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               DEPARTMENT OF DEFENSE 
     DEFENSE OFFICE OF HEARINGS AND APPEALS 
 
 
 
 
In the matter of:  ) 
 ) 
  (Redacted)  )   ISCR Case No. 15-07702 
   ) 
Applicant for Security Clearance  ) 
 
 
Appearances 
 
For Government: Carroll J. Connelley, Esq., Department Counsel 
For Applicant: Pro se 
 
 
______________ 
 
Decision 
______________ 
 
 
MATCHINSKI, Elizabeth M., Administrative Judge: 
 
As of June 2016, Applicant owed a credit card collection debt of approximately 
$10,683 and past-due federal income taxes for 2013. Applicant has a history of borrowing 
against his retirement to pay his debts, but his past-due debts have been resolved through 
legal means, and his current income is sufficient to meet his obligations. Clearance is 
granted. 
 
Statement of the Case 
 
 On June 8, 2016, the Department of Defense Consolidated Adjudications Facility 
(DOD CAF) issued a Statement of Reasons (SOR) to Applicant, detailing the security 
concerns under Guideline F, financial considerations, and explaining why it was unable to 
find it clearly consistent with the national interest to grant or continue security clearance 
eligibility for him. The DOD CAF took the action under Executive Order (EO) 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 for 
Determining Eligibility for Access to Classified Information (AG) effective within the DOD on 
September 1, 2006. 
 
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On July 8, 2016, Applicant answered the SOR allegations and requested a hearing 
before an administrative judge from the Defense Office of Hearings and Appeals (DOHA). 
On October 28, 2016, the case was assigned to me to conduct a hearing to determine 
whether it is clearly consistent with the national interest to grant or continue a security 
clearance for Applicant. On November 1, 2016, I scheduled a hearing for November 30, 
2016. 
 
I convened the hearing as scheduled. Before the introduction of any evidence, the 
Government withdrew the allegation in SOR ¶ 1.a. Three Government exhibits (GEs 1-3) 
and two Applicant exhibits (AEs A-B) were admitted into evidence without objection. 
Applicant testified, as reflected in a transcript (Tr.) received on December 9, 2016. 
 
I held the record open for one month for post-hearing submissions from Applicant. 
On December 1, 2016, Applicant submitted amended federal and state income tax returns 
for tax year 2014, and a personal financial statement. (AEs C-E). On December 5, 2016, 
the Government expressed no objection to their admissibility, so I accepted the records in 
evidence. On January 2, 2017, Applicant submitted a statement about his work history (AE 
F). Department Counsel filed no objection by the January 11, 2017 deadline for comment. I 
admitted the exhibit and closed the record. 
   
While this case was pending a decision, Security Executive Agent Directive 4 was 
issued establishing National Security Adjudicative Guidelines (AG) applicable to all covered 
individuals who require initial or continued eligibility for access to classified information or 
eligibility to hold a sensitive position. The AG supersede the adjudicative guidelines 
implemented in September 2006 and are effective for any adjudication made on or after 
June 8, 2017. Accordingly, I have adjudicated Applicant’s security clearance eligibility 
under the new AG.1 
 
Findings of Fact 
 
 After the Government’s withdrawal of the allegation in SOR ¶ 1.a, the SOR alleges 
under Guideline F that, as of June 8, 2016, Applicant owed a $10,683 credit card collection 
debt (SOR ¶ 1.b) and delinquent federal income taxes of $3,466 for tax year 2013 (SOR ¶ 
1.c). When he responded to the SOR, Applicant admitted the debts, but indicated that the 
tax debts had been paid off as of July 2015. Applicant acknowledged that the credit card 
debt had not yet been satisfied. He expressed his intention to borrow against his retirement 
to satisfy the debt in full.  
 
 After considering the pleadings, exhibits, and transcript, I make the following 
findings of fact. 
 
