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ISCR Case 04-09688.h1 — CASE

ISCR Case 04-09688.h1denied

Case Headnote

ISCR Case No. 04-09688.h1

deniedJan 27, 2006· Hon. James A. Young· hearing

Summary

A 51-year-old security officer for a defense contractor was denied a security clearance under Guideline F (Financial Considerations) due to over $79,000 in delinquent debt. The Statement of Reasons detailed 17 delinquent debts totaling more than $60,000 that were placed for collection, and four delinquent accounts totaling over $19,800 that were charged off. Additionally, the applicant owed the IRS approximately $6,000 for tax years 2000-2002, having failed to file timely returns in those years, though an agreement was in place to repay this debt.

The applicant filed for Chapter 7 bankruptcy, which was expected to discharge most debts except for alimony payments and the IRS obligation. He also received financial counseling.

However, the clearance was denied because the applicant lacked a sufficient track record of financial stability to mitigate the security concerns raised by his substantial delinquent debt. The decision noted that he waited too long to seek financial assistance, which undermined his claims of resolution.

Why the Applicant Was Denied

Applicant has over $79,000 in delinquent debt, including alimony and tax obligations.
Applicant does not have a sufficient track record of financial stability to mitigate security concerns.
Applicant waited too long to seek financial assistance, undermining his claims of resolution.

Conditions Referenced

Disqualifying

E2.A6.1.2.1raisedHistory of Not Meeting Financial Obligations
E2.A6.1.2.3raisedUnable or Unwilling to Satisfy Debts

Mitigating

E2.A6.1.3.3rejectedDebts Resulted From Conditions Largely Beyond ControlThe applicant's divorce caused financial difficulties, but it occurred five years ago.
E2.A6.1.3.4rejectedReceived Counseling and Indications of ResolutionWhile the applicant received counseling, the bankruptcy is not final and he lacks a track record of financial stability.
E2.A6.1.3.6rejectedInitiated Good-faith Effort to Resolve DebtsThe applicant's delay in seeking assistance undermines his good-faith efforts.

Key Rule Quoted

“An applicant who is financially overextended is at risk of having to engage in illegal acts to generate funds.”

Procedural Posture

SOR issuedJul 25, 2005
Answer filedAug 9, 2005
Hearing heldDec 9, 2005
Decision dateJan 27, 2006

Cite For

Denial of Clearance Due to Significant Delinquent Debt Under Guideline F
Impact of Financial Counseling and Bankruptcy on Security Clearance Eligibility
Importance of Timely Action in Addressing Financial Issues for Clearance Applicants.

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 against the applicant on all financial allegations due to a significant amount of delinquent debt exceeding $79,000, despite the applicant's attempts at financial counseling and filing for Chapter 7 bankruptcy. The applicant's financial instability and failure to timely address his debts were key factors in the denial of his security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant admits 17 delinquent debts totaling more than $60,000 that were placed for collection. $60,000	Against Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.b	Applicant admits 17 delinquent debts totaling more than $60,000 that were placed for collection. $60,000	Against Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.c	Applicant admits 17 delinquent debts totaling more than $60,000 that were placed for collection. $60,000	Against Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.d	Applicant admits 17 delinquent debts totaling more than $60,000 that were placed for collection. $60,000	Against Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.e	Applicant admits 17 delinquent debts totaling more than $60,000 that were placed for collection. $60,000	Against Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.f	Applicant admits four delinquent accounts totaling more than $19,800 that were charged off. $19,800	Against Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.g	Applicant admits four delinquent accounts totaling more than $19,800 that were charged off. $19,800	Against Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.h	Applicant admits 17 delinquent debts totaling more than $60,000 that were placed for collection. $60,000	Against Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.i	Applicant admits four delinquent accounts totaling more than $19,800 that were charged off. $19,800	Against Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.j	Applicant admits 17 delinquent debts totaling more than $60,000 that were placed for collection. $60,000	Against Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.k	Applicant admits 17 delinquent debts totaling more than $60,000 that were placed for collection. $60,000	Against Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.l	Applicant admits 17 delinquent debts totaling more than $60,000 that were placed for collection. $60,000	Against Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.m	Applicant admits 17 delinquent debts totaling more than $60,000 that were placed for collection. $60,000	Against Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.n	Applicant admits 17 delinquent debts totaling more than $60,000 that were placed for collection. $60,000	Against Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.o	Applicant admits 17 delinquent debts totaling more than $60,000 that were placed for collection. $60,000	Against Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.p	Applicant admits four delinquent accounts totaling more than $19,800 that were charged off. $19,800	Against Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.q	Applicant admits he owed the IRS some $6,000 for tax years 2000-2002. $6,000	Against Applicant	Tax Unpaid	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.r	Applicant failed to file timely tax returns in those years.	Against Applicant	Tax Filing Failure	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.s	Applicant has an agreement with the IRS to repay the debt.	Against Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.t	Applicant filed a Chapter 7 bankruptcy that should result in the discharge of all his debts except the alimony payments and the debt to the IRS.	Against Applicant	Bankruptcy Filing	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.u	Applicant does not have a track record of financial stability sufficient to mitigate security concerns raised by his more than $79,000 in delinquent debt. $79,000	Against Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (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

