1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-00281 ) ) Applicant for Security Clearance ) Appearances For Government: Ray T. Blank, Esq., Department Counsel For Applicant: Pro se ______________ Decision ______________ COACHER, Robert E., Administrative Judge: Applicant has not mitigated the financial considerations security concerns. Eligibility for access to classified information is denied. Statement of the Case On June 16, 2016, the Department of Defense Consolidated Adjudications Facility (DOD CAF) issued Applicant a Statement of Reasons (SOR) detailing security concerns under Guideline F, financial considerations. The DOD CAF acted under Executive Order (EO) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; DOD 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG).1 1 I decided this case using the AG implemented by DOD on June 8, 2017. However, I also considered this case under the previous version of the AG implemented on September 1, 2006, and my conclusions are the same using either set of AG. 2 Applicant answered the SOR on July 18, 2016, and elected to have her case decided on the written record in lieu of a hearing. Department Counsel submitted the Government’s File of Relevant Material (FORM) on August 31, 2016. The evidence included in the FORM is identified as Items 4-11 (Items 1-3 include pleadings and transmittal information). The FORM was mailed to Applicant, who received it on September 11, 2016. Applicant was given an opportunity to file objections and submit material in refutation, extenuation, or mitigation. Applicant did not file objections or submit any documentary evidence. Items 4-11 are admitted into evidence without objection. The case was assigned to me on August 8, 2017. Procedural Issue In her answer, Applicant disputed ever having filed a Chapter 11 bankruptcy petition as alleged in SOR ¶ 1.b. The record contains no evidence supporting this allegation. My formal findings will reflect a finding in favor of Applicant on this allegation. Applicant also disputed the amount owed reflected in SOR ¶ 1.f ($89,200). The evidence supports Applicant’s claim that the amount of this debt is $892. I sua sponte amended SOR ¶ 1.f to reflect the amount owed as $892. Findings of Fact Applicant admitted part of the allegations and denied other allegations in her answer to the SOR. The admissions are adopted as findings of fact. After a careful review of the pleadings and evidence, I make the following additional findings of fact. Applicant is 46 years old. She is seeking a position with a defense contractor. From 2012 to 2015 she worked in the private sector. She was unemployed from July 2011 to August 2012. From 1996 to 2011, she worked for federal contractors. She is married and has four children.2 The SOR alleges four bankruptcy filings and six delinquent debts totaling approximately $6,721. The debts are comprised of charged-off and collections accounts (credit cards, consumer debts, telecommunication debts, and medical debts). The bankruptcies and debts are supported by a credit report from July 2015, bankruptcy court records (with the exception of SOR ¶ 1.b), her statement to an investigator in October 2015, and her SOR admissions in her answer from July 2016.3 Applicant attributes her financial problems to her period of unemployment and her husband’s financial problems. Applicant had her debts discharged in her 2012 Chapter 7 bankruptcy. All the SOR debts were incurred after her 2012 bankruptcy. Applicant’s 2015 Chapter 13 bankruptcy was dismissed on August 4, 2016, for failure to make payments under the approved plan. Applicant claimed she was making monthly 2 Items 4, 11. 3 Items 2, 5-11. 3 payments in the amount of $1,180 to the trustee. She failed to document these payments. Applicant filed another Chapter 13 petition on August 24, 2016, but that petition was pending a motion to dismiss for failure to file required documentation. No further updated information on the status of this Chapter 13 is contained in the record. Applicant provided no proof of payment for any of the listed debts. Applicant’s debts remain unresolved.4 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(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 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. Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, 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 that an applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible 4 Items 5-11. 4 extrapolation about 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). Analysis Guideline F, Financial Considerations AG & 18 expresses the security concern for 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. 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. I have considered all of them under AG & 19 and the following potentially apply: (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’s delinquent debts remain unpaid or unresolved. She had debts discharged through a Chapter 7 bankruptcy in 2012 and filed two Chapter 13 bankruptcies in 2011 and 2015 that were dismissed.5 I find the above disqualifying conditions are raised. 5 The August 2016 Chapter 13 was not alleged in the SOR. It will not be used for disqualification purposes, but I will consider it as it may relate to the application of mitigating conditions and the whole- person factors. 5 The guideline also includes conditions that could mitigate security concerns arising from financial difficulties. I have considered all of the mitigating conditions under AG ¶ 20 and the following potentially apply: (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. Applicant’s debts are recent and remain unresolved. She did not provide sufficient evidence to show that her financial problems are unlikely to recur. AG ¶ 20(a) does not apply. Applicant presented some evidence that the debts were due to circumstances beyond her control (unemployment and husband’s financial problems). She did not show that she took responsible action to attempt to resolve her debts. I find AG ¶ 20(b) does not apply. Applicant’s only efforts to resolve her debts was to use the bankruptcy process. She was unsuccessful at that though when her 2015 Chapter 13 was dismissed for failure to make plan payments. She failed to provide documentation showing any efforts to contact the creditors, set up payment plans, or make payments on the listed debts. She obtained financial counseling through the bankruptcy process from a legitimate and credible source. AG ¶¶ 20(c) and 20(d) partially apply. Applicant successfully disputed the Chapter 11 bankruptcy alleged in SOR ¶ 1.b. AG ¶ 20(e) applies to that allegation. 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 6 conduct and all the 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 guideline 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 considered Applicant’s period of unemployment and her husband’s financial difficulties. However, I also considered that Applicant filed four bankruptcy actions since 2012, receiving a discharge of debts one time, and having her case dismissed twice for failure to make plan payments. She also failed to present documentation addressing her other listed debt. Applicant has not established a track record of financial stability. Overall, the record evidence leaves me with questions and doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant 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 Subparagraph 1.a: Against Applicant Subparagraph 1.b: For Applicant Subparagraphs 1.c–1.j: Against Applicant 7 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. _____________________________ Robert E. Coacher Administrative Judge