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ISCR Case 11-14361.h1 — CASE

ISCR Case 11-14361.h1denied

Case Headnote

ISCR Case No. 11-14361.h1

deniedDec 4, 2013· Hon. Richard A. Cefola· hearing

Summary

A 43-year-old Ph.D. and government contractor was denied a security clearance under Guideline F (Financial Considerations) and Guideline B (Foreign Influence). The denial primarily stemmed from unresolved financial issues, specifically a past-due debt of approximately $34,913 on a second mortgage owed to Creditor 2.

The applicant acknowledged that the financial difficulties originated from the 2008 housing market crash. However, the decision noted that he failed to demonstrate reasonable actions to resolve this significant debt. This lack of proactive engagement raised concerns regarding his reliability and trustworthiness, which are critical for security clearance eligibility.

Ultimately, the applicant did not meet the burden of persuasion to demonstrate that he had adequately addressed his financial obligations. The unresolved debt of over $34,000 and the absence of reasonable efforts to resolve it were the primary reasons for the denial.

Why the Applicant Was Denied

The applicant has over $34,000 in past-due indebtedness that he has yet to resolve.
The applicant did not demonstrate reasonable actions to address his financial obligations.
The applicant's financial issues raised questions about his reliability and trustworthiness.

Conditions Referenced

Disqualifying

F.19.araisedInability or Unwillingness to Satisfy Debts
F.19.craisedA History of Not Meeting Financial Obligations

Key Rule Quoted

“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.”

Procedural Posture

SOR issuedApr 15, 2013
Answer filedMay 17, 2013
Hearing heldOct 15, 2013
Decision dateDec 4, 2013

Cite For

Financial Considerations Under Guideline F
Impact of Unresolved Debts on Security Clearance Eligibility
Whole-person Concept in Security Clearance Determinations

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 B (Foreign Influence) · descriptive summary of a decided case

Posture: Decision on RecordDecided: denied

The judge found against the applicant on the allegations related to Guideline B, as the government withdrew the relevant subparagraphs from consideration. Consequently, the applicant's eligibility for access to classified information was denied based on the findings under Guideline F.

¶	Allegation	Finding	Relationship	Country	Response	Disqualifying (¶7)	Mitigating applied (¶8)	Mitigation
1.a	specific text not stated in this decision	Against Applicant	Unspecified Foreign Relationship Other	—	Unknown	—	—	—

Descriptive standardized rendering of a decided public case (Guideline B). The verbatim source decision is shown in full below.

Standardized Decision Profile

SEAD-4 Guideline F · descriptive summary of a decided case

Posture: Decision on RecordDecided: denied

The judge found that the applicant has a significant past-due debt of approximately $34,913 on a second mortgage, which he has not resolved. This financial obligation raised security concerns under Guideline F, leading to a decision against the applicant's eligibility for a security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	It is alleged that Applicant owes Creditor 2 the past-due amount of about $34,913 on a second mortgage. $34,913	Against Applicant	Mortgage or Home Loan Debt	Denied	(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. 11-14361 ) ) Applicant for Security Clearance )

For Government: Jeff Nagel, Esquire, Department Counsel For Applicant: Pro se

December 4, 2013

______________

STATEMENT OF CASE

______________

CEFOLA, Richard A., Administrative Judge:

Applicant submitted his Electronic Questionnaires for Investigations Processing (e-QIP) on September 20, 2011. On April 15, 2013, the Department of Defense (DOD) issued a Statement of Reasons (SOR) detailing the security concerns under Guidelines F and B for Applicant. 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 within the Department of Defense after September 1, 2006.

Applicant acknowledged receipt of the SOR on May 2, 2013. He answered the SOR in writing on May 17, 2013, and requested a hearing before an Administrative Judge. DOHA received the request on May 23, 2013, and I received the case assignment on September 17, 2013. DOHA issued a notice of hearing on September 18, 2013, and I convened the hearing as scheduled on October 15, 2013. The Government offered Exhibits (GXs) 1 through 7, which were received without objection. Applicant testified on his own behalf. DOHA received the transcript of the hearing (TR) on October 23, 2013. I granted Applicant’s request to keep the record open until November 15, 2013, to submit additional matters. On November 15, 2013, he submitted Exhibits (AppXs) A and B, which were received without objection. The record closed on November 15, 2013. Based upon a review of the pleadings, exhibits, and testimony, eligibility for access to classified information is denied.

