ISCR Case No. 23-00123

______________ ______________ DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 23-00123 ) Applicant for Security Clearance ) Appearances For Government: John Lynch, Esq., Department Counsel For Applicant: Pro se 04/04/2024

LOUGHRAN, Edward W., Administrative Judge: Applicant mitigated the personal conduct security concerns, but he did not mitigate the financial considerations security concerns. Eligibility for access to classified information is denied. Statement of the Case On April 27, 2023, the Department of Defense (DOD) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guidelines E (personal conduct) and F (financial considerations). Applicant responded to the SOR on May 8, 2023, with attached documents, and requested a hearing before an administrative judge. The case was assigned to me on January 11, 2024. The hearing convened as scheduled on January 24, 2024. The Government withdrew SOR ¶¶ 1.l and 1.m. Government Exhibits (GE) 1 through 8 were admitted in evidence without objection. I also took administrative notice at the Government’s request and without objection of IRS Publication 17, Tax Guide for Individuals 2017 (Hearing Exhibit (HE) I). Applicant testified, but he did not submit any documents beyond those that were attached to his response to the SOR. The record was held open for him to submit additional documentary evidence. He submitted an email and attached

documents that I have marked Applicant Exhibits (AE) A through C and admitted without objection.

Applicant is 35 years old. He served on active duty in the U.S. military from 2009 until he was honorably discharged in 2012. He has never married. He has two children. (Transcript (Tr.) at 22, 92-93; GE 1, 2) Applicant served in the Reserve from about 2012 until he was separated in about 2016 or 2017 with a general under honorable conditions discharge for unsatisfactory participation. He admitted that he missed some drills, but it was because of financial issues, and he could not afford the transportation to his drills. He asked to be activated to active duty so that he would not have the transportation costs, and his finances would improve. That request was not granted, and he was separated. (Tr. at 20-22, 34-47, 86- 87; Applicant’s response to SOR; GE 1, 2) Applicant went through extended periods of unemployment and underemployment after he was discharged from the military in 2012. He attended college from 2013 to 2016 without earning a degree and technical school in late 2016. He lived on his Reserve pay, assistance from his parents, and possibly a combination of the GI Bill and Department of Veterans Affairs (VA) disability pay. (GE 1, 2) Applicant worked as a cook for a defense contractor overseas from about late 2017 through March 2019. He worked as a cook in the United States, not in the defense industry, from about April 2019 through September 2019. He returned overseas and worked for another defense contractor from about September 2019 to October or November 2020. He was unemployed for a time, and then he drove for a rideshare company from about early 2021 until the summer of 2021 when he started working for a defense contractor on a military installation in the United States. Applicant moved to a foreign country in September 2021 to work for a defense contractor on a military installation. He worked there until May 2023 when he had to leave because he did not have a security clearance. He was unemployed until he found a job in a restaurant in November 2023. He stated in his post-hearing submission that he lost his job a week after his hearing. His former defense contractor employer will rehire him and send him overseas to work on a military installation if he receives a security clearance. (Tr. at 25- 33, 47-49; GE 1, 2) Applicant’s driver’s license was suspended in about March 2023 for failure to maintain liability insurance on his vehicle. (SOR ¶¶ 1.q and 2.b). He was working overseas at the time, not driving the vehicle, and he did not realize that he needed to maintain the insurance. He was cited in August 2023 with, among other violations, unknowingly operating a vehicle while driver’s license suspended, cancelled, or revoked. He was not cited for failure to maintain liability insurance. He paid a fine. His license was replaced in September 2023, and is currently valid. (Tr. at 58-65, 72-73; Applicant’s response to SOR; GE 2, 8; AE A, C)

