1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 12-08949 ) Applicant for Security Clearance ) Appearances For Government: Tovah Minster, Esq., Department Counsel For Applicant: Pro se ______________ Decision ______________ CREAN, Thomas M., Administrative Judge: Based on a review of the pleadings, exhibits, and testimony, eligibility for access to classified information is denied. Applicant failed to provide sufficient information to mitigate security concerns based on her finances and personal conduct. Statement of the Case On March 8, 2012, Applicant submitted an Electronic Questionnaire for Investigations Processing (e-QIP) to obtain a security clearance required for a position with a defense contractor. Applicant was interviewed by a security investigator from the Office of Personnel Management (OPM) on March 22, 2012. On October 9, 2014, Applicant provided information on her finances in response to interrogatories sent to her by the Department of Defense (DOD). After reviewing the results of the OPM investigation and Applicant’s answers to the interrogatories, DOD could not make the affirmative findings required to issue a security clearance. DOD issued Applicant a Statement of Reasons (SOR), dated April 19, 2015, detailing security concerns for personal conduct under Guideline E and financial considerations under Guideline F. The action was taken under Executive Order 10865, Safeguarding Classified 2 Information within Industry (February 20, 1960), as amended; DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) effective in the DOD on September 1, 2006. Applicant answered the SOR on June 9, 2015. She admitted 6 and denied 7 of the 13 allegations under Guideline F. She denied the one allegation under Guideline E. Department Counsel was prepared to proceed on August 8, 2015, and the case was assigned to me on September 17, 2015. DOD issued a Notice of Hearing on October 8, 2015, scheduling a hearing for October 12, 2015. I convened the hearing as scheduled.1 The Government offered four exhibits that I marked and admitted into the record without objection as Government Exhibits (GX) 1 through 4. Applicant testified and offered two exhibits that I marked and admitted into the record without objection as Applicant Exhibits (AX) A and B. I kept the record open for Applicant to submit additional documents. Applicant timely submitted nine documents that I marked and admitted into the record as AX C through AX K. Department Counsel did not object to the admission of the documents. (GX 5, Memorandum, dated November 9, 2015) DOHA received the transcript of the hearing (Tr.) on October 21, 2015. Findings of Fact After a thorough review of the pleadings, transcript, and exhibits, I make the following essential findings of fact. Applicant is a 52-year-old high school graduate who has been employed since February 2012 by a defense contractor as a call center technician. She married in June 1990. Applicant and her husband separated in June 2005 but still live in the same house. She has two adult children that still live with Applicant. In addition to her husband and the two adult children, Applicant has living in her house an adult friend of her daughters, and a teenage nephew. Applicant and her husband pay the rent and utilities and the others contribute for food and utilities. Her approximate monthly income is $2,800, with approximately $2,586 in monthly expenses, leaving $214 in discretionary funds. Applicant claims her 401K retirement account has a balance of approximately $10,000, but did not provide any verifying documents. She does not have a credit card. (Tr. 23-30, 55-64; GX 1, e-QIP, dated March 8, 2012; GX 2, Personal Financial Statement, dated October 9, 2014; Response to SOR, Budget and Bank Statement) Applicant was employed in a call center from April 1999 until May 2009 when she was laid off due to downsizing. She was unemployed from May 2009 until September 2010. She worked from September 2010 until April 2011 in a position for which she had no experience and was not trained. She was released by her employer from that position, and was unemployed from April 2011 until she started working for her present employer in February 2012. (Tr. 19-27) 1Applicant did not receive the required 15-day notice of a hearing. She requested an expedited hearing and waived the 15-day notice requirement. (Transcript at 6-7; Hearing Exhibit A) 3 The SOR alleges, and the transcript of the personal subject interview, Applicant’s responses to the interrogatories (GX 2, dated October 9, 2014), and credit reports (GX 3, dated September 14, 2014; GX 4 dated March 13, 2013) confirm 13 delinquent debts for Applicant: a charged-off car loan for $5,563 (SOR 1.a); a loan in collection for $423 (SOR 1.b); a federal tax lien for $26,800 (SOR 1.c); a judgment on a medical account for $321 (SOR 1.d); another judgment placed by an individual for $661 (SOR 1.e); medical debts in collection for $87 (SOR 1.f), $122 (SOR 1.g), $110 (SOR 1.i), $140 (SOR 1.j), $86 (SOR 1.l), and $110 (SOR 1.m); a cable debt in collection for $185 (SOR 1.h); and a loan in collection for $686 (SOR 1.k). The total amount of delinquent debt is over $31,000. The largest single item is the tax lien of approximately $26,800. Applicant provided a letter from her landlady to establish that she has been a tenant for over nine years and paid her rent on time. She also takes good care of the property and is a dependable tenant. (AX B, Letter, dated October 8, 2015) Applicant had a heart condition that required the installation of a pacemaker in the 1990s. At the time, she was basically living paycheck to paycheck. She incurred medical bills from laboratory work and emergency room visits not covered by her health insurance policies. These debts are