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ISCR Case 08-10252.h1 — CASE

ISCR Case 08-10252.h1denied

Case Headnote

ISCR Case No. 08-10252.h1

deniedSep 29, 2009· Hon. Wilford H. Ross· hearing

Summary

A 45-year-old single male defense contractor employee was denied a security clearance under Guideline F (Financial Considerations) due to significant financial irresponsibility. The applicant admitted to being over $42,000 in debt, primarily stemming from a failed business.

Specifically, the applicant acknowledged a $32,027 judgment from 2007 and a $10,547 debt to a bank, also from 2007. Both debts were incurred by a corporation he owned, which closed in 2006. In a December 2008 interrogatory, he explicitly stated he did not plan to repay either debt with personal funds.

The denial was based on the applicant's admission of substantial, unpaid debts and his stated lack of intent to repay them. He also failed to provide evidence that these debts were forgiven or that he was not personally liable, leading the judge to conclude that his financial irresponsibility raised significant security concerns.

Why the Applicant Was Denied

The applicant admitted to significant, unpaid debts totaling over $42,000.
He expressed no intention to repay these debts, indicating a lack of responsibility.
The applicant failed to provide evidence that his debts were forgiven or that he was not personally liable for them.

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)rejectedBehavior Happened Long Ago or InfrequentlyThe applicant's debts are recent and ongoing.
AG ¶ 20(b)rejectedConditions Largely Beyond the Person's ControlThe applicant did not demonstrate that the debts were not his personal responsibility.
AG ¶ 20(c)rejectedClear Indications That the Problem Is Being ResolvedThe applicant has no intention of resolving his past due debts.

Key Rule Quoted

“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.”

Procedural Posture

SOR issuedApr 9, 2009
Answer filedMay 1, 2009
Hearing held—Decision made without a hearing.
Decision dateSep 29, 2009

Cite For

Financial Irresponsibility as a Disqualifying Factor Under Guideline F
Lack of Evidence to Support Claims of Debt Forgiveness
The Importance of Personal Liability in Financial Considerations for Security Clearance

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 significant financial issues, including a judgment debt of $32,027 and a bank debt of $10,547, both of which have not been paid. The applicant's admissions regarding these debts and his stated intention not to repay them contributed to the decision to deny his security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	The Applicant admits that he is indebted to a company for a judgment in the amount of $32,027 since 2007. This debt has not been paid and the Applicant states in an interrogatory dated December 30, 2008, “This debt was incurred by the corporation I owned which was closed when the housing market crashed in 2006. I do not plan to repay this debt with personal funds.” $32,027	Against Applicant	Judgment Against Applicant	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	The Applicant admits that he is indebted to a bank in the amount of $10,547 since 2007. This debt has not been paid and the Applicant states in an interrogatory dated December 30, 2008, “This debt was also incurred by the corporation I owned which was closed when the housing market crashed in 2006. I do not plan to repay this debt with personal funds.” $10,547	Against Applicant	Unspecified Financial	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. 08-10252 SSN: -------------------- ) ) Applicant for Security Clearance )

For Government: Gregg A. Cervi, Esquire, Department Counsel

For Applicant: Pro se

September 29, 2009

______________

STATEMENT OF CASE

______________

ROSS, Wilford H., Administrative Judge:

Applicant submitted his Electronic Questionnaire for National Security Positions (e-QIP), on July 18, 2008 (Item 5). On April 9, 2009, the Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) detailing the security concerns under Guideline F concerning the 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 President Bush on December 29, 2005, and effective within the Department of Defense for SORs issued after September 1, 2006.

Applicant submitted an Answer to the SOR on May 1, 2009, and requested a decision without a hearing. Department Counsel submitted a File of Relevant Material (FORM) to the Applicant on June 16, 2009. The Applicant received the FORM on June 23, 2009, and was given 30 days to submit any additional information. He elected not to submit any additional information. The case was assigned to me on September 9, 2009. Based upon a review of the case file, pleadings, and exhibits, eligibility for access to classified information is denied.

