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ISCR Case 18-00799 · CASE

ISCR Case 18-00799denied

Case Headnote

ISCR Case No. 18-00799

deniedNov 19, 2018· Hon. Darlene Lokey Anderson· hearing

Synopsis

Darlene D. Lokey Anderson, the Administrative Judge, denied the security clearance application of a 66-year-old female applicant under Guideline F due to significant financial issues, including over $90,000 in delinquent debts and failure to file tax returns. The applicant admitted to the debts but failed to demonstrate responsible efforts to resolve them, raising concerns about her reliability and trustworthiness.

Why the Applicant Was Denied

Applicant has over $90,000 in delinquent debts, including federal and state tax liabilities.
Applicant failed to file tax returns for multiple years and did not demonstrate sound judgment in managing her finances.
Most debts remain unresolved, and the applicant has not shown diligent efforts to address her financial obligations.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability or Unwillingness to Satisfy Debts
AG ¶ 19(b)raisedUnwillingness to Satisfy Debt 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(b)rejectedConditions That Resulted in the Financial Problem Were Largely Beyond the Person’s ControlThe applicant did not demonstrate that her financial issues were beyond her control or that she acted responsibly.
AG ¶ 20(g)rejectedMade Arrangements with the Appropriate Tax Authority to File or Pay the Amount Owed and Is in Compliance with Those ArrangementsThe applicant has not shown compliance with any arrangements to resolve her tax debts.

Key Rule Quoted

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

Procedural Posture

SOR issuedApr 26, 2018
Answer filedMay 7, 2018
Hearing heldSep 24, 2018
Decision dateNov 19, 2018

Cite For

Denial of Security Clearance Due to Significant Financial Issues Under Guideline F
Failure to Demonstrate Responsible Financial Management
Impact of Unresolved Debts on Reliability and Trustworthiness

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 multiple financial concerns under Guideline F, including significant tax liabilities and delinquent debts totaling over $90,000. Despite the applicant's claims of making payments and seeking assistance, the judge concluded that the applicant had not demonstrated responsible financial management or sufficient efforts to resolve her debts, resulting in a denial of her security clearance.

