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ISCR Case 15-04612.h1 — CASE

ISCR Case 15-04612.h1denied

Case Headnote

ISCR Case No. 15-04612.h1

deniedMay 8, 2017· Hon. Wilford H. Ross· hearing

Summary

A 78-year-old male applicant was denied eligibility for a public trust position due to financial considerations under Guideline F. The applicant admitted to failing to file federal income tax returns for tax years 2002, 2003, 2005, and 2006. He also acknowledged failing to pay federal income taxes for at least tax years 2002, 2003, 2009, 2010, 2011, and 2013.

These tax delinquencies amounted to at least $97,289. While the applicant stated he was making monthly payments, he did not provide sufficient documentation or a workable plan to resolve the outstanding tax issues.

The judge determined that the applicant did not meet the burden to mitigate these financial concerns, which raised questions about his reliability and trustworthiness. Consequently, the applicant's eligibility was denied.

Why the Applicant Was Denied

The applicant failed to file federal income tax returns for multiple years and did not pay taxes owed for several years.
The applicant did not provide documentation to demonstrate a plan for resolving his tax delinquencies.
The applicant's financial problems raised questions about his reliability and trustworthiness.

Conditions Referenced

Disqualifying

F.1.araisedInability or Unwillingness to Satisfy Debts
F.1.craisedHistory of Not Meeting Financial Obligations
F.1.graisedFailure to File Annual Federal, State, or Local Income Tax Returns

Key Rule Quoted

“Failure or inability 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 information.”

Procedural Posture

SOR issuedDec 8, 2015
Answer filedJan 12, 2016Applicant elected to have the case decided on the written record.
Hearing held—No hearing; decided on the written record.
Decision dateMay 8, 2017

Cite For

Failure to Provide Sufficient Evidence to Mitigate Financial Concerns Under Guideline F
Importance of Demonstrating a Workable Plan for Resolving Tax Issues
Impact of Financial Irresponsibility on Trustworthiness Determinations

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 all financial allegations under Guideline F, primarily due to the applicant's failure to file and pay federal income taxes over several years, resulting in significant tax liabilities. The applicant's lack of documentation and a clear plan to resolve these debts contributed to the decision to deny eligibility for a public trust position.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant admitted that he failed to file his Federal income tax returns for tax years 2002, 2003, 2005, and 2006.	Against Applicant	Tax Filing Failure	Admitted	(a) inability to satisfy debts (g) unexplained affluence	—	—
1.b	Applicant admitted that he failed to pay his Federal income taxes for at least the tax years 2002, 2003, 2009, 2010, 2011, and 2013.	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c–1.h	6 sub-charges — specific text not stated in this decision (against the applicant). (low confidence)	Against Applicant			—	—	—

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: ) ) ------------------------ ) ADP Case No. 15-04612 ) Applicant for Public Trust Position ) )

For Government: Julie R. Mendez, Esquire, Department Counsel For Applicant: Pro se

May 8, 2017

______________

STATEMENT OF CASE

______________

ROSS, Wilford H., Administrative Judge:

On October 16, 2014, Applicant submitted an Electronic Questionnaire for Investigations Processing (e-QIP). On December 8, 2015, the Department of Defense (DoD) issued Applicant a Statement of Reasons (SOR) detailing trustworthiness concerns under Guideline F, Financial Considerations. The action was taken under DoD Regulation 5200.2-R, Personnel Security Program, dated January 1987, as amended (Regulation); 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 for SORs issued after September 1, 2006.

On January 12, 2016, Applicant answered the SOR in writing and elected to have the case decided on the written record in lieu of a hearing. (Item 2.) On February 19, 2016, Department Counsel prepared a File of Relevant Material (FORM). Applicant received the FORM on February 26, 2016, and had 30 days from its receipt to file objections and submit additional information.1 Applicant elected not to submit additional information. On September 13, 2016, the Defense Office of Hearings and Appeals (DOHA) assigned the case to me.

FINDINGS OF FACT

Applicant is 78 years old and married since 1966. He has two adult children. In September 2012 he began working for a defense contractor. (Item 3.)

The SOR contained eight allegations related to his failure to file or pay Federal taxes. In his Answer, Applicant admitted all of the allegations. (Item 2.)

1.a. Applicant admitted that he failed to file his Federal income tax returns for tax years 2002, 2003, 2005, and 2006.

1.b. Applicant admitted that he failed to pay his Federal income taxes for at least the tax years 2002, 2003, 2009, 2010, 2011, and 2013.

1.cthrough 1.h. Each one of these subparagraphs sets forth how much Applicant owes in Federal income taxes for the tax years 2002, 2003, 2009, 2010, 2011, and 2013. The total amount is at least $97,289.

