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ISCR Case 10-08204.h1 — CASE

ISCR Case 10-08204.h1denied

Case Headnote

ISCR Case No. 10-08204.h1

deniedApr 13, 2011· Hon. Mark W. Harvey· hearing

Summary

A 64-year-old senior safety and health specialist was denied a security clearance under Guideline F, Financial Considerations, due to significant unresolved financial issues. The Statement of Reasons detailed nine delinquent debts totaling $276,097. These included a federal tax lien from the IRS for $181,000, a repossessed motor home debt of $89,858, a state tax lien of $1,966, and a county tax lien of $260. Other debts included credit card debt of $2,377, two medical debts of $50 each, and two judgments for $261 and $275 respectively.

The judge identified Disqualifying Conditions AG ¶ 19(a) and AG ¶ 19(c) as applicable. While Mitigating Conditions AG ¶ 20(d) and AG ¶ 20(e) were considered, they were not sufficient to overcome the concerns.

The denial was based on the applicant's failure to demonstrate a good-faith effort to resolve his debts, particularly the substantial IRS debt and the repossessed motor home debt. The judge concluded that these financial issues indicated a lack of judgment and reliability, which are essential for holding a security clearance.

Why the Applicant Was Denied

The applicant has nine delinquent debts totaling $276,097, including a significant IRS debt of $181,000.
The applicant did not establish a good-faith effort to resolve his debts, particularly the IRS debt and the debt from the repossessed motor home.
The applicant's financial issues indicate a lack of judgment and reliability, which are critical for security clearance.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability or Unwillingness to Satisfy Debts
AG ¶ 19(c)raisedA History of Not Meeting Financial Obligations

Mitigating

AG ¶ 20(d)rejectedGood-faith Effort to Repay Overdue CreditorsThe applicant did not demonstrate sufficient effort to resolve his debts.
AG ¶ 20(e)rejectedReasonable Basis to Dispute the Legitimacy of the Past-due DebtThe applicant did not provide sufficient evidence to dispute the 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 4, 2010
Answer filedDec 7, 2010
Hearing heldMar 21, 2011
Decision dateApr 13, 2011

Cite For

Denial of Security Clearance Due to Unresolved Financial Obligations
Lack of Good-faith Effort in Debt Resolution
Impact of Financial Irresponsibility on Security Clearance Eligibility

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

Standardized Decision Profile

SEAD-4 Guideline F · descriptive summary of a decided case

Posture: Decision on RecordDecided: denied

The judge found multiple financial concerns under Guideline F, including significant debts to the IRS and unresolved credit card and repossession debts. Ultimately, the judge ruled against the applicant on several debts, citing a lack of sufficient progress in resolving these financial issues, leading to the denial of the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	state tax lien ($1,966) $1,966	For Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(d) good-faith effort to repay or otherwise resolve debts	Documented Payment Plan with Creditor
1.b	federal tax lien entered by the IRS ($181,000) $181,000	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	medical debt ($50) $50	For Applicant	Medical Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	credit card debt ($2,377) $2,377	Against Applicant	Credit Card Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	repossessed motor home debt ($89,858) $89,858	Against Applicant	Auto Loan Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	county tax lien ($260) $260	Withdrawn	Unspecified Financial	Unknown	—	—	—
1.g	judgment ($261) $261	Withdrawn	Unspecified Financial	Unknown	—	—	—
1.h	judgment ($275) $275	Withdrawn	Unspecified Financial	Unknown	—	—	—
1.i	medical debt ($50) $50	For Applicant	Medical Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—

Descriptive standardized rendering of a decided public case (Guideline F). The verbatim source decision is shown in full below.

Full decision

The complete, official text — footnotes and signatures included — is in the original PDF.

Decision text, by section

DEFENSE OFFICE OF HEARINGS AND APPEALS

HEARING

APPEARANCES

DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS

In the matter of: ) ) ---------------------- ) ISCR Case No. 10-08204 ) Applicant for Security Clearance )

For Government: Paul Delaney, Esquire, Department Counsel For Applicant: Pro se

April 13, 2011 __________

STATEMENT OF CASE

__________

HARVEY, Mark, Administrative Judge:

Applicant’s statement of reasons (SOR) lists nine delinquent debts totaling $276,097. He failed to make sufficient progress resolving three delinquent SOR debts, which are owed to the Internal Revenue Service (IRS) ($181,000), a credit card company ($2,377), and for his voluntarily repossessed motor home ($41,628). Financial considerations security concerns are not mitigated, and eligibility for access to classified information is denied.

