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DEPARTMENT OF DEFENSE 
DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
 
                                
 
In the matter of: ) 
 ) 
 [Redacted] )  ISCR Case No. 18-02040 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Rhett Petcher, Esq., Department Counsel 
For Applicant: Pro se 
06/06/2019 
______________ 
 
 
Decision 
______________ 
 
 
FOREMAN, LeRoy F., Administrative Judge: 
 
This case involves security concerns raised under Guidelines F (Financial 
Considerations) and E (Personal Conduct). Eligibility for access to classified information 
is denied. 
 
Statement of the Case 
 
Applicant submitted a security clearance application (SCA) on July 28, 2016. On 
February 23, 2019, the Department of Defense Consolidated Adjudications Facility 
(DOD CAF) sent him a Statement of Reasons (SOR) alleging security concerns under 
Guidelines F and E. The DOD CAF acted 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) promulgated in Security Executive Agent Directive 4, National Security 
Adjudicative Guidelines (December 10, 2016). 
 
 Applicant answered the SOR on April 15, 2019, and requested a hearing before 
an administrative judge. Department Counsel was ready to proceed on April 30, 2019, 
 
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and the case was assigned to me on the same day. Applicant requested that his 
hearing be expedited and held while he was in the United States on leave from an 
overseas worksite.  
 
On May 3, 2019, the Defense Office of Hearings and Appeals (DOHA) notified 
Applicant that the hearing was scheduled to be conducted by video teleconference on 
May 7, 2019. I convened the hearing as scheduled. Applicant waived the 15-day notice 
requirement of Directive ¶ E3.1.8. Government Exhibits (GX) 1 through 13 were 
admitted in evidence without objection. Department Counsel’s letter transmitting copies 
of the government’s documentary evidenced is attached to the record as Hearing 
Exhibit (HX) I. Applicant testified but did not submit the testimony of any other witnesses 
or any documentary evidence. I kept the record open until May 22, 2019, to enable him 
to submit documentary evidence. He timely submitted Applicant’s Exhibits (AX) A 
through E, which were admitted without objection. Department Counsel’s comments 
about AX A through E are attached to the record as HX II. DOHA received the transcript 
(Tr.) on May 29, 2019. 
 
Findings of Fact1 
 
 In Applicant’s answer to the SOR, he admitted SOR ¶¶ 1.a, 1.g, 1.n, 1.o, and 2.a-
2.e. He denied SOR ¶¶ 1.b-1.f, and 1.h-1.m. His admissions in his answer and at the 
hearing are incorporated in my findings of fact.  
 
 Applicant is a 53-year-old waterfront manager employed by a defense contractor 
since July 1, 2016. He served on active duty in the U.S. Navy from August 1984 to 
September 1999. He was self-employed and owned a mortgage company from October 
2002 to December 2007. He sold the business and was unemployed from December 
2007 to June 2008. He worked in various jobs as a consultant or project manager at 
non-government shipyards from June 2008 to October 2012. He was a federal civilian 
employee from October 2012 to September 2013. He applied for a security clearance in 
November 2012, but his application was denied in December 2013. 
 
After Applicant’s application for a security clearance was denied, he worked in 
non-government shipyards from October 2013 and as a truck driver from March 2015 to 
June 2016. His work history includes unemployment from December 2007 to June 
2008, April to June 2011, July to October 2012, and January to March 2015. 
 
 Applicant married in July 1984 and divorced in March 1996. He remarried in July 
2011. He has four adult children and two adult stepchildren. He obtained a bachelor’s 
degree in 2013 and financed it with student loans. (Tr. 21.) 
 
 Applicant filed a petition for Chapter 7 bankruptcy in 2005 and received a 
discharge in 2006. Approximately $73,000 in delinquent debts were discharged. He 
                                                          
1 Applicant’s personal information is extracted from his security clearance application (GX 1) unless 
otherwise indicated by a parenthetical citation to the record. 
 
