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ISCR Case 07-11338.h1 — CASE

ISCR Case 07-11338.h1denied

Case Headnote

ISCR Case No. 07-11338.h1

deniedJul 1, 2007· Hon. Marc E. Curry· hearing

Summary

A 47-year-old married professional truck driver was denied a security clearance under Guideline F, Financial Considerations. The denial stemmed from a history of financial problems, including bankruptcy and tax delinquencies. Specific allegations included an outstanding debt of approximately $11,000 in delinquent medical expenses.

The judge identified several disqualifying conditions, noting the applicant's persistent financial issues. Despite the applicant's stated efforts to manage her debts, the judge found these issues remained unresolved and continued to pose a security risk.

Furthermore, the applicant's spending on vacations during periods of financial distress was cited as an indicator of poor judgment. Ultimately, these factors led to the denial of her security clearance.

Why the Applicant Was Denied

Applicant has a history of financial problems, including bankruptcy and tax delinquencies.
Despite efforts to manage debts, the financial issues remain unresolved and pose a security risk.
Applicant's spending on vacations during financial distress indicated poor judgment.

Conditions Referenced

Disqualifying

AG ¶ 19(a)appliedInability or Unwillingness to Satisfy Debts
AG ¶ 19(c)appliedA History of Not Meeting Financial Obligations
AG ¶ 19(e)appliedConsistent Spending Beyond One’s Means
AG ¶ 19(g)appliedFailure to File Federal, State, or Local Income Tax Returns as Required

Key Rule Quoted

“"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."”

Procedural Posture

SOR issuedOct 28, 2007
Answer filedNov 27, 2007
Hearing heldFeb 7, 2008
Decision dateApr 17, 2008

Cite For

Financial Considerations Under Guideline F
Impact of Bankruptcy on Security Clearance Eligibility
Importance of Responsible Financial Management in Security Clearance Cases

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 multiple financial concerns under Guideline F, including unpaid medical debts and failure to file federal income taxes on time. Despite some efforts to address these issues, the judge concluded that the applicant's financial problems remained a security concern, resulting in a denial of the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	specific text not stated in this decision	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations (e) consistent spending beyond one’s means / irresponsible spending (g) unexplained affluence	—	—
1.b	Applicant also owes approximately $11,000 in delinquent medical expenses $11,000	Against Applicant	Medical Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations (e) consistent spending beyond one’s means / irresponsible spending	—	—
1.c–1.j	7 sub-charges — specific text not stated in this decision (6 against, 1 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: ) ) ---------------------- ) ISCR Case No. 07-11338 SSN: ----------- ) ) Applicant for Security Clearance )

For Government: Stephanie C. Hess, Esquire, Department Counsel For Applicant: Pro Se

April 17, 2008 ______________

STATEMENT OF CASE

______________

CURRY, Marc E., Administrative Judge:

On October 28, 2007, the Defense Office of Hearings and Appeals (DOHA) issued to Applicant a Statement of Reasons (SOR) detailing the security concern under Guidelines F. The action was taken under Executive Order 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 revised adjudicative guidelines (AG) promulgated by the President on December 29, 2005, and effective within the Department of Defense for SORs issued after September 1, 2006.

DOHA received Applicant’s answer, requesting a hearing, on November 27, 2008. I received the case assignment on December 20, 2007. DOHA issued a notice of hearing on January 24, 2008, and I convened the hearing as scheduled on February 7, 2008. During the hearing, I received three government exhibits, three Applicant exhibits, and the testimony of two Applicant witnesses. Applicant attempted to move a fourth exhibit into the record. Department Counsel objected because she had not seen it before the hearing. I identified it, reserving judgment on its admissibility until Department Counsel had an opportunity to review it after the hearing . Department Counsel reviewed it and withdrew her objection, whereupon I received it. I received the transcript on February 27, 2008. Based upon a review of the case file, pleadings, exhibits, and testimony, eligibility for access to classified information is denied.

Preliminary Ruling

SOR subparagraphs 1.hand 1.i allege delinquencies owed to “unknown” creditors. Because these allegations are vague and overbroad, I have resolved them in Applicant’s favor without further discussion.

FINDINGS OF FACT

Applicant is a 47-year-old, married woman with one adult child. Both she and her husband are professional truck drivers. He has a twelfth grade education (Tr. 34).

In 1997, Applicant and her husband started a trucking business. They financed the purchase of two eighteen-wheelers for approximately $230,000. Typically, they drove one together, and either leased the other or hired employees to drive it (Tr. 46, 49).

The business struggled. Applicant and her husband had trouble finding competent employees, and they underestimated the vehicles’ maintenance costs (Tr. 46). When Applicant experienced a serious medical crisis in 2001, everything “snowballed” (Tr. 25). Because they had no medical insurance, they incurred tremendous out-of-pocket health care expenses and grew increasingly unable to pay their business expenses.

In October 2000, Applicant and her husband filed for Chapter 7 bankruptcy protection (Exhibit D). The court discharged approximately $290,000 of business and personal debt (Exhibit D at 11).

