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ISCR Case 16-01892.h1 — CASE

ISCR Case 16-01892.h1denied

Case Headnote

ISCR Case No. 16-01892.h1

deniedAug 31, 2017· Hon. Martin H. Mogul· hearing

Summary

A 76-year-old security officer was denied a Department of Defense security clearance due to financial considerations under Guideline F. The Statement of Reasons alleged two primary issues: the applicant's failure to file federal and State A tax returns for tax year 2014, and 11 past-due or delinquent debts totaling approximately $53,000.

The applicant admitted to both allegations. Disqualifying conditions under Guideline F, specifically AG ¶ 19(a), AG ¶ 19(c), and AG ¶ 19(f), were raised due to these financial difficulties.

The judge determined that the applicant failed to provide sufficient mitigating evidence. No independent documentation was submitted to demonstrate that any of the debts had been resolved or reduced. Furthermore, the applicant did not provide a Personal Financial Statement or any other documents to mitigate the financial concerns, leading to the denial of the security clearance.

Why the Applicant Was Denied

The applicant failed to file Federal and State tax returns for 2014, admitting this allegation.
The applicant had 11 past due or delinquent debts totaling approximately $53,000, which he admitted.
No independent evidence was provided to show that any debts were resolved or reduced.
The applicant did not submit a Personal Financial Statement or any documents in mitigation.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(c)raisedA History of Not Meeting Financial Obligations
AG ¶ 19(f)raisedFailure to File or Fraudulently Filing Annual Federal, State, or Local Income Tax Returns

Key Rule Quoted

“Any doubt concerning personnel being considered for national security eligibility will be resolved in favor of national security.”

Procedural Posture

SOR issuedSep 16, 2016
Answer filedOct 10, 2016Applicant requested decision on written record.
Hearing held—No hearing; decision based on written record.
Decision dateAug 31, 2017

Cite For

Failure to File Tax Returns as a Disqualifying Condition Under Guideline F
Significant Delinquent Debts as a Basis for Denial of Security Clearance
Lack of Evidence to Mitigate Financial Concerns in Security Clearance Cases

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 multiple financial concerns under Guideline F, including the applicant's failure to file tax returns and a history of delinquent debts totaling approximately $53,000. Despite the applicant's claims of seeking assistance to resolve these debts, the judge determined that no mitigating factors were established, leading to a decision against the applicant on all allegations.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	failed to file Federal and State A tax returns for tax year 2014	Against Applicant	Tax Filing Failure	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	has 11 past due or delinquent debts, totaling approximately $53,000 $53,000	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c–1.l	10 sub-charges — specific text not stated in this decision (against the applicant). (low confidence)	Against Applicant			—	—	—

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. 16-01892 ) ) Applicant for Security Clearance )

For Government: Benjamin R. Dorsey, Esq., Department Counsel For Applicant: Pro se

August 31, 2017 ______________

STATEMENT OF CASE

______________

MOGUL, Martin H., Administrative Judge:

Statement of the Case

On September 16, 2016, in accordance with Department of Defense (DoD) Directive 5220.6, as amended (Directive), the DoD issued Applicant a Statement of Reasons (SOR) alleging facts that raise security concerns under Guideline F.1 (Item 1.) The SOR further informed Applicant that, based on information available to the government, DoD adjudicators could not make the preliminary affirmative finding it is clearly consistent with the national interest to grant or continue Applicant’s security clearance.

On October 10, 2016, Applicant submitted a written reply to the SOR (RSOR), and he requested that his case be decided on the written record in lieu of a hearing. (Item 2.) On October 19, 2016, Department Counsel issued the Department's written

1 I considered the previous Adjudicative Guidelines, effective September 1, 2006, as well as the new case. A complete copy of the file of relevant material (FORM) was provided to Applicant. In the FORM, Department Counsel offered seven documentary exhibits. (Items 1-7.) Applicant was given the opportunity to file objections and submit material in refutation, extenuation, or mitigation. A response was due on November 27, 2016. Applicant submitted no additional documents. The case was assigned to this Administrative Judge on August 9, 2017. Based upon a review of the pleadings and exhibits, eligibility for access to classified information is denied.

FINDINGS OF FACT

After a thorough and careful review of the pleadings, and exhibits, I make the following findings of fact:

Applicant is 76 years old. He earned a high school degree in 1958. Applicant has never been married, and he has no children. He served in the United States Navy on inactive reserves from 1961 to 1966, and on inactive ready reserves from 1966 to 1967, when he received an Honorable Discharge. He is employed as a security officer by a defense contractor, and he seeks a DoD security clearance in connection with his employment in the defense sector. (Item 3.)

