KEYWORD: Financial; Personal Conduct
DIGEST: Applicant has  mitigated security concerns over financial problems by his decision to begin
to address his long-standing debts even before he was formally given notice of the government’s
security concern by a Statement of Reasons. Overall, he has reformed and demonstrated positive
changes in behavior to mitigate financial concerns.  He also established he had no intent to falsify
his security submission by his failure to detail all of his debts as he did not know about the judgment
and did not understand the questions on late payments.  Clearance is granted.
CASENO: 07-01877.h1
DATE: 09/26/2007
DATE:  September 26, 2007
In Re:
-----------------
SSN: -----------
Applicant for Security Clearance
)
)
)
)
)
)
)
)
ISCR Case No. 07-01877
DECISION OF ADMINISTRATIVE JUDGE
KATHRYN MOEN BRAEMAN
APPEARANCES
FOR GOVERNMENT
James F. Duffy, Esquire, Department Counsel
FOR APPLICANT
Rick R. Looker, Personal Representative
SYNOPSIS
       This procedure is required by Executive Order 10865, as amended, and Department of Defense Directive1
5220.6 (Directive), as amended.  
       Applicant did receive a copy of the DoD Directive 5220.6 sent with the Statement of Reasons (SOR).2
2
Applicant has  mitigated security concerns over financial problems by his decision to begin
to address his long-standing debts even before he was formally given notice of the government’s
security concern by a Statement of Reasons. Overall, he has reformed and demonstrated positive
changes in behavior to mitigate financial concerns.  He also established he had no intent to falsify
his security submission by his failure to detail all of his debts as he did not know about the judgment
and did not understand the questions on late payments.  Clearance is granted.
STATEMENT OF THE CASE
The Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR)
to the Applicant on May 2, 2007.  The SOR detailed reasons why the Government could not make
the preliminary positive finding that it is clearly consistent with the national interest to grant or
continue a security clearance for the Applicant.   The SOR alleged specific concerns over Financial1
Considerations (Guideline F) in paragraph 1 and over Personal Conduct (Guideline E) in paragraph
2 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 June 6, 2007, and
requested a hearing.  On June 25, 2007,  Department Counsel indicated the case was ready to
proceed, and the matter was assigned to me on June 27, 2007. After a mutually convenient date for
hearing was agreed to, a Notice of Hearing, issued on July 12, 2007, set the matter for August 1,
2007, at a location near where Applicant works and lives.
 
At the hearing the Government offered seven exhibits  (Exhibit 1-7), which were admitted
into evidence. The Government noted that the allegation in SOR ¶ 1.i. used the wrong figure; his
monthly net remainder was not $2,403 but $1,586; a technical amendment was made to amend and
correct this error.  (TR 10; 132-133)
 Applicant was represented by a personal representative, a certified financial planner.
Applicant testified, called one witness and offered five exhibits into evidence which were admitted
as Exhibits A - E. I granted Applicant one week until August 8, 2007, to submit additional
evidence; and the government one day to review it.  (TR 56-57, 104-105,126, 134)  Applicant’s
representative submitted the additional evidence on August 8, 2007. (Exhibit F)  After Department
Counsel responded on August 9, 2007, that he had no objection, the exhibit was admitted into
evidence.  The record closed on August 9, 2007.  The transcript (TR) was received on August 15,
2007.
FINDINGS OF FACT
3
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, 26 years old, began working for a defense contractor (Company #1) in State #1
in July 2007.  While now operating under a new name, it is the same company where he worked
when he provided his initial Electronic Questionnaire for Investigations Processing (e-QIP) (SF
86) to obtain a security clearance in October 2005.  Company #1 is again sponsoring him for a
security clearance.  He worked for another company (Company #2) for eighteen months from 2005
to 2007. He had an interim clearance from 2005 to April 2007 when it was terminated for
jurisdictional reasons.  Before that he worked from October 2002 to 2005 as a senior network
engineer for Company #1, which then operated under a different name. He previously worked as
a sales representative in 2002 for a few months; earlier in 2002 he had a temporary position.  He
worked as an assistant manager in a store from 1999 to 2002.  He grew up on a farm and still helps
his parents with the farm work.  A high school graduate, he attended a trade school for one month
in 2002.  (Exhibits 1; TR 19-24; 37-38, 73-74)  Applicant married in September 2006. (TR 29; 44;
46-47)
Finances and Personal Conduct
In response to questions on his financial record in Section 27 of the e-QIP, he failed to
disclose an unpaid judgment entered against him in 2002.  (SOR ¶ 2.a.)  He denied any intent to
falsify as he stated he did not know of this judgment as he was not given notice and had not
reviewed a credit report before completing this form. (Answer; Exhibit 1; TR 87-91)  He first
learned of the judgment when his mortgage broker showed him the credit report in November
2005.  (TR 91)
 In response to questions on his financial delinquencies in Section 27 of the e-QIP, he did
disclose one delinquency (SOR ¶ 1.f.), but he failed to disclose delinquencies to other creditors
who were over 180 days delinquent.  (SOR ¶ 2.b.) or over 90 days delinquent.  (SOR ¶ 2.c.)   He
denied any intent to falsify as he stated he did not fully understand the question. He did the
application on line and did not know anyone who could answer any of his questions and clarify the
question.  (Answer, Exhibit 1; TR 87-88, 91-94) 
Applicant maintained that he answered the questions to the best of his ability as he did not
know about the judgment and did not understand what 90 and 180 days late meant and had no one
to ask for a clarification.  (TR 35-36) He certified that his answers were true, complete and correct
to the best of his knowledge and belief.  (Exhibit 1)
Investigation revealed a substantial number of debts.  (Exhibits 4, 5, 6, 7) In response to
an Interrogatory that questioned him about his debts and other matters, Applicant replied in March
2007 that he had paid or was making payment arrangements for a majority of these overdue debts.
