KEYWORD: Financial
DIGEST: Applicant has a history of delinquent debts associated with his efforts to finance the
development and marketing of his patented improvised explosive device (IED) detector for use by
American military forces in Iraq and other areas of armed conflict.  Choosing not to utilize other
fund-raising options to finance his project while awaiting clearance decisions for himself and his
company (such as Chapter 11 or 13 or licensing his technology to venture capitalists), Applicant
accumulated over $150,000.00 in delinquent credit card and student loan debts that he cannot
currently repay with the limited resources at his disposal.  Given the level of his carried debt loan
and repayment uncertainty, he is unable to mitigate security concerns associated with his past history
of delinquent debts.  Clearance is denied.
CASENO: 07-02417.h1
DATE: 09/27/2007
DATE:  September 27, 2007
In re:
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SSN: -----------
Applicant for Security Clearance
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ISCR Case No. 07-02417
DECISION OF ADMINISTRATIVE JUDGE
ROGER C. WESLEY
APPEARANCES
FOR GOVERNMENT
Julie R. Edmunds, Department Counsel
FOR APPLICANT
Pro Se
FOR OFFICIAL USE ONLY
When unredacted this document contains information
EXEMPT FROM MANDATORY DISCLOSURE under the FOIA
Exemption 6 applies 2
SYNOPSIS
Applicant has a history of delinquent debts associated with his efforts to finance the
development and marketing of his patented improvised explosive device (IED) detector for use by
American military forces in Iraq and other areas of armed conflict.  Choosing not to utilize other
fund-raising options to finance his project while awaiting clearance decisions for himself and his
company (such as Chapter 11 or 13 or licensing his technology to venture capitalists), Applicant
accumulated over $150,000.00 in delinquent credit card and student loan debts that he cannot
currently repay with the limited resources at his disposal.  Given the level of his carried debt loan
and repayment uncertainty, he is unable to mitigate security concerns associated with his past history
of delinquent debts.  Clearance is denied.
STATEMENT OF THE CASE
On May 10, 2007, the Defense Office of Hearings and Appeals (DOHA), pursuant to
Executive Order 10865 and Department of Defense Directive 5220.6 (Directive), dated January 2,
1992, issued a Statement of Reasons (SOR) to Applicant, which detailed reasons why DOHA could
not make the preliminary affirmative finding under the Directive that it is clearly consistent with the
national interest to grant or continue a security clearance for Applicant, and recommended referral
to an administrative judge to determine whether clearance should be granted, continued, denied or
revoked.
Applicant responded to the SOR on May 24, 2007, and requested a hearing.  The case was
assigned to me on June 21, 2007, and was scheduled for hearing on July 24, 2007.  A hearing was
held on July 24, 2007, for the purpose of considering whether it would be clearly consistent with the
national interest to grant, continue, deny, or revoke Applicant’s security clearance.  At hearing, the
Government's case consisted of three  exhibits; Applicant relied on three witnesses (including
himself) and three exhibits, each containing multiple sub-parts.  The transcript (R.T.) was received
on August 8, 2007.
SUMMARY OF PLEADINGS
Under Guideline F, Applicant is alleged to have accumulated 15 delinquent debts exceeding
$152,000.00.  For his answer to the SOR, Applicant admitted each of the allegations covering his
delinquent debts, and furnished numerous explanations of the debts and his repayment plan that is
conditioned on his receiving Government grants to fund his patented device.
FINDINGS OF FACT
Applicant is a 43-year-old adjunct professor and principal of a defense contractor who has
held a security clearance since 1986 and seeks to retain his clearance.  The allegations covered in the
SOR and admitted by Applicant are incorporated herein and adopted as relevant and material
findings.  Additional findings follow.
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Over the past ten years, Applicant has established a good reputation as a scientist, college
professor and community college instructor.  He has no history of breaking rules for safeguarding
sensitive proprietary and classified information.  He made a conscious choice in 2001, however, to
finance the development and marketing of his three patented laser verification authentication Raman
Spectrometer devices (lvars device) through the use of credit cards and other debt financing means.
He made this choice on the expectation his company (OFT) would obtain its required facility
clearance, and be awarded a $30 million defense contract for the licensed use of his patented lvars
device (see ex. B(19)).  Applicant describes his lvars as a laser-based system designed “to detect
explosives both at point (within one meter), as well as at a distance, which could be hundreds, if not
thousands, of meters” away (R.T., at 154). He claims available explosives detection systems tend
to yield false negatives, which place soldiers serving in Iraq in harm’s way (R.T., at 167).  
