CASEClearance Adjudication Search EngineCASE

Loading case…

ISCR Case 05-04469.h1 — CASE

ISCR Case 05-04469.h1denied

Case Headnote

ISCR Case No. 05-04469.h1

deniedMar 30, 2006· Hon. LeRoy F. Foreman· hearing

Summary

A 52-year-old operations analyst for a defense contractor was denied a security clearance under Guideline F, Financial Considerations. The denial stemmed from seven delinquent debts totaling approximately $34,320, which raised disqualifying conditions related to financial irresponsibility and an inability to meet financial obligations.

Specific allegations included multiple charged-off credit card accounts, a charged-off bank loan, a dental bill in collection, and outstanding federal and state taxes, with a lien filed for state taxes in April 2003. While the applicant negotiated a payment plan for federal taxes and resolved some debts, he failed to address three significant credit card debts exceeding $15,800.

Despite the application of several mitigating conditions, the judge concluded that the financial concerns were not sufficiently mitigated. The applicant did not demonstrate a good-faith effort to resolve his outstanding debts, leading to the denial of his security clearance.

Why the Applicant Was Denied

The applicant had seven delinquent debts totaling about $34,320.
He failed to resolve three delinquent credit card accounts totaling more than $15,800.
The applicant did not demonstrate a good-faith effort to resolve his debts.

Conditions Referenced

Disqualifying

E2.A6.1.2.1raisedDC 1: History of Not Meeting Financial Obligations
E2.A6.1.2.3raisedDC 3: Inability or Unwillingness to Satisfy Debts

Mitigating

E2.A6.1.3.1rejectedMC 1: Delinquent Debts Were Not RecentThe applicant had multiple delinquent debts that were not fully resolved.
E2.A6.1.3.2rejectedMC 2: Isolated IncidentThe applicant had multiple delinquent debts.
E2.A6.1.3.3rejectedMC 3: Financial Problems Due to Conditions Beyond ControlThe applicant did not show that his financial difficulties were largely beyond his control.
E2.A6.1.3.4rejectedMC 4: Counseling Received for the ProblemThe applicant did not show that his financial problems were being resolved.
E2.A6.1.3.6rejectedMC 6: Good-faith Effort to Resolve DebtsThe applicant did not demonstrate a good-faith effort to resolve his debts.

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 issuedSep 14, 2005
Answer filedUndated
Hearing heldN/ADecided on written record.
Decision dateMar 30, 2006

Cite For

Denial of Security Clearance Due to Unresolved Financial Obligations
Failure to Demonstrate Good-faith Efforts in Resolving Debts
Impact of Financial Irresponsibility on Security Clearance Eligibility

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 had multiple delinquent debts totaling approximately $34,320, including credit card debts and federal taxes. While some debts were settled, significant amounts remained unresolved, leading to a denial of the security clearance due to financial considerations.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Credit card; charged off $5,013	Against Applicant	Credit Card Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	State taxes; lien filed April 2003 $1,337	For Applicant	Tax Unpaid	Admitted	—	—	Documented Debt Paid in Full
1.c	Credit card; charged off $2,733	For Applicant	Credit Card Debt	Unknown	—	—	Documented Debt Paid in Full
1.d	Credit card; charged off $5,985	Against Applicant	Credit Card Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	Credit card; charged off $4,799	Against Applicant	Credit Card Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	Dental bill; collection $217	For Applicant	Unspecified Financial	Unknown	—	—	Documented Debt Paid in Full
1.g	Federal taxes for 2002 and 2003 $1,100	For Applicant	Tax Unpaid	Unknown	—	—	Documented Payment Plan with IRS
1.h	Bank Loan, charged off $14,473	For Applicant	Unspecified Financial	Unknown	—	—	Documented Debt Paid in Full

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 accumulated seven delinquent debts totaling about $34,320. He refuted an allegation of unpaid state taxes. He negotiated a payment plan for delinquent federal income taxes. After he received the Statement of Reasons, he resolved three delinquent debts, but he took no action to resolve three delinquent credit card accounts totaling more than $15,800. The security concern based on financial considerations is not mitigated. Clearance is denied.

