DATE: January 30, 2007
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SSN: -----------
Applicant for Security Clearance
ECISION OF ADMINISTRATIVE JUDGE
HENRY LAZZARO
APPEARANCES
FOR GOVERNMENT
Candace Le'i, Esquire, Department Counsel
FOR APPLICANT
Alan V. Edmunds, Esquire
SYNOPSIS
Applicant has failed to mitigate his history of financial irresponsibility. Clearance is denied.
STATEMENT OF THE CASE
On December 30, 2005, the Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) to Applicant stating it was unable to find it is clearly consistent with the national interest to grant or continue a security clearance for Applicant. (1) The SOR, which is in essence the administrative complaint, alleges a security concern under Guideline F (financial considerations). Applicant submitted a response to the SOR, dated February 14, 2006, denied all SOR allegations, and requested a hearing.
The case was assigned to another administrative judge on March 14, 2006, transferred to a different administrative judge on June 29, 2006, and reassigned to me on October 13, 2006, to be heard with other cases I had scheduled for hearing in the same region. A notice of hearing was issued on October 31, 2006, scheduling the hearing for November 29, 2006. (2) The hearing was conducted as scheduled. The government submitted seven documentary exhibits that were marked as Government Exhibits (GE) 1-7, and admitted into the record without objection. Applicant testified, called one witness to testify on his behalf, and submitted ten documentary exhibits that were marked as Applicant's Exhibits (AE) 1-10, and admitted into the record without objection. The transcript was received by DOHA on December 8, 2006.
FINDINGS OF FACT
After a thorough review of the pleadings, exhibits, and testimony, I make the following findings of fact.
Applicant is 53 years old, and has been employed by a defense contractor since January 2005. He was previously employed by federal contractors as a senior group manager from September 1995 until August 2000, and as a senior systems analyst from August 2000 until January 2005. He was awarded a bachelor of business administration degree in May 1976. Applicant has been married since February 1974, and has two adult children.
Applicant submitted letters of recommendation from individuals who identify themselves as his supervisors, co-workers, and social acquaintances. They vouch for Applicant's reputation as a dedicated, hardworking, honest, reliable, and trustworthy person. He also submitted documents from his employer that attest to him being a valued employee. Applicant has possessed a security clearance on and off since 1979. There have never been any complaints or accusations made against him indicating that he mishandled or otherwise risked the compromise of classified information.
SOR subparagraph 1.a alleges a collection account in the amount of $73.00. Applicant provided a statement to a Special Agent (SA) from the Defense Security Service (DSS) on March 25, 2004 (GE 2), in which he stated he would pay this debt "right away." In answers to interrogatories propounded to him on August 3, 2005 (GE 3), he claimed this account was paid. He testified he has paid this account but did not remember when. (Tr. 28-29) The account is listed in his February 24, 2006 credit bureau report (CBR) as an unpaid collection account with the date of last activity being November 2000. Applicant did not submit any documentary proof to establish this account has been satisfied.
Subparagraph 1.b alleges an account for delinquent student loans that was placed for collection in the amount of $21,000.00. Applicant claimed to be on a payment plan with the creditor in his 2004 DSS statement. He did not provide any information concerning this account in response to an inquiry about it in the interrogatories propounded to him in August 2005. His February 2005 CBR lists the date of last activity on this account as September 1999, and the past due amount as $20,500.00. Applicant's February 2006 CBR still lists the date of last activity as September 1999, but discloses the past due amount had risen to $21,408.00. Applicant testified he has a "financial arrangement" with this creditor and his wages are now being garnished to repay this debt. (Tr. 29-31) Applicant's wage statements disclose his wages began to be garnished in the amount of $558.80 per payday commencing November 22, 2006. (AE 10)
Subparagraph 1.c alleges a delinquent account in the amount of $5,249.00 that arose from an automobile repossession. Applicant reacquired the vehicle following the repossession, fully satisfied the account, and eventually donated the auto to charity. (GE 4, GE 7, Tr. 19-22, and AE 6)
Subparagraph 1.d alleges delinquent federal income taxes owing in the approximate amount of $18,507.00. In his 2004 DSS statement, Applicant claimed to have been in contact with the IRS, that his account was on hold until his financial situation changed, and that he was negotiating a payment plan that was to begin in July 2004. In his August 2005 responses to the interrogatories propounded to him, Applicant stated he had a payment arrangement with the IRS which terminated in December 2004 when he changed jobs. He attached a statement from the IRS to his answer which discloses that between November 12, 2004 and January 3, 2005, he made five payments, totaling $904.72, toward delinquent taxes owing for the 1995 tax year. The government now has a $315.38 per payday levy against Applicant's wages and, as of November 22, 2006, had recouped $7,569.12 in 2006. (AE 10)
Subparagraph 1.e alleges a collection account owing in the amount of $107.00. Applicant testified this account has been paid. This account is listed in his February 2006 CBR as an unpaid collection account with the date of last activity being January 2005. Applicant did not submit any documentary proof to establish this account has been satisfied.
