1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-02227 ) Applicant for Security Clearance ) Appearances For Government: Andrea M. Corrales, 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 September 13, 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 October 12, 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 December 12, 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 responded to the FORM; did not object to the Government’s evidence; and submitted documents marked as Applicant Exhibits (AE) A through D.2 All evidence was admitted. The case was assigned to me on August 23, 2017. Findings of Fact Applicant admitted all of the allegations in the SOR. After a thorough and careful review of the pleadings and exhibits submitted, I make the following findings of fact. Applicant is 40 years old. He earned an associate’s degree in 2004 and is presently attending college online while working full time. He married in 1999 and has two children ages 17 and 16 years old. He served in the military from 1999 until his honorable discharged in 2005. He disclosed a four-month period of unemployment after his discharge and a three-month period of unemployment in 2006. Otherwise he has been steadily employed by federal contractors. He has worked for his present employer since November 2014.3 Applicant completed a security clearance application (SCA) in January 2015. In it he disclosed he was counseled, warned, or disciplined for violating the terms of the agreement for a travel or credit card provided by his employer. He disclosed in 2006 he used the card for personal expenses. He estimated the amount to be $1,000.4 In response to the inquiry about what action he had taken to rectify the situation, he stated: Not sure of the amount, and not sure that this was even taken care of. I moved on shortly after having used the card for personal expenses, but was not in relation. Several tax return checks were garnished for the next few years for numerous instances of nonpayment of various debts.5 Applicant disclosed on his SCA that he had a car debt ($12,000) and stated: “unable to continue making payments; can’t recall specific reasons—possibly due to 2 AE C and D had multiple pages. 3 Item 3. 4 Item 3. 5 Item 3 at page 40-41. Any information that was not alleged in the SOR, I will not consider for disqualifying purposes. I may consider the information in mitigation, and when analyzing the whole- person and making a credibility determination. 3 purchasing new home???”6 He stated in response to what action he had taken regarding the debt, “never did anything with it.” He also disclosed in the SCA the debts in SOR ¶¶ 1.a ($5,016); 1.b ($1,603); 1.c ($974); 1.k (charged off approximately $600); and 1.j (charged off approximately $400). He stated that he had defaulted on these debts in 2013 and 2014, and he was unable to continue making payments on them and they were in collection. He did not provide any information about his intention to pay the debts.7 Applicant attributed his financial problems to being a one-income family, overspending, and mishandling his finances. The debts alleged in the SOR are corroborated by credit reports from June 2016, February 2015, and Applicant’s disclosures and admissions.8 In his SOR answer, Applicant stated that his wife is now working and their household income will increase by $1,000 monthly. He and his wife were separated for a period, but have reconciled. They have agreed to be more mindful of their financial situation and live within their budget. He stated that they had been living like a two- income family with one income. He sought credit counseling, and they have changed their lifestyle. Applicant stated he reduced some household expenses and he planned to “catch-up on creditors we’ve neglected and set ourselves straight.”9 Applicant’s response to the FORM stated that after reviewing his financial situation with his credit counseling service, it was determined the best plan was to file bankruptcy. He provided a copy of the contract with the bankruptcy attorney. No documentation was provided to show that Applicant had filed bankruptcy or that his debts were discharged. He stated he was given budget and financial awareness advice from the credit counseling service.10 No documentation was provided to show that any of the 11 debts alleged in the SOR are resolved. 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. 6 Item 3 at page 42. 7 Item 3. 8 Items 3, 4, 5, 6. 9 Item 2. 10 AE B, C, D. 4 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. Under Directive ¶ E3.1.15, an “applicant is responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or mitigate 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 5 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 (c) a history of not meeting financial obligations. Applicant has experienced financial difficulty since at least 2013. He has numerous delinquent debts that he is unable or unwilling to pay. 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; and 6 (d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts. Applicant admitted all of the delinquent debts alleged in the SOR. He disclosed some of the delinquent debts on his SCA and did not indicate his intention to resolve them at the time. In Applicant’s response to the FORM, he stated that he was going to file bankruptcy to resolve the delinquent debts. Applicant’s history of being unable or unwilling to resolve his debts is ongoing. There is insufficient evidence to conclude that it is unlikely similar circumstances will not recur. Applicant’s conduct casts doubt on his current reliability, trustworthiness, and good judgment. AG ¶ 20(a) does not apply. Applicant disclosed periods of unemployment and a period of separation with his wife. His periods of unemployment were more than ten years ago, and he has been steadily employed since then. This is not a condition beyond his control. He did not elaborate on his separation, but it likely had a financial impact, which was beyond his control. For the full application of AG ¶ 20(b), Applicant must have acted responsibly under the circumstances. He did not provide sufficient evidence to show he responsibly addressed any of his delinquent debts. He disclosed some of them on his SCA and indicated he had done nothing to resolve them. He intends to resolve them through bankruptcy. I cannot find that under the circumstances he has acted responsibly. I find AG ¶ 20(b) partially applies. Applicant sought credit counseling after he received the SOR. He intends to file bankruptcy, but evidence was not provided to show his debts are discharged or resolved. There is insufficient evidence that his financial problems are under control or being resolved. There is no evidence that he has initiated a good-faith effort to repay overdue creditors or otherwise resolve his debts. AG ¶¶ 20(c) and 20(d) do not apply. 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. 7 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 40 years old. He has a history of financial problems that include numerous delinquent debts. He admitted he and his wife lived beyond their means. Applicant disclosed several of the alleged debts on his SCA, and indicated he had not taken any action to resolve them. Although he intends to file bankruptcy, the evidence shows that he contracted with a bankruptcy attorney to represent him but no further action has been take. Applicant did not provide sufficient evidence in mitigation. The record evidence leaves me with serious 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.k: 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 security to grant Applicant’s eligibility for a security clearance. Eligibility for access to classified information is denied. _____________________________ Carol G. Ricciardello Administrative Judge