1
                                                                     
                              DEPARTMENT OF DEFENSE
               DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 09-07328
)
)
Applicant for Security Clearance )
Appearances
For Government: Fahryn E. Hoffman, Esquire, Department Counsel
For Applicant: Elizabeth M. Sziebert, Esquire
______________
Decision
______________
WHITE, David M., Administrative Judge:
Applicant, her husband, and their parents purchased a printing business to
capitalize on her husband’s expertise in marketing commercial print services. Over the
next two years, their printing machine operator died and their business manager was
disabled. Neither could be properly replaced, and sales were hurt by the severe
recession. They did their best, but ultimately had to close the business and file for
bankruptcy. Applicant remains gainfully employed in work at which she excels, and is
very highly regarded. Based upon a review of the pleadings, exhibits, and testimony,
eligibility for access to classified information is granted. 
Applicant submitted an updated security clearance application (SF 86) on July
10, 2009, after self-reporting her family’s emergent financial problems to her Facility
Security Officer. On June 9, 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, Safeguarding Classified Information within Industry (February 20, 1960), as
amended; Department of Defense Directive 5220.6, Defense Industrial Personnel
GE 1; Tr. 93-96.1
AR. Note that Applicant misunderstood the allegation in SOR ¶ 1.b. That debt had been repaid before the2
date of the SOR. She admitted its existence, but did not mean to admit it was still unpaid. Tr. 138-139.
GE 2.3
AE B; AE C; AE I; Tr. 96.4
2
Security Clearance Review Program (January 2, 1992), as amended (Directive); and the
Adjudicative Guidelines for Determining Eligibility for Access to Classified Information
effective within the Department of Defense on September 1, 2006. 
Applicant answered the SOR in writing (AR) on June 9, 2010, and requested a
hearing before an administrative judge. Department Counsel was prepared to proceed
on November 10, 2010, and the case was assigned to me on November 15, 2010.
DOHA issued a Notice of Hearing on December 21, 2010, and I convened the hearing
as scheduled on January 31, 2011. The Government offered exhibits (GE) 1 through 4,
which were admitted without objection. Applicant offered exhibits (AE) A through E,
which were admitted without objection, and testified on her own behalf. Her father and
husband also testified. I granted Applicant’s request to leave the record open until
February 14, 2011, for submission of additional evidence. DOHA received the transcript
of the hearing (Tr.) on February 9, 2011. On February 10, 2011, Applicant submitted
additional documents that were marked AE F through K, and admitted without objection.
The record was closed as scheduled. 
Findings of Fact
Applicant is a 31-year-old employee of a defense contractor, where she has
worked since October 2004. She has no military service. She has held a security
clearance throughout her current employment without incident. She earned a bachelor’s
degree in business management in 2002. She and her husband were married in
February 2006. They have two children, ages four and two.  In her response to the1
SOR, Applicant admitted all of the factual allegations in SOR ¶¶ 1.a through 1.d.2
Applicant’s admissions, including her statements in response to DOHA interrogatories,3
are incorporated in the following findings.
When Applicant started working for her current employer, she earned a salary of
$42,000 per year as a Configuration Analyst Associate. Due to her ability to learn
quickly and her excellent professional performance, her duties and responsibilities were
rapidly increased. She presently earns about $65,000 per year and is very highly
regarded by her present and former managers. Both of them wrote letters extolling her
integrity, trustworthiness, responsibility, and dedication.4
Applicant’s husband is a high school graduate, who worked in a variety of jobs
after school before moving home to take over his father’s printing business about ten
years ago. After his father passed away, he purchased the duplex in which his mother
GE 2; GE 4; AE A; Tr. 43, 49-56, 74-77.5
GE 2; GE 4;Tr. 26-28, 42-56, 76-77.6
GE 2; Tr. 44-45, 51-54, 70-71.7
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lived and refinanced the first mortgage for $160,000. His mother then paid him rent to
live in her unit, while he occupied the other unit. After he and Applicant married and she
became pregnant, they decided to buy a larger home that would also reduce Applicant’s
90-minute commute from the duplex to her job site. In April 2007, they purchased their
present home for $320,000, with a first mortgage loan of $256,000 and a second
mortgage loan of $32,000. They financed the down payment and closing costs by taking
out a $33,000 second mortgage on the duplex.  5
Around the same time, Applicant’s husband wanted to expand his printing
business, in which he brokered commercial printing sales for other printing operations,
by buying an existing print shop franchise that was for sale. Up to that time, he earned
about $35,000 to $40,000 per year. He consulted with a number of people about the
viability of his business plan, and projected that he could earn about $30,000 to $35,000
for the first few years while business grew, with net profits on top of that beginning
within three years. Applicant’s father, who is recently retired from a career as a business
operations planner with a defense contractor, has successfully invested and saved
sufficient funds to be financially well off. Her mother continues to earn a good salary as
a school principal. With the economy growing strongly in mid-2007, and a good base of
existing customers for print products, Applicant’s father agreed to cosign a Small
Business Administration start-up loan with her husband to finance the purchase. The
original loan amount was between $125,000 and $130,000. Applicant’s husband also
took out a home equity loan on the duplex for $55,000. Applicant was a co-borrower on
