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ISCR Case 02-30783.h1 — CASE

ISCR Case 02-30783.h1denied

Case Headnote

ISCR Case No. 02-30783.h1

deniedOct 6, 2004· Hon. Joseph Testan· hearing

Summary

A 50-year-old defense contractor employee was denied a security clearance under Guideline E (Personal Conduct) due to significant financial indebtedness. The Statement of Reasons cited an outstanding debt of approximately $4,000 to the IRS for taxes, penalties, and interest, which remained unsatisfied as of August 17, 2004. Additionally, the applicant was paying $1,000 monthly in child support, with $950 allocated to current obligations and $50 to a past-due amount of approximately $100,000.

The denial was based on several factors. The judge found that the applicant's total indebtedness, exceeding $100,000, reflected adversely on his judgment and reliability. A key concern was the approximately $100,000 in past-due child support, which is not dischargeable in bankruptcy, indicating a severe and persistent financial burden.

Despite the applicant's plans to file for bankruptcy, the judge concluded that his financial situation was unlikely to improve. Furthermore, the applicant's financial difficulties were determined to have begun before he started caring for a relative, which undermined his claim that the situation was largely beyond his control.

Why the Applicant Was Denied

The applicant is indebted to numerous creditors totaling over $100,000, which reflects adversely on his judgment and reliability.
The applicant's past-due child support debt of approximately $100,000 is not dischargeable in bankruptcy, indicating a severe financial burden.
The applicant's financial difficulties began prior to caring for a relative, undermining claims that his situation was largely beyond his control.

Conditions Referenced

Disqualifying

E2.A6.1.2.1raisedA History of Not Meeting Financial Obligations
E2.A6.1.2.3raisedInability or Unwillingness to Satisfy Debts

Key Rule Quoted

“It is not clearly consistent with the national interest to grant or continue a security clearance for applicant.”

Procedural Posture

SOR issuedMar 26, 2004
Answer filedApr 28, 2004
Hearing heldAug 17, 2004
Decision dateOct 6, 2004

Cite For

Financial Obligations Impacting Security Clearance Under Guideline E
Dischargeability of Child Support Debt in Security Clearance Cases
Consideration of Personal Circumstances in Financial Management Assessments

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 E (Personal Conduct) · descriptive summary of a decided case

Posture: Decision on RecordDecided: denied

The judge found against the applicant on personal conduct concerns related to financial obligations. The applicant's significant debt and failure to meet financial obligations were deemed inconsistent with national interest, leading to the denial of his security clearance.

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
1.a–1.b	2 sub-charges — specific text not stated in this decision (against the applicant).	Against Applicant		—		—	—	—
1.c	You are indebted to the Internal Revenue Service, Los Angeles, California in the amount of about $4,000.00 in taxes, penalties, and interest. As of August 17, 2004, this debt has not been satisfied.	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	—	—
1.d	specific text not stated in this decision	Against Applicant	Unspecified Personal Conduct	—	Admitted	(a) deliberate omission, concealment, or falsification on a security form (c) credible adverse information across areas supporting a whole-person concern	—	—
1.e	You are currently paying $1,000.00 per month in child support. Of the $1,000.00, $950.00 goes toward your current support obligation and $50.00 is applied to your past-due support obligation, which currently stands at approximately $100,000.00.	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	—	—
1.f–1.r	13 sub-charges — specific text not stated in this decision (against the applicant).	Against Applicant		—		—	—	—

Descriptive standardized rendering of a decided public case (Guideline E). 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

DATE: October 6, 2004

In Re:

-------------------

SSN: -----------

Applicant for Security Clearance

ISCR Case No. 02-30783

DECISION OF ADMINISTRATIVE JUDGE

JOSEPH TESTAN

SYNOPSIS

Applicant is indebted to numerous creditors in an amount in excess of $100,000.00. He intends to file for bankruptcy, but even if he does so, at least $100,000.00 of his debt, which is for past-due child support, is not dischargeable. Based on the evidence presented, there is little or no chance applicant will ever be able to satisfy this debt. He is, and will most likely remain, under severe financial duress. This fact precludes a finding that it is now clearly consistent with the national interest to grant him access to classified information. Clearance is denied.

