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                            DEPARTMENT OF DEFENSE                                                  
             DEFENSE OFFICE OF HEARINGS AND APPEALS                               
           
             
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 16-02328 
  ) 
 ) 
Applicant for Security Clearance ) 
 
Appearances 
 
For Government: Caroline Heintzelman, Esq., Department Counsel 
For Applicant: Pro se 
 
 
 
______________ 
  
Decision 
______________ 
 
 
WHITE, David M., Administrative Judge: 
 
 Applicant incurred some delinquent consumer debt due to unforeseen 
circumstances. He has since resolved all formerly delinquent accounts and restored his 
financial solvency. Resulting security concerns were mitigated. Based upon evaluation 
of the testimony, pleadings and exhibits, national security eligibility is granted. 
 
History of Case 
 
On January 26, 2016, Applicant submitted an Electronic Questionnaire for 
Investigations Processing (e-QIP). On August 21, 2016, the Department of Defense 
Consolidated Adjudications Facility (DoD CAF) issued Applicant a Statement of 
Reasons (SOR) alleging security concerns under Guideline F (Financial 
Considerations). The action was taken 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 
effective within the DoD after September 1, 2006. 
 
 
 
 
 
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 Applicant answered the SOR in writing on September 15, 2016 (Answer), and 
requested a hearing before an administrative judge. The Defense Office of Hearings 
and Appeals (DOHA) assigned the case to me on November 17, 2016. DOHA issued a 
Notice of Hearing on July 11, 2017, setting the hearing for July 26, 2017. On that date, 
Department Counsel offered Government Exhibits (GE) 1 through 7 into evidence. 
Applicant testified, and offered Exhibits (AE) A through E into evidence. All exhibits 
were admitted without objection. I granted requests by both parties to leave the record 
open until August 28, 2017, to permit submission of additional evidence. DOHA 
received the hearing transcript (Tr.) on August 2, 2017. Department Counsel and 
Applicant timely submitted additional evidence, which I marked GE 8, GE 9, and AE F, 
and admitted without objection from either party. The record closed as scheduled.  
 
The SOR in this case was issued under the adjudicative guidelines that came 
into effect within the DoD on September 1, 2006. Security Executive Agent Directive 
(SEAD) 4, National Security Adjudicative Guidelines, implemented new adjudicative 
guidelines that came into effect on June 8, 2017. All national security eligibility 
determinations issued on or after June 8, 2017, are to be decided using the new 
National Security Adjudicative Guidelines for Determining Eligibility for Access to 
Classified Information or Eligibility to Hold a Sensitive Position (AG), as promulgated in 
Appendix A of SEAD 4. I considered the previous adjudicative guidelines, as well as the 
new AG, in adjudicating Applicant’s national security eligibility. This decision is issued 
pursuant to, and cites, the new AG; but my decision would be the same under either set 
of guidelines. 
 
Findings of Fact 
 
 Applicant has been employed by a Federal contractor since June 2009, and 
applied for the periodic review and renewal of his security clearance in connection with 
that work. The SOR contained 19 allegations concerning Applicant’s formerly delinquent 
debts, which totaled $72,052. This sum included a past-due balance of $15,349 on his 
residential mortgage loan, and a $26,264 charged-off second mortgage account related 
to a former residence that he unsuccessfully tried to retain as an investment rental 
property. Applicant denied all of the allegations, and explained that his residential 
mortgage loan had been modified and brought current in late January 2016, and the 
remaining debts were included for discharge in his June 2016 Chapter 7 bankruptcy 
filing. (Answer.)   
 
 Applicant is 42 years old and married, with an adult stepson and a 17-year-old 
daughter. He was honorably discharged in January 1999 after a four-year enlistment in 
the Marine Corps, and again in August 2003 after being recalled to active duty in 
February 2002 in support of Operation Enduring Freedom. He has successfully held a 
security clearance since 1995 in connection with his military service and subsequent 
employment by several defense contractors. (Answer; GE 1; Tr. 7-9, 62-63.)  
 
 
 
 
 
 
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 Due to financial hardships caused by Applicant’s 2002 recall to active reserve 
service at pay grade E-4, but without the normal allowances to which he would be 
entitled on full active duty due to the 179-day limit on the recall orders, he and his wife 
filed for Chapter 7 bankruptcy relief in March 2004 and their $26,972 in unsecured debts 
were discharged in June 2004. This was a reasonable and responsible resolution of 
debts they became unable to pay through circumstances beyond their control while 
Applicant was serving in support of important national security priorities. These matters 
were not alleged as supporting present security concerns, and were completely 
unrelated to the more recent financial issues alleged in the SOR. (GE 3; GE 9; Tr. 44-
46.) 
 
