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                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 11-09731
)
)
Applicant for Security Clearance )
Appearances
For Government: Melvin A. Howry, Esquire, Department Counsel 
For Applicant: Amy C. Broderick, Esquire
September 9, 2013
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Decision
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MOGUL, Martin H., Administrative Judge:
On November 7, 2012, the Department of Defense (DoD) issued a Statement of
Reasons (SOR) detailing the security concerns under Guideline F for Applicant. 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
Department of Defense for SORs issued after September 1, 2006. 
 
On December 26, 2012, Applicant replied to the SOR (RSOR) in writing, and she
requested a hearing before an Administrative Judge (AJ). The case was assigned to
this AJ on April 3, 2013. DOHA issued a notice of hearing on May 1, 2013, and the
hearing was convened as scheduled on May 29, 2013. The Government offered
Exhibits 1 through 8, which were received without objection. Applicant testified on her
own behalf and submitted Exhibits A through I, which were also admitted without
objection. One additional witness testified on behalf of Applicant. The record was kept
open until June 7, 2013, to allow Applicant to submit additional evidence. The
documents that were timely received have been identified and entered into evidence
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without objection as Exhibits A1, J, K, and L. DOHA received the transcript of the
hearing (Tr) on June 12, 2013. Based upon a review of the pleadings, exhibits, and the
testimony of Applicant and the other witness, eligibility for access to classified
information is denied.
Findings of Fact
After a complete and thorough review of the evidence in the record, described
above, and upon due consideration of that evidence, I make the following findings of
fact: 
Applicant is 50 years old. She is currently unmarried, but was previously married.
She has one daughter. She graduated high school and attended some college.
Applicant is employed by a defense contractor, and she seeks a DoD security clearance
in connection with her employment in the defense sector.
Guideline F, Financial Considerations
The SOR lists 14 allegations (1.a. through n.) regarding financial difficulties,
specifically overdue debts, under Adjudicative Guideline F. The allegations will be
discussed below in the same order as they were listed on the SOR:
1.a. This overdue debt is cited in the SOR in the amount of $22,026. Applicant
admitted this allegation in her RSOR, and averred that this debt has been listed on her
Chapter 7 bankruptcy. Exhibit 1A (page 13) shows that this debt was listed on
Applicant’s bankruptcy. A letter was received from Applicant’s bankruptcy attorney. The
attorney wrote that the bankruptcy discharge was granted on April 8, 2013. (Exhibit K.) I
find that this debt was discharged in bankruptcy. 
1.b. This overdue debt is cited in the SOR in the amount of $508. Applicant
admitted this allegation in her RSOR, and averred that this debt has been listed on her
Chapter 7 bankruptcy. Exhibit K shows that Applicant had disputed this bill with a credit
reporting agency. The agency determined that the debt was still owed, but it showed
that it had been charged off and the charged off amount was $0.  In reviewing
Applicant’s bankruptcy filing I find that this debt was not listed as an unsecured creditor.
Applicant’s bankruptcy attorney wrote that all of Applicant’s unsecured debts
were discharged if they existed during the time of the bankruptcy filing, and that even
though this debt was not listed on her bankruptcy, pursuant to 11 U.S.C. 727, this debt
is considered discharged. (Exhibit K.) I find that this debt should be considered
discharged in bankruptcy. 
1.c. This overdue debt is cited in the SOR in the amount of $748. Applicant
admitted this allegation in her RSOR, and averred that this debt has been listed on her
Chapter 7 bankruptcy. Exhibit 1A (page 14) shows that this debt was listed on
Applicant’s bankruptcy. I find that this debt was discharged in bankruptcy. 
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1.d. This overdue debt is cited in the SOR in the amount of $435. Applicant
admitted this allegation in her RSOR, and averred that this debt has been listed on her
Chapter 7 bankruptcy. Exhibit 1A (page 14) shows that this debt was listed on
Applicant’s bankruptcy. I find that this debt was discharged in bankruptcy. 
1.e. This overdue debt is cited in the SOR in the amount of $435. Applicant
admitted this allegation in her RSOR, and averred that this debt has been listed on her
Chapter 7 bankruptcy. Exhibit 1A (page 14) shows that this debt was listed on
Applicant’s bankruptcy. I find that this debt was discharged in bankruptcy. 
1.f. This overdue debt is cited in the SOR in the amount of $333. Applicant
admitted this allegation in her RSOR, and averred that this debt has been listed on her
Chapter 7 bankruptcy. Exhibit 1A (page 15) shows that this debt was listed on
Applicant’s bankruptcy. I find that this debt was discharged in bankruptcy. 
1.g. This overdue debt is cited in the SOR in the amount of $219. Applicant
admitted this allegation in her RSOR, and averred that this debt has been listed on her
Chapter 7 bankruptcy. Exhibit 1A (page 13) shows that this debt was listed on
Applicant’s bankruptcy. I find that this debt was discharged in bankruptcy. 
1.h. This overdue debt is cited in the SOR in the amount of $64,176. Applicant
admitted this allegation in her RSOR, and averred that this debt has been listed on her
Chapter 7 bankruptcy. She also indicated in her RSOR that this mortgage debt is being
listed for a short sale, but it may become a foreclosure.  Exhibit 1A (page 11) shows that
this debt was listed on Applicant’s bankruptcy as a secured debt with a value of
$150,000. This secured debt would not be resolved in bankruptcy, and it may have
gone into foreclosure. .  
1.i. This overdue debt is cited in the SOR in the amount of $410. Applicant
admitted this allegation in her RSOR, and averred that this debt has been listed on her
Chapter 7 bankruptcy. Exhibit 1A (page 14) shows that this debt was listed on
Applicant’s bankruptcy. I find that this debt was discharged in bankruptcy. 
1.j. This overdue debt is cited in the SOR in the amount of $1,272. Applicant
admitted this allegation in her RSOR, and averred that this debt has been listed on her
Chapter 7 bankruptcy. Exhibit 1A (page 13) shows that this debt was listed on
Applicant’s bankruptcy. I find that this debt was discharged in bankruptcy. 
1.k. This overdue debt is cited in the SOR in the amount of $1,200. Applicant
admitted this allegation in her RSOR, and averred that this debt has been listed on her
Chapter 7 bankruptcy. This debt was also not listed on Applicant’s bankruptcy. Pursuant
to Exhibit K, and as reviewed in 1.b., above, I find that this debt should be considered
as discharged in bankruptcy.
1.l. This overdue debt is cited in the SOR in the amount of $22,280. Applicant
denied this allegation in her RSOR, and averred that she paid $7,975 toward this debt
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for a vehicle repossession, and the deficiency balance was paid in full. Exhibit D, a letter
from the creditor, establishes that this debt was resolved. 
1.m. This overdue debt is cited in the SOR in the amount of $2,000. Applicant
admitted this allegation in her RSOR, and averred that this debt has been listed on her
Chapter 7 bankruptcy. I find that this debt was discharged in bankruptcy. 
1.n. This overdue debt is cited in the SOR in the amount of $6,000. Applicant
admitted this allegation in her RSOR, and averred that this debt has been listed on her
Chapter 7 bankruptcy. Applicant explained that this debt was for homeowners fees, and
that she had a dispute with a woman from her condominium homeowners association
as to the amount owed. However, she conceded that she knew she owed something,
and she could give no legitimate reason for why she failed to pay the amount she knew
was due. (Tr at 48-55.) I find that this debt was discharged in bankruptcy. 
 
