CASE · Clearance Adjudication Search EngineCASE

Loading case…

ISCR Case 02-04083.h1 — CASE

ISCR Case 02-04083.h1granted

Case Headnote

ISCR Case No. 02-04083.h1

grantedSep 30, 2003· Hon. Barry M. Sax· hearing

Summary

A 52-year-old contract administrator for a defense contractor was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The Statement of Reasons alleged four delinquent debts. The Applicant admitted to three of these: an account with Bank A charged off in February 2002 for approximately $1,890; an account with Bank B charged off in December 2001 for approximately $5,393; and an account with Bank C charged off in June 2002 for approximately $3,454. The government did not establish that the Applicant was indebted to Credit Card Company D for $333, or any other amount.

While Disqualifying Condition F1 was raised, the judge applied Mitigating Conditions F3 and F6. The Applicant successfully demonstrated that he had sufficient funds to pay the disputed debts once their exact amounts were resolved. He also provided evidence of good-faith efforts to negotiate and resolve these debts with the respective creditors, often with legal assistance.

Ultimately, the security clearance was granted. The decision highlighted the Applicant's financial capacity and proactive steps to address the outstanding obligations, alongside the government's failure to substantiate one of the alleged debts.

Why the Applicant Prevailed

Applicant has sufficient funds to pay the disputed debts once amounts are resolved.
He has made good-faith efforts to negotiate and resolve the debts with creditors.
The Government failed to establish the existence of one alleged debt.

Conditions Referenced

Disqualifying

F1raisedA History of Not Meeting Financial Obligations.

Mitigating

F3rejectedBehavior Caused by Conditions Largely Beyond His Control, Such as Loss of Employment.
F6appliedInitiation of a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts.

Key Rule Quoted

“An applicant's admission of the information in specific allegations relieves the Government of having to prove those allegations.”

Procedural Posture

SOR issuedJan 31, 2003
Answer filedMar 14, 2003
Hearing heldJun 5, 2003
Decision dateSep 30, 2003

Cite For

Mitigation of Financial Issues Under Guideline F
Good-faith Efforts to Resolve Debts
Disputed Debts and Their Impact 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: granted

The judge found that the applicant had three delinquent debts but was actively disputing the amounts owed and had retained legal counsel to assist in resolving these issues. The applicant demonstrated a good faith effort to address the debts and had sufficient funds to pay them once the amounts were confirmed. Ultimately, the judge ruled in favor of the applicant on all financial allegations, concluding that the applicant's financial situation did not pose a security risk.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant was indebted to Bank A for an account charged off in February 2002, in an amount alleged to be approximately $1,890 $1,890	For Applicant	Unspecified Financial	Admitted	—	(c) received/receiving counseling; problem being resolved	Claimed Other
1.b	Applicant was indebted to Bank B for an account charged off in December 2001, in an amount alleged to be approximately $5,393 $5,393	For Applicant	Unspecified Financial	Admitted	—	(c) received/receiving counseling; problem being resolved	Claimed Other
1.c	Applicant was indebted to Bank C for an account charged off in June 2002, in an amount alleged to be approximately $3,454 $3,454	For Applicant	Unspecified Financial	Admitted	—	(c) received/receiving counseling; problem being resolved	Claimed Other
1.d	The Government has not established that Applicant is indebted to Credit Card Company D, in the amount of $333, or otherwise. $333	For Applicant	Unspecified Financial	Denied	—	—	—

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: September 30, 2003

In Re:

---------------------------

SSN: --------------------

Applicant for Security Clearance

ISCR Case No. 02-04083

DECISION OF ADMINISTRATIVE JUDGE

BARRY M. SAX

SYNOPSIS

This 52-year-old Applicant accumulated three delinquent debts in 2001/2002. He has been seeking to resolve these debts, but disputes the total amounts claimed for each debt . He has retained an attorney to help him but, for more than a year, neither has been successful in getting creditor representatives to acknowledge the debts and agree to negotiations. Applicant has available funds far in excess of the approximately $9,000 alleged in the SOR, and intends to pay all of the debts as soon as the dispute as to amount is resolved. Mitigation has been established. Clearance is granted.

