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ISCR Case 18-00514 · CASE

ISCR Case 18-00514denied

Case Headnote

ISCR Case No. 18-00514

deniedNov 8, 2018· Hon. LeRoy F. Foreman· hearing

Synopsis

The applicant, a 35-year-old pipefitter employed by a defense contractor, faced security concerns under Guideline F due to significant financial issues, including multiple delinquent debts totaling approximately $16,000 and additional tax liabilities. Despite some efforts to address one debt, the applicant failed to demonstrate a consistent pattern of financial responsibility or mitigation for the remaining debts, leading to a denial of his security clearance application.

Why the Applicant Was Denied

The applicant has multiple delinquent debts totaling approximately $16,000, which he has not resolved or disputed.
He has not received any credit counseling or demonstrated a good-faith effort to repay overdue creditors for the majority of his debts.
The applicant's financial issues indicate a lack of self-control and judgment, raising concerns about his reliability and trustworthiness.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(b)raisedUnwillingness to Satisfy Debts Regardless of the Ability to Do So
AG ¶ 19(c)raisedA History of Not Meeting Financial Obligations

Mitigating

AG ¶ 20(a)rejectedBehavior Happened so Long Ago, Was Infrequent, or Unlikely to Recur
AG ¶ 20(b)rejectedConditions Beyond the Person's Control
AG ¶ 20(c)rejectedReceived Financial Counseling
AG ¶ 20(d)rejectedGood-faith Effort to Repay Debts
AG ¶ 20(e)rejectedReasonable Basis to Dispute the Legitimacy of the Debt

Key Rule Quoted

“Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines.”

Procedural Posture

SOR issuedMar 12, 2018
Answer filedMay 15, 2018
Hearing heldSep 27, 2018
Decision dateNov 8, 2018

Cite For

Financial Irresponsibility as a Disqualifying Factor Under Guideline F
Lack of Evidence for Mitigating Conditions Related to Financial Issues
Importance of Demonstrating a Good-faith Effort to Resolve Debts in Security Clearance Cases

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 that the applicant had significant financial concerns under Guideline F, with six delinquent debts totaling about $16,000. While one debt was settled, the applicant failed to resolve the remaining debts, leading to a denial of his security clearance application.

1.a Applicant’s pay was being garnished to satisfy the judgment for $5,240 alleged in SOR ¶ 1.a until he settled it for $3,700 in July 2018.
$3,700
Finding: For Applicant
Type: Judgment Against Applicant
Response: Admitted
Disqualifying (¶19):
(a) inability to satisfy debts
(b) unwillingness to satisfy debts regardless of ability
(c) a history of not meeting financial obligations
Mitigating applied (¶20):
(d) good-faith effort to repay or otherwise resolve debts
Mitigation:
Credited
Debt Paid in Full
1.b As of the date of the hearing, none of the debts alleged in SOR ¶ 1.b had been paid, disputed, or otherwise resolved.
$7,147
Finding: Against Applicant
Type: Medical Debt
Response: Denied
Disqualifying (¶19):
(a) inability to satisfy debts
(b) unwillingness to satisfy debts regardless of ability
(c) a history of not meeting financial obligations
Mitigating applied (¶20): —
Mitigation: —
1.c As of the date of the hearing, none of the debts alleged in SOR ¶ 1.c had been paid, disputed, or otherwise resolved.
$200
Finding: Against Applicant
Type: Unspecified Financial
Response: Unknown
Disqualifying (¶19):
(a) inability to satisfy debts
(b) unwillingness to satisfy debts regardless of ability
(c) a history of not meeting financial obligations
Mitigating applied (¶20): —
Mitigation: —
1.d As of the date of the hearing, none of the debts alleged in SOR ¶ 1.d had been paid, disputed, or otherwise resolved.
$106
Finding: Against Applicant
Type: Unspecified Financial
Response: Unknown
Disqualifying (¶19):
(a) inability to satisfy debts
(b) unwillingness to satisfy debts regardless of ability
(c) a history of not meeting financial obligations
Mitigating applied (¶20): —
Mitigation: —
1.e As of the date of the hearing, none of the debts alleged in SOR ¶ 1.e had been paid, disputed, or otherwise resolved.
$3,263
Finding: Against Applicant
Type: Unspecified Financial
Response: Unknown
Disqualifying (¶19):
(a) inability to satisfy debts
(b) unwillingness to satisfy debts regardless of ability
(c) a history of not meeting financial obligations
Mitigating applied (¶20): —
Mitigation: —
1.f As of the date of the hearing, none of the debts alleged in SOR ¶ 1.f had been paid, disputed, or otherwise resolved.
$901
Finding: Against Applicant
Type: Credit Card Debt
Response: Unknown
Disqualifying (¶19):
(a) inability to satisfy debts
(b) unwillingness to satisfy debts regardless of ability
(c) a history of not meeting financial obligations
Mitigating applied (¶20): —
Mitigation: —

