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ISCR Case 16-00543.h1 — CASE

ISCR Case 16-00543.h1granted

Case Headnote

ISCR Case No. 16-00543.h1

grantedMay 23, 2017· Hon. Thomas M. Crean· hearing

Summary

A 40-year-old defense contractor and Army veteran was granted a security clearance despite concerns under Guideline F (Financial Considerations). The Statement of Reasons cited a mortgage account with a past-due balance of $49,575 on a $204,174 loan, and a Chapter 7 bankruptcy filed in January 2004 and discharged in April 2004. These issues raised disqualifying conditions per Adjudicative Guidelines (AG) ¶ 19(a) and AG ¶ 19(c).

However, the judge applied mitigating conditions under AG ¶ 20(a), AG ¶ 20(b), and AG ¶ 20(d). It was determined that the applicant's financial difficulties stemmed primarily from circumstances beyond his control, specifically a failed marriage and inconsistent child support payments from his ex-wife.

Crucially, the applicant demonstrated responsible financial management following his bankruptcy discharge in April 2004, with no subsequent delinquencies on any debts except the aforementioned mortgage. He also showed a good-faith effort to resolve his financial issues and is currently current on all other financial obligations. Based on these factors, the security clearance was granted.

Why the Applicant Prevailed

The applicant's financial issues were largely due to circumstances beyond his control, including a failed marriage and lack of child support.
He has not been delinquent on any debts except for the mortgage since his bankruptcy discharge in 2004.
The applicant has shown a good-faith effort to resolve his financial issues and is current on all other financial obligations.

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(a)appliedThe Behavior Happened so Long Ago, Was so Infrequent, or Occurred Under Such Circumstances That It Is Unlikely to Recur
AG ¶ 20(b)appliedThe Conditions That Resulted in the Financial Problem Were Largely Beyond the Person’s Control
AG ¶ 20(d)appliedThe Individual Has Initiated a Good-faith Effort to Repay the Overdue Creditors or Otherwise Resolve Debts

Key Rule Quoted

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

Procedural Posture

SOR issuedJun 2, 2016
Answer filedJun 2, 2016
Hearing heldApr 27, 2017
Decision dateMay 23, 2017

Cite For

Mitigation of Financial Issues Under Guideline F Due to Circumstances Beyond Control
Good-faith Efforts to Resolve Financial Obligations
Consideration of the Whole-person Concept 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's financial issues, including a mortgage foreclosure and a Chapter 7 bankruptcy, were mitigated by circumstances beyond his control, such as a failed marriage and the lack of child support from his ex-wife. The applicant demonstrated responsible behavior in managing his finances and has since maintained a stable financial situation, leading to a decision in his favor regarding security clearance eligibility.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	A mortgage account past due for $49,575 on a balance of $204,174. $49,575	For Applicant	Mortgage or Home Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly	Claimed Other
1.b	A Chapter 7 bankruptcy filed in January 2004 and discharged in April 2004.	For Applicant	Bankruptcy Filing	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly	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. 16-00543 ) ) Applicant for Security Clearance

For Government: Benjamin R. Dorsey, Esq., Department Counsel For Applicant: Pro se

05/23/2017 ______________

STATEMENT OF CASE

______________

CREAN, Thomas M., Administrative Judge:

Based on a review of the pleadings, exhibits, and testimony, eligibility for access to classified information is granted. Applicant presented sufficient information to mitigate financial security concerns.

Statement of the Case

On September 30, 2015, Applicant submitted an Electronic Questionnaire for Investigations Processing (e-QIP) to retain a security clearance required for a position with a defense contractor. After an investigation conducted by the Office of Personnel Management on January 6, 2016, the Department of Defense (DOD) could not make the affirmative findings required to issue a security clearance. The DOD issued to Applicant a Statement of Reasons (SOR), dated June 2, 2016, detailing security concerns for financial considerations under Guideline F. The action was taken under Executive Order 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) effective in the DOD on September 1, 2006. Applicant answered the SOR on June 2, 2016. He admitted the two financial allegations. Department Counsel was prepared to proceed on July 28, 2016. The case was assigned to me on December 2, 2016. The DOD issued a notice of hearing on April 6, 2017, for a hearing on April 27, 2017. I convened the hearing as scheduled. The Government offered five exhibits that I marked and admitted into the record without objection as Government Exhibits (GX) 1 through 5. Applicant testified but did not present any documents. I kept the record open for Applicant to submit documents. Applicant timely submitted one document that I admitted into the record without objection as Applicant Exhibit (AX) A. (GX 6, e-mail dated April 27, 2017) I received the transcript of the hearing (Tr.) on May 4, 2017.

