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ISCR Case 09-08533.h1 — CASE

ISCR Case 09-08533.h1denied

Case Headnote

ISCR Case No. 09-08533.h1

deniedJul 30, 2010· Hon. Noreen A. Lynch· hearing

Summary

A 40-year-old defense contractor employee was denied a security clearance under Guideline F, Financial Considerations, due to significant financial issues. The Statement of Reasons cited approximately $41,000 in delinquent credit card debt and a defaulted home mortgage loan past-due by $162,000. These conditions raised disqualifying concerns under Adjudicative Guideline (AG) ¶ 18.

The applicant's financial difficulties were exacerbated by her husband's abandonment and a subsequent ten-month period of unemployment. While the applicant filed for Chapter 7 bankruptcy, the judge found insufficient evidence to mitigate the financial concerns, despite considering mitigating conditions under AG ¶ 20(b), AG ¶ 20(d), and AG ¶ 20(c).

Ultimately, the denial was based on the substantial delinquent debts and the determination that insufficient time had passed since the bankruptcy filing for the applicant to demonstrate sound financial judgment and reliability.

Why the Applicant Was Denied

The applicant has approximately $41,000 in delinquent credit card debt and a defaulted home mortgage loan of $162,000.
The applicant's financial problems were exacerbated by her husband's abandonment and her subsequent unemployment for ten months.
Insufficient time had passed for the applicant to demonstrate sound judgment and reliability after filing for bankruptcy.

Conditions Referenced

Disqualifying

AG ¶ 18raisedFinancial Considerations

Mitigating

AG ¶ 20(b)appliedConditions Largely Beyond ControlThe applicant's financial issues were largely due to her husband's abandonment and her unemployment.
AG ¶ 20(d)appliedGood-faith Effort to Resolve DebtsThe applicant filed for Chapter 7 bankruptcy as a legal means to resolve her debts.
AG ¶ 20(c)appliedCounseling ReceivedThe applicant received financial counseling as part of her bankruptcy process.

Key Rule Quoted

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

Procedural Posture

SOR issuedMar 9, 2010
Answer filedMar 22, 2010Notarized response requesting administrative determination.
Hearing held—
Decision dateJul 30, 2010

Cite For

Insufficient Time to Demonstrate Financial Stability After Bankruptcy Filing
Impact of Personal Circumstances on Financial Obligations
Burden of Proof on Applicant to Mitigate Financial Concerns

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 had significant financial issues, including approximately $41,000 in delinquent credit card debt and a defaulted home mortgage loan of $162,000. Despite the applicant's claims of mitigating circumstances related to her ex-husband's abandonment and her subsequent bankruptcy filing, the judge ruled against the applicant, citing insufficient evidence of financial stability and the potential for recurring financial problems.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	approximately $41,000 in delinquent credit card debt $41,000	Against Applicant	Credit Card Debt	Admitted	—	—	—
1.b	defaulted home mortgage loan that was past-due in the amount of $162,000 $162,000	Against Applicant	Mortgage or Home Loan Debt	Admitted	—	—	—
1.c–1.k	9 sub-charges — specific text not stated in this decision (against the applicant). (low confidence)	Against Applicant			—	—	—

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. 09-08533 SSN: ----------------- ) ) Applicant for Security Clearance )

For Government: Richard A. Stevens, Esq., Department Counsel For Applicant: Pro se

July 30, 2010 ______________

STATEMENT OF CASE

______________

LYNCH, Noreen, A. Administrative Judge:

On March 9, 2010, the Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) enumerating security concerns arising 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 Adjudicative Guidelines (AG), effective for SORs issued after September 1, 2006.

On March 22, 2010 in a notarized response, Applicant requested an administrative determination. Department Counsel submitted a File of Relevant Material (FORM), dated April 15, 2010. Applicant received the FORM on April 21, 2010. On July 16, 2010, the Director, DOHA, forwarded the case for assignment to an administrative judge. The case was assigned to me on the same day. Based on a review of the case file, submissions, and exhibits, I find Applicant failed to meet her burden to mitigate the security concern raised. Security clearance is denied.

FINDINGS OF FACT

Applicant is a 40-year-old employee of a defense contractor. She graduated from college in May 2002. She is divorced, and has two children from her marriage. Applicant held a security clearance from 1991 through 1998 while employed with the Air Force. (Item 1) She has worked for her current employer since October 2009. (Item 5)

Applicant explained that her financial problems began in May 2008 when her husband suffered a “mental breakdown.” He abandoned the family and he quit his job. Applicant was not working at the time. She relocated to her family home in another state and sought full-time employment. She was unemployed for approximately ten months. (Item 1)

The Statement of Reasons (SOR) alleged eleven delinquent debts for unpaid credit card accounts totaling $41,871. In addition, Applicant reported a defaulted home mortgage loan that was past-due in the amount of $162,000. (Item 1) Applicant admitted the allegations in SOR ¶ 1.a through k.

Applicant denied having “poor self-control.” In 2008, her husband abandoned her and her two children. He was later institutionalized for mental health issues. (Item 4) She finally obtained a divorce on January 26, 2010. She incurred additional expenses to pay for the divorce. She is now in the process of filing bankruptcy. Her financial problems are directly related to her ex-husband. (Item 5) Applicant receives sporadic, limited financial support from her former spouse. She claims that bankruptcy is her only option because she has been unsuccessful in selling her home. (Item 4) Applicant hopes that a short sale will occur soon. She fully intends to pay her delinquent debts.

