KEYWORD: Financial
DIGEST: Applicant failed to mitigate security concerns over her long-standing financial problems
as she has over $800,000 in debt incurred from 1999 to 2006, including two judgments totaling
$371,000.  While she recently decided to file for Chapter 7 bankruptcy in July 2007 to discharge her
long-standing debts, she did not establish which, if any, of the two dozen debts have been
discharged.  Even since her business failed in 2002, she developed  many new debts and documented
no efforts to resolve even minor debts.  Her business failure linked to bad advice does not establish
a defense of special circumstance.  Her reported good performance on the job is not sufficient to
establish how she has reformed or demonstrated positive changes in behavior need to mitigate
financial concerns. Eligibility for a trustworthiness position is denied.
CASENO: 06-21980.h1
DATE: 09/27/2007
DATE:  September 27, 2007
In Re:
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SSN: -------------
Applicant for Public Trust Position
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ADP Case No. 06-21980
DECISION OF ADMINISTRATIVE JUDGE
KATHRYN MOEN BRAEMAN
APPEARANCES
FOR GOVERNMENT
Stephanie C. Hess, Esquire, Department Counsel
FOR APPLICANT
Pro Se
      This action was taken under Executive Order 10865, dated February 20, 1960, as amended; and1
Memorandum from the Deputy Under Secretary of Defense Counterintelligence and Security, titled
"Adjudication of Trustworthiness Cases," dated November 19, 2004.
       Applicant did receive a copy of the DoD Directive 5220.6 sent with the Statement of Reasons (SOR).2
2
SYNOPSIS
Applicant failed to mitigate security concerns over her long-standing financial problems as
she has over $800,000 in debt incurred from 1999 to 2006, including two judgments totaling
$371,000.  While she recently decided to file for Chapter 7 bankruptcy in July 2007 to discharge her
long-standing debts, she did not establish which, if any, of the two dozen debts have been
discharged.  Even since her business failed in 2002, she developed  many new debts and documented
no efforts to resolve even minor debts.  Her business failure linked to bad advice does not establish
a defense of special circumstance.  Her reported good performance on the job is not sufficient to
establish how she has reformed or demonstrated positive changes in behavior need to mitigate
financial concerns. Eligibility for a trustworthiness position is denied.
STATEMENT OF THE CASE
On December 5, 2006, the Defense Office of Hearings and Appeals (DOHA) declined to
grant the application  for a position of public trust under Department of Defense Directive 5220.6,
Defense Industrial Personnel Security Clearance Review Program (Jan. 2, 1992), as amended (the
"Directive").    Consequently, DOHA issued a Statement of Reasons (SOR) detailing the basis for1
its decision and  alleged security concerns under Guideline F (Financial Considerations) in paragraph
1 based on the revised Adjudicative Guidelines  issued on December 29, 2005, and implemented by2
the Department of Defense, to be effective September 1, 2006. Applicant responded to these SOR
allegations in a notarized Answer dated December 26, 2006, which DOHA received on January 3,
2007.  She requested a decision without a hearing. 
Department Counsel on June 5, 2007, prepared a File of Relevant Material (FORM) which
was forwarded to her on June 8, 2007.  The Applicant received the FORM on June 15, 2007; in
response she submitted supplementary information on July 1, 2007.  The Department Counsel did
not object to her submissions, so they were admitted into evidence as Exhibits A and B.   The matter
was assigned to me on July 26, 2007.  Subsequently, after an initial review, I requested Department
counsel contact the Applicant and allowed her to submit updated information on her bankruptcy
filing.  In response, on August 14, 2007, she submitted Exhibit C, the Notice of Chapter 7
Bankruptcy Case Filing of July 13, 2007, and other documents which were admitted into evidence.
FINDINGS OF FACT
After a complete and thorough review of the evidence in the record, and upon due
consideration of that evidence, I make the following Findings of Fact:
Applicant, 49 years old, has worked for a defense contractor in State #1 since September 11,
3
2005, when she completed a Questionnaire for Public Trust Positions (SF 85P).   She is a health care
finder.  She stated she had excellent evaluations and attendance.   Earlier, she attended a state
university in State #2 from 1976 to 1977 but received no degree. She is divorced.  (Answer; Exhibit
4)
Finances 
Although Applicant revealed only one debt in her SF 85P, investigation revealed a substantial
number of debts.  (Exhibits 5, 6) In her response to the SOR, she explained that she had a business
as a sole proprietor where she was “misinformed and ignorant as to how to open a business” and was
“given the wrong advice.”  (Answer)  She explained further that she had been misled by her former
boyfriend in this business.  She used all of the income to pay for bills, insurance, and had even paid
her boyfriend’s child support for three children.  The business failed five years ago in 2002.  She
claimed to have been “tricked” and that caused the “break up of that relationship,” but she could not
sue him as he had signed nothing.  She could not afford to file for bankruptcy at that time.  However,
she has used her financial resources to help support her daughter and her two-year old child.
