DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
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                                                                      )                                                             
       -------------------------------------                  )         ISCR  Case No.  11-12627          
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Applicant for Security Clearance )
Appearances
For Government: Caroline Jeffreys, Esq., Department Counsel
For Applicant: Pro se
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 Decision
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WESLEY, Roger C., Administrative Judge:
Based upon a review of the pleadings, exhibits, and testimony, I conclude that
Applicant has not mitigated the security concerns regarding his finances. Eligibility for
access to classified information is denied. 
 
Statement of Case
On March 6, 2013, the Department of Defense (DOD) issued a Statement of
Reasons (SOR) detailing reasons why DOD adjudicators could not make the preliminary
affirmative determination of eligibility for a security clearance, and  recommended referral
to an administrative judge to determine whether a security  clearance should be granted,
continued, denied, or revoked. The action was taken under Executive Order 10865,
Safeguarding Classified Information Within Industry (February 20, 1960), as amended;
DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program
(January 2, 1992), as amended (Directive); and the Adjudicative Guidelines (AGs)
implemented by DOD on September 1, 2006.  
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Applicant responded to the SOR on April 11, 2013, and requested a hearing. The
case was assigned to me on May 14, 2013, and was scheduled for hearing on June 13,
2013, by video teleconference. At hearing, the Government's case consisted of six
exhibits (GEs 1-6). Applicant relied on one witness (himself) and nine exhibits (AEs A-I).
The transcript (Tr.) was received on June 24, 2013. 
Summary of Pleadings
Under Guideline F, Applicant allegedly accumulated 10 delinquent consumer debts
exceeding $17,000 and accrued a delinquent mortgage debt in in 2007.  In his answer to
the SOR, Applicant admitted most of the allegations. He denied the allegations covered in
subparagraphs 1.a and 1.j. He claimed he has made payments on two of the covered
debts (creditors 1.h and 1.I) and cured the mortgage default covered in subparagraph 1.k
with a short sale in 2007. He claimed he made contact with the remaining creditors but
has made no payment progress with these remaining creditors.
               
