ISCR Case 09-04389.h1

Case Headnote

ISCR Case No. 09-04389.h1

deniedJul 1, 2009· Hon. Erin C. Hogan· hearing

Summary

A 53-year-old Department of Defense contractor was denied a security clearance under Guideline F (Financial Considerations) due to significant financial mismanagement. The applicant had 12 delinquent accounts totaling approximately $829,988, primarily stemming from foreclosures on multiple properties.

Specific allegations included an $1,822 judgment for a shed violation, a $193 judgment from a former residence, and a $199 Direct TV account, which the applicant later provided proof of payment for. Other debts included a $186 medical account and a $19 charged-off account, for which no proof of payment was submitted. Major debts involved a $206,762 home equity loan on his current residence, a $360,000 charged-off first mortgage after a foreclosure, and a $233,000 charged-off account from an investment property foreclosure. A $27,450 second mortgage on a foreclosed home and a disputed $60 medical account were also cited.

Despite some mitigating circumstances, the judge found that the applicant's financial irresponsibility and inability to meet obligations raised serious concerns about his reliability and judgment. The applicant failed to provide documentation to support claims that foreclosures resolved outstanding debts, and his financial issues were largely attributed to poor judgment in purchasing multiple properties. The security clearance was DENIED.

Why the Applicant Was Denied

The applicant had 12 delinquent accounts totaling approximately $829,988, indicating financial irresponsibility.
The applicant failed to provide documentation to substantiate claims that foreclosures resulted in no outstanding debts.
The applicant's financial issues were largely self-inflicted due to poor judgment in purchasing multiple properties.

Conditions Referenced

Disqualifying

AG ¶ 19(a)appliedInability or Unwillingness to Satisfy Debts
AG ¶ 19(c)appliedA History of Not Meeting Financial Obligations
AG ¶ 19(e)appliedConsistent Spending Beyond One’s Means

Mitigating

AG ¶ 20(b)appliedConditions Largely Beyond the Person's ControlThe applicant experienced job loss and his wife quit her job to care for her mother.
AG ¶ 20(d)appliedGood-faith Effort to Repay Overdue CreditorsThe applicant made efforts to resolve some debts.
AG ¶ 20(e)rejectedReasonable Basis to Dispute Legitimacy of Past-due DebtThe applicant did not provide sufficient documentation to substantiate his claims.

Key Rule Quoted

“The protection of the national security is the paramount consideration.”

Procedural Posture

SOR issuedOct 21, 2009
Answer filedDec 10, 2009
Hearing heldApr 14, 2010
Decision dateJul 20, 2010

Cite For

Financial Irresponsibility Under Guideline F
Impact of Significant Debt on Security Clearance Eligibility
Consideration of Mitigating Circumstances in Financial Cases

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

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	$1,822 judgment filed against Applicant in February 2009 on behalf of the Homeowner’s Association in the neighborhood of Applicant’s current residence – House #2. The judgment is related to a fine for a shed on their property that is too close to the property line. Applicant testified the previous owners built the shed. He anticipates the judgment will be incorporated into the mortgage loan modification that he is working on for his primary residence. $1,822	Against Applicant	Judgment Against Applicant	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	$193 judgment filed against Applicant in 2007 on behalf of the Homeowner’s Association in the neighborhood of Applicant’s former residence – House #1. Applicant believes this debt is resolved. He believes the settlement was paid off when the home foreclosed. $193	Against Applicant	Judgment Against Applicant	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	$199 Direct TV account placed for collection. Applicant believes this was paid off in July 2007 and in October 2009. He paid the account off when he separated from his first wife. He claims his ex-wife opened the account again in his name. The record was held open for him to provide proof of payment. He provided proof the debt was paid. $199	For Applicant	Unspecified Financial	Admitted	—	(e) reasonable, documented basis to dispute the debt	Documented Debt Paid in Full
1.d	$186 medical account placed for collection in February 2009. Applicant testified this debt was paid off over the telephone in October or November 2009. The record was held open for him to provide proof of payment. Nothing was submitted. $186	Against Applicant	Medical Debt	Denied	—	—	Claimed Debt Paid in Full
1.e	$19 charged off account. Applicant claims his ex-wife opened this account in his name. He paid the account once he discovered it. He was going to look for a receipt. Nothing was submitted after the hearing. $19	Against Applicant	Unspecified Financial	Denied	—	—	Claimed Debt Paid in Full
1.f	$206,762 home equity loan that was placed for collection in November 2008 for House # 2. This is the second mortgage on Applicant’s current residence. He requested that he be allowed to pay a lesser payment. He hopes the second mortgage will be combined with his primary mortgage when he modifies his current mortgage. $206,762	Against Applicant	Mortgage or Home Loan Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.g	$209 discount department store account that was placed for collection in August 2008. Applicant testified the account was paid and intended to provide proof of payment after the hearing. Proof was provided that the account is paid in full. $209	For Applicant	Unspecified Financial	Admitted	—	(e) reasonable, documented basis to dispute the debt	Documented Debt Paid in Full
1.h	$88 charged off cell phone account. Applicant paid this account. $88	For Applicant	Unspecified Financial	Admitted	—	(e) reasonable, documented basis to dispute the debt	Documented Debt Paid in Full
1.i	$360,000 charged off first mortgage owed after Applicant’s Home # 1 was foreclosed in September 2008. Applicant testified that the home sold for more than the mortgage amount. He provided no documentation verifying this assertion. He intends to pursue this issue with a real estate attorney. $360,000	Against Applicant	Mortgage or Home Loan Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.j	$233,000 charged off account related to the investment property – House # 3, which foreclosed in December 2007. Applicant claims the property was sold for more than its value. No documentation was provided. $233,000	Against Applicant	Mortgage or Home Loan Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.k	second mortgage on home # 1 that is 120 days or more past due in the amount of $5,289, balance $27,450. Applicant claims the home was sold for more than the mortgage amount and both mortgages should have been paid off as a result of the foreclosure sale. No documentation was provided. $5,289	Against Applicant	Mortgage or Home Loan Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.l	$60 medical account placed for collection in November 2007. Applicant disputes this account. His last contact with the creditor was in March 2009. Status of the debt is uncertain. $60	Against Applicant	Medical Debt	Denied	—	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

