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DEPARTMENT OF DEFENSE 
DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
In the matter of:    ) 
      ) 
      )  ISCR Case No. 15-01184 
     ) 
Applicant for Security Clearance  ) 
 
 
Appearances 
 
For Government: Adrienne M. Strzelczyk, Esq., Department Counsel 
For Applicant: Linda Lane Drummond, Personal Representative 
 
 
______________ 
 
Decision 
______________ 
 
 
CREAN, Thomas M., Administrative Judge: 
 
Based on a review of the pleadings, exhibits, and testimony, eligibility for access 
to classified information is denied. Applicant failed to present sufficient information to 
mitigate financial security concerns. 
 
Statement of the Case 
 
On October 8, 2012, Applicant submitted an Electronic Questionnaires for 
Investigations Processing (e-QIP) to obtain a security clearance required for a position 
with a defense contractor. Applicant was interviewed by a security agent from the Office 
of Personnel Management (OPM) on November 16, 2012. After reviewing the results of 
the OPM investigation, the Department of Defense (DOD) issued Applicant a Statement 
of Reasons (SOR), dated March 5, 2015, detailing security concerns for financial 
considerations under Guideline F. 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 
(AG) effective in the DOD on September 1, 2006.  
 
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Applicant answered the SOR on March 20, 2015, admitting the financial 
considerations allegation. Department Counsel was prepared to proceed on May 27, 
2015, and the case was assigned to me on June 8, 2015. DOD issued a notice of 
hearing on July 2, 2015, scheduling a hearing for July 29, 2015. I convened the hearing 
as scheduled. The Government offered five exhibits that I marked and admitted into the 
record without objection as Government Exhibits (GX) 1 through 5. Applicant and one 
witness testified. Applicant submitted nine documents that I marked and admitted into 
the record without objection as Applicant Exhibits (AX) A through I. I left the record open 
for Applicant to submit additional documents. Applicant timely submitted one additional 
exhibit that I marked and admitted into the record without objection as AX J. (GX 6, e-
mail, dated August 6, 2015). I received the transcript of the hearing (Tr.) on August 6, 
2015, and the record closed that day. 
 
Findings of Fact 
 
After a thorough review of the pleadings, transcript, and exhibits, I make the 
following findings of fact.  
  
Applicant is 43 years old and has been employed by a defense contractor as a 
shipyard planner for three years. He received an associate’s degree in 2012 and a 
bachelor’s degree in 2014. He is now studying for a master’s degree. Applicant or his 
employer paid for his education, and he did not incur any student loan debt for his 
education. He served in the Army National Guard from 1989 until 1996, and in the Army 
Inactive Reserve from 1996 until 1998. He was discharged with an honorable discharge 
in 1998 as a specialist (E-4). Applicant was unemployed from December 2010 until 
November 2011.  
 
Applicant first married in May 1995, and divorced in 2002. He had one child from 
this marriage. He did not have any financial issues during his first marriage. He married 
again in January 2004. His second wife had three children, so Applicant now has a 
biological son and three stepchildren at home. One stepdaughter will soon enter active 
duty in the Air Force, and one stepson is a college senior. He will enter the Air Force 
after graduation. The two children at home have some medical and developmental 
issues. The family’s net monthly income is $4,100, with monthly expenses of $3,689, 
leaving $410 in monthly discretionary income. As will be noted below, the payments 
required by a Chapter 13 bankruptcy are taken directly from Applicant’s pay before 
determining his monthly net pay. (Tr. 42-50; GX 1, e-QIP, dated October 5, 2012; GX2, 
Personal Subject Interview, dated November 16, 2012; AX B, Budget, dated July 2015;; 
AX D, Payroll Statement, dated July 12, 2015) 
 
The SOR alleges that Applicant filed a Chapter 13 Bankruptcy on August 1, 
2014, with liabilities of $538,814.41, and assets of $199,779.20. (GX 3, Bankruptcy 
Documents, filed August 27, 2014) Applicant admitted the allegation in his response to 
the SOR. The security issue raised by the bankruptcy is not just the bankruptcy filing but 
the amount of delinquent debt listed in the bankruptcy petition. Applicant and his wife 
have been making the approximately $1,090 monthly payments to the bankruptcy 
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trustee since Applicant and his wife received financial counseling as part of their 
bankruptcy petition action. They did not present any information on any other payments 
they made on any of the debts. The only action taken on their debts is to file the 
Chapter 13 bankruptcy. Applicant and his wife received financial counseling as part of 
their bankruptcy petition action. (AX C, Counseling Certificate, dated August 25, 2014) 
 
