1
                                                             
                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 08-11786
SSN: )
)
Applicant for Security Clearance )
Appearances
For Government: Michael Lyles, 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 deny
Applicant’s eligibility for access to classified information.
Applicant signed his Electronics Questionnaire for Investigations Processing (e-
QIP) on May 8, 2008. The Defense Office of Hearings and Appeals (DOHA) issued
Applicant a Statement of Reasons (SOR) detailing security concerns under Guidelines
F and E on July 10, 2009. DOHA acted 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 received the SOR, and answered it in writing on August 24, 2009. He
requested a hearing before an administrative judge. DOHA received the request on
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).
2
August 27, 2009. Department Counsel was prepared to proceed on September 14,
2009, and I received the case assignment on November 9, 2009. DOHA issued a notice
of hearing on November 16, 2009, and I convened the hearing as scheduled on
December 10, 2009. The government offered six exhibits (GE) 1 through 6, which were
admitted into evidence without objection. Applicant testified on his own behalf. He
submitted 15 exhibits (AE) A through O, which were admitted into evidence without
objection. DOHA received the transcript of the hearing (Tr.) on December 18, 2009. I
held the record open until January 10, 2020, for Applicant to submit additional
documentation. Applicant timely submitted two exhibits, AE P and AE Q, without
objection. The record closed on January 10, 2010.
Procedural and Evidentiary Rulings
Notice
At the hearing, I advised Applicant of his right under ¶ E3.1.8 of the Directive to
15 days notice before the hearing. Applicant affirmatively waived his right to 15 days
notice. (Tr. 9.) 
Post-hearing Submissions
The record closed January 10, 2010. Thereafter, Applicant submitted additional
documentation on two separate occasions. Applicant did not file a motion requesting
that the record be reopened. The Government objected to the admission of this
additional evidence on the grounds that the submissions are not timely. The
Government has not argued that it would be prejudiced by the submission of Applicant’s
additional evidence.
I have considered the Government’s argument and the failure of Applicant, a
non-lawyer, to file a motion. I find that the Government is not prejudiced by the
admission of Applicant’s submissions. These documents are admitted as AE R through
AE U. 
Findings of Fact
In his Answer to the SOR, Applicant admitted the factual allegations in ¶¶ 1.c and
1.d of the SOR, with explanations. He denied the factual allegations in ¶¶ 1.a, 1.b, 2.a,
and 2.b of the SOR.1
GE 1; Tr. 30-31.2
GE 1; Tr. 29-30.3
AE F; AE J; AE K; AE L; AE M; AE N; AE O; Tr. 33-34, 47-48.4
AE E; Tr. 42-43.5
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Applicant, who is 50 years old, was hired by a Department of Defense contractor
in 2008 to work as a law enforcement professional with the troops in Iraq. He deployed
to Iraq to work on the improvised explosive device (IED) problems. At the end of his one
year tour of duty, he learned that his security clearance was rescinded. As of the date of
the hearing, Applicant was not working.  2
Applicant graduated from college in 1985 with a Bachelor of Science degree. He
joined a major city police department in July 1985. He worked in narcotics and gang
units during his 16 years as a police officer. He retired in September 2001 on disability.
Applicant married in 2005 and has a daughter, who is 35 months old.3
Applicant purchased two properties in 1988 or 1989 (AE F - house B and house
C). In 2002, he purchased a property, where he lived, for $700,000 (AE F - house A).
He rented the other two properties. Applicant began purchasing fix-up properties around
2002. After he repaired each property, he sold it for a profit. He retained ownership of
these properties for a short period of time. He indicated that he sold each property for
between $20,000 and $50,000. He used the profits to purchase another property and to
pay any bills related to the sold property. Applicant received tax notices on his
investment properties which he either paid in April or December of the year when due.
