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                            DEPARTMENT OF DEFENSE                                                  
             DEFENSE OFFICE OF HEARINGS AND APPEALS                               
           
             
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 17-03971 
  ) 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Allison Marie, Esq., Department Counsel 
For Applicant: Pro se 
 
 
 
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Decision 
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GOLDSTEIN, Jennifer, Administrative Judge: 
 
 Applicant filed a Chapter 7 Bankruptcy petition in August 2017, which was 
discharged in November 2017. Additionally, she had two delinquent mortgage accounts 
that she abandoned. Resulting security concerns were not mitigated. Based upon a 
review of the pleadings, testimony, and exhibits, national security eligibility is denied. 
 
History of Case 
 
On April 13, 2017, Applicant submitted an Electronic Questionnaire for 
Investigations Processing (e-QIP). On December 15, 2017, 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 Security Executive Agent Directive (SEAD) 4, National 
Security Adjudicative Guidelines, implemented June 8, 2017. 
 
 
 
 
 
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 Applicant answered the SOR in writing on January 3, 2018 (Answer), and 
requested a hearing before an administrative judge. The Defense Office of Hearings 
and Appeals (DOHA) assigned the case to another administrative judge on July 19, 
2018. DOHA issued a Notice of Hearing on July 25, 2018, setting the hearing for August 
16, 2018, per Applicant’s request. On July 26, 2018, the case was reassigned to me. 
The hearing proceeded as scheduled. Department Counsel offered Government 
Exhibits (GE) 1 through 9 into evidence, without objection, and Hearing Exhibits I and II. 
Applicant offered Applicant Exhibits (AE) A through D, without objection. Applicant 
testified. DOHA received the hearing transcript (Tr.) on August 23, 2018. The record 
was left open for the submission of additional documentation. On September 5, 2018, 
Applicant submitted additional exhibits, which I marked as (AE) E through P. 
Department Counsel had no objections to AE E through P, and they were admitted. The 
record then closed. 
 
Findings of Fact 
 
 Applicant is 64 years old. She is single and has no children. She is a high school 
graduate and has attended some college. She is employed as a security officer for a 
government contractor. She has worked as a security officer since 2003. She was 
granted a security clearance in 2007. She admitted filing a Chapter 7 Bankruptcy 
petition in August 2017, which was discharged in November 2017, but denied the 
mortgage accounts alleged in SOR ¶¶ 1.b and 1.c. (Answer; GE 1; GE 2; Tr. 33-37.) 
Applicant’s admission is incorporated in the findings below.  
 
 In December 2005, Applicant purchased a house (Home 1) for $367,000. She 
purchased it jointly with her cousin, and they were co-owners on the title. Her cousin did 
not have good credit and promised to refinance the mortgage in the cousin’s name 
solely when she could obtain a loan. That did not occur. Instead, the purchase loan was 
refinanced in 2006, through two loans: a primary mortgage and a secondary mortgage. 
Applicant was listed as the primary borrower on both of the mortgages and her cousin 
was the co-signer. Applicant’s first mortgage was financed by a Bank (Loan 1), and that 
mortgage called for interest-only payments for the first ten years of the loan. That loan is 
the subject of SOR ¶ 1.b, which was alleged to be delinquent in the amount of $26,426 
with a balance of $320,704. She further financed the home with a second mortgage for 
approximately $58,800, with a second creditor (Loan 2), which is the subject of SOR ¶ 
1.c. It is alleged to be delinquent in the amount of $59,318. Applicant lived in the house 
with her cousin and her cousin’s daughter continuously beginning in 2005. She 
understood that she would be responsible for the loans should there be a problem. (GE 
2; GE 3; Tr. 29-49.) 
 
 In 2012, she sought help from a home retention workshop and communicated via 
email with an “independent foreclosure review” enterprise. (AE J.) It is unclear from the 
record if she was experiencing financial difficulties at that time. However, she was 
unhappy with her living situation and wanted to move out. She testified that in 2014 she 
gave her cousin two-years notice that she would move out and would no longer pay the 
mortgages beginning in 2016. While her cousin was receiving social security disability 
 
 
 
 
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and had never contributed financially to the mortgage payments, Applicant wanted to 
move out and told her cousin that she would not pay further after she moved. (Tr. 47-
73.) 
 
 In August 2016, just two months after the interest only payments on Loan 1 
ceased and Applicant’s monthly mortgage payments increased, Applicant stopped 
making payments on both mortgages. She claimed she thought her cousin was paying 
it, although she acknowledged that her cousin had never contributed to the mortgage 
before and previously had no plan to pay them. The same month that Applicant stopped 
paying the primary and secondary mortgage for Home 1, she purchased a second 
property (Home 2) for $250,000. She then acquired approximately $38,000 in credit-
card debt for charges incurred to repair Home 2. She also purchased a used luxury 
vehicle for approximately $18,500 in March 2017. (GE 2; GE 3; GE 7; Tr. 47-73.) 
 
 From August 2016 to June 2017, after her cousin failed to make any mortgage 
payments and the mortgages fell into default, Applicant tried to negotiate with the holder 
of Loan 1 to submit a deed in lieu of foreclosure on Home 1. Her negotiations on Loan 1 
were not successful and she consulted an attorney. She was advised to file Chapter 7 
Bankruptcy. On August 18, 2017, Applicant filed a Chapter 7 Bankruptcy petition. She 
listed $640,652 in secured claims and $38,015 in unsecured claims. The docket showed 
that the trustee abandoned $487,778 in secured claims including the claim for Home 1. 
The Bankruptcy was discharged on November 28, 2017. (GE 4; AE A; AE E; AE F; AE 
G; AE H; AE I; Tr. 49-68.) 
 
