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                        DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)
)       ISCR Case No. 12-06721
Applicant for Security Clearance  )
Appearances
For Government: Tovah Minster, Esq., Department Counsel
For Applicant: Pro se
                                                                            
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Decision
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LYNCH, Noreen, A., Administrative Judge:
On November 26, 2013, the Department of Defense (DOD) issued Applicant a
Statement of Reasons (SOR) alleging security concerns arising under Guideline F
(Financial Considerations). 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
(AG) implemented in September 2006. 
Applicant timely answered the SOR and requested a hearing before an
administrative judge. The case was assigned to me on February 12, 2014. A notice of
hearing was issued on February 21, 2014, scheduling the hearing for March 11, 2014.
Government Exhibits (GX) 1-4 were admitted into evidence, without objection. Applicant
testified, and submitted Applicant Exhibits (AX) A-B, which were admitted without
objection. The transcript (Tr.) was received on March 19, 2014.  Based on a review of
the pleadings, testimony, and exhibits, eligibility for access to classified information is
denied.
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Findings of Fact
In her answer to the SOR, Applicant admitted the factual allegations under
Guideline F (Financial Considerations), with explanations.
Applicant is a 58-year-old defense contractor. Applicant graduated from high
school in 1975 and attended college courses, receiving a diploma in 2000. She has
been with her current employer since 2007. (GX 1) She has held a security clearance
for about 14 years. (Tr. 17) 
In 2006, Applicant and her husband purchased two rental condominiums in
another state.  She believes the purchase price for the two units was about $300,000.
They did so based on a fellow church member’s advice. Applicant made a deposit on
the unseen properties. She relied on the friend’s description of the property as a good
business opportunity. The friend was a real estate agent. Applicant was told that the
developer would pay the mortgage, keep the properties rented, and pay the
management fees for two years. After two years, Applicant would sell the properties.
(Tr. 14) She had no intention of renting them. She believed there would be about a
$5,000 profit. After about one year, the developer of the condominiums went bankrupt. 
When the properties reverted to Applicant, she tried to contact the property
management company. She learned that it was her responsibility and that the
condominium had no current renters. She was paying her home mortgage and did not
have sufficient income to pay the mortgages for the condominiums. Applicant recalls
that she paid for about two months, which was about $9,000. (Tr. 15) Applicant
received a letter that stated the properties would go to foreclosure. She stated that
there was nothing that she could do at that time. Applicant testified that she does not
believe the two defaulted mortgage loans are her burden. (Tr.20) Applicant has not had
any contact with the banks.
The SOR alleges three delinquent debts which are mortgage loan defaults and
home foreclosures totaling approximately $373,000. The credit reports reflect the
delinquent debts. (GX 3,4 )
The account alleged in SOR 1.a for $171,000 is the result of the first mortgage
account. The condo went to foreclosure. The account is unpaid. Applicant has no plans
to resolve the debt. (Tr. 37)
.
The  account in the amount of $162,000 alleged in SOR 1.b is the result of a first
mortgage account. The home went to foreclosure. The account is unpaid. Applicant has
no plans to resolve the debt.
The past-due account on a second mortgage alleged in SOR 1.c for
approximately $40,126, has been satisfied. Applicant submitted a form 1099-C, which
documents that the debt has been forgiven. (AX A,B)
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When Applicant purchased the investment properties, she earned about
$40,000. Her husband earned about $60,000. They had the ability to pay for their home
mortgage of $2,100. There was no contingency plan in place if the investment
properties did not work out. 
Applicant acknowledged that she has been in this country for about 30 years.
She is a naturalized U.S. citizen and has never had any financial or legal difficulty. She
stated that she does not live extravagantly or beyond her means and abides by all rules
and regulations. The mortgages were for investment purposes and she has no history
of not paying her bills. She does not believe she has poor self-control or lack of
judgment. Her credit was in good shape before the unfortunate incident with the rental
properties. She acknowledged that this was a poor business decision. 
Applicant’s husband held a security clearance and he lost that clearance due to
the financial problems that arose from the investments. He became unemployed for a
period of time in 2010. (Tr. 42) He found new employment in June 2012. (Tr. 43) 
 
