1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ------------------------------------ ) ISCR Case No. 16-00978 ) ) Applicant for Security Clearance ) Appearances For Government: Pamela C. Benson, Esquire, Department Counsel For Applicant: Pro se ______________ Decision ______________ HOWE, Philip S., Administrative Judge: On September 1, 2015, Applicant submitted his Electronic Questionnaire for Investigations Processing (e-QIP). On July 12, 2016, the Department of Defense Consolidated Adjudications Facility (DODCAF) issued Applicant a Statement of Reasons (SOR) detailing security concerns under Guideline F (Financial Considerations). The action was taken under Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) effective within the Department of Defense on June 8, 2017. Applicant acknowledged receipt of the SOR on July 15, 2016. He answered the SOR in writing on August 8, 2016, and requested a hearing before an administrative judge. The Defense Office of Hearings and Appeals (DOHA) received the request in August 2016. Department Counsel was prepared to proceed on October 5, 2016, and I received the case assignment on February 28, 2017, after the case was transferred from another administrative judge. DOHA issued a Notice of Hearing on February 2, 2 2017, and an amended Notice on March 8, 2017. I convened the hearing as scheduled on March 13, 2017. The Government offered Exhibits 1 through 5, which were received without objection. Applicant testified and submitted Exhibit A, without objection. This exhibit was an update to the credit reports he attached to his Answer. I gave Applicant until March 27, 2017, to submit additional information about his payment efforts and debt status on the delinquent debts. No information was received. DOHA received the transcript of the hearing (Tr.) on March 29, 2017. Based upon a review of the pleadings, exhibits, and testimony, eligibility for access to classified information is denied. Findings of Fact In his Answer to the SOR, Applicant admitted the factual allegations in Subparagraphs 1.a, 1.b, 1.c, 1.e to 1.g, 1.i, and 1.k of the SOR, with explanations. He denied the factual allegations in Subparagraphs 1.d, 1.h, 1.j, and 1.l to 1.w of the SOR. He also provided additional information to support his request for eligibility for a security clearance. Applicant is 47 years old and is married. He has three sons. He has two years of college work beyond his high school degree. He works for a defense contractor. He served in the U.S. Navy from August 1999 to September 2004. (Tr. 14-18; Exhibit 1) Applicant has 23 delinquent debts totaling $20,261. He owes creditors for telephone services, education loans, veteran’s education repayments, utility bills, credit card debts, and medical accounts, among other categories of debts. Applicant did not list any delinquent debts on his e-QIP in Section 26, the financial question area of the form. The SOR did not allege falsification, but he discussed how he answered the e-QIP at the hearing. (Tr. 28-30; Exhibits 1-5; Answer) About two years ago, Applicant retained a law firm that helps correct a client’s credit record by filing disputes with the three national credit reporting agencies. He paid the law firm $99 for a year’s service. Applicant submitted reports from that law firm that 55 debts were removed from his credit report in 2016 without payments being made to the creditors. The reports from this law firm do not specify the amounts of the debts or account numbers of debts “removed” from Applicant’s credit records. There is no showing that any debts were paid and “removed.” The latest credit report shows certain listed debts are “disputed after resolution” by Applicant, without any explanation as to what that designation means. (Tr. 34-36, 47, 54; Exhibits 2-5, A; Answer) Applicant also claims his personal information was “compromised” by an internet hacker. Applicant submitted a standard letter the Office of Personnel Management (OPM) sent to anyone whose background information was obtained illegally by internet hackers. He also submitted a letter from a TRICARE contractor, dated November 3, 2011, which stated Applicant’s personal information was on a computer tape stolen from a contract employee’s car. He did not provide any documents to show what information 3 was taken or how his debts and credit record were affected adversely by either incident. (Tr. 34-36, 47, 54; Exhibits 2-5, A; Answer) Applicant owes a telephone company $1,990 from service provided from 2013 to 2015 (Subparagraph 1.a). Applicant obtained phones for himself and his wife when he worked at a hospital at a discount rate. The service became too expensive for him and he tried to cancel it before the contract expired. This debt consists of some monthly telephone fees and the penalty for