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ISCR Case 16-01714.h1 — CASE

ISCR Case 16-01714.h1denied

Case Headnote

ISCR Case No. 16-01714.h1

deniedJul 1, 2016· Hon. Thomas M. Crean· hearing

Summary

A 51-year-old applicant was denied a security clearance under Guideline F (Financial Considerations) due to a history of delinquent debts and unfiled tax returns. The Statement of Reasons detailed a July 2014 wage garnishment by the U.S. Treasury for $18,456, along with unfiled federal and state income tax returns for 2011 and 2013.

Additional financial concerns included delinquent state taxes for 2009 ($5,505), 2012 ($404), and 2014 ($1,175) for the same state. The applicant also had a past due debt to a mail order company, with an initial amount of $113 and a balance of $455.

The denial was based on the applicant's admission to these allegations and a failure to provide sufficient documentation demonstrating a good-faith effort to resolve the financial issues. The applicant also did not present evidence of financial counseling or concrete plans to address the outstanding debts, leading to the determination that eligibility for access to classified information could not be granted.

Why the Applicant Was Denied

The applicant admitted to multiple allegations of delinquent debt and failure to file tax returns.
The applicant did not provide sufficient documentation to demonstrate a good-faith effort to resolve his financial issues.
The applicant failed to present evidence of financial counseling or plans to address his debts.

Conditions Referenced

Disqualifying

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

Key Rule Quoted

“The protection of the national security is the paramount consideration.”

Procedural Posture

SOR issuedAug 17, 2016
Answer filedSep 13, 2016Applicant admitted all allegations.
Hearing held—Decided on the written record.
Decision dateAug 8, 2017

Cite For

Insufficient Documentation to Mitigate Financial Concerns Under Guideline F
Failure to Demonstrate Good-faith Efforts to Resolve Debts
Impact of Financial Irresponsibility on Security Clearance Eligibility

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 all financial allegations under Guideline F, citing a lack of sufficient documentation to mitigate the security concerns. The applicant admitted to multiple debts, including tax issues and a wage garnishment, but failed to provide evidence of efforts to resolve these financial problems, leading to a denial of eligibility for access to classified information.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	a July 2014 wage garnishment for the United States Treasury for $18,456 $18,456	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (f) failure to file / fraudulent filing of tax returns or unpaid tax	—	—
1.b	a failure to file federal income tax returns for 2011 and 2013	Against Applicant	Tax Filing Failure	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (f) failure to file / fraudulent filing of tax returns or unpaid tax	—	—
1.c	failure to file state income tax returns for 2011 and 2013	Against Applicant	Tax Filing Failure	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (f) failure to file / fraudulent filing of tax returns or unpaid tax	—	—
1.d	delinquent state tax for 2009 of $5,505 $5,505	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	delinquent state taxes for the same state of $404 for tax year 2012 $404	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	delinquent state taxes for the same state for tax year 2014 for $1,175 $1,175	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.g	a past due debt to a mail order company of $113 with a balance of $455 $455	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—

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. 16-01714 ) ) Applicant for Security Clearance

For Government: Douglas Velvel, Esq., Department Counsel For Applicant: Pro se

08/15/2017 ______________

STATEMENT OF CASE

______________

CREAN, Thomas M., Administrative Judge:

Applicant did not provide sufficient documentation to mitigate security concerns for financial considerations under Guideline F. Eligibility for access to classified information is denied.

Statement of the Case

On December 8, 2014, Applicant submitted an Electronic Questionnaire for Investigations Processing (e-QIP) to obtain a security clearance required for employment with a defense contractor. (Item 2) The Department of Defense (DOD) could not make the affirmative findings required to issue a security clearance. On August 17, 2016, DOD issued a Statement of Reasons (SOR) to Applicant detailing security concerns for financial considerations under Guideline F. (Item 1) The action was taken under Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) effective in the DOD on September 1, 2006. On June 8, 2017, new AGs were implemented and are effective for decisions issued after that date.1

Applicant answered the SOR on September 13, 2016, admitting the seven allegations of delinquent debt under Guideline F. He elected to have the matter decided on the written record. (Item 1) Department Counsel submitted the Government’s written case on October 6, 2016. (Item 7) Applicant received a complete file of relevant material (FORM) on October 17, 2016. He was provided the opportunity to file objections and to submit material to refute, extenuate, or mitigate the disqualifying conditions. Applicant did not respond to the FORM. I was assigned the case on August 8, 2017.

FINDINGS OF FACT

After thoroughly reviewing the case file, I make the following findings of fact. Applicant is 51 years old. He graduated from high school in June 1984. Applicant married in March 1992 and has one child and one stepchild. He has been eligible for access to classified information since 2007. (Item 2, e-QIP, dated December 8, 2014)

The SOR alleges, and credit reports (Item 3, dated February 26, 2015; Item 4, dated April 14, 2016), confirm the following delinquent debts for Applicant: a July 2014 wage garnishment for the United States Treasury for $18,456 (SOR 1.a); a failure to file federal income tax returns for 2011 and 2013 (SOR 1.b); failure to file state income tax returns for 2011 and 2013 (SOR 1.c); delinquent state tax for 2009 of $5,505 (SOR 1.d); delinquent state taxes for the same state of $404 for tax year 2012 (SOR 1.e); delinquent state taxes for the same state for tax year 2014 for $1,175 (SOR 1.f); and a past due debt to a mail order company of $113 with a balance of $455 (SOR 1.g).

