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                           DEPARTMENT OF DEFENSE 
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
In the matter of: ) 
)
) ISCR Case No. 11-08936
)
Applicant for Security Clearance ) 
 
 
Appearances 
For Government: Robert Kilmartin, Esq., Department Counsel
For Applicant: Pro se 
______________ 
 
Decision 
______________
RICCIARDELLO, Carol G., Administrative Judge:
Applicant failed to mitigate the Government’s security concerns under Guideline
F, financial considerations. Applicant’s eligibility for a security clearance is denied.
Statement of the Case 
 
On December 19, 2012, the Department of Defense (DOD) issued Applicant a
Statement of Reasons (SOR) detailing security concerns under Guideline F. The action
was taken 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) effective within the DOD on
September 1, 2006.
Applicant answered the SOR on January 16, 2013, and requested a hearing
before an administrative judge. The case was assigned to me on March 30, 2013. The
Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on April 1,
2013. I convened the hearing as scheduled by video teleconference on April 18, 2013.
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The Government offered Exhibits (GE) 1 through 4, and they were admitted into
evidence without objection. Applicant testified, and he offered Exhibits (AE) A through
K, which were admitted into evidence without objection. The record was held open until
May 2, 2013, to allow Applicant an opportunity to submit additional documents. He
submitted AE L. Department Counsel had no objection, and it was admitted into
evidence.1 DOHA received the hearing transcript (Tr.) on April 25, 2013.
Findings of Fact
Applicant admitted all SOR allegations. After a thorough and careful review of the
pleadings, exhibits, and testimony, I make the following findings of fact.
Applicant is 34 years old. He served in the Army from 1998 to 2008 and was
honorably discharged in the rank of staff sergeant (E-6). He has a daughter born in
2001 from a previous relationship. He pays child support for his daughter. He married in
2005 and divorced in 2007. There are no children from the marriage. He earned an
associate’s degree in 2009. He is enrolled in an online college and expects to earn his
bachelor’s degree in 2014.2
Applicant has numerous delinquent debts. He attributes his financial problems to
periods of unemployment. He also admitted that he was immature in handling his
finances. After leaving active duty, Applicant was employed with a federal contractor at
an overseas facility from September 2008 to October 2010. His was underemployed
and unemployed from October 2010 to November 2011. He was employed from
November 2011 to April 2012 with a federal contactor at an overseas location. He
stated he has been unemployed since April 2012. While employed overseas from 2008
to 2010 he was earning an annual salary of approximately $85,000. He currently
receives unemployment benefits and a stipend from his educational GI bill. He uses this
money to pay his child support and for living expenses. He is currently living with a
relative.3
The debt in SOR ¶ 1.a ($3,552) is for a personal loan Applicant obtained in 2006
while he was still in the military. He used the money to pay bills. The loan became
delinquent in late 2007 or early 2008. Applicant did not make payments while he was
working overseas from September 2008 to October 2010. He contacted the creditor in
approximately December 2010 and indicated he would begin making payments when
he started working. In his statement to an Office of Personnel Management (OPM)
investigator in May 2011, Applicant indicated he was not earning enough money to pay
the debt. He stated that he anticipated getting an overseas job and intended to pay the
loan. He did not get the job. In January 2013, Applicant began a repayment plan and is
                                                          
1 Hearing Exhibit I is Department Counsel’s memorandum forwarding the exhibit and noting there were no
objections.
2 Tr. 12-14, 20-21, 23-24.
3 Tr. 21, 24, 52-58.
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to pay $75 a month. He made two payments in January and February 2013. He did not
provide proof of other payments.4
 
The debt in SOR ¶1.f ($5,406) is a loan that has been charged off. Applicant
obtained the loan in 2006 or 2007 while he was on active duty with the military. This
loan was added to a previous loan balance that he obtained from the same creditor. He
obtained the loan to catch up on bill payments. The account became delinquent
sometime in 2009. In his statement to the OPM investigator, Applicant indicated that the
loan was being repaid through a military allotment that stopped when he left active duty,
and he did not realize it was no longer being paid. While working overseas, he learned
the account was in a delinquent status. He contacted the creditor who was unwilling to
negotiate a payment plan and demanded the loan be paid in full. Applicant could not
pay the entire balance so he did not pay anything. He intended to pay the debt when he
obtained employment. The debt remains unresolved.5
The debt in SOR ¶ 1.g ($3,000) is to reimburse the Department of Veteran’s
Affairs for a loan he received. Applicant later learned he was not authorized to receive
the loan and has been making payments to resolve it. His payments have reduced the
balance to $775. He is paying this debt from his GI stipend and has been making
payments since September 2012.6
The debt in SOR ¶ 1.h $2,853 is a credit card account that has been charged off.
Applicant has a payment plan with the creditor. He stated the plan is to pay $35 a
month. He provided documents from the law firm handling the debt that shows payment
coupons for $50 a month. He believes this is an error. Applicant’s documents show that
he made one payment in February 2013 and a payment on April 1, 2013, was pending.
He stated he missed his March payment because he did not have the money at the time
to pay it. He stated he now has the money and intends to pay it. Applicant did not
provide additional information to substantiate he is making regular payments and that
$35 is an acceptable payment to the creditor.7
Applicant disputed the debt in SOR ¶ 1.i ($1,094) for cellular telephone service.
He explained he contacted the company to place his phone in stand-by status while he
was overseas. The company failed to do so, and Applicant disputed the debt on his
credit report. His statement to the OPM investigator indicated the telephone company
agreed that he was not obligated to pay the debt. The debt is resolved.8
                                                          