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attributed his financial problems to legal fees totaling about $70,000 for child-custody 
litigation and travel to visit his ailing mother. Most of the discharged debts were for 
business loans and a credit-card account. (GX 12 at 3.) The bankruptcy is alleged in 
SOR ¶ 1.n. 
 
Between 1996 and 2007, Applicant was charged with check fraud or uttering 
worthless checks about 21 times. At a personal appearance in November 2013, he 
admitted these offenses, which occurred when he floated checks before sufficient funds 
were in his account. (GX 12 at 2.) In his answer to the SOR, he attributed these 
financial problems to mistakes while trying to start and operate a business. The bad 
checks are alleged in SOR ¶ 1.o. 
 
 In addition to the bankruptcy and bad-check offenses, the SOR alleges multiple 
failures to timely file federal income tax returns, failures to timely pay federal income 
taxes, delinquent student loans, and delinquent consumer debts. The federal tax debt, 
federal tax liens, delinquent student loans, and delinquent consumer debts are reflected 
in credit reports from December 2012, October 2016, February 2018, and May 2019. 
(GX 3-6.) The bad- check offenses are reflected in arrest records maintained by the 
Federal Bureau of Investigation. (GX 7.) The evidence concerning Applicant’s financial 
problems is summarized below. 
 
SOR ¶ 1.a: failure to timely file federal income tax returns for 2000 through 
2005, 2007, and 2010 through 2017. Applicant admitted this allegation in his answer to 
the SOR. Tax transcripts submitted by Applicant in response to DOD CAF 
interrogatories in June 2018 reflect that substitute returns were filed in 2004 by the IRS 
for tax years 2000 and 2001; returns for 2002 through 2005 were filed in 2006; the 
return for 2007 was filed in September 2009; a return for 2010 was filed in November 
2011; a return for 2011 was filed in November 2012; returns for 2012 and 2013 were 
filed in April 2018; and no returns had been filed for 2014 through 2017. (GX 9 at 27-
65.) 
 
SOR ¶ 1.b-1.f: failure to timely pay the federal taxes due for 2005, 2006, and 
2007; federal tax debt of $54,297 for 2006; federal tax debt of $3,007 for 2007; 
federal tax liens filed in September 2007 and February 2013. In his answer to the 
SOR, Applicant denied that he failed to pay the taxes due. At the hearing, he admitted 
that he did not make any voluntary payments, but he relied on garnishments and 
diversions of refunds to pay the taxes due. (Tr. 44-45.) In April 2006, the IRS 
erroneously filed a tax lien for $1.4 million against Applicant. After Applicant challenged 
the amount of the lien, the lien was released on February 2007. The IRS filed another 
lien for $43,264 in September 2007, and a third lien for $37,202 in February 2013. In 
February 2018, Applicant hired an attorney to help him resolve his federal tax problems. 
He testified that he could not hire professional help earlier because he did not have 
enough disposable income to pay the lawyer’s $4,000 retainer fee. (Tr. 47-48.) The lien 
for $43,264 was released in August 2018, and the $37,202 lien was released in 
February 2019. In Applicant’s answer to the SOR, he provided evidence from his tax 
lawyer that he had filed the delinquent federal tax returns for 2010 through 2017 in 
 
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December 2018, and that the refunds for tax years 2015 through 2017 were sufficient to 
pay the delinquent taxes for the earlier years and resolve the tax liens that had been 
filed against him.  
 
SOR ¶ 1.g: delinquent debt placed for collection of $1,161. In Applicant’s 
answer to the SOR, he presented documentary evidence that the debt had been settled. 
 
