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                          DEPARTMENT OF DEFENSE   
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
 ------------------------- )     ISCR Case No. 09-04354
SSN: ----------------- )
)
Applicant for Security Clearance )
Appearances
For Government: Gina L. Marine, Esquire, Department Counsel
For Applicant: Pro se
______________
Decision
______________
MATCHINSKI, Elizabeth M., Administrative Judge:
Applicant became unemployed in January 2005 when he and his fiancee had
joint mortgage obligations on two homes totaling around $3,500 per month. He
defaulted on about $4,500 in old student loan debt, and he and his fiancee borrowed
about $25,000 for a graduate program that he did not complete. Maintenance and repair
costs for their homes and his fiancee’s vehicle led Applicant to incur about $14,367 in
delinquent credit card debt, despite his full-time employment. Applicant recently paid off
his older student loan from 1999 and some of his delinquent credit card debt. Late
payments on their mortgage for his fiancee’s residence led to problems with the lender
that have yet to be resolved. In addition, they owe between $7,000 and $8,000 in past
due real estate taxes for Applicant’s residence, and they have yet to make good faith
efforts to resolve the outstanding student loan debt for the graduate program. It is too
soon to conclude Applicant’s financial problems are behind him. Clearance is denied.
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Statement of the Case
Applicant submitted an Electronic Questionnaire for Investigations Processing (e-
QIP) on November 7, 2008. On September 23, 2009, the Defense Office of Hearings
and Appeals (DOHA) issued to Applicant a statement of reasons (SOR) detailing the
security concerns under Guideline F, Financial Considerations, that provided the basis
for its preliminary decision to deny him a security clearance and to refer the matter to an
administrative judge. 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) effective within the Department of Defense as of September 1, 2006.
On October 19, 2009, Applicant answered the SOR allegations, but he did not
indicate whether he wanted a hearing. He filed a supplemental response on November
11, 2009, in which he requested a hearing. On November 25, 2009, the case was
assigned to me to conduct a hearing and to determine whether it is clearly consistent
with the national interest to grant or continue a security clearance for Applicant. On
December 15, 2009, I scheduled a hearing for January 13, 2010.
I convened the hearing as scheduled. Before the submission of any evidence,
the Government moved to amend SOR 1.l to correctly identify the creditor. I granted the
motion without objection. Five Government exhibits (Ex. 1-5) and ten Applicant exhibits
(Ex. A-J) were admitted into evidence without objection. Applicant and his fiancee
testified on his behalf, as reflected in a transcript (Tr.) received on January 22, 2010.
At Applicant’s request, I held the record open until February 3, 2010, for
Applicant to submit additional documentation. Applicant submitted five additional
exhibits (Ex. K-O), which were admitted without objection.
Findings of Fact
The SOR alleged under Guideline F, Financial Considerations, that as of
September 2009, Applicant owed delinquent debt of $4,152 on credit card balances
totaling about $16,799 (SOR 1.a, 1.b, 1.j, 1.l); was $9,000 past due on a $360,000
mortgage loan (SOR 1.c); owed a collection balance of $424 to a telephone company
(SOR 1.d); and owed delinquent student loan debt totaling $42,070 (SOR 1.e-1.i, 1.k).
Applicant denied that he was past due 120 days on the credit card debts in SOR 1.a
and 1.b, or the mortgage loan in SOR 1.c. He disputed the charge-off balance claimed
by the telephone company (SOR 1.d) because not all services were installed.
Concerning the $22,500 student loan debt in SOR 1.e, Applicant asserted that he
should not be responsible for the entire balance because he was not given a fair
opportunity to complete the program financed by the loan. He indicated that the $9,970
in alleged student loan debt identified in SOR 1.f through 1.i was a duplicate of the
$9,600 student loan debt in SOR 1.k. As for SOR 1.k, he took out a hardship loan from
his 401(k) account, but due to market losses, did not have the full $8,600 needed to
settle the student loan. He also contested the balances of the credit card debts
Applicant indicated that the credit card debts identified in SOR 1.a and 1.b were joint accounts1
opened with his fiancee in late 2000 or early 2001. (Ex. 5.) His November 2008 credit report (Ex. 3.) indicates
the two accounts were individual revolving charge accounts opened respectively in September 2003 and
November 2004.
