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ISCR Case 17-01489.h1 — CASE

ISCR Case 17-01489.h1denied

Case Headnote

ISCR Case No. 17-01489.h1

deniedApr 25, 2018· Hon. Elizabeth M. Matchinski· hearing

Summary

A 60-year-old subcontracts manager was denied a security clearance under Guideline F, Financial Considerations, due to significant unresolved financial issues. The Statement of Reasons specifically cited a charged-off home-equity loan of $68,082, outstanding as of May 25, 2017, and a judgment debt of $6,879 from April 2010.

The denial was based on the finding that the $68,082 charged-off home-equity loan remained unresolved, and the $6,879 judgment debt from April 2010 was still being addressed. These conditions raised concerns under Disqualifying Conditions AG ¶ 19(a) and AG ¶ 19(c).

Ultimately, the judge determined that the applicant's financial situation demonstrated poor judgment and an inability to manage debts, leading to ongoing security concerns and the denial of the security clearance.

Why the Applicant Was Denied

The applicant has a charged-off home-equity loan of $68,082 that remains unresolved.
The applicant has a judgment debt of $6,879 from April 2010 that he is still addressing.
The applicant's financial situation indicates poor judgment and inability to manage debts.

Conditions Referenced

Disqualifying

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

Key Rule Quoted

“An applicant is not required to be debt free, but is required to manage his finances in a way as to exhibit sound judgment and responsibility.”

Procedural Posture

SOR issuedMay 25, 2017
Answer filedAug 2, 2017
Hearing heldDec 5, 2017
Decision dateApr 25, 2018

Cite For

Financial Judgment Issues Under Guideline F
Impact of Unresolved Debts on Security Clearance Eligibility
Criteria for Evaluating Financial Responsibility in Security Clearance Cases

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 against the applicant on financial considerations due to significant outstanding debts, including a charged-off home-equity loan of $68,082 and a judgment debt of $6,879. Despite the applicant's claims of financial distress stemming from family obligations and attempts to make payments, the judge concluded that the applicant's financial judgment raised security concerns, leading to a denial of the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	as of May 25, 2017, Applicant owed a charged-off debt of $68,082 $68,082	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	an April 2010 judgment debt of $6,879 $6,879	Against Applicant	Judgment Against Applicant	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: ) ) ) ISCR Case No. 17-01489 ) Applicant for Security Clearance )

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

04/25/2018 ______________

STATEMENT OF CASE

______________

MATCHINSKI, Elizabeth M., Administrative Judge:

Applicant became financially extended, in part, because of college costs for his children and renovations to his home for his in-laws. He has not addressed a home-equity loan charged off for $68,082. He is making extra payments each month with his electric bill toward resolving a $6,879 judgment from April 2010, but security concerns persist about his financial judgment. Clearance is denied.

Statement of the Case

On May 25, 2017, the Department of Defense Consolidated Adjudications Facility (DOD CAF) issued a Statement of Reasons (SOR) to Applicant, detailing the security concerns under Guideline F, financial considerations, and explaining why it was unable to find it clearly consistent with the national interest to grant or continue security clearance eligibility for him. The DOD CAF took the action 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 (AG) effective within the DOD on September 1, 2006. On August 2, 2017, Applicant answered the SOR allegations and requested a hearing before an administrative judge from the Defense Office of Hearings and Appeals (DOHA). On September 22, 2017, the case was assigned to me to conduct a hearing to determine whether it is clearly consistent with the national interest to grant or continue a security clearance for Applicant. I scheduled a hearing to be held on December 6, 2017. In prehearing guidance, Applicant was informed that the Director of National Intelligence (DNI) had issued Security Executive Agent Directive 4 establishing the National Security Adjudicative Guidelines (AG) effective June 8, 2017, for all adjudications for national security eligibility or eligibility to hold a sensitive position.1

On November 29, 2017, I rescheduled the hearing for December 5, 2017. I convened the hearing as rescheduled. Four Government exhibits (GEs 1-4) were admitted into evidence without objection. Two hearing exhibits (HE) were marked but not entered into evidence: an August 28, 2017 letter forwarding GEs 1-4 to Applicant (HE 1) and a list of the Government’s exhibits (HE 2). Applicant testified, as reflected in a transcript (Tr.) received on December 13, 2017.

