1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) [Redacted] ) ISCR Case No. 16-00625 ) Applicant for Security Clearance ) Appearances For Government: Ross Hyams, Esq., Department Counsel For Applicant: Pro se ______________ Decision ______________ FOREMAN, LeRoy F., Administrative Judge: This case involves security concerns raised under Guideline F (Financial Considerations) Eligibility for access to classified information is denied. Statement of the Case Applicant submitted a security clearance application (SCA) on November 9, 2015. On June 3, 2016, the Department of Defense (DOD) sent him a Statement of Reasons (SOR), alleging security concerns under Guideline F. The DOD acted under Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) implemented by DOD on September 1, 2006. The AG are codified in 32 C.F.R. § 154, Appendix H (2006), and they replace the guidelines in Enclosure 2 to the Directive. Applicant answered the SOR on June 16, 2016, and requested a decision on the record without a hearing. Department Counsel submitted the Government’s written case on August 12, 2016. On August 15, 2016, a complete copy of the file of relevant 2 material (FORM) was sent to Applicant, who was given an opportunity to file objections and submit material to refute, extenuate, or mitigate the Government’s evidence. The FORM included a copy of the SOR (Items 1 and 2), Applicant’s answer to the SOR (Item 3), a copy of Applicant’s SCA (Item 4), a summary of a personal subject interview (PSI) conducted on December 7, 2015 (Item 5), and a copy of a credit bureau report (CBR) dated November 18, 2015 (Item 6). He received the FORM on August 22, 2016; and did not object to any of the items in the FORM.1 On August 25, 2016, he submitted Applicant’s Exhibit (AX) A, containing explanations and matters in rebuttal, extenuation, and mitigation. AX A was admitted in evidence without objection. The case was assigned to me on November 8, 2016. Findings of Fact2 In his answer to the SOR and response to the FORM, Applicant admitted all the allegations, with explanations. His admissions are incorporated in my findings of fact. Applicant is a 39-year-old integration mechanical engineer employed by a defense contractor since November 2015. He received a bachelor’s degree in March 2003. He received a security clearance in June 2009. He voluntarily quit his job in April 2015 to care for his father, who was recovering from a heart attack. He was unemployed until he began his current job. He lived on his savings while he was unemployed. (Item 5 at 5.). He has never married and has no children. Applicant’s financial problems began when he and a friend purchased a home in 2006. They had both been renting and they decided that buying and sharing a house was a better use of their income. The November 2015 CBR reflects a first mortgage loan of $300,000 and a second mortgage loan of $75,000. (Item 6 at 6, 9.) They made a verbal agreement to split the mortgage loan payments, maintenance costs, and improvements. The mortgage loan payments were $2,500 per month. The maintenance costs of the home were higher than they expected. Applicant was spending money to visit an out-of-state girlfriend, and his partner in the venture was unable to pay his share of the expenses. Applicant sought second-shift jobs, traded his car for a less expensive one, and minimized his living expenses. After an attempt at a short sale was unsuccessful, the mortgage was foreclosed in August 2010. (Item 5 at 1-2; Answer to SOR; Item 4 at 38; AX A at 8.) The November 2015 CBR does not reflect any deficiency from the foreclosure. At about the same time, Applicant fell behind on other financial obligations, giving rise to the delinquent debts alleged in the SOR. 1 Item 5 is an unauthenticated summary of a personal subject interview. In the FORM, Applicant was notified that Item 5 was unauthenticated and might be inadmissible, and that his failure to object to it might result in waiver of any objection. Applicant provided a detailed response to the FORM but did not object to the admission of Item 5. I conclude that any objection to Item 5 was waived. “Although pro se applicants are not expected to act like lawyers, they are expected to take timely and reasonable steps to protect their rights under the Directive.” ISCR Case No. 12-10810 at 2 (App. Bd. Jul. 12, 2016). 2 Applicant’s personal information is extracted from his security clearance application (GX 1) unless otherwise indicated by a parenthetical citation to the record. 