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ISCR Case 15-03511.h1 — CASE

ISCR Case 15-03511.h1denied

Case Headnote

ISCR Case No. 15-03511.h1

deniedOct 24, 2017· Hon. Richard A. Cefola· hearing

Summary

A 32-year-old applicant with two children was denied a security clearance under Guideline F, Financial Considerations, due to unmitigated financial issues. The Statement of Reasons detailed three primary concerns: the applicant admitted to failing to file a federal income tax return for tax year 2013, acknowledged an outstanding debt of approximately $2,996 to a state agency, and confirmed that other debts were discharged in December 2013 through a Chapter 7 bankruptcy filing.

The judge identified several disqualifying conditions related to these financial issues. While certain mitigating conditions were considered, the applicant ultimately failed to provide sufficient evidence to resolve the concerns. Specifically, the judge noted the unfiled 2013 tax return and the outstanding state agency debt as key factors.

The denial was based on the applicant's failure to demonstrate any mitigating conditions that adequately addressed these financial problems. Consequently, the security clearance was denied.

Why the Applicant Was Denied

Applicant failed to file his Federal income tax return for tax year 2013.
Applicant has outstanding debts, including a significant amount owed to a state agency.
Applicant did not demonstrate any mitigating conditions to address his financial issues.

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 Fraudulently Filing Tax Returns

Mitigating

AG ¶ 20(a)rejectedBehavior Unlikely to RecurApplicant did not demonstrate that his financial issues were infrequent or unlikely to recur.
AG ¶ 20(d)rejectedGood-faith Effort to Repay CreditorsApplicant failed to show any good-faith effort to resolve his debts.
AG ¶ 20(g)rejectedArrangements with Tax AuthorityApplicant did not make arrangements with the IRS or demonstrate compliance.

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 issuedJun 14, 2016
Answer filedJul 19, 2016Applicant admitted all allegations.
Hearing held—
Decision dateOct 24, 2017

Cite For

Failure to File Tax Returns Under Guideline F
Inability to Satisfy Debts as a Disqualifying Condition
Lack of Mitigating Evidence in Financial Cases

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 against the applicant on financial considerations due to failure to file a tax return and outstanding debts. The applicant admitted to the allegations but did not provide sufficient evidence to mitigate the concerns, resulting in a denial of security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant admits that he failed to file his Federal income tax return for tax year 2013	Against Applicant	Tax Filing Failure	Admitted	(f) failure to file / fraudulent filing of tax returns or unpaid tax	—	—
1.b	Applicant admits that he is indebted to a state agency for a past-due debt totaling about $2,996 $2,996	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts	—	—
1.c	Applicant admits that his debts were discharged in December of 2013, as the result of a Chapter 7 bankruptcy filing	Against Applicant	Bankruptcy Filing	Admitted	(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: 15-03511 ) Applicant for Security Clearance )

For Government: Rhett Petcher, Esquire, Department Counsel For Applicant: Pro se

October 24, 2017 ______________

STATEMENT OF CASE

______________

CEFOLA, Richard A., Administrative Judge:

On September 10, 2014, Applicant submitted a security clearance application (SF-86). On June 14, 2016, the Department of Defense Consolidated Adjudications Facility (DoD CAF) 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, effective within the DoD after September 1, 2006.

Applicant answered the SOR (Answer) on July 19, 2016. He admitted all three of the SOR allegations. (Item 1.) On September 8, 2016, Department Counsel submitted the Government’s written case. A complete copy of the File of Relevant Material (FORM), containing six Items, was mailed to Applicant on September 8, 2016, and received by him on September 14, 2016. 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 submitted nothing in response.

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

Guideline F – Financial Considerations

Applicant is 32 years old. (Item 2 at page 5.) He is not married, but has two children. (Item 2 at pages 20, and 23–24.)

1.a. Applicant admits that he failed to file his Federal income tax return for tax year 2013, but avers that he “recently [prepared in the June~July 2016 time frame] for that year [and the] IRS should have . . . [his] mailed return within a couple of weeks.” (Answer at page 2.) As Applicant has offered nothing in support of his bare averment, this allegation is found against Applicant.

1.b. Applicant admits that he is indebted to a state agency for a past-due debt totaling about $2,996, but avers that “this account is currently being paid.” (Answer at page 2.) As Applicant has offered nothing in support of his bare averment, this allegation is found against Applicant.

1.c. Applicant admits that his debts were discharged in December of 2013, as the result of a Chapter 7 bankruptcy filing.

POLICIES

When evaluating an applicant’s suitability for national security eligibility, the administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations for each guideline, the adjudicative guidelines (AG) 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 EO 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 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. . . .

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 was unable to satisfy his debts in 2013; and as such filed for the protection of a Chapter 7 bankruptcy. He failed to file his Federal income tax return for tax year 2013 in a timely fashion, and owes a state agency a significant amount of monies. These facts establish prima facie support for the foregoing disqualifying conditions, and shift the burden to Applicant to mitigate those concerns.

The guideline includes three conditions in AG ¶ 20 that could mitigate the security concerns arising from Applicant’s alleged financial difficulties:

(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;

(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. Applicant has failed to demonstrate any of these mitigating conditions. Guideline F is found against Applicant.

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.

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. Overall, the record evidence leaves me with questions and doubts as to Applicant’s judgment, eligibility, and suitability for a security clearance. He has not met 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. through1.c.: 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 national security eligibility and a security clearance. National security eligibility is denied.

________ Richard A. Cefola Administrative Judge