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                           DEPARTMENT OF DEFENSE 
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
In the matter of: ) 
 ) 
 XXXXXXXXXX, XXXXX )  ISCR Case No. 14-03406 
  ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Richard Stevens, Esq., Department Counsel 
For Applicant: Pro se 
 
 
 
______________ 
 
Decision 
______________ 
 
 
TUIDER, Robert J., Administrative Judge: 
 
Applicant has mitigated security concerns pertaining to Guideline F (financial 
considerations). Clearance is granted. 
 
Statement of the Case 
 
On September 23, 2013, Applicant submitted an Electronic Questionnaires for 
Investigations Processing (e-QIP) or security clearance application (SF 86). On 
August 18, 2014, the Department of Defense (DOD) Consolidated Adjudications 
Facility (CAF) issued a Statement of Reasons (SOR) to Applicant, pursuant to 
Executive Order 10865, Safeguarding Classified Information Within Industry, dated 
February 20, 1960, as amended; DOD Directive 5220.6, Defense Industrial Personnel 
Security Clearance Review Program (Directive), dated January 2, 1992, as amended; 
and the adjudicative guidelines (AG) promulgated by the President on December 29, 
2005. 
 
The SOR alleged security concerns under Guideline F (financial 
considerations).  The SOR detailed reasons why the DOD CAF was unable to find that 
it is clearly consistent with the national interest to grant a security clearance for 
 
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Applicant, and it recommended that his case be submitted to an administrative judge 
for a determination whether his clearance should be continued or revoked.  
 
On August 27, 2014, Applicant responded to the SOR. On October 9, 2014, 
Department Counsel was ready to proceed on Applicant’s case. On October 17, 2014, 
DOHA assigned Applicant’s case to me. On October 20, 2014, the Defense Office of 
Hearings and Appeals (DOHA) issued a hearing notice, setting the hearing for 
November 4, 2014. Applicant’s hearing was held as scheduled. At the hearing, 
Department Counsel offered Government Exhibits (GE) 1 through 5, which were 
received into evidence without objection. Applicant did not call any witnesses, testified, 
and offered Applicant Exhibits (AE) A through AE G, which were received into 
evidence without objection.  
 
 I held the record open until November 14, 2014, to afford Applicant the 
opportunity to submit additional documents. Applicant timely submitted AE H through 
AE Y, which were received into evidence without objection. On November 13, 2014, 
DOHA received the hearing transcript (Tr.).  
  
Findings of Fact 
 
In his SOR answer, Applicant denied all of the allegations with explanations. 
Applicant’s answers and explanations are incorporated as findings of fact. After a 
thorough review of the evidence, I make the following additional findings of fact.  
 
Background Information 
 
Applicant is a 33-year-old subcontract manager, who has been employed by a 
defense contractor since May 2013. He seeks to retain his secret security clearance, 
which is a requirement of his continued employment. (GE 1, Tr. 15, 23-26.)  
 
Applicant graduated from high school in May 1999. He was awarded a bachelor 
of science degree in business administration with a focus on management in May 
2003. Applicant attended graduate school and was awarded a master of business 
administration degree in international business in May 2008. He took an on-line 
university level course from 2006 to 2008 and was awarded a graduate certificate for 
operations manager. (GE 1, Tr. 15-16, 23-25.) Applicant is unmarried and has no 
dependents. He did not serve in the armed forces. (GE 1, Tr. 15-16.) 
 
Financial Considerations 
 
Applicant’s SOR contains five separate allegations: (1) a judgment on 
foreclosure of his mortgage in January 2014 for $266,376. The property was sold in 
June 2014 for $203,400 with judgment remaining unsatisfied; (2) student loan 
collection account for $15,163; (3) student loan collection account for $10,205; (4) 
credit card collection account for $7,750; and (5) cell phone collection account for $86. 
(SOR ¶¶ 1.a – 1.e.) 
 
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Applicant attributes his financial problems to the financial fallout following the 
break-up with his former fiancée. In 2004, Applicant purchased a home for $207,000 
with a monthly payment of $1,800. He and his former fiancée moved in together and 
had an arrangement in which he would pay the mortgage, and his fiancée would pay 
the day-to-day expenses for maintaining the house. In 2007, Applicant and his fiancée 
broke up, leaving Applicant with a significant income shortfall. Applicant 
unsuccessfully attempted a mortgage loan modification several times. Consequently, 
he was unable to make his mortgage payments, defaulted, and the lender initiated 
foreclosure proceedings. The home was sold in June 2013 pursuant to a Stipulated 
Consent To Final Judgment Of Foreclosure, discussed infra, for $203,000. While 
Applicant lived in the home, he took out an equity loan in 2007 when the value of his 
house had increased to $400,000. (Tr. 11-13, 27-28, AE C.)  
 
