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ISCR Case 02-13049.h1 — CASE

ISCR Case 02-13049.h1denied

Case Headnote

ISCR Case No. 02-13049.h1

deniedJan 29, 2004· Hon. Michael H. Leonard· hearing

Summary

A 49-year-old senior hardware technician for a major defense company was denied a security clearance under Guideline F (Financial Considerations). The denial stemmed from a history of financial irresponsibility, including approximately $44,000 in unsecured credit card debt discharged through Chapter 7 bankruptcy in 1998.

Further concerns arose from additional delinquent credit card debt incurred since the bankruptcy, specifically an account with an approximate balance of $2,966.00 that was 120 days past due before being sent to collections. These issues raised Disqualifying Conditions 1 and 3 under Guideline F.

The judge concluded that the applicant's history of not meeting financial obligations, coupled with new delinquent debt post-bankruptcy, indicated a pattern of financial irresponsibility. Ultimately, the evidence was deemed insufficient to demonstrate that these financial issues were unlikely to recur, leading to the denial of the security clearance.

Why the Applicant Was Denied

Applicant has a history of not meeting financial obligations.
Applicant has incurred additional delinquent credit card debt after bankruptcy.
The judge found it too soon to determine if the applicant's financial irresponsibility is unlikely to recur.

Conditions Referenced

Disqualifying

DC 1raisedA History of Not Meeting Financial Obligations
DC 3raisedInability or Unwillingness to Satisfy Debts

Key Rule Quoted

“"It should be obvious that no one has a 'right' to a security clearance," and "the clearly consistent standard indicates that security clearance determinations should err, if they must, on the side of denials."”
— Egan, 484 U.S. at 528, 531.

Procedural Posture

SOR issuedJul 10, 2003
Answer filedAug 6, 2003Applicant requested a decision based on the written record.
Hearing held—No hearing was held.
Decision dateJan 29, 2004

Cite For

Financial Irresponsibility Under Guideline F
Impact of Bankruptcy on Security Clearance Eligibility
Insufficient Evidence of Financial Recovery Post-bankruptcy

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 a significant history of financial irresponsibility, including approximately $44,000 in unsecured credit card debt discharged under Chapter 7 bankruptcy in 1998 and additional delinquent credit card debt. The applicant's failure to address these debts and his unwillingness to pay a subsequent collection account led to a denial of his security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	approximately $44,000 in unsecured credit card debt discharged under Chapter 7 in 1998 $44,000	Against Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	additional delinquent credit card debt since the bankruptcy	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	the account was 120-days past due at some point before it was turned over to a collection agency. The balance owed is approximately $2,966.00 $2,966	Against Applicant	Credit Card Debt	Admitted	(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

DATE: January 29, 2004

In re: ---------------- SSN: ----------- Applicant for Security Clearance

ISCR Case No. 02-13049 DECISION OF ADMINISTRATIVE JUDGE MICHAEL H. LEONARD

SYNOPSIS Applicant, a 49-year-old man, is a senior hardware technician for a major defense company. The record evidence is insufficient to overcome the negative security implications stemming from his history of financial irresponsibility (e.g., approximately $44,000 in unsecured credit card debt discharged under Chapter 7 in 1998 and additional delinquent credit card debt since the bankruptcy). It is too soon to tell if Appellant's financial irresponsibility is a thing of the past unlikely to recur. Clearance is denied.

STATEMENT OF CASE

On July 10, 2003, the Defense Office of Hearings and Appeals (DOHA) issued to Applicant a Statement of Reasons (SOR) stating the reasons why DOHA proposed to deny or revoke access to classified information for Applicant. (1) The SOR, which is in essence the administrative complaint, alleges security concerns under Guideline F for financial considerations. Applicant answered the SOR on August 6, 2003, and he requested a clearance decision based on the written record without a hearing. In his Answer, Applicant admitted to the factual events alleged in the SOR. Thereafter, Department Counsel prepared and submitted its written case. The File of Relevant Material (FORM) was mailed to Applicant on or about October 2, 2003, and it was received by Applicant on October 21, 2003. Applicant's written response to the FORM was due November 20, 2003, and no response was received. The case was assigned to me January 15, 2004.

