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ISCR 13-01310.h1: Guideline F security clearance hearing, denied (2014) · CASE

ISCR Case 13-01310.h1denied

Case headnote

ISCR Case No. 13-01310.h1

deniedNov 12, 2014· Hon. Mark W. Harvey· hearing

Summary

A 44-year-old aviation life support equipment technician was denied a security clearance under Guideline F, Financial Considerations, due to significant financial issues. The applicant had 17 delinquent accounts, totaling $102,199. Specific allegations included a 2009 judgment for a voluntary vehicle repossession, a charged-off "vehicle buy back" debt, and multiple medical debts ranging from $52 to $95. Additionally, a 2001 bank judgment for $63,959 resulted from a foreclosure, and another judgment for $1,776 was paid.

Disqualifying conditions under Guideline F were raised, while mitigating conditions were considered. However, the applicant failed to provide sufficient documentation of efforts to resolve his financial problems. Although he acknowledged his debts and planned to file for bankruptcy, this plan was considered speculative and did not demonstrate adequate financial responsibility.

Ultimately, the applicant's substantial financial burden and lack of documented efforts to mitigate his debts led to the denial of his security clearance.

Why the applicant was denied

The applicant had 17 delinquent accounts totaling $102,199, indicating a significant financial burden.
He failed to provide sufficient documentation of efforts to resolve his debts or financial situation.
The applicant's planned bankruptcy was deemed speculative and did not demonstrate financial responsibility.

Conditions referenced

Disqualifying

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

Mitigating

AG ¶ 20(b)rejectedConditions That Resulted in the Financial Problem Were Largely Beyond the Person’s ControlWhile underemployment contributed to financial issues, the applicant did not act responsibly to resolve debts.
AG ¶ 20(d)rejectedThe Individual Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve DebtsThe applicant did not provide evidence of good-faith efforts to resolve debts.

Key rule quoted

“Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines.”

Procedural posture

SOR issuedMar 27, 2014
Answer filedApr 9, 2014Applicant waived his right to a hearing.
Hearing held—
Decision dateNov 12, 2014

Cite for

Denial of Security Clearance Due to Unresolved Financial Issues Under Guideline F
Insufficient Documentation of Financial Responsibility
Speculative Nature of Bankruptcy Plans as a Mitigating Factor

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

From the decision

Facts this decision states, each with the exact sentence it comes from. Descriptive of the record, not an assessment.

Age at decision: 44: “Applicant is a 44-year-old aviation life support equipment (ALSE) technician, who has worked for a defense contractor since September 2011.”
Tenure: ~3 years: “Applicant is a 44-year-old aviation life support equipment (ALSE) technician, who has worked for a defense contractor since September 2011.”
Delinquent debt cited: $102,199 (on a payment plan; bankruptcy filed, not discharged): “Applicant’s statement of reasons (SOR) alleges 17 delinquent, collection, judgment, or charged-off accounts totaling $102,199.”

Standardized Decision Profile

SEAD-4 Guideline F · descriptive summary of a decided case

Posture: Decision on RecordDecided: denied

The applicant faced significant financial concerns due to 17 delinquent, collection, judgment, or charged-off accounts totaling $102,199. The judge ruled against the applicant on all allegations under Guideline F, citing insufficient evidence of financial responsibility and failure to mitigate the debts, despite some admissions of responsibility and a planned bankruptcy.

The sub-allegation breakdown is part of the Professional plan. See what it includes.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation

Descriptive standardized rendering of a decided public case. 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. 13-01310 ) ) Applicant for Security Clearance

For Government: Candace Le’i Garcia, Esquire, Department Counsel For Applicant: Pro se

11/12/2014 __________

STATEMENT OF CASE

__________

HARVEY, Mark, Administrative Judge:

Applicant’s statement of reasons (SOR) alleges 17 delinquent, collection, judgment, or charged-off accounts totaling $102,199. He failed to provide sufficient documentation of his progress resolving his financial problems. Financial considerations concerns are not mitigated. Eligibility for access to classified information is denied.

Statement of the Case

On August 13, 2013, Applicant submitted an Electronic Questionnaires for Investigations Processing (e-QIP) version of a security clearance application (SF 86). (Item 3) On March 27, 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) as revised by the Under Secretary of Defense for Intelligence on August 30, 2006, which became effective on September 1, 2006.

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 April 9, 2014, Applicant responded to the SOR allegations and waived his right to a hearing. (Item 2) A complete copy of the file of relevant material (FORM), dated August 8, 2014, was provided to him on August 25, 2014.1 Applicant did not respond to the FORM. The case was assigned to me on November 3, 2014.