(Exhibit A)
Applicant admitted all of the debts listed to creditors which total $861,710. Her debts include
three repossessed car debts in  a $6,154 debt for an auto repossessed in1999 (SOR  ¶ 1.a.), a $27,912
debt for a repossessed leased auto in 2002 (SOR  ¶ 1.g.), and $7,291 for an auto repossessed in 2004
(SOR  ¶ 1.p.) which seem unlikely to be business-related debts. Her other debts range from small
consumer debts which she documented no efforts to pay to numerous other large debts and
judgments detailed in the SOR.   Her financial problems continued to April 2006 when a $69,028
delinquent account (SOR  ¶ 1.v.) was referred for collection.  In December 2006 she explained she
planned to file for bankruptcy, but had not been able to do so earlier as she did not have the money.
(Answer)   Prior to filing bankruptcy she provided no evidence that she had made arrangements to
pay any of the debts. 
She paid a $1,700 fee in December 2006 to a bankruptcy firm.  (Exhibit B)  In July 2007 she
stated that she planned to see her attorney to file for bankruptcy under Chapter 7 and had taken a
required credit counseling course.  (Exhibit A)  Her Chapter 7 bankruptcy case was filed on July 12,
2007; and a meeting of creditors was scheduled for August 15, 2007.  (Exhibit C)  However, she
failed to provide any documentation as to which creditors were included in the bankruptcy and
which, if any, of her debts were discharged. 
In her Answer she disclosed she has a net monthly income of approximately $1,700 and
monthly expenses of $1,300 which leaves her a balance of over $400 each month; however, beyond
stating that she lives within her means, she did not explain how she planned to resolve these debts
other than to file for bankruptcy.  She moved to a less expensive apartment to reduce her expenses.
She drives a 1997 vehicle that she owns.  (Answer)
POLICIES
The President has “the authority to . . . control access to information bearing on national
security and to determine whether an individual is sufficiently trustworthy to occupy a position …
      Department of the Navy v. Egan, 484 U.S. 518, 527 (1988).  3
      Directive, ¶ E2.2.1.4
      Id.5
      Id.6
      Directive, ¶ E3.1.14.7
      Directive, ¶ E3.1.15.8
      ISCR Case No. 01-20700 at 3 (App. Bd. December 19, 2002).9
      Directive, ¶ E2.2.2.10
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that will give that person access to such information.”  In Executive Order 10865, Safeguarding3
Classified Information Within Industry (Feb. 20, 1960), the President set out guidelines and
procedures for safeguarding classified information and determining trustworthiness within the
executive branch. 
To be eligible for a security clearance or access to sensitive information, an applicant must
meet the security guidelines contained in the Directive. Enclosure 2 of the Directive sets forth
personnel security guidelines, as well as the disqualifying conditions and mitigating conditions under
each guideline. 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 a security clearance.  4
An administrative judge must apply the “whole person concept,” and consider and carefully
weigh the available, reliable information about the person.  An administrative judge should consider5
the following factors: (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.   6
Initially, the Government must present evidence to establish controverted facts in the SOR
that disqualify or may disqualify the applicant from being eligible for access to classified
information.  Thereafter, the applicant is responsible for presenting evidence to rebut, explain,7
extenuate, or mitigate the facts.  An applicant “has the ultimate burden of demonstrating that it is8
clearly consistent with the national interest to grant or continue his security clearance.”  Any doubt9
as to whether access to classified information is clearly consistent with national security will be
resolved in favor of the national security.  The same rules apply to trustworthiness determinations10
for access to sensitive positions.
CONCLUSIONS
       Five Financial Considerations Mitigating Conditions under Guidelines ¶ 20(a)-(e) potentially apply:11
(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;
(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;
(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;
(d) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts;
(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.
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Guideline F:  Financial Considerations
 ¶ 18. The Concern.  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 acts to generate funds.  Compulsive gambling is a concern as it may
lead to financial crimes including espionage.  Affluence that cannot be explained by
known sources of income is also a security concern.  It may indicate proceeds from
financially profitable criminal acts.
The government provided substantial evidence of Applicant’s financial problems reflected
by her accumulating over $861,000 in debts that have persisted from 1999 to 2006. While she
claimed that several of the debts were linked to her failed business, she did not explain exactly how
any of the debts were business debts.  Included are three repossessed car debts in 1999 (SOR  ¶ 1.a.),
in 2002 (SOR  ¶ 1.g.), and  in 2004 (SOR  ¶ 1.p.)  which seem unlikely to be business-related debts.
