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ISCR Case 16-00292.h1 — CASE

ISCR Case 16-00292.h1denied

Case Headnote

ISCR Case No. 16-00292.h1

deniedAug 24, 2017· Hon. Edward W. Loughran· hearing

Summary

A 54-year-old defense contractor employee was denied a security clearance due to concerns under Guideline E (Personal Conduct) and Guideline F (Financial Considerations). The Statement of Reasons cited a $70,063 IRS tax lien filed in December 2014 for unpaid taxes, which remained unreleased. Additionally, the applicant was alleged to have a $216 medical debt.

A significant issue under Personal Conduct arose from the applicant's June 2015 Questionnaire for National Security Positions (SF 86). In this document, she answered "No" to all financial questions in Section 26, including inquiries about failing to file or pay taxes, having tax liens, being delinquent on federal debt, having debts turned over to collections, or being over 120 days delinquent on any debt within the past seven years.

While the judge found the applicant refuted the personal conduct concerns, she failed to mitigate the financial issues. The denial was based on her history of state and federal tax problems, the unreleased $70,063 tax lien, and her inability to provide corroborating documentation for claimed IRS payments. This failure to comply with tax laws ultimately raised questions about her reliability and trustworthiness.

Why the Applicant Was Denied

The applicant has a history of state and federal tax issues, including a $70,063 tax lien that remains unreleased.
The applicant did not provide corroborating documentation to support her claims of making payments to the IRS.
The applicant's failure to comply with tax laws raises questions about her reliability and trustworthiness.

Conditions Referenced

Disqualifying

F.19(a)raisedInability to Satisfy Debts
F.19(c)raisedA History of Not Meeting Financial Obligations
F.19(f)raisedFailure 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

Key Rule Quoted

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

Procedural Posture

SOR issuedJun 14, 2016
Answer filedJul 8, 2016Applicant elected to have the case decided on the written record.
Hearing held—No hearing; case decided on written record.
Decision dateAug 24, 2017

Cite For

Failure to Mitigate Financial Considerations Under Guideline F
Insufficient Evidence to Establish Intentional Falsification of SF 86 Under Guideline E
Importance of Corroborating Documentation in Financial Matters for Security Clearance Eligibility

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 E (Personal Conduct) · descriptive summary of a decided case

Posture: Decision on RecordDecided: denied

The judge found that the applicant refuted the personal conduct security concerns and concluded that the allegations under Guideline E were resolved in her favor. Specifically, the judge determined that there was insufficient evidence to establish that the applicant intentionally falsified her SF 86, leading to a finding for the applicant on the relevant subparagraph.

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
2.a	Applicant submitted a Questionnaire for National Security Positions (SF 86) in June 2015. She answered “No” to all the financial questions under Section 26, including the following: In the past seven (7) years, have been failed to file or pay Federal, state, or other taxes when required by law or ordnance? In the past seven (7) years, you had a lien placed against your property for failing to pay taxes or other debts? (Include financial obligations for which you were the sole debtor, as well as those for which you were a cosigner or guarantor). You are currently delinquent on any Federal debt? (Include financial obligations for which you were the sole debtor, as well as those for which you were a cosignor or guarantor). In the past seven (7) years, you had bills or debts turned over to a collection agency? (Include financial obligations for which you were the sole debtor, as well as those for which you were a cosignor or guarantor). In the past seven (7) years, you have been over 120 days delinquent on any debt not previously entered? (Include financial obligations for which you were the sole debtor, as well as those for which you were a cosignor or guarantor) You are currently over 120 days delinquent on any debt? (Include financial obligations for which you were the sole debtor, as well as those for which you were a cosignor or guarantor)	For Applicant	Falsification Security Form	Financial	Denied	—	—	—

Descriptive standardized rendering of a decided public case (Guideline E). The verbatim source decision is shown in full below.

