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DEPARTMENT OF DEFENSE 
DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
 
In the matter of: ) 
 ) 
 [Redacted] )  ISCR Case No. 15-04546 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Nicole A. Smith, Esq., Department Counsel 
For Applicant: Alan V. Edmunds, Esq. 
 
 
______________ 
 
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 December 30, 2014. On 
January 27, 2016, the Department of Defense Consolidated Adjudications Facility (DOD 
CAF) sent her a Statement of Reasons (SOR) alleging security concerns under 
Guideline F. The DOD CAF acted under Executive Order (Exec. Or.) 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. The adjudicative guidelines are 
codified in 32 C.F.R. § 154, Appendix H (2006), and they replace the guidelines in 
Enclosure 2 to the Directive. 
 
 Applicant answered the SOR on February 15, 2016, and requested a hearing 
before an administrative judge. Department Counsel was ready to proceed on July 11, 
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2016, and the case was assigned to me on July 20, 2016. On September 9, 2016, after 
coordinating with Applicant’s attorney, the Defense Office of Hearings and Appeals 
(DOHA) notified Applicant that the hearing was scheduled for September 28, 2016. I 
convened the hearing as scheduled. Government Exhibits (GX) 1 through 5 were 
admitted in evidence without objection. Applicant testified, presented the testimony of 
four other witnesses, and submitted Applicant’s Exhibits (AX) A through HH, which were 
admitted without objection.1 DOHA received the transcript (Tr.) on October 11, 2016. 
 
Findings of Fact2 
 
 Applicant admitted the two Chapter 13 bankruptcies alleged in the SOR. Her 
admissions are incorporated in my findings of fact.  
 
 Applicant is a 48-year-old business relations supervisor employed by a defense 
contractor since June 2003. She received a bachelor’s degree in May 1991, a diploma 
in hotel and restaurant operations in May 2003, and several certificates of professional 
training. (GX 1 at 13-14; AX G-I.) She married in June 2001. She and her husband have 
a six-year-old son. She has held a security clearance since June 2003.  
 
 When Applicant and her husband married, they were both employed and 
financially secure. Her husband has only a high-school education, which limits his ability 
to find and retain well-paying jobs. In November 2001, they started a wedding 
photography business in an effort to earn additional money. They used credit cards to 
buy photography equipment, reached their credit limits on their credit cards, and started 
living paycheck to paycheck.  
 
 In July 2002, Applicant’s husband was laid off, reducing the family income by 
about $32,000 per year. In November 2002, they moved cross-country so that 
Applicant’s husband could accept a new job. They were not reimbursed for moving 
expenses. They purchased a home in their new location in March 2003. Her husband 
was laid off again in December 2003, and he decided to reopen the wedding 
photography business as a Subchapter S corporation. To cover the start-up costs for 
the business, they incurred about $90,000 in credit card debt. In 2006, they 
encountered several home-repair emergencies, which they could not afford.3  
 
 Applicant and her husband filed a Chapter 13 bankruptcy petition in March 2007, 
listing assets of $334,840 and liabilities of $319,688. They completed the Chapter 13 
payment plan, which provided for monthly $1,630 payments, and received a discharge 
in July 2012. (GX 4.) 
                                                          
1 Applicant’s answer included Applicant’s Exhibits (AX) A through M, which were submitted again at the 
hearing, along with AX N through HH. (Tr. 13.) 
 
2 Applicant’s personal information is extracted from her security clearance application unless otherwise 
indicated by a parenthetical citation to the record. 
 
3  The circumstances leading up to two bankruptcies alleged in the SOR were set out in Applicant’s 
answer to the SOR and adopted during her hearing testimony. (Tr. 49.) 
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 In November 2007, Applicant and her husband were notified by their 
homeowners’ association that they were not permitted to operate a business from their 
home. They signed a lease for a business location in January 2008 and were required 
to personally guarantee the lease payments. They incurred additional business 
expenses for furniture, utilities, telephone, and Internet service. Their business declined 
in 2008 due to the economic downturn. (GX 3 at 5.) 
 