FINDINGS OF FACT

Applicant's admissions to the SOR allegations are incorporated herein. In addition, after a thorough review of the record, I make the following essential findings of fact: In general, I find that the record evidence as a whole is sufficient to establish, by substantial evidence, the occurrence of all the factual events alleged in SOR subparagraphs 1.a, 1.b, and 1.c. Applicant is a 49-year-old man. He is employed by a major defense company as a senior hardware technician. He has worked for this company since January 1978. The record is silent concerning Applicant's abilities and attributes as an employee. Applicant has held a secret-level security clearance since at least January 1990. In conjunction with his employment, Applicant completed a security-clearance application (SF 86) in May 2001. In response to Question 33, (2) Applicant answered "yes" disclosing a bankruptcy from June 1998.

The background investigation established that Applicant and his spouse filed a Chapter 7 bankruptcy petition in February 1998. According to the summary of schedules filed with the petition, Applicant listed $123,291.00 for total assets and $161,952.00 for total liabilities. Concerning liabilities, $57,737.00 were listed on Schedule F as unsecured nonpriority debt and the balance was listed on Schedule D as secured debt. The Schedule F listed 16 accounts. Of the 16 accounts, 14 were credit card accounts, and those 14 accounts amounted to $44,097.00 in unsecured credit card debt. The other two accounts were for a student loan and attorney's fees. Applicant agreed to reaffirm $11,072.53 in debt owed for a car listed on the Schedule D. The bankruptcy court granted Applicant and his spouse a discharge under Chapter 7 in June 1998. After the bankruptcy, Applicant opened a credit card account in December 1999. According to a credit report, the account was 120-days past due at some point in time before it was turned over to a collection agency. The balance owed is approximately $2,966.00. Applicant incurred this debt due to car repairs and other expenses. Applicant has said he has no intention of paying this debt since it has been turned over to a collection agency. In his answer, Applicant attributes his financial problems to overextending his credit and poor spending habits by him and his spouse. It appears Applicant is now divorced.

POLICIES

The Directive sets forth adjudicative guidelines to consider when evaluating a person's security-clearance eligibility, including disqualifying conditions (DC) and mitigating conditions (MC) for each applicable guideline. In addition, each clearance decision must be a fair and impartial commonsense decision based on the relevant and material facts and circumstances, the whole-person concept, and the factors listed in ¶ 6.3.1. through ¶ 6.3.6. of the Directive. Although the presence or absence of a particular condition or factor for or against clearance is not outcome determinative, the adjudicative guidelines should be followed whenever a case can be measured against this policy guidance. Considering the record evidence as a whole, the following adjudicative guidelines are most pertinent here: Guideline F for financial considerations. (3)

BURDEN OF PROOF The only purpose of a security-clearance decision is to decide if it is clearly consistent with the national interest to grant or continue a security clearance for an applicant. (4) The government has the burden of proving controverted facts. (5) The U.S. Supreme Court has said the burden of proof in a security-clearance case is less than the preponderance of the evidence. (6) The DOHA Appeal Board has followed the Court's reasoning on this issue establishing a substantial- evidence standard. (7) "Substantial evidence is more than a scintilla, but less than a preponderance of the evidence." (8) Once the government meets its burden, an applicant has the burden of presenting evidence of refutation, extenuation, or mitigation sufficient to overcome the case against them. (9) In addition, an applicant has the ultimate burden of persuasion to obtain a favorable clearance decision. (10)

As noted by the Court in Egan, "it should be obvious that no one has a 'right' to a security clearance," and "the clearly consistent standard indicates that security clearance determinations should err, if they must, on the side of denials." (11) Under Egan, Executive Order 10865, and the Directive, any doubt about whether an applicant should be allowed access to classified information will be resolved in favor of protecting national security.

