ISCR Case 12-09735.h1

Case Headnote

ISCR Case No. 12-09735.h1

deniedSep 4, 2013· Hon. Robert E. Coacher· hearing

Summary

A 45-year-old former defense contractor employee was denied a security clearance due to significant financial concerns under Guideline F. The applicant faced over $24 million in delinquent debts and multiple bankruptcy filings. The judge determined that these financial problems were recent and demonstrated poor judgment, leading to the denial.

The Statement of Reasons detailed numerous financial allegations. Resolved debts included a personal secured loan, federal and state tax obligations, and two automobile loans of $15,000 each. Debts included in a Chapter 7 bankruptcy filing encompassed over $9 million in personal loan guarantees for business lines of credit, $75,464 in delinquent credit card accounts, various consumer debts, and a $30,000 personal loan from his father.

However, several debts remained unresolved or inconclusive. These included mortgage debts of $465,000 and a $55,000 home equity line of credit, which resulted in a deficiency after a short sale in April 2012. Additionally, two consumer debts of $600 and $15,000, respectively, were not included in the Chapter 7 bankruptcy and remained unresolved. A judgment of $15,000 was also issued against the applicant on a counterclaim in July 2012. The judge noted that previous bankruptcy petitions had been dismissed, further indicating an inability to resolve financial obligations.

Why the Applicant Was Denied

The applicant has over $24 million in delinquent debts and multiple bankruptcy filings, raising significant financial concerns.
The applicant's financial issues were recent and indicative of poor judgment, failing to demonstrate responsible financial management.
The applicant's previous bankruptcy petitions were dismissed, reflecting an inability to resolve financial obligations.

Conditions Referenced

Disqualifying

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

Mitigating

F.20(b)rejectedConditions Largely Beyond the Person's ControlWhile some conditions were beyond the applicant's control, he made conscious decisions to finance high-risk ventures.
F.20(c)rejectedReceived or Is Receiving CounselingThe only evidence of counseling was related to bankruptcy, which does not constitute a good-faith effort to repay debts.
F.20(d)rejectedGood-faith Effort to Repay Overdue CreditorsSeeking bankruptcy relief is not considered a good-faith effort to repay debts.

Key Rule Quoted

“Any doubt concerning personnel being considered for access to classified information will be resolved in favor of national security.”

Procedural Posture

SOR issuedJan 3, 2013
Answer filedJan 25, 2013
Hearing heldJul 30, 2013
Decision dateSep 4, 2013

Cite For

Financial Considerations Under Guideline F
Impact of Multiple Bankruptcy Filings on Security Clearance Eligibility
Importance of Demonstrating Responsible Financial Management for Security Clearance Applicants

