DATE: April 9, 1998

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

Applicant for Security Clearance

DECISION OF ADMINISTRATIVE JUDGE

ROBERT R. GALES

APPEARANCES

FOR GOVERNMENT

Michael H. Leonard, Esquire, Department Counsel

FOR APPLICANT

Pro Se

STATEMENT OF THE CASE

On January 30, 1998, the Defense Office of Hearings and Appeals (DOHA), 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, issued a Statement of Reasons (SOR) to Applicant which detailed reasons 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 Applicant, and recommended referral to an Administrative Judge to determine whether a clearance should be granted, continued, denied, or revoked.

In a sworn written statement, dated February 17, 1998, Applicant responded to the allegations set forth in the SOR, and requested a hearing. The case was initially assigned to Administrative Judge Jerome H. Silber on February 26, 1998, but due to caseload considerations, was subsequently reassigned to, and received by, this Administrative Judge on March 2, 1998. A notice of hearing was issued on March 2, 1998, and the hearing was held before me on March 23, 1998. During the course of the hearing, three Government exhibits and one Applicant exhibit, and the testimony of one Government witness (the Applicant, who chose not to testify in his own case), were received. The transcript was received on April 3, 1998. As an accommodation to Applicant, the record was kept open until the close of business, April 6, 1998, to enable him to make later submissions. He elected not to submit any additional documents.

RULINGS ON PROCEDURE

On March 16, 1998, Department Counsel filed a Motion in Limine to strike three pages of attachments appended to Applicant's Answer to the SOR because they were the "written statements of third parties" and they were the type of document normally offered as exhibits rather than as part of the Answer. A ruling was deferred on the Motion until the hearing, and there being no objection by Applicant at that time, the Motion was granted.

During the proceeding, Department Counsel moved to amend the SOR to conform to the evidence presented. Specifically, he sought to amend subparagraph 1.n. thereof by adding an "n" to the word "a" in the second line of the first sentence, and deleting the words "medical service" from the same line and sentence, so that the phrase remaining read as follows: "for a balance owed on an account." There being no objection by Applicant, the Motion was granted, and the SOR was amended as described above.

FINDINGS OF FACT

Applicant has admitted some of the factual allegations pertaining to financial considerations under Criterion F. Those admissions are hereby incorporated herein as findings of fact. His denials to the remaining allegations are based on his contention that the outstanding financial obligations alleged in those subparagraphs had previously been satisfied.

After a complete and thorough review of the evidence in the record, and upon due consideration of same, I make the following additional findings of fact:

Applicant is a forty-five year old male employed by a defense contractor, and he is seeking to obtain a SECRET security clearance.

Applicant has seemingly been financially overextended since about 1991-92, and as a consequence, he has established a history of not meeting his financial obligations. In 1991, while employed by his previous employer, Applicant incurred an injury to his back and had to undergo treatment from a number of physicians and therapists.⁽¹⁾ At that time, he had medical coverage with a health maintenance organization (HMO), and was under the impression that the HMO had covered his expenses. For whatever reason, it did not, and several accounts remained outstanding.

During Applicant's initial interview with the Defense Investigative Service (DIS) in 1997, he first learned of the unsatisfied creditors. During a subsequent DIS interview on November 18, 1997, Applicant stated that it was his intention to contact all his listed creditors, collection agencies, and the HMO to determine whether he or his HMO was responsible for the remaining balances, and if it was determined that he was, he would make efforts to satisfy those balances. Applicant denied previously having received any notices from creditors or collection agencies regarding unpaid balances.⁽²⁾

A Report of Credit generated on September 25, 1997, reflects 15 or 16 accounts listed as "bad debt" or "unpaid."⁽³⁾ In this regard, the Report is internally inconsistent because the Credit Report Summary reflects 16 accounts sent to collection or charged off, and the Report of Credit, itself, reflects only 15 such accounts. Despite Applicant's declared intention to determine if he really owed the unpaid balances, it appears that on October 9, 1997,⁽⁴⁾ not in December 1997, as Applicant contended, without ever personally checking with the HMO, he made substantial payments to the identified collection agency to be applied to his various accounts. Each of the accounts placed for collection with that particular collection agency was paid off. The funds for such payments became available for distribution to the creditors when Applicant cashed in his 401(k) retirement plan.⁽⁵⁾