the majority of the delinquent medical debts. In addition, she and her husband were not on good terms and they could not agree on the responsibility for specific debts. Applicant had to assume most of the household debt because her income was greater than her husband’s income. (Tr. 16-19) The delinquent debt at SOR 1.a is for the remainder of a car loan after the car was totaled in an accident. Her loan gap insurance did not cover the full amount she owed. She has been making $50 month payments on the debt since April 2015. (Tr. 40- 42, 63-64; Response to the SOR, Receipt, dated April 20, 2015) The delinquent debt at SOR 1.b is for a cell phone account for her daughter. She negotiated a $25 a month payment plan starting in June 2015. She provided a copy of the payment agreement, but did not provide any documentation to establish that payments are being made on this agreement. (Tr. 41-42 64; Response to SOR, MCM Agreement, dated June 4, 2015) The delinquent debt of $26,800 at SOR 1.c is a lien placed by the IRS for past due taxes. In approximately 2005, Applicant changed her pay status to an exempt employee. As an exempt employee, her company no longer took withholding for tax purposes from her pay. She does not know why she changed to exempt status. She believes it may have been to stop tax withholding for overtime pay. She also thought the exempt status was only temporary, so she failed to have the status changed back to regular pay status. Applicant stated she did not realize taxes were not being taken from her pay because she did not check her pay statements for over three years. She did not notice the difference in the amount direct deposited to her account. She admits that her failure to follow-up on her pay status was irresponsible. Applicant did not file tax returns for tax 4 years 2006, 2007, and 2008 until 2010. Applicant thought she had a few years to file her tax returns. By the time she realized she had to file tax returns yearly, she owed over $26,800 in federal income taxes to the Internal Revenue Service (IRS). She has filed her tax returns on time since 2010. (Tr. 19-20, 32-36) Applicant learned she owed a large federal tax debt when she filed her late tax returns in 2010. She did not contact the IRS concerning the debt until she started her present employment in April 2012, and realized she needed to be eligible for access to classified information. Applicant reached an agreement with the IRS and has had $100 monthly automatically withdrawn from her pay since September 2013. She has made $1,150 in payments, and her delinquent tax debt is now $22,781.42. (Tr. 33-39, 64; AX C, Index; AX D, IRS Agreement, dated June 7, 2013, with attached list of IRS payments; AX E, IRS Installment Agreement Review, dated July 20, 2015; AX F, Tax Transcript for Tax Year 2006; AX G, Tax Transcript for Tax Year 2007; AX H, Tax Transcript for Tax Year 2008; AX I, Tax Transcript for Tax Year 2009) The delinquent debt at SOR 1.d is a judgment from the local electric company. Applicant initially negotiated a payment plan but she did not have sufficient income to maintain the plan. She is not making any payments on this account. This debt has not been resolved. (Tr. 43-44, 64-65) The debt at SOR 1.e is for rent associated with an apartment where she previously resided. She contacted the management company and learned there is no debt for her in their files. (Tr. 44-45, 65-66) Applicant claims she paid the medical debts to the same collection agency for $87 at SOR 1.f and for $122 at SOR 1.g. She requested receipts from the collection agency. She received from the collection agency a receipt for payment of the debt at SOR 1.f, but has not yet received a receipt for the payment of the debt at SOR 1.g. These debts have been resolved. (Tr. 45-47, 66-67; AX J, Letter, dated October 19, 2015) Applicant contacted the cable company for the delinquent debt at SOR 1.h. She has started making payments on this account. This account is being resolved. (Tr. 46- 48, 67; AX K, Payment Authorization, dated October 30, 2015) Applicant provided receipts for payment of the medical debts at SOR 1.i and 1.j. These debts are resolved. (Tr. 48-50, 67-68; Response to SOR, Letter, dated June 5, 2015) The delinquent credit card at SOR 1.k is from a fraudulent account. Applicant used a cash advance company to get funds for living expenses. She had recurring loans and would pay a loan off to get a new loan. She believes she is current with paying all loans she received. Applicant claims an employee of the company used her name to get a loan from the company. She contacted the cash advance company and told them that she did not take out the loan. The company told her that they received payments from her on the loan. Applicant learned that the employee was fired and no additional payments were received. When Applicant found out that the cash advance 5 company was listed with the Better Business Bureau for filing false claims, she stopped any contact with the company. This debt has not been resolved. (Tr. 50-53, 68-71) Applicant admitted to the medical debts at SOR 1.l and 1.m in her response to the SOR. The creditors were not identified by name on the credit reports. Applicant contacted the local medical billing office which had no information on the debts or the creditors. The billing office did provide information on various collection agencies to contact. Applicant contacted the agencies and was informed that they also had no information on the debts. She examined other credit agency reports which did not list the debts. She has not been able to learn the identity of the creditor to pay to resolve these debts. (Tr. 53-55, 70-72) Applicant did not list any financial issues in response to financial questions in Section 26 of the e-QIP