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                           DEPARTMENT OF DEFENSE 
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 17-00867 
  ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Erin P. Thompson, Esq., Department Counsel 
For Applicant: Pro se 
 
 
__________ 
 
Decision 
__________ 
 
 
RIVERA, Juan J., Administrative Judge: 
 
Applicant failed to mitigate the financial considerations concerns raised by his 
failure to timely file federal income tax returns between 2007 and 2012. Moreover, he 
deliberately falsified his 2016 security clearance application (SCA) to cover his failure to 
timely file his income tax returns and resulting federal and state tax debts. The financial 
considerations and personal conduct security concerns are not mitigated. Clearance is 
denied. 
 
Statement of the Case 
 
Applicant submitted an SCA on May 18, 2016. He was interviewed by a 
government investigator on October 27, 2016, and answered a set of interrogatories on 
June 28, 2017. After reviewing the information gathered during the background 
investigation, the Department of Defense (DOD) issued a Statement of Reasons (SOR) 
on April 13, 2017, alleging security concerns under Guideline F (financial 
considerations) and Guideline E (personal conduct). Applicant answered the SOR on 
July 27, 2017, and requested a hearing before an administrative judge from the Defense 
Office of Hearings and Appeals (DOHA).  
 
 
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DOHA assigned the case to me on January 17, 2018, and issued a notice of 
hearing on March 6, 2018, setting the hearing for March 20, 2018. The hearing was held 
as scheduled. At the hearing, the Government offered six exhibits (GE 1 through 6). 
Applicant testified and submitted three exhibits at the hearing (AE 1 – through AE 3), 
and he submitted AE 4 post-hearing. All exhibits were admitted without objection. 
DOHA received the hearing transcript (Tr.) on March 28, 2018. 
 
Procedural Issues 
 
At the hearing, the Government moved to amend SOR ¶ 1.a by deleting the 
years “2013 through 2016”. I granted the motion as requested. As a grammatical 
correction, the word “and” was inserted between the years “2011, and 2012.” 
 
Findings of Fact 
 
Applicant admitted the factual allegations in SOR ¶¶ 1.a (as amended), 1.j 
through 1.p, 2.a, and 2.b. He denied the allegations in SOR ¶¶ 1.b through 1.i. Although 
Applicant admitted the allegations in SOR ¶¶ 2.a and 2.b, he averred his falsifications 
were not deliberate. Thus, I considered both SOR ¶¶ 2.a and 2.b denied. His 
admissions to the SOR and at his hearing are incorporated herein as findings of fact. 
After a thorough review of the record evidence, including his testimony and demeanor 
while testifying, I make the following additional findings of fact:  
 
Applicant is a 41-year-old employee of a federal contractor. He graduated from 
high school in 1994. He is currently in college working on his associate’s degree. He 
enlisted in the U.S. Coast Guard in January 1995, and honorably served on active duty 
until his discharge in July 1999. He has a 50% service-connected disability. He married 
in 1996 and divorced in 2015. (AE 1) He has a 20-year-old daughter of this relationship. 
Applicant married his current wife in April 2017. He has some grown stepchildren. 
 
Applicant has been working for federal contractors from July 2001 to present. He 
was granted a secret clearance shortly after he was hired in 2001, which has been 
continued to present. In addition, Applicant worked part-time in retail stores between 
May 2015 and May 2016. In May 2013, Applicant’s current employer, a federal 
contractor, hired him. His current yearly salary is about $72,000. His wife is not currently 
working because she is taking care of her ill father.  
 
Applicant’s adjusted gross income (married filing jointly) for 2008 was close to 
$98,000; for 2009, over $90,000; for 2010, over $77,000; for 2011, close to $88,000; for 
2012, close to $92,000; for 2013, over $100,000; and for 2014, over $101,000. 
Applicant’s adjusted gross income (filing as head of household) for 2015 was close to 
$67,000; and for 2016, was close to $80,000. Applicant vacationed to the Bahamas in 
June 2015. He stated the trip was a graduation present for his daughter, and claimed he 
only spent $400 in the trip. He took a cruise to Honduras, Belize, and Mexico with his 
then fiancé, now wife, in May 2016. He stated she paid for the cruise. 
 
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In his May 2016 SCA, Applicant disclosed that he had financial problems, which 
included being over 120 days delinquent on a debt, and he and his ex-wife had two cars 
repossessed in 2011 and 2015. He disclosed no additional delinquent or charged off 
accounts. 
 
