1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) --- ) ADP Case No. 15-02870 ) Applicant for Public Trust Position ) Appearances For Government: Chris Morin, Esquire, Department Counsel For Applicant: Pro se ______________ Decision ______________ GALES, Robert Robinson, Administrative Judge: Applicant has mitigated the trustworthiness concerns regarding financial considerations. Eligibility to occupy a public trust position is granted. Statement of the Case On November 21, 2012, Applicant applied for a public trust position and submitted an Electronic Questionnaire for Investigations Processing (e-QIP).1 On October 30, 2015, the Department of Defense (DOD) Consolidated Adjudications Facility (CAF) issued a Statement of Reasons (SOR) to him, pursuant to DOD Regulation 5200.2-R, Personnel Security Program, dated January 1987, as amended and modified (Regulation); 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 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 1 GE 1 (e-QIP, dated November 21, 2012). 2 reasons why the DOD adjudicators were unable to make an affirmative finding under the Directive that it is clearly consistent with the interests of national security to grant or continue Applicant’s eligibility for occupying a public trust position to support a contract with the DOD. The SOR 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 11, 2015. In a sworn statement, dated January 14, 2016, Applicant responded to the SOR allegations and requested a hearing before an administrative judge. On March 8, 2016, Department Counsel indicated the Government was prepared to proceed. The case was assigned to me on March 23, 2016. A Notice of Hearing was issued on April 28, 2016. I convened the hearing, as scheduled, on May 18, 2016. During the hearing, three Government exhibits (GE 1 through GE 3), eight Applicant exhibits (AE A through AE H), and one administrative exhibit were admitted into evidence without objection. Applicant testified. The transcript (Tr.) was received on June 1, 2016. I kept the record open to enable Applicant to supplement it. Applicant failed to take advantage of that opportunity. The record closed on June 22, 2016. Findings of Fact In his Answer to the SOR, Applicant admitted all but one of the factual allegations pertaining to financial considerations (¶¶ 1.b. through 1.m.) 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 41-year-old employee of a defense contractor. He has been a full- time manager for a defense contractor since November 2012.2 He previously served as an operations manager with the same employer from October 1999 until February 2005, and in a variety of positions with other employers from October 2005 until November 2012.3 He is seeking to retain his eligibility for occupying a public trust position to support a contract with the DOD. He is a 1993 high school graduate, and he received an associate’s degree in 2005 and a bachelor’s degree in May 2015.4 He served active duty with the U.S. Air Force from November 1994 until he was honorably discharged in 2 Tr. at 24-25. 3 GE 1, supra note 1, at 12-16. 4 GE 1, supra note 1, at 11-12; AE B (Letter, dated June 11, 2015); AE C (Degree Verification, dated December 3, 2015); AE D (Diploma, dated May 16, 2015); Tr. at 22. 3 November 1998.5 Applicant was married in March 2011.6 He has one daughter, born in April 2011.7 Financial Considerations8 In early 2005, the company for which Applicant worked initiated a reduction in force, and, because Applicant did not possess a degree for his position, he was laid off and given a severance package. That package enabled him to take off for an entire year to return to school full-time to obtain his degree.9 It is unclear as to the nature of Applicant’s finances until approximately February 2007. He stated in his e-QIP that he had a “lack in finances that were coming in,”10 apparently referring to a lack of income. However, in reviewing his December 2012 credit report, it appears that in 2007 and 2008, several accounts started to become delinquent. Additional delinquencies eventually ensued. Other than that one comment, Applicant did not attribute his initial delinquent debts to any one factor. In any event, for unspecified reasons, accounts became delinquent and they were placed for collection. The SOR identified 13 purportedly continuing delinquent accounts, totaling approximately $38,375, as reflected by the December 2012 credit report,11 and the March 2015 credit report.12 Those debts and their respective current status, according to the credit reports, other evidence submitted by the Government and Applicant, and Applicant’s comments regarding same, are described below: SOR ¶¶ 1.a., 1.c., and 1.d.: These are three medical accounts for professional services with unpaid balances of $251, $360, and $179 that were placed for collection in 2008 and 2009.13 Applicant contacted the credit reporting agency to determine the identity of the medical providers, but was unable to obtain the requested information from them. He also spoke with the two hospitals in his local area but they could not assist him either. Only the account for $251 remains listed in his March 2015 credit 5 GE 1, supra note 1, at 17-18; Tr. at 22. 