KEYWORD: Guideline F
DIGEST: The record evidence does not support the Judge’s conclusion that Applicant’s
decisions to move to lower paying jobs for family reasons were beyond his control.  Favorable
decision reversed.
CASENO: 09-08108.a1
DATE: 02/15/2011
  
DATE: February 15, 2011
In Re:
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Applicant for Security Clearance
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ISCR Case No. 09-08108
APPEAL BOARD DECISION
APPEARANCES
FOR GOVERNMENT
Alison O’Connell, Esq., Department Counsel
FOR APPLICANT
Pro se
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The Defense Office of Hearings and Appeals (DOHA) declined to grant Applicant a security
clearance.  On March 12, 2010, DOHA issued a statement of reasons (SOR) advising Applicant of
the basis for that decision—security concerns raised under Guideline F (Financial Considerations)
of Department of Defense Directive 5220.6 (Jan. 2, 1992, as amended) (Directive).  Applicant
requested a hearing.  On October 29, 2010 after the hearing, Administrative Judge Robert J. Tuider
granted Applicant’s request for a security clearance. Department Counsel timely appealed pursuant
to the Directive ¶¶ E3.1.28 and E3.1.30.
Department Counsel raises the following issues on appeal: (a)  whether the Judge erred in
the application of Guideline F mitigating conditions; (b) whether the Judge’s whole-person analysis
is unsustainable because it is unsupported by the totality of the record evidence.  For the following
reasons, the Board reverses the Judge’s favorable security clearance determination.
The Judge made the following pertinent findings of fact:
Applicant is 31 years old, has previously held a security clearance while in the military and
as a civilian, and has never had a security violation.  Applicant served in the Navy for ten years and
was honorably discharged in 2006.  Applicant married for the second time in 2002.  He and his wife
have five children.  Applicant’s wife does not work outside the home and he is solely responsible
for supporting her and the children.  Applicant has settled, paid, or attempted to resolve in good faith
the four debts alleged in the SOR.  The first debt is a charged-off account for a $12,000 line of credit
loan.  In July 2009, Applicant enrolled this debt with a debt consolidation firm and made monthly
payments until April 2010.  At that time he stopped making payments because he could no longer
afford them, and he dis-enrolled from the consolidation program.  He has sought alternative help and
continues in his attempts to resolve the debt.  The second debt is a $16,000 past-due balance on a
home mortgage loan.  This account was satisfied following the proceeds netted in a foreclosure sale
in March 2010.  The third debt is a charged-off credit card account in the amount of $4,711.  This
debt had also been enrolled with the debt consolidation firm and was settled and paid in December
2009.  The fourth debt is the balance of $5,222 owed on a vehicle repossession.  Applicant
negotiated a settlement through the debt consolidation firm and was making monthly payments
through the creditor.  The final payment was due in October 2010.  Applicant attributes his financial
problems to a job change that resulted in a substantial income reduction, a cross-country move, and
the costs associated with maintaining two households following his cross-country move.  After
leaving the Navy, Applicant made approximately $170,000 a year working for a subcontractor.  He
changed jobs to his current employer in February 2008 and his salary was reduced to about $120,000
per year.  This was later reduced to $58,000 per year when he changed his working environment.
In September 2008, he accepted a cross-country transfer.  He was unable to sell his home after being
transferred and was unable to afford maintaining homes in two locations.  To address his
indebtedness, Applicant enrolled in the consolidation program, borrowed against his 401K,
refinanced his vehicle, worked overtime, and consulted a bankruptcy attorney.  Applicant’s budget,
although strained, reflects that he maintains a modest lifestyle and is able to keep his head above
water.  He has little discretionary income left over after paying his monthly expenses.  Applicant is
doing as well as can be expected and has addressed the majority of his debts.  Applicant served with
1“[T]he 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 [.]”
2“[T]he 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 [.]”
3“[T]he 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[.]”
4“[T]he individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts[.]”
5“[T]he 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[.]”
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distinction in the Navy and has engaged in above-average performance in his contribution to the
defense industry.  
The Judge reached the following conclusions:
Applicant’s history of delinquent debt is established by his admissions and the evidence
presented.  He had four delinquent debts totaling $37,933 that have been in varying states of
delinquency for at least several years.  The Government established disqualifying conditions under
Guideline F.  Applicant’s conduct does not warrant full application of AG ¶ 20(a).1  His financial
problems are not isolated, and his debt is a continuing course of conduct.  He receives partial credit
because the debt occurred under such circumstances that it is unlikely to recur and does not cast
doubt on the individual’s current reliability or good judgment.  Under AG ¶ 20(b)2 Applicant
receives credit because his reduction in income and subsequent work-related move and costs
associated with his move were largely beyond his control and he acted responsibly under the
circumstances.  Even though he did not have the funds for full repayment, he remained in contact
with his creditors.  AG ¶ 20(c)3 is not applicable because Applicant did not seek financial
counseling.  He has, however, produced evidence that reflects he is living within his means and is
on the road to regaining financial solvency.  There is sufficient information to establish full
mitigation under AG ¶ 20(d).4 Applicant has paid, is paying, or attempting to resolve his debts.  AG
¶ 20(e)5 is not applicable because Applicant does not dispute the validity of any of his debts.
