demonstrates that he has ‘. . . established a plan to resolve his financial problems and taken significant actions to implement that plan.’ The Judge can reasonably consider the entirety of an applicant’s financial situation and his actions in evaluating the extent to which that applicant’s plan for the reduction of his outstanding indebtedness is credible and realistic. See Directive ¶ E2.2 (a) (‘Available, reliable information about the person, past and present, favorable and unfavorable, should be considered in reaching a determination.’) There is no requirement that a plan provide for payments on all outstanding debts simultaneously. Rather, a reasonable plan (and concomitant conduct) may provide for the payment of such debts one at a time. Likewise, there is no requirement that the first debts actually paid in furtherance of a reasonable debt plan be the ones listed in the SOR.4

According to his budget, Applicant has sufficient money to continue making payments on repayment plans he established with eight creditors. He has paid and resolved 25 debts. During the hearing, he displayed candor and a commitment to financial stability. The likelihood that similar financial problems will recur or Applicant will stop making payments on the plans he initiated is minimal based on his efforts to-date and knowledge that similar problems could jeopardize his employment. Overall, the record evidence leaves me without doubt as to Applicant’s reliability, trustworthiness, good judgment, eligibility and suitability for a security clearance. He met 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 the Directive, are:

Paragraph 1, Guideline F: FOR APPLICANT

Subparagraphs 1.a through 1.hh: For Applicant

4 ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008) (internal citations omitted).

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is clearly consistent with the interests of national security to grant Applicant access to classified information. National security eligibility is granted.

SHARI DAM Administrative Judge

FOOTNOTES

2017. My decision would be the same under either set of guidelines.