6 GE 1, supra note 1, at 20-21. 7 GE 1, supra note 1, at 22-23. 8 General source information pertaining to the financial accounts discussed below can be found in the following exhibits: GE 1, supra note 1; GE 2 (Combined Experian, TransUnion, and Equifax Credit Report, dated December 18, 2012); GE 3 (Equifax Credit Report, dated March 4, 2015); Answer to the SOR, dated January 14, 2016. More recent information can be found in the exhibits furnished and individually identified. 9 Tr. at 24. 10 GE 1, supra note 1, at 33. 11 GE 2, supra note 8. 12 GE 3, supra note 8. 13 GE 3, supra note 8, at 2; GE 2, supra note 8, at 9, 14. 4 report.14 Applicant disavowed responsibility for the accounts because he was unmarried at the time and did not have a child, and he could not recall any incident requiring medical treatment during that period.15 The accounts are unresolved. SOR ¶ 1.e.: This is a bank credit card with a high credit of $7,367 and unpaid and past-due balance of $3,256 that was placed for collection.16 Applicant contacted the collection agent to establish a repayment plan. Under that plan, Applicant made several small payments over time, and in July 2014, approximately 15 months before the SOR was issued, he made his final payment. Applicant’s cumulative payments of $6,328.15 left a remaining balance of zero.17 The account was no longer listed in his March 2015 credit report.18 The account has been resolved. SOR ¶¶ 1.b., 1.j. through 1.m.: These are federal student loan accounts for both subsidized and unsubsidized Stafford loans that, over time, were transitioned, transferred, or sold by and between the state student loan agency, the U.S. Department of Education, a loan servicing agent, and a collection agency when they were placed for collection.19 Applicant routinely made monthly payments by automatic withdrawal from July 2011 through March 2012, but when a new bank account debit card was issued replacing the old card (because of a bank merger), his payments ceased without Applicant’s knowledge.20 The loans, totaling $22,424.75, went into a default status. They were placed for collection with one collection agent. Applicant entered into a repayment installment agreement under which, commencing in January 2016, he was to make regular monthly payments of $50 for a period of six months. At that point, based on his finances, an adjustment in the payment amount would be considered.21 Applicant has made two monthly payments each month to the U.S. Department of Education’s Default Resolution Group since the commencement of the agreement.22 Those payments are applied to accrued interest and fees. The accounts are in the process of being resolved. SOR ¶¶ 1.f. through 1.i.: These are state student loan accounts for both subsidized and unsubsidized Stafford loans for which Applicant routinely made his monthly payments by automatic withdrawal until March 2012. When the debit card issue 14 GE 3, supra note 8, at 2. 15 Tr. at 30-31. 16 GE 2, supra note 8, at 9. 17 AE A (Final Statement, dated January 15, 2016); Tr. At 41. 18 GE 3, supra note 8. 19 GE 2, supra note 8, at 9-11, 14-15; GE 3, supra note 8, at 2. 20 Tr. at 34-36, 53-54. 21 AE G (Letter, dated January 14, 2016); Answer to SOR, supra note 8, at 1. 22 AE H (Payment History, dated May 18, 2016); Tr. at 49. 5 arose, his payments ceased without Applicant’s knowledge.23 The loans went into a default status and then into a deferred status as he was still enrolled in school.24 Applicant made some individual payments, and along with his 2012 income tax refund that was involuntarily applied by the state to his unpaid student loan balance, he was credited with paying $14,425.69.25 Applicant entered into a repayment installment agreement under which, commencing in May 2016, he was to make regular monthly payments of $124.26 Applicant has made monthly payments by automatic withdrawal each month since the commencement of the agreement.27 The accounts are in the process of being resolved. While he did not submit a written personal financial statement, Applicant estimated that his monthly net income is $2,200, and after unspecified monthly expenses, he has a monthly remainder of between $200 and $400 available for saving or spending.28 He has a checking account with a balance of approximately $700, and a 401(k) retirement account with approximately $3,000.29 His wife maintains a separate savings account with approximately $3,000.30 In lieu of a written budget, Applicant and his wife rely on the bank phone applications and computer on-line accounting to keep track of their income and expenses.31 Applicant has no other outstanding debts. In the absence of any additional unidentified delinquencies, it appears that Applicant's financial problems are under control. 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 [position of public trust].”32 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 and ADP-II are classified as “sensitive positions.”33 “The standard that must be met for . . . assignment 23 Tr. at 44-45. 24 Answer to SOR, supra note 8, at 1. 