The house is 5,000 square feet, and there are two barns on the property. (Tr. 117.) Applicant testified2
that his fiancee wanted to establish a bed and breakfast with the property. (Tr. 122.)
As of late 2009/early 2010, the monthly mortgage obligation on his fiancee’s primary residence was3
$2,426.84. (Ex. B.) The mortgage payment on his home was about $1,200 a month. (Tr. 132.)
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identified in SOR 1.j and 1.l. After considering the pleadings, exhibits, and transcript, I
make the following  factual findings.
Applicant is a 47-year-old power systems engineer employed by a defense
contractor. (Ex. 1.) He earned his bachelor of science degree in marine engineering in
July 1988, and then served in the U.S. military until 1996, when he was honorably
discharged. (Ex. 1.) He has a long-term fiancee, who has grown children from a
previous marriage. Her 29-year-old son was living with her as of January 2010. (Tr. 58.)
Applicant never married, but he has a 17-year-old son. (Ex. 1, Tr. 123.) He supports his
son by sending him $150 to $200 per week. (Tr. 124.)
Starting in February 1999, Applicant began living with his fiancee. (Ex. 1.) They
maintained separate checking accounts, but shared responsibility for payment of
household expenses. (Tr. 57.) Over the next five years, Applicant opened some credit
card accounts, including the accounts identified in SOR 1.a and 1.b, for general
purchases, repairs, appliance replacements, home improvement, and for a vacation that
he took with his fiancee.  An individual revolving charge account with a home1
improvement retailer (SOR 1.l) was used to purchase a snow blower for his fiancee’s
house, a trailer, and a sump pump. (Ex. 5.)
Around 2004, Applicant and his fiancee decided to jointly purchase Applicant’s
parents’ home as an investment property,  and to add Applicant’s name to the deed on2
his fiancee’s home. (Ex. 5, Tr. 43-44.) In April 2004, they took out a $300,000 mortgage
on her property, which was paid off in a refinancing of a new loan of $360,000 in
February 2005 (SOR 1.c). (Ex. 3.) The mortgage lender listed the loan solely in
Applicant’s name, even though they intended to be held jointly responsible. Applicant’s
fiancee paid the mortgage since it was her primary residence. (Ex. B, Tr. 46.) In
September 2004, they bought his parents’ home for $270,000 by taking on a joint
mortgage loan of $170,000 on that property. (Tr. 116-17.) Applicant became primarily
responsible for paying that mortgage. (Ex. 3, Tr. 56.)  He lived with his fiancee during3
the work week since her home was about 11 miles from his work. But he traveled every
weekend to their other home, located over two-hours drive away, to check on the house
and to see his son, who lived in the same area. (Tr. 125.) At the height of the gasoline
prices, he was spending about $800 per month on gasoline. (Tr. 124-25.)
Applicant worked as a contract safety and reliability engineer at the same plant
for more than four years, until late December 2004, when he was laid off. Over his four
Evidence confirms that SOR 1.k represents an aggregate balance of the four student loans alleged4
in SOR 1.f through 1.i. (Ex. N.)
Applicant testified that the $25,000 originally owed on the loan was for the full program, which5
included the cost of staying onsite every other weekend over a 16-month period. (Tr. 192.)
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years, his salary had increased from $50,000 to almost $100,000 annually as of
December 2004. (Tr. 114.) He was unemployed from January 2005 to July 2006, with
the exception of some consulting work out of his home between November 2005 and
April 2006. (Ex.1.) When he was unemployed from January 2005 until November 2005,
he was paid about $500 per week in unemployment compensation. (Tr. 111-12.) From
May to July 2006, his unemployment benefit had increased to about $600 per week. (Tr.
