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 DEPARTMENT OF DEFENSE  
DEFENSE OFFICE OF HEARINGS and APPEALS 
  
  
  
 
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 14-00205 
  ) 
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. The unpaid, delinquent federal 
income tax and five charged-off or collection accounts alleged in the Statement of 
Reasons (SOR) totaled approximately $15,000. His delinquent taxes have yet to be 
paid or a repayment plan agreed upon. Clearance is denied.  
 
History of the Case 
 
 Acting under the relevant Executive Order and DoD Directive,1 on March 20, 
2014, the DoD issued a SOR detailing financial considerations security concerns. DoD 
adjudicators could not find that it is clearly consistent with the national interest to grant 
                                                          
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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or continue Applicant’s security clearance. On May 22, 2014, Applicant answered the 
SOR and requested a hearing. On January 27, 2015, the Defense Office of Hearings 
and Appeals (DOHA) issued a Notice of Hearing for a hearing convened on February 9, 
2015.2 At the hearing, Government’s Exhibits (Ex) 1 through 7 were admitted without 
objection. Applicant provided one original document, which was returned to him to allow 
him to provide a copy of the document following the hearing, He testified at the hearing. 
The record was held open to allow Applicant to submit additional information. No 
additional material was received. On February 19, 2015, DOHA received the hearing 
transcript (Tr.). 
 
Findings of Fact 
 
In Applicant’s Answer to the SOR, he asserted that the amount owed to the 
Internal Revenue Service (IRS) was less than what was stated in the SOR, that two 
additional SOR debts had been paid, and he was waiting verification on the remaining 
debt. (SOR Answer) I incorporate Applicant’s admissions as facts. After a thorough 
review of the pleadings, exhibits, and testimony, I make the following additional findings 
of fact: 
 
 Applicant is a 52-year-old administrative specialist – systems administrator who 
has worked for a defense contractor since April 2012, and seeks to obtain a security 
clearance. (Tr. 10, 11) Applicant called no witnesses other than himself and produced 
no work or character references. From June 1983 until June 2005, he was in the U.S. 
Army before being honorably discharged as a sergeant first class (E-7). (Ex. 4) While on 
active duty, among other award and decorations, he was awarded the Meritorious 
Service Medal three times, the Army Commendation Medal three times, and the Army 
Achievement Medal three times.  
 
As of May 2013, Applicant was receiving $2,171 monthly in military retirement 
from which a tax levy of $896 was taken. (SOR Answer) As of May 2013, a balance of 
$5,849 was owed on the tax levy. (SOR Answer) He provided no documentation3 as to 
which tax year the levy pertained. From November 2009 through March 2013, he was 
unemployed. As of December 2013, when he completed a Personnel Financial 
Statement (PFS), his monthly net remainder (net monthly income less monthly 
expenses and monthly debt payment) was $3,266, which included his military retirement 
income and his contractor job income. (Ex. 5)  
                                                          
2 On August 28, 2014, I was assigned the case, before it was transferred to another judge on September 
11, 2014. On September 15, 2014, I was again assigned the case before it was again reassigned to 
another judge on November 5, 2014. On January 15, 2015, I was again assigned the case. The case was 
originally set for hearing on October 23, 2014, which was continued for good cause when Applicant 
experienced vehicle problems on the day of the hearing. On January 8, 2015, DOHA issued a Notice of 
Video Tele-conference Hearing to be held on January 15, 2015. The hearing was not held as scheduled 
because the notice had been sent to an incorrect address. 
 
3 At the hearing, Applicant was informed of the necessity to support his assertions with documents. (Tr. 
21) Following closing argument, he was informed the record would be held open for one week to allow 
him to submit documents. (Tr. 58) No documents were received.  
 
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While on active duty, Applicant was selected to be a drill sergeant. (Tr. 9, 41-43) 
He had to take a leave of absence from the school when his mother was diagnosed with 
cancer. (Tr. 31) After he left the Army in 2005, his father died. (Tr. 31) At that time, his 
daughter was incarcerated, and his stepson became involved with illegal drugs. (Tr. 32) 
He and his wife of 26 years had separated in September 2012. (Tr. 48, 58) His wife has 
not worked since shortly after their separation and has applied for social security 
disability. (Tr. 49) He stated he was trying to keep his head financially above water. (Tr. 
32) He under withheld on his federal income tax.  
 
