DATE:  November 28, 2007
In re:
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SSN: -----------
Applicant for Security Clearance
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ISCR Case No. 07-04323
DECISION OF ADMINISTRATIVE JUDGE
MICHAEL H. LEONARD
APPEARANCES
FOR GOVERNMENT
John Bayard Glendon, Esq., Department Counsel
FOR APPLICANT
Pro Se
SYNOPSIS
Applicant has a history of financial problems. Although he is making progress in resolving
his indebtedness, it is likely that his financial problems will continue or recur. Applicant did not
present sufficient evidence to explain, extenuate, or mitigate the financial considerations security
concern. Clearance is denied. 
STATEMENT OF THE CASE
 Executive Order 10865, dated February 20, 1960, as amended, and DoD Directive 5220.6, dated January 2,1
1992, as amended (Directive).
 See Memorandum from the Under Secretary of Defense for Intelligence, dated August 30, 2006, Subject:2
Implementation of Adjudicative Guidelines for Determining Eligibility for Access to Classified Information (December
29, 2005). 
2
This is a security clearance case. Applicant contests the Defense Department’s intent to deny
or revoke his eligibility for a security clearance. Acting under the relevant Executive Order and DoD
Directive,  the Defense Office of Hearings and Appeals (DOHA) issued a statement of reasons1
(SOR) to Applicant on August 17, 2007. The SOR is equivalent to an administrative complaint and
it details the factual basis for the action. The issues in this case fall under Guideline F for financial
considerations. 
In addition to the Directive, this case is brought under the revised Adjudicative Guidelines
for Determining Eligibility for Access to Classified Information (Revised Guidelines) approved by
the President on December 29, 2005. The Revised Guidelines were then modified by the Defense
Department, effective September 1, 2006. They supersede or replace the guidelines published in
Enclosure 2 to the Directive. They apply to all adjudications and other determinations where an SOR
has been issued on September 1, 2006, or thereafter.  The Directive is pending revision or2
amendment. The Revised Guidelines apply here because the SOR is dated after the effective date.
Applicant replied to the SOR in an undated response and requested a hearing. The hearing
took place as scheduled on November 6, 2007, and the transcript was received on November 14,
2007.
FINDINGS OF FACT
Under Guideline F, the SOR alleges three delinquent debts for about $19,952 in total, which
Applicant admits. Based on the record evidence as a whole, the following facts are established. 
Applicant is a 59-year-old military analyst/senior logistician. He has worked for his current
employer since February 1999.  
Applicant has been married since 1976. He and his wife have two children, sons, who are
both young adults who do not depend on their parents for financial support. Applicant’s wife is not
employed outside the home, although she is currently looking for a job. Applicant and his wife have
lived at the same address since 1994. 
Applicant served nearly 25 years on active duty in the U.S. Air Force. He retired in 1991 at
the rank of master sergeant (pay grade E7). During the last ten years of his military service,
Applicant traveled frequently for business, approximately 100 days annually. As a result, his spouse
managed their finances. After his retirement, this practice or habit continued and is essentially the
way they manage their finances today, as Applicant still does a fair amount of business travel. 
3
Applicant has a history of financial problems. It is established by an April 2006 credit report
and an August 2007 credit report (Exhibits 2 and 3). For example, the first credit report lists 30
accounts in the trade section of the report, of which 3 accounts are described as 120 days or more
past due and 8 accounts are described as a bad debt, placed for collection. The second credit report
confirms Applicant’s adverse financial history as of August  2007.
Applicant completed a security-clearance application in April 2006 (Exhibit 1). He met with
an investigator in approximately October 2006 (R. 40, 43). He did not know about his adverse
financial condition until he was shown a credit report during the interview. Indeed, he admits that
he was totally disengaged from the household finances (R. 92). He described seeing the credit report
as a “two-by-four across my nose” that resulted in he and his wife having serious discussions and
he now believes he is on the road to repairing his financial condition (R. 43). He admits that he has
played a “very limited” role in repayment of the debts (R. 61). 
In May 2007, Applicant took a $41,000 loan against his 401(k) retirement account (Exhibit
4). He used the loan proceeds to pay debts. He paid $20,444 to a law firm to resolve three accounts,
(Exhibits 4 and D). He paid $10,532 to a law firm to resolve one account (Exhibit 4). And he paid
$4,585 to a collection agency to resolve one account (Exhibit 4). After making these payments, about
$5,500 remained, and Applicant believes it may have gone toward a son’s college expenses, but he
does not know for certain (R. 82–83).
The debt in SOR ¶ 1.a concerns a charged-off credit card account for about $13,031.
Applicant admits this debt is his obligation. The debt is now being collected by a law firm and
Applicant made an initial $300 payment in August 2007 (Exhibit A). According to a budget prepared
by his wife, Applicant has budgeted $100 monthly for repayment of this debt (Exhibit D). The
account’s current balance is about $14,553.
