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                 DEPARTMENT OF DEFENSE 
     DEFENSE OFFICE OF HEARINGS AND APPEALS 
 
 
 
 
In the matter of:  ) 
 ) 
  REDACTED  )   ISCR Case No. 16-03123 
   ) 
Applicant for Security Clearance  ) 
 
 
Appearances 
 
For Government: Rhett E. Petcher, Esq., Department Counsel 
For Applicant: Robert D. Noonan, Esq. 
 
 
______________ 
 
Decision 
______________ 
 
 
MATCHINSKI, Elizabeth M., Administrative Judge: 
 
Applicant cashed in 401(k) assets and obtained loans to transfer $428,000 at the 
direction of a person he did not know for a promised $900,000 return not received. He 
owed about $100,000 in federal and state tax debt for tax year 2015 because the 
retirement withdrawals were taxable as income on his returns. A $38,547 credit card debt 
was cancelled by a creditor in 2013. Applicant is making payments on his defaulted loans 
and income tax delinquency, but serious doubts persist about his judgment and reliability. 
Clearance is denied. 
 
Statement of the Case 
 
 On December 12, 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 Guideline E, personal 
conduct. The SOR explained why the DOD CAF 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 
 
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amended (Directive); and the Adjudicative Guidelines for Determining Eligibility for Access 
to Classified Information (AG) effective within the DOD on September 1, 2006. 
 
On January 12, 2017, Applicant, then pro se, answered the SOR allegations and 
requested a hearing before an administrative judge from the Defense Office of Hearings 
and Appeals (DOHA). On April 13, 2017, 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 April 20, 2017, I scheduled a hearing for 
May 22, 2017.  
 
While this case was pending final adjudication, the Director of National Intelligence 
(DNI) issued Security Executive Agent Directive 4 establishing the National Security 
Adjudicative Guidelines (AG) applicable to all covered individuals who require national 
security eligibility or eligibility to hold a sensitive position. On May 18, 2017, I provided 
Applicant’s counsel with a copy of the updated Directive incorporating the new AG which 
supersede the adjudicative guidelines implemented in September 2006 and are effective 
for any adjudication made on or after June 8, 2017. I advised him that I would be 
adjudicating his client’s security clearance eligibility under the new AG,1 and that I would 
consider a request to leave the record open after his hearing for additional information if 
necessary in light of this change in the AG. 
 
At the hearing, four Government exhibits (GEs 1-4) and 19 Applicant exhibits (AEs 
A-S) were admitted into evidence without objection. A February 23, 2017 letter forwarding 
discovery of the Government’s exhibits to Applicant was marked as a hearing exhibit (HE 
1) for the record but was not admitted as an evidentiary exhibit. Applicant testified, as 
reflected in a transcript (Tr.) received on June 1, 2017. 
 
I held the record open for two weeks for Applicant to submit additional 
documentation. On June 6, 2017, Applicant submitted through counsel a copy of his 2012 
performance appraisal. Department Counsel filed no objections by the June 19, 2017 
deadline for comment, so the performance appraisal was admitted as AE T. 
 
Summary of Pleadings 
 
 The SOR alleges under Guideline F (SOR ¶¶ 1.a-1.f) and cross-alleges under 
Guideline E (SOR ¶ 2.a) that Applicant transferred approximately $428,000 to individuals, 
whom he had never met but contacted primarily via Facebook, in an attempt to receive a 
$900,000 return, and that his family and his girlfriend are unaware of his monetary loss 
(SOR ¶ 1.a). Additionally, under Guideline F, Applicant was allegedly $2,441, $1,129, and 
$263 past due on three loans with respective balances of $31,117 (SOR ¶ 1.b), $29,867 
(SOR ¶ 1.c), and $7,798 (SOR ¶ 1.d) that he obtained for the monetary transfers in SOR ¶ 
1.a; that he owed delinquent income taxes totaling approximately $100,000 (SOR ¶ 1.e); 
and that he had an account that was charged off for $42,232 (SOR ¶ 1.f). Applicant 
admitted the allegations when he responded to the SOR, but he also stated that he was 
                                                 
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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making monthly tax payments to the IRS and payments under a consolidated loan 
repayment program that will settle the debts in three years. 
 
