DEPARTMENT OF DEFENSE 
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 06-23026 
  ) 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Fahryn Hoffman, Esquire, Department Counsel 
For Applicant: Richard D. Dvorak, Esquire 
 
 
 
______________ 
 
Decision 
______________ 
 
 
HEINY, Claude R., Administrative Judge: 
 
It was alleged Applicant had eight accounts placed for collection or past due 
totaling in excess of $26,000. He paid four of the debts and is not responsible for the 
other four debts. Applicant has successfully mitigated financial considerations and 
personal conduct concerns. Clearance is granted. 
 
On April 4, 2007, the Defense Office of Hearings and Appeals (DOHA) issued a 
Statement of Reasons (SOR) detailing the security concerns under Guideline F, 
Financial Considerations for Applicant. The action was taken under Executive Order 
10865, Safeguarding Classified Information within Industry (February 20, 1960), as 
amended; Department of Defense Directive 5220.6, Defense Industrial Personnel 
Security Clearance Review Program (January 2, 1992), as amended (Directive), and the 
revised adjudicative guidelines (AG) promulgated by the President on December 29, 
2005, and effective within the Department of Defense for SORs issued after September 
1, 2006.  
  
 Applicant answered the SOR, and requested a hearing before an Administrative 
Judge. On December 11, 2007, DOHA issued a notice of hearing for a hearing held on 
January 14, 2008. On December 18, 2007, I was assigned the case, the case having 
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previously been assigned to a different judge. The government offered Exhibits (Ex.) 1 
through 4, which were admitted into evidence. Applicant testified on his own behalf and 
submitted Exhibits A through J, which were admitted into evidence.  
 
The record was kept open to submit additional matters. Additional documents 
were received on February 1, 2008, which Department Counsel (DC) did not object to, 
and was admitted as Ex. K.  DC did object as untimely the admission of material sent on 
February 19, 2008. I find the material to be relevant and material and admit it as Ex. L. 
On January 30, 2008, DOHA received the transcript (Tr.) of the hearing.  
 
Findings of Fact 
 
 In his Answer to the SOR, dated May 1, 2007, Applicant denied responsibility for 
the debts listed in SOR ¶¶ 1.b and 1.g and admitted responsibility for the debts listed in 
SOR ¶¶ 1.a, 1.c, 1.d, 1.e, 1.f and 1.h of the SOR, with explanations. He also provided 
additional information to support his request for eligibility for a security clearance.  
 
 Applicant is a 55-year-old audio visual technician who has worked for a defense 
contractor since July 1996, and is seeking to maintain a security clearance. Coworkers 
and supervisors indicate Applicant never spent lavishly and has displayed outstanding 
talents. (Ex G and H) Applicant received an honorable discharge after serving twenty 
years in the Army. In June 1995, he retired at the grade of E-5. (Tr. 20) 
 
 A number of times when Applicant was overseas for duty or work, he gave his 
wife financial powers of attorney (POA). She abused the POAs. She purchased vehicles 
for their children even when some of them did not have driver’s licenses. (Tr. 29) She 
used the POA to make changes preventing him access to his retirement account and 
checking account. (Tr. 29) He and his wife were unable to meet their financial 
obligations with their five children. When he discovered her overspending, he filed for 
bankruptcy protection and began divorce proceedings. In December 1996, Applicant 
commenced the Chapter 7 bankruptcy. (Ex. 4) In March 2002, Applicant and his wife 
divorced. (Ex. A) All child support related to the divorce ended in 2003. (Tr. 51) 
 
 The divorce decree granted his ex-wife possession of the 1994 van and he kept 
the 1995 pickup. The decree required his ex-wife to hold Applicant harmless for any 
liability on the vehicle and was to sell or refinance the vehicle within six months to 
remove the husband from any further liability. (Ex A. p.6) He was to do the same on the 
truck. The van was purchased in October 1997 for $14,317 with monthly payments of 
$390. (Ex. 3) Timely payments were made on the van for at least two years before an 
involuntary repossession occurred. (Ex. 3) Applicant was unaware the vehicle had been 
repossessed until he learned of it from the investigator during an interview. (Tr. 72)  
 
