1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-00694 ) Applicant for Security Clearance ) Appearances For Government: Tovah Minster, Esquire, Department Counsel For Applicant: Pro se September 1, 2017 ______________ Decision ______________ GOLDSTEIN, Jennifer I., Administrative Judge: Applicant is indebted to seven creditors in the approximate amount of $88,000. He failed to produce documentation to show he resolved any of his delinquencies. Based upon a review of the pleadings and exhibits, eligibility for access to classified information is denied. Statement of Case On June 15, 2015, Applicant submitted a security clearance application (SF-86). (Item 2.) On July 27, 2016, the Department of Defense Consolidated Adjudications Facility (DoD CAF) issued Applicant a Statement of Reasons (SOR), detailing security concerns under Guideline F, Financial Considerations. (Item 1.) 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 for Determining Eligibility for Access to Classified Information. 2 Applicant answered the SOR on August 26, 2016. (Item 1.) He requested that his case be decided by an administrative judge on the written record without a hearing. (Item 1.) On September 15, 2016, Department Counsel submitted the Government’s written case. A complete copy of the File of Relevant Material (FORM), containing five Items, was mailed to Applicant on September 16, 2016, and received by him on September 27, 2016. The FORM notified Applicant that he had an opportunity to file objections and submit material in refutation, extenuation, or mitigation within 30 days of his receipt of the FORM. Applicant responded to the FORM on October 14, 2016. I marked his submission Applicant Exhibit (AE) A, and it was admitted without objection. DOHA assigned the case to me on August 2, 2017. Items 1 through 5 are admitted into evidence. Due to the passage of time since Applicant responded to the FORM, and the implementation of the new SEAD 4 AG during that period, I notified both parties on August 18, 2017, that I would reopen the record, in order to permit submission of any desired new evidence or argument. In particular, I noted that anything addressing Applicant’s subsequent adherence to his plan to file for bankruptcy would be pertinent under the new language of the mitigating factor in AG ¶ 20(d), which added the language, “and is adhering to.” On August 28, 2017, Applicant responded with a letter and a credit report dated August 28, 2017. Department Counsel had no objection to this evidence, which is marked AE B, and is admitted together with the associated email correspondence. The record closed on August 29, 2017, after Applicant indicated he had nothing further to submit. I considered the previous eligibility guidelines, as well as the new SEAD 4 AG, in adjudicating Applicant’s national security eligibility. My decision would be the same under either set of guidelines, although this decision is issued pursuant to the currently effective SEAD 4 AG. Findings of Fact Applicant is 43 years old and married. He has three children. He has worked for his current employer, a government contractor, since June 2015. (Item 2.) Applicant was alleged to be indebted to seven creditors in the approximate amount of $88,094. Applicant admitted to the debts identified in SOR ¶¶ 1.a through 1.g, with clarifications. Applicant’s debts appear in credit reports dated June 27, 2015; and June 3, 2016. (Items 4 and 5.) Applicant attributed his delinquencies to the failure of his remodeling business during the 2007 and 2008 financial crisis. (Item 1; AE A; AE B.) Applicant was indebted on a judgment in the amount of $3,029, as alleged in SOR ¶ 1.a. This judgment was filed in August 2009. Applicant produced no documentation of actions taken to resolve this debt. It remains unresolved. (Item 4; Item 5.) 3 Applicant was indebted on a charged-off automobile loan in the amount of $3,461, as alleged in SOR ¶ 1.b. This was for a “business vehicle” that was repossessed. Applicant’s August 28, 2017 credit report reflects this debt as “collections/charge-off.” It remains delinquent. (AE B; Item 5.) Applicant was indebted on a charged-off account in the amount of $38,712, as alleged in SOR ¶ 1.c. This debt was for equipment that Applicant leased for his business. He claimed the equipment was repossessed. However, his June 2016 credit report reflects a balance of $38,712, which has been delinquent since 2010. This debt is unresolved. (Item 1; Item 4.) Applicant was indebted on a charged-off credit card account in the amount of $3,164, as alleged in SOR ¶ 1.d. Applicant claimed that he is making court-ordered payments on this debt and the balance has declined to $1,984.27, as of the date of his Answer. However, he failed to produce documentation to support this claim. This debt is unresolved. (Item 1; Item 5.) Applicant was indebted on a collection account in the amount of $31,536, as alleged in SOR ¶ 1.e. Applicant explained in his Answer that this debt was for a “business line of credit.” Applicant produced no documentation of actions taken to resolve this debt. It remains unresolved. (Item 5.) Applicant was indebted on a collection account in the amount of $8,013, as alleged in SOR ¶ 1.f. Applicant produced no documentation of actions taken to resolve this debt. It remains unresolved. (Item 5.) Applicant was indebted on a collection account in the amount of $179, as alleged in SOR ¶ 1.g. Applicant produced no