Statement of the Case

On May 18, 2010, Applicant submitted an Electronic Questionnaires for Investigations Processing (e-QIP) or security clearance application (SF 86) (GE 1). On November 4, 2010, the Defense Office of Hearings and Appeals (DOHA) issued an SOR to Applicant, pursuant to Executive Order 10865, Safeguarding Classified Information Within Industry, dated February 20, 1960, as amended; Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (Directive), dated January 2, 1992, as amended; and the adjudicative guidelines (AG) promulgated by the President on December 29, 2005. The SOR alleged security concerns under Guideline F (financial considerations). (Hearing Exhibit (HE) 2) The SOR detailed reasons why DOHA could not make the preliminary affirmative finding under the Directive that it is clearly consistent with the national interest to grant or continue a security clearance for Applicant. The SOR recommended referral to an administrative judge to determine whether Applicant’s clearance should be granted, continued, denied, or revoked (HE 2).

On December 7, 2010, Applicant responded to the SOR and requested a hearing. (HE 3) On February 11, 2011, Department Counsel indicated he was ready to proceed on Applicant’s case. On February 17, 2011, DOHA assigned Applicant’s case to me. On March 1, 2011, DOHA issued a hearing notice. (HE 1) On March 21, 2011, Applicant’s hearing was held. At the hearing, Department Counsel offered three exhibits (GE 1-3) (Tr. 18), and Applicant offered four exhibits. (Tr. 51-55; AE A-D) There were no objections, and I admitted GE 1-3 and AE A-D. (Tr. 18-19, 53-54) Additionally, I admitted the hearing notice, SOR, and Applicant’s response to the SOR as hearing exhibits. (HE 1-3) On March 31, 2011, I received the transcript.

Findings of Fact1

Applicant’s SOR response admitted the debt in SOR ¶ 1.a (state tax debt of $1,966). He stated he had an established payment plan, which was resolving this state tax debt. He admitted the debt in SOR ¶ 1.b (IRS debt of $181,000) and explained he is working on a repayment plan. He denied responsibility in full or in part for the remainder of the SOR debts and provided documentation describing how the debts arose or were resolved. His admissions are accepted as factual findings.

Applicant is a 64-year-old senior safety and health specialist, who has been employed by a Government contractor since 1985.2 (Tr. 5, 55) He graduated from high school in 1965. (Tr. 5) In 1983, he received a bachelor’s degree in healthcare administration. (Tr. 7)

Applicant enlisted in the Navy in June 1966, and served as a hospital corpsman until February 1970. (Tr. 6) His service included a tour in the Republic of Vietnam. (Tr. 6) He returned to active duty in the Navy from 1974 to 1981 and served as a hospital corpsman. (Tr. 6) He received a discharge under honorable conditions after both enlistments. After leaving active Navy service, he was employed at a Navy shipyard. (Tr. 7)

Applicant married his spouse in 1968. His children were born in 1969, 1973, and 1977. (Tr. 54-55) He did not report any adverse information concerning alcohol or drug abuse or involvement with law enforcement or judicial authorities. He has held a secret security clearance since 1976. (Tr. 8, 56) He believes he will probably be able to retain his employment even if he loses his security clearance. (Tr. 56-57)

Financial Considerations

Applicant disclosed a problem with the IRS and the voluntary repossession of his motor home on his May 18, 2010 SF 86. (GE 1) His SOR listed nine debts totaling $276,097 as follows: (a) state tax lien ($1,966); (b) federal tax lien entered by the IRS ($181,000); (c) medical debt ($50); (d) credit card debt ($2,377); (e) repossessed motor home debt ($89,858); (f) county tax lien ($260); (g) judgment ($261); (h) judgment ($275); and (i) medical debt ($50).

