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ISCR Case 02-15217.h1 — CASE

ISCR Case 02-15217.h1denied

Case Headnote

ISCR Case No. 02-15217.h1

deniedJun 9, 2004· Hon. James A. Young· hearing

Summary

A 52-year-old federal contractor driver was denied a security clearance under Guideline F (Financial Considerations) due to a history of delinquent debts. The Statement of Reasons detailed several outstanding obligations, including a federal tax lien filed in March 1995 for $8,874 owed for tax year 1990. Additionally, the applicant owed federal income taxes for 1989, 1991, 1992, 1998, and 1999, with a disputed IRS figure of $25,000.

Further financial concerns included a $523 bad debt owed to a bank and a delinquent account of over $12,000 with a truck company, which was turned over for collection in 1999. Despite the applicant reporting approximately $990 in disposable income monthly after expenses, these debts remained unresolved.

While mitigating conditions were considered, the clearance was denied because the applicant failed to provide evidence of substantial progress toward resolving his debts or that they were fully resolved. The decision concluded that the applicant demonstrated a history of not meeting financial obligations and was unable or unwilling to satisfy them.

Why the Applicant Was Denied

The applicant failed to produce evidence demonstrating that his debts were resolved or that he was making substantial progress towards resolution.
The applicant has a history of not meeting financial obligations and is unable or unwilling to satisfy his debts.

Conditions Referenced

Disqualifying

E2.A6.1.2.1raisedFinancial Considerations - History of Not Meeting Financial Obligations
E2.A6.1.2.3raisedFinancial Considerations - Unable or Unwilling to Satisfy Debts

Mitigating

E2.A6.1.3.4rejectedFinancial Considerations - Receiving Counseling for Financial ProblemsThe applicant failed to produce evidence on the current status of his debts.
E2.A6.1.3.6rejectedFinancial Considerations - Good-faith Effort to Resolve DebtsThe applicant did not provide evidence of progress in resolving his IRS debts.

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 issuedMay 28, 2003
Answer filedUndated
Hearing heldJan 6, 2004Canceled due to applicant's wife's illness.
Decision dateJun 9, 2004

Cite For

Denial of Security Clearance Due to Unresolved Financial Obligations
Failure to Demonstrate Progress in Debt Resolution
Impact of Financial Issues on 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 F · descriptive summary of a decided case

Posture: Decision on RecordDecided: denied

The judge found against the applicant on multiple financial allegations, including federal tax liens and delinquent debts. Despite the applicant's claims of working with a CPA and credit counseling service, he failed to provide evidence of debt resolution, leading to the denial of his security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	The IRS filed a federal tax lien filed against Applicant on 24 March 1995 for a debt of $8,874 owed for tax year 1990. $8,874	Against Applicant	Tax Unpaid	Denied	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.b	Applicant also owes federal income taxes for 1989, 1991, 1992, 1998, and 1999, but the $25,000 IRS figure is in dispute. $25,000	Against Applicant	Tax Unpaid	Denied	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.c	Applicant owes a bank for a bad debt of $523. $523	Against Applicant	Unspecified Financial	Denied	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.d	Applicant owes a truck company for a delinquent account of more than $12,000 that was turned over for collection in 1999. $12,000	Against Applicant	Unspecified Financial	Denied	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.e	Applicant has approximately $990 left over each month after expenses.	Against Applicant	Unspecified Financial	Unknown	(b) unwillingness to satisfy debts regardless of ability (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: June 9, 2004

In re:

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

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

Applicant for Security Clearance

ISCR Case No. 02-15217

DECISION OF ADMINISTRATIVE JUDGE

JAMES A. YOUNG

SYNOPSIS

Applicant failed to mitigate the security concerns raised by his delinquent debts. Although he disputed the existence of some debts and the amounts of others, and was working with a certified public accountant and a credit counseling service, he produced no evidence to demonstrate the debts were resolved or he was making substantial progress towards such resolution. Clearance is denied.

STATEMENT OF CASE

The Defense Office of Hearings and Appeals (DOHA) declined to grant or continue a security clearance for Applicant. On 28 May 2003, DOHA issued a Statement of Reasons (1) (SOR) detailing the basis for its decision-security concerns raised under Guideline F (Financial Considerations) of the Directive. Applicant answered the SOR in an undated writing and requested a hearing before an administrative judge. A hearing was set for 6 January 2004. Applicant's wife took ill on the way to the hearing and it was canceled. Applicant withdrew his request for a hearing and elected to have his case decided on the written record. Item 5. Department Counsel submitted the Government's written case on 22 January 2004. A complete copy of the file of relevant material (FORM) was provided to Applicant, and he was afforded an opportunity to file objections and submit material to refute, extenuate, or mitigate the disqualifying conditions. Applicant received the FORM on 25 February 2004. (2) He did not submit any response to the FORM within the 30-day period allowed. The case was assigned to me on 10 May 2004.

FINDINGS OF FACT

Applicant is a 52-year-old driver for a federal contractor. He has been married to his current wife since 1991. Item 6 at 1, 2, 4. He served in the U.S. Army from 1967 until 1970, during which time he held a secret clearance. Id. at 6, 10.

