DEPARTMENT OF DEFENSE 
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 10-00298 
            ) 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: William T. O'Neil, Esquire, Department Counsel 
For Applicant: Pro se 
 
 
______________ 
 
Decision 
______________ 
 
 
CREAN, Thomas M., Administrative Judge: 
 
Based on a review of the case file and pleadings, Applicant provided adequate 
information to mitigate security concerns under Guideline F. Eligibility for access to 
classified information is granted. 
 
On August 18, 2009, Applicant submitted an Electronic Questionnaire for 
Investigations Processing (e-QIP) as part of his employment with a defense contractor. 
(Item 5) On June 25, 2010, the Defense Office of Hearings and Appeals (DOHA) issued 
a Statement of Reasons (SOR) to Applicant detailing security concerns for financial 
considerations under Guideline F. (Item 1) The SOR alleges six delinquent debts 
totaling approximately $94,000. 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 in the Department of Defense on September 1, 
2006.  
 
 
1 
 
 
 
2 
 
 
 Applicant acknowledged receipt of the SOR on July 7, 2010. (Item 3) He 
answered the SOR on July 23, 2010, admitting two allegations (SOR 1.a and SOR 1.e), 
but noting that he is paying the debt listed at SOR 1.e. He denied four allegations noting 
that he is either unaware of the debt, is paying the debt, or the debt has been paid. He 
elected to have the matter decided on the written record. (Item 4)  
 
 Department Counsel submitted the Government’s written case on September 9, 
2010. Applicant received a complete file of relevant material (FORM) on September 28, 
2010. The FORM stated that Applicant failed to provide adequate information to verify 
all statements concerning payment of debts. Applicant was given until October 28, 
2010, to file objections, and submit material to refute, extenuate, or mitigate the 
disqualifying conditions. Department Counsel granted a delay until November 29, 2010, 
to provide additional information. However for unspecified reasons, this delay was not 
adequately noted in the file and the case was forwarded from the Department Counsel 
office and assigned to me on November 5, 2010. I rendered an unfavorable decision on 
December 9, 2010. However, Applicant had timely provided additional information which 
was received at DOHA on November 29, 2010. The Department Counsel office did not 
timely forward the information to me. The additional information was sent to me on 
December 10, 2010, and I received it on December 13, 2010. I withdrew my initial 
decision on December 13, 2010, to consider the additional information. The additional 
material consisted of a statement from Applicant concerning actions taken to resolve his 
indebtedness, a letter of employment and first pay from his new defense contractor 
employer, a letter from the state comptroller noting the payments he has made on his 
state taxes, a new personal financial statement, and the amount of debt remaining on a 
credit card. Department Counsel had no objection to consideration of this additional 
information. 
 
Findings of Fact 
 
 I thoroughly reviewed the case file and the pleadings. I make the following 
findings of fact. 
 
Applicant is 61 years old, has an associate's degree, and is presently employed 
as a grounds keeper for a defense contractor. Prior to this job, he was a franchisee for a 
tool company for 22 years. He is married with two grown children. (Item 5) A personal 
financial statement provided by Applicant in response to Interrogatories shows that he 
and his wife have a combined monthly income of $4,677.73, with monthly expenses of 
$4,284.16, leaving approximately $400 in monthly disposable income. He also lists 
$845,000 in total assets from real estate, savings, investments, and other 
miscellaneous assets. He does not list any liabilities against these assets. (Item 7 at 5) 
Applicant started a new position with a new defense contractor on November 8, 2010. 
His pay has almost doubled. His new net monthly salary increased from $2,470.37 to 
$3,808.50. His monthly expenses are approximately the same as previously stated. He 
continues to list his total assets as $845,000. (Additional information filed in response to 
the FORM on November 29, 2010) 
 
 
3 
 
 
Applicant was the sole owner of a tool franchise from 1986 to 2008. As the sole 
owner, he was responsible for the operation of the business including payment of 
business and other taxes. He closed the business in 2008 after accumulating debt 
because of the declining economy, making it difficult to meet expenses and payoff the 
debts. He believes he held on to the business too long and knows it is hard to start a 
new career at his age. He intends to do everything to pay the debts. (Item 6 at 7-8),  
 
Credit reports (Item 8, credit report, dated April 15, 2010; Item 9, credit report, 
dated January 26, 2010; Item 10, credit report, dated August 26, 2009) show state tax 
liens for $38,038 (SOR 1.a), and $857 (SOR 1.b). The reports also show three credit 
card debts to different banks for $699 (SOR 1.c), $10,495 (SOR 1.d), and $13,495 
(SOR 1.e); and a charged-off debt of $30,220 to the tool company for franchise items 
provided to Applicant's business.  
 
