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ISCR Case 07-14704.h1 — CASE

ISCR Case 07-14704.h1denied

Case Headnote

ISCR Case No. 07-14704.h1

deniedJul 25, 2008· Hon. Erin C. Hogan· hearing

Summary

A 32-year-old Department of Defense contractor was denied a security clearance under Guideline F, Financial Considerations, due to significant and ongoing financial issues. The Statement of Reasons detailed 18 delinquent accounts totaling approximately $61,721. These included multiple student loans, a consolidation loan from a previous marriage, a repossessed automobile debt, and various other collection accounts for services like telephone, cell phone, and satellite television, with delinquencies dating from October 2000 through November 2006.

The applicant admitted to all allegations. Disqualifying conditions FC DC 19(a) and FC DC 19(c) were raised, indicating a history of not meeting financial obligations and an inability or unwillingness to satisfy debts. While mitigating conditions FC MC 20(b) and FC MC 20(d) were considered, they were not sufficient to overcome the concerns.

The denial was based on the applicant's failure to demonstrate a consistent track record of timely payments or resolution of his debts. Most of the debts remained unresolved, and the applicant's current financial situation was tight, leading the judge to conclude there was insufficient evidence of responsible action to alleviate doubts about his reliability and trustworthiness.

Why the Applicant Was Denied

The applicant admitted to all allegations in the SOR, including having 18 delinquent accounts totaling approximately $61,721.
The applicant's financial problems were ongoing, with most debts remaining unresolved and a tight current financial situation.
The applicant failed to demonstrate a consistent track record of timely payments or resolution of his debts.

Conditions Referenced

Disqualifying

FC DC 19(a)appliedInability or Unwillingness to Satisfy Debts
FC DC 19(c)appliedHistory of Not Meeting Financial Obligations

Mitigating

FC MC 20(b)appliedConditions Largely Beyond the Person's ControlThe applicant's financial issues were partly due to the failure of his landscaping business.
FC MC 20(d)appliedGood-faith Effort to Repay Overdue CreditorsThe applicant entered a loan rehabilitation plan for some student loans.

Key Rule Quoted

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

Procedural Posture

SOR issuedMar 5, 2008
Answer filedMar 28, 2008
Hearing heldMay 29, 2008
Decision dateJul 25, 2008

Cite For

Financial Irresponsibility Leading to Security Clearance Denial
Impact of Unresolved Debts on Security Clearance Eligibility
Importance of Demonstrating Responsible Financial Behavior in 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 a total of 18 delinquent accounts amounting to approximately $61,721. Despite some efforts to address certain debts, the judge concluded that the applicant failed to mitigate the financial issues, resulting in a decision against the applicant.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	an $89 delinquent telephone account placed for collection in October 2000 $89	Against Applicant	Utility or Phone Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	a $4,677 consolidation loan of debts from his first marriage, placed for collection in May 2002 $4,677	Against Applicant	Personal Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	a $5,968 delinquent student loan account placed for collection in April 2003 $5,968	Against Applicant	Student Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	a $1,377 delinquent student loan account placed for collection in April 2003 $1,377	Against Applicant	Student Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	a $5,508 delinquent student loan account placed for collection in April 2003 $5,508	Against Applicant	Student Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	a $5,417 delinquent student loan account placed for collection in April 2003 $5,417	Against Applicant	Student Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.g	a $701 delinquent account placed for collection in June 2003 $701	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.h	a $606 delinquent account placed for collection in August 2003 $606	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.i	a $10,538 balance on a repossessed automobile, placed for collection in August 2003 $10,538	Against Applicant	Auto Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.j	a $1,833 delinquent account for a credit card machine, delinquent since August 2003 $1,833	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.k	a $421 cell phone account placed for collection in January 2004 $421	Against Applicant	Utility or Phone Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.l	a $241 delinquent account placed for collection in January 2004 $241	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.m	a $15,941 debt charged off in January 2004 $15,941	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.n	a $415 delinquent cell phone account placed for collection in December 2004 $415	Against Applicant	Utility or Phone Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.o	a $198 satellite television account placed for collection in June 2005 $198	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.p	a $1,220 delinquent student loan account delinquent since August 2006 $1,220	Against Applicant	Student Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.q	a $6,655 delinquent student loan account, placed for collection in November 2006 $6,655	Against Applicant	Student Loan Debt	Admitted	(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. 07-14704 SSN: ) ) Applicant for Security Clearance )

For Government: Gina Marine, Esquire, Department Counsel For Applicant: Pro Se

July 25, 2008 ______________

STATEMENT OF CASE

______________

HOGAN, Erin C., Administrative Judge:

Applicant submitted his Electronic Questionnaire for Investigations Processing (e-QIP), on March 27, 2006. On March 5, 2008, the Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) detailing the security concerns under Guideline F, Financial Considerations, 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.

