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DEPARTMENT OF DEFENSE 
DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
 
In the matter of: ) 
 ) 
 [Redacted] )  ISCR Case No. 12-02245 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Eric H. Borgstrom, Esq., Department Counsel 
For Applicant: Pro se 
 
 
______________ 
 
Decision 
______________ 
 
 
FOREMAN, LeRoy F., Administrative Judge: 
 
This case involves security concerns raised under Guideline F (Financial 
Considerations). Eligibility for access to classified information is granted. 
 
Statement of the Case 
 
Applicant submitted a security clearance application on November 4, 2010. On 
April 28, 2014, the Department of Defense (DOD) sent him a Statement of Reasons 
(SOR) alleging security concerns under Guideline F. The DOD acted 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 by DOD on September 1, 2006.  
 
 Applicant answered the SOR on May 19, 2014, and requested a hearing before 
an administrative judge. Department Counsel was ready to proceed on July 30, 2014, 
and the case was assigned to me on August 1, 2014. The Defense Office of Hearings 
and Appeals (DOHA) issued a notice of hearing on August 8, 2014, scheduling the 
hearing for August 28, 2014. I convened the hearing as scheduled. Government 
 
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Exhibits (GX) 1 through 9 were admitted in evidence without objection. Applicant 
testified and submitted Applicant’s Exhibits (AX) A through H, which were admitted 
without objection. DOHA received the transcript (Tr.) on September 8, 2014.  
 
I kept the record open until September 15, 2014, to enable Applicant to submit 
additional documentary evidence. At Applicant’s request, I extended the deadline to 
September 19, 2014. Applicant timely submitted AX I through Z, which were admitted 
without objection. Department Counsel’s comments regarding AX I through Z are 
attached to the record as Hearing Exhibit (HX) I.1  
 
Amendment of the SOR 
 
 On my own motion, without objection from either party, I amended the second 
sentence of SOR ¶ 1.b by deleting the words, “bankruptcy was” and substituting the 
words “dischargeable debts were.” The second sentence, as amended, alleges, “The 
dischargeable debts were discharged in or about December 2012.”  
 
Evidentiary Issue 
 
 Department Counsel offered an unauthenticated summary of a personal subject 
interview conducted in December 2010, which was part of a report of investigation 
conducted by the Office of Personnel Management for the DOD. (GX 9; Tr. 26-27.) 
Because Applicant declined to waive the authentication requirement of Directive ¶ 
E3.1.20, I did not admit the document. 
 
Findings of Fact 
 
 In his answer to the SOR, Applicant admitted both allegations. His admissions in 
his answer and at the hearing are incorporated in my findings of fact.  
 
 Applicant is a 44-year-old test engineering manager employed by a defense 
contractor. He has worked for his current employer since August 1990. (Tr. 54.) He 
worked for another defense contractor from October 1996 to July 1997 and then 
returned to his current employer. He attended a community college as a full-time 
student for about two years and part-time for two semesters, but he did not receive a 
degree. Tr. 52-53.) 
 
Applicant has held a clearance since October 1997. He was appointed as the 
facility security officer (FSO) for his place of employment in September 2011. In August 
2012, he was appointed as the corporate FSO for all facilities operated by his employer. 
(AX G; Tr. 46-47.)  
 
                                                          
1 A copy of HX I, annotated to cross-reference the documents listed in HX I and Applicant’s post-hearing 
submissions of AX I through Z, is attached to the record as HX II.  
 
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 Throughout his career, Applicant has enjoyed a reputation for technical 
proficiency, hard work, dedication, innovation, and good judgment. (AX U at 1-9.) His 
most recent performance appraisal rated him above “meets requirements” and below 
“exceeds requirements.” (AX U at 14-19.) His evaluations for the four previous years 
commented favorably on his dependability, technical ability, judgment, and 
organizational skills. (AX U at 10-18.) 
 
