CASEClearance Adjudication Search EngineCASE

Loading case…

ISCR Case 16-02220.h1 — CASE

ISCR Case 16-02220.h1granted

Case Headnote

ISCR Case No. 16-02220.h1

grantedMay 3, 2017· Hon. Gina L. Marine· hearing

Summary

A 47-year-old engineer was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The Statement of Reasons alleged that the applicant failed to file federal and state income tax returns for tax years 2012 through 2014, raising a disqualifying condition under AG ¶ 19(g).

The applicant attributed his non-filing to financial difficulties experienced during his divorce. Before the hearing, he successfully filed all overdue returns and sought assistance from a certified tax volunteer to navigate the process. These actions demonstrated a commitment to resolving his tax issues and timely future filings.

The judge applied mitigating conditions under AG ¶ 20(a), AG ¶ 20(c), and AG ¶ 20(d). The applicant's financial situation had significantly improved after paying off debts, indicating responsible financial management. Based on these factors, the judge found that the applicant had mitigated the security concerns, and his clearance was granted.

Why the Applicant Prevailed

The applicant demonstrated a commitment to resolving his tax issues by filing overdue returns before the hearing.
He sought assistance from a certified tax volunteer to navigate his tax filings.
The applicant's financial situation improved significantly after paying off debts, indicating responsible financial management.

Conditions Referenced

Disqualifying

AG ¶ 19(g)raisedFailure to File Annual Federal, State, or Local Income Tax Returns as Required

Mitigating

AG ¶ 20(a)appliedThe Behavior Happened so Long Ago, Was so Infrequent, or Occurred Under Such Circumstances That It Is Unlikely to Recur
AG ¶ 20(c)appliedThe Person Has Received or Is Receiving Counseling for the Problem And/or There Are Clear Indications That the Problem Is Being Resolved or Is Under Control
AG ¶ 20(d)appliedThe Individual Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts

Key Rule Quoted

“Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the AG.”

Procedural Posture

SOR issuedAug 19, 2016
Answer filedOct 5, 2016
Hearing heldMar 28, 2017
Decision dateMay 3, 2017

Cite For

Mitigation of Financial Issues Under Guideline F
Importance of Timely Filing Tax Returns
Consideration of Personal Circumstances 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 timely file federal and state income tax returns for the years 2012 through 2014 raised security concerns under Guideline F. However, the applicant demonstrated that these issues were mitigated by his proactive steps to resolve the tax filings and his commitment to timely future filings, leading to a decision in favor of the applicant.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	failed to file his federal income tax return for tax years 2012 through 2014	For Applicant	Tax Filing Failure	Admitted	(g) unexplained affluence	(a) behavior happened long ago / infrequent / unlikely to recur (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full Documented Financial Counseling Claimed Other
1.b	failed to file his state income tax return for tax years 2012 through 2014	For Applicant	Tax Filing Failure	Admitted	(g) unexplained affluence	(a) behavior happened long ago / infrequent / unlikely to recur (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full Documented Financial Counseling Claimed Other

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: ) ) [REDACTED] ) ISCR Case No. 16-02220 ) Applicant for Security Clearance )

For Government: Rhett E. Petcher, Esq., Department Counsel For Applicant: Pro se 05/03/2017 ______________

STATEMENT OF CASE

______________

MARINE, Gina L., Administrative Judge:

This case involves security concerns raised under Guideline F (Financial Considerations). Eligibility for access to classified information is granted.

Statement of the Case

Applicant submitted a security clearance application (SCA) on May 11, 2015. On August 19, 2016, the Department of Defense Consolidated Adjudications Facility (DOD CAF) sent him a Statement of Reasons (SOR) alleging security concerns under Guideline F. The DOD CAF acted under Executive Order (Exec. Or.) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) implemented by the DOD on September 1, 2006.

Applicant answered the SOR on October 5, 2016, and requested a hearing before an administrative judge. Department Counsel was ready to proceed on November 7, 2016, and the case was assigned to me on January 25, 2017. On February 27, 2017, the Defense Office of Hearings and Appeals (DOHA) notified Applicant that the hearing was scheduled for March 28, 2017. I convened the hearing as scheduled. Government Exhibits (GE) 1 and 2 were admitted into evidence without objection. I appended to the record a letter that Government sent to Applicant as Hearing Exhibit (HE) I, and Government’s exhibit list as HE II. At the hearing, Applicant testified and submitted Applicant’s Exhibits (AE) A through E, which were admitted without objection. DOHA received the transcript (Tr.) on April 5, 2017.

