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ISCR Case 15-01422.h1 — CASE

ISCR Case 15-01422.h1denied

Case Headnote

ISCR Case No. 15-01422.h1

deniedJun 14, 2016· Hon. Roger C. Wesley· hearing

Summary

A 55-year-old engineer for a defense contractor was denied a security clearance under Guideline F (Financial Considerations) due to significant unresolved delinquent debts totaling over $59,000. The Statement of Reasons detailed three specific allegations: a student loan with a past due balance of $28,188, a line-of-credit account charged off with a delinquent balance of $30,172, and another delinquent account with a past due balance of $768, which the applicant claimed was paid.

The decision cited Disqualifying Conditions ¶ 19(a) and ¶ 19(c), indicating a history of not meeting financial obligations and an inability or unwillingness to satisfy debts. While Mitigating Condition ¶ 20(b) was applied, suggesting the conditions were largely beyond the applicant's control, it was not sufficient to overcome the security concerns.

Ultimately, the clearance was denied because the applicant accumulated three delinquent debts exceeding $59,000 that remained unresolved. Furthermore, the applicant failed to provide sufficient documentation to support claims of debt resolution or current status and did not demonstrate responsible actions to address these financial obligations.

Why the Applicant Was Denied

The applicant accumulated three delinquent debts exceeding $59,000, which remain unresolved.
The applicant provided insufficient documentation to support claims of debt resolution and current status.
The applicant did not demonstrate responsible actions to address his financial obligations.

Conditions Referenced

Disqualifying

DC ¶ 19(a)appliedInability or Unwillingness to Satisfy Debts
DC ¶ 19(c)appliedA History of Not Meeting Financial Obligations

Mitigating

MC ¶ 20(b)rejectedConditions That Resulted in the Behavior Were Largely Beyond the Person’s ControlThe applicant failed to provide specific details about the circumstances surrounding his financial difficulties.

Key Rule Quoted

“"Holding a security clearance involves a fiduciary relationship between the Government and the clearance holder."”

Procedural Posture

SOR issuedSep 18, 2015
Answer filedOct 19, 2015Applicant elected to have the case decided on the written record.
Hearing held—
Decision dateJun 14, 2016

Cite For

Denial of Security Clearance Due to Unresolved Financial Obligations
Importance of Documentation in Mitigating Financial Concerns
Impact of Financial Irresponsibility 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 accumulated three delinquent debts exceeding $59,000, with two debts remaining unresolved. While one debt was paid off, the applicant failed to provide sufficient documentation to demonstrate that the other debts were being addressed, leading to a denial of the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant accumulated a delinquent student loan account with a past due balance of $28,188. $28,188	Against Applicant	Student Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	Applicant accumulated a delinquent line-of-credit account with a past due balance of $4,380, which was charged off with a delinquent balance of $30,172. $30,772	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	Applicant accumulated a delinquent account with a past due balance of $768, which he claimed was paid off. $768	For Applicant	Unspecified Financial	Admitted	—	—	—

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. 15-01422 ) ) Applicant for Security Clearance )

For Government: Andrea M. Corrales, Esq., Department Counsel For Applicant: Pro se 06/14/2016 ______________

STATEMENT OF CASE

______________

WESLEY, Roger C., Administrative Judge:

Based upon a review of the pleadings and exhibits, I conclude that Applicant did not mitigate security concerns regarding his finances. Eligibility for access to classified information is denied.

History of the Case

On September 18, 2015, the Department of Defense (DOD) Consolidated Adjudication Facility (CAF) issued a Statement of Reasons (SOR) detailing reasons why DOD adjudicators could not make the the preliminary affirmative determination of eligibility for granting a security clearance, and recommended referral to an administrative judge to determine whether a security clearance should be granted, continued, denied, or revoked. The action was taken under Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the Adjudicative Guidelines (AGs) implemented by the DOD on September 1, 2006. Applicant responded to the SOR on October 19, 2015, and elected to have his case decided on the basis of the written record. Applicant received the Government’s File of Relevant Material (FORM) on January 6, 2016. He had 30 days to submit a documentary response setting forth objections, rebuttal, extenuation, mitigation, or explanation, as appropriate. Applicant did not respond to the FORM.

