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ISCR Case 15-02787.h1 — CASE

ISCR Case 15-02787.h1granted

Case Headnote

ISCR Case No. 15-02787.h1

grantedNov 22, 2016· Hon. Noreen A. Lynch· hearing

Summary

A 58-year-old administrative specialist for a defense contractor was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The Statement of Reasons cited four delinquent debts, including three charged-off accounts and one collection account, totaling approximately $20,000. These allegations raised disqualifying conditions under Adjudicative Guidelines Paragraphs 19(a) and 19(c).

However, the applicant successfully demonstrated that she had addressed her financial issues. She provided evidence of resolving the delinquent debts through repayment plans and settlements, and she received financial counseling. This demonstrated responsible financial behavior following a period of personal circumstances that contributed to the instability.

The decision to grant the clearance was further supported by the application of mitigating conditions under Adjudicative Guidelines Paragraphs 20(a), 20(b), 20(c), and 20(d). Her long-standing employment and positive character references also affirmed her reliability and trustworthiness.

Why the Applicant Prevailed

The applicant provided evidence of resolving delinquent debts through repayment plans and settlements.
She demonstrated responsible financial behavior following a period of instability due to personal circumstances.
The applicant's long-standing employment and positive character references supported her reliability and trustworthiness.

Conditions Referenced

Disqualifying

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

Mitigating

AG ¶ 20(a)appliedThe Behavior Happened so Long Ago, Was so Infrequent, or Occurred Under Such Circumstances That It Is Unlikely to Recur
AG ¶ 20(b)appliedThe Conditions That Resulted in the Financial Problem Were Largely Beyond the Person's Control
AG ¶ 20(c)appliedThe Person Has Received or Is Receiving Counseling for the Problem
AG ¶ 20(d)appliedThe Individual Initiated a Good-faith Effort to Repay Overdue Creditors

Key Rule Quoted

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

Procedural Posture

SOR issuedNov 23, 2015
Answer filedTimely
Hearing heldN/ADecision based on written record.
Decision dateNov 22, 2016

Cite For

Mitigating Conditions Under Guideline F for Financial Considerations
Demonstrating Responsible Financial Behavior After Personal Hardship
The Importance of Character References 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 had several delinquent debts totaling about $20,000, but she successfully mitigated the financial concerns by addressing her debts and demonstrating responsible financial behavior. The judge ruled in favor of the applicant on all allegations under Guideline F, granting her security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	$10,507 (charged-off account) $10,507	For Applicant	Credit Card Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.b	$2,384 (2014 charged-off account) $2,384	For Applicant	Credit Card Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.c	$1,720 (charged-off account) $1,720	For Applicant	Credit Card Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.d	$5,302 (collection account) $5,302	For Applicant	Unspecified Financial	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. 15-02787 ) ) ) Applicant for Security Clearance

For Government: Andrew H. Henderson, Esq. Department Counsel For Applicant: Arran S. Treadway, Esq.

11/22/2016 ______________

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 November 23, 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 March 21, 2016. Applicant received the FORM on March 24, 2016. Applicant responded to the FORM through Counsel. The case was assigned to me on November 8, 2016. Based on a review of the case file, eligibility for access to classified information is granted.

FINDINGS OF FACT

In her answer to the SOR, Applicant denied allegations 1.a through 1.c. She provided detailed explanations for the four allegations under Guideline F (Financial Considerations).

Applicant is a 58-year-old administrative specialist for a defense contractor. She is three times divorced with two adult children. She worked and attended college and obtained her undergraduate degree in 2013. Applicant has worked for her current employer since 1981, where she has held a security clearance since at least 1982. (Item 2) She completed a security clearance application in October 2014.

