1
                                                             
                           DEPARTMENT OF DEFENSE   
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
------------------------- )     ISCR Case No. 08-00070
SSN: ----------------- )
)
Applicant for Security Clearance )
Appearances
For Government: Daniel F. Crowley, Esquire, Chief Department Counsel
For Applicant: Pro se
______________
Decision
______________
MATCHINSKI, Elizabeth M., Administrative Judge:
Applicant submitted an Electronic Questionnaire for Investigations Processing (e-
QIP) on May 18, 2007. On July 30, 2008, the Defense Office of Hearings and Appeals
(DOHA) issued a Statement of Reasons (SOR) to Applicant detailing the security
concerns under Guideline F and Guideline E 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 acknowledged receipt of the SOR on August 5, 2008. He answered the
SOR allegations in writing on September 12, 2008, and requested a hearing. The case
was assigned to me on November 12, 2008, to conduct a hearing and to determine
whether it is clearly consistent with the national interest to grant or continue a security
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clearance for Applicant. On November 13, 2008, I scheduled a hearing for December 1,
2008. 
The parties appeared as scheduled. Ten government exhibits (Ex. 1-10) and one
Applicant exhibit (Ex. A) were admitted. Applicant and the older of his two sons testified,
as reflected in a transcript received on December 10, 2008. Based upon a review of the
SOR, Answer, transcript, and documentary exhibits, eligibility for access to classified
information is denied.
Findings of Fact
DOHA alleged under Guideline F, financial considerations, that following an
October 2004 Chapter 7 bankruptcy discharge, Applicant’s case was reopened in May
2005 for failure to disclose an annuity and his discharge was revoked in July 2006 with
the case still open as of June 2008 (SOR ¶ 1.a); that Applicant filed a Chapter 13
bankruptcy petition in November 2004, but his case was dismissed in April 2005 (SOR ¶
1.b); and that Applicant owes several delinquent debts totaling $13,983 (SOR ¶¶ 1.c-
1.r). Under Guideline E, Applicant was alleged to have deliberately falsified his May
2007 e-QIP by failing to disclose his Chapter 13 bankruptcy filing and by
misrepresenting that his 2004 Chapter 7 bankruptcy case was closed (SOR ¶ 2.a).
Applicant admitted the Chapter 7 bankruptcy filing and the revocation of the discharge,
but denied the case was still open. He admitted the Chapter 13 filing and its dismissal,
as well as the debts alleged with the exception of SOR ¶ 1.m. He explained that he was
seeking to consolidate his debts. Applicant denied that he deliberately falsified his e-
QIP. After considering the evidence of record, I make the following findings of fact.
Applicant is a 60-year-old electrical tester, who has worked for his current
employer, a defense contractor, since May 1972 (Ex. 1, Tr. 61). He seeks to retain the
secret-level security clearance that he has held for the past 33 years (Tr. 61, 159). It
was last renewed in May 1996 by the Defense Industrial Security Clearance Office
(DISCO) (Exs. 1, 7).
Applicant was married to his first wife from September 1972 to about October
1981 (Ex. 1, Tr. 71-72). In August 1988, he married his second wife, from whom he is
now divorced (Tr. 79). They had three children together, a son before their marriage in
February 1988, a daughter in July 1989, and another son in January 1993 (Ex. 1, Tr.
73). She worked outside the home, initially for a local law firm and then as a
secretary/medical records clerk at a medical center (Tr. 75-77). Applicant’s spouse
handled the family’s finances. He turned over all but $50 of his pay to her each week
(Tr. 90). They financed their home a couple of times for the funds to cover their financial
obligations (Tr. 91).
In late January 1999, Applicant’s spouse suffered a traumatic brain injury from a
fall down their basement stairs (Tr. 77). Following brain surgery and a lengthy
hospitalization of three or four months and then rehabilitation (Tr. 80-81), she was
unable to work and the responsibility of providing for her and the children fell on him. In
April 1999, Applicant was legally appointed to act on behalf of his spouse and her estate
There is conflicting evidence as to when Applicant’s spouse went to live with her mother. Applicant1
gave a separation date of June 2001 on his e-QIP (Ex. 1), and his son testified that she left them about seven
years ago (Tr. 153). However, Applicant testified that his spouse resided with them for about a year in a home
that he purchased in 2002 (Tr. 85, see also Ex. 8). He told a government investigator in August 2007 that his
spouse left in 2002 (Ex. 2).
