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ISCR Case 03-10582.h1 — CASE

ISCR Case 03-10582.h1denied

Case Headnote

ISCR Case No. 03-10582.h1

deniedSep 14, 2004· Hon. Charles D. Ablard· hearing

Summary

A 41-year-old contract librarian for a defense contractor was denied a security clearance under Guideline F (Financial Considerations) due to a history of significant financial difficulties. The applicant had filed for Chapter 7 bankruptcy twice, first in 1995 and again in 2003, with the latter discharged in June 2004.

Despite these bankruptcies, the applicant accumulated over $18,000 in new delinquent debts, ranging from $73 to over $4,000, since her initial bankruptcy discharge. Some of these debts resulted in judgments against her. While some cited debts were either paid or discharged in the 1995 bankruptcy, her current monthly income of $1,700 was deemed barely adequate for household and living expenses, with $700 for rent and $800 for other necessities.

The judge concluded that the applicant's repeated bankruptcies and failure to resolve her debts demonstrated a pattern of financial irresponsibility. Although some circumstances between the bankruptcies were beyond her control, she did not take adequate remedial steps to prevent future financial problems. Consequently, the security clearance was denied, as her adverse financial situation showed few signs of improvement and she had not shown a proper response for resolving her obligations.

Why the Applicant Was Denied

Applicant has a history of financial irresponsibility, including two Chapter 7 bankruptcies.
She has incurred over $18,000 in delinquent debts since her first bankruptcy discharge.
The judge found that she failed to demonstrate adequate remedial steps to ensure future financial stability.

Conditions Referenced

Disqualifying

E2.A6.1.2.1raisedHistory of Not Meeting Financial Obligations
E2.A6.1.2.3raisedEvidence of Inability or Unwillingness to Satisfy Debts

Mitigating

E2.A6.1.3.6rejectedGood Faith Effort to Repay Overdue Creditors or Resolve DebtsPetitioning for a second bankruptcy does not mitigate the allegations.

Key Rule Quoted

“"[N]o one has a 'right' to a security clearance."”
— Department of the Navy v. Egan, 484 U.S. 518, 528 (1988)

Procedural Posture

SOR issuedFeb 4, 2004
Answer filedMar 1, 2004
Hearing heldJun 23, 2004Applicant waived the 15-day notice requirement.
Decision dateSep 14, 2004

Cite For

Financial Irresponsibility as a Disqualifying Factor Under Guideline F
Impact of Multiple Bankruptcies on Security Clearance Eligibility
Burden of Proof on Applicant to Demonstrate Financial Stability After 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 applicant faced significant financial difficulties, including two Chapter 7 bankruptcies and over $18,000 in delinquent debts. The judge ruled against the applicant on all but one financial allegation, concluding that the applicant failed to demonstrate adequate financial responsibility and resolution of her debts, leading to a denial of the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant petitioned for Chapter 7 bankruptcy in 1995 because of extensive debts. The bankruptcy was discharged later the same year.	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.b	Since the bankruptcy, Applicant has incurred over $18,000.00 in delinquent debts ranging in amount from $73 to over $4,000. $18,000	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.c	In 2003, Applicant again petitioned for Chapter 7 bankruptcy and it was discharged in June, 2004.	Against Applicant	Bankruptcy Filing	Admitted	—	—	—
1.d	Some of the debts resulted in judgments against Applicant.	Against Applicant	Judgment Against Applicant	Admitted	—	—	—
1.e	Several of the cited debts in the SOR had either been paid or discharged in the 1995 bankruptcy.	Against Applicant	Unspecified Financial	Denied	—	—	—
1.f	Applicant's monthly take home pay is $1,700.00 of which $700 is paid for rent, $800 for food, clothing, and medical. $1,700	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.g	Her income is barely adequate to pay household and living expenses.	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.h	While her willingness to help relatives and friends who live in her home is commendable from a social standpoint, it has not served her well in providing sufficient financial assets to pay her debts.	Against Applicant	Unspecified Financial	Denied with Explanation	—	—	—
1.i	The fact that she has taken bankruptcy, not just once but twice in the last ten years, militates against the grant of a security clearance.	Against Applicant	Bankruptcy Filing	Denied	—	—	—
1.j	The totality of Applicant's adverse financial situation continues and shows few signs of improvement.	Against Applicant	Unspecified Financial	Denied	—	—	—
1.k	Applicant has not shown the proper response for resolution of her financial obligations.	Against Applicant	Unspecified Financial	Denied	—	—	—
1.l	She failed to take adequate remedial steps to insure that similar problems might not arise in the future.	Against Applicant	Unspecified Financial	Denied	—	—	—
1.m	While there were some circumstances that occurred which were beyond her control between the first and second bankruptcies, Applicant has failed to take adequate remedial steps to insure that similar problems might not arise in the future.	Against Applicant	Unspecified Financial	Denied	—	—	—
1.n–1.t	7 sub-charges — specific text not stated in this decision (5 against, 2 for the applicant).	Mixed			—	—	—

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

SYNOPSIS

KEYWORD: Financial

DIGEST: Applicant is a 41-year-old employee of a defense contractor working as a contract librarian who petitioned for Chapter 7 bankruptcy in 1995 because of extensive debts. The bankruptcy was discharged later the same year. Since the bankruptcy, Applicant has incurred over $18,000.00 in delinquent debts ranging in amount from $73 to over $4,000. In 2003, Applicant again petitioned for Chapter 7 bankruptcy and it was discharged in June, 2004. She helps to support several family members who are employed and could, but do not, contribute to the household expenses. Clearance is denied.

