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ISCR Case 16-03661.h1 — CASE

ISCR Case 16-03661.h1granted

Case Headnote

ISCR Case No. 16-03661.h1

grantedNov 3, 2017· Hon. Nichole L. Noel· hearing

Summary

A federal contractor, employed since 2013, faced security clearance concerns under Guideline F (Financial Considerations) due to a history of financial issues. The Statement of Reasons detailed eleven state tax liens filed against him between February and May 2015, a Chapter 7 bankruptcy protection received in 2010, and outstanding federal income taxes for the 2010 through 2012 tax years. These issues raised disqualifying conditions F3 and F4.

However, the applicant demonstrated a good-faith effort to resolve these debts. He entered a payment plan for his tax issues by at least September 2015 and took appropriate steps to remediate the situation. It was determined that his financial problems were caused by circumstances beyond his control.

Considering these mitigating factors, specifically F2, F3, and F4, the applicant's security clearance was GRANTED.

Why the Applicant Prevailed

The applicant has been in a payment plan to resolve his tax issues since at least September 2015.
The applicant demonstrated a good-faith effort to repay overdue creditors and resolve his outstanding tax debt.
The applicant's financial problems were caused by circumstances beyond his control, and he has taken appropriate steps to remediate the issue.

Conditions Referenced

Disqualifying

F3raisedFailure to Meet Financial Obligations
F4raisedInability to Satisfy Debts

Mitigating

F2appliedThe Conditions That Resulted in the Financial Difficulties Were Beyond the Person's Control
F3appliedThe Individual Has Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts
F4appliedThe Individual Has a Reasonable Plan in Place to Resolve Debts

Key Rule Quoted

“An applicant is not required to be debt-free, all that is required is that he make a plan to resolve his delinquent debt and show that he has taken steps to effectuate that plan.”

Procedural Posture

SOR issuedJan 7, 2017
Answer filed—Requested a decision without a hearing.
Hearing held—No hearing; decision made based on written submissions.
Decision dateNov 3, 2017

Cite For

Good-faith Efforts to Resolve Tax Debts Under Guideline F
Mitigating Circumstances Due to Financial Difficulties Beyond the Applicant's Control
Requirements for Demonstrating a Reasonable Plan to Resolve Debts

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: granted

The judge found that the applicant had a history of financial issues, including multiple state tax liens and federal tax obligations. However, the applicant demonstrated a commitment to resolving these issues through a payment plan, leading to a decision in favor of granting the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	11 state tax liens filed against him between February and May 2015	For Applicant	Tax Unpaid	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Payment Plan with Creditor
1.b	11 state tax liens filed against him between February and May 2015	For Applicant	Tax Unpaid	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Payment Plan with Creditor
1.c	11 state tax liens filed against him between February and May 2015	For Applicant	Tax Unpaid	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Payment Plan with Creditor
1.d	11 state tax liens filed against him between February and May 2015	For Applicant	Tax Unpaid	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Payment Plan with Creditor
1.e	11 state tax liens filed against him between February and May 2015	For Applicant	Tax Unpaid	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Payment Plan with Creditor
1.f	11 state tax liens filed against him between February and May 2015	For Applicant	Tax Unpaid	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Payment Plan with Creditor
1.g	11 state tax liens filed against him between February and May 2015	For Applicant	Tax Unpaid	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Payment Plan with Creditor
1.h	11 state tax liens filed against him between February and May 2015	For Applicant	Tax Unpaid	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Payment Plan with Creditor
1.i	11 state tax liens filed against him between February and May 2015	For Applicant	Tax Unpaid	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Payment Plan with Creditor
1.j	11 state tax liens filed against him between February and May 2015	For Applicant	Tax Unpaid	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Payment Plan with Creditor
1.k	11 state tax liens filed against him between February and May 2015	For Applicant	Tax Unpaid	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Payment Plan with Creditor
1.l	received Chapter 7 bankruptcy protection in 2010	For Applicant	Bankruptcy Filing	Admitted	—	(f) the affluence resulted from a legal source	Documented Chapter 7 Bankruptcy
1.m	owing Federal income taxes for the 2010 through 2012 tax years	For Applicant	Tax Unpaid	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur	Documented Payment Plan with Creditor

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. 16-03661 ) Applicant for Security Clearance )

For Government: Erin P. Thompson, Esq., Department Counsel For Applicant: Pro se 11/03/2017 ______________

STATEMENT OF CASE

______________

NOEL, Nichole L., Administrative Judge:

Applicant contests the Department of Defense’s (DOD) intent to deny his eligibility for a security clearance. Applicant has been in a payment plan to resolve his tax issues since at least September 2015. Clearance is granted.

Statement of the Case

On January 7, 2017, the DOD issued a Statement of Reasons (SOR) detailing security concerns under the financial considerations guideline.1 DOD adjudicators were unable to find that it is clearly consistent with the national interest to grant Applicant’s security clearance and recommended his case be submitted to an administrative judge for consideration. Applicant answered the SOR and requested a decision without a hearing.2 The Government submitted its written case on April 7, 2017. A complete copy of the file of relevant material (FORM) and the Directive were provided to Applicant. He received the FORM on May 25, 2017, and provided a response. The documents appended to the FORM are admitted as Government’s Exhibits (GE) 1 through 7 and Applicant’s Exhibits (AE) A and B, are admitted without objection. On October 25, 2017, I opened the record to allow the parties to submit additional information. Applicant submitted information about the status of his tax repayment plan, which was admitted as AE C, without objection.