Section 26 (Financial Record) of Applicant’s 2016 SCA specifically asked 
Applicant to disclose, among other things, whether in the past seven years he: (1) had 
failed to file or pay federal, state, or local taxes when required by law or ordinance; (2) 
had a lien placed against his property for failing to pay taxes; (3) was currently 
delinquent on any federal debt; and (4) had his wages, benefits, or assets garnished or 
attached for any reason. Applicant answered “No” to all the questions and deliberately 
failed to disclose that: (1) he had failed to timely file his federal and state income tax 
returns for tax years 2007 through 2012; (2) the IRS placed a lien on his assets in 
December 2015; (3) he had an extensive federal tax debt; and (4) his assets had been 
attached by the IRS. 
 
Applicant admitted making incorrect statements in his responses to the questions 
in Section 26. However, he claimed that his failure to disclose the information was an 
oversight, and that the 2016 SCA questions were confusing, hard to manage, and 
difficult to fill out. He denied any intention to falsify his SCA or to mislead the 
government. 
 
Applicant explained that up until 2012, his ex-wife was handling his finances, 
including the preparation, signing, and filing of their income tax returns. He claimed he 
was unaware of his tax problems until 2012, when he received 15 registered-mail 
documents from the IRS that revealed his tax situation. The IRS documents warned 
Applicant the IRS intended to levy his wages. (Tr. 26-30) He contacted the IRS and 
found out about his ex-wife’s failure to file the income tax returns. Applicant claimed he 
then took control of his finances, changed his withholdings to avoid future tax debt, and 
thereafter, timely filed his tax returns. 
 
Applicant’s IRS account transcripts for 2008 through 2012 (all dated as of June 
28, 2017) show he filed late his income tax returns for all the alleged years, and was 
assessed penalties and interests. Applicant also admitted he filed late his 2007 income 
tax return. However, he failed to submit his tax year 2007 account transcript. Applicant’s 
IRS account transcript for 2008 shows Applicant established installment agreements 
with the IRS in December 2009, February and October 2011, September 2012, 
December 2013, and January 2015. He established the installment agreements, but 
stopped making payments after the first or second payment because “at the time we 
were tight on money” and he could not afford to continue making his payments. (Tr. 31) 
As of his hearing day, Applicant had only made four payments to the IRS since 2012. 
(Tr. 35) 
 
The IRS placed a $19,182 tax lien on Applicant’s assets in December 2015, and 
notified him of the lien and of his right to a collection due process hearing that same 
month. (Tr. 34, SOR ¶ 1.l) The IRS issued to Applicant 20 “collection due process 
 
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notices of intent to levy” in June 2016 (after he submitted his May 2016 SCA). Applicant 
established another installment agreement with the IRS in July 2016, which he failed to 
honor. As of May 2017, Applicant had been in the process of establishing another 
installment agreement. Applicant testified the IRS told him to wait until the end of the 
2017 tax year to contact them because one of his tax debts was approaching the statute 
of limitation and would be removed. As of his hearing day, Applicant had not contacted 
the IRS. He claimed he called several times, but was placed on hold for hours and had 
not talked with the IRS. 
 
Concerning the other SOR allegations, I find that: 
 
SOR ¶ 1.b ($8,868) alleged a charged-off car loan. Applicant’s divorce decree 
establishes the court awarded his ex-wife the car and all its financial responsibility. I find 
this allegation for Applicant. (Tr. 36, AE 1)  
 
SOR ¶ 1.c ($1,131) alleged a delinquent phone services account. Applicant’s 
documents show he disputed the account and was resolved in his favor. (Tr. 37-38) 
 
Applicant’s evidence shows he paid the medical debts alleged in SOR ¶¶ 1.d 
through 1.h ($110, $110, $110, $110, and $110, respectively). (AE 2) 
 
SOR ¶ 1.i ($30) alleged a delinquent medical debt. Applicant claimed he paid the 
debt, but submitted no corroborating documentary evidence. I find for him on this debt. 
 
SOR ¶¶ 1.j ($1,600), 1.k ($2,086), and 1.m through 1.p ($8,063; $4,559; $1,477; 
and $1,654, respectively) alleged unpaid tax liens entered against Applicant by his 
state. Applicant made twelve $400 monthly payments between 2016 and 2017, and a 
$1,477 lien was released. (AE 4) He stated he was asked by his state tax authority to 
contact them to establish another installment agreement, but he has failed to do so. He 
has not made payments to the state since 2017. 
 
Applicant believes that his financial situation is in good shape. His wife owns the 
home they live in free and clear. He has tenants who pay the mortgage on his rental 
property, and his car is paid off. He receives disability payments from the VA. He stated 
he has a $4,000 surplus at the end of the month. (Tr. 54) He has not participated in 
financial counseling. 
 
