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ISCR Case 12-11298.h1 — CASE

ISCR Case 12-11298.h1denied

Case Headnote

ISCR Case No. 12-11298.h1

deniedDec 31, 2015· Hon. John Grattan Metz, Jr.· hearing

Summary

The applicant, a 32-year-old machine operator employed as a defense contractor, faced security concerns under Guideline F due to significant delinquent debts totaling over $34,000. Despite some debts being satisfied, the applicant failed to demonstrate responsible financial management or efforts to address his financial issues, leading to the denial of his security clearance.

Under Guideline F (Financial Considerations), the Statement of Reasons alleged the following: Applicant has an automobile repossession for $16,778 (1.a). Applicant has two unpaid home electronics accounts totaling $1,610 (1.b). Applicant has an unpaid telephone account for $590 (1.c). Applicant has an unpaid home electronics account for $38 (1.g). Applicant has two education loans totaling $3,500, which are not delinquent (1.h). Applicant has two education loans totaling $4,000, which are not delinquent (1.i).

The judge denied the clearance. The government raised disqualifying conditions AG ¶ 19 (a), AG ¶ 19 (c). The decision turned on the following: The applicant has significant delinquent debts totaling over $34,000, which he has not addressed; The applicant has not received any credit or financial counseling and lacks a budget; The applicant has not made contact with creditors regarding his debts.

Why the Applicant Was Denied

The applicant has significant delinquent debts totaling over $34,000, which he has not addressed.
The applicant has not received any credit or financial counseling and lacks a budget.
The applicant has not made contact with creditors regarding 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

“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.”
— Department of the Navy v. Egan, 484 U.S. 518 (1988)

Procedural Posture

SOR issuedMay 2, 2015
Answer filed—
Hearing heldSep 30, 2015
Decision dateDec 31, 2015

Cite For

Failure to Demonstrate Financial Responsibility Under Guideline F
Impact of Unresolved Delinquent Debts on Security Clearance Eligibility
Lack of Financial Counseling as a Factor in Clearance Denial

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 multiple financial concerns under Guideline F, including several delinquent debts totaling over $34,000, which the applicant admitted. Despite some debts being resolved, the applicant's overall financial management was deemed inadequate, leading to a denial of the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant has an automobile repossession for $16,778. $16,778	Against Applicant	Auto Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	Applicant has two unpaid home electronics accounts totaling $1,610. $1,610	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	Applicant has an unpaid telephone account for $590. $590	Against Applicant	Utility or Phone Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d–1.f	3 sub-charges — specific text not stated in this decision (against the applicant). (low confidence)	Against Applicant			—	—	—
1.g	Applicant has an unpaid home electronics account for $38. $38	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.h	Applicant has two education loans totaling $3,500, which are not delinquent. $3,500	For Applicant	Student Loan Debt	Admitted	—	—	—
1.i	Applicant has two education loans totaling $4,000, which are not delinquent. $4,000	For Applicant	Student Loan Debt	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: ) ) XXXXXX, Xxxxx Xxxxx ) ISCR Case No. 12-11298 ) Applicant for Security Clearance )

For Government: Benjamin R. Dorsey, Esquire, Department Counsel For Applicant: Pro Se

12/31/2015 ______________

STATEMENT OF CASE

______________

METZ, John Grattan, Jr., Administrative Judge:

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

On 2 May 2015, the Department of Defense (DoD) issued an 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 17 August 2015, and I convened a hearing 30 September 2015. DOHA received the transcript (Tr.) 8 October 2015.

FINDINGS OF FACT

Applicant admitted the SOR allegations, except for SOR 1.d-1.f, which he denied, claiming that the debts had been paid. He is a 32-year-old machine operator employed as a defense contractor since September 2010. He was previously employed with other defense contractors in similar positions from November 2006 to September 2010 and September 2003 to November 2006. He has been continuously employed since July 2001, albeit in lower paying jobs. He seeks to retain the security clearance he obtained in 2008, which he requires for building access, but not in the performance of his job.

