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                           DEPARTMENT OF DEFENSE   
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
 -------------------------- )     ISCR Case No. 08-11152
SSN: ------------------ )
)
Applicant for Security Clearance )
Appearances
For Government: Gina L. Marine, Esquire, Department Counsel
For Applicant: Pro se
______________
Decision
______________
MATCHINSKI, Elizabeth M., Administrative Judge:
Applicant fell behind more than 60 days on his mortgage in 2006, and the lender
commenced foreclosure proceedings. He resolved an order to foreclose on his home by
paying off the loan through a new mortgage in January 2009. He still owes $6,000 in
attorney fees to the lender, about $6,439 in delinquent real estate taxes on an
investment property, and $8,268 on a delinquent construction loan. He intends to pay
those debts and he has been otherwise responsible in handling his personal financial
matters. But personal conduct concerns persist because he did not disclose the ongoing
litigation over the mortgage or that he owed a delinquent construction loan when he filed
his security clearance application. Clearance is denied.
Statement of the Case
Applicant submitted an Electronic Questionnaire for Investigations Processing (e-
QIP) on June 12, 2008. On February 10, 2009, the Defense Office of Hearings and
Appeals (DOHA) issued to Applicant a Statement of Reasons (SOR) detailing the
security concerns under Guideline F and Guideline E that provided the basis for its
preliminary decision to deny him a security clearance and refer the matter to an
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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) effective within the Department of Defense as of September 1, 2006.
On March 2, 2009, Applicant answered the SOR and he requested a hearing.
The case was assigned to me on April 2, 2009, to decide whether it is clearly consistent
with the national interest to grant or continue a security clearance for Applicant. On May
4, 2009, I scheduled a hearing for June 5, 2009.
I convened the hearing as scheduled. Nine government exhibits (Ex. 1-9) and
five Applicant exhibits (A-E) were admitted, all but Exhibit C without any objections.
Department Counsel objected, in part to Exhibit C, on the basis it contained legal
representations about foreclosure in Applicant’s state of residence. The document was
admitted in full, but I held the record open for two weeks at the government’s request for
possible rebuttal of Exhibit C following Department Counsel’s research into the state’s
foreclosure laws. Applicant and two witnesses testified on Applicant’s behalf. Just
before closing argument, the government moved to amend the SOR to add two new
allegations under Guideline F. I granted the motion, in part, over Applicant’s objections,
infra. A transcript (Tr.) of the hearing was received on June 16, 2009.
On June 18, 2009, in rebuttal of Applicant exhibit C, Department Counsel timely
submitted a memorandum, seeking the admission of an order and judgment of
foreclosure (Ex. 10) and pertinent state statutes. Applicant filed no response, and
government exhibits 10 and 11 were admitted.
Procedural and Evidentiary Rulings
Pursuant to ¶ E.3.1.17 of the Directive, the government moved to amend the
SOR to add as SOR 1.c and 1.d two new allegations under Guideline F to allege that
Applicant is indebted to the state for about $6,000 in unpaid taxes, and to allege that
Applicant owes about $12,000 in outstanding attorney fees. Applicant objected on the
basis that these debts were not past due. I sustained Applicant’s objection as to the
attorney fees because there was no evidence that the obligations were delinquent.
Based on Applicant’s unrebutted testimony, the court ordered in early June that he had
30 days in which to pay the bank’s attorney fees. In light of the unpaid tax debt subject
to the May 2009 tax lien, I sustained the motion as to the delinquent real estate taxes on
the investment property. Accordingly, the SOR was amended as follows:
1.c. You are indebted to the state of [state name omitted] for unpaid real
estate taxes assessed on June 19, 2008, in the approximate amount of
$6,000. As of June 5, 2009, this debt has not been paid.
Applicant clarified that three lots were involved. His primary residence and an undeveloped lot1
separate from the lot on which he was building the investment property, served as collateral for two mortgage
loans taken out under a single promissory note (Tr. 124).
