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ISCR Case 15-08240.h1 — CASE

ISCR Case 15-08240.h1granted

Case Headnote

ISCR Case No. 15-08240.h1

grantedJun 16, 2017· Hon. Richard A. Cefola· hearing

Summary

A 57-year-old defense contractor employee's security clearance was initially questioned under Guideline F (Financial Considerations) due to the late filing of his 2012 and 2013 Federal income tax returns. Both returns were filed in June 2016, resulting in the applicant receiving tax refunds totaling approximately $1,664. These late filings raised concerns under Disqualifying Condition F.1.

The applicant attributed the delays to significant personal hardships, specifically the death of his mother and a period of unemployment. The judge applied Mitigating Conditions 20(b) and 20(g), acknowledging that the financial issues stemmed from circumstances largely beyond the applicant's control.

Ultimately, the security clearance was GRANTED. The decision highlighted that the applicant mitigated the financial concerns by filing the overdue tax returns and receiving refunds, demonstrating responsible financial behavior. Additionally, the applicant's strong reputation in his workplace and community supported his overall reliability and trustworthiness.

Why the Applicant Prevailed

The applicant filed his overdue tax returns and received refunds, demonstrating responsible financial behavior.
The financial issues were attributed to circumstances beyond the applicant's control, including a death in the family and unemployment.
The applicant is well-respected in his workplace and community, supporting his reliability and trustworthiness.

Conditions Referenced

Disqualifying

F.1raisedFailure to File or Fraudulently Filing Annual Federal, State, or Local Income Tax Returns

Mitigating

20(b)appliedConditions That Resulted in the Financial Problem Were Largely Beyond the Person's Control
20(g)appliedIndividual Has Made Arrangements with the Appropriate Tax Authority to File or Pay the Amount Owed and Is in Compliance with Those Arrangements

Key Rule Quoted

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

Procedural Posture

SOR issuedMay 22, 2016
Answer filedJun 13, 2016
Hearing heldOct 25, 2016
Decision dateJun 16, 2017

Cite For

Mitigation of Financial Issues Under Guideline F Due to Personal Hardships
Consideration of the Whole-person Concept in Security Clearance Decisions
Responsible Financial Behavior Demonstrated Through Timely Tax Filings

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: granted

The judge found that the applicant's financial issues were primarily due to personal circumstances, including the death of his mother and a period of unemployment. The applicant successfully filed his overdue tax returns and received refunds, leading to a conclusion that the financial concerns were mitigated, resulting in a favorable decision for the applicant.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant filed both his 2012 and 2013 Federal income tax returns in June of 2016. As a result of these filings, Applicant received tax refunds totaling about $1,664. $1,664	For Applicant	Tax Filing Failure	Denied	—	(b) conditions largely beyond the person’s control; acted responsibly (g) arrangements made with the tax authority; in compliance	Documented Tax Returns Filed Late
1.b	Applicant filed both his 2012 and 2013 Federal income tax returns in June of 2016. As a result of these filings, Applicant received tax refunds totaling about $1,664. $1,664	For Applicant	Tax Filing Failure	Denied	—	(b) conditions largely beyond the person’s control; acted responsibly (g) arrangements made with the tax authority; in compliance	Documented Tax Returns Filed Late

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. 15-08240 ) ) Applicant for Security Clearance )

For Government: Andrew Henderson, Esq., Department Counsel For Applicant: Jason A. Weiner, Esq., Applicant’s Counsel

June 16, 2017 ______________

STATEMENT OF CASE

______________

CEFOLA, Richard A., Administrative Judge:

Statement of the Case

On May 22, 2016, in accordance with DoD Directive 5220.6, as amended (Directive), the Department of Defense issued Applicant a Statement of Reasons (SOR) alleging facts that raise security concerns under Guideline F.1 The SOR further informed Applicant that, based on information available to the government, DoD adjudicators could not make the preliminary affirmative finding it is clearly consistent with the national interest to grant or continue Applicant’s security clearance.

Applicant answered the SOR on June 13, 2016, and requested a hearing before an administrative judge. (Answer.) The case was assigned to me on August 8, 2016. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on October 13, 2016, scheduling the hearing for October 25, 2016. The hearing was

1 I considered the previous Adjudicative Guidelines, effective September 1, 2006; as well as the new convened as scheduled. The Government offered Exhibits (GXs) 1 through 5, which were admitted into evidence. Applicant testified on his own behalf. Applicant offered three documents, which I marked Applicant’s Exhibits (AppXs) A through C, which were admitted into evidence. The record was left open until November 28, 2016, for receipt of additional documentation. Applicant offered five additional exhibits in a timely fashion, which were also admitted into evidence as AppXs D through H. DOHA received the transcript of the hearing (TR) on November 2, 2016.

FINDINGS OF FACT

Applicant denied the two allegations of the SOR, ¶¶ 1.a., and 1.b. After a thorough and careful review of the pleadings, exhibits, and testimony, I make the following findings of fact.

Applicant is a 57-year-old employee of a defense contractor. He has been employed with the defense contractor since about March of 2013. (GX 1 at pages 5 and 9.) He is divorced, and has four children, and nine grandchildren. (TR at page 22 lines 21–23, and GX 1 at pages 18–19.) Applicant attributes his late 2012 and 2013 Federal Income tax filings to his mother’s death in March of 2012, and to his being “laid off” from his employment in September of 2012. (TR at page 20 line 11 to page 22 line 17, and at page 25 lines 1–25.) He thought he had filed for an extension for his 2012 filing, but he was mistaken. (Id.)

Guideline F – Financial Considerations

1.a. and 1.b. Applicant filed both his 2012 and 2013 Federal income tax returns in June of 2016. (TR at page 27 line 17 to page 29 line 19.) This is evidenced by those income tax returns. (AppXs A and B.) As a result of these filings, Applicant received tax refunds totaling about $1,664. This is evidenced by tax refund checks from the Internal Revenue Service (IRS). (AppX A the last page, and Appx B the last page.)

POLICIES

When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines (AG). 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 AG ¶ 2 describing 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 access to classified 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.

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, and has the ultimate burden of persuasion as to obtaining a favorable clearance decision.”

A person who applies for access to classified 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 classified information. 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 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 relating to the guideline for Financial Considerations is set out in AG ¶ 18:

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 under AG ¶ 19. F. is potentially applicable in this case:

(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 did not initially file his 2012 and 2013 Federal income tax returns in a timely fashion. The evidence is sufficient to raise this disqualifying condition.

AG ¶ 20 provides conditions that could mitigate security concerns. I considered all of the mitigating conditions under AG ¶ 20 including:

(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; 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 financial problems were attributed to his mother’s untimely death, and to a period of unemployment. He has since filed his tax returns, and received tax refunds from the IRS as a result of those filings. Mitigation under AG ¶¶ 20(b) and (g) was established.

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.

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 facts and circumstances surrounding this case. I have incorporated my comments under Guideline F in my whole-person analysis. Applicant is well respected in both the work place and in his community. (AppXs D~H.)

Overall, the record evidence leaves me without questions or doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant 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 ¶ E3.1.25 of the Directive, are:

Paragraph 1, Guideline F: FOR APPLICANT

Subparagraph 1.a: For Applicant Subparagraph 1.b: For Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is clearly consistent with the national interest to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is granted.

________________________ Richard A. Cefola Administrative Judge

FOOTNOTES

Adjudicative Guidelines, effective June 8, 2017. My decision would be the same if the case was considered under the previous Adjudicative Guidelines.