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                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
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[NAME REDACTED] )       ISCR Case No. 15-04520
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Applicant for Security Clearance )
Appearances
For Government: Douglas Velvel, Esq., Department Counsel
For Applicant: Pro Se
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Decision
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MALONE, Matthew E., Administrative Judge:
Applicant accrued significant past-due and delinquent debt due, in part, to
circumstances beyond his control. However, he did not act responsibly in addressing his
financial problems. Applicant also failed to file his federal and state income tax returns
for the 2014 and 2015 tax years. His attempts to mitigate the security concerns caused
by his financial problems are not sufficient. His request for a security clearance is
denied.
Statement of the Case
On March 13, 2013, Applicant submitted an Electronic Questionnaire for
Investigations Processing (EQIP) to obtain eligibility for a security clearance required for
his employment with a defense contractor. Based on the results of the ensuing
background investigation, Department of Defense (DOD) adjudicators could not
  Required by Executive Order 10865, as amended, and by DOD Directive 5220.6 (Directive), as amended.1
 The adjudicative guidelines were implemented by the Department of Defense on September 1, 2006. These2
guidelines were published in the Federal Register and codified through 32 C.F.R. § 154, Appendix H (2006).
 Department Counsel’s list of exhibits is included for administrative purposes as Hearing Exhibit (Hx.) 1.3
 Department Counsel’s email waiving objection to Ax. G is included as Hx. 2.4
 Authorized by Directive Section E3.1.17.5
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determine that it is clearly consistent with the national interest for Applicant to continue
to hold a security clearance.  1
On December 16, 2015, DOD issued an SOR alleging facts which raise security
concerns addressed under the adjudicative guideline  for financial considerations2
(Guideline F). Applicant timely responded to the SOR (Answer) and requested a
hearing. The case was assigned to me on March 24, 2016, and I convened a hearing on
April 26, 2016. The parties appeared as scheduled. Department Counsel presented
Government Exhibits (Gx.) 1 - 3.  Applicant testified and presented Applicant’s Exhibits3
(Ax.) A - F. All exhibits were admitted without objection. A transcript of the hearing (Tr.)
was received on May 4, 2016. The record closed on May 7, 2016, when I received
Applicant’s post-hearing submission. It has been admitted without objection as Ax. G.4
Findings of Fact
Under Guideline F, the Government alleged that Applicant had two delinquent
mortgages, one of which (SOR 1.a) went to foreclosure, and one of which (SOR 1.b)
was charged off. The SOR also contained allegations that Applicant owes $27,430 for
five delinquent or past-due debts (SOR 1.c - 1.g). Applicant denied SOR 1.d, but
admitted the remaining allegations. He also provided explanatory remarks with each
response. 
At the hearing, I granted Department Counsel’s motion to amend the SOR to
conform to the record.  Specifically, the following allegation was added as SOR 1.h:5
You failed to file your federal income taxes for tax years 2014 and 2015,
as required.
Applicant responded at hearing by admitting this allegation. (Tr. 70 - 75) In
addition to the facts established by these exhibits and by Applicant’s admissions, I make
the following findings of fact.
Applicant is 53 years old. He works as a software engineer for a defense
contractor in a position that requires he be eligible for access to classified information.
He has held a security clearance for most of the past 30 years. (Gx. 1; Tr. 8 - 9)
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Before being hired for his current position in March 2015, Applicant was
unemployed for about 13 months after he was laid off from his previous employer in
January 2014. He was hired by company in September 2012. Before that, he was
unemployed for about 19 months. He had been laid off from a large defense contractor
where he had worked from January 2003 until February 2011. (Gx. 1)
Applicant has been married twice. His first marriage began in December 1985
and ended in divorce in June 1991. He and his first wife had no children. Applicant
remarried in October 1991 but was divorced in December 2006 after a four-year
separation. Applicant has one adult child from his second marriage. He paid child
support from May 2006 until the child turned 18 in 2012, and thereafter until 2014 to
satisfy an arrearage. The $5,810 child support debt alleged at SOR 1.d arose after
Applicant was laid off in 2011. Applicant’s child support payments were always taken as
a direct allotment from his pay. Also contributing to his child support arrearage was a
mis-communication between the state child support agency and Applicant’s employer’s
payroll department when he found work in 2012. Applicant presented information at the
hearing that shows all of his child support obligations, including missed payments from
over four years ago, were satisfied in early 2014. SOR 1.d is resolved for Applicant.
