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                        DEPARTMENT OF DEFENSE 
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 18-01323 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Eric Price, Esq., Department Counsel 
Kelly Folks, Esq. Department Counsel 
For Applicant: Pro se 
 
04/15/2019 
 
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Decision 
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LYNCH, Noreen A., Administrative Judge: 
 
This case alleges security concerns raised under Guideline F (Financial 
Considerations). Eligibility for access to classified information is denied. 
 
Statement of the Case 
 
On May 23, 2018, in accordance with DoD Directive 5220.6, as amended 
(Directive), the Department of Defense issued Applicant a Statement of Reasons (SOR) 
alleging facts that raise security concerns under Guidelines F. The SOR further informed 
Applicant that, based on information available to the Government, DoD adjudicators could 
not make the preliminary affirmative finding it is clearly consistent with the national interest 
to grant or continue Applicant’s security clearance. 
 
Applicant answered the SOR on August 3, 2018, and requested a hearing before 
an administrative judge. (Answer.) The case was assigned to me on January 16, 2019.  
The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on 
February 11, 2019, scheduling the hearing for March 1, 2019. The hearing was convened 
as scheduled. Applicant’s counsel withdrew from the case and Applicant represented 
himself. The Government offered Exhibits (GE) 1 through 6, which were admitted. 
Applicant testified on his own behalf. He submitted Applicant Exhibits (AE) A though K. 
 
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The record was left open until April 1, 2019, and Applicant timely submitted a packet of 
six documents, which was marked as AE L, and was accepted into the record without 
objection. DOHA received the transcript of the hearing (Tr.) on March 11, 2019. 
 
Findings of Fact 
 
Applicant, age 50, is married with two children. He obtained his undergraduate 
degree in electrical engineering in 1995. Applicant completed his security clearance 
application (SCA) on August 11, 2017. (GE 1)  He has worked for his current employer 
for a little more than two years. He has a real estate license and has taken other 
certification courses. (Tr.27) 
 
The SOR alleges in 1.a through 1.e, five delinquent debts totaling about $38,000, 
which include a first and second mortgage, a real estate course, and a credit account. 
(GE 2, 6) Applicant admitted the SOR allegations and provided explanations for each 
one. (Answer) He noted that he had paid the debt in SOR allegation 1.d, and provided 
documentation. 
 
FINANCIAL 
 
Applicant acknowledged his financial hardship, and explained that the financial 
problems started when his home in state A was rented for about seven years with no 
problems at first. Applicant and his wife moved from that home in 2009 and relocated to 
state B for jobs. Applicant was unemployed for seven or eight months in 2009. The renter 
caused massive damage to the home in state A and Applicant eventually evicted the 
tenant. (GE 1) The renter was also about $2,000-$3,000 behind in rent payments. 
Applicant obtained a judgment against the tenant but has not received any money. (Tr.13) 
He recounted the expense this caused him in terms of fixing the damage and various 
fines that he received from the state. In addition, he incurred legal fees. He approximates 
that he spent over $20,000, not counting the citations from the state and legal fees.  (AE 
A-K) He borrowed from his 401(k) to pay for the repairs. (Tr. 14) 
 
Applicant hired an attorney to dispute the state citations in state A. This is ongoing. 
The home is now repaired, but the rent is not sufficient to cover the first or second 
mortgage on the home in state A. Applicant attempted a loan modification but that was 
not successful.  He is now in the process of attempting a short sale. Applicant credibly 
testified that until the fiasco with the renter, he never missed a mortgage payment. (Tr. 
17) His last mortgage payments were one year ago because he could not afford to pay a 
mortgage on his current home in state B as well as state A. (Tr. X) A second set of tenants 
were also evicted in March 2019. 
 
Applicant recounted how he and his wife purchased a home in state B in 2013. He 
put a down payment on the house. His wife handles the finances for the family. (Tr. 39)  
He could not recall her precise salary, but believed it may be $110,000. Applicant was 
working for a small company earning about $80,000. (Tr. 29)  
 
 
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Applicant purchased three or four investment properties when he came to state B. 
He and his business partner purchased the homes between 2016 and 2018. (Tr. 95-101) 
The purpose was to fix the homes and eventually resell them. (GE 1) Applicant borrowed 
from his 401(k). He also used a credit card to get some advance cash. (Tr. 62) Equity 
from one house was used to purchase another. Each home purchased turned into a 
nightmare. (Tr. 53-58) The cost of repairs were higher than they imagined and some of 
the contractors did not complete the required work. Two houses are now rented. (Tr.60)  
Applicant stated that he plans to end this business relationship because he believes that 
his partner has cheated him out of some money that was received from equity in one 
house. 
 