Applicant did not file a federal income tax return for tax year 2017 (SOR ¶ 1.a), but it is unclear that he had to. His IRS wage and income transcript showed $99 and $4,898 in wages, tips, and other compensation from wage and tax statements (W-2s) from two employers. His second employer withheld $320 in income taxes; $303 for Social Security; and $71 for Medicare. If there was no other income, Applicant would not have been required to file a federal income tax return for 2017. (Tr. at 47-53; GE 2; HE I; AE A, B) Applicant did not file his 2018, 2019, and 2020 federal income tax returns when they were due (SOR ¶ 1.b). He reported in his August 2020 Questionnaire for National Security Positions (SF 86) that he failed to file a tax return in 2019, because he was working out of the country and “just completely forgot about it.” He was interviewed for her background investigation in December 2020. He told the investigator that he did not file his 2018 and 2019 returns because he thought he was tax exempt from working overseas. He told the investigator that he intended to file his 2018, 2019, and 2020 tax returns by April 2021. (Applicant’s response to SOR; GE 1, 2) Applicant did not file his 2018 through 2020 tax returns by April 2021.The IRS prepared a substitute tax return for 2018 in July 2022. An IRS account transcript from March 2023 indicated that based on the substitute return, he owed the IRS $23,556 in taxes, penalties, and interest for 2018. Applicant retained a tax professional to prepare his tax returns. Applicant filed his 2018, 2019, and 2020 federal income tax returns in March 2023. Because of the amount of foreign income, his 2018 return indicated that he did not owe the IRS; his 2019 return indicated that he was due a refund of $366; and his 2020 return indicated that he was due a refund of $1,999. (Tr. at 53-54; Applicant’s response to SOR; GE 2) Applicant has not filed his 2021 (SOR ¶ 1.a) and 2022 (not alleged) income tax returns. He plans on having the same tax professional prepare the returns. (Tr. at 57- 58, 87-88; Applicant’s response to SOR; GE 2) The SOR originally alleged 14 delinquent debts totaling about $32,350. After 2 debts totaling about $4,940 were withdrawn because they were paid, the SOR alleges 12 delinquent debts totaling about $27,420. The debts are listed on one or more credit reports from August 2020, December 2022, and January 2024. Some of the debts have been paid. Applicant has not paid the $17,368 defaulted auto loan (SOR ¶ 1.c), but he stated the balance on the auto loan was $4,606. He fell behind on the payments, and he let the mother of his children drive the vehicle while he was overseas, and she got in a minor accident. The vehicle also needed maintenance. It was repaired and maintenance performed, incurring a bill of about $6,000 or $7,000. Nobody paid the bill. The auto repair shop had a mechanic’s lien on the vehicle and eventually sold it to recoup its charges. The debt is listed on all three credit reports in evidence, with the most recent report listing the balance as $20,747. The original creditor apparently did not receive anything from the sale. The creditor offered to accept $5,000 in a lump sum or

