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                           DEPARTMENT OF DEFENSE 
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
In the matter of: ) 
 ) 
 XXXXXXXXXX, XXXXX )  ISCR Case No. 10-09069 
  ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: William O’Neil, Esq., Department Counsel 
For Applicant: Stephen E. Spira, Esq., and Jack B. Spira, Esq. 
 
 
 
______________ 
 
Decision 
______________ 
 
 
TUIDER, Robert J., Administrative Judge: 
 
Applicant has mitigated security concerns pertaining to Guideline F (financial 
considerations). Clearance is granted. 
 
Statement of the Case 
 
On November 3, 2009, Applicant submitted an Electronic Questionnaires for 
Investigations Processing (e-QIP). On April 22, 2011, the Defense Office of Hearings 
and Appeals (DOHA) issued a Statement of Reasons (SOR) 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 Security Clearance Review Program (January 2, 1992), as amended 
(Directive); and the adjudicative guidelines (AG) effective within the Department of 
Defense for SORs after September 1, 2006.  
 
 Applicant answered the SOR on May 27, 2011, and DOHA received his answer 
on June 6, 2011. Department Counsel was prepared to proceed on August 10, 2011. 
The case was assigned to me on August 23, 2011. DOHA issued a notice of hearing 
 
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on August 23, 2011, scheduling the hearing for September 12, 2011. The hearing was 
held as scheduled. 
 
The Government offered Government Exhibits (GE) 1 through 6, which were 
received into evidence without objection. Applicant offered Applicant Exhibits (AE) A 
through T, which were received into evidence without objection, and he testified on his 
own behalf.  
 
I held the record open until September 30, 2011, to afford the Applicant the 
opportunity to submit additional documents on his behalf. Applicant timely submitted 
AE U through Y, which were received into evidence without objection. DOHA received 
the hearing transcript (Tr.) on September 20, 2011. The record closed on September 
30, 2011. 
 
Findings of Fact 
 
Applicant admitted all of the SOR allegations, with explanations. His answers 
and explanations are incorporated as findings of fact. After a thorough review of the 
evidence, I make the following additional findings of fact. I found Applicant’s testimony 
to be credible. 
 
Background Information 
 
Applicant is a 52-year-old engineer, who has worked for a defense contractor 
since February 1997. He seeks to retain his top secret security clearance, which is a 
requirement of his continued employment. He was initially granted a security 
clearance in 1979 as a Department of the Navy civilian employee, and has 
successfully held a security clearance at various levels for the past 32 years. (Tr. 18-
20, 25, 29-30, GE 1.) 
 
Applicant was awarded a Bachelor of Science degree in engineering with a 
specialty in aircraft engineering in May 1982. He was later awarded a Master’s Degree 
in engineering in August 1991. He married in August 1987, separated in December 
2008, and divorced in March 2010. Applicant and his former wife, age 49, have one 
child, an 18-year-old daughter. Applicant’s former wife lives in a Midwestern state with 
their daughter (State A) and he lives in a Southern state (State B). (Tr. 20-22, 43, 62-
64, 85-86, GE 1, AE Q - R.) 
 
Financial Considerations 
 
Applicant’s background investigation addressed his financial situation and 
included the review of his November 2009 e-QIP, one set of February 2011 DOHA 
Interrogatories; as well as his November 2009, September 2010, October 2010, and 
July 2011 credit reports. (GE 1 – 6.) Applicant’s SOR alleges three separate debts 
consisting of a mortgage foreclosure with a balance of $296,002, a home equity line of 
 
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credit with a balance of $175,000, and a homeowner’s association fee of $872. (SOR 
¶¶ 1a – 1c.) 
 
Applicant’s financial problems stem from a variety of factors to include a 1989 
automobile accident that left his wife disabled, a health-related move from State B to 
State A to accommodate his wife, his unemployment following that move, his 
attempting to maintain the costs of two households in States A and B, a separation 
and divorce, uncovered hurricane damage to his home in State B, and a dramatic 
decline in the value of his home in State B when he tried to sell his house following his 
move from State B to State A. All of these factors played a role in Applicant’s financial 
problems; however, the decline in the value of his home in State B and his inability to 
sell it while separated and going through a divorce were perhaps the most significant 
factors. (Tr. 30-44, 86-87.) 
 
