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ISCR Case 01-22001.h1 — CASE

ISCR Case 01-22001.h1denied

Case Headnote

ISCR Case No. 01-22001.h1

deniedAug 6, 2004· Hon. Charles D. Ablard· hearing

Summary

A 69-year-old security guard for a defense contractor was denied a security clearance due to significant financial issues and personal conduct concerns. The applicant failed to file tax returns for six years between 1989 and 1994 while working overseas, and for an additional five years between 1996 and 2000 after returning to the U.S. This resulted in approximately $163,000 in delinquent debts to the IRS, leading to two tax liens filed against him in 1996.

The applicant also filed for bankruptcy in February 1995, which was dismissed in December 1995 due to a missed payment. Furthermore, he falsified his security clearance application (SF 86) in February 2000 by deliberately failing to disclose these tax liens and delinquent debts. While he did pay two small, unrelated debts in 2001, these efforts were deemed insufficient to mitigate the broader financial irresponsibility and lack of candor.

The judge concluded that the applicant's financial issues and the falsification of his application raised serious security concerns. Consequently, the security clearance was DENIED under Guideline E (Personal Conduct) and Guideline F (Financial Considerations).

Why the Applicant Was Denied

Applicant failed to file tax returns for six years while working overseas and for five additional years after returning to the U.S.
Applicant incurred approximately $163,000 in delinquent debts to the IRS, which he did not adequately address in a timely manner.
Applicant falsified answers on his SF 86 by failing to disclose tax liens and delinquent debts.

Conditions Referenced

Disqualifying

E2.A6.1.2.1raisedHistory of Not Meeting Financial Obligations
E2.A6.1.2.3raisedEvidence of Inability or Unwillingness to Satisfy Debts
E2.A5.1.1raisedLack of Candor

Key Rule Quoted

“"[N]o one has a 'right' to a security clearance."”
— Department of the Navy v. Egan, 484 U.S. 518, 528 (1988)

Procedural Posture

SOR issuedSep 3, 2003
Answer filedOct 15, 2003Applicant elected to have the case decided on the written record.
Hearing held—
Decision dateAug 6, 2004

Cite For

Denial Based on Failure to File Tax Returns Under Guideline F
Lack of Candor in Security Clearance Application Under Guideline E
Significant Financial Issues Impacting Security Clearance Eligibility

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 all allegations under Guideline E, citing a lack of candor regarding his financial obligations. The applicant failed to disclose tax liens and delinquent debts on his security clearance application, which the judge determined were significant concerns that were not mitigated.

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
2.a	Applicant falsified answers to questions on his security clearance application (SF 86) dated February 2000 by deliberately failing to acknowledge the tax liens and his delinquent debts.	Against Applicant	Lack of Candor in InterviewFOUND DELIBERATE	Financial	Denied	—	—	—
2.b–2.c	2 sub-charges — specific text not stated in this decision (against the applicant). (low confidence)	Against Applicant		—		—	—	—

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 multiple financial concerns under Guideline F, including significant delinquent debts to the IRS and a history of failing to file tax returns. Despite some debts being resolved, the applicant's overall financial situation and lack of candor led to a denial of the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant incurred approximately $163,000.00 in delinquent debts to the Internal Revenue Service (IRS). $163,000	Against Applicant	Tax Unpaid	Unknown	—	—	—
1.b	Applicant did not file tax returns for six years between 1989 and 1994 while working overseas for a private company.	Against Applicant	Tax Filing Failure	Unknown	(b) unwillingness to satisfy debts regardless of ability	—	—
1.c	After Applicant returned to the U.S. he failed to file tax returns for five more years between 1996 and 2000.	Against Applicant	Tax Filing Failure	Unknown	(b) unwillingness to satisfy debts regardless of ability	—	—
1.d	Applicant filed for bankruptcy in February 1995, but it was dismissed by the court in December 1995, for failure to make a required payment.	Against Applicant	Bankruptcy Filing	Unknown	(b) unwillingness to satisfy debts regardless of ability	—	—
1.e	Two tax liens were filed against Applicant by the IRS in 1996.	Against Applicant	Tax Unpaid	Unknown	—	—	—
1.f	Applicant paid two small debts in 2001 that were unrelated to the IRS problems.	Against Applicant	Unspecified Financial	Unknown	—	—	—
1.g–1.k	5 sub-charges — specific text not stated in this decision (3 against, 2 for the applicant). (low confidence)	Mixed			—	—	—

