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DEPARTMENT OF DEFENSE 
 DEFENSE OFFICE OF HEARINGS AND APPEALS 
In the matter of: )
)
) ISCR Case No. 18-01330 
) 
Applicant for Security Clearance ) 
Appearances 
For Government: Michelle Tilford, Esq., Department Counsel 
For Applicant: Pro se 
___________ 
Decision 
___________ 
BENSON, Pamela C., Administrative Judge: 
Applicant was unable to mitigate the security concerns under Guideline F 
(Financial Considerations). Given the nature and seriousness of Applicant’s failure to 
timely file Federal and state income tax returns for three consecutive years, his significant 
outstanding state tax liens and other delinquencies, and the length of time they remained 
unresolved, Applicant’s eligibility for a security clearance is denied.  
Statement of the Case 
On January 5, 2017, Applicant submitted a security clearance application (SCA). 
On June 20, 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 within the DOD on June 8, 2017.  
On July 3, 2018, Applicant responded to the SOR, and requested a hearing. On 
October 29, 2018, the case was assigned to me. On December 31, 2018, the Defense 
Office of Hearings and Appeals (DOHA) issued a notice of hearing, setting the hearing 
for January 15, 2019. Applicant’s hearing was held as scheduled.  
04/11/2019
 
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During the hearing, Department Counsel offered five exhibits, Government Exhibit 
(GE) 1-5, and Applicant offered two exhibits, Applicant Exhibit (AE) A and B. There were 
no objections, and all proffered exhibits were admitted into evidence. I granted Applicant’s 
request to leave the record open until February 15, 2019, in the event he wanted to 
provide additional documentation. On January 25, 2019, DOHA received the hearing 
transcript (Tr.). On February 12, 2019, Applicant requested additional time to obtain a 
state tax lien document, and he wanted additional time to file his 2013-2015 income tax 
returns. On February 13, 2019, I granted his request to hold the record open for an 
additional two-week period from the date of my ruling. On February 26, 2019, Applicant 
submitted two documents, which I labeled as (AE) C and D, and admitted into evidence 
without objection. The record closed on February 27, 2019.  
 
Findings of Fact 
 
 In Applicant’s SOR response, he admitted SOR ¶¶ 1.a, 1.b, 1.d through 1.i, and 
1.r. He denied SOR ¶¶ 1.c, and 1.j through 1.q.  At the hearing, Applicant stated that his 
previous admission to SOR ¶ 1.i was a mistake, and denied owing this debt. (Tr. 25)   
 
Applicant is 40 years old. He earned an associate’s degree in 1998. He married in 
2000 and divorced in 2001. He considered himself to be in a common-law marriage from 
2003 to at least 2017. He legally married his common law spouse in 2018. He has three 
children, ages 4, 9, and 12. He is employed with a Federal contractor as a fire pump 
technician since October 2016. He does not currently possess a DOD security clearance. 
(Tr. 8-9; GE 1, GE 2) 
 
Financial Considerations 
 
 The SOR alleges that Applicant failed to timely file state and Federal income tax 
returns for 2013, 2014, and 2015.1 He owes seven state tax liens totaling approximately 
$14,323. He is also indebted for a deficiency balance from his mortgage, a delinquent 
student loan, a repossessed car deficiency balance, and various other forms of consumer 
debt. These debts total approximately $55,000. Applicant attributed his financial problems 
to a failed business he opened in March 2013 and closed in September 2013.2 He was 
then underemployed in 2013-2014, which provided a minimal amount of income. (Tr. 23) 
 
 The record established the status of Applicant’s unpaid accounts and untimely 
filed tax returns as follows: 
 
SOR ¶¶ 1.a and 1.b allege Applicant failed to file state and Federal income tax 
returns for tax years 2013, 2014, and 2015. He has not filed these tax returns because 
                                            
1 Department Counsel asked to amend SOR ¶ 1.a to include tax year 2013, to conform to the testimony 
and evidence presented at the hearing, which I granted without objection. 
 
