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ISCR Case 16-00843.h1 — CASE

ISCR Case 16-00843.h1granted

Case Headnote

ISCR Case No. 16-00843.h1

grantedMay 8, 2017· Hon. Juan J. Rivera· hearing

Summary

A 34-year-old former Air Force officer was granted a security clearance despite concerns under Guideline E (Personal Conduct) and Guideline F (Financial Considerations). The Statement of Reasons (SOR) alleged that the applicant deliberately falsified his 2015 security clearance application by failing to disclose several debts. These included a delinquent credit card account of $11,372, an unpaid security monitoring service charge of $382, and an unpaid toll violation of $103. Additionally, a delinquent mortgage of $41,958 was cited, stemming from a home purchased with his wife in 2009 for $269,000.

The judge found that the applicant's financial difficulties were due to circumstances beyond his control, specifically a marital separation and an economic downturn. The applicant demonstrated responsible management of his financial situation, with no new delinquent debts reported as of 2017.

Crucially, the judge determined there was no intent to mislead or deliberately falsify information in the applicant's security clearance application. Based on these mitigating factors, the security clearance was granted.

Why the Applicant Prevailed

The applicant's financial problems were due to circumstances beyond his control.
He demonstrated responsible management of his financial situation, with no new delinquent debts as of 2017.
The judge found no intent to mislead in the applicant's security clearance application.

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 Control
AG ¶ 20(c)appliedThe Person Has Received or Is Receiving Counseling for the Problem
AG ¶ 20(d)appliedThe Individual Initiated a Good-faith Effort to Repay Overdue Creditors

Key Rule Quoted

“Eligibility for access to classified information may be granted only upon a finding that it is clearly consistent with the national interest to do so.”
— Exec. Or. 10865, Safeguarding Classified Information within Industry § 2 (Feb. 20, 1960), as amended.

Procedural Posture

SOR issuedJul 13, 2016
Answer filedAug 1, 2016
Hearing heldMar 8, 2017
Decision dateMay 8, 2017

Cite For

Mitigation of Financial Issues Under Guideline F Due to Circumstances Beyond Control
Credibility of Applicant's Testimony Regarding Personal Conduct
Good Faith Efforts to Resolve Financial Obligations

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 E (Personal Conduct) · descriptive summary of a decided case

Posture: Decision on RecordDecided: granted

The judge found that the applicant's omissions on his security clearance application were not deliberate and did not reflect a lack of candor. The applicant's personal conduct concerns were mitigated, leading to a decision to grant access to classified information.

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
2.a	Applicant deliberately falsified his 2015 SCA when he failed to disclose the debts alleged in SOR ¶¶ 1.a, 1.c, and 1.d.	For Applicant	Omission or Failure to DiscloseNOT DELIBERATE	Financial	Denied	—	—	—

Descriptive standardized rendering of a decided public case (Guideline E). The verbatim source decision is shown in full below.

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 problems were largely due to circumstances beyond his control and that he acted responsibly in addressing his debts. All allegations under Guideline F were resolved in favor of the applicant, leading to the granting of his security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	SOR ¶ 1.a ($11,372) alleged a delinquent credit card account. $11,372	For Applicant	Credit Card Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(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.b	Regarding the delinquent mortgage alleged in SOR ¶ 1.b ($41,958), Applicant explained that he purchased a home with his wife in 2009 for $269,000. $41,958	For Applicant	Mortgage or Home Loan Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(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.c	Concerning the debt alleged in SOR ¶ 1.c ($382), Applicant testified that when he was about to deploy for an overseas assignment he paid off his security system but failed to pay the last month charges for the security monitoring services. $382	For Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(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	SOR ¶ 1.d ($103) alleged an unpaid toll violation. $103	For Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(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

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. 16-00843 ) ) Applicant for Security Clearance

For Government: Erin Thompson, Esq., Department Counsel For Applicant: Pro se

05/08/2017 ___________

STATEMENT OF CASE

___________

RIVERA, Juan J., Administrative Judge:

Applicant’s financial problems resulted from circumstances beyond his control and he acted responsibly under the circumstances. His 2017 credit report shows no new delinquent debt. He is in control of his financial situation. He did not deliberately falsify his security clearance application. Financial considerations and personal conduct security concerns are mitigated. Access to classified information is granted.

