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ISCR Case 01-22311.h1 — CASE

ISCR Case 01-22311.h1denied

Case Headnote

ISCR Case No. 01-22311.h1

deniedDec 17, 2002· Hon. Barry M. Sax· hearing

Summary

A 46-year-old aircraft mechanic for a defense contractor was denied a security clearance due to concerns under Guideline E (Personal Conduct) and Guideline F (Financial Considerations). The applicant had a history of financial irresponsibility, including 14 delinquent debts totaling approximately $40,000. These debts included various charged-off accounts, past-due amounts, and deficiencies from voluntarily repossessed automobiles, with some dating back to 1995.

Specifically, the applicant was alleged to have knowingly falsified material facts on his Security Clearance Application (SF 86). While he answered "Yes" to a question about financial delinquencies and listed two creditors, he intentionally omitted 12 other delinquent debts from his response. The applicant also claimed bankruptcy, but this was not documented and did not demonstrate financial rehabilitation.

The judge found that the applicant failed to demonstrate financial rehabilitation or mitigate the concerns raised by his long history of financial irresponsibility and the deliberate falsification of his SF 86. Consequently, the security clearance was denied.

Why the Applicant Was Denied

The applicant had a long history of financial irresponsibility with 14 delinquent debts totaling approximately $40,000.
The applicant's claimed bankruptcy was not documented and did not demonstrate financial rehabilitation.
The applicant intentionally omitted 12 of the 14 debts from his SF 86, which constituted a deliberate falsification of material facts.

Conditions Referenced

Disqualifying

F1raisedA History of Not Meeting Financial Obligations.
F3raisedInability or Unwillingness to Satisfy Debts.
E2raisedThe Deliberate Omission, Concealment, or Falsification of Relevant and Material Facts From Any Security Clearance Application.

Key Rule Quoted

“Bankruptcy, although a legal means of avoiding responsibility to pay debts, does not instantly and automatically establish the existence and level of financial rehabilitation required of someone seeking the privilege of being granted access to the nation's secrets.”
— ISCR Case No. 00-0345 (December 12, 2001), at page 2 - 3

Procedural Posture

SOR issuedJun 19, 2002
Answer filedJul 8, 2002Applicant elected to have a decision made on the written record.
Hearing held—No hearing; decision made on the written record.
Decision dateDec 17, 2002

Cite For

Financial Irresponsibility and Its Impact on Security Clearance Eligibility
Deliberate Omission of Debts on Security Clearance Applications
Insufficient Evidence of Financial Rehabilitation in Bankruptcy Cases

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 E (Personal Conduct) · descriptive summary of a decided case

Posture: Decision on RecordDecided: denied

The judge found that the applicant knowingly falsified material facts on his Security Clearance Application by intentionally omitting mention of 12 out of 14 delinquent debts. The applicant's explanations for this omission were deemed unreasonable, and he did not demonstrate any mitigation of the personal conduct concerns. Consequently, the application for a security clearance was denied.

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
2.a	Applicant knowingly falsified material facts on his Security Clearance Application (SF 86) when, in his response to "Question 38 Your Financial Delinquencies. In the past seven years, have you been over 180 days delinquent on any debt(s)?" he answered "Yes" and listed the creditors cited in SOR 1.j. and 1.l., but omitted mention of the creditors cited in any of the other 12 allegations cited above in paragraph 1.	Against Applicant	Falsification Security FormFOUND DELIBERATE	Financial	Denied	—	—	—

Descriptive standardized rendering of a decided public case (Guideline E). The verbatim source decision is shown in full below.

