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ISCR Case 19-02730 — CASE

ISCR Case 19-02730denied

Case Headnote

ISCR Case No. 19-02730

deniedAug 23, 2021· Hon. Richard A. Cefola· hearing

Summary

A 33-year-old defense contractor employee was denied a security clearance due to concerns under Guideline E (Personal Conduct) and Guideline F (Financial Considerations). The applicant had a history of untimely filing federal and state income tax returns for tax years 2011-2013 and 2015-2017. Additionally, the applicant was making monthly child support payments of $679, reducing a past-due amount to $330.

While the judge acknowledged mitigating factors related to the financial considerations, specifically the efforts to resolve the child support debt, the primary reason for denial stemmed from personal conduct. The applicant admitted to failing to disclose the delinquent tax returns on the security clearance application.

This lack of candor, specifically the failure to disclose the delinquent tax returns, was a significant factor in the denial. The decision highlighted that despite efforts to address financial issues, the omission of critical information on the application raised unmitigated concerns under Guideline E, leading to the denial of the security clearance.

Why the Applicant Prevailed

The applicant filed all delinquent tax returns and is making payments on child support, demonstrating responsible financial behavior.

Conditions Referenced

Disqualifying

AG ¶ 16(a)appliedDeliberate Omission, Concealment, or Falsification of Relevant Facts

Mitigating

AG ¶ 20(a)appliedBehavior Occurred Long Ago and Unlikely to Recur
AG ¶ 20(d)appliedGood-faith Effort to Repay Overdue Creditors

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 issuedFeb 7, 2020
Answer filed—undated answer submitted
Hearing heldJun 25, 2021originally scheduled for 2021-04-16, continued
Decision dateAug 23, 2021

Cite For

Failure to Disclose Delinquent Tax Returns Under Guideline E
Mitigating Factors for Financial Considerations Under Guideline F
Importance of Candor in Security Clearance Applications

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 E (Personal Conduct) · descriptive summary of a decided case

Posture: HearingDecided: denied

The judge found against the applicant on the personal conduct allegation regarding the failure to disclose delinquent tax returns. The applicant admitted to the allegation, which was not mitigated in the context of national security eligibility.

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
2.a	Applicant admits that he failed to disclose the delinquent tax returns noted above.	Against Applicant	Omission or Failure to Disclose	Financial	Admitted	—	—	Claimed Other

Descriptive standardized rendering of a decided public case (Guideline E). The verbatim source decision is shown in full below.

Standardized Decision Profile

SEAD-4 Guideline F · descriptive summary of a decided case

Posture: HearingDecided: denied

The judge found that the applicant had untimely filed his federal and state income tax returns for multiple years but acknowledged that he is making monthly payments for child support and has reduced his past-due amount. Ultimately, despite these factors, the judge ruled against the applicant regarding financial considerations, concluding that granting national security eligibility was not consistent with the national interest.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant admits that he untimely filed his Federal income tax returns for tax years 2011~2013 and 2015~2017.	For Applicant	Tax Filing Failure	Admitted	—	—	—
1.b	Applicant admits that he untimely filed his state income tax returns for tax years 2011~2013 and 2015~2017.	For Applicant	Tax Filing Failure	Admitted	—	—	—
1.c	Applicant is making monthly payments of $679 in child support; and as such, has reduced his past-due amount to $330. $330	For Applicant	Child Support Debt	Admitted	—	—	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: ) ) ) ISCR Case No. 19-02730 ) ) Applicant for Security Clearance ) Appearances For Government: Jeff Nagel, Esq., Department Counsel For Applicant: Pro se August 23, 2021

STATEMENT OF CASE

CEFOLA, Richard A., Administrative Judge: Statement of the Case On February 7, 2020, 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 Guidelines F and E. 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 submitted an undated answer to the SOR, and requested a hearing before an administrative judge. (Answer.) The case was assigned to me on March 16, 2021. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on March 18, 2021, scheduling the hearing for April 16, 2021, but later continued the hearing to June 25, 2021. The hearing was convened as scheduled. The Government offered Exhibits (GXs) 1 and 2, which were admitted into evidence. Applicant testified on his own behalf. Applicant offered two sets of documents, which I marked Applicant’s Exhibits (AppXs) A and B, and admitted into evidence. The record was left open until

July 23, 2021, for receipt of additional documentation. On July 6, 2021, Applicant offered two additional documents which I marked AppXs C and D, and admitted into evidence. DOHA received the transcript of the hearing (TR) on July 12, 2021.