Findings of Fact
Applicant is a 33-year-old employee of a defense contractor who seeks a security
clearance. The allegations covered in the SOR and admitted by Applicant are
incorporated and adopted as relevant and material findings. Additional findings follow.
Background
Applicant married in September 2006 and has four children from this marriage:
three children together and one stepchild. (GEs 1 and 2; Tr. 33). He was awarded a
bachelor’s degree in psychology in May 2000 from a recognized state university. (GE 1;
Tr. 78) He also claims educational credits for technical training between October 2010
and October 2011, helicopter flight training between January 2007 and June 2007, and
post-graduate studies. (GEs 1and 2; Tr. 37-38, 83) Applicant reports no military service.
(GE 1; Tr. 33, 80-81)
Applicant’s finances
Between 2007 and 2010, Applicant accumulated a number of delinquent debts
during recurrent periods of unemployment. (GE 2; Tr. 34-36) Altogether, he accrued 10
delinquent debts exceeding $17,000. (GEs 2-5) They are comprised of the following
delinquent accounts: Pinnacle/T Mobile ($629); CACHILLC/Citifinancial ($2,762);
SST/CIGPFI ($1,994); CAP ONE ($1,998); GECRB ($2,361); HSBC ($3,517); Chase
($1,500); CAPITAL ONE ($8,545); a medical account ($239); and COOLIDGE LTD DIV
($1,985) (GE 2 and AEs C-I; Tr. 41-64). Further, in 2007 he was defaulted by his
mortgage holder. (GE 2; Tr. 69-70) For the most part, applicant relied on charge-offs and
statute of limitations protections to resolve his debts. (GEs 2-5; Tr. 63-64) 
Since he received the SOR, Appellant has addressed several of his debts. (AEs C-
I; Tr. 32) He  established a payment plan with creditor 1.c and documents making two
$200 payments to this creditor since April 2013 in connection with a deficiency balance
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from a repossessed vehicle. (AE C; Tr. 48-51, 58-62, 66) He paid the medical account
covered in subparagraph 1.i with a $241 payment in April 2013 (AE F; Tr. 47, 60), and he
has made two payments of $284 and $372, respectively, to creditor 1.h. (AEs E and G;
Tr. 55-59) Also, he provided documentary proof of his satisfaction of the judgment
entered against him by creditor 1.j in September 1999. (AE H; Tr. 68-69) 
But Applicant has failed to make any further headway with the balance of creditors
covered in the SOR.  Several of the covered creditors have not responded to Applicant’s
inquiries.  These debts (i.e., creditors 1.a, 1.b, 1.d, 1.e, and 1.g) are presumably charged-
off and have not been pursued by the creditors owning these debts. The remaining debts
covered by the SOR have not been addressed by Applicant and remain outstanding
obligations.  To date, Applicant has expended close to $1,500 on his listed debts. 
Besides his consumer debts, Applicant had an adverse judgment taken against
him in December 1999 in the amount of $1,985. (GE 2)  More recently (in April 2013), the
judgment creditor dismissed him from the judgment and furnished him a satisfaction of
judgment. (AE H; Tr. 68-69) The entered dismissal was based on reasons other than the
payment of money. (Tr. 69) 
In 2007, Applicant accrued delinquencies in his mortgage during a period of
unemployment. (GE 2) In 2007, he received a default notice on his mortgage. (GEs 2 and
6; Tr. 70) At the time, he was enrolled in helicopter training and got behind in his
mortgage payments. (Tr. 70) He arranged for a short sale of his home the same year and
is not aware of any deficiency obligations associated with the sale. (Tr. 70-71)
In a 2012 personal financial statement, Applicant reported net monthly income of
$6,000 a month. (GE 2; Tr. 71-77) He reported personal expenses of $2,082 and over
$400 in debt payments. (GE 2; Tr. 72-75)  He estimates his monthly expenses have
increased by almost $700 a month, and he has no savings. (Tr. 71) Applicant has no
established plan for resolving his outstanding debts or seeking financial counseling.  Still,
he assured that he lives within his means and has stable finances. (Tr. 32)
Endorsements
Applicant provided one character reference from a coworker, who has known
Applicant for many years. This coworker values Applicant’s abilities and integrity and
recommended him for a position of trust. (AE A) Applicant provided no performance
evaluations or proof of community and civic contributions.
Policies
           The AGs list guidelines to be used by administrative judges in the decision-making
process covering DOHA cases. These guidelines take into account factors that could
create a potential conflict of interest for the individual applicant, as well as considerations
that could affect the individual’s reliability, trustworthiness, and ability to protect classified
information. These guidelines include "[c]onditions that could raise a security concern and
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may be disqualifying” (disqualifying conditions), if any, and many of the "[c]onditions that
could mitigate security concerns.” 
These guidelines must be considered before deciding whether or not a security
clearance should be granted, continued, or denied. The guidelines do not require
administrative judges to place exclusive reliance on the enumerated disqualifying and
mitigating conditions in the guidelines in arriving at a decision. Each of the guidelines is to
be evaluated in the context of the whole person in accordance with AG ¶ 2(c). 
In addition to the relevant AGs, administrative judges must take into account the
pertinent considerations for assessing extenuation and mitigation set forth in AG ¶ 2(a) of
the revised AGs, which are intended to assist the judges in reaching a fair and impartial
commonsense decision based upon a careful consideration of the pertinent guidelines
within the context of the whole person. 
The adjudicative process is designed to examine a sufficient period of an
applicant’s life to enable predictive judgments to be made about whether the applicant is
an acceptable security risk. The following AG ¶ 2(a) factors are pertinent: (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 chances; (7) the motivation for the conduct; (8) the potential for
pressure, coercion, exploitation, or duress; and (9) the likelihood of continuation or
recurrence.
Viewing the issues raised and evidence as a whole, the following individual
guideline is pertinent in this case:
Financial Considerations
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.  Compulsive gambling is a concern as it may lead to financial
crimes including espionage.  Affluence that cannot be explained by known
sources of income is also a security concern.  It may indicate proceeds
from financially profitable criminal acts. (AG, ¶ 18)
Burden of Proof
By virtue of the principles and policies framed by the AGs, a decision to grant or
continue an applicant's security clearance may be made only upon a threshold finding
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that to do so is clearly consistent with the national interest.  Because the Directive