One of those accounts, opened in August 1991 with a hospital, identified in the Report as number 336175 and in subparagraph 1.a. of the SOR, reflects an unpaid balance, as of July 1997, of $153.00. Applicant paid the identified collection agency $81.75, applied to the account, on October 9, 1997, before the SOR was issued, and the receipt reflects a zero balance.⁽⁶⁾

Another account, opened in April 1992 with the same hospital, identified in the Report as number 359218 and in subparagraph 1.e. of the SOR, reflects an unpaid balance, as of July 1997, of $495.00. Applicant paid the identified collection agency $272.97, applied to the account, on October 9, 1997, before the SOR was issued, but the receipt was not entirely photocopied, and it is unclear if there is any unpaid balance. Applicant contends the account was paid off.⁽⁷⁾

Another account, opened in May 1993 with the same hospital, identified in the Report as number 385503 and in subparagraph 1.h. of the SOR, reflects an unpaid balance, as of July 1997, of $236.00. Applicant paid the identified collection agency $139.73, applied to the account, on October 9, 1997, before the SOR was issued, and the receipt reflects a zero balance.⁽⁸⁾

Another account, opened in May 1992 with a physician, identified in the Report as number 361092 and in subparagraph 1.f. of the SOR, reflects an unpaid balance, as of July 1997, of $114.00. Applicant paid the identified collection agency $115.83, applied to the account, on October 9, 1997, before the SOR was issued, and the receipt reflects a zero balance.⁽¹⁰⁾

Another account, opened in January 1994 with a health care provider, identified in the Report as number 410060 and in subparagraph 1.i. of the SOR, reflects an unpaid balance, as of July 1997, of $536.00. Applicant paid the identified collection agency $546.41, applied to the account, on October 9, 1997, before the SOR was issued, and the receipt reflects a zero balance.⁽¹¹⁾

Another account, opened in September 1995 with a radiology provider, identified in the Report as number 445307 and in subparagraph 1.k. of the SOR, reflects an unpaid balance, as of July 1997, of $196.00. Applicant paid the identified collection agency $200.88, applied to the account, on October 9, 1997, before the SOR was issued, and the receipt reflects a zero balance.⁽¹²⁾

Another account, opened in May 1997 with another radiology provider, identified in the Report as number 499312 and in subparagraph 1.m. of the SOR, reflects an unpaid balance, as of July 1997, of $61.00. Applicant paid the identified collection agency $63.55, applied to the account, on October 9, 1997, before the SOR was issued, and the receipt reflects a zero balance.⁽¹³⁾

Another account, opened in May 1997 with an Internet provider, identified in the Report as number 497982 and in subparagraph 1.n. of the SOR, reflects an unpaid balance, as of July 1997, of $67.00. Applicant paid the creditor $63.64,⁽¹⁴⁾ applied to the account, on December 7, 1997, before the SOR was issued. There is only a photocopy of the money order, and no receipt to reflect a balance, but Applicant contends the account was paid off.⁽¹⁵⁾

During the period 1995-97, Applicant issued three checks, which were subsequently returned for insufficient funds, to three different commercial entities identified in subparagraph 1.o. of the SOR. On October 9, 1997, before the SOR was issued, Applicant paid the identified collection agency an amount to satisfy each of those insufficient checks, and $95.73 was applied to account number 494106, an unspecified amount was applied to account number 4758855, and $26.58 was applied to account number 448440, and the receipts reflect a zero balance for two of the accounts, with the remaining account too blurred to read.⁽¹⁶⁾

