ISCR Case 98-0083.h1

Case Headnote

ISCR Case No. 98-0083.h1

deniedMay 7, 1998· Hon. Elizabeth M. Matchinski· hearing

Summary

A 49-year-old designer employed by a defense contractor was denied a security clearance due to significant financial considerations and criminal conduct. The applicant had a history of delinquent debts totaling approximately $14,617.00, which remained largely unaddressed. These debts included an unsatisfied $910.71 loan judgment from 1993, a $1,132.00 charged-off revolving account, and judgments for delinquent real estate taxes ($605.57) and another creditor ($668.00).

Further financial issues included an unpaid $80.00 credit card debt, a $1,544.00 bank loan judgment, and an automobile loan judgment of $5,402.70, which had grown to approximately $8,356.00 by late 1997. Other outstanding debts included a $96.00 hospital bill, two past-due department store accounts totaling $1,789.00, and a $65.00 cable television bad debt. Additionally, the applicant fell behind on child support payments by $3,000.00, leading to wage garnishment from 1994 to 1997.

Beyond the delinquent debts, the applicant failed to file federal income tax returns for tax years 1993 through 1996, despite having W-2 forms. The judge found that the applicant's financial irresponsibility and lack of effort to resolve his debts, coupled with the failure to file tax returns, raised significant security concerns, leading to the denial of his security clearance.

Why the Applicant Was Denied

The applicant had a history of delinquent debts totaling approximately $14,617.00, which he failed to address responsibly despite being gainfully employed.
The applicant did not file federal income tax returns for tax years 1993 to 1996, raising concerns about his judgment and reliability.

Conditions Referenced

Disqualifying

F1appliedA History of Not Meeting Financial Obligations
F3appliedInability or Unwillingness to Satisfy Debts
J1raisedAny Criminal Conduct, Regardless of Whether the Person Was Formally Charged

Mitigating

F3rejectedThe Conditions That Resulted in the Behavior Were Largely Beyond the Person's Control (e.g., Loss of Employment)While the applicant's debts were incurred during periods of unemployment, he failed to make good-faith efforts to repay them once employed.

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 Navy v. Egan, 484 U.S. 518, 531 (1988)

Procedural Posture

SOR issuedJan 27, 1998
Answer filedFeb 20, 1998
Hearing heldApr 21, 1998
Decision dateMay 7, 1998

Cite For

Denial of Security Clearance Due to Financial Irresponsibility Under Guideline F
Failure to File Tax Returns as a Disqualifying Factor Under Guideline J
The Importance of Addressing Financial Obligations to Maintain Security Clearance Eligibility

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

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	In August 1991 Applicant co-signed on a loan obtained by his girlfriend from a credit union. A judgment was obtained against him in April 1993 in the amount of $910.71. As of his hearing in April 1998, the debt remained unsatisfied. $910	Against Applicant	Judgment Against Applicant	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	In December 1989 Applicant opened a revolving charge account with creditor #2. The account became delinquent and a $1,132.00 outstanding balance was charged off in August 1993. $1,132	Against Applicant	Credit Card Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	In November 1993 a judgment was entered against Applicant in the amount of $605.57 for delinquent real estate taxes owed to the local municipality. A second judgment was filed in favor of creditor #3 in October 1994 in the amount of $668.00. $668	Against Applicant	Judgment Against Applicant	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	Applicant's credit card account with a nationwide department store became delinquent in the amount of $80.00 circa December 1993. The debt remains unpaid. $80	Against Applicant	Credit Card Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	In January 1994 a bank obtained a judgment against Applicant in the amount of $1,544.00 to recover the balance of an outstanding personal loan. Reported due balance as of February 1997 was $1,571.00. $1,544	Against Applicant	Personal Loan Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	In late March 1994, the creditor was awarded a judgment in the amount of $5,402.70 to recover monies owed on an automobile loan. As of early December 1997, Applicant owed approximately $8,356.00 to the creditor. $5,402	Against Applicant	Auto Loan Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.g	Applicant has been indebted since December 1993 in the amount of $96.00 to a hospital for medical services rendered him for a sprained ankle. $96	Against Applicant	Medical Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.h	Two separate credit accounts with a nationwide department store became past due in the amounts of $1,166.00 and $623.00, respectively, and were referred for collection in the total amount of $1,789.00 in about September 1995. $1,789	For Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.i	Applicant did not remain current on his cable television bill and a bad debt of $65.00 was placed for collection in March 1994. $65	Against Applicant	Utility or Phone Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.j	Applicant got behind some $3,000.00 in his child support payments for his son when he was unemployed during the 1992/93 time frame. His wages were garnished by the state in the amount of $82.80 per week from September 1994 to May 1997 to collect the child support. $3,000	Against Applicant	Child Support Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.k	Applicant has not filed his federal individual income tax returns for tax years 1993 to date.	Against Applicant	Tax Filing Failure	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

In August 1991 Applicant co-signed on a loan obtained by his girlfriend from a credit union. A judgment was obtained against him in April 1993 in the amount of $910.71. As of his hearing in April 1998, the debt remained unsatisfied.

