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ISCR Case 18-01259 · CASE

ISCR Case 18-01259denied

Case Headnote

ISCR Case No. 18-01259

deniedSep 27, 2018· Hon. Mark Harvey· hearing

Synopsis

The applicant, a 36-year-old systems engineer, faced security clearance denial under Guideline F due to significant unresolved debts totaling $66,188. Despite acknowledging his financial issues and attempting to work with creditors, he failed to provide sufficient evidence of progress or responsible financial management, leading to the conclusion that his financial problems raised unmitigated concerns about his reliability and trustworthiness.

Why the Applicant Was Denied

Applicant admitted to all debts listed in the SOR, totaling $66,188.
He provided insufficient evidence of efforts to resolve his debts or financial responsibility.
Lack of corroborating documentation regarding attempts to settle debts contributed to the denial.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(c)raisedHistory of Not Meeting Financial Obligations

Mitigating

AG ¶ 20(b)rejectedConditions Largely Beyond the Person's ControlApplicant did not act responsibly under the circumstances regarding his debts.
AG ¶ 20(c)rejectedReceived Financial CounselingApplicant did not receive financial counseling or provide a budget.
AG ¶ 20(d)rejectedGood-faith Effort to Repay CreditorsInsufficient evidence of documented progress in resolving debts.

Key Rule Quoted

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

Procedural Posture

SOR issuedMay 11, 2018
Answer filedMay 22, 2018Applicant requested a decision based on the administrative record.
Hearing held—
Decision dateSep 27, 2018

Cite For

Insufficient Evidence of Financial Responsibility Under Guideline F
Lack of Corroborating Documentation in Financial Cases
Importance of Demonstrating Efforts to Resolve Debts for Mitigation Under AG ¶ 20

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 eight delinquent debts totaling $66,188, which he admitted in his response to the Statement of Reasons. The judge found that the applicant failed to provide sufficient evidence to mitigate the financial concerns, leading to a decision against the applicant on all allegations under Guideline F.

1.a charged-off debts owed to the same bank for $21,298
$21,298
Finding: Against Applicant
Type: Unspecified Financial
Response: Admitted
Disqualifying (¶19):
(a) inability to satisfy debts
(c) a history of not meeting financial obligations
Mitigating applied (¶20): —
Mitigation: —
1.b charged-off debts owed to the same bank for $18,401
$18,401
Finding: Against Applicant
Type: Unspecified Financial
Response: Admitted
Disqualifying (¶19):
(a) inability to satisfy debts
(c) a history of not meeting financial obligations
Mitigating applied (¶20): —
Mitigation: —
1.c placed for collection or charged-off debts that are owed to the same bank for $14,708
$14,708
Finding: Against Applicant
Type: Unspecified Financial
Response: Admitted
Disqualifying (¶19):
(a) inability to satisfy debts
(c) a history of not meeting financial obligations
Mitigating applied (¶20): —
Mitigation: —
1.d placed for collection or charged-off debts that are owed to the same bank for $3,664
$3,664
Finding: Against Applicant
Type: Unspecified Financial
Response: Admitted
Disqualifying (¶19):
(a) inability to satisfy debts
(c) a history of not meeting financial obligations
Mitigating applied (¶20): —
Mitigation: —
1.e placed for collection or charged-off debts that are owed to the same bank for $3,328
$3,328
Finding: Against Applicant
Type: Unspecified Financial
Response: Admitted
Disqualifying (¶19):
(a) inability to satisfy debts
(c) a history of not meeting financial obligations
Mitigating applied (¶20): —
Mitigation: —
1.f debt placed for collection originating at a store for $2,579
$2,579
Finding: Against Applicant
Type: Unspecified Financial
Response: Admitted
Disqualifying (¶19):
(a) inability to satisfy debts
(c) a history of not meeting financial obligations
Mitigating applied (¶20): —
Mitigation: —
1.g charged-off debts for $1,353
$1,353
Finding: Against Applicant
Type: Unspecified Financial
Response: Admitted
Disqualifying (¶19):
(a) inability to satisfy debts
(c) a history of not meeting financial obligations
Mitigating applied (¶20): —
Mitigation: —
1.h charged-off debts for $857
$857
Finding: Against Applicant
Type: Unspecified Financial
Response: Admitted
Disqualifying (¶19):
(a) inability to satisfy debts
(c) a history of not meeting financial obligations
Mitigating applied (¶20): —
Mitigation: —

