1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ------------------ ) ADP Case No. 14-00264 ) Applicant for Public Trust Position ) Appearances For Government: Fahryn Hoffman, Esq., Department Counsel For Applicant: Pro se __________ Decision __________ HARVEY, Mark, Administrative Judge: Applicant’s statement of reasons (SOR) alleges six delinquent debts, totaling $61,099. His financial problems were caused by medical problems and unemployment. On February 20, 2014, he filed for bankruptcy under Chapter 7 of the Bankruptcy Code, and on May 20, 2014, his unsecured, nonpriority debts were discharged. He received a fresh financial start. He made sufficient progress resolving his financial problems to mitigate financial considerations concerns. His eligibility to occupy a public trust position is granted. Statement of the Case On October 3, 2013, Applicant submitted an Electronic Questionnaires for Investigations Processing (e-QIP) version of an application for a public trust position (SF 86). (GE 1) On March 7, 2014, the Department of Defense (DOD) Consolidated Adjudications Facility (CAF) issued an SOR to Applicant, pursuant to Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (Directive), dated January 2, 1992, as amended, and modified; DoD Regulation 5200.2-R, Personnel Security Program, dated Jan. 1987, as amended (Regulation); and the adjudicative guidelines (AG) promulgated by the President on December 29, 2005. 2 The SOR alleges trustworthiness concerns under Guideline F (financial considerations). (HE 2) The SOR detailed reasons why DOD was unable to find that it is clearly consistent with the national interest to grant or continue Applicant’s eligibility to occupy a public trust position, which entails access to sensitive information. (HE 2) The DOD CAF recommended referral to an administrative judge to determine whether such access to sensitive information should be granted, continued, denied, or revoked. On March 26, 2014, Applicant responded to the SOR and requested a hearing. (HE 3) On August 4, 2014, Department Counsel indicated she was ready to proceed on Applicant’s case. On August 11, 2014, the Defense Office of Hearings and Appeals (DOHA) assigned Applicant’s case to me. On September 5, 2014, DOHA issued a hearing notice, setting Applicant’s hearing for October 1, 2014. (HE 1) Applicant’s hearing was held as scheduled. Department Counsel offered three exhibits, which were admitted without objection. (Tr. 23-24; GE 1-3) A discovery letter was admitted as hearing exhibit 4. (Tr. 23-24; HE 4) The record was held open until October 14, 2014. (Tr. 17) After the hearing, Department Counsel provided one exhibit, and Applicant provided seven exhibits, which were admitted without objection. (GE 4; AE A-G) Findings of Fact1 In his Answer to the SOR, Applicant admitted the SOR allegations in ¶¶ 1.a-1.f, and he provided mitigating information. His admissions are accepted as findings of fact. Applicant is a 43-year-old help desk computer technician and information technology specialist employed by a defense contractor since September 2013. (Tr. 7, 28-29) He graduated from high school in 1989. (Tr. 7) He attended community college and earned an information technology certification. (Tr. 7-8) He served in the Marine Corps from 1989 to 1993, and he left active duty as a corporal (E-4). (Tr. 8) He served in Southwest Asia in Desert Shield/Storm in 1991. (Tr. 8) His specialty in the Marine Corps was diesel mechanic. (Tr. 30) He received an honorable discharge. (Tr. 9) He has never been married, and he does not have any children. (Tr. 9) There is no evidence of criminal offenses, security violations, illegal drug use, or alcohol abuse. (Tr. 25-26) Financial Considerations Applicant’s SOR alleges six delinquent debts, totaling $61,099 as follows: ¶ 1.a ($8,076) is a bank-collection debt; ¶ 1.b ($21,400) is a bank-collection debt resulting from a home equity loan; ¶ 1.c ($16,964) is a credit card-collection debt; (4) ¶ 1.d ($2,083) is a collection debt based on a vehicle repossession; ¶ 1.e ($3,295) is a bank- collection debt; and ¶ 1.f ($9,281) is a credit card-collection debt. (Tr. 45-48; HE 2) 1Some details have been excluded in order to protect Applicant’s right to privacy. Specific information is available in the cited exhibits. 