The debt in SOR ¶ 1.b concerns a collection account (originally a credit card account) for
about $4,379. Applicant admits this debt is his obligation. In June 2007, Applicant settled this
account for $4,365 (Exhibits B). This payment may account for the $5,500 remaining from the
401(k) loan proceeds, but the record is not clear on this point.
The debt in SOR ¶ 1.c concerns a collection account (originally a credit card account) for
about $2,542. Applicant admits this debt is his obligation. A law firm is handling the account, and
Applicant began making payments in August 2006 (Exhibit C). Since then, he has made
approximately ten payments of various amounts ranging from $185 to $1,200 for a total amount paid
of $4,685. According to the budget, Applicant has budgeted $100 monthly for repayment of this debt
and the account’s current balance is about $3,000 (Exhibit D). 
In addition to the debts in the SOR, Applicant is repaying three delinquent debts (originally
credit card accounts) to collection agencies (Exhibit D). According to the budget, the outstanding
balances for these three debts are $7,953, $4,100, and $4,308, for a total of $16,361. Applicant has
budgeted $100 monthly for repayment of each of these debts.
Concerning his overall financial situation, Applicant’s annual salary is nearly $70,000. His
gross monthly salary is about $5,824 or $2,912 per pay period (Exhibit D at 4). In addition to his
salary, his net military retirement pay is about $15,500 annually or $1,290 monthly.  
 Department of Navy v. Egan, 484 U.S. 518, 528 (1988) (“it should be obvious that no one has a ‘right’ to a3
security clearance”); Duane v. Department of Defense, 275 F.3d 988, 994 (10  Cir. 2002) (“It is likewise plain that thereth
is no ‘right’ to a security clearance, so that full-scale due process standards do not apply to cases such as Duane’s.”).
 Egan, 484 U.S. at 531.4
 Directive, ¶ 3.2. 5
 Directive, ¶ 3.2. 6
4
According to the budget, Applicant’s total net monthly income is about $4,188 (Exhibit D).
Household expenses are estimated at $1,268 monthly. Payments on four credit card accounts and one
gas card account are estimated at $490 monthly. All five of these accounts are current. Mortgage
payments (including a second mortgage) and other debt payments are estimated at $2,169 monthly.
Total monthly debt payments are $2,659. The result is a positive cash flow or net remainder of about
$261. 
These numbers do not include the approximate $834 monthly that is automatically deducted
from Applicant’s salary for repayment of the 401(k) loan at the rate of $417 per pay period. So far,
Applicant has repaid $4,175 on the loan (Exhibit D at 4). 
Applicant obtained a second mortgage of $40,000 in about 1995 (R. 85). The monthly
payment is about $469, and the balance has been reduced to about $25,000 (Exhibit D). The
proceeds were used to “clean up some bills” (R. 85).  
Applicant is current with the two mortgage payments. He has no car payments, and both he
and his wife drive late model cars. He is current with his federal and state income tax obligations.
Because he was disengaged from his household’s finances, Applicant does not really know
what happened to the money that caused the indebtedness. He attributes the indebtedness to credit
cards (R. 88-89). 
GENERAL PRINCIPLES OF LAW AND POLICIES
No one has a right to a security clearance.  As noted by the Supreme Court in Department3
of Navy v. Egan, “the clearly consistent standard indicates that security clearance determinations
should err, if they must, on the side of denials.”  A favorable decision establishes eligibility of an4
applicant to be granted a security clearance for access to confidential, secret, or top-secret
information.  An unfavorable decision: (1) denies any application; (2)  revokes any existing security5
clearance; and (3) prevents access to classified information at any level and retention of any existing
security clearance.  Under Egan, Executive Order 10865, and the Directive, any doubt about whether6
an applicant should be allowed access to classified information will be resolved in favor of
protecting national security.
