The Government submitted nine items for the record.      1
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                        DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)      ISCR Case No. 14-03502
)
Applicant for Security Clearance )
Appearances
For Government: Philip J. Katauskas, Esq., Department Counsel
For Applicant: Pro se
                                                                            
______________
Decision
______________
LYNCH, Noreen A, Administrative Judge:
On December 18, 2014, the Department of Defense (DOD) issued a Statement
of Reasons (SOR) listing security concerns arising 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 (DoD) Directive 5220.6, Defense Industrial Personnel Security Clearance
Review Program (January 2, 1992), as amended (Directive); and the adjudicative
guidelines (AG) implemented in September 2006. 
Applicant timely answered the SOR and requested a review based on the written
record in lieu of a hearing. The case was assigned to me on September 17, 2015.
Department Counsel submitted a File of Relevant Material (FORM), dated July 10,
2015.  Applicant received the FORM on July 17, 2015. Applicant submitted information1
in response to the FORM, which was marked and admitted into the record as AX A.
Based on a review of the case file, eligibility for access to classified information is
denied.
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Findings of Fact
In her answer to the SOR, Applicant admitted the factual allegations under
Guideline F (Financial Considerations) with the exception of 1.c and 1.h of the SOR,
and provided explanations. (Item 1)
Applicant is a 58-year-old employee of a defense contractor. She is a college
graduate, married with two grown sons. (Item 5) She has worked for her employer since
1998, her clearance sponsor. She completed a security clearance application in 2013.
The SOR alleges eight delinquent debts totaling $342,272. (Item 1) The majority
of the debt is from past-due mortgages on four rental properties owned by Applicant. 
Applicant attributes her delinquent debts to failure to live within her means. She
notes that she is an advocate of lay-away plans and long-term payment arrangements
to obtain what she wants. (Response to FORM) Specifically, Applicant has rental
properties that she purchased as an investment for the future. She wanted to keep
them until they could be sold at a profit and not a loss. At the time she purchased them,
she believed real estate to be a sound investment.
As to the SOR allegation at 1.a for a past-due amount of $7,624 on a real estate
mortgage balance of $103,593, Applicant contacted the loan company who is allowing
a repayment plan. She notes that the actual mortgage balance is $100,185. This rental
property has been vacant and is in the process of being made ready for new tenants.
The mortgage payment fell behind when there was no rental income. She provided
documentation that she made a payment of $860 in July 2015. 
As to the SOR allegation at 1.b for a past-due amount of $3,004 on a real estate
mortgage balance of $98,522, Applicant contacted the loan company who is allowing a
repayment plan. She notes that the actual mortgage balance is $97,690. This rental
property, which has been vacant was vandalized. It is now being prepared for new
tenants. Applicant keeps the company apprised of her intention so that she can avoid a
short sale or foreclosure of the property. She submitted a payment that was made in
the amount of $1,129 in July 2015. (Response to FORM, EX A)
Applicant stated that, as to the alleged debt at 1.c, she is still working to resolve
this. It was a rental property that foreclosed in 2014. The amount charged off was
approximately $50,977. There is documentation in the record that Applicant was issued
foreclosure notice in 2012, and that a payment of $52,393 was needed to avoid a
foreclosure. Applicant stated that she had no notice before the auction of the home.
She stated that she will try to settle this issue. She also denied that she owed the
alleged amount.
As to the SOR allegation at 1.d for a past-due amount of $1,746 on a real estate
mortgage balance of $41,736, Applicant admits there is a past-due amount. She states
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that it is still delinquent, but the amount is about $1,500.  The reason it is delinquent is
the same as the other rental properties. 
Applicant does not admit being indebted to the company at 1.e for a past-due
amount of $1,582, with a total mortgage balance of $19,883. She notes the account
was sold to another company. She stated that she was sending payments to a new
company but it was sold again. This account is a second mortgage on the rental
property at allegation 1.a. Applicant’s plan is to work with a consultant to address this
issue. 
Applicant states that she has a payment plan in place for the debt at 1.f that was
charged off in the amount of $11,152.  She states that she pays $84 a month. There
was no documentation in the record to substantiate her assertions.
As to the SOR allegation at 1.g for an account charged off in the amount of
$10,294, Applicant states that the debt has decreased and that her agreed upon
payment plan is up to date. She did not provide documentation that she is paying $170
per month on the account.
Applicant has settled the account at 1.h in the amount of $6,115 for $2,100 in
May 2014. She provided documentation to support her claim.
Applicant notes that she worked with a credit counselor at a bank last year, but
she did not provide any specific information.  She states that her ultimate plan is to sell
the rental properties as soon as practical. She emphasized  the fact that she invested in
real estate and then bad economic times occurred should not be interpreted as poor
judgment. She states that she and her husband together earn about $145,000 a year
and she has used her income and savings to keep the mortgages afloat. She states
that she just needs more time and that real estate is not something that you can just
sell overnight. She plans to consult with an attorney to help resolve some of the
financial issues. (Response to FORM)
Policies
When evaluating an applicant’s suitability for a security clearance, an
administrative judge must consider the adjudicative guidelines (AG). In addition to brief
introductory explanations for each guideline, the adjudicative guidelines list potentially
disqualifying conditions and mitigating conditions. These guidelines are not inflexible
rules of law. Instead, recognizing the complexities of human behavior, they are applied
in conjunction with the factors listed in the adjudicative process. An administrative
judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision.
