1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) [Redacted] ) ISCR Case No. 16-03119 ) Applicant for Security Clearance ) Appearances For Government: Robert B. Blazewick, Esq., Department Counsel For Applicant: Pro se ______________ Decision ______________ FOREMAN, LeRoy F., Administrative Judge: This case involves security concerns raised under Guideline F (Financial Considerations). Eligibility for access to classified information is denied. Statement of the Case Applicant submitted a security clearance application on March 26, 2015. On November 21, 2016, the Department of Defense Consolidated Adjudications Facility (DOD CAF) sent him a Statement of Reasons (SOR) alleging security concerns under Guideline F. 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, 2006.1 1 Security Executive Agent Directive 4 (SEAD 4), was issued on December 10, 2016, revising the 2006 adjudicative guidelines. The SEAD 4 guidelines apply to all adjudicative decisions issued on or after June 8, 2017. My decision is based on the guidelines in SEAD 4, referred to in this decision as “AG.” The changes resulting from issuance of SEAD 4 did not affect my decision in this case. 2 Applicant answered the SOR on January 31, 2017, and requested a hearing before an administrative judge. Department Counsel was ready to proceed on February 27, 2017, and the case was assigned to me on April 7, 2017. On May 11, 2017, the Defense Office of Hearings and Appeals (DOHA) notified Applicant that the hearing was scheduled for June 8, 2017. I convened the hearing as scheduled. Government Exhibits (GX) 1 through 4 were admitted in evidence without objection. Applicant testified and submitted Applicant’s Exhibits (AX) A, B, and D, which were not admitted. I kept the record open until June 19, 2017, to enable Applicant to submit documentary evidence. He did not submit anything. DOHA received the transcript (Tr.) on June 19, 2017. Evidentiary Issue At the hearing, Applicant proffered AX A, B, and D. His exhibits were original documents, and he had not made copies. The hearing was in a venue where a copier was not readily available. I returned the documents to him and instructed him to submit copies of the documents not later than June 19, 2017. I told him, “Now, I’m not going to admit the documents until they are returned to me. So it is very important that you comply with the requirement that you send them, because otherwise it will be like they don’t exist.” (Tr. 18.) The designation of AX C was reserved for a document that Applicant claimed to have at home. (Tr. 29.) He did not proffer it, but he promised to submit it after the hearing. He did not resubmit AX A, B, and D and did not submit any additional documents. Findings of Fact2 In his answer to the SOR, Applicant admitted the allegations with explanations. His admissions in his answer and at the hearing are incorporated in my findings of fact. Applicant is a 60-year-old shipyard materiel handler employed by defense contractors since September 2002. He was a truck driver for a non-government employer from May 1997 to August 2002. He married in July 1977 and has three children. He served in the U.S. Navy from 1976 to 1996 and retired as an operations specialist first class (pay grade E-6). (Tr. 20.) He held a security clearance during his military service. The SOR alleges that Applicant failed to timely file his Federal income tax returns for tax years 2011 through 2014 and his state income tax returns for tax years 2013 and 2014 (SOR ¶¶ 1.a and 1.b). It also alleges that the IRS filed a tax lien against him in 2011 for $45,604 (SOR ¶ 1.h); that in February 2015, the state garnished his wages for $1,598 (SOR ¶ 1.c); and that in June 2016, the IRS garnished his wages for $50,698 (SOR ¶ 1.d). Finally, the SOR alleges a home mortgage loan was past due for $14,640, with a total balance of $248,310 (SOR ¶ 1.e); a credit-card account that was charged off for $8,980 (SOR ¶ 1.f); and an unsecured loan that was past due for $628 with a total 2 Applicant’s personal information is extracted from his security clearance application (GX 1) unless otherwise indicated by a parenthetical citation to the record. 3 balance of $3,727 (SOR ¶ 1.g). The debts alleged in SOR ¶¶ 1.e-1.g are reflected in a credit report from August 2016 (GX 2). The IRS tax lien is reflected in state court records (GX 4). The JPAS (Joint Personnel Adjudication System) reports from February 2015 and June 2016 reflect that Applicant’s wages were garnished to satisfy a state tax lien, with an initial balance of $1,598 and a remaining balance of $843 as of February 15, 2015. The JPAS reports also reflect that his wages were garnished to satisfy a federal tax lien, with an initial balance of $50,698 and a remaining balance of $48,569 as of June 28, 2016. (GX 3). In Applicant’s answer to the SOR and at the hearing, he stated that he hired a tax preparer to file his Federal and state tax returns for tax years 2011 through 2014. When the tax preparer did not file the