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ISCR Case 16-00419.h1 — CASE

ISCR Case 16-00419.h1denied

Case Headnote

ISCR Case No. 16-00419.h1

deniedJul 26, 2017· Hon. Gina L. Marine· hearing

Summary

A 57-year-old model builder was denied a security clearance under Guideline F (Financial Considerations) due to multiple delinquent debts totaling over $16,000. The Statement of Reasons specifically cited five collection accounts and a past-due mortgage. The collection accounts ranged from $83 to $1,034, while the mortgage was $4,649 past due on a total balance of $91,874.

Disqualifying conditions under Guideline F were raised, and while several mitigating conditions were considered, they were ultimately not sufficient to overcome the security concerns. The applicant admitted to seven debts but denied others without explanation.

The denial was primarily based on the applicant's failure to provide documentation demonstrating mitigation or responsible financial management. Furthermore, the applicant did not seek financial counseling or respond to the FORM, leaving no record of efforts to resolve the outstanding debts.

Why the Applicant Was Denied

Applicant has multiple delinquent debts totaling over $16,000, with seven debts admitted and others denied without explanation.
Applicant failed to provide documentation to establish mitigation or demonstrate responsible financial management.
Applicant did not seek financial counseling or respond to the FORM, leaving the record silent on any efforts to resolve his debts.

Conditions Referenced

Disqualifying

AG ¶ 19(a)appliedInability to Satisfy Debt
AG ¶ 19(c)appliedA History of Not Meeting Financial Obligations

Mitigating

AG ¶ 20(a)rejectedBehavior Happened so Long Ago, Was Infrequent, or Unlikely to RecurApplicant's numerous delinquent debts remain unresolved.
AG ¶ 20(b)rejectedConditions Largely Beyond the Person's ControlApplicant's debts were not caused by circumstances largely beyond his control.
AG ¶ 20(c)rejectedReceived Financial CounselingApplicant did not receive financial counseling.
AG ¶ 20(d)rejectedGood-faith Effort to Repay DebtsApplicant did not demonstrate a good-faith effort to resolve debts.

Key Rule Quoted

“Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the AG.”
— EO 10865 § 2.

Procedural Posture

SOR issuedJun 16, 2016
Answer filedJul 15, 2016
Hearing held—Applicant requested a decision on the record without a hearing.
Decision dateJul 26, 2017

Cite For

Failure to Disclose Known Debts on Security Clearance Application
Impact of Financial Irresponsibility on Security Clearance Eligibility
Criteria for Evaluating Financial Considerations Under Guideline F

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 multiple delinquent debts totaling $16,207, of which he admitted seven debts totaling $10,260. The judge ruled against the applicant on all allegations under Guideline F, citing an inability to satisfy debts and a history of not meeting financial obligations, with no mitigating factors established.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a–1.d	4 sub-charges — specific text not stated in this decision (against the applicant).	Against Applicant			—	—	—
1.e	collection account/$83 $83	Against Applicant	Unspecified Financial	Denied	—	—	—
1.f	collection account/$1,034 $1,034	Against Applicant	Unspecified Financial	Denied	—	—	—
1.g–1.h	2 sub-charges — specific text not stated in this decision (against the applicant).	Against Applicant			—	—	—
1.i	past-due mortgage account/$4,649 with a total balance of $91,874 $4,649	Against Applicant	Mortgage or Home Loan Debt	Denied	—	—	—
1.j	specific text not stated in this decision	Against Applicant	Unspecified Financial	Unknown	—	—	—
1.k	collection account/$98 $98	Against Applicant	Unspecified Financial	Denied	—	—	—
1.l	collection account/$83 $83	Against Applicant	Unspecified Financial	Denied	—	—	—

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: ) ) [REDACTED] ) ISCR Case No. 16-00419 ) Applicant for Security Clearance )

For Government: Andre M. Gregorian, Esq., Department Counsel For Applicant: Pro se

07/26/2017 ______________

STATEMENT OF CASE

______________

MARINE, Gina L., Administrative Judge:

This case involves security concerns raised under Guideline F (Financial Considerations). Eligibility for access to classified information is denied.

Statement of the Case

Applicant submitted a security clearance application (SCA) on June 9, 2015. On June 16, 2016, the Department of Defense Consolidated Adjudications Facility (DOD CAF) sent him a Statement of Reasons (SOR) alleging security concerns under Guideline F. The DOD CAF acted 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 (AG) implemented by the DOD on September 1, 2006.

Applicant answered the SOR on July 15, 2016, and requested a decision on the record without a hearing. Department Counsel submitted the Government’s written case on August 10, 2016. On August 11, 2016, a complete copy of the file of relevant material (FORM) was sent to Applicant, including documents identified as Items 1 through 5. He was given an opportunity to submit a documentary response setting forth objections, rebuttal, extenuation, mitigation, or explanation to the Government’s evidence. He received the FORM on August 22, 2016, and did not respond. Item 1 contains the pleadings in the case. Items 2 through 5 are admitted into evidence. The case was assigned to me on June 1, 2017.

