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ISCR Case 16-00879.h1 — CASE

ISCR Case 16-00879.h1granted

Case Headnote

ISCR Case No. 16-00879.h1

grantedJul 13, 2017· Hon. Erin C. Hogan· hearing

Summary

A 59-year-old Department of Defense contractor and retired Navy Chief Petty Officer was granted a security clearance despite concerns under Guideline F (Financial Considerations). The applicant's financial issues stemmed from a period of unemployment, leading to approximately $19,768.97 in delinquent accounts.

Specific allegations included a past-due mortgage payment of $3,315, a $6,779 charged-off credit card, a $3,830 collection account owed to a bank, and a $1,244 charged-off credit card. Other debts comprised a $664 charged-off credit union account, a $342 cell phone collection account, and a $250 speeding ticket in collection. Additionally, a wage garnishment for state taxes occurred in July 2015.

The judge found that the applicant's financial difficulties were largely due to circumstances beyond his control. He successfully resolved most of his delinquent debts and is making payments on the remaining ones, demonstrating a good-faith effort to manage and repay his obligations. Based on these mitigating factors, his security clearance was granted.

Why the Applicant Prevailed

The applicant resolved most of his delinquent debts and is making payments on the remaining debts.
His financial difficulties were primarily due to a period of unemployment, which he has since overcome.
The applicant demonstrated a good-faith effort to manage and repay his debts.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(b)raisedUnwillingness to Satisfy Debts
AG ¶ 19(c)raisedHistory of Not Meeting Financial Obligations
AG ¶ 19(f)raisedFailure to File or Pay Taxes

Mitigating

AG ¶ 20(a)appliedBehavior Occurred Long Ago or Unlikely to Recur
AG ¶ 20(b)appliedConditions Largely Beyond the Person's Control
AG ¶ 20(d)appliedGood-faith Effort to Repay Debts
AG ¶ 20(g)appliedArrangements with Tax Authority

Key Rule Quoted

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

Procedural Posture

SOR issuedJul 4, 2016
Answer filedJul 25, 2016
Hearing heldJun 14, 2017
Decision dateJul 13, 2017

Cite For

Mitigating Conditions Under Guideline F for Financial Difficulties
Good-faith Efforts to Resolve Debts
Impact of Unemployment on Financial Stability

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 had several delinquent debts, including mortgage and credit card debts, primarily due to a period of unemployment. However, the applicant demonstrated a good-faith effort to resolve these debts, leading to a decision in favor of the applicant under Guideline F.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	a mortgage payment that was past due in the amount of $3,315 with a total balance of $292,492. $3,315	For Applicant	Mortgage or Home Loan Debt	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (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 Documented Payment Plan with Creditor
1.b	a delinquent credit card account that was charged off in the amount of $6,779. $6,779	For Applicant	Credit Card Debt	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (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 Payment Plan with Creditor
1.c	a $3,830 collection account owed to a bank. $3,830	For Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (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	a $1,244 delinquent credit card account that was charged off. $1,244	For Applicant	Credit Card Debt	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (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.e	a $664 credit union account that was charged off. $664	For Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (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 Payment Plan with Creditor
1.f	a $342 cell phone account that was placed for collection. $342	For Applicant	Utility or Phone Debt	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (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.g	a $250 speeding ticket that was placed for collection. $250	For Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (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.h	a wage garnishment in July 2015 owed for state taxes. $3,344	For Applicant	Tax Unpaid	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (g) arrangements made with the tax authority; in compliance	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: ) ) [Name Redacted] ) ISCR Case No. 16-00879 ) ) Applicant for Security Clearance )

For Government: Alison O’Connell, Esquire, Department Counsel For Applicant: Pro se

07/13/2017 ______________

STATEMENT OF CASE

______________

HOGAN, Erin C., Administrative Judge:

On July 4, 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; Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) effective within the Department of Defense after September 1, 2006. On June 8, 2017, the AGs were updated and the AGs effective September 1, 2006 were cancelled. This decision will be decided based on the new AGs effective on June 8, 2017. If I were to consider this case under the AGs effective September 1, 2006, it would result in the same outcome.