Policies
When evaluating an applicant’s suitability for a security clearance, an
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. These guidelines are not inflexible
rules of law. Instead, recognizing the complexities of human behavior, they are applied
in conjunction with the factors listed in the adjudicative process. An administrative
judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision.
Under AG ¶ 2(c), this process is a conscientious scrutiny of a number of variables
known as the “whole-person concept.” An 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.
The Government must present evidence to establish controverted facts alleged
in the SOR. An applicant is responsible for presenting “witnesses and other evidence to
rebut, explain, extenuate, or mitigate facts admitted by applicant or proven by
 See also ISCR Case No. 94-1075 at 3-4 (App. Bd. Aug. 10, 1995).      1
 Department of the Navy v. Egan, 484 U.S. 518, 531 (1988).      2
 ISCR Case No. 93-1390 at 7-8 (App. Bd. Jan. 27, 1995).      3
 See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive      4
information), and EO 10865 § 7.
 ISCR Case No. 93-1390 at 7-8 (App. Bd. Jan. 27, 1995).      5
 Id.      6
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Department Counsel. . . .”  The burden of proof is something less than a1
preponderance of evidence.  The ultimate burden of persuasion is on the applicant.  2 3
A person seeking access to classified information enters into a fiduciary
relationship with the Government based on 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 classified information. Such
decisions entail a certain degree of legally permissible extrapolation of 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.”  “The clearly consistent standard indicates that security clearance4
determinations should err, if they must, on the side of denials.”  Any reasonable doubt5
about whether an applicant should be allowed access to sensitive information must be
resolved in favor of protecting such information.  The decision to deny an individual a6
security clearance does not necessarily reflect badly on an applicant’s character. It is
merely an indication that the applicant has not met the strict guidelines the President
and the Secretary of Defense established for issuing a clearance.
      Analysis
Guideline F, Financial Considerations
AG ¶ 18 expresses the security concern pertaining to financial considerations:
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 over-
extended is at risk of having to engage in illegal acts to generate funds.  
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AG ¶ 19 describes conditions that could raise a security concern and may be
disqualifying:
(a) inability or unwillingness to satisfy debts; and
(c) a history of not meeting financial obligations
Applicant acknowledges that she has delinquent debts. Her credit reports
confirm the debts. Consequently, the evidence is sufficient to raise the disqualifying
conditions in ¶¶ 19(a) and 19(c). 
AG ¶ 20 provides conditions that could mitigate security concerns. The following
are potentially relevant:
(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;
(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
(d) the individual initiated a good-faith effort to repay overdue creditors or
otherwise resolve debts.
Applicant’s financial problems began when the two investment properties that
she purchased from a realtor friend did not succeed. She and her husband willingly
entered into the contract to purchase the two condominiums without researching the
area. When the developer went bankrupt, Applicant paid the mortgages for about two
months. However, she was unable to maintain the payments. While the bankruptcy of
the developer was beyond their control, Applicant did not have a contingency plan if
something went wrong with the investments. She did not have sufficient funds to
maintain her own home and the two properties, although she tried. The second
mortgage has been satisfied and the debt forgiven. However, the first two mortgage
loans have not been resolved. Applicant has no plans at this time to resolve the debts.
Applicant did not produce documentation to show the current status of the two
mortgage loans. Moreover, she does not believe that she has an obligation to pay the
mortgage accounts since the condominiums went to foreclosure. Applicant has not
shown mitigation under the guidelines.
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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 an 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. As noted above, the
ultimate burden of persuasion is on the applicant seeking a security clearance. 
I considered the potentially disqualifying and mitigating conditions in light of all
the facts and circumstances surrounding this case as well as the whole-person factors.
Applicant is a 58-year-old professional with a history of employment in the defense
arena. She has held a security clearance for more then ten years.
Applicant is an honest, credible person, who has no criminal record. She wanted
to invest in properties, but did not take sufficient steps to research her investment. She
and her husband had always been able to pay their bills, but when the investment
properties went bankrupt, Applicant did not have sufficient funds or a contingency plan
in place to address the situation. Applicant does not believe she has the obligation for
these two mortgage accounts because they went to foreclosure. However, she signed
the contracts and has provided no information that the two first mortgage debts have
been forgiven. Applicant has not met her burden to mitigate the financial considerations
security concerns.  
Any doubts about Applicant’s judgment must be resolved in favor of the
Government. She has not acted reasonably under the circumstances. Clearance is
denied. 
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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
Subparagraph 1.a: Against Applicant
Subparagraph 1.b: Against Applicant
Subparagraph 1.c: 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 a security clearance.
Clearance is denied. 
                                                     
NOREEN A. LYNCH.
Administrative Judge