3 The four delinquent debts alleged in the SOR are reflected in the November 2015 CBR. (Item 6). The evidence regarding these delinquent debts is summarized below. SOR ¶ 1.a: delinquent credit-card account, 180 days past due for about $1,386, with a total balance of $11,714. Applicant has remained in contact with this creditor but has not made any payments or negotiated a payment agreement for this debt. (AX A at 2.) SOR ¶¶ 1.b and 1.c: delinquent credit-card account, placed for collection of about $4,074 in November 2015; and delinquent installment account, placed for collection of about $12,687 in November 2015. Applicant has remained in contact with the collection agency for these debts and has resolved other debts handled by the same collection agency. He was contacted by the collection agency in July 2016, who expressed willingness to negotiate payment plans for these two debts, but he has not yet responded to the offer or made any payments on these debts. (AX A at 4-6.) SOR ¶ 1.d: delinquent credit-card account, placed for collection of about $11,100 in March 2010. This debt was paid in full in April 2011. (AX A at 6-7.) In his answer to the SOR and response to the FORM, Applicant stated that he has paid off about $68,000 in delinquent credit-card accounts and installment loans. (Answer at 3; AX A at 2.). If the $68,000 is added to the unpaid balances on the debts in SOR ¶¶ 1.a-1.c, it means that Applicant accumulated more than $96,000 in credit card debt and installment loans.3 Applicant drives a 13-year-old pickup and lives in a rental property. He works on weekends as an independent contractor for his family’s business. (AX A at 8-10.) His SCA reflects that he took two short vacations (five days or less) outside the United States in November 2013 and December 2014. (Item 4 at 29-30.) He has not provided any specific information regarding his net current income, expenses, and savings, if any. He has not explained how he accumulated $96,000 in credit card and installment debt. He has declared his intention to resolve the remaining three debts, but he has provided no timetable or plan for doing so. He has not sought or received financial counseling. (Item 5 at 9.) Policies “[N]o 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 3 The defaulted mortgage loan and $68,000 in credit card and installment debt were not alleged in the SOR and may not be an independent basis for revoking Applicant’s security clearance. However, conduct not alleged in the SOR may be considered to assess an applicant=s credibility; to decide whether a particular adjudicative guideline is applicable; to evaluate evidence of extenuation, mitigation, or changed circumstances; to consider whether an applicant has demonstrated successful rehabilitation; or as part of a whole-person analysis. ISCR Case No. 03-20327 at 4 (App. Bd. Oct. 26, 2006) I have considered the unalleged debts for these limited purposes. 4 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 applicants 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 § 2. Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the AG. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, an administrative judge applies these guidelines 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 and 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 that 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 made “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” Exec. Or. 10865 § 7. Thus, a decision to deny a security clearance 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. 92-1106 at 3, 1993 WL 545051 at *3 (App. Bd. Oct. 7, 1993). 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 burden of proving a mitigating condition, and the burden of disproving it never shifts to the Government. See ISCR Case No. 02- 31154 at 5 (App. Bd. Sep. 22, 2005). 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. 5 01-20700 at 3 (App. Bd. Dec. 19, 2002). “[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 Guideline F, Financial Considerations The concern under this guideline is set out in AG ¶ 18: Failure or inability to live within one=s means, satisfy debts, and meet financial obligations may indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which can raise questions about an individual=s reliability, trustworthiness and ability to protect classified information. An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds. This concern is broader than the possibility that a person might knowingly compromise classified information to raise money. It encompasses concerns about a person’s self-control, judgment, and other qualities essential to protecting classified information. A person who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information. See ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012). Applicant’s admissions, corroborated by his credit bureau reports, establish two disqualifying conditions under this guideline: AG ¶ 19(a) (“inability or unwillingness to satisfy debts”) and AG ¶ 19(c) (“a history of not meeting financial obligations”). The following mitigating conditions under this guideline are potentially applicable: AG ¶ 20(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; AG ¶ 20(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; AG ¶ 20(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; AG ¶ 20(d): the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts; and 