Item 5.1
Item 1.2
1
                                                                     
                               DEPARTMENT OF DEFENSE
                DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 10-07009
)
)
Applicant for Security Clearance )
Appearances
For Government: Gregg A. Cervi, Esq., Department Counsel
For Applicant: Pro se
______________
Decision
______________
WHITE, David M., Administrative Judge:
Applicant accrued more than $80,000 in delinquent debt over the past few years,
while she was employed full time. Resulting security concerns were not mitigated. She
made no showing of unusual circumstances giving rise to these debts, or of changes to
prevent continued financial irresponsibility. She very recently filed for discharge of her
debts in bankruptcy, and purchased an expensive new car with a loan that will consume
much of her income. Based on a review of the pleadings and exhibits, eligibility for
access to classified information is denied. 
Applicant submitted a security clearance application (SF 86) on April 20, 2010.1
On April 6, 2011, 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 10865,2
Safeguarding Classified Information within Industry (February 20, 1960), as amended;
Item 4.3
The Government submitted nine Items in support of the SOR allegations. 4
Item 5.5
Item 3.6
Items 6 and 7.7
Item 5.8
2
Department of Defense Directive 5220.6, Defense Industrial Personnel Security
Clearance Review Program (January 2, 1992), as amended (Directive); and the
adjudicative guidelines promulgated by the President on December 29, 2005, and
effective within the Department of Defense for SORs issued after September 1, 2006. 
Applicant answered the SOR in writing on April 22, 2011, and requested that her
case be decided by an administrative judge on the written record without a hearing.3
Department Counsel submitted the Government’s written case on June 6, 2011. A
complete copy of the File of Relevant Material (FORM)  was provided to Applicant, and4
she was afforded an opportunity to file objections and submit material in refutation,
extenuation, or mitigation within 30 days of her receipt of the FORM. 
Applicant signed the document acknowledging receipt of her copy of the FORM
on June 23, 2010, and returned it to DOHA. She provided no further response to the
FORM within the 30-day period, did not request additional time to respond, and
expressed no objection to my consideration of the evidence submitted by Department
Counsel. On September 8, 2011, a legal assistant at the law firm of the attorney who
filed a bankruptcy petition for Applicant on that date forwarded a copy of the petition
(Applicant Exhibit (hereinafter AE) 1) as an email attachment to Department Counsel.
This material was included in the case file as Applicant’s response to the FORM at
Department Counsel’s request, and without objection from him. I received the case
assignment on September 15, 2011.
Findings of Fact
Applicant is a 38-year-old employee of a defense contractor, where she has
worked as a senior manufacturing associate since March 2010. She has no prior
military service, and has never held a security clearance. She has never married, and
has no children.  In her response to the SOR, she admitted all of the delinquent debts5
alleged in the SOR.  Applicant’s admissions, including her responses to DOHA6
interrogatories,  are incorporated in the following findings.7
According to section 13A of her SF 86, Applicant worked for a different company
from April 1996 until March 2007. However, in section 13C of the SF 86 she reported
that she was laid off from that job in August 2006.  On May 13, 2010, she told an8
Item 6.9
Item 4.10
Item 5.11
Item 8 at 2.12
Item 9 at 3.13
Items 4 and 7.14
AE 1 at 17-22.15
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interviewer from the Office of Personnel Management (OPM) that her financial problems
began in 2008 when she was laid off by that employer, and for the past two years had
been unemployed or employed at much lower wages than she had made previously.
She verified the accuracy of this statement to the OPM investigator on November 8,
2010.  In her response to the SOR she said, “I was let go by [that employer] back in9
2006 and from then on I knew I could not afford my bills because I was not making the
same I did [there].”  There is no other information in the record from which to determine10
which of her statements in this regard is accurate, and she provided no information
concerning her respective earnings in that job and her subsequent positions. Section
13A of her SF 86 reflects subsequent full time manufacturing employment with a
different company from April 2007 to January 2010, from which she was also laid off.
She was unemployed during the rest of January and February 2010, before starting her
current employment.11
The 12 SOR-listed delinquent debts to which Applicant admitted total $84,631.
