1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) --------- ) ADP Case No. 13-01059 ) ) Applicant for Public Trust Position ) Appearances For Government: Richard Stevens, 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 automated data processing (ADP) I/II/III (public trust position) is denied. Statement of the Case On June 3, 2013, Applicant applied for a public trust position and submitted an Electronic Questionnaire for Investigations Processing (e-QIP) version of a Security Clearance Application (SF 86).1 On November 6, 2013, the Department of Defense (DOD) Consolidated Adjudications Facility – Industry Division (CAF) 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; DOD 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 DOD 1 Item 5 ((SF 86), dated June 3, 2013). 2 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 the DOD adjudicators 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 ADP I/II/III position to support a contract with the DOD, 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 November 18, 2013. In a written statement, notarized on December 2, 2013, Applicant responded to the SOR allegations and elected to have his case decided on the written record in lieu of a hearing.2 A complete copy of the Government’s file of relevant material (FORM) was prepared by the Defense Office of Hearings and Appeals (DOHA). The FORM was provided to Applicant on February 28, 2014, and he was afforded an opportunity, within a period of 30 days after receipt of the FORM, to file objections and submit material in refutation, extenuation, or mitigation. Applicant received the FORM on March 17, 2014. Applicant’s response was due on April 16, 2014, but as of May 12, 2014, he had not submitted any response. The case was assigned to me on May 12, 2014. Findings of Fact In his Answer to the SOR, Applicant admitted all of the factual allegations (¶ 1.a. through 1.h.) of the SOR. Applicant’s admissions are incorporated herein as findings of fact. After a complete and thorough review of the evidence in the record, and upon due consideration of same, I make the following additional findings of fact. Applicant is a 34-year-old employee of a defense contractor, and he is seeking to retain his eligibility for occupying an ADP I/II/III position to support a contract with the DOD. A June 1998 high school graduate, Applicant received an associate’s degree from a community college in December 2006, and subsequently attended a university and a community college for nearly two years. He did not obtain another degree. Applicant enlisted in the U.S. Marine Corps (USMC) in September 1998, and remained on active duty until he was honorably discharged in September 2002. That same month he joined the USMC Inactive Reserve, and remained with that component until he was again honorably discharged in September 2006. Applicant has worked in a variety of positions with different employers. He was a part-time dishwasher, part-time package handler, glass seamer, data entry clerk, and technician before being hired by his current employer as a data entry operator in May 2013. He was unemployed from December 2012 until May 2013.3 He was granted a secret security clearance in July 2007.4 Applicant has never been married and has no children. 2 Item 4 (Applicant’s Answer to the SOR). 3 Item 5, supra note 1, at 13-23. 4 Item 5, supra note 1, at 37-38. 3 Financial Considerations There was nothing unusual about Applicant’s finances until January 2007, when he moved across country for unspecified reasons. A series of events occurred that Applicant contends negatively impacted his finances: he used his credit card to pay for moving and living expenses; he broke his lease when he moved; he expected to receive a large settlement stemming from a 2004 wrongful death lawsuit involving his deceased sister, but lost the case; his automobile was destroyed in a crash, and he had to purchase a new vehicle; he had several expensive automobile repairs; some of the benefits he had received from his GI Bill were not used for the designated purposes when he had to withdraw from some classes, and an overpayment resulted; he has had many years of low income work; and, he has had “periods of long unemployment.”5 Applicant had anticipated being able to resolve all of his debts when he expected to receive the large settlement stemming from his sister’s wrongful death lawsuit, but when the verdict went against him, all of his plans collapsed. In June 2013, he stated “If I obtain a steady, decent paying job then I will be able to start repaying. . . .”6 His current plans are:7 I will be able to make payment arrangements/settlements for all of my debts listed here once I have worked for some further period of time and catch up with current financial issues after my last long period of unemployment during which time I had no income for roughly 7 months. Although Applicant has held his current position since May 2013, he has not submitted any information or documentation to indicate that he has contacted his creditors, made any payments, or attempted to establish any repayment plans. The SOR identified eight purportedly continuing delinquencies as reflected by credit reports from June 2013,8 and October 2013,9 totaling approximately $26,590. 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. Those debts listed in the SOR and their respective current status, according to the credit reports, other evidence already in the case file, and Applicant’s submissions regarding the same, are described below. 5 Item 4, supra note 2. 6 Item 5, supra note 1, at 40. 7 Item 4, supra note 2. 8 Item 6 (Combined Experian, TransUnion, and Equifax Credit Report, dated June 12, 2013). 9 Item 7 (Experian Credit Report, dated October 1, 2013). 