 SOR ¶¶ 1.h-1.l: five delinquent student loans totaling about $44,000. In his 
answer to the SOR, Applicant denied these debts, stating that they had not been 
delinquent since 2017. The May 2019 credit report reflects five delinquent student 
loans, on which the last payment was made in April 2017. According to this credit 
report, the scheduled payment for each loan was $703, but the actual payments were 
$99, $255, $166, $66, and $115. The loans are reflected as past due for $5,584; 
$15,420; $9,396; $3,753; and $6,504. (GX 6 at 2-3.) The credit report contradicts 
Applicant’s documentation from the Department of Education (DOE), dated March 3, 
2019, reflecting monthly payments of $599 from April 2017 to July 2017; a $418 
payment in July 2017; a $514 payment in August 2017; monthly payments of $876 from 
March 2018 to July 2018; and monthly payments of $703 from November 2018 to 
March 2019.  
 
 SOR ¶ 1.m: delinquent debt for $747. In response to DOD CAF interrogatories, 
Applicant submitted evidence that this debt was settled for less than the full amount. 
(GX 9 at 72.) 
 
 When Applicant submitted an SCA in November 2012, he disclosed that he had 
not filed his federal income tax returns for 2003, 2004, and 2005. He did not disclose 
that he had failed to timely file his federal income tax returns for 2010 and 2011. (GX 1 
at 45-46.) At the hearing, he testified that he did not know why he did not disclose the 
past-due tax returns for 2010 and 2011. (Tr. 64.) 
 
 During a personal appearance conducted by a DOHA administrative judge in 
November 2013, he testified that he had filed his federal income tax returns for 2000 
through 2012. (GX 13 at 31.) At the hearing, he admitted that his answer during the 
personal appearance was false. (Tr. 66.) 
 
 When Applicant submitted his most recent SCA in July 2016, he answered “No” 
to the question whether he had failed to file returns or pay federal, state, or other taxes 
during the past seven years. (GX 2 at 48.) He did not disclose that he had failed to file 
returns or pay taxes for 2010 through 2015. At the hearing, he testified that he did not 
know why he answered “No” to this question. (Tr. 64.) 
 
 In response to DOD CAF financial interrogatories in March 2018, he stated that 
he had filed his returns and paid the taxes for 2006 and 2007. (GX 8 at 4.) At the 
hearing, he admitted that these answers were false. (Tr. 68.) 
 
 
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 In response to DOD CAF interrogatories, Applicant submitted a personal financial 
statement in June 2018 reflecting that he and his wife had a joint net monthly income of 
about $12,623; debt payments (including $1,100 in student loan payments) of $6,363; 
mortgage loan payments of $3,403; and a net monthly remainder of about $3,220. (GX 
9 at 73.) They reported total wage income of $208,981 for tax year 2017 and $258,948 
for tax year 2018. (AX B; AX C.) 
 
 Applicant and his wife own real estate worth more than $1,000,000. They own 
four rental properties, two undeveloped lots, and their primary residence. In 2018, 
Applicant and his wife purchased three investment properties for $95,000; $45,000; and 
about $70,000. The entire amounts were financed by the sellers. Their monthly 
payments are $1,900; $700; and $1,400. The properties are rented and generate 
monthly income of about $7,000 per month. Applicant testified that he was comfortable 
taking on additional debt because he believes he could sell each of them within 30 days 
if he needed to generate income. (Tr. 34-37; 71-72.) 
 
Policies 
 
 “[N]o 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 applicants 
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 § 2.  
 
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, an administrative judge 
applies these guidelines in conjunction with an evaluation of the whole person. An 
administrative judge’s overarching adjudicative goal is a fair, impartial, and 
commonsense decision. An administrative judge must consider all available and 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 that 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. 
 
Clearance decisions must be made “in terms of the national interest and shall in 
no sense be a determination as to the loyalty of the applicant concerned.” Exec. Or. 
10865 § 7. Thus, a decision to deny a security clearance is merely an indication the 
 
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applicant has not met the strict guidelines the President and the Secretary of Defense 
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. 15-
01253 at 3 (App. Bd. Apr.20, 2016).   
 
 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 burden of proving a mitigating condition, 
and the burden of disproving it never shifts to the Government. See ISCR Case No. 02-
31154 at 5 (App. Bd. Sep. 22, 2005).  
 
