1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) [NAME REDACTED] ) ISCR Case No. 16-01920 ) ) Applicant for Security Clearance ) Appearances For Government: Benjamin Dorsey, Esq., Department Counsel For Applicant: Pro se ______________ Decision ______________ MALONE, Matthew E., Administrative Judge: Applicant failed to ensure his income tax returns for 2011 and 2012 were filed as required. He has since filed those returns and is meeting all of his financial obligations. Applicant established that his debts are not reflective of his judgment and reliability. He has mitigated the security concerns about his debts, and his request for a security clearance is granted. Statement of the Case On April 29, 2015, Applicant submitted an Electronic Questionnaire for Investigations Processing (e-QIP) to obtain or renew a security clearance required for his employment with a defense contractor. Based on the results of the ensuing background investigation, Department of Defense (DOD) adjudicators could not 2 determine that it is clearly consistent with the interests of national security for Applicant to have a security clearance.1 On August 30, 2016, DOD issued a Statement of Reasons (SOR) alleging facts raising security concerns addressed under the adjudicative guideline2 for financial considerations (Guideline F). Applicant timely responded to the SOR (Answer) and requested a hearing. On February 1, 2017, I received this case, and I convened the requested hearing on March 8, 2017. The parties appeared as scheduled. Department Counsel presented Government Exhibits (Gx.) 1 – 3. Applicant testified on his own behalf and presented Applicant’s Exhibit (Ax.) A – D. I admitted all exhibits without objection. I received a transcript of the hearing (Tr.) on March 20, 2017. Findings of Fact Under Guideline F, the Government alleged that Applicant failed to file, as required, his federal income tax returns for the 2011 and 2012 tax years (SOR 1.a); that he owed $5,500 for the 2011 and 2012 tax years (SOR 1.b); that he owed two delinquent debts for $363 (SOR 1.c) and $119 (SOR 1.d). Applicant admitted all four allegations. He also presented information showing he paid the debt at SOR 1.c, and that in October 2016, he filed his 2011 and 2012 tax returns. In addition to the facts thus established, I make the following additional findings of fact. Applicant is 48 years old. From August 1988 until August 2014, he served in the United States Navy, retiring as a senior chief petty officer. Applicant’s last assignment was as the leading chief petty officer of a large division aboard a Navy aircraft carrier. He held a security clearance for most of his Navy career. After retiring from the Navy, he was unemployed until April 2015, when he found work with another defense contractor. Applicant has worked for his current employer since May 2016. (Gx. 1; Tr. 7, 56, 63 - 64) Applicant was married from December 1992 until divorcing in March 2017. He and his ex-wife separated in about April 2008. They had two children, ages 22 and 18. Through a private agreement with his ex-wife, Applicant pays her $700 in monthly support; however, he regularly helps her and his children with other unplanned financial needs. For example, doctors recently diagnosed his ex-wife with cancer, and she has been unable to work. Applicant and his girlfriend have been living together since April 1 Required by Executive Order 10865, as amended, and by DOD Directive 5220.6 (Directive), as amended. 2 At the time they issued the SOR, DOD adjudicators applied the adjudicative guidelines implemented by the Department of Defense on September 1, 2006. On December 10, 2016, the Director of National Intelligence issued a new version of the adjudicative guidelines, to be effective for all adjudications on or after June 8, 2017. In this decision, I have considered and applied the new adjudicative guidelines. My decision in this case would have been the same under either version. 3 2012. At times, she has been unemployed, and for a time after he retired, they subsisted on his retirement pay alone. (Gx. 1; Tr. 21, 43 – 44) Because Applicant spent most of his Navy career aboard ship, his ex-wife took care of their finances, including their income taxes. Even after they separated in 2008, she continued to file their taxes jointly for the next two years. In July 2011, she filed for Chapter 7 bankruptcy liquidation of her debts. In 2012, she did not file their taxes for 2011. Nor did she file their taxes in 2013 for the 2012 tax year. As of this hearing, Applicant had filed his own income tax returns as required for the 2013 – 2015 tax years. He did not know until he was gathering information for his April 2015 e-QIP that his returns for 2011 and 2012 were not filed. He waited until October 2016 to file his 2011 and 2012 returns because he did not have enough money to pay what he thought would be a significant tax debt. He accepts that he was responsible for making sure he reported his taxes. (Answer; Gx. 1; Ax. B; Ax. D; Tr. 18 – 20, 34, 36 – 40, 62) When Applicant submitted his e-QIP, he disclosed his failure to file his 2011 and 2012 income tax returns. He also estimated he owed about $5,500 for both tax years. This estimation was the basis for the SOR 1.b allegation. In fact, Applicant owed $1,221.81 for 2011. Applicant has paid that debt. Available information does not show that the IRS reported his tax debt as delinquent. He has received refunds for each year since 2011 and is now current in his income tax reporting obligations. (Answer; Gx. 1 – 3; Ax. A; Ax. C; Tr. 22 - 26) Applicant incurred the credit card delinquency alleged at SOR 1.c during his divorce. He thought his ex-wife had agreed to pay it. When he realized