 Applicant began employment with a major defense contractor in August 2003. In 
March 2005, he purchased a home in the state where he then worked using “80/20” 
financing with a first and second mortgage from the same lender. He and his family 
lived there until June 2009, when he moved to another state to accept a job with his 
current employer. In June 2010, he purchased his current home with a VA-guaranteed 
first mortgage loan. He successfully managed his former home as an investment/rental 
property until late 2013 or early 2014, when the responsible renters moved out and two 
subsequent families occupied the house for brief periods before moving out on short 
notice. Applicant unsuccessfully attempted to sell the property before exhausting his 
savings and defaulting on the loans, after making his last payments in June 2014. The 
lender foreclosed on the home in October 2015, satisfying the $113,520 balance due on 
the first mortgage, then charged off the $26,264 balance due on the second mortgage. 
In January 2016, after months of negotiation, the lender holding the mortgage on 
Applicant’s current home agreed to a fixed-rate loan modification reducing the interest 
rate and extending the term of the loan to provide affordable payments. Applicant has 
made all payments required under the terms of the modified agreement. He also 
brought his formerly delinquent Homeowner’s Association dues account into fully paid 
and current status. (GE 1; GE 4; AE B; AE C; AE D; Tr. 33-34, 46-53, 56-58.) 
 
 From 2006 through 2013, Applicant’s work with his current and last employer 
involved lengthy overseas deployment rotations in support of ongoing U.S. military 
operations. During those deployments, he earned significant wages as well as large per 
diem payments for being in a forward deployed status. His pay was significantly 
reduced during the inter-deployment periods when he returned home. His family’s 
spending patterns were within their earnings, and reasonable under the circumstances. 
Applicant’s scheduled deployment in early 2014 was postponed for a number of 
months, and the company’s deployment compensation scheme was reduced by his 
employer. He and his wife used their savings to meet expenses, reduced expenditures 
where possible, and began using credit to pay bills. The simultaneous problems renting 
their former home compounded these problems, and Applicant’s wife sought 
employment to supplement the family income. She was hired in January 2015, and they 
worked to repay their creditors until she became ill and needed surgery in June 2015. 
This caused her to lose her job, and she was unable to resume working until October 
2015, at which point they resumed paying down their debts. At the end of September 
2015, Applicant also took a reduction in his annual pay in order to accept a salaried 
 
 
 
 
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management position with his employer that no longer involved deployments. This 
helped to stabilize his family’s income flow and permit more dependable budget 
planning. (Answer; GE 1; AE E; Tr. 59-64.) 
 
 In May 2016, Applicant consulted an attorney for financial counseling and 
assistance with debt resolution. After analysis and consultations concerning available 
options, Applicant and the attorney agreed that filing for Chapter 7 bankruptcy relief was 
the best course of action. On June 27, 2016, Applicant and his wife completed their final 
required credit counseling program and their Chapter 7 petition was filed. All of 
Applicant’s outstanding debts, including the charged-off second mortgage balance from 
his former investment property and all other SOR-listed debts, were listed in the 
bankruptcy schedules. The bankruptcy court granted Applicant and his wife a discharge 
of their $115,968 in unsecured debts under Chapter 7 on October 6, 2016. (Answer; GE 
8; AE A; AE F; Tr. 57-61.) 
 
 Applicant received periodic pay raises in his original salaried management 
position, and on February 10, 2017, was promoted into a supervisory management 
position with a substantial pay raise. He presently earns about the same amount he did 
while regularly deploying. His bankruptcy schedules and budget documents 
demonstrate that he and his wife earn sufficient income to meet all ongoing living 
expenses in a timely manner, without needing to incur post-bankruptcy delinquent debt. 
Applicant’s supervisor wrote that Applicant is an outstanding and trusted employee who 
is loyal to the United States, and has regularly handled sensitive and classified 
information in support of deployed U.S. military forces without compromise or concern. 
(Answer; GE 8; AE E; AE F; Tr. 63-64, 78.) 
 
Policies 
 
 When evaluating an applicant’s national security eligibility, the administrative 
judge must consider the adjudicative guidelines. In addition to brief introductory 
explanations for each guideline, the adjudicative guidelines (AG) list potentially 
disqualifying conditions and mitigating conditions, which are to be used in evaluating an 
applicant’s national security eligibility. 
 
 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 AG ¶ 2 describing the adjudicative process. The administrative judge’s 
overarching adjudicative goal is a fair, impartial, and commonsense decision. The entire 
process is a conscientious scrutiny of applicable guidelines in the context 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 national security 
eligibility will be resolved in favor of the national security.” In reaching this decision, I 
 
 
 
 
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have drawn only those conclusions that are reasonable, logical, and based on the 
evidence contained in the record. I have not drawn inferences based on mere 
speculation or conjecture.  
 
