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DEPARTMENT OF DEFENSE 
DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
 
In the matter of: ) 
 ) 
 [Redacted] )  ISCR Case No. 14-05879 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Carroll J. Connelley, Esq., Department Counsel 
For Applicant: Greg D. McCormack, Esq. 
 
 
______________ 
 
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 March 12, 2013. On 
February 7, 2015, the Department of Defense Consolidated Adjudications Facility (DOD 
CAF) sent him a Statement of Reasons (SOR) alleging security concerns under 
Guideline F. The DOD CAF 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 
the DOD on September 1, 2006.  
 
 Applicant answered the SOR on March 18, 2015, and requested a hearing before 
an administrative judge. Department Counsel was ready to proceed on May 27, 2015, 
and the case was assigned to an administrative judge June 6, 2015. The administrative 
judge granted Applicant’s request for postponement on June 30, 2015. The case was 
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reassigned several times due to scheduling difficulties and the geographical separation 
between Applicant and his counsel. It was reassigned to me on November 24, 2015. On 
November 30, 2015, the Defense Office of Hearings and Appeals (DOHA) notified 
Applicant that the hearing was scheduled for December 15, 2015. I convened the 
hearing as scheduled. Government Exhibits (GX) 1 through 4 were admitted in evidence 
without objection. Applicant testified and submitted Applicant’s Exhibits (AX) A through 
C, which were admitted without objection. DOHA received the transcript (Tr.) on 
December 23, 2015. 
 
I kept the record open until January 14, 2016, to enable Applicant to submit 
additional documentary evidence. He timely submitted Supplemental Exhibits (SX) A 
through H, which were admitted without objection. 
 
Findings of Fact 
 
 In his answer to the SOR, Applicant admitted all the allegations. His admissions 
in his answer and at the hearing are incorporated in my findings of fact.  
 
 Applicant is a 40-year-old business software architect, employed by a defense 
contractor since February 2013. (AX A.) He also is the owner and sole employee of a 
computer network support company. He has owned the company since May 1998. His 
company is a Subchapter S corporation, through which he reports the flow-through of 
company income and losses on his personal tax returns and is assessed taxes at 
individual income tax rates. (AX A.) The company currently is inactive and generates no 
income. (AX B-3.)  
 
Applicant graduated from college with a bachelor’s degree in computer science in 
August 1998. He has never married. He has never held a security clearance.  
 
Applicant admitted in his security clearance application and a follow-up interview 
with a security investigator that he had not timely filed his federal and state income tax 
returns or paid the taxes due for tax years 2006-2011. ((GX 1 at 24-27.) GX 2 at 2-3.) 
His credit bureau report (CBR) dated March 27, 2013, reflected a federal tax lien for 
$31,436, filed in December 2012 (SOR ¶ 1.j); an unsatisfied judgment for $235 for 
homeowners’ association fees, filed in June 2012 (SOR ¶ 1.m); a medical collection 
account for $323 (SOR ¶ 1.n); and a medical collection account for $171, referred for 
collection in in July 2012 (SOR ¶ 1.o). This CBR also reflected two other judgments filed 
by the same homeowners’ association in October 2010 and December 2011, which 
were satisfied in March 2011 and April 2012. (GX 3.) 
 
Applicant’s June 2014 CBR reflected seven medical collection accounts for $308, 
$129, $82, $69, $57, $22, and $22, referred for collection between June 2009 and 
October 2013 (SOR ¶¶ 1.c-1.i); a federal tax lien for $51,887, filed in August 2013 (SOR 
¶ 1.k); a federal tax lien for $264,000, filed in April 2014 (SOR ¶ 1.i); and the December 
2012 tax lien also reflected in the March 2013 CBR. (GX 4.) 
 
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 Applicant had major surgery in 2004. He suffered complications from that surgery 
from 2006 to 2009, requiring frequent medical treatment and hospitalization.. (Tr. 30-
34.) In 2010, his doctors identified and resolved the cause of his surgical complications. 
(SX E through G) In addition to his surgical complications, Applicant also required back 
surgery in 2012 and periodic medical treatment for his back programs after the surgery. 
(Tr. 42-44; SX H.) 
 
In July 2005, Applicant moved from the state where his business was located to 
a state where his current employer is located, but he continued to use the tax 
accountant in his former home state. (GX 1 at 8-9; Tr. 30.) He prepared the information 
for his tax returns but did not submit it to his tax accountant. Because his company is a 
Subchapter S corporation, he needed to file his corporate returns before he could file 
his personal returns, and he relied on his tax accountant to prepare the corporate and 
personal returns. In 2010, Applicant received the tax returns for 2006, 2007, and 2008 
from his accountant, but he did not file them. (AX B-9; Tr. 27-34.)  
 
