1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ------------------------------- ) ADP Case No. 09-01193 ) ) Applicant for Public Trust Position ) Appearances For Government: Melvin A. Howry, Esquire, Department Counsel For Applicant: Pro se ______________ Decision ______________ GALES, Robert Robinson, Administrative Judge: Applicant failed to mitigate the trustworthiness concerns regarding financial considerations. Eligibility to occupy an Information Systems Position designated ADP I/II/III (public trust position) is denied. Statement of the Case On May 7, 2008, Applicant applied for a public trust position and submitted a Questionnaire for Public Trust Positions (SF 85P).1 On an unspecified date, the Defense Office of Hearings and Appeals (DOHA) furnished him a set of interrogatories pertaining to his financial situation. He responded to the interrogatories on May 26, 2009.2 On another unspecified date, DOHA furnished him another set of interrogatories, this time pertaining to an unsworn declaration of an interview he had with an investigator from the U.S. Office of Personnel Management (OPM) on June 3, 2008. He 1 Government Exhibit 1 (SF 85P), dated May 7, 2008. 2 Government Exhibit 2 (Applicant’s Answers to Interrogatories, dated May 26, 2009). 2 responded to those interrogatories on May 26, 2009.3 On another unspecified date, DOHA furnished him another set of interrogatories, this time pertaining to his intentions regarding the possible filing of bankruptcy. He responded to those interrogatories on December 2, 2009.4 On May 7, 2010, 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; Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended and modified (Directive); and Adjudicative Guidelines for Determining Eligibility For Access to Classified Information (effective within the Department of Defense on September 1, 2006) (AG) for all adjudications and other determinations made under the Directive. The SOR alleged trustworthiness 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 Applicant’s eligibility for occupying an Information Systems Position designated ADP I/II/III to support a contract with the Department of Defense, and recommended referral to an administrative judge to determine whether such eligibility should be granted, continued, denied, or revoked. Applicant acknowledged receipt of the SOR on June 7, 2010. In a written statement, notarized on June 7, 2010, Applicant responded to the SOR allegations and requested a hearing before an administrative judge. Department Counsel indicated the Government was prepared to proceed on July 6, 2010, and the case was assigned me on October 18, 2010. A Notice of Hearing was issued on November 13, 2010, and I convened the hearing, as scheduled, on December 2, 2010. During the hearing, 10 Government exhibits (1-10) were admitted into evidence, without objection. Applicant testified, but offered no exhibits. The record remained open to afford Applicant the opportunity to supplement it. On December 23, 2010, and on January 7, 2011, he submitted a total of 4 documents that were marked as exhibits (A- D) and admitted into evidence, without objection. The transcript (Tr.) was received on December 7, 2010. Findings of Fact In his Answer to the SOR, Applicant admitted nearly all of the factual allegations (¶1.a., and ¶¶ 1.d. through 1.h.) of the SOR. He denied the remaining factual allegations (¶¶ 1.b., 1.c., 1.i., and 1.j.) of the SOR. Applicant is a 43-year-old employee of a defense contractor, and he is seeking to retain his eligibility for occupying an Information Systems Position designated ADP II5 to support a contract with the Department of Defense. He has no prior military service.6 A 3 Government Exhibit 3 (Applicant’s Answers to Interrogatories, dated May 26, 2009). 4 Government Exhibit 4 (Applicant’s Answers to Interrogatories, dated December 2, 2009). 5 Tr. at 69. 6 Government Exhibit 1, supra note 1, at 6. 3 June 1985 high school graduate,7 with some technical courses,8 he has worked in a variety of positions in a variety of locations in two different states. He was a senior system administrator for a large telecommunications company from October 2000 until July 2004; a self-employed information technology (IT) consultant from July 2004 until February 2006;9 and a ramp service agent and subsequently IT technical support for an airline from February 2006 until February 2008,10 before being hired by his current employer in May 2008.11 He went through two periods of underemployment or unemployment. In 2004, he was laid off along with all of the employer’s employees before the company eventually went out of business.12 Although he attempted to make a living as a self-employed IT consultant, he was essentially unemployed from July 2004 until February 2006.13 His second period of unemployment was much shorter, and lasted about one month when the airline for which he was working in February 2008 entered bankruptcy and laid him off.14 Applicant estimated he earned less than $20,000 in 2004; not more than $30,000 in 2005; and less than $40,000 in 2006.15 Applicant was married in April 1989.16 They have five children, born in 1989, 1991, 1992, 1995, and 1997, respectively.17 In February 2007, Applicant and his wife informally separated, in part, due to financial stress and her involvement with another individual.18 They have remained separated. Financial Considerations There was nothing unusual about Applicant’s finances until July 2004, when Applicant was laid off.19 When the company eventually went out of business, all 7 Id. at 2. 