DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
--------------------------------- )      ISCR Case No. 11-14334
)
Applicant for Security Clearance )
Appearances
For Government: Melvin A. Howry, Department Counsel
For Applicant: Pro se
September 11, 2013
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Decision
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LOKEY ANDERSON, Darlene D., Administrative Judge:
Applicant submitted his Electronic Questionnaires for Investigations Processing
(E-QIP) on February 6, 2006.  (Government Exhibit 1.)  On March 4, 2013, the Defense
Office of Hearings and Appeals (DOHA), pursuant to Executive Order 10865 and
Department of Defense Directive 5220.6 (Directive), dated January 2, 1992, (as
amended), issued a Statement of Reasons (SOR) to the Applicant, which detailed
reasons why DOHA could not make the preliminary affirmative finding under the
Directive that it is clearly consistent with the national interest to grant or continue a
security clearance for the Applicant and recommended referral to an Administrative
Judge to determine whether clearance should be denied or revoked.
The Applicant responded to the SOR on April 26, 2013, and he requested an
administrative hearing before a DOHA Administrative Judge.  This case was assigned
to the undersigned Administrative Judge on July 2, 2013.  A notice of hearing was
issued on July 3, 2013, and the hearing was scheduled for July 23, 2013.  At the
hearing the Government presented eleven exhibits, referred to as Government Exhibits
1 through 11, which were admitted without objection.  The Applicant presented seven
exhibits, referred to as Applicant’s Exhibits A through G, which were also admitted into
evidence without objection.  He also testified on his own behalf.  The record remained
open until close of business on August 13, 2013, to allow the Applicant to submit
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additional documentation.  The Applicant submitted one Post-Hearing Exhibit, referred
to as Applicant’s Post-Hearing Exhibit A, which was admitted without objection.  The
official transcript (Tr.) was received on August 5, 2013.  Based upon a review of the
pleadings, exhibits, and testimony, eligibility for access to classified information is
granted.
 FINDINGS OF FACT
The Applicant is 66 years old and married.  He has an Associate Degree in
Metals Technology from the Community College of the Air Force, and holds the position
of Inspector for a defense contractor.  He is seeking to obtain a security clearance in
connection with this employment.   
The Government opposes the Applicant's request for a security clearance, on the
basis of allegations set forth in the Statement of Reasons (SOR).  The following findings
of fact are entered as to each paragraph and guideline in the SOR:
Paragraph 1 (Guideline F - Financial Considerations)  The Government alleges that the
Applicant is ineligible for clearance because he is financially overextended and at risk of
having to engage in illegal acts to generate funds.      
The Applicant admitted the allegation set forth in the SOR under this guideline.
(See Applicant’s Answer to SOR.)  Credit Reports of the Applicant dated March 3, 2006;
August 30, 2011; December 10, 2012; and February 22, 2013, reflect that at one time
Applicant was indebted to the creditor set forth in the SOR, in an amount totaling over
$151,000.  (Government Exhibits 2, 4, 5 and 8.)
Applicant served in the United States Air Force from 1968 to 1988, before
receiving an honorable discharge after twenty years of service.  Following his military
career, the Applicant began working in the defense industry as a civilian.
Throughout his military career and up until 2005, Applicant always paid his bills
on time and had good credit.  In March 2004, he was employed as a member of a
Contract Field Team consisting of about 20 employees.  This team travels anywhere
necessary to fulfill short term work contracts.  During travel, the Applicant was paid per
diem (which amounted to as much as half of his pay) in addition to his regular salary.  In
2004, one particular contract was expected to last three to six months with a possible
maximum of one year.  The contract kept extending and looked like it was going to
continue indefinitely.  In 2005, instead of continuing to pay rent, seven of the team
employees, including the Applicant, decided to purchase a house not knowing all of the
rules required in order to continue to receive per diem from the company.  Applicant
purchased his house for $205,000.  He put $16,000 down with the intention of keeping
the monthly payments low.  The house payments were $1400 monthly that he could
comfortably afford to pay.  He states that his supervisor was not aware of the rules or
regulations concerning per diem but did know that they had to be at least 50 miles away
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from their home of record in order to receive it.  (Tr. p. 39.)  At some point, Applicant
learned that in order to receive per diem he could not purchase a house in the area
because he would then be considered a resident and per diem would stop. 
Several months after he purchased the house, his company found out about it,
and his per diem stopped.  It was also about this time that the housing market collasped
in the state and property was difficult to sell.  This caused the Applicant serious financial
problems.  Without the per diem, he struggled to make the house payments.  He tried to
work as much overtime as possible, but it was not enough to maintain the payments.
After struggling like this for about two and a half years, he obtained a transfer from this
work assignment to another and his per diem was reinstated.  He then started to get
caught up on his bills.  He noted that he was 90 days delinquent on his mortgage
payments and contacted the mortgage company to work out an agreement and was told
that his house was in foreclosure.  In order to stop the foreclosure the Applicant would
have to pay $5,000 down and $5,000 monthly for six months.  He was unable to afford
to do so.  