Findings of Fact1

Applicant, age 47, divorced his wife of eight years in 2014. They have two sons, ages 11 and 9. He received an aerospace engineering B.A. degree in 1991, a mechanical engineering M.A. degree in 1993, and completed most of the coursework required for a Ph.D degree. Applicant has been employed full time as an engineer with the same federal contractor since 1994, and has maintained a security clearance for most of that time.2 Since 2005, he has also held a part-time job as a referee.

Applicant admitted both SOR allegations involving his failure to file, as required, federal (SOR ¶ 1.a) and state (SOR ¶ 1.b) income tax returns for tax years 2012 through 2014. He also reported the issue on his SCA. He attributes his failure to file to being unable to navigate the more complicated filing process due to his separation and divorce. He did not believe he could afford to hire a professional to help him due to his then overextended finances. While he did not anticipate owing any delinquent taxes, he had a plan in place to pay them in the event that it was determined that he did owe. As such, he believed he was better off filing his complicated tax returns late rather than risk filing them incorrectly.3 He was unaware of the criminal or security-related consequences of his failure to timely file.4 He also did not perceive the IRS inquiries regarding his non-filing as an indication that he needed to take immediate action.5 Prior to 2012, Applicant filed his income tax returns on time each year.6

In May 2012, Applicant separated from his wife, who also then stopped contributing to their household finances. As a result, his annual household income dropped from about $150,000 to $90,000 and his finances became overextended. Except for a few expenses that were divided by a February 2013 court order, Applicant was primarily responsible for their joint expenses, including those of their children, until the divorce was finalized.7 One of those expenses included a deduction from his paycheck to repay a 401kloan taken out during the marriage to resolve a high-interest mortgage loan.8 Since early 2016, when he paid off a car loan and the 401kloan, his finances have not been overextended.9 His current finances are in good order.10

In March 2016, Applicant sought the assistance of a friend who is a certified tax volunteer in the IRS’s Volunteer Income Tax Assistance (VITA) program. With his help, Applicant filed his 2015 tax returns on time and concurrently began the process of completing his 2012 through 2014 tax returns, well before the SOR was issued. Over several months, Applicant diligently worked through his more complicated tax-filing requirements and eventually completed the filings of those returns in December 2016.11 As expected, his state and federal income tax withholdings for each of those tax years exceeded the taxes due so he incurred no taxes or penalties.12 He is committed to filing all future returns in a timely fashion.13 To that end, he created a spreadsheet that keeps track of the information required for him to file so he can easily update it from year to year.14

Applicant’s coworker of 18 years who is also a close friend says that Applicant has consistently demonstrated integrity and trustworthiness. He described him as a loyal friend and caring father. He commended Applicant for staying focused on caring for his sons and maintaining his home, while working full time during a long divorce process. He observed the severe emotional turmoil that Applicant experienced during that time. This individual is the same person who educated Applicant about the various tax issues with which Applicant was otherwise unfamiliar, and who assisted Applicant with filing his delinquent and 2015 tax returns.15

POLICIES

“[N]o one has a ‘right’ to a security clearance.”16 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.”17 The President has authorized the Secretary of Defense or his designee to grant applicants eligibility for access to classified information “only upon a finding that it is clearly consistent with the national interest to do so.”18

Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the AG. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, an administrative judge applies these guidelines 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 and 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 that 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 made “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.”19 Thus, a decision to deny a security clearance is merely an indication the applicant has not met the strict guidelines the President and the Secretary of Defense 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.20 “Substantial evidence” is “more than a scintilla but less than a preponderance.”21 The guidelines presume a nexus or rational connection between proven conduct under any of the criteria listed therein and an applicant’s security suitability.22 Once the Government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts.23 An applicant has the burden of proving a mitigating condition, and the burden of disproving it never shifts to the Government.24

An applicant “has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue his security clearance.”25 “[S]ecurity clearance determinations should err, if they must, on the side of denials.”26

ANALYSIS

Guideline F (Financial Considerations)

The concern under this guideline is set out in AG ¶ 18:

Failure or inability 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 information. An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds . . . .

