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ISCR Case 06-12076.h1 — CASE

ISCR Case 06-12076.h1denied

Case Headnote

ISCR Case No. 06-12076.h1

deniedJan 31, 2007· Hon. Michael H. Leonard· hearing

Summary

A 62-year-old customer service representative was denied a security clearance due to financial considerations under Guideline F. The applicant had approximately $20,000 in delinquent debt across 15 accounts. These included various charged-off accounts, collection accounts, and medical bills, with one significant debt of $11,486 resulting from a car repossession. While one medical bill for $25 was paid, and a $3,892 charged-off account was settled for about $1,500 in 2000, the majority of the debts remained unpaid.

Specific allegations included an unpaid $336 collection account, a $285 charged-off account, and multiple unpaid medical bills ranging from $49 to $2,910. The applicant disputed the amount owed on one $555 collection account and did not recognize a $750 medical bill. She also admitted to establishing a $948 credit card account for her daughter, which subsequently became delinquent and unpaid.

Despite her long-term employment history, the applicant failed to provide sufficient evidence to mitigate the financial concerns. The denial was based on her substantial delinquent debt, the absence of a comprehensive plan to resolve these financial issues, and a lack of demonstrated good-faith effort to pay or settle her outstanding obligations.

Why the Applicant Was Denied

Applicant has approximately $20,000 in delinquent debt across multiple accounts.
She failed to present a comprehensive plan to resolve her financial issues.
The evidence did not demonstrate a good-faith effort to pay or settle her debts.

Conditions Referenced

Disqualifying

F3raisedInability to Satisfy Debts
F1raisedFinancial Irresponsibility

Mitigating

F2appliedUnexpected Medical BillsThe applicant received some credit in mitigation due to unexpected medical problems contributing to her financial issues.
F3rejectedDivorce Leading to Financial DifficultiesWhile the divorce contributed to her financial situation, it occurred 15 years ago and she has been continuously employed since.

Key Rule Quoted

“An individual who is financially overextended is at risk of having to engage in illegal or unethical acts to generate funds to meet financial obligations.”

Procedural Posture

SOR issuedAug 7, 2006
Answer filedSep 6, 2006
Hearing heldDec 13, 2006
Decision dateJan 31, 2007

Cite For

Financial Irresponsibility Under Guideline F
Insufficient Evidence to Mitigate Financial Concerns
Impact of Long-term Financial Issues 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 has approximately $20,000 in delinquent debt across multiple accounts, with significant unpaid debts raising concerns under Guideline F. The judge found that while some debts were settled or paid, the majority remain unpaid, leading to a denial of eligibility for security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	$3,892 charged-off account referred for collection. Settled for about $1,500 in 2000. $3,892	For Applicant	Unspecified Financial	Denied	—	—	—
1.b	$336 collection account. Unpaid. $336	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.c	$285 charged-off account. Unpaid. $285	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.d	$546 collection account. Unpaid. $546	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.e	$11,486 collection account. Unpaid. Deficiency balance owed after voluntary repossession of car when could no longer make payments. $11,486	Against Applicant	Auto Loan Debt	Admitted	—	—	—
1.f	$49 collection account-medical bill. Unpaid. $49	Against Applicant	Medical Debt	Admitted	—	—	—
1.g	$694 collection account. Unpaid. $694	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.h	$76 collection account-medical bill. Unpaid. $76	Against Applicant	Medical Debt	Admitted	—	—	—
1.i	$1,067 charged-off account and referred for collection. Unpaid. $1,067	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.j	$83 collection account. Unpaid. $83	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.k	$555 collection account. Unpaid. Disputes amount owed. $555	Against Applicant	Unspecified Financial	Denied	—	—	—
1.l	$2,910 collection account-medical bill. Making payments, but balance unknown. $2,910	Against Applicant	Medical Debt	Admitted	—	—	—
1.m	$130 collection account-medical bill. Unpaid. $130	Against Applicant	Medical Debt	Admitted	—	—	—
1.n	$150 collection account-medical bill. Unpaid. $150	Against Applicant	Medical Debt	Admitted	—	—	—
1.o	$948 collection account based on delinquent credit card account. Unpaid. Now admits this was an account she established for daughter who did not pay. $948	Against Applicant	Credit Card Debt	Denied	—	—	—
1.p	$750 collection account-medical bill. Unpaid. Does not recognize account. $750	Against Applicant	Unspecified Financial	Denied	—	—	—
1.q	$25 collection account-medical bill (co-payment). Paid. $25	For Applicant	Medical Debt	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

APPEARANCES

DATE: January 31, 2007

In re:

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

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

Applicant for Security Clearance

ADP Case No. 06-12076

DECISION OF ADMINISTRATIVE JUDGE

MICHAEL H. LEONARD

SYNOPSIS

Applicant has about $20,000 in delinquent debt on 15 accounts. She failed to present sufficient evidence to rebut, explain, extenuate, or mitigate the concerns under Guideline F for financial considerations. Eligibility is denied.

