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                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 08-11940
SSN: )
)
Applicant for Security Clearance )
Appearances
For Government: Jennifer Goldstein, Esquire, Department Counsel
For Applicant: Alan V. Edmunds, Esquire
Stephanie N. Mendez, Esquire
December 15, 2009
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Decision
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CEFOLA, Richard A., Administrative Judge:
Applicant submitted his Electronic Questionnaires for Investigations Processing
(e-QIP), on September 2, 2008.  On June 22, 2009, the Defense Office of Hearings and
Appeals (DOHA) issued a Statement of Reasons (SOR) detailing the security concerns
under Guideline F for Applicant.  The action was taken under Executive Order 10865,
Safeguarding Classified Information within Industry (February 20, 1960), as amended;
Department of Defense Directive 5220.6, Defense Industrial Personnel Security
Clearance Review Program (January 2, 1992), as amended (Directive); and the revised
adjudicative guidelines (AG) promulgated by the President on December 29, 2005, and
effective within the Department of Defense for SORs issued after September 1, 2006. 
Applicant acknowledged receipt of the SOR on June 25, 2009.  He answered the
SOR in writing through counsel on July 8, 2009, and requested a hearing before an
Administrative Judge.  DOHA received the request soon thereafter, and I received the
case assignment on August 4, 2009.  I granted Applicant’s request for a delay until
September 16, 2009, in order for his counsel to be available.  DOHA issued a notice of
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hearing on August 5, 2009, and I convened the hearing as scheduled on September 16,
2009.  The Government offered Exhibits (GXs) 1 through 8, which were received
without objection.  Applicant testified on his own behalf, as did four other witnesses, and
submitted Exhibits (AppXs) A through BB, without objection.  DOHA received the
transcript of the hearing (TR) on September 23, 2009.  The record closed on September
16, 2009, the date of the hearing.  Based upon a review of the case file, pleadings,
exhibits, and testimony, eligibility for access to classified information is granted.
Findings of Fact
In his Answer to the SOR, Applicant through counsel denied the factual
allegations in all of the subparagraphs of the SOR.
Guideline F - Financial Considerations
In 2003, the Applicant purchased Property #1 as a residence; and in 2005 he
purchased Property #2 for a new residence, thus turning Property #1 into a rental (TR at
page 57 line 3 to page 59 line 16, and at page 59 line 17 to page 61 line 15).  The
original appraisal price for Property #1 was fraudulently set high by the original lender,
and the Applicant sued successfully in this regard (TR at page 48 line 16 to page 49 line
4, and AppXs A and B).  This is evidenced by a Declaration by his former Counsel, who
represented him in this matter, and by a Stipulation of Settlement from the lender
(AppXs A and B).
In 2008, the real estate market collapsed, and the Applicant’s spouse lost her job
(TR at page 53 lines 3~11, and at page 61 line 16 to page 62 line 2).  In addition, the
renter of Property #1 moved out, and he was unable to rent the property (Id).  This
caused the Applicant financial difficulties.
1.a. and 1.d.  It is alleged that the Applicant owes $344,000 and $86,000,
respectively on a first and a second mortgage on Property #1.  This property was
foreclosed on by the lenders, and the Applicant now owes nothing on these debts (TR
at page 47 lines 1~9 and 22~25, at page 52 lines 18~24, and AppXs A, C, D, J, Y and
BB).  This is evidenced by a Declaration by his former Counsel, a Notice of Trustee’s
Sale, a Home Loan 1099-A Tax Form, a Grant Deed, a Trustee’s deed Upon Sale, and
a June 2009 Credit Report (AppXs A, C, D, J, Y and BB).
1.b. and 1.c.  It is alleged that the Applicant owes $567,000 and $140,000,
respectively on a first and a second mortgage on Property #2.  This property was also
foreclosed on by the lenders, and the Applicant, again, owes nothing on these debts
(TR at page 47 lines 10~21, at page 52 line 25 to page 53 line 2, and AppXs J, Z, and
AA).  This is evidenced by a Grant Deed, a Trustee’s deed Upon Sale, and a June 2009
Credit Report ( AppXs J, Z, and AA).
