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ISCR Case 16-02439.h1 — CASE

ISCR Case 16-02439.h1denied

Case Headnote

ISCR Case No. 16-02439.h1

deniedOct 4, 2017· Hon. Robert J. Kilmartin· hearing

Summary

A 37-year-old applicant seeking a public trust position was denied eligibility for access to sensitive information due to significant financial concerns under Guideline F (Financial Considerations). The Statement of Reasons detailed multiple allegations, including the applicant's failure to file federal and state income tax returns from 2008 to 2014. Additionally, the applicant had several delinquent debts, including specific amounts of $1,032 and $3,332, and payment plans with the IRS, State One, and State Two.

The judge found that the applicant admitted to these multiple delinquent debts and a history of not meeting financial obligations. However, the applicant did not provide sufficient evidence to mitigate these concerns. Specifically, there was no proof of payments or a concrete plan to resolve the outstanding debts.

The denial was based on the applicant's failure to file tax returns for multiple years, which raised trustworthiness concerns, and the lack of demonstrated control over financial problems. The applicant also did not show that these issues arose from circumstances beyond their control. While one mitigating condition (AG ¶ 20(g)) was applied, it was insufficient to overcome the disqualifying conditions, leading to the denial.

Why the Applicant Was Denied

The applicant failed to file federal and state income tax returns for multiple years, raising trustworthiness concerns.
The applicant admitted to multiple delinquent debts but provided no evidence of payments or a plan to resolve them.
The applicant did not demonstrate that his financial problems were under control or that they arose from circumstances beyond his control.

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 Tax Returns

Mitigating

AG ¶ 20(g)appliedArrangements with Tax AuthorityThe applicant made arrangements with the IRS but did not demonstrate compliance.

Key Rule Quoted

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

Procedural Posture

SOR issuedAug 15, 2016
Answer filedSep 13, 2016Applicant elected to have the case decided on the written record.
Hearing held—
Decision dateOct 4, 2017

Cite For

Failure to Mitigate Financial Considerations Under Guideline F
Insufficient Evidence of Financial Responsibility
Impact of Delinquent Debts on Trustworthiness Evaluations

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 that the applicant did not mitigate the financial concerns under Guideline F, which included multiple delinquent debts and failure to file tax returns. As a result, the applicant's eligibility for access to a public trust position was denied.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant failed to file federal and state income tax returns for the years 2008 to 2014.	Against Applicant	Tax Filing Failure	Denied	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations (f) failure to file / fraudulent filing of tax returns or unpaid tax	—	—
1.b	Applicant has a delinquent debt of $1,032. $1,032	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.c	Applicant has a delinquent debt of $3,332. $3,332	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.d	Applicant has a delinquent debt related to a payment plan with the IRS.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.e	Applicant has a delinquent debt related to a payment plan with State One.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.f	Applicant has a delinquent debt related to a payment plan with State Two.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.g	Applicant has a delinquent debt of $1,032 and claims to be paying $50 per month. $1,032	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.h	Applicant has a delinquent debt of $3,332 and claims to be paying $50 per month. $3,332	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.i	Applicant has admitted multiple delinquent debts.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.j	Applicant has a history of not meeting financial obligations.	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (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: ) ) ) ADP Case No. 16-02439 ) Applicant for Public Trust Postion )

For Government: Chris Morin, Esq., Department Counsel For Applicant: Pro se 10/04/2017 ______________

STATEMENT OF CASE

______________

KILMARTIN, Robert J., Administrative Judge:

Applicant did not mitigate the trustworthiness concerns under Guideline F, financial considerations. Applicant’s eligibility for access to a public trust position is denied.

Statement of the Case

Applicant submitted a Questionnaire for National Security Positions (e-QIP) on January 12, 2016. On August 15, 2016, the Department of Defense Consolidated Adjudications Facility (DOD CAF) issued Applicant a Statement of Reasons (SOR) detailing security concerns under Guideline F, financial considerations. The DOD CAF acted under DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AGs) implemented by DOD on September 1, 2006.

On December 10, 2016, the Director of National Intelligence signed Security Executive Agent Directive 4 (SEAD 4), implementing new AGs effective within the DOD on June 8, 2017. Accordingly, I have applied the June 8, 2017 AGs in this decision.1 Applicant answered the SOR on September 13, 2016, admitting the allegations at SOR ¶¶ 1.d, 1.e, 1.f, 1.i, and 1.jand electing to have his case decided on the written record.

Department Counsel submitted the Government’s file of relevant material (FORM) on September 28, 2016. Applicant received the FORM on October 5, 2016, and had 30 days to file objections and submit material in refutation, extenuation, or mitigation. Applicant provided no response to the FORM. The Government’s evidence, identified as Items 1 through 4, is admitted into evidence without objection. The case was assigned to me on September 15, 2017.

Findings of Fact2

Applicant is 37 years old. He obtained his GED in 1998. He never married and reports no military service. He reports periods of unemployment from July 2010 to June 2011, and from October 2015 to present. He disclosed some of his delinquent debts in section 26 of his January 2016 e-QIP, including his failure to timely file federal and state income tax returns for 2008 through 2014. He mailed in his over-due returns all at once on January 1, 2016 coincidentally with filing his e-QIP. Applicant’s only explanation for this tardiness was that he could not pay his taxes due to unspecified financial troubles.

