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                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)         ISCR Case No. 14-03343
)
)
Applicant for Security Clearance )
Appearances
For Government: Philip J. Katauskas, Esq., Department Counsel
For Applicant: Pro se 
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Decision
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MASON Paul J., Administrative Judge:
Applicant’s character evidence from his coworkers and his father, together with his
satisfaction of three listed collection accounts is insufficient to overcome the remaining
security concerns arising from the financial considerations guideline. Eligibility for access
to classified information is denied. 
Evidentiary Rulings
During the hearing, Department Counsel asked Applicant if he had any corrections
to make to his unverified April 2013 interview summary. He referred to the first paragraph
of page one of the summary and testified that he was fired in February 2008, not February
2003. He indicated that he had no additional corrections to make to the interview summary.
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He then indicated that he had no objection to the exhibit being entered into evidence. The
correction was noted and GE 2 was admitted in evidence. (GE 2; Tr. 77-80)
Statement of the Case
Applicant completed and signed an Electronic Questionnaire for Investigations
Processing (e-QIP), Government’s Exhibit (GE) 1, on February 27, 2013. He was
interviewed by an investigator from the Office of Personnel Management (OPM) on April
17, 2013. On July 28, 2014, the Department of Defense (DOD) issued a SOR detailing
security concerns under the financial considerations guideline (Guideline F). The action
was taken pursuant to Executive Order 10865, Safeguarding Classified Information within
Industry (February 20, 1960), as amended; DOD 5220.6, Defense Industrial Personnel
Security Clearance Review Program (January 2, 1992), as amended (Directive); and the
adjudicative guidelines (AG) implemented by the DOD in September 1, 2006. 
On September 10, 2014, Applicant provided a notarized answer to the SOR. The
Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on July 30,
2015, for a hearing on August 14, 2015. The hearing was held as scheduled. The
Government’s five exhibits (GE) 1-5 and Applicant’s six exhibits (AE) A-F were admitted
into evidence without objection. On August 26, 2015, Department counsel sent me an email
Hearing Exhibit (HE) 1 expressing no objection to Applicant’s two post-hearing exhibits (AE
G, H) being entered into evidence. The two exhibits were received in evidence. The
transcript (Tr.) was received on August 20, 2015. The record in this case closed on August
26, 2015. 
Findings of Fact
The SOR alleges six delinquent accounts totaling $95,036. Applicant admitted that
he was responsible for five of the six delinquent accounts listed in the SOR. He indicated
that he satisfied SOR 1.c, 1.e, and 1.f. He explained that SOR 1.b and 1.d were the same
account. The credit reports show that the SOR 1.b creditor became a successor-in-interest
to the SOR 1.d account in approximately August 2011. (GE 3, 4; AE A) SOR 1.d is resolved
in Applicant’s favor. The subtraction of the SOR 1.d account reduces the delinquent debt
total to $86,664. 
Applicant is 41 years old and single. He has been employed as an engineering
technician with a defense contractor since February 2009. He has held a security clearance
since April 2009. (GE 1 at 11, 33)
SOR 1.a is a real estate mortgage with a total loan balance of $76,492, is past due
in the amount of $27,344. The account was reported delinquent in February 2013.