she submitted on March 9, 2012. Applicant told the OPM security investigator that she did not list her past-due debts because she was not aware of them. At the hearing, Applicant stated she did not provide the correct status of her finances on the e-QIP because the financial questions were not clear to her. She did not know the status of her debts and she had never completed an e-QIP before. She was not trying to be deceitful but her understanding of her finances was not clear. Her answers were not intended to mislead. (Tr. 28-31, 70-78) Applicant’s cousin testified that Applicant is a caring person who will help others but will never ask for help for herself. The witness does not understand the full extent of Applicant’s finances, but she has tried to help Applicant understand her finances and establish a budget. She advised Applicant on the steps needed to resolve her delinquent debts. She considers Applicant to be reliable and trustworthy, with good judgment. (Tr. 72-83) A fellow employee of Applicant testified that she has known Applicant for approximately four years. She was Applicant’s trainer when Applicant started with the company. Applicant quickly learned the job. She presents herself to the customers as very professional and willing to go beyond the requirements to get the job done. She has a good work ethic and is always willing to help others. (Tr. 83-87) Applicant included a letter of recommendation from her supervisor in her response to the SOR. The supervisor wrote that Applicant displays a strong moral fiber in both her professional and personal life, and is a valuable asset to the company. She is honest, dependable, courteous, and always willing to lend a hand. (Response to SOR, Letter, dated June 5, 2015) Policies When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially 6 disqualifying conditions and mitigating conditions, which must be considered in evaluating an applicant’s eligibility for access to classified information. These guidelines are not inflexible rules of law. Instead, recognizing 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 commonsense decision. According to AG ¶ 2(c), the entire process is a conscientious scrutiny of a number of variables known as the “whole-person concept.” The administrative judge must consider all available, reliable information about the person, past and present, favorable and unfavorable, in making a decision. The protection of the national security is the paramount consideration. AG ¶ 2(b) requires that “[a]ny doubt concerning personnel being considered for access to classified information will be resolved in favor of national security.” In reaching this decision, I have drawn only those conclusions that are reasonable, logical, and based on the evidence contained in the record. Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, the applicant is responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by applicant or proven by Department Counsel. . . . .” The applicant has the ultimate burden of persuasion in seeking a favorable security decision. A person who seeks access to classified information enters into a fiduciary relationship with the Government predicated upon trust and confidence. This relationship transcends normal duty hours and endures throughout off-duty hours. The Government reposes a high degree of trust and confidence in individuals to whom it grants access to classified information. Decisions include, by necessity, consideration of the possible risk that the applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation as to potential, rather than actual, risk of compromise of classified information. Analysis Financial Considerations 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, thereby raising 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 ¶ 18) Similarly, an individual who is financially irresponsible may also be irresponsible, unconcerned, or careless in her obligations to protect classified 7 information. Behaving responsibly or irresponsibly in one aspect of life provides an indication of how a person may behave in other aspects of life. A person’s relationship with her creditors is a private matter until evidence is uncovered demonstrating an inability or unwillingness to repay debts under agreed terms. Absent evidence of strong extenuating or mitigating circumstances, an applicant with a history of serious or recurring financial difficulties is in a situation of risk inconsistent with the holding of a security clearance. An applicant is not required to be debt free, but is required to manage finances in such a way as to meet financial obligations. It is well-settled that adverse information in credit reports can normally meet the substantial evidence standard to establish financial delinquency. Applicant’s history of delinquent debts is documented in her credit reports, her SOR response, her answers to financial question from a security investigator, and responses to interrogatory financial questions. Applicant’s delinquent debts are a security concern. The evidence is sufficient to raise security concerns under Financial Considerations Disqualifying Conditions AG ¶ 19(a) (inability or unwillingness to satisfy debts), and AG ¶ 19(c) (a history of not meeting financial obligations). The information raises both an inability and an unwillingness to pay delinquent debt. I considered the following Financial Consideration Mitigating Conditions: (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 problems 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 has initiated a good-faith effort to repay the overdue creditors or otherwise resolve debts; 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. 