 Applicant’s tax accountant passed away in February 2011. A new tax accountant 
prepared the past-due returns for 2009 and 2010 and sent them to Applicant in August 
2012. The accountant sent Applicant the 2011 return in December 2012 and the 2012 
return in July 2013. (AX B-9 at 70-73.)  
 
Applicant’s IRS account transcripts reflect that he filed the 2007 return in 
September 2011, the 2008 return in November 2012, the 2009 and 2010 returns in 
March 2013, the 2011 return in January 2013, the 2012 return in August 2013, and the 
2013 return in June 2014. His 2014 return was timely filed in April 2015. (SX B.) The 
record does not reflect when he filed his 2006 return. 
 
 In September 2014, Applicant entered into a payment agreement with the 
Internal Revenue Service (IRS), providing for monthly payments of $750. (AX B-7.) He 
made the required payments from September 2014 to April 2015. (AX B-8; SX B.) 
 
 Applicant submitted an Offer in Compromise to the IRS in May 2015, offering to 
pay $27,500. (AX B-4; AX B-5.) He made a payment of $5,500 as part of his offer. (AX 
B-6.) His offer was denied in December 2015, and his appeal of the denial is pending. 
(SX A.) He suspended the $750 monthly payments pending a decision on his Offer in 
Compromise. (Tr. 57-58.) 
 
 Applicant testified that he paid all the medical bills alleged in the SOR, even 
though he knew some of them were inaccurate or duplicates. Many of the debts were 
small amounts for copayments. (Tr. 40-42.) He provided documentation that the medical 
collection accounts in SOR ¶¶ 1.c and 1.g were paid in December 2015 (SX C; SX D.) 
He did not document his payment of the other medical bills alleged in the SOR. The 
medical debts alleged in SOR ¶¶ 1.c and 1.g are reflected in Applicant’s December 
2015 Equifax CBR, and they are listed as disputed. The basis for the dispute is not 
reflected. The medical debts alleged in SOR ¶¶ 1.d-1.i, 1.n, and 1.o are not reflected in 
his Applicant’s Equifax CBR or his December 2015 TransUnion CBR. (AX B-1 and AX 
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B-2.) None of the medical collection accounts were subject to the seven-year limitation 
of the Fair Credit Reporting Act.1 Thus, the deletion of the medical debts alleged in SOR 
¶¶ 1.d-1.i, 1.n, and 1.o indicates that they probably were resolved, either by payment or 
favorable resolution of a dispute. 
 
 Applicant testified that the judgment for homeowners’ association dues, alleged 
in SOR ¶ 1.m, was for the year after he moved, but he paid the debt to remove it from 
his credit record. (Tr. 53-54.) During his May 2013 PSI, Applicant told the investigator 
that the three judgments for homeowners’ association dues were the result of his 
frequent business travel and forgetfulness. (GX 2 at 3.) The most recent judgment is 
reflected on his December 2015 TransUnion CBR as disputed. The basis for the dispute 
is not reflected, and the dispute is not resolved. (AX B-2.) 
 
 Applicant’s current net monthly pay is about $3,362. (AX B-10.) His gross annual 
income is about $140,000 (Tr. 29.) His current employer withholds federal and state 
income taxes from his pay, and he has medical insurance. (Tr. 44-46.) 
 
 Several of Applicant’s colleagues and long-time friends submitted statements on 
his behalf. They describe him as extremely capable, dedicated, and trustworthy. (AX C.) 
 
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 
                                                          
1 Under the Fair Credit Reporting Act, a credit report may not list accounts placed for collection or 
charged off that antedate the credit report by more than seven years, or until the statute of limitations has 
run, which is longer. The exceptions to this prohibition do not apply to these debts. 10 U.S.C. § 1681c.  
 
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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).   
 
 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 failed to timely file his federal income tax returns 
for tax years 2006-2013 (SOR ¶ 1.a); that he owes about $254,984 in federal taxes 
(SOR ¶ 1.b); and that the IRS filed tax liens against him in 2012, 2013, and 2014 (SOR 
¶¶ 1.j-1.l). It also alleges an unsatisfied judgment for homeowners’ association dues 
filed against him in 2012 (SOR ¶ 1.m), and nine delinquent medical debts (SOR ¶¶ 1.c-
1.i, 1.n, and 1.o). Applicant’s failure to timely file his state income tax returns is not 
alleged. 
 
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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). 
 
