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ISCR 16-00771.h1: Guideline F security clearance hearing, granted (2017) · CASE

ISCR Case 16-00771.h1granted

Case headnote

ISCR Case No. 16-00771.h1

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

Summary

A 54-year-old defense contractor and veteran was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The Statement of Reasons cited several financial issues, including unpaid federal taxes of $23,084 for tax years 2009 and 2014, a $195 state tax lien, and six miscellaneous delinquent debts totaling approximately $13,758. These issues were attributed to a period of unemployment and family obligations.

To mitigate these concerns, the applicant demonstrated a strong commitment to resolving his financial difficulties. He established a structured repayment plan with the IRS for his federal tax debt and provided evidence that he had paid, settled, or otherwise resolved most of his other delinquent debts.

The decision to grant the clearance was further supported by positive character references, which attested to his reliability and integrity in his professional conduct. The judge concluded that the applicant had successfully addressed his financial management issues, leading to the favorable outcome.

Why the applicant prevailed

Applicant demonstrated a commitment to resolving his financial issues through a structured repayment plan with the IRS.
He provided evidence of having paid, settled, or resolved most of his delinquent debts.
Positive character references highlighted his reliability and integrity in his professional conduct.

Conditions referenced

Disqualifying

AG ¶ 19(a)raisedInability or Unwillingness to Satisfy Debts
AG ¶ 19(c)raisedA History of Not Meeting Financial Obligations

Mitigating

AG ¶ 20(a)appliedBehavior Happened Long Ago or Under Circumstances Unlikely to Recur
AG ¶ 20(c)appliedReceived Counseling for the Problem and Indications That It Is Under Control
AG ¶ 20(d)appliedInitiated a Good-faith Effort to Repay Overdue Creditors

Key rule quoted

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

Procedural posture

SOR issuedJul 30, 2016
Answer filedAug 19, 2016
Hearing heldNov 17, 2016
Decision dateJan 24, 2017

Cite for

Mitigation of Financial Considerations Under Guideline F
Importance of Demonstrating a Commitment to Resolving Debts
Whole-person Concept in Security Clearance Evaluations

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: 54: “Applicant is a 54-year-old employee of a defense contractor.”
Tenure: ~1 year: “He has worked for his current employer since May 2016.”
Delinquent debt cited: $23,084 (on a payment plan): “The SOR alleges unpaid federal taxes of $23,084 for tax years 2009 and 2014 (SOR ¶ 1.a); a $195 state tax lien (SOR ¶ 1.b); and six miscellaneous delinquent debts totaling about $13,758 (SOR ¶¶ 1.c-1.h).”

Standardized Decision Profile

SEAD-4 Guideline F · descriptive summary of a decided case

Posture: Decision on RecordDecided: granted

The judge found that the applicant mitigated the financial considerations security concerns related to unpaid federal and state taxes, as well as miscellaneous delinquent debts. The applicant demonstrated a commitment to resolving his financial issues through installment agreements and increased tax withholding, leading to a favorable decision for security clearance eligibility.

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. 16-00771 ) Applicant for Security Clearance )

For Government: Jeff A. Nagel, Esq., Department Counsel For Applicant: Kenneth M. Roberts, Esq.

01/24/2017 ______________

STATEMENT OF CASE

______________

LOUGHRAN, Edward W., Administrative Judge:

Applicant mitigated the financial considerations security concerns. Eligibility for access to classified information is granted.

Statement of the Case

On July 30, 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 August 19, 2016, and requested a hearing before an administrative judge. The case was assigned to me on October 11, 2016. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on October 11, 2016, scheduling the hearing for November 17, 2016. The hearing was convened as scheduled. Government Exhibits (GE) 1 through 5 were admitted in evidence without objection. Applicant testified, called three witnesses, and submitted Applicant’s Exhibits (AE) 1, and A through V, which were admitted without objection. The record was held open for Applicant to submit additional information. He submitted documents that were marked AE W and X and admitted without objection. DOHA received the hearing transcript (Tr.) on December 1, 2016.

