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ISCR Case 17-02915.h1 — CASE

ISCR Case 17-02915.h1denied

Case Headnote

ISCR Case No. 17-02915.h1

deniedApr 19, 2018· Hon. Robert E. Coacher· hearing

Summary

A 51-year-old defense contractor with four children was denied a security clearance under Guideline F (Financial Considerations) due to significant unresolved financial issues. The Statement of Reasons detailed several concerns, including delinquent debts totaling approximately $17,045, a judgment against him, child support arrears, and a medical debt. Additionally, the applicant failed to file federal and state income tax returns for 2013 and 2014 and had five consumer debts.

Disqualifying conditions under Guideline F were raised, specifically concerning delinquent debts due to an inability to pay, a judgment against the applicant, and multiple consumer debts. The judge noted the applicant provided no documentation of efforts to pay these debts, establish payment plans, or contact creditors. There was also no evidence supporting any disputed debts, information about his current financial situation or a budget, or participation in financial counseling.

The denial was based on the applicant's failure to provide evidence of efforts to resolve delinquent debts or file tax returns. The absence of documentation for financial counseling or established payment plans, combined with the recent and unresolved nature of his financial issues, led the judge to conclude that the applicant had not mitigated the financial concerns, raising doubts about his reliability and trustworthiness.

Why the Applicant Was Denied

The applicant failed to provide evidence of efforts to resolve delinquent debts or file tax returns.
There was no documentation of financial counseling or payment plans established by the applicant.
The applicant's financial issues were recent and unresolved, raising doubts about his reliability and trustworthiness.

Conditions Referenced

Disqualifying

F.1.araisedInability to Satisfy Debts
F.1.craisedA History of Not Meeting Financial Obligations
F.1.fraisedFailure to File or Fraudulently Filing Annual Federal, State, or Local Income Tax Returns

Key Rule Quoted

“A person who seeks access to classified information enters into a fiduciary relationship with the Government predicated upon trust and confidence.”

Procedural Posture

SOR issuedSep 8, 2017
Answer filedOct 12, 2017Applicant elected to have the case decided on the written record.
Hearing held—No hearing; decision made on the written record.
Decision dateApr 19, 2018

Cite For

Failure to Mitigate Financial Considerations Under Guideline F
Importance of Providing Evidence of Financial Stability
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 had unresolved financial issues, including delinquent debts and failure to file tax returns, which raised significant security concerns under Guideline F. The applicant did not provide sufficient evidence to mitigate these concerns, leading to a denial of eligibility for a security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant has delinquent debts that remain unpaid or unresolved because of his inability to pay them.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	Applicant failed to file his 2013 and 2014 federal and state income tax returns as required.	Against Applicant	Tax Filing Failure	Admitted	(f) failure to file / fraudulent filing of tax returns or unpaid tax	—	—
1.c	Applicant has a judgment against him.	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	Applicant has child support arrears.	Against Applicant	Child Support Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	Applicant has a medical debt.	Against Applicant	Medical Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	Applicant has five consumer debts.	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.g	Applicant failed to provide documentation showing any effort to pay the debts, that he established payment plans, or that he contacted any creditors.	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.h	Applicant failed to provide documentation supporting any disputed debt.	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.i	Applicant did not provide any information about his current financial situation or a budget.	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.j	There is no evidence of financial counseling.	Against Applicant	Unspecified Financial	Unknown	(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. 17-02915 ) ) Applicant for Security Clearance )

For Government: Andre M. Gregorian, Esq., Department Counsel For Applicant: Pro se

04/19/2018 ______________

STATEMENT OF CASE

______________

COACHER, Robert E., Administrative Judge:

Applicant has not mitigated the financial considerations security concerns. Eligibility for access to classified information is denied.

Statement of the Case

On September 8, 2017, the Department of Defense Consolidated Adjudications Facility (DOD CAF) issued Applicant a Statement of Reasons (SOR) detailing security concerns under Guideline F. The DOD CAF acted under Executive Order (EO) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; DOD 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG).

