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          DEPARTMENT OF DEFENSE 
                     DEFENSE OFFICE OF HEARINGS AND APPEALS 
 
           
             
 
 
In the matter of: ) 
 ) 
  ) ISCR Case No: 14-03176 
  ) 
 ) 
Applicant for Security Clearance ) 
 
 
 
 
For Government: Caroline Heintzelman, Esquire, Department Counsel 
For Applicant: Pro se 
 
 
 
______________ 
 
Decision 
______________ 
 
 
DAM, Shari, Administrative Judge: 
 
 Based upon a review of the pleadings, exhibits, and testimony, eligibility for 
access to classified information is denied. 
 
Statement of the Case 
 
On December 7, 2007, Applicant submitted an electronic Questionnaire for 
Investigations Processing Investigation Request (e-QIP) as part of a re-investigation for 
his security clearance. On September 17, 2014, the Department of Defense 
Consolidated Adjudications Facility (DOD CAF) issued Applicant a Statement of 
Reasons (SOR) 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; Department of 
Defense 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 effective within the 
Department of Defense on September 1, 2006.  
 
 
 
 
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 Applicant answered the SOR in writing (Answer) on October 22, 2014, and 
requested a hearing before an administrative judge. On December 15, 2014, the 
Defense Office of Hearings and Appeals (DOHA) assigned the case to me. On January 
6, 2015, DOHA issued a Notice of Hearing, setting the case for January 20, 2015. 
Applicant conferred with Department Counsel on December 10 and 19, 2014, and on 
January 2, 2015, regarding the scheduling of a hearing date in January 2015. (Tr. 8.) At 
the hearing, he did not object to proceeding with the hearing, having received a formal 
notice of the date less than 15 days before the scheduled date. (Tr. 7.) The case was 
heard as scheduled. Department Counsel offered Government Exhibits (GE) 1 through 
9 into evidence without objection. Applicant testified. He offered Applicant Exhibits (AE) 
1 through 5 into evidence without objection. The record remained open until February 
16, 2015, in order to provide him time to submit additional documents. DOHA received 
the hearing transcript (Tr.) on January 30, 2015. Applicant timely submitted AE 6, which 
was admitted without objection, after which the record closed. 
 
Findings of Fact 
 
 In his Answer to the SOR, Applicant admitted all allegations, except those 
alleged in ¶¶ 1.c, 1.f, and 1.l because he was unfamiliar with the creditor. All admissions 
are incorporated herein. 
 
 Applicant is 55 years old. He has some college credits. His wife of 24 years died 
in March 2014. Applicant stayed home with her for four months before she died. (Tr. 
12.) They have two adult children, ages 18 and 21, both of whom he supports while they 
attend college. (Tr. 26.) He has worked for the same defense contractor for 36 years 
and held a secret security clearance for 30 years. For the past nine years, he has been 
a project manager. (Tr. 33.) In January 2008 he submitted a security clearance 
application (SCA) for a routine re-investigation. In a February 2008 interview, the 
Government discussed financial concerns with him, including delinquent debts. (Tr. 34; 
GE 4.) His security clearance was subsequently renewed. (Tr. 32.) 
 
 Applicant stated that his financial problems began sometime in 2004 after his 
wife was injured and unable to work. Subsequent to the injury, she taught music lessons 
at home and played piano for their church until she could no longer do that. (Tr. 30.) 
She earned about $800 a month and received social security disability benefits from the 
time she was injured until 2012 when she could no longer teach. In 2007 Applicant and 
his wife hired a debt consolidation company to help manage their mounting debts, but 
stopped after six or eight months because they were not happy with the company’s 
payment process. (Tr. 32.) By 2012 their financial situation worsened. (Tr. 35.) They 
considered filing bankruptcy, but decided to attempt to pay their debts. (Tr. 37.) In 
December 2012 Applicant submitted another SCA in order to upgrade his position. In 
that SCA, he disclosed that he was making payments on unpaid taxes for 2010. (GE 1.)  
 
