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                             DEPARTMENT OF DEFENSE
                DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 14-05639
)
)
Applicant for Security Clearance )
Appearances
For Government: Jeff A. Nagel, Esquire, Department Counsel
For Applicant: Ronald Talmo, Esquire
December 10, 2015
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Decision
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CEFOLA, Richard A., Administrative Judge:
Applicant submitted his Electronic Questionnaires for Investigations Processing
(e-QIP) on May 17, 2012.  On January 21, 2015, the Department of Defense (DOD)
issued a Statement of Reasons (SOR) detailing the security concerns under Guideline F
for Applicant.  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. 
Applicant acknowledged receipt of the SOR on February 13, 2015.  He answered
the SOR in writing on March 16, 2015, and requested a hearing before an
Administrative Judge.  The Defense Office of Hearings and Appeals (DOHA) received
the request soon thereafter, and I received the case assignment on July 13, 2015.
DOHA issued a notice of hearing on July 16, 2015, and I convened the hearing as
scheduled on August 12, 2015.  The Government offered Exhibits (GXs) 1 through 4,
which were received without objection.  Applicant testified on his own behalf and
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submitted Exhibits (AppXs) 1 through 25, which were received without objection.  DOHA
received the transcript of the hearing (TR) on August 20, 2015.  I granted Applicant’s
requests, one made at his hearing and two made after his hearing, to keep the record
open until November 16, 2015, to submit additional matters.  On September 10, and
November 16, 2015, he submitted Exhibits 26, 27, and a written closing argument,
which were received without objection.  The record closed on November 16, 2015.
Based upon a review of the pleadings, exhibits, and testimony, eligibility for access to
classified information is granted.
Findings of Fact
In his Answer to the SOR, Applicant admitted the factual allegations in all the
Subparagraphs of the SOR, with explanations.  He also provided additional information
to support his request for eligibility for a security clearance.
Guideline F - Financial Considerations
Applicant is 52 years old, has held a security clearance for 30 years, and has
never had a security clearance violation.  (TR at page 65 line 25 to page 74 line 6, and
GX 1 at page 5.)  Post-Hurricane Katrina, he, in partnership with others, made real-
estate investments in New Orleans.  (TR at page 29 line 6 to page 43 line 14.)  Because
of ever changing real-estate ordinances in New Orleans, he defaulted on two
rehabilitation construction loans, which represent the vast majority of the alleged past-
due debts.  (Id.)
1.a. and 1.d.  These are one and the same construction loan debt.  Applicant was
indebted to Creditor A in the amount of about $94,500.  After investing $15,000 of his
own monies, Applicant was informed that the property, a triplex, was not rehabilitated to
historic standards; and as such, could not be occupied.  (TR at page 48 line 21 to page
56 line 4, page 80 line 7 to page 81 line 18, AppXs 1~4, and AppX 26 at pages 1, 4 and
5.)  It was eventually repossessed by Creditor A; and this creditor has chosen not to
pursue a deficiency judgment in this regard, as evidenced by correspondence from his
real-estate attorney, and by an August 31, 2015 credit report.  (Id.)  I find that this debt
has been satisfied by the repossession.
1.b.  Applicant was indebted to Creditor B in the amount of about $36,984.  After
rehabilitating this single family residence, Applicant was informed that the property
could not be rented, but must be owner occupied.  (TR at page 26 line 6 to page 43 line
14, page 63 line 22 to page 64 line 11, and at page 79 line 13 to page 80 line 6.)  As
Applicant is a resident of another state and unwilling to move to New Orleans, it was
eventually repossessed by Creditor B; and this creditor submitted an Internal Revenue
Service (IRS) form 1099 forgiving this debt, as evidenced by correspondence from the
IRS, and by an August 31, 2015 credit report.  (AppX 26 at page 2, and AppX 27 at
page 3.)  I find that this debt has been satisfied by the repossession.
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1.c.  Applicant has paid the alleged, $97 past-due cell phone debt to Creditor C,
as evidence by his banking records and by an August 31, 2015 credit report.  (TR at
page 56 line 10 to page 57 line 25, at page 74 lines 10~17, AppXs 6 and 7, and AppX
26 at page 7.)
1.d.  This allegation has already been discussed, above.
1.e.  Applicant has relinquished his property interest in a time share; and as
such, his $928 past-due debt to Creditor E has been forgiven, as evidence by
correspondence from Creditor E and by an August 31, 2015 credit report.  (TR at page
58 line 5 to page 59 line 16, at page 74 line 18 to page 75 line 3, AppX 5, and AppX 26
at page 3.)
1.f.  Applicant does not owe a $2,790 past-due debt to Creditor F.  He testified
credibly that he did not co-sign for a friend’s apartment, but only permitted his name to
be used as a reference.  (TR at page 59 line 16 to page 61 line 5, and at page 75 lines
15~24.)  He further avers that his friend has paid this debt.  (Id.)  Applicant’s credibility
in this regard is attested to by those who authored 14 letters of recommendation, and by
the fact the debt does not appear on the Government’s most recent June 29, 2015
credit report.  (GX 4, and AppXs 10~24.)
1.g.  Applicant has paid the alleged, $1,327 past-due debt to Creditor G, as
evidence by correspondence from Creditor G.  (TR at page 61 lines 6~23, at page 75
lines 4~14, AppXs 8 and 9.)
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 are useful 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 over-arching
adjudicative goal is a fair, impartial and commonsense decision.  According to AG
Paragraph 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.
Paragraph 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
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and based on the evidence contained in the record.  Likewise, I have avoided drawing
inferences grounded on mere speculation or conjecture.
Under Directive Paragraph E3.1.14, the Government must present evidence to
establish controverted facts alleged in the SOR.  Under Directive Paragraph 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).
Analysis
Guideline F - Financial Considerations
The security concern relating to the guideline for Financial Considerations is set
out in Paragraph 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 conditions that could raise security concerns.  Under
Subparagraph 19(a), an “inability or unwillingness to satisfy debts@ is potentially
disqualifying.  Similarly under Subparagraph 19(c), “a history of not meeting financial
obligations@ may raise security concerns.  Applicant has had difficulty meeting his
financial obligations.  However, under Subparagraph 20(d), it may be mitigating where
“the individual initiated a good-faith effort to repay overdue creditors or otherwise
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resolve debts.”  Applicant has made a good-faith effort to resolve all of the alleged past-
due debt.
Under the whole-person concept, the administrative judge must evaluate an
applicant’s eligibility for a security clearance by considering the totality of Applicant’s
conduct and all the circumstances.  Under Paragraph 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.
The administrative judge should also consider the nine adjudicative process
factors listed at AG Paragraph 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.
I considered all of the evidence, including the potentially disqualifying and
mitigating conditions surrounding this case.  Applicant is highly respected in the
workplace.  (AppX 10~24.)  The record evidence leaves me without questions and
doubts as to Applicant’s eligibility and suitability for a security clearance.  For this
reason, I conclude Applicant has mitigated the security concerns arising from his
Financial Considerations, under the whole-person concept.
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
Subparagraphs 1.a.~1.g. For Applicant
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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.
Richard A. Cefola
Administrative Judge