112.) Due to the lack of income he stopped paying on a student loan that he had taken
out for $15,260 (SOR 1.k ) for technical training between February 1999 and June4
2000. (Ex. 1, 3, 5.) The loan balance was about $4,500 when he ceased his payments
around May 2005. (Ex. 5.) While he was unemployed, Applicant started a master’s
degree program at his undergraduate alma mater in September 2005. He and his
fiancee jointly took out a $25,000 student loan to cover the program’s cost (SOR 1.e).5
(Ex. 3, 5.) After three or four months, Applicant decided that the program was not a
good fit for him, but he was persuaded by the Dean’s office to continue his studies. (Ex.
5, Tr. 119-20.) In February 2006, Applicant stopped attending, but it was too late to
receive a refund of his tuition. (Ex. 5.) Applicant knew when he left the program that it
was too late for any refund. (Tr. 157.) He has not had any contact with the school since
he left the program. (Tr. 161.)
In June 2006, Applicant opened a revolving charge account with the lender
identified in SOR 1.j. The account had a credit limit of $500, and he used it for general
purchases and for automobile repairs. (Ex. 3, 5.) 
From July 2006 to September 2008, Applicant worked as a staff engineer for the
company that had contracted for his services earlier in the decade. (Ex. 1.) But the
costs of maintaining two old homes, and unexpected home repair and vehicle costs, put
a strain on their finances. In 2006, Applicant spent about $3,500 after his fiancee’s car
rims were damaged due to road construction. (Tr. 180-81.) In 2007, Applicant and his
fiancee had to pay $7,000 out-of-pocket to replace the roof, and to repair walls, after her
primary residence was damaged in a storm. In 2008, they spent $3,000 to replace the
furnace in her home. (Tr. 49.) On the property that served as Applicant’s primary
residence, they spent $2,000 to $3,000 to repair the house roof around 2006 and
another $4,000 for materials and $1,000 to $2,000 in labor costs to repair the barn roof
the following year. (Tr. 50-52.)  In September 2007, a $292 balance on the credit card
identified in SOR 1.j was placed for collection. (Ex. 3, 5.) As of January 2008, Applicant
was delinquent on the credit card accounts identified in SOR 1.a and 1.b. (Ex. 4.) He
made a few payments to the bank on those two charge accounts after the bank
restructured his interest rates, but he ceased payment when the rates jumped to 28%
and 34%. (Ex. 5.) When the credit card account identified in SOR 1.l went 180 days
past due, the collection agent for that debt agreed to settle the $5,500 balance for
$3,900. Applicant made three payments of about $865 each in 2008, which he now
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contends was sufficient to settle the debt. (Ex. K.) As of November 2008, Experian (as
to the original lender) and Equifax (as to the collection agency) reported the debt as
settled for less than the full amount. (Ex. 3.) Applicant told the investigator in December
2008 that his payments fell short of the settlement balance. (Ex. 5.) Moreover, a
collection agency reported a balance due of $1,972 on the account as of July 2009. (Ex.
4.) He acknowledged as of January 2010 that the holder of the debt was contending
that he still owed the funds. (Tr. 101.) He provided no documentation to resolve the
discrepancy.
Starting in March 2008, Applicant made about six months of $120 payments on
the student loan debt in SOR 1.k. (Ex. 5.) Around 2008, a collection agent for the
student loan debt in SOR 1.e threatened to place a lien on Applicant’s properties if he
did not begin repaying the debt. Applicant did not make any payments, but to date, no
lien had been filed. (Tr. 165-66.) He was chronically late in paying the mortgage on his
primary residence in 2008, and the loan was $1,000 past due as of June 2009. (Ex. 4.)
In September 2008, Applicant left the job he had held for two years to work for
his current employer at an annual salary of $85,000. (Tr. 110.) His new job was located
near his primary residence. (Ex. 1.)
On November 7, 2008, Applicant completed his e-QIP for a security clearance.
