1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-02321 ) Applicant for Security Clearance ) Appearances For Government: Tara R. Karoian, Esq., Department Counsel For Applicant: Pro se ______________ Decision ______________ LYNCH, Noreen A., Administrative Judge: Applicant presented sufficient information to mitigate security concerns raised by his financial circumstances. Clearance is granted. Statement of the Case On October 6, 2016, the Department of Defense (DoD) Consolidated Adjudications Facility (CAF) sent Applicant a Statement of Reasons (SOR) alleging security concerns under the financial considerations guideline.1 On November 2, 2016, Applicant answered the SOR (Answer) and requested a determination on the administrative (written) record. He denied or disputed the delinquent accounts listed on the SOR, and stated that he is working with a credit repair company. On February 2, 2017, Department Counsel sent Applicant the Government’s written case, known as a file of relevant material (FORM). With the FORM, Department 1 The CAF took this action under Executive Order (E.O.) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended, and DoD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive). The CAF adjudicated this case using the previous version of the adjudicative guidelines, which were applicable for all cases falling under the jurisdiction of the Directive between September 1, 2006 and June 7, 2017. 2 Counsel forwarded to Applicant five exhibits (Items 1 – 5) that the Government offers for admission into the record. On March 22, 2017, Applicant submitted a response to the FORM (Response). The Response consists of two letters of reference from his employment, which he offers for admission into the record. (AX A-B) In his Answer, he attached two pages from the credit repair company he is working with to resolve his credit. (Item 2) On October 1, 2017, I was assigned the case. Procedural Issue On December 10, 2016, the Director of National Intelligence issued Security Executive Agent Directive 4 (SEAD 4), establishing a “single, common adjudicative criteria for all covered individuals who require initial or continued eligibility for access to classified information or eligibility to hold a sensitive position.”2 The National Security Adjudicative Guidelines (hereinafter “adjudicative guidelines” or “AG”), which are found in Appendix A to SEAD 4, are to be used in all security clearance decisions issued on or after June 8, 2017.3 Accordingly, I have applied the current version of the adjudicative guidelines.4 ISCR Case No. 02-00305 at 3 (App. Bd. Feb. 12, 2003) (security clearance decisions must be based on current DoD policy and standards). Findings of Fact Applicant, 61, is currently working for a contractor supporting the U.S. Government. He served in the U.S. military from 1974 to 1988, and was honorably discharged. He is married and has three children. He has held a security clearance in the past. He completed his security clearance application in June 2015. (Item 3) In his answer, Applicant stated that the financial hardships were the result of unemployment and illness for himself in 2010, and his wife’s not working for a year in 2014, in addition to her diagnosis of breast cancer and extensive treatments. She has undergone surgery and many intensive treatments. (Item 2) His wife did not work for about six months in 2010 and did not work for about a year in 2014. In response to questions in his SCA about his financial record, Applicant answered “yes” to a failure to file and pay his 2011 state income tax due to illness. He stated that he paid all taxes and penalties in 2013. The credit report in the file does not reflect any unpaid state taxes. (SOR 1.m) He also responded “yes” to delinquency involving routine accounts, and included the foreclosure on his home in 2011. He listed credit-card debts and a loan that he co-signed for his daughter. (Item 3) 2 SEAD 4, ¶ B, Purpose. 3 SEAD 4, ¶ C, Applicability. 4 Nonetheless, I have considered the previous version of the adjudicative guidelines and my ultimate decision in this case would have been the same. 3 In his 2015 investigative interview, Applicant discussed his home foreclosure in 2011. He explained that when he purchased the home, he was told that he could refinance in five years and by then he would have sufficient equity in the home. He was given a loan with no down payment. When he asked the mortgage company to refinance, his monthly mortgage payment increased, such that he could not afford the payment. He asked for a loan modification and was refused. At the same time, he was ill and could not work. (Item 5) The bank refused to make any arrangements with Applicant. He was advised to stop payments and the mortgage company would refinance or make a loan modification. Instead, the company auctioned the house after Applicant missed four payments. He was provided with a $400 settlement from the mortgage company based on a “predatory loan.” (Item 5) Based on that settlement, he believes he does not owe anything after the foreclosure. (SOR 1.i) Applicant submitted information to show that the SOR accounts that he disputed with the credit company have been deleted. These include the alleged debt at SOR 1.d, 1.f, 1.g, and 1.c. The document shows that eleven accounts have been deleted