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ISCR Case 14-07065.h1 — CASE

ISCR Case 14-07065.h1granted

Case Headnote

ISCR Case No. 14-07065.h1

grantedJun 14, 2016· Hon. Robert Robinson Gales· hearing

Summary

A 44-year-old vice-president of operations and co-owner of a defense contractor was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The applicant faced allegations regarding nine delinquent accounts, including a $2,503 line of credit settled for $2,047.24, a $38,540 secured second mortgage with $25,797 charged off and settled after a residence sale, and multiple credit card accounts with balances ranging from $924 to $14,302, all of which were charged off and subsequently settled for various amounts between $554.87 and $3,545.

One department store charge account with an unpaid balance of $1,723 was charged off but not resolved, with the applicant stating it was closed with a zero balance. The financial difficulties were attributed to economic downturns and her husband's inconsistent income.

The applicant successfully mitigated these concerns by demonstrating significant improvement in her financial situation, resolving eight of the nine alleged delinquent accounts. She provided evidence of good-faith efforts to repay debts and received financial counseling. The security clearance was granted.

Why the Applicant Prevailed

The applicant demonstrated a significant improvement in her financial situation, resolving multiple delinquent accounts.
The financial difficulties were largely due to external factors beyond the applicant's control, such as economic downturns and her husband's inconsistent income.
The applicant provided evidence of good-faith efforts to repay debts and received financial counseling.

Conditions Referenced

Disqualifying

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

Mitigating

AG ¶ 20(a)appliedBehavior Happened Long Ago or Infrequently
AG ¶ 20(b)appliedConditions Largely Beyond the Person's Control
AG ¶ 20(c)appliedReceived Counseling and Indications of Resolution
AG ¶ 20(d)appliedGood-faith Effort to Repay Creditors

Key Rule Quoted

“Eligibility for a security clearance and access to classified information is granted.”

Procedural Posture

SOR issuedJun 20, 2015
Answer filedJul 15, 2015
Hearing heldOct 27, 2015
Decision dateJun 14, 2016

Cite For

Mitigation of Financial Concerns Under Guideline F
Impact of External Economic Factors on Financial Stability
Good-faith Efforts in Debt Resolution

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: granted

The judge found that the applicant mitigated the financial concerns under Guideline F, resulting in a decision to grant eligibility for a security clearance. All alleged debts were resolved, and the applicant demonstrated improved financial stability and responsibility.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	This is a line of credit with a credit limit of $2,500 and an unpaid balance of $2,503 that was charged off and eventually settled with a payment of $2,047.24 on October 7, 2015. The account has been resolved. $2,503	For Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Debt Paid in Full
1.b	This is a secured second mortgage account with a high credit of $38,540 of which $25,797 was charged off and eventually settled in full on May 2, 2015, after the residence was sold in April 2015, before the SOR was issued. The account has been resolved. $25,797	For Applicant	Mortgage or Home Loan Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Debt Paid in Full
1.c	This is a credit card account with a high credit and unpaid balance of $924 that was charged off and eventually settled with a payment of $554.87 on October 13, 2015. The account has been resolved. $924	For Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Debt Paid in Full
1.d	This is a credit card account opened during Applicant’s first marriage with a credit limit of $5,400 and an unpaid balance of $5,662 that was charged off and eventually settled with a payment of $3,397.62 on October 13, 2015. The account has been resolved. $5,662	For Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Debt Paid in Full
1.e	This is a credit card account with a credit limit of $13,300 and an unpaid balance of $14,302 that was charged off and eventually settled with a payment of $3,200 on October 9, 2015. The account has been resolved. $14,302	For Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Debt Paid in Full
1.f	This is a credit card account with a credit limit of $4,500 and an unpaid balance of $5,647 that was charged off and eventually settled with a payment of $1,500 on October 9, 2015. The account has been resolved. $5,647	For Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Debt Paid in Full
1.g	This is a bank credit card account with a credit limit of $11,700 and an unpaid balance of $11,813 that was charged off and sold to a debt purchaser and eventually settled with a payment of $3,545 on October 2, 2015. The account has been resolved. $11,813	For Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Debt Paid in Full
1.h	This is a department store charge account with an unpaid balance of $1,723 that was charged off. Although Applicant initially proffered evidence that the account had been paid, she changed her explanation to state that the account had been closed in such a manner that payments could not be accepted, and that the creditor considered the account closed with a zero balance. The account has not been resolved. $1,723	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	Claimed Debt Disputed with Creditor
1.i	This is a credit card account with a credit limit of $2,900 and an unpaid balance of $3,116 that was charged off and eventually settled with a payment of $1,246.55 on September 18, 2015. The account has been resolved. $3,116	For Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Debt Paid in Full

