DATE: August 10, 2006

----------------------------

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

Applicant for Security Clearance

DECISION OF ADMINISTRATIVE JUDGE

ELIZABETH M. MATCHINSKI

APPEARANCES

FOR GOVERNMENT

Eric H. Borgstrom, Esq., Department Counsel

FOR APPLICANT

Pro Se

SYNOPSIS

Applicant owes on several delinquent accounts, including $26,833 in child support arrearage. His claims of 90 percent satisfaction of his consumer credit debt and waiver of child support arrearage are not proven. Financial considerations persist given his failure to timely address delinquencies when he had the income to do so. Personal conduct concerns also persist where he disclosed only one debt of $900 on his security clearance application when he owed more than $13,000 in delinquent consumer credit debt, $10,133 after a voluntary repossession, $5,901 in back federal taxes, $3,184 in judgment debt, and about $30,400 in child support. Clearance is denied.

On June 24, 2005, the Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) to the Applicant. The SOR detailed reasons under Guideline F, financial considerations, and Guideline E, personal conduct, why DOHA could not make the preliminary affirmative finding under the Directive that it is clearly consistent with the national interest to grant or continue a security clearance for the Applicant. ⁽¹⁾

Applicant initially submitted a response to the SOR that was returned to him for failing to answer ¶ 1.y. He submitted another answer, undated, which was received by DOHA on September 22, 2005. Applicant requested a hearing before a DOHA administrative judge, and the case was assigned to me on December 20, 2005. On March 3, 2006, I convened a hearing pursuant to formal notice dated January 17, 2006. Applicant appeared pro se. Eight government exhibits and four Applicant exhibits were admitted, and testimony was taken from Applicant, as reflected in a transcript received March 17, 2006.

The record was held open until April 14, 2006, for Applicant to submit financial documentation. On April 20, 2006, Applicant submitted a document from his accountant dated March 20, 2006. Its belated submission notwithstanding, it was admitted as Exhibit E, as it was not clear when Applicant received the correspondence from his accountant and Department Counsel filed no objection by the May 8, 2006, deadline.

FINDINGS OF FACT

Applicant was alleged under Guideline F to owe $64,798 in delinquent debt, including $30,116 in child support arrearage, and under Guideline E to have deliberately falsified his security clearance application (SF 86) by failing to disclose a September 2000 federal tax lien and several debts that had been delinquent more than 180 days in the preceding seven years, and denying he had debts currently over 90 days delinquent. Applicant admitted the debts alleged in ¶¶ 1.d., 1.g. (in part), 1.j., 1.m.1.r., 1.s., 1.t., and 1.v. He denied the other alleged debts as well as any intentional omission from his SF 86. Applicant's admissions to specific debts are incorporated as findings of fact. After a thorough review of the evidence of record, I make the following additional findings:

Applicant is a 43-year-old electronics test technician who started as a welder with a defense contractor in mid-March 2003. In December 2004, he was transferred to an electronics technician position because of former work experience. He seeks a secret-level security clearance for his duties.

Applicant married his first wife in September 1985. She brought about $7,000 in unpaid medical debt into the marriage, which was satisfied through garnishment of his wages at a car dealership. They incurred debt before they divorced in April 1997. In May 1998, Applicant was ordered to pay child support for their two children, a son born in July 1989 and a daughter born in December 1991. Although he was employed for a major telecommunications company, he failed to make any payments and fell seriously in arrears. He also opened several accounts after his divorce that became seriously delinquent. As of the issuance of the SOR in June 2005, he owed on several delinquent debts, as set forth in the following table:

In 2001, Applicant was laid off from his job with the telecommunications company where he had been earning around $38,000 annually. He collected unemployment for a few months until he went to work on commission for a local car wash. In April 2002, he married his current spouse, who had two children of her own, a daughter born in August 1995 and a son born in March 1994. Since she works in a bank, Applicant allowed her to handle their finances.

