1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-00359 ) Applicant for Security Clearance ) Appearances For Government: Braden M. Murphy, Esq., Department Counsel For Applicant: Pro se ______________ Decision ______________ RICCIARDELLO, Carol G., Administrative Judge: Applicant failed to mitigate the security concerns under Guideline F, financial considerations. Eligibility for access to classified information is denied. Statement of the Case On June 3, 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 Applicant answered the SOR on June 30, 2016, and elected to have his case decided on the written record in lieu of a hearing. Department Counsel submitted the Government’s file of relevant material (FORM). Applicant received it on October 25, 2016. He was afforded an opportunity to file objections and submit material in refutation, extenuation, or mitigation within 30 days of receipt of the FORM. The Government’s evidence is identified as Items 1 through 7. Applicant did not provide a response to the FORM, object to the Government’s evidence, or submit documents. The case was assigned to me on August 23, 2017. Findings of Fact Applicant admitted all the allegations in the SOR, except ¶ 1.a, which he denied. After a thorough and careful review of the pleadings and exhibits submitted, I make the following findings of fact. Applicant is 37 years old. He married in 2008. He has no children. He earned bachelor’s degrees in 2002 and 2004. He has been employed by his present employer, a federal contractor, since October 2014. He disclosed one month of unemployment in 2014. He has been employed steadily since 2003.2 The delinquent debts alleged in the SOR are supported by credit reports from March 2015 and May 2016, along with Applicant’s admissions. Applicant denied the debt in SOR ¶ 1.a ($16,978). He stated in his SOR answer that he disputed the debt with the credit bureaus and was contacting the creditor to resolve the debt. He denied it because he believed it was for a car loan he had with the creditor in 2004 that was paid in 2010. Credit reports show there are two debts with the same named creditor in SOR ¶ 1.a. One is for a credit card and the other for a repossessed vehicle that has a zero balance. The credit card debt was transferred to a collection agency and is outstanding. This information was detailed in the FORM. In Applicant’s February 2015 security clearance application (SCA), he disclosed he had a credit card debt with the creditor in SOR ¶ 1.a and listed the account number, which matches the original creditor’s account number in the March 2015 credit report and is reflected as the collection account debt in the same report.3 He stated that he was unable to pay the credit card at the time due to medical issues with his wife, and the debt in SOR ¶ 1.a was “charged off-transferred to another lender (according to my credit report).”4 During Applicant’s August 2015 background investigation with a government investigator, he disclosed this debt from the original creditor. The investigator confronted him with this debt that was now transferred to the collection agency that is alleged in the SOR (with the same account number). Applicant indicated that he believed it was the original charged-off debt. This 2 Item 4. 3 Item 5. 4 Items 4, 5, 7, 3 is a valid debt. Applicant did not provide documents to support that he has resolved this debt with the creditor, collection agency, or the credit bureaus. It is unresolved. Applicant admitted he owes the delinquent debts alleged in SOR ¶¶ 1.b through 1.j (ranging from $4,651 to $26; totaling $5,633; six debts are under $100). All but SOR ¶ 1.c ($330) are medical debts. On his SCA, he disclosed this debt was for internet and cell phone service. He said he did not have the money at the time to pay it, and it went to collection. He stated he would be contacting the creditor to resolve the debt. In August 2015, he reiterated the same to the investigator that he planned on contacting the collection agency, verifying the debt, and would either pay it or dispute it. In his SOR answer, he stated he had contacted the creditor and was “in the process of resolving this debt.” He did not provide documents to corroborate his actions or show the debt is resolved.5 Applicant attributed his financial problems to medical issues with his wife that began in 2008. When they married they both had good jobs. Then the loss of her income and medical costs impacted their finances. They owned a townhouse at the time. Due to the seriousness of her condition, they were required to move to a house without stairs. They were unable to maintain their mortgage payments and the house was foreclosed. Applicant began to use credit cards to pay bills. At the time of his interview, he had not participated in financial counseling, sought debt consolidation or begun to address these delinquent debts.6 In Applicant’s SOR answer, he stated that his wife had unexpected medical bills over the past five years and some were unpaid. With regard to SOR ¶ 1.b ($4,651), Applicant disclosed this debt on his SCA and indicated he would contact the creditor to resolve it. In his SOR answer, he stated he believed insurance was going to cover the bills, but it came back denied, and he lost track of it. He stated he had reached out to the creditor for additional information to verify the validity of the debt and then will schedule a payment plan to repay it.7 Regarding the remaining medical debts, he stated in his SOR answer to each allegation: “As noted in [¶ 1.b], a number of medical bills have slipped through the cracks and gone to collection. I have contacted the creditor and am in the process of resolving this debt.”8 He went on to state that he requested written statements from the creditors “that if the debt is paid off it will be reported as “Paid in full.”9 Once he receives responses he will pay the debts or begin payment plans. 