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ISCR Case 17-02387 — CASE

ISCR Case 17-02387granted

Case Headnote

ISCR Case No. 17-02387

grantedJan 17, 2019· Hon. Richard A. Cefola· hearing

Summary

A 65-year-old defense contractor employee was granted a security clearance despite initial concerns under Guideline F, Financial Considerations. The Statement of Reasons alleged that the applicant filed federal and state income tax returns untimely from 2000 to 2015. Additionally, the applicant partially admitted and partially denied owing approximately $10,320 in back federal income taxes for tax years 2012, 2013, 2015, and 2016.

The applicant demonstrated a good faith effort to resolve these financial issues. She made consistent monthly payments of about $160 to the Internal Revenue Service (IRS) under an installment agreement. Furthermore, the applicant provided a monthly budget showing a surplus of approximately $689, including her IRS payments, indicating she lives within her financial means.

The administrative judge found that the applicant successfully mitigated the security concerns. This was supported by her timely IRS payments, demonstrated financial responsibility, and evidence of community respect and support, including letters from professionals. Consequently, eligibility for access to classified information was granted.

Why the Applicant Prevailed

The applicant made timely payments under an Installment Agreement with the IRS.
The applicant demonstrated financial responsibility by living within her means and maintaining a monthly budget surplus.
The applicant provided evidence of community respect and support, including letters from professionals.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(c)raisedA History of Not Meeting Financial Obligations
AG ¶ 19(f)raisedFailure to File or Fraudulently Filing Annual Federal, State, or Local Income Tax Returns or Failure to Pay Annual Federal, State, or Local Income Tax as Required

Mitigating

AG ¶ 20(b)appliedConditions Largely Beyond the Person's Control
AG ¶ 20(d)appliedGood-faith Effort to Repay Overdue Creditors
AG ¶ 20(g)appliedArrangements with Tax Authority and Compliance

Key Rule Quoted

“The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision.”

Procedural Posture

SOR issuedNov 13, 2017
Answer filedDec 26, 2017
Hearing heldFeb 22, 2018
Decision dateJan 17, 2019

Cite For

Mitigation of Financial Issues Under Guideline F
Good Faith Efforts in Resolving Tax Debts
Whole-person Concept in Security Clearance Evaluations

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: HearingDecided: granted

The judge found that the applicant's financial concerns related to untimely tax filings and owed back taxes were mitigated. The applicant demonstrated a commitment to addressing her financial obligations through an installment agreement with the IRS and maintained a monthly budget surplus, leading to a favorable decision for her security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant admits that she filed both her Federal and state income tax returns in an untimely fashion from 2000~2015.	For Applicant	Tax Filing Failure	Admitted	—	—	—
1.b	Applicant admits, in part, and denies, in part, that she owes back federal income taxes for tax years 2012, 2013, 2015 and 2016, totaling about $10,320. $10,320	For Applicant	Tax Unpaid	Admitted	—	—	—
1.c	Applicant denies owing back federal income taxes for tax years 2012, 2013, 2015 and 2016, totaling about $10,320. $10,320	For Applicant	Tax Unpaid	Denied	—	—	—
1.d	Applicant is making monthly payments of about $160 to the Internal Revenue Service (IRS). $160	For Applicant	Tax Unpaid	Admitted	—	—	Documented Payment Plan with IRS
1.e	Applicant lives within her financial means, as evidenced by a monthly budget showing a monthly surplus of about $689, including her IRS payments. $689	For Applicant	Unspecified Financial	Admitted	—	—	Documented Budget Change with Documentation

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

APPEARANCES

DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS

In the matter of: )

)

ISCR Case No. 17-02387

)

) Applicant for Security Clearance )

For Government: Andrew Henderson, Esq., Department Counsel For Applicant: Pro se

January 17, 2019 ______________

STATEMENT OF CASE

______________

CEFOLA, Richard A., Administrative Judge:

Statement of the Case

On November 13, 2017, in accordance with DoD Directive 5220.6, as amended (Directive), the Department of Defense issued Applicant a Statement of Reasons (SOR) alleging facts that raise security concerns under Guideline F. The SOR further informed Applicant that, based on information available to the government, DoD adjudicators could not make the preliminary affirmative finding it is clearly consistent with the national interest to grant or continue Applicant’s security clearance.