payments in settlement of the debt. Applicant stated that he has not had the money to pay the settlement. (Tr. at 66-71; Applicant’s response to SOR; GE 2, 3, 5-7) SOR ¶ 1.d alleges a $996 debt to a collection company on behalf of a college. Applicant paid a $437 debt to the college in May 2015, but that was a different debt. The $996 debt is listed on all three credit reports in evidence. Applicant thought the VA paid the college. He did not submit any documentation establishing that the $996 debt has been paid. (Tr. at 73-75; Applicant’s response to SOR; GE 2, 3, 5-7) The December 2022 credit report lists a charged-off $470 debt to a bank (SOR ¶ 1.e). The January 2024 credit report lists the account as paid, with a zero balance, and a last payment date in May 2023. The bank confirmed the debt was paid. (Tr. at 76; Applicant’s response to SOR; GE 2, 3, 5-7) Applicant paid $438 to a collection company in April 2023 to resolve the $438 debt it was collecting on behalf of a bank (SOR ¶ 1.f). (Tr. at 78-79; Applicant’s response to SOR; GE 5-7) The December 2022 TransUnion credit report lists a $423 debt to a collection company on behalf of a utility provider (SOR ¶ 1.g). It included the narrative: “Consumer dispute following resolution.” Applicant denied owing the debt and stated that he attached a receipt to his response to the SOR. There were several receipts attached to his response, but I could not find one for this debt. The debt is not listed on the January 2024 Equifax credit report. (Tr. at 79-80; Applicant’s response to SOR; GE 5-7) SOR ¶ 1.h alleges a $402 debt to a bank. Applicant paid the debt with a $402 payment on May 2, 2023. (Tr. at 76; Applicant’s response to SOR) The December 2020 combined credit report lists a $307 debt to a collection company on behalf of a gym, as reported by TransUnion (SOR ¶ 1.i). The activity date was reported as July 2020. The debt is listed on the December 2022 credit report with the same information, except the activity date was changed to November 2022. The debt is not listed on the January 2024 Equifax credit report. Applicant denied owing the debt. He stated that the debt was reported by mistake, and it had been removed from his credit report. He stated that he has a current membership with the gym, and it would not permit him to continue to work out if he had a delinquent balance. (Tr. at 80-81; Applicant’s response to SOR; GE 5-7) SOR ¶ 1.j alleges a $203 debt to a bank. Applicant paid the debt in full in May 2023. (Tr. at 81-83; Applicant’s response to SOR; GE 3, 5-7) Applicant admitted owing the $4,887 charged-off debt to a credit union (SOR ¶ 1.k), but he stated that he was not aware that it was still delinquent as it is not on his credit report. The debt was reported by Experian and Equifax on the December 2020 combined credit report. The debt was assigned in January 2012 and the last activity date was March 2020. The debt is not listed on the December 2022 TransUnion credit report or the January 2024 Equifax credit report. Applicant told the investigator during

his December 2020 background interview that he forgot about the debt, but he planned to pay it in a lump sum. There is no evidence of any payments. (Tr. at 83; Applicant’s response to SOR; GE 2, 5-7) Before it was withdrawn, SOR ¶ 1.l alleged an unpaid judgment of $3,541 awarded to an apartment landlord in 2019. Applicant made a final payment of $3,546 in October 2020 to satisfy the judgment. (Applicant’s response to SOR) Applicant paid $1,118 to a credit union in October 2020 for the $1,398 debt that was previously alleged in SOR ¶ 1.m. Applicant’s documents do not specifically state that the debt was paid in full, but the debt was not listed on any credit reports after August 2020. (Applicant’s response to SOR) Applicant denied owing the $698 debt that was placed in collection by the VA (SOR ¶ 1.n). The debt was reported by all three credit report agencies on the December 2020 combined credit report. The debt was assigned in January 2015 and the activity date was July 2020. The debt is not listed on the December 2022 TransUnion credit report or the January 2024 Equifax credit report. (Tr. at 83; Applicant’s response to SOR; GE 2. 5-7) Applicant denied owing the $205 delinquent debt to a collection company on behalf of a telecommunications company (SOR ¶ 1.o). He stated that the debt was paid in full, and that he called the collection company, but it had no record of the account. The debt was reported by TransUnion and Experian on the December 2020 combined credit report. The debt was assigned in June 2020, and the activity date was August 2020. The debt is not listed on the December 2022 TransUnion credit report or the January 2024 Equifax credit report. (Tr. at 83; Applicant’s response to SOR; GE 5-7) Applicant denied owing the $1,022 charged-off debt to a bank (SOR ¶ 1.p). He stated that he was not aware of the debt. The debt was reported by all three credit reporting agencies on the December 2020 combined credit report. The debt was assigned in February 2016 and the activity date was May 2020. He told the investigator during his December 2020 background interview that he paid the debt in October 2020. The debt is not listed on the December 2022 TransUnion credit report or the January 2024 Equifax credit report. Applicant stated that this debt was for unpaid charges on his government credit card from when he was in the Reserve. He stated that the amount was recouped from a federal income tax refund. The 2019 IRS wage and income transcript indicates that this creditor cancelled a $942 debt and $80 interest ($1,022 total) in August 2018. (Tr. at 83-86; Applicant’s response to SOR; GE 2) To summarize, Applicant paid six debts totaling about $6,452 (SOR ¶¶ 1.e, 1.f, 1.h, and 1.j, and SOR ¶¶ 1.l and 1.m, both withdrawn); for various reasons, he disputed owing five debts totaling about $2,655 (SOR ¶¶ 1.g, 1.i, 1.n, 1.o, and 1.p); and he still owes three debts totaling about $23,250 (SOR ¶¶ 1.c, 1.d, and 1.k). Applicant admitted he made some financial mistakes, but he stated that he has made great strides and will continue to improve, but he needs a security clearance to do

