1
 
                                                             
                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 11-00178
)
Applicant for Security Clearance )
Appearances
For Government: Fahryn Hoffman, Esquire, Department Counsel
For Applicant: Pro se  
______________
Decision
______________
HENRY, Mary E., Administrative Judge:
Based upon a review of the pleadings, exhibits, and testimony, I grant Applicant’s
eligibility for access to classified information.
Statement of the Case
Applicant signed an Electronic Questionnaire for Investigations Processing (e-
QIP) on August 5, 2010. The Defense Office of Hearings and Appeals (DOHA) issued
Applicant a Statement of Reasons (SOR) on March 29, 2011, detailing security
concerns under Guideline F, Financial Considerations, 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 For Determining Eligibility for Access to
Classified Information (AG) implemented on September 1, 2006. 
 
W hen  SOR allegations are controverted, the Government bears the burden of producing evidence sufficient1
to prove controverted allegations. Directive, ¶ E3.1.14. “That burden has two components. First, the
Government must establish by substantial evidence that the facts and events alleged in the SOR indeed took
place. Second, the Government must establish a nexus between the existence of the established facts and
events and a legitimate security concern.” See ISCR Case No. 07-18525 at 4 (App. Bd. Feb. 18, 2009),
(concurring and dissenting, in part) (citations omitted). The guidelines presume a nexus or rational connection
between proven conduct under any of the criteria listed therein and an applicant’s security suitability. See
ISCR Case No. 08-06605 at 3 (App. Bd. Feb. 4, 2010); ISCR Case No. 08-07290 at 2 (App. Bd. Nov. 17,
2009).
GE 1; Tr. 21-22.2
2
Applicant received the SOR and answered it on April 18, 2011. He requested a
hearing before an administrative judge. DOHA received the request, and Department
Counsel was prepared to proceed on June 2, 2011. I received the case assignment on
June 20, 2011. DOHA issued a Notice of Hearing on July 6, 2011, and I convened the
hearing as scheduled on July 25, 2011. The Government offered exhibits marked as GE
1 through GE 6, which were received and admitted into evidence without objection.
Applicant testified. He submitted exhibits marked as AE A through AE F, which were
received and admitted into evidence without objection. The record closed on July 25,
2011. DOHA received the hearing transcript (Tr.) on July 29, 2011.
Procedural Ruling
Notice
Applicant received the hearing notice less than 15 days before the hearing. (Tr.
10.) I advised Applicant of his right under ¶ E3.1.8 of the Directive to receive the notice
15 days before the hearing. Applicant affirmatively waived his right to the 15-day notice.
(Id.) 
Findings of Fact
In his Answer to the SOR, Applicant admitted the factual allegations in ¶¶ 1.a -
1.c of the SOR. His admissions are incorporated herein as findings of fact. He denied
the factual allegations in ¶ 1.d of the SOR  He also provided additional information to1
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 44 years old, works as an engineering technician for a
Department of Defense contractor. He began this job in August 2010 after four months
of unemployment. From 1996 until April 2010, when he was laid-off, Applicant worked
as a heavy equipment operator and concrete laborer for a paving and excavating
company.2
Applicant married his first wife in October 1996, and they divorced in January
2001. He has two sons from this marriage, who are ages 17 and 13. His sons live with
GE 1; Tr. 21, 23.3
GE 4; Tr. 25, 34.4
GE 4; Tr. 24-25, 34-36.5
Ge 1; GE 2; GE 5; Tr. 26-28, 37-41.6
GE 1; GE 3; Tr. 22, 27.7
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his former wife. He married his present wife in March 2006. His wife has two daughters.
