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        DEPARTMENT OF DEFENSE 
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
In the matter of: ) 
)
) ISCR Case No. 17-00822 
)
Applicant for Security Clearance ) 
Appearances 
For Government: Nicole A. Smith, Esq., Department Counsel 
For Applicant: Heather C. Tenney, Esq. 
______________ 
Decision 
______________ 
GARCIA, Candace Le’i, Administrative Judge: 
Applicant did not mitigate the financial considerations security concerns. 
Eligibility for access to classified information is denied.  
Statement of the Case 
On August 23, 2017, the Department of Defense (DOD) issued a Statement of 
Reasons (SOR) to Applicant detailing security concerns under Guideline F (financial 
considerations). The action was taken 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 (January 2, 1992), as amended (Directive); and the adjudicative guidelines 
(AG) implemented by DOD on June 8, 2017. 
Applicant responded to the SOR on September 15, 2017, and requested a 
hearing before an administrative judge. The case was assigned to me on April 13, 2018. 
The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing (NOH) 
on May 11, 2018, scheduling the hearing for June 12, 2018. Applicant retained an 
attorney on May 24, 2018, and requested a continuance for additional time to prepare. 
02/08/2019
 
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With no objection, I granted Applicant’s request and DOHA issued an amended NOH on 
May 29, 2018, rescheduling the hearing for July 9, 2018. I convened the hearing as 
rescheduled. 
 
I appended to the record, as Hearing Exhibit (HE) I, the Government’s discovery 
letter and exhibit list. Government Exhibits (GE) 1 through 4 were admitted in evidence 
without objection. Applicant testified and submitted Applicant Exhibits (AE) A through D, 
which I admitted in evidence without objection. At Applicant’s request, I kept the record 
open until July 23, 2018, for additional evidence. By that date, Applicant submitted 
additional documentation, which I marked as AE E and admitted in evidence without 
objection. DOHA received the hearing transcript (Tr.) on July 13, 2018.  
  
Findings of Fact 
 
 Applicant admitted both of the SOR allegations. He is 49 years old. He married in 
1991, divorced in 1995, remarried in 1996, divorced in 2011, and remarried in 2011. He 
has three children: one is an adult from his second marriage, and the other two are 
minors from his current marriage.1 
 
 Applicant graduated from high school in 1987, earned a bachelor’s degree in 
1992, and earned a juris doctorate degree in 1995. He worked in state law enforcement 
from around 2001 to 2007, and he has since served as a reserve officer. He has worked 
for various DOD contractors since 2008. As of the date of the hearing, he worked as a 
division vice president for a DOD contractor since January 2018. He has never held a 
security clearance.2  
   
 The SOR alleges a delinquent consumer account for $5,709 (SOR ¶ 1.a) and a 
state tax lien from December 2006 for $31,253 (SOR ¶ 1.b). SOR ¶ 1.a is established 
by a 2017 credit bureau report. Applicant disclosed and discussed SOR ¶¶ 1.a and 1.b 
in his 2015 security clearance application (SCA), 2016 background interview, and 2017 
response to interrogatories.3  
 
 SOR ¶ 1.a is for the outstanding balance on an apartment lease placed in 
collection for $5,709. Applicant and his wife broke their lease seven months early. She 
unexpectedly became pregnant with their second child in 2013 and they decided they 
needed to rent a bigger place. Prior to breaking the lease, he unsuccessfully attempted 
to work with the apartment company to resolve the outstanding balance, but was told 
there was nothing that could be done and his balance would be placed in collection.4  
 
                                                     
1 Applicant’s response to the SOR; Tr. at 18-77; GE 1. 
 
2 Tr. at 5-6, 18-77; GE 1, 2; AE A. 
 
3 GE 1-4; AE A, E. 
 
4 Tr. at 22-27, 40-43, 61-66; GE 1, 2, 4; AE A, D. 
 
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 In 2014, Applicant unsuccessfully attempted to work with the collection agency 
when he received a demand letter for payment. The collection agency only wanted a full 
or a half payment, which he could not then afford. He paid a security deposit and the 
first and last month’s rent on his new rental; he was paying child support for his eldest 
child; and he was ensuring that his mortgage on his home, as further discussed below, 
remained current. He stopped trying to work with the collection agency in 2014, when it 
threatened to sue him. Between 2014 and 2017, he received telephone calls from the 
collection agency demanding payment in full, which he still could not then afford.5  
 
 In December 2017, Applicant contacted the collection agency to try to resolve the 
debt. He was motivated, in part, from having received the August 2017 SOR. He 
managed to rebuild his credit, and he had a credit card that he could use to resolve the 
debt. He also had enough money in his 401k retirement account that he could use, if 
necessary. He sought to pay in full with his credit card, only to learn that the collection 
agency stopped accepting any payments from his credit-card company. In May 2018, 
he resolved the account in full with a loan from his 401k retirement account.6 
  