 Even before Applicant’s company’s facility clearance was denied, however, the Army’s
responsible approval organization informed Applicant’s company that it had decided not to pursue
the company’s proposal (see ex. A(12); R.T., at 138-40).  The responsible organization cited the
device’s described technique of remotely detecting and characterizing explosives as a technique that
“is extremely high risk and unproven” (see ex. A(12); R.T., at 145).  The organization noted the
proponents’ failure to construct any basic test prototype, as well as the absence of any included
technical plan or analysis of how OFT expected to overcome detected technical obstacles (ex.
A(12)).  By contrast, the responsible approving organization noted the existence of other
developmental techniques for remote detection of explosives that have been successfully prototyped
and demonstrated (A(12)). 
At no place in the responsible organization’s October 2006 response did it attempt to tie the
proposal to its sponsor’s obtaining a facility clearance or suggest any potential for renewed interest
in the proposal in the future.  Despite assurances from Applicant and W3 that the Army’s responsible
approval organization could be expected to look favorably on Applicant’s lvars contract proposal
once OFT obtained its facility clearance, neither provide any documentary support for this
anticipated action. Certainly, there are no documentary assurances from the responsible organization
or inserted contract conditions that would offer any realistic hope of reconsideration in the future
(R.T., at 175).   Under the circumstances,  there are simply too many variables at this time to draw
any meaningful inferences about the prospects of Applicant and his company’s obtaining Army
approval of his device.
Applicant accumulated a number of delinquent debts (15 altogether) after 2001, mostly credit
card-related, while developing three patented prototype IED detectors and seeking to obtain funding
grants for the device from the responsible approving organization (see ex. B-11 through 22; T., at
80-95, 108-09).  After incorporating his company in 1998, Applicant, to date, has been unsuccessful
in raising grant money to develop and market his device for lack of collateral and has had to turn to
“bootstrapping” techniques through his credit cards to raise the necessary funds to sustain his
personal and professional needs (R.T., at 118).  He briefly considered pursuing Chapter 11 relief, but
he ultimately determined not to pursue bankruptcy out of concern for creditor attachment of his IED
detector, in the event of payment default (R.T., at162-63).  While the vast majority of his
accumulated delinquent debts represent cash withdrawals on his credit cards to fund his project, three
of his listed debts represent student loans taken out to finance his wife’s education (creditors 1.I
through 1.k) and, as such, are not directly linked to his business project (R.T., at 135-37).
Altogether, he accumulated over $21,000.00 in student loans.
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The listed credit card accounts listed in the SOR bear the personal names of Applicant and
his wife, and not his company, OFT (R.T., at 140-41).  Applicant never pursued company credit
cards or explored a business line of credit to finance his project because his company did not have
any assets aside from his three patents to use as collateral (R.T., at 141, 159-61).  Applicant never
considered a business loan or home equity loan to finance his project.  He not only does not own a
home, but has no other appreciable assets to collateralize a loan besides his patents, which he does
not wish to risk losing.
While he could perhaps generate capital contributions from his partners who contributed
$5,000.00 to $10,000.00 each (five partners in all), and to a lesser extent from the four other
investors who contributed small amounts to the project (R.T., at 142), he does not think such
contributions would be sufficient to cover his cash needs on the project.   Licensing his technology
to raise venture capital is not an option either, because (again) he could run the risk of losing control
of his intellectual property, which would be needed to collateralize any venture funding (R.T., at
160).  
Applicant and his OFT company have worked hard to maintain control of their patents on
the lvars device he developed.  He characterizes himself as the chief scientist and developer of the
project covering the patented device (R.T., at 130-31, 169).  At the present, he and his company
continue to seek a facility clearance for his OFT company and a personal security clearance for
himself, which he claims has been an unfulfilled condition to his firm’s finalizing its $30 million
development contract with a major prime defense contractor, which wants his patented dual use
device for use in meeting the latter’s Army contracts (R.T., at 108-09, 146).  Applicant assures his
technology lacks any real U.S. competition and only a few foreign countries who are currently doing
any known research in this IED detector area (R.T., at 164).  He states the detector device has good
dual use potential to the responsible Army reviewing organization due to its capability to eliminate
both false positives and false negative signals for military vehicles operating in war zones.  With the
funds he expects from his company’s finalizing its expected contract with the identified defense
contractor, Applicant believes he will be able to pay off his accumulated delinquent debts from his
company’s expected contract award (R.T., at 106-07).  Without the contract, though, he cannot see
how he can pay any of his delinquent creditors, in which case he would expect to relocate and
explore anticipated job opportunities for himself and his wife (R.T., at 107-08).
