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                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
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)         ISCR Case No. 12-09656
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Applicant for Security Clearance )
Appearances
For Government: Robert J. Kilmartin, Esq., Department Counsel
For Applicant: Pro se
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Decision
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MASON, Paul J., Administrative Judge:
Rather than taking some responsible role in managing the family finances,
Applicant ceded complete authority of the job to his wife. Without informing Applicant,
his wife signed an agreement in November 2007, to have a debt consolidation company
consolidate and pay their debts, and file their federal tax returns. Some credit card
debts were not paid and tax returns for 2008, 2009, and 2010 were not filed. Eighteen
additional months passed before Applicant took documented action in June 2013, to
resolve his delinquent federal taxes and past due mortgage. However, Applicant has
paid about 80% of his delinquent federal taxes and is bringing his mortgage to a current
status. Eligibility for access to classified information is granted. 
Statement of the Case
On or about June 12, 2013, the Department of Defense (DOD) issued the
Statement of Reasons (SOR) detailing security concerns under financial considerations
 The SOR is undated. However, the cover letter that was mailed with the SOR. explaining the significance1
of the SOR and how it must be answered, is dated June 12, 2013. 
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(Guideline F).  The action was taken under Executive Order 10865, Safeguarding1
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
(AG). 
Applicant furnished his notarized answer to the SOR on July 15, 2013. A copy of
the Government’s File of Relevant Material (FORM), the Government’s evidence in
support of the allegations of the SOR, was sent to Applicant on August 27, 2013. In an
attachment to the FORM, Applicant was advised he could object to the information in
the FORM or submit additional information in explanation, mitigation, or extenuation. He
received the FORM on September 5, 2013. His response was received between
September 30, 2013, and October 4, 2013, the date the Government indicated no
objection to Applicant’s response. The case was assigned to me on October 16, 2013. 
Findings of Fact
The SOR contains three allegations under the financial considerations guideline.
¶ 1.a identifies a mortgage that is over 120 days past due. Applicant admitted his
mortgage was past due, but provided documentation indicating he had been approved
for a loan modification agreement on July 11, 2013. He explained that he has a 15-year
refinance loan that is scheduled to be paid off in 2018. 
¶ 1.b alleges that Applicant did not file his 2008, 2009, and 2010 tax returns in a
timely manner. He admitted he did not file the returns, but blamed the omission on a
debt consolidation company who did not file the tax returns or pay other debts as
promised. Applicant indicated he filed tax returns for the missing years, and also filed
his 2011 and 2012 tax returns on time. He was ultimately able to establish a
documented payment plan with the Internal Revenue Service (IRS) that was scheduled
to begin on July 8, 2013. No supporting documentation was presented to support his
claim that the federal returns were filed. 
¶ 1.c alleges that Applicant owes the IRS approximately $20,681. He admitted
that he owed the taxes although he claimed the deficient balance was less than
$13,020, after subtracting a refund for tax year 2008 of $1,661, and owing only $3,639
in 2009 and $2,138 in 2010. On June 13, 2013, he provided proof of a $5,000 payment
to the IRS in reduction of the deficiency balance. As noted under ¶ 1.b, the IRS notified
him of an installment agreement on June 26, 2013, requiring him to pay $300 a month
beginning on July 8, 2013, the same day Applicant provided documentary proof of a
second payment of $1000 on the balance owed the IRS.  
Applicant is 53 years old. He married his second wife in June 1992, and has two
children. He was hired by a defense contractor as a senior logistics analyst in January
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2008. He currently is employed as a technical analyst by a different defense contractor.
He has held previous positions similar to his current job. He served in the U.S. Navy
from October 1978 until he retired with an honorable discharge in November 2002. He
served on an inactive status in the Navy Reserve from November 2002 until October
2008. He has held a security clearance since October 1978. In the 1980s, Applicant
received an associate’s degree in general studies based on an assessment of his
military training in lieu of academic credits. He has also been taking online courses at a
university since 2007. 
