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                           DEPARTMENT OF DEFENSE   
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
 ------------------------- )     ISCR Case No. 08-07505
SSN: ----------------- )
)
Applicant for Security Clearance )
Appearances
For Government: Gina L. Marine, Esquire, Department Counsel
For Applicant: Pro Se
______________
Decision
______________
MATCHINSKI, Elizabeth M., Administrative Judge:
Between July 2002 and October 2006, the Internal Revenue Service (IRS) filed
liens totaling $88,698 against Applicant for nonpayment of taxes. The most recent lien
of about $53,154 covers tax years 2003 and 2004, when Applicant was gambling
heavily, and it has not been released. In 2007, he defaulted on two mortgage loans.
While he averted foreclosure of his home by modifying or refinancing his primary
mortgage, the lender of his second mortgage wrote off its loan. Applicant continues to
ignore some consumer credit delinquencies, and he was not fully candid about his
financial problems when he applied for his security clearance. Clearance is denied.
Statement of the Case
Applicant submitted an Electronic Questionnaire for Investigations Processing (e-
QIP) on April 14, 2008. On March 2, 2009, the Defense Office of Hearings and Appeals
(DOHA) issued to Applicant a statement of reasons (SOR) detailing the security
concerns under Guideline F, financial considerations, and Guideline E, personal
conduct, that provided the basis for its preliminary decision to deny him a security
clearance and to refer the matter to an administrative judge. The action was taken
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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) effective within the
Department of Defense as of September 1, 2006.
On March 26, 2009, Applicant answered the SOR and requested a hearing. On
May 12, 2009, Applicant resubmitted his Answer, apparently clarifying his response to
one or more allegations at DOHA’s request (Tr. 10). The case was assigned to me on
June 30, 2009, to conduct a hearing and to determine whether it is clearly consistent
with the national interest to grant or continue a security clearance for Applicant. On
August 11, 2009, I scheduled a hearing for September 16, 2009.
I convened the hearing as scheduled. Six government exhibits (Exs. 1-6) were
admitted into evidence without any objections. Applicant testified and submitted one
exhibit (Ex. A) that was entered into the record without any objections, as reflected in a
transcript (Tr.) received on September 25, 2009.
At Applicant’s request, I held the record open for one week for additional
documentation. On September 22, 2009, Applicant forwarded a written statement (Ex.
B) and financial records (Exs. C-G), which were admitted without any objections.  On
September 28, 2009, the government moved in rebuttal for the admission of four IRS
publications. Applicant filed no objections by the October 9, 2009, due date, and the
documents were admitted as government exhibits (Exs. 7-10).
Findings of Fact
DOHA alleged under Guideline F, financial considerations, that two federal tax
liens were filed against Applicant in 2005 for federal tax debts of $28,437.45 (SOR 1.a)
and $24,717.36 (SOR 1.b), which had not been paid as of October 2008; that he owed
delinquent consumer debts totaling $2,177.44 (SOR 1.c-1.f) and mortgage loan debt
totaling $449,000 (SOR 1.g-1.h); that he had $56,125 in gambling losses during tax
year 2004 (SOR 1.i); and that he was granted a Chapter 7 bankruptcy discharge in
about November 2000 (SOR 1.j). Applicant’s gambling loss was cross-alleged under
Guideline E, personal conduct (SOR 2.a). Also under Guideline E, DOHA alleged that
Applicant falsified his April 2008 security clearance application by failing to report the tax
liens (SOR 2.b) and delinquent mortgage loans (SOR 2.c-2.d). Applicant submitted a
response in which he indicated that he filed amended tax returns to the IRS, owed the
creditor in SOR 1.c $300 rather than $597.44, received a release from the mortgage
debt in SOR 1.g, had been in forbearance and not foreclosure of the mortgage loan in
SOR 1.h, and he won money gambling in 2004. After considering the pleadings,
exhibits, and transcript, I make the following findings of fact.
