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       DEPARTMENT OF DEFENSE 
   DEFENSE OFFICE OF HEARINGS AND APPEALS 
In the matter of: )
)
) ISCR Case No. 17-01360 
) 
Applicant for Security Clearance ) 
Appearances 
For Government: Rhett Petcher, Esq., Department Counsel 
For Applicant: Pro se 
______________ 
Decision 
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CREAN, Thomas M., Administrative Judge: 
Applicant failed to provide sufficient evidence to mitigate security concerns for 
financial considerations under Guideline F. Eligibility for access to classified information 
is denied. 
Statement of the Case 
On January 26, 2016, Applicant submitted an Electronic Questionnaire for 
Investigations Processing (e-QIP) to retain a security clearance required for 
employment with a defense contractor. (Item 2) A security investigator from the Office of 
Personnel Management (OPM) interviewed Applicant on December 22, 2016. (Item 3, 
Personal Subject Interview (PSI)) After reviewing the background investigation, the 
Department of Defense (DOD) could not make the affirmative findings required to issue 
a security clearance. On May 17, 2017, DOD issued a Statement of Reasons (SOR) to 
Applicant detailing security concerns for financial considerations under Guideline F. 
(Item 1) The action was taken under Executive Order 10865, Safeguarding Classified 
Information within Industry (February 20, 1960), as amended; Department of Defense 
Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program 
 
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(January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) 
effective in the DOD on September 1, 2006.  
 
Applicant answered the SOR on June 2, 2017. He admitted the two allegations of 
financial security concern for not filing federal and state tax returns for tax years 2012 
through 2015. He requested that the matter be decided on the written record. (Item 1) 
Department Counsel submitted the Government’s written case on June 26, 2017. (Item 
4) Applicant received a complete file of relevant material (FORM) on June 29, 2017, and 
he was provided the opportunity to file objections and to submit material to refute, 
extenuate, or mitigate the disqualifying conditions. Applicant did not file a response to 
the FORM. I was assigned the case on October 23, 2017. 
 
While this case was pending a decision, the Director of National Intelligence 
issued Security Executive Agent Directive 4, establishing National Security Adjudicative 
Guidelines for Determining Eligibility for access to Classified Information or Eligibility to 
Hold a Sensitive Position (AGs) which he made applicable to all covered individuals 
who require initial or continued eligibility for access to classified information or eligibility 
to hold a sensitive position. The new AGs supersede the September 1, 2006 AGs and 
are effective “for all covered individuals” on or after June 8, 2017. Accordingly, I have 
evaluated Applicant’s security clearance eligibility under the new AGs.  
 
Procedural Issues 
 
 Applicant was advised in the FORM that the summary of the Personal Subject 
Interview (PSI) with an OPM investigator (Item 3) was not authenticated and could not 
be considered over his objection. He was further advised that he could make any 
corrections, additions, or deletions to the summary to make it clear and accurate, and 
could object to the admission of the summary as not authenticated by a Government 
witness. He was additionally advised that if no objection was raised to the summary, the 
administrative judge could determine that he waived any objection to the admissibility of 
the PSI summary. Applicant did not respond to the FORM, so he did not raise any 
objection to consideration of the PSI. Since there is no objection by Applicant, I 
considered information in the PSI in my decision. 
 
Findings of Fact 
 
 After thoroughly reviewing the case file, I make the following findings of fact. 
Applicant is 72 years old. He graduated from college with a bachelor’s degree in June 
1968. He and his wife were married in August 1968. They have three adult children 
Applicant was employed by a government agency as a mathematician from 1968 until 
1987. He has work for the same company, even as the company changed names, from 
1987 until present as a computer scientist or software engineer. He initially was granted 
eligibility for access to classified information in 1968. His last reinvestigation and grant 
of eligibility was in 2011. The case file contains no indications of any security issue or 
violation. (Item 2, e-QIP, dated April January 26, 2016)  
 
 
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 The SOR alleges, and Applicant’s PSI statement confirms, the two financial 
allegations in the SOR, that Applicant did not file federal tax returns for tax years 2012 
through 2015 (SOR 1.a), and state tax returns for 2012 through 2015 (SOR 1.b)  
 
