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ISCR Case 15-02968.h1 — CASE

ISCR Case 15-02968.h1denied

Case Headnote

ISCR Case No. 15-02968.h1

deniedMay 4, 2017· Hon. Mark W. Harvey· hearing

Summary

A 48-year-old mechanic was denied a security clearance under Guideline F, Financial Considerations, due to unresolved financial issues. The applicant faced allegations concerning 10 delinquent debts totaling $72,903. Specific allegations included a $13,011 charge-off on a second mortgage, a $56 delinquent medical debt, and $19,600 owed to the Federal Government for 2010 and 2011 taxes.

Disqualifying conditions under Guideline F were raised, while mitigating conditions were considered. However, the applicant failed to provide sufficient evidence of efforts to resolve his debts or demonstrate financial responsibility.

Ultimately, the clearance was denied because eight of the applicant's delinquent debts, totaling over $72,500, remained unresolved, including significant tax obligations. These unmitigated financial issues raised concerns about his reliability and trustworthiness.

Why the Applicant Was Denied

The applicant has eight unresolved delinquent debts totaling over $72,500, including significant tax debts.
He did not provide sufficient evidence of efforts to resolve his debts or demonstrate financial responsibility.
The applicant's financial issues raised unmitigated questions about his reliability and trustworthiness.

Conditions Referenced

Disqualifying

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

Mitigating

AG ¶ 20(h)rejectedBehavior Happened so Long Ago, Was Infrequent, or Occurred Under Circumstances Unlikely to RecurThe applicant's ongoing debts are considered recent and indicative of a continuing course of conduct.
AG ¶ 20(b)rejectedConditions That Resulted in the Financial Problem Were Largely Beyond the Person's ControlWhile circumstances were acknowledged, the applicant did not demonstrate responsible actions to address the debts.
AG ¶ 20(d)rejectedIndividual Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve DebtsThe applicant failed to provide evidence of any good-faith efforts to resolve his debts.

Key Rule Quoted

“Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines.”

Procedural Posture

SOR issuedMar 16, 2016
Answer filedApr 21, 2016Applicant requested a decision without a hearing.
Hearing held—
Decision dateMay 4, 2017

Cite For

Insufficient Evidence of Financial Responsibility Under Guideline F
Impact of Unresolved Debts on Security Clearance Eligibility
Burden of Proof on Applicant to Demonstrate Mitigation of Financial Concerns

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 on multiple financial allegations, including significant delinquent debts totaling over $72,500, which raised security concerns under Guideline F. Although two minor debts were mitigated, the applicant failed to provide sufficient evidence of progress in resolving the remaining debts, leading to a denial of eligibility for a security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	a financial entity charged off $13,011 on a second mortgage. $13,011	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.h	Applicant owes a delinquent medical debt for $56. $56	For Applicant	Medical Debt	Unknown	—	—	—
1.j	Applicant owes the Federal Government $19,600 for taxes for 2010 and 2011. $19,600	Against Applicant	Tax Unpaid	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. 15-02968 ) ) Applicant for Security Clearance

For Government: Mary Margaret Foreman, Esq., Department Counsel For Applicant: Pro se

05/04/2017 ___________

STATEMENT OF CASE

___________

HARVEY, Mark, Administrative Judge:

Applicant’s statement of reasons (SOR) alleges, and the record establishes 10 delinquent debts totaling $72,903, including delinquent taxes totaling $19,600. Two debts were mitigated; however, eight debts totaling more than $72,500 remain for resolution. He did not show sufficient progress towards resolution of the SOR allegations. Financial considerations security concerns are not mitigated. Eligibility for access to classified information is denied.

Statement of the Case

On October 17, 2012, Applicant completed and signed a Questionnaire for National Security Positions (SF 86) or security clearance application (SCA). (Item 3) On March 16, 2016, the Department of Defense (DOD) Consolidated Adjudications Facility (CAF) issued an SOR to Applicant under Executive Order (Exec. Or.) 10865, Safeguarding Classified Information within Industry, February 20, 1960; DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (Directive), January 2, 1992; and the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information (AG), which became effective on September 1, 2006.

The SOR detailed reasons why the DOD CAF did not find under the Directive that it is clearly consistent with the national interest to grant or continue a security clearance for him, and recommended referral to an administrative judge to determine whether a clearance should be granted, continued, denied, or revoked. (Item 1) Specifically, the SOR set forth security concerns arising under the financial considerations guideline.

