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ISCR Case 15-00102.h1 — CASE

ISCR Case 15-00102.h1denied

Case Headnote

ISCR Case No. 15-00102.h1

deniedAug 11, 2016· Hon. Richard A. Cefola· hearing

Summary

A pro se applicant was denied a security clearance under Guideline F (Financial Considerations) due to significant unresolved financial obligations. The Statement of Reasons alleged the applicant was indebted to a creditor for approximately $295,167, stemming from a short sale of real estate where the property sold for less than its original purchase price. This raised disqualifying conditions under Adjudicative Guidelines Paragraphs 19(a) and 19(c).

The denial was based on the applicant's failure to resolve this substantial debt. Specifically, the applicant did not provide evidence of debt forgiveness, such as a 1099-C form, which would have mitigated the financial concerns.

Ultimately, the judge found that the applicant failed to meaningfully address the government's concerns regarding his financial situation and responsibility, leading to the denial of the security clearance.

Why the Applicant Was Denied

The applicant has significant unresolved financial obligations totaling approximately $295,167.
The applicant did not provide evidence of debt forgiveness, such as a 1099-C form, to mitigate the financial concerns.
The applicant failed to meaningfully address the government's concerns regarding his financial situation.

Conditions Referenced

Disqualifying

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

Key Rule Quoted

“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.”

Procedural Posture

SOR issuedAug 22, 2015
Answer filedSep 11, 2015
Hearing held—Applicant represented himself (pro se) and submitted a one-page statement.
Decision dateAug 11, 2016

Cite For

Denial of Security Clearance Due to Unresolved Financial Obligations Under Guideline F
Importance of Providing Evidence to Mitigate Financial Concerns
Application of the Whole-person Concept in Security Clearance Determinations

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 against the applicant regarding financial considerations, specifically a significant mortgage debt resulting from a short sale that was not resolved. The applicant failed to provide evidence of debt forgiveness, leading to concerns about his financial reliability and trustworthiness.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	It is alleged that Applicant is indebted to Creditor A in the amount of about $295,167, as the result of a sale of Applicant’s real estate by Creditor A, at less than it’s original purchase price. $295,167	Against Applicant	Mortgage or Home Loan Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—

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. 15-00102 ) ) Applicant for Security Clearance )

For Government: Gregg A. Cervi, Department Counsel For Applicant: Pro se

August 11, 2016

______________

STATEMENT OF CASE

______________

CEFOLA, Richard A., Administrative Judge:

Applicant submitted his Electronic Questionnaires for Investigations Processing (e-QIP) on February 27, 2014. On August 22, 2015, the Department of Defense (DOD) 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), effective within the Department of Defense after September 1, 2006.

Applicant answered the SOR in writing (Answer) on September 11, 2015, and requested an Administrative Determination by an administrative judge. Department Counsel issued a File of Relevant Material (FORM) on November 13, 2015. Applicant responded to the FORM on November 29, 2015. Department Counsel had no objection, and the documents are entered into evidence. The case was assigned to me on March 2, 2016. Based upon a review of the pleadings and exhibits, eligibility for access to classified information is denied.

FINDINGS OF FACT

In his Answer to the SOR, Applicant denies the factual allegation of the single Paragraph SOR.

Guideline F - Financial Considerations

1.a. It is alleged that Applicant is indebted to Creditor A in the amount of about $295,167, as the result of a sale of Applicant’s real estate by Creditor A, at less than it’s original purchase price. This is evidenced by a December 2014 credit report. (Item 4 at page 1.) Applicant admits to this “short sale,” and avers that his “home . . . was sold in June of 2012 for $184,900 and the balance was charged off . . .” (Answer at page 2.) However, in the FORM, Department Counsel correctly points out that “there has been no offer of a 1099-C to show forgiveness of this debt.” (FORM at page 2.) An IRS FORM 1099-C is issued to the former real estate owner when the “short sale” price is less than the mortgage owed by the debtor at the time of the “short sale,” and thereby the creditor forgives any remaining mortgage amount owed. The amount on the Form 1099-C is considered income, for which Applicant would be required to pay Federal income tax. In this case, at the time of the “short sale,” the amount owed was $336,110.44. (Answer at page 3.) In response to the FORM, Applicant only submits a one page statement, but no IRS Form 1099-C. I find that this significant mortgage debt is not resolved.

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. (AG Paragraph 2.) The administrative judge’s over-arching adjudicative goal is a fair, impartial and commonsense decision. According to AG Paragraph 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 Paragraph 2(b) requires that “[a]ny doubt concerning personnel being considered for access to classified information will be resolved in favor of the 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 Paragraph E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive Paragraph 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 Paragraph 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 Subparagraph 19(a), an “inability or unwillingness to satisfy debts@ is potentially disqualifying. Similarly under Subparagraph 19(c), “a history of not meeting financial obligations@ may raise security concerns. Applicant, although given an opportunity to do so in response to the FORM, has not submitted any evidence that his remaining mortgage debt has been forgiven by the creditor. I can find no countervailing Mitigating Condition that is applicable here. Financial Considerations are found against Applicant.

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. Under AG Paragraph 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 Administrative Judge should also consider the nine adjudicative process factors listed at AG Paragraph 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.

I considered all of the evidence, including the potentially disqualifying and mitigating conditions surrounding this case. The record evidence leaves me with questions and doubts as to his eligibility and suitability for a security clearance. Applicant has failed to fully respond to the Government’s concerns; and as such, has failed to meaningfully address the alleged past-due debt. For this reason, I conclude Applicant has not mitigated the security concerns under the whole-person concept arising from his Financial Considerations.

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

Subparagraph 1.a. 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.

_________________ Richard A. Cefola Administrative Judge