I held the record open for one month after the hearing for post-hearing submissions from Applicant. On December 19, 2017, Applicant offered ten exhibits, which were entered into evidence without objection as AEs A-J.

Summary of Pleadings

The SOR alleges under Guideline F that, as of May 25, 2017, Applicant owed a charged-off debt of $68,082 (SOR ¶ 1.a) and an April 2010 judgment debt of $6,879 (SOR ¶ 1.b). When Applicant answered the SOR, he admitted the debts. He attributed his financial issues to having taken on the dual obligations of caring for elderly parents while paying for his children’s educations. Applicant explained that he had fallen behind on a home-equity loan (SOR ¶ 1.a) and was on a plan to bring his loan current when the creditor wrote it off and placed it for collection. He asserted that he has been unable to obtain any information about the loan from a succession of collection entities and so lacked assurance that payments would go toward discharging the note. Applicant also explained that he was paying down the judgment debt as part of his monthly electric bill.

FINDINGS OF FACT

After considering the pleadings, exhibits, and transcript, I make the following findings of fact.

Applicant is a 60-year-old manager of subcontracts with a bachelor’s degree awarded in May 1980 and a master’s degree conferred in May 1990. He has worked for his defense-contractor employer since April 2009. He does not currently hold a security clearance, but he held a DOD secret clearance from June 1980 to approximately 1983 and from May 2001 to 2009 for his work with a different defense firm. His present position does not require that he hold a security clearance, but Applicant understands that his employer wants him to work on other programs involving classified work. (GEs 1, 4; Tr. 24, 29, 33.)

Applicant and his spouse have been married since September 1981. They have two daughters, ages 35 and 28, and a son age 31. Applicant and his spouse purchased their home in September 1989. (GE 1.) They obtained their current mortgage for $286,230 in February 2005. (GEs 2-3.)

In August 2002, Applicant began obtaining student loans in his name for his children’s college educations. Over the next decade, he took on more than $300,000 in student-loan debt. He obtained approximately 18 student loans in his name and lost track of some of them. Available credit information shows that some of the student loans had been in collection before he consolidated most of his outstanding student loans with a new loan for $324,622 in October 2013. The loan was reportedly deferred with a balance of $404,506 as of March 2017. As of March 2017, Equifax was reporting that he owed an additional student loan balance of $5,219. That loan had been obtained for $4,000 in October 2010. (GEs 2-4; Tr. 25-27.)

Sometime before 2000, Applicant obtained a second mortgage (home-equity loan) (SOR ¶ 1.a) to add an in-law apartment to his home.2 Applicant’s in-laws had to vacate their apartment. Shortly after his in-laws moved into his home, his father-in-law died.3 Applicant incurred some expenses for his mother-in-law’s care and for his elderly mother as well, although his mother did not live in his home. By the mid-2000s, Applicant was financially overextended because of college expenses for his children and caring for his and his spouse’s elderly mothers. Applicant made no payments on the home-equity loan after 2004 or 2005, and the loan was sold off in March 2006. As of October 2015, Applicant owed a charged-off balance of $68,082 on the loan. In April 2010, an electricity provider obtained a $6,879 judgment against Applicant (SOR ¶ 1.b). He testified that he could not afford the electricity bills incurred in part because his mother-in-law needed “a medical life- support machine.” (GEs 2-4; Tr. 25-26, 37-39, 45.)

