KEYWORD: Guideline F
DIGEST: A Judge’s failure to discuss a significant aspect of a case that reasonably could be
expected to be taken into account raises a serious question as to whether the Judge forgot that
aspect, ignored it, failed to appreciate its significance, or engaged in arbitrary or capricious
analysis. The $100,000 personal loan is important because of its size and nature and the fact that
Applicant had been unable to make payments on it since November 2007 and would not be able
to make payments at least until later in 2008. The debt is significant because Applicant cannot
identify what he did with the proceeds of the loan.  The money was borrowed between 2002 and
2007. Applicant can only attribute its use to financial bleeding. There is no evidence that it has
been used to satisfy the delinquencies in the SOR.  This calls into question Applicant’s ability to
live within his means, satisfy debts, and meet  financial obligations. The record does not support
the Judge’s application of MC 20(a).  While Applicant testified about his financial difficulties in
2002, he did not demonstrate that the delinquencies in the SOR were from that period.  Three of
the delinquencies arose from his purchase of a larger home in 2005, which Applicant now says
was not a wise choice. The record does not support a conclusion that Applicant’s debts are under
control or that he has made a good-faith effort to pay them off.  The Judge apparently gave
considerable weight to Applicant’s plan for paying off his debts after his wife has finished
training and gets a new job.  The Board has indicated that promises to pay off delinquent debts in
the future are not a substitute for a track record of paying debts in a timely manner and otherwise
acting in a financially responsible manner. The Judge’s whole-person analysis fails to consider
important aspects of the case that reasonably should have been addressed.  Most notably,
Applicant borrowed more than $100,000  in personal loans from a friend between 2002 and
2007, and cannot explain how he expended these proceeds or why he needed to borrow such a
large amount.  
CASENO: 07-08291.a1
DATE: 08/26/2008
DATE: August 26, 2008
In Re:
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Applicant for Security Clearance
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ISCR Case No. 07-08291
APPEAL BOARD DECISION
APPEARANCES
FOR GOVERNMENT
Julie R. Edmunds, Esq., Department Counsel
FOR APPLICANT
Pro Se
The Defense Office of Hearings and Appeals (DOHA) declined to grant Applicant a security
clearance.  On December 19, 2007, DOHA issued a statement of reasons advising Applicant of the
basis for that decision—security concerns raised under Guideline F (Financial Considerations) of
Department of Defense Directive 5220.6 (Jan. 2, 1992), as amended (Directive).  Applicant
requested a hearing.  On April 22, 2008, after the hearing, Administrative Judge Noreen A. Lynch
granted Applicant’s request for a security clearance.  Department Counsel timely appealed pursuant
to the Directive ¶¶ E3.1.28 and E3.1.30.
Department Counsel raises the following issues on appeal: whether the Judge’s decision is
arbitrary and capricious because she failed to adequately address certain disqualifying evidence;
whether the Judge applied Guideline F Mitigating Conditions in a piecemeal fashion that was
unsupported by the record evidence; and whether the Judge’s whole-person analysis is unsustainable
because it is unsupported by the record evidence.  Finding error, we reverse the Judge’s favorable
security clearance decision. 
Whether the Record Supports the Judge’s Factual Findings
A. Facts
The Judge made the following relevant factual findings: Applicant married for the second
time in 2000.  Applicant and his wife have two children.  Applicant’s wife quit her job during her
first pregnancy.  The first child was born in 2002.  Applicant has experienced financial difficulties
due to loss of her income and to medical expenses.  Applicant was unemployed for a period of time
in 2003.  At that time, he unsuccessfully attempted to start his own consulting business.
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Additionally, Applicant’s wife experienced a very difficult second pregnancy and was on bed rest
for six months prior to the child’s birth in 2004.  After the birth, his wife was not able to return to
work due to health problems of the child.  In 2005, Applicant and his wife sold their house and
bought a larger one, refinancing it at a mortgage rate of 8.5%.  Applicant expected to refinance the
house again at a lower interest rate in two years, but was unable to do so because he was unemployed
from January 2007 until March 2007.  
The SOR alleged delinquent debts in the amount of $14,000.  Applicant also owes
approximately $99,000 to a friend and is not making payments on that debt.  However, the friend
told Applicant that he needn’t make any payments until his financial situation improved.
At the time of the hearing, Applicant’s wife was learning a new skill. She was expected to
graduate in June 2008 and go back to work.  Applicant had finally been able to refinance his home
at the reduced rate of 5.12% for three years.  With the income from his wife’s expected job and
increased disposable income from reduced mortgage payments, Applicant has created a plan to pay
off his debts promptly, although it will take over 15 years to pay off the personal loan. 
