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ISCR Case 03-16915.h1 — CASE

ISCR Case 03-16915.h1granted

Case Headnote

ISCR Case No. 03-16915.h1

grantedApr 1, 2005· Hon. Barry M. Sax· hearing

Summary

A 42-year-old driver for a defense contractor was granted a security clearance despite concerns under Guideline F (Financial Considerations). The applicant had incurred 10 delinquent debts in the late 1990s following a business failure.

At the time of the hearing, the applicant had paid off six of these debts. This included resolving a $1,432 debt for $1,000, settling a $4,005 debt with Financial Service Company B, and closing a $910 debt with Financial Services Company C. An Asset Management Company D debt of $734 was resolved with a $592 payment on February 18, 2005, and a $3,427 debt to Financial Services Company G was paid in full by March 5, 2005. A $6,032 debt to Collection Firm E was partially settled with a $1,500 check cashed and a second $500 check sent.

Efforts were underway to resolve the remaining debts. The applicant was disputing an $8,040 debt with Bank H, making payments to the IRS for $15,000 in past taxes, and actively researching a $379 telephone company debt. He was also attempting to locate records for a $3,482 debt from a bank that was no longer a separate entity. The judge found substantial financial rehabilitation, noting that the financial issues stemmed from a business downturn, and granted the security clearance.

Why the Applicant Prevailed

The applicant demonstrated substantial financial rehabilitation by paying off six debts.
He made significant progress in resolving two additional debts and was actively seeking to locate the last two creditors.
The financial issues were primarily due to a business downturn, which was considered mitigating.

Conditions Referenced

Disqualifying

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

Mitigating

MC 3appliedThe Financial Problems Were Substantially the Result of a Business Downturn
MC 6appliedThe Individual Initiated a Good Faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts

Key Rule Quoted

“A person seeking access to classified information enters into a fiduciary relationship with the Government based upon trust and confidence.”

Procedural Posture

SOR issuedSep 8, 2004
Answer filedNov 5, 2004
Hearing heldFeb 24, 2005
Decision dateApr 1, 2005

Cite For

Mitigation of Financial Issues Under Guideline F
Demonstrating Financial Rehabilitation
Good Faith Efforts to Resolve Debts

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 applicant had multiple delinquent debts primarily resulting from a business failure in the late 1990s. He has made significant progress in resolving these debts, having paid off several and actively working on others, which led to the judge granting his security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Financial Services Company A -$1,432. The day prior to the hearing, Applicant was able to learn the name of the original creditor and contacted them. The creditor agreed to resolve the debt for $1,000, if promptly paid. Applicant has documented the payment. $1,432	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(c) received/receiving counseling; problem being resolved	Documented Debt Paid in Full
1.b	Financial Service Company B - $4,005. Applicant negotiated a settlement with this creditor and the account is closed. $4,005	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(c) received/receiving counseling; problem being resolved	Documented Debt Paid in Full
1.c	Financial Services Company C - $910. Applicant negotiated a settlement of this debt and the account is now closed. $910	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(c) received/receiving counseling; problem being resolved	Documented Debt Paid in Full
1.d	Asset Management Company D - $734. This debt has been resolved by a payment of $592 on February 18, 2005. The account is now closed. $734	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(c) received/receiving counseling; problem being resolved	Documented Debt Paid in Full
1.e	Collection Firm E - $6,032. Applicant has negotiated a settlement of this debt and has documented that the creditor has cashed a check of $1,500. A second check, for $500, was sent to the creditor by Applicant, but had not been cashed by the creditor by the time the document was submitted to DOHA. $6,032	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(c) received/receiving counseling; problem being resolved	Documented Debt Paid in Full
1.f	Financial Services Company F - $3,482. This is from a bank that is no longer a separate entity and Applicant has been unable to find anyone with a record of the account. He is continuing to look for it. $3,482	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	Claimed Other
1.g	Financial Services Company G - $3,427. This debt of $3,247 has been paid in full as of March 5, 2005. $3,427	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(c) received/receiving counseling; problem being resolved	Documented Debt Paid in Full
1.h	Bank H - $8,040. The record documented payments late last year that reduced the balance due to $7,049.63. As of the hearing, this debt was still being disputed, but Applicant promised to pay it. He had opened an account with the creditor into which he could make payments, with the first one being due in April 2005. $8,040	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	Claimed Other
1.i	Company I - $379. This is an old telephone company account that Applicant believes may not be his. He is continuing to research his liability for the debt. $379	For Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	Claimed Other
1.j	Internal Revenue Service - $15,000 in taxes, penalties, and interest for tax years 1998 to 2001. Applicant states he made monthly payments of $225 from about September 2002 to May 2004 and $275 per month since then. His Federal tax return for 2004 shows a $2,981 refund due him that will go toward the balance of his past due taxes. $15,000	For Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	Claimed Other
1.k	Applicant's Personal Financial Statement of June 18, 2003, indicates that he had the ability to make substantial payments on the above delinquent debts, as shown by a monthly net remainder of $877. The current evidence show significant payments are being made toward the delinquent debts cited in the SOR.	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	Claimed Other

