CASE · Clearance Adjudication Search EngineCASE

Loading case…

ISCR Case 15-08726.h1 — CASE

ISCR Case 15-08726.h1denied

Case Headnote

ISCR Case No. 15-08726.h1

deniedJun 15, 2017· Hon. Robert Robinson Gales· hearing

Summary

A 30-year-old defense contractor employee was denied eligibility for a public trust position due to significant financial concerns under Guideline F. The Statement of Reasons included an August 2014 judgment for $2,527 in unpaid rent and associated costs. Disqualifying conditions F.19(a), F.19(b), F.19(c), and F.19(e) were raised, while mitigating conditions F.20(a), F.20(b), F.20(c), F.20(d), and F.20(e) were considered.

The denial was based on the applicant's failure to provide documentation supporting her claims of debt resolution efforts. Her financial difficulties were deemed ongoing and not sufficiently addressed over time.

Ultimately, the applicant did not demonstrate a good-faith effort to repay overdue creditors or resolve her debts, leading to the denial of her security clearance.

Why the Applicant Was Denied

The applicant failed to provide documentation supporting her claims of debt resolution efforts.
The applicant's financial difficulties were ongoing and not sufficiently addressed over time.
The applicant did not demonstrate a good-faith effort to repay overdue creditors or resolve debts.

Conditions Referenced

Disqualifying

F.19(a)raisedInability to Satisfy Debts
F.19(b)raisedUnwillingness to Satisfy Debts
F.19(c)raisedHistory of Not Meeting Financial Obligations
F.19(e)raisedConsistent Spending Beyond One's Means

Mitigating

F.20(b)appliedConditions Largely Beyond the Person's ControlThe applicant's financial problems were exacerbated by periods of unemployment.
F.20(a)rejectedBehavior Occurred so Long Ago or Infrequently
F.20(c)rejectedReceived Financial Counseling
F.20(d)rejectedGood-faith Effort to Repay Creditors
F.20(e)rejectedReasonable Basis to Dispute Debts

Key Rule Quoted

“The standard that must be met for . . . assignment to sensitive duties is that, based on all available information, the person’s loyalty, reliability, and trustworthiness are such that . . . assigning the person to sensitive duties is clearly consistent with the interests of national security.”
— Regulation ¶ C6.1.1.1.

Procedural Posture

SOR issuedMay 31, 2016
Answer filedJun 29, 2016Applicant elected to proceed without a hearing.
Hearing held—Case decided on the written record.
Decision dateJun 15, 2017

Cite For

Financial Difficulties Leading to Trustworthiness Concerns Under Guideline F
Lack of Evidence for Good-faith Efforts to Resolve Debts
Impact of Ongoing Financial Issues on Eligibility for Public Trust Positions

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 against the applicant on all allegations under Guideline F, citing a history of financial difficulties including multiple judgments, evictions, and a vehicle repossession. The applicant's failure to provide sufficient evidence of financial stability or resolution of debts led to the denial of her eligibility for a public trust position.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	rent and costs for $2,527 that went to judgment in August 2014 $2,527	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (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: ) ) --- ) ADP Case No. 15-08726 ) Applicant for Public Trust Position )

For Government: Mary Margaret Foreman, Esquire, Department Counsel For Applicant: Pro se

06/15/2017 ______________

STATEMENT OF CASE

______________

GALES, Robert Robinson, Administrative Judge:

Applicant has failed to mitigate the trustworthiness concerns regarding financial considerations. Eligibility to occupy a public trust position is denied.

Statement of the Case

On August 7, 2015, Applicant applied for a public trust position and submitted an Electronic Questionnaire for Investigations Processing (e-QIP).1 On May 31, 2016, the Department of Defense (DOD) Consolidated Adjudications Facility (CAF) issued a Statement of Reasons (SOR) to her, pursuant to DOD Regulation 5200.2-R, Personnel Security Program (January 1987), as amended and modified (Regulation); DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended and modified (Directive); and the Adjudicative Guidelines for Determining Eligibility For Access to Classified Information (December 29, 2005) applicable to all adjudications and other determinations made under the Directive, effective September 1, 2006.2 The SOR alleged trustworthiness concerns under Guideline F (Financial Considerations), and detailed reasons why the DOD CAF was unable to make an affirmative finding under the Directive that it is clearly consistent with the national interest to grant or continue Applicant’s eligibility for occupying a public trust position to support a contract with the DOD. The SOR recommended referral to an administrative judge to determine whether to grant or continue Applicant’s eligibility for occupying a public trust position to support a contract with the Department of Defense, and recommended referral to an administrative judge to determine whether such eligibility should be granted, continued, denied, or revoked.

