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    DEPARTMENT OF DEFENSE 
            DEFENSE OFFICE OF HEARINGS AND APPEALS 
          
             
 
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 11-03268 
  ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Gregg A. Cervi, Esquire, Department Counsel 
For Applicant: Pro se 
 
 
 
 
__________ 
 
Decision 
__________ 
 
DUFFY, James F., Administrative Judge: 
 
Applicant failed to mitigate security concerns arising under Guideline F, Financial 
Considerations. Clearance is denied. 
 
Statement of the Case 
 
On September 15, 2011, the Defense Office of Hearings and Appeals (DOHA) 
issued a Statement of Reasons (SOR) detailing security concerns under Guideline F. 
DOHA acted under Executive Order 10865, Safeguarding Classified Information Within 
Industry, dated February 20, 1960, as amended; Department of Defense Directive 
5220.6, Defense Industrial Personnel Security Clearance Review Program, dated 
January 2, 1992, as amended (Directive); and the adjudicative guidelines (AG) 
implemented on September 1, 2006. 
 
The SOR detailed reasons why DOHA could not make the preliminary affirmative 
finding under the Directive that it is clearly consistent with the national interest to grant 
or continue Applicant’s security clearance. On October 11, 2011, Applicant answered 
the SOR and elected to have her case decided on the written record in lieu of a hearing. 
 
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On November 29, 2011, the Government compiled its File of Relevant Material (FORM) 
that contained documents identified as Items 1 through 10.  
 
On December 2, 2011, DOHA forwarded to the Applicant a copy of the FORM 
with instructions to submit any additional information and objections within 30 days of its 
receipt. Applicant received the FORM on December 9, 2011, and did not submit any 
objections or additional matters within the allotted time period. The case was assigned 
to me on February 7, 2012. Items 1 through 10 are entered into the record. 
 
Findings of Fact 
 
Applicant is a 63-year-old executive assistant who works for a defense 
contractor. She has worked at her current job since August 1999. She graduated from 
high school in 1966. She married in April 1969 and divorced in November 1974. She 
listed no children in her security clearance application (SCA). She has apparently held a 
security clearance since 1999.1 
 
The SOR alleged that Applicant had a foreclosed mortgage in the amount of 
$125,796 (SOR ¶ 1.a), that she had a delinquent Internal Revenue Service (IRS) debt in 
the amount of $5,000 (SOR ¶ 1.b), and that she failed to file her 2010 federal income 
tax return when it was due (SOR ¶ 1.c). In her Answer to the SOR, Applicant admitted 
each of the allegations. Her admissions are incorporated as findings of fact.2 
 
Applicant submitted a SCA on October 28, 2010. In that application, she checked 
the box indicating that she “[f]ailed to pay Federal, state, or other taxes, or to file a tax 
return, when required by law or ordinance” and also stated, “taxes have been prepared 
but not filed. Awaiting to work ou[t] a payment plan.” She did not indicate the tax year(s) 
involved, but noted she owed the IRS $5,000. In responding to other questions in her 
SCA, she also disclosed that she was currently over 90 days delinquent on a $125,796 
mortgage that was going into foreclosure and that she had been counseled, warned, or 
disciplined for violating the terms of agreement for an employer-provided travel or credit 
card.3 
 
During an interview with an Office of Personnel Management (OPM) investigator 
on November 18, 2010, Applicant indicated that her debts were not the result of events 
beyond her control, but were due to her procrastination. She noted that she put off her 
financial obligations until she was too deep in debt. Regarding her tax issues, the 
summary of her OPM interview indicated: 
 
                                                          
1 Item 5. 
2 Items 1 and 4. 
3 Item 5. 
 
3 
 
 
[Applicant] explained that she used to file her taxes through an agency. 
When she started doing her own tax return for the tax year ending in 2007, 
she had some problems on how to fill out the forms and started to 
procrastinate. She missed the filing deadline, kept putting it off, finally 
deciding to wait for the next tax year. The same thing happened, she kept 
procrastinating. Finally, around 05/2010, she decided to take action and 
contacted a company she had previously used to prepare her taxes, . . . 
The company has done all the paperwork for the past three years and 
given it to [her] to file. She is planning to take it to the federal building in 
[City X] before the end of this month, 11/2010. She is going in person so 
she can arrange the method of payment. The amount listed, $5,000 is the 
estimated amount she owes on her taxes. [Applicant] has no intention to 
not file her income tax [returns] on time in the future.4  
 
In responding to interrogatories, she acknowledged that the summary of her OPM 
interview was accurate. In another set of interrogatories dated July 7, 2011, she 
indicated that she had not filed her federal and state income tax returns for 2010.5 
 
In October 2004, Applicant purchased a home with a 30-year mortgage. At that 
time, her monthly payments were about $800. In 2009, she decided to refinance to 
obtain a 20-year mortgage. The new mortgage was initially for $129,673. Her new 
monthly mortgage payment was $1,232. In refinancing her home, she indicated that she 
failed to take into consideration other expenses such as a local recreation fee, 
homeowner’s association fee, insurance payments, and property taxes. Her mortgage 
payment along with the other expenses totaled $1,424 per month. She stated that, in 
about March 2010, she could no longer make the payments and stopped paying the 
mortgage.  
 