In October 2004, on Applicant’s motion, the bankruptcy court ordered that the judgment liens that2
could impair his exemption were avoided, but that should his bankruptcy case be dismissed, they would be
reinstated (Ex. 8).
The annuity was from an insurance settlement with the payout at $1,000 per month for 20 years (Tr.3
71).
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(Ex. 2, Tr. 61-62). He had medical insurance that covered most of her care, although he
incurred a debt obligation of about $1,790 with one health care provider for her care
(Ex. 8, Tr. 80). She received social security disability payments of $1,000 per month that
Applicant put toward their bills (Tr. 80, 83). He began receiving notices from creditors
concerning debts that he could not pay, including some debts that his spouse had
incurred before her injury without his knowledge (Tr. 61-62). He earned gross income of
$34,331 for 2002 and $33,257 for 2003 (Ex. 8). Applicant’s spouse eventually went to
live with her mother (“Her mother basically took her away.”) (Tr. 83-86),  and the1
probate court removed Applicant as conservator (Tr. 89). Their children remained with
him (Tr. 67). He had to do without her disability pay (Tr. 80), but continued to receive
$1,000 a month in annuity payments from an insurance settlement from a motorcycle
accident in 1985 (Ex. 10).
Facing foreclosure of his $91,200 mortgage on the home he bought for $147,000
in June 2002 (Exs. 4, 8), and with his wages subject to two garnishment orders issued
in January 2004 to collect debts of $10,352.57 and $1,129.35 (Ex. 7), Applicant filed an
individual petition for Chapter 7 bankruptcy on July 26, 2004, listing $203,138.17 in
liabilities ($120,501.80 in secured claims and $82,636.37 in unsecured debt). Applicant
listed as assets his residence and $18,025 in personal property ($1,000 in
miscellaneous household goods, $5,000 retirement pension, and two 1996 model-year
vehicles with market value totaling $12,025). He indicated his intent to retain his home
and one of the vehicles, on which he would continue to make regular payments. The
property was encumbered by liens filed against him for unpaid property taxes of $4,194,
and unpaid judgments of $8,485.46 and $920 from December 2003 (Ex. 8).  He did not2
list his $1,000 monthly annuity payments on his bankruptcy petition (Tr. 97).  On3
September 15, 2004, the trustee filed a no distribution report, and on October 25, 2004,
Applicant was granted a Chapter 7 discharge (Ex. 8).
On December 10, 2004, Applicant filed for Chapter 13 bankruptcy listing
$155,625 in assets (his home, $1,000 in miscellaneous household goods, and the value
of the vehicle he retained in the Chapter 7 bankruptcy), and $111,702.79 in liabilities
(secured claims that did not include the judgment liens avoided in the Chapter 7
bankruptcy). He listed no unsecured debt, but included the $1,000 monthly annuity
income on the advice of his attorney to show that he had the income to make payments
under a plan (Ex. 10, Tr. 64, 99). Current income and expense figures showed
discretionary funds of $1,468.15 per month with $0.00 to be paid into the plan each
Applicant maintains that he did not realize that the bankruptcy attorney expected him to hand over4
his monthly annuity on its receipt. He used the annuity funds to pay his monthly expenses (Tr. 155).
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week. On January 22, 2005, Applicant filed an amendment to the plan, indicating that
he would pay $530.86 monthly to the trustee for 60 months to repay a mortgage
arrearage of $21,866.83, $3,268.53 in local real estate taxes, $1,130 on his auto loan,
and $411.82 in delinquent water/sewer charges. (Ex. 10). After living through the winter
with a broken furnace in his residence (Tr. 94), and with the lender threatening
foreclosure, Applicant sold his house in about June 2005, and the mortgage was paid
off (Ex. 2, Ex. 5). He and his children moved into a small apartment (Tr. 94).
