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ISCR Case 09-05806.h1 — CASE

ISCR Case 09-05806.h1granted

Case Headnote

ISCR Case No. 09-05806.h1

grantedDec 13, 2010· Hon. Martin H. Mogul· hearing

Summary

A 36-year-old defense contractor with two sons was granted a security clearance under Guideline F (Financial Considerations) despite initial concerns regarding multiple overdue debts. The Statement of Reasons cited thirteen specific financial allegations, ranging from $132 to $28,000.

The applicant successfully demonstrated good-faith efforts to address these concerns. For several debts, including amounts of $338 and $996, the applicant provided evidence of ongoing disputes, asserting that the amounts were incorrect or had been resolved. Other debts, such as those for $2,761, $280, $160, $1,342, $1,230, $333, $132, and $1,992, were found to have been paid, removed from credit reports, or otherwise resolved through the applicant's actions.

Regarding a $565 judgment, the applicant had made a partial payment and planned to resolve the remaining balance. For the largest debt, $28,000 in child support arrears, the applicant established a structured payment plan of $400 per month, exceeding the current obligation and reducing the arrearage via automatic deductions. The judge concluded that the applicant mitigated the financial concerns through responsible management and positive witness testimony, leading to the granted security clearance.

Why the Applicant Prevailed

The applicant demonstrated good-faith disputes of several debts.
The applicant established a structured payment plan for child support arrears.
Positive character testimony from multiple witnesses supported the applicant's trustworthiness.

Conditions Referenced

Disqualifying

AG ¶ 19 (a)raisedInability or Unwillingness to Satisfy Debts
AG ¶ 19 (c)raisedHistory of Not Meeting Financial Obligations

Mitigating

AG ¶ 20 (b)appliedConditions Largely Beyond the Person's Control
AG ¶ 20 (c)appliedReceived Counseling or Indications of Problem Resolution
AG ¶ 20 (d)appliedGood-faith Effort to Repay Overdue Creditors

Key Rule Quoted

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

Procedural Posture

SOR issuedJan 11, 2010
Answer filedJan 27, 2010
Hearing heldMay 6, 2010
Decision dateDec 13, 2010

Cite For

Good-faith Disputes of Debts Under Guideline F
Structured Payment Plans for Child Support Arrears
Positive Witness Testimony Supporting Applicant's Trustworthiness