Summary of Pleadings

Under Guideline F, Applicant allegedly accumulated three delinquent debts exceeding $59,000, respectively. Allegedly, each of the listed delinquent debts remain delinquent.

In his response to the SOR, Applicant admitted each of the listed debts and provided explanations. He claimed he is no longer indebted to the U.S. Department of Education (DOE) since the student loan account was transferred to an entity charged with servicing the DOE student loans. He claimed the current balance on his student loan has been reduced to $28,188, with a last payment in October 2015 for $400. Applicant claimed his creditor 1.bdebt was charged off due to financial hardship (i.e., his wife’s losing her job), but he has continued to make payments on the loan from January 2013 to October 2015, with a most recent payment of $200 in October 2015. And, he claimed his creditor 1.cdebt was paid off in October 2015.

FINDINGS OF FACT

Applicant is a 55-year-old engineer for a defense contractor who seeks a security clearance. The allegations covered in the SOR and admitted by Applicant are adopted as relevant and material findings. Additional findings follow.

Background

Applicant married in August 1981 and has three adult children from this marriage, ages 32, 24, and 23. (Item 3) He earned an associate’s degree in June 1982 and a bachelor’s degree in August 1994. (Item 3) He claimed no military service. Applicant has worked for his current employer since August 1983 as an engineer.

Finances

Between 2013 and 2014, Applicant accumulated three delinquent student loan accounts. (Items 4 and 5) He opened his student loan account in September 2007 and received disbursed loan funds of $27,736. (Items 4 and 5). Applicant’s credit reports document that Applicant was current with his DOE student loan account through March 2012. (Item 5) In March 2012, his student loan account was transferred to an educational servicing arm of the DOE. Records indicate that Applicant was delinquent in his loan account for 120 days or more after making a most recent reported payment in March 2013. Thereafter, the loan was transferred to another lender in August 2013. (Item 5) Applicant claimed to have made 12 timely payments, and a last payment of $400 in October 2015, on his student loan account with his lender. He claimed to have a present balance on his account, which is in current status. However, he provided no documented proof of his payment and current account status. (Item 2)

Applicant’s claim that his student loan referenced in subparagraph 1.a of the SOR is in current status at this time is too lacking in documentary corroboration to be accepted. Credit reports (like the ones admitted in this case) create presumptions of authenticity and accuracy. The Appeal Board has explained that credit reports can “normally meet the substantial evidence standard and the government’s obligations under [Directive] ¶ E3.1.14 for pertinent allegations.” ISCR Case No. 08-12184 at 7 (App. Bd. Jan. 7, 2010) The Government’s admitted credit reports are entitled to considerable weight.

An updated credit report, while not conclusive, might have shed light on the status of Applicant’s creditor 1.a student loan, but was not provided. Without a historical payment summary to track Applicant’s payment history on the loan, inferences of payment status with this lender have no probative evidence to draw upon to verify Applicant’s payment claims with creditor 1.a. Applicant’s claims that he is current with creditor 1.a cannot be accepted without documented proof that his student loan account is in current status with creditor 1.a’s successor servicing agent.

In May 2008, Applicant opened a line-of-credit with creditor 1.b. Reported credit limits on the account were $44,100. (Item 5) The account became delinquent in April 2013 with a past due balance of $4,380. (Item 5) Records reveal that the account was closed in October 2013 and charged off with a delinquent balance of $30,172. (Item 4) Applicant has since made payments on the account and reduced the delinquent balance to $26,772 with a most recent payment of $200 in July 2015. (Items 2 and 5) Applicant’s creditor 1.baccount is still in delinquent status, however, with no documented plan to pay or resolve the delinquent account.

Credit records reveal that Applicant opened an account with creditor 1.c (date unknown) and the account became delinquent in July 2013 with a past due balance of $768. (Item 5) Applicant claimed he paid this debt, and the debt was removed from his 2015 credit report. (Item 2) Applicant’s 2015 credit report reflects the deletion of this relatively small creditor 1.cdebt without explanation. Considering all of the facts in the record, his claims of payment of this debt are credible and are accepted.