Findings of Fact 
 
 After considering the pleadings, exhibits, and transcript, I make the following 
findings of fact. 
 
Applicant is 62 years old. He is twice divorced, has five grown daughters, and has 
been in a cohabitant relationship since November 2013. After ten years of taking college 
classes, he earned a bachelor’s degree in engineering in January 2005. He has worked for 
his defense contractor employer for 43 years and has held a DOD secret clearance for 
most of that time. He became a supervisor in 1991. (GEs 1-2; AE P; Tr. 23-24, 61, 73-75.) 
 
Applicant completed and certified to the accuracy of a Questionnaire for National 
Security Positions (SF 86) on October 6, 2015, to renew his security clearance eligibility. In 
response to financial inquiries concerning any delinquency involving routine accounts in the 
last seven years, Applicant listed four credit card debts totaling $120,000, including the 
$42,000 credit card debt alleged in SOR ¶ 1.f. He indicated that he reached settlements 
with his creditors and paid off the debts, although concerning the debt in SOR ¶ 1.f, he 
stated discrepantly that he settled with the creditor and the debt was paid off but also that 
the debt was forgiven. Applicant responded negatively to an inquiry concerning whether he 
had failed to file or pay federal, state, or other taxes in the past seven years. (GE 1.) 
 
A check of Applicant’s credit on November 10, 2015, confirmed that Applicant had 
settled for less than their full balances three credit card debts that had been in collection for 
$27,900, $13,400, and $44,000. However, the account in SOR ¶ 1.f had an outstanding 
collection balance of $42,323. (GE 3.) 
 
Applicant was interviewed on December 2, 2015, by an authorized investigator for 
the Office of Personnel Management (OPM). Applicant admitted that he had become 
delinquent on the credit card account in SOR ¶ 1.f in January 2013 and that he had owed 
$42,000, but also that he settled with the creditor. He paid nothing because the debt had 
been forgiven. About the other three credit card delinquencies listed on his SF 86, 
Applicant explained in August 2015 he paid $9,000, $12,000 or $13,000, and $20,000 in 
August 2015 in full settlement of balances totaling $78,000. He described his financial 
situation as good. (GE 2.) 
 
During Applicant’s background investigation, it was discovered that he had made 
several cash withdrawals totaling $194,270 from his bank accounts between April 2, 2015, 
and October 27, 2015. On June 15, 2016, Applicant was re-interviewed by the OPM 
investigator and asked about those cash transactions. Applicant explained that his now 
deceased aunt, a lawyer by profession (AE B), had texted him about a government grant 
program in the fall of 2014. She told him that she had applied for and received $100,000 in 
grant money through a Mr. X. (AE D; Tr. 27-28, 76-77.) Applicant respected the opinion of 
his aunt, even though they had contact primarily only at family functions, and he did no 
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research of his own before contacting Mr. X via Facebook.2 (Tr. 79-80.) In return for a 
$2,000 application fee, Applicant was promised $200,000 in federal grant money by Mr. X.3 
Over the course of several months between late 2014 and October 2015, Applicant sent 
money via wire transfer or by Federal Express to five different individuals at Mr. X’s 
direction. The grant money promised by Mr. X increased over time from $200,000 to 
$450,000 to $900,000, but so had the fees. (Tr. 30-31.) In November 2015, Mr. X wanted 
another $30,000 in fees from Applicant. Applicant began to suspect that he had been 
scammed because he had repeatedly asked Mr. X for his credentials starting in May or 
June 2015, and Mr. X refused. Mr. X told him that he was fearful of lawsuits. (Tr. 40-41, 
86.) By late 2015, Applicant received no grant money. He informed Mr. X that he would not 
give him any additional funds until he provided his credentials. (Tr. 89.) When asked by the 
OPM investigator in June 2016 why he had not disclosed these transactions during his 
December 2015 interview, Applicant responded that he did not think that it had anything to 
do with his security clearance eligibility, and he was embarrassed. Applicant acknowledged 
that he had not reported the scam to law enforcement, and that neither his girlfriend nor his 
family was aware of his monetary loss. The investigator suggested to Applicant that he 
report the scam to the FBI. Applicant expressed his intention to file a complaint. (GE 2; Tr. 
90.) On June 16, 2016, in a follow-up contact with the OPM investigator, Applicant 
explained that he had contact with Mr. X by Facebook from June or July 2014 to present, 
and that Mr. X was still asking him for money. Applicant explained that he had previously 
sent money to the persons at Mr. X’s direction as a service fee for “earned tax-free 
income.” (GE 2.) 
 