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: This 42-year-old driver for a defense contractor incurred 10 delinquent debts arising out of a business failure in the late 1990s. His financial situation has greatly improved and he had paid off six of the debts, has made significant inroads in paying off two others, and is seriously seeking to locate the last two creditors and resolve those debts with available assets. He has shown substantial financial rehabilitation. Mitigation has been shown. Clearance is granted. CASENO: 03-16915.h1 DATE: 04/01/2005 DATE: April 1, 2005

In Re:

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

Applicant for Security Clearance

ISCR Case No. 02-16915

DECISION OF ADMINISTRATIVE JUDGE BARRY M. SAX

APPEARANCES

SYNOPSIS

This 42-year-old driver for a defense contractor incurred 10 delinquent debts arising out of a business failure in the late 1990s. His financial situation has greatly improved and he had paid off six of the debts, has made significant inroads in paying off two others, and is seriously seeking to locate the last two creditors and resolve those debts with available assets. He has shown substantial financial rehabilitation. Mitigation has been shown. Clearance is granted.

STATEMENT OF CASE

On September 8, 2004, 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 November 5, 2004, Applicant responded to the allegations set forth in the SOR, and elected to have a decision made by a DOHA Administrative Judge after a hearing. The matter was assigned to me for resolution on January 3, 2005. A Notice of Hearing was issued on February 1, 2005, setting the matter for February 24, 2005. At the hearing the Government introduced six exhibits (Government Exhibits (GX) 1 - 6). Applicant testified and introduced six exhibits (Applicant's Exhibits (AX) A - F). He also offered a collection of timely post hearing exhibits (AX G1 - G10). All exhibits were admitted into evidence without objection. The transcript was received at DOHA on March 4, 2005.

FINDINGS OF FACT

The SOR contains 11 allegations (1.a. - 1.k.) under Guideline F (Financial Considerations). In his response to the SOR, Applicant admits allegations 1.a.,1.b., 1.d., 1.e., 1.f. ,1.g., 1.h., 1.j., and 1.k. He denies allegations 1.c., as to the amount, and 1.i. His admissions are incorporated herein as Findings of Fact.

After considering the entire record, I make the following additional Findings of Fact:

Guideline F (Financial Considerations)

Applicant is a 42-year-old driver for a defense contractor. As of the issuance date of the SOR, September 8, 2004, Applicant had the following past due, delinquent, charged off, or referred for collection debts owed to the following creditors in the approximate amounts cited:

1.a. - Financial Services Company A -$1,432. The day prior to the hearing, Applicant was able to learn the name of the original creditor and contacted them (Tr at 22). The creditor agreed to resolve the debt for $1,000, if promptly paid (Tr at 22). Applicant has documented the payment (Tr at 21 - 23, AX G1).

1.b. - Financial Service Company B - $4,005. Applicant negotiated a settlement with this creditor and the account is closed (Tr at 22, 23 and AX G2).

