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ISCR Case 11-09246.h1 — CASE

ISCR Case 11-09246.h1denied

Case Headnote

ISCR Case No. 11-09246.h1

deniedJul 5, 2013· Hon. Robert E. Coacher· hearing

Summary

A 35-year-old defense contractor was denied a security clearance due to significant financial concerns under Guideline F. The Statement of Reasons detailed several unresolved debts, including a consumer account of $250 and delinquent automobile loans, one of which had a $505 payment made in July 2012 but still carried a balance. The largest debt was a home foreclosure from 2011, amounting to approximately $201,000.

These issues raised disqualifying conditions related to financial irresponsibility. While mitigating conditions were considered, the judge ultimately found them insufficient. The applicant had unresolved debts totaling about $205,884, primarily from the foreclosure.

The denial was based on the applicant's failure to demonstrate responsible financial behavior or provide evidence of financial counseling or good-faith efforts to resolve the outstanding debts. Despite his military service, the judge concluded there was insufficient evidence to grant the security clearance.

Why the Applicant Was Denied

Applicant has unresolved debts totaling approximately $205,884, including a home foreclosure.
Applicant failed to demonstrate responsible behavior in managing his financial obligations.
There is no evidence of financial counseling or good-faith efforts to resolve debts.

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 That Resulted in the Financial Problem Were Largely Beyond the Person's ControlApplicant's wife failed to pay debts while he was deployed.
AG ¶ 20(a)rejectedBehavior Happened so Long Ago or Infrequently That It Is Unlikely to RecurApplicant did not provide sufficient evidence to show debts are unlikely to recur.
AG ¶ 20(c)rejectedReceived Counseling for the ProblemApplicant failed to present evidence of financial counseling.
AG ¶ 20(d)rejectedGood-faith Effort to Repay Overdue CreditorsNo evidence of good-faith efforts to pay remaining debts.

Key Rule Quoted

“Any doubt concerning personnel being considered for access to classified information will be resolved in favor of national security.”

Procedural Posture

SOR issuedNov 20, 2012
Answer filednullApplicant elected to have case decided on written record.
Hearing heldnullDecision based on written record.
Decision dateJul 5, 2013

Cite For

Insufficient Evidence of Financial Responsibility Under Guideline F
Impact of Unresolved Debts on Security Clearance Eligibility
Consideration of the Whole-person Concept in Financial Cases

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 failed to mitigate financial concerns under Guideline F, with multiple unresolved debts totaling approximately $205,884, including a significant home foreclosure. The applicant's financial situation was deemed to lack responsible management, leading to a denial of security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a–1.g	7 sub-charges — specific text not stated in this decision (against the applicant).	Against Applicant			—	—	—
1.h	The delinquent debt alleged in SOR ¶ 1.h is a consumer account in the amount of $250. This debt is unresolved. $250	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.i	specific text not stated in this decision	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.j	The delinquent debts alleged in SOR ¶¶ 1.i and 1.j are automobile loans. The record indicates that a $505 payment was made in July 2012 toward the amount owed on SOR ¶ 1.j; however, a delinquent balance remains.	Against Applicant	Auto Loan Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.k	The bulk of this delinquent debt is a home foreclosure occurring in 2011 in the amount of about $201,000. $201,000	Against Applicant	Mortgage or Home Loan Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—

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. 11-09246 ) Applicant for Security Clearance )

For Government: Candace L. Garcia, Esq., Department Counsel For Applicant: Pro se

07/05/2013 ______________

STATEMENT OF CASE

______________

COACHER, Robert E., Administrative Judge:

Applicant failed to mitigate the security concerns under Guideline F, financial considerations. Applicant’s eligibility for a security clearance is denied.

Statement of the Case

On November 20, 2012, the Department of Defense (DOD) issued Applicant a Statement of Reasons (SOR) detailing security concerns under Guideline F, financial considerations. DOD acted 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 within DOD on September 1, 2006.

Applicant answered the SOR (undated), and elected to have his case decided on the written record. Department Counsel submitted the Government’s File of Relevant Material (FORM) on March 20, 2013. The FORM was mailed to Applicant and he received it on April 5, 2013. Applicant was given an opportunity to file objections and submit material in refutation, extenuation, or mitigation. He did not submit any information. The case was assigned to me on June 21, 2013.

FINDINGS OF FACT

In Applicant’s answer to the SOR, he admitted all the allegations, except for the debt listed in ¶ 1.j, which he denied. Those admissions are adopted as findings of fact. After a thorough and careful review of the pleadings and evidence submitted, I make the following additional findings of fact.

