1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ADP Case No. 16-01489 ) Applicant for Public Trust Position ) Appearances For Government: Andre Gregorian, Department Counsel For Applicant: Pro se __________ Decision __________ DAM, Shari, Administrative Judge: Applicant did not mitigate the trustworthiness concerns raised under the guideline for financial considerations. National security eligibility is denied. History of the Case On June 1, 2015, Applicant submitted an application for public trust position (SF- 85P). On July 13, 2016, the Department of Defense Consolidated Adjudications Facility (DoD CAF) issued Applicant a Statement of Reasons (SOR), alleging trustworthiness concerns under Guideline F, Financial Considerations. 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 effective on September 1, 2006. This decision applies the New Adjudicative Guidelines (AG) that came into effect on June 8, 2017.1 Applicant answered the SOR in writing on August 10, 2016 (Answer), and requested a hearing before an administrative judge. The Defense Office of Hearings 1I considered the previous Adjudicative Guidelines, effective September 1, 2006, as well as the new Adjudicative Guidelines, effective June 8, 2017. My decision would be the same if the case was considered under the previous Adjudicative Guidelines. 2 and Appeals (DOHA) assigned the case to me on October 7, 2016. It issued a Notice of Hearing on December 21, 2016, scheduling the hearing for January 19, 2017. On January 6, 2017, DOHA issued an amended Notice of Hearing rescheduling the hearing to January 17, 2017. The hearing convened as re-scheduled. Department Counsel offered Government Exhibits (GE) 1 through 4 into evidence. Applicant testified, and offered Applicant Exhibits (AE) A through P into evidence. All exhibits were admitted without objection. DOHA received the transcript of the hearing (Tr.) on January 25, 2017. The record remained open until February 10, 2017, to give Applicant an opportunity to provide additional exhibits. That deadline was extended to March 20, 2017. Applicant submitted AE Q through U. Department Counsel had no objections to those exhibits and they are admitted into the record. Findings of Fact Applicant admitted all 15 allegations in the SOR, and provided explanations. Her admissions are incorporated into these findings. Applicant is 48 years old and unmarried. She has a 28-year-old son, who no longer lives with her. Applicant has earned 55 college credits. She has certifications in computer technology and phlebotomy. She began working for her current employer in June 2015. She performs some community service. (Tr. 13-17.) Applicant attributed her financial problems to several factors. They include: in 2008 her ill father moved in with her until his death in 2014; a $3,000 funeral for her father; being a single mother; insufficient money after she moved for her job; periods of unemployment, from March 2015 to June 2015, September 2009 to March 2010, and June 2012 through November 2012; and money mismanagement. (Tr. 18-19; 27-30, 66.) Applicant’s annual salary is $65,000. It is the largest salary she has earned. Prior to this job, she earned between $43,000 and $48,000 annually. (Tr. 30-31.) According to her budget, her net monthly income is $5,416 and expenses are $3,192, leaving about $1,658 remaining. Recently, she began a weekend position with a hospital to earn additional money. She has not sought credit or financial counseling since she was about 30 years old. (Tr. 67-68.) Applicant sends her mother $200 to $300 each month to help pay expenses for Applicant’s son, and two grandchildren, who live with her mother. (Tr. 65; AE A.) Other than one student loan, mentioned below, all of Applicant’s student loans are consolidated. They were deferred until December 2016. She began making $100 monthly payments toward these consolidated loans this month. (Tr. 33-34.) Applicant owes state taxes for years 2003 to 2012, including the monies owed for the tax liens filed in 2008 and 2009, as alleged in the SOR.2 As of January 24, 2017, 2 The SOR did not allege the specific state tax years that underlie the 2008 and 2009 liens, and the evidence does not identify the years. (Tr. 42.) Only the two alleged liens will be analyzed as potential 3 she owed $13,862, and agreed to begin making automatic monthly payments of $240 on March 15, 2017. Her agreement is for 60 months. She previously made monthly payments of $192 on a tax payment plan she had negotiated with the state. She made those payments for six months, and then stopped in March 2015 because she did not have enough money. (Tr. 47-48; AE M, AE P.) Based on credit bureau reports (CBR) from June 2015 and April 2016, the SOR alleged 15 delinquent debts, which became delinquent between 2008 and 2015, and totaled $12,667. (GE 2, GE 3.) The status of each debt is as follows: 1. (SOR ¶ 1.a) The $6,381 student loan was charged off in 2015. Applicant negotiated a $797 settlement on January 9, 2017, and paid it on January 31, 2017. (Tr. 32; AE F.) This debt is resolved. 2. (SOR ¶ 1.b) The $872 charged off utility bill was paid on January 31, 2017. (AE O.) It is resolved. 