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ISCR Case 04-06074.h1 — CASE

ISCR Case 04-06074.h1denied

Case Headnote

ISCR Case No. 04-06074.h1

deniedMar 9, 2005· Hon. John Grattan Metz, Jr.· hearing

Summary

A 29-year-old defense contractor was denied a security clearance under Guideline F (Financial Considerations) due to a history of significant and ongoing financial irresponsibility. The Statement of Reasons detailed numerous allegations, including a history of financial difficulties dating back to 1996, a judgment for a car loan, and admitted debts totaling nearly $3,000.00. Credit reports documented 19 delinquent accounts, with delinquencies occurring between November 1996 and August 2003, totaling over $21,000.00.

Specific issues included a deficiency amount on a totaled car, a co-signed loan for a friend's pool table, and another co-signed loan on which payments had not been made since June 2004. The applicant was found to have made little progress on debts even with higher income, lacked the means to address them, and had not pursued potential defenses. The judge noted that the applicant's financial difficulties were both recent and ongoing, not isolated, and did not appear to be due to circumstances beyond his control.

Despite character witnesses extolling his work ethic, the applicant had not entered into a recovery plan. The denial was based on the applicant's long history of financial difficulties, admitted substantial indebtedness, poor financial management, and the ongoing nature of these issues, which demonstrated a lack of progress in resolving his debts.

Why the Applicant Was Denied

Applicant has a history of financial difficulties dating back to 1996.
Applicant admitted to substantial indebtedness and acknowledged poor financial management.
The applicant's financial issues are ongoing and not isolated, indicating a lack of progress in addressing debts.

Conditions Referenced

Disqualifying

F1raisedFinancial Considerations - Inability to Satisfy Debts
F3raisedFinancial Considerations - Unexplained Affluence

Key Rule Quoted

“The government has a compelling interest in ensuring each Applicant possesses the requisite judgement, reliability, and trustworthiness of those who must protect national interests as their own.”
— Department of the Navy v. Egan, 484 U.S. 518 (1988)

Procedural Posture

SOR issuedMay 10, 2004
Answer filedMay 27, 2004
Hearing heldAug 9, 2004
Decision dateMar 9, 2005

Cite For

Financial Irresponsibility as a Basis for Clearance Denial
Ongoing Financial Difficulties Not Mitigated by Circumstances
Lack of Progress in Addressing Debts as a Disqualifying Factor

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's financial irresponsibility and substantial indebtedness were deemed unsuitable for a security clearance, leading to a denial. The judge found that the applicant's financial difficulties were ongoing and not isolated, with no mitigating factors applicable.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant has a history of financial difficulties and irresponsibility dating back to 1996.	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.b	A judgment for another car loan from a private seller.	Against Applicant	Judgment Against Applicant	Denied	—	—	—
1.c	Applicant admits eight debts totaling nearly $3,000.00. $3,000	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.d	Applicant has not made much progress on his debts when his income was higher.	Against Applicant	Unspecified Financial	Denied	—	—	—
1.e	Applicant's financial difficulties are both recent and not isolated; indeed they are ongoing.	Against Applicant	Unspecified Financial	Denied	—	—	—
1.f	Applicant lacks the means to address his debts at various times in the past, and currently lacks the means to do so.	Against Applicant	Unspecified Financial	Denied	—	—	—
1.g	Applicant has not pursued his potential defenses on any of these debts.	Against Applicant	Unspecified Financial	Denied	—	—	—
1.h	Applicant's financial irresponsibility is exemplified by his handling of the largest and smallest of the debts he paid off before submitting his answer.	Against Applicant	Unspecified Financial	Denied	—	—	—
1.i	Applicant's credit reports document 19 delinquent accounts totaling over $21,000.00, falling delinquent between November 1996 and August 2003. $21,000	Against Applicant	Unspecified Financial	Denied	—	—	—
1.j	Applicant has not corroborated his claim that he had positive cash flow then.	Against Applicant	Unspecified Financial	Denied	—	—	—
1.k	Applicant's character witnesses and exhibits extol his work ethic and his integrity, but he has not entered into a recovery plan.	Against Applicant	Unspecified Financial	Denied	—	—	—
1.l	Applicant's financial difficulties do not appear to be due to circumstances beyond his control.	Against Applicant	Unspecified Financial	Denied	—	—	—
1.m	The bulk of this debt stems from a deficiency amount on a car Applicant admits buying but which was totaled in an accident.	Against Applicant	Auto Loan Debt	Denied	—	—	—
1.n	Applicant co-signed a loan for a friend to buy a pool table.	Against Applicant	Personal Loan Debt	Denied	—	—	—
1.o	Applicant has a loan he co-signed.	Against Applicant	Personal Loan Debt	Denied	—	—	—
1.p	Applicant has not made payments since June 2004.	Against Applicant	Unspecified Financial	Denied	—	—	—
1.q	Applicant's financial insight seems only slightly higher than in the past.	Against Applicant	Unspecified Financial	Denied	—	—	—
1.r	Applicant has a deficiency amount on a car loan from a private seller.	Against Applicant	Auto Loan Debt	Denied	—	—	—
1.s	Applicant's financial difficulties are ongoing and do not appear to be isolated.	Against Applicant	Unspecified Financial	Denied	—	—	—
1.t	Applicant has not stopped digging himself into a financial hole, much less started to pull himself out of it.	Against 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

