ISCR Case No. 16-01192.h1

DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS

In the matter of: ) ) ) [NAME REDACTED] ) ISCR Case No. 16-01192 ) ) ) Applicant for Security Clearance

For Government: Benjamin Dorsey, Esq., Department Counsel For Applicant: Pro se

07/25/2017 ______________

______________

MALONE, Matthew E., Administrative Judge:

Applicant failed to comply with his income tax reporting obligations between 2006 and 2013. Although his employer did not report what he paid Applicant in those years, it was still incumbent on Applicant to contact the IRS for guidance on how to report his income. Applicant also failed to address his past-due debts in a timely fashion. After the hearing, he paid several overdue medical bills, but he has yet to resolve several remaining delinquencies or document his claimed disputes with other creditors. Applicant did not mitigate the security concerns about his debts, and his request for a security clearance is denied.

Statement of the Case

On April 28, 2015, Applicant submitted an Electronic Questionnaire for Investigations Processing (e-QIP) to obtain a security clearance required for his employment with a defense contractor. Based on the results of the ensuing background investigation, Department of Defense (DOD) adjudicators could not determine that it is clearly consistent with the interests of national security for Applicant to have a security clearance.1

On July 7, 2016, DOD issued a Statement of Reasons (SOR) alleging facts raising security concerns addressed under the adjudicative guideline2 for financial considerations (Guideline F). Applicant timely responded to the SOR (Answer) and requested a hearing. On February 1, 2017, I received this case, and I convened the requested hearing on March 8, 2017.

The parties appeared as scheduled. Department Counsel presented Government Exhibits (Gx.) 1 – 3. Applicant and his wife testified. Applicant also presented, post- hearing, Applicant’s Exhibit (Ax.) A and B.3 Applicant objected to the admissibility of Gx. 2 and 3; however, I overruled his objection.4 I admitted all other exhibits without objection. The record closed on March 16, 2017, and I received a transcript of the hearing (Tr.) on March 20, 2017.

Under Guideline F, the Government alleged that Applicant owed $3,940 for nine delinquent or past-due debts (SOR 1.a – 1.i). The Government also alleged that Applicant failed to file his federal (SOR 1.j) and state (SOR 1.k) income tax returns for the 2006 through 2013 tax years. Applicant denied SOR 1.a, 1.d, 1.e, and 1.h. As to these controverted issues of fact,5 the information in Gx. 2 and 3 supports the allegations Applicant denied. He admitted the remaining allegations and provided explanatory remarks with all of his responses. In addition to the facts thus established, I make the following additional findings of fact.

Applicant is 45 years old. He and his wife have been married since October 2005, and they work for the same defense contractor. Since June 2014, he has worked there as an electronics technician. She works in the human resources department. (Gx. 1; Tr. 12, 37)

Before his current defense contractor employment, Applicant worked as an independent cable television installer from August 2000 until June 2014. His former employer was responsible for reporting Applicant’s taxable wages, Social Security withholdings, and so forth, to the IRS. Applicant needed the information so he could file his personal income tax returns each year. That information normally would appear on a W-2 or, in the case of an independent contractor, a Form 1099. Applicant would then be responsible for using that information to complete his annual federal and state income tax returns. (Answer; Gx. 1; Tr. 34)

Applicant’s former employer has been remiss in his responsibilities in this regard. He previously did not provide Applicant a Form 1099 for the tax years 2002 through 2005, but Applicant filed his taxes retroactively once he received the necessary information. This has recurred for the tax years 2006 through 2013. After the hearing, Applicant’s former employer provided a statement documenting Applicant’s explanation for why, as alleged at SOR 1.j and 1.k, he has yet to file his tax returns for those years. During the seven tax years at issue, and in the four years that have since elapsed, Applicant has not contacted the IRS for guidance in trying to resolve this matter. (Answer; Ax. A; Tr. 34 - 37)

In 2014, Applicant was hospitalized and received treatment for ulcers. Applicant’s wife’s employer-sponsored medical insurance covers Applicant’s medical needs. The medical debts alleged at SOR 1.a, 1.c, 1.d, and 1.h are related to his 2014 hospitalization. Applicant did not deny owing money for services not covered by insurance; however, he claimed that there was only one debt, and he disagreed with the actual balance due. Further, he and his wife averred they have been disputing his medical bills. They did not provide any details about the nature of that dispute. Rather than provide that information, Applicant and his wife paid several medical bills the day after the hearing. They also proffered that they established a monthly payment plan for their largest medical bill. (Answer; Ax. B; Tr. 37 - 38)

After the hearing, Applicant also made a payment to the creditor referenced in SOR 1.e. That debt is for a missed car loan payment. The information Applicant provided (Ax. B) shows the payment but does not establish that Applicant is current on his car note. However, the Government’s information does not establish that the amount in question was more than 30 days past due. Applicant still possesses the car. (Answer; Gx. 2; Ax. B; Tr. 38)

Applicant also owes $563 for two delinquent cable bills (SOR 1.g and 1.i); $1,191 for a delinquent credit card debt being enforced by a civil judgment (SOR 1.f); and $435 for a delinquent cell phone account (SOR 1.b). As to SOR 1.b and 1.f, Applicant has not paid or otherwise resolved these debts because he disputes some aspect of each debt. He did not document either dispute. As to SOR 1.g and 1.i, Applicant simply has taken no action on either debt. (Answer; Gx. 2 and 3; Tr. 29 – 30, 38 - 44) Together, Applicant and his wife bring home about $3,900 each month. Applicant’s wages would be higher if not for a garnishment to pay taxes owed for 2014 and 2015.6 After expenses, they have at least $1,000 remaining each month. Applicant has not sought or received any financial counseling or other professional assistance in managing his personal finances. (Tr. 45 – 48, 57, 68)

Each security clearance decision must be a fair, impartial, and commonsense determination based on examination of all available relevant and material information,7 and consideration of the pertinent criteria and adjudication policy in the adjudicative guidelines (AG). Decisions must also reflect consideration of the factors listed in ¶ 2(d) of the guidelines. Commonly referred to as the “whole-person” concept, those factors are:

(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.

