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                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
------------------------ )     ISCR Case No. 08-05778
SSN: ---------------- )
)
Applicant for Security Clearance )
Appearances
For Government: Gina Marine, Esquire, Department Counsel
For Applicant: Greg D. McCormack, Esquire
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Decision
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MATCHINSKI, Elizabeth M., Administrative Judge:
Applicant submitted an Electronic Questionnaire for Investigations Processing (e-
QIP) on May 20, 2007. On June 24, 2008, the Defense Office of Hearings and Appeals
(DOHA) issued a Statement of Reasons (SOR) to Applicant detailing the security
concerns under Guideline F that provided the basis for its decision to deny him a
security clearance and refer the matter to an administrative judge. 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 as of
September 1, 2006.
 
Applicant, acting pro se, answered the SOR allegations in writing on June 23,
2008, and he requested a hearing before a DOHA administrative judge. On August 5,
2008, the case was assigned to me to consider whether it is clearly consistent with the
national interest to grant or continue a security clearance for him. On September 4,
Concerning the specific objections to portions of exhibits A and B, the absence of a handwritten1
signature on a settlement confirmation letter did not render Exhibit A inadmissible. It was issued on the
letterhead of the law firm collecting the debt in SOR ¶ 1.a and contained the typewritten name of the firm in
the signature block. As for Exhibit B, the government  had legitimate concerns about the authentication of
Internet-based complaints about the debt consolidation firm, and they were afforded little, if any, weight, but
the document also contained Applicant’s request to terminate his account and evidence of his payments to
the debt consolidation firm. 
Applicant testified he did not look into alternative sources of funding (Tr. 109).2
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2008, I scheduled a hearing for October 2, 2008. On September 9, 2008, counsel for
Applicant entered his appearance and requested a brief continuance. I granted his
request on September 10, 2008, Department Counsel having no objection. On
September 18, 2008, I rescheduled the hearing for October 7, 2008.
 The parties appeared as scheduled on October 7, 2008. Five government
exhibits (Ex. 1-5) and four Applicant exhibits (Ex. A-D) were admitted, over the
government’s objections about portions of exhibits A and B.  Applicant also testified on1
his behalf, as reflected in a transcript (Tr.) received on October 20, 2008. Based on a
review of the pleadings, exhibits, and hearing testimony, eligibility for access to
classified information is granted.
Findings of Fact
DOHA alleged under Guideline F, financial considerations, that Applicant owed
about $18,379 on a debt in collection (SOR ¶ 1.a), and that he had a history of not
meeting his financial obligations as evidenced by his recent settlement between
September 2007 and January 2008 of about $45,695 in delinquent credit card debt
(SOR ¶ 1.b). Applicant denied the allegations on the basis that he had settled all his
outstanding debt, was not financially overextended, and lives within his means.  He
added that he had learned a valuable lesson and maintains a single credit card account
with a minimal balance. After considering the evidence of record, I make the following
findings of fact.
Applicant is a 56-year-old security guard who has worked for the same defense
contractor since February 1979 (Ex. 1, Tr. 41). He held a security clearance throughout
most of his employ until it was suspended on issuance of the SOR (Tr. 37, 42). He
continues to drive company executives but requires his clearance so that he can handle
classified documents placed in his office’s control (Tr. 58).
Applicant relied on credit extensively for home improvements, college tuition for
the younger of his two sons, and some travel (Tr. 45, 76). About $30,000 went to put a
new roof and windows on his residence (Tr. 77, 109-10), which had been built in the
1940s (Tr. 112). He inherited the house from his father in 1989 and paid off the
mortgage ten years later (Tr. 61). He charged about $20,000 of his son’s college tuition
(Tr. 107),  and about $5,000 or $6,000 for family vacations (Tr. 78-79). Applicant paid2
about double the minimum payments, approximately $200 per month on each of four
Applicant testified that he was current on the four accounts (Tr. 45). His credit  report of June 20073
(Ex. 5) shows a last activity date of November 2005 for his Discover Card account, but a more recent credit
report of September 2008 (Ex. C) shows it was current until June 2006, which is consistent with his testimony.
