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       DEPARTMENT OF DEFENSE 
   DEFENSE OFFICE OF HEARINGS AND APPEALS 
In the matter of: )
)
) ISCR Case No. 18-00987 
) 
Applicant for Security Clearance ) 
Appearances 
For Government: David Hayes, Esq., Department Counsel 
For Applicant: Pro se 
______________ 
Decision 
______________ 
RICCIARDELLO, Carol G., Administrative Judge: 
Applicant failed to mitigate the security concerns under Guideline F, financial 
considerations. Eligibility for access to classified information is denied.  
Statement of the Case 
On April 19, 2018, 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); and the 
adjudicative guidelines (AG) effective on June 8, 2017. 
Applicant answered the SOR on May 12, 2018, and requested a hearing before an 
administrative judge. The case was assigned to me on October 1, 2018. The Defense 
Office of Hearings and Appeals (DOHA) issued a notice of hearing on October 12, 2018, 
scheduling the hearing for November 7, 2018. I convened the hearing as scheduled. The 
01/24/2019
 
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Government offered exhibits (GE) 1 through 3. Applicant offered Applicant’s Exhibits (AE) 
A and B. There were no objections and all of the exhibits were admitted into evidence. 
The record was held open until November 26, 2018, to permit Applicant to submit 
additional documents, which he did. They were marked AE C through H. There were no 
objections and they were admitted into evidence and the record closed. DOHA received 
the transcript on November 16, 2018.  
 
Findings of Fact 
 
 Applicant admitted both SOR allegations. After a thorough and careful review of 
the pleadings, testimony, and exhibits submitted, I make the following findings of fact. 
 
 Applicant is 55 years old. He earned bachelor’s degree in 1985. He married in 
1989 and divorced in 2011. His children from the marriage are ages 27, 23, 19, and 15 
years old. Applicant remarried in 2012. He has four adult stepchildren. Applicant has 
worked for his current employer, a federal contractor since May 2017.1  
 
 Applicant worked in a foreign country and was employed by a foreign company 
from June 2013 until March 2017. He testified that in the past, he completed his federal 
income tax returns without assistance He testified it was difficult to file his tax returns 
when living in a foreign country due to the foreign tax issues. He said his employer 
provided an attorney for him, but he was not a competent tax attorney and did not 
complete his obligation. Applicant further stated he did not want to file his federal tax 
returns because he knew they would be incorrect. He believed his U.S. tax debt would be 
minimal and most of his taxes would be owed to the foreign country where he was 
working. He explained that he was not able to get his attorney to understand the 
complexity of the issue. He also stated that he did not want to pay for a competent tax 
professional because the other one was being provided by his employer.2 
 
 Applicant testified that he failed to timely file his 2013 through 2016 federal income 
tax returns. He said he returned to the United States twice a year, but did not use that 
opportunity to file his tax returns. He did not seek the assistance of tax professionals 
because of anxiety over his tax situation. He stated he procrastinated and each year he 
ignored the problem and told himself he would address the issues in in the future. He was 
aware of his legal tax obligations. When he left employment in the foreign country and 
returned to the United States in April 2017, he said he thought about filing his tax returns, 
but failed to do promptly.3  
 
 Applicant completed a security clearance application (SCA) in April 2017. He was 
interviewed by a government investigator in July 2017 and his delinquent tax returns were 
discussed. He completed government interrogatories in March 2018. In response to the 
                                                          
1 Tr. 18, 24-26. 
 
2 Tr. 25-28, 35-37. 
 
3 Tr. 37-40. 
 
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interrogatories, he provided IRS transcripts for tax years 2013, 2014, 2015, and 2016 
verifying he failed to file his tax returns for these years. In May 2018, he filed federal 
income tax returns for 2013, 2014, 2015, 2016, and 2017. He provided an IRS document 
that shows he owes $7,832 for tax year 2013. He provided a document to show he made 
one payment of $500 in November 20, 2018 on that tax debt. He provided documents 
confirming an agreement with the IRS to pay $500 a month. He provided IRS documents 
to show he did not owe taxes for the other tax years.4 
 
 Applicant’s explanation for his failure to timely file federal income tax returns for 
multiple years and his failure to pay foreign taxes was because his father passed away in 
June 2013, and his father-in-law passed away in October 2015. After each death, he 
returned to the United States. He said these trips were unexpected expenses.5  
 
 Applicant disclosed in his SCA that he traveled for tourism to European countries 
in May 2014, September 2014, March 2015, July 2015, November 2015, April 2016, July 
2016, August 2016, and March 2017. Applicant’s wife provided a letter and noted these 
were relatively inexpensive trips.6  
 
