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ISCR Case 15-08873.h1 — CASE

ISCR Case 15-08873.h1granted

Case Headnote

ISCR Case No. 15-08873.h1

grantedApr 26, 2017· Hon. Braden M. Murphy· hearing

Summary

A 61-year-old defense industry employee was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The Statement of Reasons (SOR) detailed four specific financial delinquencies: a $19,615 charged-off bank debt, a $5,040 past-due consumer account, and two separate entries for past-due student loans totaling $2,024 and $1,024, respectively. These issues raised disqualifying conditions under Adjudicative Guidelines (AG) ¶ 19(a) and AG ¶ 19(c).

However, the applicant successfully demonstrated that all alleged delinquent debts were resolved prior to the issuance of the SOR. He provided documentation that evidenced responsible financial management and a significant improvement in his overall financial situation.

The decision to grant the clearance was based on the application of mitigating conditions AG ¶ 20(a), AG ¶ 20(b), AG ¶ 20(c), and AG ¶ 20(d). The adjudicator concluded that the applicant's financial issues were unlikely to recur, thereby demonstrating good judgment and reliability.

Why the Applicant Prevailed

Applicant resolved all delinquent debts prior to the issuance of the SOR.
He provided documentation showing responsible financial management and improvement in his financial situation.
The applicant's financial issues were unlikely to recur, demonstrating good judgment and reliability.

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(a)appliedBehavior Happened so Long Ago or Infrequently
AG ¶ 20(b)appliedConditions Largely Beyond the Person's Control
AG ¶ 20(c)appliedReceived Counseling or Indications of Resolution
AG ¶ 20(d)appliedGood-faith Effort to Repay or Resolve Debts

Key Rule Quoted

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

Procedural Posture

SOR issuedMay 23, 2016
Answer filedJun 24, 2016Applicant elected to decide on the written record.
Hearing held—No hearing; decided on written record.
Decision dateApr 26, 2017

Cite For

Mitigation of Financial Concerns Under Guideline F
Demonstrating Responsible Financial Management
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 mitigated the financial concerns under Guideline F by demonstrating that all delinquent debts had been paid or resolved. The applicant's eligibility for access to classified information was granted, indicating that his financial issues no longer posed a security risk.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	SOR ¶ 1.a is a $19,615 debt that has been charged off by a bank. $19,615	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.b	SOR ¶ 1.b is a consumer account that is past due for $5,040. $5,040	For Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.c	SOR ¶ 1.c ($2,024) are two past-due student loans. $2,024	For Applicant	Student Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.d	SOR ¶ 1.d ($1,024) are two past-due student loans. $1,024	For Applicant	Student Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full

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. 15-08873 ) Applicant for Security Clearance )

For Government: Douglas Velvel, Esq., Department Counsel For Applicant: Maurice Arcadier, Esq.

04/26/2017 ______________

STATEMENT OF CASE

______________

MURPHY, Braden M., Administrative Judge:

Applicant has mitigated the security concerns under Guideline F, financial considerations by demonstrating that his delinquent debts have been paid or resolved. Applicant’s eligibility for access to classified information is granted.

Statement of the Case

On May 23, 2016, the Department of Defense (DOD) issued to 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 answered the SOR on June 24, 2016, and elected to have his case decided on the written record in lieu of a hearing. On July 24, 2016, Department Counsel submitted the Government’s file of relevant material (FORM), along with documents identified as Items 1 through 5. Applicant received the FORM on August 5, 2016. Applicant was afforded an opportunity to file objections and submit material in refutation, extenuation, or mitigation. Through counsel, Applicant submitted a response on August 26, 2016 with documentation. He did not object to the Government’s evidence. The SOR and the answer (combined as Item 1) are the pleadings in the case. Items 2 through 5 are admitted into evidence without objection. Applicant’s FORM response and the attachments provided with it are marked as Applicant’s Exhibits (AE) A through E and are admitted into evidence without objection. The case was assigned to me on April 10, 2017.