B. Discussion
The Appeal Board’s review of the Judge’s findings of facts is limited to determining if they
are supported by substantial evidence—“such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion in light of all the contrary evidence in the same record.”
Directive ¶ E3.1.32.1.  “This is something less than the weight of the evidence, and the possibility
of drawing two inconsistent conclusions from the evidence does not prevent an administrative
agency’s finding from being supported by substantial evidence.”  Consolo v. Federal Maritime
Comm’n, 383 U.S. 607, 620 (1966).  In evaluating the Judge’s findings, we are required to give
deference to the Judge’s credibility determinations.  Directive ¶ E3.1.32.1.      
Department Counsel has not challenged the above facts.  However, she contends that the
Judge failed to adequately address certain disqualifying evidence.  The Board will address that
contention below.
Whether the Record Supports the Judge’s Ultimate Conclusions 
A Judge is required to “examine the relevant data and articulate a satisfactory explanation
for” the decision “including a ‘rational connection between the facts found and the choice made.’”
Motor Vehicle Mfrs. Ass’n of the United States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29,
43 (1983) (quoting Burlington Truck Lines v. United States, 371 U.S. 156, 168 (1962)).  The Appeal
Board may reverse the Judge’s decision to grant, deny, or revoke a security clearance if it is arbitrary,
capricious, or contrary to law.  Directive ¶ E3.1.32.3 and ¶ E3.1.33.3.  “The general standard is that
a clearance may be granted only when ‘clearly consistent with the interests of the national security.’”
Dep’t of the Navy v. Egan, 484 U.S. 518, 528 (1988). 
 Directive ¶ E2.19(a):  “inability or unwillingness to satisfy debts;” and ¶ 19(c):  “a history of not meeting1
financial obligations[.]” 
Directive ¶ E2.19(e): “ consistent spending beyond one’s means, which may be indicated by excessive2
indebtedness, significant negative cash flow, high debt-to-income ratio, and/or other financial analysis[.]”
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In deciding whether the Judge's rulings or conclusions are arbitrary or capricious, the Board
will review the Judge's decision to determine whether:  it does not examine relevant evidence; it fails
to articulate a satisfactory explanation for its conclusions, including a rational connection between
the facts found and the choice made; it does not consider relevant factors; it reflects a clear error of
judgment; it fails to consider an important aspect of the case; it offers an explanation for the decision
that runs contrary to the record evidence; or it is so implausible that it cannot be ascribed to a mere
difference of opinion.  In deciding whether the Judge's rulings or conclusions are contrary to law,
the Board will consider whether they are contrary to provisions of Executive Order 10865, the
Directive, or other applicable federal law.  See ISCR Case No. 03-22861 at 2-3 (App. Bd. Jun. 2,
2006).
Department Counsel points out the Judge properly applied Disqualifying Conditions (DC)
¶¶ E2.19(a) and (c) to Applicant’s $14,000 in delinquent debt and his inability to satisfy that debt.1
However, Department Counsel contends that the Judge’s decision is arbitrary and capricious because
she failed to adequately address certain disqualifying evidence–i.e., the personal loan in the
approximate amount of $99,000.  The Judge mentioned the debt (Decision at 4 and 7), but failed to
address its significance.  Department Counsel contends that the personal loan also raises DC ¶
E2.19(e).   Department Counsel’s contention has merit. 2
While there is a rebuttable presumption that a Judge has considered all the record evidence,
a Judge’s failure to discuss or even mention a significant aspect of a case that reasonably could be
expected to be taken into account in a decision raises a serious question as to whether the Judge
forgot that aspect, ignored it, failed to take it into account, failed to appreciate its significance, or
engaged in arbitrary or capricious analysis.  See, e.g., ISCR Case No. 02-00318 at 7-8 (App. Bd. Feb.
25, 2004).  In this case, the personal loan is important because of its size and nature and the fact that
as of the time of the hearing in April 2008, Applicant had been unable to make payments on it since
November 2007 and would not be able to make payments until his wife graduated from her training
and obtained a job as Applicant expected later in 2008.  However, the debt is more significant
because Applicant cannot identify what he did with the proceeds of the loan.  The money was
borrowed over time–between 2002 and 2007, and Applicant can only attribute its use to “financial
bleeding.”  Transcript at 159.  There is no record evidence that it has been used to satisfy the
delinquencies in the SOR.  This calls into question Applicant’s ability to live within his means,
satisfy debts, and meet  financial obligations.  Directive ¶ E18 (Financial Considerations Concern).
