1 
 
 
 
               DEPARTMENT OF DEFENSE 
     DEFENSE OFFICE OF HEARINGS AND APPEALS 
 
 
 
 
In the matter of:  ) 
 ) 
  REDACTED  )   ISCR Case No. 14-02914 
   ) 
Applicant for Security Clearance  ) 
 
 
Appearances 
 
For Government: David F. Hayes, Esq., Department Counsel 
For Applicant: Pro se 
 
 
______________ 
 
Decision 
______________ 
 
 
MATCHINSKI, Elizabeth M., Administrative Judge: 
 
Applicant incurred online gambling losses of approximately $60,000-$65,000. He 
has satisfied all but one delinquent credit card debt of $19,467 that was caused by his 
gambling.  He does not intend to pay the debt because if he reaffirms it, the creditor will no 
longer be legally barred by state statute from collecting the full balance. Concerns persist 
about Applicant’s financial judgment. Clearance is denied. 
 
Statement of the Case 
 
 On October 9, 2014, the Department of Defense Consolidated Adjudications Facility 
(DOD CAF) issued a Statement of Reasons (SOR) to Applicant, detailing the security 
concerns under Guideline F, financial considerations, and explaining why it was unable to 
find it clearly consistent with the national interest to grant or continue security clearance 
eligibility for him. The DOD CAF took the action under Executive Order 10865, 
Safeguarding Classified Information within Industry (February 20, 1960), as amended (EO); 
DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program 
(January 2, 1992), as amended (Directive); and the Adjudicative Guidelines for 
Determining Eligibility for Access to Classified Information (AG) effective within the DOD on 
September 1, 2006. 
 
2 
 
 
On November 1, 2014, Applicant answered the SOR allegations and requested a 
decision on the written record without a hearing. At Applicant’s request, the case was 
subsequently converted to a hearing before an administrative judge from the Defense 
Office of Hearings and Appeals (DOHA). (Tr. 9-10.) On May 23, 2016, the case was 
assigned to me to conduct a hearing to determine whether it is clearly consistent with the 
national interest to grant or continue a security clearance for Applicant. On May 19, 2016, I 
scheduled a hearing for June 15, 2016. 
 
I convened the hearing as scheduled. Three Government exhibits (GEs 1-3) and 
three Applicant exhibits (AEs A-C) were admitted into evidence without objection. Applicant 
testified, as reflected in a transcript (Tr.) received on June 22, 2016. 
 
Findings of Fact 
 
 The SOR alleges that Applicant owed a credit card collection debt of $19,467 as of 
October 2014 and that he incurred the delinquency because of his gambling problems 
(SOR ¶ 1.a). When he answered the SOR allegation, Applicant admitted the debt and that 
his compulsive gambling led to the debt. He asserted that his gambling activities ceased in 
May 2011. After considering the pleadings, exhibits, and transcript, I make the following 
findings of fact. 
 
Applicant is a 51-year-old project assistant with an associate degree awarded in 
February 1990. He has been married since May 1987 and has two adult children ages 28 
and 23. Applicant served on active duty in the U.S. military from January 1986 to January 
1990, when he was granted an honorable discharge. He has worked for his current 
employer, a defense contractor, since February 1990. He seeks to retain a secret 
clearance. (GE 1.) 
 
 In approximately July 2006, Applicant began to play online poker. By July 2010, 
Applicant was gambling compulsively through daily involvement in online poker games. In 
addition to not getting a lot of sleep, he incurred about $60,000-$65,000 in credit card debt 
from online gambling. (GE 1; Tr. 39, 47.) In April or May 2011, the federal government shut 
down the wire transfers that facilitated the online payments. Applicant stopped online 
gambling completely, and he began to work with some of his creditors to resolve his 
excessive credit card debt. Applicant made payments to resolve a $17,000 credit card debt 
after the creditor brought him to court. He sent verification letters to other creditors, and he 
managed to settle another $20,000 credit card debt. (Tr. 39-41.) When he received no 
response to his verification letter about the credit card debt in the SOR, he followed up with 
a request for details of fees and accrued interest. He testified that he also received no 
response to that request. (Tr. 41.) In November 2010, a $19,919 collection balance was 
sold to the creditor in the SOR. (GE 2.)  
 
 As of April 2011, Applicant’s and his spouse’s mortgage was in foreclosure 
proceedings. They had obtained the mortgage for $233,600 in May 2003. A second 
mortgage obtained for $147,900 in March 2007 was over 120 days past due. (GE 2.) 
3 
 
Applicant testified that he was able to obtain a modification of his primary mortgage and to 
forestall foreclosure until he was able to sell the home and satisfy his loan. (Tr. 30.) 
Available credit information shows that his second mortgage was satisfied in September 
2012. His primary mortgage was closed with a zero balance on payment of $175,424 in 
April 2013. (GEs 2, 3.) Applicant currently owns his residence on which he has a mortgage 
of $120,000 obtained in November 2014. (GEs 1, 3.) He has been making timely mortgage 
payments of $1,385 per month. (GE 3.) 
 
