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ISCR Case 16-00163.h1 — CASE

ISCR Case 16-00163.h1denied

Case Headnote

ISCR Case No. 16-00163.h1

deniedMar 9, 2017· Hon. Robert J. Tuidar· hearing

Summary

A 71-year-old senior design checker was denied a security clearance under Guideline F (Financial Considerations) due to significant unresolved financial issues. The applicant faced disqualifying conditions related to his substantial debts, which totaled $98,678 and included multiple foreclosures.

Despite the applicant's assertion of financial stability based on his retirement income, the judge found a lack of evidence demonstrating effective debt resolution or a clear plan for financial management. Specifically, the applicant failed to provide documentation showing that his significant debts had been resolved or were being actively managed.

Consequently, the applicant did not adequately demonstrate financial responsibility or a viable strategy to address his outstanding financial obligations. This led to the denial of his security clearance.

Why the Applicant Was Denied

The applicant failed to provide evidence of resolving or managing his significant debts.
The applicant did not demonstrate financial responsibility or a plan to address his financial issues.

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

“"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 4, 2016
Answer filedJun 24, 2016
Hearing heldNov 30, 2016
Decision dateMar 9, 2017

Cite For

Failure to Mitigate Financial Concerns Under Guideline F
Insufficient Evidence of Debt Resolution
Impact of Financial Irresponsibility on Security Clearance Eligibility

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 failed to mitigate financial concerns under Guideline F, which included multiple debts totaling $98,678, three mortgage foreclosures, and a charged-off credit card account. The applicant admitted to the debts but did not provide sufficient evidence to demonstrate that he was addressing these financial issues, leading to a denial of his security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a–1.n	14 sub-charges — specific text not stated in this decision (against the applicant).	Against Applicant			—	—	—

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. 16-00163 ) Applicant for Security Clearance )

For Government: Tovah Minster, Esq., Department Counsel For Applicant: Gregory F. Greiner, Esq.

03/09/2017 __________

STATEMENT OF CASE

__________

TUIDER, Robert J., Administrative Judge:

Applicant failed to mitigate security concerns under Guideline F (financial considerations). Clearance is denied.

Statement of the Case

On March 30, 2015, Applicant submitted a Questionnaire for National Security Positions (SF-86). On June 4, 2016, the Department of Defense Consolidated Adjudications Facility (DOD CAF) issued a Statement of Reasons (SOR) to Applicant, pursuant to Exec. Or. 10865, Safeguarding Classified Information Within Industry, dated February 20, 1960, as amended; DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (Directive), dated January 2, 1992, as amended; and the adjudicative guidelines (AG), which became effective on September 1, 2006.

The SOR alleged security concerns under Guideline F. The SOR detailed reasons why the DOD CAF was unable to find that it is clearly consistent with the national interest to grant a security clearance for Applicant, and it recommended that his case be submitted to an administrative judge for a determination whether his clearance should be granted or denied. On June 24, 2016, Applicant responded to the SOR. On August 1, 2016, Department Counsel was ready to proceed. On August 4, 2016, DOHA assigned Applicant’s case to me. On October 19, 2016, the Defense Office of Hearings and Appeals (DOHA) issued a hearing notice, setting the hearing for November 30, 2016. Applicant’s hearing was held as scheduled.

At the hearing, Department Counsel offered Government Exhibits (GE) 1 through 8, which were received into evidence without objection. Applicant testified, did not call any witnesses, and did not offer any exhibits. On December 8, 2016, DOHA received the hearing transcript (Tr.).

FINDINGS OF FACT

Applicant admitted all of the SOR allegations except for SOR ¶ 1.i, which he denied. After a thorough review of the record, I make the following findings of fact.