 In December 2011, Applicant underwent his first security review as FSO. The 
Defense Security Service rated his employer’s security program as “satisfactory.” 
Subsequent reviews in January 2013, February 2013, August 2013, and February 2014, 
rated his employer’s security program as “commendable,” one level below the top rating 
of “superior.” (AX H.)  
 
 Applicant married in November 1992 and divorced in November 2013. Three 
children were born during the marriage, now ages 23, 21, and 19. The oldest has 
graduated from college and is self-supporting. The middle child is in college, living away 
from home. The youngest lives with Applicant and is a full-time student at an art 
institute. 
 
 Applicant’s wife began consuming alcohol excessively in about 2008, and her 
alcohol consumption began interfering with her job. She quit her job in January 2010, 
substantially reducing the family income. She went through alcohol rehabilitation 
programs twice and worked part-time briefly, but never returned to full-time 
employment. (Tr. 74-77; GX-7.) Applicant’s federal income tax returns reflected family 
income from wages and salaries of $104,318 for 2007; $110,975 for 2008; $116,450 for 
20092; $96,139 for 2010; $87,550 for 2011; $96,379 for 2012; and $100,957 for 2013. 
(AX A.) His current annual salary is about $104,000. (Tr. 55.) 
 
Applicant’s wife left the marital home in October 2011 and lived with her mother. 
She filed for divorce in January 2012, the marital stipulation was signed in April 2013, 
and the divorce was granted on October 30, 2013. The marital stipulation granted 
Applicant custody of their minor daughter, with no requirement that either party pay child 
support. The stipulation required Applicant to pay $10,000 to support his wife, to be paid 
in a lump sum of $5,000 followed by monthly $250 payments for 20 consecutive 
months. He began making his monthly support payments in April 2013, and they are 
current. His marital support obligation will be satisfied in December 2014. (AX W.) 
 
Applicant and his wife agreed that the marital home would be sold. They also 
agreed that if either party should file a bankruptcy petition that would cause the non-
filing party to incur liability for a joint debt, the filing party would affirm the debt. (AX B.) 
 
 Applicant was unable to keep up the payments on the home. His monthly 
payments were $1,937 on the first mortgage and $680 on the second mortgage. In 
                                                          
2 Applicant and his wife filed separate federal returns in 2009. He reported wages and salaries of $84,790 
and she reported $31,660.  
 
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November 2011, he applied for a loan modification due to hardship, and he exchanged 
extensive correspondence with the lender. In August 2012, the lender agreed to reduce 
the monthly payments to $1,734.55, and Applicant made two payments of the reduced 
amount. (AX I through M and O through T.) He stopped making payments when the 
divorce was final, because he intended to sell the home. He began negotiating with the 
lender about a short sale. When the lender expressed reluctance to approve a short 
sale, he offered a deed in lieu of foreclosure. (Tr. 41.) The offer was rejected by the 
lender because a subordinate lien holder would not agree to release its lien. (GX 8.) 
 
 Applicant filed a Chapter 7 bankruptcy petition in September 2012 and received a 
discharge in December 2012. He completed the financial counseling required by the 
bankruptcy court. He affirmed a debt for $251,874, secured by a first mortgage on the 
marital home; a debt for $62,408, secured by a second mortgage on the marital home; 
and a line of credit for $18,228, also secured by the marital home. (AX C, Schedule D 
and Individual Debtor’s Statement of Intention.) The remaining debts included an 
automobile loan, local property taxes, a student loan, multiple consumer debts, and a 
delinquent personal loan. (AX C, Schedules D through F.) The student loan for his son’s 
college education and the property taxes on the marital home were not discharged. (Tr. 
41, 58-61.) 
 
