DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
--------------------------------- )       ISCR Case No. 11-05910
)
Applicant for Security Clearance )
Appearances
For Government: Jeff A. Nagel, Department Counsel
For Applicant: Pro se
October 24, 2012
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Decision
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LOKEY ANDERSON, Darlene D., Administrative Judge:
The Applicant submitted his Electronic Questionnaires for Investigations
Processing (e-QIP) on August 26, 2010.  (Government Exhibit 2.)  On May 8, 2012, 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 June 27, 2012, and he requested a
hearing before a DOHA Administrative Judge.  This case was assigned to the
undersigned Administrative Judge on August 3, 2012.  A notice of hearing was issued
on August 8, 2012, scheduling the hearing for September 20, 2012.  On September 12,
2012, the hearing was rescheduled for September 18, 2012.  The Government
presented six exhibits, referred to as Government Exhibits 1 through 6, which were
admitted without objection.  The Applicant presented five exhibits, referred to as
Applicant’s Exhibits A through E which were also admitted without objection.  The
Applicant also testified on his own behalf.  The record remained open until close of
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business on September 25, 2012, to allow the Applicant to submit additional
documentation. The Applicant submitted two Post-Hearing Exhibits, consisting of
twenty-two pages, referred to as Applicant’s Post-Hearing Exhibits A and B,  which were
admitted without objection.  The official transcript (Tr.) was received on September 26,
2012.  Based upon a review of the pleadings, exhibits, and testimony, eligibility for
access to classified information is denied.
 FINDINGS OF FACT
The Applicant is 54 years old, and married with two children.  He has a
Bachelor’s Degree in Web Technology and Computer Arts.  He is employed with a
defense contractor as a Web Technologist 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 admitted allegations 1(a)., 1(b)., and 1(e)., as set forth in the SOR.
He denies allegations 1(c)., and 1(d).  Credit Reports of the Applicant dated October 28,
2000; September 1, 2010; January 28, 2012; and September 15, 2012; reflect that the
Applicant is indebted to a number of creditors set forth in the SOR, in an amount totaling
at least $30,000.  (Government Exhibits 1, 3, 4 and 6.)  
The Applicant began working for a defense contractor in June 2000, and first
obtained a security clearance at the time.  He has never received a security violation or
infraction.  
Prior to 2009, the Applicant had good credit and he paid his bills on time.  His
financial problems began in 2009.  (Tr. p. 34.)  He explained that when his wife lost her
job, she had been earning $55,000 annually, and their credit was overextended.  She
was unemployed for almost two years.  By 2010, the Applicant had problems making
their credit card payments, and contacted a law firm that he saw on television for
assistance.  It was recommended that he file for bankruptcy.  (Tr. p. 38.)  In preparation
for bankruptcy, he followed their legal advice, stopped paying their credit card bills and
stopped using credit.  The Applicant then applied for a loan modification on his home.  
The law firm then recommended that the Applicant stop the bankruptcy
proceedings so not to jeopardize their loan modification.  (Tr. p. 40.)  The law firm then
went bankrupt and could no longer provide assistance to the Applicant, even though the
Applicant had paid them $3,000 for their services and the filing fee of $325.  The
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Applicant was returned $500 of his fee.  He decided to wait to hear from his creditors
and negotiate them one by one on his own.  (Tr. p. 40.)  The Applicant claims that in
2010, he paid off seven of his creditors that are not alleged in the SOR.  (Tr. p. 41.)  He
used money he received from an inheritance from his aunt.  His mother then passed
away and he received more money that he used to pay debts.
The following delinquent debts set forth in the SOR became owing and the
Applicant has not had the money to pay the debts;  
1.(a) The Applicant is indebted to a bank for a delinquent credit card in the
amount of $13,000.  The Applicant testified that the bank has filed suit against the
Applicant and is seeking a judgment.  The matter is scheduled for hearing for December
2012.  The Applicant testified that there is a good chance that he may file bankruptcy
and discharge the debt.  (Tr. p. 45.)       
1.(b) The Applicant is indebted to a bank for a delinquent credit card in the
amount of $16,000.  The bank has filed suit against the Applicant and is seeking a
judgment.  The Applicant testified that he may file bankruptcy and discharge the debt.
(Tr. p. 47.)
1.(c) The Applicant was delinquently indebted to a creditor for a student loan for
his daughter in the amount of $20,000.  The Applicant was the originator on the loan
and his daughter was the co-signor.  The debt has been placed into deferment and is no
longer delinquent.  (Applicant’s Exhibit E.)  
1.(d) The Applicant’s credit report indicated a delinquent debt to bank for a
mortgage loan in the amount of $81,050.  The Applicant contends that the bank made a
mistake as it should not have been reported as delinquent on his credit report when he
was in the midst of a mortgage modification and was making payments according to
bank agreement.  A letter from the creditor confirms the error.  (Tr. pp. 53 - 54 and
Applicant’s Exhibit B.)  
