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ISCR Case 14-03765.h1 — CASE

ISCR Case 14-03765.h1granted

Case Headnote

ISCR Case No. 14-03765.h1

grantedAug 31, 2015· Hon. Mary E. Henry· hearing

Summary

A 50-year-old operations officer for a DOD contractor was granted a security clearance despite concerns under Guideline F (Financial Considerations). The Statement of Reasons detailed numerous debts, including a $27,843 tax lien, a $142,500 mortgage, and 17 other debts ranging from $52 to $18,846. These allegations raised Disqualifying Conditions F.1.a and F.1.c.

The decision to grant the clearance was based on several mitigating factors. The applicant's financial difficulties were primarily attributed to a difficult divorce, a circumstance largely beyond his control. He demonstrated responsible financial behavior by consistently making court-ordered child support and alimony payments.

Furthermore, the applicant actively engaged in a good-faith effort to resolve his overdue debts by working with a debt resolution company. These actions, demonstrating a commitment to managing and resolving his financial obligations, led to the application of Mitigating Conditions F.2.b and F.2.d, and ultimately, the granting of his security clearance.

Why the Applicant Prevailed

The applicant's financial problems were largely due to circumstances beyond his control, specifically his divorce.
He made court-ordered payments for child support and alimony, demonstrating responsible financial behavior.
The applicant initiated a good-faith effort to resolve overdue debts through a debt resolution company.

Conditions Referenced

Disqualifying

F.1.araisedInability or Unwillingness to Satisfy Debts
F.1.craisedA History of Not Meeting Financial Obligations

Mitigating

F.2.bappliedThe Conditions That Resulted in the Financial Problem Were Largely Beyond the Person's Control
F.2.dappliedThe Individual Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts

Key Rule Quoted

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

Procedural Posture

SOR issuedDec 2, 2014
Answer filedDec 27, 2015
Hearing heldMay 13, 2015
Decision dateAug 31, 2015

Cite For

Mitigating Conditions Under Guideline F Related to Financial Difficulties Due to Divorce
Good-faith Efforts to Resolve Debts
Impact of Personal Circumstances on Financial Obligations

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's financial issues stemmed primarily from his divorce, which resulted in significant debts that he has been actively working to resolve. The judge ruled in favor of the applicant on all allegations under Guideline F, acknowledging the mitigating circumstances surrounding his financial difficulties.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant has a tax lien in the amount of $27,843. $27,843	For Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Claimed Other
1.b	Applicant has a debt of $773. $773	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Claimed Other
1.c	Applicant has a debt of $2,301. $2,301	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Claimed Other
1.d	Applicant has a debt of $18,846. $18,846	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Claimed Other
1.e	Applicant has a debt of $1,121. $1,121	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Claimed Other
1.f	Applicant has a debt of $122. $122	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Claimed Other
1.g	Applicant has a debt of $497. $497	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Claimed Other
1.h	Applicant has a debt of $7,686. $7,686	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Claimed Other
1.i	Applicant has a debt of $9,070. $9,070	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Claimed Other
1.j	Applicant has a debt of $8,970. $8,970	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Claimed Other
1.k	Applicant has a debt of $132. $132	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Claimed Other
1.l	Applicant has a mortgage debt of $142,500. $142,500	For Applicant	Mortgage or Home Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Claimed Other
1.m	Applicant has a debt of $1,804. $1,804	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Claimed Other
1.n	Applicant has a debt of $475. $475	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Claimed Other
1.o	Applicant has a debt of $1,066. $1,066	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Claimed Other
1.p	Applicant has a debt of $52. $52	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Claimed Other
1.q	Applicant has a debt of $10,435. $10,435	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Claimed Other
1.r	Applicant has a debt of $1,312. $1,312	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Claimed Other
1.s	Applicant has a debt of $840. $840	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Claimed Other
1.t	Applicant has a debt of $1,184. $1,184	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Claimed Other

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. 14-03765 ) Applicant for Security Clearance )

For Government: Jeff A. Nagel, Esquire, Department Counsel For Applicant: Pro se

08/31/2015 ______________

STATEMENT OF CASE

______________

HENRY, Mary E., Administrative Judge:

Based upon a review of the pleadings, exhibits, and testimony, Applicant’s eligibility for access to classified information is granted.

