1
                                                             
                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 08-04927
SSN: )
)
Applicant for Security Clearance )
Appearances
For Government: Francisco Mendez, Esquire, Department Counsel
For Applicant: Pro Se
______________
Decision
______________
HENRY, Mary E., Administrative Judge:
Based upon a review of the case file, pleadings, exhibits, and testimony, I
conclude that Applicant’s eligibility for access to classified information is denied.
Applicant submitted his Security Clearance Application (SF 86) on July 23, 2007.
The Defense Office of Hearings and Appeals (DOHA) issued Applicant a Statement of
Reasons (SOR) detailing security concerns under Guideline F on February 26, 2009.
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 on May 8, 2009. He answered the
SOR in writing, initially, on April 19, 2009, and additionally on May 12, 2009. He
W hen  SOR allegations are controverted, the government bears the burden of producing evidence sufficient1
to prove controverted allegations. Directive, ¶ E3.1.14. “That burden has two components. First, the
government must establish by substantial evidence that the facts and events alleged in the SOR indeed took
place. Second, the government must establish a nexus between the existence of the established facts and
events and a legitimate security concern.” See ISCR Case No. 07-18525 at 4 (App. Bd. Feb. 18, 2009),
(concurring and dissenting, in part) (citations omitted).
GE 1; Response to SOR.2
Id.; AE J; Tr. 27.3
Applicant changed insurance companies after this damage. Under the new insurance policy, his deducible4
would have been only two percent for future property damage.
2
requested a hearing before an administrative judge. DOHA timely received the hearing
request. Department Counsel was prepared to proceed on July 24, 2009, and I received
the case assignment on July 28, 2009. DOHA issued a notice of hearing on August 4,
2009, and I convened the hearing as scheduled on August 26, 2009. The government
offered eight exhibits (GE) 1 through 8, which were received and admitted into evidence
without objection. Applicant and one witness testified on his behalf. He submitted nine
exhibits (AE) A through I, which were received and admitted into evidence without
objection. DOHA received the transcript of the hearing (Tr.) on September 3, 2009. I
held the record open until September 15, 2009, for Applicant to submit additional
matters. On September 14, 2009, he submitted eight additional exhibits, AE J through
AE Q, without objection. The record closed on September 15, 2009.
Findings of Fact
In his Answer to the SOR, Applicant admitted the factual allegations in ¶¶ 1.a and
1.d-1.g of the SOR, with explanations. He denied the factual allegations in ¶¶ 1.b, 1.c,
and 1.h of the SOR.  He also provided additional information to support his request for1
eligibility for a security clearance.  
Applicant, who is 34 years old, works as a production manager for a Department
of Defense contractor. He began this position in October 2008 after relocating from
another state. The record contains no evidence that shows he mishandled classified
information or that he has performance issues at work.2
Applicant married in 1998. He has three children, ages 12, 8, and 7 from his
marriage. He and his wife divorced in June 2008. His children live many miles from him,
with his former wife and her new husband.  3
Until 2004, Applicant managed his finances well. In 2004, a major hurricane
seriously damaged his home. The damage included loss of his roof and significant
water damage, requiring he and his family to live in a hotel for at least a month. His
homeowner’s insurance paid for all repairs in excess of Applicant’s nine percent
deductible.  Applicant estimated that he personally paid approximately $20,000 in repair4
costs for damages to his home from the hurricane. He financed the repairs with his
Response to SOR; Tr. 35-36, 52, 62.5
Response to SOR; Tr. 37.6
Response to SOR and attachments; Tr. 32.7
Id.; Tr. 42-45.8
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savings and a line of credit with the bank. When they were doing the repairs, he and his
wife decided to do some improvements to the property.  5
Applicant worked for a company for eight years. During his tenure of
employment, the company promoted him from employee to supervisor, to quality
assurance manager, to senior director and project manager, and finally, to vice
president in 2005. In March 2005, his company experienced a reduction in business,
which resulted in reduced hours for all employees and managers. Applicant’s work
hours and income declined by 20%. This work and income reduction lasted three
months. Applicant used his remaining savings to pay his bills.6
In November 2005, his company again experienced a decline in business, which