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credit card accounts (Tr. 75, 97). He had no problems making the payments. He was
involved in a long-time cohabitant relationship with a woman with whom he had two
sons, who are now grown (Tr. 40-41). She was employed and contributing to the
household expenses (Tr. 95).
In November 2005, Applicant and his significant other of some 30 years (Tr. 40,
74) terminated their relationship. Without her income, Applicant found it difficult to make
his payments on the approximate $64,000 in accumulated credit card debt (Ex. 5, Tr.
44-45, 80).  To ensure that he could continue to make payments (Tr. 45-46, 73),3
Applicant retained the services of a debt consolidation company that he found on the
Internet in about May 2006 (Ex. B, Tr. 46). In good faith, Applicant set up an account
with the company and arranged for automatic withdrawal of $560 per month from his
checking account for five years starting that month (Tr. 47-48, 71). Applicant understood
that the debt consolidation company would in turn pay four consumer credit card
balances for him (Ex. 48-49). From May 25, 2006 to September 25, 2007, the company
directly and through a client services company debited a total of $560 per month from
his checking account (about half for fees), but made no payments to Applicant’s
creditors (Tr. 73). Applicant assumed his creditors were being paid, and he did not notify
the creditors of the debt consolidation agreement or confirm receipt of payments by the
credit lenders (Tr. 50-52).
With no payments being made on four credit card accounts after May 2006, the
accounts were subsequently referred for collection in the amounts of $12,600, $18,376,
$19,187, and $14,408 (Ex. 5). In late 2006, Applicant began receiving calls from the
creditors demanding payment of the delinquent balances (Tr. 50-51, 100). Applicant
informed the creditors that he had arranged with a debt consolidation company to make
payments on his behalf (Tr. 51). He called the debt consolidation firm, and was told that
they were handling it and he should not be concerned (Tr. 52). Applicant understood
from the debt consolidation company that it was still negotiating with his creditors.
Sometime thereafter, Applicant began receiving calls from collection agencies. He told
the debt consolidation firm that something had to be done, but he did not cancel the
agreement (Tr. 101-04).
In May 2007, Applicant got married (Ex. 1). Applicant’s spouse is a certified
public accountant who works as a supervisor in a public accounting firm (Ex. D). In mid-
May 2007, Applicant took out a $20,000 loan from his 401(k) account to pay some bills
(Tr. 90, 99).
On May 20, 2007, Applicant completed an e-QIP on which he responded
negatively to questions 28.a (“In the last 7 years, have you been over 180 days
delinquent on any debt(s)?”) and 28.b (“Are you currently over 90 days delinquent on
any debt(s)?”) (Ex. 1, Tr. 53). His account was still being debited by the debt
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consolidation company at $560 per month (“I had all this money tied up in this thing and
I was hoping it was going to work for me.” Tr. 101-04). 
 
A check of Applicant’s credit on June 20, 2007, disclosed the four delinquent
credit card accounts. Applicant owed balances of $4,793 on a credit card account with
the credit union at work, and $175 on a gasoline credit card account. They were rated
as current and being repaid on agreed upon terms (Ex. 5). Within a month or so,
Applicant was interviewed by a government investigator and questioned about his
seriously delinquent accounts (Tr. 53-54).
Applicant contacted his creditors himself as he “didn’t think [repayment through
the debt consolidation firm] was going to work.” (Tr. 54) Over the next few months, he
worked out settlement agreements with the collection agencies on three of his four
delinquent credit card accounts (Tr. 55-56). On September 10, 2007, he made an initial
payment of $2,000 toward settling his $19,187 delinquent Visa card debt (Ex. A).
