Summary
The applicant, a 73-year-old businessman, faced security clearance denial under Guideline E (Personal Conduct) and Guideline F (Financial Considerations) due to significant unpaid debts exceeding $77,700, failure to file federal tax returns for multiple years, and a history of financial mismanagement. The judge found that the applicant did not demonstrate sufficient mitigating circumstances to alleviate the security concerns raised by his financial history.
Under Guideline E (Personal Conduct) and Guideline F (Financial Considerations), the Statement of Reasons alleged the following: In early 1990, Applicant filed for Chapter 13 bankruptcy. Because of the substantial assets held by himself and his consulting firm, the court converted the filing to a Chapter 11 proceeding (1.a). Delinquent account 120 days or more past due in the approximate amount of $341 with a balance of about $1,300. Unpaid. The issuer cut off Applicant’s access to the credit card (1.b). Charged-off account for a balance of approximately $21,984. Unpaid. Applicant does not dispute that he owes the balance at issue, but has a separate dispute with the issuer (1.c). Past-due equity account in the approximate amount of $22,988 on an account in foreclosure status with a total loan balance of about $227,000. Sold; recourse against Applicant waived for any balances owed (1.d). Charged-off account in the approximate amount of $25,000. Unpaid. This acknowledged debt was ultimately secured in a judgment in about 2009 and is deemed by him to be uncollateralized (1.e). Charged-off auto account for approximately $8,047. Unpaid. Applicant acknowledges this debt. He deems this debt to be uncollateralized and, therefore, not an immediate priority in terms of his overall debt (1.f). Past-due mortgage account in the approximate amount of $80,755 on an account in foreclosure status with a total loan balance of about $370,000. Resolved or being resolved (1.g). Charged-off account for approximately $21,374. Unpaid. Applicant acknowledges this debt and categorizes it with other uncollateralized debts owed (1.h). Mortgage account that went into foreclosure with a deficiency of approximately $117,000. Loan modified, but account delinquent (1.i). Failure to file federal income tax returns, as required, for tax years 2006, 2007, 2008, and 2009, and failure to file federal tax returns for his business, as required, for at least tax years 2006, 2007, and 2008 (1.j).
The judge denied the clearance. The government raised disqualifying conditions AG ¶ 19(a), AG ¶ 19(c), AG ¶ 19(g). The judge applied mitigating conditions AG ¶ 20(a), AG ¶ 20(b), AG ¶ 20(c), AG ¶ 20(d). The decision turned on the following: The applicant admitted to over $77,700 in unpaid debts and failed to file federal tax returns for multiple years; The applicant's financial issues were characterized by a cavalier attitude towards obligations, undermining his reliability and trustworthiness; The applicant did not provide evidence of efforts to resolve disputes with creditors or to address his financial obligations.
Why the Applicant Was Denied
- The applicant admitted to over $77,700 in unpaid debts and failed to file federal tax returns for multiple years.
- The applicant's financial issues were characterized by a cavalier attitude towards obligations, undermining his reliability and trustworthiness.
- The applicant did not provide evidence of efforts to resolve disputes with creditors or to address his financial obligations.
Conditions Referenced
- AG ¶ 19(a)raisedInability or Unwillingness to Satisfy Debts
- AG ¶ 19(c)raisedA History of Not Meeting Financial Obligations
- AG ¶ 19(g)raisedFailure to File Annual Federal, State, or Local Income Tax Returns as Required
- AG ¶ 20(a)rejectedThe Behavior Happened so Long Ago, Was so Infrequent, or Occurred Under Such Circumstances That It Is Unlikely to RecurThe applicant's financial issues are ongoing and not isolated incidents.
- AG ¶ 20(b)rejectedThe Conditions That Resulted in the Behavior Were Largely Beyond the Person’s ControlThe applicant voluntarily ceased income-generating work and did not demonstrate that his financial issues were beyond his control.
- AG ¶ 20(c)rejectedThe Person Has Received or Is Receiving Counseling for the ProblemThe applicant did not provide evidence of receiving financial counseling.
- AG ¶ 20(d)rejectedThe Individual Initiated a Good-faith Effort to Repay DebtsThe applicant's efforts to repay debts were sporadic and ultimately ceased.
Key Rule Quoted
“"The protection of the national security is the paramount consideration."”
Procedural Posture
- SOR issuedMar 23, 2010
- Answer filedApr 15, 2010Applicant admitted to several allegations.
- Hearing heldOct 5, 2010Hearing convened as scheduled.
- Decision dateJun 29, 2011
Cite For
- Denial of Security Clearance Due to Significant Financial Issues Under Guideline F
- Failure to File Tax Returns as a Disqualifying Factor Under Guideline E
- Insufficient Evidence of Mitigating Circumstances in Financial Considerations Cases