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ISCR Case 07-11908.h1 — CASE

ISCR Case 07-11908.h1granted

Case Headnote

ISCR Case No. 07-11908.h1

grantedJul 3, 2008· Hon. Robert J. Tuidar· hearing

Summary

A 31-year-old logistics engineer was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The Statement of Reasons (SOR) identified 14 separate financial issues, including a Chapter 7 bankruptcy, six collection accounts, two charged-off accounts, one IRS tax debt, one state tax debt, and three judgments, totaling $23,111.

Since the SOR was issued, the applicant demonstrated significant efforts to resolve these debts. He paid off three debts, consisting of two collection accounts and one judgment. Additionally, he contacted six creditors—four collection accounts, the IRS, and the state tax debt—establishing payment plans and remaining current on all of them. He also made a good-faith effort to resolve two other debts, one collection account and one judgment.

The judge found that the applicant had successfully mitigated the financial concerns. This decision was supported by the applicant's aggressive steps to correct his financial situation, his current status on payment plans, and positive employer references attesting to his reliability and trustworthiness.

Why the Applicant Prevailed

The applicant took aggressive steps to correct his financial situation after acknowledging past poor decisions.
He is current on payment plans and has paid off several debts since the SOR was issued.
Positive references from employers supported his reliability and trustworthiness.

Conditions Referenced

Disqualifying

19(a)raisedInability or Unwillingness to Satisfy Debts
19(c)raisedA History of Not Meeting Financial Obligations
19(e)raisedConsistent Spending Beyond One's Means

Mitigating

20(c)appliedThe 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
20(d)appliedThe Individual Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts
20(e)appliedThe 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 to Resolve the Issue

Key Rule Quoted

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

Procedural Posture

SOR issuedDec 5, 2007
Answer filedDec 28, 2007
Hearing heldFeb 27, 2008
Decision dateJul 3, 2008

Cite For

Mitigation of Financial Issues Under Guideline F
Importance of Positive Employer References in Security Clearance Cases
Demonstrating Good-faith Efforts to Resolve Debts as a Mitigating Factor

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 mitigated the financial concerns under Guideline F, which included a history of debts and a Chapter 7 bankruptcy. The applicant demonstrated significant efforts to resolve his financial issues, including paying off debts and establishing payment plans, leading to a favorable decision for security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant’s SOR identified 14 separate line items, which included a chapter 7 bankruptcy, six collection accounts, two charged off accounts, one Internal Revenue (IRS) tax debt, one state tax debt, and three judgments for a total of $23,111.	For Applicant	Bankruptcy Filing	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (e) consistent spending beyond one’s means / irresponsible spending	(c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts (e) reasonable, documented basis to dispute the debt	Claimed Chapter 7 Bankruptcy
1.b	Since his SOR was issued, Applicant has paid off three debts (two collection accounts and one judgment).	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (e) consistent spending beyond one’s means / irresponsible spending	(d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.c	Applicant has contacted six creditors (four collection accounts, the IRS, and state tax debt), set up payment plans, and is current on the payment plans.	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (e) consistent spending beyond one’s means / irresponsible spending	(d) good-faith effort to repay or otherwise resolve debts	Documented Payment Plan with Creditor
1.d	Applicant has contacted six creditors (four collection accounts, the IRS, and state tax debt), set up payment plans, and is current on the payment plans.	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (e) consistent spending beyond one’s means / irresponsible spending	(d) good-faith effort to repay or otherwise resolve debts	Documented Payment Plan with Creditor
1.e	He made a good-faith effort to resolve two debts (one collection account and one judgment).	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (e) consistent spending beyond one’s means / irresponsible spending	(d) good-faith effort to repay or otherwise resolve debts	Claimed Debt Paid in Full
1.f–1.h	3 sub-charges — specific text not stated in this decision (for the applicant). (low confidence)	For Applicant			—	—	—
1.i	Since his SOR was issued, Applicant has paid off three debts (two collection accounts and one judgment).	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (e) consistent spending beyond one’s means / irresponsible spending	(d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.j–1.n	5 sub-charges — specific text not stated in this decision (for the applicant). (low confidence)	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: ) ) XXXXXX, XXXX ) ISCR Case No. 07-11908 SSN: XXX-XX-XXXX ) ) Applicant for Security Clearance )

For Government: Emilio Jaksetic, Esq., Department Counsel For Applicant: Pro se

July 3, 2008 ______________

STATEMENT OF CASE

______________

TUIDER, Robert J., Administrative Judge:

Applicant has mitigated security concerns pertaining to Financial Considerations. Clearance is granted.

Statement of the Case

Applicant submitted an Electronic Questionnaire for Investigations Processing on (e-QIP), on February 22, 2006. On December 5, 2007, the Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) detailing security concerns under Guideline F for Applicant. 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 28. 2007, and requested a hearing before an Administrative Judge. Department Counsel was prepared to proceed on January 23, 2008, and I received the case assignment on January 28, 2008. DOHA issued a notice of hearing on February 5, 2008, scheduling the hearing for February 27, 2008. The hearing was held as scheduled.