Two years after Applicant married, his wife was involved in a severe automobile 
accident in 1989. At the time of the accident, she was a college graduate and a dental 
office manager. Before college, she was a figure skater. She has been disabled since 
her 1989 accident. During an August 2009 medical evaluation, she was diagnosed 
with severe bilateral patellofemoral syndrome, moderately severe fibromyalgia, 
moderately severe chronic daily headaches, and adjustment disorders with mostly 
depressive features. She is severely limited with regard to her physical activities and it 
is “very unlikely she would be able to work in any productive capacity, part time or full 
time.” (AE P.) This accident and diagnosis is pertinent in that it significantly impacted 
Applicant’s marriage, choices they made, and the collateral financial fallout.  
 
As noted, Applicant moved his family from State B to State A as an 
accommodation to his wife where they rented a home. That move occurred in 
November/December 2007. Applicant attempted to sell his house in State B before 
moving to State A. In October 2007, his house in State B was appraised at $659,000 
with a mortgage of $303,945. He also owed a home equity line of credit (home asset 
funds currently in use) of $120,462. Applicant used the line of credit to upgrade the 
house in order to increase its “curb appeal” as well as to make expensive repairs 
following a series of hurricanes in 2004. (Tr. 15-16, 38-41, AE J.) Applicant was 
unsuccessful in his efforts to sell his house from 2008 to 2010. These efforts included 
two short sale attempts. The record is replete with Applicant’s diligent efforts to sell his 
house and attempts to work with his lenders during the process. During his separation, 
Applicant found that he could not maintain a household in State A where his wife was 
residing with their daughter, pay her spousal and child support, and maintain their 
home in State B. To Applicant’s credit, he was able to remain current on his mortgage 
until about September 2009. (Tr. 45-54, AE F – H.) 
 
The bank initiated foreclosure proceedings and obtained a final summary 
judgment of mortgage foreclosure of $329,996.77 in August 2010 with a sale date in 
January 2011. In essence, Applicant had approximately five months to sell his home 
or lose it to foreclosure. In June 2011, the bank was awarded title and Applicant lost 
his home. (Tr. 55-56, AE L.) 
 
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The appraised property value of Applicant’s house at the time of hearing was 
$339,690, an amount greater than the foreclosure amount of $329,996.77. The first 
mortgage appears to be more than satisfied through foreclosure proceeds. He has yet 
to receive a final accounting, however. Applicant understands that any potential 
outstanding debt on his mortgage may have to be addressed and he is prepared to do 
so. With regard to the home equity line of credit, under applicable State B law, 
Applicant is no longer legally liable for that debt. Furthermore, his credit report reflects 
that this debt has been charged off and has a zero balance. However, and even 
though Applicant is not legally obligated to pay the home equity line of credit balance, 
he is prepared to do so. Applicant provided ample documentation of his efforts to 
remain in contact with his creditors with regard to both his mortgage and his home 
equity line of credit. Lastly, the homeowner’s association debt has been paid and his 
account is current. (Tr. 56-62, 71-72, 79-84, 95, GE 3 – 5, AE M, AE U, AE W - Y.)  
 
In short and apart from the potential liability arising from his foreclosure, 
Applicant is “debt free.” Applicant did seek counsel from real estate agents and an 
attorney regarding his foreclosure and made on-line credit counseling inquires. He has 
not, however, sought formal financial counseling. Applicant’s budget reflects that his 
monthly gross salary is $11,328 and his net monthly remainder after paying all of his 
bills is $1,214. His monthly alimony and child support payments are $4,783.  In 
conclusion, Applicant has addressed each and every debt alleged. The proceeds from 
his home foreclosure sale appear to have satisfied his mortgage. He is prepared, 
however, to deal with any shortfall, should one arise, from his foreclosure. His budget 
clearly demonstrates that he maintains a modest lifestyle and is living within his 
means.  (Tr. 62-66, 77-78, 81-82, AE Q - R, V.) 
 
