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ISCR Case 17-03005 — CASE

ISCR Case 17-03005granted

Case Headnote

ISCR Case No. 17-03005

grantedDec 18, 2018· Hon. Richard A. Cefola· hearing

Summary

This case involves a 50-year-old defense contractor employee whose security clearance was reviewed under Guideline F (Financial Considerations). The Statement of Reasons alleged several past-due debts and tax liens. The applicant admitted to owing Creditor A approximately $544, and to three IRS tax liens totaling an original amount of $16,928, and amended amounts of $290 and $364 respectively. He denied debts to Creditors B, C, G, and H, which ranged from about $53 to $270.

Disqualifying conditions under AG ¶ 19(a), AG ¶ 19(c), and AG ¶ 19(f) were raised. However, the administrative judge applied mitigating conditions under AG ¶ 20(c), AG ¶ 20(d), and AG ¶ 20(g). The applicant demonstrated that he had engaged a debt counseling service and was making monthly payments toward his debts. He also contacted the IRS, paid two of the tax delinquencies, and was addressing the third.

The judge determined that the applicant's financial issues were being resolved and did not undermine his current reliability. Consequently, the applicant's security clearance was GRANTED.

Why the Applicant Prevailed

The applicant engaged a debt counseling service and made monthly payments towards his debts.
He has been in contact with the IRS and has paid two of the tax delinquencies, addressing the third.
The applicant's financial issues were being resolved and did not cast doubt on his current reliability.

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(c)appliedThe Individual Has Received or Is Receiving Financial Counseling for the Problem From a Legitimate and Credible Source
AG ¶ 20(d)appliedThe Individual Initiated and Is Adhering to a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts
AG ¶ 20(g)appliedThe Individual Has Made Arrangements with the Appropriate Tax Authority to File or Pay the Amount Owed and Is in Compliance with Those Arrangements

Key Rule Quoted

“The protection of the national security is the paramount consideration.”

Procedural Posture

SOR issuedSep 29, 2017
Answer filedOct 17, 2017
Hearing heldFeb 15, 2018record left open until April 16, 2018
Decision dateDec 18, 2018

Cite For

Mitigation of Financial Concerns Under Guideline F
Importance of Financial Counseling in Security Clearance Cases
Consideration of Whole-person Concept in Adjudication

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 had several financial concerns, primarily related to tax liens owed to the IRS. However, the applicant successfully mitigated these concerns through evidence of payments and communication with the IRS, leading to a decision in favor of the applicant.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant admits that he is indebted to Creditor A for a past-due debt of about $544. $544	For Applicant	Unspecified Financial	Admitted	—	—	—
1.b	Applicant denies that he is indebted to Creditor B for a past-due debt of about $250. $250	For Applicant	Unspecified Financial	Denied	—	—	Claimed Payment Plan with Creditor
1.c	Applicant denies that he is indebted to Creditor C for a past-due debt of about $60. $60	For Applicant	Unspecified Financial	Denied	—	—	Claimed Payment Plan with Creditor
1.d	Applicant admits that he owed the Internal Revenue Service (IRS) a past-due tax lien in the amended amount of $290. $290	For Applicant	Tax Unpaid	Admitted	—	—	Documented Debt Paid in Full
1.e	Applicant admits that he owed the IRS a second past-due tax lien in the original amount of $16,928. $16,928	For Applicant	Tax Unpaid	Admitted	—	—	Documented Debt Paid in Full
1.f	Applicant admits that he owed IRS a third past-due tax lien in the amended amount of $364. $364	For Applicant	Tax Unpaid	Admitted	—	—	Documented Debt Paid in Full
1.g	Applicant denies that he is indebted to Creditor G for a past-due debt of about $53. $53	For Applicant	Unspecified Financial	Denied	—	—	—
1.h	Applicant denies that he is indebted to Creditor H for a past-due debt of about $270. $270	For Applicant	Unspecified Financial	Denied	—	—	—

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. 17-03005

)

) Applicant for Security Clearance )

For Government: Jeff Nagel, Esq., Department Counsel For Applicant: Pro se

December 18, 2018 ______________

STATEMENT OF CASE

______________

CEFOLA, Richard A., Administrative Judge:

Statement of the Case

On September 29, 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 October 17, 2017, and requested a hearing before an administrative judge. (Answer.) The case was assigned to me on January 22, 2018. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on January 24, 2018, scheduling the hearing for February 15, 2018. The hearing was convened as scheduled. The Government offered Exhibits (GXs) 1 through 5, which were admitted into evidence. Applicant testified on his own behalf. Applicant presented three sets of documents; which I marked Applicant’s Exhibits (AppXs) A through C, and admitted into evidence. The record was left open until April 16, 2018, for receipt of

additional documentation. On April 15, 2018, Applicant presented another set of documents; which I marked AppX D, and admitted into evidence. DOHA received the transcript of the hearing (TR) on February 26, 2018.

