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      DEPARTMENT OF DEFENSE 
 DEFENSE OFFICE OF HEARINGS AND APPEALS 
In the matter of: ) 
) 
)       ADP Case No. 16-01389 
) 
Applicant for Public Trust Position ) 
Appearances 
For Government: Adrienne Driskill, Esq., Department Counsel 
For Applicant: Gary S. Barthel, Esq. 
November 30, 2017 
______________ 
Decision 
______________ 
GOLDSTEIN, Jennifer I., Administrative Judge: 
Applicant failed to mitigate the alleged financial trustworthiness concerns. Based 
on a review of the testimony, pleadings and exhibits, national security eligibility for a 
position of trust is denied.  
Statement of the Case 
On November 16, 2016, the Department of Defense Consolidated Adjudications 
Facility (DOD CAF) issued to Applicant a Statement of Reasons (SOR), detailing security 
concerns under Guideline F, Financial Considerations. The action was taken 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); the 
Adjudicative Guidelines (AG) effective within the DOD for SORs issued after September 
1, 2006; and the AG effective within the DOD after June 8, 2017.1  
1I considered the previous AG, effective September 1, 2006, as well as the new AG, effective June 8, 2017. 
My decision would be the same under either set of guidelines. 
 
 
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Applicant submitted an answer to the SOR (Answer) on December 16, 2016, and 
requested a hearing before an administrative judge. On April 10, 2017, the Defense Office 
of Hearings and Appeals (DOHA) assigned the case to me. On May 4, 2017, DOHA 
issued a Notice of Hearing setting the case for July 24, 2017. The case was heard as 
scheduled. Department Counsel offered Government Exhibits (GE) 1 through 4 into 
evidence without objection. Applicant testified, called three witnesses, and offered 
Applicant Exhibits (AE) A through G into evidence, without objection. All exhibits were 
admitted. The record was left open until November 3, 2017, for Applicant to present 
additional documentation. On July 25, 2017, and November 3, 2017, he presented AE H 
through AE N. Department Counsel had no objections to AE H through AE N and they 
are admitted. DOHA received the hearing transcript (Tr.) on August 1, 2017.                           
 
Findings of Fact 
 
 Applicant admitted the allegations in SOR ¶¶ 1.d through 1.i, with explanations. He 
denied SOR ¶¶ 1.a through 1.c. (Answer.) 
 
 Applicant is 46 years old. In 2007 he and his first wife divorced. Together, they had 
three children, only one of whom remains a minor. Applicant served on active duty in the 
Navy from 1990 to 1992 and from 1997 to 2000. He currently is a Navy Reservist. He is 
engaged to be married to his second wife. (Tr. 68, 73, 77, 80.) 
 
 Applicant acknowledged experiencing financial difficulties beginning in 
approximately 2007. He attributed his delinquent debts to his marital separation and 
subsequent divorce. (Tr. 52.) He used credit cards to pay his living expenses. (Tr. 52-53.) 
Further, he and his ex-wife were audited by the IRS in 2007, for tax years 2004 through 
2006. The tax accountant, who prepared their Federal and state income tax filings during 
that period, “didn’t realize the limitations of how much in losses you can take is subject to 
how much equity you have in the business.” (Tr. 25.) As a result, they incurred additional 
tax liabilities from Applicant’s then-wife’s aesthetician business, which were disclosed 
during the IRS audit. 
  
 Applicant was alleged to be indebted on a charged-off debt in the amount of 
$25,011 in SOR ¶ 1.a. Applicant produced an IRS Form 1099-C Cancellation of Debt 
showing that the debt was discharged by the creditor in December 2014. (AE H; Tr. 54-
56.) It is resolved.  
 
 Applicant was alleged to be indebted on a charged-off debt in the amount of 
$19,248 in SOR ¶ 1.b. Applicant produced an IRS Form 1099-C Cancellation of Debt 
showing that the debt was discharged by the creditor in December 2011. (AE I; Tr. 54-
56.) It is resolved. 
 
