1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ----------------------- ) ISCR Case No. 12-03530 ) Applicant for Security Clearance ) Appearances For Government: Eric Borgstrom, Esquire, Department Counsel For Applicant: Pro se __________ Decision __________ HARVEY, Mark, Administrative Judge: Applicant’s statement of reasons (SOR) alleges 10 charged-off or collection accounts totaling $39,446. She paid four SOR debts, disputed one SOR debt, planned to pay one SOR debt in April 2015, and one SOR debt in May 2015. She also plans to begin payment plans for two debts in May 2015. She failed to address one $95 medical debt. She provided sufficient documentation of her progress resolving her financial problems. Financial considerations concerns are mitigated. Eligibility for access to classified information is granted. Statement of the Case On December 23, 2011, Applicant submitted an Electronic Questionnaires for Investigations Processing (e-QIP) (SF 86). (Item 2) On April 28, 2014, the Department of Defense (DOD) Consolidated Adjudications Facility (CAF) issued an SOR to Applicant, pursuant to Executive Order 10865, Safeguarding Classified Information Within Industry, dated February 20, 1960, as amended; DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (Directive), dated January 2, 1992, as amended; and the adjudicative guidelines (AG), which became effective on September 1, 2006. 2 The SOR alleged security concerns under Guideline F (financial considerations). (Item 1) The SOR detailed reasons why DOD could not make the 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 Applicant’s clearance should be granted, continued, denied, or revoked. (Item 1) On May 29, 2014, Applicant responded to the SOR allegations, and she did not request a hearing. (Item 1) A complete copy of the file of relevant material (FORM), dated February 23, 2015, was provided to her on March 17, 2015.1 On April 14, 2015, Applicant responded to the FORM and provided additional mitigating evidence. On May 6, 2015, Department Counsel did not object to consideration of the additional evidence. On June 18, 2015, the case was assigned to me. Findings of Fact2 In her Answer to the SOR, Applicant admitted responsibility for the debts in SOR ¶¶ 1.a, 1.b, and 1.e through 1.j. (Item 1) She also provided extenuating and mitigating information. (Item 1) Her admissions are accepted as findings of fact. Applicant is a 47-year-old senior business manager, who has worked for a defense contractor since May 1997.3 In 1986, she received a high school diploma. From 1986 to 1987, she attended a university; however, she did not receive a degree. She has never served in the military. In 1991, she married, and in 1996, she divorced. In 1997, she married; however, she is separated from her spouse. Her two sons were born in 1992 and 1998. Her eldest son is on active duty in the Army. (FORM response) There is no evidence of disciplinary problems with her employer, illegal drug use, criminal offenses, or alcohol abuse. Financial Considerations Applicant’s pay was reduced by $30,000 in 2010 because her employer experienced a business downturn.4 In September 2011, her company lost a major source of revenue and Applicant lost her income. Her home was foreclosed, and she closed all of her active accounts. Her pay did not recover until June 2013. In 2013, her 1The Defense Office of Hearings and Appeals (DOHA) transmittal letter is dated March 4, 2015, and Applicant’s receipt is dated March 17, 2015. The DOHA transmittal letter informed Applicant that she had 30 days after her receipt to submit information. 2Some details have been excluded in order to protect Applicant’s right to privacy. Specific information is available in the cited exhibits. 3Unless stated otherwise, the source for the information in this paragraph is her December 23, 2011 Electronic Questionnaires for Investigations Processing (e-QIP) (SF 86). (Item 2) 4Applicant’s response to DOHA interrogatories, SOR response, and FORM response are the sources for the facts in this paragraph. 3 gross annual compensation was $40,500. (FORM response, IRS Form 1099 MISC) When her pay increased, she began paying her delinquent debts. Applicant’s history of delinquent debt is documented in the following exhibits: her December 23, 2011 SF 86; her January 4, 2012, April 10, 2014, and October 8, 2014 credit reports; her SOR response; and her FORM response. (Items 2-7; FORM response) Applicant’s SOR alleges 10 charged-off or collection accounts totaling $39,446. She paid four debts and disputed one debt. She planned to pay one debt in April 2015, and one debt in May 2015. She has payment plans for her remaining SOR debts, except for a $95 medical debt, which she does not address. The status of her SOR debts is as follows: SOR ¶¶ 1.a and 1.b are debts for $447 and $223 originating from the same business and being collected by the same collection agent. (PAID) Applicant paid these two debts on January 16, 2014, and on February 18, 2014, as documented in her checking account statements. (FORM response) SOR ¶ 1.c is a medical collection debt for $95. She did not explain how she plans to resolve this debt. (FORM response) SOR ¶ 1.d is a telecommunications collection debt for $592. Applicant disputed her responsibility for this debt, asserting she has never had an account with this creditor. (FORM response) SOR ¶ 1.e is a telecommunications collection debt