 Directive ¶ E3.1.14 requires the Government to present evidence to establish 
controverted facts alleged in the SOR. Directive ¶ E3.1.15 says that an “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, and has the 
ultimate burden of persuasion as to obtaining a favorable clearance decision.”  
 
 A person applying for national security eligibility seeks to enter 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 national security eligibility. 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 or 
sensitive information.  
 
 Finally, as emphasized in Section 7 of Executive Order 10865, “[a]ny 
determination under this order adverse to an applicant shall be a determination in terms 
of the national interest and shall in no sense be a determination as to the loyalty of the 
applicant concerned.” See also Executive Order 12968, Section 3.1(b) (listing multiple 
prerequisites for access to classified or sensitive information.) 
 
Analysis 
 
Guideline F: Financial Considerations 
 
 The security concerns relating to the guideline for financial considerations are set 
out in AG ¶ 18, which reads in pertinent part:       
 
Failure 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 or sensitive information. Financial distress can also be 
caused or exacerbated by, and thus can be a possible indicator of, other 
issues of personal 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. 
 
 
 
 
 
 
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 AG ¶ 19 describes two conditions that could raise security concerns and may be 
disqualifying in this case:  
 
(a) inability to satisfy debts; and 
 
(c) a history of not meeting financial obligations. 
 
Applicant encountered financial difficulties starting in early 2014, due primarily to 
an unexpected delay in his scheduled deployment and his inability to find replacement 
renters for his former residence. He partially dealt with these issues through depletion of 
his savings and his wife’s short-term employment, but could not timely pay all of his 
debts and compiled excess credit. These facts establish prima facie support for the 
foregoing disqualifying conditions, and shift the burden to Applicant to mitigate the 
resulting security concerns. 
 
 The guideline includes five conditions in AG ¶ 20 that could mitigate the security 
concerns arising from Applicant’s alleged financial difficulties:  
 
(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, clear victimization by predatory lending practices, or identity 
theft), and the individual acted responsibly under the circumstances; 
 
(c) the individual has received or is receiving financial counseling for the 
problem from a legitimate and credible source, such as a non-profit credit 
counseling service, and there are clear indications that the problem is 
being resolved or is under control;  
 
(d) the individual initiated and is adhering to a good-faith effort to repay 
overdue creditors or otherwise resolve debts; and 
 
(g) the individual has made arrangements with the appropriate tax 
authority to file or pay the amount owed and is in compliance with those 
arrangements. 
 
In 2015 and early 2016, Applicant restructured his employment situation, 
negotiated a modification of the mortgage on his current home, and obtained financial 
counseling and legal advice from an attorney to address his past-due debts. Pursuant to 
the attorney’s advice, he successfully discharged his former debts through a Chapter 7 
bankruptcy. He has received steady raises and promotions, establishing a solvent and 
 
 
 
 
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responsible financial situation with sufficient income to avoid future delinquencies. He 
demonstrated complete mitigation of financial security concerns under these five 
mitigating conditions. 
 
Whole-Person Concept 
 
 Under the whole-person concept, the administrative judge must evaluate an 
applicant’s national security eligibility 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(d):  
 
(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. 
 
According to AG ¶ 2(c), the ultimate determination of whether to grant national security 
eligibility must be an overall commonsense judgment based upon careful consideration 
of the applicable guidelines and the whole-person concept.  
 
I considered the potentially disqualifying and mitigating conditions in light of all 
pertinent facts and circumstances surrounding this case. Applicant is a mature adult, 
who has demonstrated accountability for his decisions that led to substantial debt he 
was formerly unable to repay. He has now resolved his formerly delinquent debt. He 
demonstrated strong character and has devoted most of his adult life to successful 
support of national security objectives. Applicant provided persuasive evidence of 
rehabilitation and sufficient income security to ensure solvency in the future. The 
potential for pressure, exploitation, or duress is minimal. Overall, the evidence has 
eliminated the formerly legitimate doubt as to Applicant’s eligibility and suitability for a 
security clearance. He successfully met his burden to mitigate the security concerns 
arising under the guideline for financial considerations.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Formal Findings 
 
 Formal findings for or against Applicant on the allegations set forth in the SOR, 
as required by ¶ E3.1.25 of the Directive, are: 
 
  Paragraph 1, Guideline F:   FOR APPLICANT 
 
   Subparagraphs 1.a through 1.s:   For Applicant 
 
Conclusion 
 
 In light of all of the circumstances presented by the record in this case, it is 
clearly consistent with the interests of national security to grant Applicant eligibility for a 
security clearance. National security eligibility for access to classified information is 
granted. 
                                        
         
 
DAVID M. WHITE 
Administrative Judge