4 (SOR ¶ 1.a.) There is a bank credit card with a credit limit of $5,500 and unpaid balance of $6,767 that was past due in the amount of $1,718 when the unpaid balance was charged off in January 2008.10 Applicant used this credit card to pay for his moving and living expenses. He has not made any effort to approach the creditor to establish a repayment plan because he does not have sufficient funds to start making payments. The account has not been resolved. (SOR ¶ 1.b.) There is a bank credit card with a credit limit of $500 and a past-due and unpaid balance of $991 that was closed by the creditor, placed for collection, and charged off.11 Applicant also used this credit card to pay for his moving and living expenses. He has not made any effort to approach the creditor to establish a repayment plan because he does not have sufficient funds to start making payments. The account has not been resolved. (SOR ¶ 1.c.) There was a disbursement of $6,000 from the Department of Veterans Affairs which was to be used by Applicant to pay college tuition, books, supplies, and living expenses under Applicant’s GI Bill benefits. When Applicant withdrew from college, the funds not used by him for the declared purposes were to be refunded.12 He has not made any effort to approach the creditor to establish a repayment plan because he does not have sufficient funds to start making payments. The account has not been resolved. (SOR ¶ 1.d.) There is a bank credit card with a credit limit of $1,300 and high credit of $1,763 that was closed, placed for collection, and sold to a bad debt purchaser.13 The debt purchaser increased the unpaid balance to $2,447.14 Applicant also used this credit card to pay for his moving and living expenses. He has not made any effort to approach the new creditor to establish a repayment plan because he does not have sufficient funds to start making payments. The account has not been resolved. (SOR ¶ 1.e.) There is an apartment lease that Applicant broke when he moved from his apartment leaving an unpaid balance of $6,023 that was placed for collection in 2007.15 The unpaid balance was subsequently increased to $6,152.16 Applicant has not made any effort to approach the new creditor to establish a repayment plan because he does not have sufficient funds to start making payments. The account has not been resolved. 10 Item 6, supra note 8, at 5; Item 7, supra note 9, at 1. 11 Item 6, supra note 8, at 7; Item 7, supra note 9, at 1. 12 Item 7, supra note 9, at 1. 13 Item 6, supra note 8, at 7. 14 Item 7, supra note 9, at 1. 15 Item 6, supra note 8, at 12. 16 Item 7, supra note 9, at 1. 5 (SOR ¶ 1.f.) There is a bank credit card with a credit limit of $3,000 and high credit of $3,906 that was over 120 days past due that was closed by the creditor, placed for collection, and transferred in 2008.17 Applicant also used this credit card to pay for his moving and living expenses. He has not made any effort to approach the creditor to establish a repayment plan because he does not have sufficient funds to start making payments. The account has not been resolved. (SOR ¶ 1.g.) There is a department store account with a credit limit of $590 and high credit of $891 that was closed, placed for collection, and sold to a bad debt purchaser claiming to be a factoring company.18 The debt purchaser increased the unpaid balance to $1,141.19 Applicant also used this credit card to pay for his moving and living expenses. He has not made any effort to approach the new creditor to establish a repayment plan because he does not have sufficient funds to start making payments. The account has not been resolved. (SOR ¶ 1.h.) There is a cable television account with an unpaid balance of $92 that was placed for collection in 2007.20 Applicant claimed he was unaware of the outstanding balance as he had never received a final bill following his move across country. He has not made any effort to approach the creditor to establish a repayment plan because he does not have sufficient funds to start making payments. The account has not been resolved. It is not known what Applicant’s financial resources may be for he has not submitted a personal financial statement to indicate his net monthly income, his monthly rent, debt, or household expenses, or whether or not he has any funds remaining at the end of each month for discretionary use or savings. There is no evidence to indicate that Applicant ever received financial counseling. 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.”21 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 17 Item 6, supra note 8, at 9; Item 7, supra note 9, at 2. 18 Item 6, supra note 8, at 6, 9; Item 7, supra note 9, at 2. It should be noted that a "factoring company" is a company that buys "accounts receivable" from a current creditor and then collects on those receivables from the debtor. A factored account is not supposed to be an account that is charged off or uncollectible. 19 Item 7, supra note 9, at 6. 20 Item 6, supra note 8, at 13; Item 4, supra note 2. 21 Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). 6 positions.”22 “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.”23 DOD contractor personnel are afforded the right to the procedures contained in the Directive before any final unfavorable access determination may be made.24 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. In the decision-making process, facts must be established by “substantial evidence.”25 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.26 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 22 Regulation ¶¶ C3.1.2.1.1.7 and C3.1.2.1.2.3. 23 Id. at ¶ C6.1.1.1. 24 See Id. at ¶ C8.2.1. 25 “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 (4 th Cir. 1994). 26 See ISCR Case No. 02-31154 at 5 (App. Bd. Sep. 22, 2005). 