Exacerbating Applicant’s financial situation even more, his graduate school 
student loans became due in 2008, discussed infra. (Tr. 29-30.) Although Applicant 
was able to find some relief in 2010 when his brother moved in and shared expenses, 
he was unable to remain afloat. He fell behind on his debts in the 2010 to 2011 
timeframe and sold his company stock to pay down his debts.  (Tr. 30-31, 37.) In 
2011, Applicant actively attempted to negotiate a lower mortgage payment directly 
with his lender and was unsuccessful in that effort. In early 2012, Applicant retained 
an attorney in an attempt to navigate his way out of debt, particularly with regard to his 
mortgage. In June 2014, the lender obtained a judgment against Applicant for 
$266,376. (Tr. 32-39.) 
 
The following summarizes the status of each SOR debt:  
 
SOR ¶ 1.a – Foreclosure judgment entered against Applicant in January 2014 
for $266,376. Actually, this “judgment” was a mutual agreement between Applicant 
and his lender in which they “amicably settled” and entered into a Consent Final 
Judgment of Foreclosure dated January 10, 2014. Of note, the lender agreed “not to 
seek a deficiency judgment against Borrower (Applicant) for any amount in which the 
indebtedness secured by the Mortgage exceeds the value of the Property after sale.” 
Applicant provided documentation of same reflecting this debt has been “completely 
settled” in all respects.  DEBT RESOLVED. (Tr. 39-40, 68-69, AE A – AE E, AE H.) 
 
SOR ¶¶ 1.b and 1.c – Student loan collection accounts in the amounts of 
$15,163 and $10,205, respectively. Applicant submitted documentation dated October 
9, 2014 that he successfully rehabilitated both student loans. Since he rehabilitated 
both loans, he has been making $376 monthly payments by direct debit, and both 
loans are in good standing. DEBTS BEING RESOLVED. (Tr. 40-49, 69-70, AE G, AE 
I, AE L.) 
 
SOR ¶ 1.d – Credit card collection account for $7,750. Applicant has been in 
active negotiations with the creditor-in-interest. As of June 1, 2014, Applicant and the 
creditor have agreed on a settlement amount of $1,976, but have yet to come to terms 
on a monthly payment amount. DEBT BEING RESOLVED. (Tr. 49-53, 70-71, AE K.) 
 
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SOR ¶ 1.e – Cell phone collection account for $86. Applicant submitted 
documentation reflecting this account was been paid in full on October 9, 2014. DEBT 
RESOLVED. (Tr. 71, AE F.) 
 
Applicant annual salary is $73,000. His budget reflects that he is current on his 
monthly bills and lives within his means. Applicant’s monthly budget reflects a net 
monthly income of $4,100 and a net monthly remainder of $611. (Tr. 56-68, AE L, AE 
X, AE Y.) 
  
Character Evidence 
 
 Applicant provided work performance evaluations for 2012 and 2013 
documenting above average performance and documentation reflecting merit 
increases for his performance. (AE L – AE N, AE U, AE V.) Applicant also submitted 
five reference letters from personal and professional sources attesting to his good 
character. His employer fully supports him for a security clearance. (AE P – AE T.) 
 
                                                  Policies 
 
The U.S. Supreme Court has recognized the substantial discretion of the 
Executive Branch in regulating access to information pertaining to national security 
emphasizing, “no 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 applicant’s 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 adjudicative guidelines. These guidelines are not inflexible 
rules of law. Instead, recognizing the complexities of human behavior, these 
guidelines are applied 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, 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 possible risk 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 “in terms of the national interest and shall in 
no sense be a determination as to the loyalty of the applicant concerned.”  See Exec. 
 
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Or. 10865 § 7. See also Executive Order 12968 (Aug. 2, 1995), § 3.1. Thus, nothing in 
this Decision should be construed to suggest that I have based this decision, in whole 
or in part, on any express or implied determination about applicant’s allegiance, 
loyalty, or patriotism. It 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. 
95-0611 at 2 (App. Bd. May 2, 1996).      
 
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 ultimate burden of demonstrating that 
it is clearly consistent with the national interest to grant or continue her security 
clearance.” ISCR Case No. 01-20700 at 3 (App. Bd. Dec. 19, 2002). The burden of 
disproving a mitigating condition never shifts to the Government. See ISCR Case No. 
02-31154 at 5 (App. Bd. Sep. 22, 2005). “[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 
 
  AG ¶ 18 articulates the security concern relating to financial problems: 
 
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 
overextended is at risk of having to engage in illegal acts to generate 
funds. 
  
 AG ¶ 19 provides two financial considerations disqualifying conditions that 
could raise a security concern and may be disqualifying in this case, “(a) inability or 
unwillingness to satisfy debts,” and “(c) a history of not meeting financial obligations.” 
Applicant’s history of delinquent debt is established by the evidence presented. The 
Government established disqualifying conditions in AG ¶¶ 19(a) and 19(c).   
 