Applicant admitted owing 2002, 2005, and 2006 taxes in Section 26 of his e-QIP. He stated that these taxes were, “Deemed uncollectable,” by the IRS because Applicant, “Did not have the funds to pay.” Applicant estimated that he owed approximately $220,000 to the IRS. (Item 3.)

In his Answer Applicant stated, “I am making monthly installment payments to the IRS based on my income and personal living expenses.” (Item 2.)

Applicant did not provide any documentation from the IRS setting forth the amount he owes in back taxes with particularity. He did not provide a workable plan or budget from which his ability to resolve the tax delinquencies and avoid additional debt problems can be predicted with any certainty. He submitted no evidence concerning the quality of his professional performance, or the level of responsibility his duties entail. He provided no character references describing his judgment, trustworthiness, integrity, or reliability.

POLICIES

Positions designated as ADP I/II/III are classified as “sensitive positions.” (See Regulation ¶¶ C3.1.2.1.1.7 and C3.1.2.1.2.3.) “The standard that must be met for . . . assignment to sensitive duties is that, based on all available information, the person’s loyalty, reliability, and trustworthiness are such that . . . assigning the person to sensitive duties is clearly consistent with the interests of national security.” (See Regulation ¶ C6.1.1.1.) The Deputy Under Secretary of Defense (Counterintelligence and Security) Memorandum, dated November 19, 2004, indicates trustworthiness adjudications will apply to cases forwarded to the DoD and DOHA by the Defense Security Service and Office of Personnel Management. DoD contractor personnel are afforded the right to the procedures contained in the Directive before any final unfavorable access determination may be made. (See Regulation ¶ C8.2.1.)

When evaluating an applicant’s suitability for a public trust position, the administrative judge must consider the disqualifying and mitigating conditions in the AGs. 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(a), describing the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶ 2(c), 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 access to [sensitive] information will be resolved in favor of 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 as to obtaining a favorable trustworthiness decision.

A person who applies for access to sensitive information 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 access to sensitive information. Decisions include, by necessity, consideration of the possible risk the applicant may deliberately or inadvertently fail to protect or safeguard sensitive information. Such decisions entail a certain degree of legally permissible extrapolation as to potential, rather than actual, risk of compromise of sensitive information.

ANALYSIS

Guideline F, Financial Considerations

The trustworthiness concerns relating to the guideline for financial considerations are set out in AG ¶ 18, which reads in pertinent part:

Failure or inability 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 information. An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds.

AG ¶ 19 describes three conditions that could raise trustworthiness concerns and may be disqualifying in this case:

(a) inability or unwillingness to satisfy debts;

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

Applicant has a history of being unable or unwilling to fully satisfy his Federal tax obligations. Applicant admits failing to file his Federal income tax returns for at least four years, and not paying his applicable income tax for at least six years. The amount of taxes he currently owes is unknown, but appears to be between approximately $97,000 and $220,000. The evidence raises all three security concerns, thereby shifting the burden to Applicant to rebut, extenuate, or mitigate those concerns.

The guideline includes five conditions in AG ¶ 20 that could mitigate trustworthiness concerns arising from Applicant’s 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;

(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 person has received or is receiving counseling for the problem and/or there are clear indications that the problem is being resolved or is under control;

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

(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.

Applicant submitted no information that would show what his current indebtedness is to the Federal government, how much he has paid, or how he intends to finally resolve his tax issues. There is insufficient information to demonstrate that his financial problems are unlikely to continue or recur, calling into question his reliability and trustworthiness. The evidence does not support the application of any of the mitigating conditions in this case.

WHOLE PERSON CONCEPT

Under the whole-person concept, the administrative judge must evaluate an applicant’s eligibility for a public trust position 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(a):

(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 eligibility for a trustworthiness determination 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 the facts and circumstances surrounding this case. Applicant is a 78-year-old man, who started working for a national company that handles defense contracts in 2012. He has a long history of tax problems, which began in about 2002, and continue to date. Applicant failed to submit sufficient information from which to conclude that his financial obligations are being responsibly managed and that similar problems are unlikely to recur. Overall, the record evidence leaves me with questions as to Applicant’s eligibility and suitability for a public trust position. For these reasons, I conclude Applicant did not meet his burden to mitigate the trustworthiness concerns arising from his financial problems.

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 to 1.h: 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 public trust position. Eligibility for access to sensitive ADP information is denied.

_________________ WILFORD H. ROSS Administrative Judge

FOOTNOTES

1 Department Counsel submitted four Items in support of the SOR allegations. Item 4 is inadmissible. It will not be considered or cited as evidence in this case. It is the summary of an unsworn interview of Applicant conducted by an interviewer from the Office of Personnel Management on January 9, 2013. Applicant did not adopt the summary as her own statement, or otherwise certify it to be accurate. Under Directive ¶ E3.1.20, this Report of Investigation summary is inadmissible in the absence of an authenticating witness. In light of Applicant’s admissions and other evidence in the record, it is also cumulative.