8 Tr. at 64. 9 Id. at 65. 10 Government Exhibit 1, supra note 1, at 3. 11 Id. 12 Personal Subject Interview, dated June 3, 2008, at 1, attached to Government Exhibit 3, supra note 3. 13 Tr. at 65. 14 Id. 15 Id. at 27-29. 16 Government Exhibit 1, supra note 1, at 5. 17 Id. 18 Id. 19 At the time he was laid off, Applicant’s bills were all current. Personal Subject Interview, supra note 12, at 2. 4 pensions and contributions were lost.20 Although Applicant’s wife routinely handled the bills, within a few months they started to fall behind in the monthly payments; several accounts became delinquent and were placed for collection or charged off. Reluctant to seek bankruptcy, his wife returned to the workforce, and Applicant borrowed $10,000 to save their house from foreclosure and to help with the delinquencies, but everything deteriorated.21 His wife always received correspondence from the creditors, and that situation has continued to the present time.22 Immediately upon separating, Applicant moved from the family residence and in with a friend. He later relocated to another state upon being hired by his current employer, and now resides with his mother to conserve money.23 Commencing the first month following their separation, Applicant sent over 50% of his salary as a support payment to his wife.24 In August 2009, the court ordered him to pay her $2,549.19 in monthly child support, and $2,500.00 in monthly maintenance, for a total monthly obligation of $5,049.19.25 The order was forwarded to his employer to garnish his wages, and $2,330.40 is withheld each pay date.26 When Applicant and his wife separated, he made an oral arrangement with her regarding medical benefits for their children. He maintained those benefits, and she was to take care of any medical bills whenever the children need medical attention.27 Additionally, upon receiving the financial interrogatories which listed his delinquent accounts,28 he approached her, and she indicated she was going to help and they would jointly seek discharge through bankruptcy.29 Since then, she apparently reversed course, and he was advised he would have to handle the problem by himself.30 In May 2009, Applicant claimed he was “working toward paying [his] debt.”31 He also prepared a personal financial statement, indicating his monthly expenses, including 20 Id. at 1. 21 Id. 22 Id. at 2. 23 Id. 24 Id. 25 Applicant Exhibit D (Amended Support Order, dated August 25, 2009), at 2. 26 Applicant Exhibit C (Original Income Withholding Order, dated August 18, 2010), at 1, and (Interoffice Memo, Subject: Courtesy Notice of Wage Attachment Received, dated October 29, 2009). 27 Tr. at 33-34. 28 Government Exhibit 2, supra note 2. 29 Tr. at 34. 30 Id. 31 Government Exhibit 2, supra note 2, at 7. 5 support and maintenance, and his telephone bill, totaled $2,480.32 In December 2009, he stated: “My plans are to get this completed myself. My ex was to do all of this and looks like she hasn’t. I will take control of this process and get the bankruptcy going. . . . I will take control and get this going at the first of the year.”33 On December 23, 2010, he prepared another personal financial statement indicating his monthly net salary as $2,921.02, his wife’s monthly net salary as $1,610.00, for a total monthly net income of $4,021.00, and monthly expenses, not including any debt repayment, of $2,625.00.34 No delinquent accounts were listed. It appears that he personally has a net remainder available for discretionary spending, such as debt repayment, totaling $296.02. Nevertheless, Applicant contends he barely has enough money to give to his wife for the children, or “keep [his] head above water,” much less attempt to pay any delinquent bills.35 The SOR identified 10 purportedly continuing delinquencies as reflected by credit reports from 2008,36 2009,37 and 2010,38 totaling approximately $96,529. Some accounts listed in the credit reports have been transferred, reassigned, or sold to other creditors or collection agents. Other accounts are referenced repeatedly in these credit reports, in many instances duplicating other accounts listed, either under the same creditor name or under a different creditor name. Some accounts are identified by complete account numbers, while others are identified by partial account numbers, in some instances eliminating the last four digits and in others eliminating other digits. Some accounts reflect no account number. The delinquent accounts include a judgment in favor of a homeowner’s association, in the amount of $1,294.00 (SOR ¶ 1.a.), obtained after the separation;39 four medical accounts totaling $750.00 (SOR ¶¶ 1.b., 1.c., 1.i., and 1.j.); a loan to minimize a potential foreclosure, now increased to $11,046.00 (SOR ¶ 1.g.); a foreclosed mortgage, in the amount of $81,761.00 (SOR ¶ 1.h.), also completed after the separation;40 and some other rather minor accounts. 32 Id. at 6. The document did not reflect monthly net income or a net remainder available for discretionary spending. No delinquent accounts were listed. 33 Government Exhibit 4, supra note 4, at 3. 