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Findings of Fact
In the amended SOR, DOHA alleged under Guideline F, financial considerations,
that as of January 12, 2009, Applicant owed $132,000 to a bank that had initiated
foreclosure proceedings against him (SOR 1.a), $8,268 on a charged-off loan (SOR
1.b), and about $6,000 in real estate taxes (SOR 1.c). Under Guideline E, personal
conduct, Applicant was alleged to have falsified his June 12, 2008, e-QIP by responding
“No” to questions 28.a (delinquent over 180 days on any debt in the last seven years),
28.b (currently over 90 days delinquent on any debts), and 29 (party to any public
record civil court actions not otherwise listed on the form).
Applicant denied owing the debt in SOR 1.a on the basis that it had been paid in
full. When he answered the SOR, he indicated he was making payments on the debt in
SOR 1.b, although he admitted at his hearing that he was not paying on the debt. He
denied SOR 1.c on the basis that the debt was not more than 90 days delinquent.
Applicant also denied any deliberate falsification of his security clearance application,
and asserted that he had responded to the best of his knowledge and understanding of
court proceedings as of June 12, 2008. After considering the pleadings, transcript, and
exhibits, I make the following findings of fact.
Applicant is a 60-year-old retired Navy Captain with 30 years of active and
reserve distinguished service (Exs. 1, B, Tr. 112-14). He held a top secret clearance
while he was in the military (Ex. 1, Tr. 152-53). Since January 2000, he has been
employed as a vice president and naval architect for a defense contractor (Ex. 1), where
he is required to maintain a security clearance for his position and his managerial
responsibilities on two surface warfare programs (Ex. A, Tr. 47). Applicant is also
president of his own marine design and consulting firm (Ex. B) that, until recently, had
been inactive for a few years (Tr. 134).
As of January 2000, Applicant and his family were living at his current residence,
which is where he was raised (Tr. 43). The property had been in his family since 1945.
Applicant was required to travel out of state about one week per month in connection
with his duties as vice president for the defense contractor, including to his employer’s
office (Ex. 10).
In late May 2005, Applicant refinanced the mortgage on his primary residence.
He signed a promissory note of $885,000 with a bank, encumbering his primary
residence with mortgage loan #1 of $885,000 (SOR ¶ 1.a), which was about $485,000
more than his original mortgage (Tr. 126). He also mortgaged an abutting parcel of
unimproved land through mortgage loan #2 (Exs. 2, 3, 4, 9, 10). Mortgage loan #1 was
to be repaid at $4,353.67 per month (Ex. 10). He borrowed the funds, in part, to build a
house on an adjoining undeveloped parcel (lot #3) that he owned (Tr. 77).  His plan was1
to sell the new home for about $1.2 million (Tr. 44, 88-89). In addition to the equity he
Applicant’s credit reports show he had a loan of $93,000 for home improvement that he took out in2
October 2006 (Exs. 2, 3, 4). He paid off that loan (Tr. 146).
Available credit reports (Exs. 2, 3, 4) all indicate an unsecured loan with a high credit of $6,493 was3
opened in June 2006.
Applicant testified that his monthly net income was about $9,000 and his construction expenses were4
“probably $10,000 a month.” (Tr. 110).
Pursuant to 14 M.R.S.§ 6321, after breach of a condition in a mortgage of first priority, the mortgagee5
or any person claim ing under the mortgagee may proceed for the purpose of foreclosure by a civil action
against all parties in interest in either the Superior Court or the District Court in the division in which the
mortgaged premises or any part of the mortgaged premises is located, regardless of the amount of the
mortgage claim (Ex. 11).
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cashed out from mortgage loan #1 that he planned to use for the construction, he had a
separate construction loan with another financial institution under which he was required
to demonstrate progress in the building of the home before the bank would provide him
the funds that he needed to reimburse the contractors that he had hired (Tr. 44, 88,
126-27).  His mortgage and construction loan payments together took between 40 and2
50 percent of his monthly income (Tr. 127). Applicant believed that he could maintain
the payments and build equity for his family, because he planned on passing down the
family home (Tr. 127-28). The residential market was favorable at the time construction
began (Tr. 128).
