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ISCR Case 08-04926.h1 — CASE

ISCR Case 08-04926.h1granted

Case Headnote

ISCR Case No. 08-04926.h1

grantedJul 1, 2008· Hon. LeRoy F. Foreman· hearing

Summary

The applicant, a 35-year-old aircraft mechanic employed by a defense contractor, faced security concerns under Guideline F (Financial Considerations) due to a history of delinquent debts. The applicant successfully demonstrated that he had resolved most of his debts and was actively working to resolve the remaining one, leading to a decision to grant his security clearance.

Under Guideline F (Financial Considerations), the Statement of Reasons alleged the following: Dental bill $1,563 (1.a). Business equipment $1,208 (1.b). Credit card $4,078 (1.c). Credit card $1,619 (1.d). Auto loan $5,461 (1.e). Bad check $640 (1.f). Rental car $340 (1.g). Collection $766 (1.h). Utility bill $613 (1.i).

The judge granted the clearance. The government raised disqualifying conditions AG ¶ 19(a), AG ¶ 19(c), AG ¶ 19(e). The judge applied mitigating conditions AG ¶ 20(a), AG ¶ 20(b), AG ¶ 20(c), AG ¶ 20(d). The decision turned on the following: The applicant paid off or settled most of his delinquent debts; He demonstrated a methodical approach to resolving his financial issues; The applicant's financial difficulties were largely due to circumstances beyond his control, such as a business failure after 9/11.

Why the Applicant Prevailed

The applicant paid off or settled most of his delinquent debts.
He demonstrated a methodical approach to resolving his financial issues.
The applicant's financial difficulties were largely due to circumstances beyond his control, such as a business failure after 9/11.

Conditions Referenced

Disqualifying

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

Mitigating

AG ¶ 20(a)appliedBehavior Happened Long Ago or Infrequently
AG ¶ 20(b)appliedConditions Largely Beyond the Person's Control
AG ¶ 20(c)appliedReceived Counseling or Indications of Resolution
AG ¶ 20(d)appliedGood-faith Effort to Repay Debts

Key Rule Quoted

“Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the revised adjudicative guidelines (AG).”
— Executive Order 10865

Procedural Posture

SOR issuedDec 4, 2008
Answer filedFeb 20, 2009
Hearing heldJun 9, 2009via video teleconference
Decision dateAug 5, 2009

Cite For

Mitigation of Financial Issues Under Guideline F
Demonstrating Good Faith Efforts to Resolve Debts
Impact of External Circumstances on Financial Stability

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 several financial concerns under Guideline F, including debts related to dental bills, business equipment, credit cards, an auto loan, and other obligations. However, the applicant demonstrated a methodical approach to resolving these debts, leading to a decision in favor of granting the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Dental bill $1,563 $1,563	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	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	—
1.b	Business equipment $1,208 $1,208	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	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	—
1.c	Credit card $4,078 $4,078	For Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (e) consistent spending beyond one’s means / irresponsible spending	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	—
1.d	Credit card $1,619 $1,619	For Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (e) consistent spending beyond one’s means / irresponsible spending	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	—
1.e	Auto loan $5,461 $5,461	For Applicant	Auto Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (e) consistent spending beyond one’s means / irresponsible spending	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	—
1.f	Bad check $640 $640	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	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	—
1.g	Rental car $340 $340	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	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	—
1.h	Collection $766 $766	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	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	—
1.i	Utility bill $613 $613	For Applicant	Utility or Phone Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (e) consistent spending beyond one’s means / irresponsible spending	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	—

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. 08-04926 SSN: ----------- ) ) Applicant for Security Clearance )

For Government: Francisco Mendez, Esq., Department Counsel For Applicant: Pro se

August 5, 2009 ______________

STATEMENT OF CASE

______________

FOREMAN, LeRoy F., Administrative Judge:

This case involves security concerns raised under Guideline F (Financial Considerations). Eligibility for access to classified information is granted.

Statement of the Case

Applicant submitted a security clearance application on October 3, 2007. On December 4, 2008, the Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) detailing the basis for its preliminary decision to deny his application, citing security concerns based on financial considerations. 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 adjudicative guidelines (AG) promulgated by the President on December 29, 2005.

