1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) [REDACTED] ) ISCR Case No. 16-03177 ) Applicant for Security Clearance ) Appearances For Government: Rhett E. Petcher, Esq., Department Counsel For Applicant: Thomas Albin, Esq. ______________ Decision ______________ MARINE, Gina L., Administrative Judge: This case involves security concerns raised under Guideline F (Financial Considerations) and Guideline E (Personal Conduct). Eligibility for access to classified information is granted. Statement of the Case Applicant submitted a security clearance application (SCA) on January 21, 2016. On November 22, 2016, the Department of Defense Consolidated Adjudications Facility (DOD CAF) sent him a Statement of Reasons (SOR) alleging security concerns under Guidelines F and E. The DOD CAF acted under Executive Order (Exec. Or.) 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 adjudicative guidelines (AG) implemented by the DOD on September 1, 2006. On December 12, 2016, Applicant answered the SOR, and his counsel entered an appearance and requested a hearing before an administrative judge. Department Counsel was ready to proceed on January 5, 2017, and the case was assigned to me on January 25, 2017. On February 28, 2017, the Defense Office of Hearings and Appeals (DOHA) notified Applicant that the hearing was scheduled for March 30, 2017. I convened the hearing as scheduled. 2 Government Exhibits (GE) 1 and 2 were admitted into evidence without objection. I appended to the record a letter that the Government sent to Applicant as Hearing Exhibit (HE) I, and the Government’s exhibit list as HE II. At the hearing, Applicant testified and submitted Applicant’s Exhibits (AE) A through C, which were admitted without objection. One witness testified on behalf of Applicant. DOHA received the transcript (Tr.) on April 7, 2017. HE III contains the relevant pages of a document containing the facts of which I took sua sponte administrative notice, as further discussed below. SOR Amendment At the hearing, I granted Department Counsel’s motion to amend the SOR, without objection, to correct an error with respect to the date of the SCA referenced in subparagraphs 2.a through 2.c, by changing the date from September 4, 2015 to January 21, 2016.1 Findings of Fact2 Applicant, age 58, divorced his wife of almost 20 years in 1999. He has four adult children and five grandchildren. He received his G.E.D. in 1978 or 1979.3 He honorably served in the U.S. Navy from 1975 through 1979. A federal contractor has employed Applicant as a welder since 2016. He previously worked for this same employer for six years in the 1980s. He spent approximately 13 years working for the federal government between the late 1980s and 1999, and another 14 years driving limousines.4 Applicant worked sporadically as a welder for company A from December 2005 through July 2014.5 Applicant was unemployed from September 2014 through February 2016, during which time he received public assistance.6 The SOR alleges that Applicant failed to file, as required, state and federal income tax returns for tax years 2014 and 2015, reporting income earned from company A (SOR ¶¶ 1.a and 1.b). With the exception of tax year 2015, Applicant timely filed his state and federal tax returns for all tax years through 2016, reporting all income for which he received a W2.7 In 2014, he reported his limousine-driver income of $4,321 for 1 Tr. at 71-72. 2 Unless otherwise indicated by citation to another part of the record, I extracted these facts from Applicant’s SOR answer and his SCA (GE 1). 3 GE 3 at p. 3. 4 See also Tr. at 33-38, 58-59; GE 4 at p. 3-4. 5 See also GE 3 at p. 4; Tr. at p. 73. 6 Tr. at 25, 31-32 & 38; GE 3 at p. 3. 7 Tr. at 26-29, 38, 74-75, 78-79; AE A. 3 which he received a W2, and did not report any income earned from company A.8 In 2015, he did not file any tax returns because he was not required to, as he did not receive taxable income that year because he was unemployed.9 Applicant worked for company A on a sporadic and inconsistent basis. He had a casual arrangement with the owner of company A, who was a friend, to work as needed. Typically, he worked for a day or two at a time whenever the owner needed help to complete a job that the owner could not handle by himself. The owner always paid Applicant in cash and never provided Applicant with a W2 or other tax forms. At the hearing, Applicant was unable to provide an accurate account of either the hours he worked or the income he earned with company A in any given tax year.10 At the time he completed his 2014 and prior tax returns, he believed the income he earned from company A was not reportable because he was paid cash, never received a W2 or other tax form, and it was only “a little bit of money” and “not very significant.” He also believed that the threshold number for reportable income exceeded what he earned from company A in any given tax year.11 Neither party provided evidence of what that threshold number was in tax year 2014. Therefore, I have taken administrative notice of Internal Revenue Service (IRS) Publication 501 for tax year 2014, which provides that an income threshold of $10,150 triggers the requirement to file tax returns for most taxpayers under age 65.12 The SOR also alleges that Applicant deliberately failed to disclose on his SCA: 1) that he did not file or pay, as required, his state and federal taxes for tax years 2014 and 2015 (SOR ¶ 2.a); and 2) that he had a delinquent $276 telephone bill, and a $2,788 judgment related to credit-card debt (SOR ¶¶ 2.b and 2.c). At the time he completed his SCA, Applicant did not recall either debt, and he had timely filed his 2014 tax returns believing that he had not earned any reportable income from company A.13 Not only was Applicant not required to file or pay taxes in tax year 2015, but the tax returns were not due to be filed or paid as of the date of his SCA. 8 AE A; Tr. at 26-29. 