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___________ ___________ DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: Applicant for Security Clearance ) ) ) ) ) ISCR Case No. 24-00605 Appearances For Government: Alison P. O'Connell, Esq., Department Counsel For Applicant: Pro se 06/06/2025

HARVEY, Mark, Administrative Judge: Guideline F (financial considerations) security concerns are not mitigated. Eligibility for access to classified information is denied. Statement of the Case On May 15, 2023, Applicant completed an Electronic Questionnaires for Investigations Processing or security clearance application (SCA). (Government Exhibit (GE) 1) On September 19, 2024, the Defense Counterintelligence and Security Agency (DCSA) issued a statement of reasons (SOR) to Applicant under Executive Order (Exec. Or.) 10865, Safeguarding Classified Information within Industry (February 20, 1960); Department of Defense (DOD) Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (Directive) (January 2, 1992), as amended; and Security Executive Agent Directive 4, establishing in Appendix A, the National Security Adjudicative Guidelines for Determining Eligibility for Access to Classified Information or Eligibility to Hold a Sensitive Position (AGs), effective June 8, 2017. (Hearing Exhibit (HE) 2) The SOR detailed reasons why the DCSA did not find under the Directive that it is clearly consistent with the interests of national security to grant or continue a security clearance for Applicant and recommended referral to an administrative judge to determine

whether a clearance should be granted, continued, denied, or revoked. Specifically, the SOR set forth security concerns arising under Guideline F. (HE 2) On November 18, 2024, Applicant provided his response to the SOR, and he requested a hearing before an administrative judge. On February 26, 2025, Department Counsel was ready to proceed. On March 10, 2025, the case was assigned to me. On March 11, 2025, the Defense Office of Hearings and Appeals (DOHA) issued a notice scheduling the hearing on May 5, 2025. The hearing was held as scheduled using the Microsoft Teams video teleconference system. During the hearing, Department Counsel offered three exhibits into evidence, and Applicant offered four exhibits into evidence. (Tr. 12-15; GE 1-GE 3; Applicant Exhibit (AE) A-AE D) There were no objections, and all proffered exhibits were admitted into evidence. (Tr. 13, 15) On May 19, 2025, DOHA received a copy of the transcript. The record was not held open after the hearing. (Tr. 45) Some details were excluded to protect Applicant’s right to privacy. Specific information is available in the cited exhibits and transcript.

In Applicant’s SOR response, he admitted the SOR allegations in ¶¶ 1.a, 1.b, and 1.c. He also provided mitigating information. His admissions are ac

cepted as findings of fact. Applicant’s SOR response said: My “reasons” for not filing in the period 2012–[2]019 are that I thought it tedious and unnecessary since I didn’t make much money and very much doubted that I owed anything beyond what was already deducted from my pay. The IRS has bigger fish to fry. Moreover, the expectations are murky at best: every year I have to fill out random forms using information provided by my employer (hopefully) and other random guidelines distributed by the government in some fashion (online? from the post office?). This isn’t something I was taught, there doesn’t seem to be a simple authoritative source explaining my obligations. Most Americans have a single source of income and simplifying or automating the filing process would increase compliance, but I digress. In 2019–2020, I moved from [State C] to [State M] to [State F], COVID was in full swing, I lost my job, my father was having health problems, etc. In short, circumstances outside of my control put “filing taxes” on a back burner and I had developed the habit of not filing and a mindset that it was an unimportant exercise. Moreover, I wasn’t aware of the possibility of filing returns for previous years. At the time of writing, I am looking into the matter and will do what I can to fill in the gaps in my filing history.

