1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-02611 ) Applicant for Security Clearance ) Appearances For Government: David Hayes, Esquire, Department Counsel For Applicant: Pro se ______________ Decision ______________ RICCIARDELLO, Carol G., Administrative Judge: Applicant failed to mitigate the security concerns under Guideline F, financial considerations. Applicant’s eligibility for access to classified information is denied. Statement of the Case On October 22, 2016, the Department of Defense Consolidated Adjudications Facility (DOD CAF) issued to Applicant a Statement of Reasons (SOR) detailing security concerns under Guidelines 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 on 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. My decision would be the same if the case was considered under the previous AG. 2 Applicant answered the SOR on November 26, 2016, and requested a hearing before an administrative judge. The case was assigned to me on May 1, 2017. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on May 4, 2017. I convened the hearing as scheduled on June 6, 2017. The Government offered exhibits (GE) 1 through 4, and they were admitted into evidence without objection. Applicant and one witness testified. Applicant Exhibits (AE) A through I were offered and admitted into evidence without objection. The record was held open until June 20, 2017, to allow Applicant to submit additional documents. She submitted documents that were marked as AE J through L. They were admitted into evidence without objection, and the record closed.2 DOHA received the hearing transcript on June 14, 2017. Findings of Fact Applicant admitted all of the allegations in the SOR, except ¶ 1.c.3 After a thorough and careful review of the pleadings, exhibits, and testimony, I make the following findings of fact. Applicant is 43 years old. She attended college from 1991 to 1994, but did not earn a degree. She enlisted in the Air Force, served from 1994 to 1998, and received an honorable discharge. She attended college from 2004 to 2008, obtaining a bachelor’s degree in 2006 and a master’s degree in 2008. She married in 2007. Her husband has five children ages 26, 24, 23, 22, and 21. Applicant stated the youngest child moved out of their residence in July 2016. She does not have biological children. Applicant has been employed since 2003. Her annual salary has ranged from $84,000 beginning in 2003 to $112,000 in 2015 and $121,000 in 2016. She earned substantially more in 2016 due to overtime.4 In 2009, Applicant’s husband accepted an early retirement from his employer and received a lump-sum payment of $50,000 that he used to start a small business. Around that time his sons got into trouble, and he became depressed and stopped working. His business subsequently failed and he started consuming alcohol and drugs. Applicant’s husband was unemployed for two to three years. He worked sporadically for several months. In October 2016, he began a full-time job.5 To finance her college education, Applicant obtained student loans beginning in 1991. She testified that while in the Air Force her loans were deferred, but she did not know for how long. She stated that she made sporadic payments from 1998 to 2004, but did not pay her loans consistently. She did not provide supporting documents. While attending college from 2004 through 2008, she obtained more student loans. She stated 2 Hearing Exhibit I is Department Counsel’s email memorandum. 3 Applicant did not admit or deny SOR ¶¶ 1.s or 1.z in her answer to the SOR. She admitted those allegations on the record. 4 Tr. 22-30. 5 Tr. 25-27. 3 that around 2009, she had a regular payment plan and paid $300 on one loan and $100 on another. She made those payments for nine months. She did not provide substantiating documents. During that time, two stepchildren got into legal trouble and she paid their legal fees because her husband was not working. He used some of the family funds to pay for furniture. Applicant stated she was trying to pay all bills for the household on her income.6 Applicant testified that from 2009 to October 2016 she made some payments toward other student loans and may have made consecutive payments for some period between 2012 and 2014, but did not make payments after 2014. No supporting documents were provided. Applicant defaulted on her student loans and the loans are in collection accounts (SOR ¶¶ 1.d through 1.r). After receiving the SOR, Applicant made arrangements with the collection company to rehabilitate the loans beginning in February 2017. Based on her income, she is required to make nine consecutive payments of $485. She provided proof that she has made payments from February to June 2017. After the loans are successfully rehabilitated, they will be transferred back to the Department of Education. The total balance owed as of February 2017 is $122,211.7 Applicant stated that she hired a law firm that is disputing her delinquent accounts.8 In her SOR answer, Applicant admitted she owed the medical debt in SOR ¶ 1.a ($125). At her hearing, she stated this account was paid. She provided an internal document from the law firm titled “credit report removals,” which listed this creditor. Having admitted she owed the account, Applicant did not provide evidence that the account was paid, or that it was removed from her credit report because it was paid. She also did not provide a copy of her credit report showing it was removed. The debt is unresolved.9 The debt in SOR ¶ 1.b ($495) is a medical debt owed for services from 2012. Applicant stated she failed to pay the bill due to an oversight. She disputed the bill with the collection company, and it was verified by the original creditor. She provided a document to show she made a $248 payment toward the balance of the debt on June 5, 2017. She did not provide additional documentation that the remaining balance was satisfied. It is not resolved.10 Applicant stated that the law firm sent a letter to the creditor disputing that she owed the account in SOR ¶ 1.c ($385) for cable services. She admitted she had an account with the company. She is waiting to learn of the results of the dispute from the 6 Tr. 48-55, 60. 