Applicant listed the failure to file federal and state tax returns, the wage garnishment, and a delinquent loan on his e-QIP. (Item 2) In his response to the SOR, Applicant admitted the wage garnishment of $18,456; his failure to file federal and state income tax returns for tax years 2009, 2012, and 2013; that as a result of his failure to file state income tax returns, he owes state income taxes for 2009, 2012, and 2014; and that he has a debt to a mail order company of $455. He noted that he had his tax returns prepared, but he did not turn them in to the proper tax authorities until September 7, 2016. (Item 7, Response to SOR, dated September 13, 2016)

Applicant claims that he was contacting the Internal Revenue Service (IRS) and state tax authorities to make payment arrangements for the taxes owed. Applicant noted that the delinquent debt is his own fault and that he wants to resolve the issues. He works hard six or seven days a week and it takes all he can do to meet his financial obligations. There is no information in the case file concerning the cause of the delinquent debt, any financial counseling received, or future plans and actions to resolve the delinquent debt. There is no information in the case file of any contact with the IRS or state tax office.

POLICIES

When evaluating an applicant’s suitability for a security clearance, 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 must be considered 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, these guidelines are applied 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(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. Under Directive ¶ E3.1.15, the applicant is responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by applicant or proven by Department Counsel. . . .” The applicant has the ultimate burden of persuasion for obtaining 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 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 and sensitive information)

ANALYSIS

Financial Considerations

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. (AG ¶ 18) An individual who is financially irresponsible may also be irresponsible, unconcerned, or careless in his obligations to protect classified information. Behaving responsibly or irresponsibly in one aspect of life provides an indication of how a person may behave in other aspects of life.

A person’s relationship with his creditors is a private matter until evidence is uncovered demonstrating an inability or unwillingness to meet his financial obligations. Absent evidence of strong extenuating or mitigating circumstances, an applicant with a history of serious or recurring financial difficulties is in a situation of risk inconsistent with the holding of a security clearance. An applicant is required to manage his or her finances in such a way as to meet financial obligations.

Credit reports reveal, and Applicant admitted, that he has delinquent tax and consumer debts. The evidence is sufficient to raise security concerns under Financial Considerations Disqualifying Conditions AG ¶ 19:

(a) inability to satisfy debts,

(b) unwillingness to satisfy debts regardless of the ability to do so;

(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 information raises issues about Applicant’s willingness and ability to meet his financial obligations. Once the Government has established the adverse financial issue, the Applicant has the responsibility to refute or mitigate the issue.

I considered the following Financial Consideration Mitigating Conditions under AG ¶ 20:

(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 problems 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;

(c) the person has received or is receiving counseling for the problem from a legitimate and credible sources, such as a non-profit credit counselling 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 the overdue creditors or otherwise resolve debts; 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 mitigating conditions do not apply. Applicant’s debts are numerous, recent, and were not incurred under circumstances making recurrence unlikely. The debts are a normal consumer debt or arose from his failure to timely file his Federal and state income tax returns. In his response to the SOR, Applicant noted that the tax returns were prepared and he simply did not file them with the proper tax authorities as required. He further indicated that he was making arrangements to pay the Federal and state income taxes. He did not present any documents to verify the plans or payment arrangements for the taxes or any debts. Applicant was advised by Department Counsel in the FORM that he needed to provide proof of his claims of payment or resolution of the debts. He has not documented his plans to resolve his financial problems or his claimed efforts to pay and resolve his delinquent debts. He also did not provide information concerning financial counseling. Accordingly, he has not established a good-faith effort to pay her debts.

Applicant has been gainfully employed since at least June 1990. He appears to have the ability to resolve his delinquent debts. However, he has not acted responsibly because he just did not file his federal and state tax returns after the documents were prepare. There is no clear evidence that his debt problems have been resolved, and his finances are not under control. Overall, he has not provided evidence or proof that he acted with reason and responsibility towards his finances. His lack of documented actions to resolve his financial problems are a strong indication that he may not protect and safeguard classified information. In sum, Applicant did not present sufficient information to mitigate financial security concerns.

WHOLE PERSON CONCEPT

Under the whole-person concept, an administrative judge must evaluate an applicant’s eligibility for access to classified information 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 access to classified information must be an overall common-sense 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 the facts and circumstances surrounding this case. Applicant failed to timely file his Federal and state income tax returns, and he did not provide proof that he was implementing his plan to pay his delinquent taxes and debts. In requesting an administrative determination, Applicant chose to rely on the written record. In so doing, he failed to supplement the record with relevant and material facts regarding his financial circumstances; to adequately document and articulate his positions; and to provide facts to mitigate the financial security concerns. In short, the file lacks sufficient evidence provided by Applicant to establish arrangements to pay, settle, compromised, disputed, or otherwise resolved his delinquent accounts. The record lacks corroborating or substantial documents and details to explain his finances.

I am unable to determine that Applicant reasonably and responsibly managed his finances and that his finances are under control because Applicant failed to provide documents to verify the appropriate management of his finance and actions to resolve financial issues. In short, Applicant did not demonstrate appropriate management of his finances and a consistent record of action to resolve financial issues. His lack of demonstrated financial action is a firm indication that he may not adequately safeguard classified information. Overall, the record evidence leaves me with questions and doubts concerning Applicant’s judgment, reliability, and trustworthiness. He has not established his suitability for access to classified information. For all these reasons, I conclude Applicant did not provide sufficient information to mitigate financial security concerns.

FORMAL FINDINGS

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 - 1.g: Against Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is not clearly consistent with the national security to grant Applicant eligibility for access to classified information. Eligibility for access to classified information is denied.

_________________ THOMAS M. CREAN Administrative Judge

FOOTNOTES

1 I considered the previous AGs, effective September 1, 2006, as well as the new AGs, effective June 8, 2017. My decision would be the same if the case were considered under the previous AGs.