He responded affirmatively to the financial delinquency inquiries, and disclosed the
student loans identified in SOR 1.e and 1.k, and the past due credit card debts identified
in SOR 1.a, 1.b, and 1.l. (Ex.1.)  
On December 30, 2008, Applicant was interviewed by an authorized investigator
about his delinquent debts. He indicated that the collection agent for the $28,262
student loan debt in SOR 1.e had threatened to place a lien on his two homes, and he
expressed his intent to make payments if he could come to some resolution about a fair
balance. As for his other student loan (SOR 1.k), his balance had accrued to about
$9,800 on the account. He was attempting to settle the $8,900 in delinquent credit card
balances identified in SOR 1.a and 1.b, and planned to satisfy the $900 that he
contended was owed on the account identified in SOR 1.l after he made three payments
around $88 each. He maintained that he owed no balance to the lender identified in
SOR 1.j as the debt had been paid in early 2008. (Ex. 5.) Yet, on January 14, 2010, he
paid $117.52 to satisfy the debt in SOR 1.j. (Ex. M.)
On February 1, 2009, Applicant paid $4,000 on the student loan debt in SOR 1.k.
(Ex. J.). He was supposed to pay the lender an additional $3,800 to settle the debt, but
“things didn’t happen.” (Tr. 144.)
Starting in March 2009, Applicant and his fiancee began having issues with the
mortgage lender on her primary residence, after a late payment on March 5, 2009,
intended for their mortgage payment for February 2009, was applied by the mortgagee
Applicant’s fiancee testified that there was an escrow shortage, but rather than contact her and ask6
for a separate payment or notify her of an increase in the amount of the monthly payment, the lender allocated
the entire amount to the escrow with no prior notification. Applicant’s fiancee acknowledged that she has been
late at times in making the mortgage payment. (Tr. 68-69.)
According to the mortgage statements in Exhibit B, the monthly mortgage payment of $2,406.16 was7
due March 1, 2009, but was late if payment was received after March 16, 2009. The monthly mortgage
statement for the period ending March 16, 2009, shows payments of $2,460.23 on March 5, 2009 (which was
applied to escrow), and of $2,406.16 on March 16, 2009.  
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to the escrow.  (Ex. B, Tr. 64.) Applicant’s fiancee made the loan payment for March6
2009 on time,  but the lender reported the account as past due one payment of7
$2,406.16, and late charges of $54.07. On April 22, 2009, the mortgagee issued a
notice of default to Applicant, requesting payment of $4,776.47 (payments for March
and April plus late fees). On April 30, 2009, Applicant’s fiancee sent a late payment of
$2,460 to the mortgagee for April 2009, which was returned to Applicant on May 15,
2009, as it was deemed insufficient to cure the default. The mortgagee again demanded
the March 2009 payment, for a total of $7,051.89 to cure the default. On May 30, 2009,
Applicant’s fiancee sent a payment of $5,000, which was returned. The lender claimed
that $9,368.13 was due to cure the default. On July 1, 2009, Applicant’s fiancee paid
$8,000 on the mortgage. In August 2009, she paid another $3,500. As of August 26,
2009, the mortgage statements reflected no balance due other than the current  monthly
payment plus some late fees and charges ($2,494.16 total). The evidence does not
include the mortgage statements for the period ending September 26, 2009, and
October 26, 2009. Payment information shows that a check to the mortgagee for
$2,494.16, dated September 11, 2009, presumably for September, cleared Applicant’s
fiancee’s checking account on September 16, 2009, but it is unclear whether it was ever
credited by the mortgage lender. A $2,500 check issued October 25, 2009, presumably
a late payment for October, was credited to her account on November 4, 2009. On
November 15, 2009, Applicant’s fiancee issued another check for $2,500, which was
applied to their mortgage loan on November 24, 2009. The mortgagee continued to
report the account as one payment past due for November. Inexplicably, on November
25, 2009, the lender sent a letter to Applicant indicating that it had received a payment
of $1,908.93, which was short of their monthly loan payment. On December 16, 2009,
the lender  issued a notice of intent to foreclose on the mortgage, reportedly for failure
to make the mortgage payment due November 1, 2009. Applicant’s fiancee has been
frustrated in her efforts to resolve the issue, because of the mortgagee’s failure or
inability to respond to her concerns. (Ex. B, Tr. 66.) Applicant and his fiancee have
looked into refinancing the mortgage (Ex. K, Tr. 138-40.), but he has been unable to
obtain a suitable loan due to his poor credit. (Tr. 140.)