Since then, i.e. the last 3–4 years where I have had steady and well- compensated employment ($110k–$125kgross annual), I have recognized the importance in filing and have done so (with the exception of [State C] income taxes in 2022, which I didn’t file due to technical difficulties). In summary, I’ve met my recent obligations, will continue to do so, and will work to meet any past obligations. I failed to meet previous obligations mostly for cultural reasons: I’ve been poor and underemployed most of my life and find inefficient bureaucracy distasteful. I didn’t think it important, but apparently I was wrong. Applicant is a 42-year-old microelectronic security engineer, who has worked for a defense contractor for about one month. (Tr. 6-7) He previously worked in this field for about three years. (Tr. 8) In 2001, he graduated from high school, and in 2005, he received a bachelor’s degree. (Tr. 7) In 2009, he received a master’s degree, and in 2019, he was awarded a Ph.D. (Tr. 7) He has not served in the military. (Tr. 7) He has never married, and he does not have any children. (Tr. 8) He has not previously held a security clearance. (Tr. 9) Financial Considerations Applicant’s September 19, 2024 SOR states he has the following tax issues: SOR ¶ 1.a alleges Applicant failed to file, as required, his federal income tax returns for tax years (TYs) 2012 through 2020. SOR ¶ 1.balleges Applicant failed to file, as required, his State C income tax returns for TYs 2013 through 2019, and 2022. SOR ¶ 1.calleges Applicant failed to file, as required, his State M income tax returns for TYs 2012, 2013, 2019, and 2020. Applicant was underemployed or unemployed for several years from around 2009 to 2019. (Tr. 19-22; SOR response) His reasons for not filing his tax returns were accurately detailed in his SOR response, supra. (Tr. 22-23) However, he does not currently find the “inefficient bureaucracy” of the tax-collection system to be distasteful. (Tr. 23) He accepts his responsibility to file his tax returns and pay his taxes. Applicant has not filed his federal income tax returns for TYs 2012 and 2013. (Tr. 23) His gross income for TYs 2012 and 2013 was $20,800 annually. (SOR response) In 2012, the filing threshold for a single person under age 65 was $9,750, and the filing threshold for a single person under age 65 in 2013 was $10,000. See IRS publications 501 for 2012 and 2013, available on IRS website. He met the thresholds and was required to file federal income tax returns for TYs 2012 and 2013. Applicant provided tax returns; however, they were not signed or dated. (AE A) Some did not have the top filled out. He said the tax returns were filed about six to eight

months before his hearing (late 2024). (Tr. 24) He said the checks he sent with the returns were cashed. (Tr. 24) For example, his federal income tax return for TY 2014 showed he owed $300, and he sent the IRS a check for $300 with his tax return. (Tr. 24) The IRS sent him a bill for about $1,000, which he said was probably due to penalties and interest charges. (Tr. 24) He paid the IRS charges. (Tr. 25-28) Applicant’s federal and state income tax returns showed the following information (adjusted gross income rounded to nearest $1,000 and taxes owed to nearest $100): Tax Year Date Filed Adjusted Gross Income Tax Owed (O) Tax Refund (R) 2014 Late 2024 $22,000 $300 (O) 2015 Late 2024 $21,000 $200 (O) 2016 Late 2024 $18,000 $0 2017 Late 2024 $20,000 $100 (O) 2018 Jan. 2025 (Tr. 29) $25,000 $400 (O) 2019 Mar. 2025 (Tr. 29) $36,000 $400 (R) 2020 Feb. 2025 (Tr. 29) $19,000 $1,600 (R) 2021 Filed Timely (Tr. 30; GE 2) $50,000 $1,800 (R) 2022 Filed Timely (Tr. 30; GE 2) $115,000 $2,100 (R) 2023 Filed Timely (Tr. 30; GE 2) $125,000 $3,300 (R) 2024 Filed Timely (Tr. 30) $109,000 $800 (O) Applicant has paid all taxes owed to the IRS. (Tr. 31) He has not filed his State C tax return for TY 2013 because he needed information from his federal income tax return for TY 2013. (Tr. 31-32) All of his other State C tax returns are filed. (Tr. 34) His State C tax returns were filed about the same time as his federal income tax returns for TYs 2014 through 2019, 2022, 2023, and 2024. (Tr. 32-33) He paid State C’s additional charges for filing late when he was billed by State C. (Tr. 33) Applicant has not filed his State M income tax returns for TYs 2012 and 2013. (Tr. 34) He filed his other required State M income tax returns. (Tr. 34) He was unable to file the TYs 2012 and 2013 State M income tax returns because he did not have W

-2sfrom his employer. (Tr. 34) The State M income tax returns for TYs 2019, 2020, and 2022 were filed in the six to eight months preceding his hearing. (Tr. 24, 35) Applicant said he would ask the IRS to provide income transcripts for TYs 2012 and 2013, which would enable him to file the remaining unfiled state and federal income tax returns. (Tr. 39) These transcripts are not available on the Internet. (Tr. 39-40)

