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ISCR Case 16-02642.h1 — CASE

ISCR Case 16-02642.h1denied

Case Headnote

ISCR Case No. 16-02642.h1

deniedOct 11, 2017· Hon. Robert J. Kilmartin· hearing

Summary

A 51-year-old engineering technician and retired U.S. Navy veteran was denied a security clearance under Guideline F, Financial Considerations. The denial stemmed from unresolved financial issues, specifically the failure to file multiple federal income tax returns and delinquent debts.

The Statement of Reasons cited the applicant's failure to file a federal income tax return for 2008, failure to satisfy debts related to a payroll deduction from retirement pay, and failure to submit payment with a payment agreement. Further investigation revealed the applicant had not filed federal income tax returns for 2008, 2011, 2012, and 2013.

The judge determined that the applicant did not provide sufficient evidence to mitigate these financial concerns. There was no proof of efforts to resolve the delinquent debts or to seek financial counseling as claimed. Consequently, the applicant's financial problems remained unresolved, leading to questions about his reliability and trustworthiness, and ultimately, the denial of his security clearance.

Why the Applicant Was Denied

The applicant failed to file federal income tax returns for multiple years, including 2008, 2011, 2012, and 2013.
The applicant did not provide evidence of efforts to resolve his delinquent debts or to seek financial counseling as claimed.
The applicant's financial problems remain unresolved, raising serious questions about his reliability and trustworthiness.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(b)raisedUnwillingness to Satisfy Debts Regardless of the Ability to Do So
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

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

Procedural Posture

SOR issuedOct 15, 2016
Answer filedNov 12, 2016
Hearing held—Decided on the written record.
Decision dateOct 11, 2017

Cite For

Failure to Mitigate Financial Concerns Under Guideline F
Importance of Providing Evidence to Support Claims of Financial Responsibility
Impact of Unresolved Debts 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 that the applicant failed to mitigate financial concerns under Guideline F, primarily due to a history of not meeting financial obligations and failure to file tax returns. As a result, the applicant's eligibility for access to classified information was denied.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	failure to file a federal income tax return for 2008	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	failure to satisfy debts related to a payroll deduction taken out of retirement pay	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	failure to send in payment with a payment agreement	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–1.h	5 sub-charges — specific text not stated in this decision (against the applicant).	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. 16-02642 ) Applicant for Security Clearance )

For Government: Julie Mendez, Esq., Department Counsel For Applicant: Pro se 10/11/2017 ______________

STATEMENT OF CASE

______________

KILMARTIN, Robert J., Administrative Judge:

Applicant did not mitigate the security concerns under Guideline F, financial considerations. Applicant’s eligibility for access to classified information is denied.

Statement of the Case

On October 15, 2016, the Department of Defense (DOD) issued Applicant a Statement of Reasons (SOR) detailing security concerns under Guideline F, financial considerations. Applicant timely answered the SOR and elected to have his case decided on the written record.

Department Counsel submitted the Government’s file of relevant material (FORM) on December 7, 2016. Applicant received the FORM on December 16, 2016, and had 30 days to file objections and submit material in refutation, extenuation, or mitigation. Applicant did not object to the Government’s evidence, and he provided no response to the FORM. The Government’s evidence, identified as Items 1 through 5, is admitted into evidence without objection. The case was assigned to me on October 1, 2017. Findings of Fact1

Applicant is 51 years old. Applicant has been employed as an engineering technician by a federal contractor since October 2007. He served honorably in the U.S. Navy from 1985 to 2006 when he retired. He had a previous security clearance in the Navy. Applicant was married in 1994 and separated in 2010. He has one child born in 2003. Applicant disclosed his failure to file a federal income tax return for 2008 in section 26 of his January 2015 Security Clearance Application (SCA).2 He ultimately filed this 2008 income tax return in 2014, and he stated that he was working on filing his federal income tax returns for 2011, 2012, and 2013.

In his Answer to the SOR, Applicant admitted his failure to file a federal income tax return as alleged in SOR ¶ 1.a. He stated “due to my marital separation/divorce the financial burden has put me in the situation with my taxes. I will be taking this matter seriously and within a year hopefully all past taxes will be handled accordingly in a legal and just way.” He submitted no documentary evidence to show that he followed through on his stated plan. In his Answer, Applicant stated that he currently, and has always, had a payroll deduction taken out of his retirement pay in regards to SOR ¶ 1.b, and the account will be brought up to date. He provided no substantiating documentation. Similarly, he claims to have sent in payment with a payment agreement in SOR 1.c, but produced no evidence. In response to SOR ¶¶ 1.d, 1.e, 1.f, and 1.g, Applicant stated that he either did not know what they are, or he thought they had been paid off. In response to SOR ¶ 1.h, he stated “I currently have no reason as to why I haven’t paid off this account.” All of the alleged delinquent debts are reflected in Applicant’s February 6, 2015 and July 13, 2016 credit bureau reports.3

No explanation about how Applicant got into debt has been provided. Applicant provided no response to the FORM. In his Answer to the SOR, he stated that he had planned to pay off all of his delinquent debts and tried to get a home-equity loan through his mortgage company, but his plan did not work out. “I also plan to seek financial counseling.”4 Applicant has provided no evidence of financial counseling, monthly income and expenses, performance evaluations, or character reference letters.

POLICIES

This action was taken under Executive Order (EO) 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 promulgated in Security Executive Agent Directive 4 (SEAD 4), effective within the DOD on June 8, 2017.5

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, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which are 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, 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 adjudicative process is an examination of a sufficient period and a careful weighing of a number of variables of an individual’s life to make an affirmative determination that the individual is an acceptable security risk. This is 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. Likewise, I have avoided drawing inferences grounded on mere speculation or conjecture.

Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, an “applicant is responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by applicant or proven by Department Counsel, and has the ultimate burden of persuasion as to 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 that an applicant may deliberately or inadvertently fail to 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.

ANALYSIS

Guideline F, Financial Considerations

The security 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 classified information.

AG ¶ 19 provides conditions that could raise security 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.6 The guideline also includes conditions that could mitigate security 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;

(c) the individual has received, or is receiving financial counseling for the problem from a legitimate and credible source, such as 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; and

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

Applicant endured a separation and a divorce. Arguably, these conditions were beyond his control. He has produced no documentation showing efforts to address his delinquencies, either with his Answer to the SOR or in response to the FORM. He has not demonstrated that he acted responsibly under the circumstances. Applicant has the 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. Applicant has not met that burden. None of the delinquent debts have been resolved. The 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 security clearance 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 ¶ 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 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 ¶ 2(d) were addressed under those guidelines.

Applicant’s finances remain a security concern. There is insufficient evidence to conclude that Applicant’s financial problems are under control. He has not met his burden of persuasion. The record evidence leaves me with serious questions and doubts as to Applicant’s suitability for a security clearance. For all these reasons, I conclude Applicant has not mitigated the security 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 to 1.h: 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 security clearance. Eligibility for access to classified information is denied.

________________________ Robert J. Kilmartin Administrative Judge

FOOTNOTES

1 Unless stated otherwise, the source of the information in this section is Applicant’s January 28, 2015 Security Clearance Application (SCA). (Item 3) and his Answer to the SOR dated November 12, 2016.

2 Item 3.

3 Items 4 and 5.

4 Item 2, Answer to SOR. 5 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 September 1, 2006, and my decision would be the +same under either AG. 6 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).