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                           DEPARTMENT OF DEFENSE 
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 10-01346 
  )   
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Melvin A. Howry, Esq., Department Counsel 
For Applicant: Pro se 
 
 
January 5, 2011 
______________ 
 
Decision 
______________ 
 
 
GOLDSTEIN, Jennifer I., Administrative Judge: 
 
Applicant has not mitigated Financial Considerations security concerns. Eligibility 
for access to classified information is denied.  
 
Statement of the Case 
 
On July 8, 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 (EO) 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 for cases after September 1, 2006.  
 
Applicant answered the SOR on July 21, 2010, and requested a hearing before 
an administrative judge. The case was assigned to me on September 22, 2010. DOHA 
issued a notice of hearing on September 30, 2010, and the hearing was convened as 
scheduled on November 9, 2010. The Government offered Exhibit (GE) 1 through 7, 
 
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which were admitted without objection. The Applicant offered Exhibit (AE) A through G 
and testified on her own behalf. The record was held open for Applicant to submit 
additional information until November 23, 2010. Applicant submitted AE H through J, 
which were admitted without objection, post hearing. DOHA received the transcript of 
the hearing (Tr.) on November 19, 2010.  
 
Findings of Fact 
 
 Applicant admits all of the SOR allegations. After a thorough and careful review 
of the pleadings, exhibits, and testimony, I make the following findings of fact. 
 
 Applicant is a 31-year-old employee of a defense contractor. She has worked for 
her employer since October 2009. She is not married. She has a 19-month-old daughter 
and lives with her father. She receives no child support from her child’s father. (GE 1; 
Tr. 36, 67-68.) 
 
 Applicant is indebted to six creditors in the approximate total amount of 
$174,746. She also has filed a Chapter 7 bankruptcy, discharged in July of 2003. She 
attributes her 2003 bankruptcy to being “young” and never having been taught how to 
use credit. Her more recent debts, listed in the SOR, she attributes to obligations she 
acquired along with her former fiancé, who manipulated her into making purchases for 
him using her credit, due to his poor credit. Applicant met her former fiancé in 
approximately 2003, at a karaoke bar. In approximately 2004, she began incurring 
expenses for him at his request, as set out below. Their relationship ended in 2006. She 
is unable to locate her former fiancé. Applicant does not attribute her delinquencies to a 
period of unemployment in September 2009, as she was already not paying her bills at 
that time. (AE G; Tr. 37-40, 49, 69-70.)  
 
 Allegation 1.a. alleges that Applicant filed for Chapter 7 bankruptcy in March 
2003. In her 2003 Chapter 7 Summary of Schedules, she indicated she had total 
liabilities of $29,400, with only $15,035 in assets. Approximately $14,900 of her 
liabilities, at that time, was for credit card debt. The remainder of her debt was for her 
vehicle, which she reaffirmed. In July 2003, her credit card debt was discharged. (GE 1; 
GE 3; GE 5; Tr. 45, 48-49.) 
 
 Allegation 1.b. alleges that Applicant is indebted for two computers she financed 
through a bank in the approximate amount of $962. Applicant’s former fiancé kept the 
computers when the two separated. Applicant claimed that she tried to pay on this debt, 
but that the account had been closed by the creditor. She has made no payments on 
this account since 2007. (GE 4; GE 5; GE 6; Tr. 42, 60-63.) 
 
 Allegation 1.c. alleges that Applicant is indebted for fitness equipment in the 
approximate amount of $735. She purchased the equipment in approximately 2005, on 
credit, for her fiancé’s use. Her fiancé kept the equipment after the two separated. She 
has not contacted this creditor to arrange repayment. (GE 3; GE 4; GE 5; Tr. 42, 60.) 
 
 
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 Allegation 1.d. alleges that Applicant is indebted on a loan she took for the 
purchase of a Harley Davidson in the approximate amount of $5,587. She purchased 
the Harley for her former fiancé. Applicant presented a contract between herself and her 
former fiancé that stated he would be liable to her for the payments on the vehicle. 
When he failed to make the payments, Applicant returned the vehicle to the lender and 
it was repossessed. She has not contacted this creditor to arrange repayment of this 
debt and has no intention of paying the remaining balance. (GE 3; GE 4; GE 5; GE 6; 
Tr. 40-42, 58.) 
 
