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                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
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------------------------ )       ISCR Case No. 08-08499
SSN: ---------------- )
)
Applicant for Security Clearance )
Appearances
For Government: Fahyrn Hoffman, Esquire, Department Counsel
For Applicant: Pro Se
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Decision
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LYNCH, Noreen A., Administrative Judge:
Applicant submitted his Security Clearance Application (SF 86), on May 9, 2008.
On January 28, 2009, the Defense Office of Hearings and Appeals (DOHA) issued a
Statement of Reasons (SOR) detailing the security concerns under Guideline F for
Applicant. The action was taken under Executive Order 10865, Safeguarding Classified
Information within Industry (February 20, 1960), as amended; Department of Defense
Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program
(January 2, 1992), as amended (Directive); and the revised adjudicative guidelines (AG)
promulgated by the President on December 29, 2005, and effective within the
Department of Defense for SORs issued after September 1, 2006. 
Applicant acknowledged receipt of the SOR and he requested a hearing before
an Administrative Judge. I received the case assignment on March 12, 2009. DOHA
issued a notice of hearing on March 18, 2009, and I convened the hearing as scheduled
on April 28, 2009. The Government offered Exhibits (GE) 1-5, which were received
without objection. Applicant testified in his own behalf. He submitted Exhibits (AE) A-C
which were admitted into the record without objection. I held the record open until May
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12, 2009 for any additional documents that Applicant wished to submit. Applicant
submitted a packet of documents that was marked as AE D and received into the record
without objection. DOHA received the transcript of the hearing (Tr.) on May 6, 2009.
Based upon a review of the case file, pleadings, exhibits, and testimony, eligibility for
access to classified information is denied.
Findings of Fact
In his Answer to the SOR, dated February 23, 2009, Applicant admitted the
factual allegations in ¶¶ 1.a through 1.c of the SOR. He denied allegations ¶¶ 1.d and
1.e. because he thought they were related to the judgments. He provided additional
information to support his request for eligibility for a security clearance. 
Applicant is a 31-year-old employee of a defense contractor. After he graduated
from high school, he attended college from 1995 until 2001. He worked full time and
completed his undergraduate courses and received a Bachelor of Arts degree in 2005.
He has worked for his current employer since February 2006 (GE 1). He is single and
has no children (Tr. 20). He holds a security clearance (public trust for DoD) (Tr. 22).
Applicant was approached by a family friend in 2006 to engage in a business
venture. He learned of three properties that were available for sale in another state (Tr.
24). Applicant agreed to buy the properties and take out a mortgage for each of the
properties. The total was approximately $200,000 (GE 3).
Applicant was ambitious and wanted to “get ahead”. The market was good and
he admits being overzealous about becoming an investor (Tr. 31). He agreed to this
business deal but admitted that he had not researched the properties and had no
knowledge in this area (Tr. 11). He did not schedule a trip to view the properties. He
saw pictures of them. His friend was to rehabilitate the properties and find renters for
them. This did not occur. Sometime in 2007, Applicant tried to end the partnership.
Applicant learned that payments were not made on the mortgages (Tr. 33). He
contacted the banks holding the mortgages (AE A). He was advised by the bank to try a
“short sell” the properties. He could not reach his friend by telephone. Applicant did not
have the money to pay the mortgages as he had been counting on rental income to pay
for the mortgages (Tr. 29). The properties were foreclosed and the banks obtained
default judgments in each case.
The SOR alleged five delinquent debts, including three judgments and two past
due mortgages. The total amount of delinquent debt is approximately $200,000 (GE 3).
Applicant admitted that the default judgments were for the three properties. He has not
paid on any of the judgments. At the hearing, he admitted he had no information to
dispute the allegations concerning the late mortgages to the other two banks (GE 4, 5).
However, he knows he purchased three properties and signed three mortgages.
Applicant submitted documentation after the hearing regarding the three properties and
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the judgments. In each case, the judgment was partially satisfied due to a sale of the
property. This reduces the amount that Appellant owes on each of them (AE D). 
Applicant discussed the situation with a bankruptcy attorney last summer but he
does not want to file for bankruptcy. He wants to pay his debts (Tr. 39). In 2007, he
wrote a letter to one of the mortgage companies and tried to have a realtor sell the
property (AE A). Applicant hired another attorney who is a friend of his to research any
options that Applicant may have in this matter because Applicant wants to protect his
primary residence. Applicant’s lawyer has no information on the properties as yet.
