1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ----------------------- ) ISCR Case No. 16-02089 ) Applicant for Security Clearance ) Appearances For Government: Andre M. Gregorian, Esquire For Applicant: Pro se ______________ Decision ______________ MARSHALL, Jr., Arthur E., Administrative Judge: Statement of the Case On September 3, 2016, the Department of Defense (DOD) Consolidated Adjudication Facility (CAF) issued Applicant a Statement of Reasons (SOR) detailing security concerns under Guideline F (Financial Considerations). The action was taken under Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) effective within the DOD on or after June 8, 2017. In an undated response, Applicant admitted the allegations and requested a hearing before an administrative judge from the Defense Office of Hearings and Appeals (DOHA). I was assigned the case on December 2, 2016. The matter was scheduled on March 6, 2017, for an April 5, 2017, hearing. The hearing was convened as scheduled. The Government offered three documents, which were accepted without objection as exhibits (Exs.) 1-3. Applicant gave testimony, introduced one witness, and 2 offered four documents, which were accepted into the record without objection as Exs. A-D. The transcript (Tr.) was received on April 13, 2017, and the record was closed. After review of the record as a whole, I find that Applicant mitigated financial considerations security concerns. Findings of Fact Applicant is a 63-year-old engineer who has worked for her present employer, a defense contractor, since 2015. Prior to this position, she worked within the defense contracting community for over 30 years. Applicant served as an active reservist in the Army National Guard from 1975 until receiving an honorable discharge in 1979. She has earned an associate’s degree and a bachelor’s degree. A former superior testified on her behalf in positive terms. Applicant is presently single. She has been financially stable and has had no problems meeting her financial obligations to date. (Tr. 37) Applicant has not received financial counseling. She has maintained a security clearance since 1990 without issue. From 2012 to 2015, Applicant worked for a former employer. As a qualification engineer, her work there required extensive travel to various sites, domestically and internationally. Each month, she would be away from home for up to three weeks. As soon as she would return home, usually on a Friday, she would unload all of her equipment on Saturday, leaving little time to conduct her personal affairs and prepare for her next trip. (Tr. 20-21) During the months leading up to the deadline for filing her tax year 2013 federal income tax returns, she was rarely home. Due to her schedule and distraction, she failed to apply for a filing extension. She also failed to file her federal income tax return for that year, and then again for tax year 2014.1 Applicant ascribes her belated filings to oversight or procrastination. In her 60s, with a career stretching back over 40 years, she has never before neglected to timely file her tax returns. (Tr. 25) In September 2015, Applicant met with investigators, noting that she had forgotten to file the tax returns at issue. Ultimately, the returns were filed by October 2016. (Tr. 26) In November 2016, she received tax refunds varying from $1,750 to $2,000 for tax years 2013 and 2014, respectively, and a refund of about $1,700 for tax year 2015. (Tr. 26-27; Exs. B-C) She was not penalized by the IRS for her late filings. Hence forward, Applicant intends to be timely with her tax filing and all related obligations. Her most recent job does not require extensive work travel, leaving her sufficient time to see to her personal affairs. As of the April 5, 2017, hearing, she noted that she was currently accumulating all of her documentation and planning on e-filing her tax year 2016 federal income tax returns this year. Because she is presently not generating a paycheck, she is economizing and not utilizing the services of a 1 Starting in the mid-2000s, Applicant began to file her own federal taxes, itemizing in her forms so she could references expenses such as mortgage interest and student loans. She does not use software to aid her in her tax preparation. 3 professional tax preparer or service. (Tr. 28) She is, however, amenable to using such services when needed. Applicant stated that although she has maintained a security clearance for many years, she was not previously aware failure to file taxes posed a security concern, only a concern with regard to Internal Revenue Service rules. (Tr. 30) Policies When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which are 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, these guidelines are applied in conjunction with the factors listed in the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶ 2(c), 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 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. Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, 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 and has the ultimate burden of persuasion to obtain a favorable security 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. The Government reposes a high degree of trust and confidence in individuals to whom it grants access to classified information. Decisions include consideration of the possible risk the applicant may deliberately or inadvertently fail to safeguard 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.” See also EO 12968, Section 3.1(b). 