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ISCR Case 16-00344.h1 — CASE

ISCR Case 16-00344.h1granted

Case Headnote

ISCR Case No. 16-00344.h1

grantedAug 15, 2017· Hon. Robert J. Kilmartin· hearing

Summary

A 39-year-old deputy program manager and law school graduate was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The Statement of Reasons cited three specific financial allegations: two charged-off loans totaling $11,274 and $8,694 respectively, and a disputed medical debt of $1,969. These issues raised disqualifying conditions F.19(a), F.19(b), and F.19(c).

However, the judge determined that the applicant had successfully mitigated these concerns. She settled her charged-off loans for a discounted amount, demonstrating a good-faith effort to resolve her debts. Furthermore, she provided evidence that the medical debt was mistakenly attributed to her credit report.

The applicant's financial difficulties were also linked to circumstances beyond her control, specifically a divorce and separation. The judge concluded that the applicant had taken responsible actions to resolve her debts and that the financial problems were unlikely to recur, leading to the granting of her security clearance. Mitigating conditions F.20(a), F.20(b), F.20(d), and F.20(e) were applied in this decision.

Why the Applicant Prevailed

The applicant settled her charged-off loans for a discounted amount, demonstrating a good-faith effort to resolve her debts.
The applicant provided evidence that the disputed medical debt was mistakenly attributed to her credit report.
The applicant's financial issues were linked to circumstances beyond her control, such as divorce and separation.

Conditions Referenced

Disqualifying

F.19(a)raisedInability to Satisfy Debts
F.19(b)raisedUnwillingness to Satisfy Debts
F.19(c)raisedHistory of Not Meeting Financial Obligations

Mitigating

F.20(a)appliedBehavior Happened Long Ago or Infrequently
F.20(b)appliedConditions Beyond the Person's Control
F.20(d)appliedGood-faith Effort to Repay Debts
F.20(e)appliedReasonable Basis to Dispute Debt

Key Rule Quoted

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

Procedural Posture

SOR issuedJun 14, 2016
Answer filednull
Hearing heldnullDecided on written record.
Decision dateAug 15, 2017

Cite For

Mitigation of Financial Issues Under Guideline F
Good-faith Efforts to Resolve Debts
Impact of Personal Circumstances on Financial Stability

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, resulting in a favorable decision for all alleged debts. The applicant demonstrated responsible actions in addressing her financial issues, including settling two charged-off loans and disputing a medical debt that was mistakenly attributed to her.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	charged-off loan, in the amount of $11,274 $11,274	For Applicant	Personal Loan Debt	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	(d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.b	charged-off loan, in the amount of $8,694 $8,694	For Applicant	Personal Loan Debt	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	(d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.c	medical debt of $1,969 $1,969	For 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	—	Claimed Other

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. 16-00344 ) Applicant for Security Clearance )

For Government: Ray Blank, Esq., Department Counsel For Applicant: Pro se 08/15/2017 ______________

STATEMENT OF CASE

______________

KILMARTIN, Robert J., Administrative Judge:

Applicant mitigated the security concerns under Guideline F, financial considerations. Applicant’s eligibility for access to classified information is granted.

Statement of the Case

On June 14, 2016, the Department of Defense (DOD) issued 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 (AGs) effective with the DOD for SORs issued after September 1, 2006.

On December 10, 2016, the Director of National Intelligence issued Security Agent Executive Agent Directive (SEAD) 4, which revised and replaced the 2006 AGs and became effective for all decisions issued on or after June 8, 2017. Accordingly, I have applied the newly promulgated AGs to this decision.1 Applicant timely answered the SOR and elected to have her case decided on the written record. Department Counsel submitted the Government’s file of relevant material (FORM) on October 20, 2016. Applicant received the FORM on October 25, 2016, and had 30 days to file objections and submit material in refutation, extenuation, or mitigation. Applicant did not object to the Government’s evidence, and she provided a response to the FORM comprised of a three-page affidavit signed November 22, 2016, and attached correspondence with a bank including a settlement agreement and a November 22, 2016 credit bureau report. These attachments are marked as Applicant’s Exhibits (AE) A and B respectively, and admitted into evidence. The Government’s evidence, identified as Items 1 through 6, is admitted into evidence without objection. The case was assigned to me on July 21, 2017.