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 significant financial concerns, including a $70,063 tax lien and a history of wage garnishments. While the applicant provided some explanations regarding her financial situation, the judge concluded that these concerns were not sufficiently mitigated, resulting in a denial of the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	The IRS filed a $70,063 tax lien against Applicant in December 2014 for unpaid taxes. $70,063	Against Applicant	Tax Unpaid	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations (f) failure to file / fraudulent filing of tax returns or unpaid tax	—	—
1.b	SOR ¶ 1.b alleges a $216 medical debt. $216	For Applicant	Medical Debt	Admitted	—	—	Claimed Debt Paid in Full
1.c	specific text not stated in this decision	For Applicant	Unspecified Financial	Unknown	—	—	—

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. 16-00292 ) Applicant for Security Clearance )

For Government: Andrew H. Henderson, Esq., Department Counsel For Applicant: Pro se

08/24/2017 ______________

STATEMENT OF CASE

______________

LOUGHRAN, Edward W., Administrative Judge:

Applicant refuted the personal conduct security concerns, but she did not mitigate the financial considerations security concerns. Eligibility for access to classified information is denied.

Statement of the Case

On June 14, 2016, the Department of Defense (DOD) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guidelines E (personal conduct) and F (financial considerations). Applicant responded to the SOR on July 8, 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 August 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 September 2, 2016. As of October 11, 2016, she had not responded. The case was assigned to me on July 5, 2017. The Government exhibits included in the FORM are admitted in evidence.

FINDINGS OF FACT

Applicant is a 54-year-old employee of a defense contractor. She has worked for the same employer since 1986. She attended college for a period without earning a degree. She married in 1988 and divorced in 1998. She has two adult children.1

Applicant has a history of state and federal tax issues. Her employer reported through the Joint Personnel Adjudication System (JPAS) that it received a $5,000 wage garnishment from the state in 2004 for tax year 2001; a $23,608 garnishment from the IRS in 2006; and a $7,298 garnishment from the state in 2012.2

Applicant discussed her taxes during background interviews in 2002, 2006, 2007, 2008, and 2015. She indicated the old state garnishment was a mistake related to her filing status, the state acknowledged she filed correctly, and the taxes were paid. In 2007, she discussed the 2006 IRS garnishment for tax year 2003. She stated that she liquidated some mutual funds; the original amount of the tax owed was $2,699; the IRS garnished about $1,000 from her pay; and she was paying $100 per month. In 2008, she stated that she had been paying the IRS, and the balance was down to between $100 and $200.3

The IRS filed a $70,063 tax lien against Applicant in December 2014. In her October 2015 background interview, she stated the lien was for tax years 2006 through 2009 when she claimed too many personal exemptions, and the IRS disallowed some of her deductions. She stated that she paid $442 per month from 2010 to 2014, but the payments were not coded properly, leading to her not being credited with the payments and the IRS issuing the tax lien. She stated that the IRS resolved the discrepancy, and in the fall of 2014, she set up a $700 per month payroll deduction to the IRS. She stated that the IRS informed her that the lien would be released by the spring of 2015. She also stated that her 2014 income tax refund was diverted to pay her back taxes. In her response to the SOR, she stated that the lien was still in effect, but the wage garnishment had been lifted, and she was voluntarily paying $800 per month.4

Applicant did not submit any documentation to corroborate payments to the IRS. The $70,063 lien is listed as unreleased on the May 2016 credit report.5

Applicant’s wages have been garnished since 2011 for spousal support. Applicant stated the divorce order granted her ex-husband alimony while he was unemployed. The order remained in effect, but was uncollected, after he went back to work. Her employer reported in May 2016 that the original amount of the garnishment was $82,527, plus $2,000 attorney’s fees. It indicated that approximately $46,391 had been garnished up to that date. The garnishment at that time was $173 per week.6

SOR ¶ 1.balleges a $216 medical debt. The debt is listed by all three credit reporting agencies on the June 2015 combined credit report. Applicant stated that she paid the debt when she became aware of it. The debt is not listed on the May 2016 credit report.7

Applicant submitted a Questionnaire for National Security Positions (SF 86) in June 2015. She answered “No” to all the financial questions under Section 26, including the following:

In the past seven (7) years, have been failed to file or pay Federal, state, or other taxes when required by law or ordnance?

