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DEPARTMENT OF DEFENSE 
DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
 
In the matter of: ) 
 ) 
 [Redacted] )  ISCR Case No. 12-09621 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Carroll J. Connelley, Esq., Department Counsel 
For Applicant: Richard L. Morris, Esq. 
 
 
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Decision 
______________ 
 
 
FOREMAN, LeRoy F., Administrative Judge: 
 
This case involves security concerns raised under Guideline F (Financial 
Considerations). Eligibility for access to classified information is granted. 
 
Statement of the Case 
 
Applicant submitted a security clearance application on April 23, 2012. On 
August 5, 2015, the Department of Defense Consolidated Adjudications Facility (DOD 
CAF) sent him a Statement of Reasons (SOR) alleging security concerns under 
Guideline F. The DOD CAF acted 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) implemented by 
DOD on September 1, 2006.  
 
 Applicant answered the SOR on August 20, 2015, and requested a hearing 
before an administrative judge. Department Counsel was ready to proceed on October 
8, 2015, and the case was assigned to me on October 23, 2015. The Defense Office of 
Hearings and Appeals (DOHA) issued a notice of hearing on November 3, 2015, 
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scheduling the hearing for November 17, 2015. I convened the hearing as scheduled.1 
Government Exhibits (GX) 1 through 7 were admitted in evidence without objection. 
Applicant testified and submitted Applicant’s Exhibits (AX) A through S, which were 
admitted without objection. DOHA received the transcript (Tr.) on November 25, 2015. I 
kept the record open until December 7, 2015, to enable Applicant to submit additional 
documentary evidence. He timely submitted AX T through V, which were received 
without objection.  
 
Findings of Fact 
 
 In his answer to the SOR, Applicant did not expressly admit any allegations. 
However, at the hearing, he admitted all the allegations. His admissions are 
incorporated in my findings of fact.  
 
 Applicant is a 57-year-old logistics analyst employed by defense contractors 
since June 2000. He has worked for his current employer since September 2014 (AX I.) 
He first received a security clearance in 1978, but he does not have a current active 
clearance. (Tr. 6, 10, 21.)  
 
Applicant served in the U.S. Air Force from September 1978 to September 1980 
and was trained as a laboratory technician. (Tr. 20, 23.) He attended a community 
college for about two years but did not receive a degree. (Tr. 20)  
 
 Applicant married in in April 2002. He and his wife have a 12-year-old daughter. 
His wife has two adult sons from a previous relationship. 
 
 Applicant was laid off in 1990 and remained unemployed for 18 months. When 
he found employment, his pay was 35% lower than his previous pay. (Tr. 24, 28.) He 
filed a Chapter 7 bankruptcy petition in December 1990, and his debts were discharged 
in April 1991. (GX 5.) The record does not reflect the debts that were included in this 
bankruptcy, but he was able to prevent foreclosure of his home mortgage loan by 
exhausting his investments. 
 
 In January 1993, Applicant filed a Chapter 13 bankruptcy petition. The record 
does not reflect the debts included in this bankruptcy. The wage assignment was 
terminated in November 1993. (GX 6.) 
 
 In 2007, Applicant’s daughter was diagnosed with a rare genetic disorder, and 
his insurance company refused to pay for her treatment. Applicant paid for her 
treatment with his own resources. Treatment was not available locally, requiring out-of-
pocket travel expenses for treatment at specialty clinics. Applicant applied for Medicaid 
in 2007, but it was not approved until 2012. (Tr. 30-31.)  
 
 In September 2012, Applicant sold his home in a short sale. The proceeds of the 
sale were sufficient to satisfy the mortgage loan. (GX 7 at 17-18.) In October 2012, 
                                                          
1 Applicant waived the 15-day notice requirement of Directive ¶ E3.1.8. (Tr. 8.) 
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Applicant filed another Chapter 13 bankruptcy petition, listing assets of $44,805 and 
liabilities of $50,139 (GX 7 at 17.) The debts alleged in SOR ¶¶ 1.g, 1.i, 1.j, and 1.k are 
included in the Chapter 13 bankruptcy. (GX 3 at 2; GX 7 at 8-10.) His schedule of 
creditors and payment schedule include tax debts for state and federal income taxes for 
2012. (GX 7 at 18.) The federal income taxes are being paid through the Chapter 13 
bankruptcy. (AX D; Tr. 45.) He paid the state tax debt in full by direct payments from his 
bank account. (AX T.)  
 