Applicant made timely, monthly payments on mortgage loan #1 until the payment
due April 1, 2006 (Ex. 10). Due to problems with the timing of construction financing on
the home, he had to shuffle sums of money to keep the construction project going. At
times he used his personal income (about $120,000 annually, Tr. 110) to pay his
construction contractors (Tr. 44, 83). Applicant brought his payments on mortgage loan
#1 current in June 2006.3
Applicant did not make his payment on mortgage loan #1 due August 1, 2006.4
The mortgage contained an acceleration clause that allowed the bank to pursue
foreclosure on breach of a condition of the mortgage. On September 1, 2006, the
successor bank mailed a written notice of intent to foreclose to Applicant at his
residential address. Applicant was notified that he could cure the default by paying all
amounts due without acceleration within 30 days. Applicant did not receive the notice of
default and right to cure (Ex. 10).
On October 6, 2006, the bank filed a complaint for foreclosure of the first
mortgage and his primary residence (Ex. 9).  Applicant did not make his mortgage5
payments for September and October 2006, although he assumed they could be made
up. He repeatedly left voice mail messages with the bank’s collection officer over the
August to October 2006 time frame explaining his financial situation (Ex. 10). In
November, Applicant attempted to resume payment, but it was rejected by the lender
Applicant testified that the lender withdrew the funds from his account but then returned them (Tr.6
84-85).
Applicant testified that he had to pay about $20,000 in legal fees to the bank in the first action (Tr.7
149). Court records indicate that the bank claimed $23,443.89 in attorney fees. The court awarded half for the
claim of the bank secured by mortgage loan #1 (Ex. 10).
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and the funds were returned to his account. Applicant was away on business at the time
(Ex. 10, Tr. 84, 208).6
Applicant was served with the complaint of foreclosure in mid-November 2006.
Previously unaware of the bank’s intent to foreclose, he contested the bank’s actions to
accelerate the note and to foreclose the mortgage securing his primary residence. In
December 2006, the bank moved for summary judgment (Ex. 8). The district court
granted the motion and issued an order of judgment and foreclosure in favor of the
bank. Applicant appealed, contending there was a genuine issue of material fact in that
he had not been given notice (Ex. 8). The original lender bank was acquired through a
merger by another financial institution (Ex. 10), and the successor-in-interest continued
to pursue the foreclosure.
On May 20, 2008, the state supreme court vacated the summary judgment
entered as to the foreclosure of mortgage loan #1, and remanded the case to the district
court for further proceedings (Ex. 8). Following a trial in October 2008 in the district
court, the court found it likely that the intent to foreclose and notice of right to cure was
lost before it reached Applicant’s mailbox. However, the post office certificate of mailing
was sufficient under state law to fulfill the bank’s statutory requirement of constructive
notice to Applicant, absent any defects in the certificate of mailing (e.g., wrong address,
notice returned). In late October 2008, the district court ordered a foreclosure of
mortgage loan #1. Applicant was given 90 days to redeem the property by paying the
amount due on the mortgage plus interest ($960,015.15 as of October 10, 2008) and
reasonable attorney fees assessed at $11,721.95 (Ex. 10).  In about January 2009,7
Applicant took out a mortgage loan of approximately $900,000 with another bank,
putting up his primary residence as collateral (Tr. 74-75, 129). Applicant’s monthly
mortgage payment is about $6,000 (Tr. 75, 143). For consideration paid by Applicant
from the monies obtained from this new loan, the bank discharged mortgage deed #1
and stipulated to dismissal of its foreclosure action as to his primary residence without
prejudice to any related or pending claims of the bank (Ex. C). 
While Applicant was contesting the summary judgment ordering foreclosure of
mortgage loan #1, in late July 2007 the bank filed to foreclose on the abutting property
that had been put up as collateral under the promissory note. The bank alleged that the
amount due was the full $885,000 of the promissory note rather than the $250,000
secured by the undeveloped lot. On January 29, 2008, the district court granted a
motion by the bank for summary judgment, and entered an order and judgment of
foreclosure. Applicant appealed, contending that the bank was barred from bringing a
second foreclosure action when mortgage loan #1 under the same promissory note had
been litigated to a final judgment (Ex. 9). In mid-October 2008, the state supreme court
concluded that the bank was not precluded from pursuing foreclosure of the second
The county registry of deeds is reporting liens filed May 8, 2008, as well as May 9, 2009 (Ex. 5).8
Applicant apparently satisfied the May 2008 lien in January 2009 (Tr. 216). 
