1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) [Redacted] ) ISCR Case No. 16-01209 ) Applicant for Security Clearance ) Appearances For Government: Nicole A. Smith, Esq., Department Counsel For Applicant: Pro se ______________ Decision ______________ FOREMAN, LeRoy F., Administrative Judge: This case involves security concerns raised under Guideline F (Financial Considerations). Eligibility for access to classified information is denied. Statement of the Case Applicant submitted a security clearance application (SCA) on November 12, 2014. On July 8, 2016, the Department of Defense Consolidated Adjudications Facility (DOD CAF) sent him a Statement of Reasons (SOR) alleging security concerns under Guideline F. The DOD CAF acted under Executive Order (Exec. Or.) 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) implemented by the DOD on September 1, 2006. The adjudicative guidelines are codified in 32 C.F.R. § 154, Appendix H (2006), and they replaced the guidelines in Enclosure 2 to the Directive. Applicant answered the SOR on August 15, 2016, and requested a hearing before an administrative judge. Department Counsel was ready to proceed on February 2 27, 2017, and the case was assigned to me on March 2, 2017. On March 3, 2017, the Defense Office of Hearings and Appeals (DOHA) notified Applicant that the hearing was scheduled for March 21, 2017. I convened the hearing as scheduled. Government Exhibits (GX) 1 through 4 were admitted in evidence without objection. Applicant testified and submitted Applicant’s Exhibits (AX) A through C, which were admitted without objection. I kept the record open until March 31, 2017, to enable him to submit additional evidence. He timely submitted AX D and E, which were admitted without objection. DOHA received a transcript (Tr.) on March 31, 2017, but it was incomplete. DOHA received a complete transcript on May 25, 2017. Findings of Fact1 In his answer to the SOR, Applicant admitted the debts alleged in SOR ¶¶ 1.a- 1.o and 1.q-1.s. He stated that the debt alleged in SOR ¶ 1.b was the same debt as alleged in SOR ¶ 1.r, which he admitted. He admitted the Chapter 7 bankruptcy alleged in SOR ¶ 1.p. His admissions in his answer and at the hearing are incorporated in my findings of fact. Applicant is a 63-year-old ship designer employed by a defense contractor. He previously held a security clearance but does not have a current active clearance. (Tr. 8.) Applicant served on active duty in the U.S. Army from February 1971 to September 1973 and was discharged under other than honorable conditions after being convicted in a civilian court of robbery. He was sentenced as a juvenile in December 1972, spent nine months in a juvenile facility, and completed one year of probation. (GX 1 at 35-36.) Applicant married in June 1997 and has two adult daughters from previous relationships. He was employed by a defense contractors from January 2000 to November 2008. He testified that his financial problems began around 2006, when he and his wife decided to buy a larger home so that his daughter, a single mother, and her three children could live with them. After about a year, he realized that his income “just wasn’t enough to support everything that was going on.” (Tr. 30.) He left his job with a defense contractor and began working for a private contractor, earning twice as much, but with no benefits. (Tr. 30.) He was laid off when his employer’s contract expired, and he was unemployed from November 2008 to August 2009. He and his wife filed a Chapter 7 bankruptcy petition in March 2009 and received a discharge in July 2009. About $420,000 was discharged. Applicant was employed by a defense contractor from August 2009 to November 2010, unemployed from November 2010 to May 2011, and employed in the private sector from May 2011 until July 2014, when he was hired by a subcontractor for his 1 Applicant’s personal information is extracted from his security clearance application (GX 1) unless otherwise indicated by a parenthetical citation to the record. 3 current employer. He was hired by his current employer in November 2014 in a probationary status. He became a permanent employee with medical benefits at the end of January 2015. Before his medical benefits became effective, he was hospitalized twice for treatment of his diabetes, and he incurred about $12,000 in medical expenses. All his medical bills that were incurred from November 2010 to January 2015 were not covered by medical insurance. (Tr. 30-31, 37, 41; GX 2 at 4; GX 3 at 1, 4.) The SOR alleged 18 delinquent debts and the Chapter 7 bankruptcy (SOR ¶ 1.p). The debts are reflected in his credit bureau reports (CBRs) from November 2014 (GX 4) and March 2016 (GX 3.), and he was questioned about them during a personal subject interview (PSI) in February 2015. Thirteen of the debts alleged in the SOR were medical debts, incurred by Applicant at a time when he did not have medical insurance. (SOR ¶¶ 1.a, 1.c-1.g, 1.i- 1.n, and 1.q.) All the medical debts have been consolidated by one collection agency, and Applicant has been paying the collection agency $100 per month since July 2016. (AX A; AX D.) He testified that the total balance due on his medical debts is now about $8,000. (Tr. 26.) The debts alleged in SOR ¶¶ 1.b (collection account for $4,052) and 1.r (collection account for $3,562) are the same debt. The debt was incurred around November 2011, when Applicant terminated his apartment lease early to accept employment in another state. Applicant made two $700 payments on this debt in February 2012 and July 2012. (AX B; AX C) He testified that he was financially unable to continue the payments after July 2012. He contacted the collection agency about six months before the hearing, after receiving the SOR, and he received an offer to settle the debt for $2,800. He