DATE: October 31, 2007 
In Re:
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SSN: --------------------
Applicant for Security Clearance
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ISCR Case No. 06-23362
DECISION OF ADMINISTRATIVE JUDGE
DARLENE LOKEY ANDERSON
APPEARANCES
FOR GOVERNMENT
Melvin A. Howry, Department Counsel
FOR APPLICANT
Alan V. Edmunds, Attorney At Law
SYNOPSIS
Applicant’s delinquent financial indebtedness, partially caused by episodes of poor judgment
and partially caused by circumstances beyond his control, is currently being paid through Chapter
13 Bankruptcy.  He has made a good faith effort to resolve his indebtedness and has shown that he
is now financially responsible.  Clearance is granted.
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STATEMENT OF THE CASE
On April 26, 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, (as amended) issued a Statement of Reasons (SOR) to the 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 the Applicant and
recommended referral to an Administrative Judge to determine whether clearance should be denied
or revoked.
The Applicant responded to the SOR in writing on May 19, 2007, and requested a hearing
before DOHA Administrative Judge.  This case was assigned to the undersigned on July 11, 2007.
A notice of hearing was issued on August 15, 2007, scheduling the hearing for September 26, 2007.
At the hearing the Government presented fourteen exhibits.  The Applicant presented seventeen
exhibits, sixteen of which were admitted into evidence and are referred to as Applicant’s Exhibits
A through P.  The Applicant also testified on his own behalf.  The official transcript (Tr.) was
received on October 4, 2007.
FINDINGS OF FACT
The Applicant is 46 years old and married.  He is employed by a defense contractor as a
Project Lead on a Transformational Satellite Program and is seeking to obtain a security clearance
in connection with his employment.
The Government opposes the Applicant's request for a security clearance, on the basis of
allegations set forth in the Statement of Reasons (SOR).  The following findings of fact are entered
as to each paragraph and guideline in the SOR:
Paragraph 1 (Guideline F - Financial Considerations)  The Government alleges that the Applicant
is ineligible for clearance because he is financially overextended and at risk to engage in illegal acts
to generate funds. 
Upon graduating from the United States Air Force Academy in May 1985, the Applicant got
married.  Marital problems ensued, and in 1987, the Applicant and his wife divorced.  In 1989, after
confusion concerning whether his divorce was legally valid, the Applicant, who at the time was an
officer in the Air Force, was charged with two counts of knowingly obtaining services he was not
entitled to.  In lieu of court martial, the Applicant resigned his commission and received an Other
than Honorable Discharge.  Following this, the Applicant was unemployed for a time which caused
financial difficulties.  
In 1990, the Applicant was still trying to financially recover from his previous divorce.  His
ex-wife had spent money without considering the consequences, and purchased things they really
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could not afford and did not need.  She did not pay their bills on time; and as a result, the Applicant
was deeply indebted.  Following the divorce, the Applicant absorbed all of the debt from the
marriage and the divorce expenses.
 By 1992, the Applicant had recovered from the debt he incurred during his first marriage.
In February 1988, the Applicant remarried and they had a daughter. By 1994, the Applicant had
determined that there was something wrong with his daughter.  The Applicant explained that his
daughter’s medical bills caused him to fall behind on his other bills and he was forced to resort to
bankruptcy.  He explained that when his daughter was fourteen months old, she was over-medicated
by her pediatrician.  This caused severe and permanent nerve damage to her ear and she lost her
hearing.  (Tr. p. 54).   It was determined that she needed surgery that would entail a cochlear implant.
His daughter had the surgery which cost the Applicant $2,000.00 out of pocket.  The Applicant also
explained that in order to maintain the implant, batteries cost about $50.00 a week that must be
provided on a daily basis for the implant to work. The implant must to be replaced every two to three
years. It was also about this time, between 2003/2004, the Applicant  learned that his mother had
cancer and he did everything he could to help her and spend time with her before she died.  Already
in financial straits, he accumulated more debt.   
On June 23, 1995, the Applicant filed for bankruptcy under Chapter 7 of the Bankruptcy
Code.  He listed assets of $5,765.00 and total liabilities of $56,909.00.  On October 13, 1995, the
Applicant’s debts were discharged.  (See Government Exhibits 9 and 10).
Following his Chapter 7 bankruptcy, the Applicant was debt free.  In 1996, the Applicant’s
employment contract expired and his employer gave him the option of being laid off or taking a 25%
pay reduction and move to Florida.  The Applicant took the pay reduction and move.  It was also
about this time that he and his wife had two more children and their living expenses increased.  Just
after moving to Florida and purchasing a house, the Applicant was offered a permanent job in
California.  He moved back to California with his family and took the job.  The house in Florida sat
vacant for three months before he could sell it, but he continued to pay the mortgage on it while still
paying his living expenses in California.  This caused additional financial difficulties. 
On March 30, 2006, the Applicant filed for bankruptcy protection under Chapter 13 of the
Bankruptcy Code.  At that time he listed total liabilities of $293,148.00 and total assets of
$37,533.00.  On November 6, 2006, the Chapter 13 was dismissed for failing to comply with the
trustee’s payment plan.  The Applicant explained that his son in high school pulled a prank at school
and was arrested.  To get him out of juvenile hall, the Applicant paid the costs of bail and legal fees
to represent his son.  In total these expenses cost the Applicant as much as $25,000.00.  (See
Applicant’s Exhibit H and Tr. p. 59).    
