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                           DEPARTMENT OF DEFENSE 
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
In the matter of: ) 
 ) 
  )  ADP Case No. 07-12305 
  ) 
 ) 
Applicant for Public Trust Position ) 
 
 
Appearances 
 
For Government: Robert E. Coacher, Esq., Department Counsel 
For Applicant: Pro Se 
 
 
 
______________ 
 
Decision 
______________ 
 
 
LOUGHRAN, Edward W., Administrative Judge: 
 
Applicant has not mitigated the Financial Considerations security concerns. 
Eligibility for access to sensitive information is denied.  
 
On July 15, 2008, the Defense Office of Hearings and Appeals (DOHA) issued a 
Statement of Reasons (SOR) detailing the trustworthiness concerns under Guideline F, 
Financial Considerations. 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); Department of 
Defense (DoD) Regulation 5200.2-R, Personnel Security Program, dated January 1987, 
as amended (Regulation); 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 in writing on October 3, 2008 and requested a 
hearing before an administrative judge. The case was assigned to me on December 9, 
2008. DOHA issued a Notice of Hearing on December 19, 2008, and the hearing was 
convened as scheduled on January 7, 2009. The Government offered Exhibits (GE) 1 
through 4, which were received without objections. Applicant testified on his own behalf, 
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called one witness, and submitted Exhibits (AE) A through E, which were received 
without objections. I granted Applicant’s request to keep the record open to submit 
additional information. Applicant submitted 13 pages of documents, which were marked 
AE F through K, and admitted without objections. Department Counsel’s memo is 
marked Hearing Exhibit (HE) I. DOHA received the transcript of the hearing (Tr.) on 
January 26, 2009.  
 
Procedural Rulings 
 
I advised Applicant of his right under ¶ E3.1.8 of the Directive to 15 days notice 
before the hearing. Applicant affirmatively waived his right to 15 days notice.   
 
Findings of Fact 
 
 Applicant is a 53-year-old employee of a defense contractor. He has an 
associate’s degree. He has been married for more than 30 years and has one adult 
son.1 
 
 The SOR lists 11 delinquent debts totaling about $193,271. Applicant admitted to 
all the SOR allegations, except for SOR ¶ 1.a, which is a debt for $125. He stated that 
this debt “was incorrectly reported to the credit bureau, but is such a small amount that 
no attempt was made to correct it.” The debt is listed on the credit report of February 6, 
2008.2  
 
 Applicant’s financial difficulties started in about 2003. His company closed their 
office in his city and he was unemployed for about three months. He accepted a similar 
position with the same company in another city about 200 miles away. His wife was 
working in their home city on a research project necessary to complete her doctorate 
and was unable to relocate to the new city. They purchased a recreational vehicle for 
Applicant to live in his new city while his wife remained in their home. The cost of 
maintaining two households had an adverse impact on their finances. His wife also had 
numerous medical problems and she was unable to work. Applicant and his wife both 
had an elderly parent who became ill and passed away. They also had damage to their 
house from a natural disaster.3  
 
 Applicant’s finances were further damaged by his wife’s spending habits. 
Applicant stated that he is personally responsible for only about 5% of their debt. She 
was working on attaining a doctoral degree. She was told by professors and others that 
she would be capable of earning a very large salary once she had her doctorate and 
she spent money on the prospect of future income. She never obtained the doctorate 
                                                          
1 Tr. at 25, 53; GE 1. 
 
2 Tr. at 30-31; Applicant’s response to SOR; GE 4. 
 
3 Tr. at 28, 32, 39-42, 46-47; Applicant’s response to SOR; GE 2. 
 
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and never obtained the high paying job. She indicated that she has learned from this 
experience and will not make the same financial mistakes again.4  
 
 Applicant was questioned by an investigator from the Office of Personnel 
Management (OPM) on March 14, 2007, and fully discussed his finances. His finances 
were already in total disarray by that point. He indicated that he intended to resolve his 
delinquent debts either by a debt consolidation plan or by filing Chapter 13 bankruptcy.5  
 