The presence or absence of a disqualifying or mitigating condition is not determinative of a conclusion for or against an applicant. However, specific applicable guidelines should be followed whenever a case can be measured against them as they represent policy guidance governing the grant or denial of access to classified information.

A security clearance decision is intended only to resolve whether it is clearly consistent with the national interest8 for an applicant to either receive or continue to have access to classified information. The Government bears the initial burden of producing admissible information on which it based the preliminary decision to deny or revoke a security clearance for an applicant. Additionally, the Government must be able to prove controverted facts alleged in the SOR. If the Government meets its burden, it then falls to the applicant to refute, extenuate or mitigate the Government’s case. Because no one has a “right” to a security clearance, an applicant bears a heavy burden of persuasion.9 A person who has access to classified information enters into a fiduciary relationship with the Government based on trust and confidence. Thus, the Government has a compelling interest in ensuring each applicant possesses the requisite judgment, reliability and trustworthiness of one who will protect the national interests as his or her own. The “clearly consistent with the national interest” standard compels resolution of any reasonable doubt about an applicant’s suitability for access in favor of the Government.10

Financial Considerations

The Government’s information reasonably raised a security concern about Applicant’s finances. That concern is stated at AG ¶ 18, as follows:

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.

More specifically, the record as a whole requires application of the disqualifying conditions at AG ¶¶ 19(a) (inability to satisfy debts); 19(c) (a history of not meeting financial obligations); and 19(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).

I also have considered the following pertinent AG ¶ 20 mitigating conditions:

(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;

(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.

SOR 1.e, the missed car loan payment, is resolved for Applicant because the Government did not establish it was actually past-due more than 30 days or that the loan itself is similarly delinquent. Applicant did not address his other accrued debts, medical and otherwise, until after his hearing. His cable, credit card, and cell phone debts remain unresolved. Available information shows he has had the means to pay at least some of his debts over the past three years.

As to his taxes, Applicant’s failure to file his returns was due, in part, to his employer’s failure to provide him the necessary information for his returns. Nonetheless, it was incumbent on Applicant to file at least one tax return that would have informed the IRS that his employer had not provided a Form 1099. A reasonable person in Applicant’s position, after not paying taxes for seven years, would at least have contacted the IRS to find out what he should have done.

On balance, none of the AG ¶ 20 mitigating conditions applies based on this record. Applicant did not meet his burden of showing that he acted in good-faith to pay any of his debts, or that he has taken any action to resolve his tax reporting discrepancies. His lack of action in response to the issues raised by the SOR over the eight months that elapsed between the SOR and his hearing reflects poor judgment and reliability. Applicant did not mitigate the security concerns under this guideline.

I also have evaluated this record in the context of the whole-person factors listed in AG ¶ 2(d). Applicant did not present information that overcomes the doubts about his suitability for a clearance raised by the Government’s information. Because protection of the interests of national security is the principal focus of these adjudications, any remaining doubts must be resolved against the Applicant.

Formal findings 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.e: For Applicant

Subparagraphs 1.a - 1.d, 1.f – 1k: Against Applicant

In light of all of the foregoing, it is not clearly consistent with the interests of national security for Applicant to have access to classified information. Applicant’s request for a security clearance is denied.

MATTHEW E. MALONE Administrative Judge

1 Required by Executive Order 10865, as amended, and by DOD Directive 5220.6 (Directive), as amended.

2 At the time they issued the SOR, DOD adjudicators applied the adjudicative guidelines implemented by the Department of Defense on September 1, 2006. On December 10, 2016, the Director of National Intelligence issued a new version of the adjudicative guidelines, to be effective for all adjudications on or after June 8, 2017. In this decision, I have considered and applied the new adjudicative guidelines. My decision in this case would have been the same under either version.

3 Ax. A is a one-page letter, dated March 13, 2017, from Applicant’s former employer as part of Applicant’s response to SOR 1.j and 1.k. Ax. B consists of six pages. The first page shows a March 9, 2017 payment to the creditor referenced in SOR 1.e. The remaining pages are records of full payment of various medical debts, and a partial payment to another with Applicant’s representation that he is now paying $50 a month on the remaining balance.

4 Tr. 24 – 25.

5 See Directive, E3.1.14. 6 Applicant filed his tax returns as required but owed additional taxes because he had claimed too many exemptions from withholding. (Tr. 45 – 46)

7 See Directive. 6.3.

8 See Department of the Navy v. Egan, 484 U.S. 518 (1988). 9 See Egan, 484 U.S. at 528, 531.

10 See Egan; AG ¶ 2(b).