4 Analysis Under Guideline F, AG ¶ 18 sets forth that the security concern under this guideline is that 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. Here, the Government introduced credible evidence indicating that Applicant failed to timely file federal income tax returns for tax years 2013 and 2014. Applicant admits she failed to file taxes for those years. This is sufficient to invoke financial considerations disqualifying conditions: AG ¶ 19(a): inability to satisfy debts; AG ¶ 19(b): unwillingness to satisfy debts regardless of the inability to do so; AG ¶ 19(c): a history of not meeting financial obligations; and AG ¶ 19(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 Seven conditions could mitigate these finance related security concerns: 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; 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, a death, divorce or separation), and the individual acted responsibly under the circumstances; AG ¶ 20(c) the person has received or is receiving counseling for the problem from a legitimate and credible source, such as a non-profit counseling service, and there are clear indications that the problem is being resolved or is under control; AG ¶ 20(d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts; AG ¶ 20(e) the individual has a reasonable basis to dispute the legitimacy of the past-due debt which is the cause of the problem and provides 5 documented proof to substantiate the basis of the dispute or provides evidence of actions to resolve the issue; AG ¶ 20(f): the affluence resulted from a legal source of income; and AG ¶ 20(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. Under these facts, application of AG ¶ 20(a) initially appears limited because the multiple income tax returns at issue were for recent years. However, Applicant’s present work and seniority make her constant work travel less likely, and make her less vulnerable to being professionally overwhelmed. Now apprised of the importance of filing tax returns, even when a refund is expected, Applicant is aware of her obligations in that regard. She has promised to be timely going forward, and to seek professional guidance when needed in the future. Consequently, I find AG ¶ 20(a) applies. Moreover Applicant is genuinely contrite over her laxity and oversight. She has taken the appropriate ameliorative action. Evidence of her Federal tax return filings was introduced, and it was shown that payment of her refunds have settled those issues with the IRS. In the future, she will be mindful of her obligation to file her tax returns timely. The situation is now under control and AG ¶ 20(g) applies. Whole-Person Concept Under the whole-person concept, an administrative judge must evaluate an applicant’s eligibility for a security clearance by considering the totality of the her conduct and all relevant circumstances. The administrative judge should consider the nine adjudicative process factors listed at AG ¶ 2(a). Here, I have considered those factors. I am also mindful that, under AG ¶ 2(c), the ultimate determination of whether to grant eligibility for a security clearance must be an overall commonsense judgment based on careful consideration of the guidelines and the whole-person concept. Applicant is a 63-year-old engineer who has worked for her present employer since 2015. She has supported the defense contracting industry since at least 1985 and maintained a security clearance without adverse incident since 1990. Applicant served as an active reservist in the Army National Guard from 1975 until honorably discharged in 1979. She has earned an associate’s degree and a bachelor’s degree. During the years at issue in the early 2010s, Applicant held a position that entailed extensive travel. Her work trips left her with little personal time. Although she was a seasoned professional who had been within the workforce for many years, the overwhelming demands of her job took its toll on her personal life. Included in this toll was her failure to timely submit federal tax returns for tax years 2013 and 2014 in 2014 and 2015, respectively. At no time was her delay caused by deficient funds, only insufficient time and organization. 6 In 2016, Applicant filed tax returns for the years at issue, received owed refunds, and is now in full compliance with IRS rules. Through this process, Applicant has become thoroughly aware of the importance of timely filing all tax returns, an issue that never before arose during her professional career or her 27 years maintaining a security clearance. Free of a position that is so time-consuming she is overwhelmed, I have no reservations feeling that all future tax returns will be timely filed or appropriate extensions requested. Consequently, I find Applicant has mitigated financial considerations security concerns. 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: FOR APPLICANT Subparagraphs 1.a-1.b: For Applicant Conclusion In light of all of the circumstances presented by the record in this case, it is clearly consistent with the national interest to grant Applicant a security clearance. Eligibility for access to classified information is granted. _____________________________ Arthur E. Marshall, Jr. Administrative Judge