Married since 1999, Applicant characterizes his lifestyle as frugal.  He has few tangible assets
to claim as his own.  Specifically, he claims his personal bank account as his only bank account, and
he has no stocks, bonds, real estate, insurance policies, or interests in any companies other than his
own company (see ex. A-8 through 10; R.T., at 97-98).  He estimates his personal property to be nor
more than $35,000.00 in total value.   Standing alone, without any major contract support from the
Army’s approving organization, his patents lack any appreciable value (R.T., at 165). 
Applicant and  his company have both patent and corporate attorneys on retainer to protect
his  patent and corporate interests and to date have been successful in perfecting and protecting their
patented lvars device (see exs. B(20) and B(21); R.T., at 92-96).  Corporate counsel is responsible
for administering and arranging all of his company and personal accounts associated with his patent
and related business interests.  Both Applicant and his spouse are pursuing advanced degrees to
expand their employment opportunities (R.T., at 107).  Applicant documents a fair credit score and
a record of good credit before he turned to deficit financing in 2002 (or thereabouts) to fund his
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patent investments (R.T., at 60-61).  Should he and his company fail to obtain the defense contract
they seek, he intends to pursue a banking career to pay off his debts (R.T., at 111).
Applicant currently takes home around $2,800.00 a month; his wife is a full time student and
currently does not contribute to their household income.  He has around $350.00 in his checking
account (R.T., at 147), but no mutual funds or retirement plan that he could draw upon in times of
emergency (R.T., at 148).  
Applicant is highly regarded by former colleagues with whom he has shared  academic and
business pursuits in the scientific fields that Applicant has been involved in.  W1 (a high level
manager of a large financial institution) who has known Applicant since 1983 credits him with
outstanding character and excellent earnings potential were he join his bank (R.T., at 12-14).  While
W1 is aware of Applicant’s experiencing financial difficulties from funding his project, he has no
knowledge of the specific debts and amounts.  W2 is a former teaching colleague of Applicant’s and
recollects his achieving excellent reviews from his students (R.T., at 40).  W2 is also unaware of
Applicant’s specific debts (R.T., at 42-43). 
Another witness (W3) owns a specialty engineering firm that supports projects for the
strategic intelligence community (R.T., at 47-48) and holds a top secret security clearance (R.T., at
70).  Through his association with an Army electronic warfare testing program, W3 became with
Applicant, who at the time was one of his professors (R.T., at 48).  This missile program issued a
contract to Applicant’s firm in 2005, contingent on Applicant’s obtaining his security clearance
(R.T., at 48-49, 71-72).  When Applicant was unable to obtain his clearance within conditioned time
limits, this special agency within the Army testing program terminated the contract (in April 2007),
with the understanding it could be renewed should Applicant obtain his security clearance (R.T., at
71).  W3 is familiar with the security clearance process (having worked as a DSS personnel security
adjudicator) and assures that because Applicant is the senior scientist with his contractor who owns
the underlying patents, the approving agency will approve no contract for his company without his
obtaining his security clearance (R.T., at 62-64).  W3 expressed confidence in Applicant’s intentions
and ability to repay his debts, once the DoD contract was approved, but could point to nothing in
writing that would confirm the agency’s intention to renew OPT contract in the event Applicant and
his country were to obtain their clearances (R.T., 71).  
POLICIES
The revised Adjudicative Guidelines for Determining Eligibility for Access to Classified
Information (effective September 2006) list Guidelines to be considered by judges in the decision
making process covering DOHA cases.  These Guidelines require the judge to consider all of the
"Conditions that could raise a security concern and may be disqualifying” (Disqualifying
Conditions), if any, and all of the "Mitigating Conditions," if any, before deciding whether or not a
security clearance should be granted, continued or denied.  The Guidelines do not require the judge
to assess these factors exclusively in arriving at a decision.  In addition to the relevant Adjudicative
Guidelines, judges must take into account the pertinent considerations for assessing extenuation and
mitigation set forth in E.2.2 of the Adjudicative Process of Enclosure 2 of the Directive, which are
intended to assist the judges in reaching a fair and impartial common sense decision.
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Viewing the issues raised and evidence as a whole, the following adjudication policy factors
are pertinent herein:
Financial Considerations
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.