On June 8, 2017, the DOD implemented new AG.1 Accordingly, I have applied the June 2017 AG.2 However, because the September 2006 AG were in effect on the date the FORM was completed, I have also considered the September 2006 AG. Having considered both versions of the AG, I conclude that my decision would have been the same had I applied the September 2006 AG.

Findings of Fact3

Applicant, age 57, divorced his wife of 22 years in 2000. They have two adult sons. Since approximately 2012, he has been cohabiting with his girlfriend of about 12 years. Applicant did not obtain a high school diploma or G.E.D. He has worked full time as a model builder for the same defense contractor since 1981. He was granted a secret clearance in 1984. The record is silent as to whether he currently maintains a security clearance.

The SOR alleged 12 delinquent debts totaling $16,207. Applicant admitted seven debts totaling $10,260. He denied, without explanation, the debts alleged in SOR ¶¶ 1.e (collection account/$83), 1.f (collection account/$1,034), 1.i (past-due mortgage account/$4,649 with a total balance of $91,874), 1.k (collection account/$98), and 1.l (collection account/$83). The credit reports establish each of the denied debts.4

In his SOR answer, without any specific details, Applicant attributed his delinquent debts to an “extremely difficult separation” in 2011 that “threw [his] life as well as [his] financial stability off track.” He claimed that he was “actively pursuing making arrangements” with his “legitimate” creditors to satisfy his delinquent debts.

During his 2015 interview, Applicant explained that he granted his girlfriend access to his financial accounts so that she could pay his bills while he travelled for work. His work travel accounted for 50% of his time. Instead of paying his bills, Applicant claimed that his girlfriend used his money to start a business that was ultimately unsuccessful. Applicant claimed not to have discovered that the mortgage loan for his primary residence was pending foreclosure (SOR ¶ 1.i) until it was “too late.” Applicant claimed not only that he did not see any late notices or foreclosure warnings, but that he “rarely” saw any of his bills and “did not ask about them.” Applicant claimed, without providing any corroborating documentation, that the mortgage loan was foreclosed upon on an unspecified date and that he had not received any notification of a deficiency balance.

After the foreclosure, Applicant separated from his girlfriend “for a while” and granted his brother and one of his sons access to his financial accounts so that they could pay his bills while he travelled for work. Applicant claimed, without providing corroborating documentation or any specific details, that his brother used Applicant’s credit cards to make unauthorized purchases, and that his brother and son did not pay the bills as expected. During his 2015 interview, Applicant was confronted with most of the debts alleged in the SOR. He promised to pay “as soon as possible” any delinquent debts known to him and those unknown to him for which he determined he was responsible after researching them.

Although it was not alleged in the SOR, Applicant answered “no” to each financial-related question on his SCA, thereby failing to disclose any of the SOR or other delinquent debts that he knew about at the time that he completed it.5 During his 2015 interview, he claimed that the computer would not allow him to input incomplete information about the foreclosure and other known debts, that he was in a rush to complete his SCA, and that he knew he would be interviewed about his debts. He voluntarily reported his known debts during that interview.

The record is silent as to whether Applicant has sought out or received any credit counseling. Attached to his SOR answer were three references from friends, who are also co-workers, commending Applicant’s character and work performance. None of those references indicated knowledge of the state of Applicant’s financial affairs.

In the FORM, Department Counsel specifically highlighted that Applicant had not provided certain documentation to establish mitigation and advised of the opportunity that he had to do so in his response to the FORM. Applicant did not respond to the FORM.

POLICIES

“[N]o one has a ‘right’ to a security clearance.”6 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.”7 The President has authorized the Secretary of Defense or his designee to grant applicants eligibility for access to classified information “only upon a finding that it is clearly consistent with the national interest to do so.”8

Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the AG. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, an administrative judge applies these guidelines 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 and 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 that 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 made “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.”9 Thus, a decision to deny a security clearance 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.10 “Substantial evidence” is “more than a scintilla but less than a preponderance.”11 The guidelines presume a nexus or rational connection between proven conduct under any of the criteria listed therein and an applicant’s security suitability.12 Once the Government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts.13 An applicant has the burden of proving a mitigating condition, and the burden of disproving it never shifts to the Government.14

An applicant “has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue his security clearance.”15 “[S]ecurity clearance determinations should err, if they must, on the side of denials.”16

ANALYSIS

Guideline F (Financial Considerations)

The concern under this guideline 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 misuse, 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 a person might knowingly compromise classified information to raise money. It encompasses concerns about a person’s self-control, judgment, and other qualities essential to protecting classified information. A person who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information. See ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012).