In July or August 2010, he tried to obtain a loan modification, but was not
successful.  (Tr. p. 44-45)  He states that at some point the bank agreed to a loan
modification but sent the correspondence to his previous address, which was not
forwarded to him.  The bank only informed him about it when he was told that he missed
his first payment, which voided the agreement.  The bank then told the Applicant that
the only option available to him was a  short sale.  Applicant contacted a realtor and
started the short sale process.  The process was not successful, and Applicant’s house
was eventually foreclosed upon by the lender in January 2011.  In June 2012, the
lender sold the house to another party for $90,100.  Applicant was issued a Form 1099A
from the mortgage company.  Applicant’s attorney indicates that the highest possible
deficiency that could be entered against Applicant would be $24,399.99 and that the
lender has until July 1, 2014, to pursue a deficiency.  (Applicant’s Post-Hearing Exhibit
A.)  In regards to the second loan on the property, which was a line of credit that the
Applicant used to make repairs on the property, the actual balance is $39,950.  The
Applicant indicates that he has been in contact with the lender and plans to start making
payments over and about the normal monthly payments.  (Tr. p. 86.)      
Since 2010, Applicant’s financial situation has vastly improved.  In addition to his
regular salary, in September 2013, he will start receiving Social Security Benefits in the
amount of $2,048 monthly.  He recently inherited $10,000 from his mother who passed
away.  Applicant is current with all of his other financial obligations and is living within
his means.  (Tr. p. 58.)  His credit score has improved and is reporting at 656 by one of
the credit agencies.  According to his financial payment plan, he expects to be
completely out of debt by the end of the year.  (Tr. p. 60.)
Applicant’s personal financial statement dated July 18, 2013, indicates that after
paying all of his monthly expenses and debts, he has a net remainder of $3,069 left at
the end of the month.  (Applicant’s Exhibit F.)
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A letter of recommendation from one of the Applicant’s supervisor’s who has
worked with the Applicant for the past five years states that Applicant goes above and
beyond what is expected of him in the job.  He is honest, responsible, a person of high
integrity and loyalty.  He is the first to volunteer to help others.  (Applicant’s Exhibit E.)
A letter of recommendation from another supervisor of the Applicant, who the
Applicant has worked for in one capacity or another, indicates that Applicant’s work
product produces the highest standard of quality.  He has consistently shown honesty,
trustworthiness and loyalty.  He is a person of integrity who has knowledge,
workmanship and a desire to succeed.  He is recommended for a security clearance.
(Applicant’s Exhibit B.)  
Letters of recommendation from coworkers indicates that Applicant is intelligent,
trustworthy, honest and motivated on the job.  He does an exceptional job and pays
great attention to detail.  He has maintained the highest level of accountability, integrity,
and dedication to the job, his coworkers and the company.  He accomplishes all tasks at
the highest standards and is considered a trusted and valued member of the team.
(Applicant’s Exhibits C and D.)
POLICIES
Enclosure 2 of the Directive sets forth adjudication policies divided into
"Disqualifying Factors" and "Mitigating Factors."  The following Disqualifying Factors
and Mitigating Factors are found to be applicable in this case:
Guideline F (Financial Considerations)
18.  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. 
Conditions that could raise a security concern:
19.(a) inability or unwillingness to satisfy debts; and
19.(c) a history of not meeting financial obligation. 
Conditions that could mitigate security concerns:
20.(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
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medical emergency, or a death, divorce or separation), and the individual acted
responsibly under the circumstances;
20.(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; and 
20.(d) the individual initiated a good-faith effort to repay overdue creditors or
otherwise resolve debts.
In addition, as set forth in Enclosure 2 of the Directive at pages 18-19, in
evaluating the relevance of an individual’s conduct, the Administrative Judge should
consider the following general factors:
a. The nature, extent, and seriousness of the conduct and surrounding
circumstances;
    b. The circumstances surrounding the conduct, to include knowledgeable
participation;
c.  The frequency and recency of the conduct;
d.  The individual’s age and maturity at the time of the conduct;
e.  The extent to which participation is voluntary;
f.  The presence or absence of rehabilitation and other permanent behavior
changes;
g.  The motivation for the conduct; 
h. The potential for pressure, coercion, exploitation or duress; and
 i.  The likelihood of continuation or recurrence.
The eligibility criteria established in the DoD Directive identify personal
characteristics and conduct, which are reasonably related to the ultimate question,
posed in Section 2 of Executive Order 10865, of whether it is “clearly consistent with the
national interest” to grant an Applicant’s request for access to classified information.