Applicant attributed his creditor 1.band 1.cdebts to financial hardship due to his wife’s losing her job. (Item 2) However, he provided no details about the duration of her unemployment or the effects her unemployment had on his own finances. He furnished no evidence either of his income, financial counseling, family budget, or personal financial statement. (Item 2)

Character Evidence

Applicant provided no character references on his behalf, either with his answer or with his response to the FORM. Nor did he furnish any performance evaluations or evidence of community and civic contributions.

POLICIES

The AGs list guidelines to be used by administrative judges in the decision-making process covering DOHA cases. These guidelines take into account factors that could create a potential conflict of interest for the individual applicant, as well as considerations that could affect the individual’s reliability, trustworthiness, and ability to protect classified information. These guidelines include "[c]onditions that could raise a security concern and may be disqualifying” (disqualifying conditions), if any, and many of the "[c]onditions that could mitigate security concerns.”

The AGs must be considered before deciding whether or not a security clearance should be granted, continued, or denied. The guidelines do not require administrative judges to place exclusive reliance on the enumerated disqualifying and mitigating conditions in the guidelines in arriving at a decision. Each of the guidelines is to be evaluated in the context of the whole person in accordance with AG ¶ 2(c).

In addition to the relevant AGs, administrative judges must take into account the pertinent considerations for assessing extenuation and mitigation set forth in AG ¶ 2(a) of the AGs, which are intended to assist the judges in reaching a fair and impartial commonsense decision based upon a careful consideration of the pertinent guidelines within the context of the whole person. The adjudicative process is designed to examine a sufficient period of an applicant’s life to enable predictive judgments to be made about whether the applicant is an acceptable security risk.

When evaluating an applicant’s conduct, the relevant guidelines are to be considered together with the following AG ¶ 2(a) factors: (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 chances; (7) the motivation for the conduct; (8) the potential for pressure, coercion, exploitation, or duress; and (9) the likelihood of continuation or recurrence.

Viewing the issues raised and evidence as a whole, the following individual guideline is pertinent in this case:

Financial Considerations

The Concern: 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 ¶ 18. Burden of Proof

By virtue of the principles and policies framed by the AGs, a decision to grant or continue an applicant's security clearance may be made only upon a threshold finding that to do so is clearly consistent with the national interest. Because the Directive requires administrative judges to make a commonsense appraisal of the evidence accumulated in the record, the ultimate determination of an applicant's eligibility for a security clearance depends, in large part, on the relevance and materiality of that evidence. See United States, v. Gaudin, 515 U.S. 506, 509-511 (1995). As with all adversarial proceedings, the judge may draw only those inferences which have a reasonable and logical basis from the evidence of record.

The Government's initial burden is twofold: (1) it must prove by substantial evidence any controverted facts alleged in the SOR, and (2) it must demonstrate that the facts proven have a material bearing to the applicant's eligibility to obtain or maintain a security clearance. The required materiality showing, however, does not require the Government to affirmatively demonstrate that the applicant has actually mishandled or abused classified information before it can deny or revoke a security clearance. Rather, the judge must consider and weigh the cognizable risks that an applicant may deliberately or inadvertently fail to safeguard classified information.

Once the Government meets its initial burden of proof of establishing admitted or controverted facts, the evidentiary burden shifts to the applicant for the purpose of establishing his or her security worthiness through evidence of refutation, extenuation, or mitigation. Based on the requirement of Executive Order 10865 that all security clearances be clearly consistent with the national interest, the applicant has the ultimate burden of demonstrating his or her clearance eligibility. “[S]ecurity-clearance determinations should err, if they must, on the side of denials.” See Department of the Navy v. Egan, 484 U.S. 518, 531 (1988).

ANALYSIS

Applicant is a fully employed engineer for a defense contractor who accumulated delinquent debts exceeding $59,000. Two of the listed debts were charged off (i.e., debts owed to creditors 1.a and 1.b). Neither of these listed debts bear documented evidence of their being addressed over the past year and returned to current status. Only Applicant’s debt owed to creditor 1.chas been fully paid and resolved.

