1
 
                                                             
                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 09-06992
)
)
Applicant for Security Clearance )
Appearances
For Government: Nichole Noel, Esquire, Department Counsel
For Applicant: Pro se  
______________
Decision
______________
HENRY, Mary E., Administrative Judge:
Based upon a review of the pleadings, exhibits, and testimony, I deny Applicant’s
eligibility for access to classified information.
Applicant signed an Electronic Questionnaire for Investigations Processing (e-
QIP) version of a security clearance application (SF-86) on May 5, 2009. The Defense
Office of Hearings and Appeals (DOHA) issued Applicant a Statement of Reasons
(SOR) on June 8, 2010 detailing security concerns under Guideline F, Financial
Considerations, and Guideline H, Drug Involvement, that provided the basis for its
preliminary decision to deny him a security clearance. 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) implemented on September 1, 2006. 
 
GE 1.1
Id.; Tr. 13.2
Tr. 13-14, 18-19.3
2
Applicant acknowledged receipt of the SOR on June 14, 2010. He answered the
SOR in writing and requested a hearing before an administrative judge. DOHA received
the request on July 6, 2010. Department Counsel was prepared to proceed on
September 28, 2010, and I received the case assignment on October 4, 2010. DOHA
issued a notice of hearing on October 26, 2010, and I convened the hearing as
scheduled on November 17, 2010. The Government offered four exhibits (GE) 1
through 4, which were received and admitted into evidence without objection. Applicant
testified. DOHA received the transcript of the hearing (Tr.) on December 2, 2010. I held
the record open for Applicant to submit additional matters. Applicant timely submitted
Exhibits (AE) A through G, which were admitted without objection. The record closed on
December 21, 2010.
Findings of Fact
In his Answer to the SOR, Applicant admitted the factual allegations in ¶¶ 1.a and
2.a-2.j of the SOR. His admissions are incorporated herein as findings of fact. He also
provided additional information to support his request for eligibility for a security
clearance. After a complete and thorough review of the evidence of record, I make the
following additional findings of fact.  
Applicant, who is 47 years old, works as a network administrator for a
Department of Defense contractor. He began his current employment in October 2008.
After high school, he received training at a technical school.1
Applicant married his first wife in November 1985, and they divorced in February
1989. He married his second wife in May 1989, and they divorced in July 1995. He and
his present wife married in June 2005. They have a four-year-old son. His wife works as
a nurse.2
Applicant moved from another state to his current location in 2001. He initially
worked as an information technology consultant. At the same time, he started to
develop a real estate investment company. In time, his investment company became his
sole source of work and income. His business purchased properties, which he would
rehabilitate then sell. He established several limited liability corporations (LLC) to
purchase and sell the properties. He also established an S Corporation, which operated
as the management company for his LLCs.3
Applicant used lines of credit and credit cards to finance his business purchases
and operations. He opened bank accounts and credit cards in the names of his LLCs
and his own name. His creditors required him to personally guarantee all transactions of
Tr. 18-20.4
Id. at 26-27, 37-38; GE 2.5
He listed expenses such as auto repairs for $25, home repairs for $50, home improvement for $50, and6
garden supplies for $40. These expenses are not incurred every month. Thus, his deficit is lower some
months. GE 3. 
Id.; Tr. 27.7
Tr. 19-24.8
Applicant’s high balance on this card was $24,000.9
GE 3; GE 4; AE B; Tr. 22-24.10
3
his LLCs in these accounts. Applicant used these accounts for deposits on prospective
property purchases, for closing money, and for purchases of materials to repair the
property before reselling it. He regularly paid his credit card bills and his lines of credit
until 2008.4
Applicant successfully operated his business until 2008, when the economic
downturn impacted his business operations. He had a number of properties he could
not sell, as the real estate market had severely declined. He began to default on his
mortgages, credit card payments, and bank loans. In July 2008, he spoke with a
bankruptcy attorney, who advised Applicant not to file for bankruptcy at that time, but to
wait for the completion of the foreclosure process on his properties, which he has done.
