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ISCR Case 17-03218.h1 — CASE

ISCR Case 17-03218.h1denied

Case Headnote

ISCR Case No. 17-03218.h1

deniedJun 4, 2018· Hon. Edward W. Loughran· hearing

Summary

A 39-year-old defense contractor and military veteran was denied a security clearance under Guideline F (Financial Considerations) due to a history of financial issues. The Statement of Reasons cited a Chapter 7 bankruptcy filed in 2002 and discharged the same year, a mortgage loan foreclosed in 2015, and ten delinquent debts totaling approximately $11,100.

Disqualifying conditions F1 and F3 were raised, while mitigating conditions F2, F3, and F4 were considered. However, the applicant failed to provide evidence of financial counseling or repayment of debts. The judge noted that the financial issues were ongoing, raising doubts about the applicant's reliability and judgment.

Ultimately, the application was denied because the applicant did not mitigate the financial concerns. The applicant also failed to respond to a FORM, leaving the current state of his finances unknown and preventing a favorable determination.

Why the Applicant Was Denied

The applicant did not provide evidence of financial counseling or repayment of debts.
The applicant's financial issues are ongoing and raise doubts about his reliability and judgment.
The applicant failed to respond to the FORM, leaving the current state of his finances unknown.

Conditions Referenced

Disqualifying

F1raisedInability to Satisfy Debts
F3raisedA History of Not Meeting Financial Obligations

Mitigating

F2rejectedConditions Beyond the Person's ControlWhile the applicant's income dropped after deployment, he did not demonstrate responsible actions to address his debts.
F3rejectedFinancial CounselingThere is no evidence that the applicant received financial counseling.
F4rejectedGood-faith Effort to Repay DebtsThe applicant did not initiate or adhere to a good-faith effort to repay overdue creditors.

Key Rule Quoted

“Any doubt concerning personnel being considered for national security eligibility will be resolved in favor of the national security.”

Procedural Posture

SOR issuedOct 10, 2017
Answer filedNov 27, 2017Applicant elected to decide on the written record.
Hearing held—No hearing; case decided on written record.
Decision dateJun 4, 2018

Cite For

Denial of Security Clearance Due to Unresolved Financial Issues
Importance of Demonstrating Financial Responsibility for Security Clearance Eligibility
Impact of Ongoing Financial Distress on Trustworthiness and Reliability Under Guideline F.

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 did not mitigate the financial considerations security concerns, which included a history of financial problems such as a Chapter 7 bankruptcy, a foreclosed mortgage, and multiple delinquent debts totaling approximately $11,100. The applicant's financial issues were deemed recent and ongoing, leading to a denial of eligibility for access to classified information.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Chapter 7 bankruptcy case that was filed in 2002, with the dischargeable debts discharged the same year	Against Applicant	Bankruptcy Filing	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	a mortgage loan that was foreclosed in 2015	Against Applicant	Mortgage or Home Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	ten delinquent debts totaling about $11,100 $11,100	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d–1.l	9 sub-charges — specific text not stated in this decision (against the applicant). (low confidence)	Against Applicant			—	—	—

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. 17-03218 ) Applicant for Security Clearance )

For Government: Benjamin R. Dorsey, Esq., Department Counsel For Applicant: Pro se

06/04/2018 ______________

STATEMENT OF CASE

______________

LOUGHRAN, Edward W., Administrative Judge:

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

Statement of the Case

On October 10, 2017, the Department of Defense (DOD) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guideline F, financial considerations. Applicant responded to the SOR on November 27, 2017, and elected to have the case decided on the written record in lieu of a hearing.

The Government’s written case was submitted on December 20, 2017. A complete copy of the file of relevant material (FORM) was provided to Applicant, who was afforded an opportunity to file objections and submit material to refute, extenuate, or mitigate the security concerns. Applicant received the FORM on January 4, 2018. As of March 13, 2018, he had not responded. The case was assigned to me on May 10, 2018. The Government exhibits included in the FORM are admitted in evidence.

FINDINGS OF FACT

Applicant is a 39-year-old employee of a defense contractor. He has worked for his current employer since August 2015. He served on active duty in the U.S. military from 2003 until he was honorably discharged in 2006. He served in the reserves from 2006 to 2017, including active duty from 2009 to 2010 and 2012 to 2013, during which he deployed to Afghanistan. He attended college for a period without earning a degree. He is married with two children.1

The SOR alleges a Chapter 7 bankruptcy case that was filed in 2002, with the dischargeable debts discharged the same year; a mortgage loan that was foreclosed in 2015; and ten delinquent debts totaling about $11,100. Applicant admitted all the allegations.2

Applicant stated that his income dropped significantly when he returned from deployment. He paid too much for his house, and his income was insufficient to pay the monthly mortgage loan payments of about $1,000. He was about ten months behind on the payments when the house was lost to foreclosure in 2015. He stopped paying an auto loan because of a lack of income. Several debts were not paid on time because he moved, and the bills were late getting forwarded to his new address. He reported financial problems on his February 2016 Questionnaire for National Security Positions (SF 86), and he discussed them during his background interview in July 2017. He told the investigator at that time that he was fully willing and able to repay his current and future debt.3

There is no evidence that Applicant received financial counseling or paid any of the debts alleged in the SOR. Because he did not respond to the FORM, the current state of his finances is unknown.

POLICIES

This case is adjudicated 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 (AG), which became effective on June 8, 2017.

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 to be 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, administrative judges apply the guidelines 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.”

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 the 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 the applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation of potential, rather than actual, risk of compromise of classified information.

Section 7 of EO 10865 provides that adverse 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 concern for financial considerations is set out 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.

The guideline notes several conditions that could raise security concerns under AG ¶ 19. The following are potentially applicable in this case:

(a) inability to satisfy debts; and

Applicant has a history of financial problems, including a Chapter 7 bankruptcy case, a foreclosed house, an unpaid auto loan, and other delinquent debts. The evidence is sufficient to raise the above disqualifying conditions.

Conditions that could mitigate the financial considerations security concerns are provided under AG ¶ 20. The following are potentially applicable:

(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; and

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

Applicant’s financial problems date back more than 16 years. His income dropped significantly after he returned from deployment. He told the background investigator in July 2017 that he was fully willing and able to repay his current and future debt. There is no evidence that Applicant received financial counseling or paid any of the debts alleged in the SOR. Because he did not respond to the FORM, the current state of his finances is unknown. I am unable to find that Applicant acted responsibly under the circumstances or that he made a good-faith effort to pay his debts. His financial issues are recent and ongoing. They continue to cast doubt on his current reliability, trustworthiness, and good judgment. AG ¶¶ 20(a), 20(c), and 20(d) are not applicable. AG ¶ 20(b) is partially applicable. I find that financial considerations concerns remain despite the presence of some mitigation.

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.

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 guidelines 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 have incorporated my comments under Guideline F in my whole-person analysis. I also considered Applicant’s honorable military service, and particularly his deployment to Afghanistan.

Overall, the record evidence leaves me with questions and doubts about Applicant’s eligibility and suitability for a security clearance. I conclude Applicant did not mitigate the financial considerations security concerns.

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.l: Against Applicant

CONCLUSION

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.

________________________ Edward W. Loughran Administrative Judge

FOOTNOTES

1 Items 3, 4. 2 Items 2-6. 3 Items 3, 4.