Standardized Decision Profile

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

Posture: Decision on RecordDecided: denied

The applicant has a history of financial irresponsibility, with 14 delinquent debts totaling approximately $40,000. Despite claiming to have filed for Chapter 13 bankruptcy, the applicant failed to provide documentation to support this claim, and the judge found no evidence of financial rehabilitation. Consequently, all allegations under Guideline F were ruled against the applicant.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Creditor A, in the approximate amount of $1,008.00, which was past due as of March 1999. $1,008	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.b	Creditor B, in the approximate amount of $15.00, which was 120 days past due as of November 2000. $15	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.c	Creditor C, in the approximate amount of $420.00, which was charged off in January 1996. $420	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.d	Creditor D, in the approximate amount of $113.00, which was charged off in December 1997. $113	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.e	Creditor E, in the approximate amount of $850.00, which was charged off in March 1997. $850	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.f	Creditor F, in the approximate amount of $8,412.00, for a deficiency resulting from the voluntary repossession of an automobile in July 1999. $8,412	Against Applicant	Auto Loan Debt	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.g	Creditor G, in the approximate amount of $16,841.00, for a deficiency resulting from the voluntary repossession of an automobile lease in June 1995. $16,841	Against Applicant	Auto Loan Debt	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.h	Creditor H, in the approximate amount of $1,086.00, which was charged off in October 1998. $1,086	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.i	Creditor I, in the approximate amount of $1,060.00, which was charged off in December 1995. $1,060	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.j	Creditor J, in the approximate amount of $2,218.00, which was turned over for collection in July 1998. $2,218	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.k	Creditor K, in the approximate amount of $1,014.00, which was charged off on May 2000. $1,014	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.l	Creditor L, in the approximate amount of $2,980.00, which was charged off in September 1998. $2,980	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.m	Creditor M, in the approximate amount of $755.00, which was charged off in January 1999. $755	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.n	Creditor N, in the approximate amount of $467.00, which was turned over for collection in September 2000. $467	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—

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

DATE: December 17, 2002 In Re: ------------------------- SSN: ------------ Applicant for Security Clearance ISCR Case No. 01-22311 DECISION OF ADMINISTRATIVE JUDGE BARRY M. SAX

SYNOPSIS This 46-year-old aircraft mechanic for a defense contractor has a history of financial irresponsibility going back to 1985, and includes 14 delinquent debts totaling $40,000.00. His recent claimed bankruptcy has not been documented and, in any case, does not adequately establish financial rehabilitation. He intentionally omitted mention of 12 or the 14 debts in his SF 86. Mitigation has not been demonstrated. Clearance is denied.

STATEMENT OF CASE

On June 19, 2002, the Defense Office of Hearings and Appeals (DOHA), pursuant to Executive Order 10865 and Department of Defense Directive 5220.6 (Directive), dated January 2, 1992, as amended, issued a Statement of Reasons (SOR) to the Applicant. The SOR detailed reasons why DOHA could not make the preliminary affirmative finding required under the Directive that it is clearly consistent with the national interest to grant or continue a security clearance for the Applicant. The SOR recommended referral to an Administrative Judge to conduct proceedings and determine whether a clearance should be granted, denied or revoked. On July 8, 2002, Applicant responded to the allegations set forth in the SOR, and elected to have a decision made by a DOHA Administrative Judge on the written record, i.e., without a hearing. Department Counsel issued a File of Relevant Material (FORM) on August 2, 2002. The Form instructed Applicant that any response to the FORM had to be submitted within 30 days of its receipt by Applicant. The response was timely received on September 12, 2002, and Department Counsel did not object to any of its contents. The matter was assigned to me for resolution on October 28, 2002.

