DATE: March 30, 2007

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

Applicant for Security Clearance

REMAND DECISION OF ADMINISTRATIVE JUDGE

CHRISTOPHER GRAHAM

APPEARANCES

FOR GOVERNMENT

Braden M. Murphy, Esq., Department Counsel

FOR APPLICANT

Pro Se

SYNOPSIS

Applicant is a 31-year-old employee of a federal contractor, employed as a material handler laborer. He had substantial unpaid debts, most of them for medical services, because he went seven years without medical insurance. He and his wife separated for nearly two years which further inhibited his ability to pay debts. He was also unemployed for nearly a year. Clearance was granted. The government appealed. The Appeal Board remanded the decision. After additional findings of facts and conclusions, I again conclude that Applicant successfully mitigated the security concerns under Guideline F (financial considerations.) Clearance is granted.

On August 3, 2005, the Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) to Applicant pursuant to Executive Order 10865, Safeguarding Classified Information Within Industry, dated February 20, 1960, as amended and modified, and Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (Directive), dated January 2, 1992, as amended and modified. The SOR alleged reasons under Guidelines F (financial considerations) 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 Applicant's security clearance.

In a written statement dated August 18, 2005, Applicant responded to the allegations in the SOR and requested a hearing. The case was assigned to me on September 27, 2005. A Notice of Hearing was issued September 30, 2005, scheduling the hearing for October 26, 2005. The hearing was held as scheduled. At the hearing, the government offered four exhibits, Government Exhibits 1 through 4. Applicant submitted nine exhibits, Applicant's Exhibits A through I. Applicant testified in his own behalf. I kept the record open until December 2, 2005. Applicant submitted a tenth exhibit, Exhibit J, dated December 1, 2005. Department Counsel offered no objection. Applicant's Exhibit J is received in evidence. The transcript (Tr.) was received November 9, 2005.

Thereafter, on February 8, 2006, February 21, 2006, and March 21, 2006, Department Counsel received additional proposed exhibits from Applicant. Although Department Counsel had no objection to these proposed exhibits they were marked for identification purposes as Applicant's Exhibits K, L, and M. On May 31, 2006, I rejected the proffered exhibits as not being timely filed.

Upon reconsideration, I withdraw that decision and now admit Applicant's Exhibits K, L, and M into evidence. I do so in light of the Appeal Board's decision stating: "The fact that Applicant had not actually made any payments under the [debt reduction] plan is critical to an overall evaluation of the significance of the plan in alleviating the government's concerns." ⁽¹⁾ These exhibits show payments Applicant made toward debt reduction.

A decision was entered on June 8, 2006. The government appealed. The Appeal Board remanded the case on March 1, 2007.

The Appeal Board directed me to issue new findings of fact and address the facts that Applicant had less than $400 cash on hand, lived "paycheck to paycheck", had ongoing current debt, the December 1, 2005 credit report showed $22,000 in delinquent debt, and he had made no payments on the Debt Settlement Agreement (DSA). The Appeal Board held that a discussion of the 2005 credit report was unnecessary, but found it error to not discuss the lack of payments to the DSA. The Board directed me to consider the issue of no payments to the DSA as that fact may or may not apply to a discussion of Financial Considerations Mitigating Conditions 3, 4, and 6, of Guideline F, and whether the evidence reasonably supports an overall favorable decision. ⁽²⁾ The applicable mitigating conditions set out in the Directive are: Financial Considerations Mitigating Conditions (FC 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 or a death or divorce); FC MC E2.A6.1.3.4. (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); and FC MC E2.A6.1.3.6. (The individual initiated a good-faith effort to repay overdue creditors or otherwise resolve bad debts).

I adopt the findings of fact from the original decision. The following additional findings of fact are confined to those issues raised in the Appeal Board's decision concerning the factual basis for granting a clearance.

Most of Applicant's delinquent medical bills were for his own medical treatment. He had problems with his lower back and a bone spur in his neck. ⁽³⁾ During this time he was having marital difficulties. He had primary custody of his children for two years after he separated from his wife. He received no child support from his wife. The financial pressures caused him to have panic and anxiety attacks. ⁽⁴⁾ These events occurred during a two to three year period when Applicant had no medical insurance. ⁽⁵⁾ This was also a time he was unemployed. ⁽⁶⁾ Not listed in the SOR was a state tax lien which he was paying by wage garnishments and withholdings from his unemployment compensation payments, which created additional financial pressures. ⁽⁷⁾ He is now current with his taxes. ⁽⁸⁾ He also has a garnishment for a student loan debt that began in the spring of 2005. ⁽⁹⁾ After reconciling, Applicant and his wife attended marriage and family counseling. ⁽¹⁰⁾

