DEPARTMENT OF DEFENSE 
  DEFENSE OFFICE OF HEARINGS AND APPEALS 
  
  
 
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 09-00657 
  ) 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Candace Le'i, Esq., Department Counsel 
For Applicant: Leslie Gordon, Esq. 
 
 
 
 
______________ 
 
Decision 
______________ 
 
HEINY, Claude R., Administrative Judge: 
 
Applicant and his wife have a combined annual salary in excess of $225,000. 
They are making $465 monthly payments on five accounts, which had been placed for 
collection, charged off, or had been past due. He has failed to make any mortgage 
payments for approximately one year. Applicant has failed to rebut or mitigate the 
government’s security concerns under financial considerations and personal conduct. 
Clearance is denied. 
 
Statement of the Case 
 
 Applicant contests the Defense Department’s intent to deny or revoke his 
eligibility for an industrial security clearance. Acting under the relevant Executive Order 
and DoD Directive,1 the Defense Office of Hearings and Appeals (DOHA) issued a 
Statement of Reasons (SOR) on April 16, 2009, detailing security concerns under 
financial considerations and personal conduct. 
                                                          
 
1 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) 
1 
 
 
 
 On May 6, 2009, Applicant answered the SOR, and requested a hearing. On 
June 15, 2009, I was assigned the case. On June 26, 2009, DOHA issued a notice of 
hearing, scheduling the hearing to be held on July 14, 2009. For good cause that 
hearing was cancelled. On July 29, 2009, DOHA issued a notice of hearing, scheduling 
the hearing, and it was held on August 25, 2009.  
 
 The government offered Exhibits (Ex.) 1 through 4, which were admitted into 
evidence. Applicant testified on his own behalf and submitted Exhibits A through N, 
which were admitted into evidence. The record was held open to allow additional 
information from Applicant. On August 27, 2009, additional material was submitted. 
Department Counsel had no objection to the material, which was admitted into the 
record as Ex. O. On September 1, 2009, the transcript (Tr.) was received. 
 
Findings of Fact 
 
 In Applicant’s Answer to the SOR, he admits the factual allegations, with 
explanations in ¶ 1.a through ¶ 1.f of the SOR. He denied the allegations, in ¶¶ 1, 2, and 
2.a of the SOR. He also provided additional information to support his request for 
eligibility for a security clearance. Applicant’s admissions of the SOR allegations are 
incorporated herein. After a thorough review of the record, pleadings, exhibits, and 
testimony, I make the following additional findings of fact: 
 
 Applicant is a 35-year-old combat engineer analyst who has worked for a 
defense contractor since August 2007, and is seeking to obtain a security clearance. 
From May 1991 until October 2007, Applicant was in the U.S. Army. (Tr. 45, Ex. 1) In 
1995, he became an officer. He left the Army as a major (O-4). Applicant’s Officer 
Evaluation Report (OER), with a closeout date of May 31, 2007, recommended 
Applicant be promoted early to lieutenant colonel and that his duty performance was 
excellent indicating he was a top 10% officer. (Ex. L) He served both in Iraq and 
Afghanistan (Ex. M). His awards and decorations include the Bronze Star and two 
Meritorious Service Medals. (Ex. N, O) Applicant had a clearance the entire time he was 
in the Army. (Tr. 74) 
 
Applicant’s wife is an active duty major in the U.S. Army. They married in June 
1998 and have four children. (Tr. 23-24) Applicant’s yearly income is $118,000. (Tr. 86) 
His wife’s income is approximately $80,000, plus an additional nontaxable pay of 
$28,000, which includes allowances for housing and subsistence. Together their yearly 
income is approximately $226,000. Applicant’s and his wife’s net monthly income is 
$12,713. (Ex. H) Their net monthly income (gross income less monthly expenses) is 
approximately $12,700. (Ex. H) His monthly net income includes a mortgage payment of 
approximately $4,100, which currently is not being paid. Without making their mortgage 
payment their net monthly disposable income is approximately $5,800.  
 
 
                                                                                                                                                                                           
promulgated by the President on December 29, 2005, and effective within the Department of Defense for 
SORs issued after September 1, 2006. 
 
