1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-02034 ) Applicant for Security Clearance ) Appearances For Government: Douglas Velvel, Esq., Department Counsel For Applicant: Pro se ______________ Decision ______________ RICCIARDELLO, Carol G., Administrative Judge: Applicant mitigated the security concerns under Guideline F, financial considerations. Eligibility for access to classified information is granted. Statement of the Case On July 30, 2016, the Department of Defense Consolidated Adjudications Facility (DOD CAF) 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 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 Findings of Fact Applicant denied all allegations in the SOR. After a thorough and careful review of the pleadings and exhibits submitted, I make the following findings of fact. Applicant is 53 years old. He attended college, but did not earn a degree. He served in the military from 1984 to 1988, and was honorably discharged. He married in 2005 and has a daughter, age 31, and a son, age 28. He has worked for his present employer, a federal contractor, since 2000.3 The SOR alleges four charged-off student loans: ¶¶ 1.a-$22,578; 1.b-$17,072; 1.c-$12,188; and 1.d-$10,434, from the same creditor. An October 2015 credit report supports the allegations. In Applicant’s September 2015 security clearance application (SCA), he disclosed that he cosigned for these loans for his son. His son defaulted on the loans. Unbeknownst to Applicant, his son filed Chapter 13 bankruptcy in 2014. Applicant disclosed on his SCA that he recently became aware of the debts when he found them on his credit report. He disclosed that he disputed the debts and “received a discharge due to the disputes.” A document was not provided from the creditor showing Applicant is not responsible for these debts. However, a one-page consolidated credit report reflects Applicant has no collection accounts and his credit scores are over 700. This one-page credit report does not provide the details of Applicant’s accounts.4 Applicant provided a copy of a bankruptcy document pertaining to his son. It is a “Trustee’s Notice of Filed Claims and Post-Confirmation Report on Plan, Claims, and Debts.” The document states that the Court confirmed the Chapter 13 plan on May 19, 2016, and the Trustee expected to begin disbursements in 30 days. The student loans alleged in the SOR are included in the plan and are listed as unsecured. The document advises that “the Trustee will pay claims in ascending order of the Payment Sequence number . . . 100 or less are for creditors who have filed a proof of claim with the court.” The debts alleged in the SOR have numbers less than 100. Applicant’s son’s monthly Chapter 13 payments for months 1-17 is $100 and months 18-60 is $140.5 In Applicant’s response to the FORM, he confirmed that the debts alleged in the SOR are included in his son’s Chapter 13 bankruptcy. According to Applicant, the creditor charged-off the loans after his son filed bankruptcy. Applicant indicated that he is making payments on other student loans from his son that could not be included in the bankruptcy. Applicant provided documents showing that he paid and resolved one of those student loans and is making monthly payments on two others. Those loans were not alleged in the SOR. Applicant stated in his FORM response that when he 3 Item 2. 4 Items 1, 2, 3; AE D. 5 Item 1. 3 became aware of the student loans that were not included in the bankruptcy, he took immediate action and made prompt payments. Applicant has no other financial issues.6 Policies When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines (AG). In addition to brief introductory explanations for each guideline, the AG 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 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. 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 as to obtaining 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 extrapolation as to potential, rather than actual, risk of compromise of classified information. 6 Item 1; AE A, B, C. 4 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 The security concern relating to the guideline 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. AG ¶ 19 provides conditions that could raise security concerns. The following are potentially applicable: (a) inability to satisfy debts; and (b) unwillingness to satisfy debts regardless of the ability to do so. Applicant cosigned student loans for his son, who subsequently defaulted on them, and they were charged off. As the cosigner, Applicant is legally responsible for the loans. There is sufficient evidence to support the application of the above disqualifying conditions. The guideline also includes conditions that could mitigate security concerns arising from financial difficulties. The following mitigating conditions under AG ¶ 20 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; 5 (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; and (d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts. Applicant was unaware that his son defaulted on the student loans alleged in the SOR, and subsequently included in his son’s Chapter 13 bankruptcy. After the bankruptcy was filed, the creditor charged-off the loans. As the cosigner, Applicant remains legally responsible for the loans. He indicated in his SCA that he disputed the debts with the creditor, and he received a discharge of the debt. Clearly, Applicant believes the creditor is not holding him responsible for paying these loans. Although no documents were provided from the creditor advising Applicant that he is no longer liable for the debts, he provided a one-page consolidated credit report that does not show derogatory entries. These loans were included in Applicant’s son’s Chapter 13 bankruptcy. Upon learning that other student loans were not included in the bankruptcy, Applicant began making payments on them. The only debts alleged in the SOR were Applicant’s son’s student loans. It is unlikely similar circumstances will recur and it does not cast doubt on Applicant’s current reliability, trustworthiness, and good judgment. AG ¶ 20(a) applies. The financial concerns alleged were not beyond Applicant’s control. When he cosigned for his son’s student loans, he agreed to be responsible for them. He had a responsibility to follow-up on them to ensure they were being timely paid by his son. Although he failed to stay abreast of their status, once he learned of the problem, he began addressing it. Without a definitive declaration from the creditor that it does not intend to seek reimbursement from him, Applicant could still be held accountable for the loans. However, because the loans were charged off and are included in his son’s bankruptcy plan, it is unlikely. I find AG ¶ 20(b) and 20(d) have some application because once Applicant became aware of the debts, he promptly addressed them with his son and the creditor. In addition, Applicant is paying other student loans that were not included in the bankruptcy and were not alleged, showing a good-faith effort to address any other potential financial concerns. 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 the circumstances. The administrative judge should consider the nine adjudicative process factors listed at AG ¶ 2(d): 6 (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. Some of the factors in AG ¶ 2(d) were addressed under that guideline, but some warrant additional comment. Applicant is 53 years old and served in the military for four years. He has been employed by the same federal contractor since 2000. As the cosigner for his son’s student loans, he was responsible for ensuring they were paid. His son defaulted on them and they are included in his Chapter 13 bankruptcy. It is unknown if the creditor will see reimbursement from Applicant. His current credit report does not show any derogatory information that rises to the level of a security concern. Applicant is paying student loans that were not included in the bankruptcy, showing he is acting responsibly. A security clearance adjudication is not a debt collection procedure. It is a procedure designed to evaluate an applicant’s judgment, reliability, and trustworthiness. See ISCR Case No. 09-02160 (App. Bd. Jun. 21, 2010). An applicant is not required, as a matter of law, to establish resolution of every debt alleged in the SOR. An applicant need only establish a plan to resolve the financial problems and take significant actions to implement the plan. See ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008). There is also no requirement that an applicant pay every debt listed in the SOR, only that he remove concerns about his reliability and trustworthiness raised by those debts. See ISCR Case No. 14-00504 at 3 (App. Bd. August 4, 2014). Based on the record, I find that there are no longer financial considerations security concerns. I considered the circumstances surrounding these debts and Applicant’s subsequent actions. I also considered that Applicant has no other financial issues. The record evidence leaves me with no questions or doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant mitigated the security concerns arising under Guideline F, financial considerations. Formal Findings 7 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: FOR APPLICANT Subparagraphs 1.a-1.d: For Applicant Conclusion In light of all of the circumstances presented by the record in this case, it is clearly consistent with the national interest to grant Applicant’s eligibility for a security clearance. Eligibility for access to classified information is granted. _____________________________ Carol G. Ricciardello Administrative Judge