DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
--------------------------------- )      ISCR Case No. 12-04143
)
Applicant for Security Clearance )
Appearances
For Government: Jeff Nagel, Department Counsel
For Applicant: Pro se
March 25, 2014
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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 April 17, 2013.  (Government Exhibit 1.)  On November 19, 2013, the
Department of Defense (DoD), 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 December 20, 2013, and he requested
an administrative hearing before a DOHA Administrative Judge.  This case was
assigned to the undersigned Administrative Judge on February 4, 2014.  A notice of
hearing was issued on February 5, 2014, and the hearing was scheduled for February
27, 2014.  At the hearing the Government presented six exhibits, referred to as
Government Exhibits 1 through 6, which were admitted without objection.  The Applicant
presented four exhibits, referred to as Applicant’s Exhibits A through D, which were also
admitted into evidence without objection.  He also testified on his own behalf.  The
record remained open until close of business on March 10, 2014, to allow the Applicant
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to submit additional documentation.  The Applicant submitted three Post-Hearing
Exhibits, referred to as Applicant’s Post-Hearing Exhibits A through C, which were
admitted without objection.  The official transcript (Tr.) was received on March 6, 2014.
Based upon a review of the pleadings, exhibits, and testimony, eligibility for access to
classified information is granted.
 FINDINGS OF FACT
The Applicant is 39 years old and married.  He has a high school diploma,
military training, some college, and holds the position of Technical Support Manager 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 each of the allegations set forth in the SOR under this
guideline.  (See Applicant’s Answer to SOR.)  Credit Reports of the Applicant dated
November 4, 2011; April 25, 3013; and January 17, 2014, reflect that at one time
Applicant was indebted to each of the creditors set forth in the SOR, in an amount
totaling almost $34,000.  (Government Exhibits 4, 5, and 6.)
After graduating from high school, Applicant joined the United States Marine
Corps in 1993, where he served for a total of almost fifteen years.  During this period,
Applicant served on active duty and in the reserves, and received a number of awards
and decorations for his achievements.  (Tr. p. 34, and Applicant’s Exhibit C.)  He
completed his military service in 2009.  Applicant held a security clearance during his
entire military career and had no security violations.  In May 2002, Applicant was hired
by his current employer and has held a security clearance since then without incident.
Applicant’s payment history shows that he has always paid his bills on time and
has been financially responsible.  The three delinquent debts set forth in the SOR arose
out of one property transaction that went bad.  In 2005, Applicant lived in an apartment
building that he enjoyed.  In 2006, he learned that the apartment complex was being
converted into to condominiums and he decided to purchased a unit in the first phase of
the conversion.  By June 2006, Applicant’s purchase was completed.  He purchased a
condominium in the complex for $325,000, with a down payment of $30,000.  The loan
was an adjustable rate mortgage that was set for five years, before it would adjust.
Shortly after purchasing the condo, Applicant was notified that Builder A, responsible for
developing the condos, was foreclosed upon by Bank A, and were no longer selling the
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properties.  By this time, 50 condominiums had already been converted and sold and
the Homeowners Association (HOA) was in full operation.  There was hope that Bank A
would find another buyer (developer) to finish the conversion process for the remaining
233 units in the complex.  Applicant continued to make his regular mortgage payments
according to the mortgage loan agreement.  By 2007, Bank A had determined that the
complex would stay as apartments and started advertising them for rent.  Applicant was
urged to short sale his condo back to the bank but refused.  Renters started moving in
and assuming the remaining 230 properties and the community significantly changed.
The crime rate increased.  Applicant’s vehicle was broken into on three separate
occasions.  After about two years of making both his mortgage and HOA payments in a
timely fashion, Applicant stopped making his HOA payments since he was not receiving
the services that he had bargained for.  As a result, he was sued in small claims court
for the damages and lost.  A judgment was filed against the Applicant in April 2013 in
the approximate amount of $5,150 for back owed HOA dues.  Applicant borrowed
money from his savings account and sold some stock in order to pay off the debt in full.
(Tr. p. 76.)
