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ISCR Case 09-03785.h1 — CASE

ISCR Case 09-03785.h1denied

Case Headnote

ISCR Case No. 09-03785.h1

deniedNov 23, 2010· Hon. John Grattan Metz, Jr.· hearing

Summary

A 42-year-old operations manager for a defense contractor was denied a security clearance under Guidelines E (Personal Conduct) and F (Financial Considerations). The denial stemmed from significant, recent, and unresolved financial delinquencies, as well as a failure to disclose a tax lien on his January 2009 clearance application.

Specifically, the applicant owed the IRS $25,000 from 1995, $37,426 from 1998, and $3,182.93 for tax year 2003. He also had three additional debts totaling less than $1,000, which he disputed without documentation. While one judgment was paid within months, an outstanding warrant existed due to his failure to comply with probation requirements from a January 2003 domestic violence charge, which he denied but resulted in 12 months of supervised probation and an anger-management program.

The judge concluded that the applicant's substantial delinquent debts, totaling over $38,000, and his lack of candor in failing to disclose a known tax lien, demonstrated poor judgment and were inconsistent with national security interests. The security clearance was therefore denied.

Why the Applicant Was Denied

Applicant has significant delinquent debts totaling over $38,000, including an unresolved IRS lien.
Applicant failed to disclose a known tax lien on his clearance application, demonstrating a lack of candor.
Applicant has an outstanding warrant due to failure to comply with probation requirements, indicating poor judgment.

Conditions Referenced

Disqualifying

F.19(a)raisedInability or Unwillingness to Satisfy Debts
F.19(b)raisedIndebtedness Caused by Frivolous or Irresponsible Spending
E.16(a)raisedDeliberate Omission, Concealment, or Falsification of Relevant and Material Facts
E.16(c)raisedCredible Adverse Information in Several Adjudicative Issue Areas

Key Rule Quoted

“The Government has an interest in examining all relevant and material adverse information about an applicant before making a clearance decision.”
— Department of the Navy v. Egan, 484 U.S. 518 (1988)

Procedural Posture

SOR issuedJan 15, 2010
Answer filed—
Hearing heldApr 29, 2010
Decision dateNov 23, 2010

Cite For

Lack of Candor in Security Clearance Applications Under Guideline E
Financial Irresponsibility and Inability to Resolve Debts Under Guideline F
Impact of Unresolved Legal Issues on Security Clearance Eligibility Under Guideline E

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 E (Personal Conduct) · descriptive summary of a decided case

Posture: Decision on RecordDecided: denied

The judge found against the applicant on all allegations under Guideline E, determining that the applicant's failure to disclose relevant financial issues on his clearance application constituted deliberate falsification. Additionally, the applicant's failure to resolve an outstanding warrant demonstrated poor judgment inconsistent with the requirements for access to classified information.

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
2.a	On Applicant’s January 2009 clearance application (GE 1), he failed to disclose the 2002 IRS lien, which he claims to have been unaware of until 2006.	Against Applicant	Falsification Security FormFOUND DELIBERATE	Financial	Denied	—	—	—
2.b	In January 2003, Applicant was charged with a domestic violence offense. Applicant adamantly denies the charge. However, the disposition of the offense placed him on 12 months supervised probation, and required completion of an anger-management program.	Against Applicant	Questionable Judgment General	—	Denied	—	—	—

Descriptive standardized rendering of a decided public case (Guideline E). The verbatim source decision is shown in full below.

Standardized Decision Profile

SEAD-4 Guideline F · descriptive summary of a decided case

Posture: Decision on RecordDecided: denied

The judge found multiple financial concerns under Guideline F, including significant tax liabilities and delinquent debts totaling nearly $56,000. The applicant failed to demonstrate responsible management of his financial obligations, leading to a decision against his security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant owes the IRS $25,000 for unpaid taxes from 1995 that he was unable to pay. $25,000	Against Applicant	Tax Unpaid	Denied	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.b	Applicant owes the IRS $37,426 for unpaid taxes, penalties, and interest assessed in February 1998. $37,426	Against Applicant	Tax Unpaid	Denied	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.c	Applicant owes the IRS for tax year 2003, with a balance of $3,182.93 after adjustments and seizures of overpayments. $3,182	Against Applicant	Tax Unpaid	Denied	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.d	Applicant has three additional debts totaling less than $1,000, which he claims to dispute or not recognize, but has provided no documentation. $1,000	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.e	Applicant had a judgment that was paid within months of its issuance.	For Applicant	Unspecified Financial	Admitted	—	—	—