for $781. She said she planned to pay this debt in April 2015. (FORM response) SOR ¶ 1.f is a collection debt for $377. (PAID) On January 2, 2014, and February 3, 2014, Applicant paid the debt in full as documented in her checking account statements. (FORM response) SOR ¶¶ 1.g and 1.h are telecommunications collection debts originating from the same creditor for $1,846 and $368. She said she planned to pay the smaller debt in May 2015, and to start paying the larger debt through an installment plan in May 2015. (FORM response) SOR ¶ 1.i is a charged-off bank debt for $33,660. This debt was a home equity loan borrowed in September 2005, which became delinquent in 2012. (FORM response) She planned to start paying this debt through an installment plan on April 30, 2015. (FORM response) SOR ¶ 1.j is a charged-off bank debt for $1,057. (PAID) On December 17, 2013, Applicant paid the debt in full as documented in her checking account statement. (FORM response) 4 There is no evidence of credit counseling. She did not provide a budget or comprehensive information about her income the last several years. 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.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). 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.” Id. at 527. The President has authorized the Secretary of Defense or his designee to grant applicant’s eligibility for access to classified information “only upon a finding that it is clearly consistent with the national interest to do so.” Exec. Or. 10865, Safeguarding Classified Information within Industry § 2 (Feb. 20, 1960), as amended. Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the revised adjudicative guidelines. 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. The Government reposes a high degree of trust and confidence in persons with access to classified information. This relationship transcends normal duty hours and endures throughout off-duty hours. Decisions include, by necessity, consideration of the possible risk the applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation about potential, rather than actual, risk of compromise of classified information. Clearance decisions must be “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See Exec. Or. 10865 § 7. See also Executive Order 12968 (Aug. 2, 1995), § 3.1. Thus, 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 about applicant’s allegiance, loyalty, or patriotism. It is merely an indication the applicant has not met the strict guidelines the President and the Secretary of Defense have established for issuing a clearance. Initially, the Government must establish, by substantial evidence, conditions in the personal or professional history of the applicant that may disqualify the applicant from being eligible for access to classified information. The Government has the burden of establishing controverted facts alleged in the SOR. 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 suitability. See ISCR Case No. 95-0611 at 2 (App. Bd. May 2, 1996). 5 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 is clearly consistent with the national interest to grant or continue his security clearance.” 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 determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531; see AG ¶ 2(b). Analysis Financial Considerations AG ¶ 18 articulates the security 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 classified 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 security concern and may be disqualifying in this case: “(a) inability or unwillingness to satisfy debts;” and “(c) a history of not meeting financial obligations.” Applicant’s history of delinquent debt is documented in her credit reports, SF 86, SOR response, and FORM response. Her SOR alleges 10 charged-off or collection accounts totaling $39,446. The Government established the disqualifying conditions in AG ¶¶ 19(a) and 19(c), requiring additional inquiry about the possible applicability of mitigating conditions. 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; 6 (d) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts;5 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. Applicant’s conduct in resolving her debts warrants application of AG ¶¶ 20(a) to 20(c). Her financial problems were affected by circumstances largely beyond her control. Applicant’s employer lost business; her salary was decreased substantially; and then stopped completely for a time. Once her salary resumed, she resumed payments to her creditors. She paid four SOR debts (SOR ¶¶ 1.a, 1.b, 1.f, and 1.j); she planned to pay two SOR debts in April and May 2015 (SOR ¶¶ 1.e and 1.h); and she planned to begin payment plans on two SOR debts in May 2015 (SOR ¶¶ 1.g and 1.i).6 She did not address the debt in SOR ¶ 1.c, a $95 medical debt. It is noteworthy that she paid the four SOR debts before she received the SOR. A recent Appeal Board decision illustrates the analysis for applying AG ¶¶ 20(a) and 20(b). In ISCR Case No. 09-08533 (App. Bd. Oct. 6, 2010), 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. Id. at 3. The Appeal Board also decided that the record 5The 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)). 6The 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)). 