34 Applicant Exhibit A (Personal Financial Statement, dated December 23, 2010). 35 Tr. at 35, 46. 36 Government Exhibit 5 (Combined Experian, TransUnion, and Equifax Credit Report, dated May 22, 2008). 37 Government Exhibit 6 (Equifax Credit Report, dated January 30, 2009); Government Exhibit 7 (Equifax Credit Report, dated June 3, 2009); Government Exhibit 8 (Equifax Credit Report, dated December 17, 2009). 38 Government Exhibit 9 (Equifax Credit Report, dated July 6, 2010); Government Exhibit 10 (Equifax Credit Report, dated November 24, 2010). 39 Tr. at 31. 40 Id. at 46. 6 Despite promises to file for bankruptcy, to date, Applicant has taken no action to see an attorney to commence bankruptcy proceedings.41 He does not believe he has sufficient funds, thought by him to be $1,100.00 to engage a bankruptcy attorney’s services.42 In addition, he has never approached his creditors to set up repayment arrangements, choosing instead to let his wife remain responsible for such communications. 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.”43 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. Positions designated as ADP I/II/III are classified as “sensitive positions.”44 “The standard that must be met for . . . assignment to sensitive duties is that, based on all available information, the person’s loyalty, reliability, and trustworthiness are such that . . . assigning the person to sensitive duties is clearly consistent with the interests of national security.”45 Department of Defense contractor personnel are afforded the right to the procedures contained in the Directive before any final unfavorable access determination may be made.46 When evaluating an applicant’s suitability for a public trust position, the administrative judge must consider the AG. In addition to brief introductory explanations for each guideline, the AG list potentially disqualifying conditions and mitigating conditions, which are used in evaluating an applicant’s eligibility for a public trust position. 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 overarching adjudicative goal is a fair, impartial, and common sense decision. 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. 41 Id. at 54. 42 Id. 43 Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). 44 Regulation ¶¶ C3.1.2.1.1.7 and C3.1.2.1.2.3. 45 Id. at ¶ C6.1.1.1. 46 See Id. at ¶ C8.2.1. 7 In the decision-making process, facts must be established by “substantial evidence.”47 The Government initially has the burden of producing evidence to establish a potentially disqualifying condition under the Directive, and has the burden of establishing controverted facts alleged in the SOR. 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.48 A person who seeks access to sensitive 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 sensitive information. Decisions include, by necessity, consideration of the possible risk the applicant may deliberately or inadvertently fail to safeguard sensitive information. Such decisions entail a certain degree of legally permissible extrapolation as to potential, rather than actual, risk of compromise of sensitive information. Furthermore, security clearance determinations, and by inference, public trust determinations, should err, if they must, on the side of denials.”49 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. 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. . . . 47 “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). “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). 48 See ISCR Case No. 02-31154 at 5 (App. Bd. Sep. 22, 2005). 49 Egan, 484 U.S. at 531. 8 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. As noted above, there was nothing unusual about Applicant’s finances until about mid-2004, when he was laid off and was underemployed or unemployed until February 2006 before obtaining another job with a reduced salary. As noted above, Applicant estimated he earned less than $20,000 in 2004; not more than $30,000 in 2005; and less than $40,000 in 2006. With his marriage dissolving, his accounts becoming delinquent, and his income and credit deteriorating, Applicant and his wife separated, and he left the family residence. Since she had always taken care of their family finances, he let her continue doing so, despite their separation. He essentially divorced himself from the delinquent accounts, and satisfied himself by simply paying her child support and maintenance. With insufficient funds to pay the monthly payments, Applicant’s accounts fell deeper into delinquency, and the bank foreclosed on the family residence. He made no effort to contact his creditors to resolve his accounts, and has not filed for bankruptcy. 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.@ Also, 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.@ 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.@50 Also, AG ¶ 20(e) may apply where “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.” 50 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)). 