so. He recently lost one grandparent and another grandparent was diagnosed with cancer. He also recently lost his job. The January 2024 credit report lists a few relatively minor delinquent accounts that were not alleged in the SOR and will not be used for disqualification purposes. (Applicant’s response to SOR; GE 2, 5-7; AE A)

This case is adjudicated 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 adjudicative guidelines (AG), which became effective on June 8, 2017. When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines. 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 eligibility for access to classified information. 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 the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶ 2(c), 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.” Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, 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.” The applicant has the ultimate burden of persuasion to obtain 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 the applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation of potential, rather than actual, risk of compromise of classified information.

Section 7 of 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).

Guideline F, Financial Considerations The security concern 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. The guideline notes several conditions that could raise security concerns under AG ¶ 19. The following is potentially applicable in this case: (a) inability to satisfy debts; (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 a history of financial problems including delinquent debts and income tax returns that were not timely filed. The above disqualifying conditions are applicable. Applicant did not file a federal income tax return for 2017 (SOR ¶ 1.a), but the Government did not establish by substantial evidence that he was required to file a return. The language in SOR ¶ 1.a relating to tax year 2017 is concluded for Applicant. Applicant’s driver’s license was suspended in about March 2023 for failure to maintain liability insurance on his vehicle. (SOR ¶ 1.q). He was working overseas at the time, not driving the vehicle, and he did not realize that he needed to maintain the insurance. He was cited in August 2023 with, among other violations, unknowingly operating a vehicle while driver’s license suspended, cancelled, or revoked. He was not cited for failure to maintain liability insurance. He paid a fine. His license was replaced in

September 2023, and is currently valid. Any financial considerations security concerns raised by his failure to maintain liability insurance are mitigated. SOR ¶ 1.q is concluded for Applicant. Conditions that could mitigate the financial considerations security concerns are provided under AG ¶ 20. The following 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, 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; 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. Applicant went through extended periods of unemployment and underemployment after he was discharged from the military in 2012. He told a background investigator in December 2020 that he intended to file his 2018, 2019, and 2020 tax returns by April 2021. He did not file his 2018, 2019, and 2020 federal income tax returns until March 2023. AG ¶ 20(g) is applicable to those years. He still has not filed his returns for 2021 (SOR ¶ 1.a) and 2022 (not alleged). He plans on having the same tax professional prepare the returns. Failure to comply with tax laws suggests that an applicant has a problem with abiding by well-established government rules and systems. Voluntary compliance with rules and systems is essential for protecting classified information. See, e.g., ISCR Case No. 16-01726 at 5 (App. Bd. Feb. 28, 2018). A person who fails repeatedly to fulfill