2 There is a discrepancy in dates when comparing the SCA with the dates provided in Applicant’s testimony 
at the hearing. I used the dates of self-employment listed on the 2017 SCA. (GE 1) 
 
 
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he claimed his previous employer has not provided him with the necessary tax 
documentation. At the hearing, he admitted that he has not contacted the Internal 
Revenue Service or state tax agency to discuss these tax issues. On February 26, 2019, 
Applicant submitted two documents showing that he was continuing to have taxes 
assessed against him by the state for his business that closed in 2013. He also provided 
an agreement with a company he hired to help him resolve his state tax issue and assist 
him in filing his 2013-2015 state and Federal income tax returns. (Tr. 15-19, 33; AE C, 
AE D) 
 
SOR ¶ 1.c3 (SOR ¶ 1.p) alleges a mortgage deficiency in the amount of $12,668, 
after Applicant’s residence was sold via short sale in 2015. Applicant claimed that he 
could not recall if he received a 1099-C from the mortgage creditor to reflect the deficiency 
amount as income for his unfiled 2015 income tax return. Applicant admitted that he had 
not contacted this creditor to resolve this financial issue. (Tr. 29-33) 
 
SOR ¶ 1.d alleges a deficiency balance of $14,157, the amount due after a car 
was repossessed for failure to make timely payments. Applicant purchased a new car in 
late 2012, but it was repossessed approximately one year later. This account has not 
been resolved, and he has not contacted this creditor. (Tr. 22, 24) 
 
SOR ¶ 1.e alleges a delinquent account in the amount of $9,902, which Applicant 
used to purchase tools for his business he opened in 2013. At the time of his hearing, 
Applicant had not taken any action to resolve this debt. (Tr. 23-25) 
 
SOR ¶ 1.f alleges an unpaid utility account in the amount of $788. Applicant moved 
from state A to state B, and did not realize that he had an outstanding utility bill. He has 
not made any payments on this account, but stated he hopes to pay this account in full in 
the near future. As of the date of the hearing, he had not made any contact with the 
creditor. (Tr. 24-25) 
 
 In January 2019, Applicant paid the two outstanding medical bills alleged in SOR 
¶¶ 1.g and 1.h, in the combined amount of $130. These debts are resolved. (Tr. 25; AE 
A, AE B)  
 
SOR ¶¶ 1.i -1.o allege seven state tax liens filed in the total amount of $14,323. 
Applicant claimed the state tax liens were related to his 2013 self-employment. During 
the time he operated his business, he did not file or report quarterly earnings to the state. 
The state then filed the maximum amount of taxes for each quarter. The seven tax liens 
are for seven quarters, and include taxes assessed against Applicant long after he closed 
the business in September 2013. Applicant admitted that he failed to notify the state when 
he closed his business. In about August 2018, Applicant filed a form through the state 
website providing notice that he had closed his business in September 2013. He admitted 
that he had not called the state tax agency directly to discuss the seven tax liens filed 
against him. On February 26, 2019, Applicant provided a document showing that the state 
                                            
3 Note SOR allegations ¶¶ 1.c and 1.p are duplicate allegations with the same creditor, which is actually a 
mortgage creditor and not a student loan creditor, as mistakenly alleged in SOR ¶ 1.c. (Tr. 29-31) 
 
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continued to assess taxes against him in at least 2017. He also submitted a signed 
agreement dated February 2019 with a tax resolution company to provide assistance with 
his current tax issues. (Tr. 25-29; AE C, AE D) 
 
SOR ¶ 1.q alleges a delinquent student loan in the amount of $16,577. Applicant 
stated that he has only had one student loan account, and his tax refunds for tax years 
2016 and 2017 were intercepted to pay this outstanding debt. He claimed that the balance 
of his unpaid student loan is approximately $11,439. He failed to provide documentation 
with his SOR response and at the hearing. On February 27, 2019, Applicant stated that 
he had called the student loan servicer and claimed his current outstanding student loan 
balance was $11,276. He asked that his 2018 tax refund be voluntarily intercepted to pay 
this account. Applicant failed to provide any supporting documentation with his e-mail to 
show the current student loan balance, or whether this account has been fully resolved. 
(Tr. 34-35, e-mail dated February 27, 2019.) 
 