4 Tr. 25-28; AE E, F; GE 2 at 145.
5 Tr. 39-42; GE 2 at 144.
6 Tr. 42-44; AE A, H.
7 Tr. 44-48; AE A, I, J.
8 Tr. 49-50; GE 2.
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Applicant has numerous student loan debts alleged in SOR ¶¶ 1.b ($4,059), 1.c
($1,754), 1.d ($6,959), 1.e ($3,217), 1.j ($3,144), 1.k ($4,390), and l.l ($8,415), for a
total of $31,938.9
The student loans in SOR ¶¶ 1.b, 1.c, 1.d, and 1.e are being serviced by the
same lender who has agreed to Applicant’s participation in a loan rehabilitation
program. Applicant obtained these loans when he was earning his associate’s degree in
2009. He believes he made some payments before he stopped. The rehabilitation
program requires Applicant to pay $100 a month for all of the loans for nine consecutive
months. If he successfully completes the rehabilitation program the loans will be
removed from default status. Applicant has made four payments from January through
March 2013.10
Applicant’s student loans in SOR ¶¶ 1.j and 1.k appear to be from the same
lender. Applicant stated the loans were in a deferred status for two years while he was
stationed overseas.11 He was to begin paying the loans in November 2010. At the time
his annual income was $85,000. He did not make the required payments. He stated he
was using his income to pay child support, a car note, and to help family. These loans
are now deferred until September 2014, when Applicant anticipates completing his
degree.12
Applicant believed the student loan in SOR ¶ 1.l was consolidated with other
loans. He failed to provide documents that reflect this balance has been consolidated
with his other loans.13
Applicant provided additional information about his financial issues during his
May 2011 interview with the OPM investigator. He has had two cars repossessed.
Applicant was stationed overseas in 2006. He thought his wife was making their car
payments. He does not know if she thought he was making the payments. This
confusion resulted in no payments being made on the loan. He indicated in his interview
with the investigator that the car was voluntarily turned back to the creditor. He also
indicated that the car had mechanical problems and could not be driven. It was
eventually auctioned for sale by the creditor. He indicated he has not received further
correspondence from the creditor about any deficiency.14
                                                          
9 Tr. 28.
10 Tr. 28-31, 33-38, 69-85; AE G, L.
11 GE 2, at page 6; AE L.
12 Tr. 53, 64-65, 69-85; AE K, D.
13 AE L.
14 Tr. 59-61; GE 2 at page 4. Any information that was not alleged in the SOR will not be considered for
disqualifying purposes. It will be considered when analyzing Applicant’s credibility, his history of financial
stability, and in the “whole-person” analysis.
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A second car was repossessed after Applicant was delinquent in his payments in
2010. He was stationed overseas and he could not make the payments because he had
too many other bills and insufficient income. Later he was unemployed and could not
make the payments. The vehicle was repossessed and sold at auction. Applicant told
the OPM investigator that he was notified by the creditor that there was no deficiency on
the account.15
Applicant has an installment payment plan with the Internal Revenue Service for
unpaid federal taxes for tax year 2008. He stated that the person who prepared his
2008 federal income tax return failed to include his income from his work overseas. He
admitted he signed the tax form, but did not notice the discrepancy. His tax return was
audited in 2011, and it was determined he owed $4,000 in federal income tax. He pays
$50 a month to resolve the debt. He has filed his 2012 federal income tax return and
owes $2,000. He is unable to pay the amount and anticipated it being added to the
current installment payment plan. 
 
 Applicant stated he has worked with credit repair companies in the past. He
provided character letters stating he is an honest, reliable, trustworthy and hardworking
individual. He continues to live by military standards of loyalty, duty, respect, and
integrity. He volunteers weekly at a local school as a “book buddy” to three students.16
Policies
When evaluating an applicant’s suitability for a security clearance, the
administrative judge must consider the adjudicative guidelines. In addition to brief
introductory explanations for each guideline, the adjudicative guidelines list potentially
disqualifying conditions and mitigating conditions, which are 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 the adjudicative process. The administrative judge’s overarching
adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶
2(c), the entire process is a conscientious scrutiny 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 national security.” In reaching this
decision, I have drawn only those conclusions that are reasonable, logical, and based
                                                          
15 Tr. 62, 65-68; GE 2 at 7.
16 Tr. 62; AE B, C.
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on the evidence contained in the record. Likewise, I have not drawn 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, an “applicant is
responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or
mitigate facts admitted by applicant or proven by Department Counsel and has the
ultimate burden of persuasion to obtain a favorable security decision.”
A person who seeks access to classified information enters 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 safeguard
classified information. Such decisions entail a certain degree of legally permissible
extrapolation of potential, rather than actual, risk of compromise of classified
information.
Section 7 of Executive Order 10865 provides that decisions shall be “in terms of
the national interest and shall in no sense be a determination as to the loyalty of the
applicant concerned.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites
for access to classified or sensitive information).
 