Applicant testified that her financial problems began when she was going through
a split from her significant other in 2004 or 2005, when she had one child and her
income was reduced by half. She also co-signed for the purchase of a truck for a friend
and the friend thereafter stopped making payments. She then became responsible for
making payments on two vehicles. In 2006, Applicant refinanced the mortgage on her
home in an attempt to take some money out of the equity in the house to pay off the
loan, but before she could gain access to the money the truck of her friend was
repossessed. In addition, the refinance loan had a variable rate with a balloon payment,
of which she contended she was not aware. Because of the rate, she refinanced her
home loan a second time in 2007. Her monthly mortgage payments went up and this
made it more difficult for her to pay all of her other bills. Applicant testified that prior to
the truck repossession and the two refinances of her home, she did not have any
significant financial delinquencies.  (Tr at 34-41.)  
Applicant also testified that in 2008, she had some health problems with her
thyroid and high blood pressure which resulted in her having to miss time from work.
For some of her leave time she was compensated, but she also had to take some time
off from work without compensation. (Tr at 41-44.) 
Ultimately, despite her reluctance, Applicant engaged the services of an attorney
and filed for Chapter 7 bankruptcy. Applicant also completed the required financial
counseling as part of the bankruptcy procedure. She testified that her debts were
discharged in the bankruptcy. (Tr at 44-46.) 
Applicant testified that she has gambled periodically starting in approximately
2000. She went with a friend at least once a month to a casino. She estimated that she
would gamble about $100 or $200 each time. She began writing checks to the casino
and they would give her chips. On Applicant’s bankruptcy, Schedule A1 shows that
Applicant wrote five checks, in the amounts of $538, $435, $435, $435, and $333, even
though she had insufficient funds in her checking account. (Exhibit A1.) Applicant
conceded that she was aware that she did not have sufficient funds to write the checks.
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When she was asked why she continued to write the checks with insufficient funds, she
answered, “I don’t know what I was thinking.” (Tr at 95-99.) 
Applicant was not certain of the amount of money she lost from gambling, but
she estimated it to be $3,000 a year. Applicant testified that she has not gambled during
this current year, but she estimated that in the year before, she went approximately
once a month and gambled between $200 and $300 a month. Finally, Applicant
conceded that she gambled to try to get some extra money to try to pay off her debts,
but her gambling resulted in additional debts. (Tr at 99-101.) 
Mitigation
Applicant offered into evidence five positive and laudatory character letters,
submitted on her behalf from friends and co-workers. (Exhibit F 1-5.)  She was praised
as being, “reliable, trustworthy and of good character.” Applicant also submitted copies
of 12 certificates and awards that she has earned in her career. (Exhibit G 1-12.) 
Exhibits B and C establish that Applicant received the proper counseling and
education requirements to file a bankruptcy. Finally, Exhibit L is a copy of a Personal
Financial Statement of Applicant, dated June 4, 2013.  It revealed that Applicant has a
net monthly income of $3,794.54, monthly expenses of $2,318, and monthly debt
payments of $1,326, leaving a net monthly remainder of $150.59.
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 and mitigating conditions, which are useful 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 over-arching
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 on
the evidence contained in the record. Likewise, I have avoided drawing inferences
grounded on mere speculation or conjecture.
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Under Directive ¶ E3.1.14, the Government must present evidence to establish
controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, the Applicant is
responsible for presenting “witnesses and other evidence to rebut, explain, extenuate,
or mitigate facts admitted by applicant or proven by Department Counsel. . . .” The
Applicant has the ultimate burden of persuasion as to obtaining 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 protect or
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.
 
