1 
 
 
 
               DEPARTMENT OF DEFENSE 
     DEFENSE OFFICE OF HEARINGS AND APPEALS 
 
 
 
 
In the matter of:  ) 
 ) 
  REDACTED  )   ISCR Case No. 15-07823 
   ) 
Applicant for Security Clearance  ) 
 
 
Appearances 
 
For Government: Carroll J. Connelley, Esq., Department Counsel 
For Applicant: Pro se 
 
 
______________ 
 
Decision 
______________ 
 
 
MATCHINSKI, Elizabeth M., Administrative Judge: 
 
Applicant handled his finances irresponsibly and several of his accounts were 
placed for collection. In May 2016, he began working a second job for the income to pay 
down his debt, but it is too soon to conclude that his financial problems are behind him. 
Clearance is denied. 
 
Statement of the Case 
 
 On February 26, 2016, 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 (EO) 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 for 
Determining Eligibility for Access to Classified Information (AG) effective within the DOD on 
September 1, 2006. 
 
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 On March 4, 2016, Applicant answered the SOR allegations and requested a 
hearing before an administrative judge from the Defense Office of Hearings and Appeals 
(DOHA). On May 9, 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. I scheduled a hearing for May 18, 2016. Applicant waived his right 
under ¶ E3.1.8 of the Directive to 15 days advance notice of his hearing.  
 
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, AE A 
being a duplicate of GE 3. The letter forwarding discovery to Applicant was marked as a 
hearing exhibit (HE 1) for the record. Applicant testified, as reflected in a transcript (Tr.) 
received on May 27, 2016. 
 
I held the record open after the hearing initially for one month for Applicant to 
supplement the record. On June 17, 2016, Applicant submitted three documents, which 
were incomplete. I extended the record for another two weeks for Applicant to submit 
complete documents. On June 20, 2016, Department Counsel expressed that the 
Government had no objection to the documents Applicant had submitted. No additional 
documents were received from Applicant by the new deadline, so the documents submitted 
on June 17, 2016, were marked and admitted without objection as AEs D-F. The record 
closed on July 1, 2016. 
 
Findings of Fact 
 
 The SOR alleges under Guideline F that, as of February 26, 2016, Applicant owed 
$7,190 in collection debt placed by phone companies (SOR ¶¶ 1.a, 1.g-1.j, and 1.m-1.n); 
$354 in collection debt placed by a cable/Internet provider (SOR ¶ 1.b); four charged-off 
debts totaling $11,012 (SOR ¶¶ 1.c-1.f); and three collection debts totaling $1,522 (SOR ¶¶ 
1.k, 1.l, and 1.o). When he responded to the SOR, Applicant admitted each of the debts as 
alleged. He stated with regard to each debt that he was responsible for not paying his bills 
on time, but that he was or would be in the process of paying off the debt as soon as 
possible.  
 
 After considering the pleadings, exhibits, and transcript, I make the following 
findings of fact. 
 
Applicant is a 35-year-old manager for a defense contractor. Applicant began his 
employment in March 2012, and he held an interim security clearance until it was 
withdrawn pending final adjudication of his security clearance eligibility. (GE 1; Tr. 24-25.) 
 
Applicant graduated from high school in June 1999. He served on active duty in the 
U.S. military starting in January 2000. He deployed for six months to the Persian Gulf. (Tr. 
34.) In February 2002, he was discharged under other than honorable conditions for 
financial issues and for unauthorized absence of 40 days. (Tr. 35-37.) After his discharge, 
he lived with his parents and worked in retail. From March 2005 to April 2008, he served in 
the National Guard as a unit supply specialist. (GE 1; Tr. 38.) He reenlisted in the U.S. 
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military in April 2008 and served until June 2009. (GE 1; Tr. 39-40.) Due to stress related to 
family issues at home, he received a hardship discharge. (Tr. 40-42.) 
 
Applicant was employed as a full-time security guard from June 2009 to April 2011.  
From September 2010 to May 2011, he also attended a community college. While working 
part time in security for a private high school, Applicant attended a private university from 
September 2011 to May 2012. In February 2013, he resigned from his part-time security 
guard position and enrolled in a public university. In the fall of 2013, he temporarily 
suspended his studies. He started working in retail part time in September 2013. In 
September 2014, he resumed his studies toward a bachelor’s degree while continuing to 
work in retail part time until he began his current employment. (GE 1; Tr. 30-31.) He did not 
re-enroll for the fall semester 2015 because he needed to focus on his job. (Tr. 31.) 
 