1.c. - Financial Services Company C - $910. Applicant negotiated a settlement of this debt and the account is now closed (Tr at 22 -24 and AX G3); 1.d. - Asset Management Company D - $734. This debt has been resolved by a payment of $592 on February 18, 2005. The account is now closed (AX G3);

1.e. - Collection Firm E - $6,0327 Applicant has negotiated a settlement of this debt and has documented that the creditor has cashed a check of $1,500. A second check, for $500, was sent to the creditor by Applicant, but had not been cashed by the creditor by the time the document was submitted to DOHA (Tr at 25 and AX G4);

1.f. - Financial Services Company F - $3,482. This is from a bank that is no longer a separate entity and Applicant has been unable to find anyone with a record of the account. He is continuing to look for it (Tr at 26);

1.g. - Financial Services Company G - $3,427. This debt of $3,247 has been paid in full as of March 5, 2005 (AX G7);

1.h. - Bank H - $8,040. The record documented payments late last year that reduced the balance due to $7,049.63 (GX 3). As of the hearing, this debt was still being disputed, but Applicant promised to pay it. He had opened an account with the creditor into which he could make payments, with the first one being due in April 2005 (Tr at 26-28).

1.i. - Company I - $379. This is an old telephone company account that Applicant believes may not be his. He is continuing to research his liability for the debt (Tr at 19).

1.j. - Internal Revenue Service - $15,000 in taxes, penalties, and interest for tax years 1998 to 2001. Applicant states he made monthly payments of $225 from about September 2002 to May 2004 and $275 per month since then (AX G10). His Federal tax return for 2004 shows a $2,981 refund due him that will go toward the balance of his past due taxes.

In addition,

1.k. - Applicant's Personal Financial Statement of June 18, 2003, indicates that he had the ability to make substantial payments on the above delinquent debts, as shown by a monthly net remainder of $877. The current evidence show significant payments are being made toward the delinquent debts cited in the SOR. Applicant's current delinquent debt situation resulted from the failure of a 1997/1998 export/import business venture Applicant operated out of his home. He financed the business to a substantial degree using his credit cards and was eventually able to make only minimum payments. He was also unable to pay his taxes. His wages were garnished four times up to 2002 (GX 4). His delinquent debts totaled about $43,000. As of the hearing on February 24, 2005, Applicant had settled six of the nine consumer debts and he has the money to settle the other three as soon as the disputed amount is agreed to (Tr at 18, 21). His post hearing submissions show continuing payments and a significant reduction of his debt load.

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 and applicant's response.

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

Guideline F (Financial Considerations)

The current evidence of record shows that Applicant has paid off the debts alleged in SOR 1.a., 1.b., 1.c., 1.d. ,1.g., and 1.h. He has reached resolution agreements on the debts alleged at SOR 1.c. (he has already paid about 1/3 of the debt) and 1.i. (has made a series of payments and a tax refund of almost $3,000 will go to the IRS). On two accounts, (SOR 1.f. -$3,427 and 1.i. - $379), he is continuing his efforts to find and contact the creditors so that he can resolve these debts. In summary, six debts have been paid off, two are being resolved with significant payments, and two have not yet been located, despite what I conclude are serious efforts.

Disqualifying and Mitigating Conditions

The Concern: An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds.

Disqualifying Conditions (DC) 1 (a history of not meeting financial obligations) and 3 (inability or unwillingness to satisfy debts) are applicable. As to itigating Conditions (MC), 3 is applicable since the financial problems were substantially the result of a business downturn. MC 6 is also applicable since Applicant has initiated a good faith effort to repay overdue creditors or otherwise resolve debts. I find MC 6 to be highly persuasive in that Applicant has actually made substantial inroads into repaying or otherwise resolving his debts and has demonstrated significant financial rehabilitation to the degree that he can reasonably be relied on to continue the process he has begun.

In summary, Applicant has successfully mitigated the Guideline's concerns and can be relied upon to protect the nation's secrets.

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 Considerations) For the Applicant Subparagraph l.a. For the Applicant Subparagraph 1.b. For the Applicant Subparagraph l.c. For the Applicant Subparagraph 1.d. For the Applicant

Subparagraph l.e. For the Applicant Subparagraph 1.f. For the Applicant Subparagraph l.g. For the Applicant Subparagraph 1.h. For the Applicant Subparagraph l.i. For the Applicant Subparagraph 1.j. For the Applicant Subparagraph l.k 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

FOR GOVERNMENT file:///usr.osd.mil/...Computer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/03-16915.h1.htm[6/24/2021 3:26:38 PM] Melvin A. Howry, Esquire, Department Counsel FOR APPLICANT Pro Se