FINDINGS OF FACT

Applicant is a 46-year-old aircraft mechanic employed by a defense contractor that is seeking a security clearance for Applicant in connection with his employment. In his response to the SOR, which contains 14 allegations (1.a. - 1.n.) under Guideline F (Financial) and two allegations (2.a and 2.b.) under Guideline E (Personal Conduct). Applicant admitted all 14 Guideline F allegations and denied both Guideline E allegations (Government Exhibits (GX) 3). After considering the totality of the evidence derived from the FORM and its attachments, including but not limited to Applicant's response to the SOR, I make the following FINDINGS OF FACT as to each SOR allegation: Guideline F (Financial Considerations) As of the date of issuance of the credit bureau report (GX 5) on which the SOR allegations are based, March 29, 2001, Applicant was delinquent on debts owed to the following creditors: 1.a. Creditor A, in the approximate amount of $1,008.00, which was past due as of March 1999. 1.b. Creditor B, in the approximate amount of $15.00, which was 120 days past due as of November 2000. 1.c. Creditor C, in the approximate amount of $420.00, which was charged off in January 1996. 1.d. Creditor D, in the approximate amount of $113.00, which was charged off in December 1997. 1.e. Creditor E, in the approximate amount of $850.00, which was charged off in March 1997. 1.f. Creditor F, in the approximate amount of $8,412.00, for a deficiency resulting from the voluntary repossession of an automobile in July 1999. 1.g. Creditor G, in the approximate amount of $16,841.00, for a deficiency resulting from the voluntary repossession of an automobile lease in June 1995. 1.h. Creditor H, in the approximate amount of $1,086.00, which was charged off in October 1998. 1.i. Creditor I, in the approximate amount of $1,060.00, which was charged off in December 1995. 1.j. Creditor J, in the approximate amount of $2,218.00, which was turned over for collection in July 1998. 1.k. Creditor K, in the approximate amount of $1,014.00, which was charged off on May 2000. 1.l. Creditor L, in the approximate amount of $2,980.00, which was charged off in September 1998. 1.m. Creditor M, in the approximate amount of $755.00, which was charged off in January 1999. 1.n. Creditor N, in the approximate amount of $467.00, which was turned over for collection in September 2000. As of May 24, 2001, none of these debts had been satisfied. In his May 24, 2001 sworn statement to the Defense Security Service (DSS) (GX 6), Applicant generally admitted that he had been aware of each delinquent debt (except for that to Creditor B), and that he intended to contact each creditor to arrange payments. He then added that he had arranged a cash advance/debt consolidation loan of $9,000 to be used to pay off at least some of his debts which, as indicated above, totaled close to $40,000.00. However, in his July 8, 2002 response to the SOR (GX 3), Applicant stated that all 14 cited debts were had not been paid, but were "included in chapter 13, case # 02-20079-pcy5." Finally, in his September 12, 2002 response to the FORM, he repeated that he had filed for Chapter 13 protection after the debt repayment plan described in GX 6 did not work out. Beyond his statement that he had filed for Chapter 13, there is no documentation establishing the filing, the debts covered, or the repayment plan. Guideline E (Personal Conduct) 2.a. Applicant knowingly falsified material facts on his Security Clearance Application (SF 86) when, in his response to "Question 38 Your Financial Delinquencies. In the past seven years, have you been over 180 days delinquent on any debt(s)?" he answered "Yes" and listed the creditors cited in SOR 1.j. and 1.l., but omitted mention of the creditors cited in any of the other 12 allegations cited above in paragraph 1 (Response to FORM, GX 4, GX 5, and GX 6).

POLICIES

Each adjudicative decision must also include an assessment of nine generic factors relevant in all cases: (1) the nature, extent, and seriousness of the conduct; (2) the circumstances surrounding the conduct, to include knowing participation; (3) the frequency and recency of the conduct; (4) the individual's age and maturity at the time of the conduct; (5) the voluntariness of participation; (6) the presence or absence of rehabilitation and other pertinent 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 (Directive, E.2.2.1., on page 16 of Enclosure 2). I have considered all nine factors, individually and collectively, in reaching my overall conclusion. Because each security case presents its own facts and circumstances, it should not be assumed that the factors cited above exhaust the realm of human experience or that the factors apply equally in every case. Moreover, although adverse information concerning a single criterion may not be sufficient for an unfavorable determination, the individual may be disqualified if available information reflects a recent or recurring pattern of questionable financial judgment and conduct. Because Applicant chose to have this matter decided without a hearing and without submitting any additional information in response to the FORM, all credibility determinations and findings of fact are necessarily based entirely on the contents of the FORM. Considering the evidence as a whole, I find the following specific adjudicative guidelines to be most pertinent to this case: GUIDELINE F (Financial) Conditions that could raise a security concern and maybe disqualifying include: 1. A history of not meeting financial obligations. 3. Inability or unwillingness to satisfy debts. Conditions that could mitigate security concerns include: None that are applicable under the facts of this case. GUIDELINE E (Personal Conduct) Condition that could raise a security concern and may be disqualifying: 2. The deliberate omission, concealment, or falsification of relevant and material facts from any security clearance application. Conditions that could mitigate security concerns include: None that are applicable under the facts of this case. The eligibility criteria established by Executive Order 10865 and DoD Directive 5220.6 identify personal characteristics and conduct that are reasonably related to the ultimate question of whether it is "clearly consistent with the national interest" for an individual to hold a security clearance. In reaching the fair and impartial overall common sense determination based on the "whole person" concept required by the Directive, the Administrative Judge is not permitted to speculate, but can only draw those inferences and conclusions that have a reasonable and logical basis in the evidence of record. In addition, as the trier of fact, the Administrative Judge must make critical judgments as to the credibility of witnesses, here based solely on the written record. In the defense industry, the security of classified information is entrusted to civilian workers who must be counted on to safeguard classified information and material twenty-four hours a day. The Government is therefore appropriately concerned where available information indicates that an applicant for a security clearance, in his or her private life or connected to work, may be involved in conduct that demonstrates poor judgment, untrustworthiness, or unreliability. These concerns include consideration of the potential, as well as the actual, risk that an applicant may deliberately or inadvertently fail to properly safeguard classified information. An applicant's admission of the information in specific allegations relieves the Government of having to prove those allegations. If specific allegations and/or information are denied or otherwise controverted by the applicant, the Government has the initial burden of proving those controverted facts alleged in the Statement of Reasons. If the Government meets its burden (either by the Applicant's admissions or by other evidence) and proves conduct that creates security concerns under the Directive, the burden of persuasion then shifts to the Applicant to present evidence in refutation, extenuation or mitigation sufficient to demonstrate that, despite the existence of conduct that falls within specific criteria in the Directive, it is nevertheless consistent with the interests of national security to grant or continue a security clearance for the Applicant. A person seeking access to classified information enters into a fiduciary relationship with the Government based upon trust and confidence. As required by DoD Directive 5220.6, as amended, at E2.2.2., "any doubt as to whether access to classified information is clearly consistent with the interests of national security will be resolved in favor of the nation's security."

