Item 5.1
Item 1.2
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                               DEPARTMENT OF DEFENSE
                DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 14-04085
)
)
Applicant for Security Clearance )
Appearances
For Government: Alison O’Connell, Esq., Department Counsel
For Applicant: Pro se
______________
Decision
______________
WHITE, David M., Administrative Judge:
Applicant incurred more than $40,000 in delinquent taxes and consumer debts
over the past five years, and failed to document resolution of any of them despite
substantial income. Resulting security concerns were not mitigated. Based on a review
of the pleadings and exhibits, eligibility for access to classified information is denied.
Statement of the Case 
Applicant submitted a security clearance application (SF-86) on March 8, 2013.1
On June 12, 2014, the Department of Defense Consolidated Adjudications Facility (DoD
CAF) issued a Statement of Reasons (SOR) to Applicant, detailing security concerns
under Guideline F (Financial Considerations).  The action was taken under Executive2
Order 10865, Safeguarding Classified Information Within Industry (February 20, 1960),
Item 4.  Applicant’s response said that he had made three monthly $100 payments toward his credit union3
unsecured loan delinquency, alleged in SOR ¶ 1.d.  A credit union letter (AE A, Encl. 2) said that he began
those payments on August 14, 2014. This, and references to making future payments toward other alleged
debts in early November 2014, suggest that the response was signed and submitted in mid to late October
2014.  
Department Counsel submitted eight Items in support of the SOR allegations. Item 8 is a part of the Office4
of Personnel Management (OPM) Report of Investigation. It is a summary of Applicant’s unsworn interview
with an OPM investigator on March 28, 2013. It is not admissible evidence since it was neither adopted by
Applicant nor authenticated by a witness. Its contents will not be considered. (Directive ¶ E3.1.20.)
Item 5; AE A, Encl. 9.5
Item 4.6
2
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 that came into effect in the Department of Defense on
September 1, 2006. 
Applicant timely submitted an undated written response to the SOR, and
requested that his case be decided by an administrative judge on the written record
without a hearing.  Department Counsel submitted the Government’s written case on3
February 27, 2015. A complete copy of the File of Relevant Material (FORM)  was4
provided to Applicant on April 21, 2015, and he was afforded an opportunity to file
objections and submit material in refutation, extenuation, or mitigation within 30 days of
his receipt of the FORM. Applicant submitted additional material in response to the
FORM on May 27, 2015, to which Department Counsel had no objection. This response
to the FORM, with eight enclosures, is admitted as Applicant’s Exhibit (AE) A. I received
the case assignment on June 8, 2015.
Findings of Fact
Applicant is 51 years old, and has worked full time for various defense
contractors since June 2003 when he began terminal leave before retiring from the
Navy. He is married for the second time, with an adult daughter. He served on active
duty in the Navy from August 1983 to October 2003, and was honorably discharged in
pay grade E-6. He earned Enlisted Aviation Warfare Specialist and Naval Air Crewman
designations, two Navy Air Medals, two Navy/Marine Corps Commendation Medals, five
Navy/Marine Corps Achievement Medals, five Navy Good Conduct Medals, and various
unit and service awards. He has held a security clearance since his time in the Navy.  5
In his response to the SOR, Applicant admitted the truth of the allegations
concerning his seven delinquent debts, totaling about $40,000. He also admitted the
allegations that his home mortgage loan went into foreclosure with an outstanding
balance of about $205,000 and that he failed to file his required Federal and state
income tax returns for 2010.  Applicant’s admissions are incorporated as findings of6
fact.