Applicant answered the SOR on December 26, 2017, and requested a hearing before an administrative judge. (Answer.) The case was assigned to me on January 29, 2018. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on February 2, 2018, scheduling the hearing for February 22, 2018. The hearing was convened as scheduled. The Government offered Exhibits (GXs) 1 through 5, which were admitted into evidence. Applicant testified on her own behalf and offered ten documents, which I marked Applicant’s Exhibits (AppXs) A through J, and admitted into evidence. The record was left open until April 22, 2018, for receipt of additional

documentation. On April 22, 2018, Applicant offered AppXs K and L, which were also admitted into evidence. DOHA received the transcript of the hearing (TR) on March 1, 2018.

FINDINGS OF FACT

Applicant admitted to the allegations in SOR ¶¶ 1.a., 1.b., 1.d., and 1.e. She denied SOR allegation ¶ 1.c. After a thorough and careful review of the pleadings, exhibits, and testimony, I make the following findings of fact.

Applicant is a 65-year-old employee of a defense contractor. (GX 1 at page 5.) She has been employed with the defense contractor since August of 2015, and she has held a security clearance, with extended periods of unemployment and under employment, since about October of 1989. (GX 1 at pages 10–17 and 29.) She attributes her admitted financial difficulties to her periods of unemployment, and to her focus on caring for her father and grandmother. (TR at page 22 line 8 to page 26 line 21.) Her father suffered from dementia, and her grandmother “lived to be 106 years old.” (Id.)

Guideline F – Financial Considerations

1.a. and 1.b. Applicant admits that she filed both her Federal and state income tax returns in an untimely fashion from 2000–2015. (TR at page 39 line 5 to page 40 line 20, see also TR at page 26 line 22 to page 32 line 13.) She attributes her late filings to her family pressures. (Id.) Applicant filed her 2016 tax returns in a timely fashion. (TR at page 39 line 5 to page 40 line 20.)

1.c.~1.e. Applicant admits, in part, and denies, in part, that she owes back federal income taxes for tax years 2012, 2013, 2015 and 2016, totaling about $10,320. (TR at page 40 line 21 to page 42 line 5; see also TR at page 32 line 14 to page 37 line 19.) Pursuant to an “Installment Agreement,” she is making monthly payments of about $160 to the Internal Revenue Service (IRS), as evidenced by documentation from the IRS. (AppX J.)

Applicant lives within her financial means, as evidenced by a monthly budget showing a monthly surplus of about $689, including her IRS payments. (AppX L.) She is also well respected at work and in her community as evidenced by eight letters of support. (AppX K.) These letters include those from a lawyer, from a law enforcement officer, and from a Public Safety Commissioner. (Id.)

POLICIES

When evaluating an applicant’s national security eligibility, the administrative judge must consider the adjudicative guidelines (AG). In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which are to be used in evaluating an applicant’s national security eligibility.

These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, administrative judges apply the guidelines in conjunction with the factors listed in AG ¶ 2 describing the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶ 2(a), the entire process is a conscientious scrutiny of a number of variables known as the whole-person concept. The administrative judge must consider all available, reliable information about the person, past and present, favorable and unfavorable, in making a decision.

The protection of the national security is the paramount consideration. AG ¶ 2(b) requires that “[a]ny doubt concerning personnel being considered for national security eligibility will be resolved in favor of the national security.” In reaching this decision, I have drawn only those conclusions that are reasonable, logical, and based on the evidence contained in the record.

Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Directive ¶ E3.1.15 states the “applicant is responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by the applicant or proven by Department Counsel, and has the ultimate burden of persuasion as to obtaining a favorable clearance decision.”

