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                           DEPARTMENT OF DEFENSE 
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 09-03795 
 SSN:   ) 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Candace Le’I Garcia, Esquire, Department Counsel 
For Applicant: Pro Se 
 
 
______________ 
 
Decision 
______________ 
 
 
HOGAN, Erin C., Administrative Judge: 
 
Applicant submitted a security clearance questionnaire (SF 86 - eQIP) on 
January 28, 2009. On October 15, 2009, the Defense Office of Hearings and Appeals 
(DOHA) issued a Statement of Reasons (SOR) 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.  
  
 On October 22, 2009, Applicant answered the SOR and requested a hearing 
before an administrative judge. Department Counsel was ready to proceed on 
November 24, 2009. The case was assigned to me on December 7, 2009. On January 
11, 2010, a Notice of Hearing was issued, scheduling the hearing for January 28, 2009. 
The case was heard on that date. During the hearing, the government offered eight 
exhibits which were admitted as Government Exhibits (Gov) 1 – 8. Applicant and his 
wife testified and offered 20 exhibits which were admitted as Applicant Exhibits (AE) A - 
 
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T. The record was held open until February 18, 2010, to allow Applicant to submit 
additional documents. Applicant timely submitted a 4-page document that was admitted 
as AE U with no objection. Department Counsel’s response to AE U is marked as HE I. 
The transcript (Tr) was received on February 4, 2010.  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 admits the allegations in SOR ¶¶ 1.a – 1.e, 
and denies the allegation in SOR ¶1.f. 
 
 Applicant is a 42-year-old curriculum developer employed by a Department of 
Defense contractor seeking to maintain his security clearance. He has worked for his  
current employer since October 2005. He held a security clearance for 25 years. He 
served 20 years in the United States Navy, retiring as an E-6 on December 31, 2005. 
He was an air crewman, aviation warfare systems operator. He was hired in his current 
position because of his experience in the Navy. He is a high school graduate and has 
taken some college courses. He is married and has a 21-year-old daughter and a 20-
year-old son. (Tr at 7-9; Gov 1.)  
 
Applicant’s security clearance background investigation revealed that he has the 
following delinquent accounts: a $363 cable television account placed for collection 
(SOR ¶ 1.a: Gov 4 at 1; Gov 5 at 1; Gov 6 at 5); a $1,921 state tax lien entered against 
Applicant in March 2009 (SOR ¶ 1.b: Gov 4 at 1; Gov 5 at 1); a $9,063 charged off loan 
(SOR ¶ 1.c: Gov 4 at 2; Gov 5 at 1; Gov 6 at 3); a $3,701 bulk department store account 
that was placed for collection (SOR ¶ 1.d: Gov 4 at 2; Gov 5 at 2); a $6,042 charged off 
bank loan (SOR ¶ 1.e: Gov 4 at 2; Gov 5 at 2; Gov 6 at 4,9); and a $9,008 account that 
was 120 days past due in the amount of $1,807 (SOR ¶ 1.f: Gov 6 at 4). 
 
Applicant and his wife have had two periods where they experienced significant 
financial problems.  In November 1993, Applicant’s military pay was cut to $300 per 
month because of a clerical error. The error was not fixed until January 1994. Applicant 
did not have enough income to support his family and could not pay any bills. He was 
not reimbursed for the error until June 1994. At the same time, a $12,000 balloon 
payment was due on his car loan because Applicant cancelled his automobile insurance 
when he deployed overseas. He left his car at his father’s home. The loan agreement 
required full coverage insurance on the car at all times. The bank insured the car at its 
own rates, which were much higher. Applicant felt he could not pay his expenses and 
filed for bankruptcy in 1994. His total assets were $10,255. His total liabilities were 
$20,702. His debts were discharged. (Tr at 137-139; Gov 7; Gov 8) 
 
After he retired from the military, Applicant struggled financially. In September 
2005, Applicant’s wife broke her ankle and had to have a metal plate put in her ankle. 
She was incapacitated for six weeks. She worked in retail and was only able to work 
part-time because she could not stand for long periods of time. Her work hours were 
 