In the last two years, Applicant transferred many of his properties by giving a “deed-in-
lieu” to the mortgage holder. As a result, he no longer owns the properties,  and he does
not owe the mortgage holder any money on his loans. The mortgage company owns the
properties.     5
Applicant submitted a personal financial statement. He listed his net monthly
income as $2,970 and his monthly expenses as $3,617.  His did not list his wife’s6
income in his statement. He and his wife split monthly expenses, and she pays what he
cannot pay each month.  7
Concerning the debts listed in the SOR, Applicant advises that the debts in
allegations 2.a through 2.d, which total $86,853, are credit cards and lines of credit
related to his business and are unpaid. Likewise, the debts in allegation 2.f and 2.g are
unpaid credit cards from his business. He lacks the financial resources to pay these
debts.8
Applicant continues to pay the $19,700 credit card debt listed in SOR ¶ 2.e.  He9
estimates that he owes approximately $17,000 on this debt. He stopped using the credit
card in 2008 and pays the creditor $244 a month. The $1,140 property tax lien in SOR ¶
2.h is paid.  10
AE C; Tr. 33.11
AE D; AE E; AE F; Tr. 33-35.12
Tr. 33, 35-37.13
Tr. 37-38.14
GE 2; AE G; Tr. 15-18, 39-41.15
4
SOR ¶ 2.i concerns a homeowners association lien. Applicant provided
documentation which shows that this lien attached to the property, not to him personally
or his businesses. The property has been sold at foreclosure and includes the lien. I find
that this lien is resolved, as Applicant no longer owns the property.11
SOR ¶ 2.j lists three debts related to two property mortgages and an equity line
of credit. Both properties have been sold at foreclosure after Applicant transferred title
to the properties to the mortgage holder. In both cases, the mortgage company waived
the deficiency judgment in the foreclosure documents. As a result of this waiver,
Applicant does not owe any additional money on the mortgages in 2.j(2) and 2.j(3). He
received a 1099-A for the 2.j(2) mortgage. This form indicates that Applicant has
abandoned the property. To his knowledge, he does not owe any income taxes on this
property. These allegations are found in favor of Applicant.12
The allegation in SOR ¶ 2.j(1) concerns a second mortgage on the 2.j(2)
property. Applicant has not received a cancellation of debt notice or a forgiveness of
debt letter. He, however, believes that under state law, the creditor’s only recourse is to
file a lien on the property. Thus, he believes he is not personally liable on the debt. He
has not provided information which supports his belief or shown that this debt is
resolved.   13
Applicant contacted a bankruptcy attorney a few months before the hearing. He
has not yet filed bankruptcy as he does not have the $3,000 filing fee. Once he
proceeds with bankruptcy, he has been told that he must stop all payments on debts.
He expects to make the final loan payment on his truck by May 2011. He then hopes to
save the money to file bankruptcy.14
As a high school student and young man, Applicant smoked marijuana between
1985 and 1990. He did not smoke marijuana again until 2002. He attended parties with
friends from a community service group, where marijuana was sometimes smoked. For
no particular reason, he occasionally smoked a marijuana cigarette. He never
purchased or sold the marijuana. He last smoked marijuana in June 2008. He last
attended a party with this group in 2009, as he prefers to spend time with his son. He
continues to participate in the group’s community service activities where marijuana is
not smoked. He signed a statement of intent not to use drugs in the future and agreed
to a revocation of his security clearance if he did.  15
5
Policies
When evaluating an applicant’s suitability for a security clearance, the
administrative judge must consider the adjudicative guidelines. In addition to brief
introductory explanations for each guideline, the adjudicative guidelines list potentially
disqualifying conditions and mitigating conditions, which are 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 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, an applicant is
responsible for presenting “witnesses and other evidence to rebut, explain, extenuate,
or mitigate facts admitted by applicant or proven by Department Counsel. . . .” An
applicant has the ultimate burden of persuasion for 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 an applicant may deliberately or inadvertently fail to protect or
safeguard classified information. Such decisions entail a certain degree of legally
permissible extrapolation as to potential, rather than actual, risk of compromise of
classified information.
 
Section 7 of Executive Order 10865 provides that decisions shall be “in terms of
the national interest and shall in no sense be a determination as to the loyalty of the
applicant concerned.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites
for access to classified or sensitive information).  
6
Analysis
Guideline F, Financial Considerations
The security concern relating to the guideline for Financial Considerations 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. 