Burden of Proof
By virtue of the precepts framed by the revised Adjudicative Guidelines, a decision to grant
or continue an applicant's security clearance may be made only upon a threshold finding that to do
so is clearly consistent with the national interest.  Because the Directive requires Administrative
Judges to make a common sense appraisal of the evidence accumulated in the record, the ultimate
determination of an applicant's eligibility for a security clearance depends, in large part, on the
relevance and materiality of that evidence.  As with all adversary proceedings, the Judge may draw
only those inferences which have a reasonable and logical basis from the evidence of record.
Conversely, the Judge cannot draw factual inferences that are grounded on speculation or
conjecture.
The Government's initial burden is twofold: (1) It must prove any controverted fact[s]
alleged in the Statement of Reasons and (2) it must demonstrate that the facts proven have a
material bearing  to the applicant's eligibility to obtain or maintain a security clearance.  The
required showing of material bearing, however, does not require the Government to affirmatively
demonstrate that the applicant has actually mishandled or abused classified information before it
can deny or revoke a security clearance. Rather, consideration must take account of cognizable risks
that an applicant may deliberately or inadvertently fail to safeguard classified information.
Once the Government meets its initial burden of proof of establishing admitted or
controverted facts, the burden of persuasion shifts to the applicant for the purpose of establishing
his or her security worthiness through evidence of refutation, extenuation or mitigation of the
Government's case.
CONCLUSIONS
Applicant is an adjunct professor and principal of a closely held defense subcontractor  who
accumulated a number of delinquent debts in his effort to develop and market a patented lvars
device.  Some of his accrued delinquent debts relate to student loans for his wife, but most of of his
debts cover credit card debts from his use of his cards to generate cash withdrawals (a process he
characterizes as “bootstrapping”).   Considered together, Applicant’s use of high risk fund-raising
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techniques to underwrite his project raise  security significant concerns under a personal security
program that is grounded in the encouragement of low-risk behavior by the clearance holder.
Security concerns are raised under the financial considerations guideline of the revised
Adjudicative Guidelines where the individual applicant is so financially overextended as to indicate
poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, which can
raise questions about the individual’s reliability, trustworthiness and ability to protect classified
information.  Specifically, determined financial difficulties emanating from an applicant’s  inability
to sustain his use of borrowing on his credit cards without falling far behind, and eventual
delinquency, in the servicing of his financial obligations (in this case, credit card and student loan
accounts) can place the person at risk of having to engage in illegal acts to generate funds.
Applicant’s accumulation of delinquent debts and his past failures to document payments on any
of her listed debts warrant the application of two of the disqualifying conditions (DC) of the
Guidelines for financial considerations: DC 19(a) (inability or unwillingness to satisfy debts) and
DC 19(c) (a history of not meeting financial obligations).
Applicant’s debts are attributable in part to his inability to sustain his longstanding corporate
and personal efforts to develop and market his patented lvars device and finance his wife’s education
with very little personal or business capital at his disposal (save for the patents themselves and some
limited funds of his own).  
While Applicant’s substantial debt accumulations are primarily linked to his persistent efforts
to develop and market his company project and consummate a $30 million contract with an elite
Army agency, these debt accumulations cannot be considered to be unexpected given the substantial
outlays required to develop an market the patented lvars device and place it with the Government.
 
Fundamentally, Applicant chose a high risk (“bootstrapping”) means to raise money for his
project.  While his earnest efforts to develop a valuable improvised explosive device detector are
commendable, they reflect a high risk choice on Applicant’s part that is at odds with the low risks
associated generally with approved behavior and conduct under the Adjudicative Guidelines.
Mitigation credit is difficult for Applicant based on his lack of any presented repayment proofs
and his still very speculative plan of repayment (conditioned on obtaining facility and personal
security clearances and approval of a $30 million Army agency contract for his patented detector
device).  As a result of his choices and sizeable amount of his still unresolved accrued debts, he make
take little advantage of any of the Adjudicative Guidelines covering financial considerations.  Age
of the debts at issue is potentially applicable, given the collective age of most of these covered
delinquent debts and potential applicability of pertinent statutes of limitation.  Having some
application, accordingly, is MC 20(a) (the behavior happened so long ago, was so infrequent, or
occurred under circumstances that it is unlikely to recur and does not cast doubt on the individual’s
reliability, trustworthiness, or good judgment).   Because Applicant’s decision to use his credit cards
to employ “bootstrapping” techniques to finance his project represents conscious and deliberative
actions on Applicant’s part, his financing choices cannot be considered beyond his control.  Put
another way, a key requirement for invoking MC 20(b) of the financial consideration guidelines (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) is missing.
