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ISCR Case 12-08081.h1 — CASE

ISCR Case 12-08081.h1denied

Case Headnote

ISCR Case No. 12-08081.h1

deniedJun 18, 2015· Hon. Nichole L. Noel· hearing

Summary

The applicant, a 39-year-old federal contractor, sought a security clearance but was denied due to unresolved delinquent debts totaling approximately $39,000. Despite claims of financial hardship stemming from periods of unemployment, the applicant failed to demonstrate a good-faith effort to resolve his debts or file necessary tax returns, leading to concerns about his reliability and trustworthiness.

Under Guideline F (Financial Considerations), the Statement of Reasons alleged the following: Applicant owes approximately $4,186 on a state tax lien (1.a). Applicant owes approximately $30,594 on a student loan (1.b). Applicant owes approximately $538 on a collection account (1.c). Applicant owes approximately $506 on a collection account (1.d). Applicant owes approximately $1,346 on a judgment obtained by a creditor in 2006 (1.e). Applicant owes approximately $1,055 on a collection account, which is reported as both current and delinquent (1.j).

The judge denied the clearance. The government raised disqualifying conditions F.3, F.1. The decision turned on the following: The applicant has approximately $39,000 in unresolved delinquent debt; The applicant failed to provide evidence of a good-faith effort to resolve his debts; The applicant did not file federal and state income tax returns for multiple years.

Why the Applicant Was Denied

The applicant has approximately $39,000 in unresolved delinquent debt.
The applicant failed to provide evidence of a good-faith effort to resolve his debts.
The applicant did not file federal and state income tax returns for multiple years.

Conditions Referenced

Disqualifying

F.3raisedInability to Satisfy Debts
F.1raisedFinancial Irresponsibility

Key Rule Quoted

“Unresolved delinquent debt is a serious security concern because failure to satisfy debts 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.”
— AG ¶ 18

Procedural Posture

SOR issuedDec 3, 2014
Answer filed—Applicant requested a decision without a hearing.
Hearing held—Decision made based on written record.
Decision dateJun 18, 2015

Cite For

Denial of Security Clearance Due to Unresolved Financial Obligations
Failure to Demonstrate Financial Responsibility Under Guideline F
Impact of Financial Issues on Security Clearance Eligibility

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 unresolved delinquent debts totaling approximately $39,000, which raised significant security concerns under Guideline F. Although the applicant admitted to some debts, he failed to provide sufficient evidence of efforts to mitigate these financial issues, leading to a decision against his eligibility for a security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant owes approximately $4,186 on a state tax lien. $4,186	Against Applicant	Tax Unpaid	Admitted	—	—	—
1.b	Applicant owes approximately $30,594 on a student loan. $30,594	Against Applicant	Student Loan Debt	Admitted	—	—	—
1.c	Applicant owes approximately $538 on a collection account. $538	Against Applicant	Unspecified Financial	Denied	—	—	—
1.d	Applicant owes approximately $506 on a collection account. $506	Against Applicant	Unspecified Financial	Denied	—	—	—
1.e	Applicant owes approximately $1,346 on a judgment obtained by a creditor in 2006. $1,346	Against Applicant	Judgment Against Applicant	Denied	—	—	—
1.f–1.i	4 sub-charges — specific text not stated in this decision (against the applicant). (low confidence)	Against Applicant			—	—	—
1.j	Applicant owes approximately $1,055 on a collection account, which is reported as both current and delinquent. $1,055	For Applicant	Unspecified Financial	Admitted	—	—	—
1.k	specific text not stated in this decision	Against Applicant	Unspecified Financial	Unknown	—	—	—

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. 12-08081 ) Applicant for Security Clearance )

For Government: Alison O’Connell, Esq., Department Counsel For Applicant: Pro se

06/18/2015 ______________

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 financial considerations concerns raised by his $39,000 of unresolved delinquent debt. Clearance is denied.

Statement of the Case

On December 3, 2014, the DOD issued a Statement of Reasons (SOR) detailing security concerns under the financial considerations guideline.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 23, 2015. A complete copy of the file of relevant material (FORM) and the Directive was provided to Applicant, who received the FORM on April 2, 2015. He did not respond. The case was assigned to me on May 26, 2015. I admitted the items attached to the FORM as Government’s Exhibits (GE) 1 through 9, without objection.

