1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case: 16-02276 ) Applicant for Security Clearance ) Appearances For Government: Jeff A. Nagel, Department Counsel For Applicant: Pro se July 5, 2017 ______________ Decision ______________ LOKEY ANDERSON, Darlene D., Administrative Judge: Statement of Case On December 17, 2014, Applicant submitted a security clearance application (SF-86). On October 15, 2016, the Department of Defense Consolidated Adjudications Facility (DoD 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; DoD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information, effective within the DoD after September 1, 2006. Applicant answered the SOR on November 16, 2016, which was certified on November 18, 2016, and requested a hearing before an administrative judge. The case was assigned to me on January 17, 2017. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on March 7, 2017, scheduling the hearing for April 11, 2017. The hearing was convened as scheduled. The Government offered five 2 exhibits, referred to as Government Exhibits 1 through 5, which were admitted without objection. He also testified on his own behalf. DOHA received the transcript of the hearing (Tr.) on April 26, 2017. The SOR in this case was issued under the adjudicative guidelines that came into effect within the DoD on September 1, 2006. Security Executive Agent Directive (SEAD) 4, National Security Adjudicative Guidelines, implements new adjudicative guidelines, effective June 8, 2017. All national security eligibility decisions issued on or after June 8, 2017, are to be decided using the new National Security Adjudicative Guidelines for Determining Eligibility for Access to Classified Information or Eligibility to Hold a Sensitive Position (AG), as implemented by SEAD 4. I considered the previous adjudicative guidelines, effective September 1, 2006, as well as the new AG, effective June 8, 2017, in adjudicating Applicant’s national security eligibility. My decision would be the same under either set of guidelines, although this decision is issued pursuant to the new AG. Findings of Fact Applicant is 60 years old. He is married with two adult children. He has a high school diploma and four years of college. He is employed with a defense contractor as a Team Lead. He is seeking to obtain a security clearance in connection with his employment. Guideline F – Financial Considerations The Government alleges that Applicant is ineligible for a clearance because he made financial decisions that indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which raise questions about his reliability, trustworthiness, and ability to protect classified information. The SOR alleges that Applicant failed to file his Federal income tax return for tax year 2013. It also states that Applicant failed to file his state income tax returns for tax years 2010, 2011, 2012, 2013, and 2014. Applicant admits each of the allegations. Applicant has worked for the Department of Defense in some capacity since 2000. He has held a security clearance at times during that period without a security violation or any disciplinary action. Applicant attributes his failure to file his income tax returns to marital problems. For a while things were good, and then their relationship declined. At some point, his wife took control of the finances. Applicant signed his checks over to her. He does not understand why his income taxes were not filed on time as they had always filed jointly. At some point he and his wife separated, but agreed to remain living together until their children have graduated from college. One of the many problems is that his wife has 3 claimed all of the college costs that he has paid. Nothing more than that has been achieved regarding his income tax returns. Applicant admitted that he has failed to file both his Federal and state income tax returns for tax years 2010 through 2016. He believes his tax liability will be about $100,000. He has not contacted the Internal Revenue Service (IRS) or the state tax authorities to make arrangements to file to pay his taxes as of yet. He is currently trying to obtain some paperwork from his wife that he needs. He has given himself to the end of the summer as a deadline. (Tr. p. 30.) He has a 401K with his employer that is worth about $100,000. (Tr. pp. 30-31.) He also owns a home that has about $500,000 in equity. The SOR also alleges that Applicant’s delinquent credit card account that was charged off in the amount of approximately $3,418 remains owing. Applicant claims that he settled the debt. He has provided no documentation to support his payment. Due to Applicant’s honesty and truthfulness regarding other matters, I find that he paid the debt. Allegation 1.g is found for the Applicant. Policies When evaluating an applicant’s suitability for national security eligibility, the administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations for each guideline, the adjudicative guidelines (AG) list potentially disqualifying conditions and mitigating conditions, which are to be used in evaluating an applicant’s national security eligibility. 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 AG ¶ 2 describing the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. The entire process is a conscientious scrutiny of applicable guidelines in the context 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 national security eligibility will be resolved in favor of the 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. I have not drawn inferences based on mere speculation or conjecture. Directive ¶ E3.1.14, requires the Government to present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, an “applicant is 4 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 applying for national security eligibility 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 national security eligibility. 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 or sensitive information. Finally, as emphasized in Section 7 of Executive Order 10865, “[a]ny determination under this order adverse to an applicant shall be a determination 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.) Analysis Guideline F, Financial Considerations The security concerns relating to the guideline for financial considerations are set out in AG ¶ 18, which reads in pertinent part: 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. AG ¶ 19 describes three conditions that could raise security concerns and may be disqualifying in this case: (a) inability to satisfy debts; (b) a history of not meeting financial obligations; and 5 (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 failing to file state and federal income tax returns for the past six years, specifically years 2010 through 2016. He also has delinquent credit card debt that remains owing. Admittedly, he and his wife have been in marital discord. This does not excuse his failure to file income tax returns for six years. Under these particular circumstances, there is no acceptable excuse. These facts establish prima facie support for the foregoing disqualifying conditions, and shift the burden to Applicant to mitigate those concerns. The guideline includes one condition in AG ¶ 20 that could mitigate the security concerns arising from Applicant’s alleged financial difficulties: (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; Applicant has not acted responsibly under unforeseen difficult circumstances that were completely beyond his control, and there are no clear indications that his financial issues are under control. He simply ignored filing his tax returns for many years. The record establishes no mitigation of financial security concerns under the provisions of AG ¶¶ 20(a) through 20(g). 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. 6 According to 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 applicable guidelines and the whole-person concept. I considered the potentially disqualifying and mitigating conditions in light of all pertinent facts and circumstances surrounding this case. Applicant is a mature adult, who understand his responsibilities to file his income taxes and took no action to file his income tax returns. He has not contacted the tax authorities, nor has he paid his past due taxes. In fact, he has done nothing other than to wait for his wife to find paperwork he needs to file. Overall the record evidence leaves me with serious doubt as to Applicant’s judgment, eligibility, and suitability for a security clearance. He has not met his burden to mitigate the security concerns arising under the guideline for financial considerations. Formal Findings Formal findings for or against Applicant on the allegations set forth in the SOR, as required by ¶ E3.1.25 of Enclosure 3 of the Directive, are: Paragraph 1, Guideline F: AGAINST APPLICANT Subparagraphs 1.a through1.f: Against Applicant Subparagraph 1.g: For 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 national security eligibility and a security clearance. National security eligibility is denied. Darlene Lokey Anderson Administrative Judge