 In May 2014, Applicant’s home loan was sold to another lender. (AX D.) The new 
lender was more receptive to a short sale and gave Applicant a list of realtors. (Tr. 42.) 
The property was listed for sale in June 2014. (AX E.) A prospective buyer submitted an 
offer in July 2014 (AX F.) The draft settlement statement provides for a sale price of 
$186,000, with $160,416 to be paid to the holder of the first mortgage. There is no 
provision for payoff of the second mortgage loan or the line of credit. (AX V, Settlement 
Statement (HUD-1).) Applicant testified that closing on the short sale was tentatively 
scheduled for September 1, 2014. (Tr. 44.) On September 4, 2014, he received an 
email from the lender stating that it was “in process of reviewing the value results along 
with the current offer submitted.” (AX-V at 2.) When the record closed on September 19, 
2014, the short sale had not yet been closed.  
 
 Since 2009, Applicant has withdrawn about $60,000 from his 401k retirement 
fund. About $10,000 was used to pay his son’s college expenses, and the remainder 
was used to pay bills. He now has about $5,000 in his retirement fund. (Tr. 69-71.) 
Applicant’s bank records reflect that in 2010, he made two payments to an attorney 
totaling $1,625 and five payments to his mortgage lender totaling $17,380. In 2011, he 
paid $875 in attorney’s fees; $4,446 in tuition for his son; two payments to his mortgage 
lender totaling $14,403; and $9,930 in past-due property taxes. In 2012, he paid $2,500 
in attorney’s fees; $735 in tuition; and $10,000 in past-due property taxes. In 2013, he 
paid about $3,500 in tuition and $4,800 for a security deposit and first month’s rent for 
his apartment. (AX-Y.)  
 
 In April 2013, Applicant was notified that he owed $16,558 in federal income 
taxes. In August 2013, he received credit for $6,668 in taxes withheld, reducing his 
indebtedness to $10,634. He began making monthly $148 payments in October 2013. 
 
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In March 2014, his tax refund for 2013 was applied to his indebtedness, reducing it to 
$7,910. In April 2014, he increased his monthly payments to $300. (AX X at 17-72; Tr. 
83-86.) Applicant testified that his tax debt arose when his wife withdrew money from 
her retirement fund in 2010 but did not pay the penalty for an early withdrawal. He 
testified that he was unaware of her withdrawal from her retirement fund until he 
received the bill for unpaid taxes. 
 
 In May 2014, Applicant was notified that he owed $5,294 in state income taxes. 
In the same month, he entered into a payment agreement providing for 36 payments of 
$171.69, and he began making payments by automatic monthly deductions from his 
checking account. The projected interest and penalties during the payment period 
increased his debt to $6,180. (AX X at 3-16.) 
 
 Applicant tracks his income and expenses in an Excel spread sheet. His budget 
for 2014 is based on a gross annual income of $104,000 and projected annual 
expenses of $48,597. ((Tr. 91; AX N.) 
 
 The unpaid property taxes, federal income taxes, and state income taxes were 
not alleged in the SOR. I have considered these debts for the limited purposes of 
evaluating Applicant=s credibility; to decide whether a particular adjudicative guideline is 
applicable; to evaluate evidence of extenuation, mitigation, or changed circumstances; 
to consider whether Applicant has demonstrated successful rehabilitation; and as part of 
my whole-person analysis. See ISCR Case No. 03-20327 at 4 (App. Bd. Oct. 26, 2006).  
 
Policies 
 
 “[N]o one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 
484 U.S. 518, 528 (1988). As Commander in Chief, the President has the authority to 
“control access to information bearing on national security and to determine whether an 
individual is sufficiently trustworthy to have access to such information.” Id. at 527. The 
President has authorized the Secretary of Defense or his designee to grant applicants 
eligibility for access to classified information “only upon a finding that it is clearly 
consistent with the national interest to do so.” Exec. Or. 10865, Safeguarding Classified 
Information within Industry § 2 (Feb. 20, 1960), as amended.   
 
Eligibility for a security clearance is predicated upon the applicant meeting the 
criteria contained in the AG. These guidelines are not inflexible rules of law. Instead, 
recognizing the complexities of human behavior, an administrative judge applies these 
guidelines in conjunction with an evaluation of the whole person. An administrative 
judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. An 
administrative judge must consider all available and reliable information about the 
person, past and present, favorable and unfavorable. 
 
