1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-01673 ) Applicant for Security Clearance ) Appearances For Government: Ray T. Blank, Esq., Department Counsel For Applicant: Janice Williams-Jones, Esq. ___________ Decision ___________ RIVERA, Juan J., Administrative Judge: Applicant’s financial problems resulted from circumstances beyond his control – two periods of unemployment, totaling 19 months. He showed financial responsibility by contacting his creditors and making payment arrangements to resolve his delinquent debts. He paid or resolved most of his delinquent debts, and his credit report show no new delinquent debt. He established he is in control of his financial situation. Financial considerations security concerns are mitigated. Access to classified information is granted. History of the Case Applicant submitted a security clearance application (SCA) on November 14, 2014. After reviewing it and the information gathered during a background investigation, the Department of Defense (DOD) on June 9, 2016, issued Applicant a Statement of Reasons (SOR) detailing security concerns under Guideline F (financial considerations).1 Applicant answered the SOR on July 8, 2016 (Answer), and requested a decision based 1 The DOD acted under Executive Order (EO) 10865, Safeguarding Classified Information Within Industry (February 20, 1960), as amended; DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (Directive) (January 2, 1992), as amended; and the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information (AG), implemented by the DOD on September 1, 2006. 2 on the written record. On an unknown date, Applicant requested a hearing before an administrative judge from the Defense Office of Hearings and Appeals (DOHA). On February 1, 2017, Applicant submitted a motion for an expedited hearing. (Hearing Exhibit (HE) 1) On February 28, 2017, Applicant submitted a written waiver of his 15-day advanced notice of hearing. (HE 2) Applicant’s counsel entered her appearance on that same day. (HE 3) The case was assigned to me on February 24, 2017. DOHA issued a notice of hearing on March 2, 2017, scheduling the hearing for March 9, 2017. The hearing was held as scheduled. Government exhibits (GE) 1 through 4, 6, and 7 were admitted without objection. Applicant objected to GE 5 (summary of Applicant’s May 2015 unsworn interview), and the document was marked and made part of the record, but not considered as evidence. Applicant’s exhibit (AE) A, with Tabs 1 through 23, were admitted into evidence without objection. AE A(23) was received post-hearing. On March 20, 2017, DOHA received the transcript of the hearing. Findings of Fact In Applicant’s response, he failed to admit or deny any of the SOR allegations. I considered all the SOR allegations denied. He provided extensive extenuating and mitigating information. Applicant’s admissions at the hearing are incorporated into my findings of fact. Applicant is 42 years old. He completed a bachelor’s degree in electrical engineering in 1999, and a master’s degree in computer science. (Tr. 30) He was also working on a master’s degree in business administration (MBA). Applicant married in 1997 and divorced in 2003. He has a 19-year-old son for whom he provided court-ordered child support. Applicant’s employment history shows that he was employed between 2001 and June 2006; unemployed between July 2006 and September 2006; employed between September 2006 and November 2011; unemployed from December 2011 and August 2012 (9 months); employed between September 2012 and February 2014; and unemployed between February 2014 and November 2014 (10 months). He started working for his current employer, a federal contractor, in November 2014. Applicant was granted access to classified information at the secret level in 2001. He maintained his clearance until 2011, when he lost his sponsorship. There is no evidence of any security issues or concerns, except for the financial allegations in the SOR. Applicant submitted his most recent SCA in 2014. In response to Section 26 (Financial Record) of the SCA, Applicant disclosed financial problems that included a delinquent child support obligation, a car loan, and credit card accounts. Applicant explained that he was unemployed for a period of nine months in 2011-2012. He was unable to find employment, received unemployment benefits, lived off his savings, and his debts accumulated. Applicant sought and received a modification on the terms of his court-imposed child support obligation. 