KEYWORD: Financial
DIGEST: Applicant is a 46-year-old employee of a defense contractor. He still owes a significant
number and amount of delinquent debts that resulted from his failed attempt to start a restaurant
business. Although he has resumed stable employment and is working to pay off his debts, it will
be several years before his financial situation is solvent. Security concerns raised by financial
considerations were not mitigated. Clearance is denied.
CASENO: 06-23854.h1
DATE: 09/25/2007
DATE:  September 25, 2007
In re:
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SSN: -----------
Applicant for Security Clearance
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ISCR Case No. 06-23854
DECISION OF ADMINISTRATIVE JUDGE
DAVID M. WHITE
APPEARANCES
FOR GOVERNMENT
Candace Le’i, Esq., Department Counsel
FOR APPLICANT
Pro Se
SYNOPSIS
Adjudicative Guidelines for Determining Eligibility for Access to Classified Information (August 2006) as1
implemented by Under Secretary of Defense Memorandum of Aug. 30, 2006 for use in adjudication of all cases in which
an SOR had not been issued by Sept 1, 2006. These revised AG replaced those found in enclosure 2 of the Directive,
which is pending revision to incorporate them. Copies of the applicable AG were provided to Applicant with the SOR.
 
2
Applicant is a 46-year-old employee of a defense contractor. He still owes a significant
number and amount of delinquent debts that resulted from his failed attempt to start a restaurant
business. Although he has resumed stable employment and is working to pay off his debts, it will
be several years before his financial situation is solvent. Security concerns raised by financial
considerations were not mitigated. Clearance is denied.
STATEMENT OF THE CASE
Applicant applied for a security clearance on February 7, 2006, in conjunction with his
employment by a defense contractor as a project management specialist. On May 25, 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), of the revised
Adjudicative Guidelines (AG),  why DOHA could not make the preliminary affirmative finding1
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 on a notarized, annotated copy of the SOR,
dated July 3, 2007, admitting the truth of some of the allegations and denying others, and elected to
have a hearing before an administrative judge. The case was then assigned to me on August 7, 2007.
A Notice of Hearing was issued on August 9, 2007, and the hearing was held as scheduled on August
28, 2007. During the hearing, the Government submitted a motion to amend the SOR by correcting
certain obvious typographical errors. This motion was granted at the hearing, without objection, and
Department Counsel made pen and ink corrections to the original SOR. The Government offered six
exhibits that were marked as Government Exhibits (GE) 1 through 6, and admitted without
objection. Applicant testified, but offered no documentary evidence or exhibits. DOHA received the
hearing transcript (Tr) on September 5, 2007.
FINDINGS OF FACT
Applicant formally admitted the truth of the factual allegations set forth in SOR ¶¶ 1.h, 1.i,
1.k, 1.m, 1.n, and 1.o, pertaining to financial considerations under AG F. Those admissions are
incorporated herein as findings of fact. He denied the remaining allegations under AG F in his
response to the SOR. After a complete and thorough review of all the evidence in the record, and
upon due consideration of same, I make the following findings of fact:
GE 1 (e-QIP, dated Feb. 7, 2006) at 6, 11-12, 37.  2
Tr at 52-55.3
See also, GE 3 (credit bureau report (CBR) dated Jul 18, 2007); GE 4 (CBR dated May 11, 2007); GE 5 (CBR4
dated Dec. 12, 2006; and GE 6 (CBR dated Mar. 8, 2006) documenting these debts, as well as those debts Applicant
disputed for reasons discussed below. The “dispute” noted in his response to the SOR, concerning the ¶ 1.h debt, was
with the date rather than the amount due or its delinquent status. Tr at 43-44. (Note: the transcript incorrectly reads,
“debts” on page 43, lines 11 and 13, when Applicant used the word, “dates.”) 
Tr at 85-86, 99-100. 5
Tr at 31, 53; GE 2 (Interrogatories) at attachment 8.6
Tr at 83.7
3
Applicant is a 46-year-old employee of a defense contractor seeking to obtain a security
clearance for the first time.  He is married, for the second time, with seven children ranging from a2
son who just finished undergraduate studies at Columbia to a newborn. He has two other children
in college. His wife does not work because daycare for their three pre-school children would cost
more than she can earn. He initially came to the United States from Nigeria in 1982 for college and
graduate school, and became a naturalized citizen in 1993. 
