1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-01388 ) Applicant for Security Clearance ) Appearances For Government: Julie R. Mendez, Esq., Department Counsel For Applicant: Pro se ______________ Decision ______________ GARCIA, Candace Le’i, Administrative Judge: Applicant mitigated the financial considerations security concerns. Eligibility for access to classified information is granted. Statement of the Case On September 28, 2016, the Department of Defense (DOD) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guideline F (financial considerations). The action was taken 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. Applicant responded to the SOR on October 28, 2016, and requested a hearing before an administrative judge. The case was assigned to me on April 18, 2017. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on April 24, 2017, scheduling the hearing for May 10, 2017. I convened the hearing as scheduled. 2 Government Exhibits (GE) 1 through 3 were admitted in evidence without objection. The Government’s amendment to the SOR, November 2016 discovery letter, exhibit list, and demonstrative exhibit were appended to the record as Hearing Exhibits (HE) 1 through 4. Applicant testified at the hearing. At Applicant’s request and with no objection from the Government, I left the record open until May 31, 2017. Applicant timely provided documentation that I admitted as Applicant’s Exhibits (AE) A through K without objection. DOHA received the hearing transcript (Tr.) on May 22, 2017. Procedural Rulings Amendment to the SOR The Government moved to amend the SOR pursuant to ¶ E3.1.17 of the Directive, to withdraw duplicate allegations. Without objection, I granted the motion and SOR ¶¶ 1.f, 1.i, and 1.o were stricken because they are duplicates of SOR ¶¶ 1.n, 1.c, and 1.e, respectively.1 New AG On June 8, 2017, the DOD implemented new AG under the Directive.2 Accordingly, I have applied the June 2017 AG.3 However, because the September 2006 AG were in effect on the date of the hearing, I have also considered the September 2006 AG. Having considered both versions of the AG, I conclude that my decision would have been the same had I applied the September 2006 AG. Findings of Fact Applicant is a 58-year-old employee of a defense contractor. He has worked for his current employer since May 2015. He obtained a bachelor’s degree in physics in 1981. He is married and has one minor child and two adult children, one of whom lives with Applicant.4 Applicant began working as a defense contractor and was first granted a DOD security clearance in 1985. When the contractor company merged with another, Applicant continued working for the new company until he was unexpectedly laid off in 1 HE 1. 2 On December 10, 2016, the Security Executive Agent issued Directive 4 (SEAD-4), establishing a “single, common adjudicative criteria for all covered individuals who require initial or continued eligibility for access to classified information or eligibility to hold a sensitive position.” (SEAD-4 ¶ B, Purpose). The SEAD-4 became effective on June 8, 2017 (SEAD-4 ¶ F, Effective Date). The National Security AG, which are found at Appendix A to SEAD-4, apply to determine eligibility for initial or continued access to classified national security information. (SEAD-4 ¶ C, Applicability). 3 ISCR Case No. 02-00305 at 3 (App. Bd. Feb. 12, 2003) (security clearance decisions must be based on current DOD policy and standards). 4 Tr. at 18-23; GE 1. 3 January 2013, due to a government contract reduction. Applicant’s attempts to obtain another job were hindered by the federal government shutdown. Applicant was unemployed until March 2014, when he obtained employment with another defense contractor. He was laid off again in October 2014, when the company went out of business. He was unemployed for five months until his current employer hired him.5 The SOR alleges a total of $39,700 in financial indebtedness, consisting of three judgments and ten delinquent debts. Applicant admitted all of the SOR allegations in his response to the SOR. The SOR allegations are established by Applicant’s admissions and the credit reports from October 2015 and July 2016.6 SOR ¶ 1.a is a delinquent medical debt for $352. Applicant stated he paid this debt online to a collection firm in early 2016. He did not provide documentation to corroborate his claim.7 SOR ¶ 1.b is a store credit card charged off for $4,891. Applicant indicated he paid $25 monthly directly to the store through automatic draft since late 2014. An October 2014 letter from a collection agency for the store credit card indicates that Applicant’s post-dated check of $25 would be deposited later that month, September 2014 was the date of last payment, and the outstanding balance was $5,041.8 SOR ¶ 1.c is a delinquent store credit card for $3,495. It is only listed on the July 2016 credit report, which reflects that this debt was placed for collection with Midland Funding LLC (Midland). Applicant stated he paid Midland $205 monthly through an electronic check since around early 2014, the balance was $1,200, and he expected to have the debt paid within a few months. A May 2017 letter from