Department Counsel also argues that the Judge applied Mitigating Conditions (MC) in a
piecemeal fashion that was unsupported by the record evidence.  In her decision, the Judge applied
Directive ¶ E2.20(a): “the behavior happened so long ago, was so infrequent, or occurred under such3
circumstances that it is unlikely to recur and does not cast doubt on the individual’s current reliability, trustworthiness,
or good judgment[.]”
Directive ¶ E2.20(b): “the conditions that resulted in the financial problem were largely beyond the person’s4
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[.]”
Directive ¶ E2.20(c): “the person has received or is receiving counseling for the problem and/or there are clear5
indications that the problem is being resolved or is under control[.]”
Directive ¶ E2.20(d): “the individual initiated a good-faith effort to repay overdue creditors or otherwise6
resolve debts[.]”
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Mitigating Conditions (MC) 20(a),  20(b),  20(c),  and 20(d)  at least in part and therefore found in3 4 5 6
Applicant’s favor as to all the SOR allegations.  In applying MC 20(a), the Judge stated that
Applicant’s financial problems arose in 2002 due his wife’s pregnancy and unemployment and his
son’s medical bills, and she concluded that “the circumstances that occurred do not raise concerns
about his current reliability, trustworthiness, or good judgment.”  Decision at 7.  The record does not
support the Judge’s application of MC 20(a).  While Applicant testified about his financial
difficulties in 2002, he did not demonstrate that the delinquencies in the SOR were from that period.
Three of the delinquencies arose from his purchase of a larger home in 2005, which Applicant now
says was not a wise choice.  Transcript at 87.  (Those three are SOR ¶ 1(b), an equity line of credit;
¶1(e), the primary mortgage; and ¶ 1(f), tree work on the new property.)  Applicant had already
experienced the loss of his wife’s income and the birth of his young sons by 2005.  Applicant’s child
support arrearage for his son from his prior marriage began to accrue when Applicant was
unemployed from January until March 2007, but continued until the son graduated from high school
three months later.  Moreover, the personal loan accrued in increments from 2002 until 2007, and
Applicant’s inability to account for his use of the proceeds of the loan casts doubt on his “current
reliability, trustworthiness, and good judgment.”    
Application of MC 20(b) requires both that the financial difficulties occurred due to
circumstances beyond the individual’s control and that the individual acted responsibly under the
circumstances.  Here again, the Judge relied on circumstances beyond Applicant’s control--such as
his periods of unemployment, the failure of his consulting business, his children’s medical expenses,
his wife’s unemployment, etc.  As discussed above, Applicant did not demonstrate that his current
financial problems are directly connected to two brief periods of unemployment and the other
circumstances listed above.  Furthermore, the periods of unemployment Applicant experienced are
not different from what an average person might expect to encounter during the course of a lifetime,
and there is no evidence that the medical expenses accounted for a major portion of his financial
difficulties.  See, e.g., ISCR Case No. 06-23362 at 4 (App. Bd. Apr. 4, 2008).  Since  the difficulties
appear to be more closely connected to his purchase of a larger home in 2005 under terms he could
not afford, it does not appear that Applicant acted responsibly in the aftermath of the loss of his
wife’s income, medical expenses, etc.
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The Judge discussed mitigation under MC ¶¶ 20(c) and 20(d) together, concluding that
Applicant’s financial difficulties are now under control and that he has made a good-faith effort to
repay his delinquencies.  Decision at 7.  The record evidence does not support the Judge’s
conclusions.  The only two delinquencies that had been paid at the time of the hearing were the child
support arrearage and the primary mortgage.  The child support arrearage was paid by a partial
withholding of Applicant’s income tax refund, and the mortgage delinquency was folded into his
mortgage when it was refinanced.  Applicant was still delinquent on the equity line of credit, was
making only minimal payments ($50 to $100 instead of $375 per month) toward the tree service
debt, and was not making any payments on a state tax debt, the balance on a computer, or the large
personal loan.  The record does not support a conclusion that Applicant’s debts are under control or
that he has made a good-faith effort to pay them off.  The Judge apparently gave considerable weight
to Applicant’s plan for paying off his debts after his wife has finished training and gets a new job.
The Board has indicated that promises to pay off delinquent debts in the future are not a substitute
for a track record of paying debts in a timely manner and otherwise acting in a financially responsible
manner.  See, e.g., ISCR Case No. 99-0012 at 3 (App. Bd. Dec. 1, 1999).