Applicant has been working in his position for 17 years, and for the same direct 
supervisor during the last 15 years. He has established an excellent reputation for his 
professionalism, work ethic, knowledge, and the quality of his work. He is well liked by 
his supervisors, clients, and coworkers. He is considered to be a hardworking IT 
professional, dependable, responsible, and instrumental on his employer’s success. He 
has been a teacher, mentor, and a positive role model for junior technicians. Applicant 
loves his job, working for his agency, and he takes his responsibilities very seriously. 
 
 
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Applicant acknowledged the importance of national security and the fiduciary 
responsibilities one acquires when holding a clearance. He understands that his lack of 
financial responsibility may show a lack of judgment, but he believes that it does not 
show he is untrustworthy. Applicant believes he is not a threat to the United States. He 
considers himself to be an honest, patriotic, and dedicated American. He would like to 
continue serving the United States through his work for federal contractors.  
 
Policies 
 
The SOR was issued under Executive Order (Exec. Or.) 10865, Safeguarding 
Classified Information Within Industry (February 20, 1960), as amended; DOD Directive 
5220.6, Defense Industrial Personnel Security Clearance Review Program (Directive) 
(January 2, 1992), as amended; and the National Security Adjudicative Guidelines for 
determining eligibility for access to classified information (AG), implemented by the 
DOD on June 8, 2017.  
 
Eligibility for access to classified information may be granted “only upon a finding 
that it is clearly consistent with the national interest to do so.” Exec. Or. 10865, § 2. The 
U.S. Supreme Court has recognized the substantial discretion of the Executive Branch 
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). 
 
The AG list disqualifying and mitigating conditions for evaluating a person’s 
suitability for access to classified information. Any one disqualifying or mitigating 
condition is not, by itself, conclusive. However, the AG should be followed where a case 
can be measured against them, as they represent policy guidance governing access to 
classified information. Each decision must reflect a fair, impartial, and commonsense 
consideration of the whole person and the factors listed in SEAD 4, App. A ¶¶ 2(d) and 
2(f). All available, reliable information about the person, past and present, favorable and 
unfavorable, must be considered.  
 
Security clearance decisions resolve whether it is clearly consistent with the 
national interest to grant or continue an applicant’s security clearance. The Government 
must prove, by substantial evidence, controverted facts alleged in the SOR. If it does, 
the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. The 
applicant bears the heavy burden of demonstrating that it is clearly consistent with the 
national interest to grant or continue his or her security clearance.  
 
Persons with access to classified information enter into a fiduciary relationship 
with the Government based on trust and confidence. Thus, the Government has a 
compelling interest in ensuring each applicant possesses the requisite judgment, 
reliability, and trustworthiness of those who must protect national interest as their own. 
The “clearly consistent with the national interest” standard compels resolution of any 
reasonable doubt about an applicant’s suitability for access in favor of the Government. 
“[S]ecurity clearance determinations should err, if they must, on the side of denials.” 
 
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Egan, 484 U.S. at 531; SEAD 4, ¶ E(4); SEAD 4, App. A, ¶¶ 1(d) and 2(b). Clearance 
decisions are not a determination of the loyalty of the applicant concerned. They are 
merely an indication that the applicant has or has not met the strict guidelines the 
Government has established for issuing a clearance. 
 
Analysis 
 
Financial Considerations 
 
AG ¶ 18 articulates the security concern for financial problems:  
 
Failure or inability to live within one’s means, satisfy debts, and meet 
financial obligations may indicate poor self-control, lack of judgment, or 
unwillingness to abide by rules and regulations, all of which can raise 
questions about an individual’s reliability, trustworthiness, and ability to 
protect classified information. 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.  
 
Applicant’s history of financial problems is documented in the record. He had 
numerous delinquent accounts that were in collection. Moreover, he failed to file his 
federal income tax returns for tax years 2007 through 2012, the IRS filed a lien of over 
$19,000 against him, and his state filed another lien of over $19,000. AG ¶ 19 provides 
three disqualifying conditions that could raise a security concern and may be 
disqualifying 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 . . . . income tax as required.” The record 
established the disqualifying conditions, requiring additional inquiry about the possible 
applicability of mitigating conditions.  
 
The following mitigating conditions under AG ¶ 20 are potentially applicable: 
 
(a) the behavior happened so long ago, was so infrequent, or occurred 
under such circumstances that it is unlikely to recur and does not cast 
doubt on the individual’s current reliability, trustworthiness, or good 
judgment;  
 
(b) the conditions that resulted in the financial problem were largely 
beyond the person’s control (e.g., loss of employment, a business 
downturn, unexpected medical emergency, or a death, divorce or 
separation, clear victimization by predatory lending practices, or identity 
theft), and the individual acted responsibly under the circumstances; 
  
 
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(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;1  
 
(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. 
 
