1
 
 
                                                             
                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 14-00234
)
Applicant for Security Clearance )
Appearances
For Government: James Norman, Esquire, Chief Department Counsel
For Applicant: Pro se  
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Decision
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HENRY, Mary E., Administrative Judge:
Based upon a review of the pleadings, exhibits, and testimony, Applicant’s
eligibility for access to classified information is denied.
Statement of the Case
Applicant completed and certified an Electronic Questionnaire for Investigations
Processing (e-QIP) on June 21, 2013. The Department of Defense (DOD) issued
Applicant a Statement of Reasons (SOR) on March 14, 2014, detailing security
concerns 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 For Determining Eligibility for Access to Classified Information
(AG), implemented on September 1, 2006. 
 
GE 1; AE H; AE J; Tr. 19-20.1
2
 
Applicant received the SOR, and he answered it on May 15, 2014. He requested
a hearing  before an administrative judge with the Defense Office of Hearings and
Appeals (DOHA). Department Counsel was prepared to proceed on August 21, 2014,
and I received the case assignment on August 28, 2014. DOHA issued a first Notice of
Hearing on September 12, 2014. On October 14, 2014, Appellant requested a
continuance of the hearing scheduled for October 22, 2014 because his work required
him to travel out-of-state during the week the hearing had been scheduled. For good
cause shown, the request for a continuance was granted in an order dated October 14,
2014. A second Notice of Hearing was mailed on October 16, 2014, and I convened the
hearing as scheduled on November 4, 2014. The Government offered exhibits (GE)
marked as GE 1 through GE 4, which were received and admitted into evidence without
objection. Applicant testified. He submitted one exhibit (AE) marked as AE A, which was
received and admitted into evidence without objection. Applicant offered a second
document which was marked and received as Hearing Exhibit 1. DOHA received the
hearing transcript (Tr.) on November 13, 2014. I held the record open until December 4,
2014, for Applicant to submit additional matters. On December 1, 2014, Applicant
requested more time to submit the additional documentation. The Government did not
object to his request. Applicant was given until January 5, 2015 to submit the
documentation. Applicant timely submitted AE B - AE Q, which were received and
admitted without objection. The record closed on January 5, 2015.
Procedural and Evidentiary Rulings
Notice
Applicant received the notice of the date, time and place of the hearing less than
15 days before the hearing. I advised Applicant of his right under ¶ E3.1.8. of the
Directive to receive the notice at least 15 days before the hearing. Applicant
affirmatively waived this right under the Directive. (Tr. 9.)
Findings of Fact
In his Answer to the SOR, Applicant admitted the factual allegations in ¶¶ 1.a and
1.b of the SOR. His admissions are incorporated herein as findings of fact. He also
provided additional information to support his request for eligibility for a security
clearance. After a complete and thorough review of the evidence of record, I make the
following findings of fact.  
Applicant, who is 44 years old, works as a network systems engineer for a DOD
contractor. His supervisor praises his work skills and ethics. His management also
recognized his dedication and team work. Applicant has worked for his current employer
since June 2008. He began his employment as a systems engineer with a start-up
company in 2000. This company was purchased by his second employer. His second
employer was purchased by his current employer in 2008.1
GE 1; AR G; AE I; AE Q; Tr. 19-21.2
GE 1; AE K -AE P; Tr.19.3
AE B; AE C; Tr.  66.4
3
 