On April 21, 2016, Applicant provided a response to the SOR, and he requested a decision without a hearing. (Item 2) On June 15, 2016, Department Counsel completed the File of Relevant Material (FORM). On June 21, 2016, Applicant received the FORM. Applicant did not provide a response to the FORM. On April 25, 2017, the case was assigned to me. The case file consists of six Government exhibits. (Items 1-6) Applicant did not object to any of the exhibits. Findings of Fact1

In Applicant’s SOR response, he admitted the SOR allegations in ¶¶ 1.a through 1.d, and he made some partial admissions. (Item 2) Applicant’s admissions are accepted as findings of fact. Additional findings follow.

Applicant is 48 years old, and he has been employed as a mechanic with his current employer since 1988.2 He has never served in the U.S. Armed Forces. In 1995, he married, and in 2003, he divorced. His children were born in 1995 and 1997. There is no evidence that he violated security rules, abused alcohol, or used illegal drugs. There is no evidence of employer performance evaluations.

Financial Considerations

In his January 24, 2013 Office of Personnel Management (OPM) personal subject interview (PSI), Applicant attributed his financial problems to vandalism of his home in 2010 and 2011, and being in a no-pay medical-leave status for his employer after his knee injury in 2011. (Item 4) He said he had a payment plan with the Internal Revenue Service (IRS). (Items 3, 4) Applicant’s history of delinquent debt is documented in his credit reports, SCA, OPM PSI, and SOR response. The status of his delinquent SOR debts is as follows:

¶ 1.a alleges, and Applicant admits that a financial entity charged off $13,011 on a second mortgage. (Items 2, 3)

¶¶ 1.band 1.callege, and Applicant admits that two banks charged off $12,508 and $11,206.

¶ 1.dalleges, and Applicant admits that he owes a delinquent debt to a financial institution for $7,886. ¶¶ 1.e, 1.f, and 1.gallege Applicant has three charged-off debts owed to financial institutions for $7,685, $428, and $367. (Item 2) The debt in SOR ¶ 1.e for $7,685 was owed to the same creditor who repossessed his truck in 2011. (Item 4) In his SOR response, Applicant did not describe any actions to address the three debts. (Item 2)

¶ 1.halleges Applicant owes a delinquent medical debt for $56. Applicant said he will contact his primary care provider for information. (Item 2)

¶ 1.i alleges Applicant has a telecommunications debt placed for collection for $156. Applicant said he will contact the creditor to resolve the issue. (Item 2)

¶ 1.jalleges, and Applicant admits that he owes the Federal Government $19,600 for taxes for 2010 and 2011. Applicant said he is currently in an installment agreement with the IRS. (Item 2) In 2013, he had a payment plan of $250 monthly, and he owed the IRS $17,000. (Item 4)

Aside from Applicant’s uncorroborated statements, there is no documentary evidence that Applicant paid, arranged to pay, settled, compromised, or otherwise resolved any of the SOR debts. He did not describe financial counseling. The record lacks corroborating or substantiating documentation and detailed explanations of the causes for his financial problems, reasons for lack of significant financial progress, and other mitigating information. The FORM noted that Applicant had 30 days from the receipt of the FORM “in which to submit a documentary response setting forth objections, rebuttal, extenuation, mitigation, or explanation, as appropriate. If you do not file any objections or submit any additional information . . . your case will be assigned to an Administrative Judge for a determination based solely” on the evidence set forth in this FORM. (FORM at 3)

POLICIES

The U.S. Supreme Court has recognized the substantial discretion of the Executive Branch in regulating access to information pertaining to national security emphasizing, “no one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). As Commander in Chief, the President has the authority to control access to information bearing on national security and to determine whether an individual is sufficiently trustworthy to have access to such information.” Id. at 527. The President has authorized the Secretary of Defense or his designee to grant applicant’s eligibility for access to classified information “only upon a finding that it is clearly consistent with the national interest to do so.” Exec. Or. 10865, Safeguarding Classified Information within Industry § 2 (Feb. 20, 1960), as amended.

Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, these guidelines are applied in conjunction with an evaluation of the whole person. An administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. An administrative judge must consider all available, reliable information about the person, past and present, favorable and unfavorable.

The Government reposes a high degree of trust and confidence in persons with access to classified information. This relationship transcends normal duty hours and endures throughout off-duty hours. 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 about potential, rather than actual, risk of compromise of classified information. Clearance decisions must be “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See Exec. Or. 10865 § 7. Thus, nothing in this decision should be construed to suggest that it is based, in whole or in part, on any express or implied determination about applicant’s allegiance, loyalty, or patriotism. It is merely an indication the applicant has not met the strict guidelines the President and the Secretary of Defense have established for issuing a clearance.

Initially, the Government must establish, by substantial evidence, conditions in the personal or professional history of the applicant that may disqualify the applicant from being eligible for access to classified information. The Government has the burden of establishing controverted facts alleged in the SOR. See Egan, 484 U.S. at 531. “Substantial evidence” is “more than a scintilla but less than a preponderance.” See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). The guidelines presume a nexus or rational connection between proven conduct under any of the criteria listed therein and an applicant’s security suitability. See ISCR Case No. 95-0611 at 2 (App. Bd. May 2, 1996).

