2 Applicant answered the SOR on July 15 and August 10, 2016. He admitted the 20 allegations of delinquent debt. Department Counsel was prepared to proceed on October 6, 2016, and the case was assigned to me on December 2, 2016. DOD issued a notice of hearing on January 19, 2017, for a hearing on February 14, 2017. I convened the hearing as scheduled. The Government offered four exhibits that I marked and admitted into the record without objection as Government Exhibits (GX) 1 to 4. Applicant testified and submitted eight exhibits that I marked and admitted into the record without objection as Applicant Exhibits (AX) A through H. I kept the record open for Applicant to submit additional documents. Applicant timely submitted four additional documents that I marked and admitted into the record without objection as AX I to L. I received the transcript of the hearing (Tr.) on February 23, 2017. Findings of Fact After a thorough review of the pleadings, transcript, and exhibits, I make the following findings of fact. Applicant is 34 years old. He served on active duty in the Air Force from September 2000 until December 2015 when he left active duty with an honorable discharge. He was eligibility for access to classified information while on active duty. He has worked for his defense contractor employer as an acquisition specialist since December 2015. He received a bachelor’s degree in 2015, and is studying for a master’s degree. He married in 2008 and has two children. (Tr. 25-28) Applicant’s net monthly income is $6,200. His wife is a former service member who is attending school under the GI Bill. She receives $1,600 monthly in living- expense benefits in addition to tuition benefits. The family has a total monthly income of $7,800. Their monthly expenses, including payments on debts, is approximately $7,200, leaving approximately $600 a month in discretionary income. (Tr. 30-36, GX 1, e-QIP, dated August 17, 2015; GX 2, Personal Subject Interview, dated October 16, 2015) The SOR alleges, and credit reports (GX 3, dated August 26, 2015; GX 4, dated September 29, 2016) confirm the following delinquent debt for Applicant; a loan past due for $746 with a balance of $796 (SOR 1.a); a credit card debt charged off for $771 (SOR 1.b); a loan placed for collection for $774 (SOR 1.c); a loan charged off for $1,541 (SOR 1.d); a loan charged off for $168 (SOR 1.e); a medical debt placed for collection for $159 (SOR 1.f); a closed bank account charged off for $644 (SOR 1.g) two credit card debts to the same creditor for $3,660 (SOR 1.h), and $3,692 (SOR 1.i); and a loan placed for collection for $10,862 (SOR 1.j). Also listed are traffic camera tickets for the same city for $250 (SOR 1.k ), $65 (SOR 1.l), $250 (SOR 1.m), $250 (SOR 1.n), $400 (SOR 1.o), $360 (SOR 1.p), $240 (SOR 1.q); and $240 (SOR 1.r). The credit reports also list a loan placed for collection for $541 (SOR 1.s), and a bank loan placed for collection for $724 (SOR 1.t). The total amount of the delinquent debt is approximately $26,000. Applicant’s wife served on active duty. She was attending school using her GI Bill educational benefits when she experienced medical problems after the birth of their first child in 2009. She was unable to work or continue to attend school and could no longer collect her GI Bill benefits. Applicant took out loans and used credit cards to sustain the 3 family and cover household expenses. Applicant hoped to repay the loans and credit cards over time when his wife could work or attend school and again receive GI Bill benefits. His wife was able to return to work and receive GI Bill benefits for a time. They were able to sustain the household without going too far into debt. Applicant’s wife became pregnant again and could not work or attend school. Applicant again resorted to using credit cards and loans to meet expenses. As Applicant described it, he had to “rob Peter to pay Paul.” The loans and credit cards he used had high interest rates, and Applicant could not keep up with the growing living expenses and debt payments. He did not pay his debt as agreed so he could maintain his household’s standard of living. After 15 years on active duty, he decided to leave the military in December 2015 to follow a career path with defense contractors where he could potentially receive a higher income. He went from an active duty pay of approximately $89,000 a year as a master sergeant (E-7) to a civilian pay of approximately $123,000 a year. Applicant claims to have been paying his loan and credit card debts since he started working as a civilian in December 2015. (Tr. 16-19, 23-25) Applicant contracted with a credit servicing company in 2008 and paid them over $500 per month to assist him in pay his bills. Applicant did not want to continue paying the high fees, so he started paying the debts directly in November 2008. (AX J, e-mail, dated March 1, 2017) The debts remaining to be paid are listed in the SOR. Applicant provided sufficient information to establish that he paid in full the personal loan debt at SOR 1.a. The credit card debts at SOR 1.b and 1.c are duplicate debts. Applicant presented sufficient information to show that the debt has been paid in full and resolved. (Tr. 18-19, 22,36-37; AX B, e-mail, dated February 1, 2017; AX D, Letter, dated February 2, 2017) The debt at SOR 1.d is a personal loan. Applicant contacted the creditor to arrange a payment plan. He is waiting to hear from them concerning his offer. He made some small payments on this loan when he could. (Tr. 19, AX C, Letter, dated January 26, 2017) He paid the personal loan debt at SOR 1.e in full. (Tr. 19, 35) The medical debt at SOR 1.f arose when Applicant was on active duty, and should have been paid by the military medical system. In spite of this fact, Applicant disputed the debt with the creditor, and then