Applicant’s family started to experience financial problems in 2009. Applicant 
claims that the delinquent debts were incurred not from frivolous or unnecessary 
spending, but because of difficult issues that happened to the family. Applicant’s wife 
had two major surgeries in 2009, two in 2011, and another in 2012. She still held a 
realtor’s license but was unable to work and therefore did not receive any commissions. 
Their four children had various serious medical issues requiring constant doctor visits, 
hospitalizations, and medications. For most of the time, Applicant’s family was covered 
by health insurance that assisted with payment of medical bills. In approximately 2006, 
Applicant’s employer switched the health coverage to a health savings account and 
their out-of-pocket expenditure dramatically increased. Applicant noted that many of the 
medical debts listed in the bankruptcy stemmed from the time the family was covered by 
a health savings account system. The family did not have health insurance when 
Applicant was unemployed from December 2010 until being employed with his present 
employer in November 2011. Since November 2011, he has had a much better health 
insurance program and did not incur any delinquent medical debts. From 2006 until 
2010, Applicant did not look for a different health insurance plan because the family 
could not afford a plan outside of Applicant’s employment. The medical bills became 
delinquent because Applicant and his wife prioritized their debts and focused on 
providing for their children and paying to maintain their house. Their priorities were the 
mortgage, utilities, insurance, vehicles, and groceries. (Tr. 41-50, 54-56, 63-69).  
 
Applicant’s wife became a real estate agent receiving sales commissions starting 
in 2005. Taxes were not taken from her commissions and she was responsible for 
setting aside funds to pay the state and federal taxes. Applicant and his wife filed their 
tax returns as married filing separately. Applicant’s wife did not file federal or state tax 
returns from 2005 until 2009. After auditing the tax returns, the federal and state tax 
authorities placed tax liens on the family’s property for the back taxes. The tax liens in 
the bankruptcy pertain to the federal and state taxes for those years. The tax debt is 
included in the bankruptcy. Applicant’s wife states that only she is responsible for those 
tax liens since it was her commission that generated the tax liability. (Tr. 33-35) 
 
Applicant’s wife is presently in school which she will complete shortly. She used 
student loans to pay for her education. Her student loans are presently deferred. The 
student loans listed in the bankruptcy are for their children’s education. They are 
primarily responsible for their own student loans. Applicant was the co-signer on the 
loans as their parent. Applicant does not expect to have to pay the loans since their 
children were raised to be responsible and pay their debts. Their daughter is an Air 
Force officer and is expected to meet her financial obligations. (Tr. 75-76) 
 
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Applicant and his wife provided the bankruptcy attorney credit reports so that all 
of their debts could be included in the bankruptcy filing. They did not see the bankruptcy 
document prepared by the attorney, GX 2, until the documents were sent to them before 
the hearing by Department Counsel. At the hearing, they objected to the amount of debt 
listed on the bankruptcy schedules. Applicant’s wife pointed out that some of the debts 
listed in the documents should not be considered bankruptcy debts and some were 
duplicate debts. They believed the correct amount of debt should be $218,827.84. 
Applicant’s wife is 100% sure that her calculations are absolutely correct.  
 
Applicant presented a document indicating that he is only responsible for a 
limited part of the family’s delinquent debts. The document indicates Applicant’s belief 
that he is responsible for a loan, five small medical debts, a car loan, and student loans 
for his children that are in deferment. The bankruptcy documents show these debts as 
$50,098, while Applicant believes he should only be responsible for $23,559 in 
delinquent debt, the overwhelming part of this debt is attributed to a car loan. There are 
also joint accounts with his wife that include two mortgage accounts in arrears, medical 
accounts, a city tax lien, and another vehicle repossession debt, for a total of 
$31,564.61. The bankruptcy documents list the amount of the debts as $36,423.61 (Tr. 
56-58; AX A, List of Debts, undated) 
 
Applicant presented a list of debts from the bankruptcy that he states should not 
be attributed to him but only to his wife. The total amount of the debt shown on the 
bankruptcy list is $281,540.34, but Applicant and his wife argue that the total should 
only be $163,704.23. The delinquent debts include a repossessed car loan, credit card 
and loan debt, utility bills, medical debt, potential student loan debts, and significant 
federal and state tax liens. Applicant stated that the credit cards were used to pay for 
necessities and not for frivolous entertainment.  
 
