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ISCR Case 16-00028.h1 — CASE

ISCR Case 16-00028.h1denied

Case Headnote

ISCR Case No. 16-00028.h1

deniedFeb 17, 2017· Hon. Jennifer I. Goldstein· hearing

Summary

A 37-year-old defense contractor was denied a security clearance under Guideline F (Financial Considerations) due to unresolved financial delinquencies totaling over $128,107 across 17 debts. These included a $64 tax lien, a $611,013 mortgage with an $80,726 past-due amount, and a $29,000 delinquent child support obligation. Other debts ranged from a $23 tax lien to a $5,586 charged-off account and various collection and delinquent accounts.

The applicant had filed for Chapter 13 Bankruptcy in March 2010, which was dismissed in August 2011 due to a failure to make plan payments. While two debts, totaling $2,174 and $3,422, were resolved through the bankruptcy for $691.34 and $3,422.49 respectively, the majority remained outstanding.

Despite attributing his financial issues to circumstances beyond his control, the applicant failed to provide sufficient documentation demonstrating resolution of his debts or responsible financial management. He also did not present evidence of financial counseling or a good-faith effort to repay overdue creditors, leading to the denial of his security clearance.

Why the Applicant Was Denied

The applicant has unresolved financial delinquencies totaling over $128,107.
He failed to provide documentation to show that his debts have been resolved or that he is managing his finances responsibly.
The applicant did not demonstrate evidence of financial counseling or a good-faith effort to repay overdue creditors.

Conditions Referenced

Disqualifying

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

Key Rule Quoted

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

Procedural Posture

SOR issuedJun 8, 2016
Answer filedJul 1, 2016
Hearing heldSep 19, 2016
Decision dateFeb 17, 2017

Cite For

Denial of Security Clearance Due to Unresolved Financial Delinquencies
Failure to Demonstrate Responsible Financial Management
Lack of Evidence for Mitigating Financial Conditions

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 applicant was found to have multiple unresolved financial delinquencies totaling over $128,107, with 15 out of 17 debts remaining unresolved. The judge ruled against the applicant on all but two debts, concluding that the applicant failed to demonstrate responsible management of his financial obligations, leading to a denial of his security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant is indebted on a tax lien in the amount of $64. $64	Against Applicant	Tax Unpaid	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	Applicant filed Chapter 13 Bankruptcy in March 2010, which was dismissed in August 2011 for failure to make plan payments.	Against Applicant	Bankruptcy Filing	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	Applicant was past due on a $611,013 mortgage in the amount of $80,726. $80,726	Against Applicant	Mortgage or Home Loan Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	Applicant is indebted for a charged-off account in the amount of $5,586. $5,586	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	Applicant is indebted on a collections account in the amount of $918. $918	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	Applicant is indebted on a delinquent account in the amount of $585. $585	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.g	Applicant is indebted to a city in the amount of $98. $98	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.h	Applicant is indebted to a collection agent for a city on three accounts in the amounts of $554, $360, and $155. $1,069	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.i	Applicant is indebted to a collection agent for a city for delinquent child support in the amount of $29,000. $29,000	Against Applicant	Child Support Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.j	Applicant is indebted on a tax lien against him in the amount of $23. $23	Against Applicant	Tax Unpaid	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.k	Applicant is indebted to a bank on a delinquent account in the amount of $3,530. $3,530	Against Applicant	Auto Loan Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.l	Applicant is indebted on a consumer credit account in the amount of $480. $480	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.m	Applicant was indebted to a bank in the amount of $2,174. $2,174	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.n	Applicant is indebted on a delinquent account in the amount of $291. $291	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.o	Applicant was indebted to a bank in the amount of $2,174, which was resolved through Applicant’s Chapter 13 bankruptcy for $691.34. $2,174	For Applicant	Unspecified Financial	Admitted	—	—	—
1.p	Applicant is indebted on a delinquent account in the amount of $291. $291	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.q	Applicant was indebted on a delinquent account in the amount of $3,422, which was resolved through Applicant’s Chapter 13 bankruptcy for a payment of $3,422.49. $3,422	For Applicant	Unspecified Financial	Admitted	—	—	—
1.r	Applicant is indebted on a delinquent account in the amount of $141. $141	Against Applicant	Unspecified Financial	Denied	(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 No. 16-00028 ) ) Applicant for Security Clearance )

