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ISCR Case 16-03375.h1 — CASE

ISCR Case 16-03375.h1denied

Case Headnote

ISCR Case No. 16-03375.h1

deniedMar 6, 2018· Hon. Shari Dam· hearing

Summary

A 61-year-old retired Marine Corps officer was denied a security clearance under Guideline F (Financial Considerations) due to over $40,000 in unpaid taxes and delinquent debts. Specific concerns included unpaid state and federal taxes for 2013 and 2014, as well as other delinquent debts. A judgment against the applicant was satisfied in October 2016.

While the applicant acknowledged some debts and made payments, he did not provide sufficient evidence to resolve the outstanding financial issues. He also failed to participate in financial counseling or submit a budget to demonstrate a commitment to financial responsibility.

Ultimately, the absence of evidence regarding the resolution of his financial obligations raised sufficient doubt about his judgment and reliability, leading to the denial of his security clearance.

Why the Applicant Was Denied

Applicant failed to provide evidence of resolving unpaid taxes and delinquent debts.
He did not participate in financial counseling or provide a budget to demonstrate financial responsibility.
The absence of evidence raised sufficient doubt regarding his judgment and reliability.

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 Pay Taxes

Mitigating

AG ¶ 20(d)appliedGood-faith Effort to Repay DebtsEvidence established mitigation for the paid judgment.
AG ¶ 20(a)rejectedBehavior Unlikely to RecurApplicant did not provide evidence to support this condition.
AG ¶ 20(b)rejectedConditions Beyond ControlNo evidence presented to support this condition.
AG ¶ 20(c)rejectedFinancial Counseling ReceivedApplicant did not participate in financial counseling.
AG ¶ 20(g)rejectedArrangements with Tax AuthorityNo evidence of compliance with tax arrangements.

Key Rule Quoted

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

Procedural Posture

SOR issuedDec 22, 2016
Answer filedJan 31, 2017
Hearing held—Decided on the written record without a hearing.
Decision dateMar 6, 2018

Cite For

Failure to Mitigate Financial Considerations Under Guideline F
Importance of Providing Evidence to Support Claims of Financial Responsibility
Impact of Financial Distress on National Security 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 related to unpaid taxes and delinquent debts, resulting in a denial of security clearance. While one judgment was found to be paid and thus mitigated, the applicant did not provide sufficient evidence to address the remaining debts, leading to a ruling against him on those allegations.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	unpaid taxes and delinquent debts totaling over $40,000 $40,000	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	a judgment that was satisfied in October 2016	For Applicant	Judgment Against Applicant	Denied	—	(d) good-faith effort to repay or otherwise resolve debts	Credited Debt Paid in Full
1.f	unpaid state and Federal taxes for 2013 and 2014 $20,000	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (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: ) ) ) ISCR Case No: 16-03375 ) ) Applicant for Security Clearance

For Government: Daniel F. Crowley, Esquire, Department Counsel For Applicant: Pro se

03/06/2018 ______________

STATEMENT OF CASE

______________

DAM, Shari, Administrative Judge:

Applicant failed to mitigate the financial considerations security concerns, resulting from unpaid taxes and delinquent debts. Based upon a review of the pleadings and exhibits, national security eligibility for access to classified information is denied.

On December 22, 2016, the Department of Defense (DOD) issued Applicant a Statement of Reasons (SOR), detailing security concerns under Guideline F, Financial Considerations. (Item 1) The action was taken under Executive Order 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 for Determining Eligibility for Access to Classified Information (AG), effective within the DOD after September 1, 2006. On June 8, 2017, new AG were implemented and are effective for decisions issued after that date.1 Applicant answered the SOR on January 31, 2017, and requested that his case be decided by an administrative judge on the written record without a hearing (Answer). (Item 1) On February 25, 2017, Department Counsel submitted the Government’s written case. A complete copy of the File of Relevant Material (FORM), containing eight Items, was mailed to Applicant and received by him on March 8, 2017. The FORM notified Applicant that he had an opportunity to file objections and submit material in refutation, extenuation, or mitigation within 30 days of his receipt of the FORM. Applicant did not submit a response to the FORM or object to the Government’s Items. Hence, Items 1 through 8 are admitted into evidence without objection. The Defense Office of Hearings and Appeals (DOHA) assigned this case to me on October 1, 2017.