testified that he did not accept the offer at the time because he could not afford to pay it. (Tr. 43-45.) He did not follow up on the offer or have any further contact with the collection company. (Tr. 48.) Applicant disputed the $325 telecommunication bill alleged in SOR ¶ 1.h and reflected in the March 2016 CBR. (GX 3 at 2.) However, he admitted it in his answer to the SOR and promised to pay it. He currently has service with the creditor, but it is in his wife’s name only. (Tr. 49.) After the hearing, he submitted a bill from the creditor in his name, not his wife’s, reflecting a current debt for $325 and Applicant’s handwritten notation that the bill was paid on March 22, 2017. (AX E at 3.) He presented no evidence from the creditor reflecting payment of the debt. The $65 debt to a retail pharmacy alleged in SOR ¶ 1.o is unresolved. Applicant admitted the debt in his answer to the SOR and testified that the debt probably was incurred by his wife and was unpaid. (Tr. 46.) Applicant’s answer to the SOR reflects that it is not included in the payments of $100 per month for his medical debts. The $215 debt alleged in SOR ¶ 1.s is unresolved. Applicant testified that it was for a red-light violation. It was referred for collection on a date not reflected in the 4 November 2014 CBR. (GX 4 at 10.) Applicant testified he had made no attempts to resolve the debt. (Tr. 47.) Applicant’s annual salary is about $97,000. His wife earns about $23,000. He testified that he has “pretty much nothing” left each month after paying all his bills. (Tr. 32.) He provides financial assistance to his grandchildren by helping the older ones (ages 23 and 22) with the payments on their car insurance and helping his 17-year-old granddaughter with college fees. (Tr. 33-34.) He has one credit card with a $500 limit and no delinquent credit-card accounts. The November 2014 CBR reflects that he leased a luxury car in November 2007 incurring an obligation of $41,296, which was discharged in his Chapter 7 bankruptcy. (GX 4 at 4.) He leased another luxury car in September 2010 and completed the terms of the lease. (GX 4 at 5.) The March 2016 CBR reflects that he borrowed $44,846 to purchase a luxury car in November 2013, and paid off the loan. It also reflects that he borrowed $44,281 in February 2015 to purchase a luxury car, his payments are $816 per month, and the payments are current. (GX 3 at 3-4.) Policies “[N]o one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). As Commander in Chief, the President has the authority to “control access to information bearing on national security and to determine whether an individual is sufficiently trustworthy to have access to such information.” Id. at 527. The President has authorized the Secretary of Defense or his designee to grant applicants eligibility for access to classified information “only upon a finding that it is clearly consistent with the national interest to do so.” Exec. Or. 10865 § 2. Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, an administrative judge applies these guidelines in conjunction with an evaluation of the whole person. An administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. An administrative judge must consider all available and reliable information about the person, past and present, favorable and unfavorable. The Government reposes a high degree of trust and confidence in persons with access to classified information. This relationship transcends normal duty hours and endures throughout off-duty hours. 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 about potential, rather than actual, risk of compromise of classified information. Clearance decisions must be made “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” Exec. Or. 5 10865 § 7. Thus, a decision to deny a security clearance is merely an indication the applicant has not met the strict guidelines the President and the Secretary of Defense have established for issuing a clearance. Initially, the Government must establish, by substantial evidence, conditions in the personal or professional history of the applicant that may disqualify the applicant from being eligible for access to classified information. The Government has the burden of establishing controverted facts alleged in the SOR. See Egan, 484 U.S. at 531. “Substantial evidence” is “more than a scintilla but less than a preponderance.” See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). The guidelines presume a nexus or rational connection between proven conduct under any of the criteria listed therein and an applicant’s security suitability. See ISCR Case No. 92-1106 at 3, 1993 WL 545051 at *3 (App. Bd. Oct. 7, 1993). Once the Government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. Directive ¶ E3.1.15. An applicant has the burden of proving a mitigating condition, and the burden of disproving it never shifts to the Government. See ISCR Case No. 02- 31154 at 5 (App. Bd. Sep. 22, 2005). An applicant “has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue his security clearance.” ISCR Case No. 01-20700 at 3 (App. Bd. Dec. 19, 2002). “[S]ecurity clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531; see AG ¶ 2(b). Analysis Guideline F, Financial Considerations The concern under this guideline 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 a person might knowingly compromise classified information to raise money. It encompasses concerns about a person’s self-control, judgment, and other qualities essential to protecting classified information. A person who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information. See ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012). 