In June 2009, Applicant was offered settlements of $2,300 for the $6,262.47
balance of SOR 1.a and $2,600 for the $7,394.99 balance of SOR 1.b. Applicant was
required under the settlements to make four installment payments on each account
between May 31, 2009 and August 29, 2009. (Ex. F, G.) Applicant settled the debt in
SOR 1.a. (Ex. K., Tr. 102-03.) However, when he failed to make the last installment
payment on the debt in SOR 1.b, the settlement as to that debt was nullified. (Tr. 175.)
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Following a $400 payment in December 2009 on the debt in SOR 1.b, Applicant owed
$6,092.13. (Ex. H.)
As of July 2009, a telephone provider had placed a $424 balance for collection
(SOR 1.d) due since October 2008. (Ex. 4.) Applicant had contracted with the telephone
company for the installation of telephone, Internet, and satellite services for his primary
residence. Since only the telephone line was installed, he disputed the debt balance
with the company without success. (Ex. K, Tr. 98-100.) On October 13, 2009, the
assignee collecting the $424 balance for the telephone company (SOR 1.d) offered to
settle for $297.16. In January 2010, Applicant countered with an offer to pay $96 ($9.60
per month for the telephone that was connected for ten months). (Ex. O). As of
February 2010, the creditor had not accepted his counteroffer. (Ex. K.)
On October 12, 2009, Applicant was informed that the creditor identified in SOR
1.k intended to collect his defaulted student loan balance of $6,193.46 by intercepting
his state income tax refund for 2010. (Tr. 147.) On January 14, 2010, in response to
Applicant’s request for a final payoff figure for the student loan debt in SOR 1.k, the
collection agency notified him on January 12, 2010, that his account would be closed
and paid in full on receipt of $5,867.23 by January 29, 2010. (Ex. E.) On January 20,
2010, Applicant paid $5,501.62, which was accepted in full satisfaction of the student
loan debt in SOR 1.k (duplicated in SOR 1.f. –1.i.). (Ex. N.)
Applicant was chronically (12 times) 30 days late in repaying a vehicle loan of
$13,202 that he had taken out in April 2004. (Ex. 3, 4.) He paid off his truck in 2009 after
making “aggressive payments” that year with the intent of selling the vehicle for the
funds to pay off other debts. (Tr. 178.) Applicant had not sold the truck by January 2010
because of about $6,000 in repairs needed because of a fuel injector problem. Applicant
acknowledged that the vehicle is not likely to be sold in the near future because he is
“locked in kind of a battle” with the vehicle manufacturer over the repair issue. (Tr. 180.)
Applicant did not pay the mortgage on his primary residence for November or
December 2009. (Tr. 117, 136.). With the upkeep of the property becoming “just too
much,” Applicant and his fiancee decided to sell it. (Tr. 117-18.) In preparation for listing
the property, Applicant had an estate sale in December 2009. He sold some vehicles
and equipment, which netted him $8,471. (Ex. I, Tr. 126, 129.) Applicant gave $1,500 of
the proceeds to his fiancee to put toward their delinquent debts, including the debt in
SOR 1.b. (Tr. 130.) As of January 2010, he had $2,500 of the sales proceeds and he
intended to sell other items for the funds to address his remaining debt. (Tr. 151.)
