1
 
                                                             
                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 11-03181
)
Applicant for Security Clearance )
Appearances
For Government: Gregg A. Cervi, Esquire, Department Counsel
For Applicant: Dana D. Jacobson, Esquire
______________
Decision
______________
HENRY, Mary E., Administrative Judge:
Based upon a review of the pleadings, exhibits, and testimony, Applicant’s
eligibility for access to classified information is granted.
Statement of the Case
Applicant signed an Electronic Questionnaire for Investigations Processing (e-
QIP) on August 15, 2008. The Defense Office of Hearings and Appeals (DOHA) issued
Applicant a Statement of Reasons (SOR) on October 26, 2011, detailing security
concerns under Guideline F, financial considerations, after Applicant notified her facility
security officer of her financial problems. 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 For Determining Eligibility for Access to Classified Information
(AG) implemented on September 1, 2006. 
    
W hen  SOR allegations are controverted, the Government bears the burden of producing evidence sufficient1
to prove controverted allegations. Directive, ¶ E3.1.14. “That burden has two components. First, the
Government must establish by substantial evidence that the facts and events alleged in the SOR indeed took
place. Second, the Government must establish a nexus between the existence of the established facts and
events and a legitimate security concern.” See ISCR Case No. 07-18525 at 4 (App. Bd. Feb. 18, 2009),
(concurring and dissenting, in part) (citations omitted). The guidelines presume a nexus or rational connection
between proven conduct under any of the criteria listed therein and an applicant’s security suitability. See
ISCR Case No. 08-06605 at 3 (App. Bd. Feb. 4, 2010); ISCR Case No. 08-07290 at 2 (App. Bd. Nov. 17,
2009).
GE 1; Tr. 17-18, 22-23.2
2
Applicant received the SOR on November 4, 2011, which she answered on
November 30, 2011. Applicant retained counsel and requested a hearing before an
administrative judge. DOHA received the request, and Department Counsel was
prepared to proceed on February 6, 2012. I received the case assignment on February
9, 2012. DOHA issued a Notice of Hearing on February 22, 2012, and I convened the
hearing as scheduled on March 6, 2012. The Government offered exhibits marked as
GE 1 through GE 5, which were received and admitted into evidence without objection.
Applicant testified. She submitted exhibits marked as AE A through AE D, which were
received and admitted into evidence without objection. I held the record open until
March 13, 2012, for Applicant to submit additional matters. Applicant timely submitted
AE E through AE G, which were received and admitted without objection. The record
closed on March 13, 2012. DOHA received the hearing transcript (Tr.) on March 21,
2012.
Procedural Ruling
Notice
Applicant received the hearing notice less than 15 days before the hearing. (Tr.
8.) I advised Applicant of her right under ¶ E3.1.8 of the Directive to receive the notice
15 days before the hearing. After consulting with counsel, Applicant affirmatively waived
her right to the 15-day notice. (Id.) 
Findings of Fact
In her Answer to the SOR, Applicant admitted the factual allegations in ¶¶ 1.a -
1.c of the SOR. Her admissions are incorporated herein as findings of fact. She denied
the factual allegations in ¶ 1.d of the SOR.  She also provided additional information to1
support her request for eligibility for a security clearance. After a complete and thorough
review of the evidence of record, I make the following additional findings of fact.  
Applicant, who is 55 years old, works as a software developer for a Department
of Defense contractor. She began her current employment in November 2007. She has
worked as a software developer for more than 14 years.2
GE 1; Tr. 17, 23, 36.3
GE 5; Tr. 38-39.4
GE 1; Tr. 26-28.5
GE 2; Tr. 30-31.6
3
Applicant and her husband married in June 1983. Their daughter is 24 years old
and lives with them while she attends school and works. Their son died in May 2011 at
the age of 17. At the time of his death, he suffered from a degenerative muscle disease
and was totally disabled. Her husband was his primary care giver for many years and
has not returned to work since their son’s death.3
In late 1993 or early 1994, the employer of Applicant’s husband laid him off from
his manager job. Applicant had concerns about the stability of her job. At the same time,
she was pregnant with her son. She and her husband also owned two houses at this
time, one of which they rented. In 1994, the rental income stopped, and they could not
sell the rental house. Their ability to pay their bills declined. They decided to file
bankruptcy, which they did in August 1994. The bankruptcy court discharged their debts
in November 1994.   4
Following the Chapter 7 discharge, Applicant and her husband managed their
finances and paid their bills. In late August 2007, Applicant’s employer laid her off. She
found another job in another state, which required Applicant and her family to move
more than 1,000 miles. In the spring of 2007, Applicant’s home had been appraised at
$420,000. When they prepared to move, they learned that they would encounter
difficulty selling their home for $250,000, well below their mortgage debt. They decided
to rent their home, which they did for a year. The tenant paid rent for 11 months, not 12
months. The tenants left the property in need of repair and cleaning, which resulted in
additional expenses. Her husband did much of the work on the property. They rented
the property beginning in January 2009, but this tenant remained for only three months.