Applicant’s failure to timely file, as required, his federal and state tax returns for tax years 2012 through 2014 establishes AG ¶ 19(g) (“failure to file annual Federal, state, or local income tax returns as required or the fraudulent filing of the same”).

The security concerns raised in the SOR may be mitigated by any of the following potentially applicable factors:

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;

AG ¶ 20(c): the person has received or is receiving counseling for the problem and/or there are clear indications that the problem is being resolved or is under control; and

AG ¶ 20(d): the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts. AG ¶ 20(a) is established. Applicant failed to timely file his 2012 through 2014 tax returns during a distinct period of time that coincides with the financial and emotional effects of his transition from married to divorced. Prior to that period, he filed his tax returns on time each year. He filed his 2015 returns on time and is committed to filing all future returns in a timely fashion. Not only did Applicant’s delayed filings occur under circumstances not likely to recur, but they do not cast doubt on his current reliability, trustworthiness, or good judgment.

AG ¶¶ 20(c) and 20(d) are established. Applicant sought the assistance of a certified tax volunteer to assist him with filing his overdue tax returns well before the SOR was issued. He worked diligently during the course of nine months to complete his overdue returns, which were filed before his hearing. He filed his 2015 tax returns on time and intends to file all future returns on time. To ensure his success in following through on his commitment, he developed a spreadsheet and has the resource of a knowledgeable friend to assist him when needed. Applicant incurred no tax liability and has otherwise managed his finances responsibly.

WHOLE PERSON CONCEPT

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. In applying the whole- person concept, an 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. An administrative judge should consider the nine adjudicative process factors listed at AG ¶ 2(a):

(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.

I have incorporated my comments under Guideline F in my whole-person analysis, and I have considered the AG ¶ 2(a) factors. Applicant was candid, sincere, and credible at the hearing. After weighing the disqualifying and mitigating conditions under Guideline F, and evaluating all the evidence in the context of the whole person, I conclude that Applicant has mitigated the security concerns raised by his failure to timely file his income tax returns. Accordingly, Applicant has carried his burden of showing that it is clearly consistent with the national interest to continue his eligibility for access to classified information.

FORMAL FINDINGS

I make the following formal findings on the allegations in the SOR:

Paragraph 1, Guideline F (Financial Considerations): FOR APPLICANT

Subparagraph 1.a – 1.b: For Applicant

CONCLUSION

I conclude that it is clearly consistent with the national interest to continue Applicant’s eligibility for access to classified information. Clearance is granted.

Gina L. Marine Administrative Judge

FOOTNOTES

1 Unless otherwise indicated by citation to another part of the record, I extracted these facts from Applicant’s SOR answer, SCA (GE 1), and the summary of his personal subject interview (GE 2). 2 See also Tr. at 44 and 58. 3 See also Tr. at 39-41, 59-64, 71-73, 77. 4 Tr. at 56, 65-66, 76. 5 Tr. at 70; AE B. 6 Tr. at 39 and 42; AE B. 7 Tr. at 39-40, 48-53. 8 Tr. at 55-56. 9 Tr. at 55 and 77. 10 Tr. at 42 and 80, AE D. 11 Tr. at 41-44, 67-68; 75-76; AE A and B. 12 AE B. 13 Tr. at 42, 44, 69, 80. 14 Tr. at 68. 15 AE A. 16 Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). 17 Egan at 527. 18 Exec. Or. 10865 § 2. 19 Exec. Or. 10865 § 7. 20 See Egan, 484 U.S. at 531. 21 See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). 22 See ISCR Case No. 92-1106 at 3, 1993 WL 545051 at *3 (App. Bd. Oct. 7, 1993). 23 Directive ¶ E3.1.15. 24 See ISCR Case No. 02-31154 at 5 (App. Bd. Sep. 22, 2005). 25 ISCR Case No. 01-20700 at 3 (App. Bd. Dec. 19, 2002). 26 Egan, 484 U.S. at 531; See also AG ¶ 2(b).