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ISCR Case 12-05980.h1 — CASE

ISCR Case 12-05980.h1denied

Case Headnote

ISCR Case No. 12-05980.h1

deniedOct 14, 2014· Hon. Mark W. Harvey· hearing

Summary

A 31-year-old engineer employed by a defense contractor was denied a security clearance under Guideline F, Financial Considerations. The denial stemmed from seven unresolved financial obligations totaling $85,123, which included a judgment owed to a bank, a charged-off student loan, and five charged-off or collection bank debts.

The Statement of Reasons specifically cited these seven delinquent accounts. Disqualifying conditions under Guideline F were raised due to the applicant's significant overdue debts and his failure to demonstrate a consistent effort to resolve them.

Ultimately, the clearance was denied because the applicant did not provide sufficient documentation of his efforts to address his financial problems and failed to establish a meaningful track record of resolving his debts. This led to concerns regarding his reliability and trustworthiness.

Why the Applicant Was Denied

The applicant had seven delinquent, collection, or charged-off accounts totaling $85,123.
He failed to provide sufficient documentation of efforts to resolve his financial problems.
The applicant did not establish a meaningful track record of resolving his debts.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability or Unwillingness to Satisfy Debts
AG ¶ 19(c)raisedA 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 issuedJul 17, 2014
Answer filedAug 7, 2014Applicant waived his right to a hearing.
Hearing held—No hearing; decision based on written submissions.
Decision dateOct 14, 2014

Cite For

Denial of Security Clearance Due to Unresolved Financial Issues Under Guideline F
Insufficient Evidence of Financial Responsibility and Progress in Debt Resolution
Importance of Providing Documentation to Mitigate Financial Concerns

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 against the applicant on all allegations under Guideline F, citing a total of seven delinquent accounts amounting to $85,123. The applicant admitted responsibility for the debts but failed to provide sufficient documentation to demonstrate progress in resolving these financial issues, leading to a denial of eligibility for a security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	is a judgment owed to a bank $18,657	Against Applicant	Judgment Against Applicant	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	is a charged-off student loan debt $7,769	Against Applicant	Student Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	is a charged-off bank debt $19,564	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	is a charged-off bank debt $19,433	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	is a charged-off bank debt $13,828	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	is a charged-off bank debt $4,354	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.g	is a collection debt $1,518	Against Applicant	Unspecified Financial	Admitted	(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. 12-05980 ) ) Applicant for Security Clearance

For Government: Chris Morin, Esquire, Department Counsel For Applicant: Pro se

10/14/2014 __________

STATEMENT OF CASE

__________

HARVEY, Mark, Administrative Judge:

Applicant’s statement of reasons (SOR) alleges seven delinquent, collection, or charged-off accounts totaling $85,123. He failed to provide sufficient documentation of his progress in resolving his financial problems. Financial considerations concerns are not mitigated. Eligibility for access to classified information is denied.

Statement of the Case

On January 27, 2012, Applicant submitted an Electronic Questionnaires for Investigations Processing (e-QIP) version a security clearance application (SF 86). (Item 5) On July 17, 2014, the Department of Defense (DOD) Consolidated Adjudications Facility (CAF) issued an SOR to Applicant, pursuant to Executive Order 10865, Safeguarding Classified Information Within Industry, dated February 20, 1960, as amended; DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (Directive), dated January 2, 1992, as amended; and the adjudicative guidelines (AG) promulgated by the President on December 29, 2005.

The SOR alleged security concerns under Guideline F (financial considerations). (Item 1) The SOR detailed reasons why DOD could not make the preliminary affirmative finding under the Directive that it is clearly consistent with the national interest to grant or continue a security clearance for Applicant and recommended referral to an administrative judge to determine whether Applicant’s clearance should be granted, continued, denied, or revoked. (Item 1)

On August 7, 2014, Applicant responded to the SOR allegations and waived his right to a hearing. (Item 4) A complete copy of the file of relevant material (FORM), dated September 15, 2014, was provided to him on September 23, 2014.1 On September 29, 2014, Applicant responded to the FORM. The case was assigned to me on October 9, 2014.

Findings of Fact2

In Applicant’s SOR response, he admitted responsibility for the debts in SOR ¶¶ 1.a-1.g.3 He also provided some extenuating and mitigating information. Applicant’s admissions are accepted as findings of fact.