Statement of the Case

Applicant completed and certified an Electronic Questionnaire for Investigations Processing (e-QIP) on October 31, 2013. The Department of Defense (DOD) issued Applicant a Statement of Reasons (SOR) on December 2, 2014, detailing security concerns under Guideline F, financial considerations. The action was taken 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 (January 2, 1992), as amended (Directive); and the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information (AG), implemented on September 1, 2006. Applicant received the SOR, and he answered it on December 27, 2015. Applicant requested a hearing before an administrative judge with the Defense Office of Hearings and Appeals (DOHA). Department Counsel was prepared to proceed on February 10, 2015, and I received the case assignment on March 2, 2015. DOHA issued a Notice of Hearing on April 17, 2015, and I convened the hearing as scheduled on May 13, 2015. Through a joint stipulation of admissibility, the Government offered exhibits (GE) marked as GE 1 through GE 4. The Government also offered GE 5 at the hearing, which was received and admitted into evidence without objection. Applicant testified. He submitted exhibits (AE) marked as AE A through AE N, which were received and admitted into evidence without objection. DOHA received the hearing transcript (Tr.) on May 21, 2015. I held the record open until June 13, 2015, for Applicant to submit additional matters. Applicant timely requested additional time to submit his documents. In an Order dated June 11, 2015, Applicant was given until July 13, 2015 to submit additional documentation. He timely submitted AE O - AE W, which were received and admitted without objection. The record closed on July 13, 2015.

FINDINGS OF FACT

In his Answer to the SOR, Applicant admitted the factual allegations in ¶¶ 1.a - 1.kand 1.m - 1.tof the SOR. His admissions are incorporated herein as findings of fact. He denied the factual allegation in ¶ 1.lof the SOR. He also provided additional information to support his request for eligibility for a security clearance. After a complete and thorough review of the evidence of record, I make the following findings of fact.

Applicant, who is 50 years old, works as an operations officer for a DOD contractor. He began working for his current employer in February 2013. Applicant submitted one commendation letter and nine letters of recommendation for a security clearance. The owner of his company, who is also a vice president and the chief technical officer of the company, has known Applicant for ten years and describes him as hardworking, serious, and knowledgeable about his work. He has never witnessed Applicant abuse his position or authority, and he notes that Applicant takes his responsibility to protect sensitive information and technology seriously. He trusts Applicant with the most sensitive information and technology of the company and the government. Several other colleagues similarly describe him. Friends, his pastor, and coworkers have great respect for Applicant and trust him. All recommend him for a security clearance based on their trust and confidence in Applicant. Some know about his financial problems arising from his divorce.2 Applicant graduated from high school in 1983. He married in 1994 and divorced in 2009. He has a 20-year-old daughter, who lives with him and attends college. The record lacks any evidence that Applicant has been disciplined at work for any reason or that he mishandled classified or proprietary information. Likewise, the record evidence does not indicate that he has been involved with drugs or been arrested.3

Applicant’s financial problems began when he and his wife separated in 2008. He describes his divorce as extremely difficult, in part due to his former wife’s emotional and physical abuse of their daughter and him. Under the terms of the divorce settlement, Applicant and his former wife shared legal joint custody of their daughter, while Applicant maintained full-time physical custody of his daughter. Since he and his former wife shared legal custody of their daughter, the court ordered him to pay his former wife $1,000 a month in child support until their daughter graduated from high school, which occurred in June 2014. The court also ordered Applicant to pay $1,500 a month in alimony to his former wife until December 2014. Besides these payments and at Applicant’s request, the domestic relations master recommended counseling for Applicant’s daughter and wife, and he paid for the counseling. For the first several years of his divorce, Applicant paid at least $3,000 a month for alimony, child support and counseling.