Under AG ¶ 2(c), this process is a conscientious scrutiny of a number of variables
known as the “whole-person concept.” An administrative judge must consider all
available, reliable information about the person, past and present, favorable and
unfavorable, in making a decision.
 See also ISCR Case No. 94-1075 at 3-4 (App. Bd. Aug. 10, 1995).      2
 Department of the Navy v. Egan, 484 U.S. 518, 531 (1988).      3
 ISCR Case No. 93-1390 at 7-8 (App. Bd. Jan. 27, 1995).      4
 See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive      5
information), and EO 10865 § 7.
 ISCR Case No. 93-1390 at 7-8 (App. Bd. Jan. 27, 1995).      6
 Id.      7
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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.
The United States Government must present evidence to establish controverted
facts alleged in the SOR. 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. . . .”  The burden of proof is something less than a2
preponderance of evidence.  The ultimate burden of persuasion is on the applicant.  3 4
A person seeking access to classified information enters into a fiduciary
relationship with the Government based on 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 classified information. Such
decisions entail a certain degree of legally permissible extrapolation of 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.”  “The clearly consistent standard indicates that security clearance5
determinations should err, if they must, on the side of denials.”  Any reasonable doubt6
about whether an applicant should be allowed access to sensitive information must be
resolved in favor of protecting such information.  The decision to deny an individual a7
security clearance does not necessarily reflect badly on an applicant’s character. It is
merely an indication that the applicant has not met the strict guidelines the President
and the Secretary of Defense established for issuing a clearance.
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Analysis
Guideline F, Financial Considerations
The security concern for Financial Considerations is set out in AG ¶ 18:
Failure or an 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.” It also
states that “an individual who is financially overextended is at risk
of having to engage in illegal acts to generate funds.
Applicant has substantial delinquent debt as a result of delinquent
mortgages on various rental properties. Consequently, Financial Considerations
Disqualifying Condition (FC DC) AG ¶ 19(a) (inability or unwillingness to satisfy
debts), and FC DC AG ¶ 19(c) (a history of not meeting financial obligations)
apply. With such conditions raised, it is left to Applicant to overcome the case
against her and mitigate security concerns.  
Applicant notes that the declining real estate economy has caused the
financial difficulties with the mortgages. She would pay her mortgages with the
money from her tenants. As the properties lacked tenants she could not always
pay the various mortgages. She also had a second mortgage on one of the
properties. She recently started making payments on several mortgages. She
still has a substantial amount of unresolved debts. Consequently, Financial
Considerations Mitigating Condition (FC MC) 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) does not apply.
Financial Considerations Mitigating Condition (FC MC) AG ¶ 20(b) (the
conditions that resulted in the behavior 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) does not apply. As noted, Applicant answered that she invested
in rental property with the idea that the rental income would pay the mortgages.
She also noted that she does not deny “failure to live within one’s means.” She
does not want to sell the properties at a loss. She wants to sell at a profit and
notes that will take time. She has provided documentation that she recently
started a repayment plan on two of the delinquent mortgages. One small account
has been settled. She did not show responsible action in addressing the
delinquent debts. This mitigating condition does not apply.
FC MC AG ¶ 20(d), (the individual initiated a good-faith effort to repay
overdue creditors or otherwise resolve debts) partially applies. She resolved the
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debt in 1.h. Applicant receives partial credit due to her two payment plans.
Applicant received financial counseling with one of the banks. FC MC AG ¶ 20(c)
(the person has received or is receiving counseling for the problem and there are
clear indications that the problem is being resolved or is under control) does not
fully 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 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. 
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. As noted
above, the ultimate burden of persuasion is on the applicant seeking a security
clearance. 
I considered the potentially disqualifying and mitigating conditions in light
of all the facts and circumstances surrounding this case, as well as the whole-
person factors. Applicant is 58-years old. She is married and has held a position
with her employer since 1998.
Applicant answered the FORM with a narrative that explained her
investment properties and the failing economy. She planned to pay her
mortgages with rental income. This is not, in and of itself, a bad thing. However,
Applicant wants to sell her properties at a profit. Her plan is to pay the mortgages
when she can sell the rental properties. She has made some recent efforts to
address accounts.  She has settled one account. However, she has a substantial
amount of debt. Her financial problems are not under control and she presented
no realistic plan for resolving them. I have doubts about her judgment and
reliability based on the record. Any doubts must be resolved in favor of the
Government.  
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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
Subparagraphs 1.a-1.g: Against Applicant
Subparagraph 1.h: 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 a security
clearance. Clearance is denied.
                                                     
NOREEN A. LYNCH.
Administrative Judge