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ISCR Case 09-02348.h1 — CASE

ISCR Case 09-02348.h1denied

Case Headnote

ISCR Case No. 09-02348.h1

deniedMay 13, 2010· Hon. Claude R. Heiny II· hearing

Summary

A 36-year-old investigations analyst was denied a security clearance under Guideline F, Financial Considerations. The denial stemmed from 24 delinquent debts totaling approximately $6,000, in addition to a $22,724 debt from a repossessed leased truck. Specific allegations included various unpaid utility, medical, and telephone bills, several personal loan obligations, and a $20 restaurant debt. The applicant also paid $250.65 in restitution.

Disqualifying conditions related to financial irresponsibility and an inability to meet financial obligations were raised. While the applicant demonstrated exemplary workplace conduct and acknowledged her financial issues, mitigating conditions were applied for these factors.

Ultimately, the clearance was denied because the applicant failed to provide evidence of a good-faith effort to resolve her debts or repay overdue creditors. There was also no evidence of financial counseling or a systematic plan for managing her financial obligations, leading to the conclusion that her financial irresponsibility raised security concerns.

Why the Applicant Was Denied

Applicant has 24 delinquent debts totaling approximately $6,000 and a repossessed vehicle debt of $22,724.
Applicant failed to demonstrate a good-faith effort to repay overdue creditors or resolve debts.
The applicant did not provide evidence of financial counseling or a systematic method for handling her 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(b)rejectedConditions Largely Beyond the Person's ControlWhile some debts were due to lack of medical insurance, the applicant's overall financial irresponsibility remained.
AG ¶ 20(d)rejectedGood-faith Effort to Repay Overdue CreditorsNo evidence of a systematic approach to debt repayment was presented.
AG ¶ 20(e)rejectedReasonable Basis to Dispute the Legitimacy of the Past-due DebtApplicant did not provide documented proof to substantiate disputes of debts.

Key Rule Quoted

“An applicant is not required to be debt free, but is required to manage her finances so as to meet her financial obligations.”

Procedural Posture

SOR issuedAug 27, 2009
Answer filedOct 6, 2009
Hearing heldJan 27, 2010
Decision dateMay 13, 2010

Cite For

Denial of Security Clearance Due to Unresolved Financial Obligations
Impact of Financial Irresponsibility on Security Clearance Eligibility
Requirements for Demonstrating Good-faith Efforts in Debt Repayment

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 a significant history of financial problems, including 24 delinquent debts totaling approximately $6,000 and an unpaid loan of approximately $3,000. Despite the applicant's claims of improved financial circumstances, the judge concluded that the applicant failed to mitigate the security concerns related to her financial obligations, resulting in a denial of her security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant has 22 unpaid debts, which total approximately $6,000. $6,000	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	$553 electric utility bill $553	Against Applicant	Utility or Phone Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	$379 medical debt $379	Against Applicant	Medical Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	collection agency collecting a $470 telephone bill $470	Against Applicant	Utility or Phone Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	collection agency collecting a $226 telephone bill $226	Against Applicant	Utility or Phone Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	$124 gas utility bill $124	Against Applicant	Utility or Phone Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.g	$20 debt placed for collection by a restaurant $20	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.h	$2,717 delinquent loan debt $2,717	Against Applicant	Personal Loan Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.i	$41 debt $41	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.j	$469 hospital bill $469	Against Applicant	Medical Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.k	$284 debt $284	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.l	$235 medical bill $235	Against Applicant	Medical Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.m	collection agency collecting a $246 telephone bill $246	Against Applicant	Utility or Phone Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.n	$66 medical $66	Against Applicant	Medical Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.o	$190 personal loan $190	Against Applicant	Personal Loan Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.p	$203 $203	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.q	$50 medical bill $50	Against Applicant	Medical Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.r	$820 medical bill $820	Against Applicant	Medical Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.s	$50 medical bill $50	Against Applicant	Medical Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.t	$110 medical bill $110	Against Applicant	Medical Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.u	$558 medical bill $558	Against Applicant	Medical Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.v	$176 loan obligation $176	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.w	$22,724 debt which arose from a repossessed leased truck $22,724	Against Applicant	Auto Loan Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.x	specific text not stated in this decision	Against Applicant	Unspecified Financial	Unknown	—	—	—
1.y	paid $250.65 in restitution $250	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.z	specific text not stated in this decision	Against Applicant	Unspecified Financial	Unknown	—	—	—

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. 09-02348 ) ) Applicant for Security Clearance )

For Government: Daniel Crowley, Esq., Department Counsel For Applicant: Pro se

May 13, 2010 ______________

STATEMENT OF CASE

______________

HEINY, Claude R., Administrative Judge:

Applicant has paid none of the 24 delinquent debts listed in the Statement of Reasons (SOR). Applicant has failed to rebut or mitigate the Government’s security concerns under financial considerations. Clearance is denied.