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: ) ) ---1 ) ISCR Case No. 14-07065 ) Applicant for Security Clearance )

For Government: Richard Stevens, Esquire, Department Counsel For Applicant: Alan V. Edmunds, Esquire

06/14/2016 ______________

STATEMENT OF CASE

______________

GALES, Robert Robinson, Administrative Judge:

Applicant mitigated the security concerns regarding financial considerations. Eligibility for a security clearance and access to classified information is granted.

Statement of the Case

On May 29, 2014, Applicant applied for a security clearance and submitted an Electronic Questionnaire for Investigations Processing (e-QIP) version of a Security Clearance Application.2 On June 20, 2015, the Department of Defense (DOD) Consolidated Adjudications Facility (CAF) issued an SOR to her, under Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended and modified; DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended and modified (Directive); and the Adjudicative Guidelines for Determining Eligibility For Access to Classified Information (December 29, 2005) (AG) applicable to all adjudications and other determinations made under the Directive, effective September 1, 2006. The SOR alleged security concerns under Guideline F (Financial Considerations), and detailed reasons why the DOD adjudicators were unable to find that it is clearly consistent with the national interest to grant or continue a security clearance for Applicant. The SOR recommended referral to an administrative judge to determine whether a clearance should be granted, continued, denied, or revoked.

Applicant received the SOR on June 30, 2015. On July 15, 2015, she responded to the SOR and requested a hearing before an administrative judge. Department Counsel indicated the Government was prepared to proceed on September 10, 2015. The case was assigned to me on September 18, 2015. A Notice of Hearing was issued on September 28, 2015. I convened the hearing as scheduled on October 27, 2015.

During the hearing, 4 Government exhibits (GE) 1, and 3 through 5, and 15 Applicant exhibits (AE) A through O, were admitted into evidence without objection.3 Applicant and one witness testified. The transcript (Tr.) was received on November 6, 2015. I kept the record open to enable Applicant to supplement it. No further documents were submitted. The record closed on November 3, 2015.

FINDINGS OF FACT

In her Answer to the SOR, Applicant admitted all but one (¶ 1.b.) of the factual allegations pertaining to financial considerations. Applicant’s answers are incorporated herein as findings of fact. After a complete and thorough review of the evidence in the record, and upon due consideration of same, I make the following additional findings of fact:

Applicant is a 44-year-old employee of a defense contractor. She has been the vice-president of operations and co-owner of the company since September 2005.4 She previously held positions with other commercial entities as a loan officer, realtor, and mortgage broker. As a state merit scholar and the recipient of scholarships and financial aid, Applicant earned a bachelor of arts degree in communications in 1993.5 She has never served with the U.S. military.6 She has never held a security clearance.7 Applicant was married in August 1996 and divorced in April 1999. She married her current husband in November 2003.8 She has a son born in 2005 and a daughter born in 2006.9 Financial Considerations10

In 2006, Applicant was a licensed realtor and mortgage broker earning a good part-time salary that paid the bills related to her businesses and supplemented her husband’s income as a government contractor. Unfortunately for her husband, his employer paid him inconsistently and bounced checks worth an entire month’s salary. As the national economy fell on hard times and the real estate market collapsed, Applicant’s source of income decreased to zero. As mortgage restrictions increased, it became more difficult for her to qualify her customer base for new mortgage loans. Her efforts to qualify as a Federal Housing Administration (FHA) lender were denied because she was a sole proprietor. Without a successful real estate closing for months, in 2008, Applicant closed her business and paid off as many of her accumulated bills as possible. She prioritized her accounts, and she paid her mortgage and utilities and then her vendors, including the companies and appraisers with whom she had been associated. The remaining resources were used to address existing credit card debts and routine household expenses. In 2009, Applicant and her husband separated for a brief period, and debt payments ceased. They reconciled and Applicant joined her husband and began to work full-time and things improved financially. Prior to 2010, Applicant’s credit score was in the mid-700’s, and although she was stretched financially, she met all obligations and was not incurring new debt.

