ISCR Case No. 09-07818.h1

DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS

In the matter of: ) ) ) ISCR Case No. 09-07818 ) ) Applicant for Security Clearance )

For Government: David F. Hayes, Esquire, Department Counsel For Applicant: Pro se

March 17, 2011 ______________

______________

HEINY, Claude R., Administrative Judge:

Applicant has failed to rebut or mitigate the financial considerations security concerns. Clearance is denied.

Statement of the Case

Applicant contests the Department of Defense’s (DoD) 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 a Statement of Reasons (SOR) on May 4, 2010, detailing security concerns under financial considerations.

On June 16, 2010, Applicant answered the SOR and elected to have the matter decided without a hearing. Department Counsel submitted the Government's case in a File of Relevant Material (FORM), dated September 3, 2010. The FORM contained ten attachments. On September 17, 2010, Applicant received a copy of the FORM, along with notice of her opportunity to file objections and submit material to refute, extenuate, or mitigate the potentially disqualifying conditions.

On October 18, 2010 and December 21, 2010, Applicant responded to the FORM. Department Counsel did not object to the material, which was admitted as Exhibits (Ex. A – Q). Applicant's responses were admitted into the record. On October 28, 2010, I was assigned the case.

In Applicant’s Answer to the SOR, Applicant admitted owing 23 debts and denies owing 16 debts. I incorporate Applicant’s admissions to the SOR allegations. After a thorough review of the record, pleadings, and exhibits, I make the following findings of fact.

Applicant is a 29-year-old risk management analyst and engineer who has worked for a defense contractor since June 2009, and is seeking to obtain a security clearance. In her May 2010 evaluation, her supervisor states Applicant has demonstrated a proactive spirit and has developed a very favorable reputation with the government customer. Her job performance ratings or the period were “exceeds expectations” and “outstanding.” (Item 4, Ex. E) She is a single mother of one.

From January 2001 to June 2002, Applicant was unemployed. (Item 5) From January 2001 to December 2004, Applicant attended state university and obtained a bachelor’s degree in electronics engineering in December 2004. From January 2006 to August 2009, Applicant attended state university in the position of project administrator. Applicant had a number of jobs while attending school.

In August 2009, Applicant completed an Electronic Questionnaires for Investigations Processing (e-QIP). (Item 5) Numerous creditors were listed in her response to the financial inquires on her e-QIP. In March 2010, in response to written interrogatories, she indicated she was paying $300 monthly on her debts. (Item 6)

Applicant asserts she hired a credit counseling company to help her with her financial problems. In December 2009, Applicant went to a credit service to seek help in restoring her credit. On December 14, 2009, she paid the service $99. (Item 6) She made a similar payment in January 2010. She provided no documentation as to what services the company had provided or was to provide. On December 20, 2010, Applicant submitted a letter from a law firm she appears to have employed to help her with her financial problems. (Ex. N) From the letter it appears Applicant had just recently employed the firm. There is no documentation showing what services the firm was to provide. This is not the same financial assistance company that she previously employed.

As of March 2010, Applicant’s monthly gross income was $5,773 and her monthly net remainder was $1,315. Her monthly debts, which she was paying, included: $300 on her student loans, $650 car payment, $80 credit card payment, $130 orthodontist, and $75 for the credit service. Her current salary is $80,000 per year. (Ex. A)

On June 16, 2010, Applicant stated she intended to have all her debt paid in full within seven months. Applicant asserts her financial problems began in 2006 when she was involved in a vehicle accident and difficult pregnancy. As a part-time employee, she did not have health insurance to cover her medical expenses. Applicant also suffers from a hypo thyroid condition. She asserted that medical debt accounted for the majority of the debt. She also asserted she had contacted all of the creditors and arranged repayment plans and the debts were being paid by automatic deductions from her checking account. (Item 1)

In Applicant’s September 2009 personal subject interview (Item 6), she was aware of the ten of her medical debts listed in her credit bureau report (CBR). They had been consolidated and were being collected by a single collection agency. Those accounts are: $78, $21, $52, $179, $197, $522, $207, $243, $1,184 and $148 (SOR ¶¶ 1. q, 1.t – 1.y, 1.ae, and 1af). In March 2010, she again acknowledged these amounts appear on her CBR, however she had no information about the accounts.