The IRS filed a federal tax lien filed against Applicant on 24 March 1995 for a debt of $8,874 owed for tax year 1990. The lien was filed in both the real property and personal property records, but it is really only one lien. Item 9 at 2. Applicant also owes federal income taxes for 1989, 1991, 1992, 1998, and 1999, but the $25,000 IRS figure is in dispute. Item 7 at 1; Answer. The IRS admits the total figure may not be accurate, but is unable to correct it because Applicant does not have the appropriate records. Item 9 at 2. As of February 2002, the IRS was willing to consider an offer in compromise for settlement of all of the couple's tax deficiencies. Id. Applicant hired a certified public accountant (CPA) to help him negotiate a resolution with the IRS. Item 3 at 3.

In November 1997, Applicant leased a tractor (semi cab) for $1,500 per month. He paid as agreed until December 1998, when he turned the tractor back to the company because he "no longer wanted to use it anymore." Ex. 7 at 1. The company claims Applicant owes more than $12,000 for unpaid services. Applicant disputes that he owes this debt. Id.; Item 8 at 5-6; Item 3 at 2. Applicant owes a bank for a bad debt of $523. Ex. 7 at 1; Ex. 8 at 4. As of February 2002, Applicant had been participating in a debt management program with a credit counseling service to handle payments of four accounts. He, his wife, and apparently his mother had made timely payments of $436 a month for approximately 18 months to the program. Ex. 10. Applicant admitted that his and his wife's monthly income exceeds their monthly expenses by approximately $990. Ex. 11 at 5.

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.

Enclosure 2 of the Directive sets forth personal security guidelines, as well as the

disqualifying conditions (DC) and mitigating conditions (MC) under each guideline. In evaluating the security worthiness of an applicant, the administrative judge must also assess the adjudicative process factors listed in ¶ 6.3 of the Directive. The decision to deny an individual a security clearance is not necessarily a determination as to the loyalty of the applicant. See 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.

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. "[T]he Directive presumes there is a nexus or rational connection between proven conduct under any of the Criteria listed therein and an applicant's security suitability." ISCR Case No. 95-0611 at 2 (App. Bd. May 2 1996) (quoting DISCR Case No. 92-1106 (App. Bd. Oct. 7, 1993)).

Once the Government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. ISCR Case No. 01-20700 at 3 (App. Bd. Dec 19, 2002); 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). "[S]ecurity clearance determinations should err, if they must, on the side of denials." Egan, 484 U.S. at 531; see Directive ¶ E2.2.2.

CONCLUSION

In the SOR, DOHA alleged Applicant has two federal tax liens filed against him by the IRS (¶ 1.a.), owes taxes and penalties for underpayment of his federal income taxes for tax years 1989, 1991, 1992, 1998, and 1999 (¶ 1.b.), is indebted to a bank for a delinquent account of $523 that was charged off in 1996 (¶ 1.c.), is indebted to a truck company for a delinquent account of more than $12,000 that was turned over for collection in 1999 (¶ 1.d.), and, with his wife, has approximately $990 left over each month after expenses (¶ 1.e.). An applicant who is financially overextended is at risk of having to engage in illegal acts to generate funds. Directive ¶ E2.A6.1.1.

The Government established by substantial evidence and Applicant's admissions each of the allegations contained in the SOR. Applicant has a history of not meeting his financial obligations (DC E2.A6.1.2.1) and is unable or unwilling to satisfy his debts (DC E2.A6.1.2.3.). Applicant denies his income currently exceeds his expenses by $990 a month because he and his wife have started to pay on debts they owe. Item 3 at 2. Applicant denies the debt set forth in SOR ¶ 1.c., claiming the creditor has no record of him ever holding an account with them. But in his 7 February 2002 statement to an agent of the Defense Security Service, Applicant claimed that debt was being paid as part of his debt management program with a credit counseling service. Ex. 7 at 1. Applicant has received or is receiving counseling for his financial problems (see MC E2.A6.1.3.4.) and was making a good-faith effort to resolve his IRS debts through the services of a CPA (see MC E2.A6.1.3.6.). But he failed to produce any evidence on the current status of those debts since his Answer to the SOR in June 2003. At that time, none of the alleged debts had been resolved. Therefore, neither MC E2.A6.1.3.4. or MC E2.A6.1.3.6. apply to Applicant's case. Under these circumstances, I am unable to find for Applicant.

FORMAL FINDINGS

The following are my conclusions as to each allegation in the SOR:

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

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. Clearance is denied.

James A. Young

Administrative Judge

1. Exec. Or. 10865, Safeguarding Classified Information within Industry (Feb. 20, 1960), as amended and modified, and Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (Jan. 2, 1992), as amended and modified.

2. Applicant's receipt reads 25 March 2004, but DOHA received the receipt on 1 March 2004.

FOOTNOTES

02-15217.h1 FOR GOVERNMENT Erin C. Hogan, Esq., Deputy Chief Department Counsel FOR APPLICANT Pro Se file:///usr.osd.mil/...omputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/02-15217.h1.html[6/24/2021 10:57:56 AM] 02-15217.h1