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ISCR Case 02-01664.h1 — CASE

ISCR Case 02-01664.h1denied

Case Headnote

ISCR Case No. 02-01664.h1

deniedApr 8, 2003· Hon. James A. Young· hearing

Summary

A 69-year-old defense contractor clerk was denied a security clearance under Guideline E (Personal Conduct) and Guideline F (Financial Considerations) due to unresolved tax debts and a history of financial issues. The Statement of Reasons detailed several financial obligations, including a $7,613 county tax claim, over $4,900 owed to the city for taxes, and a $922 state tax lien. Additionally, the applicant filed for bankruptcy in 1991.

A key allegation under Personal Conduct was that the applicant falsified material facts on his security clearance application by denying any debts over 180 days delinquent within the past seven years. While the applicant claimed a misunderstanding regarding his property taxes, he did not demonstrate a good faith effort to resolve his outstanding debts.

The denial was based on the applicant's significant back taxes and a pattern of not meeting financial obligations, which raised concerns about his reliability and trustworthiness. Although a mitigating condition related to personal conduct was applied, it was insufficient to overcome the disqualifying conditions, resulting in the denial of his security clearance.

Why the Applicant Was Denied

Applicant owes significant back taxes and has a history of not meeting financial obligations.
He failed to demonstrate a good faith effort to resolve his debts, indicating a lack of reliability and trustworthiness.

Conditions Referenced

Disqualifying

E2.A6.1.2.1raisedA History of Not Meeting Financial Obligations.
E2.A6.1.2.2raisedDeceptive or Illegal Financial Practices Such as Tax Evasion.
E2.A6.1.2.3raisedInability or Unwillingness to Satisfy Debts.

Mitigating

E2.A6.1.3.3rejectedConditions That Resulted in the Behavior Were Largely Beyond the Person's Control.Applicant's financial issues stemmed from the failure of his business, but he did not take action to resolve his current debts.

Key Rule Quoted

“"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.

Procedural Posture

SOR issuedNov 11, 2002
Answer filedDec 6, 2002
Hearing heldMar 14, 2003
Decision dateApr 8, 2003

Cite For

Financial Obligations and Their Impact on Security Clearance Eligibility
The Importance of Demonstrating Good Faith Efforts to Resolve Debts
The Relationship Between Personal Conduct and Trustworthiness in Security Clearance Determinations

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 for the applicant on the personal conduct concerns under Guideline E, concluding that the applicant did not deliberately omit or falsify information regarding debts on his security clearance application. The applicant was unaware of the delinquencies at the time of application, leading to a favorable ruling on the allegation.

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
2.a	Applicant falsified material facts on his security clearance application by denying that he had any debts in the past seven years that were over 180 days' delinquent.	For Applicant	Omission or Failure to DiscloseNOT DELIBERATE	Financial	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: denied

The applicant has significant financial concerns, including back taxes owed to the county and city, as well as a state tax lien. The judge found against the applicant on these financial issues, concluding that he failed to demonstrate a willingness to resolve his debts, which ultimately led to the denial of his security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant owes $7,613 on a county tax claim. $7,613	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	Applicant owes over $4,900 for taxes to the city. $4,900	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	Applicant has a state tax lien against him for $922. $922	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	Applicant filed for bankruptcy in 1991.	Against Applicant	Bankruptcy Filing	Admitted	(a) inability to satisfy debts	—	—
1.e	specific text not stated in this decision	For Applicant	Unspecified Financial	Unknown	—	—	—

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 8, 2003

In Re:

-----------

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

Applicant for Security Clearance

ISCR Case No. 02-01664

DECISION OF ADMINISTRATIVE JUDGE

JAMES A. YOUNG

SYNOPSIS

Applicant, a 69-year-old clerk for a defense contractor, owes back taxes on real estate. Although he believed the city or country had seized the property, when he was confronted with the fact that he still owned the property and was responsible for delinquent taxes, he declined to resolve the debt. Applicant failed to demonstrate it is in the national interest to grant him a clearance. Clearance is denied.

STATEMENT OF CASE

Applicant, an employee of a defense contractor, applied for a security clearance. The Defense Office of Hearings and Appeals (DOHA), the federal agency tasked with determining an applicant's eligibility for access to classified information, declined to grant Applicant a clearance. In accordance with the applicable Executive Order (1) and Department of Defense Directive, (2) DOHA issued a Statement of Reasons (SOR) on 11 November 2002 detailing why a clearance was not granted and recommending Applicant's case be referred to an administrative judge to determine whether the clearance should be denied/revoked. In the SOR, DOHA alleged Applicant failed to meet the financial considerations (Guideline F) and personal conduct (Guideline E) personnel security guidelines.