In mid-March 2003, Applicant started as a welder with his current employer at an hourly wage of $10.08. Needing a secret-level clearance for his duties, Applicant completed a security clearance application (SF 86) on March 11, 2003. He responded "NO" to question 36 ["In the last 7 years, have you had a lien placed against your property for failing to pay taxes or other debts?"], question 37 ["In the last 7 years, have you had any judgments against you that have not been paid?"], and question 39 ["Are you currently over 90 days delinquent on any debt(s)?"]. He answered question 38 ["In the last 7 years, have you ever been over 180 days delinquent on any debt(s)?"] affirmatively, indicating he owed $900 on debt ¶ 1.v.

A check by the Defense Security Service (DSS) of Applicant's credit on March 17, 2003, revealed four unpaid financial judgments (¶¶ 1.a., 1.b., 1.l., 1.o.), a federal tax lien filed in September 2000 not yet released (¶ 1.p.), four debts in collection (¶¶ l.i., 1.q., 1.u., 1.w.), several other debts charged off by the credit grantors (¶¶ 1.d., 1.g., 1.j., 1.k., 1.n., 1.r., 1.s., 1.t., 1.x.) and one voluntary automobile repossession (¶ 1.f.).

In May 2003, the state bureau of child support enforcement began garnishing Applicant's wages at $140.40 per week. In July 2003, the amount was reduced to $117 weekly. As of late February 2004, his child support arrearage was $30,583.80.

A DSS credit check on January 23, 2004, revealed little to no progress by Applicant in satisfying his delinquent debt. Several debts surfaced that had not been previously reported: child support arrearage of $30,400 (¶ 1.y.), a $139 dental debt in collection (¶ 1.m.), a $837 music debt (¶ h.), and a $509 past due balance for fitness club fees (not alleged).

Applicant was interviewed by a DSS agent on three occasions between January 22, 2004 and February 10, 2004. Shown his March 2003 and January 2004 credit reports, Applicant disputed the child support arrearage, claiming his ex-wife had agreed with him that he would not have to pay any back child support. He indicated his current child support payments were being deducted from his pay at the rate of $468 per month, and the state was not pursuing collection of the arrearage. Applicant expressed no plan to repay the arrearage unless ordered by the court. Applicant disputed the amount of the outstanding balances on the debts in ¶ 1.j. ⁽²⁾ and ¶ 1.s., but otherwise acknowledged his debt, which he attributed to his former spouse's irresponsibility, to low paying jobs, to helping out financially some family members, and to his own "ineffectiveness in controlling debts." He added that his first wife was supposed to pay her share, and when she failed to do so, he "withheld from doing anything.". He expressed a plan to file for Chapter 7 bankruptcy and therefore would not be making any payments on his past due accounts. Applicant provided a personal financial statement. Based on his and his spouse's joint earnings and household expenses, he estimated a monthly net remainder of $2,550, excluding any debt repayment. Applicant denied that he intentionally falsified his SF 86 and claimed he disclosed what he knew existed.

In response to DOHA interrogatories concerning whether he had filed for bankruptcy, Applicant indicated on or about July 19, 2004, that he and his spouse earned too much to file, and that he had hired a debt consolidation company and tax attorney to resolve his indebtedness. He added that his child support arrearage would be discharged following a court date in August 2004, and he had made arrangements with some creditors (¶¶ 1.t., 1.v., 1.x., the fitness club debt). Repayment terms had not yet been established with regard to other creditors.

Sometime in 2004, the state filed to increase the wage garnishment by $25 which would go toward the substantial child support arrearage. Applicant claims the case was dismissed by the judge but he had been told he would have to reopen to get the entire arrearage dismissed. Applicant has not done so, as he has spent the last fourteen months on temporary duty out of state.