Statement of the Case

Applicant contests the Defense Department’s intent to deny or revoke her eligibility for an industrial security clearance. Acting under the relevant Executive Order and DoD Directive,1 the Defense Office of Hearings and Appeals (DOHA) issued an SOR on August 27, 2009, detailing security concerns under financial considerations. On October 6, 2009, Applicant answered the SOR, and requested a hearing. On December 22, 2009, I was assigned the case. On January 4, 2010, DOHA issued a notice of hearing for a hearing held on January 27, 2010. At the hearing, the Government offered Exhibits (Ex.) 1 through 8, which were admitted into evidence. Applicant testified on her own behalf and submitted Exhibits A through F, which were admitted into evidence. On February 4, 2010, DOHA received the hearing transcript (Tr.).

FINDINGS OF FACT

In Applicant’s Answer to the SOR, she admitted all the factual allegations in the SOR. Applicant’s admissions to the SOR allegations are incorporated herein. After a thorough review of the record, pleadings, exhibits, and testimony, I make the following additional findings of fact:

Applicant is a 36-year-old investigations analyst who has worked for a defense contractor since November 2008, and is seeking to obtain a security clearance. (Tr. 50) Coworkers indicate Applicant’s conduct is exemplary and she fully accepted the responsibility for financial situation. (Ex. E) Applicant displays high ethical standards, conscientious work habits, mature judgment, and fully and forthrightly admits her mistakes. (Ex. F)

In 2006, Applicant wrote a check for groceries. At the time she wrote the check, she did not know there were insufficient funds in the account. (Ex. 4) In November 2008, Applicant was arrested and charged with theft of property greater than $20 and less than $500 by check. (Ex. 2, Ex. D) She pleaded guilty, was fined $200, and sentenced to four days in jail. In December 2008, she paid $250.65 (SOR ¶ 1.y) in restitution. (Ex. 5, Ex. C)

The SOR alleges 24 delinquent debts, which include 22 debts that total approximately $6,000. There is also a $2,717 delinquent loan debt (SOR ¶ 1. h) and a $22,724 debt which arose from a repossessed leased truck. (SOR ¶ 1. w).

In 2003, Applicant thought she was purchasing a truck when in fact she was leasing it. (Tr. 28) She did not want a lease because of the expensive additional insurance required. (Ex. 4) Two weeks after the lease, the clutch needed repairs. Within two to three months of the lease, the vehicle needed additional repairs twice more including replacement of the power steering pump. (Tr. 29) She called the auto lot and told them to come and get the non-working truck. The auto company states Applicant owes them $22,724 (SOR ¶ 1. w). The creditor offered to settle this matter for $8,500, which she is unable to pay. (Ex. 6, Tr. 29)

In 2001 or 2002, Applicant took out a personal loan which might have been used for medical treatment or for a car. (Ex. 4) Applicant owes $190 (SOR ¶ 1. o) on this loan. In 2002, she purchased a Saturn automobile for $7,000 with $280 monthly payments. A year and a half later, it was repossessed when she missed a payment. (Ex. 4) She was told she could redeem the car by paying the $2,000 balance on the vehicle, which she was unable to do. The debt was initially $2,717 (SOR ¶ 1. h). She is unable to pay the current balance of $4,387. (Ex. 6)

Applicant and her husband had seasonal contract work instead of permanent full- time jobs. (Tr. 29) He was a pipe fitter and she worked in document control. (Tr. 38-39) These positions did not have health insurance. (Tr. 30) This contributed to their financial problems. (Ex. 4) Nine of the SOR debts, which total approximately $2,800, were for medical bills. Applicant and her two children were first covered by her husband’s medical insurance in 2006 or 2007. (Tr. 35) In 2005, Applicant’s husband obtained a full-time job as a locomotive engineer and in 2007; she obtained her current full-time job. (Tr. 30) Applicant asserts that as of December 2008, their financial picture had improved now that they have full-time jobs. They are able to pay their current obligations, but have not addressed the past-due debts. (Ex. 4)

In May 2009, Applicant responded to written interrogatories. (Ex. 6) She disputed the six following debts, which total $1,642: $553 electric utility bill (SOR ¶ 1. b); $235 medical bill (SOR ¶ 1. l); $66 medical (SOR ¶ 1. n); $203 (SOR ¶ 1. p); collection agency collecting a $470 telephone bill (SOR ¶ 1. d); and $124 gas utility bill (SOR ¶ 1. f). She was unable to locate the following six accounts, which total $1,967 : the medical provider in a $379 medical debt (SOR ¶ 1. c); $50 medical bill (SOR ¶ 1. q); $820 medical bill (SOR ¶ 1. r); $558 medical bill (SOR ¶ 1. u); $50 medical bill (SOR ¶ 1. s); and, $110 medical bill (SOR ¶ 1. t). She was unable to resolve the six following debts, which total $1,591: collection agency collecting a $226 telephone bill (SOR ¶ 1. e); collection agency collecting a $246 telephone bill (SOR ¶ 1. m); $190 (SOR ¶ 1. o); $176 loan obligation (SOR ¶ 1. v); $469 hospital bill (SOR ¶ 1. j); and $284 (SOR ¶ 1. k).

An additional $20 debt placed for collection by a restaurant (SOR ¶ 1. g) was being investigated. She paid two debts of $44 and $191 not listed in the SOR. (Ex. 6, I- 19, I-20, Ex. A, Ex. B) In May 2009, she asserted she would pay a $41 debt (SOR ¶ 1. i) within the next few months.

