1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-00264 ) Applicant for Security Clearance ) Appearances For Government: Caroline E. Heintzelman, Esq., Department Counsel For Applicant: Rev. Robert Porter, Personal Representative ___________ Decision ___________ HARVEY, Mark, Administrative Judge: Applicant’s statement of reasons (SOR) alleges five delinquent debts totaling $60,254. The SOR also alleges she failed to file her federal income tax return for tax year 2013. Applicant made substantial progress on her SOR debts, and she filed her 2013 federal income tax return in 2015 before the SOR was issued. She has established a track record of debt payment and resolution. Financial considerations security concerns are mitigated. Access to classified information is granted. History of the Case On November 21, 2014, Applicant completed and signed her Questionnaire for National Security Positions (SF 86) or security clearance application (SCA). (Government Exhibit (GE) 1) On June 22, 2016, the Department of Defense (DOD) Consolidated Adjudications Facility (CAF) issued an SOR to Applicant pursuant to Executive Order (Exec. Or.) 10865, Safeguarding Classified Information Within Industry; DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (Directive); and the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information (AG), which became effective on September 1, 2006. The SOR detailed reasons why the DOD CAF did not find that it is clearly consistent with the national interest to grant or continue a security clearance for her, and recommended referral to an administrative judge to determine whether a clearance 2 should be granted, continued, denied, or revoked. (HE 2) Specifically, the SOR set forth security concerns arising under the financial considerations guideline. On July 18, 2016, Applicant responded to the SOR, and she requested a hearing. On August 30, 2016, Department Counsel was ready to proceed. On September 19, 2016, the case was assigned to me. On November 16, 2016, the Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing, setting the hearing for December 5, 2016. (HE 1) Applicant waived her right to 15 days of notice of the date, time, and location of the hearing. (Tr. 6-7) The hearing was held on December 5, 2016. Department Counsel offered five exhibits; Applicant offered four exhibits; and all exhibits were admitted into evidence. (Transcript (Tr.) 17-22; GE 1-5; Applicant Exhibits (AE) A-D) On December 13, 2016, DOHA received a copy of the transcript of the hearing. On December 12 and 22, 2016, Applicant provided a total of six exhibits, and all exhibits were admitted into evidence without objection. (AE E-AE J) Findings of Fact In Applicant’s SOR response, she admitted the allegations in SOR ¶¶ 1.a, 1.b, 1.c, and 1.e. She also provided extenuating and mitigating information. Applicant’s admissions are accepted as findings of fact. Applicant is a 56-year-old employee of a defense contractor. (Tr. 6; GE 1) In 1994, she received an associate’s degree, and in 2014, she received a bachelor’s degree. (Tr. 24; GE 1) She served in the Air Force from 1980 to 2004. (Tr. 23; AE F) She honorably retired from the Air Force as a senior master sergeant (E-8). (Tr. 23) Applicant’s primary Air Force specialty was 3C291-communications computer systems. In 1988, she married, and her two daughters were born in 1981 and 1988. (Tr. 23) The Department of Veterans Affairs (VA) rated her service connected disability at 50 percent. (Tr. 53) Financial Considerations In 2008, Applicant and her partner began an information technology business. (Tr. 24-25) All of the profits were reinvested into the business, and Applicant lived off of her Air Force retirement pay. (Tr. 26-27) The business became unsuccessful in 2014. (Tr. 25) Her spouse is also retired from the military. (Tr. 26) He was unemployed for two years, and he became employed about six weeks before Applicant’s hearing. (Tr. 26-27) Applicant and her husband have a monthly remainder of about $1,500. (Tr. 28) In 2015, she received financial counseling. (Tr. 30-31) The credit card debts in SOR ¶¶ 1.a, 1.b, 1.c, and 1.e resulted from Applicant funding her business with credit cards. (Tr. 40-41) She also used her 401(k) account to fund the business. (Tr. 42) Applicant’s business partner was untrustworthy and unreliable, which caused the business to be less profitable. (Tr. 51-52) In early 2015, she stopped making payments on the four credit card debts. (Tr. 42) Later in 2015, she resumed making payments on the four credit cards. (Tr. 43) The status of the SOR allegations is as follows: 3 SOR ¶ 1.a alleges a charged-off credit card debt owed to a bank for $17,006. Applicant made $100 monthly payments to the creditor for 14 months. (Tr. 44) A November 22, 2016 letter from the creditor indicated Applicant owed the creditor $15,606. (AE C) SOR ¶ 1.b alleges a charged-off credit card debt owed to a bank for $12,382. Applicant made $100 monthly payments to the creditor for 12 months. (Tr. 45) A November 25, 2016 letter from the creditor indicated Applicant owed the creditor $11,182. (AE A) SOR ¶ 1.c alleges a charged-off credit card debt owed to a bank for $12,028. Applicant made $100 monthly payments to the creditor for 12 months. (Tr. 45) A November 25, 2016 letter from the creditor indicated Applicant owed the