Applicant is a 49-year-old engineering supervisor who began working as a welder for 
his defense contractor employer in February 1991. (GE 1; Tr. 38.) After progressing from a 
sixth step to a first class welder, he was laid off for lack of work. He was recalled to work in 
                                                 
1 Application of the AGs that were in effect as of the issuance of the SOR would not change my decision in this 
case. 
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1994 and survived subsequent layoff notices by transferring positions. He has been in his 
current department since late 2000. In 2012, he was promoted to a supervisory position, 
which increased his salary to $124,000 a year. (AE F; Tr. 67.) Applicant holds a DOD 
secret clearance, which was last renewed in November 2005. (GE 1.) He understands that 
he cannot maintain his current employment without his security clearance. (Tr. 38.) 
 
Applicant and his spouse married in February 1990. They have two grown 
daughters, who were born in July 1991 and September 1993. They have owned their home 
since July 1991. (GE 1.) Applicant’s current mortgage loan was obtained for $173,858 in 
July 2006. His loan has been 60 days late four or more times, although it was current as of 
May 2015. (GE 3.) 
 
Applicant opened a credit card account in 2008 or 2009 with a credit limit of 
approximately $11,000 (SOR ¶ 1.b) that he used for a family vacation in 2010 and for food, 
clothes, and other necessities. (GE 2; Tr. 39-40.) Around June 2013, the account became 
delinquent because his debts exceeded his income. He had to prioritize debts and stopped 
payment on the credit card. (GEs 1-3; Tr. 40-41.) 
 
In early 2013, Applicant received medical treatment at a local hospital. He assumed 
that his medical insurance had covered all the expenses because he received no bills. 
While reviewing his credit report in the summer of 2013, Applicant discovered that the 
hospital had obtained a court judgment against him in August 2013 for $552. Applicant 
paid the judgment in full in September 2013. (GEs 2-3.) 
 
In 2013, Applicant withdrew $9,000 from his 401(k) at work to pay for college tuition 
for his younger daughter. He and his spouse utilized a professional tax service to prepare 
their federal and state income tax returns. Applicant failed to document the 1099 
transaction on his and his spouse’s tax returns for tax year 2013. (GEs 1-2.) The 1099 form 
was issued to him electronically, and he just “missed” it. (Tr. 56.) In May or June 2015, 
Applicant received a notice from the IRS that he and his spouse owed approximately 
$3,000 in income taxes for tax year 2013. With the help of his tax preparer, Applicant 
submitted an adjustment to their federal income tax return. (GEs 2-3.) An IRS account 
transcript for 2013 shows that Applicant and his spouse filed their return on time, reporting 
$139,327 in adjusted gross income. They were issued a refund of $3,777 in May 2014. On 
July 2, 2015, the IRS conducted a review of unreported income (presumably on review of 
his amended return), and on July 6, 2015, the IRS assessed additional taxes of $4,558 and 
$117 in interest for late payment. (AE B.) 
 
In the course of reviewing his tax situation to resolve the tax issue for 2013, 
Applicant realized he had withdrawn $4,500 from his 401(k) in 2014 to pay for some of his 
daughter’s college costs, and he failed to document the transaction on his and his spouse’s 
tax return for tax year 2014. (GEs 1-2; Tr. 63.) 
 
In January 2015, Applicant’s spouse was diagnosed with cancer, which required 
aggressive treatment until August 2015. Applicant and his spouse were focused on her 
care rather than addressing his credit card debt in SOR ¶ 1.b. (Tr. 31.) Applicant began 
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receiving collection calls in the spring of 2015. He offered to make installment payments, 
but the creditor wanted a lump sum of approximately $10,000. His creditor offered to settle 
for $4,000, but he could not afford the payment. His creditor charged off the debt and 
referred the balance for collection. As of May 2015, the balance was $10,683. (GEs 1- 3; 
Tr. 40-41.) 
 