In November 2008, Applicant completed an Electronic Questionnaires for Investigations Processing (E-QIP) in which she listed a number of delinquent debts. Applicant is currently not receiving any calls or letters from creditors demanding payment. (Tr. 31) Applicant was first asked about her delinquent debts in January 2009 and she answered written interrogatories about her debts in May 2009. (Ex. 4, 5, 6, Tr. 48) Applicant’s husband’s annual salary is approximately $33,000 as is her annual salary. (Tr. 49)

POLICIES

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 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 to obtain 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 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

Revised Adjudicative Guideline (AG) ¶ 18 articulates the security concerns relating to financial problems: 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.

Additionally, an individual who is financially irresponsible may also be irresponsible, unconcerned, negligent, or careless in properly handling and safeguarding classified information. Behaving responsibly or irresponsibly in one aspect of life provides an indication of how a person may behave in other aspects of life.

A person’s relationship with her creditors is a private matter until evidence is uncovered demonstrating an inability or unwillingness to repay debts as agreed. Absent substantial evidence of extenuating or mitigating circumstances, an applicant with a history of serious or recurring financial difficulties is in a position of risk that is inconsistent with holding a security clearance. An applicant is not required to be debt free, but is required to manage her finances so as to meet her financial obligations.

The record evidence supports a conclusion Applicant has a history of financial problems. Applicant has 22 unpaid debts, which total approximately $6,000, an unpaid loan of approximately $3,000, and a repossessed leased vehicle which the creditor has offered to settle for $8,500. Disqualifying Conditions AG ¶ 19(a), “inability or unwillingness to satisfy debts” and AG ¶ 19(c), “a history of not meeting financial obligations,” apply.

Five Financial Considerations Mitigating Conditions under AG ¶¶ 20(a) – (e) are potentially applicable:

(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;

(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;

(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;

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

Applicant's financial problems were contributed to by her and her husband’s previous job history. They worked seasonal contract work until 2005 when her husband obtained a full-time job as an engineer and in 2007 when she obtained her current full- time job. AG ¶ 20(a) does not apply because the debts remain unpaid and were numerous.

The nature of Applicant and her husband’s prior jobs did not offer medical insurance. Nine of the SOR debts totaling approximately $3,000 were for medical services provided when Applicant did not have medical insurance. This is a factor beyond her control. Medical debts will not be a problem in the future because both her job and her husband’s job have medical coverage for their family. AG ¶ 20(b) has limited applicability.

Applicant has not received any financial counseling and the debts remain unpaid. She appears to be meeting her new obligations and is not receiving any calls or letters from creditors demanding payment. Since the debts have not been paid there is no clear indication the problem has been resolved. AG ¶ 20(c) does not apply.

For AG ¶ 20 (d) to apply there must be an “ability” to repay the debts, the “desire” to repay, and evidence of a good-faith effort to repay. A systematic, concrete method of handling her debts is needed, which is not present here.

In May 2009, Applicant disputed six debts, which total $1,642. For AG ¶ 20 (e) to apply there must be a reasonable basis to dispute the past-due obligations and Applicant must provide documented proof to substantiate the basis of the dispute. Applicant has provided no documents related to the dispute of these six debts. AG ¶ 20 (f) does not apply because affluence was not alleged.

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. A number of the debts incurred were not the type that indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations. Money was not spent frivolously. The debts set forth in the SOR were not incurred on luxuries. Nine of the debts involved medical treatment.

Now that Applicant and her husband have full-time jobs they appear to be meeting their current financial obligations. However, the 24 SOR debts remain unpaid. In January 2009, Applicant was questioned about her unpaid obligations. Since then, she has been able to provided documentation that she has paid three debts, which total approximately $500. It is noted that four of the unpaid debts were each for amounts of $50 or less. An additional ten of the debts were each for amounts of $250 or less. These 14 unpaid debts, more than half of the SOR debts alleged, total approximately $2,000 and remain unpaid.

Overall, the record evidence leaves me with questions and doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant mitigated the security concerns arising from her unpaid financial obligations.

This decision should not be construed as a determination that Applicant cannot or will not attain the state of true reform and rehabilitation necessary to justify the award of a security clearance. The awarding of a security clearance is not a once in a lifetime occurrence, but is based on applying the factors, both disqualifying and mitigating, to the evidence presented. Under Applicant's current circumstances, a clearance is not recommended. Should Applicant be afforded an opportunity to reapply for a security clearance in the future, having paid the delinquent obligations, established compliance with a repayment plan, or otherwise addressed the obligations, she may well demonstrate persuasive evidence of her security worthiness. However, a clearance at this time is not warranted.

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, Financial Consideration: AGAINST APPLICANT

Subparagraphs 1.a—1.y: Against 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.

_______________________ CLAUDE R. HEINY II Administrative Judge

FOOTNOTES

1 Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; Department of Defense (DoD) Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive), and the adjudicative guidelines (AG) effective within the DoD on September 1, 2006.