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ISCR Case 15-03399.h1 — CASE

ISCR Case 15-03399.h1denied

Case Headnote

ISCR Case No. 15-03399.h1

deniedJun 5, 2017· Hon. Philip J. Katauskas· hearing

Summary

A 53-year-old defense contractor was denied a security clearance under Guideline F, Financial Considerations, due to a history of financial instability. The Statement of Reasons cited a Chapter 13 bankruptcy petition filed in June 2010 and dismissed in 2011. Additionally, the applicant had three separate delinquent debts totaling $30,224, $22,348, and $7,876, respectively. These issues raised disqualifying conditions under Adjudicative Guidelines Paragraphs 19(a) and 19(c).

The denial was based on the applicant's failure to provide sufficient evidence to explain or mitigate the security concerns arising from his financial history. While the applicant admitted to the Chapter 13 bankruptcy and multiple delinquent debts exceeding $30,000, he did not offer adequate documentation to support his denials of certain other debts.

Ultimately, the judge determined that the applicant did not present enough information to resolve the financial concerns, leading to the denial of his security clearance.

Why the Applicant Was Denied

Applicant did not present sufficient evidence to explain or mitigate the security concern stemming from his financial history.
The applicant admitted to a Chapter 13 bankruptcy and multiple delinquent debts totaling over $30,000.
The applicant failed to provide documentation to support his denials of certain debts.

Conditions Referenced

Disqualifying

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

Key Rule Quoted

“The overall concern is: 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 a [person’s] reliability, trustworthiness, and ability to protect classified information.”

Procedural Posture

SOR issuedFeb 17, 2016
Answer filedMar 15, 2016
Hearing held—Applicant requested a decision based on the written record without a hearing.
Decision dateJun 5, 2017

Cite For

Denial Based on Financial Considerations Under Guideline F
Importance of Providing Documentation to Support Claims of Debt Resolution
Failure to Mitigate Financial Concerns Leading to Security Clearance Denial

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 a problematic financial history, including a Chapter 13 bankruptcy and multiple delinquent debts totaling $30,224. The judge ruled against the applicant on most financial allegations, concluding that the applicant did not provide sufficient evidence to mitigate the security concerns raised under Guideline F.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Chapter 13 Bankruptcy petition filed in June 2010 and dismissed in 2011	Against Applicant	Bankruptcy Filing	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	Delinquent debt totaling $30,224 $30,224	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	Delinquent debt totaling $22,348 $22,348	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	Delinquent debt totaling $7,876 $7,876	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e–1.n	10 sub-charges — specific text not stated in this decision (9 against, 1 for the applicant). (low confidence)	Mixed			—	—	—

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. 15-03399 ) Applicant for Security Clearance )

For Government: David F. Hayes, Esq., Department Counsel For Applicant: Pro se

06/05/2017 ______________

STATEMENT OF CASE

______________

KATAUSKAS, Philip J., Administrative Judge:

Applicant contests the Defense Department’s intent to revoke his eligibility for access to classified information. He did not present sufficient evidence to explain, extenuate, or mitigate the security concern stemming from his problematic financial history. Accordingly, this case is decided against Applicant.

Statement of the Case

Applicant completed and submitted a Questionnaire for National Security Positions (SF 86 format) on February 13, 2013. This document is commonly known as a security clearance application. On February 17, 2016, after reviewing the application and the information gathered during a background investigation, the Department of Defense Consolidated Adjudications Facility sent Applicant a statement of reasons (SOR), explaining it was unable to find that it was clearly consistent with the national interest to grant him eligibility for access to classified information.1 The SOR is similar to a complaint in a civil court case. It detailed the factual reasons for the action under the security guideline known as Guideline F for financial considerations. Applicant answered the SOR on March 15, 2016, and requested a decision based on the written record without a hearing.

On May 31, 2016, Department Counsel submitted a file of relevant material (FORM).2 The FORM was mailed to Applicant on that same day. He was given an opportunity to file objections and submit material to refute, extenuate, or mitigate the Government’s evidence. Applicant received the FORM on June 22, 2016.3 Applicant did not respond to the FORM. The case was assigned to me on May 4, 2017.

