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                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
--------------- )       ISCR Case No. 09-03631
SSN: ----------- )
)
Applicant for Security Clearance )
Appearances
For Government: Julie Mendez, Esquire, Department Counsel
For Applicant: Pro se
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Decision
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CURRY, Marc E., Administrative Judge:
Applicant mitigated the security concern generated by her financial
delinquencies. Clearance is granted.
Statement of the Case
On June 30, 2009, the Defense Office of Hearings and Appeals (DOHA) issued a
Statement of Reasons (SOR) to Applicant detailing a security concern under Guideline
F, Financial Considerations. 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. 
On July 24, 2009, DOHA received Applicant’s Answer. She admitted all of the
allegations except SOR subparagraphs 1.c. and 1.e. The case was assigned to me on
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August 2, 2009. On August 12, 2009, Department Counsel amended the SOR striking
subparagraphs 1.a and 1.g. On September 4, 2009, a notice of hearing was issued
scheduling the case for September 30, 2009. The hearing was conducted as scheduled.
I received four government exhibits and four Applicant exhibits. I left the record open at
the close of the hearing, at Applicant’s request, to allow her to submit additional
exhibits. Within the time allotted, she submitted seven additional documents that I
incorporated into the record. DOHA received the transcript on October 7, 2009.
Findings of Fact
Applicant is a 45-year-old single woman. She earned a bachelor’s degree in
marketing in 1987, and a master’s degree in systems engineering in 2006 (Tr. 22). In
1990, she enlisted in the U.S. Navy and served for four years (Tr. 24). She was
honorably discharged. Since leaving the Navy, she has worked in the systems
engineering field.
Applicant has worked for the same employer, a defense contractor, for the past
nine years (Tr. 24). Her direct technical lead who worked with her daily from 1999
through 2003, and intermittently since then, testified. He characterized Applicant as a
steadying influence on other employees and a capable systems engineer whose only
weakness is that “she does not toot her own horn as much as she probably should, so
that a lot of people underestimate her capabilities” (Tr. 18, 20).
Applicant has approximately $57,000 of delinquent debt. Applicant never had any
financial problems before 2006 (Exhibit 2 at 12). That summer, however, she started a
business that struggled for a year before failing the following year (Answer at 3; Tr. 52).
All of Applicant’s delinquencies relate to the failed business.
Applicant’s business involved providing school transportation services for special
needs children (Tr. 71). Under Applicant’s business plan, she planned to purchase a
fleet of vans and bid on a transportation contract with a school district. Applicant
designated her stepsister, who had previous experience operating a transportation
company, to manage the business. Applicant chose to operate the company in the state
where her stepsister lived. Applicant began organizing the business in the summer of
2006 with the goal of servicing children in the 2006-2007 school year. 
Through much of the time Applicant’s business operated, she was incapacitated
by an illness that required major surgery (Tr. 90). Consequently, she was uninvolved in
its daily operations, relying upon her stepsister for periodic updates as to the business’
viability. 
In July 2006, Applicant began preparing for the upcoming school year by leasing
a van from the automobile company listed in SOR subparagraph 1.f (Tr. 46). The state,
however, required transportation contractors to own their vehicles (Tr. 46).
Consequently, Applicant was unable to begin transporting students when school began
It is unclear from the record which vehicle was titled incorrectly.1
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in September 2006, and the state imposed fines on Applicant’s company for not having
the vehicle ready on time (Tr. 26, 51).
Applicant’s credit bureau report (Exhibit 4 at 14, 20) indicates that she purchased
two vans in September 2006, as listed in SOR subparagraphs 1.c and 1.e, and two
vans in November 2006, as listed in SOR subparagraphs 1.b and 1.d. Applicant denies
purchasing the vehicles listed in SOR subparagraph 1.c and 1.e. She testified that she
knew her stepsister had purchased two additional vehicles for the business, but thought
she purchased them in her name, rather than Applicant’s name (Tr. 73).
