ISCR Case 14-01909.h1

Case Headnote

ISCR Case No. 14-01909.h1

grantedMar 20, 2015· Hon. Robert Robinson Gales· hearing

Summary

A 58-year-old defense contractor and U.S. Navy veteran was granted a security clearance despite concerns under Guideline E (Personal Conduct) and Guideline F (Financial Considerations). The Statement of Reasons detailed a history of financial mismanagement, including unpaid federal income taxes totaling $12,600 for tax years 2008-2012, with the 2013 tax liability in resolution. The applicant also faced allegations of irresponsible spending habits, leading to financial overextension and multiple bankruptcies, with one instance attributed to the impact of Hurricane Ivan in 2004.

Further financial issues included purportedly continuing delinquencies totaling approximately $10,766 from January and October 2014 credit reports, and an automobile loan account with a past-due balance of $9,715 that was charged off in December 2013. The applicant attributed his past financial difficulties to a lack of financial education in his younger years, leading to impulsive credit card use without understanding the consequences.

Ultimately, the judge found that the applicant had mitigated these concerns. He demonstrated a commitment to resolving his financial issues by entering into an installment agreement with the IRS and obtaining financial counseling. Additionally, character references supported his trustworthiness and ethical behavior, leading to the granting of his security clearance.

Why the Applicant Prevailed

The applicant demonstrated a commitment to resolving his financial issues through an installment agreement with the IRS.
He obtained financial counseling to improve his financial management skills.
Character references attested to the applicant's trustworthiness and ethical behavior.

Conditions Referenced

Disqualifying

F.3raisedInability to Satisfy Debts
E.2raisedPersonal Conduct That Creates a Risk of Adverse Impact on National Security

Mitigating

F.2appliedThe Conditions That Resulted in the Financial Difficulties Were Largely Beyond the Person's Control
F.3appliedThe Individual Has Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts
E.2appliedThe Individual Has Taken Positive Steps to Reduce or Eliminate the Risk of Future Misconduct

Key Rule Quoted

“A person who seeks access to classified information enters into a fiduciary relationship with the Government predicated upon trust and confidence.”
— Department of the Navy v. Egan, 484 U.S. 518, 528 (1988)

Procedural Posture

SOR issuedJul 17, 2014
Answer filedAug 14, 2014
Hearing heldDec 16, 2014
Decision dateMar 20, 2015

Cite For

Mitigation of Financial Considerations Under Guideline F
Mitigation of Personal Conduct Concerns Under Guideline E
Importance of Character References in Security Clearance Cases

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

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
2.a	specific text not stated in this decision	For Applicant	Unspecified Personal Conduct	—	Admitted	—	—	—

Allegation

Finding

Conduct

Concealed Issue

Response

Disqualifying (¶16)

Mitigating applied (¶17)

Mitigation

2.a

specific text not stated in this decision

For Applicant

Unspecified Personal Conduct

—

Admitted

—

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	At the times Applicant filed his federal income tax returns for the tax years 2008, 2009, 2010, 2011, and 2012, he failed to make any of the tax payments associated with those respective tax returns. He owed the following approximate amounts for the designated years: $2,700 (2008), $2,800 (2009), $2,800 (2010), $1,300 (2011), and $3,000 (2012), totaling $12,600. $12,600	For Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (e) consistent spending beyond one’s means / irresponsible spending (g) unexplained affluence	(b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved	Documented Financial Counseling Documented Payment Plan with IRS
1.b	In addition to the professional services of his attorney representing him with respect to his federal income tax liability for those past tax years, the attorney assisted him in filing his federal income tax return for tax year 2013. That tax return has been filed, and any tax liability for that particular tax year is in the process of being resolved.	For Applicant	Tax Filing Failure	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (e) consistent spending beyond one’s means / irresponsible spending (g) unexplained affluence	(b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved	Documented Financial Counseling Documented Payment Plan with IRS
1.c	Because he was brought up poor, Applicant was very naïve about financial matters, never having had financial counseling or guidance. In his younger years, he never had anything, but later on, if he saw something he wanted, he would use a credit card to purchase it. He never realized the consequences of purchasing something he could not afford. As a result, he became overextended financially and was unable to continue paying his mounting bills.	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (e) consistent spending beyond one’s means / irresponsible spending (g) unexplained affluence	(b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved	Documented Financial Counseling
1.d	Applicant’s financial situation during the early years following the discharge of his debts is unclear. Unfortunately, his irresponsible spending habits eventually returned. As a result, he again became overextended financially and was unable to continue paying his mounting bills.	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (e) consistent spending beyond one’s means / irresponsible spending (g) unexplained affluence	(b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved	Documented Financial Counseling
1.e	Applicant contends that for a number of years following his 2001 bankruptcy discharge he was 'doing excellent' financially. In September 2004, things changed dramatically when Hurricane Ivan, a Category 3 hurricane with 120 mph winds made landfall on the U.S. mainland, causing extensive damage to the entire area.	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (e) consistent spending beyond one’s means / irresponsible spending (g) unexplained affluence	(b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved	Documented Financial Event Outside Control
1.f	The SOR also identified two purportedly continuing delinquencies as reflected by credit reports from January 2014 and October 2014, totaling approximately $10,766. Those debts listed in the SOR and their respective current status, according to the credit reports, other evidence in the case file, and Applicant’s admissions regarding the same, are described below. $10,766	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (e) consistent spending beyond one’s means / irresponsible spending (g) unexplained affluence	(b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved	Documented Financial Counseling
1.g	There is another automobile loan account with a high credit of $10,266 and a past-due balance of $9,715 that was placed for collection and charged off in December 2013. $9,715	For Applicant	Auto Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (e) consistent spending beyond one’s means / irresponsible spending (g) unexplained affluence	(b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved	Documented Financial Counseling

