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                        DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
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        )
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)       ISCR Case No. 14-00332
Applicant for Security Clearance  )
Appearances
For Government: P. Katauskas, Esq., Department Counsel
For Applicant: Pro se
                                                                            
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Decision
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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 July 23, 2014. A notice of
hearing was issued on August 8, 2013, scheduling the hearing for August 14, 2012.
The case was postponed for good cause. An amended notice of hearing was issued on
August 12, 2014, scheduling the hearing for August 28, 2014. Government Exhibits
(GX) 1-6 were admitted into evidence without objection. Applicant testified, and he
submitted Applicant Exhibits (AX) A-M, which were admitted into the record without
objection. I kept the record open for Applicant to submit additional documents. He
timely provided an exhibit, which was marked as AX N, and admitted into the record
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without objection. The transcript (Tr.) was received on September 8, 2014. Based on a
review of the pleadings, testimony, and exhibits, eligibility for access to classified
information is granted. 
Findings of Fact
In his answer to the SOR, Applicant admitted the SOR allegations ¶¶1. a-1.y with
explanations for several debts that were paid. He denied overall security concerns
under  Guideline F (Financial Considerations).   
Applicant is a 35-year-old software engineer for a defense contractor who
graduated from high school in 1997. He attended college, but he has not yet obtained
his undergraduate degree. Applicant is married and has two children.  Applicant has
been with his employer since July 2012. (GX 1) However, he has worked in the
information technology (IT) field for about 15 years. (Tr. 25) Applicant has held a
security clearance since 2007. (GX 1).
The SOR alleges indebtedness for 21 delinquent debts including a judgment,
medical accounts, a federal tax lien, collection accounts, and charged-off accounts for a
total of approximately $20,000. The SOR also alleges failure to file income tax returns
for the state and federal government for tax years 2011 and 2012. 
Applicant disclosed his multiple financial issues on his latest security clearance
application. He noted that his spouse’s vehicle had been repossessed, and that he was
delinquent on some credit card debt and medical bills. He attempted to work with
creditors and collection agencies, but he had difficulty sorting out which debts were
valid.
Applicant’s explanation for his accumulated debts is not monitoring the
household money. He also did not keep track of his bills and how they were paid.
Applicant believes that due to his long work hours and commute, he left the
responsibility for the financial matters to his wife. Applicant and his wife shared a joint
bank account and he believed that the money was used to pay bills and expenses. He
later learned that the money was spent in a frivolous manner on clothing, jewelry, and
other unnecessary expenses. (Tr. 32)
In addition, Applicant’s wife inherited a large sum of money before she and
Applicant were married. The house was purchased in 2004 with some of that money.
The mortgage loan was an adjustable rate mortgage. However, his wife only earned
$30,000.  When the mortgage increased by almost $2,000 a month, it was not possible
to make the payments. Applicant explained the house was too expensive to maintain.
He helped with the mortgage payments, but they could not maintain the payments. His
wife attempted a short sale, which did not materialize. In 2008, the house went to
foreclosure.  Applicant’s wife paid $200,000 to the bank, but her income was garnished.
The issue is now resolved, but the garnishment of her income reduced the total family
income by about $15,000 a year. (Tr. 40)
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Applicant has a child from a previous relationship. He attempted to gain custody
of his child several times, the latest a few years ago. As a result of a contentious battle,
it cost him about $30,000 in legal fees and other court costs. Applicant pays child
support in the amount of $700 a month, which comes directly from his paycheck. He
has never missed a payment. He has no arrears. (Tr. 46) Applicant also pays a portion
of his child’s school fees. 
The combination of the loss of his wife’s income, the legal fees for the child
custody battle, and his wife’s excessive spending and not paying the household bills,
created the financial crisis that Applicant now faces.  
After learning about the mismanagement of household fund, and the ensuing
delinquent debts, Applicant opened a separate bank account to be used for household
expenses. His wife does not have access to this account. 
Applicant consulted an attorney who advised him to file Chapter 13 bankruptcy.
(AX A-D). He saved sufficient money to pay the attorney and file for the bankruptcy.  In
June 2014, he and his wife took the required credit counseling course. (AX E) All of the
debts alleged in the SOR are included in the bankruptcy. (Tr. 29) He follows a budget.
