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ISCR Case 15-01217.h1 — CASE

ISCR Case 15-01217.h1granted

Case Headnote

ISCR Case No. 15-01217.h1

grantedApr 21, 2016· Hon. Erin C. Hogan· hearing

Summary

A Department of Defense contractor, a father of four, was granted a security clearance despite concerns under Guideline F (Financial Considerations). The Statement of Reasons cited a mortgage account with a past-due balance of $53,298 and an overall balance of $350,077, along with a $55 cable television account sent to collections. These issues raised disqualifying conditions under Adjudicative Guidelines paragraphs 19(a) and 19(c).

However, the judge applied mitigating conditions under paragraphs 20(a), 20(b), 20(c), and 20(d). The decision to grant the clearance was based on several factors. The applicant's financial difficulties were largely attributed to circumstances beyond his control, specifically periods of unemployment and reduced salary due to sequestration.

Furthermore, the applicant demonstrated a good-faith effort to resolve his debts, including applying for a mortgage loan modification and paying off the minor cable debt. He also maintained current payments on his other financial obligations, indicating responsible financial behavior despite his past challenges.

Why the Applicant Prevailed

The applicant's financial difficulties were primarily due to circumstances beyond his control, including sequestration and periods of unemployment.
The applicant demonstrated a good-faith effort to resolve his financial issues, including applying for a mortgage loan modification and paying off a minor debt.
The applicant maintained current payments on other debts, indicating responsible financial behavior despite past difficulties.

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 or Problem Is Under Control
AG ¶ 20(d)appliedGood-faith Effort to Repay Creditors

Key Rule Quoted

“An applicant is not required to be debt free, but is required to manage his finances in such a way as to meet his financial obligations.”

Procedural Posture

SOR issuedSep 15, 2015
Answer filedNov 8, 2015Requested decision on the record.
Hearing held—
Decision dateApr 21, 2016

Cite For

Mitigating Conditions Under Guideline F Due to Financial Difficulties
Impact of External Economic Factors on Financial Responsibility
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.

Standardized Decision Profile

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

Posture: Decision on RecordDecided: granted

The judge found that the applicant's financial difficulties were primarily due to circumstances beyond his control, including periods of unemployment and a reduction in income. The applicant demonstrated responsible behavior by working towards resolving his debts, including a pending mortgage loan modification and paying off a minor cable television debt. Ultimately, the judge ruled in favor of the applicant on all financial allegations, granting him eligibility for a security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	a mortgage account past due in the amount of $53,298, with an account balance of $350,077 $53,298	For Applicant	Mortgage or Home Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	Claimed Other
1.b	a $55 cable television account placed for collection $55	For Applicant	Utility or Phone Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	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: ) ) [Name Redacted] ) ISCR Case No. 15-01217 ) ) Applicant for Security Clearance )

For Government: Tovah Minster, Esquire, Department Counsel For Applicant: Pro se

04/21/2016 ______________

STATEMENT OF CASE

______________

HOGAN, Erin C., Administrative Judge:

On September 15, 2015, the Department of Defense (DOD) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guideline F, Financial Considerations. 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.

On November 8, 2015, Applicant answered the SOR and requested a decision on the record. Department Counsel issued a File of Relevant Material (FORM) on December 4, 2015. Applicant received the FORM on December 15, 2015. Applicant had 30 days to submit a response to the FORM. He did not submit a response to the FORM. On February 1, 2015, the FORM was forwarded to the Hearing Office and assigned to me on March 1, 2016. Based upon a review of the pleadings, exhibits, and testimony, eligibility for access to classified information is granted.

FINDINGS OF FACT

In his response to the SOR, Applicant admits the SOR allegations. (Item 1)

Applicant is an employee of a DOD contractor seeking to maintain his security clearance. He has worked for his current employer since May 2014. He is married and has four children. (Item 2)

On June 27, 2014, Applicant submitted an Electronic Questionnaire for Investigation Processing (e-QIP). In response to Section 26 – Delinquency Involving Routine Accounts, Applicant listed several delinquent accounts, including a past-due automobile loan, and a past-due mortgage. He mentioned that he has a payment arrangement on the automobile loan and that he was in the process of applying for a loan modification on his mortgage. From 2013 to 2014, Applicant endured two periods of unemployment, which caused these accounts to become delinquent. (Item 3, section 26)

A subsequent background investigation revealed the following delinquent accounts which are alleged in the SOR: a mortgage account past due in the amount of $53,298, with an account balance of $350,077 (SOR ¶ 1.a: Item 4 at 1; Item 5 at 4); and a $55 cable television account placed for collection. (SOR ¶ 1.b: Item 4 at 2; Item 5 at 5).