SYNOPSIS

KEYWORD: Financial DIGEST: Applicant's financial irresponsibility makes him unsuitable for a security clearance. Clearance denied. CASENO: 04-06074.h1 DATE: 03/09/2005 DATE: March 9, 2005

In Re:

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

Applicant for Security Clearance

ISCR Case No. 04-06074

DECISION OF ADMINISTRATIVE JUDGE JOHN GRATTAN METZ, JR.

APPEARANCES

SYNOPSIS

Applicant's financial irresponsibility makes him unsuitable for a security clearance. Clearance denied.

STATEMENT OF CASE

Applicant challenges the 10 May 2004 Defense Office of Hearings and Appeals (DOHA) Statement of Reasons (SOR) recommending denial or revocation of his clearance because of financial considerations. (1) Applicant answered the SOR on 27 and 28 May 2004 and requested a hearing. DOHA assigned the case to me 19 July 2004 and I heard it 9 August 2004. DOHA received the transcript 24 August 2004.

FINDINGS OF FACT

Applicant admitted eight debts and denied eleven others; he also denied having negative monthly cash flow. He is a 29- year-old employee of a defense contractor who briefly held a clearance while in the Army from 1998 to 1999.

Applicant has a history of financial difficulties and irresponsibility dating back to 1996. Applicant states his financial problems were originally due to his poor spending habits and financial irresponsibility. He also had some brief periods of unemployment and underemployment, and some unpaid medical bills as a result of an automobile accident. He claims without corroboration to have had medical insurance as well as a liability claim against the driver of the other car. He also claims to have retained an attorney to represent him, but did not follow up on his case. His credit reports document 19 delinquent accounts totaling over $21,000.00, falling delinquent between November 1996 and August 2003. Applicant admits eight debts totaling nearly $3,000.00. On the eve of his answer, Applicant had entered into repayment plans on three accounts totaling just over $2,100.00. However, he made only one month's payments of $277.00 before he was placed in a leave-without-pay status by his employer.

Of the 11 accounts Applicant denies, three (totaling $2,232.00) were paid on the eve of his answer (2) and a fourth was shown to be a duplicate of one of the three paid accounts. Two more accounts ($467.00) fell delinquent in August 2003, and while Applicant denies these accounts, he has produced no evidence showing that the accounts are not his. The remaining five accounts (nearly $16,000.00) were acknowledged by Applicant in his June 2003 sworn statement. The bulk of this debt (over $15,000.00) stems from a deficiency amount on a car Applicant admits buying but which was totaled in an accident (1.m.), a loan he co-signed (1.r) (3), and a judgment for another car loan from a private seller (1.b). Although Applicant feels these debts are unfair or possibly unenforceable, he never pursued his potential defenses on any of these debts.

Applicant's financial irresponsibility is exemplified by his handling of the largest and smallest of the debts he paid off before submitting his answer. The smallest ($18.00) was for an unpaid utility bill that Applicant was unaware of until his June 2003 subject interview, but remained unpaid until late May 2004. The largest ($2,033) was for a personal loan applicant took out in 1996 to help a friend buy a stereo system. The account was substantially delinquent when Applicant entered the Army in April 1998 and although he claimed he made payments on the account while in the Army, the delinquent amount on a loan that was originally $2,100.00 eventually grew to over $2,500.00. The final payment of $263.00 was made a few days before he answered the SOR. Except as noted above, none of the accounts have been paid off, and no account has had any payments since June 2004. His June 2003 Personal Financial Statement documents his negative cash flow, and he has not corroborated his claim that he had positive cash flow then. Additionally, in summer 2003, he spent about $1,600.00 on a trip to the Carribean with his girlfriend.

