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ISCR Case 16-03604.h1 — CASE

ISCR Case 16-03604.h1denied

Case Headnote

ISCR Case No. 16-03604.h1

deniedJan 29, 2018· Hon. Darlene Lokey Anderson· hearing

Summary

Darlene D. Lokey Anderson, an Administrative Judge, denied a security clearance application for a 51-year-old retired Navy veteran working as an Avionics Technician. The denial was based on Guideline F (Financial Considerations), specifically citing the applicant's failure to file federal income tax returns for the 2013, 2014, and 2015 tax years. This omission raised concerns about the applicant's judgment and reliability.

The Statement of Reasons specifically alleged the failure to file these federal income tax returns, which constituted a disqualifying condition under F.19(g). The judge determined that the applicant had not provided evidence of timely contact with the IRS or demonstrated efforts to resolve the outstanding tax issues.

Ultimately, the applicant failed to provide documentation that would mitigate the financial concerns. Given the lack of mitigating circumstances to address the security risks posed by the applicant's financial history, the security clearance was denied.

Why the Applicant Was Denied

Applicant failed to file federal income tax returns for tax years 2013, 2014, and 2015.
There was no evidence of timely contact with the IRS or efforts to resolve tax issues.
Applicant did not provide documentation to demonstrate mitigation of financial concerns.

Conditions Referenced

Disqualifying

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

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 issuedJan 7, 2017
Answer filedJun 7, 2017Applicant requested a decision on the written record.
Hearing held—No hearing; decision made on the written record.
Decision dateJan 29, 2018

Cite For

Failure to File Tax Returns as a Disqualifying Condition Under Guideline F
Lack of Evidence for Mitigating Financial Considerations
Importance of Demonstrating Financial Responsibility for 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 file his Federal income tax returns for the years 2013, 2014, and 2015, which raised significant financial concerns under Guideline F. The applicant's lack of action regarding his tax obligations demonstrated unreliability and poor judgment, leading to a decision against the applicant.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	failure to file his Federal income tax returns for tax years 2013, 2014, and 2015	Against Applicant	Tax Filing Failure	Admitted	(g) unexplained affluence	—	—

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. 16-03604 ) ) Applicant for Security Clearance )

For Government: Chris Morin, Department Counsel For Applicant: Pro se

January 29, 2018 ______________

STATEMENT OF CASE

______________

LOKEY ANDERSON, Darlene D., Administrative Judge:

On January 12, 2016, Applicant submitted a security clearance application (e- QIP). (Government Exhibit 3.) On January 7, 2017, 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 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, effective within the DoD after September 1, 2006.

Applicant answered the SOR on June 7, 2017. He requested that his case be decided by an administrative judge on the written record without a hearing. (Item 2.) On June 26, 2017, Department Counsel submitted the Government’s written case. A complete copy of the File of Relevant Material (FORM), containing 4 Items, were received by Applicant on July 7, 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 failed to respond to the FORM. DOHA assigned the case to me on November 9, 2017. Items 1 through 4 are admitted into evidence, and hereinafter referenced as Government Exhibits 1 through 4.

The SOR in this case was issued under the adjudicative guidelines that came into effect within the DoD on September 1, 2006. Security Executive Agent Directive (SEAD) 4, National Security Adjudicative Guidelines, implements new adjudicative guidelines, effective June 8, 2017. All national security eligibility decisions issued on or after June 8, 2017, are to be decided using the new National Security Adjudicative Guidelines for Determining Eligibility for Access to Classified Information or Eligibility to Hold a Sensitive Position (AG), as implemented by SEAD 4. I considered the previous adjudicative guidelines, effective September 1, 2006, as well as the new AG, effective June 8, 2017, in adjudicating Applicant’s national security eligibility. My decision would be the same under either set of guidelines, although this decision is issued pursuant to the new AG.

FINDINGS OF FACT

Applicant is 51 years old. He is retired from the United States Navy with an honorable discharge. He is employed by a defense contractor as an Avionics Technician. He is seeking to obtain a security clearance in connection with his employment.

Guideline F - Financial Considerations

The Government alleged that Applicant is ineligible for a clearance because he made financial decisions that indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which raise questions about his reliability, trustworthiness and ability to protect classified information.

Applicant served on active duty in the United States Navy from June 1986 to June 2006, when he was honorably discharged. He then went to work for the defense industry as a civilian. Applicant has been working for his current employer since September 2010.

The SOR identified one allegation concerning Applicant’s failure to file his Federal income tax returns for tax years 2013, 2014, and 2015. Applicant admits that he failed to file his Federal income tax returns for tax years 2013 and 2015, but that he has filed his 2014 Federal income tax returns. Applicant did not provide copies of any tax return filings or proof of any such filings. Applicant speculates that he is entitled to a refund for tax years 2013, and believes that he owes money for tax years 2015. There is no evidence in the record that he made any formal calculations to make this determination. Furthermore, the record is also void as to whether Applicant has even filed his Federal income tax returns for 2016.

Applicant has known the unfiled tax returns and unpaid taxes were of potential current security concern to DOD since he certified his security clearance application in January 2016, and completed his interviews with an OPM investigator in March and June 2016. In his June 23, 2016, interview with the OPM investigator, he pledged to take action to prepare and file the Federal income tax returns in question. (Government Exhibits 1 and 4.)

Applicant did not provide copies of his Federal income tax filings for tax years, 2013, 2014 and 2015. Understanding that these tax returns are in issue, it can be reasonably assumed that he has yet to file them.

POLICIES

When evaluating an applicant’s suitability for national security eligibility, the administrative judge must consider the adjudicative guidelines (AG). In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which are to be 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, administrative judges apply the guidelines 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 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. 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, the 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.” The applicant has the ultimate burden of persuasion to obtain a favorable clearance 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 the 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.

Section 7 of EO 10865 provides that adverse decisions shall be “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information).

ANALYSIS

Guideline F - Financial Considerations

The security concern for 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 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.

The guideline notes several conditions that could raise security concerns under AG ¶ 19. One is applicable in this case:

(g) failure to file annual Federal, state, or local income tax returns as required or the fraudulent filing of the same.

Applicant failed to file his Federal income tax returns for tax years 2013, 2014, and 2015 in a timely fashion as required by law. Applicant’s actions demonstrate both a history of and a unwillingness to abide by the law. There is no evidence that Applicant timely contacted the IRS at the time he was required to file each return, or since then to explore options for filing extensions or to bring his filings current. The failure to file tax returns suggests that Applicant has a problem complying with well-established governmental rules and systems. Tax liability was assessed against him. The evidence is sufficient to raise the above disqualifying conditions.

The following mitigating conditions under the Financial Considerations are potentially applicable under 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;

(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), 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; and

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

Applicant provided no information concerning his Federal income tax filings that demonstrate appropriate mitigation. There is no documentary evidence showing that he has filed his Federal income tax returns for tax years 2013, 2014, and 2015. Given this situation, there is no evidence that he has acted reasonably and responsibly. His actions demonstrate unreliability, untrustworthiness, and poor judgment.

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 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. 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 relevant facts and circumstances surrounding this case. I conclude Applicant has not mitigated the Financial Considerations concerns.

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

Subparagraph 1.a.: 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 or continue Applicant’s national security eligibility for a security clearance. Eligibility for access to classified information is denied.

Darlene Lokey Anderson Administrative Judge