Applicant and his wife stated that they would meet with their bankruptcy attorney 
the day after the hearing. I informed Applicant that they should advise the attorney of 
their issues on the amount of the debt, and have him determine the correct amount to 
include in the bankruptcy filing. After the hearing, Applicant presented a letter from the 
attorney. The attorney noted that the bankruptcy judge confirmed the bankruptcy 
payment plan on March 27, 2015. Applicant and his wife will pay $1,090 per month for 
60 months (total of $65,400). The plan will pay all secured debts and mortgage arrears. 
The $2,544.51 secure part of the $88,839.92 tax lien will be the only part of the debt 
paid by the bankruptcy. The remainder will be treated as unsecured debt. However, as 
noted below, this only affects the tax lien and not the underlying tax debt. The tax debt 
will not be discharged by the bankruptcy and Applicant and his wife are still responsible 
to pay the remainder of the tax debt.  
 
Applicant’s bankruptcy attorney stated that the second mortgage is also treated 
as an unsecured debt. The unsecured creditors, which are the bulk of the creditors, will 
receive 1% of the debt they are owed. The remaining debt will be discharged at the end 
of the bankruptcy as long as Applicant and his wife successfully complete the 
bankruptcy. At the end of the bankruptcy, Applicant and his wife will only owe the 
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normal monthly regular mortgage payment, their student loans (if any), and any debts 
incurred after the bankruptcy filing date. The bankruptcy attorney did not indicate that 
the amount of debt in the original bankruptcy documents was changed. The amount of 
debt noted in the SOR is still valid at $538,814.41. (Tr. 19-27, 30-33, 70-73; AX J, letter, 
dated August 4, 2015)   
 
For security purposes, I find that Applicant is responsible for the majority of the 
delinquent debts listed in the bankruptcy documents. The real estate commissions were 
earned by Applicant’s wife during the marriage. While she filed her tax return separately 
and did not file tax returns for four years incurring tax liens, Applicant was in the 
household benefiting from the additional funds represented by the taxes his wife did not 
pay. While the credit cards, loans, and utilities were in his wife’s name, again Applicant 
was in the household and benefitted from the purchases. The medical debts were 
incurred for members of Applicant’s family and resulted from gaps in Applicant’s health 
insurance coverage. The only debts that may not accrue to Applicant are the student 
loans for his children. The loans are deferred for now but the children will have to start 
making student loan payments soon. The children appear to be responsible and will 
make the loan payments since they will be Air Force officers and held responsible for 
their own debts. However, if for some reason the children default on payment of the 
student loans, Applicant, as the co-signer of the loans, will be responsible for payment.  
 
 Applicant presented an e-mail from his supervisor noting that he is her best 
planner. She noted that he has great potential. She is asking to promote him so she 
does not lose him to another division in the shipyard. In a memorandum to her 
supervisor, Applicant’s supervisor noted his exceptional duty performance and his ability 
to train other members of the team. She notes that Applicant has an excellent rapport 
and relationship with other leaders in the organization. She recommends him for 
promotion. (AX E, E-mail, dated April 8, 2015; AX F, Memorandum, undated)  
 
 Applicant also presented his performance appraisals for 2012, 2013, and 2014. 
The appraisals show that Applicant started in 2012 by meeting all his expected goals, 
and by 2013 exceeding his goals. His supervisor noted that he goes above and beyond 
to help his team members meet deadlines and helps them improve. (AX G, H, and I, 
Performance Appraisals)  
 
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 must be considered 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 
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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 in seeking 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 that the applicant may deliberately or inadvertently fail to 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. 
 
Analysis 
 
Financial Considerations 
 
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. (AG ¶ 18) An individual who 
is financially overextended is at risk of having to engage in illegal acts to generate 
funds. However, the security concern is broader than the possibility that an individual 
might knowingly compromise classified information to raise money. It encompasses 
concerns about an individual’s responsibility, trustworthiness, and good judgment. 
Security clearance adjudications are based on an evaluation of an individual’s reliability 
and trustworthiness. It is not a debt-collection procedure. An individual who is financially 
irresponsible may also be irresponsible, unconcerned, or careless in his or her 
obligations to protect classified information. Behaving responsibly or irresponsibly in one 
aspect of life provides an indication of how a person may behave in other aspects of life.  
 
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A person’s relationship with his creditors is a private matter until evidence is 
uncovered demonstrating an inability or unwillingness to repay debts under agreed 
terms. Absent evidence of strong extenuating or mitigating circumstances, an applicant 
with a history of serious or recurring financial difficulties is at risk of acting inconsistently 
with holding a security clearance. An applicant is not required to be debt free, but is 
required to manage his finances in such a way as to meet his financial obligations. 
 