On April 5, 2005, the trustee for the Chapter 7 bankruptcy moved to reopen the
Chapter 7 case on being informed by the Chapter 13 trustee of the $1,000 monthly
annuity payments that Applicant had not disclosed (Ex. 8). On April 29, 2005, the
Chapter 13 case was dismissed (Ex. 10), and on May 4, 2005, the Chapter 7 case was
reopened. On May 17, 2005, Applicant filed an amended Schedule B including the
annuity worth $26,285, and seeking to exempt that annuity. On May 26, 2005, the
trustee moved to revoke Applicant’s Chapter 7 discharge for fraudulent concealment of
the annuity on his initial filing and for failure to report it during a meeting of the creditors.
On July 14, 2005, $1,782.26 in pre-confirmation payments from the Chapter 13 filing
were transferred to the Chapter 7 trustee, and Applicant’s monthly annuity began to be
paid directly to the trustee as well. On July 26, 2005, Applicant was ordered to turn over
$10,217.74 to the trustee (the amount of his annuity payments received after the filing of
the bankruptcy) for asset distribution as well as any future annuity payments. Applicant
did not comply and he was ordered to appear to show cause why he should not be held
in contempt (Ex. 8).4
On April 25, 2006, Applicant notified the government of the revocation of his
Chapter 7 discharge:
I did not disclose an annuity I had at this period in time and the bankruptcy
for Chapter seven was denied! The trustee in charge, [name omitted] in
response to this took claim of my annuity. At a specified time he wanted
my annuity payments each month which I did not acknowledge he wanted
immediately the monthly payments I was receiving. This amount totaled to
$10,000. He is now looking to some way of getting this money through the
court system. . . . (Ex. 7).
On May 28, 2006, Applicant offered to settle claims against him by waiving his
Chapter 7 discharge and assigning his federal income tax refund to the trustee. On
June 26, 2006, the court approved the settlement, and on July 5, 2006, his Chapter 7
discharge was revoked. On March 16, 2007, Applicant turned over his $4,708.05 tax
refund to the trustee. After a final receipt of $15,000 in annuity proceeds from the
insurer, the trustee submitted a report in December 2007 showing disbursement of
$60.10 and a balance of $49,713.48 ($49,490.31 in annuity proceeds) for distribution to
The five debts are the  $919 judgment debt in SOR ¶ 1.e, $2,497.14 to the same creditor owed the5
debt in ¶ 1.j, credit card debts of $7,491.68 and $2,626.93 (not alleged), and $30,499.83 ($30,126.37
proposed payment) to a creditor not identified in the SOR or in the available credit reports. The creditor  in
SOR ¶ 1.g filed a personal property claim for $988.59 that was disallowed by the trustee. It appears to have
been a charged off balance on the automobile loan for the vehicle  Applicant reaffirmed in the bankruptcy.
The collection agency  named in SOR ¶ 1.c filed a claim for $7,491.68 that it later withdrew because the
original creditor filed a claim for the same amount that was allowed. This debt was not shown to be a duplicate
debt of SOR ¶ 1.c (Ex. 8).
Only the court docket entry indicating the date of the final distribution report was available for review.6
The distribution report itself was not included in Exhibit 8.
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five of the seven of Applicant’s creditors that had filed claims under the plan.  One claim5
had been disallowed and the other had been withdrawn by the collection agency as a
duplicate of an allowed claim. On February 12, 2008, the trustee filed a final distribution
report.6
For a periodic reinvestigation into his security clearance, Applicant executed an
e-QIP on May 18, 2007. In response to question 27.a, “In the last 7 years, have you
filed a petition under any chapter of the bankruptcy code (to include Chapter 13)?,”
Applicant disclosed that he had filed for Chapter 7 bankruptcy in about October 2004,
but it was denied and his case was now closed. He did not list his Chapter 13
bankruptcy filing. He answered “Yes” to questions 27.b concerning any garnishment of
his wages in the last 7 years and 27.d concerning any unpaid judgments against him in
the last 7 years, and listed a $100 garnishment of his wages by a furniture company.
