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ISCR Case 16-00941.h1 — CASE

ISCR Case 16-00941.h1denied

Case Headnote

ISCR Case No. 16-00941.h1

deniedSep 14, 2017· Hon. Nichole L. Noel· hearing

Summary

A federal contractor, employed since 2010, was denied a security clearance due to concerns under Guideline E (Personal Conduct) and Guideline F (Financial Considerations). The denial stemmed primarily from unresolved delinquent debts and a history of poor financial management, which raised significant questions about the applicant's reliability and trustworthiness.

Specific allegations included approximately $1,000 owed in federal taxes for 2016, and about $4,600 in other delinquent accounts, including 22 unpaid parking tickets. The applicant also failed to timely file federal and state income tax returns for 2014 and had a general history of not meeting financial obligations. Additionally, in 2013, the applicant received a deferred conviction for misdemeanor theft and making a false statement.

While the applicant had timely filed other tax returns and the criminal incident was isolated, these mitigating factors were insufficient. The judge concluded that the applicant's ongoing financial issues, coupled with the lack of a concrete plan for resolution, warranted the denial of the security clearance.

Why the Applicant Prevailed

The applicant mitigated concerns related to an isolated arrest in 2013.
The applicant filed his outstanding 2014 tax returns and rehabilitated his student loans.

Conditions Referenced

Disqualifying

AG ¶ 19raisedFinancial Considerations
AG ¶ 15notedPersonal Conduct

Mitigating

AG ¶ 20(g)appliedFinancial Considerations
AG ¶ 17(e)appliedPersonal Conduct

Key Rule Quoted

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

Procedural Posture

SOR issuedJul 8, 2016
Answer filed09/2016Applicant requested a hearing.
Hearing heldApr 20, 2017
Decision dateSep 14, 2017

Cite For

Impact of Unresolved Financial Obligations on Security Clearance Eligibility
Mitigation of Personal Conduct Issues Due to Isolated Incidents
Importance of Presenting a Concrete Plan for Financial Rehabilitation in Security Clearance Cases

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's personal conduct concerns were mitigated, specifically regarding a past misdemeanor theft and making a false statement. The applicant was found to have exhibited questionable judgment but had expressed regret and remorse for his actions, leading to a ruling in his favor under Guideline E.

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
2.a	In 2013, Applicant received a deferred conviction for misdemeanor theft and making a false statement.	For Applicant	Questionable Judgment General	—	Admitted	—	—	—

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 unresolved delinquent debts, which raised significant financial concerns under Guideline F. Although the applicant mitigated some issues related to his failure to file tax returns, the ongoing financial problems led to a denial of his security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Owes approximately $1,000 in federal taxes for 2016. $1,000	For Applicant	Tax Unpaid	Unknown	—	—	—
1.b	Owes approximately $4,600 in delinquent accounts, including 22 unpaid parking tickets. $4,600	Against Applicant	Unspecified Financial	Unknown	—	—	—
1.c	Failed to timely file his 2014 federal and state income tax returns.	Against Applicant	Tax Filing Failure	Unknown	—	—	—
1.d	Has a history of not meeting his financial obligations and an inability to do so.	Against 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. 16-00941 ) Applicant for Security Clearance )

For Government: Rhett Petcher, Esq., Department Counsel For Applicant: Pro se

09/14/2017 ______________

STATEMENT OF CASE

______________

NOEL, Nichole L., Administrative Judge:

Applicant contests the Department of Defense’s (DOD) intent to deny his eligibility for a security clearance to work in the defense industry. Applicant mitigated security concerns raised by an isolated arrest in 2013 and his failure to timely file his state and federal income tax returns in 2014. However, concerns raised by his unresolved delinquent debt remain. Clearance is denied.

Statement of the Case

On July 8, 2016, the DOD issued a Statement of Reasons (SOR) detailing security concerns under the financial considerations and personal conduct guidelines.1 DOD adjudicators were unable to find that it is clearly consistent with the national interest to continue Applicant’s security clearance and recommended that the case be submitted to an administrative judge for a determination whether to revoke his security clearance. Applicant timely answered the SOR and initially requested an administrative determination. In September 2016, Applicant requested a hearing.2 On March 17, 2017, I issued a prehearing order to the parties regarding the exchange and submission of discovery, the filing of motions, and the disclosure of any witnesses, and the parties complied.3 At the hearing, convened on April 20, 2017, I admitted Government’s Exhibits (GE) 1 through 4 and Applicant’s Exhibits (AE) A and B, without objection. DOHA received the transcript (Tr.) on April 28, 2017. Applicant timely submitted AE C through E, without objection.4

PROCEDURAL MATTERS

While the case was pending decision, the Director of National Intelligence (DNI) issued Security Executive Agent Directive 4, establishing the National Security Adjudicative Guidelines (AG) applicable to all covered individuals who require initial or continued eligibility for access to classified information or eligibility to hold a sensitive position. The 2017 AG superseded the AG implemented in September 2006, and they are effective for any adjudication made on or after June 8, 2017. Accordingly, I have applied them in this case.

