Item 1.1
Item 2.2
1
                                                                     
                               DEPARTMENT OF DEFENSE
                DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
---------, --------- ---- )       ISCR Case No. 09-06306
SSN: ------ ---- -------- )
)
Applicant for Security Clearance )
Appearances
For Government: D. Michael Lyles, Esquire, Department Counsel
For Applicant: Pro se
______________
Decision
______________
WHITE, David M., Administrative Judge:
Applicant incurred all of the SOR-listed delinquent debts, totaling about $20,000,
since 2004. In 2000, he tried to fraudulently avoid paying a substantial gambling debt.
He resolved several of the smaller delinquencies when confronted with denial of his
security clearance, but did not establish his willingness or ability to avoid similar issues
in the future, and failed to mitigate the resulting security concerns. Based upon a review
of the case file, pleadings, and exhibits, eligibility for access to classified information is
denied. 
Applicant submitted a security clearance application (SF 86) on April 3, 2009.1
On April 13, 2010, the Defense Office of Hearings and Appeals (DOHA) issued a
Statement of Reasons (SOR) to Applicant, detailing security concerns under Guideline
F (Financial Considerations).  The action was taken under Executive Order 10865,2
Safeguarding Classified Information within Industry (February 20, 1960), as amended;
Department of Defense Directive 5220.6, Defense Industrial Personnel Security
Item 4.3
The Government submitted ten Items in support of the SOR allegations.4
Items 1 and 4.5
Item 4.6
Items 5 and 6. 7
Items 2 and 4.8
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Clearance Review Program (January 2, 1992), as amended (Directive); and the
adjudicative guidelines effective within the Department of Defense for SORs issued
after September 1, 2006. 
Applicant answered the SOR in writing (AR) on May 24, 2010, and requested
that his case be decided by an administrative judge on the written record without a
hearing.  Department Counsel submitted the Government’s written case on July 12,3
2010. On July 14, 2010, a complete copy of the File of Relevant Material (FORM)  was4
mailed to Applicant, and he was afforded an opportunity to file objections and submit
material in refutation, extenuation, or mitigation within 30 days of his receipt of the
FORM. Applicant did not return the signed document acknowledging receipt of his copy
of the FORM, but submitted a written response, which is considered to be timely, on
August 25, 2010. Applicant made no objection to consideration of any evidence
submitted by Department Counsel, but did submit additional comments and evidence
for consideration. Department Counsel had no objection to the admissibility of
Applicants response to the FORM (AFR). I received the case assignment on August 31,
2010.
Findings of Fact
Applicant is a 41-year-old employee of a defense contractor, where he was hired
in December 2007. He retired from the Air Force in November 2007 as a technical
sergeant (E-6), after 20 years of enlisted service. He held a security clearance during
most of that time. He is married for the second time. He has a 15-year-old son who lives
with his first wife, for whom he pays $400 per month in child support. He also has two
sons, ages eight and four, with his second wife, who also has a ten-year-old daughter
who lives with them. He earned an associate’s degree from a community college in
2004.  In his response to the SOR, he admitted all of the factual allegations in SOR ¶¶5
1.a through 1.f, with some explanations.  Applicant’s admissions, including his6
responses to the SOR, to the FORM, and to DOHA interrogatories,  are incorporated in7
the following findings.
Applicant admitted owing each of the five delinquent debts alleged in SOR ¶ 1.a
through 1.e, totaling just under $20,000.  He said that his credit problems began around8
2004 due to excessive credit card spending, and worsened when he and his wife had
Item 4 at 11; Item 5 at 3.9
Item 5 at 3.10
Item 4 at 1, 4.11
Item 7.12
Item 8.13
Item 9 at 7.14
Item 4 at 1, 5-7; AFR at 2, 4.15
Item 7 at 2; Item 6 at 5; Item 4 at 1, 8-9; AFR at 2, 5-6. 16
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their second child and his wife quit working to avoid large child-care expenses. During
the summer of 2005, they had recently moved to Biloxi, Mississippi, and their on-base
housing became uninhabitable after hurricane Katrina. Applicant began drawing a
housing allowance to live off base. His wife and children went to live with relatives
elsewhere, and Applicant moved back into government quarters. He failed to stop the
housing allowance, however, and was overpaid about $10,000 before the Air Force
caught the erroneous payments. Thereafter, his pay was garnished around $312 per
month to recoup the improper payments. This garnishment continued after he retired,
and was completed at the end of May 2010.9
In April 2007, Applicant received a $15,000 gift from his grandfather to help pay
his delinquent debts. Applicant used most of the funds for that purpose.  By the time10
the SOR was issued, his delinquent debt was down to the accounts listed in the SOR.
