KEYWORD: Financial; Personal Conduct
DIGEST: Applicant and her husband operated a trucking business hauling auto parts to-and-from
salvage yards located in multiple states. Due to a business downturn starting in about 1997, followed
by a business failure in 2002, Applicant incurred excessive indebtedness. She and her husband now
own-and-operate a truck driving as a team for a transit company hauling munitions and other
materials for the government. She is not incurring new delinquent debt, and she is otherwise living
within her means. When she completed a security-clearance application in April 2004, she did not
make a deliberately false statement when  responding to a question about her financial delinquencies.
Eligibility for a security clearance is granted.
CASENO: 06-20812.h1
DATE: 06/13/2007
DATE:  June 13, 2007
In re:
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SSN: ------------
Applicant for Security Clearance
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ISCR Case No. 06-20812
DECISION OF ADMINISTRATIVE JUDGE
MICHAEL H. LEONARD
APPEARANCES
FOR GOVERNMENT
James F. Duffy, Esq., Department Counsel
FOR APPLICANT
Joseph L. Johnson, Esq.
 Executive Order 10865, dated February 20, 1960, as amended, and DoD Directive 5220.6, dated January 2,1
1992, as amended (Directive).
 See Memorandum from the Under Secretary of Defense for Intelligence, dated August 30, 2006, Subject:2
Implementation of Adjudicative Guidelines for Determining Eligibility for Access to Classified Information (December
29, 2005). 
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SYNOPSIS
Applicant and her husband operated a trucking business hauling auto parts to-and-from
salvage yards located in multiple states. Due to a business downturn starting in about 1997, followed
by a business failure in 2002, Applicant incurred excessive indebtedness. She and her husband now
own-and-operate a truck driving as a team for a transit company hauling munitions and other
materials for the government. She is not incurring new delinquent debt, and she is otherwise living
within her means. When she completed a security-clearance application in April 2004, she did not
make a deliberately false statement when  responding to a question about her financial delinquencies.
Eligibility for a security clearance is granted.
STATEMENT OF THE CASE
Applicant contests the Defense Department’s intent to deny or revoke her eligibility for a
security clearance. Acting under the relevant Executive Order and DoD Directive,  the Defense1
Office of Hearings and Appeals (DOHA) issued a statement of reasons (SOR) to Applicant on
January 26, 2007. The SOR—which is equivalent to an administrative complaint—details the factual
basis for the action and alleges security concerns under Guideline F for financial considerations and
Guideline E for personal conduct (falsification). Applicant timely replied to the SOR and requested
a hearing. 
In addition to the Directive, this case is brought under the revised Adjudicative Guidelines
for Determining Eligibility for Access to Classified Information (Revised Guidelines) approved by
the President on December 29, 2005. The Revised Guidelines were then modified by the Defense
Department, effective September 1, 2006. They supersede or replace the guidelines published in
Enclosure 2 to the Directive and Appendix 8 to DoD Regulation 5200.2-R, and they apply to all
adjudications and other determinations where an SOR has been issued on September 1, 2006, or
thereafter.  Both the Directive and the Regulation are pending formal amendment. The Revised2
Guidelines apply to this case because the SOR is dated January 26, 2007, which is after the effective
date. 
The case was assigned to me April 4, 2007. A notice of hearing was issued scheduling the
hearing for April 23, 2007. The hearing took place as scheduled. DOHA received the hearing
transcript May 4, 2007.
FINDINGS OF FACT
Applicant’s response to the SOR allegations was mixed. She admitted all the indebtedness
under Guideline F. She explained that the indebtedness arose from a small business that she and her
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husband operated, and this indebtedness relates to business expenses and is not personal debt,
although she is personally responsible for the debts. She denied the falsification allegation under
Guideline E. She explained that she answered “yes” to the question about financial delinquencies
and attached a copy of a credit report to her security-clearance application. Her admissions and
explanations are incorporated herein. And I make the following findings of fact. 
1. Applicant is a 53-year-old truck driver for a transit company engaged in defense contracting
by hauling munitions and other materials for the government. She and her husband have been
married for 38 years, and they own-and-operate a truck working as independent contractors for the
transit company. They have a 37-year-old daughter and a 12-year-old grandson. Applicant has
worked as a truck driver for about 30 years, and she has a Class A commercial driver’s license. She
has a good driving and employment record in her current job (Exhibits A, B, and C). She, along with
her husband, began their current employment in about April 2004. Her husband was granted a
security clearance in about March 2007 (R. 52–53). 
2. Applicant has a history of financial problems, and that history is verified by credit reports
from 2005 and 2006 (Exhibits 4 and 5). Based on this history, the SOR sets forth ten delinquent
accounts for about $63,000. Based on the evidence at hearing, it appears that nine accounts are at
issue, as the debt in SOR subparagraph 1.d is redundant with the debt in SOR subparagraph 1.h. 
3. As she explained in her answer, all the debts in the SOR relate to their small business. The
small business was a specialized trucking company hauling auto parts for a cooperative to-and-from
salvage yards located in multiple states. The business started in 1991, and they operated it at a profit.