As of late January 2010, Applicant owed between $7,000 and $8,000 in
delinquent real estate taxes from 2005 to 2007 on his primary residence (Tr. 133.). He
brought the mortgage on the property current with a payment of $4,170 on January 29,
2010. (Ex. L.) He borrowed $4,200 from his 401(k) to get caught up on his mortgage.
Applicant had withdrawn funds from his 401(k) twice before, including in 2009 for
$2,600 (Ex. E, Tr. 152-53.) Applicant owes $6,092.13 on the credit card debt in SOR
1.b, and he has requested a payoff balance from the creditor. (Ex. H, K.) He and his
fiancee have not resolved the status of the loan on her primary residence, although the
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loan on their other home is up-to-date as of February 2010. (Ex. K, L.) Applicant has not
resolved his disputes as to the balances of the telephone company debt in SOR 1.d, or
his student loan for the graduate program in SOR 1.e. He is willing to pay for the phone
line since it was installed, but not for Internet and satellite since they were not installed.
(Tr. 99, 170-72.) Contending the school had not been receptive to his request for a
structured leave of absence to deal with his new job and relocation, he disagrees that
he should have to pay the entire cost of the program. (Ex. K, Tr. 81.) He has not had
any contact with the student loan lender in some time because he assumes the lender
wants a lump sum payment that he cannot afford. (Tr. 163.)
In addition to the $2,500 from the estate sale on deposit in a checking account,
Applicant had $500 in a savings account as of his hearing. (Tr. 154.) He also had about
$1,300 cash on hand. (Tr. 155.) He closed the credit card accounts in SOR 1.a and 1.b,
and has opened no new credit card accounts. (Ex. 4.)
Applicant’s fiancee is employed full time in the health care field at an annual
salary of about $72,000. She started with her employer ten years ago at an annual
wage of $35,000. In 2006, she earned about $45,000. In 2008, she was given a 30%
increase in her pay. (Tr. 60-61.) She rents out an apartment on the first floor of her
residence, which brings an additional $800 in income per month. The present tenants
have resided there for the past five years and pay their rent on time. (Tr. 62.) Applicant’s
fiancee has taken joint responsibility for Applicant’s debt in the SOR, and she intends to
resolve them in partnership with him. (Tr. 77.) As of January 2010, she and Applicant
did not have a joint bank account. She had $3,000 on deposit in the checking account
from which she pays the mortgage on her primary residence. She had $318 in a savings
account and $200 on deposit in another checking account. (Tr. 76.)
Applicant is supported in his efforts to obtain a security clearance by a former
supervisor and personal acquaintance (Ex. C), and by a former coworker (Ex. D), from
Applicant’s previous employment in safety and reliability engineering. Applicant’s former
supervisor is aware that Applicant has had “various financial challenges over the years.”
In his experience, Applicant’s “integrity has held firm with respect to professional
intellectual property and other areas of confidential information.” He believes that with
proper financial consultation, Applicant’s financial issues will be resolved. (Ex. C.)
Policies
The U.S. Supreme Court has recognized the substantial discretion the Executive
Branch has in regulating access to information pertaining to national security,
emphasizing that “no one has a ‘right’ to a security clearance.” Department of the Navy
v. Egan, 484 U.S. 518, 528 (1988). When evaluating an applicant’s suitability for a
security clearance, the administrative judge must consider the adjudicative guidelines
(AG). In addition to brief introductory explanations for each guideline, the adjudicative
guidelines list potentially disqualifying conditions and mitigating conditions, which are
required to be considered 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
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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, 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
that the applicant may deliberately or inadvertently fail to 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 about finances 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.
Applicant began to fall behind in some financial obligations during a period of
unemployment in 2005. In May 2005, he stopped paying on the student loan taken out
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for technical training in 1999 (SOR 1.k, duplicated in SOR 1.f-1.i). With about $4,500 in
student loan debt in default, Applicant and his fiancee took on a new student loan of
around $25,000 (SOR 1.e) for Applicant to attend a graduate program. After he dropped
out in February 2006, he made no effort to repay that student loan, which due to interest
had risen to $28,262. By late 2007, he was delinquent on three credit card accounts
(SOR 1.a, 1.b, 1.l), on which he owed an aggregate balance around $14,367. While the
mortgage on his primary residence is now current, he has been chronically late in
making his mortgage payment, including as recently as November and December 2009.