Applicant answered the SOR in writing on 6 December 2002. The case was assigned to me on 24 January 2003. On 14 March 2003, I convened a hearing to consider whether it is clearly consistent with the national interest to grant Applicant's security clearance. The Government's case consisted of six exhibits. Applicant testified on his own behalf but did not submit any exhibits. A transcript (Tr.) of the proceeding was received on 25 March 2003

Upon returning to my office after the hearing, I found a small file on my desk concerning Applicant. The file consisted of a letter from the Chief, Personnel Clearance Division of the Defense Security Service, Defense Industrial Security Clearance Office (DISCO), dated 9 January 2003, a copy of a newspaper article, and a letter from Applicant's security officer, 10 February 2003. The letter from DISCO notified the facility security officer that Applicant's interim security clearance had been withdrawn. The newspaper article reported that an individual from the town in which Applicant resides, with the same name, aged 70 years, had been arrested with a woman for disorderly conduct and committing a lewd act in public on 12 January 2003. The security officer forwarded the article to DISCO, but advised that he had no authority to corroborate whether Applicant was the person arrested. As these materials were not presented at the hearing and Applicant has not had an opportunity to comment on them, I have not considered them in determining Applicant's security clearance worthiness.

FINDINGS OF FACT

Applicant is a 69-year-old clerk for a defense contractor. Ex. 1 at 1; Tr. 40. In 1986 he opened a building company that put up modular homes. Ex. 3 at 3; Tr. 15. As the result of a canceled contract, Applicant ended up owning a lot with a damaged house on it. Applicant's business eventually failed and he was forced into bankruptcy in 1991. Ex. 3 at 3. Applicant admits owing $7,613 on a county tax claim, over $4,900 for taxes to the city, and has a state tax lien against him for $922, all on the lot he garnered from the canceled contract. Ex. 6 at 2. Applicant failed to disclose these debts in response to question 38 on his security clearance application dated 2 July 1999. Question 38 asked if Applicant had been over 180 days delinquent on any debt in the previous seven years. Ex. 1 at 6.

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. The President has restricted eligibility for access to classified information to United States citizens "whose personal and professional history affirmatively indicates loyalty to the United States, strength of character, trustworthiness, honesty, reliability, discretion, and sound judgment, as well as freedom from conflicting allegiances and potential for coercion, and willingness and ability to abide by regulations governing the use, handling, and protection of classified information." Exec. Or. 12968, Access to Classified Information § 3.1(b) (Aug. 4, 1995). Eligibility for a security clearance is predicated upon the applicant meeting the security guidelines contained in the Directive.

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." Exec. Or. 10865 § 2. See Exec. Or. 12968 § 3.1(b).

Initially, the Government must establish, by substantial 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. All that is required is proof of facts and circumstances that indicate an applicant is at risk for mishandling classified information, or that an applicant does not demonstrate the high degree of judgment, reliability, or trustworthiness required of persons handling classified information. ISCR Case No. 00-0277, 2001 DOHA LEXIS 335 at **6-8 (App. Bd. May 9, 2001). Once the Government has established a prima facie case by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. See Directive ¶ E3.1.15. An applicant "has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue his security clearance." ISCR Case No. 01-20700 at 3 (App. Bd. Dec. 19, 2002). "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 Exec. Or. 12968 § 3.1(b).

CONCLUSION

Applicant requested the hearing because he believed his loyalty to the U.S. had been attacked by DOHA's refusal to give him a security clearance. Tr. 44-45. He is almost 70 years old, served seven years in the armed forces, and argues that he would never compromise national security. The decision to deny an individual a security clearance is in no sense a determination as to the loyalty of the applicant. Exec. Or. 10865 § 7. It is merely an indication that the applicant has not met the strict guidelines the President and the Secretary of Defense have established for issuing a clearance.

Financial Considerations-Guideline F

In the SOR, DOHA alleged under Guideline F that Applicant was indebted to a collection company for back taxes owed to the county and city, that a state tax lien had been levied against him, and that he had filed for bankruptcy in 1991.

An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds. Directive ¶ E2.A6.1.1. The following applicable conditions could raise a security concern and may be disqualifying in this case:

(1) A history of not meeting financial obligations. Directive ¶ E2.A6.1. 2.1.