 Applicant’s son works for a car dealer. He was able to lease a 2008 luxury car for 
his mother at a rate of $656 per month. She pays her son who makes the monthly 
payments. Applicant testified that this was done without his knowledge.6 
 
 Applicant filed a Chapter 13 bankruptcy in January 3, 2009. Under Schedule D – 
Creditors Holding Secured Claims, he listed the mortgage on his house, the loans for 
his car and recreational vehicle, and the leased car. Schedule F – Creditors Holding 
Unsecured Nonpriority Claims listed 24 creditors and debts totaling $271,029. Schedule 
F includes all the debts in the SOR, except for the debts alleged in SOR ¶¶ 1.d and 1.f 
which total $30,304. Applicant realized after the hearing that the debt alleged in SOR ¶ 
1.d was not included in the schedule. He indicated he called his bankruptcy attorney 
about the omission and was waiting a response. He incorrectly stated that the debt 
alleged in SOR ¶ 1.f was included in Schedule F. His proposed plan called for 60 
monthly payments of $1,000 beginning in February 2009. Of the projected $60,000 in 
payments, $3,570 would go to the Trustee, $2,085 to his bankruptcy attorney, $46,836 
to the loan for his recreational vehicle, and $7,508 to his unsecured creditors. The plan 
has not been approved by the bankruptcy court. Applicant and his wife received 
counseling by internet and telephone pursuant to his bankruptcy.7  
 
 Applicant’s supervisor testified that Applicant is honest, reliable, trustworthy, and 
that he has good work ethics and is a valuable member of their team.8 
 
Policies 
 
Positions designated as ADP I and ADP II are classified as “sensitive positions.”  
(See Regulation ¶¶ C3.1.2.1.1.7 and C3.1.2.1.2.3.)  “The standard that must be met for 
. . . assignment to sensitive duties is that, based on all available information, the 
person’s loyalty, reliability, and trustworthiness are such that . . . assigning the person to 
sensitive duties is clearly consistent with the interests of national security.” (See 
Regulation ¶ C6.1.1.1.) The Deputy Under Secretary of Defense (Counterintelligence 
and Security) Memorandum, dated November 19, 2004, indicates trustworthiness 
                                                          
4 Tr. at 26-28, 37, 48-50, 54; Applicant’s response to SOR; GE 2; AE H. 
 
5 GE 2. 
 
6 Tr. at 43-45; AE C. 
 
7 Tr. at 52-56; AE A-E, I, J.  
 
8 Tr. at 22-23. 
 
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adjudications will apply to cases forwarded to DOHA by the Defense Security Service 
and Office of Personnel Management. Department of Defense contractor personnel are 
afforded the right to the procedures contained in the Directive before any final 
unfavorable access determination may be made. (See Regulation ¶ C8.2.1.)   
 
When evaluating an applicant’s suitability for a public trust position, the 
administrative judge must consider the disqualifying and mitigating conditions in the AG. 
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 
[sensitive] 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 trustworthiness 
decision.  
 
A person who seeks access to sensitive 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 sensitive information. Decisions include, by necessity, consideration of 
the possible risk the applicant may deliberately or inadvertently fail to protect or 
safeguard sensitive information. Such decisions entail a certain degree of legally 
permissible extrapolation as to potential, rather than actual, risk of compromise of 
sensitive information. 
 
 Section 7 of Executive Order (EO) 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).   
 
 
 
 
 
5 
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. Two are potentially applicable in this case:   
 
 (a) inability or unwillingness to satisfy debts; and 
 
 (c) a history of not meeting financial obligations. 
 
 Applicant accumulated a number of delinquent debts and was unable or unwilling 
to pay his obligations for a period of time. The evidence is sufficient to raise AG ¶¶ 19(a) 
and (c).  
 
  Five Financial Considerations Mitigating Conditions under AG ¶¶ 20(a)-(e) are 
potentially applicable:  
 
(a) the 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; 
 
(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; 
 
(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;  
 
(d) the individual initiated a good-faith effort to repay overdue creditors or 
otherwise resolve debts; and 
 
(e) the 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. 
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 Applicant’s financial problems are extensive. He is still in the process of resolving 
his debts. AG ¶ 20(a) is not applicable at this time.  
 
