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Summary

The applicant, a 51-year-old ground support equipment technician with a history of financial difficulties, faced security concerns under Guideline F due to multiple bankruptcy filings and delinquent debts. Despite some mitigating circumstances, the judge found that the applicant's financial irresponsibility raised significant questions about his reliability and trustworthiness, leading to a denial of his security clearance application.

Under Guideline F (Financial Considerations), the Statement of Reasons alleged the following: Applicant filed Chapter 13 bankruptcy petitions in June 2004, October 2004, March 2005, July 2005, March 2006, and June 2006. Each petition was dismissed for failures to obtain confirmation of a payment plan, comply with a confirmed plan, submit required documents, or appear at show-cause hearings (1.a). Applicant filed a motion to reconsider the dismissal of his June 2006 petition and then withdrew it, declaring: 'I, [Applicant], wish to withdraw my pending motion to reconsider the dismissal and other issues pertaining to my case.' (1.b). In addition to his employment by defense contractors, Applicant owned and operated a pizza business from 1998 to 2003, when the business failed and he found himself in financial distress (1.c). Applicant's first six bankruptcy petitions were an effort to save his business and to prevent foreclosure on the family home (1.d). In September 2012, Applicant filed an identity theft complaint with the local sheriff. He suspected identity theft because he was contacted by the Internal Revenue Service (IRS) after he filed his tax return, and the IRS informed him that a return had already been filed in his name (1.e). Applicant filed his eighth Chapter 13 petition in May 2015, when the lender again promised to negotiate a modification but reneged on the promise. The petition included a state tax debt of $38,219 and a federal tax debt of $6,812 (1.f). SOR ¶ 1.i: state tax lien filed in December 2011 for $38,219; and federal tax lien filed in August 2010 for $6,812. Applicant listed these liens in his May 2015 bankruptcy petition (1.g). SOR ¶ 1.k: judgment for water treatment system entered in July 2011 for $786. This debt was included in Applicant’s May 2015 bankruptcy petition (1.h). SOR ¶ 1.l: unspecified charged-off debt to a bank (the lender for Applicant’s home mortgages) for an unspecified amount incurred on an unspecified date. This allegation did not comply with the specificity requirement of Directive ¶ E3.1.3, and it did not provide adequate information to enable Applicant to respond to it. This allegation is resolved for Applicant (1.i). SOR ¶ 1.m: debt to a credit union past due for $20,229. Applicant purchased a new vehicle in 2011. His July 2015 credit bureau report (CBR) reflected that his payments were past due in the amount alleged in the SOR as of the date of the CBR. The debt was included in his May 2015 bankruptcy petition (1.j). SOR ¶ 1.n: debt to a bank placed for collection of $644. Applicant testified that this debt was incurred when he deposited a check from someone for whom he had done work, and the check was dishonored for insufficient funds. The debt was paid in January 2013 (1.k). SOR ¶¶ 1.o, 1.p, 1.q, and 1.r: debt to a collection agency for $619; debt to a furniture store charged off for $2,353; debt to a collection agency for $417; medical debt placed for collection of $89. Applicant testified that he did not recognize these debts. He made no effort to identify the creditors or the nature of the debts. In his answer to the SOR, he attributed the debt in SOR ¶ 1.o, which was referred for collection in June 2011, to identity theft. The debts in SOR ¶¶ 1.o, 1.p, and 1.q were included in his May 2015 bankruptcy petition, but the medical debt in SOR ¶ 1.r was not included (1.l). SOR ¶ 1.s: debt to municipal government placed for collection of $60. Applicant testified that this debt was for a stop-sign violation and that it was paid. He submitted no proof of payment. The debt was included in his May 2015 bankruptcy petition (1.m). SOR ¶¶ 1.t and 1.u: insufficient-funds checks $383 and $739. Applicant testified that he did not recognize these debts, but he surmised that they must have been resolved because the financial institution on which the checks were drawn approved him for a car loan. The debts were included in his May 2015 bankruptcy petition. They are not reflected in his CBRs from January 2014, February 2015, or July 2015, indicating that they were resolved (1.n).

The judge denied the clearance. The government raised disqualifying conditions AG ¶ 19(a), AG ¶ 19(c). The judge applied mitigating conditions AG ¶ 20(b), AG ¶ 20(c), AG ¶ 20(d), AG ¶ 20(e). The decision turned on the following: The applicant has a history of multiple bankruptcy filings, indicating an inability to manage financial obligations; Delinquent debts were numerous and recent, undermining claims of financial stability; The applicant's use of bankruptcy was viewed as a delaying tactic rather than a genuine effort to resolve debts.

Why the Applicant Was Denied

• The applicant has a history of multiple bankruptcy filings, indicating an inability to manage financial obligations.
• Delinquent debts were numerous and recent, undermining claims of financial stability.
• The applicant's use of bankruptcy was viewed as a delaying tactic rather than a genuine effort to resolve debts.

Conditions Referenced

Key Rule Quoted

“Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the AG.”

Procedural Posture

• SOR issuedMar 24, 2016
• Answer filedApr 29, 2016
• Hearing heldAug 18, 2016
• Decision dateNov 2, 2016

Cite For

• Denial Based on Multiple Bankruptcy Filings Under Guideline F
• Financial Irresponsibility as a Disqualifying Factor
• Impact of Identity Theft on Financial Obligations in Security Clearance Cases