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ISCR Case 15-03591.h1 — CASE

ISCR Case 15-03591.h1denied

Case Headnote

ISCR Case No. 15-03591.h1

deniedSep 28, 2016· Hon. Richard A. Cefola· hearing

Summary

Michael Wayne Putnam, a 51-year-old Federal Contractor and Air Force veteran, was denied a security clearance due to concerns under Guideline F, Financial Considerations. The primary issue was an outstanding second mortgage debt of approximately $62,722.

Initially, Putnam denied owing this debt to a successor bank, but later acknowledged the possibility that he did. Despite being informed of the outstanding debt and its impact on his clearance application, he failed to take any action to address or resolve it.

This inaction regarding the $62,722 mortgage debt raised significant concerns about his reliability and trustworthiness, leading to the denial of his security clearance.

Why the Applicant Was Denied

Applicant has an outstanding mortgage debt of approximately $62,722.
He acknowledged the debt but took no action to address it after being informed of the issue.
The applicant's financial decisions raised concerns about his 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

Key Rule Quoted

“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.”

Procedural Posture

SOR issuedDec 13, 2015
Answer filedJan 26, 2016
Hearing heldMay 5, 2016
Decision dateSep 28, 2016

Cite For

Financial Obligations Under Guideline F
Impact of Outstanding Debts on Security Clearance Eligibility
Whole-person Concept 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: denied

The judge found that the applicant has an outstanding mortgage debt of approximately $62,722, which he initially denied but later acknowledged. The judge concluded that the applicant failed to take adequate steps to address this debt, leading to a decision against the applicant under Guideline F.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	In his Answer, Applicant initially denied he was indebted to a successor Bank as the result of a second mortgage in the amount of about $62,722. He now realizes he may owe the monies alleged. $62,722	Against Applicant	Mortgage or Home Loan Debt	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: ) ) PUTNAM, Michael Wayne ) ISCR Case No. 15-03591 ) ) Applicant for Security Clearance )

For Government: Andrew Henderson, Esquire, Department Counsel For Applicant: Pro se

September 28, 2016

______________

STATEMENT OF CASE

______________

CEFOLA, Richard A., Administrative Judge:

Applicant submitted his Electronic Questionnaires for Investigations Processing (e-QIP) on June 18, 2014. On December 13, 2015, the Department of Defense (DOD) issued a Statement of Reasons (SOR) detailing the security concerns under Guideline F for Applicant. The action was taken under Executive Order 10865, Safeguarding Classified Information Within Industry (February 20, 1960), as amended; Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG), effective within the Department of Defense after September 1, 2006.

Applicant answered the SOR in writing (Answer) on January 26, 2016, and requested a hearing before an Administrative Judge. The Defense Office of Hearings and Appeals (DOHA) received the request soon thereafter, and I received the case assignment on March 28, 2016. DOHA issued a notice of hearing on March 31, 2016, and I convened the hearing as scheduled on May 5, 2016. The Government offered Exhibits (GXs) 1 through 6, which were received without objection. Applicant testified on his own behalf, but submitted no exhibits. DOHA received the transcript of the hearing (TR) on May 13, 2016. I granted Applicant’s request to keep the record open until June 3, 2016, to submit additional matters. He has submitted nothing. The record closed on June 3, 2016. Based upon a review of the pleadings, exhibits, and testimony, eligibility for access to classified information is denied.

FINDINGS OF FACT

In his Answer to the SOR, Applicant denied the factual allegation in Subparagraph 1.a. of the SOR. He provided nothing further, just a simple “I deny.”

Guideline F - Financial Considerations

Applicant is a 51-year-old “Federal Contractor,” employed as an “Electro- Mechanical Technician.” (GX 1 at pages 5 and 9.) He is a veteran of the United States Air Force, having served from 1987 to 1991. (TR at page 16 line 14 to page 18 line 11.)

1.a. In his Answer, Applicant initially denied he was indebted to a successor Bank as the result of a second mortgage in the amount of about $62,722. He now realizes he may owe the monies alleged. (TR at page 18 line 15 to page 31 line 14.) The allegation is supported by a March 2009 credit report (GX 4 at page 6), and reiterated by a June 2014 credit report (GX 5 at page 5).

