DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
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                                                                      )                                                             
        ------------------------------------                   )        ISCR  Case No.  12-00945          
                                                               )
)
Applicant for Security Clearance )
Appearances
For Government: Ray Blank, 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 mitigated the security concerns regarding his finances. Eligibility for access to
classified information is granted. 
 
Statement of Case
On June 28, 2013, the Department of Defense (DOD) issued a Statement of
Reasons (SOR) detailing reasons why DOD adjudicators could not make the 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 July 29, 2013, and requested a hearing. The
case was assigned to me on September 6, 2013, and was scheduled for hearing on
September 25, 2013. At hearing, the Government's case consisted of five  exhibits (GEs
1-5). Applicant relied on one witness (himself) and one exhibit (AE A). The transcript (Tr.)
was received on October 3, 2013. 
Procedural Issues
Before the close of the hearing, Applicant requested the record be kept open to
afford him the opportunity to supplement the record with documented credit card transfers
and debt payments. For good cause shown, Applicant was granted 14 days to
supplement the record, The Government was afforded two days to respond. Within the
time permitted, Applicant provided a cover summary and copies of an updated personal
financial statement, payment histories with payment plans, and a character reference.
Applicant’s submissions were admitted as AEs B-M.
Summary of Pleadings
Under Guideline F, Applicant allegedly accumulated 12 delinquent medical and
consumer debts. The alleged debts exceeded $43,000. 
In his answer to the SOR, Applicant admitted two of the listed debts: creditors 1.c
($264) and creditor 1.j ($10,209). He denied the remaining listed debts, claiming payment
(creditors 1.a, 1.b, and 1.g); completed payment agreements (creditors 1.d through 1.f,
1.i, and 1.l); erroneous amounts alleged (creditor 1.h); and lack of verification of the
debt’s validity (creditor 1.k) 
             