It is unclear when Applicant received the SOR as there is no receipt in the case file. In a statement, notarized June 29, 2016, Applicant responded to the SOR allegations and elected to have her case decided on the written record in lieu of a hearing. A complete copy of the Government’s file of relevant material (FORM) was mailed to Applicant on August 22, 2016, and she was afforded an opportunity, within a period of 30 days after receipt of the FORM, to file objections and submit material in refutation, extenuation, or mitigation. In addition to the FORM, Applicant was furnished a copy of the Directive, as well as the Guidelines applicable to her case. It is unclear if she was subsequently furnished a copy of the SEAD 4. Applicant purportedly received the FORM on September 29, 2016. The response was due on October 29, 2016. On September 13, 2016, Applicant submitted a number of documents in response to the FORM, to which there was no objection. They were admitted into evidence as Applicant exhibit A. The case was assigned to me on June 2, 2017.

FINDINGS OF FACT

In her Answer to the SOR, Applicant admitted nearly all of the factual allegations pertaining to financial considerations in the SOR (¶¶ 1.a. through 1.c., 1.e., 1.f., and 1.h. through 1.w.). Applicant’s admissions are incorporated herein as findings of fact. After a complete and thorough review of the evidence in the record, and upon due consideration of same, I make the following additional findings of fact:

Applicant is a 30-year-old employee of a defense contractor. She has been serving as a clinical administrative coordinator with her current employer since July 2015. She previously held a variety of positions with a number of employers. Applicant was expelled from high school for excessive absences. She returned briefly to an alternative school, and eventually obtained a General Educational Development (GED) diploma in 2012. Applicant enrolled in a college but subsequently withdrew. She has never served with the U.S. military. She was never granted a security clearance, and it is unclear if she ever held a public trust position. Applicant has never been married, although she has been regularly cohabiting since February 2013. She has three sons, born in 2002, 2004, and 2007. Financial Considerations3

It is unclear when Applicant first experienced financial difficulties, but she acknowledged that she had been through a number of periods of voluntary and involuntary unemployment over the years: from January 2005 until January 2007 as a stay-at-home mother; from May 2008 until October 2008, because she had resigned from her job to get a higher-paying job, without having any offer of a new job; from October 2009 until April 2010, after being fired for failing to keep up with the workload; from May 2012 until October 2012, after resigning her position to be a stay-at-home mother to care for her grandfather and son; from January 2013 until June 2013, because her seasonal position ended and she returned to being a stay-at-home mother; from August 2014 until January 2015, because she had resigned to accept a new position that subsequently became unavailable to her; and from May 2015 until July 2015, when her temporary position ended. During her periods of unemployment, Applicant received financial assistance from various combinations of the state, her family, her cohabitant, and child support.

Because Applicant had insufficient funds to make monthly account payments, her finances deteriorated to the point where she was unable to prevent them from becoming delinquent, placed for collection, or charged off. Two judgments were filed against her. She was evicted from two apartments for non-payment of rent. A vehicle was repossessed.

When Applicant completed her e-QIP in August 2015, she acknowledged having two judgments filed against her but denied that, within the past seven years, she had any delinquent accounts. Applicant claimed that when she was required to complete the e- QIP, the three-day period was insufficient for her to verify that any debts were her legal responsibility, so she omitted them. When Applicant was interviewed by an investigator from the U.S. Officer of Personnel Management (OPM) in September 2015, she denied having a substantial number of identified debts about which she was confronted.

Applicant stated that she would look into all of the identified accounts, and, in October 2015, she would consolidate those which she was satisfied were her debts. Applicant eventually changed her mind regarding consolidation. Instead, she chose to establish a plan to get her credit back on track by herself. On September 13, 2016, Applicant wrote 13 letters to creditors, asking for account information, raising the possibility of establishing repayment plans, and requesting that no further negative or derogatory reports be placed in her credit reports to negatively impact her credit rating. In her Answer to the SOR, Applicant contended that she had paid off certain accounts, either by way of voluntary payments or involuntary garnishment, or that she was in the process of gathering information to enable her to resolve other accounts. She failed to submit any documentation to support her contentions regarding those payments or other resolution efforts.