7 Tr. 55-61; AE A, B. 8 Tr. 70-72; AE F. 9 Tr. 74; AE G. 10 Tr. 64, 75; AE D. 4 law firm.11 This debt is unresolved. The law firm counseled Applicant over the phone about making a budget. She indicated she has a spreadsheet reflecting her debts.12 The debts in SOR ¶¶ 1.s ($1,492) and 1.t ($1,013) are for medical services from 2014. She received the bills, but forgot to pay them due to oversight. She stated she is making $100 payments toward each debt. Her documents support payments made in April and May 2017 and a previous payment of $40 toward each debt.13 In her answer to the SOR, Applicant admitted the debt in SOR ¶ 1.x ($88). It was incurred in 2012, and she did not pay it due to an oversight. The document she provided shows that she disputed the debt with the collection company and it was verified with the original creditor. Applicant paid the account in April 2017.14 The debt in SOR ¶ 1.z ($70) owed for a medical debt incurred in December 2014 was paid in April 2017. A supporting document was provided.15 Applicant testified that she was unfamiliar with the accounts alleged in SOR ¶¶ 1.v, 1.w, 1.y, and 1.aa through 1.ff. She stated she used a credit report to review her debts instead of the SOR.16 Post-hearing, Applicant provided a document that verified on June 19, 2017, she paid the balance owed for the delinquent debt in SOR ¶ 1.y ($76). She also provided a statement that she had made payment arrangements for the debts in SOR ¶¶ 1.v ($146) and 1.w ($113) to be paid from her account in July 2017, but the creditor would not provide her a letter showing her plan. She stated in a post-hearing letter that she is unable to contact the creditor for the debt in SOR ¶ 1.u ($436) because the telephone numbers for the collection agency are disconnected. She asked the law firm to contact them, and they too have been unsuccessful. She attempted to call collection agencies with the same name, located in different states, but no accounts with her name were found.17 Post-hearing, Applicant provided documents verifying that on June 8, 2017, she paid the balance owed for the delinquent debts in SOR ¶¶ 1.aa ($61), 1.bb ($61), 1.cc ($61) 1.dd ($61), 1.ee ($52), and 1.ff ($45).18 11 Tr. 75-77; AE G. 12 Tr. 98. 13 Tr. 65-68; AE E. 14 Tr. 62-64; AE C, E. 15 Tr. 82-83; AE E. 16 Tr. 77-79. 17 Tr. 79-80; AE K, L. 18 AE J. 5 When questioned about her income and current financial situation, Applicant admitted she owes approximately $2,000 to $3,000 in federal income taxes for tax year 2016. She also may owe state and federal income taxes for 2015 and 2014. She received a letter from the IRS in 2017, stating that she owed approximately $5,000 for taxes owed for tax year 2012. It advised her that when the total amount owed was determined, a payment plan would be discussed. She and her husband do not file their tax returns jointly.19 Applicant does not have credit cards. She is current on car loans for a 2014 and 2016 vehicle. She and her husband rent their residence. She is making payments for a 2015 computer she purchased. She has an $800 loan that she obtained in 2010. Her payments of $117 are current. She has renewed the loan to obtain additional money. She also pays $149 monthly on a loan she obtained in 2007. The balance is about $600 and is current.20 Applicant has about $500 remaining after she pays her monthly expenses. She has about $600 in savings and $750 in checking accounts. She contributes to her employer’s pension plan and has about $8,000-$9,000 saved. In 2012, she withdrew money from the plan to pay for college expenses for one of her stepchildren. She incurred tax consequences and stated that the 2012 tax issues relate to that withdrawal. She estimated she paid about $70,000 for her stepchildren’s legal fees. Applicant stated that she let her finances get away from her and she is working toward putting them in order.21 A witness who served with Applicant in the Air Force in 1994 testified on her behalf. She stated Applicant was a hard worker, honest, and disciplined. She stated that Applicant is not a liability to the country. She noted that Applicant’s husband is not financially responsibly.22 Applicant provided character letters. In them she is described as loyal, reliable, honorable, compassionate, diligent, dedicated, humble, professional, hardworking, conscientious, responsible and trustworthy. She goes above and beyond in her efforts to serve the clients of her employer and is a person of integrity.23 19 Tr. 14, 30-48, 117. Applicant’s tax debts were not alleged and are not considered for disqualifying purposes, but may be considered when analyzing her credibility, in mitigation, and the whole-person analysis. 20 Tr. 84-93. 21 Tr. 94-97, 122. 22 Tr. 119-121. 23 AE I. 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 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 the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶ 2(c), 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.” 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 not drawn 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 applicant or proven by Department Counsel and 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 EO 10865 provides that 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). 7 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. 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 classified information. An individual who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handing and safeguarding classified information.24 The guideline notes several conditions that could raise security concerns. I have considered all of the disqualifying conditions under AG & 19, and the following are potentially applicable: (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 has unresolved delinquent debts that began accumulating several years ago and continue to the present. She has more than $120,000 of delinquent student loans. The above disqualifying conditions apply. The guideline also includes conditions that could mitigate security concerns arising from financial difficulties. The following mitigating conditions under AG ¶ 20 are potentially applicable: 24 See ISCR Case No. 11-05365 at 3 (App.Bd. May 1, 2012). 