Applicant formerly lived in a city whose economy depends heavily on high-technology
corporations. He had a good job with a large corporation and good credit until he decided to open
a restaurant business. In mid 2003, he quit his job to work in the restaurant full time. Unfortunately,
an economic downturn caused massive layoffs and his business began to fail about six months after
it opened. Applicant stopped paying personal bills and incurred additional debt, both commercial and
to friends, trying to keep the business afloat. He took a consulting job to generate extra income, but
finally realized the business could not be saved. In April 2005, he relocated and started his current
employment. He now makes $84,000 per year and is working to pay off some of his delinquent
debts. He is current on his rent and car payments, and is not incurring additional delinquent debt.3
Applicant admitted to owing $11,071 in delinquent debts, as alleged in SOR ¶¶ 1.h, 1.i, 1.k,
1.m,1.n, and 1.o.   He further admitted that he most probably owes the $1,349 delinquent debt4
alleged in ¶ 1.f, but denied it because he is not sure which debt that is.  He also admitted that he owes5
the $9,427 debt placed for collections as alleged in ¶ 1.g, but denied that it is delinquent since he is
making regular payments of $102 per month under a repayment plan agreement with the creditor.6
Thus, the total SOR-alleged debt that Applicant admittedly still owes is $21,847. In addition, he
owes an estimated $12,000 to $15,000 to close friends who informally lent him more than $25,000
to help keep his family going while he tried to save his restaurant business.  7
SOR ¶¶ 1.a and 1.b alleged 18 delinquent medical debts, totaling $4,202. He does not intend
to pay these debts, testifying that they are overcharges by the medical providers. He said his
insurance paid their maximum allowable amounts and he paid his deductibles and co-pays, but the
providers wanted more than his insurance would allow and billed him for the difference. He does
Tr at 34-36, 60-64.8
Tr at 36-37, 44-47, 65, 70-73.9
GE 2 at attachments 2 through 4; GE 3 at 4 (item number six); Tr at 37-41.10
Tr at 29-32, 48-50, 75-78.11
Tr at 52-55.12
4
not feel he owes these debts, but they are not removed from his CBRs because the creditors
documented valid claims when he disputed them.8
The debts alleged in SOR ¶¶ 1.c, 1.d, 1.j, and 1.l, totaling only $660, involve three close-out
utility bills and one apartment cleaning fee claimed by the creditors after Applicant moved various
times. He has disputed owing each of them, but decided it is not worth it to return to the various
locations to fight them in court. He does not plan to pay them and, other than reporting them to the
credit bureaus, none of the creditors are actively seeking payment.  9
Applicant fully resolved the $7,383 delinquent debt alleged in SOR ¶ 1.e in 2005.  He10
consulted a debt consolidation service, but calculated that it would merely cost him significant
additional interest and fees to enter their repayment plan. He has refused advice to file for
bankruptcy, as he considers that dishonorable and intends to pay his debts when he can. His approach
to debt repayment is to save enough money to approach his creditors, one at a time, and negotiate
a figure at which they are willing to settle the debt in full. He accomplished this with some of his
creditors. In July 2006, he decided to start paying down his informal debts to friends, with available
funds at the rate of at least $1,000 per month.  At this rate it will be at least another year before they11
are repaid, although he will have an additional $650 per month available when his current auto lease
expires next January. He expects he will not be able to repay all of his delinquencies until late 2009
at the earliest.12
POLICIES            
The revised AG that replaced Enclosure 2 of the Directive set forth adjudicative guidelines
which must be considered in the evaluation of security suitability. In addition to brief introductory
explanations for each guideline, the AG 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 must be considered in deciding whether to grant, continue, deny or revoke
an individual's eligibility for access to classified information. Conditions that could raise a security
concern and may be disqualifying, as well as those which would mitigate security concerns, under
Guideline F (Financial Considerations), are set forth and discussed in the conclusions section below.
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
AG  ¶ 2.13
AG ¶¶ 2(b), 2(c).14
“Substantial evidence [is] such relevant evidence as a reasonable mind might  accept as adequate to support15
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
Directive ¶ E3.1.14.16
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of the Directive,  to assist the administrative judge in reaching fair and impartial, common sense13
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.
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, logical14
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.”  The15
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
have been controverted.”   “The applicant is responsible for presenting witnesses and other evidence16
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
Directive ¶ E3.1.15.17
ISCR Case No. 02-31154 at 5 (App. Bd. Sep. 22, 2005); ?The Administrative Judge [considers] the record18
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). 