Financial Considerations

The SOR alleges four delinquent debts including a collection account and three charged-off accounts. (Items 6 and 8) The delinquent debts totaled about $20,000. (Item 1)

In her 2014-2015 investigative interview, Applicant stated that her financial problems began when her father died in 2001 and she “received his home as a gift.” She tried to maintain that home on her own. She had tenants in her father’s home but the tenants were not consistent with rent payments. Eventually, she could not maintain both homes. She also fell behind in payments on her own home. In 2011, her father’s house was foreclosed and the account was satisfied. She has not had any issues since the foreclosure. However, she incurred delinquent accounts. In the interview, Applicant described other non-SOR accounts that were settled or resolved. (Item 3) The credit bureau reports (Items 4 and 5) reflect the vast majority of accounts are noted as “pays as agreed.”

As to SOR allegation 1.a, $10,507 (charged-off account), Applicant provided information that the debt was discharged in 2011. She provided a 1099-C form (cancellation of Debt, dated April 2011). Although she was not legally obligated to pay the debt, she opted to pay the debt, which was the result of a credit card. Applicant has spoken with the company to make arrangements to settle. (Item 3)

As to SOR allegation 1.b, $2,384 (2014 charged-off account), Applicant addressed the debt in 2014. She contacted the company and voluntarily entered into a repayment agreement. After paying $74 a month, the account was paid in 2015. She provided proof of payment. (Item 1)

As to SOR allegation 1.c, $1,720 (charged-off account), Applicant contacted the company in 2014 and made payment arrangements. The account was paid in 2015. (Item 1) As to SOR allegation 1.d, $5,302 (collection account) Applicant denied any indebtedness. She believes that her ex-husband had access to the account and may have charged items. She had no information about the account and it was not on her credit report.

Applicant submitted information pertaining to her 35 year career, including letters of recommendation, awards, performance evaluations, and certificates of appreciation for leadership and development. She received awards for “Exceptional Support” and individual “spot” awards for continued excellence throughout the years. Her performance evaluations reflect an impeccable record of loyalty and reliability. In 2014, she obtained a certificate of completion for financial counseling. (Response to FORM)

In addition, Applicant submitted documentation that she volunteers regularly for the city attorney’s office in their dispute resolution program. Her pastor of 25 years considers her a person of good moral character. (Response to FORM)

A former professor wrote noting that during Applicant’s time of crisis, she performed responsibly. She told the professor about a personal emergency and alerted her team classmates so that the schedule could be adjusted to successfully complete the course project.

The Director of her company wrote a letter stating that he has known Applicant for about 20 years. She has exhibited a positive attitude and high quality leadership skills.

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 had a period of financial instability when she inherited her deceased father’s home. She tried to maintain that home and her own, but could not keep tenants. She fell behind in bills. In 2011, she began to have delinquent accounts. She has also been three times divorced and believes an ex-husband used one of her accounts without her knowledge.

Applicant has a credit history of paying her bills. Beginning in 2011, she addressed her accounts. She provided documentation that either the debt was cancelled or that she arranged payment plans and paid her charged-off accounts. She received financial counseling in 2014. She maintained her professionalism at work. She acted responsibly. I find that mitigating conditions AG ¶ 20 (a,b,cand d) apply in this case.

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 58 years old and has worked for 35 years with a security clearance. She has an exemplary work history. She had a period of financial difficulty and was able to address the delinquent debts. While they were not listed on the SOR, Applicant also paid other bills and debts that she had incurred. She has been divorced and has two adult children. She volunteers in the community. She has been a loyal and dedicated employee for the same company. She has no listed security violations. Her employer, pastor, friends, and colleagues praise her. She worked full time and attended college in the evening and obtained her undergraduate degree.

Applicant addressed her financial difficulties from a few years ago. The few delinquent debts and the small amount of money in comparison to the many years of responsible dealings in her finances convinces me that she is reliable and trustworthy. I have no doubts about her ability to continue to safeguard classified information. She has mitigated the financial considerations concerns, especially in light of the whole person. Eligibility for continued security clearance is granted.

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-d: For Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is clearly consistent with the national interest to grant Applicant a security clearance. Clearance is granted.

NOREEN A. LYNCH. Administrative Judge

FOOTNOTES

The Government submitted five 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.