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ISCR Case 16-00738.h1 — CASE

ISCR Case 16-00738.h1granted

Case Headnote

ISCR Case No. 16-00738.h1

grantedSep 19, 2017· Hon. Braden M. Murphy· hearing

Summary

A 42-year-old male applicant with over two decades of experience in the defense industry was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The Statement of Reasons (SOR) cited five delinquent debts, including a second mortgage charged off in 2009 for $35,579, a mortgage foreclosed in 2014, and three small medical debts totaling approximately $840. These issues raised disqualifying conditions under Adjudicative Guideline (AG) ¶ 19(a) and AG ¶ 19(c).

The applicant successfully mitigated these concerns by demonstrating that all delinquent debts have been paid or otherwise resolved. The decision noted that mitigating conditions AG ¶ 20(a), AG ¶ 20(b), and AG ¶ 20(d) were applied.

Ultimately, the clearance was granted because the applicant proved that all outstanding financial obligations were resolved and that similar financial issues are unlikely to recur, thereby indicating improved reliability and judgment.

Why the Applicant Prevailed

Applicant demonstrated that all delinquent debts have been paid or resolved.
Financial issues are unlikely to recur, indicating improved reliability and judgment.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(c)raisedHistory of Not Meeting Financial Obligations

Mitigating

AG ¶ 20(a)appliedBehavior Unlikely to Recur
AG ¶ 20(b)appliedConditions Largely Beyond Control
AG ¶ 20(d)appliedGood-faith Effort to Resolve Debts

Key Rule Quoted

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

Procedural Posture

SOR issuedSep 14, 2016
Answer filedSep 30, 2016Applicant elected to decide on the written record.
Hearing held—No hearing; case decided on written record.
Decision dateSep 19, 2017

Cite For

Mitigation of Financial Considerations Under Guideline F
Resolution of Delinquent Debts as a Factor in Security Clearance Decisions
Impact of Employment Stability on Financial Reliability

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 by demonstrating that his delinquent debts have been resolved and are unlikely to recur. The applicant's eligibility for continued access to classified information was granted.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	SOR ¶ 1.a ($35,579) is a second mortgage that was charged off in 2009. $35,579	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 (d) good-faith effort to repay or otherwise resolve debts	Claimed Other
1.b	SOR ¶1.b concerns a mortgage that was foreclosed in 2014.	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 (d) good-faith effort to repay or otherwise resolve debts	Claimed Other
1.c	SOR ¶ 1.c are three small medical debts totaling about $840. $840	For Applicant	Medical Debt	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.d–1.e	2 sub-charges — specific text not stated in this decision (for the applicant). (low confidence)	For 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. 16-00738 ) Applicant for Security Clearance )

For Government: Mary Margaret Foreman, Esq., Department Counsel For Applicant: Pro se

09/19/2017 ______________

STATEMENT OF CASE

______________

MURPHY, Braden M., Administrative Judge:

Applicant mitigated the security concerns under Guideline F, financial considerations, by demonstrating that his delinquent debts have now been paid or otherwise resolved, and similar financial issues are unlikely to recur. Applicant’s eligibility for continued access to classified information is granted.

Statement of the Case

On September 14, 2016, the Department of Defense (DOD) issued a Statement of Reasons (SOR) to Applicant 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 effective within the DOD for SORs issued after September 1, 2006.

Applicant answered the SOR on September 30, 2016, and elected to have his case decided on the written record in lieu of a hearing. On October 20, 2016, Department Counsel submitted the Government’s file of relevant material (FORM), along with documents identified as Items 1 through 6. Applicant received the FORM on October 25, 2016. He was afforded an opportunity to file objections and submit material in refutation, extenuation, or mitigation. Applicant responded to the FORM on November 16, 2016. He provided a narrative statement and four documents, which are marked collectively as Applicant’s Exhibit (AE) A and admitted into evidence without objection. Applicant did not object to the Government’s evidence. The SOR and the answer (Items 1 and 2) are the pleadings in the case. Items 3 through 6 are admitted into evidence without objection. The case was assigned to me on July 1, 2017.

On December 10, 2016, the Director of National Intelligence issued Security Executive Agent Directive 4, National Security Adjudicative Guidelines (AG). These AGs apply to all adjudicative decisions issued on or after June 8, 2017.

FINDINGS OF FACT

Applicant admitted all the SOR allegations (¶¶ 1.a-1.e) without explanation. I have incorporated his answers into the findings of fact. After a thorough and careful review of the pleadings and exhibits submitted, I make the following findings of fact.

Applicant is 42 years old. He was married from 1996 to 2000, and he re-married in 2006. He has one child with his second wife, born in 2002 (age 15), and a 20-year-old stepdaughter. Applicant served in the United States Army (1996-1999). He briefly served in the Army Reserves (2003) before spending six years in the Air National Guard (2003- 2009). (Items 3, 4)

After leaving the Army in 1999, Applicant has largely been employed in the defense industry. He worked for defense contractors at a military base in his home state (State 1) from 1999 to 2010. From July 2010 to September 2012, he worked for his current employer in State 2. He returned to State 1 in September 2012 to care for his mother, who was ill. He worked there until his employment contract ended in July 2013. Applicant then worked for a casino (July to November 2013). He was then unemployed for three months, until he was re-hired by his current employer in February 2014. He remains employed there, though he now lives in State 3. He currently rents his home. (Items 3, 4; FORM Response)

Applicant has held a security clearance for over 20 years. He reported on his December 2014 security clearance application (SCA) that he was granted security clearances in 1997, 2007 and 2011. (Item 3).