3 Applicant’s history of delinquent debt is documented in his October 29, 2013 credit report, his SF 86, his November 12, 2013 Office of Personnel Management (OPM) personal subject interview (PSI), his bankruptcy documentation, his SOR response, and his hearing transcript. Applicant’s evidence established two circumstances beyond his control that contributed to his financial problems: unemployment and illness. For 13 years Applicant worked for a large corporation. (Tr. 29) He was being paid $29 an hour and grossed about $60,000 a year. (Tr. 39) In 2008, Applicant received a $100,000 buyout from the corporation, which amounted to $67,000 after deductions for taxes. (Tr. 33) He also had $60,000 in a 401(k) account, which was reduced to about $45,000 after deductions for taxes. (Tr. 34-35) Applicant had a good credit history until his unemployment from April 2008 to July 2012. (Tr. 33; GE 3) For the first several years, Applicant lived off the buyout funds he received from his employer. (GE 3) Then he used the funds in his 401(k) account and credit cards to live. (GE 3) He was unable to work for a year because of severe problems with a burst appendix in 2009. (Tr. 26, 40-41) He was in the hospital for a month. (Tr. 41) He paid $13,000 for training in information technology and $5,000 for medical bills. (Tr. 37-38) From 2010 to 2012, he attempted to start and live off of an on- line business. (Tr. 42) In 2012, he obtained information technology employment at nine dollars an hour. (Tr. 32, 42) His current salary is $12.50 an hour. (Tr. 32) Applicant does not owe any student loans, tax debts, or secured loans. (Tr. 35- 38, 56) He received financial counseling as part of the bankruptcy process. (Tr. 49) His debts were all discharged on August 30, 2014, as a result of his Chapter 7 bankruptcy. (Tr. 49; AE A-B) With his current budget and income, he is able “to pay everything [he] need[s] to pay.” (Tr. 49) He did not obtain any loans or credit cards after his bankruptcy, and he lives on a cash basis. (Tr. 49, 56) He has $2,000 in his bank account and about $1,500 in a 401(k) account. (Tr. 51-52) He has about $300 left over after he pays his expenses at the end of the month. (Tr. 52) He assured his financial problems will not happen again. (Tr. 49, 54) Character Evidence While Applicant was in the Marine Corps, he earned the following awards and decorations: Combat Action Ribbon; National Defense Service Medal (NDSM); Good Conduct Medal (GCM); Kuwait Liberation Medal (KLM); Southwest Asia Service Medal with 3 Stars; Navy Unit Commendation Medal. (AE F) Applicant’s supervisor noted the absence of security problems and indicated Applicant is a “key support resource” for his employer. (AE E) Policies The U.S. Supreme Court has recognized the substantial discretion of the Executive Branch in regulating access to information pertaining to national security 4 emphasizing, “no one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). The Government’s authority to restrict access to classified information applies similarly in the protection of sensitive, unclassified information. As Commander in Chief, the President has the authority to control access to information bearing on national security or other sensitive information and to determine whether an individual is sufficiently trustworthy to have access to such information. See Id. at 527. Positions designated as ADP I and ADP II are classified as “sensitive positions.” Regulation ¶¶ C3.1.2.1.1.7 and C3.1.2.1.2.3. “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.” Regulation ¶ C6.1.1.1. 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. See Regulation ¶ C8.2.1. When evaluating an applicant’s suitability for a public trust position, an administrative judge must consider the disqualifying and mitigating conditions in the AG. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, these guidelines are applied in conjunction with an evaluation of the whole person. An administrative judge’s overarching adjudicative goal is a fair, impartial and commonsense decision. An administrative judge must consider all available, reliable information about the person, past and present, favorable and unfavorable. 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. The Government reposes a high degree of trust and confidence in 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 protect or 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. Initially, the Government must establish, by substantial evidence, conditions in the personal or professional history of the applicant which may disqualify the applicant from being eligible for access to sensitive information. See Egan, 484 U.S. at 531. “Substantial evidence” is “more than a scintilla but less than a preponderance.” See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). The guidelines presume a nexus or rational connection between proven conduct under any of the criteria listed therein and an applicant’s security and trustworthiness suitability. See ISCR Case No. 95-0611 at 2 (App. Bd. May 2, 1996). Once the Government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. Directive ¶ E3.1.15. An applicant “has the ultimate burden of demonstrating that it 5 is clearly consistent with the national interest to grant or continue his or her security clearance [or access to sensitive information].” ISCR Case No. 01-20700 at 3 (App. Bd. Dec. 19, 2002). The burden of disproving a mitigating condition never shifts to the Government. See ISCR Case No. 02-31154 at 5 (App. Bd. Sep. 22, 2005). “[S]ecurity clearance [or trustworthiness] determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531; see AG ¶ 2(b). The protection of the national security and sensitive records is of paramount consideration. AG ¶ 2(b) requires that “[a]ny doubt concerning personnel being considered for access to [sensitive] information will be resolved in favor of national security.” Section 7 of Executive Order (EO) 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.” Analysis Financial Considerations AG ¶ 18 articulates the trustworthiness concern relating to financial problems: 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 [sensitive] information. An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds. AG ¶ 19 provides two disqualifying conditions that could raise a trustworthiness concern and may be disqualifying in this case: “(a) inability or unwillingness to satisfy debts;” and “(c) a history of not meeting financial obligations.” In ISCR Case No. 08- 12184 at 7 (App. Bd. Jan. 7, 2010), the Appeal Board explained: It is well-settled that adverse information from a credit report can normally meet the substantial evidence standard and the government’s obligations under [Directive] ¶ E3.1.14 for pertinent allegations. At that point, the burden shifts to applicant to establish either that [he or] she is not responsible for the debt or that matters in mitigation apply. (internal citation omitted). Applicant’s history of delinquent debt is documented in his credit report, his SF 86, his OPM PSI, his bankruptcy documentation, his SOR response, his OPM PSI, and his hearing transcript. His SOR alleged, and he admitted that he had six delinquent debts, totaling $61,099. The Government established the disqualifying conditions in AG ¶¶ 19(a) and 19(c) requiring additional inquiry about the possible applicability of mitigating conditions. 6 Five mitigating conditions under AG ¶ 20 are potentially applicable: (a) 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; (b) the conditions that resulted in the financial problem were largely beyond the person’s control (e.g., loss of employment, a business downturn, unexpected medical emergency, or a death, divorce or separation), and the individual acted responsibly under the circumstances; (c) the 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; (d) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts;2 and (e) the individual has a reasonable basis to dispute the legitimacy of the past-due debt which is the cause of the problem and provides documented proof to substantiate the basis of the dispute or provides evidence of actions to resolve the issue. The Appeal Board concisely explained Applicant’s responsibility for proving the applicability of mitigating conditions as follows: Once a concern arises regarding an Applicant’s security clearance eligibility, there is a strong presumption against the grant or maintenance of a security clearance. See Dorfmont v. Brown, 913 F. 2d 1399, 1401 (9th Cir. 1990), cert. denied, 499 U.S. 905 (1991). After the Government presents evidence raising security concerns, the burden shifts to the applicant to rebut or mitigate those concerns. See Directive ¶ E3.1.15. The 2The 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) 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)). 7 standard applicable in security clearance decisions is that articulated in Egan, supra. “Any doubt concerning personnel being considered for access to classified information will be resolved in favor of the national security.” Directive, Enclosure 2 ¶ 2(b). ISCR Case No. 10-04641 at 4 (App. Bd. Sept. 24, 2013). Applicant’s conduct in resolving his debts warrants application of AG ¶¶ 20(a) to 20(c).3 Applicant had a good credit history until he exhausted his 401(k) and buyout, had medical problems, and was unable to obtain employment. Applicant’s financial problems were affected by circumstances largely beyond his control.4 He had insufficient income to pay his debts and chose to file for protection and discharge of his debts under Chapter 7 of the Bankruptcy Code. Two recent Appeal Board decisions illustrate the analysis for applying AG ¶¶ 20(a) and 20(b). In ISCR Case No. 09-08533, the applicant had $41,000 in delinquent credit card debt and defaulted on a home loan generating a $162,000 delinquent debt. Id. at 2. That applicant filed for bankruptcy the same month the Administrative Judge issued her decision. Id. at 1-2. The applicant in ISCR Case No. 09-08533 was recently divorced, had been unemployed for 10 months, and had childcare responsibilities. Her former husband was inconsistent in his payment of child support to her. The Appeal Board