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DEPARTMENT OF DEFENSE 
DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
 
In the matter of: ) 
 ) 
 [Redacted )  ISCR Case No. 13-00759 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Eric H. Borgstrom, Esq., Department Counsel 
For Applicant: Pro se 
 
 
______________ 
 
Decision 
______________ 
 
 
FOREMAN, LeRoy F., Administrative Judge: 
 
This case involves security concerns raised under Guideline F (Financial 
Considerations). Eligibility for access to classified information is denied. 
 
Statement of the Case 
 
Applicant submitted a security clearance application on July 20, 2012. On August 
12, 2013, the Department of Defense (DOD) sent him a Statement of Reasons (SOR) 
alleging security concerns under Guideline F. DOD acted under 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) implemented by DOD on September 1, 2006.  
 
 Applicant received the SOR on August 19, 2013; answered it on September 3, 
2013; and requested a hearing before an administrative judge. Department Counsel 
was ready to proceed on November 4, 2013, and the case was assigned to me on 
November 12, 2013. The Defense Office of Hearings and Appeals (DOHA) issued a 
notice of hearing on November 19, 2013, scheduling the hearing for December 12, 
 
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2013. On December 11, 2013, Applicant requested that the hearing be postponed 
because he was ill. DOHA issued an amended notice of hearing on January 6, 2014, 
rescheduling the hearing for January 15, 2014. I convened the hearing as rescheduled. 
Government Exhibits (GX) 1 through 4 were admitted in evidence without objection. 
Department Counsel also submitted a demonstrative exhibit summarizing the evidence, 
which is attached to the record as Hearing Exhibit (HX) I.  
 
 Applicant testified and submitted Applicant’s Exhibits (AX) A through C, which 
were admitted without objection. I kept the record open until February 18, 2014, to 
enable Applicant to submit additional documentary evidence. I extended the deadline to 
February 26, when the closing on the sale of his house was delayed. He timely 
submitted AX D through H, which were admitted without objection. Department 
Counsel’s comments regarding AX D through H are attached to the record as HX II and 
III.  
 
On February 26, 2013, Appellant advised that the closing was postponed again 
because of problems with the certificate of occupancy. (HX II.) On February 27, 2014, I 
extended the deadline to March 17, 2014, to enable him to provide updated information 
about the sale of his house. (HX IV.) He did not present any additional evidence. DOHA 
received the transcript (Tr.) on January 30, 2014. 
 
Findings of Fact 
 
 In his answer to the SOR, Applicant admitted all the allegations in the SOR. His 
admissions in his answer and at the hearing are incorporated in my findings of fact.  
 
 Applicant is a 48-year-old plant manager for a federal contractor. He has worked 
for his current employer since October 2005. He received a security clearance in June 
1999 and worked as an employee of a defense contractor from 1999 to 2002. His 
current job does not require a security clearance. He is applying for a security clearance 
in order to accept a position as the facility security officer. 
 
 Applicant married in September 1992. For many years, Applicant’s wife took care 
of the family finances. They filed joint federal and state returns, using an accountant 
who was a friend of Applicant’s wife, to prepare their returns. In mid-2010, Applicant 
was notified by his employer that his wages were being garnished for delinquent taxes. 
Upon investigation, he learned that he had signed the joint federal returns for 2007 
through 2010, but his wife had not submitted them. (Tr. 21, 33-34)  
 
 Applicant obtained copies of the federal returns for 2007 through 2010 that were 
never submitted, along with documentation of income and deductions, and gave them to 
a certified public account (CPA). The CPA noted that the accountant employed by 
Applicant’s wife had not entered accurate information for 2007 through 2010, but 
instead had merely entered the income and deductions from a previous year on the 
returns for all four years. (Tr. 22.) The CPA prepared corrected returns and Applicant 
submitted them. (Tr. 33-35.)   
 
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Based on the corrected returns prepared by the CPA, the Internal Revenue 
Service (IRS) determined that Applicant and his wife owed about $8,482 for 2007; 
$5,348 for 2008; $5,475 for 2009; and $2,100 for 2010. (GX 2 at 32-48.) His wife had 
timely filed the state returns for 2007-2010, and they received refunds of $1,700 for 
2007; $606 for 2008; $3,482 for 2009; and $3,267 for 2010. The state refunds for 2008 
and 2009 were seized by the IRS. (GX 2 at 49-50.) 
 
