KEYWORD: Financial
DIGEST: Applicant is a 47-year-old employee of a defense contractor. He discharged his debts in
a 2001 Chapter 7 bankruptcy, and subsequently incurred significant delinquent debt. He paid the two
smallest delinquent debts after receiving notice that his clearance may be denied, but did not meet
his burden of mitigating security concerns raised by his history of, and ongoing, financial
irresponsibility. Clearance is denied.
CASENO: 06-19547.h1
DATE: 06/14/2007 
DATE:  June 14, 2007
In re:
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SSN: -----------
Applicant for Security Clearance
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ISCR Case No. 06-19547
DECISION OF ADMINISTRATIVE JUDGE
DAVID M. WHITE
APPEARANCES
FOR GOVERNMENT
Emilio Jaksetic, Esq., Department Counsel
FOR APPLICANT
Pro Se
SYNOPSIS
Applicant is a 47-year-old employee of a defense contractor. He discharged his debts in a
Item 3 (Applicant’s letter response to SOR dated Feb. 22, 2007).
1
The government submitted eight items in support of the allegations.
2
See Item 3. Although he denied that the statements in SOR ¶¶ 1.a, 1.b, 1.c and 1.d were accurate as of the date
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of his response, he admitted that he had owed each listed debt and said he had made payments, during February 2007,
toward these debts as further specified below. 
2
2001 Chapter 7 bankruptcy, and subsequently incurred significant delinquent debt. He paid the two
smallest delinquent debts after receiving notice that his clearance may be denied, but did not meet
his burden of mitigating security concerns raised by his history of, and ongoing, financial
irresponsibility. Clearance is denied.
STATEMENT OF THE CASE
Applicant applied for a security clearance on August 19, 2005, in conjunction with his
employment by a defense contractor. On January 30, 2007, 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 Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance
Review Program (Directive), dated January 2, 1992, as amended. The SOR detailed reasons, under
Guideline 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 a security
clearance for Applicant, and recommended referral to an administrative judge to determine whether
a clearance should be granted, continued, denied, or revoked.
Applicant responded to the SOR allegations in a notarized letter dated February 22, 2007,
admitting the truth of all of the allegations at the time the SOR was issued but denying that he still
owed some of the debts, and elected to have his case decided on the written record in lieu of a
hearing. Applicant included settlement payment receipts for two of the five debts listed in the SOR,
and a letter from a third creditor documenting a repayment plan.  He did not submit any other matters1
for consideration in extenuation or mitigation of his admissions. Department Counsel submitted the
government's written case on March 16, 2007. A complete copy of the file of relevant material
(FORM)  was provided to Applicant, and he was afforded an opportunity to file objections and2
submit material in refutation, extenuation, or mitigation. Applicant signed the document
acknowledging receipt of his copy of the FORM on March 26, 2007, and returned it to DOHA. He
did not submit any further response to the FORM by the April 25, 2007 due date, nor did he request
an extension of time to respond. The case was assigned to me on May 24, 2007.
FINDINGS OF FACT
Applicant admitted the truth of the factual allegations set forth in the SOR pertaining to
financial considerations under Guideline B (subparagraphs 1.a through 1.f).  Those admissions are3
Item 4 (e-QIP security clearance questionnaire, dated Aug. 19, 2005) at 8, 13-14. (Note: Item 4 has 32 pages,
4
variously numbered as “x of 33” (top right), “x/38” (bottom right) and hand-numbered “7” through “38” (bottom right).
Only the handwritten numbers cover all of the pages, so they will be used in cites. Item 4 has no pages 1 through 6.) 
Item 4 at 27, 31-32.
5
Item 4 at 17-22.
6
Item 7 (Applicant’s response to interrogatories) at 3, 5; Item 6 (credit bureau report (CBR) dated Oct 16, 2006)
7
at 2; Item 8 (CBR dated Jan. 23, 2007) at 3; Item 4 at 11. The mortgage interest rate calculates to 9.75%.
Item 4 at 15.
8
Item 5 (Bankruptcy case history and list of creditors) at 1-2. Applicant also admitted this was true in his
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response to SOR ¶ 1.f.
Item 4 at 29.
10
Item 8 at 1.
11
Item 3 at 1, 3.
