DEPARTMENT OF DEFENSE 
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
 
In the matter of: ) 
 ) 
 ------------------------- )  ISCR Case No. 08-10829 
 SSN: ----------------- ) 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: James Norman, Esquire, Department Counsel 
For Applicant: Pro Se 
 
 
 
______________ 
 
Decision 
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HOWE, Philip S., Administrative Judge: 
 
On April 17, 2008, Applicant submitted his Security Clearance Application (SF 
86) (e-QIP). He signed it again on May 7, 2009. On June 17, 2009, the Defense Office 
of Hearings and Appeals (DOHA) issued Applicant a Statement of Reasons (SOR) 
detailing security concerns under Guideline F (Financial Considerations). The action 
was taken under Executive Order 10865, Safeguarding Classified Information within 
Industry (February 20, 1960), as amended; Department of Defense Directive 5220.6, 
Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as 
amended (Directive); and the revised adjudicative guidelines (AG) promulgated by the 
President on December 29, 2005, and effective within the Department of Defense for 
SORs issued after September 1, 2006.  
  
 Applicant acknowledged receipt of the SOR on June 30, 2009. He answered the 
SOR in writing on July 7, 2009, and requested a hearing before an administrative judge. 
Department Counsel was prepared to proceed on August 12, 2009, and I received the 
case assignment on August 27, 2009. DOHA issued a Notice of Hearing on August 31, 
2009, and I convened the hearing as scheduled on September 14, 2009. The 
 
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Government offered Exhibits 1 through 3, which were received without objection. 
Applicant testified and did not submit any exhibits at the hearing. DOHA received the 
transcript of the hearing (Tr.) on September 24, 2009. Subsequent to the hearing, 
Applicant requested permission to submit exhibits. The Department Counsel had no 
objection to their submission, and Applicant submitted Exhibits A through E.  The record 
closed on November 2, 2009. Based upon a review of the case file, pleadings, exhibits, 
and testimony, eligibility for access to classified information is denied. 
 
Findings of Fact 
 
 In his Answer to the SOR, dated July 7, 2009, Applicant admitted all the factual 
allegations in the SOR, with explanations. He also provided additional information to 
support his request for eligibility for a security clearance.   
 
 Applicant is 50 years old, divorced in July 2008, and has two children.  He 
operated his own computer installation business from 2000 to 2008, when he went to 
work for a defense contractor. Applicant served in the U.S. Army from 1980 to 1983, 
and then in the National Guard until approximately 1988. During that time, Applicant had 
a security clearance without any violations of policy. (Tr. 14, 21-31, 44; Exhibit 1) 
 
 Applicant blames his former wife’s conspicuous consumption demands, and his 
weakness in not refusing them, for most of his delinquent debt and his inability to pay 
his current list of delinquent debt in the SOR. His former wife was an officer of his 
company and had access to the checking accounts. She wanted a new house in 2000, 
and got one costing $205,000. She wanted a new car every year, and a private school 
education for their oldest child that had tuition of $53,000 over four years. The marriage 
started to fall apart and they separated in December 2007. Without advice of legal 
counsel, Applicant signed a property settlement, which assigned him the obligation to 
pay the mortgage and other debts.  (Tr. 29-31, 66) 
 
 Applicant incurred state and federal tax liabilities from his failure to pay sufficient 
income tax withholding or estimated payments during the years he operated his 
business. Applicant paid his business tax and other financial obligations. He filed all the 
returns required, but he did not have the money to pay the taxes. He did not save 
money during each year with which to pay the income taxes. The 10 state tax liens 
(SOR Para. 1.a to 1.h, 1.j, and 1.k) listed in the SOR, totaling $19,505, arose from his 
failure to pay his personal income taxes for several years when he owned his computer 
business. He also owes $37,898 to the Internal Revenue Service (SOR Para. 1.i) for 
personal income tax obligations. Applicant did not have an accountant handle his 
business books and records for the first two years of the business operation.  He did not 
manage his accounts receivable in the proper manner, and his income fluctuated from 
year to year. He never paid himself a regular monthly income. He did pay his employee 
payroll taxes on time. Applicant does not have sufficient income from his current 
$57,000 annual salary to pay these delinquent debts. From his monthly net income after 
taxes and deductions, he pays $1,100 in child support for his daughter who is under 18 
years of age.  He pays his son’s college tuition and some other expenses, leaving him a 
 
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remaining net income of about $600 monthly. He has no savings and little money in his 
checking account. (Tr. 22, 23, 30, 31, 33, 34, 36, 44-46, 51-54, 56, 57, 68, 69; Exhibits 
2, 3) 
 