Applicant explained that his wife always handled the financial responsibilities. In
November 2007, for unknown reasons, she was having trouble paying the bills each
month. She attended an employer-sponsored seminar presented by a debt
management company. The company promised to consolidate and pay the family’s
debts at a lower interest rate. The company also promised to file the family’s federal tax
returns. Unbeknownst to Applicant, his wife accepted the company’s promises and
signed an agreement to pay the company $1,544 a month beginning in December 2007.
Although Applicant’s wife learned in early 2011, that the debt company was not making
payments to the creditors each month, and had not filed the federal tax returns, she did
not tell Applicant about the financial and tax problems until November or December
2011, when he was being processed for a continuation of his security clearance. 
On February 27, 2013, Applicant provided responses to questions about the
status of his past-due mortgage identified in ¶ 1.a, and other delinquent debts. He
claimed that he made arrangements to bring the past-due mortgage payments and
other delinquent debts to a current status, but provided no evidence in support of his
claims. 
On September 30, 2013, Applicant responded to the FORM with a position
statement and additional documentary steps taken to extinguish his mortgage arrearage
and resolve his tax problems. Though he did not present documentation establishing
that he filed the missing tax returns identified in ¶ 1.b, he did provide computations of a
refund due for 2008, and the amount of taxes owed for 2009 and 2010. He also
presented proof of making additional payments of $1,500 in August 2013, and $1,500 in
September 2013, to the IRS. (¶ 1.c) His purpose for accelerating the payments was to
have the remaining deficiency balance of $3,782 paid by November 2013.
Documentation provided by Applicant indicates that on August 12, 2013, he applied for
an increase in the amount of federal withholding allowance to be taken from his bi-
weekly earnings to increase the amount of money available to pay taxes at the end of
the year. He provided his leave and earning statement for August 16, 2013, that shows
federal withholding was $384. His leave and earning statement for August 30, 2013,
reflects federal withholding increased to $459. Regarding Applicant’s mortgage,
documentation reflects that he made four mortgage payments totaling $2,304 in July
and August 2013, to bring his mortgage closer to a current status. 
The credit reports and Applicant’s March 2012 OPM interview indicate, in
addition to the past-due mortgage, he was delinquent on four credit card accounts
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between 2009 and late 2011, that are not listed in the SOR. Applicant explained in his
March 2013 interview when each unlisted account was opened and why the accounts
became delinquent. Applicant stated that each account was paid off between April 2009
and October 2011. His explanation is corroborated by the credit reports for February
and April 2013.
Applicant accepted full responsibility for his financial problems and he has
learned from his mistakes. He indicated that all his debt is resolved or in a current
status, however, his mortgage documentation indicates payments made, but does not
show the mortgage completely restored to a current status.
Policies
When evaluating an applicant's suitability for a security clearance, the
administrative judge must consider the guidelines in the AG. Each guideline lists
potentially disqualifying conditions and mitigating conditions that are useful in evaluating
an applicant's eligibility for access to classified information.
The administrative judge's ultimate goal is to reach a fair and impartial decision
that is based on sound and prudent judgment. The decision should also include a
careful, thorough evaluation of a number of variables known as the "whole-person
concept" that brings together all available, reliable information about the person, past
and present, favorable and unfavorable, in making a decision. Decisions include, by
necessity, consideration of the possible risk the applicant may deliberately or
inadvertently fail to protect or safeguard classified information. Such decisions entail a
certain degree of legally permissible extrapolation as to the potential, rather than actual,
risk of compromise of classified information.
Under Directive ¶ E3.l.14., the Government must present evidence to establish
controverted facts alleged in the SOR. Under Directive ¶ E3.l.l5., 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 bears the ultimate burden of persuasion in demonstrating that he warrants a
favorable security clearance decision. 
Analysis
Financial Considerations 
The security concern for financial considerations is set forth 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
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is at risk of having to engage in illegal acts to generate funds. Compulsive
gambling is a concern as it may lead to financial crimes including
espionage. Affluence that cannot be explained by known sources of
income is also a security concern. It may indicate proceeds from
financially profitable criminal acts.
