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                           DEPARTMENT OF DEFENSE 
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
 
In the matter of: ) 
 ) 
) 
 [NAME REDACTED] )       ISCR Case No. 17-00778 
  ) 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Robert Blazewick, Esq., Department Counsel 
For Applicant: Pro se 
 
 
 
 
______________ 
 
Decision 
______________ 
 
 
MALONE, Matthew E., Administrative Judge:  
 
 A fair and commonsense assessment of the record evidence as a whole shows 
the security concerns raised by Applicant’s financial problems and a felony theft 
conviction are mitigated. His request for a security clearance is granted. 
 
Statement of the Case 
  
 On October 7, 2015, Applicant submitted an Electronic Questionnaire for 
Investigations Processing (e-QIP) to obtain eligibility for a security clearance required for 
his employment with a defense contractor. Based on the results of the ensuing 
background investigation, Department of Defense (DOD) adjudicators could not 
 
 
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determine that it is clearly consistent with the interests of national security for Applicant 
to have a security clearance.1 
 
 On May 15, 2017, DOD issued a Statement of Reasons (SOR) alleging facts that 
raise security concerns under the adjudicative guideline for financial considerations 
(Guideline F).2 Applicant timely responded to the SOR (Answer) and requested a hearing.  
 
 I received the case on January 24, 2018, and convened the requested hearing on 
March 7, 2018. The parties appeared as scheduled. Department Counsel proffered 
Government Exhibits (GX) 1 - 5. Applicant and one witness testified. Applicant also 
proffered Applicant Exhibits (AX) A – G. All exhibits were admitted without objection. I 
received a transcript of the hearing (Tr.) on March 14, 2018.  
 
Findings of Fact 
 
 Under Guideline F, the Government alleged Applicant owed $10,824 for four 
delinquent or past-due debts (SOR 1.a – 1.d). About 80 percent of that total was for an 
unpaid income tax debt of $8,057 (SOR 1.d). It was further alleged that in February 2011, 
Applicant was charged with three counts of felony fraudulent use of a credit card; that he 
was later convicted of felony theft of property, placed on probation for three years, and 
ordered to pay $11,000 in restitution. (SOR 1.e). 
 
 In response, Applicant denied SOR 1.a and 1.d, with explanations and supporting 
documents. He admitted, with explanations and supporting documents, the other three 
allegations. (Answer)  In addition to the facts established by Applicant’s admissions, I 
make the following additional findings of fact. 
 
 Applicant is 35 years old and has worked in the information technology (IT) field 
since at least 2003. He was hired by his current employer, a defense contractor, in August 
2015, for a position that requires eligibility for a security clearance. Before being hired for 
his current job, Applicant was self-employed as a software developer for about four years. 
Applicant and his wife have been married since October 2009. They have two children, 
ages 6 and 3. This is Applicant’s first application for a security clearance. When he 
submitted his e-QIP, he disclosed most of the adverse information that is the subject of 
the SOR. (GX 1; Tr. 6- 7) 
 
 From January 2003 until April 2010, Applicant worked as a network engineer for 
an insurance company. His duties included purchasing IT equipment and supplies for 
support of the insurance company. He also traveled for work assignments. About three 
                                                 
1 Required by Executive Order 10865, as amended, and by DOD Directive 5220.6 (Directive), as amended. 
 
2 At the time they issued the SOR, DOD adjudicators applied the adjudicative guidelines implemented by 
the Department of Defense on September 1, 2006. On December 10, 2016, the Director of National 
Intelligence issued a new version of the adjudicative guidelines, to be effective for all adjudications on or 
after June 8, 2017. My decision in this case would have been the same under either version. 
 
 
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or four years before his employment with the insurance company ended, Applicant was 
issued a credit card to use when paying for work-related procurement and travel 
expenses. Until sometime in 2009, Applicant would submit receipts for those charges to 
an office administrator. That person would then process the information and Applicant 
would be reimbursed. Applicant’s supervisor, also a family friend, told Applicant to charge 
for gas and mileage in addition to equipment costs and other travel expenses (e.g., hotels, 
rental cars, airfare, etc.), something that Applicant now knows was not allowed. For about 
a year before he left the company, Applicant’s use of the company credit card expanded 
to include gas and other expenses not directly related to his work; in other words, personal 
expenses. (Answer; GX 3; Tr. 31 – 32) 
 
 In 2009, Applicant’s employer was purchased by another company and many of 
the procedures related to Applicant’s claims for expenses either changed or received 
more stringent scrutiny than before. Additionally, the office administrator to whom 
Applicant submitted his claims for payment left the company. In March or April 2010, 
Applicant was advised that his claims for expenses constituted misuse of the credit card. 
Additionally, it was determined that he had not properly documented his work-related 
purchases of IT equipment. The results of an internal investigation resulted in a one-week 
suspension without pay. Not long thereafter, Applicant resigned. He did not receive any 
written documentation, such as a letter of reprimand, nor was he verbally counseled about 
the investigation. (Answer; GX 3; Tr. 32 – 34, 43 – 50) 
 