CASENO: 03-10582.h1

DATE: 09/14/2004

DATE: September 14, 2004

In Re:

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

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

Applicant for Security Clearance

ISCR Case No. 03-10582

DECISION OF ADMINISTRATIVE JUDGE

CHARLES D. ABLARD

APPEARANCES

SYNOPSIS

Applicant is a 41-year-old employee of a defense contractor working as a contract librarian

who petitioned for Chapter 7 bankruptcy in 1995 because of extensive debts. The bankruptcy was discharged later the same year. Since the bankruptcy, Applicant has incurred over $18,000.00 in delinquent debts ranging in amount from $73 to over $4,000. In 2003, Applicant again petitioned for Chapter 7 bankruptcy and it was discharged in June, 2004. She helps to support several family members who are employed and could, but do not, contribute to the household expenses. Clearance is denied.

STATEMENT OF CASE

On February 4, 2004, the Defense Office of Hearings and Appeals (DOHA) pursuant to Executive Order 10865, Safeguarding Classified Information Within Industry, as amended and modified, and Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (Directive), dated January 2, 1992, as amended and modified, issued a Statement of Reasons (SOR) to Applicant which detailed reasons why DOHA could not make the preliminary affirmative finding under the Directive that it is clearly consistent with the national interest to grant or continue a security clearance for Applicant. DOHA recommended the case be referred to an administrative judge to determine whether a clearance should be granted, continued, denied, or revoked.

On March 1, 2004, Applicant, in a sworn written statement, responded to the allegations set forth in the SOR, and requested a hearing. The matter was assigned to me on May 12, 2004. A notice of hearing was issued on June 15, 2004, and a hearing was held on June 23, 2004. The Applicant waived the 15-day notice requirement and testified. The Government introduced 14 exhibits and the Applicant introduced two exhibits. All exhibits were admitted into evidence. The transcript was received on July 9, 2004. Two post-hearing exhibit were introduced by the Applicant on September 1 and 10, 2004 without objection by the government

FINDINGS OF FACT

Applicant is a 41-year-old employee of a defense contractor working as a contract librarian. She admitted all but one of the specific allegations in the SOR. She disagreed with all of the conclusions reached in the SOR based on the allegations. After a complete review of the evidence in the record and upon due consideration of the record, the following additional findings of fact are made:

Applicant left her employment in another state in 1992 to move with her two children to be near her family. She had difficulty finding employment and shared a house with another woman and her child. Applicant took responsibility for the house-mate's child when the she was sentenced to prison on a drug charge. Applicant petitioned for Chapter 7 bankruptcy in 1995 because of extensive debts. The bankruptcy was discharged later the same year Since the bankruptcy, Applicant had further financial difficulties and incurred over $18,000.00 in delinquent debts ranging in amount from $73 to over $4,000 cited in the SOR. Some of the debts resulted in judgments against Applicant. Several of the cited debts in the SOR had either been paid or discharged in the 1995 bankruptcy.

In 2003, Applicant again petitioned for Chapter 7 bankruptcy which was discharged in June 2004, several days prior to the hearing in this matter. That bankruptcy proceeding discharged other debts cited in the SOR.

Applicant's monthly take home pay is $1,700.00 of which $700 is paid for rent, $800 for food, clothing, and medical. Applicant has two children ages 21 and 6 who live with her and the father of the younger child. He contributes to the household expenses when he is employed. Her older child is employed but does not contribute to the household expenses and Applicant pays auto insurance for her. Applicant has also taken into her household a nephew and his daughter who are both employed but contribute nothing to the household expenses. Her income is barely adequate to pay household and living expenses.

Several of Applicant's family members have worked on the installation where she is employed and she takes pride in that fact. Her brother is a sergeant in the Army who has just returned from Iraq.

POLICIES

"[N]o one has a 'right' to a security clearance." Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). As Commander in Chief, the President has "the authority to control access to information bearing on national security and to determine whether an individual is sufficiently trustworthy to occupy a position that will give that person access to such information." Id. at 527.

An evaluation of whether the applicant meets the security guidelines includes consideration of the following factors: (1) the nature, extent, and seriousness of the conduct; (2) the circumstances surrounding the conduct; (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 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, ¶ E2.2.1. Security clearances are granted only when "it is clearly consistent with the national interest to do so." Executive Order No. 10865 § 2. See Executive Order No. 12968 § 3.1(b).