Applicant also responded “Yes” to the financial delinquency inquiries, 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)?”. He listed the debts in SOR ¶¶ 1.l
(but claimed his son was responsible), 1.m, 1.o, 1.p, and 1.q. 
A check of Applicant’s credit on March 22, 2007, revealed two unpaid medical
judgments of $919 (SOR ¶ 1.e) and $1,825 (SOR ¶ 1.f) from 2003, and outstanding
delinquent balances on six accounts (SOR ¶¶ 1.c, 1.d, 1.h, 1.g, 1.h, and 1.k). Additional
debt had either been transferred or was listed as included in his Chapter 7 bankruptcy,
which was reported as discharged in October 2004 (Ex. 3). A check of the three credit
bureaus on June 15, 2007, revealed additional past due balances (SOR ¶¶ 1.n, 1.p, and
1.q) placed for collection since November 2006 (Ex. 4).
On July 5, 2007, Applicant was interviewed by a government investigator about
the garnishments of his wages and his bankruptcy filings. Applicant indicated the
garnishments were lifted when he filed for Chapter 7 bankruptcy. Applicant related a
discharge was granted in October or November 2004, but when questioned further he
admitted that the Chapter 13 filing had been dismissed and his Chapter 7 case
reopened for failure to include his annuity payment in his income. Applicant indicated he
was unaware of what he owed or to whom he owed it. He was requested to return with
financial information. Ten days later, Applicant presented income information only and
was unable or unwilling to provide any detail as to his indebtedness (Ex. 2).
Several of the debts were included on his bankruptcy petition (SOR ¶¶ 1.c, 1.d, 1.e, 1.f, 1.h, and 1.i).7
Only one of the debts in the SOR (SOR ¶ 1.e) was to be paid by the trustee. 
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Applicant was reinterviewed on August 28, 2007. Concerning the $1,825 medical
judgment (SOR ¶ 1.f) for which he was reported to be solely liable, Applicant explained
that his spouse was responsible for her own medical bills since he no longer had power
of attorney. He did not intend to satisfy the debt. He claimed no knowledge of the other
medical judgment (SOR ¶ 1.e). He admitted he owed a dental debt of about $90 (SOR ¶
1.k), an unknown collection balance on the furniture debt listed on his e-QIP (not
alleged), about $1,100 on an automobile loan delinquent since 2002 (SOR ¶ 1.g), and
about $500 in delinquent debt for residential telephone services (SOR ¶ 1.h). He
thought an outstanding gas debt for his home (SOR ¶ 1.j) had been paid by the state’s
department of children and family services. He expressed a willingness but present
inability to repay his debts, as he was still struggling to regain his financial footing (Ex.
2).
A $100 medical debt from July 2007 was placed for collection the following
month (SOR ¶ 1.r). In October 2007, Applicant financed the purchase of a vehicle
through a loan of $9,898 to be repaid at $236 per month (Ex. 6). Applicant took out a
loan against his 401(k) of $2,000 for the down payment. He is repaying the loan at  $50
per week (Tr. 124, 131). In response to interrogatories from DOHA, Applicant obtained
his credit report on February 24, 2008, which listed the unpaid judgments in SOR ¶¶ 1.e
and 1.f, and the unpaid balances in SOR ¶¶ 1.g, 1.i, 1.k, 1.n, and 1.q (Ex. 2). Applicant
received an income tax refund of between $5,000 and $6,000 for 2007 that he used to
catch up on his bills and for household expenses (Tr. 139-40).
In early fall 2008, the engine burned up in the vehicle Applicant had purchased in
October 2007. He owes about $6,800 on the vehicle loan (Tr. 124-25). Although he still
had the 1996 model-year vehicle that he had reaffirmed in the Chapter 7 bankruptcy, it
needed tires (Tr. 124), so he took some proceeds from the sale of his mother’s home on
her death and bought a 1997-model year vehicle for $4,000 to $4,200 cash (Tr. 131-34).
