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                              DEPARTMENT OF DEFENSE
               DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
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)       ISCR Case No. 12-02451
)
)
Applicant for Security Clearance )
Appearances
For Government: Daniel Crowley, Esquire, Department Counsel
For Applicant: Pro se
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Decision
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WHITE, David M., Administrative Judge:
Applicant incurred about $50,000 in still-delinquent debts over the past four
years, despite steady employment and apparently sufficient income to meet her
financial obligations. The evidence is insufficient to mitigate resulting security concerns.
Based upon a review of the pleadings, testimony, and exhibits, eligibility for access to
classified information is denied. 
Statement of the Case
Applicant submitted a security clearance application (SF 86) on November 16,
2011. On June 26, 2013, the Department of Defense Consolidated Adjudications
Facility (DoD CAF) issued a Statement of Reasons (SOR) to Applicant, detailing
security concerns under Guideline F (Financial Considerations). 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 for Determining Eligibility for
Access to Classified Information, effective within the Department of Defense after
September 1, 2006. 
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Applicant answered the SOR in writing (AR) on July 16, 2013, and requested a
hearing before an administrative judge. Department Counsel was prepared to proceed
on August 13, 2013. The case was assigned to me on August 19, 2013. The Defense
Office of Hearings and Appeals (DOHA) issued a Notice of Video Teleconference
Hearing on August 30, 2013, setting the hearing date for October 9, 2013. On October
8, 2013, DOHA issued a cancellation notice for the hearing due to the Government
shutdown. On October 15, 2013, DOHA issued another Notice of Video Teleconference
Hearing, and I convened the hearing, as rescheduled, on October 22, 2013. Applicant,
and the court reporter attended the hearing in person. Department Counsel participated
from DOHA Headquarters by video teleconference. The Government offered Exhibits
(GE) 1 through 6, which were admitted without objection, and Hearing Exhibit (HE) I, a
Government exhibit list. Applicant offered Exhibits (AE) A through I, which were
admitted without objection, and testified on her own behalf. I granted Applicant’s request
to leave the record open until November 5, 2013, for submission of additional evidence.
I later extended that deadline to November 27, 2013, at Applicant’s request. DOHA
received the transcript of the hearing (Tr.) on October 30, 2013. Applicant timely
submitted AE J and K. Department Counsel forwarded those exhibits to me on
December 2, 2013, with no objection to their admission. AE J and K were admitted, and
the record closed.
Findings of Fact
Applicant is a 70-year-old employee of a defense contractor. She worked as a
Government employee at a U.S. Navy facility from 1968 to 1993, and has been
continuously employed in administrative assistant positions for a series of support
contractors at the same facility since 1997. She married her 75-year-old husband in
1986, after divorcing her first husband in 1974. She has two children and four
stepchildren, all of whom were born in the 1960s and live independently. She earned a
high school diploma in 1961, and has taken some computer classes at a community
college. She has held security clearances since 1968, except during her temporary
retirement from 1993 to 1997. (GE 1; GE 5; Tr. 8-10, 37.) 
Applicant admitted all of the factual allegations concerning her delinquent debts
as set forth in SOR ¶¶ 1.a through 1.f, with some explanations. (AR.) Applicant’s
admissions, including her statements in response to DoD CAF interrogatories (GE 5),
are incorporated in the following findings.
Applicant has lived in the home she owns since 1972. In June 1998, she and her
husband entered into a $47,256 first mortgage loan on the property, with monthly
payments of $394. By January 2001 the balance was reduced to $45,012 and she had
no delinquent debt. (GE 2 at 7.) 
In April 2002, January 2003, May 2004, April 2006, December 2006, and March
2008, Applicant borrowed equity out of the property through a second mortgage, a
home equity line of credit, and refinancing the first mortgage loan four times. The
current balance on her first mortgage is about $232,000 with a monthly payment of
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$1,514. The balance on her $50,000 home equity line of credit is $50,590 toward which
she had been making interest-only monthly payments of $164. That payment is due to
rise to $450 or $500 per month in June 2014. (GE 3; GE 4; GE 5; AE J; Tr. 44-46.) 
Applicant admitted owing six delinquent debts, which totaled $49,695 as alleged
in the SOR. (AR.) She attributed her financial difficulties to about $3,000 in unplanned
septic system repairs that became necessary in 2010, and “mismanagement.” (GE 5;
AR; Tr. 30, 42-47.) The six debts became delinquent between August 2009 and
November 2012. (GE 3; GE 4; Tr. 49.) Since being questioned about her financial
difficulties during her November 30, 2011 security interview with an investigator from the
Office of Personnel Management (OPM), she has made small payments toward the
debts, as described below.
