1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-00076 ) Applicant for Security Clearance ) Appearances For Government: Andrew H. Henderson, Esq., Department Counsel For Applicant: Pro se ______________ Decision ______________ CERVI, Gregg A., Administrative Judge: Applicant failed to mitigate the financial considerations and personal conduct security concerns. Eligibility for access to classified information is denied. Statement of the Case Applicant submitted security clearance applications (SCAs) in 2012 and 2016, requesting Department of Defense (DOD) security clearances. On May 2, 2017, the DOD issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guidelines F (financial considerations) and E (personal conduct). Applicant responded to the SOR on May 15, 2017, and requested a hearing before an administrative judge.1 The case was assigned to me on June 2, 2017. Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on June 20, 2017, scheduling the hearing for 1 The DOD CAF acted under Executive Order (Exec. Or.) 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) implemented by the DOD on September 1, 2006. These guidelines were revised on June 8, 2017, and are applicable to all decisions issued thereafter. 2 July 12, 2017. The hearing was convened as scheduled. Government Exhibits (GE) 1 through 15 were admitted in evidence without objection. Applicant testified and submitted Applicant’s Exhibit (AE) A through E, which were admitted without objection. The record was held open for Applicant to submit additional information. He submitted AE F through Q,2 which were admitted without objection. DOHA received the hearing transcript (Tr.) on July 20, 2017. Findings of Fact Applicant is a 54-year-old former employee of a defense contractor. He was last employed by a defense contractor from July 2016 to July 2017,3 for a government agency from 2015 to 2016, and for other contractors from 2011 to 2014. Since 2010, he has been unemployed on and off for approximately 17 months. During these times, he suffered financial hardships. He received a bachelor’s degree in computer science in 1997. He has been married since 1985, and has two adult children that live with him. Applicant has a long history of holding various security clearances. The SOR alleges 18 delinquent debts totaling about $89,000, a revoked corporate credit card for misuse, and a 2010 collection lawsuit. In addition, the SOR alleges under guideline E that Applicant falsified his August 2012 and January 2016 SCAs by not reporting leaving a job under adverse conditions, financial delinquencies, civil suits, a tax lien, not paying traffic fines, and revocation of his employer’s credit card for misuse. He and his spouse testified at the hearing and he provided detailed answers to the SOR. SOR ¶ 1.a alleges a debt for a time-share that was forfeited in lieu of foreclosure. Applicant purchased the time-share in 2002, but by 2003 or 2004, he could not afford the payments on the property, so agreed to relinquish it in lieu of foreclosure, and he does not owe anything further. No delinquency related to this property appears on Applicant’s latest credit bureau report (CBR)(GE 9). The account was closed in 2010 and resolved. SOR ¶¶ 1.b, 1.o, and 1.p allege student loans that are past due. Applicant testified that these loans were in a forbearance status in 2002 based on financial hardship, then converted to interest-only payments in 2006 when he lost his job, and finally reinstated to full repayment status in 2007. He could not pay the full amount. He made payments of $30 per month until 2014 on at least one of the loans per an agreement, but when they were consolidated with a new lender, he could not continue the full payments. He negotiated a repayment plan in 2017, with a first payment due under the plan on August 21, 2017. The new plan shows a current balance of $57,557 with no amount past due. (AE N) 2 AE Q consists of post-hearing e-mails from Applicant noting his current employment status and requesting an expedited decision. Applicant submitted another document related to his mortgage on August 30, 2017, with a plea for a favorable decision. Department Counsel objected to the document as it was submitted after the record closed. All post-hearing e-mails and the mortgage document are admitted and attached as AE Q. 3 Applicant was terminated from his position with a defense contractor in July 2017, after the hearing. He has been out of work since. He was offered another position, which was held open until August 5, 2017, pending a final security clearance decision. 3 SOR ¶ 1.c and 1.j involve Applicant’s mortgage. Applicant noted that a suit by the successor lender was dismissed in 2016, and he renegotiated a modified mortgage with the current mortgagee. He testified that his payments on his mortgage are current. His 2017 CBR does not support a continuing mortgage delinquency. SOR ¶¶ 1.d, 1.e, 1.g, 1.i, 1.k – 1.n, and 1.r allege consumer credit and medical debts that are past due or in a collection status. Applicant has not shown documentary evidence that these debts are duplicates, have been resolved or legitimately disputed, or that payments have been made on renegotiated accounts. Of note, the debt in SOR ¶ 1.r became delinquent in May 2008, and was charged-off in July 2012. (GE 5) Applicant testified that it was not resolved and that he would inquire into it after the hearing. SOR ¶ 1.f involves a small amount owed to a cable television provider for a modem that Appellant purchased, but was billed as a rental. Applicant credibly disputed the debt with all three credit bureaus. This minor debt is resolved. SOR ¶ 1.h involves a loan for a vehicle that was voluntarily repossessed. Applicant testified that relinquishment of the vehicle satisfied the debt. His current CBR shows all loans by this creditor (credit union) have been paid and resolved. Likewise, Applicant’s 2012 CBR shows the debt alleged in SOR ¶ 1.q was resolved through payment of a negotiated amount in 2011. (GE 5) SOR ¶ 1.s alleged that Applicant was accused of misusing a corporate credit card in 2012, however the evidence does not sufficiently support the allegation. Corporate emails do not clearly show the alleged abuse of the credit card, and Applicant’s testimony