CASENO: 05-04469.h1

DATE: 03/30/2006

DATE: March 30, 2006

In re:

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

SSN: ---------

Applicant for Security Clearance

ISCR Case No. 05-04469

DECISION OF ADMINISTRATIVE JUDGE

LEROY F. FOREMAN

APPEARANCES

SYNOPSIS

Applicant accumulated seven delinquent debts totaling about $34,320. He refuted an allegation of unpaid state taxes. He negotiated a payment plan for delinquent federal income taxes. After he received the Statement of Reasons, he resolved three delinquent debts, but he took no action to resolve three delinquent credit card accounts totaling more than $15,800. The security concern based on financial considerations is not mitigated. Clearance is denied.

STATEMENT OF CASE

On September 14, 2005, the Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) detailing the basis for its preliminary decision to not grant a security clearance to Applicant. (1) The SOR alleged security concerns under Guideline F (Financial Considerations). It alleged Applicant had seven delinquent debts totaling more than $21,000. Applicant answered the SOR in an undated document. He admitted all allegations except ¶ 1.b., alleging a debt of $1,337. He admitted a lesser amount than alleged for the federal tax debt in ¶ 1.g. He elected to have the case decided on the written record in lieu of a hearing. Department Counsel submitted the Government's written case on January 18, 2006. A complete copy of the file of relevant material (FORM) was provided to Applicant, and he was afforded an opportunity to file objections and submit material to refute, extenuate, or mitigate the disqualifying conditions. Applicant received the FORM on January 23, 2006 and his response was received by DOHA on March 6, 2006. The case was assigned to me on arch 14, 2006.

PROCEDURAL RULINGS

Department Counsel's submission included a motion to amend the SOR to add paragraph 1.g., alleging an additional delinquent debt of $14,473. Applicant denied the allegation in his response to the FORM and produced evidence the debt was settled, but he did not object to amending the SOR. The motion to amend the SOR by adding paragraph 1.g. is granted.

FINDINGS OF FACT

Based on the entire record, I make the following findings of fact:

Applicant is a 52-year-old operations analyst for a defense contractor. He has worked in this position since March 2003. He previously served in the U.S. Navy from April 1980 to April 2000. He appears to be eligible for military retirement, but the record does not reflect whether he receives military retirement benefits. He held two civilian jobs before his current position. He received a security clearance in September 1999. He submitted the current security clearance application in March 2003.

Applicant was married in September 1980 and divorced in August 1999. He has two children, born in 1982 and 1984.

In his answer to the SOR, Applicant stated he incurred significant credit card debt after his divorce. He lost his job in March 2002. He worked at another job at about half the pay he had been making until he accepted his current position in March 2003. (2) Applicant disclosed on his March 2003 security clearance application that he owed about $2,000 from his 2001 federal tax return and that his wages were garnished for $50 per month to pay his delinquent federal taxes. (3) His credit report dated March 31, 2003, reflected the debts alleged in SOR ¶¶ 1.d. and 1.e. were 30 days past due and the debt alleged in ¶ 1.a. was 120 days past due. All other accounts were current. (4) His credit report dated November 4, 2003, less than eight months later, showed all accounts current. (5) His credit report dated July 14, 2005, showed three charged off credit card accounts, corresponding to the SOR ¶¶ 1.a., 1.c., and 1.e. (6) Finally, his credit report dated January 12, 2006, showed the debt alleged in SOR ¶ 1.c. settled, the debts alleged in ¶¶ 1.a., 1.d., and 1.h. as charged off, and the debt alleged in ¶ 1.f. as sent to collection. (7)

The evidence concerning the debts alleged in the SOR is summarized in the following table.