The Applicant admits each of the allegations in the SOR that includes indebtedness to twenty
different creditors for a total of between $60,000 and 70,000.  (See Government Exhibits 3, 4 and
5, Applicant’s Answer to SOR, and Tr. p. 71). 
The Applicant re-filed on January 12, 2007, for bankruptcy protection under Chapter 13 of
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the Bankruptcy Code.  The Applicant testified and the documentation substantiates that the Chapter
13 bankruptcy plan includes each of the creditors listed in the SOR.  (See Applicant’s Exhibit O and
Tr. p. 45).  He plans to resolve each of these debts through the Chapter 13.  The plan requires that
he pay $1,700.00 a month to the bankruptcy trustee to be distributed to his creditors.  These funds
are automatically deducted out of his payroll check.  Presently, the Applicant has paid approximately
$6,100.00 towards the plan since he started it in March 2007.  He plans to continue with the program
until his debts are paid in full.  The plan schedule indicates that it will take three to five years to pay
all of the Applicant’s debts, with 100 percent being paid to unsecured creditors.  (See Applicant’s
Answer to SOR and attachments that include Chapter 13 Petition, Schedules and Plan).
On January 17, 2007, the Applicant received Consumer Credit Counseling as required by law
when filing Chapter 13 Bankruptcy.  (See Applicant’s Exhibit N) 
  
In June 2004, the Applicant was employed by another defense contractor.  From 2003
through 2004, he misused the corporate credit card by using it for personal expenses.  To afford to
travel to visit his mother while she was ill, the Applicant used his corporate credit card for airplane
tickets, gas and other related expenses.  He is indebted in the amount of $6,000.00.  He was
terminated by this defense contractor for this misconduct.
The Applicant was unemployed for four to five months before he got another job with a
defense contractor.  During this period, his wife was also unemployed and he withdrew money from
his retirement account to help cover their living expenses.  He was so desperate for money and the
desire to spend time with his mother that he again started using his corporate credit card for personal
expenses.  In 2005, the Applicant was counseled by his employer for using his corporate credit card
for personal expenses; and told that if he were ever to do it again, he would be terminated from
employment.
Numerous letters of recommendation from the Applicant’s superiors, coworkers and friends
some of who know the Applicant during his time at the Air Force Academy attest to the Applicant’s
sense of integrity, honesty, reliability, loyalty to the United States, positive attitude, and maturity.
They say that his character is simply beyond reproach.  He is considered to be a hard worker and
team player with a strong commitment to the Department of Defense.  He is said to be an in valuable
asset to the program and an outstanding individual in every way.  The Applicant is highly
recommended for a position of trust.  (See Applicant’s Exhibits A, B, C, D, E, F, J and K).  
The Applicant currently earns $110,000 annually and his income comfortably covers his bills
and expenses.
POLICIES
Enclosure 2 of the Directive sets forth adjudication policies divided into "Disqualifying
Factors" and "Mitigating Factors."  The following Disqualifying Factors and Mitigating Factors are
found to be applicable in this case:
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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. 
Conditions that could raise a security concern:
19(a) inability or unwillingness to satisfy debts; 
19(c) a history of not meeting financial obligation; 
19(e) consistent spending beyond one’s means, which may be indicated by excessive
indebtedness, significant negative cash flow, high debt-to-income ration, and/or other financial
analysis. 
Conditions that could mitigate security concerns:
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 has acted responsibly under the circumstances;
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;
20(d) the individual initiated a good-faith effort to repay overdue creditors or otherwise
resolve debts.
 
In addition, as set forth in Enclosure 2 of the Directive at pages 16-17,  in evaluating the
relevance of an individual’s conduct, the Administrative Judge should consider the following general
factors:
 a.  The nature and seriousness of the conduct and surrounding circumstances
b.  The circumstances surrounding the conduct, to include knowledgeable participation
c.  The frequency and recency of the conduct
d.  The individual’s age and maturity at the time of the conduct
e.  The voluntariness of participation
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f.  The presence or absence of rehabilitation and other pertinent behavior changes
g.  The motivation for the conduct 
h. The potential for pressure, coercion, exploitation or duress
 i.  The likelihood of continuation or recurrence.
The eligibility criteria established in the DoD Directive identify personal characteristics and
conduct which are reasonably related to the ultimate question, posed in Section 2 of Executive Order
10865, of whether it is “clearly consistent with the national interest” to grant an Applicant’s request
for access to classified information.
The DoD Directive states, “The adjudicative process is an examination of a sufficient period
of a person’s life to make an affirmative determination that the person is an acceptable security risk.
