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ISCR Case 08-10075.h1 — CASE

ISCR Case 08-10075.h1granted

Case Headnote

ISCR Case No. 08-10075.h1

grantedSep 8, 2010· Hon. Wilford H. Ross· hearing

Summary

A 47-year-old married defense contractor sought a security clearance under Guidelines E (Personal Conduct) and F (Financial Considerations). The Statement of Reasons alleged that the applicant falsified an official questionnaire regarding his financial situation and detailed ten separate credit card debts. These debts ranged from an original amount of $2,130 to $54,583, with several resolved through payment arrangements for lesser amounts or ongoing monthly payments.

The applicant admitted to all listed debts and demonstrated a proactive approach to resolving them, including negotiating payment plans with creditors and consulting a bankruptcy attorney. The financial difficulties stemmed primarily from a home remodeling project that was abandoned by a contractor.

The judge found that the applicant's financial situation was stable and under control. The decision to grant the security clearance was based on the applicant's active efforts to resolve his financial issues, the origin of the difficulties being largely beyond his control, and his demonstrated commitment to paying off debts. The security clearance was GRANTED.

Why the Applicant Prevailed

The applicant actively worked to resolve his financial issues by negotiating payment plans with creditors.
The applicant's financial difficulties were primarily due to circumstances beyond his control, specifically the abandonment of a home remodeling project by a contractor.
The applicant demonstrated a stable financial situation and a commitment to paying off debts.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability or Unwillingness to Satisfy Debts
AG ¶ 19(c)raisedA History of Not Meeting Financial Obligations

Mitigating

AG ¶ 20(a)appliedBehavior Happened so Long Ago, Was Infrequent, or Occurred Under Circumstances Unlikely to Recur
AG ¶ 20(b)appliedConditions That Resulted in Financial Problems Were Largely Beyond the Person's Control
AG ¶ 20(c)appliedThe Problem Is Being Resolved or Is Under Control
AG ¶ 20(d)appliedGood-faith Effort to Pay Off Creditors

Key Rule Quoted

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

Procedural Posture

SOR issuedJul 27, 2009
Answer filedAug 20, 2009
Hearing heldJan 27, 2010
Decision dateSep 8, 2010

Cite For

Mitigation of Financial Issues Under Guideline F
Consideration of Circumstances Beyond the Applicant's Control
Stability of Financial Situation as a Factor 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 E (Personal Conduct) · descriptive summary of a decided case

Posture: Decision on RecordDecided: granted

The judge found that the allegation under Guideline E regarding falsification of an official questionnaire was withdrawn. As a result, there were no personal conduct concerns under this guideline, leading to a favorable decision for the applicant.

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
2.a	Falsified an official questionnaire concerning his financial situation.	Withdrawn	Falsification Security Form	Financial	Denied	—	—	—

Descriptive standardized rendering of a decided public case (Guideline E). The verbatim source decision is shown in full below.

