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ISCR Case 03-25086.h1 — CASE

ISCR Case 03-25086.h1denied

Case Headnote

ISCR Case No. 03-25086.h1

deniedJan 25, 2005· Hon. Joseph Testan· hearing

Summary

A 56-year-old defense contractor employee was denied a security clearance under Guideline F (Financial Considerations) due to significant and ongoing financial difficulties. The applicant was indebted to at least five creditors for a past-due amount of at least $17,000, with little prospect of satisfying these debts soon. Specific allegations included an approximate $13,000 debt to the IRS for back taxes from 2000-2002, about $4,000 in past-due rent, and outstanding debts to two food stores for bounced checks.

The applicant's financial issues were attributed in part to his wife's insufficient income tax withholding and a job layoff. Despite filing for Chapter 7 Bankruptcy, the applicant continued to experience severe financial difficulties. Although an agreement with the IRS for monthly payments existed, the applicant's overall inability to meet financial obligations persisted.

The denial was based on the applicant's substantial indebtedness, the unlikelihood of resolving these debts in the near future, and the determination that his failure to honor financial obligations adversely reflected on his judgment and reliability. Disqualifying conditions related to financial irresponsibility were raised, while mitigating conditions concerning the circumstances of the debt and efforts to resolve it were considered but ultimately did not overcome the security concerns.

Why the Applicant Was Denied

Applicant is indebted to at least five creditors in the past-due amount of at least $17,000.00.
Applicant has little or no chance of satisfying these debts anytime soon.
Applicant's failure to honor financial obligations reflects adversely on his judgment and reliability.

Conditions Referenced

Disqualifying

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

Mitigating

E2.A6.1.3.6appliedThe Individual Has Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts
E2.A6.1.3.3rejectedThe Conditions That Resulted in the Behavior Were Largely Beyond the Person's ControlApplicant's IRS debt arose in part because he didn't file his income tax returns on time.

Key Rule Quoted

“It is not now clearly consistent with the national interest for applicant to have access to classified information.”

Procedural Posture

SOR issuedJun 8, 2004
Answer filedJul 2, 2004
Hearing heldNov 10, 2004
Decision dateJan 25, 2005

Cite For

Financial Obligations Under Guideline F
Impact of Bankruptcy on Security Clearance
Good-faith Efforts to Resolve Debts

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 applicant has significant financial issues, including debts totaling at least $17,000, which he has little chance of repaying. Despite a Chapter 7 bankruptcy discharge, he remains indebted to the IRS and is behind on rent payments, leading to a denial of his security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant is indebted to at least five creditors in the past-due amount of at least $17,000.00, and there is little or no chance he will be able to satisfy these debts anytime soon. $17,000	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(f) the affluence resulted from a legal source	Claimed Other
1.b	Applicant is still indebted to the IRS in the approximate amount of $13,000.00 for back taxes, penalties, and/or interest for tax years 2000, 2001 and 2002. $13,000	Against Applicant	Tax Unpaid	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(f) the affluence resulted from a legal source	Claimed Other
1.c	Applicant is behind about $4,000.00 in his rent payments. $4,000	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(f) the affluence resulted from a legal source	Claimed Other
1.d	Applicant currently owes two food stores for checks he wrote that bounced.	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(f) the affluence resulted from a legal source	Claimed Other
1.e	Applicant had an agreement with the IRS to pay this past-due tax debt by making monthly payments.	Against Applicant	Unspecified Financial	Unknown	—	(f) the affluence resulted from a legal source	Claimed Other
1.f	Applicant's financial difficulties arose in part because his wife refused to have enough income tax withheld from her paycheck.	Against Applicant	Unspecified Financial	Unknown	—	(f) the affluence resulted from a legal source	Claimed Other
1.g	Applicant was laid off from his job.	Against Applicant	Unspecified Financial	Unknown	—	(f) the affluence resulted from a legal source	Claimed Other
1.h	Despite his bankruptcy discharge, applicant is still experiencing severe financial difficulties.	Against Applicant	Unspecified Financial	Unknown	—	(f) the affluence resulted from a legal source	Claimed Other

