Item 4.1
Item 1.2
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                               DEPARTMENT OF DEFENSE
                DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 12-07948
)
)
Applicant for Security Clearance )
Appearances
For Government: Ray T. Blank, Jr., Esq., Department Counsel
For Applicant: Pro se
______________
Decision
______________
WHITE, David M., Administrative Judge:
Applicant accrued substantial delinquent debts over the past five years. He made
little progress toward resolution of major mortgage debts, and offered no evidence of an
effective plan to resolve these debts or of changes to prevent continued financial
irresponsibility. Resulting security concerns were not mitigated. Based on a review of
the pleadings and exhibits, eligibility for access to classified information is denied.
Statement of the Case 
Applicant submitted a security clearance application (SF 86) on December 21,
2010.  On August 10, 2012, the Department of Defense (DoD) issued a Statement of1
Reasons (SOR) to Applicant, detailing security concerns under Guideline F (Financial
Considerations).  The action was taken under Executive Order 10865, Safeguarding2
Classified Information within Industry (February 20, 1960), as amended; Department of
Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review
Item 3.3
Item 2. 4
The Government submitted nine Items in support of the SOR allegations. 5
Items 4, 5, and 6.6
Items 1, 7, 8, and 9.7
Items 5 and 6.8
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Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines
effective in the Department of Defense on September 1, 2006. 
Applicant received the SOR on August 21, 2012.  He submitted a written3
response on August 31, 2012, and requested that his case be decided by an
administrative judge on the written record without a hearing.  Department Counsel4
submitted the Government’s written case on January 15, 2013. A complete copy of the
File of Relevant Material (FORM)  was provided to Applicant, and he was afforded an5
opportunity to file objections and submit material in refutation, extenuation, or mitigation
within 30 days of his receipt of the FORM. 
Applicant signed the document acknowledging receipt of his copy of the FORM
on January 22, 2013. He provided no further response to the FORM within the 30-day
period, did not request additional time to respond, and expressed no objection to my
consideration of the evidence submitted by Department Counsel. I received the case
assignment on March 28, 2013.
Findings of Fact
Applicant is 59 years old, and has worked for a defense contractor since
November 2010. He has worked for defense contractors in the logistics field since 1998,
shortly after he retired from the Navy after a 24-year career. He earned an online
Masters of Business Administration degree in 2005. He has been married for almost 37
years, and has an adult son who is married and an adult daughter who resides with him.
He has held a security clearance since 1973, when he joined the Navy.  6
In his response to the SOR, Applicant admitted the truth of the account
information concerning his delinquent debts set forth in SOR ¶¶ 1.a through 1.f, with
some explanations. The total due on Applicant’s delinquent debts alleged in the SOR,
and supported by entries in the record credit bureau reports, was $65,330.  Applicant7
also defaulted on a $400,000 first mortgage home loan in 2008, resulting in a
foreclosure sale. His admissions, including those made in response to DOHA
interrogatories,  are incorporated into the following findings of fact.8
This interview occurred in January 2011, not in 2012 as Applicant asserted several times in his answer to9
the SOR. See Items 2 and 6. 
Item 2 at 3, Exh A; Item 9 at 1.10
Item 9 at 2; Item 2 at 3, Exh B.11
Item 7 at 115; Item 9 at 3; Item 5 at 18, 50; Item 2 at 3, Exh C.12
3
Applicant was involved in an automobile accident in January 2009, and incurred
the $1,061 medical debt for ambulance services listed in SOR ¶ 1.a. The charge was
erroneously billed to his medical insurer, who refused to pay it. He says that he was
unaware that it remained unpaid until he was asked about it during his security
clearance interview in January 2012 [sic].  After that interview, he contacted his9
personal injury lawyer about having the other driver’s automobile insurance pay the bill,
but was told it was too late since the case had been fully settled. During June 2012, he
contacted the collection agency and arranged to make one payment of $311, with
payments of $250 each during the months of July, August, and September. He
submitted proof of the first three payments, and his July 2012 credit report confirmed an
outstanding balance of $500. However, he did not submit proof of having made the final
$250 payment in September 2012 to resolve this debt within the time afforded him to
respond to the FORM.  10
Applicant owed $587 on a charged-off health credit card account that was
opened in March 2007 and became delinquent in late 2011, as listed in SOR ¶ 1.b.