The creditor contacted her to discuss options about the mortgage. The creditor 
wanted to extend the length of her mortgage to cover the amount of the delinquency 
and not make any changes to the amount of her monthly payments. She decided that 
she could not agree to that option. After the creditor sent her a letter and called her at 
work, she became demoralized and moved out of the property shortly after submitting 
her SCA. Neighbors later told her the creditor changed the locks on the doors and 
placed a foreclosure notice on the property. She later consulted an attorney who is 
made available to employees at her company. The lawyer advised her to let the creditor 
file for foreclosure. During the OPM interview, she indicated that she had no further 
information regarding the status of the property. She noted that she is waiting for the 
creditor to contact her to see what happens next.6 
 
                                                          
4 Item 6.  
5 Items 6 and 7.  
6 Items 6 and 10.  
 
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Applicant’s credit report dated November 6, 2010, indicated that the mortgage’s 
balance was $125,796, that it was past due $9,593, and that foreclosure proceedings 
were initiated. Her credit reports dated May 24, 2011, and September 2, 2011, provided 
no information about the mortgage’s balance, the past-due amount, or the status of the 
foreclosure proceedings, but stated “contact mbr for status.” In her Answer to the SOR, 
she provided no information about the status of the foreclosure.7 
 
In her OPM interview, Applicant indicated that she was issued a corporate credit 
card for office purposes. At one point, this card became overdue $200 to $250. She also 
noted that she used the card for a $40 personal purchase because it was the only credit 
card she had with her at that time of the purchase. Due to these incidents, her manager 
verbally counseled her in mid-2009 about the proper use of the corporate credit card.8 
 
In November 2010, Applicant indicated that her net monthly income was $2,256, 
her monthly expenses were $1,595, and her monthly debt payments were $326, which 
left her a net monthly remainder of $335. Those monthly debt payments did not include 
payments towards the delinquent debts. She also indicated that she was meeting her 
current financial obligations and was actively working to resolve her financial issues. 
Her most recent credit report reflected that she had two unpaid medical debts totaling 
$1,916 that have been placed for collection.9 
 
Policies 
 
The President of the United States has the authority to control access to 
information bearing on national security and to determine whether an individual is 
sufficiently trustworthy to have access to such information. Department of the Navy v. 
Egan, 484 U.S. 518, 527 (1988). The President has authorized the Secretary of 
Defense to grant eligibility for access to classified information “only upon a finding that it 
is clearly consistent with the national interest to do so.” Exec. Or. 10865, Safeguarding 
Classified Information within Industry § 2 (Feb. 20, 1960), as amended. The U.S. 
Supreme Court has recognized the substantial discretion of the Executive Branch in 
regulating access to information pertaining to national security, emphasizing that “no 
one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 
518, 528 (1988). 
 
Eligibility for a security clearance is predicated upon the applicant meeting the 
criteria contained in the adjudicative guidelines. These AGs are not inflexible rules of 
law. Instead, recognizing the complexities of human behavior, these guidelines are 
applied in conjunction with an evaluation of the whole person. An administrative judge’s 
adjudicative goal is a fair, impartial, and commonsense decision. An administrative 
                                                          
7 Items 4, 8, 9, and 10.  
8 Item 6.  
9 Items 6 and 8. 
 
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judge must consider all available, reliable information about the person, past and 
present, favorable and unfavorable, to reach his decision.  
 
The Government reposes a high degree of trust and confidence in persons with 
access to classified information. This relationship transcends normal duty hours and 
endures throughout off-duty hours. Decisions include, by necessity, consideration of the 
possible risk that the applicant may deliberately or inadvertently fail to safeguard 
classified information. Such decisions entail a certain degree of legally permissible 
extrapolation of potential, rather than actual, risk of compromise of classified 
information. Clearance decisions must be “in terms of the national interest and shall in 
no sense be a determination as to the loyalty of the applicant concerned.”  See Exec. 
Or. 10865 § 7. See also Executive Order 12968 (Aug. 2, 1995), Section 3. Thus, a 
clearance decision is merely an indication that the Applicant has or has not met the 
strict guidelines the President and the Secretary of Defense have established for issuing 
a clearance. 
 
