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ISCR Case 15-02235.h1 — CASE

ISCR Case 15-02235.h1denied

Case Headnote

ISCR Case No. 15-02235.h1

deniedDec 13, 2016· Hon. Noreen A. Lynch· hearing

Summary

A 47-year-old defense contractor employee was denied a security clearance under Guideline F, Financial Considerations, due to 14 delinquent debts totaling approximately $49,928. These debts included a judgment, collection accounts, and charged-off accounts, with financial problems dating back to 2007.

The applicant admitted to the debts and expressed regret for past financial decisions. However, the denial was based on the applicant's failure to demonstrate any efforts to resolve these financial issues.

Specifically, the applicant did not provide evidence of seeking financial counseling, disputing any debts, or establishing a payment plan. This lack of demonstrated mitigation efforts led to the denial of his security clearance.

Why the Applicant Was Denied

The applicant admitted to 14 delinquent debts totaling about $49,928.
He did not provide evidence of efforts to resolve his financial issues or seek financial counseling.
The applicant's financial problems date back to 2007, and he failed to dispute any debts or establish a payment plan.

Conditions Referenced

Disqualifying

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

Key Rule Quoted

“Any doubt concerning personnel being considered for access to classified information will be resolved in favor of national security.”
— Executive Order 10865

Procedural Posture

SOR issuedSep 19, 2015
Answer filed—Applicant requested a decision based on the written record.
Hearing held—No hearing; decision based on written record.
Decision dateDec 12, 2016

Cite For

Failure to Demonstrate Financial Responsibility Under Guideline F
Lack of Evidence for Mitigating Financial Conditions
Importance of Proactive Debt Resolution Efforts in Security 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 multiple delinquent debts totaling approximately $49,928, including a judgment and collection accounts. Despite admitting to the debts and expressing regret for past financial decisions, the applicant failed to provide evidence of efforts to resolve these debts, leading to a denial of the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Delinquent debt totaling about $49,928, including a judgment, collection accounts and charged-off accounts. $49,928	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	Delinquent debt totaling about $49,928, including a judgment, collection accounts and charged-off accounts. $49,928	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	Delinquent debt totaling about $49,928, including a judgment, collection accounts and charged-off accounts. $49,928	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	Delinquent debt totaling about $49,928, including a judgment, collection accounts and charged-off accounts. $49,928	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	Delinquent debt totaling about $49,928, including a judgment, collection accounts and charged-off accounts. $49,928	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	Delinquent debt totaling about $49,928, including a judgment, collection accounts and charged-off accounts. $49,928	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.g	Delinquent debt totaling about $49,928, including a judgment, collection accounts and charged-off accounts. $49,928	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.h	Delinquent debt totaling about $49,928, including a judgment, collection accounts and charged-off accounts. $49,928	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.i	Delinquent debt totaling about $49,928, including a judgment, collection accounts and charged-off accounts. $49,928	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.j	Delinquent debt totaling about $49,928, including a judgment, collection accounts and charged-off accounts. $49,928	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.k	Delinquent debt totaling about $49,928, including a judgment, collection accounts and charged-off accounts. $49,928	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.l	Delinquent debt totaling about $49,928, including a judgment, collection accounts and charged-off accounts. $49,928	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.m	Delinquent debt totaling about $49,928, including a judgment, collection accounts and charged-off accounts. $49,928	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.n	Delinquent debt totaling about $49,928, including a judgment, collection accounts and charged-off accounts. $49,928	Against Applicant	Unspecified Financial	Admitted	(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.15-02235 ) ` ) Applicant for Security Clearance )

For Government: Charles Hale, Esq. Department Counsel For Applicant: Pro se

12/13/2016 ______________

STATEMENT OF CASE

______________

LYNCH, Noreen, A., Administrative Judge:

The Department of Defense (DOD) issued a Statement of Reasons (SOR) to Applicant alleging security concerns arising under Guideline F (Financial Considerations). The SOR was dated September 19, 2015. The action was taken under Executive Order (EO) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; DOD 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the Adjudicative Guidelines (AG) implemented in September 2006.

Applicant timely answered the SOR and requested a decision based on the written record in lieu of a hearing. Department Counsel submitted a File of Relevant Material, (FORM), dated February 17, 2016. Applicant received the FORM on February 25, 2016. Applicant did not respond to the FORM. The case was assigned to me on December 2, 2016. Based on a review of the case file, eligibility for access to classified information is denied.

FINDINGS OF FACT

In his answer to the SOR, Applicant admitted allegations 1.a through 1.n. He provided explanations for the allegations under Guideline F (Financial Considerations).

Applicant is a 47-year-old employee for a defense contractor. He is married with one child, age nine. He graduated from high school in 1986. Applicant has worked for his current employer since July 2014. (Item 3) He completed a security clearance application in August 2014.

