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ISCR Case 19-03788 — CASE

ISCR Case 19-03788granted

Case Headnote

ISCR Case No. 19-03788

grantedDec 11, 2020· Hon. Richard A. Cefola· hearing

Summary

A 51-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 failed to file or fraudulently filed annual Federal, state, or local income tax returns, or failed to pay required taxes, as outlined in Disqualifying Condition AG ¶ 19(f).

However, the applicant successfully mitigated these concerns. He filed all overdue tax returns, demonstrating current compliance with his tax obligations. Furthermore, he provided evidence of actively managing his finances by working with a financial advisor since 2017.

The decision to grant the clearance was also supported by positive recommendations from both his workplace and community. Based on these mitigating factors, specifically AG ¶ 20(g), the judge determined that the security concerns were resolved, and the applicant was deemed eligible for a security clearance.

Why the Applicant Prevailed

The applicant filed all overdue tax returns and is now compliant with tax obligations.
He provided evidence of working with a financial advisor since 2017 to manage his finances.
The applicant received positive recommendations from his workplace and community.

Conditions Referenced

Disqualifying

AG ¶ 19(f)raisedFailure to File or Fraudulently Filing Annual Federal, State, or Local Income Tax ReturnsThe applicant had not filed Federal and state income tax returns for tax years 2012-2014.

Mitigating

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 ArrangementsThe applicant is current with his Federal and state income tax filings.

Key Rule Quoted

“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.”

Procedural Posture

SOR issuedFeb 26, 2020
Answer filedApr 2, 2020
Hearing heldNov 6, 2020
Decision dateDec 11, 2020

Cite For

Mitigation of Financial Issues Under Guideline F
Importance of Compliance with Tax Obligations
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 had filed his Federal and state income tax returns for the years in question, albeit late. Both allegations under Guideline F were resolved in favor of the applicant, indicating that the financial concerns were mitigated.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	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.	For Applicant	Tax Filing Failure	Admitted	—	—	Claimed Other
1.b	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.	For Applicant	Tax Filing Failure	Admitted	—	—	Claimed Other

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. 19-03788 ) ) Applicant for Security Clearance ) Appearances For Government: Jeff Nagel, Esq., Department Counsel For Applicant: Pro se December 11, 2020

STATEMENT OF CASE

CEFOLA, Richard A., Administrative Judge: Statement of the Case On February 26, 2020, in accordance with DoD Directive 5220.6, as amended (Directive), the Department of Defense (DoD) 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 April 2, 2020, and requested a hearing before an administrative judge. (Answer.) The case was assigned to me on June 4, 2020. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on September 30, 2020, scheduling the hearing for November 6, 2020. 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. The record was left open until December 4, 2020, for receipt of additional documentation. On December 1, 2020, Applicant offered ten exhibits, which I marked Applicant’s Exhibits (AppXs) A through J

Applicant admitted both SOR allegations. After a thorough and careful review of the pleadings, exhibits, and testimony, I make the following findings of fact. Applicant is a 51-year-old employee of a defense contractor. (TR at page 15 lines 12–14.) He has been employed with defense contractors for “about three years,” but with his current employer “since August 31st of this year,” 2020. (TR at page 17 line 14 to page 18 line 1.) He currently holds no security clearance. Applicant is unmarried, and has no children. (TR at page 18 lines 10–15.) He is a “Structural Mechanic.” (TR at page 16 lines 17–20.)

Guideline F - Financial Considerations

and admitted into evidence. DOHA received the transcript of the hearing (TR) on November 13, 2020.

FINDINGS OF FACT

1.a. and 1.b. Applicant has filed his Federal and state income tax returns, albeit after the issuance of the SOR, for tax years 2012, 2013 and 2014. (TR at page 21 line 15 to page 27 line 11.) This is evidenced by those filings. (AppXs A~C.) He was due refunds for all three years. (Id.) Applicant has also offered documentation showing he has filed his Federal and state income tax returns for tax years 2015–2019. (AppXs D~H.) He blames his late filings on procrastination (TR at page 23 lines 1–17.) He has been working with a “financial advisor . . . since 2017.” (AppX J.)

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. One is potentially applicable in this case: (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 not filed Federal and state income tax returns for tax years 2012–2014, when the SOR was issued. The evidence is sufficient to raise this disqualifying condition. AG ¶ 20 provides conditions that could mitigate security concerns. I considered all of the mitigating conditions under AG ¶ 20 including: (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 is current with his Federal and state income tax filings. Mitigation under AG ¶ 20 has been established.

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. Some of the factors in AG ¶ 2(d) were addressed under those guidelines, but some warrant additional comment. Applicant is highly respected in the workplace and in his community as evidenced by seven letters of recommendation. (AppX I.)

________________________ 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: For Applicant Subparagraph 1.b: 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