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                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
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------------------------- )       ISCR Case No. 10-08154
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Applicant for Security Clearance )
Appearances
For Government: 
Jeff Nagel, Esq., Department Counsel
For Applicant:
Barry M. Sax, Esquire
March 29, 2012
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DECISION
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ROSS, Wilford H., Administrative Judge:
Applicant submitted his Electronic Questionnaire for Investigations Processing
(e-QIP) on June 17, 2010. (Government Exhibit 1.) On April 27, 2011, the Defense
Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) detailing
the 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 issued after September 1, 2006. 
 
Applicant answered the SOR in writing on June 16, 2011, and requested a
hearing before an administrative judge (Answer). Department Counsel was prepared to
proceed on July 14, 2011. This case was assigned to me on July 19, 2011. DOHA
issued notices of hearing on July 27, 2011, and August 3, 2011. I convened the hearing
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as scheduled on September 9, 2011. The Government offered Government Exhibits 1
through 7, which were received without objection. Applicant testified on his own behalf,
and submitted Applicant Exhibits A through K, which were also received without
objection. Applicant asked that the record remain open for the receipt of additional
documents. Applicant submitted Applicant Exhibit L, which was admitted without
objection. DOHA received the transcript (Tr.) of the hearing on September 21, 2011.
The record closed on October 3, 2011. Based upon a review of the pleadings, exhibits,
and testimony, eligibility for access to classified information is denied.
Findings of Fact
Applicant is 52 and married. He has a Master’s degree in Business
Administration. He is employed by a defense contractor in the financial management
area and seeks to retain a security clearance in connection with his employment. 
Guideline F, Financial Considerations
The Government alleges that Applicant is ineligible for clearance because he is
financially overextended and, therefore, at risk of having to engage in illegal acts to
generate funds. Applicant admitted paragraphs 1.b, 1.d, and 1.g of the SOR. Those
admissions are findings of fact. Paragraphs 1.a, 1.c, 1.e, and 1.f were denied. He also
submitted additional information to support his request for a security clearance.
Applicant’s financial difficulties began in approximately 2006. At that time, during
his honeymoon, he suffered a hand injury that required surgery. Applicant went to an
out of network provider for the surgery, had to pay $10,000 out of pocket, and was not
reimbursed by his insurance provider. (SOR 1.f.) (Tr. 33-34.) In addition, in 2008,
Applicant’s wife lost her job and was unemployed for a period of time. She became self-
employed in the 2010 time frame. (Tr. 102.)
The SOR sets out five delinquent consumer debts, which total $66,223. (SOR
1.b, 1.c, 1.d, 1.f, and 1.g.) The SOR also alleges a delinquent real estate mortgage and
a delinquent home equity line of credit. (SOR 1.a, and 1.e.) The existence and status of
these debts is supported by credit reports concerning Applicant dated June 25, 2010;
April 8, 2011; July 14, 2011; and two dated September 9, 2011. (Government Exhibits
4, 5, 6, and 7; Applicant Exhibit I.) The current status of these debts is as follows:
1.a. Applicant denied that he owed $172,000 for a home equity line of credit that
was delinquent. The actual delinquency on this account is approximately $10,000 to
$15,000. He testified that negotiations were taking place with the lender to reduce the
amount owed, with Applicant making a lump-sum payment to begin the process. (Tr. 36-
39, 72-78, 113-115.) The day after the hearing, September 10, 2011, Applicant received
a letter from the creditor stating, “Our records indicate that above account has been
charged off, please contact my office to arrange reduced payment arrangements or a
settlement for less than the balance.” There is a hand-written notation indicating that
an offer may be submitted by September 27, 2011. (Applicant Exhibit L at PH G1.)
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(Emphasis in original.) Applicant also submitted documentation showing that he had
made two $300 payments on this account between January and September 2011.
(Applicant Exhibit L at PH G2.)  No further information was provided. This debt is
unresolved.
