DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
--------------------------------- )       ISCR Case No. 11-01878
)
)
Applicant for Security Clearance )
Appearances
For Government: Jeff A. Nagel, Department Counsel
For Applicant: Joseph Testan
April 24, 2012
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Decision
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LOKEY ANDERSON, Darlene D., Administrative Judge:
Applicant submitted his Electronic Questionnaires for Investigations Processing
(e-QIP) on October 18, 2010.  (Government Exhibit 1.)  On August 17, 2011, the
Defense Office of Hearings and Appeals (DOHA), pursuant to Executive Order 10865
and Department of Defense Directive 5220.6 (Directive), dated January 2, 1992, (as
amended), issued a Statement of Reasons (SOR) to the Applicant, which 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 a
security clearance for the Applicant and recommended referral to an Administrative
Judge to determine whether clearance should be denied or revoked.
The Applicant responded to the SOR on September 29, 2011, and initially
requested an administrative decision without a hearing.  He subsequently requested the
matter be converted to an administrative hearing before a DOHA Administrative Judge.
An Amendment to the SOR was issued to the Applicant on November 8, 2011.  The
Applicant submitted his response to the Amendment on November 27, 2011.  The case
was assigned to the undersigned Administrative Judge on January 20, 2012.  A notice
of hearing was issued on February 7, 2012, and the  hearing was scheduled for
February 13, 2012.  The Applicant requested a continuance and the matter was
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continued and rescheduled for March 14, 2012.  At the hearing the Government
presented five exhibits, referred to as Government Exhibits 1 through 5, which were
admitted without objection.  The Applicant called one witness and presented twelve
exhibits, referred to as Applicant’s Exhibits A through L that were admitted without
objection.  He also testified on his own behalf.  The official transcript (Tr.) was received
on March 26, 2012.  Based upon a review of the pleadings, exhibits, and testimony,
eligibility for access to classified information is granted.
 FINDINGS OF FACT
The Applicant is 55 years old and married with two children.  He is employed with
a defense contractor as an Air Vehicle Pilot and is seeking to obtain a security
clearance in connection with this employment.
The Government opposes the Applicant's request for a security clearance, on the
basis of allegations set forth in the Statement of Reasons (SOR).  The following findings
of fact are entered as to each paragraph and guideline in the SOR:
Paragraph 1 (Guideline F - Financial Considerations)  The Government alleges that the
Applicant is ineligible for clearance because he is financially overextended and at risk of
having to engage in illegal acts to generate funds.      
The Applicant denied allegations 1(a), and 1(b) with some explanations.  (See
Applicant’s initial Answer to SOR.)  He admitted allegations 1(c), 1(d), 1(e) and 1(f) of
the SOR.  (See Applicant’s response to Amendment to SOR.)  Credit Reports of the
Applicant dated October 30, 2010 and June 8, 2011 reflect that the Applicant was
indebted to each of the creditors set forth in the SOR.  (Government Exhibits 2 and 3.)
In 2000, the Applicant and his wife purchased a single family home for their
primary residence.  At that time, they were both gainfully employed, she as a registered
dental assistant, and he as a Network Engineer.  They paid their bills on time and had
no financial problems.  (Tr. p. 35.)  
In December 2005, caused by her prolonged standing on the job, the Applicant’s
wife began suffering left knee pain that eventually led to a hip replacement in December
2006.  That same month, she filed for state disability.  (Applicant’s Exhibit J.)  She was
unable to work for a while.  Upon the recommendation of her physician, she changed
occupations and began working as a Senior Care Giver. The pay is half of what she
was earning as a dental assistant.  Then, in May 2007, the Applicant was laid off from
his job.  He found it difficult to find work and was unemployed or underemployed for
sometime.  Since then, the Applicant has not earned as much as he had before.  This
was a significant financial set back for the Applicant and caused his financial difficulties. 
To exacerbate his financial situation, in May 2009, one evening around midnight
while he was sleeping, the dryer in the garage had some lint buildup that caught on fire.
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As a result, the fire gutted the garage with both of their vehicles and $50,000 worth of
computer equipment.  (Applicant’s Exhibit I.)  The Applicant had property insurance for
the structure but no insurance for the contents.  (Tr. p. 78.)
The Applicant’s wife testified that it was only after her medical problems that the
Applicant experienced financial difficulties.  She stated that her husband is trustworthy,
honest and reliable.  (Tr. pp. 34 - 42.)
The Applicant has a son who is autistic and must not be left unsupervised.  When
the Applicant, his wife or daughter is unable to stay with his son, the Applicant must hire
someone to watch him, which costs money.  (Tr. p. 81.)