 The credit reports list two auto accounts opened at the same time with monthly 
payments of $390 and $391. The two accounts are with the same company although 
one account lists the company solely by its initials (SOR ¶ 1.g) and the other account 
gave a full name (SOR ¶ 1.b). Theses two accounts are obligations on the same 
vehicle. The credit reports (Ex. 3, 4) indicate the last activity on the accounts occurred in 
2001. 
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 In September 2007, Applicant completed a monthly income and expense 
statement. (Ex. B) Applicant still owns his 1995 truck. (Tr. 31) His income, year to date, 
was approximately $47,000. As of December 21, 2007, his yearly income was $51,000. 
(Ex. C) His monthly income, not including overtime, was $3,600 and his monthly 
expenses approximately $3,000. (Ex. B) His monthly income, with overtime, exceeds 
his monthly expenses by $1,275. (Tr. 35) Applicant has $19,000 in a company savings 
plan retirement program. (Ex. D) He has $6,600 in his checking accounts, $1,000 in 
savings, $1,200 in one bank, and $7,200 in another bank. (Tr. 108, 109)  
 
 In late January 2007, Applicant received an interrogatory asking about ten 
accounts, seven of which were medical debts. Applicant sent five creditors letters 
stating he was unfamiliar with the past due accounts listed in his credit report (Ex. E) 
asking for information verifying the debts. The two auto accounts were included in the 
letters asking for verification. (Ex. 2) 
 
 In January 2007, Applicant paid the $163 owed on the medical bill listed in SOR 
¶ 1.c. (Ex. F) In April 2007, he paid the $502 owed on the medical debt listed in SOR ¶ 
1.e. (Ex. F) In January 2007 and April 2007, Applicant paid other debts not listed in the 
SOR. Following the hearing, Applicant paid the $421 medical debt listed in SOR ¶ 1.a. 
(Ex K) 
 
 In late January 2008, Applicant again contacted the telephone company 
attempting to get information concerning the $374 phone debt. (SOR ¶ 1.f) Applicant 
asserts he paid this debt in full in 2001 and was informed the debt had been paid in full. 
(Ex. K)  
 
 As retired military, Applicant and his minor children would be entitled to medical 
care through Tricare or treatment at military facilities. (Tr. 138) He would not be liable if 
his ex-wife took any of the grandchildren to receive medical attention. In checking with a 
collection agency holding two hospital obligations, he was informed the $6,465 hospital 
debt (SOR ¶ 1.h) was not his debt, but was his ex-wife’s obligation. The collection 
agency agreed to have both hospital bills (SOR ¶ 1.d and 1.h) deleted from his credit 
bureau account because the creditor could not verify Applicant was the responsible 
party. (Ex. L) 
 
 A summary of the debts follows: 
 
SOR Creditor Amount Current Status 
1.a Medical debt. 
 
$421 Paid. (Ex. K) 
1.b 1994 Chevrolet van debt. 
Same debt as 1.g. 
$12,023 Denies owing the debt on his ex-
wife’s car. Divorce decree (Ex. A) 
required her to hold Applicant 
harmless of this debt.  
1.c Medical bill. $163 Paid.  (Ex. F) 
1.d Hospital bill. 
 
$918 Collection agency agreed to have 
the account deleted from his credit 
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report because they were unable to 
verify Applicant was responsible for 
this debt. (Ex. L) 
1.e Medical bill.  $502 Paid.  (Ex. F) 
1.f Telephone bill.  $374 Paid. (Ex. K) 
1.g Automobile repossession.
Same debt as 1.b. 
$5,711 Denies owing the debt on his ex-
wife’s car. Divorce decree (Ex. A) 
required her to hold Applicant 
harmless of this debt. 
1.h Hospital bill. 
 
$6,465 Collection agency agreed to have 
the account deleted from his credit 
report because they were unable to 
verify Applicant was responsible for 
this debt. (Ex. L)  
 Total of past due debt 
listed in SOR. 
$26,577.00  
 
Policies 
 
 When evaluating an Applicant’s suitability for a security clearance, the 
Administrative Judge must consider the revised adjudicative guidelines (AG). In addition 
to brief introductory explanations for each guideline, the adjudicative guidelines list 
potentially disqualifying conditions and mitigating conditions, which are useful in 
evaluating an Applicant’s eligibility for access to classified information. 
 
