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ISCR Case 15-00384.h1 — CASE

ISCR Case 15-00384.h1granted

Case Headnote

ISCR Case No. 15-00384.h1

grantedSep 26, 2016· Hon. Nichole L. Noel· hearing

Summary

A 50-year-old federal contractor was granted a security clearance despite initial concerns under Guideline F, Financial Considerations. The Statement of Reasons (SOR) cited indebtedness across three credit cards totaling $19,334, $1,046, and $1,955, respectively. It also noted that her primary mortgage was in good standing and that a second mortgage on her home had been forgiven in December 2015. Disqualifying conditions under Adjudicative Guidelines (AG) ¶ 19(a) and AG ¶ 19(c) were raised.

However, the judge applied mitigating conditions under AG ¶ 20(b), AG ¶ 20(c), and AG ¶ 20(d). The decision highlighted that the applicant's financial difficulties, which included approximately $131,011 in delinquent accounts, were primarily caused by medical issues beyond her control.

The applicant demonstrated a good-faith effort to resolve her debts, including rehabilitating her primary mortgage and paying off nearly $30,000 in non-SOR debts. She also showed a clear intent to continue addressing her financial issues. Ultimately, the judge concluded that her financial problems did not indicate poor judgment or irresponsibility, leading to the security clearance being granted.

Why the Applicant Prevailed

The applicant's financial problems were caused by circumstances beyond her control, including medical issues.
She made a good-faith effort to resolve her delinquent accounts, including rehabilitating her primary mortgage and paying off almost $30,000 in non-SOR debts.
The applicant demonstrated intent to continue resolving her financial issues despite ongoing challenges.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(c)raisedDelinquent Debts

Mitigating

AG ¶ 20(b)appliedFinancial Problems Due to Circumstances Beyond the Applicant's Control
AG ¶ 20(c)appliedGood-faith Effort to Repay Debts
AG ¶ 20(d)appliedSuccessful Resolution of Some Debts

Key Rule Quoted

“Applicants are not held to a standard of perfection.”

Procedural Posture

SOR issuedSep 30, 2015
Answer filedSep 26, 2016
Hearing heldApr 27, 2016
Decision dateSep 26, 2016

Cite For

Good-faith Efforts in Resolving Financial Issues Under Guideline F
Impact of Medical Circumstances on Financial Stability
Consideration of the Whole-person Concept in Security Clearance Decisions

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 from circumstances beyond her control, including medical expenses and loss of income. Despite ongoing financial struggles, the applicant demonstrated a good-faith effort to resolve her debts, leading to a favorable decision regarding her security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant is indebted to three credit cards, SOR ¶ 1.a ($19,334) $19,334	For Applicant	Credit Card Debt	Admitted	—	—	—
1.b	Her primary mortgage is currently in good standing (SOR ¶ 1.b)	For Applicant	Mortgage or Home Loan Debt	Unknown	—	—	—
1.c	Applicant is indebted to three credit cards, SOR ¶ 1.c ($1,046) $1,046	For Applicant	Credit Card Debt	Admitted	—	—	—
1.d	The creditor holding the second mortgage on her home forgave the loan in December 2015 (SOR ¶ 1.d)	For Applicant	Mortgage or Home Loan Debt	Unknown	—	—	—
1.e	Applicant is indebted to three credit cards, SOR ¶ 1.e ($1,955) $1,955	For Applicant	Credit Card Debt	Admitted	—	—	—

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. 15-00384 ) Applicant for Security Clearance )

For Government: David Hayes, Department Counsel For Applicant: Kevin J. Tagliaferri, Esq. 09/26/2016 ______________

STATEMENT OF CASE

______________

NOEL, Nichole L., Administrative Judge:

Applicant contests the Department of Defense’s (DOD) intent to deny her eligibility for a security clearance to work in the defense industry. Applicant’s financial problems were not caused by irresponsible, reckless, or negligent behavior. She is making a good-faith effort to resolve her delinquent accounts. To date, she has rehabilitated her mortgage and has paid almost $30,000 to the resolution of non-SOR debts. Clearance is granted.