The U.S. Supreme Court has recognized the substantial discretion of the Executive Branch in regulating access to information pertaining to national security emphasizing, “no one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). As Commander in Chief, the President has the authority “to control

access to information bearing on national security and to determine whether an individual is sufficiently trustworthy to have access to such information.” Id. at 527. The President has authorized the Secretary of Defense or his designee to grant applicant’s eligibility for access to classified information “only upon a finding that it is clearly consistent with the national interest to do so.” Exec. Or. 10865, Safeguarding Classified Information within Industry § 2 (Feb. 20, 1960), as amended. Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, these guidelines are applied in conjunction with an evaluation of the whole person. An administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. An administrative judge must consider all available, reliable information about the person, past and present, favorable, and unfavorable. The Government reposes a high degree of trust and confidence in persons with access to classified information. This relationship transcends normal duty hours and endures throughout off-duty hours. 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 about potential, rather than actual, risk of compromise of classified information. Clearance decisions must be “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See Exec. Or. 10865 § 7. Thus, nothing in this decision should be construed to suggest that it is based, in whole or in part, on any express or implied determination about applicant’s allegiance, loyalty, or patriotism. It is merely an indication the applicant has not met the strict guidelines the President, Secretary of Defense, and Director of National Intelligence have established for issuing a clearance. Initially, the Government must establish, by substantial evidence, conditions in the personal or professional history of the applicant that may disqualify the applicant from being eligible for access to classified information. The Government has the burden of establishing controverted facts alleged in the SOR. See Egan, 484 U.S. at 531. “Substantial evidence” is “more than a scintilla but less than a preponderance.” See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). The guidelines presume a nexus or rational connection between proven conduct under any of the criteria listed therein and an applicant’s security suitability. See ISCR Case No. 95-0611 at 2 (App. Bd. May 2, 1996). Once the Government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. Directive ¶ E3.1.15. An applicant “has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue his [or her] security clearance.” ISCR Case No. 01-20700 at 3 (App. Bd. Dec. 19, 2002). The burden of disproving a mitigating condition never shifts to the Government. See ISCR Case No. 02- 31154 at 5 (App. Bd. Sep. 22, 2005). “[S]ecurity clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531; see AG ¶ 2(b).

Financial Considerations AG ¶ 18 articulates the security concern for financial problems: 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 Appeal Board explained the scope and rationale for the financial considerations security concern in ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012) (citation omitted) as follows: This concern is broader than the possibility that an applicant might knowingly compromise classified information in order to raise money in satisfaction of his or her debts. Rather, it requires a Judge to examine the totality of an applicant’s financial history and circumstances. The Judge must consider pertinent evidence regarding the applicant’s self-control, judgment, and other qualities essential to protecting the national secrets as well as the vulnerabilities inherent in the circumstances. The Directive presumes a nexus between proven conduct under any of the Guidelines and an applicant’s security eligibility. AG ¶ 19 includes disqualifying conditions that could raise a security concern and may be disqualifying in this case: (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. The record establishes the disqualifying conditions in AG ¶¶ 19(c) and 19(f), requiring additional inquiry about the possible applicability of mitigating conditions. Discussion of the disqualifying conditions is contained in the mitigation section, infra.

The financial considerations mitigating conditions under AG ¶ 20 which may be applicable in this case are as follows: (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. The Appeal Board in ISCR Case No. 10-04641 at 4 (App. Bd. Sept. 24, 2013) explained Applicant’s responsibility for proving the applicability of mitigating conditions as follows: Once a concern arises regarding an Applicant’s security clearance eligibility, there is a strong presumption against the grant or maintenance of a security clearance. See Dorfmont v. Brown, 913 F. 2d 1399, 1401 (9th Cir. 1990), cert. denied, 499 U.S. 905 (1991). After the Government presents evidence raising security concerns, the burden shifts to the applicant to rebut or mitigate those concerns. See Directive ¶ E3.1.15. The standard applicable in security clearance decisions is that articulated in Egan, supra. “Any doubt concerning personnel being considered for access to classified information will be resolved in favor of the national security.” Directive, Enclosure 2 ¶ 2(b).

