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ISCR Case 15-05451.h1 — CASE

ISCR Case 15-05451.h1granted

Case Headnote

ISCR Case No. 15-05451.h1

grantedMay 23, 2017· Hon. Robert J. Kilmartin· hearing

Summary

A 62-year-old federal contractor was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The applicant's financial difficulties stemmed from medical issues and a temporary inability to work, which raised disqualifying conditions related to overdue debts.

The applicant successfully mitigated these concerns by demonstrating responsible actions to resolve his financial issues. He provided evidence that one alleged delinquent debt had been paid off, and two others were successfully disputed and removed from his credit reports. A home mortgage loan delinquency was resolved when the house was transferred back to the mortgagee bank, resulting in no balance due. While one automobile loan of $15,150 remained unresolved, the applicant had sought consumer credit counseling and legal assistance to manage his debts.

The decision to grant the clearance was based on the applicant's good-faith efforts to repay creditors, the resolution of multiple debts, and the demonstration that his financial challenges were largely due to circumstances beyond his control.

Why the Applicant Prevailed

The applicant provided evidence of resolving multiple delinquent debts, including paying off one debt and successfully disputing others.
He demonstrated that his financial difficulties were largely due to circumstances beyond his control, including medical issues and disability.
The applicant showed a good-faith effort to repay overdue creditors and sought legal assistance to manage his debts.

Conditions Referenced

Disqualifying

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

Mitigating

AG ¶ 20(b)appliedConditions That Resulted in the Financial Problems Were Largely Beyond the Person’s Control
AG ¶ 20(d)appliedThe Individual Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts
AG ¶ 20(e)appliedThe Individual Has a Reasonable Basis to Dispute the Legitimacy of the Past-due Debt

Key Rule Quoted

“The protection of the national security is the paramount consideration.”

Procedural Posture

SOR issuedMar 29, 2016
Answer filedNot specified
Hearing heldNot specifiedDecided on written record.
Decision dateMay 23, 2017

Cite For

Mitigation of Financial Concerns Under Guideline F Due to Medical Issues
Good-faith Efforts to Resolve Debts
Impact of Personal Circumstances on Financial Responsibility

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: granted

The judge found that the applicant mitigated the financial concerns under Guideline F, resulting in a favorable decision for all subparagraphs. The applicant demonstrated responsible behavior in addressing his financial issues, including resolving several debts and showing that his financial problems are under control.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant admitted to virtually all of the delinquent debts alleged in the SOR, except for the debt alleged at SOR ¶ 1.a. In his Answer to the SOR, Applicant denied SOR ¶ 1.a, as it has been paid off.	For Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.b	Applicant disputed the debt at SOR ¶ 1.b as fraudulent. It has been removed from his credit reports, and it is resolved.	For Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(e) reasonable, documented basis to dispute the debt	Documented Debt Paid in Full
1.c	Page one of his July 2016 credit report reflects that the delinquent debt alleged at SOR ¶ 1.c has been deleted and removed, after Applicant successfully disputed it. This debt is resolved.	For Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(e) reasonable, documented basis to dispute the debt	Documented Debt Paid in Full
1.d	In regards to the home mortgage loan delinquency at SOR ¶ 1.d, Applicant annotated his Answer stating 'I agree, the house to be sold May 26, 2016.' The house has since been transferred back to the mortgagee bank, and his credit reports all reflect no balance due. This debt is resolved.	For Applicant	Mortgage or Home Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.e	Applicant described an automobile loan delinquency, in the amount of $15,150, with a bank at SOR ¶ 1.e. Applicant does not dispute it. He was previously using consumer credit-counseling services, then he hired attorneys in 2009 to attempt resolution of his delinquent debts. SOR ¶ 1.e is not resolved. $15,150	For Applicant	Auto Loan Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	Claimed Financial Counseling

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. 15-05451 ) Applicant for Security Clearance )

For Government: Pamela C. Benson, Esq., Department Counsel For Applicant: Pro se 05/23/2017 ______________

STATEMENT OF CASE

______________

KILMARTIN, Robert J., Administrative Judge:

Applicant mitigated the security concerns under Guideline F, financial considerations. Applicant’s eligibility for access to classified information is granted.

