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                         DEPARTMENT OF DEFENSE
       DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
---------------------- )       ISCR Case No. 14-02171
)
Applicant for Security Clearance )
Appearances
For Government: Jeff Nagel, Esquire, Department Counsel
For Applicant: Pro se
April 14, 2015
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DECISION
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ROSS, Wilford H., Administrative Judge:
Applicant submitted his Electronic Questionnaire for Investigations Processing
(e-QIP), on January 6, 2014. (Government Exhibit 1.)  On August 15, 2014, the
Department of Defense issued a Statement of Reasons (SOR) detailing the security
concerns under Guideline F (Financial Considerations) concerning Applicant. The action
was taken under Executive Order 10865, Safeguarding Classified Information within
Industry (February 20, 1960), as amended; Department of Defense Directive 5220.6,
Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as
amended (Directive); and the adjudicative guidelines (AG) effective within the
Department of Defense on September 1, 2006. 
 
Applicant answered the SOR in writing on September 11, 2014 (Answer), and
requested a hearing before an administrative judge. Department Counsel was prepared
to proceed on November 21, 2014. This case was assigned to me on December 2,
2014. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing
on December 11, 2014. I convened the hearing as scheduled on January 13, 2015. The
Government offered Government Exhibits 1 through 4, which were admitted without
objection. Applicant testified on his own behalf, and submitted Applicant Exhibits A and
B, also without objection. Applicant submitted Applicant Exhibit C on January 28, 2015,
Applicant was technically correct. In 2009 a single person had to make at least $9,350 in order to be required1
to file a tax return. Even if  Applicant is viewed as being self-employed that year he had to have  net earnings
of at least $400. (Department of the Treasury, Internal Revenue Service, Publication 501: Exemptions,
Standard Deduction, and Filing Information 2009 Tables 1 and 3, http://www.irs.gov/pub/irs-prior/
p501--2009.pdf (accessed April 9, 2015).
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and it was admitted without objection. DOHA received the transcript of the hearing (Tr.)
on January 21, 2015. The record closed on January 28, 2015. Based upon a review of
the pleadings, exhibits, and testimony, eligibility for access to classified information is
granted.
Findings of Fact
Applicant is 37 and single. He has a bachelor of science degree, and has never
held a security clearance. He is employed by a defense contractor, and seeks to obtain
a security clearance in connection with his employment.
Paragraph 1 (Guideline F, Financial Considerations)
The Government alleges in this paragraph that Applicant is ineligible for
clearance because he is financially overextended and therefore potentially unreliable,
untrustworthy, or at risk of having to engage in illegal acts to generate funds. Applicant
admitted subparagraph 1.a in the SOR under this paragraph. That admission is a
finding of fact. He also submitted additional information to support his request for a
security clearance.
The sole allegation in the SOR is that Applicant owes the Internal Revenue
Service (IRS) approximately $10,000 in unpaid taxes for the year 2009. Applicant
stated, and provided evidence supporting his statement, that this is incorrect and he
actually owes the IRS nothing for that tax year.
Applicant worked for his current employer from approximately 2002 through
2007. He then left to work for another contractor. He was laid off from that job in July
2008, and was unemployed from August 2008 through October 2010. (Government
Exhibit 1 at Section 13A.)
Applicant resided with his parents, and lived on his savings and their generosity
during this two-year period of unemployment. During the year 2009, when he was
unemployed for the entire year, Applicant tried his hand as a day trader. He was not
successful at it and wound up losing money, about $915. Since Applicant had no
income that year he thought he did not need to file a tax return.  However, the trades1
were reported to the IRS and they thought he had made money and owed them
$10,000. Once Applicant figured this out he filed a 2009 tax return in 2014, showing that
he had a loss for the year. (Applicant Exhibit B.) The IRS has received his return and
confirmed in a letter dated December 30, 2014, that he owes them no money for tax
year 2009. (Applicant Exhibit A; Tr. 18-19, 22-26, 28-31.)
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Mitigation
Applicant submitted documentation showing that he is a highly respected
employee. Applicant Exhibit C is his most recent Performance Review for the 2014
calendar year. His overall summary is “Consistently Exceeds Expectations.” (Tr. 34-36.)
The credit reports in the record also show that Applicant is financially stable. He
had one charge off in his past, which he paid. (Government Exhibits 2, 3, and 4; Tr. 27.)
Policies
Security clearance decisions are not made in a vacuum.  When evaluating an
applicant’s suitability for a security clearance, the administrative judge must consider
the adjudicative guidelines (AG). In addition to brief introductory explanations for each
guideline, the adjudicative guidelines list potentially disqualifying conditions and
mitigating conditions, which are to be used as appropriate 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 AG ¶ 2 describing the adjudicative process. The administrative judge’s
over-arching 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.  In addition, the administrative judge may also rely on
his or her own common sense, as well as knowledge of the law, human nature, and the
ways of the world, in making a reasoned decision.
