1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-00172 ) Applicant for Security Clearance ) Appearances For Government: Andre Gregorian, Esq., Department Counsel For Applicant: Pro se ______________ Decision ______________ DAM, Shari, Administrative Judge: Applicant failed to mitigate the financial considerations security concerns. National security eligibility for access to classified information is denied. Statement of the Case On April 29, 2015, Applicant submitted a security clearance application (SF 86). On June 15, 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, 2006.1 1I 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 July 15, 2016, Applicant answered the SOR (Answer), and requested a hearing. On September 28, 2016, the Department of Defense Office of Hearings and Appeals (DOHA) assigned Applicant’s case to me. On December 21, 2016, DOHA issued a Notice of Hearing, setting the hearing for January 17, 2017. At the hearing, Department Counsel offered Government Exhibits (GE) 1 through 4. Applicant testified and offered Applicant Exhibits (AE) A through E. All exhibits were admitted. DOHA received the hearing transcript (Tr.) on January 25, 2017. The record remained open until February 13, 2017, to give Applicant an opportunity to submit additional information. She timely submitted a letter and other documents, which I marked as AE F and AE G, and admitted into evidence without an objection from Department Counsel. Procedural Rulings At the commencement of the hearing, Department Counsel moved to withdraw the allegation in SOR ¶ 1.g. Applicant did not object. Said motion was granted (Tr. 7.) Findings of Fact Applicant is 34 years old and divorced since 2011 after seven years of marriage. She received a bachelor’s degree in 2006 and a doctorate in veterinary medicine in 2012. She then performed two one-year internships in her field. In January 2015, she started her own practice. She is being sponsored for a security clearance by a defense contractor. (Tr. 16-20.) Applicant attributed her financial problems to a contentious separation and divorce that started in January 2010, in addition to educational costs. During that time, she was finishing veterinary school in another country when her husband failed to responsibly manage the maintenance and finances for the home that they had purchased. To avoid a foreclosure, the house was sold and Applicant received $10,000 in proceeds. She estimated that her marital situation depleted about $50,000 of her assets and savings, leaving her with debts. (Tr. 21-24, 27.) Applicant’s financial situation is improving. In 2016, she earned $110,000. She anticipates earning between $130,000 and $140,000 through her practice in 2017. She has sufficient money to pay debts. (Tr. 26.) She did not submit a written budget. Her student loans total $310,000 and were delinquent between December 2013 and February 2014. (AE A.) Several months ago she established a rehabilitation payment plan for them. She is paying $100 per month for six months, after which the payments will increase. (Tr. 24, 79.). Based on credit bureau reports (CBR) from May 2015 and September 2016, the amended SOR alleged 18 debts. They became delinquent between 2010 and 2015, and total $26,280.2 (GE 2, GE 3.) Applicant disclosed some debts in her April 2015 SCA. (GE 2 SOR ¶ 1.m does not include the amount of the charged off debt. 3 1.) During an interview in September 2015, Applicant discussed her delinquent debts with an investigator. (GE 4.) She testified that she is not responsible for making payments on the debts alleged in SOR ¶ ¶ 1.a, 1.b, 1.e, 1.f, 1.i, 1.j, 1.k, 1.l, 1.m, 1.o, 1.p, and 1.s. (Tr. 40.) SOR ¶ 1.a: This unpaid 2010 judgment is for a $177 medical debt. Applicant admitted that it was her debt. She disclosed it in her April 2015 SCA. She intended to begin paying it in June 2015. Subsequently, she disputed the debt with the credit bureau on the basis that the default judgment was invalid because she was not properly served with notice of the complaint when the lawsuit was filed. (Tr. 41-43; Answer.) It is unresolved. SOR ¶ 1.b: This references an unpaid 2010 judgment for a $2,630 credit card debt. Applicant admitted that she used the credit card while she was in graduate school. She disclosed it in her SCA and noted that she would begin paying it in June 2015. Subsequently, she disputed the debt with the credit bureau on the basis that the default judgment was invalid because she was not properly served with notice of the complaint when the lawsuit was filed. (Tr. 41-43; GE 1; Answer.) It is unresolved. SOR ¶ 1.c and ¶ 1.d: These two delinquent medical debts for $189 and $422 are Applicant’s ex-husband’s debts. They were discharged in his bankruptcy. (Tr. 38; 46.) They are resolved. SOR ¶ 1.e: In her April 2015 SCA, Applicant said she was unaware of this unpaid $69 medical debt. She testified that she telephoned the credit reporting company and it was unable to locate the creditor. (Tr. 69.) It is resolved. SOR ¶ 1.f: In August 2015, Applicant agreed to pay the delinquent medical debt for $113 owed to a specific provider. She admitted that it was her debt. She asked the credit company to verify debt, which it did, but subsequently deleted from her credit history. She said she does not know where to send a payment. (Tr. 70-71; Answer). It is resolved. SOR ¶ 1.g: Withdrawn. SOR ¶ 1.h: Applicant paid the $50 unpaid medical debt in August 2015. (Answer.) It is resolved. SOR ¶ 1.i: Applicant disclosed this $125 unpaid cable bill in her April 2015 SCA. She stated that the service should have been transferred to the new tenant. (GE 1.) She disputed it with the creditor, and the creditor maintained that her it was her debt; however, the creditor chose to delete it from her credit history and ceased requesting payment. (Tr. 76; Answer.) It is resolved. 4 SOR ¶ 1.j: Applicant disclosed this unpaid $762 tuition bill she received after dropping a course. She filed a letter with the creditor requesting the creditor verify that it was owed. She submitted a letter from the creditor stating that the debt was returned to the original creditor. It is her debt. She said the debt was consolidated with other student loans and was being paid through her student loan payment plan. She submitted no evidence that it is included in the plan. (Tr. 56-60, 79; GE 1.) It is unresolved. SOR ¶ 1.k: This unpaid medical debt for $124 is from 2012. Applicant disputed it, and it was deleted from her credit history. (Tr. 72; Answer.) It is resolved. SOR ¶ 1.l and ¶ 1.m: These are the same debt, but different creditors. Applicant disclosed the $819 debt in her April 2015 SCA. She stated she was in the process of resolving it and would begin payments in May 2015. (GE 1.) She subsequently disputed it and was notified by the creditor that it was charged off in May 2013 for non-payment. The debt was purchased by the current listed creditor. She said she subsequently asked the creditor how to pay the debt, but was told the account is now closed. (Tr. 50-57; AE B.) They are unresolved. SOR ¶ 1.n: Applicant disclosed this $209 unpaid cell phone bill in her April 2015 SCA. She stated she intended to pay it. (GE 1.) While testifying, she said that after speaking to the company the morning of the hearing, she learned that the original creditor was deleting it from her credit history and she would not be able to pay it. (Tr. 73-74.) Documentary evidence was not provided to confirm that. It is unresolved. SOR ¶ 1.o and ¶ 1.p: Applicant disclosed these two delinquent student loans in her April 2015 SCA. They are from 2013 and owed to the same creditor. They total $19,364. Applicant admitted that she owed these student loans. However, she disputed them with a credit bureau and demanded that they be verified. (Tr. 46-49; GE 1.) Post- hearing she received notification they are her debts. (AE F.) They are unresolved. SOR ¶ 1.q: Applicant disclosed this cell phone debt for $161 in her April 2015 SCA. She stated the creditor confirmed that it was her bill. This bill is owed to the same carrier noted in SOR ¶ 1.n. She stated she intended to pay this debt. (Tr. 74; Answer; GE 1.) It is unresolved. SOR ¶ 1.r: Applicant agreed to pay this $50 parking ticket, if the credit bureau would delete it from her credit history. She paid it in August 2015. (Answer.) It is resolved. SOR ¶ 1.s: This unpaid $1,016 student loan is also owed to the creditor listed in SOR ¶ 1.j. (Tr. 59.) It is unresolved. Applicant has been working with a financial advisor for five years. As a consequence, she uses credit reporting services to monitor her credit. Through using those services she learned how to communicate with creditors and successfully dispute 5 debts. She said she has worked hard to improve her credit, which includes disputing debts and having them deleted or removed from her credit history. (Tr. 66, 87-89; AE G.) Applicant submitted a letter of recommendation from a member of a DOD training academy with whom Applicant worked. He said she is a professional and trustworthy person. He praised her veterinary skills and proactive role in the community. (Answer.) Policies When evaluating an applicant’s national security eligibility, 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 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.” 