On June 25, 2015, Applicant completed and certified to the accuracy of a 
Questionnaire for National Security Positions (SF 86) to renew his security clearance 
eligibility. In response to a financial record inquiry concerning whether, in the last seven 
years, he had failed to file or pay Federal, state, or other taxes when required by law or 
ordinance, Applicant indicated that he owed the IRS approximately $3,000 for tax year 
2013 and $2,000 for tax year 2014 for not filing his 1099-R income tax form. Applicant 
explained that after the IRS asked him about the missing 1099-R from 2013 in May 2015, 
he obtained the form, and his wife met with their tax preparer to revise their return. He 
indicated that he was told that they could make payments for 2013, but that he had yet to 
revise their tax return for 2014. In response to delinquencies involving enforcement, 
Applicant listed the $552 paid judgment from 2013. In response to any delinquencies 
involving routine accounts, Applicant listed his delinquent credit card debt (SOR ¶ 1.b). He 
indicated that he was working with the collection entity to settle the debt. (GE 1.) 
 
On August 6, 2015, Applicant was interviewed by an authorized investigator for the 
Office of Personnel Management (OPM). Concerning his finances, Applicant indicated that 
in late June 2015, his spouse met with a local IRS representative to arrange for repayment 
of their 2013 tax debt and was told that they could make estimated payments or wait until 
they were billed by the IRS. He stated that he met with his tax preparer in July 2015 and 
completed an amended return for 2014 showing an estimated tax debt of $2,000.2 
Applicant indicated that an agreement was made with the IRS to make no payments before 
their amended return for 2014 was processed. Applicant expressed his intention to pay his 
income tax debts as soon as possible. Applicant admitted that he also owed a delinquent 
$10,683 credit card debt, but that he had been in contact with the collection entity and was 
in the process of arranging a repayment plan. He characterized his financial situation as 
good. (GE 2.)  
 
On September 23, 2015, Applicant and his spouse entered into an installment 
agreement with the IRS to repay their 2013 tax debt at $350 per month. They made 
payments in October 2015 and November 2015. Applicant’s spouse apparently went to the 
local IRS office and made the payments in person. (Tr. 60.) In December 2015, the IRS 
credited $350 from their 2014 taxes to their tax debt for 2013. There is no evidence of any 
further progress until April 2016, when the IRS applied $1,294 of their tax refund for 2015 
to their tax debt for 2013.3 Applicant could not explain why they failed to make their 
                                                 
2 Applicant testified to his belief that he and his spouse had amended their income tax returns for 2014 
because he “had the amended things in [their] 2014 returns. He admitted that he did not establish a repayment 
plan for 2014. He also indicated that he “might have been mistaken.” (Tr. 63.) 
 
3 Applicant testified that his spouse was in bed at that time because she had stated treatment for her illness in 
January. (Tr. 60.) However, that date cannot be reconciled with his previous testimony about her treatment. He 
testified that she was originally diagnosed in January 2015, had aggressive treatment and surgery until 
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installment payments. (Tr. 69.) On July 6, 2016, Applicant paid $1,481 to fully resolve their 
federal income tax debt for 2013. (AE B; Tr. 58-59.) Applicant’s spouse received $1,500 
from her employer as compensation for not having to cover her medical insurance because 
she is covered by Applicant’s insurance. They used those funds to satisfy the tax debt. (Tr. 
28.) 
 
Applicant and his spouse filed amended federal and state income tax returns for 
2014 on December 1, 2016, to report additional income of $2,611 in 1099-R distributions.4 
On adjusted gross income of $146,587 for 2014, they reported owing $653 in federal taxes 
and $143 in state taxes. They submitted payment of the taxes with their returns. (AEs C, 
D.) 
 
On August 25, 2016, Applicant paid $10,683 in full settlement of the credit card debt 
in SOR ¶ 1.b. (AE A.) Applicant borrowed $24,000 from his 401(k) at work to address the 
debt, and to put a new roof on his house. According to Applicant, his credit was not good 
enough to obtain a conventional loan from other sources. (Tr. 44.) Allowed a maximum of 
two concurrent loans against his 401(k), he had to wait until one of his loans was paid off. 
(Tr. 22-23, 29, 42-43.) Applicant has relied on loans of $20,000 or more from his 401(k) to 
address home improvement issues, car payments, and college tuition for several years. He 
obtained his first loan, which was for $33,000, when his first daughter started college in 
2009. He then borrowed $20,000 from his 401(k) “for either home improvements or to get a 
car.” The loans are being repaid directly from his pay. His older loan will be paid off in mid-
2017. The monthly payment on his new loan is $500-$550. (Tr. 44-47.) Applicant still has 
$10,000 saved from his new 401(k) loan. (Tr. 54-55.) 
 
