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                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
------------------------ )       ISCR Case No. 09-03613
SSN: ----------- )
)
Applicant for Security Clearance )
Appearances
For Government: Eric Borgstrom, Esquire, Department Counsel
For Applicant: Pro se
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Decision
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CURRY, Marc E., Administrative Judge:
Applicant mitigated the government’s financial considerations security concern.
Clearance is granted.
On July 23, 2009, the Defense Office of Hearings and Appeals (DOHA) issued a
Statement of Reasons (SOR) to Applicant detailing security concerns 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. 
Applicant answered the SOR on March 1, 2009, admitting the allegations set
forth in SOR subparagraphs 1.a, 1d, and 1.e, and denying the allegations set forth in
SOR subparagraphs 1.b, 1.c, 1.f, and 1.g. He requested a hearing, and the case was
assigned to me on August 31, 2009. On September 28, 2009, a Notice of Hearing was
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issued scheduling the case for October 9, 2009. The day of the hearing, Applicant
moved for a continuance because of problems retaining an attorney. Department
Counsel did not object, and I granted Applicant’s motion, rescheduling the hearing for
November 9, 2009. The hearing was held as rescheduled. I received nine government
exhibits, identified as Government Exhibits (GE) 1-9, and eight Applicant exhibits,
identified as Applicant’s Exhibits (AE) A-H. Also, I received Applicant’s testimony. At
Applicant’s request, I left the record open at the conclusion of the hearing to allow him
to submit additional exhibits. Within the time allotted, he submitted four additional
exhibits that I marked and received as Applicant’s AE I through L. The transcript was
received on November 17, 2009.
Preliminary Ruling
Department Counsel stipulated that Applicant satisfied the delinquent debts listed
in SOR subparagraphs 1.a, 1.e, and 1.f (Tr. 8).
Findings of Fact
Applicant is a 51-year-old married man with three children, ages 25, 22, and 17.
He earned a GED in 1975 and is a certified electrician (Tr. 16). He has been self-
employed since 1987 (Tr. 16). For the past four years, he has worked as a
subcontractor for a defense contractor. Applicant installs video-teleconferencing
equipment in hotel conference rooms that the military uses during staff meetings (Tr.
76). According to a longtime business associate, he is “conscientious, dependable, and
trustworthy” (AE E).
In the late 1990s, Applicant was working on a large corporate contract (GE 2 at
29). In furtherance of the project he was contracted to perform, Applicant spent
approximately $16,000 on operating expenses that he anticipated being reimbursed per
the contractual agreement (Tr. 23). In late 2001, the company that retained his services
began struggling financially, and abruptly stopped paying Applicant (Id.). Ultimately, the
client went out of business, and never paid Applicant. Applicant considered suing the
delinquent client (Tr. 23). Based upon his attorney’s advice, Applicant decided to forego
litigation (Tr. 23). Applicant’s business expenses gradually became delinquent. 
In addition to operating a video-teleconferencing business, Applicant owned a
tanning salon with his wife (Tr. 78). In 2004, they entered an agreement with the owner
of a shopping plaza to open another tanning salon (Tr. 79). Under the agreement,
Applicant was to renovate the property at his expense. In exchange, the landlord was to
waive rent for the months that Applicant was renovating the property.
Subsequently, a dispute arose between the landlord and Applicant that resulted
in Applicant withdrawing from the deal without finishing the renovations (Tr. 79). In
2005, the landlord sued Applicant (GE 8). The court ruled in the landlord’s favor and
entered a judgment for $39,676 (Id.). 
SOR subparagraph 1.f is the judgment against Applicant stemming from his dispute about the commercial1
rental property. SOR 1.g is a duplicate. The judgment appeared twice on Applicant’s credit report because
the landlord filed suit twice in different jurisdictions (cf. AE B and C).
These are the delinquencies that Department Counsel stipulated were satisfied at the beginning of the2
hearing.
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By 2006, Applicant had accrued approximately $128,000 of delinquent debt,
including two judgments (SOR subparagraphs 1.a and 1.f ), three business credit cards1
(SOR subparagraphs 1.b, 1.c, and 1.e), and a business line of credit (SOR
subparagraph 1.d). That year, Applicant began meeting with a credit counselor (AE G).
The counselor initially advised Applicant to file bankruptcy, but Applicant decided to
address his debts “in a more responsible manner” (Id.). 