 On November 14, 2013, Applicant completed and certified to the accuracy of a 
Questionnaire for National Security Positions (SF 86) to renew his security clearance 
eligibility. Applicant responded affirmatively to an inquiry concerning whether he had ever 
experienced any financial problems related to gambling. He indicated that he had been 
involved in online poker games from approximately July 2006 to July 2010, “before it was 
turned off by the DOJ.” He estimated his gambling losses at $65,000. He indicated that he 
had ceased his online gambling and settled debt with creditors. Applicant denied any 
additional financial problems due to gambling. Applicant responded negatively to all the 
inquiries concerning delinquencies involving routine accounts, including whether any debts 
had been turned over to a collection agency in the past seven years and whether he was 
currently over 120 days delinquent on any debt. (GE 1.) 
 
 As of May 8, 2014, Applicant had yet to resolve the collection debt in the SOR, 
which had been placed with a collection entity for $19,467 in July 2013. On October 9, 
2014, the DOD CAF issued an SOR to Applicant because of that unresolved debt. Shortly 
after Applicant received the SOR, he called the creditor about possibly settling his debt. 
Applicant testified that he was told that he needed to verify his debt and take responsibility. 
(Tr. 26.) On November 1, 2014, Applicant answered the SOR allegation. He indicated that 
he had stopped online gambling in May 2011, but that his financial circumstances had 
been negatively impacted by his spouse losing her job that paid her $52,000 annually in 
2012. He indicated that he had taken steps to resolve the debt in the SOR. Applicant filed a 
dispute with the collection entity and requested verification for his account. On November 
18, 2014, the collection entity advised Applicant that it had ceased collection efforts in 
response to his request and that no further collection efforts would be made “unless and 
until validation is provided.” Applicant was also notified that because of the age of his debt, 
he would not be sued for it. (AE A; Tr. 34-35.) In follow-up correspondence on December 
16, 2014, the collection entity advised Applicant that account documentation had been 
requested from his original lender. Applicant was again advised that because of the age of 
his debt and legal limits on when debtors can be sued, he would not be sued for the debt. 
(AE A.) 
 
 As of January 2016, Applicant was making timely payments on two car loans. His 
scheduled car payments are $237 on a car loan obtained for $11,995 in April 2013 and 
$226 on a car loan obtained for $14,786 in December 2014. He had zero balances on his 
open revolving credit card accounts. He had made no progress toward resolving the credit 
card collection debt in the SOR. (GE 3.) 
 
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 In late May 2016 (Tr. 22), Applicant completed a Personal Financial Statement. He 
reported net monthly discretionary income of $2,477 after paying his monthly expenses, his 
mortgage, his car payments, and $249 per month toward a $6,378 debt to an investment 
company. (AE B.) This debt may well be a loan against his retirement, although the 
evidence is unclear.  
 
 As of his hearing in mid-June 2016, Applicant had not made any payments toward 
the debt. (Tr. 26, 31.) In 2010 or 2011, he had researched the applicable state statute of 
limitations regarding legal debt collection. He learned that his state had a six year statute of 
limitations for some financial obligations, including notes payable on demand (AE C), and 
that the clock starts with the last activity on the account. (Tr. 43.) Applicant chose not to 
verify his liability for repayment because he would “re-obligate” himself under the statute of 
limitations to possible legal collection action for the full balance. He continues to feel that it 
is not in his best interest to arrange for repayment, given the creditor is “time-barred” from 
pursuing him in court.
1
 He could cause himself financial difficulty, especially if he loses his 
employment, and the debt is scheduled to age off his credit report in March 2017.
2
 (Tr. 26-
28, 35.) Applicant does not believe that he is shirking his responsibility to the creditor or 
“hiding behind the law.” He testified that he “paid a heavy price for the damage to his credit 
report,” and that the statute of limitations is an example of the consumer protections in 
place against predatory practices used by lenders, such as increasing interest rates and 
fees “when somebody gets in trouble.” (Tr. 32-33.) 
 
 There is no evidence Applicant has engaged in online gambling since April or May 
2011. Three or four times a year, he plays poker at a casino. Occasionally, he enters poker 
tournaments with entry fees that range from $80 to $120. While at the casinos, he plays “a 
few slots.” He was last in a casino in February 2016. (Tr. 45-47.) Applicant has never had 
any counseling for his gambling. He does not consider his poker playing at casinos to be a 
problem, citing his current stable financial situation. He denies any interest in online 
gambling. (Tr. 47.) 
 
