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                           DEPARTMENT OF DEFENSE 
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 16-02555 
  ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Erin Thompson, Esq., Department Counsel 
For Applicant: Pro se 
 
 
__________ 
 
Decision 
__________ 
 
 
RIVERA, Juan J., Administrative Judge: 
 
Applicant’s financial problems were partially caused or aggravated by 
circumstances beyond her control, and partially because of her financial irresponsibility. 
Her evidence is insufficient to establish a track record of financial responsibility, or that 
her financial problems are resolved or are under control. Financial consideration 
security concerns are not mitigated. Clearance is denied.  
 
Statement of the Case 
 
Applicant submitted a security clearance application (SCA) on October 30, 2015. 
She was interviewed by a government investigator on February 12, 2016. After 
reviewing the information gathered during the background investigation, the Department 
of Defense (DOD) issued a statement of reasons (SOR) on December 3, 2016, alleging 
security concerns under Guideline F (financial considerations). Applicant answered the 
SOR on December 29, 2016, and requested a hearing before an administrative judge 
from the Defense Office of Hearings and Appeals (DOHA). 
 
DOHA assigned the case to me on June 13, 2017, and issued a notice of hearing 
on June 26, 2017, setting the hearing for July 13, 2017. At the hearing, the Government 
offered six exhibits (GE 1 through 6). Applicant testified on her own behalf and 
 
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submitted three exhibits (AE) 1 through 3). All exhibits were admitted as evidence 
without objections. DOHA received the hearing transcript (Tr.) on July 21, 2017. 
 
Findings of Fact 
 
Applicant admitted the SOR financial considerations allegations in ¶¶ 1.a through 
1.i, 1.k, 1.n, 1.o, and 1.s through 1.bb. She denied the allegations in SOR ¶¶ 1.j, 1.l, 
1.m, and 1.p through 1.r. Her admissions to the SOR allegations and at her hearing are 
incorporated herein as findings of fact. After a thorough review of the record evidence, I 
make the following additional findings of fact:  
 
Applicant is a 44-year-old employee of a federal contractor. After graduating from 
high school, she attended a technical college where she received an accounting 
certificate. She earned her bachelor’s degree in Business and Information Technology 
Management in 2005. Applicant started working on her master’s degree in October 
2007. As of her hearing date, she had two classes to take to complete her master’s 
degree in Finance.  
 
Applicant married in 2003, and she has two children, ages 21 and 15, that 
depend on her for support. She intends to file for divorce in the near future. Applicant’s 
husband is disabled. He was diagnosed with renal failure in 2013, and since then he 
has received disability benefits. She has been the sole provider for the family since 
2013. (Tr. 25) 
 
Applicant has been working for federal contractors on and off from April 2005 to 
present. She has held a secret clearance for the last 10 years. There is no evidence to 
show any security concerns during that period, except for financial problems. 
Applicant’s work history revealed numerous periods of unemployment. She was 
unemployed between January 2005 and April 2005; between November 2010 and 
March 2011; between July 2013 and September 2013; and between August 2016 and 
December 2016. She relocated with her two children to her current state of residency 
for a better paying job. Her current employer, a federal contractor, hired Applicant in 
January 2017. She testified that now that she has a better paying job, she is trying to 
get her household finances in order. (GE 1, Tr. 22-23, 30) 
 
Applicant disclosed on Section 22 (Police Record) of her 2015 SCA that she was 
convicted for issuing checks without sufficient funds in January 2009. She further 
disclosed on Section 26 (Financial Record) that she had financial problems, which 
included: a 2007-2008 Chapter 7 bankruptcy, and delinquent student loans, hospital 
bills, and several delinquent consumer accounts.  
 
In February 2016, a government investigator questioned Applicant about her 
financial problems. During the interview, Applicant acknowledged and agreed with most 
of the delinquent debts that are now listed in the SOR. Applicant explained to the 
investigator that she had accumulated numerous delinquent medical accounts for 
services provided to her and her family because some of the medical services were not 
 
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covered by her insurance. She was hoping to get on a payment plan with the creditors 
to pay her debts as soon as possible.  
 
Applicant told the investigator that she was trying to fix her credit scores to buy a 
home. She retained a credit counseling company to help her remove some of her 
delinquent accounts from her credit report. At the suggestion of the credit counseling 
company, she opened two personal loans to pay off accumulated delinquent accounts, 
and the loans became delinquent. She also opened several credit card accounts to 
reestablish her credit in 2015 that also became delinquent. She attempted to fix her 
credit, but “fell short of keeping herself financially in line.” (Tr. 40) In addition to the 
above debts, Applicant purchased furniture in 2015, and she and her spouse bought at 
least three vehicles, which they could not afford to pay. The vehicles were repossessed 
and they acquired the deficiency balances on the debts. 
 
