DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
--------------------------------- )      ISCR Case No. 12-06544
)
Applicant for Security Clearance )
Appearances
For Government: Andrew H. Henderson, Department Counsel
For Applicant: Pro se
March 17, 2016
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Decision
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LOKEY ANDERSON, Darlene D., Administrative Judge:
Applicant submitted her Electronic Questionnaires for Investigations Processing
(e-QIP) on January 10, 2012.  (Government Exhibit 1.)  On May 30, 2015, the
Department of Defense (DoD), pursuant to Executive Order 10865 and Department of
Defense Directive 5220.6 (Directive), dated January 2, 1992, (as amended), issued a
Statement of Reasons (SOR) to Applicant, which detailed reasons why DoD could not
make the preliminary affirmative finding under the Directive that it is clearly consistent
with the national interest to grant or continue a security clearance for Applicant and
recommended referral to an administrative judge to determine whether clearance
should be denied or revoked.
Applicant responded to the SOR on June 25, 2015, and she requested a hearing
before a Defense Office of Hearings and Appeals (DOHA) administrative judge.  This
case was assigned to this administrative judge on December 16, 2015.  A notice of
hearing was issued that same day, scheduling the hearing for January 5, 2016.  At the
hearing the Government presented six exhibits, referred to as Government Exhibits 1
through 6, which were admitted without objection.  Applicant presented one exhibit,
referred to as Applicant’s Exhibit A which was admitted without objection.  She also
testified on her own behalf.  The record remained open until close of business on
January 11, 2016, to allow Applicant to submit additional supporting documentation.
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Applicant submitted four Post-Hearing Exhibits, referred to as Applicant’s Post-Hearing
Exhibits 1 through 4, which were admitted without objection.  The official transcript (Tr.)
was received on January 13, 2016.  Based upon a review of the pleadings, exhibits, and
testimony, eligibility for access to classified information is granted.
 FINDINGS OF FACT
Applicant is 45 years old and is divorced.  She has a high school diploma and
two years of college.  She holds the position of Secretary/Administrative Assistant for a
defense contractor.  She is seeking to obtain a security clearance in connection with this
employment.   
The Government opposes Applicant's request for a security clearance, on the
basis of allegations set forth in the Statement of Reasons (SOR).  The following findings
of fact are entered as to each paragraph and guideline in the SOR:
Paragraph 1 (Guideline F - Financial Considerations)  The Government alleges that
Applicant is ineligible for clearance because she is financially overextended and at risk
of having to engage in illegal acts to generate funds.      
Applicant admits both allegations set forth in the SOR under this guideline.  (See
Applicant’s Answer to SOR.)  Credit Reports of Applicant dated January 31, 2012;
December 9, 2014; and November 29, 2015, reflect that at one time Applicant was
indebted to each of the creditors set forth in the SOR in an amount totaling in excess of
approximately $172,000, most of which was for a delinquent mortgage.  (Government
Exhibits 3, 4 and 5).  
Applicant began working for her current employer in April 2004.  In 2007, she
purchased a condominium for $495,000.  She put $130,000 down with cash that she
acquired from the proceeds of her divorce.  The remaining balance was covered by her
adjustable rate mortgage on the condo consisting of two loans, a first, and a second,
which was an equity line of credit.  The monthly payments started out as $2,000.  In
2009, her loan adjusted upward, and her monthly payments increased to $3,000.  From
2007 to 2010, Applicant made the payments on the condo as required.  
In 2010, Applicant contacted the bank to obtain a loan modification as her
payments had become too steep to maintain.  The value of her condo had also greatly
depreciated.  The bank denied her loan modification request.  She then tried to short
sale the property, but was unsuccessful.  Applicant testified that she continued to
badger the bank about refinancing her house to negotiate a lower rate, but the bank
was unresponsive.  With the increased mortgage rate, the taxes, and the home owner’s
association fees, the condo had become a money pit that she could no longer afford.  In
October 2010 Applicant stopped making her mortgage payments.  At this point, she was
upside down on the house and wanted out.  Applicant continued to live in the condo for
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almost a year without making a payment, until August 2011.  In 2011, the condo was
foreclosed upon, and later sold by the bank for $280,000.  