8 For AG ¶ 20(d) to apply, there must be an “ability” to repay the debts, the “desire” to repay, and “evidence” of a good-faith effort to repay. A systematic method of handling debts is needed. Good faith means acting in a way that shows reasonableness, prudence, honesty, and adherence to duty or obligation. Applicant must establish a "meaningful track record" of debt payment. A "meaningful track record" of debt payment can be established by evidence of actual debt payments or reduction of debt through payment of debts. A promise to pay delinquent debts in the future is not a substitute for a track record of paying debts in a timely manner and acting in a financially responsible manner. Applicant must establish that she has a reasonable plan to resolve her financial problems and has taken significant action to implement that plan. Applicant incurred medical debts starting in the 1990s when she had a heart procedure and her health insurance did not cover all of her medical bills, particularly co- pays and emergency room visits. Applicant’s medical debts at SOR 1.f, 1.g, 1.i, 1.j, 1.l and 1.m happened because of the heart issue not covered by insurance. The conditions causing the debts were beyond Applicant’s control. Applicant has paid or is paying her medical debts so she established a meaningful track record of payment of these debts. She acted responsibly by resolving these debts. AG ¶¶ 20(a), (b), and (d) apply to these debts. Applicant has other consumer debts, a car loan (SOR 1.a), a cell phone debt for her daughter’s phone (SOR 1.b), an electric bill (SOR 1.d), and a cable bill (SOR 1.h) that were incurred in the normal course of life and not under unusual circumstances or for reasons beyond her control. She has acted reasonably towards these debts by initiating payment plans and having a meaningful track record of paying these debts. She has taken no action on the electric bill debt. SOR 1.a, 1.b, and 1.h are mitigated. The debt at SOR 1.d is not mitigated. SOR 1.e is mitigated because Applicant acted reasonably by tried to get information to pay the debt remaining from her rent of an apartment. She could not learn about the debt or the creditor. Applicant had good steady employment from 1999 until 2009. However, in 2006, Applicant requested that her employer place her in an exempt pay status, which means that she did not have income tax withheld from her pay. She stated that she did not check her pay statements and did not realize that taxes were not being withheld from her pay. She was in an exempt status for three years. Applicant did not file income tax returns for tax years 2006, 2007, and 2008. When she filed the tax returns in 2010, she learned that she owed over $26,000 in income tax and a tax lien was placed on her pay. Applicant did not immediately negotiate a payment plan with the IRS. She contacted the IRS after learning that she needed a security clearance for her job and had to have a good financial record. She reached an agreement with the IRS in 2012 and has been paying $100 a month on this debt since June 2013. Applicant has not shown reasonable and responsible action when she requested to be placed on an exempt-pay status. She did not inquire into or know about the ramifications of being in an exempt-pay status before asking to be placed in that status. She never checked on her pay status to learn that taxes were not being withheld from 9 her pay. She compounded these issues by not filing her tax returns for three years thereby delaying knowledge of the consequences of a tax-exempt status. She learned of her tax problems in 2010 when she finally filed her past-due tax returns. She did not resolve her tax problem with the IRS until after learning that she needed a clean financial record to be granted eligibility for access to classified information, a requirement for her job. She did not start to pay her taxes until after receipt of the SOR. Applicant did not act reasonably and responsibly by not understanding and taking appropriate action in regard to being in a tax-exempt status. She does receive some mitigating credit for paying her past-due taxes under a payment plan with the IRS and being current with the payments for over two years. Applicant’s failure to act reasonably and responsibly towards her finances is a strong indication that she may not act reasonably and responsibly to protect and safeguard classified information. Applicant has not presented sufficient information to mitigate security concerns for financial considerations. Personal Conduct Personal conduct is a security concern because conduct involving questionable judgment, untrustworthiness, unreliability, or unwillingness to comply with rules and regulations can raise questions about an individual’s reliability, trustworthiness, and ability to protect classified and sensitive information. Of special interest is any failure to provide truthful and candid answers during the process to determine eligibility for access to classified information or any other failure to cooperate with this process (AG ¶ 15). Personal conduct is always a security concern because it asks whether the person’s past conduct justifies confidence the person can be trusted to properly safeguard classified or sensitive information. Authorization for a security clearance depends on the individual providing correct and accurate information. If a person conceals or provides false information, the security clearance process cannot function properly to ensure that granting access to classified or sensitive information is in the best interest of the United States Government. Applicant provided no derogatory financial information on her security clearance application. Her answers to the financial questions were all positive. As noted in the SOR and the credit reports, Applicant had delinquent debts. Her failure