Applicant answered the SOR on October 12, 2017, and elected to have his case decided on the written record in lieu of a hearing. Department Counsel submitted the Government’s File of Relevant Material (FORM) on October 27, 2017. The evidence included in the FORM is identified as Items 2-7 (Item 1 includes pleadings and transmittal information). The FORM was mailed to Applicant, who received it on November 6, 2017. Applicant was given an opportunity to file objections and submit material in refutation, extenuation, or mitigation. Applicant did not file objections nor did he submit any exhibits. Items 2-7 are admitted into evidence without objection. The case was assigned to me on April 12, 2018.

FINDINGS OF FACT

Applicant admitted some of the allegations and denied others in his answer to the SOR. The admissions are adopted as findings of fact. After a careful review of the pleadings and evidence, I make the following additional findings of fact.

Applicant is 51 years old. He has worked for a defense contractor since 1990. He has no military service. He has never married and has four children, ages 29, 25, 24, and 8. He is required to pay child support for the youngest. The record is silent about his education history.1

The SOR alleged seven delinquent debts, an unpaid judgment, and Applicant’s failure to file his 2013 and 2014 federal and state tax returns. The debts and judgment total approximately $17,045. One debt is for child support arrears, one is a medical debt, and the rest are five consumer debts. Applicant admitted in his February 2015 security clearance application (SCA) and his statement to a defense investigator in January 2016 that he failed to file his 2013 and 2014 federal and state income tax returns. Credit reports from March 2015, May 2016, and April 2017 support the remaining delinquent debts and judgment.2

Applicant provided no proof that he filed any of the federal or state tax returns. He also failed to provide documentation showing any effort to pay the debts, that he established payment plans, or that he contacted any creditors. He also failed to provide documentation supporting any disputed debt. Applicant’s delinquent debts and tax issues remain unresolved.3

He did not provide any information about his current financial situation or a budget. There is no evidence of financial counseling.4

POLICIES

When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations for each guideline, 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 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.

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 to obtain 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 about potential, rather than actual, risk of compromise of classified information.

Section 7 of EO 10865 provides that 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

AG ¶ 18 expresses the security concern for financial considerations: 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. I have considered all of them under AG ¶ 19 and the following potentially apply:

(a) inability to satisfy debts;

(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 delinquent debts that remain unpaid or unresolved because of his inability to pay them. He also failed to file his 2013 and 2014 federal and state income tax returns as required. I find all the disqualifying conditions are raised.

The guideline also includes conditions that could mitigate security concerns arising from financial difficulties. I have considered all of the mitigating conditions under AG ¶ 20 and the following potentially apply:

(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; 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.

Applicant’s debts are recent and remain unresolved. He did not provide sufficient evidence to show that his financial problems are unlikely to recur. AG ¶ 20(a) does not apply. Even if the record contained evidence that his financial conditions were impacted by circumstances beyond his control (which it does not), he failed to take responsible actions to address any of his debts. AG ¶ 20(b) does not apply. Applicant failed to provide documentation showing any efforts pay or settle any of the debts. He failed to provide documentation supporting his dispute of any debts. There is no evidence of financial counseling. There is no evidence he made arrangements with the IRS and state tax authorities to file his delinquent tax returns. AG ¶¶ 20(c), 20(d), 20(e), and 20(g) 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 guideline 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 considered his civilian employment, but I also considered his lack of progress in resolving his debts and filing his tax returns. Applicant has not established a track record of financial stability.

Overall, the record evidence leaves me with questions and doubts as to Applicant’s eligibility and suitability for a security clearance because of his financial status. For all these reasons, I conclude Applicant failed to mitigate 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 – 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 eligibility for a security clearance. Eligibility for access to classified information is denied.

_____________________________ Robert E. Coacher Administrative Judge

FOOTNOTES

1 Item 2. 2 Items 2, 4-7. 3 Items 3-4. 4 Items 3-4.