Due to their financial hardships, the folllowing debts became delinquent and
owing.  1(a).  A debt owed to Creditor A in the amount of $2,300 became delinquent.
The Applicant started making payments toward the debt and eventually paid off the
creditor over two years ago.  (Tr. p. 51, and Applicant’s Exhibit A.)
1(b).  A debt owed to Creditor B for the mortgage on the Applicant’s primary
residence in the amount of $272,619.00 became delinquent and was placed into
collections.  After several unsuccessful attempts to modify the loan, the Applicant
reached a loan modification agreement in 2012.  He is currently making payments
according to the agreement and will continue to do so.  (Applicant’s Exhibits B, C and
D.)
1(c).  A judgment entered against the Applicant in June 2008, owed to Creditor C
for a medical bill in the amount of $2,273.00 has been paid in full.  (Tr. p. 56, and
Applicant’s Exhibit E.)
1(d).  A debt owed to Creditor D in the amount of $15,000 became delinquent
and was referred to collection.  The Applicant entered into a repayment agreement with
the creditor and has been making the monthly payments according to the plan.  He
currently owes about $13,200.  (Tr. p. 63, and Applicant’s Exhibit F.)
1(e).  A debt owed to Creditor E in the amount of $44,764.00 became delinquent.
The Applicant entered into a repayment agreement with the creditor and has been
making the monthly payments according to the plan.  He is currently making payments
of $100 monthly.  (Applicant’s Exhibit G.)  
1(f).  A debt owed to Creditor F in the amount of $142,243.00 became delinquent
and was placed into collection.  (Applicant’s Exhibit H.)  The Applicant entered into a
repayment agreement with the creditor and has been making the monthly payment
according to the plan.  He is currently making payments of $100 monthly.  (Tr. p. 65.)  
The Applicant is current with all of his monthly expenses and he has no other
delinquent debts.  He has set up a strict financial budget that he is following.  He has a
positive monthly cash flow.  (Applicant’s Exhibit L.) In the event that he receives a
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security clearance, he will be deployed overseas and his salary will significantly
increase, enabling him to increase his monthly payments toward his creditors and
resolve his debts sooner.  He testified that he would never do anything to jeopardize the
national security.  (Tr. p. 90.)   
Letters of recommendation from professional and personal associates submitted
on behalf of the Applicant describe him as professional, responsible, ambitious, a
dependable team player, an individual with good character and high moral values.  The
Applicant is always willing to tackle whatever task he is asked to perform, and is highly
recommended for a security clearance.  (Applicant’s Exhibit K.)
POLICIES
Enclosure 2 of the Directive sets forth adjudication policies divided into
"Disqualifying Factors" and "Mitigating Factors."  The following Disqualifying Factors
and Mitigating Factors are found to be applicable in this case:
Guideline F (Financial Considerations)
18.  The Concern.  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. 
Conditions that could raise a security concern:
19.(a) inability or unwillingness to satisfy debts; and
19.(c) a history of not meeting financial obligation. 
Conditions that could mitigate security concerns:
20.(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;
20.(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
20.(d) the individual initiated a good-faith effort to repay overdue creditors or
otherwise resolve debts.
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In addition, as set forth in Enclosure 2 of the Directive at pages 18-19,  in
evaluating the relevance of an individual’s conduct, the Administrative Judge should
consider the following general factors:
a.  The nature, extent, and seriousness of the conduct and surrounding
circumstances;
     b.  The circumstances surrounding the conduct, to include knowledgeable
participation;
c.  The frequency and recency of the conduct;
d.  The individual’s age and maturity at the time of the conduct;
e.  The extent to which participation is voluntary;
f.  The presence or absence of rehabilitation and other permanent behavior
changes;
g.  The motivation for the conduct; 
h. The potential for pressure, coercion, exploitation or duress; and
 i.  The likelihood of continuation or recurrence.
The eligibility criteria established in the DoD Directive identify personal
characteristics and conduct which are reasonably related to the ultimate question,
posed in Section 2 of Executive Order 10865, of whether it is “clearly consistent with the
national interest” to grant an Applicant’s request for access to classified information.
The DoD Directive states, “The adjudicative process is an examination of a
sufficient period of a person’s life to make an affirmative determination that the person is
an acceptable security risk.  Eligibility for access to classified information is predicated
upon the individual meeting these personnel security guidelines.  The adjudicative
process is the careful weighing of a number of variables known as the whole-person
concept.  Available, reliable information about the person, past and present, favorable
and unfavorable should be considered in reaching a determination.” The Administrative
Judge can draw only those inferences or conclusions that have reasonable and logical
basis in the evidence of record.  The Judge cannot draw inferences or conclusions
based on evidence which is speculative or conjectural in nature.  Finally, as emphasized
by President Eisenhower in Executive Order 10865, “Any determination under this order
. . . 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.”
