DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
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------------------------ )       ISCR Case No. 08-08419
SSN: ---------------- )
)
Applicant for Security Clearance )
Appearances
For Government: Jeff Nagel, Esquire, Department Counsel
For Applicant: Pro se
August 21, 2009
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Decision
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ROSS, Wilford H., Administrative Judge:
Applicant submitted his Questionnaire for National Security Positions (SF86), on
November 27, 2007 (Government Exhibit 1). On January 30, 2009, the Defense Office
of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) detailing the
security concerns under Guideline F concerning the 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 filed an Answer to the SOR on February 12, 2009, and requested a
decision without a hearing. Pursuant to Paragraph E3.1.7 of the Additional Procedural
Guidance at Enclosure 3 of the Directive, Department Counsel requested that a hearing
be held in this case. (Transcript at 8-9.) Department Counsel was prepared to proceed
on March 3, 2009. I received the case assignment on March 5, 2009. DOHA issued a
Because of the particular factual situation in this case, at the request of the Applicant, and with the express1
understanding of the Department Counsel, the record was left open for an  extended period of time. This is
pursuant to my authority under Paragraph E3.1.9. of the Additional Procedural Guidance at Enclosure 3 of
the Directive, which states, “The Administrative Judge may rule on questions on procedure, discovery and
evidence and shall conduct all proceedings in a fair, timely, and orderly manner.”  (Transcript at 68-70.)  
An “80/20 split” refers to a situation where the borrower takes out two mortgages that pay 100% of the2
purchase price for a house, using an 80% loan and a 20% loan.  These loans can be with the same or different
lenders.
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notice of hearing on April 8, 2009, setting the hearing for May 19, 2009. The hearing
was convened on that date.  
The Government offered Government Exhibits 1 through 7, which were received
without objection. Applicant testified on his own behalf and submitted Applicant’s
Exhibits A through H, without objection. The Applicant requested that the record remain
open for the submission of additional documents. The Applicant submitted Applicant’s
Exhibits I through P at various dates ending on August 17, 2009, and they were
received without objection.  DOHA received the transcript of the hearing on May 27,1
2009. The record closed on August 17, 2009. Based upon a review of the case file,
pleadings, exhibits, and testimony, eligibility for access to classified information is
granted.
Findings of Fact
The Applicant is 37, married, and has a Master’s degree. He is employed by a
defense contractor and seeks to retain a security clearance previously granted in
connection with his employment.
Guideline F, Financial Considerations
The Government alleges in this paragraph that the Applicant is financially
overextended and therefore at risk of engaging in illegal acts to generate funds. The
Applicant admitted allegations 1.a., 1.b., 1.c., 1.d., and 1.f. under this guideline. Those
admissions are hereby deemed findings of fact.  He denied allegation 1.e.
The Applicant served on active duty in the United States Army for 13 years. His
career was very successful and he left with the rank of Staff Sergeant. (Government
Exhibit 6; Applicant’s Exhibit A at 5-10.) The Applicant left active duty to pursue civilian
opportunities in his field of expertise, and to advance in the Navy Reserve.  (Transcript
at 31-39.)
Once the Applicant began working in his civilian career, he found that his income
almost doubled, to over $100,000 a year. This lasted from about 2003 to 2007. During
this time the Applicant and his wife bought a house using an 80/20 split.  They also2
used several credit cards to pay for improvements to the house, as well as other
household expenses, and the wife’s medical care when their child was born. When the
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Applicant became unemployed for several months in 2007, their financial situation
became untenable. (Transcript at 54-63.)
When they were unable to pay the mortgage, the Applicant and his wife
downsized their expenses. They have been on a stable budget for the past two years,
and are able to pay their current debts. He has also been working to resolve his past
due indebtedness.  (Transcript at 27-30, 63-66.) As part of his attempts to resolve his
indebtedness, the Applicant considered bankruptcy and had extensive discussions with
a bankruptcy law firm.  (Applicant’s Exhibit D.) He decided against filing for bankruptcy,
in part, because of the family trust, discussed immediately below.
