DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
                                                                     )                                                           
          -----------------------                                )          ISCR  Case No.   07-04843     
          SSN: --------------- )
)
Applicant for Security Clearance )
Appearances
For Government: Jeff A. Nagel, Esquire, Department Counsel
For Applicant: Pro Se
______________
 Decision
______________
WESLEY, Roger C., Administrative Judge:
Statement of Case
On July 16, 2008, the Defense Office of Hearings and Appeals (DOHA), pursuant
to Department of Defense Directive 5220.6 (Directive), dated January 2, 1992, and
Department of Defense (DoD) Regulation 5200.2-R, issued a Statement of Reasons
(SOR) to Applicant, which detailed reasons why DOHA could not make the preliminary
affirmative determination of eligibility for granting a security clearance, and
recommended referral to an administrative judge to determine whether a security
clearance should be granted, continued, denied or revoked.
Applicant responded to the SOR on August 11, 2008, and requested a hearing.
The case was assigned to me on August 22, 2008, and was scheduled for hearing on
November 13, 2008.  The hearing was rescheduled for December 5, 2008 and
convened on that date for the purpose of considering whether it would be clearly
consistent with the national interest to grant, continue, or deny, Applicant’s application
for a security clearance.  At hearing, the Government's case consisted of seven
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exhibits; Applicant relied on one witness (himself) and eight exhibits.  The transcript
(R.T.) was received on December 15, 2008.  Based upon a review of the case file,
pleadings, exhibits, and testimony, eligibility for access to classified information is
denied. 
Procedural Rulings and Evidentiary Issues
Prior to the close of the hearing, Department Counsel moved to amend sub-
paragraph 1.a of the SOR to designate the referenced tax lien as a state lien instead of
a federal lien.  Applicant did no object to the amendment, and Department Counsel’s
motion to amend was granted.
Before the close of the hearing, Appellant requested leave to supplement the
record with documented partnership tax lien information and information material to
creditor’s 1.g’s default judgment.  For good cause shown, Applicant was granted 10
days to supplement the record.  The Government was afforded two days to respond.
Within the time permitted, Applicant supplemented the record with an explanatory e-mail
covering conversations he had with an IRS representative about the tax liability status of
his personal and corporate tax liabilities and copies of tax returns filed in behalf of
himself and his sons for the tax years of 1995 through 1998.
Applicant’s submissions were admitted as exhibits I through L.  He followed up
his submissions with e-mail accounts of his unsuccessful efforts to enlist the same IRS
representative to forward a non-collection letter (see ex. M).  He did not produce an IRS
letter covering the cessation of collection activities against his corporation and/or his
sole proprietorship, and recounted in a final e-mail that the IRS representative told him
she could not send such a letter.  Nor did Applicant provide any documentation of the
dissolution of his product design corporation.
Summary of Pleadings
Under Guideline F, Applicant is alleged to have accumulated (a) IRS tax liens in
November 1998, November 1999, March 2001, and April 2008, respectively, for tax
years 1996 through 2003, that exceed $42,000.00 in the aggregate, (b) accumulated
additional tax debts with the IRS for tax year 2004, (c) submitted an offer in compromise
to the IRS in May 2008 for $3,000.00 to settle all federal taxes owed by him and/or his
businesses for tax years 1996 through 2005 (no response to date), (d) a debt with a
medical provider for $282.00, and (e) a personal judgment against him in the amount of
$8,711.16 in February 2007 that is unsatisfied.
Under Guideline E, Applicant is alleged to falsified the security clearance
application (e-QIP) he completed in February 2006 by (i) omitting IRS liens filed against
him when responding to question 27 and (ii) omitting his debts over 180 and 90 days
delinquent, respectively, when responding to question 28(a) and (b). 
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Under Guideline J, the falsification allegations are incorporated by reference and
cover the same underlying alleged facts alleged under Guideline E.  The Guideline J
allegations add a criminal component to Applicant’s alleged e-QIP omissions
For his response to the SOR, Applicant admitted his federal tax lien of April 2008
and his still pending offer in compromise, his medical debt, and the judgment entered
against him in February 2007.  He denied the remaining allegations without explanation
or comment.           