 Allegation 1.e. alleges that Applicant is indebted for a truck she purchased in 
2005, for approximate amount of $7,900. She purchased the truck to haul her fiancé’s 
Harley. She maintained the truck after the end of their relationship. However, during 
2007, Applicant had a low wage earning position. She also had her hours at work 
reduced from 40-hours-per week to 32-hours-per week. As a result, she found that she 
could no longer afford her truck and the insurance payments on the vehicle. She 
voluntarily had the truck repossessed. She has not made any efforts to pay her 
remaining debt on this vehicle. (GE 4; GE 5; GE 6; Tr. 41, 58.) 
 
 Allegation 1.f. alleges that Applicant is indebted on her first mortgage of 
$157,000. In 2003, Applicant purchased a condo, where she lived with her former 
fiancé, for approximately $190,000. She financed the purchase with a first mortgage of 
approximately $152,000 with a five-year adjustable-interest rate, and a second 
mortgage of approximately $38,000. She put no money down. Applicant moved out of 
the condo is approximately 2006. She was able to evict her former fiancé from the 
condo approximately six months after she moved out, per a signed rental agreement. 
She was current on her mortgage payments until November 2008. From November 
2008 through approximately July 2009, Applicant failed to make any payments on her 
first mortgage. In November 2009, Applicant secured a tenant to occupy the condo. She 
receives $1,150 each month from the tenant. In approximately August 2009, she began 
making payments of $580 per month on her first mortgage, although she reported that 
her monthly required payments should have been approximately $1,160. She does not 
have an agreement with the creditor for a reduced payment amount, although she has 
requested a loan modification. She presented documentation showing that she made 
payments of $580 to her mortgage holder in August through October of 2010. She 
claims to be current on her monthly payments of $288 on her second mortgage. (GE 3; 
GE 4; GE 5; GE 6; AE A; AE D; AE H; AE I; AE J; Tr. 42, 49-55, 70-74.) 
 
 Allegation 1.g. alleges that Applicant is indebted on a Jeep Applicant purchased 
for her former fiancé in the approximate amount of $2,562. She presented a contract 
with her fiancé in which he agreed he would be liable to Applicant for the payments on 
this vehicle. However, she acknowledged that she did sign the loan for the vehicle and 
was responsible for the payments. When her fiancée defaulted on the payments to her, 
she returned the vehicle to the creditor. Since the repossession, she has made no 
efforts to pay this debt. (GE 3; GE 5; GE 6; Tr. 39-41, 56-59.) 
 
 In addition to the debts alleged on the SOR, Applicant is also indebted to a gym 
for a membership that she defaulted on in the approximate amount of $265. She offered 
 
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to settle for half of the amount owed, but the creditor did not accept her offer. She is 
currently delinquent on this account. (AE F; Tr. 64-65.) 
 
 In October 2009, Applicant contacted a debt resolution company to assist her 
with her delinquent accounts. She was advised that her best option to satisfy her debts 
would be to file Chapter 7 bankruptcy again. She is required to wait eight years after her 
first bankruptcy is discharged. She indicated that she will be eligible to file bankruptcy in 
March 2011. She testified that after seven years from the date of default, these items 
would be removed from her credit report. She had no intention to pay any of her debts 
listed in the SOR at the time of the hearing. She has had no other financial counseling. 
In 2008, her total income, as reported on her adjusted gross income for tax purposes 
was $21,547. In 2009, her adjusted gross income was $13,253. (GE 4; AE F; Tr. 47, 63-
66.) 
  
 Applicant is well respected by her co-workers and supervisors. She presented 
seven reference letters from former co-workers and supervisors that all spoke highly of 
her trustworthiness and strong work ethic. Her performance in her current position 
“consistently exceeds expectations.” (AE B; AE C.) 
  
