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    DEPARTMENT OF DEFENSE 
  DEFENSE OFFICE OF HEARINGS AND APPEALS 
  
  
 
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 11-12358 
  ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Ray Blank, Esq., Department Counsel 
For Applicant: Pro se 
 
 
 
 
______________ 
 
Decision 
______________ 
 
 
HEINY, Claude R., Administrative Judge: 
 
Applicant contests the Department of Defense’s (DoD) intent to deny his eligibility 
for a security clearance to work in the defense industry. Applicant has yet to address 
$90,000 in past-due taxes for tax years 2003 – 2006, 2009, 2010, and 2012. He failed 
to mitigate the financial considerations security concerns. Clearance is denied. 
 
History of the Case 
 
 Acting under the relevant Executive Order and DoD Directive,1 on February 8, 
2013, the DoD issued a Statement of Reasons (SOR) detailing security concerns. DoD 
adjudicators could not find that it is clearly consistent with the national interest to grant 
or continue Applicant’s security clearance. On March 12, 2013, Applicant answered the 
SOR and requested a hearing. On May 23, 2013, I was assigned the case. On May 31, 
                                                          
1 Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as 
amended; 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. 
 
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2013, the Defense Office of Hearings and Appeals (DOHA) issued a Notice of Hearing 
for the hearing convened on June 12, 2013. I admitted Government’s Exhibits (Ex) 1 
through 7 and Applicant’s Exhibits A through V, without objection. Applicant testified at 
the hearing as did two other witnesses on Applicant’s behalf. The record was held open 
to allow Applicant to submit additional information. Additional material (Ex. W) was 
submitted and admitted into the record without objection. On June 20, 2013, DOHA 
received the hearing transcript (Tr.). 
 
Findings of Fact 
 
In Applicant’s Answer to the SOR, Applicant admitted filing for bankruptcy 
protection and being indebted to the Internal Revenue Service (IRS), but denied owing 
the six additional debts. I incorporate Applicant’s admissions to the SOR allegations. 
After a thorough review of the pleadings, exhibits, and testimony, I make the following 
additional findings of fact: 
 
 Applicant is a 53-year-old senior systems field support engineer who has worked 
for a defense contractor since March 2011, and seeks to obtain a security clearance. 
(Tr. 42) From 1979 through 1984, he served on active duty in the U.S. Air Force. (Tr. 
55) Applicant’s co-workers, supervisors, and friends state: Applicant is an open, honest, 
trustworthy individual and a committed, dedicated worker. He is hard-working, 
conscientious, dependable, and reliable. (Ex. H - N, P – R, Tr. 32 - 52)  
 
In June 2001, Applicant suffered a stroke that caused him to miss work and incur 
medical debts not paid by his insurance. (Ex. 3, Tr. 17, 56) Following his stroke, he had 
to learn to walk and talk again. (Tr. 57) In November 2001, his divorce from his first wife 
was finalized. (Ex. 3) He was unemployed from September 2002 through January 2003, 
February 2004 through September 2004, and October 2010 through March 2011. (Ex. 
1, 2, 3) Following his stroke and while unemployed, he started using funds from his tax-
deferred retirement account to pay medical expenses and to meet living expenses. (Ex. 
3) In 2006,2 he and his wife purchased a home for $649,000, which was 100% financed 
with an adjustable rate mortgage. (Ex. 3) The monthly mortgage payments totaled 
$5,000. (Ex. 3) He stated his monthly mortgage payment increased from $3,000 to 
$6,800. (Tr. 58) In June 2011, a short sale was executed on the home selling it for 
$450,000. (Ex. 3)  
 In April 2003, Applicant solely in his name, and not with his wife, filed for Chapter 
13, Wage Earner’s Plan bankruptcy protection. (Ex. 3) In July 2004, when the creditors 
sought payment from his wife, he asked that the action be dismissed so a joint filing 
could be made. In October 2004, a joint filing was made. Monthly payments of $1,125 
were made in accord with the Chapter 13 until April 2006, when he cashed in his 
retirement accounts and paid the remaining balances due his creditors under the wage 
                                                          
2 During the June 2011 personal subject interview, Applicant stated the house was purchased in 2004. 
However, the adjustable rate note on the house was dated April 2006. (Ex. 3) 
 
 
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earner’s bankruptcy plan. (Ex. 3) In April 2006, the bankruptcy was discharged.3 No tax 
obligations4 were included in the bankruptcy. (Tr. 67)  
 In 2005, Applicant’s mother-in-law moved into his home. (Tr. 57) She suffered 
from senile dementia. Her treatment cost $2,000 monthly. (Ex. 3) Applicant did not 
provide any documentation showing how much of the monthly treatment cost he paid. In 
2012, his mother-in-law died. (Ex. 3, Tr. 82) His mother had previously died in 2011. (Tr. 
59) 
 In June 2008, Applicant purchased a timeshare property for $27,914. (Ex. 6) In 
December 2012, he asserted, but provided no documentation, that he was attempting to 
sell a timeshare property, and the creditor had suspended his $960 monthly payments 
on the timeshare. (Ex. 3) He anticipated the timeshare would be sold in January or 
February 2013. He provided no documentation that the timeshare has been sold or the 
forbearance on the debt continues. 
 