On October 21, 2015, Applicant completed and certified to the accuracy of an SF 86 on which he responded affirmatively to a financial record inquiry concerning delinquency involving enforcement, including whether he had a judgment entered against him in the last seven years. He disclosed that a lien had been placed against his home by the electric company because he owed approximately $10,000, which he incurred largely because of his mother-in-law’s medical equipment. He also listed a judgment of $10,000 entered against him for a defaulted unsecured loan (not alleged in the SOR), which he was repaying at $100 a month. Applicant attributed the delinquent accounts to having had three children in college at the same time and to having taken on the obligation of caring for his and his spouse’s elderly parents. He indicated that he was working on improving his financial situation. In response to SF 86 inquiries concerning any delinquency involving routine accounts, Applicant reported only one debt: a $240 disputed medical bill in collection. Applicant reported foreign travel for business and for tourism in the last seven years. He listed pleasure trips to the Caribbean in February 2010 and February 2012; to Mexico in February 2011, February 2013, February 2014, and December 2014; and to Central America in February 2015. (GE 1.)

A check of Applicant’s credit on November 17, 2015, revealed the judgment awarded the electric company in April 2010; the charged-off home-equity loan of $68,082; a history of late student-loan payments and some student loans in collection before the October 2013 loan consolidation; and a history of late payments as recently as January 2015 on his home mortgage.4 Applicant was making timely payments on a joint vehicle loan obtained for $27,674 in July 2014, and on an individual unsecured loan obtained for $20,000 in April 2015. (GE 2.)

Applicant was interviewed on January 8, 2017, by an authorized investigator for the Office of Personnel Management (OPM). His current and previous U.S. passport were reviewed. His passports confirmed his recent foreign travels reported on his SF 86 with some discrepancy in dates (e.g., February 2011 and April 2012 to the Caribbean; April 2010, December 2010, and February 2014 to Mexico). Applicant volunteered that he had again traveled to Mexico, in late January 2016, for a one-week vacation. Regarding his finances, Applicant described his financial situation as overburdened with college debt for his children and other debt caring for his parents and in-laws. Applicant indicated that he was paying $150 extra each month on his electric bill toward the arrearage, but the balance had accrued to $14,000. As for his $68,082 charged-off home-equity loan, he explained that he began having problems making his payment in 2007 or 2008 while paying college tuition. He related that he had arranged repayment terms, but his loan was then sold off to collection entities, who could not produce any payment records. Applicant expressed a willingness to enter into a repayment plan, but the debt was not a priority for him. He was “not chasing ghosts.” He claimed he did not list the debt on his SF 86 because of “oversight.” (GE 4.)

During his OPM interview, Applicant volunteered that he had withdrawn approximately $40,000 from his 401(k) in approximately 2010 to pay college tuition for one of his children. As a result, he owed federal taxes plus penalties. In September 2013, he began repaying $8,858 in outstanding federal taxes for 2010 at $63 every pay period. He missed some payments because some pay periods did not align with the IRS monthly payment plan. After the IRS sent him a demand notice for $3,435 in February 2016, he arranged for $127 per month to be automatically deducted from his pay. He estimated his balance at $5,457. Applicant acknowledged his large student loan debt and that some of the student loans for his children’s educations had been in collection before the consolidation. He claimed that he was making monthly payments on the consolidated student loan, but there is no evidence corroborating repayment. (GE 4; Tr. 49-50.)

As of March 2017, Equifax was reporting no progress on the charged-off loan for $68,082. The power company’s judgment from 2010 had been dropped from his credit record. No evidence was presented showing the balance of the judgment debt. His consolidated student loan was listed as deferred with a balance of $404,506. Applicant was making monthly payments of $538 for his spouse’s vehicle purchased in July 2014 (balance $18,349); of $507 on an unsecured $20,000 loan obtained in April 2015 for a wedding (balance $14,079); and of $135 on an unsecured loan obtained in September 2014 (balance $1,039). (Tr. 53-54.) He was also making payments on three credit-card accounts opened between September 2014 and January 2016. The credit card balances totaled $3,713 as of March 2017. Applicant was past-due 30 days on his monthly mortgage payment of $1,924 in both January 2017 and February 2017. (GE 3.)