since the file investigation began. The account at SOR 1.b is believed to be a duplicate of SOR 1.d. (Attachments to Answer, Item 2) The account in 1.l shows a zero balance on the credit report. (Item 5) As to the charged-off student loan account in SOR 1.a in the amount of $10,720, Applicant co-signed a loan for his daughter. The credit report in the file shows that the amount is now past due in the amount of $716. He stated that he has been diligently addressing this account. The credit report shows a lower balance and a monthly payment amount of $102. (Item 4) The credit report in the file is from 2015. It does reflect the other alleged delinquencies, but it also clearly shows that prior to the medical issues and unemployment, Applicant had at least 15 accounts that note “pays as agreed.” Any efforts that Applicant has made since 2015 would not be noted on that older credit report. Applicant submitted two letters of recommendation from employers who have known him for 18 years. The first letter attested to the fact that Applicant has worked with sensitive information in many areas. He is respectful of privacy, classified information, rules and restrictions. Applicant has never had any security incidents and is a mentor to the junior staff. He is trusted and has never done anything to create doubts about his trustworthiness. (AX A) The second letter attests to Applicant’s judgment and his reasonable attempts to satisfy his debts. The writer has known Applicant for 18 years and knows that he provides for his family. He has no criminal record. Applicant responsibly paid his debts until the hardships that occurred a few years ago. His wife is still battling breast cancer. His wife was the main provider, and now Applicant’s income must suffice. The writer witnessed Applicant’s efforts to obtain a credit repair company to help him. Also, he 4 knows that Applicant has settled some debts and is doing all that he can do. He has protected classified information and will continue to do so. (AX B) In the FORM, the Government through counsel acknowledged that additional information supporting a whole-person analysis that Applicant is an individual of honorable character who exercises sound judgment and is suited to safeguard classified information could be considered in this case. Counsel elaborated that the issue in the case is not whether Applicant has paid all his debts or otherwise resolved them. The issue is whether the financial circumstances raise security concerns. (FORM at 2) Applicant provided such information to mitigate any concerns in response to the FORM. At the time of the 2015 investigative interview, Applicant earned about $47,000 a year and his wife returned to employment. Her earnings were $51,000 annually. There was a budget and discretionary income at the end of a month. (Item 5) Policies “[N]o one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). Individuals are eligible for access to classified information “only upon a finding that it is clearly consistent with the national interest” to authorize such access. E.O. 10865 § 2; SEAD 4, ¶ E.4. When evaluating an applicant’s eligibility for a security clearance, an administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations, the guidelines list potentially disqualifying and mitigating conditions. The guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, an administrative judge applies the guidelines in a commonsense manner, considering all available and reliable information, in arriving at a fair and impartial decision. AG ¶ 2. Department Counsel must present evidence to establish controverted facts alleged in the SOR. Directive ¶ E3.1.14. Applicants are responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by the applicant or proven . . . and has the ultimate burden of persuasion as to obtaining a favorable clearance decision.” Directive ¶ E3.1.15. Administrative Judges make certain that applicants: (a) receive fair notice of the issues, (b) have a reasonable opportunity to address those issues, and (c) are not subjected to unfair surprise. Directive, ¶ E3.1.10; ISCR Case No. 12-01266 at 3 (App. Bd. Apr. 4, 2014). In deciding a case, a judge must resolve any doubt raised by the evidence in favor of the national security. AG ¶ 2(b). See also SEAD-4, ¶ E.4. Moreover, the Supreme Court has held that officials making “security clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531. A person who seeks access to classified information enters into a fiduciary relationship with the Government predicated upon trust and confidence. This 5 relationship transcends normal 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 an applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation of potential, rather than actual, risk of compromise of classified information. Analysis Guideline F, Financial Considerations 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. . . .5 Guideline F is not limited to a consideration of whether a person with financial issues might be tempted to compromise classified information or engage in other illegality to pay their debts. It also addresses the extent to which the circumstances giving rise to delinquent debt cast doubt upon a person’s judgment, self-control, and other qualities essential to protecting classified information.6 In assessing Applicant’s case, I considered all the disqualifying and mitigating conditions under Guideline F, including the following: AG ¶ 19(a): inability to satisfy debts; AG ¶ 19(b): unwillingness to satisfy debts . . .; AG ¶ 19(c): a history of not meeting financial obligations; and AG Ᵽ19(f): failure to timely file or pay…. AG ¶ 20(a): the behavior happened so long ago, . . . 