After purchasing the condominium, but before learning of the problems, Applicant
used his line of credit on a credit card to purchase upgrades for the condo.  He
purchased new appliances for the kitchen and granite counter tops for the kitchen and
bathrooms.  He made payments on the debt until 2010, when he decided to leave the
community.  As a result, Applicant became indebted to a bank in the amount of
$22,884.  Applicant initially contacted the creditor and was told that the debt was
charged off.  He was later told that they were willing to settle the debt for $11,000.
Applicant’s Post-Hearing Exhibit B is a letter from the collection agency confirming that
on March 4, 2014, Applicant set up a structured payment plan that he intends to follow
until the debt is paid in full.       
Applicant was also indebted to a Bank A in the amount of $5,824 for a credit card
used to purchase flooring for the Applicant’s condo when his unit incurred damage from
another unit.  Applicant thought he would be reimbursed for the damage, but was not.
When he contacted the creditor he was initially told that the debt was charged off.  He
testified that he was currently in negotiations with the bank concerning his debt.
Applicant’s Post-Hearing Exhibit A is a letter from the collection agency confirming that
on March 4, 2014, Applicant set up a structured payment plan that he intends to follow
until the debt is paid in full.    
Applicant admitted that he was urged to short sale the property back to Bank A
beginning in late 2007, but refused.  He had made a significant financial investment in
the property that he did not want to lose and so he tried to hold on as long as he could.
When he finally realized that things would not improve, he stopped making payments on
the mortgage for about eight months before it was foreclosed upon in April 2011.
Applicant explained that he received a Form 1099 A and has handled the tax
implications.  (Applicant’s Post-Hearing Exhibit C.)  Applicant self-reported his property
foreclosure to his company security officer.  (Government Exhibit 3.)        
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A letter of recommendation from the Applicant’s direct supervisor reveals that
Applicant consistently exhibits a high level of integrity and high moral character on the
job.  He is considered to be an effective leader, who is respected by his subordinates,
colleagues, program managers, and the general manager of the business unit.  He is
considered reliable and trustworthy.  (Applicant’s Exhibit B.)  
A letter from a fellow coworker, and landlord of the Applicant, indicates that
Applicant always pays his rent on time and in full every month.  Applicant takes
excellent care of the property, is professional at work and in their landlord/tenant
relationship.  Applicant is considered reliable and trustworthy.  (Applicant’s Exhibit A.)    
A letter from the Applicant’s company security officer indicates that Applicant
demonstrates an exemplary work ethic, honesty, integrity, security consciousness, and
has great respect for the protection and safety of his country and those that protect it.
He is recommended for a security clearance.  (Applicant’s Exhibit A.)
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
medical emergency, or a death, divorce or separation), and the individual acted
responsibly under the circumstances;
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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
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
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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 became delinquently indebted through no
fault of his own, after certain unfortunate circumstances occurred surrounding the
purchase of his condominium.  When an individual is entirely dependent upon the
actions of others, in this case, the developer and the bank, there is certainly no way the
Applicant could predict that the apartment conversion process would not be completed
as scheduled, and that he would be stuck in the middle of this unlucky financial
dilemma.  Despite this situation, Applicant acted responsibly and reasonably under the
circumstances.  And, 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.           
This humbling, unpredictable, and unfortunate circumstance was an isolated
incident that will not recur.  Although Applicant’s property was foreclosed upon, he really
had no other viable option available to him.  Since then he has set up structured
payments plans regarding the other two delinquent debts and is scheduled to start
making regular monthly payments toward the debts until they are resolved.  Applicant
understands that he must be extremely careful when making decisions about property
purchases and must often anticipate or even prepare for the worst.  He understands
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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.  He has not incurred any new debt that he cannot
afford to pay.  He has clearly demonstrated that he can properly handle his financial
affairs.  There is clear evidence of financial rehabilitation.  However, in the event that he
becomes excessively indebted again and cannot meet his financial obligations, 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 almost fifteen 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.   
     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.
        Subpara.  1.b.: For the Applicant.
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        Subpara.  1.c.: For the Applicant.
        Subpara.  1.d.: 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