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ISCR Case 07-14739.h1 — CASE

ISCR Case 07-14739.h1denied

Case Headnote

ISCR Case No. 07-14739.h1

deniedJul 14, 2008· Hon. Michael H. Leonard· hearing

Summary

A 59-year-old office administrator for a federal contractor was denied a security clearance under Guideline F, Financial Considerations. The denial stemmed from a significant history of financial problems, including 20 delinquent debts totaling approximately $26,000. Disqualifying Conditions 1 and 3 were raised, indicating a pattern of financial irresponsibility and an inability or unwillingness to meet financial obligations.

The judge determined that the applicant failed to provide sufficient evidence to mitigate these security concerns. Specifically, she did not present any documentary evidence demonstrating that she had paid, settled, or resolved any of the debts listed in the Statement of Reasons. Furthermore, her claim of identity theft, offered as an explanation for some of the debts, was not substantiated with documentation, which negatively impacted her credibility.

Ultimately, the applicant failed to demonstrate a good-faith effort to repay her overdue creditors or otherwise resolve her debts. Consequently, the security clearance was denied.

Why the Applicant Was Denied

The applicant has a significant history of financial problems, including multiple delinquent debts totaling about $26,000.
The applicant did not present any documentary evidence showing that she has paid, settled, or resolved any of the debts in the SOR.
The applicant's claim of identity theft was not substantiated with documentation, leading to doubts about her credibility.
The applicant failed to demonstrate a good-faith effort to repay overdue creditors or resolve her debts.

Conditions Referenced

Disqualifying

DC 1appliedInability or Unwillingness to Satisfy Debts
DC 3appliedA History of Not Meeting Financial Obligations

Key Rule Quoted

“No one has a right to a security clearance.”
— Department of Navy v. Egan, 484 U.S. 518, 528 (1988)

Procedural Posture

SOR issuedMar 12, 2008
Answer filedApr 7, 2008
Hearing heldJun 25, 2008
Decision dateJul 14, 2008

Cite For

Denial of Security Clearance Due to Financial Irresponsibility Under Guideline F
Insufficient Evidence to Mitigate Financial Concerns
Importance of Substantiating Claims of Identity Theft in Financial 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 that the applicant has a significant history of financial problems, including multiple delinquent debts totaling approximately $26,000. The applicant's claims of identity theft and efforts to dispute debts were not substantiated with sufficient evidence, leading to a decision against the applicant on all financial allegations under Guideline F.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a–1.t	20 sub-charges — specific text not stated in this decision (against the applicant).	Against 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: ) ) ----------------------------- ) ISCR Case No. 07-14739 SSN: --------------------- ) ) Applicant for Security Clearance )

For Government: D. Michael Lyles, Esquire, Department Counsel For Applicant: Pro Se

July 14, 2008 ______________

STATEMENT OF CASE

______________

LEONARD, Michael H., Administrative Judge:

Applicant contests the Defense Department’s intent to deny or revoke her eligibility for an industrial security clearance. Acting under the relevant Executive Order and DoD Directive, the Defense Office of Hearings and Appeals (DOHA) issued a statement of reasons (SOR) to Applicant on March 12, 2008. The SOR is equivalent to an administrative complaint and it details the factual basis for the action. The issues in this case fall under Guideline F for financial considerations based on a history of financial problems. For the reasons discussed below, this case is decided against Applicant.

In addition to the Executive Order and Directive, this case is brought under the revised Adjudicative Guidelines for Determining Eligibility for Access to Classified Information (Revised Guidelines) approved by the President on December 29, 2005. The Revised Guidelines were then modified by the Defense Department, effective September 1, 2006. They supersede or replace the guidelines published in Enclosure 2 to the Directive. They apply to all adjudications and other determinations where an SOR has been issued on September 1, 2006, or thereafter. The Directive is pending revision or amendment. The Revised Guidelines apply here because the SOR is dated after the effective date.

Applicant’s response to the SOR was received on April 7, 2008, and she requested a hearing. The case was assigned to me on May 19, 2008. The hearing took place as scheduled on June 25, 2008. The transcript (Tr.) was received on July 3, 2008.

FINDINGS OF FACT

Under Guideline F, the SOR alleges 20 delinquent debts for about $26,000 in total. Her Answer was mixed. Based on the record evidence as a whole, the following facts are established by substantial evidence.

Applicant is a 59-year-old employee of a federal contractor. She has worked for her current employer since 1987; her position or title is office administrator. A former supervisor has high regard for her “sound security practices” and believes she can be trusted with access to classified information (Exhibit A).

Applicant has a history of financial problems (including a Chapter 7 bankruptcy in the 1990sthat is not alleged in the SOR). The delinquent debts in the SOR are established by the admitted documentary evidence (Exhibits 2–4). Her history of financial problems is extensive. For example, a March 2007 credit report contains multiple accounts with derogatory information (for example, past due, bad debt, assigned for collection) as well as 19 accounts in the collections section of the report (Exhibit 3). The 19 collection accounts total about $14,000.

She did not present any documentary evidence showing that she has paid, settled, or resolved any of the debts in the SOR. She claims she was a victim of identity theft and discovered it a few years ago. But she did not present any documentary evidence to verify her claim and to show its connection to the debts in the SOR.

She presented copies of three letters wherein she was disputing liability for a couple of debts (Exhibits B–D). The letters are from the 2004–2005 period. She did not present any response to her letters or more recent dispute letters. She did not present any documentary evidence (for example, account statements, repayment agreements, or receipts of payment) from creditors, collection agencies, credit reporting agencies and the like.