AG ¶ 18.19
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decision.”  Once it has met its initial burden of production, the burden of persuasion (including any17
burden to disprove a mitigating condition) never shifts to the government.  18
A person applying for 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,” so the decision to deny an individual a
security clearance is not necessarily a determination as to the loyalty of the applicant. It is merely an
indication the applicant has not met the strict guidelines the President and the Secretary of Defense
have established for issuing a clearance.
CONCLUSIONS
As set forth in the Directive, every personnel security determination must be a fair and
impartial overall common sense decision based on all available evidence, both favorable and
unfavorable. The decision must be arrived at by applying the standard that the grant or continuance
of a security clearance or access to classified information is clearly consistent with the interests of
national security.  
Guideline F: Financial Considerations
Financial considerations raise security concerns when a person has significant
delinquent 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 acts to generate funds.”19
I have considered all of  the Financial Considerations Disqualifying Conditions (FC DC), and
find that FC DC 19(a) (“inability or unwillingness to satisfy debts”) and FC DC 19(c) (“a history of
not meeting financial obligations”) apply to Applicant’s situation and raise security concerns. He
admittedly owes almost $22,000 in SOR-alleged delinquent debts, which he does not intend to begin
7
repaying for at least a year, while he repays $12,000 to $15,000 in informal loans from friends. He
disputes owing, and does not intend to repay, another $4,860 in medical, utility and apartment
cleaning bills that are sufficiently legitimate to remain on his credit report after he challenged them.
He did not meet his burden of proving that these bills are invalid. No other FC DC applies. 
I have considered all of the Financial Considerations Mitigating Conditions (FC MC) that
might apply to Applicant’s inability to meet, and history of not meeting, his financial obligations.
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 since his delinquent indebtedness
continues to date.
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”)
applies to some degree. Applicant chose to leave secure employment to begin a restaurant business.
This business failed, and he chose to continue trying to make it work by allowing other debts to go
unpaid. When he realized he could not save the business, he again obtained stable employment and
is working to reduce his debts rather than declaring bankruptcy and avoiding them. However, the
pressures resulting from the delinquent indebtedness and a bad credit rating remain. 
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”) was not established
by Applicant. He chose not to follow a debt consolidation program, did not follow the advice of
counsellors, and his financial difficulties are not yet at the point of being resolved or under control.
FC MC 20(d) (“the individual initiated a good-faith effort to repay overdue creditors or
otherwise resolve debts”) also does not apply to mitigate security concerns arising from his financial
situation. He showed that he is making regular payments toward one major delinquent debt, and
claimed without corroboration that he was making significant monthly payments toward debts he
owes to friends from informal loans. He does not intend to resume paying his SOR-listed debts until
about a year from now, and does not intend to pay a significant portion of that debt at all.
Applicant disputes the legitimacy of some of his past-due debts, but presented no
documentation to substantiate the basis of the disputes, or actions to resolve them. Accordingly, 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 mitigate security concerns, even with
respect to the portion of the indebtedness he disputes. No unexplained affluence concerns were
raised, so FC MC 20(f) has no bearing in this case.
Whole Person Analysis 
I have considered the “whole person” concept in evaluating Applicant’s risk and vulnerability
in protecting our national interests. The nature, extent, and seriousness of his delinquent
indebtedness may be coming under control, and is not getting worse. However, his financial situation
remains tenuous, with large ongoing family obligations and significant off-the-books debt in addition
to that listed in the SOR. Applicant is a mature, educated adult professional who took a risk starting
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a business that failed, and offered no reason he should not be considered accountable for his
voluntary actions. He has secured good employment and is repaying debts as he can, which is some
evidence of rehabilitation or other permanent behavioral changes. The evidence shows that
continuation of these problems is highly probable over the next few years, although he is resolving
the debts as quickly and responsibly as he is able to do. Accordingly, I do not find that Applicant has
mitigated the security concerns raised by the financial considerations of his current situation. With
continued efforts, he may resolve and mitigate these concerns in a few years, but it is not clearly in
the interest of national security to grant him access to classified material right now.
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: Against Applicant
Subparagraph 1.b: Against Applicant
Subparagraph 1.c: Against Applicant
Subparagraph 1.d: Against Applicant
Subparagraph 1.e: For Applicant
Subparagraph 1.f: Against Applicant
Subparagraph 1.g: Against Applicant
Subparagraph 1.h: Against Applicant
Subparagraph 1.i: Against Applicant
Subparagraph 1.j: Against Applicant
Subparagraph 1.k: Against Applicant
Subparagraph 1.l: Against Applicant
Subparagraph 1.m: Against Applicant
Subparagraph 1.n: Against Applicant
Subparagraph 1.o: 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