indicates that he was never counseled on the use of the card, that he paid all balances when due, and he did not abuse the card at any time. SOR ¶ 1.t alleged a lawsuit by a creditor in 2010. Applicant provided evidence that he disputed the debt and the case was dismissed by the plaintiff in December 2011. At the time of the hearing, Applicant had no savings and $400 in a checking account. He claimed to have about $400 per month net remainder after payment of monthly expenses, but his personal accounts did not reflect it. Applicant was terminated from his position with a defense contractor in July 2017, after the hearing. He has been out of work since. He has a 401k retirement account valued at approximately $2,500. Applicant has not provided documentary evidence of financial counseling or professional assistance with resolving delinquent debts. In February 2017, he paid $18,000 in overdue federal taxes for tax years 2011 to 2013, resulting from an employer not withholding taxes. He claimed his federal and state tax obligations have been satisfied through withholding refunds. Applicant was terminated from employment with a government contractor in December 2012 because of a dispute over his work schedule and use of personal leave. He did not report this termination on his 2016 SCA as leaving a job under mutual agreement after notice of poor performance. (SOR ¶ 2.a) He believed his supervisor improperly forced him to return overseas during a period when he had approved leave and had incurred personal expenses to return to the U.S. His supervisor gave him an ultimatum to return or be fired. Applicant declined to return as directed and requested reassignment in the U.S. No other position was offered, and his resignation was accepted. 4 SOR ¶ 2.b alleges Applicant did not pay traffic tickets he received while he was working in a foreign country. He explained in testimony that if he did not present a passport when requested by police, a “ticket” would be filed with his employer. He never received a ticket or notice of a fine. He did not learn of the tickets or fines until after leaving employment and returning to the U.S., and did not know to whom he would pay. SOR ¶¶ 2.c and 2.d allege that Applicant failed to list his delinquent financial accounts in Section 26 of his 2016 and 2012 SCAs. Applicant testified that he did not include the information in his SCAs because of an oversight. He also claimed the delinquent debts were on his credit report and therefore, would have been known by the government, and he was “not thinking” when completing the SCA. He noted that he completed about six previous SCAs, has listed financial delinquencies in the past, and knew that he should have reported his debts but denied intentionally falsifying the SCAs. SOR ¶ 2.e alleges that Applicant failed to list a 2013 state tax lien in his 2016 SCA. He testified that it was not listed because he was unaware a lien was filed, but knew there was a tax debt that his spouse was paying. His spouse also testified that they were not notified of the state tax lien. SOR ¶ 2.f alleged Applicant failed to list his corporate credit card was revoked for misuse. He testified that he was unaware that it was revoked for misuse, that he was never notified of misuse, and that all cards for overseas employees were canceled at the same time. SOR ¶¶ 2.g and 2.h alleged that Applicant failed to list his civil court actions against him in his 2016 and 2012 SCAs. He testified that he believed he only needed to report active lawsuits, not those like his that were settled. In post-hearing submissions, Applicant provided a copy of various orders of dismissal, including an order in a case filed in 2015 by a bank that was dismissed on May 3, 2016, well after Applicant completed his January 2016 SCA. (AE J) Law and Policies The Director of National Intelligence (DNI) issued revised adjudicative guidelines (AG) in a Security Executive Agent Directive, on June 8, 2017. The revised guidelines are applicable to this decision. 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 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, administrative judges apply the guidelines 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), 5 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.” Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, the 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.” The applicant 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 adverse 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 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. 6 The guideline notes several conditions that could raise security concerns under AG ¶ 19. The following are potentially applicable 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. Applicant has had financial problems extending over many years, and incurred multiple delinquent debts that are unresolved. The evidence is sufficient to raise the above disqualifying conditions. Conditions that could mitigate the financial considerations security concerns are provided under AG ¶ 20. The following 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; (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. Appellant attributed his financial problems to lost income during periods of unemployment and as a result of termination of an overseas assignment. Although these are conditions beyond his control, he failed to show efforts to adequately address his financial issues while he was employed and since receiving the SOR. His claimed net remainder after paying living expenses is not credible given the small balance in his checking account. Unfortunately, Applicant lost his job shortly after the hearing, and reportedly has not worked since. This situation undoubtedly has contributed to his dire financial status. I do not believe he has control over his finances. 