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ISCR Case 14-03751.h1 — CASE

ISCR Case 14-03751.h1denied

Case Headnote

ISCR Case No. 14-03751.h1

deniedNov 21, 2015· Hon. Edward W. Loughran· hearing

Summary

A 46-year-old defense contractor employee was denied a security clearance under Guideline F (Financial Considerations) due to a history of financial problems. The Statement of Reasons detailed several outstanding debts, including a $21,373 loan for a repossessed vehicle, a $600 pawn shop debt, a $236 trash collection debt, a $438 credit card debt, a $745 payday loan, and a $323 returned check from a grocery store.

Disqualifying conditions F.19(a) and F.19(c) were raised, indicating a history of not meeting financial obligations and an inability or unwillingness to satisfy debts. While mitigating conditions F.20(b) and F.20(d) were applied, acknowledging efforts to live within means and recent improvements, these were insufficient to overcome the concerns.

The denial was based on the applicant's failure to demonstrate a good-faith effort to resolve longstanding debts. The judge determined that the applicant's financial issues continued to raise doubts about his reliability and trustworthiness, and that relying on the statute of limitations for debt resolution was not an adequate mitigating factor.

Why the Applicant Was Denied

The applicant did not demonstrate a good-faith effort to resolve longstanding debts.
The applicant's financial issues continue to cast doubt on his reliability and trustworthiness.
The applicant's reliance on the statute of limitations for debt resolution was insufficient.

Conditions Referenced

Disqualifying

F.19(a)raisedInability or Unwillingness to Satisfy Debts
F.19(c)raisedA History of Not Meeting Financial Obligations

Mitigating

F.20(b)appliedConditions That Resulted in the Financial Problem Were Largely Beyond the Person’s ControlThe first bankruptcy was due to circumstances beyond the applicant's control.
F.20(d)rejectedGood-faith Effort to Repay Overdue Creditors or Resolve DebtsThe applicant did not make a good-faith effort to resolve his debts.

Key Rule Quoted

“Any doubt concerning personnel being considered for access to classified information will be resolved in favor of national security.”

Procedural Posture

SOR issuedApr 2, 2015
Answer filedMay 4, 2015
Hearing heldAug 20, 2015Hearing convened as scheduled.
Decision dateNov 21, 2015

Cite For

Denial of Security Clearance Due to Unresolved Financial Obligations
Impact of Financial History on Security Clearance Eligibility
Insufficient Evidence of Good-faith Efforts to Resolve Debts

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 multiple unpaid debts and a history of bankruptcies. The applicant's financial issues raised doubts about his reliability and trustworthiness, leading to a denial of his security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	$21,373 debt for a loan on another vehicle that was repossessed $21,373	Against Applicant	Auto Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b–1.c	2 sub-charges — specific text not stated in this decision (against the applicant). (low confidence)	Against Applicant			—	—	—
1.d	$600 debt from a pawn shop $600	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	specific text not stated in this decision	For Applicant	Unspecified Financial	Unknown	—	—	—
1.f	$236 debt for trash-collection services $236	For Applicant	Utility or Phone Debt	Admitted	—	(d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.g–1.i	3 sub-charges — specific text not stated in this decision (for the applicant). (low confidence)	For Applicant			—	—	—
1.j	$438 debt from a credit card $438	Against Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.k–1.m	3 sub-charges — specific text not stated in this decision (for the applicant). (low confidence)	For Applicant			—	—	—
1.n	$745 debt from a payday loan $745	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.o	$323 debt for a returned check from a grocery store $323	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.p–1.q	2 sub-charges — specific text not stated in this decision (1 against, 1 for the applicant). (low confidence)	Mixed			—	—	—

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. 14-03751 ) Applicant for Security Clearance )

For Government: Robert J. Kilmartin, Esq., Department Counsel For Applicant: Pro se

11/21/2015 ______________

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 April 2, 2015, the Department of Defense (DOD) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guideline F, financial considerations. The action was taken 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) implemented by the DOD on September 1, 2006.

Applicant responded to the SOR on May 4, 2015, and requested a hearing before an administrative judge. The case was assigned to me on July 13, 2015. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on July 23, 2015, scheduling the hearing for August 20, 2015. The hearing was convened as scheduled. Government Exhibits (GE) 1 through 5 were admitted in evidence without objection. Applicant testified and submitted Applicant’s Exhibits (AE) A through D, which were admitted without objection. The record was held open for Applicant to submit additional information. He did not submit any additional documentation. DOHA received the hearing transcript (Tr.) on August 31, 2015.

