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ISCR Case 12-06756.h1 — CASE

ISCR Case 12-06756.h1denied

Case Headnote

ISCR Case No. 12-06756.h1

deniedJun 26, 2015· Hon. Nichole L. Noel· hearing

Summary

A 54-year-old federal contractor was denied a security clearance due to concerns under Guideline E (Personal Conduct) and Guideline F (Financial Considerations). The applicant faced allegations of owing approximately $23,400 across 22 delinquent accounts, including specific debts of $2,842, $1,400, $1,261, $30, and $1,117. The applicant denied one debt as a duplicate and claimed another ($2,811) was satisfied via military retirement pay garnishment.

A key issue was the applicant's failure to disclose any derogatory information on his March 2012 security clearance application. The judge found that the applicant did not demonstrate a good-faith effort to resolve his debts and provided conflicting, non-credible explanations for these omissions.

Ultimately, the applicant failed to mitigate security concerns regarding the unresolved delinquent debt and the lack of disclosure on his application, leading to the denial of his security clearance.

Why the Applicant Was Denied

The applicant failed to mitigate security concerns related to unresolved delinquent debt totaling $23,400.
The applicant did not disclose any derogatory financial information on his security clearance application, raising questions about his reliability and trustworthiness.
The applicant provided conflicting explanations for his omissions, which were deemed not credible.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedFinancial Considerations
AG ¶ 15raisedPersonal Conduct

Key Rule Quoted

“Any doubt concerning personnel being considered for access to classified information will be resolved in favor of national security.”
— AG ¶ 2(b)

Procedural Posture

SOR issuedOct 28, 2014
Answer filed—Applicant requested a decision without a hearing.
Hearing held—No hearing; decision made based on written submissions.
Decision dateJun 26, 2015

Cite For

Failure to Disclose Financial Issues on Security Clearance Applications Under Guideline F
Inability to Mitigate Financial Concerns Under Guideline E
Importance of Full Disclosure in Security Clearance Applications

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 E (Personal Conduct) · descriptive summary of a decided case

Posture: Decision on RecordDecided: denied

The judge found against the applicant on personal conduct allegations, specifically regarding a failure to disclose derogatory information on his security clearance application. The applicant's lack of candor raised significant concerns about his reliability and trustworthiness, leading to a denial of his security clearance.

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
2.a	Applicant deliberately failed to disclose any derogatory information on his March 2012 security clearance application.	Against Applicant	Omission or Failure to DiscloseFOUND DELIBERATE	—	Denied	—	—	—

Descriptive standardized rendering of a decided public case (Guideline E). 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 had approximately $23,400 in unresolved delinquent debt, which he failed to disclose on his security clearance application. Despite admitting to 18 of the 22 debts, the applicant did not provide sufficient evidence of financial reform or a good-faith effort to repay his creditors, leading to a denial of his security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant owes approximately $23,400 on 22 delinquent accounts. $23,400	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.b	Applicant owes approximately $23,400 on 22 delinquent accounts. $23,400	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.c	Applicant owes approximately $23,400 on 22 delinquent accounts. $23,400	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.d	Applicant owes approximately $23,400 on 22 delinquent accounts. $23,400	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.e	Applicant owes approximately $23,400 on 22 delinquent accounts. $23,400	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.f	Applicant owes $2,842. $2,842	Against Applicant	Unspecified Financial	Denied	—	—	—
1.g	Applicant owes approximately $23,400 on 22 delinquent accounts. $23,400	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.h	Applicant owes $1,400. $1,400	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.i	Applicant owes $1,261. $1,261	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.j	Applicant owes approximately $23,400 on 22 delinquent accounts. $23,400	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.k	Applicant owes approximately $23,400 on 22 delinquent accounts. $23,400	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.l	Applicant owes $30. $30	Against Applicant	Unspecified Financial	Denied	—	—	—
1.m	Applicant owes approximately $23,400 on 22 delinquent accounts. $23,400	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.n	Applicant owes $1,117. $1,117	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.o	Applicant owes approximately $23,400 on 22 delinquent accounts. $23,400	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.p	Applicant owes approximately $23,400 on 22 delinquent accounts. $23,400	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.q	Applicant owes approximately $23,400 on 22 delinquent accounts. $23,400	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.r	Applicant denies the debt alleged in SOR ¶ 1.r as a duplicate of ¶ 1.k. $85	Against Applicant	Unspecified Financial	Denied	—	—	—
1.s	Applicant owes approximately $23,400 on 22 delinquent accounts. $23,400	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.t	Applicant owes approximately $23,400 on 22 delinquent accounts. $23,400	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.u	Applicant denies the debt alleged in SOR ¶ 1.u ($2,811), claiming that the debt has been satisfied through the garnishment of his military retirement pay. $2,811	Against Applicant	Unspecified Financial	Denied	—	—	—
1.v	Applicant owes approximately $23,400 on 22 delinquent accounts. $23,400	Against Applicant	Unspecified Financial	Admitted	—	—	—