On September 17, 2007, the debt consolidation firm, acting through its affiliated
banking services company, notified Applicant that he had $2,545.20 in set aside
balances in his account as of August 24, 2007 (Ex. B). In October 2007, Applicant
informed the banking services company that he wanted to close his account. Applicant
cancelled the authorization for the debt consolidation company and its affiliate to debit
his account by issuing stop payment orders with his credit union (Ex. B). Applicant was
refunded about $2,000 of the $9,500 he paid to the debt consolidation firm (Tr. 57, 71).
On or about January 16, 2008, Applicant was notified that he could settle his
$14,408.89 balance of a delinquent oil/national credit card by paying $7,204.44 in a
lump sum within 15 days. Applicant paid it on January 30, 2008. With a final payment of
$9,900, he also settled the $19,187 delinquent Visa credit card account for $12,000.
The next day, he paid $3,630.06 to settle his $12,100.02 Discover card balance. (Ex. 2,
Ex. A) Applicant obtained the funds from his and his spouse’s accounts (Tr. 56), and
through a loan taken out against his retirement account (401(k) account) at work (Ex. 2,
Tr. 63-64). As of September 2008, the loan was still being repaid directly out of his pay
at $117.43 per week (Ex. C).
In February 2008, DOHA asked Applicant to update the status of his four
delinquent credit card accounts. On April 7, 2008, Applicant furnished documentation
showing that three of his four delinquent credit card accounts had been settled. He
indicated that he had contacted the fourth creditor, to whom he owed $18,379, and was
still working on resolving that debt. Applicant notified DOHA that he had made about 18
months of payments to a debt consolidation firm that failed to perform, so he had to
settle with the creditors. Applicant estimated that after payment of monthly expenses,
his spouse’s $319 car payment, and $200 on her credit cards, he and his spouse have
a net monthly remainder of $2,873 (Ex. 2). He failed to account for a mortgage payment
on a two-family rental property owned by his spouse (Ex. C, Tr. 39, 66, 69-70).
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As of June 2008, Applicant had two open credit card accounts with balances: a
gasoline card with a balance of $61 and a MasterCard account with a balance of $137.
Both were rated as current (Ex. 3). On July 2, 2008, Applicant was notified by the
assignee collecting his remaining delinquent account that its client had agreed to settle
the $18,379 balance (SOR ¶ 1.a)  on receipt of $15,825.17 by July 17, 2008. Applicant
made the payment by cashier’s check dated July 9, 2008, which was accepted as
settlement in full (Ex. A).
In about July/August 2008, Applicant took out a five-year, $10,000 loan against
his 401(k) account to pay for legal representation at his security clearance hearing (Tr.
64). The loan payments of $43.49 weekly are being taken directly out of his paycheck
(Ex. C). He and his spouse implemented a household budget around that time (Tr. 82).
As of late September 2008, Applicant and his spouse had joint assets totaling
about $881,087.07, which included his home valued at $452,600 and $146,067.53 in his
401(k) account at work. Applicant had an outstanding balance of $51 on a gasoline
credit card account, and it was current. After payment of their joint expenses and debts
totaling $5,284, they had monthly discretionary funds in excess of $1,300 (Ex. C, Tr.
67). As of October 7, 2008, Applicant had paid the balance of his gasoline credit card.
His other credit card account had a balance of about $3,000 because he relied on credit
to pay a portion of his attorney’s fee (Tr. 83).
Applicant now understands that it was poor judgment on his part to have
continued making the payments to the debt consolidation firm after he had been notified
by the creditors that they were not receiving payment (Tr. 102). He is current on his
present obligations and did not intend for any of his financial accounts to become
delinquent (Tr. 59).
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 overarching
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.
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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 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
that 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 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. 
Applicant incurred sizeable credit card balances on four credit card accounts that
with interest totaled about $64,000 as of May 2006. While the accounts were current,
the balances were so high that he had trouble making the payments after he and the
mother of his two sons ended their relationship in November 2005. While a significant
portion of the debt (about $50,000) was for expenses that were necessary (roof, new
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windows for an older home) and/or reasonable (college tuition for his son), a security
risk is raised when one is so financially overextended. Given his inability to satisfy these
debts in full on his income at the time, AG ¶ 19(a) (“inability or unwillingness to satisfy
debts”) is implicated.