SOR ¶ 1.a (state tax lien)—Payment Plan. Applicant has begun a payment plan, which will resolve the state tax debt listed on his SOR. (HE 3 at 1) One hundred dollars is automatically taken out of his bank account each month. (Tr. 58) Applicant has paid at least $1,370 towards this debt. (Tr. 59)

Applicant’s spouse’s 1996 settlement and SOR ¶ 1.b (IRS debt)— Unresolved. In 1984, Applicant’s spouse was injured when she inhaled some toxic paint chemicals at work. (Tr. 21-22, 28) Workman’s compensation paid her medical expenses. (Tr. 28-29) In about 1991, she went on total disability from Social Security. (Tr. 41-42) In about 1996, she received a $2 million dollar award (less attorney fees) from her employer. (Tr. 21-25, 29) She entrusted an investment expert with investment of $1,684,000 from the settlement and over the years Applicant and his spouse gradually spent or gave the funds to their children. (Tr. 30, 43-45, 49, 102-103) She received quarterly statements showing the status of her investments. (Tr. 30-32) Her investment advisor told her that none of the money from her settlement was taxable, and she interpreted this advice to be the profits on the investment of her settlement funds were also tax free. (Tr. 32-33) She denied that she received 1099 forms showing the amount of her profits on the sale of various investments. (Tr. 30, 33-34) She insisted she was unaware that the sale of the investments, such as stocks and mutual funds, amounted to a taxable event. (Tr. 40) Her investment advisor provided all of the annual 1099sto the IRS about four years ago. (Tr. 22-25, 34) The investment advisor could not locate the annual 1099sthat were supposed to be sent from 1997 to 2006. (Tr. 35) Her settlement fund was exhausted in about 2007. (Tr. 42)

Applicant and his spouse have filed joint federal tax returns for many years. (Tr. 35-36) The IRS sought additional taxes, interest, and penalties totaling about $182,000. The IRS placed a lien on Applicant’s property. (HE 3 at 29) Applicant’s tax attorney and the IRS have been discussing settlement amounts and options for about three or four years. (Tr. 36-37) On December 1, 2010, Applicant’s tax attorney billed him for $3,183 for work on his tax problems. (Tr. 27; HE 3 at 30) Applicant’s spouse used $126,000 from the settlement fund to pay off the mortgage on their residence. (Tr. 38) On February 4, 2011, Applicant and his spouse applied for a mortgage loan in the amount of $181,000 which is intended to be used to pay their federal tax lien. (Tr. 42-43; AE D) Their home is currently valued at about $460,000. (Tr. 46) She thought the IRS would reduce the settlement amount by dropping some penalties. (Tr. 40) The $181,000 IRS debt is a joint debt. (Tr. 36)

Applicant and his spouse used about $150,000 of the settlement fund to assist their daughter and son-in-law when they were unemployed over about a five-year period. (Tr. 43-45) They provided $35,000 to their son to purchase his former spouse’s share of their house. (Tr. 49, 102) They spent $20,000 on another daughter’s wedding. (Tr. 103) They lost about $200,000 on their investments over the years; however, they were unable to use their losses to offset their gains because they did not timely include the losses in their tax returns. (Tr. 44) Applicant was unaware about whether state taxing entities would be seeking additional taxes from him and his spouse, and Applicant did not know whether they declared the income from their settlement on their state tax returns over the period from 1997 to 2007. (Tr. 60-61)

SOR ¶¶ 1.cand 1.i (medical debts)—Disputed. Applicant disputed his responsibility for the two $50 medical debts in SOR ¶¶ 1.cand 1.i. with the creditor and the collection company that received the debt. (Tr. 62-66; HE 3 at 8) Applicant went to a clinic for medical care. According to his insurance plan, the charge was supposed to be $10; however, the creditor sought $50, contending the treatment was from an emergency room as opposed to a clinic. (Tr. 62-66, 85-87; HE 3 at 8)

SOR ¶ 1.d (credit card)—Unresolved. Applicant disputed his responsibility for the credit card debt of $2,377. He said his credit card was stolen about ten years ago, and he alleged some of the charges on the card were not his charges. (Tr. 66-71; HE 3 at 8-9) He reported the loss of the card to the credit card company within two days of the loss. (Tr. 68) He wanted to see the signatures on the credit card charges to determine which ones were his or his spouse’s charges. (Tr. 67) He did not offer to pay the charges he actually owes. (Tr. 69)