early termination. When he left the hospital employment, he was no longer in this telephone program. His contract was for two years. He contacted the company and was trying to arrange an installment payment plan. He has not arranged that repayment plan because he put his efforts aside while he tried to pay other debts. This debt is unresolved. (Tr. 21-23; Exhibits 2-5, A; Answer) Applicant’s tax refunds were withheld by the Internal Revenue Service (IRS) and sent to the Department of Veteran’s Affairs (VA) to pay his VA education loan overpayments (Subparagraph 1.b for $1,579 and Subparagraph 1.c for $611). Applicant thinks those two debts are paid. The credit reports show these accounts as “paid collections.” Applicant did not voluntarily or in good-faith pay them. (Tr.22-24; Exhibits 2-5, A; Answer) Applicant owes $258 on a loan (Subparagraph 1.d). He thinks it was paid but has no proof. He denies he owes this debt. It is unresolved. (Tr. 32; Exhibits 2-5; Answer) Applicant owes a credit union $6,654 on a truck loan (Subparagraph 1.e). He returned the truck to the lender about three months before the hearing. He became delinquent on the loan in 2011. He owes the same credit union $1,584 on a Christmas loan (Subparagraph 1.f). He thinks the loan has been paid down to about $580 but has no documentary proof. He admits he owes both loans. He has been trying to make monthly payments. The credit union combined both loans into one account and his repayment plan starts in April 2017, after the hearing. The amount now owed is just under $8,000. These two debts are unresolved. (Tr. 42-44; Exhibits 2-5, A; Answer) Applicant owes a university $1,322 (Subparagraph 1.g) since 2014 for on-line courses he took. He had a deferment of payment on this debt, which has now expired. This debt is unresolved. (Tr. 44, 45; Exhibit 2-5, A; Answer) Applicant owes a collector $1,260 (Subparagraph 1.h) and $65 (Subparagraph 1.t). He denies he owes these debts. The first debt is a medical account. He does not know to what treatment the debt relates. He claims he is paying $100 monthly on the larger debt but had no documentary proof of payment. The $65 debt he admitted was not paid. Both debts are unresolved. (Tr. 45, 46, 53; Exhibits 2-5, A; Answer) Applicant owes a bank a debt of $1,002 (Subparagraph 1.i) for a credit card. He admits this debt. He is trying to contact the creditor to determine the validity of the debt because he is not certain what it is. This debt is unresolved. (Tr. 46, 47, 51; Exhibits 2- 5, A; Answer) 4 Applicant owes an educational institution $917 (Subparagraph 1.j), which he denies owing. He claims he cancelled the class before the close-out date. This course was an on-line instruction his wife took to become a medical assistant. This debt is not resolved. (Tr. 51, 52; Exhibits 2-5, A; Answer) Applicant claims he is paying the utility bill for natural gas alleged in Subparagraph 1.k for $908, but did not submit any proof of payment. This debt is unresolved. (Tr. 52; Exhibits 2-5, A; Answer) Applicant denies that he owes the remaining delinquent debts listed in SOR, Subparagraphs 1.l to 1.w, because the law firm has “removed” them from his credit report. However, Applicant has not paid any money to resolve these debts. He believes that the internet service provider listed in Subparagraph 1.n is paid because he has the same provider now. He has no documentary proof of payment. Applicant admitted he is not certain which debts have actually been paid. He did not submit any documents to show that the debts were paid. (Tr. 52-55; Exhibits 2-5, A; Answer) Applicant submitted a letter from the U.S. Department of Education loan servicing agency granting him forbearance on his student loans. The letter is dated October 7, 2015. The amount he owes is about $8,400. The original loans date from 2012. He also has a current deferment based on a recent education enrollment for the same loans. The deferment is from January 2016 to February 2020. Applicant submitted these letters, although these student loans are not listed in the SOR. (Tr. 54, 55; Exhibits 2-5, A; Answer) Applicant had some financial counseling years ago when he was on active duty with the Navy. He called a local law firm to determine how it might help him. (Tr. 55, 56) Applicant earns about $3,200 every month after all deductions. He owns one car. He does not have any credit cards. His checking account has only a minimal amount of money in it. He uses a debit card for purchases. (Tr. 66-68; Exhibit 1) Policies When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines (AG). In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which are useful 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 (AG ¶ 2(a)). 