 Applicant admitted he was responsible for paying taxes in the foreign country 
where he was living. He explained that he did not want to file his U.S. federal income tax 
returns because of the complexity with his foreign tax returns. He testified that he was 
paying very little toward his foreign income taxes because he had a significant child 
support obligation in 2013 that he was paying. He said he owed so much money that the 
United States would not issue him a passport. His ex-wife agreed to waive the support 
obligation if he agreed to make certain payments, which he did.7 He testified that at the 
time his foreign taxes were not being paid. He was required to budget throughout the year 
so he could pay the taxes at the end of the tax year, but he failed to do so. At one point, 
personnel from the foreign tax authority came to his house and made him pay 5,000£, 
which he did. He continued to procrastinate and did not pay his foreign taxes. He admitted 
he paid minimal foreign taxes the years he was required to pay foreign taxes.8  
 
 Applicant testified that he paid approximately 33,000£ for his foreign taxes. His 
final two months of income, from February and March 2017 before he returned to the 
U.S., was seized by the foreign government. He said he had no money to live on during 
this period. He went to see a new attorney in the country where he was living, who worked 
                                                          
4 Tr. 46-55, 80-83; GE 1, 2, 3; AE A, B, C, F, G. 
 
5 Tr. 76-79. 
 
6 Tr. 78-79; GE 1; AE D. 
 
7 Applicant’s child support is not an issue, except as he testified how it may impacted his ability to pay his 
foreign tax debt. I have not considered any derogatory information that was not alleged for disqualifying 
purposed. I may consider it when making a credibility determination, in applying mitigating conditions, and 
in my whole-person analysis.  
 
8 Tr. 35-37, 40-45, 57-68, 72-76. 
 
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with the foreign tax authorities, so he could receive some income while living there. Once 
he returned to the United States, Applicant testified he did not feel a sense of urgency to 
resolve the foreign tax issues. After he received the government interrogatories, he began 
pursuing resolution of his foreign tax debt.9  
 
 Applicant testified and provided a copy of a July 2018 letter from his foreign 
attorney who requested that Applicant provide him certain information. At the time of his 
hearing, Applicant had not yet responded to the request. Part of the letter included an 
accounting of the tax balance owed by Applicant, which noted credit for amounts he 
previously paid. The amount owed in dollars based on exchange rates from November 
2018 is approximately $142,532. In his post-hearing statement, Applicant said that he 
was in contact with his attorney and requested that he work out a payment agreement 
with the foreign tax authority with payments beginning in January 2019.10 
 
 Applicant testified that he would propose to pay $1,000 a month for ten years to 
resolve his foreign tax debt. He stated his finances are stable. Applicant’s wife provided 
a character letter. She provided insight into their travels and finances when they had to 
return to the Unites States due to family matters. She considers him to be a good and 
devoted father.  She noted he has great respect for the law and follows the rules.11 
 
Policies 
 
 When evaluating an applicant’s national security eligibility, the administrative judge 
must consider the AG. In addition to brief introductory explanations for each guideline, 
the adjudicative guidelines list potentially disqualifying conditions and mitigating 
conditions, which are used 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 overarching 
adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶ 2(c), 
the entire process is a conscientious scrutiny of a number of variables known as the 
“whole-person concept.” The administrative judge must consider all available, reliable 
information about the person, past and present, favorable and unfavorable, in making a 
decision. 
 
The protection of the national security is the paramount consideration. AG ¶ 2(b) 
requires that “[a]ny doubt concerning personnel being considered for 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 
                                                          
9 Tr. 57-68, 81-82. 
 
10 Tr. 82, 85-89; AE C; AE E is the letter dated July 19, 2018. Applicant translated the document.  
 
11 Tr. 68-69; AE D. 
 
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contained in the record. Likewise, I have avoided drawing inferences grounded on mere 
speculation or conjecture. 
 
Under Directive ¶ E3.1.14, the Government must present evidence to establish 
controverted facts alleged in the SOR. Directive ¶ E3.1.15 states an “applicant is 
responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or 
mitigate facts admitted by applicant or proven by Department Counsel, and has the 
ultimate burden of persuasion as to 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 
that an applicant may deliberately or inadvertently fail to safeguard classified information. 
Such decisions entail a certain degree of legally permissible extrapolation as to 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 concern relating to the guideline for financial considerations is set out 
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. 
 
AG ¶ 19 provides conditions that could raise security concerns. The following are 
potentially applicable:  
 
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 (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 failed to timely file federal income tax returns for tax years 2013 through 
2016. He is indebted to a foreign government for delinquent taxes in the approximate 
amount of more than $117,000 for tax years 2013 through 2016. There is sufficient 
evidence to support the application of the above disqualifying conditions. 
 
The guideline also includes conditions that could mitigate security concerns arising 
from financial difficulties. 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, 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 credit 
counseling service, and there are clear indications that the problem is being 
resolved or is under control;  
 
(d) the individual initiated and is adhering to a good-faith effort to repay 
overdue creditors or otherwise resolve debts; and  
 
(g) the individual has made arrangements with the appropriate tax authority 
to file or pay the amount owed and is in compliance with those 
arrangements. 
 
