DEPARTMENT OF DEFENSE 
  DEFENSE OFFICE OF HEARINGS AND APPEALS 
  
  
 
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 09-07595 
  ) 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Daniel Crowley, Esquire, Department Counsel 
For Applicant: Pro se 
 
 
 
 
______________ 
 
Decision 
______________ 
 
 
HEINY, Claude R., Administrative Judge: 
 
Applicant had three student loans placed for collection, which totaled 
approximately $20,000 and he owed the IRS approximately $8,000 in past-due taxes. 
He has established repayments schedules and is making timely monthly payments on 
his debts. Applicant has rebutted or mitigated the security concerns under financial 
considerations. Clearance is granted. 
 
Statement of the Case 
 
 Acting under the relevant Executive Order and DoD Directive,1 the Defense 
Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) on April 
29, 2010, detailing security concerns under financial considerations. Applicant contests 
                                                          
1 Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as 
amended; Department of Defense (DoD) Directive 5220.6, Defense Industrial Personnel Security 
Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines 
(AG) effective within the DoD on September 1, 2006. 
 
1 
the Defense Department’s (DoD) intent to deny or revoke his eligibility for an industrial 
security clearance. 
  
 On June 4, 2010, Applicant answered the SOR and requested a hearing. On 
August 12, 2010, I was assigned the case. On August 25, 2010, DOHA issued a Notice 
of Hearing for the hearing held on September 14, 2010.  
 
 The Government offered Exhibits (Ex.) 1 through 6, which were admitted into 
evidence without objection. Applicant testified on his own behalf and submitted Exhibits 
A through L, which were admitted into evidence without objection. The record was held 
open to allow additional information from Applicant. On November 16, 2010, additional 
material was submitted. Department Counsel had no objection to the material, which 
was admitted into the record as Ex. M. On September 21, 2010, DOHA received the 
hearing transcript (Tr.). 
 
Findings of Fact 
 
In Applicant’s Answer to the SOR, he admitted the four debts. Applicant’s 
admissions to the SOR allegations are incorporated herein. After a thorough review of 
the record, pleadings, exhibits, and testimony, I make the following additional findings of 
fact. 
 
 Applicant is a 31-year-old multimedia engineer who has worked for a defense 
contractor since April 2009, and is seeking to obtain a security clearance.  
 
 Applicant attended college from August 1998 through February 2000, from 
January 2002 through August 2002, and January 2004 through January 2005, which he 
paid for with student loans. Applicant’s financial problems began in 2000. (Tr. 27) He 
made poor choices with credit cards while in college. He agreed to work for his father’s 
company, receive an allowance, and his father was to pay his creditors the balance of 
his wages. His father’s cancer medication caused his father to act irrationally and his 
father failed to make more than minimum payments to Applicant’s creditors. (Tr. 28)  
 
 Applicant retook control of his finances and sought debt consolidation. When he 
was laid off from work, he stopped his monthly payments to the debt consolidation 
service. (Tr. 29) As of that date, he had paid the company $1,590, but none of his 
payments had been sent to his creditors. He ended his arrangement with the debt 
service.  
 
 In 2005, Applicant was notified he had a daughter. (Tr. 31) In December 2005, 
Applicant’s mother died. (Ex. 4) At that time, he was also dealing with this daughter’s 
adoption and an investigation stemming from dating a married woman whom he thought 
was single. These events resulted in his procrastination in filing his 2005 federal income 
tax return. As of his personal subject interview in August 2009 (Ex. 4), he had requested 
an extension for filing his 2006 and 2008 taxes. At that time, he had yet to file his taxes 
for 2005 through 2008. (Ex. 4) In October 2009, he filed all his past-due returns. His 
 
2 
2009 return was timely filed. The $61 tax refund for 2009 was intercepted and applied to 
the balance owed.  
 
 As of January 2010, Applicant owed $3,137 for tax year 2006, $5,025 for tax year 
2008, and $3,098 for tax year 2009. (Ex. 5, Ex. G-1, and Ex. G-2) For tax year 2007 he 
owed $2. (Ex. K) In response to interrogatories, he provided copies of all three years tax 
returns. (Ex. 5, Ex. I, Ex. J, and Ex. K) His tax obligation for 2008 increased because he 
cashed in his $27,473 from a 401(k) account, which he used to pay old debts. (Tr. 35, 
Ex. I)  
 
 Applicant entered into an installment agreement with the IRS for $135 monthly 
payments, which he continues to make. (Ex. 5) As of October 8, 2010, he owed $2,617 
for tax year 2006 and $4,282 for tax year 2008. (Ex. L) When possible, he pays 
additional amounts on his IRS debt above the agreed upon monthly amount. (Tr. 51) In 
October 2010, he paid the IRS $400 in addition to his agreed $135 monthly payment. 
(Ex. L) In September 2010, he was unsuccessful in his attempt to obtain a credit union 
loan to pay off the IRS debt. (Tr. F)  
 
 Applicant had two student loans (SOR 1.a, $3,146 and SOR 1.b, $2,926) which 
were placed for collection. He set up an automatic payment to make monthly payments 
of $61 and $57 on these loans. (Ex. C) The loans are out of default status. (Tr. 43) He is 
making $118 monthly payments by automatic deduction on these loans. (Ex. B)  
 
 Applicant had a $14,000 student loan placed for collection (SOR 1.c), which he 
was paying with a $115 monthly automatic payment. (Ex. D and E). In October 2009, he 
paid $1,100 on the debt (Ex. 5) and in December 2009 the amount changed to a $115 
monthly automatic deduction. (Ex. 5) His student loans have been successfully 
rehabilitated. (Ex. A) A $123 automatic debited is made monthly from his bank account. 
(Ex. A and D)  
 