FINDINGS OF FACT

After a thorough review of the pleadings, transcript, and exhibits, I make the following findings of fact. Applicant is a 40-year-old high school graduate with some community college education. He served on active duty in the Army from 1995 until 2002, when he received an honorable discharge. He was granted eligibility for access to classified information while on active duty in 1995, and his eligibility was renewed in 2003. He submitted his latest request to retain his eligibility in 2015. Applicant married for the first time in 1998 and divorced in 2009. He married again in 2012. He has three children from his first marriage that he has custody of, and his wife is required to provide child support. He has two children from his second marriage. The five children live with him and his second wife. He has been employed by a defense contractor since July 2003 as a light armor range technician. (Tr. 14-16, 27-29; GX 1, e-QIP, dated September 14, 2015; GX 2, PSI, dated January 5, 2016)

The SOR alleges a mortgage account past due for $49,575 on a balance of $204,174 (SOR 1.a). The SOR also alleges a Chapter 7 bankruptcy filed in January 2004 and discharged in April 2004. (SOR 1.b).

Applicant married his first wife while he was still on active duty in the Army. He purchased kiosks in a mall for his wife’s employment. When he left active duty in 2002, Applicant also worked at the kiosks. The kiosks were not doing well financially. In 2003, Applicant decided to move his family to the area where he was raised before joining the Army. He had debt from the kiosks he owned before he moved, moving expenses, medical expenses, and family expenses. He filed bankruptcy in January 2004, and his debts discharged in April 2004. Applicant has not been delinquent on any debts except for the mortgage discussed below since the bankruptcy discharge. He may have been late with some payments, but no debts went to collection or were charged off. (Tr. 37- 39; GX. 4 Bankruptcy Petition, dated January 16, 2004; GX 5, Discharge Order, dated April 14, 2004)

Applicant and his first wife purchased a home in 2005 after he left active duty and they moved to a new location. Applicant was able to meet the mortgage payments since his wife contributed to the family income. His wife left him in July 2009, and Applicant had the care and custody of the children. His wife agreed on a separation agreement requiring $1,010 a month in child support. The divorce became final in early 2010. Applicant’s first wife did not make any support payments in 2009 or 2010 and only sporadically in 2011. In November 2012, Applicant went back to court, and the support payments were changed to $507 a month plus arrears of $35,000. His wife paid the child support only sporadically until January 2017 when she started to pay her child support obligation more regularly because of a pending criminal action. (Tr. 16-20, 36- 44)

Applicant became delinquent on the mortgage for their home in 2010. His wife paid child support only sporadically. He lived in the house but he could not pay the full mortgage every month. He called the mortgage company to arrange a modify mortgage, but the company only wanted full mortgage payments. He became about two or three months behind with his payments. When Applicant realized he could not meet his mortgage obligations, he contacted the mortgage company to tell them about the foreseeable issues on the mortgage. The mortgage company sent him to a collection agency. He unsuccessfully tried to make arrangements with the collection agency in 2010 and 2011. He successfully negotiated a loan modification in 2011, rented the house, and moved in with his future wife. He rented the house in 2011 and part of 2012, and was able to meet most of his mortgage payments with the rent income. However, he had two different renters in two years. After each move there was damage to the house. In late 2013, after his second renter moved out, he twice submitted papers to arrange for either a short sale or a deed in lieu of foreclosure. (Tr. 44-52) The house was finally foreclosed and sold at auction in 2016. Applicant received the required tax form. (Tr. 52-55; AX A, 1099-C)

Applicant and his second wife purchased a house in 2013 for their large family, and they are current with the mortgage. He is current with all other bills and his taxes. He is meeting all of his financial obligations. (Tr. 55-57) Applicant’s net monthly salary is $4,400, and his wife’s net monthly salary is $2,500, for a combined monthly family income of $6,900. The monthly family expenses are about $6,500, leaving a monthly remainder of approximately $400. (Tr. 28-32)

POLICIES

When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which must be considered 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.