Subparagraph 1.f alleges a collection account owing in the amount of $2,851.00. In his 2004 DSS statement, Applicant claimed he had never heard of this creditor (a collection agency) but would contact them to find out what the indebtedness was about. He also claimed to have contacted the underlying creditor but they were unable to identify the current account holder. This account appears as a bad debt placed for collection under the name of the underlying creditor in Applicant's November 2002 CBR with an amount owing of $2,851.00 and the date of last activity being September 1999. (GE 7) It appears in his February 2006 CBR under the name of the collection agency with an amount owing of $2,851.00 and the date of last activity being September 1998. (GE 5) Applicant testified he now has a payment plan in effect with this creditor and has made one payment toward satisfaction of this debt. (Tr. 33-34)
Applicant attributes his financial problems to periods of unemployment which either occurred in 1990 and 1992 (GE 2) or 1991, 1994 and 1995. (Tr. 39-40) He testified he was unemployed for about five months in 1995 (Tr. 40), but was unable to even estimate how long his periods of unemployment lasted in 1991 and 1994. (Tr. 42) He has been continuously employed since 1995. (Tr. 61)
Applicant submitted a financial statement with his March 2004 DSS statement in which he listed his and his wife's monthly combined net income as $5,926.00, total expenses as $2,325.00, total payments as $1,016, and net remainder as $2,585.00. (GE 2) He submitted a financial statement with his answers to the interrogatories propounded to him in August 2005 in which he listed his monthly net income as $4772,00, total expenses and total payments combined as $4,515.00.00, and net remainder as $257.00. He did not include any income for his wife in the 2005 financial statement. However, he testified she has worked in a hospital office for about one year, although he claims to have no idea what she earns. (Tr. 59) He testified she is primarily responsible for keeping the family financial records (Tr. 61), but also indicated she retains her income as her separate property (Tr. 63 and 66).
The following colloquy occurred during the hearing:
ADMINISTRATIVE JUDGE: (Applicant), according to your SF-86, you've
been continuously employed since at least September 1995?
THE WITNESS: Yes, sir.
ADMINISTRATIVE JUDGE: You prepared a financial statement that's included with your statement back in 2004 that showed your wife and your combined net income was $6,000 a month, expenses $2300 a month, payments a thousand dollars a month, with a net remainder of $2,585. And that included payments to the (creditor's name omitted) and the student loans. Is that right?
THE WITNESS: I believe so. Yes, sir.
ADMINISTRATIVE JUDGE: That's a lot of disposable income every month. Why weren't you making payments on these bills?
THE WITNESS: I don't have a reason, sir.
* * *
ADMINISTRATIVE JUDGE: Why did you wait until November of this year to do something about these student loans?
THE WITNESS: I don't have a reason for that either, sir.
* * *
ADMINISTRATIVE JUDGE: Ten years of steady employment, at least substantial periods with discretionary and substantial discretionary income. Why haven't they been resolved long before today's date? That's the real question that I need to know.
THE WITNESS: And I don't have an answer for you, sir. I'm sorry. (Tr. 61-64)
POLICIES
The Directive sets forth adjudicative guidelines to consider when evaluating a person's eligibility to hold a security clearance. Chief among them are the Disqualifying Conditions (DC) and itigating Conditions (MC) for each applicable guideline. Additionally, each clearance decision must be a fair and impartial commonsense decision based upon the relevant and material facts and circumstances, the whole person concept, and the factors listed in ¶ 6.3.1 through ¶ 6.3.6 of the Directive. Although the presence or absence of a particular condition or factor for or against clearance is not outcome determinative, the adjudicative guidelines should be followed whenever a case can be measured against this policy guidance. Considering the evidence as a whole, Guideline F, pertaining to financial considerations, with its respective DC and MC, is most relevant in this case.