FINDINGS OF FACT

Applicant is a 46-year-old employee of a defense contractor. He has worked for his current employer since December 2012. He is applying for a security clearance for the first time. He attended college for a period, but he did not earn a degree. He is married with three children, ages 26, 22, and 19.1

Applicant has a history of financial problems. He filed Chapter 7 bankruptcy in 1993, and his debts were discharged in 1994. He filed Chapter 7 bankruptcy again in 2003, and his debts were discharged the same year. He had additional financial problems after the bankruptcy.2

The SOR alleges the two bankruptcies, two unpaid judgments totaling $5,645, and 13 delinquent debts totaling $26,827. Applicant admitted owing the debts alleged in SOR ¶¶ 1.a ($21,373), 1.j ($438), and 1.o ($323). He stated that he was unable to admit or deny owing the remaining debts as he did not recognize the creditors. Credit reports from November 2012 and June 2014 substantiate the debts.3

Applicant stated that his first bankruptcy resulted from having three young children without medical insurance. He also stated that he and his wife got “quite a bit in debt with [the medical expenses] and a couple of vehicles and some other things.” He stated that he was told he could file bankruptcy and “make it all go away.” He stated that immediately after the 1994 bankruptcy, he “was given all this credit and it snowballed and it got right on top of [him] again, and it was so easy the first time, [he] fell right back into it the second time.”4

Applicant bought a motorcycle in 2004. In about 2005, he lost his job because of a failed drug test.5 There is no evidence of any additional drug use. The motorcycle was repossessed in about 2005. The $21,373 debt alleged in SOR ¶ 1.a is for a loan on another vehicle that was repossessed.6 Seven of the delinquent debts alleged in the SOR, totaling $3,115, were medical debts. The remaining debts were from what appears to be a pawn shop (SOR ¶ 1.d - $600), trash-collection services (SOR ¶ 1.f - $236), a credit card (SOR ¶ 1.j - $438), a payday loan (SOR ¶ 1.n - $745), and a returned check from a grocery store (SOR ¶ 1.o - $323). Applicant established that he paid the $236 trash-collection-services debt (SOR ¶ 1.f) in 2012.7

The judgments were awarded against Applicant in 2006 and 2007. Applicant stated that he did not recognize the plaintiffs in the cases. With the exception of the paid trash-collection-services debt, Applicant has not paid any of the debts or judgments identified in the SOR. He stated that a number of the debts were uncollectable because of the statute of limitations.8

Applicant stated that for years after 2007 or 2008, he did not buy anything if he could not pay for it with cash. He stated that he currently lives within his means, and he is attempting to rebuild his credit. He recently bought a house. With the exception of the paid trash-collection-services debt, none of the debts alleged in the SOR are listed on Applicant’s current credit reports, predominantly because of the age of the debts. There are no other derogatory accounts listed on his current credit reports. He has not received formal financial counseling.9

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 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(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.” 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 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.

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

(a) inability or unwillingness to satisfy debts; and

Applicant had delinquent debts that he was unable or unwilling to pay. 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, 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; and

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

Applicant’s first bankruptcy resulted from having three young children without medical insurance. That was beyond his control. His subsequent financial problems were caused by overspending and the loss of a job because of a failed drug test. Those events were not beyond his control.

Applicant paid a $236 debt in 2012 (SOR ¶ 1.f). That debt is mitigated. The medical debts are not readily identifiable, and they do not appear on Applicant’s most recent credit report. Those debts are mitigated. Applicant has done a good job the last few years of curtailing his spending and paying his current bills, but he ignored his longstanding debts. He has not paid any of the other debts, including the $323 debt to a grocery store for a returned check. He is relying on the statute of limitations and that the debts are no longer listed on his credit report. However, reliance on the statute of limitations does not constitute a good-faith effort to resolve debts. See e.g., ISCR Case No. 14-01231 at 3 (App. Bd. Feb. 10, 2015). Moreover, the judgments may still be enforceable.

There is insufficient evidence for a determination that Applicant’s financial problems will be resolved within a reasonable period. I am unable to find that he acted responsibly under the circumstances or that he made a good-faith effort to pay his debts. His financial issues 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 only applicable to the first bankruptcy. 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(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.

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.

Overall, the record evidence leaves me with questions and doubts as to 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.d: Against Applicant Subparagraphs 1.e-1.i: For Applicant Subparagraph 1.j: Against Applicant Subparagraphs 1.k-1.m: For Applicant Subparagraphs 1.n-1.o: Against Applicant Subparagraph 1.p: For Applicant Subparagraph 1.q: Against Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, 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 Tr. at 49; GE 1, 2. 2 Tr. at 26; GE 2-5. 3 Tr. at ; GE 2-5. 4 Tr. at 19-20, 46; GE 2. 5 The failed drug test was not alleged in the SOR. Any matter that was not alleged in the SOR will not be used for disqualification purposes. It may be used in assessing how it affected Applicant’s finances, when determining the applicability of mitigating conditions, and when conducting the whole-person analysis. 6 Tr. at 20, 27-28, 50, 52; GE 2, 4, 5. 7 Tr. at 17-19, 23-24, 44-45; GE 2, 4, 5. 8 Tr. at 21-22, 25-26; GE 2, 4, 5. 9 Tr. at 22-23, 47-49; Applicant’s response to SOR; GE 2, 4, 5; AE A-D.