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ISCR Case 15-01085.h1 — CASE

ISCR Case 15-01085.h1denied

Case Headnote

ISCR Case No. 15-01085.h1

deniedJan 12, 2017· Hon. Roger C. Wesley· hearing

Summary

A 26-year-old software engineer was denied a U.S. DOHA security clearance under Guideline F, Financial Considerations. The denial stemmed from his accumulation of over $22,000 in delinquent debts, predominantly student loans, which were detailed in seven separate allegations. These debts remained outstanding at the time of the decision.

The applicant acknowledged his financial obligations and expressed an intent to resolve them. However, he failed to provide any evidence of payments made toward these debts or participation in financial counseling. This lack of demonstrated effort to manage or mitigate his financial issues raised concerns regarding his reliability and trustworthiness.

The decision cited Disqualifying Conditions ¶ 19(a) and ¶ 19(c). The applicant's own admissions regarding his financial situation were sufficient to establish the delinquencies, negating the need for additional independent proof. Ultimately, the absence of any concrete steps to address his significant outstanding debts led to the denial of his security clearance.

Why the Applicant Was Denied

The applicant accumulated over $22,000 in delinquent debts, primarily student loans, which remain unresolved.
He provided no documentation of payments or financial counseling to mitigate the concerns raised by his debts.
The applicant's admissions regarding his financial situation negated the need for independent proof of his delinquencies.

Conditions Referenced

Disqualifying

DC ¶ 19(a)appliedInability or Unwillingness to Satisfy Debts
DC ¶ 19(c)appliedA History of Not Meeting Financial Obligations

Key Rule Quoted

“Holding a security clearance involves a fiduciary relationship between the Government and the clearance holder.”
— Snepp v. United States, 444 U.S. 507, 511 n.6 (1980)

Procedural Posture

SOR issuedNov 12, 2015
Answer filedDec 8, 2015Applicant elected to have the case decided on the written record.
Hearing held—No hearing; decided on the written record.
Decision dateJan 12, 2017

Cite For

Denial of Security Clearance Due to Unresolved Financial Obligations
Impact of Delinquent Debts on Security Clearance Eligibility
Importance of Providing Evidence of Financial Management Efforts in Clearance Cases

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 had accumulated delinquent debts exceeding $22,000, primarily from student loans, and had not taken verifiable steps to address these debts. As a result, the judge ruled against the applicant on all financial allegations under Guideline F, leading to the denial of the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant allegedly accumulated seven delinquent debts (mostly student loans) exceeding $22,000. Allegedly, each of the listed delinquent debts remains outstanding. $22,000	Against Applicant	Student Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b–1.g	6 sub-charges — specific text not stated in this decision (against the applicant). (low confidence)	Against Applicant			—	—	—

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. 15-01085 ) ) Applicant for Security Clearance )

For Government: Braden M. Murphy, Esq., Department Counsel For Applicant: Pro se 01/12/2017 ______________

STATEMENT OF CASE

______________

WESLEY, Roger C., Administrative Judge:

Based upon a review of the pleadings and exhibits, I conclude that Applicant did not mitigate security concerns regarding his finances. Eligibility for access to classified information is denied.

History of the Case

On November 12, 2015, the Department of Defense (DOD) Consolidated Adjudication Facility (CAF) issued a Statement of Reasons (SOR) detailing reasons why DOD adjudicators could not make the affirmative determination of eligibility for granting a security clearance, and recommended referral to an administrative judge to determine whether a security clearance should be granted, continued, denied, or revoked. The action was taken under Executive Order 10865 (E.O. 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 (AGs) implemented by the DOD on September 1, 2006. Applicant responded to the SOR on December 8, 2015, and elected to have his case decided on the basis of the written record. Applicant received the Government’s File of Relevant Material (FORM) on February 11, 2016 and did not respond to the FORM. The case was assigned to me on August 16, 2016.

Summary of Pleadings

Under Guideline F, Applicant allegedly accumulated seven delinquent debts (mostly student loans) exceeding $22,000. Allegedly, each of the listed delinquent debts remains outstanding.

In his response to the SOR, Applicant admitted each of the allegations in the SOR, with explanations. He claimed to have been promised a raise from his employer and intends to pay his student loan debts. He claimed to have paid off one of his two remaining debts (creditor 1.f) and has enough put aside to pay off the other non-student loan debt (creditor 1.e).