Applicant is 35 years old. He is currently employed by a defense contractor and is working in a deployed location. He has worked for his current employer since December 2003. He is married and has two children. He is currently living separately from his wife and is seeking a divorce. He continues to provide financial support for his wife and family. He holds a high school diploma. From 1999 until 2003, he served in the Air National Guard for his state of residence.1

The debts listed in the SOR are supported by credit reports from April 2010, June 2011, July 2012, October 2012, and March 2013. The SOR sets out 11 debts amounting to about $205,884. The bulk of this delinquent debt is a home foreclosure occurring in 2011 in the amount of about $201,000 (SOR ¶ 1.k). Applicant’s job has kept him deployed on a regular basis since 2003. As a result of his deployments, his wife maintained the family finances. At some unrecalled date, his variable rate mortgage increased and his monthly payments rose from $1,500 per month to $2,400. Unbeknownst to Applicant, his wife stopped making the mortgage payments and eventually the property was foreclosed. Once Applicant became aware of his mortgage delinquency, he attempted to seek a loan modification, but was unsuccessful. There are no details in the record about the foreclosure, any resulting deficiency amount, or debt forgiveness, other than what is indicated in the credit reports. Applicant’s wife also failed to pay the remaining debts listed in the SOR, which included multiple medical debts, two automobile payments, and a commercial debt.2

The delinquent debts alleged in SOR ¶¶ 1.a through 1.gare medical accounts. Applicant stated that he was unaware why his wife would accrue these debts because he had health insurance that covered his family’s medical costs. He later admitted the debts in his answer. In August 2012, Applicant’s wife entered them into a settlement agreement with a debt company to pay all the medical debts. There is no evidence that any payments were made. These debts are unresolved.3 The delinquent debt alleged in SOR ¶ 1.his a consumer account in the amount of $250. This debt is unresolved.4

The delinquent debts alleged in SOR ¶¶ 1.i and 1.jare automobile loans. The record indicates that a $505 payment was made in July 2012 toward the amount owed on SOR ¶ 1.j; however, a delinquent balance remains. These debts are unresolved.5

Applicant’s personal financial statement shows that he receives a sizable monthly net income ($10,747); however, his monthly expenses of about $8,400 and his debt payments of about $3,500 surpass that income and leave him with a negative balance. He also has a long history of delinquent debts relating back to 2000. He has deployed to hostile areas in support of U.S. forces. No further information is available about his activities.6

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 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, 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, 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, and 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 that an applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation about 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

AG ¶ 18 expresses the security concern for financial considerations:

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 conditions that could raise security concerns. I have considered all of them under AG ¶ 19 and the following potentially apply:

(a) inability or unwillingness to satisfy debts; and

Applicant has delinquent debts that remain unpaid or unresolved. I find both disqualifying conditions are raised.

The guideline also includes conditions that could mitigate security concerns arising from financial difficulties. I have considered all of the mitigating conditions under AG ¶ 20 and the following potentially apply: (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; and

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

All of Applicant’s debts remain unresolved. He did not provide sufficient evidence to show that the debts are unlikely to recur. I find mitigating condition AG ¶ 20(a) does not apply. Applicant provided evidence that his home mortgage payments increased because of an interest rate increase and that his wife failed to pay their debts while he was deployed. However, in order for this mitigating condition to fully apply, Applicant must demonstrate responsible behavior in light of the circumstances. Other than seeking a loan modification and setting up a payment plan for the medical debts, but failing to make any of the required payments, Applicant provided insufficient evidence to show he acted on the remaining debts. This demonstrates a lack of responsible behavior. I find AG ¶ 20(b) partially applies. Applicant failed to present evidence of financial counseling and there is no clear evidence that Applicant’s financial problems are being resolved or under control because several debts remain unpaid and his monthly disposable income is in the negative range. There is no evidence that he has made a good-faith effort to pay the remaining debts. I find AG ¶¶ 20(c) and 20(d) do not apply.

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 guideline 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 service to the U.S. military in hostile territory and the impact his wife’s inaction had on his debt situation. However, he has not shown a track record of financial stability. The record lacks evidence that Applicant has made an overall good-faith effort to resolve his debts. Therefore, he failed to provide sufficient evidence to mitigate the security concerns.

Overall, the record evidence leaves me with questions and doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant failed to mitigate the security concerns arising under Guideline F, 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: AGAINST APPLICANT

Subparagraphs 1.a – 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 eligibility for a security clearance. Eligibility for access to classified information is denied.

_____________________________ Robert E. Coacher Administrative Judge

FOOTNOTES

1 Items 4, 6. 2 Items 6-11. 3 Items 3, 6-11. 4 Items 6-11. 5 Items 6-11. 6 Items 6, 12-13.