In mitigation, once he realized that he was going to have trouble keeping the
accounts current without some help, Applicant retained the services of a debt
consolidation company to negotiate on his behalf with his creditors. Applicant fulfilled his
obligations under the agreement in that he paid the company $560 per month for about
17 months. This qualifies as a “good-faith effort to repay overdue creditors or otherwise
resolve debts” under AG 20(d). AG ¶ 20(b) (“the conditions that resulted in the financial
problems 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”) also applies because the
delinquencies were caused directly by the malfeasance and/or neglect of the debt
consolidation firm upon which Applicant relied in good faith to his detriment.
To be sure, Applicant should have checked into the business practices of the
debt resolution company before he arranged for automatic withdrawal of monies from
his checking account. It can reasonably be argued that Applicant was financially
irresponsible in waiting until October 2007 to terminate his relationship with the debt
consolidation company. He learned in late 2006 from his creditors that they were not
getting paid, and collection agencies started contacting him in or before May/June 2007.
Yet, in all fairness to Applicant, he had already paid more than $7,000 to the debt
consolidation company by May 2007. His hope that the debt consolidation company
would fulfill its obligations is understandable given the circumstances. Moreover,
Applicant has settled the delinquent accounts. Over the September 2007/July 2008
period, Applicant paid more than $38,000 to his creditors. While a portion of the funding
was from a loan taken out against his 401(k), the loan is being repaid directly from his
wages. AG ¶ 20(c) (“the 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”)
applies. His financial problem has been resolved and his finances are clearly under
control.
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 in light of 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 time of the conduct; (5) the extent to
which participation is voluntary; (6) the presence or absence of
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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. 
The Appeal Board has addressed a key element in the whole person analysis in
financial cases stating:
In evaluating Guideline F cases, the Board has previously noted that the
concept of “‘meaningful track record’ necessarily includes evidence of
actual debt reduction through payment of debts.” However, an applicant is
not required, as a matter of law, to establish that he has paid off each and
every debt listed in the SOR. All that is required is that an applicant
demonstrate that he has ‘ . . . established a plan to resolve his financial
problems and taken significant actions to implement that plan.’ The Judge
can reasonably consider the entirety of an applicant’s financial situation
and his actions in evaluating the extent to which that applicant’s plan for
the reduction of his outstanding indebtedness is credible and realistic. See
Directive ¶  E2.2(a) (‘Available, reliable information about the person, past
and present, favorable and unfavorable, should be considered in reaching
a determination.’). There is no requirement that a plan provide for
payments on all outstanding debts simultaneously. Rather, a reasonable
plan (and concomitant conduct) may provide for the payment of such
debts one at a time. Likewise, there is no requirement that the first debts
actually paid in furtherance of a reasonable debt plan be the ones listed in
the SOR.
ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008) (internal citations omitted).
Applicant’s accumulation of about $64,000 in credit card debt shows a naivete in
financial matters. He testified that he did not consider an alternative, such as a student
loan to cover his son’s tuition. He also showed questionable financial judgment in
authorizing a company known to him only via the Internet to debit his account each
month without checking into the firm’s business practices. Yet, he clearly did not intend
to defraud his creditors and has settled the accounts in good faith. He showed a
“meaningful track record” in attempting to resolve his debt through the debt
consolidation firm. His current financial situation is sound and he learned a valuable
lesson that he is not likely to repeat. Based on a totality of the evidence, it is clearly
consistent with the national interest to restore the security clearance that he held
throughout much of his 29 years in the employ of the same defense contractor.
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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
Conclusion
In light of the record in this case, it is clearly consistent with the national interest
to grant Applicant a security clearance. Eligibility for access to classified information is
granted.
                                        
ELIZABETH M. MATCHINSKI
Administrative Judge