Applicant also had two unpaid accounts with another collection agency. In February or March 1998, he entered into a payment arrangement to promptly satisfy both accounts.⁽¹⁷⁾ One account, opened in April 1995 with a rehabilitation provider, identified in subparagraph 1.j. of the SOR, reflects an unpaid balance, as of August 1997, of $152.00. It is Applicant's intention to address this account and pay it off by April 25, 1998.⁽¹⁸⁾

Subparagraph 1.l. of the SOR alleges nine unspecified medical accounts, in the total amount of $2,133.56, turned over to another collection agency for collection, and identifies the names of the two creditors. Purportedly included in the amount, are two unpaid accounts with a hospital. One account, opened in June 1994, reflects an unpaid balance, as of October 1994, of $204.00. The other account, opened in October 1995 with the same hospital, reflects an unpaid balance, as of February 1996, of $174.00. The other identified creditor is a different medical provider. While Applicant has admitted the allegation, it appears that his admission, as to the specifics of the allegation, may have been improvidently made. He has acknowledged that the balance seems to be for medical services, but cannot explain the specifics of the charges.⁽²¹⁾ In an effort to determine the nature and extent of the charges, and possible indebtedness, Applicant's wife and daughter have attempted to contact the hospital and the medical provider cited. The Report of Credit does not support the allegation in that it reflects only the two cited accounts having been turned over to the specific collection agency, and the medical provider is not listed as a creditor in the Report of Credit. The sole amount supported by the Report of Credit is that combined total of the two hospital accounts.

In about November 1990, Applicant purchased a previously owned automobile. Nothing unusual occurred during the ensuing year, and he routinely made timely payments on his account. Unfortunately, at some point in 1992, Applicant found himself unable to continue with the monthly payments, he fell behind, and eventually the automobile was repossessed.⁽²²⁾ It was apparently sold at auction in December 1992. The Report of Credit indicates that the installment loan was established in November 1990, and that, as of May 1992, the balance on the "charged off account" was $2,364.00⁽²³⁾ Subparagraph 1.c. of the SOR alleges that the amount owed, including accrued interest, is $5,340.90--or over twice the original balance owed at the time of the repossession. Subsequent to the repossession, Applicant made no further payments to the creditor because he assumed that his installment loan was satisfied when the automobile was sold.⁽²⁴⁾ His future intentions as to this debt are not known. What is known, however, is that Applicant is not prepared to pay $5,340.00 if he only owes one-half of that amount.⁽²⁵⁾

Applicant has been employed by his current employer since June 1997, when it took over the contract responsibilities previously held by his prior employer of 15 years. The quality of his performance has not been characterized. The monthly take home salary of Applicant and his wife combined is estimated to be $1,800.00.⁽²⁸⁾

POLICIES

Enclosure 2 of the Directive sets forth adjudicative guidelines which must be considered in the evaluation of security suitability. In addition to brief introductory explanations for each guideline, the adjudicative guidelines are divided into those that may be considered in deciding whether to deny or revoke an individual's eligibility for access to classified information (Disqualifying Factors) and those that may be considered in deciding whether to grant an individual's eligibility for access to classified information (Mitigating Factors).

An Administrative Judge need not view the adjudicative guidelines as inflexible ironclad rules of law. Instead, acknowledging the complexities of human behavior, these guidelines, when applied in conjunction with the factors set forth in the Adjudicative Process provision--an expansion of the factors set forth in Section F.3. of the Directive, are intended to assist the Administrative Judge in reaching fair and impartial common sense decisions.

Because the entire process is a conscientious scrutiny of a number of variables known as the "whole person concept," all available, reliable information about the person, past and present, favorable and unfavorable, should be considered in making a meaningful decision.

The Adjudicative Process factors which an Administrative Judge should consider are: (1) the nature, extent, and seriousness of the conduct; (2) the circumstances surrounding the conduct, to include knowledgeable participation; (3) the frequency and recency of the conduct; (4) the individual's age and maturity at the time of the conduct; (5) the voluntariness of participation; (6) the presence or absence of rehabilitation and other pertinent behavioral changes; (7) the motivation for the conduct; (8) the potential for pressure, coercion, exploitation, or duress; and (9) the likelihood of continuation or recurrence.