The SOR concerns five delinquent accounts. SOR ¶ 1.a ($35,579) is a second mortgage that was charged off in 2009. SOR ¶1.bconcerns a mortgage that was foreclosed in 2014. SOR ¶¶ 1.c, 1.dand 1.e are three small medical debts totaling about $840. (Items 2, 6) The medical debts are paid and resolved. (FORM Response). Applicant disclosed the two mortgage debts on his SCA, and discussed all his debts fully in his background interview. (Items 3, 4) Applicant and his wife bought a home (House 1) in 2004. He refinanced in 2006, adding a second mortgage. In July 2007, he purchased a home that was much closer to his job on the military base (House 2). He was able to rent out House 1 for about a year, but fell behind on the mortgage when the renters moved out. He attempted a short sale but the home was foreclosed on in 2009. The second mortgage was charged off in 2009. This foreclosure occurred before Applicant’s most recent clearance adjudication, in 2011. Applicant disclosed the foreclosure on his 2014 SCA, and contacted the creditor. They confirmed the status of the account but did not provide anything in writing. (Items 4, 5, 6; FORM Response) (SOR ¶ 1.a)

Applicant purchased House 2 in July 2007. He lost his job in November 2013, and soon fell behind on the mortgage payments. He was unable to sell it, and the home was foreclosed on in July 2014. Applicant’s credit reports show that the account has a zero balance. (SOR ¶ 1.b) No other delinquencies are indicated. (Items 4, 5, 6)

POLICIES

It is well established that no one has a right to a security clearance.12 As the Supreme Court noted in Department of the Navy v. Egan, “the clearly consistent standard indicates that security determinations should err, if they must, on the side of denials.”13

The AGs 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 national security eligibility will be resolved in favor of the national security.” Under ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under ¶ 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 safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation of potential, rather than actual, risk of compromise of classified information.

ANALYSIS

Guideline F, Financial Considerations

The security concern relating to the guideline for 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 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 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 handing and safeguarding classified information.14

AG ¶ 19 provides conditions that could raise security concerns. The following are potentially applicable: (a) inability to satisfy debts; and (c) a history of not meeting financial obligations.

Applicant’s delinquent debts are established by the record. There is sufficient evidence to support the application of disqualifying conditions AG ¶¶ 19(a) and 19(c).

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 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; and

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

Applicant has been gainfully employed in the defense industry, with a security clearance, for many years. He had two home foreclosures, in 2009 and 2014, and he candidly disclosed both during his application process. The first foreclosure occurred after he was unable to find stable renters. The second occurred after he lost his job. Both circumstances were beyond his control. The second mortgage from his first home (SOR ¶ 1.a) was charged off in 2009. Applicant undertook reasonable efforts to resolve the foreclosure at the time. More recently, the creditor confirmed to Applicant that the account was charged off, but did not provide anything in writing.15 SOR ¶ 1.b, the account relating to the second foreclosure, has a zero balance, so it is resolved. His financial issues are unlikely to recur and no longer cast doubt on his current reliability, trustworthiness, and good judgment. AG ¶¶ 20(a), 20(b), and 20(d) 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. I also considered the factors that led to Applicant’s financial issues and the steps he took to rectify them. Overall, the record evidence leaves me with no questions as to Applicant’s eligibility and suitability for a security clearance. I conclude Applicant mitigated the financial considerations security concerns.

FORMAL FINDINGS

Formal findings for or against Applicant on the allegations set forth in the SOR, as required by ¶ E3.1.25 of Enclosure 3 of the Directive, are:

Paragraph 1, Guideline F: FOR APPLICANT

Subparagraphs 1.a-1.e: For Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is clearly consistent with the interests of national security to continue Applicant’s eligibility for a security clearance. Eligibility for continued access to classified information is granted.

_____________________________ Braden M. Murphy Administrative Judge

FOOTNOTES

12 Department of Navy v. Egan, 484 U.S. 518, 528 (1988) (“it should be obvious that no one has a ‘right’ to a security clearance”).

13 484 U.S. at 531. 14 See ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012). 15 Applicant also asserts in his FORM Response that SOR ¶ 1.a is covered by his state statute of limitations. Even if so, the DOHA Appeal Board has long held that security clearance decisions are not controlled or limited by such statutes of limitation. A security clearance adjudication is not a proceeding aimed at collecting an applicant’s personal debts. Rather, it is a proceeding aimed at evaluating an applicant’s judgment, reliability and trustworthiness. Accordingly, even if a delinquent debt is legally unenforceable under state law, the federal government is entitled to consider the facts and circumstances surrounding an applicant’s conduct in incurring and failing to satisfy the debt in a timely manner. See, e.g., ISCR Case No. 01-09691 at 3 (App. Bd. Mar. 27, 2003). As discussed above, while several mitigating conditions apply, the state statute of limitations has limited mitigating value.