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ISCR Case 07-18520.h1 — CASE

ISCR Case 07-18520.h1granted

Case Headnote

ISCR Case No. 07-18520.h1

grantedSep 17, 2008· Hon. Robert J. Tuidar· hearing

Summary

A 33-year-old engineer was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The Statement of Reasons (SOR) highlighted several financial issues, including a federal tax lien filed on or about March 20, 2008, for approximately $17,636.00, which remained unpaid as of July 17, 2008. These issues raised disqualifying conditions F.1.a and F.1.c.

However, the applicant demonstrated substantial mitigation of these concerns. Prior to the hearing, he settled or paid off most of the debts identified in the SOR. Crucially, he established a payment plan with the IRS for the federal tax lien and was current on all payments.

Furthermore, the applicant presented evidence of improved financial stability, including a positive monthly budget and established savings. These actions satisfied mitigating conditions F.2.b and F.2.d, leading to the decision to grant the security clearance.

Why the Applicant Prevailed

The applicant settled or paid off most debts identified in the SOR prior to the hearing.
He established a payment plan with the IRS and is current on payments.
The applicant demonstrated financial stability with a positive monthly budget and savings.

Conditions Referenced

Disqualifying

F.1.araisedInability or Unwillingness to Satisfy Debts
F.1.craisedA History of Not Meeting Financial Obligations

Mitigating

F.2.bappliedConditions That Resulted in the Financial Problem Were Largely Beyond the Person's ControlThe applicant was underemployed and experienced a business downturn when debts were incurred.
F.2.dappliedThe Individual Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve DebtsThe applicant took significant steps to settle debts and improve his financial situation.

Key Rule Quoted

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

Procedural Posture

SOR issuedApr 8, 2008
Answer filedMay 8, 2008
Hearing heldJul 15, 2008Hearing time modified from 9 A.M. to 1:30 P.M.
Decision dateSep 17, 2008

Cite For

Mitigation of Financial Issues Under Guideline F
Importance of Demonstrating Financial Responsibility
Consideration of the Whole Person Concept in Security Clearance Decisions

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 raised under Guideline F, which included multiple debts totaling $27,931. The applicant demonstrated significant improvement in his financial situation by settling most debts and establishing a payment plan for the remaining tax liability, leading to a favorable decision for security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a–1.g	7 sub-charges — specific text not stated in this decision (for the applicant).	For Applicant			—	—	—
1.h	On or about March 20, 2008, a federal tax lien was filed against you in the [County Court House], in the approximate amount of $17,636.00. As of July 17, 2008, this debt has not been paid. $17,636	For Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Documented Payment Plan with IRS

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. 07-18520 SSN: ) ) Applicant for Security Clearance )

For Government: Francisco Mendez, Esq., Department Counsel For Applicant: Mark S. Zaid, Esq. Bradley P. Moss, Esq.

September 17, 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 March 12, 2007. On April 8, 2008, 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 May 8, 2008, and requested a hearing before an Administrative Judge. Department Counsel was prepared to proceed on May 20, 2008, and I received the case assignment on May 28, 2008. DOHA issued a notice of hearing on June 5, 2008, scheduling the hearing for July 15, 2008 at 9 A.M. On June 10, 2008, DOHA issued an amended notice of hearing modifying the start time on July 15, 2008 from 9 A.M. to 1:30 P.M. The hearing was held as scheduled.

The government offered Government Exhibits (GE) 1 through 5, which were received without objection. The government submitted a List of Government Exhibits, Exhibit (Ex.) III. The Applicant offered Applicant Exhibits (AE) A through G, which were received without objection, and testified on his own behalf.

I held the record open until July 25, 2008 to afford the Applicant the opportunity to submit additional documents on his behalf. Applicant timely submitted AE K and L without objection. DOHA received the hearing transcript (Tr.) on July 23, 2008.

PROCEDURAL RULINGS

Amendment of SOR

Department Counsel submitted a Motion to Amend the Statement of Reasons (Ex. I) dated July 14, 2008, adding the following allegation under Guideline F:

1.h. On or about March 20, 2008, a federal tax lien was filed against you in the [County Court House], in the approximate amount of $17,636.00. As of July 17, 2008, this debt has not been paid.

Counsel for Applicant submitted a Response to Motion to Amend the Statement of Reasons and Answer to Amended Statement of Reasons (Ex. II) dated July 14, 2008. Counsel for Applicant did not object to the Government’s Motion to Amend. Through Counsel for Applicant, Applicant admitted the first sentence, and denied the second sentence in that the debt has been partially paid. During the hearing, I granted the Government’s Motion to Amend. Tr. 9-11.

FINDINGS OF FACT

Applicant denied all of the SOR allegations with explanations. His denials with explanations 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 33-year-old engineer, who has worked for his defense contractor employer since October 2006. GE 1, Tr. 30. He is a first-time applicant for a security clearance. Tr. 56. Applicant graduated from high school in June 1994. Tr. 99. He did not pursue higher education. He has never married and has no dependents. GE1.

Applicant’s background investigation addressed his financial situation and included the review of his March 2007 e-QIP, his January 2008 Response to DOHA Financial Interrogatory, his April 2007 and July 2008 credit reports, and March 2008 federal tax lien record. GE 1 – 5.

