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                        DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 10-10912
)
)
Applicant for Security Clearance )
Appearances
For Government: Rashid Williams, Esq., Department Counsel
For Applicant: Pro se
                                                                            
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Decision
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LYNCH, Noreen A, Administrative Judge:
On May 11, 2011, the Defense Office of Hearings and Appeals (DOHA) issued a
Statement of Reasons (SOR) listing security concerns arising 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 (DoD) Directive 5220.6, Defense Industrial Personnel Security
Clearance Review Program (January 2, 1992), as amended (Directive); and the
adjudicative guidelines (AG), implemented in September 2006. 
Applicant timely answered the SOR and requested a hearing. DOHA assigned
the case to me on July 5, 2011. A notice of hearing was issued on July 19, 2011, and
the case was heard on August 23, 2011 and September 9, 2011. Department Counsel
offered five exhibits (GE) 1-5, which were admitted without objection. Applicant testified
and submitted seven exhibits (AE) A-G at the hearing, which were admitted without
objection. DOHA received the hearing transcripts on August 23, 2011, and September
18, 2011. Based on a review of the pleadings, submissions, and exhibits, I find
Applicant met his burden to mitigate regarding the security concerns raised. Security
clearance is granted.
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Findings of Fact
In his answer to the SOR, Applicant denied the four debts alleged, with
explanation of settlement agreements and payments for the accounts. 
Applicant is 31 years old. He is not married and has no children. He graduated
from high school in 1998 and received an associate’s degree in 2000. He has continued
with college courses but has not yet obtained his undergraduate degree.  (Tr. 21)
Applicant has been employed with his current employer since June 2010. This is his
first request for a security clearance. (GE 1)
Applicant’s two brothers owned a home improvement business which bought
homes and rehabilitated them for resale. Applicant began working for them in 2003. He
invested his own money in the company in 2005. In order to invest in the company,
Applicant obtained several loans. (GE 5) His brothers promised to repay the loans from
profits earned from the business. However, the business expansion did not occur due
to the decline in the real estate market, which caused a loss of company profits. In
2008, the business filed for bankruptcy. Applicant not only did not receive the money to
repay his loans, but he lost his job as well. Applicant was unemployed from June 2008
until December 2008. (Tr. 12)
The SOR lists four delinquent accounts totaling approximately $145,000. The
credit reports in the record confirm the debts. (GE 2) Applicant acknowledged that he
had delinquent debts, but he asserts that they have been paid or are settled. 
At the hearing, Applicant provided proof that the four alleged debts have been
satisfied. (AE C) The debts originated when Applicant could no longer make payments
on the two lines of credit that he opened in 2005. Applicant’s home was foreclosed in
2010. He tried to work with the creditors and the bank, but to no avail. (Tr. 13) The bank
sold his home. He did not shirk his financial responsibility and remained motivated to
repay his debts. In 2010, he contacted a law firm and was advised to file a Chapter 13
bankruptcy. (GE4) Applicant paid $1,600 to his bankruptcy lawyer. However, the
process was taking too long and Applicant determined that it was not the solution. (Tr.
22) 
Applicant presented a Certificate of Satisfaction showing his past-due mortgage
equity line of credit in the amount of $6,000 was paid in full (SOR 1.a). (AE C, D) He
also submitted bank statements showing settlements of $32,500 for his loans (SOR 1.b,
1.d). (AE B, F, G) Finally, he submitted a bank statement that verified that he settled an
account for $3,845 (SOR 1.c). (AE B) Applicant’‘s most recent credit report confirms
that he settled the four delinquent debts. (AE A) The credit report also shows that
Applicant has other accounts that he pays as agreed. 
Applicant obtained financial counseling. His monthly net income is $3,200. He
occasionally works overtime, which increases his income. He follows a budget. He has
 See also ISCR Case No. 94-1075 at 3-4 (App. Bd. Aug. 10, 1995).      1
 Department of the Navy v. Egan, 484 U.S. 518, 531 (1988).      2
 ISCR Case No. 93-1390 at 7-8 (App. Bd. Jan. 27, 1995).      3
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a net monthly remainder of approximately $500 to $1,000. (Tr. 21) He is current on all
living expenses. 
. Policies
When evaluating an applicant’s suitability for a security clearance, an
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. These guidelines are not inflexible
rules of law. Instead, recognizing the complexities of human behavior, they are applied
in conjunction with the factors listed in the adjudicative process. An administrative
judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision.
Under AG ¶ 2(c), this process is a conscientious scrutiny of a number of variables
known as the “whole-person concept.” An 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. Likewise, I have avoided drawing inferences
grounded on mere speculation or conjecture.
