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ISCR Case 16-01244.h1 — CASE

ISCR Case 16-01244.h1granted

Case Headnote

ISCR Case No. 16-01244.h1

grantedAug 17, 2017· Hon. Michael H. Leonard· hearing

Summary

A 77-year-old IT specialist was granted a security clearance despite initial concerns under Guideline E (Personal Conduct) and Guideline F (Financial Considerations). The Statement of Reasons alleged that the applicant failed to disclose delinquent financial accounts on his security clearance application, raising disqualifying conditions related to financial issues and potential falsification.

However, the applicant successfully demonstrated that he was unaware of these delinquent accounts when he submitted his application. He provided evidence of improved financial stability, including a stable financial situation reflected in his 2016 credit report.

The judge determined that the applicant's past financial history did not warrant a denial under Guideline F, and his omission was not a deliberate act of falsification under Guideline E. The applicant resolved the security concerns, leading to a favorable decision and the granting of his security clearance.

Why the Applicant Prevailed

The applicant resolved security concerns stemming from his past financial history.
He was unaware of delinquent accounts at the time of his application, negating the falsification allegation.
The 2016 credit report showed a stable financial situation, supporting his case.

Conditions Referenced

Disqualifying

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

Mitigating

AG ¶ 20(e)appliedThe Individual Has a Reasonable Basis to Dispute the Legitimacy of the Past-due DebtThe applicant provided evidence of actions taken to resolve the issue and disputed the legitimacy of the debts.

Key Rule Quoted

“A statement is false when it is made deliberately (knowingly and willfully). An omission of relevant and material information is not deliberate if the person genuinely forgot about it, inadvertently overlooked it, misunderstood the question, or genuinely thought the information did not need to be reported.”

Procedural Posture

SOR issuedJul 26, 2016
Answer filedAug 12, 2016
Hearing heldMar 3, 2017Rescheduled due to inclement weather.
Decision dateAug 17, 2017

Cite For

Resolution of Financial Concerns Under Guideline F
Credibility of Applicant's Explanation Regarding Omissions Under Guideline E
Impact of Recent Credit Reports on 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 E (Personal Conduct) · descriptive summary of a decided case

Posture: Decision on RecordDecided: granted

The judge found that the applicant did not falsify his security clearance application regarding delinquent financial accounts, as he was unaware of them at the time of application. The judge concluded that the applicant's personal conduct concerns were resolved, leading to a favorable decision for the applicant.

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
2.a	The applicant failed to disclose delinquent financial accounts on his security clearance application.	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 history did not raise sufficient concerns under Guideline F to deny him a security clearance. All allegations related to financial considerations were resolved in favor of the applicant, indicating that he adequately explained and addressed the issues raised.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a–1.f	6 sub-charges — specific text not stated in this decision (for the applicant).	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. 16-01244 ) ) Applicant for Security Clearance

For Government: Robert Blazewick, Esq., Department Counsel, and Julie R. Mendez, Esq., Deputy Chief Department Counsel For Applicant: Pro se

08/17/2017 ______________

STATEMENT OF CASE

______________

LEONARD, Michael H., Administrative Judge:

Applicant contests the Defense Department’s intent to deny him eligibility for access to classified information. He adequately explained the circumstances and resolved any security concern stemming from his past financial history. He did not falsify his security clearance application when he failed to disclose delinquent financial accounts of which he was then unaware. Accordingly, this case is decided for Applicant.

Statement of the Case

Applicant completed and submitted a Questionnaire for National Security Positions (SF 86 format) on March 28, 2015. This document is commonly known as a security clearance application. Thereafter, on July 26, 2016, after reviewing the application and the information gathered during a background investigation, the U.S. Department of Defense Consolidated Adjudications Facility, Fort George G. Meade, Maryland, sent Applicant a statement of reasons (SOR), explaining it was unable to find that it was clearly consistent with the national interest to grant him eligibility for access to classified information. The SOR is similar to a complaint. It detailed the factual reasons for the action under the security guidelines known as Guideline F for financial considerations and Guideline E for personal conduct (falsification).

Applicant answered the SOR on August 12, 2016. He denied five of the six delinquent financial accounts alleged under Guideline F, and he denied the falsification allegation under Guideline E. He also requested a hearing before an administrative judge. The hearing did not proceed as scheduled on February 3, 2017, due to inclement winter weather at Applicant’s place of residence. The hearing took place as rescheduled on March 3, 2017. The hearing transcript (Tr.) was received March 9, 2017.