1.(e) The Applicant is  indebted to a creditor for a delinquent credit card in the
amount of $1,071.  The debt remains owing.  (Tr. p. 62.)
The Applicant testified that he is current on his regular monthly expenses and is
living within his means.  At the end of the month, he has approximately $400 left,  but
somehow it is used and he has no money for savings.  He has about $90,000 in his
401(k) and other investments.  (Tr. pp. 65 -66.)
The Applicant indicates that his home modification was approved and although
his payments actually increased, he is paying more towards the principal.  (Tr. p. 69.)
He also learned that he owes about $15,000 on a delinquent credit card that was not
alleged in the SOR.  About a month ago the Applicant contacted a bankruptcy attorney
and retained him to file bankruptcy on his behalf that is planned for December 2012.
(Applicant’s Post-Hearing Exhibit B.)  He borrowed $2,400 from his 401(k) to pay the
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legal fees.  The Applicant is not sure whether it will be a Chapter 7 or a Chapter 13.  (Tr.
p. 76.)  The Applicant contends that he has made a lifestyle change.  He states that he
has learned a lesson and that he will never financially overextend himself again.  (Tr. p.
74.)
Applicant’s performance appraisals for the periods from February 2009 to March
2010, February 2010 to March 2011, and February 2011 to March 2012, reflects overall
ratings that the Applicant  “consistently meets” the expectations of the job.  (Applicant’s
Post-Hearing Exhibit A.)   
Five letters of recommendation submitted on behalf of the Applicant by his
current supervisor, past supervisor, a family friend, and two coworkers indicate that they
consider the Applicant to be honest, trustworthy, and a team player.  He is considered
to be a gracious and kind person who is a good and loyal citizen of the United States.
(Applicant’s Exhibit A.)     
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.
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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).  The 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 circumstances largely beyond his control started his
financial problems.  In 2008, his wife lost her job and they had overextended
themselves financially with excessive credit card debt.  In 2010, they hired a law firm to
assist them in resolving their debts, but this was not successful as the firm went
bankrupt.  More recently, the Applicant’s wife has been working and the Applicant
inherited money from family that he has used to pay some of his debts.  However, none
of the debts listed in the SOR were paid and he remains excessively indebted.  He
currently owes approximately $30,000 in delinquent debt alleged in the SOR.  He has
also recently learned of another outstanding credit card debt owed to a creditor in the
amount of $15,000.  He states that he has made a lifestyle change, and plans to file
bankruptcy to discharge his debts in the future.        
                     
The Applicant has not done enough to show that he is fiscally responsible.
Although he seems to understand the importance of paying his bills on time, he simply
has not been able to do so.  At this time, there is insufficient evidence of financial
rehabilitation.  The Applicant has not demonstrated that he can properly handle his
financial affairs or that he is fiscally responsible. 
Under the particular circumstances of this case, the Applicant has not met his
burden of proving that he is worthy of a security clearance.  Admittedly, the law firm he
hired in 2010 to assist him in resolving his debts did delay his ability to resolve his
indebtedness when they went bankrupt.  Sufficient time has passed that would have
given him the opportunity to address his delinquent debts more efficiently.  Although he
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has recently hired an attorney to file bankruptcy in December 2012, his financial
situation remains dismal.  Thus, it cannot be said that he has made a good-faith effort to
resolve his past-due indebtedness.  He has not shown that he is or has been
reasonably, responsibly or prudently addressing his financial situation.  Assuming that
he continues to work to resolve his debts, and then shows that he has not acquired any
new debt that he is unable to pay, he may be eligible for a security clearance in the
future.  However, not at this time.  Considering all of the evidence, the Applicant has not
introduced persuasive evidence in rebuttal, explanation or mitigation that is sufficient to
overcome the Government's case. 
Under Guideline F (Financial Considerations), Disqualifying Conditions 19.(a)
inability or unwillingness to satisfy debts; and 19.(c) a history of not meeting financial
obligations, apply.  Mitigating Condition 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 applies, but is not
controlling.  Accordingly, I find against 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 poor judgement, untrustworthiness,
unreliability, a lack of candor, an unwillingness to comply with rules and regulations,
and/or other characteristics indicating that the person may not properly safeguard
classified information.
  
I have considered all of the evidence presented.  It does not 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 not
overcome the Government's case opposing his request for a security clearance.
Accordingly, the evidence supports a finding against 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: Against the Applicant.
        Subpara.  1.a.: Against the Applicant.
    Subpara.  1.b.: Against the Applicant.
      Subpara.  1.c.: For the Applicant.
    Subpara.  1.d.: For the Applicant.
    Subpara.  1.e.: Against the Applicant
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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 a security clearance for
the Applicant.
  Darlene Lokey Anderson
Administrative Judge