1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ---------------------- ) ISCR Case No. 07-12704 SSN: ----------- ) ) Applicant for Security Clearance ) Appearances For Government: Robert E. Coacher, Esquire, Department Counsel For Applicant: Pro Se ______________ Decision ______________ GALES, Robert Robinson, Chief Administrative Judge: Applicant failed to mitigate the security concerns regarding financial considerations. Eligibility for a security clearance and access to classified information is denied. Statement of the Case On February 22, 2007, Applicant applied for a security clearance and submitted an e-QIP version of a Security Clearance Application (hereinafter SF 86). On January 22, 2008, the Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) to him, pursuant to Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended and modified; and Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended and modified (Directive). The SOR alleged security concerns under Guideline F (Financial Considerations), and detailed reasons why DOHA could not make a preliminary affirmative finding under the Directive that it is clearly consistent with the national interest to grant or continue a security clearance for Applicant, and recommended referral to an Administrative Judge to determine whether a clearance should be granted, continued, denied, or revoked. 2 It should be noted that on December 29, 2005, the President promulgated revised Adjudicative Guidelines for Determining Eligibility For Access to Classified Information, and on August 30, 2006, the Under Secretary of Defense (Intelligence) published a memorandum directing implementation of those revised Adjudicative Guidelines (hereinafter AG) for all adjudications and other determinations made under the Directive and Department of Defense (DoD) Regulation 5200.2-R, Personnel Security Program (January 1987), as amended and modified (Regulation), in which the SOR was issued on or after September 1, 2006. The AG are applicable to Applicant’s case because his SOR was issued after September 1, 2006. Applicant acknowledged receipt of the SOR on January 29, 2008. In a sworn, written statement, notarized February 17, 2008, Applicant responded to the SOR allegations and requested a hearing before an Administrative Judge. Department Counsel indicated the Government was prepared to proceed on March 13, 2008, and the case was assigned to Administrative Judge Charles D. Ablard on March 20, 2008. On March 27, 2008, because of caseload considerations, it was reassigned to me. A Notice of Hearing was issued on March 31, 2008, and I convened the hearing, as scheduled, on May 6, 2008. During the hearing, three Government exhibits and four Applicant exhibits were received without objection, and Applicant testified. The transcript of the hearing (Tr.) was received on May 14, 2008. Findings of Fact In his Answers to the SOR, Applicant admitted the factual allegations in ¶¶ 1.a. through 1.f., 1.h., 1.j., 1.m. through 1.o., 1.q. through 1.s., 1.v. through 1.x., and 1.z. through 1.bb., of the SOR, with explanations. He failed to address ¶ 1.cc., and denied the remaining allegations. Applicant is a 48-year-old employee of a defense contractor, serving as a senior help desk analyst in network administration,1 and he is seeking to retain a SECRET security clearance. He was initially granted such clearance in 1988.2 He was married to his first wife from 1981 until 1986, when they divorced, and has been married to his current wife since 1990. He has five children.3 Applicant served on active duty with the U.S. Army for over 15 years, with five months service in Southwest Asia during hostilities in 1991.4 He declined further 1 Government Exhibit 1 (Electronic Questionnaires for Investigations Processing (e-QIP)/Questionnaire for National Security Positions (SF 86), dated Feb. 22, 2007), at 14. 2 Id. at 46. 3 Tr. at 47. 4 Applicant Exhibit A (Certificate of Release or Discharge From Active Duty (DD Form 214), dated Apr. 14, 2000). 3 military service to avoid a second overseas deployment in 2000,5 and was given an honorable discharge.6 There was nothing unusual about Applicant’s finances until about November 1997, when, with an approved VA guaranteed loan of $176,128, he closed on a new home.7 One month later, his wife was laid off from her job.8 Since her salary covered the majority of their monthly expenses, his salary as an enlisted man, along with her unemployment checks, were insufficient to meet the family obligations.9 Creditors were unwilling to negotiate new payment arrangements, and bills eventually became delinquent. His wife did manage to secure a position in April 1998. Nevertheless, in October 1998, Applicant’s debts, other than his residential mortgage loan, were discharged under Chapter 7 backruptcy.10 For an extended period thereafter, Applicant’s wife experienced periodic periods of brief employment and unemployment. The job she obtained in April 1998 lasted until June 1999, and she remained unemployed until December 1999. In April 2000, his enlistment with the Army ended and he immediately entered the ranks of the unemployed.11 Unable to pay their mortgage, they relocated to an apartment and rented their home. In October 2000, he entered the workforce again and remained gainfully employed until September 2001.12 His wife was again already laid off in May 2001, and remained unemployed until September 2001.13 After a month of unemployment, commencing in October 2001, and lasting until May 2003, Applicant held a series of jobs with different companies.14 Although he was again unemployed during May- September 2003, he has been employed consistently since September 2003.15 At one point, the tenants who were renting Applicant’s residence decided to end their lease and move. Unfortunately, they had damaged the residence to such a degree that Applicant was unable to subsequently rent it or sell it. It was foreclosed.16 In about 5 Tr. at 41. 