During a six-month medical check in 2016, Applicant’s spouse learned of a 
recurrence of her cancer, although of a different type. She was in treatment as of 
Applicant’s hearing in late November 2016, although in contrast to 2015, she has not 
missed much time at work. (Tr. 31-32.) 
 
Applicant’s interview and the issuance of the SOR have led Applicant to realize that 
he has to handle his finances more responsibly, which includes budgeting for household 
expenses, although his spouse still handles bill payments. (Tr. 33-35, 53.) He intends to 
obtain financial help if he has difficulty managing their finances because he can afford their 
expenses on his income. (Tr. 35.) As of November 30, 2016, Applicant and his spouse had 
a budget showing $940 in monthly discretionary income after paying $1,717 toward his 
                                                                                                                                                             
approximately August 2015, and then entered a recovery phase followed by monthly checks, then three-month 
checks, and finally six-month checks. It was during a six-month check that recurrence was detected, and she 
was in treatment as of his hearing in late November 2016. (Tr. 31-32.) He subsequently confirmed that she 
started treatment in 2015, and that she has had some issues in 2016 but had not missed work for any 
extended periods. (Tr. 69.)  
 
4 Applicant told an OPM investigator in August 2015 that an amended return to report income from a 401(k) 
withdrawal for 2014 had been filed in July 2015, but that it had not yet been processed by the IRS. The 
amended returns for 2014 dated December 1, 2016, were filed to report a $2,611 1099-R distribution. 
Applicant explained that it was from a dividend distribution rather than a 401(k) withdrawal, so it may be 
another adjustment to income or Applicant was mistaken as to the nature of unreported income on his original 
tax returns for 2014.  
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mortgage, $1,360 toward student loans obtained by Applicant in his name for his 
daughters’ educations, $335 on a credit card, and $1,834 in other monthly expenses. (AE 
E.) Applicant’s July 2015 credit report shows that Applicant opened a joint revolving credit 
card account in December 1996 on which he has made timely payments. As of July 2015, 
the account balance was $19,261. Applicant’s spouse had been paying on the monthly 
minimum on the debt. Applicant estimated the balance at $18,000 as of late November 
2016. (Tr. 35-36.) Applicant took out five federal student loans totaling $77,025 for his 
daughters’ educations. As of June 2015, the loans were in deferment with an aggregate 
balance of $99,644. (GE 3.) Applicant made his first student loan payment in November 
2016 toward a balance of $106,000. (Tr. 35-37, 50-51.) 
 
Policies 
 
The U.S. Supreme Court has recognized the substantial discretion the Executive 
Branch has in regulating access to information pertaining to national security,  emphasizing 
that “no one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 
U.S. 518, 528 (1988). When evaluating an applicant’s suitability for a security clearance, 
the administrative judge must consider the adjudicative guidelines. In addition to brief 
introductory explanations for each guideline, the adjudicative guidelines list potentially 
disqualifying conditions and mitigating conditions, which are required to be considered 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 the adjudicative 
process. The administrative judge’s overall 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. 
 
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 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. 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 applicant or proven by Department Counsel. . . .” The applicant 
has the ultimate burden of persuasion to obtain a favorable security 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 grants access to 
classified information. Decisions include, by necessity, consideration of the 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, 
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rather than actual, risk of compromise of classified information. Section 7 of EO 10865 
provides that decisions shall be “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 
 
Guideline F, Financial Considerations 
 
 The security concerns about financial considerations are articulated in AG ¶ 18: 
 
Failure 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 or 
sensitive information. Financial distress can also be caused or exacerbated 
by, and thus can be a possible indicator of, other issues of personnel security 
concern such as excessive gambling, mental health conditions, substance 
misuse, or alcohol abuse or dependence. An individual who is financially 
overextended is at greater risk of having to engage in illegal or otherwise 
questionable acts to generate funds. Affluence that cannot be explained by 
known sources of income is also a security concern insofar as it may result 
from criminal activity, including espionage. 
 