POLICIES

This section sets forth the general principles of law and policies that apply to an industrial security clearance case. To start, no one has a right to a security clearance.3 As noted by the Supreme Court in 1988 in the case of Department of Navy v. Egan, “the clearly consistent standard indicates that security clearance determinations should err, if they must, on the side of denials.” A favorable decision establishes eligibility of an applicant to be granted a security clearance for access to confidential, secret, or top- secret information. An unfavorable decision: (1) denies any application; (2) revokes any existing security clearance; and (3) prevents access to classified information at any level and retention of any existing security clearance. Under Egan, Executive Order 10865, and the Directive, any doubt about whether an applicant should be allowed access to classified information will be resolved in favor of protecting national security.

There is no presumption in favor of granting, renewing, or continuing eligibility for access to classified information. The government has the burden of presenting evidence to establish facts alleged in the SOR that have been controverted. An applicant is responsible for presenting evidence to refute, explain, extenuate, or mitigate facts that have been admitted or proven. In addition, an applicant has the ultimate burden of persuasion to obtain a favorable clearance decision. In Egan, the Supreme Court stated that the burden of proof is less than a preponderance of the evidence.11 The agency appellate authority has followed the Court’s reasoning, and a judge’s findings of fact are reviewed under the substantial-evidence standard.12

The Revised Guidelines set forth adjudicative guidelines to consider when evaluating a person’s security clearance eligibility, including disqualifying conditions (DC) and mitigating conditions (MC) for each guideline. In addition, each clearance decision must be a fair and impartial commonsense decision based upon consideration of all the relevant and material information, the pertinent criteria and adjudication factors, and the whole-person concept. A person granted access to classified information enters into a special relationship with the government. The government must be able to have a high degree of trust and confidence in those persons to whom it grants access to classified information. The decision to deny a person a security clearance is not a determination of an applicant’s loyalty. Instead, it is a determination that the applicant has not met the strict guidelines the President has established for granting eligibility for a security clearance.

ANALYSIS

Under Guideline F for financial considerations, a security concern typically exists due to significant unpaid debts. “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.” Similarly, an individual who is financially irresponsible may also be irresponsible, unconcerned, negligent, or careless in properly handling and safeguarding classified information.

The record evidence supports a conclusion that Applicant has a history of financial problems. Her history of financial problems is a security concern because it indicates inability or unwillingness to satisfy debts and a history of not meeting financial obligations within the meaning of Guideline F. The record evidence is more than sufficient to establish these two disqualifying conditions. And the same evidence supports a conclusion of financial irresponsibility.

The guideline also provides that certain conditions may mitigate security concerns:

MC 1–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; MC 2–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;

MC 3–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;

MC 4–the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts;

MC 5–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;

MC 6–the affluence resulted from a legal source of income.

All of the mitigating conditions have been considered and none apply in Applicant’s favor. In particular, MC 2—conditions largely beyond a person’s control—has some potential application based on her claim of identity theft. But her claim cannot be accepted as genuine given that she did not present any documentation to verify it.

Another potential mitigating condition is MC 4, which requires a person to initiate a good-faith effort to repay overdue creditors or otherwise resolve debts. Based on the record evidence, she has done little to demonstrate an intent to clean up her financial house. Her efforts are not enough to qualify as a good-faith effort. Indeed, what is missing here is: (1) a realistic and workable plan; (2) documented actions taken in furtherance of the plan; and (3) a measurable improvement to the situation. In simple terms, she did not present sufficient evidence to establish her case.

To conclude, Applicant did not present sufficient evidence to explain, extenuate, or mitigate the security concerns. Applicant did not meet her 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 not support a favorable decision. This case is decided against Applicant.

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.t: Against Applicant

CONCLUSION

In light of all of the circumstances, it is not clearly consistent with national interest to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is denied.

Michael H. Leonard Administrative Judge

FOOTNOTES

Executive Order 10865, Safeguarding Classified Information within Industry, dated February 20, 1960, as amended, and DoD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program, dated January 2, 1992, as amended (Directive). See Memorandum from the Under Secretary of Defense for Intelligence, dated August 30, 2006, Subject: Implementation of Adjudicative Guidelines for Determining Eligibility for Access to Classified Information (December 29, 2005). Department of Navy v. Egan, 484 U.S. 518, 528 (1988) (“it should be obvious that no one has a ‘right’ to a th security clearance”); Duane v. Department of Defense, 275 F.3d 988, 994 (10 Cir. 2002) (“It is likewise plain that there is no ‘right’ to a security clearance, so that full-scale due process standards do not apply to cases such as Duane’s.”). Egan, 484 U.S. at 531. Directive, ¶ 3.2. Directive, ¶ 3.2. ISCR Case No. 02-18663 (App. Bd. Mar. 23, 2004). Directive, Enclosure 3, ¶ E3.1.14. Directive, Enclosure 3, ¶ E3.1.15. Directive, Enclosure 3, ¶ E3.1.15. Egan, 484 U.S. at 531. ISCR Case No. 01-20700 (App. Bd. Dec. 19, 2002) (citations omitted). Executive Order 10865, § 7. Revised Guidelines at pp. 13–14 (setting forth the security concern and the disqualifying and mitigating conditions). Revised Guidelines at p. 13. DC 1 is “inability or unwillingness to satisfy debts.” DC 3 is “a history of not meeting financial obligations.”