Background Information

Applicant is a 71-year-old senior design checker previously employed by a defense contractor. At the time of his hearing, he was in a “dormant stage” seeking a security clearance to enhance his employment potential (Tr. 15-18, 22-25; GE 1)

Applicant graduated from high school in 1963. After high school, he attended community college and earned approximately 30 credit hours, but did not graduate. (Tr. 18-19; GE 1) Applicant was married from 1967 to 1984, and that marriage ended by divorce. He remarried in 2001. Applicant has five adult children and one stepchild. Applicant did not serve in the armed forces. (Tr. 19-21; GE 1)

Financial Considerations

Applicant’s SOR contains 14 allegations consisting of 10 itemized debts totaling $98,678, three mortgage foreclosures – two that occurred in 2010 and one that occurred in 2012, and a charged-off credit card account for an undisclosed amount. These allegations are documented in Applicant’s May 2011 and March 2015 SF-86s, June 2011 and August 2015 Office of Personnel Management Personal Subject Interviews (OPM PSI), and May 2011, April 2015, December 2015, and July 2016 credit reports. (SOR ¶¶ 1.a – n; GE 1 – 8; Tr. 28-36)

Applicant attributes his financial difficulties to buying homes for his children when the housing market was at its peak. However, when the housing market crashed, the properties “were worth less than half of what we owed and our children bailed on the properties and we were stuck with mortgage payments and no rental income. We tried renting the properties and couldn’t rent for what our mortgage payments were.” (SOR answer) When Applicant was in his “early 60s,” approximately ten years ago, he bought three homes and a mobile home at the peak of the housing market. He bought those homes with the belief “the market would continue to go up,” adding “I didn’t buy them with the intention of losing money.” As noted, he bought these homes to help his children, but they moved out and Applicant attempted to replace them with renters. He was unable to charge enough rent to cover the mortgages and used credit cards to upgrade the properties and cover rental expenses. (Tr. 26-36, 53-55)

Applicant received correspondence from several credit card companies offering to reduce the amounts owed, but he was unable to repay the requested amounts. The last time Applicant received any communication with any creditor was “a couple two, three years” ago. He received a Form 1099 from one of his creditors writing off a debt, but he could not offer specific details about the debt. (Tr. 36-38) Applicant considered filing bankruptcy, but decided against doing so because of his age and not all debts were eligible for discharge as well as concern about jeopardizing his clearance eligibility. (Tr. 38-40) He has not made any payments on his credit cards since “around 2011.” (Tr. 63-64)

Applicant and his wife live in a senior citizen gated community, own three cars, valued at “about $80,000,” and are able to live comfortably on his monthly retirement income of $14,000 net a month. (Tr. 40-42, 46-48) Applicant does not believe that he is irresponsible and maintains that he has re-established his credit that was “previously destroyed because of these foreclosures and credit card debts.” (Tr. 43) He does not use his money to pay off his outstanding debts because his wife cannot work and he wants to provide for her in the event something should happen to him. (Tr. 43) Applicant asked that his clearance be granted so he could continue to work. He maintains that he is trustworthy and has a long history of following security procedures. (Tr. 44-46)

The record lacks any evidence that Applicant paid, arranged to pay, settled, compromised, or otherwise resolved any of the delinquent SOR accounts. He did not describe financial counseling or present a budget. (Tr. 55)

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. See also Executive Order 12968 (Aug. 2, 1995), § 3.1. Thus, nothing in this Decision should be construed to suggest that I have based this decision, 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 her 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

The Government met its burden of production in support of the allegations in the SOR. The facts established raise a security concern addressed, in relevant part, at 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.

More specifically, available information requires application of the disqualifying conditions at AG ¶ 19(a) (inability or unwillingness to satisfy debts; and 19(c) (a history of not meeting financial obligations). In response to the Government’s information, it was incumbent on Applicant to produce information sufficient to refute or mitigate the facts established against him. He did not submit any documents in response to the SOR that demonstrated he paid or otherwise resolved any of his debts or financial concerns raised.

In summary, Applicant did not mitigate the security concerns raised by the Government’s information. In addition to evaluating the facts and applying the appropriate adjudicative factors under Guideline F, I have reviewed the record before me in the context of the whole-person factors listed in AG ¶ 2(a). Applicant has been gainfully employed for the majority of his adult life, and he is presumed to be a mature, responsible citizen. Nonetheless, without other information suggesting his financial problems are being addressed, doubts remain about his suitability for access to classified information. Protection of the national interest is the principal focus of these adjudications. Accordingly, those doubts must be resolved against the Applicant.

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

Subparagraph 1.a – 1.n: Against Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is not clearly consistent with national security to grant Applicant eligibility for a security clearance. Clearance is denied.

_________________ ROBERT J. TUIDER Administrative Judge