The SOR alleges, Applicant’s 2008 bankruptcy discharge of close to $60,000 in 
unsecured debts, and that following the discharge, Applicant accumulated 27 delinquent 
or in collection accounts. They include 3 repossessed vehicles, 14 delinquent medical 
services accounts (ranging from $69 to $855), 3 utility delinquent accounts, and several 
loans and consumer accounts, all of which total approximately $30,000. The accounts 
alleged in the SOR are established by Applicant’s admissions and the credit reports in 
evidence. 
 
Three times during her testimony, Applicant acknowledged that she had financial 
problems because she had been financially irresponsible acquiring her debts, and that 
she had not been diligent paying her debts. (Tr. 13, 50, 62) She claimed her efforts to 
resolve her delinquent debts were precluded by her periods of unemployment, her 
spouse’s disability and unemployment, and she being the sole provider for a family of 
four. She claimed that she tried to establish payment plans with her creditors, but they 
were not willing to accept what Applicant could afford to pay. Applicant presented no 
documentary evidence to show her efforts to contact her creditors, settlement offers 
made, or any payments made towards the SOR debts. 
 
Applicant plans to pay most of her small delinquent debts by using excess funds 
from her current student loans. (Tr. 13, 19) Applicant owes between $125,000 and 
$150,000 in student loans. Although the student loans have been delinquent in the past, 
they are currently in deferment while she is in college. She noted that credit counseling 
agencies advised her to start by paying her small debts first. Then, she was to save 
money and attempt to negotiate settlements for less than what she owed. At hearing, 
Applicant claimed she had been paying off her small debts and making payment on 
other accounts. She submitted a spread sheet identifying 23 accounts that she claimed 
to have paid off, or was making payment on. (AE 3) I asked Applicant to submit 
documentary evidenced of her alleged payments and left the record open for her to 
submit the evidence. She failed to do so. 
 
Applicant denied the allegations in SOR ¶¶ 1.j, 1.l, 1.m, and 1.p through 1.r., 
because even though she was the holder of the medical insurance through her 
 
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employer, the medical services were incurred by her husband and she believes he 
should be responsible for his own medical debts. At hearing, Applicant stated she 
intended to add these medical debts on her pending payment plan. Concerning the 
largest delinquent debt alleged in the SOR ¶ 1.h ($7,200), Applicant explained that she 
and her spouse purchased a time share property in 2014-2015, and they were not able 
to afford the mortgage payments and it became delinquent. 
 
Applicant’s current salary is $65,000. Her take home pay is about $1,900 after 
taxes twice a month. Her rent payment is $980, and her car payment is $500. She has 
about $800 left over at the end of the month on discretionary income. She testified that 
her marital problems, depending on her medically disabled husband to provide financial 
assistance, and her periods of unemployment and underemployment prevented her 
from responsibly addressing her delinquent debts. Because of her lack of income, she 
did not have the financial resources to pay the family’s living expenses and her 
delinquent debts. 
 
Applicant submitted her SCA in October 2015, was interviewed about her 
financial problems in February 2016, and received the SOR in December 2016. As of 
her hearing in July 2017, she presented no documentary evidence of any contacts with 
creditors, payment of any of the SOR debts, disputes filed, or of the resolution of any of 
the delinquent accounts alleged in the SOR. 
 
Applicant testified that she understands the security concerns raised by her 
financial situation. She believes that she is completely trustworthy, as demonstrated by 
her 10 years of service working for federal contractors while possessing a secret 
clearance. Applicant would like to continue working for federal contractors but she 
needs her clearance eligibility to do so. She noted that she just moved with her children 
to her current state, and she needs her job to support her children. Applicant believes 
that her financial situation is currently improving as a result of her better-paying job. She 
noted that her earnings are meeting the family needs and anticipated starting to pay off 
her creditors in the near future. 
 
Policies 
 
The SOR was issued under Executive Order 10865, Safeguarding Classified 
Information Within Industry (February 20, 1960), as amended; DOD Directive 5220.6, 
Defense Industrial Personnel Security Clearance Review Program (Directive) (January 
2, 1992), as amended; and the Adjudicative Guidelines for Determining Eligibility for 
Access to Classified Information (AG), implemented by the DOD on September 1, 2006.  
 
