1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) -------------------- ) ISCR Case No. 07-17476 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 mitigated the security concerns regarding financial considerations. Eligibility for a security clearance and access to classified information is granted. Statement of the Case On June 18, 2007, Applicant applied for a security clearance and submitted an Electronic Questionnaires for Investigations Processing (e-QIP) version of a Security Clearance Application (hereinafter SF 86). On August 21, 2008, the Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) to her, 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 her. 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 her SOR was issued after September 1, 2006. Applicant acknowledged receipt of the SOR on September 2, 2008. In a sworn, written statement, dated September 29, 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 December 2, 2008, and the case was assigned to Administrative Judge Michael H. Leonard on December 8, 2008. It was reassigned to me on January 5, 2009, due to caseload considerations. A Notice of Hearing was issued on January 12, 2009, and I convened the hearing, as scheduled, on January 29, 2009. During the hearing, eight Government exhibits and ten Applicant exhibits were received without objection. Applicant testified. The transcript of the hearing (Tr.) was received on February 4, 2009. Findings of Fact In her Answers to the SOR, Applicant admitted eleven of the factual allegations in ¶¶ 1.a., 1.b., and 1.e. through 1.m. of the SOR. She denied all other allegations. Department Counsel conceded the presence of satisfactory mitigation pertaining to ¶ 1.d.1 Applicant is a 48-year-old employee of a defense contractor, and she is seeking to obtain a security clearance, the level of which has not been divulged. She was previously granted a SECRET clearance on two occasions. The first time was in the early 1990s, but that clearance was lost when she was laid off.2 The second time was in September 1998,3 but that clearance was revoked in November 2004, due to financial reasons.4 She was married from 1984 until 1993,5 and has three children, born in 1984, 1989, and 1990, respectively.6 Her three children, a son-in-law, and her former father-in-law, all presently reside with 7 1 Tr. at 14. 2 Id. at 59. 3 Government Exhibit 1 (e-QIP, dated June 18, 2007), at 32. 4 Id. at 33; Tr. at 59. 5 Government Exhibit 1, supra note 3, at 16. 3 Applicant has been gainfully employed by the same defense contractor, in a variety of positions, from November 1997 until the present, and currently serves as a material coordinator.8 Applicant’s finances were apparently unremarkable until about 1994, when she was laid off and her former spouse stopped making the court-ordered child support payments.9 In an effort to improve her employment opportunities she enrolled in a vocational or technical school and completed her training in March 1995.10 Additionally, to reduce expenses, she moved back into her ex-spouse’s residence (he was a truck driver on the road) with their children, but that situation did not work out, so they eventually relocated in 1998.11 With the arrearage of over $30,000.00 in child support payments from her former spouse,12 and with mounting expenses, she experienced financial difficulties which resulted in accounts becoming delinquent and being “charged off” and/or placed for collection. In addition, Federal tax liens were placed on their property on several occasions. In 2004, when presented with a list of delinquent accounts by an investigator of the Defense Security Service, Applicant pledged to contact those creditors and arrange payment “when money becomes available.”13 She stated the money would have to come from the child support arrearage.14 The SOR identified thirteen purportedly continuing delinquencies, but Applicant contends several of the accounts alleged have current payment arrangements; some have been satisfied or otherwise resolved; and some were not her responsibility. Her contentions have merit. The evidence and information offered by the Government consists, in large measure, of four credit reports and written and oral statements made by Applicant. Additional credit reports, along with financial records and correspondence with creditors, as well as official court records, were offered in support of Applicant’s case. The thirteen debts listed in the SOR, and their respective purported current status, according to the credit reports, financial records and correspondence with creditors, as well as Applicant’s comments regarding same, are described below: 6 Id. at 20-21. 7 Id. at 27. 8 Id. at 14. 9 Government Exhibit 7 (Statement, dated July 28, 2004) at 2. 10 Government Exhibit 1, supra note 3, at 12. 11 Government Exhibit 7, supra note 9, at 2. 12 Id. 13 Id. at 3. 