SOR Debt Amount Status as of Date of FORM

Paragraph Department Counsel's Submission 1.a. Credit card; charged off October $5,013 Unpaid Items 1 and 3 2002 1.b. State taxes; lien filed April 2003 $1,337 Settled, 12-13-03, before SOR was Item 10 issued 1.c. Credit card; charged off September $2,733 Settled, 11-14-05 Items 11 and 2003 1.d. Credit card; charged off December $5,985 Unpaid Items 1 and 3 2003 1.e. Credit card; charged off December $4,799 Unpaid Items 1 and 3 2003 1.f. Dental bill; collection January 2004 $217 Paid in Full, 1-20-06 Response

to FORM 1.g. Federal taxes for 2002 and 2003 $1,100 Paying $200 per month; balance is Items 1 and 3 about $385 1.h. Bank Loan, charged off May 2004 $14, 473 Settled, 2-13-06 Response

(added by to FORM motion)

In March 2004, Applicant hired a lawyer to assist him in settling his debts. He agreed to pay the lawyer $110 per month until her fee of $1,900 was paid and then pay $110 per month toward his delinquent debts.

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 has 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), as amended and modified. 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 (App. Bd. Dec. 19, 2002).

The Directive sets forth adjudicative guidelines for determining eligibility for access to classified information, and it lists the disqualifying conditions (DC) and mitigating conditions (MC) for each guideline. Each clearance decision must be a fair, impartial, and commonsense decision based on the relevant and material facts and circumstances, the whole person concept, and the factors listed in the Directive ¶¶ 6.3.1 through 6.3.6.

In evaluating an applicant's conduct, an administrative judge should consider: (1) the nature, extent, and seriousness of the conduct; (2) the circumstances surrounding the conduct, to include knowledgeable participation; (3) the frequency and recency of the conduct; (4) the applicant'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 ¶¶ E2.2.1.1 through E2.2.1.9.

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.

Initially, the government must establish, by substantial evidence, conditions 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. "[T]he Directive presumes there is a nexus or rational connection between proven conduct under any of the Criteria listed therein and an applicant's security suitability." ISCR Case No. 95-0611 at 2 (App. Bd. May 2, 1996) (quoting DISCR Case No. 92-1106 (App. Bd. Oct. 7, 1993)).

Once the government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. ISCR Case No. 01-20700 at 3; see Directive ¶ E3.1.15. 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 (App. Bd. Dec. 19, 2002). "[S]ecurity clearance determinations should err, if they must, on the side of denials." Egan, 484 U.S. at 531; see Directive ¶ E2.2.2.

CONCLUSION

Under Guideline F (Financial Considerations), "[a]nindividual who is financially overextended is at risk of having to engage in illegal acts to generate funds." Directive ¶ E2.A6.1.1. A person who fails or refuses to pay long-standing debts or is financially irresponsible may also be irresponsible or careless in his or her duty to protect classified information.

Two disqualifying conditions (DC) under Guideline F could raise a security concern and may be disqualifying in this case. DC 1 applies where an applicant has a history of not meeting his or her financial obligations. Directive ¶ E2.A6.1.2.1. DC 3 applies where an applicant has exhibited inability or unwillingness to satisfy debts. Directive ¶ E2.A6.1.2.3. Applicant's history of delinquent debts and continued inability to satisfy them establishes DC 1 and DC 3.

Since the government produced substantial evidence to establish DC 1 and DC 3, the burden shifted to Applicant to produce evidence to rebut, explain, extenuate, or mitigate the facts. Directive ¶ E3.1.15. Applicant has the burden of proving a mitigating condition, and the burden of disproving it is never shifted to the government. See ISCR Case No. 02-31154 at 5 (App. Bd. Sep. 22, 2005).

A security concern based on financial problems can be mitigated by showing the delinquent debts were not recent (MC 1) or an isolated incident (MC 2). Directive ¶ E2.A6.1.3.1., E2.A6.1.3.2. Applicant has multiple delinquent debts that are not yet fully resolved. I conclude MC 1 and MC 2 are not established.