Applicant admitted that she was young and stupid about quitting jobs without having another job, and that she intends to be smarter about her medical bills and more attentive to her credit report. Her goal, as of September 2015, was to resolve all of her debts, except her student loans, within one year. Applicant failed to achieve her goal, and it appears that she did not take her initial efforts to contact her creditors until September 2016.

The SOR identified 23 purportedly continuing delinquent debts totaling approximately $20,250 that had been placed for collection, charged off, or gone to judgment, as reflected by the August 2015 credit report. Those unpaid accounts were as follows: rent and costs for $2,527 that went to judgment in August 2014 (SOR ¶ 1.a.); rent and costs for $812 that went to judgment in November 2011 (SOR ¶ 1.b.); a utility account for $257 that Applicant claims she paid off in February 2016 (SOR ¶ 1.c.); an unspecified type of account for $256 (SOR ¶ 1.d.); a defaulted student loan for $1,252 that Applicant contended was paid off by a garnishment from her income tax refund (SOR ¶ 1.e.); rent and costs for $5,593 (SOR ¶ 1.f.); student loan and college expenses for $3,506 (SOR ¶ 1.g.); a cellular telephone account for $1,440 (SOR ¶ 1.h.); a direct-broadcast satellite service provider account for $762 (SOR ¶ 1.i.); a direct-broadcast satellite service provider account for $677 (SOR ¶ 1.j.); five medical accounts with the same collection agent for $578 (SOR ¶ 1.k.), $578 (SOR ¶ 1.l.), $228 (SOR ¶ 1.p.), $57 (SOR ¶ 1.t.), and $57 (SOR ¶ 1.u.); a loan for $437 (SOR ¶ 1.m.); a medical account for $322 (SOR ¶ 1.n.); a utility account for $257 that Applicant claims she paid off in July 2016 (SOR ¶ 1.o.); an unspecified account for $192 that Applicant claims was scheduled to be paid off as of July 2016 (SOR ¶ 1.q.); three medical accounts with different collection agents for $183 (SOR ¶ 1.r.), $182 (SOR ¶ 1.s.), and $50 (SOR ¶ 1.v.); and a gas utility account for $47 that Applicant claims she paid off as of February 2016 (SOR ¶ 1.w.).

With the exception of her September 2016 letters to various creditors, Applicant has offered no documentation to support the creation of any repayment plans, or positive actions with any of her creditors, such as letters, statements, receipts, or cancelled checks. She did not submit any documentation indicating she had disputed any of the accounts with either the creditors, collection agents, or the credit reporting agencies. There is no documentary evidence that Applicant took any steps to resolve her debts between her September 2015 OPM interview and her May 2016 SOR. Significantly, there is no documentary evidence that she took any steps to do so until September 2016 – two weeks before the FORM was sent to her.

It is not known what Applicant’s financial resources may be because she did not submit a personal financial statement to indicate her net monthly income, her monthly household or debt expenses, or whether or not she has any funds remaining at the end of each month for discretionary use or savings. Applicant offered no evidence to indicate that her financial problems are now under control. There is no evidence to indicate that Applicant ever received financial counseling.

POLICIES

The U.S. Supreme Court has recognized the substantial discretion of the Executive Branch in regulating access to information pertaining to national security emphasizing, “no one has a ‘right’ to a [position of public trust].”4 As Commander in Chief, the President has the authority to control access to information bearing on national security and to determine whether an individual is sufficiently trustworthy to have access to such information. Positions designated as ADP I/II/III are classified as “sensitive positions.”5 “The standard that must be met for . . . assignment to sensitive duties is that, based on all available information, the person’s loyalty, reliability, and trustworthiness are such that . . . assigning the person to sensitive duties is clearly consistent with the interests of national security.”6 Department of Defense contractor personnel are afforded the right to the procedures contained in the Directive before any final unfavorable access determination may be made.7

When evaluating an applicant’s suitability for a public trust position, the administrative judge must consider the guidelines in SEAD 4. In addition to brief introductory explanations for each guideline, the guidelines list potentially disqualifying conditions and mitigating conditions, which are used in evaluating an applicant’s eligibility for a public trust position.

