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ISCR Case 16-00296.h1 — CASE

ISCR Case 16-00296.h1denied

Case Headnote

ISCR Case No. 16-00296.h1

deniedJul 1, 2016· Hon. Edward W. Loughran· hearing

Summary

A 33-year-old defense contractor employee and single parent was denied a security clearance under Guideline F (Financial Considerations) due to significant unresolved debts exceeding $20,000. The Statement of Reasons detailed three unpaid judgments totaling $6,099, a student loan with a $4,907 balance that was $400 past due, and six miscellaneous delinquent debts amounting to $8,541. Additionally, the applicant owed approximately $5,000 in federal and state income taxes.

Disqualifying conditions under Guideline F were raised, including a history of not meeting financial obligations, an inability or unwillingness to satisfy debts, and a history of financial problems. While several mitigating conditions were considered, they were not sufficient to overcome the security concerns.

The denial was based on the applicant's failure to provide evidence of actions taken to address her financial problems. The financial issues were deemed recent and ongoing, raising doubts about her reliability and trustworthiness. Furthermore, the applicant's financial problems had not been resolved within a reasonable period.

Why the Applicant Was Denied

Applicant did not provide evidence of actions taken to address her financial problems.
Financial issues are recent and ongoing, casting doubt on her reliability and trustworthiness.
The applicant's financial problems were not resolved within a reasonable period.

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 Pay Taxes

Mitigating

AG ¶ 20(b)rejectedConditions Largely Beyond ControlWhile the applicant attributed her financial problems to being a single parent, she did not demonstrate responsible actions taken to mitigate her debts.
AG ¶ 20(a)rejectedBehavior Occurred Long Ago or Infrequently
AG ¶ 20(c)rejectedReceiving Financial Counseling
AG ¶ 20(d)rejectedGood-faith Effort to Repay Debts
AG ¶ 20(g)rejectedArrangements with Tax Authority

Key Rule Quoted

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

Procedural Posture

SOR issuedJun 10, 2016
Answer filedSep 21, 2016Applicant elected to proceed without a hearing.
Hearing held—Written record only.
Decision dateOct 3, 2017

Cite For

Denial of Security Clearance Due to Unresolved Financial Issues Under Guideline F
Importance of Demonstrating Actions Taken to Mitigate Financial Concerns
Consideration of the Whole-person Concept in Security Clearance Decisions

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 did not mitigate the financial considerations security concerns, which included multiple unpaid judgments, delinquent debts, and unpaid taxes. 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	three unpaid judgments totaling $6,099 $6,099	Against Applicant	Judgment Against Applicant	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	a student loan that was $400 past due with a $4,907 balance $4,907	Against Applicant	Student Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	six miscellaneous delinquent debts totaling $8,541 $8,541	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	approximately $5,000 owed in federal and state income taxes $5,000	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (f) failure to file / fraudulent filing of tax returns or unpaid tax	—	—
1.e–1.k	7 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. 16-00296 ) Applicant for Security Clearance )

For Government: Ross Hyams, Esq., Department Counsel For Applicant: Pro se

10/03/2017 ______________

STATEMENT OF CASE

______________

LOUGHRAN, Edward W., Administrative Judge:

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

Statement of the Case

On June 10, 2016, the Department of Defense (DOD) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guideline F, financial considerations. Applicant responded to the SOR on September 21, 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 October 19, 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 an unspecified date in November 2016. As of January 11, 2017, she had not responded. The case was assigned to me on October 1, 2017. The Government exhibits included in the FORM are admitted in evidence.

FINDINGS OF FACT

Applicant is a 33-year-old employee of a defense contractor. She has worked for her current employer since June 2014. She attended college for a period without earning a degree. The most recent information available indicates that she has never married, and she has an 11-year-old child.1

The SOR alleges three unpaid judgments totaling $6,099; a student loan that was $400 past due with a $4,907 balance; six miscellaneous delinquent debts totaling $8,541; and approximately $5,000 owed in federal and state income taxes. Applicant admitted all the allegations.

Applicant stated that her 2009 and 2010 income tax returns were audited by the IRS in about 2011, resulting in an additional $15,000 to $20,000 owed to the IRS and her state. She used a tax preparer that was recommended to her. Applicant trusted the preparer to file her tax returns correctly, but the preparer reported business deductions for which Applicant was not eligible. Applicant stated that her income tax refunds have been withheld to pay the back taxes, bringing the balance down to about $5,000.2

Applicant attributed her financial problems to being a single parent without the benefit of financial assistance. She also admitted that she was young and irresponsible when she first became a parent. She stated that she has become more financially responsible as she has gotten older, and she intends to be financially responsible in the future.3 Because she did not respond to the FORM, it is unknown what, if any, actions Applicant has taken to address her financial problems.

POLICIES

This case is adjudicated 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), which became effective on June 8, 2017.

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(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.”

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 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.

The guideline notes several conditions that could raise security concerns under AG ¶ 19. The following are potentially applicable 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 had delinquent debts that she was unable or unwilling to pay. She owes approximately $5,000 in federal and state income taxes. The evidence is sufficient to raise 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, 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; 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 attributed her financial problems to being a single parent without the benefit of financial assistance. She also admitted that she was young and irresponsible when she first became a parent. She stated that her income tax refunds have been withheld to pay her delinquent taxes, bringing the balance down to about $5,000. Because she did not respond to the FORM, it is unknown what, if any, actions Applicant has taken to address her financial problems.

There is insufficient evidence for a determination that Applicant’s financial problems will be resolved within a reasonable period. I am unable to find that she acted responsibly under the circumstances or that she made a good-faith effort to pay her debts. His financial issues are recent and ongoing. They continue to cast doubt on her current reliability, trustworthiness, and good judgment. AG ¶¶ 20(a), 20(c), 20(d), and 20(g) are not applicable. AG ¶ 20(b) is partially applicable. I find that financial considerations concerns remain despite the presence of some mitigation.

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 the facts and circumstances surrounding this case. I have incorporated my comments under Guideline F in my whole-person analysis.

Overall, the record evidence leaves me with questions and doubts about Applicant’s eligibility and suitability for a security clearance. I conclude Applicant did not mitigate 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.k: 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.

________________________ Edward W. Loughran Administrative Judge

FOOTNOTES

1 Items 4, 5. 2 Items 4, 5. 3 Item 5.