CONCLUSION

This bulk of the allegations in this case involve Applicant's financial problems. It is clearly established by the totality of the record that Applicant has a long history of incurring substantial debts, to the point that he owed a total of close to $40,000 in delinquent debts to 14 different creditors. Applicant does not dispute that fact. The delinquencies began as early as June 1995 (SOR 1.i.) and continued to the present. Applicant made no attempt to pay off these debts of almost $40,000.00, or otherwise resolve them, until recently. Although Applicant now claims that all of the debts cited in SOR 1.a. - 1.n. are "included in chapter 13, case # 02-20079-pcy5," he has not documented that claim, nor explained whether he has simply filed for bankruptcy protection (which gives him temporary protection from his creditors) or been granted final relief by the court. The absence of such documentation substantially reduces the weight to be given his claim and, even if true, his claim does not determine the outcome of my analysis. Assuming, for the sake of argument, that Applicant has been granted relief by the bankruptcy court as to all the cited debts, that means only that Applicant no longer has so excessive a debt load facing him. It does not mean that Applicant has demonstrated the good judgment, reliability, and trustworthiness required of anyone seeking access to the nation's secrets. It is not shown exactly when the claimed bankruptcy petition was filed or relief granted but from the case #, it is evidently a 2002 case. This means that the bankruptcy petition was filed 18 or more months after Applicant completed his SF 86 in June 2000, and six months or more after his sworn statement to DSS in May 2001. From these facts, I conclude the bankruptcy filing was as much a reaction to the pressure of the security clearance investigation and adjudication process facing Applicant as a fundamental change in his thinking or how he faced his financial responsibilities. I have carefully considered Applicant's explanations as to how he got into such debt and why he was unable to make any substantial inroads into such debts over the ensuing years (GX 3, GX 6, and response to FORM). This includes, but is not limited to, his explanation of the problems he had with the "cash advance company" (Response to FORM). In the end, I am compelled by the totality of the evidence to conclude that Applicant's explanations do not establish substantial evidence in mitigation or extenuation. The fact remains that Applicant incurred so many debts (some of which were apparently incurred to make payments on earlier debts) and so large a delinquent debt load over a period of up to seven years, none of which were repaid or otherwise resolved over the years that followed. For the most part, Applicant simply did nothing and allowed the debts to become more and more delinquent until the creditors stopped trying to recover them. The claimed recent bankruptcy doe not mitigate this fact. It is simply too little and too late to demonstrate financial rehabilitation. It is fundamental to the security clearance adjudication process that a history or pattern of excessive debt, recurring financial difficulties, and/or financial irresponsibility establishes the existence of serous doubts about an applicant's judgment, reliability and trustworthiness. (1) Bankruptcy, although a legal means of avoiding responsibility to pay debts, does not instantly and automatically establish the existence and level of financial rehabilitation required of someone seeking the privilege of being granted access to the nation's secrets. (2) In the present case, it must be considered along with all the other facts and circumstances surrounding how Applicant incurred and resolved (or didn't resolve) his long standing and excessive delinquent debts. Based on the totality of the evidence, I conclude that Applicant has not yet met his burden of demonstrating the required level of financial rehabilitation. As to Guideline E (Personal Conduct), it is clearly established that Applicant had far more delinquent debts that should have been reported on his SF 86, 14 instead of 2. I have considered his explanations. His last words, as contained in his Response to the FORM are, in essence, that he was at a low point in his life, due to family, income, and medical problems, and that he made "another drastic mistake" getting involved with the "cash advance company." As why he reported only two debts, one of his explanations is that those were the only bills/statement he could find. Applicant knew of the other debts but had no documents showing amounts owing or dates due. He expected that the other debts would turn up in the credit report he expected DSS to obtain, and he thought he would explain it then, and he was "lead to believe that the information would be obtained from a credit report . . . "(GX 3)." Applicant's explanations are not reasonable and, in any case, do not excuse his intentional omission of such relevant and material information. Applicant could just as well have cited the other debts and stated he had no idea of amounts or dates. These were the two choices and the one he made deprived the government of a truthful and complete SF 86. He has not mitigated or extenuated the intentional omission of so many delinquent debts. DOHA decisions are not an evaluation of a person's loyalty to the United States but of the risks that result from a person's conduct, if that conduct violates one or more of the Guidelines in the Directive. In the present case, the Government's underlying concerns have not been mitigated and continue to show questionable judgment, unreliability, and/or untrustworthiness. The totality of the evidence also establishes a nexus or connection with Applicant's security clearance eligibility.