3 Applicant’s security investigation addressed his financial problems and revealed the 19 SOR debts. Applicant’s history of delinquent debt is documented in his credit reports, his SOR response, and his testimony. The status of his SOR debts is as follows: SOR ¶¶ 1.a, 1,e, and 1.f allege delinquent student loans totaling about $183,000. In May 2016, Applicant contacted the creditor and started a payment plan. In December 2016, the creditor granted Applicant a financial hardship forbearance until June 2017. Applicant’s budget shows a monthly net disposable income of about $3,500. (AE A, Tab 18) His disposable income should be sufficient for him to pay his living expenses, current debts, and his student loans. (Tr. 61-63) Additionally, Applicant’s disposable income will increase when his child support obligation ends in 2017. SOR ¶ 1.b alleges Applicant’s delinquent credit card account ($9,045). During his two periods of unemployment in 2012 and 2014, Applicant used his credit cards to pay his living expenses and debts. In October 2016, he settled and paid the debt for $5,800. (AE A, Tab 19(b)) SOR ¶ 1.c alleges Applicant’s delinquent credit card account ($8,287). In December 2015, he settled the debt for $7,000 and paid it. (AE A, Tab 19(c)) SOR ¶ 1.d alleges Applicant’s charged-off car lease debt ($8,270). Applicant’s documentary evidence shows that in 2012, he contacted the creditor and tried to make monthly payments of $100 and the creditor rejected his offer. (AE A, Tab 23) In March 2017, he settled and paid the debt. (AE A, Tab 19(d)) SOR ¶ 1.g alleges Applicant’s charged-off consumer credit account ($3,670). In January 2010, Applicant issued a check to the creditor for the amount owed. The court dismissed the creditor’s recovery case against Applicant in January 2014. (AE A, Tab 19(g)) SOR ¶ 1.h alleges Applicant’s delinquent credit card account ($3,255). In November 2016, he settled and paid the debt for $1,900. (AE A, Tab 19(h)) SOR ¶¶ 1.i ($923), 1.j ($911), and 1.k ($722) allege delinquent debts for medical services. Applicant suffered from a life-threatening condition and received operations in 2010 and 2011. He initially disputed the debts because he believed they should have been paid by his medical insurance. When the dispute was resolved against him, he established a payment plan. He has been paying $50 a month since October 2016. (AE A, Tab 19(i)) SOR ¶ 1.l alleges Applicant’s delinquent debt for phone services ($259). In October 2016, he settled and paid the debt for $123. (AE A, Tab 19(l)) SOR ¶ 1.m alleges Applicant’s delinquent medical services debt ($204). In June 2016, he paid the debt. (AE A, Tab 19(m)) 4 SOR ¶ 1.n alleges Applicant’s delinquent credit card account ($6,005). In August 2016, he settled and paid the debt for $2,700. (AE A, Tab 19(n)) SOR ¶¶ 1.o ($386) and 1.r ($166) allege delinquent consumer debts. Applicant disputed the debts after receipt of the SOR. The dispute was resolved in his favor, and the debts were removed from his credit report. (AE A, Tab 19(o)) SOR ¶ 1.p alleges Applicant’s delinquent debt for satellite services ($263). In 2016, he settled and paid the debt for $152. (AE A, Tab 19(p)) SOR ¶ 1.q alleges Applicant’s delinquent medical services debt ($177). Applicant initially disputed the collection believing it was or should have been paid by his medical insurance. The dispute was resolved against him, and he paid the debt. (AE A, Tab 19(q)) SOR ¶ 1.s alleges Applicant’s $220,427 mortgage was delinquent for $5,534. Applicant’s documentary evidence shows that as of March 2017, he was current on his mortgage. (AE A, Tab 19(s)) Applicant explained that because of his two periods of unemployment, he was delinquent on his mortgage payments several times since 2012. Applicant’s documentary evidence shows he placed the home for sale in 2014, but was unsuccessful. (AE A, Tab 23) Applicant’s financial problems were the result of his two periods of unemployment. Additionally, he incurred expenses looking for jobs in other states, moving to other states for the new jobs, and having to maintain his home expenses and rental expenses. Applicant believes he has made great strides resolving his financial problems. He had other debts not alleged in the SOR that he has resolved in the process of becoming financially stable, including his child support obligation. He noted that most of his delinquent debts were paid or have been resolved. In sum, the SOR alleged 19 delinquent accounts: Applicant paid 10; 2 were removed from his credit report after he disputed them; 3 are under payment agreements; the mortgage is current; and the three student loans are in forbearance until June 2017. Applicant explained that he was in arrears on his child support because of his two periods of unemployment. His first priority became paying his child support and to bring his arrearages current because he did not want his son to suffer or him to go to jail. His second priority was to keep the house because he needed a place to live. Applicant is current on his child support obligation. Applicant highlighted that before his periods of unemployment, he did not have financial problems, or delinquent debts, and his credit rating was good. He has always been considered to be a responsible, trustworthy person. At his hearing, Applicant expressed remorse for his financial problems. He believes that his financial problems were due to his 19-month period of unemployment – a circumstance beyond his control. His financial situation is now stable and he is motivated to continue resolving his financial problems. Currently, he is keeping his own budget and managing his expenses. 