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                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 09-01526
SSN: )
)
Applicant for Security Clearance )
Appearances
For Government: Jeff A. Nagel, Esquire, Department Counsel
For Applicant: Pro se
April 26, 2010
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Decision
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CEFOLA, Richard A., Administrative Judge:
The Applicant submitted his Electronic Questionnaires for Investigations
Processing (e-QIP), on June 26, 2008.  On September 30, 2009, the Defense Office of
Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) detailing the
security concerns under Guideline F for the 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 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. 
The Applicant acknowledged receipt of the SOR on October 16, 2009.  He
answered the SOR in writing that same day, and subsequently requested a hearing
before an Administrative Judge.  DOHA received the request on November 24, 2009,
and I received the case assignment the same day.  DOHA issued a notice of hearing on
December 7, 2009, and I convened the hearing as scheduled on January 26, 2010.
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The Government offered Exhibits (GXs) 1 through 7, which were received without
objection.  The Applicant testified on his own behalf and submitted Exhibits (AppXs) A
through H, without objection.  DOHA received the transcript of the hearing (TR) on
February 2, 2010.  I granted the Applicant’s request to keep the record open until
February 26, 2010, to submit additional matters.  He submitted nothing.  The record
closed on February 26, 2010.  Based upon a review of the case file, pleadings, exhibits,
and testimony, eligibility for access to classified information is denied.
Findings of Fact
In his Answer to the SOR, the Applicant admits the factual allegations in all three
Paragraphs of the SOR, with explanations. 
Financial Considerations
The Applicant worked for a company that provided security systems for “both
commercial, [and] residential security applications.”  (TR at page 25 lines 11~23.)  50
percent of his income was “guaranteed in salary and 50 percent” was based on sales.
(TR at page 10~16.)  As a result, the collapse of the real estate market caused the
Applicant’s current financial difficulties.
1.a.  The Applicant filed for the protection of a Chapter 7 Bankruptcy in
September of 1999.  (GX 4 at page 5.)  As a result of this filing, the Applicant’s debts
were discharged in December of 1999.  (Id.)  This bankruptcy was caused by the
Applicant acquiring joint liabilities with his ex-girl friend; who ran up their debts, and left
the Applicant with their excessive, joint indebtedness.  (TR at page 61 line 2 to page 63
line 18).
1.b. and 1.c.  As a result of the recent collapse of the real estate market, the
Applicant primary residence was foreclosed by Creditor #1, to which the Applicant owes
about $759,833 on his first mortgage.  (TR at page 48 line 17 to page 50 line 10.)  The
Applicant also owes about $46,557 to Creditor #2 as the result of a second mortgage.
(TR at page 52 lines 5~17.)  Despite the Applicant’s best efforts, he could not keep up
with his house payments.  (TR at page 48 line 17 to page 50 line 10.)  However, the
Applicant has offered nothing to show that his primary mortgage is covered by
California’s Anti-Deficiency Act.  (See California Code of Civil Procedure, Sections
580a.~580d.)  Furthermore, he has offered nothing to show that he has addressed his
second mortgage.  I find that both debts are still outstanding.
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.
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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
Paragraph 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.
Paragraph 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 Paragraph E3.1.14, the Government must present evidence to
establish controverted facts alleged in the SOR.  Under Directive Paragraph 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 Paragraph 18:
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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
Subparagraph 19(a), an “inability or unwillingness to satisfy debts@ is potentially
disqualifying.  Similarly under Subparagraph 19(c), “a history of not meeting financial
obligations@ may raise security concerns.  In 1999, the Appellant went bankrupt
pursuant to Chapter 7 of the Bankruptcy Code.  More recently, the Applicant has
defaulted on his primary and secondary mortgage loans; and as a result, has in excess
of $800,000 in past due indebtedness.
The Mitigating Condition found in Subparagraph 20(b) is applicable where “the
conditions that resulted in the financial problem were largely beyond the person’s
control (e.g., loss of employment, a business downturn . . .), and the individual acted
responsibly under the circumstances.@  With the collapse of the real estate market, the
Applicant’s income was drastically reduced; and as such, he could not keep on his
house payments.  However, Subparagraph 20(d) under the Mitigating Conditions is not
applicable, as there is no evidence to show “the individual initiated a good-faith effort to
repay overdue creditors or otherwise resolve debts.@  Here, the Applicant has offered
nothing to show that he has addressed, or is excused from, his admitted past due debts.
They are still outstanding.
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 Paragraph 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 also consider the nine adjudicative process
factors listed at AG Paragraph 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
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for the conduct; (8) the potential for pressure, coercion, exploitation, or
duress; and (9) the likelihood of continuation or recurrence.
I considered all of the evidence, including the potentially disqualifying and
mitigating conditions surrounding this case.  Here, he has the unqualified support of
those with whom he works.  (AppXs E~H.)  However, 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 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: AGAINST APPLICANT
Subparagraph 1.a. For Applicant
Subparagraphs 1.b. & 1.c.: Against Applicant
Conclusion
In light of all of the circumstances presented by the record in this case, it is not
clearly consistent with national security to grant Applicant eligibility for a security
clearance.  Eligibility for access to classified information is denied.
Richard A. Cefola
Administrative Judge