The DSS checked Applicant's credit on December 16, 2005. Outstanding balances of $902 (¶ 1.s.), $354 (¶ 1.n.), $1,085 (¶ 1.x.), $29,000 in child support arrearage (¶ 1.y.), $1,391 (¶ 1 .v.), $397 (¶ 1.r.), were reported. Also listed as unpaid were collection balances of $2,096 for telephone services, $863 (¶ 1.q.), $1,669 (¶ 1.o.), $583 (¶1.l.), and the $5,901 federal tax lien (¶ 1.p.).

On February 3, 2006, an assignee attempting to collect the debt balance of ¶ 1.s. ($883.33) offered to settle on receipt of a lump sum payment of $441.66 by February 10, 2006. Applicant claims to have settled with a total payout in 2005 of about $20,000 (Tr. 93) the debt in ¶ 1.c. as well as those in ¶¶ 1.c., 1.e., 1.k., 1.m., 1.n., 1.o. (his share), 1.p., 1.q., 1.r., 1.t., 1.u., 1.v., 1.x. He provided as proof a letter from his accountant stating he had negotiated and settled satisfactorily 90% of his debt obligations, and a credit report of February 16, 2006. That credit report listed as still outstanding those debts in ¶¶ 1.y. ($26,833 past due), 1.v. ($1,391), 1.x. ($1,085), 1.s. ($914), 1.q. ($863), 1.r. ($397)1.n. ($354). Status was reported as "unknown" with respect to the $1,669 judgment on ¶ 1.o. and the $5,091 federal tax lien.

As of March 2006, Applicant was earning $21 plus per hour for his work with the defense contractor. His spouse earns about $36,000 annually from her job as a loan officer. His monthly take-home pay is between $4,000 and $5,000 per month with his temporary duty pay. Applicant was told by his attorney that he is legally obligated to pay the child support arrearage. He testified he could pay it "pretty rapidly" on his current wages (Tr. 93), but that the arrearage for his son would "go away" on his son turning 18 (July 2007) (Tr. 100).

Applicant was given six weeks after his hearing to document his claimed debt repayments and his first wife's waiver of the child support arrearage. Applicant submitted into the record a March 20, 2006, letter from his accountant indicating that Applicant had complied with the requirement to repay his debt and that "doubtful accounts" were being investigated. Citing actions taken by Applicant to resolve his debt once he knew that his continued employment depended on acquiring a clearance, his accountant requested the Department of Defense obtain an updated credit report. Documentation proving payment of specific indebtedness had not been received as of the record closure on May 8, 2006.

Applicant claims to not have known of his delinquencies, of the judgments, or of the September 2000 tax lien, when he applied for a secret-level clearance in March 2003:

The only things I owed was the bills that were coming to the house. I didn't owe anything else. A lot of the stuff and which you will see is old, it's no longer there. It shouldn't have been there at all. I went to go look at my credit report, that's when [the DSS agent] handed me the report. I looked at the report and I didn't notice certain things were on there that should have been taken care of. Now the judgment might have been possibly put on there after the fact, and I could prove that also, because at times the credit people who don't want your obligations to go away, what they'll do is they'll list a brand new date in order to keep it from falling off your report.

(Tr. 103) His denials of any intentional concealment are not persuasive, given the extent of his financial difficulties. Even if Applicant did not know accurate debt balances when he completed his SF 86, he knew he had surrendered a car in November 1998 and he did not list it in response to question 35 (any repossessions in the last 7 years). Moreover, he admitted during his DSS interviews that significant debt was incurred during his first marriage due to his ex-spouse's irresponsibility and his "own ineffectiveness in controlling debts." (Ex. 3) He now claims he is not responsible for child support arrearage because he was taking responsibility for much of the marital debt. It also stretches credulity that he would be unaware that he owed delinquent federal taxes (see Tr. 101), or that he did not know he had paid for jewelry for his current spouse with a bounced check (see Tr. 107).

"[N]o 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 occupy a position . . . that will give that person access to such information." Id. at 527. The President has authorized the Secretary of Defense or his designee to grant applicants 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, Safeguarding Classified Information within Industry § 2 (Feb. 20, 1960). Eligibility for a security clearance is predicated upon the applicant meeting the security guidelines contained in the Directive. 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.