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incorporated herein as findings of fact. After 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 47-year-old employee of a defense contractor seeking to obtain a security
clearance.  He served on active duty in the Army Reserve from 1978 until 1995 and held a secret4
clearance.  He is married, for the third time, and has two children, ages 11 and 3, who reside with5
him.  He owns a home with a 40-year mortgage obtained in July 2006. The mortgage loan balance6
is about $584,000 with a monthly payment of $4,849. This mortgage appears to be a refinancing,
since he reported living in this home from May 2004 to present.  He and his wife have a net monthly
income of $8,820.  7
After leaving the Army, Applicant worked as a letter carrier for the Postal Service from 1995
until 2005.  Despite his ongoing and steady employment, Applicant filed for Chapter 7 (dissolution)8
bankruptcy on December 13, 2000, and the final order discharging his debts to nine creditors was
entered on August 23, 2001.  He reported never having been fired from, or leaving a job under9
unfavorable circumstances,  and since he provided no information indicating he was forced to10
resign, I conclude that he voluntarily left his job with the post office. 
For four months (February to June 2005 – between his postal job and his current
employment), Applicant was self-employed as a cook, doing business as “Rudy’s Ribs.” In his
response to the SOR, Applicant said “I . . . had financial difficulty due to a failed business attempt
but I have paid or currently [sic] in the process of paying all of my debts.” He provided no other
information concerning this business or how his debts relate to it.
The first delinquent debt, alleged in SOR ¶ 1.a, was to a satellite television company, placed
for collection, in the amount of $180. It became delinquent in May 2005.  Applicant made a $90.0911
payment to the collection agency on February 7, 2007 in full settlement of this debt.12
The second delinquent debt, alleged in SOR ¶ 1.b, was to a bank in the amount of $685 for
Item 6 at 1; Item 8 at 2.
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Item 3 at 1, 5.
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Item 6 at 2; Item 8 at 2.
15
Item 3 at 1, 4.
16
Item 6 at 3; Item 8 at 3.
17
FORM at 5, 10.
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Item 6 at 3; Item 8 at 3. Of note, the CBRs show this account as charged off with a zero balance due.
19
Applicant provided no further information about this debt, except to admit that he is currently indebted to this credit
union.
See Item 6 at 2, 3; Item 7 at 8; Item 8 at 3.
20
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credit card debt. It became delinquent in April 2005.  Applicant settled this debt in full, with13
agreement of the creditor, by making a $460 payment on February 22, 2007.14
SOR ¶ 1.c alleged delinquent credit card debt to a collection agency in the amount of $1,171.
This debt, which was $1,435 in October 2006, became delinquent in August 2004.  In December15
2006, Applicant agreed to pay  $292, and monthly payments of $198.  As of February 13, 2007, he
owed $977.86 on this debt.16
SOR ¶ 1.d alleged a $1,732 debt to a lease financing company for an account that was opened
in December 2003 and became delinquent in September 2005.  Applicant stated in his response to17
the SOR that he made a $1,082 settlement-in-full payment to this company on February 22, 2007,
and was awaiting receipt of a confirmation letter. He also included a name and telephone number
of a company employee to contact for verification. Despite Department Counsel’s comments on this
absence of documentation in the FORM discussion and argument,  Applicant did not submit a copy18
of this confirmation letter, or anything else, in response to the FORM.
SOR ¶ 1.e alleged a charged off bad debt for a $13,797 auto loan from a credit union. This
account was opened in June 2004, and became delinquent in February 2005.  Applicant admitted19
he owed an unspecified amount on this account, and said that on February 22, 2007 he had arranged
with the credit union to pay $140 per month toward it. The original monthly payment on this loan
was $497, and with no further interest or penalties it would take more than 8 years to pay it off at the
arranged monthly rate.   
The three CBRs at Items 6, 7 and 8 of the FORM report that several other debts, that were
incurred after Applicant’s August 2001 Chapter 7 bankruptcy discharge, are currently “involved in
Chapter 13 debt adj,” “included in Chapter 13,” or “wage earner plan account (Chapter 13).”  None20
of these debts are alleged in the SOR, or otherwise addressed by Department Counsel in the FORM.
POLICIES            
Enclosure 2 of the Directive sets forth adjudicative guidelines which must be considered in
Directive, Enclosure 2, Adjudicative Guidelines for Determining Eligibility for Access to Classified
21
Information, dated August 2006, at ¶ 2.
Id. at ¶ 2(a).
22
Id. at ¶¶ 2(b), 2(c).