 SOR ¶ 1.b is for a $31,253 state tax lien entered against Applicant in 2006. 
Applicant attributed the lien to incorrect advice that he and his parents received from a 
certified public accountant (CPA) in 2003. In around 2000, his parents put his name on 
their home; the home was fully paid, he was living in it, and they retired and wanted to 
move elsewhere. When he sold the home in 2003 and gave the money to his parents, 
the CPA advised him that he would not have to pay taxes on the proceeds from the sale 
of the home.7 
 
 In 2006, Applicant received a letter from the IRS and the state Department of 
Revenue (DOR), informing him that he owed back taxes on the sale of the home in the 
amounts of approximately $60,000 to the IRS and $30,000 to the state DOR, for a total 
of $90,000. He could not then afford to pay the back taxes, as he earned $30,000 
annually working as a state police officer and his then-wife was a bank teller. The IRS 
and the state consequently placed tax liens on his home, which he and his first wife 
purchased in 2004, effectively preventing him from selling it. His ability to sell the home 
was further hampered when the economic downturn affected its value from 2006 
through 2010.8  
 
 Applicant testified that his and his then-wife’s yearly federal income tax refunds 
from 2006 to 2017, totaling approximately $5,000 to $10,000, were applied to the 
$60,000 in back taxes owed to the IRS, and the IRS released its lien in 2016. He 
testified that his yearly state income tax refunds from 2006 to 2009,9 and his then-wife’s 
                                                     
5 Tr. at 22-27, 40-43, 61-66; GE 1, 2, 4; AE A, D. 
 
6 Tr. at 22-27, 40-43, 61-66; GE 1, 2, 4; AE A, D. 
 
7 Tr. at 27-35, 43-56, 66-77; GE 1, 2, 3; AE A, B, E. 
 
8 Tr. at 27-35, 43-56, 66-77; GE 1, 2, 3; AE A, B, E. 
 
9 Applicant moved out of that state in 2008. Tr. at 48, 55-56. 
 
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yearly state tax refunds from 2006 to 2014, totaling approximately $3,000 to $5,000, 
were applied to the $30,000 in back taxes owed to the state DOR. He testified that the 
state has not made any efforts to collect on its lien since 2014. He hired an attorney in 
2017 to assist him with resolving the outstanding state tax lien, though she had been 
advising him since the lien was placed against his home in 2006 because he has known 
her for a long time both professionally and personally. He testified that his attorney 
advised him against setting up a payment plan for the back taxes when his and his 
then-wife’s federal and state income tax refunds were being intercepted, since the IRS 
and the state DOR already placed a lien against his property and he could not then 
afford a payment plan; he testified that he also did not attempt an offer-in-compromise 
(OIC) because he could not then afford a sufficient offer amount to do so.10 
 
 In 2017, Applicant started to see value return to his home, and he had $50,000 in 
equity in it as of the date of the hearing. However, he testified that he had not listed the 
home for sale because the existing lien would prevent him from securing a buyer. His 
attorney advised him that his best course of action is to find a qualified buyer who is 
aware of the lien on the home; notify the state DOR that they have a qualified buyer; 
negotiate with the state DOR on an OIC for the outstanding state tax lien; and use the 
proceeds from the sale of the home to resolve the negotiated OIC for the lien. He 
intends to follow his attorney’s advice. His attorney is assisting him with finding a 
qualified buyer for the home. His prior renter from 2015 to 2018 desired to purchase the 
home, but she ultimately did not qualify for financing. His current renter desires to get 
prequalified to purchase the home, but her efforts are at a standstill until her pending 
divorce is final. He believed the balance on the state tax lien as of the date of the 
hearing was approximately $50,000 to $60,000, with penalties and interest.11 
  
 Applicant’s household annual income was $254,000 as of the date of the 
hearing. His wife started working as a teacher in 2018. In 2008, his annual income was 
approximately $78,000; in 2009, it was $90,000; in 2012 it was $150,000; in 2015 it was 
$170,000; and in 2016 it was $185,000. He has approximately $8,000 in savings and 
$30,000 in his 401k retirement account. After his income and expenses, his monthly net 
remainder is approximately $1,000. He testified that he has timely filed his federal and 
state income tax returns. He does not have any other delinquent debts. He is current on 
his expenses, to include his mortgage of $1,000 monthly and repayment of his 401(k) 
loan. Other than the financial advice given to him by his attorney, he has not received 
financial counseling.12 
  
 Two former supervisors described Applicant as an exemplary worker and a man 
of professional integrity. Applicant’s landlord from 2016 to at least 2018, who also 
considered Applicant a friend, attested to Applicant’s timely rental payments as well as 
                                                     
10 Tr. at 27-35, 43-56, 66-77; GE 1, 2, 3; AE A, B, E. 
 
11 Tr. at 27-35, 43-56, 66-77; GE 1, 2, 3; AE A, B, E. 
 
12 Tr. at 35-40, 50-51, 56-61, 74-75; GE 4; AE B, D. 
 
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his trustworthiness and unquestionable ethics. Other character references also 
described Applicant as a responsible and diligent individual.13 
 
Policies 
 
 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 to be 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, administrative judges apply the guidelines 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(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.”  
 