Eligibility for access to classified information is predicted upon the individual meeting these
personnel security guidelines.  The adjudicative process is the careful weighing of a number of
variables known as the whole person concept.  Available, reliable information about the person, past
and present, favorable and unfavorable should be considered in reaching a determination.” The
Administrative Judge can draw only those inferences or conclusions that have reasonable and logical
basis in the evidence of record.  The Judge cannot draw inferences or conclusions based on evidence
which is speculative or conjectural in nature.  Finally, as emphasized by President Eisenhower in
Executive Order 10865, “Any determination under this order . . . shall be a determination in terms
of the national interest and shall in no sense be a determination as to the loyalty of the Applicant
concerned.”
CONCLUSIONS
In the defense industry, the security of classified industrial secrets is entrusted to civilian
workers who must be counted upon to safeguard such sensitive information twenty-four hours per
day, seven days per week.  The Government is therefore appropriately concerned when available
information indicates that an Applicant for clearance may be involved in instances of financial
irresponsibility which demonstrates poor judgment or unreliability.
It is the Government’s responsibility to present substantial evidence to support the finding
of a nexus, or rational connection, between the Applicant’s conduct and the holding of a security
clearance.  If such a case has been established, the burden then shifts to the Applicant to go forward
with evidence in rebuttal, explanation or mitigation which is sufficient to overcome or outweigh the
Government’s case.  The Applicant bears the ultimate burden of persuasion in proving that it is
clearly consistent with the national interest to grant his a security clearance.
In this case the Government has met its initial burden of proving that the Applicant has been
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financially irresponsible (Guideline F).  This evidence indicates poor judgment, unreliability and
untrustworthiness on the part of the Applicant.  Because of the scope and nature of the Applicant's
conduct, I conclude there is a nexus or connection with his security clearance eligibility.
Considering all of the evidence, the Applicant has introduced persuasive evidence in rebuttal,
explanation or mitigation that is sufficient to overcome the Government's case.  With respect to his
finances, the Applicant poor financial history was partially caused by episodes of poor judgment and
poor financial management as well as circumstances beyond his control, namely his daughter’s
medical condition, his son’s unexpected legal fees, his mother’s death, and his job transfer and pay
reduction.  In regard to the debts listed in the SOR, each of them has now been included in a payment
plan under Chapter 13 of the Bankruptcy Code.  The Applicant has been making payments toward
these debts for about six months and will continue to follow the requirements of the payment plan
for the next three to five years or until he is debt free.  He has also received credit counseling that
will assist him in maintaining his budget.  Under the circumstances, he has made a good faith effort
to resolve his indebtedness, and there is evidence of financial rehabilitation.  The Applicant has
demonstrated that he can properly handle his financial affairs.  
In the event that the Applicant does not continue to follow the trustee’s plan under the
Chapter 13 and pay off his debts accordingly, his security clearance will once again be in immediate
jeopardy.  Furthermore, the Applicant understands the policy prohibiting the use of corporate or
government credit cards for personal use.  He will never ever use his corporate credit card for
personal expenses under any circumstances, unless it is specifically authorized.  Under Guideline
F (Financial Considerations), Disqualifying Conditions 19(a) inability or unwillingness to satisfy
debts; 19(c) a history of not meeting financial obligation; 19(e) consistent spending beyond one’s
means, which may be indicated by excessive indebtedness, significant negative cash flow, high debt-
to-income ration, and/or other financial analysis apply.  Mitigating Conditions 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 has acted responsibly under the circumstances, 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 and 20(d) the individual initiated a good-faith effort
to repay overdue creditors or otherwise resolve debts also apply.  Accordingly, I find for the
Applicant under Guideline F (Financial Considerations).  
On balance, it is concluded that the Applicant has overcome the Government's case opposing
his request for a  security clearance.  Accordingly, the evidence supports a finding for the Applicant
as to the factual and conclusionary allegations expressed in Paragraph 1 for the  Government's
Statement of Reasons.  
FORMAL FINDINGS
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Formal findings For or Against the Applicant on the allegations in the SOR, as required by
Paragraph 25 of Enclosure 3 of the Directive are:
Paragraph 1 For the Applicant.
    Subpara.  1.a.: For the Applicant.
    Subpara.  1.b: For the Applicant.
    Subpara.  1.c: For the Applicant.
    Subpara.  1.d: For the Applicant.
    Subpara.  1.e: For the Applicant.
    Subpara.  1.f: For the Applicant.
    Subpara.  1.g: For the Applicant.
    Subpara.  1.h: For the Applicant.
    Subpara.  1.i: For the Applicant.
    Subpara.  1.j: For the Applicant.
    Subpara.  1.k: For the Applicant.
    Subpara.  1.l: For the Applicant.
    Subpara.  1.m: For the Applicant.
    Subpara.  1.n: For the Applicant.
    Subpara.  1.o: For the Applicant.
    Subpara.  1.p: For the Applicant.
    Subpara.  1.q: For the Applicant.
    Subpara.  1.r: For the Applicant.
    Subpara.  1.s: For the Applicant.
    Subpara.  1.t: For the Applicant.
    Subpara.  1.u: For the Applicant.
    Subpara.  1.v: For the Applicant.
    Subpara.  1.w: For the Applicant.
    Subpara.  1.x: For the Applicant.
    Subpara.  1.y: For the Applicant.
   
DECISION
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.
  Darlene Lokey Anderson
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Administrative Judge