Applicant testified that she has never received an Internal Revenue Service (IRS)
Form 1099 nor has she been notified by the bank that she owes them anything.  (Tr. p.
27.)  She stated that upon receipt of the SOR on May 30, 2015, she learned for the first
time that she was indebted to the mortgage lender for the home equity loan that was
charged off in the approximate amount of $49,490.  Applicant testified that she did not
contact the creditor before the hearing because she believed that the foreclosure of the
condo, and its resale was the collateral that resolved the loan.  Applicant was given time
following the hearing to investigate the matter.        
Applicant submitted letters verifying that she has disputed the loan alleged in
allegation 1a.  (Applicant’s Post-Hearing Exhibit 1.)  She is requesting a letter of
agreement from the bank asserting the One Action Rule that would give her a zero
balance, confirming that the foreclosure in 2011 is collateral to cover the default
mortgage loan amount of $49,490.  Applicant was told by the bank that they are
currently investigating her dispute.  She has also placed protests with two of the credit
reporting agencies that report the debt as owing.  (Applicant’s Post-Hearing Exhibit 2.)
Applicant submitted a copy of her most recent Experian credit report that no longer
reflects the debt as owing.  (Applicant’s Post-Hearing Exhibit 3.)  
Performance appraisals of the Applicant for the years 2013 and 2014 are
favorable and reflect that she “exceeds expectations” or “consistently exceeds
expectations.”    (Applicant’s Post-Hearing Exhibit 4.)
Applicant testified that she now rents an apartment.  She is current with all of her
monthly expenses.  She has no outstanding delinquent debts.  She is living well within
her financial means and has no intention of getting into this type of situation again. 
POLICIES
Enclosure 2 of the Directive sets forth adjudication policies divided into
"Disqualifying Factors" and "Mitigating Factors."  The following Disqualifying Factors
and Mitigating Factors are found to be applicable in this case:
Guideline F (Financial Considerations)
18.  The Concern.  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. 
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Conditions that could raise a security concern:
19.(a) inability or unwillingness to satisfy debts; and
19.(c) a history of not meeting financial obligations. 
Conditions that could mitigate security concerns:
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
20.(d) the individual initiated a good-faith effort to repay overdue creditors or
otherwise resolve debts; and 
20.(e) the individual has a reasonable basis to dispute he legitimacy of the past-
sue debt which is the cause od the problem and provides documented proof to
substantiate the basis of the dispute or provides evidence of actions to resolve the
issues.  
In addition, as set forth in Enclosure 2 of the Directive at pages 18-19, in
evaluating the relevance of an individual’s conduct, the administrative judge should
consider the following general factors:
a. the nature, extent, and seriousness of the conduct;
    b. the circumstances surrounding the conduct, to include knowledgeable
participation;
c.  the frequency and recency of the conduct;
d.  the individual’s age and maturity at the time of the conduct;
e.  the extent to which participation is voluntary;
f.  the presence or absence of rehabilitation and other permanent behavioral
changes;
g.  the motivation for the conduct; 
h. the potential for pressure, coercion, exploitation or duress; and
 i.  the likelihood of continuation or recurrence.
The eligibility criteria established in the DoD Directive identify personal
characteristics and conduct that are reasonably related to the ultimate question, posed
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in Section 2 of Executive Order 10865, of whether it is “clearly consistent with the
national interest” to grant an applicant’s request for access to classified information.
The DoD Directive states, “The adjudicative process is an examination of a
sufficient period of a person’s life to make an affirmative determination that the person is
an acceptable security risk.  Eligibility for access to classified information is predicated
upon the individual meeting these personnel security guidelines.  The adjudicative
process is the careful weighing of a number of variables known as the whole-person
concept.  Available, reliable information about the person, past and present, favorable
and unfavorable, should be considered in reaching a determination.” The administrative
judge can draw only those inferences or conclusions that have a reasonable and logical
basis in the evidence of record.  The Judge cannot draw inferences or conclusions
based on evidence that is speculative or conjectural in nature.  Finally, as emphasized
by President Eisenhower in Executive Order 10865, “Any determination under this order
adverse to an applicant shall be a determination in terms of the national interest and
shall in no sense be a determination as to the loyalty of the applicant concerned.”
