1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-01750 ) ) Applicant for Security Clearance ) Appearances For Government: Aubrey De Angelis, Esq., Department Counsel For Applicant: Pro se July 5, 2017 ______________ Decision ______________ LOKEY ANDERSON Darlene D., Administrative Judge: Statement of the Case On October 5, 2016, in accordance with DoD Directive 5220.6, as amended (Directive), the Department of Defense issued Applicant a Statement of Reasons (SOR) alleging facts that raise security concerns under Guideline F.1 The SOR further informed Applicant that, based on information available to the government, DoD adjudicators could not make the preliminary affirmative finding it is clearly consistent with the national interest to grant or continue Applicant’s security clearance. Applicant answered the SOR on November 1, 2016, and requested a hearing before an administrative judge. (Answer.) The case was assigned to me on December 12, 2016. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on December 12, 2016, scheduling the hearing for January 19, 2017. The 1 I considered the previous Adjudicative Guidelines, effective September 1, 2006, as well as the new Adjudicative Guidelines, effective June 8, 2017. My decision would be the same if the case was considered under the previous Adjudicative Guidelines, effective September 1, 2006. 2 hearing was convened as scheduled. The Government offered Exhibits (GXs) 1 through 5, which were admitted without objection. Applicant testified on his own behalf, and presented ten documents, which I marked Applicant’s Exhibits (AppXs) A through J. The record was left open until February 10, 2017, for receipt of additional documentation. Applicant submitted one Post-Hearing Exhibit marked and admitted as Applicant’s Post-Hearing Exhibit A. DOHA received the transcript of the hearing (TR) on January 30, 2017. Findings of Fact Applicant denied the sole allegation in SOR. After a thorough and careful review of the pleadings, exhibits, and testimony, I make the following findings of fact. Applicant is 57 years old and married with two adult children. He has a high school GED and one year of college. He holds the position of Avionics Technician with a defense contractor. He has been employed with his current employer since April 2014. He has worked in the defense industry for almost 35 years and held a security clearance since 2000. He has never had a security clearance violation. Applicant owes the Internal Revenue Service a total of $32,000 in Federal taxes for tax year 2011, 2012 and 2013. He also owed about $6,500 to the State taxing authority. (Government Exhibit 2.) These back taxes are a result of not having enough withholdings for those tax years. In his personal subject interview, Applicant explained that between 2011 and 2013 he had a large profit from a real estate sale, through his real estate business, and sufficient taxes were not taken out. (Government Exhibit 2.) Applicant was employed with a defense contractor for 32 years before he was laid off in 2013. This sudden reduction of his income forced him to exhaust his savings to live on. From 2013 to 2014, Applicant was unemployed following the lay-off at work until he was hired by his current employer in 2014. During his unemployment, he exhausted his savings and without income had to obtain a loan modification on his home, which negatively impacted his credit scores. (Applicant’s Exhibit G.) Applicant could not keep up the IRS payments on his back taxes and stay current on his other debts. He made attempts to reach the IRS to set up another payment arrangement but was unsuccessful until recently because the IRS wanted a substantial up-front cash payment. Applicant testified that he paid the IRS the back the taxes owed for tax years 2011 and 2012. He made the payment of $250 a month until the IRS suspended the agreement in 2013, about the same time he was laid off of his job. As the years passed, Applicant continued to owe more taxes. Applicant currently owes a balance of $30,370 for Federal back taxes for 2013 and 2015. After receiving the SOR in 2016, he set up a payment arrangement with the IRS. He initially proposed a monthly payment of $250 but they were not willing to accept it. They counter-offered, and agreed to accept $388 monthly. Applicant testified that he is willing and able to pay the $388 monthly but has not started the payment plan yet. A copy of a letter from the IRS indicates that the payment plan will start in February 3 2017. Applicant submitted Post-Hearing Exhibit A, his most recent letter from the IRS that indicates the payment plan will start in March 2017. 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. According to AG ¶ 2(a), 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 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, 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, and has the ultimate burden of persuasion as to obtaining a favorable clearance decision.” A person who applies for access to classified information seeks to enter 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 protect or 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). 4 Analysis Guideline F, Financial Considerations The security concern relating to the guideline 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. Three are potentially applicable in this case: (a) inability to satisfy debts; (b) unwillingness to satisfy debts regardless of the ability to do so; (c) a history of not meeting financial obligations; and (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. Applicant has a history of delinquent back taxes that began in 2011 and has continued to the present. It is noted that he was laid off from work for a year from 2013 to 2014, but he had incurred delinquent back taxes before that happened. He has continued to have tax problems, and currently owes excessive Federal and state taxes. The evidence is sufficient to raise these disqualifying conditions. AG ¶ 20 provides conditions that could mitigate security concerns. I considered all of the mitigating conditions under AG ¶ 20 including: (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; 5 (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, clear victimization by predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances; and (g) the individual has made arrangements with the appropriate tax authorities to file or pay the amount owed and is in compliance with those arrangements. Applicant partially attributed his tax delinquencies to his loss of employment for a year from 2013 to 2014. These are circumstances beyond his control. However, he failed to establish that he acted reasonably or responsibly once he was employed in 2014 by his current employer. In fact, he did not start paying back taxes again until he received the SOR in this case. He has not demonstrated that he addressed his debts in a responsible or timely manner. Full mitigation under AG ¶ 20(b) and 20(g) has not been established. Applicant’s financial problems are ongoing. To his benefit, he and the IRS have recently agreed to a payment plan that he intends to follow. However, based upon the fact that he has not yet started the payment plan, and his tax problems have seemed over time to resolve and resurface, he has not demonstrated that future tax problems are unlikely. Applicant’s taxes for 2013 and 2015 remain owing. There are no clear indications that his financial problems are being resolved or are under control. AG ¶ 20(a) does not provide mitigation. 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. 6 I considered the potentially disqualifying and mitigating conditions in light of all facts and circumstances surrounding this case. I have incorporated my comments under Guideline F in my whole-person analysis. Some of the factors in AG ¶ 2(d) were addressed under those guidelines, but some warrant additional comment. Applicant has a long history of working in the defense industry. He has been working for his current employer since April 2014. Using the level of judgment required to access classified information would have required Applicant to ensure that his payment plan was well in effect, showing a systematic method of payments to resolve his current tax debt, without reoccurrence, as well as a guarantee to the administrative judge that his tax exemptions going forward have been properly calculated to avoid future tax problems. He has failed in both regards. Overall, the record evidence leaves me with questions and doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant failed to mitigate the Financial Considerations security concerns. Formal Findings Formal findings for or against Applicant on the allegations set forth in the SOR, as required by ¶ E3.1.25 of the Directive, are: Paragraph 1, Guideline F: AGAINST APPLICANT Subparagraph 1.a: 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 eligibility for a security clearance. Eligibility for access to classified information is denied. ________________________ Darlene Lokey Anderson Administrative Judge