Applicant admitted the $38,038 state tax lien at SOR 1.a, but denied the $857 tax 
lien to the same state at SOR 1.b. He is not familiar with the tax lien at SOR 1.b, but is 
sure that the state will let him know about the lien when they want the money. (Item 7 at 
2) Applicant was required to pay sales taxes to the state on his business. He was 
making monthly payments until 2002 when he started to skip the payments. In an 
interview with security investigators on September 30, 2009, Applicant admitted owing 
state taxes of approximately $68,000, but asserted he agreed to pay the state $500 
monthly on the debt starting in September 2009. (Item 6 at 5) In his response to the 
SOR, Applicant admits the tax lien and states he has been paying this debt at $500 
monthly. In the additional material in response to the FORM, Applicant provided 
documentation from the state comptroller showing he has been paying the state $500 
monthly since September 2009 on this debt. The additional information also noted his 
intent to increase the payments to $1,000 monthly since he has now gained more 
lucrative employment.  
 
Applicant admitted to the security investigator in September 2009 that he owed 
three credit card debts from his failed business. He was unsure of the amounts. (Item 6 
at 6-7) Applicant denied the credit card debt at SOR 1.c in his July 23, 2010, response 
to the SOR because he had paid the debt. (Item 4 at 3) He provided adequate 
documentation that the debt was paid in full. (Item 3 at 5) He admitted the other two 
credit card debts at SOR 1.d and 1.e. In response to interrogatories, Applicant asserts 
he had an agreement with the bank to settle the credit card debt at SOR 1.d for $9,754. 
He states he made payments of $1,455 from January 2010 to June 2010, and the debt 
was paid in full on June 25, 2010. He provided a letter concerning the payment made in 
March 2010 as well as the name and telephone number of a bank employee who could 
verify the payments. (Items 7, 10, and 12) Applicant states that he has only one credit 
card debt remaining from his failed business. Applicant has a payment agreement with 
the bank for the credit card debt at SOR 1.e, and provided documentation to show 
monthly payments of $177.50, commencing in November 2009. He plans to have this 
debt paid by the end of 2011. (Item 7 at 8-9; Additional information filed on November 
29, 2010) 
 
 
4 
 
 
Applicant denied the debt to the tool company for the tools provided his 
franchise. He received a loan of $165,000 from the tool company in the late 1990s to 
purchase a new truck and more tool merchandise. He paid all but $30,220 of the debt. 
When Applicant terminated the franchise, the tool company was required to retrieve any 
remaining inventory in payment of the debt. The company has not retrieved the tools or 
provided an accurate balance on the account. Applicant has not made any payment on 
the debt since the final and accurate balance of the debt has not been calculated. He 
anticipates the final balance will be less than the $30,000 debt now listed. He intends to 
pay this debt at $500 monthly when he is advised of the final balance. (Item 3 at 4, Item 
6 at 4; Additional Information filed in response to FORM on November 29, 2010)  
 
Policy 
 
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 must 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 
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.  
 
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 
 
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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 
 
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, 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. 
(AG ¶ 18) Similarly, an individual who is financially irresponsible may also be 
irresponsible, unconcerned, or careless in their obligations to protect classified 
information. Behaving responsibly or irresponsibly in one aspect of life provides an 
indication of how a person may behave in other aspects of life.  
 
 A person’s relationship with his creditors is a private matter until evidence is 
uncovered demonstrating an inability or unwillingness to repay debts under agreed 
terms. Absent evidence of strong extenuating or mitigating circumstances, an applicant 
with a history of serious or recurring financial difficulties is in a situation of risk 
inconsistent with the holding of a security clearance. An applicant is not required to be 
debt free, but is required to manage his finances in such a way as to meet his financial 
obligations. Applicant’s delinquent debts listed in credit reports and admitted by 
Applicant raise Financial Considerations Disqualifying Conditions (FC DC) AG ¶ 19(a) 
(inability or unwillingness to satisfy debts), and FC DC AG ¶ 19(c) (a history of not 
meeting financial obligations). Applicant started to accumulate delinquent debt in 
approximately 2002 when his tool franchise business experienced difficult times. He 
stopped making sales tax payments to the state, to banks on credit cards, and to the 
franchise company for a truck and merchandise loan.  
 
 The Government produced substantial evidence by way of credit reports and 
Applicant's statements to security investigators to establish the disqualifying conditions 
as required in AG ¶¶ 19(a) and 19(c). The burden shifts to Applicant to produce 
evidence to rebut, explain, extenuate, or mitigate the security concerns under financial 
considerations. An applicant has the burden to refute an established allegation or prove 
a mitigating condition, and the burden to prove or disprove it never shifts to the 
Government. 
 