Applicant owned a home at his last duty assignment, which he rented when he 
moved from the area. (Tr. 35) The real estate manager failed to do his job and the 
house was ransacked twice. (Tr. 35) The manager had not visited the place in six 
months. (Tr. 35) Before the damage, the fair market value (FMV) of the house was 
$60,000. After the damage, the house had a FMV of $20,000 at which time it was 
returned to the mortgage company. (Tr. 35) 
 
 Applicant cosigned on his youngest daughter’s vehicle. (Tr. 38) The vehicle was 
a used 2007 Mazda, which was purchased for $13,000. (Tr. 38) His daughter made 
payments for two or three years before she chose not to make additional payments, 
believing her father would make the payments. When he failed to make the payments, 
the vehicle was repossessed. (Tr. 39) A $6,371 debt (SOR 1.b) was incurred following 
the repossession. He  asserted, but failed to document, that the collection company 
agreed to settle the matter when it received $1,309 in payments, with the final payment 
to be made following the submission of his SOR Answer. (SOR Answer) He provided 
copies of four checks to a financial service company showing payments totaling 
approximately $700. (SOR Answer)  
 
At the hearing, he asserted the car debt had been paid, and provided an IRS 
form 1099 C, cancellation of the debt, indicating $3,000 of debt had been cancelled. (Tr. 
15, 24) The cancellation of debt letter was returned to Applicant so he could keep the 
original for his records. He was directed to make a copy of the letter and submit it 
following the hearing. (Tr. 15) No document was received.  
 
Applicant asserted the $398 insurance bill (SOR 1.c) had been paid and, as of 
May 2014, he was waiting a letter from the creditor showing the delinquent obligation 
had been paid in full. Nine months later, at the hearing in February 2015, he was still 
awaiting for a letter from the creditor. He also asserts that in May 2014, he had paid the 
$81 telephone service delinquent debt (SOR 1.d) and was waiting for a letter from the 
creditor confirming it had been paid. (SOR Answer) At the hearing, he was still waiting 
for a confirmation letter. (Tr. 22)  
 
 When Applicant completed his Electronic Questionnaires for Investigations 
Processing (e-QIP), he estimated he owed $2,000 federal income tax for 2005, $4,000 
for 2006, $2,000 for 2007, and $6,000 for 2010. (Ex. 1) In December 2013, when he 
completed written financial interrogatories, he stated his financial issues were due to 
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neglect, and he was trying to correct his mistakes. (Ex. 2) He stated he did not pay his 
taxes for the four years he listed because he could not afford to pay them. (Ex. 2)  
 
In 2006 or 2007, Applicant was contacted by the IRS about his delinquent taxes. 
He agreed to have $250 taken monthly from his military retirement. In 2010 or 2011, he 
hired a tax service to assist him in settling his tax debt. He received little benefit from 
the $4,000 he paid the company. (Ex. 4) At the hearing, he asserted his taxes were paid 
for tax years 2005 through 2007. (Tr. 45) He still owed tax for tax years 2010 and 2011, 
but did not know how much he owed. (Tr. 45) As of the hearing, his 2014 taxes were not 
due and had not yet been filed. (Tr. 47) 
 
Applicant was late in filing and paying his 2013 federal taxes. (Tr. 46) He is 
unsure if he owes any taxes for tax year 2013. (Tr. 46) He was still experiencing 
financial hardship because he is separated from his wife and they maintain two 
households. (Tr. 48)  
 
 In 2012, Applicant was again contacted by the IRS and, in September 2012, he 
started making $836 monthly payments. (Ex. 4) In his May 2013 and June 2013 
Personal Subject Interview (PSI), he asserts he originally owed $4,000 in delinquent 
tax, but that amount had grown to $15,000 with interest and penalties. (Ex. 4) He stated 
he believed his taxes for 2005 and 2006 had been paid and he only owed for tax year 
2007 and 2010. (Ex. 4) He believed his tax debt would be paid “in about one year” from 
June 2013. In October 2013, the IRS released its levy imposed on Applicant’s wages 
and property. (Ex. 4)  
 
 For tax year 2012, the only year for which Applicant provided documentation, his 
adjusted gross income was $36,721 and he was entitled to a $2,744 refund for that 
year. (SOR Answer) In the last nine years, all of his federal income tax returns have 
been filed late. (Tr. 52)  
 
 As of December 2013, when Applicant answered additional written financial 
interrogatories, he stated he had not filed his 2010 federal income tax return. (Ex. 5) As 
previously stated, he asserted he had made payment arrangements regarding the 
$6,371 charged-off account following the repossession of his daughter’s vehicle (SOR 
1.b). (Ex. 5, 6) In December 2013, a collection agency offered to settle a $364 account 
not listed in the SOR if he made three payments totaling $364. (Ex. 5) He provided no 
documentation evidencing having made the three payments. The last two SOR debts 
(SOR 1.e, $24 and SOR 1.f, $33) appear to be the same obligation generated by a DVD 
mail-order company. Applicant believes he was erroneously billed for this debt. (Tr. 22) 
 
 In December 2013, Applicant submitted an IRS Form 4506-T, Request for 
Transcript of Tax Return, requesting a copy of his Form 1040. The form does not 
indicate for which tax year the request was made. (Ex. 5) It could not be for tax year 
2010, because he had yet to file a return for that year.  
 
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 It was suggested to Applicant that he should contact the IRS and obtain some 
document showing the current status of his previously delinquent taxes. (Tr. 17) No 
document was received following the hearing. He asserted he received four tax refund 
checks within an eight-week period in the fall of 2014. (Tr. 18) He provided no 
documentation supporting this assertion.    
 