 In April or May 2012, Applicant also discovered that his wife had not been 
making the home mortgage loan payments. (Tr. 23.) His credit bureau report reflected 
that the payments for March, April, and May had not been made. (GX 4 at 5.) He 
confronted his wife about the delinquent payments, and she responded that they 
needed the money for other things. (Tr. 41.) He was able to obtain a loan modification in 
October 2012, and he brought the payments up to date. (GX 3 at 2.) 
 
Applicant filed for divorce in June 2012. The property settlement was signed by 
Applicant and his wife on November 1, 2012. (Tr. 13.) Applicant received sole custody 
of their 19-year-old daughter, and his wife agreed to pay $200 per month in child 
support. Applicant and his ex-wife agreed that each would pay one-half of the federal 
taxes due for 2007 through 2010. They also agreed that the unpaid taxes would be 
satisfied by the proceeds from the sale of the marital home. (AX A.)  
 
In response to DOHA interrogatories in April 2013, Applicant stated that he had 
made payments totaling $500 on the federal tax debt. (GX 2 at 5.) However, at the 
hearing, he testified that he made three $500 payments. (Tr. 49.) In his answer to the 
SOR, he stated that the CPA had notified the IRS that the delinquent tax debts would be 
paid in full as part of the divorce agreement. However, he did not provide any 
documentation of his CPA’s correspondence with the IRS or evidence that the IRS 
agreed to his CPA’s proposal. To the contrary, he testified that there was no payment 
agreement with the IRS. (Tr. 49.) 
 
As part of the divorce agreement, Applicant and his wife also agreed that they 
would sign and file joint tax returns for 2011 and 2012, and separate returns for 2013 
and thereafter. (AX A.) In February 2013, Applicant’s CPA prepared joint federal and 
state tax returns for 2011 and 2012. (GX 2 at 54-102.) These returns reflect that 
Applicant and his wife owe the IRS $1,238 for 2011 and are entitled to a refund of 
$2,692 for 2012. They are entitled to state tax refunds of $642 for 2011 and $931 for 
2012. (GX 2 at 55-56, 77-78.) Applicant’s wife refused to sign the 2011 and 2012 
returns until the property settlement was resolved. Applicant testified that she signed the 
2011 and 2012 returns in early November 2013, and they were filed. (Tr. 48.)  
 
 Applicant incurred substantial legal fees connected to his divorce. He submitted 
evidence of $12,614 in legal fees (GX 2 at 22-23; AX B.) As a result, he fell behind on 
his mortgage payments on the marital home. After he filed for divorce in June 2012, he 
decided to not make any additional payments on the mortgage, because half of each 
payment was his wife’s obligation. (Tr. 46-47, 50, 55 .) He testified that his attorney 
said: “[W]e can’t give you this as legal advice, but since you didn’t conclude the divorce 
 
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yet, any debt that you guys accrued during the marriage is considered marital—a 
marital asset or marital debt, so she just ran this up on you.” (Tr. 46-47.) Applicant 
concluded that, since the mortgage debt was a marital debt that would be split as part of 
the divorce settlement, he would be saving his wife money by continuing to make 
payments on the mortgage loan. He testified, “Every dollar I spend towards the marital 
debt, I’m saving her fifty cents of it.” (Tr. 50.) He decided to use the money allocated for 
the mortgage loan payments to pay his attorney fees, take care of his daughter’s 
college expenses, and get the house ready to sell. He admitted that he intentionally 
defaulted on the mortgage, and that his decision probably was a mistake. (Tr. 46-47, 
49.) 
 
Applicant testified that he notified the lender that he would continue to pay the 
insurance and taxes but would not make any more payments on the loan until his 
marital issues were resolved. (Tr. 55.) The lender initiated foreclosure in January 2013. 
(GX 5 at 2.) Applicant’s January 2014 credit report reflected that payments on the 
mortgage loan were past due in an amount of $44,319. (GX 5 at 2.)  
 
In December 2013, Applicant accepted an offer to buy the home for $570,000. 
(AX G.) The balance of Applicant’s loan is about $287,000, meaning that, if the sale is 
consummated, the profit on the sale of the home will cover the delinquent loan 
payments and the delinquent federal taxes. (GX 5 at 2.)  
 