2 
 
 
 
 In January 2008, Applicant’s wages were garnished for unpaid county property 
tax. In January 2008, Applicant began paying $700 per pay period. As of March 2008, 
$8,911 was owed. In the summer of 2008, the property tax was paid in full. (Tr. 86) 
 
 Applicant’s daughter attended private school with $1,500 per month tuition. (Tr. 
84) The $21,167 debt listed in SOR ¶ 1.a., which originated in 2007, was placed for 
collection. (Ex. A) In May 2009, when Applicant answered the SOR, he stated he was 
co-signer on the debt. At that time, he stated he would make a $1,000 payment, and 
starting in mid-May 2009, he would pay the creditor $250 per month. Applicant made 
$250 payments in May, June, and July 2009. (Ex. A)  
 
As to the debt listed in SOR ¶ 1.b, Applicant stated he had been in contact with 
the collection agency for the past year. In April 2009, he set up a monthly installment 
plan to pay $80 per month on this debt. The SOR lists the debt as having been charged 
off in the amount of $1,216; however, the amount owed as of October 2008 was 
$16,112. (Tr. 29, Ex. B) In March 2009, the creditor offered to settle the matter for 
$11,604. (Answer to SOR, Enclosure 3) As of August 18, 2009, Applicant had paid $960 
on this debt. (Ex. B) He is currently making $80 per month payments on this debt.  
 
 The $8,247 credit card debt listed in SOR ¶ 1.c, as having been charged off, is 
now in the amount of $12,157. The account became delinquent in 2005. (Tr. 69) The 
creditor has offered to settle the matter for $6,000 payable in six $500 payments. 
Applicant’s first payment was made April 2009. (Answer to SOR, Enclosure 4) The 
creditor’s August 7, 2009, letter states the account was settled in full for $5,562. (Ex. B)  
 
 In 2005, Applicant and his wife were reassigned to the local area. They rented a 
home. (Tr. 86) In July 2006, Applicant and his wife purchased their current home for 
$900,000, with no down payment. (Tr. 73, 74, 88) Applicant obtained a $720,000 first 
mortgage and a $180,000 second mortgage, both with the same company. (Tr. 89) A 
monthly payment on the first mortgage was approximately $4,200 and $1,700 on the 
second. The two mortgage payments together total approximately $5,800 per month. 
(Tr. 89) In 2006, Applicant started to fall behind on his mortgage payments. (Tr. 72)  
 
In late 2008, Applicant stopped making his mortgage payments. (Tr. 91) As of 
April 2009, he was past due in the amount of $13,476 on a mortgage of $789,000. 
Applicant is unsure how much he is currently past due on his mortgage. (Tr. 70) 
Applicant was looking to restructure the loan. He made a submission through the 
Helping Homeowners Program. (Tr. 32) The fair market value of their home is 
approximately $700,000. (Tr. 101) 
 
 Applicant was past due in the amount of $150 on a student loan. He asserts he 
paid the past due amount. Applicant made monthly payments in September, October, 
and November 2008. Since March 2009, he has made six monthly payments on this 
debt. (Ex. E)  
 
3 
 
 
 
 
Applicant owed the Defense Financial Accounting Service $3,194. At some point 
while in the military he was overpaid, and this is a recoupment action. (Tr. 36) He 
arranged to repay the debt by making $62 monthly payments. (Answer to SOR, 
Enclosure 7) As of July 2009, the amount owed had been reduced to $1,709. (Ex. F) 
 
 In March 2008, Applicant completed an Electronic Questionnaires for 
Investigations Processing (e-QIP). He answered “no” to question 28.a, which asked if 
during the prior seven years he had ever been more than 180 days delinquent on any 
debt. He also answered “no” to question 28.b, which asked if he was currently more 
than 90 days delinquent on any debt. He asserts his answers were not deliberately 
false. At the time he completed his SF 86, he was in discussions with some of his 
creditors and did not believe he was delinquent on his debts. (Tr. 48) Applicant’s wife 
handles the family’s finances and he was unaware of some of the delinquencies until 
after the clearance process started.  
 