On June 17, 2016, the investigator asked Applicant about the credit card debt in 
SOR ¶ 1.f. Applicant indicated that the creditor forgave the debt because of his financial 
hardship at the time. Applicant was issued a 1099-C Cancellation of Debt form for tax year 
2013 which shows that the creditor discharged credit card debt of $38,547 on November 
29, 2013. (GE 2; AE L.) He incurred the credit charges for costs related to his daughters’ 
weddings. (Tr. 52.) Applicant explains that he fell behind after he forgot to make a 
payment, and the creditor increased his interest rate from zero to 30%. (Tr. 114.) As of May 
2016, the creditor was still reporting the account as delinquent for $42,323 on Applicant’s 
credit record. (GE 4.) 
 
In response to DOHA interrogatories, Applicant indicated on November 9, 2016, that 
he had transferred a total of $428,500 at Mr. X’s direction and that he had obtained three 
loans (SOR ¶¶ 1.b-1.d) for some of the funds transferred. Available credit information 
shows that Applicant obtained two unsecured loans for $35,000 each (SOR ¶¶ 1.b and 1.c) 
in October 2015 and an $8,500 unsecured loan in January 2016 (SOR ¶ 1.c). As of July 
2016, the loan in SOR ¶ 1.b was $2,441 past due (two payments plus fees) on a balance 
of $31,117. The loan in SOR ¶ 1.c was $1,129 past due (one payment) on a balance of 
                                                 
2 Other individuals have complained of being victimized by Mr. X. See AE E. 
 
3 Applicant could not explain why he believed he would be granted a sum of money from the U.S. government 
without having to provide a reason for the grant. (Tr. 81-82.) He was seemingly not concerned that the 
addresses to which he sent the money were not government addresses (Tr. 85) or that Mr. X, who claimed to 
be a U.S. government agent, sent an email from a United Kingdom email account. (AE F; Tr. 85.) 
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$29,867. As of July 2016, the loan in SOR ¶ 1.d was $263 (one payment) past due on a 
balance of $7,798. (GE 4.) Applicant disclosed in November 2016 that Mr. X was asking 
him for another $25,000. Applicant claimed that he was “stringing [Mr. X] along to help and 
see if he can be caught.” Applicant indicated that the loan in SOR ¶ 1.b had been charged 
off for $31,725, the loan in SOR ¶ 1.c had a balance of approximately $31,800, and the 
loan in SOR ¶ 1.d had been charged off for $7,931. He explained, and AE G confirms, that 
in May 2016 he began working with a debt-resolution law firm to settle the three loan 
accounts. He contracted to pay $890 a month from July 2016 to October 2020 to settle the 
past-due loans then totaling $71,500. (GE 2.) Applicant presented evidence of his $890 
monthly payments from July 2016 through May 2017. (AE J.) He expects the loan in SOR 
1.d to be fully satisfied in December 2017. (Tr. 100.) 
 
Applicant withdrew $350,000 from his 401(k) account that he gave to Mr. X. (Tr. 
113.) He was aware that he would incur a tax penalty for premature withdrawal, but he did 
not realize at the time that it would raise his taxable income from approximately $163,231 
to $565,607 in 2015. (AE S; Tr. 107.) When he filed his federal and state income tax 
returns for tax year 2015, he owed approximately $100,000 in taxes (SOR ¶ 1.e). He 
retained the services of a law firm to negotiate a tax settlement with his state and the IRS 
for his $100,000 in tax liability. (GE 2.) In December 2016, the law firm negotiated 
installment agreements with the state and the IRS. Applicant began repaying his delinquent 
state taxes at $1,100 per month for three years. In January 2017, he began repaying his 
delinquent federal taxes at $870 per month. (AE H; Tr. 41, 46-47, 99.) Applicant’s bank 
statements for March and April 2017 confirm the repayment arrangements. (AEs I, K.) As 
of May 2017, he estimated his tax liabilities at $30,000 to $31,000 to the state and $61,000 
to $63,000 to the IRS. (Tr. 98.) 
 