 The Government reposes a high degree of trust and confidence in persons with 
access to classified information. This relationship transcends normal duty hours and 
endures throughout off-duty hours. Decisions include, by necessity, consideration of the 
 
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possible risk that the applicant may deliberately or inadvertently fail to safeguard 
classified information. Such decisions entail a certain degree of legally permissible 
extrapolation about potential, rather than actual, risk of compromise of classified 
information. 
 
Clearance decisions must be made “in terms of the national interest and shall in 
no sense be a determination as to the loyalty of the applicant concerned.”  See Exec. 
Or. 10865 § 7. Thus, a decision to deny a security clearance is merely an indication the 
applicant has not met the strict guidelines the President and the Secretary of Defense 
have established for issuing a clearance. 
 
 Initially, the Government must establish, by substantial evidence, conditions in 
the personal or professional history of the applicant that may disqualify the applicant 
from being eligible for access to classified information. The Government has the burden 
of establishing controverted facts alleged in the SOR. See Egan, 484 U.S. at 531.  
“Substantial evidence” is “more than a scintilla but less than a preponderance.”  See v. 
Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). The guidelines 
presume a nexus or rational connection between proven conduct under any of the 
criteria listed therein and an applicant’s security suitability. See ISCR Case No. 92-1106 
at 3, 1993 WL 545051 at *3 (App. Bd. Oct. 7, 1993).   
 
 Once the Government establishes a disqualifying condition by substantial 
evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the 
facts. Directive ¶ E3.1.15. An applicant has the burden of proving a mitigating condition, 
and the burden of disproving it never shifts to the Government. See ISCR Case No. 02-
31154 at 5 (App. Bd. Sep. 22, 2005).  
 
An applicant “has the ultimate burden of demonstrating that it is clearly consistent 
with the national interest to grant or continue his security clearance.” ISCR Case No. 
01-20700 at 3 (App. Bd. Dec. 19, 2002). “[S]ecurity clearance determinations should err, 
if they must, on the side of denials.” Egan, 484 U.S. at 531; see AG ¶ 2(b).  
 
Analysis 
 
Guideline F, Financial Considerations 
 
 The SOR alleges a delinquent home loan that is past due for $39,533.91 (SOR ¶ 
1.a). It also alleges that Applicant filed a Chapter 7 bankruptcy petition in September 
2012, and his dischargeable debts were discharged in December 2012. (SOR ¶ 1.b.) 
 
The concern under this guideline is set out in AG ¶ 18:  
 
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 
 
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protect classified information. An individual who is financially 
overextended is at risk of having to engage in illegal acts to generate 
funds. 
 
 This concern is broader than the possibility that an individual might knowingly 
compromise classified information in order to raise money. It encompasses concerns 
about an individual’s self-control, judgment, and other qualities essential to protecting 
classified information. An individual who is financially irresponsible may also be 
irresponsible, unconcerned, or negligent in handling and safeguarding classified 
information. See ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012). 
 
 The credit reports in the record (GX 2 and GX 3) do not reflect the debt alleged in 
SOR ¶ 1.a. However, Applicant admitted the debt in his answer to the SOR, and the 
notice of default (GX 5) and the correspondence regarding his tender of a deed in lieu of 
foreclosure (GX 6) list the account number alleged in the SOR. Applicant’s admissions 
in his response to the SOR, the correspondence admitted as GX 5 and GX 6, and the 
record of his Chapter 7 bankruptcy discharge establish two following disqualifying 
conditions under this guideline: AG ¶ 19(a) (“inability or unwillingness to satisfy debts”) 
and AG ¶ 19(c) (“a history of not meeting financial obligations”). 
 
 The following mitigating conditions are potentially applicable: 
 
AG ¶ 20(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; 
 
AG ¶ 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; 
 
AG ¶ 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 
 
AG ¶ 20(d): the individual initiated a good-faith effort to repay overdue 
creditors or otherwise resolve debts.  
 