7 evidence raised the applicability of AG ¶ 20(b) because of the absence of evidence7 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 addressed a situation where an applicant, who had been sporadically unemployed and lacked the ability to pay his creditors, noting that “it will be a long time at best before he has paid” all of his creditors. The applicant was living on unemployment compensation at the time of his hearing. The Appeal Board explained that such a circumstance was not necessarily a bar to having access to classified 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. Applicant’s delinquent debts “occurred under such circumstances that [are] unlikely to recur and [do] not cast doubt on [her] current reliability, trustworthiness, or good judgment.” Due to a business decline, her income was significantly reduced. Once her income resumed, she paid 4 of 10 SOR debts, disputed her responsibility for one debt, planned to pay two debts in April and May 2015, and intended to initiate payment plans in May 2015 for two debts. She did not address her $95 collection medical debt in SOR ¶ 1.c. She acted responsibly under the circumstances by maintaining contact with her creditors,8 making payments, and paying four SOR debts. Although she did not 7Applicant 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“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. 8 receive financial counseling, there are clear indications that the problem is being resolved or is under control. AG ¶ 20(d) is partially applicable. Applicant admitted responsibility for and took reasonable and responsible actions to resolve her SOR debts, establishing some good faith. AG ¶ 20(e) mitigates one debt. She disputed her responsibility for the debt in SOR ¶ 1.d, which is a telecommunications collection debt for $592, asserting she has never had an account with this creditor. In sum, Applicant fell behind on her debts primarily because of a significant reduction in income. Once her income increased, she made substantial progress and took reasonable actions to rehabilitate her finances. Her 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 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. 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. AG ¶ 2(c). I have incorporated my comments under Guideline F in my whole-person analysis. Some of the factors in AG ¶ 2(a) were addressed under Guideline F, but some warrant additional comment. Applicant is a 47-year-old senior business manager, who has worked for a defense contractor since May 1997. From 1986 to 1987, she attended a university; however, she did not receive a degree. There is no evidence of disciplinary problems with her employer, illegal drug use, criminal offenses, or alcohol abuse. Reduction in her income when her employer lost business caused her financial woes. I give Applicant substantial credit for paying, planning payment plans, or disputing her delinquent SOR debts, except for one $95 medical debt. 9 The Appeal Board has addressed a key element in the whole-person analysis in financial cases stating: . . . 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 has paid off each and every debt listed in the SOR. All that is required is that an applicant demonstrate that he has . . . established a plan to resolve his 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 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. ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008) (internal citations and quotation marks omitted). Applicant understands what she needs to do to establish and maintain her financial responsibility. Her efforts at debt resolution have established a “meaningful track record” of debt re-payment. I am confident she will resolve the remaining debts on her SOR when she is financially able to do so, and she will maintain her financial responsibility.9 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. I conclude financial considerations concerns are mitigated, and eligibility for access to classified information is granted. 9Of course, the Government can re-validate Applicant’s financial status at any time through credit reports, investigation, and interrogatories. Approval of a clearance now does not bar the Government from subsequently revoking it, if warranted. “The Government has the right to reconsider the security significance of past conduct or circumstances in light of more recent conduct having negative security significance.” ISCR Case No. 10-06943 at 4 (App. Bd. Feb. 17, 2012). Violation of a promise made in a security context to pay legitimate debts also raises judgment concerns under Guideline E, and may support future revocation of a security clearance. An administrative judge does not have “authority to grant an interim, conditional, or probationary clearance.” ISCR Case No. 10-06943 at 4 (App. Bd. Feb. 17, 2012) (citing ISCR Case No. 10-03646 at 2 (App. Bd. Dec. 28, 2011)). See also ISCR Case No. 04-03907 at 2 (App. Bd. Sep. 18, 2006) (stating, “The Board has no authority to grant [a]pplicant a conditional or probationary security clearance to allow her the opportunity to have a security clearance while she works on her financial problems.”). This footnote does not imply that this Applicant’s security clearance is conditional. 10 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 through 1.j: 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 security clearance. Eligibility for access to classified information is granted. _________________________ Mark Harvey Administrative Judge