his or her legal obligations, such as filing tax returns when due, does not demonstrate the high degree of good judgment and reliability required of those granted access to classified information. See, e.g., ISCR Case No. 17-01382 at 4 (App. Bd. May 16, 2018). This is true even when the tax returns are eventually filed. Applicant paid $3,546 in October 2020 to satisfy a judgment that was previously alleged in SOR ¶ 1.l. He paid $1,118 to a credit union in October 2020 for the $1,398 debt that was previously alleged in SOR ¶ 1.m. He paid four of the SOR debts totaling about $1,513 (SOR ¶¶ 1.e, 1.f, 1.h, and 1.j). The four paid debts are mitigated. He disputed owing five debts totaling about $2,655 (SOR ¶¶ 1.g, 1.i, 1.n, 1.o, and 1.p) for various reasons. I am giving Applicant the benefit of the doubt, and I find those debts are also mitigated. Applicant’s finances have improved. However, he still owes three debts totaling about $23,250 (SOR ¶¶ 1.c, 1.d, and 1.k), and he has not yet filed his federal tax returns for 2021 and 2022. There is insufficient evidence for a determination that Applicant’s financial problems will be resolved within a reasonable period. I am unable to find that he acted responsibly under the circumstances. His financial issues are recent and ongoing. His failure to fulfil his duty to file his income tax returns and pay his debts continues to raise doubts about his judgment, reliability, and willingness to follow rules and regulations. None of the above mitigating conditions are sufficient to mitigate financial considerations security concerns. Guideline E, Personal Conduct The security concern for personal conduct is set out in AG ¶ 15, as follows: 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 clearance investigative or adjudicative processes. AG ¶ 16 describes conditions that could raise a security concern and may be disqualifying. The following disqualifying conditions are potentially applicable: (c) credible adverse information in several adjudicative issue areas that is not sufficient for an adverse determination under any other single guideline, but which, when considered as a whole, supports a whole- person assessment of questionable judgment, untrustworthiness, unreliability, lack of candor, unwillingness to comply with rules and regulations, or other characteristics indicating that the individual may not properly safeguard classified or sensitive information;

(d) credible adverse information that is not explicitly covered under any other guideline and may not be sufficient by itself for an adverse determination, but which, when combined with all available information, supports a whole-person assessment of questionable judgment, untrustworthiness, unreliability, lack of candor, unwillingness to comply with rules and regulations, or other characteristics indicating that the individual may not properly safeguard classified or sensitive information. This includes, but is not limited to, consideration of: (1) untrustworthy or unreliable behavior to include breach of client confidentiality, release of proprietary information, unauthorized release of sensitive corporate or government protected information; (2) any disruptive, violent, or other inappropriate behavior; (3) a pattern of dishonesty or rule violations; and (4) evidence of significant misuse of Government or other employer’s time or resources; and (e) personal conduct, or concealment of information about one’s conduct, that creates a vulnerability to exploitation, manipulation, or duress by a foreign intelligence entity or other individual or group. Such conduct includes: (1) engaging in activities which, if known, could affect the person’s personal, professional, or community standing. SOR ¶ 2.a alleges that Applicant was separated from the Reserve in about 2016 with a general under honorable conditions discharge for unsatisfactory participation. SOR ¶ 2.b cross-alleges that Applicant’s driver’s license was suspended in about March 2023 for failure to maintain liability insurance on his vehicle. His conduct raises security concerns under AG ¶¶ 16(c), 16(d), and 16(e). AG ¶ 17 provides conditions that could mitigate security concerns. The following are potentially applicable: (c) the offense is so minor, or so much time has passed, or the behavior is so infrequent, or it happened under such unique circumstances that it is unlikely to recur and does not cast doubt on the individual’s reliability, trustworthiness, or good judgment; and (e) the individual has taken positive steps to reduce or eliminate vulnerability to exploitation, manipulation, or duress.

Applicant’s conduct is old, minor, or both. It does not cast doubt on his current reliability, trustworthiness, or good judgment. Personal conduct security concerns are mitigated.

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 have incorporated my comments under Guidelines E and F in my whole-person analysis. I also considered Applicant’s honorable military service. Overall, the record evidence leaves me with questions and doubts about Applicant’s eligibility and suitability for a security clearance. I conclude Applicant mitigated the personal conduct security concerns, but he did not mitigate the financial considerations security concerns.

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 Subparagraph 1.a: Against Applicant (except for tax year 2017, which is found For Applicant) Subparagraph 1.b: For Applicant Subparagraphs 1.c-1.d:

Against Applicant Subparagraphs 1.e-1.j: For Applicant Subparagraph 1.k: Against Applicant Subparagraphs 1.l-1.m: Withdrawn Subparagraphs 1.n-1.q: For Applicant

________________________ Paragraph 2, Guideline E: For Applicant Subparagraphs 2.a-2.b: For Applicant

It is not clearly consistent with the national interest to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is denied. Edward W. Loughran Administrative Judge