Statement of the Case

On March 29, 2016, the Department of Defense (DOD) issued Applicant a Statement of Reasons (SOR) detailing security concerns under Guideline F, financial considerations. 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 effective within the DOD for SORs issued after September 1, 2006.

Applicant timely answered the SOR and elected to have his case decided on the written record. Department Counsel submitted the Government’s file of relevant material (FORM) on June 16, 2016. Applicant received the FORM on June 22, 2016, and had 30 days to file objections and submit material in refutation, extenuation, or mitigation. Applicant did not object to the Government’s evidence. He provided a one-page response to the FORM dated July 10, 2016, plus attachments.1 These have collectively been marked as Applicant’s Exhibit (AE) A and are admitted without objection. The Government’s evidence, identified as items 1 through 6, is admitted into evidence without objection. The case was assigned to me on May 1, 2017.

Findings of Fact2

Applicant is 62 years old. He obtained his GED in 1973. His first marriage was from 1977 to 1980, when he was divorced. He has been married to his present wife since 1986. Applicant has been employed by a federal contractor since October 2001. Applicant reports having a security clearance since 2004. Applicant disclosed in section 26 of his Questionnaire for National Security Positions (SF 86) or security clearance application (SCA) that “after a severe injury and later diagnosed with MS I was out of work, off and on, for approximately 3 years causing some financial difficulties.”3 He also stated that he had an attorney working on his mortgage delinquency issue, and he described an automobile loan delinquency, in the amount of $15,150, with a bank at SOR ¶ 1.e. Applicant explained: “During my illness I fell behind on my payments and the loan ‘disappeared’ from all records when I paid off another car at the same bank. Just recently the loan reappeared and was charged off. The car remains in my possession and no attempt was made by the bank to recover the car.”4

In his subject interview on January 2, 2015, Applicant clarified that the auto loan in question fell off his credit report when he went on disability in 2009 and couldn’t make payments.5 Around that same time, he paid off his spouse’s similar auto loan with the same bank. Subsequently, an apparent computer error incorrectly reflected both auto loans as paid.6 Applicant did not receive any bank correspondence, or repossession notices. Applicant does not dispute it. He was previously using consumer credit- counseling services, then he hired attorneys in 2009 to attempt resolution of his delinquent debts.7 SOR ¶ 1.e is not resolved. Page one of his July 2016 credit report reflects that the delinquent debt alleged at SOR ¶ 1.chas been deleted and removed,

1 AE A attachments include: a one page bank account activity statement showing a $79.64 debit apparently

July 19, 2016 Experian Credit report; and two ten page Karma credit reports, both dated July 20, 2016. after Applicant successfully disputed it.8 This debt is resolved. Similarly, Applicant disputed the debt at SOR ¶ 1.bas fraudulent. It has been removed from his credit reports, and it is resolved.9

Applicant admitted four of the five delinquent debts alleged in the SOR, totaling approximately $65,448. In his Answer to the SOR, Applicant denied SOR ¶ 1.a, as it has been paid off. This is confirmed by the page from his bank statement dated April 29, 2016, attached to AE A. In regards to the home mortgage loan delinquency at SOR ¶ 1.d, Applicant annotated his Answer stating “I agree, the house to be sold May 26, 2016.”10 Through counsel, he attempted to negotiate the mortgage loan debt with the bank, but the bank was intractable and Applicant was advised to vacate his home of 25 years and allow foreclosure sale to ensue.11 The house has since been transferred back to the mortgagee bank, and his credit reports all reflect no balance due. This debt is resolved.

In his April 11, 2016 letter “to whom it may concern” attached to his Answer to the SOR, Applicant described a series of medical misfortunes that he and his wife endured. Approximately 20 years ago, he contracted Lyme disease with complications. This condition went undiagnosed for eight years. More recently he has been diagnosed with relapsing, reoccurring multiple sclerosis (MS). Then, in October 2010, Applicant fell from a tree, causing multiple fractures. Since then, he has been on temporary disability, on and off, for several years.12 His wife suffered a heart attack in January 2013, resulting in exorbitant medical expenses. She is 66 years old, and incapable of working. Applicant returned to work in May 2012, but the damage to his credit was substantial, as he was the sole-bread winner for his family. Despite receiving legal advice to declare bankruptcy, Applicant declined to do so, and he is making progress paying debts, with the help of legal counsel. His financial delinquencies are not due to gambling, alcohol, or drug abuse.

