KEYWORD: Guideline F; Guideline E
DIGEST: The Judge made sustainable findings that Applicant had a lengthy and serious history
of not meeting financial obligations including the purchase of a $997,000 house and a $40,000
piano.. Adverse decision affirmed
CASENO: 12-01185.a1
DATE: 03/18/2013
DATE: March 18, 2013
In Re:
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Applicant for Security Clearance
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ISCR Case No. 12-01185
APPEAL BOARD DECISION
APPEARANCES
FOR GOVERNMENT
James B. Norman, Esq., Chief Department Counsel
FOR APPLICANT
Pro se
1The Judge made a favorable formal finding under Guideline E.  This finding is not at issue on appeal.
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The Department of Defense (DoD) declined to grant Applicant a security  clearance.  On
May 2, 2012, DoD issued a statement of reasons (SOR) advising Applicant of the basis for that
decision—security concerns raised under Guideline F (Financial Considerations) and Guideline E
(Personal Conduct) of Department of Defense Directive 5220.6 (Jan. 2, 1992, as amended)
(Directive).  Applicant requested a hearing.  On January 7, 2013, after the hearing, Defense Office
of Hearings and Appeals (DOHA)Administrative Judge Edward W. Loughran denied Applicant’s
request for a security clearance.  Applicant timely appealed pursuant to the Directive ¶¶ E3.1.28 and
E3.1.30.1
Applicant raises the following issue on appeal: whether the Judge’s decision is arbitrary,
capricious, or contrary to law.  For the following reasons, the Board affirms the Judge’s unfavorable
decision. 
The Judge made the following findings of fact: Applicant is 46 years old.  Applicant started
a limited liability company (LLC) to do defense contracts in about 2004.  Applicant used business
loans and lines of credit for the company.  In 2006, Applicant bought a house for $997,000 in a city
where the real estate market was booming.  He financed $900,000 with two loans from the same
bank.  When the real estate market crashed, several creditors closed or lowered the lines of credit
Applicant used for LLC.  The company was awarded a government contract in 2008.  The contract
gave the government the right to do business with LLC, but did not guarantee a set amount of work.
LLC did not receive enough work to remain viable.  Applicant used his personal credit to pay
company expenses.  
Applicant was hired by another company in 2009.  Applicant still had his company.  His
employer felt it would be a conflict of interest for Applicant to work for both.  Applicant was hired
on the condition that he commit to cease working at his own business.  Applicant gradually closed
the physical plant of his company, but he did not terminate it as a business entity.  In May 2010, the
U.S. Small Business Administration (SBA) informed Applicant of possible defense contracting work
for his business.  Applicant did not withhold this information from his employer, and he invited his
employer to attend a meeting on the potential contract.  The meeting never took place.  In June 2010,
Applicant’s employer terminated him for violation of his agreement to give up his work with his
own company.  Applicant was unemployed from June 2012 until August 2010.  He worked for
another company from August 2010 until he was hired by his current employer in February 2011.
Applicant’s company is still in existence.  He owes the state $10,000 for fees to the state for LLC.
The SOR alleges six delinquent debts with balances totaling about $194,000 and a past-due
second mortgage.  Many of these were business debts.  Applicant is making payments on a number
of them, but has not negotiated a settlement with the creditor for any of them.  One debt for $40,000
was for the purchase of a grand piano Applicant stated was an investment.  The piano was sold for
$20,000, and the balance on the debt was $31,996.  
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Applicant resolved his delinquent mortgage loans through a short sale of his house.
Applicant has not received any formal financial counseling.  He has paid, or entered into agreements
to pay, other debts not alleged in the SOR.  He is working overseas and earns a good salary.  He
stated that he plans to settle his delinquent debts.  
The Judge reached the following conclusions: Applicant accumulated a number of delinquent
debts and was unable or unwilling to pay his financial obligations.  He spent beyond his means, as
verified by the purchase of a $997,000 house and a $40,000 piano when his income could not justify
purchases of those amounts.  The failure of Applicant’s business qualifies as a condition that was
outside his control.  Applicant may have hoped that his business would generate enough income to
justify his high-cost purchases, but he was unable to grow or sustain the business.  He has made
some strides in paying and settling his debts, but he still owes well in excess of $150,000.