Applicant paid this debt in full on May 31, 2012. He did not explain why it was not paid
when due.   11
Applicant owed $2,793 on a credit card account that was opened in April 2007
and became delinquent in July 2011, as listed in SOR ¶ 1.c. In May 2012 he agreed
with the collection agency to settle this debt in full for a one-time payment of $1,914. He
made this payment on June 21, 2012, and submitted a copy of his bank statement to
document it.12
Applicant and his wife purchased home A in 1983. They refinanced the mortgage
on the home several times over the years, withdrawing equity to supplement their
income. In 1999 they borrowed $157,500 on a first mortgage. In July 2001 they
refinanced it for $184,000. In March 2002 they took out a second mortgage for $46,000.
In March 2003 they refinanced both mortgages with a $248,000 first mortgage loan. In
April 2004, they took out a $100,952 home equity line of credit. In December 2004, they
refinanced both outstanding loans again with a $400,000 first mortgage loan. In May
2005 they moved into home B, as described below. In April 2007 they took out a
$50,000 home equity line of credit against home A. After the real estate market
collapsed, Applicant’s homes were soon worth less than he owed on their mortgages.
He said, without elaborating any details concerning the amounts involved or the effect
on the family budget, that his wife was also laid off from her job around this time. He
decided that he owed more in loans secured by home A than he could sell it for, so he
Item 2 at 4, Exh D; Item 4; Item 5 Exh B; Items 7 through 9.13
Item 5 at 39; Item 2 at 4, Exh E.14
Item 2 Exh D; Item 5 at 19-36, 40-46, 51-71; Item 6 at 15; Items 7 though 9. 15
Item 5 at 73.16
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stopped paying the mortgage and line of credit secured by it. In June 2008, as alleged
in SOR ¶ 1.e, the lender foreclosed on the $400,000 first mortgage and took possession
of home A. The lender holding the $50,000 secured line of credit declined Applicant’s
request to settle for a reduced sum and obtained a judgment for $59,453 in June 2011,
as alleged in SOR ¶ 1.d. Applicant failed to pay this judgment. In August 2011 the
creditor obtained a garnishment order in the amount of $60,114 against Applicant’s
current employer, resulting in collection of about $560 every two weeks (25% of his
after-tax pay) starting September 23, 2011.  13
Applicant entered into a one-year contract for home-alarm service for home A
with free installation on condition that service continue for at least a year. The home
was foreclosed upon before the year was complete, and the company billed Applicant
$1,437. He did not pay the debt, which was placed for collection. He said that he was
made aware of this debt during his January 2011 security clearance interview, and in
June 2012 he agreed with the collection agency to settle the debt for $1,078. He made
this payment on June 25, 2012, as documented by his bank statement.  14
Applicant and his wife bought home B in January 2007, with a first mortgage loan
of $552,500 and a second mortgage of $97,500. He could not afford to make those
mortgage payments and began to fall behind on payments during mid-2009. He told the
security investigator that he deliberately stopped paying them around September 2010
in order to qualify for a loan modification. In early 2011 he succeeded in obtaining a loan
modification under which he owed about $600,000 on the first mortgage and more than
$98,000 on the second mortgage. The payments on these loans started falling behind
after his 25% wage garnishment, for the defaulted second mortgage on home A, began
in August 2011. His combined monthly payment on the two home B mortgages was
$3,107, and his net monthly income was $3,466. In November 2011 he deliberately
stopped making payments toward either of these mortgages and listed home B on the
market for $269,900 to attempt a short sale. He provided no further information on the
status of home B or the outstanding mortgage debts. These home-B-related
delinquencies were not alleged on the SOR.  15
Applicant submitted no evidence of financial counseling, although he may have
taken some related classes while earning his online MBA. He submitted a receipt for a
$500 payment toward the $5,056 attorney fees he was charged on February 28, 2012,
in connection with the preparation and filing of a Chapter 13 bankruptcy.  No further16
information concerning this bankruptcy proceeding was provided. He provided no
budget or personal financial statement to show the means by which he could resolve
current or avoid future financial delinquencies.
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Applicant provided no evidence concerning the quality of his professional
performance, the level of responsibility his duties entail, or his track record with respect
to handling sensitive information and observation of security procedures. He submitted
no character references describing his judgment, morality, trustworthiness, integrity, or
reliability. I was unable to evaluate his credibility, demeanor, or character in person
since he elected to have his case decided without a hearing. 
Policies
When evaluating an applicant’s suitability for a security clearance, the
administrative judge must consider the adjudicative guidelines (AG). In addition to brief
introductory explanations for each guideline, the adjudicative guidelines list potentially
disqualifying conditions (DCs) and mitigating conditions (MCs), which are to be 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 AG ¶ 2 describing the adjudicative process. The administrative judge’s
overarching adjudicative goal is a fair, impartial, and commonsense decision. According
to AG ¶¶ 2(a) and 2(c), the entire process is a conscientious scrutiny of applicable
guidelines in the context 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 the 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. Likewise, I have avoided drawing inferences
grounded on mere speculation or conjecture. 