Because his wife now has medical coverage through her employer, Applicant's income is increased $207.20 per month. ⁽¹¹⁾ His hourly wage is $13.80 per hour and he works a 40 hour week. ⁽¹²⁾ His wife is employed and her hourly rate is $8.20. She also works substantial over-time. ⁽¹³⁾ He has two credit cards with a total limit of $550, with approximately $100 credit remaining. ⁽¹⁴⁾ He has $325 in a checking account and $72 in a savings account. ⁽¹⁵⁾ He pays $250 per month for an automobile loan. He and his wife have incurred no new debt. ⁽¹⁶⁾ He has been more stable financially since June 2005, making his monthly payments and starting to pay off delinquent debts. Prior to that time he was financially unable to keep current with his finances. ⁽¹⁷⁾

Applicant's debt reduction progress can be measured by examining the table of debt contained in the original decision. It has been revised to reflect those debts paid.

Applicant has paid all debts of $100 or less. He also paid off the student loan of $3,175. He paid this off to get the wage attachment off, to put more money in his pocket, so he could continue to pay more debt down. ⁽³¹⁾ He settled a medical debt of $500 for $250. He settled a $5,158 phone bill for $1,881, to be paid in full in four installments, the final one due on May 26, 2006. ⁽³²⁾ The record evidence only goes to March 21, 2006. The debts listed in the Debt Settlement Agreement (DSA) total $22,276. The settlement amount is $8,910, saving him $13,365. ⁽³³⁾

In his closing statement, Department Counsel stated:

I think this is a hard case. We've met our burden here I think of showing that there was a prima facie case of disqualifying conditions one and three, a history of not meeting financial obligations and the inability or unwillingness to satisfy debts. I think there is some mitigation here in terms of how it came to be. There is clearly some testimony of showing unemployment and the separation which is related to financial stability. A lot of the debts are medical related an Applicant has some unemployment, some sporadic steady work and not a lot of insurance at times.

I think this is a hard case. I think there's some showing of mitigation. What there needs to be though, the Applicant does have the burden of showing not just the origins here, and I think he's shown some of that, but he also has the burden of showing a steady track record of payments. And I think he's begun to dig himself out and it is his burden of showing that steady track record to the extent there has to be - it has to be shown that it's clearly consistent with the national interest to grant a security clearance.

And as I said, I think this is a hard case. I think there is a lot of things that you will have to weigh. Some of this is perhaps not Applicant's fault. I think some of it meant he got away from him a little bit.

But I think it's my duty to say that the Applicant has to show that it's clearly consistent. And in order to do that, I think you have a more steady track record that has been shown here, only for the last six months.

So we would - I think this is perhaps a close case and I think a hard case. But I think we would ask for a denial. But we submit that it's not an easy case. ⁽³⁴⁾

I adopt the statement of policies set forth in the original decision.

The government established its case under Guideline F. Financial Considerations Disqualifying Condition (FC DC) E2.A6.1.2.1. arises where there is (A history of not meeting financial obligations.) Similarly, FC DC E2.A6.1.2.3. applies where the information shows an (Inability or unwillingness to satisfy debts.) The evidence demonstrates Applicant has a history of not meeting his financial obligations. He has been delinquent in payments on numerous accounts. I conclude that FC DC E2.A6.1.2.1. and FC DC E2.A6.1.2.3. apply.

Various conditions can mitigate the security concerns arising from financial difficulties. The Directive sets out Financial Considerations Mitigating Condition (FC 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 or a death or divorce). He was unemployed for almost a year. During this time he was paying a state tax lien under garnishment from wages and unemployment compensation. He had primary physical custody of his two children for two years after he and his wife separated, but he received no child support from his wife. Most of his unpaid debts were for medical services received during the seven years when he could not afford medical insurance. All of these events exacerbated his already tenuous financial situation.

The Appeal Board directed a discussion of Applicant's efforts in dealing with those debts and whether or not his actions were reasonable. I construe that this argument is more properly related to Mitigating Conditions 4 and 6. Applicant has made great efforts in setting about his debt reduction. He has paid off all small debts of $100 or less. He paid a satellite TV bill, one of his phone bills, compromised and paid a $500 medical bill, settled a $5,158 phone bill for $1,881 which was scheduled to be paid in May 2006, and paid off the student college loan bill. He had taken steps to increase his monthly earnings to help with debt reduction. He renegotiated his rent reducing it by $25 per month, and he used insurance proceeds from a laptop computer theft claim to pay down debt. His wife's employer provides medical insurance, thereby increasing his take home pay. His taxes are current. He incurred no new debt. The DSA, negotiated by the credit counseling service, was a work in progress. About three weeks prior to the hearing, Applicant added additional creditors to the DSA, so that it ultimately will save him about $13,365 in payments. He has a positive track record toward debt retirement for about eight or nine months. Prior to that time he could not afford debt resolution. But as he paid off debts with liens and garnishments, he increased his monthly cash position to begin paying debt. Unfortunately, there is no hard evidence that Applicant is making his DSA payments. But based upon his successful payment of 12 debts, his efforts to increase his monthly cash position, the fact his wife's employer provided the family medical insurance, I find his testimony that he is paying his debts to be believable. What track record that is in evidence indicates a thoughtful, systematic approach to paying down debt. His reasons for paying some debts to increase his cash position are sensible. I note that the government did not ask Applicant if he was paying his DSA and to request additional documentation in support thereof. I find that his underlying reasons for his financial delinquencies were events beyond his control. Therefore, FC MC E2.A6.1.3.3. is applicable.