Applicant received the SOR on January 9, 2009; answered it on February 20, 2009; and requested a hearing before an administrative judge. DOHA received the request on March 16, 2009. Department Counsel was ready to proceed on May 6, 2009, and the case was assigned to me on the next day. DOHA issued a notice of hearing on May 21, 2009, scheduling the hearing by video teleconference for June 9, 2009. I convened the hearing as scheduled. Government Exhibits (GX) 1 through 6 were admitted in evidence without objection. Applicant testified and submitted Applicant’s Exhibits (AX) A through G, which were admitted without objection. I kept the record open to enable Applicant to submit additional documentary evidence. He submitted AX H on June 10, 2009. The record closed upon receipt of AX H. Department Counsel’s comments concerning AX H are attached to the record as Hearing Exhibit I. DOHA received the transcript (Tr.) on June 15, 2009.

FINDINGS OF FACT

In his answer to the SOR, Applicant admitted the allegations in SOR ¶ 1.e. His admissions in his answer and at the hearing are incorporated in my findings of fact.

Applicant is a 35-year-old aircraft mechanic employed by a defense contractor and assigned overseas. He has worked for his current employer since August 2006. He has never held a security clearance.

Applicant started his own aircraft repair business in the summer of 2000. His business declined substantially after the terrorist attacks of September 11, 2001. Applicant used personal funds and credit card accounts in an unsuccessful effort to keep the business running (Tr. 33-35). The business failed in August 2006.

Applicant started working for his current employer shortly after the business failed. He deployed overseas to a combat zone three times, and he was able to save enough money to pay off his delinquent debts (Tr. 35-38). He has about $26,000 in savings and $7,500 in investments (Tr. 46).

The table below summarizes the evidence concerning the delinquent debts alleged in the SOR.

Amount SOR Debt Status Evidence 1.a Dental bill $1,563 Paid AX B; AX G at 3 1.b Business equipment $1,208 Settled AX D; AX G at 4 1.c Credit card $4,078 Settled AX E; AX G at 5-6 1.d Credit card $1,619 Settled AX C; AX G at 7-8 1.e Auto loan $5,461 Payment agreement Answer at 9-14; AX H 1.f Bad check $640 Paid AX F; AX G at 15-16 1.g Rental car $340 Paid AX G at 17 1.h Collection $766 Paid AX G at 18 1.i Utility bill $613 Paid AX G at 19

The delinquent auto loan alleged in SOR ¶ 1.e occurred after Applicant co-signed with his mother to purchase an automobile for her. His mother failed to make the payments and the auto was repossessed. Applicant, who was deployed in a combat zone at the time, made telephonic arrangements with the creditor to start making monthly payments on the debt. He paid $123 per month from May to October 2008, when he was informed by the creditor that they had no record of his account and no record of his payments (Tr. 44). At the time of the hearing, he was still corresponding with the creditor in an effort to locate his account and resolve the debt (AX H).

Applicant’s supervisor, a chief warrant officer (CW4), has known him for about a year and described him as talented, dependable, responsible, honest, and courteous. The chief warrant officer has worked with Applicant while deployed overseas in a combat environment, and he rates Applicant among the top 5% of the contractor employees he has supervised (AX A).

POLICIES

“[N]o one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). As Commander in Chief, the President has the authority to “control access to information bearing on national security and to determine whether an individual is sufficiently trustworthy to have access to such information.” Id. at 527. The President has 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. Or. 10865, Safeguarding Classified Information within Industry § 2 (Feb. 20, 1960), as amended and modified.

Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the revised adjudicative guidelines (AG). These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, these guidelines are applied in conjunction with an evaluation of the whole person. An administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. An administrative judge must consider all available, reliable information about the person, past and present, favorable and unfavorable.

The government reposes a high degree of trust and confidence in persons with access to classified information. This relationship transcends normal duty hours and endures throughout off-duty hours. 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.

Clearance decisions must be made “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See Exec. Or. 10865 § 7. Thus, a decision to deny a security clearance is not necessarily a determination as to the loyalty of the applicant. It is merely an indication the applicant has not met the strict guidelines the President and the Secretary of Defense have established for issuing a clearance. Initially, the government must establish, by substantial evidence, conditions in the personal or professional history of the applicant that may disqualify the applicant from being eligible for access to classified information. The government has the burden of establishing controverted facts alleged in the SOR. See Egan, 484 U.S. at 531. “Substantial evidence” is “more than a scintilla but less than a preponderance.” See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). The guidelines presume a nexus or rational connection between proven conduct under any of the criteria listed therein and an applicant’s security suitability. See ISCR Case No. 95-0611 at 2 (App. Bd. May 2, 1996).

