DEPARTMENT OF DEFENSE 
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 08-04378 
  ) 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: John B. Glendon, Esq., Department Counsel 
For Applicant: Paul Bennett, Esq. 
 
 
______________ 
 
Decision 
______________ 
 
 
RICCIARDELLO, Carol G., Administrative Judge: 
 
Applicant failed to mitigate the government’s security concerns under Guideline 
F, Financial Considerations. Applicant’s eligibility for a security clearance is denied. 
 
On November 28, 2008, the Defense Office of Hearings and Appeals (DOHA) 
issued to Applicant a Statement of Reasons (SOR) detailing the security concerns 
under Guidelines F. 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 answered the SOR in writing on January 12, 2009 and did not want a 
hearing. The Government requested a hearing before an administrative judge. The case 
was assigned to me on March 9, 2009. DOHA issued a Notice of Hearing on March 19, 
2009, and after coordinating the date with both sides I convened the hearing as 
scheduled on April 28, 2009. The Government offered Exhibits (GE) 1 through 8. 
 
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Applicant did not object and they were admitted. Applicant testified and offered Exhibits 
(AE) A through H. Department Counsel did not object and they were admitted. I left the 
record open until May 11, 2009, to allow Applicant time to submit additional exhibits, 
which he did. Applicant provided by mail exhibits marked as AE I through M.1 He 
provided by fax exhibits marked as N through T. It is noted there are some duplicates of 
the same exhibits, but to ensure all exhibits were considered I included them all. 
Department Counsel responded and had no objection to the additional exhibits and they 
were admitted. Department Counsel’s response was marked as Hearing Exhibit I. 
DOHA received the transcript of the hearing (Tr.) on May 5, 2009.  
  
Findings of Fact 
 
 Applicant’s admitted the allegation in SOR 1.a and denied all of the remaining 
allegations. He also responded to the Letter of SOR allegations as follows:  
 
To continue: I reported you to [employer] lawyers and internal security that 
I felt you were trying to blackmail me with my job over this credit report. I 
now have you on record with our lawyers and security to your action of 
digging into my credit report and trying to use it against me. As you can 
see I can not be blackmailed.  
 
I have enclosed a bank statement and you can see I keep plenty of money 
in my checking account that could pay off the credit report claims if it was 
not for the fact I am contesting some of the claims like the Bank of 
American that tried to charge me for an account that was closed.  
 
Applicant provided a copy of his bank statement that showed his checking account had 
an available balance of $21,632 in December 2008.2 
 
In addition, after a thorough and careful review of the pleadings, exhibits, and 
testimony, I make the following findings of fact. 
 
 Applicant is 59 years old. He attended college for two years and received an 
associate’s degree in aeronautical engineering. He has worked for his present employer 
since June 2006, as a manufacturing process engineer. From March 2004 to June 
2006, he was the President of a company. From October 2003 to March 2004 he 
worked as an engineer for another employer. Applicant’s security clearance application 
(SCA) reflects that he has worked continuously from 1995 to the present except for a 
period from April 2001 to November 2001, when the company he worked for went out of 
business. Applicant has been married three times. He has been married to his current 
1 When marking the exhibits the letter “K” was inadvertently omitted. There is no exhibit “K.” 
 
2 Answer to SOR. 
 
 
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wife since 2000. He has four grown children. He was in the Army from 1969 to 1971 and 
in the National Guard from 1971 to 1985. He was honorably discharged.3  
 
 Applicant testified that from 1999 to 2000 he worked for a company in State A 
that eventually went bankrupt. He then moved to State B and did consulting work and 
other jobs. Applicant testified that he had periods of unemployment while living in State 
B. He testified he was unable to find work while in State B. He stated that during a four-
year-period he was unemployed or underemployed for two years and when he was 
working for some companies he would not receive compensation.4  
 
 Applicant stated that he lived in State B from 2001 to 2006 and while there he 
lived in hotels and later got an efficiency apartment and then stayed in a condominium.5 
Applicant’s SCA reflects that from February 2005 to June 2006 he lived in State B and 
from November 1999 to March 2005 he lived State A. The SCA question specifically 
states: “Provide a detailed entry for each place you have lived in the last 7 years. All 
periods must be accounted for in your list. Do not list a permanent address when you 
were actually living at a school address. etc.” In addition, it stated: “Be sure to indicate 
the actual physical location of your residence…. Be sure to specify your location, as 
closely as possible.”6 Regarding the discrepancy Applicant’s stated the following: “Well, 
my residence is my house, and you know, I was not a resident of Florida at the time. I 
was a resident of Virginia. I was living down there, but it was only on a temporary basis. 
I didn’t consider myself a resident in Florida.”7 I did not find Applicant credible.  
 