Applicant incurred a $1,244 power and electric utility bill, which in March 2010 the creditor agreed to settle for $622, Bi weekly payments were to start in March 2010 and end in July 2010. (Item 6, Ex. G) An August 2010 letter from the creditor indicates a zero balance on this debt. (Ex. M)

In April 2010, Applicant asserts she started making $40 monthly payments on a $420 balance for the three medical accounts listed in SOR ¶¶ 1.w ($522), 1.x ($197), and 1. y ($179). (Item 6, Ex. H) Applicant asserted, but failed to document, she had paid off $600 in medical debts for the debts in: SOR ¶¶ 1.b ($332), 1.ai ($174), and 1. aj ($50). (Ex. A and Ex. D)

Applicant also asserted she was making monthly payments to four other creditors. She asserts she is making $50 monthly payments on the debt listed in SOR ¶ 1.a ($1,509). She furnished five letters from the creditor reminding her $25 would be debited from her account on September 24, 2010, October 8, 2010, November 5, 2010, November 19, 2010, and, December 3, 2010. (Ex. L and Ex. P) The reminder letters do not list the balance of this account. On March 18, 2010, the creditor (SOR ¶ 1.aa, $542) offered to settle the debt for $628 with payments of $104. (Item 6, Ex. I) She provided no documentation showing payment. She asserts will be paid in full by November 2010.

In September 2010, Applicant agreed to allow the creditor to make four $70 debits from her account. Debits would occur every two weeks between October 8, 2010 and November 19, 2010. (FORM Answer) In her FORM Answer, she asserted she was making $141 monthly payment on this debt (SOR ¶¶ 1. z, $673). As of November 12, 2010, the balance had been reduced to $495. (Ex. O)

Applicant asserts she had arranged a repayment plan with the collection agency holding four medical treatment debts (SOR ¶ 1.b, $332; 1.d, $85; 1.e, $172; 1.f, $50). She asserted, but failed to document, she was paying the creditor $20 monthly. (Item 6) She said the creditor would not provide documentation until the first payment was received. (Item 6)

Applicant included a creditor’s letter dated November 12, 2010, indicating a postdated check or preauthorized payment in the amount of $25 would be processed on November 19, 2010. The balance due was $75. (Ex. Q) The creditor is not listed in the SOR and Applicant gives no indication which accounts are being handled by this payment. In her March 2010 response to written interrogatories (Item 6) she indicates she was making a $20 payment every two weeks on three debts (SOR ¶¶ 1.g, $47; 1.h. $136; and 1.i, $204). The creditor listed does not have the same name as the creditor listed in the November 12, 2010 letter.

In Applicant’s Ex. K, she asserted she was paying $25 twice monthly for a total of $50 per month to a creditor. However, that creditor’s name is not listed for any of the SOR debts and she failed to indicate which debt or debts this payment was to cover. She also asserted she had three other repayment plans, but the creditors would not provide any information until the debts were paid in full. She failed to indicate which debts were covered by these three agreements and failed to show payment to the three creditors. She pays $14 monthly to have access to view her CBRs and to receive credit alerts. (Ex. A)

Applicant and her ex-boyfriend purchased joint two-year gym memberships that resulted in two accounts being placed for collection (SOR ¶¶ 1.al, $3,202 and 1.am, $786). She stopped attending the gym. (Item 6) In her September 2009 personal subject interview, she said she had contacted the creditor and intended to pay $123 monthly on the debt. In March 2010, she said she was disputing the gym membership, but gave no reasons for so doing and provided no documentation related to the dispute. In June 2010, she said she was working on a settlement. (Item 4)

The three CBRs list 13 medical accounts (SOR ¶¶ 1.j, $32; 1.k, $39; 1.n, $106; 1.o, $44; 1.q, $78; 1.t, $148; 1.u, $243; 1.v, 4207; 1.w, $522; 1.x, $197, 1.y, $197; 1.ae, $21; and, 1.af, $1,184), which total $3,000. (Items 8, 9, 10) For these accounts the CBRs fail to provide a name, telephone number, address, or other method of contacting the creditor or verifying the account. Applicant disputed these medical accounts because there was no creditor or company information available on the CBR and no proof they were her accounts. Applicant denied owing these debts in her SOR Answer. (Item 4)

Although initially denying three of the medical accounts listed in her CBRs because they lacked additional identifying information, Applicant asserted she is making $40 monthly payments on the debts listed in SOR ¶ 1.w ($522), ¶ 1.x ($197), and ¶ 1.y ($197).

The FORM placed Applicant on notice that she had to provide documentation supporting her assertions she had paid accounts, was making payment on accounts, had established repayment agreements with creditors, had received financial counseling, or provide clear indications that her financial problems were being solved or were under control. As previously noted, documentation was not received for numerous accounts.