PROCEDURAL MATTERS

While the case was pending decision, the Director of National Intelligence (DNI) issued Security Executive Agent Directive 4, establishing the National Security Adjudicative Guidelines (AG) applicable to all covered individuals who require initial or continued eligibility for access to classified information or eligibility to hold a sensitive position. The 2017 AG superseded the AG implemented in September 2006, and they are effective for any adjudication made on or after June 8, 2017. Accordingly, I have applied them in this case.

FINDINGS OF FACT

Applicant has worked for a federal contractor since July 2013. He completed a security clearance application, his first, in September 2015. Applicant disclosed financial issues, including outstanding Federal taxes for the years 2010 through 2012 and that he filed a Chapter 7 bankruptcy petition that was discharged in January 2010. Applicant’s background investigation revealed state tax issues. The SOR alleges and Applicant admits having 11 state tax liens filed against him between February and May 2015 (SOR ¶¶ 1.a – 1.k), receiving Chapter 7 bankruptcy protection in 2010 (SOR ¶ 1.l), and owing Federal income taxes for the 2010 through 2012 tax years (SOR ¶ 1.m).

Applicant’s financial problems began between 2004 and 2006, when he was self- employed. Applicant admits that while he was good salesman, he was not a good business man and did not manage his state sales tax obligations properly, resulting in the state tax liens alleged in the SOR. Although he incurred state tax debt, Applicant believed that his finances were otherwise stable until 2008 when the country experienced a recession. Applicant’s employer, a cable company, cut Applicant’s hours. Around the same time, Applicant’s wife lost her job and began experiencing medical problems. With the lower income and increase in expenses caused by his wife’s medical treatment, Applicant fell behind on his bills. Applicant filed for bankruptcy protection in 2009, and his petition was discharged in January 2010.

Despite receiving a discharge of debts in 2010, Applicant was unable to pay his outstanding tax debt. On his security clearance application, Applicant indicated that he owed $7,000 in Federal taxes. He explained that by September 2015 he had reduced the balance by half and was paying the remaining half through payroll deductions. In September 2016, Applicant retained a lawyer to help him resolve his state tax debt. Applicant agreed to pay a $3,500 down payment and 24 monthly payments of $437 to resolve his outstanding $10,500 balance. Applicant is in compliance with this payment plan.

POLICIES

When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines. 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 the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. 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.

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 security decision.

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

Financial Considerations

Failure to live within one’s means, satisfy debts, and meet financial obligations may indicate poor self-control, lack of judgement, or willingness 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.3 The record establishes the Government’s prima facie case, that Applicant has a history of not meeting his financial obligations and an inability to satisfy debts.4 The record also establishes that Applicant has failed to pay Federal and state income taxes as required.5 Applicant’s history of financial problems between 2008 and 2010 were caused by events beyond his control. His decision to file for bankruptcy protection was reasonable given his circumstances. Applicant’s accumulation of delinquent debt during those years as he coped with his and his wife’s loss of employment and her medical expenses constitute circumstances unlikely to recur and does not cast doubt on the individual’s current reliability, trustworthiness, or good judgment.6

Applicant’s tax issues were caused by his failure to properly manage his state and federal tax obligations; however, his efforts to resolve his tax problems are enough to mitigate the security concern raised by his behavior. Applicant provided evidence that he has made arrangements with the proper tax authority to pay the amount of taxes owed and he is in compliance with those arrangements.7 The record also establishes that Applicant initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve his outstanding tax debt.8

Accordingly, no doubts remain about Applicant’s suitability for access to classified information. In reaching this decision, I have considered the whole-person factors at AG ¶ 2(d). Although Applicant failed to properly manage his Federal and state obligations for many years, he has taken the appropriate steps to remediate the issue. An Applicant is not required to be debt-free, all that is required is that he make a plan to resolve his delinquent debt and show that he has taken steps to effectuate that plan. Applicant has done so. Accordingly, his request for access to classified information is granted.

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, Financial Considerations: FOR APPLICANT

Subparagraphs 1.a – 1.m: For Applicant

CONCLUSION

Based on the record, it is clearly consistent with the national interest to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is granted.

________________________ Nichole L. Noel Administrative Judge

FOOTNOTES

1 The DOD CAF acted under Executive Order (EO) 10865, Safeguarding Classified Information within Industry, signed by President Eisenhower on February 20, 1960, as amended; as well as DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program, dated January 2, 1992, as amended (Directive), and the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information, implemented on September 1, 2006. 2 GE 1. 3 AG ¶ 18. 4 AG ¶¶ 19(a) and (c). 5 AG ¶ 19(f). 6 AG ¶ 20(a). 7 AG ¶ 20(g). 8 AG ¶ 20(d).