7 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.”27 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. . . . The guideline notes several conditions that could raise security concerns. Under AG ¶ 19(a), an inability or unwillingness to satisfy debts is potentially disqualifying. Similarly, under AG ¶ 19(c), a history of not meeting financial obligations may raise security concerns. Commencing in 2007, Applicant found himself with insufficient funds to continue making his routine monthly payments, various accounts became delinquent, and they were placed for collection, charged off, or sold. Hoping to be able to resolve his delinquent debts through a large settlement stemming from his sister’s wrongful death lawsuit, all of his plans collapsed when the verdict went against him and there was no settlement. 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 the behavior happened so long ago, was so infrequent, or occurred under such circumstances that it is unlikely to recur and does not cast doubt on the individual=s current reliability, trustworthiness, or good judgment. Also, under AG ¶ 20(b), financial security concerns may be mitigated where 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. Evidence that the person has received or is receiving counseling for the problem and/or there are 27 Egan, 484 U.S. at 531. 8 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 the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts.28 AG ¶ 20(b) only minimally applies. Applicant’s financial problems commenced in 2007 when a series of events occurred that Applicant contends negatively impacted his finances. He failed to explain why those events were largely beyond his control, or why they should not be considered normal, anticipated events in one’s life. He broke his lease, failed to resolve his cable account, and moved across country without explaining why he decided to do so, using his credit card to pay for moving and living expenses. His automobile was destroyed and he had to purchase a new vehicle that had several expensive repairs. The benefits he had received from his GI Bill were not used for the designated purposes when he had to withdraw from some classes, and an overpayment resulted. He claims he had many years of low income work, but failed to explain if he sought other positions to supplement his income. Applicant also claimed he had “periods of long unemployment,” but except for his one period from December 2012 until May 2013, he never described any other such periods except while he was a student. It is apparent that Applicant continued to live his life unaffected by most of the above events because of his unrealized expectation that he would receive a large wrongful death settlement. In fact, Applicant gambled on winning, but he lost, and the financial issues were left unresolved. Applicant failed to act responsibly under the circumstances.29 AG & 20(a) does not apply. The nature, frequency, and relative recency of Applicant’s financial difficulties since 2007 make it difficult to conclude that it occurred “so long ago” or “was so infrequent,” especially since those financial problems are continuing. 28 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)). 29 “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)). 9 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. Applicant never contacted any of the creditors to try to make repayment arrangements, even for an account as little as $92. 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, claiming he “will be able to make payment arrangements/settlements for all of [his] debts listed . . . once [he has] worked for some further period of time and catch up with current financial issues. . . . Applicant has been with his current employer since May 2013 – one year – and some positive movements should have already taken place to resolve some of his delinquent accounts. Whole-Person Concept Under the whole-person concept, the administrative judge must evaluate an applicant’s eligibility for a security clearance or suitability for a public trust position by considering the totality of the applicant’s conduct and all relevant 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 or suitability for a public trust position 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. He was honorably discharged from the USMC after serving on active duty and in the reserves. With the exception of his period of unemployment from December 2012 until May 2013, Applicant has generally been employed in either part-time or full-time positions. He has repeatedly declared his intention of resolving his delinquent accounts once he has the funds to do so. The disqualifying evidence under the whole-person concept is more substantial than the mitigating evidence. 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 10 ignoring them, even after he had acquired his current position in May 2013. His long- standing failure to repay creditors, at least in reasonable amounts (such as his $92 delinquent account), or to arrange payment plans, reflects traits which raise concerns about his fitness to hold a security clearance or a public trust position. 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.30 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(a)(9). The Appeal Board has addressed a key element in the whole-person analysis in financial cases stating:31 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 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. Applicant has demonstrated a negative track record of making no efforts to pay his creditors, and generally ignoring them until he is financially able to address his delinquent debts. 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. 30 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). 31 ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008) (internal citations omitted). 11 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 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 ADP I/II/III position to support a contract with the DOD. Eligibility for public trust position is denied. ________________________ ROBERT ROBINSON GALES Administrative Judge