Once the Government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. Directive ¶ E3.1.15. An applicant “has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue his security clearance.” ISCR Case No. 01-20700 at 3 (App. Bd. Dec. 19, 2002). The burden of disproving a mitigating condition never shifts to the Government. See ISCR Case No. 02-31154 at 5 (App. Bd. Sep. 22, 2005). “[S]ecurity clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531; see AG ¶ 2(b).

ANALYSIS

Financial Considerations

AG ¶ 18 articulates the security concern for financial problems:

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 Appeal Board explained the scope and rationale for the financial considerations security concern in ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012) (citation omitted) as follows:

This concern is broader than the possibility that an applicant might knowingly compromise classified information in order to raise money in satisfaction of his or her debts. Rather, it requires a Judge to examine the totality of an applicant’s financial history and circumstances. The Judge must consider pertinent evidence regarding the applicant’s self-control, judgment, and other qualities essential to protecting the national secrets as well as the vulnerabilities inherent in the circumstances. The Directive presumes a nexus between proven conduct under any of the Guidelines and an applicant’s security eligibility.

AG ¶ 19 provides two disqualifying conditions that raise a trustworthiness concern and may be disqualifying in this case: “(a) inability or unwillingness to satisfy debts;” and “(c) a history of not meeting financial obligations.” In ISCR Case No. 08-12184 at 7 (App. Bd. Jan. 7, 2010), the Appeal Board explained:

It is well-settled that adverse information from a credit report can normally meet the substantial evidence standard and the government’s obligations under [Directive] ¶ E3.1.14 for pertinent allegations. At that point, the burden shifts to applicant to establish either that [he or] she is not responsible for the debt or that matters in mitigation apply.

(internal citation omitted). Applicant’s history of delinquent debt is documented in his credit reports, SCA, OPM PSI, and SOR response. The record establishes the disqualifying conditions in AG ¶¶ 19(a) and 19(c) requiring additional inquiry about the possible applicability of mitigating conditions.

Five mitigating conditions under AG ¶ 20 are potentially applicable:

(a) the behavior happened so long ago,3 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;4 and

(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.

The Appeal Board concisely explained Applicant’s responsibility for proving the applicability of mitigating conditions as follows:

Once a concern arises regarding an Applicant’s security clearance eligibility, there is a strong presumption against the grant or maintenance of a security clearance. See Dorfmont v. Brown, 913 F. 2d 1399, 1401 (9th Cir. 1990), cert. denied, 499 U.S. 905 (1991). After the Government presents evidence raising security concerns, the burden shifts to the applicant to rebut or mitigate those concerns. See Directive ¶ E3.1.15. The standard applicable in security clearance decisions is that articulated in Egan, supra. “Any doubt concerning personnel being considered for access to classified information will be resolved in favor of the national security.” Directive, Enclosure 2 ¶ 2(b).

ISCR Case No. 10-04641 at 4 (App. Bd. Sept. 24, 2013).

Applicant described vandalism to his property, his knee injury, and no-pay medical leave in 2011. These circumstances beyond his control adversely affected his finances. I have credited Applicant with mitigating the debts in SOR ¶¶ 1.h ($56) and 1.i ($156) as de minimis.

ISCR Case No. 99-9020 at 5-6 (App. Bd. June 4, 2001)). The record establishes eight delinquent debts totaling about $72,500, including delinquent taxes totaling $19,600. Applicant did not provide enough details with documentary corroboration about what he did to address his SOR tax debts and to pay the debts in SOR ¶¶ 1.a through 1.g. He did not provide documentation relating to any of the eight SOR debts: (1) proof of payments, such as checking account statements, photocopies of checks, or a letter from the creditor proving that he paid or made any payments to the creditors; (2) correspondence to or from the creditors to establish maintenance of contact;5 (3) credible debt disputes indicating he did not believe he was responsible for the debts and why he held such a belief; (4) more evidence of attempts to negotiate payment plans, such as settlement offers or agreements to show that he was attempting to resolve these debts; or (5) other evidence of progress or resolution. Applicant failed to establish mitigation under AG ¶ 20(e) because he did not provide documented proof to substantiate the existence, basis, or the result of any debt disputes.

There is insufficient evidence about why Applicant was unable to make greater progress resolving his tax debts and the debts in SOR ¶¶ 1.a through 1.g. There is insufficient assurance that his financial problems are being resolved, are under control, and will not recur in the future. Under all the circumstances, he failed to establish that financial considerations security concerns are mitigated.