An administrative judge need not view the guidelines as inflexible, ironclad rules of law. Instead, acknowledging 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 common sense decision. 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 meaningful decision.

In the decision-making process, facts must be established by “substantial evidence.”8 The Government initially has the burden of producing evidence to establish a potentially disqualifying condition under the Directive, and has the burden of establishing controverted facts alleged in the SOR. Once the Government has produced substantial evidence of a disqualifying condition, under Directive ¶ E3.1.15, the applicant has the burden of persuasion to present evidence in refutation, explanation, extenuation or mitigation, sufficient to overcome the doubts raised by the Government’s case. The burden of disproving a mitigating condition never shifts to the Government.9

A person who seeks access to sensitive 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 as well. It is because of this special relationship that the Government must be able to repose a high degree of trust and confidence in those individuals to whom it grants access to sensitive information. Decisions include, by necessity, consideration of the possible risk the applicant may deliberately or inadvertently fail to safeguard sensitive information. Such decisions entail a certain degree of legally permissible extrapolation as to potential, rather than actual, risk of compromise of sensitive information. Furthermore, security clearance determinations, and by inference, public trust determinations, should err, if they must, on the side of denials.10 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.

ANALYSIS

Guideline F, Financial Considerations

The trustworthiness concern relating to the guideline for Financial Considerations is set out in & 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. 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. Affluence that cannot be explained by known sources of income is also a security concern insofar as it may result from criminal activity, including espionage.

The guideline notes several conditions that could raise trustworthiness concerns. Under ¶ 19(a), an “inability to satisfy debts” is potentially disqualifying. In addition, ¶ 19(b) may apply if there is an “unwillingness to satisfy debts regardless of the ability to do so.” Similarly, under ¶ 19(c), “a history of not meeting financial obligations” may raise concerns. “Consistent spending beyond one's means or frivolous or irresponsible spending, which may be indicated by excessive indebtedness, significant negative cash flow, a history of late payments or of non-payment, or other negative financial indicators” may raise concerns under ¶ 19(e). Applicant has had a long-standing problem with her finances. She has chronically found herself with insufficient funds to prevent her accounts from becoming delinquent. They were placed for collection or charged off. Two judgments were filed against her; she was evicted from two apartments for non-payment of rent; and a vehicle was repossessed. ¶¶ 19(a), 19(b), 19(c), and 19(e) apply.

The guideline also includes examples of conditions that could mitigate security concerns arising from financial difficulties. Under ¶ 20(a), the disqualifying condition may be mitigated where “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.” Also, under ¶ 20(b), financial security concerns may be mitigated where “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.” Evidence that “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” is potentially mitigating under ¶ 20(c). Similarly, ¶ 20(d) applies where the evidence shows “the individual initiated and is adhering to a good- faith effort to repay overdue creditors or otherwise resolve debts.”11 In addition, ¶ 20(e) may apply if “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.”

I have concluded that ¶ 20(b) partially applies, and ¶¶ 20(a), 20(c), 20(d), and 20(e) do not apply. The nature, frequency, and recency of Applicant’s continuing financial difficulties since about 2005 make it difficult to conclude that it occurred “so long ago” or “was so infrequent.” Applicant was repeatedly unemployed, both voluntarily and involuntarily, on numerous occasions during which time she received financial assistance from various combinations of the state, her family, her cohabitant, and child support. She chose to become a stay-at-home mother during some periods; she quit jobs to search for other jobs that simply failed to materialize; and she was fired from another job for poor performance. Those incidents and periods of unemployment cannot be construed as being largely beyond her control. Two relatively brief periods of unemployment occurred in January 2013, when a seasonal job ended, and in May 2015, when a temporary job ended.