SOR ¶ 1.r alleges a $750 debt owed to a bank. Applicant claimed this amount was 
for a safety deposit box he had closed with the bank, but he did not provide the bank with 
the safety deposit box key, as required. He admitted at the hearing that this debt had not 
been paid and he had not yet made contact with the bank to resolve this account. (Tr. 36-
37) 
 
On the January 2017 SCA, Applicant listed that he had not filed his tax returns for 
2013, 2014, and 2015. He listed that he disputed the state taxes for 2013, and was 
seeking the help of a tax attorney. For tax years 2014 and 2015, he listed that he had not 
filed his tax returns due to negligence. He was currently working with a tax preparation 
company to resolve his tax issues. During his background interview in October 2017, 
Applicant admitted that he had not filed his state and Federal income tax returns for 2013, 
2014, and 2015, but it was his intention to file these tax returns. During his January 2019 
hearing, he had not filed these state and Federal tax returns. 
 
Policies 
 
The U.S. Supreme Court has recognized the substantial discretion of the Executive 
Branch in regulating access to information pertaining to national security emphasizing, 
“no one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 
518, 528 (1988). As Commander in Chief, the President has the authority to control 
access to information bearing on national security and to determine whether an individual 
is sufficiently trustworthy to have access to such information.” Id. at 527. The President 
has authorized the Secretary of Defense or his designee to grant applicant’s eligibility for 
access to classified information “only upon a finding that it is clearly consistent with the 
national interest to do so.” Exec. Or. 10865, Safeguarding Classified Information within 
Industry § 2 (Feb. 20, 1960), as amended.  
 
Eligibility for a security clearance is predicated upon the applicant meeting the 
criteria contained in the adjudicative guidelines. These guidelines are not inflexible rules 
of law. Instead, recognizing the complexities of human behavior, these guidelines are 
applied in conjunction with an evaluation of the whole person. An administrative judge’s 
 
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overarching adjudicative goal is a fair, impartial, and commonsense decision. An 
administrative judge must consider all available, reliable information about the person, 
past and present, favorable and unfavorable.  
 
The Government reposes a high degree of trust and confidence in persons with 
access to classified information. This relationship transcends normal duty hours and 
endures throughout off-duty hours. 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 
about potential, rather than actual, risk of compromise of classified information. Adverse 
clearance decisions must be “in terms of the national interest and shall in no sense be a 
determination as to the loyalty of the applicant concerned.” See Exec. Or. 10865 § 7. 
Thus, nothing in this decision should be construed to suggest that it is based, in whole or 
in part, on any express or implied determination about applicant’s allegiance, loyalty, or 
patriotism. It is merely based on whether the applicant has met the strict guidelines the 
President, Secretary of Defense, and Security Executive Agent have established for 
issuing a clearance. 
  
 Initially, the Government must establish, by substantial evidence, conditions in the 
personal or professional history of the applicant that may disqualify the applicant from 
being eligible for access to classified information. The Government has the burden of 
establishing controverted facts alleged in the SOR. See Egan, 484 U.S. at 531. 
“Substantial evidence” is “more than a scintilla but less than a preponderance.” See v. 
Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). The guidelines 
presume a nexus or rational connection between proven conduct under any of the criteria 
listed therein and an applicant’s security suitability. See ISCR Case No. 95-0611 at 2 
(App. Bd. May 2, 1996). 
 
Once the Government establishes a disqualifying condition by substantial 
evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the 
facts. Directive ¶ E3.1.15. An applicant “has the ultimate burden of demonstrating that it 
is clearly consistent with the national interest to grant or continue his security clearance.” 
ISCR Case No. 01-20700 at 3 (App. Bd. Dec. 19, 2002). The burden of disproving a 
mitigating condition never shifts to the Government. See ISCR Case No. 02-31154 at 5 
(App. Bd. Sept. 22, 2005). “[S]ecurity clearance determinations should err, if they must, 
on the side of denials.” Egan, 484 U.S. at 531; see AG ¶ 2(b).  
 