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; (c) the individual has received or is receiving counseling for the problem from a legitimate and credible source, such as a non-profit credit counselling 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 (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 attributed her financial problems to her husband’s unemployment and legal fees associated with her stepchildren beginning in 2009. After receiving the SOR she began to address her delinquent student loans and started a rehabilitation program in February 2017. The SOR debts she documented as paid were not resolved until after she received the SOR, and many not until prior to her hearing or soon after her hearing. Applicant’s debts are recent, numerous and, under the circumstances, I cannot find that her behavior is unlikely to recur because of her inconsistent payment history and her failure to conscientiously address her debts. Her behavior casts doubt on her current reliability, trustworthiness, and good judgment AG ¶ 20(a) does not apply. Applicant’s husband’s unemployment was beyond her control, as were the legal fees associated with her stepchildren. For the full application of AG ¶ 20(b), Applicant must have acted responsibly under the circumstances. Applicant had numerous small delinquent medical debts that she did not pay until before her hearing, some after her hearing, and some are still being resolved. She began obtaining student loans in 1991 and believed they were deferred while she served in the military. She made payments on the loans periodically over the years. She secured more student loans beginning in 2004. Again stating that she made payments after completing her education, she did not provide corroborating documentation showing past payments. In 2009, Applicant’s family situation affected her finances, but she provided insufficient evidence showing that she was responsibly addressing or making payments on the loans until her security clearance was at issue. After receiving the SOR, she started a rehabilitation program 9 and began payments in February 2017. She has not yet completed the rehabilitation program. There is insufficient evidence to conclude Applicant acted responsibly under the circumstances. AG ¶ 20(b) partially applies. There is some evidence Applicant received financial counseling through a phone conference with the law firm she hired. She recently entered into a loan rehabilitation program for her student loans, but she has not yet completed it. It is unknown what her future monthly payments will be. She paid some of her delinquent debts, but has others that are unresolved. She also testified that she has tax debts that were brought to her attention by the IRS. There is insufficient evidence to conclude that there are clear indications her finances are under control. AG ¶ 20(c) partially applies. In February 2017, Applicant began making payments to rehabilitate her student loans. Applicant failed to provide a sufficient payment history to show she had been addressing her student loans before they became a security concern. Insufficient time has elapsed to conclude she is adhering to a good-faith effort to repay her student loans. Before her hearing and shortly after, she paid some delinquent debts. Although, some delinquent debts have been paid, I cannot find that resolution of those debts constitute a good-faith initiative, based on her failure to begin paying them until months after receiving the SOR and with some after the conclusion of her hearing. AG ¶ 20(d) does not apply. Applicant admitted all of the SOR debts, except ¶ 1.c. She admitted she had an account with the creditor, but disputed she owes the debt. The law firm is disputing the account for her and she is waiting for its results. There is insufficient documentary evidence to determine the basis of the dispute or actions to resolve it. AG ¶ 20(e) does not apply to this debt. 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. 10 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. Some of the factors in AG ¶ 2(d) were addressed under that guideline, but some warrant additional comment. Applicant is 43 years old. She served in the military for four years and received an honorable discharge. She has a history of financial problems. Her husband was unemployed for several years and two of her stepchildren had problems, and she paid their legal fees. The balance of Applicant’s consolidated student loans is more than $121,000. She failed to provide evidence that she has been consistently making payments on the loans over the years. After receiving the SOR, she began a rehabilitation program for the loans. She had numerous small delinquent debts that she did not pay until before her hearing and some after her hearing. These debts are now resolved, but her failure to pay them until her security clearance became a concern raises serious questions about her reliability, trustworthiness, and good judgment. Similarly, her failure to responsibly address her student loans over the years and her inconsistent payment history raise the same concerns. Although not considered for disqualifying purposes, Applicant also has both federal and state income tax issues that are unresolved and will affect her future finances. She has not established a reliable track record of financial stability or management. Overall, the record evidence leaves me with serious questions and doubts about Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude she failed to mitigate the security concerns arising under Guideline F, financial considerations. 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.w: Against Applicant Subparagraphs 1.x-1.ff: For Applicant 11 Conclusion In light of all of the circumstances presented by the record in this case, it is not clearly consistent with the national security to grant Applicant a security clearance. Eligibility for access to classified information is denied. _____________________________ Carol G. Ricciardello Administrative Judge