On September 19, 2024, the DCSA issued an SOR to Applicant. The SOR alleged, that Applicant failed to file as required his federal income tax returns for TYs 2012 through 2020; he failed to file as required his State C income tax returns for TYs 2013 through 2019, and 2022; and he failed to file as required his State M income tax returns for TYs 2012, 2013, 2019, and 2020. On November 18, 2024, he responded to SOR, admitted he had not filed the tax returns as alleged, and said: My “reasons” for not filing in the period 2012–1019 are that I thought it tedious and unnecessary [due to his low income, and] . . . [I put filing tax returns on] a back burner and I had developed the habit of not filing and a mindset that it was an unimportant exercise. In summary, I’ve met my recent obligations, will continue to do so, and will work to meet any past obligations. I failed to meet previous obligations mostly for cultural reasons: I’ve been poor and underemployed most of my life and find inefficient bureaucracy distasteful. I didn’t think it important, but apparently I was wrong. Recently, the Appeal Board in ISCR Case No. 23-00254 at 3 (App. Bd. Sept. 9, 2024) said: A security clearance adjudication is not a proceeding aimed at inducing an applicant to meet his or her duty to file tax returns. Rather, it is a proceeding aimed at evaluating an applicant’s judgment, reliability, and trustworthiness. E.g., ISCR Case No. 07-08049 at 5 (App. Bd. Jul. 22, 2008). Accordingly, even though Applicant eventually filed his tax returns [in the case under appeal], the Judge was obligated to consider the facts and circumstances surrounding the failure to timely meet tax obligations. Id. A willful failure to timely make (means complete and file with the IRS) a federal income tax return is a misdemeanor-level federal criminal offense. Title 26 U.S.C. § 7203, willful failure to file return or supply information, reads: Any person . . . required by this title or by regulations made under authority thereof to make a return, keep any records, or supply any information, who willfully fails to . . . make such return, keep such records, or supply such information, at the time or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of a misdemeanor. . . . A willful failure to make return, keep records, or supply information when required, is a misdemeanor without regard to the existence of any tax liability. Spies v. United States, 317 U.S. 492 (1943); United States v. Walker, 479 F.2d 407 (9th Cir. 1973); United States v. McCabe, 416 F.2d 957 (7th Cir. 1969); O’Brien v. United States, 51 F.2d 193 (7th Cir. 1931). For purposes of this decision, I am not weighing Applicant’s failure to timely file his federal income tax returns against him as a crime. Regarding the failure to timely file a federal income tax return, the Appeal Board has commented:

Failure to file tax returns suggests that an applicant has a problem with complying with well-established governmental rules and systems. Voluntary compliance with such rules and systems is essential for protecting classified information. ISCR Case No. 01-05340 at 3 (App. Bd. Dec. 20, 2002). As we have noted in the past, a clearance adjudication is not directed at collecting debts. See, e.g., ISCR Case No. 07-08049 at 5 (App. Bd. Jul. 22, 2008). By the same token, neither is it directed toward inducing an applicant to file tax returns. Rather, it is a proceeding aimed at evaluating an applicant’s judgment and reliability. Id. A person who fails repeatedly to fulfill his or her legal obligations 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. 14-01894 at 5 (App. Bd. Aug. 18, 2015). See Cafeteria & Restaurant Workers Union Local 473 v. McElroy, 284 F.2d 173, 183 (D.C. Cir. 1960), aff’d, 367 U.S. 886 (1961). ISCR Case No. 14-04437 at 3 (App. Bd. Apr. 15, 2016). See ISCR Case No. 15-01031 at 4 (App. Bd. June 15, 2016) (citations omitted); ISCR Case No. 14-05476 at 5 (App. Bd. Mar. 25, 2016) (citing ISCR Case No. 01-05340 at 3 (App. Bd. Dec. 20, 2002)); ISCR Case No. 14-01894 at 4-5 (App. Bd. Aug. 18, 2015). The Appeal Board clarified that even in instances where an “[a]pplicant has purportedly corrected [his or her] federal tax problem, and the fact that [applicant] is now motivated to prevent such problems in the future, does not preclude careful consideration of [a]pplicant’s security worthiness in light of [his or her] longstanding prior behavior evidencing irresponsibility,” including a failure to timely file federal income tax returns. See ISCR Case No. 15-01031 at 3 & n.3 (App. Bd. June 15, 2016) (characterizing “no harm, no foul” approach to an applicant’s course of conduct and employing an “all’s well that ends well” analysis as inadequate to support approval of access to classified information with focus on timing of filing of tax returns after receipt of the SOR). The Appeal Board in ISCR Case No. 15-01031 (App. Bd. June 15, 2016) explained that in some situations, even if no taxes are owed when income tax returns are not timely filed, grant of access to classified information is inappropriate. In that case, the applicant filed his 2011 federal income tax return in December 2013, his 2012 federal income tax return in September 2014, and his 2013 federal income tax return in October 2015. He received federal income tax refunds of at least $1,000 for each year. Nevertheless, the Appeal Board reversed the administrative judge’s decision to grant access to classified information. Id. In ISCR Case No. 15-06440 at 4 (App. Bd. Dec. 26, 2017) the Appeal Board reversed the grant of a security clearance, discussed how AG ¶ 20(g) applied, and noted: The timing of the resolution of financial problems is an important factor in evaluating an applicant’s case for mitigation because an applicant who begins to resolve financial problems only after being placed on notice that his clearance was in jeopardy may lack the judgment and self-discipline to follow rules and regulations over time or when there is no immediate threat to his own interests. In this case, applicant’s filing of his [f]ederal income tax

