1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-00757 ) Applicant for Security Clearance ) Appearances For Government: Chris Morin, Esquire, Department Counsel For Applicant: Alan Edmunds, Esquire ______________ Decision ______________ RICCIARDELLO, Carol G., Administrative Judge: Applicant failed to mitigate the security concerns under Guideline F, financial considerations, and Guideline E, personal conduct. Applicant’s eligibility for a security clearance is denied. Statement of the Case On June 24, 2016, the Department of Defense Consolidated Adjudications Facility (DOD CAF) issued to Applicant a Statement of Reasons (SOR) detailing security concerns under Guidelines F, financial considerations, and E, personal conduct. 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 July 20, 2016, and requested a hearing before an administrative judge. The case was assigned to me on January 24, 2017. The 2 Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on February 23, 2017. I convened the hearing as scheduled on April 18, 2017. The Government offered exhibits (GE) 1 through 3. Applicant and one witness testified. He offered Applicant Exhibits (AE) A through I. All exhibits were admitted, without objection.1 DOHA received the hearing transcript on April 26, 2017. Findings of Fact Applicant admitted all of the 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 51 years old. He served in the military from 1985 to 1994, and was honorably discharged in the paygrade E-5. He earned a bachelor’s degree in 1995 and a master’s degree in 2005. He was married from 1991 to 1993. He has a grown child from the marriage. He married in 1996 and divorced the same year. He remarried in 2012. He has an eight-year-old stepchild. He has worked for his present employer, a government contractor, since January 2010. He has no periods of unemployment.2 Applicant’s delinquent debts alleged in SOR ¶¶ 1.a ($14,696) and 1.b ($10,120), are both credit card accounts.3 Applicant testified that he had two accounts with the creditor in SOR ¶ 1.a. One was a corporate account used for business that was resolved when he left employment with the company in 2009. The other was an individual account that is alleged in SOR ¶ 1.a, which was opened in September 2007 and the last activity was in July 2009. Applicant told the government investigator that in 2009 he arranged to pay $100 a month on the account and made the payments for nine months. He stopped because he could no longer afford the payments due to a reduction in pay with his new job. He received letters from the creditor requesting he pay the balance owed. The creditor indicated it would take him to court to collect the balance. Applicant wrote the creditor a letter explaining he could not make current payments, but he intended to pay the account. He testified that approximately every two years he would receive a “harsh” telephone call from the creditor regarding the debt.4 Applicant testified that the creditor has a “loose payment agreement,” in that he must telephone them monthly to make a payment.5 Applicant began making $50 payments in January 2015 on the debt in SOR ¶ 1.a. He made consistent monthly payments until July 2016. He did not make a payment in August 2016, but made a payment of $150 in September 2016. He failed to make payments in October, November, and December 2016, but made payments in January 2017 and April 2017. A 1 Hearing Exhibit (HE) I is Department Counsel’s discovery letter. HE II is the exhibit list. 2 Tr. 21-23, 71, 77-85. 3 These delinquent debts are reflected in GE 2, a credit report from September 2015. 4 Tr. 23-26, 38-53, 65-67; GE 2, 3. 5 Tr. 25. 3 current balance on the debt was not provided. Applicant testified that he intends to pay the debt until it is resolved.6 Applicant opened the credit card account in SOR ¶ 1.b in 2006 and his last activity on the account was 2008. He testified that he did not know why he failed to pay this account. He stated that he experienced health issues in March or April 2015, which caused him to delay making payments. He could not recall contacting the original creditor, but did remember that the collection company contacted him at least once a month beginning in 2009. He advised the creditor that he was unable to pay the amount it requested. He had not heard from the creditor in a couple of years. He testified that he is now in a better financial situation. He explained that he contacted the creditor after he received phone calls and letters from the creditor. Applicant was confronted with the delinquent debt during his October 2016 background interview. After he was told about the debt by the investigator, he contacted the creditor. Applicant provided a document from the creditor. It states, “On 12-21-16, you agreed to: Pay [creditor] $300 by making multiple payments as described below via debit card. This agreement will not resolve your account.”7 The agreement indicated that Applicant would make $25 payments beginning in December 2016 through November 2017. Applicant provided proof that he made payments in January and February 2017. Applicant did not provide other information regarding the missed December 2016 payment or a plan to pay the debt beyond November 2017.8 Applicant testified that he could not remember if he had received an IRS cancellation of debt form 1099-C for the debt in SOR ¶ 1.b. During his background interview, he indicated he had no knowledge of the collection account.9 He testified that the debt was a “write-off.” He acknowledged that