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ISCR Case 11-00713.h1 — CASE

ISCR Case 11-00713.h1granted

Case Headnote

ISCR Case No. 11-00713.h1

grantedJan 31, 2012· Hon. Nichole L. Noel· hearing

Summary

This case concerns a 35-year-old single mother and government contractor whose security clearance was initially challenged under Guideline F (Financial Considerations) due to approximately $63,500 in delinquent debt owed to 15 creditors. The debt primarily consisted of education debt ($44,391), consumer credit ($17,067), and medical debt ($2,042). The applicant's financial difficulties were attributed to an undiagnosed medical condition and a car accident, both considered beyond her control.

To address these issues, the applicant actively participated in a debt repayment program and utilized various resources, including a gift from her parents, a 401K loan, and a settlement from a 2008 car accident. She successfully resolved all delinquent debts prior to the decision, demonstrating a positive repayment history and avoiding new consumer credit accounts or additional debt.

The judge ultimately granted the security clearance, finding that the applicant had mitigated the financial concerns. This decision was based on the resolution of all delinquent debts, the fact that her financial problems stemmed from circumstances beyond her control, and her demonstrated good-faith effort to repay debts and seek financial counseling.

Why the Applicant Prevailed

The applicant resolved all delinquent debts prior to the decision.
The applicant's financial issues were largely due to circumstances beyond her control.
The applicant demonstrated a good-faith effort to repay her debts and sought financial counseling.

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)appliedConditions Beyond the Person's Control
AG ¶ 20(c)appliedReceived Counseling and Indications of Resolution
AG ¶ 20(d)appliedGood-faith Effort to Repay Debts

Key Rule Quoted

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

Procedural Posture

SOR issuedAug 25, 2011
Answer filed—
Hearing heldDec 6, 2011
Decision dateJan 31, 2012

Cite For

Mitigation of Financial Issues Due to Circumstances Beyond Control
Good-faith Efforts in Debt Resolution
Impact of Family Support 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 approximately $63,500 in delinquent debt to 15 creditors, primarily due to circumstances beyond her control, including medical issues and car accidents. The applicant successfully resolved her debts through a combination of debt consolidation, financial assistance from her parents, and a settlement from a car accident, leading to a favorable decision regarding her security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant owes approximately $63,500 in delinquent debt to 15 creditors. $63,500	For Applicant	Unspecified Financial	Unknown	(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 Other
1.b	The majority of the delinquent debt falls into three categories: education debt ($44,391), consumer credit ($17,067) and medical debt ($2,042).	For Applicant	Unspecified Financial	Unknown	(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 Other
1.c	Applicant's financial problems are the result of two conditions beyond her control: an undiagnosed medical condition and a car accident.	For Applicant	Unspecified Financial	Unknown	(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 Other
1.d	Applicant acted responsibly by enrolling and participating in a debt repayment program.	For Applicant	Unspecified Financial	Unknown	(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 Other
1.e	Applicant used her available resources to resolve her delinquent debt: the gift from her parents, a 401K loan, and the windfall she received from her 2008 car accident.	For Applicant	Unspecified Financial	Unknown	(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 Other
1.f	Applicant has demonstrated a positive history of repayment of her debts.	For Applicant	Unspecified Financial	Unknown	(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 Other
1.g	Applicant does not have any open consumer credit accounts and has not accumulated any new debt.	For Applicant	Unspecified Financial	Unknown	(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 Other

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. 11-00713 ) ) Applicant for Security Clearance

For Government: Tovah Minster, Esq., Department Counsel For Applicant: Frederick W. Schutz, Esq.

01/31/2012 ______________

STATEMENT OF CASE

______________

NOEL, Nichole L., Administrative Judge:

Applicant contests the Defense Department’s intent to revoke her eligibility for a security clearance to work in the defense industry. The SOR alleges that Applicant owes approximately $63,500 in delinquent debt to 15 creditors. Applicant’s delinquent debt resulted from events beyond her control. She is currently participating in a student loan rehabilitation program and has resolved the delinquent accounts with her remaining 14 creditors. Clearance is granted.

Statement of the Case

Acting under the relevant Executive Order and DoD Directive,1 on August 25, 2011, the Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) explaining that it was not clearly consistent with the national interest to grant Applicant access to classified information. The SOR detailed the factual basis for the action under the adjudicative Guideline F, financial considerations.

Applicant answered the SOR and requested a hearing. The hearing proceeded as scheduled on December 6, 2011. Government’s Exhibits (GE) 1 through 8 and Applicant’s Exhibits (AE) A through P were admitted without objection. I left the record open until January 6, 2012 for Applicant to submit additional documentation regarding her finances. She timely submitted AE Q through W, without objection from Department Counsel.2 I received the Transcript (Tr.) on December 13, 2011.