Closing on the sale was scheduled for February 6, 2014, but was postponed 
because of the bank’s delay in providing a commitment letter to the buyer. (AX D.) It 
was rescheduled for February 26, but was postponed again because of problems with 
the occupancy permit. As of the date the record closed, the sale of the house had not 
been closed, no funds had been disbursed, and a new closing date had not been 
established. 
 
 In response to DOHA interrogatories, Applicant submitted a personal financial 
statement (PFS) in April 2013. His PFS reflects monthly net income of $7,174; net 
spousal income of $800; monthly expenses of $3,729; debt payments of $3,061; and a 
net remainder of $1,184. The spousal income is no longer included in the net family 
income. (GX 2 at 18.) The sale of the marital home would relieve Applicant of the 
monthly $2,705 mortgage payments, but will result in another undetermined expense for 
housing. 
 
 The executive director of the research center where Applicant is employed 
describes him as an employee with great initiative and conscientiousness. She states 
that his reliability and honesty that he has amply demonstrated attest to his suitability for 
the role of facility security officer. (AX E.) 
 
 Applicant has served for 25 years as a volunteer for an association devoted to 
helping special-needs children. The executive director of the association submitted a 
letter attesting to Applicant’s active involvement in the association. (AX H.) A project 
 
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manager for the association commended him for his reliability, steadiness, caring 
attitude, and professionalism. (AX F.) 
 
Policies 
 
 “[N]o one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 
484 U.S. 518, 528 (1988). As Commander in Chief, the President has the authority to 
“control access to information bearing on national security and to determine whether an 
individual is sufficiently trustworthy to have access to such information.” Id. at 527. The 
President has authorized the Secretary of Defense or his designee to grant applicants 
eligibility for access to classified information “only upon a finding that it is clearly 
consistent with the national interest to do so.” Exec. Or. 10865, Safeguarding Classified 
Information within Industry § 2 (Feb. 20, 1960), as amended.   
 
Eligibility for a security clearance is predicated upon the applicant meeting the 
criteria contained in the AG. These guidelines are not inflexible rules of law. Instead, 
recognizing the complexities of human behavior, an administrative judge applies these 
guidelines in conjunction with an evaluation of the whole person. An administrative 
judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. An 
administrative judge must consider all available and reliable information about the 
person, past and present, favorable and unfavorable. 
 
 The Government reposes a high degree of trust and confidence in persons with 
access to classified information. This relationship transcends normal duty hours and 
endures throughout off-duty hours. Decisions include, by necessity, consideration of the 
possible risk that 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. 
 
Clearance decisions must be made “in terms of the national interest and shall in 
no sense be a determination as to the loyalty of the applicant concerned.”  See Exec. 
Or. 10865 § 7. Thus, a decision to deny a security clearance is merely an indication the 
applicant has not met the strict guidelines the President and the Secretary of Defense 
have established for issuing a clearance. 
 
 Initially, the Government must establish, by substantial evidence, conditions in 
the personal or professional history of the applicant that may disqualify the applicant 
from being eligible for access to classified information. The Government has the burden 
of establishing controverted facts alleged in the SOR. See Egan, 484 U.S. at 531.  
“Substantial evidence” is “more than a scintilla but less than a preponderance.”  See v. 
Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). 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. 92-1106 
at 3, 1993 WL 545051 at *3 (App. Bd. Oct. 7, 1993).   
 
 
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 Once the Government establishes a disqualifying condition by substantial 
evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the 
facts. Directive ¶ E3.1.15. An applicant has the burden of proving a mitigating condition, 
and the burden of disproving it never shifts to the Government. See ISCR Case No. 02-
31154 at 5 (App. Bd. Sep. 22, 2005).  
 
An applicant “has the ultimate burden of demonstrating that it is clearly consistent 
with the national interest to grant or continue his security clearance.” ISCR Case No. 
01-20700 at 3 (App. Bd. Dec. 19, 2002). “[S]ecurity clearance determinations should err, 
if they must, on the side of denials.” Egan, 484 U.S. at 531; see AG ¶ 2(b).  
 
Analysis 
 
Guideline F, Financial Considerations 
 
The SOR alleges that Applicant owes delinquent federal taxes for tax years 2007 
through 2011 (SOR ¶¶ 1.a-1.e), that his payments on his home mortgage loan are past 
due (SOR ¶ 1.f), and that, as of April 2013, he had not filed his federal income tax return 
for 2011 (SOR ¶ 1.g). The concern under this guideline 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. 
 