For Government: Adrienne Driskill, Esq., Department Counsel For Applicant: Pro se

February 17, 2017 ______________

STATEMENT OF CASE

______________

GOLDSTEIN, Jennifer I., Administrative Judge:

Applicant is alleged to be delinquent on 17 debts, in a total exceeding $128,107. He resolved two of his debts, totaling $5,596. Those debts were resolved through a March 2010 Chapter 13 bankruptcy plan, which was later dismissed in August 2011. Applicant failed to introduce documentation to show his remaining delinquencies have been resolved. Eligibility for access to classified information is denied.

Statement of the Case

On May 21, 2015, Applicant submitted a signed Electronic Questionnaires for Investigations Processing (e-QIP.) On June 8, 2016, the Department of Defense issued a Statement of Reasons (SOR) to Applicant 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; Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) effective September 1, 2006. Applicant answered the SOR on July 1, 2016 (Answer), and requested a hearing before an administrative judge. The case was assigned to me on August 17, 2016. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on August 23, 2016, scheduling the hearing for September 19, 2016. The hearing was convened as scheduled. The Government offered Exhibits (GE) 1 through 5, which were admitted without objection. Applicant testified and offered three exhibits (AE), marked AE A through AE C, which were also admitted without objection. DOHA received the transcript of the hearing (Tr.) on September 28, 2016. The record was left open for Applicant to submit additional exhibits until close of business October 19, 2016. Applicant did not present anything further, and the record then closed on October 20, 2016.

FINDINGS OF FACT

Applicant is 37 years old. He has been employed by his current employer, a defense contractor, since September 2014. Applicant lives with his fiancée and has three children, ages 16, 11, and an infant. His 16-year old and 11-year old are from a prior relationship and are the subjects of the child support dispute discussed below. (GE 1; Tr.

As listed in the SOR, Applicant was alleged to be delinquent on 17 debts in a total exceeding $128,107, and to have filed for Chapter 13 bankruptcy in 2010. Applicant admitted SOR allegations 1.b, 1.c, 1.g, 1.h, 1.i, 1.j, 1.k, and 1.l. He denied SOR allegations 1.a, 1.d, 1.e, and 1.f. He failed to admit or deny subparagraphs 1.mthrough 1.r, and as a result, those subparagraphs are treated as denials. His debts are identified in the credit reports and bankruptcy record entered into evidence. (Answer; GE 3; GE 4; GE 5.) After a thorough and careful review of the pleadings, exhibits, and testimony, I make the following findings of fact.

Applicant attributes his financial delinquencies to a series of events beyond his control. In 2007, he purchased a home. He saved up a down payment on the property while deployed, but financed the rest of the purchase with a mortgage of over $600,000. He was not financially savvy and did not understand the terms of the adjustable rate mortgage he used to finance the purchase of the home. Applicant’s mother passed away in 2009, and he missed mortgage payments because he unexpectedly had to pay for the funeral. As a result of the missed mortgage payments, the mortgage company adjusted his interest rate upward and his monthly payments changed from $2,500 to $5,000. Additionally, in 2010 Applicant was laid off. He was unemployed and attending school from 2010 to 2012. He attempted to find employment during that time, but no permanent positions materialized. (Tr. 31-32.)

Applicant is indebted on a tax lien in the amount of $64, as stated in SOR subparagraph 1.a. He testified that this debt was resolved and referred to AE A, a receipt from the city showing a payment of $46.80 was made on June 28, 2016, as proof of its resolution. However, the court and case numbers identified with this debt in GE 3 do not match any of the numbers on AE A. This debt is not resolved. (GE 3; AE A; Tr. 46-48.) Applicant filed Chapter 13 Bankruptcy in March 2010, as stated in SOR subparagraph 1.b. It was dismissed in August 2011 for failure to make plan payments. Applicant explained that the amount of his monthly payments adjusted upward and he could no longer afford those payments. (Tr. 44.)