lasted at least 10 months. They company reduced his, and all employees, hours and
pay by 20%. As an officer, the company further reduced his pay by another 10%. He
used his 401k assets to pay his bills. Applicant resigned his position in August 2006
because he was unsure if his job would continue. He accepted another, more stable
position at a lower salary. In November 2006, he obtained a part-time job delivering
pizzas to help with his finances. He also contacted debt consolidation firms to help him
manage his debt problems, but all declined to help.  7
In January 2007, he and his former wife filed for Chapter 13 bankruptcy in an
effort to stabilize their monthly expenses and resolve their debts. He reported this
decision to the facility security officer at his employment. Under the court approved
payment plan, Applicant paid $3,180 a month on his debts. He made his bankruptcy
payments until July 2007, when he received notice that his monthly mortgage payment
would increase several hundred dollars. At this time, he learned that the monthly
bankruptcy payment would also increase by the same amount. He mistakenly believed
that when he filed bankruptcy, his adjustable rate mortgage could not change, and thus,
his monthly payment would not increase. When he realized that his monthly bankruptcy
payment would increase, he sought advice from his bankruptcy attorney. He then
decided to have his case dismissed. He did not realize that the dismissal would be for
non-payment.8
By the summer 2007, Applicant’s former wife agreed to seek help because of her
alcohol consumption. Her drinking impacted his work, as he needed to leave work to
care for their children, even though his wife did not work. Qualified physicians
diagnosed her as alcohol dependent. She entered a treatment program in July 2007
Response to SOR and attachment; Tr. 38, 47.9
Response to SOR and attachments. 10
Response to SOR and attachments; Tr. 46.11
Tr. 27, 39-41.12
Response to SOR; AE A-AE F; AE P.13
GE 3 (Credit report, dated August 28, 2007); GE 5 (Credit report, dated September 24, 2008); GE 7 (Credit14
report, dated December 4, 2008); GE 9 (Credit report, dated August 25, 2009); AE K (Credit reports, dated
May 11, 2009 and August 25, 2009).
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and has remained sober. Applicant estimated her alcohol consumption cost at least
$300 a month, which contributed to his financial problems.  9
Following the dismissal of his Chapter 13 bankruptcy, Applicant retained the
services of a debt consolidation firm on September 26, 2007. He also worked with his
mortgage company to resolve his debt issues and to stop any foreclosure proceedings.
In November 2007, he and his family moved out of their house into a rented town
house. On December 5, 2007, his mortgage company filed a line of satisfaction of
mortgage with the state court. The mortgage company agreed that his mortgage debt
had been paid in full.10
His wife asked for a divorce in February 2008. Although he learned that she was
involved with another man, he worked to reach a fair resolution of their issues. Their
divorce became final in June 2008. His children live with her and visit him, when he can
pay for the plane tickets. He understood that he would be responsible for joint debts
incurred in his marriage, but not his wife’s sole debts. The creditors and collection
companies for his wife sole accounts are seeking reimbursement from him for her debts
incurred while they were married. His former wife does not work.11
Applicant accepted a job offer from his current employer and moved from where
he lived to another state many miles away in October 2008. He received a $5,000
salary increase with his new position, which is offset by a higher cost of living. He stays
in contact with his children, but he sees them infrequently because it is expensive to
travel.12
Applicant currently earns $6,731 a month in gross income and $4,651 a month in
net income. His monthly expenses average $4,410 and include rent, utilities,
transportation costs, a school loan, and child support. He has a remainder of $240 each
month. Applicant verified that he pays his current monthly bills.13
After reviewing the credit reports dated August 28, 2007; September 24, 2008;
December 4, 2008; May 11, 2009; August 25, 2009; and the SOR, I have compiled a list
of the total debts owed, excluding any duplicate entries. I find that Appellant’s actual
debts are as follows:14
Of the five credit reports in the record, this debt appears only on the credit report dated September 24, 2008.15
See GE 5.
Applicant believed this debt belonged to his former wife. In her letter of July 11, 1008, his former wife lists16
an account with this creditor and an account number. His former wife’s account number does not match the
account number of a debt with this creditor listed on Applicant’s May 11, 2009. GE 4; AE K.