Analysis 
 
Guideline F: Financial Considerations 
 
AG ¶ 18 articulates the security concern for financial problems: 
 
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 
 
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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. . . . 
 
The guideline notes several conditions that could raise security concerns. I 
have considered all of the disqualifying conditions under AG ¶ 19, and the following 
are potentially applicable: 
 
(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. 
 
The evidence shows that Applicant did not timely file his Federal and state income 
tax returns for tax years 2013, 2014, and 2015. There are seven unreleased state tax 
liens in the amount of $14,323, and other unresolved delinquent debts in the total 
approximate amount of $55,000. The above disqualifying conditions apply. 
 
The Appeal Board explained the scope and rationale for the financial 
considerations security concern in ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012),  
as follows: 
 
This concern is broader than the possibility that an applicant might 
knowingly compromise classified information in order to raise money in 
satisfaction of his or her debts. Rather, it requires a Judge to examine the 
totality of an applicant’s financial history and circumstances. The Judge 
must consider pertinent evidence regarding the applicant’s self-control, 
judgment, and other qualities essential to protecting the national secrets as 
well as the vulnerabilities inherent in the circumstances. The Directive 
presumes a nexus between proven conduct under any of the Guidelines 
and an applicant’s security eligibility.  
 
  Five financial considerations mitigating conditions under AG ¶ 20 are potentially 
applicable in this case:  
 
(a) the behavior happened so long ago,4 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; 
 
                                            
4 A debt that became delinquent several years ago is still considered recent because “an applicant’s 
ongoing, unpaid debts evidence a continuing course of conduct and, therefore, can be viewed as recent for 
purposes of the Guideline F mitigating conditions.” ISCR Case No. 15-06532 at 3 (App. Bd. Feb. 16, 2017) 
(citing ISCR Case No. 15-01690 at 2 (App. Bd. Sept. 13, 2016)). 
 
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(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 has not filed his 2013, 2014, and 2015 state and Federal income tax 
returns; nor has he paid, settled, or resolved the seven state tax liens that were filed 
against him. Two weeks before this hearing, he paid two medical accounts in the total 
amount of $130. He currently has approximately $55,000 of outstanding delinquent debt. 
He has not contacted creditors to resolve or settle these accounts, nor has he made any 
payments on these accounts. Although he provided mitigating evidence of a failed 
business and subsequent underemployment, which were circumstances beyond his 
control, he does not have a reasonable explanation as to why he has been unable to file 
these state and Federal income tax returns over the past several years. His failure to give 
priority to such an important obligation as filing tax returns required by law causes 
lingering doubt about his reliability and security worthiness. I cannot conclude that he has 
mitigated the financial considerations security concerns. There are no indications that his 
tax problems and other financial difficulties are under control. Mitigation under AG ¶¶ 
20(a), (b), (c), (d) and 20(g) was not established. 
 
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; 
 
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(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 national security 
eligibility must be an overall common sense judgment based upon careful consideration 
of the guidelines and the whole-person concept. My comments under Guideline F are 
incorporated in my whole-person analysis. Some of the factors in AG ¶ 2(d) were 
addressed under that guideline but some warrant additional comment. 
 
Given the nature and seriousness of Applicant’s failure to timely file Federal and 
state income tax returns for three consecutive years, his significant outstanding state tax 
liens and debt with multiple creditors, and the length of time they have been unresolved, 
I conclude Applicant has not mitigated the financial considerations security concerns.  
 
Formal Findings 
 
Formal findings For or Against Applicant on the allegations set forth in the SOR, 
as required by ¶ E3.1.25 of Enclosure 3 of the Directive, are: 
  
Paragraph 1, Guideline F:     AGAINST APPLICANT  
 
Subparagraphs 1.a - 1.f:   Against Applicant 
 
Subparagraphs 1.g, 1.h and 1.p:  For Applicant 
 
Subparagraphs 1.i - 1.o, 1.q and 1.r: 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 or reinstate Applicant’s eligibility for 
a security clearance. National security eligibility for access to classified information is 
denied. 
 
 
                                          
    PAMELA C. BENSON 
     Administrative Judge