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 relating to the guideline 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 and
could potentially apply in this case.  Under AG ¶ 19 (a), “an inability or unwillingness to
satisfy debts” is potentially disqualifying. Similarly under AG ¶ 19 (c), “a history of not
meeting financial obligations” may raise security concerns. I find that both of these
disqualifying conditions apply to Applicant in this case. I also find that AG ¶ 19 (i),
“compulsive or addictive gambling as indicated by an unsuccessful attempt to stop
gambling, “chasing losses” (i.e. increasing the bets or returning another day in an effort
to get even) . . . or other problems caused by gambling” is applicable in this case. The
evidence has established that Applicant has accumulated significant delinquent debt,
and gambling was a contributing factor of that debt. Applicant’s conduct would also be
considered “chasing losses.”
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AG ¶ 20 provides conditions that could mitigate security concerns from financial
difficulties: Under AG ¶  20 (b), it may be mitigating where “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.” As noted
above, Applicant testified that some of her financial problems resulted from her periods
of uncompensated time off from work due to illness and her split form her significant
other. However, because her financial problems were also due to her gambling I cannot
find that this mitigating condition is applicable in this case. 
AG ¶ 20(c) applies since Applicant has received financial counseling during the
process of filing for bankruptcy, and there are indications that the problem is being
resolved and is under control. I find that this mitigating condition is a factor for
consideration in this case.
Finally, AG ¶ 20(d) applies since I find that Applicant has “initiated a good-faith
effort” to “resolve debts,” by engaging an attorney to employ the legal remedy of
bankruptcy. Since most of Applicant’s debts have been resolved in bankruptcy, and
Applicant is current with her recent debts, this mitigating condition is a factor for
consideration in this case. However, Applicant’s debt, listed as 1.h. on the SOR was not
resolved in bankruptcy, but rather in foreclosure, this factor is limited. 
Overall, Applicant’s long history of gambling has contributed to her financial
problems, and her attempts at chasing losses, plus her continued gambling is a
significant concern that has not been mitigated. Therefore, I conclude that Applicant has
not mitigated the financial concerns of the Government.
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 the 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.  
  
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I considered the potentially disqualifying and mitigating conditions in light of all
the facts and circumstances surrounding this case. Because Applicant’s gambling
continues to be an issue of concern. I find that the record evidence leaves me with
significant questions and doubts as to Applicant’s eligibility and suitability for a security
clearance under the whole-person concept. For all these reasons, I conclude Applicant
has not mitigated the security concerns under the whole-person concept. 
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.g.: For Applicant
Subparagraphs 1.h., 1.n.: Against Applicant
Subparagraphs 1.i. -1.m.: 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.
                                              
Martin H. Mogul
Administrative Judge