FINDINGS OF FACT

Applicant is 61 years old and divorced. He served in the Marine Corps from 1974 to 2003. He retired as an officer. He earned a bachelor’s degree in 2000. He has worked for a defense contractor since 2013. Prior to this position, he was self-employed. (Item 3)

On November 24, 2015, Applicant submitted a security clearance application (SCA). In it, he disclosed that he failed to timely pay state and Federal taxes for 2011 and 2012, but has since resolved those taxes. He also indicated that he had unpaid state and Federal taxes for 2013 and 2014, totaling about $20,000. He noted that he was making monthly payments of $200 on the tax debts. He also disclosed credit card debts and a judgment. (Item 3) During a June 2016 interview, Applicant discussed the unpaid state and Federal taxes and delinquent debts. He said he is current on his payments to the taxing bodies. (Item 5)

Based on credit bureau reports (CBR) from December 2015 and September 2016, the SOR alleged six delinquent debts and four unpaid tax liabilities, which became delinquent between 2011 and 2016, and totaled over $40,000. (Item 4, Item 6) In his January 2017 Answer, Applicant admitted all allegations, except a judgment listed in SOR ¶ 1.e, which he denied because it was paid. (Answer) According to Item 8, that judgment was satisfied in October 2016. He did not submit any evidence addressing the resolution of the unpaid taxes for 2013 and 2014, or other alleged debts.

There is no evidence that Applicant participated in financial or credit counseling. He did not provide a budget or other information related to his financial obligations from which to determine his current financial reliability and adherence to his legal responsibility to timely pay Federal and state income taxes.

POLICIES

When evaluating an applicant’s suitability for national security eligibility, the administrative judge must consider the pertinent AG. In addition to brief introductory explanations of the security concern, the guidelines list potentially disqualifying conditions and mitigating conditions, which are to be used in evaluating an applicant’s national security eligibility.

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 AG ¶ 2 describing the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. The entire process is a conscientious scrutiny of applicable guidelines in the context 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 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. I have not drawn inferences based on mere speculation or conjecture.

Directive ¶ E3.1.14 requires the Government to 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 the applicant or proven by Department Counsel, and has the ultimate burden of persuasion as to obtaining a favorable clearance decision.”

A person applying for national security eligibility 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 national security eligibility. 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 or sensitive information.

Finally, as emphasized in Section 7 of Executive Order 10865, “[a]ny determination under this order adverse to an applicant shall be a determination in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See also Executive Order 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information.)

ANALYSIS

Guideline F: Financial Considerations

The security concerns relating to the guideline for financial considerations are set out in AG ¶ 18, which reads in pertinent part:

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 personal 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.

This concern is broader than the possibility that an individual might knowingly compromise sensitive information in order to raise money. It encompasses concerns about an individual’s self-control, judgment, and other qualities essential to protecting sensitive information. An individual who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified or sensitive information.2

AG ¶ 19 describes four conditions that could raise security concerns and may be disqualifying in this case:

(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 has a history of being unable or unwilling to meet his financial and legal obligations, which began in 2011 and continues to date. The evidence raises security concerns under the above disqualifying conditions, and shifts the burden to Applicant to rebut, extenuate, or mitigate those concerns. The guideline includes conditions in AG ¶ 20 that could mitigate security concerns arising from Applicant’s financial difficulties. They are as follows:

(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, or 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; 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.

Evidence establishes mitigation under AG ¶ 20(d) for the paid judgment alleged in SOR ¶ 1.e. However, Applicant did not produce evidence to establish any of the above mitigating conditions regarding the remaining debts, including adherence to a payment plan he stated he had with both Federal and state taxing bodies. They are not mitigated.

WHOLE PERSON CONCEPT

Under the whole-person concept, the administrative judge must evaluate an applicant’s national security eligibility 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. According to AG ¶ 2(c), the ultimate determination of whether to grant national security eligibility must be an overall commonsense judgment based upon careful consideration of the applicable guidelines and the whole-person concept.

I considered the potentially disqualifying and mitigating conditions in light of all pertinent facts and circumstances surrounding this case, including those discussed in the analysis of the financial considerations guidelines. Applicant is a mature and educated individual, who is aware of the Government’s security concerns. He was informed that his Answer to the SOR was insufficient to mitigate the allegations because it did not contain proof that he was paying or had resolved 9 of the 10 allegations. Despite that notice, he did not submit additional evidence. Overall, the absence of evidence creates sufficient doubt as to Applicant’s judgment, reliability, and suitability for a security clearance. He failed to meet his burden to mitigate the security concerns arising under the guideline for financial considerations.

FORMAL FINDINGS

Formal findings for or against Applicant on the allegations set forth in the SOR, as required by ¶ E3.1.25 of Enclosure 3 of the Directive, are:

Paragraph 1, Guideline F: AGAINST APPLICANT

Subparagraphs 1.a through 1.d: Against Applicant Subparagraph 1.e: For Applicant Subparagraphs 1.fthrough 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 national interest to grant Applicant access to classified information. National security eligibility for access to classified information is denied.

SHARI DAM Administrative Judge

FOOTNOTES

1 I considered the previous AG, effective September 1, 2006, as well as the new AG, effective June 8, 2017. My decision would be the same under either set of guidelines. 2 See ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012).