The government offered Government Exhibits (GE) 1 through 12, which were received without objection, except for GE 6. Applicant objected to GE 6 “due to the fact that [he] was actually not aware of the [hospital] bill.” After argument by counsel and Applicant, I overruled Applicant’s objection. Tr. 16-21. The government also offered a List of Government Exhibits, Exhibit (Ex.) I. The Applicant offered Applicant Exhibits (AE) A through Y, which were received without objection, and testified on his own behalf.

I held the record open until March 12, 2008 to afford the Applicant the opportunity to submit documents on his behalf. Applicant timely submitted AE Z through FF without objection, which were forwarded to me by Department Counsel by Memorandum dated March 11, 2008 (Ex. II). DOHA received the transcript of the hearing (Tr.) on March 7, 2008.

FINDINGS OF FACT

Applicant admitted all of the SOR allegations with explanations except for SOR ¶¶ 1.l., 1.m., and 1.n. His admissions are incorporated herein as findings of fact. After a thorough review of the evidence, I make the following additional findings of fact:

Applicant is a 31-year-old logistics engineer, who has worked for a defense contractor since March 2006. Tr. 75-77, GE 1. He is a first-time applicant for a security clearance. Shortly after being hired by his current employer, he was granted an interim secret clearance, which was revoked as a result of these proceedings. His continued employment is dependent on his being granted a security clearance. Tr. 77-80.

Applicant completed the 9th grade, but did complete the coursework for and was awarded a GED in July 2000. Tr. 74-75. He was married from February 2001 to December 2004. That marriage ended by divorce. Applicant has no dependents. GE 1, Tr. 82.

Applicant’s background investigation addressed his financial situation and included the review of his e-QIP, credit reports, financial interrogatories, and various documents submitted by the government. SOR. GE 1 – 12. The allegations are substantiated by Applicants admissions and documents submitted by the government.

Applicant’s SOR identified 14 separate line items, which included a chapter 7 bankruptcy, six collection accounts, two charged off accounts, one Internal Revenue (IRS) tax debt, one state tax debt, and three judgments for a total of $23,111. SOR ¶¶ 1.a. – 1.n. Applicant provided the following explanation regarding how his financial problems began:

[W]hen I was about 17 I was diagnosed as terminally ill and at that point due to the fact that I thought I was going to die within two, three years, I didn’t care about anything financially. As time went on and I realized that I would be alive longer, I started caring about the financial stuff but I had already started getting myself into a financial black hole of sorts. The thing that actually pushed me to file bankruptcy . . . is the . . . County Hospital bill for $2,600. They actually ended up taking legal action and locking my entire bank account. And when they locked my bank account I had direct deposit at the time, they at the same time locked up a direct deposit that had gone through so I couldn’t pay my rent, car payment, anything like that. And the legal advice I got when I talked to a lawyer was that the only way for me to get that money back from my paycheck was to file bankruptcy before the court hearing that was to take place on I believe, November 1st. So, I filed the bankruptcy with a lawyer and it was actually filed by October 31st (2000) so that I could actually get that paycheck back. (SOR ¶ 1.a.) Tr. 29-30.

Applicant explained the reason he got into financial difficulties after filing bankruptcy in 2000 was due to “a combination of bad decision[s], [and] not making enough money.” Tr. 84. He became aware his credit history was poor when interviewed in March 2007 in conjunction with his security clearance application. Since then, he has taken aggressive steps to correct his indebtedness. Tr. 82-86.

Since his SOR was issued, Applicant has paid off three debts (two collection accounts and one judgment) (SOR ¶¶ 1.b., 1.i., and 1.l.), has contacted six creditors (four collection accounts, the IRS, and state tax debt), set up payment plans, and is current on the payment plans. (SOR ¶¶ 1.c., 1.d., 1.f., 1.g., 1.j., and 1.k.) He made a good-faith effort to resolve two debts (one collection account and one judgment). (SOR ¶¶ 1.e., 1.n.) Response to SOR, Tr. 35-62, GE 2, AE A – Q, AE Z, AE FF. One of the debts listed (judgment) was discharged in his 2001 Chapter 7 bankruptcy. (SOR ¶ 1.m.) Tr. 56-59, GE 10, AE B. Applicant retained the services of a credit counseling service in September 2007 and several of the debts included in the payment plans supra are included in a debt consolidation repayment plan. Response to SOR. Applicant submitted a comprehensive budget that was prepared by a credit counseling service reflecting a net monthly remainder of $531 after all his debts were paid. AE DD, AE EE.

Applicant provided three employer-related reference letters, i.e. from his Task Supervisor, his Provisioning Support Services Division Manager, and his Task Supervisor III. These individuals were uniform in their praise of Applicant and described him as “an excellent worker,” “dependable, reliable, and trustworthy,” “top five in efficiency (out of 28 peers), on-time delivery and customer support,” and “trustworthy, and independent.” All three individuals recommended Applicant for a security clearance. AE AA – CC.

