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                        DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
 )       ISCR Case No. 09-07576
)
)
Applicant for Security Clearance )
Appearances
For Government: Daniel Crowley, Esq., Department Counsel
For Applicant: Pro se
                                                                            
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Decision
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LYNCH, Noreen A., Administrative Judge:
On May 29, 2010, the Defense Office of Hearings and Appeals (DOHA) issued a
Statement of Reasons (SOR) alleging security concerns arising 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 (DoD) Directive 5220.6, Defense Industrial Personnel Security
Clearance Review Program (January 2, 1992), as amended (Directive); and the
adjudicative guidelines (AG) implemented in September 2006. 
Applicant timely answered the SOR, admitted the two allegations, and requested
a hearing. DOHA assigned the case to me on December 15, 2010. DOHA issued a
notice of hearing on February 8, 2011, and I convened the hearing as scheduled on
February 24, 2011. Department Counsel submitted six exhibits (GE 1-6) which were
admitted into the record without objection. Applicant testified, presented two witnesses
and submitted 10 exhibits (AE A-J). DOHA received the transcript on March 3, 2011.
Based on a review of the pleadings, testimony, and exhibits, eligibility for access to
classified information is granted.
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Findings of Fact
Applicant is a 42-year-old employee of a defense contractor. She graduated from
college in 1990 and has taken graduate courses. She is divorced with no children. She
has worked for her current employer since March 2008. She has held several levels of
security clearance since 1997. (GE 1)
From August until December 2004, Applicant was enrolled in a graduate
program while working full time. She borrowed approximately $30,000 in student loans
from a bank. Her loan payments were scheduled to begin in 2007. The monthly loan
payment was $330. Applicant paid on her student loan from early 2007 until the fall of
2007. (GE 3) 
In the interim, Applicant married her third husband in 2006. They built a home in
2006, for $1,400,000. Applicant made a down payment of $175,000 (cash) and her
husband contributed about $100,000. She and her husband obtained two home
mortgages. The primary mortgage was approximately $999,999. The secondary loan
(home equity line of credit) was approximately $247,000. They each contributed to the
monthly mortgage payments and had no difficulty with expenses based on a combined
income of $400,000. (GE 3)
Before September 2006, Applicant had no financial difficulties. She earned a
significant salary and was responsible for managing budgets for federal government
clients. She had no difficulty paying her expenses and had sizeable assets, as
evidenced by her favorable credit report. (GE 2) However, later in 2006, her husband
abandoned her. He left their home and filed for bankruptcy. Applicant was left with all
the marital debt, which included a mortgage of 1.25 million dollars. (Tr. 23) Applicant
did not know that her husband stopped making payments on his half of the mortgage
until January 2007. Due to her recovery from surgery, Applicant could not work from
December 18, 2006 until February 2007. During her unemployment, she lived on her
savings, which complicated her financial situation. 
Applicant downsized when she learned about that her husband defaulted on his
half of the home mortgage. She attempted to sell her car. She reduced her expenses.
However, she finally exhausted her resources.
Applicant refuses to file for bankruptcy. She intends to pay her debts. Applicant
addressed the issue of the mortgage immediately after her husband left. She paid the
monthly mortgage of approximately $9,000 until she could not longer afford the
payments. She then used her retirement funds, savings, and stocks in the amount of
approximately $60,000 to pay late fees and back payments on the mortgage. She lived
in the house approximately one year. (GE 3) She contacted the bank for a restructure
of the home loan that would have allowed her to keep the home, but the bank denied
her request. She unsuccessfully attempted to sell the home. She attempted a short
sale, but that was not successful. The home was foreclosed upon in April 2007. The
bank sold the home, which covered the primary home loan ($960,00). She does not
have a balance. (GE 4) For the second home loan of $247,000, which was also
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forgiven, she was issued a Form 1099, reporting the forgiven debt as income for tax
year 2007. Applicant worked with the IRS to reissue the 1099 for half of the $247,000
due to her husband’s liability, but that was not successful. (GE 4)
The SOR alleges a May 2009 tax lien from the Internal Revenue Service (IRS) in
the amount of $52,508 and a student loan in collection in the amount of $37,896.