STATEMENT OF CASE

On March 26, 2004, the Defense Office of Hearings and Appeals (DOHA), pursuant to Executive Order 10865 and Department of Defense Directive 5220.6 (Directive), dated January 2, 1992, issued a Statement of Reasons (SOR) to applicant which 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 and recommended referral to an Administrative Judge to determine whether clearance should be denied or revoked.

Applicant responded to the SOR in writing on April 28, 2004. The case was assigned to the undersigned on June 22, 2004. A Notice of Hearing was issued on July 8, 2004, and the hearing was held on August 17, 2004. The transcript was received on August 31, 2004.

RULING ON PROCEDURE

At the hearing, SOR Allegation 1cwas amended. As amended, SOR Allegation 1cis as follows:

You are indebted to the Internal Revenue Service, Los Angeles, California in the amount of about $4,000.00 in taxes, penalties, and interest. As of August 17, 2004, this debt has not been satisfied.

FINDINGS OF FACT

Applicant is a 50 year old employee of a defense contractor.

Applicant admits SOR Allegations 1b, 1d, 1g, 1i, 1j, 1k, 1m, 1n, and 1pwithout qualification. Theses allegations are therefore incorporated by reference as Findings of Fact. Applicant has not paid these debts because he intends to include them in the bankruptcy petition he is in the process of filing. He is planning to file bankruptcy because he realizes he is not in a position to "pay off all [his] debts with everything that [he has] run up" (TR at 20, 25).

SOR Allegation 1a: Applicant denies this allegation. He testified that he has "no idea what [this debt] is." He further testified, in essence, that he has not disputed it with the credit reporting agencies because he intends to include it in his bankruptcy filing (TR at 27). I find that the Government's evidence is insufficient to support this allegation.

SOR Allegation 1c: Applicant is currently indebted to the IRS in the approximate amount of $4,000.00. The IRS has been garnishing his wages in the amount of $250.00 per month to satisfy this tax debt (TR at 31-34; Exhibit D). Applicant's tax debt is due, in part, to his failure to file his tax returns on a timely basis (TR at 21).

SOR Allegation 1e: Applicant is currently paying $1,000.00 per month in child support. Of the $1,000.00, $950.00 goes toward his current support obligation and $50.00 is applied to his past-due support obligation, which currently stands at approximately $100,000.00 (TR at 34-35). With interest and/or penalties being applied to the past-due balance, the debt continues to grow, notwithstanding the $50.00 payments. This debt will not be discharged in bankruptcy. Applicant began accruing this child support debt in 1997 or 1998 (TR at 56).

SOR Allegation 1f: Applicant testified that this debt was a corporate credit card debt that was paid by having the amount of the debt taken out of his severance pay which he received in 1999 after his employer was bought out by another company. Since his employer is no longer in existence, he cannot get any documentation to support his testimony (TR at 38-42). Based on applicant's credible testimony, I find that he is not indebted as alleged.

SOR Allegation 1h: The evidence presented does not support this allegation.

SOR Allegation 1l: Applicant is indebted to this creditor in the approximate amount of $2,922.00.

SOR Allegation 1o: This debt was for a towing and/or storage charge on a car that applicant had sold prior to the towing (TR at 47; Exhibit 3). Based on this fact, I find that applicant is not indebted to this creditor.

SOR Allegation 1q: The evidence is insufficient to establish that applicant is indebted as alleged.

