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ISCR Case 09-01446.h1 — CASE

ISCR Case 09-01446.h1granted

Case Headnote

ISCR Case No. 09-01446.h1

grantedJan 13, 2010· Hon. Erin C. Hogan· hearing

Summary

A 33-year-old network troubleshooter for a Department of Defense contractor was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The Statement of Reasons detailed ten allegations of financial difficulties, including a $32 insufficient funds check, a $176 cable television account, a $1,713 account, and a $4,502 account, all placed for collection. Additionally, five accounts were charged off: a $31 credit union account, a $582 computer purchase account, a $3,064 credit card account, a $993 bank account, and a $6,838 military exchange credit card account. A $1,000 credit card account was also placed for collection.

Disqualifying conditions FC DC 19(a) and FC DC 19(c) were raised. However, the applicant successfully applied mitigating conditions FC MC 20(a), FC MC 20(b), FC MC 20(c), FC MC 20(d), and FC MC 20(e).

The judge granted the clearance because the applicant resolved all but one minor debt, demonstrating financial responsibility. His current income is significantly higher, which facilitated debt resolution. Furthermore, character references attested to his reliability and trustworthiness, leading to a finding that his current financial situation is stable and reliable.

Why the Applicant Prevailed

The applicant resolved all but one minor debt, demonstrating financial responsibility.
The applicant's current income is significantly higher, allowing for debt resolution.
The applicant provided character references attesting to his reliability and trustworthiness.

Conditions Referenced

Disqualifying

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

Mitigating

FC MC 20(a)appliedBehavior Happened Long Ago or Infrequently
FC MC 20(b)appliedConditions Largely Beyond the Person's Control
FC MC 20(c)appliedReceived Counseling or Indications of Control Over the Problem
FC MC 20(d)appliedInitiated Good-faith Effort to Repay Creditors
FC MC 20(e)appliedReasonable Basis to Dispute Legitimacy of Debt

Key Rule Quoted

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

Procedural Posture

SOR issuedSep 11, 2009
Answer filedOct 5, 2009
Hearing heldJan 13, 2010conducted via video-teleconference
Decision dateMar 9, 2010

Cite For

Mitigation of Financial Issues Under Guideline F
Importance of Stable Income in Security Clearance Decisions
Consideration of Personal Circumstances in Financial Difficulties

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 delinquent accounts totaling approximately $18,931, primarily due to financial difficulties following his separation from military service. However, the applicant successfully mitigated these concerns by resolving all but one minor debt, demonstrating a stable financial situation and responsible behavior in managing his finances.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	a $32 debt for a insufficient funds check written to a pizza restaurant $32	For Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(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 (e) reasonable, documented basis to dispute the debt	Claimed Other
1.b	a $176 cable television account placed for collection $176	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Debt Paid in Full
1.c	a $1,713 account placed for collection $1,713	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Debt Paid in Full
1.d	a $4,502 account placed for collection $4,502	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Debt Paid in Full
1.e	a $31 credit union account that was charged off $31	For Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (e) reasonable, documented basis to dispute the debt	Claimed Other
1.f	a $582 account to purchase a computer that was charged off $582	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Debt Paid in Full
1.g	a $3,064 credit card account that was charged off $3,064	For Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Debt Paid in Full
1.h	a $993 charged off bank account $993	For Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Debt Paid in Full
1.i	a $6,838 military exchange credit card account that was charged off $6,838	For Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Debt Paid in Full
1.j	a $1,000 credit card account that was placed for collection $1,000	For Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Debt Paid in Full

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. 09-01446 SSN: ) ) Applicant for Security Clearance )

For Government: Francisco Mendez, Esquire, Department Counsel For Applicant: Eric S. Montalvo, Esquire

March 9, 2010 ______________

STATEMENT OF CASE

______________

HOGAN, Erin C., Administrative Judge:

Applicant submitted a Questionnaire for National Security Positions (SF 86) on May 21, 2009. On September 11, 2009, the Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) detailing the security concerns under Guideline F, 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 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.

On October 5, 2009, Applicant answered the SOR and requested a hearing before an administrative judge. Department Counsel was ready to proceed on October 25, 2009. The case was assigned to me on November 3, 2009. On December 15, 2009, a Notice of Hearing was issued, scheduling the hearing for January 13, 2010. On January 11, 2010, the Notice of Hearing was amended to indicate that the hearing was to be conducted via video-teleconference. The case was heard on January 13, 2010. The Government offered seven exhibits which were admitted as Government Exhibits (Gov) 1–7 without objection. The Applicant testified and offered one exhibit which was admitted as Applicant Exhibit (AE) A without objection. AE A has six tabs containing various documents. The record was held open until January 27, 2010, to allow Applicant to submit additional documents. He timely submitted a three-page document that was admitted as AE B. Department Counsel’s response to AE B is marked as Hearing Exhibit (HE) I. Applicant also timely submitted a one-page document that was admitted as AE C. Department Counsel’s response to AE C is marked as HE II. The transcript (Tr) was received on January 19, 2010. Based upon a review of the case file, pleadings, exhibits, and testimony, eligibility for a security clearance is granted.

