DATE: December 16, 2002

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SSN: -----------

Applicant for Security Clearance

DECISION OF ADMINISTRATIVE JUDGE

CLAUDE R. HEINY II

APPEARANCES

FOR GOVERNMENT

Kathryn D. MacKinnon, Department Counsel

Jennifer Campbell, Department Counsel

FOR APPLICANT

Pro Se

SYNOPSIS

In 1995, the Applicant, while in the Army reserve, was employed by an escort service, strip club, stripper-gram service, and engaged in acts of prostitution. These acts of personal conduct have been mitigated as have the financial allegations. When she completed a security clearance application, she failed to disclose she was currently more than 90 days delinquent on her debts. One year later, she filed for bankruptcy claiming assets of approximately $5,000.00 and liabilities of approximately $100,000.00. The record evidence is insufficient to mitigate or extenuate the negative security implications of her falsification on her security clearance application. Clearance is denied.

STATEMENT OF THE CASE

On April 1, 2002, the Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) to Applicant, stating that DOHA could not make the preliminary affirmative finding ⁽¹⁾ it is clearly consistent with the national interest to grant or continue a security clearance for Applicant. On April 19, 2002, the Applicant answered the SOR and requested a hearing. The case was assigned to me on May 30, 2002.

The Government's case consisted of nine exhibits (Gov Ex). The Applicant relied on her own testimony and eleven exhibits. (App Ex) Following the hearing, additional documents were received, provisions having been made at the time of the hearing for their submission following the hearing. Department counsel having no objection to their admission, the submissions were admitted as App Ex L. The transcript (tr.) of the hearing was received on August 15, 2002.

On June 14, 2002, Department Counsel (DC) moved to amend the SOR to include questionable personal conduct under Guideline E. The motion was granted. A Notice of Hearing was issued on July 24, 2002, scheduling the hearing which was held on August 8, 2002. At the hearing, the debts in SOR subparagraphs 1d and 1e were consolidated into a single subparagraph 1d. and the following subparagraph was re-lettered from 1f to 1e. (tr. 86)

FINDINGS OF FACT

The Applicant agreed she had filed bankruptcy and denied the other allegations.

The Applicant is 33 years old, has worked for a defense contractor since June 1998, and is seeking a security clearance.

Since 1987, the Applicant has been a member of the Army reserves and has been rated as a superior NCO. (App Ex B) She had received numerous medals and recognition for her military service (App Ex H) and received letters of appreciation and training in her current job. (App Ex I) On September 15, 2001, she went back on active duty for home land security (App Ex C) being paid "a lot less money" as a military member then in her civilian job. (tr. 26)

The Applicant's financial problems started in 1990, when she was 21 years old and allowed her aunt to use her charge cards. Her aunt was supposed to pay her back, but did not. At the time the Applicant was working for a hotel and when her hours of work were cut, she was unable to pay her debts.

In May 1995, the Applicant had been working for an escort service ⁽²⁾ and was sent to a hotel to meet two "businessmen." The two men offered her $250.00 each for sex and as she was getting undressed, she was arrested for two counts of prostitution. She was found guilty and sentenced to: 30 days in jail (15 days suspended), fined $300.00 ($150.00 suspended), plus $84.65 court costs and one year probation--on each of the two counts. (Gov Ex 4) The Applicant recently learned the fine and court costs were for each offense. In May 2001, (Gov Ex 2, page 6) the Applicant stated she had recently learned the total amount she owed had not been paid. As of April 2002, she had not paid the fine and court costs and a collection action was commenced for $277.81. As of the hearing date--August 2002, she is making monthly payments on this debt. (tr. 93)

The Applicant worked as an exotic dancer and also for a company providing stripper grams. The later company also did costume parties for little children. Before working in the clubs and doing parties, the Applicant checked with her military recruiter and was told she could do the work so long as she did not appear in uniform or tell people she was in the reserves. (tr. 83) At some undisclosed time the Applicant stopped working for the company, but resumed working for them when her car was repossessed. She asked to do children's costume parties, but there were too few such parties to allow her sufficient money to recover her car from repossession.

In July 1995, the Applicant was working for a stripper gram service ⁽³⁾ and was sent to entertain at a party. Other dancers had refused to go due to party's bad location. When she arrived at the party, she was told she was supposed to have sexual intercourse with all present, each of whom had paid $5.00 to attend the party. She did not agree to this, a confrontation occurred in which the Applicant was assaulted numerous times, struck in the eye and chest, and kicked in the ribs and on her back. The police later informed her she probably lived because the two most violent members of the gang were incarcerated the night of the party. Her husband who had accompanied her to the party for protection was shot multiple times when he tried to call the police. He died later that evening at the hospital. The Applicant had a miscarriage due to the beating. She was approximately four and a half months pregnant when the miscarriage occurred. The Applicant was in weekly counseling from July 1995 until June 1996. Since this incident, the Applicant has not returned to this type of employment, has no intent to engage in this type of behavior, and no longer associates with people who are involved in this type of behavior.

