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       DEPARTMENT OF DEFENSE 
   DEFENSE OFFICE OF HEARINGS AND APPEALS 
In the matter of: )
)
 ) ISCR Case No. 15-05450 
)
)
Applicant for Security Clearance ) 
Appearances 
For Government: Andrew Henderson, Esq., Department Counsel 
For Applicant: Pro se 
October 20, 2016 
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Decision 
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GOLDSTEIN, Jennifer I., Administrative Judge: 
Applicant is alleged to be indebted to one creditor in the approximate amount of 
$50,419. Applicant mitigated the Financial Considerations security concerns, because 
the debt was fully resolved through litigation. Eligibility for access to classified 
information is granted.  
Statement of the Case 
On March 29, 2016, the Department of Defense (DoD) issued a Statement of 
Reasons (SOR) to Applicant detailing security concerns under Guideline F, Financial 
Considerations. The action was taken under Executive Order (EO) 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 September 1, 2006.  
Applicant answered the SOR on April 21, 2016, and requested a hearing before 
an administrative judge. The case was assigned to me on July 28, 2016. The Defense 
 
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Office of Hearings and Appeals (DOHA) issued a notice of hearing on July 28, 2016, 
scheduling the hearing for August 10, 2016. Applicant waived the 15-day notice 
requirement. (Tr. 4.) The hearing was convened as scheduled. The Government offered 
Exhibits (GE) 1 through 4, which were admitted without objection. The Applicant offered 
Exhibits (AE) A through F, which were admitted without objection. Applicant testified on 
his own behalf. The record was left open for Applicant to submit additional exhibits and 
on August 16, 2016, Applicant presented AE G. Department Counsel had no objections 
to AE G, and it was admitted. DOHA received the transcript of the hearing (Tr.) on 
August 19, 2016.  
 
Findings of Fact 
 
 Applicant denied SOR allegation 1.a, which alleged that Applicant was indebted 
on a home equity loan that had been charged off in the amount of $50,419. After a 
thorough and careful review of the pleadings, exhibits, and testimony, I make the 
following findings of fact. 
 
 Applicant is a 36-year-old employee of a defense contractor. Applicant served in 
the Army from 2004 to 2010. He achieved the rank of sergeant, E-5. He has worked for 
various government contractors since leaving the Army in 2010. He has held a security 
clearance since 2006. He is single and has no children. (GE 1; GE 2; Tr. 21-23.) 
 
 In 2005, at the age of 25, Applicant purchased a home. He financed the 
purchase with two loans, a $200,000 loan with an adjustable rate mortgage and a 
$50,000 home equity loan. He did not understand what an adjustable rate mortgage 
was at that time. In about 2008, the adjustable rate mortgage adjusted upward, and 
Applicant could no longer afford the higher payments. The property was foreclosed 
upon by the primary mortgage holder in 2009. His primary mortgage was resolved 
through the foreclosure. (Tr. 22-37.) 
 
 Applicant made payments on his home equity loan through December 2013. At 
that point, he hired an attorney, who advised him to stop making payments because of 
“unscrupulous” activities on the part of the lender. He was referred to the attorney by the 
teller at the bank that held the home equity loan, when he went in to make payments on 
this debt. The basis of Applicant’s legal claim was that the lender had fraudulently been 
charging Applicant for home insurance over a five year period on the home, which 
Applicant did not own, despite the lender’s awareness of the foreclosure. Applicant’s 
attorney filed a complaint against the lender in civil court in May 2014. The lender and 
Applicant settled out of court in January 2015. Documentation from the lender shows 
that the lender agreed to pay Applicant $45,000 in damages, and there is “no 
outstanding balance” owed by Applicant on this debt. It is resolved. (GE 3; AE A; AE B; 
AE F; AE G; Tr. 13, 22-38.) 
 
 Applicant participated in financial counseling after the foreclosure. He learned 
about adjustable interest rates and how to properly manage money. (Tr. 36-37.)  
 
 
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 Applicant purchased a new home in 2013. He has $50,000 worth of equity in it. 
He has never been late on his mortgage payments. He also owns two rental properties 
that are fully paid for. They are valued at $120,000 each. He has no other delinquent 
accounts identified on his most recent credit report. He set up mobile alerts by email 
and phone to help him monitor his financial situation. He has approximately $40,000 in 
savings. (GE 4; AE C; AE D; AE E; Tr. 30-34.) 
 
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 to be used 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, administrative judges apply the guidelines in 
conjunction with the factors listed in AG ¶ 2(a), describing the adjudicative process. The 
administrative judge’s overarching adjudicative goal is a fair, impartial, and 
commonsense decision. According to AG ¶ 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. AG ¶ 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, and based 
on the evidence contained in the record.  
 
Under Directive ¶ E3.1.14, the Government must present evidence to establish 
controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, the applicant is 
responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, 
or mitigate facts admitted by the applicant or proven by Department Counsel.” The 
applicant has the ultimate burden of persuasion to obtain a favorable clearance 
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. 
 
 
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Section 7 of EO 10865 provides that adverse 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 for Financial Considerations is set out in AG ¶ 18, as 
follows:       
 
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 
AG ¶ 19. Two are potentially applicable in this case:   
 
(a) inability or unwillingness to satisfy debts; and 
 
 (c) a history of not meeting financial obligations. 
 
 Applicant was indebted on his home equity line of credit in the amount of 
$50,419, as alleged on the SOR. This debt was delinquent from 2014 to January 2015, 
after he stopped making loan payments on advice of his attorney during litigation to 
dispute the debt. The Government established a prima facie case for disqualification 
under Guideline F. 
 
 Two Financial Considerations Mitigating Conditions under AG ¶ 20 are 
applicable:  
 
(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  
 
(d) the individual initiated a good-faith effort to repay overdue creditors or 
otherwise resolve debts. 
  
 Applicant continued to pay on his home equity line of credit loan from 2009 to 
2013, despite the foreclosure on the property that secured the loan. It was only after he 
received legal advice that the lender was acting improperly by charging Applicant for 
insurance, despite no longer possessing the property, that Applicant ceased payments 
 
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on this loan. Applicant’s attorney filed suit against the creditor and they settled out of 
court. As part of the settlement, Applicant was deemed to have “no outstanding 
balance” on this account, and Applicant received an additional $45,000 payment from 
the creditor. This debt is resolved and Applicant’s finances are under control. He has no 
other delinquent debt. He can be trusted to monitor his finances closely and resolve his 
debts in the future. Applicant has acted responsibly by following the advice of his 
counsel and educating himself on how to avoid future debt. Substantial mitigation under 
AG ¶¶ 20(c) and 20(d) was established.  
 
Whole-Person Concept 
 
 Under the whole-person concept, the 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. The 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. 
 
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.  
 
I considered the potentially disqualifying and mitigating conditions in light of all 
the facts and circumstances surrounding this case. 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 served 
in the Army for six years. He has addressed his sole delinquency and it is resolved. He 
has matured since he first purchased the home in 2005 and now understands the 
different types of mortgages. He is unlikely to experience similar financial problems in 
the future.  
 
Overall, the record evidence leaves me without questions and doubts as to 
Applicant’s eligibility and suitability for a security clearance. For all these reasons, I 
conclude Applicant has mitigated the Financial Considerations security concern.  
 
 
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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 
 
  Subparagraph 1.a:   For Applicant 
 
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. 
 
 
________________________ 
Jennifer I. Goldstein 
Administrative Judge