 About a year after he left the insurance company, Applicant was advised that the 
results of the investigation had been forwarded to law enforcement for prosecution as a 
crime of theft. He was subsequently charged with felony fraudulent use of a credit card. 
After a warrant for his arrest was issued, he turned himself in to the local sheriff’s office 
and was released on bond. Pending trial, Applicant thought his attorney had negotiated 
a plea bargain whereby he would plead guilty to a lesser included misdemeanor charge. 
However, representatives of the insurance company urged prosecutors to press felony 
charges. In 2012, Applicant pleaded guilty to a reduced charge of felony theft of property. 
Rather than contest the charge, Applicant wanted to resolve the matter because of the 
expense involved in doing so, and more important, because his wife was pregnant with 
their first child and he could not risk incarceration. (Answer; GX 1 – 3; Tr. 32 – 34) 
 
 Applicant was placed on three years of probation, which he successfully completed 
in 2015. He also was ordered to make restitution of $11,000, the amount the insurance 
company claimed it lost through Applicant’s actions. Applicant took money from his 
retirement savings and made restitution in 2012. Applicant acknowledged that he misused 
the card in some ways, but not to the extent for which he was charged. Nonetheless, he 
has accepted full responsibility (Answer; GX 1; GX 3; Tr. 49 – 50) 
 
 As addressed in SOR 1.d, Applicant incurred a debt for unpaid federal income 
taxes. The SOR alleged the debt pertained to his 2013 federal income taxes; however, in 
his response to DOD adjudicators’ interrogatories, Applicant provided information 
showing the debt actually arose from his 2014 income taxes. Applicant explained, both in 
 
 
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a personal subject interview (PSI) during his background investigation, in response to 
interrogatories, in response to the SOR, and at hearing, that the debt arose when he lost 
income as a self-employed IT consultant in 2014. The contract from which he earned 
most of his income between 2011 and 2015 began to shrink in scope and eventually 
ended a few months before he was hired by his current employer. On advice of his 
accountant, Applicant timely filed an extension of his 2014 taxes in early 2015; however, 
when his taxes came due, he did not have sufficient income to pay either his state or 
federal taxes. As to the state taxes, they were resolved after Applicant was served with a 
garnishment and he made a lump sum payment in March 2017. In 2016, Applicant 
established a monthly repayment plan with the IRS whereby he has been making regular 
monthly payments of $103. In conjunction with annual diversions of any tax refunds to 
which Applicant is entitled, the $8,057 debt alleged at SOR 1.d had been reduced, as of 
July 2017, to about $6,800. As of the hearing in this matter, Applicant established that he 
continues to make those monthly payments as required. Applicant has never failed to file 
his state or federal income tax returns as required. (Answer; GX 1 – 3; AX E; Tr. 30 – 31, 
51 – 53) 
 
 Applicant’s loss of income in 2014 also resulted in other delinquent debts, all of 
which have been paid or otherwise resolved. The debt at SOR 1.a was for an unpaid 
credit card Applicant thought had been paid in 2013. After receiving the SOR, Applicant 
researched the debt and found it was still outstanding, so he paid it. The debt at SOR 1.b 
arose from the creditor’s claim that he did not return cable television equipment when he 
cancelled their service. Applicant was unaware he still owed anything for that account 
until he received the SOR. In response, Applicant established that he resolved the debt. 
The debt alleged at SOR 1.c was for an unpaid medical copayment. Applicant has paid 
that debt. (Answer; GX 1; GX 3; GX 4; AX B – D; Tr. 28 – 30) 
 
 Applicant and his wife recently purchased a house, and their monthly finances 
reflect a positive net cash flow. They live frugally, they have incurred no new unpaid debts, 
and they manage their money according to principals learned from a nationally-known 
financial advisor. Applicant’s supervisor and a co-worker, who have known Applicant for 
the past two years, testified that he is reliable and trustworthy in all matters at work. They 
are both aware of the Government’s concerns in this case, but expressed no reservations 
about allowing Applicant to occupy a position of trust. The same sentiments were 
expressed in written recommendations submitted on his behalf. (AX A; Tr. 34 – 42, 59 – 
65)  
 
Policies 
 
 Each security clearance decision must be a fair, impartial, and commonsense 
determination based on examination of all available relevant and material information,3 
and consideration of the pertinent criteria and adjudication policy in the adjudicative 
                                                 
3 See Directive. 6.3. 
 
 
 
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guidelines (AG). Decisions must also reflect consideration of the factors listed in ¶ 2(d) of 
the guidelines. Commonly referred to as the “whole-person” concept, those factors are:  
 
  (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. 
 