On July 25, 2016, Applicant answered the SOR and requested a hearing before an administrative judge. Department Counsel was ready to proceed on September 12, 2016. The case was assigned to another administrative judge on February 2, 2017. It was transferred to me on May 22, 2017. On May 26, 2017, a Notice of Hearing was issued, scheduling the hearing for June 14, 2017. The hearing was held as scheduled. During the hearing, the Government offered four exhibits which were admitted as Government Exhibits (Gov) 1 – 4. Applicant testified, called one witness, and offered eight exhibits which were admitted as Applicant Exhibits (AE) 1 – 8. Applicant’s attachments to his Answer to the SOR were admitted as AE 9. The transcript (Tr.) was received on June 22, 2017. The record was held open until June 28, 2017, to allow Applicant to submit additional documents. Applicant was granted an extension to submit documents and he timely submitted a document which is admitted as AE 10. Based upon a review of the pleadings, exhibits, and testimony, eligibility for access to classified information is granted.

FINDINGS OF FACT

Applicant is a 59-year-old employee of a Department of Defense contractor seeking to maintain a security clearance. He has worked for his current employer since April 2014. He has a high school diploma and some college credit. He served on active duty in the United States Navy from 1983 – 2003. He retired as a Chief Petty Officer with an honorable discharge. He is divorced and has four adult children. He is engaged to his live-in companion who is citizen of Canada, but a permanent resident of the United States. (Tr. 25-26, 29-30, 32-33; Gov 1; Answer to SOR)

After Applicant retired from active duty, he worked for Contractor A from February 2005 to 2010. He earned approximately $92,000 annually plus between $10,000 to $15,000 overtime. He left his position with Contractor A for a position with Contractor B. Between February 2010 to July 2010, he took time off to visit his children before beginning his job with Contractor B. Applicant’s annual salary with Contractor B was $95,000. In 2013, Applicant was terminated from his position with Contractor B because he failed to timely update his security clearance application and he did not disclose his fiance’s Canadian citizenship to his employer. (Tr. 26-31)

Between April 2013 and May 2014, Applicant was unemployed or underemployed. During part of the year, he worked a minimum wage job and he worked for an insurance company, but his expenses were more than his earnings. In April 2014, he began his employment with his current company. He submitted a security clearance application on June 3, 2014. (Tr. 32, Gov 1)

Applicant’s security clearance background investigation revealed that he had the following delinquent debts: a mortgage payment that was past due in the amount of $3,315 with a total balance of $292,492. (SOR ¶ 1.a: Gov 2 at 1; Gov 3 at 4) a delinquent credit card account that was charged off in the amount of $6,779. (SOR ¶ 1.b: Gov 2 at 2; Gov 3 at 5); a $3,830 collection account owed to a bank (SOR ¶ 1.c: Gov 2 at 2; Gov 3 at 5); a $1,244 delinquent credit card account that was charged off (SOR ¶ 1.d: Gov 2 at 2; Gov 3 at 6); and a $664 credit union account that was charged off (SOR ¶ 1.e: Gov 2 at 2).

Additional delinquent accounts include: a $342 cell phone account that was placed for collection; (SOR ¶ 1.f: Gov 2 at 2; Gov 3 at 14); a $250 speeding ticket that was placed for collection (SOR ¶ 1.g: Gov 2 at 2; Gov 3 at 5); and a wage garnishment in July 2015 owed for state taxes (SOR ¶ 1.h: Gov 4).

In his answer to the SOR, Applicant states that his period of unemployment in 2013 to 2014, adversely affected his finances. He went from earning $120,000 annually to living on his military retirement of $900 a month. He was responsible for two mortgages, his home and a rental property. He had to purchase a new heating and air conditioner for his house during this period which cost $6,379. He has worked with debtors to pay what he could. He worked with his mortgage company to accomplish loan modifications on both of his mortgages and now both mortgages are current. It has taken him two years to break even on his debts. (Answer to SOR: AE 7)

The status of the SOR debts are:

SOR ¶ 1.a: Past due mortgage in the amount of $3,315, with a balance of $292,492: Applicant’s mortgagor agreed to a loan modification. Applicant is now current on his mortgage payments. (Tr. 37; AE 2; AE 5; AE 6; AE 9)

SOR ¶ 1.b: $6,779 charged off credit card account: Applicant entered into a payment agreement. He agreed to pay $75 per month beginning in July 2016. He has set up an allotment to pay this amount automatically from his pay. (Tr. 37; AE 3; AE 9 at 2-3; Answer to SOR).