documentation of actions taken to resolve this debt. It remains unresolved. (Item 5.) In Applicant’s Response, he indicated that he had consulted an attorney about his delinquent debts and planned to file for bankruptcy. (AE A.) However, in his most recent submission he indicated: With my credit greatly improved, what looks like all the credit issues of the past removed from my credit report (at least on what I can see on [C]redit Karma), and because of the age of the debts and can no longer be sued [sic], I feel like filing for bankruptcy would be a huge setback for another 10 years if it is not an absolute necessity. It may still be how we move forward bit [sic] I need to sit down again with Council [sic] and re-assess. (AE B.) Applicant submitted no evidence of financial counseling, or of budget estimates from which to analyze his current financial situation. However, Applicant has no new delinquent accounts reflected on his August 2017 credit report. (AE B.) No character 4 references were submitted to describe Applicant’s judgment, trustworthiness, integrity, or reliability. I was unable to evaluate his credibility, demeanor, or character in person since he elected to have his case decided without a hearing. 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 adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which are useful 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 AG ¶ 2 describing the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶ 2(a), 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. Directive ¶ E3.1.14 requires the Government to present evidence to establish controverted facts alleged in the SOR. Directive ¶ E3.1.15 states 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 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 protect or 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. 5 Section 7 of Executive Order 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 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 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. AG ¶ 19 describes two conditions that could raise security concerns and may be disqualifying in this case: (a) inability to satisfy debts; and (c) a history of not meeting financial obligations. Applicant is indebted to seven creditors in an amount exceeding $88,000. He has documented no action to resolve these delinquencies. The facts establish prima facie support for the foregoing disqualifying conditions, and shift the burden to Applicant to mitigate those concerns. The guideline includes three conditions in AG ¶ 20 that could mitigate the security concerns arising from Applicant’s alleged financial difficulties: (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 6 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. The evidence does not establish mitigation under AG ¶ 20(a). Applicant’s SOR- alleged financial problems have been ongoing since the financial downturn in 2007 through 2008, are unresolved, and continue to date. The evidence establishes partial mitigation under AG ¶ 20(b). Applicant’s business’ failure was due to economic factors beyond his control. However, he did not provide evidence that he acted responsibly under the circumstances with respect to his debt, which is necessary for full mitigation under this condition. He has been fully employed since 2015, yet he has not documented steps taken to resolve his SOR-listed delinquencies. Mitigation under AG ¶ 20(b) is not fully applicable. Applicant has not established a history of responsible action with respect to his delinquent debts. There is no discernable evidence of a good-faith effort to repay those debts in the record. The evidence does not establish mitigation under AG ¶ 20(d). 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 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 eligibility for a security clearance 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 individual who is accountable for the decisions and choices that led to his continued 7 financial difficulties. He failed to demonstrate a basis for finding current good judgment, or permanent behavioral change, concerning his continuing pattern of financial irresponsibility. While his credit report reflects no new delinquencies, he has done little to resolve his SOR-listed debts. Applicant argues in AE B that the fact the SOR-listed debts no longer appear on his credit report means they no longer have security significance. He is incorrect. Evidence that a debt is not legally collectable through operation of law does not preclude a Judge from considering whether the circumstances underlying the debt impugn an applicant’s judgment or reliability. By the same token, evidence that an unresolved debt has dropped from an applicant’s credit report does not preclude a Judge from considering its significance. See, e.g., ADP Case No. 14-02206 (App. Bd. Oct. 15, 2015). Applicant’s unresolved delinquent debts establish continuing potential for pressure, coercion, or duress. Overall, the record evidence leaves me with questions and doubts as to Applicant’s eligibility and suitability for a security clearance. For these reasons, I conclude that he did not meet his burden to mitigate the security concerns arising from his financial considerations. 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 through1.g: Against Applicant 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. Jennifer Goldstein Administrative Judge