 Applicant owes $195,000 on his home, which is currently in foreclosure 
proceedings. Applicant attempted to sell the home between 2007 and 2009, but was not 
able to do so. His plan was to take any gain from the house sale and repay his 
delinquent debts. He also owes $15,000 on a home equity loan. Neither of these debts 
are repaid or otherwise resolved. Applicant concludes that a Chapter 7 bankruptcy is 
the only method to rid his record of these financial obligations. He has started paying an 
attorney to represent him in such a proceeding, if he can include the tax liens as 
dischargeable debt. (Tr. 35, 37-42, 47, 54; Exhibits 2, 3) 
 
 Applicant does not have any credit cards at the present time.  He used a $5,800 
income tax refund to repay part of his federal tax debt. He has maximum withholding 
taken from his monthly paycheck. He does not have a retirement plan, nor does he 
have health insurance because of the monthly $600 cost. Applicant has not obtained 
any consumer debt counseling regarding his debt and personal finances. He does not 
have any other unpaid debts, other than his tax debts and the house loans. (Tr. 44, 48, 
65) 
 
 Applicant is engaged.  He lives with his fiancée and gives her his paycheck each 
month. From that money, she pays his alimony and child support payment of $1,100 
monthly, and his other expenses.  Applicant also pays for the auto insurance for his two 
children, and is required to pay about $600 worth of expenses for his daughter’s school 
trip to Washington, D.C.  Applicant claims he has no money remaining at the end of 
each month to pay any of his tax or home mortgage liabilities. Applicant did not provide 
any information that verifies where his income goes after he gives it to his fiancée. His 
financial statement submitted in response to the interrogatories shows that he pays her 
$500 monthly rent and is paying the house mortgage and home equity loan.  Applicant 
testified he paid the mortgage only a few times on the required schedule, and at the end 
of his marriage he did not have money to pay either the mortgage or the home equity 
loan. He does not have the present financial ability to pay those house loans. Applicant 
declared that he did not care about money, and it has only caused him pain. (Tr. 31, 38-
40, 48-50, 52, 58, 59)  
 
 Applicant submitted exhibits showing three medallions he received for his work in 
support of U.S. military forces in his present employment, a certificate of appreciation 
for providing information technology support during a training exercise, a certificate of 
appreciation for his technical support during a military exercise, another certificate of 
appreciation for his technical support during another military training exercise at his 
place of employment, and his latest performance evaluation that shows he exceeds 
requirements in all areas but one.  The evaluation shows his technical job knowledge is 
“outstanding.” (Exhibits A to E)   
 
 
 
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Policies 
 
 When evaluating an applicant’s suitability for a security clearance, the 
administrative judge must consider the revised adjudicative guidelines (AG). In addition 
to brief introductory explanations for each guideline, the adjudicative guidelines list 
potentially disqualifying conditions and mitigating conditions, which are useful in 
evaluating an applicant’s eligibility for access to classified information. 
 
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 the adjudicative process. The administrative judge’s overarching 
adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶ 
2(c), the entire process is a conscientious scrutiny 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 access to 
classified information will be resolved in favor of 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. Likewise, I have avoided drawing inferences 
grounded on mere speculation or conjecture. 
 
Under Directive ¶ E3.1.14, the Government must present evidence to establish 
controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, an “applicant is 
responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or 
mitigate facts admitted by applicant or proven by Department Counsel, and has the 
ultimate burden of persuasion as to obtaining a favorable clearance decision.”  
 
A person who seeks access to classified information enters 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 access to classified information.  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 information. 
  
Section 7 of Executive Order 10865 provides that decisions shall be “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).   
 
 
 
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Analysis 
 
Guideline F, Financial Considerations 
 
The security concern relating to the guideline for Financial Considerations is set 
out in AG & 18:       
 
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.  
 
The guideline notes nine conditions that could raise security concerns. From 
these nine conditions, two disqualifying conditions are potentially applicable.  
 
Under AG & 19(a), an Ainability or unwillingness to satisfy debts@ is potentially 
disqualifying.  Similarly under AG & 19(c), Aa history of not meeting financial obligations@ 
may raise security concerns. Applicant accumulated significant delinquent tax debt and 
is unable to pay these obligations from his former business income or current salary. 
These delinquent tax and house loan debts date back to 2000 when Applicant started 
his business. Applicant admits owing all his debts. The evidence is sufficient to raise 
these two disqualifying conditions, 
 
The guideline also includes six examples of conditions that could mitigate 
security concerns arising from financial difficulties. Of these six conditions, three may 
have some applicability. 
 