Applicant submitted documentation in response to the FORM to include her July 23, 2010, Chapter 7 Bankruptcy Petition filed by her attorney. In addition, she completed the required financial counseling on April 7, 2010. On May 25, 2010, she completed a personal financial management course via the internet. She paid the filing fees and the attorney fee. Applicant stressed that now that she is divorced, she will be liable only for her bills, which she is able to pay.

The household’s income, which included her husband’s income was more than $200,000. As a result of the marital settlement agreement and divorce, Applicant expects to receive child support in the amount of $1,500 a month. She was candid in relating that she is not sure if she will in fact receive the child support from her ex- husband. (Item 7) Applicant’s current net monthly income is $3,394. After expenses, she has a negative net remainder of approximately $200.

POLICIES

When evaluating an applicant’s suitability for a security clearance, an administrative judge must consider the adjudicative guidelines (AG). In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, they are applied in conjunction with the factors listed in the adjudicative process. An administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. Under AG ¶ 2(c), this process is a conscientious scrutiny of a number of variables known as the “whole-person concept.” An 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. Likewise, I have avoided drawing inferences grounded on mere speculation or conjecture.

The United States Government (Government) must present evidence to establish controverted facts alleged in the SOR. An 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 burden of proof is something less than a preponderance of evidence. The ultimate burden of persuasion is on the applicant.

A person seeking access to classified information enters into a fiduciary relationship with the Government based on 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.” “The clearly consistent standard indicates that security clearance determinations should err, if they must, on the side of denials.” Any reasonable doubt about whether an applicant should be allowed access to sensitive information must be resolved in favor of protecting such information. The decision to deny an individual a security clearance does not necessarily reflect badly on an applicant’s character. It is merely an indication that the applicant has not met the strict guidelines the President and the Secretary of Defense established for issuing a clearance.

ANALYSIS

Guideline F, Financial Considerations

The security concern relating to the guideline for Financial Considerations is set out in AG ¶ 18:

Failure or an 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.” It also states that “an individual who is financially overextended is at risk of having to engage in illegal acts to generate funds. Applicant has approximately $41,000 in delinquent credit card debt. In addition, she has defaulted on a home loan and is past-due in the amount of $162,000. She filed a petition for bankruptcy in July 2010. Consequently Financial Considerations Mitigating Condition (FCMC) AG ¶ 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) does not apply.

FC MC AG ¶ 20(b) (the conditions that resulted in the behavior 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 in part. As noted, Applicant’s sudden separation and divorce impacted her family finances. She received limited financial support from her husband. She supported her children. Applicant was unemployed for ten months. She did not pay any of her delinquent debts due to her lack of income. However, she filed for bankruptcy in July 2010, but the debts have not been discharged. While filing bankruptcy is a legal remedy that released Applicant from the requirement to pay the majority of her debt, insufficient time has passed for her to demonstrate the necessary qualities of sound judgment, reliability, and trustworthiness.

Even so, while a discharge in bankruptcy is intended to provide a person with a fresh start financially, it does not immunize an applicant’s history of financial problems from being considered for its security significance. See, e.g., DISCR Case No. 87-1800 (February 14, 1989) at p. 3 n.2 (“Although bankruptcy may be a legal and legitimate way for an applicant to handle his financial problems, the Examiner must consider the possible security implications of the history of financial debts and problems that led to the filing of the bankruptcy.

FC MC AG ¶ 20(d), (the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts) applies in part. Applicant filed for Chapter 7 bankruptcy in July 2010. This is a legal means of resolving debts. Applicant believes that her debts will be split due to her recent marital settlement and divorce decree. However, she does not believe that she will receive child support. Applicant has been steadily employed since October 2009 and expects that now that she is divorced and has filed for bankruptcy, she has resolved her debts. However, the debts have not been discharged due to the recent filing. Applicant received the required financial counseling as part of her bankruptcy petition. There is no indication the financial problems will not recur. FC MC AG ¶ 20(c) (the person has received or is receiving counseling for the problem and there are clear indications that the problem is being resolved or is under control) partially applies.

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 an 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. As noted above, the ultimate burden of persuasion is on the applicant seeking a security clearance. I considered the potentially disqualifying and mitigating conditions in light of all the facts and circumstances surrounding this case, as well as the “whole-person” factors. Applicant is an educated, recently divorced mother of two children. She held a security clearance for a period of time when she worked for the Air Force. She suffered financial difficulty when her husband abandoned the family in 2008. Applicant has not been able to sell her home, and she filed for Chapter 7 bankruptcy in July 2010. She has been steadily employed since October 2009. However, it is too soon to show a demonstrated track record or that her financial problems are resolved or under control.

FORMAL FINDINGS

Formal findings for or against Applicant on the allegations set forth in the SOR, as required by section E3.1.25 of Enclosure 3 of the Directive, are:

Paragraph 1, Guideline F: AGAINST APPLICANT

Subparagraphs 1.a through 1.k: 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 a security clearance. Clearance is denied.

NOREEN A. LYNCH. Administrative Judge

FOOTNOTES

The Government submitted nine items in support of its case. See also ISCR Case No. 94-1075 at 3-4 (App. Bd. Aug. 10, 1995). Department of the Navy v. Egan, 484 U.S. 518, 531 (1988). ISCR Case No. 93-1390 at 7-8 (App. Bd. Jan. 27, 1995). See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information), and EO 10865 § 7. ISCR Case No. 93-1390 at 7-8 (App. Bd. Jan. 27, 1995). Id.