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ISCR Case 16-01841.h1 — CASE

ISCR Case 16-01841.h1granted

Case Headnote

ISCR Case No. 16-01841.h1

grantedJul 27, 2017· Hon. Nichole L. Noel· hearing

Summary

A 46-year-old federal contractor was granted a security clearance despite concerns under Guideline F (Financial Considerations). The Statement of Reasons alleged that the applicant failed to file and pay state and federal income taxes for the 2009 and 2011 tax years, resulting in a garnishment for the 2011 state taxes. Additionally, the applicant owed approximately $1,200 in federal income taxes for 2016. These issues raised Disqualifying Condition AG ¶ 19 (f).

However, the judge found that the applicant had resolved his tax issues prior to the hearing. His failures to file were attributed to significant personal challenges rather than a pattern of financial irresponsibility. The applicant also demonstrated a history of holding a security clearance without incident for nearly 10 years.

Based on these mitigating circumstances, including the resolution of the tax issues and the applicant's demonstrated integrity, the judge determined that the applicant's conduct did not indicate a pattern of irresponsibility. Mitigating Conditions AG ¶ 20 (g) and AG ¶ 2(d) were applied, and the security clearance was granted.

Why the Applicant Prevailed

The applicant resolved his tax issues before the hearing.
His failures to file taxes were attributed to significant personal challenges, not a disregard for financial obligations.
The applicant has held a security clearance without incident for almost 10 years.

Conditions Referenced

Disqualifying

AG ¶ 19 (f)raisedFailure to File or Pay Taxes

Mitigating

AG ¶ 20 (g)appliedThe Individual Has Taken Positive Steps to Resolve Financial Issues
AG ¶ 2(d)appliedWhole-person Concept

Key Rule Quoted

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

Procedural Posture

SOR issuedAug 22, 2016
Answer filed—
Hearing heldApr 18, 2017
Decision dateJul 27, 2017

Cite For

Mitigating Factors Under Guideline F Regarding Financial Considerations
The Importance of Personal Circumstances in Evaluating Financial Irresponsibility
The Application of the Whole-person Concept in Security Clearance Decisions

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: granted

The judge found that the applicant's failure to file and pay state and federal income taxes on two occasions did not indicate a pattern of irresponsible behavior. The applicant demonstrated an understanding of the government's concerns and resolved the tax issues prior to the hearing, leading to a decision to grant the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	failed to file and pay his state and federal income taxes as required on two occasions in the last seven years	For Applicant	Tax Filing Failure	Admitted	—	(f) the affluence resulted from a legal source	—
1.b	garnishment levied against him to collect the outstanding state taxes for 2011 $8,000	For Applicant	Tax Unpaid	Admitted	—	(f) the affluence resulted from a legal source	—
1.c	owes approximately $1,200 in federal income taxes for 2016 $1,200	For Applicant	Tax Unpaid	Admitted	—	(f) the affluence resulted from a legal source	—

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. 16-01841 ) Applicant for Security Clearance )

For Government: Alison O’Connell, Esq. For Applicant: Pro se

07/27/2017 ______________

STATEMENT OF CASE

______________

NOEL, Nichole L., Administrative Judge:

Applicant contests the Department of Defense’s (DOD) intent to deny his eligibility for a security clearance to work in the defense industry. Although Applicant failed to file and pay his state and federal income taxes as required on two occasions in the last seven years, his conduct does not indicate a pattern of behavior that suggests an unwillingness to follow rules or regulations or irresponsibility. Clearance is granted.

Statement of the Case

On August 22, 2016, the DOD issued a Statement of Reasons (SOR) detailing security concerns under the financial considerations guideline.1 DOD adjudicators were unable to find that it is clearly consistent with the national interest to continue Applicant’s security clearance and recommended that the case be submitted to an administrative judge for a determination whether to revoke his security clearance.