to list her delinquent debts and correctly answer financial questions on the security clearance application raises a security concern under Personal Conduct Disqualifying Condition AG ¶16(a) (the deliberate omission concealment, or falsification of relevant facts from any personnel security questionnaire, personal history statement, or similar form used to conduct investigations, determine employment qualifications, award benefits or status, determine security eligibility or trustworthiness, or award fiduciary responsibilities). While there is a security concern for a deliberate omission, concealment, or falsification of a material fact in any written document or oral statement to the Government when applying for a security clearance, not every omission, concealment, 10 or inaccurate statement is a falsification. A falsification must be deliberate and material. It is deliberate if it is done knowingly and willfully with intent to deceive. Applicant denied intentional falsification for failing to list any delinquent debts on his security clearance application. She told the OPM investigator that she did not list the debts on her security clearance application because she was unaware of her past-due debts. She voluntarily admitted to some of the debts and provided details on how the debts occurred. I find that Applicant knew she had delinquent debts when she completed her e-QIP, and deliberately failed to provide correct and accurate financial information on the security clearance application. She knew at the very least that she had a large tax debt that she was paying. I considered the following mitigating conditions under AG ¶ 17: (a) The individual made prompt, good-faith efforts to correct the omission, concealment, or falsification before bin confronted with the facts: (b) the refusal or failure to cooperate, omission, or concealment was cause by or significantly contributed to by improper or inadequate advice of authorized personnel or legal counsel advising or instructing the individual specifically concerning the security clearance process. Upon being made aware of the requirement to cooperate or provide the information the individual cooperated fully and truthfully; and (c) the offense is so minor, or so much time has passed, or the behavior is so infrequent, or it happened under such unique circumstance that it is unlikely to recur and does not cast doubt on the individual’s reliability, trustworthiness, or good judgment. These mitigating conditions do not apply. Failure to provide full and complete information in response to questions on a security clearance application is not a minor offense. Her failure to provide accurate information on her 2012 e-QIP was recent. She did tell the security investigator in 2012 that she had delinquent debts after he asked her about her debts. She did not acknowledge her delinquent debts until confronted with them by the security investigator. When confronted with the delinquent debts, she was able to relate significant details about some debts that she must have known when he completed the e-QIP. Whole-Person Analysis Under the whole-person concept, the administrative judge must evaluate an applicant’s security eligibility by considering the totality of the applicant’s conduct and all relevant circumstances. An administrative judge should consider the nine adjudicative process factors listed at AG ¶ 2(a): 11 (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 a security clearance must be an overall commonsense judgment based upon careful consideration of the guidelines and the whole-person concept. I considered the potentially disqualifying and mitigating conditions in light of all the facts and circumstances surrounding this case. I considered the favorable comments concerning Applicant from her supervisor, fellow workers, and relatives. I considered that Applicant made inquiries concerning her debts and paid or is paying many of the debts. Applicant claims to have paid a cell phone debt but she failed to provide verifying documentation. She has not paid a utility debt. I also considered that Applicant requested to be on an exempt-pay status without questioning and considering all of the issues with such a status. She did not have taxes withheld from her pay for three years and then did not file her income tax returns for those three years. Her management of her finances was irresponsible and unreasonable. While she has made arrangements with the IRS to pay the large tax debt she incurred, she incurred the debt from her unreasonable and irresponsible financial management. Applicant deliberately did not provide full and complete information on her security clearance application concerning the status of her finances. She knew she has a large tax debt and she failed to provide correct information until confronted by a security investigator. Her actions indicate she may not follow rules and regulations concerning the safeguarding of classified information. Overall, the record evidence leaves me with questions and doubts as to Applicant’s judgment, reliability, trustworthiness, and eligibility and suitability for a security clearance. For all these reasons, I conclude that Applicant has not mitigated security concerns arising under the financial considerations and personal conduct guidelines. Eligibility for access to classified information is denied. 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: For Applicant 12 Subparagraphs 1.b – 1.d: Against Applicant Subparagraphs 1.e -1.m: For Applicant Paragraph 2, Guideline E: AGAINST APPLICANT Subparagraphs 2.a: 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 for a security clearance. Eligibility for access to classified information is denied. _________________ THOMAS M. CREAN Administrative Judge