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	charged-off debts owed to the same bank for $21,298 $21,298	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	charged-off debts owed to the same bank for $18,401 $18,401	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	placed for collection or charged-off debts that are owed to the same bank for $14,708 $14,708	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	placed for collection or charged-off debts that are owed to the same bank for $3,664 $3,664	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	placed for collection or charged-off debts that are owed to the same bank for $3,328 $3,328	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	debt placed for collection originating at a store for $2,579 $2,579	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.g	charged-off debts for $1,353 $1,353	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.h	charged-off debts for $857 $857	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (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

DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS

In the matter of: )

)

ISCR Case No. 18-01259

) Applicant for Security Clearance )

Appearances

For Government: Tara R. Karoian, Esq., Department Counsel For Applicant: Pro se

___________

Decision ___________

HARVEY, Mark, Administrative Judge:

Applicant provided insufficient evidence that he was unable to make greater progress addressing the debts alleged in the statement of reasons (SOR). Financial considerations security concerns are not mitigated. Eligibility for access to classified information is denied.

Statement of the Case

On October 12, 2017, Applicant signed a Questionnaire for National Security Positions (SF 86) or security clearance application (SCA). (Item 3) On May 11, 2018, the Department of Defense (DOD) Consolidated Adjudications Facility (CAF) issued the SOR. (Item 1) The SOR was issued to Applicant under Executive Order (Exec. Or.) 10865, Safeguarding Classified Information within Industry, February 20, 1960; DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (Directive), January 2, 1992; and Security Executive Agent Directive 4, which established in Appendix A the National Security Adjudicative Guidelines for Determining Eligibility for Access to Classified Information or Eligibility to Hold a Sensitive Position (AGs), effective June 8, 2017.

On May 22, 2018, Applicant responded to the SOR, and he requested a decision based upon the administrative record. (Item 2) On July 16, 2018, Department Counsel completed a File of Relevant Material (FORM) including six exhibits. (Items 1-6) On July 09/28/2018

31, 2018, Applicant acknowledged receipt of the FORM. Applicant did not object to the evidence in the FORM, and Items 1-6 are admitted into evidence. Applicant did not respond to the FORM. On September 27, 2018, the case was assigned to me.

Findings of Fact1

In Applicant’s SOR response, he admitted all of the SOR debts in ¶¶ 1.a through 1.h. (Item 2) He also provided mitigating information. His admissions are accepted as findings of fact.

Applicant is a 36-year-old systems engineer, and a government contractor has employed him since September 2017. 2 In 2002, he graduated from high school, and in 2006, he received a bachelor’s degree. In 2010, he received a master’s degree. He has never served in the military. In 2012, he married, and he does not have any children.

Financial Considerations

From October 2011 to August 2012, Applicant was employed as an engineer. From August 2012 to October 2012, he was unemployed. From October 2012 to August 2015, he was employed on a systems engineer staff for a large government contractor. From August 2015 to September 2017, he was self employed and he was a chief executive officer for a company.

The SOR alleges eight delinquent debts totaling $66,188 as follows: SOR ¶¶ 1.a and 1.bare two charged-off debts owed to the same bank for $21,298 and $18,401; SOR ¶¶ 1.c, 1.d, and 1.e are three placed for collection or charged-off debts that are owed to the same bank for $14,708, $3,664, and $3,328; SOR ¶ 1.fis a debt placed for collection originating at a store for $2,579; and SOR ¶¶ 1.gand 1.hare charged-off debts for $1,353 and $857.