The $5,607 credit card debt alleged in SOR ¶ 1.a became delinquent in August
2010. In November 2011, the outstanding balance was $6,707 and she started paying
the collection agency $150 per month toward this debt. Her May 15, 2013 statement
from the collection agency showed that her last payment had been made on September
26, 2012, and her check for $100 would be deposited on May 23, 2013, toward the
balance of $5,607. Her October 15, 2013 statement showed an outstanding balance of
$5,208 after her $150 payment on September 23, 2013. (AR; GE 3; GE 5; AE C; Tr. 47-
48.)
SOR ¶ 1.b alleges a past-due approximate amount of $327 on another credit
card account that became delinquent in November 2012. The actual past-due amount
as of April 2013 was $302, with a total account balance of $2,090. (GE 4 at 3.) Applicant
authorized the creditor to begin taking $60 monthly debit payments toward this debt
from her bank account on May 24, 2013. In July 2013, she said the balance due was
$1,961. Her October 2013 account statement showed a $75 payment on September 30,
2013, past-due and membership fees of $40, and interest charges of $44 for the month.
Her balance due on this most recent statement was up to $2,157. (AR; GE 5; AE D; Tr.
48-49.)
The $2,458 delinquent debt alleged in SOR ¶ 1.c arose when Applicant
purchased a $1,200 sewing machine in July 2008 on a contract calling for no interest
and no payments for 12 months. She failed to pay for the machine as agreed, and the
account was placed for collection. On February 11, 2013, she entered into an
agreement to settle the debt by making 12 monthly electronic debit payments of
$124.64 to the collection agency. Her October 2013 account statement reflected that
she had made eight such payments and four, totaling $499, remained to be paid
through January 2014. (AR; GE 5; AE E; Tr. 49-51.)
Applicant had two delinquent credit card accounts with a major bank, as alleged
in SOR ¶¶ 1.d and 1.f, in the amounts of $16,325 and $19,711. These accounts became
delinquent in March 2011 and December 2010, respectively. In May 2013, she made
arrangements to pay the collection agency holding the first debt $200 per month for 18
months, but the confirmation letter stated that this plan would not resolve the entire
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$16,325 balance due. Her October 2013 account statement showed a balance of
$15,926 and a scheduled $180 payment due that month. Applicant submitted letters
from the major bank dated June 3, 2013, and October 10, 2013, acknowledging
payments of unspecified amounts toward the second debt. The second letter showed an
outstanding balance of $19,513. (AR; GE 5; AE F; AE H; Tr. 51-52, 82-84, 86-89.)
The $5,240 department store revolving charge account alleged in SOR ¶ 1.e
became delinquent in March 2011. In March 2013, Applicant agreed to pay the
collection agency holding the account a monthly electronic payment of $150 for 12
months, with no agreement that this would resolve the remaining balance. As of
September 16, 2013, she was still scheduled to make six of these monthly payments,
through February 2014, and the account balance had been reduced to $4,640. (AR; GE
5; AE G; Tr. 52.)
Accordingly, as of the close of the record, Applicant had made some payments
toward each of the SOR-listed debts, but none had yet been resolved according to the
documentation she provided. The total remaining on these six delinquent accounts was
$47,943, which is $1,752 less than the total alleged in the SOR. Continued payments at
the rates noted above would take more than five years to pay off the current balances,
without consideration of additional interest and fees over that period. 
Applicant submitted two financial statements showing her monthly income and
expenses, and reflecting annual net family income of about $96,000. The first
statement, submitted in June 2013, showed a monthly net remainder of $3,237 but no
savings and $4,200 in stocks/bonds. It also reflected $283,000 in mortgage debt on her
home that she valued at $200,000. (GE 5.) She was unable to explain where the extra
$3,237 per month had gone when asked during her hearing, but said she had, “very
little in savings.” (Tr. 43-44, 62-65.) After the hearing, she submitted a second statement
showing higher living expense estimates that reduced her monthly net remainder to
$1,283. (AE J.) That still leaves more than $15,000 per year unaccounted for.
Applicant has consistently stated, since submitting her SF 86 in November 2011,
that she intended to sell two small vacant lots that she subdivided from the back of her
property in order to pay her delinquent debts. (GE 1; GE 5; AR.) She provided a
property tax statement for one of the two identical lots, showing its 2013 assessed value
to be $52,770. She testified that she had made no progress toward selling the lots as of
her hearing date, but thought a neighbor might be interested in buying them despite
their reduced marketability due to a neighbor’s recent clear-cutting of the adjacent
property. (Tr. 38-42, 53-61.) After the hearing, she submitted a copy of a sale and listing
agreement with a realtor, dated October 30, 2013, placing the two lots on the market for
a total asking price of $80,000. (AE K.)  She provided no information to show whether
these lots are encumbered under her first mortgage or home equity line of credit.
