1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-01888 ) ) Applicant for Security Clearance ) Appearances For Government: Caroline E. Heintzelman, Esq., Department Counsel For Applicant: Pro se ______________ Decision ______________ DAM, Shari, Administrative Judge: Applicant’s history of delinquent student loans and other debts began in 2010. He failed to mitigate the resulting financial security concerns. National security eligibility for access to classified information is denied. Statement of the Case On October 14, 2015, Applicant submitted a security clearance application (SF 86). On August 30, 2016, the Department of Defense (DOD) issued to Applicant a Statement of Reasons (SOR), detailing security concerns under Guideline F, Financial Considerations . The action was taken under Executive Order (EO) 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) effective within the DOD for SORs issued after September 1, 2006. On June 8, 2017, new AG were implemented and are effective for decisions issued after that date.1 1 I considered the previous AG, effective September 1, 2006, as well as the new AG, effective June 8, 2017. Although this decision is issued pursuant to the new AG, my decision would be the same under either set of guidelines. 2 On September 15, 2016, Applicant answered the SOR (Answer) and requested that his case be decided on the written record. He subsequently requested a hearing. On December 20, 2016, the Department of Defense Office of Hearings and Appeals (DOHA) assigned Applicant’s case to me and issued a Notice of Hearing, setting the hearing for January 11, 2017. At the hearing, Department Counsel offered Exhibits (GE) 1 through 4 into evidence. Applicant testified and offered Exhibits (AE) A through G. All exhibits were admitted. DOHA received the hearing transcript (Tr.) on January 23, 2017. The record remained open until January 30, 2017, to give Applicant an opportunity to submit additional information. Applicant did not submit any exhibits by the deadline. However, he submitted to Department Counsel a letter by email on March 31, 2017, and a document on May 1, 2017. Department Counsel forwarded those documents to and stated that she had no objections to them. I marked the letter AE H and the document AE I. They are admitted into the record. Findings of Fact Applicant neither admitted nor denied the allegations contained in SOR ¶¶ 1.a through 1.u. (Answer.) His failure to answer is construed as a denial for all allegations. Applicant is 50 years old and married for 23 years. He and his wife do not have children. He earned a bachelor’s degree in 1995. He has two master’s degrees, one he obtained in 1999 and the other in 2011. He began working for his current employer in September 2015. Prior to this position, he owned a consulting business for five years. (Tr. 14-17.) Applicant’s financial problems began in about 2010 when his mother had a stroke, and he started caring for her. He subsequently became distraught over the situation and unable to adequately manage his business. He fell behind on his financial obligations. His problems continued until he started his current position and earned an annual salary of $100,000. However, since October 2016 he has been on administrative leave and not earning an income, pending the outcome of this investigation. (Tr. 10, 17-22, 28.) Based on credit bureau reports (CBR) from December 2016 and November 2016, the SOR alleged 21 delinquent debts, of which 16 are delinquent student loans totaling $112,140, and 6 are miscellaneous debts totaling $5,119. Applicant obtained student loans to earn both master’s degrees. These loans became delinquent in or about 2013. (Tr. 17, 26; GE 3, GE 4.) In September 2016, Applicant entered into an Education Rehabilitation Agreement with the Department of Education (DOE) to consolidate the loans and begin paying them. According to that agreement the loans totaled $143,477. Applicant agreed to make nine monthly payments of $99 beginning that month. (AE A.) Prior to starting this payment plan, Applicant did not recall making payments in 2013, 2014, or 2015.2 In April 2016, the 2 There is no evidence that Applicant has made any payments on these student loans. 3 DOE seized his 2015 tax refund of $3,434 and applied it to his delinquent loan debt. Applicant made the $99 payment in September and October 2016. In November and December 2016, the DOE changed the amount to $5 each month for unstated reasons. (Tr. 34; AE A.) As of May 26, 2017, Applicant was scheduled to make a combined monthly payment of $10 on the three separate educational loans that now totaled $198,511. (AE I.) He acknowledged he contacted DOE after receiving the SOR, but not when he completed his October 2015 SF 86 because his mother died that month. (Tr. 28.) The SOR alleged five other debts: ¶ 1.o ($2,071); ¶ 1.p ($1,612); ¶ 1.r ($1,111); ¶ 1.t ($205); and ¶ 1.u ($120). Applicant paid the debt in SOR ¶ 1.o in April 2016. It is resolved. (GE 4; AE B, AE C.) In September 2016, he made a payment of $75 on the debts listed in ¶ 1.p and ¶ 1.r. They remain unresolved. The debts in ¶ 1.t and ¶ 1.u are unresolved. (Tr. 31-32.) Applicant and his wife are living on his wife’s annual salary of $60,000. They do not have a written budget, but are aware of their income and expenses. He has not sought credit or financial counseling. He said that since DOE decreased his total payments for his student loans, they are able to manage their finances. (Tr. 22.) Applicant submitted a letter of recommendation from his supervisor. He stated that Applicant is