Applicant is a 39-year-old structural draftsman apprentice, who has been
employed by a defense contractor since April 2008 (Exs. 1, A, Tr. 51-52). From
January 2000 to April 2008, he had been self-employed as a subcontractor mortgage
Applicant has a history of failing to file timely returns, including for 2004 and 2007, and perhaps 20051
and 2006 as well (Tr. 26, 41, 43-44, 59), that could have led the IRS to file substitute returns and assess
penalties.
DOHA alleged that federal tax liens were filed in July 2005 (SOR 1.a) and May 2005 (SOR 1.b).2
Applicant’s credit reports (Exs. 4, 5, 6) show a $53,154 lien filed in October 2006, which would correspond
to the total tax debt alleged in SOR 1.a and 1.b.
It is unclear how Applicant arrived at these figures. Applicant submits that due to $56,125 in gambling3
losses, he had zero adjusted gross wages for 2004 and therefore does not owe the IRS $53,154. Neither the
win/loss statement from the casino reporting losses of $92,947 for 2004 (Ex. D), nor the form 1099-MISC
showing $600 in income for that same year (Ex. F), substantiates his claim that his losses cancelled out his
income for federal tax purposes for 2004.
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broker for a couple of mortgage companies, including one firm owned by his first cousin
(Ex. 1, Tr. 49, 55).
In August 2000, Applicant filed for Chapter 7 bankruptcy to relieve himself of the
legal responsibility to repay between $8,000 and $9,000 in medical debt following a
commercial construction accident (Tr. 65). He was granted a discharge in November
2000 (SOR 1.j) (Exs. 5, 6).
Whether due to inaccurate calculation of taxes owed due to his independent
contracting, failure to file required returns, or some other cause, Applicant had a history
of underpayment of federal income taxes that led the IRS to file liens against him.  In1
July 2002, the IRS filed a tax lien against him in the amount of $5,891, for unpaid taxes
of $3,806 for 1998 and $2,085 for 2000 (Tr. 60), which he satisfied in July 2004 (Ex. 4).
In February 2004, the IRS filed a tax lien against him in the amount of $29,655, for
unpaid taxes of $8,968 for 2001 and $20,687 for 2002, which he satisfied in July 2006
(Ex. 4, Tr. 59, 61).
In October 2006, the IRS filed a tax lien against him in the amount of $53,154
(Exs. 4, 5), for unpaid federal income tax debts of $28,437.45 for tax year 2003 (SOR
1.a) and $24,717.36 for tax year 2004 (SOR 1.b) (Exs. 4, 5, 6, Tr. 62).  The company2
for which Applicant worked as an independent contractor in 2004 reported to the IRS
that Applicant had nonemployee compensation of $95,695.36 for 2004 (Ex. C), and W-2
earnings totaling $7,615.41 (Ex. E). After the lien was filed, Applicant sought the
assistance of his father, who expressed concern that Applicant was paying too much in
taxes (Tr. 59). In about March 2008, Applicant’s father prepared an amended return for
him for tax year 2004 (Ex. 2). On his amended state and federal returns, Applicant
reported previously undisclosed gambling losses of $56,125, on adjusted gross income
of $56,125 (SOR 1.i), leaving him with no taxable income.  Based on these amended3
figures, Applicant calculated that he owed state taxes of $2,096 but was entitled to a
$432 federal tax refund for tax year 2004 (Ex. 2).
In October 2005, Applicant bought his home, taking out a primary mortgage loan
of $280,000 (SOR 1.h) and a second mortgage loan of $170,000 (SOR 1.g). In 2007,
Applicant stopped paying his mortgage loans (Tr. 67), and they fell into default. In April
2007, the servicer for the second mortgage issued a 1099-C, indicating $0 of the debt
Applicant testified that he made payments on a monthly basis, but that he could have been “a little4
late here and there” (Tr. 73). His credit report of October 14, 2008, shows a past due balance of $18,711 on
the loan. He presented no documentation showing that he made the $27,733.93 payment in May 2008
required by the forbearance agreement, although he subsequently managed to avert foreclosure by actions
taken in 2009.