These guidelines are not inflexible rules of law. Instead, recognizing the 
complexities of human behavior, these guidelines are applied in conjunction with the 
factors listed in the adjudicative process. The Administrative Judge’s over-arching 
adjudicative goal is a fair, impartial and common sense decision. According to AG ¶ 
2(c), the entire process is a conscientious scrutiny of a number of variables known as 
the “whole person concept.” The Administrative Judge must consider all available, 
reliable information about the person, past and present, favorable and unfavorable, in 
making a decision. 
 
The protection of the national security is the paramount consideration. AG ¶ 2(b) 
requires that “[a]ny doubt concerning personnel being considered for access to 
classified information will be resolved in favor of national security.” In reaching this 
decision, I have drawn only those conclusions that are reasonable, logical and based on 
the evidence contained in the record. Likewise, I have avoided drawing inferences 
grounded on mere speculation or conjecture. 
 
Under Directive ¶ E3.1.14, the Government must present evidence to establish 
controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, the Applicant is 
responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, 
or mitigate facts admitted by applicant or proven by Department Counsel. . . .” The 
Applicant has the ultimate burden of persuasion as to obtaining a favorable security 
decision.  
 
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A person who seeks access to classified information enters into a fiduciary 
relationship with the Government predicated upon trust and confidence. This 
relationship transcends normal duty hours and endures throughout off-duty hours. The 
Government reposes a high degree of trust and confidence in individuals to whom it 
grants access to classified information. Decisions include, by necessity, consideration of 
the possible risk the 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 provides that 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.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites 
for access to classified or sensitive information).  
 
Analysis 
 
Guideline F, Financial Considerations 
 
 Under Guideline F (financial considerations) a security concern typically exists 
due to 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.1 
 
 An individual who is financially overextended is at risk of having to engage in 
illegal or unethical acts to generate funds to meet financial obligations. Additionally, an 
individual who is financially irresponsible may also be irresponsible, unconcerned, 
negligent, or careless in properly handling and safeguarding classified information. 
Behaving responsibly or irresponsibly in one aspect of life provides an indication of how 
a person may behave in other aspects of life.  
 
A person’s relationship with his creditors is a private matter until evidence is 
uncovered demonstrating an inability or unwillingness to repay debts under agreed 
upon terms. Absent evidence of strong extenuating or mitigating circumstances, an 
applicant with a history of serious or recurring financial difficulties is in a position of risk 
that is inconsistent with the holding of a security clearance. An applicant is not required 
to be debt free, but is required to manage his finances so as to meet his financial 
obligations. 
 
 The record evidence supports a conclusion Applicant has a history of financial 
problems. The SOR alleges Applicant owed approximately $26,000 on eight accounts 
placed for collection or past due obligations. Disqualifying Conditions (DC) ¶ 19(a), 
“inability or unwillingness to satisfy debts” and 19(c), “a history of not meeting financial 
obligations,” apply.  
 
1 Revised adjudicative guidelines (AG) ¶ 18. 
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The guideline provides conditions that could mitigate security concerns arising 
from financial difficulties. Under AG ¶ 20(c), evidence that Athe 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@ is potentially mitigating. Similarly, AG & 20(d) 
applies where the evidence shows Athe individual initiated a good-faith effort to repay 
overdue creditors or otherwise resolve debts.@  
 
Applicant paid four of the debts (SOR ¶¶ 1.a, 1.c, 1.e, and 1.f.) The credit 
collection agency holding the two largest medical bills (SOR 1.d, $918 and SOR ¶ 1.h, 
$6,465) agreed to delete the accounts from Applicant’s credit report because the 
collection agency was unable to verify Applicant was the responsible party. Since the 
creditor is no longer actively seeking to collect the debt; Applicant is not at risk of having 
to engage in illegal or unethical acts to generate funds to meet this debt. 
 