    
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Applicant provided no evidence of financial counseling to address her admitted
“mismanagement” of her available income. She testified that she had made preliminary
contact with a financial services company, but had not decided to enter an agreement
for them to assist her. (Tr. 47, 69-71.) Her most recent performance evaluation
contained complimentary remarks concerning all aspects of her work, and gave her an
overall rating of “Exceeds Expectations.” (AE A.) She submitted several letters from
longtime friends, acquaintances, coworkers, and military supervisors praising her
character and dedication. (AE B.)
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 (DCs) and mitigating conditions (MCs), which are to be 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 AG ¶ 2 describing the adjudicative process. The administrative judge’s
overarching adjudicative goal is a fair, impartial, and commonsense decision. According
to AG ¶¶ 2(a) and 2(c), the entire process is a conscientious scrutiny of applicable
guidelines in the context 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 the 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.
Under Directive ¶ E3.1.14, the Government must present evidence to establish
controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, “[t]he applicant is
responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or
mitigate facts admitted by the applicant or proven by Department Counsel, and has the
ultimate burden of persuasion as to obtaining a favorable clearance decision.” Section 7
of Executive Order 10865 provides: “[a]ny determination under this order adverse to an
applicant 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.”
A person applying for access to classified information seeks to enter 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
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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.
Analysis
Guideline F, Financial Considerations
The security concerns under the guideline for financial considerations are set out
in AG ¶ 18, which reads in pertinent part:      
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 record evidence potentially raises security concerns under two Guideline F
DCs, as set forth in AG ¶ 19: 
(a) inability or unwillingness to satisfy debts; and
(c) a history of not meeting financial obligations. 
Over the past four years, Applicant incurred six delinquent debts, totaling about
$50,000, that she is unable to repay at present despite being steadily employed with
significant monthly surplus income according to the financial statements she submitted.
This evidence raised significant security concerns under DCs 19(a) and (c), thereby
shifting the burden to Applicant to rebut, extenuate, or mitigate those concerns. The
SOR allegations and evidence do not support any other DC under this guideline. 
The guideline includes five conditions in AG ¶ 20 that could mitigate security
concerns arising from Applicant’s financial difficulties:
(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;
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(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.
Applicant’s multiple SOR-listed debts became delinquent over the past four years
and remain unresolved. She offered no evidence of changed circumstances or
improved financial management that would support a finding that such issues are
unlikely to recur or do not reflect on her reliability and judgment. Applicant failed to
establish substantial mitigation under MC 20(a). 
Applicant also offered insufficient evidence to support significant mitigation under
MC 20(b). She claimed that her problems were caused by a $3,000 expenditure in 2010
to repair her septic system, but did not establish how that caused her to default on
about $50,000 in other debts or squander her variously estimated $15,000 to $39,000 in
annual surplus income. Between April 2002 and March 2008, she borrowed about
$237,000 against appreciation equity in her home and spent those funds, in addition to
her income, leaving her without any savings at present. This was not responsible
conduct under the circumstances.
Applicant did not undergo financial counseling, or otherwise demonstrate a basis
on which to predict improved financial management. Nor has she asserted any basis to
dispute her ongoing obligation to repay her delinquent debts, none of which were shown
to be resolved despite recent and sometimes sporadic small payments toward each. If
the two lots she recently listed for sale are encumbered under her mortgage or line of
credit, the creditors are unlikely to permit their sale without applying the proceeds
toward loan principal. If they are not encumbered she is at least $80,000 underwater on
those loans. These facts preclude significant mitigation under MC 20(c), (d), or (e). 
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
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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
pertinent facts and circumstances surrounding this case. Applicant is a sincere
individual, with a long record of service at the Navy installation where she is employed.
She is mature and accountable for her choices and actions, but has recently struggled
to remain current on her debt obligations. While she has recently made relatively small
payments toward each SOR-listed debt, she has not yet demonstrated positive
permanent behavioral changes or rehabilitation. Her conduct with respect to these
voluntarily assumed financial obligations was neither responsible nor indicative of
trustworthiness.
The potential for exploitation or duress, due to the number and magnitude of
Applicant’s outstanding debts, has not been significantly alleviated. The likelihood of
continuation of these issues has not been shown to be reduced. Applicant has earned
the trust and confidence of friends and coworkers. Overall, however, the record
evidence creates ongoing doubt as to Applicant’s present eligibility and suitability for a
security clearance.
Formal Findings
Formal findings for or against Applicant on the allegations set forth in the SOR,
as required by ¶ E3.1.25 of Enclosure 3 of the Directive, are:
Paragraph 1, Guideline F: AGAINST APPLICANT
Subparagraphs 1.a through 1.f: 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 or continue Applicant’s eligibility for
a security clearance. Eligibility for access to classified information is denied.
                                              
DAVID M. WHITE
Administrative Judge