5 Applicant does not consider himself a security risk. He serves the U.S. interests while working for a Government contractor. Applicant understands that he is required to maintain his financial responsibility to be eligible for a clearance. Applicant’s managers (one from 2014 to 2016, and his current manager, from 2016 to present) consider Applicant to be honest, professional, and trustworthy. Applicant established a reputation for following security rules and procedures, and never cutting corners. He is well respected by his peers and management and is a valuable asset to his employer. Both managers endorsed his eligibility for a clearance. Policies Eligibility for access to classified information may be granted “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. The U.S. Supreme Court has recognized the substantial discretion of the Executive Branch in regulating access to information pertaining to national security, emphasizing that “no one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). The AG list disqualifying and mitigating conditions for evaluating a person’s suitability for access to classified information. Any one disqualifying or mitigating condition is not, by itself, conclusive. However, the AG should be followed where a case can be measured against them, as they represent policy guidance governing access to classified information. Each decision must reflect a fair, impartial, and commonsense consideration of the whole person and the factors listed in AG ¶ 2(a). All available, reliable information about the person, past and present, favorable and unfavorable, must be considered. Security clearance decisions resolve whether it is clearly consistent with the national interest to grant or continue an applicant’s security clearance. The Government must prove, by substantial evidence, controverted facts alleged in the SOR. If it does, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. The applicant bears the heavy burden of demonstrating that it is clearly consistent with the national interest to grant or continue his or her security clearance. Persons with access to classified information enter into a fiduciary relationship with the Government based on trust and confidence. Thus, the Government has a compelling interest in ensuring each applicant possesses the requisite judgment, reliability, and trustworthiness of those who must protect national interest as their own. The “clearly consistent with the national interest” standard compels resolution of any reasonable doubt about an applicant’s suitability for access in favor of the Government. “[S]ecurity clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531; AG ¶ 2(b). Clearance decisions are not a determination of the loyalty of the applicant concerned. They are merely an indication that the applicant has or has not met the strict guidelines the Government has established for issuing a clearance. 6 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. Applicant’s history of financial problems is documented in his credit reports, his SOR response, his testimony, and the record evidence. AG ¶ 19 provides two disqualifying conditions that could raise a security concern and may be disqualifying in this case: “(a) inability or unwillingness to satisfy debts” and “(c) a history of not meeting financial obligations.” The record established the disqualifying conditions in AG ¶¶ 19(a) and 19(c) - primarily his inability to satisfy his debts - 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;2 and 2 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 7 (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. 