Midland for the store credit card indicates that Applicant made 10 payments of $205 between July 2016 and April 2017, and the outstanding balance was $1,233. Applicant stated that SOR ¶ 1.c is the only debt to Midland he had been paying, he did not believe he had any other outstanding debts with Midland, and he was unsure whether his payments of $205 monthly to Midland encompassed any of the other Midland debts in SOR ¶¶ 1.d, 1.e, and 1.l.9 SOR ¶ 1.d is a delinquent credit card for $1,300, placed for collection with Midland. It has a different account number than the Midland debt of SOR ¶ 1.c. In addition, while the underlying creditor for SOR ¶ 1.d is the same as the underlying creditor for SOR ¶ 1.g, both credit reports reflect that SOR ¶¶ 1.d and 1.g have different account numbers. In his SOR response, Applicant stated he had not yet resolved SOR 5 Tr. at 18-23, 30-55; GE 1. 6 Applicant’s SOR response; HE 1; GEs 2-3. 7 Tr. at 30-55; GEs 2-3. 8 Tr. at 30-55; GEs 1-3; AE D. 9 HE 1; Tr. at 28-55; GE 2; AE F. 4 ¶ 1.d. At hearing, Applicant stated he believed he paid it. He did not provide documentation to corroborate his claim.10 Applicant believes SOR ¶ 1.e is a delinquent store credit card for $1,649, though Applicant could not recall for which store, placed for collection with Midland. It has a different account number than the Midland debts of SOR ¶¶ 1.c and 1.d. Applicant stated at hearing that he believed the debt of SOR ¶ 1.e included the judgment of SOR ¶ 1.l.11 SOR ¶ 1.g is a delinquent store account of $3,657 placed for collection. Applicant stated he made arrangements to pay $100 monthly to the collection agency for SOR ¶ 1.g, and he made such payments through automatic draft since late 2014. A December 2014 letter from the creditor for SOR ¶ 1.g reflects the underlying store creditor, and indicates that Applicant’s authorized payment of $100 would be debited from his bank account later that month.12 As previously stated, while the creditor for SOR ¶ 1.g is the same as the underlying creditor of SOR ¶ 1.d, both credit reports reflect that SOR ¶¶ 1.d and 1.g have different collection agencies and account numbers. In addition, while the collection agency for SOR ¶ 1.g is the same as the collection agency that obtained the judgment of SOR ¶ 1.m, an October 2014 letter from the judgment creditor for SOR ¶ 1.m reflects that the original creditor is a different store than that of SOR ¶ 1.g.13 SOR ¶ 1.h is a delinquent account for $1,924. Both credit reports reflect that Applicant is only an authorized user for SOR ¶ 1.h.14 SOR ¶ 1.j is a delinquent account for $3,814. While SOR ¶¶ 1.j and 1.h have the same creditor, the credit reports reflect different account numbers, and SOR ¶ 1.j is listed as Applicant’s individual account. Applicant stated he believed the creditor had written off SOR ¶ 1.j. An IRS Form 1099-C, referencing the same creditor and account number as SOR ¶ 1.j, indicates that SOR ¶ 1.j was canceled in December 2015. Applicant stated he believed he accounted for the income imputed to him, as a result of the 1099-C, in an amendment to his 2015 tax returns.15 SOR ¶ 1.k is a delinquent account for $2,265. Applicant stated he believed SOR ¶¶ 1.k and 1.p are duplicate accounts because while the creditors are different, the 10 Applicant’s SOR response; Tr. at 30-55; GEs 2-3. 11 Applicant’s SOR response; HE 1; Tr. at 30-55; GEs 2-3. 12 Tr. at 30-55; GEs 2-3; AE C. 13 Tr. at 30-55; GEs 2-3; AEs C, E. 14 GE 2 at 4; GE 3 at 6. 15 Tr. at 30-55; GEs 2-3; AE B. 5 amounts owed are the same, and both debts involve one store credit card. Applicant stated he had been paying $150 monthly online to a law firm to resolve SOR ¶ 1.k, and he expected to have the debt paid in June 2017.16 SOR ¶ 1.l is a $4,799 judgment rendered in favor of Midland against Applicant in October 2014. Applicant stated at hearing that he believed the judgment of SOR ¶ 1.l included the debt of SOR ¶ 1.e. Applicant indicated in his SOR response that he worked out an arrangement to pay $150 monthly towards SOR ¶ 1.l.17 A May 2017 ledger from a law firm reflects that Applicant made 31 payments of $150 between August 2014 and May 2017, and a $300 payment in June 2015, for a total of $4,800, with a $65 balance due. This payment arrangement is similar to the arrangement Applicant described for SOR ¶¶ 1.k and 1.l. The ledger also reflects Midland as the creditor. While Midland is not the creditor of SOR ¶ 1.k, it is the creditor of SOR ¶¶ 1.e and 1.l.18 Applicant was summoned to appear in court in October 2014, for a $4,799 claim against Applicant by Midland. The summons reflects the same creditor for whom the law firm was collecting Applicant’s payments and the same amount of debt as the May 2017 ledger. The summons also shows that Midland was the successor in interest for the same creditor as SOR ¶¶ 1.e. and 1.k, and the same store for whom Applicant stated was the underlying creditor for SOR ¶¶ 1.k and 1.l.19 SOR ¶ 1.m is a $2,220 judgment for a store credit card entered against Applicant in October 2014. As previously noted, while the collection agency that obtained the judgment of SOR ¶ 1.m is the same as the collection agency for SOR ¶ 1.g, they have different underlying store creditors. Applicant stated he paid $220 monthly through automatic draft since 2015, but was unsure of the balance. An October 2014 letter from the creditor indicates that it would electronically debit $220 from Applicant’s account later that month, and the balance due was $2,220.20 SOR ¶ 1.n is a $7,084 judgment for a credit card entered against Applicant in April 2014. Applicant provided documentation that he paid this debt in 2016.21 SOR ¶ 1.p is a delinquent account for $2,265. As previously discussed, Applicant stated he believed SOR ¶¶ 1.p and 1.k are duplicate accounts because while the 16 Tr. at 28-55; GEs 1-3. 