GE 4, attachments; AE N; Tr. 50-52.17
GE 4, attachments; AE L; AE M; Tr. 67-68. 18
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SOR ¶ TYPE OF DEBT AMOUNT STATUS EVIDENCE
1.b Credit card $     733.00 No account in his
name; former
wife’s account
Response to
SOR; GE 4 -
former wife’s letter
of July 11, 2008 
1.c Store account $     442.00 No account in his
name; not on
credit reports
GE 3; GE 5; GE 7;
GE 9; AE K15
1.d Bank line of credit $26,850.00 Unpaid Tr. 49-50
1.e Credit card $  2,522.00 Unpaid Tr. 5516
1.f Credit card $14,947.00 Unpaid Tr. 56
1.g Financing $  5,343.00 Unpaid Tr. 57
1.h Medical bill $     295.00 Unpaid; disputed,
but dispute not
verified as
reasonable
Response to
SOR; Tr. 60.
Two months prior to the hearing, Applicant discharged the debt consolidation firm
with whom he had been working. The firm refused to include all his overdue debts in
their repayment plan. He paid this company $3,000 in servicing fees.  17
At the hearing, Applicant discussed to two different creditors that may have held
the debt alleged in SOR ¶ 1.d. He believed these creditors purchased this debt at
different times. Because he experienced difficulty determining who owned these debts,
he made two payments of $200 each to each of the collection agents in October and
November 2008 on accounts not listed in the SOR and not resolved. The account
numbers on his checks do not match the account numbers in the credit reports. While
these accounts and the account in allegation 1.d may be the same, the evidence of
record does not indicate the accounts are the same. These two creditors refused to
develop a repayment plan with him. Applicant has filed a dispute for one of these
debts.18
AE Q; Tr. 80.19
AE J; Tr. 90-93.20
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Subsequent to the hearing, Applicant contacted and retained a bankruptcy
attorney, instead of a debt consolidation firm. With the help of counsel, Applicant plans
to file a Chapter 13 bankruptcy petition. As required by the bankruptcy court, Applicant
participated in debt counseling. He also underwent debt counseling during his previous
bankruptcy filing and with the debt consolidation firm.19
A co-worker and friend testified on Applicant’s behalf. He has known Applicant
for 10 years. As he was the facility security officer, the witness verified that Applicant
discussed the reporting requirements for finances and his clearance in 2006 and that an
incident report was filed related to Applicant’s first bankruptcy. He verified the hurricane
damage to Applicant’s home. He testified that Applicant lives a much more meager
lifestyle and lives within his financial means. Applicant is extremely honest and hard
working. He does an outstanding job. Other co-workers agree with this assessment of
Applicant. His former wife and her husband also wrote a letter of recommendation on
his behalf.20
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 used 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.
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, an applicant is
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responsible for presenting “witnesses and other evidence to rebut, explain, extenuate,
or mitigate facts admitted by applicant or proven by Department Counsel. . . .” An
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
an 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 accumulated delinquent debt and has unable to pay his
obligations for a period of time. The evidence is sufficient to raise these potentially
disqualifying conditions.
The guideline also includes examples of conditions that could mitigate security
concerns arising from financial difficulties. Under AG ¶ 20(a), mitigation may occur when
“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.@ Applicant=s financial worries
started in 2004 when a hurricane damaged his home, and by 2006, his financial
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problems were severe. His finances continued to deteriorate until 2008. Because of the
business downturn, hurricane, alcoholic wife, and divorce, I find that this mitigating
condition is not applicable because these problems are recent and ongoing. 
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’s financial
problems started in 2004 when a hurricane damaged his home. Because he had a nine
percent deductible, he paid a significant amount in repairs, using a bank credit line and
his savings. Six months after the storm damage, his employer reduced his work hours
and income by 20% for three months due to a business downturn. He used his
remaining savings to pay his bills. Five months after he returned to work full-time, his
employer again reduced his work hour by 20% and his income by 30%, as he was an
officer. Applicant began to fall behind in his bills and unsuccessfully attempted to hire a
debt consolidation firm. In an effort to manage his finances and save his home from
foreclosure, he filed a Chapter 13 bankruptcy petition. He complied with the repayment
terms until his mortgage payment increased significantly. After the bankruptcy case was
dismissed, he worked with his mortgage company and resolved his mortgage debt. His
wife’s excessive monthly spending on alcohol impacted his ability to pay his debts until
the summer of 2007. In 2008, his wife asked for a divorce. Their divorce became final in
June 2008. When he first encountered financial problems, he used his savings, a bank
loan and retirement funds to resolve his debt issues. In doing so, he acted reasonably.