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reduced from 32 hours to 12 hours. The reduction in income affected their ability to pay 
the bills. (Tr at 47) 
 
In October 2005, Applicant moved to his current place of employment. His wife 
and two children remained behind. He used his charge cards to buy furniture and other 
necessities. He was responsible for paying for two households. He would travel to 
where his wife and children lived on the weekends. He went through three moves in a 
short period of time. His family eventually joined him in June 2006. (Tr at 47-51; Gov 2) 
 
In March 2007, Applicant’s car was hit from behind by an uninsured motorist. His 
car was a total loss. He did not have liability insurance. He obtained a $5,000 judgment 
against the uninsured motorist but has not received any money from the judgment. He 
has not purchased a new car because he was unable to afford it. (Tr at 47-49; AE A) 
 
In April 2008, Applicant and his family were renting a house. They received 
notice that the home was going to foreclosure and they needed to move out. Their 
landlord filed bankruptcy.  They never received their security deposit back. The 
unexpected move added an additional strain on the family finances. (Tr at 49-53; Gov 2; 
AE B) 
 
Applicant, his wife, and son currently live in a two bedroom apartment. They have 
one car. They have a plan in place to pay off their debt and hope to resolve the debt 
within a year. (Tr at 53-55) He denied the debt in SOR ¶ 1.f because it is a duplicate of 
SOR ¶ 1.c. (Tr at 56, 65) 
 
Applicant was not able to begin to pay these debts off earlier because he learned 
that he owed the Internal Revenue Service (IRS) approximately $9,355 in back taxes for 
tax years 2006, 2007, and 2008. He encountered tax problems because he was not 
aware that he moved into a higher tax bracket when he retired. He also could no longer 
claim his two children as exemptions.  Applicant and his wife paid the IRS a $2,000 
down payment and have been paying $650 a month over the past 13 months. They 
have one more payment of $550 before the plan is paid in full. They adjusted their tax 
withholdings in order to avoid this problem in the future. (Tr at 72-75; AE N)  
 
Applicant’s highest annual income in the Navy was $29,000. (Tr at 139) After 
separating from active duty, his adjusted gross income in 2006 was $102,061. His 
adjusted gross income in 2007 was $115,683. His adjusted gross income in 2008 was 
$123,721. (AE N) 
 
Applicant and his wife obtained a $2,000 loan in 2008 in order to pay the IRS 
down payment on their repayment plan. They paid off the loan. They have no credit 
cards and no savings. Applicant is cashing in some stock that he owns in a 401(k) in 
order to pay the down payment for the agreement with the creditor in SOR ¶ 1.c. He is 
aware of the tax consequences of early withdrawal. (Tr at 89-92, 122-127, 133-135; AE 
E; AE S) 
 
 
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Other debts that were not alleged in the SOR have been paid on a timely basis. 
(Tr at 76-80; AE D – AE J) Applicant wanted to pay the federal tax debt first before 
paying the debts alleged in the SOR. In July 2006, they began to work on a plan to 
resolve their debts. On January 19, 2007, they entered into a personal debt 
management program with Consumer Credit Counseling. They paid $624 a month to 
Consumer Credit Counseling from February 2007 to September 2007.  Applicant claims 
that Consumer Credit Counseling only resolved one account that was included in the 
plan. He and his wife decided they could do a better job resolving their delinquent 
accounts and cancelled the agreement in October 2007. Shortly after, they learned 
about the IRS tax debt. (Tr at 82-85; AE R) 
 
Applicant and his wife entered into agreements to pay other debts beginning in 
February 2010. The current status of the delinquent accounts are: 
 
SOR ¶ 1.a, $363 cable television account placed for collection: The debt was 
resolved on January 20, 2010. (AE M) 
 
SOR ¶ 1.b, $1,921 state tax lien: Applicant agreed to pay $123.77 a month for 
ten months. The first payment was due on February 15, 2010. They sent in post-dated 
checks of $150 and anticipate the debt will be paid in July 2010. The first payment was 
processed on February 15, 2010. (Tr at 61-63; AE O; AE U at 4) 
 
