1
                                                             
                           
                        DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
        )
)
)       ISCR Case No. 14-00066
Applicant for Security Clearance  )
Appearances
For Government: Julie Mendez, Esq., Department Counsel
For Applicant: Pro se
                                                                            
______________
Decision
______________
LYNCH, Noreen, A., Administrative Judge:
On April 17, 2014, 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 May 21, 2014. A notice of
hearing was issued on May 29, 2014, scheduling the hearing for June 20, 2014.
Government Exhibits (GX) 1-4 were admitted into evidence without objection. Applicant
testified. He submitted Applicant Exhibits (AX) A-C, which were admitted into the record
without objection. I kept the record open for additional submissions, and Applicant
timely offered AX D, which was admitted without objection. The transcript (Tr.) was
received on July 1, 2014. Based on a review of the pleadings, testimony, and exhibits,
eligibility for access to classified information is granted. 
The allegation in SOR 1.e is a duplicate of the allegation in SOR 1.b.      1
2
Findings of Fact
In his answer to the SOR, Applicant admitted the allegations in the SOR under
Guideline F (Financial Considerations), with explanations. 
Applicant is a 39-year-old employee of a defense contractor. He graduated from
high school and attended college, but he has not yet obtained a degree. Applicant
served in the National Guard from 1994-2005, and from 2005 until November 2011. He
was activated twice and served in Iraq. Applicant is married, and he has three children.
(Tr. 17)  Applicant has been with his employer since January 2013. (GX 1) He held a
security clearance in the military. (Tr. 20)
The SOR alleges an indebtedness for a 2013 judgment in the amount of $1,650;
a 2012  state tax lien in the amount of $2,855; a charged-off account in the amount of
$5,542; and a collection account in the amount of $1,951.  In addition, the SOR states
that Applicant filed a Chapter 7 Bankruptcy in March 2000, with the debts discharged in
June 2000.1
Applicant acknowledged the Chapter 7 Bankruptcy in 2000. He explained that he
was involved in an accident and was sued.  He was driving his sister’s car, and there
was no insurance on the car. He recalls that he did not appear in court and a judgment
was entered against him. He earned about $11 an hour and did not have the money to
pay. He believes the amount of the debts discharged was about $10,000. (Tr. 35)
Applicant also testified that he believed the parties were attempting a scam. He insists
that no one ever contacted him before the lawsuit.
Applicant was injured in Iraq and in 2009, he was faced with rehabilitation. He
had no gainful employment between May 2009 and January 2013. He decided to
pursue more studies to improve employment opportunities. At the time, his wife was
supporting him. Applicant had some temporary part-time security positions in August
2013.
Applicant co-signed for an apartment with his wife in January 2012. They
vacated the apartment after giving a 60-day notice. Applicant had paid his rent to date.
He gave a forwarding address when he left the apartment.  He did not receive any bill
from the complex. After three months, Applicant was notified by the apartment complex
that he owed rent for 19 days. The lease was officially ended in January 2013, but
Applicant gave notice and left December 31, 2012. In March 2013, Applicant arranged
a payment plan. He was paying approximately $170 a month on an original amount of
$2,200. However, Applicant’s wife became ill. She required surgery in 2012. Applicant’s
wife is disabled and can no longer work. Her annual income before her illness was
approximately $64,000.  She is currently receiving SSI in the monthly amount of $1,600.
The apartment complex entered a judgment against Applicant when he could no longer
He did not purchase the house.      2
3
afford the monthly payments. (GX 3) The August 2013 judgment amount of $1,650 plus
interest is being paid as a voluntary deduction of $337 from Applicant’s pay. (AX B) To
date,  Applicant has paid about $1,400 toward the judgment.
Applicant filed and paid his state taxes for the year 2008. (AX A) He received a
refund of $1,148. He had no idea that he owed any other taxes until the current OPM
investigation. He learned that a lien was entered against him in 2012 in the amount of
$2,855. (GX 2) He dutifully researched the issue and learned that when he took money
from his 401(k) in 2003 to purchase a house, no taxes were withheld.  He learned that2
the taxing authority reported the income in 2011 and stated that it was a result of a
distribution from his 401(k) in 2008. This was not the case. He had no knowledge of the
tax issue. As soon as OPM presented this information to him, he called and tried to set
up payment arrangements. He could not afford the payments. He was in the process of
paying other bills and he told the investigator that due to the fact that he only had one
income instead of two, he would have to prioritize the bills. 
As to the collection account of $5,542, Applicant used his military credit card
during his unemployment after active duty. The account eventually became delinquent. 
Applicant credibly testified that since his wife’s illness and inability to work after
2012, he has had a smaller income with which to pay bills. He incurred debts but he
prioritized them and paid the smaller ones first. He disclosed on his security clearance
application the other debts that he had and the payment arrangements that were in
place. He paid about $1,100, whch paid two accounts completely.  His 2013 credit
bureau report shows various accounts that are “paid as agreed.” (GX 4)
Applicant filed for Chapter 7 bankruptcy in May 2014. Applicant took the online
financial counseling course that is required for the process. (Tr. 40) He submitted a
