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                           DEPARTMENT OF DEFENSE 
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
In the matter of: ) 
 ) 
[Name Redacted] )  ISCR Case No. 12-09504 
  ) 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Eric Borgstrom, Esquire, Department Counsel 
For Applicant: Alan Edmunds, Esquire 
 
 
______________ 
 
Decision 
______________ 
 
 
HOGAN, Erin C., Administrative Judge: 
 
On January 26, 2015, the Department of Defense (DOD) issued a Statement of 
Reasons (SOR) to Applicant 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 
(AG) effective within the Department of Defense after September 1, 2006.  
  
 On March 12, 2015, Applicant answered the SOR and requested a hearing 
before an administrative judge. Department Counsel was ready to proceed on January 
16, 2015. I was assigned the case on July 28, 2015. On September 11, 2015, a Notice 
of Hearing was issued, scheduling the hearing for October 6, 2015. The hearing was 
held as scheduled.  During the hearing, the Government offered nine exhibits which 
were admitted as Government Exhibits (Gov) 1 – 9. Department Counsel’s List of 
Government Exhibits was Hearing Exhibit (HE) I. Applicant testified and offered 17 
exhibits which were admitted as Applicant Exhibits (AE) A – Q. Applicant’s List of 
Exhibits is marked as HE II. The record was held open until October 11, 2015, to allow 
Applicant to submit additional exhibits. He timely offered six exhibits which were marked 
 
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and admitted as AE R – AE W. Applicant’s Post-Hearing List of Exhibits was marked as 
HE III. The transcript (Tr.) was received on October 14, 2015. Based upon a review of 
the pleadings, exhibits, and testimony, eligibility for access to classified information is 
granted. 
 
Findings of Fact 
 
 In his response to the SOR, Applicant denies the sole SOR allegation.  
 
 Applicant is an employee of a Department of Defense contractor seeking to 
maintain a security clearance. He has held a security clearance for over 20 years. He 
has worked for his current employer since November 2005.  He is a high school 
graduate and has some college credit. He was previously married from September 2003 
to September 2007. He married his current wife in August 2009. He and his wife are 
expecting their first child. Applicant has no other children. (Tr. at 29-30; Gov 1)   
 
Applicant’s security clearance background investigation revealed a mortgage 
foreclosure in April 2009, in the total amount of $182,304. (Gov 5 at 14; Gov 6 at 1; Gov 
7 at 9)  This is the sole allegation in the SOR. Applicant is current on all his other debts.  
 
Applicant purchased a house in September 2007 with his girlfriend. He and his 
girlfriend lived in the property together. Applicant relied on both his income and his 
girlfriend’s income to pay the mortgage. Applicant’s girlfriend asked to be in charge of 
the finances. She asked Applicant if she could handle their finances because she had a 
bad experience in a prior relationship regarding finances. Applicant allowed his girlfriend 
to handle the couple’s finances.  A few months later, Applicant began to receive notice 
of late payments and past-due notices. He noticed his credit card balance was 
increasing while his girlfriend’s credit card balance was decreasing. His girlfriend was 
paying off her bills while increasing Applicant’s bills. Applicant terminated the 
relationship and both parties moved out of the house they purchased in January 2008. 
Applicant moved in with his parents. (Tr. 22-24, 31-34) 
 
Applicant contacted several realtors about selling the house. They told him that 
he would be unable to sell his house because the housing inventory was high and no 
one was buying. Applicant decided to let the home go to foreclosure because he could 
not afford the mortgage payments. Applicant never tried a short sale because his home 
went to foreclosure before he could do so. He never applied for a loan modification 
because he was unaware of a loan modification being an option. There were actually 
two mortgages that were foreclosed. The principal mortgage had a balance of 
$128,554. The second mortgage has a balance of $53,750. (Tr. 18-19, 24, 34-36, 38)   
 
Applicant was denied for a special access program by the Air Force in 2011 
because of the mortgage issue. He transferred to another department where he was not 
required to have a special access clearance. He continued to work for his company. (Tr. 
40; Gov 8 at 8) 
 
 
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Since the breakup with his girlfriend and mortgage foreclosure in 2008, Applicant 
manages all of his bills. He makes sure to review all of his mail so no bills are 
neglected. He is in better control of his bills because he is involved.  He and his wife 
have a monthly budget. They have no current delinquencies. Their taxes are current. 
(Tr. 25-26)   
 
When Applicant submitted his security clearance for renewal, he attempted to 
contact the holder of the first mortgage. The first mortgage holder told Applicant they 
had already resolved the first mortgage and it is no longer in their records. In 2009, 
Applicant was issued a 1099-A in relation to the first mortgage. (Tr. 36-37; AE R) In 
2013, Applicant settled the second mortgage for the amount of $5,375. (Tr. 18-19; AE 
A)  
 
Applicant presented a credit score which shows he is a borrower in good 
standing. His credit score improved from “low” to “good”. In February 2015, he attended 
a credit counseling course. He learned about budgeting, controlling cash flow, and 
planning for future emergencies. (Tr. 22; AE D).  
 