 Although the SOR alleges a tax debt only for 2013, Applicant disclosed on his June 
2015 SF 86 that he also owed federal income taxes for 2014 because of his failure to 
report 1099-R income. He explained in August 2015 that the 2013 taxes were from a 
premature withdrawal from his 401(k) to pay for his daughter’s college tuition. His amended 
return for tax year 2014 shows additional income of $2,611 from a 1099-R distribution. 
Applicant also disclosed on his SF 86, as corroborated by his credit report, that he owed a 
$10,683 credit card debt in collection. Three disqualifying conditions under AG ¶ 19 apply: 
 
(a) inability to satisfy debts; 
 
(c) a history of not meeting financial obligations; and 
 
(f) failure to file or fraudulently filing annual Federal, state, or local income tax 
returns or failure to pay annual Federal, state, or local income tax as 
required. 
 
 Regarding AG ¶ 20(f), Applicant and his spouse filed their income tax returns on 
time using a professional tax service. Their federal return for 2013 was processed in May 
2014, and they received a refund. After conducting a review of unreported income in July 
2015, the IRS assessed a tax liability of $4,558. While issues of unreported income could 
raise concerns of fraudulent behavior, I am persuaded that Applicant did not intentionally 
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falsify his tax returns. The 1099 forms were sent electronically, and Applicant overlooked 
them.  However, AG ¶ 19(f) is established because of his tax delinquency. 
 
 Application of the aforesaid disqualifying conditions triggers consideration of five 
potentially mitigating conditions under 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; 
 
(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, a death, divorce, or separation, clear 
victimization by predatory lending practices or identity theft), and the 
individual acted responsibly under the circumstances; 
 
(c) the person has received or is receiving financial counseling for the 
problem from a legitimate and credible source, such as a non-profit credit 
counseling service, and there are clear indications that the problem is being 
resolved or is under control; 
 
(d) the individual initiated and is adhering to a good-faith effort to repay 
overdue creditors or otherwise resolve debts; and 
 
(g) the individual has made arrangements with the appropriate tax authority 
to file or pay the amount owed and is in compliance with those 
arrangements. 
 
 The debts at issue in the SOR were incurred too recently for mitigation under AG ¶ 
20(a). Applicant began to fall behind on the credit card debt in June 2013, and his account 
was referred for collection in 2015. His income taxes for 2013 were due and payable in 
April 2014. As of the issuance of the SOR on June 8, 2016, Applicant had made no 
payment toward the credit card delinquency (SOR ¶ 1.b). While payments were made 
toward the 2013 tax debt between October 2015 and December 2015, Applicant admitted 
that he did not follow through on the installment agreement in 2016. After the IRS applied 
their income tax refund for 2015 in April 2016, Applicant and his spouse still owed $1,481 
plus penalties and interest. However, Applicant is credited with satisfying his 2013 taxes in 
July 2016 with funds paid to his spouse from her employer. He is also credited with 
resolving their tax liability for 2014 in December 2016, although no tax debt for that year 
was alleged. 
 