In addition to custody and support issues, Applicant’s divorce degree specifically addressed other financial matters. Because he traveled in dangerous areas at times for work, Applicant long ago gave his wife a power of attorney. Before their divorce finalized, his wife used the power of attorney to take funds from various accounts, including his daughter’s education fund. Specifically related to the SOR debts, in July 2008, his former wife took $12,653 from his 401(k) account and $29,642 from his annuity. The withdrawals were taken prematurely, creating a tax liability. Applicant requested to include in the divorce decree specific language about payment of these taxes. His wife and the court agreed. Under the terms of his divorce decree, Applicant’s wife is to pay the taxes assessed for the early withdrawal of this money or to indemnify Applicant for any taxes he paid related to this withdrawal. Applicant assumed responsibility for all marital debts.6

The SOR identified 20 purportedly continuing delinquencies as reflected by credit reports from 2008, 2013, and 2015, totaling approximately $237,028. Some accounts have been transferred, reassigned, or sold to other creditors or collection agents. Other accounts are referenced repeatedly in both credit reports, in many instances duplicating other accounts listed, either under the same creditor or collection agency name or under a different creditor or collection agency name. Some accounts are identified by complete account numbers, while others are identified by partial account numbers, in some instances eliminating the last four digits and in others eliminating other digits.

Applicant timely files his federal and state income tax returns each year. Following the withdrawal of funds from his retirement accounts by his former wife, the Internal Revenue Service (IRS) received notification of the withdrawal. In 2010, the IRS audited Applicant’s 2008 tax return. The IRS determined that Applicant owed taxes on the money withdrawn by his former wife as his social security number was on the account. The IRS demanded payment of almost $30,000 from him despite the terms of his divorce decree. Applicant tried to enforce these terms against his wife, but she still refused to pay the taxes owed. To date, Applicant’s former wife has neither paid nor indemnified him for these taxes.8

Applicant contacted the IRS to discuss payment of the tax debt. After this contact, the IRS filed a levy, not garnishment, against his salary for $30,239. The IRS took $500 from this paycheck. In November 2011, the IRS filed a tax lien on Applicant’s home and against him in the amount of $27,843. (SOR allegation 1.a) Applicant retained his divorce lawyer to help him with the IRS matter. The IRS released the levy on October 3, 2012. With the assistance of counsel, he and the IRS reached an agreement in December 2012 that he would pay $500 a month on his tax debt. Applicant made payments to the IRS; all federal tax refunds were applied to the balance owed; and he directed his state tax refund for the years 2013 and 2014 be applied to his federal tax debt. With his tax refunds for the 2014 tax year, he fully paid the remaining $14,000 balance on his federal tax debt. The IRS release its lien on May 13, 2015.

Applicant grew up in the east. He moved west as a young man. Around 2003, he moved his family east to State A. They purchased a home in State A, which was some 400 to 500 miles from Applicant’s place of work. He commuted weekly to his job in State B. Eventually, Applicant found this arrangement unsatisfactory, sold his house in State A, and moved his family to State C, which was closer to his job in State B. He purchased a house in State C. When he and his wife separated, he lived in State C and worked in State B. SOR allegation 1.l ($142,500) relates to the mortgage on Applicant’s house in State A. Lender 1 held the original mortgage, but later sold the mortgage to Lender 2. Applicant provided a copy of the settlement papers and of the Satisfaction of Mortgage line filed on August 25, 2009 by Lender 2. Applicant satisfied any indebtedness to Lender 1 when this company sold his mortgage to Lender 2. Applicant sold the house used as collateral on the mortgage, and the settlement papers reflect that he paid the balance of his loan. The house he purchased in State C sold through foreclosure, and the creditor forgave the home equity loan of $115,000 and issued a 1099-C. Applicant claimed this money as income for the tax year 2012.12

After completing his alimony and child support payments, Applicant started contacting the creditors listed in the SOR. He was unable to reach some creditors, and others wanted lump sum payments to resolve the debts owed. He attempted to set up small monthly payments with all the SOR creditors, but was unable to do so. After discussions and review of his past-due debts, Applicant signed an agreement with a debt resolution company on the day of his hearing. Applicant will pay $616 a month to this company for 46 months. The company will deduct its fee and use the remaining money to resolve 10 of the debts listed on the SOR. The company declined to accept for settlement the debts in SOR allegations 1.f ($122), 1.k ($132), 1.n ($475), and 1.p ($52). The debts in SOR allegations 1.h ($7,686), 1.i ($9,070) and 1.j ($8,970) are owed to the same creditor. Applicant advised that the debt resolution company told him that after talking with the creditor, he only owed $2,457. The debt in allegation 1.cis for this same creditor and is included in the payment plan.13