The Chapter 13 payment plan provided for monthly payments of $53 for 6 
months, then $412 for 1 month, then $125 for 14 months, then $300 for 9 months, then 
$630 for 9 months, then $890 for 16 months, and then $1,353 for 6 months. (GX 7 at 
21.) As of the date of the hearing, he had complied with his Chapter 13 payment plan 
for 37 months. His plan is scheduled to be completed in November 2017. (AX V.) 
 
 Applicant was diagnosed with multiple sclerosis in April 2013. (Tr. 22.) His 
mobility difficulties were obvious at the hearing. (Tr. 18.) He was unaware of three 
delinquent medical copay bills incurred in the treatment for his multiple sclerosis, until 
he received the SOR and reviewed his credit bureau report (CBR). The medical debts 
are alleged in SOR ¶¶ 1.d ($30), 1.e ($108), and 1.h ($93). He paid them in September 
2015. (AX F, G, and H; Tr. 32-34.) 
 
 Applicant’s monthly income is about $6,639. His monthly expenses are $4,062, 
including his Chapter 13 payments, leaving him a net monthly remainder of about 
$2,577. (AX M.) 
 
Applicant received top ratings in all performance categories for his first year on 
the job with his current employer, and he received a pay raise. (AX J; AX K.) A co-
worker, who retired from the U.S. Navy after 25 years of service and who has known 
Applicant since April 2008, describes him as honest, trustworthy, and loyal. (AX Q.) 
Another coworker who has known Applicant since 1972 considers him a “class act,” a 
loyal friend, and an inspiration. (AX R.) A Navy civilian employee, who has known 
Applicant for 27 years, considers him honest, trustworthy, loyal, and dedicated, with a 
great attitude and work ethic. (AX S.) 
 
Policies 
 
 “[N]o one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 
484 U.S. 518, 528 (1988). As Commander in Chief, the President has the authority to 
“control access to information bearing on national security and to determine whether an 
individual is sufficiently trustworthy to have access to such information.” Id. at 527. The 
President has authorized the Secretary of Defense or his designee to grant applicants 
eligibility for access to classified information “only upon a finding that it is clearly 
consistent with the national interest to do so.” Exec. Or. 10865, Safeguarding Classified 
Information within Industry § 2 (Feb. 20, 1960), as amended.  
 
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Eligibility for a security clearance is predicated upon the applicant meeting the 
criteria contained in the AG. These guidelines are not inflexible rules of law. Instead, 
recognizing the complexities of human behavior, an administrative judge applies these 
guidelines in conjunction with an evaluation of the whole person. An administrative 
judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. An 
administrative judge must consider all available and reliable information about the 
person, past and present, favorable and unfavorable. 
 
 The Government reposes a high degree of trust and confidence in persons with 
access to classified information. This relationship transcends normal duty hours and 
endures throughout off-duty hours. 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 about potential, rather than actual, risk of compromise of classified 
information. 
 
Clearance decisions must be made “in terms of the national interest and shall in 
no sense be a determination as to the loyalty of the applicant concerned.”  See Exec. 
Or. 10865 § 7. Thus, a decision to deny a security clearance is merely an indication the 
applicant has not met the strict guidelines the President and the Secretary of Defense 
have established for issuing a clearance. 
 
 Initially, the Government must establish, by substantial evidence, conditions in 
the personal or professional history of the applicant that may disqualify the applicant 
from being eligible for access to classified information. The Government has the burden 
of establishing controverted facts alleged in the SOR. See Egan, 484 U.S. at 531.  
“Substantial evidence” is “more than a scintilla but less than a preponderance.”  See v. 
Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). The guidelines 
presume a nexus or rational connection between proven conduct under any of the 
criteria listed therein and an applicant’s security suitability. See ISCR Case No. 92-1106 
at 3, 1993 WL 545051 at *3 (App. Bd. Oct. 7, 1993).   
 
 Once the Government establishes a disqualifying condition by substantial 
evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the 
facts. 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. Sep. 22, 2005).  
 
