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ISCR Case 19-00504 — CASE

ISCR Case 19-00504granted

Case Headnote

ISCR Case No. 19-00504

grantedNov 27, 2019· Hon. Gina L. Marine· hearing

Summary

A 52-year-old aircraft mechanic was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The Statement of Reasons (SOR) alleged that the applicant failed to timely file federal and state income tax returns for tax years 2015 through 2017. This raised a disqualifying condition under Adjudicative Guideline (AG) ¶ 19(f).

However, the applicant acknowledged his erroneous belief regarding tax filing obligations and took proactive steps to rectify the situation. He filed all delinquent returns before the SOR was issued, demonstrating a commitment to compliance. His late filings were attributed to a mistaken belief about his tax obligations, rather than willful violations.

The Administrative Judge applied mitigating conditions under AG ¶ 20(a) and AG ¶ 20(g). The applicant further demonstrated his commitment to compliance by filing his 2018 state return early. Based on these mitigating factors, the Administrative Judge found that the applicant had successfully mitigated the security concerns, and eligibility for access to classified information was granted.

Why the Applicant Prevailed

The applicant filed all delinquent tax returns before the Statement of Reasons was issued.
His late filings were due to a mistaken belief about tax obligations, not willful violations.
The applicant demonstrated a commitment to compliance by filing his 2018 state return early.

Conditions Referenced

Disqualifying

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(a)appliedThe 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
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

“Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the AG.”

Procedural Posture

SOR issuedMar 4, 2019
Answer filedMar 14, 2019
Hearing held—Decision made without a hearing.
Decision dateNov 27, 2019

Cite For

Mitigation of Financial Concerns Under Guideline F Due to Timely Corrective Actions
Impact of Mistaken Beliefs on Tax Obligations
Consideration of Whole-person Factors in Security Clearance Decisions

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: granted

The judge found that the applicant failed to timely file his federal and state income tax returns for tax years 2015 through 2017, which raised security concerns under Guideline F. However, the applicant took corrective action by filing all delinquent returns before the Statement of Reasons was issued, leading to a decision in his favor.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant failed to timely file, as required, his federal and state income tax returns for tax years 2015 through 2017. $20,918	For Applicant	Tax Filing Failure	Admitted	(f) failure to file / fraudulent filing of tax returns or unpaid tax	(a) behavior happened long ago / infrequent / unlikely to recur (g) arrangements made with the tax authority; in compliance	Claimed Acknowledgment and Remorse Documented Debt Paid in Full
1.b	Applicant acknowledged that his belief regarding tax filing was erroneous and took steps to rectify the situation by filing all delinquent returns before the SOR was issued. $2,906	For Applicant	Tax Filing Failure	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur (g) arrangements made with the tax authority; in compliance	Claimed Acknowledgment and Remorse Documented Debt Paid in Full

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: )

)

[REDACTED] )

ISCR Case No. 19-00504

) Applicant for Security Clearance )

For Government: Nicholas T. Temple, Esq., Department Counsel For Applicant: Pro se 11/27/2019 ______________

STATEMENT OF CASE

______________

MARINE, Gina L., Administrative Judge:

This case involves security concerns raised under Guideline F (Financial Considerations). Eligibility for access to classified information is granted.

Statement of the Case

Applicant submitted a security clearance application (SCA) on July 19, 2018. On March 4, 2019, the Department of Defense Consolidated Adjudications Facility (DOD CAF) sent him a Statement of Reasons (SOR) alleging security concerns under Guideline F. The DOD CAF acted under Executive Order (EO) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) implemented by the DOD on June 8, 2017.

Applicant answered the SOR on March 14, 2019, and requested a decision on the written record without a hearing. On August 6, 2019, the Government sent Applicant a complete copy of its written case, a file of relevant material (FORM), including documents identified as Items 1 through 3. He was given an opportunity to submit a documentary response setting forth objections, rebuttal, extenuation, mitigation, or explanation to the Government’s evidence. He received the FORM on August 28, 2019, and did not respond. Items 1 and 2 contain the pleadings in the case. Item 3 is admitted

into evidence. Applicant’s SOR answer included documents that I marked and admitted into evidence as Applicant Exhibits (AE) A and B. The case was assigned to me on November 5, 2019.

FINDINGS OF FACT

Applicant, age 52, is married without children. He earned his high school diploma in 1985. He has been employed by a defense contractor as an aircraft mechanic since 2007. This is his first application for a security clearance. (Item 3)

Applicant failed to timely file, as required, his federal and state income tax returns for tax years 2015 through 2017. He did not timely file them because he did not believe he had any obligation to do so if he was owed refunds, which he expected from the IRS and the state for each of those years. In his SOR answer, he acknowledged that his belief was “erroneous.” (Item 2)

Applicant reported the derogatory information about his tax return filings on his July 2018 SCA and promised to file all of his delinquent returns by the end of August 2018. He filed all three federal returns by certified mail on February 19, 2019. He filed his state returns electronically, on February 12, 2019, for tax years 2015 and 2016, and on February 13, 2019, for tax years 2017 and 2018. The status of his 2018 federal return was not addressed in the record. The expected refunds for tax years 2015 through 2017 totaled $20,918 from the IRS, and $2,906 from the state. (Item 3 at 31-32; AE A, B)

POLICIES

“[N]o one has a ‘right’ to a security clearance.” (Department of the Navy v. Egan, 484 U.S. 518, 528 (1988)). As Commander in Chief, the President has the authority to “control access to information bearing on national security and to determine whether an individual is sufficiently trustworthy to have access to such information.” (Egan at 527). The President has authorized the Secretary of Defense or his designee to grant applicants eligibility for access to classified information “only upon a finding that it is clearly consistent with the national interest to do so.” (EO 10865 § 2)

Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the AG. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, an administrative judge applies these guidelines in conjunction with an evaluation of the whole person. An administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. An administrative judge must consider all available and reliable information about the person, past and present, favorable and unfavorable.