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 significant financial difficulties but demonstrated a commitment to resolving his debts. All allegations under Guideline F were ruled in favor of the applicant, indicating that he has taken responsible steps to manage his financial situation and mitigate the associated security concerns.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant admits that he is indebted to a credit card company in the original amount of $11,442. He has made a payment arrangement with this creditor for payments of $318 a month, as evidenced by documentation from this creditor. This debt is resolved. $11,442	For Applicant	Credit Card Debt	Admitted	—	—	—
1.b	Applicant admits that he is indebted to a credit card company in the amount of $22,902.45. He has made a payment arrangement with this creditor for payments of $966.97 a month for 18 months, totaling $17,405.46, as evidenced by documentation from this creditor. This debt is resolved. $22,902	For Applicant	Credit Card Debt	Admitted	—	—	—
1.c	Applicant admits that he is indebted to a credit card company in the original amount of $15,765. He has made a payment arrangement with this creditor for payments of $305 a month, as evidenced by documentation from this creditor. This debt is resolved. $15,765	For Applicant	Credit Card Debt	Admitted	—	—	—
1.d	Applicant admits that he was indebted to a credit card company in the original amount of $3,185. He has made a payment arrangement with this creditor to resolve this debt by payment of a lesser amount of $1,752, as evidenced by documentation from this creditor. This debt is paid. $3,185	For Applicant	Credit Card Debt	Admitted	—	—	—
1.e	Applicant admits that he was indebted to a credit card company in the original amount of $2,130. He has made a payment arrangement with this creditor to resolve this debt by payment of a lesser amount of $1,200, as evidenced by documentation from this creditor. This debt is paid. $2,130	For Applicant	Credit Card Debt	Admitted	—	—	—
1.f	Applicant admits that he is indebted to a credit card company in the original amount of $54,583. He has made a payment arrangement with this creditor to resolve this debt by payment of a lesser amount of $27,500, as evidenced by documentation from this creditor. This debt is resolved. $54,583	For Applicant	Credit Card Debt	Admitted	—	—	—
1.g	Applicant admits that he is indebted to a credit card company in the original amount of $6,343. He has made a payment arrangement with this creditor to resolve this debt by payment of the lesser amount of $2,283.06 in payments of $380.51 a month, as evidenced by documentation from this creditor. This debt is resolved. $6,343	For Applicant	Credit Card Debt	Admitted	—	—	—
1.h	Applicant admits that he is indebted to a credit card company in the original amount of $9,100.58. He has made a payment arrangement with this creditor to resolve this debt by payment of the lesser amount of $3,640.08 in payments of $303.34 a month, as evidenced by documentation from this creditor. This debt is resolved. $9,100	For Applicant	Credit Card Debt	Admitted	—	—	—
1.i	Applicant admits that he is indebted to a credit card company in the original amount of $24,912. He has made a payment arrangement with this creditor to resolve this debt in payments of $300 a month, as evidenced by documentation from this creditor. This debt is resolved. $24,912	For Applicant	Credit Card Debt	Admitted	—	—	—
1.j	Applicant admits that he is indebted to a credit card company in the amount of $9,294.06. He has made a payment arrangement with this creditor to resolve this debt by payment of the lesser amount of $1,033, as evidenced by documentation from this creditor. This debt is paid. $9,294	For Applicant	Credit Card Debt	Admitted	—	—	—

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. 08-10075 SSN: ------------------ ) ) Applicant for Security Clearance )

For Government: Melvin A. Howry, Esq., Department Counsel

For Applicant: Pro se

September 8, 2010

______________

STATEMENT OF CASE

______________

ROSS, Wilford H., Administrative Judge:

Applicant submitted his Electronic Questionnaire for Investigations Processing (e-QIP) on May 23, 2008. (Government Exhibit 1.) On July 27, 2009, the Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) detailing the security concerns under Guidelines F and E concerning 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 adjudicative guidelines (AG) effective within the Department of Defense for SORs issued after September 1, 2006.

Applicant submitted Answers to the SOR on August 20 and December 8, 2009, and requested a hearing before an Administrative Judge. This case was assigned to me on December 10, 2009. Department Counsel was prepared to proceed on December 12, 2009. DOHA issued a notice of hearing on December 16, 2009, and I convened the hearing as scheduled on January 27, 2010. The Government offered Government Exhibits 1 through 9, which were received without objection. The Applicant testified on his own behalf and submitted Applicant’s Exhibits A through M, also received without objection. The record was left open at the Applicant’s request for the submission of additional documentation. The Applicant submitted Applicant’s Exhibit N on February 9, 2010. This exhibit was also received without objection. DOHA received the transcript of the hearing on February 12, 2010. The record closed on February 12, 2010. Based upon a review of the case file, pleadings, exhibits, and testimony, eligibility for access to classified information is granted.

Ruling on Procedure

Applicant denied Paragraph 2 of the SOR, under Guideline E, which stated that he had falsified an official questionnaire concerning his financial situation. After examining Applicant, Department Counsel moved to strike Paragraph 2 of the SOR and its sole allegation. That motion was granted. (Transcript at 71-72.)

FINDINGS OF FACT

Applicant is 47 and married. He is employed by a defense contractor and seeks to obtain a security clearance in connection with his employment.

