DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
---------------------------------- )      ISCR Case No. 11-07013
)
Applicant for Security Clearance )
Appearances
For Government: Melvin A. Howry, Department Counsel
For Applicant: Barry M. Sax, Attorney At Law
November 29, 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 June 7, 2010.  (Government Exhibit 2.)  On July 11, 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 August 2, 2012, and he requested an
administrative hearing before a DOHA Administrative Judge.  This case was assigned
to the undersigned Administrative Judge on September 7, 2012.  A notice of hearing
was issued on September 11, 2012, and the hearing was scheduled for October 17,
2012.  At the hearing the Government presented 9 exhibits, referred to as Government
Exhibits 1 through 9, which were admitted without objection.  The Applicant presented
nine exhibits, referred to as Applicant’s Exhibits A through I, which were also admitted
into evidence.  He also testified on his own behalf.  The official transcript (Tr.) was
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received on October 25, 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 54 years old and married.  He has a Master’s Degree.  He is
employed with a defense contractor as a Senior Program Manager 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 each of the allegations set forth in the SOR under this
guideline.  (See Applicant’s Answer to SOR.)  Credit Reports of the Applicant dated
January 30, 1997; June 19, 2010; February 29, 2010; and October 9, 2012; reflect that
the Applicant was at one time indebted to each of the creditors set forth in the SOR, in
an amount totaling about $73,000.  (Government Exhibits 1, 3, 4 and 9.)
The Applicant served in the United States Air Force from 1976 to 1980.  He then
joined the Air National Guard where he served for about five years.  Since then, he has
worked various jobs.  He has worked off and on in the defense industry, which was
interrupted by periods of lay-offs.  He also went to school and completed two college
degrees.  He worked part-time as a financial planner for about two years before he
decided in January 2008, to start his own financial planning business and work full time.
The business had no sustained success, and in January 2009, he started having
financial problems and fell behind on his credit card bills.  For seventeen months, the
Applicant was unable to find employment.  During this period, he accumulated
excessive credit card debt that he was unable to pay.  His credit card accounts were
sent to collection and then charged off.    
In June 2010, he began working for his current employer.  He contacted a credit
counseling agency to assist him in resolving his delinquent debts.  (Applicant’s Exhibit
I.)  Since then, he has paid his bills and resolved his past due indebtedness.  A debt
owed to a bank for an account that had been charged off in the amount of $14,928 has
been settled.  (Applicant’s Exhibit A.)  A debt owed to a bank for an account that has
been charged off in the amount of $12,387.00 has been settled.  (Applicant’s Exhibit B.)
A debt owed to a bank for an account that had been placed into collection in the amount
of $20,072 has been settled.  (Applicant’s Exhibit C.)  A debt placed into collections in
the amount of $16,428 has been settled.  (Applicant’s Exhibit D.)  Each of the debts
listed in the SOR have either been paid in full or resolved through a negotiated
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settlement for less than what was owed.  (Government Exhibit 5.)  Applicant’s most
recent credit report dated October 11, 2012, reflects these pay-offs or settlements.
(Applicant’s Exhibit G.)  
His personal financial statement dated April 11, 2012, indicates that after paying
all of his monthly expenses and bills he has about $961.00 in discretionary monies left
at the end of the month.  (Applicant’s Exhibit E.)    His annual salary is now $112,000.
His wife earns about $30,000 annually.  The Applicant has now paid off all of his
delinquent debts of the past.  He has incurred no new debts and is current with all of his
bills.  He has only one credit card that he uses for emergencies.  He is also saving
money in a 401(k) and currently has about $39,000.  He is downsizing his lifestyle to
prevent any future problems. 
Numerous letters of recommendation from the Applicant’s supervisor, family,
coworkers and friends attest to his professionalism, conscientiousness, high moral
character, integrity, and strong work ethic.  He is considered honest, trustworthy,
dedicated and reliable and is recommended by all for a security clearance.  (Applicant’s
Exhibit F.)    
Applicant has received a number of awards and certificates of achievement for
his excellent work product.  (Applicant’s Exhibit H.)
   
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. 
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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.
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
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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.”
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 the Applicant became delinquently indebted only after
his own business failed and he was unemployed for a year and a half.  Since he gained
employment in June 2010, he earns sufficient income to pay his bills and has promptly
resolved his past due indebtedness.        
This was an isolated incident that will not recur since the Applicant is now
working full time and understands that he must remain fiscally responsible if he is to
hold a security clearance.  He has made a good-faith effort to resolve his past due
indebtedness.  He has resolved his delinquent debts.  He has not incurred any new debt
that he cannot afford to pay.  He has clearly demonstrated that he can properly handle
his financial affairs.  There is clear evidence of financial rehabilitation.  Considering all of
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the evidence, the Applicant has 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.  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.  I have considered his favorable character
reference letters, current employment awards, as well as his past military career.
(Applicant’s Exhibit E.)  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.  It mitigates 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.
    
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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