Editorial summary generated for research. Not legal advice; not a prediction. Verify against the full decision before relying on any quoted language.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	a personal secured loan that is included in the Chapter 7 bankruptcy. Applicant also offered documentation from the creditor establishing that the loan is current and has never been in a delinquent status. This debt is resolved.	For Applicant	Personal Loan Debt	Admitted	—	—	—
1.b	for a mortgage debts and a home equity line of credit on Applicant’s personal residence. The mortgage was $465,000 and the home equity loan was $55,000. He stopped making payments on these loans in 2010 based upon his attorney’s advice. Ultimately the residence was sold through a short sale in April 2012. A deficiency resulted from the sale and Applicant believed he received IRS Forms 1099 for the cancellation of the debts. No documentation was provided to show the status of these debts. These debts are not included in the Chapter 7 bankruptcy. The evidence is inconclusive as to whether these debts are resolved. $520,000	Against Applicant	Mortgage or Home Loan Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	federal and state tax obligations. Applicant provided documentation showing that he settled the state tax debt and that he owed nothing on the federal tax debt. These debts are resolved.	Against Applicant	Tax Unpaid	Denied	—	—	—
1.d	federal and state tax obligations. Applicant provided documentation showing that he settled the state tax debt and that he owed nothing on the federal tax debt. These debts are resolved.	For Applicant	Tax Unpaid	Admitted	—	—	—
1.e	federal and state tax obligations. Applicant provided documentation showing that he settled the state tax debt and that he owed nothing on the federal tax debt. These debts are resolved.	For Applicant	Tax Unpaid	Admitted	—	—	—
1.f	the personal loan guarantees Applicant made for the businesses lines of credit he received in the amount of over nine million dollars. These are included in his Chapter 7 bankruptcy. $9,000,000	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.g	the personal loan guarantees Applicant made for the businesses lines of credit he received in the amount of over nine million dollars. These are included in his Chapter 7 bankruptcy. $9,000,000	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.h	the personal loan guarantees Applicant made for the businesses lines of credit he received in the amount of over nine million dollars. These are included in his Chapter 7 bankruptcy. $9,000,000	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.i	delinquent credit card accounts ($75,464) that Applicant used in order to support his businesses after his lines of credit were stopped. He allocated about 90 percent of this debt to his businesses and the remaining 10 percent was for personal use. These are all included in the Chapter 7 bankruptcy. $75,464	For Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.j	a consumer debt that is also included in the bankruptcy. $248	For Applicant	Unspecified Financial	Admitted	—	—	—
1.k	consumer debts ($685 and $338) and both have been included in the Chapter 7 bankruptcy. $1,023	For Applicant	Unspecified Financial	Admitted	—	—	—
1.l	consumer debts ($685 and $338) and both have been included in the Chapter 7 bankruptcy. $1,023	For Applicant	Unspecified Financial	Admitted	—	—	—
1.m	a personal loan ($30,000) from Applicant’s father. Applicant stated that his father is not seeking to collect on the loan, but it was included in the Chapter 7 bankruptcy. $30,000	For Applicant	Personal Loan Debt	Admitted	—	—	—
1.n	for an automobile loan ($15,000). Applicant paid this loan and offered a copy of a lien-free title as proof. Applicant does not know about the debt alleged at SOR ¶ 1.u ($600). It was not included in the Chapter 7 bankruptcy and is unresolved. $15,000	For Applicant	Auto Loan Debt	Admitted	—	—	—
1.o	not included in the Chapter 7 bankruptcy and is unresolved. $600	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.p	affiliated with the defunct businesses Applicant created. He testified that none of these businesses have any assets. He signed personal guarantees for these loans, and thus they are duplicate debts as alleged in the SOR.	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.q	affiliated with the defunct businesses Applicant created. He testified that none of these businesses have any assets. He signed personal guarantees for these loans, and thus they are duplicate debts as alleged in the SOR.	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.r	affiliated with the defunct businesses Applicant created. He testified that none of these businesses have any assets. He signed personal guarantees for these loans, and thus they are duplicate debts as alleged in the SOR.	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.s	affiliated with the defunct businesses Applicant created. He testified that none of these businesses have any assets. He signed personal guarantees for these loans, and thus they are duplicate debts as alleged in the SOR.	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.t	for an automobile loan ($15,000). Applicant paid this loan and offered a copy of a lien-free title as proof. $15,000	For Applicant	Auto Loan Debt	Admitted	—	—	—
1.u	not included in the Chapter 7 bankruptcy and is unresolved. $600	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.v	affiliated with the defunct businesses Applicant created. He testified that none of these businesses have any assets. He signed personal guarantees for these loans, and thus they are duplicate debts as alleged in the SOR.	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.w	affiliated with the defunct businesses Applicant created. He testified that none of these businesses have any assets. He signed personal guarantees for these loans, and thus they are duplicate debts as alleged in the SOR.	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.x	affiliated with the defunct businesses Applicant created. He testified that none of these businesses have any assets. He signed personal guarantees for these loans, and thus they are duplicate debts as alleged in the SOR.	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.y	affiliated with the defunct businesses Applicant created. He testified that none of these businesses have any assets. He signed personal guarantees for these loans, and thus they are duplicate debts as alleged in the SOR.	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.z	affiliated with the defunct businesses Applicant created. He testified that none of these businesses have any assets. He signed personal guarantees for these loans, and thus they are duplicate debts as alleged in the SOR.	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.aa	affiliated with the defunct businesses Applicant created. He testified that none of these businesses have any assets. He signed personal guarantees for these loans, and thus they are duplicate debts as alleged in the SOR.	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.bb	affiliated with the defunct businesses Applicant created. He testified that none of these businesses have any assets. He signed personal guarantees for these loans, and thus they are duplicate debts as alleged in the SOR.	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.cc	affiliated with the defunct businesses Applicant created. He testified that none of these businesses have any assets. He signed personal guarantees for these loans, and thus they are duplicate debts as alleged in the SOR.	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.dd	affiliated with the defunct businesses Applicant created. He testified that none of these businesses have any assets. He signed personal guarantees for these loans, and thus they are duplicate debts as alleged in the SOR.	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.ee	affiliated with the defunct businesses Applicant created. He testified that none of these businesses have any assets. He signed personal guarantees for these loans, and thus they are duplicate debts as alleged in the SOR.	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.ff	affiliated with the defunct businesses Applicant created. He testified that none of these businesses have any assets. He signed personal guarantees for these loans, and thus they are duplicate debts as alleged in the SOR.	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.gg	affiliated with the defunct businesses Applicant created. He testified that none of these businesses have any assets. He signed personal guarantees for these loans, and thus they are duplicate debts as alleged in the SOR.	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.hh	affiliated with the defunct businesses Applicant created. He testified that none of these businesses have any assets. He signed personal guarantees for these loans, and thus they are duplicate debts as alleged in the SOR.	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.ii–1.nn	6 sub-charges — specific text not stated in this decision (against the applicant).	Against Applicant			—	—	—
1.oo	a judgment was issued against Applicant on a counterclaim in the amount of $15,000 (the judgment alleged in amended SOR ¶ 1.oo) by order dated July 3, 2012. $15,000	Against Applicant	Judgment Against Applicant	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

a personal secured loan that is included in the Chapter 7 bankruptcy. Applicant also offered documentation from the creditor establishing that the loan is current and has never been in a delinquent status. This debt is resolved.