The government agreed that Applicant sought and used the services of a credit counselor. Can FC MC E2.A6.1.3.4. (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) apply given the fact that he had made no payments under the DSA, as it was concluded contemporaneous with the hearing? I examined what Applicant did do in reducing his debt. He took a number of steps to increase his monthly income - rent reduction, using insurance proceeds to pay debt rather than buy another computer, and his wife's employer provides the family medical insurance. He and his wife received and are receiving credit counseling. Two months after beginning the DSA he added additional creditors which will save him a total of $13,365.60. He negotiated settlements of about $6,000 in debts for $2,100. He paid off the smaller creditors. He paid off the student loan. He has systematically worked his debt to a point where it is less than $9,000. He and his wife earn at least $44,000 per annum. I believe he has sufficient income to pay off his remaining debts. He is following the advice of his credit counselor. His positive efforts at debt reduction from June 2005 to March 21, 2006, lead me to conclude that he will carry through with his plan to pay off his creditors. FC MC E2.A6.1.3.4. is applicable because he is in the process of resolving his debts, systematically, in accordance with his financial advisor's plan.

The facts cited in the foregoing paragraphs also give evidence of a good-faith effort at debt reduction. FC MC E2.A6.1.3.6. may apply where (The individual initiated a good-faith effort to repay overdue creditors or otherwise resolve bad debts). To his credit, he is paying off debt, without resorting to the protection of the bankruptcy laws. The DSA notwithstanding, all remaining debts are either paid, or are scheduled to be paid by the end of May 2006. Applicant's past actions toward debt retirement indicate that he can be expected to successfully pay off his outstanding debt. His taxes are current. He acquired no new debt. The mitigating condition says "initiate" a good-faith effort to repay creditors, it doesn't require that the payments be completed. He paid 12 debts. The remaining 17 are in the DSA, and he can be assumed to be paying that, based upon his actions in establishing a plan of debt reduction and following the advice of his credit counselor. By submitting his monthly expenditures to his credit counselor for analysis, he is providing further proof that he is making a good-faith effort to resolve debt. I believe he has done all he can do, absent filing bankruptcy. He should not be expected or required to do that to show evidence that he has made a good-faith effort at paying creditors. FC MC E2.A6.1.3.6. applies.

Whole Person Analysis

Guideline E2.2.1. The adjudicative process is an examination of a sufficient period of a person's life to make an affirmative determination that the person is eligible for as security clearance. Eligibility for access to classified information is predicated upon the individual meeting these personnel security guidelines. The adjudicative process is the careful weighing of a number of variables known as the whole person concept. Available, reliable information about the person, past and present, favorable and unfavorable, should be considered in reaching a determination. In evaluating the relevance of an individual's conduct, the adjudicator should consider the following factors:

E2.2.1.1. The nature, extent, and seriousness of the conduct;

E2.2.1.2. The circumstances surrounding the conduct, to include knowledgeable participation;

E2.2.1.3. The frequency and recency of the conduct;

E2.2.1.4. The individual's age and maturity at the time of the conduct;

E2.2.1.5. The voluntariness of participation;

E2.2.1.6. The presence or absence of rehabilitation and other pertinent behavioral changes;

E2.2.1.7. The motivation for the conduct;

E2.2.1.8. The potential for pressure, coercion, exploitation, or duress; and

E2.2.1.9. The likelihood of continuation or recurrence.

I considered his age (31), his education which includes one year of college, his employment, his period of unemployment, his medical problems, his marital problems, and in general the causative factors of his financial delinquencies. I do not believe Applicant deliberately placed himself in a state of financial exigency. I believe the circumstances beyond his control, especially paying a tax lien during a time when his only income was unemployment benefits, undoubtedly led to the accumulation of unpaid debt. He sought the advice of a credit counselor, followed that advice, and is continuing that relationship by submitting his monthly expenses to the counselor for an analysis. He has paid off small creditors which eliminates letters, phone calls, and other forms of communication demanding payment. In establishing the DSA, his credit counselor reduced his overall payments by 60%. Except those debts in the DSA, he has either paid, negotiated a settlement and paid, or set settlement by installment payments to have all debts paid by the end of May 2006.