3. (SOR ¶ 1.c) The $403 debt was owed to a cable provider for a cancellation fee. Applicant paid it on March 15, 2017. (Tr. 51; AE S.) It is resolved. 4. (SOR ¶ 1.d) The $307 debt was owed to collection agency for a utility bill. It was removed from her CBR in August 2016. In January 2017, the agency notified Applicant that it was discontinuing collection efforts. (Tr. 55; AE L.) It is resolved. 5. (SOR ¶ 1.e) The $223 debt is owed to the same telecommunications creditor as listed in ¶ 1.c. Applicant paid this debt on January 28, 2017. (AE N.) It is resolved. 6. (SOR ¶ 1.f) The $202 debt was owed to gas company. Applicant stated she paid it on January 31, 2017. (AE S.) It is resolved. 7. (SOR ¶ 1.g) The $116 is an unpaid medical debt. It was removed from her CBR in May 2016. She spoke to the creditor and inquired about paying it. She said the creditor does not have a record of it. (AE L; AE U.) It is resolved. 8. (SOR ¶ 1.h) The $76 medical debt was paid on January 13, 2017. (AE D.) It is resolved. 9. (SOR ¶ 1.i) The $28 medical debt was paid on January 30, 2017. (AE P.) It is resolved. disqualifying conditions. However, all unpaid state tax years, from 2003 to 2012, may be considered under the analysis of mitigating conditions and whole-person concept, in addition to Applicant’s credibility. 4 10. (SOR ¶ 1.j) The $2,298 state income tax lien was entered 2008.3 It remains unresolved. 11. (SOR ¶ 1.k) The $979 state income tax lien was entered 2009. It remains unresolved. 12. (SOR ¶ 1.l) The $306 water debt was paid on March 20, 2017. (AE Q.) It is resolved. 13. (SOR ¶ 1.m) The $244 cable debt was closed in 2011 by the creditor. (AE R.) It is resolved. 14. (SOR ¶ 1.n) This $50 debt is owed to a city for parking tickets. Applicant spoke to the city on January 24, 2017. The city has no information about it. (AE U.) It is resolved. 15. (SOR ¶ 1.o) This $182 debt owed to an insurance company was paid on January 13, 2017. (AE E.) This debt is resolved. Applicant submitted her 2016 mid-year and year-end performance evaluations. Her supervisor described her as a “strong team contributor,” who provided “solid support” for the team. (AE J, AE K.) Policies Positions designated as ADP-I/II/III are classified as “sensitive positions.” (See Regulation ¶¶ C3.1.2.1.1.7 and C3.1.2.1.2.3.) “The standard that must be met for . . . assignment to sensitive duties is that, based on all available information, the person’s loyalty, reliability, and trustworthiness are such that . . . assigning the person to sensitive duties is clearly consistent with the interests of national security.” (See Regulation ¶ C6.1.1.1.) The Deputy Under Secretary of Defense (Counterintelligence and Security) Memorandum, dated November 19, 2004, indicates trustworthiness adjudications will apply to cases forwarded to the DOD and DOHA by the Defense Security Service and Office of Personnel Management. DOD contractor personnel are afforded the right to the procedures contained in the Directive before any final unfavorable access determination may be made. (See Regulation ¶ C8.2.1.) When evaluating an applicant’s national security eligibility, the administrative judge must consider the disqualifying and mitigating conditions in the AGs. 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 AG ¶ 2, describing the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. The entire process is a conscientious scrutiny of a number of variables known as the whole-person concept. 3Applicant submitted an exhibit indicating that in 2003 the state filed a state tax execution (lien) for unpaid taxes for 2001, in the amount of $2,593. That lien was cancelled in December 2016, and does not appear to relate to either SOR allegation. (AE H, AE I.) 5 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 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. Directive ¶ E3.1.15 states that 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 [trustworthiness] decision.” A person who applies for national security eligibility seeks to enter 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 national security eligibility. Decisions include, by necessity, consideration of the possible risk the applicant may deliberately or inadvertently fail to protect or safeguard sensitive information. Such decisions entail a certain degree of legally permissible extrapolation as to potential, rather than actual, risk of compromise of sensitive information. Finally, as emphasized in Section 7 of Executive Order 10865, “[a]ny determination under this order adverse to an applicant shall be a determination 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 AG ¶ 18 sets out the trustworthiness concerns pertaining to financial considerations: 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. 