On April 23, 2015, Applicant completed and certified to the accuracy of a 
Questionnaire for National Security Positions (SF 86). He reported that he had previously 
undergone background investigations for DOD secret clearance eligibility in May 2000 and 
June 2008, but that he did not know when his clearances were granted. Concerning 
financial record inquiries, Applicant responded affirmatively to whether he was currently 
utilizing or seeking assistance for financial difficulties. He indicated that he was working 
with a debt counseling service to work his way out of debt, and that he hoped to pay off all 
his debts within the next few years. In response to inquiries about delinquencies involving 
routine accounts, Applicant listed one debt, a $7,500 car loan debt (SOR ¶ 1.d) that he was 
in the process of repaying. Under an additional comment section, Applicant acknowledged 
that he had been financially irresponsible in the past, but asserted that he has a plan to pay 
off his creditors. (GE 1.) 
 
Applicant had contacted a debt resolution company about negotiating settlements 
for him with his creditors. Believing that it would look better on his credit report if he paid 
his debts in full rather than settled for less than their balances, Applicant chose not to 
proceed with a debt repayment plan. (Tr. 57-58.) 
 
As of May 30, 2015, Applicant‘s credit report showed a collection balance of $7,969 
on the car loan in SOR ¶ 1.d. He had the vehicle voluntarily repossessed when he could 
not afford the payment. (Tr. 62.) Several other debts had been charged off or placed for 
collection:  a $1,948 cell phone debt from April 2014 (SOR ¶ 1.g); an unsecured payday 
loan for $1,844 in July 2010 (SOR ¶ 1.e); a payday loan for $1,261 (balance $1,049) in 
October 2009 (SOR ¶ 1.c); a $150 credit card debt from January 2014 (SOR ¶ 1.f); and 
wireless phone service collection debts of $1,652 from December 2012 (SOR ¶ 1.h), 
$1,460 from November 2013 (SOR ¶ 1.i), $1,322 from September 2013 (SOR ¶ 1.j), $348 
from November 2014 (SOR ¶ 1.a), $265 from August 2010 (SOR ¶ 1.m), and $195 from 
June 2014 (SOR ¶ 1.n). In addition, a $793 debt from February 2013 (SOR ¶ 1.k), and 
fitness membership debts of $624 from December 2013 (SOR ¶ 1.l) and of $105 from 
January 2015 (SOR ¶ 1.o) were in collection status. (GEs 2, 3.) On June 5, 2015, a 
cable/Internet provider placed a $354 debt from May 2014 for collection (SOR ¶ 1.b). (GE 
3; AEs A, B; Tr. 54-56, 62-72.) 
 
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Applicant had two outstanding federal student loans obtained in September 2011 for 
$7,516. Available credit reports show that his student loan account was 120 days past due 
as of May 2014. His student loans were deferred from June 2014 through December 2014. 
He resumed repaying his student loans in January 2015, but when he missed a payment in 
March 2015, his monthly repayment increased to $93. Available credit records show that 
he made his student loan payments on time for the most part from April 2015 through 
October 2015 (missed July 2015), when he obtained another deferment. (AEs A-C) In May 
2016, he resumed monthly payments of his student loans, but at an arranged reduced rate 
of $54 a month. (Tr. 22.) Applicant presented student loan payment records showing four 
payments of $86 and five payments of $93 but not when the payments were made. (AE F.) 
 
 On March 24, 2016, Applicant satisfied the credit card debt in SOR ¶ 1.f. (AE E.) He 
was making timely payments of $201 per month on a car loan obtained in July 2015 for 
$4,299. He was paying $25 per month on a credit card account opened in November 2015. 
The balance on the account was $202. He had made no progress toward resolving the 
delinquencies in SOR ¶¶ 1.a-1.e, 1.j, and 1.o, which were still on his credit report. (AE B-
C.) In addition to the $348 debt in SOR ¶ 1.a, the wireless phone company had placed a 
$1,144 debt for collection in November 2015 (not alleged). The payday loan account in 
SOR ¶ 1.e was reported as having been charged off and settled for less than its full 
balance. (AEs B, C.) Applicant testified that he was advised not to make any payments on 
either of his payday loans (SOR ¶¶ 1.c and 1.e) because they would be coming off his 
credit report in a few months. (Tr. 57, 64.) 
 