STATEMENT OF CASE

The Defense Office of Hearings and Appeals (DOHA) reviewed Applicant's eligibility to occupy an information systems position designated as an ADP I, II, or III position to support a contract with the Defense Department. As a result of the review, the agency recommended Applicant's case be submitted to an administrative judge for a determination whether Applicant is eligible to occupy such a position. Acting under Department of Defense Regulation 5200.2-R (Jan. 1987), as amended (Regulation), and Department of Defense Directive 5220.6 (Jan. 2, 1992), as amended (Directive), DOHA issued a statement of reasons (SOR) on August 7, 2006, detailing the basis for its action-- concerns raised under Guideline F for Financial Considerations. Applicant answered the SOR in writing on September 6, 2006, and requested a hearing.

The case was assigned to me on November 20, 2006, and a notice of hearing was issued scheduling the case for December 13, 2006. Applicant appeared and the hearing took place as scheduled. I left the record open until December 30, 2006, to allow Applicant to submit additional documentary evidence. To date, none were received. DOHA received the hearing transcript on January 4, 2007.

RULINGS ON PROCEDURE

At hearing, the government moved to amend the SOR by deleting reference to DoD Regulation 5200.2-R, as mentioned in the preamble of the SOR. The result of the amendment would be to rely exclusively on DoD Directive 5220.6, which is also mentioned in the preamble. I took the motion under advisement and indicated that I would address it in the written decision. The motion to amend is denied because the government did not provide a sufficient legal argument or analysis why such an amendment was proper and necessary to adjudicate this case.

FINDINGS OF FACT

In response to the SOR, Applicant admitted the indebtedness alleged in subparagraphs 1.b, 1.c, 1.d, 1.e, 1.f, 1.g, 1.h, 1.i, 1.j, 1.l, l.m, and 1. n. She denied the indebtedness in subparagraph 1.a and explained that she had paid about $1,500 to settle this account. She denied the indebtedness alleged in subparagraph 1.kand explained that she owed a lesser amount and disputed the greater amount. She denied the indebtedness alleged in subparagraph 1.o and explained that she did not recall having this credit card account. She, in effect, denied the indebtedness alleged in subparagraph 1.pand explained that she did not recognize the account. She, in effect, denied the indebtedness alleged in subparagraph 1.qand explained that she paid this $25 medical co-payment on the day of her visit. Her admissions are incorporated herein as findings of fact. And I make the following findings of fact.

1. Applicant is a 62-year-old customer service representative for a company that provides services to the Defense Department. She has worked for this company since October 2000. She currently earns $11.68 per hour.

2. Applicant was divorced from her husband in 1991. She now lives with an adult son and his family, and she contributes about $300 per month on mortgage payment. As a result of the divorce, Applicant estimates her annual income dropped substantially, and since the divorce she has not earned more than $25,000 per year. She has been continuously employed since her divorce.

3. Applicant has a history of financial problems. The background investigation in this case revealed unfavorable financial information. For example, a credit report was obtained in September 2003 (Exhibit 4), and the collections section of the report listed seven collection accounts. A second credit report was obtained in October 2004 (Exhibit 5), and it listed ten accounts in the collections section. The most recent credit report from May 2006 (Exhibit 6) also contains unfavorable information.

4. The SOR alleges that Applicant is indebted to multiple creditors for nearly $24,000 in total. In reply to the SOR, she admitted the vast majority of the debts. Her indebtedness is summarized in the table below.

SOR Allegations Current Status Record ¶ 1.a-$3,892 charged-off account Settled for about $1,500 in 2000. Exhibits B, C, and D and referred for collection. testimony related thereto. ¶ 1.b-$336 collection account. Unpaid. R. 44-45. ¶ 1.c-$285 charged-off account. Unpaid. R. 45. ¶ 1.d-$546 collection account. Unpaid. R. 45. ¶ 1.e-$11,486 collection account. Unpaid. Deficiency balance owed after voluntary R. 45, 57-58. repossession of car when could no longer make payments. ¶ 1.f-$49 collection account- Unpaid. R. 45. medical bill. ¶ 1.g-$694 collection account. Unpaid. R. 45. ¶ 1.h-$76 collection account- Unpaid. R. 45. medical bill. ¶ 1.i-$1,067 charged-off account Unpaid. R. 45. and referred for collection. ¶ 1.j-$83 collection account. Unpaid. R. 45. ¶ 1.k-$555 collection account. Unpaid. Disputes amount owed. R. 34-35. ¶ 1.l-$2,910 collection account- Making payments, but balance unknown. R. 46. medical bill. ¶ 1.m-$130 collection account- Unpaid. R. 46. medical bill. ¶ 1.n-$150 collection account- Unpaid. R. 46. medical bill. ¶ 1.o-$948 collection account based Unpaid. Now admits this was an account she R. 37-42, 46. on delinquent credit card account. established for daughter who did not pay. ¶ 1.p-$750 collection account- Unpaid. Does not recognize account. R. 47. medical bill. ¶ 1.q-$25 collection account- Paid. R. 42 medical bill (co-payment).