Applicant purchased a house in September 2003, securing a Federal Home Association
 Applicant explained that if the mortgagor becomes delinquent on the loan payments after consistently making1
loan payments (including the monthly mortgage premium), he is not responsible for the mortgage loan
balance. (AE G; Tr. 57, 73)
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(FHA) mortgage. He was required to pay a $36 monthly insurance premium on the
mortgage.  From the end of 2003 to early 2008, he made regular monthly mortgage1
payments, including the monthly insurance premium. He testified he fell behind his
mortgage payments because of a job termination in February 2008, and new employment
in a lower paying job two weeks later. Another major reason for his late mortgage payments
was increased drug activity and violence in his neighborhood that negatively affected his
performance with his current employer. However, in April 2013, Applicant explained to the
OPM investigator that he fell behind in mortgage payments because he spent an inordinate
amount of money on leisure activities and did not keep sufficient funds in reserve to fully
cover the monthly mortgage. He also mentioned the illegal drug activity and violence as a
reason that he no longer wanted to pay his mortgage, which he stopped paying in March
2010. (GE 2 at 5; AE G, H; Tr. 50-54, 55, 68-69)
After Applicant began working for his current employer in February 2009, he
indicated that he attempted a home loan modification (HLM). He abandoned the attempt
when he discovered he would be paying twice the monthly mortgage that he had been
paying. Applicant moved out of his house around March 2010, when his friend moved into
the dwelling, and assumed mortgage payments for two years until 2012. Applicant told the
OPM investigator that by the end of the summer of 2013, he wanted to sell the property
(then in a pre-foreclosure status) by a deed-in-lieu of foreclosure. He anticipated the house
would eventually be sold and he would pay the balance after the sale. In September 2014
(answer to SOR), he claimed that he was still trying to process the deed-in-lieu of
foreclosure. Some time between September 2014 and the hearing in August 2015, he
supposedly learned that he was too far behind in mortgage payments to execute the deed-
in-lieu of foreclosure. Applicant’s August 2015 credit report indicates a zero balance on the
SOR 1.a mortgage. (Answer to SOR; GE 2 at 5; AE A at 6-7; Tr. 50-58, 65-69) The
credibility of Applicant’s HLM and deed-in-lieu of foreclosure claims is undermined by the
lack of documentation to support these claims. 
SOR 1.b is a charged off account with a total loan balance of $7,980. The account
was opened in February 2002 and was reported charged off in September 2011 by the
original creditor. Applicant received a loan in early 2002 and purchased a boat for $14,000.
He made timely payments of $167 a month until March 2003, when he was hospitalized for
a week and could not work for two weeks. With no income for two weeks, he missed one
or two scheduled monthly payments. Even though he fell behind the contractual payment
schedule, he continued to make late payments. When continued payments caused him to
fall behind on other debts like his mortgage, he stopped making payments altogether in
April 2010. The boat was repossessed in 2011. Applicant testified that he made a serious
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effort in 2013 to negotiate a settlement with the SOR 1.b creditor. The creditor told him that
nothing could be done because of the age of the debt. (GE 2 at 3; GE 3 at 6; GE 4 at 2;
answer to SOR; AE A at 8; Tr. 58-59, 69-71) Applicant’s claims of trying to settle the
account lack credibility without substantiating documentation. SOR 1.b account remains
unpaid. 
SOR 1.c is a collection account for $1,856. The cellular account was opened in June
2011, and was reported delinquent in March 2013. Applicant accepted the collection
agency’s settlement offer of $1,113, and began payments of $101 a month in February
2014. His credit report shows the account as paid for less than the full amount. (Answer to
SOR; AE A, D; Tr. 61-62) The SOR 1.c account is resolved. 
SOR 1.e is a collection account for $256. The cellular account was opened in
September 2006, and was reported delinquent in September 2011. Supporting
documentation indicates that the account was paid off upon Applicant’s $200 payment on
August 14, 2014. (AE E) The SOR 1.e account is resolved. 
SOR 1.f is a medical collection account for $100. The account was opened in
September 6, 2006, and was reported delinquent on June 2007. Applicant’s September 9,
2014 bank statement reflects a payment of $100 to the original creditor on August 18,
2014. (AE F) The SOR 1.f account is resolved. 
On the subject of financial counseling, Applicant indicated that he used a consumer
credit counseling service that contacts one’s creditors and tries to consolidate payments
while seeking a reduction in interest rates. Applicant provided no evidence of how he used
the service. After listening to a definition of financial counseling, Applicant responded that
he never had professional financial counseling. Instead he pointed to his credit report and
credit score as evidence of an improvement in his financial management practices.
Applicant understood what a budget was, but was not using one to manage his finances.
