1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) REDACTED ) ISCR Case No. 16-03283 ) Applicant for Security Clearance ) Appearances For Government: Nicole A. Smith, Esq., Department Counsel For Applicant: Pro se ______________ Decision ______________ MENDEZ, Francisco, Administrative Judge: Applicant presented sufficient evidence to mitigate security concerns allegedly raised by the debt that he incurred when he was younger, primarily, student loan debt. After being hired by his current employer, marrying, and becoming a father, Applicant took steps to address his student loan debt and take control of his finances. He currently manages his finances in a responsible fashion. He did not falsify his security clearance application. Clearance is granted. Statement of the Case On December 2, 2016, the Department of Defense (DoD) Consolidated Adjudications Facility (CAF) sent Applicant a Statement of Reasons (SOR) alleging security concerns under the financial considerations and personal conduct guidelines.1 Applicant answered the SOR and requested a hearing (Answer). 1 Pursuant to Executive Order (E.O.) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended, and DoD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive). The CAF applied the previous version of adjudicative guidelines, which were in force from September 1, 2006 to June 7, 2017. 2 On April 12, 2017, a date mutually agreed to by the parties, the hearing was held. Applicant testified at the hearing and, without objection, the exhibits offered by the parties were admitted into the administrative record. The hearing transcript (Tr.) was received on April 20, 2017. (Government Exhibits 1 – 4; Applicant’s Exhibits A – C.)2 Findings of Fact Applicant, 28, is married with two young children. He was hired by his current employer in 2011, and works in the company’s information technology (IT) department. He submitted a security clearance application (SCA) in 2015 in connection with his job.3 In 2007, Applicant graduated from high school. For the next two years, he attended a local community college part time while also working a steady part-time job. He started receiving credit card offers and accepted several, purchasing a motorcycle in 2008 with one of the credit cards. He was fired from the part-time job in 2009 and, in the midst of the U.S. economic recession, was unable to find other suitable employment. He refocused his energies on his studies, enrolling full time in school. In 2011, he earned an associate’s degree. He then received an entry-level job offer (help desk technician) from his current employer.4 From 2009 to 2011, Applicant was only able to get seasonal, low-paying work. He was unable to pay his debts and recurring expenses on the income he was paid for this work. He fell behind on several debts, including the credit card he used to buy the motorcycle. The creditor wrote off (charged off) the account and sold the debt to a collection company. Applicant also could not pay a $350 medical bill that he incurred following a motorcycle accident. These two debts are referenced in SOR 1.a and 1.i.5 Applicant and his wife have two young children. In 2011, shortly after he was hired by his current employer, Applicant’s wife gave birth to their oldest child. They married in 2014 and, about six months later, his wife gave birth to their second child. From 2011 to relatively recently, Applicant’s wife did not work outside the home and was the primary caregiver for their children. She recently earned her professional qualifications as a hairdresser and got a job, earning about $100 a week. Applicant has been the primary income earner (the proverbial “breadwinner”) for his family. As an entry-level employee, he earned approximately $24,000 annually until a recent promotion in September 2016. He now earns $40,000 annually.6 2 Prehearing correspondence, the notice of hearing, and the case management order are attached to the record as Appellate Exhibits I – III. 3 Tr. 18-20; Exhibit 1. 4 Tr. 18-21. 5 Tr. 21-27, 30-31; Exhibits 3, 4. 6 Tr. Tr. 21-34; Exhibit 1. 3 After the birth of his oldest child in 2011, Applicant received informal financial counseling from friends and family. He began using a budget to pay his family’s recurring expenses and debts. In October 2015, he qualified for a mortgage loan and purchased a small home for his family. He has a 30-year, fixed-rate mortgage ($112,000 principal). A recent credit report corroborates Applicant’s hearing testimony that he has made his monthly mortgage payments ($856) consistently and on time. He has not incurred any other delinquent debt since being hired by his current employer in 2011. After the recent promotion at work, Applicant finally has some extra money left over each month. He is using this extra money to pay down his family’s credit card debt. As of the hearing, he had cut their outstanding credit debt from $2,500 to about $1,100.7 After earning his associate’s degree in 2011, Applicant remained registered in school and took some classes towards completing the requirements for a bachelor’s degree. He was told that his student loans would remain in a non-pay status while he continued going to school. A 2016 credit report reflects that Applicant’s student loans were in a non-pay status. The credit report also reflects that the loans were sold or transferred to a private company. The private student loan company purportedly attempted to contact Applicant through his old school email address to inform him that the loans were in a repayment status as he was no longer a full time student. Applicant was unaware that the loans were subsequently placed in a delinquent status. Applicant became aware of the student loans delinquent status during the security clearance process. In October 