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                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 07-10945
SSN: )
)
Applicant for Security Clearance )
Appearances
For Government: Gina Marine, Esquire, Department Counsel
For Applicant: Pro se 
                             
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Decision
______________
HENRY, Mary E., Administrative Judge:
Based upon a review of the case file, pleadings, exhibits, and testimony,  I
conclude that Applicant’s eligibility for access to classified information must be granted.
Applicant submitted his Electronic Questionnaire for Investigative Processing (e-
QIP), on December 21, 2005. On April 3, 2008, the Defense Office of Hearings and
Appeals (DOHA) issued a Statement of Reasons (SOR) detailing the security concerns
under Guideline F 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 acknowledged receipt of the SOR on April 8, 2008. He answered the
SOR in writing on April 18, 2008, and requested a hearing before an administrative
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judge. DOHA received the request on April 21, 2008. Department Counsel was
prepared to proceed on April 29, 2008. DOHA assigned the case to another
administrative judge on May 2, 2008. Because of workload considerations, the case
was reassigned to me on May 20, 2008. DOHA issued a notice of hearing on June 9,
2008, and I convened the hearing as scheduled on July 1, 2008. The government
offered six exhibits (GE) 1 through 6, which were received and admitted into evidence
without objection. Applicant testified on his own behalf. He submitted one exhibit (AE) A,
which was received and admitted into evidence without objection. DOHA received the
transcript of the hearing (Tr.) on July 15, 2008. I held the record open until July 31,
2008, for Applicant to submit additional matters.  On July 31, 2008, he submitted six
exhibits, marked AE B through G. The government objected to the admission of AE B
only on the grounds of hearsay. AE C through G are admitted without objection. The
record closed on July 31, 2008.
Procedural and Evidentiary Rulings
Notice
The administrative file reflects that Applicant received the hearing notice on June
18, 2008, less than 15 days prior to the hearing. At the hearing, I advised Applicant of
his right under ¶ E3.1.8 of the Directive to receive the hearing notice 15 days before the
hearing. Applicant affirmatively waived his right to 15 days notice. (Tr. at 10) 
Motion to Amend SOR
Near the end of the hearing, Department Counsel moved to amend the SOR by
adding ¶ 1.e, alleging Applicant is indebted to the Veteran’s Administration (VA) in the
amount of $14,000. (Tr. at 73) Applicant objected to the motion, arguing that he does
not owe the VA any money. Rather, if he wishes to again be eligible for a future VA
backed mortgage, he must repay the VA the money it paid to his mortgagor. I denied
the motion to amend the SOR because there is no existing debt with the VA based on
the credit reports and Applicant’s testimony. (Tr. at 77)
Evidentiary Rulings
Department Counsel challenges the admission of AE B, an undated letter from
Applicant on the grounds of hearsay. Since the hearsay rules are not strictly applied in
these proceedings, the objection is overruled. AE B is admitted into evidence. I will
accord this document whatever weight to which it is entitled.
Applicant’s response to the SOR, dated April 18, 2008, at 1.1
GE 1 (Applicant’s e-QIP) at 1, 5-8; Tr. 13, 16-18, 72.2
Tr. 32-39.3
AE A (Bankruptcy documents) at 1-2,10; Tr. 18-24.4
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Findings of Fact
In his Answer to the SOR, Applicant admitted the factual allegations in the SOR,
with explanations. He also provided additional information to support his request for
eligibility for a security clearance.   1
Applicant, who is 47-years-old, works for a Department of Defense contractor as
a senior mechanical technician. He began this job in 2005. From 2001 until 2005, he
drove a truck, owning and operating his own business for the last three years. He retired
from the U.S. Army as a staff sergeant (E-6) in 2001. He is a disabled veteran. He held
a clearance while in the Army and acted as a courier of classified information. He
married 19 years ago. He has a grown stepson, two teenage children and one
grandchild.2
Prior to his retirement from the military, he and a military colleague decided to
start a business, which they never incorporated. In their business, they purchased
trucks in need of some repairs. They would repair a truck then resell it. Applicant used
personal credit cards and a personal line of credit with a bank (the creditor in SOR ¶
1.b) in the form of 90-day short-term loans to finance his business. He would purchase
used trucks for $2,500 to $3,500, using the bank loan. The bank held title to the truck.
Applicant and his partner would repair the trucks for about $500 then resell the trucks
for about $4500. Each time he sold a truck, he repaid the loan on this truck and the
bank returned the title it held on the truck. If the loan was not repaid, the bank listed it as
an automobile repossession on the credit report.3
By December 1999, Applicant had developed serious financial problems with his
business. His sales of repaired trucks had slowed and he could not pay his loans. In
March 2000, he filed for Chapter 7 Bankruptcy. His creditors included the bank listed in
SOR ¶ 1.b. The bankruptcy court discharged his debts in an Order dated June 29,
2000.   4
He and his wife purchased a small house in 1994, which they outgrew quickly.