 As a result of the abandonment of Home 1, the property was removed from the 
Bankruptcy. (GE 4; GE 9.) It was foreclosed and sold at auction on January 3, 2018. 
That sale was ratified in April 2018 (Loan 1). (GE 6 at 9; AE B; AE C.) Applicant claimed 
that she had no further liability for Loan 1 or Loan 2 after the foreclosure of the home. 
She presented a credit report that listed Loan 1 and Loan 2 with zero balances. A series 
of emails from her bankruptcy attorney that advised her she was “not responsible for the 
deficiency in the mortgage.” (AE D; AE L.) Those emails do not distinguish between the 
two loans on Home 1, nor do they cite to any law to support that claim.1   
 
 Applicant estimated her annual income in 2017 to be between $80,000 and 
$90,000. She has approximately $2,500 in bank accounts. She is current on her two 
credit-card accounts. She participated in financial counseling, as required by the 
bankruptcy court. She learned to distinguish “between needs and wants.” She testified 
that she has an unwritten budget. (Tr. 37, 78-82.) 
 
 
 
                                            
1 It is unclear from the record if Applicant has further liability with respect to Loan 2. When the property 
was abandoned by the trustee, Loan 2 would have been attached to that abandonment. According to 
Bank of America v. Caulkett, 135 S. Ct. 1995 (2015), Loan 2 could not be stripped off from the property 
and treated as an unsecured loan by the Bankruptcy court. Applicant did not meet her burden to explain 
how Loan 2 was resolved, if in fact it was.  
 
 
 
 
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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 
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.) 
 
 
 
 
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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. 
 
 AG ¶ 19 describes conditions that could raise security concerns and may be 
disqualifying in this case:  
 
(a) inability to satisfy debts; 
 
(b) unwillingness to satisfy debts regardless of the ability to do so; and 
 
(c) a history of not meeting financial obligations. 
 
As alleged in the SOR, Applicant was delinquent on two home mortgages, which 
have been past due since 2016. She was unwilling to resolve her financial obligations 
with respect to those loans. She also discharged multiple delinquent accounts through a 
2017 Chapter 7 bankruptcy. These facts establish prima facie evidence for the 
foregoing disqualifying conditions, and shift the burden to Applicant to mitigate those 
concerns. 
 
 The guideline includes conditions in AG ¶ 20 that could mitigate the security 
concerns arising from Applicant’s admitted 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 
 
 
 
 
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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 
 
(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. 
 
 Applicant’s recent financial decisions cast doubt on her judgment. Within the last 
two years, she defaulted on two loans and discharged debts through Chapter 7 
bankruptcy. Her financial problems arose as a result of her choice to vacate the 
property she owned with her cousin and to intentionally stop paying on Loan 1 and Loan 
2. She had no realistic expectations that her cousin would pay the mortgages on her 
own. Yet, she chose to abandon those financial obligations. She failed to demonstrate 
that her financial problems were due to factors beyond her control, and she did not 
present evidence that she acted responsibly under these circumstances. While she 
documented some attempts to address these debts in 2012 and again in 2016 by 
offering to voluntarily surrender the property to the creditor for Loan 1, these do not 
establish she was acting in good faith or responsibly. Applicant’s choice to default on 
the Loan 1 and Loan 2 was part of a larger pattern of financial irresponsibility, including 
her excessive use of credit cards to repair Home 2, as well as the purchase of a used 
luxury vehicle. She has done little to show that similar circumstances are unlikely to 
occur. Mitigation was not established under AG ¶¶ 20(a) or 20(b). 
 
Applicant participated in some financial counseling, and claimed to have a 
budget to help her responsibly manage her finances. Loan 1 was resolved through 
foreclosure. Despite that evidence, she failed to show that her financial problems are 
under control. It is unclear from the record whether or not she may still be held liable for 
Loan 2. She had the burden to present sufficient evidence of its status, and she did not 
meet that burden. Further, even if Loan 2 was found to be fully resolved, her financial 
decisions, the bankruptcy, and the loss of her property to foreclosure, reflect a poor 
financial track record and there are not clear indications her finances are under control. 
Accordingly, Applicant established limited mitigation of financial security concerns under 
the provisions of AG ¶¶ 20(c), 20(d), or 20(e). 
 
 
 
 
 
 
 
 
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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 is accountable for her choices when she incurred substantial debt and did not 
repay it. She has not demonstrated responsible conduct under the circumstances. A 
determination cannot be made that her financial problems are unlikely to recur. They 
continue to cast doubt on her current reliability, trustworthiness, and good judgment. 
Financial concerns remain, despite the presence of some mitigation including financial 
counseling. Overall, the evidence creates significant doubt as to Applicant’s judgment, 
eligibility, and suitability for a security clearance. She failed to meet her burden to 
mitigate the security concerns arising under the guideline for financial considerations.  
 
Formal Findings 
 
 Formal findings for or against Applicant on the allegations set forth in the SOR, 
as required by ¶ E3.1.25 of Enclosure 3 of the Directive, are: 
 
 Paragraph 1, Guideline F:   AGAINST APPLICANT 
 
  Subparagraphs 1.a through 1.c:   Against Applicant 
 
 
 
 
 
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Conclusion 
 
 In light of all of the circumstances presented by the record in this case, it is not 
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 
denied. 
                                        
         
 
Jennifer Goldstein 
Administrative Judge