6 The evidence reflects that the debts alleged in SOR ¶¶ 1.b and 1.r are duplicates. When the same conduct is alleged twice in the SOR under the same guideline, one of the duplicative allegations should be resolved in Applicant=s favor. See ISCR Case No. 03-04704 at 3 (App. Bd. Sep. 21, 2005) (same debt alleged twice). Accordingly, I have resolved SOR ¶ 1.b in Applicant’s favor. Applicant’s admissions and the CBRs submitted at the hearing establish two disqualifying conditions under this guideline: AG ¶ 19(a) (“inability or unwillingness to satisfy debts”) and AG ¶ 19(c) (“a history of not meeting financial obligations”). The following mitigating conditions under this guideline are potentially applicable: 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; 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. AG ¶ 20(a) is not established. Applicant’s debts are numerous, recent, and were not incurred under circumstances making them unlikely to recur. AG ¶ 20(b) is established for the Chapter 7 bankruptcy. Although there is evidence suggesting that Applicant was living beyond his means by buying a house he could not afford and leasing luxury cars, the primary cause of the bankruptcy was his unemployment. However, this mitigating condition is not established for the debts alleged in SOR ¶¶ 1.h, 1.o, 1.r, and 1.s. Although Applicant’s periods of unemployment and uninsured medical expenses were conditions largely beyond his control, he has not acted responsibly. He and his wife earn about $120,000 per year, but he claimed at the hearing that he has no disposable income available to pay his delinquent debts. However, the evidence reflects that he has chosen to give priority to purchasing luxury 7 items instead of accepting the offer of settlement for premature termination of the lease, paying the pharmacy debt, or paying his traffic ticket. AG ¶ 20(c) is not fully established. Applicant has not sought or received financial counseling beyond what was required for his Chapter 7 bankruptcy in 2009. His financial situation is substantially improved, but the debts in SOR ¶¶ 1.b and 1.r (duplicates for the premature lease termination), 1.h (telecommunications debt), 1.o (pharmacy debt), and 1.s (traffic ticket) are not resolved and Applicant submitted no evidence of any recent effort to resolve them. AG ¶ 20(d) is established for the medical debts alleged in SOR ¶¶ 1.a, 1.c-1.g, 1.i-1.n, and 1.q. He has not presented evidence of any recent efforts to resolve the debts alleged in SOR ¶¶ 1.h, 1.r, 1.o, and 1.s. AG ¶ 20(d) is not established for the Chapter 7 bankruptcy. Applicant bought a home that he could not afford in 2006. His bankruptcy was triggered by his loss of employment in November 2008. While bankruptcy is a legal and sometimes prudent course of action, it does not constitute a good-faith effort to pay delinquent debts. “[A]n applicant must do more than merely show that he or she relied on a legally available option (such as bankruptcy) in order to claim the benefit of this [mitigating condition.’”] ISCR Case No. 03-20327 (App. Bd. Oct. 26, 2006). AG ¶ 20(e) is relevant to the telecommunications debt alleged in SOR ¶ 1.h, but it is not established. The CBRs and the bill submitted by Applicant (AX E) reflect an unresolved debt in his name for $325. He claimed that he paid it, but he submitted no documentation of payment. Whole-Person Concept 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. In applying the whole- person concept, an 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. An 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. 8 I have incorporated my comments under Guideline F in my whole-person analysis, and I have considered the factors in AG ¶ 2(a). Applicant is adhering to his payment plan for the medical debts and has substantially reduced the amount due. He has resolved or is resolving most of his delinquent debts. His unresolved debts in SOR ¶¶ 1.h (telecommunications), 1.o (pharmacy), 1.r (lease termination), and 1.s (traffic offense) total only about $4,167. However, Applicant’s resolution of most of his debts does not end the inquiry. A security clearance adjudication is an evaluation of an individual’s judgment, reliability, and trustworthiness. It is not a debt-collection procedure. ISCR Case No. 09-02160 (App. Bd. Jun. 21, 2010.) Applicant claims that he has no net monthly remainder, even though he and his wife have a combined annual income of about $120,000. He disclosed numerous delinquent debts in his SCA in November 2014, and he was questioned about them in the January 2015 PSI. At the hearing, he claimed that he could not afford to accept the settlement offer for the debt alleged in SOR ¶ 1.r. Nevertheless, in February 2015, he committed himself to a car payment of $816 per month. His pattern of financial conduct reflects a lack of a sense of responsibility toward his creditors and leaves me with doubts about his current reliability, trustworthiness, and good judgment After weighing the disqualifying and mitigating conditions under Guideline F, and evaluating all the evidence in the context of the whole person, I conclude Applicant has not mitigated the security concerns raised by his delinquent debts. Accordingly, I conclude he has not carried his burden of showing that it is clearly consistent with the national interest to grant him eligibility for access to classified information. Formal Findings I make the following formal findings on the allegations in the SOR: Paragraph 1, Guideline F (Financial Considerations): AGAINST APPLICANT Subparagraphs 1.a-1.g: For Applicant Subparagraph 1.h: Against Applicant Subparagraphs 1.i-1.n: For Applicant Subparagraph 1.o: Against Applicant Subparagraphs 1.p-1.q: For Applicant Subparagraphs 1.r-1.s: Against Applicant 9 Conclusion I conclude that it is not clearly consistent with the national interest to grant Applicant eligibility for access to classified information. Clearance is denied. LeRoy F. Foreman Administrative Judge