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ISCR Case 07-11808.h1 — CASE

ISCR Case 07-11808.h1denied

Case Headnote

ISCR Case No. 07-11808.h1

deniedMay 13, 2008· Hon. Joseph Testan· hearing

Summary

A 36-year-old defense contractor employee was denied a security clearance under Guideline F (Financial Considerations) due to significant financial indebtedness exceeding $100,000. The Statement of Reasons detailed multiple outstanding debts, including approximately $35,743 to AAC from an MBNA charged-off account, $12,919 to American Express for a charged-off account, and $5,102 to Hilco Receivables from another MBNA charged-off account.

Additional debts included $8,581 to Discover Card, $1,237 to West Asset Management for a medical center referral, and $211 to Certegy for a charged-off account. The applicant also owed Unifund approximately $30,927 from First USA bank and $18,804 from Chase. While the applicant denied debts of $16,493 to Bank of America and $565 to First Revenue, these were listed on credit reports.

The Administrative Judge determined that the applicant had a long history of being unable or unwilling to pay debts and failed to provide evidence of responsible financial management or mitigating circumstances. Consequently, the applicant did not meet the necessary standards for a security clearance, leading to its denial.

Why the Applicant Was Denied

The applicant has a long history of being unable or unwilling to pay debts.
The applicant owes over $100,000 to multiple creditors, with debts charged off or referred for collection.
The applicant did not present evidence to justify mitigating conditions for financial issues.

Conditions Referenced

Disqualifying

F.1.aappliedInability or Unwillingness to Satisfy Debts
F.1.cappliedA History of Not Meeting Financial Obligations

Key Rule Quoted

“Any doubt as to whether access to classified information is clearly consistent with national security will be resolved in favor of the national security.”
— Directive, Paragraph E2.2.2.

Procedural Posture

SOR issuedNov 15, 2007
Answer filedDec 4, 2007
FORM issuedDec 31, 2007
Decision dateMay 13, 2008

Cite For

Disqualifying Conditions Under Guideline F Due to Financial Irresponsibility
Failure to Mitigate Significant Financial Obligations
Importance of Demonstrating Responsible Financial Behavior for Security Clearance Eligibility

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 that the applicant has a significant history of financial issues, including multiple charged-off debts and accounts in collection, totaling over $100,000. The applicant failed to provide sufficient evidence to mitigate the financial concerns, leading to a decision against granting the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant is indebted to AAC on an account that was charged off by MBNA and referred for collection in the approximate amount of $35,743.00. $35,743	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	Applicant is indebted to American Express for a charged off account in the approximate amount of $12,919.00. $12,919	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	Applicant is indebted to AAC in the approximate amount of $263.00 on an account referred for collection by Target. $263	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	Applicant is indebted to Hilco Receivables in the approximate amount of $5,102.00 on an account that was charged off by MBNA. $5,102	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	Applicant is indebted to Discover Card in the approximate amount of $8,581.00. This debt has been referred for collection. $8,581	Against Applicant	Credit Card Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	Applicant is indebted to West Asset Management in the approximate amount of $1,237.00 on an account referred for collection by a medical center. $1,237	Against Applicant	Medical Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.g	Applicant is indebted to Certegy on a charged off account in the approximate amount of $211.00. $211	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.h	Applicant is indebted to Unifund on two debts referred to it for collection. The first, in the amount of $30,927.00, was referred by First USA bank. The second, in the amount of $18,804.00, was referred by Chase. $30,927	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.i	Applicant denies he is indebted to Bank of America in the approximate amount of $16,493.00. This debt is listed on his February 2006 credit report. $16,493	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.j	Applicant denies he is indebted to First Revenue in the approximate amount of $565.00 on an account referred to it for collection by XCEL Energy. This debt is listed on his most recent credit report. $565	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—

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. 07-11808 SSN: ----------- ) ) Applicant for Security Clearance )

For Government: Caroline H. Jeffreys, Department Counsel For Applicant: Pro Se

May 13, 2008

______________

STATEMENT OF CASE

______________

TESTAN, Joseph, Administrative Judge:

On November 15, 2007, the Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) to applicant detailing the security concerns under Guideline 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.

Applicant answered the SOR in writing on December 4, 2007, and requested an Administrative Determination by an Administrative Judge (AJ). Department Counsel issued a File of Relevant Material (FORM) on December 31, 2007. Applicant did not respond to the FORM. The case was assigned to me on March 27, 2008. Based upon a review of the case file, pleadings, and exhibits, eligibility for access to classified information is denied.

FINDINGS OF FACT

Applicant is a 36 year old employee of a defense contractor.

Applicant is indebted to AAC on an account that was charged off by MBNA and referred for collection in the approximate amount of $35,743.00.

Applicant is indebted to American Express for a charged off account in the approximate amount of $12,919.00.

Applicant denies he is indebted to AAC in the approximate amount of $263.00 on an account referred for collection by Target. However, this debt is listed on his most recent credit report (Exhibit 7).