The Applicant is now current with all of his debts (see AppX J).  He has savings
bonds with a current redemption in excess of $27,000 (AppX K); an investment portfolio
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valued at about $9,800 (AppX L); and about $2,255 and about $6,331 in two IRAs
(AppXs N and O).
Policies
When evaluating an applicant’s suitability for a security clearance, the
administrative judge must consider the revised adjudicative guidelines (AG).  In addition
to brief introductory explanations for each guideline, the adjudicative guidelines list
potentially disqualifying conditions and mitigating conditions, which are useful in
evaluating an applicant’s eligibility for access to classified information.
These guidelines are not inflexible rules of law.  Instead, recognizing the
complexities of human behavior, these guidelines are applied in conjunction with the
factors listed in the adjudicative process.  The administrative judge’s over-arching
adjudicative goal is a fair, impartial and 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
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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.  With the collapse of the real estate market, the Applicant became
delinquent as to first and second mortgages on two separate properties.  The evidence
is thus sufficient to raise these potentially disqualifying conditions, requiring a closer
examination.
The guideline also includes examples of conditions that could mitigate security
concerns arising from financial difficulties.  Under AG ¶ 20(a), the disqualifying condition
may be mitigated where Athe behavior happened so long ago, was so infrequent, or
occurred under such circumstances that it is unlikely to recur and does not cast doubt
on the individual=s current reliability, trustworthiness, or good judgment.@  All of the
Applicant’s financial difficulties arose from the recent collapse of the real estate market,
which was exacerbated by his spouse losing her job, and by the loss of a tenant.  I find
the behavior occurred under such unusual circumstances that it is unlikely to recur, and
it does not raise concerns about his current reliability, trustworthiness, or good
judgment.  The evidence raises this potentially mitigating condition. 
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.@  As noted above, the
Applicant’s spouse lost her job, and his tenant moved out of his rental property.  He now
owes nothing on these debts.  I find this potentially mitigating condition is a factor for
consideration in this case. 
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Whole Person Concept
Under the whole person concept, the Administrative Judge must evaluate an
Applicant’s eligibility for a security clearance by considering the totality of the Applicant’s
conduct and all the circumstances.  Under AG ¶ 2(c), the ultimate determination of
whether to grant eligibility for a security clearance must be an overall commonsense
judgment based upon careful consideration of the guidelines and the whole person
concept.
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.
The Applicant has offered the very supportive testimonies of a colleague, of his
Human Resources Manager, of the Vice President of his employer’s operations, and of
the CEO and President of his employer’s firm (TR at page 23 line 23 to page 45 line
10).  He has also offered Personal Letters of Reference from three colleagues, from the
Facility Security Officer, and from the before mentioned CEO (AppXs Q~U).  The CEO
avers, in part, the following:
[The Applicant] . . . is a professional with an excellent reputation within the
Navy C4I community as well as the Navy Information Assurance
community.  I have known [the Applicant] for over 3 years now and trust
his judgment, value his advice and know him to be of fine character.  I
have been aware of his security clearance issues since 2009 and that has
not changed my opinion of him nor altered our business relationship
(AppX T).
During his testimony, the CEO further averred that the Applicant was trustworthy;
and as such, should be granted a security clearance (TR at page 42 line 10 to page 45
line 10).
I considered all of the evidence, including the potentially disqualifying and
mitigating conditions surrounding this case.  Overall, the record evidence leaves me
without questions or doubts as to Applicant’s eligibility and suitability for a security
clearance.  For all these reasons, I conclude Applicant has mitigated the security
concerns arising from his financial considerations. 
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Formal Findings
Formal findings for or against Applicant on the allegations set forth in the SOR,
as required by section E3.1.25 of Enclosure 3 of the Directive, are:
Paragraph 1, Guideline F: FOR APPLICANT
Subparagraph 1.a: For Applicant
Subparagraph 1.b: For Applicant
Subparagraph 1.c: For Applicant
Subparagraph 1.d: For Applicant
Conclusion
In light of all of the circumstances presented by the record in this case, it is
clearly consistent with national security to grant Applicant eligibility for a security
clearance.  Eligibility for access to classified information is granted.
Richard A. Cefola
Administrative Judge