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ISCR Case 23-02460 — CASE

ISCR Case 23-02460denied

Case Headnote

ISCR Case No. 23-02460

deniedAug 30, 2024· Hon. Wilford H. Ross· hearing

Summary

A 45-year-old single applicant with a high school education was denied a public trust position due to financial considerations under Guideline F. The applicant admitted to multiple outstanding debts totaling approximately $25,259, including a charged-off automobile loan of $12,768, several past-due medical debts, and other charged-off or past-due accounts ranging from $180 to $2,678.

While the applicant denied owing delinquent state taxes, claiming payment on August 21, 2023, and stated that her 2017 federal tax return was filed on April 7, 2023, the judge found insufficient evidence of resolution for the admitted debts. The applicant failed to demonstrate responsible management of her financial obligations.

Consequently, the judge ruled in favor of the applicant on the tax-related issues but found that the unresolved debts raised concerns about reliability and trustworthiness. Eligibility for access to sensitive information was denied.

Why the Applicant Was Denied

The applicant admitted to multiple unpaid debts totaling approximately $25,259 without providing evidence of resolution.
The applicant failed to demonstrate responsible management of her financial obligations, raising questions about her reliability and trustworthiness.

Conditions Referenced

Disqualifying

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

Mitigating

AG ¶ 20(g)appliedMade Arrangements with Tax AuthorityThe applicant demonstrated a good-faith effort to file her 2017 Federal tax returns.

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 issuedJan 11, 2024
Answer filedFeb 8, 2024Requested decision on written record.
Hearing held—Decision based on written record.
Decision dateAug 30, 2024

Cite For

Insufficient Evidence of Debt Resolution Under Guideline F
Good-faith Effort in Tax Filing Under AG ¶ 20(g)
Impact of Financial Distress on Trustworthiness Evaluations

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 against the applicant on multiple allegations of unpaid consumer debts totaling approximately $25,259, while ruling in favor of the applicant regarding a disputed tax debt and the failure to file tax returns. The applicant's financial issues raised significant concerns about her trustworthiness for a public trust position.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant admitted that this automobile loan in the amount of $12,768 had been charged off. $12,768	Against Applicant	Auto Loan Debt	Admitted	—	—	—
1.b	Applicant admitted owing a past-due medical debt in the amount of $2,963. $2,963	Against Applicant	Medical Debt	Admitted	—	—	—
1.c	Applicant admitted that she owed a charged-off account in the amount of $2,678. $2,678	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.d	Applicant admitted owing a past-due medical debt in the amount of $1,286. $1,286	Against Applicant	Medical Debt	Admitted	—	—	—
1.e	Applicant admitted owing a past-due wireless debt in the amount of $1,027. $1,027	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.f	Applicant admitted owing a past-due debt in the amount of $635. $635	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.g	Applicant admitted owing a past-due debt in the amount of $632. $632	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.h	Applicant admitted owing a past-due medical debt in the amount of $608. $608	Against Applicant	Medical Debt	Admitted	—	—	—
1.i	Applicant admitted owing a past-due debt in the amount of $543. $543	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.j	Applicant admitted owing a past-due debt in the amount of $209. $209	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.k	Applicant admitted owing a past-due debt in the amount of $180. $180	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.l	Applicant admitted owing a past-due debt in the amount of $730. $730	Against Applicant	Unspecified Financial	Admitted	—	—	—
1.m	Applicant denied owing delinquent taxes in the amount of approximately $5,172 to State A, stating that she had paid this debt on August 21, 2023. $5,172	For Applicant	Tax Unpaid	Denied	—	—	—
1.n	Applicant admitted that she failed to timely file Federal income tax returns for at least the tax year 2017, but claimed that her 2017 return was filed on April 7, 2023.	For 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: ) ) ------------------ ) ADP Case No. 23-02460 ) Applicant for Public Trust Position ) ) Appearances For Government: Andrew H. Henderson, Esquire, Department Counsel For Applicant: Pro se 08/30/2024

STATEMENT OF CASE

ROSS, Wilford H., Administrative Judge: On December 15, 2022, Applicant submitted an Electronic Questionnaire for Investigations Processing (e-QIP). (Item 2.) On January 11, 2024, the Department of Defense (DoD) issued Applicant a Statement of Reasons (SOR) detailing trustworthiness concerns under Guideline F, Financial Considerations. (Item 1.) The action was taken under DoD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) effective within the DoD on June 8, 2017. Applicant answered the SOR in writing (Answer) on February 8, 2024. She requested her case be decided on the written record in lieu of a hearing. (Item 1.) On February 26, 2024, Department Counsel submitted the Department’s written case. A complete copy of the file of relevant material (FORM), consisting of Items 1 to 7, was provided to Applicant, who received the file on March 5, 2024. Applicant was given 30 days from receipt of the FORM to file objections and submit material in refutation, extenuation, or mitigation. She elected not to submit any

additional information. The case was assigned to me on June 24, 2024. Based upon a review of the pleadings and exhibits, national security eligibility for access to sensitive information is denied.