Based upon a consideration of the evidence as a whole, I find the following adjudicative guidelines most pertinent to an evaluation of the facts of this case:

[Financial Considerations - Criterion F]: 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.

Conditions that could raise a security concern and may be disqualifying include:

(1) a history of not meeting financial obligations;

(3) inability or unwillingness to satisfy debts;

Conditions that could mitigate security concerns include:

(1) the behavior was not recent;

(6) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts.

Since the protection of the national security is the paramount determinant, the final decision in each case must be arrived at by applying the standard that the issuance of the clearance is "clearly consistent with the interests of national security,"⁽²⁹⁾ or "clearly consistent with the national interest." For the purposes herein, despite the different language in each, I have concluded that both standards are one and the same. In reaching this Decision, I have endeavored to draw only those conclusions that are reasonable, logical and based on the evidence contained in the record. Likewise, I have attempted to avoid drawing inferences that are grounded on mere speculation or conjecture.

In the decision-making process, the burden of producing evidence initially falls on the Government to establish a case which demonstrates, in accordance with the Directive, that it is not clearly consistent with the national interest to grant or continue an applicant's access to classified information. If the Government meets its burden, the heavy burden of persuasion then falls upon the applicant to present evidence in refutation, explanation, extenuation or mitigation sufficient to overcome the doubts raised by the Government's case, and to ultimately demonstrate that it is clearly consistent with the national interest to grant or continue the applicant's clearance.

A person who seeks access to classified information enters into a fiduciary relationship with the Government predicated upon trust and confidence. It is a relationship that transcends normal duty hours and endures throughout off-duty hours as well. It is because of this special relationship that the Government must be able to repose a high degree of trust and confidence in those individuals to whom it grants access to classified information. Decisions under this Directive include, by necessity, consideration of the possible risk that an applicant may deliberately or inadvertently fail to protect or safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation as to potential, rather than actual, risk of compromise of classified information.

One additional comment is worthy of note. Applicant's loyalty and patriotism are not at issue in these proceedings. Section 7 of Executive Order 10865 specifically provides that industrial security clearance decisions shall be "in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned." Security clearance decisions cover many characteristics of an applicant other than loyalty and patriotism. Nothing in this Decision should be construed to suggest that I have based this decision, in whole or in part, on any express or implied decision as to Applicant's loyalty or patriotism.

CONCLUSIONS

Upon consideration of all the facts in evidence, an assessment of the witness testimony, demeanor, and credibility, and after application of all appropriate legal precepts and factors, including those described briefly above, I conclude the following with respect to the allegation set forth in the SOR:

With respect to Criterion F, the Government has established its case. Applicant has been portrayed as a person who is financially overextended, with a history of bad debts and delinquent or uncollectible accounts or debts written off by creditors as uncollectible losses, and who, until recently, has displayed an indifference to, or disregard of, those financial obligations, with little or no apparent or voluntary effort to satisfy them. Based on the evidence, I conclude that the characterization is superficially true, but unduly harsh.

Applicant's initial financial difficulties commenced about the time he injured his back in 1991. Although supposedly covered by an HMO, it is unclear if claims for medical services were actually paid by the HMO, if Applicant was billed for the entire balances without contribution by the HMO, or if Applicant was only responsible for remaining balances after contribution by the HMO. In the absence of evidence on this issue, I am unable to determine conclusive liability.

At about the same time, Applicant began experiencing financial difficulties, and routine payments on some accounts, including his automobile loan, started coming in late. Some accounts went to collection, and Applicant's automobile was eventually repossessed. And he issued some "bad" checks without sufficient funds to support them. Applicant's overall conduct pertaining to his financial obligations clearly fall within Financial Considerations Disqualifying Factor (DF) 1 and DF 3.