5 Item 3, 6. 6 Items 3, 4, 6. Only those debts alleged in the SOR will be considered for disqualifying purposes. All other financial matters not alleged may be considered when analyzing Applicant’s credibility; when considering the mitigating conditions; and in a whole-person analysis. 7 Item 4. 8 Item 3. 9 Item 3. 4 All of the medical debts alleged in the SOR were brought to Applicant’s attention during his background interview. Applicant has not provided any documents to substantiate his actions or to show he has resolved or is resolving any of the debts alleged in the SOR.10 In his SOR answer, Applicant stated that he has been paying his monthly expenses on time and he has been actively working on resolving issues to “clean up my credit and meet my financial obligations.”11 He further stated that he has enrolled in a credit service “to be more proactive in seeing items when they hit my credit and am keeping up with other medical bills as they come in.”12 In the FORM provided to Applicant, Department Counsel repeatedly indicated in bold print the importance and necessity of providing documentation to substantiate any action he may have taken to resolve his delinquent debts. A personal financial statement, budget, or monthly pay stub were not provided. Policies When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the 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 an “applicant is responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or mitigate 10 Item 6. 11 Item 3. 12 Item 3. It is unknown whether this credit service is to monitor Applicant’s credit report or assist him in resolving his delinquent debts, or both. 5 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. 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; (b) unwillingness to satisfy debts regardless of the ability to do so; and 6 (c) a history of not meeting financial obligations. Applicant experienced financial difficulty beginning in about 2008. The delinquent debts alleged are unresolved. 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; (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 began experiencing financial problems in 2008 with the loss of his wife’s income and her medical problems. Applicant has numerous debts that remain unresolved, including a large credit card debt and medical debts. He has not provided proof that he has paid or resolved even the small medical debts that he was made aware of during his background interview. His financial issues are ongoing. AG ¶ 20(a) does not apply. Applicant’s wife’s medical problems, which resulted in the loss of her income and medical expenses, were beyond his control. For the full application of AG ¶ 20(b), Applicant must show that he has acted responsibly under the circumstances. Applicant acknowledged on his SCA and during his background interview the large credit card debt in SOR ¶ 1.a that is held by a collection agency, and the medical debt in ¶ 1.b. He 7 was also confronted with the phone bill and small medical debts at the time. Insufficient evidence was provided to show he has paid or resolved any of the alleged debts, even the smallest or that he has successfully disputed any of them. AG¶ 20(b) partially applies. There is some evidence that Applicant is enrolled in a credit service, but there is insufficient evidence to conclude there are clear indications his financial problems are being resolved or are under control. There is insufficient evidence that he has made a good-faith effort to repay overdue creditors or otherwise resolve his delinquent debts. He did not provide sufficient evidence to show he disputed the legitimacy of any of the delinquent debts alleged or provided documented proof to substantiate the basis of a dispute or evidence of actions to resolve the issues. Despite being reminded in the FORM that documentation was required to substantiate his statements that he was addressing his debts, none were provided. Insufficient evidence was provided to apply AG ¶¶ 20(c), 20(d), and 20(e). 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): (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 37 years old and had financial setbacks beginning in 2008 when his wife developed medical problems. The additional medical expenses and loss of her income impacted Applicant’s finances. Applicant has been aware that his finances were a security concern when he completed his SCA and was interviewed by a government investigator in February and August 2015 respectively. He disclosed the two largest 8 delinquent debts on his SCA and was confronted by the investigator with the smaller debts. Insufficient evidence was provided by Applicant to conclude his debts are paid or being resolved. He has not provided documented proof of any actions he may have taken to pay or resolve any of the debts. Although, I am sympathetic to his wife’s medical issues and associated expenses that began nine years ago, Applicant failed to show he is responsibly managing his finances. 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 Subparagraphs 1.a-1.j: For Applicant Conclusion In light of all of the circumstances presented by the record in this case, it is not clearly consistent with the national security to grant Applicant’s eligibility for a security clearance. Eligibility for access to classified information is denied. _____________________________ Carol G. Ricciardello Administrative Judge