Applicant admitted the debts in SOR allegations 1.f, 1.k, 1.n, and 1.p. Allegation 1.krelates to a power bill for the house in State A, which he sold in 2009. His settlement documents reflect that he paid the town in which he lived nearly $1,000 on a delinquent water bill and $460 on an interim utility bill. Applicant believed he had resolved this debt. However, after the hearing, he contacted the creditor listed on the SOR. The creditor said it would not accept a payment from him, then gave him the name of an individual to contact about payment. Applicant sent an email to two email accounts for the individual, and both emails were returned as undeliverable. The creditor continues to decline to accept a payment from him. He asked for information on how to resolve this bill. Applicant believes the three remaining bills may be medical bills related to care for his daughter or former wife. He attempted to contact these creditors by telephone six months before the hearing, but was unable to speak with someone or leave a message to verify the original owner of the debts. He will pay the debts once he verifies the debts are his. He has not provided payment on any of these debts.14

Concerning the debts in SOR allegations 1.h ($7,686), 1.i ($9,070) and 1.j ($8,970), which are listed as owed by the same creditor bank, these three debts are listed on the December 2013 credit report as closed and charge-off by the bank creditor. The credit report also reflects that the bank creditor sold the debt in allegation 1.hto another creditor. The new owner of the debt is not listed on the credit reports in the record. The bank creditor sold the debt in allegation 1.jto the credit agency identified in allegations 1.qthrough 1.t. After a careful review of the information in the creditor reports, the debt in allegation 1.qis the same as the debt in 1.j.

The bank creditor in SOR allegation 1.e ($1,121) sold the debt to the creditor in SOR allegation 1.t ($1,184). These two debts are the same debt. The May 2015 credit report indicated a second federal tax lien (not alleged) in the amount of $2,743. At the hearing, Applicant stated that this was the original amount of the lien filed against him for the tax year 2008. He believes this lien is resolved.

The debt resolution company has agreed to resolve the following SOR debts: 1.b ($773), 1.c ($2,301), 1.d ($18,846), 1.g ($497), 1.m ($1,804), 1.o ($1,066), 1.q ($10,435), 1.r ($1,312), 1.s ($840), and 1.t ($1,184). These debts totaled $40,518. The amount of debt owed as listed with the debt resolution company does show amounts owed on several of the debts that are higher than the amount shown in the SOR. The debt resolution company has made some small payments on these debts.17

The 2013 and 2015 credit reports indicate that Applicant disputed the debts in SOR allegations 1.b - 1.d, 1.n, and 1.q - 1.t. The credit reports do not reflect if his disputes were investigated and resolved. Applicant admitted these debts and is working on a resolution of the debts.

Applicant provided a budget. His net monthly income totals $9,400. His monthly expenses include $2,265 for rent, $630 for utilities, $490 for phones, cable and internet, $330 for security, lawn, and household, $750 for food, $2,120 for car loans, gasoline, registration, and insurance, $400 for college costs, $500 for credit card payments, $972 for debt payoff, $100 for medical costs, and $250 for miscellaneous expenses. His monthly expenses total $8,807. He has an additional $593 for payment of debts not covered above.19

Applicant acknowledged that he had not made any payments on most of his SOR credit debts since 2010. He prioritized the court-directed payments and his tax debt for resolution before working on a solution to the other debts. He did not mention how much he spent on attorney fees for his divorce, but he has incurred attorney fees. The court directed his former wife to pay $2,000 of his attorney fees and there is no evidence that she did.20

POLICIES

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 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, these guidelines are applied 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(c), 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 access to classified information will be resolved in favor of 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, an applicant is responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by applicant or proven by Department Counsel. . . .” An applicant has the ultimate burden of persuasion for obtaining 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 an applicant may deliberately or inadvertently fail to protect or safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation as to potential, rather than actual, risk of compromise of classified information.

Section 7 of Executive Order 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 concern relating to the guideline for financial considerations is set out in AG ¶ 18:

Failure or inability 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 information. An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds.

AG ¶ 19 describes the disqualifying conditions that could raise security concerns. I have considered all the conditions, and the following are potentially applicable:

(a) inability or unwillingness to satisfy debts; and

Applicant developed significant financial problems when he and his wife divorced. Most of the debts have not been resolved. These two disqualifying conditions apply.