FINDINGS OF FACT

The Applicant is 45 and single. 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 the Applicant is ineligible for clearance because he is financially overextended and therefore at risk of having to engage in illegal acts to generate funds. The Applicant admitted both of the allegations under this paragraph. Those admissions are hereby deemed findings of fact.

1.a. The Applicant admits that he is indebted to a company for a judgment in the amount of $32,027 since 2007. This debt has not been paid and the Applicant states in an interrogatory dated December 30, 2008, “This debt was incurred by the corporation I owned which was closed when the housing market crashed in 2006. I do not plan to repay this debt with personal funds.” (Item 6 at 2.)

1.b. The Applicant admits that he is indebted to a bank in the amount of $10,547 since 2007. This debt has not been paid and the Applicant states in an interrogatory dated December 30, 2008, “This debt was also incurred by the corporation I owned which was closed when the housing market crashed in 2006. I do not plan to repay this debt with personal funds.” (Item 6 at 3.)

As stated above, according to the Applicant, both of these debts were related to a business he co-owned with his brother-in-law from March 2005 through December 2006. (Item 5 at 10-11.) In his Answer the Applicant states, “In accordance with IRS tax code and generally accepted accounting practices upon the closure of the business these liabilities were converted to assets and taxed as profit. All tax debts related to these debts, those of the corporation and me personally have been paid.” The Applicant submitted no evidence to support this statement.

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 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 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 own common sense, as well as his 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 by President Eisenhower 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 “inability or unwillingness to satisfy debts” is potentially disqualifying. Similarly under AG ¶19(c), “a history of not meeting financial obligations” may raise security concerns. The Applicant, by his own admission, has over $ 42,000 in past due debts, both of which have been due and owing for a considerable period. 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. The following conditions have applicability in this case:

Under AG ¶ 20(a), the disqualifying condition may be mitigated where “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.” Applicant’s financial difficulties appear to be connected to a business which failed in 2006. However, he has presented no evidence supporting his statement that these debts have been forgiven by the creditors, which is how a debt may become an asset. On the contrary, all the available evidence show these debts to be his responsibility and severely past due. This mitigating condition is not applicable 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 . . .), and the individual acted responsibly under the circumstances.” The Applicant argues that these debts were related to his business and are, therefore, not his personal responsibility. He provides no records to show that the business was an entity for which he had no personal liability. To the contrary, Applicant’s credit reports show that he was jointly responsible for the debt in subparagraph 1.a. (Item 7 at 1; Item 8 at 2); and individually responsible for the debt in subparagraph 1.b. (Item 7 at 2; Item 8 at 4,12). He affirmatively states that he has no intention of satisfying either of these debts. This mitigating condition is not applicable to this case. AG ¶ 20(c) states that it may be mitigating where, “there are clear indications that the problem is being resolved or is under control.” The Applicant’s credit reports show that, in the main, he is making sufficient payments on his current indebtedness. However, as stated above, he does not intend to resolve his considerable past due indebtedness. This mitigating condition is not applicable.

Based on all of the available evidence, I cannot find that the Applicant has mitigated the allegations under this Guideline. Paragraph 1 is found against the Applicant.

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. 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) in making such a decision:

(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 facts and circumstances surrounding this case. The Applicant has a history of not paying his debts. In addition, he affirmatively states that he has no intention of paying these debts. As set forth above, I cannot find that there have been permanent behavioral changes under AG ¶ 2(a)(6). In addition, I find that there is the potential for pressure, coercion, exploitation, or duress (AG ¶2(a)(8)), and that there is a likelihood of recurrence (AG ¶2(a)(9)).

Overall, the record evidence leaves me with questions or doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude the Applicant has not mitigated the security concerns arising from his financial considerations.

On balance, it is concluded that the Applicant has not successfully overcome the government's case opposing his request for a DoD security clearance. Accordingly, the evidence supports a finding against the Applicant as to the factual and conclusionary allegations expressed in Paragraph 1 of the government's Statement of Reasons.

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 THE APPLICANT

Subparagraph 1.a.: Against the Applicant Subparagraph 1.b.: Against the Applicant

CONCLUSION

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

WILFORD H. ROSS Administrative Judge