At his hearing, Applicant testified that he no longer knew which entity held the charged-off home-equity debt. He asserted that he had heard nothing about the debt “in months, maybe even a year,” and that he cannot “go chasing things on [his] credit report that are ten years old.” He was working on getting his finances in order. He testified that he is “more than willing” to enter into repayment arrangements for the debt with the entity that can prove it holds the note. Applicant asserted that he was repaying his consolidated student loan and his home mortgage loan on time at $1,895 and $1,960 respectively, and that he has only one open revolving charge account, which had a balance of $1,600 as of December 2017. (Tr. 26-28, 41, 54.) He stated that his federal income tax debt for 2010 was being repaid at $163 per month currently. (Tr. 50.) When asked to justify his vacation expenditures when his home-equity loan remains unaddressed, Applicant explained that his annual vacations with his spouse cost “usually $3,000 or less” and were through a company that allowed him to spread out his payments over the course of a year. (Tr. 43.) Applicant denied that vacations were given priority. It was a matter of not knowing to whom to pay the home-equity debt. (Tr. 44.) Applicant estimated the balance of his electricity arrearage (SOR ¶ 1.b) at $12,000. (Tr. 46-47.)

Applicant’s post-hearing submissions included a record of payments totaling $2,987 between December 2016 and December 2017 to the electric company. The payment record does not show the amounts applied to arrearages. (AE A.) Applicant presented a billing statement dated November 24, 2017, requesting payment in full of $68,082 for the home-equity loan. The billing address for Applicant on the billing statement does not match any address for Applicant, although Applicant’s home is the property address for the loan. (AE A.) Applicant received the statement by email after he contacted the collection entity directly in an attempt to establish a repayment plan. The collection entity requested some financial information from him before establishing any terms of repayment to start in January 2018.

Applicant’s children are now grown and employed. (Tr. 31.) Applicant has not asked them to pay any of the student loans that he obtained for their educations. He believes it is his obligation as a parent to pay for his children’s college educations. (Tr. 55.)

Applicant held a security clearance in the past for his work with a previous employer with no evidence of any violations. Available work performance evaluations for Applicant show that he has been a successful contract manager for his current employer. By the end of his second year on the job, he had demonstrated a strong ability to multi-task, prioritize his work, and be an effective team player while carrying a demanding workload. He was efficient in time management and able to handle complex assignments with little management oversight. He received two team achievement awards in 2016, including for leading an effort to redesign hardware on a project with high visibility within the company. (AEs C-J.)

Applicant’s current salary from his defense contractor employment is $123,000 annually. His starting wage was $102,000 a year. He had earned only about $70,000 a year with his previous employer. (Tr. 56-57.) In 2016, Applicant’s spouse retired from her job as a teacher’s aide because of medical issues. She had earned $800 a month, but her retirement is only $265 a month. In June 2017, Applicant began receiving a pension from his previous employer to make up for the loss of his spouse’s income. His pension is $14,000 annually. Applicant is also taking withdrawals from his 401(k), which has an approximate balance of $97,000, to pay down debt. (Tr. 27-28, 30-31, 49.) He has less than $500 in his checking account and nothing in savings. He and his spouse are living from paycheck to paycheck. (Tr. 48-49.) He has looked into debt-management programs but not contracted for services because he knows he has to pay his bills. (Tr. 52.)

POLICIES

The U.S. Supreme Court has recognized the substantial discretion the Executive Branch has in regulating access to information pertaining to national security, emphasizing that “no one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). 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 required to be considered 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 overall 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, the applicant is responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by applicant or proven by Department Counsel. . . .” The applicant 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 the 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

The security concerns about financial considerations are articulated in AG ¶ 18:

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.

An applicant is not required to be debt free, but is required to manage his finances in a way as to exhibit sound judgment and responsibility. The concern under Guideline F is broader than the possibility that an individual might knowingly compromise classified information in order to raise money to address debts. It encompasses concerns about an individual’s self-control, judgment, and other qualities essential to protecting classified information.