In his Answer to the SOR, Applicant denied the multiple allegations of failure to file his federal and state income tax returns for the years 2008 to 2014, because he had just filed the returns days earlier. He also stated that he had entered into a payment plan with the IRS and State One. He claimed to have paid all back taxes owed to State Two. Applicant attached to his Answer a payment arrangement coupon dated August 10, 2016, reflecting a payment due of $87 on August 20, 2016, and a payoff amount of $1,773 owed to State One. He also attached an IRS installment-agreement monthly payment of $52 due on September 16, 2016. However, Applicant produced no evidence of having paid these bills or any track record of actual payments in accordance with the plans.

The SOR alleges seven delinquent debts in addition to the three allegations of failure to file federal and state tax returns (for two states) from 2008 to 2014. In response to the allegations that he admitted at SOR ¶¶ 1.d, 1.e, 1.f, 1.i, and 1.j, Applicant stated “I intend to pay off this debt as my financial situation allows.” He has produced no evidence of any payments. In SOR ¶ 1.g, Applicant claimed to be paying the creditor $50 per month as his situation allows, and he claims a balance owed of $1,032. Similarly, he claims to be paying the creditor at SOR ¶ 1.h $50 each month as his situation allows, and he owes a balance of $3,332. Again, he has produced no evidence of payments or evidence that he obtained credit or debt consolidation counseling or has a budget.

POLICIES

Positions designated as ADP I and ADP II are classified as “sensitive positions.” (See Code of Federal Regulations Title 32 – National Defense, part 154.13 and part 154, Appendix J – ADP Position Categories and Criteria for Designating Positions) “The standard that must be met for . . . assignment to sensitive duties is that, based on all available information, the person’s loyalty, reliability, and trustworthiness are such that . . . assigning the person to sensitive duties is clearly consistent with the interests of national security.” The Deputy Under Secretary of Defense (Counterintelligence and Security) Memorandum, dated November 19, 2004, indicates trustworthiness adjudications will apply to cases forwarded to DOHA by the Defense Security Service and Office of Personnel Management. Department of Defense contractor personnel are afforded the right to the procedures contained in DOD Directive 5220.6 before any final unfavorable access determination may be made.

When evaluating an applicant’s suitability for a public trust position, the administrative judge must consider the disqualifying and mitigating conditions in the AG. 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 access to [sensitive] information will be resolved in favor of national security.”

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 to obtain a favorable trustworthiness decision.

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

ANALYSIS

Guideline F, Financial Considerations

The trustworthiness concern relating to 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 abuse, 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 . . . .

This concern is broader than the possibility that an individual might knowingly compromise classified information in order to raise money. It encompasses concerns about an individual’s self-control, judgment, and other qualities essential to protecting classified information. An individual who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding sensitive information.

AG ¶ 19 provides conditions that could raise trustworthiness concerns. The following apply here:

(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.

Applicant’s delinquent debts alleged in the SOR are confirmed by his credit reports and answer to the SOR. The Government produced substantial evidence to support the disqualifying conditions in AG ¶¶ 19(a), 19(b), 19(c) and 19(f) thereby shifting the burden to Applicant to produce evidence to rebut, explain, extenuate, or mitigate the facts.3 The guideline also includes conditions that could mitigate trustworthiness concerns arising from financial difficulties. The following mitigating conditions under AG ¶ 20 are potentially applicable:

(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 . . ., and the individual acted responsibly under the circumstances;

(d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts; and

(g) the individual has made arrangements with appropriate tax authority to file or pay the amount owed and is in compliance with those arrangements.

Applicant did not file his 2008 through 2014 federal or state income tax returns until he was about to file his e-QIP. He provided no adequate explanation for his tax problems or for his inability or unwillingness to pay his other delinquent debts. He has not established that these delinquent debts arose from circumstances or were due to conditions that were beyond his control. He has not produced relevant and responsive documentation, demonstrating that he acted responsibly under the circumstances. Applicant has not met his burden to provide sufficient evidence to show that his financial problems are under control, and that his debts were incurred under circumstances making them unlikely to recur. His income tax returns were filed late without explanation. The other seven delinquent debts have not been resolved. AG ¶ 20(g) has partial application. The other mitigating conditions enumerated above do not apply.

WHOLE PERSON CONCEPT

Under the whole-person concept, the administrative judge must evaluate an applicant’s eligibility for a position of public trust 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, Appendix A, ¶ 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, Appendix A, ¶ 2(c), the ultimate determination of whether to grant eligibility for a position of trust 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 the facts and circumstances surrounding this case. I have incorporated my comments under Guideline F in my whole-person analysis. Some of the factors in AG, Appendix A, ¶ 2(d) were addressed under that guideline. Most importantly, Applicant has not addressed the specific allegations in the SOR, except for his late filing of his income tax returns, and he has not met his burden of production.

Applicant’s finances remain a trustworthiness concern. There is insufficient evidence to conclude that Applicant’s financial problems are under control. The record evidence leaves me with questions and doubts as to Applicant’s suitability for a position of trust. For all these reasons, I conclude Applicant has not mitigated the trustworthiness concerns arising under Guideline F, financial considerations.

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 through 1.j: Against Applicant

CONCLUSION

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

________________________ Robert J. Kilmartin Administrative Judge

FOOTNOTES

1 Although I have decided this case under the adjudicative guidelines (AG) effective June 8, 2017, I also considered the case under the former AG effective on September 1, 2006, and my decision would be the same under either version. 2 Unless stated otherwise, the source of the information in this section is Applicant’s January 12, 2016 Questionnaire for National Security Position (e-QIP) and Applicant’s Answer to the SOR dated September 13, 2016. 3 Directive ¶ E3.1.15. See ISCR Case No. 02-31154 at 5 (App. Bd. Sep 22, 2005) (An applicant has the burden of proving a mitigating condition, and the burden of disproving it never shifts to the Government).