Applicant graduated from college in 1992 with a bachelor’s degree. He and his
first wife married in December 1992 and divorced in September 1998. They have two
sons, ages 21 and 17, and a daughter, age 16. Applicant remarried in July 1999. He
and his current wife have twin sons, age 14, a daughter, age 12, and a son, age 7. They
assumed responsibility for his now 18-year-old niece for one year beginning in
September 2008. A long-time friend, who is a licensed social worker, wrote a letter of
support on Applicant’s behalf. She has knowledge of his financial problems. She also
described his and his wife’s willingness to open their home to exchange students. She
believed Applicant is a person of integrity.2
Applicant received his commission as a second lieutenant in the United States
Air Force after he graduated from college. He served on active duty as an officer from
January 1993 until March 2000. He received an honorable discharge at the rank of
captain. During his years in the military, Applicant successfully completed a number of
training programs. He received two Air Force Commendation medals and was selected
company grade officer of the quarter at least three times. He was nominated for
company grade officer of the year for 1994. He received a number of letters of
appreciation for his work and assistance.3
Applicant currently earns $9,812 a month in gross income plus overtime pay,
which varies each payday. His net income varies each pay period because of his
overtime earnings. Applicant’s earnings statement indicates that he directly pays $820 a
month on a loan from his 401(k) account and $780 in child support for his three older
children. Based on his earnings statement of record, his net monthly income after all
deductions averages approximately $6,100. His monthly expenses include $2,200 for
rent, $500 for food, $300 for utilities, $200 for phone and internet, $1,000 for credit card
debt, $100 for gas, and $100 for church. His total monthly expenses are $4,400. He did
not include estimates for clothing for his children or for miscellaneous items, such as
cleaning supplies, haircuts, school supplies, and other items for every day living. I
estimate these costs at approximately $500 a month. He pays car insurance twice a
year ($1,000 total) and life insurance quarterly (approximately $1,000 total). His
earnings statement reflects that he puts $200 a month in a savings account. At the
hearing, he estimated that he had approximately $18,000 in cash and $8,000 in a bank
account. Applicant recently purchased a time share.4
The SOR alleges that he owes two debts on a foreclosed property. In 1999,
Applicant purchased a house for approximately $265,000. The mortgage was in his
name only. The June 2013 and the August 2014 credit reports indicate that Applicant
obtained a mortgage for $184,700 on this property in January 1999, and he closed the
account in November 2003. The credit reports also show that he refinanced his home
GE 2; GE 3; Tr. 21-22. 5
GE 2; GE 3; Tr. 22-25, 44-54.6
His credit reports reflect that he had credit cards with high limits, which have been paid and closed. GE 2;7
GE 4.
Tr. 25-27. 8
GE 2; GE 3; AE A; Tr. 27-33, 62-64.9
4
 
through another lender in November 2003 for $177,000 and closed this account in
October 2006. The credit reports reflect that he timely paid these mortgages. Applicant
testified that he refinanced to a 15-year loan in 2003.5
Applicant decided to refinance his home a second time in October 2006. He
obtained a primary mortgage of $265,000 for 30 years at a fixed rate. About six months
later, he received a home-equity loan for $163,000. He used $57,000 of the equity loan
to pay debts and to improve his home. He invested the remaining money in a large
bank, which he thought was a safe investment. During the economic downturn, the bank
where he invested money failed. Applicant later applied to refinance his house with his
latest mortgage lender. He sought to combine the mortgage and equity loan into one
mortgage. The mortgage lender declined to combine the two loans and suggested he
return in six months. Six months later, Applicant again applied to combine the two loans.
The mortgage lender again declined, advising that his house was “underwater”,
meaning that the house was worth less than his loans. During this process, Applicant
timely paid his mortgages.6
Applicant testified that he wanted to combine the mortgages into one monthly
payment because the interest rates were low. He learned that if he wished to modify his
mortgage and home equity loans, he needed to stop paying the loans. He decided to do
so as a negotiating tactic in early 2009. He then moved his family to a rental home,
which reduced his monthly payments from $4,200 to $1,800. At this time, he traveled
most of the time for his job, and he was incurring credit card debt because of his
business travel.  His employer repaid his travel expenses very slowly. Applicant used7
the monetary difference between his rent and mortgage payment to pay his credit card
debts.8
In August 2009, the mortgage lender contacted Applicant about a loan
modification which would combine both loans. Applicant completed the hardship form
and submitted the necessary documentation within a month. The mortgage lender
approved his request for a loan modification and placed him on a three-month trial
payment plan. Under this plan, he paid $2,300 a month. Applicant made the first two
payments. He, however, decided not to pay the third payment and to allow the house to
go to foreclosure. In making this decision, he weighed the cost of moving back into his
home against the cost of breaking his lease on the rental property and the impact on his
family. He made a decision that he believed at the time was the best for his family.9
GE 4; AE D -AE F; Tr. 27-28, 37-43, 65. 10
HE 1 is a copy of a 2012 case submitted by Applicant which discusses liability on two mortgages held by the11
same lender in the state where the judgment was obtained. It is unclear from the facts in this case if
Applicant’s home-equity loan is covered by the decision in this case. At this point, the mortgage lender has
a judgment against Applicant.
5
 