In 2005, Applicant refinanced his home, which resulted in about a $200,000 equity withdrawal. (TR at page 18 line 15 to page 19 line 6.) With this large sum, he had “a pool installed into the backyard of the home, and . . . paid off two vehicles.” (TR at page 19 lines 9–10.) However, with the second mortgage he was now subject to an Adjusted Rate Mortgage (ARM). As a result of the ARM, in three years his mortgage payments doubled from about $1,200 to about $2,400. (TR at page 19 line 23 to page 20 line 16.) His mortgage payments soon exceeded his income. (TR at page 20 line 17 to page 21 line 21.) As a result, Applicant contacted his primary mortgage holder; and in November of 2008, under a “Keys for Cash Program,” he received $3,000 in exchange for ownership of the house. (TR at page 21 line 22 to page 23 line 11.)

In May of 2009, during a Personal Subject Interview with an agent from the Office of Personnel Management (OPM), Applicant indicated he now realized he still may owe about $62,722 as the result of the second mortgage. (GX 2.) Applicant admits that he took no action as a result of this interview. (TR at page 28 line 18 to page 29 line 9.) He reiterated this realization at his hearing. (TR at page 26 line 17 to page 28 line 2.) Applicant also averred he would contact the successor bank to clarify his situation vis-a- vis the alleged debt. (TR at page 29 line 14 to page 30 line 10.) Despite having a month to do so, he has submitted nothing further in this regard. I find that this rather large mortgage debt is still outstanding.

POLICIES

When evaluating an applicant’s suitability for a security clearance, the 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, which are useful in evaluating an applicant’s eligibility for access to classified information.

These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, these guidelines are applied in conjunction with the factors listed in the adjudicative process. (AG Paragraph 2.) The administrative judge’s over-arching adjudicative goal is a fair, impartial and commonsense decision. According to AG Paragraph 2(c), the entire process is a conscientious scrutiny of a number of variables known as the “whole-person concept.” The 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 Paragraph 2(b) requires that “[a]ny doubt concerning personnel being considered for access to classified information will be resolved in favor of the 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.

Under Directive Paragraph E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive Paragraph E3.1.15, the applicant is responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by the applicant or proven by Department Counsel. . . .” The applicant has the ultimate burden of persuasion as to obtaining a favorable clearance security decision.

A person who seeks access to classified information enters into a fiduciary relationship with the Government predicated upon 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 or safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation as to potential, rather than actual, risk of compromise of classified information.

Section 7 of Executive Order 10865 provides that adverse 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.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information).

ANALYSIS

Guideline F - Financial Considerations

The security concern relating to the guideline for Financial Considerations is set out in AG Paragraph 18:

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 guideline notes several conditions that could raise security concerns. Under Subparagraph 19(a), an “inability or unwillingness to satisfy debts@ is potentially disqualifying. Similarly under Subparagraph 19(c), “a history of not meeting financial obligations@ may raise security concerns. Applicant has an outstanding $62,000 mortgage debt. I can find no countervailing Mitigating Condition that is applicable here. Applicant made a bad financial decision when he refinanced his home, and has submitted nothing to show he is addressing the alleged mortgage debt. Financial Considerations are found against Applicant.

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. Under AG Paragraph 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.

The Administrative Judge should also consider the nine adjudicative process factors listed at AG Paragraph 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. I considered all of the evidence, including the potentially disqualifying and mitigating conditions surrounding this case. The record evidence leaves me with questions and doubts as to his eligibility and suitability for a security clearance. Applicant has failed to fully respond to the Government’s concerns; and as such, has failed to meaningfully address the alleged past-due debt. For this reason, I conclude Applicant has not mitigated the security concerns under the whole-person concept arising from his Financial Considerations.

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. 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 eligibility for a security clearance. Eligibility for access to classified information is denied.

_________________ Richard A. Cefola Administrative Judge