As of August 2016, Applicant was making timely payments on a home-equity loan 
with a $108,542 balance, on a secured loan balance of $15,469, and on eight credit card 
accounts with balances totaling $24,444. Applicant was contractually liable on a mortgage 
loan with a balance of $502,588, which had been delinquent in May 2016. (GE 4.) 
 
 Applicant denies any dealings with Mr. X since 2016. (Tr. 39.) He did not file a timely 
complaint about the scam. He claims that he had tried to enter a complaint online in 2016 
but that it was complicated for him so he “put it on the back burner.” He filed a complaint 
with the FBI the weekend before his security clearance hearing. (Tr. 71, 90.) Applicant 
testified that he knew that the money he sent was “untraceable” and is not likely to be 
recoverable. (Tr. 90.) As of late May 2017, Applicant had not informed his girlfriend, his 
daughters, or any friends about the scam. He does not think that the matter concerns them 
and does not want to lose their respect. (Tr. 70, 102.)  
 
Applicant travels to the Caribbean about once a year. In October 2006, he, a now 
former girlfriend, and that girlfriend’s sister, purchased a villa there for approximately 
$475,000. Applicant has a 20% ownership share of the property, which he estimated is 
now worth $800,000 to $1 million. Applicant asked his co-owners to buy him out in 2016, 
but they did not respond. (GE 1; Tr. 104.) Applicant has owned a 34-foot power boat since 
2002 that is now worth about $20,000. He is considering selling it to help pay his debts. (Tr. 
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105.) Applicant pays his cohabitant girlfriend $1,000 a month to cover his living expenses. 
(Tr. 54.) His credit was rated as fair as of May 2017. Applicant was making timely 
payments on credit card accounts opened in February 2016 (balance $2,844) and October 
2016 (balance $2,639); on two credit cards obtained in January 2014, which had respective 
balances of $165 and $4,760; on closed credit card accounts with a balance of $6,128 and 
$5,104; and on a secured loan obtained in March 2004 (balance $11,314). The creditor in 
SOR ¶ 1.f was still reporting a charged-off balance of $42,323. (AE M.) 
 
Work Evaluations 
 
 Applicant has an excellent attendance record at work. He has had no lost time in the 
last five years. He also routinely received merit increases. As of June 1988, he was earning 
$25,100 annually. Four years later, his annual salary was $30,500. When he was named a 
supervisor in 1993, his annual salary was $39,000. Over the next 24 years, he received 
annual increases in his base salary ranging from $1,500 to $10,000 to bring his salary to its 
current $143,400. (AEs P, Q.) Applicant presented his annual performance appraisals, 
which cover his work performance from March 2000 to March 2016. Applicant has routinely 
exceeded his employer’s expectations and work requirements. His work has been 
satisfactory or of highest quality, and he is known for his dependability and being fully 
engaged in his work. He reportedly had a “very good year” in 2015. (AEs R, T.) 
 
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(a), 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 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. 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 
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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, 
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. 
 