PROCEDURAL MATTERS

Included in the FORM were six items of evidence, which are marked as Government Exhibits 1 through 5.4 Exhibits 1, and 3 through 5 are admitted into evidence. Exhibit 2 is a report of investigation (ROI) summarizing Applicant’s interview that took place during the April 2013 background investigation. The ROI is not authenticated, as required under ¶ E3.1.20 of the Directive.5 Department Counsel’s written brief includes a footnote advising Applicant that the summary was not authenticated and that failure to object may constitute a waiver of the authentication requirement. Nevertheless, I am not persuaded that a pro se applicant’s failure to respond to the FORM, which response is optional, equates to a knowing and voluntary waiver of the authentication requirement. The record does not demonstrate that Applicant understood the concepts of authentication, waiver, and admissibility. It also does not demonstrate that he understood the implications of waiving an objection to the admissibility of the ROI. Accordingly, Exhibit 2 is inadmissible, and I have not considered the information in the ROI.

FINDINGS OF FACT

Applicant is 53 years old and a high school graduate. He is married and has one adult daughter. Since October of 1983, he has been employed by a defense contractor.6

The SOR alleged a Chapter 13 Bankruptcy petition filed in June 2010 and dismissed in 2011, and 13 delinquent debts totaling $30,224.7 Applicant admitted the bankruptcy allegation and six of the delinquent debts totaling $22,348.8 He denied seven of the delinquent debts totaling $7,876.9 Applicant did not provide any documentation to support his denials. Except for one denied SOR debt,10 there is record evidence to support the debts that Applicant denied.11

Law and Policies

It is well-established law that no one has a right to a security clearance.12 As noted by the Supreme Court in Department of the Navy v. Egan, “the clearly consistent standard indicates that security clearance determinations should err, if they must, on the side of denials.”13 Under Egan, Executive Order 10865, and the Directive, any doubt about whether an applicant should be allowed access to classified information will be resolved in favor of protecting national security.

A favorable clearance decision establishes eligibility of an applicant to be granted a security clearance for access to confidential, secret, or top-secret information.14 An unfavorable clearance decision (1) denies any application, (2) revokes any existing security clearance, and (3) prevents access to classified information at any level.15 There is no presumption in favor of granting, renewing, or continuing eligibility for access to classified information.16 The Government has the burden of presenting evidence to establish facts alleged in the SOR that have been controverted.17 An applicant is responsible for presenting evidence to refute, explain, extenuate, or mitigate facts that have been admitted or proven.18 In addition, an applicant has the ultimate burden of persuasion to obtain a favorable clearance decision.19

In Egan, the Supreme Court stated that the burden of proof is less than a preponderance of evidence.20 The Appeal Board has followed the Court’s reasoning, and a judge’s findings of fact are reviewed under the substantial-evidence standard.21

DISCUSSION

Under Guideline F for financial considerations,22 the suitability of an applicant may be questioned or put into doubt when that applicant has a history of excessive indebtedness or financial problems or difficulties. The overall concern is:

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 a [person’s] reliability, trustworthiness, and ability to protect classified information.23

The concern is broader than the possibility that a person might knowingly compromise classified information to obtain money or something else of value. It encompasses concerns about a person’s self-control, judgment, and other important qualities. A person who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information.

In analyzing the facts of this case, I considered the following disqualifying and mitigating conditions or factors: AG ¶ 19(a) inability or unwillingness to satisfy debts;

AG ¶ 19(c) a history of not meeting financial obligations;

AG ¶ 20(b) the conditions that resulted in the financial problems 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 [person] acted responsibly under the circumstances;

AG ¶ 20(c) [t]here are clear indications that the problem is being resolved or is under control; and

AG ¶ 20(d) the [person] initiated a good-faith effort to repay overdue creditors or otherwise resolve debts.

