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ISCR Case 16-03403.h1 — CASE

ISCR Case 16-03403.h1denied

Case Headnote

ISCR Case No. 16-03403.h1

deniedOct 13, 2017· Hon. Robert J. Tuidar· hearing

Summary

A 56-year-old solution architect, employed by a defense contractor, was denied a security clearance under Guideline F (Financial Considerations). The denial stemmed from approximately $195,000 in significant financial delinquencies, which included a $56,390 tax lien.

The applicant attributed these financial difficulties to a contentious divorce and medical expenses. However, the Statement of Reasons cited several disqualifying conditions, including allegations related to the tax lien and general financial irresponsibility.

The denial was ultimately based on the applicant's failure to provide sufficient evidence of efforts to resolve his debts, a lack of a viable plan for addressing his financial issues, and explanations for his financial problems that lacked sufficient detail and corroboration. The security clearance was therefore denied.

Why the Applicant Was Denied

The applicant failed to provide sufficient evidence of efforts to resolve his debts.
The applicant did not demonstrate a viable plan for addressing his financial issues.
The applicant's explanations for his financial problems lacked sufficient detail and corroboration.

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 or Failure to Pay Annual Federal, State, or Local Income Tax as Required

Key Rule Quoted

“"Any doubt concerning personnel being considered for access to classified information will be resolved in favor of the national security."”
— Directive, Enclosure 2 ¶ 2(b)

Procedural Posture

SOR issuedNov 18, 2016
Answer filedDec 17, 2016Applicant elected to have the case decided on the written record.
Hearing held—No hearing; decided on written record.
Decision dateOct 13, 2017

Cite For

Failure to Mitigate Financial Considerations Under Guideline F
Insufficient Evidence of Debt Resolution Efforts
Importance of Providing a Viable Plan for Addressing Financial Issues

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, which included 14 delinquent accounts totaling approximately $195,000, including a significant tax lien. The applicant's explanations and attempts to address the debts were deemed insufficient, leading to a denial of the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	specific text not stated in this decision	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.b	$56,390 tax lien $56,390	Against Applicant	Tax Unpaid	Admitted	(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.c–1.n	12 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. 16-03403 ) Applicant for Security Clearance )

For Government: Andrew H. Henderson, Esq., Department Counsel For Applicant: Pro se

10/13/2017 __________

STATEMENT OF CASE

__________

TUIDER, Robert, Administrative Judge:

Applicant failed to mitigate security concerns regarding Guideline F (financial considerations). Clearance is denied.

Statement of the Case

On September 29, 2015, Applicant submitted a Questionnaire for National Security Positions (SF-86). On November 18, 2016, the Department of Defense Consolidated Adjudications Facility (DOD CAF) issued a Statement of Reasons (SOR) to Applicant, under Executive Order (Exec. Or.) 10865, Safeguarding Classified Information within Industry, dated February 20, 1960, as amended; DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (Directive), dated January 2, 1992, as amended; and the adjudicative guidelines (AG), which became effective on September 1, 2006.

While this case was pending a decision, the Director of National Intelligence issued Security Executive Agent Directive 4, National Security Adjudicative Guidelines for Determining Eligibility for Access to Classified Information or Eligibility to Hold a Sensitive Position (AGs), which he made applicable to all covered individuals who require initial or continued eligibility for access to classified information or eligibility to hold a sensitive position. The new AGs supersede the September 1, 2006 AGs and are effective “for all covered individuals” on or after June 8, 2017. Accordingly, I have evaluated Applicant’s security clearance eligibility under the new AGs, as required.1

The SOR alleged security concerns under Guideline F. The SOR detailed reasons why DOD CAF was unable to find that it is clearly consistent with the national interest to grant or continue a security clearance for Applicant.

On December 17, 2016, Applicant answered the SOR and elected to have his case decided on the written record in lieu of a hearing. A complete copy of the file of relevant material (FORM), dated January 23, 2017, was provided to him by letter on January 24, 2017. Applicant received the FORM on February 2, 2017. He was afforded a period of 30 days to file objections and submit material in refutation, extenuation, or mitigation. Applicant submitted additional information within the 30-day period.2 On October 1, 2017, the case was assigned to me.

FINDINGS OF FACT

Applicant admitted SOR ¶¶ 1.b, 1.c, 1.e through 1.k, with explanations, and denied SOR ¶¶ 1.a, 1.d, and 1.lthrough 1.n, with explanations. Additional findings of fact follow.