Applicant testified that he had been financially irresponsible in the past. (Tr. 17.) He 
lived with his mother until September 2015, when he moved into a one bedroom apartment 
at rent of $950 per month. (Tr. 28-29.) He pays his living expenses on time. (Tr. 73.) He 
was paying at least the monthly minimum of $25 on his one open credit card account. (Tr. 
46.) Applicant’s mother is unemployed and disabled. When he can, he gives her $50 to 
$100 toward some of her bills. (Tr. 29-30.) 
 
As of May 2016, Applicant had not been able to save or set aside funds to where he 
could commit to a monthly repayment under a debt consolidation. (Tr. 60-61.) Applicant 
had a total of $300 in checking and savings deposits as of his hearing. He has a 401(k) 
through work. (Tr. 45.) His net take-home pay is $500 a week from his defense contractor 
employment. (Tr. 42.) In May 2016, he began working a second job in nightclub security to 
pay off his delinquent debts. He earns $16 an hour in that job. (Tr. 23, 26-27.) He 
expressed a plan to pay off some smaller debts first, including satisfying the $195 (SOR ¶ 
1.n) and $256 (SOR ¶ 1.m) cellular phone collection debts in June 2016. (Tr. 22, 71-72.) 
Applicant authorized a credit charge of $44 on June 9, 2016, toward the debt in SOR ¶ 1.b. 
(AE D.) He testified and annotated on his credit reports that he arranged with the collection 
entities holding the wireless phone debts in SOR ¶¶ 1.h (balance $1,144) and 1.j (balance 
$1,322) to make $50 monthly payments starting May 26, 2016. (AEs B, C; Tr. 76-78.) He 
testified that he arranged to make $50 monthly payments toward the cell phone debts in 
SOR ¶¶ 1.g, 1.i, and 1.j, and that he was unaware of the debt in SOR ¶ 1.h. (Tr. 65, 67-
68.)The record does not contain any documentation confirming that agreement or any 
payments. Applicant had yet to reach out to his creditors about the debts in SOR ¶ 1.a, 1.c-
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1.e, and 1.k-1.o. (Tr. 55-72.) He lacked sufficient knowledge of the debts alleged in SOR 
¶¶ 1.k, 1.l, and 1.o to make repayment arrangements. (Tr. 66-72.) Trans Union was 
reporting the creditors as fitness clubs for the debts in SOR ¶¶ 1.l, and 1.o. (AE B.)  
Applicant expressed a determination to satisfy his past-due debts. (Tr. 74.) 
 
Applicant’s federal income tax refund of $2,300 for tax year 2015 was intercepted by 
the state and applied to a debt incurred between September 2013 and March 2015. He 
collected unemployment compensation when he was working part time in retail. He still 
owes the state another $10,000-$11,000. He has yet to establish a repayment plan for the 
debt. (Tr. 49-53, 79.) 
 
The private university Applicant attended from September 2011 to May 2012 is 
pursuing him for about $6,000 in claimed unpaid tuition and fees. Applicant intends to 
apply for retroactive GI benefits to cover any balance owed the university. (Tr. 80-81.) 
 
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 
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 
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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. 
 
 Available credit reports establish that Applicant owed approximately $19,570 in 
delinquent balances. Disqualifying conditions AG ¶ 19(a), “inability or unwillingness to 
satisfy debts,” and AG ¶ 19(c), “a history of not meeting financial obligations,” apply. 
 