As of April 2009, Applicant was current on her rental property mortgage and her bills.
With the loss of rental income, she began to experience financial difficulties with two
mortgages to pay. She used her credit cards to pay some expenses.  5
In April 2009, Applicant decided to sell the rental property. She retained the
services of a real estate agent, who listed the house for $255,000. At the same time,
Applicant contacted the mortgage company, requesting to modify the terms of her
mortgage. The mortgage company denied her request in May 2009 and September
2009. In November 2009, Applicant receive a $166,000 cash offer on this property. She
provided this information to the mortgage company. The primary mortgage lender
approved the sale, but the secondary mortgage company requested $75,000 from her
before it would agree to the sale. She did not have this money, and the sale failed. By
early 2010, the mortgage company had initiated foreclosure proceedings.6
GE 2; Tr. 29-30.7
GE 2; GE 5; AE A; AE B; AE F; Tr. 2-22, 31.8
GE 2; AE C; AE G; Tr. 31-35, 45-46.9
GE 2; Tr.42,10
4
In April 2009, Applicant contacted the credit card companies and requested
assistance. Several companies agreed to reduce the interest rate on her credit cards. In
August 2009, she contacted a credit counseling organization, which worked with her
and obtained additional interest rate reductions. The company developed a payment
plan, but she did not proceed with the plan.7
Applicant met with an attorney to discuss her legal options. She decided to file for
bankruptcy. On May 26, 2010, she and her husband filed a Chapter 13 petition for
bankruptcy. Her bankruptcy filing stopped the foreclosure proceeding on her out-of-state
rental property. Applicant and the mortgage companies reached an agreement, which
resulted in the sale of this property and a cancellation of her remaining debt. The bank
issued 1099-A (abandonment of property) and 1099-C (cancellation of debt) forms.
Applicant included the 1099-C information in her 2010 federal tax return. Her mortgage
debt on the rental property is resolved. She is current on her residential mortgage.8
The bankruptcy trustee approved Applicant’s repayment plan in June 2010,
which will last for five years. She made her first payment in July 2010 and has
continually made her monthly payment of $1,272 under her Chapter 13 bankruptcy
payment plan. Her bankruptcy plan includes the $6,729 bank debt listed in SOR ¶ 1.c.
She also took the credit counseling course required by the bankruptcy court.9
Applicant currently earns $7,916 a month in gross income and receives
approximately $6,391 a month in net income. Her monthly expenses total $5,302 a
month, leaving approximately $1,089 in disposable income. Her monthly expenses
include her Chapter 13 monthly payment. She has sufficient income to pay her monthly
bills and does. Since filing for bankruptcy, she does not use credit cards.10
Policies
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 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 the adjudicative process. The administrative judge’s overarching
adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶
5
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.
Under Directive ¶ E3.1.14, the Government must present evidence to establish
controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, an applicant is
responsible for presenting “witnesses and other evidence to rebut, explain, extenuate,
or mitigate facts admitted by applicant or proven by Department Counsel. . . .” An
applicant has the ultimate burden of persuasion for 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 an 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).  
Analysis
Guideline F, Financial Considerations
The security concern relating to the guideline 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. 
6
AG ¶ 19 describes the disqualifying conditions that could raise security concerns.
I have considered all the conditions, and the following are potentially applicable: 
(a) inability or unwillingness to satisfy debts; and
(c) a history of not meeting financial obligations. 
Appellant developed significant financial problems after losing her job in 2007
and moving to another state for employment. Loss of rental property income created
additional financial pressures which resulted in her filing a bankruptcy petition. These
two disqualifying conditions apply.
The Financial Considerations guideline also includes examples of conditions that
can mitigate security concerns. I have considered mitigating factors AG ¶ 20(a) through
20(f), and the following 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.
In assessing whether an Applicant has established mitigation under Guideline F,
the Appeal Board provided the following guidance in ISCR Case No. 07-06482 at 3
(App. Bd. May 21, 2008):
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.” See, e.g., ISCR Case
No. 05-01920 at 5 (App. Bd. Mar. 1, 2007). 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. See, e.g., ISCR Case No. 02-25499 at 2
(App. Bd. Jun. 5, 2006). 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.” See, e.g.,
7
ISCR Case No. 04-09684 at 2 (App. Bd. Jul. 6, 2006). 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 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. See, e.g., ISCR Case No. 06-25584 at 4 (App. Bd.