In 2012, Hurricane Sandy (unofficially known as "Superstorm Sandy”) struck the east coast of the United States. It was the deadliest and most destructive hurricane of the 2012 Atlantic hurricane season, and the second-costliest hurricane in United States history. While Applicant’s residence was spared extensive damage, the damage caused to the company that was their only source of income resulted in a work shut-down for one week. It eventually resulted in the contract being terminated over nine months early. That event also caused a setback in Applicant’s efforts to resolve additional debts. The budget sequestration in 2013 - automatic spending cuts to United States federal government spending in particular categories of outlays - went into effect in March 2013. For eight months, Applicant and her husband had very little income outside of her husband’s monthly disability check from the U.S. Department of Veterans Affairs (VA) for $450 or $500, plus any money he could generate by repairing computers. They struggled to meet their financial obligations by juggling their bills, but were in constant contact with their creditors. Nevertheless, accounts became delinquent, and many were charged off. Despite it all, Applicant never considered bankruptcy as an option. Repayment agreements were finally established for some of the accounts. Applicant and her husband sold their residence and relocated into an apartment in another state. With their company returning to profitability in 2014 (she estimated they made $100,000 in 2014, and projected an estimated $130,000 to $140,000 for 2015), Applicant started addressing her remaining delinquent accounts.11

The SOR identified nine purportedly delinquent debts that had been placed for collection or charged off, as reflected by the June 2014 credit report,12 the November 2014 credit report,13 and the June 2015 credit report.14 Those debts (several of which were no longer legally collectable because the statute of limitations had already expired), totaling approximately $71,487, and their respective current status, according to the credit reports, other evidence submitted by the Government and Applicant, and Applicant’s comments regarding same, are described below:

(SOR ¶ 1.a.): This is a line of credit with a credit limit of $2,500 and an unpaid balance of $2,503 that was charged off and eventually settled with a payment of $2,047.24 on October 7, 2015.15 The account has been resolved.

(SOR ¶ 1.b.): This is a secured second mortgage account with a high credit of $38,540 of which $25,797 was charged off and eventually settled in full on May 2, 2015, after the residence was sold in April 2015, before the SOR was issued.16 The account has been resolved.

(SOR ¶ 1.c.): This is a credit card account with a high credit and unpaid balance of $924 that was charged off and eventually settled with a payment of $554.87 on October 13, 2015.17 The account has been resolved.

(SOR ¶ 1.d.): This is a credit card account opened during Applicant’s first marriage with a credit limit of $5,400 and an unpaid balance of $5,662 that was charged off and eventually settled with a payment of $3,397.62 on October 13, 2015.18 The account has been resolved. (SOR ¶ 1.e.): This is a credit card account with a credit limit of $13,300 and an unpaid balance of $14,302 that was charged off and eventually settled with a payment of $3,200 on October 9, 2015.19 The account has been resolved.

(SOR ¶ 1.f.): This is a credit card account with a credit limit of $4,500 and an unpaid balance of $5,647 that was charged off and eventually settled with a payment of $1,500 on October 9, 2015.20 The account has been resolved.

(SOR ¶ 1.g.): This is a bank credit card account with a credit limit of $11,700 and an unpaid balance of $11,813 that was charged off and sold to a debt purchaser and eventually settled with a payment of $3,545 on October 2, 2015.21 The account has been resolved.

(SOR ¶ 1.h.): This is a department store charge account with an unpaid balance of $1,723 that was charged off. Although Applicant initially proffered evidence that the account had been paid, she changed her explanation to state that the account had been closed in such a manner that payments could not be accepted, and that the creditor considered the account closed with a zero balance. She submitted a document from a collection agency claiming that an account identified in the document had a zero balance and was closed. Applicant’s explanations are in error. The identity of the bank that issued the department store charge account (Citibank) and the bank identified in the document (Chase) are different. The original account numbers are different. There is no evidence to reflect that the accounts were affiliated in any way. Applicant also had a delinquent account with Chase that was not alleged in the SOR, but which was listed in her credit reports. The two accounts are not the same.22 While Applicant may have intended to resolve this account, the account in the SOR has not been resolved.