6 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. AG ¶ 19 describes four conditions that could raise a trustworthiness concern and may be disqualifying in this case: (a) inability to satisfy debts; (b) unwillingness to satisfy debts regardless of the ability to do so; (c) a history of not meeting financial obligations; and (f) failure to file or fraudulently filing annual Federal, state, or local income tax returns or failure to pay annual Federal, state, or local income tax as required. Applicant has a history of being unable or unwilling to satisfy financial obligations that began before 2008 and continued to 2015. That history also includes failing to pay annual state income taxes, as documented by two tax liens entered in 2008 and 2009. The evidence raised the above disqualifying conditions. AG ¶ 20 provides five conditions that could mitigate trustworthiness concerns raised under this guideline by the evidence 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 financial counseling for the problem from a legitimate and credible source, such as a non-profit credit counseling service, and there are clear indications that the problem is being resolved or is under control; (d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts; and (g) the individual has made arrangements with the appropriate tax authority to file or pay the amount owed and is in compliance with those arrangements. The evidence does not establish mitigation under AG ¶ 20(a). Applicant’s numerous financial problems have been ongoing for many years, including unpaid state 7 taxes. The evidence establishes minimal mitigation under AG ¶ 20(b). Some of Applicant’s financial problems resulted from periods of unemployment, her father’s illness and death, and being the sole support for her son. Those were circumstances largely beyond her control. However, Applicant acknowledged that some problems were caused by her financial mismanagement, which was not a circumstance beyond her control. In addition, she did not provide evidence that she acted responsibly under those circumstances, which is necessary for full mitigation under this condition. AG ¶ 20(c) provides no mitigation, since she has not sought financial counseling in more than 18 years and all debts of concern arose since that time. Applicant presented a budget, which accommodates her ongoing expenses, and has room to pay delinquent debts. There are some indications that her financial problems are slowly resolving and coming under control, as noted by the numerous delinquent debts she recently paid. She established some mitigation under AG ¶ 20(d), as she presented documentation that she attempted to make good-faith efforts to address and repay all SOR delinquent debts, albeit recent and post-hearing. At this time, she has not established a history of compliance with her tax repayment agreement sufficient to warrant mitigation under AG ¶ 20(g). In March 2015, after having made six payments, Applicant stopped making payments on a negotiated repayment plan for unpaid taxes. On January 17, 2017, she acknowledged that she owed $13,862 for unpaid taxes for years 2003 to 2015, and agreed to begin making automatic monthly payments of $240 on March 15, 2017. She took no action to resolve those unpaid tax debts between March 2015 and March 2017. Whole-Person Concept Under the whole-person concept, the administrative judge must evaluate an applicant’s national security eligibility by considering the totality of the applicant’s conduct and all relevant circumstances. According to AG ¶ 2(c), the ultimate determination of whether to grant national security eligibility must be an overall commonsense judgment based upon careful consideration of the guidelines and the whole-person concept. 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. I considered the potentially disqualifying and mitigating conditions in light of all relevant facts and circumstances surrounding this case. Applicant is a 48-year-old intelligent and hard-working woman, as noted by her employer. She has encountered 8 several circumstances over the past years that affected her financial situation, some of which were beyond her control and others not. Since the initiation of this investigation, she began paying more attention to her finances, as demonstrated by her efforts to pay and resolve the alleged delinquent debts, although many were resolved in January 2017. Nonetheless, they are resolved. In January 2017, she also re-negotiated a payment plan for old and unpaid taxes. She previously had a similar plan and made six payments toward those taxes before stopping in March 2015, two years ago. At this time, she has not established a solid record of financial management or payments on her new tax agreement. After weighing the disqualifying and mitigating conditions, and all relevant facts and circumstances in the context of the whole-person, Applicant mitigated all SOR- alleged debts, except two old tax liens alleged in SOR ¶¶ 1.j and 1.k. Overall, the record evidence leaves doubt as to Applicant’s present national security eligibility. 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 through 1.i: For Applicant Subparagraphs 1.j and 1.k: Against Applicant Subparagraphs 1.l through 1.o: 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 national security eligibility for a position of trust. Eligibility is denied. _________________ Shari Dam Administrative Judge