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DEPARTMENT OF DEFENSE 
DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
 
In the matter of:    ) 
      ) 
      )  ISCR Case No. 14-01653 
     ) 
Applicant for Security Clearance  ) 
 
 
Appearances 
 
For Government: Philip J. Katauskas, Esq., Department Counsel 
For Applicant: Pro se 
 
 
______________ 
 
Decision 
______________ 
 
 
CREAN, Thomas M., Administrative Judge: 
 
Based on a review of the pleadings, exhibits, and testimony, eligibility for access 
to classified information is denied. Applicant did not presented sufficient information to 
mitigate financial security concerns. 
 
Statement of the Case 
 
On October 1, 2013, Applicant submitted an Electronic Questionnaire for 
Investigations Processing (e-QIP) to receive a security clearance required for a position 
with a defense contractor. After an investigation conducted by the Office of Personnel 
Management (OPM), the Department of Defense (DOD) could not make the affirmative 
findings required to issue a security clearance. DOD issued Applicant a Statement of 
Reasons (SOR), dated June 4, 2014, detailing security concerns for financial 
considerations under Guideline F. 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) effective in the DOD on September 1, 2006.  
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Applicant answered the SOR on August 4, 2014. She denied three delinquent 
debts (SOR 1.a, 1.b, 1.c), noting that the debt at 1.a was paid, and that she did not have 
any information or knowledge about the debts at 1.b and 1.c. She admitted the other 21 
delinquent debts. Department Counsel was prepared to proceed on September 23, 
2014, and the case was assigned to me on September 26, 2014. DOD issued a notice 
of hearing on October 24, 2014, scheduling a hearing for November 20, 2014. I 
convened the hearing as scheduled. The Government offered four exhibits that I 
marked and admitted into the record without objection as Government Exhibits (Gov. 
Ex.) 1 through 4. Applicant and one witness testified. Applicant submitted two 
documents that I marked and admitted into the record without objection as Applicant 
Exhibit (AX) A and B. I kept the record open for Applicant to submit additional 
documents. Applicant timely submitted two documents that I marked and admitted into 
the record as AX C and D. Department Counsel had no objection to the admission of 
the documents. (GX 5, e-mail, dated December 18, 2014) I received the transcript of the 
hearing (Tr.) on December 4, 2014. 
 
Findings of Fact 
 
After a thorough review of the pleadings, transcript, and exhibits, I make the 
following essential findings of fact.  
  
Applicant is a 31-year-old high school graduate. She has taken some college 
level courses. She has been employed by a defense contractor as an aircraft worker 
since October 2007. Applicant served on active duty in the Navy as an airman from 
August 2003 until August 2007, and was honorably discharged as a petty officer third 
class (E-4). She has never married but is living with her life partner and the partner’s 
two children and one grandchild. She is the sole source of support for the family. (Tr. 
12-16; GX 1, e-QIP, dated October 1, 2013) 
 
The SOR alleges, Applicant admits, and a credit report (GX 3, dated November 
28, 2013) confirms approximately $15,000 in delinquent debts for Applicant. The 
delinquent debts rose from overpayment of unemployment compensation, unpaid 
educational loans, unpaid consumer credit, unpaid credit cards, unpaid utilities bills, and 
unpaid medical expenses. The delinquent debt from educational loans totals 
approximately $6,200, and the medical debts total approximately $2,500, accounting for 
over half of the amount of the delinquent debt.  
 
Applicant was unable to pay her debts and catch up with debts that already 
existed when she left active duty in August 2007. Some of Applicant’s debts became 
delinquent before she left the Navy, but the majority of her debts became delinquent 
after she left the Navy. She was unemployed from August 2007 until October 2007 
when she was hired as an aircraft handler by a defense contractor. When she did find 
employment, her salary was not as much as when she was on active duty. She lost 
track of her debts and could not pay her current or past-due debts. She was 
continuously employed on the west coast by the defense contractor until October 2010 
when she was moved by the company to the east coast to continue her employment 
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with them in the area in which she grew up. She is still employed by the defense 
contractor as an aircraft handler. She has been continuously employed since October 
2007. (Tr. 20-23)  
 
When Applicant was unemployed after leaving the Navy, she received 
unemployment compensation which she used for rent and other living expenses. She 
received more unemployment benefit than she was entitled. The state entered a 
judgment against Applicant for the overpayment. Applicant satisfied the judgment by 
November 2010. (Tr. 24-26; AX A, Acknowledgment of Satisfaction of Judgment, dated 
November 29, 2010) 
 