The Applicant was injured in the incident and incurred $554.00 in medical bills. Ultimately, the individual who assaulted her was forced, through considerable effort by the Applicant, to make restitution for her medical bills. However, prior to receiving the restitution, the Applicant's wages were garnished by the hospital, which had provided the services. The garnishment caused other checks she had written in expectation of her normal salary being in the account, to bounce. She had paid all of the bounced checks but one. (SOR subparagraph 1a) The one check she did not pay before going on nine months active duty overseas--July 1996 through April 1997--was a nine dollar check written in April 1996 at a grocery store. In addition to the garnishment, the Applicant had been experiencing problems with her reserve pay and had assumed her reserve pay had been deposited into her account when it had not.

While overseas, the Applicant's mother informed her that correspondence had arrived concerning the unpaid check and the police had asked her to come in to talk with them. Being overseas, the Applicant called the police station, but was not in a position to return to the U.S. to talk in person with the local authorities. When the Applicant returned home from her overseas duty, she left active duty, and shortly after having surgery, she was arrested and charged with issuing a worthless check. (Gov Ex 3) The Applicant was unemployed, from April 1997, when she was released from active duty, to August 1997. She was found guilty of the charge, sentenced to 90 days in jail, suspended, order to perform 40 hours of community service, assessed $110.00 for court costs, and given three years probation. She made restitution on the debt and attended a personal financial course. (tr. 42) Since the incident, she has not bounced any other checks. While waiting to be bailed out, the Applicant knew this is not where she wanted to be. (tr. 43)

In November 2000, the Applicant filed for Chapter 7 bankruptcy protection listing liabilities ⁽⁴⁾ totaling approximately $100,000.00 and her assets totaled approximately $5,000.00. (Gov Ex 5) At the time of her filing, the Applicant's gross monthly income was $3,877.44 and her take home pay, including her Army reserve pay, totaled $2,946.40. The bankruptcy was discharged in March 2001. She chose to file for bankruptcy protection after being unable to work with one of her creditors. At one point, her bank appropriated the money in her account, which left her with $36.00 until her next pay day. The action was commenced to pay an outstanding debt owed to a bank, which her bank had purchased. (tr. 44) She had written checks on her checking account for her car payment and insurance, not knowing her account would be garnished. She was able to secure a loan to cover the outstanding checks. She contacted a consumer credit service prior to filing bankruptcy, but they were not interested in helping her unless they could receive a percentage of the amounts paid.

In November 1999, she completed a Security Clearance Application, Standard Form 86 (SF 86). She answered "no" to question 39, which asked if she was currently more than 90 days delinquent on any debt. When she completed the SF 86, the Applicant indicates she was not behind on any debt, specifically she was current on her car payment, rent, utilities, or other debts. (tr. 48) Her credit report (Gov Ex 7) does not support this assertion. The Applicant did not review her credit report prior to completing the SF 86 and now tells people the importance of getting their credit reports prior to completing any forms.

In November 2000, three accounts were opened with a bank for credit cards when the Applicant was living with her mother. Although the accounts are in her name, the Applicant never charged on the accounts. (tr. 54) The Applicant let her mother use the credit cards on the promise the debt would be paid. The debts were not paid. The Applicant's October 2001 credit report (Gov Ex 6) lists one of the accounts with a balance of $350.00 being closed by the credit grantor. The other two accounts were charged off with a $451.50 delinquency on one account (SOR subparagraph 1d) and $553.00 delinquency (SOR subparagraph 1e) on another. The company offered to accept $338.63 to settle the first of the charged off accounts. (Gov Ex 8) The Applicant's credit report (App Ex G) indicates these three accounts were included in the bankruptcy. The Applicant indicates an 18-month payment plan has been established (tr. 46) to repay this creditor. (App Ex L) The Applicant's aunt also used a different department store credit card and gasoline credit card. The Applicant had provided the gasoline card to her mother to pay for travel expenses related to her grandfather's dialysis. The Applicant does not know how her aunt got the department store card although her aunt had access to the Applicant's mail. Her aunt never repaid the charges. The Applicant does not talk to part of her family and does not lend money to the other part.

