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ISCR Case 09-03672.h1 — CASE

ISCR Case 09-03672.h1granted

Case Headnote

ISCR Case No. 09-03672.h1

grantedDec 9, 2009· Hon. Erin C. Hogan· hearing

Summary

A 35-year-old systems analyst for a Department of Defense contractor was granted a security clearance despite concerns under Guideline F (Financial Considerations). The Statement of Reasons cited a state tax lien for $1,768 filed in August 2008, a $93,000 second mortgage with a $9,188 past-due balance in May 2009, and a $371,000 mortgage with a $19,582 past-due balance in May 2009. These issues raised Disqualifying Conditions FC DC 19(a) and FC DC 19(c).

However, the judge applied Mitigating Conditions FC MC 20(b), FC MC 20(c), and FC MC 20(d). The applicant demonstrated a good-faith effort to resolve overdue debts and maintained communication with creditors. Her financial difficulties were primarily attributed to her husband's drug addiction and inconsistent employment, with whom she was undergoing a divorce.

The applicant also showed responsible financial management and current stability, indicating an ability to meet her obligations post-divorce. Ultimately, the judge found that the applicant had mitigated the financial concerns, and the security clearance was granted.

Why the Applicant Prevailed

The applicant demonstrated a good-faith effort to resolve overdue debts and communicated with creditors.
The applicant's financial difficulties were largely due to her husband's drug addiction and sporadic employment.
The applicant's current financial situation showed stability and the ability to manage her obligations post-divorce.

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(b)appliedConditions That Resulted in the Financial Problem Were Largely Beyond the Person's Control
FC MC 20(c)appliedReceived Counseling for the Problem and Indications That the Problem Is Being Resolved
FC MC 20(d)appliedInitiated a Good-faith Effort to Repay Overdue Creditors or Resolve Debts

Key Rule Quoted

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

Procedural Posture

SOR issuedJul 6, 2009
Answer filedJul 22, 2009
Hearing heldNov 2, 2009
Decision dateDec 9, 2009

Cite For

Mitigating Financial Concerns Due to Personal Circumstances Under Guideline F
Good-faith Efforts to Resolve Debts in the Context of a Divorce
Impact of a Spouse's Substance Abuse on Financial Stability

Editorial summary generated for research. Not legal advice; not a prediction. Verify against the full decision before relying on any quoted language.

Standardized Decision Profile

SEAD-4 Guideline F · descriptive summary of a decided case

Posture: Decision on RecordDecided: granted

The judge found that the applicant had several financial issues, including a state tax lien and delinquent mortgages, but ultimately ruled in her favor under Guideline F. The applicant demonstrated a good-faith effort to resolve her debts and was taking steps to improve her financial situation, which contributed to the decision to grant her security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	specific text not stated in this decision	For Applicant	Unspecified Financial	Unknown	—	—	—
1.b	a state tax lien that was filed on August 22, 2008, in the amount of $1,768 $1,768	For Applicant	Tax Unpaid	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	Claimed Debt Paid in Full
1.c	a $93,000 second mortgage was past due in the amount of $9,188 in May 2009 $9,188	For Applicant	Mortgage or Home Loan Debt	Admitted	(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	Claimed Debt Paid in Full
1.d	a $371,000 mortgage was past due in the amount of $19,582 in May 2009 $19,582	For Applicant	Mortgage or Home Loan Debt	Admitted	(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	Claimed Debt Paid in Full
1.e	specific text not stated in this decision	For Applicant	Unspecified Financial	Denied	—	—	—

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. 09-03672 SSN: ) ) Applicant for Security Clearance )

For Government: Alison O’Connell, Esquire, Department Counsel For Applicant: Pro Se

December 9, 2009 ______________

STATEMENT OF CASE

______________

HOGAN, Erin C., Administrative Judge:

