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                            DEPARTMENT OF DEFENSE
             DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
----------, -------- ---------- )                                                            
                                         )       ISCR Case No. 08-11883
SSN: ------ ---- -------- )
)
Applicant for Security Clearance )
Appearances
For Government: Melvin A. Howry, Esquire, Department Counsel
For Applicant: Pro se
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Decision
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WHITE, David M., Administrative Judge:
Applicant accrued about $30,000 in delinquent debt between 2002 and 2005 while
founding and working in a start-up technology company. Once the company began
earning enough money for him to draw a regular salary, he began paying off his debts. All
but two minor debts are fully resolved, and he has taken all possible steps to resolve
them. His company was bought by a major defense contractor, for whom he now works
with a substantial salary. Based upon a review of the case file, pleadings, exhibits, and
testimony, eligibility for access to classified information is granted. 
Applicant submitted his security clearance application (SF 86) on September 3,
2008. On November 20, 2009, the Defense Office of Hearings and Appeals (DOHA)
issued Applicant 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
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adjudicative guidelines effective within the Department of Defense for SORs issued after
September 1, 2006. 
Applicant acknowledged receipt of the SOR on December 18, 2009. He answered
the SOR in writing on January 28, 2010, and requested a hearing before an
administrative judge. Department Counsel was prepared to proceed on February 27,
2010, and the case was assigned to me on March 10, 2010. DOHA issued a Notice of
Hearing on March 25, 2010, and I convened the hearing as scheduled on April 9, 2010.
The Government offered exhibits (GE) 1 through 9, which were admitted without
objection. Applicant offered exhibits (AE) A through H, which were also admitted without
objection, and testified on his own behalf. I granted Applicant’s request to leave the
record open until April 23, 2010, to permit submission of additional evidence. DOHA
received the transcript of the hearing (Tr.) on April 16, 2010. On April 19, 2010, Appellant
submitted AE I, which was admitted without objection and the record was closed.
Findings of Fact
In his answer to the SOR, Applicant admitted that he formerly owed some of the
SOR-listed debts, but denied that he presently owes any of them for the reasons
discussed below. Applicant’s admissions are incorporated into the following findings. 
Applicant is a 47-year-old program director, employed by a major defense
contractor since September 2007. He is married for the second time, with three adult
children. He served one enlistment in the Army, from 1980 to 1984, during which he held
a Top Secret security clearance. (AR; GE 1; Tr. 10, 25, 84, 94-96.)
Applicant and his first wife divorced in 2000. In 2002, he left his job and moved
across country to the state where she and their three children had relocated. He and two
former colleagues founded a technology company. He planned to live on his accumulated
savings until the company became profitable. That process took longer than anticipated
and, although he moved in with his former wife and surrendered his car to the bank in a
voluntary repossession to minimize his expenses, he accumulated some debts that
became delinquent. In 2005, the company became profitable enough that he could begin
drawing a regular salary and he began to resolve those debts. In 2007, his current
employer purchased the company and hired Applicant and his partners as employees.
Since then, his annual salary has increased from $126,000 to $177,000, and he has
accumulated about $97,000 in retirement savings. He also has about $14,000 in regular
savings. He recently purchased a home with a 30-year fixed rate mortgage, and has a
monthly budget surplus of about $1,300. (AR; AE A; AE B; AE H; Tr. 27-28, 74-77, 80-
83.)
The debt alleged in SOR ¶ 1.a in a $40 medical bill. The creditor is not identified
on any of the record credit reports, and Applicant has been unable to identify who
reported this matter to Equifax. No one has contacted him directly about this debt. He
submitted internet requests to the credit bureaus seeking the identity of the creditor so he
could resolve the matter, but had no reply by the date of his hearing. After the hearing, he
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submitted a letter to Equifax, the only credit bureau listing the debt, asking them to
identify the creditor or remove the entry from his credit report. If it is valid, he is able and
willing to pay it. This is the only delinquent debt reported on Applicant’s April 3, 2010
credit report. (AR; GE 2; GE 9; AE I; Tr. 45-46, 52-53.)
The two delinquencies alleged in SOR ¶¶ 1.b and 1.i are duplicate listings of the
same debt held at different times by different collection agencies. It originated with the
landlord of the apartment Applicant moved out of when he moved into his ex-wife’s house
to reduce his living expenses. Applicant settled this debt in February 2007. (AR Att. B;
GE 2; GE 7; Tr. 53-54, 66-71.)
