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ISCR Case 11-14775.h1 — CASE

ISCR Case 11-14775.h1denied

Case Headnote

ISCR Case No. 11-14775.h1

deniedDec 9, 2013· Hon. John Grattan Metz, Jr.· hearing

Summary

A 38-year-old project manager was denied a security clearance under Guideline F, Financial Considerations, due to significant delinquent debt. The Statement of Reasons (SOR) alleged, and government exhibits confirmed, one delinquent debt totaling $51,000. This amount represented the past-due balance on a $234,000 mortgage the applicant cosigned with his mother in approximately September 2008.

The denial was based on the applicant's failure to responsibly and timely manage his financial obligations. Disqualifying conditions F.19(a) and F.19(c) were raised. The applicant had over $51,000 in delinquent debt that he only recently began to address, despite becoming aware of the indebtedness by June 2011. He took no meaningful action for nearly two years.

The judge concluded that the applicant's financial difficulties were recent and ongoing, and he did not meet any mitigating conditions. Consequently, granting a clearance was deemed inconsistent with the national interest.

Why the Applicant Was Denied

The applicant has over $51,000 in delinquent debt that he only recently began to address.
He became aware of his indebtedness by June 2011 but took no meaningful action for nearly two years.
His financial difficulties are recent and ongoing, and he did not meet any mitigating conditions.

Conditions Referenced

Disqualifying

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

Key Rule Quoted

“The "clearly consistent with the national interest" standard compels deciding any reasonable doubt about an Applicant’s suitability for access in favor of the Government.”
— Department of the Navy v. Egan, 484 U.S. 518 (1988)

Procedural Posture

SOR issuedMay 8, 2013
Answer filed—
Hearing heldAug 1, 2013
Decision dateDec 9, 2013

Cite For

Denial of Clearance Due to Significant Delinquent Debt Under Guideline F
Failure to Act Responsibly in Addressing Financial Obligations
Recent Financial Difficulties Not Mitigated by Applicant's Actions

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 a delinquent mortgage debt totaling $51,000, which he had only recently begun to address. Despite some efforts to modify the loan, the judge concluded that the applicant did not mitigate the financial concerns, resulting in a denial of the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	The SOR alleges, and Government exhibits establish, one delinquent debt totaling $51,000. The amount represents the past-due balance on a $234,000 mortgage that Applicant cosigned with his mother in about September 2008. $51,000	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. 11-14775 ) Applicant for Security Clearance )

For Government: Tovah A. Minster, Esquire, Department Counsel For Applicant: Pro se

12/09/2013 ______________

STATEMENT OF CASE

______________

METZ, John Grattan, Jr., Administrative Judge:

Based on the record in this case, I deny Applicant’s clearance.

On 8 May 2013, the Department of Defense (DoD) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guideline F, Financial Considerations. Applicant timely answered the SOR, requesting a hearing before the Defense Office of Hearings and Appeals (DOHA). DOHA assigned the case to me 27 June 2013, and I convened a hearing 1 August 2013. DOHA received the transcript (Tr.) 7 August 2013.

FINDINGS OF FACT

Applicant denied the SOR allegation. He is a 38-year-old project manager employed by a defense contractor since May 2010. His past clearance record is unknown.

The SOR alleges, and Government exhibits establish, one delinquent debt totaling $51,000. The amount represents the past-due balance on a $234,000 mortgage that Applicant cosigned with his mother in about September 2008.

The original mortgage was cosigned by Applicant’s sister. Applicant’s mother had insufficient income from her church secretary position to qualify for the mortgage. In 2008, Applicant’s sister wanted to buy her own home, so it was necessary to refinance the mortgage to get her off it. Applicant then cosigned his mother’s mortgage. The refinanced balance was $238,000. Applicant was either unaware or indifferent to the legal obligations cosigning the note placed upon him.

The house encumbered by the mortgage was originally purchased by Applicant’s mother as her residence, and it was so when Applicant’s name was put on the mortgage in September 2008. However, after the refinancing, Applicant’s mother converted the house to rental property. She had difficulty keeping the house rented and getting the tenants to pay the rent. There is no evidence of the efforts she undertook to enforce payment of the rent or evict the tenants. She apparently did not communicate these financial issues to her son.

In June 2011, Applicant executed a clearance application to upgrade his clearance (GE 1). He reported no financial difficulties. However, by June 2011, the mortgage was 120 days past due: $14,000 on a balance of $234,000. The record is unclear concerning whether Applicant knew this at the time he executed his clearance application. However, the Government did not allege falsification of the clearance application.

