ISCR Case 14-04839.h1

Case Headnote

ISCR Case No. 14-04839.h1

deniedJan 8, 2016· Hon. Francisco Mendez· hearing

Summary

A security clearance was denied for a CEO in his early thirties, holding a bachelor's degree and an MBA, due to concerns under Guideline E (Personal Conduct) and Guideline F (Financial Considerations). The denial stemmed from significant past-due debts and deliberate dishonesty during the clearance process, which raised serious questions about his reliability and trustworthiness.

Specifically, the applicant failed to disclose a substantial past-due federal tax debt exceeding $106,000 for the years 2008-2010, despite receiving an IRS notice in February 2013. While he claimed to be paying the debt and provided an unsigned installment agreement and proof of one payment, a 2014 tax lien for over $34,600 remained unresolved, with a submitted release pertaining to an earlier lien. Additionally, his 2013 credit report showed eight collection accounts totaling approximately $2,500 for various services, and a $1,500 utility collection account remained unaddressed, with insufficient evidence to support his claim that a former tenant was responsible.

The denial was ultimately based on the applicant's deliberate disregard for financial obligations to maintain an unaffordable lifestyle and his attempts to mislead the government about his financial status during the investigation. These actions led to significant concerns regarding his eligibility for access to classified information.

Why the Applicant Was Denied

The applicant deliberately ignored financial obligations to finance an unaffordable lifestyle.
He attempted to mislead the government about his financial status during the background investigation.
The applicant's past-due debts and dishonesty raised significant concerns about his eligibility for access to classified information.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability or Unwillingness to Satisfy Debts
AG ¶ 19(c)raisedA History of Not Meeting Financial Obligations
AG ¶ 19(e)raisedConsistent Spending Beyond One’s Means
AG ¶ 16(a)raisedDeliberate Omission of Material Information

Mitigating

AG ¶ 20(d)appliedGood-faith Effort to Repay Overdue Creditors
AG ¶ 20(e)appliedReasonable Basis to Dispute the Legitimacy of the Past-due Debt

Key Rule Quoted

“"[N]o one has a ‘right’ to a security clearance."”
— Department of the Navy v. Egan, 484 U.S. 518, 528 (1988)

Procedural Posture

SOR issuedMar 4, 2015
Answer filedMay 11, 2015
Hearing heldDec 3, 2015rescheduled at applicant's request
Decision dateJan 8, 2016

Cite For

Deliberate Omission of Financial Obligations Under Guideline E
Significant Past-due Debts Indicating Poor Judgment Under Guideline F
Failure to Mitigate Financial Concerns Despite Some Efforts to Address Minor Debts

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	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 security clearance eligibility or trustworthiness, or award fiduciary responsibilities.	Against Applicant	Falsification Security FormFOUND DELIBERATE	Financial	Denied	(a) deliberate omission, concealment, or falsification on a security form (c) credible adverse information across areas supporting a whole-person concern (e) personal conduct or concealment creating vulnerability to exploitation	—	—

Allegation

Finding

Conduct

Concealed Issue

Response

Disqualifying (¶16)

Mitigating applied (¶17)

Mitigation

2.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 security clearance eligibility or trustworthiness, or award fiduciary responsibilities.

Against Applicant

Falsification Security FormFOUND DELIBERATE

Financial

Denied

(a) deliberate omission, concealment, or falsification on a security form

(c) credible adverse information across areas supporting a whole-person concern

(e) personal conduct or concealment creating vulnerability to exploitation

—

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	In February 2013, or about eight months before the submission of the SCA, Applicant received a written notice from the IRS that he and his company owed a significant amount of past-due taxes. As of February 2014, Applicant and his company owed past-due federal taxes for 2008 – 2010, totaling over $106,000. Applicant claims he is paying the debt. He provided an unsigned installment agreement and proof of one payment. The IRS filed a tax lien for over $34,600 against him in September 2014. Post-hearing, Applicant submitted a release of tax lien as proof he had resolved the tax debt. However, the release is for an earlier federal tax lien. The 2014 federal tax lien remains unresolved. $106,000	Against Applicant	Tax Unpaid	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations (e) consistent spending beyond one’s means / irresponsible spending	—	—
1.i	Applicant’s 2013 credit report reflects eight collection accounts for wireless cellphone service, utilities, insurance, etc. Combined, these eight accounts total approximately $2,500. Applicant claims these debts were either paid, brought current, or the result of fraud. He addressed SOR debts 1.i, and 1.k – 1.p. However, the $1,500 collection account referenced in 1.j remains unresolved. He claims the debt, which originally is for a utility account, was the responsibility of a former tenant. He did not supply sufficient evidence to substantiate his claim, nor that the debt has been addressed. $2,500	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations (e) consistent spending beyond one’s means / irresponsible spending	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

In February 2013, or about eight months before the submission of the SCA, Applicant received a written notice from the IRS that he and his company owed a significant amount of past-due taxes. As of February 2014, Applicant and his company owed past-due federal taxes for 2008 – 2010, totaling over $106,000. Applicant claims he is paying the debt. He provided an unsigned installment agreement and proof of one payment. The IRS filed a tax lien for over $34,600 against him in September 2014. Post-hearing, Applicant submitted a release of tax lien as proof he had resolved the tax debt. However, the release is for an earlier federal tax lien. The 2014 federal tax lien remains unresolved.

$106,000

Against Applicant

Tax Unpaid

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

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

—

1.i

Applicant’s 2013 credit report reflects eight collection accounts for wireless cellphone service, utilities, insurance, etc. Combined, these eight accounts total approximately $2,500. Applicant claims these debts were either paid, brought current, or the result of fraud. He addressed SOR debts 1.i, and 1.k – 1.p. However, the $1,500 collection account referenced in 1.j remains unresolved. He claims the debt, which originally is for a utility account, was the responsibility of a former tenant. He did not supply sufficient evidence to substantiate his claim, nor that the debt has been addressed.

$2,500

Against Applicant

Unspecified Financial

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

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

—

Loading case…

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