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had been cancelled (Ex. 3). The lender did not actively pursue the debt, but continued
to report past due balances on Applicant’s credit reports (Exs. 4, 5, 6). Foreclosure
proceedings were initiated on his primary mortgage. With his mortgage $18,410.01 in
arrears, Applicant entered into a forbearance agreement with the servicer of his primary
mortgage in February 2008. Applicant agreed to pay $28,956.73 to rehabilitate the loan
as follows: $3,402 on or before February 11, 2008, $2,161.88 on or before March 11,
2008, $2,161.88 on April 11, 2008, and $27,733.93 on May 11, 2008 (Ex. 2). Applicant
made some payments, but he was behind $15,309 on his loan as of April 2008 (Ex. 4).4
By December 2007, Applicant was seriously behind in his $694 monthly car
payment on a loan taken out in February 2004 for $32,707 (Ex. 5). His car was
repossessed (Ex. 1), but he redeemed the vehicle within a few weeks by paying $3,200
(Tr. 78, 80-81). His loan was current for only a short time. As of April 2008, he was 60
days past due in his car payment (Ex. 5).
In April 2008, Applicant began a five-year apprenticeship program to become a
structural draftsman at this present place of employment (Exs. 1, A, Tr. 92). His starting
hourly wage was $13.33 (Tr. 51). On April 14, 2008, he completed an e-QIP for a
secret-level security clearance (Tr. 93). He listed only the vehicle repossession in
December 2007 in response to inquiries into his financial record. He responded
negatively to question 27.c, concerning whether a lien had been placed against his
property in the last seven years for failing to pay taxes or other debts. He also answered
“No” to questions 28.a, “In the last 7 years, have you been over 180 days delinquent on
any debt(s)?” and 28.b, “Are you currently over 90 days delinquent on any debt(s)?”
(Ex. 1). Applicant testified at his hearing that he did not disclose the IRS tax liens or tax
debts because he did not believe he owed delinquent federal taxes based on his
recently prepared amended return (Tr. 78), and because he had satisfied past tax debts
to release earlier tax liens (Tr. 79). When asked about his failure to report any financial
delinquencies, Applicant cited the forbearance agreement, which was to bring the
primary mortgage current, and he indicated he had been unaware of any credit card
delinquency (Tr. 79-80).
As of April 2008, Applicant had not satisfied or resolved the $53,154 federal tax
lien. In addition to being late in his car payments, he owed past due balances of about
$1,000 on a MasterCard account charged off in December 2006 and in collection (SOR
1.f), $426 on a closed checking account (SOR 1.e), and $124 on a credit card account
inactive since April 2002 (SOR 1.d) (Ex. 4).  In about January 2008, a plumber filed a
mechanic’s lien of almost $600 against Applicant for nonpayment of services provided
in July and August 2007. On May 19, 2008, Applicant paid the plumber $300, reducing
the past due balance to $322.39 (Ex. G, Tr. 73-75). Applicant disputes the lien because
of his payment in May 2008, but he has not attempted to resolve the issue (Tr. 75).
Applicant considers the debt to be resolved since the lender wrote it off (Tr. 29).5
Applicant testified that he filed an extension for payment of income taxes for 2008, but he cannot6
recall the amount owed (Tr. 42).
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On June 5, 2008, Applicant was interviewed by a government investigator about
his delinquent financial accounts and the federal tax lien. Applicant disputed the lien and
claimed that as a self-employed broker from 2000 to January 2008, he filed yearly
income tax returns and paid taxes on his income. Yet, he acknowledged that he had
been notified by the IRS in 2006 about $83,000 in delinquent federal income tax debt
covering a four-year span. Applicant claimed that amended returns showed no money
owed. Applicant acknowledged one delinquent credit card debt (SOR 1.f) on which he
owed at least $1,000 due to interest. He indicated he would contact the lender and
resolve the matter. As for his delinquent mortgages, Applicant explained that his second
mortgage had been placed for collection due to him not earning enough to make the
payments, but his account had been closed and the balance written off.  Applicant5
indicated that he was in the process of modifying his primary mortgage (Ex. 3).