Statement of the Case

On September 30, 2015, the DOD issued a Statement of Reasons (SOR) detailing security concerns under the financial considerations guideline.1 DOD adjudicators were unable to find that it is clearly consistent with the national interest to continue Applicant’s security clearance and recommended that the case be submitted to an administrative judge for a determination whether to revoke her security clearance. Applicant timely answered the SOR and requested a hearing. On April 4, 2016, I issued a prehearing order to the parties regarding the exchange and submission of discovery, the filing of motions, and the disclosure of any witnesses.2 Department Counsel provided documents as requested.3 At the hearing, convened on April 27, 2016, I admitted Government’s Exhibits (GE) 1 through 4, without objection. The record remained open after the hearing to allow Applicant to submit additional information about her finances. She timely submitted AE A through I, which were also admitted without objection.4 I received the transcript (Tr.) on May 10, 2016.

FINDINGS OF FACT

Applicant, 50, has worked for a federal contractor since 2003. She was initially granted a security clearance during her service in the U.S. Air Force between 1983 and 1988. Applicant completed her current security clearance application in June 2014, disclosing her history of financial difficulties. She disclosed having sought financial assistance, as well as 46 delinquent accounts, the majority of which are related to medical expenses. The ensuing investigation confirmed Applicant’s history of financial problems. The resulting SOR alleges that Applicant is indebted to five creditors for approximately $131,011, 83% of the alleged debts are related to the two mortgages on her home.5

Applicant is married with two children, ages 14 and 13. She resides with her family in the home she and her husband purchased from her father-in-law in 2001. Applicant’s financial problems began in 2009. Applicant’s youngest son, then six years old, was diagnosed with a serious medical condition as was Applicant. Applicant’s son requires extensive and ongoing medical care. Also that year, Applicant’s husband, who works in construction, was only able to work nine months of the year due to inclement weather that prevented outside work. The loss of household income along with the increased medical expenses caused Applicant to rely on credit cards to pay expenses. By 2010, she could not afford the credit card payments. The SOR alleges three credit cards debts, SOR ¶¶ 1.a ($19,334), 1.c ($1,046), and 1.e ($1,955). Applicant admitted that she used each to pay for necessities, including medical care and clothing for her growing sons. These debts remain unresolved.6

In 2012, Applicant’s home fell into such a state of disarray that her insurance company threatened to cancel the insurance policy unless Applicant made extensive repairs. To complete the repairs, Applicant took a $26,000 loan from her retirement account. Since then, she has repaid $200 toward the loan each month. The loan will be satisfied in 2017. In 2013, Applicant learned that her youngest son suffered from another medical condition that requires him to maintain a strict diet. In addition to her son’s medical expenses, the continued increase in expenses caused by the loan repayment and her son’s new diet caused additional financial difficulty. In the face of her overwhelming financial problems, Applicant became depressed. After seeking help, she re-focused her efforts on resolving her delinquent accounts. In 2013, she sought the advice of an attorney about filing for bankruptcy protection. By 2014, Applicant could not afford to pay the mortgage on her home, which went into foreclosure. Between 2014 and 2015, Applicant applied for modification of her primary home loan three times. Her final application for modification was approved in May 2015, and her primary mortgage is currently in good standing (SOR ¶ 1.b) The creditor holding the second mortgage on her home forgave the loan in December 2015 (SOR ¶ 1.d).7

With her home mortgage under control, Applicant decided to resolve her other debts directly. She began by maxing out her the health savings plan benefit offered by her employer to help offset some of her medical expenses. Under her current insurance plan, Applicant pays $4,600 in out-of-pocket medical expenses before her medical expenses are covered by insurance. Applicant usually meets her deductible half-way through the year. She uses the second half of the year to try to stock up on as many medical supplies as possible in an effort to lessen her out-of-pocket expenses for the upcoming year. Applicant has also worked on resolving several debts that were not alleged in the SOR. In addition to repaying the loan from her retirement account, she has focused her attention on paying outstanding medical expenses. Applicant has paid almost $2,000 in medical expenses and $1,275 in outstanding state taxes. She has also paid a collection account arising from a returned check for $80.8