Procedural and Evidentiary Rulings

Motion to Withdraw

Department Counsel moved to withdraw Subparagraph 2.a. of the SOR, which incorporated Guideline B. (TR at page 6 line 13 to page line 7.) There being no objection by Applicant, the Government’s motion was granted. Guideline B is no longer in issue.

FINDINGS OF FACT

In his Answer to the SOR, Applicant denied the factual allegations in Subparagraph 1.a. of the SOR.

Guideline F - Financial Considerations

Applicant is a 43 year old Ph. D., married with two children, and works for a Government Contractor. (TR at page 23 line 3 to page 25 line 24.)

1.a. It is alleged that Applicant owes Creditor 2 the past-due amount of about $34,913 on a second mortgage. (GX 7 at page 2.) He denies this allegation.

In 2008, Applicant purchased a home for what he believes to have been “$595,000.” (TR at page 27 lines 16–27.) This purchase was made “prior to the market collapse” in 2008. (TR at page 27 lines 22–24.) According to Applicant, “It was a - - it’s called a piggy back loan. So, it was an 80/15/5 [loan arrangement]. 80 percent on the first loan [to Creditor 1], 15 percent on the second [to Creditor 2], five percent down payment.” (TR at page 28 lines 5–8.) The monthly payments on the first mortgage “was $3,014.54,” and on the second mortgage “was $1,392.16.” (TR at page 29 lines 5–15.) However, Applicant could not keep up with his monthly payments; and as a result, the house eventually went into foreclosure in April of 2011. (TR at page 30 line 5 to page 41 line 3.)

Applicant has submitted an IRS “Form 1099-A” from Creditor 1, and three October 13, 2013, credit reports showing a “Past Due” “Balance” to Creditor 2 in the amount of $34,913. (AppXs A and B at pages 2–4.) He has also submitted a dispute letter to Creditor 2, disputing that he owes anything. (AppX B at page 1.) Applicant believes the Form 1099-A covers both the first and second mortgage. (TR at page 42 lines 2–17.) Under the Code of Civil Procedure, Sections 577–582, from the state where the foreclosed property is located, it is clear that the primary mortgage is covered by the statute; i.e., that no deficiency judgment can be rendered against Applicant vis-a-vis the first loan. Not so clear, however, is that a second mortgage is also covered as to any deficiency judgment. As Applicant has the burden of demonstrating that he does not owe the alleged debt to Creditor 2, and has instead submitted three October 13, 2013, credit reports showing a “Past Due” “Balance” to Creditor 2, I find this second mortgage debt is still outstanding.

POLICIES

When evaluating an applicant’s suitability for a security clearance, the 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, which are useful 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. (AG Paragraph 2.) The administrative judge’s over-arching adjudicative goal is a fair, impartial and commonsense decision. According to AG Paragraph 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 Paragraph 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.

Under Directive Paragraph E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive Paragraph 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 as to obtaining 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 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.” 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 relating to the guideline for Financial Considerations is set out in Paragraph 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.

The guideline notes several conditions that could raise security concerns. Under Subparagraph 19(a), an “inability or unwillingness to satisfy debts@ is potentially disqualifying. Similarly under Subparagraph 19(c), “a history of not meeting financial obligations@ may raise security concerns. Applicant has a significant past-due debt, which he has not yet resolved.

I can find no countervailing Mitigating Condition that is applicable here. Subparagraph 20(b) recognizes that the 2008 crash in the housing market was a condition largely beyond Applicant’s control, but he must act “reasonably under the circumstances.” He has yet to resolve his $34,000 past-due debt on a second mortgage for a house he abandoned in April of 2011, more that two years ago. Accordingly, Applicant has not met his burden of persuasion.

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. Under AG Paragraph 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. The Administrative Judge should also consider the nine adjudicative process factors listed at AG Paragraph 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.

I considered all of the evidence, including the potentially disqualifying and mitigating conditions surrounding this case. The record evidence leaves me with questions and doubts as to Applicant’s eligibility and suitability for a security clearance. Applicant has over $34,000 in past-due indebtedness that he has yet to resolve. If he resolves this debt, he may be eligible for access to classified information in the future. For these reasons, I conclude Applicant has not mitigated the security concerns under the whole-person concept arising from his 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

Subparagraph 1.a. 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.

Richard A. Cefola Administrative Judge