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; AG ¶ 20(b): the conditions that resulted in the financial problem were largely beyond the person's control . . . and the individual acted responsibly under the circumstances; 5 AG ¶ 18. 6 ISCR Case No. 11-05365 at 3 (App. Bd. May. 1, 2012). 6 AG ¶ 20(c): the individual has received or is receiving financial counseling for the problem . . . and there are clear indications that the problem is being resolved or is under control; AG ¶ 20(d): the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts; and AG ¶ 20(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. A security clearance adjudication is not a debt-collection process. Instead, an administrative judge examines the way an applicant handles his or her personal financial obligations to assess how they may handle their security responsibilities.7 Moreover, the resolution of past financial issues alone without evidence of true reform and rehabilitation is of limited probative value in the security clearance context.8 Applicant’s history of timely payments on his debts and the circumstances that occurred beyond his control led to the financial issues. He denied the tax issue and he disclosed on his SCA that he filed and paid the taxes and penalties in 2013. It does not appear that he has a tax liability on his credit report. He disputed other debts and obtained a company to help him resolve the issues. He explained the situation about his home foreclosure. He sought guidance and continues to diligently address his debts. His 2015 credit report reflects numerous accounts that are current. AG ¶¶ 19(a) – 19(g) apply. Individuals applying for a security clearance are not required to be debt free. They are also not required to resolve all past-due debts simultaneously or even resolve the delinquent debts listed in the SOR first. However, they are expected to present evidence to refute, explain, or mitigate security concerns raised by their circumstances, to include the accumulation of delinquent debt. Moreover, they bear the burden of showing that they manage their finances in a manner expected of those granted access to classified information.9 Applicant met his burden of proof and persuasion. His financial situation continues to improve and I have no doubts as to his due diligence. 7 See generally ISCR Case No. ISCR Case No. 12-09719 at 2-3 (App. Bd. Apr. 6, 2016). 8 Compare, ISCR Case No. 12-04806 (App. Bd. July 3, 2014) (despite the presence of unresolved debt, Board affirmed judge’s grant of a clearance because clear evidence of reform and rehabilitation), with, ISCR Case No. 15-03481 (App. Bd. Sep. 27, 2016) (applicant’s resolution of alleged financial issue (filed overdue tax returns) was insufficient to mitigate security concerns, because no extenuating circumstances to explain financial issue and no evidence of financial reform). 9 ISCR Case 07-10310 at 2 (App. Bd. Jul. 30, 2008). See also ISCR Case No. 15-02585 (App. Bd. Dec. 20, 2016) (reasonable for judge to expect an applicant to present documentary evidence). 7 Whole-Person Concept An administrative judge must make a commonsense judgment about a person’s security clearance suitability after considering all available, reliable and relevant information. This is referred to as the whole-person concept.10 A judge’s assessment in these cases is informed by the guidelines, as well as the non-exclusive factors set forth in AG ¶¶ 2(d) and 2(f). I hereby incorporate my above analysis and highlight some additional whole-person factors. Applicant served in the U.S. military for many years and was honorably discharged. He has worked for his employer for many years. He previously held a security clearance. He has always been a reliable and trustworthy person according to his employers. Applicant is married and has three children. He provides for his family. He has the respect of his employers who are aware of his circumstances and his efforts to address his financial issues. He has never had a security violation and has guarded classified information for many years. The Government implied in the FORM that while Applicant did not present documentation for each alleged debt on the SOR, with character references he could show himself through a whole-person analysis to be a trustworthy, reliable individual who will not jeopardize protected information. I have no questions or doubts about his eligibility for access to classified information. 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 (Financial Considerations): FOR APPLICANT Subparagraphs 1.a – 1.m: For Applicant Conclusion In light of the circumstances presented by the record in this case, it is clearly consistent with the interests of national security to continue Applicant’s access to classified information. Applicant’s request for a security clearance is granted. ____________________ Noreen Lynch Administrative Judge 10 See generally AG ¶ 2. See also SEAD-4, ¶ E.4; Directive, ¶ 6.3.