 An applicant is not required to be debt free, but is required to manage his finances 
in a way as to exhibit sound judgment and responsibility. Applicant exhibited poor financial 
judgment in several aspects. Financially overextended on credit, he made no payment on 
the credit card account in SOR ¶ 1.f after January 2013. The creditor cancelled $38,547 of 
debt on November 29, 2013. Of even greater security concern, in 2015 primarily, Applicant 
transferred $428,000 at the direction of Mr. X, whom he did not know personally, on 
promises of free government grant money that he unsurprisingly never received. He 
withdrew $350,000 from his 401(k) account and obtained three loans totaling $78,500 
(SOR ¶¶ 1.b-1.d) for the funds sent at Mr. X’s request and direction. Applicant had to report 
the 401(k) withdrawals as income on his tax returns and incurred federal and state tax 
liabilities for 2015 totaling approximately $100,000 (SOR ¶ 1.e). Applicant then defaulted 
on the three loans. AG ¶¶ 19(a), “(a) inability to satisfy debts,” and 19(c), a history of not 
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meeting financial obligations,” are clearly established. Cancellation of the debt in SOR ¶ 1.f 
implicates AG ¶ 19(b), “unwillingness to satisfy debts regardless of the ability to do so,” 
although it must be noted that he settled three other credit card debts totaling 
approximately $85,000 for less than their full balances. AG ¶ 19(e), “consistent spending 
beyond one’s means or frivolous or irresponsible spending, which may be indicated by 
excessive indebtedness, significant negative cash flow, a history of late payments or of 
non-payment, or other negative financial indicators,” is implicated because Applicant had a 
problem making all of his credit card payments even before his irresponsible transactions 
involving Mr. X in 2015. AG ¶ 19(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,” is triggered because of his sizeable tax delinquency for 2015. While Applicant 
did not gamble in the sense of placing bets, he borrowed some $78,500 to pay the fees 
demanded by Mr. X in return for a promised grant without any legal guarantee or 
justification for the grant money. The security implications are similar to those 
contemplated in AG ¶ 19(h), “borrowing money or engaging in significant financial 
transactions to fund gambling or pay gambling debts,” even if AG ¶ 19(h) does not strictly 
apply. Likewise, Applicant’s continued concealment of his large monetary loss from his 
cohabitant girlfriend and his family, including his five adult daughters, is little different from 
the conduct contemplated within AG ¶ 19(i), “concealing gambling losses, family conflict, or 
other problems caused by gambling.” Applicant was speculating on a belief that the more 
fees he paid to Mr. X he would receive a larger return, and he fears losing the respect of 
his girlfriend and daughters because of his extremely poor judgment. 
 
 Applicant has the burden of presenting evidence of explanation, extenuation, or 
mitigation to overcome the security concerns raised by his poor financial judgment. Under 
the AG effective for any adjudication on or after June 8, 2017, a record of consumer credit 
and tax delinquency may be mitigated under one or more of the following conditions under 
¶ 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 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; 
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(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; 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 financial problems are too extensive and too recent to favorably consider 
AG ¶ 20(a). AG ¶ 20(b) has some applicability in that Applicant did not realize at first that 
the grant program was a scam. However, AG ¶ 20(b) requires that an individual act 
reasonably under the circumstances. Even assuming that Applicant was so gullible to 
believe that he would receive free government grant money of $200,000 then $400,000 
and finally $900,000 on payment of fees but without having to show some justification, he 
made several irresponsible decisions that exacerbated his financial problems. He sent 
large sums of money at Mr. X’s direction to non-government addresses. He continued to 
send money even after Mr. X refused to provide his credentials and after Mr. X told him 
that he feared a lawsuit. Applicant risked his retirement by draining $350,000 from his 
401(k) account, and by doing so, he incurred his large tax debt. He obtained $78,000 in 
loans in an effort to meet Mr. X’s increasing demands. 
 
 It is unclear when Applicant last shipped or wired funds at Mr. X’s direction. The loan 
in SOR ¶ 1.c, which Applicant admits was incurred to transfer money in the scam, was 
obtained in January 2016. Despite realizing around November 2015 that he had been 
scammed and was not likely to recoup any of his money, Applicant was still in contact with 
Mr. X as of November 2016. According to Applicant, Mr. X was seeking another $25,000 
from him, and he was “stringing [Mr. X] along” to see if he could be caught.” However, 
Applicant had not filed a complaint with law enforcement. Applicant engaged in a troubling 
course of conduct that is neither adequately explained nor mitigated. 
 
 AG ¶¶ 20(c), 20(d), and 20(g) are partially established by Applicant’s payments to 
resolve his delinquent loans in SOR ¶ 1.b-1.d and his tax debts in SOR ¶ 1.e. As of May 
2017, Applicant had made six payments of $890 each to resolve the loans. In January 
2017, he began paying $1,100 a month toward his state tax delinquency and $870 toward 
his federal income tax delinquency. Even with these payments, he still owes more than 
$60,000 in defaulted loan and approximately $91,000 in delinquent income taxes. It is 
going to take years before these debt issues are fully resolved. 
 
