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ISCR Case 23-01971 · CASE

ISCR Case 23-01971denied

Case Headnote

ISCR Case No. 23-01971

deniedAug 1, 2024· Hon. Richard A. Cefola· hearing

Synopsis

The applicant, a 50-year-old defense contractor employee, faced security concerns under Guideline F due to significant financial issues, including delinquent federal income tax filings and over $51,000 in past-due debts. Despite addressing some tax deficiencies, the applicant failed to demonstrate that his financial problems were unlikely to recur, leading to a denial of his security clearance.

Why the Applicant Was Denied

Applicant admitted all allegations in the SOR.
Applicant has ongoing financial problems, including over $51,000 in past-due debts.
Mitigation under AG ¶ 20 was not established due to lack of evidence of rehabilitation or resolution of financial issues.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(b)raisedUnwillingness to Satisfy Debts Regardless of the Ability to Do So
AG ¶ 19(c)raisedA History of Not Meeting Financial Obligations
AG ¶ 19(f)raisedFailure to File or Fraudulently Filing Annual Federal, State, or Local Income Tax Returns or Failure to Pay Annual Federal, State, or Local Income Tax as Required

Mitigating

AG ¶ 20(a)rejectedBehavior Happened so Long Ago, Was so Infrequent, or Occurred Under Such Circumstances That It Is Unlikely to Recur
AG ¶ 20(b)rejectedConditions That Resulted in the Financial Problem Were Largely Beyond the Person's Control
AG ¶ 20(c)rejectedReceived or Is Receiving Financial Counseling
AG ¶ 20(d)rejectedInitiated and Is Adhering to a Good-faith Effort to Repay Overdue Creditors
AG ¶ 20(g)appliedMade Arrangements with the Appropriate Tax Authority to File or Pay the Amount Owed

Key Rule Quoted

“The protection of the national security is the paramount consideration.”

Procedural Posture

SOR issuedOct 19, 2023
Answer filedDec 16, 2023
Hearing heldApr 3, 2024
Decision dateAug 1, 2024

Cite For

Ongoing Financial Issues Under Guideline F
Failure to Demonstrate Rehabilitation or Resolution of Debts
Impact of Financial Distress on National Security 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 that the applicant had unresolved financial issues, including significant past-due credit card and consumer debts totaling approximately $51,290. Although the applicant had made efforts to address his tax delinquency, the ongoing financial problems led to a decision against granting the security clearance.

1.a Through the auspices of a tax preparer; and more recently through his own on-line initiative, Applicant has filed all the alleged 2016~2020 delinquent Federal income tax returns.
Finding: For Applicant
Type: Tax Filing Failure
Response: Admitted
Disqualifying (¶19):
(a) inability to satisfy debts
(c) a history of not meeting financial obligations
(f) failure to file / fraudulent filing of tax returns or unpaid tax
Mitigating applied (¶20): —
Mitigation: —
1.c Applicant admits nine past-due credit card and other consumer debts to seven different creditors totaling about $51,290.
$51,290
Finding: Against Applicant
Type: Unspecified Financial
Response: Admitted
Disqualifying (¶19):
(a) inability to satisfy debts
(b) unwillingness to satisfy debts regardless of ability
(c) a history of not meeting financial obligations
Mitigating applied (¶20): —
Mitigation: —
1.l Applicant has paid the admitted past-due debt to Creditor L as evidenced by documentation.
Finding: For Applicant
Type: Unspecified Financial
Response: Admitted
Disqualifying (¶19): —
Mitigating applied (¶20): —
Mitigation: —

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Through the auspices of a tax preparer; and more recently through his own on-line initiative, Applicant has filed all the alleged 2016~2020 delinquent Federal income tax returns.	For Applicant	Tax Filing Failure	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (f) failure to file / fraudulent filing of tax returns or unpaid tax	—	—
1.c	Applicant admits nine past-due credit card and other consumer debts to seven different creditors totaling about $51,290. $51,290	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.l	Applicant has paid the admitted past-due debt to Creditor L as evidenced by documentation.	For Applicant	Unspecified Financial	Admitted	—	—	—