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 5 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 national security eligibility 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 avoided drawing 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 the applicant or proven by Department Counsel, and has the ultimate burden of persuasion as to obtaining a favorable clearance 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 protect or 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. 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 Executive Order 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information). Analysis Guideline F, Financial Considerations The security concern relating to the guideline for Financial Considerations is set out in AG & 18: Failure 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 or sensitive information. Financial distress can also be caused or exacerbated by, and thus can be a possible indicator of, other issues of personnel security concern such as excessive gambling, mental health conditions, substance misuse, or alcohol abuse or dependence. An 6 individual who is financially overextended is at greater risk of having to engage in illegal or otherwise questionable acts to generate funds. Affluence that cannot be explained by known sources of income is also a security concern insofar as it may result from criminal activity, including espionage. The guideline at AG ¶ 19 contains nine disqualifying conditions that could raise security concerns. Three conditions are applicable to the facts found in this case: (a) inability to satisfy debts; (b) unwillingness to satisfy debts regardless of the ability to do so; and (c) a history of not meeting financial obligations. Applicant accumulated $20,261of delinquent debt, as alleged in the SOR, from 2011 to the present time that remains unpaid. Applicant has 23 delinquent debts listed in the SOR. The evidence raises all of the above security concerns, thereby shifting the burden to Applicant to rebut, extenuate, or mitigate those concerns. The guideline in AG ¶ 20 contains seven conditions that could mitigate security concerns arising from financial difficulties. While four possible mitigating conditions might apply, none apply in this case: (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, a death, divorce or separation, clear victimization by predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances; (c) the individual has received or is receiving counseling for the problem from a legitimate and credible source, such as a non-profit credit counselling service, and there are clear indications that the problem is being resolved or is under control; and (d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts. None of the above mitigating conditions apply. Applicant’s delinquent debts date back to 2011. He has not taken any good-faith voluntary efforts to resolve them by payment, or installment payment agreements, or responded to the creditors’ demands 7 for payment. He has no legitimate basis to dispute any debt, nor has he submitted any documents to show he did dispute them. He has not shown that his delinquent debts are under control. Applicant was asked about his student loans at the hearing. He submitted documents to show they were deferred. They are not alleged in the SOR. Therefore, I did not consider them under the financial considerations guideline, even though Applicant submitted in his Answer those deferment documents. 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 an applicant’s conduct and all the 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. AG ¶ 2(c) requires each case must be judged on its own merits. 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. Applicant has not taken any action to resolve his delinquent debts as they became delinquent or in the eight months between receiving the SOR and the hearing. He did not disclose any debts on his e- QIP, which raises questions about his credibility then and now. His Answer and testimony revealed additional significant student loan debt which is unresolved. He did not show any change in behavior regarding the debts. The likelihood they will remain unpaid or unresolved is high. Overall, the record evidence leaves me with substantial questions or doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant did not mitigate the security concerns arising from his financial considerations. 8 Formal Findings Formal findings for or against Applicant on the allegations set forth in the SOR, as required by ¶ E3.1.25 of Enclosure 3 of the Directive, are: Paragraph 1, Guideline F: AGAINST APPLICANT Subparagraphs 1.a to 1.w: 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 eligibility for a security clearance. Eligibility for access to classified information is denied. _________________ PHILIP S. HOWE Administrative Judge