SYNOPSIS

KEYWORD: Financial

DIGEST: Although he has received financial counseling and has filed for Chapter 7 bankruptcy, Applicant does not have a track record of financial stability sufficient to mitigate security concerns raised by his more than $79,000 in delinquent debt. Clearance is denied.

CASENO: 04-09688.h1

DATE: 01/27/2006

DATE: January 27, 2006

In re:

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

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

Applicant for Security Clearance

ISCR Case No. 04-09688

DECISION OF ADMINISTRATIVE JUDGE

JAMES A. YOUNG SYNOPSIS

Although he has received financial counseling and has filed for Chapter 7 bankruptcy, Applicant does not have a track record of financial stability sufficient to mitigate security concerns raised by his more than $79,000 in delinquent debt. Clearance is denied.

STATEMENT OF CASE

The Defense Office of Hearings and Appeals (DOHA) declined to grant or continue a security clearance for Applicant. In accordance with Department of Defense Directive 5220.6 ¶ E3.1.2 (Jan 2. 1992), as amended, DOHA issued a Statement of Reasons (SOR) on 25 July 2005 detailing the basis for its decision-security concerns raised under Guideline F (Financial Considerations) of the Directive. Applicant answered the SOR in writing on 9 August 2005 and elected to have a hearing before an administrative judge. The case was assigned to me on 27 October 2005. On 9 December 2005, I convened a hearing to consider whether it is clearly consistent with the national interest to grant or continue a security clearance for Applicant. DOHA received the hearing transcript (Tr.) on 22 December 2005.

FINDINGS OF FACT

Applicant is a 51-year-old security officer for a defense contractor. His work history includes stints in the U.S. Navy and as a city police officer. He is divorced and has alimony/spousal support payments of $400 per month. He is now paying $450 a month, the extra $50 a month to pay off an arrearage. Applicant has the support of his supervisors who find him to be a dedicated and professional member of the security team. Applicant and his wife were married from November 1989 until March 2000. His wife had two children prior to this marriage. Applicant supported the children while the marriage lasted and has continued to provide some financial assistance to them.

Applicant admits 17 delinquent debts totaling more than $60,000 that were placed for collection and four delinquent accounts totaling more than $19,800 that were charged off. Included in these delinquent debts are alimony/spousal support payments. (1) His wife claims he still owes her more than $11,000. He claims the debt is only $7,000, but his October 2005 credit report still reports the debt as over $20,000. Although not alleged in the SOR, Applicant admits he owed the IRS some $6,000 for tax years 2000-2002. Applicant failed to file timely tax returns in those years. He did file his 2003 return and has resolved his taxes for the years he did not file. Applicant blames his wife for not filing the returns while they were separated. He now has an agreement with the IRS to repay the debt. He has been making payments for the last 18 months.

