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ISCR Case 09-06388.h1 — CASE

ISCR Case 09-06388.h1denied

Case Headnote

ISCR Case No. 09-06388.h1

deniedJul 1, 2009· Hon. Carol G. Ricciardello· hearing

Summary

A 52-year-old federal contractor was denied a security clearance due to concerns under Guideline E (Personal Conduct) and Guideline F (Financial Considerations). The denial stemmed from significant unresolved debts and the applicant's failure to disclose these financial issues on his security clearance application.

The applicant was indebted to the Internal Revenue Service for federal tax liens filed in January 2003, April 2005, July 2007, May 2008, and July 2008, each totaling approximately $175,688. Additionally, he had a past-due mortgage payment of $36,106, credit card debt of $3,485, and two collection accounts totaling $83 and $309, respectively. The total unresolved debt amounted to approximately $179,610.

The judge found that the applicant's failure to disclose the delinquent federal tax liens on his application was intentional, undermining his reliability and trustworthiness. Furthermore, the applicant did not provide credible evidence of efforts to resolve his debts or seek financial counseling. These factors led to the denial of his security clearance.

Why the Applicant Was Denied

Applicant has significant unresolved debts totaling approximately $179,610, including federal tax liens dating back to 2003.
Applicant failed to provide credible evidence of efforts to resolve his debts or financial counseling.
Applicant's omission of delinquent federal tax liens on his security clearance application was deemed intentional and undermined his credibility.

Conditions Referenced

Disqualifying

F.19(a)raisedInability or Unwillingness to Satisfy Debts
F.19(c)raisedA History of Not Meeting Financial Obligations
E.16(a)raisedDeliberate Omission, Concealment, or Falsification of Relevant Facts

Key Rule Quoted

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

Procedural Posture

SOR issuedApr 30, 2010
Answer filedMay 10, 2010Applicant elected to have case decided on the written record.
Hearing held—No hearing; case decided on written record.
Decision dateDec 2, 2010

Cite For

Failure to Disclose Significant Debts Under Guideline E
Unresolved Financial Obligations Under Guideline F
Credibility Issues Arising From Inconsistent Statements Regarding Financial Status

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 against the applicant on the personal conduct allegations under Guideline E. The applicant failed to disclose significant federal tax liens on his security clearance application, which the judge determined to be a deliberate omission. The applicant's lack of candor raised serious concerns about his reliability and trustworthiness, leading to the denial of his security clearance.

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
2.a	Applicant did not disclose his delinquent federal income tax liens on his SCA.	Against Applicant	Omission or Failure to DiscloseFOUND DELIBERATE	Criminal Conduct	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 failed to mitigate significant financial concerns under Guideline F, including multiple delinquent debts totaling approximately $179,610, primarily due to federal tax liens. The applicant admitted to the debts but did not provide sufficient evidence of resolution or mitigation, leading to a decision against the applicant on all relevant allegations under this guideline.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	indebted to the Internal Revenue Service (IRS) for federal tax liens filed in July 2008, totaling approximately $175,688 $175,688	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	indebted to the Internal Revenue Service (IRS) for federal tax liens filed in May 2008, totaling approximately $175,688 $175,688	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	indebted to the Internal Revenue Service (IRS) for federal tax liens filed in July 2007, totaling approximately $175,688 $175,688	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	indebted to the Internal Revenue Service (IRS) for federal tax liens filed in April 2005, totaling approximately $175,688 $175,688	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	indebted to the Internal Revenue Service (IRS) for federal tax liens filed in January 2003, totaling approximately $175,688 $175,688	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	debt for a past-due mortgage payment on a balance of $36,106 $437	Against Applicant	Mortgage or Home Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.g	credit card debt totaling $3,485 $3,485	Against Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.h	collection account totaling $83 $83	For Applicant	Unspecified Financial	Admitted	—	—	Documented Debt Paid in Full
1.i	collection account totaling $309 $309	For Applicant	Unspecified Financial	Admitted	—	—	Documented Debt Paid in Full

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. 09-06388 ) ) Applicant for Security Clearance )

For Government: Gregg A. Cervi, Esquire, Department Counsel For Applicant: Pro se

December 2, 2010 ______________

STATEMENT OF CASE

______________

RICCIARDELLO, Carol G., Administrative Judge:

Applicant failed to mitigate the Government’s security concerns under Guideline F, Financial Considerations, and Guideline E, Personal Conduct. Applicant’s eligibility for a security clearance is denied.