SOR ¶ 1.c, $9,063 loan: Applicant claims SOR ¶ 1.f is a duplicate of this account. 
They are negotiating with the law firm that is collecting the debt. The law firm wants 
them to pay ten percent of the balance ($1,000) before they are willing to negotiate 
payment arrangements.  Applicant provided a copy of a $1,071 cashier’s check in his 
post-hearing submission which was sent to the law firm on February 16, 2010. Applicant 
and the law firm are negotiating payment arrangements. (Tr at 65-66; AE U at 2) 
 
SOR ¶ 1.d, $3,701 collection account with a bulk department store: Applicant 
used this to buy furniture when he first moved. He agreed to pay $100 a month 
beginning on February 17, 2010 until the debt is paid. (Tr at 67-68; AE L) 
 
SOR ¶ 1.e, $6,042 charged off account: On January 19, 2010, Applicant agreed 
to settle the account for $2,719. He agreed to pay $459 a month beginning on February 
15, 2010 for a period of six months. Applicant made the first payment in February 2010. 
(Tr at 69-71; AE K; AE U at 3) 
 
SOR ¶ 1.f, $9,008 debt that was 120 days past due in the amount of $1,807: This 
account is a duplicate of SOR ¶ 1.c.   
 
Applicant’s net monthly income is a minimum of $4,600. It is often more when he 
works overtime. His military retirement check is $850. His wife works part-time and 
earns about $400 monthly. Their total net monthly income is a minimum of $5,850. Their 
rent is $1,595. Their monthly expenses total $4,433 which includes the payment 
 
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agreements to their delinquent creditors.  They have approximately $1,416 left over 
each month after expenses. (Tr at 122-124; AE S).  
 
Applicant’s project manager testified that Applicant is very diligent and 
professional. He is experienced in handling classified information, and handles 
classified information on a daily basis. She has supervised Applicant for four years. She 
is aware of Applicant’s financial problems. His luck has not been good over the past 
several years. She has no reason to suspect that Applicant has a gambling problem or 
abuses drugs or alcohol. She does not believe he is prone to compromise classified 
information. He talks about his financial problems freely with her including his tax 
problems. She trusts him. (Tr at 95-110) 
 
Lieutenant Commander F. worked with Applicant when he was on active duty 
from January 2002 to July 2004, and considers him a friend. He states Applicant gives 
110% to his profession. He describes Applicant as “faithful to his country,” “trustworthy, 
honest, and dependable.” He is aware that Applicant is encountering some financial 
hardship but is working on correcting the situation. He would not hesitate to work with 
Applicant and is confident that Applicant would never mishandle classified information. 
(AE T)  
 
Applicant’s performance evaluations in his current job and during his military 
service were favorable. (AE R; AE Q)  
 
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 must be considered 
when determining 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.  
 
 
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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 
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 disqualifying conditions that could raise security 
concerns. I find Financial Considerations Disqualifying Condition (FC DC) &19(a) (an 
inability or unwillingness to satisfy debts); and FC DC &19(c) (a history of not meeting 
financial obligations) apply to Applicant’s case. Applicant’s recent financial difficulties 
began shortly after he retired from the Navy in December 2005. The SOR alleged five 
delinquent accounts totaling $21,090. During the hearing, it was discovered Applicant 
owed a $9,000 tax debt to the IRS for tax years 2006, 2007, and 2008.   
 
The government’s substantial evidence and Applicant’s own admissions raise 
security concerns under Guideline F. The burden shifted to Applicant to produce 
 
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evidence to rebut, explain, extenuate, or mitigate the security concerns. (Directive 
¶E3.1.15) An applicant has the burden of proving a mitigating condition, and the burden 
of disproving it never shifts to the government. (See ISCR Case No. 02-31154 at 5 
(App. Bd. September 22, 2005))  
 
The guideline also includes examples of conditions that could mitigate security 
concerns arising from financial difficulties. Financial Considerations Mitigating Condition 
(FC MC) ¶ 20(a) (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) is not applicable. 
Applicant has had financial problems for several years. While Applicant has established 
payment plans with his creditors, he only recently started paying towards those payment 
plans. It is too soon to conclude that Applicant will follow through with the payment 
plans. Applicant’s past financial history, to include a previous bankruptcy in 1994, raise 
questions about his reliability, trustworthiness, and good judgment.  
 