Analysis 
Guideline F, Financial Considerations 
 
The security concern for financial considerations 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.
The guideline notes several conditions that could raise security concerns. I have
considered all of the disqualifying conditions under AG & 19, and the following two are
potentially applicable:
(a) inability or unwillingness to satisfy debts; and
(c) a history of not meeting financial obligations.
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Applicant has numerous delinquent debts that he was unable or unwilling to pay.
I find there is sufficient evidence to raise the above disqualifying conditions.
The guideline also includes conditions that could mitigate security concerns
arising from financial difficulties. The following mitigating conditions under AG ¶ 20 are
potentially applicable:
(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
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.
AG ¶ 20(a) is not established because Applicant’s debts are numerous and
recent, and he is still resolving them. Applicant’s history of financial problems has not
just been during his periods of unemployment, but he also had problems when he was
on active duty, as evidenced by taking out loans to pay bills. After being discharged
from the Army, Applicant was employed overseas. He was earning a salary of about
$85,000. During that period, he failed to use his income to pay his delinquent debts.
When he returned from overseas he experienced periods of unemployment and was
unable to pay his delinquent debts. His unemployment was beyond his control. For the
full application of AG ¶ 20(b), Applicant must have acted responsibly under the
circumstances. Applicant has not acted responsibly regarding his debts. When he had a
substantial income he failed to address his overdue debts. His unemployment only
exacerbated his already difficult financial state. I find AG ¶ 20(b) only partially applies.
Applicant did not begin to address his delinquent debts until he needed a security
clearance for a pending job. He has made some small payments towards some debts,
proving that when motivated he has some resources to address his finances. He does
not appear to be in a stable financial position to conclude his financial problems are
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under control. He has made some small payments to some creditors. He did not provide
evidence he has received financial counseling. I find AG ¶ 20(c) does not apply. His
student loans were in default status and he is now in a rehabilitation program for one
group and the other group is deferred. His recent action of paying small amounts
towards his debts is a good sign, but he has a short track record of consistent payments
and a track record of failing to pay his debts, including from when he was in the Army
and when earning a significant salary while he was working overseas as a civilian. I find
AG ¶ 20(d) partially applies to the debts he has made consistent payments. AG ¶ 20(e)
applies to the telephone debt Applicant disputed.
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
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
the facts and circumstances surrounding this case. 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 is 34 years old. He has a history of financial problems dating back to
when he was in the Army. He attributes his financial problems to periods of
unemployment and not having enough money. Applicant took out a loan while in the
Army to help pay bills. He increased the loan to again help pay bills and then defaulted
on the loan. He had two cars repossessed. One vehicle was repossessed while he was
still in the Army and the other while he was working as a civilian overseas. He was
earning approximately $85,000 while serving overseas. He did not use his income to
address his delinquent bills. He defaulted on his student loans that are now being
rehabilitated or are in a deferred status. He is making payments to the IRS for taxes
owed from 2008. He cannot afford to pay the $2,000 he owes for his 2012 federal taxes
and anticipated having to add it to his current installment agreement. Applicant also
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attributes his financial problems to being immature. He was an E-6 in the Army and was
31 years old when he was working as a civilian overseas. Although his unemployment
exacerbated his financial problems, his failure to address his delinquent debts when he
was earning money shows a disregard for financial responsibility. Applicant’s finances
are a security concern, and he has not met his burden of persuasion. Overall, the record
evidence leaves me with questions and doubts about Applicant’s eligibility and suitability
for a security clearance. For all these reasons, I conclude Applicant failed to mitigate the
security concerns arising under the financial considerations guideline.  
 
Formal Findings 
Formal findings for or against Applicant on the allegations set forth in the SOR,
as required by section E3.1.25 of Enclosure 3 of the Directive, are:
Paragraph 1, Guideline F: AGAINST APPLICANT
Subparagraphs 1.a-1.e: For Applicant
Subparagraph 1.f: Against Applicant
Subparagraph 1.g: For Applicant
Subparagraph 1.h: Against Applicant
Subparagraph 1.i: For Applicant
Subparagraphs 1.j-1.k: For Applicant
Subparagraph 1.l: Against 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 a security clearance.
Eligibility for access to classified information is denied.
_____________________________
Carol G. Ricciardello
Administrative Judge