                                               
Findings of Fact
Applicant is a 68-year-old self-employed owner and operator of a defense
contractor who seeks a security clearance.  The allegations covered in the SOR and
admitted to by Applicant are incorporated herein and adopted as relevant and material
findings.  Additional findings follow.
Applicant divorced his wife of 14-years in September 1983 (ex. 1).  He has two
children from this marriage (ages 41 and 39, respectively).  
Applicant started his original product design company (a graphics design
business) in 1971.  Around the same time, he founded a temporary personnel company
to support his product design business,  and ran it for five to six years (to 1976) before
folding it into a new product design-personnel company (according to the information he
furnished in his e-QIP).  This consolidated enterprise he incorporated in 1981 (R.T., at
29-30).  Besides his incorporated graphics business, Applicant owns a product design-
personnel company, which he started in the late 1990s and operates as a sole
proprietorship (R.T., at 38).  He was the president and only officer of his now defunct
company (R.T., at 34-38).
The founding mission of his product design business was to develop technical
data for major defense contractors (see ex. H).  At one time, his company employed 43
employees and was a profitable enterprise (earning close to $700,000.00 a year
between 1994 and 1996); it now has no employees and is no longer operational as of
January 2008 (R.T., at 36-37, 46, 82).  While his product design business does not
require a security clearance in Applicant’s judgment, he has not provided any
documentation of his winding up the corporation’s affairs.  So, whether his product
design corporation is formally dissolved or merely dormant is unknown at this time. 
Att present, the only one of Applicant’s companies that has a facility security
clearance is the personnel company he started in the late 1990s and  operates as a
sole proprietorship (R.T., at 36-42).  The primary mission of his personnel company is to
place temporary employees with major defense contractors (R.T., at 43).  Applicant
receives no salary from his product design-personnel company, and currently operates
it out of his garage and home (R.T., at 38).  His company has had a facility security
clearance from its inception.  His two employees have security clearances (R.T., at 44).
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Applicant himself does not have a clearance and does not need one except to satisfy
the facility requirements for his company (R.T., at 31-33, 43-44). 
Applicant’s two sons (A and B) have a company that they own and operate
separately from Applicant.  Although A and B operate their partnership business out of
Applicant’s home (R.T., at 95-97), their company has a different name, and they use a
different zip code for mailing purposes (see exs. I and J; R.T., at 58-60, 97-99).
Between 1998 and 2005, Applicant and his sons encountered financial difficulties
with their companies.  Records reflect that their state of residence filed a tax lien against
A/B’s company in November 1998 to cover owed taxes in the amount of $336.00 (see
exs. A, A-1, B and K).  Neither Applicant nor A/B paid the taxes secured by the lien.
And the lien has not been discharged to date. The IRS filed a tax lien against A/B and
their company in November 1999 to cover taxes owed by A/B and their company in the
amount of $405.34 (see exs. A, A-1, C and L).  This lien remains unsatisfied as well.
The IRS filed a lien against Applicant’s product design corporation in March
2001; this lien covered delinquent taxes totaling $30,992.11 for the inclusive tax years
of 1996, 1998, 1999 and 2000 (see exs. 2, D and E).  Applicant never paid the taxes
covered by the lien in behalf of his wholly owned corporation, and the lien has not been
released to date.  Records report that Applicant’s corporate business is in debt to the
IRS for back taxes for the 2004 tax year in the amount of $2,064.18 (see ex. 2; R.T., at
107).  This tax debt has not been satisfied to date either.  Albeit, it is not included in the
IRS’ 2008 lien (see exs. 2 and E).
In April 2008, the IRS filed a tax lien against Applicant’s sole proprietorship  to
cover delinquent taxes of $9,687.55 for tax years 1998, 1999, and 2003 (see exs 2 and
E).  These taxes have not been satisfied to date.
