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ISCR Case 19-03905 — CASE

ISCR Case 19-03905denied

Case Headnote

ISCR Case No. 19-03905

deniedMay 25, 2021· Hon. Philip J. Katauskas· hearing

Summary

A 64-year-old defense contractor was denied a security clearance under Guideline F (Financial Considerations) due to significant financial concerns. The applicant was delinquent on federal income taxes exceeding $300,000, with non-payment extending as far back as 2005. Additionally, the applicant had consumer debts totaling $1,041.

The applicant admitted to the tax delinquencies and failed to disclose them on his security clearance application. While the applicant offered an explanation that his brother-in-law was entrusted to handle his taxes, this was considered only a partly mitigating circumstance. The judge noted that some consumer debts were medical and incurred under circumstances largely beyond the applicant's control, and the magnitude of these specific consumer debts did not raise security concerns.

However, the applicant's explanations for his overall financial issues were deemed insufficient to mitigate the security concerns. The judge concluded that granting access to classified information was not consistent with national security interests, leading to the denial of the security clearance.

Why the Applicant Was Denied

The applicant admitted to significant tax delinquencies exceeding $300,000.
The applicant failed to disclose tax delinquencies on his security clearance application.
The applicant's explanations for his financial issues were deemed insufficient to mitigate security concerns.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(f)raisedFailure to File or Pay Annual Federal Income Tax

Mitigating

AG ¶ 20(a)rejectedBehavior Occurred Long Ago or InfrequentlyThe applicant's tax issues extend back to 2005.
AG ¶ 20(b)rejectedConditions Largely Beyond the Person's ControlThe applicant's failure to oversee his brother-in-law's handling of taxes was insufficient to mitigate concerns.
AG ¶ 20(g)rejectedArrangements Made with Tax AuthorityThe applicant did not provide evidence of compliance with arrangements to resolve tax issues.

Key Rule Quoted

“the clearly consistent standard indicates that security determinations should err, if they must, on the side of denials.”
— Department of the Navy v. Egan, 484 U.S. 518, 531 (1988)

Procedural Posture

SOR issuedFeb 28, 2020
Answer filedMar 5, 2020Applicant elected for a decision on the written record.
Hearing held—Decision made based on written record.
Decision dateMay 25, 2021

Cite For

Insufficient Evidence to Mitigate Financial Concerns Under Guideline F
Serious Obligation to Pay Federal Income Taxes
Questions About Judgment and Reliability in Financial Matters

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 significant financial concerns under Guideline F, particularly regarding the applicant's delinquent federal income taxes exceeding $300,000 and other consumer debts. While the applicant's tax issues were ruled against him, the judge found in favor of the applicant regarding his consumer debts, concluding that they did not raise security concerns.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant is delinquent on his federal income taxes in the amount of just over $300,000. $300,000	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.b	Applicant failed to pay his federal income taxes extending as far back as 2005.	Against Applicant	Tax Filing Failure	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.c	Applicant's excuse that his brother-in-law was entrusted to handle his taxes is only a partly mitigating circumstance.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	Claimed Other
1.d–1.f	3 sub-charges — specific text not stated in this decision (against the applicant). (low confidence)	Against Applicant			—	—	—
1.g	Applicant's consumer debts are supported by the record, totaling $1,041. $1,041	For Applicant	Unspecified Financial	Denied	—	—	Claimed Other
1.h	Medical debts incurred under circumstances largely beyond Applicant's control.	For Applicant	Medical Debt	Unknown	—	—	—
1.i	The magnitude of Applicant's consumer debts does not raise security concerns.	For Applicant	Unspecified Financial	Unknown	—	—	—

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. 19-03905

) Applicant for Security Clearance )

Appearances For Government: Tara R. Karoian, Esq., Department Counsel For Applicant: Pro se 05/25/2021

STATEMENT OF CASE

KATAUSKAS, Philip J., Administrative Judge: Applicant did not provide sufficient evidence to mitigate the financial security concerns arising from his delinquent consumer debts and delinquent income taxes. Applicant’s eligibility for access to classified information is denied. Statement of the Case Applicant submitted a security clearance application (SCA) on December 22, 2015. On February 28, 2020, the Department of Defense Consolidated Adjudications Facility (DOD CAF) issued Applicant a Statement of Reasons (SOR) detailing security concerns under Guideline F, Financial Considerations. The DOD CAF acted under Executive Order (Exec. Or.) 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 Security Executive Agent Directive 4, National Security Adjudicative Guidelines, effective within his

Applicant answered the SOR on March 5, 2020, and elected a decision on the written record by an administrative judge of the Defense Office of Hearings and Appeals

Applicant’s three consumer debts totaling $1,041 are supported by the record. Item 11. Applicant claims that the cellphone debt was incurred by an ex-wife. The two other debts, medical accounts, should have been paid by his health insurer. Item 2.