creditor $10,828. (AE B) SOR ¶ 1.d alleges a charged-off debt owed to a bank for $9,513. Applicant was a co-signer for a student loan for her daughter. (Tr. 48-49; SOR response) Applicant’s most recent credit report of record is dated December 8, 2015, and it indicates the account is $140 past due. (Tr. 48-49; GE 4) A December 8, 2016 bank statement indicates Applicant’s daughter has four student loans owed to this creditor totaling $35,436 as follows: $0 balance; $11,733 balance; $10,167 balance; and $13,535 balance. Her daughter has made all of her monthly payments from February 2014 to present. The monthly payment amounts have ranged from $220 to $1,151 with most of the payments exceeding $350. The current required monthly payment is $370. According to the December 8, 2016 account statement, the student loan account is current. (AE E) SOR ¶ 1.e alleges a collection account from a credit card owed to a bank for $9,325. Applicant reached a payment plan with the creditor to pay $500 monthly beginning in December 2015. (AE D) The current balance owed is $2,800. (Tr. 43, 46-47; AE D) SOR ¶ 1.f alleges Applicant did not file his federal income tax return for tax year 2013. Applicant provided Internal Revenue Service (IRS) account transcripts for tax years 2013, 2014, and 2015. (AE F-AE H) Applicant’s taxes were late in 2013 because her husband forgot to file their tax return. (Tr. 33) On February 20, 2015, Applicant and her husband filed their federal income tax return for tax year 2013. (AE F) On March 16, 2015, the IRS issued a $3,395 refund to Applicant and her husband. (AE F) On December 30, 2015, Applicant paid $10,723 in additional taxes for her business and self-employment tax. (AE F) For tax year 2013, all taxes are paid and the balance owed is zero. (AE F) Applicant timely filed and paid her federal income taxes for tax years 2014 and 2015. (AE G; AE H) Applicant assures that her federal and state income taxes are all paid and current. (Tr. 31-37) In sum, the evidence of record indicates all SOR debts are in established payment plans that are satisfactory to the creditors. Applicant understands the security concern raised by delinquent debts and failure to timely file her tax return, and she assures she will continue to maintain her financial responsibility. 4 Character Evidence Applicant’s pastor has known her for 14 years. (Tr. 59) He believes she was the victim of an unethical business partner. (Tr. 59) Applicant is honest, responsible, and trustworthy. (Tr. 59-60) Applicant has received the following awards: Air Force (AF) Commendation Medal with 1 Oak Leaf Cluster (OLC); AF Achievement Medal with 2 OLCS; Meritorious Service Medal with 1 OLC; Joint Service Achievement Medal; NCO Professional Military Education Ribbon with 1 OLC; Humanitarian Service Medal; National Defense Service Medal with 1 Service Star; AF Overseas Short Tour Ribbon with 4 OLCS; AF Training Ribbon; AF Longevity Service Award with 5 OLCS; Armed Forces Expeditionary Medal; AF Overseas Long Tour Ribbon; AF Outstanding Unit Award with 2 OLCS; Joint Meritorious Unit Award with 1 OLC; AF Good Conduct Medal with 7 OLCS; and Defense Meritorious Service Medal. 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 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. Thus, nothing 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 5 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). 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 or her 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. The Appeal Board explained the scope and rationale for the financial considerations security concern as follows: This concern is broader than the possibility that an applicant might knowingly compromise classified information in order to raise money in satisfaction of his or her debts. Rather, it requires a Judge to examine the totality of an applicant’s financial history and circumstances. The Judge must consider pertinent evidence regarding the applicant’s self-control, judgment, and other qualities essential to protecting the national secrets as well as the vulnerabilities inherent in the circumstances. The Directive presumes a nexus between proven conduct under any of the Guidelines and an applicant’s security eligibility. 6 ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012) (citation omitted). AG ¶ 19 provides three disqualifying conditions that could raise a security concern and may be disqualifying in this case: “(a) inability or unwillingness to satisfy debts;” “(c) a history of not meeting financial obligations;” and “(g) failure to file annual Federal, state, or local income tax returns as required . . . .” The Government established the disqualifying conditions in AG ¶¶ 19(a), 19(c), and 19(g) 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; (d) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts;1 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. 