 In August 2011, a state filed a $2,285 income tax lien against him, which he has 
admitted. (Tr. 85) In February 2010, the state garnished his wages. (Ex. 3) The 
garnishment has stopped and he is working with the state attempting to address this 
matter. Starting in 2009, the IRS levied four tax liens against him in the amounts of: 
$12,368, $29,432, $23,693, and $11,551, (Tr. 68) The four federal tax liens total 
approximately $77,000. As of June 19, 2013, he owed $90,699 for tax years 2003 – 
2006, 2009, 2010, and 2012. (Ex. G, W) His 2003 income was $68,000 and in 2004 it 
was $93,258. (Tr. 75) In 2011, his salary was approximately $80,000. His wife currently 
is not working. (Tr. 79)  
 
 In June 2011, the tax liens were released to allow the short sale of Applicant’s 
home. (Ex. 3) In June 2011, Applicant was asked about his finances during a personal 
subject interview. (Ex. 3) He stated his attorney was attempting to negotiate a 
settlement with the IRS, and he would begin monthly payments once a payment plan 
was established. (Ex. 3)  
 
 In August 2012, Applicant obtained a different law firm5 to facilitate the resolution 
of his delinquent federal tax debt. (Ex. E) In December 2012, the IRS and Applicant 
agreed to an installment agreement, which required $1,300 monthly payments starting 
in February 2013. (Ex. E, Tr. 61) He did not make the required payments. In June 2013, 
an Offer in Compromise was submitted whereby he offered to settle the $90,000 debt 
for $50 and he submitted a $10 check and paid $150 for the Offer in Compromise filing 
                                                          
3At the hearing, Department Counsel moved to change the wording of ¶ SOR 1.b to indicate the 2004 
bankruptcy had been “discharged” and not “dismissed.” (Tr. 15) Applicant did not object to the change 
and the wording was changed.  
 
4 Taxes for tax years 2006, 2009, 2010, and 2012 were not due as of April 2006, when the bankruptcy 
was dismissed. 
 
5 Applicant indicated he had three attorneys and spent $10,000 to $12,000 in attorney fees attempting to 
address the IRS debt. (Tr. 130) 
 
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fee. (Ex. E, F, G) There is no documentation that the IRS has accepted the Offer in 
Compromise. 
 
 In October 2011, Applicant and his wife planned to attend a financial workshop. 
(Ex. 3) A year and a half later, in May 2013, they received a certificate showing 
completion of a nine-week study course in finances. (Ex. B, Tr. 60, 104)  
 
 In April 2012, Applicant enrolled with a credit service. (Ex. 3, W) As a result of the 
credit service’s efforts, the $3,100 debt (SOR 1.i) was deleted by one credit reporting 
agency. (Ex. W) The credit service is attempting to have the $676 (SOR 1.j) debt 
removed from his credit reports. (Ex. W) He asserted, but failed to document, that he 
had previously hired two companies to help him address his financial problems. (Tr. 57, 
127) He asserted, but failed to document, that the companies provided no benefit to him 
after he had spent “several – tens of thousands of dollars” with the companies. (Tr. 57)  
 
 Applicant received a traffic ticket and the $518 debt (SOR 1.m), which was being 
collected by a debt collection company. Applicant asserts he has paid this debt and the 
collection company has promised to provide proof of payment, but has failed to do so. 
(Ex. 3, Tr. 87) The credit service’s efforts indicated the debt was deleted from two credit 
reporting agencies. (Ex. W) The two remaining SOR debts (SOR 1.k, $216 and SOR 1.l, 
$69) together total less than $300.  
 
 As of December 2012, his monthly net gross income was $5,200, his monthly 
expenses were $4,420, and he was paying a $471 credit union obligation, which left a 
net monthly remainder of approximately $300. (Ex. 3) At the hearing, he said he had 
approximately $220 in net remainder. (Tr. 99) He has $7,000 in a 401(k) retirement plan 
and his wife has approximately $3,500 in hers. (Tr. 85)  
 
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 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. 
 
