1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-02294 ) Applicant for Security Clearance ) Appearances For Government: Andrea Corrales, Esq., Department Counsel For Applicant: Pro se ______________ Decision ______________ MURPHY, Braden M., Administrative Judge: Applicant did not mitigate the financial considerations security concerns. Eligibility for access to classified information is denied. Statement of the Case On September 8, 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 implemented by the DoD on September 1, 2006. On December 10, 2016, the Director of National Intelligence issued Security Executive Agent Directive 4, National Security Adjudicative Guidelines (AG). These AGs apply to all adjudicative decisions issued on or after June 8, 2017. Any changes 2 resulting from the issuance of new Adjudicative Guidelines did not affect my decision in this case. I provided Applicant a copy of the new Guideline F AGs at the hearing.1 Applicant responded to the SOR on October 11, 2016, and requested a decision on the administrative record, in lieu of a hearing. On December 14, 2016, Department Counsel exercised her right to request a hearing before an administrative judge, under ¶ E.3.1.7 of Enclosure 3 of Directive 5220.6. Applicant was notified by memo and letter the same day. The case was assigned to me on April 27, 2017. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on May 3, 2017, scheduling the hearing for May 24, 2017, with the agreement of both parties. The hearing was convened as scheduled. Department Counsel offered Government Exhibits (GE) 1 through 4, which were admitted into evidence without objection. Applicant testified and submitted Applicant’s Exhibits (AE) A through H, which were admitted without objection. The record was held open until June 9, 2017, to enable Applicant to submit additional information, but she did not do so, and the record closed. DOHA received the hearing transcript (Tr.) on June 2, 2017. Findings of Fact Applicant admitted SOR ¶¶ 1.a, 1.c, 1.d, 1.e, 1.h, 1.i, and 1.n, and denied the remaining allegations, with explanations. Her admissions and other comments are incorporated into the findings of fact. After a thorough and careful review of the pleadings and exhibits submitted, I make the following findings of fact. Applicant is a 41-year-old employee of a defense contractor. She has worked for her current employer since June 2013. She earned her general educational development certificate in 1996. She has never married. She has two grown children and a granddaughter.2 Applicant worked for a government contractor from March 2010 to March 2013, when the contract ended. She was then unemployed for four months. In June 2013, she began working for her current employer. She earned an hourly wage about 50% less than what she earned at her previous position, and often only worked 32 hours a week.3 Applicant submitted a security clearance application (SCA) in January 2015. She disclosed a prior bankruptcy and some ongoing debts, and stated that she had recently entered into a credit assistance program.4 Applicant worked full time in her position until September 2016, when she had surgery. She was on medical leave until November 2016. When she returned, she 1 Tr. 13-15, 111-113. 2 Tr. 28-29; GE 1. 3 Tr. 41-43, 47; GE 1, AE G. 4 Tr. 48; GE 1. 3 received the SOR, which led to the loss of her interim clearance. She was then out of work until January 2017. She then worked at an uncleared position until late April 2017, when she was again laid off. She has been out of work since then.5 In the SOR, the government alleged 13 delinquent debts totaling about $25,755, and a prior bankruptcy (SOR ¶ 1.c). The debts include two repossessed vehicles (SOR ¶ 1.a - $6,971 and SOR ¶ 1.d - $8,537); a past-due judgment (SOR ¶ 1.b - $3,596); five debts to telecommunication companies (SOR ¶¶ 1.e, 1.f, 1,g, 1,h and 1.j, totaling $4,979); a debt to a bank (SOR ¶ 1.i - $769); three unpaid tickets to municipalities (SOR ¶¶ 1.k, 1.l and 1.m, totaling $265) and one other debt (SOR ¶ 1.n - $683). Most of the debts are listed on Applicant’s February 2015 credit report. Her June 2016 credit report lists debt SOR ¶ 1.a.6 In her answer, Applicant admitted SOR ¶ 1.a and said she was working on it. She admitted SOR ¶ 1.n but claimed it had been paid. She did not recognize SOR ¶¶ 1.k, 1.l and 1.m. For the remaining debts, she noted that they had been removed from her credit report. At hearing, she acknowledged that at one time she owed the debts alleged in SOR ¶¶ 1.d, 1.e, 1.h, and 1.i. SOR ¶ 1.n is shown as paid on her June 2016 credit report.7 Applicant’s financial problems initially arose when her identity was stolen by someone with a similar name. She filed a police report and alerted credit bureaus. This