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DEPARTMENT OF DEFENSE 
DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
 
In the matter of: ) 
 ) 
 [Redacted] )  ISCR Case No. 11-08559 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Stephanie C. Hess, Esq., Department Counsel 
For Applicant: Pro se 
 
 
______________ 
 
Decision 
______________ 
 
 
FOREMAN, LeRoy F., Administrative Judge: 
 
This case involves security concerns raised under Guideline F (Financial 
Considerations). Eligibility for access to classified information is denied. 
 
Statement of the Case 
 
Applicant submitted a security clearance application on March 15, 2011. On July 
23, 2012, the Defense Office of Hearings and Appeals (DOHA) notified him that it was 
unable to find that it was clearly consistent with the national interest to grant him access 
to classified information, and it recommended that his case be submitted to an 
administrative judge for a determination whether to grant or deny his application. DOHA 
set forth the basis for its action in a Statement of Reasons (SOR), citing security 
concerns under Guideline F. DOHA acted 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) implemented by the Department of Defense on September 1, 2006.  
 
 
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 Applicant received the SOR on July 27, 2012; answered it on August 15, 2012; 
and requested a hearing before an administrative judge. DOHA received the request on 
August 16, 2012. Department Counsel was ready to proceed on September 18, 2012, 
and the case was assigned to me on September 20, 2012. DOHA issued a notice of 
hearing on September 28, 2012, scheduling it for October 23, 2012. I convened the 
hearing as scheduled. Government Exhibits (GX) 1 through 4 were admitted in evidence 
without objection. Applicant testified, presented the testimony of one witness, and 
submitted Applicant’s Exhibits (AX) A through D, which were admitted without objection. 
DOHA received the transcript (Tr.) on November 1, 2012. 
 
 I kept the record open until November 9, 2012, to enable Applicant to submit 
additional documentary evidence. At his request, I extended the deadline to November 
16, 2012. He timely submitted AX E through H, which were admitted without objection. 
 
Findings of Fact 
 
 In his answer to the SOR, Applicant admitted the allegations in SOR ¶¶ 1.a-1.c, 
1.e-1.h, and 1.j. He denied the allegations in SOR ¶¶ 1.d, 1.i, and 1.k. His admissions in 
his answer and at the hearing are incorporated in my findings of fact.  
 
 Applicant is a 47-year-old structural inspector employed by a defense contractor 
since September 2009. He has never held a security clearance. 
 
 Applicant married in September 1995 and divorced in March 2011. He and his 
ex-wife have four adult children. (Tr. 44.) 
 
 Applicant graduated from high school in June 1983. (GX 1 at 11.) His work 
history after high school is not clear, but the record reflects that he had accumulated 
numerous debts by early 1995. He lost his full-time job with a cable company after his 
driver’s license was suspended in August 1995 for failure to pay damages resulting from 
a traffic accident, but he found another job working in a warehouse. (GX 1 at 30; Tr. 44-
45, 62-64.)  
 
Applicant filed a Chapter 13 bankruptcy petition in August 1995. He made one or 
two payments to the bankruptcy trustee, after which he was laid off from his job. His 
bankruptcy was dismissed because he could not continue to make the required 
payments. (GX 2 at 89-90.1) This bankruptcy is alleged in SOR ¶ 1.a. 
 
 The economic impact of Applicant’s loss of employment was compounded by 
fines imposed for traffic offenses. He was cited for driving on a suspended license in 
November 1995. He was cited in November 1996 for a seat belt violation and driving on 
a suspended license. He was cited in July 1997 for speeding. He was fined for each of 
these violations, but the record does not reflect the amounts of the fines. (GX 1 at 30.) 
 