SOR ¶ 1.c: $3,930 account with a bank that was placed for collection: Applicant settled and paid this debt on November 3, 2016. (Tr. 39; AE 4; AE 9 at 4)

SOR ¶ 1.d: $1,244 charged off credit card account: Applicant paid this debt on July 11, 2016. (Tr. 39; AE 9 at 5)

SOR ¶ 1.e: $664 charged off debt owed to a credit union: Applicant states this related to a truck he returned. He claims this debt was paid in full. He entered into a repayment agreement on July 22, 2016, to pay $100 a month towards this debt. (Tr. 40; AE 9 at 6-7)

SOR ¶ 1.f: $342 telephone bill placed for collection: Applicant paid this bill on July 11, 2016. (Tr. 42; AE 9 at 8)

SOR ¶ 1.g: $250 speeding ticket placed for collection: Applicant paid this debt on July 11, 2016. (Tr. 43-44; AE 9 at 9)

SOR ¶ 1.h: $3,344.97 wage garnishment for delinquent state income tax debt: Applicant set up a monthly payment with the state. When he started earning more money, he paid off the tax debt. (Item 10)

Applicant is not aware of any other delinquent debts, to include taxes. He is up- to-date on his debts. (Tr. 45-48)

POLICIES

When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines (AG). In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which are useful 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 over arching adjudicative goal is a fair, impartial and commonsense decision. According to AG ¶ 2(a), 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 for national security eligibility will be resolved in favor of the 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 as to obtaining 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 protect or 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.

Section 7 of EO 10865 provides that 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). 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. Affluence that cannot be explained by known sources of income is also a security concern insofar as it may result from criminal activity, including espionage.

AG ¶ 19 notes several disqualifying conditions that could raise security concerns. The disqualifying conditions that are relevant to Applicant’s case include:

(a) inability to satisfy debts;

(b) unwillingness to satisfy debts regardless of the ability to do so;

(f) failure to file or fraudulently filing annual Federal, state, or local income tax returns or failure to pay annual Federal, state, or local income tax as required.

Applicant encountered financial problems after he became unemployed in 2013. He struggled to pay his mortgages and his debts. He incurred eight delinquent debts, an approximate total of $19,768.97. The debts include a $3,344 delinquent state tax debt. AG ¶¶ 19(a), 19(b), 19(c), and 19(f) apply to Applicant’s case.

An individual who is financially irresponsible may also be irresponsible, unconcerned, or careless in his obligations to protect classified information. Behaving irresponsibly in one aspect of life provides an indication of how a person may behave in other aspects of life. A person’s relationship with his creditors is a private matter until evidence is uncovered demonstrating an inability or unwillingness to pay debts under agreed terms. Absent evidence of strong extenuating or mitigating circumstances, an applicant with a history of serious or recurring financial difficulties is in a situation of risk inconsistent with the holding of a security clearance. An applicant is not required to be debt free, but is required to manage his finances in such a way as to meet his financial obligations.

The Government’s substantial evidence and Applicant’s own admissions raise security concerns under Guideline F. The burden shifted to Applicant to produce evidence to rebut, explain, extenuate, or mitigate the security concerns. (Directive ¶E3.1.15) An applicant has the burden of proving a mitigating condition, and the burden of disproving it never shifts to the Government. (See ISCR Case No. 02-31154 at 5 (App. Bd. Sept. 22, 2005))

AG ¶ 20 includes examples of conditions that could mitigate security concerns arising from financial difficulties. The following mitigating conditions potentially apply:

(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;

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

(g) the individual has made arrangements with the appropriate tax authority to file or pay the amount owed and is in compliance with those arrangements.

AG ¶¶ 20(a) and 20(b) apply because Applicant’s debts were the result of a period of unemployment. There is no indication Applicant encountered financial problems prior to this time period. He is working hard to resolve the delinquent debts incurred during his period of unemployment and is acting responsibly under the circumstances. Applicant’s past financial issues do not cast doubt on his reliability, trustworthiness, or good judgment.

AG ¶ 20(d) applies because Applicant is making a good-faith effort to resolve his delinquent debts. He provided proof that he resolved the debts alleged in SOR ¶¶ 1.a, 1.c, 1.d, 1.f, 1,g, and 1.h. He entered into repayment agreements with the debts alleged in SOR ¶¶ 1.band 1.e. As soon as he was financially able, he put forth a good-faith effort to resolve his delinquent debts.

AG ¶ 20(g) applies because Applicant resolved his state tax debt. He initially began making payments and eventually paid the full balance.

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 considered Applicant’s honorable military service and his employment as a defense contractor. I considered that he has worked on resolving these debts for several years. His year of unemployment between 2013 to 2014 created considerable financial problems. Upon gaining employment and after taking some time to get on a more stable financial footing, Applicant began to resolve his delinquent accounts. He resolved most of the debts and is making payment plans towards his remaining debts. Applicant’s financial situation has improved and he is now able to meet his financial obligations. Security concerns under financial considerations 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.h: For Applicant

CONCLUSION

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

_________________ ERIN C. HOGAN Administrative Judge