FINDINGS OF FACT

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

Applicant is a 50-year-old employee of a defense contractor. (GX 1 at pages 5 and 9.) He has been employed with the defense contractor since April of 2016. (GX 1 at page 9.) He is “separated” from his spouse; and has three son’s ages “20, 12 and 10,” The two youngest live with Applicant. (TR at page 18 line 16 to page 24 line 3, and GX 1 at page 14.) Applicant served in the U.S. Navy for “16 or 17 years,” but family concerns and a personnel “draw down” caused Applicant to leave active duty. (TR at page 18 line 16 to page 24 line 3.)

Guideline F – Financial Considerations

1.a. Applicant admits that he is indebted to Creditor A for a past-due debt of about $544. He has engaged the services of a debt counseling service; and through that service, he is making monthly payments of $197 towards this and his other past- due debts. (TR at page 24 line 8 to page 25 line 11, at page 33 line 3 to page 35 line 16, AppX C, and AppX D at page 1.)

1.b. Applicant denies that he is indebted to Creditor B for a past-due debt of about $250. He believes this debt is actually owed by his eldest son; but in an abundance of caution, he is making monthly payments of $197 towards this debt and his other past-due debts. (TR at page 25 line 13 to page 26 line 18, at page 35 line 17 to page 36 line 10, and AppX D at page 1.)

1.c. Applicant denies that he is indebted to Creditor C for a past-due debt of about $60. He has “no idea what this is”; but in an abundance of caution, he is making monthly payments of $197 towards this debt and his other past-due debts. (TR at page 26 line 20 to page 27 line 3, at page 36 lines 11–15, and AppX D at page 1.)

1.d. Applicant admits that he owed the Internal Revenue Service (IRS) a past- due tax lien in the amended amount of $290. (TR at page 27 line 24 to page 32 line 18, at page 36 line 17 to page 37 line 12, and AppX D at pages 2–3.) He has been in contact with the IRS (AppX B); and has “PAID” the amended amount, as evidenced by documentation from the IRS (AppX D at pages 2–3).

1.e. Applicant admits that he owed the IRS a second past-due tax lien in the original amount of $16,928. (TR at page 27 line 24 to page 32 line 18, at page 36 line 17 to page 37 line 12, and AppX D at pages 2–3.) He has been in contact with the IRS

(AppX B); and the amount owed has yet to be determined, as evidenced by documentation from the IRS (AppX D at pages 2–3).

1.f. Applicant admits that he owed IRS a third past-due tax lien in the amended amount of $364. (TR at page 27 line 24 to page 32 line 18, at page 36 line 17 to page 37 line 12, and AppX D at pages 2–3.) He has been in contact with the IRS (AppX B); and has “PAID” the amended amount, as evidenced by documentation from the IRS (AppX D at pages 2–3).

1.g. Applicant denies that he is indebted to Creditor G for a past-due debt of about $53. He does not “recall owing them anything”; but in an abundance of caution, he is making monthly payments of $197 towards this debt and his other past-due debts. (TR at page 27 lines 4–20, at page 37 lines 15–24, and AppX D at page 1.)

1.h. Applicant denies that he is indebted to Creditor H for a past-due debt of about $270. He does not recall owing them anything; but in an abundance of caution, he is making monthly payments of $197 towards this debt and his other past-due debts. (TR at page 27 lines 21–23, at page 37 lines 15–24, and AppX D at page 1.)

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 has significant past-due debt, and owes back Federal taxes. 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:

(a) the behavior happened so long ago, was so infrequent, or occurred under such circumstances that it is unlikely to recur and does not cast doubt on the individual's current reliability, trustworthiness, or good judgment;

(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;

(c) the individual has received or is receiving financial counseling for the problem from a legitimate and credible source, such as a non-profit credit counseling service, and there are clear indications that the problem is being resolved or is under control;

(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.

Through a debt counseling service, Applicant is addressing his past-due debts. He is also in contact with the IRS; has paid two of the tax delinquencies, and is addressing the third. Guideline F 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. 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 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~h:

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