1.a Applicant owes about $90,000 in back Federal and state taxes.
$90,000
Finding: Against Applicant
Type: Tax Unpaid
Response: Admitted
Disqualifying (¶19):
(a) inability to satisfy debts
(f) failure to file / fraudulent filing of tax returns or unpaid tax
Mitigating applied (¶20): —
Mitigation: —
1.b Failed to file income tax returns for tax years 2013, 2014, and 2015.
Finding: Against Applicant
Type: Tax Filing Failure
Response: Admitted
Disqualifying (¶19):
(a) inability to satisfy debts
(f) failure to file / fraudulent filing of tax returns or unpaid tax
Mitigating applied (¶20): —
Mitigation: —
1.c A delinquent credit card was charged off in the approximate amount of $1,796.
$1,796
Finding: Against Applicant
Type: Credit Card Debt
Response: Admitted
Disqualifying (¶19):
(a) inability to satisfy debts
(c) a history of not meeting financial obligations
Mitigating applied (¶20): —
Mitigation: —
1.d A delinquent debt owed to a department store was charged off in the approximate amount of $1,310.
$1,310
Finding: Against Applicant
Type: Unspecified Financial
Response: Admitted
Disqualifying (¶19):
(a) inability to satisfy debts
(c) a history of not meeting financial obligations
Mitigating applied (¶20): —
Mitigation: —
1.e A delinquent debt owed to a department store was charged off in the approximate amount of $267.
$267
Finding: Against Applicant
Type: Unspecified Financial
Response: Admitted
Disqualifying (¶19):
(a) inability to satisfy debts
(c) a history of not meeting financial obligations
Mitigating applied (¶20): —
Mitigation: —
1.f A delinquent medical debt was charged off in the approximate amount of $182.
$182
Finding: Against Applicant
Type: Medical Debt
Response: Admitted
Disqualifying (¶19):
(a) inability to satisfy debts
(c) a history of not meeting financial obligations
Mitigating applied (¶20): —
Mitigation: —
1.g A delinquent medical debt in the approximate amount of $118 remains owing.
$118
Finding: Against Applicant
Type: Medical Debt
Response: Admitted
Disqualifying (¶19):
(a) inability to satisfy debts
(c) a history of not meeting financial obligations
Mitigating applied (¶20): —
Mitigation: —
1.h A delinquent Federal tax lien was entered against her in 2017 in the approximate amount of $77,364.
$77,364
Finding: Against Applicant
Type: Tax Unpaid
Response: Admitted
Disqualifying (¶19):
(a) inability to satisfy debts
(f) failure to file / fraudulent filing of tax returns or unpaid tax
Mitigating applied (¶20): —
Mitigation: —
1.i A state tax lien was entered against her in 2009 in the approximate amount of $15,609.
$15,609
Finding: Against Applicant
Type: Tax Unpaid
Response: Admitted
Disqualifying (¶19):
(a) inability to satisfy debts
(f) failure to file / fraudulent filing of tax returns or unpaid tax
Mitigating applied (¶20): —
Mitigation: —
1.j A Federal tax lien was entered against her in 2016 in the approximate amount of $3,534.
$3,534
Finding: Against Applicant
Type: Tax Unpaid
Response: Admitted
Disqualifying (¶19):
(a) inability to satisfy debts
(f) failure to file / fraudulent filing of tax returns or unpaid tax
Mitigating applied (¶20): —
Mitigation: —
1.k A delinquent medical account was placed for collection in the approximate amount of $150.
$150
Finding: Against Applicant
Type: Medical Debt
Response: Admitted
Disqualifying (¶19):
(a) inability to satisfy debts
(c) a history of not meeting financial obligations
Mitigating applied (¶20): —
Mitigation: —

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant owes about $90,000 in back Federal and state taxes. $90,000	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (f) failure to file / fraudulent filing of tax returns or unpaid tax	—	—
1.b	Failed to file income tax returns for tax years 2013, 2014, and 2015.	Against Applicant	Tax Filing Failure	Admitted	(a) inability to satisfy debts (f) failure to file / fraudulent filing of tax returns or unpaid tax	—	—
1.c	A delinquent credit card was charged off in the approximate amount of $1,796. $1,796	Against Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	A delinquent debt owed to a department store was charged off in the approximate amount of $1,310. $1,310	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	A delinquent debt owed to a department store was charged off in the approximate amount of $267. $267	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	A delinquent medical debt was charged off in the approximate amount of $182. $182	Against Applicant	Medical Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.g	A delinquent medical debt in the approximate amount of $118 remains owing. $118	Against Applicant	Medical Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.h	A delinquent Federal tax lien was entered against her in 2017 in the approximate amount of $77,364. $77,364	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (f) failure to file / fraudulent filing of tax returns or unpaid tax	—	—
1.i	A state tax lien was entered against her in 2009 in the approximate amount of $15,609. $15,609	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (f) failure to file / fraudulent filing of tax returns or unpaid tax	—	—
1.j	A Federal tax lien was entered against her in 2016 in the approximate amount of $3,534. $3,534	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (f) failure to file / fraudulent filing of tax returns or unpaid tax	—	—
1.k	A delinquent medical account was placed for collection in the approximate amount of $150. $150	Against Applicant	Medical Debt	Admitted	(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

DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS

In the matter of: )

)

ISCR Case No. 18-00799

)

) Applicant for Security Clearance )

Appearances

For Government: Aubrey De Angelis, Department Counsel For Applicant: Pro se

November 19, 2018 ______________

Decision ______________

LOKEY ANDERSON, Darlene D., Administrative Judge:

Statement of Case

On February 10, 2017, Applicant submitted a security clearance application (e- QIP). (Government Exhibit 1.) On April 26, 2018, the Department of Defense Consolidated Adjudications Facility (DoD CAF) issued Applicant a Statement of Reasons (SOR), detailing security concerns under Guideline F, Financial Considerations. (Item 1.) The action was taken under Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; DoD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the National Security Adjudicative Guidelines for Determining Eligibility for Access to Classified Information, effective within the DoD after June 8, 2017.

