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ISCR Case 10-04433.h1 — CASE

ISCR Case 10-04433.h1granted

Case Headnote

ISCR Case No. 10-04433.h1

grantedDec 7, 2011· Hon. John Grattan Metz, Jr.· hearing

Summary

A 51-year-old controller for a defense contractor was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The Statement of Reasons cited delinquent first and second mortgages totaling nearly $119,000, along with a $153 medical bill paid in June 2011. These issues raised disqualifying conditions F.19(a) and F.19(c).

However, the decision applied mitigating conditions F.20(a), F.20(b), and F.20(d). The applicant demonstrated responsible behavior in addressing her debts, which were largely attributed to her ex-husband's actions during their divorce. The financial difficulties were limited to a single property and were deemed unlikely to recur.

Ultimately, the clearance was granted because the applicant acted responsibly in resolving her financial issues, which were largely beyond her control. Her favorable work and character references further supported her trustworthiness, indicating she could manage her debts and was a reliable employee.

Why the Applicant Prevailed

The applicant acted responsibly in addressing her debts under circumstances largely beyond her control.
The financial difficulties were limited to one house and are unlikely to recur.
The applicant has favorable work and character references, indicating trustworthiness.

Conditions Referenced

Disqualifying

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

Mitigating

F.20(a)appliedThe Behavior Happened so Long Ago, Was so Infrequent, or Occurred Under Such Circumstances That It Is Unlikely to Recur
F.20(b)appliedThe Conditions That Resulted in the Financial Problem Were Largely Beyond the Person’s Control
F.20(d)appliedThe Individual Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts

Key Rule Quoted

“The Government has a compelling interest in ensuring each applicant possesses the requisite judgement, reliability, and trustworthiness of those who must protect national interests as their own.”
— Department of the Navy v. Egan, 484 U.S. 518 (1988)

Procedural Posture

SOR issuedJun 2, 2011
Answer filed—
Hearing heldAug 24, 2011
Decision dateDec 7, 2011

Cite For

Mitigating Factors for Financial Considerations Under Guideline F
Impact of Uncontrollable Circumstances on Financial Obligations
Importance of Character References in Security Clearance Decisions

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's financial issues, primarily stemming from a divorce and the actions of an uncooperative ex-husband, were mitigated by her responsible handling of her finances and her ability to meet day-to-day expenses. Despite the foreclosure of two mortgages, the applicant demonstrated that her financial problems were unlikely to recur, leading to a decision to grant her security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	delinquent first and second mortgages totaling nearly $119,000 $119,000	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	Claimed Other
1.b	delinquent first and second mortgages totaling nearly $119,000 $119,000	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	Claimed Other
1.c	a $153 medical bill she paid in June 2011 $153	For Applicant	Medical Debt	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. 10-04433 ) Applicant for Security Clearance )

For Government: Philip J. Katauskas, Esquire, Department Counsel For Applicant: Pro se

December 7, 2011 ______________

STATEMENT OF CASE

______________

METZ, John Grattan, Jr., Administrative Judge:

Based on the record in this case, Applicant’s clearance is granted.

On 2 June 2011, the Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guideline F, Financial Considerations. Applicant timely answered the SOR, requesting a hearing. DOHA assigned the case to me 29 July 2011, and I convened a hearing 24 August 2011. DOHA received the transcript (Tr.) 1 September 2011.

FINDINGS OF FACT

Applicant admitted the SOR allegations, except for SOR 1.c—a $153 medical bill she paid in June 2011 (AE A). She is a 51-year-old controller/corporate secretary- treasurer employed by a defense contractor since June 2009. She is also the part-time controller for another corporation. She has not previously held a clearance.

The SOR alleges, Government exhibits confirm, and Applicant admits, delinquent first and second mortgages totaling nearly $119,000. The property secured by the mortgages has since been foreclosed upon, and the status of the foreclosure is unknown.

Applicant and her ex-husband were married in August 2002, separated in April 2008, and divorced in October 2009. If her ex-husband was not contentious during the divorce, he was at least uncooperative. During their marriage, they lived in a house that was solely owned by the ex-husband. They jointly owned a house they bought as an investment property.

In September 2008, the ex-husband moved into the investment property, complicating efforts to sell the property, as he would not permit the realtor to show the property. He was supposed to continue to pay the mortgage. Unbeknownst to Applicant, he stopped paying the mortgage, and in May 2009, filed for chapter 7 bankruptcy protection to escape his liability for the investment property and house he held sole title to. The lenders foreclosed on the investment property, a fact Applicant did not learn of until after the ex-husband moved out of the house in summer 2010.