CONCLUSION

Under Guideline F, a security concern typically exists for two different types of situations--significant unpaid debts and unexplained affluence; this case involves the former. An individual who is financially overextended is at risk of having to engage in illegal or unethical acts to generate funds to meet financial obligations. Similarly, an individual who is financially irresponsible may also be irresponsible, unconcerned, negligent, or careless in his obligation to protect classified information. Here, based on the record evidence, the government has established its case under Guideline F. The record evidence shows Applicant has a history of not meeting his financial obligations as well as inability or unwillingness to satisfy his debts. (12) The record evidence also supports a conclusion of financial irresponsibility. It is noteworthy that although he received a financial "fresh start" via the Chapter 7 bankruptcy in 1998, he is back in the same hole of delinquent credit card debt by running up nearly $3,000.00 in debt that he is either unwilling or unable to repay. I have reviewed the mitigating conditions under Guideline F and conclude none apply. In particular, MC 6 (13) does not apply. It is perfectly legal and ethical to seek protection under federal law via bankruptcy. Given the circumstances here, however, I cannot conclude his actions amount to "a good-faith effort" to resolve financial problems given that Applicant continues to have delinquent credit card debt, which he has said he will not pay. Taken together, the Chapter 7 bankruptcy and the subsequent delinquent credit card debt do not paint a picture of Applicant as a financially responsible person. It is my commonsense assessment that it is too soon to tell if his financial irresponsibility is a thing of the past unlikely to recur. Accordingly, Applicant has failed to extenuate or mitigate the security concerns under Guideline F. In reaching my decision, I have considered the evidence as a whole, both favorable and unfavorable, as well as the whole-person concept and other appropriate factors and guidelines in the Directive.

FORMAL FINDINGS

SOR ¶ 1-Guideline F: Against the Applicant Subparagraph 1.a: Against the Applicant Subparagraph 1.b: Against the Applicant Subparagraph 1.c: 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. Clearance is denied. Michael H. Leonard Administrative Judge 1. This action was taken under Executive Order 10865, dated February 20, 1960, as amended, and DoD Directive 5220.6, dated January 2, 1992, as amended and modified (Directive). 2. Question 33 asks "In the last 7 years, have your filed a petition under any chapter of the bankruptcy code (to include Chapter 13)?" 3. Guideline F is found at Attachment 6 to Enclosure 2 of the Directive, at pages 29-30. 4. ISCR Case No. 96-0277 (July 11, 1997) at p. 2. 5. ISCR Case No. 97-0016 (December 31, 1997) at p. 3; Directive, Enclosure 3, Item E3.1.14. 6. Department of Navy v. Egan, 484 U.S. 518, 531 (1988). 7. ISCR Case No. 01-20700 (December 19, 2002) at p. 3 (citations omitted). 8. ISCR Case No. 98-0761 (December 27, 1999) at p. 2. 9. ISCR Case No. 94-1075 (August 10, 1995) at pp. 3-4; Directive, Enclosure 3, Item E3.1.15. 10. ISCR Case No. 93-1390 (January 27, 1995) at pp. 7-8; Directive, Enclosure 3, Item E3.1.15. 11. Egan, 484 U.S. at 528, 531. 12. Disqualifying Condition (DC) 1 is "A history of not meeting financial obligations;" and DC 3 is "Inability or unwillingness to satisfy debts." 13. "The individual has initiated a good-faith effort to repay overdue creditors or otherwise resolve debts."

FOOTNOTES

02-13049.h1 FOR GOVERNMENT Erin C. Hogan, Esq., Deputy Chief Department Counsel FOR APPLICANT Pro Se file:///usr.osd.mil/...omputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/02-13049.h1.html[6/24/2021 10:56:36 AM] 02-13049.h1