He assumed his business agent also received the tax bills.4
Applicant purchased a house in the early summer of 2005, which he sold in
August 2005. He owned this property for 63 days. Applicant believed that all expenses
related to this property, including property taxes, were contained in the settlement
documents and paid from the sale proceeds. When he was in Iraq, he learned that he
owed additional property taxes on this property. He did not receive the notices on the
past due taxes, as the notices were mailed to the wrong address. When he learned
about the unpaid taxes in 2009, he paid them. Although the State tax office issued a
release of lien for its lien filed in January 2006, Applicant stated he did not realize a lien
had been filed on this property. He did not own the property when the lien was filed.5
In the fall 2005, a real estate agent suggested Applicant purchase a property,
then tear down the house and rebuild. Applicant indicated that the destruction and
rebuilding process took about 18 months, and because of this time period, his financial
problems developed. Applicant purchased three homes for investment (House D, house
E, house F). Applicant purchased these properties by refinancing his two rental
properties and his home with a first mortgage. He also obtained a second loan, which
was a home equity loan, with the two rental properties as collateral. Before he could
complete the rebuilding of even one of the three houses of his investment properties,
AE F; AE H; AE I; Tr. 33-35.6
GE 2, p. 10; AE G; Tr. 35-39.7
GE 3; AE P; Tr. 62-66.8
AE P; AE R; AE S.9
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the real estate market changed and property values began to decline. Applicant sold the
three investment properties between February 2007 and March 2008. He does not owe
any money on these properties, as the property sold for an amount equal to the debt
owed the primary mortgagor.6
By early 2008 Applicant did not have sufficient income to pay the three
mortgages and two equity loans on his home and the two unoccupied rental homes
purchased in 1988 or 1989. He tried to sell these homes, including by short sale, but he
was unsuccessful. The mortgage holder foreclosed on all three properties (house A,
house B, house C) and sold all three homes in August 2008. Applicant does not owe the
primary lender any money on its loans.7
As previously stated, Applicant obtained two equity loans to finance his
investment properties in October 2005. He paid his monthly payment on each loan until
February 2008. When his properties sold at foreclosure, the sale proceeds covered the
mortgage loans on these properties, but were insufficient to pay the equity loans.
Applicant obtained a letter from the loan officer who arranged the four loans, including
these two equity lines of credit (junior liens), on Applicant’s rental properties. The loan
officer opined that 1) upon a foreclosure sale, the proceeds from the foreclosure sale
are applied to the first mortgage and if there are any remaining funds after all taxes and
costs are paid, the proceeds are applied to junior liens; and 2) all junior liens are either
satisfied with the sale proceeds or eliminated at the trustee’s sale. Based on this
knowledge, the loan officer stated that Applicant’s two properties (house B and house
C) went to a trustee sale and the liens were extinguished. No documentation showing
what occurred at the trustee sale has been provided.8
The company holding the equity line of credit on house B and house C and listed
as a creditor on the credit reports of record is no longer in business. Applicant traced
the loans to a banking institution, which purchased the company owning the lines of
equity. Applicant spoke with this creditor. The creditor initially agreed to provide a letter
on the status of his accounts, but later withdrew its offer. It also refused to issue a 1099
for tax purposes. Instead, the creditor verbally advised Applicant that these two debts
are charged-off and have a zero balance. The creditor did not provide any information
on what it intends to do about the collection of the charged-off debts, if anything.9
Subsequent to the hearing, Applicant challenged the validity of the two equity
lines of credit with the credit reporting companies. As a result, the three credit reporting
companies deleted these two debts from his credit report. The two credit reports of
record do not show a debt owed to the current creditor and purchaser of these two
GE 3, GE 4; AE R; AE T; AE U.10
Applicant used his cash assets to purchase his current house. Tr. 68-69. 11
Tr. 32, 68-71.12
GE 1; AE A; AE B; AE C; Tr. 54.13
GE 2; Tr. 55-57.14
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debts. Applicant did not submit a full credit report with his post-hearing submissions.
Thus, the record lacks information as to whether the current creditor has listed these
debts on his credit report.10
Applicant moved his family across the country in July 2009. He purchased a
house for $575,000 and has a mortgage of $275,000.  His monthly mortgage payment11
is $3,200. His current monthly income totals $3,700. Applicant has applied for
unemployment benefits and has some money in his checking account to pay normal
monthly living expenses. He does not have a car payment and limits his credit
expenses.12
Applicant received a job offer on April 21, 2008, which he immediately accepted.
His new employer acknowledged Applicant’s acceptance of the job offer by e-mail,
dated April 22, 2008. As a condition of employment, his new employer required him to
complete a security clearance questionnaire (e-QIP) before May 5, 2008. The e-QIP
was attached to the e-mail along with instructions. Applicant completed the e-QIP in late
April 2008 and submitted it to his facility security officer (FSO) for processing. At this
time, he was not 90 days late in his mortgage payments on his three properties nor had
the foreclosure process begun on his properties. He discussed this fact with his FSO
who advised that since he was not yet 90 days past due, he should answer “no” to
question 28 (b): “Are you currently over 90 day delinquent on any debts?”13
Applicant met with the security clearance investigator on July 21, 2008. He
discussed his housing investment enterprise with the investigator. He told the
investigator that the mortgagor had foreclosed on his three properties in May 2008, and
that he had requested the mortgagor to initiate a short-sale of the property. He also
advised the investigator that the two debts at issue in this case were more than 90 days
past due and that he was waiting to hear from the mortgagor about the short sale before
taking care of these accounts. Applicant argued at the hearing that he made a good
faith effort to reveal his mortgage debt problems at the interview. The summary of the
personal interview contains no statement which indicated that the investigator
confronted Applicant with negative information about his mortgage debts before he
acknowledged the problem. Inferences warrant a finding that Applicant disclosed his
debt problems to the investigator without confrontation.14
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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
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 for 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
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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 two delinquent debts from his real estate
investment enterprise, which are not paid. The evidence is sufficient to raise these
potentially disqualifying conditions.