 Based on credit bureau reports (CBR) dated February 2008, February 2013, 
March 2014, and December 2014, the SOR alleged 12 delinquent debts totaling 
 
 
 
 
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$42,862 that began accumulating in 2007. A summary of the status of each debt is as 
follows: 
 
Debts Paid/Resolved/Resolving: 
 
SOR ¶ 1.a. The $15,604 judgment owed to a bank for a credit card debt is paid. 
The judgment was entered on December 7, 2009. Applicant made regular 
payments on the judgment until he could no longer afford them. On October 22, 
2014, the bank obtained a garnishment order for $1,675, the unpaid amount. 
Beginning that month, $400 was deducted from Appellant’s monthly salary. As of 
February 12, 2015, the garnishment was paid. (AE 1, 6.) 
   
SOR ¶ 1.B. The past due balance of $371 for a credit card debt owed to a bank 
was paid on January 13, 2015. The remaining balance is $3,733. (AE 2.)  
 
SOR ¶ 1.e. The $13,629 credit card debt owed to a bank was cancelled by the 
bank in November 2008. Although this debt was a joint account, the IRS Form 
1099C Cancellation of Debt listed only his late wife’s name, which is the reason 
the debt continues to appear on his CBR. (Tr. 58-60; AE 3.) It is resolved. 
 
SOR ¶ 1.h. The $85 credit card debt owed to a department store was paid, but 
Applicant cannot find his receipt. (Tr. 61.) 
 
Debts Unresolved: 
 
SOR ¶ 1.c. The $207 debt owed to a creditor is unpaid. Applicant does not 
recognize it. Although he denies owing it, he has not filed a formal dispute with 
the credit reporting bureau. (Tr. 54.) 
 
SOR ¶ 1.d. The $2,292 debt for payday loans owed to a bank and charged off in 
April 2012 is unresolved. (Tr. 56-57.) 
 
SOR ¶ 1.f. The $110 debt owed to a creditor is unpaid. Applicant does not 
recognize it. Although he denies owing it, he has not filed a formal dispute with 
the credit reporting bureau. (Tr. 61.) 
 
  SOR ¶ 1.g. The $1,713 credit card debt owed to a bank is unpaid. (Tr. 62-63.) 
 
SOR ¶ 1.i. The $4,731 credit card debt owed to a retail store is unresolved. (Tr. 
62-63.) 
 
SOR¶ 1.j. The $1,061 credit card debt owed to a bank is unpaid. (Tr. 62-63.) 
 
 
SOR ¶ 1.k. The $3,371 credit card debt owed to a retail store is unresolved. (Tr. 
62-63.) 
 
 
 
 
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SOR¶ 1.l. The $50 debt owed to a creditor is unpaid. Applicant does not 
recognize it and has no bill for it. Although he denies owing it, he has not filed a 
formal dispute with the credit reporting bureau. (Tr. 61.) 
  
 In summary, Applicant paid or resolved $29,689 of the SOR-alleged debt. About 
$13,535 remains unresolved. In addition, he is repaying his 401(k) $32,000 for monies 
he borrowed in January 2012 to preserve his mortgage, and in January 2013 to pay 
personal debts. (Tr. 39, 67.) He also owes $1,400 to the Internal Revenue Service (IRS) 
for 2011 taxes, which he pays through an automatic deduction every month for $100. 
He thinks his tax refund for 2014 will be sufficient to pay that debt in full. (Tr. 42.) He 
owes $522 for state income taxes for the years 2010 and 2011. He pays the state $95 
per month through an automatic deduction. (AE 6.) He previously resolved his 2010 
outstanding federal taxes.1  
 
 Based on Applicant’s bi-weekly Leave and Earnings Statement (LES), his annual 
salary is about $64,500.2 (AE 1.) His net monthly income is $3,300, after taxes and 
payments on three debts, including the 401(k) loan. (Tr. 40.) Based on a personal 
financial statement his monthly expenses are greater than his income. (Tr. 73; AE 4.) 
His mortgage and utilities are current. (Tr. 37.) He makes minimum payments on one 
credit card that has a balance of $1,800, and another that has a balance of $916. Both 
have been delinquent at times. (Tr. 38, 52.)  
 