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CONCLUSIONS
In the defense industry, the security of classified industrial secrets is entrusted to
civilian workers who must be counted upon to safeguard such sensitive information
twenty-four hours per day, seven days per week.  The Government is therefore
appropriately concerned when available information indicates that an Applicant for
clearance may be involved in instances of financial irresponsibility, which demonstrates
poor judgment or unreliability.
It is the Government’s responsibility to present substantial evidence to support
the finding of a nexus, or rational connection, between the Applicant’s conduct and the
holding of a security clearance.  If such a case has been established, the burden then
shifts to the Applicant to go forward with evidence in rebuttal, explanation or mitigation,
which is sufficient to overcome or outweigh the Government’s case.  The Applicant
bears the ultimate burden of persuasion in proving that it is clearly consistent with the
national interest to grant him or her a security clearance.
In this case the Government has met its initial burden of proving that the
Applicant has been financially irresponsible (Guideline F).  This evidence indicates poor
judgment, unreliability and untrustworthiness on the part of the Applicant.  Because of
the scope and nature of the Applicant's conduct, I conclude there is a nexus or
connection with his security clearance eligibility.
The evidence shows that before 2005, the Applicant had no financial difficulties.
He paid his bills on time and had an excellent credit rating.  After 2005, circumstances
largely beyond the Applicant’s control, namely, his wife’s hip problems and occupation
change, coupled with his job lay-off and periods of unemployment and
underemployment, followed by the garage fire, significantly impacted his finances.
Despite these hardships, the Applicant has addressed each of his delinquent debts set
forth in the SOR.  He has either paid off the debt in full, or is currently making regular
monthly payments suitable to the creditor that he plans to continue until the debt is paid.
In regard to those creditors that he is making payment to, he plans to increase the
payments and resolve the debt much sooner when his salary increases.  He has taken
responsibility for the debt and has been working diligently within his means to resolve
the indebtedness.    
Under the particular circumstance of this case, he has made a good-faith effort to
resolve his past due indebtedness.  He has set up a financial budget that he is
following.  He does not plan on incurring any new debt.  He has acted reasonably,
responsibly and prudently.  He understands the importance of paying his bills on time
and living within his means.  He also knows that he must remain fiscally responsible in
the future.  There is clear evidence of financial rehabilitation.  The Applicant has
demonstrated that he can properly handle his financial affairs and that he is fiscally
responsible.  Considering all of the evidence, the Applicant has introduced persuasive
evidence in rebuttal, explanation or mitigation that is sufficient to overcome the
Government's case. 
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Under Guideline F (Financial Considerations), Disqualifying Conditions 19.(a)
inability or unwillingness to satisfy debts; and 19.(c) a history of not meeting financial
obligation, apply.  However, Mitigating Conditions 20.(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; 20.(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 20.(d) the
individual initiated a good-faith effort to repay overdue creditors or otherwise resolve
debts also apply.  Accordingly, I find for the Applicant under Guideline F (Financial
Considerations).    
I have also considered the “whole-person concept” in evaluating the Applicant’s
eligibility for access to classified information.  Under the particular facts of this case, the
totality of the conduct set forth above, when viewed under all of the guidelines as a
whole, support a whole person assessment of good judgement, trustworthiness,
reliability, candor, and a  willingness to comply with rules and regulations, and/or other
characteristics indicating that the person may properly safeguard classified information.
  
I have considered all of the evidence presented, including the Applicant’s receipts
for proof of payments, favorable letters of recommendation, and witness testimony.
They mitigate the negative effects of his financial indebtedness and the effects that it
can have on his ability to safeguard classified information.  On balance, it is concluded
that the Applicant has overcome the Government's case opposing his request for a
security clearance.  Accordingly, the evidence supports a finding for the Applicant as to
the factual and conclusionary allegations expressed in Paragraph 1 of the SOR.   
     FORMAL FINDINGS
Formal findings For or Against the Applicant on the allegations in the SOR, as
required by Paragraph 25 of Enclosure 3 of the Directive are:
Paragraph 1: For the Applicant.
        Subpara.  1.a.: For the Applicant.
    Subpara.  1.b.: For the Applicant.
    Subpara.  1.c.: For the Applicant.
    Subpara.  1.d.: For the Applicant.
    Subpara.  1.e.: For the Applicant.
    Subpara.  1.f.: For the Applicant.
   
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  DECISION
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 a security clearance for the
Applicant.
  Darlene Lokey Anderson
Administrative Judge