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ISCR Case 15-07719.h1 — CASE

ISCR Case 15-07719.h1granted

Case Headnote

ISCR Case No. 15-07719.h1

grantedJul 3, 2017· Hon. Stephanie C. Hess· hearing

Summary

This security clearance decision involved an applicant who has been a federal contractor since 1978. The applicant's financial difficulties, addressed under Guideline F (Financial Considerations), stemmed primarily from the destruction of a rental property by Hurricane Katrina and subsequent economic challenges. The Statement of Reasons (SOR) specifically cited a $176,502 debt related to a loan balance.

In response to these issues, the applicant filed for Chapter 13 bankruptcy and has consistently made payments since October 2016. The decision to grant the clearance was based on several mitigating factors. The applicant's financial problems were largely attributed to circumstances beyond his control, such as the natural disaster and economic downturn.

Furthermore, the applicant demonstrated a stable financial position and a long history of federal service, which underscored his reliability and trustworthiness. Given these factors, and the application of mitigating conditions AG ¶ 20, AG ¶ 21, and AG ¶ 22, the applicant's security clearance was GRANTED.

Why the Applicant Prevailed

The applicant's financial issues were largely due to circumstances beyond his control, including natural disaster and economic downturn.
He successfully filed for Chapter 13 bankruptcy and has been making consistent payments since October 2016.
The applicant is in a stable financial position and has a long history of federal service, demonstrating reliability and trustworthiness.

Conditions Referenced

Mitigating

AG ¶ 20appliedMitigating ConditionsThe applicant's financial difficulties were due to circumstances beyond his control.
AG ¶ 21appliedMitigating ConditionsThe applicant has made good faith efforts to repay his debts.
AG ¶ 22appliedMitigating ConditionsThe applicant has established a track record of financial responsibility since filing for bankruptcy.

Key Rule Quoted

“The whole-person concept requires consideration of the totality of the circumstances, including the applicant's history and current situation.”

Procedural Posture

SOR issuedApr 15, 2016
Answer filed—
Hearing heldJan 12, 2017
Decision dateJul 3, 2017

Cite For

Financial Stability After Bankruptcy Under Guideline F
Consideration of Circumstances Beyond Control in Financial Cases
Whole-person Concept in Security Clearance Evaluations

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's financial difficulties were primarily due to circumstances beyond his control, including the destruction of his rental property by Hurricane Katrina and subsequent financial struggles. The applicant successfully filed for Chapter 13 bankruptcy and has since maintained a stable financial position, leading to a decision in his favor regarding his security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	The $176,502 debt alleged in SOR ¶ 1.a is for the balance owed on this loan. $176,502	For Applicant	Personal Loan Debt	Unknown	—	—	—

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: ) ) [REDACTED] ) ISCR Case No. 15-07719 ) ) Applicant for Security Clearance

For Government: Braden M. Murphy, Esq., Department Counsel For Applicant: Pro se

07/03/2017 ______________

DECISION

______________

HESS, Stephanie C., Administrative Judge:

On April 15, 2016, the Department of Defense (DOD) Consolidated Adjudications Facility (CAF) sent Applicant a Statement of Reasons (SOR) alleging concerns under the financial considerations guideline.1 Applicant answered the SOR and requested a hearing to establish his eligibility for access to classified information. On January 12, 2017, I convened a hearing. After I received the transcript, I reviewed the record in its entirety, including Applicant’s post-hearing submissions. (AX E – AX J.) I then provided written notice to the parties of my intent to resolve the case through a summary disposition in Applicant’s favor. Department Counsel indicated that the Government had no objections. (See Appellate Exhibit I.)

Applicant’s past financial problems were primarily attributable to matters beyond his control. Specifically, Applicant’s financial difficulties began in August 2005, when his rental house was destroyed by Hurricane Katrina. He received a disaster relief loan through the U.S. Small Business Administration (SBA) of $198,000 to rebuild the house. The rebuilding process took several years, largely due to a shortage of reputable building contractors. As a result of the region-wide hurricane damage, Applicant’s insurance on the house drastically increased, as did his property taxes. By the time Applicant’s house was completed in 2010, the Government had subsidized the construction of approximately 200 rental properties within a three-mile-radius of Applicant’s house. Additionally, plans to revitalize the community never materialized and the population did not rebound as projected. The over-recovery of the rental market and the overall lack of renters left Applicant unable to rent his house, yet responsible for the loan payments.

In 2011, Applicant began contacting the SBA seeking loan forgiveness or modification, which was regularly being granted in neighboring areas. Between 2011 and 2014, Applicant made numerous attempts to modify his loan, all of which were unsuccessful. He struggled to maintain the loan payments, occasionally making a partial payment or missing a payment. He attempted to sell the house, but could not due to decreased market value and an abundance of for-sale rental houses. Applicant lived with family members to reduce his financial outlay in order maintain his loan payments.

In 2014, Applicant accepted employment in another state for a significant increase in salary. However, the greater cost of living, including rent for his apartment, consumed his increased wages, and he fell behind on his loan payments. The $176,502 debt alleged in SOR ¶ 1.a is for the balance owed on this loan. Ultimately, after never securing a renter, Applicant consulted an attorney who advised Applicant to file Chapter 13 bankruptcy, which he did in 2015 after completing the requisite financial counseling. (AX F.) The deed to Applicant’s rental house was surrendered to the SBA through the bankruptcy court. Applicant has been making $850 monthly payments since October 2016, totaling $7,650 as of January 2017. (AX G.) He is in the most stable financial position of his life, and is readily able to maintain all his financial obligations. He is an active member of his church and community, is trusted and respected by his manager and co-workers, and has received numerous awards in his employment. He has been employed as a federal contractor since 1978. (AX H; AX I; Tr. 37-42.)

Applicant’s history of financial problems does not create doubt about his current reliability, trustworthiness, good judgment, and ability to protect classified information. I weighed the evidence as a whole and gave due consideration to the whole-person concept, including Applicant’s lengthy federal service. Accordingly, I conclude that Applicant met his burden of persuasion to show that it is clearly consistent with the national interest to grant his eligibility for access to classified information. Applicant’s request for a security clearance is granted.

FORMAL FINDINGS

As required by section E3.1.25 of Enclosure 3 of the Directive, I make the following formal findings on the allegations in the SOR:

Paragraph 1, Guideline F (Financial Considerations): FOR APPLICANT

Subparagraph 1.a: For Applicant

CONCLUSION

I conclude that it is clearly consistent with the national interest to grant Applicant’s eligibility for a security clearance. Eligibility for access to classified information is granted.

Stephanie C. Hess Administrative Judge

FOOTNOTES

1 This action was taken under Executive Order (E.O.) 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) implemented by the Department of Defense on September 1, 2006. The AG were amended effective June 8, 2017. The hearing in this case was held under the AG implemented on September 1, 2006. However, the DOD implemented the amended AG on June 8, 2017, while this decision was pending. This decision will be decided based on the amended AG effective June 8, 2017. The outcome of this case would have been the same if decided based on the former AG.