7 The majority of Appellant’s financial delinquencies have not been resolved and there is insufficient evidence to determine that they will be resolved within a reasonable period. For the unresolved debts, I am unable to find that he acted responsibly under the circumstances or that he made good-faith efforts to pay his debts or negotiate good-faith solutions. His financial issues are recent and ongoing. They continue to cast doubt on his current reliability, trustworthiness, and good judgment. AG ¶ 20(b) is partially applicable but not conclusive. None of the other mitigating conditions apply, except as noted above. Guideline E, Personal Conduct The security concern for personal conduct is set out in AG ¶ 15, as follows: Conduct involving questionable judgment, lack of candor, dishonesty, or unwillingness to comply with rules and regulations can raise questions about an individual’s reliability, trustworthiness, and ability to protect classified or sensitive information. Of special interest is any failure to cooperate or provide truthful and candid answers during national security investigative or adjudicative processes. AG ¶ 16 describes conditions that could raise a security concern and may be disqualifying. The following disqualifying condition is potentially applicable: (a) deliberate omission, concealment, or falsification of relevant facts from any personnel security questionnaire, personal history statement, or similar form used to conduct investigations, determine employment qualifications, award benefits or status, determine national security eligibility or trustworthiness, or award fiduciary responsibilities. When falsification allegations are controverted, as in this case, the Government has the burden of proving the allegations. An omission, standing alone, does not prove falsification. An administrative judge must consider the record evidence as a whole to determine an applicant’s state of mind at the time of the omission.4 An applicant’s level of education and business experience are relevant to determining whether a failure to disclose relevant information on a security clearance application was deliberate.5 Appellant did not report his delinquent financial accounts or civil court actions in his 2012 and 2016 SCAs. He denied intentionally falsifying the SCAs, and attributed the omissions as oversights, and the debts were listed on his credit report. He also noted that he was “not thinking.” He has a long history of completing SCAs, and claimed to have listed financial delinquencies in the past. He stated that he knew that he should have listed his debts on his SCAs. I find Applicant’s failure to report delinquent debts and civil 4 See ISCR Case No. 03-09483 at 4 (App. Bd. Nov. 17, 2004). 5 ISCR Case No. 08-05637 (App. Bd. Sep. 9, 2010). 8 court actions on his 2012 and 2016 SCAs were intentional falsifications. AG ¶ 16 applies to SOR ¶¶ 2.c, 2.d, 2.g, and 2.h. With regard to SOR ¶¶ 2.a, 2.b, 2.e, 2.f, I am not convinced that Applicant intentionally falsified his SCA or intentionally refused to pay traffic ticket fines. He substantially refuted allegations regarding his knowledge of a state tax lien, traffic fines from a foreign country, and improper use of a corporate credit card. These constitute plausible explanations for his omissions on his SCA, and intentional falsification is not supported by the evidence. AG ¶ 16(a) is not applicable to SOR ¶¶ 2.a, 2.b, 2.e, 2.f. These personal conduct security concerns are concluded for Appellant. Conditions that could mitigate personal conduct security concerns are provided under AG ¶ 17. The following are potentially applicable: (a) the individual made prompt, good-faith efforts to correct the omission, concealment, or falsification before being confronted with the facts; (b) the refusal or failure to cooperate, omission, or concealment was caused or significantly contributed to by advice of legal counsel or of a person with professional responsibilities for advising or instructing the individual specifically concerning security processes. Upon being made aware of the requirement to cooperate or provide the information, the individual cooperated fully and truthfully; (c) the offense is so minor, or so much time has passed, or the behavior is so infrequent, or it happened under such unique circumstances that it is unlikely to recur and does not cast doubt on the individual's reliability, trustworthiness, or good judgment; and (d) the individual has acknowledged the behavior and obtained counseling to change the behavior or taken other positive steps to alleviate the stressors, circumstances, or factors that caused untrustworthy, unreliable, or other inappropriate behavior, and such behavior is unlikely to recur. I find no mitigating condition applicable to Applicant’s failure to report his financial delinquencies and civil court actions in his 2012 and 2016 SCAs. Applicant was well aware of the reporting requirements since he has had a long history of completing similar applications. He was aware of his delinquent debts and past civil court actions but willfully failed to report them. His knowing lack of candor raises questions about his trustworthiness and willingness to comply with rules and regulations. No mitigating condition fully applies to alleviate the personal conduct concerns raised by the allegations. 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 9 conduct and all relevant circumstances. The administrative judge should consider the nine adjudicative process factors listed at AG ¶ 2(a): (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 Guidelines F and E in my whole-person analysis. I considered Applicant’s testimony, his spouse’s testimony, and documents provided before and after the hearing. I understand that Applicant is facing financial hardships, however he has not shown past financial responsibility, nor has he gained control of his finances to show that he can pay his debts in the future. I am convinced that he knowingly failed to submit truthful answers on his SCAs as noted above. Overall, the record evidence leaves me with questions and doubts about Applicant’s eligibility and suitability for a security clearance. I conclude Applicant has not mitigated the financial considerations and personal conduct security concerns. 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-c, 1.f, 1.h, 1.j, 1.o-p; 1.s-t: For Applicant Subparagraph 1.d-e, 1.g, 1.i, 1.k-n; 1.q-r: Against Applicant Paragraph 2, Guideline E: Against Applicant Subparagraphs 2.a-b; 2.e-f: For Applicant Subparagraph 2.c-d; 2.g-h: Against Applicant 10 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. ________________________ Gregg A. Cervi Administrative Judge