During the bankruptcy proceeding, the Applicant continued paying her past landlord. She paid $3,200.00. (tr. 47) As of September 2001, the Applicant owed her landlord approximately $1,130.06 (SOR subparagraph 1f) for unpaid rent for April 2001 ($496.00), May 2001($496.00), June 2001 ($496.00), and July 2001 ($80.00) plus court costs and late fees less her security deposit and interest ($614.94). She was evicted from the premises on June 7, 2001. The Applicant experienced numerous problems with the apartment. The apartment was infested with roaches and mice and a snake lived under the stairs. The window leaked when it and rained causing damage to her property. It took the landlord two days to fix the refrigerator, which resulted in the spoilage of food. She did not know where to go to make a formal complaint about these things when she was living in the apartment. The bankruptcy (Gov Ex 5, Schedule F page 8) lists a debt of $3,600.00 to the same landlord incurred in March 1998. However, the bankruptcy was discharged in March 2001 and the months in question were April through July 2001 subsequent to the discharge. The Applicant will not pay this debt unless they prove their case in court. (tr. 48)

The Applicant was raised in a household where financial responsibility was not taught. She understands she must stand up and take responsibility for her actions. She attended a debtor's anonymous meeting, which was a support group, but did not teach her about personal finance or financial responsibility. She has received counseling through her boy friend to include financial budgeting. She and her boyfriend have started four companies, which manage property and haul trash. (tr. 63) She now has a monthly budget and has a $1,500.00 line of credit on which she is current. She also owes a balance of $641.56 and has a second credit card with a $750.00 credit limit. (tr. 74) She has an automatic monthly debit from her pay check to her saving account.

The Applicant has $50.00 per month automatically deducted for insurance and, as of July 2002, has $179.02 in a 401(k) Roth IRA. The Applicant is paying the state $39.00 per month on a balance owed of $728.31. The Applicant is paying her car payments ($352.00 per month), her insurance ($55.00 per month), the utility bills, and for the household's food. Her boy friend pays the rent. She takes her lunch to work to save money. In April 2002, the Applicant filed a petition seeking child support for her 15-year-old daughter. (App Ex L) She indicates she is a changed person for what she was in the mid-1990s and acknowledges that she did not always use the best judgment. She now tries to get multiple advice when facing a problem. She does not take duty or her job performance lightly.

Between December 1995 and July 2000, the Applicant took college courses to include business administration, computer networking, telecommunications, financial management and other courses. (App Ex G) The Applicant states she finished paying off her student loan in 1999. (tr. 96) However, she included her student loans her bankruptcy.

The Adjudicative Guidelines in the Directive are not a set of inflexible rules of procedure. Instead, they are to be applied by Administrative Judges on a case-by-case basis with an eye toward making determinations that are clearly consistent with the interests of national security. In making overall common sense determinations, Administrative Judges must consider, assess, and analyze the evidence of record, both favorable and unfavorable, not only with respect to the relevant Adjudicative Guidelines, but in the context of factors set forth in section E 2.2.1. of the Directive as well. In that vein, the government not only has the burden of proving any controverted fact(s) alleged in the SOR, it must also demonstrate the facts proven have a nexus to an Applicant's lack of security worthiness.

The adjudication process is based on the whole person concept. All available, reliable information about the person, past and present, is to be taken into account in reaching a decision as to whether a person is an acceptable security risk. Although the presence or absence of a particular condition for or against clearance is not determinative, the specific adjudicative guidelines should be followed whenever a case can be measured against this policy guidance.

Considering the evidence as a whole, this Administrative Judge finds the following adjudicative guidelines to be most pertinent to this case:

Financial Considerations (Guideline F) The Concern: An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds. Unexplained affluence is often linked to proceeds from financially profitable criminal acts. E2.A6.1.1.

Conditions that could raise a security concern and may be disqualifying include: E2.A6.1.2.

1. A history of not meeting financial obligations. (E2.A6.1.2.1.)

3. Inability or unwillingness to satisfy debts. (E2.A6.1.2.3.)

Conditions that could mitigate security concerns include: E2.A6.1.3.

3. The conditions that resulted in the behavior were largely beyond the person's control (e.g., loss of employment, a business downturn, unexpected medical emergency, or a death, divorce or separation). (E2.A6.1.3.3.)

4. The person has received or is receiving counseling for the problem and there are clear indications that the problem is being resolved or is under control. (E2.A6.1.3.4.)

6. The individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts. (E2.A6.1.3.6.)

Personal Conduct (Guideline E) The Concern: Conduct involving questionable judgment, untrustworthiness, unreliability, lack of candor, dishonesty, or unwillingness to comply with rules and regulations could indicate that the person may not properly safeguard classified information.