The financial considerations guideline also includes examples of conditions that can mitigate security concerns. I have considered mitigating factors AG ¶ 20(a) through ¶ 20(f), and the following are potentially applicable:

(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, or a death, divorce or separation), and the individual acted responsibly under the circumstances;

(c) the person has received or is receiving counseling for the problem and/or there are clear indications that the problem is being resolved or is under control;

(d) the individual initiated 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.

Applicant’s financial problems began when he and his former wife separated and divorced. As part of his divorce, he paid child support, alimony, and counseling costs, which increased his routine monthly expenses by at least $3,000, leaving less money to pay credit card debt. He exercised good judgment when he decided to comply with the court ordered payments, even though these payments impacted his ability to pay all his other debts. He sold his house in State A at about the time his divorce finalized, which relieved this debt burden and showed good judgment.

He always filed his income tax returns. His tax debt arose from the actions of his former wife just before their divorced finalized. Without his agreement, she took money from his retirement accounts long before he would have been legally able to remove the money without a penalty. The early removal of this money created a tax debt, which Applicant anticipated. He made sure that his divorce decree addressed this problem and that his former wife would be responsible for any tax deficiency assessed because of her actions. Because she took the money, Applicant acted reasonably by having the court specifically address his former wife’s responsibility for any tax debt and by attempting through the court to enforce his wife’s obligation on the tax debt. AG ¶ 20(b) applies fully to allegations 1.a and 1.land applies partially to the remaining debts.

Applicant tried on his own to resolve his remaining debts after concluding his court obligated payments. His efforts began about the same time he received the SOR. After his unsuccessful efforts to negotiate payment plans with his creditors, he contacted a debt resolution company. He eventually retained the company, which has agreed to resolve 10 SOR debts. He paid the tax debt his former wife owed under an agreement developed with the IRS several years ago, and he established that he resolved the mortgage debt many years ago. Mitigation applies under 20(b) and 20(d) to allegations 1.b - 1.e, 1.j, 1.k - 1.m, 1.o, and 1.q - 1.t.

Applicant disputed many debts with the credit reporting agencies. No reason has been given for these disputes. Since Applicant has admitted these debts, and the debts are part of his payment plan, AG ¶ 20(e) is not applicable.

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 an applicant’s conduct and all relevant circumstances. The administrative judge should consider the nine adjudicative process factors listed at AG ¶ 2(a):

(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. The decision to grant or deny a security clearance requires a careful weighing of all relevant factors, both favorable and unfavorable. In so doing, an administrative judge must review all the evidence of record, not a single item in isolation, to determine if a security concern is established and then whether it is mitigated. A determination of an applicant’s eligibility for a security clearance should not be made as punishment for specific past conduct, but on a reasonable and careful evaluation of all the evidence of record to decide if a nexus exists between established facts and a legitimate security concern.

In assessing whether an applicant has established mitigation under Guideline F, the Appeal Board provided the following guidance in ISCR Case No. 07-06482 at 3 (App. Bd. May 21, 2008):

In evaluating Guideline F cases, the Board has previously noted that the concept of “‘meaningful track record’ necessarily includes evidence of actual debt reduction through payment of debts.” See, e.g., ISCR Case No. 05-01920 at 5 (App. Bd. Mar. 1, 2007). However, an applicant is not required, as a matter of law, to establish that he has paid off each and every debt listed in the SOR. See, e.g., ISCR Case No. 02-25499 at 2 (App. Bd. Jun. 5, 2006). All that is required is that an applicant demonstrate that he has “. . . established a plan to resolve his financial problems and taken significant actions to implement that plan.” See, e.g., ISCR Case No. 04-09684 at 2 (App. Bd. Jul. 6, 2006). The Judge can reasonably consider the entirety of an applicant’s financial situation and his actions in evaluating the extent to which that applicant’s plan for the reduction of his outstanding indebtedness is credible and realistic. See Directive ¶ E2.2(a) (“Available, reliable information about the person, past and present, favorable and unfavorable, should be considered in reaching a determination.”) There is no requirement that a plan provide for payments on all outstanding debts simultaneously. Rather, a reasonable plan (and concomitant conduct) may provide for the payment of such debts one at a time. See, e.g., ISCR Case No. 06-25584 at 4 (App. Bd. Apr. 4, 2008). Likewise, there is no requirement that the first debts actually paid in furtherance of a reasonable debt plan be the ones listed in the SOR.