BURDEN OF PROOF
The sole purpose of a security clearance decision is to decide if it is clearly consistent with the national interest to grant or continue a security clearance for an applicant. (3) The government has the burden of proving controverted facts. (4) The burden of proof in a security clearance case is something less than a preponderance of evidence, (5) although the government is required to present substantial evidence to meet its burden of proof. (6) "Substantial evidence is more than a scintilla, but less than a preponderance of the evidence." (7) Once the government has met its burden, the burden shifts to an applicant to present evidence of refutation, extenuation, or mitigation to overcome the case against him. (8) Additionally, an applicant has the ultimate burden of persuasion to obtain a favorable clearance decision. (9)
No one has a right to a security clearance (10) and "the clearly consistent standard indicates that security clearance determinations should err, if they must, on the side of denials." (11) Any reasonable doubt about whether an applicant should be allowed access to classified information must be resolved in favor of protecting national security. (12)
CONCLUSIONS
Under Guideline F, a security concern exists when a person has significant unpaid debts. An individual who is financially overextended is at risk of having to engage in illegal or unethical acts to generate funds to meet financial obligations.
Applicant's testimony that he paid the two small debts, totaling $180.00, listed in SOR subparagraphs 1.a and 1.e is accepted despite the information contained in the February 2006 CBR to the contrary and his failure to submit any documentary evidence in support of his testimony, considering the size of the debts, the consistency of Applicant's statements about having satisfied those debts, and his overall manner of testifying. Additionally, the record evidence establishes the $5,249.00 debt listed in SOR subparagraph 1.c was satisfied several years ago. Those three subparagraphs are decided for Applicant.
The debts alleged in SOR subparagraphs 1.b, 1.d and 1.f have been delinquent for many years and remain partially but substantially unpaid. The $21,000.00 student loan debt alleged in subparagraph 1.b has only recently begun to be satisfied through a garnishment of Applicant's wages. Applicant testified he has only made a single payment on the $2,851.00 credit card collection account alleged in subparagraph 1.f. While he made several payments on the delinquent $18,507.00 tax bill between November 2004 and January 2005, those payments stopped when he changed jobs and only began again when the IRS placed a levy against his wages. Disqualifying Conditions (DC) 1: A history of not meeting financial obligations: and DC 3: Inability or unwillingness to satisfy debts apply to those debts.
Applicant allowed more than $40,000.00 in delinquent debt to languish for years despite more than ten years steady employment and substantial reported discretionary income that could have been applied to resolve that debt. He now finds himself in a position where approximately $1,750.00 per month is being seized from his net pay as a result of the garnishment and tax levy. The financial statement he submitted in August 2005 listed his net monthly income as $4,772.00, and his net remainder as $257.00. The wage statements he submitted at the hearing disclose his net biweekly income has now been reduced to $1,676.44, which leaves him with a substantial monthly deficit in the ability to pay his monthly expenses and debts. He was unable to even estimate what his wife earns and testified he has no access to those funds. Accordingly, I have considered all mitigating conditions and, based on Applicant's lack of effort to resolve this debt for many years and the troubling financial position he appears to currently be in, find none apply.
Considering all relevant and material facts and circumstances present in this case, including the whole person concept, the factors listed in ¶ 6.3.1 through ¶ 6.3.6 of the Directive, and the applicable disqualifying conditions, I find Applicant has failed to mitigate the security concern that exists in this case. He has not overcome the case against him nor satisfied his ultimate burden of persuasion. Guideline F is decided against Applicant.
FORMAL FINDINGS
SOR ¶ 1-Guideline F: Against Applicant
Subparagraphs a, c and e: For Applicant
Subparagraphs b, d and f: Against Applicant
DECISION
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.
Henry Lazzaro
Administrative Judge
1. This action was taken under Executive Order 10865 and DoD Directive 5220.6, dated January 2, 1992, as amended and modified (Directive).
The previously assigned administrative judges had scheduled hearings to be conducted on May 31, 2006, and July 20, 2006. Those hearings were continued at Applicant's request. (Tr. 11)
ISCR Case No. 96-0277 (July 11, 1997) at p. 2.
ISCR Case No. 97-0016 (December 31, 1997) at p. 3; Directive, Enclosure 3, Item E3.1.14.
Department of the Navy v. Egan 484 U.S. 518, 531 (1988).
ISCR Case No. 01-20700 (December 19, 2002) at p. 3 (citations omitted).
ISCR Case No. 98-0761 (December 27, 1999) at p. 2.
ISCR Case No. 94-1075 (August 10, 1995) at pp. 3-4; Directive, Enclosure 3, Item E3.1.15.
ISCR Case No. 93-1390 (January 27, 1995) at pp. 7-8; Directive, Enclosure 3, Item E3.1.15.
Egan, 484 U.S. at 528, 531.
Id at 531.
Egan, Executive Order 10865, and the Directive.