By October 2008, Applicant had brought his car loan current, but his primary
mortgage was $18,711 past due and again in the process of foreclosure (Ex. 5).
Applicant subsequently refinanced his primary mortgage in late spring 2009, taking out
a conventional 30-year mortgage loan of $322,000, to be repaid at $2,400 monthly (Ex.
6, Tr. 69-72), but he made no effort to address his other known debts or to verify the
debt in SOR 1.d that he was unsure about (Tr. 31). As of June 2009, he owed $1,197
on the delinquent credit card account in SOR 1.f, was reportedly $59,000 past due on
the defaulted second mortgage, owed a collection balance of $546 on another account
(likely SOR 1.e), was $1,000 past due in his car payment, and had not yet resolved his
IRS debts covered by the October 2006 lien (Ex. 6). In August 2009, the IRS began
garnishing his wages at $130 per week to repay a $6,000 federal tax debt for a tax year
that Applicant claimed to not recall (Tr. 27, 56-57, 64). As of his hearing in mid-
September 2009, Applicant had not filed his federal or state income tax returns for tax
year 2007 (Tr.41), and he provided no reason for his failure to do so (Tr. 43). He was
not sure whether he had filed returns for tax years 2005 (Tr. 44) or 2006 (Tr. 43).
Applicant filed his returns for 2008. He owes federal taxes for that year as well (Tr. 42).6
Applicant has gambled (slots, video poker) once at a casino in the last couple of
years, likely in early 2009. He took $100 or $200 with him and came home with $300 on
that occasion (Tr. 40-41).
As of September 2009, Applicant’s hourly wage in the apprenticeship program
was $15.95 (Tr. 51). Available monthly performance reviews indicate he was doing
good work and his attendance was within company guidelines (Ex. A). Since April or
May 2008, he has also worked a second job as a bartender at a local restaurant (Tr. 53-
54). His compensation there is largely dependent on tips, although he is paid a small
hourly wage (Tr. 54).
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Applicant has been married since September 2008. As of September 2009,
Applicant’s spouse was handling the bills. He did not maintain an open checking
account or a savings account (Tr. 83), and his pay was being deposited into his
spouse’s account. Applicant did not know whether they had any funds remaining after
their monthly bills were paid (Tr. 85), or whether his spouse had delinquent debt of her
own on which she was making payments (Tr. 94). No evidence was presented to
indicate the extent of her financial contributions to the household.
Policies
The U.S. Supreme Court has recognized the substantial discretion the Executive
Branch has in regulating access to information pertaining to national security,
emphasizing “no one has a ‘right’ to a security clearance.” Department of the Navy v.
Egan, 484 U.S. 518, 528 (1988). When evaluating an applicant’s suitability for a security
clearance, the administrative judge must consider the adjudicative guidelines (AG). In
addition to brief introductory explanations for each guideline, the adjudicative guidelines
list potentially disqualifying conditions and mitigating conditions, which are required to
be considered 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, 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 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 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
that 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
Applicant reported gambling winnings (Form W -2G) of $56,125 equal to reported losses of $56,1257
(Ex. 2). According to IRS Topic 419 on gambling income and losses, a payer is required to issue a Form W -2G
for certain gambling winnings or if any gambling winnings are subject to federal income tax withholding.
Gambling losses may be an itemized deduction, but the amount of loss deducted may not be more than the
amount of gambling income reported on the return (Exs. 7-10). Based on the casino win/loss statement,
Applicant’s gambling losses exceeded his winnings at that casino, but he is not entitled to claim the entire loss.
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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 security concern about finances 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.