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 applicant or proven by Department Counsel. . . . .” The applicant has the ultimate burden of persuasion in seeking 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 the 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.

ANALYSIS

Financial Considerations

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 a person’s reliability, trustworthiness, and ability to protect classified information. (AG ¶ 18) The financial security concern is broader than the possibility that an individual might knowingly compromise classified information to raise money. It encompasses concerns about an individual’s responsibility, trustworthiness, and good judgment. Security clearance adjudications are based on an evaluation of an individual’s reliability and trustworthiness. An individual who is financially irresponsible may also be irresponsible, unconcerned, or careless in his or her obligations to protect classified information. Behaving responsibly or irresponsibly in one aspect of life provides an indication of how a person may behave in other aspects of life.

Applicant filed a Chapter 7 bankruptcy in 2004 after leaving active duty in the Army, because of debts from a failing business and moving to a new location. He was not able to meet his mortgage obligations after his wife left him in 2009, and she did not pay child support. Applicant was unable to meet his mortgage obligation, and the house was foreclosed in 2016. Applicant’s delinquent mortgage debt and bankruptcy are sufficient to raise the following security concerns under Financial Considerations Disqualifying Conditions AG ¶ 19 (a) inability or unwillingness to satisfy debts and (c) a history of not meeting financial obligations.

I considered the following Financial Considerations Mitigating Conditions under 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;

(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 indication that the problem is being resolved or is under control; and

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

These mitigating conditions apply. The SOR financial allegations are a bankruptcy petition and discharge in 2004 and a delinquent mortgage. The bankruptcy happened long ago and the financial problems are infrequent. Applicant’s financial problems are the result of a failed marriage and the reluctance of his former spouse to meet her court-order financial obligations. These are conditions beyond his control. He is no longer married to his first wife, and his second wife is working and providing income to the family. His financial problems are unlikely to recur.

Applicant’s 2004 bankruptcy petition was to resolve debts that he and his first wife accumulated by a business failure, expenses incurred moving to a new area, and medical expenses not covered by health insurance. Bankruptcy is a legal and appropriate means of resolving financial issues. Credit reports show that in the 14 years since the debts were discharged, Applicant has met all but one of his financial obligations. He only had a few debts that paid late by a few months. The only financial delinquency listed in credit reports was the mortgage foreclosure noted at SOR 1.a.

Applicant acted reasonably and appropriately to resolve the mortgage issue before it went to foreclosure. The mortgage delinquency was result of conditions beyond his control. Applicant’s first wife left him with the mortgage debt after she abandoned the family. She did not timely make her child support payments. After trying to pay the mortgage, Applicant moved in with his future wife, contacted his creditor, attempted a loan modification, and sought a short sale, or deed in lieu of foreclosure. The house went to foreclosure only after Applicant tried all other means to resolve the mortgage situation. The Applicant receive the required tax form when the house foreclosed.

The conditions that led to Applicant’s financial problems were beyond his control, and there are no financial issues that cast doubt on his current reliability, trustworthiness, or good judgment. Applicant established that he acted responsibly under the circumstances. He showed his good-faith efforts to resolve all of his financial issues. I conclude that Applicant has mitigated security concerns based on financial considerations.

WHOLE PERSON ANALYSIS

Under the whole-person concept, the administrative judge must evaluate an applicant’s security eligibility by considering the totality of the applicant’s conduct and all relevant circumstances. An 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 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 considered Applicant’s seven years of active service, his continued employment in support of the military, and his successful holding of eligibility for access to classified information since 1995. Applicant presented sufficient information to establish that he acted reasonably and responsibly under the circumstances. There is clear evidence that he will continue to responsibly manage his financial obligations. There is ample evidence of his honesty, trustworthiness, and good judgment. Overall, the record evidence leaves me without questions or doubts as to Applicant’s judgment, reliability, trustworthiness, and eligibility and suitability for a security clearance. For all these reasons, I conclude that Applicant has mitigated security concerns arising under the financial considerations guideline. Eligibility for access to classified information is granted.

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.b 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 eligibility for a security clearance. Eligibility for access to classified information is granted.

_________________ THOMAS M. CREAN Administrative Judge