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. 09-03785 SSN: ) ) Applicant for Security Clearance )

For Government: Braden M. Murphy, Esquire, Department Counsel For Applicant: Pro se

November 23, 2010 ______________

STATEMENT OF CASE

______________

METZ, John Grattan, Jr., Administrative Judge:

Based on the record in this case, Applicant’s clearance is denied.

On 15 January 2010, the Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guidelines F, Financial Considerations and E, Personal Conduct. Applicant timely answered the SOR, requesting a hearing. DOHA assigned the case to me 12 March 2010, and I convened a hearing 29 April 2010. DOHA received the transcript 10 May 2010.

FINDINGS OF FACT

Applicant denied the SOR allegations. He is a 42-year-old operations manager employed by a defense contractor since January 2007. He seeks to retain the security clearance he has held since at least 2001.

The SOR alleges, and government exhibits confirm, five delinquent debts totaling nearly $56,000. However, record evidence (Answer) shows, and Department Counsel concedes (Tr. 18), that the judgment alleged in SOR 1.e. was paid within months of the judgment. Consequently, the four debts in dispute total just over $38,000. Over $37,000 of that figure is for an Internal Revenue Service (IRS) lien filed in September 2002. Applicant also remains indebted to the IRS for unpaid taxes, penalties, and interest for tax year 2003.

Applicant’s financial problems began in 1995. He was self-employed that year, and did not make estimated quarterly payments to the IRS to cover his anticipated federal income tax liability for the year. Consequently, when he filed his 1995 tax return in 1996, he owed the IRS $25,000 that he was unable to pay. Applicant claims, without documentation, to have filed several Offers-in-Compromise (OIC) over the next three years (including 1997 and 1999), each of which was denied. Applicant did not try to arrange a repayment plan because he believed his income inadequate to make payments satisfactory to the IRS (Tr. 96-101). In February 1998, the IRS assessed Applicant $37,426 for unpaid taxes, penalties, and interest, and filed a tax lien against him for that amount in August 2002. The lien remains unresolved on Applicant’s credit reports. Applicant believes, based on undocumented conversations with the IRS, that the amount owed is uncollectible as time-barred. Any payments for 1995 have been the result of IRS seizure of Applicant’s income tax refunds, but Applicant has no documentation that refunds were seized for the 1995 debt. Nor has he documented that the debt is uncollectable.

Applicant also owes the IRS for tax year 2003, for which he submitted partial documentation. Applicant’s Answer included a May 2008 IRS letter recalculating Applicant’s 2003 tax return to reflect $9,814.38 in taxes, late fees, and interest. The IRS continued to assess interest on his unpaid 2003 balance. In May 2009, the IRS wrote Applicant to inform him that recalculating his 2008 taxes resulted in a $2,323.26 overpayment, which was applied to his 2003 balance, now $8,013.95 (AE A). Similarly, in 2010, the IRS seized a $5,135.15 overpayment, reducing the 2003 balance to $3,182.93 (AE B). Applicant has no other plan for paying the IRS than for the IRS to continue to seize any overpayment until the 2003 balance is paid.

The remaining three debts total less than $1,000. Applicant claims to either not recognize them or to be disputing them as paid. However, he has provided no documentation of his efforts to dispute the debts or confirm their payment. On Applicant’s January 2009 clearance application (GE 1), he failed to disclose the 2002 IRS lien, which he claims to have been unaware of until 2006. He denies any intent to falsify his clearance application, claiming that he got hung up on the word “property” in the question rather than the words “lien” . . . “for failing to file taxes.” As corroboration for his claim, he submitted a photocopy of the financial questions from an earlier edition of the clearance application that he used as a draft for collecting the information required by his clearance application. He answered “no” to a nearly identical lien question, but answered “yes” to a question (not on his clearance application) that asked whether he had ever failed to pay taxes when required. However, he answered both “yes” and “no” to whether he was currently delinquent on any federal debt—also not on the clearance application he was preparing. Further, he answered “no” on both forms to questions requiring him to disclose debts currently 90, or ever 180, days past due.