While the majority of her debts are large debts and judgments to financial institutions which may be
linked to her failed business, she also has a series of small debts of $192 (SOR ¶ 1.m.), $53 for cable
(SOR ¶ 1.n.),  $55 for a wireless phone (SOR ¶ 1.q.), and $53 to a department store (SOR  ¶ 1.t.):
it seems unlikely that those debts relate to her failed business.  Nor did she document any efforts to
resolve even these minor debts.  Since her business failed in 2002, she did not explain how the most
recent debt of $69,028, referred for collection in April 2006, (SOR  ¶ 1.v.) is linked to her failed
business.  Consequently, Financial Considerations Disqualifying Condition (DC), AG ¶ 19(a),
(inability or unwillingness to satisfy debts) and AG ¶ 19(c), (a history of not meeting financial
obligations) apply. 
With the government’s case initially established, the burden shifted to Applicant to present
evidence of refutation, extenuation, or mitigation  to overcome the case against her.  In large part,11
Applicant claims that her debts grew out of a failed business, but she did not link any of these
specific debts to the business. While she claims that many of  her debts were due to conditions
beyond her control, she did not establish that link clearly.  Applicant did take some action and gave
a fee to a lawyer to file for Chapter 7 Bankruptcy in December 2006; however, he did not file until
July 2007.  While her debts may ultimately be discharged under Chapter 7, she provided no evidence
      The Appeal Board has previously explained what constitutes a “good faith” effort to repay overdue12
creditors or otherwise resolve debts:  
In order to qualify for application of [the “good faith” mitigating condition], an applicant
must present evidence showing either a good-faith effort to repay overdue creditors or some
other good-faith action aimed at resolving the applicant’s debts. The Directive does not
define the term ‘good-faith.’ However, the Board has indicated that the concept of good-
faith ‘requires a showing that a person acts in a way that shows reasonableness, prudence,
honesty, and adherence to duty or obligation.’ Accordingly, an applicant must do more than
merely show that he or she relied on a legally available option (such as bankruptcy) in order
to claim the benefit of [the “good faith” mitigating condition]. 
(internal citation and footnote omitted) ISCR Case No. 02-30304 at 3 (App. Bd. Apr. 20, 2004) (quoting
ISCR Case No. 99-9020 at 5-6 (App. Bd. June 4, 2001)). 
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as to which debts to which creditors were included in her filing.  She showed unsound judgment in
her delay in addressing these serious financial issues, so she did not establish she acted in good
faith.   Thus, she fails to meet AG ¶ 20(d), (the individual initiated a good-faith effort to repay12
overdue creditors or otherwise resolve debts).  Indeed the evidence suggests she continued to
develop new debts even beyond the time that her business failed in 2002.  In order to establish that
her business failed due to special circumstances, she would have to provide a clearer explanation.
While Applicant stated she had received counseling in a course that the Bankruptcy court
requires for these financial problems, she did not provide the certificate. Nor did she explain how
the counseling has led her to improve her financial practices  She failed to establish the clear steps
she has taken to turn around her long-standing financial issues. Overall, Applicant failed to establish
mitigation as her decision to file for bankruptcy is too recent and she provided no evidence as to
which debts might have been discharged.  An applicant must do more than merely show that she
relied on a legally available option (such as bankruptcy) in order to claim the benefit of the “good
faith” mitigating condition.
Whole Person Analysis
Evaluating Applicant in light of the “whole person” concept, I conclude she is a sincere
person who lived through difficult circumstances.  However, she failed to demonstrate any initiative
to develop a solution to her large and long-standing delinquent debt.  She even delayed filing for
bankruptcy under Chapter 7 from December 2006 to July 2007, so she did not establish that any of
the debts alleged in the SOR have been discharged.  Neither did she show how she has changed her
financial practices other than moving to a place with lower rent.  Beyond her own statements, she
provided no evidence to establish her favorable employment history.  Given the persistence of her
substantial financial problems from 1999 to 2006, the likelihood of new debts and related problems
is high. 
After weighing the disqualifying and mitigating conditions, and all the facts and
circumstances, in the context of the whole person, I conclude she has failed to mitigate the security
concerns pertaining to financial considerations.  I rule against  Applicant on subparagraphs 1.a.
through 1.v. under SOR Paragraph 1.
FORMAL FINDINGS
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After reviewing the allegations of the SOR in the context of the Adjudicative Guidelines in
Enclosure 2 and the factors set forth under the Adjudicative Process section, I make the following
formal findings:
Paragraph 1. Guideline F: AGAINST APPLICANT
Subparagraph 1.a through 1.v. 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 Applicant eligibility for assignment to sensitive duties.  Eligibility
for a trustworthiness position is denied.
Kathryn Moen Braeman
Administrative Judge