While the case was pending a decision, the Director of National Intelligence 
implemented Security Executive Agent Directive (SEAD) 4, National Security 
Adjudicative Guidelines (AG), effective June 8, 2017, which replaced the 2006 AG, and 
are applicable to all adjudicative decisions issued on or after June 8, 2017. I decided 
this case under the current AGs implemented by SEAD 4. 
 
 
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Eligibility for access to classified information may be granted “only upon a finding 
that it is clearly consistent with the national interest to do so.” Exec. Or. 10865, 
Safeguarding Classified Information within Industry § 2 (Feb. 20, 1960), as amended. 
The U.S. Supreme Court has recognized the substantial discretion of the Executive 
Branch 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). 
 
The AG list disqualifying and mitigating conditions for evaluating a person’s 
suitability for access to classified information. Any one disqualifying or mitigating 
condition is not, by itself, conclusive. However, the AG should be followed where a case 
can be measured against them, as they represent policy guidance governing access to 
classified information. Each decision must reflect a fair, impartial, and commonsense 
consideration of the whole person and the factors listed in SEAD 4, App. A ¶¶ 2(d) and 
2(f). All available, reliable information about the person, past and present, favorable and 
unfavorable, must be considered.  
 
Security clearance decisions resolve whether it is clearly consistent with the 
national interest to grant or continue an applicant’s security clearance. The Government 
must prove, by substantial evidence, controverted facts alleged in the SOR. If it does, 
the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. The 
applicant bears the heavy burden of demonstrating that it is clearly consistent with the 
national interest to grant or continue his or her security clearance.  
 
Persons with access to classified information enter into a fiduciary relationship 
with the Government based on trust and confidence. Thus, the Government has a 
compelling interest in ensuring each applicant possesses the requisite judgment, 
reliability, and trustworthiness of those who must protect national interest as their own. 
The “clearly consistent with the national interest” standard compels resolution of any 
reasonable doubt about an applicant’s suitability for access in favor of the Government. 
“[S]ecurity clearance determinations should err, if they must, on the side of denials.” 
Egan, 484 U.S. at 531; SEAD 4, ¶ E(4); SEAD 4, App. A, ¶¶ 1(d) and 2(b). Clearance 
decisions are not a determination of the loyalty of the applicant concerned. They are 
merely an indication that the applicant has or has not met the strict guidelines the 
Government has established for issuing a clearance. 
 
Analysis 
 
Financial Considerations 
 
AG ¶ 18 articulates the security concern relating to financial problems:  
 
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 or sensitive information. Financial distress can also be 
caused or exacerbated by, and thus can be a possible indicator of, other 
issues of personnel security concern such as excessive gambling, mental 
health conditions, substance misuse, or alcohol abuse or dependence. An 
individual who is financially overextended is at greater risk of having to 
engage in illegal or otherwise questionable acts to generate funds . . . .  
 
Applicant’s history of failure to satisfy her debts and to meet her financial 
obligations is documented in the record. Applicant’s dischargeable financial obligations 
(about $60,000) were discharged in 2008, pursuant to a Chapter 7 bankruptcy filing. 
Between 2008 and 2016, Applicant accumulated the 27 delinquent accounts alleged in 
the SOR. They include 3 repossessed vehicles, 14 delinquent medical services 
accounts (ranging from $69 to $855), 3 utility delinquent accounts, and several loans 
and consumer accounts, all of which total approximately $30,000. The accounts alleged 
in the SOR are established by Applicant’s admissions and the credit reports in 
evidence.  
 
AG ¶ 19 provides two disqualifying conditions that could raise a security concern 
and may be disqualifying in this case: “(a) inability to satisfy debts” and “(c) a history of 
not meeting financial obligations.” The record established the above disqualifying 
conditions, requiring additional inquiry about the possible applicability of mitigating 
conditions.  
 
Five mitigating conditions under AG ¶ 20 are potentially applicable: 
 
(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;  
 
(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; 
  
(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; 
 
(d) the individual initiated a good-faith effort to repay overdue creditors or 
otherwise resolve debts;1 and  
                                            
1 The Appeal Board has previously explained what constitutes a “good faith” effort to repay 
overdue creditors or otherwise resolve debts:  
 
 
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(e) the individual has a reasonable basis to dispute the legitimacy of the 
past-due debt which is the cause of the problem and provides 
documented proof to substantiate the basis of the dispute or provides 
evidence of actions to resolve the issue. 
 