Applicant’s SOR identified eight separate line items, which included two judgments, four collection accounts, one charged off account, and one federal tax lien for a total of $27,931 (excluding SOR ¶¶ 1.c., 1.g.). Two of the debts are duplicates, i.e. SOR ¶¶ 1.a. and 1.g.; 1.b. and 1.c., thus reducing the number of valid debts from eight to six. (SOR ¶¶ 1.a. – 1.h.)

Applicant provided the following explanation regarding the genesis of his financial problems and his solution for solving those problems:

The debts in this SOR were largely accumulated between 2000 and 2003 when I was young, single and lacking steady, good-paying work. Between 2003 and early 2006, I stabilized my professional career but my annual salary did not exceed $30,000 and I was unable to pay off the debts.

Since I joined my current company, [defense contractor], in October 2006, I have further stabilized my professional, financial, and social life. I have made steady progress at [defense contractor] and continue to play a more integral role within the company. My annual salary has grown consistent with the rise in my responsibilities, amounting to $57,000 in 2007 and expected to rise considerably beyond that in 2008. Equally important, I currently live with my girlfriend of five (5) years, resulting in additional savings by dividing up our living expenses.

While I recognize that youthful ignorance is no excuse for my earlier financial miscues, I believe I have demonstrated that I left behind any vestiges of a financially-unsustainable lifestyle long ago. I have taken control of all aspects of my life and have put myself on a steady footing to advance. In light of that, I believe any concerns surrounding my past financial issues have been more than sufficiently mitigated and that it is clearly consistent with the national security interests of the United States that I be granted a security clearance. Response to SOR

In response to a question from his counsel about what he had learned with respect to his finances, Applicant said:

Well, I’ve learned that it has a lot to do with my relationship. I never had a situation where I saw I was interested in having things and I needed a future, thinking house, family, that sort of portion of life I’d like to possibly be able to live.

And so, I’ve learned that, you know, it was just being immature and not taking responsibility for a lot of my actions. I, I don’t know how to, how to explain any better, but just the want to have a different side of life that I couldn’t create living that style of life, and it – that’s been the biggest motivating factor has been the sight of a future and understanding what I’m working for.

I’m not a money-motivated individual, but I understand that if that’s what it takes, then you structure your life in that way so that you can have some of the things that you want, then so be it. And I understand that, and that’s the biggest thing I’ve learned. Tr. 67-68.

Since his SOR was issued, Applicant has paid off and/or settled debts indentified in SOR ¶¶ 1.a. through 1.g., excluding 1.d. and 1.g., which are duplicates as noted supra. He paid/settled those debts in April 2008, three full months before his hearing date. He contacted the Internal Revenue Service (IRS) to address his federal tax liability identified in SOR ¶ 1.h., and established a payment plan of $259 per month. He is current on his payments to the IRS. Response to SOR, containing Exs. A – F. , Tr. 86-99.

Applicant submitted a comprehensive budget reflecting a net monthly remainder of $1,683 after all his debts were paid. He has a 401kaccount which he opened in January 2008, and a savings account reflecting a balance of $1,932. AE K.

Applicant provided five favorable reference-related documents. i.e. three e- mails from clients/customers, and two personal references. AE G – J, AE L. Applicant’s girlfriend testified on his behalf and provided favorable information about his character. Tr. 40-50. The President and Owner of Applicant’s company testified on his behalf and also provided favorable information about him. He stated Applicant was the “best engineer” he has ever had when comparing him to 200 to 300 engineers over the last 20 years. Tr. 23-39.

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 AG 18, the Government’s concern is:

“[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.”

The Government established that Applicant owed the debts alleged in SOR ¶¶1.a. – 1.b., 1.d. – 1.f., and 1.h. Applicant acknowledged he made poor financial decisions earlier in his life, especially at a time when he was underemployed. Not earning enough money to meet his day-to-day bills, he fell into a trap many individuals have and that is he lived off of or supplemented his income with credit cards. His lack of income also precluded him from paying his income taxes when due.

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 receiving his SOR in April 2008, he has taken this process quite seriously and taken what appears to be all reasonable steps to correct his financial situation. He has settled and/or paid all debts alleged in the SOR except his federal tax debt. For that debt, he has contacted the IRS, set up a monthly payment plan, and is current. His monthly budget reflects a net remainder of $1,683 after his bills are paid. What is different now as opposed to before is he has the means, tools and resolve to achieve financial stability.

Under AG ¶ 19, two disqualifying conditions raise a security concern:

(a) inability or unwillingness to satisfy debts; and

The Government established its case under Guideline F by showing Applicant owed the debts as alleged, except as noted, by the evidence presented. At the time the SOR was issued in April 2008, Applicant owed six debts totaling $27,931.

Under AG ¶ 20, there are two potentially mitigating conditions:

(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; and

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

I am able to apply partial credit under ¶ 20(b) because at the time Applicant incurred the debts, he was underemployed and experienced a business downturn, but question the level of responsibility Applicant exercised at the time. I am able to apply full credit under ¶ 20(d) because Applicant initiated a good-faith effort to repay overdue creditors or otherwise resolve debts. In short, Applicant has turned his financial situation around. He has established a viable budget, which shows a net remainder after he has paid his bills, and is able to save money.

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”1 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.h.: 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 See ISCR Case No. 04-06242 at 2 (App. Bd. June 28, 2006).