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ISCR Case 15-05453.h1 — CASE

ISCR Case 15-05453.h1denied

Case Headnote

ISCR Case No. 15-05453.h1

deniedOct 26, 2017· Hon. Richard A. Cefola· hearing

Summary

A 59-year-old separated applicant with one minor child was denied a security clearance under Guideline F, Financial Considerations, due to significant and unmitigated financial difficulties. The Statement of Reasons alleged three outstanding judgments totaling approximately $1,861, which the applicant admitted.

However, the judge's findings revealed a more extensive pattern of financial instability. The applicant had six outstanding judgments and eight past-due debts, demonstrating an inability to meet financial obligations. Furthermore, the applicant failed to file Federal income tax returns for three years, resulting in delinquent taxes owed.

The denial was ultimately based on the applicant's failure to provide sufficient evidence of mitigation. Specifically, there was no indication of financial counseling or any good-faith effort to resolve the outstanding debts and tax issues.

Why the Applicant Was Denied

The applicant has six outstanding judgments and eight past-due debts, indicating an inability to satisfy debts.
The applicant failed to file his Federal income tax returns for three years, resulting in delinquent taxes owed.
The applicant did not provide evidence of financial counseling or a good-faith effort to resolve debts.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(b)raisedUnwillingness to Satisfy Debts
AG ¶ 19(c)raisedHistory of Not Meeting Financial Obligations
AG ¶ 19(f)raisedFailure to File or Fraudulently Filing Tax Returns

Key Rule Quoted

“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.”

Procedural Posture

SOR issuedSep 12, 2016
Answer filedSep 21, 2016
Hearing held—Decided on the written record without a hearing.
Decision dateOct 26, 2017

Cite For

Denial Based on Significant Financial Difficulties Under Guideline F
Failure to Mitigate Financial Concerns Despite Multiple Opportunities
Importance of Demonstrating Financial Responsibility for 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 multiple financial concerns under Guideline F, including outstanding judgments and past-due debts, which were not mitigated by the applicant. As a result, the judge ruled against the applicant on all allegations related to financial considerations.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant admits three outstanding judgments totaling about $1,861. $1,861	Against Applicant	Judgment Against Applicant	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: 15-05453 ) Applicant for Security Clearance )

For Government: Gatha Manns, Esquire, Department Counsel For Applicant: Pro se

October 26, 2017 ______________

STATEMENT OF CASE

______________

CEFOLA, Richard A., Administrative Judge:

On June 26, 2014, Applicant submitted a security clearance application (SF-86). On September 12, 2016, the Department of Defense Consolidated Adjudications Facility (DoD CAF) issued Applicant a Statement of Reasons (SOR), detailing security concerns under Guideline F, Financial Considerations. (Item 1.) The action was taken under Executive Order (EO) 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 for Determining Eligibility for Access to Classified Information, effective within the DoD after September 1, 2006.

Applicant answered the SOR on September 21, 2016. He admitted SOR allegations 1.a., 1.b., 1.e., 1.g., 1.j., 1.l., 1.m., and 1.p.~1.r. He denied SOR allegations 1.c., 1.d., 1.f., 1.h., 1.i., 1.k. and 1.o. Applicant neither admitted nor denied allegation 1.n.; and as such, I consider it denied. He requested that his case be decided by an administrative judge on the written record without a hearing. (Item 2.) On February 10, 2017, Department Counsel submitted the Government’s written case. A complete copy of the File of Relevant Material (FORM), containing 12 Items, was mailed to Applicant on February 13, 2017, and received by him on February 24, 2017. The FORM notified Applicant that he had an opportunity to file objections and submit material in refutation, extenuation, or mitigation within 30 days of his receipt of the FORM. Applicant did not respond to the FORM. Items 1 through12 are admitted into evidence.

The SOR in this case was issued under the adjudicative guidelines that came into effect within the DoD on September 1, 2006. Security Executive Agent Directive (SEAD) 4, National Security Adjudicative Guidelines, implements new adjudicative guidelines, effective June 8, 2017. All national security eligibility decisions issued on or after June 8, 2017, are to be decided using the new National Security Adjudicative Guidelines for Determining Eligibility for Access to Classified Information or Eligibility to Hold a Sensitive Position (AG), as implemented by SEAD 4. I considered the previous adjudicative guidelines, effective September 1, 2006, as well as the new AG, effective June 8, 2017, in adjudicating Applicant’s national security eligibility. My decision would be the same under either set of guidelines, although this decision is issued pursuant to the new AG.

FINDINGS OF FACT

Guideline F – Financial Considerations

Applicant is 59 years old. (Item 3 at page 5.) He is separated from his spouse, and has one minor child. (Item 3 at pages 17 and 22.)

1.a., 1.b., and 1.e. Applicant admits three outstanding judgments totaling about $1,861. As he has submitted nothing further in this regard, these allegations are found against Applicant.

1.g., 1.j., 1.l., and 1.m. Applicant admits four alleged past-due debts totaling about $14,629. As he has submitted nothing further in this regard, these allegations are found against Applicant.