However, his problems, financial or otherwise, continue. Because Applicant has
significant, unpaid bills and has had ample time to develop a plan to resolve his debts,
this mitigating condition cannot be fully applied at this time. 
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). Applicant has been through debt counseling
three times and hired a debt consolidation company to help him with his debts. The debt
consolidation company would not work with many of his creditors, so his has
discontinued his services with this company. He established that the debt in SOR
allegation 1.a belongs to his former wife and that the debt in SOR allegation 1.b is not
his. This mitigating condition is only partially applicable because his major outstanding
debts remain unresolved, and he has not made sufficient progress in his current
Chapter 13 bankruptcy to receive full mitigating credit. 
Similarly, AG & 20(d) applies where the evidence shows “the individual initiated a
good-faith effort to repay overdue creditors or otherwise resolve debts.” Applicant does
not have an established payment plan for his major SOR debts. He intends to develop a
plan through bankruptcy, however, his future intent is insufficient for me to apply this
mitigating condition.
Under AG ¶ 20 (e), mitigation may occur if “the individual has a reasonable basis
to dispute the legitimacy of the past-due debt which is the cause of the problem and
AG ¶ 20(f) is not applicable.21
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provides documented proof to substantiate the basis of the dispute or provides evidence
of actions to resolve the issue.” Applicant disputed the debt listed in SOR allegation 1.h
on the grounds that this medical bill should have been paid by the insurance company.
As he has not provided a copy of any formal dispute on this debt, this mitigating
condition is not applicable. He also disputed his responsibility for the debts in SOR
allegations 1. and 1.b. I am satisfied these two debts totaling $1,175 are not his debts.21
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 an applicant’s
conduct and all relevant 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. The decision to grant or deny a security
clearance requires a careful weighing of all relevant factors, both favorable and
unfavorable. In so doing, an administrative judge must review all the evidence of record,
not a single item in isolation, to determine if a security concern is established and then
whether it is mitigated. A determination of an applicant’s eligibility for a security
clearance should not be made as punishment for specific past conduct, but on a
reasonable and careful evaluation of all the evidence of record to decide if a nexus
exists between established facts and a legitimate security concern. 
The evidence in support of denying a security clearance to applicant under the
whole person concept is more substantial than the evidence in support of granting his
security clearance. In reaching this conclusion, I considered the potentially disqualifying
and mitigating conditions in light of all the facts and circumstances surrounding this
case. Applicant moved up rapidly in his job between 1998 and 2005, increasing his
household income. He also spent more money. In 2004, the first of many financial
setbacks began when a hurricane struck where he lived and significantly damaged his
house. As he tried to recover from this damage and its financial impact, his job required
him to reduce his work hours and take a pay cut for three months. The loss of income
further strained his household finances. He managed to pay his bills until a second and
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more lengthy work slow down began in November 2005. Although he used his 401K
money to help pay his bills, he exhausted this money and his savings. His debt
problems continued despite his efforts to resolve the debts. He filed for bankruptcy in
2007, but stopped his payments when his monthly mortgage payment increased by
several hundred dollars. He eventually reached a resolution of his mortgage debt by
returning his house to the mortgagor. His wife’s alcoholism and their subsequent
divorce created additional financial strain for him. Throughout all his problems, Applicant
tried, not always successfully, to resolve or manage his debts. Applicant has made a
diligent effort to gain control of his finances, but his unpaid debts are significant. He
recently started the process to file a second Chapter 13 bankruptcy. At this time,
Applicant manages his current monthly living expenses without generating additional
delinquent debt. His problem remains the significant unpaid debt he still has, which is
not resolved and remains a security concern. 
Should he develop a manageable repayment plan through the bankruptcy court
and establish a track record of compliance with his payment plan, he can reapply for his
clearance in a year and his application should be favorably considered.
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 finances and under
Guideline F.
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: For Applicant
Subparagraph 1.b: For Applicant
Subparagraph 1.c: Against Applicant
Subparagraph 1.d: Against Applicant
Subparagraph 1.e: Against Applicant
Subparagraph 1.f: Against Applicant
Subparagraph 1.g: Against Applicant
Subparagraph 1.h: Against Applicant
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Conclusion
In light of all of the circumstances presented by the record in this case, it is not
clearly consistent with the national interest to grant Applicant eligibility for a security
clearance.  Eligibility for access to classified information is denied.
                                                              
MARY E. HENRY
Administrative Judge