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. 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. I have incorporated my comments under Guideline F in my whole-person analysis. Some of the factors in AG ¶ 2(a) were addressed under that guideline, but some warrant additional comment.

maintained contact with creditors and attempted to negotiate partial payments to keep debts current. Applicant is 48 years old, and he has been employed as a mechanic with his current employer since 1988. There is no evidence that he violated security rules or used illegal drugs. There is no evidence of employer performance evaluations.

Applicant’s finances were adversely affected by circumstances beyond his control: his home was vandalized; his knee was injured; and in 2011, he was in no-pay medical leave status. Applicant did not provide specific details about how these circumstances beyond his control negatively affected his finances, and he did not explain why he continued to have delinquent debts to the present.

The record establishes eight delinquent debts totaling $72,500, including delinquent taxes totaling $19,600 remaining for resolution. Applicant provided insufficient corroborating or substantiating documentary evidence of payments and established payment plans for these eight SOR debts. He did not provide a detailed plan about how he intended to resolve these eight delinquent SOR debts. His actions show lack of financial responsibility and judgment and raise unmitigated questions about Applicant’s reliability, trustworthiness, and ability to protect classified information. See AG ¶ 18. More documented information about inability to pay debts, financial history, or documented financial progress is necessary to mitigate security concerns.

It is well settled that once a concern arises regarding an applicant’s security clearance eligibility, there is a strong presumption against the grant or renewal of a security clearance. See Dorfmont, 913 F. 2dat 1401. Unmitigated financial considerations concerns lead me to conclude that grant of a security clearance to Applicant is not warranted at this time. This decision should not be construed as a determination that Applicant cannot or will not attain the state of reform necessary for award of a security clearance in the future. With more effort towards documented resolution of his past-due debts, and a track record of behavior consistent with his obligations, he may well be able to demonstrate persuasive evidence of his security clearance worthiness.

I have carefully applied the law, as set forth in Egan, Exec. Or. 10865, the Directive, and the AGs, to the facts and circumstances in the context of the whole person. I conclude that financial consideration security concerns are not mitigated. It is not clearly consistent with the national interest to grant Applicant security clearance eligibility at this time.

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 through 1.g: Against Applicant Subparagraphs 1.hand 1.i: For Applicant Subparagraph 1.j: Against Applicant

CONCLUSION

In light of all of the circumstances in this case, it is not clearly consistent with the national interest to grant Applicant’s eligibility for a security clearance. Eligibility for access to classified information is denied.

_________________________ MARK HARVEY Administrative Judge

FOOTNOTES

1 Some details have been excluded to protect Applicant’s right to privacy. Specific information is available in the cited exhibits.

2 Unless stated otherwise, the source of the information in this paragraph is Applicant’s October 17, 2012 Questionnaire for National Security Positions (SF 86) or security clearance application (SCA) and his January 24, 2013 Office of Personnel Management (OPM) personal subject interview (PSI). (Items 3, 4) 3 A debt that became delinquent several years ago is still considered recent because “an applicant’s ongoing, unpaid debts evidence a continuing course of conduct and, therefore, can be viewed as recent for purposes of the Guideline F mitigating conditions.” ISCR Case No. 15-06532 at 3 (App. Bd. February 16, 2017) (citing ISCR Case No. 15-01690 at 2 (App. Bd. Sep. 13, 2016)). 4 The Appeal Board has previously explained what constitutes a “good faith” effort to repay overdue creditors or otherwise resolve debts:

In order to qualify for application of [the “good faith” mitigating condition], an applicant must present evidence showing either a good-faith effort to repay overdue creditors or some other good-faith action aimed at resolving the applicant’s debts. The Directive does not define the term “good-faith.” However, the Board has indicated that the concept of good- faith “requires a showing that a person acts in a way that shows reasonableness, prudence, honesty, and adherence to duty or obligation.” Accordingly, an applicant must do more than merely show that he or she relied on a legally available option (such as bankruptcy) in order to claim the benefit of [the “good faith” mitigating condition].

(internal citation and footnote omitted) ISCR Case No. 02-30304 at 3 (App. Bd. Apr. 20, 2004) (quoting 5 “Even if Applicant’s financial difficulties initially arose, in whole or in part, due to circumstances outside his [or her] control, the Judge could still consider whether Applicant has since acted in a reasonable manner when dealing with those financial difficulties.” ISCR Case No. 05-11366 at 4 n.9 (App. Bd. Jan. 12, 2007) (citing ISCR Case No. 99-0462 at 4 (App. Bd. May 25, 2000); ISCR Case No. 99-0012 at 4 (App. Bd. Dec. 1, 1999); ISCR Case No. 03-13096 at 4 (App. Bd. Nov. 29, 2005)). A component is whether he or she