 
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The protection of the interests of 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 (EO) 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 
 
 Adjudicative Guideline (AG) ¶ 18 articulates the security concerns relating to 
financial problems: 
 
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.  
 
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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 has more than $90,000 in 
unresolved tax debt. Disqualifying Conditions AG ¶ 19(a), “inability or unwillingness to 
satisfy debts” and AG ¶ 19(c), “a history of not meeting financial obligations,” apply.  
 
 Five Financial Considerations Mitigating Conditions under AG ¶ 20 are potentially 
applicable: 
 
(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 
 
(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 does not fully meet any of the mitigating factors for financial 
considerations. His financial difficulties are both recent and multiple. His financial 
problems started in 2001 when he experienced both a stroke and divorce. In April 2006, 
his debts were discharged6 in bankruptcy. His finances had a fresh start, but he now 
has more than $90,000 in unaddressed, delinquent federal income tax debt and more 
                                                          
6 Applicant’s bankruptcy did not discharge his federal income tax debts. Returns for tax years 2003, 2004, 
and 2005 were due at the time of the April 2006 discharge of creditors, but there is no showing the federal 
or state delinquent tax obligations were included in the bankruptcy, that the amount owed to the IRS was 
known at the time of discharge, or that that the tax returns had even been filed at the time of the 
discharge for those three years. 
 
 
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than $2,000 in delinquent state income tax debt. He has known of the government’s 
concern about his finances since his June 2011 personal subject interview. He asserts 
he hired two credit companies that failed to help him and has hired three attorneys and 
spent more than $10,000 in attorney fees to address his tax debt.7  
 
In the two years since being questioned about the garnishment of Applicant’s 
wages to meet a past-due state tax obligation and asked about his unpaid income tax, 
he has documented he has paid a $150 filing fee and made a $10 payment to address 
his $90,000 tax debt. This is insufficient to find he has made a “good-faith effort” to 
satisfy his debts. Because Applicant has multiple delinquent debts and his financial 
problems are continuing in nature, he receives minimal application of the mitigating 
conditions listed in AG ¶ 20(a). Applicant’s handling of his finances, under the 
circumstances, casts doubt on his current reliability, trustworthiness, and good 
judgment. 
 
Applicant did experience factors beyond his control. Before his 2006 discharge of 
debts, he experienced unexpected health problems, a stroke, in 2001 as well as a 
divorce that year. He had also experienced two periods of unemployment, September 
2002 through January 2003 and February 2004 through September 2004, prior to the 
discharge of his debts. The impact of these factors on his current financial picture is 
lessened because they occurred nine to eleven years ago and occurred before his 
debts were discharged. 
 
Following the discharge of his debts, Applicant again experienced a period of 
unemployment from October 2010 through March 2011 and experienced additional 
unexpected medical issues in the caring for his mother-in-law who suffered from 
dementia. Even if Applicant’s financial difficulties initially arose, in whole or in part, due 
to circumstances outside his control, it must still be determined whether Applicant has 
since acted in a reasonable manner when dealing with those financial difficulties.8 
 
The mitigating condition listed in AG ¶ 20(d) does not apply because, to date, 
Applicant’s actual payment on his delinquent taxes has been minimal. He has 
documented the payment of only $10 and a $150 filing to address is significant federal 
income tax past-due obligation. As previously stated, this fails to show he has acted 
responsibly under the circumstances. 
 
 In May 2013, Applicant completed a nine-week financial course providing him 
with insight and guidance in addressing his past-due obligations. From the 
documentation provided, it is too soon to assess the value he has received from this 
guidance. AG & 20(c) only partially applies. He has received counseling, the results of 
                                                          
7 Applicant did not provide any documents to back up his assertions as to the two credit companies or the 
money he has spent in attorney fees to address the past-due tax obligation. 
 
8 ISCR Case No. 05-11366 at 4 n.9 (App. Bd. Jan. 12, 2007) (citing ISCR Case No. 03-13096 at 4 (App. 
Bd. Nov. 29, 2005); ISCR Case No. 99-0462 at 4 (App. Bd. May 25, 2000); ISCR Case No. 99-0012 at 4 
(App. Bd. Dec. 1, 1999). 
 
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that counseling have yet to be determined, and there are no clear indications that the 
problem is being resolved or is under control. 
 
In December 2012, Applicant entered into an installment agreement in which he 
agreed to pay the IRS the entire amount of past-due taxes. However, he has made no 
payments in accordance with the agreement. He was to start making $1,300 monthly 
payments in February 2013, but failed to do so. He now hopes to enter into a 
compromise with the IRS, but there is no showing the IRS has agreed to any 
compromise.  
 