1The Appeal Board has previously explained what constitutes a “good faith” effort to repay overdue creditors or otherwise resolve debts: In order to qualify for application of [the “good faith” mitigating condition], an applicant must present evidence showing either a good-faith effort to repay overdue creditors or some other good-faith action aimed at resolving the applicant’s debts. The Directive does not define the term “good-faith.” However, the Board has indicated that the concept of good-faith “requires a showing that a person acts in a way that shows reasonableness, prudence, honesty, and adherence to duty or obligation.” Accordingly, an applicant must do more than merely show that he or she relied on a legally available option (such as bankruptcy) in order to claim the benefit of [the “good faith” mitigating condition]. (internal citation and footnote omitted) ISCR Case No. 02-30304 at 3 (App. Bd. Apr. 20, 2004) (quoting ISCR Case No. 99-9020 at 5-6 (App. Bd. June 4, 2001)). 7 The Appeal Board concisely explained Applicant’s responsibility for proving the applicability of mitigating conditions as follows: Once a concern arises regarding an Applicant’s security clearance eligibility, there is a strong presumption against the grant or maintenance of a security clearance. See Dorfmont v. Brown, 913 F. 2d 1399, 1401 (9th Cir. 1990), cert. denied, 499 U.S. 905 (1991). After the Government presents evidence raising security concerns, the burden shifts to the applicant to rebut or mitigate those concerns. See Directive ¶ E3.1.15. The standard applicable in security clearance decisions is that articulated in Egan, supra. “Any doubt concerning personnel being considered for access to classified information will be resolved in favor of the national security.” Directive, Enclosure 2 ¶ 2(b). ISCR Case No. 10-04641 at 4 (App. Bd. Sept. 24, 2013). AG ¶¶ 20(a), 20(b), 20(c), and 20(d) apply. On February 20, 2015, Applicant and her husband filed their federal income tax return for tax year 2013, which is one year late. Applicant said her husband failed to timely file their tax return. On March 16, 2015, the IRS issued a $3,395 refund to Applicant and her husband. On December 30, 2015, Applicant paid $10,723 in additional taxes for her business and self-employment tax. Notwithstanding these errors in judgment for tax years 2013, 2014, and 2015, all taxes are paid and the balance owed is zero. Applicant understands the importance of timely filing and paying her federal and state income taxes. Applicant’s SOR alleges five delinquent debts totaling $60,254. Her delinquent debts were caused by an untrustworthy partner in her business and her husband’s unemployment. She received financial counseling. She is credited with bringing all of her SOR debts to current status. Based on Applicant’s credible and sincere promise to pay her debts and her track record of paying her debts, future new delinquent debt “is unlikely to recur and does not cast doubt on [Applicant’s] current reliability, trustworthiness, or good judgment,” and “there are clear indications that the problem is being resolved or is under control.” Her payments to address her debts showed good faith. She has sufficient income to keep her debts in current status and to continue making progress paying her remaining debts. I am confident that Applicant will conscientiously endeavor to maintain her financial responsibility. 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 8 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 security clearance must be an overall commonsense judgment based upon careful consideration of the guidelines and the whole-person concept. I have incorporated my comments under Guideline F in my whole-person analysis. Some of the factors in AG ¶ 2(a) were addressed under Guideline F, but some warrant additional comment. Applicant is a 56-year-old defense contractor who works in information technology. In 2014, she received a bachelor’s degree. In 2004, she honorably retired from the Air Force as a senior master sergeant after 24 years of service. She received numerous awards during her military service. The VA rated her with a 50 percent service connected disability. Applicant filed her 2013 tax return in 2015, before the SOR was issued. Tax returns for 2014 and 2015 were timely filed, and all taxes are paid. Applicant’s delinquent debts were caused by an untrustworthy partner in her business and her husband’s unemployment. She is credited with bringing all of her SOR debts to current status. Her payments to address her SOR debts showed good faith. She has sufficient income to keep her debts in current status and to continue making progress resolving her debts. Applicant assures she intends to pay her debts, including her taxes, and she understands the conduct required to retain her security clearance. 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. 9 ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008) (internal citations and quotation marks omitted). Applicant has established a “meaningful track record” of debt re-payment, and I am confident she will maintain her financial responsibility. I have carefully applied the law, as set forth in Egan, Exec. Or. 10865, the Directive, and the AGs, to the facts and circumstances in the context of the whole person. Financial considerations security concerns are mitigated. 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.f: For Applicant Conclusion In light of all of the circumstances presented by the record in this case, it is clearly consistent with national security to grant or continue Applicant’s eligibility for a security clearance. Eligibility for access to classified information is granted. _________________________ MARK HARVEY Administrative Judge