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 national security eligibility. 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. Section 7 of EO 10865 provides: “[a]ny determination under this order 6 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.” 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 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. Beginning in 2010 or before, Applicant accumulated delinquent debts that she has been unable or unwilling to resolve. The evidence raises the above security concerns, thereby shifting the burden to Applicant to rebut, extenuate, or mitigate those concerns. 3 See ISCR Case No. 11-05365 at 3 (App.Bd. May 1, 2012). 7 The guideline includes five 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; (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. Ten of the 18 alleged delinquent debts are ongoing, unresolved, and cast doubt on Applicant’s trustworthiness. AG ¶ 20 (a) does not apply. Applicant attributed her problems to a contentious separation and divorce from her former husband. Those circumstances were beyond Applicant’s control. However, there is insufficient evidence to establish full mitigation under AG ¶ 20(b) because Applicant did not document the actions she took to responsibly manage her obligations while they were accumulating. Applicant has participated in credit or financial counseling with a financial advisor and has used credit monitoring systems for about five years. However, there are no clear indications that the eleven unresolved SOR-alleged debts are under control. AG ¶ 20(c) does not apply. Applicant paid three alleged debts, which showed some good-faith effort to resolve the small debts alleged in SOR ¶¶ 1.e, 1.h, and 1.r. AG ¶ 20(d) applies to those debts. The majority of the other debts are unresolved. Two of debts are her former husband’s debts and were resolved through his bankruptcy. Applicant successfully disputed the debts in SOR ¶¶ 1.f, 1.i, and i.k. AG ¶ 20(e) applies to those debts. 8 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. 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 national security eligibility 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 an intelligent, and educated 34-year-old veterinarian, who was in a difficult marital situation for seven or more years while attending graduate school. In April 2015, Applicant completed a SCA, in which she honestly disclosed numerous delinquent debts and took responsibility for some of them. However, subsequent to submitting that SCA, she focused on having many of them deleted from her credit report, under the guise that the creditors were unable to verify them, and therefore, she was no longer responsible for paying them. For example, she admitted that she owed a $177 medical bill and a credit card bill of $2,630, which became judgments in 2010. However, she has chosen not to pay those debts because she asserted that the default judgments were entered without her knowledge of the lawsuit. While that maybe a valid legal argument in some instances, it is not, under an inquiry into one’s eligibility for a security clearance, a reasonable excuse for failing to pay one’s obligations. Similarly, she knows she is responsible for paying two old student loans that total over $19,000, but has taken no affirmative steps to do so. It is concerning that she acknowledged owing certain creditors, but chose to dispute the debts as a method for resolving them. This tactic may improve her credit score, but it does not show she has responsibly paid creditors or that she can be trusted to abide by established rules. She has demonstrated an unwillingness to pay her debts. Her methods for handling financial obligations are concerning and likely to continue. Applicant did not meet her burden of persuasion to mitigate the security concerns arising under the guideline for financial considerations. 9 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 and 1.b: Against Applicant Subparagraphs 1.c through 1.f: For Applicant Subparagraph 1.g: Withdrawn Subparagraphs 1.h and 1.i: For Applicant Subparagraph 1.j: Against Applicant Subparagraph 1.k: For Applicant Subparagraphs 1.l through 1.q: Against Applicant Subparagraph 1.r: For Applicant Subparagraph 1.s: 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 continue Applicant’s security clearance. National security eligibility for access to classified information is denied. SHARI DAM Administrative Judge