Applicant understands that his house sold at foreclosure, leaving a balance of
approximately $20,000 on his first mortgage. The mortgage lender filed a lawsuit
against Applicant seeking to recover the equity loan. Applicant did not defend the
lawsuit, which resulted in a default judgment against him in the amount of $190,000 in
September 2012. The mortgage lender’s attorney filed a judgment lien on January 22,
2013, which he is trying to enforce. Applicant received an e-mail from the attorney for
his current bank on October 1, 2014, advising that the attorney for the mortgage lender
had filed a notice of garnishment on Applicant’s bank accounts. As a result, Applicant
contacted an attorney to work with him to resolve this matter. Through counsel,
Applicant made a settlement offer, terms unknown. The mortgage lender’s counsel
requested a written offer to settle the judgment for $150,000 with an initial payment of
$40,000 and the other terms are not known. Applicant discussed a written offer of
$35,000 with his attorney. He later submitted a hardship form to the mortgage lender’s
attorney. At the hearing, Applicant stated that he would make a cash offer between
$20,000 and $40,000 plus a monthly payment of $800 to $1,200 a month for two
years.10
Applicant and his family moved to another state at the end of their rental lease
and have moved again. Under the state anti-deficiency law where Applicant owned this
house, he does not owe any money on the original mortgage. As for the home-equity
loan, the lender has a judgment it is now trying to enforce. Applicant acknowledged that
he made poor decisions related to these mortgages. He has not received financial
counseling. Outside of the two mortgage debts in the SOR, the credit reports reflect that
Applicant pays his bills in a timely manner and has not defaulted on any other debts.11
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 are used 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,
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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, 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. . . .” An
applicant has the ultimate burden of persuasion for obtaining 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 an applicant may deliberately or inadvertently fail to protect or
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.
 
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.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites
for access to classified or sensitive information).  
Analysis
Guideline F, Financial Considerations
The security concern relating to the guideline for Financial Considerations 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
protect classified information. An individual who is financially overextended
is at risk of having to engage in illegal acts to generate funds. 
7
 
AG ¶ 19 describes the disqualifying conditions that could raise security concerns.
I have considered all the conditions, and the following are potentially applicable: 
(a) inability or unwillingness to satisfy debts; and
(c) a history of not meeting financial obligations. 
Applicant developed financial problems when he defaulted on the mortgage and
home-equity loan on his house. His debts have not been resolved. These two
disqualifying conditions apply.
The Financial Considerations guideline also includes examples of conditions that
can mitigate security concerns. I have considered mitigating factors AG ¶ 20(a) through
¶ 20(f), and the following are potentially applicable:
(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;
and
(d) the individual initiated a good-faith effort to repay overdue creditors or
otherwise resolve debts.
Applicant experienced problems with his employer reimbursing his travel
expenses, which created increased costs for him on his credit cards. Other than this,
Applicant has provided no evidence by his testimony or documents which indicates that
circumstances beyond his control created a problem with his ability to pay his
mortgages when he defaulted on the mortgages in 2009. He failed to defend the civil
suit filed on his home-equity loan, which resulted in a default judgment against him. He
made no effort to pay or negotiate a settlement of this judgment until the attorney for his
mortgage lender filed a garnishment on his bank accounts. After reviewing the evidence
of record and his testimony, I concluded that none of the financial considerations
mitigating conditions 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
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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. The decision to grant or
deny a security clearance requires a careful weighing of all relevant factors, both
favorable and unfavorable. In so doing, an administrative judge must review all the
evidence of record, not a single item in isolation, to determine if a security concern is
established and then whether it is mitigated. A determination of an applicant’s eligibility
for a security clearance should not be made as punishment for specific past conduct,
but on a reasonable and careful evaluation of all the evidence of record to decide if a
nexus exists between established facts and a legitimate security concern. 
In reaching a conclusion, I considered the potentially disqualifying and mitigating
conditions in light of all the facts and circumstances surrounding this case. Applicant
pays his bills and lives within his financial means. He supports his family, and he pays
his child support obligations. Overall, his finances are well-managed. When he was
unsuccessful in obtaining a consolidation of his mortgage loan and his home-equity
loan, he decided to default on his loans in an effort to negotiate with the lender on a
loan consolidation. He decision resulted in the lender agreeing to a trial payment plan
which achieved his goal of loan consolidation. He made two payments, but not the third
payment. At this point, he decided to allow his house to go to foreclosure. He had the
financial resources to continue the payments and accept a reasonable modified loan
agreement. His decision on his mortgages reflected poor judgment. Under state law, he
does not owe any money on his primary mortgage. Until his bank accounts were
threatened with garnishment, he took no action to resolve the judgment against him.
Following this threat, he recently initiated steps to negotiate a resolution of the
judgment, which remains unresolved. His actions concerning the two mortgages reflect
poor judgment and show a lack of responsibility, which raises a security concern about
his handling of classified information.
Overall, the record evidence leaves me with questions or doubts as to Applicant’s
eligibility and suitability for a security clearance. For all these reasons, I conclude
Applicant has not mitigated the security concerns arising from his finances under
Guideline F.
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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: Against Applicant
Subparagraph 1.b: For Applicant
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.
                                                              
MARY E. HENRY
Administrative Judge