 The presence or absence of a disqualifying or mitigating condition is not 
determinative of a conclusion for or against an applicant. However, specific applicable 
guidelines should be followed whenever a case can be measured against them as they 
represent policy guidance governing the grant or denial of access to classified 
information. A security clearance decision is intended only to resolve whether it is clearly 
consistent with the national interest4 for an applicant to either receive or continue to have 
access to classified information.  
 
 The Government bears the initial burden of producing admissible information on 
which it based the preliminary decision to deny or revoke a security clearance for an 
applicant. Additionally, the Government must be able to prove controverted facts alleged 
in the SOR. If the Government meets its burden, it then falls to the applicant to refute, 
extenuate or mitigate the Government’s case. Because no one has a “right” to a security 
clearance, an applicant bears a heavy burden of persuasion.5 A person who has access 
to classified information enters 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 one who will 
protect the national interests as his or her 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.6 
 
Analysis 
 
Financial Considerations  
 
 The Government established that Applicant has experienced financial difficulties 
since about 2014, that he incurred unpaid personal and tax debts as a result of those 
difficulties, and that he was convicted of a felony offense arising from misuse of a 
                                                 
4 See Department of the Navy v. Egan, 484 U.S. 518 (1988). 
 
5 See Egan, 484 U.S. at 528, 531. 
 
6 See Egan; AG ¶ 2(b). 
 
 
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company credit card. That information reasonably raises a security concern about 
Applicant’s finances that is articulated at AG ¶ 18: 
 
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 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. 
Affluence that cannot be explained by known sources of income is also a 
security concern insofar as it may result from criminal activity, including 
espionage. 
 
 More specifically, available information requires application of the following 
AG ¶ 19 disqualifying conditions: 
 
(a) inability to satisfy debts; 
 
(c) a history of not meeting financial obligations; and 
 
(d) deceptive or illegal financial practices such as embezzlement, employee 
theft, check fraud, income tax evasion, expense account fraud, filing 
deceptive loan statements, and other intentional financial breaches of trust.  
 
 By contrast, Applicant resolved the debts at SOR 1.a – 1.c. He also acted promptly 
to resolve his state and federal tax debts, which arose from the loss of his income as a 
self-employed IT consultant. While the federal tax debt is still not paid off, Applicant has 
been making consistent payments for two years pursuant to an agreement with the IRS. 
 
As to Applicant’s felony theft conviction, that event occurred eight years ago. 
Applicant completed all terms of his sentence. Of note is that he promptly made restitution 
of the entire amount at issue, choosing to deplete his retirement savings rather than make 
other arrangements that may have delayed full restitution for the corporate victim. Further, 
those circumstances appear to constitute an isolated event that, in view of the more 
current positive information about Applicant’s character, is unlikely to recur. All of the 
foregoing supports application of the following pertinent AG ¶ 20 mitigating conditions: 
 
(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; 
 
 
 
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(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, a death, divorce or separation, clear 
victimization by predatory lending practices, or identity theft), 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; and 
  
(d) the individual initiated and is adhering to a good-faith effort to repay 
overdue creditors or otherwise resolve debts. 
 
I also have evaluated this record in the context of the whole-person factors listed 
in AG ¶ 2(d). Of note is the positive information about Applicant’s trustworthiness that was 
provided by associates from his current employment. Applicant was fully candid and 
forthcoming about his financial problems and his criminal conviction. I am particularly 
mindful of the financial nature of his criminal conduct. However, his misuse of a credit 
card was not the result of any financial stress. Applicant was not motivated by any 
pressing financial problems at the time. He accepted responsibility for misusing the card, 
even though he knew he should not have done so. His debts arose later, when he started 
to lose income as an independent consultant. It reflects well on Applicant’s suitability for 
clearance that he timely addressed his tax debts, that he resolved all of the other debts 
documented in the Government’s information, and that his current finances are stable 
and managed responsibly. A fair and commonsense assessment of the record evidence 
as a whole shows his conviction for theft was an aberration and that the security concerns 
about his finances are mitigated.  
 
Formal Findings 
 
 Formal findings 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:  FOR APPLICANT 
 
 Subparagraphs 1.a - 1.e:  For Applicant 
  
 
 
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Conclusion 
 
 In light of all of the foregoing, it is clearly consistent with the interests of national 
security for Applicant to have access to classified information. Applicant’s request for a 
security clearance is granted. 
 
 
                                        
MATTHEW E. MALONE 
Administrative Judge