Applicant is indebted to Hilco Receivables in the approximate amount of $5,102.00 on an account that was charged off by MBNA.

Applicant is indebted to Discover Card in the approximate amount of $8,581.00. This debt has been referred for collection.

Applicant denies he is indebted to West Asset Management in the approximate amount of $1,237.00 on an account referred for collection by a medical center. This debt is listed as a medical debt on applicant’s most recent credit report, which also notes he disputed it.

Applicant denies he is indebted to Certegy on a charged off account in the approximate amount of $211.00. This debt is listed on his most recent credit report.

Applicant is indebted to Unifund on two debts referred to it for collection. The first, in the amount of $30,927.00, was referred by First USA bank. The second, in the amount of $18,804.00, was referred by Chase.

Applicant denies he is indebted to Bank of America in the approximate amount of $16,493.00. This debt is listed on his February 2006 credit report (Exhibit 9).

Applicant denies he is indebted to First Revenue in the approximate amount of $565.00 on an account referred to it for collection by XCEL Energy. This debt is listed on his most recent credit report.

POLICIES

The President has “the authority to . . . control access to information bearing on national security and to determine whether an individual is sufficiently trustworthy to occupy a position that will give that person access to such information.” (Department of the Navy v. Egan, 484 U.S. 518,527 (1988).) In Executive Order 10865, Safeguarding Classified Information Within Industry (February 20, 1960), the President set out guidelines and procedures for safeguarding classified information within the executive branch. The President authorized the Secretary of Defense or his designee to grant applicants eligibility for access to classified information “only upon a finding that it is clearly consistent with the national interest to do so.” (Exec. Ord. 10865, Section 2.)

To be eligible for a security clearance, an applicant must meet the security guidelines contained in the Directive. Enclosure 2 of the Directive sets forth personnel security guidelines, as well as the disqualifying conditions and mitigating conditions under each guideline.

Initially, the Government must present evidence to establish controverted facts in the SOR that disqualify or may disqualify the applicant from being eligible for access to classified information. (Directive, Paragraph E3.1.14.) Thereafter, the applicant is responsible for presenting evidence to rebut, explain, extenuate, or mitigate the facts. (Directive, Paragraph E3. 1.15.) An applicant “has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue his security clearance.” (ISCR Case No. 01-20700 at 3 (App. Bd. Dec. 19, 2002).) “Any doubt as to whether access to classified information is clearly consistent with national security will be resolved in favor of the national security.” (Directive, Paragraph E2.2.2.)

A person granted access to classified information enters into a special relationship with the government. The government must be able to repose a high degree of trust and confidence in those individuals to whom it grants access to classified information. The decision to deny an individual a security clearance is not a determination as to the loyalty of the applicant. (Exec. Ord. 10865, Section 7.) It is merely an indication that the applicant has not met the strict guidelines the President has established for issuing a clearance.

ANALYSIS

Guideline F, Financial Considerations

The security concern relating to Financial Considerations is set forth in Paragraph 18 of the new AG, and is as follows:

Failure or inability to live within one*smeans, 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*sreliability, 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.

The AG note several conditions that could raise security concerns. Under Paragraph a., an “inability or unwillingness to satisfy debts” is potentially disqualifying. Under Paragraph c., “a history of not meeting financial obligations” may raise security concerns. The evidence establishes that applicant has a long history of being unable or unwilling to pay his debts. Accordingly, these disqualifying conditions are applicable. The guidelines also set out mitigating conditions. Paragraph a. may apply where “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*scurrent reliability, trustworthiness, or good judgment.” This mitigation condition is not applicable.

Under Paragraph b., it may be mitigating where “the conditions that resulted in the financial problem were largely beyond the person*scontrol (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.” Applicant presented no evidence that would justify application of this mitigating condition.

Evidence that “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” is potentially mitigating under Paragraph c. This mitigation condition does not apply.

Paragraph d. applies where the evidence shows “the individual initiated a good- faith effort to repay overdue creditors or otherwise resolve debts.” This mitigating condition does not apply.

“Whole Person” Analysis

Under the whole person concept, the AJ must evaluate an applicant’s security eligibility by considering the totality of the applicant’s conduct and all the circumstances. An AJ should consider the nine adjudicative process factors listed at AG Paragraph 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 Paragraph 2c, the ultimate determination of whether to grant a security clearance must be an overall common sense 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. Applicant is a mature man who has a history of not meeting his financial obligations. Even if he were given the benefit of the doubt with respect to the debts he denies owing, the evidence establishes that he still owes over $100,000.00 to five creditors for six debts, all of which were either charged off or referred for collection. Under these circumstances, I conclude applicant failed to mitigate the security concerns arising from Guideline F.

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:

Guideline F: AGAINST APPLICANT

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is not clearly consistent with national security to grant applicant eligibility for a security clearance. Eligibility for access to classified information is denied.

_________________ JOSEPH TESTAN Administrative Judge