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ISCR Case 15-05179.h1 — CASE

ISCR Case 15-05179.h1denied

Case Headnote

ISCR Case No. 15-05179.h1

deniedAug 24, 2017· Hon. Robert E. Coacher· hearing

Summary

A 63-year-old defense contractor employee was denied a security clearance under Guideline F (Financial Considerations) due to unresolved financial issues. The Statement of Reasons cited several concerns, including the applicant's failure to file his 2011 state tax return, an unpaid judgment, and 18 delinquent debts totaling approximately $15,610. Additionally, the applicant had filed for Chapter 7 bankruptcy in 2007, which resulted in a discharge of his debts.

The denial was based on the applicant's multiple unresolved debts and his failure to provide documentation of any payments or arrangements with creditors. Although the applicant attributed his financial difficulties to personal circumstances, he did not demonstrate a good-faith effort to address his financial obligations.

The adjudicator found that disqualifying conditions F.1.a (inability or unwillingness to satisfy debts), F.1.c (a history of not meeting financial obligations), and F.1.f (failure to file tax returns or pay taxes) were applicable. Consequently, the applicant's security clearance was denied.

Why the Applicant Was Denied

Applicant has multiple unresolved debts totaling approximately $15,610.
Applicant failed to file his 2011 state tax return and did not provide documentation of any payments or arrangements with creditors.
Applicant did not demonstrate a good-faith effort to address his financial obligations.

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

“The protection of the national security is the paramount consideration.”

Procedural Posture

SOR issuedMar 19, 2016
Answer filednullApplicant's answer was undated.
Hearing heldMar 14, 2017
Decision dateAug 24, 2017

Cite For

Failure to Provide Evidence of Financial Responsibility Under Guideline F
Impact of Unresolved Debts on Security Clearance Eligibility
Importance of Demonstrating Good-faith Efforts to Resolve Financial Issues

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 multiple recent debts totaling approximately $15,610, including an unpaid judgment and failure to file a 2011 state tax return. The applicant's financial issues were deemed unresolved, leading to a denial of eligibility for a security clearance under Guideline F.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	failed to file his 2011 state tax return	Against Applicant	Tax Filing Failure	Admitted	(f) failure to file / fraudulent filing of tax returns or unpaid tax	—	—
1.b	filed a Chapter 7 bankruptcy in 2007, which resulted in a discharge of his debts	Against Applicant	Bankruptcy Filing	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	one unpaid judgment	Against Applicant	Judgment Against Applicant	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	18 delinquent debts totaling approximately $15,610 $15,610	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e–1.u	17 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: ) ) ) ISCR Case No. 15-05179 ) Applicant for Security Clearance )

For Government: Robert J. Kilmartin, Esq., Department Counsel For Applicant: Pro se

08/24/2017 ______________

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 March 19, 2016, the Department of Defense (DOD) issued Applicant a Statement of Reasons (SOR) detailing security concerns under Guideline F, financial considerations. DOD acted under Executive Order (EO) 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 (AG).1

Applicant answered the SOR (undated), and requested a hearing before an administrative judge. The case was assigned to me on January 18, 2017. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on February 22, 2017, and the hearing was convened as scheduled on March 14, 2017. The Government offered exhibits (GE) 1 through 5, which were admitted into evidence without objection. Applicant testified, but did not produce any documentary evidence. The record was held open six weeks for Applicant to submit additional information. He failed to submit any additional evidence. DOHA received the hearing transcript (Tr.) on March 22, 2017.

FINDINGS OF FACT

Applicant admitted some of the allegations and denied others. The admissions are incorporated as findings of fact. After a review of the pleadings and evidence, I make the following additional findings of fact.

Applicant is a 63-year-old employee of a defense contractor. He has worked in his current position since April 2014. He has a high-school diploma and has taken some college courses. He is divorced from his first wife and is separated, pending divorce, from his second wife. He has four adult children and a 14-year-old for whom he pays child support. He also supports four of his grandchildren who live with him.2

The SOR alleges Applicant failed to file his 2011 state tax return and he filed a Chapter 7 bankruptcy in 2007, which resulted in a discharge of his debts. It also alleges one unpaid judgment and 18 delinquent debts totaling approximately $15,610. The bankruptcy, judgment, and debts were listed in credit reports from June 2014, February 2016, and June 2016. Applicant’s June 2014 security clearance application (SCA) and his July 2014 interview with a defense investigator document his admission of failing to file his 2011 state tax return.3

Applicant attributed his financial difficulties to expenses when he moved to a different state and expenses related to his pending divorce. He claimed some of the listed debts were paid, or he talked to the creditors about payments. He failed to produce any documentary evidence of payments or payment arrangements for any of the listed debts or judgment. He also claimed he took care of filing his 2011 tax return, but he failed to provide documentation supporting such action. He admitted in his testimony that he had not taken care of his debts. He claimed that he was due a lump- sum amount of approximately $124,000 from a retirement account from a previous job. He believed this payment was imminent, which he would use to pay the SOR debts. He failed to produce documentation of any payments from a retirement account. He also claimed that some of the medical debts could be his son’s who has the same name. He failed to produce documentation supporting this claim before the record closed. All Applicant’s outstanding obligations remain unresolved.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. He also failed to document filing of his 2011 state tax return. I find all the above 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 multiple, and his inaction in addressing any of his debts shows a lack of reliability, trustworthiness, and good judgment. AG ¶ 20(a) is not applicable.

Applicant’s divorce and moving expenses are circumstances beyond his control. Applicant has done nothing to address his debts and the judgment. Overall, the record evidence does not support that Applicant’s actions were responsible under the circumstances. AG ¶ 20(b) is partially applicable.

There is no evidence Applicant received financial counseling. Given the unpaid status of all the debts, Applicant’s financial problems are not under control. Evidence of good-faith efforts to pay or resolve the remaining debts is lacking. AG ¶¶ 20(c) and 20(d) do not apply. Applicant failed to document any disputes. AG ¶ 20(e) does not apply. He did not supply documentation to support his claim of filing his 2011 state tax return. AG ¶ 20(g) does 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 relevant facts and circumstances surrounding this case. I have incorporated my comments under Guideline F in my whole-person analysis. Some of the factors in AG ¶ 2(d) were addressed under that guideline, but some warrant additional comment.

I considered Applicant’s federal contractor service and the circumstances surrounding his indebtedness. I considered that he is supporting four grandchildren. However, I also considered that he has made no effort to resolve his debt. He also failed to file his state tax return. He has not established a meaningful track record of debt management, which causes me to question his ability to resolve his debts.

Overall, the record evidence leaves me with questions and doubts about Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant has not mitigated the financial considerations security concerns.

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.u: 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 I decided this case using the AG implemented by DOD on June 8, 2017. However, I also considered this case under the previous version of the AG implemented on September 1, 2006, and my conclusions are the same using either set of AG. 2 Tr. at 5-6, 17-19, 24; GE 1-2. 3 GE 1-5. 4 Tr. at 18, 21, 25-26, 31-32, 35, 39, 4334-39.