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). “[S]ecurity clearance determinations should err, 
if they must, on the side of denials.” Egan, 484 U.S. at 531.  
 
Analysis 
 
 
Guideline F (Financial Considerations) 
 
The security concern under this guideline 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. . . . An individual who is 
financially overextended is at greater risk of having to engage in illegal or 
otherwise questionable acts to generate funds. . . .  
 
 This concern is broader than the possibility that a person might knowingly 
compromise classified information to raise money. It encompasses concerns about a 
person’s self-control, judgment, and other qualities essential to protecting classified 
information. A person who is financially irresponsible may also be irresponsible, 
unconcerned, or negligent in handling and safeguarding classified information. See 
ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012). 
 
 
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 Applicant’s admissions and the documentary evidence in the record establish the 
following disqualifying conditions under this guideline: 
 
AG ¶ 19(a): inability to satisfy debts; 
 
AG ¶ 19(b): unwillingness to satisfy debts regardless of the ability to do so; 
 
AG ¶ 19(c): a history of not meeting financial obligations;  
 
AG ¶ 19(d): deceptive or illegal financial practices such as . . . check fraud 
. . . and other intentional breaches of trust; and  
 
AG ¶ 19(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 following mitigating conditions are potentially applicable:  
 
AG ¶ 20(a): the behavior happened so long ago, was so infrequent, or 
occurred under such circumstances that it is unlikely to recur and does not 
cast doubt on the individual's current reliability, trustworthiness, or good 
judgment; 
 
AG ¶ 20(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; 
 
AG ¶ 20(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; 
 
AG ¶ 20(d): the individual initiated and is adhering to a good-faith effort to 
repay overdue creditors or otherwise resolve debts; and 
 
AG ¶ 20(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. 
 
 AG ¶ 20(a) is not established for SOR ¶¶ 1.a-1.m. Applicant’s delinquent debts 
and past-due tax returns are recent, numerous, and did not occur under circumstances 
making recurrence unlikely. It is established for the bankruptcy alleged in SOR ¶ 1.n 
and the bad checks alleged in SOR ¶ 1.o, which are mitigated by the passage of time. 
 
 
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 AG ¶ 20(b) is not fully established. Applicant’s first period of unemployment was 
caused by his voluntary decision to sell his business. However, he had several 
subsequent periods of unemployment and pay reductions. He incurred substantial legal 
expenses resolving custody of his children. His federal tax problems were complicated 
when the IRS erroneously filed a tax lien for $1.4 million. However, he has not acted 
responsibly. He did not seriously address his past-due tax returns and federal tax debt 
until February 2018, after he realized that they were an impediment to his second 
attempt to qualify for a security clearance.  
 
 AG ¶ 20(c) is not fully established. Applicant would have been required to obtain 
financial counseling in connection with his bankruptcy petition in 2005. However, that 
counseling would not have been directed at his tax problems, which were not resolved 
until he hired an attorney in 2018. 
 
 AG ¶ 20(d) is established for the delinquent student loans alleged in SOR ¶¶ 1.h-
1.l and the debts alleged in SOR ¶¶ 1.g and 1.m. The documentation from DOE shows 
that Applicant has been making payments on his delinquent student loans. The DOE 
documentation is contradicted by the May 2019 credit report, but I have given more 
credibility to the DOE documentation. AG ¶ 20(d) is not established for the tax debt, 
which was resolved by involuntary diversion of tax refunds, which do not constitute a 
“good-faith effort” to resolve tax debts. See generally ISCR Case No. 09-05700 (App. 
Bd. Feb. 24, 2011).  
 