Applicant attributes the tax problems associated with his company to the
contractor ©) who engaged his company in 1996 to work on various projects in his
company’s facility (see ex. H). After generating hundreds of thousands of dollars in
gross income from work performed for C, C notified Applicant’s company in 1996 of
necessitated personnel changes that would reduce his company’s revenue without any
corresponding cost reductions (see ex. H; R.T., at 86-87).  Two weeks after notifying
Applicant’s company of these changes, C terminated its contract with Applicant’s
company (ex. H).  C’s actions imposed serious financial hardships on Applicant’s
company, which did not have the cash on hand to meet tax, payroll, rental and utility
obligations, and struggled to survive without much financial success (ex. H).  Applicant
considered suing C for contractual breach, but ultimately declined after hearing that he
could be risking his life by confronting C and its principals in any court action (see ex. H;
R.T., at 87).
Applicant’s financial misfortunes with the operations of his companies were
compounded by two physical accidents he suffered between 1998 and march 2001 (see
ex. 2).  The accidents impaired the nerves in his neck and right arm and significantly
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affected his ability to operate his graphics business (ex. 2; R.T., at 72-73).  He survived
for the ensuing five years on the strength of his disability insurance (R.T., at 73-74). 
His disability insurance payments ceased in February 2006 when he reached the
retirement age of 65 (ex. 2; R.T., at 73, 118).  Without an adequate income stream to
sustain him, he could not meet his personal and business-related  debts.  Applicant
assures he currently lives within his means with the income he receives from his
company (see ex. 2).
Applicant submitted a written compromise offer to the IRS in May 2008 (see ex.
2; R.T., at 90) in the amount of $3,000.00.  His written compromise offer seeks
settlement of all taxes owed by himself and his companies for the inclusive tax years of
1996 through 2005.  His offer does not include any taxes owed by his sons and their
company for any of the covered years.  Moreover, none of the correspondence from the
IRS attached to his interrogatory responses (ex. 2) make any reference to his sons or
their company.
Applicant has tried in the past, without success, to reach the responsible IRS
official to ascertain the status of his compromise offer (R.T., at 90-91, 94).  In his most
recent discussions with an IRS representative, he assures this IRS representative told
him that his personal and corporate tax liabilities were declared uncollectible, and that
he would be receiving a letter to that effect (see ex. M).  This same IRS representative
told Applicant that she could not send a confirming close-out letter, or discuss his case
with anyone outside of her office (see ex. M).  Applicant’s proofs do not include any
correspondence from this IRS representative, or any other IRS official, regarding
enforcement suspension and/or the agency’s reactions to Applicant’s compromise offer.
Besides his federal tax debts, Applicant incurred two consumer-related debts that
were reported to be delinquent in his credit reports.  Creditor 1.f is a medical debt in the
amount of $282.00.  It is reflected in as delinquent in Applicant’s creditor reports.  While
the debt remains outstanding and the subject of ongoing collection activity, medical
records support Applicant’s claims that he is not responsible for the debt (see ex. F). 
He documents his claims that he bears no personal responsibility for this debt (see ex.
F; R.T., at 71-72).  His furnished medical documentation does not identify the
responsible party that is the subject of collection action (ex. F).   
Applicant’s other consumer debt (with Creditor 1.g) covers a credit card account
opened in March 2000 (exs. 3 and 4).  When Applicant fell off a ladder in February
2001, injured his neck, he encountered recurrent difficulties in meeting his personal and
business obligations.  A settlement with a local yacht club over a slip and fall incident
produced a $70,000.00 settlement for Applicant in 2004 (see ex. 1; R.T., at 124-25).
Whether and how Applicant used these proceeds to address his debts is unclear.
Records show, though, that he stopped making payments altogether on the creditor 1.g
account in February 2006 and received a demand letter from the creditor in August
2006 (ex. F).  When he did not seasonably respond to this creditor’s demand, creditor
1.g filed suit and obtained a civil default judgment against Applicant for $8,711.16 in
February 2007 (see exs. 3 and 4; R.T., at 74-75).  This judgment remains outstanding.