FINDINGS OF FACT

Applicant admitted to all the allegations in SOR. After a thorough and careful review of the pleadings, exhibits, and testimony, I make the following findings of fact. Applicant is a 33-year-old employee of a defense contractor. He has been employed with the defense contractor since 2019. (TR at page 15 line 22 to page 16 line 9, and GX 1 at page 7.) This is his first time applying for a security clearance. (TR at page 16 lines 12–18.) He is unmarried, and has two children. (TR at page 18 lines 13–23.) Guideline F - Financial Considerations 1.a. Applicant admits that he untimely filed his Federal income tax returns for tax years 2011–2013 and 2015–2017. He mistakenly thought that as he had no income for the years in question, he was not required to file returns. (TR at page 24 line 14 to page 26 line 15.) He has since filed for those tax years as evidenced by tax documentation. (AppX A.) 1.b. Applicant admits that he untimely filed his state income tax returns for tax years 2011–2013 and 2015–2017. He mistakenly thought that as he had no income for the years in question, he was not required to file returns. (TR at page 26 line 16 to page 27 line 20.) He has since filed for those tax years as evidenced by tax documentation. (AppX D.) 1.c. Applicant is making monthly payments of $679 in child support; and as such, has reduced his past-due amount to $330, as evidenced by documentation. (TR at page 23 line 21 to page 24 line 13, and AppXs B and C.) Guideline E - Personal Conduct 2.a. In answer to “Section 26 – Financial Record - Taxes In the last (7) seven years,” Applicant admits that he failed to disclose the delinquent tax returns noted above. In his Answer he averred that it was not intentional, and at his hearing he averred it was a simple “mistake.” (TR at page 28 lines 1–25, and Answer.) When offered an opportunity to submit documentation in support of his credibility, Applicant submitted nothing in this regard. (TR at page 29 lines 16–21.) This allegation is found against Applicant.

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. Four are potentially applicable in this case: (a) inability to satisfy debts; (b) unwillingness to satisfy debts regardless of the ability to do so; (c) a history of not meeting financial obligations; and (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 had significant past due child support and unfiled Federal and state income tax returns. 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: (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. Applicant has filed all of his delinquent tax returns, and is nearly current on his past-due child support. Applicant has demonstrated that future financial problems are unlikely. Mitigation under AG ¶ 20 has been established. Financial Considerations is found for Applicant. Guideline E - Personal Conduct The security concern relating to the guideline for Personal Conduct is set out in AG ¶ 15: Conduct involving questionable judgment, lack of candor, dishonesty, or unwillingness to comply with rules and regulations can raise questions about an individual's reliability, trustworthiness, and ability to protect classified or sensitive information. Of special interest is any failure to cooperate or provide truthful and candid answers during national security investigative or adjudicative processes. The following will normally result in an unfavorable national security eligibility determination, security clearance action, or cancellation of further processing for national security eligibility: (a) refusal, or failure without reasonable cause, to undergo or cooperate with security processing, including but not limited to meeting with a security investigator for subject interview, completing security forms or releases, cooperation

with medical or psychological evaluation, or polygraph examination, if authorized and required; and (b) refusal to provide full, frank, and truthful answers to lawful questions of investigators, security officials, or other official representatives in connection with a personnel security or trustworthiness determination. The guideline notes several conditions that could raise security concerns under AG ¶ 16. One is potentially applicable in this case: (a) deliberate omission, concealment, or falsification of relevant facts from any personnel security questionnaire, personal history statement, or similar form used to conduct investigations, determine employment qualifications, award benefits or status, determine national security eligibility or trustworthiness, or award fiduciary responsibilities. Applicant did not disclose his delinquent tax filings on his January 2019 SCA. The evidence is sufficient to raise these disqualifying conditions. AG ¶ 17 provides conditions that could mitigate security concerns. I considered all of the mitigating conditions under AG ¶ 17 including: (a) the individual made prompt, good-faith efforts to correct the omission, concealment, or falsification before being confronted with the facts; and (b) the refusal or failure to cooperate, omission, or concealment was caused or significantly contributed to by advice of legal counsel or of a person with professional responsibilities for advising or instructing the individual specifically concerning security processes. Upon being made aware of the requirement to cooperate or provide the information, the individual cooperated fully and truthfully Applicant made no prompt good-faith effort correct his falsehood regarding his Federal and state tax filings. Personal Conduct 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. 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 Guidelines F and E in my whole-person analysis. Overall, the record evidence leaves me with questions and doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant failed to mitigate the Personal Conduct 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 Subparagraphs 1.a.~1.c: For Applicant Paragraph 2, Guideline E: AGAINST APPLICANT Subparagraph 2.a: Against 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 for a security clearance. Eligibility for access to classified information is denied. Richard A. Cefola Administrative Judge