AG ¶ 19 describes the disqualifying conditions that could raise security concerns.
I have considered all the conditions, and especially the following:
(a) inability or unwillingness to satisfy debts.  
(c) a history of not meeting financial obligations. 
Applicant developed significant financial problems when his real estate
investment business failed in 2008. He has been unable to resolve all of the debts from
his business failure, as he lacks the financial ability to pay these debts. These two
disqualifying conditions apply.
The Financial Considerations guideline also includes examples of conditions that
can mitigate security concerns. I have considered mitigating factors AG ¶ 20(a) through
20(f), and especially the following:
(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; and
(d) the individual initiated a good-faith effort to repay overdue creditors or
otherwise resolve debts.
7
Applicant started a real estate investment business, which he successfully
operated for at least six years. He business failed when the economy declined
significantly, particularly in the real estate market. When he realized he had significant
financial problems, he contacted a bankruptcy attorney in 2008, who advised him to wait
to file bankruptcy until his properties had proceeded through the foreclosure process.
For over two years, he has worked with mortgage companies on resolving his mortgage
debts in the foreclosure process. Given the advice from the attorney, Applicant has
acted reasonably about his mortgage debt as he could not sell the properties. At this
time, all of his first mortgage debts have been resolved. A second mortgage debt
remains unresolved and he has not paid his credit cards, except one. AG ¶ 20(a) is
applicable only to the mortgage debts alleged in SOR ¶¶ 2.j(2) and 2.j(3).
Applicant has not received financial counseling, nor has he contacted a debt
solution company about consolidation of his debts. He showed that the tax lien had
been paid and that the association lien for fees attached to the property, which means
that the lien stayed with the property after it had been sold. He no longer has any
interest in this property, thus, he does not owe this money. He has resolved the debts in
SOR ¶¶ 2.h and 2.i.  AG ¶ 20(c) partially applies since his current finances are under
control, but he has not resolved all his past debts. 
Applicant pays one credit card debt on a monthly basis and has since 2008. He
has reduced his debt by $7,000. He does not use this credit card for new purchases, as
he wants to resolve this debt. AG ¶ 20(d) applies to this debt, which is alleged in SOR ¶
1.e. The remaining mitigating conditions are not applicable in this case.
Guideline H, Drug Involvement
AG ¶ 24 expresses the security concern pertaining to drug involvement:
Use of an illegal drug or misuse of a prescription drug can raise questions
about an individual's reliability and trustworthiness, both because it may
impair judgment and because it raises questions about a person's ability
or willingness to comply with laws, rules, and regulations.
(a) Drugs are defined as mood and behavior altering substances, and include:
(1) Drugs, materials, and other chemical compounds identified and listed
in the Controlled Substances Act of 1970, as amended (e.g., marijuana or
cannabis, depressants, narcotics, stimulants, and hallucinogens), and
(2) inhalants and other similar substances;
(b) drug abuse is the illegal use of a drug or use of a legal drug in a manner that
deviates from approved medical direction.
8
The following conditions described in AG ¶ 25 could raise a security concern in
this case and may be disqualifying:
(a) any drug abuse (see above definition); and
(c) illegal drug possession, including cultivation, processing, manufacture,
purchase, sale, or distribution; or possession of drug paraphernalia.
Applicant smoked marijuana occasionally between 2002 and June 2008 at
parties for no particular reason. Because he smoked marijuana, he had to possess it.
The Government has established its prima facie case under the above disqualifying
conditions.
AG ¶ 26 provides conditions that could mitigate security concerns:
(a) the behavior happened so long ago, was so infrequent, or happened
under such circumstances that it is unlikely to recur or does not cast doubt
on the individual's current reliability, trustworthiness, or good judgment;
(b) a demonstrated intent not to abuse any drugs in the future, such as: 
(1) disassociation from drug-using associates and contacts;
(2) changing or avoiding the environment where drugs were used; 
(3) an appropriate period of abstinence; and
(4) a signed statement of intent with automatic revocation of
clearance for any violation;
(c) abuse of prescription drugs was after a severe or prolonged illness
during which these drugs were prescribed, and abuse has since ended;
and
(d) satisfactory completion of a prescribed drug treatment program,
including but not limited to rehabilitation and aftercare requirements,
without recurrence of abuse, and a favorable prognosis by a duly qualified
medical professional.