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: August 6, 2004

In Re:

-----------------------

SSN: -----------

Applicant for Security Clearance

ISCR Case No. 01-22001

DECISION OF ADMINISTRATIVE JUDGE

CHARLES D. ABLARD

SYNOPSIS

Applicant is a 69-year-old employee of a defense contractor who works as a security guard. He did not file tax returns for six years between 1989 and 1994 while working overseas for a private company. After Applicant returned to the U.S. he failed to file tax returns for five more years between 1996 and 2000. Applicant filed for bankruptcy in February 1995, but it was dismissed by the court in December 1995, for failure to make a required payment. Two tax liens were filed against Applicant by the IRS in 1996. At one time the IRS claimed he owed $163,000.00. Applicant falsified answers to questions on his SF 86 dated February 2000 by failing to acknowledge the tax liens and his delinquent debts. Clearance is denied.

STATEMENT OF CASE

On September 3, 2003, the Defense Office of Hearings and Appeals (DOHA), pursuant to Executive Order 10865, Safeguarding Classified Information Within Industry, as amended and modified, and Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (Directive), dated January 2, 1992, as amended and modified, issued a Statement of Reasons (SOR) to 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 Applicant. DOHA recommended the case be referred to an administrative judge to determine whether a clearance should be granted, continued, denied, or revoked.

In a sworn written statement dated October 15, 2003, Applicant responded to the allegations set forth in the SOR, and elected to have his case decided on the written record in lieu of a hearing. Department Counsel submitted the Government's written case on March 22, 2004. A complete copy of the file of relevant material (FORM) was provided to the Applicant, and he was afforded an opportunity to file objections and submit material in refutation, extenuation, or mitigation. Applicant responded with additional information on May 12, 2004 and the case was assigned to me on May 20, 2004.

FINDINGS OF FACT

After a complete and thorough review of the information in the record, and upon due consideration of same, I make the following additional findings of fact:

Applicant is a 69-year-old employee of a defense contractor who works as a security guard. He incurred approximately $163,000.00 in delinquent debts to the Internal Revenue Service (IRS). At the time the SOR was prepared these debts had been reduced to $4,000.00 and a payment plan had been placed in effect. Applicant did not file tax returns for six years between 1989 and 1994 while he was working overseas for a private company.

After Applicant returned to the U.S. he failed to file tax returns for five more years between 1996 and 2000. Applicant filed for bankruptcy in February1995, but it was dismissed by the court in December 1995, for failure to make a required payment. Two tax liens were filed against Applicant by the IRS in 1996.

Applicant paid two small debts in 2001 that were unrelated to the IRS problems(SOR ¶ 1.gand 1.h).

Applicant falsified answers to questions on his security clearance application (SF 86) dated February 2000, by deliberately failing to acknowledge the tax liens (Question 36) and his delinquent debts (Questions 38 and 39).

POLICIES

"[N]o one has a 'right' to a security clearance." Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). As Commander in Chief, the President has "the authority to control access to information bearing on national security and to determine whether an individual is sufficiently trustworthy to occupy a position that will give that person access to such information." Id. at 527.

An evaluation of whether the applicant meets the security guidelines includes consideration of the following factors: (1) the nature, extent, and seriousness of the conduct; (2) the circumstances surrounding the conduct; (3) the frequency and recency of the conduct; (4) the individual's age and maturity at the time of the conduct; (5) the voluntariness of participation; (6) the presence or absence of rehabilitation and other 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. Directive, ¶ E2.2.1. Security clearances are granted only when "it is clearly consistent with the national interest to do so." Executive Order No. 10865 § 2. See Executive Order No. 12968 § 3.1(b).

Initially, the Government must establish, by something less than a preponderance of the evidence, that conditions exist in the personal or professional history of the applicant which disqualify, or may disqualify, the applicant from being eligible for access to classified information See Egan, 484 U.S. at 531. The applicant then bears the burden of demonstrating that it is clearly consistent with the national interest to grant or continue the applicant's clearance. "Any doubt as to whether access to classified information is clearly consistent with national security will be resolved in favor of the national security." Directive, ¶ E2.2.2. "[S]ecurity clearance determinations should err, if they must, on the side of denials." Egan, 484 U.S. at 531. See Executive Order No. 12968 § 3.1(b)

CONCLUSION

Upon consideration of all the facts in evidence, and after application of all appropriate legal precepts, factors, and conditions above, I conclude the following with respect to all allegations set forth in the SOR.