An additional factor in this case is a family trust, of which the Applicant is a
beneficiary. The Applicant presented substantial documentary evidence, in addition to
his credible testimony, describing the trust. Due to a family disagreement, which is no
fault of the Applicant’s, the funds had not been distributed as of the date of the hearing.
The Applicant’s part of the trust, when distributed, is estimated at $400,000. (Applicant’s
Exhibit C; Transcript at 28-30, 49-51, 65-67.)  
Subparagraph 1.a.  The Applicant admits that he owed approximately $22,490
for a credit card.  The Applicant successfully paid this debt for a negotiated amount
($15,800) on June 9, 2009.  (Applicant’s Exhibit I, Exhibit J and Exhibit K; Transcript at
42-43.)  
Subparagraph 1.b.  The Applicant admits that he owed approximately $17,343
for a second credit card. The Applicant successfully paid this debt on July 10, 2009.
(Applicant’s Exhibit F at 3, Exhibit K at 2, and Exhibit M; Transcript at 43.) 
Subparagraph 1.c.  The Applicant admits that he owed approximately $19,914 for
a third credit card. The Applicant successfully paid this debt on July 23, 2009.
(Applicant’s Exhibit F at 2, and Exhibit N; Transcript at 43.) 
Subparagraph 1.d.  The Applicant admits that he owed approximately $82,620
for a second mortgage on his primary residence. As described further under 1.f., below,
the house was foreclosed upon by the primary mortgage holder.  Because he had
refinanced this loan, the second mortgage remained as a personal responsibility of the
Applicant.  The Applicant successfully paid this debt for a negotiated amount ($20,000)
on June 30, 2009.  (Applicant’s Exhibit L, and Exhibit P; Transcript at 46.) 
Subparagraph 1.e.  The Applicant denied that he was currently indebted to a
state’s tax authority in the amount of $751. He provided documentary evidence showing
that the subject tax lien (Government Exhibit 2) was released on January 20, 1998.
(Applicant’s Exhibit B; Transcript at 45-46.)
Subparagraph 1.f.  The Applicant admits that he owed $323,981 for a first
mortgage on his principal residence. When the Applicant became unemployed he
quickly burned through his savings trying to make the mortgage payments. The
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Applicant and his wife made the decision to turn the house back to the lender because
they could not make the payments, and were unable to make a short sale. 
The mortgage holder took back the property in July 2007, and held a foreclosure
sale in approximately February 2008. The state’s anti-deficiency statute applied, which
means that the mortgage holder is held to the amount received in the foreclosure sale
and the Applicant has no current debt to them. This is confirmed by the Government’s
most recent credit report, which shows there being no amount past due on this debt.
(Government Exhibit 7 at 2.) The Applicant also submitted a credit report which states,
concerning this debt, “Credit Grantor reclaimed collateral to settle defaulted mortgage.”
(Applicant’s Exhibit E at 7-8.) (See Transcript at 46-49.)
Mitigation
The Applicant submitted his evaluation for the past year, as well as work and
military related awards and commendations. The documents show that he was a highly
respected soldier, and is a successful member of the defense industry. (Applicant’s
Exhibit A.)
The Applicant’s current supervisor, a senior vice-president, submitted a letter on
the Applicant’s behalf. This gentleman states, “Despite the circumstances that led to the
foreclosure in February 2008, [the Applicant] has proven to be a professional of the
highest integrity, unquestionable ethics, and strong moral character.” (Applicant’s
Exhibit A at 1-2.)
Policies
Security clearance decisions are not made in a vacuum. 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 commonsense 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. In addition, the administrative judge may also rely on his own
common sense, as well as his knowledge of the law, human nature, and the ways of the
world, in making a reasoned decision.
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The protection of the national security is the paramount consideration. AG ¶ 2(b)
requires that “[a]ny doubt concerning personnel being considered for access to
classified information will be resolved in favor of national security.” In reaching this
decision, I have drawn only those conclusions that are reasonable, logical and based on
the evidence contained in the record. Likewise, I have avoided drawing inferences
grounded on mere speculation or conjecture.
