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                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
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---------------- )       ISCR Case No. 08-05699
SSN: ----------- )
)
Applicant for Security Clearance )
Appearances
For Government: Paul M. DeLaney, Esquire
For Applicant: Pro se
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Decision
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CURRY, Marc E., Administrative Judge:
Over the past twenty years, Applicant has filed for Chapter 7 bankruptcy
protection twice, and is currently behind on his federal and state income taxes. Although
he recently established a payment plan, it is too soon to conclude that he has mitigated
the Financial Considerations security concern. Clearance is denied.
On May 26, 2009, the Defense Office of Hearings and Appeals (DOHA) issued a
Statement of Reasons (SOR) detailing the basis for its denial of Applicant’s security
clearance. Specifically, it alleged facts which raise concerns under Guidelines 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. 
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Applicant answered the SOR on June 15, 2009, and requested an administrative
determination. On August 14, 2009, the government prepared a File of Relevant
Materials (FORM). Applicant received the FORM on September 28, 2009, and prepared
a response that day. The government received Applicant’s response on October 1,
2009, and the case was assigned to me on October 8, 2009.
Findings of Fact
Applicant is a 56-year-old married man with three adult children. He was born
and raised in Iraq, immigrated to the United States (U.S.) in the 1970s, and became a
naturalized U.S. citizen in 1982 (Item 8 at 10). Since 2006, he has worked for various
defense contractors as a translator and bi-cultural advisor in support of Operation Iraqi
Freedom (Id.). 
In the late 1980s, Applicant was a successful real estate investor (FORM
Response, Exhibit C at 9). By 1991, he was a partner in a company that owned 14
shopping centers (Id.). He financed the purchase of these shopping centers through
loans that he had personally guaranteed (Id.). In 1992, the commercial real estate
market “fell apart” (Id.; FORM Response, Exhibit A at 1). As vacancies mounted,
Applicant became unable to pay his creditors (Id.). 
In 1994, Applicant filed for Chapter 7 bankruptcy. Later that year, the bankruptcy
court discharged his debts (Item 4 at 1). The amount of debt discharged is unknown
from the record.
After Applicant’s real estate venture failed, he switched careers and became a
stockbroker (FORM Response, Exhibit C at 9). As Applicant’s expertise grew, his client
base expanded and his business prospered (Item 8 at 41). By the end of the decade, he
was earning, on average, approximately $150,000 per year (FORM, Exhibit C at 6).
Shortly after 9/11, however, “the stock market tanked” and Applicant’s income
decreased (Item 16 at 27). Also, the investments that he was managing for his clients
began to fail. (Id.). Subsequently, some of his clients became disgruntled and sued him
(Id.). 
At or about the time Applicant began having financial difficulties, his mother and
brother died (Id.). Applicant was solely responsible for their funeral arrangements. Also,
he had to support his brother’s children (Id.).
Applicant’s debts, including his federal and state income tax payments, gradually
became delinquent. In March 2004, the U.S. Internal Revenue Service (IRS) filed a lien
against his property for approximately $60,000 in unpaid taxes (Item 15). In 2005, two of
Applicant’s cars were repossessed, and his mortgage was foreclosed (Item 16 at 17-18,
29). In July 2006, Applicant filed for Chapter 7 bankruptcy protection (Item 9 at 4). He
listed on the petition $482,000 in liabilities, including $140,000 of delinquent state and
federal income taxes spanning tax years 1998 to 2005 (Item 16 at 15). As part of the
bankruptcy process, Applicant completed a budget and credit counseling course (Item
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16 at 2). Later in 2006, all of Applicant’s debts, except approximately $66,000 of back
federal and state income taxes, were discharged (Item 16 at 42). 
In December 2006, the state revenue taxing authority entered a lien against
Applicant’s property in the amount of approximately $8,700 for back income taxes (Item
8 at 40). In November 2007, Applicant entered into a payment plan to resolve his back
state income taxes (FORM Response, Exhibit C at 1). Under the plan, he is to pay $100
monthly (Id.). Applicant provided no evidence supporting his contention that he has
been complying with the plan.
