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ISCR Case 16-00088.h1 — CASE

ISCR Case 16-00088.h1denied

Case Headnote

ISCR Case No. 16-00088.h1

deniedJun 19, 2017· Hon. Darlene Lokey Anderson· hearing

Summary

An Administrative Judge denied a security clearance application for a 38-year-old male defense contractor, citing significant financial issues under Guideline F (Financial Considerations). The applicant faced multiple delinquent debts totaling approximately $69,000, which included a foreclosed mortgage of $65,000. Other outstanding debts included a delinquent credit card account for $2,703, a medical account in collections for $652, a cable company account in collections for $374, and two additional collection accounts for $126 and $31 respectively.

The denial was based on the applicant's substantial delinquent debts and his failure to provide evidence of debt resolution, despite claims of having paid several accounts. This financial history raised concerns about his reliability and judgment.

Specifically, the decision highlighted the applicant's lack of self-control and poor judgment in managing his finances. Disqualifying conditions under Adjudicative Guidelines Paragraphs 19(a), 19(b), and 19(c) were raised, leading to the ultimate denial of the security clearance.

Why the Applicant Was Denied

Applicant has significant delinquent debts totaling approximately $69,000, including a foreclosed mortgage.
Applicant failed to provide evidence of debt resolution despite claiming to have paid several debts.
The applicant's financial history demonstrated a lack of self-control and poor judgment.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability or Unwillingness to Satisfy Debts
AG ¶ 19(b)raisedUnwillingness to Satisfy Debts Regardless of the Ability to Do So
AG ¶ 19(c)raisedA History of Not Meeting Financial Obligations

Key Rule Quoted

“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.”

Procedural Posture

SOR issuedJun 15, 2016
Answer filedJul 27, 2016Applicant requested a decision on the written record.
Hearing held—No hearing was held.
Decision dateJun 19, 2017

Cite For

Denial of Security Clearance Due to Significant Financial Issues Under Guideline F
Failure to Provide Evidence of Debt Resolution as a Factor in Security Clearance Decisions
Importance of Demonstrating Financial Responsibility 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: denied

The judge found that the applicant had significant financial issues, including a mortgage foreclosure and multiple delinquent debts totaling approximately $69,000. Despite the applicant's claims of having resolved some debts, the lack of evidence to support these claims led to a decision against the applicant under Guideline F.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant is indebted to a mortgage account in the amount of $65,000. $65,000	Against Applicant	Mortgage or Home Loan Debt	Denied	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.b	Applicant is indebted for a delinquent credit card account in the amount of $2,703. $2,703	Against Applicant	Credit Card Debt	Denied	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.c	Applicant is indebted for a medical account that was placed in collection in the amount of $652. $652	Against Applicant	Medical Debt	Denied	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.d	Applicant is indebted to a cable company for an account that was placed for collection in the amount of $374. $374	Against Applicant	Utility or Phone Debt	Denied	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.e	Applicant is indebted to a creditor for an account that was placed for collection in the amount of $126. $126	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.f	Applicant is indebted to a creditor for an account that has been placed for collection in the amount of $31. $31	Against Applicant	Unspecified Financial	Denied	(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: ) ) ) ISCR Case No. 16-00088 ) ) Applicant for Security Clearance )

For Government: Douglas Velvel, Department Counsel For Applicant: Pro se

June 19, 2017 ______________

STATEMENT OF CASE

______________

LOKEY ANDERSON, Darlene D, Administrative Judge:

Statement of the Case

On February 2, 2015, Applicant submitted a security clearance application (SF- 86). On June 15, 2016, the Department of Defense Consolidated Adjudications Facility (DoD CAF) issued Applicant a Statement of Reasons (SOR), detailing security concerns under Guideline F, Financial Considerations. (Item 1.) The action was taken under Executive Order 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 for Determining Eligibility for Access to Classified Information, effective within the DoD after September 1, 2006.

Applicant answered the SOR on July 27, 2016. He denied all of the SOR allegations concerning his bankruptcy filings and delinquent debts, and requested that his case be decided by an administrative judge on the written record without a hearing. (Item 1.) On August 12, 2016, Department Counsel submitted the Government’s written case. A complete copy of the File of Relevant Material (FORM), containing 4 Items, was mailed to Applicant on August 15, 2016, and received by him on August 24, 2016. The FORM notified Applicant that he had an opportunity to file objections and submit material in refutation, extenuation, or mitigation within 30 days of his receipt of the FORM.

Applicant responded to the FORM on September 22, 2016, and submitted a one page document, admitted without objection. He did not object to Items 1 through 4 of the FORM. DOHA assigned the case to me on June 5, 2016.