 ISCR Case No. 02-18663 (App. Bd. Mar. 23, 2004).7
 Directive, Enclosure 3, ¶ E3.1.14.8
 Directive, Enclosure 3, ¶ E3.1.15.9
 Directive, Enclosure 3, ¶ E3.1.15.10
 Egan, 484 U.S. at 531. 11
 ISCR Case No. 01-20700 (App. Bd. Dec. 19, 2002) (citations omitted).12
 Executive Order 10865, § 7.13
 Revised Guidelines at 13–14 (setting forth the disqualifying and mitigating conditions). 14
 Revised Guidelines at 13. 15
5
There is no presumption in favor of granting, renewing, or continuing eligibility for access
to classified information.  The government has the burden of presenting evidence to establish facts7
alleged in the SOR that have been controverted.  An applicant is responsible for presenting evidence8
to refute, explain, extenuate, or mitigate facts that have been admitted or proven.  In addition, an9
applicant has the ultimate burden of persuasion to obtain a favorable clearance decision.  In Egan,10
the Supreme Court said that the burden of proof is less than the preponderance of the evidence.  The11
agency appellate authority has followed the Court’s reasoning, and a judge’s findings of fact are
reviewed under the substantial-evidence standard.12
The Revised Guidelines set forth adjudicative guidelines to consider when evaluating a
person’s security clearance eligibility, including disqualifying conditions (DC) and mitigating
conditions (MC) for each guideline. In addition, each clearance decision must be a fair and impartial
commonsense decision based upon consideration of all the relevant and material information, the
pertinent criteria and adjudication factors, and the whole-person concept. A person granted access
to classified information enters into a special relationship with the government. The government
must be able to have a high degree of trust and confidence in those persons to whom it grants access
to classified information. The decision to deny a person a security clearance is not a determination
of an applicant’s loyalty.  Instead, it is a determination that the applicant has not met the strict13
guidelines the President has established for granting eligibility for a security clearance.
CONCLUSIONS
Under Guideline F for financial considerations,  a security concern typically exists due to14
significant unpaid 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.”  Similarly, an individual who is15
financially irresponsible may also be irresponsible, unconcerned, negligent, or careless in properly
handling and safeguarding classified information.   
 DC 1 is “inability or unwillingness to satisfy debts.” 16
 DC 3 is “a history of not meeting financial obligations.” 17
 DC 5 is “consistent spending beyond one’s means, which may be indicated by excessive indebtedness,18
significant negative cash flow, high debt-to-income ratio, and/or other financial analysis.”
6
The record evidence supports a conclusion that Applicant has a history of financial problems.
His history of financial problems is a security concern because it indicates inability to satisfy debts16
and a history of not meeting financial obligations  within the meaning of Guideline F. The record17
evidence is more than sufficient to establish these two disqualifying conditions. In addition, the
record evidence supports a conclusion of consistent spending beyond one’s means as indicated by
the excessive indebtedness incurred over a period of years, likely dating back to at least 1995 when
Applicant took a second mortgage to resolve some bills.   18
All of the mitigating conditions under Guideline F have been considered and two deserve
discussion. First, MC 2—conditions largely beyond a person’s control—does not apply. First, his
spouse’s use of credit cards that generated excessive indebtedness was a circumstance beyond his
control. The MC does not apply, however, because Applicant’s  disengagement from his family’s
finances is not reasonable conduct under the circumstances. Once  he was confronted with the
adverse credit report in October 2006, Applicant should have become fully engaged in managing his
finances, but that is not the case.  
Second, the most pertinent mitigating condition is MC 4, which requires a person to initiate
a good-faith effort to repay overdue creditors or otherwise resolve debts. Applicant has taken positive
steps to resolve the debts. He used the 401(k) loan to resolve several debts, including settling the
debt in SOR ¶ 1.b. He is making monthly payments on five delinquent credit card debts, including
the debts in SOR ¶¶ 1.a and 1.c. He is current with five other credit/gas cards and his mortgage
payments, and he has no car payments. He has a positive monthly cash flow after paying household
expenses and all debt payments, including the 401(k) loan. Given these circumstances, Applicant’s
actions are sufficient to qualify as a good-faith effort within the meaning of the guideline. In
addition, the current circumstances suggest he is living within his means. 
This case presents both disqualifying and mitigating information, which requires thoughtful
balancing. Applicant is 59 years old and sufficiently mature to make prudent decisions about his
finances and money-management practices. He has made progress in resolving his outstanding debts
since learning about his adverse credit report in October 2006. Nevertheless, he is servicing his debts
at a minimal level (e.g., $100 monthly payments), and it will take years to eliminate the delinquent
debts at this rate of repayment. In addition, it appears that his total monthly debt payments of $2,659
are consuming a large amount of his available income, which puts him in some financial jeopardy.
Of concern here is Applicant’s lack of involvement in managing his finances. He was totally
disengaged until confronted with the credit report. Since then he has had limited involvement. It
appears his spouse is still primarily responsible for their finances. Given these circumstances, viewed
in conjunction with the indebtedness that necessitated the second mortgage in 1995, it is more likely
than not that the financial problems will continue or recur. 
7
To conclude, Applicant did not present sufficient evidence to explain, extenuate, or mitigate
the financial considerations security concern. Applicant did not meet his ultimate burden of
persuasion to obtain a favorable clearance decision. In reaching this conclusion, the whole-person
concept was given due consideration and that analysis does not support a favorable decision. 
FORMAL FINDINGS
SOR ¶ 1–Guideline F: Against Applicant
Subparagraphs a–c: Against Applicant
DECISION
In light of all the circumstances, it is not clearly consistent with the national interest to grant
or continue eligibility for security clearance for Applicant. Clearance is denied. 
Michael H. Leonard
Administrative Judge