In assessing whether an Applicant has established mitigation under Guideline F,
the Appeal Board provided the following guidance in ISCR Case No. 07-06482 at 3
(App. Bd. May 21, 2008):
In evaluating Guideline F cases, the Board has previously noted that the
concept of “‘meaningful track record’ necessarily includes evidence of
actual debt reduction through payment of debts.” See, e.g., ISCR Case
No. 05-01920 at 5 (App. BD. Mar. 1, 200). However, an applicant is not
required, as a matter of law, to establish that he has paid off each and
every debt listed in the SOR. See, e.g., ISCR Case No. 02-25499 at 2
(App. BD. Jun. 5, 2006). All that is required is that an applicant
demonstrate that he has “. . . established a plan to resolve his financial
problems and taken significant actions to implement that plan.” See,
e.g.,ISCR Case No. 04-09684 at 2(App. Bd. Jul. 6, 2006). The Judge can
reasonably consider the entirety of an applicant’s financial situation and
his actions in evaluating the extent to which that applicant’s plan for the
reduction of his outstanding indebtedness is credible and realistic. See
Directive ¶ E2.2(a)(“Available, reliable information about the person, past
and present, favorable and unfavorable, should be considered in reaching
a determination.”) There is no requirement that a plan provide for
payments on all outstanding debts simultaneously. Rather, a reasonable
plan (and concomitant conduct) may provide for the payment of such
debts one at a time. See, e.g., ISCR Case No. 06-25584 at 4 (App. Bd.
Apr. 4,2008). Likewise, there is no requirement that the first debts actually
paid in furtherance of a reasonable debt plan be the ones listed in the
SOR.
AG ¶¶ 20(e) and 20(f) are not raised in this case.15
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The guideline also includes examples of conditions that could mitigate security
concerns arising from financial difficulties. Under AG ¶ 20(a), mitigation may occur when
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.@ Applicant=s current financial
problems occurred when the real estate market collapsed in 2007. Until the collapse of
the real estate market, he paid his personal and investment bills. He is not involved in
real estate investment for profit at this time. This mitigating condition has some
applicability as he exercised reasonable judgment when he invested in his properties.
This mitigating condition has only partial applicability since the question of whether
Applicant will invest in property for resale in the future is unknown.
Under AG & 20(b), security concernt 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, Applicant’s financial problems arose when the real estate market collapsed in
2007. He sold three investment properties, but allowed three other properties to go to
foreclosure. Even though he had significant debt from his investments, he was able to
pay most of the debt by selling his properties. However, he has two unpaid equity lines
of credit, totaling $70,000. Although he acted responsibly by selling his property, he has
not resolved the two debts at issue in this case. I find this mitigating condition is partially
applicable. 
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). Similarly, AG & 20(d) applies where the
evidence shows Athe individual initiated a good-faith effort to repay overdue creditors or
otherwise resolve debts.@ Applicant has not received counseling nor has he resolved the
delinquent debts, either by payment or settlement. I conclude that these mitigating
conditions are not applicable.15
Guideline E, Personal Conduct
AG ¶ 15 expresses the security concern pertaining to personal conduct:
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.
See ISCR Case No. 03-09483 at 4 (App. Bd. Nov.17, 2004)(explaining holding in ISCR Case No. 02-2313316
at 5 (App. Bd. Jun. 9, 2004)).
