1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-01898 ) Applicant for Security Clearance ) Appearances For Government: Andre M. Gregorian, Esq., Department Counsel For Applicant: Pro se ___________ Decision ___________ HARVEY, Mark, Administrative Judge: Applicant provided sufficient evidence of resolution of her financial issues. Her husband’s unemployment and a change in her own employment were the primary causes of her financial problems. She rehabilitated her student loans, which constituted about two thirds of the $33,318 debt alleged in her statement of reasons (SOR). She disputed several debts, paid four debts, and plans to pay her verified debts through a debt- consolidation plan. Financial considerations security concerns are mitigated. Eligibility for access to classified information is granted. Statement of the Case On February 11, 2015, Applicant signed her Questionnaire for National Security Positions (SF 86) or security clearance application (SCA). Item 2. On July 30, 2016, the Department of Defense (DOD) Consolidated Adjudications Facility (CAF) issued an SOR to her, alleging security concerns under Guideline F (financial considerations). Item 1. The action was taken under Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1990), as amended; DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG), which became effective on September 1, 2006 (Sept. 1, 2006 AGs). On August 26, 2016, Applicant provided a response to the SOR, and she did not request a hearing. Item 1. On October 6, 2016, Department Counsel completed the File 2 of Relevant Material (FORM). On October 11, 2016, Applicant received the FORM, and she did not respond to the FORM. On October 1, 2017, the case was assigned to me. The case file consists of five exhibits. Items 1-5. Applicant did not object to any of the Government exhibits, and they were admitted into evidence. While this case was pending a decision, the Director of National Intelligence (DNI) issued Security Executive Agent Directive 4, establishing in Appendix A the National Security Adjudicative Guidelines for Determining Eligibility for Access to Classified Information or Eligibility to Hold a Sensitive Position (AGs), which he made applicable to all covered individuals who require initial or continued eligibility for access to classified information or eligibility to hold a sensitive position. The new AGs supersede the Sept. 1, 2006 AGs and are effective “for all covered individuals” on or after June 8, 2017. Accordingly, I have evaluated Applicant’s security clearance eligibility under the new AGs.1 Findings of Fact2 In Applicant’s SOR response, she admitted the SOR allegations in ¶¶ 1.a through 1.g, 1.j, 1.k, 1.m, 1.n, 1.p through 1.s, 1.w, 1.x, 1.z, and 1.bb. Item 1. She also provided extenuating and mitigating information. Item 1. Applicant’s admissions are accepted as findings of fact. Additional findings of fact follow. Applicant is 39 years old, and she has been employed as a corporate human resources manager since April 2013.3 From June 2002 to March 2013, she worked as a business manager for federal contractors. In 1997, she graduated from high school. Item 3. In 2014, she received a bachelor’s degree in business administration. She has no prior military service. In 2011, she married, and her seven children and stepchildren were born in 1994, 1994, 1995, 1996, 1997, 2010, and 2014. There is no evidence of violations of her employer’s rules, alcohol abuse, or illegal drug use. Financial Considerations4 When Applicant’s employment contract ended, she moved to a different state where she had an employment offer. Her new employment was in a location with a higher cost of living; however, she did not receive a pay increase. Her husband was unemployed. Her home was foreclosed; her vehicle was voluntarily repossessed; and other debts 1 Application of the AGs that were in effect as of the issuance of the SOR would not change my decision in this case. The new AGs are available at http://ogc.osd.mil/doha/SEAD4 20170608.pdf. 2 Some details were excluded to protect Applicant’s right to privacy. Specific information is available in the cited exhibits. 3 Unless stated otherwise, Applicant’s February 11, 2015 Questionnaire for National Security Positions (SF 86) or security clearance application (SCA) is the source for the facts in this paragraph. Item 2. 4 Unless stated otherwise, the source for the facts in this section is Applicant’s SOR response. Item 1. 3 became delinquent. She recently received a pay increase, and she is able to make progress resolving her delinquent debts. Applicant’s SOR lists 28 alleged debts totaling $33,318, and their status is as follows: SOR ¶¶ 1.a, and 1.c through 1.f allege Applicant has five delinquent student loans owed to the same student-loan creditor for $6,100, $4,444, $3,537, $3,483, and $2,857. Applicant said she believed her student loans were in deferment, and she was unaware that they were delinquent. The rules on deferment and forbearance are complicated and eligibility changes as personal circumstances change. She began making payments on her student loans before she received the SOR. On August 9, 2016, the student-loan creditor wrote that Applicant completed her student loan rehabilitation program, and her new monthly payment is $213. Applicant’s budget indicates her total student loan debt is about $70,000. SOR ¶ 1.b alleges Applicant has a charged-off debt for $4,877. Applicant said she believed her debt was resolved when her vehicle was repossessed in August 2013. Item 3. She asked for a copy of the loan agreement; however, the creditor did not provide it. Item 2. She disputed the amount of the debt. Item 3. She contacted the creditor