 Applicant believes his current obligations are stable. (Tr. 50) He is current on his 
credit card with a $200 balance, his rent, utility bills, and car payment. (Tr. 50, 51) He 
has approximately $8,000 in a 401(k) retirement account. (Tr. 51)  
 
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. 
 
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 
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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.  
 
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 owed approximately 
$8,000 federal tax for tax years 2007 through 2010. He is uncertain how much 
delinquent tax he still owes. He asserted, but failed to document, that other SOR 
delinquent obligations had been paid. 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: 
 
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(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. 
 
 None of the mitigating factors for financial considerations fully apply to Applicant 
or mitigate the security concern. His financial difficulties are both recent and multiple. 
For the past nine years, he was late in filing his federal income tax returns. He indicated 
on his December 2013 PFS that his net monthly remainder was $3,266. This PFS was 
completed after his September 2012 separation from his wife, when each would have 
been maintaining a separate household.  
 
 While on active duty, Applicant’s mother contracted cancer. After leaving active 
duty his father died, his daughter was incarcerated, his stepson became involved with 
drugs, and the home he owned at his final duty assignment was taken back by the 
mortgage company. In 2012, he separated from his wife of 26 years. These are all 
events beyond his control. However, his failure to timely file and pay his federal income 
tax occurred over a nine-year period starting in 2005, when he left active duty, and 
continuing through 2014, when he filed his 2013 federal taxes late. The events may 
explain some of the late filing and nonpayment, but cannot explain nine years of late 
filing and failure to pay the proper amount.  
 
Applicant asserts his financial problems are under control, he has paid some of 
the SOR delinquencies, and he has paid some of his past-due delinquent federal taxes. 
However, he has not provided any documentation supporting his assertions. 
Additionally, he is unsure how much federal tax he owes for tax years 2007 through 
2013, excluding tax year 2012. Since he has failed to show he is making payment on 
his delinquent taxes, I am unable to find he has made a good-faith effort to satisfy his 
debts.  
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The $6,371 charged-off account (SOR 1.b), following the repossession of his 
daughter car, was settled and $3,000 of the debt cancelled. The mitigating factors set 
forth in & 20 (d) apply to this debt. The telephone service collection account and the 
DVD collection debts (SOR 1.d, $81; SOR 1.e, $24; and SOR 1.f, $33) are so small as 
not to be of security significance. Applicant asserts the insurance collection account 
(SOR 1.c, $398) related to the repossessed vehicle is also small enough not to be of 
security significance. Even though he asserts his finances are stable and he is paying 
his current monthly obligations, he failed to provide any documentation supporting his 
claim. Therefore, I am unable to apply the mitigating factors listed in AG & 20 (c).  
 
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. 
 
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.  
 
Starting in 2006 or 2007, Applicant was contacted by the IRS about his 
delinquent federal taxes. An IRS tax levy was entered against him. Applicant was 
informed of the concern over his finances during his May and June 2013 interviews; in 
December 2013, when he received the financial interrogatories; in March 2014, when 
he received the SOR; and in October 2014, when he received the original notice of 
hearing. Even with his notice, he failed to document payment of his delinquent taxes or 
a repayment arrangement with the IRS. Given sufficient opportunity to address his 
financial delinquencies, Applicant has failed to act timely or responsibly under the 
circumstances. He failed to resolve his debts and failed to reduce his delinquencies.  
 
Good-faith requires a showing that a person acts in a way that shows 
reasonableness, prudence, honesty, and adherence to duty or obligation. Accordingly, 
an applicant must do more than merely show that he or she relied on a legally available 
option (such as bankruptcy or the statute of limitation) in order to claim the benefit of the 
good-faith mitigating condition. ISCR case No. 02-30304 at 3 (App. Bd. April 20, 2004) 
(quoting ISCR Case No. 99-9020 at 5-6 (App. Bd. June 4, 2001)). In the year and a half 
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that he has known of the concern over his delinquent accounts, he documented that the 
debt following the repossession of the car had been dismissed. He failed to show he 
acted in good faith in resolving his tax  debts.   
 
“Even if Applicant’s financial difficulties initially arose, in whole or in part, due to 
circumstances outside his or her control, the Judge could still consider whether 
Applicant has since acted in a reasonable manner when dealing with those financial 
difficulties.” ISCR Case No. 05-11366 at 4 n.9 (App. Bd. January 12, 2007)(citing ISCR 
Case No. 03-13096 at 4 (App. Bd. November 29, 2005)); ISCR Case No. 99-0462 at 4 
(App. Bd. May 25, 2000); ISCR Case No. 99-0012 at 4 (App. Bd. December 1, 1999). 
He has not acted in a reasonable manner to address his delinquent accounts. 
 
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).) 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 
 
  Subparagraph 1.a:   Against Applicant 
  Subparagraphs 1.b—1.f:  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