A summary of Applicant’s judgment, accounts charged off, accounts placed for collection, and other unpaid obligations and their current status follows:

Creditor Amount Current Status Bank account placed for $1,509 a Paying. The creditor sent her five letters collection. reminding her that $25 would be debited from her account as agreed. (Ex. L and Ex. P) Account placed for b $332 No documents. Applicant asserted, but collection. failed to document, she was making payment on this debt. She said collection agency had consolidated four accounts on which she was making $20 monthly payments. She said the creditor would not provide documentation until the first payment was received. (Item 6, Ex. A, and Ex. D) Account placed for c $791 No documents. Applicant asserted, but collection. failed to document, she had arranged a repayment plan on this debt. (Item 4) Account placed for d $85 No documents. Same collection firm as collection. b. above. e $172 Account placed for No documents. Same collection firm as collection. b. above. Creditor Amount Current Status f $50 Account placed for No documents. Same collection firm as collection. b. above. g $47 Account placed for No documents. She asserted, but collection. failed to document, she was making $20 payments on his debt every two weeks. (Item 6) h $136 Account placed for No documents. Same collection firm as collection. g. above. i $204 Account placed for No documents. Same collection firm as collection. g. above. j $32 Unpaid medical account. Disputes. Applicant disputes because the CBR contain no information identifying the creditor. (Item 3) k $39 Disputes. See j. above. Unpaid medical account. l Cable account placed for $324 Duplication. Applicant contacted the collection. creditor and only the account listed in m. could be located. m Cable account placed for $408 No documents. Unpaid. Applicant collection. asserted, but failed to document, she was disputing this debt. (Item 4) n $106 Disputes. See j. above. Unpaid medical account. o Disputes. See j. above. Unpaid medical account. $44 p Account placed for $705 No documents. Applicant asserted, but colletion. failed to document, she had arranged a repayment plan on this debt. (Item 4) q Disputes. See j. above. Unpaid medical account. $78 r Unpaid. Account placed for $577 collection. s Power and electric utility $1,244 Paid. The creditor offered to settle the account placed for matter for $622. (Item 6) In August collection. 2010, the creditor states there was a zero balance on this account. (Ex. G and M) Creditor Amount Current Status t $148 Disputes. See j. above. Unpaid medical account. u $243 Disputes. See j. above. Unpaid medical account. v $207 Disputes. See j. above. Unpaid medical account. w $522 Unpaid medical account. No documents. Applicant asserted, but failed to document, that in April 2010 she began to make $40 monthly payments on this debt. A single creditor is collecting this debt and the debts listed in SOR ¶¶ 1.x and 1.y. (Item 6, Ex. A, and Ex. H) x $197 No documents. See w. above. Unpaid medical account. y $179 No documents. See w. above. Unpaid medical account. z $673 Paying. In September 2010, Applicant Credit card account agreed to allow the creditor to make four placed for collection. $70 debits from her account. Debits would occur every two weeks. As of November 12, 2010, the balance due had been reduced to $495.49. (Ex. B, Ex. C, and Ex. O) aa Account charged off. $542 No documents. On March 18, 2010, the creditor offered to settle the debt for $628 and accepting monthly payments of $104. (Item 6 and Ex. I) She provided no documents showing payment on the offer. ab Judgment filed in January $110 No documents. Medical treatment debt 2007. incurred during her pregnancy. She asserts, but failed to document, she paid this debt. (Item 6) ac $713 Telephone service Unpaid. This was for telephone service account placed for her mother put in Applicant’s name collection. without telling her. (Item 6) Her mother failed to pay the bill. Applicant asserts the creditor offered to settle the debt for $215. Account placed for ad $331 No documents. Same collection firm as collection. b. above. Creditor Amount Current Status Unpaid medical account. ae $21 No documents. Applicant asserted, but failed to document, she had arranged a repayment plan on this debt. (Item 4) Unpaid medical account. af Disputes. See j. above. $1,184 ag Medical account placed $187 Unpaid. No documents. Applicant for collection. asserted, but failed to document, she was making payment on this debt. (Item 4) Bank account placed for ah $531 Unpaid. Applicant admits she owes the collection. account, but was unable to pay it. (Item 4) ai $174 Account placed for No documents. Applicant asserted, but collection. failed to document, she had paid this debt. (FORM Answer) aj $50 Account placed for No documents. Applicant asserted, but collection. failed to document, she had paid this debt. (FORM Answer, Item 4, Ex. A, and Ex. D) ak $118 Insurance account placed Unpaid. She said she would pay the for collection. debt in July 2010. No documentation of payment has been received. (Item 4) $3,202 al Unpaid. In June 2010 she said she was Gym membership working on a settlement. (Item 4) account placed for collection. $786 am Gym membership Unpaid. In June 2010 she said she was account placed for working on a settlement. (Item 4) collection. Total debt listed in SOR $17,001

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 of 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 of the loyalty of the applicant concerned.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information).

Guideline F, Financial Considerations

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.

An individual who is financially irresponsible may also be irresponsible, unconcerned, negligent, or careless in properly handling and safeguarding classified information. Behavior 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 to meet her financial obligations.