As to SOR 1.a, an account past-due in the approximate amount of $16,383, 
Applicant has not paid this first mortgage on the home in state A for about one year. (Tr. 
80) He submitted documentation concerning the circumstances. It is still not resolved. .He 
did attempt to refinance the house at one point. (Tr.80) He admits that he has not done 
anything to resolve the issue since 2018. 
 
As to SOR 1.b, an account past-due in the amount of $2,302 for a second 
mortgage on the house in state A. Applicant stated the reason for this second mortgage 
charge-off is due for the same reasons as stated for SOR 1.a. In 2017, Applicant received 
a settlement offer from the bank to settle for $17,000. The bank wanted a lump sum 
payment and Applicant did not have the money. The bank also offered Applicant a 12 
month payment plan for a monthly amount of $1,600, but Applicant stated that he did not 
have the money in his budget. In 2016, Applicant requested monthly payments of $225 
until the $17,000 is paid in full. (AE A) He hopes to do a short sale. 
 
As to SOR 1.c, a charged-off account in the amount of $13,019, Applicant is trying 
to settle this account. It was a credit card used for an educational course. At first, he 
disputed the amount due to the course nature not being what was promised. Applicant 
believed it was fraudulent.  He submitted an article entitled RIPOFF REPORT, (AE B) 
proclaiming the company has received many complaints. The charge was removed from 
the credit card, but after an investigation the charge of $5,000 was added with interest 
and penalties, which exceeded his maximum amount of credit. The bank closed the 
account eventually. Applicant’s payment increased from $180 a month to almost $500 a 
month, which he claimed he could not afford. He stated that negotiations did not continue. 
Applicant recalled that he also used the credit card for a $6,000 advance to assist in an 
investment property. (Tr.  95) At this time, there is no payment arrangement or plan. 
 
As to SOR 1.d, a charged-off account in the amount of $334, Applicant recently 
resolved the account and provided documentation. (AE L)  
 
As to SOR 1.e, a collection account in the amount of $5,686, this debt was the 
result of a real estate course that Applicant took. He stated that the company was well 
known, but it was a scam. He is disputing this amount. He attended a three day course.  
He paid $4,700, but still owes about $5,686.This account is interrelated with 1.c. (Tr. 112) 
Applicant submitted letters that he wrote to state officials complaining about the company 
that runs the course. (AE L) 
 
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Applicant recently attended a financial counseling class. He and his wife both work 
in professional positions. Applicant’s salary per year is about $104,000. He has a budget.  
Applicant has a savings and checking account. He contributes to his pension account. 
Applicant approximated that he has about $80,000 in his 401(k). (AE L) He stated that he 
and his wife take an annual cruise. He sometimes sends money to his mother in her native 
home. Applicant acknowledged that he pays a minimum amount on two other credit cards. 
(GE 1) He pays his taxes and is current on his home mortgage. Applicant travels to a 
central American country to see his family frequently, as recent as 2016. (Tr. 48) 
 
 Applicant submitted several character letters. Each letter attests to his reliability 
as an engineer and his loyalty. Applicant is dedicated to his work and is trustworthy for a 
position of responsibility.  One reference knows about his financial issues, and believes 
Applicant is working hard to resolve them. He works hard for his company and his family. 
(AE C) A former colleague states that his work ethic is beyond reproach. (AE L) 
 
Policies 
 
 When evaluating an applicant’s suitability for a security clearance, 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, “Any 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. 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, and has the 
ultimate burden of persuasion as to obtaining a favorable clearance decision.”  
 
 
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 A person who seeks access to classified information enters into 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 EO  10865, “Any 
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 EO 12968, Section 3.1(b) (listing multiple prerequisites 
for access to classified or sensitive information.) 
 
Analysis 
 
Guideline F (Financial Considerations) 
 
The concern under this guideline is set out in 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 . . . .  
 