FINDINGS OF FACT

In his Answer to the SOR, Applicant denied SOR ¶ 1.hand admitted the remaining SOR allegations.

Applicant is a 33-year-old network troubleshooter, employed with a Department of Defense contractor, who is applying for a security clearance. He has worked for his current employer since March 24, 2008. He works at an overseas location. From May 1, 1996 to July 15, 2005, he served on active duty in the United States Air Force. He was in the satellite communications career field. He separated as a Staff Sergeant (E-5) with an honorable discharge. He served two combat tours while on active duty, OPERATION SOUTHERN WATCH in Kuwait from May 2001 to September 2001, and OPERATION RESTORE HOPE in Haiti in April 2004. He was granted a SECRET clearance on May 6, 1996. His clearance became inactive on July 14, 2007. He has earned two associates degrees, one in aerospace propulsions, and one in electronic systems. He is divorced and has no children. (Tr at 18-21; Gov 1; AE A, Tab 5)

Applicant’s security clearance background investigation revealed that he encountered financial problems after he separated from active duty in July 2005. The SOR alleged the following delinquent accounts: a $32 debt for a insufficient funds check written to a pizza restaurant (SOR ¶ 1.a: Gov 2 at 7; Gov 5 at 7; Gov 6 at 1; Gov 7 at 1); a $176 cable television account placed for collection (SOR ¶ 1.b: Gov 2 at 1; Gov 5 at 7; Gov 6 at 1; Gov 7 at 1); a $1,713 account placed for collection (SOR ¶ 1.c: Gov 2 at 6; Gov 5 at 7; Gov 6 at 1); a $4,502 account placed for collection (SOR ¶ 1.d: Gov 2 at 6; Gov 5 at 7; Gov 6 at 1)); a $31 credit union account that was charged off (SOR ¶ 1.e: Gov 6 at 2); and a $582 account to purchase a computer that was charged off. (SOR ¶ 1.f: Gov 2 at 12; Gov 5 at 7; Gov 6 at 2)

Additional delinquent accounts include: a $3,064 credit card account that was charged off (SOR ¶ 1.g: Gov 2 at 4, 11; Gov 5 at 7; Gov 6 at 2); a $993 credit card account that was charged off (SOR ¶ 1.h: Gov 2 at 11; Gov 5 at 7; Gov 6 at 2); a $6,838 military exchange credit card account that was charged off (SOR ¶ 1.i: Gov 2 at 11; Gov 5 at 7; Gov 6 at 2); and a $1,000 credit card account that was placed for collection. (SOR ¶ 1.j: Gov 2 at 9; Gov 5 at 7) When Applicant separated from the Air Force he was not prepared for the transition to civilian life. He initially believed that he was to be placed on medical hold because of a back injury. His separation date was earlier than he anticipated. He was unemployed for several months. He found full-time employment in October 2005. The job location was 100 miles away from where he lived. He owned a house which he was unable to rent out until late January 2006. He got behind on his bills during this time because he was responsible for a mortgage payment and rent. (Tr at 21-23)

When he separated from the Air Force, Applicant’s annual income was $28,000 a year. His take home pay was about $2,000 a month. He earned $43,000 in his first post Air Force employment. His take home pay remained the same. His monthly take home pay in his current job is approximately $9,200. With the significant pay increase, he was able to start resolving his delinquent debts. He has no outstanding debts at this time. (Tr at 23-30) He sold the home he owned in January 2007. (Tr at 40)

The current status of the delinquent accounts are:

SOR ¶ 1.a, $32 insufficient funds check, pizza company: Applicant made several attempts to contact this creditor. He was not aware of this debt and claims it is no longer on this credit report. He will pay it if it is a legitimate debt. The debt is unresolved but of a minimal amount. (Tr at 34-35; AE C)

SOR ¶ 1.b, $176 cable television account: Debt was paid on December 21, 2009. (AE A, Tab 4 at 1)

SOR ¶ 1.c, $1,713 account placed for collection: The account was settled in full in December 2009. (Tr at 33; Gov 7 at 2; AE A, Tab 3 at 6; AE A, Tab 4 at 2)

SOR ¶ 1.d, $4,502 account placed for collection: The account was settled. (Gov 7 at 2; AE A, Tab 3 at 5)

SOR ¶ 1.e, $31 credit union account: Applicant disputed this account and it has been removed from his credit report. The account is resolved. (Tr at 35-36; AE A, Tab 3; AE B at 3)

SOR ¶ 1.f, $582 charged off computer account: The account was settled. (Gov 7 at 2)

SOR ¶ 1.g, $3,064: Account was paid in full on September 25, 2009. (AE A, Tab 3 at 6; AE A, Tab 4 at 2) The account is the same as SOR ¶ 1.d.

