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ISCR Case 19-02257 — CASE

ISCR Case 19-02257denied

Case Headnote

ISCR Case No. 19-02257

deniedMay 21, 2020· Hon. Richard A. Cefola· hearing

Summary

A 61-year-old applicant was denied a security clearance under Guideline F, Financial Considerations, due to significant unresolved debts. The Statement of Reasons detailed several financial allegations, including approximately $240,000 owed in delinquent federal taxes. Additional past-due debts included about $900 to Creditor C with a $264 past-due balance, about $600 to Creditor D with a $1,612 past-due balance, and about $800 to Creditor E, for which no further documentation was provided.

While the applicant had resolved some debts, specifically about $6,700 owed to Creditor B and about $1,500 owed to Creditor F, the majority of the outstanding financial obligations remained unpaid. The applicant admitted to the substantial tax debt, which was a primary concern.

The denial was based on the applicant's failure to demonstrate responsible action regarding most of the past-due debts. This lack of resolution, particularly concerning the large tax liability, raised significant security concerns regarding the applicant's judgment and reliability, ultimately leading to the denial of the security clearance.

Why the Applicant Was Denied

The applicant admitted to owing approximately $240,000 in delinquent taxes, which raised significant security concerns.
The applicant failed to demonstrate responsible action regarding the majority of his past-due debts, undermining his reliability and trustworthiness.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(b)raisedUnwillingness to Satisfy Debts Regardless of the Ability to Do So
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

Key Rule Quoted

“Any doubt concerning personnel being considered for national security eligibility will be resolved in favor of the national security.”

Procedural Posture

SOR issuedAug 16, 2019
Answer filedSep 12, 2019Applicant requested a decision without a hearing.
Hearing held—Decision made on the written record.
Decision dateMay 21, 2020

Cite For

Denial of Security Clearance Based on Significant Financial Obligations Under Guideline F
Importance of Financial Responsibility in National Security Eligibility
Failure to Mitigate Financial Concerns Despite Some Debts Being Resolved

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 judge found against the applicant on several financial allegations, including significant delinquent taxes and multiple past-due debts. However, the applicant successfully mitigated two debts that had been paid, resulting in a mixed outcome for the financial considerations under Guideline F.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant owes delinquent taxes to the Federal Government in the amount of about $240,000. $240,000	Against Applicant	Tax Unpaid	Admitted	—	—	—
1.b	Applicant had a past-due debt to Creditor B in the amount of about $6,700, which has been paid. $6,700	For Applicant	Unspecified Financial	Admitted	—	—	—
1.c	Applicant had a past-due debt to Creditor C in the amount of about $900, with a past-due balance of $264. $900	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.d	Applicant had a past-due debt to Creditor D in the amount of about $600, with a past-due balance of $1,612. $600	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.e	Applicant had a past-due debt to Creditor E in the amount of about $800, with no further documentation. $800	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.f	Applicant had a past-due debt to Creditor F in the amount of about $1,500, which has been paid. $1,500	For Applicant	Unspecified Financial	Admitted	—	—	—

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: 19-02257

) Applicant for Security Clearance )

For Government: Tara R. Karoian, Esquire, Department Counsel For Applicant: Pro se

May 21, 2020 ______________

STATEMENT OF CASE

______________

CEFOLA, Richard A., Administrative Judge:

On August 17, 2016, Applicant submitted a security clearance application (SF- 86). On August 16, 2019, the Department of Defense Consolidated Adjudications Facility (DoD CAF) issued Applicant a Statement of Reasons (SOR), detailing security concerns under Guideline F, Financial Considerations. (Item 1.) The action was taken 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 National Security Adjudicative Guidelines for Determining Eligibility for Access to Classified Information or Eligibility to Hold a Sensitive Position (AG), effective June 8, 2017.

