DEPARTMENT OF DEFENSE
               DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 14-04653
)
)
Applicant for Security Clearance )
Appearances
For Government: Caroline E. Heintzelman, Esquire, Department Counsel
For Applicant: Pro se1
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Remand Decision
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WHITE, David M., Administrative Judge:
Applicant incurred significant delinquent debt during the past five years, and
failed to file Federal income taxes, as required, for several years. He repaid some
debts, but fell more than $33,000 behind on his home mortgage while doing so. The
evidence is insufficient to mitigate resulting security concerns. Based upon a review of
the pleadings, testimony, and exhibits, eligibility for access to classified information is
denied. 
Statement of the Case
Applicant submitted a security clearance application (SF 86) on June 21, 2011.
On December 8, 2014, the Department of Defense Consolidated Adjudications Facility
Applicant retained Ms. Leanne M. Innet, Esquire, to help him prepare for the hearing, but they both stated1
that she was not retained to appear in person during the hearing. I informed both of them that he could ask
to put the hearing in recess and contact her, by telephone, for advice at any time he so desired. (Tr. 6-13.)
He did not choose to consult with her during the hearing, but she represented him on appeal of the original
decision in this case, which found him to be ineligible for a security clearance.
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(DoD CAF) issued a Statement of Reasons (SOR) to Applicant, detailing security
concerns under Guideline F (Financial Considerations). 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 for Determining Eligibility for Access to
Classified Information, effective within the Department of Defense after September 1,
2006. 
Applicant answered the SOR in writing (Answer) on March 5, 2015, and
requested a hearing before an administrative judge. Department Counsel was prepared
to proceed on June 29, 2015. The case was assigned to me on July 9, 2015. The
Defense Office of Hearings and Appeals (DOHA) issued a Notice of Hearing on July 21,
2015, and I convened the hearing, as scheduled, on August 12, 2015. The Government
offered Exhibits (GE) 1 through 5, which were admitted without objection. Applicant
testified on his own behalf and offered exhibits (AE) A through I, which were admitted
without objection. I granted Applicant’s request to leave the record open until August 26,
2015, for submission of additional evidence. DOHA received the transcript of the
hearing (Tr.) on August 19, 2015. 
On March 10, 2016, DOHA issued the original decision in this case, denying
Applicant’s eligibility for a security clearance. Applicant claimed, on appeal, that he
submitted additional evidence in an email while the record remained open. That email
was never received or acknowledged by Department Counsel or me. However, on May
17, 2016, the DOHA Appeal Board remanded my original decision with instructions to
consider the additional information that Applicant submitted with the appeal. Department
Counsel offered no objection to the admissibility of this additional information, which is
therefore admitted into the record as AE J and incorporated into this remand decision.
Findings of Fact
Applicant is a 51-year-old field service engineer who has worked for a defense
contractor since July 2012. He worked as a technical specialist for another defense
contractor from February 2008 until November 2011, when that company lost the
contract under which he had been working. In March 2012 he and his wife started the
retail business, which they continue to operate, and he worked there full time until
obtaining his present position. In March 2008 he retired in pay grade E-6, with an
honorable discharge, after active duty service in the U.S. Army that began in November
1987. He is married, with three children ages 28, 25, and 18, all of whom resided with
him when the record closed. He held a security clearance throughout most of his
military service and subsequent employment by defense contractors. (GE 1; GE 2; Tr.
9-13, 54.) 
In his response to the SOR, Applicant admitted all of the allegations concerning
his financial history, except SOR ¶ 1.b and part of SOR ¶ 1.a. (AR.) Applicant’s
admissions are incorporated in the following findings.
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Applicant’s wife managed their family finances for many years due to his work
demands and frequent periods of lengthy travel away from home. For tax year 2010,
after she had purchased a small business, she hired an accountant to prepare their
Federal income taxes. She was dismayed to learn that they owed $8,618 more in taxes
than had been withheld during the year, and they did not have funds to pay those taxes.
From the unsigned copies of their 2010 Form 1040 submitted with Applicant’s SOR
response and in AE A, it is unclear whether they filed that return without paying the
taxes or simply failed to file it altogether. In his response to ¶ 1.j of the DoD CAF
Financial Interrogatories (GE 2), Applicant admitted that he had not filed his Federal tax
returns for tax years 2010 to 2012, and that he did not file the 2011 return due to
pending mortgage delinquency issues. One of the two unsigned copies of their 2010
return contains the date, “4/14/11,” as the date the accountant prepared the return.