Conditions that could raise a security concern and may be disqualifying also include: E2.A5.1.2.

2. The deliberate omission, concealment, or falsification of relevant and material facts from any personnel security questionnaire, personal history statement, or similar form used to conduct investigations, determine employment qualifications, award benefits or status, determine security clearance eligibility or trustworthiness, or award fiduciary responsibilities. (E2.A5.1.2.2.)

6. Association with persons involved in criminal activity. (E2.A5.1.2.6.)

Conditions that could mitigate security concerns include: E2.A5.1.3.

2. The falsification was an isolated incident, was not recent, and the individual has subsequently provided correct information voluntarily. (E2.A5.1.3.2.)

7. Association with persons involved in criminal activities has ceased. (E2.A5.1.3.7.)

Initially, the Government has the burden of proving any controverted fact(s) alleged in the Statement of Reasons. If the Government meets that burden, the burden of persuasion then shifts to the Applicant who must remove that doubt and establish her security suitability with substantial evidence in explanation, mitigation, extenuation, or refutation, sufficient to demonstrate that despite the existence of guideline conduct, it is clearly consistent with the national interest to grant or continue her security clearance.

A person who seeks access to classified information enters into a fiduciary relationship with the Government predicated upon trust and confidence. Where the facts proven by the Government raise doubts about an applicant's judgment, reliability or trustworthiness, the applicant has a heavy burden of persuasion to demonstrate that she is nonetheless security worthy. As noted by the United States Supreme Court in Department of Navy v. Egan, 484 U.S. 518, 531 (1988), "the clearly consistent standard indicates that security clearance determinations should err, if they must, on the side of denials." As this Administrative Judge understands the Court's rationale, doubts are to be resolved against the applicant.

The Government has satisfied its initial burden of proof under Guideline F, (Financial Considerations). Under Guideline F, the security eligibility of an applicant is placed into question when the applicant is shown to have a history of excessive indebtedness, recurring financial difficulties, or a history of not meeting her financial obligations. The United States must consider whether individuals granted access to classified information are because of financial irresponsibility in a position where they may be more susceptible to mishandling or compromising classified information or material for financial gain.

The Applicant owed approximately $2,400.00 to two creditors and a collection service due to unpaid court costs and fine. The Applicant also owes $1,130.60 to a former landlord. This debt is not the same debt listed in her Chapter 7 bankruptcy because the rent is owed for May through July 2001 and the bankruptcy was discharged in March 2001. Subsequent debts cannot be discharged in a prior bankruptcy. Because of these debts, Disqualifying Conditions (DC) 1 ⁽⁵⁾ and 3 ⁽⁶⁾ apply.

The $9.00 worthless check listed in SOR subparagraph 1a has been paid in full. She has performed her community service, paid her court costs, made restitution, and completed her probation. I find for the Applicant as to SOR subparagraph 1a.

Although there is no evidence the Applicant has received formal financial counseling, she has received financial counseling from her boy friend and has established a monthly budget. She has started making payment on the amount owed because of her prostitution charges (SOR subparagraph 1.b), and is making payment to the credit card company (SOR subparagraph 1.d, 1.e). I believe the Applicant will meet these obligations for she was able to pay her debts even when she experienced periods of unemployment and periods of difficulty with her reserve pay. The Applicant owes these two creditors less than $1,300.00 and is meeting her financial obligation to these creditors. MC 4 ⁽⁷⁾ applies to these two creditors. I find for the Applicant as to SOR subparagraphs 1.b, 1.d, and 1.e.

The Applicant claims she was forced to file for Chapter 7 bankruptcy protection in November 2000 due to a single creditor. She claims she was unable to work with her bank, which had removed money from her account. However, the Applicant's credit report indicates she has more financial problems than just the one creditor. The filing of bankruptcy protection is definitely a factor to be considered in assessing the Applicant's financial picture. The amount of her liabilities listed in the bankruptcy compared to her assets is alarmingly high. However, her attorney instructed her to list all of her past debts even if they had been previously paid. I will not find against the Applicant because she had to file for bankruptcy protection. I find for the Applicant as to SOR subparagraph 1c.

The Applicant disputes the debt of $1,130.06 claimed by a former landlord (SOR subparagraph 1.e). Because of the living conditions at her previous apartment, she does not intend to pay this debt unless her former landlords prove, in court, the amount claimed. This is not unreasonable considering part of the damage claimed by her former landlord covers a period of time after the Applicant had been evicted from the apartment. Although this debt has not been paid and no agreement has been reached concerning this debt, it is a disputed debt. There is sufficient justification to warrant the Applicant's current inaction on this debt. I find for the Applicant as to SOR subparagraph 1.e

The Government has satisfied its initial burden of proof under guideline E, (Personal Conduct). Under Guideline E, the security eligibility of an applicant is placed into question when that applicant is shown to have been involved in personal conduct which creates doubt about the person's judgment, reliability, and trustworthiness.