An applicant “has the ultimate burden of demonstrating that it is clearly consistent 
with the national interest to grant or continue his security clearance.” ISCR Case No. 
01-20700 at 3 (App. Bd. Dec. 19, 2002). “[S]ecurity clearance determinations should err, 
if they must, on the side of denials.” Egan, 484 U.S. at 531; see AG ¶ 2(b).  
 
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Analysis 
 
Guideline F, Financial Considerations 
 
The concern under this guideline 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. 
 
 This concern is broader than the possibility that an individual might knowingly 
compromise classified information in order to raise money. It encompasses concerns 
about an individual’s self-control, judgment, and other qualities essential to protecting 
classified information. An individual who is financially irresponsible may also be 
irresponsible, unconcerned, or negligent in handling and safeguarding classified 
information. See ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012). 
 
 Applicant’s admissions, corroborated by his CBRs, establish two disqualifying 
conditions under this guideline: AG ¶ 19(a) (“inability or unwillingness to satisfy debts”) 
and AG ¶ 19(c) (“a history of not meeting financial obligations”). Applicant’s failure to 
pay his federal and state income taxes for tax year 2012 implicates AG 19(g) (“failure to 
file annual Federal, state, or local income tax returns as required or the fraudulent filing 
of the same”), but it may not be an independent basis for denying a security clearance, 
because it was not alleged. However, conduct not alleged in the SOR may be 
considered to assess an applicant=s credibility; to decide whether a particular 
adjudicative guideline is applicable; to evaluate evidence of extenuation, mitigation, or 
changed circumstances; to consider whether an applicant has demonstrated successful 
rehabilitation; or as part of a whole-person analysis. ISCR Case No. 03-20327 at 4 
(App. Bd. Oct. 26, 2006). I have considered Applicant’s failures to pay his federal and 
state taxes for these limited purposes. 
 
 The following mitigating conditions under this guideline are potentially applicable: 
 
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; 
 
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; 
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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; and 
 
AG ¶ 20(d): the individual initiated a good-faith effort to repay overdue 
creditors or otherwise resolve debts. 
 
 AG ¶ 20(a) is not fully established. The bankruptcy alleged in SOR ¶ 1.c is recent 
and is his third use of the bankruptcy process. The debts alleged in the SOR ¶¶ 1.d-1.k 
are numerous, recent, and were not incurred under circumstances making them unlikely 
to recur. However, the bankruptcy petitions in 1990 and 1993, alleged in SOR ¶¶ 1.a 
and 1.b, are not recent. 
 
 AG ¶ 20(b) is established. Applicant’s 18-months of unemployment, his pay 
reduction after his unemployment, his daughter’s illness, and his own illness were 
conditions beyond his control. He has acted responsibly. Instead of walking away from 
his debts in 2012, he resolved his home mortgage loan by a short sale, resorted to a 
Chapter 13 bankruptcy, and has complied with his Chapter 13 payment plan for 37 
months. When he became aware of three delinquent medical debts attributable to his 
own medical treatment, he paid them promptly.  
 
 AG ¶ 20(c) is established. His Chapter 13 necessarily would have included 
financial counseling, and his financial situation is under control 
 
 AG ¶ 20(d) is established. Applicant paid the copay bills for his medical treatment 
as soon as he became aware of them, and he has complied with his Chapter 13 
payment plan for 37 months. 
 
Whole-Person Concept 
 
 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. In applying the whole-
person concept, an administrative judge must evaluate an applicant’s eligibility for a 
security clearance 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 
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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 I have incorporated my comments under Guideline F in my whole-person 
analysis and I have considered the factors in AG ¶ 2(a). After weighing the disqualifying 
and mitigating conditions under Guideline F, and evaluating all the evidence in the 
context of the whole person, I conclude Applicant has mitigated the security concerns 
raised by his delinquent debts. Accordingly, I conclude he has carried his burden of 
showing that it is clearly consistent with the national interest to grant him eligibility for 
access to classified information. 
 
Formal Findings 
 
 I make the following formal findings on the allegations in the SOR: 
 
 Paragraph 1, Guideline F (Financial Considerations): FOR APPLICANT 
 
  Subparagraphs 1.a-1.k:    For Applicant 
 
Conclusion 
 
 I conclude that it is clearly consistent with the national interest to grant Applicant 
eligibility for a security clearance. Eligibility for access to classified information is 
granted. 
 
 
 
 
LeRoy F. Foreman 
Administrative Judge