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Applicant attributes this delinquency and ensuing judgment to health-related
circumstances beyond his control.  He fell off a ladder and injured his neck in February
2001.  The injury required serious neck surgery and extended therapy.  Because of this
injury, Applicant was off work for a number of months and fell behind with some of his
debts (including his credit card debt with creditor 1.g.  He still considers himself to be
primarily disabled.
While Applicant was disabled and recuperating at home, the IRS (in April 2001)
filed and notified Applicant of its federal tax lien.  The lien was filed against Applicant’s
corporation and served on his P.O. Box, and not against Applicant personally.
Applicant claims he never checked the post office for any IRS correspondence, and did
not know of any IRS lien notice until after he was told of the lien by an interviewing
investigator from the Office of Personnel Management (OPM) who apprised him of the
lien in 2006 (see ex. 2; R.T., at 132).  By contrast, the smaller liens filed by the IRS in
1998 and 1999 (creditors 1.a and 1.b) name his sons and a different P.O. Box number
(ex. 2). 
It is clear enough from this record that nothing in either of the identified 1998 and
1999 lien documents or related tax returns make any reference to Applicant or suggest
any ownership link between Applicant and the company affiliated with Applicant’s sons
(compare exs. B and C with J).  The initials of the companies owned by Applicant and
his sons, respectively, are identical; their reference on the lien documents identified in
exhibits B and C provides no helpful guidance.  Applicant’s only explanation for A/B’s
adoption of the same initials for their company was their perceived desire to take
advantage of Applicant’s business reputation and contacts (R.T., at 95). 
Key to differentiating the lien documents covering Applicant’s companies with
those of A/B’s company are the names of Applicant’s sons and their zip different codes
appearing on the lien and underlying tax returns.  Based on the documentation and
testimony present, Applicant’s explanations about the coverage of the liens associated
with creditors 1.a and 1.b are accepted.  Inferences warrant, accordingly, that the liens
covered by creditors 1.a and 1.b cover taxes owed by A/B, and not Applicant.  Applicant
has no manifest legal responsibility for the underlying taxes associated with creditors
1.a and 1.b.  
Asked to complete his e-QIP in February 2006, Applicant answered “no” to
question 27 (inquiring about liens placed against his property for failing to pay taxes),
and question 28(a) and (b) (asking about debts over 180 and 90 days delinquent,
respectively).  He attributes his omissions to (a) the lack of any personal responsibility
for the tax obligations of his corporation, (b) the lack of knowledge of any tax liens filed
against him, (c) and the absence of any unpaid personal debts (see ex. 2; R.T., at 63-
72, 80-81, 127-32, 136-38).  In his follow-up interview with an OPM investigator in
September 2006, he explained the circumstances surrounding his 2001 business-
related tax lien in considerable detail after being shown a copy of the lien by the
investigator (see ex. 2).  Because of the close association of Applicant’s company and
himself, typical separation between an owner and his company is complicated. 
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To the extent the IRS recognizes the personal and corporate legal distinctions in
the exchanges Applicant recites in his post-hearing e-mail submissions, treatment of
Applicant and his company as a unitary association for tax and E-QIP reporting is not
justified.  It may well be that Applicant and his company should be treated as a unitary
entity, but the evidence is not sufficiently developed in this record to make this case.
Question 28 of Applicant’s e-QIP asks financially related questions about Applicant in a
personal way and provides no expansive definitions of the term “your” that could
suggest inclusion of Applicant’s corporate interests.  His explanations regarding his
omission of his corporation’s tax lien are accepted. 
By contrast, Applicant’s omissions of his personal tax deficiencies for tax years
1998, 1999 and 2003 (covered by subparagraph 1.e) do not involve any semantical
distinctions between corporate and personal debts.  These underlying tax debts were
clearly treated by the IRS as his personal debts based on the identifying information
supplied in the covered 2008 lien and Applicant’s own testimony about the sole
proprietorship he established in the late 1990s. 