schedule F to document the delinquent bills that are included in the bankruptcy. The
SOR allegations are included in the bankruptcy. His court date was June 12, 2014. The
debts are expected to be discharged in the next few months or sooner.
.Applicant earns approximately $3,400 net monthly. His wife has a disability
income of approximately $1,600, which began in November 2013.  After expenses and
debt payments, he has a net remainder of about $700. (GX 2) Applicant is current with
all household bills. He has some savings. 
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
 See also ISCR Case No. 94-1075 at 3-4 (App. Bd. Aug. 10, 1995).      3
 Department of the Navy v. Egan, 484 U.S. 518, 531 (1988).      4
 ISCR Case No. 93-1390 at 7-8 (App. Bd. Jan. 27, 1995).      5
 See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive      6
information), and EO 10865 § 7.
 ISCR Case No. 93-1390 at 7-8 (App. Bd. Jan. 27, 1995).      7
 Id.      8
4
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
Department Counsel. . . .”  The burden of proof is something less than a3
preponderance of evidence.  The ultimate burden of persuasion is on the applicant.  4 5
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 clearance6
determinations should err, if they must, on the side of denials.”  Any reasonable doubt7
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 a8
5
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.
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 ¶ 19 describes conditions that could raise a security concern and may be
disqualifying:
(a) inability or unwillingness to satisfy debts;
(b) indebtedness caused by frivolous or irresponsible spending and the
absence of any evidence of willingness or intent to pay the debt or
establish a realistic plan to pay the debt;
(c) a history of not meeting financial obligations;
(d) deceptive or illegal financial practices such as embezzlement,
employee theft, check fraud, income tax evasion, expense account fraud,
filing deceptive loan statements, and other intentional financial breaches
of trust;
(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;
(f) financial problems that are linked to drug abuse, alcoholism, gambling
problems, or other issues of security concern;
(g) failure to file annual Federal, state, or local income tax returns as
required or the fraudulent filing of the same;
6
(h) unexplained affluence, as shown by a lifestyle or standard of living,
increase in net worth, or money transfers that cannot be explained by
subject's known legal sources of income; and
(i) compulsive or addictive gambling as indicated by an unsuccessful
attempt to stop gambling, "chasing losses" (i.e. increasing the bets or
returning another day in an effort to get even), concealment of gambling
losses, borrowing money to fund gambling or pay gambling debts, family
conflict or other problems caused by gambling.
Applicant filed for Chapter 7 Bankruptcy in 2000, and the debts were discharged.
He incurred delinquent debts and a state tax lien in approximately 2012. His admissions
and  credit report confirm his debts. In May 2014, Applicant petitioned for Chapter 7
bankruptcy.  Consequently, the evidence is sufficient to raise 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;
(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 experienced an injury as a result of active duty in Iraq. He was
unemployed during his rehabilitation. He attended college classes to obtain better
employment opportunities. His wife had sufficient income to provide for their financial
needs. He had no financial difficulties after 2000, until his wife, who was earning a
significant income, became ill and could no longer work. That was in late 2012.
Applicant did not ignore his creditors. When he learned about the money he owed to
7
the apartment complex, he initiated a plan to pay. He had no idea that there was a tax
lien in place until his security interview. He has shown good faith by paying smaller bills.
He has been gainfully employed since 2013 and is getting on his feet. He has not
incurred any new bills. He decided to file for Chapter 7 bankruptcy in 2014. He received
financial counseling as part of that process. He has acted responsibly given the
circumstances that occurred that were beyond his control  AG ¶¶ 20(b), (c) and (d)t
apply.
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 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
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 39 years old. He served in the military and has worked in the defense
contracting field for a number of years. Applicant was injured in Iraq and used his
period of rehabilitation to attend classes to improve job opportunities.  
Applicant and his wife had no financial difficulties until late 2012, when she was
forced through illness to stop working. She is disabled and receives SSI. Her income
had been significant. Applicant was unemployed for a period of time. He admits that he
had delinquent bills. However, the tax lien and the apartment complex judgment do not
appear to be as a result of any neglect on his part. Applicant held part-time jobs to help
pay his bills. He made a plan and paid small bills. The circumstances were beyond his
control, and he acted responsibly. His Chapter 7 bankruptcy leaves him with a clean
slate. That is a viable means to resolve debt. He now has steady full-time employment.
He uses a budget and lives within his means. I have no doubts about his judgment,
reliability, and commitment to be financially responsible. Applicant has met his burden
8
of proof. He has mitigated the security concerns under the financial considerations
guideline.   
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: FOR  APPLICANT
Subparagraph 1.a-1.e: For Applicant
Conclusion
In light of all of the circumstances presented by the record in this case, it is
clearly consistent with the national interest to grant Applicant’s security clearance.
Clearance is granted.
                                                     
NOREEN A. LYNCH.
Administrative Judge