Applicant disclosed several delinquent debts on his October 12, 2017 SCA, and in the comments section he explained that “[d]ue to self-employment/disability and my wife’s hours getting cut,” he had insufficient income to pay his debts, and they resorted to “heavy credit card use.” (Item 3) He said they are working to resolve their debt issues. (Item 3)

In his SOR response, Applicant said his income went from $100,000 annually to $25,000 annually in August 2015. (Item 2) He attempted to work with a credit-repair company with the intention of settling his delinquent debt starting in April 2017. (Item 2) The credit-repair company did not settle his debts. (Item 2) Since February 2018, he has

1 Some details were excluded to protect Applicant’s right to privacy. Specific information is available in the cited exhibits.

2 Unless stated otherwise, the information in this paragraph and the next paragraph are from Applicant’s October 12, 2017 Questionnaire for National Security Positions (SF 86) or security clearance application (SCA). (Item 3)

been attempting to work with his creditors to settle his debts. (Item 2) He did not describe receipt of credit counseling or provide a budget.

In the FORM, Department Counsel noted the absence of corroborating or supporting documentation of resolution of the SOR issues. FORM at 2-3. Aside from Applicant’s uncorroborated statements, there is no supporting documentary evidence, such as proof of payments to the credit-repair company or correspondence to or from the SOR creditors showing attempts to resolve debts. The record lacks corroborating or substantiating documentation and detailed explanations of the causes for his financial issues and other mitigating information. The FORM informed Applicant that he had 30 days from the receipt of the FORM “in which to submit a documentary response setting forth objections, rebuttal, extenuation, mitigation, or explanation, as appropriate. If you do not file any objections or submit any additional information . . . your case will be assigned to an Administrative Judge for a determination based solely” on the evidence set forth in this FORM. FORM at 4. Applicant did not respond to the FORM.

Policies

The U.S. Supreme Court has recognized the substantial discretion of the Executive Branch in regulating access to information pertaining to national security emphasizing, “no 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 applicant’s 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.

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, these guidelines are applied 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, 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 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 “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See Exec. Or. 10865 § 7. Thus, nothing in this decision should be construed to suggest that it is based, in whole or

in part, on any express or implied determination about applicant’s allegiance, loyalty, or patriotism. It is merely an indication the applicant has not met the strict guidelines the President, Secretary of Defense, and DNI 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. 95-0611 at 2 (App. Bd. May 2, 1996).

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 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 burden of disproving a mitigating condition never shifts to the Government. See ISCR Case No. 02-31154 at 5 (App. Bd. Sept. 22, 2005). “[S]ecurity clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531; see AG ¶ 2(b).

Analysis

Financial Considerations

AG ¶ 18 articulates the security concern for financial problems:

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. . . .

The Appeal Board explained the scope and rationale for the financial considerations security concern in ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012) (citation omitted) as follows:

This concern is broader than the possibility that an applicant might knowingly compromise classified information in order to raise money in satisfaction of his or her debts. Rather, it requires a Judge to examine the totality of an applicant’s financial history and circumstances. The Judge must consider pertinent evidence regarding the applicant’s self-control, judgment, and other qualities essential to protecting the national secrets as

well as the vulnerabilities inherent in the circumstances. The Directive presumes a nexus between proven conduct under any of the Guidelines and an applicant’s security eligibility.

AG ¶ 19 includes two disqualifying conditions that could raise a security concern and may be disqualifying in this case: “(a) inability to satisfy debts”; and “(c) a history of not meeting financial obligations.” In ISCR Case No. 08-12184 at 7 (App. Bd. Jan. 7, 2010), the Appeal Board explained:

It is well-settled that adverse information from a credit report can normally meet the substantial evidence standard and the government’s obligations under [Directive] ¶ E3.1.14 for pertinent allegations. At that point, the burden shifts to applicant to establish either that [he or] she is not responsible for the debt or that matters in mitigation apply.

(internal citation omitted). The record establishes the disqualifying conditions in AG ¶¶ 19(a) and 19(c) requiring additional inquiry about the possible applicability of mitigating conditions.