$1,822 judgment filed against Applicant in February 2009 on behalf of the Homeowner’s Association in the neighborhood of Applicant’s current residence – House #2. The judgment is related to a fine for a shed on their property that is too close to the property line. Applicant testified the previous owners built the shed. He anticipates the judgment will be incorporated into the mortgage loan modification that he is working on for his primary residence.

$1,822

Against Applicant

Judgment Against Applicant

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.b

$193 judgment filed against Applicant in 2007 on behalf of the Homeowner’s Association in the neighborhood of Applicant’s former residence – House #1. Applicant believes this debt is resolved. He believes the settlement was paid off when the home foreclosed.

$193

Against Applicant

Judgment Against Applicant

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.c

$199 Direct TV account placed for collection. Applicant believes this was paid off in July 2007 and in October 2009. He paid the account off when he separated from his first wife. He claims his ex-wife opened the account again in his name. The record was held open for him to provide proof of payment. He provided proof the debt was paid.

$199

For Applicant

Unspecified Financial

Admitted

—

(e) reasonable, documented basis to dispute the debt

Documented

Debt Paid in Full

1.d

$186 medical account placed for collection in February 2009. Applicant testified this debt was paid off over the telephone in October or November 2009. The record was held open for him to provide proof of payment. Nothing was submitted.

$186

Against Applicant

Medical Debt

Denied

—

Claimed

Debt Paid in Full

1.e

$19 charged off account. Applicant claims his ex-wife opened this account in his name. He paid the account once he discovered it. He was going to look for a receipt. Nothing was submitted after the hearing.

$19

Against Applicant

Unspecified Financial

Denied

—

Claimed

Debt Paid in Full

1.f

$206,762 home equity loan that was placed for collection in November 2008 for House # 2. This is the second mortgage on Applicant’s current residence. He requested that he be allowed to pay a lesser payment. He hopes the second mortgage will be combined with his primary mortgage when he modifies his current mortgage.

$206,762

Against Applicant

Mortgage or Home Loan Debt

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.g

$209 discount department store account that was placed for collection in August 2008. Applicant testified the account was paid and intended to provide proof of payment after the hearing. Proof was provided that the account is paid in full.

$209

For Applicant

Unspecified Financial

Admitted

—

(e) reasonable, documented basis to dispute the debt

Documented

Debt Paid in Full

1.h

$88 charged off cell phone account. Applicant paid this account.

$88

For Applicant

Unspecified Financial

Admitted

—

(e) reasonable, documented basis to dispute the debt

Documented

Debt Paid in Full

1.i

$360,000 charged off first mortgage owed after Applicant’s Home # 1 was foreclosed in September 2008. Applicant testified that the home sold for more than the mortgage amount. He provided no documentation verifying this assertion. He intends to pursue this issue with a real estate attorney.

$360,000

Against Applicant

Mortgage or Home Loan Debt

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.j

$233,000 charged off account related to the investment property – House # 3, which foreclosed in December 2007. Applicant claims the property was sold for more than its value. No documentation was provided.

$233,000

Against Applicant

Mortgage or Home Loan Debt

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.k

second mortgage on home # 1 that is 120 days or more past due in the amount of $5,289, balance $27,450. Applicant claims the home was sold for more than the mortgage amount and both mortgages should have been paid off as a result of the foreclosure sale. No documentation was provided.

$5,289

Against Applicant

Mortgage or Home Loan Debt

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.l

$60 medical account placed for collection in November 2007. Applicant disputes this account. His last contact with the creditor was in March 2009. Status of the debt is uncertain.

$60

Against Applicant

Medical Debt

Denied

—

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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