 Applicant was alleged to be indebted on a charged-off debt in the amount of 
$20,536 in SOR ¶ 1.c. This debt was for a credit card that Applicant’s ex-wife held. She 
listed Applicant as an authorized user on the account. His ex-wife filed bankruptcy and 
 
 
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discharged the debt, but Applicant was still liable as an authorized user. As a result, 
Applicant arranged a settlement agreement. He presented a letter from a collection agent 
showing that this debt was resolved for a $3,000 payment in November 2011. (AE J; Tr. 
56.)  
 
 Applicant was alleged to be delinquent on his alimony and child support obligations 
in the amount of $39,800 in SOR ¶ 1.d. At the time of their divorce, Applicant and his ex-
wife had a verbal agreement that he would pay her what support he could afford. He paid 
her various unstated amounts for several years, but she later filed a petition in court, 
requesting unpaid alimony and child support arrears. He was assessed in 2014 to owe 
$39,800 in child support arrearage since 2007. Applicant documented that he has made 
regular monthly payments of $600 on this delinquency since October 2014. Additionally, 
he pays $850 per month in current court-ordered child support. He repaid $22,400 on this 
delinquency, and the balance was reduced to $17,400. Applicant is resolving this debt. 
(AE K; Tr. 56-57, 70-71.) 
 
 SOR ¶¶ 1.e through 1.i alleged that Applicant was indebted to the Internal Revenue 
Service (IRS) and his state taxation authority for tax years 2004, 2005, 2006, 2010, and 
2011 in the total amount of $67,575. This included $11,830 owed for 2004; $19,227 owed 
for 2005; $18,053 owed for 2006; $5,001 owed for 2010; and $13,464 owed for 2011.  
 
 As noted above, his 2004 through 2006 tax debt resulted from the 2007 audit. In 
2008, after the audit was complete, Applicant hired a representative to negotiate 
repayment of his tax debt with the IRS. (AE N.) An installment agreement was established 
in July 2009. From October 2009 to May 2012, Applicant made monthly payments of 
approximately $150 to $200 to the IRS in accordance with that agreement. He incurred 
additional tax debt in 2010 and 2011 as the result of the IRS Form 1099-C Cancellation 
of Debt (noted above in SOR ¶ 1.b). In July 2012 Applicant was “no longer in installment 
agreement status.” However in the fall of 2012, Applicant, through his representative, 
attempted to renegotiate an installment agreement to include his new Federal tax liability. 
During the negotiation period, Applicant made a total of $1,150 in payments. In January 
2013, he hired a new company to negotiate with the IRS on his behalf. (AE N; Tr. 66.) 
That new company was not effective in their representation and he was denied an offer 
in compromise in May 2014. His tax debts were placed in “not collectable” status in 
February 2015. He remained in a “not collectable” status until May 2017. (AE A; AE N; 
Tr. 23, 34.) 
 
 In May 2017, Applicant sought to further address his tax debts because he did not 
want his financial issues “to interfere with [his] background” or prevent him from going 
“back into drilling status.” (Tr. 67.) He made a payment of $1,200, which was applied to 
his 2010 Federal tax debt. (Tr. 24.) He acknowledged that the debt was his responsibility 
and that having the debt in “not collectable” status was not the best solution to resolving 
this obligation. He hired a reputable “enrolled agent,” (Mr. A), to represent him with the 
IRS. Mr. A testified as to the actions he has taken on behalf of Applicant with the IRS, 
including filing amended returns for him and filing Freedom of Information requests on 
 
 
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Applicant’s behalf. At the time of the hearing, Applicant’s Federal tax liability was $71,943. 
(Tr. 21-24.) As of November 1, 2017, his tax year balances have changed to $8,533 for 
2004; $22,755 for 2005; $19,912 for 2006; $0 for 2010; and $4,085 for 2011, bringing his 
total balance down to $55,287.2 (AE N.) Mr. A estimated that it will take six to nine months 
for him to establish a new payment plan with the IRS. (Tr. 25-34.) Applicant documented 
that he has timely filed all Federal and state tax returns for the tax years identified on the 
SOR. Further, he is not indebted to his state taxation authority. He intends to resolve his 
Federal tax debt utilizing his enrolled agent’s guidance. (AE L; Tr. 57-58.) 
 