23
“Substantial evidence [is] such relevant evidence as a reasonable mind might  accept as adequate to support
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a conclusion in light of all the contrary evidence in the record.”  ISCR Case No. 04-11463 at 2 (App. Bd. Aug. 4, 2006)
(citing Directive ¶ E3.1.32.1).  “This is something less than the weight of the evidence, and the possibility of drawing
two inconsistent conclusions from the evidence does not prevent [a Judge’s] finding from being supported by substantial
evidence.”  Consolo v. Federal Maritime Comm’n, 383 U.S. 607, 620 (1966).  “Substantial evidence” is “more than a
scintilla but less than a preponderance.”  See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4  Cir. 1994).th
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the evaluation of security suitability. In addition to brief introductory explanations for each guideline,
the adjudicative guidelines are divided into disqualifying conditions (DC) that may raise security
concerns, and mitigating conditions (MC) that may reduce or negate security concerns. Applicable
DCs and MCs under Guideline F (Financial Considerations) must be considered in deciding whether
to grant, continue, deny or revoke Applicant's eligibility for access to classified information.
An administrative judge need not view the adjudicative guidelines as inflexible, ironclad
rules of law. Instead, acknowledging the complexities of human behavior, these guidelines are
intended to be applied in conjunction with the factors set forth in the Adjudicative Process provision
of the Directive,  to assist the administrative judge in reaching fair and impartial, common sense21
decisions.
The entire decision-making 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, in addition to the
applicable guidelines, 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
extent to which participation is voluntary; (6) the presence or absence of rehabilitation and other
permanent 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.22
Protection of the national security is the paramount consideration, so the final decision in
each case must be arrived at by applying the standard that issuance of a clearance must be clearly
consistent with the interests of national security. Any doubt as to whether access to classified
information is clearly consistent with national security must be resolved in favor of the national
security.   In reaching this decision, I have drawn only those conclusions that are reasonable, logical23
and based on the evidence contained in the record. Likewise, I have avoided drawing inferences
grounded on mere speculation or conjecture.
In the decision-making process, facts must be established by “substantial evidence.”  The24
burden of producing evidence initially falls on the government to establish a case which
demonstrates, in accordance with the Directive, it is not clearly consistent with the national interest
to grant or continue an applicant's access to classified information. “Department Counsel is
responsible for presenting witnesses and other evidence to establish facts alleged in the SOR that
Directive ¶ E3.1.14.
25
Directive ¶ E3.1.15.
26
ISCR Case No. 02-31154 at 5 (App. Bd. Sep. 22, 2005); ?The Administrative Judge [considers] the record27
evidence as a whole, both favorable and unfavorable, evaluate[s] Applicant’s past and current circumstances in light of
pertinent provisions of the Directive, and decide[s] whether Applicant ha[s] met his burden of persuasion under Directive
¶ E3.1.15.”  ISCR Case No. 04-10340 at 2 (App. Bd. July 6, 2006). 
Directive, Enclosure 2, supra n 20, at ¶ 18.
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have been controverted.”   “The applicant is responsible for presenting witnesses and other evidence25
to rebut, explain, extenuate, or mitigate facts admitted by the applicant or proven by Department
Counsel, and [Applicant] has the ultimate burden of persuasion as to obtaining a favorable clearance
decision.”  Once it has met its initial burden of production, the burden of persuasion (including any26
burden to disprove a mitigating condition) never shifts to the government.  27
A person who seeks access to classified information seeks to enter 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 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. Section 7 of Executive Order 10865 specifically provides that any adverse industrial
security clearance decision shall be "in terms of the national interest and shall in no sense be a
determination as to the loyalty of the applicant concerned." Nothing in this decision should be
construed to suggest 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, and after application of all appropriate legal
precepts, factors, and conditions, including those described briefly above, I conclude the following
with respect to each allegation set forth in the SOR:
Guideline F (Financial Considerations)          
Financial considerations become a security concern when a person has significant delinquent
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. Similarly, individuals who are
financially irresponsible may also be irresponsible, unconcerned, or careless in their obligation to
protect classified information. Behaving responsibly or irresponsibly in one aspect of life provides
an indication of how a person may behave in other aspects of life. Failure or inability to live within
one’s means, satisfy debts, and meet financial obligations may indicate poor self-control, lack of
judgment, or unwillingness to abide by rules and regulations.28
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I have considered all the financial considerations disqualifying conditions (FC DC), and
conclude that FC DC 19(a) (“inability or unwillingness to satisfy debts”) and FC DC 19(c) (“a
history of not meeting financial obligations”) apply. While his 2001 bankruptcy is a legal method
of discharging debt, it also shows that, at that point in time, he was unable to, and did not, satisfy his
debts or meet his financial obligations.  Within three years he was again delinquent on some of the
SOR-listed debts, adding to his history of financial irresponsibility that continues to date. Although
he provided proof of resolution of the debts listed in SOR ¶¶ 1.a and 1.b, his uncorroborated
statements that he has made payments and resolution agreements since February concerning three
of the debts are insufficient to meet his burden of proof. His inability to satisfy those debts is further
established by the minimal payments he says he has agreed to make toward what is by far the largest
debt addressed in the SOR. No other FC DC applies. 