These debts are indirectly a result of the abandonment in 2006, her home foreclosure
in 2007, and tax liability for years 2005 and 2007. Moreover, Applicant has been trying
to resolve both issues for approximately two or more years.
Applicant filed her 2005 taxes in April 2006. She received a refund. When she
filed in 2007 for the tax year 2006, she forgot to list a sale of stock. In 2007, the IRS
contacted Applicant about the error. She admitted that she owed the extra money.
Approximately eight months later the IRS determined that she owed an additional
amount of money based on a capital gain. (Tr. 103) Applicant learned that she had
about $15,000 in tax owed. She then learned that there was more tax liability due to the
$247,000 from the second home loan. 
The IRS issued a notice of federal tax lien to Applicant on May 5, 2009.
Applicant hired a tax attorney in 2009, when she received a notice of the tax lien. After
consultation, an appeal was to be filed to determine the accuracy of the tax liability.
Applicant’s attorney reviewed her tax liabilities and prepared to initiate the best manner
to resolve the tax issue with the IRS, either through an installment agreement or other
payments, and to see if any liability belonged to Applicant’s husband due to the home
that was also owned by him. (AE K) However, before the actual appeal period ended,
the IRS garnished Applicant’s wages. (Tr. 37)
Applicant’s attorney testified at the hearing that he filed a request to release the
levy and garnishment. An IRS representative advised the attorney that the
levy/garnishment was erroneous and would be lifted. An appeal was filed in June 2009.
(AE J) 
Applicant’s attorney provided the IRS with financial information between June 10,
2009 and June 25, 2009, notwithstanding the pending appeal. An installment
agreement was reached for $3,500 per month. A direct draft from Applicant’s bank
account ($1,750) semi-monthly was scheduled to begin.  (AE K)
A series of convoluted events followed. In July 2009, Applicant and her attorney
learned that the installment agreement with the IRS was put on hold and that the
appeal had been “transferred” to another unit. A hearing was held on December 21,
2009, to review and discuss the appeal and the status of the collection process.
Additional documentation was presented in January 2010. The appeal officer noted that
two years in question were coded as having been in bankruptcy, which was incorrect.
The appeal officer needed more information from the IRS.  In March 2010, Applicant’s
attorney requested status of the appeal and was told that an installment agreement
could be reached for $3,600 a month. (AE K) However, the appeal was denied and the
lien was to remain in place. The appeal file was closed on April 9, 2010.  In May 2010,
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an IRS representative contacted Applicant’s attorney concerning the resolution of the
tax liabilities. He had no information concerning the installment agreement. The file was
not accessible from the appeal officer. In June 2010, Applicant’s attorney again
provided the same information, documentation, and installment terms and agreement.
At the same time, the agreed upon payments were drafted directly from Applicant’s
account. Applicant submitted documentation of the payments made to IRS since
August 2010. (AE A-F)
The 2005 tax liability was the result of the liquidation of a stock and thus
investment income that Applicant forgot to list. She believes that she owed about
$14,000 in tax and she made arrangements with the IRS to pay $500 a month. She was
able to make three months payments in 2007, but was forced to stop because she did
not have the income. (GE 3)
The 2007 and 2008 tax liability was in part due to the reduced income and
dwindling resources that Applicant had and the liability that she incurred when using
retirement funds, IRAs or prematurely withdrawing funds from various accounts to
maintain her debts and obligations. Thus, she had underfiled.
Applicant’s student loan, which has been in default since late 2007, is now in
repayment status. (AE G) She had to develop the IRS plan before she was permitted to
address the student loan. In addition, the student loan was sold from one company to
another company. Because the payment had been automatically deducted from her
account when she noticed that it was not being automatically deducted, she called the
company but learned the loan had been sold. She was advised that she would be
contacted about the loan. (Tr. 113) By this time, she was starting to negotiate with the
IRS. She was advised to have the installment agreement in place before she addressed
the student loan. (Tr. 114) As soon as she established the IRS agreement, she
contacted the student loan company. Applicant made her first payment in May 2010.