returns, Applicant was “on him, and on him, and on him” about filing the returns, but the tax preparer died without filing the returns for 2011-2014. (Tr. 24, 27.) At some time after Applicant gave his tax preparer the documents for 2014, the tax preparer’s associate notified Applicant that the tax preparer had died. Applicant was unable to recover his tax documents from the deceased tax preparer’s office, and he had to reconstruct them. (Tr. 37.) In March 2016, Applicant hired another tax preparer. At the hearing, he proffered a letter dated April 25, 2017, from the new tax preparer, acknowledging that he had been hired by Applicant. (AX B for identification.) He did not resubmit the document after the hearing. Applicant testified that this tax preparer filed his Federal returns for 2011 through 2015, but he did not submit documentary evidence that this tax preparer filed them. He testified that he had a payment agreement with the IRS, but he did not submit any documentation of it. His answer to the SOR included an unsigned installment agreement with the IRS providing for payments of $858 per month and reflected a tax debt of $51,274. He testified that he had not yet begun payments to the IRS. (Tr. 29.) As of the date of the hearing, Applicant’s new tax preparer was still negotiating with the state about unpaid taxes. (Tr. 38.) At the hearing, Applicant proffered and I examined a document reflecting that his home mortgage loan, alleged in SOR ¶ 1.e, had been modified in May 2017. (AX D for identification.) As noted above, he did not resubmit the document after the hearing. He had not made any payments on the modified loan as of the date of the hearing. (Tr. 28- 29.) The August 2016 credit report reflects that the credit card account alleged in SOR ¶ 1.f was opened in February 2015, and the last activity was in June 2015. He testified that he trying to negotiate a settlement of this debt. (Tr. 40.) He provided no documentation of negotiations, payments, or a settlement agreement. The August 2016 credit report reflects that the unsecured loan alleged in SOR ¶ 1.g was opened in November 2009 and modified in June 2014. Applicant testified that he had a payment agreement for this debt. (Tr. 40-41.) His answer to the SOR included 4 documentation of a $105 payment on the debt in SOR ¶ 1.g, made by automatic withdrawal from his bank account. (Tr. 40-41.) I am satisfied that this debt is being resolved. Applicant attributed his inability to pay the debts in SOR ¶¶ 1.e, 1.f, and 1.g to the garnishments of his pay for his tax debts, which sometimes left him with $30 or $40 per week. (Tr. 30.) At the time of the hearing, his pay was not being garnished. (Tr. 32.) He testified that he did not know when the garnishment began, or when it ended. (Tr. 34- 35.) He did not submit any pay vouchers or other documents to reflect the amount or duration of the garnishment. Policies “[N]o one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). 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.” Id. at 527. 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.” Exec. Or. 10865 § 2. Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines. 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 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.” Exec. Or. 10865 § 7. 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 5 of establishing controverted facts alleged in the SOR. See Egan, 484 U.S. at 531. “Substantial evidence” is “more than a scintilla but less than a preponderance.” See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). The guidelines presume a nexus or rational connection between proven conduct under any of the criteria listed therein and an applicant’s security suitability. See ISCR Case No. 92-1106 at 3, 1993 WL 545051 at *3 (App. Bd. Oct. 7, 1993). Once the Government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. Directive ¶ E3.1.15. An applicant has the burden of proving a mitigating condition, and the burden of disproving it never shifts to the Government. See ISCR Case No. 02- 31154 at 5 (App. Bd. Sep. 22, 2005). An applicant “has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue his security clearance.” ISCR Case No. 01-20700 at 3 (App. Bd. Dec. 19, 2002). “[S]ecurity clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531. Analysis Guideline F, Financial Considerations The security concern under this guideline 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. . . . This concern is broader than the possibility that a person might knowingly compromise classified information to raise money. It encompasses concerns about a person’s self-control, judgment, and other qualities essential to protecting classified information. A person who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information. See ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012). The evidence indicates that the 2016 garnishment alleged in SOR ¶ 1.d and the 2011 tax lien alleged in SOR ¶ 1.h were based on the same federal tax debt. When the same conduct is alleged twice in the SOR under the same guideline, one of the duplicative allegations should be resolved in Applicant=s favor. See ISCR Case No. 03- 04704 at 3 (App. Bd. Sep. 21, 2005) (same debt alleged twice). Accordingly, I will resolve SOR ¶ 1.h for Applicant. 