 There are five delinquent debts, including one judgment alleged in the SOR, 
totaling $11,857. Applicant admitted the unpaid judgment in SOR ¶ 1.a in his answer. 
He was interviewed by an investigator from the Office of Personnel Management (OPM) 
on February 14, 2008. At the time he stated he had no knowledge of the creditor, 
however he suspected the debt had something to do with a dispute he had with a 
dentist dating back to 1999 or 2000. He had dental work done and he testified that the 
estimated cost of the work was $3,600. He testified: “I don’t even think I received a copy 
of the bill for $11,000 if I can remember.”8 He later received a bill for about $11,000. He 
admitted he refused to pay the bill. He stated he was not aware of any attempts made 
by the creditor to collect payments. In his statement he stated he paid the bill for several 
months and did not recall how many payments he made or the amounts, or the total he 
3 Tr. 21 26, 41-46. 
 
4 Tr.71-74. 
 
5 Tr. 24. 
 
6 I have not considered the discrepancies between Applicant’s SCA and his testimony for 
disqualifying purposes, but have considered it when analyzing the whole person and his credibility. 
 
7 Tr. 47-48, 71-77. 
 
8 Tr. 50. 
 
 
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paid or if there was a remaining balance. He stated he never received notification from 
any court or collection agency. He made no attempts to contact the dentist and pay the 
additional funds. At the time of his interview he said he would satisfy the judgment if it 
was proved that he was responsible. Applicant’s testimony contradicted statements he 
made to the OPM investigator.9  
 
 Applicant acknowledged that at the time he saw the dentist he did not have 
dental insurance. He later moved and said he had no money. There is no evidence that 
he provided a forwarding address to the dentist. On June 3, 2008, he sent the creditor a 
letter disputing that he owed the amount alleged. His letter stated it was the first time he 
had heard from the creditor about the alleged debt. He further inquired “Please explain 
the nature of the alleged debt, that is, what the money I allegedly owe is for.”10 On April 
15, 2009, Appellant received a letter from the creditor, noting the current balance due as 
$20,402.47. The letter referred to a conversation between Applicant and the creditor 
and an offer to settle the debt for $5,000. Applicant had not made any payments to the 
creditor by the date of his hearing. Applicant is purchasing a house and did not want to 
use his savings to make the payment to the creditor until he closes on the house to 
ensure he has enough money. He stated at his hearing he considered a partial 
payment, but the creditor wanted the full amount. Applicant has been aware of this debt 
for a considerable period of time.11 The record remained open to afford him additional 
time to provide documentation regarding the debt. Applicant stated that regardless of 
whether he closes on his house he would pay the $5,000.12 Applicant provided proof 
that he made a payment of $1,000 to the creditor on May 6, 2009, with a promise to 
satisfy the additional $4,000 by June 15, 2009. The creditor acknowledged the payment 
and next payment date.13 
  
 The delinquent debt in SOR 1.b ($88) Applicant stated is for a charge on a 
savings account that was closed. He stated:  
 
I went to the bank Saturday, and they couldn’t even find it at first. Actually 
they can’t find it at all. And I’ve got--she gave me phone number, and 
we’re still researching it. I’ve got to call this phone number and research it 
some more to find out why there’s an $88 fee there. And they wouldn’t 
accept a check Saturday when I went there to give them a check for it, 
even though I’m sure I don’t owe it.14 
9 Tr.35-37, 48-54. 
 
10 AE H. 
 
11 Tr. 55-60. 
 
12 Tr. 86. 
 
13 Tr. 35-37, 48-60; AE N. 
 
14 Tr. 37-38. 
 
 
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He stated that he talked to the creditor about the charge sometime in 2004 or 2005. The 
charge was incurred because his account went below a certain dollar amount. He stated 
he went to the bank to resolve the account, but they would not accept payment. He did 
not provide an account number. The account was in collection. Applicant was aware of 
the debt at least since the date of his interview on February 14, 2008. Applicant paid the 
account on May 1, 2009.15 
 
 The debt in SOR 1.c ($89) is to the gas company. Appellant had a residence in 
State A that he vacated in 2000-2001, however his daughter remained in the house. 
The house was sold in 2006. He paid this debt on July 28, 2008.16   
 
 The debt in SOR 1.d ($1,981) is for a loan that Applicant believed was from 
sometime around 1996 to 1998. During his interview with OPM he stated he had no 
knowledge of the debt. He contacted the creditor requesting information. Applicant did 
not include an account number on his inquiry and did not sign the letter.17 He admitted 
he did not pay the debt. It was reported on his credit report as of October 23, 2008.18 
Applicant stated the debt has now dropped off his credit report. On April 29, 2009, 
Applicant’s attorney sent a letter to the creditor with an account number expressing 
interest in resolving the debt.19 
 
 Applicant stated that the debt in SOR 1.e ($298) was for his last telephone bill 
from his house in State A. He testified he moved in 2000-2001. He paid the debt in 
December 2008.20 
 
 Applicant moved to State C in September 2007. He stated he is current on all of 
his bills. He has approximately $13,000 in savings that he wants to use for the closing 
costs on a house he is purchasing. He is not sure when he will close on his house. He 
believes he will owe approximately $4,000 on his 2008 tax return. He earns 
approximately $120,000 a year. I have considered the character letters provided by 
Applicant.21  
 
 At times I found Applicant’s testimony and explanations to be evasive, somewhat 
convoluted and not credible.  
 