Applicant timely answered the SOR and requested a hearing. On March 13, 2017, I issued a prehearing order to the parties regarding the exchange and submission of discovery, the filing of motions, and the disclosure of any witnesses, and the parties complied.2 At the hearing, convened on April 18, 2017, I admitted Government’s Exhibits (GE) 1 through 4 and Applicant’s Exhibits (AE) A through D, without objection. DOHA received the transcript (Tr.) on April 26, 2017. The record remained open until May 8, 2017; however, Applicant did not submit any additional documentation.

PROCEDURAL MATTERS

While the case was pending decision, the Director of National Intelligence (DNI) issued Security Executive Agent Directive 4, establishing the National Security Adjudicative Guidelines (AG) applicable to all covered individuals who require initial or continued eligibility for access to classified information or eligibility to hold a sensitive position. The 2017 AG superseded the AG implemented in September 2006, and they are effective for any adjudication made on or after June 8, 2017. Accordingly, I have applied them in this case.

FINDINGS OF FACT

Applicant, 46, has worked as a federal contractor since 2007, excluding 10 months of unemployment in 2013. He was initially granted access to classified information in 2008. Applicant has worked in his current position since January 2015. He completed a security clearance application in September 2014 and disclosed his failure to file and pay federal and state income taxes for the 2009 and 2011 tax years. Applicant also disclosed a 2014 garnishment levied against him to collect the outstanding state taxes for 2011. These disclosures prompted Applicant’s facility security officer (FSO) to file an incident report in the Joint Personnel Adjudication System (JPAS).3

Applicant has been married for almost 19 years. He and his wife have one son, age 13. In 2007, Applicant’s wife began experiencing health issues. Applicant could not offer a specific diagnosis for what he calls his wife’s “health sensitivities.” He acknowledges that in the early years of their marriage, she experienced some mental health issues. However, her health sensitivities of late are more mercurial in nature and treated with alternative medical treatments that are not covered by Applicant’s health insurance. At hearing, Applicant explained how his wife’s health sensitives and concerns affects his family.4

Applicant attributes his failure to file his 2009 state and federal income tax returns on events triggering his wife’s health sensitivities that consumed his attention between May 2010 and May 2011. During that year, Applicant, his wife, and son, moved twice to assuage his wife’s concerns about the safety of their living environments. In 2010, Applicant discovered mold in the home he and his wife had occupied for 12 years. The property owners, Applicant’s parents, declined to remediate the issue and Applicant could not afford to resolve the issue on his own. Deeming the home unsafe, Applicant’s wife refused to live there causing the family’s first unexpected move. Although Applicant requested an extension to file his 2009 income tax returns, he forgot to file by the deadline as his home life became more complicated. For a time, Applicant lived separately from his family as he tried to resolve the issues with the house. Eventually, the family settled into a nearby apartment. However, after several alerts from the unit’s carbon monoxide detector, Applicant’s wife considered it unsafe, requiring the family to move again.5

Although Applicant’s family remained in the same metropolitan area, they moved to a neighboring state. When preparing his 2011 state income tax returns, Applicant did not know how to handle the tax implications raised by partial-year residency in two states. He intended to seek help before filing his income tax returns, but it slipped his mind and he forgot to file. Applicant and his family remained in their home until June 2013 when Applicant, the family’s only income source, became unemployed and could no longer afford to pay the rent. Applicant’s family was homeless for the next two and a half years, living with friends for days or months at a time. During this time, many of Applicant’s possessions, including his financial records were in long-term storage and largely inaccessible, making it difficult for him to complete his outstanding income tax returns. Applicant moved his family into their own home in December 2015.6

As a result of his failure to file his 2011 state income taxes in his new state of residency, the state assessed income taxes to Applicant based on income information reported by Applicant’s employer. In September 2014, Applicant learned that the state was seeking to garnish his entire paycheck until the $8,000 in assessed taxes, penalties, and interest was satisfied. Instead, Applicant negotiated a payment plan with the state by which his wages were garnished $300 per month between September and December 2014. In January 2015, the state levied a lien against Applicant’s bank account, which contained his savings for a permanent residence for his family, to recover the balance.7