Although Applicant showed financial irresponsibility and lack of judgment for several years, the
mitigating evidence under the whole-person concept is more substantial.  Applicant’s honorable
military service, family involvement, and good employment record weighs in his favor.  There is
no evidence of any security violation.  Although he is not debt-free, there is sufficient evidence that
he is putting forth his best effort given the resources available to him.  Applicant recognizes that his
failure to regain financial responsibility can adversely affect his future employment.  His monthly
expenses are current.  His company supports him.  He has made mistakes but there is simply no
reason not to trust him.  He has established a meaningful track record of debt payments.  He has
mitigated the financial considerations security concerns.    
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Department Counsel contends that the Judge erred in the application of Guideline F
Mitigating Conditions ¶ 20(a), ¶ 20(b), and ¶ 20(c) because his factual findings and legal holdings
are unsupported by the record evidence.  These arguments have merit.
Regarding ¶ 20(a) and ¶ 20(b), Department Counsel asserts that the Judge wrongly deemed
Applicant’s voluntary decisions to change jobs (which led to income reductions) as being largely
beyond his control, and misapplied Mitigating Condition 20(b) to the benefit of Applicant.
Department Counsel maintains Applicant’s decision to make career moves that would make it
impossible to keep up with his financial obligations cast considerable doubt on his trustworthiness
and good judgment, notwithstanding the fact that the decision was made to increase the time he
could spend with his family.  Department Counsel argues further that Applicant has not acted
responsibly in dealing with his creditors since taking a pay cut and thus cannot claim the benefit of
the second requirement enumerated in ¶ 20(b).  These arguments have merit.
While his desires regarding improving his family life were laudable, the record does not
indicate that Applicant’s career and relocation decisions were involuntary.  Thus, the Judge erred
in concluding that Applicant’s actions were beyond his control, and Applicant did not satisfy that
particular criterion under ¶ 20(b).  On the issue of whether Applicant acted reasonably under the
circumstances, the Judge cites only the fact that Applicant kept in contact with his creditors when
concluding that this second requirement of ¶ 20(b) was satisfied.  This conclusion is not reasonably
supported by the evidence and fails to take into account other evidence that runs contrary to the
conclusion.  As an initial matter, given the facts of this case, where Applicant has accumulated large
amounts of outstanding delinquent debt over a significant period of time, maintaining contact with
one’s creditors, while it is a fact that is entitled to some weight in mitigation, is insufficient, standing
alone, to satisfy the “acted responsibly under the circumstances” prong of ¶ 20(b).  Department
Counsel correctly points out that Applicant made the conscious decision to take a drastic reduction
in income with the full knowledge that he would be unable to satisfy his debts.  The record also
indicates that Applicant abandoned his mortgage payments on a home when he changed locations
in September 2008, resulting in the property going into foreclosure.  A second mortgage on the
property remains unsatisfied.  Applicant was advised to stop paying his debts by the debt
consolidation company, and there is no evidence that Applicant’s use of the debt consolidation
company resulted in any payments to his creditors.  This record evidence cut strongly against the
Judge’s conclusion that Applicant has acted reasonably under the circumstances, or the Judge’s
conclusion that Applicant’s handling of his finances does not cast doubt on Applicant’s current
reliability, trustworthiness, or good judgment under ¶ 20(a).  Additionally, the Judge provides no
analysis regarding his conclusion under ¶ 20(a) that Applicant’s financial troubles are unlikely to
recur.  There is no record evidence to support this conclusion.  Indeed, the application of this prong
of ¶ 20(a) would necessarily be limited, given the fact that Applicant’s financial problems are
ongoing.
Department Counsel asserts that the Judge erred by concluding that there is sufficient
evidence to establish full mitigation under ¶ 20(d).  Department Counsel states that the Judge’s
conclusion that Applicant is paying or attempting to resolve his debts is based on an erroneous
factual finding.  Regarding a $5,222 debt resulting from an automobile repossession, the Judge
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found that Applicant negotiated a settlement through his debt consolidation firm and was making
monthly payments to the creditor through them with final payment falling due in October 2010.
Department Counsel notes that at the hearing, Applicant testified that he stopped making payments
to the debt consolidation firm at least two months prior to the hearing, the debt was outstanding and
unresolved, and Applicant planned to include the debt in a future bankruptcy.  A review of the
record evidence reveals that Department Counsel’s characterization of the record is accurate.
