CASEClearance Adjudication Search EngineCASE

Loading case…

ISCR Case 01-21243.h1 — CASE

ISCR Case 01-21243.h1denied

Case Headnote

ISCR Case No. 01-21243.h1

deniedJul 1, 2003· Hon. Richard A. Cefola· hearing

Summary

A 63-year-old retired attorney, employed by a defense contractor, was denied a security clearance under Guideline F (Financial Considerations) due to significant past due indebtedness. The primary concern was an outstanding debt to the Internal Revenue Service (IRS) exceeding $53,000. The Applicant had filed for bankruptcy twice, in 1998 and 2000, to prevent federal income tax levies, and while the IRS was not actively pursuing collection, penalty and interest continued to accrue.

Additionally, the Applicant disputed a $115 debt to an alleged creditor, which he and his spouse had no recollection of and had been unable to contact. However, the decision focused on the larger pattern of financial irresponsibility.

The denial was based on the Applicant's history of not meeting financial obligations and an inability or unwillingness to satisfy debts, specifically the ongoing IRS indebtedness. These financial difficulties were determined to be a current security concern, leading to the denial of the clearance.

Why the Applicant Was Denied

The Applicant has a history of not meeting financial obligations due to significant tax debt.
The Applicant demonstrated an inability or unwillingness to satisfy debts, as evidenced by ongoing IRS indebtedness.
The Applicant's financial difficulties were deemed of current security significance.

Conditions Referenced

Disqualifying

F.1appliedA History of Not Meeting Financial Obligations
F.3appliedInability or Unwillingness to Satisfy Debts

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 issuedMar 12, 2003
Answer filedApr 14, 2003
Hearing heldJun 11, 2003
Decision dateJul 1, 2003

Cite For

Financial Difficulties as a Disqualifying Factor Under Guideline F
The Impact of Unresolved Tax Debts on Security Clearance Eligibility
The Significance of an Applicant's Willingness to Address Financial Obligations

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 F · descriptive summary of a decided case

Posture: Decision on RecordDecided: denied

The Applicant has significant financial concerns, including a disputed tax debt to the IRS exceeding $53,000 and a small disputed debt of $115. The judge found against the Applicant on the majority of the financial allegations, concluding that the Applicant's financial difficulties raised security concerns that were not mitigated.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	The Applicant has past due indebtedness to the Internal Revenue Service (IRS) in excess of $53,000. $53,365	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	The Applicant filed bankruptcy petitions in 1998 and again in 2000 to prevent Federal Income Tax levies.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	The IRS has chosen not to pursue any collection activity. Penalty and interest continue to accrue.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	The Applicant credibly disputes a $115 debt to an alleged creditor, that, despite his best effort, he has been unable to contact. $115	For Applicant	Unspecified Financial	Denied	—	—	—
1.e	The Applicant and his spouse have absolutely no recollection of this alleged past due debt.	Against Applicant	Unspecified Financial	Denied	—	—	—
1.f	The Applicant has a history of not meeting financial obligations and an inability or unwillingness to satisfy debts.	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—

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: July 1, 2003 In Re: -------------------------- SSN: ----------- Applicant for Security Clearance ISCR Case No. 01-21243 DECISION OF ADMINISTRATIVE JUDGE RICHARD A. CEFOLA

SYNOPSIS The Applicant has past due indebtedness to the Internal Revenue Service (IRS) in excess of $53,000. The Applicant disputes this tax debt, and filed bankruptcy petitions in 1998 and again in 2000 to prevent Federal Income Tax levies. Because of the Applicant's current annual income of about $37,000, "the IRS has chosen not to pursue any collection activity. Penalty and interest continue to accrue," however. The Applicant's current financial situation is of current security significance; and as such, clearance is denied.

STATEMENT OF CASE

On March 12, 2003, 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 the 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 April 14, 2003. The case was received by the undersigned on May 5, 2003. A notice of hearing was issued on May 20, 2003, and the case was heard on June 11, 2003. The Government submitted documentary evidence and called one witness to testify. Testimony was also taken from the Applicant. The transcript was received on June 26, 2003. The issue raised here is whether the Applicant's current financial difficulties militate against the granting of a security clearance. [The Applicant admits the three bankruptcy filings, 1.a.~1.c., but denies the three alleged debts, 1.d.~1.f.]