 Applicant admitted that he also owes the state between $10,000 and $11,000 for 
unemployment compensation paid to him when he was working part time. That information 
was apparently unknown to the Government before the hearing, and it was not alleged. A 
debt not alleged cannot be considered for disqualifying purposes, but it is relevant to 
assessing Applicant’s financial judgment generally and issues in mitigation, such as 
whether he can be relied on to make consistent payments toward the delinquencies in the 
SOR.
1
 
 
 Mitigating condition 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,”  does 
not apply. The debts in SOR ¶¶ 1.a and 1.b first became delinquent in 2014 and were 
respectively placed for collection in October 2015 and June 2015. Only the credit card 
                                                 
1 
The DOHA Appeal Board has long held that the administrative judge may consider non-alleged conduct to 
assess an applicant’s credibility; to evaluate an applicant’s evidence of extenuation, mitigation, or changed 
circumstances; to consider whether an applicant has demonstrated successful rehabilitation; to decide 
whether a particular provision of the Adjudicative Guidelines is applicable; or to provide evidence for a whole-
person analysis under Section 6.3 of the Directive. See, e.g., ISCR Case No. 03-20327 (App. Bd. Oct. 26, 
2006); ISCR Case No. 09-07219 (App. Bd. Sep. 27, 2012). 
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delinquency (SOR ¶ 1.f) has been paid. The creditor in SOR ¶ 1.e is now reporting the 
account as “paid for less than full balance, Paid charge off.” Most of his delinquent debt 
was yet to be resolved as of the close of the evidentiary record. 
 
 Applicant did not provide significant evidence of circumstances beyond his control 
that would implicate 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. 
. 
Unemployment may well have been a factor at times, especially when he was employed in 
retail. However, his income was supplemented by unemployment compensation that he 
now has to repay. Applicant acknowledges that he did not handle his personal finances 
responsibly in the past. 
 
 Mitigating conditions 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,” have some applicability. Applicant paid the debt in 
SOR ¶ 1.f, although not before the SOR was issued. Applicant’s intention to satisfy his 
debts in full rather than settle them for lesser amounts is evidence of good faith towards his 
creditors and is a sign of financial responsibility. By starting a part-time job in May 2016 for 
the income needed to make payments on his delinquent debts, Applicant demonstrates a 
desire to resolve his debts. However, promises to pay debts are not a substitute for a 
record of timely payments. See, e.g., ISCR 14-04565 (App. Bd. Sep. 18, 2015); ISCR 14-
05359 (App. Bd. May 4, 2016). 
 
 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.
2
 However, while Applicant testified that 
                                                 
2 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., 
8 
 
he can afford to make the payments promised on the wireless phone debts, he also 
admitted that he was still struggling financially. He had not been able to accumulate any 
significant savings that he could put toward paying his delinquencies. With the income from 
his second job, Applicant’s financial situation may improve sufficiently in the future for him 
to pay down his debts. However, his debt to the state for unemployment compensation and 
the $6,000 in college tuition debt sought by the private university could hinder his ability to 
make progress toward stabilizing his finances. Except for SOR ¶ 1.f, he has not made 
enough progress toward repaying his delinquent accounts to find for him with respect to the 
allegations. Based on the evidence before me, I cannot yet conclude that the financial 
considerations concerns are fully mitigated. 
 
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 
process factors in AG ¶ 2(a).
3
 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. 
 
 The security clearance adjudication is not aimed at collecting an applicant’s 
personal debts. Rather, it involves an evaluation of an applicant’s judgment, reliability, and 
trustworthiness in light of the security guidelines in the Directive. See ISCR Case No. 09-
02160 (App. Bd. Jun. 21, 2010). Applicant appears to be living within his means in that he 
is not taking on new debt beyond what he can reasonably afford. However, his financial 
problems go well beyond the collection and charged-off balances in the SOR in that he 
owes the state between $10,000 and $11,000 for unemployment compensation that he 
improperly accepted when he was employed. He testified that he did not know that he was 
not entitled to that benefit at the time, but the debt is considerable in light of his current 
financial situation. He has yet to enter into any repayment arrangements with the state. Any 
tax refunds for 2016 are likely to be intercepted by the state and applied to that debt, so he 
cannot count on tax refunds to pay down his delinquencies. Applicant has taken some 
positive steps to become more financially responsible, but they are not enough to 
overcome the security concerns. 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 
                                                                                                                                                             
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. 
 
3 
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. 
 
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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 grant security clearance eligibility for Applicant. 
  
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:   AGAINST APPLICANT 
 
Subparagraphs 1.a-1.e:  Against Applicant 
Subparagraph 1.f:   For Applicant 
Subparagraphs 1.g-1.o:  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