 I considered Financial Considerations Mitigating Condition (FC MC) 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); and FC MC ¶ 20(b) (the 
conditions that resulted in the financial problems were largely beyond the person’s 
 
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control (e.g., loss of employment, a business downturn, unexpected medical 
emergency, or a death, divorce, or separations) and the individual acted responsibly 
under the circumstances). These mitigating conditions do not apply. Applicant claims he 
could not pay his state sale taxes and credit card debts because of the economic 
downturn that affected his business. Applicant presented no evidence to verify that his 
ability to meet his business financial obligations was affected by the economic decline. 
Applicant had to have income from the sale of his tool products to generate state sales 
taxes. The income from his sales had to be used for purposes other than meeting his 
obligation under state law as well as to the franchise company and his credit card debt. 
Applicant has also not shown that the business financial problems originated from 
conditions beyond his control, and that he took reasonable and appropriate steps to 
manage the business finances to meet the financial obligations of the business. 
Applicant admits that he stayed in the business too long after he realized that the 
business had financial problems. However, he established responsible action to resolve 
or pay the debts. 
 
 I considered FC MC ¶ 20(c) (the person has received or is receiving counseling 
for the problem and/or there are clear indications that the problem is being resolved or 
is under control). Applicant presented no information to indicate he received financial 
counseling. Even if he had received counseling, there is no indication his financial 
problems are being resolved or under control.  
 
 I considered FC MC ¶ 20(d) (the individual has initiated a good-faith effort to 
repay the overdue creditors or otherwise resolve debts). For FC MC ¶ 20(d) to apply, 
there must be an “ability” to repay the debts, the “desire” to repay, and “evidence” of a 
good-faith effort to repay. A systematic, concrete method of handling debts is needed. 
Good-faith means acting in a way that shows reasonableness, prudence, honesty, and 
adherence to duty or obligation. A promise to pay debts in the future is normally not 
evidence of a good-faith intention to resolve debts. Applicant has to show a "meaningful 
track record" of debt payment, including evidence of actual debt reduction through 
payment of debts. 
 
 Applicant has delinquent debts resulting from a failed business he ran for over 22 
years. He established a good-faith effort to resolve these debts by showing a 
meaningful track record of debt payment. Applicant established the payment plan with 
the state for business taxes he owes, and provided information he has made payments 
under this plan for over a year. He provided adequate information to show he has paid 
two of the three credit card debts arising from the business and that he is paying the 
third debt according to an agreed payment plan. The remaining debt is to the franchise 
company. He provided sufficient information to establish his intent to pay the debt once 
the final balance owed is established in conjunction with the franchise company. While 
Applicant could have managed the business better so as not to have these business 
debts, he has taken appropriate steps to pay and resolve the debts. Applicant has 
substantial assets and is not in danger of a financial collapse. He can use his assets, if 
financially prudent, to resolve the financial problems and pay the delinquent debts. 
 
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Applicant presented sufficient information to mitigate security concerns for financial 
considerations.  
 
Whole-Person Concept 
 
 Under the whole-person concept, an administrative judge must evaluate an 
applicant’s eligibility for access to classified information by considering the totality of the 
applicant’s conduct and all the circumstances. The administrative judge should consider 
the nine adjudicative process factors listed at AG ¶ 2(a):  
 
(1) the nature, extent, and seriousness of the conduct; (2) the 
circumstances surrounding the conduct, to include knowledgeable 
participation; (3) the frequency and recency of the conduct; (4) the 
individual’s age and maturity at the time of the conduct; (5) the extent to 
which participation is voluntary; (6) the presence or absence of 
rehabilitation and other permanent behavioral changes; (7) the motivation 
for the conduct; (8) the potential for pressure, coercion, exploitation, or 
duress; and (9) the likelihood of continuation or recurrence. 
 
Under AG ¶ 2(c), the ultimate determination of whether to grant eligibility for access to 
classified information must be an overall commonsense judgment based upon careful 
consideration of the guidelines and the whole-person concept.      
   
 I considered the potentially disqualifying and mitigating conditions in light of all 
the facts and circumstances surrounding this case. Applicant established a meaningful 
track record of paying his delinquent debts. He paid two credit card debts arising from 
his failed business and he is paying the remaining credit card debt according to a 
payment plan. He is paying the failed business state tax liability, and is attempting to 
resolve the debt owed the franchise company. Applicant has substantial assets which 
are more than the debts owed from the failed business. He is not in danger of financial 
failure. Applicant provided sufficient credible documentary information in the form of 
debt payments and assets to show he is financial stable. He established he is acting 
reasonably and responsibly to address his delinquent debts and resolve any financial 
problems. His responsible management of the financial obligations indicates Applicant 
would be concerned and responsible in regard to protecting classified information. 
Overall, the record evidence leaves me without questions and doubts as to Applicant’s 
judgment, reliability, and trustworthiness. He established his suitability for access to 
classified information. For all these reasons, I conclude Applicant has mitigated the 
security concerns arising from his financial situation. Eligibility for access to classified 
information is granted. 
 
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: 
 
 
8 
 
 
 Paragraph 1, Guideline F:   FOR APPLICANT 
 
  Subparagraph 1.a - 1.f:  For Applicant  
 
Conclusion 
 
 In light of all of the circumstances presented by the record in this case, it is 
clearly consistent with national interest to grant Applicant eligibility for access to 
classified information. Access to classified information is granted. 
 
 
 
_________________ 
THOMAS M. CREAN 
Administrative Judge