(DOHA), in lieu of a hearing. He included some documents with his Answer, and they are included in the record. On January 5, 2021, Department Counsel submitted the Government’s file of relevant material (FORM), including documents identified as Items 1 through 11. Applicant received the FORM on January14, 2021. He was afforded 30 days after receiving the FORM to file objections and submit material in refutation, extenuation, or mitigation. Applicant did not respond to the FORM. The SOR and the answer (Items 1 and 2) are the pleadings in the case. Items 3 through 11 are admitted without objection. The case was assigned to me on April 12, 2021.

FINDINGS OF FACT

Applicant admitted his delinquent taxes, SOR ¶¶ 1.a. through 1.f, and he denied his consumer debts, SOR ¶¶ 1.g. through 1.i. He included some documents with his answer. His admissions and explanations are incorporated into the findings of fact. After a thorough and careful review of the pleadings and exhibits submitted, I make the following findings of fact. Applicant is 64 years old, divorced but remarried with no children. He has a bachelor’s degree. Applicant has been employed by a defense contractor overseas since March 2016. Items 2, 3, and 4. Applicant’s admissions in his Answer and the Government’s exhibits establish that he is delinquent on his federal income taxes in the amount of just over $300,000. This covers the years 2005 through 2009 and 2014. Applicant is making $600 payments per pay period to the IRS. Applicant did not disclose his tax delinquencies on his December 22, 2015, e-QIP. He disclosed them during his May 9, 2019, personal subject interview (PSI). Items 2, and 4 through 10. The record shows that federal tax liens were filed against Applicant in 2011 and 2017. Items 8 through 10. Applicant was audited for 2001 through 2005 and was found to owe $15,000 in income taxes. Applicant claims that because he deployed overseas he appointed his brother-in-law to handle his tax matters but that his brother-in-law failed to do so. Applicant has since retained a tax-relief advocate and a tax lawyer to clear up his tax problems. Applicant said that his tax issues should be resolved by March 27, 2020. He did not, however, provide any new or additional information. Item 2.

POLICIES

It is well established that no one has a right to a security clearance. As the Supreme Court held, “the clearly consistent standard indicates that security determinations should err, if they must, on the side of denials.” Department of the Navy v. Egan, 484 U.S. 518, 531 (1988).

The adjudicative 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 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 access to classified information 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. Likewise, I have avoided drawing inferences grounded on mere speculation or conjecture. Under Directive ¶ E3.1.14, the Government must 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 applicant or proven by Department Counsel, and has the ultimate burden of persuasion as to obtaining a favorable security decision.” A person who seeks access to classified information enters 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 that an applicant may deliberately or inadvertently fail to 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.

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. . . . This concern is broader than the possibility that an individual might knowingly compromise classified information in order to raise money. It encompasses concerns about an individual’s self-control, judgment, and other qualities essential to protecting classified information. An individual 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). The guideline notes several conditions that could raise security concerns under AG ¶ 19. The following are potentially applicable in this case: (a) inability to satisfy debts; and (f) failure to file…annual Federal income tax returns…or failure to pay annual Federal … income tax as required. The SOR tax delinquencies are established by the Items 2 through 10, and the consumer debts are established by the credit report in the record. Item 11. AG ¶¶ 19(a) and 19(f) apply. The guideline also includes conditions that could mitigate security concerns arising from financial difficulties. The following mitigating conditions under AG ¶ 20 are potentially applicable: (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, or a death, divorce or separation, clear victimization by predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances; and (g) the individual has made arrangements with the appropriate tax authority to file or pay the amount owed and is compliance with those arrangements. Applicant has provided plausible explanations for the consumer debts. Medical debts are often incurred under circumstances largely beyond an applicant’s control. In addition, the magnitude of Applicant’s consumer debts does not, in itself, raise security concerns. I find in favor of Applicant on SOR ¶¶ 1.g.through 1.i. Applicant’s failure to pay his federal income taxes presents a more troublesome issue. Those failures extend as far back as 2005, if not earlier. His excuse that his brother

Against Applicant

Subparagraphs 1.g. - 1. i

_____________________________

in-law was entrusted to handle his taxes while Applicant was deployed is at best only a partly mitigating circumstance. Paying federal income taxes is a serious obligation. Applicant should at least have exercised at some minimal oversight of his brother-in-law. Apparently, Applicant did not do so. That calls into question Applicant’s judgment and reliability to have access to classified information. ISCR Case No. 98-0608 at 4 (App. Bd. Jun. 27, 2000). I find against Applicant on SOR ¶¶ 1.a. through 1.f. Under AG ¶ 2(a), 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 the facts and circumstances surrounding this case. I have also considered the whole-person concept. Applicant leaves me with questions and doubts as to his eligibility and suitability for a security clearance. For these reasons, I conclude Applicant did not mitigate the security concerns arising under Guideline F, financial considerations.

FORMAL FINDINGS

Formal findings for or against Applicant 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: AGAINST APPLICANT Subparagraphs 1.a. - 1.f For Applicant

CONCLUSION

In light of all of the circumstances presented, it is not clearly consistent with the interests of national security to grant Applicant eligibility for access to classified information. Eligibility for access to classified information is denied. Philip J. Katauskas Administrative Judge