FINDINGS OF FACT

Applicant is a 77-year-old employee who is seeking a security clearance for his job as an information technology (IT) specialist with a company doing business in the defense industry. He has been employed by this company since January 2015. He has been on leave without pay since about August 2016, when an interim security clearance was withdrawn. Since then, he and his wife have relied on Social Security benefits for their income.

Applicant has worked in the IT industry since 1965, and his employment history includes working for various entities of the federal government as a contractor.1 His employment history also includes active duty military service in the U.S. Air Force during 1958-1964. His first marriage ended in divorce. He married for the second time in 1981. His spouse is 63 years old, and she is not employed outside the home. They live on a 157-acre farm, which contains about 90 open acres suitable for grazing livestock. They no longer raise cattle, and the farm has not been an income-producing asset since about 2004.2

In his March 2015 security clearance application, Applicant, in response to Question 26 concerning financial matters, answered all questions in the negative, thereby denying any delinquent, collection, or past-due accounts as well as other financial problems.3 The background investigation reported otherwise.4 In his answer to the SOR as well as during the hearing, Applicant explained that he was unaware of any derogatory financial accounts that should have been disclosed in response to Question 26.5

In addition to the falsification allegation, the SOR alleged a history of financial problems consisting of six collection or charged-off accounts for a total of about $23,749. Upon further review, the charged-off account (without an amount) in SOR ¶ 1.bis the original account of the $2,012 collection account in SOR ¶ 1.e. The April 2015 credit report shows the original account had a balance of $2,102 when it was charged off and sold to another lender for collection.6 Because of this duplication, the allegation in SOR ¶ 1.bis decided for Applicant.

In his answer to the SOR as well as during the hearing, Applicant stated he was familiar with two of the delinquent accounts in the SOR; he disputed the charged-off account on the basis that someone else charged to his account; and he explained that the $289 collection account should have been paid by an insurance claim. He further explained that the other four accounts were unknown debts, and he has tried unsuccessfully to have them removed from his credit report.

The Government presented three credit reports from September 2012, April 2015, and June 2016 in support of its case.7 The September 2012 credit report has three collection accounts for a total of about $17,160. Those three collection accounts also appear in the April 2015 credit report. And the six delinquent accounts in the SOR appear in the April 2015 credit report.

The June 2016 credit report, which was obtained about a month before the SOR was issued in July 2016, is nearly perfect. The report has an account for an installment auto loan that was 30 days past due on one occasion. Otherwise, the report reflects no public records, repossessions, past-due accounts, charged-off accounts, foreclosure accounts, collection accounts, or other negative accounts. None of the six delinquent accounts in the SOR appear in the June 2016 credit report. The 2016 credit report shows Applicant’s overall financial situation is stable and under control.

Law and Policies

This case is adjudicated under Executive Order (E.O.) 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 National Security Adjudicative Guidelines for Determining Eligibility for Access to Classified Information or Eligibility to Hold a Sensitive Position (AG), effective June 8, 2017.8

It is well-established law that no one has a right to a security clearance.9 As noted by the Supreme Court in Department of the Navy v. Egan, “the clearly consistent standard indicates that security clearance determinations should err, if they must, on the side of denials.”10 Under Egan, Executive Order 10865, and the Directive, any doubt about whether an applicant should be allowed access to classified information will be resolved in favor of protecting national security.

A favorable clearance decision establishes eligibility of an applicant to be granted a security clearance for access to confidential, secret, or top-secret information.11 An unfavorable clearance decision (1) denies any application, (2) revokes any existing security clearance, and (3) prevents access to classified information at any level.12

There is no presumption in favor of granting, renewing, or continuing eligibility for access to classified information.13 The Government has the burden of presenting evidence to establish facts alleged in the SOR that have been controverted.14 An applicant is responsible for presenting evidence to refute, explain, extenuate, or mitigate facts that have been admitted or proven.15 In addition, an applicant has the ultimate burden of persuasion to obtain a favorable clearance decision.16

In Egan, the Supreme Court stated that the burden of proof is less than a preponderance of evidence.17 The Appeal Board has followed the Court’s reasoning, and a judge’s findings of fact are reviewed under the substantial-evidence standard.18

DISCUSSION

Under Guideline F for financial considerations, the suitability of an applicant may be questioned or put into doubt when that applicant has a history of excessive indebtedness or financial problems or difficulties. The overall concern is:

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 or sensitive information. . . .19

The concern is broader than the possibility that a person might knowingly compromise classified or sensitive information to obtain money or something else of value. It encompasses concerns about a person’s self-control, judgment, and other important qualities. A person who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified or sensitive information.