For Applicant

Personal Loan Debt

Admitted

—

1.b

for a mortgage debts and a home equity line of credit on Applicant’s personal residence. The mortgage was $465,000 and the home equity loan was $55,000. He stopped making payments on these loans in 2010 based upon his attorney’s advice. Ultimately the residence was sold through a short sale in April 2012. A deficiency resulted from the sale and Applicant believed he received IRS Forms 1099 for the cancellation of the debts. No documentation was provided to show the status of these debts. These debts are not included in the Chapter 7 bankruptcy. The evidence is inconclusive as to whether these debts are resolved.

$520,000

Against Applicant

Mortgage or Home Loan Debt

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.c

federal and state tax obligations. Applicant provided documentation showing that he settled the state tax debt and that he owed nothing on the federal tax debt. These debts are resolved.

Against Applicant

Tax Unpaid

Denied

—

1.d

federal and state tax obligations. Applicant provided documentation showing that he settled the state tax debt and that he owed nothing on the federal tax debt. These debts are resolved.

For Applicant

Tax Unpaid

Admitted

—

1.e

federal and state tax obligations. Applicant provided documentation showing that he settled the state tax debt and that he owed nothing on the federal tax debt. These debts are resolved.

For Applicant

Tax Unpaid

Admitted

—

1.f

the personal loan guarantees Applicant made for the businesses lines of credit he received in the amount of over nine million dollars. These are included in his Chapter 7 bankruptcy.

$9,000,000

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.g

the personal loan guarantees Applicant made for the businesses lines of credit he received in the amount of over nine million dollars. These are included in his Chapter 7 bankruptcy.

$9,000,000

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.h

the personal loan guarantees Applicant made for the businesses lines of credit he received in the amount of over nine million dollars. These are included in his Chapter 7 bankruptcy.

$9,000,000

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.i

delinquent credit card accounts ($75,464) that Applicant used in order to support his businesses after his lines of credit were stopped. He allocated about 90 percent of this debt to his businesses and the remaining 10 percent was for personal use. These are all included in the Chapter 7 bankruptcy.

$75,464

For Applicant

Credit Card Debt

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.j

a consumer debt that is also included in the bankruptcy.

$248

For Applicant

Unspecified Financial

Admitted

—

1.k

consumer debts ($685 and $338) and both have been included in the Chapter 7 bankruptcy.

$1,023

For Applicant

Unspecified Financial

Admitted

—

1.l

consumer debts ($685 and $338) and both have been included in the Chapter 7 bankruptcy.

$1,023

For Applicant

Unspecified Financial

Admitted

—

1.m

a personal loan ($30,000) from Applicant’s father. Applicant stated that his father is not seeking to collect on the loan, but it was included in the Chapter 7 bankruptcy.

$30,000

For Applicant

Personal Loan Debt

Admitted

—

1.n

for an automobile loan ($15,000). Applicant paid this loan and offered a copy of a lien-free title as proof. Applicant does not know about the debt alleged at SOR ¶ 1.u ($600). It was not included in the Chapter 7 bankruptcy and is unresolved.

$15,000

For Applicant

Auto Loan Debt

Admitted

—

1.o

not included in the Chapter 7 bankruptcy and is unresolved.

$600

Against Applicant

Unspecified Financial

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.p

affiliated with the defunct businesses Applicant created. He testified that none of these businesses have any assets. He signed personal guarantees for these loans, and thus they are duplicate debts as alleged in the SOR.

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.q

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.r

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.s

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.t

for an automobile loan ($15,000). Applicant paid this loan and offered a copy of a lien-free title as proof.

$15,000

For Applicant

Auto Loan Debt

Admitted

—

1.u

not included in the Chapter 7 bankruptcy and is unresolved.

$600

Against Applicant

Unspecified Financial

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.v

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.w

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.x

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.y

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.z

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.aa

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.bb

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.cc

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.dd

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.ee

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.ff

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.gg

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.hh

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.ii–1.nn

6 sub-charges — specific text not stated in this decision (against the applicant).

Against Applicant

—

1.oo

a judgment was issued against Applicant on a counterclaim in the amount of $15,000 (the judgment alleged in amended SOR ¶ 1.oo) by order dated July 3, 2012.

$15,000

Against Applicant

Judgment Against Applicant

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

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Case Profile

Summary

Why the Applicant Was Denied

Conditions Referenced

Key Rule Quoted

Procedural Posture

Cite For

Full decision

DEFENSE OFFICE OF HEARINGS AND APPEALS

HEARING

APPEARANCES

STATEMENT OF CASE

FINDINGS OF FACT

POLICIES

ANALYSIS

WHOLE PERSON CONCEPT

FORMAL FINDINGS

CONCLUSION

FOOTNOTES