Applicant’s admissions, corroborated by his credit reports, establish two disqualifying conditions under this guideline: AG ¶ 19(a) (inability to satisfy debt) and AG ¶ 19(c) (a history of not meeting financial obligations).

The security concerns raised in the SOR have not been mitigated by any of the following applicable factors:

AG ¶ 20(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;

AG ¶ 20(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, a death, divorce or separation, clear victimization by predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances;

AG ¶ 20(c): the individual has received or is receiving financial 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; and

AG ¶ 20(d): the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts.

AG ¶ 20(a) is not established. Applicant’s numerous delinquent debts remain unresolved.

AG ¶ 20(b) is not established. Applicant’s debts were not caused by circumstances largely beyond his control. However, even if they were so deemed, he has not acted responsibly to address the resulting debts.

AG ¶ 20(c) and 20(d) are not established. Applicant did not receive financial counseling. Because he did not respond to the FORM, the record is silent as to what, if any, progress he made in resolving his delinquent debts. The record is also silent as to his current ability to repay delinquent debts and the reasons that they have persisted after he promised to address them back in 2015. I cannot conclude that his financial problems are under control at this time.

WHOLE PERSON CONCEPT

Under AG ¶ 2(c), the ultimate determination of whether the granting or continuing of national security eligibility is clearly consistent with the interests of national security must be an overall common sense judgment based upon careful consideration of the following guidelines, each of which is to be evaluated in the context of the whole person. An 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.

I have incorporated my comments under Guideline F in my whole-person analysis, and I have considered the factors in AG ¶ 2(d). After weighing the disqualifying and mitigating conditions under Guideline F, and evaluating all the evidence in the context of the whole person, I conclude that Applicant has not mitigated the security concerns raised by his failure to pay delinquent debts. I am also troubled by Applicant’s failure to report the foreclosure and other known debts on his SCA. Applicant was first granted a security clearance in 1984 and, because he still works in the same position for the same defense contractor, it is reasonable to assume that he has held one for all or part of the time since then. Thus, he should have known that he had a duty to report his known debts to the Government on his SCA regardless of whether he might later have an opportunity to discuss them during an interview. His failure to do so further calls into question his reliability, trustworthiness, and good judgment. Accordingly, Applicant has not carried his burden of showing that it is clearly consistent with the national interest to grant him eligibility for access to classified information.

FORMAL FINDINGS

I make the following formal findings on the allegations in the SOR:

Paragraph 1, Guideline F (Financial Considerations): AGAINST APPLICANT

Subparagraphs 1.a – 1.l: Against Applicant

CONCLUSION

I conclude that it is not clearly consistent with the national interest to continue Applicant’s eligibility for access to classified information. Clearance is denied.

Gina L. Marine Administrative Judge

FOOTNOTES

1 On December 10, 2016, the Security Executive Agent issued Directive 4 (SEAD-4), establishing a “single, common adjudicative criteria for all covered individuals who require initial or continued eligibility for access to classified information or eligibility to hold a sensitive position.” (SEAD-4 ¶ B, Purpose). The SEAD-4 became effective on June 8, 2017 (SEAD-4 ¶ F, Effective Date). The National Security Adjudicative Guidelines (AG), which are found at Appendix A to SEAD-4, apply to determine eligibility for initial or continued access to classified national security information. (SEAD-4 ¶ C, Applicability). 2 ISCR Case No. 02-00305 at 3 (App. Bd. Feb. 12, 2003) (security clearance decisions must be based on current DOD policy and standards). 3 Unless otherwise indicated by citation to another part of the record, I extracted these facts from Applicant’s SOR answer (Item 1), his SCA (Item 2), and the summary of his November 2015 subject interview (Item 3). Because Applicant did not respond to the FORM and affirmatively waive any objection to Item 3, I will consider only those facts in Item 3 that are not adverse to Applicant, unless they are contained in other evidence or based upon his admissions in the SOR answer. 4 GE 4 and 5. I considered that several debts reference the same creditor in amounts that are similar (SOR ¶¶ 1.e, 1.k, and 1.l). 5 I will consider this only for the purposes of evaluating mitigation and whole person. 6 Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). 7 Egan at 527. 8 EO 10865 § 2. 9 EO 10865 § 7. 10 See Egan, 484 U.S. at 531. 11 See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). 12 See ISCR Case No. 92-1106 at 3, 1993 WL 545051 at *3 (App. Bd. Oct. 7, 1993). 13 Directive ¶ E3.1.15. 14 See ISCR Case No. 02-31154 at 5 (App. Bd. Sep. 22, 2005). 15 ISCR Case No. 01-20700 at 3 (App. Bd. Dec. 19, 2002). 16 Egan, 484 U.S. at 531; See also AG ¶ 2(b).