Applicant's delinquent debts prompted the allegation in the SOR of violation of Guideline F in that an individual who is financially overextended is at risk of having to engage in illegal acts

to generate funds. (E2.A6.1.1.) Conditions that could raise a security concern and may be disqualifying include a history of not meeting financial obligations (E2.A6.1.2.1.) and evidence of

inability or unwillingness to satisfy debts. (E2.A6.1.2.3.) Mitigating Conditions (MC) include the fact that the person has initiated a good faith effort to repay overdue creditors or otherwise resolve debts. (E2.A6.1.3.6.)

Applicant was exempt from payment of federal taxes while he was working overseas because the amount he was paid was below the threshold amount that required payment of tax. However, he was not exempt from filing tax returns. Upon his return to the U.S. he was obliged to pay taxes but neither paid nor filed returns for five more years. He avers that he was confused by the status of claims by the IRS so did not file. His filing for bankruptcy was based on the erroneous belief that this would resolve his tax problems. He blames this on bad advice. Applicant has since received advice from a private tax counselor with assistance from the Taxpayer Advocate office of the IRS and has resolved his difficulties with IRS (Encl. 1 to Answer).

While his failure to file when working overseas might be understandable, it is not adequately explained and mitigated as to why he failed to file for five years after his return to the U.S. Although he was involved in a protracted dispute with IRS that he appears to have eventually won on the financial aspects of the dispute, this did not relieve him of the obligation to file returns for the years in question.

The remaining IRS debt is not sufficiently large that it cannot be resolved with Applicant's current income and he is doing so under the IRS plan. However, even though the IRS debts have largely been resolved, I conclude that mitigating factors are not applicable because of the failure to file tax returns for so many years.

The allegations under Guideline E concerning lack of candor (E2.A5.1.1.) is based on the fact that he failed to acknowledge his tax lien and delinquent debts on his SF 86. Even though he felt the liens were in error, he did know of them and should have reported them as well as the debts that the IRS believed were delinquent at the time of the filing of the SF 86. No mitigating factors are applicable.

Based on the evidence of record, including Applicant's admissions, the Government has established reasons to deny him a security clearance because of criminal conduct. Having established such reasons, the Applicant has the burden to establish security suitability through evidence which refutes, mitigates, or extenuates the disqualification and demonstrates that it is clearly consistent with the national interest to grant a security clearance. ISCR Case No. 99-0424 (App. Bd. Feb. 8, 2001).

As the policy prescribes, the burden shifted to the Applicant to show that the mitigating conditions are applicable to him.

In all adjudications the protection of our national security is of paramount concern. Persons who have access to classified information have an overriding responsibility for the security concerns of the nation. The objective of the security clearance process is the fair-minded, commonsense assessment of a person's trustworthiness and fitness for access to classified information.

After considering all the evidence in its totality and as an integrated whole to focus on the whole person of Applicant, I conclude that it is not clearly consistent with the national interest to grant clearance to Applicant.

FORMAL FINDINGS

Formal findings as required by the Directive (Par. E3.1.25) are as follows:

Paragraph 1. Guideline F: AGAINST APPLICANT

Subparagraph 1.a.: Against Applicant

Subparagraph 1.b.: Against Applicant

Subparagraph 1.c.: Against Applicant

Subparagraph 1.d.: Against Applicant Subparagraph 1.e.: Against Applicant

Subparagraph 1.f.: Against Applicant

Subparagraph 1.g.: For Applicant

Subparagraph 1.h.: For Applicant

Subparagraph 1.i.: Against Applicant

Subparagraph 1.j.: Against Applicant

Subparagraph 1.k.: Against Applicant

Paragraph 2.Guideline E: AGAINST APPLICANT

Subparagraph 2.a.: Against Applicant

Subparagraph 2.b.: Against Applicant

Subparagraph 2.c.: Against Applicant

DECISION

After full consideration of all the facts and documents presented by the record in this case, it is not clearly consistent with the national interest to grant or continue a security clearance for Applicant. Clearance is denied.

Charles D. Ablard

Administrative Judge

FOOTNOTES

01-22001.h1 FOR GOVERNMENT Catherine Engstrom, Esq., Department Counsel FOR APPLICANT Pro Se file:///usr.osd.mil/...yComputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/01-22001.h1.html[7/2/2021 2:26:51 PM] 01-22001.h1