Applicant testified that the original balance of the unsecured loan was about $12,000, and that he9
made the $200 monthly payments on it for a couple of years (Tr. 60, 63, 69), although he presented no
evidence of those payments. 
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mortgage. However, since the notice of delinquency and right to cure described the
property secured by the first and not the second mortgage, the court decided summary
judgment was improper and remanded this case to the district court as well (Ex. 9).
Applicant testified that the lot securing mortgage loan #2 remained collateral for the
legal fees he was required to pay to avoid foreclosure of his primary residence (Tr. 122).
In about early June 2009, he was ordered by the court to pay $6,000 in additional legal
fees to the bank within 30 days (Tr. 131-32, 141, 149). He intends to sell some property
of his personal business to obtain the funds to resolve the matter (Tr. 133).
Applicant continues to believe that the lender with whom he executed the
promissory note in May 2005 acted in an unprecedented manner in proceeding against
him in foreclosure when he was fewer than 90 days late in his payments. As of June
2009, the home that he had built as an investment property was still on the market with
an asking price of $1.5 million (Tr. 89, 103). The property is subject to a $6,439.70 state
tax lien that was filed against him in May 2009 for nonpayment of 2008 local real estate
taxes (Ex. 6, Tr. 104). Applicant testified the original tax debt was $12,000 and he paid
about half (Tr. 105).  He has paid his lawyer about $50,000 for representing him in the8
foreclosure actions (Tr. 150). He still owes his attorney about $6,000 (Tr. 131).
On June 12, 2008, Applicant completed an e-QIP to apply for a security
clearance for his position as vice president and manager of two surface warfare
programs. He responded “No” to the financial record and financial delinquencies
inquiries, including questions 27.c, “In the last 7 years, have you had a lien placed
against your property for failing to pay taxes or other debts?,” 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 also responded “No” to question 29, “In
the last 7 years, have you been a party to any public record civil court actions not listed
elsewhere on this form?.” (Ex. 1). Applicant had filled out security clearance applications
in the past when he was in the military (Tr. 112). Applicant testified that he did not
believe questions 28.a and 28.b were applicable because he believed he would be
successful in contesting the lawsuits (Tr. 51), and that he failed to understand that the
bank had brought a civil action rather than simply an attempt to recover the loan (Tr.
53).
A check of Applicant’s credit on June 20, 2008, revealed that Applicant owed a
loan debt of $8,268 in collection (SOR 1.b),  and that mortgage foreclosure proceedings9
had been initiated against him (SOR 1.a). His mortgage was reported by the bank to be
180 days past due as of June 2008 (Ex. 4).
Sometime in July 2008, Applicant was interviewed by a government investigator
(Tr. 95). His finances, including the status of his mortgage, were not brought up during
She operates her own consulting business, and is performing contract work on a program Applicant10
manages for his employer (Ex. E, Tr. 194, 205).
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the interview and Applicant did not volunteer any information about his dispute with the
bank over his mortgage (Tr. 97). Applicant had a subsequent interview with another
investigator who raised the issue of the foreclosure proceedings. Applicant expressed
his belief that the bank was trying to unload his “nonperforming” loan (i.e., loan not
profitable for the bank). He indicated that he could afford to make the monthly payments
on his mortgage (Tr. 97-101).
Sometime in 2008, Applicant began receiving collection notices about the debt in
SOR 1.b. He disputed the balance because he had made all the payments in his
coupon book and did not receive a second book (Tr. 115). He was told that he had paid
only half of the debt (Tr. 65) and owed unpaid principal (Tr. 116). Applicant made no
payments on the debt balance as of June 2009 because he was still paying legal fees
for his representation in the foreclosure matter. He planned on paying the debt in mid-
July 2009  “to just resolve the matter.” (Ex. A, Tr. 65, 67-68).
Applicant’s gross annual income is about $160,000, including his military
retirement, which he began receiving in January 2009 (Tr. 114). His monthly take-home
income is about $12,000 (Tr. 107-08). Applicant expects about $30,000 a year in
income over the next two years from his personal business as a naval architect (Tr.