Policies 
 
The U.S. Supreme Court has recognized the substantial discretion the Executive 
Branch has in regulating access to information pertaining to national security,  emphasizing 
that “no one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 
U.S. 518, 528 (1988). When evaluating an applicant’s suitability for a security clearance, 
the administrative judge must consider the adjudicative guidelines. In addition to brief 
introductory explanations for each guideline, the adjudicative guidelines list potentially 
                                                 
1 
Applicant testified to his belief that he cannot come to an agreement with the creditor without exposing 
himself to the full balance. (Tr. 32.) 
 
2 
Given that the collection entity had twice indicated he would not be sued for the debt, I asked him about what 
legal exposure he feared. Applicant responded, “Legal liability, I believe, none. Like I said, this ages off my 
credit report in March.” (Tr. 35.) He expressed his belief that the creditor would not pursue him in court as his 
situation stands, but should be acknowledge the debt, it would restart the clock, and he could be sued for the 
full amount. Applicant admitted that the creditor had not indicated that it would sue him in that circumstance. 
He was “just going by what the law says” based on his own research. (Tr. 35-36.) 
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disqualifying conditions and mitigating conditions, which are required to be considered 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, 
these guidelines are applied in conjunction with the factors listed in the adjudicative 
process. The administrative judge’s overall 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 applicant or proven by Department Counsel. . . .” The applicant 
has the ultimate burden of persuasion to obtain a favorable security 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 
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. Section 7 of Executive 
Order 10865 provides that 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 concerns about financial considerations are set forth 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. 
 
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 The evidence establishes that Applicant incurred approximately $60,000-$65,000 in 
gambling losses from online poker games between July 2006 and April 2011. His gambling 
caused him financial difficulties, which were apparently exacerbated by his spouse’s loss of 
employment in 2012. When he applied to renew his security clearance in November 2014, 
he had not resolved a credit card debt of $19,467 in collection since 2010. As of his 
hearing in June 2016, he had made no payments and did not intend to settle or satisfy the 
debt. Disqualifying conditions AG ¶ 19(a), “inability or unwillingness to satisfy debts,” AG ¶ 
19(c), “a history of not meeting financial obligations,” and ¶ 19(f), “financial problems that 
are linked to drug abuse, alcoholism, gambling problems, or other issues of security 
concern,” are established. To the extent that Applicant relied on consumer credit cards to 
fund his online gambling habit, AG ¶ 19(i) is also implicated. AG ¶ 19(i) provides: 
 
(i) compulsive or addictive gambling as indicated by an unsuccessful attempt 
to stop gambling, “chasing losses” (i.e., increasing the bets or returning 
another day in an effort to get even), concealment of gambling losses, 
borrowing money to fund gambling or pay gambling debts, family conflict or 
other problems caused by gambling. 
 
 Concerning mitigation of Applicant’s delinquent debts, 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,” applies in that the debt was incurred more than five 
years ago. It is infrequent in that it is the only delinquency remaining, although the 
evidence shows that his financial difficulties exceeded one past-due debt. AG ¶ 20(a) does 
not mitigate the financial judgment concerns that persist because of Applicant’s 
unwillingness to address a debt that he acknowledges he incurred. 
 
 Applicant attributed his financial problems to his gambling, but also to the loss of 
income when his spouse became unemployed in 2012. Loss of employment is a 
circumstance contemplated within AG ¶ 20(b), which provides: 
 
(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. 
 
 While the loss of spousal income likely compromised his ability to make payments 
on credit card debts incurred in gambling, the debt in the SOR went to collection well 
before his spouse lost her job. Moreover, Applicant has not shown responsible behavior 
toward a creditor when he refuses to pay a legitimate debt because he can no longer be 
sued for the debt and it will be coming off his credit report.  
 
 Applicant apparently settled other delinquencies that were not alleged, including a 
$17,000 debt after he was brought to court. He is paying his monthly expenses on time. 
However, with respect to the collection debt in the SOR, neither AG ¶ 20(c), “the person 
has received or is receiving counseling for the problem and/or there are clear indications 
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that the problem is being resolved or is under control,” nor AG ¶ 20(d), “the individual 
initiated a good-faith effort to repay overdue creditors or otherwise resolve debts,” applies. 
Despite being advised twice by the collection entity that it would not seek to collect the debt 
in court, Applicant remains unwilling to take action, fearing that it could expose him to 
possible legal collection activity. He does not want to jeopardize his present financial 
stability by having to make payments on a debt that is scheduled to age off his credit report 
in March 2017. 
 