Applicant has a record of income tax delinquency and of repeated failure to file
timely tax returns when he was a self-employed broker. Federal tax liens were filed
against him in July 2002 for $5,890, in February 2004 for $29,654, and in October 2006
for $53,154. As of September 2009, his wages were being garnished to repay $6,000 in
delinquent federal taxes for a tax year that he cannot now recall, and he owes back
taxes for 2008 that he had not yet started to repay. Applicant also defaulted on his
mortgage loans in 2007, and he fell seriously delinquent on a few consumer credit debts
(SOR 1.c-1.f). His inability to remain current on his financial obligations, especially after
he had been afforded a fresh start through a Chapter 7 bankruptcy discharge in 2000,
raises serious doubts about his financial judgment. AG ¶ 19(c), “a history of not meeting
financial obligations,” and AG ¶ 19(a), “inability or unwillingness to satisfy debts,” clearly
apply.
There is credible evidence that would implicate casino gambling as a negative
influence on Applicant’s financial situation in 2004. The win/loss record of the local
casino indicates a loss of $92,647.00 from slot machines alone. Applicant reported on
his amended income tax return for 2004 that he had gambling losses of $56,125.7
Whether or not he could cover his gambling losses with his job income and winnings, it
was financially irresponsible of him to gamble to such an extent when he owed
delinquent federal taxes. He did not pay his $29,654 tax debt for 2001 and 2002 until
July 2006, despite a federal tax lien. AG ¶ 19(f), “financial problems that are linked to
drug abuse, alcoholism, gambling problems, or other issues of security concern,”
applies.
Gambling winnings are fully taxable and must be reported on one’s tax return (Ex. 8).8
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Furthermore, although not alleged as raising a separate concern under Guideline
F, Applicant had not filed his federal or state returns for tax year 2007 (Tr. 41). He is
uncertain whether he filed for 2005 or 2006. Even assuming those returns were filed,
AG ¶ 19(g), “failure to file annual Federal, state, or local income tax returns as required
or the fraudulent filing of the same,” still applies, given his failure to file his 2007 returns
and his admitted failure to report his gambling wins and losses on his 2004 return.8
Concerning potential factors in mitigation, 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 cast doubt on the individual’s current reliability, trustworthiness, or
good judgment,” cannot reasonably apply in light of the extent and recency of his
financial problems. 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, or a death, divorce or separation), and the
individual acted responsibly under the circumstances,” applies in that medical debt led
Applicant to file for bankruptcy in 2000. But AG ¶ 20(b) does not mitigate the poor
financial decisions that led to his present financial situation. He gambled beyond what
he could reasonably afford and failed to comply with the laws concerning the timely
filing of tax returns and payment of taxes owed.
AG ¶ 20(e), “the individual has a reasonable basis to dispute the legitimacy of the
past-due debt which is the cause of the problem and provides documented proof to
substantiate the basis of the dispute or provides evidence of actions to resolve the
issue,” applies in only limited part. Applicant has a credible dispute about the balance of
the mechanic’s lien (SOR 1.c) in that he paid $300 to reduce the balance on his account
to $322.39 as of mid-May 2008. Applicant’s challenge to any current liability for his
defaulted second mortgage (SOR 1.g) is based on a 1099-C form for tax year 2007
issued by the lender around the time that the primary mortgagee initiated foreclosure
proceedings. The amount of the cancelled debt was listed as $0 on the 1099-C, and the
creditor continues to report the account as delinquent on Applicant’s credit reports. Yet,
there is no evidence that the creditor has attempted to collect the debt, which it wrote off
in April 2007. While Applicant may not be required to repay the debt, it does not fall
squarely into AG ¶ 20(e) since it was a legitimate obligation that he allowed to fall into
default. Applicant still does not recognize the debt in SOR 1.d, which was listed on his
credit record, but he did not provide any documentation to substantiate his dispute.
Furthermore, Applicant’s amended return for tax year 2004 is insufficient in and of itself
to prove that he owes no back taxes for 2003 and 2004. Even if the IRS eventually
reduces his federal tax liability for 2004 because of his gambling losses, Applicant
provided no credible evidence to rebut the IRS assessment of $28,437.45 in delinquent
taxes for tax year 2003.