Guideline F security concerns are established by Applicant’s default of his home- equity loan and by the past-due electric bills that resulted in a $6,879 judgment against him in April 2010. Applicant presented evidence of recent utility payments to his electricity provider, which he asserts include up to $150 per month toward his arrearages. He estimated his past-due balance at $12,000 as of December 2017. Disqualifying conditions AG ¶ 19(a), “inability to satisfy debts,” and AG ¶ 19(c), “a history of not meeting financial obligations,” are established. Concerning AG ¶ 19(b), “unwillingness to satisfy debts regardless of the ability to do so,” Applicant testified that the charged-off home-equity loan was not a priority for him because of his other debt obligations, such as the $404,506 in consolidated student-loan debt. He later indicated on cross-examination that he was “more than willing” to make repayment arrangements if shown documentation proving that the entity claiming to hold the debt is entitled to collect it, and if his payments will go toward discharging the note. His post-hearing submissions include a billing statement from the collection entity identified in SOR ¶ 1.a showing a $68,082 balance on the account. Applicant would not likely have inquired about the debt balance if he had no intention of addressing the debt. The concern primarily is with Applicant’s inability to pay the debt rather than unwillingness to satisfy the debt.

Applicant has the burden of establishing one or more of the following potentially mitigating conditions under 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;

(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 person has received or is receiving 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. The debts were not incurred recently, but AG ¶ 20(a) does not mitigate outstanding delinquency with little documented progress at resolution. AG ¶ 20(b) has some applicability. Applicant obtained the home-equity loan for an addition to his home when his parents-in-law needed a place to live. Apparently his electric bills spiraled out of control because of his mother-in-law’s medical equipment. However, it is difficult to find that Applicant acted fully responsibly under AG ¶ 20(b) when he continued to take annual vacations to international destinations at a cost of $3,000 each trip while his home-equity loan went unaddressed.

Applicant has shown some good faith under AG ¶ 20(d) by paying something extra to his electric company each month. Yet there are no clear indications that his financial problems are under control. His payments to the electric company for the past year do not show the amounts being applied to his delinquency. In December 2017, Applicant estimated the outstanding arrearage at $12,000, almost double the judgment award, which suggests that his extra payments have been minimal, irregular, or too recent to meaningfully address his delinquency. Applicant’s belated inquiry about the status of his home-equity loan in December 2017 is not enough to satisfy either AG ¶ 20(c) or AG ¶ 20(d). He has made no payments toward the home-equity loan debt, which at $68,082 is large enough to cause financial stress for him. Available credit reports show that the home- equity loan has been charged off. A creditor charge-off is an account transfer made when a creditor no longer expects to be repaid. However, the collection entity was billing Applicant for the full balance as of November 2017. There is no evidence that Applicant received any billing statements before his post-hearing inquiry. The billing statement in the record was not correctly addressed. However, the collection entity does not appear willing to cancel Applicant’s legal liability for repayment. AG ¶ 20(e) has not been shown to apply.

The security clearance adjudication is not aimed at collecting an applicant’s personal debts. See ISCR Case No. 09-02160 (App. Bd. Jun. 21, 2010). In evaluating Guideline F cases, the Appeal Board has held that an applicant is not required, as a matter of law, to establish that he has paid off the debts in the SOR. He is required to demonstrate that he has an established plan to resolve his financial problems and that he has taken significant actions to implement that plan. See ISCR 07-06482 at 2-3 (App. Bd. May 21, 2008). Although Applicant expressed a willingness to negotiate repayment terms for the defaulted home-equity loan, no repayment plan was in place for the debt as of the close of the record. Even assuming that Applicant is able to arrange repayment terms to his satisfaction, it is debatable whether he will be able to make the payments. His finances are already strained from having to make monthly payments on other accounts, including $507 on a $20,000 unsecured loan obtained in April 2015 for a wedding; $1,895 toward his consolidated student loans for $404,506; $538 for his spouse’s car; and $163 to the IRS for past-due taxes for tax year 2010 because of a premature 401(k) withdrawal. His home mortgage loan was 30 days past due as recently as February 2017.