Enclosure 2 of the Directive sets forth personnel security guidelines, as well as the disqualifying conditions (DC) and mitigating conditions (MC) under each guideline. In evaluating the security worthiness of an applicant, the administrative judge must also assess the adjudicative process factors listed in ¶ 6.3 of the Directive. The decision to deny an individual a security clearance is not a determination as to the loyalty of the applicant. See Exec. Or. 10865 § 7. It is merely an indication that the applicant has not met the strict guidelines the President and the Secretary of Defense have established for issuing a clearance.

After considering the evidence of record, the following adjudicative guidelines are pertinent to an evaluation of Applicant's security suitability:

Financial Considerations. 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.)

Personal Conduct. 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. ( ¶ E2.A5.1.1.)

Having considered the evidence of record in light of the appropriate legal precepts and factors, and having assessed the credibility of the Applicant, I conclude the government established its case with respect to Guideline F, financial considerations, and Guideline E, personal conduct, as follows:

Under Guideline F, financial considerations, the security concerns arise when the applicant is shown to have a history of excessive indebtedness, recurring financial difficulties, or a history of not meeting his financial obligations. The government must consider whether individuals granted access to classified information are, because of financial irresponsibility, in a position where they may be at risk of having to engage in illegal acts to generate funds. As of the issuance of the SOR, Applicant owed more than $28,000 in delinquent consumer credit debt, $5,901 in back federal taxes, and about $30,000 in child support arrearages. Applicant and his first spouse failed to manage their financial affairs responsibly. Moreover, several additional accounts opened by Applicant after his divorce became seriously delinquent (¶¶ 1.d., 1.j., 1.m., 1.n., 1.r., 1.s., 1.t.). DC ¶ E2.A6.1.2.1. A history of not meeting financial obligations, and ¶ E2.A6.1.2.3. Inability or unwillingness to satisfy debts, apply.

Mitigating condition (MC) ¶ 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) applies to the extent that his job layoff in 2001 left him without the means to address the delinquent debt incurred during his first marriage. However, with his second marriage and employment with the defense contractor, Applicant reported a net monthly remainder of $2,550 as of February 2004. Apart from the garnishment of his wages for child support, he was making no payments on his delinquencies, including his child support arrearage of about $30,000. His credit report of June 2005 confirms his recent disregard of legitimate financial obligations that cannot be mitigated under ¶ E2.A6.1.3.3.

Applicant submits he has taken steps to address his outstanding financial obligations since learning that his continued employment depends on his clearance. The burden is on Applicant to demonstrate that debts are being resolved (see ¶ E2.A6.1.3.4. The person has received counseling for the problem and there are clear indications that the problem is being resolved or is under control), or he has made a good faith effort in this regard (see ¶ E2.A6.1.3.6. The individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts). At his hearing, he submitted a statement from his accountant that he had satisfied "more than 90% of his debt obligations" (Ex. C), a settlement offer as to ¶ 1.f., and a recent credit report of February 2006. However, an offer letter is not a confirmation of payment, and the credit report shows outstanding delinquent debt totaling $31,837, including past due child support of $26,833 (¶ 1.y.), and other debts he claims to have paid (¶¶ 1.n., 1.q., 1.r., 1.s., 1.v., 1.x.). His $1,699 judgment debt and $5,901 federal income tax debt are listed as status unknown. Other debts listed as delinquent on earlier credit reports are not listed on this credit report. It is not clear whether those debts have been paid or simply dropped from his credit report due to the passage of time. Applicant admitted at his hearing that he had not yet satisfied some debts that are not listed on his February 2006 credit report (¶¶ 1.d. $1,332, 1.g. $4,041, 1.j. $411). He also testified he paid his share of the $1,699 judgment (¶ 1.o.),and was waiting for his spouse to pay her half, so that debt has not been paid in full. He had six weeks after the hearing to present documentation proving he had satisfied several of his delinquent debts. He presented only a letter from his accountant, who indicates Applicant was working to establish a regular repayment schedule for his unpaid accounts, and requests Applicant be judged on his undated credit report. Even assuming Applicant has resolved some of his delinquent debts, concerns persist as to his financial judgment and reliability. Applicant does not feel obligated to pay the child support arrearage ("I have only about 10 percent debt left and the only one that's standing out is that $26,000 for child support which is not legally mine. . ." (Tr. 94), "But half that arrearage goes away because I no longer will owe that particular money for my son." (Tr. 100)). Other accounts remain unsatisfied even as he maintains he could come up with a lump sum of $15,000 to $20,000 to pay them off. Adverse findings are warranted as to the financial considerations concerns in light of the extent of his delinquent debt and his longstanding disregard of these obligations.