(AE G) She is current with her monthly payments. 
Applicant’s 2011 monthly net income is approximately $8,600. After monthly
expenses and debt repayments, there is a net remainder of $550 in disposable income.
She follows a budget. She is current on her daily expenses. 
Applicant’s professional career spans more than 15 years. She has four major
awards for ethics and customer service. She submitted several letters of
recommendation. Each attests to her responsibility as a professional. (AE A)
Applicant’s current landlord submitted documentation that Applicant is timely with her
rent.
Applicant’s facility security officer (FSO) testified that Applicant is the information
systems security manager. He met her when she was hired for the position. He noted
that she is certified in information security systems The FSO knew about the financial
issues involved in Applicant’s case. He discussed the tax lien with Applicant and stated
that she had been very candid and forthright. He described her as responsible and
accountable. (Tr. 84) He recommends her for her security clearance.
 See also ISCR Case No. 94-1075 at 3-4 (App. Bd. Aug. 10, 1995).      1
 Department of the Navy v. Egan, 484 U.S. 518, 531 (1988).      2
 ISCR Case No. 93-1390 at 7-8 (App. Bd. Jan. 27, 1995).      3
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Policies
When evaluating an applicant’s suitability for a security clearance, an
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. These guidelines are not inflexible
rules of law. Instead, recognizing the complexities of human behavior, they are applied
in conjunction with the factors listed in the adjudicative process. An administrative
judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision.
Under AG ¶ 2(c), this process is a conscientious scrutiny of a number of variables
known as the “whole-person concept.” An 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.
The United States Government (Government) must present evidence to
establish controverted facts alleged in the SOR. 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. . . .”  The burden of proof is1
something less than a preponderance of evidence.  The ultimate burden of persuasion2
is on the applicant.  3
A person seeking access to classified information enters into a fiduciary
relationship with the Government based on 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 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 as to the loyalty of the
 See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive      4
information), and EO 10865 § 7.
 ISCR Case No. 93-1390 at 7-8 (App. Bd. Jan. 27, 1995).      5
 Id.      6
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applicant concerned.”  “The clearly consistent standard indicates that security clearance4
determinations should err, if they must, on the side of denials.”  Any reasonable doubt5
about whether an applicant should be allowed access to sensitive information must be
resolved in favor of protecting such information.  The decision to deny an individual a6
security clearance does not necessarily reflect badly on an applicant’s character. It is
merely an indication that the applicant has not met the strict guidelines the President
and the Secretary of Defense established for issuing a clearance.
Analysis
Guideline F, Financial Considerations
The security concern for Financial Considerations is set out in AG ¶ 18:
Failure or an 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 acknowledged that she had a tax lien and a student loan debt.
Consequently, Financial Considerations Disqualifying Condition (FC DC) AG ¶ 19(a)
(inability or unwillingness to satisfy debts), and FC DC AG ¶ 19(c) (a history of not
meeting financial obligations) apply. With such conditions raised, it is left to Applicant to
overcome the case against her and mitigate security concerns.  
Applicant had no financial difficulties prior to 2006. The two debts alleged in the
SOR are the direct or indirect result of her husband leaving the marriage in 2006, and
leaving Applicant with a new home mortgage and other marital debts.  The 2007 home
foreclosure would not have occurred if her husband had remained in the marriage or
continued to meet his financial obligations. Applicant also had a few months of
unemployment. She paid on her student loan until she had exhausted her financial
resources in 2007. She has provided documentation concerning the fact that she has
no other debts. Applicant’s conduct in resolving her debts warrants full application of
the first mitigating condition. Consequently, Financial Considerations Mitigating
Condition (FCMC) 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) applies.