Applicant presented a copy of his monthly budget. He and his wife have a net 
monthly income of $6,792. His monthly expenses are currently $3,140. His monthly debt 
payments are currently $1,914. Applicant and his wife have approximately $1,700 left 
over each month after expenses. He has approximately $92,000 in his 401(k). He has 
more than $4,000 in savings and between $4,000 to $5,000 in checking. (Tr. 17, 21; AE 
C)  
 
Whole-person Factors 
 
Applicant’s supervisor testified during the hearing. He also provided a written 
statement.  He is Applicant’s direct manager and has known Applicant since December 
2013. He supervises 82 employees with 12 employees who report directly to him 
including Applicant. Applicant is one of his top employees.  Applicant receives some of 
the highest ratings in his performance reviews. He has received several performance 
awards. Applicant was hired into a working situation that had critical deficiencies. He 
was able to provide sound solutions that exceeded their customer’s expectations. 
Applicant’s supervisor is aware of Applicant’s mortgage foreclosure. He has no 
concerns or reservations about Applicant’s continued access to classified information. 
(Tr. 48-59: AE L)   
 
Several other co-workers and friends provided reference letters on Applicant’s 
behalf. Applicant is highly regarded by them. (AE J – AE P). Applicant provided copies 
of his performance evaluations. They indicate Applicant exceeded or significantly 
exceeded commitments. (AE I). He also provided copies of certificates and awards 
received during his career. (AE G). In 2014, Applicant received a Special Recognition 
Award for Individual Excellence in recognition of his commitment and significant 
contributions to his employer. (AE H) 
 
 
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Policies 
 
 When evaluating an applicant’s suitability for a security clearance, the 
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, which must be considered when 
determining 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 as to 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 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. 
  
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).   
 
 
 
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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.  
 
The guideline notes several disqualifying conditions that could raise security 
concerns. I find AG &19(a) (an inability or unwillingness to satisfy debts); and AG &19(c) 
(a history of not meeting financial obligations) apply to Applicant’s case. In April 2009, 
Applicant underwent a mortgage foreclosure for a home that he purchased with his 
girlfriend. Applicant owed approximately $182,304 for the first mortgage and second 
mortgage. He had been unable to satisfy these debts over the past several years.   
 
An individual who is financially irresponsible may also be irresponsible, 
unconcerned, or careless in their obligations to protect classified information. Behaving 
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 their creditors is a private matter until 
evidence is uncovered demonstrating an inability or unwillingness to pay debts under 
agreed terms. Absent evidence of strong extenuating or mitigating circumstances, an 
applicant with a history of serious or recurring financial difficulties is in a situation of risk 
inconsistent with the holding of a security clearance. An applicant is not required to be 
debt free, but is required to manage their finances in such a way as to meet their 
financial obligations.  
 
The Government’s substantial evidence and Applicant’s own admissions raise 
security concerns under Guideline F. The burden shifted to Applicant to produce 
evidence to rebut, explain, extenuate, or mitigate the security concerns. (Directive 
¶E3.1.15) An applicant has the burden of proving a mitigating condition, and the burden 
of disproving it never shifts to the Government. (See ISCR Case No. 02-31154 at 5 
(App. Bd. Sept. 22, 2005))  
 
The guideline also includes examples of conditions that could mitigate security 
concerns arising from financial difficulties. The following mitigating conditions apply:  
  
 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) applies because 
 
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Applicant’s financial problems were the result of a failed relationship as well as the 
unfortunate timing of the housing market crash in 2008. He had no financial problems 
before his relationship with his former girlfriend and has been financially responsible 
after the end of the relationship. Aside from the first mortgage, he resolved the debts 
incurred by his ex-girlfriend. He remarried. He and his wife’s financial situation is stable.   
 
 AG & 20(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) applies.  Applicant’s mortgage foreclosure 
was the result of a failed cohabitation relationship. Applicant relied on his girlfriend’s 
income to pay the mortgage. He was unable to pay the mortgage based on his income. 
His girlfriend incurred a lot of expenses in his name by using his credit cards. He also 
had to deal with this additional financial burden. Applicant contacted realtors who told 
him that his house would not sell because of the current market conditions. He decided 
to let his home go to foreclosure and to focus on the bills incurred as a result of the 
failed relationship.  He acted responsibly under the circumstances. His financial 
situation is now stable.  
 
AG ¶ 20(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) 
applies because Applicant attended financial counseling in February 2015. Applicant 
began resolving the financial issues created from his failed relationship well before he 
attended financial counseling. His current financial situation is under control.   
 
AG & 20(d) (the individual initiated a good-faith effort to repay overdue creditors 
or otherwise resolve debts) applies. Applicant settled the second mortgage in 2013. 
Although not alleged in the SOR, Applicant’s former girlfriend incurred a lot of credit 
card debt in his name. He resolved all of these unalleged SOR debts.  
 
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.  
 
 
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 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. 
        
I considered the potentially disqualifying and mitigating conditions in light of all 
the facts and circumstances surrounding this case. I considered the favorable 
recommendations of Applicant’s supervisor as well as his friends and co-workers.   I 
considered that Applicant’s mortgage foreclosure occurred after a failed relationship. 
The need to sell his home coincided with the 2008 housing market crash and Applicant 
was unable to sell the house he purchased with his former girlfriend. Aside from the 
mortgage foreclosure, Applicant is financially stable. The foreclosure was a departure 
from Applicant’s track record of financial stability. Security concerns under financial 
considerations are mitigated.    
 
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 
 
 Subparagraph 1.a:     For Applicant 
     
Conclusion 
 
In light of all of the circumstances presented by the record in this case, it is  
clearly consistent with the national interest to grant Applicant eligibility for a security 
clearance.  Eligibility for access to classified information is granted. 
 
 
                                                
_________________ 
ERIN C. HOGAN 
Administrative Judge