Instead of selling this house, they decided to rent it. They purchased and moved to a
larger house in 1996. In 2002, Applicant allowed his stepson and his girlfriend to move
into the smaller house with the agreement they would pay all expenses. However,
Applicant either paid the electric bill or the mortgage each month for his stepson.
Eventually, he stopped paying both and directed his stepson to pay both. His stepson
failed to make the mortgage payments as required. When Applicant and his wife
learned that the bank had started foreclosure, they mailed the overdue payments to the
GE 4 (Credit Report, dated April 29, 2008); GE 5 (Credit Report, dated September 20, 2007); GE 6 (Credit5
report, dated January 28, 2006); AE F (Credit report, dated July 28, 2008); AE G (Credit report, dated July 22,
2008); Tr. 45-50, 77. 
GE 4, supra note 5; GE 5, supra note 5; GE 6, supra note 5; AE F, supra note 5; AE G, supra note 5, at 2;6
Tr. 27-31, 52-59.
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bank. The bank declined their payments and foreclosed. Since the VA guaranteed their
loan, it paid the mortgage balance to the bank. As a result, Applicant lost his eligibility
for a VA loan. He can regain his eligibility for a VA guaranteed mortgage loan if he
repays the VA. He is not required by the VA to repay the loan and no debt to the VA is
listed on his credit reports in the record.5
Prior to filing bankruptcy, Applicant and his wife purchased a time share
sometime in 1998 and 1999. The purchase contract guaranteed them two full weeks a
year access to one of the time share properties anywhere and regular weekend access
to local properties. The agreement also included certain amenities and services. During
the two years they were involved with the time share, they used it four weekends locally.
Whenever they sought to exercise their right to use their two weeks, no facilities were
available, except at a higher grade. The time share company regularly offered to
upgrade their purchase, which they did once. The availability of the two weeks did not
improve with the upgrade nor did the services available.  They spoke with company
representative several times and received promises for improvements, which never
occurred. During this time, other purchasers had filed a class action law suit against the
time share company. Applicant chose not to participate in the law suit, in part because
of the promises. Finally, after many broken promises and the lack of availability of their
time share property, Applicant told the company to sell his interest in the time share
because he believed that the company had not honored their contractual agreement.
Although Applicant threatened to sue the time share company, he did not. He believes
his share was sold, but is not sure. He never received a notice that he owed the time
share company money. This time share company is now out of business. Applicant has
challenged this debt, which is listed on only two of the five credit reports of record. The
July 22, 2008 credit report indicates that this account is being investigated, which
reflects that Applicant challenged the validity of the debt, which he does not intend to
pay.6
The three 2008 credit reports indicate that Applicant timely pays his current bills
and has no outstanding balances on his present debts. The July 28, 2008 and April 29,
2008 credit reports reflect that the mortgage debt set forth SOR ¶ 1.c is a VA real estate
mortgage with a zero balance. Concerning the $3,686 bank loan in SOR ¶ 1.b, the 2007
and 2006 credit reports show several loans with this creditor, all of which are paid
except one. The credit reports show that the unpaid account, which is listed in the SOR,
was opened in December 1999 and that Applicant disputed the account in 2006. The
dispute resolution is not shown; however, the debt is not listed on any of the 2008 credit
GE 4, supra note 5; GE 5, supra note 5; GE 6, supra note 5; AE F, supra note 5; AE G, supra note 5, at 2;7
AE D.
AE C (Applicant’s monthly budget); Tr. 16-17.8
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reports. I find that Applicant successfully challenged the listing of this debt, which was
included in his 2000 bankruptcy.7
Applicant and his wife have a net monthly income of $8,563 from their earnings,
his military retirement, and his VA disability benefit. Their monthly expenses total
$3,377, leaving $5,186 of available income each month. One daughter is in college.8
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. 
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
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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
The security concern relating to the guideline for Financial Considerations is set
out in AG & 18:      
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. 
The guideline notes several conditions that could raise security concerns. Under
AG & 19(a), an Ainability or unwillingness to satisfy debts@ is potentially disqualifying.
Similarly under AG & 19(c), Aa history of not meeting financial obligations@ may raise
security concerns. Applicant accumulated delinquent debt in 1999 when he was
operating his truck repair business. He discharged his debts in bankruptcy in 2000.
Since then, he has been involved in two foreclosure proceedings and has one unpaid
debt. The evidence is sufficient to raise these potentially disqualifying conditions,
requiring a closer examination.