Once the government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. Directive ¶ 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). “[S]ecurity clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531; see AG ¶ 2(b).

ANALYSIS

Guideline F, Financial Considerations

The concern under this guideline is set out in AG ¶ 18 as follows:

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.

Three disqualifying conditions under this guideline are relevant. AG ¶ 19(a) is raised by an “inability or unwillingness to satisfy debts.” AG ¶ 19(c) is raised by “a history of not meeting financial obligations.” AG ¶ 19(e) is raised by “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.” Applicant’s financial history raises these three disqualifying conditions, shifting the burden to him to rebut, explain, extenuate, or mitigate the facts. Directive ¶ E3.1.15. An applicant has the burden of proving a mitigating condition, and the burden of disproving it never shifts to the government. See ISCR Case No. 02-31154 at 5 (App. Bd. Sep. 22, 2005).

Security concerns based on financial problems can be mitigated by showing that “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.” AG ¶ 20(a). Applicant’s delinquent debts were numerous and are not yet fully resolved. However, recurrence is unlikely because his debts occurred as a result of the business downturn following the events of September 11, 2001, and he is no longer involved in running a private business. His methodical and conscientious resolution of all but one debt dispels any doubt about his current reliability, trustworthiness, and good judgment. I conclude AG ¶ 20(a) is established.

Security concerns under this guideline also can be mitigated by showing that ‘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.” AG ¶ 20(b). Based on the above discussion of AG ¶ 20(a), I conclude AG ¶ 20(b) also is established.

Security concerns under this guideline also can be mitigated by showing 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.” AG ¶ 20(c). This mitigating condition also has two prongs that may be either disjunctive or conjunctive. If the person has received counseling, it must also be shown that there are clear indications the problem is being resolved or under control. However, if the person has not received counseling, this mitigating condition may still apply if there are clear indications that the problem is being resolved or under control. This mitigating condition is established because Applicant’s debts are being resolved.

Security concerns under this guideline also can be mitigated by showing that “the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts.” AG ¶ 20(d). Good faith means acting in a way that shows reasonableness, prudence, honesty, and adherence to duty or obligation. ISCR Case No. 99-0201, 1999 WL 1442346 at *4 (App. Bd. Oct. 12, 1999). An applicant is not required, as a matter of law, to establish resolution of each and every debt alleged in the SOR. See ADP Case No. 06-18900 (App. Bd. Jun. 6, 2008). An applicant need only establish a plan to resolve financial problems and take significant actions to implement the plan. ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008). Applicant has methodically resolved all but one of his delinquent debts, and he is actively working to resolve his one remaining debt. I conclude AG ¶ 20(d) is established.

WHOLE PERSON CONCEPT

Under the whole person concept, an 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. An 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) the 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 commonsense judgment based upon careful consideration of the guidelines and the whole person concept. I have incorporated my comments under Guideline F in my whole person analysis. Some of the factors in AG ¶ 2(a) were addressed under that guideline, but some warrant additional comment.

Applicant is a mature adult, with a reputation as a dependable, responsible, and honest person. He has rebounded from the failure of his business, resolved all but one of his delinquent debts, and is actively working to resolve the one remaining debt. After weighing the disqualifying and mitigating conditions under Guideline F, and evaluating all the evidence in the context of the whole person, I conclude Applicant has mitigated the security concerns based on his delinquent debts. Accordingly, I conclude he has carried his burden of showing that it is clearly consistent with the national interest to grant him eligibility for access to classified information.

FORMAL FINDINGS

I make the following formal findings on the allegations set forth in the SOR, as required by Directive ¶ E3.1.25:

Paragraph 1, Guideline F (Financial Considerations): FOR APPLICANT

Subparagraphs 1.a-1.i: For Applicant

CONCLUSION

In light of all of the circumstances, it is clearly consistent with the national interest to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is granted.

LeRoy F. Foreman Administrative Judge