25 AE F (Payment History, dated May 18, 2016) at 2; Tr. at 45-47. 26 AE G (Letter, dated January 14, 2016); Answer to SOR, supra note 8, at 1. 27 AE E (Account Inquiry, dated May 18, 2016). 28 Tr. at 49-50. 29 Tr. at 51. 30 Tr. at 52-53. 31 Tr. at 54. 32 Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). 33 Regulation ¶¶ C3.1.2.1.1.7, C3.1.2.1.2.3, and C3.1.2.2. See also Regulation app. 10, ¶ 10.2. 6 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.”34 DOD contractor personnel are afforded the right to the procedures contained in the Directive before any final unfavorable access determination may be made.35 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.”36 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.37 A person who seeks access to sensitive information enters into a fiduciary relationship with the Government predicated upon trust and confidence. This relationship transcends normal duty hours and endures throughout off-duty hours as well. It is because of this special relationship that the Government must be able to repose a high degree of trust and confidence in those individuals to whom it grants access to sensitive information. Decisions include, by necessity, consideration of the 34 Regulation ¶ C6.1.1.1. 35 Regulation ¶ C8.2.1. It should be noted that a memorandum from the Deputy Under Secretary of Defense for Counterintelligence and Security, Adjudication of Trustworthiness Cases, dated November 19, 2004, covers the handling of trustworthiness cases under the Directive. The memorandum directed the Defense Office of Hearings and Appeals (DOHA) to continue to utilize the Directive in ADP contractor cases for trustworthiness determinations. 36 “Substantial evidence [is] such relevant evidence as a reasonable mind might accept as adequate to support a conclusion in light of all contrary evidence in the record.” ISCR Case No. 04-11463 at 2 (App. Bd. Aug. 4, 2006) (citing Directive ¶ E3.1.32.1). “Substantial evidence” is “more than a scintilla but less than a preponderance.” See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). 37 See ISCR Case No. 02-31154 at 5 (App. Bd. Sep. 22, 2005). 7 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.38 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 trustworthiness 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 [sensitive] 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 trustworthiness concerns. Under AG ¶ 19(a), an “inability or unwillingness to satisfy debts” is potentially disqualifying. Also, under AG ¶ 19(c), “a history of not meeting financial obligations” may raise trustworthiness concerns. Applicant’s initial financial problems arose in 2007 and 2008 when several accounts started to become delinquent. Eventually, additional accounts became delinquent, and student loans went into a default status. Accounts were placed for collection. AG ¶¶ 19(a) and 19(c) have been established. The guideline also includes examples of conditions that could mitigate trustworthiness 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 trustworthiness 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 clear indications that the problem is being resolved or is under control” is potentially mitigating under AG ¶ 20(c). Similarly, AG ¶ 38 Egan, 484 U.S. at 531. 8 20(d) applies where the evidence shows “the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts.”39 AG ¶¶ 20(c) and 20(d) apply. AG ¶¶ 20(a) and 20(b) partially apply. The nature of Applicant’s multi-year period of financial difficulties since 2007 and 2008 make it difficult to conclude that it occurred “so long ago” or “was so infrequent.” However, it appears that Applicant’s initial financial problems were caused by events that were both largely and minimally beyond his control: he was laid off in 2005 and given a severance package sufficient to take off an entire year to return to school full-time to obtain his associate’s degree, and subsequently, he had a lack of income. With insufficient income to address his debts, some accounts were dormant. He continued his education with additional student loans. Applicant routinely made his monthly student loan payments by automatic withdrawal from July 2011 through March 2012, but when there was a bank merger, a new bank account debit card was issued replacing the old card, his payments ceased without Applicant’s knowledge. Upon learning of his financial predicament, Applicant eventually contacted his creditors to set up repayment plans and started making payments. He entered into a repayment installment agreement under which he has been making regular monthly payments on his federal student loans. Applicant made some individual payments, and along with his 2012 income tax refund that was involuntarily applied by the state to his unpaid state student loan balance, he was credited with paying $14,425.69. His state student loans were in a deferred status until recently. Both types of student loans are currently in the repayment process. A delinquent credit card account was resolved in July 2014, approximately 15 months before the SOR was issued. Applicant