 In the spring of 2009, Applicant’s pay was reduced by five percent, about $250 
per month, when her employer was bought by another defense contractor. (GX 3 at 4.) 
In July 2010, the family dog fell seriously ill, resulting in a veterinary bill of $2,500. In 
May 2011, Applicant gave birth to their only child. She suffered serious complications 
during childbirth and was unable to work until September 2011. After she returned to 
work, they had child-care expenses of about $600 per month. Between 2009 and 2012, 
they fell behind on their federal and state taxes. They negotiated payments plans calling 
for payments of $500 per month for three years to the IRS and $150 per month for three 
years to the state. 
 
 In the fall of 2012, Applicant and her husband closed the wedding photography 
business. In December 2012, Applicant’s husband found employment in the call center 
for a telecommunications company. However, he contracted pneumonia in January 
2013 and was hospitalized twice, for ten days each time. He suffered permanent heart 
damage. He suffered cardiac arrest in February, was near death, and was in a coma for 
two weeks. He was released from the hospital in March 2013 and spent three months 
recovering. In March 2013, Applicant notified the IRS that they could no longer afford to 
make the agreed payments. Between March and October 2013, her husband was 
hospitalized nine times, for three to five days each time, to stabilize his heart functions 
and treat him for infections. They incurred uninsured expenses for his treatment and 
medications. Applicant tried to negotiate a second mortgage modification for their 
personal residence, but she was unsuccessful. The landlord for their business property 
obtained a warrant in debt for $25,000 in unpaid rent.  
 
Applicant and her husband filed a second Chapter 13 bankruptcy petition in 
March 2014, listing assets of $227,230 and liabilities of $294,627. Applicant notified her 
security officer of the second bankruptcy petition and explained the circumstances 
leading up to it. The bankruptcy petition included debts from the wedding photography 
business, federal and state taxes, and medical debts not covered by insurance. Their 
payment plan was confirmed and they have made monthly payments of $720 since April 
2014. (GX 5.) The bankruptcy payments are automatically deducted from her pay. (Tr. 
58; AX U.) As of July 2016, she had paid the trustee a total of $20,160, leaving a 
balance due of $23,040. (AX T.)  
 
In September 2014, Applicant’s husband found full-time employment. (Tr. 50.) He 
is currently in reasonably good health, but he depends on multiple medications to 
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stabilize his heart condition, blood pressure, depression (as a result of his medical 
problems) and diabetes.4 (Tr. 55; AX GG and HH.) 
 
 Applicant’s current salary is about $75,000 per year. (Tr. 47.) Her husband earns 
about $30,000 per year. (Tr. 51.) She has about $31,809 in her 401(k) retirement 
account. (AX Z.) 
 
Applicant has obtained additional financial counseling beyond the court-
mandated counseling. (Tr. 59.) She demonstrated the lessons learned from financial 
counseling by submitting two personal financial statements (PFSs). The first PFS 
reflected net family income of $5,640 and a net monthly remainder of $341 after paying 
all monthly expenses, including mortgage loan payments and bankruptcy payments. 
(AX E.) The second PFS, reflecting an aggressive effort to reduce expenses and 
monitor spending, shows a net remainder of $1,164. (AX F.) 
 
A co-worker, who has known Applicant for 12 years, is familiar with her 
husband’s health problems, and who is aware of the failed wedding photography 
business, testified that she is a “great employee” who cares about her job and cares 
about the people who work with her. She has been assigned to the team that supports 
senior military officers and civilian officials. (AX P at 2.) When senior military and civilian 
officials have email problems, Applicant will “go the extra mile” to solve the problem and 
make sure it does not recur. The co-worker has held a security clearance for 12 years 
and has no reservations about her suitability for a security clearance. (Tr. 18-21; AX P 
at 4.) 
 
Another co-worker, who has known Applicant for 13 years and is aware of her 
husband’s medical problem and business failure, testified that she is honest and 
trustworthy. (Tr. 26-29; AX FF.) Applicant’s supervisor, who has known her for 12 years 
and supervised her for about 6 years, rates her as “exceeding expectations,” which 
places her in the top 20% of the persons he evaluates. He testified that Applicant works 
hard, tells the truth, and has high moral standards. (Tr. 33-36.) 
 