STATEMENT OF CASE

On January 31, 2003, 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 March 14, 2003, Applicant responded to the allegations set forth in the SOR, and elected to have a decision made after a hearing before a DOHA Administrative Judge. The case was initially assigned to another Administrative Judge, but was reassigned to me on May 8, 2003, because of caseload considerations. A Notice of Hearing was issued on May 19, 2003, and the hearing was conducted on June 5, 2003. The transcript was received at DOHA on June 23, 2003.

FINDINGS OF FACT

Applicant is a 52-year-old contract administrator for a defense contractor. The SOR contains four allegations, 1.a. - 1.d., under Guideline F (Financial Considerations). In his response to the SOR, Applicant admitted the debts alleged under allegations 1.a., 1.b., and 1.c., but claims that the debt alleged under 1.d. was not " a debt of mine." All of Applicant's admissions are incorporated into this decision as FINDINGS OF FACT. After considering the totality of the record evidence, including but not limited to Applicant's response to the SOR, I make the following additional FINDINGS OF FACT as to each SOR allegation:

Guideline F (Financial Considerations)

As of November 22, 2002, and based on two credit bureau reports (GX 3 and 4) and his response to Interrogatories sent to him on September 26, 2002:

1.a. - Applicant was indebted to Bank A for an account charged off in February 2002, in an amount alleged to be approximately $1,890;

1.b. - Applicant was indebted to Bank B for an account charged off in December 2001, in an amount alleged to be approximately $5,393;

1.c. - Applicant was indebted to Bank C for an account charged off in June 2002, in an amount alleged to be approximately $3,454;

1.d. - The Government has not established that Applicant is indebted to Credit Card Company D, in the amount of $333, or otherwise.

As of April 4, 2000, Applicant had "$270,000 in [his] 401K saving Plan and . . . $200,000 equity in [his] home" (GX 2).

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.

Considering the evidence as a whole, I find the following specific adjudicative guidelines to be most pertinent:

GUIDELINE F (Financial Considerations)

Condition that could raise a security concern and may be disqualifying:

1. a history of not meeting financial obligations.

Conditions that could mitigate security concerns include:

3. behavior caused by conditions largely beyond his control, such as loss of employment;

6. initiation of a good-faith effort to repay overdue creditors or otherwise resolve debts.

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. 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.

CONCLUSION

Applicant states that his financial problems arose in about 1996, when his wife became unemployed until mid 1999. In his April 4, 2000 sworn statement to the Defense Security Service (DSS) (GX) 2, Applicant admits the specific debt owed to Creditor A, as named in SOR 1.d., although he denies this debt was his in his reply to the SOR. Applicant's wife testified as to the debt cited in SOR 1.a., that she and Applicant had been disputing "portions of that debt" with the creditor for more than three years (Tr at 23), that she tried "to negotiate with [the creditor] directly," but was not "able to resolve it" (Tr at 21 - 23). Applicant was able to reach an agreement with a third party representing this creditor to settle the dispute for $1,208.94, but the account was then returned to Creditor A and nothing more has been heard about the matter from Creditor A (Tr at 51).

He then contacted the attorney now representing Applicant at the hearing, who sent numerous letters to Creditor A, without response (Tr at 22). She testified that she believed "part of this debt might be ours"(Tr at 23). As to the two debts owed to Creditor B, (SOR 1.b. and 1.c.), Applicant's wife "believe[s] we have entered into negotiations with a third party," but that third party is no longer representing this creditor (Tr at 24), "so we've gone back to" the creditor, "but they have yet to locate our file" (Tr at 24). Applicant's wife agrees that as to the first three debts (1.a., 1.b., and 1.c.), she and Applicant do owe a "portion of that debt" (Tr at 25).

Applicant has made "offers to settle this account," on more than one occasion, but has not received any response (Tr at 25, 26). At least as to SOR 1.b. anc 1.c., Applicant and his wife have offered two options to the creditor, "a single payment and payments as well" (Tr at 27). They have the money to pay these debts once the amount due is resolved (Id.). This is an unusual case in several regards. Applicant admits delinquent debts owed on the accounts cited in SOR 1.a., 1.b., and 1.c., although he has been disputing the specific amounts alleged for several years. Besides his testimony and that of his wife about their past efforts to resolve the debts, Applicant has thoroughly documented his efforts, and those of his attorney, to contact the creditors and resolve the debts.