Findings of Fact2

Applicant is 39-years old. She graduated from law school in 2007. Applicant has been employed as a deputy program manager by a federal contractor since August 2007. She reports no military service, and she had a previous security clearance since 2008. Applicant married in 2008, separated in 2011, and divorced in 2013. She has an eight year-old son. She was unemployed from August 2004 to August 2007, while she was in law school and studying for the bar exam. Applicant disclosed a charged-off loan, in the amount of $19,804, in section 26 of her Questionnaire for National Security Positions, Form SF-86, also known as a security clearance application (SCA) that she signed on August 11, 2015.3

Applicant stated in her SCA that this loan (SOR ¶¶ 1.a and 1.b) was consolidated and became delinquent when she separated from her husband in 2011 and tried to establish a new household for her and her son. She divorced her ex-husband in 2013 mainly because he could not hold a job. Her credit reports reflect that the loan in SOR ¶ 1.a ($11,274) was initially opened in August 2005 and the loan in SOR ¶ 1.b ($8,694) was initially opened in May 2006. At some point she consolidated these two loans for re-payments of $51 per month and she made some payments pursuant to the plan. Both loans were charged off by the bank in April 2011, and the credit report shows the last activity was in early 2011.4 These private loans were taken out while she attended law school, and she used the funds for living expenses while she studied for the bar exam.5 She admitted to these two delinquent bank loans, which were consolidated for re-payment, in her Answer to the SOR.6 Applicant denied the alleged delinquency in SOR ¶ 1.c (medical debt of $1,969) in her Answer to the SOR. She claimed to have no knowledge of the creditor or the source of this debt. It has fallen off or been removed from her recent credit reports. The delinquent debts alleged in the SOR total $21,937. In Applicant’s response to the FORM comprised of an affidavit she signed on November 22, 2016, she stated that she recently made contact with this creditor after repeated futile efforts. The creditor confirmed that it had no record of this debt belonging to Applicant or her ex-husband. Instead, it was apparently mistakenly placed on her credit report. Applicant stated in her affidavit that she always maintained health insurance and paid her deductibles at all relevant times. She contends that this could not be her medical debt. She provided no letter of dispute with the creditor, or correspondence from the creditor, or letter to the credit reporting bureaus asking that this alleged debt be removed.

Applicant, in her response to the FORM, also produced documentation from the bank which is the creditor for the two charged-off loans in SOR ¶¶ 1.a and 1.b.7 These documents show that she entered into a settlement agreement dated July 8, 2016, to settle both delinquent loans for a substantially discounted amount of $5,000. She also attached bank statements showing two debits from her account in the amount of $2,500 each, on August 11, 2016, in compliance with the plan.8 The debts alleged at SOR ¶¶ 1.a and 1.bare resolved.

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 financial considerations is set out in AG ¶18:

Failure 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 or sensitive 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 abuse, or alcohol abuse or dependence. An individual who is financially overextended is at greater risk of having to engage in illegal or otherwise questionable 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 handling and safeguarding classified information.

AG ¶ 19 provides conditions that could raise security concerns. The following apply here:

(a) inability to satisfy debts;

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

Applicant admitted to two of the delinquent debts alleged in the SOR. They are also confirmed by her credit reports. The Government produced substantial evidence to support the disqualifying conditions in AG ¶¶ 19(a), 19(b), and 19(c), thereby shifting the burden to Applicant to produce evidence to rebut, explain, extenuate, or mitigate the facts.9

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 problems were largely beyond the person’s control (e.g., loss of employment, a business downturn, unexpected medical emergency, a death, divorce or separation, a clear victimization by predatory lending practices, or identity theft) and the individual acted responsibly under the circumstances;

(c) the person has received, or is receiving counseling for the problem from a legitimate and credible source, such as a non-profit credit counseling service, and there are clear indications that the problem is being resolved or is under control;

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

Applicant endured a separation and divorce after law school. Arguably, these conditions were beyond her control. She has demonstrated that she acted responsibly under the circumstances, including by settling the consolidated loans from the bank. Applicant has made concerted efforts to resolve the delinquent medical debt alleged in SOR ¶ 1.c. It is disappointing that a law school graduate has provided no substantiation for her putative recent discussions with this creditor, and no documents to dispute the debt, pursuant to AG ¶ 20(e). However, I am persuaded by her affidavit-response that this debt was mistakenly reflected on her credit report. Applicant has met his burden to provide sufficient evidence to show that her financial problems are under control, and that her debts were incurred under circumstances unlikely to recur. The mitigating conditions enumerated above 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(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 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(d) were addressed under that guideline.

Applicant’s self-disclosed, charged-off bank loans, and alleged delinquent medical debt, are no longer a security concern. There is sufficient evidence to conclude that Applicant’s financial problems are under control. She has met her burden of persuasion. The record evidence leaves me with no questions or doubts as to Applicant’s 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.c: 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 a security clearance. Eligibility for access to classified information is granted.

________________________ Robert J. Kilmartin Administrative Judge

FOOTNOTES

1 I considered the previous AGs effective September 1, 2006, as well as the new AGs, effective June 8, 2017. My decision would be the same if the case were considered under either version. 2 Unless stated otherwise, the source of the information in this section is Applicant’s August 11, 2015 SCA. (Item 4) and the summaries of her clearance interviews on October 16, 2015 and December 23, 2015. (Item 6) 3 Item 4. 4 Item 5. 5 Item 6. 6 Item 2. 7 AE A. 8 AE A. 9 Directive ¶ E3.1.15. See ISCR Case No. 02-31154 at 5 (App. Bd. Sep 22, 2005) (An applicant has the burden of proving a mitigating condition, and the burden of disproving it never shifts to the Government).