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                        DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
----------------- )       ISCR Case No. 10-06095
)
Applicant for Security Clearance )
Appearances
For Government: Raashid Williams, Esquire, Department Counsel
For Applicant: Pro se
                                                                            
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Decision
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MARSHALL, Jr., Arthur E., Administrative Judge:
On August 26, 2011, the Defense Office of Hearings and Appeals (DOHA)
issued a Statement of Reasons (SOR) enumerating security concerns arising under
Guideline F (Financial Considerations). DOHA took action 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 by the DOD on
September 1, 2006.  
In an undated response, Applicant admitted seven of the nine allegations raised
under Guideline F and requested a hearing before a DOHA administrative judge. DOHA
assigned the case to me on November 4, 2011. The parties proposed a hearing date of
December 6, 2011. A notice setting that date for the hearing was issued on November
21, 2011. The hearing was convened as scheduled. Applicant testified and offered nine
documents that were accepted into the record without objection as exhibits (Exs.) A-I.
The Government introduced five documents which were accepted into the record as
Exs. 1-5. 
 Tr. 15.      1
 Tr. 16.      2
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Applicant was given until January 4, 2012, to submit any additional materials. He
timely submitted one additional document, which was accepted without objection as Ex.
J, and the record was closed. Based on a review of the testimony, submissions, and
exhibits, I find Applicant failed to meet his burden of mitigating security concerns related
to financial considerations. Clearance is denied.
Findings of Fact
Applicant is a 40-year-old computer specialist who has worked for the same
defense contractor since August 2009. He completed high school and has an
associate’s degree in computer network management. Applicant is divorced and has
one young child. A self-described “computer geek,” Applicant has worked in his present
field for nearly two decades.   1
In 2001, Applicant married a woman with whom he had grown up. In 2004, he
began working as an independent consultant. His income quickly jumped from about
$80,000 to close to $300,000 a year. At the time, he was expecting a child. Because his
new job required extensive travel, his wife, who did accounting and bookkeeping for
small businesses, managed the family’s finances. Applicant trusted her implicitly.
Whenever he would inquire about their finances, she told him that all was well. Knowing
that his business was lucrative, he did not challenge his wife’s assessment, even
though he knew that they were starting to live extravagently. He was often left out of the
decision-making process about acquisitions because he was generally gone from
Monday morning until Friday night. His wife often encouraged him to make upgrades to
their life. Telling him that there was sufficient money to do so, he bought two costly
vehicles and moved from a $180,000 home to one that cost about $500,000. By 2007,
his income had been reduced to about $180,000, a downward trend that would
continue for the next two years. Meanwhile, unbeknownst to him, his wife was leading
“a completely separate life as soon as [he] left” town for work.  2
Aside from excessive spending, Applicant’s wife stopped paying Applicant’s
taxes. Although she would go through the motions of having him sign his tax forms and
say that money had been withdrawn from his account for their payment, the forms were
never submitted and his taxes were never paid. In 2009, Applicant ran out of work as a
consultant and began working for his present employer at a substantially reduced
salary. In that same year, he discovered his wife had been having an on-going affair
and that he owed federal taxes for multiple years. In July 2009, he filed for divorce. As
they headed to their 2010 divorce, he not only learned that his wife had misled him and
that he had never had the financial resources to responsibly purchase some of their
extravagances, he also discovered other financial irregularities. For example, sums he
had allocated for their child’s future had never been invested.  He then started trying to
settle some of the debts he discovered.
 Tr. 23-24. See also Ex. A (regarding ¶ 1.g) and Ex. J (regarding ¶ 1.h).      3
 The SOR sets forth concerns regarding the taxes for tax years 2004 through 2009. Appellant also owes      4
taxes for 2010.
 Ex. D (OIC package).      5
 Tr. 30.      6
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Applicant petitioned for divorce predicated on his wife’s infidelity. As a
consequence, his wife was outraged. He proved that she had vacated their home,
taking most of their possessions and all the jewelry they had acquired. He had to take
her to court to sell the marital house, which she initially refused to sell. Ultimately, she
was denied financial support and Applicant won a $75,000 judgment against her.
Shortly after the divorce, his ex-wife filed for bankruptcy as a ploy to vacate the
judgment owed to Applicant. Applicant provided evidence that her assets were over
$100,000, far exceeding the $50 she listed in her bankruptcy petition. She is now facing
bankruptcy fraud charges. 