 Applicant’s spouse’s medical illness, which required aggressive treatment from 
January 2015 to August 2015, is a circumstance contemplated within AG ¶ 20(b). Applicant 
first learned of the federal tax debt for 2013 in approximately May 2015, when he was 
understandably preoccupied with his spouse’s illness and care. He acted reasonably 
promptly to submit an amended return for tax year 2013, and in the process, he discovered 
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that he also had a 1099-R distribution for 2014 that had not been included on his and his 
spouse’s joint tax returns. Applicant’s handling of his unreported income for 2014 cannot 
provide a basis for disqualification because it was not alleged. It can be considered for 
other purposes, including assessing his reform.5 Applicant believed as of his November 30, 
2016 hearing that he filed amended returns (federal and state) for 2014, although he was 
not certain. The 2014 amended returns in evidence are dated December 1, 2016. They 
were in the process of being completed by a tax service but apparently had not been filed 
as of his hearing. The new amended returns were to report a distribution of dividend 
income and not income from a premature 401(k) withdrawal that might have been the 
subject of an amended return that Applicant claimed was filed in July 2015. 
 
 Applicant testified that during one of his spouse’s six-month medical checks, a 
recurrence of cancer was detected for which she is currently in treatment. Unlike 2015, his 
spouse has not lost much time at work, but a recurrence of her illness after she had 
aggressive treatment in 2015 could reasonably distract Applicant from focusing on his tax 
issues. Applicant did not understand the importance of his finances to his security 
clearance at the time. 
 
 AG ¶ 20(c) applies in part in that the debts in the SOR have been resolved. He has 
not had any of the financial counseling required under AG ¶ 20(c), even though his history 
of late payments on his home loan, monthly minimum payments on a large credit card debt 
($18,000-$19,000), and repeated borrowing against his retirement suggest a need for such 
counseling. Despite annual wages of approximately $124,000 since 2012, Applicant has 
carried two large 401(k) loans for several years. Applicant testified that he obtained a 
$33,000 loan from his 401(k) in 2009 when his first daughter started college. He then 
borrowed $20,000 “for either home improvements or to get a car because [he doesn’t] like 
having payments.” (Tr. 44.) He settled his credit card delinquency in SOR ¶ 1.b for $10,683 
by borrowing $24,000 from his 401(k) in August 2016.  Allowed only two concurrent loans 
against his 401(k), he had to wait until one loan was fully repaid before he could obtain a 
new loan. Borrowing against one’s retirement is a legal means to address debts, but when 
repeated, it could indicate a failure to live within one’s income. According to Applicant, his 
credit was not good enough to obtain a conventional loan through other means, but there is 
also no evidence that he tried to obtain a loan from another source. 
 
  AG ¶ 20(d), “the individual initiated and is adhering to a good-faith effort to repay 
overdue creditors or otherwise resolve debts,” and AG ¶ 20(g), “the individual has made 
arrangements with the appropriate tax authority to file or pay the amount owed and is in 
compliance with those arrangements,” which pertains to tax issues specifically, have some 
applicability. After the IRS notified Applicant about the unreported 1099 income for 2013, 
he and his spouse filed an amended return in July 2015, entered into an installment plan 
                                                 
5 The DOHA Appeal Board has long held that the administrative judge may consider non-alleged conduct to 
assess an applicant’s credibility; to evaluate an applicant’s evidence of extenuation, mitigation, or changed 
circumstances; to consider whether an applicant has demonstrated successful rehabilitation; to decide 
whether a particular provision of the Adjudicative Guidelines is applicable; or to provide evidence for a whole-
person analysis under Section 6.3 of the Directive. See, e.g., ISCR Case No. 09-07219 (App. Bd. Sep. 27, 
2012). 
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with the IRS, and made some installment payments. His unexplained noncompliance with 
the plan in 2016 undermines his case for mitigation under AG ¶ 20(g) somewhat, but he 
demonstrated a willingness to repay his debts by fully satisfying his delinquent taxes for 
2013 in July 2016 and for 2014 in December 2016. 
 