Applicant admits that she owes delinquent student loans to a university (SOR 
1.b) and the government student loan guarantor (SOR 1.f). She used the loans to 
supplement her educational expenses not covered by the G.I. bill. At hearing, she 
stated that she disputed the charged-off debt to a university for $2,782 at SOR 1.b as 
unknown. In her subject interview, she admitted a debt to an on-line university for 
$2,782. She stated that she intended to contact the university to establish a payment 
plan. After the discussion of the debt at the hearing, Applicant understood the debt and 
the identity of the university. Applicant did not present any information to establish that 
payments were made on this debt. (Tr. 26-30) 
 
At the hearing, Applicant presented a settlement offer from the government 
student loan guarantor. She did not present any documentation to establish any 
payments made under this plan. (Tr. 47-48; AX B, Letter, dated April 16, 2012) 
 
After the hearing, Applicant presented documentation that she made $10 
payments on the $439 delinquent debt at SOR 1.j, the $289 delinquent debt at SOR1.l, 
and the $39 debt at SOR 1.x. (AX C, Money Order Receipts, dated December 15, 2014)  
 
Applicant’s life-partner testified that Applicant has called some of the creditors to 
make payment arrangements. The creditors recommended that Applicant make some 
payments in any amount on her debts. The life-partner recommended to Applicant that 
she pay the smaller medical debts first before starting to pay the larger debts. She 
further testified that Applicant is a good person who wants to clear her credit history. (Tr. 
41-43) 
 
Applicant’s life-partner presented a Statement for the Record that Applicant 
understands why her credit is under review. As an active duty sailor, Applicant was 
sheltered from the consequences of her late payment of delinquent debts. She never 
reviewed her credit history. The security clearance investigation showed her the severity 
of her financial problems and her poor financial judgment. The life-partner stated that 
Applicant has received payment arrangements from creditors and asked for time for 
Applicant to resolve her financial problems. (AX D, Statement, undated).   
 
 
 
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Policies 
 
When evaluating an applicant’s suitability for a security clearance, the 
administrative judge must consider the adjudicative guidelines. In addition to brief 
introductory explanations for each guideline, the adjudicative guidelines list potentially 
disqualifying conditions and mitigating conditions, which must be considered in 
evaluating an applicant’s eligibility for access to classified information. 
 
These guidelines are not inflexible rules of law. Instead, recognizing the 
complexities of human behavior, these guidelines are applied in conjunction with the 
factors listed in the adjudicative process. The administrative judge’s overarching 
adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶ 
2(c), the entire process is a conscientious scrutiny of a number of variables known as 
the “whole-person concept.” The 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.  
 
Under Directive ¶ E3.1.14, the Government must present evidence to establish 
controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, the 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 
applicant has the ultimate burden of persuasion in seeking a favorable security decision. 
 
A person who seeks access to classified information enters into a fiduciary 
relationship with the Government predicated upon 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 that the applicant may deliberately or inadvertently fail to safeguard 
classified information. Such decisions entail a certain degree of legally permissible 
extrapolation as to potential, rather than actual, risk of compromise of classified 
information. 
 
Analysis 
 
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, 
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trustworthiness, and ability to protect classified information. (AG ¶ 18) An individual who 
is financially overextended is at risk of having to engage in illegal acts to generate 
funds. However, the security concern is broader than the possibility that an individual 
might knowingly compromise classified information to raise money. It encompasses 
concerns about an individual’s responsibility, trustworthiness, and good judgment. 
Security clearance adjudications are based on an evaluation of an individual’s reliability 
and trustworthiness. It is not a debt-collection procedure. An individual who is financially 
irresponsible may also be irresponsible, unconcerned, or careless in his or her 
obligations to protect classified information. Behaving responsibly or irresponsibly in one 
aspect of life provides an indication of how a person may behave in other aspects of life.  
 
A person’s relationship with her creditors is a private matter until evidence is 
uncovered demonstrating an inability or unwillingness to repay debts under agreed 
terms. Absent evidence of strong extenuating or mitigating circumstances, an applicant 
with a history of serious or recurring financial difficulties is at risk of acting inconsistently 
with holding a security clearance. An applicant is not required to be debt free, but is 
required to manage her finances in such a way as to meet her financial obligations. 
Applicant incurred debts when she left active duty, was unemployed for three months, 
and her income was less than she received on active duty. The delinquent debts, as 
established by Applicant’s statements and a credit report, raise Financial 
Considerations Disqualifying Conditions AG ¶ 19(a) (inability or unwillingness to satisfy 
debts); and AG ¶ 19(c) (a history of not meeting financial obligations). The evidence 
indicates a history of both an inability and an unwillingness to satisfy debt.  
 