FORMAL FINDINGS

Formal Findings as required by Section 3, Paragraph 7 of Enclosure 1 of the Directive are hereby rendered as follows: Guideline F (Financial)) Against the Applicant Subparagraph l.a. Against the Applicant Subparagraph 1.b. Against the Applicant Subparagraph 1.c. Against the Applicant Subparagraph 1.d. Against the Applicant Subparagraph 1.e. Against the Applicant Subparagraph 1.f. Against the Applicant Subparagraph 1.g. Against the Applicant Subparagraph 1.h. Against the Applicant Subparagraph 1.i. Against the Applicant Subparagraph 1.j. Against the Applicant Subparagraph 1.k. Against the Applicant Subparagraph 1.l. Against the Applicant Subparagraph 1.m. Against the Applicant Subparagraph 1.n. Against the Applicant Guideline E (Personal Conduct) Against the Applicant Subparagraph 2.a. Against the Applicant

DECISION

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 a security clearance for Applicant. BARRY M. SAX ADMINISTRATIVE JUDGE 1. ISCR Case No. 99-9020 (June 4, 2001), at page 7. 2. ISCR Case No. 00-0345 (December 12, 2001), at page 2 - 3

FOOTNOTES

01-22311.h1 FOR GOVERNMENT Henry Lazzaro, Esquire, Department Counsel FOR APPLICANT Pro Se file:///usr.osd.mil/...yComputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/01-22311.h1.html[7/2/2021 2:27:06 PM] 01-22311.h1 file:///usr.osd.mil/...yComputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/01-22311.h1.html[7/2/2021 2:27:06 PM] 01-22311.h1 file:///usr.osd.mil/...yComputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/01-22311.h1.html[7/2/2021 2:27:06 PM] 01-22311.h1 file:///usr.osd.mil/...yComputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/01-22311.h1.html[7/2/2021 2:27:06 PM] 01-22311.h1 file:///usr.osd.mil/...yComputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/01-22311.h1.html[7/2/2021 2:27:06 PM] 01-22311.h1 file:///usr.osd.mil/...yComputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/01-22311.h1.html[7/2/2021 2:27:06 PM] 01-22311.h1 file:///usr.osd.mil/...yComputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/01-22311.h1.html[7/2/2021 2:27:06 PM]