Initially, the Government must establish, by something less than a preponderance of the evidence, that conditions exist in the personal or professional history of the applicant which disqualify, or may disqualify, the applicant from being eligible for access to classified information See Egan, 484 U.S. at 531. The applicant then bears the burden of demonstrating that it is clearly consistent with the national interest to grant or continue the applicant's clearance. "Any doubt as to whether access to classified information is clearly consistent with national security will be resolved in favor of the national security." Directive, ¶ E2.2.2. "[S]ecurity clearance determinations should err, if they must, on the side of denials." Egan, 484 U.S. at 531. See Executive Order No. 12968 § 3.1(b)

CONCLUSION

Upon consideration of all the facts in evidence, and after application of all appropriate legal precepts, factors, and conditions above, I conclude the following with respect to all allegations set forth in the SOR.

Applicant's extensive delinquent debts prompted the allegations under Guideline F in that an individual who is financially overextended is at risk of having to engage in illegal acts to generate funds. (E2.A6.1.1.) Conditions that could raise a security concern and may be disqualifying include a history of not meeting financial obligations (E2.A6.1.2.1.) and evidence of inability or unwillingness to satisfy debts. (E2.A6.1.2.3.) Mitigating Conditions (MC) include the fact that the

person has initiated a good faith effort to repay overdue creditors or otherwise resolve debts. (E2.A6.1.3.6.). Petitioning for a second bankruptcy does not mitigate the allegations in the SOR. Discharge in bankruptcy gives a fresh start but does not relieve the Applicant of responsibility for insuring sound financial practices in the future.

Applicant has not shown the proper response for resolution of her financial obligations. Having once undertaken bankruptcy for good reason, she was obliged to fulfill her financial responsibilities thereafter. She failed to do so and has again petitioned for bankruptcy a second time. While there were some circumstances that occurred which were beyond her control between the first and second bankruptcies, Applicant has failed to take adequate remedial steps to insure that similar problems might not arise in the future.

Her salary is inadequate to provide sufficient assets to pay her costs of living and this has been the principal cause of extensive indebtedness. While her willingness to help relatives and friends who live in her home is commendable from a social standpoint, it has not served her well in providing sufficient financial assets to pay her debts. Although the second bankruptcy has apparently taken care of many of the debts cited in the SOR, the fact that she has taken bankruptcy, not just once but twice in the last ten years, militates against the grant of a security clearance. Some of the circumstances that led to the bankruptcies no longer exist but the totality of Applicant's adverse financial situation continues and shows few signs of improvement.

As the policy prescribes, the burden shifted to the Applicant to show that Mitigating Conditions (MC) are applicable. She has failed to meet the burden of proof requirement to mitigate the allegations.

In all adjudications the protection of our national security is of paramount concern. Persons who have access to classified information have an overriding responsibility for the security concerns of the nation. The objective of the security clearance process is the fair-minded, commonsense assessment of a person's trustworthiness and fitness for access to classified information. The "whole person" concept recognizes that we should view a person by the totality of their acts and omissions. Each case must be judged on its own merits taking into consideration all relevant circumstances, and applying sound judgment, mature thinking, and careful analysis. While Applicant is a well-meaning person who has taken care of friends and family, the requirements in security clearance proceedings for good fiscal management precludes the grant of a clearance.

After considering all the evidence in its totality and as an integrated whole to focus on the whole person of Applicant, I conclude that Applicant has not been successful in resolving her financial difficulties and it is premature to grant her a clearance.

FORMAL FINDINGS

Formal findings as required by the Directive (Par. E3.1.25) are as follows:

Paragraph 1. Guideline F: AGAINST APPLICANT

Subparagraph 1.a.: Against Applicant

Subparagraph 1.b.: Against Applicant

Subparagraph 1.c.: Against Applicant

Subparagraph 1.d.: Against Applicant

Subparagraph 1.e.: Against Applicant

Subparagraph 1.f.: Against Applicant

Subparagraph 1.g.: Against Applicant

Subparagraph 1.h.: Against Applicant

Subparagraph 1.i.: Against Applicant

Subparagraph 1.j.: Against Applicant

Subparagraph 1.k.: Against Applicant

Subparagraph 1.l.: Against Applicant

Subparagraph 1.m.: Against Applicant

Subparagraph 1.n.: For Applicant

Subparagraph 1.o.: Against Applicant

Subparagraph 1.p.: Against Applicant

Subparagraph 1.q.: Against Applicant

Subparagraph 1.r.: Against Applicant

Subparagraph 1.s.: Against Applicant

Subparagraph 1.t.: Against Applicant

DECISION

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 or renew a security clearance for Applicant. Clearance is denied.

Charles D. Ablard

Administrative Judge

FOOTNOTES

FOR GOVERNMENT Eric Borgstrom, Esq., Department Counsel file:///usr.osd.mil/...Computer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/03-10582.h1.htm[6/24/2021 3:17:46 PM] FOR APPLICANT Pro Se