 AG ¶ 20(g) is applicable but not dispositive. To his credit, Applicant has filed the 
past-due tax returns and resolved his tax debt. However, his eventual compliance with 
his tax obligations does not end the inquiry. A security clearance adjudication is not a 
tax-enforcement procedure. It is an evaluation of an individual’s judgment, reliability, 
and trustworthiness. A person 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. ISCR Case No. 15-00216 at 4 (App. Bd. Oct. 
24, 2016), citing Cafeteria & Restaurant Workers Union Local 473 v. McElroy, 284 F.2d 
173, 183 (D.C. Cir. 1960), aff’d, 367 U.S. 886 (1961). The fact that Applicant has filed 
his past-due returns “does not preclude careful consideration of Applicant’s security 
worthiness based on longstanding prior behavior evidencing irresponsibility.” ISCR 
Case No. 12-05053 (App. Bd. Oct. 30, 2014). Applicants who begin to address their 
security-significant conduct only when their personal interests are at stake may be 
lacking in judgment and reliability. ISCR Case No. 16-01211 (App. Bd. May 30, 2018). 
 
Guideline E, Personal Conduct 
 The concern under this guideline is set out in AG ¶ 15:  
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 
 
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cooperate or provide truthful and candid answers during national security 
investigative or adjudicative processes. . . .  
 
 Applicant’s admissions in his answer to the SOR and at the hearing establish that 
Applicant falsified his SCA in November 2012, provided false testimony during a DOHA 
personal appearance in November 2013, failed to disclose his failures to file income tax 
returns in his July 2016 SCA, and falsified his answers to financial interrogatories in 
March 2018. His falsifications establish the following disqualifying conditions under this 
guideline: 
 
AG ¶16(a): deliberate omission, concealment, or falsification of relevant 
facts from any personnel security questionnaire, personal history 
statement, or similar form used to conduct investigations, determine 
employment qualifications, award benefits or status, determine national 
security eligibility or trustworthiness, or award fiduciary responsibilities; 
and 
 
AG ¶16(b): deliberately providing false or misleading information; or 
concealing or omitting information, concerning relevant facts to an 
employer, investigator, security official, competent medical or mental 
health professional involved in making a recommendation relevant to a 
national security eligibility determination, or other official government 
representative. 
 
 The following mitigating conditions under this guideline are potentially applicable: 
 
AG ¶ 17(a): the individual made prompt, good-faith efforts to correct the 
omission, concealment, or falsification before being confronted with the 
facts; and 
 
AG ¶ 17(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; 
 
 AG ¶ 17(a) is not established. Applicant did not attempt to correct his 
falsifications until confronted with the evidence.  
 
 AG ¶ 17(c) is not established. Applicant’s falsifications were recent, frequent, and 
did not occur under unique circumstances. A falsification during the adjudication 
process is not minor, because it “strikes at the heart of the security clearance process.” 
ISCR Case No. 09-01652 (App. Bd. Aug. 8, 2011.) 
 
 
Whole-Person Concept 
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 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. In applying the whole-
person concept, an administrative judge must evaluate an applicant’s eligibility for a 
security clearance by considering the totality of the applicant’s conduct and all relevant 
circumstances and applying the adjudicative factors in AG ¶ 2(d).2  
 
 I have incorporated my comments under Guidelines F and E in my whole-person 
analysis and applied the adjudicative factors in AG ¶ 2(d). After weighing the 
disqualifying and mitigating conditions under Guidelines F and E, and evaluating all the 
evidence in the context of the whole person, I conclude Applicant has not mitigated the 
security concerns raised by his tax delinquencies and personal conduct. 
 
Formal Findings 
 
 I make the following formal findings on the allegations in the SOR: 
 
 Paragraph 1, Guideline F (Financial Considerations): AGAINST APPLICANT 
 
  Subparagraphs 1.a-1.f:    Against Applicant 
 
  Subparagraphs, 1.g-1.o:    For Applicant 
 
 Paragraph 2, Guideline E (Personal Conduct):  AGAINST APPLICANT 
 
  Subparagraphs 2.a-1.e:    Against Applicant 
 
Conclusion 
 
 I conclude that it is not clearly consistent with the national security interests of the 
United States to grant Applicant eligibility for access to classified information. Clearance 
is denied. 
 
 
 
LeRoy F. Foreman 
Administrative Judge 
                                                          
2 The factors are: (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.