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ISCR Case 15-00277.h1 — CASE

ISCR Case 15-00277.h1denied

Case Headnote

ISCR Case No. 15-00277.h1

deniedNov 12, 2015· Hon. Richard A. Cefola· hearing

Summary

A 40-year-old government contractor was denied a security clearance under Guideline F, Financial Considerations, due to significant unresolved debt. The denial stemmed from a foreclosure that resulted in an outstanding obligation of approximately $589,900 to Creditor A.

The Statement of Reasons specifically cited this debt as a disqualifying condition under F.19.a and F.19.c. Despite the applicant's assertion of a strong financial position, he failed to provide any supporting evidence or documentation to mitigate concerns about the substantial past-due amount.

Ultimately, the clearance was denied because the applicant's significant debt remained unresolved, and he did not furnish proof of financial responsibility or mitigation, leaving his claims of financial stability unsubstantiated.

Why the Applicant Was Denied

The applicant has a significant past-due debt of approximately $589,900 due to foreclosure, which remains unresolved.
The applicant failed to provide evidence of financial responsibility or mitigation regarding his debts.
The applicant's claims of being in a strong financial position were unsupported by documentation.

Conditions Referenced

Disqualifying

F.19.araisedInability or Unwillingness to Satisfy Debts
F.19.craisedA History of Not Meeting Financial Obligations

Key Rule Quoted

“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.”

Procedural Posture

SOR issuedMay 22, 2015
Answer filedJun 5, 2015
Hearing held—Applicant represented himself (pro se) and submitted a response to the FORM.
Decision dateNov 12, 2015

Cite For

Significant Unresolved Financial Obligations Under Guideline F
Lack of Supporting Evidence for Financial Claims
Impact of Financial Issues on Security Clearance Eligibility

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 that the applicant had a significant past-due debt of approximately $589,900 due to a foreclosure, which raised security concerns under Guideline F. The applicant's claims of being in a strong financial position were not supported by sufficient evidence, leading to a decision against the applicant regarding financial considerations.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant admits that he is indebted to Creditor A, as the result of the above mentioned foreclosure, in the amount of about $589,900. $589,900	Against Applicant	Mortgage or Home Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—

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: ) ) ) ISCR Case No. 15-00277 ) ) Applicant for Security Clearance )

For Government: Chris Morin, Esquire, Department Counsel For Applicant: Pro se

November 12, 2015

______________

STATEMENT OF CASE

______________

CEFOLA, Richard A., Administrative Judge:

Applicant submitted his Electronic Questionnaires for Investigations Processing (e-QIP) on January 6, 2014. On May 22, 2015, the Department of Defense (DOD) issued a Statement of Reasons (SOR) detailing the security concerns under Guideline F for Applicant. The action was taken under Executive Order 10865, Safeguarding Classified Information Within Industry (February 20, 1960), as amended; Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG), effective within the Department of Defense after September 1, 2006.

Applicant answered the SOR in writing on June 5, 2015, and requested an Administrative Determination by an administrative judge. Department Counsel issued a File of Relevant Material (FORM) on July 23, 2015. Applicant responded to the FORM (Response) on August 17, 2015. Department Counsel had no objection, and the documents are entered into evidence. The case was assigned to me on September 1, 2015. Based upon a review of the pleadings and exhibits, eligibility for access to classified information is denied.

FINDINGS OF FACT

In his Answer to the SOR, dated June 5, 2015, Applicant admitted the factual allegations in Paragraph 1.a. of the SOR, with explanation.

Guideline F- Financial Considerations

Applicant is 40 years old, and has been employed by a government contractor since April of 2012. (Item 3 at pages 5 and 12.) He is applying for a security clearance for the first time. (Item 3 at page 51.) In 2006, Applicant and his spouse “had 7 properties for rental and investment purposes.” (Item 2 at page 2.) The property at issue is an additional eighth investment property. (Id.) With the fall of the housing market in 2008, Applicant was forced “to sell or short sale” his other seven properties, but he lost the eighth property by way of foreclosure.

1.a. Applicant admits that he is indebted to Creditor A, as the result of the above mentioned foreclosure, in the amount of about $589,900. This foreclosure is also evidenced by the Government’s most recent September 2014 credit report. (Item 5 at page 1.) In his Response, Applicant attaches an August 2009 Trustees Deed evidencing the foreclosure. (Response at pages 2–3.) He further avers, “There is no future action that I can take to alleviate this debt.” (Response at page 1.) He avers he is “currently in a very strong financial position,” but submits nothing in support of his averment. Furthermore, Applicant has not submitted an IRS Form 1099, or anything else, showing that this debt has been forgiven by Creditor A. I find that this very substantial debt is still outstanding.

POLICIES

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

These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, these guidelines are applied in conjunction with the factors listed in the adjudicative process. (AG Paragraph 2.) The administrative judge’s over-arching adjudicative goal is a fair, impartial and commonsense decision. According to AG Paragraph 2(c), 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 decision.

The protection of the national security is the paramount consideration. AG Paragraph 2(b) requires that “[a]ny doubt concerning personnel being considered for access to classified information will be resolved in favor of the national security.” 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. Under Directive Paragraph E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive Paragraph E3.1.15, the applicant is responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by applicant or proven by Department Counsel. . . .” The applicant has the ultimate burden of persuasion as to obtaining a favorable security decision.

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. The Government reposes a high degree of trust and confidence in 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 protect or 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.

Section 7 of Executive Order 10865 provides that decisions shall be “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information).

ANALYSIS

Guideline F - Financial Considerations

The security concern relating to the guideline for Financial Considerations is set out in AG Paragraph 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 Subparagraph 19(a), an “inability or unwillingness to satisfy debts@ is potentially disqualifying. Similarly under Subparagraph 19(c), “a history of not meeting financial obligations@ may raise security concerns. Applicant has a significant past-due debt, which he has not yet resolved. I can find no countervailing Mitigating Condition that is applicable here. Under Subparagraph 20(b), the indebtedness may be attributed to “a business downturn” that was beyond his control. However, he has not provided any documentary evidence showing he has “acted responsibly under the circumstances.” Financial Considerations are found against Applicant.

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. Under AG Paragraph 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.

The Administrative Judge should also consider the nine adjudicative process factors listed at AG Paragraph 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.

I considered all of the evidence, including the potentially disqualifying and mitigating conditions surrounding this case. The record evidence leaves me with questions and doubts as to his eligibility and suitability for a security clearance. Applicant has failed to fully respond to the Government’s concerns; and as such, has failed to address the alleged past-due debts. For this reason, I conclude Applicant has not mitigated the security concerns under the whole-person concept arising from his Financial Considerations.

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

Subparagraph 1.a. Against Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is not clearly consistent with the national interest to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is denied.

Richard A. Cefola Administrative Judge