The SOR alleges, and Government exhibits (GE 2-3), establish nine delinquent debts totaling over $34,000. Applicant admits six debts totaling nearly $27,000: one automobile repossession (SOR 1.a for $16,778), two unpaid home electronics accounts (SOR 1.bfor $1,610 and SOR 1.gfor $38), an unpaid telephone account (SOR 1.cfor $590), and two unpaid education loans (SOR 1.hfor $3,500 and SOR 1.i for $4,000). Applicant reported the repossession on his May 2012 clearance application (GE 1).

Applicant’s financial problems really relate to the fact that he and his wife do not make enough money to comfortably manage their monthly obligations. They married in April 2007 and experienced some marital problems in 2008-2009 that eventually resulted in the voluntary repossession of an automobile (Tr. 29-30). They live in a home owned by his parents. About two years ago, Applicant took a pay cut at his job, when the contract he was working on expired and the contract he was moved to did not pay as much. He recently convinced his father to lower their rent. Their finances were also tight while his wife was in school and not working. She is now working and together they make $57,000 annually. However, they have received no credit or financial counseling and have no budget (Tr. 47). They basically live paycheck to paycheck. He estimates they might have $200-400 per week disposable income. In addition to the SOR debts, Applicant is on a repayment plan with the Internal Revenue Service for delinquent taxes (Tr. 44, AE B). Since at least 2007, they file every year but have not withheld enough taxes to pay what is owed. Applicant says they have increased their withholding as much as they think they can, but eating trumps taxes (Tr. 51). Applicant seemed disinterested and unknowledgeable about his finances at hearing. It seems pretty clear that neither he nor his wife are financially sophisticated. Applicant stated that she had three education loans she was paying on. Applicant has not been in contact with any of his creditors, despite the fact that two of his debts are under $600 each. Applicant provided no work or character references, and provided no evidence of community involvement.

Applicant claimed (Answer, Tr. 48) that these debts were discussed during a subject interview for his 2008 clearance. However, the debts were never taken to a hearing, possibly based on Applicant’s assurances that he would address the debts in the near future.

The only potentially bright spot for Applicant appears to be that his educational loans (SOR 1.hfor $3,500 and SOR 1.i for $4,000 ) were improperly alleged to be delinquent. They were delinquent in the past, but Applicant’s November 2014 credit report (GE 3) reflects two current education loans. The figures alleged in the SOR come from loans held by the Government guarantor that were delinquent in the past, but which had been sold or transferred to other lenders. Consequently, I find SOR 1.hand 1.i for Applicant.

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.7

ANALYSIS

The Government established a case for disqualification under Guideline F, and Applicant did not mitigate the security concerns. Applicant has delinquent debt dating back to at least 2008 that he has not addressed.8

The mitigating factors for financial considerations provide little help to Applicant. His financial difficulties are recent and not infrequent, and the stated cause cannot be considered unlikely to recur because living on a tight budget is hard when you take no steps to become better educated about your personal finances. Commonplace occurrences such as Applicant’s pay cut or his wife’s being in school cannot be considered circumstances beyond his control, but even if they could be so considered, Applicant has not been responsible in dealing with his debts. He has had no contact with any of his creditors for several years. He provided no corroboration of the claimed payment of the January 2015 vehicle ticket. The only accounts that he is paying on are his education loans, which were delinquent at one time, but which are now current.11

In addition, Applicant has received no credit or financial counseling. He has no budget. Consequently, it is clear that the problem is not being resolved. Moreover, Applicant has not even credibly stated his intent to resolve his delinquent debt and avoid financial problems in the future. Further, Applicant provided no character or employment evidence to reasonably support a “whole person” analysis in favor of granting his clearance. I conclude Guideline F against Applicant.