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant’s pay was being garnished to satisfy the judgment for $5,240 alleged in SOR ¶ 1.a until he settled it for $3,700 in July 2018. $3,700	For Applicant	Judgment Against Applicant	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	(d) good-faith effort to repay or otherwise resolve debts	Credited Debt Paid in Full
1.b	As of the date of the hearing, none of the debts alleged in SOR ¶ 1.b had been paid, disputed, or otherwise resolved. $7,147	Against Applicant	Medical Debt	Denied	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.c	As of the date of the hearing, none of the debts alleged in SOR ¶ 1.c had been paid, disputed, or otherwise resolved. $200	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.d	As of the date of the hearing, none of the debts alleged in SOR ¶ 1.d had been paid, disputed, or otherwise resolved. $106	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.e	As of the date of the hearing, none of the debts alleged in SOR ¶ 1.e had been paid, disputed, or otherwise resolved. $3,263	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.f	As of the date of the hearing, none of the debts alleged in SOR ¶ 1.f had been paid, disputed, or otherwise resolved. $901	Against Applicant	Credit Card Debt	Unknown	(a) inability to satisfy debts (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

DECISION

DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS

In the matter of: )

)

[Redacted] )

ISCR Case No. 18-00514

) Applicant for Security Clearance )

Appearances

For Government: Benjamin R. Dorsey, Esq., Department Counsel For Applicant: Pro se

______________

Decision ______________

FOREMAN, LeRoy F., Administrative Judge:

This case involves security concerns raised under Guideline F (Financial Considerations). Eligibility for access to classified information is denied.

Statement of the Case

Applicant submitted a security clearance application on August 26, 2016. On March 12, 2018, the Department of Defense Consolidated Adjudications Facility (DOD CAF) sent him a Statement of Reasons (SOR) alleging security concerns under Guideline F. The DOD CAF acted under Executive Order (Exec. Or.) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) promulgated in Security Executive Agent Directive 4, National Security Adjudicative Guidelines (December 10, 2016), for all adjudicative decisions on or after June 8, 2017.

Applicant answered the SOR on May 15, 2018, and requested a hearing before an administrative judge. Department Counsel was ready to proceed on June 25, 2018, and the case was assigned to me on August 15, 2018. On August 27, 2018, the Defense 11/08/2018

Office of Hearings and Appeals (DOHA) notified Applicant that the hearing was scheduled for September 27, 2018. I convened the hearing as scheduled. Government Exhibits (GX) 1 through 3 were admitted in evidence without objection. Applicant testified and submitted Applicant’s Exhibits (AX) A through C, which were admitted without objection. I kept the record open until October 6, 2018, to enable him to submit additional documentary evidence. He timely submitted AX D, which was admitted without objection. DOHA received the transcript (Tr.) on October 5, 2018.

Findings of Fact1

In Applicant’s answer to the SOR, he admitted the allegations in SOR ¶¶ 1.a and 1.c-1.f. He denied the allegation in SOR ¶ 1.b. His admissions in his answer and at the hearing are incorporated in my findings of fact.

