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ISCR Case 16-00270.h1 — CASE

ISCR Case 16-00270.h1denied

Case Headnote

ISCR Case No. 16-00270.h1

deniedMay 22, 2017· Hon. Martin H. Mogul· hearing

Summary

A 43-year-old married male with a military background was denied a security clearance under Guideline F, Financial Considerations. The denial stemmed from significant unresolved debts exceeding $40,000, which included repossessions. Disqualifying conditions were raised under AG ¶ 19(a) and AG ¶ 19(c).

Despite filing for bankruptcy shortly before the hearing, this action was deemed too recent to establish a track record of financial stability or debt resolution. The applicant also failed to demonstrate financial responsibility or a plan for managing future debts, notably lacking a budget. Concerns were further exacerbated by a recent timeshare purchase made despite existing financial difficulties.

While mitigating condition AG ¶ 20(b) was applied, it was insufficient to overcome the concerns regarding the applicant's reliability and judgment. The judge found inadequate evidence of financial responsibility or a clear path to resolving the outstanding debts, leading to the denial of the security clearance.

Why the Applicant Was Denied

The applicant has significant unresolved debts totaling over $40,000, including repossessions and a recent timeshare purchase despite financial difficulties.
The applicant failed to demonstrate financial responsibility or a plan to manage future debts, including not having a budget in place.
The applicant's bankruptcy filing was too recent to establish a track record of financial stability or resolution of debts.

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(b)rejectedConditions Largely Beyond the Person's ControlThe applicant did not act responsibly under the circumstances despite some financial challenges being due to unemployment.

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 17, 2016
Hearing heldAug 31, 2016
Decision dateMay 22, 2017

Cite For

Denial of Security Clearance Due to Unresolved Financial Issues Under Guideline F
Insufficient Evidence of Financial Responsibility and Planning
Impact of Recent Bankruptcy Filing 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 significant financial concerns under Guideline F, with the applicant having a total of $46,616 in debts, including repossessions and a recent bankruptcy filing. Despite the applicant's claims of financial counseling and attempts to file for bankruptcy, the judge concluded that the applicant did not demonstrate sufficient financial responsibility or resolution of debts, leading to a decision against the applicant.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a–1.w	23 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. 16-00270 ) ) Applicant for Security Clearance )

For Government: Andrew Henderson, Esq., Department Counsel For Applicant: Pro se

May 22, 2017 ______________

STATEMENT OF CASE

______________

MOGUL, Martin H., Administrative Judge:

Statement of the Case

On June 4, 2016, the Department of Defense (DoD) issued a Statement of Reasons (SOR) detailing the security concerns under Guideline F for Applicant. The action was taken under Executive Order 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); and the adjudicative guidelines (AG), effective within the Department of Defense for SORs issued after September 1, 2006.

On June 17, 2016, Applicant replied to the SOR (RSOR) in writing, and he requested a hearing before an Administrative Judge (AJ). The case was assigned to this AJ on July 25, 2016. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on August 8, 2016, and the hearing was convened as scheduled on August 31, 2016. At the hearing, the Government offered Exhibits 1 through 7, which were received without objection. Applicant testified on his own behalf and submitted Exhibit A, which was also admitted without objection. The record was kept open until September 14, 2016, to allow Applicant to submit additional evidence. The documents that were timely received have been identified and entered into evidence without objection as Exhibits B through E. DOHA received the transcript of the hearing (Tr) on September 9, 2016. Based upon a review of the pleadings, exhibits, and the testimony of Applicant, eligibility for access to classified information is denied.

FINDINGS OF FACT

After a complete and thorough review of the evidence in the record, including Applicant's RSOR, the admitted documents, and the testimony of Applicant, and upon due consideration of that evidence, I make the following findings of fact:

Applicant is 43 years old. He is married, and he has three biological children and one adopted child. He was married one time before. Applicant received some college credits. He served in the United States Army for five years, and he received an Honorable Discharge. He reenlisted in 2007, and served for an additional five years, until 2013, when he was medically separated. He also received another Honorable Discharge. Applicant is employed by a Government contractor as a Cable Technician, and he seeks a DoD security clearance in connection with his employment in the defense sector.