it was still being reported as his, he inquired at the credit union that issued the card and was told it had been paid off. As to the medical debt alleged at SOR 1.d, he has no information. At the time the debt was reported, Applicant was still in the Navy and was covered by the military’s health insurance program. Unlike the debt at SOR 1.c, this debt does not appear on the Government’s most recent credit report. I conclude this debt is not Applicant’s responsibility. (Answer; Gx. 2 – 3; Tr. 33, 52 - 53) Applicant is currently sound financially. His girlfriend again is employed and he is current on all of his regular financial obligations. His defense contractor job, his Navy retired pay (of which his ex-wife receives 50 percent) and a monthly disability payment from the Department of Veterans Affairs (VA) provide Applicant with about $5,800 in monthly income. Against this, he meets all of his financial and support obligations and has about $500 remaining each month. (Tr. 19, 41 – 43, 47, 56 - 60) Policies Each security clearance decision must be a fair, impartial, and commonsense determination based on examination of all available relevant and material information,3 and consideration of the pertinent criteria and adjudication policy in the adjudicative 3 See Directive. 6.3. 4 guidelines (AG). Decisions must also reflect consideration of the factors listed in ¶ 2(d) of the guidelines. Commonly referred to as the “whole-person” concept, those factors are: (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. The presence or absence of a disqualifying or mitigating condition is not determinative of a conclusion for or against an applicant. However, specific applicable guidelines should be followed whenever a case can be measured against them as they represent policy guidance governing the grant or denial of access to classified information. A security clearance decision is intended only to resolve whether it is clearly consistent with the national interest4 for an applicant to either receive or continue to have access to classified information. The Government bears the initial burden of producing admissible information on which it based the preliminary decision to deny or revoke a security clearance for an applicant. Additionally, the Government must be able to prove controverted facts alleged in the SOR. If the Government meets its burden, it then falls to the applicant to refute, extenuate or mitigate the Government’s case. Because no one has a “right” to a security clearance, an applicant bears a heavy burden of persuasion.5 A person who has access to classified information enters into a fiduciary relationship with the Government based on trust and confidence. Thus, the Government has a compelling interest in ensuring each applicant possesses the requisite judgment, reliability and trustworthiness of one who will protect the national interests as his or her own. The “clearly consistent with the national interest” standard compels resolution of any reasonable doubt about an applicant’s suitability for access in favor of the Government.6 Analysis Financial Considerations The Government’s information reasonably raised a security concern about Applicant’s finances. That concern is stated at AG ¶ 18, as follows: 4 See Department of the Navy v. Egan, 484 U.S. 518 (1988). 5 See Egan, 484 U.S. at 528, 531. 6 See Egan; AG ¶ 2(b). 5 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. More specifically, the record as a whole requires application of the disqualifying conditions at AG ¶¶ 19(a) (inability to satisfy debts); 19(c) (a history of not meeting financial obligations); and 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). I have also considered the following pertinent AG ¶ 20 mitigating conditions: (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; (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; (d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts; and (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. Applicant’s failure to file taxes was his responsibility. Nonetheless, the circumstances through which they went unfiled were unforeseen and somewhat beyond his control. He has rectified his income tax discrepancies and shown that he is in full compliance with his obligations in this regard. Applicant owes no debt to the IRS, and 6 he promptly resolved a modest credit card delinquency. The debt at SOR 1.d appears to have been erroneously attributed to him. Applicant is financially sound and meets all of his regular obligations. His actions to resolve the issues raised by the Government’s information reflect positively on his judgment and reliability. Applicant has mitigated the security concerns about his finances. I also have evaluated this record in the context of the whole-person factors listed in AG ¶ 2(d). Applicant is a 26-year Navy veteran. He accepted responsibility for the issues concerning his finances. His actions to resolve his debts and file his taxes are sufficient to satisfy the security concerns raised by his financial problems. A fair and commonsense assessment of the record as a whole shows that the Government’s information about Applicant’s taxes and debts does not accurately reflect Applicant’s current judgment, reliability, and trustworthiness. He has met his burden of persuasion to show that he is suitable for access to classified information. Formal Findings Formal findings 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.d: For Applicant Conclusion In light of all of the foregoing, it is clearly consistent with the interests of national security for Applicant to have access to classified information. Applicant’s request for a security clearance is granted. MATTHEW E. MALONE Administrative Judge