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ISCR 16-00713.h1: Guideline F security clearance hearing, denied (2017) · CASE

ISCR Case 16-00713.h1denied

Case headnote

ISCR Case No. 16-00713.h1

deniedMar 29, 2017· Hon. Candace Le'i Garcia· hearing

Summary

A 37-year-old senior technician with military service was denied a security clearance under Guideline F, Financial Considerations. The denial stemmed from unresolved delinquent debts totaling $3,718 and the failure to file federal and state income tax returns for 2011 and 2012.

The Statement of Reasons specifically cited the applicant's failure to file tax returns for those two years and listed multiple instances of the $3,718 delinquent debt. Disqualifying conditions F.19(a), F.19(b), and F.19(f) were raised.

The judge determined that the applicant had not provided sufficient evidence of efforts to mitigate these financial issues. Specifically, the applicant did not resolve the six delinquent debts or demonstrate attempts to address them. Furthermore, there was no indication that the financial problems were unlikely to recur, nor had the applicant received financial counseling. These factors led to concerns about the applicant's reliability and trustworthiness, resulting in the denial of the security clearance.

Why the applicant was denied

Applicant failed to file federal and state income tax returns for tax years 2011 and 2012.
Applicant has six delinquent debts totaling $3,718, which he did not resolve or provide evidence of efforts to address.
The applicant did not demonstrate that his financial problems were unlikely to recur or that he had received financial counseling.

Conditions referenced

Disqualifying

F.19(a)raisedInability to Satisfy Debts
F.19(b)raisedUnwillingness to Satisfy Debts Regardless of the Ability to Do So
F.19(f)raisedFailure 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 issuedJun 15, 2016
Answer filedAug 30, 2016Applicant elected to have the case decided on the written record.
Hearing held—No hearing; decided on written record.
Decision dateMar 29, 2017

Cite for

Failure to Mitigate Financial Considerations Under Guideline F
Impact of Unresolved Debts on Security Clearance Eligibility
Importance of Filing Tax Returns for Maintaining Security Clearance

Editorial summary generated for research. Not legal advice; not a prediction. Verify against the full decision before relying on any quoted language.

From the decision

Facts this decision states, each with the exact sentence it comes from. Descriptive of the record, not an assessment.

Age at decision: 37: “Applicant is a 37-year-old senior technician employed by a defense contractor since May 2010.”
Tenure: ~7 years: “Applicant is a 37-year-old senior technician employed by a defense contractor since May 2010.”
Held a clearance before: Yes: “He has held a DOD security clearance since February 2003.”
Delinquent debt cited: $3,718: “The debts listed here total $3,718.”

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 security concerns related to financial considerations, specifically due to delinquent debts and failure to file federal and state income tax returns for 2011 and 2012. The applicant's financial issues were deemed unresolved, leading to a denial of the security clearance.

The sub-allegation breakdown is part of the Professional plan. See what it includes.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation

Descriptive standardized rendering of a decided public case. 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. 16-00713 ) Applicant for Security Clearance )

For Government: Tara R. Karoian, Esq., Department Counsel For Applicant: Pro se

03/29/2017 ______________

STATEMENT OF CASE

______________

GARCIA, Candace Le’i, Administrative Judge:

Applicant failed to mitigate the security concerns raised by his delinquent debts and failure to file his federal and state income tax returns. Clearance is denied.

Statement of the Case

On June 15, 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, 2006.1

Applicant responded to the SOR on August 30, 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 September 22, 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 October 6, 2016. Applicant did not respond to the Government’s FORM. The Government’s documents identified as Items 1 through 5 are admitted in evidence without objection. The case was assigned to me on August 8, 2017.

FINDINGS OF FACT

Applicant is a 37-year-old senior technician employed by a defense contractor since May 2010. He obtained a high-school diploma in 1998 and attended college from 1998 to 2002, but did not earn a degree. He honorably served in the U.S. military from February 2004 to February 2010, during which time he was deployed to Iraq from January 2007 to March 2008. He previously worked for a defense contractor from January 2010 to May 2010, and was deployed to Kuwait for 10 days in February 2010 and to Afghanistan from February to May 2010. He has held a DOD security clearance since February 2003. As of his March 2014 Questionnaire for Investigations Processing (SF 86), he was not married and he did not have any children.2

The SOR alleges Applicant’s failure to file his federal and state income tax returns for tax years 2011 and 2012, as required. It also alleges six delinquent debts totaling $3,718. Applicant admitted all of the allegations in his response to the SOR.