 This concern is broader than the possibility that an individual might knowingly 
compromise classified information in order to raise money. It encompasses concerns 
about an individual’s self-control, judgment, and other qualities essential to protecting 
classified information. An individual who is financially irresponsible may also be 
irresponsible, unconcerned, or negligent in handling and safeguarding classified 
information. See ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012). 
 
 Applicant’s admissions and the evidence presented at the hearing establish the 
following disqualifying conditions under this guideline:  
 
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. 
 
 
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 The following 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 current reliability, trustworthiness, or good 
judgment; 
 
AG ¶ 20(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; 
 
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): the individual initiated a good-faith effort to repay overdue 
creditors or otherwise resolve debts.  
 
 AG ¶¶ 20(a) is established. Although Applicant’s delinquent debts are numerous 
and recent, they occurred because his wife did not submit their tax returns after 
Applicant signed them, and she stopped making payments on their mortgage loan 
without informing Applicant. His debts arose from unusual circumstances making them 
unlikely to recur now that Applicant and his wife have separated and he no longer relies 
on her to file his tax returns and pay the household bills.  
 
 AG ¶ 20(b) is not fully established. The deceptive and irresponsible conduct of 
Appellant’s wife and the marital breakup that followed were circumstances beyond his 
control. He initially acted responsibly, by obtaining a mortgage modification, hiring a 
CPA to resolve his tax debts, and making payments on his tax debt. However, he did 
not act responsibly when he stopped making payments on the tax debt and chose to 
default on the mortgage payments to force his estranged wife to pay half of the marital 
debts. While his desire to drive a hard bargain with his estranged wife is 
understandable, it does not show responsible conduct toward his creditors, who are not 
parties to his marital discord. He admitted at the hearing that, in hindsight, his decision 
to stop making payments on the mortgage loan was unwise. 
 
 AG ¶ 20(c) is not fully established. Applicant obtained the advice and assistance 
of a CPA and a lawyer, but the sale of the marital home, which is the key to resolving 
his financial problems, has not occurred. 
 
 AG ¶ 20(d) is not established. As of the date the record closed, Applicant had not 
presented any documentary evidence of payments on the debts alleged in the SOR or a 
payment agreement with the IRS. He was given additional time to submit evidence 
regarding the potential sale of his home, but he provided no additional evidence and did 
not request additional time to provide it. As of this date, the record reflects only a 
 
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promise to pay in the future, based on a contingency, i.e., the sale of the marital home, 
but Applicant has been unable to consummate the sale or set a date on which it will be 
consummated. See ISCR Case No. 09-05390 (App. Bd. Oct. 22, 2010).  
 
Whole-Person Concept 
 
 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. In applying the whole-
person concept, an 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. An 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.  
 
 I have incorporated my comments under Guideline F in my whole-person 
analysis. Some of the factors in AG ¶ 2(a) were addressed under that guideline, but 
some warrant additional comment. 
 
 Applicant was sincere and credible at the hearing. He has a reputation for 
reliability and honesty. His financial situation arose from circumstances beyond his 
control. Although he has sufficient net income to make reasonable payments on the tax 
debt and the past-due payments on his home mortgage, he chose to default on the 
mortgage payments to force his estranged wife to pay half of the marital debts. If he is 
able to sell the marital home and use the proceeds of the sale to pay off his debts, the 
financial concerns that preclude granting him a clearance at this time may be resolved 
in the future. See Directive ¶¶ E3.1.37-E3.1.40 (reapplication authorized after one year).  
 
 After weighing the disqualifying and mitigating conditions under Guideline F, 
evaluating all the evidence in the context of the whole person, and mindful of my 
obligation to resolve close cases in favor of national security, I conclude Applicant has 
not mitigated the security concerns based on financial considerations. Accordingly, I 
conclude he has not carried his burden of showing that it is clearly consistent with the 
national interest to grant him eligibility for access to classified information. 
 
 
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Formal Findings 
 
 I make the following formal findings on the allegations in the SOR: 
 
 Paragraph 1, Guideline F (Financial Considerations): AGAINST APPLICANT 
 
  Subparagraphs 1.a-1.f:    Against Applicant 
 
  Subparagraph 1.g:     For Applicant 
 
Conclusion 
 
 I conclude that 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. 
 
 
 
 
LeRoy F. Foreman 
Administrative Judge