 AG ¶ 20(a) is partially established. Applicant’s debts are recent and numerous, 
but they occurred under circumstances making them unlikely to recur. Applicant’s 
financial problems were caused by his wife’s alcohol problems, her decision to quit her 
job, and the breakup of their marriage. It is unlikely that he will find himself in a similar 
situation again. 
 
 
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 AG ¶ 20(b) is established. Applicant’s financial problems arose from his wife’s 
alcoholism, her decision to quit her job, the breakup of their marriage, and his wife’s 
decision to make withdrawals from her retirement account without telling him or 
arranging to pay the penalties for an early withdrawal. He has acted responsibly by 
staying in contact with his creditors, seeking to resolve his defaulted mortgage, and 
making arrangements to pay his delinquent federal and state taxes.  
 
 AG ¶ 20(c) is established. Applicant completed the counseling required by the 
bankruptcy court, and he is making steady progress toward resolving his delinquent 
debts. 
 
 AG ¶ 20(d) is not established for the debts discharged in bankruptcy. Good faith 
means acting in a way that shows reasonableness, prudence, honesty, and adherence 
to duty or obligation. ISCR Case No. 99-0201, 1999 WL 1442346 at *4 (App. Bd. Oct. 
12, 1999). A bankruptcy discharge is not a “good-faith” effort to resolve a debt. “[A]n 
applicant must do more than merely show that he or she relied on a legally available 
option (such as bankruptcy) in order to claim the benefit of this [mitigating condition.’”] 
ISCR Case No. 03-20327 (App. Bd. Oct. 26, 2006).  
 
 However, a good-faith effort is established for the debt alleged in SOR ¶ 1.a. A 
security clearance adjudication is aimed at evaluating an individual’s judgment, 
reliability, and trustworthiness. It is not a debt-collection procedure. ISCR Case No. 09-
02160 (App. Bd. Jun. 21, 2010.) A person is not required, as a matter of law, to 
establish resolution of every debt alleged in the SOR. He or she need only establish a 
plan to resolve financial problems and take significant actions to implement the plan. 
The adjudicative guidelines do not require that an individual make payments on all 
delinquent debts simultaneously, nor do they require that the debts alleged in the SOR 
be paid first. See ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008). Applicant 
has a credible, realistic plan to resolve the delinquent debt in SOR ¶ 1.a, and he has 
taken significant steps to execute it. 
 
Whole-Person Concept 
 
 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. In applying the whole-
person concept, an 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. An 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 
 
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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.  
 
 I have incorporated my comments under Guideline F in my whole-person 
analysis. Some of the factors in AG ¶ 2(a) were addressed under that guideline, but 
some warrant additional comment. 
 
 Applicant has worked for defense contractors and held a security clearance for 
many years. He has a reputation for responsible behavior. He was candid, sincere, and 
credible at the hearing. Although the debt in SOR ¶ 1.a is not fully resolved, he has 
demonstrated his commitment to putting his financial house in order. His available funds 
will soon increase when his support obligation to his ex-wife is satisfied. He has done 
everything he can do to resolve his delinquent debts, and I am satisfied that he will 
continue his efforts. 
 
 After weighing the disqualifying and mitigating conditions under Guideline F, and 
evaluating all the evidence in the context of the whole person, I conclude Applicant has 
mitigated the security concerns based on financial considerations. Accordingly, I 
conclude he has carried his burden of showing that it is clearly consistent with the 
national interest to continue his eligibility for access to classified information. 
 
Formal Findings 
 
 I make the following formal findings on the allegations in the SOR: 
 
 Paragraph 1, Guideline F (Financial Considerations): FOR APPLICANT 
 
  Subparagraphs 1.a-1.b:    For Applicant 
 
Conclusion 
 
 I conclude that it is clearly consistent with the national interest to continue 
Applicant’s eligibility for a security clearance. Eligibility for access to classified 
information is granted. 
 
 
 
 
LeRoy F. Foreman 
Administrative Judge