9 Tr. at 25, 31-32, 64-65, 72. 10 Tr. at 24-26, 29-31, 59-64, 73-74, 77, 85-86. 11 Tr. at 24-27, 29-31, 62, 64, 76-78. 12 See HE III. As a general rule, the parties are entitled to know what information an Administrative Judge is relying on in making a decision. There are some narrow exceptions to this general rule: official or administrative notice, and matters known to an agency through its cumulative expertise. ISCR Case No. 99-0454 at 3 (App. Bd. Mar. 21, 2000). 13 GE 3 at p. 7; GE 2; Tr. at 48-49, 66-67, 52-53, 83-84. 4 After he filled out his SCA, Applicant accrued delinquent debt that is not security significant in light of the record as a whole.14 In October and November 2016, he paid the telephone bill (SOR ¶ 2.c) and reached an agreement with his creditor to pay $120 per month towards satisfaction of the judgment (SOR ¶ 2.b), which he paid through March 2017. He is managing his current finances responsibly.15 Applicant indicated that because he is “totally inept with computers,” his daughter completed and signed the SCA for him electronically. He provided the information to her through telephone conversations and text messages. He never reviewed the form before his daughter submitted it.16 Applicant’s supervisor who has known him for approximately one year and currently works with him daily provided favorable testimony as to Applicant’s work performance and security worthiness.17 Applicant suffers from memory problems.18 Applicant was candid, sincere, and credible at the hearing. Policies “[N]o one has a ‘right’ to a security clearance.”19 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 have access to such information.”20 The President has authorized the Secretary of Defense or his designee to grant applicants eligibility for access to classified information “only upon a finding that it is clearly consistent with the national interest to do so.”21 Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the AG. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, an administrative judge applies these guidelines in conjunction with an evaluation of the whole person. An administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. An administrative judge must consider all available and reliable information about the person, past and present, favorable and unfavorable. The Government reposes a high degree of trust and confidence in persons with access to classified information. This relationship transcends normal duty hours and 14 GE 3 at p. 3; Tr. at 66-68. 15 AE B and C; Tr. at 69-71. 16 Tr. at 46-47, 80, 82-85; GE 3 at p. 2, 4, and 10. 17 Tr. at 9-18. 18 Tr. at 80. 19 Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). 20 Egan at 527. 21 Exec. Or. 10865 § 2. 5 endures throughout off-duty hours. Decisions include, by necessity, consideration of the possible risk that the applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation about potential, rather than actual, risk of compromise of classified information. Clearance decisions must be made “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.”22 Thus, a decision to deny a security clearance is merely an indication 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, conditions in the personal or professional history of the applicant that may disqualify the applicant from being eligible for access to classified information. The Government has the burden of establishing controverted facts alleged in the SOR.23 “Substantial evidence” is “more than a scintilla but less than a preponderance.”24 The guidelines presume a nexus or rational connection between proven conduct under any of the criteria listed therein and an applicant’s security suitability.25 Once the Government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts.26 An applicant has the burden of proving a mitigating condition, and the burden of disproving it never shifts to the Government.27 An applicant “has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue his security clearance.”28 “[S]ecurity clearance determinations should err, if they must, on the side of denials.”29 22 Exec. Or. 10865 § 7. 23 See Egan, 484 U.S. at 531. 24 See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). 25 See ISCR Case No. 92-1106 at 3, 1993 WL 545051 at *3 (App. Bd. Oct. 7, 1993). 26 Directive ¶ E3.1.15. 27 See ISCR Case No. 02-31154 at 5 (App. Bd. Sep. 22, 2005). 28 ISCR Case No. 01-20700 at 3 (App. Bd. Dec. 19, 2002). 29 Egan, 484 U.S. at 531; See also AG ¶ 2(b). 