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 several overdue debts but determined that he had mitigated the financial concerns associated with them. The applicant demonstrated good-faith efforts to resolve his debts, including setting up a payment plan for child support and disputing inaccuracies in his credit report, leading to a favorable decision for his security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	This overdue debt is cited in the SOR in the amount of $338. In his RSOR, Applicant admitted this allegation, but claimed that it was for a cable box that he had returned, and he was disputing it. At the hearing, Applicant testified that he has disputed this debt with the credit reporting agencies. (Tr at 58 – 60.) Exhibit 8 shows that this debt has been disputed. I find that Applicant has a good-faith dispute of this debt. $338	For Applicant	Utility or Phone 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 (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	Claimed Debt Disputed with Creditor
1.b	This overdue debt is cited in the SOR in the amount of $996. In his RSOR and during his testimony, Applicant admitted this allegation, but claimed that it was not correct as it was from the property management where he formerly lived, and since he received back his initial deposit when he vacated the premises, the balance owed was $0. Therefore, he has been disputing this debt.(Tr at 61 – 62.) I find that Applicant has a good-faith dispute of this debt. $996	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 (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	Claimed Debt Disputed with Creditor
1.c	This overdue debt is cited in the SOR for a judgment in the amount of $565. In his RSOR, Applicant denied this allegation. However, at the hearing, Applicant testified that he has made a payment of $300 on this debt, but there is still $565 outstanding on this debt, despite his payment, and he plans to pay this debt in the next month or two. (Tr at 63 – 64.) I find that the debt has not yet been resolved. $565	For Applicant	Judgment Against Applicant	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	This overdue debt is cited in the SOR in the amount of $28,000 for child support. Applicant testified that he has made a payment plan where he would be paying $400 a month, which would meet his current obligation of $247 a month and the remainder would be applied to reduce his arrearage. This will be paid by automatic deduction. While Exhibit 8 indicated that Applicant owes $29,499 on this debt, Applicant testified that he has been double billed for part of the debt, because when he moved, more than one state tried to collect on the same debt. He therefore believed the debt was somewhat less, although he did not know the exact amount owed. (Tr at 65 - 69.) Exhibit B consisted of an Order to Withhold Income for Child Support, confirming that $400 would be withheld every month from Applicant’s wages to pay this debt. $28,000	For Applicant	Child Support Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	Documented Payment Plan with Creditor
1.e	This overdue debt is cited in the SOR in the amount of $459. Applicant testified that this debt is the same as 1.c., above. (Tr at 69.) After reviewing the credit reports, I find this debt is the same debt to the same creditor as 1. c., and is only owed once. (Exhibits 4 – 8.) $459	For Applicant	Unspecified Financial	Unknown	—	—	—
1.f	This overdue debt is cited in the SOR in the amount of $2,761. Applicant testified that this debt was paid, as it was on a secured credit card in which the credit card company had the funds to pay the debt. Applicant testified further that this debt has been removed from his credit report, which was confirmed on Exhibit 8. (Tr at 69 – 71.) I find that this debt has been resolved. $2,761	For Applicant	Credit Card Debt	Unknown	—	—	—
1.g	This overdue debt is cited in the SOR in the amount of $280. Applicant testified that this debt for his home gas bill has been paid. (Tr at 71 – 72.) While this debt was listed on Exhibit 4, it was not listed on any of the other credit reports. (Exhibits 5 – 8.) I find that this debt has been resolved. $280	For Applicant	Utility or Phone Debt	Unknown	—	—	—
1.h	This overdue debt is cited in the SOR in the amount of $160. Applicant testified that he has disputed this debt for a cable bill, as when he moved from his premises, the cable company showed he had a balance of $0. (Tr at 72.) This debt was listed on Exhibit 4, but it was not listed on any of the other credit reports. (Exhibits 5 – 8.) I find this debt has been resolved. $160	For Applicant	Utility or Phone Debt	Unknown	—	—	—
1.i	This overdue debt is cited in the SOR in the amount of $1,342. Applicant testified that this debt, for a vehicle that he turned in, was paid when he returned the vehicle in the amount of $2,100. He stated that when he disputed this bill it was removed from his credit report. (Tr at 73.) This debt was listed on Exhibit 4, but it was not listed on any of the other credit reports. (Exhibits 5 – 8.) I find this debt has been resolved. $1,342	For Applicant	Auto Loan Debt	Unknown	—	—	—
1.j	This overdue debt is cited in the SOR in the amount of $1,230. Applicant testified that this debt for college courses that he took was supposed to be paid for by his employer at the time. He stated that he sent a letter to the creditor, indicating that his employer was scheduled to pay it under the college reimbursement program, and the creditor agreed with Applicant, and this debt has subsequently been removed from his credit reports. (Tr at 74 – 75.) This debt was listed on Exhibit 4, but it was not listed on any of the other credit reports. (Exhibits 5 – 8.) I find this debt has been resolved. $1,230	For Applicant	Student Loan Debt	Unknown	—	—	—
1.k	This overdue debt is cited in the SOR in the amount of $333. Applicant testified that this debt for wireless service has been paid. (Tr at 76.) This debt was listed on Exhibits 4 through 7, but Exhibit 8 states “customer disputes this account information. Paid, charge off.” I find this debt has been resolved. $333	For Applicant	Utility or Phone Debt	Unknown	—	—	—
1.l	This overdue debt is cited in the SOR in the amount of $132. Applicant testified that this debt has been paid, and it was removed from his credit reports. (Tr at 76 – 77.) While this debt was listed on Exhibit 4, it was not listed on any of the other credit reports. (Exhibits 5 – 8.) I find this debt has been resolved. $132	For Applicant	Unspecified Financial	Unknown	—	—	—
1.m	This overdue debt is cited in the SOR in the amount of $1,992. Applicant testified that he was not aware of the origin of this debt, and he thereafter disputed it. He subsequently received a letter from Experian credit reporting service, which informed him that this debt would be removed from his Experian credit report. This debt was listed on Exhibit 4, but it was not listed on any of the other credit reports. (Exhibits 5 – 8.) I find this debt has been resolved. $1,992	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. 09-05806 SSN: ----------------- ) ) Applicant for Security Clearance )

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

December 13, 2010

______________

STATEMENT OF CASE

______________

MOGUL, Martin H., Administrative Judge:

On January 11, 2010, the Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) detailing the security concerns under Guideline F for Applicant. The action was taken under Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) promulgated by the President on December 29, 2005, and effective within the Department of Defense for SORs issued after September 1, 2006.

On January 27, 2010, Applicant replied to the SOR (RSOR) in writing, and he requested a hearing before an Administrative Judge. I received the case assignment on March 9, 2010. DOHA issued a notice of hearing on April 2, 2010, and I convened the hearing as scheduled on May 6, 2010. The Government offered Exhibits 1 through 8, which were received without objection. Applicant testified on his own behalf and submitted Exhibit A, at the time of hearing, which was also admitted without objection. Three additional witnesses testified on behalf of Applicant. DOHA received the transcript of the hearing (Tr) on May 14, 2010. I granted Applicant’s request to keep the record open until June 4, 2010, to submit additional documents, and additional documents that were received, have been identified and entered into evidence as without objection as Exhibit B. Based upon a review of the case file, pleadings, exhibits, and the testimony of Applicant and the additional witnesses, eligibility for access to classified information is granted.