SOR ¶ 1.e (repossessed motor home)—Unresolved. In 2003, Applicant and his spouse purchased a motor home for $120,000 and did not provide any money for a down payment. (Tr. 74-75) In 2009, their motor home was voluntarily repossessed. At the time of repossession, Applicant and his spouse owed $89,463 to the creditor. (HE 3 at 15) On October 14, 2009, their motor home was sold at a private sale for $55,000. (HE 3 at 15) The creditor sought interest, late charges and various fees totaling $7,164. (HE 3 at 15) On October 30, 2009, the creditor wrote Applicant seeking $41,628. (Tr. 72, 79-80; HE 3 at 15) On January 25, 2010 and February 23, 2010, Applicant sent a telefax asking for additional information. (HE 3 at 16, 17) On September 27, 2010, Applicant offered to settle the debt for $10,610. (Tr. 81; HE 3 at 19) The $10,610 would be paid using a payment plan and not a lump sum payment. (Tr. 84) Applicant also argued that under state law if he had paid 60% of the deferred payment price at the time of the default he had a right to surrender the mobile home and be released from further obligation under the contract. (Tr. 72-74; HE 3 at 21) However, 60% of $120,000 is $72,000; and Applicant still owed $89,463. (Tr. 76-78, 96-98) On November 17, 2010, the creditor wrote offering to settle the $41,628 debt for 70% of the balance or $29,140 and suggesting a payment plan of $200 per month. (Tr. 98-99; HE 3 at 18) Applicant did not respond to the November 17, 2010 counteroffer because he was waiting for a better counteroffer from the creditor. (Tr. 81-84)

SOR ¶¶ 1.fto 1.h (tax debts)—Successfully Disputed. Applicant provided evidence that the debts in SOR ¶¶ 1.f ($260), 1.g ($261), and 1.h ($275) were erroneous and the liens were removed at the request of the filing entity. (Tr. 84-85; HE 3 at 3-7) I granted the Government’s motion to withdraw SOR ¶¶ 1.f, 1.g, and 1.h. (Tr. 85)

Applicant noted that his spouse was primarily responsible over the years for handling their debts and investments. He recognized that he had a financial responsibility for paying joint debts such as their IRS debt, their joint credit cards, and jointly-made loans, such as the loan used to purchase their voluntarily repossessed motor home.

Character evidence

Three character references have known Applicant both at work and as friends in total for decades.3 They described him as very dependable, honest, intelligent, personable, hard working, trustworthy, conscientious, and reliable. He has exceptional integrity. He is extremely dedicated to his family and work. He is always willing to help others, and he is a tremendous asset to his company.

Applicant’s spouse has been married to Applicant for 43 years. (Tr. 48) She said, “he has the highest integrity of anybody that I know.” (Tr. 48)

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 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. 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. See also Executive Order 12968 (Aug. 2, 1995), § 3.1. Thus, nothing in this Decision should be construed to suggest that I have based this decision, in whole or in part, on any express or implied determination about applicant’s allegiance, loyalty, or patriotism. It is merely an indication the 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. 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. Sep. 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

Upon consideration of all the facts in evidence, and after application of all appropriate legal precepts, factors, and conditions, I conclude the relevant security concern is under Guideline F (financial considerations).

Financial Considerations

AG ¶ 18 articulates the security concern relating to financial problems: 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. An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds.

AG ¶ 19 provides two disqualifying conditions that could raise a security concern and may be disqualifying in this case: “(a) inability or unwillingness to satisfy debts”; and “(c) a history of not meeting financial obligations.” In ISCR Case No. 08-12184 at 7 (App. Bd. Jan. 7, 2010), the Appeal Board explained:

It is well-settled that adverse information from a credit report can normally meet the substantial evidence standard and the government’s obligations under [Directive] ¶ E3.1.14 for pertinent allegations. At that point, the burden shifts to applicant to establish either that [he or] she is not responsible for the debt or that matters in mitigation apply.

(Internal citation omitted.) Applicant’s history of delinquent debt is documented in his credit reports, SOR response, and his statement at his hearing. Applicant’s SOR lists nine delinquent debts totaling $276,097. His $181,000 federal tax debt has been delinquent for about four years. The Government established the disqualifying conditions in AG ¶¶ 19(a) and 19(c), requiring additional inquiry about the possible applicability of mitigating conditions.

