DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
------------------------- )       ISCR Case No. 07-12021
SSN: ----------------- )
)
Applicant for Security Clearance )
Appearances
For Government: James F. Duffy, Esquire, Department Counsel
For Applicant: Per Se
______________
 Decision
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WESLEY, Roger C., Administrative Judge:
Statement of Case
On November 29, 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 January 17, 2008, and requested a hearing.
The case was assigned to me on January 28, 2008, and was scheduled for hearing on
February 21, 2008.  A hearing was held on February 21, 2008, 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 four exhibits; Applicant relied on three witnesses (including herself)
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and six exhibits.  The transcript (R.T.) was received on February 29, 2008.  Based upon
a review of the case file,. pleadings, exhibits, and testimony, eligibility to access
classified information is granted.
Procedural Rulings and Evidentiary Issues
Before the close of the hearing, Appellant requested leave to supplement the
record with documentation of her payment and payment agreements with her listed
creditors.  For good cause shown, Applicant was granted 14 days to supplement the
record.  Department counsel was afforded three days to respond.  Within the time
permitted, Applicant supplemented the record with documented payments and
repayment agreements with two of her creditors.  Her post-hearing exhibits were
admitted and considered.  
Summary of Pleadings
Under Guideline F, Applicant is alleged to have (a) petitioned for Chapter 7
bankruptcy in July 1998 (discharged in November 1998) and (b) accumulated four debts
exceeding $16,000.00.  Applicant admitted most of the allegations.  She admitted her
Chapter 7 bankruptcy, attributing the action to financial mistakes, and claiming better
financial decisions.  She admitted her creditor 1.b and 1.d debts, attributing the debt to a
voluntary car repossession and inability to reach agreement on a repayment plan.
Applicant also admitted her creditor 1.d debt, while claiming to have reached a
repayment agreement with the creditor.  Applicant denied the creditor 1.c debt,
however, claiming the debt has been paid off. 
Findings of Fact
Applicant is a 38-year-old equipment custodian officer for a defense contractor
who seeks a security clearance.  The allegations covered in the SOR and admitted by
Applicant are incorporated herein by reference and adopted as relevant and material
findings.  Additional findings follow.
Never married, Applicant lived with her fiancé for several years (between 1993
and 1998).  While they were together, they shared living expenses.  After they
separated, she could no longer pay all of the debts she and her fiance had accumulated
in her name.  At the time, she was a college student and working part time at a local
AFB for minimum wages.  With her limited wages, she could not afford to pay her debts
on her level of income (R.T., at 33-34, 37-38).  Receiving no help from her finance, she
made the decision to file for bankruptcy. In July 1998, Applicant petitioned for Chapter 7
bankruptcy, scheduling around $15,000.00 in unsecured debts (see R.T., at 48-49).
She was discharged in November 1998 (R.T., at 33).  
In June 2002,Applicant purchased a 2002 Ford truck for around $24,000.00 (see
ex. H).  In October 2004, Applicant was involved in an accident, in which the vehicle
was declared a total loss by the insurance company.  Unable to continue paying on the
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vehicle, Applicant agreed to a voluntary repossession with creditor 1.b two weeks later
9still in October 2004.  The lender’s furnished records document that insurance
proceeds were received from the insurance company in December 2004 for $8,200.00
(the presumed market value of the vehicle at the time).  According to creditor 1.b’s
records, this left a deficiency balance owing of $14,449.61 (see ex. H).   Records also
reflect that Applicant purchased a replacement vehicle (a 2002 Ford Taurus) in October
2004 from another creditor for $14,076.44 (Ex. J).  Applicant retains this vehicle and
continues to finance it with the same seller.  
Following the hearing, Applicant documented a repayment plan she worked out
with creditor 1.b in January 2008.  Under her January 2008 repayment agreement with
creditor1.b, Applicant will make $100.00 monthly payments on a calculated $18,034.99
balance until the deficiency is satisfied (see ex. I).  This is designed to be a temporary
repayment plan until Applicant can work out a lump sum repayment of the remaining
deficiency balance (R.T., at 51-52).  Applicant efforts to date to reach an accord with
creditor 1.b on a lump sum satisfaction have been unsuccessful.
Applicant incurred two other debts that have since become delinquent. She
became indebted to creditor 1.c on a credit card account she opened in September
1999 (see ex. 3).  Earlier efforts to pay off this and her other debts through debt
consolidation were not successful.  Applicant attributes her debt consolidation failure to
her credit history which reflected her 1998 bankruptcy (R.T., at 58-59).
More recently, Applicant was able to work out a settlement agreement with the
creditor in October 2007 that enabled her to settle her account for about half of the
owed amount:  Applicant documents payment of the agreed $708.81 account balance in
October 2007 (see ex. A). She settled this debt with funds she withdrew from her 401(k)
retirement plan (ex. A; R.T., at 54).  Her 401(k) loan will be repaid out of monthly
deductions from her pay check.  
With respect to Applicant’s other incurred delinquent debt (a creditor card debt
with creditor 1.d for $2,031.00), records reflect that Applicant entered into a repayment
agreement with this creditor in December 2007 (see ex. B; R.T., at 35-36).  Under the
terms of her repayment agreement with this creditor, Applicant is obligated to make
monthly payments of $97.41 on an agreed debt balance of $2,337.84 (see ex. B; R.T.,
at 56-57).  Applicant documents making her first earnest payment under this agreement
in January 2008 (see ex. B).  
Applicant currently nets $2,405.00 a month from her work (see ex. 2; R.T., at 61).
Her monthly expenses total $1,350.00, and her other monthly deductions total
$1866.00.(ex. 2; R.T., at 63).  After deducting her monthly expenses and other
deductions, she has a net monthly remainder of $189.86 (see ex. 2; R.T., at 62).   
Applicant has received numerous performance awards between 2001 and 2004
in recognition of her outstanding technical support she has provided her current
employer (see E; R.T., at 40-42).  Her first line supervisor tracks her outstanding
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progress with his company.  As an equipment custodian officer, Applicant is responsible
for tracking valuable government equipment (ex. D).  She is credited with carrying out
her responsibilities in an organized, efficient, and competent manner, and according to
a high level of standards.  Her supervisor characterizes her as an honest and
trustworthy person (see ex. D).  Witnesses who work with Applicant and are familiar
with her work describe her as honest and trustworthy (R.T., at 83-89).  Applicant’s
updated credit report shows good payment history with her current creditors (see ex. F).
 