Applicant has not acted responsibly under the circumstances, and he has not made a good-
faith effort to pay his debts.  His finances are not yet under control.  His financial issues are recent
and ongoing.  A determination cannot be made that they are unlikely to recur.  They continue to cast
doubt on his current reliability, trustworthiness, and good judgment.  Financial concerns remain
despite the presence of some mitigation.
Applicant asserts that he agrees with the majority of the Judge’s assertions that he has made
many mistakes in this matter.  He admits to poor judgment, and indicates this was partially based
on poor advice from legal counsel.  He does fully accept the consequences of his actions.  However,
Applicant does not feel that his reliability and trustworthiness are in question.  He points to the fact
that he informed his workplace security personnel when he started the strategic default process.  He
believes his efforts to stay forthcoming to his superiors regarding his financial situation is evidence
of his integrity and provides a reason why his security clearance should not be revoked.  
Applicant asserts that the concerns over his finances have been mitigated by the passage of
time and that circumstances existed that were beyond his control.  He asserts that the focus was so
much on his error of purchasing the house and the piano that he could not fully present the
extenuating circumstances surrounding the failure of his business.  Applicant also states that when
he told the Judge that he had not received financial counseling, this was in error.  
Applicant’s submission on appeal contains matters that are not part of the record below.  The
Board cannot consider new evidence on appeal.  See  Directive, ¶ E3.1.29. 
Once the government presents evidence raising security concerns, the burden shifts to the
applicant to establish mitigation.  The presence of some mitigating evidence does not alone compel
the Judge to make a favorable security clearance decision.  As the trier of fact, the Judge has to
weigh the evidence as a whole and decide whether the favorable evidence outweighs the unfavorable
evidence, or vice versa.  See, e.g., ISCR Case No. 06-10320 at 2 (App. Bd. Nov. 7, 2007).
Applicant’s assertion that he was unable to fully present extenuating circumstances in his case
because of the focus on other matters is not entirely clear.  To the extent that he is asserting that he
was denied the opportunity at his hearing to fully present his case, such an assertion fails to
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overcome the presumption in favor of regularity and good faith on the part of DOHA Judges as they
engage in the process of deciding cases.  See, e.g., ISCR Case No. 99-0019 at 5 (App. Bd. Nov. 22,
1999).  After a review of the hearing transcript, the Board concludes that Applicant was not hindered
in his ability to present his case fully.
In this case, the Judge made sustainable findings that Applicant had a lengthy and serious
history of not meeting financial obligations and had made numerous choices regarding his finances
that reflected questionable judgment.  Central to the Judge’s analysis was his conclusion that
Applicant took on financial commitments with the purchase of a $997,000 house and a $40,000
piano that he could not support given his income level and a struggling business.  The Judge also
concluded that there is insufficient evidence to support a conclusion that Applicant’s financial
difficulties are behind him.  These conclusions are supported by the record.  The Judge adequately
discussed why, given these factors, the disqualifying conduct established under Guideline F was not
mitigated.
The Board does not review a case de novo.  The favorable evidence cited by Applicant is not
sufficient to demonstrate the Judge’s decision is arbitrary, capricious, or contrary to law.  See, e.g.,
ISCR Case No. 06-11172 at 3 (App. Bd. Sep. 4, 2007).  After reviewing the record, the Board
concludes that the Judge examined the relevant data and articulated a satisfactory explanation for
the decision, “including a ‘rational connection between the facts found and the choice made.’”
Motor Vehicle Mfrs. Ass’n of the United States v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43
(1983) (quoting Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962)).  “The
general standard is that a clearance may be granted only when ‘clearly consistent with the interests
of the national security.’” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988).  Therefore,
the Judge’s ultimate unfavorable security clearance decision is sustainable.
Order
The Judge’s decision is AFFIRMED.
Signed: Michael Y. Ra’anan     
Michael Y. Ra’anan
Administrative Judge
Chairperson, Appeal Board
Signed: Jeffrey D. Billett           
Jeffrey D. Billett
Administrative Judge
Member, Appeal Board
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Signed: Jean e. Smallin            
Jean E. Smallin
Administrative Judge
Member, Appeal Board