DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
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)       ISCR Case No. 15-04575
)
)
Applicant for Security Clearance )
Appearances
For Government: Jeff A. Nagel, Department Counsel
For Applicant: Ryan C. Nerney, Attorney At Law, The Edmunds Law Firm
October 18, 2016
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Decision
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LOKEY ANDERSON, Darlene D., Administrative Judge:
Applicant submitted his Electronic Questionnaire for Investigations Processing
(e-QIP) on November 3, 2014. (Government Exhibit 1.)  On December 11, 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 the Applicant, which detailed reasons why the 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 January 9, 2016, and he requested a hearing
before a Defense Office of Hearings and Appeals Administrative Judge.  This case was
assigned to this Administrative Judge on April 4, 2016.  A notice of hearing was issued
on April 15, 2016, scheduling the hearing for June 2, 2016.  At the hearing the
Government presented five exhibits, referred to as Government Exhibits 1 through 5,
which were admitted without objection.  The Applicant presented seventeen exhibits,
referred to as Applicant’s Exhibits A through Q, which were admitted without objection. 
He called two witnesses and testified on his own behalf.  The official transcript (Tr.) was
received on June 10, 2016.  Based upon a review of the pleadings, exhibits, and
testimony, eligibility for access to classified information is granted.
 FINDINGS OF FACT
Applicant is 33 years old, and is married with two children.  He has a Master’s of
Business degree in Project Management.  He is employed for a defense contractor as a
Program Modifications Manager.  He is seeking to retain 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 he is financially overextended and at risk of
having to engage in illegal acts to generate funds.      
There is one delinquent mortgage account set forth in the SOR, totaling
approximately $202,745.  Applicant denied the allegation under this guideline.  Credit
reports of the Applicant dated November 8, 2014; and April 16, 2015, which include
information from all three credit reporting agencies, indicates that at one time he was
indebted to the creditor listed in the SOR.  (Government Exhibits 3 and 4.)       
     
In March 2007, Applicant began working for his current employer.   He has held a
security clearance since then.  In the summer of 2008, he purchased a primary
residence not far from where he was born and raised.  He purchased a townhouse in a
newly converted townhouse community for $215,000 with a 30-year fixed loan. 
Applicant testified that he was the second individual to purchase a unit in the 40 to 60
unit housing development.  Applicant was told that when the complex was 75 to 80-
percent owner occupied, the home owners association (HOA) would begin its job of
properly up keeping and maintaining the complex.  A property management firm was
brought in to help, and in November 2008, Applicant and several other community
members attempted to establish an HOA association.  Applicant was elected President
of the HOA.  However, with the collapse of the housing market, the owner occupancy
never reached the 75 percent threshold, and the HOA was never established.  As time
passed, the property was not selling and the owner started renting the units to the
county for low-income housing.  No money was being generated for maintenance and
the area quickly declined.  Applicant’s backyard fence fell down, and there were
robberies and shootings in and around the complex.  Applicant came home from work
one day to find a DEA Agent’s car blocking his unit, as they had been raiding one of the
units in the complex.  (Tr. p. 42.)  
In June 2012, Applicant learned that his wife was pregnant with their first child. 
Applicant did not feel that his home environment was a safe place to raise a child.  He
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made a careful and well-thought out decision about what to do.  He could not rent his
property for the amount owed on the mortgage, and the bank did not agree to a short
sale.  He consulted a real estate agent and an attorney about his situation.  Applicant
was advised to walk away from the property and allow it to be foreclosed upon. 
Applicant took the advise and made his last house payment on the property in October
2013.  The house was foreclosed upon in March 2015.  Applicant testified that he
received an IRS Form 1099-C, a cancellation of debt with non-recourse against the
Applicant.  (Applicant’s Exhibit Q.)  Thus, the sale of his house in foreclosure covered
the amount owed on the loan.  Applicant’s 2014 income tax return further shows no
foreclosure tax penalty.  (Applicant’s Exhibit P.)  