1.b. Applicant admitted that he owed $13,000 for a delinquency on an automobile
that was repossessed. (Applicant Exhibit D.) He stated that there were negotiations with
the successor creditor on this account. (Tr. 30-32, 80-81, 89-91, 115-117.) Applicant
Exhibit L at PH E is a letter dated September 21, 2011, from the current collection agent
indicating that Applicant had agreed to pay $9,880.04 on this account in five payments,
three monthly payments of $500, and two of $4,190.02. Applicant’s counsel represented
that the first payment had been made, but no receipt was provided. (Applicant Exhibit L
at 3.) No further information was provided. Given the lack of a history of Applicant
making consistent payments over a period of time, and based on the state of the record
I cannot find that this debt is resolved.
1.c. Applicant denied that he owed $2,980 for a delinquent credit card account.
He submitted documentation from the credit card holder showing that he had made four
payments totalling $940 from May to August 2011. According to Applicant, this was in
accordance with an agreement with the credit card owner. His balance had been
reduced to $2,040. (Tr. 39-40, 117-118; Applicant Exhibit I at 19.) This debt is being
resolved.
1.d. Applicant admitted that he owed $2,243 for a delinquent credit card account.
He testified that a $100 payment had recently been made on that account, and that he
anticipated making further payments. (Tr. 40, 91, 120.) No documentation was
submitted showing the current status of this account, or that any payments had been
made. This debt is unresolved.
1.e. Applicant denied that he owed $611,000 for a delinquent mortgage.
According to Applicant, he had reached an agreement with the mortgage company to
modify his mortgage. (Tr. 40-42, 65-72, 94-97.) In a letter dated March 29, 2011, and
attached to his Answer, the mortgage company required Applicant to make three
payments of a specified amount on May 1, June 1, and July 1, 2011, as part of a Trial
Period Plan. He actually made these payments on May 20, June 29, and August 1,
2011. (Applicant Exhibit L at PH F.) According to Applicant, the mortgage company is
deciding whether his late payment for July 2011 abrogates the modification agreement.
(Tr. 120-123.) Applicant supplied no additional information as to that issue. The two
most current credit reports indicate, “Paying under a partial payment agreement,” and
“Current, was past due 180 days or more.” (Government Exhibit 7; Applicant Exhibit I.)
Considering all of the available evidence, I find that this debt is being resolved.
1.f. Applicant denied that he owed $21,000 for a delinquent credit card account.
He submitted evidence that he had reached a payment arrangement with this creditor in
March 2011 and had been fulfilling it with regular monthly payments. (Tr. 42, 123-126;
Applicant Exhibit L at PH A.) This debt is being resolved.
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1.g. Applicant admitted that he owed $27,000 for a delinquent credit card
account. He states that there have been continuing negotiations with the successor
creditor to reach an agreement on a payment plan with a lump-sum payment followed
by monthly payments on a reduced balance. (Tr. 42-43, 101-102, 108-109, 126-127.) In
a letter to Applicant dated August 30, 2011, the successor creditor states, “Do you
realize you have not kept your word with us? You have failed to keep your promise to
pay $8400.00 on 08-22-11, nor have you offered an explanation or alternate
arrangement.” There is a hand-written notation stating, “Contacted credit service dept to
discuss negotiation of reduced payment amount over extended monthly period.
Anticipated date Sep 30, 2011.” (Applicant Exhibit L at PH H.) No additional information
was provided. This debt is not resolved.
Applicant owed $66,223 in delinquent consumer debt: $23,980 of that debt has
been paid or resolved; and $42,243 remains unresolved. In addition, it appears that the
delinquency concerning his first mortgage had been resolved. However, the delinquency
concerning his home equity line of credit is not resolved.
Applicant submitted a budget after the hearing, which appears to show that he
can make all of his payments and have a reserve of approximately $400 per month.
However, this budget indicates payments on debts that have not yet been resolved, and
does not show how Applicant can make the two $4,190.02 payments on his auto
delinquency. (Applicant Exhibit L at PH I.)
 
Mitigation
Applicant submitted letters from two co-workers, and two friends from outside
work. He is described as someone who “always demonstrated strong moral character
and sound judgment,” is “a very honest and forthright individual,” “a person with a strong
moral fiber,” and “a trustworthy asset.” (Applicant Exhibits E, F, G, and H.)
Policies
Security clearance decisions are not made in a vacuum. 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 to be used as appropriate 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
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making a decision. In addition, the administrative judge may also rely on his or her own
common sense, as well as knowledge of the law, human nature, and the ways of the
world, in making a reasoned decision.
