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ISCR Case 15-05670.h1 — CASE

ISCR Case 15-05670.h1denied

Case Headnote

ISCR Case No. 15-05670.h1

deniedMar 27, 2017· Hon. Candace Le'i Garcia· hearing

Summary

A 39-year-old male applicant with a high school diploma was denied a security clearance under Guideline F, Financial Considerations. The denial stemmed from two primary issues: a failure to file federal and state income tax returns for twelve consecutive years, from 2002 through 2013, and four unresolved delinquent debts totaling approximately $820.

The Statement of Reasons specifically cited the applicant's failure to file tax returns for the specified period and the existence of the four delinquent debts. Disqualifying conditions F.19(a), F.19(c), and F.19(g) were raised, while mitigating conditions F.20(b), F.20(c), and F.20(d) were considered.

Ultimately, the clearance was denied because the applicant did not provide sufficient evidence of actions taken to resolve the outstanding tax issues or the delinquent debts. The decision concluded that there was insufficient evidence to determine that the applicant's financial problems were unlikely to recur.

Why the Applicant Was Denied

Applicant failed to file federal and state income tax returns for tax years 2002 through 2013 as required.
Applicant has four unresolved delinquent debts totaling approximately $820.
There is insufficient evidence to conclude that Applicant's financial problems are unlikely to recur.

Conditions Referenced

Disqualifying

F.19(a)raisedInability or Unwillingness to Satisfy Debts
F.19(c)raisedA History of Not Meeting Financial Obligations
F.19(g)raisedFailure to File Annual Federal, State, or Local Income Tax Returns as Required

Mitigating

F.20(b)appliedConditions That Resulted in the Financial Problem Were Largely Beyond the Person's ControlCircumstances beyond his control contributed to Applicant’s financial problems.
F.20(c)rejectedThe Person Has Received or Is Receiving Counseling for the ProblemApplicant has not sought financial counseling.
F.20(d)rejectedThe Individual Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve DebtsApplicant has not provided evidence of any efforts to repay or resolve his debts.

Key Rule Quoted

“Any doubt concerning personnel being considered for access to classified information will be resolved in favor of national security.”
— AG ¶ 2(b)

Procedural Posture

SOR issuedFeb 10, 2016
Answer filedMar 22, 2016
Hearing held—Decided on the written record.
Decision dateMar 27, 2017

Cite For

Failure to Mitigate Financial Considerations Under Guideline F
Impact of Unresolved Tax Issues on Security Clearance Eligibility
Importance of Providing Evidence of Financial Responsibility in Clearance 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 that the applicant failed to mitigate financial concerns under Guideline F, primarily due to a history of not filing tax returns and having multiple delinquent debts. As a result, the applicant's eligibility for access to classified information was denied.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant failed to file his federal and state income tax returns for tax years 2002 through 2013 as required.	Against Applicant	Tax Filing Failure	Unknown	(g) unexplained affluence	—	—
1.b	specific text not stated in this decision	Against Applicant	Unspecified Financial	Unknown	—	—	—
1.c	Applicant has four delinquent debts totaling about $820. $820	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d–1.f	3 sub-charges — specific text not stated in this decision (against the applicant).	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. 15-05670 ) Applicant for Security Clearance )

For Government: Rhett Petcher, Esq., Department Counsel For Applicant: Pro se

03/27/2017 ______________

STATEMENT OF CASE

______________

GARCIA, Candace Le’i, Administrative Judge:

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

Statement of the Case

On February 10, 2016, the Department of Defense (DOD) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guideline F, financial considerations. The action was taken 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) implemented by the DOD on September 1, 2006.

Applicant responded to the SOR on March 22, 2016, and elected to have the case decided on the written record in lieu of a hearing. The Government’s written case was submitted on April 21, 2016. A complete copy of the file of relevant material (FORM) was provided to Applicant, who was afforded an opportunity to file objections and submit material to refute, extenuate, or mitigate the security concerns. Applicant received the FORM on April 25, 2016. Applicant did not object to the Government’s evidence. The Government’s documents identified as Items 1 through 5 are admitted into evidence. Other than his Answer to the SOR, identified also as Item 1, Applicant failed to submit any additional documentation. The case was assigned to me on March 10, 2017.

FINDINGS OF FACT

Applicant is 39 years old. He obtained his high-school diploma in 1995, and attended community college but did not earn a degree. He has never been married and does not have any children.