Applicant has never abused prescription drugs nor has he been in a drug
treatment program. Thus, AG ¶¶ 26(c) and 26(d) are not applicable. Applicant stopped
his infrequent use of marijuana in June 2008, more than 30 months ago. His last use did
not occur a long time in the past. Although he smoked marijuana infrequently each year,
he did smoke it for seven years prior to completing his security clearance application.
Mitigation is not established under AG ¶ 26(a).
9
Applicant realized that he needed to stop his marijuana use and did in June
2008. He prefers to spend time with his son, not attending parties where marijuana is
smoked. Although he still performs community service with the organization, he does
not socialize with individual members who smoke marijuana as he did in the past. To
show his commitment to not smoking marijuana in the future, Applicant signed a
statement of intent not to do so and agreed to the revocation of his security clearance if
he did. He has mitigated the security concerns under AG ¶ 26(b). 
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 an 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. The decision to grant or
deny a security clearance requires a careful weighing of all relevant factors, both
favorable and unfavorable. In so doing, an administrative judge must review all the
evidence of record, not a single item in isolation, to determine if a security concern is
established and then whether it is mitigated. A determination of an applicant’s eligibility
for a security clearance should not be made as punishment for specific past conduct,
but on a reasonable and careful evaluation of all the evidence of record to decide if a
nexus exists between established facts and a legitimate security concern. 
In reaching a conclusion, I considered the potentially disqualifying and mitigating
conditions in light of all the facts and circumstances surrounding this case. Prior to the
economic downturn, Applicant paid his bills. He successfully built a real estate
investment business. However, when the real estate market sharply declined in 2007
and 2008, his business failed when he could not sell his property or pay the mortgages
on these properties. Upon the advice of legal counsel, he did not file bankruptcy in
2008, but allowed the mortgage companies to foreclose on his properties. He resolved
many of the foreclosure actions by giving the mortgage companies a “deed-in-lieu”
which gave the mortgage companies title to and ownership of the property and divested
him of any ownership and debt. Through this process, he resolved his primary
10
mortgages on his business properties, and he does not have any outstanding liabilities
on the primary mortgages.
As part of his business model, Applicant developed LLCs to purchase his
investment property, to manage his business, to obtain credit cards, and to open bank
accounts. He had to personally guarantee these credit cards and bank accounts. As a
result, he is liable for the unpaid credit card debts associated with his business. His
current financial circumstances do not permit him to pay these debts, and he lacks
funds at this time to file bankruptcy. With his wife’s income, he can pay his usual
monthly living expenses. His payments on his truck will finish in May 2011, and he
hopes to use this money to pay the fees for filing bankruptcy. He views bankruptcy as
the only way he can resolve his significant unpaid business debts.
Applicant is married and has a son. He prefers to spend time with his son and not
at the parties where marijuana is smoked. He does not intend to smoke marijuana in the
future and understands the consequences if he does. While he has taken affirmative
action to resolve his mortgage debts, he still has significant unpaid debts arising from
his business. These unpaid debts raise security concerns. He plans to file bankruptcy at
some time in the future. This appears to be the only way he can resolve these debts, as
his income is insufficient to pay his remaining debts. Until these debts are resolved, a
security concern remains. For the reasons stated, I conclude Applicant mitigated the
security concerns arising from his drug involvement under Guideline H, but he has not
mitigated the security concerns arising from his finances under Guideline F.
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 H: FOR APPLICANT
Subparagraph 1.a: For Applicant
Paragraph 2, Guideline F: AGAINST APPLICANT
Subparagraph 2.a-2d: Against Applicant
Subparagraph 2.e:  For Applicant
Subparagraph 2.f: Against Applicant
Subparagraph 2.g: Against Applicant
Subparagraph 2.h: For Applicant
Subparagraph 2.i: For Applicant
Subparagraph 2.j(1): Against Applicant
Subparagraph 2.j(2): For Applicant
Subparagraph 2.j(3): For Applicant
11
Conclusion
In light of all of the circumstances presented by 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.
                                                              
MARY E. HENRY
Administrative Judge