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ISCR Case 01-16579.h1 — CASE

ISCR Case 01-16579.h1granted

Case Headnote

ISCR Case No. 01-16579.h1

grantedApr 21, 2003· Hon. Richard A. Cefola· hearing

Summary

A 54-year-old defense contractor was granted a security clearance despite concerns under Guideline E (Personal Conduct) and Guideline F (Financial Considerations). The Statement of Reasons (SOR) alleged the Applicant failed to file federal income tax returns for 2000 and 2001, and cited two instances of past due indebtedness.

Specifically, the Applicant had incurred a $939 debt from co-signing a car loan for his son, which has since been satisfied. Additionally, he owed approximately $4,511 to the IRS due to an incorrect 1993 tax return related to cashing out a retirement fund; this tax debt has also been satisfied.

The judge found the Applicant's denial of the tax filing allegations credible, noting the original allegation was based on an uncorroborated statement made before the tax returns were due. With all past debts satisfied and the tax filing allegations dismissed, the security clearance was granted.

Why the Applicant Prevailed

The Applicant has no past due indebtedness and has satisfied all debts.
The judge found the Applicant's denial of failing to file tax returns credible, dismissing the allegations as uncorroborated.

Conditions Referenced

Disqualifying

F.1.araisedA History of Not Meeting Financial Obligations
F.2.araisedInability or Unwillingness to Satisfy Debts

Mitigating

F.6appliedThe Individual Initiated a Good Faith Effort to Repay Overdue Creditors or Otherwise Resolved Debts
E.2.aappliedThe Individual Has Not Engaged in Any Conduct That Raises Security Concerns

Key Rule Quoted

“An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds.”

Procedural Posture

SOR issuedDec 19, 2002
Answer filedJan 13, 2003
Hearing heldN/ADetermined on a written record.
Decision dateApr 21, 2003

Cite For

Credibility of Applicant's Denial of Tax Filing Allegations
Satisfaction of Past Debts as a Mitigating Factor
Good Faith Efforts in Resolving Financial Issues Under Guideline F

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: granted

The judge found no credible evidence to support the allegation that the Applicant failed to file his Federal Income Tax returns for tax years 2000 and 2001. The Applicant's denial of the allegation was deemed credible, leading to a favorable outcome for him under Guideline E.

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
2.a	It is alleged that the Applicant failed to file his Federal Income Tax returns for tax years 2000 and 2001. This Allegation is allegedly based on the Applicant's November 2000 sworn statement (Form at page 4, and GX 6 at page 2). There is absolutely no basis for basing this allegation on an uncorroborated statement made in November of 2000, when the 2000 tax return was not due for another four months, and tax year 2001 had not even begun. Furthermore, the Applicant denies this allegations in both his Answer to the SOR (GX 3 at page 1, and Response at pages 2 and 12).	For Applicant	Questionable Judgment General	—	Denied	—	—	—

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: granted

The Applicant had past due debts totaling approximately $5,400, primarily due to co-signing a car loan for his son and an IRS tax debt. However, he has since satisfied all debts and demonstrated that his financial situation is currently stable, leading to the granting of his security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	The Applicant co-signed on a car loan for his son. His son fell behind in the payments; and as such, the Applicant incurred $939 in past due indebtedness. This past due debt has been satisfied. $939	For Applicant	Auto Loan Debt	Admitted	—	(g) arrangements made with the tax authority; in compliance	Documented Debt Paid in Full
1.b	The Applicant had been indebted to the Internal Revenue Service (IRS) in the amount of about $4,511 in past due indebtedness. The Applicant "cashed out" a retirement fund in 1993, but the IRS found that his 1993 return was incorrect; and as a result, he incurred the back taxes. This tax debt has been satisfied. $4,511	For Applicant	Tax Unpaid	Admitted	—	(g) arrangements made with the tax authority; in compliance	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

DATE: April 21, 2003 In Re: ---------------------- SSN: ----------- Applicant for Security Clearance ISCR Case No. 01-16579 DECISION OF ADMINISTRATIVE JUDGE RICHARD A. CEFOLA

SYNOPSIS The Applicant has no past due indebtedness. He avers, credibly, that he had filed his Federal Income Tax returns for tax years 2000 and 2001. Clearance is granted.

STATEMENT OF CASE

On December 19, 2002, the Defense Office of Hearings and Appeals (DOHA), pursuant to Executive Order 10865 and Department of Defense Directive 5220.6 (Directive), dated January 2, 1992, issued a Statement of Reasons (SOR) to the Applicant, which detailed reasons why DOHA could not make the preliminary affirmative finding under the Directive that it is clearly consistent with the national interest to grant or continue a security clearance for the Applicant and recommended referral to an Administrative Judge to determine whether a clearance should be denied or revoked. Applicant filed an Answer to the SOR on January 13, 2003. Applicant elected to have this case determined on a written record in lieu of a hearing. Department Counsel submitted the Government's File of Relevant aterial (FORM) on February 5, 2003. Applicant was instructed to submit objections or information in rebuttal, extenuation or mitigation within 30 days of receipt of the FORM. Applicant received his copy on February 14, 2003, and Applicant's initial Response was received on March 21, 2003. The case was received by the undersigned for resolution that same day, March 21, 2003. An additional Response, to which the Government had no objection, was received on April 9, 2003. The issues raised here are whether the Applicant's past financial difficulties and alleged personal conduct militate against the granting of a security clearance.