He believed that he could use a budget. In April 2013, Applicant’s net income was $3,400;
his monthly debts and expenses totaled $2,003; his monthly savings was $200; leaving a
discretionary monthly remainder of $1,197. His assets included $600 in savings, $2,000 in
a checking account, and $8,000 in a retirement account. Applicant could not account for
how the $1,197 remainder was being used, but surmised that his miscellaneous expenses
were more than his $250 estimate. (GE 2 at 6; AE A; Tr. 75-77)
Character Evidence
Three character witnesses testified in Applicant’s behalf. Witness A has worked for
Applicant’s employer for 35 years and met Applicant in 2009. They have worked together
in the engineering lab for three or four years. The lab employees are impressed with
Applicant’s performance because he has learned the lab testing procedures in half the time
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of most employees. Applicant told witness A that his is paying his cell phone account.
Witness A recommends Applicant for a position of trust. (Tr. 28-34)
Witness B has been working for Applicant’s employer since 2009, and has worked
with Applicant for the past three years. Witness B’s comments to the supervisors about
Applicant’s performance have always been positive. According to witness B, Applicant is
working with his creditors. Witness B recommends Applicant for a position of trust. (34-42)
Witness C, Applicant’s father, retired from Applicant’s employer after a 40-year-
career. Witness C, who believes that Applicant is working with the banks to pay off his
debts, is aware of Applicant’s delinquent mortgage. Witness C recommends Applicant for
a position of trust based on his reliability. (Tr. 42-49)
On August 13, 2015, character reference D wrote that after his hire two years ago,
Applicant trained him by improving his engineering skills and helping his career. Reference
D views Applicant as a team-player and a good teacher. Applicant’s landlord reported in
a letter that Applicant has been a tenant for more than four years. He pays his rent in a
timely manner and respects the property. (AE B, C)
Policies
When evaluating an applicant's suitability for a security clearance, the administrative
judge must consider the potentially disqualifying and mitigating conditions of the AG. These
conditions should be evaluated in the context of nine general factors known as the whole-
person concept to bring together all available, reliable information about the person, past
and present, favorable and unfavorable, in making a decision regarding security clearance
eligibility. 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 the potential,
rather than actual, risk of compromise of classified information.
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. . . ." An applicant
has the ultimate burden of persuasion of establishing that it is clearly consistent with the
national interest to grant him a security clearance. 
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Analysis
Financial Considerations 
The security concern for financial considerations is set forth 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. Compulsive gambling is a concern
as it may lead to financial crimes including espionage. Affluence that cannot
be explained by known sources of income is also a security concern. It may
indicate proceeds from financially profitable criminal acts.
A person who holds a security clearance occupies a fiduciary position with the
government that rests on trust and confidence. The Government trusts the person to
execute security regulations in a responsible manner. The Government also trusts the
person to pay his debts as they become due. 
The applicable disqualifying conditions under AG ¶ 19 are: 
(a) inability or unwillingness to satisfy debts; and 
(c) a history of not meeting financial obligations. 
On July 28, 2014, the issuance date of the SOR, Applicant had incurred five
delinquent debts totaling $86,664. The accounts became delinquent between June 2007
and February 2013. He stopped paying the SOR 1.a mortgage in March 2010. One month
later, he stopped paying the SOR 1.b account (boat). Two cellular accounts and one
medical account were transferred for collection. AG ¶¶ 20(a) and 20(c) apply.
Four mitigating conditions under AG ¶ 20 are potentially pertinent: 
(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 reliability, trustworthiness, and good judgment; 
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(b) the conditions that resulted in the financial problem were largely beyond
the person's control 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 initiated a good-faith effort to repay overdue creditors or
otherwise resolve debts. 
AG ¶¶ 20(a) does not apply. The unresolved status of the SOR 1.b account, which
has been charged off since September 2011, continues to raise doubt about Applicant’s
trustworthiness and judgment. 