WHOLE PERSON CONCEPT

In the whole-person evaluation, the administrative judge must consider the totality of an applicant’s conduct and all relevant circumstances in light of the nine adjudicative process factors in AG ¶ 2(d).5 Some of the factors in AG ¶ 2(d) were addressed under Guideline F, but some warrant additional comment.

Applicant held a security clearance with his previous employer with no evidence of any violations. Reports of Applicant’s work performance with his current employer show him to be a dedicated employee. He has demonstrated a strong ability to multi-task, prioritize his work, and be an effective team player while carrying a demanding workload. He is efficient in time management and able to handle complex assignments with little management oversight. He has not always exercised similarly sound judgment in handing his personal finances, however. Knowing that he had more than $70,000 in loans to repay from adding an in-law apartment to his home, he took on some 18 student loans for his children’s educations. It is understandable that he would want to pay for his children’s college educations, but he overburdened himself financially by taking on more debt than he could reasonably afford on his household income. He lost track of some of the student loans, and some accounts went to collection. He managed to consolidate his federal student loans in October 2013, but with interest and other charges, his federal student-loan balance had accrued to $404,506 by March 2017. To pay college tuition in 2010, he withdrew $40,000 from his 401(k), and he is still repaying taxes owed from that premature withdrawal. He obtained an unsecured loan of $20,000 in April 2015 for a wedding. He is taking 401(k) withdrawals presently to pay other bills. As his debt burden has grown, he has spent $3,000 for a vacation abroad, for the most part annually from 2001 through 2016.

A security clearance determination is not an assessment that an applicant is disloyal. Rather, it involves an evaluation of an applicant’s judgment, reliability, and trustworthiness in light of the security guidelines in the Directive. See ISCR Case No. 09- 02160 (App. Bd. Jun. 21, 2010). It is well settled that once a concern arises regarding an applicant’s security clearance eligibility, there is a strong presumption against the grant or renewal of a security clearance. See Dorfmont v. Brown, 913 F. 2d 1399, 1401 (9th Cir. 1990). For the reasons discussed, Applicant has raised enough doubt in that regard to where I am unable to conclude that it is clearly consistent with the national interest to grant him security clearance eligibility.

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.b: Against Applicant

CONCLUSION

In light of all of the circumstances, 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.

_____________________ Elizabeth M. Matchinski Administrative Judge

FOOTNOTES

1 Application of the AGs that were in effect as of the issuance of the SOR would not change my decision in this case. 2 Applicant indicated during his January 2017 subject interview that he had a home-equity mortgage that he obtained for approximately $68,000 in 2001 or 2002 and a personal loan of $10,000 to put an addition on his home. After he defaulted on the home-equity loan, the creditor placed $68,082 for collection. (GE 4.) The collection entity now holding the loan reports that the account was opened in May 2006, although that date may be when it was first placed for collection. (GEs 2-3.) Applicant testified that the home-equity loan “dates to pre-2000.” (Tr. 26, 35-36.) He admits that he had not made any payments on the loan since "2004, maybe 2005.” (Tr. 39.) His April 2017 credit report shows no activity on the account since April 2011 (GE 3) while his November 2015 credit report indicates a date of March 2013 for last activity. (GE 2.) Applicant has not made any payments toward the charged-off balance.

3 Applicant testified that his father-in-law died while he and his spouse were on vacation in a Caribbean country. (Tr. 37.) He did not provide the date of his father-in-law’s death, but his passport bore a stamp showing an entry to the named Caribbean country in August 2001. (GE 4.) 4 As of November 2015, Applicant’s and his spouse’s home loan had been current since February 2015. Their loan payment was 30 days late eight times in 2014. His credit history shows that the mortgage had been 30 days past due 27 times, 60 days past due 13 times, and 90 days past due 15 times. (GE 2.) 5 The factors under AG ¶ 2(d) are as follows:

(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.