The SOR in this case was issued under the adjudicative guidelines that came into effect within the DoD on September 1, 2006. Security Executive Agent Directive (SEAD) 4, National Security Adjudicative Guidelines, implements new adjudicative guidelines, effective June 8, 2017. All national security eligibility decisions issued on or after June 8, 2017, are to be decided using the new National Security Adjudicative Guidelines for Determining Eligibility for Access to Classified Information or Eligibility to Hold a Sensitive Position (AG), as implemented by SEAD 4. I considered the previous adjudicative guidelines, effective September 1, 2006, as well as the new AG, effective June 8, 2017, in adjudicating Applicant’s national security eligibility. My decision would be the same under either set of guidelines, although this decision is issued pursuant to the new AG.

FINDINGS OF FACT

Applicant is 38 years old. He is married with three children and two adult step children. He has a high school diploma and some college and technical school training. He is employed with a defense contractor as a Instrumentation Technician. He is seeking to obtain a security clearance in connection with his employment.

Guideline F - Financial Considerations

The Government alleged that Applicant is ineligible for a clearance because he made financial decisions that indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which raise questions about his reliability, trustworthiness, and ability to protect classified information. The SOR identified six debts totaling approximately $69,000. These debts include a past due mortgage account in the amount of $65,000 and approximately $3,868 in other miscellaneous debts. Credit Reports of Applicant dated August 26, 2015, confirm this indebtedness. (Applicant’s Exhibit 3.)

Applicant attributes his financial problems to his failed efforts to maintain two homes during a period when he was accommodating his wife’s efforts to care for his wife’s sister who had cancer in 2010. Applicant states that he was already having problems paying his bills. As a first time home buyer, Applicant was not experienced with the mortgage adjustments; and when his adjusted, without a loan modification, he was unable to meet his obligations. As a result, several debts became seriously delinquent. (Answer to SOR.) 1(a) One of the homes was foreclosed upon. Applicant is indebted to a mortgage account in the amount of $65,000. Applicant states that he is presently in the process of discussing damage-mitigation options with a VA representative. (Answer to SOR, and Response to FORM.)

1(b) Applicant is indebted for a delinquent credit card account in the amount of $2,703. Applicant claims that he has paid the debt. No evidence of the debt satisfaction has been provided. (Answer to SOR, and Response to FORM.)

1(c) Applicant is indebted for a medical account that was placed in collection in the amount of $652. Applicant claims that he has paid the debt. No evidence of the debt satisfaction has been provided. (Answer to SOR, and Response to FORM.)

1(d) Applicant is indebted to a cable company for an account that was placed for collection in the amount of $374. Applicant claims that he has paid the debt. No evidence of the debt satisfaction has been provided. (Answer to SOR, and Response to FORM.)

1(e) Applicant is indebted to a creditor for an account that was placed for collection the amount of $126. Applicant claims that he has paid the debt. No evidence of the debt satisfaction has been provided. (Answer to SOR, and Response to FORM.)

1(f) Applicant is indebted to a creditor for an account that has been placed for collection in the amount of $31. Applicant claims that he had paid the debt. No evidence of the debt satisfaction has been provided. (Answer to SOR, and Response to FORM.)

Applicant admits that at one time he was financially overextended. He ignored his debts for a period and focused on taking care of his family of five, not including the random assistance he gives his step children. When he learned that his security clearance may be in jeopardy, he tapped into his 401K retirement account in an effort to address the debts. He states that with the exception of the home foreclosure, he has resolved all of his other debts. He further states that his finances have been stable since the passing of his sister in law. (Answer to SOR, and Response to FORM.)

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 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(a) describing the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense 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 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 the 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, 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 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:

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. 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 risk of having to engage in illegal acts 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 security concerns under AG ¶ 19. Three are potentially applicable in this case:

(a) inability or unwillingness to satisfy debts;

(b) unwillingness to satisfy debts regardless of the ability to do so; and

Applicant’s home was foreclosed upon, and he fell seriously delinquent with other creditors. He accumulated a significant amount of delinquent debt. His actions demonstrated both a history of not addressing his debt and an inability to do so. The evidence is sufficient to raise the above disqualifying conditions.

There are no mitigating conditions under the Financial Considerations guideline that are applicable here. Applicant claims that he has paid four of the five debts, however, he has provided no payment receipts or anything else to prove that he has resolved the debts. He was given the opportunity to provide these documents and failed to respond. It does cast doubt on his current reliability, trustworthiness, or good judgment.

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(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 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 relevant facts and circumstances surrounding this case. I conclude Applicant has not mitigated Financial Considerations security concerns.

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.~f.: 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 or continue Applicant’s eligibility for a security clearance. Eligibility for access to classified information is denied.

________________________ Darlene Lokey Anderson Administrative Judge