Although Applicant and her husband had to return one of the trucks to the creditor as part of the bankruptcy process, they were able to continue operating the business. They failed, however, to set aside funds in an escrow account to pay their federal income taxes (Tr. 50). In 2002, they were unable to pay them when due (Id.). With the help of their accountant, Applicant and her husband arranged an installment plan and paid an average of $200 per month (Tr. 49-51, 64).

Applicant and her husband were again unable to pay their federal income taxes in 2003 and 2004. They arranged installment plans for those years also (Tr. 50). In 2003, they “saved up and splurged” on two Caribbean vacations (Tr. 42, Exhibit 1). When Applicant and her husband were unable to pay their federal income taxes in 2004, their accountant advised them that the Internal Revenue Service (IRS) did not allow taxpayers to arrange installment plans for more than three consecutive years (Tr. 51). They then did not file their 2004 income tax return (Tr. 56).

Applicant experienced another major medical problem requiring surgery in 2005 (Tr. 70). In early 2006, Applicant and her husband filed both their 2004 and 2005 income tax returns. At that time, they had paid approximately $2,735 toward the 2002 and 2003 delinquencies through the installment plans (Exhibit E). Through their accountant, they then began negotiating an offer and compromise (Tr. 57).

The accountant worked on a settlement with the IRS for approximately a year before quitting abruptly (Tr. 57). In December 2007, the IRS froze their bank account, obtained a lien against their property for $61,838, and began garnishing Applicant’s husband’s wages (Exhibit C, Tr. 29). Currently, Applicant’s husband has paid approximately $970 through the garnishment (Exhibit B). Their bank account remains frozen (Tr. 29, 33).

Applicant also owes approximately $11,000 in delinquent medical expenses, as alleged in SOR subparagraphs 1.bthrough 1.g. She denied the debt listed in SOR subparagraph 1.d. She has not notified the creditor of her dispute.

Over the years, Applicant has intermittently made payments ranging from $10 to $240 on her medical delinquencies (See Exhibit E at 6-13). She has not made any payments since June 2007 (Exhibit 6 at 9). She intends to resume payments after she and her husband satisfy their remaining income tax delinquencies.

Applicant and her husband have retained another accounting firm to help resolve the tax delinquencies (Exhibit A). Their goal is to satisfy the tax delinquencies, then “move on to a plan that will pay the medical [bills]” (Tr. 25).

Applicant has not sought money management counseling. Recently, he read a self-help book by a prominent money management expert, and has been incorporating the book’s lessons into their daily financial plan (Tr. 35). Applicant and her husband estimate their delinquencies wil be satisfied in three years.

Applicant and her husband ended their business in 2005. Since then Applicant has been working for the same company.

POLICIES

When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the revised 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 overarching adjudicative goal is a fair, impartial and common sense decision. According to AG ¶ 2(c), the entire process is a 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 applicant or proven by Department Counsel. . . .” The Applicant has the ultimate burden of persuasion as to obtaining a favorable security decision.

ANALYSIS

Financial Considerations

Under this guideline, “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” (AG ¶ 18). Moreover, “an individual who is financially overextended is at risk of having to engage in illegal acts to generate funds” (Id.).

Applicant’s history of financial problems, and failure to file her 2004 federal income taxes on time triggers the application of AG ¶¶ 19(a), “inability or unwillingness to satisfy debts,” 19(c), “a history of not meeting financial obligations,” 19(e), “consistent spending beyond one’s means, which may be indicated by excessive indebtedness, significant negative cash flow, high debt-to-income ratio, and/or other financial analysis,” and 19(g), “failure to file Federal, state, or local income tax returns as required.” Applicant’s financial problems were originally caused by her struggling business and her illness. When they became overwhelming, she filed for Chapter 7 bankruptcy protection in 2000. Shortly after the court discharged her debts, however, Applicant’s financial problems recurred. In 2003, as Applicant was increasingly losing control of her finances again, she spent money on two Caribbean vacations. Consequently, although her problems were originally caused by circumstances beyond her control, she did not deal with them responsibly enough for AG ¶ 20(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,” to apply. I have considered the remaining mitigating conditions and conclude they do not apply either. Applicant and her husband have outlined a debt repayment plan, and have retained an accounting firm for assistance with their taxes. However, the plan is sketchy at best, and the only payments they has made thus far have been through her husband’s wage garnishment. Moreover, Applicant denied one of the delinquencies but has taken no steps to resolve the dispute. I conclude Applicant’s finances remain a security concern.

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(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) 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.

Applicant’s struggling business and her major medical problems contributed to her financial problems. Her limited education was also a factor. However, her financial problems recurred after a Chapter 7 bankruptcy discharge. Although she has taken steps to get her finances under control, it is too soon to conclude they no longer pose a security concern in light of the remaining amount of the delinquencies and their recurrent nature. Evaluating this case in the context of the whole person, I conclude Applicant’s financial problems remain a security concern. Clearance is denied.

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.g: Against Applicant Subparagraphs 1.h - i.i: For Applicant Subparagraph 1.j: 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.

_________________ MARC E. CURRY Administrative Judge

FOOTNOTES

The proposed exhibit was 43 pages long.