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ISCR Case 16-00094.h1 — CASE

ISCR Case 16-00094.h1granted

Case Headnote

ISCR Case No. 16-00094.h1

grantedJan 23, 2017· Hon. Mark W. Harvey· hearing

Summary

A 45-year-old communications systems engineer was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The Statement of Reasons (SOR) detailed multiple financial allegations, including a charged-off bank debt of $2,554, which the applicant paid in full on July 29, 2016. Another collection account for $308 was settled and paid for $200 on June 27, 2016.

The applicant also addressed several other debts. A $350 bank debt was initially put on a $29 monthly payment plan on June 27, 2016, and subsequently resolved with a $233 payment on October 19, 2016. For a $929 bank debt and a $1,219 bank debt, $77 and $102 monthly payment plans were established, respectively, on June 27, 2016. By October 18, 2016, the applicant had made four payments on each, reducing the balances to $619 and $812. The applicant also contacted creditors regarding four collection accounts totaling $1,970 and disputed a $303 store debt as a duplication.

The decision to grant the clearance was based on the applicant's demonstrated progress in resolving his financial issues. He paid three SOR debts in full, established payment plans for others, and provided credible assurances to resolve any disputed debts once verified. The judge concluded that the applicant's financial situation was being managed responsibly, leading to the favorable outcome.

Why the Applicant Prevailed

Applicant paid three SOR debts in full and established payment plans for others.
He provided credible assurances to resolve a disputed debt once verified.
The applicant's financial situation showed improvement and responsible management.

Conditions Referenced

Disqualifying

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

Mitigating

AG ¶ 20(a)appliedBehavior Happened Long Ago or Infrequently
AG ¶ 20(c)appliedReceived Counseling and Problem Is Under Control
AG ¶ 20(d)appliedGood-faith Effort to Repay Overdue Creditors

Key Rule Quoted

“Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines.”

Procedural Posture

SOR issuedJun 10, 2016
Answer filedJul 11, 2016
Hearing heldOct 25, 2016
Decision dateJan 23, 2017

Cite For

Mitigation of Financial Issues Under Guideline F
Good-faith Efforts in Debt Repayment
Whole-person Analysis in Security Clearance Decisions

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 had made sufficient progress in resolving his financial debts, having paid off several debts and established payment plans for others. The financial considerations security concerns were mitigated, leading to the granting of the applicant's eligibility for access to classified information.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	SOR ¶ 1.a alleges a charged-off bank debt for $2,554. Applicant paid this debt in full on July 29, 2016. $2,554	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(d) good-faith effort to repay or otherwise resolve debts	Credited Debt Paid in Full
1.b	SOR ¶ 1.b alleges a collection account for a $308 debt. On June 27, 2016, Applicant settled and paid the debt for $200. $308	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(d) good-faith effort to repay or otherwise resolve debts	Credited Debt Paid in Full
1.c	SOR ¶ 1.c alleges a collection account for a $350 bank debt. On June 27, 2016, Applicant and the creditor agreed to establish a $29 monthly payment plan to address the $350 debt. On October 19, 2016, Applicant paid $233 and resolved the $350 bank debt. $350	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(d) good-faith effort to repay or otherwise resolve debts	Credited Debt Paid in Full
1.d	SOR ¶ 1.d alleges a collection account for a $929 bank debt. On June 27, 2016, Applicant and the creditor agreed to establish a $77 monthly payment plan to address the $929 debt. On October 18, 2016, the creditor wrote that Applicant had made the first four monthly payments, and the current balance owed is $619. $929	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(d) good-faith effort to repay or otherwise resolve debts	Credited Payment Plan with Creditor
1.e	SOR ¶ 1.e alleges a collection account for $1,375. Applicant has contacted the creditor for the four accounts, and he was told that he owed $1,970. $1,375	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	Claimed Debt Disputed with Creditor
1.f	SOR ¶ 1.f alleges a collection account for $1,135. Applicant has contacted the creditor for the four accounts, and he was told that he owed $1,970. $1,135	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	Claimed Debt Disputed with Creditor
1.g	SOR ¶ 1.g alleges a collection account for $73. Applicant has contacted the creditor for the four accounts, and he was told that he owed $1,970. $73	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	Claimed Debt Disputed with Creditor
1.h	SOR ¶ 1.h alleges a collection account for $42. Applicant has contacted the creditor for the four accounts, and he was told that he owed $1,970. $42	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	Claimed Debt Disputed with Creditor
1.i	SOR ¶ 1.i alleges a collection account owed to a store for $303. Applicant said this debt was a duplication of the debt in SOR ¶ 1.c. $303	For Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.j	SOR ¶ 1.j alleges a collection account for a $1,219 bank debt. On June 27, 2016, Applicant and the creditor agreed to establish a $102 monthly payment plan to address the $1,219 debt. On October 18, 2016, the creditor wrote that Applicant had made the first four monthly payments, and the current balance owed is $812. $1,219	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(d) good-faith effort to repay or otherwise resolve debts	Credited Payment Plan with Creditor