                                                          
1 The page numbers in GX 2 begin with page 80. 
 
 
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 Applicant began working as a tile installer around 1998. (Tr. 46.) He was hired by 
a family friend who had known him since childhood and owned a tile and countertop 
business. This former employer testified at the hearing and described Applicant as 
honest, trustworthy, and a person of integrity. Applicant’s former employer later became 
pastor of a church and he entrusted Applicant with several duties, including the handling 
of church funds. (Tr. 26-28.) As Applicant’s pastor, he counseled him about his marriage 
and his financial problems. He told Applicant that he needed to establish a budget and 
take control of his finances. (Tr. 30.) 
 
Applicant filed a Chapter 7 bankruptcy petition in October 2004 and received a 
discharge in January 2005. He attributed this bankruptcy to periods of unemployment 
and poor financial decisions such as purchasing luxury automobiles. (GX 2 at 90; GX 3 
at 1.) This bankruptcy is alleged in SOR ¶ 1.b. 
 
 Applicant started his own tile and countertop business in June 2006. (GX 1 at 14; 
Tr. 46.) As a result of the downturn in the construction business in 2008-2009, his 
business failed and several business-related and personal debts became delinquent.  
 
 Applicant was cited for speeding, tailgating, making an illegal turn, and driving on 
a suspended license in January 2008; and driving with an expired inspection sticker in 
June 2009. He paid a fine between $100 and $300 for the January 2008 incident and a 
$60 fine for the expired inspection sticker, further exacerbating his financial difficulties. 
(GX 1 at 29-30; GX 2 at 96-98.) 
 
The judgment for $6,150 alleged in SOR ¶ 1.c was the result of a car 
repossession. Applicant contacted the creditor one time, but the creditor was unwilling 
to accept a payment agreement. (Tr. 48-49.) The judgment is unsatisfied. (GX 3 at 1.) 
 
 The delinquent $873 medical debt alleged in SOR ¶ 1.d was a copayment for a 
medical bill incurred by Appellant’s ex-wife. It was referred for collection in September 
2010, about six months before their divorce and while she was still included in 
Applicant’s medical plan. It is unresolved. (Tr. 50-52; GX 3 at 1.) 
 
 In September 2012, Applicant received a settlement offer for the $157 satellite 
television bill alleged in SOR ¶ 1.e, conditioned on making one payment of 52% of the 
amount due or paying the full amount due in three consecutive payments. (AX E.) In 
November 2012, he sent this creditor a money order for $20. (AX G.)  
 
 Applicant testified that he believed the $196 cell phone bill alleged in SOR ¶ 1.f 
was included in his Chapter 7 bankruptcy. (Tr. 53.) He did not provide documentary 
evidence supporting his belief. His March 2011 credit report reflected that the account 
was referred for collection in August 2010, after his Chapter 7 bankruptcy. (GX 4 at 8.) 
 
 Applicant testified that he believed he had settled the $105 collection account 
alleged in SOR ¶ 1.g. (Tr. 54.) He did not provide documentation of a settlement, and 
his September 2012 credit report reflected that the debt was unpaid (GX 3 at 1.)  
 
4 
 
 
 Applicant received a collection notice in October 2012 for the $280 telephone bill 
alleged in SOR ¶ 1.h. (AX F.) In November 2012, he sent the collection agency a $20 
money order. (AX H.) 
 
 The $10,445 car repossession deficiency alleged in SOR ¶ 1.i is being collected 
by garnishment of Applicant’s pay. As of the date of the hearing, the garnishment had 
reduced the outstanding debt by $5,635. (AX D.) 
 
 Applicant testified that the delinquent $885 electric bill alleged in SOR ¶ 1.j was 
incurred by his ex-wife before they were divorced. (Tr. 56-58.) The March 2011 credit 
report indicates that the account was solely in Applicant’s name and was referred for 
collection in December 2010. (GX 4 at 8.) Applicant has not contacted the creditor. The 
debt is unresolved. (Tr. 57-58.) 
 
