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ISCR Case 15-04131.h1 — CASE

ISCR Case 15-04131.h1denied

Case Headnote

ISCR Case No. 15-04131.h1

deniedJul 1, 2015· Hon. Braden M. Murphy· hearing

Summary

A 57-year-old defense contractor was denied a security clearance under Guideline F (Financial Considerations) due to unresolved debts totaling approximately $14,448. The Statement of Reasons detailed four specific allegations: $1,016, $2,506, $10,589, and $337. Disqualifying conditions AG ¶ 19(a) and AG ¶ 19(c) were raised, while mitigating conditions AG ¶ 20(b) and AG ¶ 20(d) were applied.

Despite some circumstances being beyond her control, the applicant failed to provide sufficient evidence of efforts to resolve her delinquent debts. She did not document her current income and expenses or any repayment plans for the outstanding amounts.

Ultimately, the applicant's financial issues raised doubts about her reliability and trustworthiness, leading to the denial of her security clearance application.

Why the Applicant Was Denied

The applicant did not provide sufficient evidence of efforts to resolve her delinquent debts.
The applicant failed to document her current income and expenses or any repayment plans for her debts.
The applicant's financial issues raised doubts about her reliability and trustworthiness.

Conditions Referenced

Disqualifying

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

Mitigating

AG ¶ 20(b)appliedConditions Largely Beyond the Person's ControlThe applicant's financial instability began after losing her job due to tax issues.
AG ¶ 20(d)rejectedGood-faith Effort to Repay DebtsThe applicant did not provide sufficient evidence of a good-faith effort to resolve her debts.

Key Rule Quoted

“Eligibility for covered individuals shall only be granted when facts and circumstances indicate that eligibility is clearly consistent with the national security interests of the United States, and any doubt shall be resolved in favor of national security.”
— Exec. Or. 12968, as amended

Procedural Posture

SOR issuedFeb 26, 2016
Answer filedMar 17, 2016Requested decision on the administrative record.
Hearing heldJul 10, 2017Record closed after applicant did not submit further documentation.
Decision dateJul 17, 2017

Cite For

Insufficient Evidence of Financial Mitigation Under Guideline F
Importance of Documenting Efforts to Resolve Debts
Impact of Financial Instability on Security Clearance Eligibility

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 did not provide sufficient information to mitigate the financial considerations security concerns. All four debts alleged in the Statement of Reasons were found against the applicant, leading to a denial of eligibility for access to classified information.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	SOR ¶ 1.a ($1,016) $1,016	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	SOR ¶ 1.b ($2,506) $2,506	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	SOR ¶ 1.c ($10,589) $10,589	Against Applicant	Personal Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	SOR ¶ 1.d ($337) $337	Against 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. 15-04131 ) Applicant for Security Clearance )

For Government: Daniel F. Crowley, Esq., Department Counsel For Applicant: Pro se

07/17/2017 ______________

STATEMENT OF CASE

______________

MURPHY, Braden M., Administrative Judge:

Applicant did not provide sufficient information to mitigate the financial considerations security concerns. Eligibility for access to classified information is denied.

Statement of the Case

On February 26, 2016, the Department of Defense (DoD) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guideline F, financial considerations. The action was taken under Executive Order (Exec. Or.) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; DoD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines implemented by the DoD on September 1, 2006.

On December 10, 2016, the Director of National Intelligence issued Security Executive Agent Directive 4 (SEAD 4), National Security Adjudicative Guidelines (AG). These AGs apply to all adjudicative decisions issued on or after June 8, 2017, including this one. Any changes resulting from the issuance of new Adjudicative Guidelines did not affect my decision in this case.

Applicant responded to the SOR on March 17, 2016, and requested a decision on the administrative record, in lieu of a hearing. On May 31, 2016, Department Counsel submitted the Government’s File of Relevant Material (FORM), including documents identified as Items 1 through 7. Applicant received the FORM on June 24, 2016. She was afforded an opportunity to file objections and submit material in refutation, extenuation, or mitigation. Applicant did not respond to the FORM, and did not object to the Government’s evidence. The SOR and the answer (Items 1 and 2) are the pleadings in the case. Items 3 through 7 are admitted into evidence without objection.

