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Summary

The applicant, a 49-year-old defense contractor with a history of financial difficulties, sought a security clearance under Guideline F. Despite some mitigating circumstances related to his ex-wife's financial irresponsibility, the applicant failed to demonstrate financial stability and responsibility, leading to the denial of his clearance.

Under Guideline F (Financial Considerations), the Statement of Reasons alleged the following: Applicant first petitioned for Chapter 13 bankruptcy in 1994, but the bankruptcy was dismissed in February 21, 1995. His debts were not discharged at that time (1.a). Applicant again petitioned for Chapter 13 bankruptcy on February 28, 1995. This bankruptcy concluded on September 6, 2000, at which time his debts were discharged (1.b). This overdue debt to Creditor 1 is listed in the SOR in the amount of $446, for a state tax lien. Applicant denied that there had ever been a tax lien against him, but Exhibit B, a report from a credit reporting service, establishes that there had been a tax lien against Applicant, and that it had been paid (1.c). This overdue debt to Creditor 2 is in the amount of $365.55. In his RSOR, Applicant admitted this debt is due and owing. However, at the hearing he testified that this debt had been resolved. I find no evidence that he paid anything on this debt, and I conclude that, based on his RSOR admission, this debt has not been resolved (1.d). This overdue debt to Creditor 3 is in the amount of $4,370.16. Applicant first testified that he did not believe he had a credit card from this company or incurred this debt. In later testimony, he contradicted himself and stated that he did have a credit card for this company, but he believed that this debt was paid, and he was not responsible for this debt since it was no longer on his credit report. Based on his conflicting testimony, his failure to offer any evidence to show that he paid this debt, and the fact that a debt can drop off a credit report and may still be owed, I conclude that this debt has not been resolved (1.e). This overdue debt to Creditor 4 is listed in the SOR in the amount of $716. In a signed, sworn statement Applicant made to the Defense Security Service on September 18, 2001, Applicant stated regarding this debt, 'I agree I owe the balance due and will begin to make monthly payments to the telephone company.' At the hearing he testified that he has made no payment on this debt. I have determined that he owes the entire amount stated (1.f). This overdue debt to Creditor 5 is listed in the SOR in the amount of $390.68. Applicant testified that he does not recognize or owe this debt. Yet in Exhibit 2, Applicant stated regarding this debt, 'I contacted my daughter and discovered that veterinary services were rendered for my daughter's pet in 1995. I will contact this creditor to make arrangements to pay in full in monthly payments.' Applicant has made no payment on this debt, and he currently owes the full amount stated (1.g). This overdue debt to Creditor 6 is listed in the SOR in the amount of $599. Applicant testified that he has made no payment on this debt. His version of the facts leading up to this debt are also less than consistent. I conclude that he did sign a contract and did receive course materials. There is no way for me to determine if the terms of the contract gave him the legal right to cancel the contract, but based on his inconsistent and multiple versions of the facts of this debt, and his failure to introduce evidence of his version of the facts, I consider him obligated for this debt (1.h). This overdue debt to Creditor 7 is listed in the SOR in the amount of $701. Applicant testified that he believed that this debt was discharged in bankruptcy. I conclude that this debt is still due and owing (1.i). This overdue debt to Creditor 8 is listed in the SOR in the amount of $380. Applicant stated regarding this debt, 'I have never used a check cashing service although it's possible that my former spouse had used this service.' At the hearing, Applicant testified that he has not used this service and has made no payment on this debt. Since Applicant believed that the debt may have been incurred by his ex-wife when they were married, a debt for which he would be responsible, and he has not done anything to disprove that belief, I conclude that Applicant currently owes the full amount stated (1.j). This overdue debt to Creditor 9 is listed in the SOR in the amount of $4,009. The Government has presented evidence and argued that this debt is the same as that listed in 1e. Applicant concurred that this is the same debt. I conclude that this is the same debt as in 1.e, and that Applicant does not owe this debt, only that listed in 1.e (1.k). This overdue debt to Creditor 10 is listed in the SOR in the amount of $423. Applicant testified that he does not recognize or owe this debt. The Government has presented as evidence a credit report listing this debt. Based on the credit report and Applicant's less than complete memory regarding his debts, I conclude that Applicant does owe this debt (1.l). This overdue debt to Creditor 11 is listed in the SOR in the amount of $530. The Government has presented evidence and argued that this debt is the same as that listed in 1f. Applicant concurred that this is the same debt. Since both debts are for the same phone company, I conclude that this is the same debt as in 1.f, and that Applicant does not owe this debt, only that listed in 1.f (1.m). This overdue debt to Creditor 12 is in the amount of $71. In his RSOR, Applicant admitted this debt is due and owing. At the hearing, he testified that he would be now be resolving this debt because he recently received verification that he owed this debt. Based on the serious time lapse from when he first indicated he would pay this creditor, I cannot conclude that this debt will be resolved (1.n). This overdue debt to Creditor 13 is in the amount of $50. In his RSOR, Applicant admitted this debt is due and owing. At the hearing, he testified that he had satisfied this debt in 2003. While he did not introduce evidence showing that the debt had been paid, he did seem certain in his testimony that this was a debt he had paid. I therefore, conclude that this debt has been satisfied (1.o). This debt to Creditor 14 is in the amount of $783. At the hearing, the Government withdrew this allegation, stating that this debt was not correct. I do not consider this debt to be owed by Applicant (1.p).

The judge denied the clearance. The government raised disqualifying conditions E2.A6.1.2.1. The judge applied mitigating conditions E2.A6.1.3.3. The decision turned on the following: Applicant has a long history of financial difficulties and has taken little action to resolve his debts; His financial irresponsibility and lack of a stable outlook on finances were evident, particularly with the repossession of a new truck due to non-payment; The applicant's recent financial actions did not demonstrate sufficient rehabilitation or responsible management of his financial obligations.

Why the Applicant Was Denied

• Applicant has a long history of financial difficulties and has taken little action to resolve his debts.
• His financial irresponsibility and lack of a stable outlook on finances were evident, particularly with the repossession of a new truck due to non-payment.
• The applicant's recent financial actions did not demonstrate sufficient rehabilitation or responsible management of his financial obligations.

Conditions Referenced

Key Rule Quoted

“A person who seeks access to classified information enters into a fiduciary relationship with the U.S. Government that is predicated upon trust and confidence.”

Procedural Posture

• SOR issuedSep 12, 2003
• Answer filedDec 5, 2003Applicant responded in writing to the SOR allegations.
• Hearing heldApr 28, 2004Hearing conducted with both parties presenting evidence.
• Decision dateSep 9, 2004Amended decision issued by Administrative Judge.

Cite For

• Financial Irresponsibility Under Guideline F
• Impact of Personal Circumstances on Financial Obligations
• Burden of Proof in Demonstrating Financial Stability