Findings of Fact2

In Applicant’s SOR response, he admitted responsibility for the debts in SOR ¶¶ 1.a-1.nand 1.q.3 He denied knowledge of the debt in SOR ¶ 1.o ($435), and he paid the judgment in SOR ¶ 1.p ($1,776). He explained that he has retained an attorney for his “scheduled bankruptcy.” He planned to file for bankruptcy “in the later part of 2014.” The bankruptcy documentation was not included as part of his SOR response. Applicant’s admissions are accepted as findings of fact.

Applicant is a 44-year-old aviation life support equipment (ALSE) technician, who has worked for a defense contractor since September 2011.4 Previously, he has worked as a National Guard technician and emergency medical technician (EMT). He attended technical colleges and received certifications as an EMT. He served on active duty in the Navy from 1989 to 1996 and in the Army National Guard from 1996 to 2007. He received an honorable discharge. In 2000, he married, and his son was born that same year. In 1992, his stepdaughter was born.

Financial Considerations

Applicant’s credit report and SOR allege 17 delinquent, collection, judgment, or charged-off accounts totaling $102,199. Six medical debts are for less than $100 each: ¶ 1.h ($95); ¶ 1.i ($84); ¶ 1.j ($79); ¶ 1.k ($70); ¶ 1.l ($68); and ¶ 1.n ($52). His three largest debts are described as follows: ¶ 1.q ($63,959) is a bank judgment entered in 2001, which resulted from a foreclosure; ¶ 1.a ($25,439) is a judgment entered in 2009 for the amount owed after the voluntary repossession of two vehicles; and ¶ 1.c ($6,891) is a charged-off “vehicle buy back” debt. (Item 2)

information is available in the cited exhibits.

FOOTNOTES

4 Unless stated otherwise, Applicant’s August 13, 2013 SF 86 is the source for the facts in this Applicant attributed his financial problems to underemployment or unemployment for about 10 months from 2007 to 2008. (Items 3-4) He did not receive the bills for some of the debts on his credit reports. (Items 3-4) There is no evidence of security violations, criminal conduct, use of illegal drugs, or alcohol abuse. He disclosed some financial problems on his August 13, 2013 SF 86. Applicant’s FORM 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 the evidence set forth in this [FORM].” (FORM at 7-8) Applicant did not respond to the FORM. 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 credit report and SOR response. Applicant’s SOR alleges 17 delinquent, collection, judgment, or charged-off accounts totaling $102,199. 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 all 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 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 whether 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. In his SOR response, he denied knowledge of the debt in SOR ¶ 1.o ($435), and he said he paid the debt in SOR ¶ 1.p ($1,776). I credit Applicant with mitigating the debts in SOR ¶¶ 1.o and 1.p. The possibility that his debts will be discharged through bankruptcy is too speculative to establish his financial responsibility. He did not establish that he had filed for bankruptcy, and even if he had, not every person who files for bankruptcy receives a discharge of their unsecured, nonpriority debts. His failure to prove that he has made more substantial steps to resolve his debts shows a lack of judgment and responsibility that weighs against approval of his security clearance. 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. He is a 44- year-old ALSE technician, who has worked for a defense contractor since September 2011. He has also worked as a National Guard technician and EMT. He attended technical colleges and received certifications as an EMT. He honorably served on active duty in the Navy from 1989 to 1996, and in the Army National Guard from 1996 to 2007. Underemployment and unemployment are circumstances beyond his control that contributed to his financial problems. There is no evidence of security violations, criminal conduct, use of illegal drugs, or alcohol abuse. He disclosed some of his financial problems on his August 13, 2013 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 17 delinquent, collection, judgment, or charged-off accounts totaling $102,199. A $63,959 bank judgment was entered in 2001, and a $25,439 judgment was entered in 2009. Six delinquent medical debts were for less than $100 each. He failed to provide sufficient documentation of progress to resolve his financial problems. His failure to provide more corroborating documentation shows lack of financial responsibility and 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. It is well settled that once a concern arises regarding an applicant’s security clearance eligibility, there is a strong presumption against the grant or renewal of a security clearance. See Dorfmont, 913 F. 2dat 1401. Unmitigated financial considerations concerns lead me to conclude that grant of a security clearance to Applicant is not warranted at this time. This decision should not be construed as a determination that Applicant cannot or will not attain the state of reform necessary to justify the award of a security clearance in the future. With more effort towards resolving his past-due debts, and a track record of behavior consistent with his obligations, he may well be able to demonstrate persuasive evidence of his security clearance worthiness. Based on the facts before me and the adjudicative guidelines that I am required to apply, I conclude that it is not clearly consistent with the national interest to grant Applicant security clearance eligibility at this time. 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. 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.n: Against Applicant Subparagraphs 1.o and 1.p: For Applicant Subparagraph 1.q: 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

1 The Defense Office of Hearings and Appeals (DOHA) transmittal letter is dated August 13, 2014, and Applicant’s receipt is dated August 25, 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 2) paragraph. (Item 3) 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.