estimated that he has a monthly remainder of between $200 and $400 available for saving or spending. He has a checking account with a balance of approximately $700, and a 401(k) retirement account with approximately $3,000. His wife maintains a separate savings account with approximately $3,000. They keep track of their income and expenses. Other than the three delinquent medical accounts with a combined unpaid balance of $790 about which Applicant has been unable to track down and resolve. he has no other outstanding debts. In the absence of any additional unidentified delinquencies, it appears that Applicant's financial problems are under 39 The Appeal Board has previously explained what constitutes a good-faith effort to repay overdue creditors or otherwise resolve debts: In order to qualify for application of [the “good-faith” mitigating condition], an applicant must present evidence showing either a good-faith effort to repay overdue creditors or some other good-faith action aimed at resolving the applicant’s debts. The Directive does not define the term “good-faith.” However, the Board has indicated that the concept of good-faith “requires a showing that a person acts in a way that shows reasonableness, prudence, honesty, and adherence to duty or obligation.” Accordingly, an applicant must do more than merely show that he or she relied on a legally available option (such as bankruptcy [or statute of limitations]) in order to claim the benefit of [the “good-faith” mitigating condition]. (internal citation and footnote omitted) ISCR Case No. 02-30304 at 3 (App. Bd. Apr. 20, 2004) (quoting ISCR Case No. 99-9020 at 5-6 (App. Bd. June 4, 2001)). 9 control. Applicant’s actions no longer cast doubt on his current reliability, trustworthiness, or good judgment.40 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. Moreover, I have evaluated this case in light of the totality of the record evidence and have not merely performed a piecemeal analysis.41 There is some evidence against mitigating Applicant’s conduct. He initially failed to exercise sufficient control over his expenses to maintain his various accounts in a current status. Several accounts, including his student loans, became delinquent and were placed into a default status. The mitigating evidence is more substantial. There is no evidence of misuse of information technology systems, mishandling protected information, or substance abuse. Instead, Applicant was laid off during a reduction in force, and with his severance package, he attempted to better himself by completing his initial college degree. He then went on to obtain another degree. While his efforts to keep all of his accounts in a current status fell short of Applicant’s desires, he did engage his creditors in attempts to establish payment plans. A bank merger created financial difficulties when his normal monthly student loan payments were, without his knowledge, disrupted and cancelled. He paid off one delinquent credit card 15 months before the SOR was issued. He entered into repayment installment agreements regarding his student loans. While it may take some time for those loans to be paid off, those loans are being paid at a rate agreed to by the creditors. Applicant has only the three delinquent medical debts, 40 See ISCR Case No. 09-08533 at 3-4 (App. Bd. Oct. 6, 2010). 41 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). 10 and once he can identify the creditors and verify his responsibility for them, he intends to resolve them. There are no other delinquencies. Applicant has embraced the paradigm of fiscal responsibility. Applicant did not conceal his financial difficulties when completing his e-QIP. Instead, he was honest and forthright, and he reported them. The undisputed developed evidence enables me to conclude that there are clear indications that Applicant’s financial problems are now under control. The Appeal Board has addressed a key element in the whole-person analysis in financial cases stating: 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. 42 Applicant has demonstrated a good track record of debt reduction and elimination efforts, limited only by his modest earnings. With $3,256, he paid off one credit card account, and was already credited with paying $14,425.69 on state student loans. The student loan payments continue. He keeps track of his expenses. Overall, the evidence leaves me without questions or doubts as to Applicant’s eligibility and suitability for a position of public trust. For all of these reasons, I conclude Applicant has mitigated the trustworthiness concerns arising from his financial considerations. See AG ¶ 2(a)(1) through AG ¶ 2(a)(9). 42 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: FOR APPLICANT Subparagraphs 1.a. through 1.m.: For Applicant Conclusion In light of all of the circumstances presented by the record in this case, it is clearly consistent with the interests of national security to grant Applicant eligibility to occupy a public trust position to support a contract with DOD. Eligibility is granted. ________________________ ROBERT ROBINSON GALES Administrative Judge