circumstance was difficult for her to resolve, and led to problems with her credit. Applicant then filed Chapter 7 bankruptcy, declaring about $5,000 in debts. Her bankruptcy was discharged in January 2006. (SOR ¶ 1.c).8 When Applicant first learned she would have to apply for a clearance in connection with her job, she discussed her financial issues with a supervisor, and reported her debts on her SCA. Her supervisor suggested she clean up her credit through a debt consolidation program.9 She testified that she was told by her supervisor that she did not have to worry about debts that had fallen off her credit report.10 In January 2016, Applicant entered into an agreement with a credit consulting company that would dispute items on her credit report. She paid an initial fee of $599 and then $295 a month.11 However, she said the company “didn’t do anything” to clean 5 Tr. 29-32; 46-51; AE H. 6 GE 2, GE 3. 7 Tr. 65-68; GE 2. 8 GE 1; Tr. 51-54. 9 Tr. 33-34. GE 1. 10 Tr. 93-94 11 Tr. 35-39; AE E 4 up her credit.12 After that agreement ended in September 2016, she entered into a similar arrangement with another credit monitoring company, and is paying $99 a month. Applicant testified her credit score has improved since then.13 Applicant did not provide any documentation from this company. She has fallen behind on her debts again since being unable to work without a clearance.14 The status of Applicant’s SOR debts is as follows: SOR ¶ 1.a is a repossessed car. Applicant cosigned the loan with her father. He failed to pay insurance on the car, so it became a total loss when he was in an accident. Applicant was told by the creditor that she would have to pay to full amount owed, since she had co-signed the loan. Her father later told her he had received a letter informing him the debt had been taken off of his credit report.15 Applicant did not provide a copy of the letter, or any other documentation of this debt. This debt is unresolved. SOR ¶ 1.d is another repossessed car. Applicant made a $4,000 down payment, but the car developed transmission trouble before the 30-day warranty expired. Applicant returned the car to the dealer and attempted to dispute the matter, but was unsuccessful. She returned the car to the dealer and left them the key. She did not provide any documentation to verify her dispute.16 This debt is unresolved. SOR ¶ 1.e is a $1,500 debt to a phone company. Applicant fell behind in 2013 after she lost her job. Applicant testified that she received a $700 settlement offer, and paid the debt. She provided no corroborating documentation.17 This debt is unresolved. SOR ¶ 1.h is a debt to a phone company. Applicant acknowledged having an account with the company in the years after her bankruptcy. She has not made any payments on the account since it dropped off her credit report. She called the phone company in an attempt to resolve the debt, but had not called the collection agency.18 This debt is unresolved. Applicant testified that SOR ¶ 1.i is a debt which occurred after someone stole her checkbook at work. She testified that the matter was later resolved, but did not provide any supporting documentation.19 This debt is unresolved. 12 Tr. 39 13 Tr. 39-40; 55-58. 14 Tr. 46. 15 Tr. 58-65 16 Tr. 69-75. 17 Tr. 75-78. 18 Tr. 78-81. 19 Tr. 82-84. 5 Applicant denied the remaining debts (SOR ¶¶ 1.b, 1.f, 1.g, 1.j, 1.k, 1.l and 1.m) because she either did not recognize them, or because they had dropped off her credit report. SOR ¶ 1.b is a court judgment against Applicant, in favor of a creditor she did not recognize. She testified she had never received any correspondence or other notice that a judgment that had been entered against her. She testified that she contacted her local courthouse for information, but the information they gave her was unhelpful. She produced no documentation to show that the debt is resolved.20 SOR ¶ 1.g is a debt to a cable company. Applicant submitted documentation that she is challenging the debt with the company’s fraud department. She testified that she has a current account with the same cable company.21 She did not provide any documentation about this debt. It remains unresolved. SOR ¶¶ 1.f and 1.j are debts to the same phone company, but Applicant denied being responsible for them. She produced no documentation to show that the debts are resolved.22 SOR ¶ 1.k, ¶ 1.l and ¶ 1.m are debts for parking or speeding tickets issued by local jurisdictions. Applicant denied any knowledge of them, and suggested they might have occurred when her brother was driving her car. She denied receiving notice of them in the mail. She produced no documentation to show that the debts are resolved or are not her responsibility.23 These debts are unresolved. Applicant estimated that when she was last working, she made $2,300 a month, after taxes. She estimated her monthly expenses at about the same amount.24 She lives with one of her daughters and her young granddaughter. Her daughter is currently unable to work due to a medical condition. Applicant is actively looking for work and considering taking additional part time jobs to make ends meet, but to date, has not done so. She plans to move in with her mother in early June 2017 to cut down on expenses. She testified that she keeps track of her monthly bills, and is doing her best to redeem her credit and improve her financial situation.25 20 Tr. 88-89. 