FINDINGS OF FACT

Applicant is a 54-year-old employee of a defense contractor. He served on active duty in the U.S. military from 1980 until he retired with an honorable discharge in 2001. He has worked for his current employer since May 2016. He worked consistently for other defense contractors since 2008. He has an associate’s degree. He is married with two children and two stepchildren.1

Applicant was laid off work in 2008 and was unemployed for several months. His daughter has a medical condition, and he was helping his terminally ill mother and his elderly father-in-law financially. He had difficulty paying his bills, and he sought the advice of a credit counseling company. He followed the company’s advice to stop paying his bills, and he let the company address his debts.2

Applicant had a 401(k) account through the company that laid him off in 2008. He did not realize the extent of the tax consequences that resulted when the funds were disbursed to him following the lay-off. He did not have the money to pay the additional taxes generated by the disbursement.3

The SOR alleges unpaid federal taxes of $23,084 for tax years 2009 and 2014 (SOR ¶ 1.a); a $195 state tax lien (SOR ¶ 1.b); and six miscellaneous delinquent debts totaling about $13,758 (SOR ¶¶ 1.c-1.h).4 He admitted owing all the debts at one time with the exception of the $490 debt alleged in SOR ¶ 1.c. Applicant established through documentary evidence that he was not responsible for that debt. He paid, settled, or otherwise resolved all the remaining debts with the exception of the federal taxes.5

Applicant has been paying the IRS through installment agreements since at least 2013. However, he fell into a pattern of not paying his current-year taxes and having the amount owed added to a new installment agreement. His most recent agreement was entered in August 2016 for tax years 2009, 2013, 2014, and 2015 in the amount of about $23,000. His monthly payment is $450, which is automatically deducted from his

1.g). I have corrected the numbering of the allegations to SOR ¶¶ 1.a-1.h. paycheck. Applicant realized that he needed to break of cycle of owing back taxes. In 2016, he increased the amount withheld from his pay by his employer for the current- year taxes. His accountant completed state and federal projected returns for 2016 that estimate he should be entitled to refunds of $6,425 from the IRS and $1,298 from the state. The IRS will apply the refund amount to his back taxes.6

Applicant took a credit management course. He credibly stated that he is committed to paying his taxes and keeping his finances in order.7

Applicant called three witnesses, and he submitted numerous documents and letters attesting to his excellent job performance. He is praised for his dedication, reliability, work ethic, dependability, professionalism, loyalty, trustworthiness, patriotism, and integrity.8

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; and

Applicant accumulated delinquent debts and was unable to pay his financial obligations. The above disqualifying conditions are applicable.

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; (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’s finances were adversely affected by unemployment and taking care of sick and elderly family members. He paid, settled, or otherwise resolved all of the resulting delinquent debts with the exception of his federal taxes. He has been paying the IRS through installment agreements since at least 2013. However, he did not make significant headway on his back taxes because he was not paying his current-year taxes. He broke that pattern in 2016 when he increased the amount withheld from his pay by his employer for the current-year taxes. His accountant estimated a $6,425 refund that would be withheld by the IRS for his back taxes. I am satisfied that Applicant’s finances are now in order and that he will continue his efforts to resolve his tax issues. AG ¶¶ 20(c) and 20(d) are applicable. AG ¶¶ 20(a) and 20(b) are partially applicable.

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 my whole-person analysis.

I considered honorable military service, his steady employment with defense contractors, and his favorable character evidence. Applicant broke his pattern of not paying his current-year taxes when he changed the amount withheld from his pay in 2016. He now has a viable plan to address his financial problems, and he has taken significant action to implement that plan.

Overall, the record evidence leaves me without questions or doubts as to Applicant’s eligibility and suitability for a security clearance. 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 section E3.1.25 of Enclosure 3 of the Directive, are:

Paragraph 1, Guideline F: For Applicant

Subparagraphs 1.a-1.h: 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.

________________________ Edward W. Loughran Administrative Judge

FOOTNOTES

1 Tr. at 14, 26-27, 55-56; Applicant’s response to SOR; GE 1, 2; AE B. 2 Tr. at 14-16, 52-53; Applicant’s response to SOR; GE 1, 2; AE B. 3 Tr. at 17-19; Applicant’s response to SOR; AE B. 4 The SOR allegations were incorrectly numbered (two allegations numbered SOR ¶ 1.cand no SOR ¶ 5 Tr. at 31-42, 50-52; Applicant’s response to SOR; GE 1-5; AE 1, A, F-M. 6 Tr. at 17-26, 29-30, 53-55; Applicant’s response to SOR; GE ; AE D, E, W, X. 7 Tr. at 17-26, 29-30, 43-44, 47-50, 54. 8 Tr. At 58-72; AE N-V.