Adverse information in credit reports and other documents can normally meet the 
substantial evidence standard to establish financial delinquency. Applicant and his 
family incurred delinquent debt from tax liens, credit card, loans, and medical debts 
when his wife could not work because of illness and his income was not sufficient to 
meet their financial requirements. Applicant’s history of delinquent debts is documented 
in his bankruptcy documents, credit report, his OPM interview, and his testimony at the 
hearing. Applicant’s delinquent debts are a security concern. The evidence is sufficient 
to raise security concerns under Financial Considerations Disqualifying Conditions AG ¶ 
19(a) (inability or unwillingness to satisfy debts); and AG ¶ 19(c) (a history of not 
meeting financial obligations). The evidence indicates an inability and an unwillingness 
to satisfy debt.  
 
 I considered the following Financial Considerations Mitigating Conditions under 
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;  
 
(b) the conditions that resulted in the financial problems 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; and  
 
(d) the individual has initiated a good-faith effort to repay the overdue 
creditors or otherwise resolve debts. 
 
Mitigating conditions AG ¶¶ 20(a) and (b) do not apply. Applicant incurred 
significant delinquent debt over a period of time from various sources that have not 
been resolved. The delinquent debt is frequent and current. While some of the debt is 
due to unfortunate circumstances such as his wife’s illness, the medical and credit card 
debts were within Applicant’s ability to control and not become delinquent. It is noted 
that his wife did not file or pay federal and state taxes during the time the delinquent 
debts were being incurred. Applicant did not present any information on actions taken to 
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address the delinquent debt except to file a Chapter 13 bankruptcy in 2014. While 
bankruptcy is a legal and permissible means of resolving debt, Applicant has not 
established that he acted reasonably and responsibly in regard to his finances under the 
circumstances of his case. AG ¶ 20(c) applies. Applicant and his wife received financial 
counseling as a requirement for filing the Chapter 13 bankruptcy.  
 
Applicant did not establish a good-faith initiative to pay his debts. For a good-faith 
effort, there must be an ability to repay the debts, the desire to repay, and evidence of a 
good-faith effort to repay. Good faith means acting in a way that shows reasonableness, 
prudence, honesty, and adherence to duty and obligation. A systematic method of 
handling debts is needed. Applicant must establish a meaningful track record of debt 
payment. A meaningful track record of debt payment can be established by evidence of 
actual debt payments or reduction of debt through payment of debts. A promise to pay 
delinquent debts is not a substitute for a track record of paying debts in a timely manner 
and acting in a financially responsible manner. Applicant must establish that he has a 
reasonable plan to resolve financial problems and has taken significant action to 
implement that plan.  
 
Applicant has not established a meaningful track record of debt payment. 
Applicant has not paid any of the delinquent debts. Applicant knew since November 
2012, when he was interviewed by the security investigator, that his delinquent debts 
were a security concern. The first action he took on the delinquent debt was to file a 
Chapter 13 in August 2014, just before the SOR was issued in October 2014. He has 
been making payments on the wage earner’s plan for a year, but still has four years of 
payments ahead of him. While most of his delinquent debts will be discharged by the 
bankruptcy, he and his wife will still have a substantial tax debt to pay. The limited 
payment he has made under the bankruptcy plan is not sufficient to establish a 
meaningful track record of debt payments. Applicant has not established that he acted 
with reasonableness, prudence, honesty, and an adherence to duty and obligation 
towards his finances. Applicant has not shown that he is managing his personal 
financial obligations reasonably and responsibly. His financial problems are ahead of 
him and not behind him. There is ample evidence of irresponsible behavior, poor 
judgment, and lack of financial reliability. Based on all of the financial information, I 
conclude that Applicant has not mitigated security concerns based on financial 
considerations. 
 
Whole-Person Analysis 
 
Under the whole-person concept, the administrative judge must evaluate an 
applicant’s security eligibility by considering the totality of the applicant’s conduct and all 
relevant circumstances. An 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 
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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 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 views of Applicant’s 
supervisor and Applicant’s excellent job performance. I considered Applicant service in 
the Army National Guard and his honorable discharge. Applicant did not develop a plan 
to pay his delinquent debts when he was aware they were a security concern. Two 
years after learning of the financial security concern, he filed a Chapter 13 bankruptcy. 
While he has been paying that bankruptcy plan for a year, he still has four more years to 
go. This information shows that Applicant has not responsibly managed his finances, 
and he has not acted reasonably and responsibly towards his finances. Overall, the 
record evidence leaves me with questions or doubts as to Applicant’s judgment, 
reliability, trustworthiness, and eligibility and suitability for a security clearance. For all 
these reasons, I conclude that Applicant has not mitigated security concerns arising 
under the financial considerations guideline. Eligibility for access to classified 
information is denied. 
 
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 
 
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. 
 
 
 
_________________ 
THOMAS M. CREAN 
Administrative Judge