ISCR Case 17-01778.h1

Case Headnote

ISCR Case No. 17-01778.h1

deniedOct 11, 2018· Hon. Edward W. Loughran· hearing

Summary

A 53-year-old defense contractor was denied a security clearance due to concerns under Guideline E (Personal Conduct) and Guideline F (Financial Considerations). The applicant's financial history included unfiled tax returns and multiple delinquent debts. While the judge found that the applicant successfully refuted personal conduct concerns, he failed to mitigate the financial issues.

Specific financial allegations included a $1,171 debt, which the applicant claimed was settled for $800, with half paid, though a February 2018 credit report still showed a $761 balance. A $1,612 judgment from October 2005 for back rent and eviction was listed in a 2010 bankruptcy petition, but no evidence of a creditor claim was presented. A credit card debt, $154 past due with a $597 balance in December 2016, was later charged off for $643, with the applicant denying knowledge of the bank. Finally, an $8,979 charged-off auto loan, listed in both 2010 and 2014 bankruptcy petitions, was reportedly settled for $5,000 in 2015, though the applicant stated the collection company stopped accepting payments.

The denial was based on the applicant's history of financial problems, which were deemed recent and ongoing, raising doubts about his reliability and trustworthiness. The applicant did not demonstrate a good-faith effort to resolve his financial obligations.

Why the Applicant Was Denied

The applicant has a history of financial problems, including unfiled tax returns and delinquent debts.
The applicant's financial issues are recent and ongoing, casting doubt on his reliability and trustworthiness.
The applicant did not demonstrate a good-faith effort to resolve his financial obligations.

Conditions Referenced

Disqualifying

F.19(a)raisedInability to Satisfy Debts
F.19(c)raisedA History of Not Meeting Financial Obligations
F.19(f)raisedFailure to File or Fraudulently Filing Annual Federal, State, or Local Income Tax Returns or Failure to Pay Annual Federal, State, or Local Income Tax as Required

Mitigating

F.20(a)rejectedThe 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
F.20(b)rejectedThe Conditions That Resulted in the Financial Problem Were Largely Beyond the Person’s Control
F.20(g)appliedThe Individual Has Made Arrangements with the Appropriate Tax Authority to File or Pay the Amount Owed and Is in Compliance with Those Arrangements

Key Rule Quoted

“A person who fails repeatedly to fulfill his or her legal obligations, such as filing tax returns and paying taxes when due, does not demonstrate the high degree of good judgment and reliability required of those granted access to classified information.”
— ISCR Case No. 17-01382 at 4 (App. Bd. May 16, 2018)

Procedural Posture

SOR issuedOct 26, 2017
Answer filedJan 15, 2018
Hearing heldJun 18, 2018
Decision dateOct 11, 2018

Cite For

Denial of Security Clearance Due to Unresolved Financial Issues
Failure to Mitigate Financial Considerations Despite Some Positive Actions
Rejection of Mitigating Conditions Based on Ongoing Financial Distress

Editorial summary generated for research. Not legal advice; not a prediction. Verify against the full decision before relying on any quoted language.

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
2.a–2.f	6 sub-charges — specific text not stated in this decision (for the applicant).	For Applicant		—		—	—	—

Allegation

Finding

Conduct

Concealed Issue

Response

Disqualifying (¶16)

Mitigating applied (¶17)

Mitigation

2.a–2.f

6 sub-charges — specific text not stated in this decision (for the applicant).