 Applicant attributes the failure to file income tax returns to a dispute with his wife. 
Applicant acknowledged that for over 40 years, he completed joint tax returns for he and 
his wife using a computer program. His wife wanted to take over the tax filing 
responsibility so Applicant turned over the material to her. In 2012, his wife filed their 
2011 returns with the assistance of an accountant. In 2013, his wife asked him why he 
did not file their 2012 tax returns. He told her he did not file the returns because he 
believe she wanted to take over the function. The tax returns for 2012 through 2014 
were not filed as he and his wife were in what he described as a “stubborn head-butting” 
situation. (Item 3. PSI, dated December 22, 2016 at 2) 
  
 In 2016, Applicant realized the 2012 to 2014 tax returns as well as the 2015 
returns had to be filed. He contacted a tax accountant to assist him. His wife still did not 
cooperate and wanted to file separately. Applicant pointed out to her that if they filed 
separately, it would increase the taxes he paid. He was hoping to get her to agree and 
to file the returns by January 2017. He expects if they file jointly, they will receive a 
refund for state taxes but owe some federal taxes. Applicant claims his accountant has 
completed the 2012 to 2014 returns but not the 2015 return. He did not provide copies 
of the completed returns or information that the returns are completed and ready to be 
filed. Applicant’s original plan was to use funds his wife inherited to pay the taxes. She 
refuses to provide the funds, so his plan now is to take funds from his retirement 
account to pay the taxes. (Item 3, PSI, dated December 22, 2016, at 3-4) 
 
 In his response to the SOR, Applicant noted that the tax returns were not filed in 
January 2017 because his wife refused to sign joint returns. He reported that the tax 
information for 2013 has disappeared and cannot be found. He believes his wife knows 
the location of the information. In the meantime, he has arranged a meeting in June 
2017 with a financial and family guidance center to assist in resolving the dispute. The 
federal and state tax returns for 2012 to 2015, as well as 2016 have not been filed. 
Applicant has known since at least January 2016 when he completed the e-QIP and 
noted that his tax returns had not been filed that his failure to file the tax returns was a 
security concern. (Response to SOR, dated June 2, 2017) 
 
Policies 
 
When evaluating an applicant’s suitability for a security clearance, the 
administrative judge must consider the adjudicative guidelines (AG). In addition to brief 
introductory explanations for each guideline, the adjudicative guidelines list potentially 
disqualifying conditions and mitigating conditions, which must 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 
 
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factors listed in the adjudicative process. The administrative judge’s overarching 
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 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 for obtaining 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 the applicant may deliberately or inadvertently fail to safeguard 
classified information. Such decisions entail a certain degree of legally permissible 
extrapolation of potential, rather than actual, risk of compromise of classified 
information. 
 
Analysis 
 
Financial Considerations 
 
 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. An individual 
who is financially overextended is at greater risk of having to engage in illegal or 
otherwise questionable acts to generate funds. (AG ¶ 18).  
 
 A person’s relationship with his creditors is a private matter until evidence is 
uncovered demonstrating an inability or unwillingness to meet their financial obligations. 
Absent evidence of strong extenuating or mitigating circumstances, an applicant with a 
history of serious or recurring financial difficulties is in a situation of risk inconsistent 
 
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with the holding of a security clearance. An applicant is required to manage his or her 
finances in such a way as to meet financial obligations.  
 
 Applicant’s admissions in his response to the SOR show a failure to file federal 
and state income tax returns for tax years 2012 to 2015. The evidence is sufficient to 
raise the following Financial Considerations Disqualifying Conditions under AG ¶ 19: 
 
(a) inability to satisfy debts; 
 
(b) unwillingness to satisfy debts regardless of the ability to do so; 
 
(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 agrees that when he files his past due tax returns he will owe federal 
taxes. His failure to file the returns and the taxes owed shows an inability and 
unwillingness to satisfy debt. Once the Government has established the adverse 
financial issue, the Applicant has the responsibility to refute or mitigate the issue. 
  
 I considered the following Financial Consideration 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 problems 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 individual has received or is receiving financial counseling for the 
problem from a legitimate and credible source, such as a non-profit 
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 
 
 
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(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 mitigating conditions do not apply. Applicant has not filed state and federal 
tax returns for at least four tax years. He claims his wife will not cooperate in filing the 
tax returns and she wants to either file the tax returns herself or file separately. 
Applicant admits that the dispute over tax returns with his wife is a stubborn head- 
butting issue for he and his wife. It is well recognized that filing tax returns and paying 
taxes is a necessary requirement of being a citizen. Hard-headed stubbornness does 
not relieve a person from filing returns and paying taxes. The available evidence shows 
that Applicant willingly and deliberately did not file federal and state tax returns for many 
years. His lack of action resulted in his financial problems being ongoing and recent, 
and not incurred under circumstances making recurrence unlikely. Applicant presented 
no evidence that he received financial counseling.  
 