Five mitigating conditions under AG ¶ 20 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, or a death, divorce or separation), and the individual acted responsibly under the circumstances;

(c) the person has received or is receiving counseling for the problem and/or there are clear indications that the problem is being resolved or is under control;

(d) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts; and

(e) the individual has a reasonable basis to dispute the legitimacy of the past-due debt which is the cause of the problem and provides documented proof to substantiate the basis of the dispute or provides evidence of actions to resolve the issue.

None of the mitigating conditions fully apply. Applicant has a good understanding of how to resolve his debts, and he received some financial counseling and advice from his tax attorney. However, he did not establish “there are clear indications that the problem is being resolved or is under control.” He did not establish that he acted in good faith4 in regard to his $181,000 debt owed to the IRS, the debt resulting from his repossessed motor home, and his credit card that had some fraudulent charges on it. His IRS debt was initially caused by a condition largely beyond his control because his investment advisor failed to send 1099 forms to Applicant and to the IRS; however, he did not prove that he acted responsibly under the circumstances. He had the means to pay the IRS for four years (by taking out a mortgage on his house) and did not begin the process of repaying the IRS until February 2011.

Applicant did not make sufficient effort to maintain contact and to resolve the debt owed to the creditor who repossessed his motor home.5 On September 27, 2010, he offered to settle the debt for $10,610. On November 17, 2010, the creditor counter offered to settle the $41,628 debt by proposing that Applicant agree to pay the creditor $29,140 and start $200 monthly payments. There is no correspondence from Applicant to the creditor or from the creditor to Applicant after November 17, 2010. This is not sufficient to establish Applicant is engaged in an ongoing effort to resolve this debt.

Applicant’s establishment of a payment plan for one debt totaling $1,966 is not sufficient to establish that his delinquent debt is unlikely to recur. His track record of financial responsibility shows insufficient effort, good judgment, trustworthiness, and reliability to warrant mitigation of financial considerations concerns. I have credited Applicant with refuting the allegation in SOR ¶¶ 1.cand 1.i. Applicant disputed his responsibility for the two $50 medical debts in SOR ¶¶ 1.cand 1.i. Applicant went to a clinic for medical care. According to his insurance plan, the charge was supposed to be $10; however, the creditor sought $50 contending the treatment was from an emergency room as opposed to a clinic.

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(a):

(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.

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. AG ¶ 2(c). I have incorporated my comments under Guideline F in my whole-person analysis. Some of the factors in AG ¶ 2(a) were addressed under those guidelines, but some warrant additional comment.

Although the rationale for reinstating Applicant’s clearance is insufficient to support a security clearance at this time, there are several factors tending to support approval of his access to classified information. Applicant is a 64-year-old senior safety and health specialist, who has been employed by a Government contractor since 1985. He is sufficiently mature to understand and comply with his security responsibilities. He deserves substantial credit for volunteering to support the U.S. Government as an employee of a contractor and during his years of active duty Navy service, especially his service in the Republic of Vietnam. He graduated from high school in 1965. In 1983, he earned a bachelor’s degree in healthcare administration. He married his spouse in 1968. His children were born in 1969, 1973, and 1977. He did not report any adverse information concerning involvement with law enforcement or judicial authorities. He has held a secret security clearance since 1976. There is every indication that he is loyal to the United States and his employer. There is no evidence that he abuses alcohol or uses illegal drugs. His spouse’s investment advisor’s failure to provide 1099sto Applicant and the IRS contributed to his financial woes. Four character witnesses laud his diligence, professionalism, integrity, trustworthiness, and responsibility. I give Applicant substantial credit for credibly explaining his financial circumstances. These factors show some responsibility, rehabilitation, and mitigation. The whole-person factors against reinstatement of Applicant’s clearance are more substantial. Applicant’s SOR listed nine debts totaling $276,097. He has mitigated six of the nine SOR debts. He has not mitigated his federal tax lien entered by the IRS ($181,000); his credit card debt ($2,377); and his repossessed motor home debt ($89,858) as described in SOR ¶¶ 1.b, 1.d, and 1.e, respectively. Although he will likely be able to settle the three debts for substantially less than the amounts listed in the SOR, especially the credit card debt which is not legally collectable because the statute of limitations has expired, he has not made sufficient effort and progress resolving these three debts. There is also the possibility that he has additional state tax debt because he and his spouse may not have declared the income from the profits on her settlement over the years on their state tax returns. I decline to consider this possible new debt as adverse financial information.6 Financial considerations security concerns are not fully mitigated at this time.