In the past seven (7) years, you had a lien placed against your property for failing to pay taxes or other debts? (Include financial obligations for which you were the sole debtor, as well as those for which you were a cosigner or guarantor).

You are currently delinquent on any Federal debt? (Include financial obligations for which you were the sole debtor, as well as those for which you were a cosignor or guarantor).

In the past seven (7) years, you had bills or debts turned over to a collection agency? (Include financial obligations for which you were the sole debtor, as well as those for which you were a cosignor or guarantor).

In the past seven (7) years, you have been over 120 days delinquent on any debt not previously entered? (Include financial obligations for which you were the sole debtor, as well as those for which you were a cosignor or guarantor)

You are currently over 120 days delinquent on any debt? (Include financial obligations for which you were the sole debtor, as well as those for which you were a cosignor or guarantor)8

Applicant denied intentionally falsifying the SF 86. She stated that she had been paying the IRS; the garnishment had been lifted; and she thought the garnishment and the lien were the same thing.9 After considering all the evidence, I find there is insufficient evidence for a determination that she intentionally falsified the SF 86.

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;

(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.

The IRS filed a $70,063 tax lien against Applicant in December 2014 for unpaid taxes. The evidence is sufficient to raise the above disqualifying conditions.

Applicant’s explanation for the spousal support garnishment is logical and accepted. The garnishment and the medical debt do not generate security concerns. SOR ¶¶ 1.band 1.care concluded for Applicant.

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 has a history of tax problems culminating in a $70,063 tax lien. Failure to comply with tax laws suggests that an applicant has a problem with abiding by well- established government rules and systems. Voluntary compliance with rules and systems is essential for protecting classified information. See e.g. ISCR Case No. 14- 06686 at 2 (App. Bd. Apr. 27, 2016). She stated, without corroborating documentation, that she has been paying her back taxes. The Appeal Board has held that “it is reasonable for a Judge to expect applicants to present documentation about the satisfaction of specific debts.” See ISCR Case No. 09-07091 at 2 (App. Bd. Aug 11, 2010) (quoting ISCR Case No. 04-10671 at 3 (App. Bd. May 1, 2006)). Applicant’s evidence falls short of mitigating her history of shirking her responsibility to pay her taxes.

Guideline E, Personal Conduct

The security concern for personal conduct is set out in AG ¶ 15, as follows:

Conduct involving questionable judgment, lack of candor, dishonesty, or unwillingness to comply with rules and regulations can raise questions about an individual’s reliability, trustworthiness and ability to protect classified information. Of special interest is any failure to provide truthful and candid answers during the security clearance process or any other failure to cooperate with the security clearance process. AG ¶ 16 describes conditions that could raise a security concern and may be disqualifying. The following disqualifying condition is potentially applicable:

(a) deliberate omission, concealment, or falsification of relevant facts from any personnel security questionnaire, personal history statement, or similar form used to conduct investigations, determine employment qualifications, award benefits or status, determine security clearance eligibility or trustworthiness, or award fiduciary responsibilities.

There is insufficient evidence for a determination that Applicant intentionally falsified her SF 86. AG ¶ 16(a) is not established. SOR ¶ 2.a is concluded for Applicant.

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 Guidelines E and F in my whole-person analysis. I also considered Applicant’s long and stable work history with the same employer.

Overall, the record evidence leaves me with questions and doubts about Applicant’s eligibility and suitability for a security clearance. I conclude Applicant refuted the personal conduct security concerns, but she 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

Subparagraph 1.a: Against Applicant Subparagraphs 1.b-1.c: For Applicant

Paragraph 2, Guideline E: For Applicant

Subparagraph 2.a: For 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 2, 8. 2 Items 3-6, 8, 14. These tax matters were not alleged in the SOR and will not be used for disqualification purposes. They may be considered in assessing mitigation and during the whole-person analysis. 3 Items 3-6, 8, 14. 4 Items 8, 12, 13. 5 Item 13. 6 Items 1, 14. 7 Items 12, 13. 8 Item 2. 9 Items 1, 8.