1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-00103 ) ) Applicant for Security Clearance ) Appearances For Government: Aubrey De Angelis, Esq., Department Counsel For Applicant: Steven J. Krupa, Esq. ______________ Decision ______________ WHITE, David M., Administrative Judge: Applicant incurred more than $121,000 in delinquent debt over the past 25 years, most of which she has been unable or unwilling to repay despite repeated statements that she would do so. Resulting security concerns were not mitigated. Based upon a review of the testimony, pleadings and exhibits, national security eligibility is denied. History of Case On March 25, 2015, Applicant submitted an Electronic Questionnaire for Investigations Processing (e-QIP). On June 17, 2016, the Department of Defense Consolidated Adjudications Facility (DoD CAF) issued Applicant a Statement of Reasons (SOR) alleging 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 effective within the DoD after September 1, 2006. 2 Applicant answered the SOR in writing on August 10, 2016 (Answer), and requested a hearing before an administrative judge. The Defense Office of Hearings and Appeals (DOHA) assigned the case to me on September 20, 2016. I granted Applicant’s request for a continuance on November 11, 2016, and DOHA issued a Notice of Hearing on April 27, 2017, setting the hearing for May 16, 2017. On that date, Department Counsel offered Government Exhibits (GE) 1 through 5 into evidence. Applicant testified and offered Exhibits (AE) A through U into evidence. One witness also testified for Applicant. All exhibits were admitted without objection. I granted Applicant’s request to leave the record open until June 5, 2017, to permit submission of additional evidence. On May 22, 2017, Applicant submitted another exhibit, which was marked AE V and admitted, without objection. DOHA received the hearing transcript (Tr.) on May 31, 2017. The SOR in this case was issued under the adjudicative guidelines that came into effect within the DoD on September 1, 2006. Security Executive Agent Directive (SEAD) 4, National Security Adjudicative Guidelines, implemented new adjudicative guidelines that came into effect on June 8, 2017. All national security eligibility determinations issued on or after June 8, 2017, are to be decided using the new National Security Adjudicative Guidelines for Determining Eligibility for Access to Classified Information or Eligibility to Hold a Sensitive Position (AG), as promulgated in Appendix A of SEAD 4. I considered the previous adjudicative guidelines, as well as the new AG, in adjudicating Applicant’s national security eligibility. This decision is issued pursuant to, and cites, the new AG; but my decision would be the same under either set of guidelines. Findings of Fact Applicant is employed as a staff analyst by a U.S. defense contractor, and is applying for a security clearance in connection with that work. She admitted the allegations in SOR ¶¶ 1.a through 1.f, 1.h, and 1.i. She denied being delinquent in repaying the student loan debt alleged in SOR ¶ 1.g because it had been placed in deferment status after she enrolled in more college classes. (Answer.) Applicant’s admissions are incorporated in the findings below. Applicant is 45 years old. She has never married and has no children. She incurred substantial student loan debts while attending classes at universities in two different states during the 1990s, but did not complete a degree. She has served no military or Federal government service, and this is her first application for a security clearance. She has worked, as a subcontractor and direct employee, in her current position since August 2011. (Answer; GE 1; GE 2; AE Q; Tr. 48-49, 65-66.) SOR ¶¶ 1.a through 1.e alleged five delinquent state-program student loans that Applicant entered into from 1994 through 1998, totaling an estimated $96,000. Payments on these loans were deferred until July 2005, at which time she was voluntarily unemployed and “in Italy finishing a study abroad program.” (GE 1 at 18-19.) Her April 2015 credit report showed the last activity on these loans occurred in October 3 2010, with a total balance due of $51,051. (GE 1.) She said on her March 2015 e-QIP that she would negotiate a repayment plan for these debts. During her November 2015 OPM security interview, she said that she would start repaying these loans in 2016. In her August 2016 Answer she reported that these debts had been cancelled by the state as uncollectable on May 11, 2016. This debt cancellation was duly reported to the IRS on a Form 1099-C, in the total principal and interest amount of $81,936. (GE 1; GE 2; GE 3; Answer.) Applicant’s extra taxable 2016 income of almost $82,000 from this debt cancellation resulted in $21,213 in Federal income tax obligations that she could not afford to pay. On May 17, 2017, after her hearing, she completed an online payment agreement with the IRS calling for monthly payments of $300, starting July 15, 2017. She documented no payments under this agreement. (Answer; AE A; AE J; AE K; AE V; Tr. 51-53, 60-63, 68-69.) SOR ¶ 1.f alleged a delinquent $4,418 credit card account, which was opened in 2007 and exclusively used by Applicant’s mother until 2011, but included Applicant as an authorized user. Applicant has never used that credit card or been contacted by the creditor for payment, but the account appears on her credit report. During her security interview, she said that she would pay the debt if her mother did not. In her Answer, she said that she would assume responsibility for the debt and make payments over the next five months to pay it. She testified during her hearing that it was not her debt and she had not made payments toward it. (Answer; GE 2; GE 3; AE G; Tr. 55-56, 64-65.) SOR ¶ 1.g alleged Applicant’s delinquent consolidated Federal student loans, which she entered into between 1995 and 1998, totaling $69,773. These were placed for collection with a past-due amount of $956 in 2006, but were deferred in May 2014 when Applicant enrolled in more college classes. The deferment will end sometime between August 2017 and March 2018, at which time she will owe payments of at least $667 per month. She said that she made some payments, at that rate, toward the accruing interest between August 2016 and March 2017. However, she provided no documentation, from her bank or the creditor, showing that the payments were made or received. (GE 1; GE 2; GE 3; Answer; AE L; AE M; Tr. 40-43, 53-54, 62, 69-71.) The two delinquencies alleged in SOR ¶¶ 1.h and 1.i involve $462 and $114 medical debts that Applicant incurred in 2008 and 2013, which were placed for collection in 2010 and 2014. She reported these debts on her March 2015 e-QIP, and said that she would pay them by the end of that month. During her November 2015 OPM interview, she said that she would start making payments toward these debts by the end of that month. After receiving the SOR, she finally paid these two debts on July 21, 2016. (Answer; GE 1; GE 2; GE 3; AE