I have carefully applied the law, as set forth in Department of Navy v. Egan, 484 U.S. 518 (1988), Exec. Or. 10865, the Directive, and the AGs, to the facts and circumstances in the context of the whole person. I conclude financial considerations concerns are not mitigated. Eligibility for access to classified information is denied.

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 Subparagraph 1.c: For Applicant Subparagraphs 1.dand 1.e: Against Applicant Subparagraphs 1.fto 1.h: For Applicant (Withdrawn) Subparagraph 1.i: For Applicant

CONCLUSION

In light of all the circumstances presented by the record in this case, it is not clearly consistent with the national interest to continue Applicant’s eligibility for a security clearance. Eligibility for a security clearance is denied.

____________________________ MARK HARVEY Administrative Judge

FOOTNOTES

1 Some details have been excluded in order to protect Applicant’s right to privacy. Specific information is available in the cited exhibits.

2 Unless stated otherwise, the source for the information in this paragraph and the next paragraph is Applicant’s May 18, 2010 SF 86. (GE 1) 3The sources for the information in this paragraph are three letters from the character witnesses dated March 17 and 18, 2011. (AE A to C) 4The Appeal Board has previously explained what constitutes a “good faith” effort to repay overdue creditors or otherwise resolve debts: In order to qualify for application of [the “good faith” mitigating condition], an applicant must present evidence showing either a good-faith effort to repay overdue creditors or some other good-faith action aimed at resolving the applicant’s debts. The Directive does not define the term ‘good-faith.’ However, the Board has indicated that the concept of good-faith ‘requires a showing that a person acts in a way that shows reasonableness, prudence, honesty, and adherence to duty or obligation.’ Accordingly, an applicant must do more than merely show that he or she relied on a legally available option (such as bankruptcy) in order to claim the benefit of [the “good faith” mitigating condition]. (internal citation and footnote omitted) ISCR Case No. 02-30304 at 3 (App. Bd. Apr. 20, 2004) (quoting ISCR Case No. 99-9020 at 5-6 (App. Bd. June 4, 2001)).

5 “Even if Applicant’s financial difficulties initially arose, in whole or in part, due to circumstances outside his [or her] control, the Judge could still consider whether Applicant has since acted in a reasonable manner when dealing with those financial difficulties.” ISCR Case No. 05-11366 at 4 n.9 (App. Bd. Jan. 12, 2007) (citing ISCR Case No. 99-0462 at 4 (App. Bd. May 25, 2000); ISCR Case No. 99-0012 at 4 (App. Bd. Dec. 1, 1999); ISCR Case No. 03-13096 at 4 (App. Bd. Nov. 29, 2005)). A component is whether he or she maintained contact with creditors and attempted to negotiate partial payments to keep debts current. 6The SOR did not allege that Applicant failed to pay some of his state income taxes arising from the profits received from his spouse’s settlement fund. In ISCR Case No. 03-20327 at 4 (App. Bd. Oct. 26, 2006) the Appeal Board listed five circumstances in which conduct not alleged in an SOR may be considered stating: (a) to assess an applicant’s credibility; (b) to evaluate an applicant’s evidence of extenuation, mitigation, or changed circumstances; (c) to consider whether an applicant has demonstrated successful rehabilitation; (d) to decide whether a particular provision of the Adjudicative Guidelines is applicable; or (e) to provide evidence for whole person analysis under Directive Section 6.3. (citing ISCR Case No. 02-07218 at 3 (App. Bd. Mar. 15, 2004); ISCR Case No. 00-0633 at 3 (App. Bd. Oct. 24, 2003)). I decline to consider the possible non-SOR state tax debt for any purpose because Applicant did not have a full opportunity to address this debt at his hearing.