(See chart below.)  He indicated he and his wife had net monthly income of approximately $5,000,
expenses of approximately $2,400 with  a net remainder of approximately$1,500 each month (SOR
¶ 1.i.).  (Exhibit 3; TR 85-87)
       The government conceded that SOR ¶ 1.b and ¶ 1.c. were the same debt.  (TR 116)3
4
The SOR alleged seven  debts which totaled approximately $22,000.  (Two were duplicate3
listings.) He admitted in the past he lived beyond his means and was “living paycheck to paycheck
without much thought of the future.”  (Answer)  Applicant denied he remains indebted to any of
the creditors except for ¶ 1.b., which is the same debt alleged in ¶ 1.c., where he has made
arrangements to make monthly payments. (Answer; TR 30; Exhibit F)
SOR ¶ TYPE OF DEBT (date) AMOUNT CURRENT STATUS
1.a. Credit Card debt from a
corporate account
placed for collection in
March 2006
$7,472 Applicant satisfied this debt
in March 2007.  (Answer;
Exhibits 3, 4, 5, 6; Exhibit
E; TR 30, 32; 47-52)
1.b. and 1.c. Two debts for a car
loan for a 2003 car
where the car was re-
possessed in 2004.
$20,124 for original
car loan; $10,495 is
the current debt
after the car was
sold at auction.
Applicant made
arrangements to satisfy this
debt by making $100
monthly payments
beginning in July 2007. 
(Answer; Exhibits 3, 4, 5, 6;
TR 30; TR 52-59; Exhibit F)
1.d. Judgment for a
consumer debt from a
small department store
that he incurred when
he was 18 years old.
$ 788 Applicant did not receive
notice of this collection
action; he satisfied this debt
in March 2007.  (Answer;
Exhibits 3, 4, 5, 6, and 7;
Exhibits A, D;  TR 30; 59-
62)
1.e. Consumer debt placed
for collection in 2002
for cable TV, etc.
$ 606 Applicant satisfied this debt
in March 2007.  (Answer;
Exhibits 3, 4, 5, 6; Exhibit
A, D; TR 30; TR 62-63)
1.f. Consumer debt placed
for collection in 2001.
$ 2,276 His mother satisfied this
debt in March 2007 by
paying $5,273 including past
due interest and late fees. He
believed she considered this
payment a gift to him that he
repays by working at the
farm. (Answer; Exhibits 3,
4, 5, 6; Exhibit A; TR 30;
64-66)
5
1.g. Consumer debt for a
phone when he was 18
years old, placed for
collection in 1999.
$ 553. Applicant satisfied this debt
in January  2007.  (Answer;
Exhibits 3, 4, 5, 6; Exhibit
A; TR 30, 44-45; 66-67)
1.h. Consumer debt. $ 162. He disputed this debt as the
company has no record and
it no longer shows on his
current credit report.
(Answer; Exhibits 3, 4, 5, 6;
TR 29-30; 67-69)
Steps Taken To Improve His Financial Practices 
Applicant first became aware of the need to improve his financial practices when he began
to look for a house to purchase in 2005.  After examining his credit report for the first time, he
realized he could not get a mortgage in his name.  
Applicant then consulted a certified financial planner for advice and assistance in
December 2005 and had several counseling sessions with him; he still consults with him.