(2) Deceptive or illegal financial practices such as tax evasion. See Directive ¶ E2.A6.1.2.2.

(3) Inability or unwillingness to satisfy debts. Directive ¶ E2.A6.1.2.3.

The sole mitigating condition that is possibly applicable to this case is that the conditions that resulted in the behavior were largely beyond the person's control-the failure of his business. Directive ¶ E2.A6.1.3.3.

Through Applicant's admissions and the evidence presented at the hearing, the Government established by substantial evidence that Applicant has a history of not meeting his tax obligations and has been unwilling to satisfy his debts. It seems clear that Applicant's financial problems began with the failure of his business in 1991. As a result, he was forced to into bankruptcy with the resulting discharge of approximately $25,000 in debt. However, since then, Applicant appears to have managed his finances well. He pays his credit cards off each month, has assets of over $70,000, and has a positive monthly cash flow of at least $1,000 a month. But, the real estate tax debt remains, and Applicant appears willing to resolve that debt only on his own terms.

Applicant claims that in 1992, he paid the property tax, but told the tax assessor to take the property because he couldn't afford to keep paying the taxes on it. He insists the tax assessor said the city would probably do that, and he never heard from any of the taxing authorities until confronted with the tax delinquencies by the DSS agent. Tr. 10. He asserts he assumed the city took the land because he never heard from them again. The delinquent tax assessments are now in the hands of a collection agency. Applicant "figured" that if the collection agency sued him, he could force them to re- assess the property. He would then be willing to pay the difference between the value of the property and the amount he owes in taxes. Tr. 24. But, Applicant has no idea what the property is worth. Because of the cost, he declined to get the property privately appraised, and refuses to hire a lawyer to advise him on these matters until he is sued. Tr. 32-33, 38. He does not actually know whether he will be entitled or able to get a re-assessment of the property value.

An applicant has a right to contest the legitimacy of the debts he is alleged to have incurred. But, Applicant has not done so. He admits that since the city never seized his property, he still owns it and owes the taxes. Applicant also has right to contest the amount of the assessment and the amount of the debt. But, he has not done so before a tribunal authorized to decide these issues. He is unwilling to take any action unless and until the collection agency sues him. Applicant, not the creditor, has the duty to resolve the debts. Under the circumstances, Applicant's failure to make a good faith effort to resolve the debt mandates a finding against him.

DOHA alleges Applicant's 1991 bankruptcy as a security concern. Applicant successfully mitigated that concern by establishing that the bankruptcy was caused by matters beyond his control-the failure of his company. Since that time, Applicant has been able to live free of debt with the exception of the real estate taxes which he did not know he owed. Therefore, I find for Applicant on ¶ 1.e of the SOR.

Personal Conduct-Guideline E

In the SOR, DOHA alleged under Guideline E that Applicant falsified material facts on his security clearance application by denying that he had any debts in the past seven years that were over 180 days' delinquent. Under Guideline E, conduct involving questionable judgment, untrustworthiness, unreliability, lack of candor, dishonesty, or unwillingness to comply with rules and regulations could indicate that the person may not properly safeguard classified information. Directive ¶ E2.A5.l.l. The following applicable conditions could raise a security concern and could be disqualifying in this case:

The deliberate omission, concealment, or falsification of relevant and material 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. Directive ¶ E2.A5.1.2.2. None of the mitigating conditions listed under Guideline E appear to apply to this case.

The evidence of record establishes that Applicant was unaware of the delinquencies on his real estate taxes when he completed the security clearance application. Therefore, he did not deliberately omit, conceal, or falsify these debts. Finding is for Applicant.

FORMAL FINDINGS

Conclusions as to each of the allegations in the SOR as required by Executive Order No. 10865 § 3, ¶ 7 and the Directive ¶ E3.1.25, are as follows:

Paragraph 1. Guideline G: 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.: For Applicant

Paragraph 2. Guideline E: FOR APPLICANT

Subparagraph 2.a.: For Applicant

DECISION

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 or continue a security clearance for Applicant.

James A. Young

Administrative Judge

1. Exec. Or. 10865, Safeguarding Classified Information Within Industry (Feb. 20, 1960), as amended and modified.

2. Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (Jan. 2, 1992), as amended and modified.

FOOTNOTES

02-01664.h1 FOR GOVERNMENT Kathryn D. MacKinnon, Esq., Department Counsel FOR APPLICANT Pro Se file:///usr.osd.mil/...omputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/02-01664.h1.html[6/24/2021 10:46:18 AM] 02-01664.h1