In his post-hearing submission, Applicant's counsel explains his efforts on Applicant's behalf (AX A1). These include a May 1, 2002 letter to Creditor A's legal representative, offering a settlement amount of $750 (AX A2); a May 7, 2002 letter sent directly to Creditor A (AX A3); a March 24, 2003 letter to Creditor B noting earlier efforts to resolve both accounts (SOR 1.b. and 1.c.) (AX A4); a March 20, 2003 letter to a credit reporting agency disputing specific debts and asking the credit reporting bureau to investigate and delete the debts (AX A5); a bank statement from Creditor A from August 2000, showing a balance of $1,575.33 (AX A6); a October 15, 2002 credit report containing information from all three major services (AX A7); and a second bank statement from Creditor A, dated in January 2002 (AX A8).

Applicant's wife denied any knowledge of the debt alleged in SOR 1.d. (Tr at 28), and added that Applicant's admission of the debt in his response to the SOR was actually only an admission that the debt appeared on the credit report (Tr at 28, 37). Working through counsel, Applicant and his wife attempted to get "an account number, and address, [or] an individual" identified so they could negotiate with the creditor but have been unsuccessful to date. "It's a dead end" (Tr at 28).

It is a fundamental part of the adjudicative process that uncontroverted allegations need not be independently established by the Government. In this case, however, in his response to the SOR, Applicant admits only "that it appears as though I am indebted" to the creditors named in SOR 1.a., 1.b., and 1.c. He adds that the amounts owed are in dispute as to SOR 1.a., 1.b., and 1.c. and that he has been attempting to settle the debts for some time. As to SOR 1.d., he again admits only that the debt appears on the credit report relied upon by the Government in support of the SOR, but denies it is his debt and adds that he has been seeking to have it deleted from his credit report. In his post hearing submission, Applicant's counsel states that an initial investigation of this debt show that a check of the account number shown on the credit report does not come back with Applicant's name. As to all four cited debts, counsel for applicant has documented his continuing efforts to resolve the disputes for a year or more, as yet without success.

The credit reports submitted by the Government (GX 3, GX 4, GX 5, and GX 6) do not all contain the same debt amounts, and only GX 8 cites a debt to the creditor cited in SOR 1.d. As to this last debt, I conclude, based on the totality of the evidence, that the Government has not adequately established its existence.

Overall, I conclude that this 52-year-old Applicant did incur delinquent debts to the creditors cited in SOR 1.a., 1.b., and 1.c., but that the amounts alleged have not been adequately established. He has been attempting to resolve those disputed debts with the assistance of legal counsel for several years, and he more than adequate funds available to pay all three debts when the amount due is resolved. The Government has not proven the debts alleged in SOR 1.d. Under these circumstances, the totality of the evidence does not establish that Applicant has exercised questionable judgment, is unreliable or untrustworthy. The fact that Applicant has adequate funds to pay the cited debts, but has retained counsel to help him resolve the amounts owed, suggests a stand on principle; i.e., not to pay more than he and the creditors agree he actually owes. However his position on paying these debts is characterized, the totality of the evidence does not show poor judgment, unreliability, or untrustworthiness, nor does it create a risk that Applicant might fail to protect classified information.

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 Consideration) For the Applicant

Subparagraph 1.a. For the Applicant

Subparagraph 1.b. For the Applicant

Subparagraph 1.c. For the Applicant

Subparagraph 1.d. For the Applicant

DECISION

In light of all the circumstances presented by the record in this case, it is clearly consistent

with the national interest to grant or continue a security clearance for Applicant.

BARRY M. SAX

ADMINISTRATIVE JUDGE

FOOTNOTES

02-04083.h1 FOR GOVERNMENT Melvin A. Howry, Esquire, Department Counsel FOR APPLICANT Stephen H. Darrow, Esquire file:///usr.osd.mil/...omputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/02-04083.h1.html[6/24/2021 10:48:48 AM] 02-04083.h1