twice and offered to make payments; however, the creditor rejected her offers, stating the debt was charged off. SOR ¶ 1.g alleges Applicant has a debt placed for collection for $843. Applicant said this debt is being paid through a debt-consolidation plan. The credit reporting company acknowledged receipt of Applicant’s dispute of this account. SOR ¶¶ 1.h, 1.i, 1.k, 1.m, 1.p through 1.z allege Applicant owes 15 medical debts placed for collection totaling $4,486 for $721, $524, $350, $138, $54, $151, $134, $64, $411, $721, $524, $199, $149, $210, and $136. The SOR debts in ¶ 1.h and ¶ 1.u are both for $721, and ¶ 1.i and ¶ 1.v are both for $524. She is credited with resolving the SOR debts in ¶¶ 1.u and 1.v as duplications. She did not recognize the debts in SOR ¶¶ 1.h, 1.i, 1.t, 1.u, 1.y, and 1.v, and she has disputed them. The credit reporting companies have acknowledged receipt of disputes for the debts in SOR ¶¶ 1.h, 1.i, 1.v, and 1.u. Most of the medical debts resulted from treatment of her children. Item 3. She believed her medical insurance would take care of the debts. Item 3. Applicant said the debts in SOR ¶¶ 1.k, 1.p through 1.s, 1.w, 1.x, and 1.z are being paid through a debt-consolidation plan. She said she paid the debt in SOR ¶ 1.m. SOR ¶ 1.j and 1.l allege Applicant owes two telecommunications debts placed for collection for $371 and $210. Applicant said the debt in SOR ¶ 1.j is being paid through a debt-consolidation plan. She is disputing her responsibility for the debt in SOR ¶ 1.l. SOR ¶¶ 1.n and 1.bb allege Applicant owes two debts for utilities placed for collection for $121 and $1,331. Applicant said she paid the debt in SOR ¶ 1.n. Applicant said the debt in SOR ¶ 1.bb is being paid through a debt-consolidation plan. 4 SOR ¶ 1.o alleges Applicant owes a state tax lien entered in 2008 for $562. Applicant said that this debt was paid, and the creditor is providing proof of resolution to her. SOR ¶ 1.aa alleges Applicant owes a book club debt placed for collection for $97. Applicant disputed her responsibility for this debt. Applicant said after debts are verified, she intends to pay them. Item 3. On August 20, 2016, Applicant’s credit repair company wrote her and stated nine negative financial entries were removed from her credit report, including the debts in SOR ¶¶ 1.k and 1.l. Applicant employed a credit counseling service to assist with her finances. She generated a budget and assembled a plan to address her delinquent debts. Her monthly income is $5,600, and her three largest monthly payments are rent of $1,400, health insurance of $575, and car payment of $551. She plans to pay $286 monthly into a debt management plan and to pay $213 monthly to address her student loans. She has a monthly remainder of about $200. Her budget did not include her spouse’s income and expenses. Policies The U.S. Supreme Court has recognized the substantial discretion of the Executive Branch in regulating access to information pertaining to national security emphasizing, “no one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). As Commander in Chief, the President has the authority to control access to information bearing on national security and to determine whether an individual is sufficiently trustworthy to have access to such information.” Id. at 527. The President has authorized the Secretary of Defense or his designee to grant applicant’s eligibility for access to classified information “only upon a finding that it is clearly consistent with the national interest to do so.” Exec. Or. 10865. Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, these guidelines are applied in conjunction with an evaluation of the whole person. An administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. An administrative judge must consider all available, reliable information about the person, past and present, favorable and unfavorable. The Government reposes a high degree of trust and confidence in persons with access to classified information. This relationship transcends normal duty hours and endures throughout off-duty hours. 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 about potential, rather than actual, risk of compromise of classified information. Clearance decisions must be “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See Exec. Or. 10865 § 7. Thus, nothing in this decision should be construed to suggest that it is based, in whole or in part, on any express or implied determination about applicant’s allegiance, loyalty, or 5 patriotism. It is merely an indication the applicant has not met the strict guidelines the President, Secretary of Defense, and DNI have established for issuing a clearance. Initially, the Government must establish, by substantial evidence, conditions in the personal or professional history of the applicant that may disqualify the applicant from being eligible for access to classified information. The Government has the burden of establishing controverted facts alleged in the SOR. See Egan, 484 U.S. at 531. “Substantial evidence” is “more than a scintilla but less than a preponderance.” See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). The guidelines presume a nexus or rational connection between proven conduct under any of the criteria listed therein and an applicant’s security suitability. See ISCR Case No. 95-0611 at 2 (App. Bd. May 2, 1996). Once the Government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. Directive ¶ E3.1.15. An applicant “has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue his security clearance.” ISCR Case No. 01-20700 at 3 (App. Bd. Dec. 19, 2002). The burden of disproving a mitigating condition never shifts to the