A person who applies for access to classified information seeks to enter into a fiduciary relationship with the Government predicated upon trust and confidence. This relationship transcends normal duty hours and endures throughout off-duty hours. The Government reposes a high degree of trust and confidence in individuals to whom it grants access to classified information. Decisions include, by necessity, consideration of the possible risk the applicant may deliberately or inadvertently fail to protect or safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation as to potential, rather than actual, risk of compromise of classified information.

Section 7 of Executive Order (EO) 10865 provides that adverse decisions shall be “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information).

ANALYSIS

Guideline F - Financial Considerations

The security concern relating to the guideline for Financial Considerations is set out in AG ¶ 18:

Failure to live within one's means, satisfy debts, and meet financial obligations may indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which can raise

questions about an individual's reliability, trustworthiness, and ability to protect classified or sensitive information. Financial distress can also be caused or exacerbated by, and thus can be a possible indicator of, other issues of personnel security concern such as excessive gambling, mental health conditions, substance misuse, or alcohol abuse or dependence. An individual who is financially overextended is at greater risk of having to engage in illegal or otherwise questionable acts to generate funds. Affluence that cannot be explained by known sources of income is also a security concern insofar as it may result from criminal activity, including espionage.

The guideline notes several conditions that could raise security concerns under AG ¶ 19. Three are potentially applicable in this case:

(a) inability to satisfy debts;

(f) failure to file or fraudulently filing annual Federal, state, or local income tax returns or failure to pay annual Federal, state, or local income tax as required.

Applicant failed to file both Federal and state income tax returns in a timely fashion. As a result, she owes the IRS about $10,000. The evidence is sufficient to raise these disqualifying conditions.

AG ¶ 20 provides conditions that could mitigate security concerns. I considered all of the mitigating conditions under AG ¶ 20 including:

(b) the conditions that resulted in the financial problem were largely beyond the person's control (e.g., loss of employment, a business downturn, unexpected medical emergency, a death, divorce or separation, clear victimization by predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances;

(d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts; and

(g) the individual has made arrangements with the appropriate tax authority to file or pay the amount owed and is in compliance with those arrangements.

Applicant’s financial problems have been addressed through payments to the IRS. She lives within her means, and has demonstrated that future financial problems are unlikely to occur in the future. Financial Considerations is found for Applicant.

WHOLE PERSON CONCEPT

Under the whole-person concept, the administrative judge must evaluate an applicant’s eligibility for a security clearance by considering the totality of the applicant’s conduct and all relevant circumstances. The administrative judge should consider the nine adjudicative process factors listed at AG ¶ 2(d):

(1) the nature, extent, and seriousness of the conduct; (2) the circumstances surrounding the conduct, to include knowledgeable participation; (3) the frequency and recency of the conduct; (4) the individual’s age and maturity at the time of the conduct; (5) the extent to which participation is voluntary; (6) the presence or absence of rehabilitation and other permanent behavioral changes; (7) the motivation for the conduct; (8) the potential for pressure, coercion, exploitation, or duress; and (9) the likelihood of continuation or recurrence.

Under AG ¶ 2(c), the ultimate determination of whether to grant eligibility for a security clearance must be an overall commonsense judgment based upon careful consideration of the guidelines and the whole-person concept.

I considered the potentially disqualifying and mitigating conditions in light of all facts and circumstances surrounding this case. I have incorporated my comments under Guideline F in my whole-person analysis. As noted above, Applicant is well respected both at work and in her community.

Overall, the record evidence leaves me without questions or doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant mitigated to mitigate the Financial Considerations security concerns.

FORMAL FINDINGS

Formal findings for or against Applicant on the allegations set forth in the SOR, as required by ¶ E3.1.25 of the Directive, are:

Paragraph 1, Guideline F:

FOR APPLICANT

Subparagraph 1.a:

For Applicant Subparagraph 1.b:

For Applicant Subparagraph 1.c:

For Applicant Subparagraph 1.d:

For Applicant Subparagraph 1.e:

For Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is clearly consistent with the national interest to grant Applicant national security eligibility for a security clearance. Eligibility for access to classified information is granted.

________________________ Richard A. Cefola Administrative Judge