In September 2007, Applicant refinanced his home (GE 2 at 10). He used the
cash from the refinancing to satisfy approximately $79,225 of his debt, including both
judgments and one of the credit cards.2
Applicant contends that he no longer is responsible for the debt listed in SOR
subparagraph 1.b because the creditor wrote it off, and he declared the delinquent
amount as income on his 2007 federal income tax return (Tr. 28, 29; GE 2 at 9). Neither
the account number nor the amount of the debt referenced on the IRS tax return
correspond with the account number and amount of the debt as listed on Applicant’s
credit report (GE 5 at 1). I find that SOR subparagraph 1.b remains outstanding. 
SOR subparagraph 1.c is a charge account in the amount of $1,800 that is
allegedly delinquent. Applicant contacted the creditor in September 2009, and
negotiated a settlement for $1,500 (GE H at 1). He paid it, as agreed, the following
month (AE H at 3). 
SOR subparagraph 1.d is a business line of credit that became delinquent in the
early 2000s after Applicant’s main client stopped paying him (Answer at 16). As of
March 2009, the balance was approximately $9,000 (GE 2 at 28). It remains
outstanding (Tr. 62).
Approximately three years ago, Applicant retained an investment advisor (AE G).
According to his investment advisor, Applicant’s “financial stability has increased
significantly, due to his diligence and determination to improve his financial condition”
(Id.).
In addition to meeting with the investment advisor, Applicant continues to meet
with his credit counselor (AE F). According to the credit counselor, the process of
resolving these debts has been difficult (Id.), For example:
[m]any of the creditors involved have sold the debts, ceased to be in
business, have changed names (some numerous times), or have no
viable contact that has information regarding the outstanding debt. What
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we have accomplished to date has been the result of significant man
hours of telephone work, letters, and research at various courthouses. A
number of the judgments were erroneously filed in the wrong county,
which has resulted in significant duplication of efforts to get them cleared
(Id.).
Currently, Applicant’s business is thriving. This past year, his salary doubled from
$125,000 per year to $250,000 per year (Tr. 52). He has approximately $40,000
deposited in his corporate checking account and $4,000 in his personal checking
account (Tr. 58; Answer at 5). Also, he has $8,000 invested in a corporate certificate of
deposit (Tr. 58). Each month, he pays an extra $100 toward his home mortgage (Tr.
54). As of the date of the hearing, he was two months ahead on his mortgage payments
(Tr. 54). He maintains a budget. 
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
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.” 
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.
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
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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). Here, Applicant’s history of financial problems triggers the application of AG ¶¶
19(a), “inability or unwillingness to satisfy debts,” and 19(c), “a history of not meeting
financial obligations.”
Applicant’s financial difficulties were not caused by extravagant or irresponsible
spending. Instead, they were caused by a business downturn in the early 2000s, and
exacerbated by a good-faith dispute related to a business venture in 2004 that led to a
judgment against him. Since then, Applicant retained an investment advisor and a credit
counselor to help him address his debts, and refinanced his home, using the remaining
cash to satisfy approximately $79,225 of his delinquent debt. Currently, Applicant’s
business is thriving, and he has ample money to satisfy his remaining delinquencies.
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,” 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,” and 20(d), “the individual initiated a good-faith effort to
repay overdue creditors or otherwise resolve debts,” apply.
Approximately $48,000 of Applicant’s delinquencies remain outstanding. Nearly
$40,000 constitutes one debt, as listed in SOR subparagraph 1.b. The evidence
Applicant provided failed to establish that it was satisfied, as he asserted. Nevertheless,
Applicant successfully demonstrated both that he has been diligently attempting to
identify and satisfy his delinquent debts, and that he has the ability to satisfy them
regardless of whether $8,000 remains outstanding, as he contends, or $48,000 is
outstanding, as the record evidence indicates. In reaching this conclusion, I was
particularly cognizant of the arduous nature of identifying the current credit account
assignees, as described by Applicant’s credit counselor. 
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.
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Applicant’s financial difficulties stemmed from business struggles rather than
irresponsible spending. He has been working diligently to organize his finances and
satisfy his delinquent debt. Currently, he has satisfied more than half of them, and has
ample financial resources to satisfy the remainder. Upon evaluating this case in the
context of the whole person concept, I conclude Applicant has mitigated the financial
considerations security concern. Clearance is granted.
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
Subparagraphs 1.a - 1.g: For Applicant
Conclusion
In light of all of the circumstances presented by the record in this case, it is
clearly consistent with the national interest to grant Applicant eligibility for a security
clearance. Eligibility for access to classified information is granted.
                                             
MARC E. CURRY
Administrative Judge