Items 4 through 7; AE A, Encl. 5, Encl. 8. See SOR ¶ 1.a. 7
Item 4; Item 5. The 2010 and 2011 tax issues are alleged in SOR ¶¶ 1.g through 1.i.8
AE A, Encl 4; Item 4.9
3
Applicant lived in the home he purchased with his first wife from November 2000
until July 2011, when he began living with his current wife pending finalization of his
divorce in October 2011. He refinanced his original $154,000 home mortgage loan in
March 2007, with the now foreclosed loan for $221,000 on which he stopped making
payments in June 2011. The record credit reports show that he was $17,789 past due in
mortgage loan payments, with a total balance due of $204,939 as of May 2012. He
reported that, after failed attempts at a short sale, the home was sold in foreclosure
proceedings in January 2013. He provided neither documentation nor details concerning
what, if any, deficiency balance is due or may have been forgiven by the mortgage
lender. His 2013 tax return does not reflect inclusion of any debt forgiveness in his
income.  7
Applicant said that he did not file his Federal or state income tax returns for tax
year 2010 on time because he thought his first wife had filed them jointly when, in fact,
she had only filed them for herself due to their pending divorce. He reported on his
March 2013 SF-86 that he was waiting to get tax information in the mail from the IRS
before filing these returns. He also reported that he filed his 2011 Federal income tax
return on time, but forgot to pay approximately $2,800 that he owed for that year. He
said that after he filed his 2010 return he would set up a payment plan with the IRS to
resolve his tax debts. In his October 2014 answer to the SOR, he admitted that he still
had not filed either his Federal or state returns for 2010, nor had he made arrangements
to repay his delinquent 2011 Federal tax debt, but again said that he would promptly do
both.  8
In his FORM response, Applicant submitted a copy of a 2010 Federal income tax
return dated, “4/3/2013,” that bears his signature and the typed name, but not signature,
of a paid tax preparer. The return claims that he is due a refund of $1,834 on adjusted
gross income of $67,824. Applicant provided nothing from the IRS acknowledging
receipt of this tax return, and no explanation for the discrepancy between the April 2013
date on the return and his October 2014 admission that he had still not filed it.    9
Applicant also provided an unsigned copy of a joint Federal tax return for 2013,
filed with his wife, showing that they owed an additional $976 in taxes on adjusted gross
income of $164,235. He further submitted a copy of the first page of a letter from the
IRS to his wife, dated May 19, 2015, documenting her agreement on May 8, 2015, to
begin monthly $200 installment payments on July 28, 2015, toward their combined
Federal income tax delinquencies for tax years 2005, 2008, 2012, and 2013. Since only
the first page of this letter was submitted, neither the total amount of this debt nor the
duration of payments needed to resolve it could be determined. Applicant also said that
AE A, Encl 5 through 7.10
Item 5 at 41-44. These are the debts alleged in SOR ¶¶ 1.b, 1,c, 1.d, and 1.f.11
AE A, Encl. 2.12
AE A, Encl. 3.13
AE A, Encl. 1.14
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he was working with a tax accountant to file his 2014 tax return after having timely filed
for an extension of time to do so.    10
On his March 2013 SF-86, in addition to his delinquent taxes and mortgage loan,
Applicant reported four consumer credit debts totaling about $18,000 that had become
delinquent between June 2010 and July 2011. He said that he either had or would
promptly set up repayment plans to resolve those debts.  Applicant provided11
documentation that, as of May 14, 2015, he had made nine monthly $100 payments
under an agreement he entered into in August 2014 with the collections department of
the credit union holding the debt alleged in SOR ¶ 1.d, and had reduced the outstanding
balance from $4,377 to $3,432.  No payment toward any of the other three debts was12
demonstrated, although he submitted a letter from the law firm that obtained a judgment
against him, for the $4,773 debt alleged in SOR ¶ 1.c, acknowledging his agreement to
begin paying $200 per month toward the new balance due of $6,315.  13
On May 14, 2015, Applicant and his wife signed up for a debt management plan,
under which payments of $810 per month (with an additional $50 set-up fee due with
the first payment) would start on June 1, 2015. The debt management company agreed
to offer free financial counseling and included monthly budget information showing total
income of $8,942 and total expenses of $7,231 with a resulting net surplus of $1,711
available to support those payments. The debts alleged in SOR ¶¶ 1.b and 1.d are
included in the plan, which reflects that the former debt has grown from the alleged
$8,752 to $16,605 and bears a 20% interest rate. The plan proposes to repay 18 debts
totaling $29,927 over a four-year period, but does not appear to include the
delinquencies alleged in SOR ¶¶ 1.a, 1.c, 1.e, or 1.f. No payments toward this plan were
documented, nor was participation in financial counseling by either Applicant or his
wife.14
The record lacks evidence concerning the quality of Applicant’s post-service
professional performance, the level of responsibility his duties entail, or his track record
with respect to handling sensitive information and observation of security procedures.
