1
 
                                                             
                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 11-13492
)
Applicant for Security Clearance )
Appearances
For Government: Julie R. Mendez, Esquire, Department Counsel
For Applicant: Pro se  
______________
Decision
______________
HENRY, Mary E., Administrative Judge:
Based upon a review of the pleadings and exhibits, Applicant’s eligibility for
access to classified information is denied.
Statement of the Case
Applicant completed and certified an Electronic Questionnaire for Investigations
Processing (e-QIP) on July 5, 2011. The Defense Office of Hearings and Appeals
(DOHA) issued Applicant a Statement of Reasons (SOR) on May 16, 2012, detailing
security concerns 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 Directive 5220.6, Defense
Industrial Personnel Security Clearance Review Program (January 2, 1992), as
amended (Directive); and the Adjudicative Guidelines For Determining Eligibility for
Access to Classified Information (AG) implemented on September 1, 2006. 
 
W hen  SOR allegations are controverted, the Government bears the burden of producing evidence sufficient1
to prove controverted allegations. Directive, ¶ E3.1.14. “That burden has two components. First, the
Government must establish by substantial evidence that the facts and events alleged in the SOR indeed took
place. Second, the Government must establish a nexus between the existence of the established facts and
events and a legitimate security concern.” See ISCR Case No. 07-18525 at 4 (App. Bd. Feb. 18, 2009),
(concurring and dissenting, in part) (citations omitted). The guidelines presume a nexus or rational connection
between proven conduct under any of the criteria listed therein and an applicant’s security suitability. See
ISCR Case No. 08-06605 at 3 (App. Bd. Feb. 4, 2010); ISCR Case No. 08-07290 at 2 (App. Bd. Nov. 17,
2009).
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Applicant received the SOR and submitted a notarized, written response to the
SOR allegations dated June 22, 2012. He requested a decision on the written record in
lieu of a hearing. 
Department Counsel prepared a file of relevant material (FORM) and mailed
Applicant a complete copy on July 16, 2012. Applicant received the FORM on July 25,
2012. He had 30 days from receipt of the FORM to file objections and submit material in
refutation, extenuation, or mitigation. He did not submit a response. DOHA assigned
this case to me on September 24, 2012. The Government submitted six exhibits, which
have been marked as Items 3-6 and admitted into the record. Applicant’s response to
the SOR has been marked and admitted as Item 2, and the SOR has been marked as
Item 1. 
Findings of Fact
In his Answer to the SOR, Applicant admitted the factual allegations in ¶¶ 1.c,
1.d, and 1.g of the SOR. His admissions are incorporated herein as findings of fact. He
denied the factual allegations in ¶¶ 1.a, 1.b, 1.e, and 1.f of the SOR.  He also provided1
an explanation of his answer to support his request for eligibility for a security clearance.
Department Counsel amended the SOR after receiving Applicant’s response to the
SOR. Based on documentation submitted by Applicant, Department Counsel added the
following SOR allegations;
1.h. You failed to file . . . state tax returns for tax years 2006 and 2009.
1.i. You failed to file a federal tax return for tax year 2006.
Applicant did not respond to the amendment. His silence is treated as a denial of these
allegations. After a complete and thorough review of the evidence of record, I make the
following additional findings of fact.  
Applicant, who is 31 years old, works as a cable puller for a Department of
Defense contractor. He began his current position In March 2011. Applicant previously
worked seven months full time after a two-month layoff and eight months working part
time in the retail industry following a move to a new state. Applicant worked in ministry
as an assistant pastor, music and arts, automobile repair, sales, food service, customer
Item 3; Item 5,2
Item 3.3
By dividing $7,000 by 12 (months), Applicant’s monthly gross income would be approximately $563. His net4
monthly income is estimated at $425.
Item 5.5
Item 1; Item 4 - Item 6.6
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service, and other positions, many of which were part-time jobs. He also experienced
six short periods of unemployment between 2004 and 2010.2
Applicant and his wife married in 2005. They have two children, ages 6 years and
23 months. Applicant’s e-QIP indicates that he was homeless in 2004 and later lived
with his wife’s family. Applicant attended bible college for five years, but he has not
received a degree.3
Applicant earns $2,472 a month in gross income, and he receives $2,034 a
month in net income from his current job. On his personal financial statement attached
to his answers to interrogatories, Applicant indicated that he had recently obtained a
part-time job, which pays $7,000 a year. He did not know his monthly gross or net
income as he had not been paid.  I find that Applicant’s part-time job would increase his4
net monthly income by approximately $425 a month. His current monthly expenses total
$2,045. With his part-time job, he has sufficient income to pay his monthly expenses
and some of his debts.5
The SOR identified two small medical debts totaling $525, one school debt
totaling over $9,311, and a judgment for $5,350 based on a July 26, 2011 credit report.