FINDINGS OF FACT

Applicant is a 35-year-old, single mother of a 7-year-old daughter. She received a bachelor’s degree in business administration in 2007. Applicant financed her education with student loans. She has worked as a government contractor since 1998 and has been with her current employer since 2003. She has held a security clearance since 2001.3

The SOR alleges that Applicant is indebted to 15 creditors for approximately $63,500. The majority of the delinquent debt falls into three categories: education debt ($44,391), consumer credit ($17,067) and medical debt ($2,042). Applicant started having financial problems in the early 2000safter being injured in a car accident. When she began to accumulate delinquent debt, she enrolled in a debt consolidation program and paid off her debt in three years. Despite being debt free, Applicant continued to live paycheck to paycheck.4

In 2006, Applicant began experiencing financial problems again, as a result of undiagnosed medical issues. In absence of a diagnosis, Applicant’s insurance company refused to cover the costs associated with any diagnostic testing or pre-diagnosis treatments. In 2008, she was involved in another car accident that was not her fault. Her car was declared a total loss and she incurred medical costs associated with injuries sustained in the accident. Her financial problems were further exacerbated in 2009 when her student loans entered repayment status. In September 2010, Applicant again enrolled in a debt consolidation program for assistance in resolving her mounting delinquent debt. Under the debt consolidation program, Applicant paid $1,800 toward her delinquent debt. In February 2011, she enrolled in a student loan rehabilitation program. She has successfully completed the program and is now eligible to refinance the loans under more favorable terms.5 Applicant tried to resolve her financial problems on her own, not realizing the implications the delinquent debt would have on her security clearance. After receiving the SOR, she asked her parents for help. Applicant’s parents provided financial counseling and gifted her $4,000 to help her resolve her delinquent debt. In addition to the gift from her parents, Applicant borrowed against her 401K to resolve some of her outstanding medical debt. In November 2011, she received a $7,400 settlement from her 2008 car accident. She used the windfall to pay off her remaining delinquent debt. 6

To date, Applicant continues to make timely payments on her student loans and is currently on the lender’s wait list for refinancing. She has paid or settled all of the delinquent debt alleged in the SOR. Applicant does not have any open consumer credit accounts and has not accumulated any new debt. The current balance on her 401K loan is less than $250. She has received a definitive diagnosis of her medical issues and expects her treatment and medications to be covered by her insurance company going forward.7

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 are to be used 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, administrative judges apply the guidelines 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.

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 the 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 EO 10865 provides that adverse 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 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.

AG ¶ 19 provides two Financial Considerations Disqualifying Conditions that are applicable here:

(a) inability or unwillingness to satisfy debts; and

In 2006, Applicant became overwhelmed by medical bills, car repairs, and student loan expenses that exceeded her income. For the next four years, she accumulated delinquent debt because she could not afford to pay her creditors.

The following mitigating conditions available under AG ¶ 20 apply:

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; 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; and

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

Applicant’s financial problems are the result of two conditions beyond her control: an undiagnosed medical condition and a car accident. Her finances were stressed even more when her student loans entered repayment status. Applicant acted responsibly by enrolling and participating in a debt repayment program. When she realized she was in over her head, she consulted her parents for financial counseling. In addition to the payments she made under her debt repayment program, Applicant used her available resources to resolve her delinquent debt: the gift from her parents, a 401K loan, and the windfall she received from her 2008 car accident. Applicant’s efforts constitute a good- faith effort to resolve her indebtedness. Based on the evidence, I conclude that Applicant has mitigated the Guideline F concerns.

I have no reservations about Applicant’s current reliability, trustworthiness, and ability to protect classified information. In reaching this conclusion, I have also considered the whole-person concept. Applicant approached her financial problems well before the concern was raised by this current security clearance investigation. She has demonstrated a positive history of repayment of her debts. While her finances may remain strained by her circumstances, her financial problems are not indicative of poor self-control, lack of judgment, or an unwillingness to pay her debt. She has demonstrated the opposite. Therefore, I conclude that Applicant has mitigated the security concerns.

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

Subparagraphs 1.a-1.gg: For Applicant

CONCLUSION

In light of all of the circumstances, it is clearly consistent with the national interest to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is granted.

________________________ Nichole L. Noel Administrative Judge

FOOTNOTES

1 This case is adjudicated under Executive Order (EO)10865, Safeguarding Classified Information within Industry, signed by President Eisenhower on February 20, 1960, as amended, as well as DoD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program, dated January 2, 1992, as amended (Directive). In addition, the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information (AG), effective within the Defense Department on September 1, 2006, apply to this case. The AG were published in the Federal Register and codified in 32 C.F.R. § 154, Appendix H (2006). The AG replaces the guidelines in Enclosure 2 to the Directive. 2 The Government’s Post-hearing Memorandum is appended to the record as Hearing Exhibit (HE) 1.

3 Tr. 31 – 35.

4 Tr. 40, 44-46; Answer to SOR.

5 Tr. 38-40, 61-63, 70-71; AE B. 7 GE 3; AE Q, S.