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ISCR Case 16-00759.h1 — CASE

ISCR Case 16-00759.h1denied

Case Headnote

ISCR Case No. 16-00759.h1

deniedJun 6, 2017· Hon. Eric H. Borgstrom· hearing

Summary

A 50-year-old former military service member was denied a security clearance under Guideline F (Financial Considerations) due to significant financial issues. The applicant had 13 delinquent debts totaling approximately $92,144, which raised disqualifying conditions related to financial irresponsibility and an inability to meet financial obligations.

While some payments were made in early 2017, the applicant did not provide documentary evidence of consistent debt-resolution efforts until after the Statement of Reasons (SOR) was issued. Furthermore, three of the largest debts remained unresolved, and the applicant failed to demonstrate that her financial situation was under control or that she had received financial counseling.

Although mitigating conditions were considered, the lack of sustained and documented efforts to resolve the outstanding debts, particularly the largest ones, ultimately led to the denial of her security clearance application.

Why the Applicant Was Denied

The applicant did not provide documentary evidence of debt-resolution efforts until after the SOR was issued.
Three of the largest debts remained unresolved, indicating a lack of responsible action regarding her financial obligations.
The applicant did not demonstrate that her financial situation was under control or that she had received financial counseling.

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)appliedConditions That Resulted in the Financial Problem Were Largely Beyond the Person’s ControlThe applicant's divorce and ex-husband's unemployment contributed to her financial problems.
AG ¶ 20(d)appliedGood-faith Effort to Repay Overdue Creditors or Otherwise Resolve DebtsThe applicant made payments on some debts but not on the three largest debts.

Key Rule Quoted

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

Procedural Posture

SOR issuedJul 15, 2016
Answer filed—
Hearing heldMar 9, 2017
Decision dateJun 6, 2017

Cite For

Failure to Mitigate Financial Considerations Under Guideline F
Importance of Documentary Evidence in Debt-resolution Efforts
Impact of Unresolved Debts 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 that the applicant did not mitigate the financial concerns raised under Guideline F, resulting in a denial of her security clearance. While the applicant settled several debts, significant unresolved debts remained, and she failed to demonstrate a stable financial situation or adequate debt-resolution efforts.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a–1.m	13 sub-charges — specific text not stated in this decision (3 against, 10 for the applicant).	Mixed			—	—	—

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: ) ) [NAME REDACTED] ) ISCR Case No. 16-00759 ) ) Applicant for Security Clearance

For Government: Carroll Connelley, Esq., Department Counsel For Applicant: Pro se

06/06/2017 ______________

STATEMENT OF CASE

______________

BORGSTROM, Eric H., Administrative Judge:

Applicant did not mitigate the security concerns about her financial problems. Eligibility for access to classified information is denied.

Statement of the Case

On July 15, 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 (AG) implemented by the DOD on September 1, 2006.

Applicant responded to the SOR and requested a hearing before an administrative judge. The case was assigned to me on January 25, 2017. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing, scheduling the hearing for March 9, 2017. I convened the hearing as scheduled. Government Exhibits (GE) 1-4 were admitted without objection. Applicant testified and presented 18 documents, which were admitted into evidence as Applicant’s Exhibits (AE) A-R, without objection. The record closed on May 26, 2017. I received the hearing transcript (Tr.) on March 27, 2017.

FINDINGS OF FACT

The SOR alleges six medical accounts (SOR ¶¶ 1.b., 1.d.-1.h.), five consumer accounts (SOR ¶¶ 1.a., 1.c., 1.i., 1.j., and 1.m.), a delinquent student-loan account (SOR ¶ 1.k.), and a delinquent mortgage-loan account (SOR ¶¶ 1.l.). Applicant admitted all 13 debts, claiming that she had paid four of them. After a thorough and careful review of the pleadings and exhibits, I make the following findings of fact:

Applicant is 50 years old. From 1989 to 1993, she served on active duty in the U.S. military. From 1993 to 2011, she served in the reserves, and she received an honorable discharge. Since August 2009, she has been employed by a DOD contractor. She was married in 1991, divorced in 2011, and has two adult children.1

Applicant’s admissions and her August 2015 and June 2016 credit reports establish all 13 alleged debts, which became delinquent between 2011 and 2014. Applicant’s settled her six medical collections (SOR ¶¶ 1.b., 1.d-1.h.) in February 2017.2

On the five alleged consumer accounts (SOR ¶¶ 1.a., 1.c., 1.i., 1.j., and 1.m.), Applicant paid or settled SOR ¶¶ 1.a. ($254), 1.c. ($659), 1.i. ($4,294), and 1.j. ($1283) in February 2017.3 She testified that the debt in SOR ¶ 1.m. was a marital debt that she took over at her divorce in 2011, and she made one $250 payment in May 2017.4

In September 2007, Applicant co-signed on her daughter’s student-loan account (SOR ¶ 1.k.), which became delinquent in December 2013. Applicant claimed that her daughter has made payment arrangements and is making payments on the delinquent student loans; however, there is no documentary evidence to support her claim.5