Because the tax lien covering Applicant’s personal taxes was not filed until April
2008, this lien was not covered by question 27 of the e-QIP he completed earlier.  The
underlying taxes, though, were in delinquent status, and are covered as omissions in
sub-paragraphs 2.b and 2.c.  It is certainly reasonable to believe that the IRS provided
Applicant with regular late notices about his underlying personal tax deficiencies.
However, there is no developed documentary paper trail of notices, or Applicant
acknowledgments of notice receipts, to forge the basis for any hard findings.
Without substantial evidence of Applicant’s receiving regular late notices from the
IRS concerning his personal tax deficiencies, no fair inferences can be drawn that he
deliberately omitted these delinquent tax debts that covered in the IRS’s 2008 tax lien.
Likewise, the ownership relationship of Applicant to his sons’ company is not sufficiently
developed to warrant inferences that his personal interests are unitary with A/B’s
company. 
So, as to alleged omissions that Applicant deliberately omitted the tax liens
covered by sub-paragraphs 1.a, 1b, and the underlying taxes covered by sub-paragraph
1.e, favorable inferences warrant, too, but for different reasons.  Here, the proofs are
insufficient to establish that Applicant (a) had any ownership interest in A/Bs’s
partnership and/or that he (b) was made aware of debt deficiencies relative to his sole
proprietorship. 
The SOR also alleges that Applicant omitted his medical debt (creditor 1.f) from
28b (inquiring about debts over 90 days delinquent).  Applicant attributes his failure to
list his medical debt to his claimed lack of any monies owed to the creditor 1.f (see ex.
F; R.T., at 116).  Applicant’s claims of unintentional omission are corroborated by the
documentation presented by the Government (see ex. 2) and Applicant to a more
limited degree (see ex. F, showing a zero balance attributable to Applicant personally). 
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Addressing Applicant’s credit card account with creditor 1.g (the judgment
creditor), Applicant informs that he simply misunderstood the status of his ongoing
negotiations with the creditor at the time over setting up a new payment plan (R.T., at
118-19).  Applicant’s explanations lack relevant specifics but suggest some Applicant
confusion. The August 2008 demand letter he received from creditor 1.g recites only a
five month past due history (see ex. F).  So, it is quite plausible that he had some
memory confusion over just when this account became over 180 and/or 90 days
delinquent.  In any case, omission of the underlying debt is not alleged in the SOR,
though, and no inferences need be drawn on whether or not Applicant should have
listed this debt when responding to question 28 of his e-QIP.
Policies
The revised Adjudicative Guidelines for Determining Eligibility for Access to
Classified Information (effective September 2006) list Guidelines to be considered by
judges in the decision making process covering DOHA cases.  These Guidelines require
the judge to consider all of the "Conditions that could raise a security concern and may
be disqualifying” (Disqualifying Conditions), if any, and all of the "Mitigating Conditions,"
if any, before deciding whether or not a security clearance should be granted, continued
or denied.  The Guidelines do not require the judge to assess these factors exclusively
in arriving at a decision.  In addition to the relevant Adjudicative Guidelines, judges must
take into account the pertinent considerations for assessing extenuation and mitigation
set forth in E.2.2 of the Adjudicative Process of Enclosure 2 of the Directive, which are
intended to assist the judges in reaching a fair and impartial common sense decision.
Viewing the issues raised and evidence as a whole, the following adjudication
policy factors are pertinent herein:
Financial Considerations
The Concern: “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 protect classified information.  An individual who is financially
overextended is at risk of having to engage in illegal acts to generate
funds.  Compulsive gambling is a concern as it may lead to financial
crimes including espionage.  Affluence that cannot be explained by known
sources of income is also a security concern.  It may indicate proceeds
from financially profitable criminal acts.” Adjudication Guidelines, ¶ 18.