Statement of the Case

Applicant submitted a security clearance application (SCA) on August 5, 2015. After reviewing it and the information gathered during a background investigation, the Department of Defense (DOD) on July 13, 2016, issued Applicant a Statement of Reasons (SOR) detailing security concerns under Guideline F (financial considerations) and Guideline E (personal conduct).1 Applicant answered the SOR on August 1, 2016 (Answer), and requested a hearing before an administrative judge from the Defense Office of Hearings and Appeals (DOHA). On February 15, 2017, Applicant requested an expedited hearing. (Hearing Exhibit 1) At hearing, Applicant stated he had sufficient time to prepare, was ready to proceed, and affirmatively waived his right to 15-day advanced notice of the hearing. (Tr. 15-16)

The case was assigned to me on February 28, 2017, and DOHA issued a notice of hearing that same day, scheduling the hearing for March 8, 2017. The hearing was held as scheduled. Government exhibits (GE) 1 through 4, and Applicant’s exhibits (AE) 1 through 4, were admitted into evidence without objection. On March 20, 2017, DOHA received the transcript of the hearing.

FINDINGS OF FACT

In Applicant’s Answer, he did not specifically deny or admit the SOR allegations. I considered them denied. However, he generally admitted some of the SOR factual allegations and provided extenuating and mitigating information. Applicant’s statements in his Answer and his hearing admissions are incorporated into my findings of fact.

Applicant is 34 years old. He completed a bachelor’s degree in 2005, and is currently pursuing a master’s degree. Applicant married his wife in 2007, and they separated in 2011. (Tr. 30) He has a young daughter of this marriage. He stated in his 2015 SCA that he had been living with a cohabitant since 2014. He has a one-year-old son from this relationship.

Applicant received a U.S. Air Force officer commission in 2005. He served honorably on active duty until he received an early discharge in 2011. He then joined the Reserve where he served until 2014. Applicant worked as a security specialist between October 2011 and February 2012; as a project analyst for a federal contractor between February 2012 and August 2013; he served in a full-time position with the National Guard/Reserve between August 2013 and January 2014; and as a logistics supervisor for a private company between January 2014 and February 2015. He was hired as a project analyst by his current employer (a federal contractor) in February 2015.

Applicant received a secret clearance upon his commission as an Air Force officer in 2005. His clearance was continued until his discharge from the Reserve in 2014. There are no allegations or evidence of any security violations or issues of concern, except for those in the SOR. After his discharge, Applicant deployed twice to the Middle East in support of U.S. interests while working for Government contractors.

Applicant submitted his most recent SCA in 2015. In response to Section 26 (Financial Record) of the SCA, Applicant disclosed that he had financial problems, which included being “over 120 days delinquent on some debts,” and the repossession and foreclosure of his home. Applicant explained that when he separated from active duty he also separate from his wife. He could not find employment with a salary commensurate with his Air Force salary, and his wife provided no financial assistance to pay the mortgage. He paid the mortgage until he exhausted his savings and retirement accounts.

Applicant’s security investigation addressed his financial problems and revealed the four delinquent accounts alleged in the SOR. Applicant’s history of financial problems is well documented in the record evidence and his testimony. The status of the SOR debts follows:

SOR ¶ 1.a ($11,372) alleged a delinquent credit card account. In 2015, Applicant entered into a payment agreement with the collection agency and has been paying $210 a month since. As of February 6, 2017, he had reduced the debt by $3,780, to a total owed of $7,592. (AE 4)

Regarding the delinquent mortgage alleged in SOR ¶ 1.b ($41,958), Applicant explained that he purchased a home with his wife in 2009 for $269,000. In July 2010, the bank notified him that the mortgage exceeded the value of the property ($120,000). Notwithstanding, Applicant continued paying his mortgage until 2012. In 2012, he was working overseas on a contract that was not extended. He returned to the United States and found himself without employment for about six months. When he found a job, his salary was significantly lower and he had additional expenses associated with his relocation for the job and living expenses. He did not have the financial means to continue paying the mortgage and other debts, and they became delinquent.

Applicant continued communications with the mortgage holder, and in 2015, he surrendered the property via a deed-in-lieu of foreclosure. The mortgage holder released Applicant of all liabilities resulting from the mortgage. (AE 3)

Concerning the debt alleged in SOR ¶ 1.c ($382), Applicant testified that when he was about to deploy for an overseas assignment he paid off his security system but failed to pay the last month charges for the security monitoring services. He was not aware of the debt until he was informed about it during his interview with a background investigator. Shortly thereafter, Applicant paid the debt.

SOR ¶ 1.d ($103) alleged an unpaid toll violation. Applicant credibly testified that it was his wife’s violation. The violation occurred after their separation and she kept the vehicle. She failed to pay the violation and the state initiated a collection against Applicant because at the time he was in the car title. When he was informed his wife did not pay the violation, he paid it to resolve the issue.