 The security clearance adjudication is not aimed at collecting an applicant’s 
personal debts. Rather, it involves an evaluation of an applicant’s judgment, reliability, and 
trustworthiness in light of the security guidelines in the Directive. See ISCR Case No. 09-
02160 (App. Bd. June 21, 2010). In evaluating Guideline F cases, the Appeal Board has 
established that an applicant is not required to pay off every debt in the SOR: 
 
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The Board has previously noted that the concept of a meaningful track 
record necessarily includes evidence of actual debt reduction through 
payment of debts. However, an applicant is not required, as a matter of law, 
to establish that he has paid off each and every debt listed in the SOR. All 
that is required is that an applicant demonstrate that he has established a 
plan to resolve his financial problems and taken significant actions to 
implement that plan. The Judge can reasonably consider the entirety of an 
applicant’s financial situation and evaluating the extent to which that 
applicant’s plan for the reduction of his outstanding indebtedness is credible 
and realistic.  
 
See ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008) (internal citations and 
quotation marks omitted). Nonetheless, six months of payments are not enough to inspire 
confidence in his judgment or to conclude that he is not at risk of having to engage in 
financially questionable practices to generate funds. 
 
 Concerning AG ¶ 20(e), the creditor in SOR ¶ 1.f has forgiven a debt balance of 
$38,524, although the debt is still being reported on Applicant’s credit record as $42,323 
past due. Applicant has not disputed that he incurred the debt or that he defaulted on the 
account. AG ¶ 20(e) applies only in that the creditor is not likely to pursue him for the debt. 
The Appeal Board has held that debt resolution, including a creditor’s forgiveness of a 
debt, is something that a Judge must consider, but it is not dispositive. The judge may 
consider the underlying circumstances in determining whether the applicant has the 
judgment and reliability expected of those with access to classified information. See e.g., 
ISCR 15-04560 (App. Bd. Oct. 21, 2016). Applicant’s explanation for the delinquency—that 
the creditor assessed a high interest rate after he missed a payment—is not a justification 
for stopping his payments. He also did not handle that account responsibly. 
 
Guideline E: Personal Conduct  
  
The concerns about personal conduct are articulated in AG ¶ 15: 
 
Conduct involving questionable judgment, lack of candor, dishonesty, or 
unwillingness to comply with rules and regulations can raise questions about 
an individual’s reliability, trustworthiness and ability to protect classified or 
sensitive information. Of special interest is any failure to cooperate or provide 
truthful and candid answers during national security investigative or 
adjudicative processes. 
 
 Concerning the Government’s case for disqualification under the personal conduct 
guideline because of Applicant’s transfers of $428,000 in funds at Mr. X’s direction in the 
hope of a $900,000 return, and his concealment of that activity from his family and 
girlfriend (SOR ¶ 2.a), the Appeal Board has held that security-related conduct can be 
alleged under more than one guideline, and in an appropriate case, be given independent 
weight under each. See ISCR 11-06672 (App. Bd. Jul. 2, 2012). Applicant exercised 
questionable judgment when he continued to send money at Mr. X’s direction long after a 
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reasonable person would have questioned the legitimacy of a promise of free grant money 
from the federal government. When asked why he did not report the scam before May 
2017, Applicant responded that he knew the funds he transferred were not traceable. His 
conduct raises security concerns of the type contemplated within AG ¶ 16(d): 
 
(d) credible adverse information that is not explicitly covered under any other 
guideline and may not be sufficient in and of itself for an adverse 
determination, but which, when combined with all available information, 
supports a whole-person assessment of questionable judgment, 
untrustworthiness, unreliability, lack of candor, unwillingness to comply with 
rules and regulations, or other characteristics indicating that the individual 
may not properly safeguard classified or sensitive information. This includes, 
but is not limited to, consideration of: 
 
(1) untrustworthy or unreliable behavior to include breach of client 
confidentiality, release of proprietary information, unauthorized release of 
sensitive corporate or government protected information; 
 
(2) any disruptive, violent, or other inappropriate behavior; 
 
(3) a pattern of dishonesty or rule violations; and 
 
(4) evidence of significant misuse of Government or other employer’s time or 
resources. 
 