The DoD Directive states, “The adjudicative process is an examination of a
sufficient period of a person’s life to make an affirmative determination that the person is
an acceptable security risk.  Eligibility for access to classified information is predicated
upon the individual meeting these personnel security guidelines.  The adjudicative
process is the careful weighing of a number of variables known as the whole-person
concept.  Available, reliable information about the person, past and present, favorable
and unfavorable, should be considered in reaching a determination.” The Administrative
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Judge can draw only those inferences or conclusions that have reasonable and logical
basis in the evidence of record.  The Judge cannot draw inferences or conclusions
based on evidence which is speculative or conjectural in nature.  Finally, as emphasized
by President Eisenhower in Executive Order 10865, “Any determination under this order
. . . 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.”
CONCLUSIONS
In the defense industry, the security of classified industrial secrets is entrusted to
civilian workers who must be counted upon to safeguard such sensitive information
twenty-four hours per day, seven days per week.  The Government is therefore
appropriately concerned when available information indicates that an Applicant for
clearance may be involved in instances of financial irresponsibility, which demonstrates
poor judgment or unreliability.
It is the Government’s responsibility to present substantial evidence to support
the finding of a nexus, or rational connection, between the Applicant’s conduct and the
holding of a security clearance.  If such a case has been established, the burden then
shifts to the Applicant to go forward with evidence in rebuttal, explanation or mitigation,
which is sufficient to overcome or outweigh the Government’s case.  The Applicant
bears the ultimate burden of persuasion in proving that it is clearly consistent with the
national interest to grant him or her a security clearance.
In this case the Government has met its initial burden of proving that the
Applicant has been financially irresponsible (Guideline F).  This evidence indicates poor
judgment, unreliability and untrustworthiness on the part of the Applicant.  Because of
the scope and nature of the Applicant's conduct, I conclude there is a nexus or
connection with his security clearance eligibility.
The evidence shows that the Applicant only became delinquently indebted after
he purchased a house that he thought would benefit him.  In actuality this purchase
caused him serious financial problems.  Without sufficient knowledge of his company’s
per diem policies, simultaneously aggravated by a downturn in the real estate market
and his inability to get a loan modification or a short sale, his house was foreclosed
upon.  The Applicant has been working with his attorney, who has informed him that
under the circumstances he will more than likely not be held responsible for any
deficiency on the first mortgage on the house.  If he is, he will arrange to pay it.
Applicant is current on the payments on the second line of credit.  He has now resolved
his past due indebtedness.  He has acted responsibly and reasonably under the
circumstances.  Furthermore, there is no evidence in the record to show that the
Applicant strategically arranged this loan default for the purpose of improving his
financial position.           
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These humbling, unpredictable, and unfortunate circumstances were isolated
incidents that will not recur.  Applicant now understands the company’s per diem policy,
his financial situation has stabilized, and his income has significantly increased without
per diem.   He understands that he must remain fiscally responsible if he is to hold a
security clearance.  Under the circumstances he had done the best he could.  He has
made a good-faith effort to resolve his past due indebtedness, and he has resolved his
delinquent debts.  He has not incurred any new debt that he cannot afford to pay and in
fact has reduced some of his expenses.  He has clearly demonstrated that he can
properly handle his financial affairs.  There is clear evidence of financial rehabilitation.
In the event that he becomes excessively indebted again, his security clearance will be
in immediate jeopardy.  Considering all of the evidence, the Applicant has introduced
persuasive evidence in rebuttal, explanation or mitigation that is sufficient to overcome
the Government's case. 
Under Guideline F (Financial Considerations), Disqualifying Conditions 19.(a)
inability or unwillingness to satisfy debts; and 19.(c) a history of not meeting financial
obligations, apply.  However, Mitigating Conditions 20.(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; 20.(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; and 20.(d) the
individual initiated a good-faith effort to repay overdue creditors or otherwise resolve
debts also apply.  Accordingly, I find for the Applicant under Guideline F (Financial
Considerations).    
I have also considered the “whole-person concept” in evaluating the Applicant’s
eligibility for access to classified information.  Under the particular facts of this case, the
totality of the conduct set forth above, when viewed under all of the guidelines as a
whole, support a whole-person assessment of good judgement, trustworthiness,
reliability, candor, and a willingness to comply with rules and regulations, and/or other
characteristics indicating that the person may properly safeguard classified information.
  I have considered all of the evidence presented, including his twenty years of
military service and the favorable letters of recommendation in his current job.  It
mitigates the negative effects of his financial indebtedness and the effects that it can
have on his ability to safeguard classified information.  On balance, it is concluded that
the Applicant has overcome the Government's case opposing his request for a security
clearance.  Accordingly, the evidence supports a finding for the Applicant as to the
factual and conclusionary allegations expressed in Paragraph 1 of the SOR.   
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     FORMAL FINDINGS
Formal findings For or Against the Applicant on the allegations in the SOR, as
required by Paragraph 25 of Enclosure 3 of the Directive are:
Paragraph 1: For the Applicant.
        Subpara.  1.a.: For the Applicant.
  DECISION
In light of all the circumstances presented by the record in this case, it is clearly
consistent with the national interest to grant or continue a security clearance for the
Applicant.
Darlene Lokey Anderson
Administrative Judge