1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) [Redacted] ) ISCR Case No. 16-03381 ) Applicant for Security Clearance ) Appearances For Government: Robert B. Blazewick, Esq., Department Counsel For Applicant: Greg D. McCormack, Esq. ______________ 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 (SCA) on March 26, 2015. On January 7, 2017, 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 23, 2017, and requested a hearing before an administrative judge. Department Counsel was ready to proceed on March 27, 2017. On the same day, Department Counsel amended the SOR by adding additional allegations, and Applicant answered the additional allegations on March 31, 2017. The case was assigned to me on April 19, 2017. On May 4, 2017, the Defense Office of Hearings and Appeals (DOHA) notified Applicant that the hearing was scheduled for June 6, 2017. I convened the hearing as scheduled. Government Exhibits (GX) 1 and 2 were admitted in evidence without objection. Applicant testified and submitted Applicant’s Exhibits (AX) A through E, which were admitted without objection. I kept the record open until June 13, 2017, to enable him to submit additional documentary evidence. He timely submitted AX F, which was admitted without objection. DOHA received the transcript (Tr.) on June 14, 2017. Findings of Fact2 In Applicant’s answer to the SOR as amended, he admitted all the allegations. His admissions in his answer and at the hearing are incorporated in my findings of fact. Applicant is a 54-year-old lead associate employed by a defense contractor since April 2008. He leads a team providing weapons system acquisition services and program management support for DOD agencies. (AX A at 2.) His performance appraisals reflect that he has consistently met or exceeded the expectations of his supervisors. (AX B.) Applicant received a bachelor’s degree in civil engineering in June 1986. He attended post-graduate courses in environmental engineering from August 1995 to December 1997 but did not receive an additional degree. He served on active duty in the U.S. Air Force from November 1987 to June 1995, achieved the rank of captain, and was awarded the Meritorious Service Medal at the end of his active service. (AX C at 3- 4.) He served in the U.S. Air Force Reserve from July 1995 to June 2012 and was honorably discharged. (AX C at 2.) Applicant was employed by a defense contractor as a senior engineer from September 2005 to May 2006, and self-employed as an environmental consultant from May 2006 to April 2008. He first received a security clearance in March 1982. He received a top secret clearance in November 2002, completed a periodic reinvestigation in November 2008, and has continued to hold a clearance until the present. (AX F at 11.) Applicant has never married and has no children. His father is a retired Air Force lieutenant colonel who served on active duty for 28 years. His mother is a retired school teacher. (Tr. 25.) 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 When Applicant submitted his SCA in December 2014, he disclosed that he failed to timely file his Federal and state income tax returns for tax years 2008 through 2013.3 In his response to DOHA interrogatories in January 2017, he admitted failing to file Federal and state returns for 2008 through 2015. In his responses to interrogatories and at the hearing, he provided documentary evidence showing that he filed his Federal returns for 2008 through 2012 in March 2014, filed his Federal return for 2013 in February 2015, and filed his Federal returns for 2014 and 2015 in December 2016. He was entitled to substantial refunds for each year. He also provided documentary evidence that he filed his state return for 2013 in February 2015 and the returns for 2014 and 2015 in December 2016. (GX 2 at 3; AX E at 44-60.) He timely filed his Federal and state income tax returns for 2016. (AX E at 61-63.) Applicant testified that submitting his SCA in December 2014 made him realize that his failure to timely file his tax returns could affect his security clearance. (Tr. 40.) In his SCA, Applicant stated that he failed to timely file his Federal and state income tax returns because he was lazy. He explained that he knew he owed no taxes for any of the years when he failed to timely file. (GX 1 at 42-44.) At the hearing, he attributed his failure to timely file his tax returns to his tendency to “procrastinate about certain things.” (Tr. 39.) He admitted that while he was in active duty in the Air Force, he filed his tax returns “sometimes on time, sometimes a little late.” (Tr. 44.) He admitted that occasionally he filed his returns a year late. (Tr. 46.) He testified that he was not sure he filed his 2007 returns on time, because he was nervous about owing taxes for that year. He described his failure to timely file the Federal return for 2007 as due to stupidity. (Tr. 44.) He admitted that he received reminders from the IRS about past-due tax returns “a couple of times,” and that he responded by filing the past-due returns. (Tr. 52-53.) He agreed that while in the Air Force, filing his tax returns was “never a high priority item,” but instead was “sort of an annoyance that you have to take care of.” (Tr. 53.) Applicant lives a modest and frugal life. He rents a small apartment, pays his three credit-card balances in full each month, and has a modest car payment. He earns about $136,000 per year. He has $317,000 in his retirement account and $7,000 in a health savings account. He contributes substantial sums to his church and other religious organizations. He contributed a total of $19,800 in 2014; $25,700 in 2015; and $28,500 in 2016. (Tr. 36.) Applicant testified that he takes his obligation to protect classified information very seriously. He described an incident in January 2016 when he walked out of a meeting upon learning that the subject matter was classified at a higher level than his security clearance. He described another earlier occasion where he was assigned to a desk of a former government employee, discovered classified material in the desk, and immediately reported his discovery to the security office. (Tr. 36-38; AX B at 55.) 