1.c. Applicant avers that he has “no idea about” a $4,949 outstanding judgment in favor of Creditor C, but offers nothing further in this regard. As the Government has submitted state records supporting this allegation (Item 9), this allegation is found against Applicant.

1.d. Applicant avers that he is “not sure” about a $1,470 outstanding judgment in favor of Creditor D, but offers nothing further in this regard. As the Government has submitted state records supporting this allegation (Item 10), this allegation is found against Applicant. 1.f. Applicant avers that he does not “remember” a $72 outstanding judgment in favor of Creditor F, but offers nothing further in this regard. As the Government has submitted state records supporting this allegation (Item 12), this allegation is found against Applicant.

1.h. Applicant avers that he is “not sure” about a $128 past-due debt owed to Creditor H, but offers nothing further in this regard. As this debt appears as past due on the Government’s most recent January 2016 credit report (Item 6 at page 2), this allegation is found against Applicant.

1.i. Applicant avers that he is “not sure” about a $1,560 past-due debt owed to Creditor I, but offers nothing further in this regard. As this debt appears as past due on the Government’s most recent January 2016 credit report (Item 6 at page 2), this allegation is found against Applicant.

1.k. and 1.o. These are one and the same past-due debt. Applicant avers that he is “not sure” about a $2,481 past-due debt owed to Creditor K, but offers nothing further in this regard. As this debt appears as past due on the Government’s most recent January 2016 credit report, (Item 6 at page 4), these allegations are found against Applicant.

1.n. Applicant neither admits nor denies an alleged past-due debt to Creditor N in the amount of about $776. As this debt appears as past due on the Government’s July 2014 credit report, (Item 5 at page 9), this allegation is found against Applicant.

1.p.~1.r. Applicant admits that he failed to timely file his 2011–2013 Federal income tax returns; and as a result, owes about $4,200 in delinquent taxes. These allegations are found against Applicant.

POLICIES

When evaluating an applicant’s suitability for national security eligibility, the administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations for each guideline, the adjudicative guidelines (AG) list potentially disqualifying conditions and mitigating conditions, which are to be used in evaluating an applicant’s national security eligibility.

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 AG ¶ 2 describing the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. The entire process is a conscientious scrutiny of applicable guidelines in the context 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.” In reaching this decision, I have drawn only those conclusions that are reasonable, logical, and based on the evidence contained in the record. I have not drawn inferences based on mere speculation or conjecture.

Directive ¶ E3.1.14, requires the Government to present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, an “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, and has the ultimate burden of persuasion as to obtaining a favorable clearance decision.”

A person applying for national security eligibility seeks to enter 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 national security eligibility. 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 or sensitive information. Finally, as emphasized in Section 7 of EO 10865, “[a]ny determination under this order adverse to an applicant shall be a determination 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 concerns relating to the guideline for financial considerations are set out in AG ¶ 18, which reads in pertinent part:

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. Financial distress can also be caused or exacerbated by, and thus can be a possible indicator of, other issues of personnel security concern such as excessive gambling, mental health conditions, substance misuse, or alcohol abuse or dependence. An individual who is financially overextended is at greater risk of having to engage in illegal or otherwise questionable acts to generate funds. . . . AG ¶ 19 describes four conditions that could raise security concerns and may be disqualifying in this case:

(a) inability to satisfy debts;

(b) unwillingness to satisfy debts regardless of the ability to do so;

(f) failure to file or fraudulently filing annual Federal, state, or local income tax returns or failure to pay annual Federal, state, or local income tax as required.

Applicant has six outstanding judgments, eight past-due debts, and delinquent taxes. These facts establish prima facie support for the foregoing disqualifying conditions, and shift the burden to Applicant to mitigate those concerns.

The guideline includes four conditions in AG ¶ 20 that could mitigate the security concerns arising from Applicant’s alleged financial difficulties:

(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;

(c) the individual has received or is receiving financial counseling for the problem from a legitimate and credible source, such as a non-profit credit counseling service, and there are clear indications that the problem is being resolved or is under control;

(d) the individual initiated and is adhering to 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;

(f) the affluence resulted from a legal source of income; and (g) the individual has made arrangements with the appropriate tax authority to file or pay the amount owed and is in compliance with those arrangements.

None of these mitigating conditions apply. Applicant’s financial difficulties are significant and continuing.

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.

According to AG ¶ 2(c), the ultimate determination of whether to grant national security eligibility must be an overall commonsense judgment based upon careful consideration of the applicable guidelines and the whole-person concept.

I considered the potentially disqualifying and mitigating conditions in light of all pertinent facts and circumstances surrounding this case. Overall, the record evidence leaves me with questions and doubts as to Applicant’s judgment, eligibility, and suitability for a security clearance. He has not met his burden to mitigate the security concerns arising under the guideline for financial considerations.

FORMAL FINDINGS

Formal findings for or against Applicant on the allegations set forth in the SOR, as required by ¶ E3.1.25 of Enclosure 3 of the Directive, are:

Paragraph 1, Guideline F: AGAINST APPLICANT

Subparagraphs 1.a. through 1.r.: 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 national security eligibility and a security clearance. National security eligibility is denied.

________ Richard A. Cefola Administrative Judge