As of early December 2008, Applicant had not shown any progress toward
resolving the debts in the SOR or other accounts that could potentially be pursued due
to the discharge being revoked (Ex. 5, 6), with the exception of the debt in SOR ¶ 1.e.7
Applicant is still not sure about what he owes (Tr. 102), although he recognized as likely
debts those alleged in SOR ¶¶ 1.e, 1.g, 1.h, 1.k, 1.l, 1.n, 1.o, 1.q, and 1.r (Tr. 101-15).
He expressed his belief that the debts in SOR ¶ 1.j, 1.m, and 1.p had been paid (Tr.
109-10, 113), although he submitted no proof of the debts’ satisfaction. He indicated he
would “be more than happy to try to get a hold of a debt solutions facility or something, if
need be, and to satisfy the government and what not, and try to start making payments
on whatever is owed.” (Tr. 103). He had not pursued debt consolidation because he
“was hoping to find out exactly where [he] stood with the investigation here, as far as
what was owed. . . .” (Tr. 137).
Applicant’s monthly income is $2,580 ($2,000 wages and $580 in social security
benefits for his younger son) (Tr. 116-18). He had received social security benefits for
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his two older children as well when they were younger, although the aggregate is about
what he now receives for his youngest child. His expenses are estimated at between
$2,600 and $2,700 per month, and include $100 in monthly cellular phone charges for
his sons who live with him (Tr. 119-26, 150). The younger son is a high school
sophomore (Tr. 73, 118). His older son is unemployed (Tr. 73-75), and is home most of
the day (Tr. 150). Applicant is hoping that his older son will find a job soon so that he
can contribute financially to the household (Tr. 139). This son’s last job was “a few
years back” at a gas station where he was paid “under the table.” He worked there
about one year. He had previously worked for six or seven months at a cemetery. When
he was employed, he gave his father $20 to $25 each week (Tr. 146-47). Applicant’s
daughter is a college student who moved into her own apartment in late November
2008 (Tr. 74-75). Applicant’s supervisor is of the opinion that Applicant can be trusted to
continue to handle classified material based on Applicant’s long record of appropriately
safeguarding classified material (Ex. A).
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.
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
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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 of the
adjudicative guidelines:
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.
As reflected in his bankruptcy petition filed in July 2004, in his credit reports, and
in his admissions to most of the debts in the SOR, Applicant has a long record of
financial delinquency that has yet to be resolved. Accounting for duplicate listing of
some claims, Applicant owed unsecured debt of about $70,500 as of July 2004, only
about $8,154 of which was listed in the SOR (SOR ¶¶ 1.c, 1.d, 1.f, 1.h, and 1.i). He also
owed secured debt: property taxes of $4,194, $1,550 on his vehicle (SOR ¶ 1.g), and
two judgment liens (including SOR ¶ 1.e) totaling $9,369. This delinquent debt accrued
despite his receipt of a $1,000 monthly annuity payment. Significant security concerns
are raised by “inability or unwillingness to satisfy debts” (AG ¶ 19(a)) and by “a history
of not meeting financial obligations” (AG ¶ 19(c)).
Moreover, AG ¶ 19(d), “deceptive or illegal financial practices such as
embezzlement, employee theft, check fraud, income tax evasion, expense account
fraud, filing deceptive loan statements, and other financial breaches of trust,” also
applies because of his failure to disclose the annuity income on his Chapter 7
bankruptcy petition. Applicant maintains he acted in good-faith and on the advice of
counsel:
And, for some reason, I had it in my thoughts and, because I received that
and had, every year, every month I was paid a sum of money and I never
had to pay any kind of taxes to the IRS for it, so I figured being a
supplement of income where it pertained to my financial, not financial, my
physical problems that occurred through this accident, that I didn’t have to
disclose it.  In the course of the Chapter 7, I had mentioned that to this first
attorney [name omitted]. He said, well, he says I don’t feel you have to
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disclose it, and I went on to the investigation with [name of bankruptcy
trustee omitted] (Tr. 63).