One of his step-daughters is married with two children, and the other step-daughter is
15 years old and in high school.3
Applicant filed for bankruptcy under Chapter 7 of the United States Bankruptcy
Code in 1994 after he was laid-off from a job that paid him well. He obtained other
employment which paid him a salary almost 50% lower than his previous salary. With
his lower salary, he was unable to pay his credit card debt. He estimated that the court
discharged between $6,000 and $8,000 of credit card debt.4
As a result of his divorce in January 2001, Applicant lacked sufficient income to
pay his child support, family health insurance, living expenses, and accumulated debts
from his marriage. Because the court did not divide the payment of the marital debts
and his former wife refused to pay the debts, he filed a second bankruptcy in September
2001. The court discharged his unpaid debts under Chapter 7 in early 2002. Applicant
estimated that 70% of his unpaid debts related to medical bills from hernia surgery for
him and medical treatment for his former wife. He did not have health insurance when
these bills were incurred.5
Applicant’s second wife purchased a house for $150,000 in 2004 before they
married. After their wedding, she titled the house in both names. In 2007, they obtained
a $50,000 equity loan on the house and made improvements in their 30-year-old house.
In 2009, they began to experience problems with paying their mortgage and
unsuccessfully tried to work with the lender. They stopped the payments in 2010. The
bank foreclosed on the house in September 2010. The foreclosure resolved the
mortgage loan on this property, but not the home equity loan.6
Applicant’s employer reduced his work hours from 40 hours a week to between
20 and 30 hours a week, causing a decline in his income. In April 2010, after 14 years
of employment, the company laid him off, along with about 75% of its work force
because there was no work in the construction industry. During this same period of
time, his wife’s employer stopped paying her a shift differential, which resulted in a loss
of $200 a month in household income. Applicant remained unemployed for four
months.7
Applicant currently earns $1,329 biweekly in gross income and $774 in bi-weekly
net income on his basic pay. He also earns shift differential and hazardous duty pay,
AE C - AE E; Tr. 49-53.8
Response to SOR; GE 2; G 5; AE F; Tr. 28-32, 62-64, 68.9
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which increases his monthly income. His additional pay can increase his net income by
as much as $450 bi-weekly. His wife earns $1,900 in bi-weekly gross pay and $1,449 in
bi-weekly net pay She also receives $300 a month in child support. Their net monthly
income totals $4,746. Just prior to the hearing, his wife obtained a part-time job, where
she anticipates earning $700 a month in gross income. Applicant anticipates her part-
time job will increase their net monthly income by approximately $500. Their basic
monthly expenses total $4,042, including rent, two car payments, a line of credit
payment, and two small debts. Applicant pays $691 a month in child support, which is
deducted from his pay as a voluntary garnishment. They have sufficient income to pay
their basic monthly living expenses and sufficient discretionary income to pay
unexpected expenses.8
Applicant’s reduced hours in 2009, his wife’s loss of income in 2009, and his
subsequent job loss in 2010 impacted his ability to pay his credit card debts as well as
his mortgage. The credit reports of record reflect that he worked with his creditors and
reached agreements to settle his past-due debts on four accounts and satisfactorily paid
eight other credit accounts. He recently negotiated a settlement on his home equity loan
of $57,600 (SOR ¶ 1.c) and paid the agreed-upon amount in April 2011 with a money
gift from his mother-in-law. He and his wife are saving money to pay the remaining two
small debts in the near future. His taxes are filed and up to date. He met with a financial
counselor about 18 months ago. He saves money for his retirement in a 401K account,
and he has a separate savings account for unanticipated expenses.9
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
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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).  
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 the following are potentially applicable: 
(a) inability or unwillingness to satisfy debts; and
(c) a history of not meeting financial obligations. 
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Appellant developed significant financial problems when his income declined and
he could not pay his debts. He fell behind in his mortgage and the lender foreclosed on
his property. 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 the following 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; and
(d) the individual initiated a good-faith effort to repay overdue creditors or
otherwise resolve debts.
Applicant filed for bankruptcy after he lost his job in 1996 and after his divorce in
2001, negative events which impacted his life and his finances. By 2009, he again found
himself in financial difficulty because his employer reduced his working hours by almost
one-half, which simultaneously reduced his income proportionally. His wife lost her
differential pay at the same time. They tried to resolve their financial problems with the
mortgage lender, but were unsuccessful. Although the bank foreclosed on their house,
they contacted other creditors and worked with them to resolve their debts. They
successfully resolved four past-due accounts. 