The case was assigned to me on May 4, 2017. I initially e-mailed the parties and re-opened the record on June 1, 2017, to enable Applicant to submit updated documentation. When she did not respond, I called her on June 7, 2017, and learned she had not received the e-mail and was no longer sponsored for a clearance. On June 13, 2017, I re-opened the record after learning that she was re-sponsored.1

On June 26, 2017, Applicant responded and submitted additional documentation. Her e-mail and the attachments are marked as Applicant’s Exhibits (AE) A through AE F and admitted without objection.2 On June 29, 2017, I provided Applicant a copy of SEAD 4 by e-mail and reopened the record until July 10, 2017, to allow Applicant additional time to review it and to submit documentation.3 Applicant confirmed receipt of the e-mail but did not submit documentation by the deadline. The record closed on July 10, 2017.

FINDINGS OF FACT

Applicant admitted SOR ¶¶ 1.a-1.cand denied SOR ¶ 1.d, with explanations. Her admissions and other comments are incorporated into the findings of fact. After a thorough and careful review of the pleadings and exhibits submitted, I make the following findings of fact.

Applicant is a 57-year-old employee of a defense contractor. She was married from 1989 to February 2014. She has two children (25 and 28).4 She has worked for various federal contractors since 1998. She was laid off in July 2012 after her employer lost the contract she was working on. She was unemployed until November 2013. From then until February 2014, she was employed as a contractor for a federal agency. She indicated that she was terminated from that position because she was unable to obtain a clearance due to the fact that she and her then-husband owed past-due federal income taxes.5 She was unemployed again from February to June 2014, when she was hired by a defense contractor. She remains employed in the defense industry, though with a different employer.6

Applicant submitted a security clearance application (SCA) in August 2014.7 She did not disclose the debts in the SOR, but did disclose that she was terminated from her job as a contractor with a federal agency because her family tax situation prevented her from getting a required clearance to work there.8 At the time, she was earning about $110,000 annually.9

The four debts alleged in the SOR total about $14,448. All of the debts are found on Applicant’s December 28, 2015 credit report. (Item 7) She did not recognize SOR ¶1.d ($337) but acknowledged the others.

Applicant incurred her debts when she lost her position as a contractor with a federal agency in February 2014, when it came to light that she and her husband owed significant past-due federal income taxes. As a result, Applicant fell behind on her debts, including her rent, car payments, and other debts, including consumer accounts SOR ¶¶ 1.a ($1,016), 1.b ($2,506), as well as SOR ¶ 1.c, a $10,589 charged-off loan debt to a federal credit union. Applicant took out the loan to help pay for college for her two children.10

Credit bureau reports from 2013 and 2014 also reflect a $65,407 federal tax lien issued against Applicant in May 2013.11 She filed an Innocent Spouse Relief Form 8897 with the IRS in January 2014, and indicated it was adjudicated successfully.12 Her December 2014 credit report reflects that the lien was released in October 2014.13 There is no allegation in the SOR concerning Applicant’s taxes.

In her June 26, 2017 e-mail (AE A), Applicant indicated that she did not recognize the consumer debts at SOR ¶¶ 1.a and 1.b (though she admitted them in her answer). She again did not recognize SOR ¶ 1.d. She indicated that $400 a month was being deducted or garnished from her pay for the loan debt at SOR ¶ 1.c, but she provided no documentation.14 Applicant did not provide any documentation regarding her efforts to pay, resolve, or settle any of her SOR debts. She did not provide any information about her current income and expenses.

POLICIES

The adjudicative guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, administrative judges apply the guidelines in conjunction with the factors listed in the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶ 2(a), 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 ¶ 2(b) requires that “[a]ny doubt concerning personnel being considered for national security eligibility will be resolved in favor of the national security.” AG ¶ 1(d) requires that in accordance with Exec. Or. 12968, as amended, “eligibility for covered individuals shall only be granted when facts and circumstances indicate that eligibility is clearly consistent with the national security interests of the United States, and any doubt shall be resolved in favor of national security.”