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. 16-00094 ) ) Applicant for Security Clearance

For Government: Aubrey M. De Angelis, Esq., Department Counsel For Applicant: Pro se

01/23/2017 ___________

STATEMENT OF CASE

___________

HARVEY, Mark, Administrative Judge:

Applicant made sufficient progress resolving the debts alleged in his statement of reasons (SOR). He paid three SOR debts; three SOR debts are in established payment plans; and one SOR debt is a duplication of another SOR debt. Applicant is seeking validation of a debt owed to an SOR creditor of about $1,970, and he assures he will establish a payment plan once the debt is verified. Financial considerations security concerns are mitigated. Eligibility for access to classified information is granted.

Statement of the Case

On January 20, 2015, Applicant signed his Questionnaire for National Security Positions (SF 86) or security clearance application (SCA). (Government Exhibit (GE) 1) On June 10, 2016, the Department of Defense (DOD) Consolidated Adjudications Facility (CAF) issued an SOR to Applicant pursuant to Executive Order (Exec. Or.) 10865, Safeguarding Classified Information Within Industry; DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (Directive); and the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information (AG), which became effective on September 1, 2006.

The SOR detailed reasons why the DOD CAF did not find under the Directive that it is clearly consistent with the national interest to grant or continue a security clearance for Applicant, and recommended referral to an administrative judge to determine whether a clearance should be granted, continued, denied, or revoked. (Hearing Exhibit (HE) 2) Specifically, the SOR set forth security concerns arising under Guideline F (financial considerations).

On July 11, 2016, Applicant responded to the SOR and requested a hearing. On July 20, 2016, Department Counsel was ready to proceed. On September 16, 2016, the case was assigned to me. On September 30, 2016, the Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing, setting the hearing for October 25, 2016. (HE 1) The hearing was held as scheduled.

During the hearing, Department Counsel offered 10 exhibits; Applicant offered 8 exhibits; and all proffered exhibits were admitted without objection. (Tr. 15-21; Government Exhibits (GE) 1-10; Applicant Exhibits (AE) A-H) On November 1, 2016, DOHA received a copy of the transcript of the hearing.

Findings of Fact1

In Applicant’s SOR response, he admitted to at some point owing the debts in SOR ¶¶ 1.a through 1.hand 1.j. He denied knowledge of the debt in SOR ¶ 1.i. He also provided extenuating and mitigating information. Applicant’s admissions are accepted as findings of fact.

Applicant is a 45-year-old communications systems engineer, who has worked for his employer since 2003. (Tr. 6, 25-26; GE 1) In 1989, he graduated from high school. (Tr. 6) Applicant has an associate’s degree in science and an associate’s degree in arts. (Tr. 7) In 2003, he received a bachelor of science degree in electrical engineering. (Tr. 7) He served in the Army from 1989 to 1996. (Tr. 7-8) He left active duty as a specialist (E- 4), and he received an honorable discharge. (Tr. 8)

In 1992, Applicant married, and in 1997, he divorced. (Tr. 8) In 2001, he married, and in 2005, he divorced. (Tr. 9) In 2012, he married his current spouse. (Tr. 9, 13) He has a 14-year-old son. (Tr. 9) He is current on his child support. (Tr. 9)

