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Summary

The applicant, a 58-year-old information technologist, faced security concerns under Guideline F (Financial Considerations) and Guideline J (Criminal Conduct) due to financial difficulties stemming from a business failure and failure to file federal income tax returns. The judge found that the applicant's financial issues were largely beyond his control and that he had made good-faith efforts to repay debts. Additionally, the failure to file tax returns was not deemed willful, leading to the granting of the security clearance.

Under Guideline F (Financial Considerations) and Guideline J (Criminal Conduct), the Statement of Reasons alleged the following: In April 2001, a $361.00 debt for cellular service that Applicant had incurred but had not paid was written off by the creditor as a bad debt and transferred to a debt collector. Applicant has not paid the account. He testified he should not be obligated to pay it. According to his testimony, he cancelled the service but the creditor did not post his cancellation until after an automatic renewal of his service for another year. The cancellation then resulted in the debt as an early termination charge for the renewal year (1.a). In December 1996, Applicant opened a credit card account with a bank. By May 31, 2001, Applicant had not paid a $12,626.00 balance on the account. The bank charged off the balance as a bad debt and transferred the account to a debt collector. Applicant began repaying the account with a payment of $100.00 on June 10, 2002. By the date of the hearing, Applicant had paid a total of $2,300.00 on the account, reducing the balance to $10, 326.00 (1.b). In January 1998, Applicant opened a credit card with a bank. By May 31, 2001, Applicant had not paid a $8,248.00 balance on the account. The bank charged off the balance as a bad debt and transferred the account to a debt collector. Applicant began repaying the account with a payment of $100.00 on June 10, 2002. By the date of the hearing, Applicant had paid a total of $2,300.00 on the account, reducing the balance to $5,948.00 (1.c). Applicant's failure to file federal income tax returns for a five year period raises Disqualifying Condition 1 (2.a).

The judge granted the clearance. The government raised disqualifying conditions E2.A6.1.2.1, E2.A6.1.2.3, E2.A10.1.2.1. The judge applied mitigating conditions E2.A6.1.3.3, E2.A6.1.3.6. The decision turned on the following: The applicant's financial problems were largely due to events beyond his control, including a burglary and market downturn; The applicant initiated a good-faith effort to repay overdue creditors, repaying $4,600.00 of $21,235.00 in delinquent debts; The failure to file federal income tax returns was not willful, as the applicant filed for extensions and made estimated payments.

Why the Applicant Prevailed

• The applicant's financial problems were largely due to events beyond his control, including a burglary and market downturn.
• The applicant initiated a good-faith effort to repay overdue creditors, repaying $4,600.00 of $21,235.00 in delinquent debts.
• The failure to file federal income tax returns was not willful, as the applicant filed for extensions and made estimated payments.

Conditions Referenced

Key Rule Quoted

“"[N]o one has a 'right' to a security clearance."”

Procedural Posture

• SOR issuedAug 14, 2003
• Answer filedSep 6, 2003
• Hearing heldApr 28, 2004
• Decision dateFeb 25, 2005

Cite For

• Mitigating Conditions for Financial Difficulties Under Guideline F
• Non-willful Failure to File Tax Returns Under Guideline J
• Good-faith Efforts to Repay Debts as a Mitigating Factor