all of her husband’s loans after their marriage, and was a co-owner of the new printing
business.6
Applicant and her husband bought the print shop in August 2007. They retained
the operator of the printing and binding machinery, who had worked in that shop for 10
years and in the printing business for 20 years. They also hired an office manager who
had experience running the business side of a print shop. Applicant’s husband
concentrated on sales, marketing, and customer service. The business broke about
even until the end of 2008, with enough income for Applicant’s husband to pay himself
about $30,000 per year as planned. At the end of 2008, without warning, the print
equipment operator committed suicide. In January 2009, the office manager was injured
in an automobile accident and could not work for three months. Applicant’s husband
tried to find replacement employees, but was unsuccessful. He tried to take over both
functions himself, but was then unable to generate as many sales. At about the same
time, the economic recession began to badly reduce the demand for commercial
printing services. As a result of the failing business, Applicant and her husband began
falling behind on both business and personal debt payments. They borrowed some
money from their parents, but business remained bad. The company was finally closed
and dissolved on December 10, 2010.7
GE 2; AE G; Tr. 54-58, 76-77, 98.8
GE 1; GE 2; GE 4; AE H; Tr. 62-63, 98-99.9
AE A; Tr. 58-60, 75-76.10
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After moving to their new house, Applicant and her husband rented their unit in
the duplex to tenants who lived there for about six months. The monthly payments on
the mortgage and home equity loans totaled $1,909 per month. Applicant’s mother-in-
law paid $850 per month in rent and the other tenants paid $1,050 per month. The
tenants were evicted for failing to pay rent in the fall of 2007, and they could not find
new tenants until March 2008. Those tenants moved out in November 2008 and new
tenants were not found until May 2009. During this last vacancy, their payments on the
first mortgage fell significantly behind. Applicant’s mother-in-law decided to buy the
duplex and, after several attempts, was able to arrange financing. The sale was closed
on December 31, 2009. The three loans to Applicant and her husband that were
secured by the duplex were repaid in full. The $56,437 debt alleged in SOR ¶ 1.b was
one of those loans.  8
Applicant paid the $120 debt alleged in SOR ¶ 1.d after discovering it was
delinquent when she obtained her credit report in connection with completing her SF 86.
It involved a traffic ticket that her husband received while driving her car. She thought
he had paid the ticket, but he had not.  9
The $11,017 debt alleged in SOR ¶ 1.a represents a delinquent credit card
account. The card was issued by the lender of the home equity loan discussed above
as part of that transaction. Applicant’s husband used the card to charge some business
start-up expenses, and intended to repay the balance once the business generated
sufficient revenue. It never did, and this debt is included in the bankruptcy proceedings
described below.10
The allegation in SOR ¶ 1.c concerns Applicant’s first mortgage on the home
they purchased in April 2007. The loan is in foreclosure. The loan first became
delinquent in February 2009. By the end of July 2009, the loan was six months
delinquent in the amount of almost $10,000. The original lender, who is listed as the
creditor on the SOR, sold the loan to another financial institution. Applicant and her
husband applied for a loan modification with the new creditor. While their application
was pending, and in order to qualify for consideration of a loan modification, they were
required to make three consecutive monthly payments starting in January 2010. After
making these payments, they were informed that their loan modification was still under
review and they should continue payments at the agreed rate. They made three more
payments, in April, May, and June 2010. Applicant’s husband contacted the lender in
late July concerning the status of the modification and was told that a final decision was
close and they should not pay anything that month. He contacted them again in August
and was told there was still no decision and not to pay, but to submit updated income
information. They did so, but were informed in September that their loan modification
had been denied, but they could apply for a different loan modification program. They
GE 2; GE 3; GE 4; AE A; Tr. 60-61, 66-70, 80-83, 93.11
Tr. 28-30, 33-35, 100-102.12
AE A; Tr. 71-73, 104-105, 110, 118, 120.13
AE A; Tr. 61, 71-72, 103-104.14
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again submitted an application with supporting documentation. They contacted the
lender again in October, but were told no decision had been made. During that month
they also first consulted their bankruptcy attorney and decided that they would not be
able to keep the house. Under their attorney’s advice, they had no further contact with,
and made no more payments to, the creditor while proceeding through bankruptcy. At
the time of the hearing, they continued to occupy the home pending a request for
possession by the lender. Once that happens, they intend to rent an apartment or small
house even closer to Applicant’s place of employment than the house.11
Applicant and her husband have borrowed additional funds from their parents
over the last few years. Her father is obligated to repay the remaining $105,000 balance
on the Small Business Administration loan, which he will be able to do without serious
ramifications. Her parents have also lent her a total of about $12,000 throughout this
period. The family’s plan is for Applicant and her husband to repay this $117,000 when
they are able to do so, or the remaining balance will be subtracted from her share of
their estate and distributed to her two siblings. Applicant’s mother-in-law also lent the
couple about $20,000 that primarily went into the failed business venture. They also
anticipate repaying these funds to her once Applicant’s husband resumes working.
