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ISCR Case 14-03602.h1 — CASE

ISCR Case 14-03602.h1granted

Case Headnote

ISCR Case No. 14-03602.h1

grantedDec 7, 2016· Hon. Juan J. Rivera· hearing

Summary

A security clearance was granted to a business owner despite initial concerns under Guideline F (Financial Considerations). The Statement of Reasons detailed several financial issues, including the leasing of expensive equipment and office space, opening a Small Business Administration loan, and using credit cards for living, business, and legal expenses. These issues were primarily linked to a failed business venture, which raised Disqualifying Condition F.1.

However, the applicant demonstrated significant mitigating factors. He filed for Chapter 7 bankruptcy, which discharged the debts outlined in the Statement of Reasons. Furthermore, he made a final payment on a remaining judgment in 2015, thereby resolving all outstanding debts.

The applicant also sought financial counseling and showed a good-faith effort to manage and resolve his financial obligations. These actions satisfied Mitigating Conditions F.20(a), F.20(b), F.20(c), and F.20(d), leading to the decision to grant the security clearance.

Why the Applicant Prevailed

Applicant filed for Chapter 7 bankruptcy, discharging debts related to the SOR.
Applicant made a final payment on the remaining judgment in 2015, resolving all debts.
Applicant sought financial counseling and demonstrated a good-faith effort to resolve his debts.

Conditions Referenced

Disqualifying

F.1raisedFinancial Considerations

Mitigating

F.20(a)appliedThe Behavior Was Not Recent.
F.20(b)appliedThe Conditions That Resulted in the Financial Problems Were Largely Beyond the Person's Control.
F.20(c)appliedThe Person Has Received or Is Receiving Counseling for the Problem.
F.20(d)appliedThe Person Has Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts.

Key Rule Quoted

“Applicant's past financial problems do not create doubt about his current reliability, trustworthiness, good judgment, and ability to protect classified information.”

Procedural Posture

SOR issuedAug 11, 2014
Answer filedSep 9, 2014
Hearing heldMay 20, 2016
Decision dateDec 7, 2016

Cite For

Good-faith Effort to Resolve Financial Issues Under Guideline F
Application of Mitigating Conditions for Financial Considerations
Impact of Bankruptcy on Security Clearance Eligibility

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 had financial difficulties stemming from a failed business, which led to several debts and judgments. However, the applicant demonstrated a good-faith effort to resolve these debts, sought financial counseling, and ultimately paid off the debts, leading to a decision in his favor under Guideline F.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	leased expensive equipment $92,991	For Applicant	Unspecified Financial	Unknown	—	—	—
1.b	opened a small business administration loan $62,382	For Applicant	Unspecified Financial	Unknown	—	—	—
1.c	used his credit card to pay for living and business expenses, and legal fees $25,777	For Applicant	Credit Card Debt	Unknown	—	—	—
1.d	leased office space $55,509	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. 14-03602 ) ) Applicant for Security Clearance

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

12/07/2016 ___________

DECISION

___________

RIVERA, Juan J., Administrative Judge:

Applicant submitted a security clearance application (SCA) on December 18, 2013. On August 11, 2014, the Department of Defense (DOD) issued Applicant a Statement of Reasons (SOR) alleging security concerns under Guideline F (financial considerations).1 Applicant answered the SOR on September 9, 2014, and requested a hearing, which was held on May 20, 2016. Government exhibits (GE) 1 through 7, and Applicant’s exhibits (AE) 1 through 8, were admitted into evidence. The transcript was received on June 1, 2016. On November 29, 2016, I informed Department Counsel of my intent to issue a summary disposition in Applicant’s favor. He had no objections. (Hearing Exhibit 1 (email correspondence))

In 2007, Applicant and his wife started a business. They leased expensive equipment (SOR ¶ 1.a ($92,991)), opened a small business administration loan (SOR ¶ 1.b ($62,382)), and leased office space (SOR ¶ 1.d ($55,509)). The business was initially successful, but the recession from 2008-2011 reduced their sales and they closed the business in 2011. When the business failed, Applicant used his credit card to pay for living and business expenses, and legal fees (SOR ¶ 1.c ($25,777)). Applicant tried to consolidate or sell his business; he sold two of his leases, but one remained; and tried to negotiate an equitable conclusion, but it all failed. The creditors file suit and obtained the three judgments against Applicant.

Applicant filed for Chapter 7 bankruptcy protection in February 2014, and the accounts alleged in SOR ¶¶ 1.a and 1.dwere discharged in May 2014. The creditor of the account alleged in SOR ¶ 1.cwrote off the debt and issued Applicant an IRS Form 1099-C, which he filed with his income tax return. Concerning the account alleged in SOR ¶ 1.b, in 2013 Applicant made a partial payment on that judgment. The final payment ($28,000) was made in 2015 after Applicant sold his home and paid the mortgage. This debt is paid in full.

Department Counsel presented sufficient evidence to establish the Guideline F security concerns. Based on the record evidence as a whole, I conclude Applicant demonstrated a good-faith effort to resolve his debts, sought financial counseling, and legally resolved his SOR debts. Applicant presented sufficient evidence to explain, extenuate, and mitigate the financial considerations concerns. Specifically, I find mitigating conditions AG ¶¶ 20(a) through 20(d) are applicable to this case. Applicant’s past financial problems do not create doubt about his current reliability, trustworthiness, good judgment, and ability to protect classified information. I find that it is clearly consistent with the national interest to grant Applicant eligibility for access to classified information.

____________________________ JUAN J. RIVERA Administrative Judge

FOOTNOTES

1 The DOD acted 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 (Directive) (January 2, 1992), as amended; and the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information (AG), implemented by the DOD on September 1, 2006.