Applicant admits financing the purchase of two vans through the automobile
dealer referenced in SOR subparagraphs 1.b and 1.d (Tr. 52). After the purchase,
however, the automobile company prepared the title to one of the vehicles incorrectly,1
listing the wrong owner (Exhibit C). The state then fined her company for failing to title
the vehicle correctly. (Tr. 60).
Applicant soon became irrevocably behind on her operational expenses,
compelling her to dissolve her business in approximately August 2007 (Exhibit G).
Within six months, she voluntarily returned the vehicles listed in SOR subparagraphs
1.b, 1.d, and 1.f (Tr. 81). The respective creditors resold them (Tr. 83). Applicant is
responsible for the combined deficiencies totalling approximately $40,000 (Tr. 28;
Answer at 1-2).
Some time in the fall of 2007, as the creditors listed in SOR subparagraphs 1.c
and 1.e began contacting Applicant, she discovered that her stepsister forged her name
on the purchase contracts for the vehicles (Exhibits A, L). Also, at or about the same
time, Applicant discovered that her stepsister had not consistently paid the employees
while the business was in operation, despite receiving money from Applicant for this
purpose (Tr. 28). Applicant never recovered the vehicle that her stepsister allegedly
financed fraudulently, as listed in SOR subparagraph 1.e. Applicant owes this creditor
approximately $10,500 (Exhibit 4 at 18).
Applicant’s stepsister remained in contact with Applicant after the business failed
in August 2007. However, her stepsister became less accessible as Applicant gradually
began discovering management irregularities. By 2008, Applicant completely lost
contact with her stepsister (Tr. 54; Answer at Attachment 6). In May 2008, she filed a
police report against her (Answer at 10). After investigating the matter, the police
concluded it was a civil issue, and referred Applicant to civil court (Id.). Applicant has
not pursued litigation against her stepsister because she “do[es] not think it would do
any good” (Tr. 91).
In October 2007, Applicant sold her home, earning a $313,000 profit that she
used to repay outstanding loans and other operational expenses (Tr. 84-85). In
November 2007, Applicant consulted an attorney (Exhibit 2 at 68; Answer at 4). The
W hether or not Applicant’s application for a home loan was rejected, or whether she decided not to purchase2
a home, is unknown from the record.
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attorney drafted a lawsuit that he is preparing to file against the automobile company
that financed Applicant’s purchase of two vans in November 2006 (Exhibit L). The draft
complaint alleges, among other things, “problems with financing, titling, and
registration,” “vehicles delivered in defective condition,” “forged signatures,” and
“consumer fraud” (see generally, Exhibit L). Applicant’s counsel has neither filed the
complaint yet, nor provided Applicant with a compensatory damages estimate (Tr. 60).
He did, however, provide a summary of the litigation to a mortgage loan officer when
Applicant was considering purchasing a home approximately 18 months ago  (Answer2
at 8). Also, in a November 2007 e-mail, he told Applicant that such litigation often takes
several years to complete (Exhibit 2 at 63). More recently, he advised her not to contact
the dealer until the dispute is resolved (Tr. 33).
Applicant notified her company’s security office both when she started her
business, and when it started struggling (Tr. 15). She maintains a budget (Exhibit 2 at
15). She makes $103,000 annually and has no dependents (Tr. 98, 102). She owns one
car that is paid for in its entirety (Tr. 100). She has $10,000 in savings, and $51,000 in
her 401k account (Tr. 99). She has approximately $1,000 of monthly, after-expense
income (Tr. 101).
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 together with the factors
listed in the adjudicative process. According to AG ¶ 2(c), the entire process is a
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.” 
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
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Applicant has the ultimate burden of persuasion as to obtaining a favorable security decision.
Analysis
Guideline F, Financial Considerations
Under this guideline, “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”
(AG ¶ 18). 