C; Tr. 54-55, 59-60.) Applicant underwent a financial counseling session with an accredited non-profit credit counseling organization, and submitted the resulting analysis and budget documents dated May 8, 2017. The budget reflected a current monthly surplus of $875, with a pending surplus of $209 after her $666 student loan payment begins. The budget 4 did not reflect any payments toward the IRS deficiency, toward which she subsequently agreed to pay $300 per month starting in July 2017. (AE H; Tr. 52-53.) Applicant submitted an interim performance evaluation covering the first half of 2016 that reported she met expectations. She submitted good-character letters from a supervisor, a coworker, a former employer and current friend, and her sister. The coworker also testified at the hearing. All of these people hold responsible positions, and described their high opinions of Applicant’s character, integrity, reliability, and ability to properly deal with sensitive information. (AE P through AE U; Tr. 31-38.) Policies When evaluating an applicant’s suitability for national security eligibility, the administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations for each guideline, the adjudicative guidelines (AG) list potentially disqualifying conditions and mitigating conditions, which are to be used in evaluating an applicant’s national security eligibility. 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. I have not drawn inferences based on mere speculation or conjecture. Directive ¶ E3.1.14 requires the Government to present evidence to establish controverted facts alleged in the SOR. Directive ¶ E3.1.15 says that an “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 national security eligibility 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 5 classified information. Such decisions entail a certain degree of legally permissible extrapolation as to potential, rather than actual, risk of compromise of classified or sensitive information. Finally, as emphasized in Section 7 of Executive Order 10865, “[a]ny determination under this order 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.” See also Executive Order 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information.) 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 personal 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. 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. Applicant has been employed in her current position since August 2011. She failed to document payments to reduce any of the more than $150,000 in delinquent debts, which she said she would resolve in her e-QIP, until paying $576 in old medical debt shortly before submitting her Answer to the SOR. She has been unable or unwilling to repay these debts, the largest of which was cancelled as uncollectable and converted into more than $21,000 in delinquent Federal income tax liability. These financial issues date back over twenty years, and continue. These facts establish prima facie support for the foregoing disqualifying conditions, and shift the burden to Applicant to mitigate those concerns. 6 The guideline includes five conditions in AG ¶ 20 that could mitigate the security concerns arising from Applicant’s alleged financial difficulties:1 (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, or 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 continues to owe more than $21,000 in Federal taxes, which she cannot afford to pay, as a result of her failure to repay more than $80,000 in state- program student loan debt that she incurred almost 20 years ago. She promised the IRS to make $300 monthly payments toward this tax debt starting in July 2017. Payments of at least $666 per month are due to resume shortly toward more than $69,000 in unpaid Federal student loan debt. Her budget, showing an $875 monthly surplus, does not contain sufficient funds to add this combined $966 in monthly debt payments. Of additional concern, Applicant started promising that she would resolve her delinquent debts when she submitted her e-QIP in March 2015, and also told the OPM investigator eight months later that she would start paying them, but made no such payments until late July 2016, after she received the SOR. She also said that she would repay the credit card debt on the joint account with her mother, but now disavows responsibility for that debt. Her repeated failure to follow through on expressed 1 Applicant’s failure to pay her 2016 Federal income tax debt occurred after issuance of the SOR. She made an online application to repay that debt after her hearing, but documented no payments under that proposed agreement. Under these circumstances, neither security concerns under AG ¶ 19(f), nor mitigation of such concerns under AG ¶ 20(g), were established as of the close of the record. 7 intentions to repay her delinquencies, combined with her reported budgetary deficiency to be able to afford the payments she now claims she will make, cast doubt on her willingness and ability to adhere to her proposed resolution plan. Although Applicant engaged in a single session of credit counseling, she did not establish that her financial situation is resolved or under control. Accordingly, Applicant failed to establish mitigation of security concerns arising from her student loan debts under any of these conditions. She repaid her two delinquent medical debts so, other than credibility issues based on her failure to do so until the SOR was issued, resulting security concerns were mitigated. Record evidence supports her dispute of liability for the credit card balance on her mother’s account under AG ¶ 20(e). 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 applicable 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 a mature adult, who is accountable for her choices to incur substantial debt and not repay it. She continues to owe more than $90,000 in delinquent debt that she has accumulated over the past twenty years and either could not, or chose not to, repay. Colleagues and her sister provided strong character references. However, there is insufficient evidence of rehabilitation or a track record of compliance with debt-resolution agreements, and the potential for pressure, exploitation, or duress remains undiminished. Overall, the evidence creates significant doubt as to Applicant’s judgment, eligibility, and suitability for a security clearance. She failed to meet her burden to mitigate the security concerns arising under the guideline for financial considerations. 8 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 through 1.e: Against Applicant Subparagraph 1.f: For Applicant Subparagraph 1.g: Against Applicant Subparagraphs 1.h and 1.i: For Applicant Conclusion In light of all of the circumstances presented by the record in this case, it is not clearly consistent with the interests of national security to grant Applicant eligibility for a security clearance. National security eligibility for access to classified information is denied. DAVID M. WHITE Administrative Judge