The Appeal Board concisely explained Applicant’s responsibility for proving the 
applicability of mitigating conditions as follows:  
 
Once a concern arises regarding an Applicant’s security clearance 
eligibility, there is a strong presumption against the grant or maintenance 
of a security clearance. See Dorfmont v. Brown, 913 F. 2d 1399, 1401 (9th 
Cir. 1990), cert. denied, 499 U.S. 905 (1991). After the Government 
presents evidence raising security concerns, the burden shifts to the 
applicant to rebut or mitigate those concerns. See Directive ¶ E3.1.15. The 
standard applicable in security clearance decisions is that articulated in 
Egan, supra. “Any doubt concerning personnel being considered for 
access to classified information will be resolved in favor of the national 
security.” Directive, Enclosure 2 ¶ 2(b).  
 
ISCR Case No. 10-04641 at 4 (App. Bd. Sept. 24, 2013).  
 
                                            
1 The Appeal Board has previously explained what constitutes a “good faith” effort to repay 
overdue creditors or otherwise resolve debts:  
 
In order to qualify for application of [the “good faith” mitigating condition], an applicant 
must present evidence showing either a good-faith effort to repay overdue creditors or 
some other good-faith action aimed at resolving the applicant’s debts. The Directive does 
not define the term “good-faith.” However, the Board has indicated that the concept of 
good-faith “requires a showing that a person acts in a way that shows reasonableness, 
prudence, honesty, and adherence to duty or obligation.” Accordingly, an applicant must 
do more than merely show that he or she relied on a legally available option (such as 
bankruptcy) in order to claim the benefit of [the “good faith” mitigating condition]. 
 
(internal citation and footnote omitted) ISCR Case No. 02-30304 at 3 (App. Bd. Apr. 20, 2004) (quoting 
ISCR Case No. 99-9020 at 5-6 (App. Bd. June 4, 2001)).   
 
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 None of the financial considerations mitigating conditions are fully raised by the 
facts in this case and they do not mitigate the security concerns. Applicant’s financial 
problems are ongoing and recent. Some of his financial problems could be attributed to, 
or were aggravated by, his 2015 divorce. Notwithstanding, considering the evidence as 
a whole, I find that Applicant failed to establish he was financially responsible under the 
circumstances, and that his financial problems are unlikely to recur.  
 
 Applicant acknowledged he should have been more responsible in addressing 
his delinquent accounts and his tax obligations. On balance, the record shows he 
showed some responsibility addressing most of his delinquent consumer accounts. 
Nevertheless, Applicant failed to establish his financial responsibility concerning the 
filing of his income tax returns for tax years 2007 through 2012.  
 
 Applicant has held a clearance since 2001. He knew or should have known of the 
Government’s financial concerns raised by his failure to file his income tax returns. He 
was again made aware of the raised security concerns when he submitted his 2016 
SCA, when he was interviewed by a government investigator in October 2016, and 
when he answered the interrogatories in 2017. Notwithstanding, as of his hearing day, 
Applicant had not established installment agreements to resolve his delinquent federal 
and state taxes.  
 
 Applicant’s promises to resolve his longstanding tax situation in the future do not 
mitigate the financial considerations concerns. His failure to file his income tax returns 
shows a lack of judgment and an unwillingness to abide by laws, rules, and regulations, 
all of which can raise questions about his reliability, trustworthiness, and ability to 
protect classified and sensitive information. 
 
Personal Conduct 
 
The personal conduct security concerns are based on the same facts alleged 
under Guideline F, SOR ¶ 1.a. For the sake of brevity, they will not be repeated again. 
 
AG ¶ 15 explains why personal conduct is a security concern stating: 
 
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.  
 
AG ¶ 16(a) describes a condition that could raise a security concern and may be 
disqualifying in this case: “deliberate omission, concealment, or falsification of relevant 
 
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facts from any personnel security questionnaire . . . used to conduct investigations, . . . 
determine security clearance eligibility or trustworthiness. . . .2;  
 
Considering the evidence as a whole, I find Applicant deliberately omitted that: 
he had failed to timely file his federal and state income tax returns for tax years 2007 
through 2012; the IRS placed a lien on his assets in December 2015; he had an 
extensive federal tax debt; and his assets had been attached by the IRS. His deliberate 
failure to disclose the above information satisfies the above disqualifying condition.  
 