 Applicant stated that his financial situation has improved over the years, as he has 
made progress paying debts. (Tr. 65.) He said that he has paid many debts not listed on 
the SOR, including a debt he recently settled for $400 that was owed to a company for 
outstanding payday loans. (AE 6.) He intends to pay all outstanding debts and not file 
bankruptcy. Because the garnishment is recently paid, he should have an additional 
$500 a month to resolve other debts. He contacted two banks about making future 
payments on their outstanding credit card balances. (Tr. 63-65.) 
 
 Applicant testified candidly and honestly. He is embarrassed about his financial 
problems and has tried to address them. (Tr. 65-66.) He has not participated in credit 
counseling or budget management, and disclosed that he was a credit counselor in the 
past. (Tr. 70.) He acknowledged that 8 of the 12 SOR-listed debts are credit cards, most 
of which his wife used for unnecessary items. (Tr. 70.) He admitted that he managed his 
finances and family expenditures “poorly” over the years. (Tr. 78.)   
 
 Applicant’s supervisor is aware that these financial problems have created 
security clearance concerns. Applicant discussed his financial situation with him over 
the years. (Tr. 26.) Applicant submitted performance evaluations for three years. In 
                                            
1All unalleged debts will not be considered in the analysis of disqualifying conditions, but may be 
considered in the whole-person discussion. 
2Applicant testified that his annual salary is about $78,000. (Tr. 67.) According to the LES, his total gross 
income as of November 13, 2014, was $50,323, and would not total $78,000 by the last pay period in 
December 2014. (AE 1.) 
 
 
 
 
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2011 he received a “Highly Effective” rating; in 2012 he received an “Effective” rating; 
and in 2013 he received a “Highly Effective” rating. (AE 5.) 
 
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 (AG) list 
potentially disqualifying and mitigating conditions, which are useful 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. Likewise, I have avoided drawing inferences 
grounded on mere speculation or conjecture. 
 
According to 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 the applicant or proven by Department Counsel, 
and has the ultimate burden of persuasion as to obtaining a favorable clearance 
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 the 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. 
 
 
 
 
 
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Section 7 of Executive Order 10865 provides that an adverse decision shall be 
“in terms of the national interest and shall in no sense be a determination as to the 
loyalty of the applicant concerned.”  
  
Analysis 
 
Guideline F, Financial Considerations 
 
The security concerns relating to the guideline for financial considerations are 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.  
 
AG ¶ 19 notes two disqualifying conditions that could potentially raise security 
concerns in this case: 
 
(a) inability or unwillingness to satisfy debts ; and 
 
(c) a history of not meeting financial obligations. 
 
As documented by CBRs, Applicant began accumulating delinquent debts 
between 2007 and 2014 that he has been unable or unwilling to resolve. The evidence 
is sufficient to raise these disqualifying conditions. 
 
After the Government produced substantial evidence of those two disqualifying 
conditions, the burden shifted to Applicant to produce evidence and prove mitigation of 
the security concerns. AG ¶ 20 sets forth conditions that could potentially mitigate 
financial security concerns: 
(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; 
 
 
 
 
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(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. 
According to the CBRs, Applicant’s multiple financial problems have been 
ongoing over the past seven years, but actually started earlier according to his 
testimony. Hence, AG ¶ 20(a) does not apply. Some delinquent debts arose as a result 
of his wife’s loss of employment and long-term disability, which were circumstances 
beyond his control. Because he did not present sufficient evidence demonstrating that 
he attempted to responsibly manage debts while they were accumulating over the 
years, only a partial application of AG ¶ 20(b) is warranted.  
 
Applicant did not provide evidence to support the application of AG ¶ 20(c). He 
has not participated in credit or financial counseling, nor established a detailed long-
term budget to address the unresolved SOR debts and other outstanding liabilities. 
Currently, his monthly expenses exceed his income. There are no clear indications that 
his financial issues are under control. 
 