Ultimately, he and his wife were able to buy a home worth $231,000, but the mortgage is in her
name; they settled on this property in January 2006.  (TR 26-28; 34; 43, 76, 81-82)  This home-
buying experience in 2006 was a catalyst for him to begin to change his financial practices. (TR
76-81) 
However, he could not get a debt consolidation loan in his own name because of his bad
credit rating.  (TR 102-103)  Finally, in March 2007 his mother was able to get a home equity loan
and agreed to make a personal loan to him of $12,000 to try to help him consolidate his debts.  He
is making monthly payments of $400 to pay back the principle with no interest; his mother
documented that he has consistently made these payments in May, June, and July 2007.   (TR 29,
69-70, 73, 102-103; Exhibit F)  
Applicant’s wife manages the family finances as she is “tons better” with money. (TR 30)
He now invests more money in his 401k where he has $4,000 invested.  (TR 31) He has a passion
for cars and spent $9,000 on a car in 2006, which he paid off in 2007; he also just purchased a
2000 truck in November 2006 and is making payments on that vehicle of $273 per month. (TR 34,
82-83)  He has changed his ways and has learned better how to manage his money and to budget;
he has made timely payments on his truck and on his student loan.  (TR 75-76)  In August 2007
the budget reflected monthly income of approximately $5,300, monthly expenses of approximately
$3,600, and a net remainder of approximately$1,500.  The expenses include a $400 monthly
payment to Applicant’s mother to repay the debt consolidation loan she gave him.  (Exhibit F)
References
Applicant’s former supervisor, friend, and his roommate in 2002 and from 2003 to
December 2005 testified on his behalf.  He supervised Applicant from March 2003 to March 2005
6
as they worked at the same organization.  As a roommate, Applicant paid all of his bills on time.
The supervisor assessed Applicant as one of the top five employees out of 55 he supervised.  (TR
107-111, 112)
POLICIES
Enclosure 2 of the Directive sets forth adjudicative guidelines to consider in evaluating an
individual's security eligibility which are divided into conditions that could raise a security concern
and may be disqualifying and conditions that could mitigate security concerns.  In deciding
whether to grant or continue an individual's access to classified information, the administrative
judge considers the evidence as a whole in evaluating this case and weighs relevant revised
Adjudication Guidelines: the mere presence or absence of any adjudication condition is not
decisive. 
 The responsibility for producing evidence initially falls on the Government to demonstrate
that it is not clearly consistent with the national interest to grant or continue Applicant's access to
classified information.  Then the Applicant presents evidence to refute, explain, extenuate, or
mitigate in order to overcome the doubts raised by the Government, and to demonstrate
persuasively that it is clearly consistent with the national interest to grant or continue the clearance.
Under the provisions of Executive Order 10865, as amended and revised, and the Directive, as
amended and revised, a decision to grant or continue an applicant's security clearance may be made
only after an affirmative finding that to do so is clearly consistent with the national interest. In
reaching the fair and impartial overall common sense determination, the Administrative Judge may
draw only those inferences and conclusions that have a reasonable and logical basis in the evidence
of record.  
Section 7 of Executive Order 10865 specifically provides 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.” The decision to deny an individual a security clearance is
not necessarily a determination as to the allegiance, loyalty, and patriotism of an applicant. It is
merely an indication that the applicant has not met the strict guidelines the President and the
Secretary of Defense have established for issuing a security clearance.
CONCLUSIONS
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.
       Five Financial Considerations Mitigating Conditions under Guidelines ¶ 20(a)-(e) potentially apply: 4
(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.
      The Appeal Board has previously explained what constitutes a “good faith” effort to repay overdue5
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
7
The government established Applicant’s financial problems, which were reflected  by his
accumulating over $20,000 in debts, including a car repossession.  His financial problems began
in 1999 and continued to 2007. 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 him.  In large part,4
Applicant’s debts grew out of his immaturity, overspending on expensive vehicles and other items,
and lack of understanding of finances, and his delay in finding a path to resolve his debts.  He
learned the significance of his bad credit when he was looking for a house to purchase and learned
that he could not get a mortgage in his name. At that point he started looking for a certified
financial planner and found one to help him understand how to get control of his finances.
Applicant and his wife were able to buy a home worth $231,000, with the mortgage in her name,
in January 2006. 
To his credit, after he received the Interrogatories in March 2007 and understood the
security significance of the delinquent debts, but before receiving the SOR in May 2007, Applicant
took positive and effective action. Unable to get a commercial loan with his bad credit, he
concluded that he needed to get a personal loan from his mother in order to begin to  resolve the
debts which she was willing to do in March 2007.  While his actions in then resolving a majority
of his debts are recent, he was made consistent payments of $200 per month to his mother to repay
the interest-free $12,000 loan.
