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                           DEPARTMENT OF DEFENSE 
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 16-00420 
  )   
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Jeff Nagel, Esq., Department Counsel 
For Applicant: Pro se 
 
 
May 22, 2017 
______________ 
 
Decision 
______________ 
 
 
MOGUL, Martin H., Administrative Judge: 
 
Statement of the Case 
 
On June 3, 2016, the Department of Defense (DoD) issued a Statement of 
Reasons (SOR) detailing the security concerns under Guideline F for Applicant. The 
action was taken under Executive Order 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; and the adjudicative guidelines (AG), effective within the 
Department of Defense for SORs issued after September 1, 2006.  
  
 On June 22, 2016, Applicant replied to the SOR (RSOR) in writing, and he 
requested a hearing before an Administrative Judge (AJ). The case was assigned to 
this AJ on August 17, 2016. The Defense Office of Hearings and Appeals (DOHA) 
issued a notice of hearing on August 29, 2016, and the hearing was convened as 
scheduled on September 27, 2016.  
 
 
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 At the hearing, the Government offered Exhibits 1 through 9, which were 
received without objection. Applicant testified on his own behalf and submitted Exhibits 
A and B, which were also admitted without objection. The record was kept open until 
October 7, 2016, to allow Applicant to submit additional evidence. The documents that 
were timely received have been identified and entered into evidence without objection 
as Exhibits C through O. DOHA received the transcript of the hearing (Tr) on October 5, 
2016. Based upon a review of the pleadings, exhibits, and the testimony of Applicant, 
eligibility for access to classified information is denied.  
  
Findings of Fact 
 
 After a complete and thorough review of the evidence in the record, including 
Applicant's RSOR, the admitted documents, and the testimony of Applicant, and upon 
due consideration of that evidence, I make the following findings of fact:  
 
 Applicant is 59 years old.  He is not married, and he has no children. Applicant 
received a Bachelor of Science degree in 1980 in Electrical Engineering. Applicant is 
employed as a Senior Software Engineer, and he seeks a DoD security clearance in 
connection with his employment in the defense sector. 
 
Guideline F, Financial Considerations  
 
 The SOR lists nine allegations (1.a. through 1.i.) regarding financial difficulties, 
specifically overdue debts, under Adjudicative Guideline F. All of the SOR allegations 
will be discussed below in the order they were listed on the SOR: 
 
 1.a. This overdue debt is cited in the SOR for a collection account in the amount 
of $4,543. Applicant wrote in his RSOR that he previously had two credit cards with this 
creditor, and he was not certain to which credit card this allegation referred. However, 
he contended that he had settled both credit card debts.  
 
At the hearing, Applicant testified that because of his financial difficulties with his 
properties, which will be discussed below, he used credit cards to pay for his regular 
expenses. To help him resolve his delinquent debts, he engaged the services of an 
attorney, paying him $700 a month. At some point in time after less than two years, 
Applicant became aware that the attorney was no longer trying to resolve his debts, and 
so Applicant terminated his agreement with the lawyer. However, Applicant represented 
that the lawyer had resolved some of his debts. While Applicant believed that the 
attorney had settled this debt for $ .10 on the dollar, he testified that a creditor for this 
debt subsequently filed a lawsuit against Applicant, which was dismissed without 
prejudice. (Tr at 30-43.)  
 
As reviewed above, Applicant submitted a number of documents after the 
hearing, which have been entered into evidence. Exhibit J includes a letter from 
Applicant, in which he reiterates that he had two debts to this creditor, and he settled 
one of the debts, but not the other one. An additional letter on behalf of one of the 
 
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creditor shows one of the debts was paid. I find that one of the debts to this creditor has 
been settled but one is still outstanding. 
 
 1.b. This overdue debt is cited in the SOR for a collection account in the amount 
of $2,610. Applicant wrote in his RSOR that he had settled this credit card debt in 2009.  
 
At the hearing, Applicant testified that he believed this debt was also settled by 
his attorney, but ultimately he settled it himself on June 22, 2016. (Tr at 42-44.) 
Applicant submitted a post-hearing letter from the creditor establishing that this debt has 
been settled. (Exhibits C and D.), 
   
 1.c. This overdue debt is cited in the SOR for mortgage account A that went into 
foreclosure in 2009. Applicant admitted this allegation in his RSOR and wrote that this 
was a mortgage on a rental property that was foreclosed.  
 
Applicant testified that allegations 1.c. through 1.f. were for debts that he incurred 
when he purchased rental property in approximately 2004. He purchased five properties 
in total, and he still owns one of them.  As the market underwent its downturn in 2008, 
he lost money on each of the four properties. He was unable to renegotiate a payment 
plan with the creditors so he ultimately just stopped making payments on the four 
properties, and they eventually all went into foreclosure. (Tr at 46-54.) Exhibit J includes 
a Form 1099-A that Applicant received in 2010 for a debt in the amount of $234,000. 
While Applicant did receive Form 1099-As for all of the properties that were foreclosed, 
as reviewed below, it is not clear if they have been resolved through Applicant's taxes 
requirements. The purchase and ultimate foreclosure of each property must also be 
considered adversely as to Applicant's overall financial acumen and responsibility.  
 
1.d. This overdue debt is cited in the SOR for mortgage account B that went into 
foreclosure in 2009. Applicant admitted this allegation in his RSOR and wrote that this 
was a mortgage on a rental property that was foreclosed. Exhibit F includes a Form 
1099-A that Applicant received in 2010 for this debt in the amount of $270,791.   
            