Their existence is confirmed by the two record credit reports (CBR), with the exception
of the $4,500 debt alleged in SOR ¶ 1.k. Her Equifax CBR, dated October 8, 2010,
reflects a report from July 2009 that this debt was charged off, but shows no charged-off
amount in the “High Credit” column, no amount past due, and has a “0" balance. The
credit limit was $4,500, but there is no indication that the account was at its limit when
charged off.  The same account is shown in a December 2007 Equifax entry on12
Applicant’s Full Data Report, dated May 6, 2010. This CBR shows that the account was
paid as agreed, with a “0" balance, and was paid and closed at consumer’s request.13
However, Applicant admitted owing this $4,500 debt in her responses to DOHA
interrogatories and to the SOR.  This debt does not appear on the schedule of creditors14
holding unsecured nonpriority claims filed with her bankruptcy petition on September 8,
2011.  On balance, I find that this account was paid and closed in 2007.15
Applicant’s oldest delinquent debt is the $494 account for telephone services that
was placed for collection in July 2006 (SOR ¶ 1.f). Her three most recent delinquencies,
totaling $383, arose between October 2009 and April 2010 (SOR ¶¶ 1.a, 1.i, 1.l). The
Items 8 and 9.16
Item 5 at 10, 11, 28.17
Items 8 and 9.18
AE 1 at 31.19
Item 7.20
Item 4.21
AE 1 at 13, 14, 27, 32, 36, 37.22
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remaining debts, comprising the vast majority of her SOR-listed accounts, became
delinquent between April 2008 and June 2009.  16
Applicant purchased a home in January 1999 and lived there until June 2008,
when she rented a place to live with her sister.  She refinanced her mortgage on the17
home during May 2005, in part to pay off a $31,400 home equity line of credit she
opened in October 2003, resulting in a new principal balance of $112,000. She again
refinanced this loan to withdraw additional equity during October 2007, with a new total
due of $148,800. By July 2009, her principal balance was down to $145,354, but she
was 30-days past due on her $1,131 monthly payments.  On July 7, 2010, her18
mortgage lender completed foreclosure proceedings on the residence, and sold it to
Fannie Mae for $60,000.19
On November 8, 2010, in response to DOHA interrogatories, Applicant said that
she was far behind in debt, was unable to pay what she owed, and would be filing for
bankruptcy at the beginning of the year.  She responded to the SOR on April 22, 2011,20
saying that it was hard for her to accept that she had bad credit and would have to file
for Chapter 7 at some time, but it had come time for her to do so. She provided a letter,
dated April 21, 2011, stating that an attorney represented her concerning her financial
matters and that she planned to file a Chapter 7 bankruptcy.  21
Applicant filed a petition for bankruptcy under Chapter 7 on September 8, 2011.
She previously paid $2,000 for attorney’s fees and filing fees in three payments
comprising $500 on April 21 and July 25, and $1,000 on May 3, 2011. On August 2,
2011, she sold her paid-off vehicle to her brother-in-law for $1,130. That same day, she
purchased a used 2008 Hummer H3, worth $23,000. She borrowed $26,580 to make
this purchase, leaving $3,580 of the debt unsecured. In her bankruptcy filing, she
claimed her state-allowed $5,000 vehicle exemption and indicated that she would retain
the vehicle and reaffirm the debt toward which she currently owes $720 per month.   22
The total of unsecured nonpriority claims that Applicant is seeking to discharge in
her bankruptcy proceedings in $94,682. Her gross wages in 2009 and 2010 were
$33,153 and $33,475, respectively. She is presently working two jobs, with gross
monthly income of $4,761; and net monthly income of $3,676. These figures yield
AE 1 at 10-12, 25, 27, 29, 30, 33.23
AE 1 at 6.24
5
annual amounts of $57,132 (gross) and $44,112 (net). Applicant’s monthly living
expenses total $3,658, leaving a surplus of $18. This expense estimate includes her
$720 vehicle loan but no other debt payments. Applicant also reported $1,250 in gross
gambling income for 2010. She owns no real property, and has $2,579 in personal
property assets.  23
On August 22, 2011, Applicant completed the credit counseling required by
bankruptcy laws via an internet briefing.  She supplied no evidence of any other24
financial counseling or effort to educate herself on financial responsibility. 