The evidence supports a conclusion that Applicant has a problematic financial history sufficient to raise a security concern under AG ¶¶ 19(a) and (c). Applicant has produced no documentation to support his answers to the SOR debts. In fact, the evidence is contrary to his answers. The Appeal Board has repeatedly held that applicants must present documentation to support their claims that debts have been resolved.24 I conclude that none of the Guideline F mitigating conditions apply.

The record creates doubt about Applicant’s reliability, trustworthiness, good judgment, and ability to protect classified information. In reaching this conclusion, I weighed the evidence as a whole and considered if the favorable evidence outweighed the unfavorable evidence or vice versa. I also gave due consideration to the whole-person concept.25 Accordingly, I conclude that Applicant did not meet his ultimate burden of persuasion to show that it is clearly consistent with the national interest to grant him eligibility for access to classified information.

FORMAL FINDINGS

As required by section E3.1.25 of Enclosure 3 of the Directive, I make the following formal findings on the SOR allegations:

Paragraph 1, Guideline F: Against Applicant

Subparagraphs 1.a-1.l & n: Against Applicant

Subparagraph 1.m: For Applicant

CONCLUSION

In light of the record as a whole, it is not clearly consistent with the national interest to grant Applicant access to classified information.

Philip J. Katauskas Administrative Judge

FOOTNOTES

1 This action was taken under Executive Order (E.O.) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended, as well as Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (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 here. The AG were published in the Federal Register and codified in 32 C.F.R. § 154, Appendix H (2006). 2 The file of relevant material consists of Department Counsel’s written brief and supporting documentation, some of which are identified as evidentiary exhibits in this decision. 3 The Defense Office of Hearings and Appeals’ (DOHA) transmittal letter is dated June 8, 2016, and Applicant’s receipt is dated June 22, 2016. The DOHA transmittal letter informed Applicant that he had 30 days after receiving it to submit information. 4 The first item in the FORM is the SOR and Applicant’s Answer. Because the SOR and the Answer are the pleadings in this case, they are not marked as Exhibits. Items 2 through 6 are marked as Exhibits 1 through 5. 5 See generally ISCR Case No. 12-10933 (App. Bd. Jun. 29, 2016) (In a concurring opinion, Judge Ra’anan notes the historical concern about reports of investigation in that they were considered by some to present a heightened problem in providing due process in security clearance cases. Judge Ra’anan raises a number of pertinent questions about using an unauthenticated ROI in a non-hearing case with a pro se applicant.). 6 Exhibit 1. 7 SOR ¶¶ 1.a-1.n. 8 SOR ¶¶ 1.a-1c.and 1.f-1i. 9 SOR ¶¶ 1.d-e and 1.j-1n. 10 I could not find any evidence supporting SOR ¶ 1.m. 11 Exhibit 4, pp. 7, 17; Exhibit 5, pp. 2, 4. 12 Department of Navy v. Egan, 484 U.S. 518, 528 (1988) (“it should be obvious that no one has a ‘right’ to a security clearance”); Duane v. Department of Defense, 275 F.3d 988, 994 (10TH Cir. 2002) (no right to a security clearance). 13 484 U.S. at 531. 14 Directive, ¶ 3.2. 15 Directive, ¶ 3.2. 16 ISCR Case No. 02-18663 (App. Bd. Mar. 23, 2004). 17 Directive, Enclosure 3, ¶ E3.1.14. 18 Directive, Enclosure 3, ¶ E3.1.15. 19 Directive, Enclosure 3, ¶ E3.1.15. 20 Egan, 484 U.S. at 531. 21 ISCR Case No. 01-20700 (App. Bd. Dec. 19, 2002) (citations omitted). 22 AG ¶¶ 18, 19, and 20 (setting forth the concern and the disqualifying and mitigating conditions). 23 AG ¶ 18. 24 See, e.g., ISCR Case No. 07-10310 at 2 (App. Bd. Jul. 30, 2008) (it is reasonable for a judge to expect an applicant to present documentation about the satisfaction or other resolution of individual debts); ISCR Case No. 06-17520 at 2 (App. Bd. Sep. 20, 2007). 25 AG ¶ 2(a)(1)-(9).