Applicant was past due on a $611,013 mortgage in the amount of $80,726, as stated in SOR subparagraph 1.c. This mortgage was for the property discussed above. He testified that the property has been foreclosed upon and he no longer owes anything on this property. However, he failed to support his claim with documentation. It is unresolved. (Tr. 41-42.)

Applicant is indebted for a charged-off account in the amount of $5,586, as stated in SOR subparagraph 1.d. Applicant testified that he was not aware of this debt. It is unresolved. (Tr. 48-49.)

Applicant is indebted on a collections account in the amount of $918, as stated in SOR subparagraph 1.e. Applicant testified that this debt was resolved through the “G.I. Bill.” A credit report dated August 2016 reflected this account had a remaining balance of $293. Applicant indicated he would submit post-hearing documentation to show it was fully resolved. However, he failed to produce documentation to support his claim. It is unresolved. (Tr. 49-50.)

Applicant is indebted on a delinquent account in the amount of $585, as stated in SOR subparagraph 1.f. Applicant testified he was unable to locate this debt and did not know its status. It is unresolved. (Tr. 50-51.)

Applicant is indebted to a city in the amount of $98, as stated in SOR subparagraph 1.g. Applicant claimed this debt was resolved but failed to produce documentation to support his claim. This debt is unresolved. (Tr. 51.)

Applicant is indebted to a collection agent for a city on three accounts in the separate amounts of $554, $360, and $155 as stated in SOR subparagraphs 1.h, 1.i, and 1.j. Applicant testified that he is making monthly payments of $152.33 to resolve these accounts. He produced a payment receipt showing a $152.33 payment was made on June 29, 2016. He submitted no other documentation of payments. These debts are unresolved. (AE B; Tr. 52-53.)

Applicant is indebted to a collection agent for a city for delinquent child support in the amount of $29,000, as stated in SOR subparagraph 1.k. Applicant testified that his pay is being garnished for his delinquent child support but that future child support obligations will not accumulate because he worked out a joint custody agreement with the mother of his children. He testified he owes $24,000 in delinquent child support. His Chapter 13 bankruptcy documentation reflects that his balance may have been reduced to $13,373 at the time of filing. This debt is not fully resolved. (Tr. 25-26.) Applicant is indebted on a tax lien against him in the amount of $23, as stated in SOR subparagraph 1.l. Applicant testified that this debt was related to his late mother’s estate. It is unresolved. (Tr. 56-57.)

Applicant is indebted to a bank on a delinquent account in the amount of $3,530, as stated in SOR subparagraph 1.m. Applicant testified this debt was for a vehicle loan. He believed it was resolved through his bankruptcy. He claimed to have the deed for the vehicle, although the creditor “write like a couple hundred dollars off.” He provided no documentation to support his claim. It is unresolved. (Tr. 57-60.)

Applicant is indebted on a consumer credit account in the amount of $480, as stated in SOR subparagraph 1.n. Applicant claimed he resolved this debt through bankruptcy. However, it does not appear that any funds were dispersed to this creditor upon examination of his Chapter 13 bankruptcy documentation. This debt is unresolved. (GE 5; Tr. 60.)

Applicant was indebted to a bank in the amount of $2,174, as stated in SOR subparagraph 1.o. This debt was resolved through Applicant’s Chapter 13 bankruptcy for $691.34. It is resolved. (GE 4; GE 5; Tr. 61-64.)

Applicant is indebted on a delinquent account in the amount of $291, as stated in SOR subparagraph 1.p. Applicant does not recall what happened with this debt. It is unresolved. (Tr. 64-65.)