14 Id. 4 SOR ¶ TYPE DEBT AMOUNT STATUS 1.a. Joint credit card $3,271.00 Charged off Aug 1997. (no longer on credit reports) Applicant will pay when creditor responds to her written inquiry of Dec 2008. 1.b. Joint charge account $487.00 Collection Feb 2002. Paid Jul 2008. (no longer on credit reports) 1.c. Joint charge account $2,173.00 Collection Mar 1997. Applicant sent creditor written inquiry Dec 2008, but no response. (no longer on credit reports) 1.d. Federal tax lien for 1985, 1987,1988 $7,833.31 Lien released. 1.e. Medical (original creditor unknown) $939.00 Collection Aug 2006 – Negotiated balance paid Nov 2008. 1.f. Medical $33.00 Collection Jul 2001 – Paid Nov 2008. 1.g. Medical $74.00 Collection Jul 2001 – Paid Nov 2008. 1.h. Medical $231.00 Collection Mar 2006 – Paid Nov 2008. 1.i. Medical $58.00 Collection Mar 2006 – Paid Nov 2008. 1.j. Medical $750.00 Collection Mar 2005 – Paid Dec 2008. 1.k. Hospital $50.00 Collection Oct 2002 – Paid Jan 2009. 1.l. Medical $156.00 Collection Jan 2002 – Paid Nov 2008. 1.m. Joint home mortgage $0.00 Foreclosure Apr 2005 – Zero balance. SOR ¶¶ 1.a., 1.b., and 1.c. refer to joint credit cards or charge accounts which were either charged off (¶ 1.a.) or sent to collection (¶¶ 1.b. and 1.c.). Applicant paid off the account set forth in ¶ 1.b. in July 2008, by cashier’s check, a copy of which she was unable to furnish,15 and sent the remaining two creditors written inquiries in December 2008.16 If and when they respond to her, she has acknowledged an intention to satisfy both accounts.17 None of the three accounts appear on her most current credit report. 15 Tr. at 28. 16 Id. at 24-26, 30-31; Applicant Exhibit A (U.S. Postal Service Certified Mail Receipt, dated December 8, 2008); Applicant Exhibit C (U.S. Postal Service Certified Mail Receipt, dated December 8, 2008). 5 SOR ¶ 1.d. refers to delinquent balances purportedly owed, as of September 4, 1990, on a federal tax lien filed against Applicant and her ex-spouse by the Internal Revenue Service (IRS), for insufficient or nonpayment of Federal income tax for the years 1985, 1987, and 1988.18 Applicant had filed a request with the IRS for Spousal Relief, dated April 12, 2000, stating that she and her ex-spouse were divorced in 1994, and since that date she had been the sole provider for her three children.19 Nevertheless, the IRS filed the Notice of the lien in September 1990, and refiled the Notice in March 1995.20 The lien was not refiled by the last date for such refiling in June 1999, and the lien was released. Applicant further contends the lien should have been solely against her ex- spouse because the social security account number on the lien is that of her ex-spouse. On September 19, 2008, the IRS responded to her earlier status inquiry, and advised her that her federal income tax records indicate her Form 1040 accounts for the periods in question are “paid in full at this time.”21 None of the more recent credit reports in evidence includes an entry pertaining to this particular lien. As noted above, Department Counsel conceded the presence of satisfactory mitigation pertaining to ¶ 1.d. SOR ¶¶ 1.e. through 1.l. refer to medical or hospital charges for her children that went to collection between July 2001 and March 2006. Under the terms of her divorce, Applicant’s ex-spouse was financially responsible for the costs of health care insurance for the children, and both Applicant and her husband were to be equally responsible for any uninsured health care expenses.22 As noted above, her ex-spouse was in arrears for over $30,000.00 in child support payments, and he did not comply with the provisions of the decree. Furthermore, it appears that her ex-spouse was incarcerated in a federal penitentiary, for unspecified reasons, from 2004 until at least June 2007.23 Applicant paid off each of the delinquent accounts between November 2008 and January 2009.24 17 Tr. at 26. 18 Notice of Federal Tax Lien Under Internal Revenue Laws, dated September 4, 1990, attached to Government Exhibit 2 (Answers to Interrogatory, dated May 9, 2008). 19 Applicant’s letter to IRS, dated April 12, 2000, attached to Government Exhibit 2. 20 Notice of Federal Tax Lien, dated March 26, 1995, attached to Government Exhibit 2. 21 Letter from IRS, dated September 19, 2008, attached to Applicant’s Response to SOR. 22 Government Exhibit 8 (Final Decree of Divorce, undated), at 16-20. 23 Government Exhibit 1, supra note 3, at 16-17. 24 Tr. at 35 (pertaining to SOR ¶ 1.e.); Tr. at 37, 39 (pertaining to SOR ¶ 1.f.); Tr. at 40 (pertaining to SOR ¶ 1.g.); Tr. at 41-42 (pertaining to SOR ¶ 1.h.); Tr. at 42 (pertaining to SOR ¶ 1.i.); Tr. at 44 (pertaining to SOR ¶ 1.j.); Tr. at 45-46 (pertaining to SOR ¶ 1.k.); Tr. at 47 (pertaining to SOR ¶ 1.l.); Applicant Exhibit E (Extract from checking account statement, dated January 18, 2009); Applicant Exhibits F & G (Correspondence from Debt Collector, both dated November 11, 2008); Applicant Exhibit H (Extract from credit card statement, dated January 2, 2009); Applicant Exhibit I (Hospital Statement of Account and credit card receipt, dated January 5, 2009). 