Finally, Department Counsel argues that the Judge’s whole-person analysis is unsustainable
because it is unsupported by the totality of the record evidence.  Department Counsel’s argument has
merit.  In her whole-person analysis, the Judge focused on positive aspects of Applicant’s life
history–the fact that he served in the United States Air Force with a security clearance, developed
a career in a technical field, is praised for his work and integrity, cared for his son after he and his
first wife separated, and spent large sums in a legal battle for custody of his son.  Decision at 8.  She
also relied on the factors which she considered to be beyond Applicant’s control–his second wife’s
difficult pregnancies and unemployment, the medical problems of his youngest son, the poor
economy, his unemployment, and his problems with refinancing his house.  Id.  Finally, the Judge
noted Applicant’s increased income and his plan to pay off his debts with increased family income
when his wife returns to work.  Id.
However, the Judge’s whole-person analysis fails to consider important aspects of the case
that reasonably should have been addressed.  Most notably, Applicant borrowed more than $100,000
in personal loans from a friend between 2002 and 2007, and cannot explain how he expended these
proceeds or why he needed to borrow such a large amount.  Transcript at 159-161.  As explained
above, the Judge merely notes that Applicant used the money for “various things.”  Decision at 4.
She found Applicant not to be delinquent on repayment because the friend did not expect further
repayment until Applicant’s wife returns to work.  Id. at 7.  The Judge never addressed clearly
significant issues such as the large outstanding amount of the debt (over $99,000), why it was
incurred, or Applicant’s inability to explain how he expended the proceeds.  The Judge also failed
to analyze other conduct of serious security significance.  For example, Applicant still is not paying
other debts in a timely manner. One debt involving support payments that was repaid was satisfied
not by voluntary payment, but by involuntary collection through the IRS.  Transcript at 141-142;
Applicant Exhibit A.  Applicant was able to satisfy past due amounts on his basic mortgage loan only
after he recently negotiated a lower interest rate, but the Judge did not discuss the obvious issue of
Applicant’s lack of self-control and good judgment in buying a larger home and incurring
significantly more debt in 2005 after he had already incurred considerable debts during the years
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immediately preceding this purchase.  A reasonable whole-person analysis would have considered
these aspects of the case and other conduct of security significance along with the positive evidence
noted by the Judge. The Judge did not reasonably analyze this negative conduct against the whole-
person factors in Directive ¶ E2.2(a), and her whole person analysis is not sustainable.   
 
 Order
The Judge’s favorable security clearance decision is REVERSED. 
Signed: Michael D. Hipple      
Michael D. Hipple
Administrative Judge
Member, Appeal Board
Signed: Jean E. Smallin       
Jean E. Smallin
Administrative Judge
Member, Appeal Board
CONCURRING OPINION OF ADMINISTRATIVE JUDGE JAMES E. MOODY
I agree with my colleagues’ analysis of this case.  In my opinion the most significant factor
is the private loan which Applicant received from his friend.  I note record evidence that Applicant
received this money incrementally over a five year period and that the total amount of the loans
exceeded $100,000, though Applicant was not certain as to the exact amount.  “Q: So . . . it was
about $100,000?  A: No.  I would have to say it was probably a little more than that because there
was a stretch that after he had loaned me like the first $5,000 or $10,000, I was making consistent
payments . . . It’s probably been a little more than $100,000.”   Transcript at 161.  I also note
Applicant’s  apparent inability to state what he did with the money.  “It was used over the years.  I
know back in August–I’m trying to remember how much he [loaned] me back in August . . . It’s been
here and there.  It’s been so many, I don’t remember every little thing.  It’s–it’s been consumed.”
Transcript at 159.  Furthermore, there is scant record evidence about the person who loaned
Applicant the money, except that he is a friend, former co-worker, and a millionaire.  Transcript at
155-156.  I have considered these matters in light of the record and have taken particular note of the
fact that Applicant’s has suspended his repayment efforts on this loan.   See Decision at 4.  I
conclude that Applicant has failed to demonstrate (1) that the facts underlying these loans do not
impugn his judgment; (2) that he has acted responsibly in regard to them; or (3) that he is resolving
the loans or engaging in a good-faith effort to repay.   Viewed in light of the entire record, I concur
that Applicant has failed to meet his burden of persuasion under the Egan standard.  
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Signed: James E. Moody    
James E. Moody
Administrative Judge
Member, Appeal Board