2016, before the CAF issued the SOR, Applicant entered into a repayment plan to rehabilitate his student loans. He submitted the repayment plan and documentation showing that, as of April 2017, his student loans, totaling about $60,000, are no longer delinquent.8 When Applicant completed his security clearance in April 2015, his youngest child was just a few months old. He was exhausted at the time and did not read the questions on the application, including those asking about derogatory financial accounts, thoroughly. He mistakenly replied that he did not have delinquent accounts.9 About a year later, in June 2016, Applicant voluntarily sat down for a security clearance interview. He told the clearance investigator about some delinquent accounts he had incurred in the preceding seven years. The investigator then shared with Applicant the information appearing on his (Applicant’s) credit report, including the information regarding the student loans. Applicant fully discussed his financial problems with the investigator. A recent credit report reflects that Applicant has no delinquent or derogatory accounts, except the charged-off credit card debt referenced in SOR 1.a (the credit card Applicant used to buy a motorcycle in 2008).10 7 Tr. 25-34. 8 Tr. 21-22; Exhibit 4; Exhibits A – C. 9 Tr. 29-30; Exhibit 1. 10 Exhibits 2, 4. 4 Law, Policies, and Regulations “[N]o one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). Individuals are eligible for access to classified information “only upon a finding that it is clearly consistent with the national interest” to authorize such access. E.O. 10865 § 2. When evaluating an applicant’s eligibility for a security clearance, an administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations, the guidelines list potentially disqualifying and mitigating conditions. The guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, an administrative judge applies the guidelines in a commonsense manner, considering all available and reliable information, in arriving at a fair and impartial decision. On December 10, 2016, the Director of National Intelligence issued Security Executive Agent Directive 4 (SEAD-4), revising the adjudicative guidelines. These revised adjudicative guidelines are applicable to all security clearance decisions issued on or after June 8, 2017. Accordingly, I have applied the revised adjudicative guidelines (“AG”). ISCR Case No. 02-00305 at 3 (App. Bd. Feb. 12, 2003) (security clearance decisions must be based on current DoD policy and standards). Department Counsel must present evidence to establish controverted facts alleged in the SOR. Directive ¶ E3.1.14. Applicants are responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by the applicant or proven . . . and has the ultimate burden of persuasion as to obtaining a favorable clearance decision.” Directive ¶ E3.1.15. Administrative Judges must remain fair and impartial, and conduct all hearings in a timely and orderly manner. Judges must carefully balance the needs for the expedient resolution of a case with the demands of due process. Therefore, an administrative judge will ensure that an applicant: (a) receives fair notice of the issues, (b) has a reasonable opportunity to address those issues, and (c) is not subjected to unfair surprise. Directive, ¶ E3.1.10; ISCR Case No. 12-01266 at 3 (App. Bd. Apr. 4, 2014). In evaluating the evidence, a judge applies a “substantial evidence” standard, which is something less than a preponderance of the evidence. Specifically, substantial evidence is defined as “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion in light of all the contrary evidence in the same record.” Directive, ¶ E3.1.32.1. Any doubt raised by the evidence must be resolved in favor of the national security. AG ¶ 2(b). See also SEAD-4, ¶ E.4. Additionally, the Supreme Court has held that responsible officials making “security clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531. 5 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. 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 an 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. Analysis Guideline F, Financial Considerations Applicant made imprudent financial decisions when he was in his late teens and early twenties, notably, the purchase of a motorcycle. Since entering adulthood, he has managed his personal finances in a responsible manner. As of the close of the record, he had obtained financial counseling, addressed his student loan debt, purchased a home, and paid down his credit card debt. However, his past negative financial history and inability to pay the outstanding motorcycle debt raise the Guideline F security concern, which is explained at 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. . . . Guideline F is not limited to a consideration of whether a person with financial issues might be tempted to compromise classified information or engage in other illegality to pay their debts. It also addresses the extent to which the circumstances giving rise to delinquent debt cast doubt upon a person’s judgment, self-control, and other qualities essential to protecting classified information.11 In assessing Applicant’s case, I considered all the Guideline F disqualifying and mitigating conditions, including the following: AG ¶ 19(a): inability to satisfy debts; AG ¶ 19(c): a history of not meeting financial obligations; AG ¶ 20(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; 11 ISCR Case No. 11-05365 at 3 (App. Bd. May. 1, 2012). 