The bankruptcy court reopened Applicant’s Chapter 7 bankruptcy and dismissed the
Chapter 13 on concerns of the trustee that Applicant had fraudulently concealed the
annuity payments. Had Applicant acted in good faith, it stands to reason that he would
have disclosed the annuity during the meeting of creditors or at some other time to the
trustee before the discharge and he did not. Instead, during the meeting of creditors on
August 18, 2004, he apparently asserted as to his assets and income that his schedules
were true and accurate in all respects. The Chapter 7 trustee came to learn of the asset
only from the Chapter 13 trustee. Applicant could have filed an amendment to his
Chapter 7 petition but instead waited until his unsecured creditors were legally barred
from pursuing collection and then filed for Chapter 13 bankruptcy. Applicant presented
no corroboration for his claim that he had been advised by legal counsel to not list the
annuity on his Chapter 7 petition. Applicant’s need for the annuity to cover part of his
household expenses does not extenuate or justify his failure to timely disclose this
known asset to the bankruptcy court.
 
Concerning potential mitigation, AG ¶ 20(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,” does not apply. A review of Applicant’s Schedule F of his Chapter 7 petition
shows that he owed more than $50,000 in credit card debt. Even though several of the
accounts were opened before his spouse’s injury, they were in his name and it is
difficult to believe that Applicant would have been unaware of at least some of the debt,
or of the purchases made on credit. Such over-reliance on credit shows an inability to
live within one’s means (see AG ¶ 19(e), “consistent spending beyond one’s means,
which may be indicated by excessive indebtedness, significant cash flow, high debt-to-
income ratio, and/or other financial analysis”). Moreover, he has continued to incur new
debt. In addition to the $4,171 in recent delinquent debt in SOR ¶¶ 1.m-1.r, he owes
$6,800 on a car note that he took out in 2007, and is repaying a $2,000 loan from his
401(k) that he took out for the down payment. While there is no indication that he is
delinquent in repaying either the car note or the 401(k) loan, the $400 in additional
monthly obligations further stresses an already tenuous financial situation.
In fairness to Applicant, his spouse suffered a serious head injury in a 1999 fall
that left her unable to work. With no information available about her previous earnings, it
is unclear to what extent his spouse’s monthly disability benefit compensated for the
loss of employment income. Her accident and their subsequent marital separation are
unforeseen circumstances that implicate AG ¶ 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.” Some early neglect of
his financial obligations is understandable given the demands of caring for his spouse,
but I am unable to fully apply AG ¶ 20(b) in this case because of his serious financial
irresponsibility reflected in his abuse of the bankruptcy process, his inattention to his
past due obligations over the years, and his incurring of recent financial delinquency.
10
Applicant expresses an intent to resolve his indebtedness if given a chance to
make payments through debt consolidation, but he has not been proactive in
addressing his debts. Applicant was placed on notice as of his initial interview with a
government investigator in early July 2005 that his finances were of concern to the
Department of Defense. Despite having filed Chapter 7 and Chapter 13 bankruptcy
petitions, he claimed to not know what he owed or to whom. Asked to provide debt
information, Applicant returned 10 days later again claiming not to know what he owed.
Ordered by the bankruptcy court in July 2005 to turn over annuity payments he had
received since filing for liquidation of his debt, Applicant had used the funds for
household expenses, and he eventually agreed to waive his Chapter 7 discharge and
turn over his income tax refund. Apparently, he made little effort at that point to educate
himself about the debts he would be legally obligated to repay. From net receipts
totaling $49,773.58 (the annuity and income tax refund), the Chapter 7 trustee proposed
to make payments to five creditors, including the creditor in SOR ¶ 1.e. Applicant could
reasonably expect the trustee to make the promised disbursements. However, several
other creditors have legal claims against him that remain unpaid, including a cable
television company debt for $455 (SOR ¶ 1.n) and an insurance company debt for $710
(SOR ¶ 1.q).
Applicant obtained a credit report in response to DOHA interrogatories in
February 2008. Confronted with adverse credit information that  several accounts in
addition to SOR ¶ 1.e were being reported as past due (SOR ¶¶ 1.f, 1.g, 1.h, 1.k, 1.i,
1.n, and 1.q), he made no effort to contact those creditors. On receipt of the SOR, he
indicated he was looking at debt consolidation to catch up on his expenses. As of the
date of his hearing, he had not pursued any debt consolidation or made any repayment
arrangements to resolve even those debts of $100 or less, including a medical debt that
was placed for collection as recently as August 2007 (SOR ¶ 1.r). While he had
unexpected vehicle expenses of late, he also testified that he received an income tax
refund of between $5,000 and $6,000 for 2007 that he used to catch up on his bills.