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, administrative judges apply the guidelines 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 the applicant or proven by Department Counsel.” The 
applicant has the ultimate burden of persuasion to obtain a favorable security decision.  
 
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 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 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. 
 
Section 7 of EO 10865 provides that adverse 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 for Financial Considerations is set out in AG ¶ 18, as 
follows:       
 
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.  
 
The guideline notes several conditions that could raise security concern under 
AG ¶ 19. Three are potentially applicable in this case:   
 
(a) inability or unwillingness to satisfy debts;  
 
(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 ration and/or other financial analysis. 
 
 Applicant has an extended history of financial indebtedness. Prior to 2003, she 
demonstrated poor financial practices, which caused her to use an excessive amount of 
credit and led to her filing a Chapter 7 bankruptcy in 2003. Since 2003, she has 
continued to obligate herself to debts that she could not afford. She made purchases for 
her fiancé that were beyond her means. She mistakenly relied upon her fiancé, who 
 
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already had poor credit, to pay the debts. She does not have the means nor the intent to 
satisfy her delinquent accounts.  
 
 Five Financial Considerations Mitigating Conditions under AG ¶ 20 are potentially 
applicable:  
 
(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 failed to present documentation that she has satisfied any of her 
delinquent debts listed on the SOR. Her debt is current and on-going. Further, she gave 
little indication that her financial situation is likely to improve. Her inability to address 
these debts casts doubt on her current reliability, trustworthiness, and good judgment. 
AG ¶ 20(a) is not applicable.  
 
Applicant’s financial difficulties were caused by her trust in her fiancé and a 
subsequent period of underemployment. The period of underemployment qualifies as a 
condition that was outside of her control. However, to be fully applicable, AG ¶ 20(b) 
also requires that the individual act responsibly under the circumstances. Applicant has 
not shown she made any attempt to responsibly address her remaining debts. She has 
not contacted creditors since the accounts became delinquent nor does she intend to do 
so. AG ¶ 20(b) is not applicable. 
 
 While Applicant consulted with a debt resolution company, she did not hire the 
company to assist her with her debts. Further, she has not received any financial 
education or counseling. She failed to establish that AG ¶ 20(c) applies. 
 
 
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 Applicant has presented documentation that she made payments on her first 
mortgage, alleged in 1.f. However, these payments were not for the full monthly 
amount. Further, the payments on the first mortgage have only been occurring for 
approximately three months, after a year without any payments at all. There has been 
no showing that she has initiated a good-faith effort to repay any of her overdue 
creditors or otherwise resolve her debts. AG ¶ 20(d) is not applicable. 
 
 Finally, she failed to introduce documented proof to substantiate the basis of any 
disputes with her creditors or provide evidence of actions she has taken to resolve the 
issue with her creditors. AG ¶ 20(e) is not mitigating. 
 
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 
the facts and circumstances surrounding this case. I have incorporated my comments 
under Guideline F in my whole-person analysis. Some of the factors in AG ¶ 2(a) were 
addressed under that guideline, but some warrant additional comment.  
 
Applicant’s letters of support show she is a valued employee. However, she has 
been unable to make ends meet and satisfy her financial obligations. Her choices, with 
respect to her debts, do not demonstrate the judgment, reliability, or trustworthiness 
needed to hold a security clearance. There are significant unresolved concerns about 
Applicant’s finances and judgment.  
 
Overall, the record evidence leaves me with questions and doubts as to 
Applicant’s eligibility and suitability for a security clearance. For all these reasons, I 
conclude Applicant has not mitigated Financial Considerations security concerns.  
 
 
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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.:   Against Applicant 
Subparagraph 1.b:   Against Applicant 
  Subparagraph 1.c.:   Against Applicant 
  Subparagraph 1.d.:   Against Applicant 
  Subparagraph 1.e.:   Against Applicant 
  Subparagraph 1.f.:   Against Applicant 
  Subparagraph 1.g.:   Against Applicant 
    
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. 
 
 
 
________________________ 
Jennifer I. Goldstein 
Administrative Judge