(SOR ¶ 1.i.): This is a credit card account with a credit limit of $2,900 and an unpaid balance of $3,116 that was charged off and eventually settled with a payment of $1,246.55 on September 18, 2015.23 The account has been resolved.

In October 2015, Applicant submitted a Personal Financial Statement that listed their combined net monthly income as $6,475; monthly expenses of $4,140; two credit card payments of $475; and a monthly remainder of $1,860 available for discretionary saving or spending.24 She received financial counseling on setting financial goals and creating a budget in October 2015.25 She has made substantial process in resolving her delinquent accounts, including at least one that was not alleged in the SOR. It appears that Applicant’s financial status has improved significantly, and that her financial problems are finally under control.

Character References

Various professional and personal individuals have known Applicant for a number of years and they characterize her as a diligent worker, committed mother, responsible, trustworthy, reliable, generous, compassionate, kind, honest, great moral character, ethical, helpful, loyal, dedicated, and possessing integrity.26

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.”27 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. The President has authorized the Secretary of Defense or his designee to grant an applicant eligibility for access to classified information “only upon a finding that it is clearly consistent with the national interest to do so.”28

When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the AG. In addition to brief introductory explanations for each guideline, the AG list potentially disqualifying conditions and mitigating conditions, which are used in evaluating an applicant’s eligibility for access to classified information.

An administrative judge need not view the guidelines as inflexible, ironclad rules of law. Instead, acknowledging the complexities of human behavior, these guidelines are applied in conjunction with the factors listed in the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. 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 meaningful decision. In the decision-making process, facts must be established by “substantial evidence.”29 The Government initially has the burden of producing evidence to establish a potentially disqualifying condition under the Directive, and has the burden of establishing controverted facts alleged in the SOR. Once the Government has produced substantial evidence of a disqualifying condition, under Directive ¶ E3.1.15, the applicant has the burden of persuasion to present evidence in refutation, explanation, extenuation or mitigation, sufficient to overcome the doubts raised by the Government’s case. The burden of disproving a mitigating condition never shifts to the Government.30

A person who seeks access to classified information enters into a fiduciary relationship with the Government predicated upon trust and confidence. This relationship transcends normal duty hours and endures throughout off-duty hours as well. It is because of this special relationship that the Government must be able to repose a high degree of trust and confidence in those individuals to whom it grants access to classified information. 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 as to potential, rather than actual, risk of compromise of classified information. Furthermore, “security clearance determinations should err, if they must, on the side of denials.”31

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.”32 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 as to Applicant’s allegiance, loyalty, or patriotism. It is merely an indication the Applicant has or has not met the strict guidelines the President and the Secretary of Defense have established for issuing a clearance. In reaching this decision, I have drawn only those conclusions that are reasonable, logical, and based on the evidence contained in the record. Likewise, I have avoided drawing inferences grounded on mere speculation or conjecture.

ANALYSIS

Guideline F, Financial Considerations

The security concern relating to the guideline for Financial Considerations is set out in AG ¶ 18: 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. . . .

The guideline notes several conditions that could raise security concerns. Under AG ¶ 19(a), an “inability or unwillingness to satisfy debts” is potentially disqualifying. Similarly, under AG ¶ 19(c), a “history of not meeting financial obligations” may raise security concerns. Applicant’s financial problems initially arose in 2008, increased in 2012, and substantially increased in 2013. Accounts became delinquent and they were placed for collection and charged off. AG ¶¶ 19(a) and 19(c) apply.

The guideline also includes examples of conditions that could mitigate security concerns arising from financial difficulties. Under AG ¶ 20(a), the disqualifying condition may be mitigated where “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.” Also, under AG ¶ 20(b), financial security concerns may be mitigated where “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.” Evidence that “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” is potentially mitigating under AG ¶ 20(c). Similarly, AG ¶ 20(d) applies where the evidence shows “the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts.”33

AG ¶¶ 20(a), 20(b), 20(c), and 20(d) all apply. Applicant’s financial problems were not caused by her personal frivolous or irresponsible spending. Also, it does not appear that she spent beyond her means. Instead, her financial problems initially occurred when the national economy and the associated housing market collapsed, events that were largely beyond her control. Her income from her businesses as a licensed realtor and mortgage broker essentially evaporated. She closed those businesses, prioritized her bills, and paid off as many of her accumulated debts as possible. Her brief separation from her husband caused additional stress. The climate events of 2012 – Superstorm Sandy – caused devastation to the business in which she and her husband worked. There was a work shut-down for one week, followed by the early termination of their only contract, again a situation that was largely beyond her control. The political and economic events of 2013 – the budget sequestration – shut down their business, and for eight months, they managed to financially survive with very little income aside from her husband’s monthly modest disability check. Applicant maintained contact with her creditors.