6 Applicant Exhibit A, supra note 4. 7 Answer to SOR, notarized Feb. 17, 2008, at 1. 8 Id. 9 Id. 10 Id. 11 Government Exhibit 1, supra note 1, at 26. 12 Id. at 24. 13 Answer to SOR, supra note 7, at 2. 14 Government Exhibit 1, supra note 1, at 19-23. 15 Id. at 14-19. 16 Answer to SOR, supra note 7, at 2. 4 July 2001, Applicant relocated across the country to a location where his parents could provide temporary lodging and daycare for the children.17 They moved several times to shorten commuting time, because of tornado damage to one home they were renting, to address allergies, and to be in better school districts, and finally settled in a more expensive area with increased rent and utilities.18 With diminished income during 1998-2003, his finances took an enormous hit. Payments were delayed and many of Applicant’s bills became delinquent. Applicant discussed his plight with his security officer and was referred to what Applicant characterized as “debt counseling.”19 In fact, it was a one day session on budget counseling conducted on February 12, 2008,20 after receipt of the SOR. Purportedly, as a result of what he learned from the counseling, Applicant decided to not address his financial delinquencies because the delinquent balance was quite large and the debts would be removed from his credit reports after seven years from the date of the last activity.21 During the periods of their respective employment, unemployment, and underemployment, Applicant and his wife attended educational institutions to improve their marketability for higher paying positions, and now each owes approximately $48,000 in student loans.22 His wife obtained her Bachelors and Masters degrees, and is currently working on her Ph.D.23 Applicant completed his B.S. in Information Technology in 2005, and his M.S. in the same discipline in March 2008.24 Applicant and his wife both currently hold good positions that pay well.25 According to his comments made during an interview in April 2007, they had a combined gross monthly income of $10,971, which worked out to a net income of nearly $9,000.26 After deducting approximately $8,000 in monthly expenses, including $1,118 for martial arts and music for the children, $890 for day care, and $909 for car 17 Id. 18 Id. at 2-3, 5. 19 Id. at 5. 20 Certificate of Completion, Budget Counseling, dated Feb. 12, 2008, attached to Answer to SOR, supra note 7. 21 Answer to SOR, supra note 7, at 5. 22 Tr. at 39. 23 Id. at 37; Answer to SOR, supra note 7, at 6. 24 Id. 25 Tr. at 37. 26 Personal Subject Interview, dated Apr. 18, 2007, attached to Government Exhibit 2 (Answers to Interrogatories, dated Nov. 14, 2007). 5 expenses, he generally has less than $40 remaining for discretionary spending.27 Applicant drives a 2005 Ford Explorer and his wife drives a 2005 Ford Expedition for which they pay $600 and $500, respectively, each month.28 The SOR contained 29 allegations and identified 27 purportedly continuing delinquencies, including some duplicates. Those debts listed in the SOR, and their respective current status, according to the Credit Reports, dated October 24, 2007 (the most current one in evidence) and March 8, 2007, as well as Applicant’s Answer to SOR and testimony, are described below: SOR ¶ TYPE DEBT AMOUNT STATUS 1.b. automobile loan opened Jan. 2000 $15,090 repossessed $14,073 “charged off” & transferred; unpaid 1.c. medical $63 to collection Sep. 2001; unpaid 1.d. credit card opened Sep. 2001 $1,982 $1,059 “charged off”; unpaid 1.e. credit card opened Feb. 2000 $1,455 $1,158 “charged off”; unpaid 1.f. credit card opened Dec. 2001 $1,964 “charged off”; unpaid 1.g. duplicate of 1.b. opened Dec. 2002 $12,145 transferred from other creditor; unpaid 1.h. home loan opened Apr. 1999 $194,341 foreclosed in 2002 1.i. church child day care $402 to collection Feb. 2002; unpaid 1.j. medical $165 to collection Jan. 2006; unpaid 1.k. pay day cash advance collection agency $595 to collection Aug. 2006; unpaid 1.l. insurance $71 to collection Oct. 2002; unpaid 1.m. telephone bill $90 to collection Nov. 2005; unpaid 1.n. electric bill $389 to collection Jul. 2006; unpaid 1.o. apartment rent collection agency $6,993 to collection Dec. 2001; unpaid 1.p. duplicate of 1.o. $6,592 transferred from other creditor; unpaid 1.q. telephone bill collection agency $471 to collection Oct. 2005; unpaid 1.r. electric bill $470 to collection May 2007; unpaid 27 Personal Financial Statement, undated, attached to Government Exhibit 2. 