Personal Conduct
The Concern: Conduct involving questionable judgment,
untrustworthiness, unreliability, lack of candor, dishonesty, or
unwillingness to comply with rules and regulations can raise questions
about an individual’s reliability, trustworthiness and ability to protect
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classified information.  Of special interest is any failure to provide truthful
and candid answers during the security clearance process or any other
failure to cooperate with the security clearance process.  AG ¶ 15.
Criminal Conduct
The Concern: Criminal activity creates doubt about a person’s
judgment, reliability, and trustworthiness.  By its very nature, it calls into
question a person’s ability or willingness to comply with laws, rules and
regulations.  See Adjudicative Guidelines (AG), ¶ 30.
Burden of Proof
By virtue of the precepts framed by the revised Adjudicative Guidelines, a
decision to grant or continue an applicant's security clearance may be made only upon a
threshold finding that to do so is clearly consistent with the national interest.  Because
the Directive requires Administrative Judges to make a common sense appraisal of the
evidence accumulated in the record, the ultimate determination of an applicant's eligibility
for a security clearance depends, in large part, on the relevance and materiality of that
evidence.  As with all adversary proceedings, the Judge may draw only those inferences
which have a reasonable and logical basis from the evidence of record.  Conversely, the
Judge cannot draw factual inferences that are grounded on speculation or conjecture.
The Government's initial burden is twofold: (1) It must prove any controverted
facts alleged in the Statement of Reasons and (2) it must demonstrate that the facts
proven have a material bearing  to the applicant's eligibility to obtain or maintain a
security clearance.  The required showing of material bearing, however, does not require
the Government to affirmatively demonstrate that the applicant has actually mishandled
or abused classified information before it can deny or revoke a security clearance.
Rather, consideration must take account of cognizable risks that an applicant may
deliberately or inadvertently fail to safeguard classified information.
Once the Government meets its initial burden of proof of establishing admitted or
controverted facts, the burden of persuasion shifts to the applicant for the purpose of
establishing his or her security worthiness through evidence of refutation, extenuation or
mitigation of the Government's case.
Analysis  
Applicant is the president and chief operating officer of two small defense
contractors (one incorporated and the other operated as a sole proprietorship) he has
owned and operated since his founding of the companies (in 1976 and 1998,
respectively).  Over the course of an eight-year period, Applicant’s companies failed to
pay owed federal income taxes. The IRS filed two tax liens against his companies and
two smaller ones against a company owned by his sons (A/B) that remain unpaid and
unsatisfied.  His corporation is liable as well for assessed taxes for the tax year of 2004.
Additionally, a consumer credit card company took a default judgment against him in
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February 2007 for $8,711.16. This judgment remains unpaid and unsatisfied.
Considered together, and without resolution, the recurrent tax liens and debts associated
with Applicant and his company, and the still outstanding civil judgment entered against
him raise security significant concerns.  Initial security concerns were also raised against
Applicant’s omissions of federal tax liens and his delinquent debts.      
Applicant’s finances                                                                  
Security concerns are raised under the financial considerations guideline of the
revised Adjudicative Guidelines where the individual applicant is so financially
overextended as to indicate poor self-control, lack of judgment, or unwillingness to abide
by rules and regulations, which can raise questions about the individual’s reliability,
trustworthiness and ability to protect classified information, and place the person at risk
of having to engage in illegal acts to generate funds.  Applicant’s accumulation of federal
tax liens through the small company he owns and manages, his outstanding judgment
indebtedness, and his past inability to pay  these debts warrant the application of two of
the disqualifying conditions (DC) of the Guidelines for financial considerations: DC 19(a)
“inability or unwillingness to satisfy debts” and DC 19©) “a history of not meeting
financial obligations.”
Applicant’s debts are attributable in part to recurrent income shortages following
contract terminations and other business related short-falls with his companies and
personal finances.  To date, he has not been able to effectuate a compromise settlement
with the IRS on owed taxes by both of his companies, and the IRS has reportedly
declared these debts uncollectible.  Applicant provides no documentation of this reported
uncollectible status, or whether the IRS’ reported decision covers his companies and
himself.  Without any documented dissolution of the corporate enterprise he claims to
have shuttered in 2008, ascertainment of IRS enforcement intentions cannot be made
without considerable speculation.  