I considered the following Financial Considerations Mitigating Conditions under 
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;  
 
(b) the conditions that resulted in the financial problems 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 has initiated a good-faith effort to repay the 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 
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documented proof to substantiate the basis of the dispute or provides 
evidence of action taken to resolve the issue.  
 
These mitigating conditions do not apply. Applicant encountered financial issues 
when she left active duty. She had some delinquent debt before she left active duty, but 
she incurred additional delinquent debt after leaving active duty and she lost track of the 
status of her finances. She was unemployed for three months drawing unemployment 
compensation. When she found a job after three months, her income was not as much 
as her active duty income. While she had a short period of unemployment, she has 
been continually employed since October 2007. Her delinquent debt did not happen 
under unusual or unique circumstances that are unlikely to recur. She had delinquent 
debt from unemployment but she received unemployment compensation and she just 
lost track of how and what she owed, and she did not make payments or seek payment 
arrangements for her debts. All of her financial issues were within her control to resolve. 
AG ¶¶ 20(a) and 20(b) do not apply 
 
Applicant paid the judgment resulting from an overpayment of her unemployment 
compensation. However, the token payments of $10 on three debts do not establish a 
good-faith effort to resolve debt. For a good-faith effort, there must be an “ability” to 
repay the debts, the “desire” to repay, and “evidence” of a good-faith effort to repay. 
Good faith means acting in a way that shows reasonableness, prudence, honesty, and 
adherence to duty and obligation. A systematic method of handling debts is needed. 
Applicant must establish a "meaningful track record" of debt payment. A "meaningful 
track record" of debt payment can be established by evidence of actual debt payments 
or reduction of debt through payment of debts. A promise to pay delinquent debts in the 
future is not a substitute for a track record of paying debts in a timely manner and acting 
in a financially responsible manner. Applicant must establish that she has a reasonable 
plan to resolve financial problems and has taken significant action to implement that 
plan. Applicant has not presented any plan to repay her delinquent debts or a 
meaningful track record of debt payment. The $10 payments are not a meaningful 
payment based on the size of her debts. Her request for additional time to pay the debts 
is not a substitute for actual debt payment. AG ¶ 20(d) does not apply. 
 
Applicant contacted a credit counselor and had telephone conversations with her. 
They never met in person. Under these circumstances, AG ¶ 20(c) does not apply. 
 
 Applicant stated she disputes the debt to a university at SOR 1.b because she 
has no knowledge of the debt. In her personal subject interview, she acknowledged the 
debt and provided information on the debt. She has not presented any documented 
proof that she filed a dispute. In addition, there is no reasonable basis presented to 
substantiate the dispute. AG ¶ 20(e) does not apply. 
 
Applicant has not shown that she manages her personal financial obligations 
reasonably and responsibly, and her irresponsible financial conduct is likely to continue. 
There is ample evidence of irresponsible behavior, lack of good judgment, and 
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unreliability. Based on all of the financial information, I conclude that Applicant has not 
mitigated security concerns based on financial considerations. 
 
Whole-Person Analysis 
 
Under the whole-person concept, the administrative judge must evaluate an 
applicant’s security eligibility 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 
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 a security clearance 
must be an overall commonsense judgment based upon careful consideration of the 
guidelines and the whole-person concept.  
 
I considered the potentially disqualifying and mitigating conditions in light of all 
the facts and circumstances surrounding this case. Applicant did not present sufficient 
information to establish that she acted reasonably and responsibly towards her 
finances. Her financial track record does not establish confidence that she has or will 
responsibly manage her financial obligations. This indicates that she will not be 
concerned or act responsibly in regard to classified information. Overall, the record 
evidence leaves me with questions and doubts as to Applicant’s judgment, reliability, 
trustworthiness, and eligibility and suitability for a security clearance. For all these 
reasons, I conclude that Applicant has not mitigated security concerns arising under the 
financial considerations guideline. Eligibility for access to classified information is 
denied.  
 
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;   For Applicant 
 
 Subparagraphs 1.b – 1.x:  Against Applicant 
 
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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 eligibility for a security 
clearance. Eligibility for access to classified information is denied. 
 
 
 
_________________ 
THOMAS M. CREAN 
Administrative Judge