1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-00560 ) Applicant for Security Clearance ) Appearances For Government: David Hayes, Esq., Department Counsel For Applicant: Pro se ______________ Decision ______________ RICCIARDELLO, Carol G., Administrative Judge: Applicant failed to mitigate the security concerns under Guideline F, financial considerations. Eligibility for a security clearance is denied. Statement of the Case On June 15, 2016, the Department of Defense Consolidated Adjudications Facility (DOD CAF) issued to Applicant a Statement of Reasons (SOR) detailing security concerns under Guideline F, financial considerations. The action was taken 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 (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) effective within the DOD on September 1, 2006. Applicant answered the SOR on August 31, 2016, and requested a hearing before an administrative judge. The case was assigned to me on February 9, 2017. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on February 14, 2017. I convened the hearing as scheduled on March 2, 2017. The 2 Government offered exhibits (GE) 1 through 5. Applicant testified and offered Applicant Exhibit (AE) A. All exhibits were admitted into evidence without objection. The record was held open until March 16, 2017, to allow Applicant to submit additional documents, which he did. They are marked as AE B through K, and were admitted into evidence without objection.1 DOHA received the hearing transcript (Tr.) on March 14, 2017. Findings of Fact Applicant admitted all allegations in the SOR. After a thorough and careful review of the pleadings, exhibits, and testimony, I make the following findings of fact. Applicant is 37 years old. He earned an associate’s degree in 2003 and is currently taking college courses. He is not married. He and his fiancé have lived together for more than seven years. They do not have children. Applicant supports her financially. She has a physical problem and only works about three months a year. He has worked for his current employer since September 2005.2 Applicant’s fiancé had been a part-owner of a successful restaurant with her father. In 2011, she sold her share, and she and Applicant decided to open their own restaurant. They used the money from her share to start the business. Applicant also took out numerous loans and used credit cards to finance the new business. When he could no longer obtain money from his business credit cards, he used personal credit cards to fund the business. Several months after they started this endeavor, they were unable to pay all of the bills, and they decided to abandon the business. Applicant testified that he paid what he could, but the debts alleged in the SOR remain unpaid. He was unable to make many payments until recently when he received a pay raise and his fiancé resumed working.3 Applicant stated that when his fiancé works he is able to pay some debts, but when she does not work, he cannot pay them. He indicated that he began paying some delinquent debts in 2014 or 2015. After he applied for a security clearance, he tried to work with more creditors, but could only pay small amounts. He testified that he paid other debts that were not alleged in the SOR. Applicant testified that he obtained his credit report and is using the contact information on it to call creditors and make arrangements to resolve debts.4 Two credit reports from October 2015 and another from January 2017 reflect the debts alleged in the SOR.5 1 Hearing Exhibit (HE) I is the Government’s email memorandum. HE II is my email to Applicant advising him the record closed. 2 Tr. 15-20, 27-28. 3 Tr. 20-25, 28, 68-69, 71. 4 Tr. 25-33; AE A. 5 GE 3, 4, 5. 3 The debt in SOR ¶ 1.a ($22,808) was for the purchase of a commercial stove for the restaurant made in 2011. Applicant contacted the creditor three or four months ago, but was unable to reach a settlement. He had not made any contact with the creditor before then. He has the stove in his garage. Because the debt is so large, he intends to address it last. It is unresolved.6 Applicant testified that he had not contacted the creditor for the debt in SOR ¶ 1.b ($5,009), which has been delinquent since 2011. In Applicant’s post-hearing email and documents, he stated that the debt in SOR ¶ 1.b is a duplicate of SOR ¶ 1.c ($4,453), and ¶ 1.l. The evidence confirms that the debt in SOR ¶ 1.c and ¶ 1.l are duplicates. The debt in SOR ¶ 1.b has a different account number. Applicant provided proof the debt in SOR ¶ 1.c was settled in July 2016.7 Applicant testified that he has not taken any action on resolving the debt in SOR ¶ 1.d ($2,938) that has been delinquent since 2012. In Applicant’s post-hearing email, he indicated he was negotiating with the creditor to settle the debt in SOR ¶ 1.d ($2,938).8 It remains unresolved. After Applicant’s hearing, he negotiated a payment plan with the creditor in SOR ¶ 1.e to make monthly payments of $381, beginning the end of March 2017. The current balance owed is $7,674.9 Applicant provided a letter from January 2017 from the creditor in SOR ¶ 1.f ($1,297). It indicated that he negotiated a settlement with the creditor that he would pay the debt in March 2017. The debt became delinquent in 2013.10 The debts in SOR ¶ 1.g ($740) and ¶ 1.j are duplicates. The debt became delinquent in 2014. Applicant provided an undated letter from the collection company verifying the debt was settled.11 Applicant resolved the collection accounts in SOR ¶ 1.h ($2,580) in August 2016; SOR ¶ 1.i ($1,088) in June 2016; and SOR ¶ 1.k ($322) in February 2016.12 6 Tr. 49-53; AE B. 7 Tr. 34-38, 53-54, 61-63; AE C. 8 Tr. 54-57; AE B. 9 Tr. 54-57; AE B, G. 10 Tr. 57-58; AE B, H. 11 Tr. 41-44, 58-59; GE 5; AE B, K. 12 Tr. 39-41, 44-46, 60-61; AE B, F, I and J. 4 Applicant testified that he earns about $47,000 a year. He is able to meet his monthly bills. He has two credit cards with balances that are not delinquent. He leases a car for $600 a month. He stated that he does not have any recent delinquent debts. He has not had financial counseling. He has about $800 in the bank.13 Policies When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which are used in evaluating an applicant’s eligibility for access to classified information. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, these guidelines are applied in conjunction with the factors listed in the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶ 2(c), the entire process is a conscientious scrutiny of a number of variables known as the “whole-person concept.” The administrative judge must consider all available, reliable information about the person, past and present, favorable and unfavorable, in making a decision. The protection of the national security is the paramount consideration. AG ¶ 2(b) requires that “[a]ny doubt concerning personnel being considered for access to classified information will be resolved in favor of national security.” In reaching this decision, I have drawn only those conclusions that are reasonable, logical, and based on the evidence contained in the record. Likewise, I have not drawn inferences grounded on mere speculation or conjecture. Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, an “applicant is responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by applicant or proven by Department Counsel and has the ultimate burden of persuasion to obtain a favorable security decision.” A person who seeks access to classified information enters into a fiduciary relationship with the Government predicated upon trust and confidence. This relationship transcends normal duty hours and endures throughout off-duty hours. The Government reposes a high degree of trust and confidence in individuals to whom it grants access to classified information. Decisions include, by necessity, consideration of the possible risk the applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation of potential, rather than actual, risk of compromise of classified information. 13 Tr. 17, 69-80. 5 Section 7 of EO 10865 provides that decisions shall be “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information). Analysis Guideline F, Financial Considerations The security concern 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 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 an individual might knowingly compromise classified information in order to raise money. It encompasses concerns about an individual’s self-control, judgment, and other qualities essential to protecting classified information. An individual who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handing and safeguarding classified information.14 The guideline notes several conditions that could raise security concerns. I have considered all of the disqualifying conditions under AG & 19, and the following are potentially applicable: (a) inability or unwillingness to satisfy debts; and (c) a history of not meeting financial obligations. Applicant accumulated delinquent debts in 2011 when he attempted to open a restaurant. Some remain unresolved as the result of his inability or unwillingness to address them. The above disqualifying conditions apply. The guideline also includes conditions that could mitigate security concerns arising from financial difficulties. The following 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 14 See ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012). 6 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; and (d) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts; and (e) the individual has a reasonable basis to dispute the legitimacy of the past-due debt which is the cause of the problem and provides documented proof to substantiate the basis of the dispute or provides evidence of actions to resolve the issue. Applicant resolved some delinquent debts, but he has others that remain. Despite being employed, it was several years before he began addressing the delinquent debts. He only recently made contact with some creditors. His behavior is recent, ongoing, and casts doubt on his reliability, trustworthiness, and good judgment. AG ¶ 20(a) does not applies. In 2011, Applicant and his fiancé decided to open a restaurant and finance it with her money, loans, and credit cards. He fell behind in paying the bills. The circumstances that caused the financial issue were voluntary and within his control. Applicant did not begin to address his delinquent debts until approximately 2015. He settled or paid some of them, but has numerous ones that are not resolved. Some of his attempts to address specific debts did not occur until after he received the SOR and after his hearing concluded. His fiancé’s health issues were not a factor as he had been providing her financial support, and he was aware of her sporadic work history prior to their business endeavor. I find AG ¶ 20(b) does not apply. There is no evidence that Applicant received financial counseling. There is evidence that Applicant paid some debts. Recently he negotiated settlements or payment plans for other debts, but has not yet made payments. His largest debt and some charged off debts remain unresolved. At this time, Applicant has at least $30,000 of unresolved debt. The evidence is insufficient to conclude his financial problems are under control. AG ¶ 20(c) does not apply. Applicant resolved the debts in SOR ¶¶ 1.c, 1.g, 1.h, 1.i, 1.j, and 1.k, demonstrating a good-faith effort to resolve his debts. AG ¶ 20(d) applies to these debts. Post-hearing, Applicant negotiated settlements with some creditors, but had not 7 yet made payments. Hence, it is premature to apply AG ¶ 20(d) to these debts or the others that have not been resolved. Applicant admitted all debts in the SOR. Some of them he substantiated were duplicates, others he did not. I found for him on those that he provided proof of duplication. AG ¶ 20(e) applies to them. 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 relevant 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 security clearance must be an overall commonsense judgment based upon careful consideration of the guidelines and the whole-person concept. I considered the potentially disqualifying and mitigating conditions in light of all the facts and circumstances surrounding this case. I 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. Applicant is 37 years old. He obtained loans and used credit cards to finance a failed business. He paid some of the resulting debts, but a substantial amount of delinquent debts remain unresolved. At this juncture, Applicant has not established a reliable financial track record to conclude his financial issues are not a security concern. Overall, the record evidence leaves me with questions and doubts about Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant failed to mitigates the financial considerations security concerns. Formal Findings Formal findings for or against Applicant on the allegations set forth in the SOR, as required by section E3.1.25 of Enclosure 3 of the Directive, are: Paragraph 1, Guideline F: AGAINST APPLICANT 8 Subparagraphs 1.a-1.b: Against Applicant Subparagraph 1.c: For Applicant Subparagraphs 1.d-1.f: Against Applicant Subparagraphs 1.g-1.k: For Applicant Conclusion In light of all of the circumstances presented by the record in this case, it is not clearly consistent with the national interest to grant Applicant a security clearance. Eligibility for access to classified information is denied. _____________________________ Carol G. Ricciardello Administrative Judge