Applicant paid or resolved 4 of the 12 SOR-listed debts, exhibiting a good-faith 
effort to resolve those debts, and supporting the application of AG ¶ 20(d) as to those 
allegations. Eight of the SOR-listed debts remain unresolved. He did not provide 
evidence to document that he formally disputed any debts with the credit bureaus or 
creditors, as required for application of AG ¶ 20(e).  
 
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 relevant circumstances. The administrative judge should consider the 
nine adjudicative process factors listed at AG ¶ 2(a). They include the following:  
 
(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) extent to which 
participation is voluntary; (6) the presence or absence of rehabilitation and 
other permanent behavioral changes; (7) the motivation for the conduct; 
 
 
 
 
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(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 include 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 
facts and circumstances surrounding this case. Applicant is a 55-year-old man, who has 
successfully worked for a defense contractor for 35 years and held a security clearance 
during most of those years. He was married to his wife for 22 years, before she passed 
away in March 2014 after suffering a long-term disability. He has two adult children 
attending college, whom he supports. He was a good husband and is a good father. 
 
 After his wife ceased working sometime in 2004 due to an injury, Applicant said 
he began accumulating delinquent debts, which he could not pay. For the next ten 
years, he continued accumulating delinquent debts, many of which were unpaid credit 
cards. During a renewal investigation of his security clearance in 2008, the Government 
notified Applicant of its financial security concerns. In December 2012 he submitted 
another security clearance application, and disclosed that he was making payments on 
a 2010 income tax debt. Applicant honestly admits, without hesitation, that some of the 
financial problems are the result of years of financial mismanagement. He said that his 
financial situation is slowly improving.  
 
The Appeal Board has addressed a key element in the whole-person analysis in 
financial cases, stating:  
 
In evaluating Guideline 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 
demonstrates 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 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 
 
 
 
 
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actually paid in furtherance of a reasonable debt plan be the ones listed in 
the SOR.3 
 
In this instance, there is insufficient evidence to demonstrate a meaningful track 
record within the scope of the term defined in the above case. Applicant addressed 4 of 
the 12 SOR-listed debts and reduced the amount of old delinquent debts from $42,862 
to $13,535, which is owed to eight creditors. In addition to those outstanding debts, he 
is making payments on his 2011 federal and state income taxes, and 401(k) loan, the 
balance which is unknown. He maintains one credit card (with a $3,733 balance) in 
good standing through minimum monthly payments. He has two outstanding credit 
cards, which are not alleged in the SOR, but remain unpaid or resolved. While 
acknowledging his responsibility to pay or resolve the financial problems, he has not 
sought professional advice, garnered a thorough understanding of his various financial 
obligations, or established a solid budget and plan to resolve them. Unfortunately, this 
situation has been present since before 2007, and there is no evidence to document a 
track record of financial responsibility and good judgment. In 2008 he was alerted to the 
Government’s security concerns. During the hearing, he was uncertain about the status 
of many debts and his finances. His budget does not appear to accurately record the 
scope of ongoing expenses, all outstanding liabilities, and potentially reflects an 
incorrect income amount. The record evidence leaves me with questions or doubts as to 
Applicant’s eligibility and suitability for a security clearance. For these reasons, I 
conclude Applicant did not mitigate the security concerns arising 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:     AGAINST APPLICANT 
 
  Subparagraphs 1.a and 1.b:             For Applicant 
 
  Subparagraphs 1.c and 1.d:   Against Applicant 
 
  Subparagraph 1.e:     For Applicant 
 
  Subparagraphs 1.f and 1.g:   Against Applicant 
 
  Subparagraph 1.h:     For Applicant 
 
  Subparagraphs 1.i through 1.l:   Against Applicant 
 
 
                                            
3ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008) (internal citations omitted). 
 
 
 
 
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Conclusion 
 
 In light of all of the circumstances presented by the record in this case, it is 
clearly not consistent with the national interest to continue Applicant’s eligibility for a 
security clearance. Eligibility for access to classified information is denied. 
 
                                               
_________________ 
SHARI DAM 
Administrative Judge