 In addition to his full time contractor job, Applicant has his own company and 
does contract work for others. (Tr. 40) He has obtained material from a radio financial 
talk show to help him with his finances. (Tr. 42) He is working to have an emergency 
fund of $1,000 in savings. (Tr. 53) In addition to the debts previously listed, he is current 
on his debts including his car payment, credit card debt, and one additional debt. (Tr. 
55)  
 
 In June 2009, when Applicant completed his Electronic Questionnaires for 
Investigations Processing (e-QIP), he acknowledged his delinquent student loans and 
his failure to file his tax returns on a timely basis. (Ex. 1)  
 
Policies 
 
 When evaluating an applicant’s suitability for a security clearance, the 
administrative judge must consider the adjudicative guidelines. In addition to brief 
introductory explanations for each guideline, the adjudicative guidelines list potentially 
 
3 
disqualifying conditions and mitigating conditions, which must 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.  
 
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 to obtain 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 the applicant may deliberately or inadvertently fail to safeguard 
classified information. Such decisions entail a certain degree of legally permissible 
extrapolation of 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 of 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 
 
 Adjudicative Guideline (AG) ¶ 18 articulates the security concerns relating to 
financial problems: 
 
 
4 
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. 
 
Additionally, an individual who is financially irresponsible may also be 
irresponsible, unconcerned, negligent, or careless in properly handling and 
safeguarding classified information. Behaving responsibly or irresponsibly in one aspect 
of life provides an indication of how a person may behave in other aspects of life.  
 
A person’s relationship with his creditors is a private matter until evidence is 
uncovered demonstrating an inability or unwillingness to repay debts as agreed. Absent 
substantial evidence of extenuating or mitigating circumstances, an applicant with a 
history of serious or recurring financial difficulties is in a position of risk that is 
inconsistent with holding a security clearance. An applicant is not required to be debt 
free, but is required to manage his finances to meet his financial obligations. 
 
 Applicant has a history of financial problems. Applicant had three student loans 
totaling approximately $20,000 placed for collection and owed approximately $8,000 in 
past-due taxes. Disqualifying Conditions AG ¶ 19(a), “inability or unwillingness to satisfy 
debts” and AG ¶ 19(c), “a history of not meeting financial obligations,” apply.  
 
 The guideline includes conditions that could mitigate security concerns arising 
from financial difficulties. The five potentially applicable Mitigating Conditions (MC) 
under AG ¶ 20 are: 
 
(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; 
 
(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; 
 
(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; 
 
(d) the individual initiated a good-faith effort to repay overdue creditors or 
otherwise resolve debts; and 
 
 
5 
(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. 
 
Applicant has established repayment plans with the IRS and for his student 
loans. Each month his bank account is automatically debited to pay these agreed upon 
amounts. When he is able, he makes additional payments on the accounts.  
 
An applicant is not required, as a matter of law, to establish that he has paid off 
each and every debt listed in the SOR. Nor is there a requirement that a plan provide for 
payments on all outstanding debts simultaneously. In evaluating financial consideration 
cases, the concept of “‘meaningful track record” includes evidence of actual debt 
reduction through payment of debts. An applicant must demonstrate that he has 
established a plan to resolve his financial problems and taken significant actions to 
implement that plan, which Applicant has done. 
 
Applicant’s payments in accord with his repayment plans commenced in 2009, 
which is a sufficient repayment history to infer that he will continue making his monthly 
payments as agreed. Applicant has initiated a good-faith effort to repay overdue 
creditors or otherwise resolve his debts. The mitigating factors listed in AG ¶ 20(d) 
apply. 
 
The mitigating conditions listed in AG ¶ 20(c) apply. Applicant has obtained 
financial counseling from a talk radio program on how to address his debts. He is 
working on establishing a $1,000 emergency fund. He is making timely payments on his 
student loans, on his past-due tax obligations, on his car note, his credit card account, 
and the one additional debt he has. There are clear indications that the problem is being 
resolved or is under control.  
 
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. 
 
 
6 
 
7 
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. The debts incurred were not the 
type that indicates poor self-control, lack of judgment, or unwillingness to abide by rules 
and regulations. Money was not spent frivolously. The debts set forth in the SOR were 
not incurred on luxuries, but were for student loans and taxes. 
 
He is current on all of his outstanding financial obligations. The issue is not 
simply whether all his debts are being paid–it is whether his financial circumstances 
raise concerns about his fitness to hold a security clearance. (See AG & 2(a)(1).) 
Applicant became delinquent on filing his taxes when a number of issues, including the 
death of his mother, occurred simultaneously. These events will not repeat themselves. 
He has filed all of his past-due tax returns and is making timely payment on his past-due 
taxes. He is also making timely payment on his three student loans. His student loans 
have been rehabilitated and he is current on their payment. 
 
Overall, the record evidence leaves me without questions or doubts about 
Applicant’s eligibility and suitability for a security clearance. For all these reasons, I 
conclude Applicant mitigated the security concerns arising from his financial 
considerations.  
 
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, Fnancial Considerations:  FOR APPLICANT 
 
  Subparagraphs 1.a – 1.d:   For Applicant 
  
Conclusion 
 
 In light of all of the circumstances presented by the record in this case, it is 
clearly consistent with the national interest to grant Applicant eligibility for a security 
clearance. Eligibility for access to classified information is granted.  
 
 
_______________________ 
CLAUDE R. HEINY II 
Administrative Judge