In analyzing the facts of this case, I considered the following disqualifying and mitigating conditions:

AG ¶ 19(a) inability to satisfy debts;

AG ¶ 19(c) a history of not meeting financial obligations; and

AG ¶ 20(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 taken to resolve the issue.

This case is a bit unusual, because the Government’s documentary evidence is in conflict. The 2012 and 2015 credit reports are sufficient to establish the delinquent accounts in the SOR. But the 2016 credit report is nearly perfect. And the report has none of the delinquent accounts in the SOR. Although Applicant did not present documentation, he may rely on the Government’s evidence if it supports his case, which the 2016 credit report does. To his credit, Department Counsel acknowledged during closing argument that it was “fair” to Applicant to offer the 2016 credit report as an exhibit.20 As noted in the findings of fact, the 2016 credit report shows Applicant’s overall financial situation is stable and under control.

Based on the 2016 credit report, it would be unreasonable to require Applicant to further dispute the delinquent accounts in the SOR, because there is nothing more to dispute. To impose such a requirement would force Applicant to essentially prove a negative. Accordingly, based on the totality of facts and circumstances, I am persuaded that Applicant’s past financial history, as reflected in the three credit reports and as explained by Applicant during the hearing, does not rise to the level sufficient to justify an unfavorable clearance decision under Guideline F.

Under Guideline E for personal conduct, the concern is that “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 or sensitive information. Of special concern is any failure to cooperate or provide truthful and candid answers during national security investigative or adjudicative processes.”21 A statement is false when it is made deliberately (knowingly and willfully). An omission of relevant and material information is not deliberate if the person genuinely forgot about it, inadvertently overlooked it, misunderstood the question, or genuinely thought the information did not need to be reported.

Concerning the falsification allegation, I am not persuaded that Applicant’s failure to disclose the delinquent accounts was deliberate. Applicant explained that he was unaware of any derogatory accounts when he completed the 2015 security clearance application. His explanation was credible and worthy of belief.

Following Egan and the clearly consistent standard, I have no doubts or concerns about Applicant’s reliability, trustworthiness, good judgment, and ability to protect classified information. In reaching this conclusion, I weighed the evidence as a whole and considered if the favorable evidence outweighed the unfavorable evidence or vice versa. I also considered the whole-person concept. Accordingly, I conclude that he met his ultimate burden of persuasion to show that it is clearly consistent with the national interest to grant him eligibility for access to classified information.

FORMAL FINDINGS

The formal findings on the SOR allegations are:

Paragraph 1, Guideline F: For Applicant Subparagraphs 1.a-1.f: For Applicant

Paragraph 2, Guideline E: For Applicant Subparagraph 2.a: For Applicant

CONCLUSION

In light of the record as a whole, it is clearly consistent with the national interest to grant Applicant access to classified information.

Michael H. Leonard Administrative Judge

FOOTNOTES

1 Tr. 52-55. 2 Tr. 48. 3 Exhibit 1. 4 Exhibits 2, 3, and 4. 5 Tr. 48. 6 Exhibit 3. 7 Exhibits 2, 3, and 4. 8 The 2017 AG are available at http://ogc.osd.mil/doha. 9 Department of the Navy v. Egan, 484 U.S. 518, 528 (1988) (“it should be obvious that no one has a ‘right’ to a security clearance”); Duane v. Department of Defense, 275 F.3d 988, 994 (10th Cir. 2002) (no right to a security clearance). 10 484 U.S. at 531. 11 Directive, ¶ 3.2. 12 Directive, ¶ 3.2. 13 ISCR Case No. 02-18663 (App. Bd. Mar. 23, 2004). 14 Directive, Enclosure 3, ¶ E3.1.14. 15 Directive, Enclosure 3, ¶ E3.1.15. 16 Directive, Enclosure 3, ¶ E3.1.15. 17 Egan, 484 U.S. at 531. 18 ISCR Case No. 01-20700 (App. Bd. Dec. 19, 2002) (citations omitted). 19 AG ¶ 18. 20 Tr. 58. 21 AG ¶ 15.