Finally, the financial situation improved when the company returned to profitability in 2014 and 2015. Of the nine delinquent accounts alleged in the SOR, one was resolved before the SOR was issued, and seven others were resolved shortly before the hearing was held. One delinquent SOR-related account was apparently overlooked when Applicant resolved another delinquent account that was not alleged in the SOR. As to the remaining delinquent account, once the error of her actions is brought to her attention by this decision, I am confident that she will turn her attention to resolving that relatively minor debt ($1,723) as well. It is significant that although the statute of limitations had apparently expired for most of the accounts, meaning that there was no legal enforcement mechanism to require that Applicant pay those debts, she chose to do so. It appears that Applicant’s financial status has improved significantly, and that her financial problems are finally under control. She appears to have acted prudently and responsibly. Applicant’s actions, under the circumstances confronting her, no longer cast doubt on her current reliability, trustworthiness, and good judgment.34

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. Moreover, I have evaluated the various aspects of this case in light of the totality of the record evidence and have not merely performed a piecemeal analysis.35

There is some evidence against mitigating Applicant’s conduct. Applicant failed to maintain her normal monthly payments to a number of her accounts, and, over a several-year period, at least nine of them became delinquent and were placed for collection and charged-off.

The mitigating evidence under the whole-person concept is more substantial. There is no evidence of misuse of information technology systems, mishandling protected information, substance abuse, or criminal conduct. Applicant was a licensed realtor and mortgage broker earning a good part-time salary in 2006. However, a series of events that were largely beyond her control occurred in 2008 (the collapse of the national economy and the real estate market), in 2009 (her separation from her spouse), 2012 (Superstorm Sandy), and 2013 (sequestration), all of which contributed to her financial difficulties. Applicant did not ignore her delinquent debts. Instead, when she was financially able, she entered into repayment agreements with her creditors, and paid off or otherwise resolved all but one of her SOR-related debts, as well as one debt that was not listed in the SOR. There are no other delinquent debts. Considering the current profitability of the company, there are clear indications that Applicant’s financial problems are under control.

The Appeal Board has addressed a key element in the whole-person analysis in financial cases stating:

In evaluating Guideline F cases, the Board has previously noted that the concept of “‘meaningful track record’ necessarily includes evidence of actual debt reduction through payment of debts.” However, an applicant is not required, as a matter of law, to establish that he [or she] has paid off each and every debt listed in the SOR. All that is required is that an applicant demonstrate that he [or she] has “. . . established a plan to resolve his [or her] financial problems and taken significant actions to implement that plan.” The Judge can reasonably consider the entirety of an applicant’s financial situation and his [or her] actions in evaluating the extent to which that applicant’s plan for the reduction of his outstanding indebtedness is credible and realistic. See Directive ¶ E2.2(a) (“Available, reliable information about the person, past and present, favorable and unfavorable, should be considered in reaching a determination.”) There is no requirement that a plan provide for payments on all outstanding debts simultaneously. Rather, a reasonable plan (and concomitant conduct) may provide for the payment of such debts one at a time. Likewise, there is no requirement that the first debts actually paid in furtherance of a reasonable debt plan be the ones listed in the SOR. 36

Applicant has demonstrated a “meaningful track record” of debt reduction and elimination efforts, and she started to do so before the SOR was issued. Overall, the evidence leaves me without questions and doubts as to Applicant’s eligibility and suitability for a security clearance. For all of these reasons, I conclude Applicant has mitigated the security concerns arising from her financial considerations. See AG ¶ 2(a)(1) through AG ¶ 2(a)(9).

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: FOR APPLICANT

Subparagraphs 1.a through 1.i: For Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is clearly consistent with the national interest to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is granted.