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). Applicant presented some important positive financial information. There is no evidence to show Applicant had financial problems before his 19-month period of unemployment. He was unemployed between December 2011 and August 2012 (9 months); employed between September 2012 and February 2014; and unemployed between February 2014 and November 2014 (10 months). He had to relocate several times looking for jobs and incurred additional living expenses. Most of the SOR debts relate to these periods of unemployment. Because of his unemployment, he lacked sufficient income to make payments and keep some debts current. I find that Applicant’s financial problems were caused or exacerbated by two periods of unemployment, which were circumstances beyond his control. Applicant presented documentary evidence to show he remained in contact with his creditors; paid debts based on their order or importance (some of which were not alleged in the SOR); has been making recent payments to some creditors; and disputed other debts. In sum, the SOR alleged 19 delinquent accounts: Applicant paid 10; 2 were removed from his credit report after he disputed them; 3 are under payment agreements; his mortgage is current; and his three student loans are in forbearance until June 2017. 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)). 8 There is no evidence to show that Applicant participated in financial counseling; however, he is following a budget and making great strides resolving his delinquent debts. Additionally, the credit reports show that he has not acquired any new delinquent debt. Based on Applicant’s actions addressing and paying his debts, his prior service while possessing a clearance without any issues of concern, and his promise to pay his debts, future delinquent debt is unlikely to recur. Considering the evidence as a whole, his past financial problems do not cast doubt on his current reliability, trustworthiness, or good judgment. I find there are clear indications that his financial problem is being resolved and is under control. His payments of some of his debts and establishing payment plans for other debts showed good faith. His efforts are sufficient to fully mitigate financial considerations security concerns. Applicant understands that he has to maintain financial responsibility to be eligible for a clearance and retain his job. I considered Department Counsel’s rebuttal evidence (2017 credit report, GE-7) and his arguments that Applicant failed to meet his burden to show financial responsibility. In light of the evidence as a whole, I find Applicant’s testimony credible, and his documentary evidence more persuasive than GE-7 concerning Applicant’s good-faith contacts with creditors, payments made, payment arrangements, and disputed debts. Whole-Person Concept I considered the potentially disqualifying and mitigating conditions in light of all the facts and circumstances surrounding this case, and under the whole-person concept. AG ¶ 2(c). I have incorporated my comments under Guideline F in my whole-person analysis, but some warrant additional comment. Applicant is 42 years old. He has worked for federal contractors (on-and-off) since 2001, and held a clearance between 2001 and 2011. There is no evidence of any security violations or issues of concern, except for the SOR allegations. Applicant showed financial responsibility by contacting his creditors and making payment arrangements to resolve his delinquent debts. Applicant’s finances were adversely affected by circumstances beyond his control i.e., his 19-month period of unemployment. There is no evidence showing that he acquired any additional delinquent financial obligations since 2014. He understands that he is required to demonstrate financial responsibility to retain his security clearance and ultimately his job. The Appeal Board has addressed a key element in the whole-person analysis in financial cases stating: [T]he 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 9 can reasonably consider the entirety of an applicant’s financial situation and his actions in evaluating the extent to which that applicant’s plan for the reduction of his outstanding indebtedness is credible and realistic. See Directive ¶ E2.2(a) (Available, reliable information about the person, past and present, favorable and unfavorable, should be considered in reaching a determination.) There is no requirement that a plan provide for payments on all outstanding debts simultaneously. Rather, a reasonable plan (and concomitant conduct) may provide for the payment of such debts one at a time. Likewise, there is no requirement that the first debts actually paid in furtherance of a reasonable debt plan be the ones listed in the SOR. ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008) (internal citations and quotation marks omitted). Applicant has established a “meaningful track record” of debt re-payment, and I am confident he will maintain his financial responsibility. 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 - 1.s: For Applicant Conclusion In light of all of the circumstances presented by the record in this case, it is clearly consistent with the national interest to grant or continue Applicant’s eligibility for a security clearance. Eligibility for access to classified information is granted. _________________________ JUAN J. RIVERA Administrative Judge