 Applicant is not required to establish that he has paid off each debt in the SOR, or 
even that the first debts paid be those in the SOR. However, he is required to establish a 
reasonable plan to address his delinquencies, especially when he has funds to make 
payments.
3
 The DOHA Appeal Board has long recognized that debts remain relevant for 
security clearance purposes, even if they are no longer enforceable under state law 
because of a statute of limitations or cannot be legally listed on a credit report due to the 
passage of time. See e.g., ISCR 15-02326 (App. Bd. Oct. 14, 2016). The Appeal Board 
has also held that reliance on a state’s statute of limitations does not constitute a good-
faith effort to resolve financial difficulties. See e.g., ISCR 15-01208 (App. Bd. Aug. 26, 
2016), citing 03-04779 (App. Bd. Jul. 20, 2005). It may be financially advantageous to 
Applicant for him to ignore the debt, but it casts doubt on his judgment and reliability with 
regard to complying with security rules and regulations. Applicant’s occasional gambling at 
casinos since May 2011 has not caused him additional financial problems. Even so, the 
financial considerations security concerns are not fully mitigated in light of his lack of 
intention to satisfy a debt that he incurred partially or wholly because of compulsive 
gambling. 
 
Whole-Person Concept 
 
Under the whole-person concept, the administrative judge must consider the totality 
of an applicant’s conduct and all relevant circumstances in light of the nine adjudicative 
                                                 
3 The DOHA Appeal Board stated in ISCR Case No. 07-06482, decided on May 21, 2008, in part: 
 
In evaluating Guideline F cases, the Board has previously noted that the concept of 
“‘meaningful track record’ necessarily includes evidence of actual debt reduction through 
payment of debts.” See, e.g., ISCR Case No. 05-01920 at 5 (App. Bd. Mar. 1, 2007). 
However, an applicant is not required, as a matter of law, to establish that he has paid off 
each and every debt listed in the SOR. See, e.g., ISCR Case No. 02-25499 at 2 (App. Bd. 
Jun. 5, 2006). All that is required is that an applicant demonstrate[s] that he has “. . . 
established a plan to resolve his financial problems and taken significant actions to 
implement that plan.” See, e.g., ISCR Case No. 04-09684 at 2 (App. Bd. Jul. 6, 2006). The 
Judge can reasonably consider the entirety of an applicant’s financial situation and his 
actions in evaluating the extent to which that applicant’s plan for the reduction of his 
outstanding indebtedness is credible and realistic. See Directive ¶ E2.2(a) (“Available, 
reliable information about the person, past and present, favorable and unfavorable, should be 
considered in reaching a determination.”) There is no requirement that a plan provide for 
payments on all outstanding debts simultaneously. Rather, a reasonable plan (and 
concomitant conduct) may provide for the payment of such debts one at a time. See, e.g., 
ISCR Case No. 06-25584 at 4 (App. Bd. Apr.4, 2008). Likewise, there is no requirement that 
the first debts actually paid in furtherance of a reasonable debt plan be the ones listed in the 
SOR. 
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process factors in AG ¶ 2(a).
4
 The analysis under Guideline F is incorporated in my whole-
person analysis. Some of the factors in AG ¶ 2(a) were addressed under that guideline, but 
some warrant additional comment. 
 
 Applicant is a longtime defense contractor employee who voluntarily disclosed that 
he experienced financial difficulties because of compulsive gambling. He took steps to 
address his mortgage that was in foreclosure proceedings and to repay most of his credit 
card delinquencies. Yet, his choice of self-interest over his ethical obligation to pay a debt 
he incurred, especially when he is on notice that it is an issue of security concern, raises 
considerable doubt about his willingness to comply with rules and regulations regarding the 
handling of classified information. It is well settled that once a concern arises regarding an 
applicant’s security clearance eligibility, there is a strong presumption against the grant or 
renewal of a security clearance. See Dorfmont v. Brown, 913 F. 2d 1399, 1401 (9
th
 Cir. 
1990). For the reasons noted, I am unable to conclude that it is clearly consistent with the 
national interest to continue security clearance eligibility for Applicant. 
  
Formal Findings 
 
Formal finding for or against Applicant on the allegation set forth in the SOR, as 
required by section E3.1.25 of Enclosure 3 of the Directive, is: 
 
Paragraph 1, Guideline F:  AGAINST APPLICANT 
 
Subparagraph 1.a:  Against Applicant 
 
Conclusion 
 
In light of all of the circumstances presented by the record in this case, it is not 
clearly consistent with the national interest to continue Applicant’s eligibility for a security 
clearance. Eligibility for access to classified information is denied. 
 
 
_____________________ 
Elizabeth M. Matchinski 
Administrative Judge 
 
                                                 
4 
The factors under AG ¶ 2(a) are as follows: 
 
(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.