Furthermore, although also not alleged, Applicant acknowledged that they owe between
$7,000 and $8,000 in delinquent real estate taxes on his primary residence. As for his
fiancee’s primary residence, the evidence establishes they have been late several times
in paying that mortgage (SOR 1.c), although never to the extent of the $9,000 alleged.
In October 2008, he contracted with the telephone company to install a landline,
Internet, and satellite television connections in his primary residence,  and incurred
$424 in charges (SOR 1.d) which he refused to pay because only the phone was
connected.  Disqualifying conditions AG ¶ 19(c), “a history of not meeting financial
obligations,” and AG ¶ 19(a), “inability or unwillingness to satisfy debts,” apply.
Potentially mitigating condition AG ¶ 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 pertinent. Although Applicant has resolved some of the debts in the
SOR, as discussed in reference to AG ¶ 20(d) below, he has taken no steps to resolve
the $28,262 student loan debt in SOR 1.e. Their recent history of late mortgage
payments and unaddressed delinquent real estate taxes also precludes me from
mitigating the financial concerns under AG ¶ 20(a).
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 in part. Applicant collected
unemployment at $500 per week between January and November 2005, and $600 per
week between May and July 2006, but his compensation was well short of his previous
income of $100,000 annually. His fiancee earned about $45,000 a year, when their
monthly mortgage payments totaled about $3,600. Applicant had ongoing support
obligations for his son, presumably at $150 to $200 per week as well. In addition to the
unforeseen precipitous loss of his income, Applicant and his fiancee incurred $10,500 in
out-of-pocket repair costs for her residence and her car in 2006/07. But AG ¶ 20(b)
does not mitigate the poor financial judgment that Applicant continues to display by
failing to pay his mortgages on time, and by continuing to disregard the delinquent
student loan debt in SOR 1.e and the past due real estate taxes owed on his primary
residence.
Applicant’s recent settlements of the debts in SOR 1.a, 1.j, and 1.k (duplicated in
SOR 1.f-1.i) implicate AG ¶ 20(d), “the individual initiated a good-faith effort to repay
overdue creditors or otherwise resolve debts.” Applicant has also made some payments
on the credit card debt in SOR 1.b, thereby reducing the balance to $6,092.13 as of
11
January 2010. That said, clearly it would have been in his best interest to have settled
the debt in August 2009, and his failure to make the last payment of $1,197, which
nullified the settlement agreement, reflects ongoing financial problems. As for the credit
card debt in SOR 1.l, the evidence suggests that Applicant made some payments on
the debt under a settlement agreement. The evidence is conflicting whether Applicant
paid enough to settle the debt. But AG ¶ 20(d) clearly does not apply to the unresolved
student loan debt in SOR 1.e.
Applicant and his fiancee adequately documented payments showing that the
mortgage loan identified in SOR 1.c should not have been reported as $9,000 past due.
The lender applied the payment for February 2009 to an apparent shortfall in escrow
without giving Applicant an opportunity to make a payment. It resulted in the lender
holding Applicant in default for February 2009, and returning subsequent payments.
After Applicant’s fiancee paid $11,500 to the mortgagee in the summer of 2009, the
monthly payments were considered up-to-date as of August 26, 2009. A $2,494.16
payment to the mortgagee on September 11, 2009, does not appear to have been
credited to the account. A $2,500 check issued October 25, 2009, presumably for
October, was credited to the mortgage on November 4, 2009. Applicant’s fiancee made
another $2,500 payment on November 15, 2009, which was credited on November 24,
2009. Yet, the lender inexplicably indicated it received a payment of only $1,908.93. On
December 16, 2009, the lender issued a notice of intent to foreclose on the property,
claiming it had not received the payment for November 2009. 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 with regard to the loan
balance, but Applicant and his fiancee bear some responsibility for their mortgage
problems because of their history of late payments.