During his July 2011 interview, Applicant acknowledged the debt to the Government investigator, and implied that he would address it. Applicant made the same representations in October 2011, when the investigator re-interviewed Applicant. However, Applicant took no meaningful action to address the delinquent mortgage. He thought his mother would take care of it, because she owned the house. In March 2013, she was dealing with a third-party negotiator to modify the mortgage (GE 2). The record is unclear to what extent Applicant was involved in this process. Applicant testified (Tr. 67-68) that he was not more aggressive dealing with the delinquent mortgage because until he received the SOR in June 2013, he was unaware that the delinquent mortgage could be the basis for losing his clearance. Given the financial questions on the clearance application, and two interviews with a Government investigator discussing the debt, no reasonable person can believe this to be true. Nevertheless, the SOR galvanized Applicant into action. He dismissed the third-party negotiator and began dealing with the lender directly. By 27 July 2013, he had submitted the loan modification paperwork required by the lender (AE A). On 30 July 2013, Applicant was approved for a trial period plan (AE B). The plan required Applicant to execute a plan agreement and return it by 29 August 2013, followed by three trial mortgage payments of approximately $1,500 on 1 September, 1 October, and 1 November 2013. After completion of the trial program, the lender would determine if Applicant remained eligible for a permanent loan modification.

Applicant and his mother planned to sell the property if they were able to obtain the permanent loan modification. He did not document his acceptance of the trial plan, or his ability to make the trial mortgage payments.

Applicant submitted no work or character references. Except for the debt alleged in the SOR, his credit accounts are current.

POLICIES

The adjudicative guidelines (AG) list factors to evaluate 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 show a fair, impartial, and commonsense consideration of the factors listed in AG ¶ 2(a). The applicability of a disqualifying or mitigating condition is not, by itself, conclusive. However, specific guidelines should be followed when a case can be measured against them, as they are policy guidance governing the grant or denial of a clearance. 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, disputed 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 required judgement, reliability, and trustworthiness of those who must protect national interests as their own. The “clearly consistent with the national interest” standard compels deciding any reasonable doubt about an Applicant’s suitability for access in favor of the Government.4

ANALYSIS

The Government established a case for disqualification under Guideline F, and Applicant did not mitigate the security concerns. Applicant has over $51,000 in delinquent debt that he has only recently begun to address. Applicant became aware of his indebtedness by June 2011, yet took no meaningful action to address the debt for nearly two years. While he may be on the verge of a satisfactory resolution of the debt through loan modification, complete resolution of the debt hinges on his ability to sell the house once the delinquency is removed, a contingency that is by no means certain.

In addition, Applicant meets none of the mitigating conditions for financial considerations. His financial difficulties are recent and ongoing. Applicant’s responsibility as cosigner for his mother, and his ability to monitor the status of that loan, were certainly within his control. Further, he cannot be considered to have acted responsibly in addressing this debts under the circumstances because of the length of time it took him to begin to address the delinquency. Further, while his recent efforts to address the delinquency have borne partial results, his failure to act sooner means that it is too early to tell if he will be successful in completing the trial mortgage program, obtaining a permanent loan modification, and ultimately selling the property.

The concern with Applicant is that while he credibly stated his intent to resolve this debts, successful resolution remains speculative. He has not produced a budget, or documented that he has received financial counseling. He certainly has not demonstrated that the delinquent mortgage can be resolved with his current financial means. I conclude Guideline F against Applicant.

FORMAL FINDINGS

Paragraph 1. Guideline F: AGAINST APPLICANT

Subparagraph a: Against Applicant

CONCLUSION

Under the circumstances presented by the record in this case, it is not clearly consistent with the national interest to grant or continue a security clearance for Applicant. Clearance denied.

JOHN GRATTAN METZ, JR Administrative Judge

FOOTNOTES

Consisting of the transcript (Tr.), Government exhibits (GE) 1-4, and Applicant exhibits (AE) A-B. AE B was timely received post-hearing.

DoD acted under Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; 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. The Government investigator who interviewed Applicant in July 2011 recorded that Applicant was aware of the delinquency, but did not list it on his clearance application because it was his mother’s house (GE 2). However, Applicant testified (Tr. 47) that he first became aware of the delinquency in July 2011, when the Government investigator confronted him with his June 2011 credit report (GE 3). 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(d) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts;

¶ 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;