He wants to pay his debts through the bankruptcy plan. He submitted proof that he
made his first payment of $756. (AX N)
Regarding the unfiled taxes, Applicant had not submitted his federal income tax
return for 2011. (AX G) Applicant’s document reflects that he filed the form in May
2014. With respect to the unfiled state income tax return for 2011 and 2012, Applicant
submitted documentation that they has been filed. (AX H) Applicant’s wife told him she
went to a tax consultant and took care of the tax filings. He was credible in his
testimony that he believed the returns had been filed. (Tr. 59)
Applicant incurred a debt to the IRS in the amount of $4,840. In 2010, Applicant
was late with his federal income tax. (GX 2) He learned that the filing had not occurred,
when the IRS garnished his paycheck.  He submitted a Release of Levy (Form 668-D)
dated May 6, 2014. (AX F) The debt is paid.
Applicant’s annual income is approximately $140,000. He is current on all his
expenses. He is up-to-date with his filing of tax returns. (AX I-L) His wife works in sales
and her income varies. At the hearing, Applicant explained that he is now in charge of
all his family’s personal finances. 
Applicant presented four letters of recommendation, including one from his direct
manager, project manager, colleague, and personal friend. Each attested to Applicant’s
honesty, character, and value as a team member in his work. Applicant was candid
about his financial difficulties with his employer and despite the issues, his employer
sees no reason to not continue Applicant’s security clearance. Applicant follows
procedures and properly safeguards classified information. He acts in the best interests
of the government. (AX M) Applicant has learned from his mistakes. His performance at
work has not been affected.
 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.
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  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
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
 ISCR Case No. 93-1390 at 7-8 (App. Bd. Jan. 27, 1995).      5
 Id.      6
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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.
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;
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(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;
(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 admitted that he acquired delinquent debt in the amount of $20,000.
He filed a Chapter 13 bankruptcy petition in August 2014.  His admissions and his
credit report confirm his debts. Applicant did not timely file certain state and federal tax
returns.  Consequently, the evidence is sufficient to raise disqualifying conditions in ¶¶
19(a), 19(c) and 19(g)
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.
 
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Applicant’s financial difficulties occurred as the result of his wife’s mishandling of
the household finances. She had purchased a house before they were married that she
could not afford. This impacted Applicant’s finances when they married. That issue is
fully resolved, but the household income was reduced. Applicant incurred legal fees
due to a contentious custody battle. His legal fees were about $30,000. He pays child
support in the amount of $700 a month. He has no arrears. Applicant’s belief that his
wife was paying all necessary bills was mistaken. He had no idea that she was
spending money on extravagances and not paying the household expenses. She also
told him that she had filed the income tax returns, but she had not. When Applicant
learned about the issues, he took immediate action. He separated the checking
accounts. He is handling the financial matters. He wanted to pay his creditors, and after
legal advice, he filed for Chapter 13 bankruptcy. He has made his first payment.  He
received the required financial counseling. He has resolved the tax issues. He has no
other debts. AG ¶¶ 20(a) through (d) 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 35  years old. He is married and has two children. He has held a security
clearance since 2007 without incident. He has worked in the defense contracting field
for about 15 years. He has excellent references. He is diligent in his child support
obligation.
Applicant did not relinquish responsibility for the delinquent debt, but he was
credible that his wife handled the financial household matters and that he believed all
was in order. She did not use the household money to pay the bills. She spent money
on extravagances. When Applicant learned of the situation, he took action.  He has
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made good-faith efforts to resolve the financial situation. He wants to pay his debts and
is now under a Chapter 13 plan. He made his first payment. Applicant has satisfied the
Appeal Board’s payment plan requirements with his resolved tax issues and his
payment under Chapter 13, and his expressed expectations of meeting the monthly
payment under Chapter 13. He has shown a track record with his child support
obligations. The bankruptcy is a legal means of resolving debts. Overall, Applicant’s
corrective actions to date are sufficient to meet mitigation requirements imposed by the
guideline governing his finances. I do not have doubts about Applicant’s judgment or
trustworthiness. Applicant 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
Subparagraphs 1.a- 1.y: 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