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ISCR Case 15-02942.h1 — CASE

ISCR Case 15-02942.h1denied

Case Headnote

ISCR Case No. 15-02942.h1

deniedJun 27, 2016· Hon. Richard A. Cefola· hearing

Summary

A 55-year-old high school graduate with some college education was denied a security clearance under Guideline F (Financial Considerations) due to unresolved financial obligations. The Statement of Reasons detailed two primary allegations. First, the applicant denied owing approximately $82,105 on a primary mortgage, asserting the debt was discharged after a trustee’s sale of his house. He provided an IRS Form 1099-C and stated his intent to declare the discharged debt as income for 2015.

Second, the applicant denied owing approximately $9,487 on a secondary mortgage. While this debt appeared on a government credit report from October 2015, it was absent from his February 2016 report. Despite being informed that its absence from a recent report did not confirm satisfaction, and being given one month to address the issue, the applicant provided no further documentation.

The denial was based on the applicant's failure to demonstrate resolution of significant past-due debt and to provide sufficient evidence to mitigate the financial concerns raised. The judge concluded that the applicant did not mitigate the security concerns related to his financial situation, raising questions about his reliability and judgment.

Why the Applicant Was Denied

The applicant failed to demonstrate resolution of significant past-due debt.
The applicant did not provide sufficient evidence to mitigate financial concerns raised by the Government.
The applicant's financial difficulties raised questions about his reliability and judgment.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability or Unwillingness to Satisfy Debts
AG ¶ 19(c)raisedHistory 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 issuedNov 4, 2015
Answer filedNov 24, 2015
Hearing heldFeb 16, 2016
Decision dateJun 27, 2016

Cite For

Denial of Security Clearance Due to Unresolved Financial Obligations
Impact of Financial Difficulties on Reliability Under Guideline F
Whole-person Concept in Evaluating 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 resolved one debt but failed to address another significant past-due debt. As a result, the financial considerations raised security concerns, leading to a denial of the applicant's security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant denies that he is indebted to Creditor A on his primary mortgage in the past-due amount of about $82,105. His house was sold by “a trustee’s sale,” as evidenced by a letter from said trustee. He now owes nothing on this debt, as he recently received an Internal Revenue Service (IRS) “Form 1099-C” from Creditor A, and Applicant fully intends to declare the discharged debt as income on his 2015 income tax filing. $82,005	For Applicant	Unspecified Financial	Denied	—	—	—
1.b	Applicant denies that he is indebted to Creditor B on his secondary mortgage in the past-due amount of about $9,487. This debt appears on the Government’s October 2015 credit report (CR). It does not appear on the Applicant’s February 2016 CR. It was explained to Applicant in great detail that just because a past-due debt does not appear on a more recent CR, that fact does not mean the debt has been satisfied. He assured the undersigned that he would address this issue, and was given one month to do so. Applicant has submitted nothing further in this regard. $9,487	Against Applicant	Unspecified Financial	Denied	(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. 15-02942 ) ) Applicant for Security Clearance )

For Government: Jeff Nagel, Esquire, Department Counsel For Applicant: Pro se

June 27, 2016

______________

STATEMENT OF CASE

______________

CEFOLA, Richard A., Administrative Judge:

Applicant submitted his Electronic Questionnaires for Investigations Processing (e-QIP) on October 14, 2014. On November 4, 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 acknowledged receipt of the SOR on November 24, 2015. He answered the SOR in writing on November 24, 2015, and requested a hearing before an Administrative Judge. The Defense Office of Hearings and Appeals (DOHA) received the request soon thereafter, and I received the case assignment on January 19, 2016. DOHA issued a notice of hearing on January 26, 2016, and I convened the hearing as scheduled on February 16, 2016. The Government offered Exhibits (GXs) 1 through 4, which were received without objection. Applicant testified on his own behalf and submitted Exhibits (AppXs) A through E, which were received without objection. I granted Applicant’s request to keep the record open until March 16, 2016, to submit additional matters. He has chosen to submit nothing further. The record closed on March 16, 2016. Based upon a review of the pleadings, exhibits, and testimony, eligibility for access to classified information is denied.

FINDINGS OF FACT

In his Answer to the SOR, Applicant denied the factual allegations in the two Subparagraphs of the SOR. He also provided additional information to support his request for eligibility for a security clearance.

Guideline F - Financial Considerations

Applicant is a 55-year-old high school graduate, with “some college.” (TR at page 19 line 14 to page 20 line 1.) He attributes his alleged financial difficulties to bad advice from both his attorney and his accountant. (TR at page 25 line 2 to page 26 line 25.) He purchased a house as “an investment”; but when the housing market crashed in 2007–2008, he was advised to “stop paying on both the mortgage and the second” refinanced mortgage, and “just walk away” from his financial responsibilities vis-a-vis his house. (Id.)

1.a. Applicant denies that he is indebted to Creditor A on his primary mortgage in the past-due amount of about $82,105. His house was sold by “a trustee’s sale,” as evidenced by a letter from said trustee. (AppX B.) He now owes nothing on this debt, as he recently received an Internal Revenue Service (IRS) “Form 1099-C” from Creditor A, and Applicant fully intends to declare the discharged debt as income on his 2015 income tax filing. (TR at page 27 lines11–20, and AppX A.) This allegation is found for Applicant.

1.b. Applicant denies that he is indebted to Creditor B on his secondary mortgage in the past-due amount of about $9,487. This debt appears on the Government’s October 2015 credit report (CR). (GX 4 at page 4.) It does not appear on the Applicant’s February 2016 CR. (AppX E.) It was explained to Applicant in great detail that just because a past-due debt does not appear on a more recent CR, that fact does not mean the debt has been satisfied. (TR at page 29 line 18 to page 33 line 10.) He assured the undersigned that he would address this issue, and was given one month to do so. (Id.) Applicant has submitted nothing further in this regard. This allegation is found against Applicant.

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 still has significant past-due debt, which he has failed to demonstrate he has resolved. I can find no countervailing Mitigating Condition that is applicable here. 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 Applicant’s 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. For Applicant

Subparagraph 1.b. 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