15 Tr. 37-38, 60-64; GE 4, AE M. 
 
16 Tr. 64-65; AE D and E. 
 
17 Tr. 38-39-AE H. The letter is dated June 3, 2008 and is unsigned. 
 
18 GE 5. 
 
19 Tr. 39, 65-70; AE L. 
 
20 Tr. 40; AE C. 
 
21 Tr. 82-83; AE A and B. 
 
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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 
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).  
 
 
7 
 
 
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. I have 
considered all of them under AG & 19 and especially considered the following: 
 
(a) inability or unwillingness to satisfy debts; and 
 
(c) a history of not meeting financial obligations 
 
Applicant has delinquent debts that have remained unpaid for years, despite 
having the income and assets to resolve the debts since at least 2006. I find both 
disqualifying conditions have been raised.  
 
The guideline also includes examples of conditions that could mitigate security 
concerns arising from financial difficulties. I have considered all of the mitigating 
conditions under AG ¶ 20 and especially considered the following: 
 
(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 individual 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  
 
8 
 
 
(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.  
 
 Applicant’s behavior is recent because he still has delinquent debts that remain 
unpaid, despite his ability to pay them. He has been aware of his debts and only 
recently resolved some of the small ones. His conduct casts doubt on his reliability, 
trustworthiness and good judgment. I find (a) does not apply. For mitigating condition (b) 
to be fully applicable Applicant must have acted responsibly under the circumstances. 
For a period of time Applicant did not have sufficient means to satisfy his debts due to 
his employment situation. However, Applicant has been working for his present 
employer since June 2006 and has provided overwhelming proof that he has the money 
to pay all of his delinquent debts, but he has not. He did not address the smaller debts 
in the SOR until his security clearance became an issue. Regarding the largest debt in 
SOR ¶ 1.a, a judgment, he admitted in his answer that he owed this debt and admitted 
he had the money to pay it, yet to date it is still not completely paid. Regarding the large 
debt in SOR ¶ 1.d he sent the creditor a letter, but failed to put the account number on 
the correspondence. After his hearing he sent another letter, this time with the account 
number and offering to settle the debt. I find under the circumstances Applicant did not 
act responsibly toward his debts and has lagged in addressing them. I also find he has 
not acted in good-faith to resolve his delinquent debts. Applicant has had the money to 
pay his delinquent debts, but appears to have made other choices rather than paying 
those he has owed money to for a long time. He had an opportunity to resolve his 
financial issues and has not done so. I find mitigating condition (b) only partially applies. 
There is no evidence Applicant has received counseling. Frankly, I am concerned as to 
why Applicant has dragged his feet in paying all of his debts. He waited for months to 
resolve his small debts. He waited until days before his hearing to contact the bank 
about the debt in SOR ¶ 1.d. He knew his largest debt was a concern; admitted owing it; 
has the means to pay the lower settlement amount, yet has not completely resolved it. 
Instead he has made a promise to pay it at a later date. I find mitigating conditions (c) 
and (d) do not apply. It appears by Applicant actions he acknowledges the debts in the 
SOR and does not dispute them. I find mitigating condition (e) does not apply. 
 
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 time of the conduct; (5) the extent to 
which participation is voluntary; (6) the presence or absence of 
 
9 
 
 
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. Applicant is a mature person who 
experienced a period of unemployment that impacted his finances. He did not provide 
an accurate accounting of where he was living for a period of five years on his SCA. He 
is an intelligent person and I do not find his explanation for this discrepancy to be 
credible. Although these matters are not considered for disqualifying purposes, I have 
considered them along with his testimony, demeanor and candor when analyzing the 
whole person. Applicant has been employed for almost three year with his present 
employer. He is earning a substantial salary. He has sufficient means to satisfy all of his 
debts. He paid the smaller ones months after his OPM interview. He did not make a 
payment on his largest debt until after his hearing and then only a partial payment and a 
promise to pay the remainder in the future. This debt is years old. I held the record open 
to allow Applicant additional time to address his delinquent debts. I will not speculate as 
to why he continues to delay paying the two largest debts. Clearly Applicant is making 
conscious decisions about his delinquent debts. Under the circumstances I find he has 
not acted responsibly toward his financial obligations and it is too early to conclude that 
he will satisfy his remaining delinquent debts. I find Applicant has not met his burden of 
persuasion. Overall, the record evidence leaves me with serious questions and doubts 
as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, 
I conclude Applicant failed to mitigate the security concerns arising from 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:    AGAINST APPLICANT 
 
  Subparagraph 1.a:    Against Applicant 
  Subparagraph 1.b:    For Applicant 
  Subparagraph 1.c:    For Applicant 
  Subparagraph 1.d:    Against Applicant 
  Subparagraph 1.e:    For 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 
security clearance. Eligibility for access to classified information is denied. 
 
 
                                                     
_____________________________ 
Carol G. Ricciardello 
Administrative Judge