Guideline F, Financial Considerations

The Government alleges that Applicant is ineligible for clearance because he is financially overextended and therefore at risk of having to engage in illegal acts to generate funds. Applicant admits all of the allegations under Paragraph 1 of the SOR. Those admissions are hereby deemed findings of fact.

Applicant testified about his financial situation. He stated that his family’s financial difficulties began when they were remodeling their house, and his contractor abandoned the work when it was only partially completed. Applicant began using his own funds to complete the work, which eventually got to be more than he and his wife could pay. As of the time of the hearing, the Applicant was in the midst of completing a short sale for the house. (Transcript at 48-54, 66-69.)

In order to resolve the debt, Applicant signed on with a debt relief company in January 2008. He gave the company $8,000 over approximately six months, and they did nothing for him. He stopped using the company in June 2008 and began attempting to resolve his debts himself. (Applicant Exhibits E and G; Transcript at 43-47.) As part of that effort, he consulted with a bankruptcy attorney in October 2009, and took a credit counseling course recommended by the United States Bankruptcy Court. (Applicant Exhibit D; Transcript at 48.) The current status of the Applicant’s debts is as follows:

1.a. Applicant admits that he is indebted to a credit card company in the original amount of $11,442. He has made a payment arrangement with this creditor for payments of $318 a month, as evidenced by documentation from this creditor. This debt is resolved. (Applicant Exhibit L; Transcript at 57-58.)

1.b. Applicant admits that he is indebted to a credit card company in the amount of $22,902.45. He has made a payment arrangement with this creditor for payments of $966.97 a month for 18 months, totalling $17,405.46, as evidenced by documentation from this creditor. This debt is resolved. (Applicant Exhibit H; Transcript at 37-40.)

1.c. Applicant admits that he is indebted to a credit card company in the original amount of $15,765. He has made a payment arrangement with this creditor for payments of $305 a month, as evidenced by documentation from this creditor. This debt is resolved. (Applicant Exhibit N at 6; Transcript at 40-42.)

1.d. Applicant admits that he was indebted to a credit card company in the original amount of $3,185. He has made a payment arrangement with this creditor to resolve this debt by payment of a lesser amount of $1,752, as evidenced by documentation from this creditor. This debt is paid. (Applicant Exhibit K; Transcript at 37.)

1.e. Applicant admits that he was indebted to a credit card company in the original amount of $2,130. He has made a payment arrangement with this creditor to resolve this debt by payment of a lesser amount of $1,200, as evidenced by documentation from this creditor. This debt is paid. (Applicant Exhibit J; Transcript at 37.)

1.f. Applicant admits that he is indebted to a credit card company in the original amount of $54,583. He has made a payment arrangement with this creditor to resolve this debt by payment of a lesser amount of $27,500, as evidenced by documentation from this creditor. This debt is resolved. (Applicant Exhibit N at 7; Transcript at 32-36.)

1.g. Applicant admits that he is indebted to a credit card company in the original amount of $6,343. He has made a payment arrangement with this creditor to resolve this debt by payment of the lesser amount of $2,283.06 in payments of $380.51 a month, as evidenced by documentation from this creditor. This debt is resolved. (Applicant Exhibit I; Transcript at 32-36.)

1.h. Applicant admits that he is indebted to a credit card company in the original amount of $9,100.58. He has made a payment arrangement with this creditor to resolve this debt by payment of the lesser amount of $3,640.08 in payments of $303.34 a month, as evidenced by documentation from this creditor. This debt is resolved. (Applicant Exhibit N at 8; Transcript at 32-36.) 1.i. Applicant admits that he is indebted to a credit card company in the original amount of $24,912. He has made a payment arrangement with this creditor to resolve this debt in payments of $300 a month, as evidenced by documentation from this creditor. This debt is resolved. (Applicant Exhibit N at 6,9; Transcript at 59-60.)

1.j. Applicant admits that he is indebted to a credit card company in the amount of $9,294.06. He has made a payment arrangement with this creditor to resolve this debt by payment of the lesser amount of $1,033, as evidenced by documentation from this creditor. This debt is paid. (Applicant Exhibit N at 6,10; Transcript at 61-64.)