As a result of Applicant’s drop in income, he could not make payments on those
debts associated with the house and the vehicles. With a substantially reduced income
and only the expectation of receiving the judgment against his ex-wife, Applicant
consulted an attorney to help him negotiate with the Internal Revenue Service (IRS)
regarding his tax debt. Counsel recommended that he first work on his bankruptcy
petition and address any extraneous debts.  Applicant filed for Chapter 7 bankruptcy in
November 2010 after satisfying the debts noted in the SOR at ¶ 1.g and ¶ 1.h, leaving
his tax debts as his remaining financial issues (SOR allegations ¶¶ 1.a - 1.f).  His3
bankruptcy was discharged in February 2011.
In the interim, Applicant’s attorney proceeded with IRS negotiations and
Applicant received financial counseling. On August 20, 2011, an Offer in Compromise
(OIC) package was submitted to the IRS on Applicant’s behalf for tax years 2004
through 2010.  Including fees and interest, the estimated sum at issue is about4
$280,000. The package included all necessary forms, financial statements, filing fees,
and an initial deposit check for $2,050.  The IRS accepted Applicant’s package and5
deposited his check. Negotiations are still going on to complete the IRS’ determination
of whether it will accept the offered lump sum or the lump sum plus additional
payments.  Applicant’s counsel is still working on the matter. It is unclear when the6
process will be completed. His counsel believes the final sum for the tax years at issue
will be about $10,000, after the fees are repealed and the sum negotiated down.
Consequently, the $2,050 initial payment is considered to be a 20% good faith payment
on the compromise. Applicant intends to satisfy the resultant debt by liquidating part of
 Tr. 54-55.      7
 After all expenses, Applicant has a net monthly remainder of about $300. That number should increase      8
by about $150 in April 2012, when he will no longer be paying for his ex-wife’s health insurance.
 Tr. 68.      9
 See also ISCR Case No. 94-1075 at 3-4 (App. Bd. Aug. 10, 1995).      10
 ISCR Case No. 93-1390 at 7-8 (App. Bd. Jan. 27, 1995).      11
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his 401k plan, which currently has a balance of about $17,000.  He also has a current7
income of about $93,000.  8
Applicant has acquired no new debt and lives within a defined budget. Except for
Internet/cable service, he lives simply. Applicant’s child lives with him half the time.
Some of his current spare income is for her extracurricular activities (i.e. about $300 for
piano and  gymnastics). Applicant has learned from his mistakes, developed personal
financial strategies, and changed his “entire lifestyle.”  Applicant now manages his own9
finances, except for issues related to his taxes.  
Policies
When evaluating an applicant’s suitability for a security clearance, an
administrative judge must consider the AG. In addition to brief introductory explanations
for each guideline, the AG list potentially disqualifying conditions and mitigating
conditions. 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. Under AG ¶ 2(c), this
process is a conscientious scrutiny of a number of variables known as the “whole-
person concept.” The administrative judge must consider all 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.
The 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 is something less than a10
preponderance of evidence. The ultimate burden of persuasion is on the applicant.  11
A person who seeks access to classified information enters into a fiduciary
relationship with the Government predicated upon trust and confidence. This
 Id.      12
 Id.      13
 AG ¶ 18.      14
 Id.      15
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relationship transcends normal duty hours and endures throughout off-duty hours. The
Government reposes a high degree of trust and confidence in those 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
about 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). “The clearly consistent standard
indicates that security clearance determinations should err, if they must, on the side of
denials.”  Any reasonable doubt about whether an applicant should be allowed access12
to sensitive information must be resolved in favor of protecting such sensitive
information.13
Based upon consideration of the evidence, Guideline F (Financial
Considerations) is  the most pertinent to this case. Conditions pertaining to this AG that
could raise a security concern and may be disqualifying, as well as those which would
mitigate such concerns, are set forth and discussed below.
Analysis
Guideline F - Financial Considerations 
Under Guideline F, “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.”  It14
also states that “an individual who is financially overextended is at risk of having to
engage in illegal acts to generate funds.”  The Government’s evidence showed that15
Applicant has been deemed responsible for about $280,000 in estimated federal taxes,
including fees and interest. There was also evidence of his 2009 Chapter 7 bankruptcy.