No character witnesses provided statements describing his judgment, trustworthiness,
integrity, or reliability. I was unable to evaluate his credibility, demeanor, or character in
person since he elected to have his case decided without a hearing.  
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Policies
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 (DCs) and mitigating conditions (MCs), which are to be used 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
overarching adjudicative goal is a fair, impartial, and commonsense decision. According
to AG ¶¶ 2(a) and 2(c), the entire process is a conscientious scrutiny of applicable
guidelines in the context 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 national 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 the 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, “[t]he 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.” Section 7
of Executive Order 10865 provides: “[a]ny 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.”
A person applying for access to classified information seeks to enter 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 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.
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Analysis
Guideline F, Financial Considerations
The security concerns under the guideline for financial considerations are set out
in AG ¶ 18, which reads in pertinent part:      
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. 
Department Counsel asserted, and the record evidence established, security
concerns under two Guideline F DCs, as set forth in AG ¶ 19: 
(a) inability or unwillingness to satisfy debts; and 
(c) a history of not meeting financial obligations.
Applicant owes more than $40,000 in unresolved delinquent taxes and other
debts that he incurred over the past five years. His home mortgage loan was reportedly
foreclosed in 2013, while over $17,000 past due, with an undetermined deficiency
balance. He provided minimal evidence of efforts to repay or otherwise resolve any of
these debts, despite more than two years of statements that he intended to do so. His
ongoing pattern and history of inability or unwillingness to pay lawful debts raise security
concerns under DCs 19(a) and (c), and shift the burden to Applicant to rebut, extenuate,
or mitigate those concerns. 
The guideline includes five conditions in AG ¶ 20 that could mitigate security
concerns arising from Applicant’s financial difficulties:
(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; 
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(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 has incurred substantial delinquent debts, which continue to date. He
offered insufficient evidence from which to establish a track record of debt resolution.
He failed to demonstrate that conditions beyond his control contributed to his financial
problems, or that he acted responsibly under such circumstances. Much of the debt
arose around the time of his divorce from his first wife, but the record evidence does not
indicate that those circumstances were either beyond his control or a surprise to him.
MC 20(e) requires documented proof to substantiate the basis of a dispute concerning a
delinquent debt, and Applicant admitted owing each debt alleged in the SOR.
Accordingly, the record is insufficient to establish mitigation under any of the foregoing
provisions.
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.   
I considered the potentially disqualifying and mitigating conditions in light of all
pertinent facts and circumstances surrounding this case. Applicant is an accountable
and experienced adult, who is responsible for the voluntary choices and conduct that
underlie the security concerns expressed in the SOR. His SOR-listed delinquent debts
arose over the past five years and remain largely unresolved despite his continuous
employment during the period involved, and a current budget showing at least $1,700
per month in excess income over expenses. He offered insufficient evidence of financial
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counseling, rehabilitation, better judgment, or responsible conduct in other areas of his
life to offset resulting security concerns. The potential for pressure, coercion, and
duress from his financial situation remains undiminished. Overall, the record evidence
leaves me with substantial doubt as to Applicant’s present eligibility and suitability for a
security clearance. He did not meet his burden to mitigate 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 ¶ E3.1.25 of Enclosure 3 of the Directive, are:
Paragraph 1, Guideline F: AGAINST APPLICANT
Subparagraphs 1.a through 1.i: Against 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 eligibility for a security
clearance. Eligibility for access to classified information is denied.
                                              
DAVID M. WHITE
Administrative Judge