Applicant submitted a revised personal financial statement. (Applicant Exhibit N at 3-4.) This statement shows that the Applicant is well able to pay his negotiated indebtedness. Applicant maintains, and records show, that he is able to pay his regular debts.(Government Exhibit 8.)

Mitigation

Applicant is a respected worker. He submitted character reference letters from his Director, as well as two co-workers. Applicant is described as being “trustworthy,” “committed, loyal,” and “a dependable and reliable employee.” (Applicant Exhibit A.) He has also received written commendations from his employers. (Applicant Exhibit C.)

POLICIES

Security clearance decisions are not made in a vacuum. When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which are to be used as appropriate 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 overarching adjudicative goal is a fair, impartial, and commonsense 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. In addition, the administrative judge may also rely on his or her own common sense, as well as knowledge of the law, human nature, and the ways of the world, in making a reasoned 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. Security clearance decisions include, by necessity, consideration of the possible risk that 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.

Finally, as emphasized in Section 7 of Executive Order 10865, “Any determination under this order . . . shall be a determination 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 conditions that could raise security concerns. Under AG ¶ 19(a), an Ainability or unwillingness to satisfy debts@ is potentially disqualifying. Similarly under AG ¶ 19(c), Aa history of not meeting financial obligations@ may raise security concerns. Applicant, by his own admission, and supported by the documentary evidence, had $158,163 in past-due debts, all of which have been due and owing for several years. The evidence is sufficient to raise these potentially disqualifying conditions.

The guideline also includes examples of conditions that could mitigate security concerns arising from financial difficulties. Under AG ¶ 20(a), the disqualifying condition may be mitigated where Athe 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.@ Applicant's financial difficulties arose primarily because of the money it cost to remodel his house. Once Applicant and his wife realized the extent of their indebtedness, they began working to try and resolve it. He has paid off three of the past due debts, completed negotiations to pay off his remaining past due indebtedness, has made payments to all of his creditors, and his current financial situation is stable. This mitigating condition applies to this case.

AG ¶ 20(b) states that the disqualifying conditions may be mitigated where “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.” As stated above, the Applicant’s debt situation was brought about primarily by the bad faith of his contractor, a situation that will not be repeated. This mitigating condition also applies.

Applicant has initiated a good-faith effort to pay off his creditors. Through negotiation and payment, Applicant has reduced his indebtedness to $102,947. Accordingly, AG ¶ 20(d) is applicable.

Applicant is over $100,000 in debt. However, the record is clear that he is not running up new debt. Indeed, he is paying his debts in a responsible manner. Under the particular circumstances of this case, I find that “there are clear indications that the problem is being resolved or is under control,” as required by AG ¶ 20(c).

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 relevant circumstances. 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. 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) 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.

I considered the potentially disqualifying and mitigating conditions in light of all the relevant facts and circumstances surrounding this case. The discussion under Guideline F, above, applies here as well. Applicant, with the best of intentions, wound up in financial straits. However, he has a well-thought-out and reasonable plan, which he is carrying out. His current financial condition is stable. Under AG ¶ 2(a)(3), I find that there have been permanent behavioral changes under AG ¶ 2(a)(6). Accordingly, at the present time, I find that there is little to no potential for pressure, coercion, exploitation, or duress (AG ¶ 2(a)(8)); and that there is no likelihood of recurrence (AG ¶ 2(a)(9)).

Overall, the record evidence leaves me with no questions or doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant has mitigated the security concerns arising from his financial situation. Accordingly, the evidence supports granting his request for a security clearance.

FORMAL FINDINGS

Formal findings for or against Applicant on the allegations set forth in the SOR, as required by ¶ E3.1.25 of Enclosure 3 of the Directive, are:

Paragraph 1, Guideline F: FOR APPLICANT

Subparagraphs 1.a. through 1.j.: For Applicant

Paragraph 2, Guideline E: WITHDRAWN

Subparagraph 2.a.: Withdrawn

CONCLUSION

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

WILFORD H. ROSS Administrative Judge