 Applicant testified that the delinquent $401 cell phone bill alleged in SOR ¶ 1.k 
was incurred by his ex-wife. The March 2011 credit report reflects that the account was 
solely in Applicant’s name. (GX 4 at 10.) He has not contacted the creditor or disputed 
the debt. (Tr. 58-59.) 
 
 When Applicant was interviewed by a security investigator in April 2011, he had 
not yet filed his federal income tax return for 2007, but he expected to receive a refund 
when he filed. (GX 2 at 96.) He also failed to file his state income tax return, resulting in 
a state tax lien on his pay. The state tax lien has been satisfied. (AX D.) Applicant 
indicated in his hearing testimony that he had filed his federal return for 2007. (Tr. 36.)  
 
 Applicant has satisfied several debts not alleged in the SOR. A car loan referred 
for collection was paid in August 2006. (AX A.) A $354 judgment obtained by a furniture 
store was satisfied in July 2008. (GX 4 at 5.) A $4,021 judgment based on a car 
repossession was satisfied in March 2011. (GX 3 at 1.) He resolved a $218 delinquent 
credit account in March 2012. (GX 2 at 88; GX 3 at 2.) He made a $146 payment to a 
collection agency in July 2012 on a debt for $290, but his documentary evidence does 
not identify the original creditor. (AX C.)  
 
 Applicant’s pay vouchers for the past two years reflect that his gross weekly pay 
during 2011 was usually between $655 and $683, depending on overtime. His net pay 
usually was around $471. During one week in March 2011 he received no pay because 
of a state tax lien. He received a pay raise in 2012 , and for several weeks his gross pay 
was more than $1,000. Weekly creditor garnishments ranged from $145 to $241, and 
his average net pay was between $341 and $591. (AX D.) He submitted a personal 
financial statement in July 2012, reflecting monthly income of $1,456, expenses of 
$1,350, and no debt payments. (GX 2 at 83.) He has no retirement accounts, savings 
accounts, or emergency funds. (Tr. 65.) He does not own a car, and he uses public 
transportation to get to work. (Tr. 61-62.) 
 
 
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Policies 
 
 “[N]o one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 
484 U.S. 518, 528 (1988). As Commander in Chief, the President has the authority to 
“control access to information bearing on national security and to determine whether an 
individual is sufficiently trustworthy to have access to such information.” Id. at 527. The 
President has authorized the Secretary of Defense or his designee to grant applicants 
eligibility for access to classified information “only upon a finding that it is clearly 
consistent with the national interest to do so.” Exec. Or. 10865, Safeguarding Classified 
Information within Industry § 2 (Feb. 20, 1960), as amended.   
 
Eligibility for a security clearance is predicated upon the applicant meeting the 
criteria contained in the AG. These guidelines are not inflexible rules of law. Instead, 
recognizing the complexities of human behavior, an administrative judge applies these 
guidelines in conjunction with an evaluation of the whole person. An administrative 
judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. An 
administrative judge must consider all available, reliable information about the person, 
past and present, favorable and unfavorable. 
 
 The Government reposes a high degree of trust and confidence in persons with 
access to classified information. This relationship transcends normal duty hours and 
endures throughout off-duty hours. Decisions include, by necessity, consideration of the 
possible risk that the applicant may deliberately or inadvertently fail to safeguard 
classified information. Such decisions entail a certain degree of legally permissible 
extrapolation about potential, rather than actual, risk of compromise of classified 
information. 
 
Clearance decisions must be made “in terms of the national interest and shall in 
no sense be a determination as to the loyalty of the applicant concerned.”  See Exec. 
Or. 10865 § 7. Thus, a decision to deny a security clearance is merely an indication the 
applicant has not met the strict guidelines the President and the Secretary of Defense 
have established for issuing a clearance. 
 