  Five financial considerations mitigating conditions under AG ¶¶ 20 are 
potentially applicable:  
 
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(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’s conduct does not warrant full application of AG ¶ 20(a) because 
there is more than one delinquent debt and his financial problems are not isolated. His 
debt is a “continuing course of conduct” under the Appeal Board’s jurisprudence. See 
ISCR Case No. 07-11814 at 3 (App. Bd. Aug. 29, 2008) (citing ISCR Case No. 01-
03695 (App. Bd. Oct. 16, 2002)). Nevertheless, he receives partial credit under AG ¶ 
20(a) because the debt occurred under circumstances that are unlikely to recur and 
his behavior does not cast doubt on his current reliability, trustworthiness, or good 
judgment. 
 
Full application of AG ¶ 20(b) is warranted. Applicant’s 2007 breakup with his 
fiancée and subsequent financial fallout could not have been anticipated. He was 
suddenly saddled with all of the joint expenses and did not have the funds to remain 
afloat. As noted supra, Applicant has paid or otherwise resolved all of his debts and 
has made substantial progress in regaining financial responsibility.1  
 
                                                          
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“Even if Applicant’s financial difficulties initially arose, in whole or in part, due to circumstances 
outside his [or her] control, the Judge could still consider whether Applicant has since acted in a 
reasonable manner when dealing with those financial difficulties.” ISCR Case No. 05-11366 at 4 n.9 
(App. Bd. Jan. 12, 2007) (citing ISCR Case No. 99-0462 at 4 (App. Bd. May 25, 2000); ISCR Case No. 
99-0012 at 4 (App. Bd. Dec. 1, 1999); ISCR Case No. 03-13096 at 4 (App. Bd. Nov. 29, 2005)). A 
component is whether he maintained contact with his creditors and attempted to negotiate partial 
payments to keep his debts current. 
 
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AG ¶¶  20(c) and 20(e) are not applicable. Applicant’s budget demonstrates 
that he living within his means. Having paid or otherwise resolved the debts in SOR ¶¶ 
1.a – 1.d, Applicant is able to receive full credit for those debts under AG ¶ 20(d).  
 
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 the 
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.  
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. AG ¶ 2(c). The discussion in the Analysis 
section under Guideline F is incorporated in this whole-person section. However, 
further comments are warranted. 
Applicant’s employment with a defense contractor weigh heavily in his favor. He 
is a law-abiding citizen and a productive member of society. He is current on his day-
to-day expenses, lives within his means, and his SOR debts have been addressed. 
The Appeal Board has addressed a key element in the whole-person analysis in 
financial cases stating: 
 
In evaluating F cases, the Board has previously noted that the concept 
of “‘meaningful track record’” necessarily includes evidence of actual 
debt reduction through payment of debts.” However, an applicant is not 
required, as a matter of law, to establish that he has paid off each and 
every debt listed in the SOR. All that is required is that an applicant 
demonstrate that he has “. . . established a plan to resolve his financial 
problems and taken significant actions to implement that plan.” The 
Judge can reasonably consider the entirety of an applicant’s financial 
situation and his actions in evaluating the extent to which that applicant’s 
plan for the reduction of his outstanding indebtedness is credible and 
realistic. See Directive ¶  E2.2(a) (“Available, reliable information about 
the person, past and present, favorable and unfavorable, should be 
considered in reaching a determination.”) There is no requirement that a 
 
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plan provide for payments on all outstanding debts simultaneously. 
Rather, a reasonable plan (and concomitant conduct) may provide for 
the payment of such debts one at a time. Likewise, there is no 
requirement that the first debts actually paid in furtherance of a 
reasonable debt plan be the ones listed in the SOR. ISCR Case No. 07-
06482 at 2-3 (App. Bd. May 21, 2008) (internal citations omitted). 
 
Applicant’s debts have been paid or are being resolved. Due to circumstances 
beyond his control, his debts became delinquent. Despite his financial setback as a 
result of an unplanned break-up with his fiancée, it is clear from Applicant’s actions 
that he is on the road to a full financial recovery. These factors show responsibility, 
rehabilitation, and mitigation.  
 
Both the mitigating conditions under Guideline F and the whole-person analysis 
support a favorable decision. I specifically considered Applicant’s years of financial 
responsibility before falling into debt, the circumstances that led to his financial 
difficulties, his financial recovery and steps he has taken to resolve his financial 
situation, his potential for future service as a defense contractor, the mature and 
responsible manner in which he dealt with his situation, his reference letters, and his 
testimony and demeanor. After weighing the disqualifying and mitigating conditions, 
and all the facts and circumstances, in the context of the whole-person, I conclude he 
has mitigated the financial considerations security concerns.  
 
I take this position based on the law, as set forth in Department of Navy v. 
Egan, 484 U.S. 518 (1988), my careful consideration of the whole-person factors and 
supporting evidence, my application of the pertinent factors under the adjudicative 
process, and my interpretation of my responsibilities under the adjudicative guidelines.  
 
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 to 1.e:  For Applicant 
 
 
 
 
 
 
 
 
 
 
 
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Conclusion 
 
In light of all the circumstances presented by the record in this case, it is 
clearly consistent with the national interest to grant or continue Applicant’s eligibility 
for a security clearance. Eligibility for a security clearance is granted. 
 
 
 
____________________________ 
Robert J. Tuider 
Administrative Judge