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

SYNOPSIS

KEYWORD: Financial DIGEST: Applicant is indebted to at least five creditors in the past-due amount of at least $17,000.00, and there is little or no chance he will be able to satisfy these debts anytime soon. Clearance is denied.CASENO: 03-25086.h1 DATE: 01/25/2005 DATE: January 25, 2005

In Re:

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

Applicant for Security Clearance

ISCR Case No. 03-25086

DECISION OF ADMINISTRATIVE JUDGE JOSEPH TESTAN

APPEARANCES

SYNOPSIS

Applicant is indebted to at least five creditors in the past-due amount of at least $17,000.00, and there is little or no chance he will be able to satisfy these debts anytime soon. Clearance is denied.

STATEMENT OF CASE

On June 8, 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 July 2, 2004. The case was assigned to the undersigned on August 9, 2004. A Notice of Hearing was issued on October 6, 2004, and the hearing was held on November 10, 2004. The transcript was received on November 30, 2004.

FINDINGS OF FACT

Applicant is a 56 year old employee of a defense contractor.

Applicant was indebted to all of the creditors as alleged in SOR Allegations 1a, 1b, 1c, 1d, 1e, 1f, 1g, and 1h. Theses allegations are therefore incorporated by reference as Findings of Fact. In April 2004, applicant filed a Chapter 7 Bankruptcy petition. In August 2004, all of the debts alleged in the SOR, except his debts to the IRS and California Franchise Tax Board (CFTB), were discharged.

At the present time, applicant is still indebted to the IRS in the approximate amount of $13,000.00 for back taxes, penalties, and/or interest for tax years 2000, 2001 and 2002 (TR at 18). This debt arose in part because applicant did not file his income tax returns on time. Applicant had an agreement with the IRS to pay this past-due tax debt by making monthly payments. Although the IRS suspended the agreement after applicant filed his bankruptcy petition, applicant has continued to make the monthly payments.

As of May 2004, applicant had reduced his CFTB debt to $38.00.

Despite his bankruptcy discharge, applicant is still experiencing severe financial difficulties. He is behind about $4,000.00 in his rent payments, and if he doesn't pay his landlord $500.00 per month toward this past-due rent, he is subject to being locked out of his house, which would leave not only applicant, but his children and grandchildren on the street. In addition, he currently owes two food stores for checks he wrote that bounced. Applicant summed up his current financial status by stating, "Yes, I am still robbing Peter to pay Paul" (TR at 23).

Applicant testified credibly that his financial difficulties arose in part because (1) his wife refused to have enough income tax withheld from her paycheck and (2) he had been laid off from his job.

CONCLUSION

The evidence establishes that despite receiving a Bankruptcy Discharge in August 2004, applicant is indebted to at least five different creditors for past-due debts in the total amount of at least $17,000.00. Applicant's failure to honor his financial obligations reflects adversely on his judgment and reliability, 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 is a decent man who is trying his best to take care of his family. For this, he deserves credit. However, the fact remains that at the present time, he owes at least $17,000.00 in past-due debts, debts he has little or no chance of satisfying anytime soon. In addition, his current expenses exceed his current income, or as he put it, he is currently "robbing Peter to pay Paul." This unfortunate situation, which stands little chance of being reversed anytime soon, means applicant will likely be behind on other debt payments in the near future.

In view of applicant's attempts to satisfy his IRS debt and his debt to his landlord, he qualifies for Mitigating Condition E2.A6.1.3.6 (the individual has initiated a good-faith effort to repay overdue creditors or otherwise resolve debts). He does not qualify for Mitigating Condition E2.A6.1.3.3 (the conditions that resulted in the behavior were largely beyond the person's control) because, by his own admission, his IRS debt, by far his largest past-due debt, arose in part because he didn't file his income tax returns on time.

Based on the foregoing, it is not now clearly consistent with the national interest for applicant to have access to classified information.

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

FOOTNOTES

FOR GOVERNMENT Edward W. Loughran, Department Counsel file:///usr.osd.mil/...yComputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/03-25086.h1.htm[7/2/2021 3:19:03 PM] FOR APPLICANT Pro Se