These intra-family loans are not included in the bankruptcy proceedings.12
Applicant and her husband also owe $18,250 in delinquent business taxes to the
state. This debt will not be discharged in the bankruptcy. Applicant’s student loans,
totaling about $15,000, are in forbearance and accruing interest at 3.5%. They will not
be discharged either. They reaffirmed the loan for one of their vehicles, which involves
monthly payments of $720 until the loan is fully repaid in August 2011.   13
After several sessions with their attorney, Applicant and her husband filed for a
Chapter 7 bankruptcy on January 14, 2011. They paid all required fees before the filing.
The bankruptcy was not finalized at the close of the record, but no complications were
apparent that would interfere with successful discharge of their dischargeable debts.
They will surrender their house to the secured lenders, with any unsecured remainder
discharged. About $147,000 in other unsecured debt will also be discharged.   14
Applicant submitted weekly pay statements and an updated budget plan
documenting their present financial situation with Applicant as the sole source of
income. The budget does not include housing expenses, as they remained in their
home pending notification to vacate from the bank. They showed a $469 monthly
surplus, which they were saving for their anticipated rental deposit. The budget includes
$215 per month in donations to their church. It also includes the $720 monthly car
AE I; AE J; AE K; Tr. 73-74, 89-90, 107-116.15
AE D.16
AE E.17
Tr. 30.18
Tr. 88-89, 105-107.19
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payment that will only continue through August 2011, as discussed above. They have
carefully economized their living expenses and stopped using credit cards altogether.
Applicant’s husband was actively seeking employment in a night-shift position so that
they would not have to incur child-care expenses by working at the same time. They
also enrolled in a 13-session credit counseling and financial planning class that ran from
February through May 2011.  15
A retired Navy captain, who has been a close family friend and known Applicant
since she was a young girl, described her high character and positive attributes in detail,
and concluded that her personal trustworthiness, judgment, and sense of responsibility
are beyond reproach.  Applicant’s mother also submitted an affidavit, describing her16
good academic record, leadership in school and church activities, dedication to her work
and family, and overall responsibility and good judgment.  Her father testified to her17
integrity, good judgment, and responsibility.  Applicant’s demeanor during the hearing18
was very candid, straightforward, and credible. She is thoroughly informed concerning
their financial situation and actively working to resolve it. She has kept family members
and work colleagues fully informed of her financial troubles in connection with the failure
of her husband’s business. In fact, she self-reported the emerging delinquencies as a
potential security issue to her facility security officer in April 2009, many years before
she would have been due for a reinvestigation, because she understood her obligation
to do so under applicable security procedures. She would self-report any future
potentially adverse information as well. This self-report was the only thing that triggered
the present proceedings to determine her continued eligibility for a security clearance.19
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
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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.
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. 
The evidence raised security concerns under two Guideline F DCs, as set forth in
AG ¶ 19(a) “inability or unwillingness to satisfy debts”; and ¶ 19(c) “a history of not
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meeting financial obligations.” There is no evidence of frivolous or irresponsible
spending, deceptive or illegal financial practices, or financial issues caused by any
misconduct on Applicant’s part. Her history of financial problems started in early 2009,
when a combination of the unforeseeable loss of two key employees and the sharp
business downturn associated with the severe recession caused her husband’s printing
business to begin failing. Since then, she has been unable to meet some of their joint
obligations despite maintaining full time employment and earning substantial raises. The
evidence raising these DCs shifts the burden to Applicant to mitigate the resulting
potential security concerns.