Under AG & 20(b), it may be mitigating where Athe conditions that resulted in the 
financial problem were largely beyond the person=s control (e.g., loss of employment, a 
business downturn, unexpected medical emergency, or a death, divorce or separation), 
and the individual acted responsibly under the circumstances.@ The financial problems 
arose from his failure to pay his state and federal personal income taxes while operating 
his business.  He blames his former wife for extravagant spending on a large house, 
annually obtaining new cars, and private school tuition for at least one of his children. 
Applicant admitted that he could not control his wife’s spending habits, and may not 
have tried to do so in order to avoid family arguments. Those actions were his fault and 
within his control. His business later started to fail, and he obtained a salaried position in 
2008. He paid his business debts, but has done nothing to pay or resolve his personal 
income tax liabilities incurred in the 2000 to 2007 period. He has not paid his house 
mortgage or his home equity loan, or apparently made any attempt to do so. I find this 
potentially mitigating condition is not a factor for consideration in this case because 
Applicant has not acted responsibly under the circumstances that gave rise to his 
delinquent debts.  
 
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Evidence that Athe 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@ 
is potentially mitigating under AG & 20(c). Similarly, AG & 20(d) applies where the 
evidence shows Athe individual initiated a good-faith effort to repay overdue creditors or 
otherwise resolve debts.@ Applicant has not obtained any counseling and has not 
resolved the delinquent debts, either by payment or settlement or other good-faith 
efforts. There are no clear indications that his financial problems are under control. I 
conclude these potentially mitigating conditions do not apply. 
 
Whole-Person Concept 
 
 Under the whole-person concept, the administrative judge must evaluate an 
applicant’s eligibility for a security clearance 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(a):  
 
(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.  
 
 AG ¶ 2(c) requires each case must be judged on its own merits.  Under AG ¶ 
2(c), the ultimate determination of whether to grant eligibility for a security clearance 
must be an overall commonsense judgment based upon careful consideration of the 
guidelines and the whole-person concept.        
 
I considered the potentially disqualifying and mitigating conditions in light of all 
the facts and circumstances surrounding this case. Applicant was a businessman and 
an adult when he incurred his delinquent tax debts. He could not manage his business 
finances properly during the life of his business from 2000 to 2008. Nor could he control 
his wife’s extravagant spending during the same time period. Applicant did not seek or 
obtain any financial counseling until 2008, nor has he made any efforts to resolve these 
debts. There is a continuous pattern of financial mismanagement exhibited by Applicant 
over the past eight years. Because the debts are unresolved, even in the smallest 
amount, there is the potential for pressure, coercion, exploitation, or duress. His inability 
to control his finances shows there is a likelihood of continuation or recurrence 
 
Applicant’s statement about not caring about money, coupled with his monthly 
practice of giving his fiancée his income check without verifying where the money is 
spent, shows he is oblivious to his financial obligations. He wants to do his computer 
work and have someone else handle his money for him. As stated above, during his 
 
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years in business he showed no ability to handle money, shown by his working without 
an accountant for the first two years, and his repeated failure to save money for taxes. 
This attitude, coupled with his payments to his children for their expenses and auto 
insurance, demonstrates he takes care of his family first rather than his tax liabilities. 
While that attitude might be noble, it also makes him vulnerable to pressures from the 
family or because of the family to ignore his legal duty to pay his debts and taxes. It may 
also provide fertile ground for exploitation or duress in the future on other issues relating 
to classified information and its disclosure. I also conclude Applicant’s actions show a 
lack of reliability in fulfilling his financial obligations. They also show a lack of good 
judgment in operating a business and his personal financial affairs.  
 
It is clear Applicant is a good employee and a conscientious worker for his 
company. He knows computers and can handle the technical work. His efforts are 
recognized as shown by the certificates he submitted. However, these factors are not 
enough to overcome the financial mismanagement and chronic failure exhibited by 
Applicant to pay his income taxes over the past eight years. 
 
Overall, the record evidence leaves me with questions or doubts as to Applicant’s 
eligibility and suitability for a security clearance. For all these reasons, I conclude 
Applicant did not mitigate the security concerns arising from his financial considerations. 
I conclude the “whole-person” concept against Applicant. 
 
Formal Findings 
 
 Formal findings for or against Applicant 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:   AGAINST APPLICANT 
 
 Subparagraphs 1.a to 1.m.:  Against Applicant 
     
Conclusion 
 
 In light of all of the circumstances presented by the record in this case, it is not 
clearly consistent with the national interest to grant Applicant eligibility for a security 
clearance.  Eligibility for access to classified information is denied. 
 
 
                                                     
_________________ 
PHILIP S. HOWE 
Administrative Judge