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 used 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. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶ 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 ¶ 2(b) requires that “[a]ny doubt concerning personnel being considered for access to classified information will be resolved in favor of 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 ¶ E3.1.14, the Government must 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 applicant or proven by Department Counsel, and has the ultimate burden of persuasion as to obtaining 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 that an applicant may deliberately or inadvertently fail to 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 EO 10865 provides that 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 ¶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.

This concern is broader than the possibility that an individual might knowingly compromise classified information in order to raise money. It encompasses concerns about an individual’s self-control, judgment, and other qualities essential to protecting classified information. An individual who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information.

AG ¶ 19 provides conditions that could raise security concerns. The following apply here:

(a) inability or unwillingness to satisfy debts; and

Applicant admitted to virtually all of the delinquent debts alleged in the SOR, except for the debt alleged at SOR ¶ 1.a. The Government produced substantial evidence to support the disqualifying conditions in AG ¶¶ 19(a) and 19(c), thereby shifting the burden to Applicant to produce evidence to rebut, explain, extenuate, or mitigate the facts.13 Applicant met that burden. Only one delinquent debt is unaddressed.

The guideline also includes conditions that could mitigate security concerns arising from financial difficulties. The following mitigating conditions under AG ¶ 20 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 problems were largely beyond the person’s control, 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; 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.

Applicant and his wife have endured multiple illnesses, disability, and unforeseen expenses related to the downturn in the real estate market. These conditions were beyond his control. Applicant has demonstrated that he acted responsibly under the circumstances. Applicant indicated he employed the services of a credit-counseling agency, then a law firm, to try to compromise and settle some of his delinquent debts. Applicant produced documents to show that he paid off SOR ¶ 1.a, successfully disputed the debts at SOR ¶¶ 1.band 1.c, and satisfied the mortgage loan by transferring his home back to the bank at SOR ¶ 1.d. He is making progress in resolving his only remaining delinquent debt at SOR ¶ 1.e. His debts are substantially resolved. Applicant provided sufficient evidence to show that his financial problems are under control, and that his debts were incurred under circumstances unlikely to recur. The mitigating conditions enumerated above 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 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 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. Some of the factors in AG ¶ 2(a) were addressed under that guideline. Applicant’s finances no longer remain a security concern. There are ample indications that Applicant’s financial problem are under control. He has met his burden of persuasion. The record evidence leaves me with no questions or doubts as to Applicant’s suitability for a security clearance. For all these reasons, I conclude Applicant has mitigated the security concerns arising under Guideline F, 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: FOR APPLICANT

Subparagraphs 1.a – 1.e: For Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is clearly consistent with the national interest to grant Applicant a security clearance. Eligibility for access to classified information is granted.

________________________ Robert J. Kilmartin Administrative Judge

FOOTNOTES

paid to N.R. Agency on April 29, 2016; a one page June 30, 2016 letter from JCS stating although a balance of $5,300.75 is still due Citibank on a credit card, they terminated collection efforts; a ten page 2 Unless stated otherwise, the source of the information in this section is Applicant’s September 25, 2014, Questionnaire for National Security Positions (SF 86) or Security Clearance Application (SCA). (Item 2). 3 Item 2, page 33. 4. Item 2, page 35. 5 Item 5, page 6. 6 Item 5, page 6. 7 Item 5, page 6. 8 AE A, attached Experian Credit Report. 9 AE A, attached Experian Credit Report. 10 Item 1. 11 Item 1, attached letter at p. 2. 12 Item 1, attached letter at p. 1. 13 Directive ¶ E3.1.15. See ISCR Case No. 02-31154 at 5 (App. Bd. Sep 22, 2005) (An applicant has the burden of proving a mitigating condition, and the burden of disproving it never shifts to the Government).