determined that AG ¶ 20(a) was “clearly applicable (debt occurred under such circumstances that it is unlikely to recur and [the debt] does not cast doubt on the individual’s current reliability, trustworthiness, or good judgment)” even though that applicant’s debts were unresolved at the time the Administrative Judge’s decision was issued. The Appeal Board also decided that the record evidence raised the applicability of AG ¶ 20(b) because of the absence of evidence5 of irresponsible behavior, poor judgment, unreliability, or lack of trustworthiness. Id. at 4. Similarly, in ISCR Case No. 08-06567 at 3 (App. Bd. Oct. 29, 2009) the Appeal Board considered a case where an applicant, who had been sporadically unemployed and lacked the ability to pay her creditors, and noted that “it will be a long time at best before she has paid” all of her creditors. The applicant was living on unemployment 3 The Appeal Board has indicated that promises to pay off delinquent debts in the future are not a substitute for a track record of paying debts in a timely manner and otherwise acting in a financially responsible manner. ISCR Case No. 07-13041 at 4 (App. Bd. Sept. 19, 2008) (citing ISCR Case No. 99- 0012 at 3 (App. Bd. Dec. 1, 1999)). 4“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. 99-0462 at 4 (App. Bd. May 25, 2000); ISCR Case No. 99-0012 at 4 (App. Bd. Dec. 1, 1999); ISCR Case No. 03-13096 at 4 (App. Bd. Nov. 29, 2005)). A component is whether he or she maintained contact with creditors and attempted to negotiate partial payments to keep debts current. 5 Applicant has the burden of proving the applicability of any mitigating conditions, and the burden to disprove a mitigating condition never shifts to the Government. 8 compensation at the time of her hearing. The Appeal Board explained that such a circumstance was not necessarily a bar to having access to classified or sensitive information stating: However, the Board has previously noted that an applicant is not required to be debt-free nor to develop a plan for paying off all debts immediately or simultaneously. All that is required is that an applicant act responsibly given his [or her] circumstances and develop a reasonable plan for repayment, accompanied by “concomitant conduct,” that is, actions which evidence a serious intent to effectuate the plan. See ISCR Case No. 07- 06482 at 3 (App. Bd. May 21, 2008). ISCR Case No. 08-06567 at 3 (App. Bd. Oct. 29, 2009). The applicant in ISCR Case No. 08-06567 used his limited resources to (1) resolve some of his debts; (2) had a repayment plan for the remaining debts; and (3) took “reasonable actions to effectuate that plan.” Id. The Appeal Board remanded the Administrative Judge’s decision because it did not “articulate a satisfactory explanation for his conclusions,” emphasizing the Administrative Judge did “not explain[] what he believes that applicant could or should have done under the circumstances that he has not already done to rectify his poor financial condition, or why the approach taken by applicant was not ‘responsible’ in light of his limited circumstances.” Id. Full application of AG ¶ 20(c) is warranted. Applicant received financial counseling, and he generated a budget as part of the Chapter 7 Bankruptcy process. Although there is limited evidence of record that he established and maintained contact with his creditors, his financial problem has been resolved and is under control because all of his unsecured, nonpriority debts were discharged under Chapter 7 of the Bankruptcy Code.6 Applicant admitted responsibility for and took reasonable and responsible actions to resolve his SOR debts, establishing some good faith under AG ¶ 20(d). Applicant did not provide documentation disputing any of his delinquent SOR debts, and AG ¶ 20(e) is not applicable. 6There is some duplication of debts in Applicant’s bankruptcy schedules. In a bankruptcy filing, most debtors list potential creditors, even when the debt may have been resold or transferred to a different collection agent or creditor, to ensure notice, and reduce the risk of subsequent dismissal of the bankruptcy. If Applicant failed to list some debts on her bankruptcy schedule, this failure to list some debts does not affect their discharge. Absent fraud, in a no-asset bankruptcy, all unsecured, nonpriority debts are discharged when the bankruptcy court grants a discharge, even when they are not listed on a bankruptcy schedule. See Judd v. Wolfe, 78 F.3d 110, 114 (3d Cir. 1996); Francis v. Nat’l Revenue Service, Inc., 426 B.R. 398 (Bankr. S.D. FL 2010), but see First Circuit Bucks Majority on Discharge of Unlisted Debt in No-Asset Case, American Bankruptcy Institute, 28-9 ABIJ 58 (Nov. 2009). There is no requirement to re-open the bankruptcy to discharge the debt. Collier on Bankruptcy, Matthey Bender & Company, Inc., 2010, Chapter 4-523, ¶ 523(a)(3)(A). Not all debts are discharged through bankruptcy. Priority debts, such as tax debts, student loan debts, and child support obligations, are generally not discharged through bankruptcy. Secured debts such as home mortgages and car liens are not discharged unless the security (home or car) is foreclosed or repossessed. 