Applicant is a 31-year-old engineer, who has worked for a defense contractor since October 2011.4 He attended a state university from 2001 to 2008, and he received a bachelor’s degree in 2008. In November 2010, Applicant married. He does not have any children.

Applicant has never served in the military. From December 2004 to present, he has been self-employed in on-line marketing. He also worked from January 2009 to October 2011, for a retail tire sales company, and from October 2011 to present, he was employed as a simulator technician. He was unemployed for four months in 2008, for nine months in 2007, and for nine months in 2006. His unemployment in 2006, 2007, and 2008 was due to school attendance. There is no evidence of security violations, criminal conduct, use of illegal drugs, or alcohol abuse.

Financial Considerations

Applicant’s credit reports and the SOR allege, and Applicant admits, responsibility for seven delinquent, collection, or charged-off accounts totaling $85,123 as follows: (1) ¶ 1.a ($18,657) is a judgment owed to a bank; (2) ¶ 1.b ($7,769) is a charged-off student loan debt; (3) ¶ 1.c ($19,564) is a charged-off bank debt; (4) ¶ 1.d ($19,433) is a charged-off bank debt; (5) ¶ 1.e ($13,828) is a charged-off bank debt; (6)

information is available in the cited exhibits. ¶ 1.f ($4,354) is a charged-off bank debt; and (7) 1.g ($1,518) is a collection debt. (Item 1)

When Applicant completed his January 27, 2012 SF 86, he disclosed 10 delinquent debts. (Item 5) He stated that for eight of his debts he was “in [the] process of arranging payments.” For two student loan debts, totaling $26,652 and $128,476, he was in debt “[c]onsolidation and in [the] process of arranging payments.” (Item 5) When he responded to the SOR on August 8, 2014, he indicated his delinquent debts were generated for education and living expenses while he was attending a university and earning his bachelor’s degree in engineering. (Item 4) He intended to pay his debts and was current on a portion of his student loans. (Item 4) He has two car loans and other bills that he is current on and has been making payments. He concluded:

I do demonstrate self-control, trustworthiness, and a willingness to abide by rules and regulations. I am no longer financially overextended in my daily functions, as I was while obtaining my degree. I do not gamble and strive daily to be a better employee than yesterday so that I may continue to advance in my current[] workplace. (Item 4)

Notice to Applicant of Necessity for Additional Information

The FORM notes that Applicant has not submitted any evidence that “he has attempted to satisfy the judgment or that he has contacted any of the creditors listed in the SOR. Nor has he presented any evidence that he has made any payments on, or made any payments for, the accounts at issue.” (FORM at 6). The FORM states:

Applicant's overall unresolved indebtedness remains a lingering concern impacting his eligibility for a security clearance. In the absence of additional documentary evidence, submitted in response to this FORM, to show that Applicant has been able to begin [to] regain some financial stability by establishing a meaningful track record of resolving his delinquent debts, this concern must be decided against him in evaluating his suitability to have access to classified information. FORM at 6-7 (emphasis in original).

Applicant’s FORM in its concluding paragraph repeated the admonition about the absence of corroborating documentation and other mitigating information and explained that Applicant had 30 days from the receipt of the FORM “in which to submit a documentary response setting forth objections, rebuttal, extenuation, mitigation, or explanation, as appropriate. . . If you do not file any objections or submit any additional information . . . your case will be assigned to an Administrative Judge for a determination based solely on this FORM.” (FORM at 7-8) Applicant responded to the FORM, “I have reviewed the relevant material in the case concerning my security clearance and I have no objections or any information I wish to be considered.” (FORM response)

POLICIES

The U.S. Supreme Court has recognized the substantial discretion of the Executive Branch in regulating access to information pertaining to national security emphasizing, “no one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). As Commander in Chief, the President has the authority to control access to information bearing on national security and to determine whether an individual is sufficiently trustworthy to have access to such information.” Id. at 527. The President has authorized the Secretary of Defense or his designee to grant applicant’s eligibility for access to classified information “only upon a finding that it is clearly consistent with the national interest to do so.” Exec. Or. 10865, Safeguarding Classified Information within Industry § 2 (Feb. 20, 1960), as amended.

Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, these guidelines are applied in conjunction with an evaluation of the whole person. An administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. An administrative judge must consider all available, reliable information about the person, past and present, favorable and unfavorable.

