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ISCR Case 16-01398.h1 — CASE

ISCR Case 16-01398.h1granted

Case Headnote

ISCR Case No. 16-01398.h1

grantedAug 23, 2017· Hon. Shari Dam· hearing

Summary

The applicant, a 31-year-old military veteran and defense contractor, faced financial concerns under Guideline F due to delinquent student loans and a bankruptcy. He successfully mitigated these concerns by demonstrating a good-faith effort to repay debts and resolve financial issues, leading to the granting of his security clearance.

Under Guideline F (Financial Considerations), the Statement of Reasons alleged the following: Applicant has a 2010 Chapter 7 bankruptcy that discharged about $10,000 in delinquent debts (1.a). Applicant has a delinquent student loan of $36,885 (1.b). Applicant has a delinquent student loan of $19,610 (1.c). Applicant has a delinquent student loan of $11,344 (1.d). Applicant has a delinquent student loan of $2,861 (1.e).

The judge granted the clearance. The government raised disqualifying conditions F.1.a, F.1.b, F.1.c. The judge applied mitigating conditions F.2.b, F.2.c, F.2.d. The decision turned on the following: The applicant initiated a repayment plan for his student loans and made consistent payments; He resolved additional debts and participated in credit counseling as required by bankruptcy court; The applicant's financial issues were largely due to circumstances beyond his control, such as unemployment after military deployment.

Why the Applicant Prevailed

The applicant initiated a repayment plan for his student loans and made consistent payments.
He resolved additional debts and participated in credit counseling as required by bankruptcy court.
The applicant's financial issues were largely due to circumstances beyond his control, such as unemployment after military deployment.

Conditions Referenced

Disqualifying

F.1.araisedInability to Satisfy Debts
F.1.braisedUnwillingness to Satisfy Debts Regardless of the Ability to Do So
F.1.craisedA History of Not Meeting Financial Obligations

Mitigating

F.2.bappliedThe Conditions That Resulted in the Financial Problem Were Largely Beyond the Person's Control
F.2.cappliedThe Individual Has Received or Is Receiving Financial Counseling
F.2.dappliedThe Individual Initiated and Is Adhering to a Good-faith Effort to Repay Overdue Creditors

Key Rule Quoted

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

Procedural Posture

SOR issuedSep 26, 2016
Answer filedOct 24, 2016
Hearing heldMay 19, 2017DOHA received the hearing transcript on 05/24/2017.
Decision dateAug 23, 2017

Cite For

Mitigation of Financial Concerns Under Guideline F
Good-faith Efforts to Repay 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 mitigated financial security concerns related to delinquent student loans and a 2010 bankruptcy. The applicant demonstrated a good-faith effort to adhere to a repayment plan and resolved several debts, leading to a favorable decision for security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant has a 2010 Chapter 7 bankruptcy that discharged about $10,000 in delinquent debts. $10,000	For Applicant	Bankruptcy Filing	Admitted	—	(c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	Claimed Financial Counseling Documented Debt Paid in Full Documented Payment Plan with Creditor
1.b	Applicant has a delinquent student loan of $36,885. $36,885	For Applicant	Student Loan Debt	Admitted	—	(d) good-faith effort to repay or otherwise resolve debts	Documented Payment Plan with Creditor
1.c	Applicant has a delinquent student loan of $19,610. $19,610	For Applicant	Student Loan Debt	Admitted	—	(d) good-faith effort to repay or otherwise resolve debts	Documented Payment Plan with Creditor
1.d	Applicant has a delinquent student loan of $11,344. $11,344	For Applicant	Student Loan Debt	Admitted	—	(d) good-faith effort to repay or otherwise resolve debts	Documented Payment Plan with Creditor
1.e	Applicant has a delinquent student loan of $2,861. $2,861	For Applicant	Student Loan Debt	Admitted	—	(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. 16-01398 ) ) ) Applicant for Security Clearance

For Government: Caroline E. Heintzelman, Esq., Department Counsel For Applicant: Pro se

08/23/2017 ______________

STATEMENT OF CASE

______________

DAM, Shari, Administrative Judge:

Applicant mitigated the financial security concerns related to delinquent student loans and a 2010 bankruptcy. National security eligibility for access to classified information is granted.

Statement of the Case

On May 22, 2015, Applicant submitted a security clearance application (SCA) for re-investigation. On September 26, 2016, the Department of Defense (DOD) issued to Applicant a Statement of Reasons (SOR), detailing security concerns under Guideline F, Financial Considerations. The action was taken under Executive Order 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) effective within the DOD for SORs issued after September 1, 2006. On June 8, 2017, new AG were implemented and are effective for decisions issued after that date.1 On October 24, 2016, Applicant answered the SOR (Answer) and requested a hearing before an administrative judge. On February 13, 2017, the Department of Defense Office of Hearings and Appeals (DOHA) assigned this case to me. On April 28, 2017, DOHA issued a Notice of Hearing, scheduling the hearing for May 19, 2017. At the hearing, Department Counsel offered Exhibits (GE) 1 through 5 into evidence. Applicant testified and offered Exhibits (AE) A through I. All exhibits were admitted. Applicant’s wife also testified. DOHA received the hearing transcript (Tr.) on May 24, 2017. The record remained open until June 26, 2017, to give Applicant an opportunity to submit additional information. Applicant timely submitted AE J, which was admitted without an objection.

FINDINGS OF FACT

Applicant admitted the five allegations in SOR ¶¶ 1.a through 1.e. (Answer.) His admissions are incorporated into these findings.