I find Applicant’s claim of innocent mistake incredible, and his reasoning improbable. When he sat down to complete his clearance application, even with the draft in front of him, he knew he had a tax lien against him and he knew that he had past due taxes for 2003. Further, he knew in a broad sense that the government was interested in his financial condition, and disclosed no information that would put the Government on notice of his financial problems.

In January 2003, Applicant was charged with a domestic violence offense. Applicant adamantly denies the charge. However, the disposition of the offense placed him on 12 months supervised probation, and required completion of an anger- management program. According to Applicant, the program required him to acknowledge that he committed the crime, something he could not do. He was told not to return to the program. Applicant considered this to negate the requirement to complete a program, but the program reported his dismissal from the program as a violation of his probation. Applicant also moved to another state, and failed to report to his probation officer. In February 2004, a warrant for his arrest was issued. When Applicant discovered the warrant, he attempted to have it recalled, and his probation dismissed. His motion was denied in March 2006, and the warrant remains outstanding.

Applicant called no witnesses other than himself, and produced no work or character references.

POLICIES

The adjudicative guidelines (AG) list factors for evaluating a person’s suitability for access to classified information. Administrative judges must assess disqualifying and mitigating conditions under each issue fairly raised by the facts and situation presented. Each decision must also reflect a fair, impartial, and commonsense consideration of the factors listed in AG ¶ 2(a). Any one disqualifying or mitigating condition is not, by itself, conclusive. However, specific adjudicative guidelines should be followed where a case can be measured against them, as they represent policy guidance governing access to classified information. Considering the SOR allegations and the evidence as a whole, the relevant adjudicative guidelines are Guideline F (Financial Considerations) and Guideline E (Personal Conduct).

Security clearance decisions resolve whether it is clearly consistent with the national interest to grant or continue an applicant’s security clearance. The Government must prove, by substantial evidence, controverted facts alleged in the SOR. If it does, the burden shifts to applicant to refute, extenuate, or mitigate the Government’s case. Because no one has a right to a security clearance, the applicant bears a heavy burden of persuasion.

Persons with access to classified information enter into a fiduciary relationship with the Government based on trust and confidence. Therefore, the Government has a compelling interest in ensuring each applicant possesses the requisite judgement, reliability, and trustworthiness of those who must protect national interests as their own. The “clearly consistent with the national interest” standard compels resolution of any reasonable doubt about an applicant’s suitability for access in favor of the Government.4

ANALYSIS

The Government established a case for disqualification under Guideline F, and Applicant did not mitigate the security concerns. Applicant failed to plan for his 1995 federal income tax liability, and had an initial debt of $25,000, which he could not pay. His sole effort to address the debt was several OICs, which were denied. He made no attempt to arrange a repayment schedule. He also had a significant tax liability for 2003, that he is addressing only by having the IRS seize any income-tax refunds he may be entitled to. Although the gravamen of this case is his tax liabilities to the IRS, he also has three small debts for which he has produced no proof of dispute or resolution.

Applicant meets none of the mitigating factors for financial considerations. His financial difficulties are both recent and multiple. He produced no evidence of circumstances beyond his control, and he has not acted responsibly in addressing his debts. He has received no credit or financial counseling, nor has he demonstrated that his financial problems are under control, or that he has a plan to bring them under control. He has not made a good-faith effort to satisfy his debts. I conclude Guideline F against Applicant.

The Government established a case for disqualification under Guideline E, and Applicant did not mitigate the security concerns. Applicants are expected to give full and frank answers during the clearance process. Applicant’s failure to disclose any information about his financial problems on his clearance application, specifically a tax lien he knew about, and his parsing of words to justify his omission, constitute a deliberate falsification or evasiveness inconsistent with the candor required of applicants. Applicant’s submission of the draft clearance application he used to collect his financial information only highlights how deliberate his falsification was.