The protection of the national security is the paramount consideration. AG ¶ 2(b)
requires that, “Any 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. Likewise, I have avoided drawing inferences
grounded on mere speculation or conjecture.
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 the applicant or proven by Department Counsel, and has the
ultimate burden of persuasion as to obtaining a favorable clearance 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
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grants access to classified information. Security clearance decisions include, by
necessity, consideration of the possible risk that 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 potential, rather than actual, risk
of compromise of classified information.
 
Finally, as emphasized in Section 7 of Executive Order 10865, “Any
determination under this order adverse to an applicant shall be a determination 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
Paragraph 1 (Guideline F, Financial Considerations)
The security concern relating to the guideline for Financial Considerations is set
out in AG & 18:      
Failure or inability to live within one=s means, satisfy debts, and
meet financial obligations may indicate poor self-control, lack of judgment,
or unwillingness to abide by rules and regulations, all of which can raise
questions about an individual=s reliability, trustworthiness and ability to
protect classified information. An individual who is financially overextended
is at risk of having to engage in illegal acts to generate funds. 
The guideline notes several conditions that could raise security concerns. Under
AG & 19(a), an Ainability or unwillingness to satisfy debts@ is potentially disqualifying.
Similarly under AG & 19(c), Aa history of not meeting financial obligations@ may raise
security concerns. The Government failed to show that any disqualifying condition
applies to the facts of this case. In reality, as Applicant has compellingly shown, he
never owed the IRS any money for 2009 back taxes. He is and has been willing and
able to pay his taxes. AG ¶ 19(g) “failure to file annual Federal . . . income tax returns
as required,” does not apply because Applicant was not under any obligation to file such
returns since he did not make enough money.
However, let’s assume for the sake of argument that the incorrect assertion by
the IRS that Applicant did owe them $10,000 does raise security concerns regarding
Applicant. The guideline also includes examples of conditions that could mitigate
security concerns arising from financial difficulties. AG ¶ 20(b) states that disqualifying
conditions may be mitigated where “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.” Based on the particular facts of
this case, I also find that he has “initiated a good-faith effort to repay overdue creditors
or otherwise resolve debts,” as required by AG ¶ 20(d). Finally, AG ¶ 20(e) applies as
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Applicant “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.”
This case occurred because Applicant did not realize all the financial
requirements involved in trying to be a day trader in the commodities market during
2009, when he was unemployed. Since he had no income in 2009, and actually lost
money, he thought he did not have to file a tax return. Once he was notified by the IRS
that they believed he owed them money, and why they thought that, he filed his tax
return for that year and resolved the issue.
Applicant has not received financial counseling. However, as found above, his
current financial situation is stable. I find that “there are clear indications that the
problem is being resolved or is under control,” as required by AG ¶ 20(c). 
Applicant has acted in a way that shows good judgment, quickly and successfully
resolving this tax issue. All of these mitigating conditions apply to the facts of this case.
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 the relevant circumstances. Under AG ¶ 2(c), the ultimate determination
of whether to grant eligibility for a security clearance must be an overall commonsense
judgment based upon careful consideration of the guidelines and the whole-person
concept. The administrative judge must 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 considered the potentially disqualifying and mitigating conditions in light of all
the relevant facts and circumstances surrounding this case. The discussion under
Guideline F, above, applies here as well. Applicant has resolved his tax issue, and he
has the knowledge and ability to avoid such problems in the future. 
Under AG ¶ 2(a)(2), I have considered the facts of Applicant’s debt history.
Based on the record, I find that there have been permanent behavioral changes under
AG ¶ 2(a)(6). Accordingly, I find that there is little to no potential for pressure, coercion,
exploitation, or duress (AG ¶ 2(a)(8)); and that there is a low likelihood of recurrence
(AG ¶ 2(a)(9)). 
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Overall, the record evidence leaves me with no questions or doubts as to
Applicant’s eligibility and suitability for a security clearance. For all these reasons, I
conclude Applicant has mitigated the security concerns arising from his financial
situation. Accordingly, the evidence supports granting his request for a security
clearance.
Formal Findings
Formal findings for or against Applicant on the allegations set forth in the SOR,
as required by ¶ E3.1.25 of Enclosure 3 of the Directive, are:
Paragraph 1, Guideline F: FOR APPLICANT
Subparagraph 1.a: For Applicant
Conclusion
In light of all of the circumstances presented by the record in this case, it is
clearly consistent with the national interest to grant Applicant eligibility for a security
clearance.  Eligibility for access to classified information is granted.
WILFORD H. ROSS
Administrative Judge