FINDINGS OF FACT

Applicant is 45 years old, single, and has a high school education. She began work with her current employer in October 2019. She requires access to sensitive personal information in connection with her employment. (Item 2 at Sections 12, 13A, and 17.) The SOR contained fourteen allegations under Guideline F, Financial Considerations (1.a to 1.n). Subparagraphs 1.a to 1.lconcern unpaid consumer debts amounting to approximately $25,259. Subparagraph 1.malleges Applicant owes State A $5,173 in delinquent taxes. Subparagraph 1.nalleges she has not filed, as required, Federal income tax returns for at least tax year 2017. Applicant admitted allegations 1.a through 1.lin the SOR under this paragraph. She denied allegations 1.mand 1.nwith explanations. Evidence for the existence of the debts set forth in the SOR is found in credit reports of Applicant dated January 19, 2023; September 25, 2023; and February 26, 2024. (Items 5, 6, and 7.) Evidentiary support for the existence of the debts is also found in her e-QIP. (Item 2 at Section 26.) Additional supporting evidence is found in her responses to interrogatories dated September 18, 2023. (Item 4.) Paragraph 1 (Guideline F - Financial Considerations) 1.a. Applicant admitted that this automobile loan in the amount of $12,768 had been charged off. She stated in her e-QIP that the financial issue was due to, “Financial hardship.” She also stated, “Debt was cancelled or at least I have never received any further information on actions taken that I can recall/locate.” No other evidence has been submitted showing that this debt was paid or otherwise settled. Based on the state of the record, this debt is not resolved. (Item 2 at Section 26.) 1.b. Applicant admitted owing a past-due medical debt in the amount of $2,963. No evidence has been submitted showing that this debt has been paid or otherwise settled. It is not resolved. 1.c. Applicant admitted that she owed a charged-off account in the amount of $2,678. No evidence has been submitted showing that this debt has been paid or otherwise settled. It is not resolved. 1.d. Applicant admitted owing a past-due medical debt in the amount of $1,286. No evidence has been submitted showing that this debt has been paid or otherwise settled. It is not resolved.

1.e. Applicant admitted owing a past-due wireless debt in the amount of $1,027. No evidence has been submitted showing that this debt has been paid or otherwise settled. It is not resolved. 1.f. Applicant admitted owing a past-due debt in the amount of $635. No evidence has been submitted showing that this debt has been paid or otherwise settled. It is not resolved. 1.g. Applicant admitted owing a past-due debt in the amount of $632. No evidence has been submitted showing that this debt has been paid or otherwise settled. It is not resolved. 1.h. Applicant admitted owing a past-due medical debt in the amount of $608. No evidence has been submitted showing that this debt has been paid or otherwise settled. It is not resolved. 1.i. Applicant admitted owing a past-due debt in the amount of $543. No evidence has been submitted showing that this debt has been paid or otherwise settled. It is not resolved. 1.j. Applicant admitted owing a past-due debt in the amount of $209. She stated in her interrogatory responses that this debt has been paid. (Item 4 at page 6.) No other evidence has been introduced to show that this debt has been paid or otherwise settled. It is not resolved. 1.k. Applicant admitted owing a past-due debt in the amount of $180. She stated in her interrogatory responses that this debt has been paid. (Item 4 at page 7.) No other evidence has been introduced to show that this debt has been paid or otherwise settled. It is not resolved. 1.l. Applicant admitted owing a past-due debt in the amount of $730. No evidence has been introduced to show that this debt has been paid or otherwise settled. It is not resolved. With regard to the delinquent debts set forth above Applicant stated that she had retained a credit repair law firm on or before September 2023, “to help contact all debt collectors and consolidate.” Records from the law firm are found in Item 4 at pages 63- 69. 1.m. Applicant denied owing delinquent taxes in the amount of approximately $5,172 to State A, stating that she had paid this debt on August 21, 2023. (Item 1.) She submitted tax information from State A that supported her statement. A Taxpayer Statement from State A dated August 18, 2023, stated she owed $5,172 for tax years 2017 through 2022. (Item 4 at page 38.) However, she also submitted online documentation from State A’s tax authority for tax years 2016 through 2021 dated September 13, 2023, that stated she had no balance owing. (Item 4 at 14, 32-37.)