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. 12-06756 ) Applicant for Security Clearance )

For Government: Braden M. Murphy, Esq., Department Counsel For Applicant: Pro se

06/26/2015 ______________

STATEMENT OF CASE

______________

NOEL, Nichole L., Administrative Judge:

Applicant contests the Department of Defense’s (DOD) intent to deny his eligibility for a security clearance. Applicant failed to mitigate the security concerns raised by his $23,400 in unresolved delinquent debt and his failure to disclose the delinquent accounts on his security clearance application. Clearance is denied.

Statement of the Case

On October 28, 2014, the DOD issued a Statement of Reasons (SOR) detailing security concerns under the financial considerations and personal conduct guidelines.1 DOD adjudicators were unable to find that it is clearly consistent with the national interest to grant Applicant’s security clearance. Applicant answered the SOR and requested a decision without a hearing.2 The Government submitted its written case on March 16, 2015. A complete copy of the file of relevant material (FORM) and the Directive was provided to Applicant who received the FORM on March 27, 2015. He responded timely. Without objection, the documents appended to the FORM are admitted as Government’s Exhibits (GE) 1 through 7 and the documents submitted by Applicant are admitted as Applicant’s Exhibits (AE) A through C. The case was assigned to me on June 1, 2015.

FINDINGS OF FACT

Applicant, 54, has worked for a federal contractor since May 2011. Before accepting his current position, Applicant worked as a store clerk in a small hardware store. He previously held a security clearance between 1980 and 2001 when he served in the U.S Air Force. Applicant submitted a security clearance application in March 2012. The ensuing investigation revealed that Applicant owes approximately $23,400 on 22 delinquent accounts.3

Applicant did not disclose any derogatory financial information on his security clearance application in response to the question seeking information about delinquencies involving routine accounts. In his Answer to the SOR, Applicant claims that he was in a bad place when he completed the application and that he answered the questions on the application to the best of his ability. At the time Applicant completed the form, he had not received any mail from his creditors at his new address. He did not believe that he had any charged-off accounts or any accounts that were greater than 120 days past due. He also stated that any discrepancies were cleared up in his subject interview with a background investigator. However, in his April 2012 subject interview, Applicant informed the investigator that he listed 11 delinquent accounts on the original copy of the application he completed. When the application was returned to him for corrections, the delinquent accounts were deleted.4

According to Applicant, his financial problems began during the dissolution of his second marriage in May 2011. During the divorce proceedings, Applicant relocated to another state for his current job. Applicant explains that in addition to his relocation and living expenses, he continued to pay the mortgage on the home he previously shared with his ex-wife, as required by the terms of their divorce. On his own, he also assumed responsibility for the college expenses of their three children. His finances were strained by the increase in financial obligations and a decrease in income caused by a $900 reduction in Applicant’s disability benefit from the Department of Veterans Affairs. Applicant’s financial problems worsened after he remarried in July 2011. Before their marriage, Applicant’s third wife worked in the medical field, earning $65,000 annually. Shortly after their marriage, she began experiencing a series of health issues that rendered her disabled and unable to work. As a result, Applicant assumed responsibility for her financial obligations. Applicant prioritized the needs of his family, their recurring living expenses, and his secured debt. He allowed unsecured debts to fall delinquent.5

Applicant admits 18 of the 22 debts alleged in the SOR. He denies the debts alleged in SOR ¶¶ 1.f ($2,842) and 1.l ($30) because he is not familiar with them. Applicant discussed the debts in his subject interview in April 2012. Since then, he has not provided any documentation to establish a legitimate basis for disputing that he is not responsible for the alleged debt. Applicant denies the debt alleged in SOR ¶ 1.ras a duplicate of ¶ 1.k. Although the account balances reported on the credit reports in the record are the same, $85, the accounts show different creditors, different account numbers, and different activity dates. Applicant also denies the debt alleged in SOR ¶ 1.u ($2,811), claiming that the debt has been satisfied through the garnishment of his military retirement pay. He did not provide any documentation to corroborate his claim.6