Applicant offered no explanation as to why she took no action to resolve her delinquent accounts between periods of unemployment or after she obtained her current position in July 2015. Applicant offered no evidence of a good-faith effort to resolve any of her debts and essentially ignored them to this date. She indicated purported payments on some accounts, as well as an intention to resolve all of the other accounts, with the exception of her student loans, but her professed actions and intentions are not supported by any documentation. There is no evidence to indicate that Applicant ever received financial counseling. It is unclear if she has funds remaining at the end of each month for discretionary use or savings. There is no evidence to reflect that Applicant’s financial problems are under control. Applicant has not acted responsibly by failing to address her delinquent accounts and by making little, if any, efforts of working with her creditors.12 Applicant’s actions under the circumstances cast doubt on her current reliability, trustworthiness, and good judgment.13

WHOLE PERSON CONCEPT

Under the whole-person concept, the administrative judge must evaluate an applicant’s eligibility for a public trust position 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 SEAD 4, Appendix (App.) A, ¶ 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 SEAD 4, App. A, ¶ 2(c), the ultimate determination of whether to grant eligibility for a public trust position must be an overall commonsense judgment based upon careful consideration of the guidelines and the whole-person concept. Moreover, I have evaluated the various aspects of this case in light of the totality of the record evidence and have not merely performed a piecemeal analysis.14

There is some evidence in favor of mitigating Applicant’s conduct. She has been with her current employer since July 2015. She was previously unemployed on numerous occasions. She has declared her intention of addressing her creditors and resolving her financial problems.

The disqualifying evidence under the whole-person concept is more substantial. Applicant admitted that she was young and stupid about quitting jobs without having another job, and that she intends to be smarter about her medical bills and more attentive to her credit report. She repeatedly found herself with delinquent accounts, and some were placed for collection or charged off. Two judgments were filed against her; she was evicted from two apartments for non-payment of rent; and a vehicle was repossessed. When Applicant completed her e-QIP in August 2015, other than acknowledging two judgments filed against her, she falsely denied that, within the past seven years, she had any delinquent accounts. During her OPM interview in September 2015, she denied having a substantial number of identified debts about which she was confronted. Although Applicant stated that she would take immediate action to validate and resolve her debts within a year, she waited for another 12 months before even writing her creditors. She failed to submit any documentation to support her contentions regarding any of her purported resolution efforts.

There is no evidence from third-parties as to her current reputation for reliability, trustworthiness, and good judgment. Despite her repeated promises to resolve her delinquent accounts, Applicant has essentially taken no positive actions to do so. During her periods of unemployment, Applicant received unemployment compensation or other state financial assistance, as well as financial support from her family and her cohabitant. She spent her free time with her children. Applicant’s actions, or demonstrated inaction, under the circumstances cast doubt on her current reliability, trustworthiness, and good judgment. Considering the relative absence of confirmed debt resolution and elimination efforts, Applicant’s financial issues are likely to remain.

The Appeal Board has addressed a key element in the whole-person analysis in financial cases stating:15

In evaluating Guideline F cases, the Board has previously noted that the concept of “meaningful track record” necessarily includes evidence of actual debt reduction through payment of debts. However, an applicant is not required, as a matter of law, to establish that he [or she] has paid off each and every debt listed in the SOR. All that is required is that an applicant demonstrate that he [or she] has “. . . established a plan to resolve his [or her] financial problems and taken significant actions to implement that plan.” The Judge can reasonably consider the entirety of an applicant’s financial situation and his [or her] actions in evaluating the extent to which that applicant’s plan for the reduction of his outstanding indebtedness is credible and realistic. See Directive ¶ E2.2(a) (“Available, reliable information about the person, past and present, favorable and unfavorable, should be considered in reaching a determination.”) There is no requirement that a plan provide for payments on all outstanding debts simultaneously. Rather, a reasonable plan (and concomitant conduct) may provide for the payment of such debts one at a time. Likewise, there is no requirement that the first debts actually paid in furtherance of a reasonable debt plan be the ones listed in the SOR.

Applicant has demonstrated an essentially negative track record of debt reduction and elimination efforts, generally ignoring her debts, but promising to take some corrective actions. Overall, the evidence leaves me with questions and doubts as to Applicant’s eligibility and suitability for a public trust position. For all of these reasons, I conclude Applicant has failed to mitigate the trustworthiness concerns arising from her financial considerations. See SEAD 4, App. A, ¶ 2(d)(1) through AG ¶ 2(d)(9).

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. through 1.w: Against Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is not clearly consistent with the interests of national security to grant Applicant eligibility to occupy a public trust position to support a contract with the Department of Defense. Eligibility is denied.