FORMAL FINDINGS

Paragraph 1. Guideline F: AGAINST APPLICANT

Subparagraphs a-g: Against Applicant Subparagraphs h-i: For 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

The record consists of the transcript (Tr.), Government exhibits (GE) 1-3, and Applicant exhibits (AE) A-B. AE A and B were timely received post hearing. The record in this case closed 19 October 2015, the day Department Counsel stated no objection to AE B.

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. Applicant submitted AE A, which documented the satisfaction of three judgments. The first judgment, for $799, was paid in March 2013. The judgment was in favor of a local collection agent. The case number on the record of satisfaction exactly matches the case number listed in Applicant’s June 2012 credit report (GE 2). W hile the amount of the judgment is close to the delinquent amount reported by the creditor for SOR 1.e, and both Applicant’s June 2012 and November 2014 credit reports (GE 2, 3 respectively) report that the account was sold to another lender, none of the record evidence connects the original creditor to the collection agent. The second judgment, for nearly $9,200, was paid in January 2011. The judgment was in favor of a local mortgage company. The case number and the judgment amount on the record of satisfaction exactly matches the case number listed in Applicant’s June 2012 credit report, although the credit report lists the debt as a medical debt. In either case, none of the record evidence connects the debts at SOR 1.d-1.f. to the record of satisfaction or the judgment on the credit report (which was reported as satisfied). The third judgment was for a state tax lien, which was not alleged in the SOR.

Applicant claimed (Tr. 39) that the debt was for unpaid magazine subscriptions, but no evidence supports that claim. Careful review of Applicant’s June 2012 and November 2014 credit reports requires me to find that Applicant is not delinquent on this education loan. SOR debt 1.his based on a credit entry in GE 3 from the Government’s education loan guarantor that reflects the high credit for the loan, $3,500. More likely, the amount corresponds to the amount of a loan disbursement. Although the entry reports the account as being delinquent in the past, the entry reports that the account was transferred or sold, and thus reports a zero balance. However, on GE 2, the same creditor reported that although the account had been delinquent in the past, it was current at the time it was transferred to a new lender with a $2,188 balance. GE 2 also contains an entry by a known collection agent for the Government guarantor reporting an account with the same high credit limit as deferred, and thus considered current, although the balance had grown to $4,055. GE 3 contains an entry from another known collection agent for the Government guarantor (the one that services rehabilitated loans) reporting a current account with a $3,000 high credit limit, showing a current balance of $963, with $48 monthly payments. Although Applicant claimed he had no money to pay his education loans (Answer, Tr. 41), he also testified that he had a third education loan that he was paying on, where the balance was about $400 (Tr. 43). Applicant is mistaken in stating he has three education loans. GE 2 and 3 are clear that there are only two loans, each reported twice: once by the Government guarantor and once by the Government collection agent.

Careful review of Applicant’s June 2012 and November 2014 credit reports requires me to find that Applicant is not delinquent on this education loan. SOR debt 1.i is based on a credit entry in GE 3 from the Government’s education loan guarantor of the high credit for the loan, $4,000. Although the entry reports the account as being delinquent in the past, the entry reports that the account was transferred or sold, and thus reports a zero balance. However, on GE 2, the same creditor also reported that although the account had been delinquent in the past, the entry reports that the account was transferred or sold, and thus reports a zero balance. GE 2 also contains an entry by a known collection agent for the Government guarantor reporting an account with the same high credit limit as deferred, and thus considered current, although the balance had grown to $4,635. GE 3 contains an entry from the same collection agent for the Government guarantor reporting a current account with a $4,000 high credit limit, showing a current balance of $4,182, with $59 monthly payments. Although Applicant claimed he had no money to pay his education loans (Answer, Tr. 41), he also testified that he had a third education loan that he was paying on, where the balance was about $400 (Tr. 43). He testified he would start paying on this loan as soon as the smaller loan was paid. Applicant is mistaken in stating he has three education loans. GE 2 and 3 are clear that there are only two loans, each reported twice: once by the Government guarantor and once by the Government collection agent. 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;