A March 2017 Equifax credit report confirms Applicant’s testimony. (GE 4) It reflects that Applicant has 25 transaction accounts with currently no past due balances. The SOR debts are not reflected delinquent in the credit report.

Applicant income is $79,000 annually ($5,000 a month), plus a monthly $376 disability payment he receives from the Department of Veteran’s Affairs. His monthly obligations include: child support, $950; rent, $1,435; utilities, $90; cellphone, $131; and cable, $100. Additionally, he pays lawyer’s fees ($1,000), credit card payments, car and homeowner’s insurance, and his student loans. Applicant testified that he has been able to make ends meet, but with strict financial planning. In 2015, he sought financial counseling from a financial planner who helped him restructure his bill payments. Applicant now uses a spreadsheet to track his monthly income and expenses. Applicant’s documentary evidence shows he currently has no delinquencies. His financial information and credit reports show that he is not living beyond his financial means. He needs his clearance and current job to continue paying his debts and supporting his children. Taking care of his children is his priority.

Applicant expressed remorse for his financial problems. He believes that his separation from the service, the separation from his wife, the downturn of the U.S. economy, and his inability to find a job paying a good salary were circumstances beyond his control that heavily contributed or exacerbated his financial problems. He believes that his financial situation is now stable and he is motivated to continue resolving his financial problems. He promised to maintain his financial responsibility. Applicant understands that he is required to maintain his financial responsibility to be eligible for a clearance.

POLICIES

Eligibility for access to classified information may be granted “only upon a finding that it is clearly consistent with the national interest to do so.” Exec. Or. 10865, Safeguarding Classified Information within Industry § 2 (Feb. 20, 1960), as amended. The U.S. Supreme Court has recognized the substantial discretion of the Executive Branch in regulating access to information pertaining to national security, emphasizing that “no one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988).

The AG list disqualifying and mitigating conditions for evaluating a person’s suitability for access to classified information. Any one disqualifying or mitigating condition is not, by itself, conclusive. However, the AG should be followed where a case can be measured against them, as they represent policy guidance governing access to classified information. Each decision must reflect a fair, impartial, and commonsense consideration of the whole person and the factors listed in AG ¶ 2(a). All available, reliable information about the person, past and present, favorable and unfavorable, must be considered.

Security clearance decisions resolve whether it is clearly consistent with the national interest to grant or continue an applicant’s security clearance. The Government must prove, by substantial evidence, controverted facts alleged in the SOR. If it does, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. The applicant bears the heavy burden of demonstrating that it is clearly consistent with the national interest to grant or continue his or her security clearance.

Persons with access to classified information enter into a fiduciary relationship with the Government based on trust and confidence. Thus, the Government has a compelling interest in ensuring each applicant possesses the requisite judgment, reliability, and trustworthiness of those who must protect national interest as their own. The “clearly consistent with the national interest” standard compels resolution of any reasonable doubt about an applicant’s suitability for access in favor of the Government. “[S]ecurity clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531; AG ¶ 2(b). Clearance decisions are not a determination of the loyalty of the applicant concerned. They are merely an indication that the applicant has or has not met the strict guidelines the Government has established for issuing a clearance.

ANALYSIS

Financial Considerations

AG ¶ 18 articulates the security concern relating to financial problems:

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.

Applicant’s history of financial problems is well documented in his testimony and the record evidence.

AG ¶ 19 provides two disqualifying conditions that could raise a security concern and may be disqualifying in this case: “(a) inability or unwillingness to satisfy debts” and “(c) a history of not meeting financial obligations.” The record established the disqualifying conditions in AG ¶¶ 19(a) and 19(c), requiring additional inquiry about the possible applicability of mitigating conditions.

Five 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, 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;

(d) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts;2 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.

The Appeal Board concisely explained Applicant’s responsibility for proving the applicability of mitigating conditions as follows:

Once a concern arises regarding an Applicant’s security clearance eligibility, there is a strong presumption against the grant or maintenance of a security clearance. See Dorfmont v. Brown, 913 F. 2d 1399, 1401 (9th Cir. 1990), cert. denied, 499 U.S. 905 (1991). After the Government presents evidence raising security concerns, the burden shifts to the applicant to rebut or mitigate those concerns. See Directive ¶ E3.1.15. The standard applicable in security clearance decisions is that articulated in Egan, supra. “Any doubt concerning personnel being considered for access to classified information will be resolved in favor of the national security.” Directive, Enclosure 2 ¶ 2(b).

ISCR Case No. 10-04641 at 4 (App. Bd. Sept. 24, 2013).