 Initially, the Government must establish, by substantial evidence, conditions in 
the personal or professional history of the applicant that may disqualify the applicant 
from being eligible for access to classified information. The Government has the burden 
of establishing controverted facts alleged in the SOR. See Egan, 484 U.S. at 531.  
“Substantial evidence” is “more than a scintilla but less than a preponderance.”  See v. 
Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). 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. 92-1106 
at 3, 1993 WL 545051 at *3 (App. Bd. Oct. 7, 1993).   
 
 Once the Government establishes a disqualifying condition by substantial 
evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the 
facts. Directive ¶ E3.1.15. An applicant has the burden of proving a mitigating condition, 
 
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and the burden of disproving it never shifts to the Government. See ISCR Case No. 02-
31154 at 5 (App. Bd. Sep. 22, 2005).  
 
An applicant “has the ultimate burden of demonstrating that it is clearly consistent 
with the national interest to grant or continue his security clearance.” ISCR Case No. 
01-20700 at 3 (App. Bd. Dec. 19, 2002). “[S]ecurity clearance determinations should err, 
if they must, on the side of denials.” Egan, 484 U.S. at 531; see AG ¶ 2(b).  
 
Analysis 
 
Guideline F, Financial Considerations 
 
 The SOR alleges that Applicant filed a petition for Chapter 13 bankruptcy in 
1995, which was dismissed for failure to make the requirement payments (SOR ¶ 1.a). It 
also alleges that he filed for Chapter 7 bankruptcy in October 2004 and received a 
discharge in January 2005 (SOR ¶ 1.b). Finally, it alleges nine delinquent debts totaling 
about $19,492. 
 
The concern under this guideline 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. 
 
 This concern is broader than the possibility that an applicant might knowingly 
compromise classified information in order to raise money. It encompasses concerns 
about an appellant’s self-control, judgment, and other qualities essential to protecting 
classified information. An individual who is financially irresponsible may also be 
irresponsible, unconcerned, or negligent in handling and safeguarding classified 
information. See ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012). 
 
 The evidence establishes the following disqualifying conditions under this 
guideline:  
 
AG ¶ 19(a): inability or unwillingness to satisfy debts;  
 
AG ¶ 19(c): a history of not meeting financial obligations; and 
 
AG ¶ 19(e): consistent spending beyond one’s means, which may be 
indicated by excessive indebtedness, significant negative cash flow, high 
debt-to-income ratio, and/or other financial analysis. 
 
 
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 Security concerns based on financial considerations may be mitigated by any of 
the following conditions: 
 
AG ¶ 20(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; 
 
AG ¶ 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; 
 
AG ¶ 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; 
 
AG ¶ 20(d): the individual initiated a good-faith effort to repay overdue 
creditors or otherwise resolve debts;   
 
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; or 
 
AG ¶ 20(f): the affluence resulted from a legal source of income. 
 
 AG ¶ 20(a) is not established. Applicant’s history of delinquent debts spans 17 
years, and he still has numerous unresolved debts. His debts were not incurred under 
circumstances making them unlikely to recur.  
 
 The first prong of AG ¶ 20(b) is established, because Applicant has encountered 
circumstances beyond his control, i.e., repeated periods of unemployment, a business 
failure caused by a downturn in the construction business, and a marital breakup. He 
was unable to make the required payments for his Chapter 13 bankruptcy because he 
was laid off shortly after his payment plan was approved. However, the second prong 
(responsible conduct) is not fully established. His repeated traffic violations resulted in 
fines that exacerbated his precarious financial situation. His Chapter 7 bankruptcy was 
due to poor financial decisions, such the purchase of a luxury car, as well as his periods 
of unemployment. He failed to timely file his tax returns, resulting in tax liens on his pay.  
 
 AG ¶ 20(c) is not fully established. Applicant received some general financial 
advice from his pastor, legal advice regarding his two bankruptcies, and likely has 
received mandatory financial counseling in connection with his bankruptcies. However, 
the record does not reflect “clear indications” that his financial situation is under control. 
 