Under Directive ¶ E3.1.14, the Government must present evidence to establish
controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, “[t]he applicant is
responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or
mitigate facts admitted by the applicant or proven by Department Counsel, and has the
ultimate burden of persuasion as to obtaining a favorable clearance decision.” Section 7
of Executive Order 10865 provides: “Any determination under this order adverse to an
applicant 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.”
A person applying for access to classified information seeks to enter 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 the applicant may deliberately or inadvertently fail to protect or
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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.
Analysis
Guideline F, Financial Considerations
The security concerns under the guideline for financial considerations are set out
in AG ¶ 18, which reads in pertinent part:      
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. 
Department Counsel asserted, and the record evidence established, security
concerns under two Guideline F DCs, as set forth in AG ¶ 19: 
(a) inability or unwillingness to satisfy debts; and
(c) a history of not meeting financial obligations. 
Applicant’s SOR-listed delinquent debts arose over the past five years, and
several major debts remain unresolved. His financial problems were not shown to have
arisen from incidents beyond his control, but rather resulted from his choices to incur
large mortgage debt obligations he could not afford to pay, while withdrawing and
spending substantial amounts of equity as the properties were appreciating. He
provided no evidence of available income, or other assets, from which to satisfy these
debts or avoid incurring additional delinquencies. This evidence raises substantial
security concerns under DCs 19(a) and (c), thereby shifting the burden to Applicant to
rebut, extenuate, or mitigate those concerns. 
The guideline includes five conditions in AG ¶ 20 that could mitigate security
concerns arising from Applicant’s financial difficulties:
(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
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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; 
(d) the individual initiated a good-faith effort to repay overdue creditors or
otherwise resolve debts; and
(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.
Applicant’s SOR-listed delinquent debts arose over the past five years, totaled
more than $465,000, and major financial problems continue to date. They are recent,
and arose under circumstances that involved Applicant’s voluntary choices. He showed
no capacity to avoid additional delinquent debt. The ongoing nature of these debts
precludes a finding of unlikely recurrence. Applicant failed to demonstrate that his
reliability, trustworthiness, or judgment have improved. He documented resolution of
most of the debt alleged in SOR ¶ 1.a, and full resolution of the debts alleged in SOR ¶¶
1.b, 1.c, and 1.f. The judgment debt alleged in SOR ¶ 1.d is being resolved through an
involuntary garnishment that is preventing him from remaining current on other financial
obligations, and will continue for more than four years. The foreclosure on home A
resolved the $400,000 first mortgage on that property, but he has also defaulted on
more than $700,000 in debt on home B. He earned an MBA and retained a bankruptcy
attorney, but the education preceded his financial irresponsibility and no progress on the
bankruptcy was documented. The evidence does not support the application of any AG
¶ 20 provisions, except mitigation under AG ¶ 20(d) for the security concerns arising
from the four debts he resolved between June and September 2012. 
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 the 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
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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.   
I considered the potentially disqualifying and mitigating conditions in light of all
pertinent facts and circumstances surrounding this case. Applicant is an accountable
and well-educated adult, who is responsible for his voluntary choices and conduct that
underlie the security concerns expressed in the SOR. His financial irresponsibility spans
many years, and continues at present. It involves delinquent debts and defaulted
obligations totaling more than $1,100,000, toward which he showed insufficient capacity
to resolve when the record closed. He did not demonstrate that these debts arose under
circumstances that were beyond his control, or that he initiated any changes to prevent
additional financial difficulties. He offered insufficient evidence of financial counseling,
rehabilitation, or responsible conduct in other areas of his life. The potential for
pressure, coercion, and duress remains undiminished. 
Overall, the record evidence leaves me with substantial doubt as to Applicant’s
present eligibility and suitability for a security clearance. He did not meet his burden to
mitigate the security concerns arising from his financial considerations.
Formal Findings
Formal findings for or against Applicant on the allegations set forth in the SOR,
as required by ¶ E3.1.25 of Enclosure 3 of the Directive, are:
Paragraph 1, Guideline F: AGAINST APPLICANT
Subparagraphs 1.a to 1.c: For Applicant
Subparagraphs 1.d and 1.e: Against Applicant
Subparagraph 1.f: For Applicant
Conclusion
In light of all of the circumstances presented by the record in this case, 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.
                                              
DAVID M. WHITE
Administrative Judge