$910

Against Applicant

Judgment Against Applicant

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.b

In December 1989 Applicant opened a revolving charge account with creditor #2. The account became delinquent and a $1,132.00 outstanding balance was charged off in August 1993.

$1,132

Against Applicant

Credit Card Debt

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.c

In November 1993 a judgment was entered against Applicant in the amount of $605.57 for delinquent real estate taxes owed to the local municipality. A second judgment was filed in favor of creditor #3 in October 1994 in the amount of $668.00.

$668

Against Applicant

Judgment Against Applicant

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.d

Applicant's credit card account with a nationwide department store became delinquent in the amount of $80.00 circa December 1993. The debt remains unpaid.

$80

Against Applicant

Credit Card Debt

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.e

In January 1994 a bank obtained a judgment against Applicant in the amount of $1,544.00 to recover the balance of an outstanding personal loan. Reported due balance as of February 1997 was $1,571.00.

$1,544

Against Applicant

Personal Loan Debt

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.f

In late March 1994, the creditor was awarded a judgment in the amount of $5,402.70 to recover monies owed on an automobile loan. As of early December 1997, Applicant owed approximately $8,356.00 to the creditor.

$5,402

Against Applicant

Auto Loan Debt

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.g

Applicant has been indebted since December 1993 in the amount of $96.00 to a hospital for medical services rendered him for a sprained ankle.

$96

Against Applicant

Medical Debt

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.h

Two separate credit accounts with a nationwide department store became past due in the amounts of $1,166.00 and $623.00, respectively, and were referred for collection in the total amount of $1,789.00 in about September 1995.

$1,789

For Applicant

Unspecified Financial

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.i

Applicant did not remain current on his cable television bill and a bad debt of $65.00 was placed for collection in March 1994.

$65

Against Applicant

Utility or Phone Debt

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.j

Applicant got behind some $3,000.00 in his child support payments for his son when he was unemployed during the 1992/93 time frame. His wages were garnished by the state in the amount of $82.80 per week from September 1994 to May 1997 to collect the child support.

$3,000

Against Applicant

Child Support Debt

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.k

Applicant has not filed his federal individual income tax returns for tax years 1993 to date.

Against Applicant

Tax Filing Failure

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

¶	Allegation	Finding	Offense	Criminal disposition	Response	Disqualifying (¶31)	Mitigating applied (¶32)	Mitigation
2.a	The applicant has a history of willfully failing to file federal individual income tax returns for tax years 1993, 1994, 1995, and 1996.	Against Applicant	Unspecified Criminal Conduct	Conduct No Charge	Denied	—	—	—
2.b	The applicant has not filed his federal individual income tax returns for tax years 1993 to date.	Against Applicant	Unspecified Criminal Conduct	Conduct No Charge	Denied	—	—	—
2.c	The applicant did not file a federal individual income tax return for tax years 1994 through 1996 even though he had the W-2 forms from his employer.	Against Applicant	Unspecified Criminal Conduct	Conduct No Charge	Denied	—	—	—
2.d	The applicant has not made an accounting of his taxes for those years, but is of the opinion he is due refunds for the tax years at issue.	Against Applicant	Unspecified Criminal Conduct	Conduct No Charge	Denied	—	—	—

Allegation

Finding

Offense

Criminal disposition

Response

Disqualifying (¶31)

Mitigating applied (¶32)

Mitigation

2.a

The applicant has a history of willfully failing to file federal individual income tax returns for tax years 1993, 1994, 1995, and 1996.

Against Applicant

Unspecified Criminal Conduct

Conduct No Charge

Denied

—

2.b

The applicant has not filed his federal individual income tax returns for tax years 1993 to date.

Against Applicant

Unspecified Criminal Conduct

Conduct No Charge

Denied

—

2.c

The applicant did not file a federal individual income tax return for tax years 1994 through 1996 even though he had the W-2 forms from his employer.

Against Applicant

Unspecified Criminal Conduct

Conduct No Charge

Denied

—

2.d

The applicant has not made an accounting of his taxes for those years, but is of the opinion he is due refunds for the tax years at issue.

Against Applicant

Unspecified Criminal Conduct

Conduct No Charge

Denied

—

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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

CONCLUSION

FORMAL FINDINGS

DECISION

FOOTNOTES