The $55 medical debt listed in SOR ¶ 1.a arose in 2004. Applicant was apparently
unaware of its existence until he received the SOR. His wife paid this debt by putting it
on her credit card on April 23, 2010.  SOR ¶ 1.b alleged a $404 delinquency on a11
military credit card. This figure was derived from Applicant’s credit report dated
February 24, 2010, which showed a total balance due of $4,167.  His earlier credit12
reports reflected a total balance of $4,641 with $533 past due on December 10, 2009;13
and a $6,518 balance with $1,123 past due on April 17, 2009.  By May 2010, the14
creditor had started garnishing Applicant’s retirement pay, and he entered into an
agreement to augment that amount with $200 monthly payments. The most recent
information on this account shows an account balance of $3,345 with no overdue
amount, as of August 11, 2010.  15
The delinquent debt alleged in SOR ¶ 1.c is owed to a collection agency that
acquired Applicant’s automobile loan, under which he originally borrowed $26,600,
during October 2006. On February 24, 2010, his credit report reflected a $10,657
balance, with $6,103 past due. In response to DOHA interrogatories, Applicant reported
that he had negotiated a settlement plan under which he would pay $278 per month for
12 months, starting March 7, 2010, to fully settle the debt for a total of $3,338. Applicant
documented that he made those payments monthly from March through August 2010.16
Item 9 at 9; Item 7 at 3; Item 4 at 1-2, 10; AFR at 2.17
Item 9 at 10; Item 4 at 2, 14; AFR at 2, 7, 8.18
Item 10; Item 4 at 2. Applicant did not address this allegation in his response to the FORM.19
Item 4 at 11; Item 6 at 4.20
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The debt alleged in SOR ¶ 1.d arose from the foreclosure on Applicant’s home
mortgage that he entered into in January 2003. Payments on the mortgage became
delinquent in November 2003, and foreclosure proceedings were started in January
2005 when he was $8,452 past due. Applicant provided little information concerning the
circumstances under which this problem arose, but admitted the debt. He said he has
been unable to contact the lender, and presumes that the home sold for more than the
outstanding balance due since he was never contacted concerning a deficiency. He
successfully disputed the listing of the debt on his credit report, which had not been
updated since 2005, and had it removed from the report in May 2010.   17
The debt listed in SOR ¶ 1.e was for a $354 utility bill that went to collections in
June 2007. Applicant submitted evidence that he settled with the original creditor on
April 29, 2010, by paying them $400 on a credit card.   18
During May 2000, while separated pending divorce from his first wife, Applicant
spent a lot of time gambling almost every day with bingo cards at a base morale welfare
and recreation facility. One day he lost about $500, and could not withdraw any more
funds as a cash advance on his credit card. He falsified some of his losing cards to
make them appear to be winners. He was caught, awarded non-judicial punishment of
$1,800 in forfeiture of pay, and made to repay the stolen $500. In his response to the
SOR, Applicant described this incident as “a lapse in judgment almost 10 years ago,”
but did not otherwise explain his subsequent gambling history.  19
Applicant provided no evidence of financial counseling. The only budget
information he provided, from which to determine his present or future solvency,
consisted of undocumented estimates on a personal financial statement showing a
monthly surplus of $1,484, submitted with his interrogatory response dated February 17,
2010. This budget reflected $1,250 in monthly income from Applicant’s retirement pay,
although his June earnings statement shows gross pay of $1,250 but net pay after all
deductions of only $385. This correction results in a surplus closer to $600 per month.
Applicant provided no explanation for his delay in addressing the several relatively
minor delinquent debts alleged in the SOR until denial of his clearance was proposed
when he had such surplus income. Nor did he explain his absence of any savings when
his income exceeds his listed expenses by that amount.  20
Applicant submitted no other evidence describing his character, trustworthiness,
or work performance. I was unable to evaluate his credibility, demeanor, or character in
person since he elected to have his case decided without a hearing.
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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 (DCs) and mitigating conditions (MCs), 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. 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, “[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: “[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
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.
FORM at 7.21
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Analysis
Guideline F, Financial Considerations
The security concerns relating to the guideline for financial considerations are 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. 
Department Counsel argued that the evidence established security concerns
under four Guideline F DCs, as set forth in AG ¶ 19: 
(a) inability or unwillingness to satisfy debts;
(b) indebtedness caused by frivolous or irresponsible spending and the
absence of any evidence of willingness or intent to pay the debt or
establish a realistic plan to pay the debt;
(c) a history of not meeting financial obligations; and
(e) consistent spending beyond one’s means, which may be indicated by
excessive indebtedness, significant negative cash flow, high debt-to-
income ratio, and/or other financial analysis.  21
Although not specifically identified by Department Counsel, the evidence and allegations
in the SOR also raise additional security concerns under AG ¶ 19:
(d) deceptive or illegal financial practices such as embezzlement,
employee theft, check fraud, income tax evasion, expense account fraud,
filing deceptive loan statements, and other intentional financial breaches
of trust; and 
(f) financial problems that are linked to drug abuse, alcoholism, gambling
problems, or other issues of security concern.