The evidence in support of granting a security clearance to Applicant under the whole-person concept is more substantial than the evidence in support of denial. In reaching a conclusion, I considered the potentially disqualifying and mitigating conditions in light of all the facts and circumstances surrounding this case. Applicant endured a highly stressful and emotional divorce. He made the court ordered payments and his daughter his priority during this time. His daughter continues to live with him and attends college. The court-mandated expenses seriously impacted Applicant’s ability to pay all his debt because he still had to pay rent, utilities, phones, food, insurance and other ordinary daily living expenses. He allowed his credit cards to go into default as well as his second house while he met his other obligations. He always filed his tax returns and when his former wife refused to pay the tax debt as agreed, he assumed responsibility for it. His other unpaid debts he set aside as his former wife had taken all his assets, leaving him without money for debt payment. With the conclusion of his court ordered obligations, he has started the long process of identifying and paying his remaining debts. Most significantly, he has taken affirmative action to pay or resolve most of the delinquent debts raising security concerns. He retained a company to help him achieve this goal. He has a plan to resolve many of the SOR debts, but not four small debts. Applicant’s statement that he will pay these debts once he determines they are his is accepted as credible in light of the efforts taken to resolve his debts. His current bills are paid timely, and he manages his income. He has not incurred new unpaid debt since his divorce.

Applicant remains single. For the last six or seven years, he focused his attention on providing a stable home environment for his daughter. (See AG ¶ 2(a)(6).) Four small debts are unpaid, and three larger debts belonging to the same creditor are not listed in his debt plan. Applicant’s statement that the creditor told the debt resolution company that Applicant owed about $2,400 is credible because throughout this process Appellant has been honest about the events and his choices. While he has not paid all his debts and he is still trying to resolve some of his debts, these debts cannot be a source of improper pressure or duress. Of course, the issue is not simply whether all his debts are paid: it is whether his financial circumstances raise concerns about his fitness to hold a position of trust. While some debts remain unpaid, they are insufficient to raise security concerns. (See AG ¶ 2(a)(1).) Appellant is a responsible and hard working individual who has exercised good decision making and judgment during a major life changing event. He will continue to exercise good judgment.

Overall, the record evidence leaves me without questions or doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant mitigated the security concerns arising from his finances under Guideline F.

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: FOR APPLICANT

Subparagraphs 1.a-1.t: For Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is clearly consistent with the national interest to grant Applicant eligibility for a security clearance. Eligibility for a security clearance is granted.

MARY E. HENRY Administrative Judge

FOOTNOTES

W hen SOR allegations are controverted, the Government bears the burden of producing evidence sufficient to prove controverted allegations. Directive, ¶ E3.1.14. “That burden has two components. First, the Government must establish by substantial evidence that the facts and events alleged in the SOR indeed took place. Second, the Government must establish a nexus between the existence of the established facts and events and a legitimate security concern.” See ISCR Case No. 07-18525 at 4 (App. Bd. Feb. 18, 2009), (concurring and dissenting, in part) (citations omitted). AE D - AE M. GE 1; AE B; AE E - AE M; Tr. 25. Response to SOR; Tr. 25-29. Applicant indicated that he had documentation to prove that his former wife took $57,000 from his accounts. Other documentation tends to show she may have taken up to $102,000 from him. Tr.42. Response to SOR; AE B; AE C; Tr. 30-35, 64. This amount includes penalties and interest and is most likely based on more than the $42,000 previously listed as taken from his 401(k). Response to SOR; AE B. Response to SOR; AE B; Tr. 33-35, 42-43. Applicant understood that by filing the levy, the IRS could take up to 90% of his income. AE P; Tr. 36-40. The original lender identified on the mortgage, now out of business, was a company developed and owned by the Lender 1 creditor listed in the SOR. Attachment to Response to SOR; AE R; Tr. 44-46, 62, 72-77. AE N; Tr. 49-54, 68, 81-83. Response to SOR; AE O; AE R; AE S; Tr. 52-53, 57-58. GE 3 - GE 5. GE 3 - GE 5; Tr. 49, 55-56. AE N; AE U. Response to the SOR; GE 3 - GE 5. AE V. AE B; Tr. 25-26, 84.