FINDINGS OF FACT

The following Findings of Fact are based on Applicant's Answer to the SOR, the File of Relevant Material and Applicant's Response. The Applicant is 54 years of age, and is employed by a defense contractor who seeks a security clearance on behalf of the Applicant. Guideline F - Financial Considerations 1.a. The Applicant co-signed on a car loan for his son (Government Exhibit (GX) 7 at page 2). His son fell behind in the payments; and as such, the Applicant incurred $939 in past due indebtedness (id). This past due debt has been satisfied (Applicant's second Response (Response) at page 5). 1.b. The Applicant had been indebted to the Internal Revenue Service (IRS) in the amount of about $4,511 in past due indebtedness (GX 7 at page 1). The Applicant "cashed out" a retirement fund in 1993, but the IRS found that his 1993 return was incorrect; and as a result, he incurred the back taxes (id). This tax debt has been satisfied (Response at page 12). Guideline E - Personal Conduct 2.a. It is alleged that the Applicant failed to file his Federal Income Tax returns for tax years 2000 and 2001. This Allegation is allegedly based on the Applicant's November 2000 sworn statement (Form at page 4, and GX 6 at page 2). There is absolutely no basis for basing this allegation on an uncorroborated statement made in November of 2000, when the 2000 tax return was not due for another four months, and tax year 2001 had not even begun. Furthermore, the Applicant denies this allegations in both his Answer to the SOR (GX 3 at page 1, and Response at pages 2 and 12). Mitigation The Applicant a has held a security clearance for 26 years, and attributes his past IRS difficulties to a "bad marriage" (GX 3 at page 2). His most recent credit report shows that all of his accounts are "in good standing" (Response at page 4).

POLICIES

Enclosure 2 and Section E.2.2. of the 1992 Directive set forth both policy factors, and conditions that could raise or mitigate a security concern; which must be given consideration in making security clearance determinations. The conditions should be followed in every case according to the pertinent criterion, however, the conditions are neither automatically determinative of the decision in any case, nor can they supersede the Administrative Judge's reliance on his own common sense. Because each security clearance case presents its own unique facts and circumstances, it should not be assumed that these conditions exhaust the realm of human experience, or apply equally in every case. Conditions most pertinent to evaluation of this case are: Financial Considerations Conditions that could raise a security concern and may be disqualifying include: 1. A history of not meeting financial obligations; 3. Inability or unwillingness to satisfy debts; Condition that could mitigate security concerns include: 6. The individual initiated a good faith effort to repay overdue creditors or otherwise resolved debts. Personal Conduct Conditions that could raise a security concern and may be disqualifying include: None As set forth in the Directive, each clearance decision must be a fair and impartial common sense determination based upon consideration of all the relevant and material information and the pertinent criteria and adjudication policy in enclosure 2, including as appropriate: a. Nature, extent, and seriousness of the conduct, and surrounding circumstances. b. Frequency and recency of the conduct. c. Age and maturity of the applicant. d. Motivation of the applicant, and the extent to which the conduct was negligent, willful, voluntary, or undertaken with knowledge of the consequence involved. e. Absence or presence of rehabilitation. f. Probability that circumstances or conduct will continue or recur in the future. The Administrative Judge, however, can only draw those inferences or conclusions that have a reasonable and logical basis in the evidence of record. The Judge cannot draw inferences or conclusions based on evidence which is speculative or conjectural in nature. The Government must make out a case under Guideline F (financial considerations), which establishes doubt about a person's judgment, reliability and trustworthiness. While a rational connection, or nexus, must be shown between an applicant's adverse conduct and his ability to effectively safeguard classified information, with respect to sufficiency of proof of a rational connection, objective or direct evidence is not required. Then, the Applicant must remove that doubt with substantial evidence in refutation, explanation, mitigation or extenuation, which demonstrates that the past adverse conduct is unlikely to be repeated, and that the Applicant presently qualifies for a security clearance. An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds. The Government must be able to place a high degree of confidence in a security clearance holder to abide by all security rules and regulations at all times and in all places.

CONCLUSION

Due to the malfeasance of his son, and as a result of the dissolution of his marriage, the Applicant incurred about $5,400 in past due indebtedness. Most recently, however, the Applicant has paid all of his past due indebtedness, thus satisfying the last mitigating condition under Financial Considerations. Furthermore, his most recent credit report shows that all of his accounts are in good standing. I therefore conclude that his past financial difficulties are not of present security significance. As to the Applicant's alleged Personal Conduct, I can find none. The evidence upon which it is alleged he failed to file Federal Income Tax returns for tax years 2000 and 2001, is suspect, at best. He denies the allegations, and I find his denial to be credible. This allegation is also found in the Applicant's favor. Considering all the evidence, the Applicant has rebutted the Government's case regarding his past financial difficulties and alleged personal conduct. The Applicant has thus met the mitigating conditions of Guidelines E and F, and of Section E.2.2. of the Directive. Accordingly, he has met his ultimate burden of persuasion under Guidelines E and F.

FORMAL FINDINGS

Formal Findings required by paragraph 25 of Enclosure 3 of the Directive are: Paragraph 1: FOR THE APPLICANT a. For the Applicant. b. For the Applicant. Paragraph 2: FOR THE APPLICANT a. For the Applicant. Factual support and reasons for the foregoing are set forth in FINDINGS OF FACT and CONCLUSIONS, supra.

DECISION

In light of the circumstances presented by the record in this case, it is clearly consistent with the national interest to grant or continue a security clearance for the Applicant. Richard A. Cefola Administrative Judge

FOOTNOTES

01-16579.h1 FOR GOVERNMENT Jennifer I. Campbell, Department Counsel FOR APPLICANT Pro Se file:///usr.osd.mil/...yComputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/01-16579.h1.html[7/2/2021 2:23:29 PM] 01-16579.h1