The guideline includes four conditions in AG ¶ 20 that could mitigate security
concerns arising from Applicant’s financial problems:
(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.
Applicant’s delinquent debts arose recently and continue, in part, at present.
However, they occurred under circumstances that are unlikely to recur. She had no
financial concerns until she and her husband decided that he should try to expand the
scope of his printing business. On the best advice of many experienced people they
consulted, they undertook necessary debt to execute what seemed at the time to be a
sound business plan. That business is now closed, and most of the resulting debts will
be discharged in bankruptcy. The entirety of the evidence, on balance, establishes
Applicant’s current reliability, trustworthiness, and good judgment, providing some
mitigation under AG ¶ 20(a).
Mitigation under AG ¶ 20(b) was also established. Applicant’s financial problems
were caused by the failure of her husband’s business due to the unforeseeable death of
one key employee, the disabling injury of another employee, and the most severe
business downturn since the Great Depression. They struggled to make the business
profitable, but could not do so. They minimized their living expenses to the extent
possible, sold their duplex, and tried for almost a year to obtain a modification
ISCR Case No. 06-12930 at 2 (App. Bd. Mar. 17, 2008) (quoting ISCR Case No. 04-09684 at 2-3 (App.20
Bd. Jul. 6, 2006)). 
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agreement with their home mortgage lender. When all else failed, they consulted a
bankruptcy attorney and have followed his advice to obtain a fresh start. It would be
difficult, even in hindsight, to craft a more responsible set of choices Applicant and her
husband could have made under the circumstances with which they were confronted. 
Applicant and her husband recently obtained formal financial counseling, but they
undertook each venture that led to their current problems only after consulting family
members and other professionals who recommended the choices they made. When
saving their home and business became an unrealistic goal, they retained a bankruptcy
attorney to help them resolve their delinquencies and other debts. Their Chapter 7
bankruptcy has been filed and will result in the discharge of most of their debt. They
plan to resolve their state tax debt first, then pay Applicant’s student loans and their
intra-family debts as resources allow. They plan to repay their parents, but there is no
schedule under which they need to do so. They can survive without incurring further
debt on Applicant’s income alone, and will have substantial income available to repay
the remaining debts once Applicant’s husband finds a job. Thus, significant mitigation
was also established under AG ¶¶ 20(c) and (d).
As the Appeal Board has ruled concerning the successful mitigation of security
concerns arising from financial considerations, “[a]n applicant is not required to show
that she has completely paid off her indebtedness, only that she has established a
reasonable plan to resolve her debts and has ‘taken significant actions to implement
that plan.’”  This applicant and her husband demonstrated a very reasonable plan to20
continue resolving their debts within their means, and have been implementing that plan
very successfully. 
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. 
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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
pertinent facts and circumstances surrounding this case. Applicant is a hard-working
and dedicated employee. She supported her husband’s attempts to expand his formerly
successful printing business, as did both of their parents. Unforeseeable personnel and
economic problems during late 2008 and early 2009 ultimately proved to be too much to
overcome, and the business failed resulting in substantial debt. She and her husband
minimized expenses and stretched their resources as far as they could to meet their
financial obligations. Once it became evident that the business would not survive, they
initiated bankruptcy proceedings to resolve their debts. They have established a budget
that will facilitate continued resolution of their few remaining debts, without the risk of
incurring additional debt. Applicant is a mature and experienced individual, who is fully
accountable for her situation and intends to continue resolving her obligations. She self-
reported her emerging financial troubles to her security manager to ensure that any
resulting security concerns were properly raised and resolved. She is fully cognizant of
the importance of following security procedures and has unfailingly done so. The
potential for pressure, coercion, exploitation, or duress is minimal, and she has
demonstrated a sufficient pattern of financial responsibility to show that financial
concerns are unlikely to continue or recur. 
Overall, the record evidence creates substantial confidence as to Applicant’s
present eligibility and suitability for a security clearance. She fully met her burden to
mitigate the security concerns arising from her 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: FOR APPLICANT
Subparagraphs 1.a through 1.d: For Applicant
Conclusion
In light of all of the circumstances presented by the record in this case, it is
clearly consistent with the interests of national security to grant Applicant eligibility for a
security clearance. Eligibility for access to classified information is granted.
                                              
DAVID M. WHITE
Administrative Judge