 Even where tax problems have been corrected and an applicant is motivated to 
prevent such problems in the future, the administrative judge is not precluded from 
considering an applicant’s trustworthiness in light of prior behavior evidencing 
irresponsibility. See e.g., ISCR Case No. 14-01894 at 5 (App. Bd. Aug. 2015). Applicant is 
likely to file his income tax returns on time in the future, and to report all sources of income, 
including 1099 distributions. He was proactive in paying a financial judgment in 2013 once 
he learned of it. He tried to settle his credit card debt in the spring of 2015, but the creditor 
wanted a lump-sum payment in an amount that he could not afford. On receiving notice 
from the IRS in May 2015 that they had neglected to report income from a 401(k) 
withdrawal, he and his spouse filed an amended return for 2013 and notified the local IRS 
office of a similar issue for 2014. Having reported the tax issue for 2014 on his SF 86, 
Applicant is not likely to have falsely claimed during his OPM interview that he and his 
spouse filed an amended return for 2014 in July 2015 if it had not been filed. 
 
 The issue going forward is Applicant’s financial judgment generally and whether he 
can be counted on to pay his debt obligations, including any taxes owed. Applicant testified 
credibly that he now understands that he and his spouse have to manage their finances 
more responsibly by getting their budget in order. (Tr. 26, 34-35.) The credit report of 
record is from July 2015 and is too old to enable a good assessment of Applicant’s current 
financial situation. While it reveals a history of late payments 30 to 60 days in 2014 and 
early 2015 on his mortgage, Applicant and his spouse had never been late in making their 
payments on the credit card with a $19,261 balance. Applicant could benefit from some 
financial counseling, but he has taken responsibility for addressing his legitimate 
obligations. His household budget shows net monthly discretionary income of $940, so 
Applicant has adequate income to manage his expenses. He testified to an intention to 
seek professional financial assistance if needed to ensure that he pays his debts on time in 
the future. 
  
Whole-Person Concept 
 
In assessing the whole person, the administrative judge must consider the totality of 
an applicant’s conduct and all relevant circumstances in light of the nine adjudicative 
process factors in AG ¶ 2(d).6 The analysis under Guideline F is incorporated in my whole-
                                                 
6 The factors under AG ¶ 2(d) are as follows: 
 
(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.  
11 
 
person analysis. Some of the factors in AG ¶ 2(d) were addressed under that guideline, but 
some warrant additional comment. 
 
 Applicant’s tax problems were unintentional. He overlooked 1099 distributions that 
were required to be reported on his income tax returns in 2013 and 2014. As evidenced by 
his default on the credit card account in SOR ¶ 1.b, Applicant has not always exercised 
sound financial judgment. His practice of borrowing against his retirement also raises some 
concerns in that regard, although it weighs in his favor that the 401(k) loans were for 
college tuition for his daughters and for home improvements, such as a roof, and not for 
frivolous purchases. 
 
 It is well settled that once a concern arises regarding an applicant’s security 
clearance eligibility, there is a strong presumption against the grant or renewal of a security 
clearance. See Dorfmont v. Brown, 913 F. 2d 1399, 1401 (9th Cir. 1990.) At the same time, 
the security clearance adjudication involves an evaluation of an applicant’s current 
judgment, reliability, and trustworthiness in light of the security guidelines in the Directive. 
See ISCR Case No. 09-02160 (App. Bd. Jun. 21, 2010). Concerns that Applicant may not 
comply with government rules because of his unintentional failure to report 1099 income 
and by his default of a credit card debt are allayed in that he has held a security clearance 
for years without any evidence of security violations. Especially now that he understands 
the security risk that can exist because of financial mismanagement, he is not likely to 
jeopardize the security clearance that he needs to maintain his employment by neglecting 
any financial obligations in the future. Mindful that security clearance decisions are not 
intended to punish applicants for past transgressions, I conclude that it is clearly consistent 
with the national interest to continue Applicant’s security clearance eligibility. 
 
Formal Findings 
 
Formal findings for or against Applicant 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:   FOR APPLICANT 
 
Subparagraph 1.a:    Withdrawn 
Subparagraph 1.b:    For Applicant 
Subparagraph 1.c:    For Applicant 
 
Conclusion 
 
In light of all of the circumstances, it is clearly consistent with the national interest to 
continue Applicant’s eligibility for a security clearance. Eligibility for access to classified 
information is granted. 
 
_____________________ 
Elizabeth M. Matchinski 
Administrative Judge