________________________ ROBERT ROBINSON GALES Administrative Judge

FOOTNOTES

1 It should be noted that the Statement of Reasons (SOR) was issued using Applicant’s marital last name. Since she is no longer married to that husband, and has not been since their divorce in 1996, she prefers to be known by her maiden name. Hence, the caption of this Decision differs from the SOR. 2 GE 1 (e-QIP, dated May 29, 2014). 3 GE 2 for Identification (Personal Subject Interview, dated June 19, 2014) was withdrawn by Department Counsel. Tr. at 77. 4 GE 1, supra note 2, at 9; Tr. at 23, 38. The company derives government contracts under several set-aside designations under §8(a) of the Business Development Program of the U.S. Small Business Administration as a service-disabled-veteran set-aside and social disadvantaged-set-aside. See Tr. at 40. 5 AE K (Biography, undated), at 1.

6 GE 1, supra note 2, at 13.

7 GE 1, supra note 2, at 30. 8 GE 1, supra note 2, at 15-17. 9 GE 1, supra note 2, at 22-23. 10 General source information pertaining to the financial accounts discussed below can be found in the following exhibits: GE 3 (Combined Experian, TransUnion, and Equifax Credit Report, dated June 10, 2014); GE 4 (Equifax Credit Report, dated November 7, 2014); GE 5 (Equifax Credit Report, dated June 8, 2015); GE 1, supra note 2; Applicant’s Answer to the SOR, dated July 15, 2015. More recent information can be found in the exhibits furnished and individually identified. 11 Applicant’s Answer to the SOR, supra note 10, at 1-2; AE J (Letter, dated November 9, 2012); AE K, supra note 5, at 1-2; Tr. at 22-46, 63-64. In early 2016, Applicant’s company secured about $3.5 million worth of government contracts which she estimated would generate a net profit of $200,000. See Tr. at 68. 12 GE 3, supra note 10. 13 GE 4, supra note 10. 14 GE 5, supra note 10. 15 AE A (Letter, dated October 7, 2015). 16 AE B (Letter, dated May 2, 2015); Applicant’s Answer to the SOR, supra note 10, at 1; Tr. at 46, 62. 17 AE M (Letter, dated October 23, 2015); Tr. at 46. 18 AE N (Letter, dated October 23, 2015); Tr. at 47. 19 AE D (Letter, dated October 5, 2015); AE D (Cancelled Check, dated October 9, 2015); Tr. at 47. 20 AE C (Letter, dated October 5, 2015); AE C (Cancelled Check, dated October 9, 2015); Tr. at 47. 21 AE E (Letter, dated October 2, 2015); Tr. at 47. 22 AE G (Letter, dated October 5, 2015); Tr. at 48; GE 3, supra note 10, at 9-10; GE 4, supra note 10, at 2-3; GE 5, supra note 10, at 4-5. DSBN, the issuer of the department store charge account card is a subsidiary of Citibank. 23 AE F (Letter, dated September 18, 2015); Tr. at 48. 24 AE I (Personal Financial Statement, dated October 17, 2015). 25 AE H (Certificate, dated October 21, 2015). 26 AE L (Character References, various dates as well as undated); AE O (Character References, both dated October 22, 2015). 27 Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). 28 Exec. Or. 10865, Safeguarding Classified Information within Industry § 2 (Feb. 20, 1960), as amended and modified. 29 “Substantial evidence [is] such relevant evidence as a reasonable mind might accept as adequate to support a conclusion in light of all contrary evidence in the record.” ISCR Case No. 04-11463 at 2 (App. Bd. Aug. 4, 2006) (citing Directive ¶ E3.1.32.1). “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). 30 See ISCR Case No. 02-31154 at 5 (App. Bd. Sep. 22, 2005). 31 Egan, 484 U.S. at 531.

32 See Exec. Or. 10865 § 7. 33 The 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 [or statute of limitations]) 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)). 34 See ISCR Case No. 09-08533 at 3-4 (App. Bd. Oct. 6, 2010). 35 See U.S. v. Bottone, 365 F.2d 389, 392 (2d Cir. 1966); See also ISCR Case No. 03-22861 at 2-3 (App. Bd. Jun. 2, 2006). 36 ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008) (internal citations omitted).