To sum up, the table shows Applicant paid one debt, settled one debt, and has made some payments on another. Otherwise, her delinquent indebtedness remains unpaid.

5. Concerning her overall financial situation, Applicant has filed her annual state and federal income tax returns and she is not delinquent with tax authorities. She estimated having about $35 in a checking account and maybe $20 in a savings account. She participates in a 401(k) plan at work, and she estimates the account has a $3,000 balance. Her car is paid for. She is aware of her "poor financial condition" (Exhibit A), but she maintains that does not make her a risk and she is living within her means.

POLICIES

In deciding these ADP cases, we follow the procedures contained in the Directive, and we apply the adjudicative guidelines contained in the Regulation. Under the Regulation, "[t]he standard that must be met for . . . assignment to sensitive duties is that, based on all available information, the person's loyalty, reliability, and trustworthiness are such that . . . assigning the person to sensitive duties is clearly consistent with the interests of national security." Regulation ¶ C6.1.1.1. Appendix 8 of the Regulation sets forth the adjudicative policy, as well as the disqualifying conditions (DC) and mitigating conditions (MC) associated with each guideline. DoD contractor personnel are afforded the adjudication procedures contained in the Directive. Regulation ¶ C8.2.1.

CONCLUSION

Under Guideline F, a concern typically exists for two different types of situations--significant unpaid debts or unexplained affluence. An individual who is financially overextended is at risk of having to engage in illegal or unethical acts to generate funds to meet financial obligations. Similarly, an individual who is financially irresponsible may also be irresponsible, unconcerned, negligent, or careless in properly handling and safeguarding classified information.

Here, based on the record evidence as a whole, a concern is raised by significant unpaid debt. As established above, Applicant has a history of not meeting financial obligations as well as inability to pay just debts. For example, the largest delinquent debt is the $11,486 collection account stemming from auto financing. Review of the credit reports (Exhibits 4 and 5) show the account was opened in 1998 (several years after the divorce), had a high credit of $16,077, and a $379 monthly payment. Before the voluntary repossession, the account was 30-days past due ten times, 60-days past due four times, and 90-days past due three times. These circumstances raise a concern about Applicant's trustworthiness to occupy an information systems position designated as an ADP I, II, or III position.

I reviewed the mitigating conditions under the guideline and conclude she receives some credit in mitigation. Her divorce in 1991 and the unexpected medical problems that generated the medical bills noted above (for example, subparagraph 1.l) no doubt contributed to her financial problems and were conditions largely beyond her control. The credit in mitigation is limited, however, for two reasons, First, her divorce took place about 15 years ago and she has been continuously employed since her divorce. Second, the total of the unpaid medical bills (as described in the table above) is about $4,000, which means that consumer debt is the majority of her indebtedness.

Although she receives some credit in mitigation, she has not presented sufficient evidence to mitigate the financial considerations concern. In particular, the record evidence is insufficient to establish that she has made a good-faith effort to pay or otherwise resolve her indebtedness. She currently owes about $20,000 in delinquent debt to multiple creditors. Moreover, what's missing here is: (1) a comprehensive, realistic approach for paying off, settling, or otherwise resolving her indebtedness; (2) documented actions taken in furtherance of that approach; and (3) a substantial improvement to her financial situation. It appears Applicant does not have the means to pay or otherwise resolve her delinquent indebtedness at any time in the near future. Given these circumstances, I conclude Applicant failed to establish that it is in the interests of national security to grant her eligibility for an ADP I/II/III position. In reaching this conclusion, I also considered Applicant's case under the whole-person concept, which a detailed discussion thereof would not change the outcome.

FORMAL FINDINGS

Here are my conclusions for each allegation in the SOR:

SOR Paragraph 1-Guideline F: Against Applicant

Subparagraph a: For Applicant

Subparagraph b: Against Applicant

Subparagraph c: Against Applicant

Subparagraph d: Against Applicant

Subparagraph e: Against Applicant

Subparagraph f: Against Applicant

Subparagraph g: Against Applicant

Subparagraph h: Against Applicant

Subparagraph i: Against Applicant

Subparagraph j: Against Applicant

Subparagraph k: Against Applicant

Subparagraph l: Against Applicant

Subparagraph m: Against Applicant

Subparagraph n: Against Applicant

Subparagraph o: Against Applicant

Subparagraph p: Against Applicant

Subparagraph q: For Applicant

DECISION

In light of all of the circumstances in this case, it is not clearly consistent with the interests of national security to grant or continue Applicant's eligibility for an ADP I/II/III position. Eligibility is denied.

Michael H. Leonard Administrative Judge

FOOTNOTES

06-12076.h1 FOR GOVERNMENT Ray T. Blank Jr., Esq., Department Counsel FOR APPLICANT Pro Se file:///usr.osd.mil/...yComputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/06-12076.h1.html[7/2/2021 3:55:06 PM] 06-12076.h1