 FC MC & 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) partially applies. Applicant encountered 
financial problems after retiring from the Navy. His wife broke her ankle and was unable 
to work full-time which reduced her income. In 2007, Applicant was rear-ended by an 
uninsured motorist. He obtained a judgment against the driver but has never been 
reimbursed for the loss of the car. In April 2008, he and his family had to move 
unexpectedly when their landlord filed for bankruptcy. Although Applicant encountered 
some unforeseen expenses within the past few years, his tax returns reveal that his 
income increased significantly after he retired from the Navy. He should have been 
aware this would have an impact on his taxes. Most of the financial problems resulted 
from poor planning as opposed to circumstances beyond Applicant’s control. Once 
Applicant acknowledged the financial problems, he took steps to resolve the delinquent 
accounts. He and his wife live a modest lifestyle. He is beginning to act responsibly 
towards his delinquent accounts. 
  
FC MC ¶ 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) applies. In 2007, Applicant and his wife consulted Consumer Credit Counseling 
and had an agreement with them. After making payments for several months and 
seeing no progress towards resolving their accounts, they canceled the agreement 
believing they could do better on their own. Their plan to resolve the delinquent 
accounts was delayed because of the $9,000 IRS tax debt. Paying off the tax debt was 
their first priority. Once they resolved the tax debt, they entered into payment 
arrangements to resolve the remaining delinquent accounts. They have enough income 
to make the payments and it is likely that the delinquent accounts will be resolved in ten 
months. Applicant’s financial situation will stabilize in the near future.  
 
 
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FC MC & 20(d) (the individual initiated a good-faith effort to repay overdue 
creditors or otherwise resolve debts) applies. Applicant resolved the debt alleged in 
SOR ¶ 1.a. He entered into repayment agreements with the debts alleged in SOR ¶¶ 
1.b, 1.d, and 1.e. He is in the process of negotiating payments with the creditor who is 
collecting the debt alleged in SOR ¶ 1.c.  There is sufficient evidence to conclude the 
debt alleged in SOR ¶ 1.f is a duplicate of SOR ¶ 1.c.  Although Applicant recently 
entered into these payment plans, credit is given because he made it a priority to pay off 
his tax debt first. He made payments to all of the creditors with whom he has entered 
into payment plans. He has taken proactive steps as opposed to expressing a promise 
to pay off his debts in the future. Overall, Applicant has made a good-faith effort to 
resolve his delinquent accounts.  
 
Applicant has mitigated the concerns raised under Guideline F.  
  
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.  
 
 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. 
        
I considered the potentially disqualifying and mitigating conditions in light of all 
the facts and circumstances surrounding this case. I considered Applicant’s 20 years of 
honorable service in the Navy. I considered the favorable comments of his supervisor 
and a former officer. I considered his favorable performance reports. I considered that 
Applicant had several misfortunes that caused financial problems. However, I also 
believe better planning would have prevented some of Applicant’s financial problems. 
While he recently entered into repayment agreements for the debts alleged in the SOR, 
I considered that he began to resolve these debts in 2007. His IRS tax problems 
prevented him from taking steps to resolve the accounts earlier. He set up payment 
plans with his creditors to begin once the federal tax debt was paid. Applicant 
understands the security concerns that are raised by his financial situation. He has told 
his supervisor about his financial problems. He entered into repayment agreements and 
 
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is aware of the possibility of losing his security clearance if his financial problems 
continue. Applicant has developed a plan to resolve his delinquent debts. He earns 
enough income to meet the terms of each repayment plan. He mitigated the concerns 
raised under financial considerations.   
 
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 
  Subparagraph 1.e:    For Applicant 
  Subparagraph 1.f:    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. 
 
                                                
_________________ 
ERIN C. HOGAN 
Administrative Judge