On March 28, 2008, Applicant answered the SOR and requested a hearing before an administrative judge. Department Counsel was ready to be proceed on April 22, 2008. The case was assigned to another administrative judge on April 25, 2008, and transferred to me on April 28, 2008. On May 5, 2008, a Notice of Hearing was issued, scheduling the hearing for May 29, 2008. The case was heard on that date. The Government offered five exhibits which were admitted as Government Exhibits (Gov) 1 – 5 without objection. The Applicant offered three exhibits which were admitted as Applicant Exhibits (AE) A – C without objection. Applicant testified. The record was held open until June 19, 2008, to allow Applicant to submit additional evidence. Applicant timely submitted a four page document that was admitted as AE D without objection. The transcript was received on June 5, 2008. Based upon a review of the case file, pleadings, exhibits, and testimony, eligibility for access to classified information is denied.

FINDINGS OF FACT

In his Answer to the SOR, Applicant admitted to all of the factual allegations in the SOR.

Applicant is a 32-year-old employee with a Department of Defense contractor seeking a security clearance. He has held his current position since September 2007. Applicant’s first marriage ended in divorce in 2000. He remarried in December 2007 and has a one-year-old daughter, and a four-year-old stepson. (Tr at 6-7, 30; Gov 1.)

On March 27, 2006, Applicant filed an Electronic Questionnaire for Investigations Processing (e-QIP). (Gov 1.) A subsequent background investigation revealed that Applicant had 18 delinquent accounts, with a total approximate balance of $61,721. (Gov 2; Gov 3, Gov 4, Gov 5.)

Applicant’s delinquent accounts include: an $89 delinquent telephone account placed for collection in October 2000 (SOR ¶ 1.a; Gov 5 at 11); a $4,677 consolidation loan of debts from his first marriage, placed for collection in May 2002 (SOR ¶ 1.b; Gov 5 at 3); a $5,968 delinquent student loan account placed for collection in April 2003 (SOR ¶ 1.c; Gov 3 at 3; Gov 4 at 3; Gov 5 at 7); a $1,377 delinquent student loan account placed for collection in April 2003 (SOR ¶ 1.d; Gov 3 at 3; Gov 4 at 3; Gov 5 at 7); a $5,508 delinquent student loan account placed for collection in April 2003 (SOR ¶ 1.e; Gov 3 at 3; Gov 4 at 3; Gov 5 at 7); a $5,417 delinquent student loan account placed for collection in April 2003 (SOR ¶ 1.f; Gov 3 at 4; Gov 4 at 4; Gov 5 at 8); a $701 delinquent account placed for collection in June 2003 (SOR ¶ 1.g; Gov 3 at 2; Gov 4 at 2); a $606 delinquent account placed for collection in August 2003 (SOR ¶ 1.h; Gov 3 at 2; Gov 4 at 2; Gov 5 at 4); a $10,538 balance on a repossessed automobile, placed for collection in August 2003 (SOR ¶ 1.i; Gov 3 at 2; Gov 4 at 2); a $1,833 delinquent account for a credit card machine, delinquent since August 2003 (SOR ¶ 1.j; Gov 5 at 7); a $421 cell phone account placed for collection in January 2004 (SOR ¶ 1.k; Gov 3 at 2; Gov 4 at 2); a $241 delinquent account placed for collection in January 2004 (SOR ¶ 1.l; Gov 2 at 3; Gov 5 at 4); a $15,941 debt charged off in January 2004 (SOR ¶ 1.m; Gov 4 at 4; Gov 5 at 11); a $415 delinquent cell phone account placed for collection in December 2004 (SOR ¶ 1.n; Gov 5 at 11); a $198 satellite television account placed for collection in June 2005 (SOR ¶ 1.o; Gov 5 at 11); a $1,220 delinquent student loan account delinquent since August 2006 (SOR ¶ 1.p; Gov 3 at 3; Gov 5 at 9); a $6,655 delinquent student loan account, placed for collection in November 2006; (SOR ¶ 1.q; Gov 3 at 2; Gov 4 at 2); and a $186 delinquent debt, delinquent since June 2007 (SOR ¶ 1.r; Gov 2 at 6, 35.) From March 1997 to February 2001, Applicant served on active duty in the United States Air Force. He separated with an honorable discharge at the grade of E-4. (Tr at 74; Gov 1, sections 11, 16.) After his separation from active duty, Applicant joined the National Guard. He and a friend from the Air Force opened a landscaping business in March 2001. The business closed down in late 2002. At around the same time, Applicant was recalled to active duty full-time by the Guard. He served on active duty from January 2003 to May 2005. His business partner disappeared, leaving Applicant responsible for much of the business expenses since the accounts were in his name. (Tr at 21-22, 73-76.) Applicant states the debts alleged in SOR ¶¶ 1.g, 1.h, 1.l, 1.j, 1.k, 1.l, and 1.nwere related to his failed landscaping business. (Tr at 24-25, 40-42, 46-47; Gov 2.)

Applicant entered into a loan rehabilitation plan for the student loan accounts alleged in SOR ¶¶ 1.c, 1.d, 1.e, and 1.f. He agreed to pay $146 per month beginning in June 2008. After he makes seven payments, they will discuss consolidation with him. (Tr at 23-24, 48.)

Applicant disputes the debt owed in SOR ¶ 1.q. The debt was for on-line college courses that Applicant took in 2006. He claims the university is charging him for two semesters as opposed to one semester. Applicant only attended one semester and claims he notified the university. He has not paid the university the money owed for the semester that he attended. (Tr at 26-27, 55.)