Applicant is a 35-year-old pipefitter employed by a defense contractor since June 2006. He married in October 2016 and has three children, ages 18, 14, and 1. His wife is employed by the same defense contractor. His two older children are from a previous relationship, and he pays child support of $196 for them. (Tr. 24.) His wife also has two children from a previous relationship, and they live with her and Applicant. He has never held a security clearance.

Applicant’s take-home pay is about $872 per week. Child support is automatically deducted from his pay. (Tr. 31.) He knows that his wife earns about $27 per hour, but he does not know the amount of her take-home pay. He testified that his rent is $1,400 per month and his wife’s car payment is about $400 per month, but he did not provide any other information about his monthly living expenses. (Tr. 45-46.)

The SOR alleges six delinquent debts totaling about $16,000. Applicant’s pay was being garnished to satisfy the judgment for $5,240 alleged in SOR ¶ 1.a until he settled it for $3,700 in July 2018.2 (AX C; AX D.) He hired a credit-repair company in June 2018 and pays the company $89 per month to contact creditors, dispute debts, and negotiate settlements. As of the date of the hearing, none of the debts alleged in SOR ¶ 1.b-1.fhad been paid, disputed, or otherwise resolved.3 Applicant has not received any credit counseling from his credit-repair company or anyone else. (Tr. 57.) Applicant denied the medical debt alleged in SOR ¶ 1.b, on the ground that he did not recognize it. However,

1 Applicant’s personal information is extracted from his security clearance application (GX 1) unless otherwise indicated by a parenthetical citation to the record.

2 The settlement offer from the debt collector lists a different name for the creditor, apparently a collection agent, but the court document reflecting satisfaction of the judgment has the same case number and matches the name of the creditor alleged in the SOR and reflected in the credit report from October 2016. (GX 2 at 1.).

3 The other debts alleged in the SOR were three medical debts for $7,147; $200; and $106; an unsecured loan for $3,263; and a credit-card debt charged off for $901.

as of the date of the hearing, he submitted no evidence showing that he had disputed it or otherwise resolved it.

In addition to the debts alleged in the SOR, he owes about $30,000 in federal income taxes and $5,000 in state income taxes, incurred because he intentionally claimed too many exemptions in an effort to reduce the withholding of taxes from his pay. He recently paid a tax-preparation company $1,500 to help him resolve his tax debts. (Tr. 40- 42.) Because the federal and state tax debts were not alleged in the SOR, I have considered them for the limited purposes of evaluating evidence of mitigation and as part of my whole-person analysis. See ISCR Case No. 03-20327 at 4 (App. Bd. Oct. 26, 2006).

Applicant recently borrowed $30,000 from his 401(k) retirement account. He used the funds to resolve the debt in SOR ¶ 1.a, repay a $4,000 loan his mother had given him, and pay the tax preparer to resolve his federal and state tax debts. He has about $16,000 remaining from the loan, and he is waiting for his credit-repair company to advise him how he should use it. (Tr. 42-43.)

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 have 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 § 2.

Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, an administrative judge applies these guidelines in conjunction with an evaluation of the whole person. An administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. An administrative judge must consider all available and reliable information about the person, past and present, favorable and unfavorable.

The Government reposes a high degree of trust and confidence in persons with access to classified information. This relationship transcends normal duty hours and endures throughout off-duty hours. Decisions include, by necessity, consideration of the possible risk that the applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation about potential, rather than actual, risk of compromise of classified information.

Clearance decisions must be made “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” Exec. Or. 10865 § 7. Thus, a decision to deny a security clearance 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 that may disqualify the applicant from being eligible for access to classified information. The Government has the burden of establishing controverted facts alleged in the SOR. See Egan, 484 U.S. at 531. “Substantial evidence” is “more than a scintilla but less than a preponderance.” See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). The guidelines presume a nexus or rational connection between proven conduct under any of the criteria listed therein and an applicant’s security suitability. See ISCR Case No. 15-01253 at 3 (App. Bd. Apr.20, 2016).