 The tax liens alleged in SOR ¶¶ 1.j-1.l are for the debt alleged in SOR ¶ 1.b. 
When the same conduct is alleged more than once in the SOR under the same 
guideline, the duplicative allegations should be resolved in Applicant=s favor. See ISCR 
Case No. 03-04704 (App. Bd. Sep. 21, 2005) at 3 (same debt alleged twice). 
Accordingly, I will resolve SOR ¶¶ 1.j-1.l for Applicant.  
 
 Applicant’s admissions, corroborated by his CBRs, establish three 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”). The following mitigating conditions under this guideline 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; 
 
AG ¶ 20(d): the individual initiated a good-faith effort to repay overdue 
creditors or otherwise resolve debts; and 
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AG ¶ 20(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. 
 
 AG ¶ 20(a) is not established. Applicant’s delinquent debts are numerous, recent, 
and were not incurred under circumstances making them unlikely to recur. 
 
 AG ¶ 20(b) is not fully established for the delinquent tax returns. Applicant’s 
medical problems and the death of his tax accountant in 2011 were largely beyond his 
control. However, he has not acted responsibly. His surgical complications were brought 
under control in 2010, and his back surgery was completed in 2012. His first tax 
accountant prepared the tax returns for 2006-2008 before his death in 2011, but 
Applicant did not file the 2008 return until November 2012, and he did not file the 2009, 
2010, and 2011 returns until 2013. He did not begin his payment agreement with the 
IRS until September 2014.  
 
 AG ¶ 20(b) is not established for the unsatisfied judgment filed by the 
homeowners’ association and the medical bills. These debts were not incurred because 
of conditions beyond his control. He failed to timely pay his association dues for three 
years, and he attributed it to frequent travel and forgetfulness. The unpaid medical bills 
were incurred and referred for collection after his surgical complications were under 
control and his back surgery was completed. He did not take any action to resolve them 
until he realized they were an impediment to obtaining a security clearance. 
 
 AG ¶ 20(c) is partially established. Applicant has not sought or received financial 
counseling, but he has made progress in resolving his federal income tax problems and 
paid some of the medical debts. 
 
AG ¶ 20(d) is not fully established. “Good faith” within the meaning of this 
mitigating condition means acting in a way that shows reasonableness, prudence, 
honesty, and adherence to duty or obligation. ISCR Case No. 99-0201, 1999 WL 
1442346 at *4 (App. Bd. Oct. 12, 1999). Evidence of past irresponsibility is not mitigated 
by payment of debts only under pressure of qualifying for a security clearance.   
 
 Applicant began resolving his tax problems in 2010, before he applied for a 
security clearance. However, he was dilatory and waited about six months after 
receiving his tax returns from his accountant before he filed them. He waited about a 
year before filing his late returns for 2011 and 2012. He negotiated a payment plan with 
the IRS before he received the SOR, and he made regular payments until he submitted 
his Officer in Compromise in May 2015. However, he did not demonstrate any sense of 
urgency regarding the unsatisfied judgment or the medical debts until it became 
apparent that they were an impediment to obtaining a security clearance. 
 
 AG ¶ 20(e) is not fully established. Applicant testified that some of the medical 
debts were invalid or duplicates of other debts, he did not identify which were invalid or 
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duplicates. His CBRs reflect that the medical debts alleged in SOR ¶¶ 1.c and 1.g are 
disputed, but he produced no documentation of the basis for the dispute.  
 
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. 
 
 A security clearance adjudication is an evaluation of an individual’s judgment, 
reliability, and trustworthiness. It is not a debt-collection procedure. ISCR Case No. 09-
02160 (App. Bd. Jun. 21, 2010.) Thus, the fact that a delinquent debt has been resolved 
does not end the inquiry. Applicant is a mature, well-educated, but undisciplined adult. 
He is financially secure, but his financial history reflects consistent neglect of his 
financial obligations. His approach to his debts has been reactive rather than proactive. 
He has demonstrated difficulty adhering to the federal tax laws as well as the rules of 
the homeowners’ association in his former residential community.  
 
 Applicant has resolved some of his debts, but his federal income tax debt is not 
resolved. His history of financial neglect leaves me unconvinced that he will adhere to 
his federal tax payment plan or avoid further delinquent debts once the pressure of 
obtaining a clearance is removed. 
 
 After weighing the disqualifying and mitigating conditions under Guideline F, and 
evaluating all the evidence in the context of the whole person, I conclude Applicant has 
not mitigated the security concerns raised by his financial delinquencies. 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.c:    Against Applicant 
 
  Subparagraphs 1.d-1.l:    For Applicant 
 
  Subparagraph 1.m:     Against Applicant 
 
  Subparagraphs 1.n-1.o:    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