Although his mortgage defaults reflect adversely on his judgment and reliability,
Applicant is credited with working with his primary mortgage lender to avert foreclosure.
He also satisfied tax liens filed against him in 2002 and 2004 for nonpayment of federal
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taxes in 1998, 2000, 2001, and 2002. But it would be premature to apply AG ¶ 20(c),
“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,” or AG ¶ 20(d),
“the individual initiated a good-faith effort to repay overdue creditors or otherwise
resolve debts.” He has not resolved the federal tax lien for nonpayment of taxes alleged
in SOR 1.a and 1.b. He has taken no action to arrange for repayment of his consumer
credit delinquencies. Since his marriage in September 2008, he has continued to have
difficulty meeting some of his financial obligations on time. He was behind in his primary
mortgage as recently as March 2009, although he subsequently refinanced or modified
the loan. As of June 2009, he had again fallen behind in his car payments. In August
2009, the IRS began garnishing his wages to recover back taxes of about $6,000.
Concerns persist that he may not be able to fully cover his ongoing monthly expenses,
including $130 per week to the IRS, $694 per month for his car, and $2,400 per month
for his mortgage. He has not begun repaying federal taxes owed for 2008. The financial
concerns are not fully mitigated, even though he deserves credit for limiting his casino
gambling to only once in the last couple of years.
Guideline E, Personal Conduct
The security concern about personal conduct is set out in AG ¶ 15:
Conduct involving questionable judgment, 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
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.
Applicant exercised poor judgment within the context of AG ¶ 15 when he
gambled heavily while ignoring his obligation to pay delinquent federal taxes. AG ¶
16(e), “personal conduct or concealment of information about one’s conduct, that
creates a vulnerability to exploitation, manipulation, or duress, such as (1) engaging in
activities which, if known, may affect the person’s personal, professional, or community
standing,” must be considered. Applicant’s casino losses for 2004 amounted to $92,947
when he had a $29,654 federal tax lien against him.
The government also alleged deliberate falsification of his security clearance
application in April 2008 because Applicant did not disclose the latest tax lien (SOR 2.b)
and his mortgage defaults (SOR 2.c-2.d). When he was interviewed in June 2008,
Applicant denied knowing of the tax lien, although he admitted he had been notified by
the IRS in 2006 that he owed four years of back taxes. He claimed that he had filed
amended returns showing he owed no taxes (Ex. 3). At his hearing, Applicant attributed
his negative response to the lien inquiry (27.c, “In the last 7 years, have you had a lien
placed against your property for failing to pay taxes or other debts?”), to his belief that
he did not owe any taxes based on the amended return (Tr. 78). He had satisfied the
taxes to release the earlier tax liens (Tr. 79). Applicant did not indicate at his hearing
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that he had been unaware of the October 2006 lien, but the evidence falls short of
establishing that he acted to conceal that tax lien when he completed his e-QIP.
On the other hand, he knew that he had paid more than $30,000 to the IRS
within the last seven years to satisfy delinquent taxes. An affirmative response to
question 28.a (“In the last 7 years, have you been over 180 days delinquent on any
debt(s)?”) was clearly required. Applicant’s amended return showing he was entitled to
a refund of federal taxes could extenuate his failure to list any tax debt for 2004 in
response to question 28.b (“Are you currently over 90 days delinquent on any
debt(s)?”). But it could not reasonably justify his omission of the tax delinquency for
2003 from 28.a and 28.b. Applicant’s overall credibility suffers because of his failure to
disclose his tax delinquencies on his e-QIP.
Furthermore, the facts support a finding of knowing concealment of his defaulted
mortgage loans. Applicant explained that the forbearance agreement was supposed to
bring his primary mortgage current, and he was taking care of the situation (Tr. 79-80).