 Applicant was laid off work and had to relocate to another city. His wife could not 
move because of her education. She had numerous medical problems and was unable 
to work. They both had parents who became very sick and passed away. Their home 
was damaged by a natural disaster. These are all conditions that were largely beyond 
his control. To be fully applicable, AG ¶ 20(b) also requires that the individual act 
responsibly under the circumstances. While these circumstances clearly hampered his 
financial situation, the circumstances are not fully accountable for the overwhelming 
debt accrued by Applicant and his wife. Applicant told the OPM investigator in March 
2007, that he intended to resolve his delinquent debts either by a debt consolidation 
plan or by filing Chapter 13 bankruptcy. Since then a 2008 luxury car was leased on 
behalf of his wife. He has recently filed Chapter 13 bankruptcy. His proposed payment 
plan, which has not been approved by the court, calls for him to pay $60,000 over five 
years. Only $7,508 of that amount will be used to pay the $271,029 listed as owed to his 
unsecured creditors. Two of the debts in the SOR totaling $30,304 are not listed in the 
schedule. There is insufficient information for a finding that Applicant has acted 
responsibly under the circumstances. Applicant receives partial consideration under AG 
¶ 20(b).  
 
Applicant received financial counseling pursuant to his bankruptcy. He has 
submitted a Chapter 13 bankruptcy plan that has not been approved and he has not 
started on the repayment of the debts. The process is not sufficiently advanced at this 
time for a finding that there are clear indications that the problem is being resolved. AG 
¶ 20(c) is partially applicable. His actions are not yet sufficient to qualify as a good-faith 
effort to repay overdue creditors or otherwise resolve debts.9 AG ¶ 20(d) is not 
applicable. 
 
Applicant disputed owing the debt in SOR ¶ 1.a. The debt is listed on the credit 
report of February 6, 2008. Applicant did not provide documentation in support of the 
dispute. AG ¶ 20(e) is not applicable. 
 
 
                                                          
9 The Appeal Board has previously explained what constitutes a “good faith” effort to repay 
overdue creditors or otherwise resolve debts: 
 
In order to qualify for application of Financial Considerations Mitigating Condition 6, an 
applicant must present evidence showing either a good-faith effort to repay overdue 
creditors or some other good-faith action aimed at resolving the applicant’s debts. The 
Directive does not define the term ‘good-faith.’ However, the Board has indicated that the 
concept of good-faith ‘requires a showing that a person acts in a way that shows 
reasonableness, prudence, honesty, and adherence to duty or obligation.’ Accordingly, 
an applicant must do more than merely show that he or she relied on a legally available 
option (such as bankruptcy) in order to claim the benefit of Financial Considerations 
Mitigating Condition 6.  
 
(internal citation and footnote omitted) ISCR Case No. 02-30304 at 3 (App. Bd. Apr. 20, 2004) (quoting 
ISCR Case No.  99-9020 at 5-6 (App. Bd. June 4, 2001)). 
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Whole Person Concept 
 
 Under the whole person concept, the Administrative Judge must evaluate an 
Applicant’s eligibility for a public trust position 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 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 public 
trust position 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. Applicant has an overwhelming 
amount of unsecured delinquent debt. Unforeseen events contributed to his financial 
problems, but clearly not to this extent. I considered his favorable work record, but he is 
still far too early in the bankruptcy process to alleviate concerns about his finances.  
 
Overall, the record evidence leaves me with questions and doubts as to 
Applicant’s eligibility and suitability for a public trust position. For all these reasons, I 
conclude Applicant has not mitigated the trustworthiness concerns arising from his 
financial history.  
 
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:   AGAINST APPLICANT 
 
  Subparagraphs 1.a-1.k:  Against Applicant 
 
 
 
 
 
 
 
 
 
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Conclusion 
 
 In light of all of the circumstances presented by the record in this case, it is not 
clearly consistent with the interests of national security to grant Applicant eligibility for a 
public trust position. Eligibility for access to sensitive information is denied. 
 
 
                                                     
_______________________ 
Edward W. Loughran 
Administrative Judge