DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-00306 ) ) Applicant for Security Clearance ) Appearances For Government: Andrew Henderson, Department Counsel For Applicant: Pro se February 22, 2017 ______________ Decision ______________ LOKEY ANDERSON, Darlene D., Administrative Judge: The Applicant submitted his Electronic Questionnaire for Investigations Processing (e-QIP) March 23, 2015. (Government Exhibit 1.) On June 9, 2016, the Department of Defense (DoD), pursuant to Executive Order 10865 and Department of Defense Directive 5220.6 (Directive), dated January 2, 1992, (as amended), issued a Statement of Reasons (SOR) to the Applicant, which detailed reasons why the DoD 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 the Applicant and recommended referral to an Administrative Judge to determine whether clearance should be denied or revoked. Applicant responded to the SOR on July 26, 2016, and he requested a hearing before a Defense Office of Hearings and Appeals Administrative Judge. This case was assigned to this Administrative Judge on October 3, 2016. A notice of hearing was issued on November 29, 2016, scheduling the hearing for December 12, 2016. At the hearing the Government presented three exhibits, referred to as Government Exhibits 1 through 3, which were admitted without objection. The Applicant presented no exhibits. He testified on his own behalf. The record remained open until close of business on December 30, 2016, to allow the Applicant to submit supporting documentation as well as a written closing argument. Applicant submitted nine additional documents, admitted without objection as Applicant’s Post-Hearing Exhibits A through I, including a written closing argument dated December 30, 2016. The official transcript (Tr.) was received on December 20, 2016. Based upon a review of the pleadings, exhibits, and testimony, eligibility for access to classified information is denied. FINDINGS OF FACT Applicant is 51 years old, and never married. He has a Master’s degree in Electrical Engineering. He is currently employed as a Senior Principal Electrical Engineer with a defense contractor and is seeking to obtain a security clearance in connection with this employment. The Government opposes Applicant's request for a security clearance, on the basis of allegations set forth in the Statement of Reasons (SOR). The following findings of fact are entered as to each paragraph and guideline in the SOR: Paragraph 1 (Guideline F - Financial Considerations) The Government alleges that Applicant is ineligible for clearance because he has failed to meet financial obligations that indicate a lack of judgment and also unwillingness to abide by rules and regulations which raise questions about his reliability, trustworthiness and ability to protect classified information. Applicant failed to file his Federal and state income tax returns for tax years 2011 through 2014. Applicant admitted the allegations set forth in the SOR under this guideline. (See Applicant’s Answer to SOR.) Credit reports of the Applicant dated April 7, 2015; and August 28, 2016, which include all three credit reporting agencies, reflect state and Federal tax liens that have been imposed on the Applicant. (Government Exhibits 2 and 3.) Applicant has been working for his current employer since February 2015. He has not held a security clearance since 1996/1997. In his security clearance interview in November 2015, Applicant admitted that since 2006 to the present, he has not filed his income tax returns in a timely fashion. (Tr. p. 19.) His excuse for this was that he has been overwhelmed. He had been doing his own income tax returns, using a tax preparation software. His income tax returns have become more complicated over the years, and he did not make the time to meet with an accountant to get the help he needed. He explained that over the past five years, his time has been committed to working several different jobs, entailing contract work, in faraway locations, requiring constant moving, where he has been separated from his records, and instead of focusing on his taxes, he has been focused on job search while he was unemployed. In addition, he has been busy managing his rental properties, which include filling vacancies, dealing with tenants and maintenance. (Tr.pp. 15-19.) 2 Applicant states that he and his accountant are currently working on his 2012, 2013 and 2014 income tax returns. (Tr. p. 16.) Applicant filed his 2011 Federal and two different state income tax returns on October 15, 2016, two days before the hearing. (Applicant’s Post-Hearing Exhibits B through I.) Applicant states that when he has filed his returns, he usually receives a refund. He argues that his failure to file his income tax returns has nothing to do with his inability to pay his taxes, it simply shows negligence and a lack of due diligence to get the job done. He hopes to get caught up with his income tax return filing soon, and plans to maintain timeliness in his future filings. (Tr. pp. 15-16.) POLICIES Enclosure 2 of the Directive sets forth adjudication policies divided into "Disqualifying Factors" and "Mitigating Factors." The following Disqualifying Factors and Mitigating Factors are found to be applicable in this case: Guideline F (Financial Considerations) 18. The Concern. Failure or inability 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 information. An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds. Condition that could raise a security concern: 19.