Consisting of the transcript (Tr.), Government exhibits (GE) 1-4, hearing exhibit (HE) I, and Applicant exhibits1
(AE) A-I. AE I was timely received post-hearing.
DoD acted under Executive Order 10865, Safeguarding Classified Information Within Industry (February 20,2
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 within the DoD on
1 September 2006. 
1
                                                             
                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
XXXXXX, Xxxxxx Xxxxxxxx, Xxx )       ISCR Case No. 14-01042
)
Applicant for Security Clearance )
Appearances
For Government: Daniel F. Crowley, Esquire, Department Counsel
For Applicant: Pro se
______________
Decision
______________
METZ, John Grattan, Jr., Administrative Judge:
Based on the record in this case,  Applicant’s clearance is granted.1
On 4 May 2015, the Department of Defense (DoD) sent Applicant a Statement of
Reasons (SOR) detailing security concerns under Guideline F, Financial
Considerations.  Applicant timely answered the SOR, requesting a hearing before the2
Defense Office of Hearings and Appeals (DOHA). DOHA assigned the case to me 1
July 2015 and I convened a hearing 20 August 2015. DOHA received the transcript 28
August 2015.
Applicant’s son and his family have lived in the house the last five years. His son suffers from post-traumatic3
stress disorder (PTSD) related to his two deployments to war zones as a Government civilian (AE F), and
receives disability payments. He had been living in his father’s other house with some financial assistance
from Applicant. However, the son’s mother-in-law recently died, leaving an inheritance large enough for the
son and his wife to put a large down payment on the house so they could obtain a mortgage and buy the
house from Applicant. The sale closed in August 2015 (Tr. 39-40), reducing Applicant’s financial outlays and
providing continued housing for his father.
2
Findings of Fact
Applicant admitted the SOR financial allegations. He is a 61-year-old company
owner seeking a U.S. defense contract since May 2012. He has been sponsored for a
clearance by a prospective prime contractor since September 2013. He previously
retired from the U.S. military after 22-years service in paygrade W-4. He then worked as
a civilian employee of another Government agency for nearly 10 years. He seeks
reinstatement of the clearance he has held, as needed, since January 1972.
Applicant entered the U.S. military in January 1972. He has been married since
December 1972. He and his wife have three children: a daughter born in December
1975, a son born in July 1982, and another daughter born in December 1989.
Applicant’s oldest child, a doctor of psychology, lives with Applicant and his wife, as
does her daughter, Applicant’s granddaughter. Applicant’s son lives in another state, in
a house owned by Applicant until recently. Applicant’s father lives in a “mother-in-law”
house on the same property.  Applicant’s second daughter, who has learning3
disabilities, lives with her brother while she is attending college.
Applicant obtained his undergraduate degree in May 1982, while he was in the
military. He obtained his master’s degree in business and public administration in June
1993, just before he retired from the military. His wife is an accountant. She earns about
$30,000 annually. Applicant’s military retirement is also about $30,000 annually.
The SOR alleges, Applicant admits, and Government exhibits substantiate,
seven delinquent accounts totaling over $115,000. All the debt is consumer credit card
debt owed to two creditors. Applicant reported eight delinquent debts totaling $124,572
on his September 2013 clearance application (GE 1). He reported the SOR debts,
totaling $112,417 at the time, along with his wife’s delinquent credit card totaling
$112,155.
Between July 2013 and February 2014, the creditor for SOR debts 1.a-1.e
cancelled a total of $44,086 for the five accounts. In September 2014, the creditor for
his wife’s debt offered to settle the account for a single $2,600 payment made by the
end of the month (AE I), which Applicant’s wife accepted and paid. The two creditors on
these six accounts provided Applicant with appropriate Forms 1099-C reflecting the
The amounts cancelled are less than the amounts alleged in the SOR, or reported by Applicant in his4
clearance application, because the creditors may only cancel accumulated principal and interest up to the date
the creditor charged off the debt as a bad debt (Tr. 56), whereas the balances reported on credit reports may
continue to rise.
3
cancellation of these debts (AE B).  Applicant declared the cancelled debts as income4
for the appropriate tax years, as required by the Internal Revenue Service (IRS)(AE C).
According to Applicant, the creditor on the other two credit cards has charged off the
accounts, but has not provided him with Forms 1099-C (Tr. 57, 68). However, the state
statute of limitations for these two debts expired in January 2015 (Tr. 63).
