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DEPARTMENT OF DEFENSE 
DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
 
In the matter of: ) 
 ) 
 [Redacted] )  ISCR Case No. 15-01157 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Rhett E. Petcher, Esq., Department Counsel 
For Applicant: Pro se 
 
 
______________ 
 
Decision 
______________ 
 
 
FOREMAN, LeRoy F., Administrative Judge: 
 
This case involves security concerns raised under Guideline F (Financial 
Considerations). Eligibility for access to classified information is denied. 
 
Statement of the Case 
 
Applicant submitted a security clearance application on May 29, 2014. On August 
27, 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 the DOD on 
September 1, 2006.  
 
 Applicant answered the SOR on September 23, 2015, and requested a hearing 
before an administrative judge. The SOR was amended on November 18, 2015, to add 
three allegations. Department Counsel was ready to proceed on December 2, 2015, 
and the case was assigned to me on January 6, 2016. On January 11, 2016, the 
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Defense Office of Hearings and Appeals (DOHA) notified Applicant that the hearing was 
scheduled for February 1, 2016. I convened the hearing as scheduled. Government 
Exhibits (GX) 1 through 6 were admitted in evidence without objection. Applicant 
testified and submitted Applicant’s Exhibits (AX) A through H, which were admitted 
without objection. DOHA received the transcript (Tr.) on February 8, 2016. 
 
Findings of Fact 
 
 In his answer to the SOR, Applicant admitted SOR ¶ 1.e. He denied SOR ¶¶ 1.a-
1.d, 1.f, and 1.g. His admissions in his answer and at the hearing are incorporated in my 
findings of fact.  
 
 Applicant is a 42-year-old logistics specialist employed by a defense contractor 
since May 2014. He has never held a security clearance.  
 
Applicant graduated from high school in June 1991, earned a bachelor’s degree 
in history in May 1996, and worked in various private-sector marketing and sales jobs 
until he began his current job. He had two periods of unemployment, from February to 
September 2011 and from August 2013 to March 2014. He worked briefly as an account 
executive for a landscaping company from March to May 2014. 
 
Applicant married in February 2003 and divorced in December 2009. He and his 
wife separated around 2006, reconciled and lived together for about a year, and then 
divorced. (Tr. 39-40.) He has a 12-year-old daughter born during the marriage. He has 
joint custody of his daughter, but she lives primarily with her mother. He pays child 
support of $600 per month, and his payments are current. (AX G; Tr. 40.) 
 
When Applicant submitted his SCA, he disclosed several delinquent debts, 
including those alleged in the SOR. He attributed his debts to his unemployment. (GX 1 
at 34-41.) In his SCA and during a follow-up security interview in July 2014, he indicated 
that he was receiving financial counseling but had not yet taken any action to resolve 
his delinquent debts. (GX 1 at 34; GX 2 at 4.). He testified that he paid some small 
credit-card debts, but that he was “drowning” in debt and decided that bankruptcy was 
the only feasible option. He testified that he did not make any payments on the larger 
debts, but he contacted the creditor alleged in SOR ¶ 1.d, made a payment agreement, 
and made several payments before resorting to Chapter 7 bankruptcy. (Tr. 58.) He did 
not provide any documentary evidence of payments or a payment agreement. He chose 
to not file a Chapter 13 bankruptcy petition because he did not believe his income would 
enable him to make the required payments. (Tr. 49-50, 63.) 
 
Applicant testified that he incurred the expenses of setting up a separate 
household when he and his wife first separated, while continuing to pay the mortgage 
on the marital home. When they reconciled and he moved back into the marital home, 
they spent large sums of money on the house, including renovation of a bathroom, 
repairing the floor under the bathroom, and replacing the roof. (Tr. 45-46.) 
 
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The SOR, as amended, alleges a judgment for $21,071, filed in September 2012 
for a credit-card debt (SOR ¶ 1.a); a credit-card debt charged off in April 2011 for 
$20,001 (SOR ¶ 1.b); a credit-card debt charged off in July 2011 for $5,452 (SOR ¶ 
1.c); a credit-card account charged referred for collection in July 2013 for $6,372 (SOR 
¶ 1.d); a Chapter 7 bankruptcy discharge in October 2015 (SOR ¶ 1.e); and a 
delinquent state tax debt for $150 for tax year 2014 (SOR ¶¶ 1.f and 1.g). The debts 
alleged in SOR ¶¶ 1.a-1.d were reflected in Applicant’s June 2014 credit bureau report 
(CBR). (GX 3.) 
 