The debts alleged in SOR ¶¶ 1.c and 1.g were apparently for the final month of
electricity and cable television services, respectively, in the apartment mentioned above.
Applicant had not received those bills, and had two subsequent accounts with each
company without being informed about them. He first learned about them when
interviewed concerning his credit report, and began inquiries to determine whether they
were valid. When they remained matters of concern on the SOR, he contacted both
creditors and just paid them in late January 2010 to resolve matters. (GE 4; AR Att. C; AE
B Att. G; Tr. 55-56, 58-61.)
Applicant also first learned about the $244 medical services account delinquency
alleged in SOR ¶ 1.d during his security interview. He had received no prior billing
concerning this account. After he was able to identify the creditor through researching his
credit report, he paid this amount during January 2010. (GE 4; AR Att. D; Tr. 56-57.)
The $3,343 debt alleged in SOR ¶ 1.e involved a store credit card that Applicant’s
ex-wife used. Applicant had no knowledge of this debt until his security interview. He
contacted the card-issuing company, who showed the account existed only in his ex-
wife’s name. That company, however, could not correct the credit bureau report without
action by the store that issued the card. Applicant has written to the store to dispute their
claim that he owes this debt, but heard nothing in response. After his hearing, he wrote to
each of the major credit bureaus explaining the situation and disputing this account. (AR
Att. E; AE I; Tr. 46-52.)
SOR ¶ 1.f alleges that a $9,678 credit card debt remained unpaid as of the date of
the SOR. This debt was one on which Applicant fell behind while trying to get his
business started. He contacted the creditor and settled this debt on May 20, 2005. It is no
longer reflected on his credit report. (AR Att. F; AE B Att. F; Tr. 57-58.)
The debt alleged in SOR ¶ 1.h resulted from the voluntary repossession of
Applicant’s car discussed above. He settled this account with the collection agency on
June 14, 2005. He reported this settlement to the credit bureaus that formerly reported
the debt, and succeeded in having it removed from all of his credit reports. (AR Att. H; AE
B Att. H & H1; Tr. 61-65.)  
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The debt alleged in SOR ¶ 1.j was for another credit card account that became
delinquent in 2003. He settled this account with the collection agency and made his final
payment in August 2007. (AR Att. J; GE 4 at 6; Tr. 71-72.)
Applicant submitted letters and testaments from many friends and professional
colleagues praising his integrity, responsibility, and trustworthiness. (AE C through G.)
His demeanor and presentation throughout his hearing reflected his complete
understanding of his financial situation, his maturity and intention to honorably repay all of
his legitimate debts, and his understanding of the importance of security matters.  
Policies
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 to be 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 AG ¶ 2 describing the adjudicative process. The administrative judge’s
overarching adjudicative goal is a fair, impartial, and commonsense decision. According
to AG ¶¶ 2(a) and 2(c), the entire process is a conscientious scrutiny of applicable
guidelines in the context 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 the 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. 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, “[t]he applicant is
responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or
mitigate facts admitted by the applicant or proven by Department Counsel, and has the
ultimate burden of persuasion as to obtaining a favorable clearance decision.” Section 7
of Executive Order 10865 provides that “[a]ny determination under this order adverse to
an applicant shall be a determination in terms of the national interest and shall in no
sense be a determination as to the loyalty of the applicant concerned.” 
A person applying for access to classified information seeks to enter 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
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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.
Analysis
Guideline F, Financial Considerations
AG ¶ 18 expresses the security concern pertaining to financial considerations:
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 over-extended
is at risk of having to engage in illegal acts to generate funds. Compulsive
gambling is a concern as it may lead to financial crimes including
espionage. Affluence that cannot be explained by known sources of income
is also a security concern. It may indicate proceeds from financially
profitable criminal acts.
AG ¶ 19 describes conditions that could raise a security concern and may be
disqualifying. Department Counsel asserted that the evidence would show the
applicability of two of these potentially disqualifying conditions: 
(a) inability or unwillingness to satisfy debts; and 
(c) a history of not meeting financial obligations. 
From 2002 to 2005, Applicant accumulated SOR-listed delinquent debts that
totaled about $30,000. He subsequently resolved all but two of these debts. One medical
bill for $40 he can and would gladly repay but the credit bureaus have yet to respond to
him with the identity of the alleged creditor. He is also able to repay the other SOR-
alleged delinquency that was incurred by his ex-wife if it is shown that he has any
responsibility for it. He has done all that he can to communicate with the credit bureaus to
attempt resolution of both of these debts. He is fully solvent, with significant excess
monthly income over his regular living expenses. Accordingly, he has eliminated the
formerly applicable security concerns under AG ¶ 19(a). He is not under continuing
financial duress, so he is no longer at risk of having to engage in illegal acts to generate
funds. The evidence established a brief history of not meeting some financial obligations
while starting a new business from 2002 to 2005, raising potential security concerns
under AG ¶ 19(c).