When completing his e-QIP in March 2008, he knew he had fallen behind on his 
mortgage payments in 2006. (Tr. 75) Applicant stated the mortgage company changed 
and he believed he was only 30 days delinquent on his mortgage. (Tr. 75)  
 
 At various times, Applicant and his wife have provided financial assistance to his 
sister, her sister, her brother, and her mother. (Tr. 44, 107) Applicant’s mother-in-law 
was unemployed following a back injury. Applicant helped his parents-in-law avoid 
foreclosure on their home. How the injury lead to the possible foreclosure of the 
parents-in-law’s home, a home they had lived in for 25 years, was not explained. (Tr. 
107) They still support his sister-in-law. (Tr. 80) Applicant has instituted an accelerated 
monthly payment plan and hopes to have his debts paid in full within three years. (Tr. 
57) Applicant and his wife assert they have consolidated their debt and developed a 
plan. His wife asserts they have paid $13,000 in debt. (Tr. 114) 
 
 Even with yearly income in excess of a quarter million dollars, Applicant’s debt to 
income ratio is 39%. (Ex. D) The document from the credit union states that at this level 
the debts seem manageable, but they should be paid before they spiral out of control. 
(Tr. 60, Ex. D) Applicant and his wife owe the IRS $10,000 for under withholding of 
personal income tax. (Tr. 97)  
 
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 must be considered 
in evaluating an applicant’s eligibility for access to classified information. 
 
4 
 
 
 
 
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. 
 
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).  
 
Analysis 
 
Guideline F, Financial Considerations 
 
 Revised Adjudicative Guideline (AG) ¶ 18 articulates the security concerns 
relating to financial problems: 
 
5 
 
 
 
 
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. 
 
Additionally, an individual who is financially irresponsible may also be 
irresponsible, unconcerned, negligent, or careless in properly handling and 
safeguarding classified information. Behaving responsibly or irresponsibly in one aspect 
of life provides an indication of how a person may behave in other aspects of life.  
 
A person’s relationship with his creditors is a private matter until evidence is 
uncovered demonstrating an inability or unwillingness to repay debts as agreed. Absent 
substantial evidence of extenuating or mitigating circumstances, an applicant with a 
history of serious or recurring financial difficulties is in a position of risk that is 
inconsistent with holding a security clearance. An applicant is not required to be debt 
free, but is required to manage his finances so as to meet his financial obligations. 
 
 The record evidence supports a conclusion Applicant has a history of financial 
problems. Applicant has not paid his mortgage for almost a year. He hopes there will be 
some type of program to save his house from foreclosure. His wages were garnished to 
pay past due property tax on his home. He owes the IRS $10,000. He owes in excess of 
$15,000 for past due tuition for his daughter, which has been reduced from the more 
than $21,000 previously owed. Disqualifying Conditions AG ¶ 19(a), “inability or 
unwillingness to satisfy debts” and AG ¶ 19(c), “a history of not meeting financial 
obligations,” apply.  
 
 Five Financial Considerations Mitigating Conditions under AG ¶¶ 20(a) – (e) are 
potentially applicable: 
 
(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 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; 
 
 
(d) the individual initiated a good-faith effort to repay overdue creditors or 
otherwise resolve debts; or 
6 
 
 
 
(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 settled the $12,157 debt (SOR ¶ 1.c) for $6,062. (Ex. C) AG ¶ 20(d) 
“the individual initiated a good-faith effort to repay overdue creditors or otherwise 
resolve debts” applies to this debt. 
 
AG ¶ 20(a) does not apply to the remaining debts. The debts remain unpaid and 
cast doubt on his reliability, trustworthiness, or good judgment. Applicant and his wife 
make more than $225,000 per year. With this income they are making monthly 
payments of $465 on the debts listed in the SOR. They assert they have paid off 
$13,000 in debt; however, they are not paying their $5,800 monthly mortgage. The 
amount they assert has been paid represents approximately two months of mortgage 
payment.  
 
AG ¶ 20(b) does not apply to the remaining debts. There was no loss of 
employment; in fact, Applicant started his current job while he was on terminal leave 
from the Army. There has been no separation or divorce. Applicant and his wife chose 
to financially assist their relatives. Applicant’s mother-in-law was unemployed following 
a back injury. How this lead to the possible foreclosure of the parents-in-law’s home, a 
home they had lived in for 25 years, was not explained.  
 
Applicant and his wife make in excess of $225,000, yet their debt to income ratio 
is 39%. Applicant has not acted responsibly under the circumstances. They owe the IRS 
$10,000, and $15,000 for past due private tuition, which had been in excess of $21,000. 
They have not paid their mortgage in a year, and are paying less than $500 per month 
on their debts. They are hoping for a government program to prevent foreclosure on 
their home. There are no clear indications that the problem is being resolved or is under 
control. AG ¶ 20(c) does not apply. AG & 20(e) does not apply because none of the 
debts are being disputed.  
 
Guideline E, Personal Conduct 
 
AG ¶ 15 expresses the security concern pertaining to personal conduct, which is 
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. 
 