requires administrative judges to make a commonsense appraisal of the evidence
accumulated in the record, the ultimate determination of an applicant's eligibility for a
security clearance depends, in large part, on the relevance and materiality of that
evidence. See United States, v. Gaudin, 515 U.S. 506, 509-511 (1995).  As with all
adversarial proceedings, the judge may draw only those inferences which have a
reasonable and logical basis from the evidence of record.  Conversely, the judge cannot
draw factual inferences that are grounded on speculation or conjecture.
The Government's initial burden is twofold: (1) it must prove by substantial
evidence any controverted facts alleged in the SOR, and (2) it must demonstrate that
the facts proven have a material bearing to the applicant's eligibility to obtain or maintain
a security clearance. The required materiality showing, however, does not require the
Government to affirmatively demonstrate that the applicant has actually mishandled or
abused classified information before it can deny or revoke a security clearance. Rather,
the judge must consider and weigh the cognizable risks that an applicant may
deliberately or inadvertently fail to safeguard classified information.
Once the Government meets its initial burden of proof of establishing admitted or
controverted facts, the evidentiary burden shifts to the applicant for the purpose of
establishing his or her security worthiness through evidence of refutation, extenuation,
or mitigation.  Based on the requirement of  Exec. Or. 10865 that all security clearances
be clearly consistent with the national interest, the applicant has the ultimate burden of
demonstrating his or her clearance eligibility. “[S]ecurity-clearance determinations
should err, if they must, on the side of denials.” See Department of the Navy v. Egan,
484 U.S. 518, 531 (1988). 
Analysis  
Security concerns are raised over Applicant’s history of delinquent debts and
financial instability, marked by consumer debts, an adverse judgment, and a mortgage
default.  Since accruing these delinquent debts, Applicant has been able to settle four of
the debts (i.e., creditors 1.h through 1.k). Still, he has no established plan for addressing
his remaining debts or seeking financial counseling.  
Applicant’s accumulation of consumer debts, an adverse judgment, and
mortgage delinquencies and his past inability to address most of his identified consumer
debts raise potential security concerns about his judgment, reliability, and
trustworthiness in managing his finances. His actions warrant the application of two of
the disqualifying conditions (DC) of the Guidelines: DC ¶ 19(a), “inability or
unwillingness to satisfy debts;” and DC ¶ 19(c) “a history of not meeting financial
obligations.”
Holding a security clearance involves the exercise of important fiducial
responsibilities, among which is the expectancy of consistent trust and candor.
Financial stability in a person cleared to access classified information is required
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precisely to inspire trust and confidence in the holder of the clearance. While the
principal concern of a clearance holder’s demonstrated financial difficulties is
vulnerability to coercion and influence, judgment and trust concerns are also implicit in
financial cases.
While potentially extenuating, Applicant’s identified periods of unemployment
were not fully developed and are not sufficient to extenuate his accrued debt
delinquencies. As a result, none of the mitigating conditions covering potential
extenuating circumstances have any application to Applicant’s situation.
Full mitigation is also lacking in Applicant’s payment initiatives to date. While an
applicant need not have paid every debt alleged in the SOR, the applicant needs to
establish that there is a credible and realistic plan to resolve identified financial
problems, accompanied by significant actions to implement the plan. See ISCR Case
No. 07-06482 (App. Bd. May 21, 2008). This, Applicant has failed to do. 
While Applicant has satisfactorily resolved four of the eleven debts with
documented payments, judgment satisfaction, and an approved short sale of his
residence, he has failed to establish a workable and realistic plan to resolve his
remaining debts. Minimal mitigation initiatives necessary to meet Appeal Board
requirements are not demonstrated in Applicant’s case. 
In the past, Applicant has relied on charge-offs and statute of limitation
protection. Statutes of limitation, while considered important policy tools for
discouraging plaintiffs from pursuing stale claims and promoting finality in litigation, have
never been equated with good-faith efforts to repay overdue creditors.  See, e.g.,  ISCR
Case No. 02-30304, at 3 (App. Bd. April 2004)(quoting ISCR Case No. 99-9020, at 5-6
(App. Bd. June 2001). Nonetheless, they provide effective collection barriers and, like
bankruptcy, serve to insulate the debtor from pressures to raise cash to  satisfy his or
her creditors.
From a whole-person standpoint, the evidence reflects some unfortunate
economic circumstances played a role in his accumulation of delinquent debts. Less
clear is how his economic circumstances prevented Applicant from better addressing
his consumer debts and other accrued obligations.  He still owes in excess in excess of
$9,500 on his remaining debts. While he has made some modest headway in repaying
several of his listed consumer debts, and has successfully obtained a satisfaction of
judgment and an approved short sale of his residence, he still retains outstanding
delinquent debts without any established plan for repayment or obtaining financial
counseling assistance. 
Overall, Applicant demonstrates some progress in stabilizing his finances with his
settlement initiatives, successful satisfaction of an adverse judgment, and approved
short sale disputes, and documented payments to two of his listed creditors. His efforts
to date are insufficient, however, to meet mitigation requirements imposed by the
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guideline governing his finances. At this time, it is premature to make safe predictable
judgments about the future course of Applicant’s finances.
Formal Findings
In reviewing the allegations of the SOR and ensuing conclusions reached in the
context of the findings of fact, conclusions, conditions, and the factors listed above, I
make the following formal findings:
GUIDELINE F (FINANCIAL CONSIDERATIONS):   AGAINST APPLICANT
   
Subparas. 1.a through 1.g:                             Against Applicant   
Subparas. 1.h through 1.k:             For Applicant
Conclusions
In light of all the circumstances presented by the record in this case, it is not
clearly consistent with the national interest to grant or continue Applicant’s security
clearance.  Clearance is denied.
                                          
Roger C. Wesley
Administrative Judge 
                                        
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