Applicant submitted her security clearance questionnaire (e-QIP) on February 6, 2009. On July 6, 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 July 22, 2009, Applicant answered the SOR and requested a hearing before an administrative judge. Department Counsel was ready to proceed on July 27, 2009. The case was assigned to me on October 7, 2009. On October 9, 2009, a Notice of Hearing was issued, scheduling the hearing for November 2, 2009. The case was heard on that date. The Government offered eight exhibits which were admitted as Government Exhibits (Gov) 1 – 8. The Applicant testified and offered 18 exhibits which were admitted as Applicant Exhibits (AE) A - R. The record was held open until November 16, 2009, to allow Applicant to submit additional documents. She timely submitted an 18-page document that was admitted as AE S. Department Counsel’s response to AE S is marked as Hearing Exhibit (HE) I. An additional two-page document was submitted on November 17, 2009. It was admitted as AE T. Department Counsel’s response to AE T is marked as HE II. The transcript was received on November 10, 2009. Based upon a review of the case file, pleadings, exhibits, and testimony, eligibility for access to classified information is granted.

FINDINGS OF FACT

In her Answer to the SOR, Applicant admits SOR allegations 1.a, 1.c, and 1.d. She denies SOR allegations 1.band 1.e.

Applicant is a 35-year-old systems analyst with a Department of Defense contractor applying for a security clearance. She has worked for her current company since January 2008. This is her first time applying for a security clearance. She is a high school graduate and has 2 ½ years of college credit. She married in July 2001, but has been separated from her husband since August 2008. A divorce is pending. She and her husband have two children, a four-year-old son and an eight-year-old daughter. (Tr at 5-6, 46, 54-55, 88; Gov 1)

Applicant filed for Chapter 7 bankruptcy on July 23, 2002. She listed total assets of $9,754 and total liabilities of $32,423. Her debts were discharged on October 30, 2002. (Gov 6 at 5; Gov 7 at 4; Gov 8) Applicant filed for bankruptcy on the advice of her father-in-law. He is a real estate agent and advised Applicant and her husband that if they filed for bankruptcy they can expedite the process of qualifying for a mortgage. Some of the debts included in the bankruptcy were accounts that her mother opened in Applicant’s name when Applicant was still a minor. She admits that she had delinquent debts prior to her marriage. (Tr at 34-35, 56-58)

Her background investigation revealed that she incurred the following delinquent accounts after the bankruptcy: a state tax lien that was filed on August 22, 2008, in the amount of $1,768 (SOR ¶ 1.b: Gov 4); a $93,000 second mortgage was past due in the amount of $9,188 in May 2009 (SOR ¶ 1.c: Gov 2 at 4; Gov 3 at 4-5, 8; Gov 6 at 9; Gov 7 at 4); a $371,000 mortgage was past due in the amount of $19,582 in May 2009 (SOR ¶ 1.d: Gov 2 at 4; Gov 3 at 4-5, 8; Gov 6 at 9; Gov 7 at 4). In June 2009, both the first and second mortgages were in foreclosure proceedings. (Gov 2 at 4, 9)

Applicant’s husband was the primary breadwinner for the family. In 2003, Applicant discovered that her husband was using crack cocaine. He eventually became addicted to crack cocaine and had difficulty holding jobs. Applicant has had several periods of unemployment over the past six years. From November 2003 to May 2004, she was unemployed after resigning from her position as a flight attendant in order to take care of her daughter. Her husband was working at the time and worked unusual hours so child-care proved to be difficult. From December 2004 to August 2005, Applicant was unemployed after she gave birth to her son. (Tr at 66-69; Gov 1, Section 11; Gov 3 at 8-9) Applicant’s husband’s drug addiction adversely affected the family finances. He would withdraw money from the family bank accounts and disappear for days. He could not hold a job. On December 6, 2003, he was arrested for driving under the influence of a controlled substance after Applicant discovered him in his car in the driveway passed out with a low pulse. He currently has not worked for over a year and a half. He does not provide child support. (Tr at 38, 65, 100-101; Gov 3 at 8-9; AE S at 16)