6 Applicant’s admissions, corroborated by the August 2016 credit report and the documents submitted by Department Counsel at the hearing, establish the following disqualifying conditions: AG ¶ 19(a): inability to satisfy debts; AG ¶ 19(b): unwillingness to satisfy debts regardless of the ability 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. The following mitigating conditions are potentially applicable: 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, clear victimization by predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances; AG ¶ 20(c): the individual has received or is receiving financial counseling for the problem from a legitimate and credible source, such as a non- profit credit 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; 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. AG ¶¶ 20(a) and 20(b) are partially established. Applicant’s financial delinquencies are recent and numerous, but the tax debt, tax liens, garnishments, and the resulting inability to pay the debts in SOR ¶¶ 1.e, 1.f, and 1.g were the result of the procrastination and untimely death of Applicant’s tax preparer, which was an unusual event and a circumstance beyond his control. However, Applicant has not explained why he did not take decisive action, such as hiring another tax preparer, after learning that his tax returns were not being timely filed. Other than nagging his tax preparer, he 7 took no decisive action until he was notified of his tax preparer’s death by his tax preparer’s associate and hired a new tax preparer in March 2016. AG ¶ 20(c) is not established. Applicant is receiving assistance from a professional tax preparer, but there is no evidence that he has been receiving the financial counseling contemplated by this mitigating condition. AG ¶ 20(d) is established for the debt alleged in SOR ¶ 1.g. It is not established for the Federal and state tax debts. Applicant failed to submit documentary evidence of a payment plan for his Federal taxes, and he has not yet reached an agreement for payment of the state taxes. Furthermore, even if he has a payment agreement for his Federal taxes, he has not yet established a track record of payments. AG ¶ 20(g) is not established. Applicant testified that his past-due Federal tax returns have been filed and that he had a payment agreement for his delinquent Federal taxes, but he failed to provide documentary evidence to support his testimony. He has not explained or justified his failure to submit copies of AX A, B, and D. He has not made any payments on his delinquent Federal or state taxes. When applicants claim that they have paid or otherwise resolved delinquent debts, it is reasonable to expect that they will present documentary evidence showing resolution of the debts. See, e.g., ISCR Case No. 15-03363 at 2 (App. Bd. Oct. 19, 2016). Although I examined AX A, B, and C at the hearing and am able to generally recall the contents of those documents, it would be inappropriate for me to act as Applicant’s witness by relying on my knowledge of documents that he failed to submit. 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(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. 8 I have incorporated my comments under Guideline F in my whole-person analysis. Some of the factors in AG ¶ 2(d) were addressed under that guideline, but some warrant additional comment. Applicant was candid and sincere at the hearing. He served honorably in the U.S. Navy for 20 years and held a security clearance during that time. On the other hand, his passive approach to his obligation to timely file Federal and state income tax returns raises doubt about his sense of obligation to follow the law. His failure to resubmit copies of AX A, B, and D is inexplicable. It demonstrates inattention to his financial obligations and raises doubt about his trustworthiness and reliability. After weighing the disqualifying and mitigating conditions under Guideline F, and evaluating all the evidence in the context of the whole person, I conclude Applicant has not mitigated the security concerns raised by his failure to timely file his federal and state income tax return and to resolve his delinquent debts. Formal Findings I make the following formal findings on the allegations in the SOR: Paragraph 1, Guideline F (Financial Considerations): AGAINST APPLICANT Subparagraphs 1.a-1.d: Against Applicant Subparagraph 1.e: For Applicant Subparagraph 1.f: Against Applicant Subparagraphs 1.g-1.h: For Applicant Conclusion I conclude that it is not clearly consistent with the national security interests of the United States to grant Applicant eligibility for access to classified information. Clearance is denied. LeRoy F. Foreman Administrative Judge