Applicant’s current net monthly income is $4,736 (GE 2). After expenses and
payments to current credit card accounts, he has a negative net remainder. He has a
budget and a savings plan. He is current on all his expenses (Tr.). He owns a condo
and is current on his mortgage. He admits to living pay check to paycheck (Tr. 80).
Applicant acknowledged that he took several vacations in the past few years with
bonus money from his employment. He also purchased a car in 2008. He was leasing a
vehicle prior to that time.
Applicant emphasized that prior to this business venture, his credit was good.
Each position that he obtained earned him a greater salary. He was able to finance his
condominium in 2005 with no problems. He currently has about $26,000 equity in his
condominium.  
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,
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
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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).  
Analysis
Guideline F, Financial Considerations
The security concern relating to the guideline for Financial Considerations is set
out in AG & 18:      
Failure or inability to live within one=s means, satisfy debts, and meet
financial obligations may indicate poor self-control, lack of judgment, or
unwillingness to abide by rules and regulations, all of which can raise
questions about an individual=s reliability, trustworthiness and ability to
protect classified information. An individual who is financially overextended
is at risk of having to engage in illegal acts to generate funds. 
The guideline notes several conditions that could raise security concerns. Under
AG & 19(a), an Ainability or unwillingness to satisfy debts@ is potentially disqualifying.
Similarly under AG & 19(c), Aa history of not meeting financial obligations@ may raise
security concerns. Applicant has three judgments that are unpaid totaling less than
$200,000. He admits that could not meet his financial obligations from 2006 until the
present. His credit reports confirm that he has the judgments and the past due
mortgages. The evidence is sufficient to raise these potentially disqualifying conditions.
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The guideline also includes examples of conditions that could mitigate security
concerns arising from financial difficulties. Under AG ¶ 20(a), the disqualifying condition
may be mitigated where Athe behavior happened so long ago, was so infrequent, or
occurred under such circumstances that it is unlikely to recur and does not cast doubt
on the individual=s current reliability, trustworthiness, or good judgment.@ Applicant
engaged in a business venture in 2006. He wanted to use investment to have a second
income. The venture failed recently and his judgments are outstanding in an amount
less than $200,000. This potentially mitigating condition does not apply. 
Under AG & 20(b), it may be mitigating where Athe conditions that resulted in the
financial problem were largely beyond the person=s control (e.g., loss of employment, a
business downturn, unexpected medical emergency, or a death, divorce or separation),
and the individual acted responsibly under the circumstances.@ Applicant freely entered
into the business venture without researching the properties. He acknowledged that he
had no knowledge of the business. I find this mitigating condition does not apply. 
Evidence that Athe person has received or is receiving counseling for the problem
and/or there are clear indications that the problem is being resolved or is under control@
is potentially mitigating under AG & 20(c). Similarly, AG & 20(d) applies where the
evidence shows Athe individual initiated a good-faith effort to repay overdue creditors or
otherwise resolve debts.@ Applicant has not received formal financial counseling. He has
not paid any of the judgments or late mortgages. He presented no evidence of financial
reform or resolution of debts. I conclude these mitigating conditions do 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 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.       
Applicant is an intelligent, young professional. He has been steadily employed
since 2001 and has earned a higher income each year. He is single with no children. He
purchased his own condominium in 2005. He had good credit. In 2006, he decided to
engage in a business venture with a family friend. He did no research on any of the
properties involved. He trusted his friend but he signed the three mortgages for the
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properties. The mortgages were not paid and default judgments were entered. He
decided not to file for bankruptcy but he has no immediate plan in place to pay the
judgments that total less than $200,000. He is consulting another attorney and promises
to pay his debts. 
I considered the potentially disqualifying and mitigating conditions in light of all
the facts and circumstances surrounding this case and conclude Applicant has not met
his burden in this case. 
Overall, the record evidence leaves me with questions and doubts as to
Applicant’s eligibility and suitability for a security clearance. For all these reasons, I
conclude Applicant has not mitigated the security concerns arising from his financial
considerations. 
Formal Findings
Formal findings for or against Applicant on the allegations set forth in the SOR,
as required by section E3.1.25 of Enclosure 3 of the Directive, are:
Paragraph 1, Guideline F: AGAINST APPLICANT
Subparagraph 1.a: Against Applicant
Subparagraph 1.b: Against Applicant
Subparagraph 1.c: Against Applicant
Subparagraph 1.d: For Applicant
Subparagraph 1.e: For Applicant
Conclusion
In light of all of the circumstances presented by the record in this case, it is not
clearly consistent with national security to grant Applicant eligibility for a security
clearance. Eligibility for access to classified information is denied.
                                              
NOREEN A. LYNCH
Administrative Judge