Security concerns arising from financial problems can be mitigated by showing they are the result of conditions "largely beyond the person's control" (MC 3). Directive ¶ E2.A6.1.3.3. Even if Applicant's financial difficulties initially arose due to circumstances outside his control, an administrative judge may consider whether Applicant acted in a reasonable manner when dealing with his financial difficulties. ISCR Case No. 02-02116 at 4 (App. Bd. Sep. 25, 2003).

Applicant attributes his financial problems to credit card debt incurred after his divorce in August 1999, loss of employment in March 2002, and the necessity of taking a lower-paying job until he obtained his current position in March 2003. However, he has not shown any impact of his 1999 divorce on his financial problems. The evidence shows he had only three past due credit card debts when he started his current job, and he owed federal taxes for 2001. Less than eight months later he had no delinquent credit card debts, but a civil suit had been filed for $1,337 in state taxes. He now owes federal taxes for 2002 and 2003.

His credit card and bank loan delinquencies first began appearing on his credit report in July 2005, almost two years after starting in his current position. He has not explained why he owed federal taxes for 2003. He has not explained why he was current on all his credit card accounts eight months after starting his current job, but heavily in debt two years later. I conclude MC 3 is not established.

A mitigating condition (MC 4) applies when an applicant "has received or is receiving counseling for the problem and there are clear indications that the problem is being resolved or is under control." Directive ¶ E2.A6.1.3.4. The record shows Applicant hired a lawyer in March 2004 to assist him, but two years later no action has been taken to resolve three of the four largest delinquent debts. I conclude MC 4 is not established because the record does now show the problem is being resolved. A security concern arising from financial problems can be mitigated by showing a good-faith effort to resolve debts (MC 6). Directive ¶ E2.A6.1.3.6. The concept of good faith "requires a showing that a person acts in a way that shows reasonableness, prudence, honesty, and adherence to duty or obligation." ISCR Case No. 99-0201, 1999 WL 1442346 at *4 (App. Bd. Oct. 12, 1999). Evidence of past irresponsibility is not mitigated by payment of debts only under pressure of qualifying for a security clearance. The record shows Applicant made some progress with his financial situation after he submitted his SF 86, but he still owes almost $15,800 in delinquent credit card debts, and he apparently has no plan to resolve them. He settled the additional $14,473 debt after he received the motion to amend the SOR. He presented no evidence he followed through with his plan to allocate $110 per month to resolving delinquent debts. I conclude Applicant has not carried his burden of establishing MC 6.

After weighing the disqualifying and mitigating conditions and evaluating all the evidence in the context of the whole person, I conclude Applicant has not mitigated the security concern based on financial considerations.

FORMAL FINDINGS

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

Paragraph 1. Guideline F (Financial Considerations): AGAINST APPLICANT

Subparagraph 1.a.: Against Applicant

Subparagraph 1.b.: For Applicant

Subparagraph 1.c.: For Applicant

Subparagraph 1.d.: Against Applicant

Subparagraph 1.e.: Against Applicant

Subparagraph 1.f.: For Applicant

Subparagraph 1.g.: For Applicant

Subparagraph 1.h.: For 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 Applicant a security clearance. Clearance is denied.

LeRoy F. Foreman

Administrative Judge

1. This action was taken under Executive Order 10865, Safeguarding Classified Information within Industry (Feb. 20, 1960), as amended and modified, and Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (Jan. 2, 1992), as amended and modified (Directive).

2. FORM Item 3.

3. FORM Item 4 at 11-12.

4. FORM Item 9.

5. FORM Item 8.

6. FORM Item 7.

7. FORM Item 6.

FOOTNOTES

FOR GOVERNMENT file:///usr.osd.mil/...yComputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/05-04469.h1.htm[7/2/2021 3:47:01 PM] Fahryn E. Hoffman, Esq., Department Counsel FOR APPLICANT Pro Se