Guideline F, Financial Considerations

The SOR lists 23 allegations (1.a. through 1.w.) regarding financial difficulties, specifically overdue debts, under Adjudicative Guideline F. The debts that were incurred over many years total $46,616. Applicant admitted all of the SOR allegations in his RSOR with the exceptions of 1.i. and 1.o., which he denied, 1.g. and 1.w., which Applicant claimed were debts that he paid off, and 1.j., which Applicant claimed he owed less than was alleged on the SOR. The total of undisputed delinquent debts is $40,213. All of the SOR debts were established by Exhibits 3, 4, and 5. Applicant has not proven that any of these debts has been resolved.

The SOR delinquent debts included but were not limited to: two vehicles that were repossessed as recently as a few months before the hearing for failure to make payments, and several credit cards and loans. Applicant even purchased a timeshare in 2015, which has become delinquent. When Applicant was asked why he bought a timeshare as recently as 2015, when he had so many overdue debts, he could give no reasonable answer. (Tr at 44-50.)

At the hearing, Applicant testified that he began the process of filing for bankruptcy in March 2016, but it took him until August 2016, until he was able to save the amount of $1,480 to be able to actually file the bankruptcy. He was informed that by November 2016, his bankruptcy will be complete, and all of the SOR debts are included on the bankruptcy filing and will be discharged in bankruptcy. He and his wife also took an online counseling course to help them manage their finances. (Tr at 30-33.)

Applicant stated that his overdue indebtedness occurred because of his unemployment in 2013. However, he conceded that he had steady employment, either in the Army or with private companies from 1997 through 2013, but he still had a significant amount of delinquent debt during that period. He admitted that he was living beyond his means during the time he was working full time, which contributed to his indebtedness. Applicant also conceded that at the time of the hearing, he and his wife had not formulated any kind of a budget to help him with his finances. Applicant also conceded that in 2008, while he was in the Army, he received notice that he would lose his security clearance if he did not get his finances in order, but he still was unable to resolve all of his delinquent debt. (Tr at 43-44, Exhibit E.)

While Applicant averred that he was tired of living in debt, he could not offer any significant evidence to establish that he would be more financially responsible in the future, including establishing a budget for his wife and him. (Tr at 49-52.)

Applicant submitted a Notice of Bankruptcy Case Filing, showing that a bankruptcy was filed on Applicant's behalf on August 19, 2016. (Exhibit A.) He also submitted documents showing that some of his debts were current while he was serving in the Army. (Exhibits B, C, and D.) Finally, Applicant submitted three positive character letters from individuals who know Applicant in a professional capacity. (Exhibit E.)

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 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 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 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.

The guideline notes several conditions that could raise security concern under AG ¶ 19. Three are potentially applicable in this case:

(a) inability or unwillingness to satisfy debts; and

The record is clear that Applicant has significant debt incurred over many years to many different companies. This includes recently purchasing a timeshare in 2015, and having two of his vehicles be repossessed only a few months before the hearing. His filing a Chapter 7 Bankruptcy in 2016 that may have discharged his debt at that time. Finally, he had his security clearance suspended in 2004, for failing to meet his financial responsivities. The evidence is sufficient to raise the above disqualifying conditions.

One Financial Considerations Mitigating Condition under AG ¶ 20 is potentially applicable:

(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;

Some of Applicant's financial challenges occurred because of his periods of unemployment. However, I do not find that he has acted responsibly under the circumstances. While he has attempted to use the legal remedy of bankruptcy, it was only filed a very short time before the hearing. There is no way to know if that will resolve his overdue debts. At this point, there are no indications that Applicant's debts have been resolved or reduced, or even that he has ever contacted these creditors to attempt to develop a payment plan. Also, Applicant has failed to prepare a budget or in any other way establish that he will be more responsible in the future. Therefore, I do not find that this mitigating condition or any other mitigating condition is applicable in this case. Until Applicant can show financial responsibility and a legitimate attempt to resolve his delinquent debts, and be responsible with his future debts, the concern remains unmitigated.

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. There are significant unresolved concerns about Applicant’s finances and judgment.

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 has not mitigated the Financial Considerations security concerns under the whole-person concept.

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.w.: 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.

Martin H. Mogul Administrative Judge