Applicant acknowledged his financial problems. They resulted from circumstances beyond his control, including his separation from the service, his marital separation, the downturn of the real estate market, his inability to find a paying job commensurate with his service pay, and periods of unemployment and underemployment.

Applicant’s documentary evidence show that he remained in contact with his creditors, established payment plans in 2015 (before issuance of the SOR), and has been paying the debt alleged in SOR ¶ 1.a. Moreover, he resolved the largest debt alleged in the SOR and paid the two remaining debts. Applicant is currently in control of his own finances. The credit reports show that he has not acquired any new delinquent debt. His financial information and credit report show that he is not living beyond his financial means.

Applicant expressed remorse for his past financial problems. His financial situation is now stable and he is motivated to continue resolving his financial problems. He is keeping his own budget and managing his expenses. Applicant believes he has learned his lesson and promised to maintain his financial responsibility. Considering the evidence as a whole, Applicant’s past financial problems do not cast doubt on his current reliability, trustworthiness, or good judgment. Applicant’s efforts are sufficient to mitigate the financial considerations security concerns.

Guideline E, Personal Conduct

AG ¶ 15 articulates the security concern for personal conduct:

Conduct involving questionable judgment, lack of candor, dishonesty, or unwillingness to comply with rules and regulations can raise questions about an individual’s reliability, trustworthiness and ability to protect classified information. Of special interest is any failure to provide truthful and candid answers during the security clearance process or any other failure to cooperate with the security clearance process.

SOR ¶ 2.a alleged that Applicant deliberately falsified his 2015 SCA when he failed to disclose the debts alleged in SOR ¶¶ 1.a, 1.c, and 1.d. I find that Applicant’s omissions were not deliberate or made with the intent to mislead the Government.

Applicant disclosed in his 2015 SCA that he developed financial problems after he left the service and separated from his wife in 2011. He disclosed that he was delinquent on his mortgage, the largest debt, and was pending foreclosure. He credibly testified that he was not aware of the debt alleged in SOR ¶ 1.cuntil he met with the investigator, and he believed that his wife would have paid for her toll violation.

Considering the totality of the circumstances, including his demeanor while testifying, I find Applicant’s testimony to be truthful and credible. I find he refuted the Guideline E allegation.

WHOLE PERSON CONCEPT

I considered the potentially disqualifying and mitigating conditions in light of all the facts and circumstances surrounding this case, and under the whole-person concept. AG ¶ 2(c). I have incorporated my comments under Guidelines F and E in my whole-person analysis, but some warrant additional comment.

Applicant, 34, honorably served 10 years in the Air Force as an officer. He possessed a security clearance during his service and there is no evidence of any security violations or concerns, except for the SOR allegations. He has worked for federal contractors (on-and-off) since 2011, and deployed twice to the Middle East in support of U.S. interests. His financial problems were due to circumstances beyond his control and his documentary evidence shows he acted responsibly under the circumstances.

Applicant’s evidence is sufficient to establish his current financial responsibility. He showed good-faith efforts to resolve his debts. He is in control of his financial situation. Applicant understands that he has to maintain financial responsibility to be eligible for a clearance and retain his job. I find that his omissions on the 2015 SCA were not deliberate. Financial considerations and personal conduct security concerns are mitigated.

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.d: For Applicant

Paragraph 2, Guideline E: FOR APPLICANT

Subparagraph 2.a: 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 or continue Applicant’s eligibility for a security clearance. Eligibility for access to classified information is granted.

_________________________ JUAN J. RIVERA Administrative Judge

FOOTNOTES

1 The DOD 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 (Directive) (January 2, 1992), as amended; and the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information (AG), implemented by the DOD on September 1, 2006. 2 The Appeal Board has previously explained what constitutes a “good faith” effort to repay overdue creditors or otherwise resolve debts:

In order to qualify for application of [the “good faith” mitigating condition], an applicant must present evidence showing either a good-faith effort to repay overdue creditors or some other good-faith action aimed at resolving the applicant’s debts. The Directive does not define the term “good-faith.” However, the Board has indicated that the concept of good- faith “requires a showing that a person acts in a way that shows reasonableness, prudence, honesty, and adherence to duty or obligation.” Accordingly, an applicant must do more than merely show that he or she relied on a legally available option (such as bankruptcy) in order to claim the benefit of [the “good faith” mitigating condition].

(internal citation and footnote omitted) ISCR Case No. 02-30304 at 3 (App. Bd. Apr. 20, 2004) (quoting ISCR Case No. 99-9020 at 5-6 (App. Bd. June 4, 2001)).