It grew from one truck to six trucks, and they added four employees. Starting in about 1997, the
business started to experience a downturn.  
4. After the events of September 11, 2001, the car salvage business deteriorated. Car dealers
offered lucrative deals to sell new cars, and the auto repair business declined because it was not cost
effective to repair a car when you could get a great deal on a new car. Because of this decline in
business, they lost money and were unable to meet all of their financial obligations. When they
eventually closed the business in June 2002, they sold the assets for what they owed. 
5. When they closed the business, Applicant realized they owed payroll taxes. After completing
their payroll, Applicant called the IRS in an attempt to arrange a repayment agreement. The result
was an IRS audit that concluded they owed about $20,000 in taxes. They also learned during the
audit that their tax preparer had failed to file their tax returns. Based on the audit, the IRS filed a lien,
and Applicant and her husband paid it off in about May 2006. Paying off the tax debt limited their
ability to repay the debts in the SOR.
6. In response to interrogatories issued by the agency, Applicant provided detailed information
about her efforts and actions to address the debts in the SOR (Exhibit 3). Those matters are
incorporated herein by reference. In summary, Applicant has made a few payments on a couple of
the accounts, but otherwise the accounts remain delinquent. 
7. For her current employment, Applicant completed and signed a security-clearance application
in April 2004 (Exhibit 1). This application was completed by hand using a pen. When she signed the
application, she certified that her statements were true, complete, and correct to the best of her
 “In the last 7 years, have you been over 180 days delinquent on any debt(s)?”3
 Executive Order 10865, § 7.4
 ISCR Case No. 96-0277 (App. Bd. Jul. 11, 1997).5
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knowledge and were made in good faith. Also, she acknowledged that a knowing and willful false
statement could be punished under federal law. In response to Question 28a  about financial3
delinquencies, Applicant answered “yes.” In addition, she reported two credit card accounts and
wrote the words “see attached.” Exhibit 1 includes a one-page attachment wherein she reported three
delinquent credit card accounts. 
8. In addition to the 2004 security-clearance application, another application was submitted in
May 2005, and it appears to be the electronic version. In response to the same question about
financial delinquencies, Applicant responded “yes,” and she reported three credit card accounts.
Also, this application contains a one-page attachment wherein Applicant provided more information
about the three accounts.
9. In her hearing testimony, Applicant elaborated on the explanation she provided about the
falsification allegation. With the assistance of her daughter, who worked for a finance company, they
pulled a credit report for Applicant (R. 62–63). This is the credit report Applicant submitted with
her initial application (R. 107–110). The 2005 credit report tends to verify this because it shows that
the finance company the daughter worked for did make an inquiry in December 2003, a few months
before Applicant completed the initial application (Exhibit 5 at 10). Applicant then turned in the
security-clearance application along with the credit report to her employer. The attached credit report
is not included in the initial application admitted into the record evidence.  
POLICIES
The Revised Guidelines sets forth adjudicative guidelines to consider when evaluating a
person’s security clearance eligibility, including disqualifying conditions (DC) and mitigating
conditions (MC) for each guideline. In addition, each clearance decision must be a fair and impartial
commonsense decision based upon consideration of all the relevant and material information, the
pertinent criteria and adjudication factors, and the whole-person concept. A person granted access
to classified information enters into a special relationship with the government. The government
must be able to have a high degree of trust and confidence in those persons to whom it grants access
to classified information. The decision to deny a person a security clearance is not a determination
of an applicant’s loyalty.  Instead, it is a determination that the applicant has not met the strict4
guidelines the President has established for granting eligibility for a security clearance.
BURDEN OF PROOF
The only 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.  There is no5
 ISCR Case No. 02-18663 (App. Bd. Mar. 23, 2004).6
 Directive, Enclosure 3, ¶ E3.1.14.7
 Directive, Enclosure 3, ¶ E3.1.15.8
 Directive, Enclosure 3, ¶ E3.1.15.9
 Department of Navy v. Egan, 484 U.S. 518, 528 (1988) (“it should be obvious that no one has a ‘right’ to a10
security clearance”); Duane v. Department of Defense, 275 F.3d 988, 994 (10  Cir. 2002) (“It is likewise plain that thereth
is no ‘right’ to a security clearance, so that full-scale due process standards do not apply to cases such as Duane’s.”).
 Egan, 484 U.S. at 531.11
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presumption in favor of granting or continuing access to classified information.  The government6
has the burden of presenting evidence to establish facts alleged in the SOR that have been
controverted.  An applicant is responsible for presenting evidence to refute, explain, extenuate, or7
mitigate facts that have been admitted or proven.  In addition, an applicant has the ultimate burden8
of persuasion to obtain a favorable clearance decision.9
No one has a right to a security clearance.  As noted by the Supreme Court in Department10
of Navy v. Egan, “the clearly consistent standard indicates that security clearance determinations
should err, if they must, on the side of denials.”  Under Egan, Executive Order 10865, and the11
Directive, any doubt about whether an applicant should be allowed access to classified information
will be resolved in favor of protecting national security.