In November 1999, the Applicant completed her SF 86 and stated she was not currently more than 90 days delinquent on her debts. She completed the SF 86 in November 1999 and one year later had liabilities totaling approximately $100,000.00 with assets totaling approximately $5,000.00. It is inconceivable that this amount of debt was incurred after she completed her SF 86. The question is meant to solicit the Applicant's entire financial picture and does not include just those debts which she is current in their payment. The government is asking her to disclose her financial delinquencies, which she failed to do. Because of her deliberate falsification, DC 2 ⁽⁸⁾ applies.

The Applicant's explanation as to why she failed to disclose her delinquent debts on her SF 86 is unpersuasive. She incorrectly interpreted the question to relate only to the debts she was currently paying such as her rent, car payments, insurance, utilities, etc. The Applicant's credit report indicated she was not current on other debts and these debts were later included in her November 2000 bankruptcy. These other debts were not on her mind because she had not reviewed her credit reports nor were these creditors actively attempting to collect the debts. Because her answer concerning her financial delinquencies was false, and none of the mitigating factors apply, I find against the Applicant as to SOR subparagraph 2.a.

During 1995, the Applicant was employed by an escort service in which she engaged in prostitution. She was also employed as a stripper in strip clubs and worked for a stripper gram company. She was so employed while a member of the Army reserves which she had joined in 1987. This type of conduct is inconsistent with duties as an NCO. DC 6 ⁽⁹⁾ applies because she was associating with persons involved in criminal activity.

All of her involvement with such employment ended in July 1995 with the incident that resulted in the death of her husband and miscarriage. In the past seven years, there has been no recurrence of this type of behavior and she has credibly testified she will not return to such behavior and no longer associates with persons involved in criminal activity. MC 7 ⁽¹⁰⁾ applies. I find for the Applicant as to SOR subparagraph 2.b.

In reaching my conclusions I have also considered: the nature, extent, and seriousness of the conduct; the Applicant's age and maturity at the time of the conduct; the circumstances surrounding the conduct; the Applicant's voluntary and knowledgeable participation; the motivation for the conduct; the frequency and recency of the conduct; presence or absence of rehabilitation; potential for pressure, coercion, exploitation, or duress; and the probability that the circumstance or conduct will continue or recur in the future.

Formal Findings as required by Section 3., Paragraph 7., of Enclosure 1 of the Directive are hereby rendered as follows:

Paragraph 1 Financial Considerations (Guideline F): FOR THE APPLICANT

Subparagraph 1.a.: For the Applicant

Subparagraph 1.b.: For the Applicant

Subparagraph 1.c.: For the Applicant

Subparagraph 1.d.: For the Applicant

Subparagraph 1.e.: For the Applicant

Paragraph 2 Personal Conduct (Guideline E) AGAINST THE APPLICANT

Subparagraph 2.a.: Against the Applicant

Subparagraph 2.b.: For the Applicant

In light of all the circumstances presented by the record in this case, it not clearly consistent with the national interest to grant or continue a security clearance for the Applicant.

1. Required by Executive Order 10865, as amended and Department of Defense Directive 5220.6 (Directive), dated January 2, 1992 as amended.

2. This event was the last time she worked for the escort service. (tr.81)

3. This was the last day she worked for the stripper gram service. (tr. 81)

4. Her bankruptcy attorney advised her to list all of her creditors even if the creditors had not had contact with her for years. (tr. 46) She listed every debt she could locate even if she believed it had been paid.

5. DC 1. A history of not meeting financial obligations. (E2.A6.1.2.1.)

6. DC 3. Inability or unwillingness to satisfy debts. (E2.A6.1.2.3.)

7. MC 4. The person has received or is receiving counseling for the problem and there are clear indications that the problem is being resolved or is under control. (E2.A6.1.3.4.)

8. DC 2. The deliberate omission, concealment, or falsification of relevant and material facts from any personnel security questionnaire, personal history statement, or similar form used to conduct investigations, determine employment qualifications, award benefits or status, determine security clearance eligibility or trustworthiness, or award fiduciary responsibilities. (E2.A5.1.2.2.)

9. DC 6. Association with persons involved in criminal activity. (E2.A5.1.2.6.)

10. MC 7. Association with persons involved in criminal activities has ceased. (E2.A5.1.3.7.)