FINDINGS OF FACT

The following Findings of Fact are based on Applicant's Answer to the SOR, the documents and the live testimony. The Applicant is 63 years of age, is retired from practicing law for 35 years, and is employed by a defense contractor who seeks a security clearance on behalf of the Applicant. After a complete and thorough review of the evidence in the record, and upon due consideration of the same, I make the following additional findings of fact. Guideline F - Financial Considerations 1.a.~1.e. While the Applicant practiced law, he also had a computer business (Transcript (TR) at page 34 line 1 to page 37 line 23). He ceased lawyering; and when he filed his Federal Income Tax return for tax year 1994, the IRS disallowed the business deductions he claimed on his personal income tax return (TR at page 19 line 21 to page 21 line 14, at page 27 line 15 to page 28 line 13, at page 34 line 1 to page 37 line 23, at page 40 lines 12–21, and page 43 line 24 to page 44 line 25). The Applicant disputes the IRS claim, but the IRS does not agree with his position (id). The State followed up on the IRS claim, and collected $6,630 from the Applicant by levying his wages (TR at page 28 line 22 to page 30 line 4, and Applicant's Exhibit (AppX) B at page 2). He currently owes nothing to the State (id). The Applicant filed for bankruptcy protection in 1998 and again in 2000 in an effort to stop potential Federal Income Tax levies (TR at page 30 line 20 to page 32 line 13, at page 33 lines 15–21, at page 37 line 24 to page 38 line 25, and Government Exhibits (GX) 3–5). As of June 16, 2003, the IRS's position is the following: With penalty and interest, computed through June 30, 2003, the current balance due on tax year 1994 is $53,365.10. At present time the IRS has elected not to pursue any collection activity. Penalty and interest continue to accrue on this debt and will continue to do so until paid in full (AppX C at page 2, emphasis supplied). 1.f. The Applicant credibly disputes a $115 debt to an alleged creditor, that, despite his best effort, he has been unable to contact (TR at page 25 line 1 to page 27 line 14, and AppX C at page 3). He and his spouse have absolutely no recollection of this alleged past due debt (id). Mitigation The Applicant submits "Points and Authorities In Opposition" to the Government's position disputing the three alleged debts (AppX A).

POLICIES

Enclosure 2 and Section E2.2. of the 1992 Directive set forth both policy factors and conditions that could raise or mitigate a security concern, and which must be given binding 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; Conditions that could mitigate security concerns 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, 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

The Applicant owes in excess of $53,000 in past due indebtedness to the IRS. He disputes this debt which was incurred in 1995; and as the Applicant earns only about $37,000 each year, the IRS has "elected not to pursue any collection activity" at present. However, as the Applicant is financially unwilling or unable to do anything to address this financial responsibility, disqualifying conditions 1 and 3 are applicable in this case, as the Applicant has a "history of" and an "inability" to satisfy this significant past due debt. His current financial difficulties are clearly of concern to the Government; and as such, are of present security significance. Guideline F is therefore found against the Applicant. Considering all the evidence, the Applicant has not rebutted the Government's case regarding his financial difficulties. The Applicant has thus not met the mitigating conditions of Guideline F, and of Section E2.2. of the Directive. Accordingly, he has not met his ultimate burden of persuasion under Guideline F.

FORMAL FINDINGS

Formal Findings required by paragraph 25 of Enclosure 3 of the Directive are: Paragraph 1: AGAINST THE APPLICANT a. Against the Applicant. b. Against the Applicant. c. Against the Applicant. d. For the Applicant. e. Against the Applicant. f. 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 not clearly consistent with the national interest to grant or continue a security clearance for the Applicant. Richard A. Cefola Administrative Judge

FOOTNOTES

01-21243.h1 FOR GOVERNMENT Jennifer I. Campbell, Esquire, Department Counsel FOR APPLICANT Pro Se file:///usr.osd.mil/...yComputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/01-21243.h1.html[7/2/2021 2:26:19 PM] 01-21243.h1