 Applicant failed to timely file his federal income tax returns for tax years 2013 
through 2016. Despite being on notice of the Government’s security concerns since he 
completed his SCA in 2017, he did not file these tax returns until May 2018, after receiving 
government interrogatories. Applicant intentionally failed to pay his foreign taxes from 
2013 through 2016, and was aware of the foreign tax debt. Foreign tax authorities came 
 
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to his house for payment. His income was seized for two months before he left the country 
in 2017. His attorney sent Applicant a letter in July 2018, requesting that he provide 
certain documents. At the time of the hearing, Applicant testified he had not yet responded 
to the attorney’s request. Applicant’s debts are ongoing and recent. AG 20(a) does not 
apply.   
 
 Applicant indicated that because his federal income tax returns were complex due 
to the foreign tax implications, he procrastinated in completing them. He also explained 
that as the result of two family emergencies, he failed to timely file them. I did not find 
these factors were beyond his control due to the number of years he failed to complete 
his tax obligations. I did not find his explanation that his attorney was not competent, and 
therefore the situation was beyond his control. Applicant procrastinated for many years in 
addressing his domestic and foreign tax obligations. Even if these factors were beyond 
his control, he failed to act responsibly. AG ¶ 20(b) does not apply.   
 
 No evidence was submitted to show Applicant received financial counseling. He 
has not made payments toward his foreign tax debt. There are no clear indications that 
his financial problems are under control. AG ¶¶ 20(c) and 20(d) do not apply.  
 
 Applicant failed to timely file 2013 through 2016 federal income tax returns. He 
subsequently filed these returns in May 2018. AG ¶ 20(g) minimally applies, as he did not 
file them until after he received the SOR. Applicant provided some evidence that he has 
a foreign attorney who is working for him. However, Applicant has procrastinated in 
providing his attorney with requested information necessary to resolve his foreign tax 
debt. Nor has Applicant provided documents to show he has a payment plan or made any 
payments on the plan. AG¶ 20(g) does not apply to his foreign tax debt.  
 
Whole-Person Concept 
 
 Under the whole-person concept, the administrative judge must evaluate an 
applicant’s eligibility for a security clearance by considering the totality of the applicant’s 
conduct and all the 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 a 
security clearance must be an overall commonsense judgment based upon careful 
consideration of the guidelines and the whole-person concept.  
 
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 I considered the potentially disqualifying and mitigating conditions in light of all the 
facts and circumstances surrounding this case. I have incorporated my comments under 
Guideline F in my whole-person analysis. Some of the factors in AG ¶ 2(d) were 
addressed under that guideline, but some warrant additional comment. 
 
Applicant failed to timely file his 2013 through 2016 federal income tax returns. 
Despite being aware of the security concerns, he did not file his returns until after he was 
confronted with government interrogatories in April 2018. Applicant failed to pay his 
foreign income taxes for tax years 2013 through 2016. He left the country and did not 
resolve them. His income was seized for the last two months he lived abroad to pay his 
delinquent taxes. He owes a significant amount of taxes to that country. He has made 
minimal efforts to resolve this debt. The DOHA Appeal Board has held that:  
 
Failure to file tax returns suggests that an applicant has a problem with 
complying with well-established government rules and systems. Voluntary 
compliance with these things is essential for protecting classified 
information. ISCR Case No. 14-04437 at 3 (App. Bd. Apr. 15, 2016). 
Someone who fails repeatedly to fulfill his or her legal obligations does not 
demonstrate the high degree of good judgment and reliability required of 
those granted access to classified information. See, e.g., ISCR Case No. 
14-01894 at 5 (App. Bd. August 18, 2015). See Cafeteria & Restaurant 
Workers Union Local 473 v. McElroy, 284 F.2d 173, 183 (D.C. Cir. 1960), 
aff’d, 367 U.S. 886 (1961). 12 
 
Applicant’s history of non-compliance with a fundamental legal obligation to file his 
federal tax returns and to pay his foreign income taxes raises serious security concerns. 
The record evidence leaves me with questions and doubts as to Applicant’s eligibility and 
suitability for a security clearance. For all these reasons, I conclude Applicant failed to 
mitigate the security concerns arising under Guideline F, financial considerations.  
 
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.b:  Against Applicant 
     
 
 
 
 
 
                                                          
12 ISCR Case No. 12-10933 at 3 (App. Bd. June 29, 2016). 
 
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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 security to grant Applicant’s eligibility for a security 
clearance. Eligibility for access to classified information is denied. 
 
 
                                                     
_____________________________ 
Carol G. Ricciardello 
Administrative Judge