Once the Government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. Directive ¶ E3.1.15. An applicant has the burden of proving a mitigating condition, and the burden of disproving it never shifts to the Government. See ISCR Case No. 02- 31154 at 5 (App. Bd. Sep. 22, 2005).

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.

Analysis

Guideline F, Financial Considerations

The security concern under this guideline is set out in AG ¶ 18:

Failure to live within one's means, satisfy debts, and meet financial obligations may indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which can raise questions about an individual's reliability, trustworthiness, and ability to protect classified or sensitive information. . . . An individual who is financially overextended is at greater risk of having to engage in illegal or otherwise questionable acts to generate funds. . . .

This concern is broader than the possibility that a person might knowingly compromise classified information to raise money. It encompasses concerns about a person’s self-control, judgment, and other qualities essential to protecting classified information. A person who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information. See ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012).

Applicant’s admissions and the evidence submitted at the hearing establish the following potentially disqualifying conditions under this guideline: AG ¶ 19(a) (“inability to satisfy debts”); AG ¶ 19(b) (“unwillingness to satisfy debts regardless of the ability to do so”); and AG ¶ 19(c) (“a history of not meeting financial obligations”). The following mitigating conditions are potentially relevant:

AG ¶ 20(a): the behavior happened so long ago, was so infrequent, or occurred under such circumstances that it is unlikely to recur and does not cast doubt on the individual's current reliability, trustworthiness, or good judgment;

AG ¶ 20(b): the conditions that resulted in the financial problem were largely beyond the person's control (e.g., loss of employment, a business downturn, unexpected medical emergency, a death, divorce or separation, clear victimization by predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances;

AG ¶ 20(c): the individual has received or is receiving financial counseling for the problem from a legitimate and credible source, such as a non-profit credit counseling service, and there are clear indications that the problem is being resolved or is under control;

AG ¶ 20(d): the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts; and

AG ¶ 20(e): the individual has a reasonable basis to dispute the legitimacy of the past-due debt which is the cause of the problem and provides documented proof to substantiate the basis of the dispute or provides evidence of actions to resolve the issue.

AG ¶ 20(d) is established for the debt alleged in SOR ¶ 1.a. None of the above mitigating conditions are established for the remaining debts. They are recent, numerous, and were not incurred under conditions making them unlikely to recur. He submitted no evidence of conditions beyond his control. He has not obtained credit counseling. He has not disputed the medical debt in SOR ¶ 1.b. He submitted no evidence of payments, payment agreements, or other resolution of the debts alleged in SOR ¶¶ 1.b-1.f.

Whole-Person Concept

Under AG ¶ 2(c), the ultimate determination of whether to grant eligibility for a security clearance must be an overall commonsense judgment based upon careful consideration of the guidelines and the whole-person concept. In applying the whole- person concept, an administrative judge must evaluate an applicant’s eligibility for a

security clearance by considering the totality of the applicant’s conduct and all relevant circumstances and applying the adjudicative factors in AG ¶ 2(d).4

I have incorporated my comments under Guideline F in my whole-person analysis and applied the adjudicative factors in AG ¶ 2(d). After weighing the disqualifying and mitigating conditions under Guideline F, and evaluating all the evidence in the context of the whole person, I conclude Applicant has not mitigated the security concerns raised by his delinquent debts.

Formal Findings

I make the following formal findings on the allegations in the SOR:

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

Subparagraph 1.a:

For Applicant

Subparagraphs 1.b-1.f:

Against Applicant

Conclusion

I conclude that it is not clearly consistent with the national security interests of the United States to grant Applicant eligibility for access to classified information. Clearance is denied.

LeRoy F. Foreman Administrative Judge

4 The factors are: (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 individual’s age and maturity at the time of the conduct; (5) the extent to which participation is voluntary; (6) the presence or absence of rehabilitation and other permanent 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.