7 
 
 
 
 
Deliberate omission, concealment, or falsification of a material fact in any written 
document or oral statement to the Government when applying for a security clearance 
is a security concern. The government has an interest in examining all relevant and 
material adverse information about an applicant before making a clearance decision. 
The government relies on applicants to truthfully disclose that adverse information in a 
timely fashion, not when it is perceived to be prudent or convenient. Further, an 
applicant’s willingness to report adverse information about himself provides some 
indication of his willingness to report inadvertent security violations or other security 
concerns in the future, something the government relies on to perform damage 
assessments and limit the compromise of classified information.  
 
In March 2008, when completing his e-QIP, Applicant did not list all of his past 
due obligations, but did list a garnishment which had started two months earlier. When 
completing his e-QIP, Applicant asserts he knew he had fallen behind on his mortgage 
payments in 2006, but believed he was only 30 days delinquent on his mortgage. (Tr. 
75) Knowing there had been a problem with late mortgage payments, he should have 
been especially attuned to the questions about his financial situation. He should have 
investigated his financial situation further before answering “no” when asked if he had 
ever been more than 180 delinquent on any debt or was currently more than 90 days 
delinquent on any debt. His answers were false. 
 
None of the mitigating conditions related to personal conduct apply. Applicant did 
not make a prompt, good-faith effort to correct the omission, concealment, or 
falsification before being confronted with the facts (AG ¶ 17(a)). There was no refusal or 
failure to cooperate. AG ¶ 17(b) “the refusal or failure to cooperate, omission, or 
concealment was caused or significantly contributed to by improper or inadequate 
advice of authorized personnel or legal counsel advising or instructing the individual 
specifically concerning the security clearance process. Upon being made aware of the 
requirement to cooperate or provide the information, the individual cooperated fully and 
truthfully,” does not apply.  
 
The offense is not minor, and the e-QIP was completed less than two years ago. 
Knowing he had experienced financial problems and not listing them on his 
questionnaire casts doubt on the individual's reliability, trustworthiness, or good 
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” has limited applicability because the conduct was limited to two 
questions on a single e-QIP.  
 
Applicant has not acknowledged the bad behavior nor obtained counseling. 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 apply.  
 
8 
 
 
 
 
AG ¶ 17(e) “the individual has taken positive steps to reduce or eliminate 
vulnerability to exploitation, manipulation, or duress” does not apply because there is no 
showing of positive steps taken by the Applicant as to his conduct. AG ¶ 17(g) 
“association with persons involved in criminal activity has ceased or occurs under 
circumstances that do not cast doubt upon the individual's reliability, trustworthiness, 
judgment, or willingness to comply with rules and regulations,“ does not apply because 
association with persons involved in criminal activity is not a factor. AG ¶ 17(f) “the 
information was unsubstantiated or from a source of questionable reliability” does not 
apply because Applicant’s financial difficulties have been substantiated.  
 
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 commonsense 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 and his wife were U.S. Army majors when they decided to purchase a 
$900,000 home with no down payment. They knew their monthly mortgage would be 
approximately $6,000. They chose to put their daughter in private school and incur a 
$1,500 per month tuition. They currently make more than $225,000 per year. Had they 
paid their debts as agreed there would have been no security concern. They have not 
paid their mortgage in almost a year. Since they are not making their monthly mortgage 
payments their monthly net disposable income is $5,800, from which they are paying 
less than $500 per month on the SOR debts. Knowing he was experiencing financial 
difficulties, he should have been more forthcoming about his financial problems when 
he completed his e-QIP. 
 
9 
 
 
 
 
10 
 
 
 
 
 With their sizable annual income and with monthly payments of less than $500 
per month on the SOR debts, I find Applicant has not acted responsibly under the 
circumstances. Additionally, there is no clear indication that the problem is being 
resolved or is under control. Overall, the record evidence leaves me with questions or 
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 and personal conduct.  
 
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, Financial Consideration: AGAINST APPLICANT 
 
  Subparagraphs 1.a and 1.b: Against Applicant 
  Subparagraph 1.c:   For Applicant 
  Subparagraphs 1.d through 1.f: Against Applicant 
  
 Paragraph 2, Personal Conduct:   AGAINST APPLICANT 
 
  Subparagraph 2.a:   Against Applicant 
 
Conclusion 
 
 In light of all of the circumstances presented by 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.  
 
 
_______________________ 
CLAUDE R. HEINY II 
Administrative Judge