Applicant does not provide adequate explanations either as to why he has not
made more concerted earlier attempts to work out payment arrangements with the IRS.
Nor has he provided any convincing justifications for failing to make any concerted
attempts  to resolve the outstanding judgment against him. 
Since receiving the SOR, Applicant has initiated little follow-up efforts to resolve
the outstanding tax liens covering his product design corporation (reportedly no longer
operational) and personnel proprietorship he owns and maintains. Afforded an
opportunity to consummate compromise arrangements with the IRS on all of the owed
taxes by his corporation and his sole proprietorship, he has not been able to engage the
IRS in any tangible settlement discussions, much less obtain approval of his still pending
compromise offer.  Prospects for reaching any compromise accord with the IRS are less
promising in the face of the latest information furnished Applicant by the IRS
representative who spoke with him. 
11
Mitigation credit to Applicant is very limited based on his furnished proofs. True,
two of the documented state/federal tax liens (associated with creditors 1.a and 1.b)
involve tax deficiencies covered by a company owned by Applicant’s two sons and have
no tangible legal connection with Applicant. Applicant was careful in his May 2008
compromise offer to limit the coverage of his compromise to federal taxes owed the IRS
by himself and his own graphics design and personnel businesses. 
However, the remaining tax and consumer debts belong to Applicant. The
corporate taxes covered by the IRS’s March 2001 lien were accrued over a five-year
period spanning 1996 and 2000, and involve a company wholly owned and operated by
Applicant.  As his company’s owner and president he was responsible for making sure
that the corporation’s taxes were timely paid.  He acknowledged as much in his
compromise offer which covers all federal taxes owed by himself, his sole proprietorship,
and his corporate business.  Of all of the proven debts listed in the SOR, he is only able
to document resolution (by way of release of any liability he might have) of the small
medical debt covered by subparagraph 1.f of the SOR. 
Accordingly, the tax debts and judgment debt linked to Applicant exclusively in the
SOR through his identified graphics design corporation and personnel business remain
his legal obligation and responsibility, even if the IRS considers the underlying taxes no
longer collectible.  And at this time, the IRS has not provided any documentary proof to
Applicant that it is no longer looking to enforcement of back taxes associated with
himself and his companies. The same holds true with the judgment debt identified in
subparagraph 1.g.  As a result, MC 20(a), “the behavior happened so long ago, was so
infrequent, or occurred under circumstances that it is unlikely to recur and does not cast
doubt on the individual’s reliability, trustworthiness, or good judgment,” cannot be applied
to Applicant’ situation.  ¶ MC 20 (d), “the individual initiated a good-faith effort to repay
overdue creditors or otherwise resolve debts,” has some limited applicability based on
Applicant’s documented payment of his creditor 1.f medical debt and satisfactory proofs
that the tax debts covered by subparagraphs 1.a and 1.b are not his obligations or
responsibilities.  
                                                       
Because Applicant has not chosen to seek any counseling advice relative to his
identified tax and judgment debts, he may take only limited advantage of ¶ MC 20©),
“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.”  While there is some
reason to anticipate future resolution of his federal tax issues based on his documented
written compromise, he has produced no tangible progress with the IRS to date.  Nor
does he provide any tangible evidence of repayment efforts with the consumer judgment
holder covered in the SOR.  Considered together, Applicant’s efforts are not enough to
warrant any more than partial application of ¶ MC 20©).  
Holding a security clearance involves the exercise of important fiducial
responsibilities, among which is the expectancy of consistent trust and candor.  Financial
stability in a person cleared to access classified information is required precisely to
inspire trust and confidence in the holder of the clearance.  While the principal concern of
12
a clearance holder’s demonstrated financial difficulties is vulnerability to coercion and
influence, judgment and trust concerns are implicit in financial cases (as here).
Whole person assessment does not help Applicant to overcome the judgment
lapses associated with his tax debt accumulations and consumer judgment concerns.