Under the terms of the February 2008 forbearance agreement, which covered only his
primary mortgage, the loan servicer agreed to forbear from pursuing the foreclosure
proceedings and give Applicant time to cure the default by making payments totaling
$28,956.73. Applicant has not shown that his loan was out of default status as of his e-
QIP in April 2008. Also, whether or not the holder of his second mortgage had written off
the balance of its loan in April 2007, Applicant knew he had been behind more than 180
days on that debt within the last seven years. AG ¶ 16(a), “deliberate omission,
concealment, or falsification of relevant facts from any personnel security questionnaire,
personal history statement, or similar form used to conduct investigations, determine
employment qualifications, award benefits or status, determine security clearance
eligibility or trustworthiness, or award fiduciary responsibilities,” is implicated. A person
reviewing Applicant’s e-QIP would have no reason to know that he had financial
problems beyond a car repossession in 2007.
Applicant was not completely forthcoming about his tax situation when he was
interviewed in June 2008. He claimed that he had filed yearly income tax returns and
paid taxes on income earned. Concerning the notification of tax delinquency from the
IRS in 2006, Applicant averred that he filed amended returns and owed no taxes. Yet,
he admitted at his hearing that he has not filed for tax year 2007 and perhaps 2005 and
2006 as well. He did not volunteer to the government investigator any information about
previous tax liens or his satisfaction of delinquent tax debts in 2004 and 2006. Although
Applicant discussed his mortgage loan defaults with the investigator, I am unable to
apply mitigating condition AG ¶ 17(a), “the individual made prompt, good-faith efforts to
correct the omission, concealment, or falsification before being confronted with the
facts,” because of his lack of full candor about his tax situation.
AG ¶ 17(c), “the offense is so minor, or so much time has passed, or the
behavior is so infrequent, or it happened under such unique circumstances that it is
unlikely to recur and does not cast doubt on the individual’s reliability, trustworthiness,
or good judgment,” and AG ¶ 17(d), “the individual has acknowledged the behavior and
obtained counseling to change the behavior or taken other positive steps to alleviate the
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stressors, circumstances, or factors that caused untrustworthy, unreliable, or other
inappropriate behavior, and such behavior is unlikely to recur,” are not pertinent in light
of Applicant’s failure to appreciate the importance of providing true and complete
information during the security clearance process. Applicant has curtailed his gaming
activities in the past couple of years, so AG ¶ 17(e), “the individual has taken positive
steps to reduce or eliminate vulnerability to exploitation, manipulation, or duress,” must
be considered, but it does not fully mitigate the personal conduct concerns generated by
his excessive gambling when he had not complied with his federal income tax
obligations.
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 conduct
and all the circumstances in light of 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.
 Between July 2002 and October 2006, the IRS filed liens totaling $88,698
against him for nonpayment of taxes. The most recent lien of about $53,154 covers tax
years 2003 and 2004, when Applicant was gambling heavily, and it has not been
released. In 2007, he defaulted on two mortgage loans. While he averted foreclosure of
his home by modifying or refinancing his primary mortgage, he took no steps to cure the
default of his second mortgage. He continues to ignore some consumer credit
delinquencies of which he has had notice since June 2008, if not before. Applicant listed
no current financial delinquencies on his security clearance application. His work for the
defense contractor has been satisfactory. However, concerns about his financial
situation, and whether he can be counted on to comply with his tax obligations and
those expected of persons granted a security clearance, preclude me from finding that it
is clearly consistent with the national interest to grant him a security clearance at this
time.
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
12
Subparagraph 1.a: Against Applicant
Subparagraph 1.b: Against Applicant
Subparagraph 1.c: Against Applicant
Subparagraph 1.d: Against Applicant
Subparagraph 1.e: Against Applicant
Subparagraph 1.f: Against Applicant
Subparagraph 1.g: Against Applicant
Subparagraph 1.h: For Applicant
Subparagraph 1.i: Against Applicant
Subparagraph 1.j: For Applicant
Paragraph 2, Guideline E: AGAINST APPLICANT
Subparagraph 2.a: Against Applicant
Subparagraph 2.b: For Applicant
Subparagraph 2.c: Against Applicant
Subparagraph 2.d: Against Applicant
Conclusion
In light of 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.
Elizabeth M. Matchinski
Administrative Judge