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 over-arching adjudicative goal is a fair, impartial and common sense decision. According to AG ¶ 2(c), 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 to classified information will be resolved in favor of 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.

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 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 Executive Order 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).

ANALYSIS

Guideline F, Financial Considerations

Under Guideline F (Financial Considerations),1 the government’s concern is that an Applicant’s

“[f]ailure 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. An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds.”

Applicant acknowledged he made poor financial decisions, before and after his 2000 Chapter 7 bankruptcy. His pre-bankruptcy problems occurred at a young age after being diagnosed with what he thought at the time was a terminal illness. He embarked on an irresponsible spending pattern, which lead to Chapter 7 bankruptcy. After being awarded a Chapter 7 discharge, his health took a turn for the better and he fell into a pattern of spending beyond his means. His financial situation has substantially improved as a result of earning more income, maturity, and the realization that his failure to handle his finances responsibly may jeopardize his ability to obtain and maintain a security clearance. Since being interviewed in 2007, he has taken this process quite seriously and taken what appears to be all reasonable steps to correct his financial situation. He is current on his payments and provided credible documentation of good faith attempts to contact two creditors yet to be paid.

He participated in two separate types of financial counseling. The first financial counseling he participated in was mandatory and in conjunction with his chapter 7 bankruptcy. The second financial counseling he participated in was voluntary and occurred more recently. Applicant’s financial picture has taken a sharp turnaround from where he was several years ago. His budget reflects a net remainder of $531 per month after his monthly bills are paid. What is different now as opposed to before is he has the means, tools and resolve to achieve financial stability.

His reference letters are noteworthy. He has proven to be a conscientious, trusted and valued employee, and a contributing member of society.

¶ 19. Conditions that could raise a security concern and may be disqualifying include: (a) inability or unwillingness to satisfy debts;

(b) indebtedness caused by frivolous or irresponsible spending and the absence of any evidence of willingness or intent to pay the debt or establish a realistic plan to pay the debt.

(d) deceptive or illegal financial practices such as embezzlement, employee theft, check fraud, income tax evasion, expense account fraud, filing deceptive loan statements, and other intentional financial breaches of trust;

(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;

(f) financial problems that are linked to drug abuse, alcoholism, gambling problems, or other issues of security concern;

(g) failure to file annual Federal, state, or local income tax returns as required or the fraudulent filing of the same;

(h) unexplained affluence, as shown by a lifestyle or standard of living, increase in net worth, or money transfers that cannot be explained by subject's known legal sources of income; and

(i) compulsive or addictive gambling as indicated by an unsuccessful attempt to stop gambling, "chasing losses" (i.e. increasing the bets or returning another day in an effort to get even), concealment of gambling losses, borrowing money to fund gambling or pay gambling debts, family conflict or other problems caused by gambling.

Of the nine Financial Considerations Disqualifying Conditions (FC DC) listed supra, three are applicable: ¶ 19(a): inability or unwillingness to satisfy debts; FC DC ¶ 19(c): a history of not meeting financial obligations; ¶ (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;

¶ 20. Conditions that could mitigate security concerns include:

(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, or a death, divorce or separation), and the individual acted responsibly under the circumstances;

(c) 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;

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

(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 to resolve the issue; and

(f) the affluence resulted from a legal source of income.

Considering the record evidence as a whole,2 I conclude three of the six Financial Considerations Mitigating Conditions (FC MC) are applicable or partially applicable: ¶ 20(c) 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; ¶ 20(d) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts, and ¶ 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 to resolve the issue.

To conclude, Applicant presented sufficient evidence to explain, extenuate, or mitigate the financial considerations security concerns. Applicant met his ultimate burden of persuasion to obtain a favorable clearance decision. In reaching this conclusion, the whole person concept was given due consideration and that analysis does support a favorable decision.

I take this position based on the law, as set forth in Department of Navy v. Egan, 484 U.S. 518 (1988), my “careful consideration of the whole person factors”3 and supporting evidence, my application of the pertinent factors under the Adjudicative Process, and my interpretation of my responsibilities under the Guidelines. Applicant has mitigated or overcome the government’s case. For the reasons stated, I conclude he is eligible for access to classified information.

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

Subparagraph 1.a. – 1.n.: For Applicant

CONCLUSION

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

_________________ ROBERT J. TUIDER Administrative Judge

FOOTNOTES

1 Guideline ¶ 18. 2 See ISCR Case No. 03- 02374 at 4 (App. Bd. Jan. 26, 2006) (citing ISCR Case No. 02-22173 at 4 (App. Bd. May 26, 2004)). When making a recency analysis for FC MC 1, all debts are considered as a whole. 3 See ISCR Case No. 04-06242 at 2 (App. Bd. June 28, 2006).