On April 30, 2010, the Defense Office of Hearings and Appeals (DOHA) issued Applicant a Statement of Reasons (SOR) detailing security concerns under Guideline F, Financial Considerations, and Guideline E, Personal Conduct. The action was taken under Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the Adjudicative Guidelines (AG) effective within the Department of Defense for SORs issued after September 1, 2006.

Applicant answered the SOR on May 10, 2010, and elected to have his case decided on the written record. Department Counsel submitted the Government’s File of Relevant Material (FORM) on August 6, 2010. The FORM was mailed to Applicant and it was received on August 20, 2010. Applicant was afforded an opportunity to file objections and submit material in refutation, extenuation, or mitigation. Applicant did not object to the FORM and did not submit additional material. The case was assigned to me on November 2, 2010.

FINDINGS OF FACT

Applicant admitted all of the SOR allegations with explanations. After a thorough and careful review of the pleadings, exhibits, and statements submitted, I make the following findings of fact.

Applicant is a 52-year-old employee of a federal contractor. He also owns his own business. He was married in 1978 and divorced in 1991. He has two children from the marriage, born in 1983 and 1987. He remarried in 1992 and has one child born in 1995. Applicant completed a security clearance application (SCA) on May 21, 2009.

Applicant admitted he is indebted to the Internal Revenue Service (IRS) for federal tax liens listed in SOR ¶¶ 1.a, 1.b, 1.c, 1.d, and 1.e, filed in July 2008, May 2008, July 2007, April 2005, and January 2003, totaling approximately $175,688. In his response to the SOR, Applicant stated he is in negotiation with the IRS to satisfy the debts. He did not provide any evidence that he has paid or resolved these debts.

The debt in SOR ¶ 1.f ($437) is for a past-due mortgage payment on a balance of $36,106. In his answer to the SOR, Applicant stated this debt is “up to date and current.” He also stated the debt “will be paid up to date on June 10, [2010].”1 He did not provide any documentation to support that the debt is paid or up to date.

The debt in SOR ¶ 1.g ($3,485) is a credit card debt. Applicant admitted the debt in his answer and stated the balance owed is “$400 and will be paid in full on June 15, [2010].” Applicant provided a document from the collection company indicating a balance of $1,641.07 and offering to accept this amount as payment in full, if payment was received by May 28, 2010. There is a handwritten note at the bottom of the document, presumably written by Applicant, indicating that the settlement would be paid on June 15, [2010]. In his statement to the OPM investigator, Applicant denied this was his debt, claiming it belonged to his former spouse and she was responsible for it. In his answer to interrogatories, he indicated he placed a hold on the account and was paying- off the debt in installments. Applicant credit bureau report indicates that this is an “individual” account owned by him. He did not provide any documentation to support the debt is paid.2 The debts in SOR ¶¶ 1.hand 1.i ($83 and $309) are collection accounts. Applicant provided documentation the debts were paid on May 12, 2010, and May 17, 2010, respectively.3

Applicant did not disclose his delinquent federal income tax liens on his SCA. On August 6, 2009, Applicant was interviewed by an Office of Personnel Management (OPM) investigator. He expressed surprise and stated he had no knowledge about any of the federal taxes that were in arrears. He claimed he had a life-long problem of identity theft. He did recall that several years ago he received a notice from the IRS advising him of a large tax debt. He stated his wife contacted the IRS and resolved the issue. He advised the investigator that he was up-to-date on all of his federal taxes and that his current financial situation was good. In his answer to the SOR, Applicant stated: “I was not aware that these things existed on my credit report at the time of the original questionnaire.”4 In his answer to interrogatories Applicant stated: “We have since the interview found out the debt belongs to old taxes/penalties not paid.”5 No other explanation or information was provided.6

Applicant lived at the same residence from 2004 to the present. Prior to 2004, he lived at the same residence from 1997 to 2004. His former residence is on the same street as his present residence.7

POLICIES

When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the revised adjudicative guidelines (AG). In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which are 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, these guidelines are applied 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.” In reaching this decision, I have drawn only those conclusions that are reasonable, logical and based on the evidence contained in the record. Likewise, I have avoided drawing inferences grounded on mere speculation or conjecture.

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 applicant or proven by Department Counsel. . . .” The applicant has the ultimate burden of persuasion as to obtaining 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 protect or safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation as to potential, rather than actual, risk of compromise of classified information.