The Government reposes a high degree of trust and confidence in persons with access to classified information. This relationship transcends normal duty hours and endures throughout off-duty hours. Decisions include, by necessity, consideration of the possible risk that the applicant may deliberately or inadvertently fail to safeguard

classified information. Such decisions entail a certain degree of legally permissible extrapolation about potential, rather than actual, risk of compromise of classified information.

Clearance decisions must be made “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” (EO 10865 § 7). Thus, a decision to deny a security clearance is merely an indication the applicant has not met the strict guidelines the President and the Secretary of Defense have established for issuing a clearance.

Initially, the Government must establish, by substantial evidence, conditions in the personal or professional history of the applicant that may disqualify the applicant from being eligible for access to classified information. The Government has the burden of establishing controverted facts alleged in the SOR. (Egan, 484 U.S. at 531). “Substantial evidence” is “more than a scintilla but less than a preponderance.” (See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994)). The guidelines presume a nexus or rational connection between proven conduct under any of the criteria listed therein and an applicant’s security suitability. (ISCR Case No. 92-1106 at 3, 1993 WL 545051 at *3 (App. Bd. Oct. 7, 1993)). Once the Government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. (Directive ¶ E3.1.15). An applicant has the burden of proving a mitigating condition, and the burden of disproving it never shifts to the Government. (ISCR Case No. 02-31154 at 5 (App. Bd. Sep. 22, 2005))

An applicant “has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue his security clearance.” (ISCR Case No. 01-20700 at 3 (App. Bd. Dec. 19, 2002)). “[S]ecurity clearance determinations should err, if they must, on the side of denials.” (Egan, 484 U.S. at 531; AG ¶ 2(b)).

ANALYSIS

Guideline F: Financial Considerations

The concern under this guideline 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 . . . .

This concern is broader than the possibility that a person might knowingly compromise classified information to raise money. It encompasses concerns about a person’s self-control, judgment, and other qualities essential to protecting classified information. A person who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information. (ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012)

Applicant’s failure to timely file, as required, his federal and state income tax returns for tax years 2015 through 2017 establishes the following disqualifying condition: AG ¶ 19(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).

The following are the potentially applicable mitigating conditions under this guideline:

AG ¶ 20(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; and

AG ¶ 20(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 failed to timely file federal and state income tax returns over a three- year period. It is well-established law that individuals who are required to file income tax returns shall do so in a timely manner regardless of whether a refund is owed. However, Applicant believed, at the time, that he was not required to file a tax return if he was owed a refund, which he expected in each of those tax years. He eventually realized that his belief was wrong. He filed all the delinquent federal and state income tax returns within a reasonable time period of the date he initially promised, considering the number of returns to be filed, and, most importantly, before the SOR was issued.

Applicant’s late tax return filings were not willful violations of his legal duties, but rather the result of a mistaken belief that was justifiable given his background and experience. The fact that he not only resolved the concerns prior to issuance of the SOR, but also filed his 2018 state return early, demonstrates that he will comply with his tax filing obligations going forward. In light of the responsible manner in which Applicant handled the concerns raised in the SOR, I conclude that his late filings are not likely to recur and no longer cast doubt on his current reliability, trustworthiness, and judgment. AG ¶¶ 20(a) and (g) are established.

WHOLE PERSON ANALYSIS

Under AG ¶ 2(c), the ultimate determination of whether the granting or continuing of national security eligibility is clearly consistent with the interests of national security must be an overall common sense judgment based upon careful consideration of the adjudicative guidelines, each of which is to be evaluated in the context of the whole person. An 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.

I have incorporated my comments under Guideline F in my whole-person analysis, and I have considered the factors in AG ¶ 2(d). After weighing the disqualifying and mitigating conditions under Guideline F, and evaluating all the evidence in the context of the whole person, I conclude that Applicant has mitigated the security concerns raised by his failure to timely file federal and state tax income tax returns. Accordingly, Applicant has carried his burden of showing that it is clearly consistent with the national interest to grant him eligibility for access to classified information.

FORMAL FINDINGS

Formal findings on the allegations set forth in the SOR, as required by Section E3.1.25 of Enclosure 3 of the Directive, are:

Paragraph 1, Guideline F:

FOR APPLICANT

Subparagraphs 1.a – 1.b:

For Applicant

CONCLUSION

I conclude that it is clearly consistent with the national interest to grant Applicant eligibility for access to classified information. Clearance is granted.

Gina L. Marine Administrative Judge