(Answer; Ax. C - F; Tr. 22 - 23, 28, 59 - 64)
From 2003 until 2011, Applicant earned in excess of $100,000 annually. He used
credit cards, but paid them as they came due. In October 2006, he bought a house for
about $280,000. The debts alleged at SOR 1.a and 1.b represent the two mortgages,
for 80 percent and 20 percent of the cost, respectively, he used to finance the purchase.
After he lost his job in 2011, Applicant struggled to keep up with the mortgage
payments. He used savings in his 401k account and used credit cards for more
expenses than usual. He could not sell the house to cover his mortgages as it had lost
value during the collapse of the housing market. (Answer; Tr. 29 - 30, 43 - 44, 57 - 58)
After Applicant found work in September 2012, he was able to stay current on his
mortgage and credit cards. But he again found himself unemployed in January 2014. By
late summer of that year he had fallen at least three months behind on his mortgages
and he could not keep up with his credit cards. His mortgages were foreclosed in the fall
of 2014, and he had to leave the property in January 2015. (Tr. 30 - 36, 38 - 39, 56 - 58)
Applicant does not know of any efforts by his mortgage lenders to collect any
deficiencies after the house was sold at auction. He did not present any information
regarding efforts to negotiate with his mortgage lenders as he struggled to make his
payments. When he left that house he moved to another state and was supported for a
time by his parents. He is still in that state and has again become self-supportive. (Gx.
1; Tr. 58)
The debts alleged at SOR 1.c and 1.e - 1.g are for delinquent credit card
accounts. Although he estimates the actual balances due for SOR 1.f and 1.g to be
about half of what is reported, Applicant has not made a payment on SOR 1.f since July
2014, or on SOR 1.g since December 2011. The credit card debts alleged at SOR 1.c
 See Directive. 6.3.6
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and 1.e were held by the same creditor. Those accounts were forgiven and reported as
taxable income in 2013. Applicant did not contact that creditor before 2013 to resolve
his debts with them. He also has not contacted either of the SOR 1.f and 1.g creditors to
resolve those debts. (Answer; Ax. A and B; Tr. 39 - 44, 54)
At the time of this hearing, Applicant had not filed his federal income tax returns
for 2014 or 2015. He did not request filing deadline extensions for either year, and he
was unable to articulate a sufficient explanation for failing to file. Applicant also
acknowledged that he had also not filed his tax returns on time during the last few years
of his second marriage. Applicant filed his 2014 and 2015 returns nine days after his
hearing. (Ax. G; Tr. 52 - 53, 69 - 75)
Applicant’s current finances are sound, in that he is able to pay his rent and all
other regular monthly obligations on time. He uses an automated budget software to
manage his finances, and he has saved about $6,000 in his 401k account. Applicant
has about $750 remaining each month after expenses, and he has not incurred any new
unpaid debts. (Tr. 46 - 52)
Policies
Each security clearance decision must be a fair, impartial, and commonsense
determination based on examination of all available relevant and material information,6
and consideration of the pertinent criteria and adjudication policy in the adjudicative
guidelines (AG). Decisions must also reflect consideration of the factors listed in ¶ 2(a)
of the guidelines. Commonly referred to as the “whole-person” concept, those factors
are:
(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. 
The presence or absence of a disqualifying or mitigating condition is not
determinative of a conclusion for or against an applicant. However, specific applicable
guidelines should be followed whenever a case can be measured against them as they
represent policy guidance governing the grant or denial of access to classified
information.