There are three pertinent disqualifying conditions that are potentially applicable:
AG ¶ 19(a) (inability or unwillingness to satisfy debts); AG ¶ 19(c) (a history of not
meeting financial obligations); and AG ¶ 19(g) (failure to file annual Federal, state, or
local income tax returns as required or the fraudulent filing of the same). In June 2012,
credit reports reflected that Applicant was over 120 days past due on his mortgage in an
amount over $16,000. He did file his tax returns for 2008, 2009, and 2010, and owed
the IRS over $20,680 in federal taxes for those years. AG ¶¶ 19(a), 19(c), and 19(g)
apply. 
Four mitigating conditions are potentially applicable: 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 reliability, trustworthiness,
and good judgment); AG ¶ 20(b) (the conditions that resulted in the financial problem
were largely beyond the person's control and the individual acted responsibly under the
circumstances); AG ¶ 20(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 AG ¶ 20(d) (a good-faith effort to repay overdue creditors or otherwise
resolve debts).
AG ¶ 20(a) is inapplicable. Even after he discovered the mortgage and tax
problems in November or December 2011, he took no documented action to address
them until at least June 2013. The first prong of AG ¶ 20(b) does not apply. Applicant’s
financial problems occurred because of circumstances within his control. An applicant
has a duty to contribute at some level to the management or monitoring of his financial
obligations. In addition, he is required by law to file his tax returns and pay his taxes. His
reliance on his wife to ensure family debts were paid, tax returns were filed, and taxes
were paid, does not relieve him of his financial responsibilities and is not extenuating. 
Concerning the second prong of AG ¶ 20(b), Applicant paid $9,000 of the
delinquent federal tax balance. He owes less than $4,000 and plans to pay the
remainder by November 2013. In July and August 2013, he made four mortgage
payments totaling about $2,304 to bring his mortgage closer to a current status. The
second prong of AG ¶ 20(b) applies in part. Though there is no evidence of financial
counseling, Applicant’s overall repayment efforts also receive some credit under AG ¶¶
20(c) and 20(d) because he has successfully demonstrated his financial troubles are
being resolved in a good-faith manner. 
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Whole-Person Concept 
I have examined the evidence under the disqualifying and mitigating conditions of
the financial considerations guideline. I have also weighed the circumstances within the
context of nine variables known as the whole-person concept. In evaluating the
relevance of an individual's conduct, the administrative judge should consider the
following factors listed in 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 the participation was
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.
As set forth in AG ¶ 2(c), the final security clearance decision must be an overall
commonsense judgment based upon careful consideration of the specific guidelines,
each of which is to be evaluated in the context of the whole person.
Applicant is 53 years old. He has been married since July 1990. He has two
children. He received his first security clearance when he entered the U.S. Navy in
October 1978. He retired from the Navy in November 2002 with a honorable discharge.
He continued his service to the Navy on an inactive status until October 2008. He has
been employed as a technical specialist since January 2008. 
In November 2007, Applicant’s wife was managing the family finances. For some
unexplained reason, she was having problems paying bills. She entered an agreement
to pay $1,544 a month to a debt company to pay her debts and file her tax returns.
Applicant should have applied more attention to his wife’s financial practices but did not.
He did not find out about the unlisted credit card, federal tax, and mortgage problems
until November or December 2011. 
Applicant compounded his poor judgment by taking no action to file the tax
returns until at least March 2012. He did not act to repay the delinquent federal taxes
until June 2013. However, his repayment efforts to pay both his delinquent taxes and
past-due mortgage between July and September 2013, persuades me to conclude he
finally understands the importance of handling his finances in a responsible manner.
Considering the disqualifying and mitigating evidence in the context of the factors of the
whole-person concept, Applicant has mitigated the security concerns arising under the
financial considerations guideline. See AG ¶ 2(a)(1) through AG ¶ 2(a)(9).
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
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Subparagraph 1.a-1.c: For Applicant
Conclusion
In light of all of the circumstances presented by the record in this case, it is
clearly consistent with national interest to grant Applicant eligibility for a security
clearance. Eligibility for access to classified information is granted.  
                      
Paul J. Mason
Administrative Judge