Based on the state of the record, I find there is insufficient evidence to support the current validity of this debt. This allegation is found for Applicant. 1.n. Applicant admitted that she failed to timely file Federal income tax returns for at least the tax year 2017, but claimed that her 2017 return was filed on April 7, 2023, “along with the previous years returns.” (Item 1.) She submitted her IRS transcripts with her interrogatory responses. (Item 4 at 21-31.) Those transcripts confirm that her 2017 return had not been filed as of September 18, 2023. However, they also show that all of her subject tax returns from 2016, and 2018 through 2021 had been filed. With regard to her late filing for tax returns Applicant stated: I filed an extension in 2018 for 2017 taxes and then forgot to file by October. I did the same thing in 2019 and then just procrastinated until it became overwhelming with the late files and no files and potential amounts owed. 2017 Federal taxes have been filed but I have not had a letter of determination of balance so I will probably need to re-file those. All other taxes have been repaid and have $0 balance for State/Federal 2016, State 2017, State/Federal 2018, State/Federal 2019, State/Federal 2020, State /Federal 2021, State/Federal 2022. (Item 4 at 13) Based on the state of the record, I find that Applicant has made a good-faith effort to file her 2017 Federal tax returns. This allegation is found for Applicant.

POLICIES

Positions designated as ADP I/II/III are classified as “sensitive positions.” The Deputy Under Secretary of Defense (Counterintelligence and Security) Memorandum, dated November 19, 2004, indicates trustworthiness adjudications will apply to cases forwarded to the DoD and DOHA by the Defense Security Service and Office of Personnel Management. DoD contractor personnel are afforded the right to the procedures contained in the Directive before any final unfavorable access determination may be made. When evaluating an applicant’s suitability for national security eligibility for a public trust position, the administrative judge must consider the disqualifying and mitigating conditions in the AGs. 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(d), describing 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.” 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. Directive ¶ E3.1.14 requires the Government to 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 as to obtaining a favorable national security eligibility decision. A person who applies for access to sensitive 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 sensitive information. Decisions include, by necessity, consideration of the possible risk the applicant may deliberately or inadvertently fail to protect or safeguard sensitive information. Such decisions entail a certain degree of legally permissible extrapolation as to potential, rather than actual, risk of compromise of sensitive information.

ANALYSIS

Paragraph 1 (Guideline F - Financial Considerations) The trustworthiness 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 personal 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 three conditions that could raise trustworthiness concerns and may be disqualifying 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 Federal, state, or local income tax as required. Applicant has a history of being unable to fully satisfy all of her debts. At one point she owed State A delinquent taxes and there was evidence she had not timely filed her 2017 Federal income tax return. The evidence raises all three trustworthiness concerns, thereby shifting the burden to Applicant to rebut, extenuate, or mitigate those concerns. The guideline includes three conditions in AG ¶ 20 that could mitigate trustworthiness concerns arising from Applicant’s 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, 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 in compliance with those arrangements. The evidence does not support application of AG ¶¶ 20(a) and (b) in this case. Applicant submitted no evidence that she has paid or otherwise resolved any of the admittedly delinquent consumer debts set forth in subparagraphs 1.a through 1.l. However, under the particular circumstances of this case, AG ¶ 20(g) does apply to subparagraphs 1.mand 1.nfor the reasons stated in Findings of Fact, above. Those subparagraphs are found for Applicant. With those exceptions, the remaining subparagraphs and Paragraph 1 of the SOR are found against Applicant.

WHOLE PERSON CONCEPT

Under the whole-person concept, the administrative judge must evaluate an applicant’s eligibility for a public trust position 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 for a trustworthiness determination 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 the facts and circumstances surrounding this case. Applicant did not submit sufficient information from which to conclude that her financial obligations are being responsibly managed or that similar problems are unlikely to recur. Overall, the record evidence leaves me with questions and doubts as to Applicant’s eligibility and suitability for a public trust position. For these reasons, I conclude Applicant did not meet her burden to mitigate the trustworthiness concerns arising from her financial problems.

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: AGAINST APPLICANT Subparagraph 1.a through 1.l: Against Applicant Subparagraphs 1.mand 1.n:

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 public trust position. Eligibility for access to sensitive ADP information is denied. WILFORD H. ROSS Administrative Judge