Applicant answered the SOR on September 12, 2019. He admitted all of the SOR allegations concerning his delinquent debts, and requested that his case be decided by an administrative judge on the written record without a hearing. (Item 2.) On October 23, 2019, Department Counsel submitted the Government’s written case. A

complete copy of the File of Relevant Material (FORM), containing eight Items, was provided to Applicant. The FORM notified Applicant that he had an opportunity to file objections and submit material in refutation, extenuation, or mitigation within 30 days of his receipt of the FORM. Applicant did not respond to the FORM.

FINDINGS OF FACT

Guideline F – Financial Considerations

Applicant is 61 years old. (Item 3 at page 5.) He is married, and has two children by a former marriage. (Item 3 at pages 19–24.)

1.a. Applicant admits that he owes delinquent taxes to the Federal Government in the amount of about $240,000. As he has offered nothing further in this regard, this allegation is found against Applicant.

1.b. Applicant admits that he had a past-due debt to Creditor B in the amount of about $6,700. As he has offered documentation showing this debt has been “paid,” with a “$0” balance, this allegation is found for Applicant. (Item 2 at page 9.)

1.c. Applicant admits that he had a past-due debt to Creditor C in the amount of about $900. As he has offered documentation showing this debt still has a past-due balance of $264, this allegation is found against Applicant. (Item 2 at page 7.)

1.d Applicant admits that he had a past-due debt to Creditor D in the amount of about $600. As he has offered documentation showing this debt still has a past-due balance of $1,612, this allegation is found against Applicant. (Item 2 at page 8.)

1.e. Applicant admits that he had a past-due debt to Creditor E in the amount of about $800. As he has offered nothing further in this regard, this allegation is found against Applicant.

1.f. Applicant admits that he had a past-due debt to Creditor F in the amount of about $1,500. As he has offered documentation showing this debt has been “paid,” with a “$0” balance, this allegation is found for Applicant. (Item 2 at page 6.)

POLICIES

When evaluating an applicant’s suitability for national security eligibility, the administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations for each guideline, the adjudicative guidelines (AG) 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, these guidelines are applied 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. The entire process is a conscientious scrutiny of applicable guidelines in the context 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. I have not drawn inferences based on mere speculation or conjecture.

Directive ¶ E3.1.14, requires the Government to present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, an “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 applying for national security eligibility 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 national security eligibility. 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 or sensitive information. Finally, as emphasized in Section 7 of EO 10865, “[a]ny determination under this order adverse to an applicant shall be a determination 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 concerns relating to the guideline for financial considerations are set out in AG ¶ 18, which reads in pertinent part:

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. . . .

AG ¶ 19 describes four conditions that could raise security concerns and may be disqualifying in this case:

(a) inability to satisfy debts;

(b) unwillingness to satisfy debts regardless of the ability to do so;

(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 indebtedness, including back taxes of about $240,000. These facts establish prima facie support for the foregoing disqualifying conditions, and shift the burden to Applicant to mitigate those concerns.

The guideline includes conditions in AG ¶ 20 that could mitigate the security concerns arising from Applicant’s alleged financial difficulties:

(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;

(e) the individual has a reasonable basis to dispute the legitimacy of the past-due debt which is the cause of the problem and provides documented proof to substantiate the basis of the dispute or provides evidence of actions to resolve the issue;

(f) the affluence resulted from a legal source of income; 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.

None of these apply. Applicant has not acted responsibly as to the vast majority of his past-due indebtedness. Financial Considerations is found against 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.

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

I considered the potentially disqualifying and mitigating conditions in light of all pertinent facts and circumstances surrounding this case. Overall, the record evidence leaves me with questions and doubts as to Applicant’s judgment, eligibility, and suitability for a security clearance.

FORMAL FINDINGS

Formal findings for or against Applicant on the allegations set forth in the SOR, as required by ¶ E3.1.25 of Enclosure 3 of the Directive, are:

Paragraph 1, Guideline F:

AGAINST APPLICANT

Subparagraphs 1.a., and 1.c.~1.e.: Against Applicant

Subparagraphs 1.b. and 1.f.:

For Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is not clearly consistent with the national interest to grant Applicant national security eligibility and a security clearance. National security eligibility is denied.

Richard A. Cefola Administrative Judge