decided to pay it himself. He is waiting for the final documents from the creditor to show that the debt is resolved. (Tr. 19-20) The debt at SOR 1.g is the balance from a bank account Applicant thought was closed. There were payment of bills associated with the account that continued to be debited from the account creating a deficit. Applicant’s plan is to pay and resolve this debt after completing payment on the debts he is now paying. (Tr. 20, 36-42) The debts at SOR 1.h and 1.i are to the same creditor specializing in loans for military members but for different loans totaling approximately $7,000. SOR 1.j is also a loan from a lender specializing in loans to military members. Applicant contacted both creditors concerning payment plans for the debts. Both creditors requested large down payments to initiate a payment plan because of the age of the loans and the amount of the debts. The amount borrowed on the loans was not large but the debts increased because of interest and penalties. Applicant is saving funds to make the payments. (Tr. 20-21) 4 The debts at SOR 1.k through 1.r are for traffic camera tickets to a city. Applicant did not receive notice of the tickets and the fines. After receiving the SOR and learning of the fines, Applicant contacted the city. The city does not have a procedure for an individual issued a ticket to establish a plan to pay the ticket. The ticket must be paid at one time. Applicant intends to use his tax refund for 2016 to pay for the tickets. Applicant did not present any information on the amount of the funds he saved to pay these tickets. (Tr. 21) Applicant is attempting to negotiate a payment plan on the credit card debt at SOR 1.s. (Tr. 22) Applicant settled and paid the bank debt at SOR 1.t. (Tr. 43-44; AX I, e-mail, undated) Applicant’s credit score increased as he has paid some of his debts. (Tr. 21-22; AX E, Credit Score, dated February 9, 2017) Applicant presented five letters of recommendation from former supervisors and associates. They favorably commented on his leadership and management skills and performance. He successfully negotiated and managed high-dollar complex contracts. They noted that Applicant is trustworthy, reliable, with the highest integrity. He accepted responsibility and was a frequent volunteer for duties in the unit. (AX F, Letters of Recommendation). Applicant’s military performance reports show his work performance that consistently exceeded expectations, the highest rating. (AX G, Enlisted Performance Reports) Applicant also received many Letters of Recommendation and Commendations for the quality of his service and performance. (Tr. 22-27; AX H, Letters, various dates) 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 must be considered 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. Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, the applicant is 5 responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by applicant or proven by Department Counsel. . . . .” The applicant has the ultimate burden of persuasion in seeking 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 that the applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation as to potential, rather than actual, risk of compromise of classified information. Analysis Financial Considerations 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 a person’s reliability, trustworthiness, and ability to protect classified information. (AG ¶ 18) The financial security concern is broader than the possibility that an individual might knowingly compromise classified information to raise money. It encompasses concerns about an individual’s responsibility, trustworthiness, and good judgment. Security clearance adjudications are based on an evaluation of an individual’s reliability and trustworthiness. An individual who is financially irresponsible may also be irresponsible, unconcerned, or careless in his or her obligations to protect classified information. Behaving responsibly or irresponsibly in one aspect of life provides an indication of how a person may behave in other aspects of life. A person’s relationship with his creditors is a private matter until evidence is uncovered demonstrating an inability or unwillingness to meet their financial obligations. Absent evidence of strong extenuating or mitigating circumstances, an applicant with a history of serious or recurring financial difficulties is in a situation of risk inconsistent with the holding of a security clearance. An applicant is required to manage his or her finances in such a way as to meet financial obligations. Adverse information in credit reports can normally meet the substantial evidence standard to establish financial delinquency. Applicant’s history of delinquent debts is documented in his credit reports and in his admissions. Applicant’s wife was unable to work because of pregnancy and childcare issues. After losing his wife’s income, Applicant used credit cards and personal loans to maintain their lifestyle thereby incurring delinquent debt. The information raises an issue about Applicant’s willingness and ability to meet his financial obligations. Once the Government has established the 6 adverse financial issue, the Applicant has the responsibility to refute or mitigate the issue. Applicant’s delinquent debts raise the following security concerns under Financial Considerations Disqualifying Conditions AG ¶ 19: (a) inability or unwillingness to satisfy debts; and (c) a history of not meeting financial obligations. I considered the following Financial Considerations Mitigating Conditions under 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; (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 indication that the problem is being resolved or is under control; and (d) the individual has initiated a good-faith effort to repay the