Despite her efforts, Applicant has ongoing financial problems. At the time of the hearing, Applicant recently learned that she and her husband owe almost $11,000 in past-due federal taxes. She has contacted the IRS and set up a payment arrangement of $50 per month. The creditor holding SOR ¶ 1.a is suing Applicant to collect the past- due account. She plans to use money from her retirement account to satisfy any judgment. Applicant bears the responsibility of resolving her family’s financial issues. Her husband is not coping well with the changes in their family life caused by their son’s medical issues. She pays the majority of the household bills. Her husband gives her money to help with their expenses. She is able to set aside $500 each month to cover emergency expenses. Applicant has expressed her intent to keep working on her finances until she is able to resolve her delinquent accounts.9

Applicant is well regarded at work. For the past five years, Applicant has been entrusted with a corporate credit card to facilitate the purchase of office supplies. She has never used the card for personal use. Applicant does not believe that her employer would allow her to retain purchasing responsibilities if she were not trustworthy.10

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.” 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, 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

Unresolved delinquent debt is a serious security concern because failure to “satisfy debts [or] 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.”11 Similarly, an individual who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information.

The SOR alleges that Applicant owes approximately $131,011 on five delinquent accounts, the largest two accounts being the primary and secondary mortgages on her home, totaling $108,676. The record supports a prima facie case that Applicant has a history of not paying her bills and, that for several years, she has had an inability to do so.12 However, Applicant’s financial problems did not occur under circumstances that raise doubts about her security worthiness. Her financial problems were caused by events beyond her control - medical diagnoses for her youngest son that require extensive and costly medical care and food.13 The record shows that Applicant has been working to rehabilitate her finances. She sought legal counsel to determine her available options.14 Applicant is making a good-faith effort to repay her creditors. She actively and persistently pursued a home loan modification. As a result, she has rehabilitated her primary home loan and the obligation is now current. She no longer owes the secondary mortgage. Although the three other SOR debts remain unresolved, Applicant has taken steps to resolve almost $30,000 in non-SOR accounts.15

After reviewing the record, I have no doubts about her suitability for access to classified information. In reaching this conclusion, I have also considered the whole- person factors at AG ¶ 2(a). Applicants are not held to a standard of perfection. Even though Applicant is still struggling financially, she has provided sufficient history of debt repayment and intent to resolve her delinquent accounts.

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.e: For Applicant

CONCLUSION

In light of all of the circumstances presented, it is clearly consistent with the national interest to grant Applicant a security clearance. Eligibility for access to classified information is granted.

________________________ Nichole L. Noel Administrative Judge

FOOTNOTES

1 This case is adjudicated under Executive Order (EO) 10865, Safeguarding Classified Information within Industry, signed by President Eisenhower on February 20, 1960, as amended; as well as DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program, dated January 2, 1992, as amended (Directive). In addition, the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information (AG), effective within the Defense Department on September 1, 2006, apply to this case. The AG were published in the Federal Register and codified in 32 C.F.R. § 154, Appendix H (2006). The AG replace the guidelines in Enclosure 2 to the Directive. 2 The prehearing scheduling order is appended to the record as Hearing Exhibit (HE) I. 3 The discovery letter, dated November 23, 2015, is appended to the record as HE II. 4 AE E. 5 GE 1-4; AE C. 6 Tr. 15-18, 26, 40, 43, 52, 59. 7 Tr. 14, 19-23, 28, 33-34, 45, 49-50, 56-57, 59; AE G. 8 Tr. 17-18, 23-25, 35-37, 44-49, 60; AE E-F, H. 9 Tr. 36, 38-39, 42, 55-56, 58-59; AE H. 10 Tr. 30, AE A-B, D. 11 AG ¶ 18. 12 AG ¶¶ 19(a) and (c). 13 AG ¶ 20(b). 14 AG ¶ 20(c). 15 AG ¶ 20(d).