135). In April 2009, he accepted a contract to design a ship and received $6,000 as a
deposit (Tr. 133). He used it to pay bills (Tr. 134). He has about $200,000 in a 401(k)
account (Tr. 140) and about $4,000 in checking account deposits and $4,000 in savings
(Tr. 139). Applicant does not rely on consumer credit cards for purchases (Exs. 2, 3, 4).
A retired Naval Reserve Commander, who has known Applicant as a
professional colleague or personal friend or both since about 1999,  is aware that10
Applicant had some financial issues over the past year with the bank loan taken out to
build the investment property (Tr. 195-96). She is aware from Applicant of the
government’s allegation that he had lied on his e-QIP because he had not disclosed the
bank’s actions to foreclose on his mortgage. She understood from him that the bank
had not foreclosed on his home (Tr. 203). He has given her no reason to doubt his
integrity or his ability to protect classified information (Ex. E, Tr. 196, 200). 
Policies
The U.S. Supreme Court has recognized the substantial discretion of the
Executive Branch in regulating access to information pertaining to national security
emphasizing, “no one has a ‘right’ to a security clearance.” Department of the Navy v.
Egan, 484 U.S. 518, 528 (1988). 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
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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.
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
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 about finances 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.
DOHA alleged in SOR 1.a that Applicant was past due about $132,000 in his
mortgage loan, leading to the initiation of foreclosure proceedings. The evidence shows
Pursuant to 14 M.R.S. § 6321, the acceptance, before the expiration of the right of redemption and11
after the commencement of foreclosure proceedings, of anything of value to be applied on or to the mortgage
indebtedness by the mortgagee, constitutes a waiver of the foreclosure unless an agreement to the contrary
in writing is singed by the person from whom the payment is accepted or unless the bank returns the payment
to the mortgagor within 10 days of receipt.
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that Applicant fell behind in his payments on mortgage loan #1. He missed his
payments due in April and May 2006, but he caught up in June. After he failed to make
his monthly mortgage payments due the first of August and September 2006, the lender
mailed him a notice of its intent to foreclose if he did not cure the default within 30 days.
Applicant did not receive the notice, and the bank elected to commence with foreclosure
proceedings under state law by filing a civil action. Unaware of the commencement of
the foreclosure action, Applicant missed his payment due October 1. An attempt to
resume payment was refused by the bank. Since the funds were returned, it did not
constitute a waiver of the foreclosure action under state law.  Certainly, no payments11
were made on the mortgage during the protracted litigation, although at that point the
bank is not likely to have accepted any efforts to cure the default. But there is also no
question that Applicant was behind more than 60 days, or over $8,000 in his payments
in the fall of 2006. Applicant also did not make timely payments on the loan in SOR ¶
1.b. Available credit records show a past due balance of $8,268 as of June 2008 and no
subsequent payments on the debt. Applicant claims he paid about half of an original
$12,000 balance although there is no evidence confirming those payments. Moreover,
Applicant did not pay the 2008 real estate taxes on the investment property by the due
date and a lien was filed in the amount of $6,439.70 in May 2009 (SOR 1.c).
Disqualifying conditions AG ¶ 19(a), “inability or unwillingness to satisfy debts,” and AG
¶ 19(c), “a history of not meeting financial obligations,” apply.
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,” cannot reasonably be
applied in mitigation. The state tax debt and the court order in late May or early June
2009 requiring Applicant to pay the mortgagor’s attorneys fees stemming from his
breach of the promissory note and mortgages #1 and #2 are too recent. Furthermore,
Applicant has not made any recent payments on the delinquent loan in SOR 1.b.
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,” applies in a very limited sense that
materials costs for the construction of the investment property were subject to market
forces that Applicant did not control. The financial pressures that Applicant faced in
2006 were essentially of his own making, however. He risked his family’s home by
doubling the amount of his home mortgage in the refinancing to obtain funds to
construct the investment property and in taking out a loan with another institution that
was tied to benchmarks in the construction. Mortgage loan #1 had terms favorable to
both parties to the contract in that Applicant was given an attractive interest rate. In
return, the bank did not have to wait until he was 90 days delinquent to commence
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foreclosure proceedings. Applicant had been allowed to cure one default earlier that
year. He was a victim of an unfortunate circumstance, in that he apparently did not
receive notice of the bank’s intent to foreclose before the bank filed its civil action. Yet, I
cannot conclude that the bank’s actions were as predatory as he believes. Applicant
knew he had not paid his mortgage payments for August and September 2006 on time.