 The seeds of Applicant’s financial problems were planted in 2008. Applicant left
his Government employment in June 2005, to pursue work with a Government
contractor that offered the possibility of further advancement. He did well with the
company, and was responsible for the company’s contracting efforts with the
Government. However, in early 2008, the company decided to leave the Government
contracting arena because of perceived inadequate profit margins, and focus on its core
business. Applicant’s work qualifications left him well qualified in Government
contracting, but not particularly well suited to the company’s core business, and he and
his employer agreed to part company. Nevertheless, some of his work colleagues and
Federal contracting contacts urged him to go into consulting work with the Government
based on the contacts he had made in the Federal sector, and anticipating that there
was Government contracting work available in the future. Applicant established his
consulting firm in April 2008.
Of course, 2008 was the start of the great recession. By June 2008, it became
clear to Applicant that the expected contracts were not materializing. Nevertheless, the
economic predictions at the time suggested only a fairly short downturn in Government
contracting. Applicant used the credit cards alleged in the SOR to try to keep his
business going until Government contracting picked up, and to pay regular living
expenses while he had no income from his company. However, he continued to look for
regular employment along with Government contracting, and he received
unemployment benefits.
In November 2008, Applicant received a job offer for a high-paying job, deploying
overseas with a Government contractor, beginning in January 2009 (Tr. 65). Applicant
accepted the job and deployed overseas until May 2010. He closed his consulting
business. The high overseas salary allowed him to keep up the payments on his credit
cards. After his overseas deployment, Applicant look a job with a subsidiary of the same
company back in the U.S., as the general manager. His reduced salary in the U.S. was
still enough for him to make his credit card payments.
In February 2012, Applicant’s company restructured. The restructured company
expected its managers to have business development backgrounds, a skill set Applicant
lacked (his skills were technical and managerial), and he was let go in May 2012. He
was unemployed for about nine months. Applicant established another consulting
4
company, and began looking for work, while again receiving unemployment benefits.
However, he was unable to keep up with his credit card payments.
He remained unemployed until he obtained part-time unclassified employment
with the company that is sponsoring his request for a clearance. The contract he was
working on expired in March 2015, and he was unemployed again until June 2015,
when he took a job selling new cars (Tr. 49-50). If he obtains his clearance, he has a job
offer from this company, as well as at least one other (Tr. 52).
Over the time Applicant was unemployed or underemployed, he investigated a
number of alternatives for dealing with his delinquent debts. Although his wife works as
an accountant, and he has his military retirement income, his income stream was
otherwise unpredictable. The creditors were unwilling to accept a flexible payment
arrangement, and he was unable to commit to the fixed repayments they demanded. At
a certain point, the creditors would not agree to any repayment plan, insisting instead on
a significant lump-sum payment to settle the accounts—sums Applicant was unable to
manage. 
Applicant explored Chapter 7 bankruptcy in January 2013, and a petition was
prepared, but never filed (AE H). Applicant was worried that if he filed for bankruptcy
protection, he would lose one or the other of his homes, either putting himself or his son
and father out on the street. Consequently, he took extraordinary measures to ensure
that he continued payments on both mortgages. He restructured the mortgage on his
personal residence to free up money to pay his bills. He exhausted his retirement
accounts (and paid taxes on the income).
With the sale of the other house to his son, Applicant’s monthly cash flow
increases $600-700 monthly. That will improve the family’s current $75,000 annual
income. However, Applicant’s salary alone (currently about $20,000) would balloon to
about $150,000 annually if he got his clearance (Tr. 52).
Applicant received financial counseling as part of his bankruptcy process. He
also has a degree in business management and his wife is an accountant. Applicant’s
work and character references (a cross section from both his military career and post-
career employment) consider him honest and trustworthy and recommend him for his
clearance (AE D). There is no record of any security violations during any time he held a
clearance.
Policies
The adjudicative guidelines (AG) list factors for evaluating a person’s suitability
for access to classified information. Administrative judges must assess disqualifying and
mitigating conditions under each issue fairly raised by the facts and situation presented.
Each decision must also reflect a fair, impartial, and commonsense consideration of the
factors listed in AG ¶ 2(a). Any one disqualifying or mitigating condition is not, by itself,
conclusive. However, specific adjudicative guidelines should be followed where a case
See, Department of the Navy v. Egan, 484 U.S. 518 (1988).5
¶ 19(a) inability or unwillingness to satisfy debts; (c) a history of not meeting financial obligations;6
¶ 20(a) the behavior happened so long ago, was so infrequent, or occurred under such circumstances that7
it is  unlikely to recur . . . 