Such facts are sufficient to raise 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). With such conditions raised, it is left to
Applicant to overcome the case against him and mitigate security concerns. 
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The debts at issue are multiple in number. They were acquired over a protracted
period of time, from approximately 2004 through 2009. During that time, Applicant
thoroughly deferred to his wife to manage the household accounts, despite
considerable evidence that the couple was leading an extravagant lifestyle. Applicant
admits that he failed to adequately inquire about their expenses and finances.
Moreover, while the extraneous debts have been addressed, Applicant’s taxes remain
at issue, despite the best efforts of Applicant and his tax attorney. This includes not only
the taxes at issue in the SOR (2004-2009), but also his tax debt for 2010. At present,
his net monthly remainder is lean. Until his tax issue is resolved and a final sum is
compromised, it cannot be discerned whether Applicant has the financial resources to
meet his IRS obligation. Furthermore, Applicant has not yet had an opportunity to show
that he can personally handle his finances independently and reliably. While the facts
regarding the creation of the debts are unique and Applicant has demonstrated
improved judgment and responsibility, there is insufficient evidence to raise Financial
Considerations Mitigating Condition (FC MC) 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) or 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).
Applicant has received financial counseling. With the knowledge gained, he
satisfied some of his debts, formulated a budget, proceeded with a bankruptcy petition,
and has followed the advice of a tax attorney concerning his IRS debt. With only his tax
debts remaining at issue, Applicant has executed an OIC with the IRS and made a
good faith payment. Consequently, there are sufficient facts to raise 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). However, because
the total sum to be paid to the IRS has yet to be determined, Applicant’s payment of
$2,050 only raises FC MC AG ¶ 20(d) (the individual initiated a good-faith effort to
repay overdue creditors or otherwise resolve debts) to a limited extent. 
Whole-Person Concept
Under the whole-person concept, an 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. An administrative judge should consider the nine
adjudicative process factors listed at AG ¶ 2 (a). Under AG ¶ 2(c), the ultimate
determination of whether to grant a security clearance must be an overall
commonsense judgment based on careful consideration of the guidelines and the
whole-person concept. In addition, what constitutes reasonable behavior in such cases,
as contemplated by FC MC ¶ 20(b), depends on the specific facts in a given case. 
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 a mature and highly credible professional. During his marriage, he was
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offered a highly lucrative professional opportunity that demanded he work out of town
Monday through Friday. He depended on his wife, a bookkeeper, to manage the
household accounts. Unbeknownst to him, his wife abused his trust by overspending,
mishandling his finances, and conducting an affair. Because of his trust in her,
Appellant never questioned their lifestyle despite the fact their lifestyle was becoming
conspicuously lavish – even as his high salary began to decrease. 
Applicant discovered his wife’s affair and her financial abuse in 2009. He
divorced her and tried to rehabilitate his financial situation. He satisfied most of their
debts by payment or bankruptcy. However, he did not pursue a compromise with the
IRS over the nearly $280,000 at issue until August 2011. That compromise offer has yet
to be accepted. While his tax attorney apparently believes that the matter should be
compromised for about $10,000, no evidence to that effect has been received or
presented. Therefore, it is premature to conclude that his current net monthly remainder
and 401k balance is sufficient to honor the IRS obligation at issue (2004-2009) and any
additional debt due from 2010. 
This process does not demand that all of an applicant’s debts be paid. It does,
however, require that an applicant present a workable plan for satisfying his debts and
evidence that such a plan has been implemented successfully. Here, Applicant has a
plan. Until the IRS sets a sum certain for his tax liability, however, it cannot be
discerned whether the plan can be successfully implemented, despite Applicant’s
recent good faith efforts. As previously noted, any reasonable doubt about whether an
applicant should be allowed access to sensitive information must be resolved in favor of
protecting such sensitive information. Based on Applicant’s evidence and argument,
financial considerations security concerns remain unmitigated. As noted, any
reasonable doubt about whether an applicant should be allowed access to sensitive
information must be resolved in favor of protecting such sensitive 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.f: Against Applicant
Subparagraph 1.g-1.i: For Applicant
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Conclusion
In light of all of the circumstances presented by the record in this case, it is not
clearly consistent with national interest to grant Applicant a security clearance.
Clearance denied.
ARTHUR E. MARSHALL, JR.
Administrative Judge