The Government reposes a high degree of trust and confidence in persons with access to classified information. This relationship transcends normal duty hours and endures throughout off-duty hours. 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 about potential, rather than actual, risk of compromise of classified information. Clearance decisions must be “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See Exec. Or. 10865 § 7. See also Executive Order 12968 (Aug. 2, 1995), § 3.1. Thus, nothing in this Decision should be construed to suggest that I have based this decision, in whole or in part, on any express or implied determination about applicant’s allegiance, loyalty, or patriotism. It is merely an indication the applicant has not met the strict guidelines the President and the Secretary of Defense have established for issuing a clearance.

Initially, the Government must establish, by substantial evidence, conditions in the personal or professional history of the applicant that may disqualify the applicant from being eligible for access to classified information. The Government has the burden of establishing controverted facts alleged in the SOR. See Egan, 484 U.S. at 531. “Substantial evidence” is “more than a scintilla but less than a preponderance.” See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). The guidelines presume a nexus or rational connection between proven conduct under any of the criteria listed therein and an applicant’s security suitability. See ISCR Case No. 95-0611 at 2 (App. Bd. May 2, 1996).

Once the Government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. Directive ¶ E3.1.15. An applicant “has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue his [or her] security clearance.” ISCR Case No. 01-20700 at 3 (App. Bd. Dec. 19, 2002). The burden of disproving a mitigating condition never shifts to the Government. See ISCR Case No. 02-31154 at 5 (App. Bd. Sep. 22, 2005). “[S]ecurity clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531; see AG ¶ 2(b).

ANALYSIS

Financial Considerations

AG ¶ 18 articulates the security concern relating to financial problems:

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 disqualifying conditions that could raise a security concern and may be disqualifying in this case: “(a) inability or unwillingness to satisfy debts;” and “(c) a history of not meeting financial obligations.” In ISCR Case No. 08-12184 at 7 (App. Bd. Jan. 7, 2010), the Appeal Board explained:

It is well-settled that adverse information from a credit report can normally meet the substantial evidence standard and the government’s obligations under [Directive] ¶ E3.1.14 for pertinent allegations. At that point, the burden shifts to applicant to establish either that [he or] she is not responsible for the debt or that matters in mitigation apply.

(internal citation omitted). Applicant’s history of delinquent debt is documented in his two credit reports and SOR response. Applicant’s SOR alleges seven delinquent, collection, or charged-off accounts totaling $85,123. The Government established the disqualifying conditions in AG ¶¶ 19(a) and 19(c), requiring additional inquiry about the possible applicability of mitigating conditions.

Five mitigating conditions under AG ¶ 20 are potentially applicable:

(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;

(d) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts;5 and

(e) the individual has a reasonable basis to dispute the legitimacy of the past-due debt which is the cause of the problem and provides documented proof to substantiate the basis of the dispute or provides evidence of actions to resolve the issue.

The Appeal Board concisely explained Applicant’s responsibility for proving the applicability of mitigating conditions as follows:

Once a concern arises regarding an Applicant’s security clearance eligibility, there is a strong presumption against the grant or maintenance of a security clearance. See Dorfmont v. Brown, 913 F. 2d 1399, 1401 (9th Cir. 1990), cert. denied, 499 U.S. 905 (1991). After the Government presents evidence raising security concerns, the burden shifts to the applicant to rebut or mitigate those concerns. See Directive ¶ E3.1.15. The standard applicable in security clearance decisions is that articulated in Egan, supra. “Any doubt concerning personnel being considered for access to classified information will be resolved in favor of the national security.” Directive, Enclosure 2 ¶ 2(b).

ISCR Case No. 10-04641 at 4 (App. Bd. Sept. 24, 2013).

Applicant’s conduct in resolving his delinquent debt does not warrant full application of any mitigating conditions to any of his SOR debts. He did not provide sufficient information about his finances to establish his inability to make greater progress paying his creditors. His decision to accrue substantial student loan debt is an appropriate decision. His underemployment and unemployment damaged his family finances and are circumstances largely beyond his control; however, he did not act responsibly under the circumstances. He did not establish his income over the last three years or show what his spouse earned or how she contributed to the family financial situation. He did not provide a family budget. He presented insufficient evidence about what he has done over the last two years to pay his SOR debts or his other debts.