Under Directive ¶ E3.1.14, the Government must present evidence to establish
controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, the applicant is
responsible for presenting “witnesses and other evidence to rebut, explain, extenuate,
or mitigate facts admitted by applicant or proven by Department Counsel. . . .” The
applicant has the ultimate burden of persuasion as to obtaining a favorable security
decision. 
A person who seeks access to classified information enters into a fiduciary
relationship with the Government predicated upon trust and confidence. This
relationship transcends normal duty hours and endures throughout off-duty hours. The
Government reposes a high degree of trust and confidence in individuals to whom it
grants access to classified information. Security clearance decisions include, by
necessity, consideration of the possible risk that the applicant may deliberately or
inadvertently fail to protect or safeguard classified information. Such decisions entail a
certain degree of legally permissible extrapolation as to potential, rather than actual, risk
of compromise of classified information.
 
Finally, as emphasized by President Eisenhower in Section 7 of Executive Order
10865, “Any determination under this order . . . shall be a determination 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. AG ¶
19(a) states that, “inability or unwillingness to satisfy debts” maybe disqualifying. Under
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AG & 19(c), Aa history of not meeting financial obligations@ may also raise security
concerns. The Applicant admits that he owed the debts set forth in SOR subparagraphs
1.a., 1.b., 1.c., 1.d., and 1.f. The record evidence shows that he had successfully
resolved subparagraph 1.e. in 1998. The evidence is sufficient to raise these potentially
disqualifying conditions, requiring a closer examination.
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.@ In addition, AG
¶ 20(b) states that it may be mitigating if “the conditions that resulted in the financial
problems were largely beyond the person’s control (e.g., loss of employment . . .), and
the individual acted responsibly under the circumstances.” AG ¶ 20(c) applies when,
“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.” Finally, under
AG ¶ 20(d), it is a mitigating factor where “the individual initiated a good-faith effort to
repay overdue creditors or otherwise resolve debts.”
The Applicant, by his own account, made a poor financial choice in buying a
home when he was doing well financially. Like many people today, he has lost that
investment when he became unemployed for several months. However, he then acted
in an intelligent manner by downsizing his household, finding full-time employment, and
attempting to resolve his debts. The Applicant has been able to pay his current bills for
several years, and has paid a substantial amount of money towards the arrearage.  The
three debts he owed to credit card companies, and his second mortgage, have been
completely paid off. This is confirmed by documentary evidence from the creditors. As
for his first mortgage, that debt is no longer due and owing because of the foreclosure
sale and his state’s anti-deficiency statute.    
I find the behavior occurred under such unusual circumstances that it is unlikely
to recur, and it does not raise concerns about his current reliability, trustworthiness, or
good judgment. The evidence shows that the problem is under control and that the
situation will not be repeated. He has a firm grasp of his financial situation, and has
shown that he can be relied upon in the future. The evidence raises all the mitigating
conditions discussed above.
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.  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.  In addition, the administrative judge should consider the nine adjudicative
process factors listed at AG ¶2(a): 
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(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. 
I considered the potentially disqualifying and mitigating conditions in light of all
the facts and circumstances surrounding this case. The Applicant got into financial
difficulty because of a relatively short but devastating span of unemployment.  He has a
plan to pay all of his debts and has fulfilled it. The Applicant has behaved reasonably
and appropriately in trying to resolve his debts, thereby AG ¶ 2(a)(6) applies. Under the
particular circumstances of this case, I find that there is little to no potential for pressure,
coercion, exploitation, or duress (AG ¶2(a)(8)), and that there is little to no likelihood of
recurrence (AG ¶2(a)(9)). 
Overall, the record evidence leaves me without questions or doubts as to
Applicant’s eligibility and suitability for a security clearance. For all these reasons, I
conclude Applicant mitigated the security concerns arising from his financial
considerations.  Paragraph 1 is found for the Applicant.  He is currently eligible for a
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: FOR THE APPLICANT
Subparagraphs 1.a through 1.f.: For the Applicant
Conclusion
In light of all of the circumstances presented by the record in this case, it is
clearly consistent with the national interest to grant Applicant eligibility for a security
clearance.  Eligibility for access to classified information is granted.
                                              
WILFORD H. ROSS
Administrative Judge