overdue creditors or otherwise resolve debts. Mitigating conditions AG ¶¶ 20 (a) and (b) do not apply. Applicant accumulated debts he could not pay within his income when his wife became pregnant, had children, could not work, and the family had to rely on Applicant’s income only. While the loss of his wife’s income was not within his ability to control and could recur, the direct cause of his delinquent debts was within his ability to control. His income alone was not sufficient to maintain the family lifestyle and pay their debts. He did not present any evidence that he changed his lifestyle to live within his lower income level. Instead, he used credit cards and personal loans to continue his lifestyle and make ends meet. Applicant also accumulated a number of traffic camera fines that were within his control to avoid. Mitigating condition AG ¶ 20(c) does not apply. Applicant presented evidence of financial counseling, but that was in 2008. That counseling has no bearing on the debts in the SOR. His financial situation is not under control. Mitigating condition AG ¶ 20(d) does not apply. Good faith means acting in a way that shows reasonableness, prudence, honesty, and adherence to duty and obligation. 7 Applicant is not required to be debt-free nor must his plan require paying off all debts immediately or simultaneously. All that is required is that Applicant act responsibly given his circumstances. Applicant must establish that he has a reasonable plan to resolve financial problems, and that he has taken significant action to implement that plan. Applicant’s plan must evidence a systematic method of handling debts, and Applicant must establish a meaningful track record of debt payment. A meaningful track record of debt payment can be established by evidence of actual debt payments or reduction of debt through payment of debts. A promise to pay delinquent debts is not a substitute for a track record of paying debts in a timely manner and acting in a financially responsible manner. Appellant presented sufficient information that he has paid four debts. (SOR 1.a, 1. b, 1.e, and 1.f.) Because of duplication, he has resolved two additional debts. (SOR 1.c. and 1.t) The payment of these debts still leaves many debts unpaid and is not sufficient to establish a meaningful track record of debt payment. Applicant claims he contacted most of his creditors to establish payments plans. However, he presented no documentation of any plans he is negotiating or finalizing for his other delinquent debts. He presented no documents to show any present payments made to creditors. He claims to be saving funds to make payments, but he did not present any evidence to show that the funds are saved and may be available to pay debts. His promise to save funds and pay in the future is not a substitute for a meaningful track record of debt payment. He has not established a track record of paying his debts in a timely manner and acting in a financially responsible manner. His lack of responsible financial conduct is likely to continue. There is evidence of a lack of responsible behavior, good judgment, and reliable conduct and actions by Applicant towards his finances. Applicant has not met his burden to establish his good-faith efforts to resolve his remaining debts. He has not established that he acted with reasonableness, prudence, honesty, and an adherence to duty and obligation towards his financial obligations. With evidence of delinquent debt and no documentation to support responsible management of his finances, it is obvious that Applicant’s financial problems are not under control, and that Applicant is not managing his personal financial obligations reasonably and responsibly. His financial problems are not behind him. Applicant’s failure to act reasonably and responsibly towards his finances is an indication that he may not protect and safeguard classified information. Applicant has not presented sufficient information to mitigate security concerns for financial considerations. Whole-Person Analysis Under the whole-person concept, the administrative judge must evaluate an applicant’s security eligibility 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): 8 (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 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 considered Applicant 15 years of commendable active service in the Air Force. I considered the comments and recommendations contained in his performance evaluation reports from the Air Force and the laudatory comments of his supervisor, leaders, and peers. Applicant incurred delinquent debt when he did not modify his spending after the loss of his wife’s income. He used credit cards and personal loans to maintain his family’s lifestyle. While he paid some debts, he has not established an adequate plan to resolve his remaining delinquent debts. Applicant has not presented sufficient information to establish that he acted reasonably and responsibly towards his finances under the circumstances. Overall, the record evidence leaves me with questions and doubts as to Applicant’s judgment, reliability, trustworthiness, and eligibility and suitability for a security clearance. For all these reasons, I conclude that Applicant has not mitigated security concerns arising under the financial considerations guideline. Eligibility for access to classified information is denied. 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 Subparagraphs 1.a – 1.c For Applicant Subparagraph 1.d: Against Applicant Subparagraphs 1.e and 1.f: For Applicant Subparagraphs 1.g – 1.s: Against Applicant Subparagraph 1.t: For Applicant 9 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 eligibility for a security clearance. Eligibility for access to classified information is denied. _________________ THOMAS M. CREAN Administrative Judge