 1.e. This overdue debt is cited in the SOR for mortgage account C that went into 
foreclosure in 2009. Applicant admitted this allegation in his RSOR and wrote that this 
was a mortgage on a rental property that was foreclosed. Exhibit E includes a Form 
1099-A that Applicant received in 2010 for this debt in the amount of $173,826.   
 
 1.f. This overdue debt is cited in the SOR for mortgage account D that went into 
foreclosure in 2009. Applicant admitted this allegation in his RSOR and wrote that this 
was a mortgage on a rental property that was foreclosed. Exhibit G includes a Form 
1099-A that Applicant received in 2010 for this debt in the amount of $192,925.   
 
 1.g. This overdue debt is cited in the SOR for a collection account in the amount 
of $27,477. Applicant wrote in his RSOR that he had settled this credit card debt, and 
the legal action that was filed against him by this creditor was dismissed.   
 
 
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Applicant testified that he believed this debt was also settled by his attorney, but 
eventually a creditor for this debt filed a lawsuit against Applicant. The lawsuit was 
dismissed without prejudice. (Tr at 54-56.) In a post-hearing letter, Applicant wrote that 
he had a payment plan in 2011, and he made 12 payments of $223, but he stopped 
after that because he could not continue to make payments. He added that he has 
renewed a payment plan with this creditor. Exhibits K and L establish that this debt is 
being reduced, but there is a significant amount left to be paid, and less than a positive 
payment history.   
 
 1.h. This overdue debt is cited in the SOR for a collection account in the amount 
of $18,124. Applicant wrote in his RSOR that he had settled this credit card debt, but he 
did not have documentation to establish that fact. He indicated that he was in contact 
with the creditor, and he hoped to have the documentation by the time of the hearing.  
 
 Applicant testified that while he thought he had settled this debt, at the time of the 
hearing, he still had not obtained any documentation to establish that he had resolved 
this debt. (Tr at 56-58.) In a post-hearing letter, Applicant wrote that the attorney that he 
had hired to resolve his debts had sent one payment of $1,960 to this creditor in 
December 2010, but that did not settle this debt. A letter from this creditor, establishes 
that a settlement plan was set with this creditor for the settlement amount of $15,258, 
with Applicant making one payment of $2,000 in October 2016, and 37 additional 
monthly payments of $368.29. (Exhibit N.) There is no evidence that any of the 
payments have yet been made. 
 
 1.i. This overdue debt is cited in the SOR for a collection account in the amount 
of $519. Applicant wrote in his RSOR that he was not aware of this debt, and the 
creditor also informed him that they could not locate his name on a debt. He wrote that 
he planned to dispute this debt.  
 
 Applicant testified that he contacted the creditor, but they did not have any 
documentation showing the amount owed on this debt, but he never received anything 
showing this debt had been resolved. (Tr at 58-60.) While this debt was not listed on the 
latest credit report it was listed on the earlier reports offered into evidence by the 
Government. In a post-hearing letter, Applicant reiterated that he had contacted this 
creditor, who indicated to him that they could find no history of this debt. (Exhibit O.) I 
find that no evidence was introduced to establish that this debt has been resolved or 
reduced, although it appears that Applicant has been making a good faith effort to 
resolve this debt.  
 
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. 
 
 
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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 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 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 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. 
 
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 
 
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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 concern 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. 
 
 The record is clear that Applicant has significant debt incurred over many years 
to different companies, some of which has remained unresolved. The evidence is 
sufficient to raise the above disqualifying conditions. 
 
 Two Financial Considerations Mitigating Conditions under AG ¶ 20 are potentially 
applicable:  
 
(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; 
and 
 
(d) the individual initiated a good-faith effort to repay overdue creditors or 
otherwise resolve debts. 
 
 Applicant’s financial difficulties occurred in large part because of the downturn in 
the economy, which ultimately led to four of his investment properties being foreclosed, 
and Applicant trying to pay many of his other bills with credit cards.  When Applicant 
was faced with his debts, he first took the responsible position of engaging the services 
of an attorney to attempt to resolve his delinquent indebtedness. However, as Applicant 
became aware that the attorney had not fulfilled his obligation, he failed to make a good 
faith effort to resolve the debts himself. While some of the debts have now been 
satisfied, some of the significant debts have not yet been resolved or reduced, and it is 
not clear that his current financial status is stable and secure. Until Applicant has shown 
a more, consistent history of meeting his obligation to repay all of his debts, the concern 
has not yet been mitigated, and neither mitigating factor can be applied in this case.  
 
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):  
 
 
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(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. There are significant unresolved 
concerns about Applicant’s finances and judgment.  
 
Overall, the record evidence leaves me with questions and doubts as to 
Applicant’s eligibility and suitability for a security clearance. For all these reasons, I 
conclude Applicant has not mitigated the Financial Considerations security concerns.  
 
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 
 
  Subparagraph 1.a.:    Against Applicant 
  Subparagraph 1.b.:    For Applicant 
  Subparagraphs 1.c.-1.h.:   Against Applicant 
  Subparagraph 1.i.:    For 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 grant Applicant eligibility for a security 
clearance. Eligibility for access to classified information is denied. 
 
 
 
 
Martin H. Mogul 
Administrative Judge