For Applicant

—

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a–1.i	9 sub-charges — specific text not stated in this decision (against the applicant).	Against Applicant			—	—	—
1.j	Applicant admitted owing the $1,171 debt alleged in SOR ¶ 1.j at one time, but he stated that the debt was settled for $800, and that he paid half the settlement amount. He paid $409.88 to the creditor in November 2017. The February 2018 credit report lists the debt with a $761 balance ($1,171 minus $410 equals $761). $761	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.k	The judgment is reported by LexisNexis as being filed in October 2005 for $1,612. As indicated above, the judgment was listed as a creditor in Applicant’s 2010 bankruptcy petition. However, there is no evidence that the creditor ever filed a claim with the bankruptcy court. The judgment was for back rent and eviction. $1,612	Against Applicant	Judgment Against Applicant	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.l	SOR ¶ 1.l alleges a credit card debt that was $154 past due with a $597 balance. The debt is listed as such on the December 2016 credit report. The debt is listed on the February 2018 credit report as charged off in the amount of $643, transferred, with a zero balance. A collection company lists the debt with a $643 balance. Applicant denied owing the debt and stated that he had never heard of the bank. He stated that he called the bank, but they had no record of his account. He provided no documentation of his dispute. $643	Against Applicant	Credit Card Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.m	Applicant admitted owing the $8,979 charged-off auto loan alleged in SOR ¶ 1.m, but he stated that the account was closed. The December 2016 credit report lists the account as opened in 2005. The 2010 bankruptcy petition listed the debt with a balance of $18,818. The bankruptcy court allowed secured and unsecured claims of $18,473 on the debt. The creditor received $7,293 in principal and $1,637 in interest during the course of the bankruptcy. The debt was listed as a secured debt with a balance of $5,781 on the 2014 bankruptcy petition. There is no evidence that the creditor filed a claim with the bankruptcy court. Applicant stated that he settled the debt for $5,000 with a collection company in 2015. He stated that he paid $600 every two weeks until the collection company stopped accepting payments. The debt is not listed on the February 2018 credit report. $8,979	Against Applicant	Auto Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a–1.i

9 sub-charges — specific text not stated in this decision (against the applicant).

Against Applicant

—

1.j

Applicant admitted owing the $1,171 debt alleged in SOR ¶ 1.j at one time, but he stated that the debt was settled for $800, and that he paid half the settlement amount. He paid $409.88 to the creditor in November 2017. The February 2018 credit report lists the debt with a $761 balance ($1,171 minus $410 equals $761).

$761

Against Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.k

The judgment is reported by LexisNexis as being filed in October 2005 for $1,612. As indicated above, the judgment was listed as a creditor in Applicant’s 2010 bankruptcy petition. However, there is no evidence that the creditor ever filed a claim with the bankruptcy court. The judgment was for back rent and eviction.

$1,612

Against Applicant

Judgment Against Applicant

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.l

SOR ¶ 1.l alleges a credit card debt that was $154 past due with a $597 balance. The debt is listed as such on the December 2016 credit report. The debt is listed on the February 2018 credit report as charged off in the amount of $643, transferred, with a zero balance. A collection company lists the debt with a $643 balance. Applicant denied owing the debt and stated that he had never heard of the bank. He stated that he called the bank, but they had no record of his account. He provided no documentation of his dispute.

$643

Against Applicant

Credit Card Debt

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.m

Applicant admitted owing the $8,979 charged-off auto loan alleged in SOR ¶ 1.m, but he stated that the account was closed. The December 2016 credit report lists the account as opened in 2005. The 2010 bankruptcy petition listed the debt with a balance of $18,818. The bankruptcy court allowed secured and unsecured claims of $18,473 on the debt. The creditor received $7,293 in principal and $1,637 in interest during the course of the bankruptcy. The debt was listed as a secured debt with a balance of $5,781 on the 2014 bankruptcy petition. There is no evidence that the creditor filed a claim with the bankruptcy court. Applicant stated that he settled the debt for $5,000 with a collection company in 2015. He stated that he paid $600 every two weeks until the collection company stopped accepting payments. The debt is not listed on the February 2018 credit report.

$8,979

Against Applicant

Auto Loan Debt

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

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Case Profile

Summary

Why the Applicant Was Denied

Conditions Referenced

Key Rule Quoted

Procedural Posture

Cite For

Full decision

DEFENSE OFFICE OF HEARINGS AND APPEALS

HEARING

APPEARANCES

STATEMENT OF CASE

FINDINGS OF FACT

POLICIES

ANALYSIS

WHOLE PERSON CONCEPT

FORMAL FINDINGS

CONCLUSION

FOOTNOTES