Applicant gains no mitigation under the first prong of AG ¶ 20(b). His medical
problem in 2003 resulting in no income for a two-week period, was an unforseen event that
had a negative impact on his ability to pay his other debts. However, the mitigation that
Applicant received in 2003 during the two-week period and when he resumed work, is no
longer available because the debt is still delinquent 12 years later. Similarly, Applicant’s
unanticipated job termination and two-week unemployment in February 2008, were events
beyond his control. On the other hand, his unemployment was brief. He found new
employment two weeks later even though the pay was less. In February 2009, Applicant
began working for his current employer. There is no documented evidence demonstrating
that Applicant acted responsibly under the circumstances to address either the SOR 1.a
or 1.b accounts. AG ¶ 20(b) does not apply. 
AG ¶ 20(c) requires financial counseling that provides indications the delinquent
debts are being resolved or under control. Though he mentioned a consumer credit
counseling service, he provided no explanation of how he used the service. When asked
about financial counseling, he pointed to his credit report and credit score as evidence of
better financial practices. The absence of documentation to corroborate his testimonial
claims of trying to resolve the SOR 1a. and 1.b accounts provides no mitigation under AG
¶ 20(c). 
AG ¶ 20(d) may provide mitigation when an applicant makes a good-faith effort to
repay debts. Good-faith has been defined by the DOHA Appeal Board as conduct that
demonstrates reasonableness, prudence, and an adherence to duty and obligation. An
applicant must do more than merely rely on a legally available option (such as bankruptcy)
to claim the benefit of the condition. See, ISCR Case No. O2-30304 at 3 (App. Bd. Apr. 20,
2004), quoting ISCR Case No. 99-9020 at 5-6 (App. Bd. June 4, 2001). By analogy,
Applicant’s reliance on the mortgage insurance provision that released him from liability for
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the SOR 1.a mortgage contract does not carry the same weight as documentation
demonstrating a good-faith effort to repay the mortgage lender. Applicant receives no
mitigation under SOR 1.b. He earns only limited mitigation for the three other listed
accounts because he did not satisfy the accounts until they had been transferred for
collection and after the security investigation began. 
Whole-Person Concept 
I have examined the evidence under the disqualifying and mitigating conditions of
the financial guideline. I have also weighed the circumstances within the context of nine
variables known as the whole-person concept. In evaluating the relevance of an individual's
conduct, the administrative judge should consider the following factors:
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 the participation was 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 a commonsense judgment based on careful consideration of
the guidelines and the whole-person concept.
Applicant is 41 years old. He is an engineering technician who has been employed
in that position since February 2009. Witnesses A and B have worked with Applicant for the
last three or four years. He is a quick-learner who gets the job done in a timely fashion. All
witnesses recommend Applicant for a position of trust. Applicant has been a good teacher
and role model in advancing reference D’s career. 
Applicant’s evidence in mitigation, including his satisfaction of three collection
accounts during the security clearance investigation, is insufficient to grant his security
clearance application. The first reason for denial is the loan he obtained to purchase the
boat in 2002 that was charged off in September 2011, and is still delinquent. The second
reason for denial is the manner in which Applicant was released from the mortgage
contract. As noted in the financial considerations discussion, the mortgage insurance
mechanism that released Applicant’s liability does not represent a good-faith effort to pay
the mortgage lender. The third reason for denial is based on the fact that Applicant has
received no financial counseling. As indicated in his responses to the OPM investigator in
April 2013, he needs a budget so that he can monitor his expenditures and generally
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improve the management of his finances. With no plan for resolving the SOR 1.b creditor,
I am unable to conclude with complete confidence that Applicant’s current financial
problems will not persist in the future. Having weighed all the evidence in light of the factors
of the whole-person concept, Applicant’s evidence in mitigation does not overcome the
security concerns arising from the guideline for financial considerations. 
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.b: Against Applicant
Subparagraphs 1.c-1.f: For Applicant
Conclusion
In light of all of the circumstances presented by the record in this case, it is not
clearly consistent with national interest to grant Applicant eligibility for a security clearance.
Eligibility for access to classified information is denied. 
Paul J. Mason
Administrative Judge