In July 2005, Applicant sought assistance from a credit counseling service. His counselor provided financial training and assistance in setting up budgets, but recommended he file a Chapter 7 bankruptcy. In August 2005, Applicant filed a Chapter 7 bankruptcy that should result in the discharge of all his debts except the alimony payments and the debt to the IRS.

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. The President authorized the Secretary of Defense or his designee to grant applicants eligibility for access to classified information "only upon a finding that it is clearly consistent with the national interest to do so." Exec. Or. 10865, Safeguarding Classified Information within Industry § 2 (Feb. 20, 1960). Eligibility for a security clearance is predicated upon the applicant meeting the security guidelines contained in the Directive. An applicant "has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue his security clearance." ISCR Case No. 01-20700 at 3.

Enclosure 2 of the Directive sets forth personnel security guidelines, as well as the disqualifying conditions (DC) and mitigating conditions (MC) under each guideline. In evaluating the security worthiness of an applicant, the administrative judge must also assess the adjudicative process factors listed in ¶ 6.3 of the Directive. The decision to deny an individual a security clearance is not necessarily a determination as to the loyalty of the applicant. See Exec. Or. 10865 § 7. It is merely an indication the applicant has not met the strict guidelines the President and the Secretary of Defense have established for issuing a clearance.

CONCLUSION

In the SOR, DOHA alleged Applicant had 17 delinquent debts totaling more than $60,000 that were placed for collection (¶¶ 1.a-1e, 1.h, 1.j-1.o, 1.q-1.u); and four delinquent accounts totaling more than $19,800 that were charged off (¶¶ 1.f, 1.g, 1.i, 1.p). Applicant admitted each of the allegations. An applicant who is financially overextended is at risk of having to engage in illegal acts to generate funds. Directive ¶ E2.A6.1.1.

The Government's evidence established potentially disqualifying conditions under Guideline F. Applicant has a history of not meeting his financial obligations (DC E2.A6.1.2.1) and is unable or unwilling to satisfy his debts (DC E2.A6.1.2.3). An applicant may mitigate such disqualifying conditions by showing, among other things, that the debts resulted from conditions that were largely beyond his control (MCE2.A6.1.3.3), he has received counseling and there are clear indications the problem is being resolved (MC E2.A6.1.3.4), and he initiated a good-faith effort to resolve his debts (MC E2.A6.1.3.6). Applicant's divorce caused him some financial difficulties, but occurred about five years ago. Applicant made an effort, through counseling and by filing for bankruptcy, to resolve his delinquent debts. But the applicability of these mitigating conditions is tempered by the fact Applicant waited so long to seek assistance for his financial problems. He waited until September 2004 to contact an attorney to file for bankruptcy and until July 2005 to see a financial counselor. The bankruptcy is not final and Applicant does not have a track record of financial stability sufficient to overcome the disqualifying conditions. After considering all the circumstances, I find against Applicant.

FORMAL FINDINGS

The following are my conclusions as to each allegation in the SOR:

Paragraph 1. Guideline F: AGAINST APPLICANT

Subparagraph 1.a-1.u: Against Applicant

DECISION

In light of all of the circumstances in this case, it is not clearly consistent with the national interest to grant or continue a security clearance for Applicant. Clearance is denied.

James A. Young

Administrative Judge

1. In ¶ 1.qof the SOR, DOHA alleged Applicant had a delinquent child support debt to a county "Child Support Enforcement Agency." In his Answer, Applicant admitted this delinquent debt. Nevertheless, it appears the delinquent debt owed to the "Child Support Enforcement Agency" is actually for spousal support. Applicant was not misled by the reference to child support in the SOR.

FOOTNOTES

APPEARANCES

FOR GOVERNMENT Robert E. Coacher, Esq., Department Counsel file:///usr.osd.mil/...yComputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/04-09688.h1.htm[7/2/2021 3:36:53 PM] FOR APPLICANT Pro Se