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

-z. O· i!:Z~ M 0 "" >- "tr 00 ______________ ______________ DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS "' In the matter of: Applicant for Security Clearance ) ) ) ) ) ISCR Case No. 23-01971 Appearances For Government: Adrienne Driskill, Esq., Department Counsel For Applicant: Pro Se 08/01/2024 Decision CEFOLA, Richard A., Administrative Judge Statement of the Case On October 19, 2023, in accordance with DoD Directive 5220.6, as amended (Directive), the Department of Defense issued Applicant a Statement of Reasons (SOR) alleging facts that raise security concerns under Guideline F (Financial Considerations). The SOR further informed Applicant that, based on information available to the government, DoD adjudicators could not make the preliminary affirmative finding it is clearly consistent with the national interest to grant or continue Applicant's security clearance. Applicant answered the SOR on December 16, 2023, and requested a hearing before an administrative judge. (Answer.) The case was assigned to me on February 6, 2024. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on February 9, 2024, scheduling the hearing for April 3, 2024. The hearing was convened as scheduled. The Government offered Exhibits (GXs) 1 through 4, which were admitted into evidence. Applicant testified on his own behalf and called two witnesses. Applicant offered nine documents, which I marked Applicant's Exhibits (AppXs) A through I, and admitted into evidence. The record was left open until May 4, 2024, for receipt of additional documentation. Applicant offered nothing further. DOHA received the transcript of the hearing (TR) on April 15, 2024. 1

Findings of Fact Applicant admitted all the allegations in the SOR. After a thorough and careful review of the pleadings, exhibits, and testimony, I make the following findings of fact. Applicant is a 50-year-old employee of a defense contractor. He has been employed with the defense contractor since 2022. He is not married, and has no children. (TR at page 25 line 24 to page 26 line 25, and GX 1 at page 5.) Applicant attributes his current financial situation to periods of underemployment. (TR at page 45 line 11 to page 48 line 11.) Guideline F - Financial Considerations 1.a. Through the auspices of a tax preparer; and more recently through his own on-line initiative, Applicant has filed all the alleged 2016~2020 delinquent Federal income tax returns. This is evidenced by documentation from the Internal Revenue Service (IRS). (TR at page 27 line 12 to page 40 line 6, and AppXs A and B.) 1.b. Applicant has agreed to make monthly payments of $322 to the IRS, towards the alleged $21,516 tax delinquency, which has been greatly reduced with refunds from his 2016~2022 Federal income tax filings being credited towards his delinquency. This is evidenced by documentation from the IRS. (TR at page 40 line 7 to page 44 line 19, and AppXs A, B and H.) 1.c.~1.k Applicant admits nine past-due credit card and other consumer debts to seven different creditors totaling about $51,290. (TR at page 51 line 2 to page 52 line 10.) Despite having a month to do so, Applicant has submitted nothing further in this regard. 1.l. Applicant has paid the admitted past-due debt to Creditor L as evidenced by documentation. (TR at page 52 lines 11~20, and AppX D.) Policies When evaluating an applicant's national security eligibility, the administrative judge must consider the adjudicative guidelines (AG). In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which are to be used in evaluating an applicant's national security eligibility. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, administrative judges apply the guidelines in conjunction with the factors listed in AG ¶ 2 describing the adjudicative process. The administrative judge's overarching adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶ 2(a), the entire process is a conscientious scrutiny of a number of variables known as the whole-person concept. The administrative judge must consider all available, reliable information about the person, past and present, favorable and unfavorable, in making a decision. 2