9 AG ¶ 20(a) only minimally applies for while Applicant’s financial problems commenced in 2004 when he was laid off, to date, they remain unattended, Applicant’s handling of his finances, under the circumstances, casts doubt on his current reliability, trustworthiness, or good judgment. Likewise, he receives partial application of AG ¶ 20(b), because the conditions that contributed to the financial problem were initially beyond Applicant’s control (e.g., loss of his employment in 2004, his continuing underemployment, and his separation). While he attempted to minimize his expenses, in essentially ignoring his delinquencies and continuing to allow his wife to be responsible for the handling of the accounts, Applicant failed to act responsibly under the circumstances.51 AG & 20(c) does not apply because there is no evidence that Applicant has ever received financial counseling or debt consolidation guidance. AG ¶ 20(d) does not apply because Applicant failed to initiate any effort, much less a “good-faith effort,” to start repaying any of his creditors before the hearing. The two delinquent accounts with balances of $150.00, and the delinquent account with a $252.00 balance have been ignored. Applicant never contacted any of the creditors to try to make repayment arrangements. Over the years, Applicant did not act aggressively, timely, or responsibly to resolve his delinquent debts. Instead, he ignored his debts and continues to do so. AG ¶ 20(e) does not apply because Applicant he has not provided documented proof to substantiate the basis of any disputed account. 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. 51 “Even if Applicant’s financial difficulties initially arose, in whole or in part, due to circumstances outside his [or her] control, the Judge could still consider whether Applicant has since acted in a reasonable manner when dealing with those financial difficulties.” ISCR Case No. 05-11366 at 4 n.9 (App. Bd. Jan. 12, 2007) (citing ISCR Case No. 03-13096 at 4 (App. Bd. Nov. 29, 2005); ISCR Case No. 99-0462 at 4 (App. Bd. May 25, 2000); ISCR Case No. 99-0012 at 4 (App. Bd. Dec. 1, 1999)). 10 (a)(9). 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. There is some evidence in favor of mitigating Applicant’s conduct. When these problems commenced with his being laid off in 2004, and continued through his unemployment and underemployment, his finances continued to go steadily out of control. His financial problems were exacerbated by his separation and the garnishment of a substantial portion of his wages. After a lengthy period of inaction during which he did not address his creditors, Applicant indicated he intends to file for bankruptcy. The disqualifying evidence under the whole-person concept is more substantial. While the unemployment and reduced earnings were circumstances beyond his control, Applicant either had no ability or no intention to pay his delinquent accounts. He did not make any efforts to pay his creditors, generally ignoring them and relying on his wife to handle everything. His long-standing failure to repay creditors, at least in reasonable amounts, or to arrange payment plans, reflects traits which raise concerns about his fitness to hold a security clearance. I am mindful that any one factor, considered in isolation, might put Applicant’s 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.52 The absence of any efforts or evidence to reflect actual payments to his SOR creditors are sufficient to raise continuing security concerns. See AG ¶ 2(a)(1) through AG ¶ 2 The Appeal Board has addressed a key element in the whole-person analysis in financial cases stating:53 In evaluating Guideline F cases, the Board has previously noted that the concept of “‘meaningful track record’ necessarily includes evidence of actual debt reduction through payment of debts.” However, an applicant is not required, as a matter of law, to establish that he [or she] has paid off each and every debt listed in the SOR. All that is required is that an applicant demonstrate that he [or she] has “ . . . established a plan to resolve his [or her] financial problems and taken significant actions to implement that plan.” The Judge can reasonably consider the entirety of an applicant’s financial situation and his [or her] actions in evaluating the extent to which that applicant’s plan for the reduction of his outstanding indebtedness is credible and realistic. See Directive ¶ E2.2(a) (“Available, reliable information about the person, past and present, favorable and unfavorable, should be considered in reaching a determination.”) There is no requirement that a plan provide for payments on all outstanding debts 52 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). 53 ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008) (internal citations omitted). 11 simultaneously. Rather, a reasonable plan (and concomitant conduct) may provide for the payment of such debts one at a time. Likewise, there is no requirement that the first debts actually paid in furtherance of a reasonable debt plan be the ones listed in the SOR. Overall, the record evidence leaves me with substantial questions and doubts as to Applicant’s eligibility and suitability for a public trust position. 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 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 eligibility to occupy an Information Systems Position designated ADP II to support a contract with the Department of Defense. Eligibility for public trust position is denied. ________________________ ROBERT ROBINSON GALES Administrative Judge