Financial Considerations

The SOR alleges 14 delinquent debts including a judgment, collection accounts and charged-off accounts. (Items 5 and 6) The delinquent debts totaled about $49,928. (Item 1)

In his answer to the SOR Applicant admitted all the debts on the SOR. He stated that he made some bad decisions in his life. He moved from one state to another to invest in an oil speculation deal on the advice of a relative. He invested his money and settled with his family in the new state. He bought a house, furniture, a car and other consumer items. He stated that this occurred in 2007. He lost everything and stated that he has learned from his mistakes. (Item 2) He was unemployed for various periods of time in 2014 (about four months) and in 2011 (about four months). He noted that he was supported by his wife’s income and unemployment benefits. (Item 4)

During his 2014 investigative interview, Applicant spoke about his home foreclosure but seemed unaware of many of the debts listed on the SOR. He thought that he closed most of the accounts and was shocked and dismayed to learn about the debts on his credit report. He stated that he has had no financial counseling and that he had not sought debt consolidation. He stated that he would research some of the debts to get information and possibly arrange a payment plan. (Item 4)

Applicant states that he enjoys his current job and his wife has a good job. He asked that his bad decisions be overlooked. However, Applicant did not respond to the FORM and provide any information concerning what he has done or is doing to resolve his delinquent debts. Some of the delinquent debts date back to 2009.

POLICIES

When evaluating an applicant’s suitability for a security clearance, an 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. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, they are applied in conjunction with the factors listed in the adjudicative process. An administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. Under AG ¶ 2(c), this process is a conscientious scrutiny of a number of variables known as the “whole-person concept.” An 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.

The Government must present evidence to establish controverted facts alleged in the SOR. An 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 burden of proof is something less than a preponderance of evidence. The ultimate burden of persuasion is on the applicant.

A person seeking access to classified information enters into a fiduciary relationship with the Government based on 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 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 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.” “The clearly consistent standard indicates that security clearance determinations should err, if they must, on the side of denials.” Any reasonable doubt about whether an applicant should be allowed access to sensitive information must be resolved in favor of protecting such information. The decision to deny an individual a security clearance does not necessarily reflect badly on an applicant’s character. It is merely an indication that the applicant has not met the strict guidelines the President and the Secretary of Defense established for issuing a clearance.

ANALYSIS

Guideline F, Financial Considerations

AG ¶ 18 expresses the security concern pertaining to financial considerations:

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 over- extended 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 ¶ 19 describes conditions that could raise a security concern and may be disqualifying:

(a) inability or unwillingness to satisfy debts;

(b) indebtedness caused by frivolous or irresponsible spending and the absence of any evidence of willingness or intent to pay the debt or establish a realistic plan to pay the debt;

(d) deceptive or illegal financial practices such as embezzlement, employee theft, check fraud, income tax evasion, expense account fraud, filing deceptive loan statements, and other intentional financial breaches of trust;

(e) consistent spending beyond one's means, which may be indicated by excessive indebtedness, significant negative cash flow, high debt-to- income ratio, and/or other financial analysis;

(f) financial problems that are linked to drug abuse, alcoholism, gambling problems, or other issues of security concern;

(g) failure to file annual Federal, state, or local income tax returns as required or the fraudulent filing of the same; (h) unexplained affluence, as shown by a lifestyle or standard of living, increase in net worth, or money transfers that cannot be explained by subject's known legal sources of income; and

(i) compulsive or addictive gambling as indicated by an unsuccessful attempt to stop gambling, "chasing losses" (i.e. increasing the bets or returning another day in an effort to get even), concealment of gambling losses, borrowing money to fund gambling or pay gambling debts, family conflict or other problems caused by gambling.

The Government produced credible evidence to establish the delinquent debts. Consequently, the evidence is sufficient to raise disqualifying conditions ¶¶ 19(a) and 19(c).

AG ¶ 20 provides conditions that could mitigate the security concerns:

(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;

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

(e) the individual has a reasonable basis to dispute the legitimacy of the past-due debt which is the cause of the problem and provides documented proof to substantiate the basis of the dispute or provides evidence of actions to resolve the issue; and

(f) the affluence resulted from a legal source of income.

Applicant experienced unemployment for various periods of time. He invested in an oil speculation deal that was not successful. He incurred delinquent debts and a judgment. He has been employed since 2014 and states that his wife works. He sincerely regrets the bad decisions that he has made in the past. However, despite the unsuccessful investment and some unemployment, which were circumstances beyond his control, Applicant has provided no evidence that he acted responsibly. He stated that he has not sought financial counseling or debt consolidation. There is no information concerning any payment plans. He did not dispute any accounts not did he provide any reason to believe that he has made good-faith efforts to resolve his delinquent debts. None of the mitigating conditions apply.

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 an 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. As noted above, the ultimate burden of persuasion is on the applicant seeking a security clearance.

I considered the potentially disqualifying and mitigating conditions in light of all the facts and circumstances surrounding this case, as well as the whole-person factors.

Applicant is 47 years old. He has worked for his current employer since 2014. He is married and has one child. He admitted his delinquent debts and recognizes his mistakes. However, he presented no information or documentation to show that he has made any efforts to address his financial problems, which started around 2007.

Applicant stated in his investigative interview that he would research the debts but there is no information that he has done so. He has not carried his burden of proof in this case.

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.n: 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 a security clearance. Clearance is denied.

NOREEN A. LYNCH Administrative Judge

FOOTNOTES

The Government submitted six items for the record. See also ISCR Case No. 94-1075 at 3-4 (App. Bd. Aug. 10, 1995). Department of the Navy v. Egan, 484 U.S. 518, 531 (1988). ISCR Case No. 93-1390 at 7-8 (App. Bd. Jan. 27, 1995). See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information), and EO 10865 § 7. ISCR Case No. 93-1390 at 7-8 (App. Bd. Jan. 27, 1995). Id.