Applicant’s accrual of $57,000 of delinquent debt between 2006 and 2008
triggers the application of AG ¶ 19(c), “a history of not meeting financial obligations.” All
of Applicant’s debt relate to a failed business venture. Applicant had never experienced
any financial problems before starting her business. 
Applicant kept her employer informed of her business from its inception to its
demise. Many of the problems the business experienced resulted from her stepsister’s
mismanagement. Although Applicant should have been more actively involved in the
business’ daily operations, her designation of her stepsister as its manager was
reasonable given her stepsister’s previous experience with similar businesses. Also,
Applicant’s illness prevented her from more actively managing the business. Once she
concluded that her stepsister was defrauding her, Applicant attempted to locate her,
then filed a police report.
Applicant’s delinquent debt consists of the deficiencies owed for five vans that
either she or her sister had purchased for the business’ operation. As part of the
process of dissolving the business, she voluntarily returned three of the vehicles to the
respective dealers. She retained an attorney to file a complaint against the automobile
company that, among other things, allegedly allowed her sister to fraudulently purchase
the vans by forging her name on the sales contract. Based on the advice of her
attorney, Applicant is taking no further action related to the payment of the deficiencies
on any of the vans until her dispute is resolved. 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.
The draft complaint is convoluted and confusing. At the hearing, Applicant
identified her stepsister’s misfeasance, rather than the automobile company’s
negligence, as the primary reason for the business’ failure. The draft complaint,
however, lists the automobile company as the defendant.
Applicant’s attorney has not filed the complaint even though he has been working
with her for two years. Also, Applicant could not provide an estimate of her
compensatory damages.
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Nevertheless, Applicant provided evidence of communication with her attorney
detailing the merits of the complaint and explaining the delay in filing it. Consequently, I
conclude that although Applicant’s claim is not strong, it is not unreasonable. AG ¶
20(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,” applies.
When Applicant’s business began failing, she sold her home, and used the profit
to repay start-up loans and other expenses. AG ¶ 20(c), “. . . there are clear indications
that the problem is being resolved or is under control,” applies. 
The remaining delinquencies, as listed in the SOR, constitute finance costs for
five vans. Applicant does not intend to satisfy them. AG ¶ 20(d), “the individual initiated
a good-faith effort to repay overdue creditors or otherwise resolve debts,” does not
apply. Her decision not to satisfy them, however, was based upon her attorney’s advice.
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.
Applicant’s financial problems were not caused by exorbitant, irresponsible
spending. Instead, they were caused by a business that failed because of her
underestimation of its operating costs, her stepsister’s misfeasance, and mistakes made
by one of the loan companies that financed the purchase of two vehicles used for the
business. 
Applicant’s delinquent debts are limited to the deficiencies remaining on five
vehicles she purchased for her business, which the creditors voluntarily repossessed
when the business failed. The Applicant has pursued litigation against one of the
creditors listed in the SOR, and paid creditors unlisted in the SOR through the sale of
her home.
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Applicant’s belief that the litigation she has been pursuing will remedy all the
remaining delinquencies is unfounded. However, Applicant has ample disposable
income to resolve the delinquencies regardless of whether her litigation is successful. 
Applicant did not manage her business well, and the legal advice she has
received since its dissolution has been questionable. However, she managed the
business transparently, informing her employer both when she started it, and when it
began struggling. The potential for pressure, coercion, exploitation, or duress is
minimal.
Applicant’s business was the sole source of her financial problems. Because she
dissolved it, and had never previously experienced financial problems, they are unlikely
to recur. Upon evaluating this case in the context of the whole person concept, I
conclude that Applicant has mitigated the financial considerations security concern.
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: WITHDRAWN
Subparagraphs 1.b - 1.f: For Applicant
Subparagraph 1.g: WITHDRAWN
Conclusion
In light of all of the circumstances presented by the record in this case, it is
clearly consistent with the national interest to continue Applicant’s eligibility for a
security clearance. Eligibility for access to classified information is granted.
                                             
MARC E. CURRY
Administrative Judge