The Government has offered no evidence to support a conclusion that Applicant had been living in a lifestyle reflecting irresponsible, reckless, or improvident expenditures. Rather, his initial financial problems were caused by a combination of unspecified events and forces, and his injury. And, it must be recognized that Applicant's monthly household take home salary is $1,800.00--hardly enough to satisfy current bills. In late 1997, Applicant was interviewed by DIS and shown a copy of a credit report. To his astonishment, he learned that there were a number of unsatisfied financial obligations listed about which he apparently had little awareness. His initial reaction to DIS was to say that he would check up on the accounts and, if those accounts were found to be his financial responsibility, he would try to satisfy them. Instead, rather than waiting for the answer, Applicant promptly applied a significant percentage of the proceeds of his recently cashed-in 401(k) to all of the collection accounts held by one particular collection agency, and applied additional payments to two accounts held by another collection agency. His actions in so doing reflected a good-faith effort to repay overdue creditors or otherwise resolve debts, especially since he did so before ever receiving the SOR, and fall within Financial Consideration Mitigating Factor (MF) 6. But Applicant failed to satisfy all of his outstanding financial obligations.

Applicant has a steady employment record, having been employed for 15 years by one company and an additional 10 months by its successor on a particular contract. And, when confronted with possible responsibility for those debts, even when he was unsure as to their accuracy, or his responsibility, he readily agreed to satisfy them. Promises were made, and promises were kept. I cannot fault him for failing to eliminate all of his debts immediately when his earnings are insufficient for him to do so. His wife, child, and grandchildren must be fed and clothed, and mortgages or rent, along with utilities, car payment, and other necessities of life, have to be paid.

Of the 15 allegations against Applicant in the SOR, he satisfied the creditors referred to in 9 of the allegations four months before the SOR was even issued, and another creditor two months before the SOR was issued. In one additional instance, he satisfied a creditor after the SOR was issued, but before the hearing took place. And in one other instance, Applicant entered into an agreement with the collection agency to make the first payment before the hearing, which he did, and to make the last and final payment on the balance by April 25, 1998. That leaves the creditors referred to in three allegations remaining unpaid.

The first, and potentially the largest of the remaining balances pertains to the automobile which had been repossessed and apparently sold at auction. As stated above, the evidence is inconsistent, and reflects a balance on the "charged off account" as being $2,364.00, rather than the alleged, and admitted, amount of $5,340.90--or over twice the original balance owed at the time of the repossession. It is true that subsequent to the repossession, Applicant made no further payments to the creditor, but he explained that his inaction was caused by the belief that his installment loan was satisfied when the automobile was sold. As indicated above, the record is silent as to whether or not the creditor or anyone acting at its behest has ever informed Applicant that there was still an outstanding balance on the installment loan. And there is no evidence to indicate that the amount realized from the sale of the automobile was ever deducted from the balance owed on the installment loan.

However, even accepting the evidence as presented, I am unable to find bad faith on the part of Applicant, for it is inconsistent with his expressed desire, and proven efforts, to resolve all outstanding balances for which he is responsible. His inability to do so immediately, in light of his recent payments to the other creditors, in this instance, should not be construed as indifference or viewed as a DF, but rather recognized for what it is: reality in the current economic environment.

The check which was issued in March 1992, and which was subsequently returned for insufficient funds, referred to in subparagraph 1.d. of the SOR, is an allegation of greatest concern, in my estimation. The amount is not so substantial as to require additional delay in satisfying the indebtedness, and I believe Applicant should have taken additional effort to resolve the matter earlier. However, because of the number of creditors, accounts, and collection agencies, I can appreciate Applicant's possible confusion regarding this debt. He was unsure as to earlier payment dates or amounts, and was not particularly clear as to his intentions. However, in light of his earlier declaration that he would pay those obligations for which he was responsible, followed by his actions to do so, I am confident that this indebtedness simply fell through the crack unnoticed by him, and that, it too will be paid by him when he is reminded and has the money to do so.