 Applicant’s 2017 credit report reflected that he was current on all accounts. (AE 
G.) Applicant testified: 
 
I think I'm a lot better now financially as far as making good, better 
decisions. As you can see from my IRS documentation there, that I have 
been paying since the last time I owed. So I've been filing and paying it off 
every year, bringing down credit card payments, making all the payments 
that I've been obligated to. So I haven't fallen behind, no late payments, no 
missing payments, as it shows on my credit reports as well. (Tr. 58.) 
 
 Applicant’s direct supervisor testified that he is a trusted employee. (AE D; Tr. 40-
42.) His friend and former fellow Navy Reservist testified that Applicant is trustworthy and 
has worked hard to recover financially after his divorce. (AE E; Tr. 45-47.) Applicant’s 
annual performance review shows he regularly exceeds job requirements. (AE C.)  
 
Policies 
 
 When evaluating an applicant’s national security eligibility, the administrative judge 
must consider the adjudicative guidelines. In addition to brief introductory explanations 
for each guideline, the AG list potentially disqualifying conditions and mitigating 
conditions, which are to be used in evaluating an applicant’s eligibility for a position of 
trust. 
 
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. 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. 
 
                                                 
2 On May 1, 2015, Applicant’s ex-wife was ordered by the Superior Court of their state to pay $2,475 for tax 
year 2004; $4,115 for tax year 2005; and $5,125 for tax year 2006. (AE B.) She has not made any payments 
on her share of this debt. Applicant realizes that he is liable to the IRS for the whole amount and may seek 
judicial enforcement of the order against his ex-wife. 
 
 
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  The protection of the national security is the paramount consideration. AG ¶ 2(b) 
requires that “[a]ny doubt concerning personnel being considered for national security 
eligibility 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.  
 
 Directive ¶ E3.1.14 requires the Government to present evidence to establish 
controverted facts alleged in the SOR. According to 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 [trustworthiness] decision.” 
 
 A person applying for a position of trust 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 national security 
eligibility. Decisions include, by necessity, consideration of the possible risk the applicant 
may deliberately or inadvertently fail to protect or safeguard sensitive information. Such 
decisions entail a certain degree of legally permissible extrapolation as to potential, rather 
than actual, risk of compromise of sensitive information. Finally, as emphasized in Section 
7 of EO 10865: “[a]ny determination under this order adverse to an applicant shall be a 
determination in terms of the national interest and shall in no sense be a determination 
as to the loyalty of the applicant concerned.” See also EO 12968, Section 3.1(b) (listing 
multiple prerequisites for access to classified or sensitive information.) 
 
Analysis 
 
Guideline F: Financial Considerations 
 
 The trustworthiness concerns relating to the guideline for financial considerations 
are set out in AG ¶ 18, which reads in pertinent part:  
 
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 
 
 
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security concern insofar as it may result from criminal activity, including 
espionage. 
 
The guideline notes several conditions that could raise trustworthiness concerns 
under AG ¶ 19. Three are potentially applicable in this case:   
 
(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. 
 
  Applicant was unable to satisfy three consumer debts, delinquent alimony and 
child support obligations, and unpaid Federal income taxes for 2004, 2005, 2006, 2010, 
and 2011. The evidence is sufficient to raise these disqualifying conditions.  
 
 AG ¶ 20 provides conditions that could mitigate trustworthiness concerns. I 
considered all of the mitigating conditions under AG ¶ 20, including the following four: 
 
(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; 
 
(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. 
 
 Applicant’s three consumer debts are resolved. Two were discharged by the 
creditor (SOR ¶¶ 1.a and 1.b), and Applicant settled the third debt (SOR ¶ 1.c) at a 
substantially reduced rate. They were the result of his divorce, a circumstance beyond 
his control, and he acted reasonable under the circumstances. He is making payments 
on his alimony and child support arrearages (SOR ¶ 1.d) and has substantially reduced 
that balance. These debts were incurred between 2007 and 2011, and were largely 
 
 
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attributable to his divorce. There is some evidence of mitigation under AG ¶¶ 20(b) and 
20(d), with respect to these debts. 
 