On October 30, 2008, the district court ordered a judgment of foreclosure as to
mortgage loan #1. Applicant had 90 days from the entry of the order to pay the principal
due on the loan plus interest and assessed attorney fees awarded the bank. Applicant
satisfied the mortgage debt in SOR 1.a in January 2009 through a new mortgage loan
with a different lender. He also paid some of the attorney fees awarded the bank in
connection with the two foreclosure actions. But it is difficult to fully apply AG ¶ 20(d),
“the individual initiated a good-faith effort to repay overdue creditors or otherwise
resolve debts,” when he has done nothing to address the debts in SOR 1.b and 1.c.
Applicant still owes about $12,000 in attorney fees. While they are not
delinquent, Applicant has to pay the bank its $6,000 within 30 days, and that debt is
likely to take precedence over the $8,268 delinquent loan balance in SOR 1.b and the
$6,439.70 delinquent real estate taxes for the investment property. But his outstanding
debt is significantly less than the attorney fees he has paid in the past few years,
including $50,000 to his own counsel.  He reports monthly net income of $12,000 since
January 2009 when he began receiving his military retirement. His new mortgage takes
half of his income, and the $6,000 advanced to him in April 2009 for shipbuilding work
went to pay some bills. His financial situation is likely to improve in the near future
through an expected $30,000 in income from that project over the next two years. AG ¶
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,” applies. The
record as a whole shows he is likely to resolve his debts.
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.
As of Applicant’s completion of his June 2008 e-QIP, he was a party to two civil
proceedings filed by the bank to foreclose his mortgage loans secured by a single
promissory note. He had also defaulted on the loan in SOR 1.b. He did not disclose
these financial delinquencies on his e-QIP. Applicant denies the intentional concealment
addressed under AG ¶ 16(a), “deliberate omission, concealment, or falsification of
relevant facts from any personnel security questionnaire, personal history statement, or
11
similar form used to conduct investigations, determine employment qualifications, award
benefits or status, determine security clearance eligibility or trustworthiness, or award
fiduciary responsibilities.”
Concerning the delinquent loan in SOR 1.b, Applicant maintains that he thought
he had paid off the loan because he had used up his coupon book and not received
another book (“I didn’t get a second book, so there was, there is some confusion as to
how that loan had been administered and that’s been part of the issue.” Tr. 115). He
testified that he learned in late 2008 that he had paid only half the debt (Tr. 65), and that
interest had accrued on the account. But he also acknowledged that the creditor was
claiming unpaid principal on the account (Tr. 116). According to his own testimony, he
paid on the loan for a couple of years at about $200 per month (Tr. 63). The available
credit information shows a charge-off balance of $6,493. These figures fail to
substantiate his claim of a good faith belief that the loan had been paid.
As for his failure to disclose the delinquency in his mortgage, Applicant testified
that he was behind more than 60 but fewer than 90 days. He missed his payment for
August, September, and October, so he would have been delinquent around 90 days, if
not more, when he attempted to resume payment in November 2006. Certainly by June
2008, there was no question that Applicant was more than 180 days delinquent on the
mortgage loan. Applicant testified he did not regard questions 28.a and 28.b as
applicable because he believed he would be successful in contesting the lawsuits (Tr.
51). Had Applicant acted in good faith, however, he would at a minimum have disclosed
the ongoing litigation in response to question 29 concerning any public record civil court
actions in the last seven years. Applicant’s claim that he did not understand that the
bank had brought a civil action rather than simply an attempt to recover the loan (Tr. 53)
is untenable. He is a retired Navy captain and vice president of a defense contracting
firm, who can reasonably be expected to understand the importance of full disclosure.
As of June 2008, Applicant had successfully appealed a summary judgment order of
foreclosure of his primary mortgage to his state’s highest court. Although Applicant is
not a lawyer, It is simply not credible for him to claim that the results of the lawsuit would
determine whether it was a civil action or a foreclosure (Tr. 53) for purposes of whether
he was required to disclose the ongoing legal proceedings in response to question 29
on the e-QIP. AG ¶ 16(a) applies because of his failure to disclose the delinquent
construction loan in response to the financial delinquency questions and the litigation
involving the mortgage loans in response to question 29.