returns for 2009-2014 after submitting his SCA, undergoing his background interview, or receiving the SOR undercuts the weight such remedial action might otherwise merit. In this case, Applicant filed all required tax returns and paid all required taxes, except the federal and state income tax returns for TYs 2012 and 2013. He said he needed W-2sfor those two TYs. He needs to contact the IRS and seek income transcripts for those two TYs. He did not provide copies of correspondence to his employer seeking income information for those two TYs. His filing of overdue tax returns after receipt of the SOR for multiple TYs may be too late under the DOHA Appeal Board’s jurisprudence and all the circumstances. In any event, AG ¶ 20(g) does not apply to the tax returns that are not filed. None of the mitigating conditions fully apply to the SOR allegations. Financial considerations security concerns are not mitigated at this time.

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 the 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), “[t]he ultimate determination” of whether to grant a security clearance “must be an overall common-sense judgment based upon careful consideration of the guidelines” and the whole-person concept. My comments under Guideline F are incorporated in my whole-person analysis. Some of the factors in AG ¶ 2(d) were addressed under that guideline but some warrant additional comment. Applicant is a 42-year-old microelectronic security engineer, who has worked for a defense contractor for about one month. He previously worked in this field for about three years. In 2005, he received a bachelor’s degree. In 2009, he received a master’s degree, and in 2019, he was awarded a Ph.D. Applicant was a credible witness at his hearing. He timely filed recent tax returns; has filed most of his overdue tax returns; and he does not owe any taxes, except possibly for TYs 2012 and 2013. The evidence against grant of a security clearance is detailed in the financial considerations section, supra, and the evidence against mitigation is more persuasive at this time. He failed to timely file his federal and state income tax returns for TYs 2012 through 2020. His failure to take timely, prudent, responsible, and good-faith actions

_________________________ regarding his taxes raise unmitigated questions about his reliability, trustworthiness, and ability to protect classified information. See AG ¶ 18. It is well settled that once a concern arises regarding an applicant’s security clearance eligibility, there is a strong presumption against granting a security clearance. See Dorfmont, 913 F. 2dat 1401. “[A] favorable clearance decision means that the record discloses no basis for doubt about an applicant’s eligibility for access to classified information.” ISCR Case No. 18-02085 at 7 (App. Bd. Jan. 3, 2020) (citing ISCR Case No.12-00270 at 3 (App. Bd. Jan. 17, 2014)). This decision should not be construed as a determination that Applicant cannot or will not attain the state of reform necessary for award of a security clearance in the future. With more effort towards maintenance of his financial responsibility, and an established history of timely filing his income tax returns and paying his taxes, he may well be able to demonstrate persuasive evidence of his security clearance worthiness. I have carefully applied the law, as set forth in Egan, Exec. Or. 10865, the Directive, the AGs, and the Appeal Board’s jurisprudence to the facts and circumstances in the context of the whole person. Applicant failed to mitigate 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 Subparagraphs 1.a through 1.c: Against Applicant

Considering all of the circumstances in this case, it is not clearly consistent with the interests of national security to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is denied. Mark Harvey Administrative Judge