Assuming, arguendo, that Financial Considerations Mitigating Condition 4 is not applicable. In reviewing Department Counsel's closing argument, it is clear the government thought this to be a close case of whether or not to grant Applicant a security clearance. I observed Applicant during the hearing, and especially during his testimony. I find his testimony to be believable and find him to be a sincere and credible witness, because he answered questions directly, completely, and honestly. I believe his actions in initiating a good-faith effort to pay his creditors, including those he has paid and those remaining to be paid under the DSA, are indicative of his willingness to successfully complete his repayment of delinquent debts.

Guideline F cases raise a security concern that 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. By addressing his debts, Applicant has moved himself to a position where his DSA amounts to about $9,000 of delinquent debts remaining. Based upon his family income, he is no longer in financial exigency. He acted responsibly in resolving his debts. This demonstrates he will be responsible in the access to classified information.

A fair and commonsense assessment of the record before me as required by Directive Section E2.2.3. leads me to conclude that Applicant is not a security risk, has the ability to protect classified information, and will exercise the requisite good judgment and discretion expected of one in whom the government entrusts its interests. Therefore, even if Financial Considerations Mitigating Condition 4 is inapplicable, under the "whole person concept", I conclude Guideline F for Applicant, and I conclude that it is clearly consistent with the national interest to grant or continue Applicant's security clearance.

Formal findings For or Against Applicant on the allegations set forth in the SOR, as required by E3.1.25 of Enclosure 3 of the Directive, are:

Paragraph 1. Guideline F: FOR APPLICANT

Subparagraph 1.a. For Applicant

Subparagraph 1.b. For Applicant

Subparagraph 1.c. For Applicant

Subparagraph 1.d. For Applicant

Subparagraph 1.e. For Applicant

Subparagraph 1.f. For Applicant

Subparagraph 1.g. For Applicant

Subparagraph 1.h. For Applicant

Subparagraph 1.i. For Applicant

Subparagraph 1.j. For Applicant

Subparagraph 1.k. For Applicant

Subparagraph 1.l. For Applicant

Subparagraph 1.m. For Applicant

Subparagraph 1.n. For Applicant

Subparagraph 1.o. For Applicant

Subparagraph 1.p. For Applicant

Subparagraph 1.q. For Applicant

Subparagraph 1.r. For Applicant

Subparagraph 1.s. For Applicant

Subparagraph 1.t. For Applicant

Subparagraph 1.u. For Applicant

Subparagraph 1.v. For Applicant

Subparagraph 1.w. For Applicant

Subparagraph 1.x. For Applicant

Subparagraph 1.y. For Applicant

Subparagraph 1.z. For Applicant

Subparagraph 1.aa. For Applicant

Subparagraph 1.bb. For Applicant

Subparagraph 1.cc. For Applicant

On remand, in light of all the circumstances presented by the record in this case, I find again it is clearly consistent with the national interest to grant or continue Applicant's security clearance. Clearance is granted.

Christopher Graham

Administrative Judge

1. ISCR Case No. 05-01920 at 3 (App. Bd. March 2, 2007).

2. Id. at 2-3.

3. Tr. at 52.

4. Id.

5. Id. at 52, 55.

6. Id. at 61.

7. Id. at 61-62.

8. Id. at 62.

9. Id. at 49-51.

10. Id. at 54.

11. Id. at 64.

12. Id.

13. Id. at 65.

14. Id. at 69.

15. Id. at 70.

16. Id. at 70-71.

17. Id. at 73.

18. Applicant's Exhibit M (Settlement Agreement, dated February 16, 2006) at 2.

19. Applicant's Exhibit L (Paid Receipt, dated February 3, 2006) at 1-2.

20. Tr. at 23; Applicant's Exhibit J (Debt Settlement Agreement, dated November 30, 2005) at 15-16.

21. Applicant's Exhibit J, supra, note 17, at 25.

22. Id.

23. Applicant's Exhibit J, supra, note 17, at 25.

24. Applicant's Exhibit K (Paid Receipt, dated January 23, 2006) at 1-3.

25. Applicant's Exhibit J, supra, note 17, at 19-20.

26. Applicant's Exhibit J, supra, note 17, at 20.

27. Applicant's Exhibit M, supra, note 15, at 1.

28. Applicant's Exhibit J, supra, note 17, at 26.

29. Applicant's Exhibit K, supra, note 21, at 4.

30. Tr. at 22; Applicant's Exhibit G (Paid Receipt, dated June 13, 2005); Applicant's Exhibit J, supra, note 17, at 21-22.

31. Tr. at 50.

32. Applicant's Exhibit M, supra, note 15, at 3.

33. Id.

34. Tr. at 74-75.