The U. S. Government must present evidence to establish controverted facts
alleged in the SOR. 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. . . .”  The burden of proof is something less than a1
preponderance of evidence.  The ultimate burden of persuasion is on the applicant.  2 3
A person seeking access to classified information enters into a fiduciary
relationship with the Government based on 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 classified information. Such
decisions entail a certain degree of legally permissible extrapolation of 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
 See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive      4
information), and EO 10865 § 7.
 ISCR Case No. 93-1390 at 7-8 (App. Bd. Jan. 27, 1995).      5
 Id.      6
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applicant concerned.”  “The clearly consistent standard indicates that security clearance4
determinations should err, if they must, on the side of denials.”  Any reasonable doubt5
about whether an applicant should be allowed access to sensitive information must be
resolved in favor of protecting such information.  The decision to deny an individual a6
security clearance does not necessarily reflect badly on an applicant’s character. It is
merely an indication that the applicant has not met the strict guidelines the President
and the Secretary of Defense established for issuing a clearance.
Analysis
Guideline F, Financial Considerations
The security concern for Financial Considerations is set out in AG ¶ 18:
Failure or an 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.” It also states that “an individual who is
financially overextended is at risk of having to engage in illegal acts to
generate funds.
Applicant has acknowledged his delinquent debts. His credit report confirms
them. Consequently, Financial Considerations Disqualifying Condition (FC DC) AG ¶
19(a) (inability or unwillingness to satisfy debts), and FC DC AG ¶ 19(c) (a history of not
meeting financial obligations) apply. With such conditions raised, it is left to Applicant to
overcome the case against him and mitigate security concerns.  
Applicant had financial difficulties in the past due to the demise of his family
business and his investments in the company which became bankrupt in 2008. He also
lost employment when the company failed. He now has employment that is secure and
affords him the ability to pay all his bills. He has satisfied his delinquent accounts.
Consequently, Financial Considerations Mitigating Condition (FCMC) 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) applies.
Financial Considerations Mitigating Condition (FC MC) AG ¶ 20(b) (the
conditions that resulted in the behavior were largely beyond the person’s control (e.g.,
loss of employment, a business downturn, unexpected medical emergency, or a death,
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divorce or separation) and the individual acted responsibly under the circumstances)
applies. As noted, Applicant was unemployed after his brothers’ business failed in
2008. He suffered almost six months unemployment after the failure of the company.
He paid on his bills for as long as he could. He acted responsibly by paying the debts
that he could and by obtaining financial counseling. Thus, he acted reasonably under
the circumstances. This mitigating condition applies.
FC MC AG ¶ 20(d) (the individual initiated a good-faith effort to repay overdue
creditors or otherwise resolve debts) applies. Applicant provided evidence of his good-
faith efforts to repay his debts with payment receipts, and certificates of satisfaction. He
has consistently addressed his delinquent accounts. He sought financial counseling and
his finances are under control. FC MC AG ¶ 20(c) (the person has received or is
receiving counseling for the problem and there are clear indications that the problem is
being resolved or is under control) applies.
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 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 a
security clearance must be an overall commonsense judgment based upon careful
consideration of the guidelines and the whole-person concept. As noted above, the
ultimate burden of persuasion is on the applicant seeking a security clearance. 
I considered the potentially disqualifying and mitigating conditions in light of all
the facts and circumstances surrounding this case as well as the whole-person factors.
Applicant is 31 years old. He began employment with his brothers’ business after he
obtained his associate’s degree. He worked hard and invested in the company
business. He obtained loans because the business was expanding and his brothers
assured him he would be able to pay the loans with profits from the company. However,
due to the unforeseen real estate decline, the business suffered and eventually failed.
Applicant was unemployed as a result of the demise of the business. Prior to that time,
he had no financial difficulties.
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Applicant addressed the issue of his financial problems. He made good-faith
efforts at all times to repay his loans. He has satisfied the four delinquent debts. He
now has secure employment that provides him the means to save money, pay is debts,
and maintain his daily expenses. He accepted the financial advise that he received and
addressed his delinquent debts. He never shirked his responsibility. 
Applicant submitted information to mitigate the security concerns raised in his
case. He offered evidence of financial counseling and provided documentation
regarding the settlement of his debts. Applicant has  mitigated the security concerns
under the financial considerations guideline.  Clearance 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:
Paragraph 1, Guideline F: FOR APPLICANT
Subparagraphs 1.a-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 national interest to grant Applicant a security clearance.
Clearance is granted.
                                                     
NOREEN A. LYNCH.
Administrative Judge