Moreover, their record of recent late payments on both mortgages shows
ongoing financial mismanagement. As of his hearing, Applicant had primary
responsibility for making the mortgage payments on the house they bought from his
parents, and he was two months behind. He paid $4,170 on January 29, 2010, to bring
the loan current, but he had to borrow funds from his 401(k) to do so. His fiancee was
late several times in the payments on the mortgage loan in SOR 1.c, which is in
Applicant’s name, despite receiving $800 per month in rent from their tenants. Neither
Applicant nor his fiancee made any payments on the $7,000 to $8,000 in delinquent real
estate taxes owed on the property in which Applicant primarily resides. In addition,
Applicant has done little to legally discharge himself of liability for repaying all or part of
the student loan debt in SOR 1.e. There is no evidence that Applicant has had any
financial counseling, which his former supervisor believes could be of benefit to
Applicant. On the facts presented, I am unable to apply AG ¶ 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.”
The factors under AG ¶ 2(a) are:8
(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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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 conduct
and all the relevant circumstances in light of the nine adjudicative process factors listed
at AG ¶ 2(a).  Applicant continues to owe a substantial amount of delinquent debt, most8
notably the $28,262 in defaulted student loan debt identified in SOR 1.e and the $6,092
in past due credit card debt in SOR 1.b. The telephone company is holding him liable for
a $424 debt from October 2008. It is unclear whether he owes a balance on the account
identified in SOR 1.l. The DOHA Appeal Board addressed a key element in the whole-
person analysis in financial cases stating:
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.” 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. 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.’ 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. 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.
ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008) (internal citations omitted).
While Applicant need not have satisfied or settled all of his debts to obtain a security
clearance, there must be adequate assurances that his debts are likely to be resolved in
the near future, and that his financial problems are not likely to persist.
The allegation is found in Applicant’s favor because it was not established that the mortgage was9
delinquent to the extent alleged. However, evidence of recent late payments on the account, as well as of the
mortgage on their other home, bears negative implications for Applicant’s handling of his finances overall.
13
Assuming the telephone company accepts his counteroffer, and that he
continues to make payments on the credit card debt in SOR 1.b, he has no established
plan to address the student loan debt in SOR 1.e. He has had four years to challenge
his legal liability for the full cost of the graduate program with the educational institution,
and he has not done so. Furthermore, he has yet to demonstrate a track record of
responsibility with regard to handling his financial matters generally, as evidenced by his
record of late vehicle and mortgage loan payments, and unpaid delinquent real estate
taxes. Despite a recent estate sale that netted him $8,241, he had to borrow $4,200
from his 401(k) account to bring his mortgage current as of January 2010, and to settle
the student loan debt in SOR 1.k. While he plans to sell his truck for additional funds,
the vehicle needs costly repairs, which he contends the manufacturer should cover, so
the sale is not likely to be soon. From roof and furnace replacements, to maintenance
and repair costs for the two houses and vehicles, something has always prevented
Applicant from repaying his debts and reestablishing good credit. Based on the
evidence before me, I am unable to conclude that it is clearly consistent with the
national interest to grant Applicant a security clearance at this time.
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
Subparagraph 1.b: Against Applicant
Subparagraph 1.c: For Applicant9
Subparagraph 1.d: Against Applicant
Subparagraph 1.e: Against Applicant
Subparagraph 1.f: For Applicant
Subparagraph 1.g: For Applicant
Subparagraph 1.h: For Applicant
Subparagraph 1.i: For Applicant
Subparagraph 1.j: For Applicant
Subparagraph 1.k: For Applicant
Subparagraph 1.l: For Applicant
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Conclusion
In light of 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.
Elizabeth M. Matchinski
Administrative Judge