5
can be measured against them, as they represent policy guidance governing access to
classified information. Considering the SOR allegations and the evidence as a whole,
the relevant adjudicative guideline is Guideline F (Financial Considerations).
Security clearance decisions resolve whether it is clearly consistent with the
national interest to grant or continue an applicant’s security clearance. The Government
must prove, by substantial evidence, controverted facts alleged in the SOR. If it does,
the burden shifts to applicant to refute, extenuate, or mitigate the Government’s case.
Because no one has a right to a security clearance, the applicant bears a heavy burden
of persuasion.
Persons with access to classified information enter into a fiduciary relationship
with the Government based on trust and confidence. Therefore, the Government has a
compelling interest in ensuring each applicant possesses the requisite judgement,
reliability, and trustworthiness of those who must protect national interests as their own.
The “clearly consistent with the national interest” standard compels resolution of any
reasonable doubt about an applicant’s suitability for access in favor of the Government.5
Analysis
The Government established a case for disqualification under Guideline F, but
Applicant mitigated the security concerns. Applicant’s unemployment from April to
December 2008 and from June to December 2012, as well as his unemployment and
underemployment from December 2012 to the present created financial problems for
him.  Despite the financial problems begun with his 2008 employment, Applicant was6
able to keep his finances in order until June 2012.
          
The mitigating factors for financial considerations give Applicant substantial aid.
While his financial difficulties are both recent and multiple, the prospective employments
awaiting the granting of his clearance suggest that the circumstances that caused them
are less likely to recur.  Further, his financial problems were largely due to7
circumstances beyond his control, and he acted responsibly during both major
unemployment periods. Department Counsel argued that Applicant was financially
irresponsible by waiting too long before shuttering his first business in December 2008.
Setting aside the fact that the 2008 recession required greater clairvoyance than most
economists brought to the picture, and the fact that any worthy effort to start a business
can easily take more than eight months, the fact remains that Applicant was looking for
other full-time work by June 2008, less than three months after he started his company.
This was hardly irresponsible behavior. Applicant’s 2008 unemployment would have
¶ 20(b) the conditions that resulted in the financial problem were largely beyond the person’s control . . . and8
the individual acted responsibly under the circumstances;
¶ 20(c) the person has received or is receiving counseling for the problem and there are clear indications that9
the problem is being resolved or is under control;
¶ 20(d) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts.10
ISCR Case No. 07-06482 (App. Bd. 21 May 2008).11
6
happened whether Applicant started his company or not.  Furthermore, even if it was8
irresponsible to not shutter his first business any sooner, that irresponsibility was cured
by Applicant’s obtaining good employment in January 2009 and keeping his finances in
order until 2012. Moreover, Applicant would have lost his job in June 2012, whether he
started a second company or not. However, in this instance as well, he was pursuing
regular employment while also trying to obtain contracts for his company. Furthermore,
after Applicant lost his job in June 2012, he tried, without success, to work with his
creditors to resolve the SOR debts through repayment plans.
Applicant received financial counseling as part of his exploration of bankruptcy in
January 2013, and he continued to work to get his finances under control.  Both he and9
his wife have professional backgrounds that should ensure their financial success once
Applicant obtains the better employment that will be available to him once he obtains his
clearance. Applicant declined to file for bankruptcy protection to ensure that he could
continue to provide housing for his father and his children, not an unreasonable choice
under the circumstances. He was prepared to work with his creditors to establish
repayment plans. That the debts were resolved by cancellation and charge off was as
much the creditors’ choice as Applicant’s. Overall, substantial progress has been made
addressing his delinquent debt.  The Appeal Board has stated that an Applicant need10
not have paid every debt alleged in the SOR, need not pay the SOR debts first, and
need not be paying on all debts simultaneously. Applicant need only establish that there
is a credible and realistic plan to resolve the financial problems, accompanied by
significant actions to implement the plan.  Applicant’s efforts to date constitute such a11
plan, and his consistent contacts with his creditors—before the SOR was
issued—reflect significant actions. Finally, Applicant’s record of military and
Government service, his record of appropriate handling of classified information in the
past, and the favorable work and character references he provided establish a strong
“whole person” analysis in favor of granting Applicant’s clearance. I conclude Guideline
F for Applicant.
Formal Findings
Paragraph 1. Guideline F: FOR APPLICANT
Subparagraphs a-g: For Applicant
7
Conclusion
Under the circumstances presented by the record in this case, it is clearly
consistent with the national interest to grant or continue a security clearance for
Applicant. Clearance granted.
   
                                              
                                             
JOHN GRATTAN METZ, JR.
Administrative Judge