ISCR Case 01-10227.h1

Case Headnote

ISCR Case No. 01-10227.h1

deniedFeb 14, 2002· Hon. Roger C. Wesley· hearing

Summary

A classified spray painter was denied a security clearance due to significant financial and personal conduct issues, as well as criminal conduct. The applicant failed to file federal tax returns for the years 1987 through 1989 and state tax returns for 1990 through 1994 and 1997. This resulted in accrued state tax obligations exceeding $4,500 for 1990, 1991, 1995, and 1996, and approximately $33,000 in federal tax debts that were discharged in bankruptcy in July 1999.

Further issues arose from the applicant's personal conduct. In November 1998, the applicant provided a false sworn statement to DSS, denying any state tax financial problems. The applicant also furnished information about 1995 and 1996 state income taxes only after being notified by the IRS that it had forwarded data from federal tax returns. The applicant repeatedly assured DSS of no state tax obligation problems and failed to provide documentation of filing delinquent state returns or addressing tax obligations through a payment plan.

The judge determined that the applicant failed to demonstrate the filing of any delinquent federal and state tax returns and provided false information regarding tax obligations. This conduct demonstrated a lack of reliability and trustworthiness, leading to the denial of the security clearance under Guidelines E (Personal Conduct), F (Financial Considerations), and J (Criminal Conduct).

Why the Applicant Was Denied

The applicant failed to file federal tax returns for 1987-1989 and state tax returns for 1990-1994 and 1997.
The applicant accumulated over $4,500 in state tax debts and approximately $33,000 in federal tax obligations, which were not discharged in bankruptcy.
The applicant provided false statements to DSS regarding his tax obligations and failed to follow through on promises to resolve his tax issues.

Conditions Referenced

Disqualifying

DC 1raisedA History of Not Meeting Financial Obligations.
DC 3raisedDeliberately Providing False or Misleading Information Concerning Relevant and Material Matters to an Investigator.
DC 5raisedA Pattern of Dishonesty or Rule Violations.

Key Rule Quoted

“A taxpayer's wilful failure to file federal and state income tax returns (as here) constitutes criminal conduct of a misdemeanor nature under both the federal and State statutory schemes, punishable by fine and imprisonment.”
— See Sec. 7203 of Title 28 (U.S.C.A.) and State's Sec. 58.1-348, Code of State Ann.

Procedural Posture

SOR issuedMay 9, 2001
Answer filedOct 23, 2001
Hearing heldJan 16, 2002
Decision dateFeb 14, 2002

Cite For

Failure to File Tax Returns as a Disqualifying Condition Under Guideline J
Misrepresentation of Financial Obligations as a Disqualifying Condition Under Guideline E
Lack of Mitigating Conditions in Cases of Financial Irresponsibility and Dishonesty.

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

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
2.a–2.b	2 sub-charges — specific text not stated in this decision (against the applicant).	Against Applicant		—		—	—	—

Allegation

Finding

Conduct

Concealed Issue

Response

Disqualifying (¶16)

Mitigating applied (¶17)

Mitigation

2.a–2.b

2 sub-charges — specific text not stated in this decision (against the applicant).

Against Applicant

—

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
3.a	specific text not stated in this decision	For Applicant	Tax Filing Failure	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
3.b	failed to pay his accrued state tax obligations for the tax years of 1990, 1991, 1995 and 1996, totaling in excess of $4,500.00 $4,500	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
3.c	accrued federal tax debts discharged in bankruptcy in July 1999 (i.e., debts totaling approximately $33,000.00) $33,000	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
3.d–3.e	2 sub-charges — specific text not stated in this decision (against the applicant).	Against Applicant			—	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

3.a

specific text not stated in this decision

For Applicant

Tax Filing Failure

Unknown

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

3.b

failed to pay his accrued state tax obligations for the tax years of 1990, 1991, 1995 and 1996, totaling in excess of $4,500.00

$4,500

Against Applicant

Tax Unpaid

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

3.c

accrued federal tax debts discharged in bankruptcy in July 1999 (i.e., debts totaling approximately $33,000.00)

$33,000

Against Applicant

Tax Unpaid

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

3.d–3.e

2 sub-charges — specific text not stated in this decision (against the applicant).