Under ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under ¶ 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 to obtain a favorable 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 safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation of potential, rather than actual, risk of compromise of classified information.

ANALYSIS

Guideline F, Financial Considerations

The security concern for financial considerations is set out in AG ¶ 18: Failure 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 or sensitive information. . . .

The guideline sets forth several conditions that could raise security concerns under AG ¶ 19. The following are potentially applicable in this case:

(a) inability to satisfy debts; and

Applicant has several delinquent debts that remain unresolved. The above disqualifying conditions are applicable.

Conditions that could mitigate financial considerations security concerns are provided under AG ¶ 20. The following are potentially applicable:

(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, a death, divorce or separation, clear victimization by predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances; and

(d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts.

Applicant’s financial instability began after she lost her federal contracting position in February 2014, after it came to light that she and her then-husband owed significant past-due federal taxes. She was then unemployed until June 2014. Since she later successfully sought innocent spouse relief with the IRS, these were circumstances at least somewhat beyond Applicant’s control. The first prong of AG ¶ 20(b) applies. Applicant undertook reasonable action under the circumstances to resolve her tax situation. This led to the release of the resulting tax lien (which was not alleged).

This leaves the four non-tax debts alleged in the SOR, all of which Applicant incurred during her subsequent period of unemployment. Those debts are unresolved. Applicant did not show sufficient evidence that she undertook reasonable action under the circumstances to resolve them. She indicated that the $10,589 charged-off loan is being resolved through a $400-a-month payment plan, but did not provide any corroborating documentation. It is reasonable to expect applicants to present documentation about the satisfaction of specific debts,15 and she did not do so. While her tax issues are resolved, there is no documentary evidence of her efforts to pay, resolve, or settle the debts in the SOR.

I am therefore unable to find that Applicant made a good-faith effort to pay these debts, under AG ¶ 20(d). AG ¶ 20(b) also does not fully apply because she did not show that she acted responsibly under the circumstances in attempting to resolve them. She did not establish that her debts are unlikely to recur, and they continue to cast doubt on her current reliability, trustworthiness and good judgment. AG ¶ 20(a) does not 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 the applicant’s conduct and all relevant circumstances. The administrative judge should consider the nine adjudicative process factors listed at AG ¶ 2(d):

(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 considered the potentially disqualifying and mitigating conditions in light of all the facts and circumstances surrounding this case. I have incorporated my comments under Guideline F in my whole-person analysis. I also considered the factors that led to Applicant’s financial difficulties and the steps she has taken to rectify them. Applicant did not provide sufficient evidence that she is repaying her delinquent debts. Because Applicant requested a determination on the record without a hearing, I had no opportunity to evaluate her credibility based on demeanor.16 Overall, the record evidence leaves me with questions and doubts as to Applicant’s eligibility and suitability for a security clearance. I conclude Applicant did not mitigate the financial considerations security concerns.

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.d: 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 of the United States to grant Applicant eligibility for access to classified information. Eligibility for access to classified information is denied.

________________________ Braden M. Murphy Administrative Judge

FOOTNOTES

1 Hearing Exhibit (HE) I - HE VI. 2 HE VII. 3 HE VIII. 4 Item 3. 5 Item 3 at 12. 6 HE IV (noting Applicant’s new sponsorship as of June 2017). 7 Item 3. 8 Item 3 at 12, 34. 9 AE B at 3. In AE A, she estimated that she earned $120,000 at the time. 10 Items 1, 2, 7. 11 Items 4, 5. 12 AE B – AE E. 13 Items 4, 5, 7. 14 AE A. 15 See ISCR Case No. 09-07091 at 2 (App. Bd. Aug. 11, 2010) (quoting ISCR Case No. 04-10671 at 3 (App. Bd. May 1, 2006)). 16 ISCR Case No. 01-12350 at 3-4 (App. Bd. Jul. 23, 2003).