Applicant has been unable or unwilling to satisfy numerous debts over the past
six years, including those alleged in SOR ¶¶ 1.a through 1.e. Whether this was through
unwillingness or inability, or some combination of both, is not clear from the record
evidence, but no other explanation was offered. DC 19(a) and (c) were accordingly
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established. There is no substantial evidence of frivolous or irresponsible spending,
since all SOR-listed debts were apparently incurred for regular living expenses.
Moreover, Applicant exhibited some willingness and intent to repay those creditors.
Accordingly, security concerns under DC 19(b) were not raised. The level of
indebtedness involved in this case does not, per se, support application of DC 19(e),
nor did Department Counsel provide evidence or financial analysis or either negative
cash flow or a high debt-to-income ratio. However, Applicant’s admitted fraudulent
attempt to liquidate $500 in gambling debt by falsifying bingo cards in a base club is
substantial evidence of a deceptive and illegal financial practice and breach of trust that
was linked to his gambling problem. The evidence raises security concerns under DCs
19(a), (c), (d), and (f), thereby shifting the burden to Applicant to rebut, extenuate, or
mitigate those concerns. 
The guideline includes five conditions in AG ¶ 20 that could mitigate security
concerns arising from Applicant’s financial difficulties:
(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.
Applicant’s delinquent debts arose over the past six years, and continue in part
despite his recent resolution of several of them. Applicant failed to demonstrate that
such problems are unlikely to continue or recur, or that his reliability and trustworthiness
have improved. His bingo fraud happened more than ten years ago, but his wrongful
collection of about $10,000 in unearned housing allowances, that were only repaid
through a recently-concluded garnishment, precludes a mitigating finding that his lack of
integrity was an isolated “lapse in judgment.” The evidence does not support the
application of MC 20(a). 
8
Applicant was continuously employed throughout the period in question, and
offered no evidence that would support mitigation under MC 20(b). He and his wife
simply spent more than they earned on a regular basis. Applicant did not undergo
financial counseling, and his last-minute efforts to address some of his delinquent debts
were insufficient to establish clear indications that the problem is under control. MC
20(c) is therefore inapplicable. 
Applicant did repay some of his overdue creditors, albeit only when his security
clearance eligibility came under significant doubt, which calls into question the good-
faith nature of the efforts. Those payments demonstrate a good start toward
establishing potential clearance eligibility, but the evidence is insufficient to support a
conclusion that such problems will not recur given the paucity of budget corroboration
and the shifting of some debt to other credit cards. Some mitigation under MC 20(d)
was proven, but its weight is not sufficient to overcome all the foregoing concerns.
Finally, Applicant disputes the debt he admitted formerly owing on his delinquent
mortgage loan. However, he offered only speculation that his former house may have
sold for a sufficient price to cover the debt, without any evidence to corroborate that
basis for dispute. Nor did he document any serious effort to contact the creditor, or
obtain real estate records concerning the subsequent history of the property involved.
He therefore failed to meet his burden of proof under MC 20(e). 
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 guidelines and the whole-person concept.     
I considered the potentially disqualifying and mitigating conditions in light of all
relevant facts and circumstances surrounding this case. Applicant is a mature,
educated, and experienced individual, who is responsible for his voluntary choices and
conduct that underlie the security concerns expressed in the SOR. His financial
irresponsibility spans the past ten years, and continues at present from all indications in
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the record. He demonstrated some effort to resolve his debts since gaining his current
employment three years ago, but primarily within the last six months while his clearance
was in evident jeopardy. When confronted with significant gambling losses, he
fraudulently altered his bingo cards in an attempt to wrongfully regain those funds. He
collected more than $10,000 in housing allowances to which he was not entitled, and
would have continued doing so had the mistake not been discovered by the
Government. He failed to offer good-character evidence that would establish his
trustworthiness, responsibility, and good judgment in light of his financial history. He
remains subject to coercion and duress from his financial obligations, and made an
insufficient showing that such problems are unlikely to continue or recur. 
Overall, the record evidence creates substantial doubt as to Applicant’s present
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 ¶ E3.1.25 of Enclosure 3 of the Directive, are:
Paragraph 1, Guideline F: AGAINST APPLICANT
Subparagraph 1.a: For Applicant
Subparagraph 1.b: For Applicant
Subparagraph 1.c: For Applicant
Subparagraph 1.d: Against Applicant
Subparagraph 1.e: For Applicant
Subparagraph 1.f: Against Applicant
Conclusion
In light of all of the circumstances presented by the record in this case, it is not
clearly consistent with the interests of national security to grant Applicant eligibility for a
security clearance. Eligibility for access to classified information is denied.
                                              
DAVID M. WHITE
Administrative Judge