Findings of Fact
Applicant is a 62-year-old multimedia design engineer 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 March 1971 and has two children from this marriage. (GE 1)
He divorced his first wife in December 1977. (GE 1) He married again in December 1978
and has two children from this marriage. (GE 1) He divorced his second wife in March
1991. (GE 1) In May 1991, Applicant married his third wife. He divorced her June 1992
and has no children from this marriage. (GE 1) Applicant married his current wife in
March 2000 and has no children from this marriage; although he does have several
stepchildren.  (GEs 1 and 2)  
Applicant enlisted in the Navy in January 1971 and served almost seven years of
active duty as a Navy enlistee before receiving his honorable discharge in December
1978. (GE 1) He was commissioned as a Navy officer in December 1978 and served an
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additional six years before receiving his honorable discharge in February 1984. (GE 1)
While on active-duty, he completed his degree requirements under the Navy’s enlisted
scientific education program. (GE 1)
Applicant’s finances
Before 2009, Applicant and his wife held well-paying jobs and maintained good
credit.  In 2009, Applicant paid $38,000 to creditor 1.j for an SUV and financed it with
monthly payments of $700. (Tr. 31-32, 39-40) And for the first 18 months they were able
to keep their monthly payments current. (GE 2)  
In 2009, Applicant’s current wife, who sells printer supplies on commission,
experienced a significant reduction in her annual earnings from a base earnings level of
$53,353 in 2007 to just $33,798 in 2010. (GE 2; Tr. 23, 34-37, 44) He attributed her
earnings reductions to business downturn conditions and reorganizations by her account
customers. (GE 2 and AE B; Tr. 23) 
Between December 2009 and mid-2010, Applicant and his wife struggled to meet
their financial obligations, and sometimes were unable to fulfill their responsibilities. In
2010, Applicant met with his creditors and developed a plan of action to repay his past-
due creditors and close his outstanding accounts.  (GE 2) As a part of their continuing
efforts to stabilize their finances, Applicant explored financial counseling, but without
success, and even surrendered the SUV that he and his wife had purchased from the
lender in 2010. (GE 2; Tr. 41-42). 
After the SUV was sold at public auction by the repossessing lender, Applicant
was left with a $10,209 deficiency balance with creditor 1.j. (Tr. 31, 42)  He offered the
creditor $50 to $100 a month to settle the deficiency claim, but has not heard anything
from the creditor to date. (Tr. 31, 42)  He will continue to reach out to this creditor in his
efforts to complete a payment plan with the creditor. 
Without the benefit of financial counseling or debt consolidation, Applicant and his
wife worked earnestly to catch up with their delinquent accounts and even permitted the
repossession of one of their vehicles to stabilize their debts. (GE 2; Tr. 41-42) And by
September 2011, Applicant and his wife had made some progress in repaying several of
their outstanding debts. (GE 2)  
Still, Applicant and his wife remained in debt with a number of their creditors after
September 2011. (GE 2) Credit reports corroborate Applicant’s having delinquent debts
(some in collection or charged off) with creditors holding medical and consumer accounts
with Applicant and his wife. Altogether, Applicant accumulated delinquent debts between
2009 and 2011, exceeding $43,000. (GEs 3-5)
Since 2011, Applicant has completed payment plans with a number of creditors.
His proofs document a payment plan with creditor 1.d, which reveals $50 monthly
payments totaling $1,650 since December 2010 and a reduced balance of approximately
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$1,100. (AE D). His post-hearing submissions document payment plans with creditor 1.e
($60 monthly payments on a $7,816 balance); creditor 1.f ($25 monthly payments on a
$7,124 balance); and creditor 1.l ($38.89 monthly payments on a $260 balance).
Applicant’s proofs also show pay-offs of reported debts with creditors 1.a ($24), 1.b ($97),
and creditor 1.g ($1,379). Applicant’s payments reduce his overall delinquency total by a
little less than $5,000, or a little more than 10 per cent of the aggregate of listed debts in
the SOR. (GEs 2-5 and AEs D-G; Tr. 29-33) Additionally, he has made payments to
several non-listed creditors. (AEs H-K)
Several of Applicant’s listed debts remain outstanding without any payment plans
in force.  One of the debts is a charged-off debt with creditor 1.h in the amount of $8,984.
(GEs 2-5) He claims he has a settlement offer from this creditor to make monthly
payments, and is hopeful of doing so. (Tr. 28-29) He is hopeful, too of working out
payment plans with his remaining creditors (i.e., creditors 1.c, 1.i, and 1.j). 
In 2008, Applicant and his wife grossed $154,257 and reported credit debt of
$103,758. (GE 2; Tr. 33) He acknowledged that he and his wife were living beyond their
means during this reporting period. (GE 2; Tr. 34) By 2010, his wife’s net monthly income
had decreased to less than $3,000 a month. (Tr. 34) 
With their decreased income, Applicant and his wife took steps to cancel most of
their credit cards. (Tr. 35-36) By 2013, he and his wife were able to reduce their overall
credit debt to around $78,000, exclusive of the car deficiency covered in subparagraph
1.j. (GEs 3-5; Tr. 37-38) 
Currently, Applicant nets around $4,856 a month from his job. (AE C; Tr. 44)  His
wife nets about $2,000 a month from her commission sales. (AE C; Tr. 43) With monthly
debts and expenses totaling $7,553, Applicant and his wife have a net minus monthly
remainder of $697. (AE C) 
Endorsements
Applicant provided a character reference from a police department veteran and
friend who expressed high regard for Applicant’s core values of honesty, loyalty, and
integrity. (AE M)  This friend credited Applicant with being a person of high character and
above all a loyal U.S. citizen. (AE M)
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
may be disqualifying” (disqualifying conditions), if any, and many of the "[c]onditions that
could mitigate security concerns.”  They must be considered before deciding whether or
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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
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
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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 periods of living beyond his means and accumulating
over $43,000 in delinquent debts over a three-year period. He has since paid off several
debts and has established payment plans with a number of his creditors.
Historically, Applicant encountered considerable financial strains after his wife
experienced income losses due to decreased commission sales in the 2009-2012 time
frame. His financial issues raise potential security concerns about his judgment,
reliability, and trustworthiness in managing his finances. His actions warrant the
application of three of the disqualifying conditions (DC) of the Guidelines: DC ¶ 19(a),
“inability or unwillingness to satisfy debts;” DC ¶ 19(c) “a history of not meeting financial
obligations;” and DC ¶ 19(e), “consistent spending beyond one’s means, which may be
indicated by excessive indebtedness, significant negative cash-flow, high debt-to-
income ratio, and/or other financial analysis.” 
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
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
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vulnerability to coercion and influence, judgment and trust concerns are also explicit in
financial cases.
Applicant’s identified periods of living beyond his means and leaving no margin
for reduced earnings placed too much dependence on his wife’s earnings capabilities.
While his wife’s earnings losses could reasonably be expected to limit his ability to
manage his family’s finances, they are not enough by themselves to extenuate his
accrued debt delinquencies. His wife’s earnings losses entitle Applicant to some
application of MC ¶ 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.” 
Mitigation is demonstrated, though, 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). Applicant has demonstrated considerable
progress with his debts through the pay-offs he has made with several creditors and
with the payment plans he has established and serviced with five of the listed creditors
in the SOR.  MC ¶ 20(d), “the individual initiated a good-faith effort to repay overdue
creditors or otherwise resolve debts,” applies to Applicant’s situation.
To his credit, Applicant has established a considerable track record of payments
with most of his creditors and hopes to complete payment plans with his remaining
creditors. His payments to date have reduced his aggregate debt total by close to
$5,000 and reflect satisfactory progress in accordance with the criteria established by
the Appeal Board for assessing an applicant’s efforts to rectify his poor financial
condition with responsible efforts considering his circumstances. See ISCR Case No.
08-06567 at 2-3 (App. Bd. Oct. 29, 2009).
In considering whether Applicant acted reasonably when dealing with his
financial difficulties caused in part by his wife’s reduced earnings, consideration was
accorded Applicant’s maintained contact with his creditors and the payoffs and modest
payment plans he was able to arrange with a number of them.  His actions satisfied a
major component of the criteria established by the Appeal Board to gauge an
applicant’s payment initiatives. See ISCR Case No. 05-11366 at 4 n.9 (App. Bd. Jan.,
12, 2007)(citing ISCR Case No. 99-0462 at 4 (App. Bd. May 25, 2000); ISCR Case No.
99-0012 at 4 (App. Bd. Dec. 1, 1999). Minimal mitigation initiatives necessary to meet
Appeal Board requirements are met in Applicant’s case. 
From a whole-person standpoint, the evidence reflects some unfortunate
economic circumstances associated with Applicant’s accumulation of delinquent debts.
He is credited with 13 years of active military service and is well-regarded by a police
department veteran and friend who is familiar with Applicant’s habits of honesty, loyalty,
integrity in his work and personal life. Applicant has since made steady inroads in
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stabilizing his finances and shows good prospects for paying off his debts and restoring
his finances to acceptable levels.
Overall, Applicant demonstrates considerable progress in stabilizing his finances
with his payment initiatives. His efforts to date are sufficient to meet mitigation
requirements imposed by the guideline governing his 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):   FOR APPLICANT
   
Subparas. 1.a  through 1.l:        For Applicant
                                  
Conclusions
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 Applicant’s security clearance.
Clearance is granted.
                                          
Roger C. Wesley
Administrative Judge 
                                        
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