On July 6, 2015, Applicant filed a Chapter 7 bankruptcy petition, claiming assets 
of $13,525 and liabilities of $51,959. His petition included all the debts alleged in the 
SOR. (GX 6 at 7-8.) On July 21, 2015, he paid the state tax debt alleged in SOR ¶¶ 1.f 
and 1.g. (AX H.) The remaining debts were discharged on October 15, 2015. (GX 6 at 
25.) 
 
Applicant testified that the state tax debt occurred because a friend prepared his 
tax return for him, and he erroneously assumed that his friend had filed the state tax 
return electronically. When Applicant found out the return had not been filed, he 
contacted the state tax authorities, determined the penalty for late filing, filed the return, 
and paid the taxes due. (Tr. 52.) 
 
Applicant testified that during his periods of unemployment he concentrated on 
paying his rent, making his car payment, keeping current on his child support. While he 
was living on unemployment benefits, he fell behind on his credit-card payments. When 
he was interviewed by the security investigator in July 2014, he told the investigator that 
he intended to consolidate his debts and pay down the balances. He later decided that 
the best option for removing the debt burden and making himself less of a security risk 
was to file a Chapter 7 bankruptcy petition. (Tr. 33-36.) 
 
Applicant currently earns about $50,000 per year. His net pay per month, after 
taxes, is about $2,600. (Tr. 42-44.) His loan on an 11-year-old car is now paid, and he 
has a net monthly remainder of about $500 or $600. (Tr. 51, 54-55.) 
 
A retired Navy captain, retired Marine Corps major, a Navy paralegal, and two 
civilian friends submitted letters supporting Applicant. The Navy captain has known 
Applicant for more than 30 years, and the Marine major has known him for more than 
20 years. The others have known him for 13-16 years. They uniformly admire him for 
his extensive and selfless involvement in the community, his devotion to his daughter, 
and his personal qualities. They regard him as honest, trustworthy, responsible, 
dependable, and patriotic. (AX A through E.) 
 
Applicant’s facility security officer (FSO), who has known him for about two 
years, also supports his application for a clearance. He states that Applicant takes on all 
assignments with enthusiasm and dedication, and he treats everyone with respect. He 
trusts Applicant to the extent that he would leave him alone with his teenage daughter. 
(AX F.) 
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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.   
 
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, 
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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).  
 
Analysis 
 
Guideline F, Financial Considerations 
 
 The SOR alleges an unsatisfied judgment for about $21,071 (SOR ¶ 1.a), three 
delinquent credit-card accounts totaling about $31,825 (SOR ¶¶ 1.b-1.d); a Chapter 7 
bankruptcy in which liabilities of $51,959 were discharged (SOR ¶ 1.e); and an unpaid 
state tax debt of $150 (SOR ¶¶ 1.f-1.g). 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 failure to pay state taxes as required is alleged twice in SOR ¶¶ 1.f 
and 1.g. When the same conduct is alleged twice in the SOR under the same guideline, 
one of the duplicative allegations should be resolved in Applicant=s favor. See ISCR 
Case No. 03-04704 (App. Bd. Sep. 21, 2005) at 3 (same debt alleged twice). I will 
resolve SOR ¶ 1.g in Applicant’s favor.  
 
 Applicant’s admissions, his testimony, and the documentary evidence 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 admission at the hearing that he failed to timely file his state tax return would 
be sufficient to establish AG ¶ 19(g) (“failure to file annual Federal, state, or local 
income tax returns as required or the fraudulent filing of the same”). However, the SOR 
alleges only his failure to pay his taxes, and not a failure to file his return. I will consider 
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his failure to timely file his return for the limited purpose of assessing his credibility; to 
evaluating evidence of extenuation, mitigation, or changed circumstances; considering 
whether he has demonstrated successful rehabilitation; and as part of a whole-person 
analysis. See ISCR Case No. 03-20327 at 4 (App. Bd. Oct. 26, 2006). 
 