Applicant’s third-line supervisor and a fellow member of Applicant’s church is a 
retired Navy captain who has held a clearance for more than 30 years. He testified that 
he is aware of Applicant’s financial problems and believes that she is a valuable 
resource for their employer and has “all the right moral characteristics to retain her 
clearance.” (Tr. 39-43.) Applicant’s manager, who has known her for more than 15 
years and supervised her for about 7 years, submitted a letter stating that she has a 
strong moral compass, is honest, and a strong leader. (AX P at 2.) A former supervisor, 
who has known her since 2003, submitted a letter stating that he has never worked with 
someone as honest and conscientious as Applicant. Her strong commitment to her job 
sometimes required him to tell her to shut down her computer and go home, knowing 
that she probably would go home, log back on, and continue to work. (AX P at 1.) 
 
                                                          
4 Department Counsel stipulated to the factual accuracy of Applicant’s description of her husband’s 
medical history. (Tr. 73-74.) 
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Applicant’s pastor submitted a letter attesting to her strong faith, perseverance in 
the face of adversity, and active participation in church activities. He considers Applicant 
to be “utterly trustworthy.” (AX P at 5.)) 
 
Applicant has consistently been rated as an employee who “exceeds 
expectations.” (AX J and K.) She has received numerous certificates for job-related 
achievements and her community involvement. (AX L, M, and EE.)  
 
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 § 2.  
 
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.” 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 
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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).  
 
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 a person might knowingly 
compromise classified information to raise money. It encompasses concerns about a 
person’s self-control, judgment, and other qualities essential to protecting classified 
information. A person 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, her testimony at the hearing, and the documentary 
evidence submitted by both sides at the hearing 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”). 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; 
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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; and 
 
AG ¶ 20(d): the individual initiated a good-faith effort to repay overdue 
creditors or otherwise resolve debts. 
 
 AG ¶ 20(a) is established. Applicant’s debts and the resulting bankruptcies were 
numerous and recent, but they were largely due to the failed wedding photography 
business and her husband’s medical problems. They have closed the wedding 
photography business, Applicant’s husband’s health has stabilized, and they are both 
employed full time. Her financial problems are not likely to recur, and they do not cast 
doubt about her current reliability, trustworthiness, and good judgment.  
 
 AG ¶ 20(b) is established. Applicant’s unwise decision to use credit cards to 
cover start-up costs for the photography business and to continue pouring money into a 
failing business were not conditions beyond her control. However, she experienced 
several conditions largely beyond her control: her husband’s periods of unemployment; 
his life-threatening medical problems and the resulting uninsured medical expenses and 
inability to work; the downturn in the economy around 2008, which reduced the demand 
for discretionary services such as professional wedding photography; her childbirth 
complications; the illness of a beloved family dog; and her pay reduction in 2009. She 
acted responsibly be keeping in contact with creditors, obtaining a modification of the 
home mortgage loan, negotiating payment agreements for unpaid taxes, seeking legal 
advice, and obtaining financial counseling beyond the court-mandated counseling. 
 
 AG ¶¶ 20(c) and 20(d) are established. Applicant received financial counseling 
as part of the bankruptcy process as well as additional counseling that was not 
mandated. She has a reasonable budget, has tightened and monitored her spending, 
and has made the monthly payments to the bankruptcy trustee as required since April 
2014. She and her husband have abandoned their plans for a wedding photography 
business. Her husband has overcome his medical problems and found full-time 
employment. There are “clear indications” that her financial situation is under control. 
 
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 
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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.  
 
 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 sincere, candid, and credible at the hearing. She realizes that she 
and her husband made some foolish financial decisions in the past, and she has taken 
significant measures to improve her financial skills. She enjoys an outstanding 
reputation at work. She is active in her community. She has held a security clearance 
since 2003, apparently without incident.  
 
 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 her two Chapter 13 bankruptcies. Accordingly, 
I conclude she has carried her burden of showing that it is clearly consistent with the 
national interest to continue her 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 and 1.b:   For Applicant 
 
Conclusion 
 
 I conclude that it is clearly consistent with the national interest to continue 
Applicant’s eligibility for access to classified information. Clearance is granted. 
 
 
 
LeRoy F. Foreman 
Administrative Judge