Applicant’s collective accumulation of delinquent debts warrant the application of two of the disqualifying conditions (DC) of the Guidelines. DC ¶ 19(a), “inability or unwillingness to satisfy debts,” and DC ¶19(c), “a history of not meeting financial obligation,” apply to Applicant’s situation.

Applicant’s pleading admissions with respect to his accumulation of delinquent debts covered in the SOR negate the need for any independent proof (see McCormick on Evidence, § 262 (6th ed. 2006)). Each of Applicant’s listed filing lapses and debts are fully documented in his credit reports. Some judgment problems persist over Applicant’s insufficiently explained accrual of delinquent student loan and line-of- credit debts. To date, he has taken insufficient documented steps to resolve his two principal delinquencies and demonstrate he acted responsibly in addressing his listed debts. See ISCR Case 03-01059 at 3 (App. Bd. Sep. 24, 2004).

Holding a security clearance involves a fiduciary relationship between the Government and the clearance holder. Quite apart from any agreement the clearance holder may have signed with the Government, the nature of the clearance holder’s duties and access to classified information necessarily imposes important duties of trust and candor on the clearance holder that are considerably higher than those typically imposed on Government employees and contractors involved in other lines of Government business. See Snepp v. United States, 444 U.S. 507, 511 n.6 (1980).

Inferentially, Applicant’s delinquent debts are attributable in part to inattention and the loss of spousal employment. Based on the documented materials in the FORM, some extenuating circumstances are associated with Applicant’s inability to pay or otherwise resolve his debts. Partially available to Applicant is MC ¶ 20(b), “the conditions that resulted in the behavior 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.”

What is not clear from this developed record are the specifics of Applicant’s claims of bringing his creditor 1.a student loan and creditor 1.bline of credit debts into current status. Neither updated creditor reports nor explanations from these two creditors covering the status of Applicant’s accounts with these creditors were provided. Without documentation of the payment histories of creditors 1.a and 1.b, and the specific steps he has taken to address these past-due debts, mitigation credit is not available to Applicant based on the evidence developed in the record.

Whole-person assessment does not enable Applicant to surmount the judgment questions raised by his accumulation of delinquent mortgage and consumer debts and failure to resolve them. Resolution of his listed delinquent accounts is a critical prerequisite to his regaining control of his finances.

While unanticipated financial burdens might have played some role Applicant’s failures to address his delinquent debts on a consistent basis, he failed to provide more specific explanatory material for consideration. Endorsements and performance evaluations might have been helpful, too, in making a whole-person assessment of her overall clearance eligibility, but were not provided.

Overall, clearance eligibility assessment of Applicant based on the limited amount of information available for consideration in this record does not enable him to establish judgment and trust levels sufficient to overcome security concerns arising out of his lapses in judgment associated with his accumulation of delinquent student loan and line-of-credit debts. Taking into account all of the documented facts and circumstances surrounding Applicant’s accrual of delinquent student loan and line-of-credit debt accumulations and his lack of more specific explanations for his debt accruals and resolution of them, it is still too soon to make safe predictions of Applicant’s ability to satisfactorily resolve his debts.

More evidence is needed to determine whether Applicant’s is making the necessary progress with his creditors to facilitate conclusions that his finances are sufficiently stabilized to permit him access to classified information. Unfavorable conclusions warrant with respect to the allegations covered by subparagraphs 1.a and 1.b. Favorable conclusions are warranted with respect to subparagraph 1.c

FORMAL FINDINGS

In reviewing the allegations of the SOR and ensuing conclusions reached in the context of the findings of fact, conclusions, conditions, and the factors listed above, I make the following formal findings:

GUIDELINE F (FINANCIAL CONSIDERATIONS): AGAINST APPLICANT

Subparagraphs 1.a-1.b: Against Applicant Subparagraph 1.c: For Applicant

CONCLUSION

In light of all the circumstances presented by the record in this case, it is not clearly consistent with the national interest to grant or continue Applicant’s security clearance. Clearance is denied.

Roger C. Wesley Administrative Judge