6 SOR ¶ 1.m. refers to a foreclosure on Applicant’s residence mortgage that occurred in April 2005. When Applicant initially purchased her residence she was under the impression that she had obtained financing with a fixed monthly payment of $660.00. After she had been in the house for three years, to her surprise, the monthly rate increased to $900.00.25 Although she attempted to work with the bank to refinance the loan to conditions more favorable to her, and within her ability to pay, the bank refused to work with her. Eventually, in about April 2005, the bank foreclosed on the mortgage, but there was no deficiency owed by her.26 Applicant has resided in another residence for the past three years. It is presently owner-financed, with her payments going toward her anticipated purchase of the property. Once she receives clear title, she intends to refinance the property to pay off any continuing debts.27 In September 2001, Applicant completed a Personal Financial Statement which reflected a gross monthly salary of $1,938.04; a net monthly income of $2,924.28; total monthly expenses of $2,757.00; and a balance of about $167.00 in discretionary funds available for her use.28 Her financial condition has substantially improved since then. On January 27, 2009, she completed another Personal Financial Statement, and it reflects a gross monthly salary of $3,503.91; a net monthly income of $2,961.30; total monthly expenses of $1,839.00; and a balance of about $1,122.30 in discretionary funds available for her use.29 As a “single mother” raising three children, and after “ignoring” her debts for a number of years because of her former financial situation,30 despite having received no financial or credit counseling,31 the changed financial circumstances have allowed her to commence paying off her debts and enabled her to start saving money.32 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 25 Tr. at 48. 26 Id. at 49. 27 Id. at 49-50. 28 Personal Financial Statement, dated September 10, 2001, attached to Government Exhibit 2. 29 Applicant Exhibit J (Personal Financial Statement, dated January 27, 2009). 30 Tr. at 17. 31 Id. at 57. 32 Id. at 56-57. 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.”33 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 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. 33 “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. The evidence is sufficient to substantiate SOR ¶¶ 1.a. through 1.m. The Government attributes substantial importance and credibility to entries in the various credit reports in evidence.34 I have reviewed them, and even with extensive experience in deciphering the entries, found them generally to be garbled and internally inconsistent, with minimum indicia of reliability. There is no indication as to the source(s) of the information appearing therein, for as one Equifax Credit Report states, the entries are derived from “public records or other information” without identifying the “other information.”35 It provides even less information about the sources of the derogatory financial information. The other individual or combined reports offer little additional useful information. For a substantial period of time, Applicant did experience an inability to keep up with the payments on her various accounts and mortgage. Her financial condition was not caused by an extravagant lifestyle, substance abuse, or gambling issues, but was exacerbated because she was a single mother of three children trying to raise them without the child support her ex-spouse was required to pay. The arrearage of over $30,000.00 in child support would have enabled her to avoid her financial difficulties. Nevertheless, her delay until 2008-09 in commencing to pay off the delinquent balances constitutes a history of not meeting financial obligations. Her actions are sufficient to raise these potentially disqualifying conditions, requiring a closer examination. However, the issue pertaining to the federal tax lien is a different matter. The federal tax lien was filed against Applicant and her ex-spouse by the IRS in 1990, refiled 34 The Appeal Boad has previously determined that credit reports are sufficient to establish a prima facie case that an Applicant has SOR-identifed delinquent debts that are of security concern. ISCR Case No. 03-20327 at 3 (App. Bd. Oct. 26, 2006). 35 Government Exhibit 3 (Credit Report, dated February 26, 2008), at 1. 9 once, and eventually released. The IRS indicated there is a zero balance. The evidence of record, Applicant’s contentions, and Department Counsel’s concession that the allegation has been mitigated, in the absence of any contrary evidence, satisfies me that this allegation has been mitigated. 