SOR ¶ 1.h, $993 charged off bank account: Account was paid. (AE A, Tab 3 at 5; AE B at 3) SOR ¶ 1.i, $6,838 charged off military exchange credit card: Applicant made payments on this account until it was paid in full in July 2009. (Gov 5 at 4; Gov 7 at 2; AE A, Tab 3 at 6; AE B at 3)

SOR ¶ 1.j, $1,000 credit card account placed for collection. The debt is paid. (AE A, Tab 3 at 11; AE A, Tab 4 at 3)

After the hearing, Applicant submitted an updated personal financial worksheet. His net monthly income is $9,719. This figure includes a $225 monthly disability payment from the Veteran’s Administration. His total monthly expenses are $5,490. He has approximately $4,284 left over each month after expenses. (Tr at 39-40; AE B, Note: The net remainder figure on Applicant’s personal financial worksheet is incorrect.) He currently has no delinquent accounts. He is current on federal and state income taxes. (Tr at 24, 39) Department Counsel conceded Applicant’s debts are resolved. (Tr at 37)

Applicant’s supervisor states that Applicant has worked for him for a year and a half. He describes Applicant’s character as stable and reliable. He comes to work on time and completes assigned duties and responsibilities above expectations and in a timely manner. Applicant is trusted by his teammates because of his work ethic and his ability to pull his weight. The supervisor believes Applicant can be trusted to protect United States classified material. (AE A, Tab 2 at 1)

Applicant’s co-worker has worked with him since May 2008. He also socializes with Applicant outside of work. He states that Applicant has always conducted himself with a high degree of character in all situations. The co-worker states Applicant is a dependable co-worker and does his fair share of the work load. The co-worker states Applicant is trustworthy and is capable of being entrusted with sensitive information. (AE A, Tab 2 at 2)

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 must be considered 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. 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.

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

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 over- extended is at risk of having to engage in illegal acts to generate funds.

The guideline notes several disqualifying conditions that could raise security concerns. I find Financial Considerations Disqualifying Condition (FC DC) &19(a) (an inability or unwillingness to satisfy debts); and FC DC &19(c), (a history of not meeting financial obligations) apply to Applicant’s case. Applicant encountered financial problems during the first few years after he separated from the military. The SOR alleged 10 delinquent accounts, an approximate total balance of $18,931.

The government’s substantial evidence and Applicant’s own admissions raise security concerns under Guideline F. The burden shifted to Applicant to produce evidence to rebut, explain, extenuate, or mitigate the security concerns. (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. September 22, 2005))

The guideline also includes examples of conditions that could mitigate security concerns arising from financial difficulties. Financial Considerations Mitigating Condition (FC MC) ¶ 20(a) (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) applies. Applicant’s financial problems occurred when he separated from the Air Force. He did not anticipate his early separation because he believed that he would be placed on medical hold. He was unemployed for a few months. When he found a job, it was 100 miles away and he was paying a mortgage at his former location and rent at his new job location. When he found his current position, he received a substantial pay increase and was able to resolve his delinquent accounts. He has paid off all of his delinquent accounts with the exception of the $32 debt alleged in SOR ¶ 1.a. His financial situation is stable. His past financial struggles do not raise questions about his reliability, trustworthiness, and good judgment.

FC MC & 20(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) applies because Applicant was unemployed for several months after separating from active duty. As a result he began to incur delinquent debts. Once he found a job, it was located 100 miles away. Applicant found himself paying a mortgage and rent for several months which added an additional financial burden. He acted responsibly under the circumstances. Once he was able to resolve the debts, Applicant systematically resolved his delinquent accounts.

FC MC ¶20(c) (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) applies. Applicant resolved all of his delinquent debts with the exception of a $32 debt resulting from an insufficient funds check. Applicant demonstrated that he took steps to resolve this account but could not locate the owner of the account. All of his debts are current. His income has increased significantly in his current job. His financial situation is under control.

FC MC &20(d) (the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts) applies. Applicant has resolved all of his accounts with the exception of one minor account which he attempted to resolve but was unsuccessful in locating the owner of the debt. He is capable of paying the $32 debt if the owner of the debt is located in the future. As soon as he was able, Applicant began to pay the delinquent accounts that he incurred in his first few years after separating from the military. He initiated a good-faith effort to resolve his delinquent accounts.

FC MC ¶20(e) (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) applies with respect to SOR ¶ 1.e. Applicant disputed this debt and it was removed from his credit report.

Applicant mitigated the concerns raised under Guideline F.

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. 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.

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 considered the potentially disqualifying and mitigating conditions in light of all the facts and circumstances surrounding this case. I considered Applicant’s military service and his honorable discharge from the military. I considered the favorable comments of Applicant’s supervisor and co-worker. Applicant faced difficulties when he transitioned from active duty to civilian life. His discharge date came sooner than he expected. He did not have a job when he separated from the Air Force. After several months of unemployment, he found a job that was located 100 miles away and found himself responsible for a mortgage and a rent payment. He was able to resolve his delinquent accounts when he accepted his current position in an overseas location. He has resolved all delinquent accounts with the exception of a $32 account which he will pay if he is able to locate the current owner of the debt. Applicant has demonstrated that he is reliable. His current financial situation is stable. He mitigated the concerns raised under financial considerations.

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

Subparagraphs 1.a – 1.j: For Applicant

CONCLUSION

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

_________________ ERIN C. HOGAN Administrative Judge