Applicant filed his outstanding 2011 tax return in June 2015 using alternative documentation after reaching an agreement with the state tax authority. His filing resulted in the refund of $5,200. He filed his 2009 federal income tax return in September 2016 and his 2009 state tax return in April 2017. He owed approximately $700 in outstanding taxes, which he paid. Aside from these two years, Applicant has filed his federal and state income tax returns on time. He currently owes $1,200 in federal income taxes for 2016, but has asked the IRS to apply the proceeds of an $1,800 refund owed to him for 2014 to satisfy the balance. The credit reports in the record show a favorable credit history. At hearing, Applicant showed that he is vigilant about his finances. Concerned that his credit card debt was becoming too high, Applicant voluntarily enrolled in a debt management program. Applicant has relied on credit cards to pay his wife’s healthcare expenses since 2007 and to support his family during his 10 months of unemployment in 2013. Since October 2016, Applicant has been paying $1,000 each month to the debt management company. 8

Applicant presented two witnesses at the hearing. Both have known Applicant and his wife for over 15 years. They have each allowed Applicant and his family to live in their homes for various periods. Both have observed Applicant’s wife’s health sensitivities become more acute over time. Each spoke of the balancing act Applicant performs to maintain stability within family, juggling the responsibilities of his job, home schooling his son, and tending to his wife health issues. One described Applicant as a man of, “great honesty, integrity, and loyalty.” The other described Applicant as “an honest, committed person, one who is sacrificial in giving in caring for the people in [his] family…”9

POLICIES

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(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 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).

ANALYSIS

Guideline F, Financial Considerations

Failure to meet one’s 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.10 Applicant admits that he failed to timely file his 2009 and 2011 federal and state income tax returns as required, resulting in a wage garnishment to collect his outstanding 2011 state taxes.11 Applicant’s admissions establish the Government’s prima facie case. However, having made arrangements with the appropriate tax authorities, Applicant resolved the tax issues alleged in the SOR before the hearing.12

After reviewing the record, I have no doubts about Applicant’s suitability for access to classified information. In reaching this conclusion, I have also considered the whole-person factors at AG ¶ 2(d). Applicant’s failure to file his income tax returns, as required, on two occasions does not constitute a pattern of behavior. His actions are not indicative of a disregard for his financial obligations or laws, rules, and regulations. He has not acted in a way to suggest that he intended to avoid his duties as a taxpayer. Given the turmoil in Applicant’s personal life over the past seven years, timely filing his 2009 and 2011 income tax returns may not have been his top priority. However, he has demonstrated that he understands the basis of the Government’s concerns as well as the potential consequences of similar lapses in the future. Applicant, who has held a security clearance without incident for almost 10 years, has demonstrated that he is a man of integrity and loyalty. He has proven that he will honor his commitments even under the most difficult circumstances. The favorable evidence in the record outweighs the potential security concerns raised by Applicant’s past conduct.

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, Financial Considerations: FOR APPLICANT

Subparagraphs 1.a – 1.c: For Applicant

CONCLUSION

In light of all of the circumstances presented, it is clearly consistent with the national interest to grant Applicant a security clearance. Eligibility for access to classified information is granted.

________________________ Nichole L. Noel Administrative Judge

FOOTNOTES

1 The DOD CAF acted under Executive Order (EO) 10865, Safeguarding Classified Information within Industry, signed by President Eisenhower on February 20, 1960, as amended; as well as DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program, dated January 2, 1992, as amended (Directive), and the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information, implemented on September 1, 2006. 2 The prehearing scheduling order and the discovery letter are appended to the record as Hearing Exhibit (HE) I and II, respectively. 3 Tr. 35, 39-40; GE 1,4. 4 Tr. 68-72. 5 Tr. 52-53; GE 1; AE D; Answer. 6 Tr. 40-41, 44, 54-56; Answer. 7 Tr. 44-46, 59-60. 8 Tr. 36, 41-42, 46-52, 57-68, 72-74; GE 2-3; AE A-C; Answer. 9 Tr. 19-31. 10 AG ¶ (18). 11 AG ¶ 19 (f). 12 AG ¶ 20 (g).