Applicant testified that he felt he would have the opportunity to discuss the
matters in detail during the investigation (Tr. 55). He had an obligation to provide “true,
complete, and correct” responses on his e-QIP, although a subsequent rectification
could mitigate earlier falsification or deliberate omission. The evidence shows Applicant
disclosed nothing about the litigation or the related financial issues during his first
interview with a government investigator in July 2008. Apparently he was not asked
about it and he did not volunteer the information. Applicant discussed the matter during
an interview of a later date with a different investigator, but it was not until the
investigator asked him about the adverse information on his credit record. Applicant’s
failure to volunteer the information during his first interview undercuts his explanation for
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the e-QIP omissions and precludes application of AG ¶ 17(a), “the individual made
prompt, good-faith efforts to correct the omission, concealment, or falsification before
being confronted with the facts.”
Similarly, a personal belief that the bank was not being fair to him and that he
would ultimately prevail on the merits does not excuse or justify his failure to inform the
Department of Defense about the current and ongoing litigation over his mortgage loan.
Any failure to be fully forthright is serious and casts doubts on an individual’s reliability,
trustworthiness, and judgment. AG ¶ 17(c), “the offense is so minor, or so much time
has passed, or the behavior is so infrequent, or it happened under such unique
circumstances that it is unlikely to recur and does not cast doubt on the individual’s
reliability, trustworthiness, or good judgment,” is not pertinent in light of the recency of
the falsifications. Applicant has yet to acknowledge that he was not as candid as he
should have been about his personal financial issues. AG ¶ 17(d), “the individual has
acknowledged the behavior and obtained counseling to change the behavior or taken
other positive steps to alleviate the stressors, circumstances, or factors that caused
untrustworthy, unreliable, or other inappropriate behavior, and such behavior is unlikely
to recur,” does not mitigate the personal conduct concerns.
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.
The DOHA Appeal Board has addressed a key element in the whole-person
analysis in financial cases stating, in part, “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).
The financial issues stem from Applicant’s decision to build a house as an
investment property that he intended to sell for the equity that he would not realize in his
own home. He took on substantial debt that he managed until spring 2006 when he was
forced to use his personal income to pay for materials and labor for the construction.
After expensive and protracted litigation, the lender prevailed in a foreclosure action that
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Applicant resolved legally with the proceeds from a new mortgage loan with a different
lender. He remains under some financial pressures in that he has to pay the lender
$6,000 in legal fees within 30 days, the investment property is subject to a lien for
nonpayment of taxes, and another bank is pursuing collection against Applicant on a
delinquent construction loan. However, Applicant is not likely to engage in illegal acts to
generate funds to address these debts. He has already paid substantial legal costs
associated with the lawsuit without resorting to illegal means, intends to resolve his
outstanding debt, and has been otherwise responsible in handling his personal financial
matters.
Yet considerable personal conduct concerns persist because of his concealment
of the ongoing litigation over the mortgage and the delinquent construction loan when
he completed his June 2008 security clearance application. Applicant, who had held
high-level security clearances in the past for his military duties, was certainly familiar
with the purpose of the security clearance application. He knew, or can reasonably be
expected to have known, that he had an obligation to reveal the problems with his
mortgage loan and the delinquency on the construction loan, and that it did not depend
on whether he ultimately prevailed, whether he felt the lawsuit was not justified, or
whether he disputed the balance of the delinquent construction loan. Despite his record
of distinguished commissioned service, I am unable to conclude that it is clearly
consistent with the national interest to grant him a security clearance at this time.
Formal Findings
Formal findings for or against Applicant on the allegations set forth in the
amended SOR, as required by section E3.1.25 of Enclosure 3 of the Directive, are:
Paragraph 1, Guideline F: FOR APPLICANT
Subparagraph 1.a: For Applicant
Subparagraph 1.b: For Applicant
Subparagraph 1.c: For Applicant
Paragraph 2, Guideline E: AGAINST APPLICANT
Subparagraph 2.a: Against Applicant
Subparagraph 2.b: Against Applicant
Subparagraph 2.c: Against 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
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ADMINISTRATIVE JUDGE