Applicant's character witnesses and exhibits extol his work ethic and his integrity. His other exhibits reveal that he consulted a credit counseling service but did not enter into a plan, tried to obtain a credit line to consolidate his bills but was turned down, entered into a repayment plan on one of the accounts discussed above, paid off a lien for a debt not alleged in the SOR, and retained a tax attorney to assist him with some tax returns (for which he expected refunds, but refunds that would not cover his outstanding debt) and educate him about recovering from his financial difficulties and making better choices in the future. However, he consulted this attorney 5 August 2004. There is no recovery plan in place.

POLICIES

The Directive, Enclosure 2 lists adjudicative guidelines to be considered in evaluating an Applicant's suitability for access to classified information. Administrative Judges must assess both disqualifying and mitigating conditions under each adjudicative issue fairly raised by the facts and circumstances presented. Each decision must also reflect a fair and impartial common sense consideration of the factors listed in Section 6.3. of the Directive. The presence or absence of a disqualifying or mitigating condition is not determinative for or against Applicant. However, specific adjudicative guidelines should be followed whenever a case can be measured against them, as they represent policy guidance governing the grant or denial of access to classified information. Considering the SOR allegations and the evidence as a whole, the relevant, applicable, adjudicative guideline is Guideline F (Financial Considerations).

BURDEN OF PROOF

Security clearance decisions resolve whether it is clearly consistent with the national interest to grant or continue an Applicant's security clearance. The government must prove, by something less than a preponderance of the evidence, controverted facts alleged in the SOR. If it does so, it establishes a prima facie case against access to classified information. Applicant must then refute, extenuate, or mitigate the government's case. Because no one has a right to a security clearance, the Applicant bears a heavy burden of persuasion.

Persons with access to classified information enter into a fiduciary relationship with the government based on trust and confidence. Therefore, the government has a compelling interest in ensuring each Applicant possesses the requisite judgement, reliability, and trustworthiness of those who must protect national interests as their own. The "clearly consistent with the national interest" standard compels resolution of any reasonable doubt about an Applicant's suitability for access in favor of the government. (4)

CONCLUSION

The Government established a Guideline F case. Applicant's substantial indebtedness was acquired largely through his own irresponsibility (or poor responses when the initial loss was caused by circumstances beyond his control). Although Applicant lacked the means to address his debts at various times in the past, and currently lacks the means to do so, he has not made much progress on his debts when his income was higher. He acknowledged his lack of financial insight in the past, but while he has obviously matured, his current level of financial insight seems only slightly higher than in the past. He does not currently have a grip on his finances nor does it appear he will any time soon. Disqualifying Factors 1 and 3 apply.

Applicant meets none of the mitigating factors for financial considerations. His financial difficulties are both recent and not isolated; indeed they are ongoing. They do not appear to be due to circumstances beyond his control. It does not appear that Applicant has stopped digging himself into a financial hole, much less started to pull himself out of it. I conclude Guideline F against Applicant.

FORMAL FINDINGS

Paragraph 1. Guideline F: AGAINST THE APPLICANT

Subparagraph a: Against the Applicant Subparagraph b: Against the Applicant Subparagraph c: Against the Applicant Subparagraph d: Against the Applicant Subparagraph e: Against the Applicant Subparagraph f: Against the Applicant Subparagraph g: Against the Applicant Subparagraph h: Against the Applicant Subparagraph i: Against the Applicant Subparagraph j: Against the Applicant Subparagraph k: Against the Applicant Subparagraph l: Against the Applicant Subparagraph m: Against the Applicant Subparagraph n: Against the Applicant Subparagraph o: Against the Applicant Subparagraph p: Against the Applicant Subparagraph q: Against the Applicant Subparagraph r: Against the Applicant Subparagraph s: Against the Applicant Subparagraph t: 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.

John G. Metz, Jr. Administrative Judge 1. Required by Executive Order 10865 and Department of Defense Directive 5220.6, as amended (Directive). 2. Although the largest of these ($2,033.00) was paid in installments, only the last of which was paid just before his answer. 3. Applicant co-signed this loan so a friend could buy a pool table. 4. See, Department of the Navy v. Egan, 484 U.S. 518 (1988).

FOOTNOTES

FOR GOVERNMENT Eric H. Borgstrom, Esquire, Department Counsel file:///usr.osd.mil/...yComputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/04-06074.h1.htm[7/2/2021 3:30:58 PM] FOR APPLICANT Pro Se