 This concern is broader than the possibility that a person might knowingly 
compromise classified information to raise money. It encompasses concerns about a 
person’s self-control, judgment, and other qualities essential to protecting classified 
information. A person who is financially irresponsible may also be irresponsible, 
unconcerned, or negligent in handling and safeguarding classified information. See ISCR 
Case No. 11-05365 at 3 (App. Bd. May 1, 2012). 
 
 Applicant’s admissions, corroborated by his credit reports, establish two 
disqualifying conditions under this guideline: AG ¶ 19(a) (“inability to satisfy debts”), and 
AG ¶ 19(c) (“a history of not meeting financial obligations”).  
 
 The security concerns raised in the SOR may be mitigated by any of the following 
potentially applicable factors: 
 
AG ¶ 20(a): the behavior happened so long ago, was so infrequent, or 
occurred under such circumstances that it is unlikely to recur and does not 
 
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cast doubt on the individual's current reliability, trustworthiness, or good 
judgment; 
 
AG ¶ 20(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; 
 
AG ¶ 20(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; and 
 
AG ¶ 20(d): the individual initiated and is adhering to a good-faith effort to 
repay overdue creditors or otherwise resolve debts. 
 
Applicant’s financial difficulties are the result of several things. In 2009, he became 
unemployed and rented his home in State A. Unfortunately, the tenant, after a number of 
years, ruined the home and has not paid a judgment against her. Applicant could not pay 
the mortgage for that house and the current house in state B. He also received legal 
citations. He incurred legal fees. He received a settlement offer but could not accept 
because he did not have the money. This has been ongoing. He bought a house and then 
invested in three or four properties using money from his 401(k) and a credit card. He 
took a course that he believed is a scam and disputed it. He charged part of the fee on a 
credit card. He invested in three properties when he already had financial issues with the 
house in state A.  This casts doubt on his judgment. AG ¶ 20(a) is not established.    
 
AG ¶ 20(b) is not fully established.  Applicant’s unemployment, and other issues 
were beyond his control, but he has not acted responsibly. He recently paid one small 
debt. He has disputed one debt but he has not resolved any debts. He promises that once 
he has the money from the sale of house in state A, he will pay his debts. A promise to 
pay in the future is not sufficient. He has also used his money for travel. He has no track 
record of paying these debts. He has not produced sufficient information to show that he 
has been proactive in his actions. 
 
AG ¶ 20(c) and 20(d) are not fully established. Applicant took a financial course 
after the hearing. He now has a budget. From the evidence in the record, there are no 
clear indications that his financial situation is under control. He has not been able to start 
a settlement plan for the mortgages because he does not have the money.   
 
 
 
 
 
 
 
 
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Whole-Person Concept 
 
 Under AG ¶ 2(c), the ultimate determination of whether the granting or continuing 
of national security eligibility is clearly consistent with the interests of national security 
must be an overall commonsense judgment based upon careful consideration of the 
applicable guidelines, each of which is to be evaluated in the context of the whole person. 
An 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. 
 
 I have incorporated my comments under Guideline F in my whole-person analysis, 
and I have considered the factors in AG ¶ 2(d). After weighing the disqualifying and 
mitigating conditions under Guideline F, and evaluating all the evidence in the context of 
the whole person, including his credibility and openness at the hearing. Applicant had 
circumstances that occurred beyond his control and he has made some strides in 
attempting to resolve the mortgage issues. However, at this time, Applicant has not 
mitigated the security concerns raised by his financial indebtedness. The property 
investments in state B, after the financial issues that existed from the house in state A do 
not persuade me that Applicant’s judgment is suitable.  Accordingly, Applicant has not 
carried his burden of showing that it is clearly consistent with the national interest to grant 
him eligibility for access to classified information. 
 
Formal Findings 
 
I make the following formal findings on the allegations in the SOR: 
 
Paragraph 1, Guideline F (Financial Considerations): AGAINST APPLICANT 
 
Subparagraph 1.a:     Against Applicant 
Subparagraph 1.b:     Against Applicant 
Subparagraph 1.c:     Against Applicant 
Subparagraph 1.d:     For Applicant 
Subparagraph 1.e:     Against Applicant 
      
 
 
 
 
 
 
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Conclusion 
 
I conclude that it is not clearly consistent with the national interest to continue 
Applicant’s eligibility for access to classified information. Clearance is denied. 
 
 
 
 
Noreen A. Lynch 
Administrative Judge