Applicant denied the debt in SOR ¶ 1.m ($1,400 utility services debt listed on his
e-QIP) on the basis that it had been paid with the assistance of the department of
children and family services (Tr. 111). He also expressed his belief that the debts in
SOR ¶¶ 1.j and 1.p had been paid (Tr. 109-110), but did not document the claimed
satisfaction. When he was interviewed in August 2007, he expressed his belief that the
gas services debt in SOR ¶ 1.j had been paid with public assistance (Ex. 2). The debt in
SOR ¶ 1.j was still listed as past due on his January 2008 (Ex. 5) and June 2008 (Ex.  6
credit reports. The debt in SOR ¶ 1.p appeared on his January 2008 credit report as an
active collection debt but not on his later credit report. Assuming Applicant had satisfied
the debts in SOR ¶¶ 1.m and 1.p, these efforts to repay his debts would more
appropriately fall within AG ¶ 20(d), “the individual initiated a good-faith effort to repay
overdue creditors or otherwise resolve debts,” rather than AG ¶ 20(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.” Notwithstanding the revocation of
his Chapter 7 discharge, about $43,661.12 in general unsecured claims were going to
be paid by the trustee. Yet, given his abuse of the bankruptcy process and his ongoing
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financial problems (his monthly expenses exceed his income), neither  ¶ 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,” or AG ¶ 20(d) fully
mitigate the financial concerns in this case.
Guideline E, Personal Conduct
The security concern for personal conduct is set out in Guideline E, ¶ 15 of the
adjudicative guidelines:
Conduct involving questionable judgment, lack of candor, dishonesty, or
unwillingness to comply with rules and regulations can raise questions
about an individual’s reliability, trustworthiness and ability to protect
classified information. Of special interest is any failure to provide truthful
and candid answers during the security clearance process or any other
failure to cooperate with the security clearance process.
In response to question 27.a on his e-QIP, “In the last 7 years, have you filed a
petition under any chapter of the bankruptcy code (to include Chapter 13)?,” Applicant
indicated he had filed for bankruptcy under Chapter 7 in about October 2004 but it was
not granted. He added that there was nothing pending and the case was now closed.
The government contends that Applicant deliberately did not disclose his Chapter 13
filing, or that his Chapter 7 case had been reopened and was still pending as of his May
18, 2007, e-QIP. Applicant explained he did not report the Chapter 13 filing because “it
never got off first base. It never went into effect.” As for his assertion that his Chapter 7
bankruptcy was closed, Applicant testified that once he had turned over his annuity and
income tax refund to the trustee, he “figured everything was over and done with” (Tr.
101).
Even if mistaken, a belief or assumption held in good faith could negate the willful
intent required for a finding of deliberate concealment, omission, or falsification.
Available bankruptcy records (Ex. 10) show Applicant filed a voluntary petition under
Chapter 13 on December 10, 2004. After a meeting of the creditors, Applicant filed an
amended plan on January 24, 2005. By order of the court, the case was dismissed prior
to confirmation. Although Applicant made $1,857.26 in pre-confirmation payments to the
Chapter 13 trustee, I am not convinced that he understood he had to report the Chapter
13 as a separate filing on his e-QIP. As for allegedly misrepresenting that the Chapter 7
case was closed, the bankruptcy court did not close the Chapter 7 case until July 17,
2008, more than a year after Applicant completed his e-QIP. The trustee filed his final
distribution report on February 12, 2008. However, the trustee began receiving
Applicant’s monthly annuity payment in July 2005, and Applicant had turned over his
income tax refund to the trustee on or about March 16, 2007. His explanation for
considering the case as closed is accepted under the circumstances. AG ¶ 17 (f), “the
information was unsubstantiated or from a source of questionable reliability,” applies to
mitigate any potential security concerns raised by his failure to report his Chapter 13
filing (see AG ¶ 16(a), “deliberate omission, concealment, or falsification of relevant
facts from any personnel security questionnaire, personal history statement, or similar
form used to conduct investigations, determine employment qualifications, award
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benefits or status, determine security clearance eligibility or trustworthiness, or award
fiduciary responsibilities”).