 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; 
 
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; 
 
AG ¶ 20(d): the individual initiated a good-faith effort to repay overdue 
creditors or otherwise resolve debts; and 
 
AG ¶ 20(e): the individual has a reasonable basis to dispute the legitimacy 
of the past-due debt which is the cause of the problem and provides 
documented proof to substantiate the basis of the dispute or provides 
evidence of actions to resolve the issue. 
 
 AG ¶ 20(a) is not established. Applicant’s delinquent debts are numerous, recent, 
and were not incurred under circumstances making them unlikely to recur. 
 
 AG ¶ 20(b) is established for Applicant’s failure to timely pay his state income 
taxes. The failure of his tax preparer to file his state return for 2014 was a condition 
beyond his control, and he acted responsibly by resolving the debt as soon as he 
discovered it.  
 
 AG ¶ 20(b) is not fully established for the debts alleged in SOR ¶¶ 1.a-1.d. 
Applicant’s marital breakup and his two periods of unemployment were conditions 
largely beyond his control, but he has not acted responsibly. He had almost two years of 
gainful employment after he returned to the workforce in September 2011, but he 
presented no evidence of any meaningful actions to resolve the debts in SOR ¶¶ 1.a-
1.d, which became delinquent while he was unemployed. He testified that he made an 
effort resolve the debt in SOR ¶ 1.d after his second period of unemployment ended, 
but he provided no documentary evidence of payments or a payment agreement. After 
he returned to the workforce in March 2014, he made no meaningful effort to resolve his 
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delinquent debts until he realized that he needed a security clearance and that his debts 
were an impediment to obtaining it.  
 
 AG ¶ 20(c) is established. As a result of the Chapter 7 bankruptcy discharge, 
Applicant’s debts are resolved. 
 
AG ¶ 20(d) requires a showing of good faith. “Good faith” means acting in a way 
that shows reasonableness, prudence, honesty, and adherence to duty or obligation. 
ISCR Case No. 99-0201, 1999 WL 1442346 at *4 (App. Bd. Oct. 12, 1999). Evidence of 
past irresponsibility is not mitigated by payment of debts only under pressure of 
qualifying for a security clearance. This mitigating condition is established for the state 
tax debt, but it is not established for the debts alleged in SOR ¶¶ 1.a-1.d. The resolution 
of the debts by bankruptcy does not end the inquiry, because a security clearance 
adjudication is an evaluation of an individual’s judgment, reliability, and trustworthiness. 
It is not a debt-collection procedure. ISCR Case No. 09-02160 (App. Bd. Jun. 21, 2010.) 
Reliance on the fact that a debt is uncollectible does not constitute a good-faith effort to 
resolve that debt within the meaning of this mitigating condition. ISCR Case No. 07-
06841 at 4. Bd. Dec. 19, 2008). Even though the debts are uncollectible, the facts and 
circumstances facts and circumstances under which they were incurred but not timely 
resolved are relevant. See, e.g., ISCR Case No. 01-09691 at 3 (App. Bd. Mar. 27, 
2003). 
 
 AG ¶ 20(e) is not applicable. Applicant has not disputed any of the debts alleged 
in the SOR. 
 
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. Some of the factors in AG ¶ 2(a) were addressed under that guideline, but 
some warrant additional comment. 
 
 Applicant was candid and sincere at the hearing. He enjoys a reputation for being 
a devoted father and a selfless contributor to his community. Experienced military 
officers and life-long friends regard him as honest, dependable, reliable, and 
trustworthy. His FSO trusts him and supports his application for a clearance. On the 
other hand, his complacency about his debts during his periods of employment from 
September 2011 to August 2013 and from March 2014 to the present raises doubts 
about his trustworthiness and reliability. His recent actions to resolve his debts through 
bankruptcy appear to have been motivated by his need for a clearance rather than a 
sense of obligation to his creditors. He voluntarily accepted substantial financial 
obligations and then disregarded them when they appeared to interfere with his 
professional goals. 
 
 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 
not mitigated the security concerns raised by his delinquent debts. Accordingly, I 
conclude he has not 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): AGAINST APPLICANT 
 
  Subparagraphs 1.a-1.e:    Against Applicant 
 
  Subparagraphs 1.f-1.g:    For Applicant 
 
Conclusion 
 
 I conclude that it is not clearly consistent with the national interest to grant 
Applicant eligibility for a security clearance. Eligibility for access to classified information 
is denied. 
 
 
 
 
LeRoy F. Foreman 
Administrative Judge