FINDINGS OF FACT

Applicant admitted all four Guideline F allegations in the SOR, with explanations. I have incorporated his answers and relevant comments into the findings of fact. After a thorough and careful review of the pleadings and exhibits submitted, I make the following findings of fact.

Applicant is 61 years old. He and his wife have three children, ages 18, 21 and 23. Applicant has worked in the defense industry for the same employer since 1986. He has had a clearance for his entire career.1 Applicant submitted a security clearance application (SCA) in September 2015. He disclosed on his SCA that he had financial delinquencies.2

The SOR concerns four delinquent accounts. Two of them are credit card or consumer accounts, and two of them are past-due student loans. They are found on Applicant’s February 2016 credit report.3 Applicant admitted each debt in his answer, with explanations but no documents. He provided additional explanations, and supporting documentation, with his FORM response.

The current status of the debts is as follows:

SOR ¶ 1.a is a $19,615 debt that has been charged off by a bank. Applicant indicates that the debt occurred when his wife assumed some of their daughter’s expenses after she became pregnant, and fell behind on other debts, including this one. Applicant paid this debt with funds from his 401(k) account. The Government’s own evidence indicates (and Department Counsel acknowledges in his brief) that the debt was paid and resolved before the SOR was issued.4

SOR ¶ 1.bis a consumer account that is past due for $5,040. Applicant indicates that he negotiated a settlement for $4,032 and that his wife paid about $2,600 towards the debt in February 2015. Upon learning more recently that the account remained outstanding, Applicant took steps to pay the remaining balance, of about $1,422.5

SOR ¶¶ 1.c ($2,024) and 1.d ($1,024) are two past-due student loans. Applicant’s daughter accepts responsibility for them in an affidavit. The accounts are also in good standing.6

Applicant also indicates that his finances are sound. He indicates that he has a monthly income of about $8,000, and monthly expenses of about $4,000. His only current debt obligations are his mortgage and a car payment, which are about $1,250 per month combined. Having worked for his employer for over 30 years, he indicates that he has a vested pension of over $500,000.7 Applicant has received numerous certificates of achievement and recognition throughout his career.8

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 handing and safeguarding classified information.9

AG ¶ 19 provides conditions that could raise security concerns. The following are potentially applicable: (a) inability or unwillingness to satisfy debts; and

Applicant’s delinquent debts are established by the record. There is sufficient evidence to support the application of disqualifying conditions AG ¶¶ 19(a) and 19(c).

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 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; and

(d) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts.

Applicant and his wife fell behind on their debts after their daughter became pregnant. Applicant has shown that he undertook responsible action to resolve the debts, and he has provided documentation that they all have now been paid or are in good standing. Applicant’s credit reports establish that his finances have improved. His financial issues are unlikely to recur and no longer cast doubt on his current reliability, trustworthiness, and good judgment. AG ¶¶ 20(a), 20(b), 20(c) and 20(d) all 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 these guidelines, but some warrant additional comment.

Applicant is a 61-year-old man who has spent most of his adult life as a cleared employee of a defense contractor. He accrued some delinquent debts after his daughter became pregnant. Once he became aware of the debts, he took timely and responsible steps to pay and resolve them. The largest debt was resolved before the SOR was issued. He has a reliable financial track record. His finances are no longer a security concern. He has met his burden of persuasion. The record evidence leaves me without questions or doubts as to Applicant’s eligibility and 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.d: 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’s eligibility for a security clearance. Eligibility for access to classified information is granted.

_____________________________ Braden M. Murphy Administrative Judge

FOOTNOTES

1 Items 2, 3, 5. 2 Items 2, 5. 3 Item 4. 4 Item 4; AE A. 5 FORM Response, AE B. 6 FORM Response, AE A, AE C. 7 FORM Response. 8 AE E. 9 See ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012).