CONCLUSIONS
In the defense industry, the security of classified industrial secrets is entrusted to
civilian workers who must be counted upon to safeguard such sensitive information
twenty-four hours per day, seven days per week.  The Government is therefore
appropriately concerned when available information indicates that an applicant for
clearance may be involved in instances of financial irresponsibility, which demonstrates
poor judgment or unreliability.
It is the Government’s responsibility to present substantial evidence to support
the finding of a nexus, or rational connection, between the applicant’s conduct and the
holding of a security clearance.  If such a case has been established, the burden then
shifts to the applicant to go forward with evidence in rebuttal, explanation or mitigation,
which is sufficient to overcome or outweigh the Government’s case.  The applicant
bears the ultimate burden of persuasion in proving that it is clearly consistent with the
national interest to grant him or her a security clearance.
In this case the Government has met its initial burden of proving that Applicant
has been financially irresponsible (Guideline F).  This evidence indicates poor judgment,
unreliability and untrustworthiness on the part of Applicant.  Because of the scope and
nature of Applicant's conduct, I conclude there is a nexus or connection with her
security clearance eligibility.
The evidence shows that there is no history of financial indebtedness.  Other
than this defaulted mortgage account, Applicant has always paid her bills on time.
Following her divorce, Applicant purchased a condo that she really could not afford.
She purchased the house with an adjustable rate mortgage, and the understanding that
when it adjusted she could refinance it. This was a fallacy.  She could not afford to
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make the payments with the loan adjustment.  To avoid foreclosure, she consistently
tried to obtain a loan modification and even a short sale, but was unsuccessful.  Her
condo was foreclosed upon and resold by the bank.
                 
Since receiving the SOR and learning of this debt, Applicant has contacted the
creditor and asked for clarification about the debt.  Both parties are currently working to
resolve the matter and Applicant understands that she must follow through.  At this time,
Applicant has done everything possible to show that she is addressing this issue.  She
has demonstrated a good-faith effort to resolve her past-due indebtedness.  She
understands that she must remain financially responsible if she is to hold a security
clearance.  There is clear evidence of financial rehabilitation.  Considering all of the
evidence, Applicant has introduced persuasive evidence in rebuttal, explanation or
mitigation that is sufficient to overcome the Government's case. Applicant only learned
of the debt for the first time when she received the SOR.  She also recently filed
disputes with each of the credit reporting agencies.  Her most recent credit report from
one of the credit reporting agencies no longer shows the debt as owing.  Under the
circumstances, Applicant has shown good judgment. 
Under Guideline F (Financial Considerations), Disqualifying Conditions 19.(a)
inability or unwillingness to satisfy debts; and 19.(c) a history of not meeting financial
obligations; apply.  However, Mitigating Conditions 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 20.(d) the individual initiated a good-faith effort
to repay overdue creditors or otherwise resolve debts; also apply.  Accordingly, I find for
the Applicant under guideline F. 
I have also considered the “whole-person concept” in evaluating Applicant’s
eligibility for access to classified information.  Under the particular facts of this case, the
totality of the conduct set forth above, when viewed under all of the guidelines as a
whole, support a whole-person assessment of good judgement, trustworthiness,
reliability, candor, willingness to comply with rules and regulations, and/or other
characteristics indicating that the person may properly safeguard classified information.
  I have considered all of the evidence presented.  It mitigates the negative effects
that her financial indebtedness can have on her ability to safeguard classified
information.  On balance, it is concluded that Applicant has overcome the Government's
case opposing her request for a security clearance.  Accordingly, the evidence supports
a finding for Applicant as to the factual and conclusionary allegations expressed in
Paragraph 1 of the SOR.   
     FORMAL FINDINGS
Formal findings For or Against Applicant on the allegations in the SOR, as
required by Paragraph 1.25 of Enclosure 3 of the Directive are:
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Paragraph 1: For Applicant.
        Subpara.  1.a.: For Applicant.
     Subpara.  1.b.: For Applicant.        
  DECISION
In light of all 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.  Eligibility for access to classified information is granted.
Darlene Lokey Anderson
Administrative Judge