The guideline also includes examples of conditions that could mitigate security
concerns arising from financial difficulties. 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.@ Applicant=s
financial worries arose from his truck repair business in 1999. He resolved these debts
issues through bankruptcy, a process which included the debts to the bank listed in
SOR ¶ 1.b. Since his bankruptcy discharge, he has paid all his credit card bills, his car
loans, his usual household expenses and current mortgage. I find his bankruptcy
occurred because of his now defunct truck repair business and the costs related to
operating this business, which is unlikely to recur. It does not raise concerns about his
AG ¶ 20(f) does not apply in this case.9
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current reliability, trustworthiness, or good judgment. This potentially mitigating condition
applies only to the issue of bankruptcy and the one discharged bank debt. 
Under AG & 20(b), Applicant may mitigate where Athe 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.@ As noted
above, Applicant’s financial problems arose from his 1999 business problems, when
sales declined, thus, severely limiting his ability to pay his loans and credit cards. He
has closed his business and eliminated it as a source of financial problems. The
foreclosure on his little house occurred when his stepson failed to pay his rent, which
was the mortgage. The bank refused to accept the back payments from Applicant.
Because the VA guaranteed this loan, the VA paid the debt. Applicant is not indebted to
the VA, but if he wishes to regain his eligibility for a future VA loan, he must repay the
VA the amount it paid on his foreclosure loan. I find this potentially mitigating condition
is a factor for consideration in this case. 
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 under AG & 20(c). Applicant has not received any counseling
about his debt issues and does not need it since his debts are resolved. He is current in
all his bills and now has a good credit record. Similarly, AG & 20(d) applies where the
evidence shows Athe individual initiated a good-faith effort to repay overdue creditors or
otherwise resolve debts.@ This mitigating condition does not apply in this case.
Finally, Appellant may mitigate the government’s security concern under AG ¶
20(e), which states that [if] an individual has a reasonable basis to dispute the
legitimacy of the past-due debt which is the cause of the problem and provides
documented proof to substantiate the basis of the dispute or provides evidence of
actions to resolve the issue. Appellant successfully disputed the bank debt listed on his
2006 and 2007. This unpaid debt has been removed from his credit reports. This
mitigating condition has some applicability.9
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 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
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time of the conduct; (5) the 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 common sense judgment based upon careful
consideration of the guidelines and the whole person concept.       
I considered the potentially disqualifying and mitigating conditions in light of all
the facts and circumstances surrounding this case. Appellant’s problems first began,
while he was still in the military. He and a friend decided to develop a business which
would provide them with work and an income when they retired, even though they had
little business experience. Because of their lack of business experience, they not only
did not incorporate the business, they did not understand the financial liability for not
incorporating the business. As a result, they financed the business with Applicant’s
good credit history, and when the business absorbed his personal income, Applicant
financed his living expenses with his credit cards. These financial decisions led
Applicant to file for bankruptcy when business sales slowed and he could not pay his
bills. His business ended when he filed bankruptcy. Since 2000, he has managed his
personal finances and his second trucking business prudently.
As a parent and in an effort to help his stepson, Applicant allowed his stepson
and his girl friend to live in the small house with the understanding that they would pay
all the bills related to this property. They did not, and as a result, the mortgagor
foreclosed on the property, despite Applicant’s efforts to pay the delinquent payments.
Because it was a VA guaranteed loan, the VA paid the mortgage balance and denied
Applicant access to future VA loans. Applicant’s efforts to catch up the mortgage
payments was reasonable and the rejection of his offer by the mortgage company is not
within his control. Applicant has always paid his other house mortgage in a timely
fashion. Applicant’s decision not to pay the money owed on the time share is
reasonable in light of his belief that the time share company breached its contract with
him. While he had the option to sue the time share company in court, such actions are
time consuming, expensive and stressful. His decision not to pursue legal action in light
of these factors is reasonable.
In considering the totality of the evidence in this record, all the debts listed in the
SOR, except the time share debt, are resolved. Applicant held a security clearance for
many years as an active duty soldier, and never violated his responsibilities. Except for
his decision to run a business in the late 1990s with a friend, Applicant has always
managed his finances prudently and wisely. He lives well within his financial means. His
continued problem with the time share company is not sufficient to raise security
concerns. (See AG ¶ 2(a)(1).)
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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: For Applicant
Subparagraph 1.b: For Applicant
Subparagraph 1.c: For Applicant
Subparagraph 1.d: For Applicant
Conclusion
In light of all of the circumstances presented by the record in this case, it is
clearly consistent with the national interest to grant Applicant eligibility for a security
clearance.  Eligibility for access to classified information is granted.
                                                              
MARY E. HENRY
Administrative Judge