21 Tr. 87-88; AE F. 22 Tr. 85-86. 23 Tr. 91-92. 24 Tr. 97-98. 25 Tr. 45 -46, 99-101, 109-110. 6 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 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 Exec. Or. 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 Exec. Or. 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: 7 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 has accumulated delinquent debts due to unstable employment, underemployment or a reduction in income. The above disqualifying conditions are applicable. Conditions that could mitigate financial considerations security concerns are provided under AG ¶ 20. The following are potentially applicable: (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 8 (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. Applicant’s financial instability began in about 2005, when she was the victim of identity theft. She testified that she filed a police report and reported the matter to credit bureaus. This led her to file bankruptcy. SOR ¶ 1.c, concerning the bankruptcy, is mitigated due to the passage of time. Applicant’s more recent delinquent debts are ongoing. She did not establish that they are unlikely to recur, and they continue to cast doubt on her current reliability, trustworthiness and good judgment. AG ¶ 20(a) does not apply. Since being laid off in March 2013, Applicant has earned about 50% less than what she made previously. Her subsequent employment has also been sporadic and less than full-time. These were circumstances beyond Applicant’s control that impacted her finances. The first prong of AG ¶ 20(b) applies. However, Applicant did not show sufficient evidence that she undertook reasonable action under the circumstances to resolve her debts. AG ¶ 20(b) does not fully apply. When Applicant applied for a clearance, she sought guidance from her supervisor about how to clean up her credit. She was told to pursue debt consolidation. She retained a credit consulting company who was to challenge items on her credit reports. Applicant saw little positive impact on her credit until she entered into a less expensive arrangement with a similar company in fall 2016. The first part of AG ¶ 20(c) (financial counseling) is applicable. However, there are not clear indications that her financial problem is being resolved or is under control. The second part of AG ¶ 20(c) does not apply. Many of Applicant’s debts do not appear on her most recent credit report. However, “the fact that a debt no longer appears on a credit report does not establish any meaningful, independent evidence as to the disposition of the debt.”26 Beyond that, there is little documentary evidence of her efforts to pay, resolve, or settle her various delinquent debts. It is reasonable to expect applicants to present documentation about the satisfaction of specific debts.27 I am therefore unable to find that Applicant made a good-faith effort to pay her debts, under AG ¶ 20(d). Applicant did not establish a reasonable basis to dispute the legitimacy of her past-due debts, and did not provide sufficient documented proof to substantiate her claims. AG ¶ 20(e) is not applicable. 26 ISCR Case No. 14-03612 at 3 (Aug. 25, 2015). 27 See ISCR Case No. 09-07091 at 2 (App. Bd. Aug. 11, 2010) (quoting ISCR Case No. 04-10671 at 3 (App. Bd. May 1, 2006)). 9 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 under Guideline F in my whole-person analysis. I also considered the factors that led to Applicant’s financial difficulties and the steps she has taken to rectify them. Applicant has not established a viable plan to stabilize her financial situation and to repay her delinquent debts. Overall, the record evidence leaves me with questions and doubts as to Applicant’s eligibility and suitability for a security clearance. I conclude Applicant did not mitigate 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: AGAINST APPLICANT Subparagraphs 1.a-1.b: Against Applicant Subparagraph 1.c: For Applicant Subparagraphs 1.d-1.m: Against Applicant Subparagraph 1.n: For Applicant 10 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. ________________________ Braden M. Murphy Administrative Judge