Applicant sought advice from realtors, attorneys, and other lenders about how to resolve the foreclosed property. Because the house was in foreclosure, the lenders would not communicate with her. Nevertheless, she has the means to deal with any deficiencies on the two mortgages once the foreclosure process is complete (Tr. 64).

Aside from the two mortgages, and the medical bill she was unaware of, Applicant has no trouble meeting her day-to-day expenses. He coworkers and supervisors at both companies consider her extremely conscientious and trustworthy. They uniformly recommend her for her clearance.

POLICIES

The adjudicative guidelines (AG) list factors for evaluating a person’s suitability for access to classified information. Administrative judges must assess disqualifying and mitigating conditions under each issue fairly raised by the facts and situation presented. Each decision must also reflect a fair, impartial, and commonsense consideration of the factors listed in AG ¶ 2(a). Any one disqualifying or mitigating condition is not, by itself, conclusive. However, specific adjudicative guidelines should be followed where a case can be measured against them, as they represent policy guidance governing access to classified information. Considering the SOR allegations and the evidence as a whole, the relevant adjudicative guideline is Guideline F (Financial Considerations).

Security clearance decisions resolve whether it is clearly consistent with the national interest to grant or continue an applicant’s security clearance. The Government must prove, by substantial evidence, controverted facts alleged in the SOR. If it does, the burden shifts to applicant to refute, extenuate, or mitigate the Government’s case. Because no one has a right to a security clearance, the applicant bears a heavy burden of persuasion.

Persons with access to classified information enter into a fiduciary relationship with the Government based on trust and confidence. Therefore, the Government has a compelling interest in ensuring each applicant possesses the requisite judgement, reliability, and trustworthiness of those who must protect national interests as their own. The “clearly consistent with the national interest” standard compels resolution of any reasonable doubt about an applicant’s suitability for access in favor of the government.3

ANALYSIS

The Government established a case for disqualification under Guideline F, but Applicant mitigated the security concerns. Applicant experienced financial problems because of her divorce and her uncooperative ex-husband. He stopped paying the two mortgages on the investment property and then filed for bankruptcy protection to evade his joint liability for the debt. However, it appears that the financial fallout from this situation has been limited to the house and the two mortgages.

Applicant meets significant mitigating factors for financial considerations. While her financial difficulties are recent, they were limited to the one house, and the circumstances under which they occurred are unlikely to recur. Applicant proceeded reasonably during the divorce and was unaware of the actions being taken by her ex- husband. This was clearly a circumstance beyond her control, and Applicant acted responsibly in addressing her debts under the circumstances. Although the house was foreclosed upon, she remained current on her other expenses. While there is no evidence that she sought credit counseling, her professional qualifications as a controller make this less significant, and it does not otherwise appear that Applicant was living beyond her means in any regard. The only unknowns in the case are whether there will be a deficiency when the foreclosure process is completed and whether the lender will forgive the debt, resulting in income to Applicant that may be taxable. However, Applicant appears able to resolve any remaining liability on the house.8 Finally, given Applicant’s favorable work and character references, her otherwise clean financial record, and the peculiar convergence of events that lead to the financial problems, the record does not suggest that Applicant’s financial problems will recur. Accordingly, I conclude Guideline F for Applicant.

FORMAL FINDINGS

Paragraph 1. Guideline F: FOR APPLICANT

Subparagraphs a-c: For Applicant

CONCLUSION

In view of the circumstances presented by the record in this case, it is clearly consistent with the national interest to grant or continue a security clearance for Applicant. Clearance granted.

JOHN GRATTAN METZ, JR Administrative Judge

FOOTNOTES

Consisting of the transcript (Tr.), Government exhibits (GE) 1-4, and Applicant exhibit (AE) A.

DOHA acted under 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 1 September 2006. See, Department of the Navy v. Egan, 484 U.S. 518 (1988).

¶ 19(a) inability or unwillingness to satisfy debts; (c) a history of not meeting financial obligations;

¶ 20(a) the behavior happened so long ago, was so infrequent, or occurred under such circumstances that it is unlikely to recur . . .

¶ 20(b) the conditions that resulted in the financial problem were largely beyond the person’s control . . . and the individual acted responsibly under the circumstances; ¶ 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;

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