The SOR also identified unpaid tax debts of $3,300, which Applicant acknowledged in
his interview with the Office of Personnel Management (OPM) investigator on
September 1, 2011. In this same interview, Applicant admitted owing over $51,000 in
education loans to the U.S. Department of Education, although a April 26, 2012 credit
report reflects a balance of $39,000 on this debt. Applicant listed several small unpaid
debts on his personal financial statement, which are not listed on the credit reports in
the record or in the SOR. The credit reports reflect that Applicant has paid several
collection debts not listed in the SOR.6
In his response to the interrogatories, Applicant admitted that his state tax returns
for the years 2006 and 2009 were missing. He attached copies of his federal tax returns
for 2010 and 2008 as provided to him by the Internal Revenue Service. The status of his
2009 tax return is not shown in his IRS information; however, Applicant admitted to the
OPM investigator that he owed $3,000 in taxes for that year. The IRS documentation
indicated that tax return transcripts are available for the current year and the three prior
processing years. For earlier years, account transcripts are available and may provide
Item 5.7
Item 2.8
Item 5.9
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the necessary information. The IRS had no record that Applicant filed a tax return for
the tax year 2006.7
In his response to the SOR, Applicant denied owing any federal taxes for 2009
and any state taxes for 2007. He stated that he had paid these debts, but he did not
provide any documentation showing that these debts are satisfied. He also indicated
that he paid the two medical bills identified in SOR allegations 1.a ($288) and 1.b
($237), but he did not provide a copy of a cancelled check or statement from the
creditor showing that these debts are resolved. He also indicated that he had
established a payment plan for his school loan debts and that he is in compliance with
his payment plan. He again did not provide any documentation which shows the terms
of his payment plan or his monthly payments under the plan. Finally, Applicant stated
that he contacted the creditor about paying the judgment, but that he could not afford
the monthly payment. He did not provide documentation, which reflects his contacts
with this creditor, its offered payment plan, and his rejection of this offer.8
In his answers to interrogatories, Applicant indicated that he and his wife recently
sought help from a financial specialist to help work out a method to resolve his debts.
He has not provided any information about this person or a copy of an agreement with
this individual.9
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
disqualifying conditions and mitigating conditions, which are used 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
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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, 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. . . .” An
applicant has the ultimate burden of persuasion for 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 an applicant may deliberately or inadvertently fail to protect or
safeguard classified information. Such decisions entail a certain degree of legally
permissible extrapolation as to potential, rather than actual, risk of compromise of
classified information.
 
Section 7 of Executive Order 10865 provides that decisions shall be “in terms of
the national interest and shall in no sense be a determination as to the loyalty of the
applicant concerned.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites
for access to classified or sensitive information).  
Analysis
Guideline F, Financial Considerations
The security concern relating to the guideline for Financial Considerations 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. 
AG ¶ 19 describes the disqualifying conditions that could raise security concerns.
I have considered all the conditions, and the following are potentially applicable: 
(a) inability or unwillingness to satisfy debts;
(c) a history of not meeting financial obligations; and 
In assessing whether an Applicant has established mitigation under Guideline F, the Appeal Board10
provided the following guidance in ISCR Case No. 07-06482 at 3 (App. Bd. May 21, 2008):
In evaluating Guideline F cases, the Board has previously noted that the concept of
“‘meaningful track record’ necessarily includes evidence of actual debt reduction through
payment of debts.” See, e.g., ISCR Case No. 05-01920 at 5 (App. Bd. Mar. 1, 2007).
However, 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. See, e.g., ISCR Case No. 02-25499 at 2 (App. Bd.
Jun. 5, 2006). All that is required is that an applicant demonstrate that he has “. . . established
a plan to resolve his financial problems and taken significant actions to implement that plan.”