Government. See ISCR Case No. 02-31154 at 5 (App. Bd. Sep. 22, 2005). “[S]ecurity clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531; see AG ¶ 2(b). Analysis Financial Considerations AG ¶ 18 articulates the security concern for financial problems: 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. . . . An individual who is financially overextended is at greater risk of having to engage in illegal or otherwise questionable acts to generate funds. . . . The Appeal Board explained the scope and rationale for the financial considerations security concern in ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012) (citation omitted) as follows: This concern is broader than the possibility that an applicant might knowingly compromise classified information in order to raise money in satisfaction of his or her debts. Rather, it requires a Judge to examine the totality of an applicant’s financial history and circumstances. The Judge must consider pertinent evidence regarding the applicant’s self-control, judgment, and other qualities essential to protecting the national secrets as well as the vulnerabilities inherent in the circumstances. The Directive 6 presumes a nexus between proven conduct under any of the Guidelines and an applicant’s security eligibility. AG ¶ 19 includes four disqualifying conditions that could raise a security concern and may be disqualifying in this case: “(a) inability to satisfy debts”; “(b) unwillingness to satisfy debts regardless of the ability to do so”; “(c) a history of not meeting financial obligations”; and “(f) failure to file or fraudulently filing annual Federal, state, or local income tax returns or failure to pay annual Federal, state, or local income tax as required.” In ISCR Case No. 08-12184 at 7 (App. Bd. Jan. 7, 2010), the Appeal Board explained: It is well-settled that adverse information from a credit report can normally meet the substantial evidence standard and the government’s obligations under [Directive] ¶ E3.1.14 for pertinent allegations. At that point, the burden shifts to applicant to establish either that [he or] she is not responsible for the debt or that matters in mitigation apply. (internal citation omitted). The record establishes the disqualifying conditions in AG ¶¶ 19(a), 19(b), 19(c), and 19(f) requiring additional inquiry about the possible applicability of mitigating conditions. Seven financial considerations mitigating conditions under AG ¶ 20 are potentially applicable in this case: (a) the behavior happened so long ago,5 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;6 and 5 A debt that became delinquent several years ago is still considered recent because “an applicant’s ongoing, unpaid debts evidence a continuing course of conduct and, therefore, can be viewed as recent for purposes of the Guideline F mitigating conditions.” ISCR Case No. 15-06532 at 3 (App. Bd. February 16, 2017) (citing ISCR Case No. 15-01690 at 2 (App. Bd. Sep. 13, 2016)). 6 The Appeal Board has previously explained what constitutes a “good faith” effort to repay overdue creditors or otherwise resolve debts: 7 (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; (f) the affluence resulted from a legal source of income; and (g) the individual has made arrangements with the appropriate tax authority to file or pay the amount owed and is in compliance with those arrangements. The DOHA Appeal Board concisely explained Applicant’s responsibility for proving the applicability of mitigating conditions as follows: Once a concern arises regarding an Applicant’s security clearance eligibility, there is a strong presumption against the grant or maintenance of a security clearance. See Dorfmont v. Brown, 913 F. 2d 1399, 1401 (9th Cir. 1990), cert. denied, 499 U.S. 905 (1991). After the Government presents evidence raising security concerns, the burden shifts to the applicant to rebut or mitigate those concerns. See Directive ¶ E3.1.15. The standard applicable in security clearance decisions is that articulated in Egan, supra. “Any doubt concerning personnel being considered for access to classified information will be resolved in favor of the national security.” Directive, Enclosure 2 ¶ 2(b). ISCR Case No. 10-04641 at 4 (App. Bd. Sept. 24, 2013). Applicant provided important mitigating information. She lost her employment and needed to transfer to a different state, and her husband was unemployed. These are circumstances partially or fully beyond her control that harmed her finances. Applicant paid three SOR debts and brought her student loans to current status. Of her total SOR debt of $33,318, Applicant rehabilitated five delinquent student loans totaling $20,420, which are owed to the same student-loan creditor. She began making payments on her student loans before she received the SOR. Two medical debts were duplications. Applicant disputed several debts. AG ¶ 20(a), 20(b), and 20(d) apply. In order to qualify for application of [the “good faith” mitigating condition], an applicant must present evidence showing either a good-faith effort to repay overdue creditors or some other good-faith action aimed at resolving the applicant’s debts. The Directive does not define the term “good-faith.” However, the Board has indicated that the concept of good- faith “requires a showing that a person acts in a way that shows reasonableness, prudence, honesty, and adherence to duty or obligation.” Accordingly, an applicant must do more than merely show that he or she relied on a legally available option (such as bankruptcy) in order to claim the benefit of [the “good faith” mitigating condition]. (internal citation and footnote omitted) ISCR Case No. 02-30304 at 3 (App. Bd. Apr. 20, 2004) (quoting ISCR Case No. 99-9020 at 5-6 (App. Bd. June 4, 2001)). 