In March 2004, Applicant’s car was repossessed. Both she and her husband were unemployed at the time. The balance owed on the car loan after the repossession was $16,405. In 2006, Applicant and her husband entered into a settlement agreement pertaining to the deficiency judgment. They paid $4,000. Approximately, $11,000 of the debt owed was forgiven by the creditor and reported to the Internal Revenue Service (IRS) as income. Applicant did not understand that this would be reported as income. The IRS later contacted Applicant notifying her that she and her husband owed taxes for tax year 2006. Applicant and her husband still owe the IRS $3,384. Applicant wants the divorce decree to hold her husband responsible for part of the debt. (Tr at 70-71, 79- 82, 100-101; Gov 3 at 8-9; AE C; AE D; AE J; AE Q)

In October 2006, Applicant and her husband purchased a home for $465,000. They financed the home with two mortgages in the amounts of $93,000 and $371,000. When asked under cross-examination why she purchased a home with her husband while aware that he was a drug addict, Applicant stated that at the time she no longer had seen evidence of drug use. Her husband was employed and appeared to have stopped his substance abuse. Even though she did not say it, she implied that she wanted to save the marriage. In January 2007, Applicant and her husband became delinquent on their mortgage payments. Her husband’s substance abuse problems re- surfaced as well. In April 2008, they applied for a loan modification because her husband was unemployed. The loan modification was not approved until October 2008, three months after Applicant moved out. (Tr at 36, 76-77; Gov 3 at 8-9)

In April 2008, she found crack cocaine in her house. Her son was 2 ½ at the time. She realized that she needed to start planning to move out for the safety of her children because her husband’s behavior was getting more unpredictable and violent. He physically attacked her in late July 2008. She moved out with the children in August 2008. (Tr at 37-39, 59, 87-88; Gov 3 at 8-9)

After Applicant moved out, she believed that the home went to foreclosure. She did not make payments on the home and her husband did not make payments on the home. She believes the last time payments were made on the home was in 2008. She was instructed to not make payments on the home when she applied for the loan modification. She later discovered that the home was not in foreclosure. She was advised that if she was awarded the home in her divorce decree, the bank would work with her to have the mortgage adjusted. Her husband was formally served Applicant’s petition for divorce on November 14, 2009. She requests the house in her divorce paperwork. (Tr at 40-41, 88-89; Gov 1, section 28; Gov 2 at 4, 9; AE M; AE N; AE O; AE T) A state tax lien was filed against Applicant and her husband on August 22, 2008, in the amount of $1,768. Applicant initially denied that she owed this debt. She was not aware of the tax lien. She had previously paid off a state tax lien through a wage garnishment in 2006. When she contacted the state comptroller’s office, she discovered the tax lien was a valid debt. She wrote a letter to the state comptroller’s office stating that she is willing to pay 50 percent of the debt, but believes her husband should be responsible for 50 percent of the debt. She paid the state 10 percent of the balance owed and submitted an application for tax amnesty in September 2009. She has not received a reply from the state comptroller’s office. If she is required to pay the full amount of the lien she will do it, but believes her husband should be responsible for half of the debt. (Tr at 47-49, 100-101; AE A at 1; AE B; AE H)

Applicant resolved several delinquent accounts that were not alleged in the SOR. She has been working to keep her financial situation current. (Tr at 51, 73, 89-92; Gov 1, section 28; Gov 2; AE A) She sought financial counseling from a company over the phone in July 2009 and August 2009. She has progressed in her job and is able to take care of herself and her two children. Her current annual salary is $90,000. If she is awarded the home in the divorce and the mortgage companies continue to work with her, she claims she is able to pay the mortgage payment, which she anticipates will be $3,408 monthly. (Tr at 52, 55, 94-95, 101-102; AE S at 14)

Applicant’s net monthly income is $7,049. Her expenses include rent $1,950; groceries $175, utilities $200; car expenses $200; daycare $600; car $388.80. She also lists eight credit cards with balances of $2,000, $480, $300, $161; $1,400; $300; $230, and $480. She makes monthly payments to each card ranging from $15 to $67. The total amount applied towards her credit cards each month is $207. Her total monthly expenses total $3,720. After expenses, she has approximately $3,320 in discretionary funds. (Tr at 96 – 97; Gov 2 at 12)