AG ¶ 16(e) is implicated because Applicant has not informed his girlfriend or his five 
adult daughters of the financial scam and his actions in the transfer of some $428,000 over 
little more than a year in the hope of a large return. AG ¶ 16(e) provides: 
 
(e) personal conduct, or concealment of information about one’s conduct, 
that creates a vulnerability to exploitation, manipulation, or duress by a 
foreign intelligence entity or other individual or group. Such conduct includes: 
 
(1) engaging in activities which, if known, could affect the person’s personal, 
professional, or community standing. 
 
 None of the mitigating conditions under AG ¶ 17 apply. As already discussed, 
Applicant made several transfers of funds at Mr. X’s direction in 2015, even after Mr. X 
refused to provide his credentials. Applicant was still in contact with Mr. X as of November 
2016, about a year after he first realized that the promised grant was likely a scam. While 
he claims that he was stringing Mr. X along to see if he could be caught, Applicant had not 
reported the scam to law enforcement. Whether he still held out hope that he would obtain 
the promised $900,000 or, as he now claims, he put the report of the scam “on the back 
burner,” his conduct from late 2014 to at least November 2016 precludes me from 
favorably considering AG ¶ 17(c), which provides: 
 
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(c) the offense is so minor, or so much time has passed, or the behavior is so 
infrequent, or it happened under such unique circumstance that it is unlikely 
to recur and does not cast doubt on the individual’s reliability, 
trustworthiness, or good judgment. 
 
 Applicant has yet to fully acknowledge his responsibility in the scam. He does not 
show adequate reform under AG ¶ 17(d) by claiming that he is a victim of government 
impersonation, that he relied in good faith on his aunt, or that he “just wanted to believe it.” 
AG ¶ 17(d) states: 
 
(d) the individual has acknowledged the behavior and obtained counseling to 
change the behavior or taken other positive steps to alleviate the stressors, 
circumstances, or factors that contributed to untrustworthy, unreliable, or 
other inappropriate behavior, and such behavior is unlikely to recur. 
 
AG ¶ 17(e), “the individual has taken positive steps to reduce or eliminate vulnerability to 
exploitation, manipulation, or duress,” is only minimally established by the fact that he filed 
a complaint with the FBI the weekend before his security clearance hearing. Applicant has 
not informed his cohabitant girlfriend or his adult daughters of his considerable financial 
loss because of his seriously poor judgment. There is no evidence that his security officer 
or any of his co-workers know that he squandered some $350,000 of his retirement funds 
and incurred a significant tax debt in the process. Personal conduct security concerns 
persist. 
 
Whole-Person Concept 
 
In the whole-person evaluation, 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).4 Some of the factors in AG ¶ 2(d) were addressed under 
Guideline F, but some warrant additional comment. 
 
 Applicant’s performance evaluations document his considerable contributions to his 
defense contractor employer. However, Applicant has placed his security clearance 
eligibility seriously in doubt by not acting responsibly in response to an online scam. 
Whether because he was already into the scam for so much money that he felt he could 
not walk away or he was pressured by Mr. X to continue to send money, his conduct raises 
a considerable risk that he may not recognize an improper attempt to gain classified 
                                                 
4 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. 
 
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information or that he may respond inappropriately. He has a history of extensive reliance 
on consumer credit that raises concerns about his financial management generally. He 
opened new credit card accounts in 2016 on which he owes outstanding balances, despite 
being in debt for income taxes totaling $100,000 and for three defaulted loans totaling 
approximately $68,782. 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). For the 
reasons noted above, I conclude that it is not 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:  AGAINST APPLICANT 
 
Subparagraphs 1.a-1.f:  Against Applicant 
 
  Paragraph 2, Guideline E:  AGAINST APPLICANT 
 
  Subparagraph 2.a:   Against Applicant 
 
Conclusion 
 
In light of all of the circumstances, it is not clearly consistent with the national 
interest to continue Applicant’s eligibility for a security clearance. Eligibility for access to 
classified information is denied. 
 
 
_____________________ 
Elizabeth M. Matchinski 
Administrative Judge