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.
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.”  See Adjudicative Guidelines (AG), ¶ 18.
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
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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.
Analysis  
Applicant is a highly regarded equipment control officer for a defense contractor
who accumulated a number of delinquent debts over a six-year period spanning 1998
and 2004 attributable to a number of unforeseen circumstances ranging from the loss
of a second income following her split with her fiance and some difficult times with
several of her creditors following an accident in October 2004.  Considered together,
and without resolution, they raise  security significant concerns.
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, and place the
person at risk of having to engage in illegal acts to generate funds.  Applicant’s
accumulation of several delinquent debts and her past inability to address these 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©) “a history of not meeting financial obligations.”
Applicant’s Chapter 7 bankruptcy in 1998 is mostly attributable to cash
shortages following her separation from her fiance.  With no financial support from her
ex-boyfriend to help her discharge the debts they incurred in her name, she could not
pay them all and decided to discharge them through Chapter 7 bankruptcy.
Following her bankruptcy, Applicant was able to maintain her finances for
several years and reestablish her good credit.  As the result of her accident in 2004,
the insurance company declared her financed vehicle a total loss, and dispensed a
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check for only $8,200.00 on a carried balance of around $22,000.00 at the time.
Unable to continue paying this balance and purchase a replacement vehicle (a Ford
Taurus) to drive, she agreed to a voluntary repossession.  This repossession left her
with a deficiency balance of over $14,000.00 on the original purchase, minus the
received insurance proceeds.  Until recently, she has not been able to pay off either
this deficiency balance or the other two listed debts covered by creditors 1.c and 1.d. 
Since receiving the SOR, Applicant has initiated considerable efforts to resolve
the debts she acknowledges as her own, and documents paying off one of her
creditors (creditor 1.c), and reaching repayment agreements with her two remaining
listed creditors 9creditors 1.b and 1.d).
Considering Applicant’s exhibited extenuating circumstances associated with
her sudden loss of joint income in 1998 and again in 2004 following the loss of her Ford
truck, and her demonstrated responsible efforts to resolve her acknowledged debts,
Applicant may rely on MC 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 acted responsibly under the circumstances,” of the Guidelines for financial
considerations.  Her limited financial income, while improving, precludes her from
paying off her two remaining debts in lump sums.
Mitigation credit is also available to Applicant based on her credible proofs of
payment and age of the debts.  Age of the debts at issue is covered by two of the
mitigating conditions for financial considerations: 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,” has applicability, while not dispositive.  MC 20(d), “the individual initiated a
good-faith effort to repay overdue creditors or otherwise resolve debts,” is fully
applicable. 
                                                   
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).
Both from a whole person assessment that a consideration of all of the facts and
circumstances surrounding Applicant’s debt accumulations, her documented steps
taken to resolve them, and the responsibility and trustworthiness she is credited with in
her work and personal life, Applicant mitigates security concerns related to her proven
debt delinquencies.  Favorable conclusions warrant with respect to the allegations
covered by sub-paragraphs 1.a through 1.d 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, I
make the following formal findings:
GUIDELINE F: (FINANCIAL CONSIDERATIONS): FOR APPLICANT
Sub-paras. 1.a through 1.d: FOR APPLICANT
Conclusions
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 Applicant’s security clearance.
Clearance is granted.
                                          
Roger C. Wesley
Administrative Judge