________________________ ROBERT ROBINSON GALES Administrative Judge

FOOTNOTES

1 Item 3 (e-QIP, dated August 7, 2015). 2 Effective June 8, 2017, by Directive 4 of the Security Executive Agent (SEAD 4), dated December 10, 2016, National Security Adjudicative Guidelines for all covered individuals who require initial or continued eligibility for access to classified information or eligibility to hold a sensitive position, were established to supersede all previously issued national security adjudicative criteria or guidelines. Accordingly, those guidelines previously implemented on September 1, 2006, under which this trustworthiness review case was initiated, no longer apply. In comparing the two versions, there is no substantial difference that might have a negative effect on Applicant in this case. 3 General source information pertaining to the financial accounts discussed below can be found in the following exhibits: Item 3, supra note 1; Item 2 (Applicant’s Answer to the SOR, dated June 29, 2016); Item 4 (Personal Subject Interview, dated September 23, 2015); and Item 5 (Combined Experian, TransUnion, and Equifax Credit Report, dated August 20, 2015). 4 Department of the Navy v. Egan, 484 U.S. 518, 528 (1988).

5 Regulation ¶¶ C3.1.2.1.1.7 , C3.1.2.1.2.3, and C3.1.2.2. See also Regulation app. 10, ¶ 10.2.

6 Regulation ¶ C6.1.1.1.

7 Regulation ¶ C8.2.1. It should be noted that a memorandum from the Deputy Under Secretary of Defense for Counterintelligence and Security, Adjudication of Trustworthiness Cases, dated November 19, 2004, covers the handling of trustworthiness cases under the Directive. The memorandum directed the Defense Office of Hearings and Appeals (DOHA) to continue to utilize the Directive in ADP contractor cases for trustworthiness determinations.

8 “Substantial evidence [is] such relevant evidence as a reasonable mind might accept as adequate to support a conclusion in light of all contrary evidence in the record.” ISCR Case No. 04-11463 at 2 (App. Bd. Aug. 4, 2006) (citing Directive ¶ E3.1.32.1). “Substantial evidence” is “more than a scintilla but less than a preponderance.” See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). 9 See ISCR Case No. 02-31154 at 5 (App. Bd. Sep. 22, 2005).

10 Egan, 484 U.S. at 531. 11 The Appeal Board has previously explained what constitutes a good-faith effort to repay overdue creditors or otherwise resolve debts:

In order to qualify for application of [the “good-faith” mitigating condition], an applicant must present evidence showing either a good-faith effort to repay overdue creditors or some other good-faith action aimed at resolving the applicant’s debts. The Directive does not define the term ‘good-faith.’ However, the Board has indicated that the concept of good-faith ‘requires a showing that a person acts in a way that shows reasonableness, prudence, honesty, and adherence to duty or obligation.’ Accordingly, an applicant must do more than merely show that he or she relied on a legally available option (such as bankruptcy [or statute of limitations]) in order to claim the benefit of [the “good-faith” mitigating condition].

(internal citation and footnote omitted) ISCR Case No. 02-30304 at 3 (App. Bd. Apr. 20, 2004) (quoting ISCR Case No. 99-9020 at 5-6 (App. Bd. June 4, 2001)). 12 “Even if Applicant’s financial difficulties initially arose, in whole or in part, due to circumstances outside his [or her] control, the Judge could still consider whether Applicant has since acted in a reasonable manner when dealing with those financial difficulties.” ISCR Case No. 05-11366 at 4 n.9 (App. Bd. Jan. 12, 2007) (citing ISCR Case No. 99- 0462 at 4 (App. Bd. May 25, 2000); ISCR Case No. 99-0012 at 4 (App. Bd. Dec. 1, 1999); ISCR Case No. 03-13096 at 4 (App. Bd. Nov. 29, 2005)). A component is whether he or she maintained contact with creditors and attempted to negotiate partial payments to keep debts current.

13 See ISCR Case No. 09-08533 at 3-4 (App. Bd. Oct. 6, 2010). 14 See U.S. v. Bottone, 365 F.2d 389, 392 (2d Cir. 1966); See also ISCR Case No. 03-22861 at 2-3 (App. Bd. Jun. 2, 2006).

15 ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008) (internal citations omitted).