Department Counsel argues additionally that the evidence does not establish that Applicant had
instituted a good-faith effort to repay overdue creditors or otherwise resolve debts.  Applicant has
paid only one of the four debts listed in the SOR and he paid that debt only after he was sued.  He
walked away from a sizable mortgage obligation. Two other debts remain unpaid, there are no
payments ongoing, and Applicant intends to include these debts in a bankruptcy action that has yet
to be filed.  In addition to the debts listed in the SOR, the evidence establishes that Applicant has
an additional $80,000 in outstanding debt, much of it delinquent, that he intends to resolve by filing
bankruptcy.  The Judge’s application of the Guideline F mitigating factors in Applicant’s favor is
not reasonably supported by the record evidence.  
Department Counsel also maintains that the Judge’s analysis under the whole-person concept
is erroneous.  She notes that much of the evidence cited by the Judge in his whole-person analysis
concerns his personal and professional character.  A review of the record indicates that this is
favorable evidence entitled to some weight.  However, Department Counsel argues that the Judge’s
analysis failed to establish a sufficient nexus between Applicant’s good character and the mitigation
of the Government’s concerns regarding his financial troubles.  This argument is persuasive.  The
Judge cites such factors as Applicant’s good military and civilian career record, Applicant never
having had a security violation, and Applicant being a law-abiding citizen without linking these
aspects of Applicant’s life to an evaluation of whether he can successfully recover from a history
of financial troubles.  In his whole-person analysis, the Judge did note that he did not detect any
recalcitrance or reluctance on Applicant’s part to address his past debts and that Applicant views the
process seriously and recognizes that a failure to regain financial health can adversely affect future
employment.  The cited evidence concerning Applicant’s attitudes and desires regarding his finances
cut in his favor, but they are not a substitute for a meaningful track record of addressing
indebtedness.  The Judge bases part of his whole-person analysis on his conclusion that Applicant
has established a meaningful track record of debt repayment.  This conclusion is not supported by
the record evidence.
The Judge’s whole-person analysis, and his conclusions in the case generally, are undercut
by the fact that he failed to discuss significant evidence that has an important bearing on the case.
In addition to the debts listed in the SOR, Applicant had other significant debts, including a vehicle
payment, a second mortgage payment, and two credit cards, that totaled approximately $78,700.
The record evidence indicates that by the time the case went to hearing, Applicant had stopped
making payments on these obligations, in part because he could not afford to make payments and
in part because he anticipated declaring bankruptcy.  Applicant indicated on the record his intention
to declare bankruptcy, but at the time of the hearing he had not done so, in part because he had not
paid the bankruptcy attorney’s full $1,800 fee, and had tendered to the attorney only $300, a sum
that he had to borrow from his mother.  The Judge’s decision does not mention this evidence.
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None of the evidence cited in the preceding paragraph supports the Judge’s conclusions that
Applicant had a meaningful track record of debt payments, had demonstrated responsibility,
rehabilitation, and mitigation, was living within his means, or was on the road to debt resolution.
Rather, this additional evidence detracts from such conclusions.  A Judge is not required to discuss
each and every piece of record evidence in making a decision, but the Judge cannot ignore,
disregard, or fail to discuss significant record evidence that a reasonable person could expect to be
taken into account in reaching a fair and reasoned decision.  See, e.g.,  ISCR Case No. 05-03250 at
4 (App. Bd. Apr. 6, 2007).  An analysis of Applicant’s debts not listed in the SOR is important to
the outcome in this case.  It is appropriate for a Judge to consider conduct and matters not alleged
in the SOR for a variety of purposes such as to evaluate a claim of extenuation, mitigation or
changed circumstances, and when weighing the relevant and material information under the whole
person concept.  See, ISCR Case No. 02-23365 at 5 (App. Bd. Mar. 22, 2004); ISCR Case No. 05-
05334 at 4 (App. Bd. Jan. 10, 2007).            
The record as a whole does not support a conclusion that Applicant has met his burden of
persuasion in light of the Egan standard.  Therefore, the Judge’s ultimate decision is not sustainable.
Order
The decision of the Administrative Judge granting Applicant a security clearance is REVERSED.
     
Signed: Michael Y. Ra’anan          
Michael Y. Ra’anan
Administrative Judge
Chairperson, Appeal Board
Signed; Jeffrey D. Billett                 
Jeffrey D. Billett
Administrative Judge
Member, Appeal Board
DISSENTING OPINION OF ADMINISTRATIVE JUDGE JAMES E. MOODY
I disagree with my colleagues in their resolution of this case.  The Judge found that (1)
Applicant’s financial problems are attributable to a job change, which entailed maintaining two
households; (2) he has satisfied two of the SOR debts and is making payments on another; (3) he
has enrolled with a debt consolidation firm, worked overtime, and consulted a bankruptcy attorney;
(4) he is not behind on his current bills; and (5) he has held a security clearance for many years
without incident or concern.  I believe these findings support the Judge’s favorable decision under
a whole-person analysis.  We need not agree with a Judge’s decision in order to find it sustainable.
See, e.g.,  ISCR Case No. 08-08649 at 2 (App. Bd. May 28, 2010).
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Signed James E. Moody               
James E. Moody
Administrative Judge
Member, Appeal Board