Guideline F, Financial Considerations

The SOR lists 12 allegations (1.a. through 1.l.) regarding financial difficulties, under Adjudicative Guideline F. The SOR alleges that Applicant failed to file Federal and State A tax returns for tax year 2014. Applicant admitted this allegation in his RSOR. In his response to interrogatories propounded to him, Applicant indicated that he has yet to file his Federal or State A tax returns for tax year 2014. He also wrote that he has tried to engage the services of a tax relief company, but he needs $995 before he can hire them, which apparently he does not have. (Item 7.)

The SOR also alleges that Applicant has 11 past due or delinquent debts, totaling approximately $53,000. Applicant also admitted each of these allegations in his RSOR. In his interrogatory responses, Applicant wrote that he has hired a law firm to help him resolve his delinquent debts, and he has made regular payments to the law firm for the retainer. An attached document from the law firm states that two of the SOR debts have been resolved, but no independent evidence has been introduced to establish that any of the SOR debts were resolved. (Item 7.)

Applicant explained that a significant part of his financial difficulties occurred because he had retired on the advice of his financial counselor without sufficient financial resources to live with limited income. (Item 4.) Applicant did not submit a Personal Financial Statement or provide any other information or evidence about his current financial status. He also has failed to submit any other documents in mitigation.

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 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 AG ¶ 2 describing 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 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, and has the ultimate burden of persuasion as to obtaining a favorable clearance decision.”

A person who applies for access to classified 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 classified information. Decisions include, by necessity, consideration of the possible risk the applicant may deliberately or inadvertently fail to protect or safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation as to potential, rather than actual, risk of compromise of classified information.

Section 7 of Executive Order (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

The security concern relating to the guideline 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. Affluence that cannot be explained by known sources of income is also a security concern insofar as it may result from criminal activity, including espionage.

Applicant had many delinquent debts for several years. No independent evidence was introduced to establish that any of his debts has been reduced or resolved. There also has been no evidence introduced to establish that Applicant will be able to be more responsible in resolving his debts in the future. Finally, Applicant has not filed his Federal or State A tax returns for tax year 2014.

The guideline notes several conditions that could raise security concerns under AG ¶ 19. The evidence is sufficient to raise disqualifying conditions (a), (c), and (f) as potentially applicable in this case:

(a) inability to satisfy debts;

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

(d) deceptive or illegal financial practices such as embezzlement, employee theft, check fraud, expense account fraud, mortgage fraud, filing deceptive loan statements and other intentional financial breaches of trust;

(e) consistent spending beyond one's means or frivolous or irresponsible spending, which may be indicated by excessive indebtedness, significant negative cash flow, a history of late payments or of non-payment, or other negative financial indicators; (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;

(g) unexplained affluence, as shown by a lifestyle or standard of living, increase in net worth, or money transfers that are inconsistent with known legal sources of income;

(h) borrowing money or engaging in significant financial transactions to fund gambling or pay gambling debts; and

(i) concealing gambling losses, family conflict, or other problems caused by gambling.

AG ¶ 20 provides conditions that could mitigate security concerns. I considered all of the mitigating conditions under AG ¶ 20 including:

(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;

(f) the affluence resulted from a legal source of income; 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 has not yet filed his Federal or State A tax returns for tax year 2014. While Applicant has begun the process of resolving his delinquent debts by engaging the services of a law firm to help him settle his debts, no evidence has been introduced to establish that Applicant has resolved or reduced any of his delinquent debt. Also he has not established that that he is current with all his recent debt or that he will be able to live within his means in the future. Therefore, I do not find that any mitigating factor under AG ¶ 20 has been established.

WHOLE PERSON CONCEPT

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 considered the potentially disqualifying and mitigating conditions in light of all facts and circumstances surrounding this case. I have incorporated my comments under Guideline F in my whole-person analysis.

Overall, the record evidence leaves me with significant questions and doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant has not mitigated the Financial Considerations security concerns.

FORMAL FINDINGS

Formal findings for or against Applicant on the allegations set forth in the SOR, as required by ¶ E3.1.25 of the Directive, are:

Paragraph 1, Guideline F: AGAINST APPLICANT

Subparagraph 1.a: Against Applicant Subparagraph 1.b: Against Applicant Subparagraph 1.c: Against Applicant Subparagraph 1.d: Against Applicant Subparagraph 1.e: Against Applicant Subparagraph 1.f: Against Applicant Subparagraph 1.g: Against Applicant Subparagraph 1.h: Against Applicant Subparagraph 1.i: Against Applicant Subparagraph 1.j: Against Applicant Subparagraph 1.k: Against Applicant Subparagraph 1.l: 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 interest to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is denied.

Martin H. Mogul Administrative Judge

FOOTNOTES

Adjudicative Guidelines, effective June 8, 2017. My decision would be the same if the case was considered under the previous Adjudicative Guidelines, effective September 1, 2006.