FINDINGS OF FACT

After a complete and thorough review of the evidence in the record, including Applicant's RSOR, the admitted documents, and the testimony of Applicant, and upon due consideration of that evidence, I make the following findings of fact:

Applicant is 36 years old. He is not married, and he has two sons. Applicant is employed by a defense contractor, and he seeks a DoD security clearance in connection with his employment in the defense sector.

Guideline F, Financial Considerations

The SOR lists 13 allegations (1.a. through m.) regarding overdue debts under Adjudicative Guideline F. The allegations will be discussed below in the same order as they were listed on the SOR:

1.a. This overdue debt is cited in the SOR in the amount of $338. In his RSOR, Applicant admitted this allegation, but claimed that it was for a cable box that he had returned, and he was disputing it. At the hearing, Applicant testified that he has disputed this debt with the credit reporting agencies. (Tr at 58 – 60.) Exhibit 8 shows that this debt has been disputed. I find that Applicant has a good-faith dispute of this debt.

1.b. This overdue debt is cited in the SOR in the amount of $996. In his RSOR and during his testimony, Applicant admitted this allegation, but claimed that it was not correct as it was from the property management where he formerly lived, and since he received back his initial deposit when he vacated the premises, the balance owed was $0. Therefore, he has been disputing this debt.(Tr at 61 – 62.) I find that Applicant has a good-faith dispute of this debt.

1.c. This overdue debt is cited in the SOR for a judgment in the amount of $565. In his RSOR, Applicant denied this allegation. However, at the hearing, Applicant testified that he has made a payment of $300 on this debt, but there is still $565 outstanding on this debt, despite his payment, and he plans to pay this debt in the next month or two. (Tr at 63 – 64.) I find that the debt has not yet been resolved.

1.d. This overdue debt is cited in the SOR in the amount of $28,000 for child support. Applicant testified that he has made a payment plan where he would be paying $400 a month, which would meet his current obligation of $247 a month and the remainder would be applied to reduce his arrearage. This will be paid by automatic deduction. While Exhibit 8 indicated that Applicant owes $29,499 on this debt, Applicant testified that he has been double billed for part of the debt, because when he moved, more than one state tried to collect on the same debt. He therefore believed the debt was somewhat less, although he did not know the exact amount owed. (Tr at 65 - 69.) Exhibit B consisted of an Order to Withhold Income for Child Support, confirming that $400 would be withheld every month from Applicant’s wages to pay this debt.

1.e. This overdue debt is cited in the SOR in the amount of $459. Applicant testified that this debt is the same as 1.c., above. (Tr at 69.) After reviewing the credit reports, I find this debt is the same debt to the same creditor as 1. c., and is only owed once. (Exhibits 4 – 8.)

1.f. This overdue debt is cited in the SOR in the amount of $2,761. Applicant testified that this debt was paid, as it was on a secured credit card in which the credit card company had the funds to pay the debt. Applicant testified further that this debt has been removed from his credit report, which was confirmed on Exhibit 8. (Tr at 69 – 71.) I find that this debt has been resolved.

1.g. This overdue debt is cited in the SOR in the amount of $280. Applicant testified that this debt for his home gas bill has been paid. (Tr at 71 – 72.) While this debt was listed on Exhibit 4, it was not listed on any of the other credit reports. (Exhibits 5 – 8.) I find that this debt has been resolved.

1.h. This overdue debt is cited in the SOR in the amount of $160. Applicant testified that he has disputed this debt for a cable bill, as when he moved from his premises, the cable company showed he had a balance of $0. (Tr at 72.) This debt was listed on Exhibit 4, but it was not listed on any of the other credit reports. (Exhibits 5 – 8.) I find this debt has been resolved.

1.i. This overdue debt is cited in the SOR in the amount of $1,342. Applicant testified that this debt, for a vehicle that he turned in, was paid when he returned the vehicle in the amount of $2,100. He stated that when he disputed this bill it was removed from his credit report. (Tr at 73.) This debt was listed on Exhibit 4, but it was not listed on any of the other credit reports. (Exhibits 5 – 8.) I find this debt has been resolved.

1.j. This overdue debt is cited in the SOR in the amount of $1,230. Applicant testified that this debt for college courses that he took was supposed to be paid for by his employer at the time. He stated that he sent a letter to the creditor, indicating that his employer was scheduled to pay it under the college reimbursement program, and the creditor agreed with Applicant, and this debt has subsequently been removed from his credit reports. (Tr at 74 – 75.) This debt was listed on Exhibit 4, but it was not listed on any of the other credit reports. (Exhibits 5 – 8.) I find this debt has been resolved.