Applicant was unemployed from May 2011 to December 2011. He was also unemployed from October 2013 to April 2014, when a prior employer laid him off due to a lack of work. During both periods of unemployment, Applicant supported himself through unemployment benefits and part-time work as a waiter. He began his current job with a federal contractor in April 2014.1

The SOR alleges Applicant’s failure to file his federal and state income tax returns for tax years 2002 through 2013 as required, and four consumer debts totaling about $820. Applicant completed a Questionnaire for National Security Positions (SF 86) in June 2014 and was interviewed by an authorized DOD investigator in July 2014. In his SF 86, Applicant disclosed his failure to file his federal and state income tax returns for tax years 2007 through 2013. He disclosed during his interview that his failure to file his federal and state income tax returns dated back to 2002. He stated that on unrecalled dates between 2002 through 2013, he twice filed a federal income tax return and received refunds. He has not provided corroborating evidence of actions he may have taken to file any of his federal income tax returns from 2002 through 2013. He indicated an intent to immediately resolve his unfiled tax returns, and planned to find an accountant to assist him.2

Credit reports from June 2014 and January 2016 verify the four debts alleged in the SOR as ¶¶ 1.cto 1.f.3 Applicant knew that he had fallen behind on SOR debt ¶ 1.cand received notice of SOR debts ¶¶ 1.dand 1.e, but forgot about them. When he pulled a copy of his credit report in May 2014, he learned that these debts were still delinquent. He indicated an intent to immediately resolve them.4

3 While both credit reports list SOR debt ¶ 1.c. as having a zero balance, they also show that the debt Applicant attributes his financial problems to his period of unemployment from October 2013 to April 2014, and a move that resulted in him not receiving mail concerning his debts.5 His failure to timely file his relevant federal and state income tax returns began in 2002, when he was laid off by a previous employer. He did not have the income to pay the taxes he knew he would owe if he filed for that year. He then repeatedly failed to file his tax returns because he feared the consequences of his actions. There is no evidence that Applicant has sought the assistance of a credit counselor.6

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 to be 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, administrative judges apply the guidelines 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(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 classified information will be resolved in favor of national security.”

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 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 the applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation of potential, rather than actual, risk of compromise of classified information.

Section 7 of EO 10865 provides that adverse 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

The security concern for financial considerations is set out in AG ¶ 18:

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.

The guideline notes several conditions that could raise security concerns under AG ¶ 19. The following are potentially applicable 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 failed to file his federal and state income tax returns for tax years 2002 through 2013 as required, and he has four delinquent debts. There is sufficient evidence to support the application of the above disqualifying conditions.

Conditions that could mitigate the financial considerations security concerns are provided under AG ¶ 20. The following are potentially applicable:

(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; and

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

Applicant has yet to file his federal and state income tax returns for tax years 2002 through 2013. He also has four unresolved debts. There is insufficient evidence to conclude that his financial problems are unlikely to recur. His failure to timely file his relevant tax returns and address his delinquent debts casts doubt on his current reliability, trustworthiness, and good judgment. AG ¶ 20(a) does not apply.

Circumstances beyond his control contributed to Applicant’s financial problems. For the full application of AG ¶ 20(b), Applicant must provide evidence that he acted responsibly under the circumstances. Applicant has not filed his relevant federal and state income tax returns, despite his indication that he immediately planned to resolve them. He has not provided evidence of actions he may have taken to resolve his debts. There is insufficient evidence to conclude Applicant acted responsibly under the circumstances. AG ¶ 20(b) is partially applicable.

Applicant has not sought financial counseling. Applicant’s financial problems are not under control. AG ¶ 20(c) does not apply. Applicant has not provided evidence of any efforts he may have taken to repay or otherwise resolve his debts. AG ¶ 20(d) 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 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. 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 guidelines 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 have incorporated my comments under Guideline F in this whole-person analysis. Some of the factors in AG ¶ 2(a) were addressed under that guideline, but some warrant additional comment.

Applicant has worked for a federal contractor since 2014. Circumstances beyond his control contributed to his financial problems. He failed to file his federal and state income tax returns from 2002 through 2013 as required, and he has financial delinquencies that remain unresolved. His finances remain a security concern. He failed to meet his burden of persuasion. The record evidence leaves me with serious questions and doubts as to Applicant’s eligibility and suitability for a security clearance. 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.f: 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.

________________________ Candace Le’i Garcia Administrative Judge

FOOTNOTES

1 Items 2, 3. 2 Items 2, 3. was transferred or sold to another lender, and the January 2016 credit report reflects that the debt was charged off for $519. Items 4, 5. 4 Items 2, 3. 5 Applicant does not provide the date of this move; his SF 86 reflects that he moved to his current address in June 2013. Items 2, 3. 6 Items 1, 2, 3.