Applicant’s and his wife’s signature blocks are blank and undated. The copy of that
return he submitted in AE A does not show a date in the Tax Preparer’s block. His wife
testified that she (and he) did not file their subsequent year tax returns due to the
amount of unpaid taxes from 2010. Applicant testified that he knew the 2011 through
2013 returns were not filed when required. (Answer; GE 2; AE A; Tr. 60, 85-86.)
The IRS documentation Applicant submitted with his appeal shows that
Applicant’s 2010 Federal income tax return was timely filed and received by April 15,
2011; with $37,740 in taxes owed but only $29,122 having been withheld. The
document shows that he finished paying the resulting tax delinquency on June 4, 2015.
(AE J.) 
Applicant and his wife filed their Federal income tax returns for tax years 2011
through 2013 on March 4, and 5, 2015, when he submitted his Answer to the SOR. He
also submitted an unsigned and undated copy of a Federal tax return for 2014 during
his hearing. These four tax returns indicated that Applicant and his wife were due
refunds of $696 for 2011; $3,207 for 2012; and $1,420 for 2014; but owed an additional
$227 in taxes for 2013. On July 21, 2015, Applicant requested IRS transcripts of the tax
returns in question in order to document that they had been filed and the taxes were
paid. He was granted additional time after his hearing to obtain these transcripts, but he
failed to effectively submit them before issuance of the original decision in this case.
The documents that he submitted with his appeal confirm the tax information detailed
above; and show that he made additional payments totaling $3,375 during May and
June 2015 to resolve his remaining Federal income tax delinquency from 2010.
(Answer; GE 2; AE A; Tr. 35, 60-61, 94-95.) 
Applicant provided documentation showing that in November 2012 he fully repaid
the mortgage loan that he previously held in connection with a former residence in
another state, which went into foreclosure after he unsuccessfully tried to convert it into
a rental property. This debt, alleged in SOR ¶ 1.b, is resolved. (Answer; GE 2; AE B; Tr.
36, 64-66, 68-71.)
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On March 5, 2015, Applicant made a final payment to settle the delinquent debt
alleged in SOR ¶ 1.c for a negotiated lesser amount. This debt, which became
delinquent in March 2012, is resolved. (Answer; AE C; Tr. 36-37.)
Applicant’s salary is being garnished for the delinquent $1,224 student loan debt
alleged in SOR ¶ 1.d. This debt, which had been delinquent since February 2010, is
being involuntarily resolved. (AE D; Tr. 37.)
On August 6, 2015, Applicant paid $690 to resolve the student loan debt alleged
in SOR ¶ 1.e. This debt, which had been delinquent since March 2010, is resolved. (AE
E; Tr. 37-38.) 
The two delinquencies to a major bank, alleged in SOR ¶¶ 1.f and 1.h, represent
different credit report listings concerning the same account. Record evidence shows
that this debt has been fully repaid and has a zero balance due. (Answer; GE 3; GE 4;
GE 5; AE G; Tr. 38-44, 46-47.)
The two delinquencies to a different major bank and a collection agency for that
bank, alleged in SOR ¶¶ 1.g and 1.i, also represent different credit report listings
concerning a $2,853 credit card balance that became delinquent in May 2009. The
collection agency obtained a judgment against Applicant for that amount in May 2013,
and his recent communications with the creditor indicate that the amount due has grown
to $4,006. No agreement had been reached to resolve this debt as of the time of
Applicant’s hearing. (Answer; GE 2; GE 5; AE F; AE I; Tr. 44-46, 49-51.) In his appeal
submission, Applicant included copies of emails and a check stub, dated during August
2015, which showed that he negotiated to repay this debt to the collection agency for
payments of $250 every two weeks, and made the first payment by check on August 15,
2015. (AE J.) 
Applicant resolved some of the SOR-listed debts as described above, but has not
made any payments toward his home mortgage loan since May 2014. The mortgage
lender has initiated foreclosure proceedings. Applicant anticipated being forced to leave
the property and find rental accommodations for his family within 30 days following his
hearing. He also had not paid his recent property taxes on the home. As of June 2015,
his home mortgage payments were about $33,000 past due, with an outstanding
balance of about $242,700 on the loan. He estimated the value of the home at $150,000
to $160,000. (AE I; Tr. 51-52, 61-67, 71-75, 78, 84-85, 87.)
Applicant and his wife opened a small retail business that generates some cash
flow. They operate this business independently of their family finances, and any profits
realized from it have been reinvested in the business. (Tr. 66, 79, 97-98.) Applicant and
his wife recently purchased a used car for her to drive. (Tr. 82.) One of their adult
children suffers from drug addiction, and a significant, but unspecified, amount of their
resources was spent for a series of rehabilitation programs and fees for criminal
defense attorney services. Applicant’s wife testified that she diverted family funds to
these expenses without Applicant’s knowledge or consent. (Tr. 80, 87-89.)