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Financial Considerations Mitigating Condition (FC MC) AG ¶ 20(b) (the
conditions that resulted in the behavior 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. Applicant’s husband abandoned her in 2006. They had recently purchased a
home. Applicant’s husband stopped paying his half of the $9,000 monthly mortgage
and filed for bankruptcy. This event had a profoundly negative affect on her financial
circumstances and caused the delinquencies noted. She made adjustments to her
lifestyle and reduced expenses. And for the past nine months has paid the $3,600
monthly installment payment to the IRS. She is currently paying off her student loan
balance in monthly automatic payments of $200. Her financial problems were
generated by circumstances largely beyond her control. She acted responsibly.
FC MC AG ¶ 20(d), (the individual initiated a good-faith effort to repay overdue
creditors or otherwise resolve debts) applies. When Applicant learned that her husband
was not paying his half of the mortgage, she continued to pay the mortgage until she
used all of her savings. She tried to sell the home, but unfortunately the home was
foreclosed upon. She also inherited the marital debts. Applicant received a 1099 for the
$247,00 equity loan, so that was more income and more tax liability. She learned in
2006 that due to selling a stock, she incurred more tax liability. She worked with the IRS
and took action immediately. She hired a tax attorney. Applicant provided evidence of
payments for both the tax lien and the student loan. FC MC AG ¶ 20(c) (the person has
received or is receiving counseling for the problem and there are clear indications that
the problem is being resolved or is under control) applies.
A recent Appeal Board decision illustrates the analysis for applying AG 20(a) and
20(b). In ISCR Case No. 09-08533, the Applicant had $41,000 in delinquent credit card
debt and defaulted on a home loan generating a $162,000 delinquent debt. She filed for
bankruptcy the same month the Administrative Judge issued her decision. The
Applicant was recently divorced, had been unemployed for 10 months and had
childcare responsibilities. Her former husband was inconsistent in his payment of child
support. The Appeal Board determined that AG 20(a) was “clearly applicable (debt
occurred under such circumstances that it is unlikely to recur and [the debt] does not
cast doubt on the individual’s current reliability, trustworthiness, or good judgment” even
though that Applicant’s debts were unresolved at the time the Administrative Judge’s
decision was issued. The Appeal Board also decided that the record evidence raised
the applicability of AG 20(b) because of the absence of evidence of irresponsible
behavior, poor judgment, unreliability, or lack of trustworthiness.
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 an applicant’s
conduct and all the circumstances. The administrative judge should consider the nine
adjudicative process factors listed at AG ¶ 2(a): 
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(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. As noted above, the
ultimate burden of persuasion is on the applicant seeking a security clearance. 
I considered the potentially disqualifying and mitigating conditions in light of all
the facts and circumstances surrounding this case as well as the “whole-person”
factors. Applicant is 42 years old. She is a highly educated and accomplished
individual. Applicant has held a security clearance for many years without any incidents.
She has an excellent record of employment. She has favorable letters of
recommendation. Her FSO recommends her for a clearance. She was candid and
forthright at the hearing.
In 2006, Applicant was abandoned by her husband, and was left with
responsibility for all the marital debts, including the entirety of the recent mortgage and
her student loans. Since that time, she has worked diligently and in good faith with her
tax attorney to pay off her debts, a process that was complicated by the fact that she
could not in good faith commit to a payment schedule with other creditors until the IRS
determined the extent of her obligation and her schedule for payment. She remains a
key employee. She is recommended for retention of a security clearance by her FSO.
She has been paying on the two debts alleged in the SOR for at least nine months. She
has the ability to carry out her plan. She is not required to have the entire debt resolved.
I have no doubts about Applicant’s eligibility for access to classified information. She
has met her burden. Clearance is granted.
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: FOR APPLICANT
Subparagraphs 1.a-1.b: For Applicant
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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 a security clearance.
Clearance is granted.
                                                     
NOREEN A. LYNCH
Administrative Judge