Applicant has a history of financial problems. The SOR lists 39 delinquent accounts. Applicant has one judgment, 13 unpaid accounts, 24 accounts placed for collection, and one account charged off, which totaled approximately $17,000. Nine of Applicant’s debts were under $100 each. Another seven were $150 or less, and an additional ten were $500 or less. The evidence supports application of 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 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.

Because Applicant has multiple delinquent debts and her financial problems are continuing in nature, she receives minimal application of the mitigating conditions listed in AG ¶ 20(a). Applicant’s handling of her finances, under the circumstances, casts doubt on her current reliability, trustworthiness, or good judgment.

There is no evidence Applicant has received financial counseling. She asserts she hired a credit company to help her with her financial problems and help in restoring her credit. No documentation was received as to the services the company had provided or was to provide. The amount of remaining debt must be considered in determining the amount of benefit Applicant received from the credit company.

Applicant has paid or is paying three of the SOR debts (SOR ¶ 1 a, $1,509; SOR ¶ 1 s, $1,244; and SOR ¶ 1 z, $673) which total $3,426. The mitigating conditions listed in &20(d) apply to these three debts. Applicant contacted the collection agency collecting the debts listed in SOR ¶ 1.l ($324) and SOR ¶ 1.m ($408), which both related to the same cable company. The collection agency had only one of the accounts placed for collection. I find the cable account listed in SOR ¶ 1.l is a duplicate of the debt listed in SOR ¶ 1.m.

Applicant asserted she had arranged repayment plans with 16 additional accounts, but failed to provide documents to support her assertion. Merely stating a debt was paid or that a repayment plan has been established is insufficient. Promises of payment without actual payment are common. Additionally, she has not shown payments in accordance with the repayment plans. Without a history showing actual payments having been made, I can not find she has made a “good-faith2” effort to repay overdue creditors or otherwise resolve debt. The mitigating conditions in &20.(d) do not apply to these 16 debts.

Applicant asserts she disputes nine additional accounts placed for collection which total approximately $2,000. For the mitigating conditions in AG ¶ 20.(e) to apply not only must an applicant a dispute the obligation, but they must provide documented proof to substantiate the basis of the dispute or provide evidence of actions to resolve the issue. She failed to provide documentation for these nine accounts placed for collection.

The mitigating factors listed under AG ¶ 20.(b) only partly apply. She was unemployed form January 2001 through June 2002. In 2006, she was involved in an automobile accident and had a difficult pregnancy. These are factors beyond her control. In 2009, her current employment began and her monthly net remainder has been $1,300 with which she could have addressed her debts. She asserted, but failed to document, she is paying her bills. Without such documentation, I can not find she has acted responsibly under the circumstances.

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 relevant 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. About $3,300 of the debt, which is about 20 percent of the total debt, related to medical bills. Medical bills are not financial obligations that indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, and do not reflect money spent frivolously. However, 80 percent of Applicant’s debt represents non-medical debt. Since being hired, Applicant has had more than $1,000 per month in net disposable income, which could have been applied to her debts. She asserted she has made arrangements with her creditors and is repaying her debts. However, there is no documentation showing the repayment plans or monthly payment in compliance with the plans.

In requesting an administrative determination, Applicant chose to rely on the written record. In so doing, however, she failed to submit sufficient information or evidence to supplement the record with relevant and material facts regarding her circumstances, articulate her position, and mitigate the financial security concerns. She failed to offer sufficient evidence of financial counseling or provide documentation regarding her past efforts to address her delinquent debt. By failing to provide such information, financial considerations security concerns remain. Clearance is denied.

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 Considerations: AGAINST APPLICANT

Subparagraph 1.a: For Applicant Subparagraphs 1.b–1.r: Against Applicant Subparagraph 1.s: For Applicant Subparagraphs 1.t–1.y: Against Applicant Subparagraph 1.z: For Applicant Subparagraphs 1.aa–1.am: Against Applicant

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

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. 2 The Appeal Board has previously explained what constitutes a “good-faith” effort to resolve debts:

In order to qualify for application of [the “good-faith” mitigating condition], an applicant must present evidence showing either a good-faith effort to repay overdue creditors or some other good-faith action aimed at resolving the applicant’s debts. The Directive does not define the term ‘good-faith.’ However, the Board has indicated that the concept of good-faith ‘requires a showing that a person acts in a way that shows reasonableness, prudence, honesty, and adherence to duty or obligation.’ Accordingly, an applicant must do more than merely show that he or she relied on a legally available option (such as bankruptcy) in order to claim the benefit of [the “good-faith” mitigating condition].

(internal citation and footnote omitted) ISCR Case No. 02-30304 at 3 (App. Bd. Apr. 20, 2004) (quoting ISCR Case No. 99-9020 at 5-6 (App. Bd. June 4, 2001))