6 AG ¶ 20(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. AG ¶ 20(a) is not fully established. Applicant’s delinquent debts are numerous and recent. However, the defaulted mortgage was the result of circumstances making it unlikely to recur, because Applicant is not likely to rely on another verbal agreement to share the expenses of buying and maintaining a home. Applicant’s efforts to avoid foreclosure on the home contributed to his delinquent credit card and installment accounts, but cannot fully mitigate them. If Applicant paid $68,000 toward credit card and installment accounts that were not alleged in the SOR, it means that he accumulated more than $96,000 in credit card and installment debt that is unexplained and not likely to be completely attributable to the defaulted mortgage loans. AG ¶ 20(b) is not established. The decline in the housing market, the failure of Applicant’s partner in the home purchase to pay his share of the expenses, and Applicant’s father’s heart attack in March 2015 were conditions largely beyond Applicant’s control. However, Applicant’s inability to resolve the debts alleged in SOR ¶¶ 1.a-1.c was not largely due to these conditions. Instead, his inability to pay the debts alleged in the SOR was caused by his unexplained spending that resulted in $68,000 in delinquent debts that he chose to pay first. AG ¶ 20(c) is not established. Applicant has not sought or received financial counseling and his financial problems are not yet under control. AG ¶ 20(d) is established for the debt alleged in SOR ¶ 1.d, but not for the other debts alleged in the SOR. Good faith means acting in a way that shows reasonableness, prudence, honesty, and adherence to duty or obligation. ISCR Case No. 99-0201, 1999 WL 1442346 at *4 (App. Bd. Oct. 12, 1999). A security clearance adjudication is an evaluation of an individual’s judgment, reliability, and trustworthiness. It is not a debt-collection procedure. ISCR Case No. 09-02160 (App. Bd. Jun. 21, 2010.) The adjudicative guidelines do not require that an individual make payments on all delinquent debts simultaneously, pay the debts alleged in the SOR first, or establish resolution of every debt alleged in the SOR. He or she need only establish a plan to resolve financial problems and take significant actions to implement the plan. See ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008). Applicant has not articulated a specific plan to resolve the debts in SOR ¶¶ 1.a-1.c. A promise to pay a delinquent debt in the future is not a substitute for a track record of paying debts in a timely manner. ISCR Case No. 07-13041 at 4 (App. Bd. Sep. 19, 2008). AG ¶ 20(e) is not established. Applicant has not disputed any of the debts alleged in the SOR. 7 Whole-Person Concept Under AG ¶ 2(c), 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. In applying the whole- person concept, an administrative judge must evaluate an applicant’s eligibility for a security clearance 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): (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. 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. Because Applicant requested a determination on the record without a hearing, I had no opportunity to evaluate his credibility and sincerity based on demeanor or to question him about his explanations for his delinquent debts. See ISCR Case No. 01- 12350 at 3-4 (App. Bd. Jul. 23, 2003). Applicant has satisfied the debt alleged in SOR ¶ 1.d and a number of debts not alleged in the SOR. However, his foolhardy decision to undertake responsibility for $375,000 in loans based on a verbal agreement and his unexplained accumulation of more than $96,000 in credit card and installment debt raise serious doubts about his reliability and good judgment. See ISCR Case No. 14- 02394 (App. Bd. Aug. 17, 2015.) “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.” ISCR Case No. 09-01652 at 3 (App. Bd. Aug 8, 2011), citing Dorfmont v. Brown, 913 F.2d 1399, 1401 (9th Cir. 1990), cert. denied, 499 U.S. 905 (1991). Applicant has not overcome that presumption. After weighing the disqualifying and mitigating conditions under Guideline F, and evaluating all the evidence in the context of the whole person, I conclude Applicant has not mitigated the security concerns raised by his delinquent debts. Accordingly, I conclude he has not carried his burden of showing that it is clearly consistent with the national interest to continue his eligibility for access to classified information. 8 Formal Findings I make the following formal findings on the allegations in the SOR: Paragraph 1, Guideline F (Financial Considerations): AGAINST APPLICANT Subparagraphs 1.a-1.c: Against Applicant Subparagraph 1.d: For Applicant Conclusion I conclude that it is not clearly consistent with the national interest to continue Applicant’s eligibility for access to classified information. Clearance is denied. LeRoy F. Foreman Administrative Judge