1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) --------------------- ) ISCR Case No. 16-00972 ) Applicant for Security Clearance ) Appearances For Government: Tovah Minster, Esquire, Department Counsel For Applicant: Pro se ______________ Decision ______________ MARSHALL, Jr., Arthur E., Administrative Judge: Statement of the Case On June 22, 2016, the Department of Defense (DOD) Consolidated Adjudications Facility (CAF) issued Applicant a Statement of Reasons (SOR) detailing security concerns under Guideline F (Financial Considerations) and Guideline E (Personal Conduct).1 In a response notarized on July 28, 2016, he admitted one of the 11 allegations raised under Guideline F and denied the sole allegation raised under Guideline E. On August 17, 2016, the Government issued a File of Relevant Material (FORM) with five attachments (“Items”). The case was assigned to me on May 24, 2017. Based on my review of the case file and submissions, I find Applicant failed to mitigate financial considerations security concerns. Findings of Fact Applicant is a 51-year-old employee of a defense contractor. He has worked for the same employer as a welder since 2015. Prior to that, he was a self-employed landscaper for over 20 years. Applicant has earned a high school diploma and an 1 The action was taken under Executive Order 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. 2 associate’s degree. He divorced his first two spouses in 1990 and 2004, respectively. He married his current wife in 2004, the same year he started living at his present address. He has two children over the age of 18 and three stepchildren. From March 1993 through June 2015, Applicant owned a landscaping business. He closed his business due to adverse economic conditions and his failure to generate sufficient income. He then began his current position as a salaried employee. Applicant solely attributes his delinquent debts to events beyond his control (e.g., the economy). During an investigation conducted between September 2015 and October 2015, Applicant noted that while he was capable of meeting his obligations, his “financial situation [was] not good.” (FORM, Item 3 at 2) He noted that his future intent was to pay off all of his debts. It was noted that he had not received financial counseling. In April 2015, Applicant completed a security clearance application (SCA). In response to Section 26: Financial Record – Delinquency Involving Enforcement, he denied having had a judgment entered against him in the preceding seven years; had bills or debts turned over to a collection agency in the preceding seven years; had any accounts suspended, charged off, or cancelled for failure to pay as agreed in the preceding seven years; or been over 120 days delinquent on any debt not previously noted in the SCA. This denial was incorrect inasmuch as such financial delinquencies had been existent within the time period at issue. Applicant denied that his answer was false. His explanation was stated thusly: “I answered truthfully based on my understanding at the time.2 My responses do not constitute conduct involving questionable judgment, lack of candor, dishonesty, or unwillingness to comply with rules and regulations.” (FORM, Item 1, SOR Response, notarized July 28, 2016) At issue are 11 delinquent debts. Including two past-due amounts owed on larger balances, approximately $29,000 is at issue. The debts alleged in the SOR are: 1.a - $14,204 past due on a home mortgage with an approximate total balance of $189,724. Offer extended; status unclear. In July 2016, Applicant was extended an offer for a home loan modification trial period plan, under which he was to pay $1,394.63 per month for a period of time. The signed agreement and the first payment on the plan were both expected on or by August 1, 2016. If the signed agreement was not received by the lender by August 1, 2016, the offer would no longer be available. Applicant’s evidence included a copy of the signed agreement, dated June 22, 2016, but there is no proof of mailing or delivery confirmation reflecting that the statement was timely received. Applicant also provided evidence in a September 25, 2016, bank statement reflecting that $1,394.63 was debited from his bank account on August 19, 2016. Therefore, it is unclear whether the notably late first 2 There is no reference elsewhere in the record elaborating on this explanation (e.g., failure to first check his credit report, change of address causing a misdirection of mail, etc.) or detailing what his understanding of his finances was at the time. 3 payment was accepted by the lender for the purposes of implementing the loan modification plan. (see FORM Response, Bank statement excerpt) 1.b - $1,351 charged off account. Status unknown Applicant attributed this debt to his spouse. 1.c - $1,306 charged off account. Status unknown Applicant attributed this debt to his spouse. 1.d - $1,194 charged off account. Status unknown Applicant attributed this debt to his spouse. 1.e - $11,031 charged off account. Status unknown Applicant attributed this debt to his spouse. 1.f - $1,003 charged off account. Status unknown Applicant attributed this debt to his spouse. 1.g - $169 past due on an account with a total balance of $612. Paid. Applicant attributed this debt to his spouse. Examination of a 2015 credit report indicates that this account and the account noted below at 1.h refer to the same debt. The debt here appears to be the underlying account for the collection account noted at 1.h. While the balances are different, they both have the same account numbers, opening dates, and dates of last activity. (FORM, Item 4, at page 2 of 5) Payment was provided for the debt at 1.h. (FORM Response) Therefore, it may be concluded that an approximately $255 payment made by Applicant addressed both the accounts noted at 1.g and 1.h. 1.h - $255 collection account. Paid. Applicant wrote that he was unable to verify this debt. He further wrote that he is attempting obtain information to verify or refute this item, but provided no documentary evidence reflecting his attempt(s). See above. 