In addition to his falsification of his clearance application, Applicant’s failure to resolve an outstanding warrant in another state demonstrates poor judgment inconsistent with access to classified information. Applicant failed to complete the stated requirements of his probation, and failed to pursue alternate means of meeting those requirements. He made a long-distance attempt to have the warrant dismissed, but has taken no action to resolve the warrant since the attempt was unsuccessful.

None of the Guideline E mitigating conditions apply. The concealed information was relevant to a clearance decision. Applicant did not disclose this adverse information until his subject interview. Applicant’s failure to disclose this information demonstrates a lack of candor required of cleared personnel. The Government has an interest in examining all relevant and material adverse information about an applicant before making a clearance decision. The Government relies on applicants to truthfully disclose that adverse information in a timely fashion, not when they perceive disclosure to be prudent or convenient. Further, an applicant’s willingness to report adverse information about himself provides some indication of his willingness to report inadvertent security violations or other security concerns in the future, something the Government relies on to perform damage assessments and limit the compromise of classified information. Similarly, Applicant’s failure to resolve his outstanding warrant—and the decisions he made that caused the warrant to be issued—exemplifies his belief that he can ignore rules he perceives to be inconvenient. Applicant’s conduct suggests he is willing to put his personal needs ahead of legitimate Government interests. I resolve Guideline E against Applicant.

FORMAL FINDINGS

Paragraph 1. Guideline F: AGAINST APPLICANT

Subparagraphs a-d: Against Applicant Subparagraph e: For Applicant

Paragraph 2. Guideline E: AGAINST APPLICANT

Subparagraphs a-b: Against Applicant

CONCLUSION

In light of all the circumstances presented by the record in this case, it is not clearly consistent with the national interest to grant or continue a security clearance for Applicant. Clearance denied.

JOHN GRATTAN METZ, JR Administrative Judge

FOOTNOTES

Consisting of the transcript (Tr.), Government exhibits (GE) 1-7, and Applicant exhibits (AE) A-B (submitted post hearing).

DOHA acted under Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1990), as amended; Department of Defense (DoD) Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) effective within the DoD on 1 September 2006. Accordingly, I find SOR 1.e for Applicant. See, Department of the Navy v. Egan, 484 U.S. 518 (1988).

¶ 19.(a) inability or unwillingness to satisfy debts; (b) indebtedness caused by frivolous or irresponsible spending and the absence of any evidence of willingness or intent to pay the debt or establish a realistic plan to pay the debt; (c) a history of not meeting financial obligations; . . . (e) consistent spending beyond one’s means, which may be indicated by excessive indebtedness, significant negative cash flow, high debt-to- income ratio, and/or other financial analysis;

¶ 20 (a) the behavior happened so long ago, was so infrequent, or occurred under such circumstances that it is unlikely to recur . . .

¶ 20.(b) the conditions that resulted in the financial problem were largely beyond the person’s control . . . and the individual acted responsibly under the circumstances; ¶ 20.(c) the person has received or is receiving counseling for the problem and there are clear indications that the problem is being resolved or is under control;

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

¶ 16.(a) deliberate omission, concealment, or falsification of relevant and material facts from any personnel security questionnaire, personal history statement, or similar form used to conduct investigations, . . . [or] determine security clearance eligibility or trustworthiness. . .;

¶ 16.(c) credible adverse information in several adjudicative issue areas that is not sufficient for an adverse determination under any other single guideline, but which, when considered as a whole, supports a whole- person assessment of questionable judgment, untrustworthiness, unreliability, lack of candor, unwillingness to comply with rules and regulations, or other characteristics indicating that the person may not properly safeguard protected information; (d) credible adverse information that is not explicitly covered under any other guideline and may not be sufficient by itself for an adverse determination, but which, when combined with all available information supports a whole-person assessment of questionable judgment, untrustworthiness, unreliability, lack of candor, unwillingness to comply with rules and regulations, or other characteristics indicating that the person may not properly safeguard protected information. . . ;

¶ 17(a) the individual made prompt, good-faith efforts to correct the omission, concealment, or falsification before being confronted with the facts;