Following their divorce in 2011, Applicant’s ex-husband resided in and agreed to pay the mortgage for their marital home. Applicant’s name remained on the mortgage- loan account. Applicant’s ex-husband subsequently became unemployed and abandoned the residence. Applicant re-occupied the home and purportedly made mortgage-loan payments for a year. The loan became delinquent in about 2013 and later the bank foreclosed. In July 2016, the lender issued a 1099-C cancelling the $57,415 debt and potentially imputing taxable income to Applicant for tax year 2016. Applicant has not provided any documentation showing her debt-resolution efforts and payments on her mortgage-loan account, including her purported attempts to sell the house and to modify the mortgage loan. Furthermore, she has not amended her 2016 federal income tax returns to reflect the imputed income.6

Applicant was aware that her finances could impact her clearance eligibility. During her November 2015, she acknowledged her delinquent debts and indicated that she would begin payments as soon as possible. Applicant attributed her financial problems to her divorce in 2011 and a poor personal relationship from 2012 to 2015, wherein she financially supported her partner. In February 2017, Applicant borrowed $20,000 from her 401kaccount to resolve her delinquent debts. She has used approximately $10,300 to pay her delinquent debts, and approximately $9,700 remains. She has not received any credit or financial counseling.7

Applicant is well-regarded by her current and former supervisors for her leadership, work performance, and character.8

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 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.”

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 safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation of 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:

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 concerns under AG ¶ 19. The following are potentially applicable in this case:

(a) inability or unwillingness to satisfy debts; and

Applicant’s 13 alleged debts total approximately $92,144. These debts became delinquent between 2011 and 2014. The Government produced substantial evidence to raise the disqualifying conditions in AG ¶¶ 19(a) and 19(c).9 Conditions that could mitigate the financial considerations security concerns are provided under AG ¶ 20. The following 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, 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 indications that the problem is being resolved or is under control; and

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

Applicant’s delinquent debts were incurred between 2011 and 2014. Although she remained gainfully employed throughout, there is no documentary evidence of any debt- resolution efforts until after the issuance of the SOR in July 2016. Notwithstanding Applicant’s debt payments in February 2017, the three largest debts remain unresolved (SOR ¶¶ 1.k., 1.l., and 1.m.). She has not adequately accounted for her delay in addressing her delinquent debts or shown that her financial situation has stabilized such that these circumstances are unlikely to recur. AG ¶ 20(a) does not apply.

The application of AG ¶ 20(b) requires both that (1) Applicant’s financial indebtedness resulted from circumstances beyond his control, and (2) Applicant acted responsibly under the circumstances. Applicant’s divorce and her ex-husband’s unemployment contributed to her financial problems. These events may constitute circumstances beyond his control in the context of AG ¶ 20(b).

AG ¶ 20(b) also requires that an applicant act responsibly under the circumstances. Following the issuance of the SOR, Applicant paid or settled the debts alleged in SOR ¶¶ 1.a.-1.j. She only recently took steps to resolve the debts in SOR ¶¶ 1.k., 1.l., and 1.m., including one payment on the debt in SOR ¶ 1.m. She has not acted responsibly in addressing these three debts. AG ¶ 20(b) applies only to SOR ¶¶ 1.a.-1.j.

Applicant has not received any financial counseling. There is no evidence of Applicant’s monthly income and expenses to permit me to conclude that her financial situation is under control. AG ¶ 20(c) does not apply.

The concept of good faith Arequires a showing that a person acts in a way that shows reasonableness, prudence, honesty, and adherence to duty or obligation.”10 As discussed above, Applicant has resolved 10 of the alleged debts (SOR ¶¶ 1.a.- 1.j.) and made one payment on SOR ¶ 1.m. AG ¶ 20(d) applies as to SOR ¶¶ 1.a.-1.j.

Applicant’s divorce and her ex-husband’s unemployment triggered her financial problems. Nonetheless, there is no documentary evidence of any debt-resolution efforts until after the issuance of the SOR, despite her longtime gainful employment. Moreover, Applicant’s three largest delinquent debts remain unresolved. I find that Applicant did not mitigate the financial considerations security concerns.

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 and the factors in AG ¶ 2(c) in this whole-person analysis.

Applicant honorably served in the military for 22 years. She is very well-regarded by her current and former supervisors. Notwithstanding the financial problems triggered by Applicant’s divorce (2011) and her ex-husband’s unemployment (2012), Applicant did not make any debt-resolution efforts for over four years. Her three largest debts remain unresolved, and she has not established a track record of payments to address them. I conclude Applicant did not mitigate the financial considerations security concerns.

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

Subparagraphs 1.a.-1.j.: For Applicant

Subparagraphs 1.k.-1.m.: 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.

________________________ Eric H. Borgstrom Administrative Judge

FOOTNOTES

1 GE 1; Tr. 35-36 (Applicant was recalled to active duty from 2001-02, 2005-06, and 2008-09). 2 AE O; Tr. 38-41. 3 AE A; AE C.; AE E; AE F; AE G; AE H; AE O; Tr. 18-20, 22, 23, 44-45, 74. 4 AE R. 5 AE O; Tr. 49-51. 6 Tr. 29-30, 56-59. 7 GE 2; Tr. 30-32, 38, 47, 78. 8 AE P; AE Q. 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.). 10 See ISCR Case No. 08-12184 at 10 (App. Bd. Jan. 7, 2010) (Good-faith effort to resolve debts must be evidenced by a meaningful track record of repayment).