Applicant is 31 years old and married for nine years. He and his wife have two young children. He enlisted in the military reserves after graduating from high school in 2005. He earned an associate’s degree in 2008. He received an honorable discharge in 2013 as an E4. He received medals and commendations during his service and while deployed. (Tr. 16-19; AE J.) He has held a clearance since enlisting in the military. He began working for his current employer in 2011. (Tr. 19-20.)

Based on credit bureau reports (CBR) from June 2015, July 2016, and May 2017, the SOR alleged a 2010 Chapter 7 bankruptcy and four student loans totaling $70,700, which became delinquent in 2014. (GE 3, GE 4, and GE 5.) Applicant explained that he and his wife filed bankruptcy because after he returned from a deployment in 2009, he was unemployed for three to six months and did not have money to pay bills and student loans. (Tr. 24, 36.) The bankruptcy discharged about $10,000 of delinquent debts. (Tr. 35; AE I.) Subsequently, he was unemployed for about six months in 2011 after being laid off from a position. Later, he could not afford a $500 monthly student loan payment. (Tr. 24, 36, 41.)

In January 2017, Applicant began a payment plan for three student loans: ¶ 1.b ($36,885); ¶ 1.c ($19,610); and ¶ 1.d ($11,344). He is paying $75 per month toward the three loans. He provided proof that he made those payments in January, February, March and April, 2017. (AE C.) Applicant paid the loan in ¶ 1.e ($2,861) in May 2017. (AE A.) Although not alleged, he provided proof that he resolved another student loan in November 2016 for $1,000. (AE F.)

Applicant’s annual salary is $34,000 and his wife’s salary is $35,000. They use an online website for budgeting. (AE J.) He participated in credit counseling, which was required by the bankruptcy court before filing a Chapter 7 in 2010. He has filed and paid federal and state income tax returns for the past five years. He does not owe any taxes. (Tr. 21-23.)

POLICIES

When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the AG. In addition to brief introductory explanations for each guideline, the AG list potentially disqualifying conditions and mitigating conditions, which are to be used in evaluating an applicant’s national security eligibility.

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 AG ¶ 2 describing the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. The entire process is a conscientious scrutiny of applicable guidelines in the context 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.” In reaching this decision, I have drawn only those conclusions that are reasonable, logical, and based on the evidence contained in the record. Likewise, I have avoided drawing inferences grounded on mere speculation or conjecture.

Directive ¶ E3.1.14 requires the Government to present evidence to establish controverted facts alleged in the SOR. Directive ¶ E3.1.15 states that “[t]he 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, and has the ultimate burden of persuasion as to obtaining a favorable clearance decision.”

A person applying for national security eligibility seeks to enter 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 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. Finally, as emphasized in Section 7 of Executive Order 10865, “[a]ny determination under this order adverse to an applicant shall be a determination in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See also Executive Order 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information.

ANALYSIS

Guideline F: Financial Considerations

The security concerns relating to the guideline for financial considerations are set out in AG ¶ 18, which reads in pertinent part:

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 describes three conditions that could raise security concerns and may be disqualifying in this case:

(a) inability to satisfy debts;

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

Applicant began accumulating delinquent debts prior to 2010, when he filed a Chapter 7 bankruptcy. Subsequently, he was unable to satisfy or resolve student loan debt that began accumulating. The evidence raises the above security concerns, and shifts the burden to Applicant to rebut, extenuate, or mitigate those concerns.

The guideline includes three conditions in AG ¶ 20 that could mitigate security concerns arising from financial problems:

(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; (c) the individual has received or is receiving financial counseling for the problem from a legitimate and credible source, such as a non-profit credit counseling service, and there are clear indications that the problem is being resolved or is under control; and

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

Applicant’s delinquent debt problems began in 2009 after he returned from a deployment and was unemployed for several months. In 2011, he experienced another period of unemployment and was unable to pay debts and stay current on student loans. Those were circumstances that contributed to his financial problems and were beyond his control. However, in order to establish full mitigation under AG ¶ 20(b), Applicant needed to demonstrate that he acted responsibly while the problems were arising. There is insufficient evidence of that. Hence, AG ¶ 20(b) partially applies.

Applicant participated in credit counseling as a requirement for filing bankruptcy in 2010. There are clear indications that Applicant’s student loans are coming under control, as evidenced by his resolution of two loans and the initiation in January 2017 of a repayment plan for three loans. AG ¶ 20(c) applies. Applicant is making a good-faith effort to adhere to the payment plan he established. The evidence establishes mitigation under AG ¶ 20(d) as to those loans.

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(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.

According to AG ¶ 2(c), the ultimate determination of whether to grant national security eligibility 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 pertinent facts and circumstances surrounding this case. Applicant is a 31-year-old man, who served in the military reserves from 2005 to 2013. He has worked for a defense contractor since 2011. After returning from a deployment in 2009, he was unemployed for several months and was unable to pay expenses and student loans. He subsequently filed a bankruptcy and discharged about $10,000 in 2010. In 2016, he paid off a $1,000 student loan, not alleged in the SOR. In 2017, he paid off the $2,861 student loan alleged in SOR ¶ 1.e and began making payments on the $66,500 balance he owes. Based on his recent actions and family income, I have no concern that he will fail to make payments on the plan he negotiated. He is aware that further financial delinquencies will jeopardize his security clearance. Overall, the record evidence leaves me without doubt as to Applicant’s judgment, eligibility, and suitability for a security clearance. Applicant met his burden of persuasion to mitigate the security concerns arising under the guideline for financial considerations.

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 though 1.e: For Applicant

CONCLUSION

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

SHARI DAM Administrative Judge

FOOTNOTES

1 I considered the previous AG, effective September 1, 2006, as well as the new AG, effective June 8, 2017. Although this decision is issued pursuant to the new AG, my decision would be the same under either set of guidelines.