Good faith means acting in a way that shows reasonableness, prudence, 
honesty, and adherence to duty and obligation. All that is required is that Applicant act 
responsibly given his circumstances. Applicant must establish that he has a reasonable 
plan to resolve financial problems, and that he has taken significant action to implement 
that plan. Applicant’s plan must show a systematic method of handling debts, and 
Applicant must establish a meaningful track record of tax or debt payment. A meaningful 
track record of tax filing and payment can be established by evidence of actual filing and 
payments. A promise to pay taxes or debts is not a substitute for a track record of filing 
returns and paying taxes in a timely manner and acting in a financially responsible 
manner. Applicant contacted a tax accountant to assist him in resolving hisfederal and 
state taxes, but he did not present any documents to establish the status of any plans or 
arrangements made with the state tax office or the Internal Revenue Service (IRS) to 
resolve the federal tax issues.  
 
 Failure to file tax returns suggests that an applicant has a problem complying 
with well-established governmental rules and systems. Voluntary compliance with such 
rules and systems is essential for protecting classified and sensitive information. A 
person who fails repeatedly to fulfill his or her legal obligation to file tax returns does not 
demonstrate the high degree of good judgment and reliability required for a grant of 
access to classified or sensitive information. Where an applicant may have attempted to 
correct the tax return problem, there must still be careful consideration of the applicant’s 
trustworthiness in view of his longstanding prior behavior evidencing irresponsibility by 
failing to timely file income tax returns. By failing to file four years of federal and state 
tax returns, Applicant did not demonstrate the high degree of good judgment and 
reliability required of persons granted access to classified or sensitive information. 
 
 Applicant did not provide enough details about what he did to address the tax 
return allegations in the SOR. Tax return filing is a necessity. The fact that a husband 
and wife are in dispute on filing tax returns, and both are stubborn does not indicate that 
the Applicant is acting reasonably and reliably. Applicant did not provide sufficient 
 
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documentation to show that he is working diligently to resolve the issues that has been 
ongoing for over four years. There is insufficient evidence to establish why Applicant 
was unable to make greater progress resolving his tax return problem. There is 
insufficient assurance that his tax problems are being resolved, are under control, and 
will not recur in the future. His lack of reasonable and responsible actions towards his 
tax return is a strong indication that he will not protect and safeguard classified or 
sensitive information. Under all these circumstances, Applicant failed to mitigate 
financial security concerns.  
 
Whole-Person Concept 
 
 Under the whole-person concept, an administrative judge must evaluate an 
applicant’s eligibility for access to classified information 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 
individual’s age and maturity at the time of the conduct; (5) the extent to 
which participation is voluntary; (6) the presence or absence of 
rehabilitation and other permanent behavioral changes; (7) the motivation 
for the conduct; (8) the potential for pressure, coercion, exploitation, or 
duress; and (9) the likelihood of continuation or recurrence. 
 
 Under AG ¶ 2(c), the ultimate determination of whether to grant eligibility for 
access to classified information must be an overall common-sense 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 
the facts and circumstances surrounding this case. I have considered that Applicant has 
been employed since graduating from college in 1968 for either a government agency 
or a defense contractor. He has been eligible for access to classified information for 
almost 50 years without any issues. However, Applicant did not provide sufficient 
credible documentary information to establish that he took reasonable and responsible 
action to resolve his tax and financial obligations. Applicant did not demonstrate 
appropriate management of his finances and did not show a record of action to resolve 
tax and financial issues. Overall, the record evidence leaves me with questions and 
doubts concerning Applicant’s judgment, reliability, and trustworthiness. He has not 
established his suitability for access to classified information. For all these reasons, I 
conclude Applicant failed to mitigate the security concerns arising from his financial 
situation.  
 
 
 
 
 
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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 and 1.b:  Against Applicant 
 
Conclusion 
 
 In light of all of the circumstances presented by the record in this case, it is not 
clearly consistent with the national interest to grant Applicant eligibility for access to 
classified information. Eligibility for access to classified information is denied. 
 
 
 
_________________ 
THOMAS M. CREAN 
Administrative Judge