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ISCR Case 20-00772 — CASE

ISCR Case 20-00772denied

Case Headnote

ISCR Case No. 20-00772

deniedAug 26, 2021· Hon. Richard A. Cefola· hearing

Summary

A 34-year-old married applicant was denied a security clearance under Guideline F, Financial Considerations, due to admitted financial issues and insufficient mitigation. The Statement of Reasons detailed several allegations, including the applicant's admission to failing to file federal and state income tax returns for 2015, 2016, and 2018.

The applicant also admitted to owing a past-due state tax debt of approximately $650, a bank debt of about $22,400, a wireless phone service debt of approximately $144, and a debt to Creditor I of about $207. However, the applicant denied owing over $19,000 in student loans, a claim supported by the loan holder. The applicant also denied two past-due medical debts, one for about $334 to Creditor G and another for about $150 to Creditor J.

The administrative judge found that the applicant's failure to file tax returns for multiple years and the presence of significant past-due debts were not adequately mitigated. Consequently, the security clearance was denied.

Why the Applicant Was Denied

The applicant failed to file federal and state income tax returns for multiple years.
The applicant has significant past-due debts and delinquent tax filings, which were not sufficiently mitigated.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(b)raisedUnwillingness to Satisfy Debts
AG ¶ 19(c)raisedHistory of Not Meeting Financial Obligations
AG ¶ 19(f)raisedFailure to File or Fraudulently Filing Tax Returns

Key Rule Quoted

“The protection of the national security is the paramount consideration.”

Procedural Posture

SOR issuedOct 15, 2020
Answer filedOct 30, 2020
Hearing held—Decided on the written record without a hearing.
Decision dateAug 26, 2021

Cite For

Insufficient Mitigation of Financial Concerns Under Guideline F
Failure to File Tax Returns as a Disqualifying Condition
Significant Past-due Debts Impacting Security Clearance Eligibility

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 multiple financial concerns against the applicant, including failures to file tax returns and several past-due debts. Ultimately, the applicant was denied security clearance due to unresolved financial issues and lack of sufficient mitigation.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant admits that he failed to file his federal and state income tax returns for tax years 2015, 2016, and 2018.	Against Applicant	Tax Filing Failure	Admitted	(a) inability to satisfy debts	—	—
1.b	Applicant admits that he owes a past-due tax debt to his state in the amount of about $650. $650	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts	—	—
1.d	Applicant denies that he owes over $19,000 in student loans, and this averment is supported by the holder of these student loans. $19,000	For Applicant	Unspecified Financial	Denied	—	—	—
1.f	Applicant admits that he owes a past-due debt to a bank in the amount of about $22,400. $22,400	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts	—	—
1.g	Applicant admits that he owes a past-due debt for a wireless phone service in the amount of about $144. $144	For Applicant	Utility or Phone Debt	Admitted	—	—	—
1.h	Applicant denies that he owes Creditor G a past-due medical debt in the amount of about $334. $334	Against Applicant	Unspecified Financial	Denied	—	—	—
1.i	Applicant admits that he owes a past-due debt to Creditor I in the amount of about $207. $207	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts	—	—
1.j	Applicant denies that he owes Creditor J a past-due medical debt in the amount of about $150. $150	Against Applicant	Unspecified Financial	Denied	—	—	—

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: 20-00772

) Applicant for Security Clearance ) Appearances For Government: Alison O’Connell, Esquire, Department Counsel For Applicant: Pro se August 26, 2021

STATEMENT OF CASE

CEFOLA, Richard A., Administrative Judge: Statement of Case On July 3, 2018, Applicant submitted a security clearance application (SCA). On October 15, 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. (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 the 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 October 30, 2020. He admitted all allegations of the SOR regarding his delinquent debts; except for allegations 1.d., 1.e., 1.h., and 1.i., and requested that his case be decided by an administrative judge on the written record without a hearing. On December 7, 2020, Department Counsel submitted the

Government’s written case. A complete copy of the File of Relevant Material (FORM), containing 12 Items, was mailed to Applicant on December 7, 2020, and received by him on December 21, 2020. 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 responded to the FORM on or about March 29, 2021. He did not object to Items 1 through 12. Applicant also submitted additional information in his FORM response, Applicant Exhibits A~D to which Department Counsel had no objection. DOHA assigned the case to me on July 19, 2021. Items 1 through 12 are admitted into evidence. Applicant’s response to the FORM (Response) is also admitted.

FINDINGS OF FACT

Guideline F – Financial Considerations Applicant is 34 years old. He is married, and has no children. (Item 5 at pages 5 and 27.) 1.a. and 1.b. Applicant admits that he failed to file his federal and state income tax returns for tax years 2015, 2016, and 2018. Applicant avers that he has submitted the returns in question to a tax preparer, bur has submitted little else. These allegations are found against applicant. 1.c. Applicant admits that he owes a past-due tax debt to his state in the amount of about $650, but has submitted nothing further in this regard. This allegation is found against Applicant. 1.d. and 1.e. Applicant denies that he owes over $19,000 in student loans, and this averment is supported by the holder of these student loans. (AppXs B and C at page 3.) These allegations are found for Applicant. 1.f. Applicant admits that he owes a past-due debt to a bank in the amount of about $22,400. He submitted documentation showing Applicant has recently made two payments totaling $100, towards this rather substantial debt. (AppXs A, C at page 2, and D at page 1.) This is too little too late; and as such, this allegation is found against Applicant. 1.g. Applicant admits that he owes a past-due debt for a wireless phone service in the amount of about $144; and has submitted documentation showing he has recently paid $55 towards this debt and has a credit of $2.31 due him, with a “$.00” due. (AppX C at page 1.) This allegation is found for Applicant.

1.h. Applicant denies that he owes Creditor G a past-due medical debt in the amount of about $334. As this past-due debt appears on the Government’s April 2017 credit report, this allegation is found against Applicant. (GX 5 at page 15.) 1.i. Applicant admits that he owes a past-due debt to Creditor I in the amount of about $207, but has submitted nothing further in this regard. This allegation is found against Applicant. 1.j. Applicant denies that he owes Creditor J a past-due medical debt in the amount of about $150. As this past-due debt appears on the Government’s April 2017 credit report, this allegation is found against Applicant. (GX 5 at page 16.)

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; (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 has significant past-due debt and delinquent tax filings. These facts establish prima facie support for the foregoing disqualifying conditions, and shift the burden to Applicant to mitigate those concerns.

The guideline includes seven 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. While Applicant has cleared his student loans and settled a small wireless phone debt; he still owes substantial past-due debts and is delinquent in his tax filings. There are no indications that his financial issues are under control.

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. He has not met his burden to mitigate the security concerns arising under the guideline for financial considerations.

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: Subparagraphs 1.a. through 1.c: AGAINST APPLICANT Against Applicant Subparagraphs 1.d. and 1.e: For Applicant Subparagraph 1.f: Against Applicant Subparagraph 1.g: For Applicant Subparagraphs 1.h. through 1.j: 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 and a security clearance. National security eligibility is denied. Richard A. Cefola Administrative Judge