 Applicant’s tax delinquencies are more concerning. After the audit, he took steps 
to address the Federal tax debt, by working with the IRS to set up an installment 
agreement. His IRS tax transcripts show he made payments from October 2009 to May 
2012, when he ceased making payments under that agreement. He neglected to offer a 
clear explanation as to why he stopped making payments under the installment 
agreement. His efforts to resolve his Federal tax debts between May 2012 and April 2017 
were minimal. He switched representatives, hoping to negotiate smaller payments and 
made a few payments to the IRS, but ultimately allowed his Federal tax debts to be placed 
in a “not collectible” status. In 2017, when he feared his tax debt would interfere with his 
background investigation and prevent him from moving back into drilling status, he again 
took action to address his Federal tax debt. The Appeal Board has noted the following in 
similar circumstances: 
 
[T]he timing of resolution of the financial problems is relevant in determining 
the extent to which an applicant has demonstrated mitigation. See, e.g., 
ISCR Case No. 09-07551 at 4 (App. Bd. Mar. 1, 2011). In this case, 
Applicant did not resolve his tax filing delinquencies until after submission 
of his security clearance application and after undergoing his background 
interview. Taking action to resolve the delinquent tax filings well after the 
initiation of the security clearance process undercuts a determination that 
those actions constitute a good-faith effort to resolve the delinquencies. 
See, ISCR Case No. 15-03481 at 5-6 (App. Bd. Sept. 27, 2016.) 
 
 Although Applicant has resolved his 2010 Federal income tax debt, he did not 
provide proof that he has established a payment arrangement with the IRS to pay the 
remaining $55,287 owed.3 Based on his earning statements, I am not confident he has 
sufficient funds available to make payments to the IRS and meet his current financial 
obligations. He has not demonstrated sufficient good-faith efforts to resolve his Federal 
tax debts to establish mitigation under AG ¶ 20 as to his unpaid Federal taxes 
 
Whole-Person Concept 
 
 Under the whole-person concept, the administrative judge must evaluate an 
applicant’s national security eligibility 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(d):  
 
(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 
                                                 
3 Whether Applicant owes the full debt or his wife is responsible for part of the tax debt is immaterial to the 
fact that he has no current payment arrangement to pay his outstanding Federal taxes. 
 
 
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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.  
 
 According to AG ¶ 2(c), the ultimate determination of whether to grant national 
security eligibility 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. Some of Applicant’s financial 
problems may have been caused by circumstances beyond his control, including his 
divorce and an improper tax deduction taken by his accountant. However, he had an 
obligation to address his financial delinquencies in a responsible and timely manner. At 
this time, Applicant has not established a track record of resolving delinquent debts and 
achieving financial solvency. Overall, the record evidence leaves me with doubt as to 
Applicant’s judgment, reliability, eligibility, and suitability for a position of trust. He failed 
to meet his burden to mitigate the trustworthiness concerns raised under the guidelines 
for financial considerations. 
 
Formal Findings 
 
 Formal findings for or against Applicant on the allegations set forth in the SOR, as 
required by ¶ E3.1.25 of Enclosure 3 of the Directive, are: 
 
Paragraph 1, Guideline F:               AGAINST APPLICANT 
 
  Subparagraph 1.a:    For Applicant 
                    
                    Subparagraph 1.b:    For Applicant 
 
          Subparagraph 1.c:    For Applicant  
 
          Subparagraph 1.d:    For Applicant  
 
  Subparagraphs 1.e through 1.g:  Against Applicant 
 
  Subparagraph 1.h:    For Applicant  
 
  Subparagraph 1.i:    Against Applicant 
 
  
 
 
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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 public trust 
position. National security eligibility for access to sensitive information is denied. 
                                               
  
 
                                              
 
Jennifer Goldstein 
Administrative Judge