The remaining two debts are with the same company, were opened on the same 
date, and the monthly payments were $390 and $391, which indicates the two accounts 
are one and the same obligation. The debt arises from the repossession of his ex-wife’s 
van. He was unaware of the repossession until asked about it during the security 
investigation. The divorce decree clearly states his ex-wife is entitled to possession of 
the van and agreed to hold Applicant harmless for any liability therefore. She was 
required to sell or refinance the vehicle within six months to remove the husband from 
any liability therefore. She did not do this and an obligation was incurred following 
repossession of the vehicle.  
 
Applicant was initially jointly liable on this debt. The divorce decree does not limit 
the original creditor’s ability to hold Applicant liable on the debt. If the creditor pursued 
the matter, Applicant could be found liable on the debt and could in turn bring an action 
against his ex-wife for satisfaction. The last action taken by the creditor, on either of the 
debts, occurred in 2001. There is no evidence the obligation is barred by the Statute of 
Limitations, but there is also no evidence the creditor is actively seeking collection from 
Applicant. It is unlikely Applicant is at risk of having to engage in illegal or unethical acts 
to generate funds to meet this debt. 
 
Under AG ¶ 20(a), the disqualifying condition may be mitigated where Athe 
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.@ The obligation arose following his 
divorce and his wife’s failure to honor the divorce decree. These are circumstances that 
are unlikely to recur. Failure to pay an obligation where no one is actively seeking to 
collect the debt does not raise concerns about Applicant’s current reliability, 
trustworthiness, or good judgment. 
 
Whole Person Concept 
 
 Under the whole person concept, the administrative judge must evaluate an 
Applicant’s eligibility for a security clearance by considering the totality of the Applicant’s 
conduct and all the circumstances. The administrative judge should consider the nine 
adjudicative process factors listed at AG ¶ 2(a): “(1) the nature, extent, and seriousness 
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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) 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.” 
Under AG ¶ 2(c), the ultimate determination of whether to grant eligibility for a security 
clearance must be an overall commonsense judgment based upon careful consideration 
of the guidelines and the whole person concept.  
 
The debts incurred were not the type that indicates poor self-control, lack of 
judgment, or unwillingness to abide by rules and regulations. Money was not spent 
frivolously. The debts were not incurred on luxuries, but more than half were for medical 
treatment. His ex-wife’s failure to honor the divorce decree fails to show extravagance 
on Applicant’s part or living beyond his means. 
 
I considered the potentially disqualifying and mitigating conditions in light of all 
the facts and circumstances surrounding this case. The SOR listed eight debts of which 
Applicant paid four and the creditor agreed to delete two others from Applicant’s creditor 
report when the creditor was unable to verity Applicant was the responsible party.  
 
The only unaddressed obligation is the van debt. The last action on the vehicle 
repossession debt occurred in 2001, more than six years ago. It is unlikely this 
obligation could be a source of improper pressure or duress. Of course, the issue is not 
simply whether all the debts are paid—it is whether his financial circumstances raise 
concerns about his fitness to hold a security clearance. (See AG & 2(a) (1)) While some 
debts remain unpaid, their nature is insufficient to raise security concerns. (See AG & 
2(a) (1).) Neither the size of the debt, $12,000, nor the non payment of his ex-wife’s 
obligation makes Applicant a security risk.  
 
Overall, the record evidence leaves me without questions or doubts as to 
Applicant’s eligibility and suitability for a security clearance. For all these reasons, I 
conclude Applicant mitigated the security concerns arising from his financial 
considerations.  
 
Formal Findings 
 
 Formal findings for or against Applicant on the allegations set forth in the SOR, 
as required by section E3.1.25 of Enclosure 3 of the Directive, are: 
 
 Paragraph 1, Guideline F.:  FOR APPLICANT 
 
  Subparagraph 1.a – 1.i: For Applicant 
 
 
 
   
    
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Conclusion 
 
 In light of all of the circumstances presented by the record in this case, it is 
clearly consistent with national security to grant Applicant eligibility for a security 
clearance. Eligibility for access to classified information is granted. 
 
 
_________________ 
CLAUDE R. HEINY II 
Administrative Judge