Background

Applicant is a 26-year-old software engineer for a defense contractor who seeks a security clearance. The allegations covered in the SOR and admitted by Applicant are adopted as relevant and material findings. Additional findings follow.

Applicant has never been married and has no children. (Item 4) He earned a bachelor’s degree in May 2012 and claimed no military service.

Applicant has worked for his current employer as a software engineer since 2012. (Item 4) Between 2007 and 2012, he was a full-time college student and worked in the local public school system as a part-time after-school instructor. (Item 4) He has never held a security clearance.

Finances

Between 2007 and 2010, Applicant accumulated a number of delinquent federal student loan debts. Altogether, he accrued over $21,000 in student loan debts that became delinquent and were referred for collection. (Items 5-7) He obtained these loans to finance his education. Since his graduation from college, he has not made enough income to fund his student loan payments. With his promised raise, he hopes to be able to address his student loans. (Items 3 and 6)

To date, Applicant has provided no evidence of his addressing his student loans debt. Before his student loans can be restored to rehabilitation status, Applicant must establish a payment plan with the Department of Education (DOE) and make enough agreed-on payments to satisfy the DOE’s rehabilitation criteria. Applicant has not documented any payments on his delinquent student loans. Applicant’s remaining two debts listed in the SOR with creditors 1.e ($903) and creditor 1.l ($61.00) are relatively small debts that Applicant claims to have either paid (i.e., creditor 1.f), or is prepared to pay (i.e., creditor 1.e).(Item 3) Applicant has provided no evidence to date, however, of payment of either of these two debts. Nor did he provide any evidence of financial counseling, budgeting, character references, performance evaluations, or evidence of community and civic contributions, either as attachments to his answer or in response to the FORM.

POLICIES

The AGs list guidelines to be used by administrative judges in the decision-making process covering DOHA cases. These guidelines take into account factors that could create a potential conflict of interest for the individual applicant, as well as considerations that could affect the individual’s reliability, trustworthiness, and ability to protect classified information. These guidelines include "[c]onditions that could raise a security concern and may be disqualifying” (disqualifying conditions), if any, and many of the "[c]onditions that could mitigate security concerns.”

The AGs must be considered before deciding whether or not a security clearance should be granted, continued, denied, or revoked. The guidelines do not require administrative judges to place exclusive reliance on the enumerated disqualifying and mitigating conditions in the guidelines in arriving at a decision. Each of the guidelines is to be evaluated in the context of the whole person in accordance with AG ¶ 2(c).

In addition to the relevant AGs, administrative judges must take into account the pertinent considerations for assessing extenuation and mitigation set forth in AG ¶ 2(a) of the AGs, which are intended to assist the judges in reaching a fair and impartial commonsense decision based upon a careful consideration of the pertinent guidelines within the context of the whole person. The adjudicative process is designed to examine a sufficient period of an applicant’s life to enable predictive judgments to be made about whether the applicant is an acceptable security risk.

When evaluating an applicant’s conduct, the relevant guidelines are to be considered together with the following AG ¶ 2(a) factors: (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 chances; (7) the motivation for the conduct; (8) the potential for pressure, coercion, exploitation, or duress; and (9) the likelihood of continuation or recurrence.

Viewing the issues raised and evidence as a whole, the following individual guideline is pertinent in this case: Financial Considerations

The Concern: 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. Compulsive gambling is a concern as it may lead to financial crimes including espionage. Affluence that cannot be explained by known sources of income is also a security concern. It may indicate proceeds from financially profitable criminal acts. AG ¶ 18.

Burden of Proof

By virtue of the principles and policies framed by the AGs, a decision to grant or continue an applicant's security clearance may be made only upon a threshold finding that to do so is clearly consistent with the national interest. Because the Directive requires administrative judges to make a commonsense appraisal of the evidence accumulated in the record, the ultimate determination of an applicant's eligibility for a security clearance depends, in large part, on the relevance and materiality of that evidence. See United States, v. Gaudin, 515 U.S. 506, 509-511 (1995). As with all adversarial proceedings, the judge may draw only those inferences which have a reasonable and logical basis from the evidence of record.

The Government's initial burden is twofold: (1) it must prove by substantial evidence any controverted facts alleged in the SOR, and (2) it must demonstrate that the facts proven have a material bearing to the applicant's eligibility to obtain or maintain a security clearance. The required materiality showing, however, does not require the Government to affirmatively demonstrate that the applicant has actually mishandled or abused classified information before it can deny or revoke a security clearance. Rather, the judge must consider and weigh the cognizable risks that an applicant may deliberately or inadvertently fail to safeguard classified information.