the “write-off” occurred because he failed to pay the debt. After Applicant’s background investigation, he researched the debt and concluded he did not receive an IRS cancellation of debt form. He acknowledged receiving at least three IRS 1099C forms for other credit card debts that were not alleged in the SOR.10 6 Tr. 23-26; AE A. In Applicant’s interview with a government investigator in October 2014, he refers to his business credit card account with the same creditor. Based on his testimony, I believe he confused the accounts and was referring to his personal credit card. At his hearing, he testified that his business credit card was paid when he left employment with the company, but the amount may not have covered interest and penalties owed. The account discussed in his interview has the same balance as is alleged in SOR ¶ 1.a. The business account is not alleged. Applicant testified it has a zero balance. 77 AE B. 8 Tr. 27-29, 53-56. 9 Applicant may have been unaware of the name of the company handling the collection when he was confronted with the debt by the investigator. 10 Tr. 32-36, 58, 94-96. Other delinquent debts not alleged and the fact that Applicant received IRS cancellation of debt forms for these debts are not considered for disqualifying purposes, but may be 4 In 2010, when Applicant began employment with his present employer, he earned about $70,000. His income increased incrementally. He testified that he has earned $105,000 in annual income for the past three years. Applicant provided a document to show he participated in financial counseling in October 2016. Applicant testified that he recently received an income tax refund of approximately $15,000 to $16,000 that he is saving in the event he loses his job.16 In September 2015, Applicant completed his security clearance application (SCA). In response to section 26, which inquired if in the past seven years Applicant had bills or debts turned over to a collection agency; had any account or credit card suspended, charged off, or canceled for failing to pay as agreed; or had been 120 days delinquent on any debt; or was currently over 120 days delinquent on any debt, Applicant answered “no.” Applicant testified that he was not sure why he checked “no” on the SCA, and “it might have been an error.”17 Applicant told a government investigator that he failed to report the account in SOR ¶ 1.a due to oversight.18 He also testified that he failed to disclose it because, “In my mind I did not feel that, since I started paying on it, I was not delinquent, as far as resuming the payments of the plan.”19 Applicant testified that he did not deliberately fail to disclose his delinquent debts.20 Based on all of the evidence, I did not find Applicant’s testimony credible. A coworker testified on behalf of Applicant. He has known Applicant both professionally and socially for five years and works with him daily. He testified that Applicant’s work performance was consistently above average. He is trustworthy and truthful, and handled sensitive material appropriately. Applicant provided character letters from other coworkers and friends who describe him as dedicated, honest, hardworking, trustworthy, reliable, and loyal.21 considered when apply mitigating conditions, in the whole-person analysis, and in making a credibility assessment. 15 Tr. 27-29, 38, 67-75. 16 Tr. 30-31, 35, 64, 85-87; AE D. 17 Tr. 62. 18 GE 1, 2. 19 Tr. 32. 20 Tr. 31-32, 57-60. 21 Tr. 16-20, 36-38; AE H. 5 Applicant provided copies of performance evaluations that show he consistently meets or exceeds the performance standards of his employer. He provided a copy of a 2014 letter of appreciation.22 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. 22 AE E, F. 6 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.23 The guideline notes several conditions that could raise security concerns. I have considered all of the disqualifying conditions under AG & 19, and the following two are potentially applicable: (a) inability or unwillingness to satisfy debts; and (c) a history of not meeting financial obligations. Applicant has delinquent debts that began to accumulate in 2009, which he was unwilling or unable to resolve. 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 doubt on the individual=s current reliability, trustworthiness, or good judgment; 23 See ISCR Case No. 11-05365 at 3 (App.Bd. May 1, 2012). 7 (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. Applicant has delinquent debts that are unresolved. He has been aware of their delinquency since approximately 2009. Although he told the government investigator that he made $100 payments in 2009 on the debt in SOR ¶ 1.a, he stopped until January 2015, when he began making $50 payments. He began making $25 payments on the debt in SOR ¶ 1.b in January 2017. He agreed to pay a total of $300, with his agreement ending in November 2017. His delinquent debts are recent because they are unresolved. His years of failure to responsibly address and resolve them cast doubt on his current reliability, trustworthiness, and good judgment. AG ¶ 20(a) does not apply to either debt. Applicant attributed his financial problems to a reduction of income after he left his job in 2009 and medical expenses in 2014 and 2015. These were conditions beyond his control. For the full application of AG ¶ 20(b), Applicant must have acted responsibly under the circumstances. Although Applicant’s income was reduced, he has been employed full time since January 2010, and his income has