CONCLUSIONS
1. The Financial Considerations Security Concern
Under Guideline F, a concern typically exists due to significant unpaid debts. 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, all of which can
raise questions about an individual’s reliability, trustworthiness, and ability to protect classified
information. 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, an individual who is
financially irresponsible may also be irresponsible, unconcerned, negligent, or careless in properly
handling and safeguarding classified information.   
Here, based on the record evidence as a whole, a security concern is raised by significant
unpaid debts. Applicant has a well-established history of financial problems. Her derogatory
financial history is a security concern because it indicates inability (not unwillingness) to satisfy
debts and a history of not meeting financial obligations within the meaning of Guideline F.
I reviewed the MC under the guideline and conclude she receives credit in mitigation. Each
applicable MC is briefly summarized and discussed below.
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The first MC—the behavior happened so long ago, was so infrequent, or occurred under such
circumstances that it is unlikely to recur—applies. The record evidence shows that the financial
problems happened due to a business downturn followed by a business failure. The personal debts
were incurred in an effort to keep the business afloat, which is not an unusual occurrence with a
small business. The financial problems are unlikely to recur because Applicant is no longer involved
in the small business, and she and her husband are gainfully employed and otherwise financially
stable. The financial problems do not cast doubt on Applicant’s current reliability, trustworthiness,
or good judgment because they were not caused by high living, frivolous spending, deceptive or
illegal financial practices, or personal problems (e.g., drug abuse, alcoholism, or gambling).
The second MC—the conditions that resulted in the behavior were largely beyond the
person’s control—applies. The record evidence shows that the financial problems happened due to
a business downturn followed by a business failure, which were circumstances beyond Applicant’s
control. Although Applicant still has indebtedness from that period, she and her husband have acted
responsibly under the circumstances. When the business closed in 2002, they made their last payroll
and contacted the IRS to address the issue of payroll taxes. It was then they learned of their tax
problems, which resulted in a federal tax lien for $20,000. It was paid off in 2006. The repayment
of the tax debt no doubt limited their ability to address old personal debts associated with their failed
business. Given these circumstances, Applicant has acted responsibly in dealing with the overall
financial problems created by the business failure. 
2. The Personal Conduct Security Concern
Personal conduct under Guideline E addresses issues of questionable judgment,
untrustworthiness, unreliability, lack of candor, dishonesty, or unwillingness to comply with rules
and regulations. In this regard, the deliberate omission, concealment, or falsification of a material
fact in any written document or oral statement to the government when applying for a security
clearance or in other official matters is a security concern. It is deliberate if it is done knowingly and
willfully. An omission of relevant and material information is not deliberate if the person genuinely
forgot about it, inadvertently overlooked it, misunderstood the question, or genuinely thought the
information did not need to be reported.
At issue here is the truthfulness of Applicant’s answer to Question 28a in her April 2004
security-clearance application. It is alleged that she listed two debts from the SOR, but that she
deliberately failed to list the others. Her explanation—attaching a credit report to her application
in an effort to be complete and forthcoming—is credible. Moreover, her explanation is corroborated,
in part, by Exhibit 5, because it shows that the finance company the daughter worked for did make
an inquiry in December 2003, a few months before Applicant completed the initial application. After
having had a chance to listen to and observe Applicant, I am persuaded that she made a good-faith
effort to provide a full, frank, and truthful answer to Question 28a. Given all the facts and
circumstances, I conclude Applicant did not deliberately conceal or omit information about her
financial delinquencies. 
3. The Whole-Person Concept
I have also considered this case in light of the whole-person concept. Applicant is a 53-year-
old professional truck driver with 30 years’ experience. Although she has not resolved the
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indebtedness stemming from the business failure, given the surrounding facts and circumstances, I
have no doubts about her current suitability for a security clearance. In financial cases under
Guideline F, it is important to remember that the point of the process is not for the government to
act as a third-party collector requiring applicants to repay delinquent debts. Instead, the point of the
process is to assess the security significance of an applicant’s financial record. Here, my assessment
of Applicant’s financial record is that this appears to be a case of bad things happening to a good
person, as opposed to the typical case of an applicant incurring excessive credit card debt by
shopping, frivolous spending, or otherwise living beyond their means. Applicant is a mature woman,
a wife, mother, and grandmother, and it appears she is living a responsible and law-abiding life.
These circumstances further mitigate the security concern stemming from her indebtedness.
After weighing the favorable and unfavorable evidence, I conclude that Applicant has
presented sufficient information to explain, extenuate, or mitigate the financial considerations
security concern. Likewise, she has met her ultimate burden of persuasion to obtain a favorable
clearance decision. 
FORMAL FINDINGS
Here are my conclusions for each allegation in the SOR:
SOR ¶ 1–Guideline F: For Applicant
Subparagraphs a–j: For Applicant
SOR ¶ 2–Guideline E: For Applicant
Subparagraph a: For Applicant
DECISION
In light of all the facts and circumstances, it is clearly consistent with the national interest to
grant or continue a security clearance for Applicant. Eligibility for a security clearance is granted.
Michael H. Leonard
Administrative Judge