Against Applicant

—

¶	Allegation	Finding	Offense	Criminal disposition	Response	Disqualifying (¶31)	Mitigating applied (¶32)	Mitigation
1.a	Failed to file federal tax returns for the tax years of 1987 through 1989.	Against Applicant	Unspecified Criminal Conduct	Conduct No Charge	Admitted	(a) pattern of minor offenses casting doubt on judgment/reliability (b) evidence of criminal conduct, regardless of charge or conviction	—	—
1.b	Failed to file state tax returns for the tax years of 1990 through 1994 and 1997.	Against Applicant	Unspecified Criminal Conduct	Conduct No Charge	Admitted	(a) pattern of minor offenses casting doubt on judgment/reliability (b) evidence of criminal conduct, regardless of charge or conviction	—	—
1.c	Failed to pay accrued state tax obligations for the tax years of 1990, 1991, 1995, and 1996, totaling in excess of $4,500.00.	Against Applicant	Unspecified Criminal Conduct	Conduct No Charge	Admitted	(a) pattern of minor offenses casting doubt on judgment/reliability (b) evidence of criminal conduct, regardless of charge or conviction	—	—
1.d	Had his accrued federal tax debts discharged in bankruptcy in July 1999, totaling approximately $33,000.00.	Against Applicant	Unspecified Criminal Conduct	Conduct No Charge	Admitted	(a) pattern of minor offenses casting doubt on judgment/reliability (b) evidence of criminal conduct, regardless of charge or conviction	—	—
1.e	Falsified his signed, sworn statement to DSS in November 1998 by falsely denying any state tax financial problems.	Against Applicant	Unspecified Criminal Conduct	Conduct No Charge	Denied	(a) pattern of minor offenses casting doubt on judgment/reliability (b) evidence of criminal conduct, regardless of charge or conviction	—	—
1.f	Furnished information about his state income taxes for the years 1995 and 1996 only after being notified by the IRS that it had forwarded data from his federal tax returns.	Against Applicant	Unspecified Criminal Conduct	Conduct No Charge	Denied	(a) pattern of minor offenses casting doubt on judgment/reliability (b) evidence of criminal conduct, regardless of charge or conviction	—	—
1.g	Repeatedly assured DSS that he never had any problems with any state tax obligations.	Against Applicant	Unspecified Criminal Conduct	Conduct No Charge	Denied	(a) pattern of minor offenses casting doubt on judgment/reliability (b) evidence of criminal conduct, regardless of charge or conviction	—	—
1.h	Failed to provide documentation of ever following through on filing his delinquent state returns or addressing his tax obligations through a payment plan.	Against Applicant	Unspecified Criminal Conduct	Conduct No Charge	Denied	(a) pattern of minor offenses casting doubt on judgment/reliability (b) evidence of criminal conduct, regardless of charge or conviction	—	—
1.i	Failed to demonstrate that he filed any of his covered delinquent federal and state tax returns.	Against Applicant	Unspecified Criminal Conduct	Conduct No Charge	Denied	(a) pattern of minor offenses casting doubt on judgment/reliability (b) evidence of criminal conduct, regardless of charge or conviction	—	—

Allegation

Finding

Offense

Criminal disposition

Response

Disqualifying (¶31)

Mitigating applied (¶32)

Mitigation

1.a

Failed to file federal tax returns for the tax years of 1987 through 1989.

Against Applicant

Unspecified Criminal Conduct

Conduct No Charge

Admitted

(a) pattern of minor offenses casting doubt on judgment/reliability

(b) evidence of criminal conduct, regardless of charge or conviction

—

1.b

Failed to file state tax returns for the tax years of 1990 through 1994 and 1997.

Against Applicant

Unspecified Criminal Conduct

Conduct No Charge

Admitted

(a) pattern of minor offenses casting doubt on judgment/reliability

(b) evidence of criminal conduct, regardless of charge or conviction

—

1.c

Failed to pay accrued state tax obligations for the tax years of 1990, 1991, 1995, and 1996, totaling in excess of $4,500.00.

Against Applicant

Unspecified Criminal Conduct

Conduct No Charge

Admitted

(a) pattern of minor offenses casting doubt on judgment/reliability

(b) evidence of criminal conduct, regardless of charge or conviction

—

1.d

Had his accrued federal tax debts discharged in bankruptcy in July 1999, totaling approximately $33,000.00.

Against Applicant

Unspecified Criminal Conduct

Conduct No Charge

Admitted

(a) pattern of minor offenses casting doubt on judgment/reliability

(b) evidence of criminal conduct, regardless of charge or conviction

—

1.e

Falsified his signed, sworn statement to DSS in November 1998 by falsely denying any state tax financial problems.

Against Applicant

Unspecified Criminal Conduct

Conduct No Charge

Denied

(a) pattern of minor offenses casting doubt on judgment/reliability

(b) evidence of criminal conduct, regardless of charge or conviction

—

1.f

Furnished information about his state income taxes for the years 1995 and 1996 only after being notified by the IRS that it had forwarded data from his federal tax returns.

Against Applicant

Unspecified Criminal Conduct

Conduct No Charge

Denied

(a) pattern of minor offenses casting doubt on judgment/reliability

(b) evidence of criminal conduct, regardless of charge or conviction

—

1.g

Repeatedly assured DSS that he never had any problems with any state tax obligations.

Against Applicant

Unspecified Criminal Conduct

Conduct No Charge

Denied

(a) pattern of minor offenses casting doubt on judgment/reliability

(b) evidence of criminal conduct, regardless of charge or conviction

—

1.h

Failed to provide documentation of ever following through on filing his delinquent state returns or addressing his tax obligations through a payment plan.

Against Applicant

Unspecified Criminal Conduct

Conduct No Charge

Denied

(a) pattern of minor offenses casting doubt on judgment/reliability

(b) evidence of criminal conduct, regardless of charge or conviction

—

1.i

Failed to demonstrate that he filed any of his covered delinquent federal and state tax returns.

Against Applicant

Unspecified Criminal Conduct

Conduct No Charge

Denied

(a) pattern of minor offenses casting doubt on judgment/reliability

(b) evidence of criminal conduct, regardless of charge or conviction

—

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Case Profile

Summary

Why the Applicant Was Denied

Conditions Referenced

Key Rule Quoted

Procedural Posture

Cite For

Full decision

DEFENSE OFFICE OF HEARINGS AND APPEALS

HEARING

APPEARANCES

STATEMENT OF CASE

POLICIES

CONCLUSION

FORMAL FINDINGS

DECISION

FOOTNOTES