incrementally increased over the years. He did not provide a reasonable explanation for his failure to make any effort to make payments on the debts from 2010 to when his wife began having medical problems, four to five years later. Despite being contacted by both creditors over the years, he did not begin to make payments to the creditor in SOR ¶ 1.a until January 2015. He did not begin to make a payment to the creditor in SOR ¶ 1.b until January 2017. AG ¶ 20(b) has limited application because Applicant has failed to act responsibly in resolving his just debts. There is evidence Applicant received financial counseling in October 2016. Applicant has made payments on the debt in SOR ¶ 1.a since January 2015. His payments occurred before he completed his SCA and background interview. He began paying $25 a month in January 2017 on the debt in SOR ¶ 1.b. The document he provided indicated he agreed to make a payment in December 2016. His document does not reflect that payment. This agreement requires him to pay $300 over 12 months, but does not go beyond that date. The debt owed is more than $10,000. I find only the first part of AG ¶ 20(c) applies. There is insufficient evidence to conclude Applicant’s financial problems are under control. I do not find that Applicant’s agreement to pay $300 on a $10,000 debt that has been delinquent since approximately 2008 and 8 the fact he has been contacted by the creditor repeatedly about the debt for years constitute a good-faith effort to repay his debt. The second part of AG ¶ 20(c) does not apply, as his debts are not under control. AG ¶ 20(d) marginally applies to SOR ¶ 1.a because Applicant has made some effort to resolve the debt, although his payments are minimal, and it occurred before his SCA was initiated. It does not apply to SOR ¶ 1.b. as explained above. Guideline E, Personal Conduct AG ¶ 15 expresses the security concern for personal conduct: Conduct involving questionable judgment, lack of candor, dishonesty, or unwillingness to comply with rules and regulations can raise questions about an individual's reliability, trustworthiness and ability to protect classified information. Of special interest is any failure to provide truthful and candid answers during the security clearance process or any other failure to cooperate with the security clearance process. AG ¶ 16 describes conditions that could raise a security concern and may be disqualifying. I find the following potentially applicable: (a) deliberate omission, concealment, or falsification of relevant facts from any personnel security questionnaire, personal history statement, or similar form used to conduct investigations, determine employment qualifications, award benefits or status, determine security clearance eligibility or trustworthiness, or award fiduciary responsibilities. Applicant was aware he had delinquent debts when he completed his SCA, and he deliberately failed to disclose them. He testified that he received letters and phone calls over the years regarding the delinquent accounts alleged. I did not find his explanations for failing to disclose the delinquent debts credible. The above disqualifying condition applies. The guideline also includes conditions that could mitigate security concerns arising from personal conduct. I have considered the following mitigating conditions under AG ¶ 17: (a) the individual made prompt, good-faith efforts to correct the omission, concealment, or falsification before being confronted with the facts; and (c) the offense is so minor, or so much time has passed, or the behavior is so infrequent, or it happened under such unique circumstances that it is unlikely to recur and does not cast doubt on the individual’s reliability, trustworthiness, or good judgment. 9 There is no evidence that Applicant made a good-faith effort to correct the omission before he was confronted with the facts. I find AG ¶ 17(a) does not apply. I find Applicant’s omissions are serious and cast doubt on his reliability, trustworthiness, and good judgment. There is insufficient evidence to raise AG ¶ 17(c). 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 Guidelines F and E in my whole-person analysis. Some of the factors in AG ¶ 2(a) were addressed under those guidelines, but some warrant additional comment. Applicant is a 51-year-old educated man. He served nine years in the military. He has worked for his present employer since January 2010. Applicant was aware he had two delinquent credit card debts. The creditors repeatedly contacted him. Although his income was reduced in 2010, it was incrementally raised over the years. I have considered the effect his family’s medical expenses had on his ability to address his debts. However, these issues did not occur until four to five years after the debts were delinquent. Of greater concern is Applicant’s failure to honestly disclose his delinquent debts on his SCA. Applicant’s conduct raises questions about his judgment, reliability, and trustworthiness. Overall, the record evidence leaves me with serious questions and doubts about Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant failed to mitigate the security concerns arising under the financial considerations guideline and the personal conduct guideline. Formal Findings 10 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 Subparagraph 1.a: For Applicant Subparagraph 1.b: Against Applicant Paragraph 2, Guideline E: AGAINST APPLICANT Subparagraph 2.a: Against 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