9 In sum, Applicant fell behind on his debts primarily because of unemployment and medical problems. On February 20, 2014, he filed for bankruptcy under Chapter 7 of the Bankruptcy Code, and on May 20, 2014, his unsecured, nonpriority debts were discharged. He received a fresh financial start.7 He has established his financial responsibility. It is unlikely that financial problems will recur. His efforts are sufficient to mitigate financial considerations security concerns. Whole-Person Concept Under the whole-person concept, the administrative judge must evaluate an Applicant’s eligibility for a public trust position 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 public trust position must be an overall commonsense judgment based upon careful consideration of the guidelines and the whole-person concept. I have incorporated my comments under Guideline F in my whole-person analysis. Some of the factors in AG ¶ 2(a) were addressed under that guideline, but some warrant additional comment. Applicant is a 43-year-old help desk computer technician and information technology specialist employed by a defense contractor since September 2013. He attended community college and obtained an information technology certification. He served from 1989 to 1993 in the Marine Corps, and he left active duty as a corporal (E- 4). He served in Southwest Asia in Desert Shield/Storm in 1991. He received an honorable discharge. There is no evidence of criminal offenses, security violations, illegal drug use, or alcohol abuse. Applicant is sufficiently mature to understand and comply with his security responsibilities. He deserves some credit for volunteering to support the U.S. Government as an employee of a contractor and for his Marine Corps service, including 7Resolution of Applicant’s debts using bankruptcy in this case does not adversely affect his eligibility for access to sensitive information, so long as he does not generate new delinquent debt after his debts were discharged. Bankruptcy resolved all of his delinquent SOR debts and gave him a fresh financial start. 10 service in a combat zone. There is every indication that he is loyal to the United States and his employer. Applicant’s history of paying his debts before becoming unemployed and having medical problems shows his financial responsibility. He understands what he needs to do to establish and maintain his financial responsibility. There is simply no reason not to trust him. I am confident he will keep his promise to maintain his financial responsibility and avoid future delinquent debt.8 He has demonstrated his reliability, trustworthiness, and ability to protect sensitive information. See AG ¶ 18. I have carefully applied the law, as set forth in Department of Navy v. Egan, 484 U.S. 518 (1988), Exec. Or. 10865, the Directive, and the AGs, to the facts and circumstances in the context of the whole person. Financial considerations concerns are mitigated. For the reasons stated, I conclude Applicant is eligible for a public trust position. 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 Subparagraphs 1.a to 1.f: For Applicant Conclusion In light of all of the circumstances presented by the record in this case, it is clearly consistent with the national interest to grant Applicant eligibility for a public trust position. Eligibility for access to sensitive information is granted. _________________________ Mark Harvey Administrative Judge 8Of course, the Government can re-validate Applicant’s financial status at any time through credit reports, investigation, and additional interrogatories. Approval of a clearance now does not bar the Government from subsequently revoking it, if warranted. Violation of a promise made in a trustworthiness context to pay legitimate debts also raises judgment concerns under Guideline E, and may support future revocation of a public trust position. An administrative judge does not have authority to grant conditional access to sensitive information. See ISCR Case No. 99-0901, 2000 WL 288429 at *3 (App. Bd. Mar. 1, 2000). See also ISCR Case No. 04-03907 at 2 (stating, “The Board has no authority to grant [a]pplicant a conditional or probationary [access to sensitive information] to allow her the opportunity to [hold a public trust position] while she works on her financial problems.” and citing ISCR Case No. 03-07418 at 3 (App. Bd. Oct. 13, 2004)). This footnote does not imply that this Applicant’s access to sensitive information is conditional.