1.i - $151 collection account. Paid. Applicant wrote that he was unable to verify this debt. He further wrote that he is attempting obtain information to verify or refute this item, but provided no documentary evidence reflecting his attempt(s). (FORM Response) 1.j - $8,026 adverse judgment. Status unknown. Applicant wrote that he was unable to verify this debt. He further wrote that he is attempting obtain information to verify or refute this item, but provided no documentary evidence reflecting his attempt(s). 1.k - $407 charged off account. Plan initiated; one payment reflected. Applicant initially wrote that he was unable to verify this debt. In response to the FORM, he 4 submitted a payment plan for monthly payments of $25.02 to be made October 2016 through 2020 on a balance of $1,003.99. It is dated September 28, 2016, and notes a last payment date or default date in February 2014. He provided documentary evidence in the form of a September 26, 2016, bank statement reflecting a debit from his account to this creditor on September 7, 2016, for $82, although an unexplained credit from this creditor is noted two lines below from September 8, 2016. The amount of this credit has been redacted.3 In addition, Applicant wrote that he had two other accounts not noted in the SOR for which he has made payment arrangements. (FORM Response, cover letter) He also referenced that he would be sending by facsimile transmission (FAX) proof of a second payment toward his mortgage, but the only subsequent FAX transmission received was another copy of his payment plan on the account noted at 1.k. 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, 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, an “applicant is responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or 3 Although the writing has been blackened, it appears another payment of $82 was made on September 9, 2016, followed by another credit for that same amount on September 12, 2016. As with the previously noted transactions, a $35 debit is indicated between these debits and credits. These latter entries are preceded with blackened overall account balances noted in parenthesis, which often indicates negative account balances. The redacted information makes it unclear as to the significance of these debits and credits, as well as what appears to be $35 in fees that are entered between the debit and credit entries for the transactions related to this creditor. See FORM Response, Bank statement, two pages. 5 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 seeking access to classified information enters into a fiduciary relationship with the Government based on trust and confidence. This relationship transcends normal duty hours. Decisions include consideration of the possible risk the applicant may deliberately or inadvertently fail to safeguard classified information. Section 7 of Executive Order 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 Under AG ¶ 18, the security concern under this guideline is that 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 engaging in illegal acts to generate funds. Here, the Government introduced credible evidence showing Applicant has 10 delinquent accounts and an adverse judgment amounting to significant debt. This is sufficient evidence to invoke two of the available disqualifying conditions: AG ¶ 19(a) inability or unwillingness to satisfy debts; and AG ¶ 19(c) a history of not meeting financial obligations. Five conditions could mitigate these finance-related security concerns: 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; AG ¶ 20(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; 6 AG ¶ 20(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; AG ¶ 20(d) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts; and AG ¶ 20(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 debt cited at SOR allegation 1.a is for $14,204 past due on a mortgage with a total balance of approximately $189,724. Applicant provided documentary evidence indicating he timely signed an offered agreement designed to lead to a modified home loan in order to bring him current on the loan. While the acceptance signature space on the offer is signed and dated before the deadline for submission and acceptance, there is no documentary evidence indicating it was timely received by the lender. Meanwhile, based on Applicant’s submission, it appears the first payment of $1,394.63 on that plan was not submitted until over two weeks after it was scheduled for payment. Consequently, Applicant’s present status in terms of this plan remains unclear. Moreover, the submission of a single transaction does not establish a track record of timely and regular payments on a repayment plan. No documentation was submitted regarding the status of the delinquent debts cited at SOR allegations 1.b-1.f. Applicant only noted that these debts are debts belonging to his spouse. He did not, however, submit documentation reflecting that his wife has assumed sole responsibility for the accounts, or actions on his part to dispute his responsibility for them with either the creditors or a credit reporting bureau. Applicant paid the debt reflected at SOR allegation 1.g, eliminating an obligation for $612. The record reflects that the debts at allegations 1.g and 1.h are the same. Applicant provided evidence he paid the $151 debt reflected at SOR allegation 1.i. He provided no insight on the adverse judgment noted at SOR allegation 1.j, which is over $8,000. Applicant’s documentary evidence shows that the debt reflected at SOR allegation 1.k now has a balance of over $1,000, and he has paid approximately $82 toward this balance. He provided documentary evidence of a payment plan extending into 2020 with monthly payments of $25.02, but no documentary evidence was presented showing that such payments on this plan were initiated. In