(g) failure to file annual Federal, state or local income tax returns as required or the fraudulent filing of the same. Condition that could mitigate security concerns: 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. In addition, as set forth in Enclosure 2 of the Directive at pages 18-19, in evaluating the relevance of an individual’s conduct, the Administrative Judge should consider the following general factors: a. The nature, extent, and seriousness of the conduct and surrounding circumstances; 3 b. The circumstances surrounding the conduct, to include knowledgeable participation; c. The frequency and recency of the conduct; d. The individual’s age and maturity at the time of the conduct; e. The extent to which participation is voluntary; f. The presence or absence of rehabilitation and other permanent behavioral changes; g. The motivation for the conduct; h. The potential for pressure, coercion, exploitation or duress; and i. The likelihood of continuation or recurrence. The eligibility criteria established in the DoD Directive identify personal characteristics and conduct, which are reasonably related to the ultimate question, posed in Section 2 of Executive Order 10865, of whether it is “clearly consistent with the national interest” to grant an Applicant’s request for access to classified information. The DoD Directive states, “The adjudicative process is an examination of a sufficient period of a person’s life to make an affirmative determination that the person is an acceptable security risk. Eligibility for access to classified information is predicated upon the individual meeting these personnel security guidelines. The adjudicative process is the careful weighing of a number of variables known as the whole-person concept. Available, reliable information about the person, past and present, favorable and unfavorable should be considered in reaching a determination.” The Administrative Judge can draw only those inferences or conclusions that have reasonable and logical basis in the evidence of record. The Judge cannot draw inferences or conclusions based on evidence, which is speculative or conjectural in nature. Finally, as emphasized by President Eisenhower in Executive Order 10865, “Any determination under this order . . . shall be a determination in terms of the national interest and shall in no sense be a determination as to the loyalty of the Applicant concerned.” CONCLUSIONS In the defense industry, the security of classified industrial secrets is entrusted to civilian workers who must be counted upon to safeguard such sensitive information twenty-four hours per day, seven days per week. The Government is therefore appropriately concerned when available information indicates that an Applicant for clearance may be involved in instances of financial irresponsibility, which demonstrates poor judgment or unreliability. 4 It is the Government’s responsibility to present substantial evidence to support the finding of a nexus, or rational connection, between the Applicant’s conduct and the holding of a security clearance. If such a case has been established, the burden then shifts to the Applicant to go forward with evidence in rebuttal, explanation or mitigation, which is sufficient to overcome or outweigh the Government’s case. The Applicant bears the ultimate burden of persuasion in proving that it is clearly consistent with the national interest to grant him or her a security clearance. In this case the Government has met its initial burden of proving that the Applicant has been financially irresponsible (Guideline F). This evidence indicates poor judgment, unreliability and untrustworthiness on the part of the Applicant. Because of the scope and nature of the Applicant's conduct, I conclude there is a nexus or connection with his security clearance eligibility. The evidence shows that Applicant has failed to file his Federal and State income tax returns in a timely fashion since 2006. For ten years, he has been busy and focused on other things instead of complying with Federal and State law that requires him to filed annual income tax returns. His failure to file his income tax returns suggests that he has a problem abiding by well-established Government rules and regulations. Voluntary compliance with rules and regulations is essential for protecting classified information. He has known for sometime that the Defense Department has been concerned about this problem, and he has done little to remedy it. To file them now only shows that he has been strong-armed to do so by the Defense Department, and undercuts any determination that he has shown good faith in doing so. Applicant’s conduct shows negligence and a lack of due diligence. Furthermore, his repeated failure to file his Federal tax returns in a timely manner does not demonstrate the high degree of good judgment and reliability required of persons granted access to classified information. This pattern of unreliability demonstrates that he has not met his burden of proving that he is worthy of a security clearance. Considering all of the evidence, Applicant has not introduced persuasive evidence in rebuttal, explanation or mitigation that is sufficient to overcome the Government's case. Under Guideline F (Financial Considerations), Disqualifying Condition 19.(g) failure to file annual Federal, state or local income tax returns as required or the fraudulent filing of the same applies. It can be argued that Mitigating Condition 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 applies. However, this mitigating condition is not controlling. Just because Applicant has been busy with other matters, is not a viable excuse for failing to comply with the laws of this country. In this case, none of the mitigating conditions are applicable. Accordingly, I find against the Applicant under Guideline F (Financial Considerations). 5 I have also considered the “whole-person concept” in evaluating Applicant’s eligibility for access to classified information. Under the particular facts of this case, the totality of the conduct set forth above, when viewed under all of the guidelines as a whole, supports a whole-person assessment of poor judgement, untrustworthiness, unreliability, and an unwillingness to comply with rules and regulations, and/or other characteristics indicating that the person may not properly safeguard classified information. I have considered all of the evidence presented. It does not mitigate the negative effects his repeated failure to file his income tax returns have on his ability to safeguard classified information. On balance, it is concluded that Applicant has not overcome the Government's case opposing his request for a security clearance. Accordingly, the evidence supports a finding against Applicant as to the factual and conclusionary allegations expressed in Paragraph 1 of the SOR. FORMAL FINDINGS Formal findings For or Against the Applicant on the allegations in the SOR, as required by Paragraph 25 of Enclosure 3 of the Directive are: Paragraph 1: Against the Applicant. Subpara. 1.a. Against the Applicant. Subpara. 1.b Against the Applicant. Subpara. 1.c. Against the Applicant. DECISION In light of all 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 the Applicant. Darlene Lokey Anderson Administrative Judge 6