17 Applicant’s SOR response; Tr. at 30-55; GE 3. 18 Applicant’s SOR response; Tr. at 28-55; GEs 1-3; AE J. 19 Applicant’s SOR response; Tr. at 28-55; GEs 1-3; AEs J and K. 20 Tr. at 30-55; GEs 2-3; AEs C, E. 21 HE 1; Tr. at 28-55; GE 3; AEs G-I. 6 creditors are different, the amounts owed are the same, and both debts involve one store credit card.22 Since Applicant’s unexpected layoff in January 2013, unemployment until March 2014, second layoff in October 2014, and unemployment until May 2015, Applicant has made a good-faith effort to resolve his delinquent debts. He has not incurred additional delinquent debts. He is current on his mortgage for the home he has lived in since December 1996. He stated that he also paid off his car loans, and AE A reflects that he did so for one car in October 2016. Applicant’s current annual income of approximately $122,700, not accounting for his wife’s annual income of approximately $60,000, is about what Applicant made prior to his first layoff. He also expects to start receiving his retirement income of $3,500 monthly in June 2017. While Applicant has unresolved SOR debts, Applicant’s track record of repayment demonstrates a commitment to continue resolving his remaining debts.23 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 to be 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, administrative judges apply the guidelines 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(a), 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.” 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 responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by the applicant or proven by Department Counsel.” The applicant 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 22 Tr. at 30-55; GEs 2-3. 23 Tr. at 18-55; GEs 1-3; AE A. 7 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. Section 7 of EO 10865 provides that adverse 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 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 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 notes several conditions that could raise security concerns under AG ¶ 19. The following are potentially applicable in this case: (a) inability to satisfy debts; and (c) a history of not meeting financial obligations. Applicant was unable to pay his debts. The evidence is sufficient to raise AG ¶¶ 19(a) and 19(c) as disqualifying conditions. I find that SOR ¶¶ 1.e and 1.k are duplicates of SOR ¶ 1.l, and SOR ¶ 1.p is a duplicate of ¶ 1.k. Conditions that could mitigate the financial considerations security concerns are provided under AG ¶ 20. The following are potentially applicable: 8 (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; and (d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts. Since Applicant’s unexpected layoff in January 2013, unemployment until March 2014, second layoff in October 2014, and unemployment until May 2015, Applicant has made a good-faith effort to resolve his delinquent debts. He paid SOR ¶ 1.n. He provided a 1099-C to show that he resolved SOR ¶ 1.j. He demonstrated a track record of payments for SOR ¶¶ 1.c. and 1.l. He began paying SOR ¶¶ 1.b, 1.g, and 1.m. He is current on his mortgage for the home he has lived in since December 1996. He stated that he paid off his car loans, and demonstrated that he did so for one car in October 2016. He has not incurred additional delinquent debts. While Applicant has unresolved SOR debts, Applicant has demonstrated a track record of repayment and has the means to continue to resolve his remaining debts. AG ¶¶ 20(a) to 20(c) are applicable. 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(d): (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 9 under Guideline F in my whole-person analysis. While Applicant has unresolved SOR debts, there is sufficient evidence that Applicant is committed to resolving them. Overall, the record evidence leaves me without questions and doubts as to Applicant’s eligibility and suitability for a security clearance. I conclude Applicant mitigated the financial considerations security concerns. 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: For Applicant Subparagraphs 1.f, 1.i, 1.o: Withdrawn Subparagraphs 1.a - 1.e, 1.g - 1.h, 1.j - 1.n, 1.p: For Applicant Conclusion In light of all of the circumstances presented by the record in this case, it is clearly consistent with the national interest to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is granted. ________________________ Candace Le’i Garcia Administrative Judge