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ISCR Case 21-02682 — CASE

ISCR Case 21-02682denied

Case Headnote

ISCR Case No. 21-02682

deniedAug 16, 2023· Hon. Richard A. Cefola· hearing

Summary

A 62-year-old defense contractor employee was denied a security clearance due to concerns under Guideline F (Financial Considerations) and Guideline E (Personal Conduct). The applicant admitted to failing to file federal income tax returns for 16 years, covering tax years 2006 through 2021. While the applicant denied willfully falsifying Section 26 of his September 6, 2018 e-QIP by not disclosing these unfiled returns, the judge ultimately found for the applicant on the personal conduct issue.

However, the security clearance was denied based on unresolved financial obligations and national interest concerns. The applicant's failure to file federal income tax returns for such an extended period raised significant financial concerns, specifically Disqualifying Condition AG ¶ 19(f).

Despite the application of Mitigating Condition AG ¶ 20(g), the applicant did not demonstrate a good-faith effort to resolve the ongoing tax filing issues by the time of the decision. Consequently, the security clearance was denied.

Why the Applicant Was Denied

The applicant failed to file federal income tax returns for 16 years, raising significant financial concerns.
The applicant did not demonstrate a good-faith effort to resolve his tax filing issues, which were ongoing at the time of the decision.

Conditions Referenced

Disqualifying

AG ¶ 19(f)raisedFailure to File or Fraudulently Filing Annual Federal, State, or Local Income Tax Returns

Mitigating

AG ¶ 20(g)rejectedThe Individual Has Made Arrangements with the Appropriate Tax Authority to File or Pay the Amount Owed and Is in Compliance with Those ArrangementsThe applicant's financial filing problem was ongoing, and he had not filed his delinquent tax returns.

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 issuedJun 28, 2022
Answer filed—
Hearing heldApr 25, 2023
Decision dateAug 16, 2023

Cite For

Failure to File Federal Income Tax Returns as a Disqualifying Condition Under Guideline F
The Importance of Demonstrating Good-faith Efforts to Resolve Financial Issues
The Application of the Whole-person Concept in Security Clearance Determinations

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 that the applicant did not willfully falsify his e-QIP regarding his failure to file federal income returns for tax years 2007-2017. The applicant's testimony indicated he believed he was not required to file based on advice he received, leading to a finding in his favor on this allegation.

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
2.a	Applicant denies that he willfully falsified 'Section 26' of his September 6, 2018, e-QIP by failing to disclose his failure to file his federal income returns for tax years 2007~2017.	For Applicant	Omission or Failure to Disclose	—	Denied	—	—	—

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 against the applicant regarding his failure to file federal income tax returns for 16 years, which raised significant financial concerns under Guideline F. The applicant admitted to the allegation but did not provide evidence of a good-faith effort to rectify the situation, leading to a denial of his security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant admits that he failed to file his Federal income returns for tax years 2006~2021, a period of 16 years.	Against Applicant	Tax Filing Failure	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. 21-02682 ) ) Applicant for Security Clearance ) Appearances For Government: Tara Karoian, Esq., Department Counsel For Applicant: Pro se August 16, 2023

STATEMENT OF CASE

CEFOLA, Richard A., Administrative Judge: Statement of the Case On June 28, 2022, 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 answered the SOR soon thereafter; without explanation, and requested a hearing before an administrative judge. (Answer.) The case was assigned to me on March 15, 2023. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on March 21, 2023, scheduling the hearing for April 25, 2023. The hearing was convened as scheduled. The Government offered Exhibits (GXs) 1 through 4, which were admitted into evidence. Applicant testified on his own behalf. The record was left open until May 25, 2023, for receipt of additional documentation. Applicant

offered nothing in support of his averments. DOHA received the transcript of the hearing (TR) on May 3, 2023.

FINDINGS OF FACT

Applicant admits the allegation in SOR ¶ 1.a, but denies SOR ¶ 2.a. After a thorough and careful review of the pleadings, exhibits, and testimony, I make the following findings of fact. Applicant is a 62-year-old employee of a defense contractor. He has been employed with the defense contractor since 2018. He has held a security clearance since about 2000. Applicant is retired from the U.S. Air Force. He is married and has one adult child. (TR at page 18 line 9 to page 20 line 10, and GX 1 at pages 7, 13, 15, 23, 26 and 30.) Guideline F - Financial Considerations 1.a. Applicant admits that he failed to file his Federal income returns for tax years 2006–2021, a period of 16 years. He was stationed and later employed overseas. He sought and took the advice of his “Site Lead,” a non-certified public accountant, and thought he was not required to file as he lived outside the United States. (TR at page 20 line 19 to page 30 line 22, and at page 33 line 12 to page 40 line 16.) He has known of the Government’s concerns, and of his requirement to file those returns, since at least the time the issuance of the SOR more than a year ago, but has submitted nothing demonstrating a good-faith attempt to file those tax returns. (Id.) This allegation is found against Applicant. Guideline E - Personal Conduct 2.a. Applicant denies that he willfully falsified “Section 26” of his September 6, 2018, e-QIP by failing to disclose his failure to file his federal income returns for tax years 2007–2017. Applicant testified credibly that, based on the advice of his “Site Lead,” he thought that he was not required to file said tax returns. (TR at page 45 line 8 to page 40 line 5, and at page 47 line 7 to page 49 line 23.) This allegation is found for 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. 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 failed to file his Federal income tax returns from 2006–2021. 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: (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’s financial, filing problem is ongoing. He has yet to file his delinquent tax returns. Mitigation under AG ¶ 20 has not been established. Financial Considerations is found against 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. 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. This condition does not apply. I find that Applicant’s omission on his e-QIP was not intentional, because at that time he honestly, but erroneously, believed that he was not required to file the returns in question. Personal Conduct is found for 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 Financial Considerations concern.

________________________

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 Subparagraph 1.a: Against Applicant Paragraph 1, Guideline E: FOR APPLICANT Subparagraph 2.a: For 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