Background Information3

Applicant is a 56-year-old solution architect employed by a defense contractor since July 2015. He seeks a security clearance in conjunction with his current employment. In his FORM response, he stated that he held various levels of security clearances from 2002 to 2011. (Item 6)

Applicant was awarded a bachelor’s degree in May 1984, and was awarded a master’s degree in December 1988. Applicant married in June 1986 and divorced in June 1990. He married a second time in September 1996 and divorced in August 2012. Applicant has three children from his second marriage, ages 22, 16, and 14. He did not serve in the U.S. armed forces. Financial Considerations

Applicant’s SOR lists 14 delinquent accounts totaling about $195,000, including a $56,390 tax lien. (SOR ¶¶ 1.a – l.n; Item 1) These allegations are established through Applicant’s admissions, in part, and the Government’s exhibits. (Items 1 – 5)

Applicant attributes his financial delinquencies primarily to his 2012 divorce, which he described as very contentious and costly. He stated that he spent “[o]ver $100,000” in legal fees. His departure from a long-term employment with a defense contractor to “adjust to being a single parent” in 2011 and medical costs spanning a two-year period associated with treatment and hospitalization of his oldest child were also factors cited in the FORM. (Items 1, 2, 3, and 6)

Department Counsel discussed the shortcomings of Applicant’s SOR answer in his FORM, to include the lack of evidence demonstrating Applicant’s efforts to resolve his debts. Applicant’s FORM response addressed only two of his SOR debts, discussed below. His FORM response shows that his liabilities in his divorce proceedings were $226,232, which he said correlated with his SOR debts. (Item 6)

Applicant stated that the debt in SOR 1.a was allocated to his former wife in their divorce. Upon review of Applicant’s documentation, the name of the creditor and amount of $744 listed on the SOR is different from the name of the creditor and amount of $1,057 listed on his FORM response. Absent additional corroboration such as matching account numbers, this evidence is non-persuasive. (Items 1, 6)

To address the July 2013 $56,390 Federal tax lien in SOR 1.b, Applicant stated that he is working directly with the IRS to reach a final settlement. He provided a copy of a May 30, 2016 IRS notice from tax year 2015 that indicated $5,263 of his tax refund had been applied towards his “unpaid balance,” leaving a balance of $18,155. It is difficult to discern from this documentation whether this recoupment was applied to his outstanding tax lien or some other tax liability. Again, absent additional corroboration demonstrating how Applicant is working directly with the IRS to resolve his tax lien, this evidence is non-persuasive. (Items 1, 6)

Unfortunately, the post-FORM evidence Applicant submitted for the two SOR debts he addressed was not particularly helpful nor was it helpful that he did not submit any evidence for the remaining 12 SOR debts. He stated in his FORM response that once he satisfied his IRS debt, he would begin addressing the remaining debts without providing a specific plan or timeline of how or when this would occur. (Item 6) I note in Applicant’s April 5, 2016 Office of Personnel Management Personal Subject Interview (OPM PSI), he stated that he incurred his large tax liability when he liquidated his IRAs in 2011, 2012, 2013, and 2014 to pay for his divorce and did not set aside any tax withholdings. During the same interview, he also stated that he made the IRS an offer in compromise in August 2015 and the matter was “in a review stage.” Applicant also stated that he anticipated having the IRS debt settled in 2016 and the commercial accounts resolved by 2018. In short, the file lacks sufficient evidence that Applicant paid, arranged to pay, settled, compromised, disputed, or otherwise resolved the vast majority of the delinquent SOR accounts. He did not describe financial counseling or present a budget. Although, Applicant provided evidence on how he arrived where he is today, he did not offer a viable plan on how he planned to resolve his substantial debt. The FORM noted that Applicant had 30 days from the receipt of the FORM “in which to submit a documentary response setting forth objections, rebuttal, extenuation, mitigation, or explanation, as appropriate. If you do not file any objections or submit any additional information . . . your case will be assigned to an Administrative Judge for a determination based solely” on the evidence set forth in this FORM. As noted, Applicant’s FORM response fell short of addressing the concerns raised by Department Counsel.