AG ¶ 16 describes conditions that could mitigate the personal conduct security 
concerns: 
 
(a) the individual made prompt, good-faith efforts to correct the omission, 
concealment, or falsification before being confronted with the facts; 
 
(b) the refusal or failure to cooperate, omission, or concealment was 
caused or significantly contributed to by advice of legal counsel or of a 
person with professional responsibilities for advising or instructing the 
individual specifically concerning security processes. Upon being made 
aware of the requirement to cooperate or provide the information, the 
individual cooperated fully and truthfully; 
 
(c) the offense is so minor, or so much time has passed, or the behavior is 
so infrequent, or it happened under such unique circumstances that it is 
unlikely to recur and does not cast doubt on the individual's reliability, 
trustworthiness, or good judgment; 
 
(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; and 
 
                                            
2 The Appeal Board has cogently explained the process for analyzing falsification cases, stating:
 
(a) when a falsification allegation is controverted, Department Counsel has the burden of 
proving falsification; (b) proof of an omission, standing alone, does not establish or prove 
an applicant’s intent or state of mind when the omission occurred; and (c) a Judge must 
consider the record evidence as a whole to determine whether there is direct or 
circumstantial evidence concerning the applicant’s intent or state of mind at the time the 
omission occurred. [Moreover], it was legally permissible for the Judge to conclude 
Department Counsel had established a prima facie case under Guideline E and the 
burden of persuasion had shifted to the applicant to present evidence to explain the 
omission.  
 
ISCR Case No. 03-10380 at 5 (App. Bd. Jan. 6, 2006) (citing ISCR Case No. 02-23133 (App. Bd. June 9, 
2004)). 
 
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(e) the individual has taken positive steps to reduce or eliminate 
vulnerability to exploitation, manipulation, or duress. 
 
None of the mitigating conditions is fully applicable to the facts in this case and 
they do not mitigate the personal conduct security concerns. Applicant’s explanations 
and purportedly exculpatory statements in his 2016 SCA, October 2016 interview, and 
at his hearing are contradicted by the 2008-2012 IRS Accounts Transcripts. Applicant 
claimed he was not aware of his federal tax problems until he received certified 
documents from the IRS in 2012. However, Applicant’s IRS account transcript for 2008 
shows Applicant established installment agreements with the IRS in December 2009, 
February and October 2011, September 2012, December 2013, and January 2015. 
Additionally, the IRS placed a $19,182 tax lien on Applicant’s assets in December 2015, 
and notified him of the lien and of his right to a collection due process hearing that same 
month. 
 
Applicant was required to disclose these information in his May 2016 SCA. He 
failed to do so because he was aware the information would raise financial 
considerations security concerns that could adversely impact his eligibility for a 
clearance. Applicant’s falsification is a serious offense (felony), it did not occur under 
unusual circumstances, and it continues to cast doubt on his reliability, trustworthiness, 
and good judgment.  
 
Whole-Person Concept 
 
 I considered the potentially disqualifying and mitigating conditions in light of all 
the facts and circumstances surrounding this case, and under the whole-person 
concept. AG ¶¶ 2(a) and 2(d). I have incorporated my comments under Guideline F and 
Guideline E in my whole-person analysis. Some of these factors were addressed under 
those guidelines, but some warrant additional comment. 
 
Applicant, 41, received an honorable discharge from the U.S. Coast Guard after 
four years of service. While in the service, Applicant possessed a clearance that has 
been continued to present. Applicant demonstrated some responsibility by resolving 
most of his consumer financial obligations. Regardless, he failed to present sufficient 
evidence of financial responsibility to mitigate the concerns raised by his failure to file 
federal income tax returns between 2007 through 2012. He owes a substantial tax debt 
to the IRS and his state. Moreover, Applicant deliberately falsified his 2016 SCA to 
cover his failure to timely file his income tax returns and to pay his tax debts. The 
financial considerations and personal conduct security concerns are not mitigated. 
 
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:          
 
 
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  Paragraph 1, Guideline F:      AGAINST APPLICANT 
 
  Subparagraphs 1.a, 1.j-1.n,       
    and 1.p:       Against Applicant 
 
 Subparagraphs 1.b-1.i,        
    and 1.o:       For Applicant 
 
  Paragraph 2, Guideline E:      AGAINST APPLICANT 
 
 Subparagraphs 2.a-2.b:     Against Applicant  
 
Conclusion 
 
In light of all the circumstances presented by the record in this case, it is not 
clearly consistent with the national security interests of the United States to grant 
eligibility for a security clearance to Applicant. Clearance is denied. 
 
 
 
____________________________ 
JUAN J. RIVERA 
Administrative Judge