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ISCR Case 20-00995 — CASE

ISCR Case 20-00995denied

Case Headnote

ISCR Case No. 20-00995

deniedApr 13, 2023· Hon. Richard A. Cefola· hearing

Summary

A 37-year-old defense contractor employee was denied a security clearance under Guideline F (Financial Considerations) due to significant and ongoing financial problems. The applicant admitted to all allegations in the Statement of Reasons, which included delinquent state taxes for 2016 totaling approximately $1,119, and a failure to file federal and state income taxes for tax years 2017 through 2020.

Additionally, the applicant acknowledged past-due debts to twelve separate creditors, amounting to approximately $44,008. These issues raised disqualifying conditions under Guideline F, specifically concerning an inability or unwillingness to satisfy debts, a history of not meeting financial obligations, and a pattern of financial irresponsibility.

The administrative judge determined that the applicant failed to mitigate these financial concerns. Despite his employment and positive work reputation, the applicant did not provide explanations for the admitted allegations and had not demonstrated that future financial issues were unlikely. Consequently, the security clearance was denied.

Why the Applicant Was Denied

The applicant admitted to all allegations in the Statement of Reasons (SOR) without providing explanations.
He has significant past-due debts and delinquent tax filings, which raised security concerns under Guideline F.
The applicant's financial problems are ongoing, and he has not demonstrated that future financial issues are unlikely.

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

“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.”

Procedural Posture

SOR issuedAug 5, 2021
Answer filed—
Hearing heldOct 18, 2022convened as scheduled
Decision dateApr 13, 2023

Cite For

Denial of Security Clearance Due to Unresolved Financial Issues Under Guideline F
Impact of Financial Distress on Security Clearance Eligibility
Failure to Mitigate Ongoing Financial Problems as a Basis for Denial

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: denied

The judge found against the applicant on all financial allegations under Guideline F, including delinquent taxes and failure to file tax returns. The applicant admitted to the debts and did not provide sufficient mitigation to alleviate the security concerns raised by his financial issues.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant admits that he is indebted to State C for delinquent taxes for tax year 2016, in the amount of about $1,119. $1,119	Against Applicant	Tax Unpaid	Admitted	—	—	—
1.b	Applicant admits that he has failed to file his Federal and state income taxes for tax years 2017~2020.	Against Applicant	Tax Filing Failure	Admitted	—	—	—
1.c	Applicant admits that he has past-due debts to twelve separate creditors totaling about $44,008. $44,008	Against 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 No. 20-00995 ) ) Applicant for Security Clearance ) Appearances For Government: Jeff Nagel, Esq., Department Counsel For Applicant: Pro se April 13, 2023

STATEMENT OF CASE

CEFOLA, Richard A., Administrative Judge: Statement of the Case On August 5, 2021, 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 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 soon thereafter, and requested a hearing before an administrative judge. (Answer.) The case was assigned to me on July 26, 2022. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on September 6, 2022, scheduling the hearing for October 18, 2022. The hearing was convened as scheduled. The Government offered six Exhibits (GXs) 1 through 6, which were admitted into evidence. Applicant testified on his own behalf. The record was left open until November 10, 2022, for receipt of documentation. Applicant offered three documents, which I marked Applicant’s Exhibits (AppXs) A through C, and were

admitted into evidence. DOHA received the transcript of the hearing (TR) on October 27, 2022.

FINDINGS OF FACT

Applicant admitted to all the allegations in the SOR with no explanation. After a thorough and careful review of the pleadings, exhibits, and testimony, I make the following findings of fact. Applicant is a 37-year-old employee of a defense contractor. He has been employed with the defense contractor since February of 2019. Applicant was divorced from his first wife in 2012 and remarried in 2018. He has two children from his first marriage. (TR at page 14 line 6 to page 16 line 9, and GX 1 at pages 7, 12, 19–20 and 26–27.) He attributes much of his admitted past-due debt to his decade old divorce. (TR at page 20 line 14 to page 23 line 8.) Guideline F - Financial Considerations 1.p. Applicant filed for the protection of a Chapter 7 bankruptcy in August of 2009, and his debts were discharged in January of 2010. 1.a. Applicant admits that he is indebted to State C for delinquent taxes for tax year 2016, in the amount of about $1,119. (TR at page 26 line 2 to page 27 line 7.) He has offered nothing further in this regard; and as such, this allegation is found against Applicant. 1.b. and 1.c. Applicant admits that he has failed to file his Federal and state income taxes for tax years 2017–2020. (TR at page 27 line 8 to page 31 line 24.) He has offered documentation showing that he has filed his income tax returns for tax year 2021. (AppX C.) These allegations, as to tax years 2017–2020, are found against Applicant. 1.d.~1.o. Applicant admits that he has past-due debts to twelve separate creditors totaling about $44,008. (TR at page 32 line 10 to page 40 line 32.) He has offered nothing further in this regard. These allegations are 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 has significant past-due indebtedness, delinquent state taxes, and delinquent Federal and state tax filings. 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 including: (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’s financial problems are ongoing. He has a long history of delinquencies. Applicant attributes them, in part, to his divorce, but that was ten years ago. He has not demonstrated that future financial problems are unlikely. Mitigation under AG ¶ 20 has not 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 respected by those who know him at work. He performs well at his job. (AppX s A and B.) However, 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 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: AGAINST APPLICANT Subparagraphs 1.a~1.p: 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