The Appeal Board concisely explained Applicant’s responsibility for proving the 
applicability of mitigating conditions as follows:  
 
Once a concern arises regarding an Applicant’s security clearance 
eligibility, there is a strong presumption against the grant or maintenance 
of a security clearance. See Dorfmont v. Brown, 913 F. 2d 1399, 1401 (9th 
Cir. 1990), cert. denied, 499 U.S. 905 (1991). After the Government 
presents evidence raising security concerns, the burden shifts to the 
applicant to rebut or mitigate those concerns. See Directive ¶ E3.1.15. The 
standard applicable in security clearance decisions is that articulated in 
Egan, supra. “Any doubt concerning personnel being considered for 
access to classified information will be resolved in favor of the national 
security.” Directive, Enclosure 2 ¶ 2(b).  
 
ISCR Case No. 10-04641 at 4 (App. Bd. Sep. 24, 2013).  
 
 None of the financial considerations mitigating conditions are fully raised by the 
facts in this case, and they do not mitigate the security concerns. Applicant’s delinquent 
debts are multiple, recurrent, and ongoing. Applicant established that her financial 
problems were partially caused or aggravated by circumstances beyond her control. 
However, she was irresponsible acquiring debts she could not afford, and in her efforts 
to resolve them.  
 
 Applicant failed to submit documentary evidence to corroborate her assertions of 
payments made on 23 accounts listed in her spreadsheet (AE 3) or of any efforts to 
resolve her debts. I note that some of her SOR debts are for relatively small amounts 
(less than $100). She presented no evidence of contacts with creditors, payment plans, 
disputes, or that she made any payments on any of the SOR debts. The evidence 
suggests that Applicant may have been overwhelmed by her circumstances and was 
                                                                                                                                            
In order to qualify for application of [the “good faith” mitigating condition], an applicant 
must present evidence showing either a good-faith effort to repay overdue creditors or 
some other good-faith action aimed at resolving the applicant’s debts. The Directive does 
not define the term “good-faith.” However, the Board has indicated that the concept of 
good-faith “requires a showing that a person acts in a way that shows reasonableness, 
prudence, honesty, and adherence to duty or obligation.” Accordingly, an applicant must 
do more than merely show that he or she relied on a legally available option (such as 
bankruptcy) in order to claim the benefit of [the “good faith” mitigating condition]. 
 
(internal citation and footnote omitted) ISCR Case No. 02-30304 at 3 (App. Bd. Apr. 20, 2004) (quoting 
ISCR Case No. 99-9020 at 5-6 (App. Bd. Jun. 4, 2001)).   
 
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unable to repay the debts. Nevertheless, Applicant failed to present any evidence 
showing that she attempted to be financially responsible under the circumstances. On 
the contrary, the evidence suggests she continued to acquire financial obligations 
knowing that she could not afford to repay them. 
 
 Applicant’s plan to pay some of her delinquent debts using her student loans 
surplus is not a viable plan to resolve her delinquent debts. She owes between 
$125,000 and $150,000 in student loans. She just would be transferring the debt from 
one creditor to another, and her student loans are not dischargeable through a 
bankruptcy proceeding. Applicant’s financial problems are not resolved or under control. 
 
Whole-Person Concept 
 
 I considered the potentially disqualifying and mitigating conditions in light of all 
the facts and circumstances surrounding this case, and under the whole-person 
concept. SEAD 4, App. A, ¶¶ 2(a) and 2(d). I have incorporated my comments under 
Guideline F in my whole-person analysis. Some of these factors were addressed under 
that guideline, but some warrant additional comment. 
 
Applicant, 44, failed to demonstrate financial responsibility. It is well settled that 
once a concern arises regarding an applicant’s security clearance eligibility, there is a 
strong presumption against granting a security clearance. Unmitigated financial 
considerations security concerns lead me to conclude that grant of a security clearance 
to Applicant is not warranted at this time. This decision should not be construed as a 
determination that Applicant cannot or will not attain the state of reform necessary for 
award of a security clearance in the future. With more effort towards documented 
resolution of her past-due debts, and a track record of behavior consistent with her 
obligations, she may well be able to demonstrate persuasive evidence of her security 
clearance worthiness.  
 
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.bb:    Against Applicant 
 
 
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Conclusion 
 
In light of all the circumstances presented by the record in this case, it is not 
clearly consistent with the national security interests of the United States to grant 
eligibility for a security clearance to Applicant. Clearance is denied. 
 
 
 
____________________________ 
JUAN J. RIVERA 
Administrative Judge