Applicant was indebted on a delinquent account in the amount of $3,422, as stated in SOR subparagraph 1.q. This debt was resolved through Applicant’s Chapter 13 bankruptcy for a payment of $3,422.49. It is resolved. (Tr. GE 4; GE 5; Tr. 65.)

Applicant is indebted on a delinquent account in the amount of $141, as stated in SOR subparagraph 1.r. Applicant did not recognize this debt and indicated he would research this debt. However, he submitted nothing further with respect to this account. It is unresolved. (Tr. 65.)

Applicant submitted a one-page performance review. It shows Applicant is dependable and is consistently a good employee. (AE C.)

Applicant provided no household budget showing monthly household expenses. He did not provide a copy of his earnings statement. I am unable to assess his current financial status and his ability or willingness to repay his past-due debts, without more information on his debt to income ratio. The record lacks any evidence of credit or financial counseling. (Tr. 67-69.)

POLICIES

When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the AG. In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which are to be 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, administrative judges apply the guidelines 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. 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.

Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, the 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.” The applicant has the ultimate burden of persuasion to obtain a favorable clearance 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 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 information.

Section 7 of EO 10865 provides that adverse 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 for Financial Considerations is set out in AG ¶ 18, as follows:

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.

AG ¶ 19 describes two conditions that could raise security concerns and may be disqualifying in this case:

(a) inability or unwillingness to satisfy debts; and

Applicant has a history of financial indebtedness documented by the credit reports in evidence, which substantiate all of the allegations. He resolved two debts. He has been unable or unwilling to address the remaining delinquencies. The evidence raises security concerns under both of these disqualifying conditions, thereby shifting the burden to Applicant to rebut, extenuate, or mitigate those concerns.

The guideline includes five conditions in AG ¶ 20 that could mitigate security concerns arising from Applicant’s 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, or a death, divorce or separation), 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’s financial problems are ongoing. Of Applicant’s 17 delinquent accounts, 15 remain unresolved. He has not demonstrated that future financial problems are unlikely. Mitigation under AG ¶ 20(a) has not been established.

Applicant attributed his delinquencies to his unfair mortgage, unemployment, and the unexpected death of his mother. These are circumstances beyond his control. However, he failed to establish that he has acted reasonably or responsibly since gaining full employment with a defense contractor in 2014. He has not demonstrated that he addressed his debts in a timely manner. Mitigation under AG ¶ 20(b) has not been established.

Applicant provided no evidence of financial counseling. Further, there are no clear indications that his financial problems are being resolved or are under control. Mitigation under AG ¶¶ 20(c) or (d) has not been established.

AG ¶ 20(e) requires Applicant to provide documented proof to substantiate the basis of any dispute or provide evidence of actions to resolve the issue. Applicant has not provided evidence of any formal dispute or a basis for one. Mitigation under AG ¶ 20(e) has not been established.

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(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, but some warrant additional comment. Applicant’s debts remain largely unresolved. While he was given the opportunity to document the current status of his debts, he failed to produce evidence of any actions on his remaining delinquent accounts. Overall, the record evidence leaves me with questions and doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant failed to mitigate the Financial Considerations security concerns.

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

Subparagraph 1.a: Against Applicant Subparagraph 1.b: Against Applicant Subparagraph 1.c: Against Applicant Subparagraph 1.d: Against Applicant Subparagraph 1.e: Against Applicant Subparagraph 1.f: Against Applicant Subparagraph 1.g: Against Applicant Subparagraph 1.h: Against Applicant Subparagraph 1.i: Against Applicant Subparagraph 1.j: Against Applicant Subparagraph 1.k: Against Applicant Subparagraph 1.l: Against Applicant Subparagraph 1.m: Against Applicant Subparagraph 1.n: Against Applicant Subparagraph 1.o: For Applicant Subparagraph 1.p: Against Applicant Subparagraph 1.q: For Applicant Subparagraph 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 eligibility for a security clearance. Eligibility for access to classified information is denied.

________________________ Jennifer I. Goldstein Administrative Judge