POLICIES

The U.S. Supreme Court has recognized the substantial discretion of the Executive Branch in regulating access to information pertaining to national security emphasizing, “no one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). 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.” Id. at 527. The President has authorized the Secretary of Defense or his designee to grant applicant’s eligibility for access to classified information “only upon a finding that it is clearly consistent with the national interest to do so.” Exec. Or. 10865, Safeguarding Classified Information within Industry § 2 (Feb. 20, 1960), as amended.

Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, these guidelines are applied 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, 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 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 “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See Exec. Or. 10865 § 7. See also Executive Order 12968 (Aug. 2, 1995), § 3.1. Thus, nothing in this Decision should be construed to suggest that I have based this decision, in whole or in part, on any express or implied determination about applicant’s allegiance, loyalty, or patriotism. It 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. See Egan, 484 U.S. at 531. “Substantial evidence” is “more than a scintilla but less than a preponderance.” See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). The guidelines presume a nexus or rational connection between proven conduct under any of the criteria listed therein and an applicant’s security suitability. See ISCR Case No. 95-0611 at 2 (App. Bd. May 2, 1996).

Once the Government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. Directive ¶ E3.1.15. An applicant “has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue her security clearance.” ISCR Case No. 01-20700 at 3 (App. Bd. Dec. 19, 2002). The burden of disproving a mitigating condition never shifts to the Government. See ISCR Case No. 02-31154 at 5 (App. Bd. Sep. 22, 2005). “[S]ecurity clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531; see AG ¶ 2(b).

ANALYSIS

Financial Considerations

AG ¶ 18 articulates the security concern for financial problems:

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.

AG ¶ 19 provides four disqualifying conditions that could raise a security concern and may be disqualifying in this case: “(a) inability to satisfy debts”; “(b) unwillingness to satisfy debts regardless of the ability to do so”; “(c) a history of not meeting financial obligations”; “(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.” Based on the information in the SOR, the record established the disqualifying conditions in AG ¶¶ 19(a), 19(b), 19(c), and 19(f), requiring additional inquiry about the possible applicability of mitigating conditions. AG ¶ 20 lists seven potential mitigating conditions:

(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.

The Appeal Board concisely explained Applicant’s responsibility for proving the applicability of mitigating conditions as follows:

Once a concern arises regarding an Applicant’s security clearance eligibility, there is a strong presumption against the grant or maintenance of a security clearance. See Dorfmont v. Brown, 913 F. 2d 1399, 1401 (9th Cir. 1990), cert. denied, 499 U.S. 905 (1991). After the Government presents evidence raising security concerns, the burden shifts to the applicant to rebut or mitigate those concerns. See Directive ¶ E3.1.15. The standard applicable in security clearance decisions is that articulated in Egan, supra. “Any doubt concerning personnel being considered for access to classified information will be resolved in favor of the national security.” Directive, Enclosure 2 ¶ 2(b).

ISCR Case No. 10-04641 at 4 (App. Bd. Sept. 24, 2013). In summary, no mitigating conditions fully apply. In addition to evaluating the facts and applying the appropriate adjudicative factors under Guideline F, I have reviewed the record before me in the context of the whole-person factors listed in AG ¶ 2(d). Applicant has been gainfully employed for the majority of his adult life, and he is presumed to be a mature, responsible citizen. Nonetheless, without other information suggesting his financial problems are being adequately addressed, doubts remain about his suitability for access to classified information. Protection of the national interest is the principal focus of these adjudications. According, those doubts must be resolved against the Applicant.

Applicant chose to rely on the written record. In so doing, however, he failed to submit sufficient evidence to supplement the record with relevant and material facts regarding his circumstances, articulate his position, and mitigate the financial security concerns. He failed to offer evidence of financial counseling or provide documentation regarding his past efforts to address his delinquent debt. By failing to provide such information, and in relying on an explanation lacking sufficient detail to fully establish mitigation, financial considerations security concerns remain.

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 – 1.n: Against Applicant

CONCLUSION

In light of all of the record as a whole, it is not clearly consistent with the national interest to grant Applicant eligibility for a security clearance. Clearance is denied.

_________________________ ROBERT TUIDER Administrative Judge

FOOTNOTES

1 The new AGs are available at http://ogc.osd.mil/doha/SEAD4 20170608.pdf. 2 Applicant’s post-FORM submission was marked as Item 6, and received into evidence. 3 The limited background information regarding Applicant was derived from the FORM and was the most current information available.