8 Applicant said she paid her $562 state tax debt in SOR ¶ 1.o. AG ¶ 20(g) applies to her state tax debt. Based on Applicant’s track record of paying or resolving her debts, future new delinquent debt “is unlikely to recur and does not cast doubt on [Applicant’s] current reliability, trustworthiness, or good judgment,” and “there are clear indications that the problem is being resolved or is under control.” Her payments to address her debts showed good faith. She has sufficient income to keep her debts in current status and to continue making progress paying her remaining debts. Applicant assures she will conscientiously endeavor to maintain her financial responsibility. Her efforts are sufficient to mitigate financial considerations security concerns. 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), “[t]he ultimate determination” of whether to grant a security clearance “must be an overall commonsense judgment based upon careful consideration of the guidelines” and the whole-person concept. My comments under Guideline F are incorporated 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 39 years old, and she has been employed as a corporate human resources manager since April 2013. From June 2002 to March 2013, she worked as a business manager for federal contractors. In 2014, she received a bachelor’s degree in business administration. In 2011, she married, and she has seven children and stepchildren. There is no evidence of violations of her employer’s rules, alcohol abuse, or illegal drug use. Applicant provided sufficient evidence of resolution of her financial issues. Her husband’s unemployment and a change in her own employment were the primary causes of her financial problems. She rehabilitated her student loans, which constituted about two thirds of the $33,318 debt alleged in her SOR. She disputed several debts, paid four debts, and plans to pay her verified debts through a debt-consolidation plan. 9 The Appeal Board has addressed a key element in the whole-person analysis in financial cases stating: . . . the concept of meaningful track record necessarily includes evidence of actual debt reduction through payment of debts. However, an applicant is not required, as a matter of law, to establish that he has paid off each and every debt listed in the SOR. All that is required is that an applicant demonstrate that he has . . . established a plan to resolve his financial problems and taken significant actions to implement that plan. The Judge can reasonably consider the entirety of an applicant’s financial situation and his actions in evaluating the extent to which that applicant’s plan for the reduction of his outstanding indebtedness is credible and realistic. See Directive ¶ E2.2(a) (Available, reliable information about the person, past and present, favorable and unfavorable, should be considered in reaching a determination.) There is no requirement that a plan provide for payments on all outstanding debts simultaneously. Rather, a reasonable plan (and concomitant conduct) may provide for the payment of such debts one at a time. Likewise, there is no requirement that the first debts actually paid in furtherance of a reasonable debt plan be the ones listed in the SOR. ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008) (internal citations and quotation marks omitted). She understands what she needs to do to establish and maintain her financial responsibility. She took reasonable actions under her particular financial circumstances to address her delinquent debts. Applicant has established a “meaningful track record” of debt repayment, and she assures she will maintain her financial responsibility.7 I have carefully applied the law, as set forth in Egan, Exec. Or. 10865, the Directive, and the AGs, to the facts and circumstances in the context of the whole person. I conclude that financial considerations security concerns are mitigated. It is clearly consistent with the interests of national security to grant Applicant security clearance eligibility. 7 Failure to comply with payment plans or other delinquent debt will raise a security concern. The Government has the option of following-up with more questions about Applicant’s finances. The Government can re-validate Applicant’s financial status at any time through credit reports, investigation, and interrogatories. Approval of a clearance now does not bar the Government from subsequently revoking it, if warranted. “The Government has the right to reconsider the security significance of past conduct or circumstances in light of more recent conduct having negative security significance.” ISCR Case No. 10- 06943 at 4 (App. Bd. Feb. 17, 2012). An administrative judge does not have “authority to grant an interim, conditional, or probationary clearance.” ISCR Case No. 10-06943 at 4 (App. Bd. Feb. 17, 2012) (citing ISCR Case No. 10-03646 at 2 (App. Bd. Dec. 28, 2011)). See also ISCR Case No. 04-03907 at 2 (App. Bd. Sep. 18, 2006) (stating, “The Board has no authority to grant [a]pplicant a conditional or probationary security clearance to allow her the opportunity to have a security clearance while she works on her financial problems.”). This footnote does not imply that this decision to grant Applicant’s security clearance is conditional. 10 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: FOR APPLICANT Subparagraphs 1.a through 1.bb: For Applicant Conclusion In light of all of the circumstances in this case, it is clearly consistent with the interests of national security to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is granted. _________________________ MARK HARVEY Administrative Judge