See, e.g., ISCR Case No. 04-09684 at 2 (App. Bd. Jul. 6, 2006). The Judge can reasonably
consider the entirety of an applicant’s financial situation and his actions in evaluating the
extent to which that applicant’s plan for the reduction of his outstanding indebtedness is
credible and realistic. See Directive ¶ E2.2(a) (“Available, reliable information about the
person, past and present, favorable and unfavorable, should be considered in reaching a
determination.”) There is no requirement that a plan provide for payments on all outstanding
debts simultaneously. Rather, a reasonable plan (and concomitant conduct) may provide for
the payment of such debts one at a time. See, e.g., ISCR Case No. 06-25584 at 4 (App. Bd.
Apr. 4, 2008). Likewise, there is no requirement that the first debts actually paid in
furtherance of a reasonable debt plan be the ones listed in the SOR.
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(g) failure to file annual Federal, state, or local income tax returns as
required or the fraudulent filing of the same;
. 
Applicant developed significant financial problems due to part-time employment,
low income, and unemployment. He also incurred significant educational loans. He has
been unable to resolve his debts. Disqualifying conditions AG ¶¶ 19(a) and 19(c) apply.
AG ¶ 19(g) is also established because the IRS has no record of Applicant having filed
a federal income tax return for tax year 2006. However, concerning the amended
allegation that he did not file his state tax returns in 2006 and 2009, the Government did
not establish its case because a statement that these tax returns are missing is
insufficient to show he did not file the returns. Applicant could have filed the returns and
the state could have lost or misplaced his returns. Additional information from the state
about the status of his tax returns for the years 2006 and 2009 is needed to prove this
allegation. SOR allegation 1.h is found in favor of Applicant.
The Financial Considerations guideline also includes examples of conditions that
can mitigate security concerns. I have considered mitigating factors AG ¶ 20(a) through
20(f), and the following are potentially applicable:10
(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
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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; and
(d) the individual initiated a good-faith effort to repay overdue creditors or
otherwise resolve debts.
Applicant’s debts occurred over several years and as recently as 2010. His debts
are continuing and he has not shown that his “missing” federal tax return for tax year
2006 has been filed. Thus, AG ¶ 20(a) is not applicable. The record lacks clear
evidence that Applicant received credit or financial counseling or that his debts are
resolved. While Applicant experienced short periods of unemployment which impacted
his ability to pay some of his bills, he has not provided documentation which shows he
has paid his debts, negotiated a repayment plan in good faith, acted reasonably under
the circumstances, or otherwise resolved his debts. The above mitigating conditions in
AG ¶¶ 20(b) - 20(d) are not applicable.
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 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. 
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. The decision to grant or
deny a security clearance requires a careful weighing of all relevant factors, both
favorable and unfavorable. In so doing, an administrative judge must review all the
evidence of record, not a single item in isolation, to determine if a security concern is
established and then whether it is mitigated. A determination of an applicant’s eligibility
for a security clearance should not be made as punishment for specific past conduct,
but on a reasonable and careful evaluation of all the evidence of record to decide if a
nexus exists between established facts and a legitimate security concern. 
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In reaching a conclusion, I considered the potentially disqualifying and mitigating
conditions in light of all the facts and circumstances surrounding this case. Applicant’s
financial problems have been ongoing for nearly eight years, due in part to
unemployment and low-paying jobs, which prevented him from paying all his bills. He
has paid some past-due debts, but he continued to incur more unpaid debts. Applicant
avers that he had paid his 2009 federal tax debt and his 2007 state tax debt as well as
several small debts. He stated that he is in compliance with a payment plan he arranged
for his educational loans and that he tried to negotiate a settlement for the judgment.
Applicant has not provided any documentation from the creditors showing his debts are
resolved or copies of cancelled checks or bank statements which reflect the payments
he states he has made. Applicant needs more time to show he has control over his
debts and debt payment.
Overall, the record evidence leaves me with questions or doubts as to Applicant’s
eligibility and suitability for a security clearance. For all these reasons, I conclude
Applicant has not mitigated the security concerns arising from his finances and failure to
timely file his federal income tax return for tax year 2006 under Guideline F.
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.g: Against Applicant
Subparagraph 1.h: For Applicant
Subparagraph 1.i: Against Applicant
Conclusion
In light of all of the circumstances presented by 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.
                                                              
MARY E. HENRY
Administrative Judge