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AG ¶ 16(a) describes conditions that could raise a security concern and may be
disqualifying:
(a) deliberate omission, concealment, or falsification of relevant facts from
any personnel security questionnaire, personal history statement, or
similar form used to conduct investigations, determine employment
qualifications, award benefits or status, determine security clearance
eligibility or trustworthiness, or award fiduciary responsibilities; and (e)
personal conduct, or concealment of information about one's conduct, that
creates a vulnerability to exploitation, manipulation, or duress, such as (1)
engaging in activities which, if known, may affect the person's personal,
professional, or community standing, or (2) while in another country,
engaging in any activity that is illegal in that country or that is legal in that
country but illegal in the United States and may serve as a basis for
exploitation or pressure by the foreign security or intelligence service or
other group;
For AG ¶ 16(a) to apply, Applicant’s omission, concealment or falsification in his
answer must be deliberate. Applicant completed his e-QIP a few days before his debts
became 90 days past due, and denied any overdue debts. He also denied having any
liens placed against his property in the prior seven years for failing to pay taxes or other
debts. He signed the E-QIP at the time his debts became 90 days past due. Thus, at the
time he executed the e-QIP, he omitted material facts about his debts. This information
is material to the evaluation of Applicant’s trustworthiness to hold a security clearance
and to his honesty. In his response, he denies, however, that he had an intent to hide
this information from the government. When a falsification allegation is controverted, the
government has the burden of proving it. Proof of an omission, standing alone, does not
establish or prove an applicant’s intent or state of mind when the omission occurred. An
administrative judge must consider the record evidence as a whole to determine
whether there is direct or circumstantial evidence concerning an applicant’s intent or
state of mind at the time the omission occurred.16
When he completed his e-QIP in April 2008, Applicant followed the advice of his
FSO and answered “no” to existence of any debts 90 days past due. Under these
circumstances, his answer is technically correct. He voluntarily provided the security
clearance investigator information about his foreclosed property and past due mortgage
debts in July 2008. His actions in July 2008 show that he had no intent to falsify his
answer to Question 28b or to hide his debt problems from the government. 
Regarding the property lien filed in January 2006, Applicant credibly testified that
he did not know about the lien until he was in Iraq. His testimony is supported by the
fact that the State tax office mailed the delinquent tax notice to the property address in
late 2005 or early 2006, even though its records indicated that Applicant sold the
10
property in August 2005 and by the fact that the State government placed the lien
against the property Applicant had already sold. Overall, I find the evidence of record
failed to show that Applicant intentionally falsified his answers to the e-QIP. The
government has not established intentional falsification.
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. 
In reaching a conclusion, I considered the potentially disqualifying and mitigating
conditions in light of all the facts and circumstances surrounding this case. Applicant
worked for a large city police department for 16 years, retiring in 2001 on disability. After
he retired, he began purchasing houses in need of repair. He made the necessary
repairs and sold the houses a few months later for a profit. In the fall 2005, he followed
the advice of a real estate agent and purchased three properties where he would tear
down the existing house and rebuild. He purchased his new investment properties by
refinancing his personal home and two other long-held properties. Shortly after he
began this investment process, the real estate market declined significantly, impacting
his ability to resell his property. He eventually sold the three properties he had
purchased in 2005. 
Applicant could not sell his personal home or the remaining two rental properties.
He defaulted on his mortgages and the mortgagor foreclosed on his properties. These
207 C. A.3d 1018 (1989); 2003 W L 23025437 (2003).17
Bank of America National Trust and Savings Association v. Graves, E015010 (2009).18
11
three properties sold at foreclosure and his primary mortgage debt on his home was
satisfied. The two home equity loans on his investment properties were not paid from
the sale proceeds as there were no funds to pay these loans. His loan officer correctly
indicated that under state law, the foreclosure sale extinguished the junior liens on the
house created by the equity loans.  However, under State law, a sold out junior lien17
holder, such as the equity loan holder in this case, generally has a right to sue Applicant
for the unpaid debt.  The original creditor for the two equity loans did not sue Applicant18
and is no longer in business. However, Applicant determined that the debts are held by
another mortgage lender with an assigned account number. The lender carries the
debts on its books as a charge-off with a zero balance. Applicant provided no
information that he paid these debts. He denied owing the debts based on his
understanding that the foreclosure sale eliminated the debts and the elimination of the
original creditor from his credit report. 
Applicant’s problem is not resolved because he has not provided evidence that
he paid these debts; that the current creditor has forgiven the debts; that the current
creditor will not pursue legal action to obtain a judgment for the debts; or that he has
otherwise resolved these debts. The fact that the current creditor shows a zero balance
on the debts is not enough to show he does not owe these debts. Applicant
acknowledged that the two debts are listed on the creditor’s records as a charge-off
which, under security clearance law, is not considered resolution of the debts. While
Applicant has shown that he timely pays his other bills, he has not provided sufficient
evidence to show that the equity lines of credit are resolved in his favor, or discharged.
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 under
Guideline F. The government did not establish its case under Guideline E.
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: Against Applicant
Subparagraph 1.b: Against Applicant
Subparagraph 1.c: For Applicant
Subparagraph 1.d: For Applicant
12
Paragraph 2, Guideline E: FOR APPLICANT
Subparagraph 2.a: For Applicant
Subparagraph 2.b: For 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.
                                                              
MARY E. HENRY
Administrative Judge