Financial Considerations

For several years after Applicant completed college, he was financially stressed because of paying his student loans, and he used a debt consolidation plan to resolve his delinquent debts. (Tr. 30-31) Applicant fell behind on his finances because he sent his son to an expensive private school, and he lived in an expensive area of the country. (Tr. 28, 36) Now that his son will be attending public school, he will have an additional $700 available monthly for his debts. (Tr. 36-37, 39) He maintains a low balance on his credit cards, and he is trying to build his credit score. (Tr. 28) He is systematically reducing the amount of his debt. (Tr. 28) His student loans briefly went into a garnishment; however,

available in the cited exhibits. they are current at this time. (Tr. 33-34) He owes $31,000 in student loans, and he has paid about $10,000 to address his student loans. (Tr. 35) His current monthly student loan payments are $431. (Tr. 36) His annual salary is $109,000, and his spouse’s annual salary is about $48,000. (Tr. 37-38) He has $61,000 in a 401(k) account. (Tr. 41) He has had financial counseling, and he utilizes an informal budget to control expenditures. (Tr. 46-49)

Applicant’s history of delinquent debt is documented in his credit reports, SOR response, and hearing record. The status of his SOR debts is as follows:

SOR ¶ 1.a alleges a charged-off bank debt for $2,554. Applicant paid this debt in full on July 29, 2016. (Tr. 22-23; AE B; AE C)

SOR ¶ 1.balleges a collection account for a $308 debt. On June 27, 2016, Applicant settled and paid the debt for $200. (Tr. 23; AE B; AE D)

SOR ¶ 1.calleges a collection account for a $350 bank debt. On June 27, 2016, Applicant and the creditor agreed to establish a $29 monthly payment plan to address the $350 debt. (AE E) On October 19, 2016, Applicant paid $233 and resolved the $350 bank debt. (Tr. 23; AE E)

SOR ¶ 1.dalleges a collection account for a $929 bank debt. On June 27, 2016, Applicant and the creditor agreed to establish a $77 monthly payment plan to address the $929 debt. (AE F) On October 18, 2016, the creditor wrote that Applicant had made the first four monthly payments, and the current balance owed is $619. (AE F)

SOR ¶¶ 1.e through 1.halleges four collection accounts for $1,375; $1,135; $73; and $42. Applicant has contacted the creditor for the four accounts, and he was told that he owed $1,970. (Tr. 23-24, 51) He asked the creditor to provide information so that he could verify the amount of the debt. (Tr. 24) Once the amount of the debt is verified, he intends to establish a payment plan. (Tr. 24)

SOR ¶ 1.i alleges a collection account owed to a store for $303. Applicant said this debt was a duplication of the debt in SOR ¶ 1.c. (Tr. 24)

SOR ¶ 1.jalleges a collection account for a $1,219 bank debt. On June 27, 2016, Applicant and the creditor agreed to establish a $102 monthly payment plan to address the $1,219 debt. (AE H) On October 18, 2016, the creditor wrote that Applicant had made the first four monthly payments, and the current balance owed is $812. (AE H)

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 security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). 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.” Id. at 527. The President has authorized the Secretary of Defense or his designee to grant applicant’s eligibility for access to classified information “only upon a finding that it is clearly consistent with the national interest to do so.” Exec. Or. 10865, Safeguarding Classified Information within Industry § 2 (Feb. 20, 1960), as amended.

Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, these guidelines are applied in conjunction with an evaluation of the whole person. An administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. An administrative judge must consider all available, reliable information about the person, past and present, favorable and unfavorable.

The Government reposes a high degree of trust and confidence in persons with access to classified information. This relationship transcends normal duty hours and endures throughout off-duty hours. 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 about potential, rather than actual, risk of compromise of classified information. Clearance decisions must be “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See Exec. Or. 10865 § 7. Thus, nothing in this decision should be construed to suggest that it is based, in whole or in part, on any express or implied determination about applicant’s allegiance, loyalty, or patriotism. It is merely an indication the applicant has not met the strict guidelines the President and the Secretary of Defense have established for issuing a clearance.

Initially, the Government must establish, by substantial evidence, conditions in the personal or professional history of the applicant that may disqualify the applicant from being eligible for access to classified information. The Government has the burden of establishing controverted facts alleged in the SOR. See Egan, 484 U.S. at 531. “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). The guidelines presume a nexus or rational connection between proven conduct under any of the criteria listed therein and an applicant’s security suitability. See ISCR Case No. 95-0611 at 2 (App. Bd. May 2, 1996).

Once the Government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. Directive ¶ E3.1.15. An applicant “has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue his security clearance.” ISCR Case No. 01-20700 at 3 (App. Bd. Dec. 19, 2002). The burden of disproving a mitigating condition never shifts to the Government. See ISCR Case No. 02-31154 at 5 (App. Bd. Sep. 22, 2005). “[S]ecurity clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531; see AG ¶ 2(b).