Applicant’s financial history shows that he has always paid his bills on time.  His
most recent credit report shows that he has no delinquent debts.  (Applicant’s Exhibit
N.)  He lives frugally and responsibly.  His financial statement and banking information
show that he has about $64,000 in his savings account, and $210,000 in his retirement
account.  (Applicant’s Exhibits L and M.)  His credit score at the time of the foreclosure
was 780.  Although he had sufficient monies to pay the mortgage on the condo, upon
the advise of his real estate agent and attorney he chose to let it go into foreclosure,
knowing it would negatively effect his credit, because of the danger continuing to stay in
the condo posed his family.  
Two witnesses testified on behalf of the Applicant.  They are both long-time
friends of the Applicant.  They know him to be a hard worker, mature, honest, reliable
and trustworthy.  One of them commented on Applicant’s frugal nature, and his
responsibility with his money.  Applicant is highly respected and recommended for a
security clearance.  (Tr. pp. 26-36.)
Letters of recommendation from professional colleagues and friends of the
Applicant attest to his reliability and trustworthiness.  (Applicant’s Exhibit A.)
Performance Evaluations of the Applicant for 2013 through 2015 reflect that he
either meets or exceeds expectations in every category.  He is described as an
outstanding employee.  (Applicant’s Exhibit E.)
Applicant has received a number of awards, certificates, and commendations for
his dedicated performance and valuable contributions on the job.  He has also provided
a list of accomplishments and recognitions he has received.  (Applicant’s Exhibit J and
K.) 
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 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. 
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.(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;
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;
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;
20.(d) the individual initiated a good-faith effort to repay overdue creditors or
otherwise resolve debts.
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;
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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, which are reasonably related to the ultimate question,
posed 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 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
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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 his security
clearance eligibility.
The evidence presented shows that when Applicant purchased his home in 2008,
he expected the housing development to be properly maintained by the HOA.  This
never transpired.  Instead, the owner of the development rented most of the units to the
county for low-income housing.  The value of the property declined in value and over
time became a dangerous place for his family.  Applicant’s decision to walk away from
the property was not financially motivated.  The property was underwater, but he had
the money to pay the mortgage.  After consulting a real estate agent and an attorney,
upon their recommendation, he chose to allow it to be foreclosed upon for the safety of
his family, due to the increasing crime rate in the area, and because it lacked  an HOA
to maintain the property.  Given the unusual circumstances in this situation, Applicant
has demonstrated good judgment.  But for this instance, Applicant has an unblemished
history of financial responsibility.  As evidenced by his credit reports, he has never
backed out or failed to pay his financial obligations.  Applicant received an IRS Form
1099-C, a cancellation of debt with non-recourse against the Applicant.  In the unusual
even that Applicant is required to pay anything in taxes, he is willing, and has the money
to do so.  Under ordinary circumstances, allowing your home to be foreclosed upon
shows poor judgment, however in this case, Applicant demonstrated good judgment
and reliability by moving his family our of a dangerous situation before it became more
serious.  
Under the particular circumstances of this case, Applicant has met his burden of
proving that he is worthy of a security clearance.  He has a concrete understanding of
his financial responsibilities.  Thus, it can be said that he has made a good-faith effort to
resolve his past-due indebtedness.  He no longer owes the lender for the mortgage loan
as evidenced by the IRS Form 1099-C.  He has made reasonable and responsible
decisions when addressing this financial situation.  Thus, Applicant has demonstrated
that he can properly handle his financial affairs.  Considering all of the evidence,
Applicant has introduced persuasive evidence in rebuttal, explanation, or mitigation that
is sufficient to overcome the Government's case. 
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.  Mitigating Conditions 20.(a) the behavior happened so long ago, was
so infrequent, or occurred under such circumstances that it is unlikely to recur and does
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not cast doubt on the individual’s current reliability, trustworthiness, or good judgment;
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; 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 are also applicable.  Accordingly, I find for Applicant
under Guideline F (Financial Considerations).    
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, a 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 does mitigate the negative
effects of his history of financial indebtedness and the effects that it can have on his
ability to safeguard classified information.  On balance, it is concluded that Applicant
has overcome the Government's case opposing his 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 the Applicant on the allegations in the SOR, as
required by Paragraph E3.1.25 of Enclosure 3 of the Directive are:
Paragraph 1:  For Applicant.
    Subpara.    1.a. 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
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