Once the Government meets its initial burden of proof of establishing admitted or controverted facts, the evidentiary burden shifts to the applicant for the purpose of establishing his or her security worthiness through evidence of refutation, extenuation, or mitigation. Based on the requirement of Exec. Or. 10865 that all security clearances be clearly consistent with the national interest, the applicant has the ultimate burden of demonstrating his or her clearance eligibility. “[S]ecurity-clearance determinations should err, if they must, on the side of denials.” See Department of the Navy v. Egan, 484 U.S. 518, 531 (1988).

ANALYSIS

Applicant is a fully employed software engineer for a defense contractor, and he has accumulated delinquent debts exceeding $22,000. His listed debts are comprised of five delinquent student loan debts exceeding $21,000 and two smaller consumer debts approximating $964. While Applicant claims to have addressed one of his listed debts (creditor 1.e), and is in a position to address his remaining debts, he provided no documentation to verify his claims. As matters stand, Applicant has made no verifiable payments on any of the listed debts in the SOR that can be validated and approved.

Applicant’s collective accumulation of delinquent debts warrant the application of two of the disqualifying conditions (DC) of the Guidelines. DC ¶ 19(a), “inability or unwillingness to satisfy debts,” and DC ¶19(c), “a history of not meeting financial obligation.” Applicant has not addressed any of his covered debts that can be verified to date.

Applicant’s pleading admissions with respect to his accumulation of unaddressed delinquent debts covered in the SOR negate the need for any independent proof (see McCormick on Evidence, § 262 (6th ed. 2006)). Each of Applicant’s listed filing lapses and debts are fully documented in his credit reports. Some judgment problems persist over Applicant’s insufficiently explained accrual of mortgage debts with his principal lender and other consumer creditors. To date, he has taken no verifiable corrective steps to resolve his delinquencies and demonstrate he acted responsibly in addressing his listed debts. See ISCR Case 03-01059 at 3 (App. Bd. Sep. 24, 2004).

Holding a security clearance involves a fiduciary relationship between the Government and the clearance holder. Quite apart from any agreement the clearance holder may have signed with the Government, the nature of the clearance holder’s duties and access to classified information necessarily imposes important duties of trust and candor on the clearance holder that are considerably higher than those typically imposed on Government employees and contractors involved in other lines of Government business. See Snepp v. United States, 444 U.S. 507, 511 n.6 (1980).

Inferentially, Applicant’s delinquent debts are attributable for the most part to inadequate income. Without more information from Applicant about his debt delinquencies and the status of any delinquencies on his delinquent student loan debts and two consumer debts, more detailed assessments cannot be made. Based on the documented materials in the FORM, no extenuating circumstances can be credited to Applicant.

Whole-person assessment does not enable Applicant to surmount the judgment questions raised by his accumulation of delinquent student loan debts and two listed consumer accounts. Resolution of his listed delinquent accounts is a critical prerequisite to his regaining control of his finances. Based on the limited information provided by Applicant, the evidence of record does not permit Applicant to establish judgment and trust levels sufficient to overcome security concerns associated with his accumulation of past due federal taxes, adverse judgments, and delinquent consumer debts. Taking into account all of the documented facts and circumstances surrounding Applicant’s accrual of delinquent student loan and consumer accounts and lack of documented resolution of them, it is still too soon to make safe predictions of Applicant’s ability to satisfactorily resolve his debts. More time is needed to afford Applicant the opportunity to make the necessary progress with his creditors to facilitate conclusions that his finances are sufficiently stabilized to permit him access to classified information. Allegations covered by subparagraphs 1.a through 1.gof Guideline F are resolved unfavorably for Applicant.

FORMAL FINDINGS

In reviewing the allegations of the SOR and ensuing conclusions reached in the context of the findings of fact, conclusions, conditions, and the factors listed above, I make the following formal findings:

GUIDELINE F (FINANCIAL CONSIDERATIONS): AGAINST APPLICANT

Subparagraphs 1.a through 1.g: Against Applicant

CONCLUSION

In light of all the circumstances presented by the record in this case, it is not clearly consistent with the national interest to grant or continue Applicant’s security clearance. Clearance is denied.

Roger C. Wesley Administrative Judge