 
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 AG ¶ 20(d) is partially established, because Applicant has resolved several 
delinquent debts that were not alleged in the SOR. He maintained contact with the 
creditors alleged in SOR ¶¶ 1.e and 1.h and demonstrated good faith by making $20 
payments on each of them before the record closed. On the other hand, the payments 
on the $10,445 judgment alleged in SOR ¶ 1.i were the results of garnishment actions 
initiated by his creditors rather than voluntary actions by Applicant.  
 
 AG ¶¶ 20(e) and (f) are not applicable because Applicant has not provided 
documentary proof of a basis to dispute any of the debts alleged in the SOR, and 
unexplained affluence is not involved in this case. 
 
Whole-Person Concept 
 
 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. In applying the whole-
person concept, an administrative judge must evaluate an applicant’s eligibility for a 
security clearance by considering the totality of the applicant’s conduct and all relevant 
circumstances. An 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 have incorporated my comments under Guideline F in my whole-person 
analysis. Some of the factors in AG ¶ 2(a) were addressed under that guideline, but 
some warrant additional comment.  
 
 Applicant has experienced numerous financial setbacks and a recent marital 
breakup. He was candid and sincere at the hearing. He has worked for his current 
employer for more than three years and he has received pay raises. He resolved 
several delinquent debts that were not alleged in the SOR. He appears to have matured 
and is living frugally. On the other hand, he has a long record of irresponsible behavior, 
including poor financial decisions, multiple traffic offenses, and failure to timely file his 
tax returns.2 He did not present any evidence of his reputation or duty performance in 
                                                          
2 Applicant’s traffic violations and tax delinquencies were not alleged in the SOR. Conduct not alleged in 
the SOR may be considered to assess an applicant=s credibility; to decide whether a particular 
adjudicative guideline is applicable; to evaluate evidence of extenuation, mitigation, or changed 
circumstances; to consider whether an applicant has demonstrated successful rehabilitation; or as part of 
a whole-person analysis. ISCR Case No. 03-20327 at 4 (App. Bd. Oct. 26, 2006). 
 
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his current job. He has no savings or emergency funds for unexpected expenses. He 
has not yet established a consistent track record of responsible behavior 
 
 A security clearance adjudication is aimed at evaluating an applicant’s judgment, 
reliability, and trustworthiness. It is not a debt-collection procedure. ISCR Case No. 09-
02160 (App. Bd. Jun. 21, 2010.) An applicant is not required, as a matter of law, to 
establish resolution of every debt alleged in the SOR. An applicant need only establish 
a plan to resolve financial problems and take significant actions to implement the plan. 
There is no requirement that an applicant make payments on all delinquent debts 
simultaneously, nor is there a requirement that the debts alleged in the SOR be paid 
first. See ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008). Applicant is living 
paycheck to paycheck. He credibly testified that he intends to resolve his debts, but his 
intentions have not yet evolved into a reasonable, coherent, and plausible financial plan.  
 
 After weighing the disqualifying and mitigating conditions under Guideline F, and 
evaluating all the evidence in the context of the whole person, I conclude Applicant has 
not mitigated the security concerns based on financial considerations. Accordingly, I 
conclude he has not carried his burden of showing that it is clearly consistent with the 
national interest to grant him eligibility for access to classified information. 
 
Formal Findings 
 
 I make the following formal findings on the allegations in the SOR: 
 
 Paragraph 1, Guideline F (Financial Considerations): AGAINST APPLICANT 
 
  Subparagraph 1.a:     For Applicant 
  Subparagraph 1.b-1.d:    Against Applicant 
  Subparagraph 1.e:     For Applicant 
  Subparagraphs 1.f-1.g:    Against Applicant 
  Subparagraph 1.h:     For Applicant 
  Subparagraphs 1.i-1.k:    Against Applicant 
 
Conclusion 
 
 I conclude that 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. 
 
 
 
 
LeRoy F. Foreman 
Administrative Judge