Applicant provided no evidence concerning the quality of her professional
performance, the level of responsibility her duties entail, or her history of handling
sensitive information and observing security procedures. She submitted no other
character references, or evidence tending to establish good judgment, trustworthiness,
or reliability. I was unable to evaluate her credibility, demeanor, or character in person
since she elected to have her case decided without a hearing. 
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
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
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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 under the guideline for financial considerations are set out
in AG ¶ 18, which reads in pertinent part:      
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 record evidence established security concerns under two Guideline F DCs,
as set forth in AG ¶ 19: 
(a) inability or unwillingness to satisfy debts; and
(c) a history of not meeting financial obligations. 
Applicant’s SOR-listed delinquent debts total over $80,000. She admitted owing
these debts, and that she cannot afford to repay them. Except for a $494 telephone
debt from mid-2006, all of these debts became delinquent since April 2008 while she
held a full-time job. This evidence raises substantial security concerns under DCs 19(a)
and (c), thereby shifting the burden to Applicant to rebut, extenuate, or mitigate those
concerns. 
7
The guideline includes five conditions in AG ¶ 20 that could mitigate security
concerns arising from Applicant’s financial difficulties:
(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’s multiple delinquent debts arose over the past three years, and
continue to date. They are both frequent and recent, and arose under circumstances
that have not materially changed. Applicant failed to demonstrate that her reliability,
trustworthiness, and judgment have improved, since her total unsecured debt has risen
to more than $94,500, and she recently bought an expensive new car with a $720
monthly payment that will absorb all but $18 of her post-bankruptcy estimated monthly
surplus income. The evidence does not establish mitigation under MC 20(a). 
Applicant has been continuously employed since well before these debts became
delinquent, and she offered no evidence to support mitigation under MC 20(b). None of
the debts were shown to have arisen from conditions beyond her control. If, as she
claimed without providing specifics, the job she started in 2007 paid substantially less
than her previous job, the extent of her subsequent delinquent debt shows that she did
not act responsibly under those circumstances. Between 2003 and 2007, she
apparently withdrew close to $70,000 in equity from the home she owned before she
stopped making her mortgage payments and the lender foreclosed on the property. She
has almost no assets to show for all her earnings, equity withdrawals, and debt incurred
over the past eight years.
Applicant offered no evidence of effective financial counseling, and her failure to
repay any of her delinquent debts does not establish clear indications that the problem
8
is being resolved or is under control. Her last-minute filing for Chapter 7 bankruptcy
relief to discharge more than $94,500 in acknowledged debts, that she made no effort to
repay, is insufficient to establish a good-faith effort to resolve her debts. She obligated
herself to a new $720 monthly car payment that consumes all but $18 of her projected
post-discharge budget solvency, precluding any conclusion that her financial situation
will be under control in the foreseeable future. Applicant admitted the validity of all SOR-
listed debts. MC 20(c), 20(d), and 20(e) are therefore inapplicable. 
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
pertinent facts and circumstances surrounding this case. Applicant is an accountable
adult, who is responsible for her voluntary choices and conduct that underlie the
security concerns expressed in the SOR. Her financial irresponsibility spans the past
several years, and continues at present. It involves substantial delinquent debts totaling
more than $80,000, toward which she had paid nothing at the close of the record. She
very recently filed for Chapter 7 bankruptcy discharge of more than $94,500 in
acknowledged debts, yet did not establish that she would become financially
responsible after receiving such relief. She did not demonstrate that these debts arose
under unusual circumstances, or that she initiated any changes to prevent additional
financial difficulties. She offered no evidence of effective financial counseling,
rehabilitation, or responsible conduct in other areas of her life. The potential for
pressure, coercion, and duress remains undiminished. 
Overall, the record evidence leaves me with substantial doubt as to Applicant’s
present eligibility and suitability for a security clearance. She did not meet her burden to
mitigate the security concerns arising from her financial considerations.
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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: AGAINST APPLICANT
Subparagraphs 1.a through 1.j: Against Applicant
Subparagraph 1.k: For Applicant
Subparagraph 1.l: 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.
                                              
DAVID M. WHITE
Administrative Judge