Five financial considerations mitigating conditions under AG ¶ 20 are potentially applicable in this case:

(a) the behavior happened so long ago,3 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;

(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;

(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;

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

(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

3 A debt that became delinquent several years ago is still considered recent because “an applicant’s ongoing, unpaid debts evidence a continuing course of conduct and, therefore, can be viewed as recent for purposes of the Guideline F mitigating conditions.” ISCR Case No. 15-06532 at 3 (App. Bd. Feb. 16, 2017) (citing ISCR Case No. 15-01690 at 2 (App. Bd. Sept. 13, 2016)).

proof to substantiate the basis of the dispute or provides evidence of actions to resolve the issue; and

The DOHA Appeal Board concisely explained Applicant’s responsibility for proving the applicability of mitigating conditions as follows:

Once a concern arises regarding an Applicant’s security clearance eligibility, there is a strong presumption against the grant or maintenance of a security clearance. See Dorfmont v. Brown, 913 F. 2d 1399, 1401 (9th Cir. 1990), cert. denied, 499 U.S. 905 (1991). After the Government presents evidence raising security concerns, the burden shifts to the applicant to rebut or mitigate those concerns. See Directive ¶ E3.1.15. The standard applicable in security clearance decisions is that articulated in Egan, supra. “Any doubt concerning personnel being considered for access to classified information will be resolved in favor of the national security.” Directive, Enclosure 2 ¶ 2(b).

ISCR Case No. 10-04641 at 4 (App. Bd. Sept. 24, 2013).

Applicant presented some mitigating evidence. He had periods of underemployment and underemployment. His spouse’s income was also reduced. He does not receive full mitigating credit under AG ¶ 20(b) because he did not act responsibly under the circumstances with respect to the SOR debts. He did not receive financial counseling, and he did not provide a budget.

There is insufficient evidence about why Applicant was unable to make greater documented progress resolving his delinquent debts. There is insufficient assurance that his financial problem is being resolved and will not recur in the future. Under all the circumstances, he failed to establish mitigation of financial considerations security concerns.

Whole-Person Concept

Under the whole-person concept, the administrative judge must evaluate an Applicant’s eligibility for a security clearance by considering the totality of the Applicant’s conduct and all the circumstances. The administrative judge should consider the nine adjudicative process factors listed at AG ¶ 2(d):

(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.

Under AG ¶ 2(c), “[t]he ultimate determination” of whether to grant a security clearance “must be an overall commonsense judgment based upon careful consideration of the guidelines” and the whole-person concept. My comments under Guideline F are incorporated in my whole-person analysis. Some of the factors in AG ¶ 2(d) were addressed under that guideline but some warrant additional comment.

Applicant is a 36-year-old systems engineer, and a government contractor has employed him since September 2017. In 2006, he received a bachelor’s degree, and in 2010, he received a master’s degree.

Underemployment of Applicant and his spouse and unemployment of Applicant harmed Applicant’s finances. However, Applicant did not establish he had insufficient income to make greater progress resolving his SOR debts, and his actions show a lack of financial responsibility and judgment and raise unmitigated questions about his reliability, trustworthiness, and ability to protect classified information. See AG ¶ 18.

It is well settled that once a concern arises regarding an applicant’s security clearance eligibility, there is a strong presumption against the grant or renewal of a security clearance. See Dorfmont, 913 F. 2dat 1401. Unmitigated financial considerations concerns lead me to conclude that grant of a security clearance to Applicant is not warranted at this time. This decision should not be construed as a determination that Applicant cannot or will not attain the state of reform necessary for award of a security clearance in the future. With more effort towards documented resolution of his past-due debts, and a track record of behavior consistent with his obligations, he may well be able to demonstrate persuasive evidence of his security clearance worthiness.

I have carefully applied the law, as set forth in Egan, Exec. Or. 10865, the Directive, and the AGs, to the facts and circumstances in the context of the whole person. I conclude that financial consideration concerns are not mitigated.

Formal Findings

Formal findings For or Against Applicant on the allegations set forth in the SOR, as required by Section E3.1.25 of Enclosure 3 of the Directive, are:

Paragraph 1, Guideline F:

AGAINST APPLICANT

Subparagraphs 1.a through 1.h: Against Applicant

Conclusion

In light of all of the circumstances presented by the record in this case, it is not clearly consistent with the national interest to grant Applicant’s eligibility for a security clearance. Eligibility for access to classified information is denied.

_________________________ MARK HARVEY Administrative Judge