 See Department of the Navy v. Egan, 484 U.S. 518 (1988).7
 See Egan, 484 U.S. at 528, 531.8
 See Egan; AG ¶ 2(b).9
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A security clearance decision is intended only to resolve whether it is clearly
consistent with the national interest  for an applicant to either receive or continue to7
have access to classified information. The Government bears the initial burden of
producing admissible information on which it based the preliminary decision to deny or
revoke a security clearance for an applicant. Additionally, the Government must be able
to prove controverted facts alleged in the SOR. If the Government meets its burden, it
then falls to the applicant to refute, extenuate or mitigate the Government’s case.
Because no one has a “right” to a security clearance, an applicant bears a heavy
burden of persuasion.  A person who has access to classified information enters into a8
fiduciary relationship with the Government based on trust and confidence. Thus, the
Government has a compelling interest in ensuring each applicant possesses the
requisite judgment, reliability and trustworthiness of one who will protect the national
interests as his or her own. The “clearly consistent with the national interest” standard
compels resolution of any reasonable doubt about an applicant’s suitability for access in
favor of the Government.9
Analysis
Financial Considerations
Available information is sufficient to support the SOR allegations under this
guideline. The facts established reasonably raise a security concern about Applicant’s
finances that is addressed, in relevant part, at AG ¶ 18, as follows:
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.
More specifically, this record requires application of the disqualifying condition at
AG ¶¶ 19(a) (inability or unwillingness to satisfy debts); 19(c) (a history of not meeting
financial obligations); and 19(g) (failure to file annual Federal, state, or local income tax
returns as required or the fraudulent filing of the same). 
The following AG ¶ 20 mitigating conditions are potentially applicable to these
facts and circumstances:
(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
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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; and
(d) the individual initiated a good-faith effort to repay overdue creditors or
otherwise resolve debts.
    
Of these mitigating conditions, only AG ¶ 20(b) is supported by the record. But its
application is only partial. Applicant’s financial problems arose from two lengthy periods
of unemployment, two divorces, and a failed housing market. Nonetheless, available
information does not show that he took any action to try to resolve his debts. By this
record, he did not try to negotiate with his mortgage lenders. He also took no action to
pay or otherwise resolve his credit card debts. It is true that two of his credit card debts
were forgiven, but that simply means the creditor made a business decision to resolve
delinquent accounts receivable. As to his child support debt, Applicant is credited with
having satisfied his obligations; but those payments were taken from his pay each
month. When he wasn’t working, there was no indication he tried to negotiate a
satisfactory resolution.
Finally, it was determined that Applicant has, at times, neglected his income tax
reporting obligations. He did not request extensions for the past two tax filing deadlines,
and he did not show that there was an acceptable reason for his failure to file. The fact
that he filed after his hearing does not address the security concerns raised by these
facts. Applicant’s financial problems are recent, there is no indication that he has sought
professional assistance for his financial problems, and he has displayed a recurring
willingness to neglect his income tax obligations. On balance, Applicant has failed to
mitigate the security concerns raised by the Government’s information.
I also have evaluated this record in the context of the whole-person factors listed
in AG ¶ 2(a). Applicant has held a security clearance for most of his adult life. He is
presumed to have been aware of the need to attend to his finances and to be proactive
in response to financial problems. His failure to address his credit card debts despite
once again having the means to do so, or to timely file his tax returns are factors that
sustain the doubts about his suitability for clearance that have been raised by the
Government. Because protection of the national interest is the principal focus in these
adjudications, any unresolved doubts must be resolved against the Applicant.
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Formal Findings
Formal findings on the allegations set forth in the SOR, as required by section
E3.1.25 of Enclosure 3 of the Directive, are:
Paragraph 1, Guideline F: AGAINST APPLICANT
Subparagraph 1.d: For Applicant
Subparagraphs 1.a - 1.c,1.e - 1.h: Against Applicant
Conclusion
In light of all of the foregoing, it is not clearly consistent with the national interest
for Applicant to have access to classified information. Applicant’s request for a security
clearance is denied.
                                       
MATTHEW E. MALONE
Administrative Judge