Applicant's lack of candor about his indebtedness, including the tax lien filed in September 2000, raises security significant Guideline E concerns. Applicant clearly knew about the debt incurred during his first marriage, as he claims he is not obligated for his child support arrearage because he took responsibility for paying the marital debt. He also knew that his vehicle had been repossessed. It is inconsistent for him to claim that he did not know of the $1,699 judgment (¶ 1.o.) while at the same time maintaining he was waiting for his spouse to pay her share. It stretches credulity for him to have been unaware of the sizeable tax debt and consequent lien on his property. DC ¶ E2.A5.1.2.2. The deliberate omission, concealment, or falsification of relevant and material fact 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, applies.

None of the Guideline E mitigating conditions (MC) apply. Applicant did not dispute most of the delinquent debt when asked about it by a DSS agent in January and February 2004, yet claimed he provided on his SF 86 only what he knew existed. With a couple of the creditors (¶¶ 1.j. and 1.s.) he asserted to the DSS agent he owed lesser amounts than indicated on his credit reports. This shows some knowledge of the outstanding accounts beyond the information presented in the credit reports. Reform of the judgment concerns raised by his lack of candor are not established by his ongoing denials of intentional misrepresentation.

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

Paragraph 1. Guideline F: AGAINST THE APPLICANT

Subparagraph 1.a.: Against the Applicant

Subparagraph 1.b.: Against the Applicant

Subparagraph 1.c.: Against the Applicant

Subparagraph 1.d.: Against the Applicant

Subparagraph 1.e.: Against the Applicant

Subparagraph 1.f.: Against the Applicant

Subparagraph 1.g.: Against the Applicant

Subparagraph 1.h.: Against the Applicant

Subparagraph 1.i.: Against the Applicant

Subparagraph 1.j.: Against the Applicant

Subparagraph 1.k.: Against the Applicant

Subparagraph 1.l.: Against the Applicant

Subparagraph 1.m.: Against the Applicant

Subparagraph 1.n: Against the Applicant

Subparagraph 1.o.: Against the Applicant

Subparagraph 1.p.: Against the Applicant

Subparagraph 1.q.: Against the Applicant

Subparagraph 1.r.: Against the Applicant

Subparagraph 1.s.: Against the Applicant

Subparagraph 1.t.: Against the Applicant

Subparagraph 1.u.: Against the Applicant

Subparagraph 1.v.: Against the Applicant

Subparagraph 1.w.: Against the Applicant

Subparagraph 1.x.: Against the Applicant

Subparagraph 1.y.: Against the Applicant

Paragraph 2. Guideline E: AGAINST THE APPLICANT

Subparagraph 2.a.: Against the Applicant

Subparagraph 2.b.: Against the Applicant

Subparagraph 2.c.: Against the Applicant

Subparagraph 2.d.: Against the Applicant

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

1.

2. Applicant appears to have misread the March 2003 credit report. While he contended the balance of ¶ 1.j. was $500, his credit report reflected a debt balance of $411 and not $6,451, which was the high credit. (Ex. 7)