an outstanding employee and requests that his security clearance be re- instated. (AE G.) Policies When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the AG. In addition to brief introductory explanations for each guideline, the AG 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, 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 applicable guidelines in the context 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 national security eligibility will be resolved in favor of the national security.” In reaching this decision, I have drawn only those conclusions that are reasonable, logical, and based on the evidence 4 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. According to Directive ¶ E3.1.15, “[t]he 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.” Section 7 of EO 10865 provides: “[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.” A person applying for access to classified information 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 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. Analysis Guideline F: Financial Considerations The security concerns relating to the guideline for financial considerations are set out in AG ¶ 18, which reads in pertinent part: 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. This concern is broader than the possibility that an individual might knowingly compromise classified information in order to raise money. It encompasses concerns about an individual’s self-control, judgment, and other qualities essential to protecting 5 classified information. An individual who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information.3 AG ¶ 19 describes three conditions that could raise security concerns and may be disqualifying 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 began accumulating delinquent debts in 2010, including a large number of student loan debts, which he has been unable or unwilling to resolve. The evidence raises the above security concerns, and shifts the burden to Applicant to rebut, extenuate, or mitigate those concerns. The guideline includes four conditions in AG ¶ 20 that could mitigate security concerns arising from financial problems: (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; and (d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts. Applicant’s delinquent debt problems began in 2010 when his mother had a stroke, and he started caring for her, after which he was unable to fully manage his business. His student loans for his graduate degrees became delinquent sometime after he received his second master’s degree in 2011. There is no evidence that he made any payments 3 See ISCR Case No. 11-05365 at 3 (App.Bd. May 1, 2012). 6 on the loans until after he received the SOR in August 2016. In September 2016, he arranged with DOE to make small monthly payments on the consolidated loan balance of $143,477. Subsequently, that balance has increased to $198,500, although his required payment has decreased to a nominal amount. While caring for his mother was a consequence beyond his control, he provided no evidence that he took steps to responsibly address his financial obligations while they were arising or prevent similar problems from occurring. His negligence in ignoring his student loan commitments for years raises questions about his reliability. The evidence does not establish mitigation under AG ¶ 20(a) or AG ¶ 20(b). Applicant has not participated in credit or financial counseling and there are no clear indications that the large amount of student loan debt and four other SOR-alleged debts are under control. AG ¶ 20(c) does not apply. Applicant made a good-faith effort to resolve the debt in SOR ¶ 1.o. The evidence establishes mitigation under AG ¶ 20(d) as to that debt. Applicant initiated a payment plan with the DOE after he received the SOR in August 2016. There is no evidence that he made payments when the loans were due. His agreement with DOE was not a good-faith effort to pay his debts, but rather in response to his concerns about a security clearance. The nominal payments do not reflect a realistic plan at resolving his large student loans. The eight small payments he has made on the plan demonstrates some compliance with the payment plan, but it is insufficient to establish full mitigation under AG ¶ 20(d). 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. According to 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 pertinent facts and circumstances surrounding this case. Applicant is a mature, educated 50-year-old man who has worked for a defense contractor since 2015. His employer 7 strongly recommends him for a security clearance based on his observation of Applicant’s work. Those are positive facts in this case. However, Applicant has a history of not responsibly managing his federal student loans and other delinquent debts. He owes over $198,000 in loans that he voluntarily assumed and stopped paying. At this time, he has not established a sufficient record of financial reliability and responsibility. Applicant did not meet his burden of persuasion to mitigate the security concerns arising under the guideline for financial considerations. 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 though 1.n: Against Applicant Subparagraph 1.o: For Applicant Subparagraphs 1.p through 1.u: Against Applicant Conclusion In light of all circumstances presented by the record in this case, it is not clearly consistent with the national interest to grant Applicant’s eligibility for access to classified information is denied. SHARI DAM Administrative Judge