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AG ¶ 20 provides conditions that could mitigate security concerns arising from the
foregoing financial considerations. The potentially applicable mitigating conditions are:
(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;
(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;
(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;
(d) the individual initiated a good-faith effort to repay overdue creditors or
otherwise resolve debts; and
(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.
Mitigation under AG ¶ 20(a) was fully established. Applicant’s delinquencies arose
because the new business he started with colleagues was not profitable as quickly as
they planned. After it became profitable, he repaid creditors and was subsequently
bought out by his current employer. He earns a sufficient salary that recurrence is
unlikely. His conduct throughout was honorable, and casts no doubt on his reliability,
trustworthiness, or judgment. Some mitigation under AG ¶ 20(b) was also established.
Applicant voluntarily left a comfortable employment situation to start a new company and
be closer to his children. He thought he had sufficient savings to survive the start-up
period, but underestimated what he would need. Once he realized he could not draw a
regular salary and still keep the business going, he drastically reduced his living
expenses, but still incurred some delinquent debt. As soon as the business became self-
sustaining, he began resolving his outstanding debts. 
Applicant provided no evidence of financial counseling, but demonstrated his full
understanding and capable management of his financial situation. He has fully resolved
his earlier delinquencies except one unidentifiable $40 medical debt, and a credit card
debt belonging solely to his ex-wife. He has more than sufficient resources to resolve
both of these matters when and if the legitimacy of the debts is determined. These are
substantial steps in the right direction, creating substantial mitigation under AG ¶¶ 20(c)
and (d). Moreover, Applicant demonstrated his present solvency and ability to avoid
additional delinquencies in the future. Applicant has taken all possible steps to dispute his
responsibility for the two unresolved delinquencies under AG ¶ 20(e). 
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As the Appeal Board has ruled concerning the successful mitigation of security
concerns arising from financial considerations, “[a]n applicant is not required to show that
[he] has completely paid off [his] indebtedness, only that [he] has established a
reasonable plan to resolve [his] debts and has ‘taken significant actions to implement that
plan.’” ISCR Case No. 06-12930 at 2 (App. Bd. Mar. 17, 2008) (quoting ISCR Case No.
04-09684 at 2-3 (App. Bd. Jul. 6, 2006)). This applicant has established and substantially
implemented an effective plan to resolve the debts that could formerly have given rise to
security concerns.
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 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 applicable guidelines and the whole-person concept.  
I considered the potentially disqualifying and mitigating conditions in light of all the
pertinent facts and circumstances surrounding this case. Applicant’s conduct of security
concern was incurring some delinquent debts, which totaled about $30,000, between
2002 and 2005. He fully resolved all but two of these debts, one of which involves $40 to
an unidentified creditor, and the other of which, for about $3,000, he legitimately disputes
owing. He has more than sufficient resources to pay these debts if shown to be valid, and
has contacted the credit bureaus and known creditors seeking the information needed to
resolve them. His actions have fully mitigated the formerly applicable security concerns,
and he has established a good-faith track record of financial responsibility. The record
demonstrates his ongoing ability to avoid any future delinquent debt, and his excellent
performance of responsible duties at work. Applicant’s actions have eliminated any
continuing potential for pressure, coercion, or duress. He demonstrated that his financial
problems are unlikely to recur. Applicant presented sufficient evidence to fully mitigate
security concerns arising from his brief history of failing to meet financial obligations, and
his former inability to pay some delinquent debts. The record generates significant
confidence as to his present eligibility and suitability for a security clearance.
 
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Formal Findings
Formal findings for or against Applicant on the allegations set forth in the SOR, as
required by ¶ E3.1.25 of Enclosure 3 of the Directive, are:
Paragraph 1, Guideline F: FOR APPLICANT
Subparagraph 1.a through 1.j: For Applicant
Conclusion
In light of all of the circumstances presented by the record in this case, it is clearly
consistent with the interests of national security to grant Applicant eligibility for a security
clearance. Eligibility for access to classified information is granted.
                                             
DAVID M. WHITE
Administrative Judge