6 AG ¶ 20(b): the conditions that resulted in the financial problem were largely beyond the person's control . . . and the individual acted responsibly under the circumstances; AG ¶ 20(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 AG ¶ 20(d): the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts. Applicant’s financial problems were, in part, due to impulsive spending when he was younger. His financial situation was also negatively impacted by an inability to earn sufficient income to keep pace with the expenses generated by a young family of four. A person’s ability to earn or generate income is not a meaningful measure of how they will likely handle their security obligations. Instead, in assessing a person’s suitability for a security clearance, an administrative judge examines: (1) the circumstances giving rise to financial problems; (2) what, if any, action the person took to address those issues; and (3) how the person currently manages their financial obligations.12 Here, Applicant demonstrated that his past financial issues do not cast doubt on his current reliability, trustworthiness, and judgment. After earning an IT degree and securing a position with his current employer in 2011, Applicant matured greatly, handling his financial and other personal obligations in a manner expected of all prospective and active clearance holders. He has not incurred other delinquent debt since gaining full- time employment in 2011. Despite only earning less than $25,000 annually until his recent promotion, Applicant managed his finances prudently and was able to qualify for a mortgage and purchase a home for his family in 2015. He has paid his mortgage and other recurring debts on a consistent and timely basis. Applicant applied the financial counseling that he received to his circumstances. He addressed his student loans, which amount to $60,000 of the $72,000 in alleged SOR debt. He also paid down his family’s outstanding credit card debt. This six-year track record of responsible financial management is not undercut by Applicant’s inability to resolve a credit card debt the he incurred when he was a young man.13 In short, Applicant showed that he has reformed the behavior that was partly the cause of his financial problems. He also demonstrated that he currently handles his personal finances in a responsible manner and, though his financial situation may not be perfect, his finances no longer raise a concern about his ability to handle and safeguard classified information. Specifically, I find that the above-listed mitigating conditions apply in full or in part and, when considered together with the positive whole-person matters raised by the evidence, mitigate the Guideline F security concern. 12 See generally ISCR Case No. ISCR Case No. 12-09719 at 2-3 (App. Bd. Apr. 6, 2016). 13 Applicant’s failure to resolve the relatively minor medical debt (SOR 1.i) does not alter my analysis. 7 Guideline E, Personal Conduct The security clearance process relies on the honesty and candor of all applicants, and starts with the answers provided in the security clearance application. The deliberate falsification of a clearance application raises a serious concern about the suitability of an applicant. See generally AG ¶¶ 15, 16(a).14 However, an omission standing alone is not enough to establish that an applicant deliberately falsified their response to a question asked on the security clearance application. Instead, in assessing intent, an administrative judge must examine the relevant facts and circumstances surrounding the omission, including the person’s age, level of education, work experience, and familiarity (or lack thereof) with the security clearance process. An omission is not deliberate if the person genuinely forgot the information, was unaware of the facts, inadvertently overlooked or misunderstood the question, or earnestly thought the matter did not need to be reported.15 Applicant’s explanation for why he responded in the negative to questions on the security clearance application asking about delinquent debts was credible, rationale, and consistent with the record evidence. He was tired while filling out the security clearance application, as his youngest child was just a few months old at the time. He mistakenly overlooked the question at issue and incorrectly responded “no.” He was also unaware of the delinquent status of his student loans. When subsequently questioned by a clearance investigator, Applicant self-reported the debts that he knew were delinquent. He discussed the full scope of his financial problems with the investigator and, after the interview, took positive action to address his student loans. He was upfront, candid, and forthcoming at hearing. See generally AG ¶¶ 17(a), and 17(c) – (e). Accordingly, the Guideline E allegation is decided in Applicant’s favor. Overall, the record evidence leaves me with no questions or doubts about Applicant’s present eligibility for a security clearance.16 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 (Financial Considerations): FOR APPLICANT Subparagraphs 1.a – 1.i: For Applicant 14 See also SEAD-4, Appendix A, ¶ 2(i) (falsifications and misrepresentations during the investigative or adjudicative stages of the clearance process raise heightened concerns about a person’s judgment, reliability, and trustworthiness); ISCR Case No. 09-01652 at 7 (App. Bd. Aug. 8, 2011) (describing falsifications as “an offense that strikes at the heart of the security clearance process.”). 15 See generally ISCR Case No. 02-12586 (App. Bd. Jan. 25, 2005). 16 In reaching this conclusion, I considered the whole-person concept. See AG ¶ 2. 8 Paragraph 2, Guideline E (Personal Conduct): FOR APPLICANT Subparagraph 2.a: For Applicant Conclusion In light of the record evidence, it is clearly consistent with the interest of national security to grant Applicant eligibility for access to classified information. Applicant’s request for a security clearance is granted. ____________________ Francisco Mendez Administrative Judge