Applicant states the debts alleged in SOR ¶¶ 1.a, 1.b, 1.j, 1.l, 1.nand 1.rare no longer on his credit report. (Tr at 17, 22, 23, 25 -27, 58-59; Gov 2; AE A.) He may have paid some of them but thinks they were charged off. He paid taxes related to the charged off accounts. (Tr at 33; 58-59.) He is not sure what the account alleged in SOR ¶ 1.gis but will pay if it is his debt. (Tr at 24; 60.) He states the debt alleged in SOR ¶ 1.his the next debt to be settled. (Tr at 24, 60.) He claims the debts alleged in SOR ¶¶ 1.i, 1.kand 1.mare the same. (Tr at 25, 28.)

In February 2008, Applicant attended some financial counseling through the Veteran’s Administration. He also learned about credit on the Equifax web-site. He and his wife are in the process of working out a payment plan. She has good credit. (Tr at 68.) He admits his financial problems are also the result of having a lack of funds to cover all of his debts. (Tr at 70-71.)

After the hearing, Applicant submitted a current budget. His monthly income is $5,854. After expenses, approximately $373 is left over each month. Of the amount, $200 is put in savings. (AE D at 4.) Aside from the student loans alleged in SOR ¶¶ 1.c, 1.d, 1.e, and 1.f, none of the delinquent accounts alleged in the SOR are included in the budget.

The numerous reference letters submitted by Applicant’s current and former co- workers and family friends indicate that he is held in high esteem. (AE C; AE D at 2-3.) The letters describe Applicant as “extremely honest”, “forthright”, “reliable”, “conscientious,” “professional”, and “trustworthy.” His supervisor indicates that Applicant demonstrates a strong work ethic and has met or exceeded all implementation deadlines imposed upon him by his superiors. He gained the respect and trust of his peers as well his supervisor and senior leadership. (AE C at 4.)

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.

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

The security concern relating to the guideline for Financial Considerations is set out in AG ¶ 18:

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.An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds.

The guideline notes several disqualifying conditions that could raise security concerns. I find Financial Considerations Disqualifying Condition (FC DC) & 19(a) (an inability or unwillingness to satisfy debts); and FC DC & 19(c) (a history of not meeting financial obligations); apply to Applicant’s case. Since 2002, Applicant has incurred approximately $61,721 in delinquent debt.

The guideline also includes examples of conditions that could mitigate security concerns arising from financial difficulties. Financial Considerations Mitigating Condition (FC MC) ¶ 20(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) is not applicable. Applicant’s financial problems continue. Most of the delinquent debts remain unresolved. Aside from the delinquent accounts, Applicant’s current financial situation is tight. After monthly expenses, he has only $373 left over each month.

FC MC & 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) applies, in part, due to the failure of Applicant’s landscaping business in 2002. The next question to be asked is whether the Applicant acted responsibly since that time. The record evidence indicates Applicant took little action towards resolving the delinquent accounts which resulted from the landscaping business. He notes that many of the accounts no longer appear on his credit report but cannot confirm that he resolved any of the accounts. It cannot be concluded that he acted responsibly under the circumstances with regards to resolving his delinquent accounts. FC MC ¶ 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) does not apply. Applicant attended financial counseling through the Veteran’s Administration in 2008. He is starting to take steps to assess his financial situation. However, his financial problems are not likely to be resolved in the near future.

FC MC & 20(d) (the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts) applies, in part, with respect to the student loan rehabilitation payment plan Applicant recently entered into pertaining to SOR ¶¶ 1.c, 1.d, 1.e, and 1.f. However, the first payment was not due until June 2008. He has not developed a track record of timely payments towards this debt. In addition, he has not met his burden of proof pertaining to the resolution of the other debts in the SOR. Although some of the debts are no longer listed on his credit report, Applicant did not provide proof that he paid off these debts.

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 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. I considered Applicant’s favorable references, his military service, and his efforts to resolve some of the accounts. However, a person’s outstanding work history does not mitigate financial irresponsibility. While Applicant’s business failed in 2002, he took no action to resolve his delinquent accounts until recently. It is too soon to conclude Applicant has mitigated the concerns raised under financial considerations. Overall, the record evidence leaves me with doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant failed to mitigate the security concerns arising under financial considerations.

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

Subparagraph 1.a: Against Applicant Subparagraph 1.b: Against Applicant Subparagraph 1.c: Against Applicant Subparagraph 1.d: Against Applicant Subparagraph 1.e: Against Applicant Subparagraph 1.f: Against Applicant Subparagraph 1.g: Against Applicant Subparagraph 1.h: Against Applicant Subparagraph 1.i: Against Applicant Subparagraph 1.j: Against Applicant Subparagraph 1.k: Against Applicant Subparagraph 1.l: Against Applicant Subparagraph 1.m: Against Applicant Subparagraph 1.n: Against Applicant Subparagraph 1.o: Against Applicant Subparagraph 1.p: Against Applicant Subparagraph 1.q: 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.

_________________ ERIN C. HOGAN Administrative Judge