Applicant answered the SOR on May 7, 2018, and requested a hearing before an administrative judge. The case was assigned to me on August 27, 2018. The Defense Office of Hearings and Appeals issued a notice of hearing on August 28, 2018, and the hearing was convened as scheduled on September 24, 2018. The Government offered

six exhibits, referred to as Government Exhibits 1 through 6, which were admitted without objection. The Applicant offered four exhibits, referred to as Applicant’s Exhibits A through D, which were admitted without objection. Applicant testified on her own behalf. The record remained open until close of business on October 23, 2018, to allow Applicant the opportunity to submit additional supporting documentation. Applicant failed to submit any additional documents. DOHA received the transcript of the hearing (Tr.) on October 3, 2018.

Findings of Fact

Applicant is 66 years old and is divorced a second time. She has a high school diploma. She is employed by a defense contractor is as a senior laboratory technician. She is seeking to obtain a security clearance in connection with her employment.

Guideline F - Financial Considerations

The Government alleged that Applicant is ineligible for a clearance because she made financial decisions that indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which raise questions about her reliability, trustworthiness and ability to protect classified information.

The SOR identified nine delinquent debts totaling in excess of approximately $90,000. Applicant admitted each of the allegations set forth in the SOR. (Applicant’s Answer to SOR.) Credit reports of the Applicant dated March 7, 2018; and March 29, 2017, confirm the debts listed in the SOR. (Government Exhibits 3 and 4.) Applicant began working for her current employer in about September 2016. She has worked in the defense industry for the past 27 years.

Applicant testified that she retired from the defense industry, got married, and went into business with her second ex-husband in 2000. Over time, their marriage and business went bad, so most of her money that she invested from her retirement account is now gone. She is now divorced, and back to work.

1.a. and 1.b. She explained that when she got married to her second husband in 2000, she withdrew $50,000 from her 401(k) to invest in his tile business. She also withdrew $25,000 to open up a sandwich shop for herself. She ran her business for several years before she got sick and tired and closed it. It was understood between she and her husband that they would both share the tax liability. As it turns out, they did not file their income tax returns for tax years 2013, 2014 and 2015, because they did not have the money to pay their taxes. When they divorced, neither of them paid the taxes. Applicant admits that she currently owes about $90,000 in back Federal and state taxes. (Tr. p. 37.) She has also failed to file her state income tax returns for tax years 2012, 2013, 2014, and 2015. Applicant provided a copy of her divorce decree that indicates that her husband was to keep the business and pay all debts associated with the tile company, including the tax obligations owed by the corporation. (Applicant’s Exhibit D.) Applicant states that she recently made an appointment with the IRS to sit

down and go over her tax liabilities. She states that since 2016 she has been paying $100 monthly toward the debt. (Tr. p. 41.) She states that in the past she was told that in order to hire an attorney to help her she needed $7,000 which she does not have. She currently has a restraining order against her ex-husband for domestic violence. (Tr. p. 40.) She states that in 2015 he kept harassing her and damaged her thumb. Applicant states that she still owes the attorney for fees for representing her in the divorce.

Other delinquent debts listed in the SOR also became owing:

1.c. A delinquent credit card was charged off in the approximate amount of $1,796. Applicant claims that she has made payment arrangements of $100 monthly, but is not sure of the current status. (Tr. pp. 48-49 and Applicant’s Exhibit B.)