1.k. This overdue debt is cited in the SOR in the amount of $333. Applicant testified that this debt for wireless service has been paid. (Tr at 76.) This debt was listed on Exhibits 4 through 7, but Exhibit 8 states “customer disputes this account information. Paid, charge off.” I find this debt has been resolved. 1.l. This overdue debt is cited in the SOR in the amount of $132. Applicant testified that this debt has been paid, and it was removed from his credit reports. (Tr at 76 – 77.) While this debt was listed on Exhibit 4, it was not listed on any of the other credit reports. (Exhibits 5 – 8.) I find this debt has been resolved.

1.m. This overdue debt is cited in the SOR in the amount of $1,992. Applicant testified that he was not aware of the origin of this debt, and he thereafter disputed it. He subsequently received a letter from Experian credit reporting service, which informed him that this debt would be removed from his Experian credit report. This debt was listed on Exhibit 4, but it was not listed on any of the other credit reports. (Exhibits 5 – 8.) I find this debt has been resolved.

Applicant testified that the majority of his financial problems occurred in the period from 1999 to 2000 when he was unemployed, and he was also forced to relocate to get other employment. Most of the overdue debts originated in 2000 and 2001. He had not resolved these debts until recently, because he was not aware of them until he met with the Government investigator in regards to this security clearance. He testified that he is now doing a better job of managing his credit by retaining and reviewing all of his documentation, as many of these debts were simply mistakes that he did not resolve until recently. He also makes sure that he remains on budget. Finally, he pays $14 a month to have regular access to credit reports from each of the credit reporting agencies. (Tr at 79 – 83 .)

Mitigation

Applicant had three additional witness testify on his behalf. The first was a co- worker, who has known Applicant since November 2009, and he sees him every day at work. He indicated that he has no reason to doubt that Applicant is trustworthy, and he knows no reason why he can not be trusted. (Tr at 31 - 39.)

The second witness was also a co–worker, who has known Applicant for approximately 6 to 8 months. He testified that he believed Applicant had “an exemplary character.” He also testified that Applicant was honest, truthful, and trustworthy. (Tr at 41 – 44.)

The third witness was Applicant’s girlfriend, who has known Applicant for one year and seven months. She indicated that she has never seen Applicant act irresponsibly or negatively regarding his finances. She confirmed that Applicant considered, but did not purchase, a new vehicle, because it was outside of his budget. She also reiterated that Applicant has been proactive in attempting to resolve all of his debts for more than a year. She testified that Applicant had another bank account that he is holding for his children, which he could have used to pay off his child support arrearage, but he is saving that money for their college funds. Finally, the witness testified that Applicant is current on all of his most recent debts. (Tr at 45 – 56.)

POLICIES

When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines (AG). In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which are useful 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 over-arching adjudicative goal is a fair, impartial and common sense 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. Likewise, I have avoided drawing inferences grounded on mere speculation or conjecture.

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 applicant or proven by Department Counsel. . . .” The Applicant has the ultimate burden of persuasion as to 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 the 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.

The guideline notes several conditions that could raise security concerns and could potentially apply in this case. Under AG ¶ 19 (a), “an inability or unwillingness to satisfy debts” is potentially disqualifying. Similarly under AG ¶ 19 (c), “a history of not meeting financial obligations” may raise security concerns. I find that both of these disqualifying conditions apply to Applicant in this case. The evidence has established that Applicant has accumulated significant delinquent debt.

AG ¶ 20 provides conditions that could mitigate security concerns from financial difficulties: Under AG ¶ 20 (b), it may be mitigating where “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.” As noted above, Applicant testified that his financial problems resulted from the periods of unemployment, together with the costs of moving to find employment. I find that he has acted responsibly, since he has been paying off his debts or challenging the debts that he has legitimately disputed. He has now set up a payment plan to resolve his one remaining significant overdue debt for child support. Therefore, I find that this mitigating condition is a factor for consideration in this case.

AG ¶ 20(c) is also applicable since Applicant has “received counseling for the problem and/or there are clear indications that the problem is being resolved.”

Finally, AG ¶ 20(d) is applicable since Applicant has “initiated a good-faith effort to repay overdue creditors or otherwise resolve debts.” I find that this mitigating condition is also a factor for consideration in this case.

I conclude that Applicant has significantly reduced or resolved his overdue debt, and he has shown that he can maintain more financial stability. Therefore, he has mitigated the financial concerns of the Government.

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 the 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. Based on all of the reasons cited above as to why the Mitigating Conditions apply, considered together with the positive testimony from Applicant’s witnesses, I find that the record evidence leaves me with no significant questions or doubts as to Applicant’s eligibility and suitability for a security clearance under the whole-person concept. For all these reasons, I conclude Applicant has mitigated the 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: FOR APPLICANT

Subparagraphs 1.a through 1.m.: For Applicant

CONCLUSION

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

Martin H. Mogul Administrative Judge