While he initially showed unsound judgment in his delay in addressing these issues, he now
has initiated a conscientious plan.  He has already demonstrated an effective and consistent
approach to resolving these debts.  He also has a plan to make  monthly payments for his
repossessed vehicle which shows his good faith  efforts to resolve this debt and set aside his claims5
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)). 
8
against the dealer.  Thus, he merits consideration under AG ¶ 20(d), (the individual initiated a
good-faith effort to repay overdue creditors or otherwise resolve debts) because he took these steps
to use legally available means to resolve his delinquent debt.  
Further, Applicant provided evidence under AG  ¶ 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.  Even before he received the SOR, he initiated efforts to obtain
counseling for these financial problems with a certified financial planner who represented him at
the hearing.  Applicant has  made substantial steps to turn around his financial issues with the
assistance of this financial planner, his mother’s loan, and his wife financial management skills.
Thus, he has shown there are clear indications that the problem is being resolved or is under
control.  He has only one debt he did not resolve: that was a small debt where he investigated and
found the company had no record; this debt (SOR 1.h.) he disputes as it no longer appears on his
credit report.  Also, AG ¶ 20(a) also applies as the circumstances seem unlikely to recur given his
marriage and increased maternity.  He also has established a responsible work record per his
former supervisor. 
Whole Person Analysis
Evaluating Applicant in light of the “whole person” concept, I conclude he is an earnest
person who demonstrated his initiative in developing a solution to his delinquent debt once he
understood the security significance of his debts. He has been consistent in making three payments
to his mother for the debt consolidation loan and has another monthly payment plan to resolve
another large debt for a repossessed vehicle.  Significantly, with his wife’s help, he has changed
his financial practices and developed a budget.  The potential for pressure, coercion, exploitation,
or duress is slight as he has a stable and impressive employment history with the confidence of the
past supervisor who testified for him.  Based on all of these positive steps, I conclude favorably
for him based on a whole person assessment.  He is earnestly working to resolve his financial
problems, so the likelihood of new debts and related problems is low. 
Overall, Applicant has established a substantial case in mitigation under AG  ¶ 20 , but
since his reform and repayment efforts are so recent, I also assess him as a whole person and
conclude that the security concerns are mitigated under that analysis. After weighing the
disqualifying and mitigating conditions, and all the facts and circumstances, in the context of the
whole person, I conclude he has  mitigated the security concerns pertaining to financial
considerations.  I rule for  Applicant on subparagraphs 1.a. through 1.i. under SOR Paragraph 1.
      See ISCR Case No. 03-09483 at 4 (App. Bd. Nov.17, 2004)(explaining holding in ISCR Case No. 02-6
23133 at 5 (App. Bd. Jun. 9, 2004)).
9
Guideline E:  Personal Conduct
¶ 15. The Concern.  Conduct involving questionable judgment, lack of candor,
dishonesty, or unwillingness to comply with rules and regulations can raise
questions about an individual’s reliability, trustworthiness and ability to protect
classified information. Of special interest is any failure to provide truthful and a
candid answers during the security clearance process or any other failure to
cooperate with the security clearance process.  
Applicant denies he had any intent to falsify by not including all of his debts on the security
form.  He did not review a credit report that would have listed all his debts and was not given
notice of his adverse judgment.  I found his explanation that he did not understand 90 to 180 days
late in making payments was credible as he did list one overdue $2,200 debt from 2001 (SOR 1.f.).
While he admits he was rushed in completing the form, he did reveal one debt; thus he did not try
to hide his financial problems.  Also, he had no easy resource to ask for clarification as he
completed the form on line.  Given his candor and willingness to supply adverse information to
other questions, I conclude that it was not his intent to falsify by omitting his other debts.  An
administrative judge must consider the record evidence as a whole to determine whether there is
direct or circumstantial evidence concerning an applicant’s intent or state of mind at the time the
omission occurred.   Based on Applicant’s credible testimony and review of him as a whole6
person, I conclude  Guideline E  in favor of Applicant. 
 
After weighing the disqualifying and mitigating conditions, and all the facts and
circumstances, in the context of the whole person as discussed above, I conclude he has refuted
the security concerns pertaining to personal conduct.  I rule for Applicant on subparagraphs 2.a.
through 2.c. under SOR Paragraph 2.
FORMAL FINDINGS
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: FOR APPLICANT
Subparagraph 1.a through 1.i. For Applicant
Paragraph 2. Guideline E: FOR APPLICANT
Subparagraph 2.a. through 2.c. For Applicant
DECISION
10
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 the Applicant.  Clearance is
granted.
Kathryn Moen Braeman
Administrative Judge