His long work history in providing contact support for other defense contractors is
commendable and deserving of public praise.  His failure, though, to diligently monitor
and ensure timely tax payments to the IRS in connection with his corporate and personal
businesses reflects the lack of adequate attention to his fiducial duties of meeting his
companies’ tax obligations.  His efforts to compromise these accrued tax debts (most of
which are  covered by still outstanding tax liens) have been unsuccessful to date and
preclude him from mitigating security concerns over his ability to achieve and maintain
stable finances for both himself and his defense-related business enterprises.  These
concerns are not mitigated under the whole person concept.
Taking into account all of the facts and circumstances surrounding Applicant’s
debt accumulations, his earnest but still mostly unsuccessful steps to resolve them, and
the absence of sufficient efforts to demonstrate his financial responsibility and
trustworthiness in managing his finances, Applicant does not mitigate security concerns
related to his proven debt delinquencies.  While Applicant is to be commended and
encouraged in his repayment efforts, more tangible proofs of success are necessary to
satisfy minimum standards of security eligibility.  Unfavorable conclusions warrant with
respect to the allegations covered by sub-paragraphs 1.c through 1.e and 1.g of the
SOR.  Favorable conclusions warrant with respect to subparagraphs 1.a, 1.b and 1.f.
Applicant’s e-QIP omissions
Posing potential security concerns, too, are Applicant’s documented omitted tax
liens and delinquent debts in the e-QIP he completed in February 2006.  He attributed
his omissions to (a) the lack of any personal responsibility for the tax obligations of his
corporation, (b) the lack of knowledge of any tax liens or underlying taxes assessed or
filed against him, and ©) the absence of any unpaid personal debts.  His claims have
merit. 
From a whole person perspective, Applicant presents as an essentially honest
applicant who experienced mostly business-related losses and ensuing tax liens and
persuaded he did not deliberately omit the corporate tax lien filed against him and his
company in March 2001. His e-QIP omissions appear to be isolated mistakes and the
source of misunderstandings, and are not indicative of any overall trust problem. 
Applicant’s accepted explanations enable him to persuasively demonstrate that
his omissions (if they can be characterized as omissions) were inadvertent, based on the
corporate nature of the 2001 tax lien against his company and his lack of any personal
knowledge, or reasons to believe otherwise, that question 28 of his e-QIP covered not
just personal liens, but corporations in which the applicant had a material interest.  
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Based on Applicant’s stated understanding of the financial questions in the e-QIP
and his accepted claims he the lien was not his personally, the lack of any documented
evidence of Applicant’s notification of personal taxes owed, and his accepted assurances
that his medical debt had already been paid (the only cognizable claims covered by
Guideline E of the SOR), Applicant is able to successfully refute the allegations of
falsification in the SOR.  Favorable conclusions warrant with respect to the allegations
covered by Guidelines E and J.
In reaching my decision, I have considered the evidence as a whole, including
each of the E 2(a) factors enumerated in the Adjudicative Guidelines of the Directive.
Formal Findings
In reviewing the allegations of the SOR and ensuing conclusions reached in the
context of the findings of fact, conclusions, conditions, and the factors listed above, I
make the following formal findings:
GUIDELINE F: (FINANCIAL CONSIDERATIONS): AGAINST APPLICANT
Sub-paras. 1.a, 1.b and 1.f: FOR APPLICANT    
Sub-paras. 1.c, through 1.e and 1.g AGAINST APPLICANT
GUIDELINE C: (PERSONAL CONDUCT): FOR APPLICANT
Sub-paras. 2.a through 2.c: FOR APPLICANT
GUIDELINE J.  (CRIMINAL CONDUCT): FOR APPLICANT
Sub-para. 3.a FOR APPLICANT
Conclusions
In light of all the circumstances presented by the record in this case, it is not
clearly consistent with the national interest to grant or continue Applicant’s security
clearance.  Clearance is denied.
                                          
Roger C. Wesley
Administrative Judge 
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