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Applicant reaffirms his intention to pay his outstanding debts and has resisted suggestions to
petition for Chapter 11 or 13 bankruptcy relief.  Due to his failure to seek financial counseling,
however, he may not invoke MC 20(c) of the financial consideration  guidelines (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).  Without any tangible repayment efforts to his credit,
he may not invoke MC 20(d) (the individual initiated a good-faith effort to repay overdue creditors
or otherwise resolve debts) either.
Holding a security clearance involves the exercise of important fiducial responsibilities,
among which is the expectancy of consistent trust and candor.  Financial stability in a person cleared
to access classified information is required precisely to inspire trust and confidence in the holder of
the clearance.  While the principal concern of a clearance holder’s demonstrated financial difficulties
is vulnerability to coercion and influence, judgment and trust concerns are implicit in financial cases
(as here). When high risk funding activities like Applicant’s are assessed in juxtaposition to the
relatively low-risk standards of the Adjudicative Guidelines, the former, generally must give way, no
matter how potentially valuable the funded project might be to a particular defense department
customer.
Applicant was not without alternative choices to his resorting to financing his project through
his credit cards in hopes of his company’s winning a contract from the approving Army organization.
Licensing the patented technology to his partners, his company’s prime contractor, or even a qualified
outsider for a limited period with agreed upon return options was certainly one potential avenue to
pursue while he and his company awaited the outcome of their facility and personal security
applications, respectively.  Drawing upon the capital resources of his partners and interested others
was another possible option.  With this option, Applicant might have been able to motivate potential
investors with the prospect of an increased share in his patented projects.  And, of course, he might
have achieved something of a holding pattern with petitioned for Chapter 11 or13 relief.  True, all of
these alternative courses of actions could have placed Applicant and his company at risk to lose
control of the patented technology: either temporarily or permanently.  Nonetheless, Applicant did
have options at his disposal that did not involve his defaulting on $152,000.00 plus in personal debts.
The sheer size of these accumulated debt delinquencies is incompatible with the guidelines for
establishing minimum eligibility for holding a security clearance.
That Applicant has enjoyed a distinguished and successful career in his scientific and teaching
endeavors is not in dispute.  By all accounts, he is a highly regarded scientist and inventor of
technology that can potentially benefit the U.S. defense effort in Iraq and other war time theaters
around the world.  But even according maximum whole person credits to Applicant’s worthwhile
scientific and teaching achievements, minimum security clearance eligibility standards do not permit
the level of relaxation of applicable adjudicative standards that Applicant seeks.  If an exception is
to be made in recognition of Applicant’ special and valuable contributions to the defense effort, it
cannot be made at this adjudicative level.
Taking into account all of the facts and circumstances surrounding Applicant’s debt
accumulations and lack of concrete steps taken to date to resolve them, Applicant fails to mitigate
security concerns related to his covered debt delinquencies.  Unfavorable conclusions warrant with
respect to the allegations covered by subparagraphs 1.a through 1.o of the SOR.
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In reaching my decision, I have considered the evidence as a whole, including each of the E2.2
factors enumerated in the Adjudicative Guidelines of the Directive.
FORMAL FINDINGS
In reviewing the allegations of the SOR and ensuing conclusions reached in the context of the
FINDINGS OF FACT, CONCLUSIONS, CONDITIONS, and the factors listed above, this
Administrative Judge makes the following FORMAL FINDINGS:
GUIDELINE F: (FINANCIAL CONSIDERATIONS): AGAINST APPLICANT
Sub-para. 1.a: AGAINST APPLICANT
Sub-para. 1.b: AGAINST APPLICANT
Sub-para. 1.c: AGAINST APPLICANT
Sub-para. 1.d: AGAINST APPLICANT
Sub-para. 1.e: AGAINST APPLICANT
Sub-para. 1.f: AGAINST APPLICANT
Sub-para. 1.g: AGAINST APPLICANT
Sub-para. 1.h: AGAINST APPLICANT
Sub-para. 1.i: AGAINST APPLICANT
Sub-para. 1.j: AGAINST APPLICANT
Sub-para. 1.k: AGAINST APPLICANT
Sub-para. 1.l: AGAINST APPLICANT
Sub-para. 1.m: AGAINST APPLICANT
Sub-para. 1.n: AGAINST APPLICANT
Sub-para. 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 Applicant’s security clearance.  Clearance is granted.
Roger C. Wesley
Administrative Judge 
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