Applicant’s omission of his annuity from his bankruptcy petition is conduct that
could have been alleged under personal conduct (see AG 16(a)). Similarly, his failure to
disclose his annuity when asked about his assets during the meeting of creditors could
fall within the concerns underlying AG ¶ 16(b), “deliberately providing false or
misleading information concerning relevant facts to an employer, investigator, security
official, competent medical authority, or other official government representative.” Since
his failure to disclose the annuity to the bankruptcy court before his Chapter 13 filing in
December 2004 was not alleged under personal conduct, it cannot provide an
independent basis for disqualification under Guideline E. However, it certainly is
relevant in assessing the risk presented by his financial situation (see Guideline F,
supra), and his overall judgment, reliability, and trustworthiness under the whole-person
concept. 
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 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
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 commonsense judgment based upon careful consideration
of the guidelines and the whole-person concept.
Applicant’s finances were negatively affected by the loss of his spouse’s income
and then her social security disability benefit. In July 2004, he sought relief from more
than $80,000 in unsecured debt through a Chapter 7 bankruptcy filing. Needing the
proceeds of an annuity to cover living expenses and wanting to relieve himself of his
legal responsibility to pay debt more than double his annual wage income, he elected to
not disclose it on his petition. He paid a high price for his poor judgment in that he lost
his annuity and the benefit of a financial fresh start.
Applicant deserves significant credit for raising three children on his own, with no
financial help from his former spouse. After he was forced to sell his home in 2005, he
and his children moved into a small apartment, thereby reducing his monthly housing
costs. At the same time, it is also evident that he continues to indulge his children (e.g.,
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$100 in monthly cellular phone costs for his sons). He has repeatedly expressed
ignorance about what he owes and to whom.
The DOHA 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.’
ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008) (internal citations omitted).
To date, he has yet to establish a plan to resolve his financial problems. His tendency to
ignore debts, presumably hoping that they will just go away, is inconsistent with the
good judgment that is required of those with access to classified information.
Applicant has stable employment, having worked for his employer since 1972
and having held a security clearance for most of that time. Under the whole-person
concept, it must be acknowledged that Applicant has no record of violating his
employer’s trust. Yet, this is not enough to mitigate the serious mismanagement of his
personal finances. In response to financial pressures, he has done what he felt he had
to do to continue to provide for his family. By choosing to wait to disclose his annuity
until it was most advantageous to him, Applicant raised considerable doubts about
whether he can be counted on to fulfill his fiduciary obligations irrespective of the
personal cost. Based on the facts before me, I am unable to conclude that it is clearly
consistent with the national interest to continue Applicant’s security clearance.
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
Subparagraph 1.a: Against Applicant
Subparagraph 1.b: Against Applicant
Subparagraph 1.c: Against Applicant
Subparagraph 1.d: Against Applicant
Subparagraph 1.e: For Applicant
Subparagraph 1.f: Against Applicant
Subparagraph 1.g: Against Applicant 
Subparagraph 1.h: Against Applicant
Subparagraph 1.i: Against Applicant
Subparagraph 1.j: Against Applicant
Subparagraph 1.k: Against Applicant 
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Subparagraph 1.l: Against Applicant
Subparagraph 1.m: Against Applicant
Subparagraph 1.n: Against Applicant
Subparagraph 1.o: Against Applicant
Subparagraph 1.p: Against Applicant
Subparagraph 1.q: Against Applicant
Subparagraph 1.r: Against Applicant
Paragraph 2, Guideline E: FOR APPLICANT
Subparagraph 2.a: For Applicant
Conclusion
In light of the record in this case, it is not clearly consistent with the national
interest to grant Applicant eligibility for a security clearance. Eligibility for access to
classified information is denied.
ELIZABETH M. MATCHINSKI
Administrative Judge