1.d. A delinquent debt owed to a department store was charged off in the approximate amount of $1,310. The debt remains outstanding. (Tr. p. 50 and Applicant’s Exhibit A.)

1.e. A delinquent debt owed to a department store was charged off in the approximate amount of $267. Applicant states that she made payment arrangements of $86.89 twice monthly to resolve the debt. (Tr. p. 51 and Applicant’s Exhibit C.)

1.f. A delinquent medical debt was charged off in the approximate amount of $182. Applicant claims that she contacted the creditor and they were unable to find the file. (Tr. p. 52.)

1.g. A delinquent medical debt in the approximate amount of $118 remains owing. Applicant claims that she contacted the creditor and they were unable to find the file. (Tr. p. 52.)

1.h. A delinquent Federal tax lien was entered against her in 2017 in the approximate amount of $77,364. Applicant is not sure of the status of this debt.

1.i. A state tax lien was entered against her in 2009 in the approximate amount of $15,609. Applicant states that since March 2017, she has been paying the state back taxes in the amount of $100 weekly, totaling $400 monthly. (Tr. p. 54.)

1.j. A Federal tax lien was entered against her in 2016 in the approximate amount of $3,534.

1.k. A delinquent medical account was placed for collection in the approximate amount of $150.

Policies

When evaluating an applicant’s suitability for a security clearance, 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 eligibility for access to classified information.

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. 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.

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. Likewise, I have avoided drawing inferences grounded on mere speculation or conjecture.

Under Directive ¶ E3.1.14, the government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, 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.” The applicant has the ultimate burden of persuasion to obtain a favorable clearance decision.

A person who seeks access to classified information enters 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 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 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 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 or unwillingness to satisfy debts;

(b) unwillingness to satisfy debt regardless of the ability to do so;

(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.

As a result of her divorce, Applicant incurred delinquent tax liability, credit card debt and medical bills that she could not afford to pay. Following her divorce, she has still been unable to pay her bills or her back taxes. The evidence is sufficient to raise the above disqualifying conditions.

The following mitigating conditions under the Financial Considerations are potentially applicable under AG ¶ 20.

(b) the conditions that resulted in the financial problem were largely beyond the person’s control (e.g. loss of employment, a business downturn, unexpected medical emergency, or a death, divorce, or separation), and the individual acted responsibly under the circumstances. (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.

In regard to Applicant’s tax liability and delinquent debts, most of them remain owing. At this time, she has not demonstrated sound judgment, nor has she made diligent effort to resolve her debts or even to learn enough about them to be able to testify about their status. Furthermore, she does not appear to have the financial

resources available to pay them. Based upon these facts, there is no evidence that she has acted responsibly under the circumstances. There remain questions about her current reliability, trustworthiness, or good judgment. Whole-Person Concept

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 eligibility for a security clearance must be an overall commonsense judgment based upon careful consideration of the guidelines and the whole-person concept.

I considered the potentially disqualifying and mitigating conditions in light of all relevant facts and circumstances surrounding this case. I conclude Applicant has not mitigated the Financial Considerations security concern.

Formal Findings

Formal findings for or against Applicant on the allegations set forth in the SOR, as required by section E3.1.25 of Enclosure 3 of the Directive, are:

Paragraph 1, Guideline F:

AGAINST APPLICANT

Subparagraphs 1.a.:

Against Applicant Subparagraphs 1.b.:

Against Applicant Subparagraphs 1.c.:

Against Applicant Subparagraphs 1.d.:

Against Applicant Subparagraphs 1.e.:

Against Applicant Subparagraphs 1.f.:

Against Applicant Subparagraphs 1.g.:

Against Applicant Subparagraphs 1.h.:

Against Applicant Subparagraphs 1.i.:

Against Applicant Subparagraphs 1.j.:

Against Applicant Subparagraphs 1.k:

Against 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 eligibility for a security clearance. Eligibility for access to classified information is denied.

Darlene Lokey Anderson Administrative Judge