ANALYSIS

Financial Considerations

AG ¶ 18 articulates the security concern for financial problems:

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 provides two disqualifying conditions that could raise a security concern and may be disqualifying in this case: “(a) inability or unwillingness to satisfy debts;” and “(c) a history of not meeting financial obligations.” Applicant’s history of delinquent debt is documented in his credit reports, SOR response, and hearing record. The Government established the disqualifying conditions in AG ¶¶ 19(a) and 19(c) requiring additional inquiry about the possible applicability of mitigating conditions.

Five 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;

(d) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts;2 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.

The Appeal Board concisely explained Applicant’s responsibility for proving the applicability of mitigating conditions as follows:

Once a concern arises regarding an Applicant’s security clearance eligibility, there is a strong presumption against the grant or maintenance of a security clearance. See Dorfmont v. Brown, 913 F. 2d 1399, 1401 (9th Cir. 1990), cert. denied, 499 U.S. 905 (1991). After the Government presents evidence raising security concerns, the burden shifts to the applicant to rebut or mitigate those concerns. See Directive ¶ E3.1.15. The standard applicable in security clearance decisions is that articulated in Egan, supra. “Any doubt concerning personnel being considered for access to classified information will be resolved in favor of the national security.” Directive, Enclosure 2 ¶ 2(b).

ISCR Case No. 10-04641 at 4 (App. Bd. Sept. 24, 2013).

AG ¶¶ 20(a), 20(c), and 20(d) apply. Applicant’s delinquent debts were caused by living in an expensive area of the country; his support for his son; and the requirement to address his student loans. He acted responsibly by paying three SOR debts and establishing payment plans for two SOR debts.

Applicant paid the debts in SOR ¶¶ 1.a ($2,554), 1.b ($308), 1.c ($350), and he has an established payment plan to address the debts in SOR ¶¶ 1.d ($929) and 1.j ($1,219). The debt in SOR ¶ 1.i ($303) is a duplication of the debt in SOR ¶ 1.c ($350). The four debts in SOR ¶¶ 1.e ($1,375), 1.f ($1,135), 1.g ($73), and 1.h ($42) are actually a single medical-collection debt for $1,970, and Applicant is waiting for verification of the debt to begin a payment plan.

Based on Applicant’s credible and sincere promise to pay his debts and his track record of paying his debts, future new delinquent debt “is unlikely to recur and does not cast doubt on [Applicant’s] current reliability, trustworthiness, or good judgment,” and “there are clear indications that the problem is being resolved or is under control.” His payments of his debts showed good faith. He has sufficient income to keep his debts in current status and to continue making progress paying his remaining debts. I am confident that Applicant will conscientiously endeavor to maintain his financial responsibility. His efforts are sufficient to mitigate financial considerations security concerns.

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 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 is a 52-year-old employee of a defense contractor. He has been employed as a supervisor in shipping and receiving or in manufacturing support for 23 years. There is no evidence of security violations.

Applicant paid three SOR debts, and three SOR debts are in established payment plans. One SOR debt is a duplication. Applicant is seeking validation of a debt owed to a SOR creditor of about $1,970, and he assures he will establish a payment plan once the debt is verified. His 401(k) account contains about $61,000. His current family annual income is $157,000 and he has sufficient income to pay his expenses and debts. He assures he intends to pay his debts, and he understands the conduct required to retain his security clearance. The Appeal Board has addressed a key element in the whole- person analysis in financial cases stating:

. . . 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 has paid off each and every debt listed in the SOR. All that is required is that an applicant demonstrate that he has . . . established a plan to resolve his 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 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.

ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008) (internal citations and quotation marks omitted). Applicant has established a “meaningful track record” of debt re-payment, and I am confident he will maintain his financial responsibility.

I have carefully applied the law, as set forth in Egan, Exec. Or. 10865, the Directive, and the AGs, to the facts and circumstances in the context of the whole person. Financial considerations security concerns are mitigated.

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 through 1.i: For Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is clearly consistent with national security to grant or continue Applicant’s eligibility for a security clearance. Eligibility for access to classified information is granted.

_________________________ MARK HARVEY Administrative Judge

FOOTNOTES

1 Some details have been excluded to protect Applicant’s right to privacy. Specific information is 2The 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) 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)).