The protection of the national security is the paramount consideration. AG ¶ 2(b) requires that "[a]ny doubt concerning personnel being considered for national security eligibility will be resolved in favor of the national security." In reaching this decision, I have drawn only those conclusions that are reasonable, logical, and based on the evidence contained in the record. Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Directive ¶ E3.1.15 states the "applicant is responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by the applicant or proven by Department Counsel, and has the ultimate burden of persuasion as to obtaining a favorable clearance decision." A person who applies for access to classified information seeks to enter into a fiduciary relationship with the Government predicated upon trust and confidence. This relationship transcends normal duty hours and endures throughout off-duty hours. The Government reposes a high degree of trust and confidence in individuals to whom it grants access to classified information. Decisions include, by necessity, consideration of the possible risk the applicant may deliberately or inadvertently fail to protect or safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation as to potential, rather than actual, risk of compromise of classified information. Section 7 of Executive Order (EO) 10865 provides that adverse decisions shall be "in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned." See also EO 12968, Section 3.1 (b) (listing multiple prerequisites for access to classified or sensitive information). Analysis Guideline F - Financial Considerations The security concern relating to the guideline for Financial Considerations is set out in AG ¶ 18: Failure to live within one's means, satisfy debts, and meet financial obligations may indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which can raise questions about an individual's reliability, trustworthiness, and ability to protect classified or sensitive information. Financial distress can also be caused or exacerbated by, and thus can be a possible indicator of, other issues of personnel security concern such as excessive gambling, mental health conditions, substance misuse, or alcohol abuse or dependence. An individual who is financially overextended is at greater risk of having to engage in illegal or otherwise questionable acts to generate funds. Affluence that cannot be explained by known sources of income is also a security concern insofar as it may result from criminal activity, including espionage.

The guideline notes several conditions that could raise security concerns under AG ¶ 19. Four are potentially applicable in this case: (a) inability to satisfy debts; (b) unwillingness to satisfy debts regardless of the ability to do so; (c) a history of not meeting financial obligations; and (f) failure to file or fraudulently filing annual Federal, state, or local income tax returns or failure to pay annual Federal, state, or local income tax as required. Applicant had delinquent Federal income tax filings and monies owed to the Federal Government. He also has substantial past-due indebtedness. The evidence is sufficient to raise these disqualifying conditions. AG ¶ 20 provides conditions that could mitigate security concerns. I considered all of the mitigating conditions under AG ¶ 20 including: (a) the behavior happened so long ago, was so infrequent, or occurred under such circumstances that it is unlikely to recur and does not cast doubt on the individual's current reliability, trustworthiness, or good judgment; (b) the conditions that resulted in the financial problem were largely beyond the per

son's control (e.g., loss of employment, a business downturn, unexpected medical emergency, a death, divorce or separation, clear victimization by

predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances; (c) the individual has received or is receiving financial counseling for the problem from a legitimate and credible source, such as a non-profit credit counseling service, and there are clear indications that the problem is being resolved or is under control; (d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts; and (g) the individual has made arrangements with the appropriate tax authority to file or pay the amount owed and is in compliance with those arrangements. Applicant's financial problems are ongoing. Although he has addressed his Federal income tax deficiencies, Applicant has yet to address over $51,000 of past-due credit card and consumer indebtedness. He has not demonstrated that financial problems are unlikely to recur. Mitigation under AG ¶ 20 has not been established. Whole-Person Concept 4

____________________ Under the whole-person concept, the administrative judge must evaluate an applicant's eligibility for a security clearance by considering the totality of the applicant's conduct and all relevant circumstances. The administrative judge should consider the nine adjudicative process factors listed at AG ¶ 2(d): (1) the nature, extent, and seriousness of the conduct; (2) the circumstances surrounding the conduct, to include knowledgeable participation; (3) the frequency and recency of the conduct; (4) the individual's age and maturity at the time of the conduct; (5) the extent to which participation is voluntary; (6) the presence or absence of rehabilitation and other permanent 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. Under AG ¶ 2(c), the ultimate determination of whether to grant national security eligibility for a security clearance must be an overall commonsense judgment based upon careful consideration of the guidelines and the whole-person concept. Applicant has not demonstrated rehabilitation, or reduced the potential for pressure and duress. Overall, the record evidence leaves me with questions and doubts as to Applicant's eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant failed to mitigate the Financial Considerations security concerns. Formal Findings Formal findings for or against Applicant on the allegations set forth in the SOR, as required by ¶ E3.1.25 of the Directive, are: Paragraph 1, Guideline F: AGAINST APPLICANT Subparagraphs 1.a. and 1.b.: For Applicant Subparagraph 1.c. through 1.k: Against Applicant Subparagraph 1.l: For Applicant Conclusion 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 Applicant's national security eligibility for a security clearance. Eligibility for access to classified information is denied. Richard A. Cefola Administrative Judge 5