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 inability to make her monthly payments on various accounts, and the absence of actual payments or repayment arrangements until 2008-09, is the single most potentially troublesome issue. While Applicant’s three children are now over 21 and she is no longer responsible for supporting them, they do continue to reside with her, along with one son-in-law and her former father-in-law. Also, Applicant’s improved financial condition, the fact that she has already paid off all but two accounts, and the wisdom, maturity, and greater understanding of her financial responsibilities, makes it less likely that the behavior will recur. I find AG ¶ 20(a) applies in this case. Likewise, under AG ¶ 20(b), when “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, or a death, divorce or separation), and the individual acted responsibly under the circumstances,” there may be potential mitigation. Applicant was impacted by not only one of those conditions, but by three of them almost simultaneously. She was laid off, encountered several medical emergencies, and went through a separation and eventual divorce, all of which took a toll on her ability to avoid financial difficulties. Added to that cornucopia of contributing difficulties was her ex-spouse’s failure or refusal to comply with his court-mandated child support responsibilities. In the absence of those problems, her financial difficulties might never have occurred. Accordingly, I find AG ¶ 20(b) applies in this case. 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). In this instance, the first section of AG & 20(c) is not in issue for there is no evidence of Applicant having received counseling for financial issues. However, there are clear indications that her financial issues have been resolved or are under control. Similarly, AG & 20(d) applies where the evidence shows Athe individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts.@36 Applicant generally has a monthly balance of about $1,122.30 in 36 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 10 discretionary funds available for her use. She previously paid off nine of the alleged debts; has mitigated the federal tax issue; relinquished her foreclosed residence to the creditor, with no deficiency owed by her; is engaged in purchasing her current residence; and has taken the first steps toward resolving the two remaining delinquent accounts identified in the SOR (¶¶ 1.a. and 1.c.), with the clear intention of satisfying any remaining balances. Her actions in addressing her debts indicate good-faith efforts on her part as well as showing clear indications the problem is now largely under control. I find AG ¶¶ 20(c) and 20(d) apply in this case. 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) 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. Applicant has taken affirmative action and made substantial good-faith efforts to pay off or resolve her legitimate delinquent debts, including those raising security concerns. (See AG & 2(a)(6).) While it is the Government’s contentions that she still has two outstanding debts identified in the SOR, those debts are being addressed by her. Thus, these debts cannot be sources of improper pressure or duress. (See AG & 2(a)(8).) Of course, the issue is not simply whether all her debts are resolved; it is whether her financial circumstances raise concerns about her fitness to hold a security clearance. I am mindful that while any one factor, considered in isolation, might put Applicant’s credit history in a sympathetic light, I have evaluated the various aspects of 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)). 11 this case in light of the totality of the record evidence and have not merely performed a piecemeal analysis.37 Considering her continuing good-faith efforts, the nature and circumstances behind some of the debts, the child support arrearage of her ex-spouse, and her current financial condition, her past financial situation is insufficient to raise continuing security concerns. (See AG & 2(a)(1).) Overall, the record evidence leaves me without questions or doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant mitigated the security concerns arising from her 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: FOR APPLICANT Subparagraph 1.a: For Applicant Subparagraph 1.b: For Applicant Subparagraph 1.c: For Applicant Subparagraph 1.d: For Applicant Subparagraph 1.e: For Applicant Subparagraph 1.f: For Applicant Subparagraph 1.g: For Applicant Subparagraph 1.h: For Applicant Subparagraph 1.i: For Applicant Subparagraph 1.j: For Applicant Subparagraph 1.k: For Applicant Subparagraph 1.l: For Applicant Subparagraph 1.m: For Applicant 37 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 Conclusion In light of all of the circumstances presented by the record in this case, it is clearly consistent with national security to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is granted. ________________________ ROBERT ROBINSON GALES Chief Administrative Judge