28 Id. 6 SOR ¶ TYPE DEBT AMOUNT STATUS 1.s. university collection agency $322 to collection Oct. 2001; unpaid 1.t. duplicate of 1.n. $319 transferred from other creditor Oct. 2001; unpaid 1.u. computer company bill collection agency $255 to collection Jun. 2007; unpaid 1.v. medical bill $240 to collection Apr. 2004; unpaid 1.w. medical bill $226 to collection Apr. 2003; unpaid 1.x. telephone bill collection agency $209 to collection Jan. 2004; disputed & unpaid 1.y. duplicate of 1.x. $188 to collection Nov. 2001, & transferred to other creditor; unpaid 1.z. gas bill collection agency $107 to collection Aug. 2003; unpaid 1.aa. cable bill collection agency $51 to collection Sep. 2005; unpaid 1.bb. medical bill $50 to collection Aug. 2002; unpaid Although Applicant had indicated an intention to pay his delinquent debts in the past, most notably during his interview on April 18, 2007,29 as well as in his Questionnaire for National Security Positions, dated Feb. 22, 2007,30 it is well established that he has made no efforts to do so. Quite to the contrary, his inaction towards his delinquent debts and his continuing efforts in avoiding contact with his creditors so as not to interfere with the removal of such debts from his credit report after seven years of inactivity, support his newly stated intention that he will not satisfy his delinquent financial obligations.31 Over a period of about 10 years Applicant obtained services and goods from a wide variety of creditors. While there were periods of economic difficulty brought about by unemployment and underemployment, there were also periods of prosperity, and Applicant has continuously ignored even the smallest of his financial obligations. Policies When evaluating an Applicant’s suitability for a security clearance, the Administrative Judge must consider the adjudicative guidelines (AG). In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially 29 Personal Subject Interview, supra note 26. 30 Government Exhibit 1, supra note 1, at 43-44. 31 Tr. at 53. 7 disqualifying conditions and mitigating conditions, which are useful in evaluating an Applicant’s eligibility for access to classified information. An Administrative Judge need not view the guidelines as inflexible, ironclad rules of law. Instead, acknowledging the complexities of human behavior, these guidelines are applied in conjunction with the factors listed in the adjudicative process. The Administrative Judge’s over-arching adjudicative goal is a fair, impartial and common sense decision. According to AG ¶ 2(c), the entire process is a conscientious scrutiny of a number of variables known as the “whole person concept.” The Administrative Judge must consider all available, reliable information about the person, past and present, favorable and unfavorable, in making a meaningful decision. Since the protection of the national security is the paramount consideration, AG ¶ 2(b) requires that “[a]ny doubt concerning personnel being considered for access to classified information will be resolved in favor of national security.” In reaching this decision, I have drawn only those conclusions that are reasonable, logical and based on the evidence contained in the record. Likewise, I have avoided drawing inferences grounded on mere speculation or conjecture. In the decision-making process, facts must be established by “substantial evidence.”32 The Government initially has the burden of producing evidence to establish a potentially disqualifying condition under the Directive. Once the Government has produced substantial evidence of a disqualifying condition, under Directive ¶ E3.1.15, the Applicant has the heavy burden of persuasion to present evidence in refutation, explanation, extenuation or mitigation, sufficient to overcome the doubts raised by the Government’s case. The burden of disproving a mitigating condition never shifts to the Government. A person who seeks access to classified information enters into a fiduciary relationship with the Government predicated upon trust and confidence. This relationship transcends normal duty hours and endures throughout off-duty hours as well. It is because of this special relationship that the Government must be able to repose a high degree of trust and confidence in those individuals to whom it grants access to classified information. Decisions include, by necessity, consideration of the possible risk the Applicant may deliberately or inadvertently fail to protect or safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation as to potential, rather than actual, risk of compromise of classified information. Section 7 of Executive Order 10865 provides that decisions shall be “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” Accordingly, nothing in this Decision should be construed to suggest that I have based this decision, in whole or in part, on any express or implied determination as to Applicant’s allegiance, loyalty, or patriotism. 32 “Substantial evidence [is] such relevant evidence as a reasonable mind might accept as adequate to support a conclusion in light of all contrary evidence in the record.” ISCR Case No. 04-11463 at 2 (App. Bd. Aug. 4, 2006) (citing Directive ¶ E3.1.32.1). 