In January 2007, the IRS obtained a lien against Applicant’s property for
approximately $41,000 (Item 14 at 1). In May 2009, Applicant entered into a payment
plan with the IRS (FORM Response, Exhibit C at 3). As of September 2009, he owed
the federal government approximately $76,000 of back income taxes for tax years 2002
through 2005 (FORM Response, Exhibit B). Under the plan, he is to pay $1,000
monthly. He provided no evidence of payments. 
Applicant maintains a budget. As of September 2008, he earns approximately
$8,900 monthly and has $34,000 in savings (Item 9 at 3).
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 together with the factors
listed in the adjudicative process. According to AG ¶ 2(c), the entire process is a
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.
Under Directive ¶ E3.1.14, the government must 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 applicant or proven by Department Counsel. . . .” The
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applicant has the ultimate burden of persuasion as to obtaining a favorable security
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. 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 an 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).
Analysis
Guideline F, Financial Considerations
Under this guideline, “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” (AG
¶ 18). Moreover, “an individual who is financially overextended is at risk of having to
engage in illegal acts to generate funds” (Id.). Applicant’s history of financial
delinquencies triggers the application of AG && 19(a), “an inability or unwillingness to
satisfy debts,@ and 19(c), Aa history of not meeting financial obligations.” 
At different periods during Applicant’s career, his financial well-being was
dependent on the viability of both the commercial real estate market and the stock
market. Consequently, his contention that his financial hardship corresponded with
downturns in these respective markets was credible. Applicant, however, provided
neither specific evidence detailing the relationship of these market factors to his
financial difficulties, nor specific evidence detailing any steps he took to stabilize his
finances before filing for bankruptcy protection. Also, he offered no explanation as to
why his delinquencies, which were most recently discharged, were so extensive.
Moreover, not all of Applicant’s financial difficulties corresponded with downturns in the
U.S. economy. For example, Applicant attributes the cause of his most recent financial
struggles to the post-9/11 stock market downturn; however, the evidence indicates that
some of his delinquencies predate 9/11 by three years.
In 2006, Applicant obtained a discharge of all of his delinquent commercial debts
and a partial discharge of his back state and federal income taxes. He is paying the
remaining tax debt through installment agreements. However, Applicant still owes
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approximately $85,000 of delinquent federal and state income tax debt, and just began
paying the federal tax debt in September 2009. Although he arranged the state tax
payment plan two years ago, he provided no evidence that he has been complying with
the plan. 
The cause of Applicant’s delinquencies and the steps he has taken to address
them, including counseling, are sufficient to merit application of AG ¶ 20(a), “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 separation), and the individual acted responsibly
under the circumstances,” AG ¶ 20(d), “the individual initiated a good-faith effort to
repay overdue creditors or otherwise resolve debts,” and the first prong of AG ¶ 20(c),
“the person has received or is receiving counseling for the problem . . . .” However, the
amount of his outstanding delinquent debt and his failure to provide evidence
demonstrating compliance with the income tax installment payment agreements compel
me to conclude that the second prong of AG ¶ 20(c), “. . . there are clear indications that
the problem is being resolved or is under control,” does 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 the 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.
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.
Applicant deserves credit for assisting the U.S. war effort by returning to his
native country to work as a translator and bi-cultural advisor. Circumstances beyond his
control contributed to his financial difficulties. Absent more detail about these
circumstances, this mitigating factor is outweighed by the recurrent nature of his
financial difficulties, the amount of debt Applicant accrued before filing for bankruptcy
protection in 2006, the amount of delinquent debt that remains outstanding, and the lack
of documentation supporting Applicant’s contention that he has been satisfying the
remaining income tax delinquencies. Upon evaluating the whole person factors, I
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conclude that it is not clearly consistent with the national interest to grant Applicant
access to classified information. Clearance is denied.
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 - 1.e: Against Applicant
Conclusion
In light of all of the circumstances presented by the record in this case, it is not
clearly consistent with national security to grant Applicant eligibility for a security
clearance. Eligibility for access to classified information is denied.
                                             
MARC E. CURRY
Administrative Judge