Character Evidence 
 
Applicant submitted five work-related reference letters from individuals who 
have known Applicant throughout his working career. Four of the five individuals are in 
management positions at Applicant’s company and the remaining individual is a co-
worker and friend. It is clear from these references that Applicant is very highly 
regarded at his place of employment. They note that Applicant is a recognized expert 
in the theory, application, and development of navigation and related systems. 
Applicant is truly making a contribution to the national defense in a very meaningful 
way. He is held in very high regard, both personally and professionally. There is no 
question that Applicant’s company considers him to be a valued and trusted 
employee. All individuals are familiar with Applicant’s situation the security clearance 
process. They all strongly recommend that Applicant be granted a security clearance. 
(Tr. 27-30, AE A – E.) 
 
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 
 
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potentially disqualifying conditions and mitigating conditions, which are useful 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 
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. 
 
Under Directive ¶ E3.1.14, the Government must present evidence to establish 
controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, the 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 
applicant has the ultimate burden of persuasion as to 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 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. 
  
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). 
 
 
 
 
   
 
 
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Analysis 
 
  AG ¶ 18 articulates the security concern relating to financial problems: 
 
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 provides two financial considerations disqualifying conditions that 
could raise a security concern and may be disqualifying in this case, “(a) inability or 
unwillingness to satisfy debts,” and “(c) a history of not meeting financial obligations.” 
Applicant’s history of delinquent debt is established by his admissions and the 
evidence presented. His house went through foreclosure in 2010 as a result of his 
inability to maintain his mortgage and home equity line of credit. During the process, 
he also fell behind on his homeowners association dues. These debts have been in 
various states of delinquency for several years. The Government established the 
disqualifying conditions in AG ¶¶ 19(a) and 19(c).   
 
  Five financial considerations mitigating conditions under AG ¶¶ 20 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; 
 
(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 
 
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documented proof to substantiate the basis of the dispute or provides 
evidence of actions to resolve the issue. 
 
Applicant’s conduct does not warrant full application of AG ¶ 20(a) because 
there is more than one delinquent debt and his financial problems are not isolated. His 
debt is a “continuing course of conduct” under the Appeal Board’s jurisprudence. See 
ISCR Case No. 07-11814 at 3 (App. Bd. Aug. 29, 2008) (citing ISCR Case No. 01-
03695 (App. Bd. Oct. 16, 2002)). Nevertheless, he receives partial credit under AG ¶ 
20(a) because the debt occurred under circumstances that are unlikely to recur and 
does not cast doubt on his current reliability, trustworthiness, or good judgment. 
 
Applicant merits full credit under AG ¶ 20(b) because of the direct and indirect 
costs associated with his wife’s automobile accident and disability, his separation and 
divorce, uncovered hurricane damage to his house, and dramatic decline in the value 
of his house were circumstances beyond his control and he acted responsibly under 
the circumstances. Even though he did not have the funds to remain current on his 
debts, he remained in contact with his creditors during this timeframe and has taken 
reasonable steps to resolve his debts.1
 
  
AG ¶ 20(c) is partially applicable even though Applicant did not seek formal 
financial counseling. He has, however, produced evidence that reflects he is living 
within his means and has regained financial responsibility. There are clear indications 
that his financial problems are being resolved. Furthermore, there is sufficient 
information to establish partial if not full mitigation under AG ¶ 20(d).2
                                                          
1“Even if Applicant’s financial difficulties initially arose, in whole or in part, due to circumstances outside 
his [or her] control, the Judge could still consider whether Applicant has since acted in a reasonable 
manner when dealing with those financial difficulties.” ISCR Case No. 05-11366 at 4 n.9 (App. Bd. Jan. 
12, 2007) (citing ISCR Case No. 99-0462 at 4 (App. Bd. May 25, 2000); ISCR Case No. 99-0012 at 4 
(App. Bd. Dec. 1, 1999); ISCR Case No. 03-13096 at 4 (App. Bd. Nov. 29, 2005)). A component is 
whether he maintained contact with his creditors and attempted to negotiate partial payments to keep 
his debts current. 
 Applicant has 
paid his home owners association debt. Applicant’s first mortgage appears to be 
satisfied following the foreclosure of his home. As noted, he is not required under 
 