SOR Allegation1r: Applicant claims that his current financial condition is much better than what was portrayed in his July 18, 2002 financial statement. (1) In his April 28, 2004 response to the SOR, he made the following statement:

Yes, I admit, I have a history of financial difficulties, some due to issues beyond my control and some due to personal mismanagement, bad judgment and ignorance. I also had a period of a year (2) where I cared for an uncle I thought was going to die, he is alive. I believe in no small part to my sacrifices.

Currently, I am moving into a house, renting 2 rooms; this will put me in a situation where I am living well within my means and able to pay my bills. At the end of May I will be filing for bankruptcy, while I know this is a red flag, it will enable me to start clean, and build a reputation of financial responsibility. My work ethic and dedication to my job is above reproach, my major character flaw has been my financial management.

Applicant testified that he feels he has financially "turned the corner." He has made a commitment to himself to change his lifestyle and has taken positive steps, such as moving to a cheaper residence in April 2004, to help him better manage his finances. Although he has thought about filing for bankruptcy since at least 2002, he has been reluctant to take that step until he feels confident he can properly manage his financial affairs after he files. He believes that he has now capable of doing so, and intends to file for bankruptcy in September 2004 (TR at 49-50, 53-54, 58).

CONCLUSION

The evidence establishes that applicant is indebted to more than ten different creditors in the total amount of approximately $109,000.00. All of these debts are past-due. Applicant's failure to honor his financial obligations reflects adversely on his judgment, reliability and trustworthiness, and suggests he cannot be relied upon to safeguard classified information. With respect to the Financial Considerations guideline, Disqualifying Conditions E2.A6.1.2.1 (a history of not meeting financial obligations) and E2.A6.1.2.3 (inability or unwillingness to satisfy debts) are applicable.

The evidence establishes that applicant has apparently tired of walking a financial tightrope and has taken concrete steps to begin to live within his means. For this, he deserves credit. However, the fact remains that even if he follows through with his plan to file bankruptcy, he will still be liable for a past-due child support debt in the approximate amount of $100,000.00, a debt he has little or no chance of satisfying. As applicant testified, "unless I win the lotto or something, that won't be taken care of" (TR at 20). This overwhelming financial obligation precludes a finding that it is now clearly consistent with the national interest for applicant to have access to classified information.

Applicant does not qualify for any of the formal mitigating factors under Guideline F. I have considered applicant's testimony that he spent "almost eight, nine months"caring for an uncle instead of working. However, viewing the evidence as a whole, I cannot conclude that his failure to honor his financial obligations to so many creditors over such a long period of time is largely the result of this fact. Significantly, by his own admission, his financial difficulties began before he started caring for his uncle. Accordingly, Mitigating Condition E2.A6.1.3.3 (the conditions that resulted in the behavior were largely beyond the person's control) is not applicable.

Nor does applicant qualify for Mitigating Condition E2.A6.1.3.6 (the individual has initiated a good-faith effort to repay overdue creditors or otherwise resolve debts). Applicant's plan to rid himself of most of his past-due debts by filing bankruptcy is certainly legal. However, under the facts of this case, it does not constitute a good-faith effort to resolve debts.

FORMAL FINDINGS

PARAGRAPH 1: AGAINST THE APPLICANT

DECISION

In light of all the circumstances presented by the record in this case, it is not clearly consistent with the national interest to grant or continue a security clearance for applicant.

____________________________

Joseph Testan

Administrative Judge

1. Applicant offered into evidence a budget he prepared in August 2004 that shows a monthly surplus of $350.00 (Exhibit B). Even if I accepted this budget as accurate, applicant has not yet proven he has the discipline to live within it.

2. Applicant testified he cared for his uncle "almost eight, nine months" (TR at 46). The care began in 2000 (Exhibit 3).

FOOTNOTES

02-30783.h1 FOR GOVERNMENT Edward W. Loughran, Department Counsel FOR APPLICANT Pro Se file:///usr.osd.mil/...omputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/02-30783.h1.html[6/24/2021 11:16:33 AM] 02-30783.h1