As stated above, subparagraph 1.l. of the SOR alleges nine unspecified medical accounts, in the total amount of $2,133.56, turned over to another collection agency for collection, and identifies the names of the two creditors. While Applicant has admitted the allegation, it appears that his admission, as to the specifics of the allegation, may have been improvidently made. He has acknowledged that the balance seems to be for medical services, but cannot explain the specifics of the charges. And the Report of Credit does not support the allegation in that it reflects only the two cited accounts having been turned over to the specific collection agency, and the medical provider is not listed as a creditor in the Report of Credit. The sole amount supported by the Report of Credit is that combined total of two particular hospital accounts, not the amount alleged.

I had ample opportunity to evaluate the demeanor of Applicant, observe his manner and deportment, appraise the way in which he responded to questions, assess his candor or evasiveness, read his statement, listen to his testimony, and watch the interplay between himself and those around him. Upon consideration of all of these contributing elements, I have come away with the feeling that Applicant is committed to financial soundness, with honor. Challenging his security eligibility now for not taking another, possibly more suitable, route to financial purity would not, under these circumstances, be justified.

I do not take this position lightly, but based on the law, as set forth in Department of Navy v. Egan, 484 U.S. 518 (1988), my evaluation of the evidence, and my application of the pertinent factors under the Adjudicative Process, I believe that Applicant has, through evidence of extenuation and explanation, successfully mitigated and overcome the Government's case. Accordingly, allegations 1.a. through 1.o. of the SOR are concluded in favor of Applicant.

For the reasons stated, I conclude Applicant is suitable for access to classified information.

FORMAL FINDINGS

Formal findings For or Against Applicant on the allegations set forth in the SOR, as required by Paragraph 25 of Enclosure 3 of the Directive, are:

Paragraph 1. Criterion 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

Subparagraph 1.f.: For the Applicant

Subparagraph 1.g.: For the Applicant

Subparagraph 1.h.: For the Applicant

Subparagraph 1.i.: For the Applicant

Subparagraph 1.j.: For the Applicant

Subparagraph 1.k.: For the Applicant

Subparagraph 1.l.: For the Applicant

Subparagraph 1.m.: For the Applicant

Subparagraph 1.n.: For the Applicant

Subparagraph 1.o.: For the Applicant

DECISION

In light of all the circumstances presented by the record in this case, it is clearly consistent with the national interest to grant or continue a security clearance for Applicant.

________________

Robert R. Gales

Chief Administrative Judge

1. See Government Exhibit 2 (Statement of Subject, dated November 18, 1997) at 2.

2. See id. at 3.

3. See Government Exhibit 3 (Report of Credit, dated September 25, 1997) at numbered 2-3 (actual 3-4).

4. See Transcript (Tr.) at 33.

5. See Tr. at 36-37.

6. See Applicant Exhibit A (Receipt from collection agency, dated October 9, 1997) at 3.

7. See Tr. at 34.

8. See Applicant Exhibit A, supra note 6, at 3.

9. Ibid.

10. Ibid.

11. Ibid.

12. Ibid.

13. Ibid.

14. Id. at 1.

15. See Tr. at 40.

16. See Applicant Exhibit A, supra note 6, at 2.

17. See Tr. at 26.

18. Id. at 27-28.

19. Id. at 25.

20. Ibid.

21. Id. at 29.

22. Id. at 21-22.

23. See Government Exhibit 3, supra note 3, at number 2 (actual 3).

24. See Tr. at 23.

25. Id. at 58.

26. Id. at 59.

27. Id. at 24.

28. Id. at 47.

29. See, Executive Order 12968, "Access to Classified Information;" as implemented by Department of Defense Regulation 5200.2-R, "Personnel Security Program," dated January 1987, as amended by Change 3, dated November 8, 1995. However, the Directive uses both "clearly consistent with the national interest" (see, Sec. B.3; Sec. C.2.; and Sec. D.2.; Enclosure 3, Sec. 1.; and Sec. 25), and "clearly consistent with the interests of national security" (see, Enclosure 2 (Change 3), Adjudicative Guidelines, at 2-2).