Section 7 of Executive Order 10865 provides that 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 conditions that could raise security concerns. I have considered all of the disqualifying conditions under AG ¶ 19 and the following are potentially applicable: (a) inability or unwillingness to satisfy debts; and

Applicant has seven delinquent debts totaling approximately $179,610. The debts date back to at least 2003 and they are not paid or resolved. I find there is sufficient evidence to raise these disqualifying conditions.

The guideline also includes conditions that could mitigate security concerns arising from financial difficulties. I have considered the following mitigating conditions under AG ¶ 20:

(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, or a death, divorce or separation), and the individual acted responsibly under the circumstances;

(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;

(d) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts; and

(e) the individual has a reasonable basis to dispute the legitimacy of the past-due debt which is the cause of the problem and provides documented proof to substantiate the basis of the dispute or provides evidence of actions to resolve the issue.

Applicant admits he owes all the SOR alleged debts. He paid the two debts in SOR ¶¶ 1.hand 1.i. The remaining debts are unpaid and unresolved. Applicant’s federal tax debts date back to 2003. Applicant had an opportunity to provide documentation that he paid or made payments towards the delinquent debts, but failed to do so. He has not provided information that the financial problems were beyond his control. He has not provided evidence that he received financial counseling, has made good-faith payments, except as noted, or that the problem is being resolved. Although he apparently disputed one debt that he stated belonged to his former spouse, the evidence is to the contrary, and he indicated he was going to pay it. Applicant did not provide evidence as to why he failed to pay his federal taxes and incurred tax liens imposed since 2003. I find none of the mitigating conditions apply. Guideline E, Personal Conduct

AG ¶ 15 expresses the security concern pertaining to personal conduct.

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. I have specifically considered

(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.

Applicant indicated to the OPM investigator that he was surprised he had federal tax liens. However, he was aware of a notice from the IRS several years ago about a large tax debt. He stated he believed his wife resolved it. Applicant’s tax liens date back to 2003, and each one is for a substantial amount. He has lived at the same residence since 2004. He claimed in his interview that he was up-to-date on all of his federal taxes. The liens are for $18,760, $46,223, $38,854, $31,681, and $40,170. It is common knowledge that the IRS sends many notices to taxpayers about discrepancies and delinquencies regarding their taxes. I have considered all of the statements made by Applicant to the OPM investigator. After considering the available evidence, I find Applicant’s statements that he was unaware he had any tax debts are not credible. I find he intentionally failed to disclose his tax liens. Applicant chose to have his case determined on the record, so I have not had the opportunity to ask him questions. He had an opportunity to explain how he accumulated numerous tax liens, but he failed to provide additional information. I find the above disqualifying condition applies.

The guideline also includes examples of conditions that could mitigate security concerns arising from personal conduct. I have considered the following mitigating conditions under AG ¶ 17:

(a) the individual made prompt, good-faith efforts to correct the omission, concealment, or falsification before being confronted with the facts; and

(c) the offense is so minor, or so much time has passed, or the behavior is so infrequent, or it happened under such unique circumstances that it is unlikely to recur and does not cast doubt on the individual’s reliability, trustworthiness, or good judgment. Applicant did not make a prompt, good-faith effort to correct his omission before being confronted with the facts. The omissions are serious and not minor, and cast doubt on Applicant’s reliability, trustworthiness, and good judgment. I have considered all of the evidence and conclude none of the mitigating conditions 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 the 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 Guidelines F and E, in my whole-person analysis. Some of the factors in AG ¶ 2(a) were addressed under that guideline, but some warrant additional comment. Applicant is 52 years old. He owes approximately $179,610 in delinquent federal taxes and other debts. He has not provided documentation he has paid or resolved these debts. In May 2010, he paid two small debts that had been in collection. He made assertions that certain debts were going to be paid by certain dates, but did not provide documents to support his assertions. He provided no explanation for how he accumulated over $175,000 in federal tax liens and failed to pay them. Overall, the record evidence leaves me with serious questions and doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant failed to meet his burden of persuasion and mitigate the security concerns arising under the guidelines for Financial Considerations and Personal Conduct.

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 Subparagraphs 1.h-1.i: For Applicant

Paragraph 2, Guideline E: AGAINST APPLICANT

Subparagraph 2.a: Against 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.

_____________________________ Carol G. Ricciardello Administrative Judge

FOOTNOTES

1 Item 4. 2 Item 4, 6, 7, 8, 9. 3 Item 4 4 Id. 5 Item 7. 6 Item 4, 6. 7 Item 5.