Initially, the Government must establish, by substantial evidence, conditions in 
the personal or professional history of the applicant that may disqualify the applicant 
from being eligible for access to classified information. The Government has the burden 
of establishing controverted facts alleged in the SOR. See Egan, 484 U.S. at 531.  
“Substantial evidence” is “more than a scintilla but less than a preponderance.” See v. 
Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). The guidelines 
presume a nexus or rational connection between proven conduct under any of the 
criteria listed and an applicant’s security suitability. See ISCR Case No. 95-0611 at 2 
(App. Bd. May 2, 1996). 
 
Once the Government establishes a disqualifying condition by substantial 
evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the 
facts. Directive ¶ E3.1.15. An applicant “has the ultimate burden of demonstrating that it 
is clearly consistent with the national interest to grant or continue [his or her] security 
clearance.” ISCR Case No. 01-20700 at 3 (App. Bd. Dec. 19, 2002). The burden of 
disproving a mitigating condition never shifts to the Government. See ISCR Case No. 
02-31154 at 5 (App. Bd. Sep. 22, 2005). “[S]ecurity clearance determinations should err, 
if they must, on the side of denials.” Egan, 484 U.S. at 531; see AG ¶ 2(b).   
 
Analysis 
 
Guideline F, Financial Considerations 
 
The security concern for Financial Considerations is set out in AG ¶ 18 as 
follows: 
 
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 
 
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protect classified information. An individual who is financially 
overextended is at risk of having to engage in illegal acts to generate 
funds.  
 
The guideline notes several conditions that could raise security concerns under 
AG ¶ 19. Three are potentially applicable in this case:   
 
 (a) inability or unwillingness to satisfy debts;  
 
 (c) a history of not meeting financial obligations; 
 
(g) failure to file annual Federal, state, or local income tax returns as 
required or the fraudulent filing of the same. 
 
 Applicant did not file her 2010 federal income tax return on time. For tax years 
2007 through 2009, she owes the IRS $5,000 in back taxes. In about March 2010, she 
stopped making her mortgage payments, and the creditor initiated foreclosure 
proceedings. The current status of the foreclosure proceedings is unknown. This 
evidence is sufficient to raise the above disqualifying conditions. 
 
  Four 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; and 
 
(d) the individual initiated a good-faith effort to repay overdue creditors or 
otherwise resolve debts. 
 
 Appellant’s financial issues are recent, ongoing, and cast doubt on her current 
reliability, trustworthiness, and good judgment. She provided no proof that she has yet 
filed her 2010 federal income tax return or that she made any arrangements to resolve 
her $5,000 delinquent tax debt. She admitted that her financial problems were not due 
to events beyond her control, but were the result of her procrastination. She consulted 
an attorney about her pending foreclosure and was advised to let the creditor file for 
 
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foreclosure. In her Answer to the SOR, she provided no information about the status of 
foreclosure proceeding. No documents were presented to show that her financial 
obligations arising from the mortgage have changed in any manner. There is insufficient 
evidence to conclude that she has initiated good-faith efforts to resolve her financial 
problems, that those problems are under control, or that they are unlikely to recur. She 
merits partial credit under AG 20(c) for consulting with the attorney. None of the other 
mitigating conditions apply. 
 
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 
relevant facts and circumstances surrounding this case. I have incorporated my 
comments under Guideline F in my whole-person analysis. Some of the factors in AG ¶ 
2(a) were addressed under that guideline, but some warrant additional comment.  
 
Applicant has worked for her current employer for about 12 years. She provided 
no work performance evaluations or character reference letters. In 2009, she was 
counseled for misuse of an employer-provided credit card. She also indicated that she 
failed to file her 2007 through 2009 federal income tax returns on time. Her financial 
problems remain a security concern. 
 
Overall, the record evidence leaves me with questions and doubts about 
Applicant’s eligibility and suitability for a security clearance. Therefore, I conclude 
Applicant has not mitigated the security concerns arising under Guideline F. 
 
 
 
 
 
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Formal Findings 
 
Formal findings 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:    AGAINST APPLICANT 
 
   Subparagraphs 1.a – 1.c:   Against Applicant 
 
Decision 
 
In light of all the circumstances presented by the record in this case, it is not 
clearly consistent with the national interest to grant or continue Applicant’s eligibility for 
a security clearance. Eligibility for access to classified information is denied. 
 
 
_______________________ 
James F. Duffy 
Administrative Judge