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 the 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 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. 
 
Section 7 of Exec. Or. 10865 provides that adverse 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 Exec. Or. 12968, Section 3.1(b) (listing multiple 
prerequisites for access to classified or sensitive information).   
 
                                                     
13 AE C. 
 
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Analysis 
 
Guideline F, Financial Considerations 
 
The security concern 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 . . . . 
 
The guideline notes several conditions that could raise security concerns under 
AG ¶ 19. The following are potentially applicable in this case:  
  
(a) inability to satisfy debts; 
 
(c) a history of not meeting financial obligations; and  
 
(f) failure to file or fraudulently filing annual Federal, state, or local income 
tax returns or failure to pay annual Federal, state, or local income tax as 
required. 
 
 Applicant was unable to pay his debts, to include a state tax lien from 2006. The 
evidence is sufficient to raise AG ¶¶ 19(a), 19(c) and 19(f) as disqualifying conditions.  
 
  Conditions that could mitigate the financial considerations security concerns are 
provided under AG ¶ 20. The following 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 
 
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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. 
 
Conditions beyond Applicant’s control, as previously discussed, contributed to his 
financial problems. Thus, the first prong of AG ¶ 20(b) applies to SOR ¶¶ 1.a and 1.b. 
For the full application of AG ¶ 20(b), he must provide evidence that he acted 
responsibly under his circumstances. He credibly testified that he unsuccessfully tried to 
work with the apartment company and the collection agency for SOR ¶ 1.a prior to the 
SOR. He then continued his efforts upon receipt of the SOR and when he had the 
financial capability to resolve this debt, which he did in May 2018. I find that AG ¶¶ 20(b) 
and 20(d) apply to SOR ¶ 1.a. 
 
Applicant’s ability to sell his home to satisfy the state tax lien in SOR ¶ 1.b was 
hampered when the economic downturn affected the home’s value from 2006 through 
2010. He credibly testified that though he did not hire an attorney to assist him with 
resolving the lien until 2017, the attorney has given him advice, which he has been 
following, since the lien was entered against him 2006. On the attorney’s advice, he 
relied upon the state DOR’s interception of his and his then-wife’s yearly state income 
tax refunds from 2006 to 2014, collectively, to resolve the lien during this period. He did 
not attempt to set up a payment plan or present an OIC to the state DOR. He indicated 
that he also lacked the income during this period, however he has earned upwards of 
$150,000 annually since at least 2012. He did not list the home for sale because he 
testified that the existing lien would prevent him from securing a buyer. 
 
Applicant believed the balance on the lien as of the date of the hearing was 
approximately $50,000 to $60,000. On his attorney’s advice, he planned to find a 
qualified buyer who is aware of the lien on the home; notify the state DOR that they 
have a qualified buyer; negotiate with the state DOR on an OIC for the outstanding state 
tax lien; and use the proceeds from the sale of the home to resolve the negotiated OIC 
for the lien. He intends to follow his attorney’s advice. As of the date of the hearing, he 
had not secured a qualifier buyer, as his prior renter from 2015 to 2018 did not qualify 
for financing, and his current renter’s efforts to secure financing are at a standstill until 
she finalizes her divorce. As such, I find that AG ¶¶ 20(a), 20(b), 20(c), 20(d), and 20(g) 
do not apply to SOR ¶ 1.b. 
 
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 
 
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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 a 
security clearance must be an overall commonsense judgment based upon careful 
consideration of the guidelines and the whole-person concept.        
 
I considered the potentially disqualifying and mitigating conditions in light of all 
the facts and circumstances surrounding this case. I have incorporated my comments 
under Guideline F in my whole-person analysis. Overall, the record evidence leaves me 
with questions and doubts as to Applicant’s eligibility and suitability for a security 
clearance. I conclude Applicant did not mitigate the financial considerations security 
concerns.  
 
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 
 
Subparagraph 1.a:     For Applicant 
 
 Subparagraph 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’s eligibility for a security 
clearance. Eligibility for access to classified information is denied. 
 
 
 
________________________ 
Candace Le’i Garcia 
Administrative Judge