Applicant listed on his March 2014 Questionnaire for National Security Positions (SF 86), and discussed during his April 2014 interview with an Office of Personnel Management (OPM) investigator, his failure to file his 2011 and 2012 federal income tax returns. He acknowledged during his April 2014 interview that he had not formally filed his taxes for tax years 2011 and 2012. A credit report from March 2014 also verifies Applicant’s delinquent debts in SOR ¶¶ 1.bto 1.dand 1.fto 1.g.

Applicant failed to file his tax returns for tax years 2011 and 2012 because he missed the deadline and then forgot about them. He realized he had not filed his tax returns when he received a letter from the IRS in October 2013, notifying him that he owed $350 in taxes for tax year 2011, and that he had to submit a completed IRS 1040 form with his payment. He had not done so as of his April 2014 interview, but indicated that he intended to file his 2011 and 2012 tax returns when he filed his 2013 tax returns in 2014. Applicant has not provided documentation to show that he has taken action to file his federal and state income tax returns for tax years 2011 and 2012.3

Applicant indicated during his April 2014 interview that he was unaware of the debts in SOR ¶¶ 1.bto 1.dand 1.fto 1.g. He intended to pull his credit report, contact the creditors, and immediately pay the debts if they were his. In his response to the SOR, Applicant stated: The debts listed here total $3,718. This amount is less than 1 month’s pay and would not be a financial burden to immediately pay these debts. These debts to not leave me financially overextended.

Applicant failed to provide documentary evidence of actions he may have taken to resolve the SOR debts in ¶¶ 1.bto 1.g.4

Applicant indicated during his April 2014 interview that his debts are isolated and not part of a pattern. He described his current financial status as good and indicated that he timely paid all his debts. He also indicated that he has no intention to repeat or continue his financial delinquencies.5

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 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. 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. 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 has six delinquent debts totaling $3,718. He was made aware of these delinquent debts during his April 2014 interview. He indicated then that he intended to pull his credit report, contact the creditors, and immediately pay the debts if they were his. He also stated that it would not be a financial burden to him to pay these debts. He failed to provide documentary evidence of actions he may have taken to resolve the SOR debts in ¶¶ 1.bto 1.g.

In addition, Applicant failed to file his federal and state income tax returns for tax years 2011 and 2012, as required. He failed to do so because he missed the deadline and then forgot about them. He was reminded in October 2013, when he received a letter from the IRS. However, he has not provided documentation to show that he has taken action to file his relevant tax returns. 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, 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 failed to file his federal and state income tax returns for tax years 2011 and 2012, as required, because he missed the deadline and then forgot about them. He has not provided documentation to show that he has taken action to file his relevant tax returns, or that he has resolved his delinquent debts. There is insufficient evidence to conclude that his financial problems are unlikely to recur, and they continue to cast doubt on his current reliability, trustworthiness, and good judgment. Circumstances beyond his control did not contribute to his financial problems. He has not received financial counseling. His financial problems are not under control. AG ¶¶ 20(a), 20(b), 20(c), 20(d), and 20(g) do 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 honorably served in the U.S. military from February 2004 to February 2010, and he was deployed to Iraq from January 2007 to March 2008. When he previously worked for a defense contractor from January 2010 to May 2010, he was deployed to Kuwait for 10 days in February 2010 and to Afghanistan from February to May 2010. He has held a DOD security clearance since February 2003.

Applicant’s financial delinquencies, though minimal, remain unresolved. In addition, he has not provided proof that he has filed his 2011 and 2012 tax returns. His finances remain a security concern. He failed to meet his burden of persuasion. The record evidence leaves me with 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.g: Against Applicant

CONCLUSION

In light of all of the circumstances, it is not clearly consistent with the national interest to continue Applicant’s eligibility for a security clearance. Eligibility for access to classified information is denied.

________________________ Candace Le’i Garcia 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 AG implemented on September 1, 2006, and my conclusions are the same using either set of AG. 2 Items 3, 5. 3 Items 1-5. 4 Items 1-5. 5 Item 5.