ISCR Case 07-11259.h1

Case Headnote

ISCR Case No. 07-11259.h1

deniedMay 12, 2008· Hon. Mark W. Harvey· hearing

Summary

A 55-year-old instructor and consultant was denied a security clearance under Guideline F, Financial Considerations, due to a history of significant financial delinquencies. The Statement of Reasons detailed multiple federal tax liens and a Chapter 7 bankruptcy filing.

Specifically, the IRS filed a tax lien in April 1993 for $64,698 covering tax years 1984, 1986, and 1987-1991. In May 1996, the applicant filed for Chapter 7 bankruptcy, which was discharged in August 1996. A subsequent IRS lien was filed in February 2005 for $74,730, related to tax years 1995-1998. While $11,260 for tax year 1995 was cleared by statutory expiration in September 2007, the applicant still owed $58,825 for other years. This debt was resolved in February 2008 with a payment of $35,457. Additionally, a credit card debt of approximately $1,362 was paid in full in November 2007.

Despite these recent efforts to resolve some debts, the judge found that the applicant's long-standing financial issues, including a profound history of delinquent tax debt and excessive indebtedness, were not sufficiently mitigated. The decision highlighted that the applicant's prioritization of his children's education over his tax obligations demonstrated poor judgment, leading to the denial of the security clearance.

Why the Applicant Was Denied

The applicant had a profound history of delinquent tax debt and excessive indebtedness.
Recent efforts to resolve debts did not fully mitigate the government's allegations due to the long duration of the financial issues.
The applicant's prioritization of paying for his children's education over his tax obligations indicated poor judgment.

Conditions Referenced

Disqualifying

AG ¶ 19(c)appliedHistory of Not Meeting Financial Obligations

Mitigating

AG ¶ 20(a)rejectedBehavior Happened Long Ago or InfrequentlyThe applicant's financial issues were chronic and not infrequent.
AG ¶ 20(b)rejectedConditions Largely Beyond the Person's ControlThe applicant's financial problems were not solely due to circumstances beyond his control.
AG ¶ 20(c)rejectedReceived or Receiving CounselingThe applicant did not provide evidence of financial or credit counseling.
AG ¶ 20(d)rejectedGood-faith Effort to Repay Overdue CreditorsInsufficient evidence to establish that the applicant showed good faith in resolving debts.
AG ¶ 20(e)rejectedReasonable Basis to Dispute Legitimacy of DebtThe applicant did not provide documented proof to substantiate disputes regarding past-due debts.

Key Rule Quoted

“Failure or inability to live within one’s means, satisfy debts, and meet financial obligations may indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which can raise questions about an individual’s reliability, trustworthiness, and ability to protect classified information.”

Procedural Posture

SOR issuedNov 20, 2007
Answer filedDec 3, 2007Applicant elected to have the case decided on the written record.
Hearing held—No hearing; decided on the written record.
Decision dateMay 12, 2008

Cite For

Denial of Security Clearance Due to Chronic Financial Issues Under Guideline F
Impact of Prioritizing Personal Financial Obligations on Security Clearance Eligibility
Insufficient Evidence of Good Faith Efforts to Resolve Financial Delinquencies

Editorial summary generated for research. Not legal advice; not a prediction. Verify against the full decision before relying on any quoted language.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	On April 14, 1993, the Federal IRS filed a federal tax lien against Applicant for $64,698 for taxes and additions assessed for tax years 1984, 1986, and 1987 through 1991. $64,698	Against Applicant	Tax Unpaid	Admitted	(c) a history of not meeting financial obligations	—	—
1.e	On February 18, 2005, the IRS filed a federal tax lien against Applicant for $74,730 for taxes and additions assessed for tax years 1995, 1996, 1997, and 1998. In September 2007, his account balance of $11,260.00 for taxes and additions assessed for tax year 1995 was cleared due to a statutory expiration. As of September 17, 2007, Applicant still owed $58,825.00 for taxes and additions assessed for tax years 1996, 1997, and 1998. On February 29, 2008, he paid the IRS $35,457, resolving this debt. $74,730	Against Applicant	Tax Unpaid	Admitted	(c) a history of not meeting financial obligations	—	—
1.f	Applicant filed for Chapter 7 Bankruptcy in May 1996. This Bankruptcy discharge was effective in August 1996.	For Applicant	Bankruptcy Filing	Admitted	—	—	—
1.h	On February 18, 2005, the IRS filed a federal tax lien against Applicant for $74,730 for taxes and additions assessed for tax years 1995, 1996, 1997, and 1998. In September 2007, his account balance of $11,260.00 for taxes and additions assessed for tax year 1995 was cleared due to a statutory expiration. As of September 17, 2007, Applicant still owed $58,825.00 for taxes and additions assessed for tax years 1996, 1997, and 1998. On February 29, 2008, he paid the IRS $35,457, resolving this debt. $74,730	Against Applicant	Tax Unpaid	Admitted	(c) a history of not meeting financial obligations	—	—
1.i	As of August 20, 2007, Applicant owed about $1,362 on a credit card account. On November 22, 2007, Applicant paid this debt in full. $1,362	For Applicant	Credit Card Debt	Admitted	—	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

On April 14, 1993, the Federal IRS filed a federal tax lien against Applicant for $64,698 for taxes and additions assessed for tax years 1984, 1986, and 1987 through 1991.

$64,698

Against Applicant

Tax Unpaid

Admitted

(c) a history of not meeting financial obligations

—

1.e

On February 18, 2005, the IRS filed a federal tax lien against Applicant for $74,730 for taxes and additions assessed for tax years 1995, 1996, 1997, and 1998. In September 2007, his account balance of $11,260.00 for taxes and additions assessed for tax year 1995 was cleared due to a statutory expiration. As of September 17, 2007, Applicant still owed $58,825.00 for taxes and additions assessed for tax years 1996, 1997, and 1998. On February 29, 2008, he paid the IRS $35,457, resolving this debt.

$74,730

Against Applicant

Tax Unpaid

Admitted

(c) a history of not meeting financial obligations

—

1.f

Applicant filed for Chapter 7 Bankruptcy in May 1996. This Bankruptcy discharge was effective in August 1996.

For Applicant

Bankruptcy Filing

Admitted

—

1.h

$74,730

Against Applicant

Tax Unpaid

Admitted

(c) a history of not meeting financial obligations

—

1.i

As of August 20, 2007, Applicant owed about $1,362 on a credit card account. On November 22, 2007, Applicant paid this debt in full.

$1,362

For Applicant

Credit Card Debt

Admitted

—

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Case Profile

Summary

Why the Applicant Was Denied

Conditions Referenced

Key Rule Quoted

Procedural Posture

Cite For

Full decision

DEFENSE OFFICE OF HEARINGS AND APPEALS

HEARING

APPEARANCES

STATEMENT OF CASE

FINDINGS OF FACT

POLICIES

ANALYSIS

WHOLE PERSON CONCEPT

FORMAL FINDINGS

CONCLUSION

FOOTNOTES