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

At the times Applicant filed his federal income tax returns for the tax years 2008, 2009, 2010, 2011, and 2012, he failed to make any of the tax payments associated with those respective tax returns. He owed the following approximate amounts for the designated years: $2,700 (2008), $2,800 (2009), $2,800 (2010), $1,300 (2011), and $3,000 (2012), totaling $12,600.

$12,600

For Applicant

Tax Unpaid

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(e) consistent spending beyond one’s means / irresponsible spending

(g) unexplained affluence

(b) conditions largely beyond the person’s control; acted responsibly

(c) received/receiving counseling; problem being resolved

Documented

Financial Counseling

Documented

Payment Plan with IRS

1.b

In addition to the professional services of his attorney representing him with respect to his federal income tax liability for those past tax years, the attorney assisted him in filing his federal income tax return for tax year 2013. That tax return has been filed, and any tax liability for that particular tax year is in the process of being resolved.

For Applicant

Tax Filing Failure

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(e) consistent spending beyond one’s means / irresponsible spending

(g) unexplained affluence

(b) conditions largely beyond the person’s control; acted responsibly

(c) received/receiving counseling; problem being resolved

Documented

Financial Counseling

Documented

Payment Plan with IRS

1.c

Because he was brought up poor, Applicant was very naïve about financial matters, never having had financial counseling or guidance. In his younger years, he never had anything, but later on, if he saw something he wanted, he would use a credit card to purchase it. He never realized the consequences of purchasing something he could not afford. As a result, he became overextended financially and was unable to continue paying his mounting bills.

For Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(e) consistent spending beyond one’s means / irresponsible spending

(g) unexplained affluence

(b) conditions largely beyond the person’s control; acted responsibly

(c) received/receiving counseling; problem being resolved

Documented

Financial Counseling

1.d

Applicant’s financial situation during the early years following the discharge of his debts is unclear. Unfortunately, his irresponsible spending habits eventually returned. As a result, he again became overextended financially and was unable to continue paying his mounting bills.

For Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(e) consistent spending beyond one’s means / irresponsible spending

(g) unexplained affluence

(b) conditions largely beyond the person’s control; acted responsibly

(c) received/receiving counseling; problem being resolved

Documented

Financial Counseling

1.e

Applicant contends that for a number of years following his 2001 bankruptcy discharge he was 'doing excellent' financially. In September 2004, things changed dramatically when Hurricane Ivan, a Category 3 hurricane with 120 mph winds made landfall on the U.S. mainland, causing extensive damage to the entire area.

For Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(e) consistent spending beyond one’s means / irresponsible spending

(g) unexplained affluence

(b) conditions largely beyond the person’s control; acted responsibly

(c) received/receiving counseling; problem being resolved

Documented

Financial Event Outside Control

1.f

The SOR also identified two purportedly continuing delinquencies as reflected by credit reports from January 2014 and October 2014, totaling approximately $10,766. Those debts listed in the SOR and their respective current status, according to the credit reports, other evidence in the case file, and Applicant’s admissions regarding the same, are described below.

$10,766

For Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(e) consistent spending beyond one’s means / irresponsible spending

(g) unexplained affluence

(b) conditions largely beyond the person’s control; acted responsibly

(c) received/receiving counseling; problem being resolved

Documented

Financial Counseling

1.g

There is another automobile loan account with a high credit of $10,266 and a past-due balance of $9,715 that was placed for collection and charged off in December 2013.

$9,715

For Applicant

Auto Loan Debt

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(e) consistent spending beyond one’s means / irresponsible spending

(g) unexplained affluence

(b) conditions largely beyond the person’s control; acted responsibly

(c) received/receiving counseling; problem being resolved

Documented

Financial Counseling

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Case Profile

Summary

Why the Applicant Prevailed

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