  
I have considered all the Financial Considerations Mitigating Conditions (FC MC) that might
apply to Applicant’s history of not meeting financial obligations, and inability to satisfy debts. FC
MC 20(a) (“the behavior happened so long ago, was so infrequent, or occurred under such
circumstances that it is unlikely to recur and does not cast doubt on the individual’s current
reliability, trustworthiness or good judgment”) does not apply. Applicant’s financial difficulties are
numerous and ongoing. The behavior forms a recent pattern of failing to meet financial obligations,
while in his current employment situation. He has not demonstrated that his debt problems are
unlikely to recur, particularly in view of his $4,849 monthly mortgage payment being 55% of the
$8,821 net monthly income of his family of four, and the unlikelihood that he could further refinance
the home.
Applicant did not directly assert that financial security concerns should be mitigated under
FC MC 20(b) (“the conditions that resulted in the financial problem were largely beyond the person’s
control (e.g., loss of employment, a business downturn, unexpected medical emergency, or a death,
divorce or separation), and the individual acted responsibly under the circumstances”).  While he did
mention that his brief “Rudy’s Ribs” business had failed, and some of his debts became delinquent
during or near this time, he did not show how the debts related to the failed business. His 2001
bankruptcy occurred in the middle of steady employment with the post office. Neither the dates nor
the nature of the SOR-listed debts suggest they were in any way related to this business, and his
choice to leave his postal job to start “Rudy’s Ribs” was voluntary and totally within his control.
Accordingly, Applicant has not shown that FC MC 20(b) applies.
Applicant made no attempt to establish that FC MC 20(c) (“the person has received or is
receiving counseling for the problem and/or there are clear indications that the problem is being
resolved or is under control”) applies, and there is no evidence that would support it.  FC MC 20(d)
(“the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts”)
does not apply either. His uncorroborated assertions, that one debt is paid and he initiated payment
arrangements with two other creditors, and his belated resolution of the two smallest delinquent
debts only after receipt of the SOR, do not demonstrate sufficient good-faith efforts to mitigate
security concerns raised by Applicant’s history of financial irresponsibility and delinquent
indebtedness. 
Finally, FC MC 20(e) (“the individual has a reasonable basis to dispute the legitimacy of the
past-due debt which is the cause of the problem and provides documented proof to substantiate the
basis of the dispute or provides evidence of actions to resolve the issue”) does not apply. Applicant
did not dispute the validity of any of the SOR-listed debts. FC MC 20(f) has to do with unexplained
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affluence, and has no application here.
Whole Person Analysis           
Applicant’s history of, and ongoing financial irresponsibility are significant and pervasive.
His pattern of delinquent indebtedness resumed shortly after being completely discharged of debt
in a 2001 Chapter 7 bankruptcy. He voluntarily entered into each credit arrangement that he
subsequently dishonored, and gave no reason to believe that any of these problems could not have
been avoided by making better choices. His irresponsibility is recent and ongoing. He is a fully
mature and experienced individual, with about 27 years of combined military service and federal
employment, so neither youth nor inexperience can mitigate his conduct. He demonstrated no
rehabilitative efforts and gave no indication such problems are unlikely to recur.
Although he did document resolution of the two smallest of the SOR-listed delinquent debts,
Applicant submitted neither evidence nor other information from which any mitigating condition or
circumstance might be applied to lessen the security concerns raised by the potential for conflict of
interest, coercion, pressure or manipulation created by his overall financial considerations. For the
reasons stated, I conclude Applicant has not demonstrated that it is clearly consistent with the
interests of national security to grant him 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, Guideline F: AGAINST APPLICANT
Subparagraph 1.a: For Applicant
Subparagraph 1.b: For Applicant
Subparagraph 1.c: Against Applicant
Subparagraph 1.d: Against Applicant
Subparagraph 1.e: Against Applicant
Subparagraph 1.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.
David M. White             
Administrative Judge