Applicant did not provide any of the following documentation relating to the SOR creditors: (1) proof of payments such as checking account statements, photocopies of checks, or a letter from the creditor proving that he paid or made any payments to the creditor; (2) correspondence to or from the creditor to establish maintenance of contact with the creditor;6 (3) a credible debt dispute; (4) attempts to negotiate payment plans, such as settlement offers or agreements to show that he was attempting to resolve these SOR debts; (5) evidence of financial counseling; or (6) other evidence of progress or resolution of his SOR debts. There is insufficient evidence that he was unable to make greater progress resolving his delinquent debts, or that his financial problems are being resolved, are under control, and will not recur in the future. Under all the circumstances, he failed to establish that financial consideration concerns are mitigated.

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 guidelines and the whole-person concept. I have incorporated my comments under Guideline F in my whole-person analysis. Some of the factors in AG ¶ 2(a) were addressed under Guideline F, but some warrant additional comment.

There is some evidence supporting approval of Applicant’s clearance. Applicant is a 31-year-old engineer, who has worked for a defense contractor since 2011. He attended a state university from 2001 to 2008, and he received a bachelor’s degree in 2008. In November 2010, Applicant married. From October 2011 to present, he was employed as a simulator technician for a defense contractor. Underemployment and unemployment are circumstances beyond his control that contributed to his financial problems. Accrual of substantial student loan-related debt is an appropriate decision. There is no evidence of security violations, criminal conduct, use of illegal drugs, or alcohol abuse. He disclosed his financial problems on his January 27, 2012 SF 86.

The financial evidence against approval of Applicant’s clearance is more substantial at this time. Applicant has a history of financial problems. His SOR alleges seven delinquent, collection, or charged-off accounts totaling $85,123. He failed to provide sufficient documentation of progress to resolve his financial problems. He was well aware of his financial problems, as he listed them in his January 27, 2012 SF 86. His failure to provide more corroborating documentation shows lack of financial responsibility and lack of judgment and raises unmitigated questions about Applicant’s reliability, trustworthiness, and ability to protect classified information. See AG ¶ 18. More information about inability to pay debts or documented financial progress is necessary to mitigate security concerns.

I have carefully applied the law, as set forth in Department of Navy v. Egan, 484 U.S. 518 (1988), Exec. Or. 10865, the Directive, and the AGs, to the facts and circumstances in the context of the whole person. Financial considerations concerns are not mitigated. For the reasons stated, I conclude Applicant is not eligible for access to classified information at this time.

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.g: Against Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is not clearly consistent with national interest to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is denied.

_________________________ Mark Harvey Administrative Judge

FOOTNOTES

1 The Defense Office of Hearings and Appeals (DOHA) transmittal letter is dated September 17, 2014, and Applicant’s receipt is dated September 23, 2014. The DOHA transmittal letter informed Applicant that he had 30 days after his receipt to submit information.

2 Some details have not been included in order to protect Applicant’s right to privacy. Specific

3 The source for the information in this paragraph is Applicant’s SOR response. (Item 4)

4 Unless stated otherwise, Applicant’s January 27, 2012 SF 86 is the source for the facts in this paragraph and the next paragraph. (Item 5) 5The Appeal Board has previously explained what constitutes a good-faith effort to repay overdue creditors or otherwise resolve debts: In order to qualify for application of [the good-faith mitigating condition], an applicant must present evidence showing either a good-faith effort to repay overdue creditors or some other good-faith action aimed at resolving the applicant’s debts. The Directive does not define the term “good-faith.” However, the Board has indicated that the concept of good- faith “requires a showing that a person acts in a way that shows reasonableness, prudence, honesty, and adherence to duty or obligation.” Accordingly, an applicant must do more than merely show that he or she relied on a legally available option (such as bankruptcy) in order to claim the benefit of [the good-faith mitigating condition]. (internal citation and footnote omitted) ISCR Case No. 02-30304 at 3 (App. Bd. Apr. 20, 2004) (quoting ISCR Case No. 99-9020 at 5-6 (App. Bd. June 4, 2001)). 6 “Even if Applicant’s financial difficulties initially arose, in whole or in part, due to circumstances outside his [or her] control, the Judge could still consider whether Applicant has since acted in a reasonable manner when dealing with those financial difficulties.” ISCR Case No. 05-11366 at 4 n.9 (App. Bd. Jan. 12, 2007) (citing ISCR Case No. 99-0462 at 4 (App. Bd. May 25, 2000); ISCR Case No. 99-0012 at 4 (App. Bd. Dec. 1, 1999); ISCR Case No. 03-13096 at 4 (App. Bd. Nov. 29, 2005)). A component is whether he or she maintained contact with creditors and attempted to negotiate partial payments to keep debts current.