6 Analysis Guideline F (Financial Considerations) The concern under this guideline is set out in AG ¶ 18: 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 . . . . The SOR alleges that Applicant failed to file, as required, state and federal income tax returns for tax years 2014 and 2015, reporting income earned from company A (SOR ¶¶ 1.a and 1.b). The potentially relevant disqualifying condition in this case is AG ¶ 19(g) (“failure to file annual Federal, state, or local income tax returns as required or the fraudulent filing of the same”). For tax year 2015, Applicant was not required to file federal or state tax returns. While Applicant filed his 2014 state and federal tax returns, he did not report income he earned from company A. However, the Government did not meet its burden to establish that Applicant was either required to report it or that he fraudulently failed to do so. Applicant worked for company A on a sporadic and inconsistent basis during a period of approximately seven months in 2014. Applicant reported $4,321 of W2 income on his 2014 tax returns. The record does not contain sufficient evidence for me to determine the amount of income he earned from company A during 2014 in order to determine whether the $10,150 income threshold was met. I am unable to conclude that Applicant was required to file a tax return for tax year 2014. The record contains no evidence that Applicant fraudulently failed to report income earned from company A in tax year 2014. He believed that he did not earn reportable income from company A in tax year 2014 or any other tax year and, in any event, that he needed a W2 or other tax form from his employer in order to report any income earned. Applicant otherwise timely filed and reported his W2 income for each year in which he was required to do so. AG ¶ 19(g) is not established. I find SOR ¶¶ 1.a and 1.b in Applicant’s favor. Guideline E, Personal Conduct The concern under this guideline is set out in AG ¶ 15: Conduct involving questionable judgment, lack of candor, dishonesty, or unwillingness to comply with rules and regulations can raise questions about an individual’s reliability, trustworthiness and ability to protect classified 7 information. Of special interest is any failure to provide truthful and candid answers during the security clearance process or any other failure to cooperate with the security clearance process. The SOR alleges that Applicant deliberately failed to disclose on his SCA his failure to file or pay, as required, his state and federal taxes for tax years 2014 and 2015 as to income earned from company A (SOR ¶ 2.a). It also alleges that he deliberately failed to disclose two delinquent debts (SOR ¶¶ 2.b and 2.c). The potentially relevant disqualifying condition in this case is AG ¶ 16(a) (“deliberate omission, concealment, or falsification of relevant facts from any personnel security questionnaire . . . .”) When a falsification allegation is controverted, as in this case, the Government has the burden of proving it. An omission, standing alone, does not prove falsification. An administrative judge must consider the record evidence as a whole to determine an applicant’s state of mind at the time of the omission.30 An applicant’s level of education and business experience are relevant to determining whether a failure to disclose relevant information on a security clearance application was deliberate.31 At the time he completed his SCA, Applicant did not recall his delinquent debt nor had he failed to file any of his tax returns. At the time he completed his SCA, he had timely filed his tax returns for tax year 2014 believing he had not earned any reportable income from company A. Further, not only was Applicant not required to file or pay taxes in tax year 2015, but the tax returns were not due to be filed or paid as of the date of his SCA. Given these facts, I do not find any intent on the part of the Applicant to omit, conceal, or falsify his SCA with respect to his two delinquent debts or his tax filings. Therefore, AG ¶ 16(a) is not established. I find SOR ¶¶ 2.a through 2.c in favor of Applicant. Whole-Person Concept 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. In applying the whole- person concept, an 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. An 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 30 See ISCR Case No. 03-09483 at 4 (App. Bd. Nov. 17, 2004). 31 ISCR Case No. 08-05637 (App. Bd. Sep. 9, 2010). 8 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. I have incorporated my comments under Guidelines F and E in my whole-person analysis, and I have considered the factors in AG ¶ 2(a). Applicant is a welder whose highest level of education is a G.E.D. He was candid, sincere, and credible at the hearing. He did not intend to falsify his SCA. Even if he had a requirement to file tax returns for tax year 2014 and to report income he earned from company A that year or any other year, his failure to do so was not a deliberate intent to avoid his tax obligation but rather the result of what he reasonably believed to be true at the time given his misperception about the filing requirements. After finding that no disqualifying conditions apply under Guidelines F and E, and evaluating all the evidence in the context of the whole person, I conclude that Applicant has mitigated the security concerns raised by the Government. Accordingly, Applicant has carried his burden of showing that it is clearly consistent with the national interest to grant him eligibility for access to classified information. Formal Findings I make the following formal findings on the allegations in the SOR: Paragraph 1, Guideline F (Financial Considerations): FOR APPLICANT Subparagraphs 1.a – 1.b: For Applicant Paragraph 2, Guideline E (Personal Conduct): FOR APPLICANT Subparagraphs 2.a – 2.c: For Applicant Conclusion I conclude that it is clearly consistent with the national interest to grant Applicant eligibility for access to classified information. Clearance is granted. Gina L. Marine Administrative Judge