DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-01782 ) ) Applicant for Security Clearance ) Appearances For Government: David F. Hayes, Esq., Department Counsel For Applicant: Pro se ______________ Decision ______________ LYNCH, Noreen A., Administrative Judge: On September 7, 2016, the Department of Defense (DOD) issued Applicant a Statement of Reasons (SOR) listing security concerns arising under Guideline F (Financial Considerations). The action was taken under Executive Order (EO) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; Department of Defense (DoD) Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG), implemented in September 2006. Applicant timely answered the SOR and requested a hearing before an administrative judge. The case was assigned to me on December 2, 2016. A notice of hearing, dated February 3, 2017, was issued, scheduling the case for April 27, 2017. Government Exhibit (GX) 1 was admitted into evidence without objection. Applicant testified and submitted Applicant Exhibit (AX) A, which was admitted without objection. The transcript was received on May 5, 2017. Based on a review of the pleadings, testimony, and exhibits, eligibility for access to classified information is denied. 1 Findings of Fact In his answer to the SOR, Applicant denied both allegations in the SOR under Guideline F, with explanations for each item. His denials were based on the fact that he has filed his Federal and state tax returns for tax years 2012 to 2014. Applicant is 49 years old. He is divorced and he remarried and has two children. He obtained an undergraduate degree, and he served in the U.S. Army and retired after 22 years in 2012, with an honorable discharge. Since 2012, he has worked as a defense contractor. Applicant has held a security clearance since 1990. He completed his security clearance application in 2015. (GX 1) The SOR alleges that Applicant failed to file his Federal tax returns for tax years 2012 through 2014. (SOR 1.a) It also alleges that Applicant failed to file his state tax returns for tax years 2012 through 2014. (SOR 1.b) In his 2015 security clearance application, Applicant disclosed the fact that he did not file his tax returns for the years in question. He also noted that he owed about $2,000 to each entity. Applicant answered Question 26 on the security clearance application with a reason for not filing the taxes. He wrote “lethargic.” He also told the investigator in 2015, that the only reason that he did not file the required tax returns was he was “basically lazy and did not understand the tax code.” He did not request extension for any of the tax years. (Tr. 24) Nor did he seek out tax advice. At the hearing, Applicant acknowledged that there was no excuse for not filing the tax returns for the years in question. At the hearing, Applicant submitted a packet (AX A) that provided documentation that he filed his Federal and state income tax returns for tax years 2012, 2013, 2014. Applicant used a tax preparer and the date for all filings was September 28, 2016. Applicant paid the taxes that were owed to the Federal government, but he still owes the state an amount of $4,000. (Tr. 24) He stated that he is working with the state to arrange a payment plan. Applicant stated that he made one payment to the state in September 2016. (Tr. 20 ) Applicant explained that he also filed the 2015 tax return late but he knew he had to get his act together. He also noted that he is now remarried and is filing jointly and did not want to get his current spouse into any difficulty. (Tr. 32) He has completed his tax return for 2016 and stated that he believes he owes the Federal government about $3,000. (AX A, Tr. 20) Applicant and his wife earn about $200,000 a year. His salary and retirement amount to about $150,000 a year. He has no delinquent debts. He agreed that he has the money to pay his taxes, but noted that he sends $1,500 a month to his two children for child support. 2 Policies When evaluating an applicant’s suitability for a security clearance, an 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. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, they are applied in conjunction with the factors listed in the adjudicative process. An administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. Under AG ¶ 2(c), this process is a conscientious scrutiny of a number of variables known as the “whole-person concept.” An 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 access to classified information will be resolved in favor of 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. The U.S. Government must present evidence to establish controverted facts alleged in the SOR. An applicant is responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by applicant or proven by Department Counsel. . . .” The burden of proof is something less than a1 preponderance of evidence. The ultimate burden of persuasion is on the applicant. 2 3 A person seeking access to classified information enters into a fiduciary relationship with the Government based on 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 classified information. Such decisions entail a certain degree of legally permissible extrapolation of potential, rather than actual, risk of compromise of classified information. Section 7 of Executive Order 10865 provides that 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.” “The clearly consistent standard indicates that security clearance4 See also ISCR Case No. 94-1075 at 3-4 (App. Bd. Aug. 10, 1995). 1 Department of the Navy v. Egan, 484 U.S. 518, 531 (1988). 2 ISCR Case No. 93-1390 at 7-8 (App. Bd. Jan. 27, 1995). 3 See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive 4 information), and EO 10865 § 7. 3 determinations should err, if they must, on the side of denials.” Any reasonable doubt5 about whether an applicant should be allowed access to sensitive information must be resolved in favor of protecting such information. The decision to deny an individual a6 security clearance does not necessarily reflect badly on an applicant’s character. It is merely an indication that the applicant has not met the strict guidelines the President and the Secretary of Defense established for issuing a clearance. Analysis Guideline F, Financial Considerations The security concern for financial considerations is set out in AG ¶ 18: Failure or an 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.” It also states that “an individual who is financially overextended is at risk of having to engage in illegal acts to generate funds. The Government provided credible evidence that Applicant did not timely file his Federal and state tax returns from 2012 to 2014. Applicant denied the allegations because he filed the required forms in late September 2016. Consequently, Financial Considerations Disqualifying Conditions (FC DC) AG ¶ 19(g) (failure to file annual Federal, state, or local income tax returns as required or the fraudulent filing of same) applies. With such conditions raised, it is left to Applicant to overcome the case against him and mitigate security concerns. Financial Considerations Mitigating Condition (FC MC) AG ¶ 20(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) does not apply. Applicant filed his 2015 tax returns late as well. He was aware of the Government’s concern in 2015 when he disclosed the issue in his 2015 security clearance application. Applicant still did not act until late 2016. Financial Considerations Mitigating Condition (FC MC) AG ¶ 20(b) (the conditions that resulted in the behavior 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) does not apply. Applicant was clear that there was no excuse but that he was lethargic. ISCR Case No. 93-1390 at 7-8 (App. Bd. Jan. 27, 1995). 5 Id. 6 4 FC MC AG ¶ 20(d), (the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts) has limited application. Some of the money owed to the Federal government is paid, but Applicant still owes money to the state. FC MC AG ¶ 20(c) (the person has received or is receiving counseling for the problem and/or there are clear indications that the problem is being resolved, or is under control) applies. 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 an applicant’s conduct and all the circumstances. The administrative judge should consider the nine adjudicative process factors listed at AG ¶ 2(a): (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. As noted above, the ultimate burden of persuasion is on the applicant seeking a security clearance. I considered the potentially disqualifying and mitigating conditions in light of all the facts and circumstances surrounding this case, as well as the whole-person factors. Applicant is 49 years old. He served in the U.S. Army and retired after 22 years, with an honorable discharge. He has worked for his current employer since 2012. He is an educated man. He has held a security clearance for many years. Applicant’s income has been stable. He has no other financial issues. Applicant filed the required tax forms for the years in question after receiving the SOR in 2016. He has not met his burden of proof in this case. He does not owe money to the IRS for those years, but for the 2015 and 2016, Applicant owes money to the Federal government. As to the state, he is in the process of making payment arrangements for the $4,000 that he owes. He believes he owes an additional $2,844 for state taxes for the tax year 2016. (Tr. 27) I have doubts about his judgment and reliability. Any doubts must be resolved in favor of the Government. Applicant failed to meet his burden in this case. He did not mitigate the security concerns under the financial considerations guideline. 5 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-1.b: 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 Applicant a security clearance. Clearance is denied. NOREEN A. LYNCH Administrative Judge 6