As for the 18 debts Applicant admits, he has only taken steps to address the student loan debts alleged in SOR ¶¶ 1.a through 1.c. Applicant rehabilitated the loans and began making payments under a new payment plan in April 2015. In 2014, the debts alleged in SOR ¶¶ 1.h ($1,400), 1.i ($1,261), and 1.n ($1,117), were forgiven by their creditors.7 Applicant properly reported the forgiven debt as income on his 2014 federal income tax return and paid the necessary taxes. The remaining debts are unresolved.8

Applicant intends to pay his debts and avers that he will do so in time. In his response to the FORM, Applicant identified a number of changes in cash flow that will allow him to do so. His wife was awarded Social Security disability benefits, which allowed them to pay off her car loan. The garnishment on Applicant’s military retirement pay will be satisfied in the upcoming months. Applicant believes these changes will make $850 to $1,000 available for the payment of his delinquent accounts. Also, Applicant’s claim against the Veteran’s Administration regarding the reduction of his disability benefits was resolved in his favor. He expects to receive a lump-sum payment of $4,000 in retroactive pay.9

POLICIES

When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines. 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.

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

Unresolved delinquent debt is a serious security concern because failure to “satisfy debts [or] 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.”10

The SOR alleges that Applicant owes approximately $23,400 in delinquent debt. The allegations are supported by the record, establishing the Government’s prima facie case.11 Applicant has demonstrated an inability to pay his debts as well as a history of not doing so.12 Although Applicant’s financial problems may have been caused by events beyond his control, he has not proven that he acted responsibly given his circumstances. Nor does the evidence establish that Applicant has made a good-faith effort to repay his creditors. Applicant has taken active steps to resolve only 3 of the 24 delinquent accounts in the SOR, the student loan accounts alleged in ¶¶ 1.a through 1.c. With only two payments on these debts, Applicant has not established a positive history of repayment or actual debt reduction. Furthermore, the resolution of SOR ¶ 1.u by garnishment (which is not supported by the record), and the cancellation of debts alleged in SOR ¶¶ 1.h, 1.i. and 1.nwere resolved, albeit in Applicant’s favor, by action of the respective creditors.

Applicant has stated his intentions to pay his debts in the future. However, this promise, no matter how genuine, does not mitigate the security concern. Applicant failed to establish a track record of financial reform or rehabilitation. Accordingly, none of the financial considerations mitigating conditions apply.

Personal Conduct

Conduct involving a lack of candor or dishonesty, in particular, a failure to provide truthful and candid answers during the security process raises questions about an individual’s reliability, trustworthiness, and ability to protect classified information.13 The SOR alleges that Applicant deliberately failed to disclose any derogatory information on his March 2012 security clearance application. Applicant denies the allegation. Proof of omission, standing alone, does not establish or prove an applicant’s intent or state of mind when he completed the application. Applicant has provided conflicting explanations for his omissions. Neither is credible. Applicant was admittedly in a bad place emotionally and financially when he completed his security clearance application. It is likely that securing better paying employment was a priority for him at the time. This provides sufficient circumstantial evidence of Applicant’s intent to withhold information from the government.14

Applicant’s deliberate falsification is not a minor offense. Applicant held a security clearance for the duration of his 21-year career in the military. He undoubtedly completed numerous security clearance applications and should have known the importance of full disclosure. He has not acknowledged or taken responsibility for his behavior. None of the personal conduct mitigating conditions apply.

Based on the record, doubts remain about Applicant’s ability to properly handle and safeguard classified information. Ultimately, Applicant failed to meet his burdens of production and persuasion. The security concerns raised in the SOR remain. Following Egan15 and the clearly-consistent standard, I resolve these doubts in favor of protecting national security.

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, Financial Considerations: AGAINST APPLICANT

Subparagraphs 1.a – 1.v: Against Applicant

Paragraph 2, Personal Conduct AGAINST APPLICANT

Subparagraph 2.a Against Applicant

CONCLUSION

Based on the record, 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.

________________________ 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 replace the guidelines in Enclosure 2 to the Directive. 2 GE 3. 3 GE 4. 4 GE 3-4, 6. 5 GE 3, 6. 6 GE 3, 5, 7. 7 Applicant also claims that SOR ¶ 1.fwas also forgiven by the creditor. However, none of the account identifiers on the cancellation of debt forms matches that debt or any other alleged in the SOR. 8 AE A - C. 9 GE 3, AE A - C . 10 AG ¶ 18. 11 GE 4-9. 12 AG ¶¶ 19(a) and (c). 13 AG ¶ 15. 14 AG ¶ 16 (a). 15 Navy v. Egan, 484 U.S. 518 (1988).