FINDINGS OF FACT

Applicant, 39, has worked for a federal contractor since February 2012. He is seeking a security clearance for the first time. On his security clearance application, submitted in March 2012, Applicant disclosed his failure to file state income tax returns between 2008 and 2010. He also disclosed several delinquent accounts. The ensuing investigation confirmed Applicant’s failure to file federal and state income tax returns during the aforementioned years and his indebtedness to 11 creditors for approximately $39,000.3

Applicant claims that his financial problems began when he and his wife experienced periods of unemployment. After quitting a job that he felt required too much travel in April 2010, Applicant was unemployed for eight months. He was also unemployed for three months in 2008 and two months in 2005. Applicant returned to full-time employment in November 2010 and has since been employed without interruption. The record does not indicate specific dates for Applicant’s wife’s unemployment. Applicant attributes his failure to file his federal and state income tax returns between 2008 and 2010 to not having all of the W-2 forms necessary to do so.4

Applicant admits all but two of the debts alleged in the SOR, specifically SOR ¶¶ 1.d ($506) and 1.i ($1,346). Applicant claims that the accounts alleged in SOR ¶¶ 1.c ($538) and 1.dare duplicates. Although the accounts have the same date of last payment, they were opened under different account numbers, three years apart. Applicant also denies the account alleged in SOR ¶ 1.i, a judgment obtained by a creditor in 2006, stating that he is unfamiliar with the account and did not attend any court proceedings regarding a delinquent debt. He was made aware of the debt during his April 2012 subject interview. Applicant informed the investigator that he would investigate the debt and resolve it if the account proved to be a legitimate debt. Applicant has not provided any documentation to establish a legitimate basis for disputing that he is not responsible for the alleged debt. Although Applicant admitted that he owes the debt alleged in SOR ¶ 1.j ($1,055), the account is simultaneously reported as being current and delinquent on GE 7, the most recent credit report in the record. Because of the conflicting information, I resolve the conflict in Applicant’s favor.5 The remaining debts alleged in the SOR remain unresolved. Applicant claims to be making payments toward the debts alleged in SOR ¶¶ 1.a and 1.bfor a state tax lien and a student loan, respectively. However, he did not provide any documentation to corroborate his claims. Nor are his claims supported by the record. The most recent credit report in the record, GE 7, dated March 2015, shows no change in the account balance for the state tax lien alleged in SOR ¶ 1.a ($4,186), and an increase in the account balance for the debt alleged in SOR ¶ 1.b, now $32,408 from the $30,594 alleged in the SOR. In his answer to the SOR, Applicant states that he intends to repay his delinquent accounts. Not only did Applicant fail to produce any evidence of debt repayment, he also failed to produce any evidence to indicate that his outstanding federal and state income tax returns have been filed.6

According to a personal financial statement Applicant completed in March 2014, he and his wife are employed. After paying their recurring expenses and consumer credit accounts, which totals approximately $11,000 in addition to the delinquent debts alleged in the SOR, they have disposable income of approximately $23.7

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.”8

The SOR alleges that Applicant owes approximately $39,000 in delinquent debt. The allegations are supported by the record, establishing the Government’s prima facie case.9 Applicant has demonstrated an inability to pay his debts as well as a history of not doing so.10 Although Applicant’s financial problems may have been caused by events beyond his control, it is not enough to mitigate the financial considerations concerns. Since obtaining steady employment in 2008, Applicant has not acted responsibly to resolve his delinquent debt. He has not shown a good-faith effort to reduce his indebtedness or that his finances are under control. Applicant has not received financial counseling. While Applicant may well be able to meet his recurring monthly living expenses, this does not resolve the security concerns raised by his history of financial problems or unresolved delinquent debts. Applicant’s financial problems are ongoing and unresolved. None of the financial 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. In requesting an administrative determination, Applicant chose to rely on the written record. In doing so, however, he failed to submit sufficient information or evidence to supplement the record with relevant and material facts regarding his circumstances, mitigate the financial concerns, or establish evidence of financial rehabilitation. The security concerns raised in the SOR remain. Following Egan11 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.i, and 1.k: Against Applicant

Subparagraph 1.j. For 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 4. 3 GE 5. 4 GE 4, 6. 5 GE 6-9. 6 GE 4-9. 7 GE 6. 8 AG ¶ 18. 9 GE 4-9. 10 AG ¶¶ 19(a) and (c). 11 Navy v. Egan, 484 U.S. 518 (1988).