8 Analysis Guideline F, Financial Considerations The security concern relating to the guideline for Financial Considerations is set out in AG & 18: Failure or inability 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 information. An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds. . . . The guideline notes several conditions that could raise security concerns. Under AG & 19(a), an Ainability or unwillingness to satisfy debts@ is potentially disqualifying. Similarly, under AG & 19(c), Aa history of not meeting financial obligations@ may raise security concerns. Applicant’s financial condition collapsed in December 1997, when his wife first lost her job. Although he remained on active duty until April 2000, his salary and her unemployment checks were insufficient to meet the family obligations, and bills eventually became delinquent. In October 1998, Applicant’s debts, other than his residential mortgage loan, were discharged under Chapter 7 backruptcy. That enabled them to start all over with a clean financial slate. Nevertheless, for an extended period of time, or until they were both fully employed in September 2003, more financial obligations were created only to, again, become delinquent because of his inability to satisfy them. Commencing in September 2003, and continuing until this date, Applicant and his wife have both been gainfully employed and currently earn a combined gross monthly income of $10,971. What was purportedly a willingness, accompanied by an inability, to satisfy debts, became more clearly an ability, accompanied by an unwillingness, to satisfy them. Applicant’s clear intention is to ignore all his debts until such time as they are removed from his credit report. AG && 19(a) and 19(c) apply. The guideline also includes examples of conditions that could mitigate security concerns arising from financial difficulties. Under AG ¶ 20(a), the disqualifying condition may be mitigated where Athe 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.@ Applicant=s financial situation collapsed in December 1997, but was restored with his bankruptcy in October 1998. Thereafter, he continued to accumulate substantial delinquent debt due, in large measure, to lengthy and sporadic unemployment and underemployment. The sporadic unemployment and underemployment circumstances are no longer present, and both he and his wife have been gainfully employed since September 2003. His refusal to address his financial delinquencies over the past five years raises concerns 9 about recurrence of delinquent debts and his current reliability, trustworthiness, or good judgment. The evidence fails to establish AG ¶ 20(a). Under AG & 20(b), financial security concerns may be mitigated where Athe 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, or a death, divorce or separation), and the individual acted responsibly under the circumstances.@ As noted above, the financial problems arose initially because of his wife’s unemployment in December 1997. But Applicant’s situation was seemingly resolved when most of his debts were discharged in bankruptcy in October 1998. His discharge from the Army and subsequent unemployment and his wife’s periodic unemployment and underemployment, only exacerbated his financial difficulties. He acted irresponsibly when he became unemployed and then refused to resolve his debts. His continuing refusal to satisfy even the smallest of his delinquent obligations since 2003, even though he and his wife are gainfully employed, tarnishes his actions as irresponsible. While the evidence regarding the period 1997-2003 initially established AG ¶ 20(a), the evidence of events since 2003 vitiates the applicability of this mitigating condition. Evidence that Athe person has received or is receiving counseling for the problem and/or there are clear indications that the problem is being resolved or is under control@ is potentially mitigating under AG & 20(c). Similarly, AG & 20(d) applies where the evidence shows Athe individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts.@33 In February 2008, after receipt of the SOR, Applicant attended a budget counseling seminar. He decided to not address his financial delinquencies because the delinquent balance was quite large and the debts would be removed from his credit reports after seven years from the date of the last activity. In fact, that decision was clearly made after he and his wife became employed in 2003, and he failed to make any effort to address his debts. In this instance, the budget counseling is insufficient to establish that the problem is being resolved or is under control. And, there is no credible evidence Applicant initiated a good-faith effort to repay overdue creditors or otherwise resolve his debts. The evidence fails to establish AG ¶ 20(c) or AG ¶ 20(d). 33 The Appeal Board has previously explained what constitutes a “good faith” effort to repay overdue creditors or otherwise resolve debts: In order to qualify for application of [the “good faith” mitigating condition], an applicant must present evidence showing either a good-faith effort to repay overdue creditors or some other good-faith action aimed at resolving the applicant’s debts. The Directive does not define the term ‘good-faith.’ However, the Board has indicated that 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.’ Accordingly, an applicant must do more than merely show that he or she relied on a legally available option (such as bankruptcy [or statute of limitations]) in order to claim the benefit of [the “good faith” mitigating condition]. (internal citation and footnote omitted) ISCR Case No. 02-30304 at 3 (App. Bd. Apr. 20, 2004) (quoting ISCR Case No. 99-9020 at 5-6 (App. Bd. June 4, 2001)). 10 Considering Applicant’s extensive financial delinquencies, which continue unaddressed, his focus on obtaining educational degrees, and his significant spending of discretionary funds for everything but his overdue debts, Applicant has not demonstrated his financial responsibility. 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(a): (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), the ultimate determination of whether to grant eligibility for a security clearance must be an overall common sense judgment based upon careful consideration of the guidelines and the whole person concept. I considered the potentially disqualifying and mitigating conditions in light of all the facts and circumstances surrounding this case. When these problems first began, Applicant was an active duty member of the U.S. Army and his wife was employed. She lost her job and entered periodic periods of employment and unemployment. Unable to meet the family financial obligations, in October 1998, his debts were discharged in bankruptcy. Intending to avoid another overseas tour, he left military service and became unemployed. He also endured periods of employment and unemployment. While their underemployment and unemployment are circumstances beyond their control, Applicant obtained services and goods from a wide variety of creditors, but either had no ability or intention to pay for them. As a result, he accumulated extensive new delinquent debt. (See AG & 2(a)(1) and AG & 2(a)(2).) Applicant and his wife have been gainfully employed since 2003, and while their combined gross monthly income is $10,971, he has refused to make any good-faith efforts to pay a variety of delinquent debts listed in the SOR. Instead, he preferred to wait for the debts to drop off his credit report after seven years of inactivity. (See AG & 2(a)(6), AG & 2(a)(7), and AG & 2(a)(9).) While these debts may eventually become uncollectible, failure to repay creditors reflects traits which raise concerns about his fitness to hold a security clearance. (See AG & 2(a)(5).) Of course, the issue is not simply whether all his debts are resolved; it is whether his financial circumstances raise concerns about his fitness to hold a security clearance. I am mindful that while any one factor, considered in isolation, might put Applicant’s 11 credit history in a sympathetic light, I have evaluated the various aspects of this case in light of the totality of the record evidence and have not merely performed a piecemeal analysis.34 Considering what Applicant had gone through financially and emotionally during 1998-2003, and mindful of his 1998 bankruptcy, subsequent clean slate, the absence of any good-faith efforts, and his continuing refusal to address his debts, his current financial situation is sufficient to raise continuing security concerns. (See AG & 2(a)(1).) Overall, the record evidence leaves me with substantial questions or doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant has failed to mitigate the security concerns arising from his financial considerations. 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 Subparagraph 1.a: Against Applicant Subparagraph 1.b: Against Applicant Subparagraph 1.c: Against Applicant Subparagraph 1.d: Against Applicant Subparagraph 1.e: Against Applicant Subparagraph 1.f: Against Applicant Subparagraph 1.g: Against Applicant Subparagraph 1.h: Against Applicant Subparagraph 1.i: Against Applicant Subparagraph 1.j: Against Applicant Subparagraph 1.k: Against Applicant Subparagraph 1.l: Against Applicant Subparagraph 1.m: Against Applicant Subparagraph 1.n: Against Applicant Subparagraph 1.o: Against Applicant Subparagraph 1.p: Against Applicant Subparagraph 1.q: Against Applicant Subparagraph 1.r: Against Applicant Subparagraph 1.s: Against Applicant Subparagraph 1.t: Against Applicant Subparagraph 1.u: Against Applicant Subparagraph 1.v: Against Applicant Subparagraph 1.w: Against Applicant 34 See U.S. v. Bottone, 365 F.2d 389, 392 (2d Cir. 1966); See also ISCR Case No. 03-22861 at 2-3 (App. Bd. Jun. 2, 2006). 12 Subparagraph 1.x: Against Applicant Subparagraph 1.y: Against Applicant Subparagraph 1.z: Against Applicant Subparagraph 1.aa: Against Applicant Subparagraph 1.bb: Against Applicant Subparagraph 1.cc: Against Applicant Conclusion In light of all of the circumstances presented by the record in this case, it is not clearly consistent with national security to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is denied. ________________________ ROBERT ROBINSON GALES Chief Administrative Judge