The protection of the national security is the paramount consideration. AG ¶ 2(b)
requires that, “Any 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 the applicant or proven by Department Counsel, and has the
ultimate burden of persuasion as to obtaining a favorable clearance 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. Security clearance decisions include, by
necessity, consideration of the possible risk that 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.
 
Finally, as emphasized in Section 7 of Executive Order 10865, “Any
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.” 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 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. 
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The guideline notes several conditions that could raise security concerns. Under
AG & 19(a), an Ainability or unwillingness to satisfy debts@ is potentially disqualifying.
Similarly under AG & 19(c), Aa history of not meeting financial obligations@ may raise
security concerns. Applicant, by his own admission, and supported by the documentary
evidence, had considerable delinquent debts, a mortgage, and a home equity line of
credit, on which he could not make regular payments. The evidence is sufficient to raise
these potentially disqualifying conditions.
The guideline also includes examples of conditions that could mitigate security
concerns arising from financial difficulties. Under AG ¶ 20(a), disqualifying conditions
may be mitigated where Athe 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.@ In addition, AG
¶ 20(b) states that disqualifying conditions may be mitigated where “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.”  
The evidence shows that neither of the above mitigating conditions apply to
Applicant. As discussed above, his delinquent debts are several years old, and only
recently has he even begun to negotiate settlements or make any payments. His finger
surgery, and his wife’s layoff, may have had an impact on his ability to pay his debts,
but he presented insufficient evidence to show that he has behaved responsibly under
the circumstances. It is Applicant’s burden to show that his financial situation has
changed for the better. He has not met that burden. 
Applicant has not received financial counseling. There is also insufficient
evidence to show that his current financial situation is stable. Accordingly, I cannot find
that “there are clear indications that the problem is being resolved or is under control,”
as required by AG ¶ 20(c).
Applicant has made, and is fulfilling, payment arrangements with two creditors.
He appears to have successfully modified his mortgage. However, he does not have a
long track record of fulfilling his promises, and the evidence is insufficient for me to
make a finding that he will carry through with making his planned payments. Based on
the particular facts of this case, at this time, I cannot find that he has “initiated a good-
faith effort to repay overdue creditors or otherwise resolve debts,” as required by AG ¶
20(d).
Applicant does not dispute the fact that he owes these debts. Accordingly, AG ¶
20(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,” does not
apply. 
This is a close case. Applicant has begun to get his financial house in order, and
I have considered that fact in making my decision. Given the extent of his debts, and the
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fact that he had not yet made arrangements for all of them by the time the record
closed, he has not met his burden. Paragraph 1 is found against Applicant.
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 relevant circumstances. 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 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.      
I considered the potentially disqualifying and mitigating conditions in light of all
the relevant facts and circumstances surrounding this case. Applicant’s financial
difficulties were not a result of poor judgment on his part. Under AG ¶ 2(a)(2), I have
considered the facts of Applicant’s debt history. As stated above, he has resolved
approximately half of the past due indebtedness. In addition, he successfully modified
the mortgage on his residence, resolving that particular debt. However, he has been
extremely slow to resolve the debts, and several are still unresolved. Based on the
record, I cannot find that there have been permanent behavioral changes under AG ¶
2(a)(6). Accordingly, I find that there is the potential for pressure, coercion, exploitation,
or duress (AG ¶ 2(a)(8)); and that there is a likelihood of recurrence (AG ¶ 2(a)(9)). 
If he resolves all of his delinquent debts, and shows the ability over a longer
period of time to make his planned payments, he may be eligible for a clearance in the
future. He is not eligible now.
Overall, the record evidence leaves me with questions and doubts as to
Applicant’s eligibility and suitability for a security clearance. For all these reasons, I
conclude Applicant has not mitigated the security concerns arising from his financial
situation. Accordingly, the evidence supports denying his request for a security
clearance.
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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
Subparagraph 1.a : Against Applicant
Subparagraph 1.b : Against Applicant
Subparagraph 1.c : For Applicant
Subparagraph 1.d : Against Applicant
Subparagraph 1.e : For Applicant
Subparagraph 1.f : For Applicant
Subparagraph 1.g : Against Applicant
Conclusion
In light of all of the circumstances presented by the record, 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.
                                              
WILFORD H. ROSS
Administrative Judge