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Applicant’s tax returns indicate that his income has fluctuated over the past five
years, but he testified that his base salary is about $72,000 per year. His testimony
demonstrated minimal knowledge of the family budget, and he had not sought any
financial counseling before his hearing. (Tr. 55-60, 68, 83.) After the hearing, he made
an appointment to see a counselor at the local joint base Armed Forces Community
Service Financial Readiness Program. No budget information was provided. (AE J.) 
Applicant’s lead engineer wrote a character reference letter describing
Applicant’s high degree of accountability, responsibility, honesty, and trustworthiness.
Applicant has performed in demanding and dangerous environments, displaying good
judgment and achieving outstanding results. Applicant earned a Meritorious Service
Medal, six Army Commendation Medals, a Joint Service Achievement Medal, five Army
Achievement Medals, six Army Good Conduct Medals, and various unit and service
awards during his Army career. (AE H.)
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
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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.
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. 
The record evidence potentially raises security concerns under three Guideline F
DCs, as set forth in AG ¶ 19: 
(a) inability or unwillingness to satisfy debts;
(c) a history of not meeting financial obligations; and
(g) failure to file annual Federal, state, or local income tax returns as
required or the fraudulent filing of the same. 
Applicant’s history of significant delinquent debt goes back more than five years,
and continues to date. He failed to file his Federal income tax returns as required for
several of those years, and only did so contemporaneously with submitting his Answer
to the SOR. These debts, and his history of financial irresponsibility, raise security
concerns under DCs 19(a), (c), and (g), thereby shifting the burden to Applicant to
rebut, extenuate, or mitigate those concerns.
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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; 
(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.
Some of Applicant’s SOR-listed delinquent debts are ongoing, without indication
that the circumstances under which they arose have significantly changed. He resolved
some of those debts, but did so while failing to make more than $33,000 in payments
toward his home mortgage that became due since May 2014. His history of financial
irresponsibility spans many years, despite regular employment or voluntary self-
employment during all but four months while between jobs. He therefore failed to
establish substantial mitigation under MC 20(a). 
Applicant also offered insufficient evidence to support mitigation under MC 20(b).
He voluntarily incurred all of the debt in question and chose not to file required income
tax returns. His family’s small business generated profits that they chose to reinvest
rather than pay lawful creditors. His relatively brief period of unemployment five years
ago and his son’s substance abuse problems do not sufficiently explain his ongoing
financial troubles or his failure to file tax returns as required. He did not demonstrate 
responsible action under those circumstances.
Applicant provided insufficient evidence of effective credit counseling, budget
planning, or changes to bring his financial situation under control. He said that he has
taken over management of the family finances from his wife and showed some progress
toward overall debt resolution, but did not establish full mitigation under MC 20(c) or (d).
He failed to pay more than $33,000 in mortgage payments which became due on his
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residence as he and his family continued to live there. His August 2015 initial payment
of $250 toward his $4,006 delinquent judgment debt (SOR ¶¶ 1.g and 1.i) is
commendable, but insufficient to establish resolution of that debt. His Federal income
tax delinquency issues were finally resolved in June 2015, but he provided no
reasonable justification or excuse for failing to file Federal income tax returns for 2011
through 2013 as required. MC 20(e) is not pertinent since Applicant admitted that all
debts alleged in the SOR were originally his.
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 incurred substantial
delinquent indebtedness that he made some effort to repay, but contemporaneously
became seriously delinquent on his home mortgage payments. He knowingly failed to
file Federal income tax returns for several years, without justification. His financial
situation remains apparently untenable, creating the ongoing potential for pressure and
duress. He presented insufficient evidence to show that his financial situation will not
continue to deteriorate, to support a finding that continuation or recurrence are unlikely,
or that behavioral changes demonstrate rehabilitation. He is a mature and experienced
individual who is accountable for his choices and financial situation. Overall, the record
evidence creates ongoing doubt as to Applicant’s present eligibility and suitability for a
security clearance.
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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
Subparagraph 1.a: Against Applicant
Subparagraph 1.b: For Applicant
Subparagraph 1.c: For Applicant
Subparagraph 1.d: For Applicant
Subparagraph 1.e: For Applicant
Subparagraph 1.f: For Applicant
Subparagraph 1.g: Against Applicant
Subparagraph 1.h: For Applicant
Subparagraph 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
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