sum, Applicant has paid about $2,150 toward his overall delinquent debt of nearly $30,000. Meanwhile, the debts he denies have yet to be disputed with the appropriate entities, and there is no documentary evidence regarding any attempts to research the adverse judgment noted in the SOR. He has not received financial counseling. Further, the only explanation offered as to how he acquired these delinquent debts is by reference to adverse economic conditions hurting his landscaping business 7 from some unspecified point until he closed that business in 2015. Consequently, he cites to the economy as being the condition beyond his control leading to his debt. Although AG ¶ 20(b) can be raised as a mitigating condition in the presence of conditions beyond one’s control, such adverse conditions must be accompanied with evidence that “the individual acted responsibly under the circumstances.” At best, AG ¶ 20(b) is raised because Applicant closed his failing business and sought a salaried position as an employee. While the creation of the delinquent debts at issue is thus addressed, there remains the issue of what Applicant has done with those debts, and how his finances are today. While some measures have been made toward the debts at issue -- $2,150 paid of nearly $30,000 in debt, one uninitiated payment plan, and one payment plan where the issue of whether it has been accepted and initiated remains unclear -- there are no clear indications that the problem is being resolved or is now under control.4 Meanwhile, as Applicant stated during his investigation, his present financial situation remains “not good.” Guideline E, Personal Conduct The security concern for personal conduct is set out in AG ¶ 15: 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. The following disqualifying condition is 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. In his April 2015 SCA, Applicant denied that in the preceding seven years he had been subject to any adverse judgments, had any debts turned over to a collection agency, had debts charged-off for failing to pay as agreed, or been over 120 days delinquent on any debts. In response to the allegation that he falsified material facts by answering related questions in the negative, Applicant only wrote: “I answered truthfully based on 4 At best, AG ¶ 20(d) is raised, in part, to the extent that Applicant initiated a good-faith effort to repay or resolve the debts noted at SOR allegations 1.a, 1.g, 1.i, and 1.k. 8 my knowledge at the time,” and noting that his responses did not constitute questionable judgment, lack of candor, dishonesty, or unwillingness to comply with rules and regulations. It is unknown whether Applicant’s inaccurate answers were the result of his failure to stay apprised of his credit report findings, or perhaps his failure to stay timely on his delinquent accounts. Regardless, there is no evidence of a deliberate intent to defraud or mislead. Consequently, in light of his answer, I find none of the available personal conduct disqualifying conditions apply. 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 adjudicative process factors listed at AG ¶ 2(a). Under AG ¶ 2(c) sets forth the need to utilize a whole-person evaluation. I considered the potentially disqualifying and mitigating conditions in light of all the facts and circumstances surrounding this case. I incorporated my comments under the guideline at issue in my whole-person analysis. Applicant is a 51-year-old former landscaper who has worked for the same employer since 2015. He left the landscaping business in 2015 after 20 years because he was not generating sufficient income in that profession during what he described as a poor economy. Twice divorced, he married his current wife in 2004. He has two adult children and three stepchildren. Applicant acquired approximately $30,000 in delinquent debt in his name. He denies responsibility for some of the debts, stating those accounts belong to his wife. However, there is no documentary evidence to that effect, or evidence he has formally disputed the fact that his name is associated with those accounts on his credit report. He denies knowledge of an adverse judgment for approximately $8,000, but failed to provide documentary evidence indicating any effort to research or dispute the matter. Of the two payment plans regarding which Applicant submitted documentary evidence, it is unclear whether the mortgage-related plan was technically accepted and his late payment accepted, and the second payment plan submitted bares no evidence regular payments of $26.01 have been commenced. Applicant did, however, show that he has paid about $2,000 toward his total debt sum. To date, Applicant’s demonstrated efforts have been nominal. The documentary evidence submitted is scant. Applicant related that his present financial situation remains “not good.” Further, although Applicant provided two payment plans and denied responsibility for several of the cited debts, he failed to describe his strategy for approaching the considerable debt at issue. While this process does not require an applicant to satisfy all of his delinquent debts, it does expect an applicant to formulate and initiate a realistic plan for addressing the debts at issue. Here, Applicant’s efforts, as currently documented, fail to satisfy that inquiry. Given the scant information provided, 9 the evidence reflects that the Applicant has failed to mitigate personal conduct and financial considerations security concerns. Clearance 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: Guideline F - Financial Considerations Paragraph 1, Guideline F: AGAINST APPLICANT Subparagraphs 1.a-1.g: Against Applicant Subparagraph 1.h: Against Applicant Subparagraphs 1.I-1.k: Against Applicant Guideline E – Personal Conduct Paragraph 2, Guideline E: FOR APPLICANT Subparagraphs 2.a: 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. _____________________________ Arthur E. Marshall, Jr. Administrative Judge