2The Appeal Board has previously explained what constitutes a “good-faith” effort to repay overdue 
creditors or otherwise resolve debts: 
 
In order to qualify for application of [the “good-faith” mitigating condition], an applicant 
must present evidence showing either a good-faith effort to repay overdue creditors or 
some other good-faith action aimed at resolving the applicant’s debts. The Directive 
does not define the term ‘good-faith.’ However, the Board has indicated that the 
concept of good-faith ‘requires a showing that a person acts in a way that shows 
reasonableness, prudence, honesty, and adherence to duty or obligation.’ Accordingly, 
an applicant must do more than merely show that he or she relied on a legally available 
option (such as bankruptcy) in order to claim the benefit of [the “good-faith” mitigating 
condition].  
 
(internal citation and footnote omitted) ISCR Case No. 02-30304 at 3 (App. Bd. Apr. 20, 2004) (quoting 
ISCR Case No. 99-9020 at 5-6 (App. Bd. June 4, 2001)). 
 
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applicable state law to repay the home equity line of credit, he is nonetheless 
negotiating a settlement with the creditor. Given his financial situation, Applicant has 
done all that can reasonably be expected of him. AG ¶ 20(e) is not applicable. 
 
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 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.  
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. AG ¶ 2(c). The discussion in the Analysis 
section under Guideline F is incorporated in this whole-person section. However, 
further comments are warranted. 
Applicant’s record of 14 years of distinguished service as a defense contract 
employee and 18 years of similar service as a Department of the Navy civilian 
employee and his successfully holding a security clearance for a total of 32 years 
during that time weighs heavily in his favor. He is a law-abiding citizen and a 
productive member of society. He is current on his day-to-day expenses, lives within 
his means, and his SOR debts have been and are being addressed in a meaningful 
and thoughtful manner. The Appeal Board has addressed a key element in the whole-
person analysis in financial cases stating: 
 
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.” 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. 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.” 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 
 
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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. 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. ISCR Case No. 07-
06482 at 2-3 (App. Bd. May 21, 2008) (internal citations omitted). 
 
With the exception of one debt that Applicant is attempting to settle, he satisfied 
or paid the remaining debts alleged. And, as discussed, there is little more for him to 
do with regard to his mortgage or home equity line of credit debts. He is in no way 
trying to rely on his state statute to avoid responsibility for his home equity line of 
credit. He is making a significant contribution to the national defense. His company 
fully supports him and recommends him for a security clearance. Due to 
circumstances beyond his control, his debts became delinquent. Despite Applicant’s 
recent financial setback, it is clear from his actions that he is on the road to a full 
financial recovery. These factors show responsibility, rehabilitation, and mitigation.  
 
Both the mitigating conditions under Guideline F and the whole-person analysis 
support a favorable decision. I specifically considered Applicant’s military service and 
employment history, his history of successfully holding a security clearance, his years 
of financial responsibility before falling into debt, his plan for financial recovery and 
substantial steps he has taken to resolve his financial situation, his potential for future 
service as a defense contractor, the mature and responsible manner in which he dealt 
with adversity, his reference letters, and his testimony and demeanor. After weighing 
the disqualifying and mitigating conditions, and all the facts and circumstances, in the 
context of the whole-person, I conclude he has mitigated the financial considerations 
security concerns.  
 
I take this position based on the law, as set forth in Department of Navy v. 
Egan, 484 U.S. 518 (1988), my careful consideration of the whole-person factors and 
supporting evidence, my application of the pertinent factors under the adjudicative 
process, and my interpretation of my responsibilities under the adjudicative guidelines. 
Applicant has fully mitigated or overcome the Government’s case. For the reasons 
stated, I conclude he is eligible for access to classified information. 
 
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 1a to 1c:  For Applicant 
 
 
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Conclusion 
 
In light of all the circumstances presented by the record in this case, it is 
clearly consistent with the national interest to grant or continue Applicant’s eligibility 
for a security clearance. Eligibility for a security clearance is granted. 
 
 
 
____________________________ 
ROBERT J. TUIDER 
Administrative Judge