Applicant met with a financial counselor 18 months ago. He saves money for his
retirement and to pay unexpected expenses. He and his wife have a savings account.
When they realized that they still owed money on the home equity line, they contacted
the creditor and reached a settlement agreement. They paid this debt in April 2011.
They have sufficient income to pay all their monthly living expenses and to save. They
are not living beyond their income. Applicant has mitigated the Government’s security
concerns under AG ¶¶ 20(b), 20(c), and 20(d), but not AG ¶ 20(a).
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
In assessing whether an Applicant has established mitigation under Guideline F, the Appeal Board provided10
the following guidance in ISCR Case No. 07-06482 at 3 (App. Bd. May 21, 2008):
In evaluating Guideline F cases, the Board has previously noted that the concept of
“‘meaningful track record’ necessarily includes evidence of actual debt reduction through
payment of debts.” See, e.g., ISCR Case No. 05-01920 at 5 (App. Bd. Mar. 1, 200). However,
an applicant is not required, as a matter of law, to establish that he has paid off each and
every debt listed in the SOR. See, e.g., ISCR Case No. 02-25499 at 2 (App. Bd. Jun. 5,
2006). All that is required is that an applicant demonstrate that he has “. . . established a plan
to resolve his financial problems and taken significant actions to implement that plan.” See,
e.g., ISCR Case No. 04-09684 at 2 (App. Bd. Jul. 6, 2006). The Judge can reasonably
consider the entirety of an applicant’s financial situation and his actions in evaluating the
extent to which that applicant’s plan for the reduction of his outstanding indebtedness is
credible and realistic. See Directive ¶ E2.2(a) (“Available, reliable information about the
person, past and present, favorable and unfavorable, should be considered in reaching a
determination.”) There is no requirement that a plan provide for payments on all outstanding
debts simultaneously. Rather, a reasonable plan (and concomitant conduct) may provide for
the payment of such debts one at a time. See, e.g., ISCR Case No. 06-25584 at 4 (App. Bd.
Apr. 4, 2008). Likewise, there is no requirement that the first debts actually paid in
furtherance of a reasonable debt plan be the ones listed in the SOR.
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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. 
The evidence in support of granting a security clearance to Applicant under the
whole-person concept is more substantial than the evidence in support of denial. In
reaching a conclusion, I considered the potentially disqualifying and mitigating
conditions in light of all the facts and circumstances surrounding this case.  Applicant10
twice filed bankruptcy to eliminate excessive debt after circumstances beyond his
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control created financial problems for him. After his second bankruptcy, he and later his
wife managed their finances until his work hours decreased, and she lost her shift
differential. In less than a year, he lost his construction industry job of 14 years because
of the current economic downturn. As a result of his job loss, the mortgage lender
foreclosed on his house. However, Applicant remained current on his car payments and
a personal loan. He also contacted the creditors on past-due accounts and resolved his
indebtedness. He chose not to file bankruptcy, but to pay his debts. He recently
negotiated a settlement on his unpaid equity line of credit. He pays his bills and lives
within his monthly income. He has money left over each month, part of which he saves
to pay for unexpected expenses, such as car repairs and needs of his children.
Applicant is financially stable and fiscally responsible. His past debts are resolved and
not a security concern.
Overall, the record evidence leaves me without questions or doubts as to
Applicant’s eligibility and suitability for a security clearance. For all these reasons, I
conclude Applicant 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 F: FOR APPLICANT
Subparagraph 1.a: For Applicant
Subparagraph 1.b: For Applicant
Subparagraph 1.c: For Applicant
Subparagraph 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 eligibility for a security
clearance.  Eligibility for access to classified information is granted.
                                                              
MARY E. HENRY
Administrative Judge