Apr. 4, 2008). 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.
Applicant’s financial problems arose when several major events occurred at the
same time. Her employer laid her off in August 2007, during the economic downturn.
She was the only wage earner in the household because her husband provided full-time
care for their disabled son. She found other employment many miles from their
residence. Since the market value of her house had declined about $150,000, she
decided to rent the house because she could not sell the house at a price which would
pay her debt. She successfully rented the house for 14 months, which enabled her to
continue paying the mortgage and meet her living expenses in her new location. Her
decision to rent the property in 2007 was reasonable under the circumstances. AG ¶
20(b) applies.
With the loss of rental income in 2009, Applicant’s finances became problematic.
She made a good faith effort to resolve her mortgage and credit problems when she
sought assistance from the mortgage lender to modify her mortgage. The mortgage
lender twice rejected her request. She tried to sell the house through a short-sale, but
the secondary mortgage holder would not cooperate with the sale. She obtained the
services of a creditor counseling organization, which helped her reduce some of her
credit card interest rates, which she also did on her own. Ultimately, she filed a Chapter
13 petition in May 2010. Because of her bankruptcy, she has fully resolved her
mortgage debt on the rental property. The bankruptcy trustee approved her payment
plan, which she began paying in July 2010 and continues to do so each month. She has
established a track record for resolving her past-due debts with the bankruptcy court
and for paying her current expenses. Her debts listed in the SOR are resolved. She has
done everything that she can to resolve her financial problems for the last three years.
Her financial problems do not reflect on her reliability, trustworthiness, and
dependability. Her past financial problems are resolved and under control. She lives
within her current income and pays her bills. She has mitigated the Government’s
security concerns under AG ¶¶ 20(a), 20(c), and 20(d).  
8
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 an 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. The decision to grant or
deny a security clearance requires a careful weighing of all relevant factors, both
favorable and unfavorable. In so doing, an administrative judge must review all the
evidence of record, not a single item in isolation, to determine if a security concern is
established and then whether it is mitigated. A determination of an applicant’s eligibility
for a security clearance should not be made as punishment for specific past conduct,
but on a reasonable and careful evaluation of all the evidence of record to decide if a
nexus exists between established facts and a legitimate security concern. 
The evidence in support of granting a security clearance to Applicant under the
whole-person concept is more substantial than the evidence in support of denial. In
reaching a conclusion, I considered the potentially disqualifying and mitigating
conditions in light of all the facts and circumstances surrounding this case. In 1994,
Applicant’s husband lost his job, and her job appeared in jeopardy. Their rental income
from one rental property had ended, and she was pregnant. These factors created
financial problems beyond her control, which she resolved by filing for Chapter 7
bankruptcy. Following the discharge of her debts in 1994, Applicant managed her
income and debts for the next 15 years. Since she is the only wage earner in the family,
her job loss in 2007 during the economic decline eventually created significant financial
problems for her. Although she found employment within two months of her layoff, she
needed to move many miles from her home to work. Initially, she rented her home when
she moved. For more than a year, she managed her bills. When the rental income
stopped after the abrupt departure of the second tenant, she immediately took steps to
resolve her mounting financial difficulties. She was able to reduce the interest rate on
her credit cards, but could not modify her mortgage loan on the rental house because
the bank would not work with her. Her efforts to sell the house through a short-sale
failed because the second mortgage holder would not cooperate. The source of her
financial problems was again largely beyond her control. (See AG & 2(a)(2).) Applicant
9
never sat back when her financial problems developed. She took numerous steps in
2009 to resolve her problems and manage her expenses. She ultimately filed for
Chapter 13 bankruptcy protection and is compliant with her payment plan. She has
learned to manage her finances. Most significantly, she has taken affirmative action to
pay or resolve most of the delinquent debts raising security concerns. (See AG &
2(a)(6).) Thus, her debts cannot be a source of improper pressure or duress. Of course,
the issue is not simply whether all her debts are paid: it is whether her financial
circumstances raise concerns about her fitness to hold a security clearance. It does not.
Overall, the record evidence leaves me without questions or doubts as to
Applicant’s eligibility and suitability for a security clearance. For all these reasons, I
conclude Applicant mitigated the security concerns arising from her finances under
Guideline F.
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
Subparagraph 1.a: For Applicant
Subparagraph 1.b: For Applicant
Subparagraph 1.c: For Applicant
Subparagraph 1.d: For Applicant
Conclusion
In light of all of the circumstances presented by the record in this case, it is
clearly consistent with the national interest to grant Applicant eligibility for a security
clearance.  Eligibility for access to classified information is granted.
                                                              
MARY E. HENRY
Administrative Judge