AG & 20(d) does not apply. A good-faith effort to repay overdue creditors or 
otherwise resolve debt requires more than an agreement. It requires action to 
implement that agreement. It requires payment in accordance with the agreement. 
Good-faith requires a showing that a person acts in a way that shows reasonableness, 
prudence, honesty, and adherence to duty or obligation. Applicant signed an installment 
agreement to pay his past-due taxes, but has not made the payments the agreement 
requires.   
 
Applicant appears to be sincere in his promise that he will ultimately address his 
past-due tax obligation. However, a promise of future performance, no matter how 
sincere, is insufficient to demonstrate a track record of meeting financial obligations. 
Without evidence of steps taken to implement a plan to resolve indebtedness, a good-
faith effort cannot be substantiated. 
 
Other than the past-due tax obligation, there are six additional debts that the 
SOR alleged were unpaid, which total approximately $4,600. The efforts of Applicant’s 
current credit service resulted in the removal of two debts (SOR 1.i, $3,100 and SOR 
1.m, $518) from his credit reports. The other four debts total less than $1,000. Neither 
the remaining four debts nor having had to resort to bankruptcy protection nine years 
ago, raises concerns about his current reliability, trustworthiness, or good judgment.  
 
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. 
 
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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. There is some evidence in favor of 
mitigating Applicant’s conduct. He had many co-workers and friends submit letters and 
testimony as to his outstanding work. Following the discharge of his debts in 2006, he 
was unemployed for six months in 2010 and 2011. In March 2011, he started his current 
employment. He has initiated effort to address his past-due tax obligation by hiring an 
attorney to help him.  
 
The disqualifying evidence under the whole-person concept is more substantial. 
The tax debt goes back to April 2004, when his 2003 federal income tax was required to 
be filed and taxes owed to be paid. When those taxes were not paid, the IRS instituted 
a tax lien. Additional tax liens were issued, which were removed when his home sold at 
a short sale for less than what was owed on the mortgage. It has been nine years since 
the 2003 taxes were due and they have yet to be paid. He owes more than $90,000 in 
delinquent state and federal income tax. Having been employed full-time since March 
2011, he has documented payment of a $150 filing fee and a $10 payment on the tax 
debt.  
 
Applicant’s long-standing failure to repay his past-due taxes, at least in 
reasonable amounts, or to make payments in accord with the installment plan he 
agreed to in December 2012, reflects traits which raise concerns about his fitness to 
hold a security clearance. Without a track record of actual resolution of debts, it is 
unknown whether the debts will, in fact, be resolved in the future.  
 
The concept of “meaningful track record” includes evidence of actual debt 
reduction through payment of debts. However, an applicant is not required to establish 
that he has paid off each and every debt listed in the SOR. All that is required is for him 
to demonstrate he has established a plan to resolve his delinquent debt and has taken 
significant action to implement that plan. I must reasonably consider the entirety of 
Applicant’s financial situation and his actions in evaluating the extent to which that plan 
is credible and realistic.  
 
The issue is not simply whether all Applicant’s debts have been paid – they have 
not – it is whether his financial circumstances raise concerns about his fitness to hold a 
security clearance. (See AG & 2(a)(1).) Applicant would like to pay his delinquent taxes, 
but there is no established compromise agreement with the IRS with a track record of 
payments on his tax obligation.  
 
This decision should not be construed as a determination that Applicant cannot 
or will not attain the state of true reform and rehabilitation necessary to justify the award 
of a security clearance. The awarding of a security clearance is not a once in a lifetime 
 
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occurrence, but is based on applying the factors, both disqualifying and mitigating, to 
the evidence presented. Under Applicant=s current circumstances, a clearance is not 
recommended. Should Applicant be afforded an opportunity to reapply for a security 
clearance in the future, having paid his delinquent tax obligation, established 
compliance with a repayment plan, or otherwise substantially addressed his past-due 
taxes, he may well demonstrate persuasive evidence of his security worthiness. 
However, a clearance at this time is not warranted.  
 
Overall, the record evidence leaves me with questions and doubts about 
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 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, Financial Considerations: AGAINST APPLICANT 
 
  Subparagraphs 1.a – 1.b:  For Applicant     
  Subparagraph 1.c – 1.g:  Against Applicant 
  Subparagraphs 1.h – 1.m:  For 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 a security clearance. 
Eligibility for access to classified information is denied.  
 
 
_______________________ 
CLAUDE R. HEINY II 
Administrative Judge