ISCR Case 14-06150.h1

Case Headnote

ISCR Case No. 14-06150.h1

grantedNov 23, 2015· Hon. Wilford H. Ross· hearing

Summary

A 47-year-old married defense contractor sought to retain his security clearance, which was challenged under Guidelines E (Personal Conduct) and F (Financial Considerations). The Statement of Reasons alleged that the applicant made false statements to the Department of Defense and had two past-due debts totaling approximately $16,738.

Specifically, the applicant was alleged to have denied a $16,648 past-due bank credit card debt, which originated from a small business he ran with his wife between 2002 and 2008. Although the applicant maintained he always made timely payments, he eventually entered a payment arrangement in August 2012, making an initial payment of $927, followed by 24 monthly payments of $396.41. The creditor confirmed the settlement was completed and issued a Form 1099 for $12,752.61 in cancelled debt, which the applicant properly reported on his 2014 tax return. The second alleged debt was a $90 past-due dental bill, which the applicant resolved by paying $4.35 after learning of it during his clearance interview, attributing it to a clerical error.

The judge found that the applicant had resolved both delinquent debts through payment arrangements and demonstrated stable financial circumstances. The applicant provided reasonable, documented explanations for not disclosing the debts on his security questionnaire, and the judge concluded there was no intentional falsification. The applicant's interpretation of his financial situation was deemed reasonable, and his financial issues were mitigated, not affecting his reliability or trustworthiness. The security clearance was GRANTED.

Why the Applicant Prevailed

The applicant resolved his delinquent debts through payment arrangements and demonstrated stable financial circumstances.
The applicant provided reasonable explanations for his failure to disclose debts on his security questionnaire, which were supported by documentation.
The judge found no intentional falsification of the security questionnaire, as the applicant's interpretation of his financial situation was reasonable.

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(a)appliedThe Behavior Happened so Long Ago, Was so Infrequent, or Occurred Under Such Circumstances That It Is Unlikely to Recur
AG ¶ 20(b)appliedThe Conditions That Resulted in the Financial Problem Were Largely Beyond the Person’s Control
AG ¶ 20(c)appliedThere Are Clear Indications That the Problem Is Being Resolved or Is Under Control
AG ¶ 20(d)appliedThe Individual Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts

Key Rule Quoted

“The administrative judge’s over-arching adjudicative goal is a fair, impartial and commonsense decision.”

Procedural Posture

SOR issuedJan 24, 2015
Answer filedFeb 12, 2015
Hearing heldJun 17, 2015
Decision dateNov 23, 2015

Cite For

Mitigation of Financial Issues Under Guideline F
Reasonable Explanations for Failure to Disclose Debts Under Guideline E
Whole-person Concept in Security Clearance Evaluations

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

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
2.a	Applicant made false statements to the Department of Defense during the clearance screening process.	For Applicant	Omission or Failure to DiscloseNOT DELIBERATE	Financial	Admitted	—	(a) prompt, good-faith correction before being confronted (b) omission/refusal followed advice of counsel; later cooperated fully (c) offense is minor, long ago, infrequent, or unique circumstances (d) acknowledged the behavior; counseling/positive steps taken	Claimed Explanation of Omission Credible

Allegation

Finding

Conduct

Concealed Issue

Response

Disqualifying (¶16)

Mitigating applied (¶17)

Mitigation

2.a

Applicant made false statements to the Department of Defense during the clearance screening process.

For Applicant

Omission or Failure to DiscloseNOT DELIBERATE

Financial

Admitted

—

(a) prompt, good-faith correction before being confronted

(b) omission/refusal followed advice of counsel; later cooperated fully

(c) offense is minor, long ago, infrequent, or unique circumstances

(d) acknowledged the behavior; counseling/positive steps taken

Claimed

Explanation of Omission Credible

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant denied that he owed $16,648 for a past-due bank credit card debt. The credit card was used by Applicant in connection with a small business he ran with his wife in the 2002-2008 time frame. The small business had financial issues and eventually closed. Applicant maintains that he always made timely payments on this account, keeping it current, and that it was never in default. Eventually the payments required by the bank became impossible for Applicant to sustain. He made a payment arrangement with this creditor in August 2012. Applicant submitted documentary evidence showing the initial payment of $927 made on August 1, 2012, in fulfillment of this agreement. An additional 24 monthly payments of $396.41 were made, as shown in additional bank records supplied by Applicant. The creditor sent Applicant a letter stating that the settlement had been completed. In addition, in September 2014 the creditor issued Applicant a Form 1099, which indicated that $12,752.61 of the debt was cancelled. Applicant properly included this debt forgiveness on his 2014 tax return. This debt is resolved. $16,648	For Applicant	Credit Card Debt	Denied	—	(d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.b	Applicant denied that he owed $90 for a past-due dental debt. It appears that the debt was the result of a clerical error by the dental provider, and Applicant only became aware of the debt when interviewed for his security clearance. He submitted a statement from the debt collector indicating that the debt was paid in full after a payment of $4.35. This debt is resolved. $90	For Applicant	Utility or Phone Debt	Denied	—	(d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

Applicant denied that he owed $16,648 for a past-due bank credit card debt. The credit card was used by Applicant in connection with a small business he ran with his wife in the 2002-2008 time frame. The small business had financial issues and eventually closed. Applicant maintains that he always made timely payments on this account, keeping it current, and that it was never in default. Eventually the payments required by the bank became impossible for Applicant to sustain. He made a payment arrangement with this creditor in August 2012. Applicant submitted documentary evidence showing the initial payment of $927 made on August 1, 2012, in fulfillment of this agreement. An additional 24 monthly payments of $396.41 were made, as shown in additional bank records supplied by Applicant. The creditor sent Applicant a letter stating that the settlement had been completed. In addition, in September 2014 the creditor issued Applicant a Form 1099, which indicated that $12,752.61 of the debt was cancelled. Applicant properly included this debt forgiveness on his 2014 tax return. This debt is resolved.

$16,648

For Applicant

Credit Card Debt

Denied

—

(d) good-faith effort to repay or otherwise resolve debts

Documented

Debt Paid in Full

1.b

Applicant denied that he owed $90 for a past-due dental debt. It appears that the debt was the result of a clerical error by the dental provider, and Applicant only became aware of the debt when interviewed for his security clearance. He submitted a statement from the debt collector indicating that the debt was paid in full after a payment of $4.35. This debt is resolved.

$90

For Applicant

Utility or Phone Debt

Denied

—

(d) good-faith effort to repay or otherwise resolve debts

Documented

Debt Paid in Full

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Case Profile

Summary

Why the Applicant Prevailed

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