In his response to the SOR, Applicant states that the sequestration imposed by Congress adversely affected a lot of contractors. In 2012, his salary was initially reduced. A few months later, his position was cut because of the lack of funds. He was unemployed from July 2013 to November 2013, and April 2014 to June 2014. His periods of unemployment adversely affected his ability to pay his mortgage. Applicant was the sole breadwinner. When Applicant found a job, his salary decreased by $100,000. (Item 1)

Applicant is being considered for a position that will increase his income. His wife, a psychologist, is also actively seeking employment in order to help out with expenses. Applicant and his wife have been working with the bank when the first delinquency occurred on their mortgage. They did not purchase a home that they could not afford. They submitted a request for a loan modification in July 2014. It is under consideration. The $55 cable television debt was just overlooked. Applicant provided proof that he paid this debt. (Item 1)

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 must be considered when determining 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. The administrative judge’s overarching adjudicative goal is a fair, impartial and commonsense decision. According to AG ¶ 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 ¶ 2(b) requires that “[a]ny doubt concerning personnel being considered for access to classified information will be resolved in favor of 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.

Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ 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 ¶ 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 disqualifying conditions that could raise security concerns. I find AG ¶19(a) (an inability or unwillingness to satisfy debts) and AG ¶19(c) (a history of not meeting financial obligations) apply to Applicant’s case. Applicant encountered financial problems since 2012. He had difficulty meeting his mortgage payments, resulting in a past-due balance of $53,298. I consider the $55 cable bill to be insignificant and do not give it much weight when assessing Applicant’s financial responsibility.

An individual who is financially irresponsible may also be irresponsible, unconcerned, or careless in their obligations to protect classified information. Behaving irresponsibly in one aspect of life provides an indication of how a person may behave in other aspects of life. A person’s relationship with his creditors is a private matter until evidence is uncovered demonstrating an inability or unwillingness to pay debts under agreed terms. Absent evidence of strong extenuating or mitigating circumstances, an applicant with a history of serious or recurring financial difficulties is in a situation of risk inconsistent with the holding of a security clearance. An applicant is not required to be debt free, but is required to manage his finances in such a way as to meet his financial obligations.

The Government’s substantial evidence and Applicant’s admissions raise security concerns under Guideline F. The burden shifted to Applicant to produce evidence to rebut, explain, extenuate, or mitigate the security concerns. (Directive ¶ E3.1.15) An applicant has the burden of proving a mitigating condition, and the burden of disproving it never shifts to the Government. (See ISCR Case No. 02-31154 at 5 (App. Bd. Sept. 22, 2005))

The guideline also includes examples of conditions that could mitigate security concerns arising from financial difficulties. The following mitigating conditions potentially apply:

AG ¶ 20(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);

AG ¶ 20(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); AG ¶ 20(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);

AG ¶ 20(d) (the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts); and

AG ¶ 20(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).

AG ¶ 20(a) and AG ¶ 20(b) apply because circumstances beyond Applicant’s control adversely affected Applicant’s ability to pay his mortgage payments. The sequestration initiated by Congress resulted in Applicant’s pay being reduced in 2012 and the loss of his job in 2013. He endured two periods of unemployment, four months in 2013 and two months in 2014. It should be noted that aside from the delinquent mortgage account, Applicant appears to be current on all of his other debts. He paid the cable television debt alleged in SOR & 2(b). He is in the process of having his mortgage loan modified. This process can take years. Circumstances beyond Applicant’s control adversely affected his financial situation. He has taken reasonable steps to resolve the problem. Applicant’s situation does not cast doubt on his reliability, trustworthiness, or good judgment.

AG ¶ 20(c) applies because Applicant’s financial situation will be resolved once the mortgage loan modification is approved. AG ¶ 20(d) applies because Applicant demonstrated that he made a good-faith effort to resolve his delinquent accounts. He paid off the cable television account and is working with the bank to obtain a mortgage loan modification. He has several student loans that are in deferment. He has no additional delinquent accounts. AG ¶ 20(e) does not apply to the facts of this case.

Sequestration, a reduction in income, and several periods of unemployment adversely affected Applicant’s financial situation. As a result, his mortgage payments became delinquent. Applicant is attempting to obtain a loan modification. The other delinquent account alleged in the SOR was not paid because of oversight as opposed to an inability to pay. It is paid in full. Applicant is taking sufficient measures to rectify the delinquent mortgage situation. He has no other delinquent accounts.

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 considered that Applicant is a married father of four. I considered his history of working for Department of Defense contractors. I considered the adverse impact sequestration had on Applicant as well as his two periods of unemployment and his reduction in pay. Considering the hardships Applicant has endured over the past few years, it is a testament to Applicant that he maintained payments towards his other debts. The key issue in this case is the delinquent mortgage. Applicant requested a loan modification which is currently pending. He and his wife are looking for better employment opportunities. Should the loan modification not be approved, it is likely Applicant will take steps to resolve his mortgage. He has mitigated the security concerns raised under 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: FOR APPLICANT

Subparagraphs 1.a – 1.b: 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.

_________________ ERIN C. HOGAN Administrative Judge