Applicant received an outstanding performance rating for the performance period beginning February 2008 and ending February 2009. (AE S at 8 – 15) Applicant’s co- worker provided a letter stating that she has worked with Applicant for two years. Applicant has integrity and works hard. She is a talented systems analyst with excellent communication skills and a strong moral compass. (AE R)

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 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 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 overextended 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 has had financial difficulties for several years. In 2002, she filed for Chapter 7 bankruptcy and received a bankruptcy discharge. She continued to incur delinquent accounts after the bankruptcy discharge. She and her husband defaulted on two mortgages valued at $93,000 and $371,000 for a home that they purchased in October 2006. She and her husband have an outstanding state tax lien in the amount of $1,768. Although not alleged in the SOR, Applicant and her husband have a federal tax debt in the amount $3,384 related to the $11,000 debt forgiveness owed from a 2004 automobile repossession. Applicant resolved several other delinquent accounts that were incurred after her bankruptcy prior to the SOR being issued.

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) is not applicable because Applicant’s history of financial irresponsibility. She admits that most of the debts included in her Chapter 7 bankruptcy were incurred prior to her marriage. While Applicant is in the process of negotiating settlement agreements with the creditors alleged in the SOR, she received no response as to her proposals at the close of the record.

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. Applicant is in the middle of divorce proceedings. Her husband’s crack cocaine addiction created most of the recent family financial problems. While Applicant was well aware of her husband’s substance abuse problems when she purchased a home with him in October 2006, she believed that he had turned a corner, most likely out of desire to keep her marriage together. When it was evident that her husband was using again, she eventually moved out of the marital residence in August 2008 with her children. She has resolved several delinquent accounts that were not alleged in the SOR. She has taken steps to resolve the remaining delinquent accounts which include the two mortgages, a state tax lien, and a federal tax debt that was not alleged in the SOR. She is waiting for her divorce settlement to determine whether she can renegotiate the two mortgages on the home. She acted responsibly under the circumstances. She supports two young children while receiving no child support from her husband. He has been unemployed for the past year and a half. His employment was sporadic during their marriage because of his substance abuse problems.

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 attended two telephonic financial counseling sessions in July and August 2009. She earns a sufficient income to make the mortgage payment if she is awarded the house in the divorce property settlement. She is also capable of paying the full amount of the outstanding state and federal tax debt if her husband does not pay half of the debt. Once her divorce is final, it is likely Applicant’s financial situation will be resolved.

FC MC & 20(d) (the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts) applies. Applicant resolved several delinquent accounts before the SOR was issued. She has communicated with the mortgage company, the IRS, and the state comptroller’s office regarding the outstanding debts. If she is awarded the home in the divorce proceedings, her income is sufficient to make the mortgage payments. Applicant wants the divorce settlement to hold her husband responsible for 50 percent of the federal and state tax as a matter of principle. It is unlikely that her husband will be able to pay the debts even if he is held responsible because of his substance abuse problems and unemployment. She is capable of paying the debt if he does not. While the debts are not fully resolved, Applicant demonstrated a good-faith effort to resolve the accounts.

Applicant has not 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 previous bankruptcy in 2002 and the delinquent accounts incurred after the bankruptcy. I considered Applicant’s husband’s crack cocaine addiction and sporadic employment contributed a large part to the financial problems. While Applicant did not exercise the best judgment purchasing a home with her husband while aware of his substance abuse problems, her actions are understandable in the view of attempting to save her marriage and provide a home for her two young children. Applicant has fully informed the government of her financial issues and pending divorce. She is taking action to resolve the situation. While the status of the two mortgages, the state tax lien, and the federal tax debt remain unresolved, Applicant has been negotiating with all of the parties and is able to resolve these accounts if required to be responsible for the debts. Under the unique circumstances of this case, I conclude Applicant mitigated the security 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

Subparagraph 1.a: For Applicant Subparagraph 1.b: For Applicant Subparagraph 1.c: For Applicant Subparagraph 1.d: For Applicant Subparagraph 1.e: 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