FINDINGS OF FACT

Applicant has worked on the same federal contract since at 2010. During his tenure, he has worked for three different employers. He has held a security clearance since 2004. Applicant completed his most recent security clearance application in March 2015, disclosing delinquent student loans and two other delinquent accounts. He also disclosed a 2013 deferred conviction for a misdemeanor theft. The ensuing investigation confirmed these details as well as other unresolved financial issues.5

Applicant’s deferred conviction arises from his failure to amend or withdraw a reimbursement claim he filed after an arrest. During a traffic stop where Applicant was the passenger, he was arrested on an outstanding bench warrant for failure to appear in an earlier traffic case. During the arrest, the police lost Applicant’s personal belongings, which included a cashier’s check for his rent. After his release from jail, Applicant returned to the place where he was arrested to look for his things. He found the cashier’s check, which constituted the majority of his reimbursement claim. Applicant, believing that he was treated unfairly by the police, decided not to amend or withdraw his claim and accepted reimbursement for his items. Applicant was arrested in April 2013 and charged with theft and making a false statement. He received probation before judgment and complied with the terms of his sentence. In October 2013, the matter was expunged from his record. Applicant regrets his behavior, which he admits showed poor judgment. He understands that his actions could have resulted in more severe penalties. He testified that he will not engage in criminal behavior in the future.6

Applicant’s current background investigation revealed financial problems more extensive than those he disclosed on his March 2015 security clearance application. Applicant failed to timely file his 2014 federal and state income tax returns. He did so to prevent the government from capturing his refund and applying it toward his defaulted student loans, which it had done since 2010. In 2015, Applicant rehabilitated his student loans and filed his outstanding tax returns. Applicant has since filed his income tax returns on time; however, he owes $1,000 in federal taxes for 2016. The investigation also revealed that Applicant also owes approximately $4,600 in delinquent accounts, including 22 unpaid parking tickets. Applicant believes that only eight of the tickets were issued to him. He claims that the other 13 tickets were issued to a car that he co-signed for a friend. In his August 2016 answer to the SOR, Applicant indicated that he was working with a credit repair service. He discontinued the service after realizing that the service only guaranteed accurate reporting on his credit report, but did not help him resolve his delinquent accounts. In his post-hearing submission, Applicant indicated that he would start paying his delinquent accounts in May 2017, but he did not articulate plan for doing so.7

Applicant earns approximately $41,000 annually. He is the primary source of income for his household, which includes his fiancée and her adult son. Although Applicant is willing to pay his delinquent accounts, he is wary of implementing a plan to do so because he believes his employment future is uncertain.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(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.” 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.” 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

Personal Conduct

In 2013, Applicant received a deferred conviction for misdemeanor theft and making a false statement. While none of the specific personal conduct disqualifying conditions apply, his conduct falls under the general concern that Applicant exhibited questionable judgment, dishonesty, and an unwillingness to comply with rules and regulations, raising questions about his reliability trustworthiness, and ability to protect classified information.9

Applicant’s conduct is mitigated as an isolated act for which he expressed regret and remorse. Applicant’s involvement with the criminal justice system and the resulting deferred conviction will likely deter him from similar conduct in the future. Applicant properly disclosed the incident on his security clearance application; and he discussed it candidly throughout the adjudication process. As a result, it is an unlikely source of vulnerability for him and does not reflect negatively on his current security worthiness.10 Financial Considerations

However, Applicant’s finances remain a source of concern. Failure to meet one’s 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.11 Applicant’s admissions and the credit reports establish the Government’s prima facie case that Applicant has a history of not meeting his financial obligations and that he has an inability to do so.12 Applicant presented sufficient evidence to mitigate the concerns about his failure to timely file his 2014 income tax returns. He made arrangements with the appropriate tax authorities to file the outstanding returns.13 He also resolved the underlying cause of the issue by rehabilitating his defaulted student loans. Despite this favorable financial information, it is not enough to mitigate the remaining financial concerns. Applicant’s financial problems are ongoing and were not caused by events beyond his control. Although Applicant has expressed a desire to repay his creditors, the alleged accounts remain unresolved and Applicant did not present a plan for resolving them.

After a review of the record and a consideration of the whole-person factors at AG ¶ 2(d), I conclude that Applicant’s financial problems render him unsuitable for continued access to classified information at this time. This decision should not be construed as a determination that Applicant cannot or will not attain the type of financial stability necessary to reapply for national security eligibility in the future. Rather, it is recognition of the fact that financial issues have historically been a motivating factor behind acts of espionage. The award of a security clearance is not a once-in-a-lifetime occurrence, but is based on applying the factors, both disqualifying and mitigating, to the evidence presented. While a favorable decision is not warranted at this time, he may present persuasive evidence of financial rehabilitation and reform in the future.

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, Financial Considerations: AGAINST APPLICANT

Subparagraph 1.a: For Applicant

Subparagraphs 1.b – 1.aa: Against Applicant

Paragraph 2, Personal Conduct: FOR APPLICANT Subparagraph 2.a: For Applicant

CONCLUSION

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

________________________ Nichole L. Noel Administrative Judge

FOOTNOTES

1 The DOD CAF acted under Executive Order (EO) 10865, Safeguarding Classified Information within Industry, signed by President Eisenhower on February 20, 1960, as amended; as well as DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program, dated January 2, 1992, as amended (Directive), and the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information, implemented on September 1, 2006. 2 Hearing Exhibit (HE) III. 3 The prehearing scheduling order and the discovery letter are appended to the record as HE I and II, respectively. 4 HE IV. 5 Tr. 22-24, 33; GE 1. 6 Tr. 39-32, 63-67; AE A-B. 7 Tr. 24-29, 33-38, 46-62; GE 3-4; AE C. 8 Tr. 19-22, 37, 82. 9 AG ¶ 15. 10 AG ¶ 17(e). 11 AG ¶ (18). 12 AG ¶¶ 19 (a) and (c). 13 AG ¶ 20(g).