3 The previous version of the SCA, which Applicant submitted in June 2008, did not ask any questions about filing Federal and state income tax returns. (AX F.) 4 At the hearing, Applicant submitted a statement from his current supervisor, who describes him as a “trusted advisor to his DOD client.” The supervisor states that Applicant “is exemplary in adherence to [his employer’s] core values, which include trustworthiness, loyalty, professionalism, and dedication.” (AX D at 7-8.) Applicant also presented 16 other statements from colleagues, friends who have known him for 20-30 years, professional associates, his pastor for 10 years, and his younger brother. All declarants were familiar with the allegations in the SOR. Many of the declarants know Applicant primarily through his involvement in church activities. They all describe him as a trustworthy, humble, reliable, honest, kind, and generous. His supervisor respects him for his trustworthiness and dedication. (AX D at 1-6, 9-23.) 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 5 from being eligible for access to classified information. The Government has the burden 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 SOR, as amended, alleges that Applicant failed to timely file his Federal and state income tax returns for tax years 2008 through 2015. 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. . . . The term “financial obligations” encompasses the obligation to timely file Federal and state tax returns, whether or not the filer owes taxes. Applicant’s admissions and the documentary evidence submitted at the hearing establish the disqualifying condition in AG ¶ 19(g): “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 relevant mitigating condition is 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.” Applicant’s documentary evidence establishes this mitigating condition. 6 However, Applicant’s eventual compliance with his tax obligations does not end the inquiry. A security clearance adjudication is not a tax-enforcement procedure. It is an evaluation of an individual’s judgment, reliability, and trustworthiness. The fact that Applicant has filed his past-due returns “does not preclude careful consideration of Applicant’s security worthiness based on longstanding prior behavior evidencing irresponsibility.” ISCR Case No. 12-05053 (App. Bd. Oct. 30, 2014). Furthermore, the establishment of some mitigating evidence does not compel a favorable security- clearance decision. ISCR Case No. 11-14784 (App. Bd. Jan.17, 2014). Applicant is a mature, intelligent, well-educated adult. His military service and experience in acquisition and program management should have made him acutely aware of the importance of financial responsibility and accountability. His pattern of non- compliance with tax laws began while he was on active duty in the Air Force. He sometimes filed his tax returns a year late. He received notices from IRS about his failure to file, and he responded to the notices by filing the past-due returns. He admitted at the hearing that he regarded the obligation to file returns as an annoyance and not a high-priority duty. He testified that submitting his SCA in December 2014 made him realize that non-compliance with tax rules had security implications, but he was clearly aware before December 2014 that he needed to resolve his tax issues, as demonstrated by the fact that he filed his past-due returns for 2008 through 2012 in March 2014. Applicant’s failure to comply with federal and state tax laws suggests that he has a problem with abiding by well-established rules and regulations, which are essential for protecting classified information. He has demonstrated that he decides which duties have high priority and which rules amount to an annoyance rather than a duty. Individuals entrusted with classified information do not have the luxury of deciding which rules they will follow and which they will ignore. Applicant’s repeated failure to timely file his tax returns does not demonstrate the “high degree of good judgment and reliability required of persons granted access to classified information.” ISCR Case No. 15-03481 (App. Bd. Sep. 27, 2016), citing ISCR Case No. 14-04437 (App. Bd. Apr. 15, 2016) and ISCR Case No. 14-01894 (App. Bd. Aug. 18, 2015). Whole-Person Concept 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 7 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. 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 on active duty as an Air Force officer for seven years. He has held a security clearance since 1982. He voluntarily self-reported his failures to timely file his tax returns. On the other hand, he has a long history of non-compliance with tax rules, beginning during his active duty in the Air Force.4 When he received notices from the IRS about his failure to file, he complied and then reverted to his lack of concern about the duty to file. I am not convinced that he will not revert to old habits once the pressure of protecting his security clearance is removed. Once a concern arises regarding a person’s eligibility for access to classified information, there is a strong presumption against the grant or maintenance of a security clearance. ISCR Case No. 10-04641 at 4 (App. Bd. Sep. 24, 2013), citing Dorfmont v. Brown, 913 F.2d 1399, 1401 (9th Cir. 1990), cert. denied, 499 U.S. 906 (1991). Applicant has not overcome that presumption. 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 tax returns. Formal Findings Paragraph 1, Guideline F (Financial Considerations): AGAINST APPLICANT Subparagraphs 1.a-1.b: Against Applicant 4 Applicant’s failure to file tax returns before 2008 was not alleged in the SOR. However, conduct not alleged in the SOR may be considered to assess an applicant=s credibility; to decide whether a particular adjudicative guideline is applicable; to evaluate evidence of extenuation, mitigation, or changed circumstances; to consider whether an applicant has demonstrated successful rehabilitation; or as part of a whole-person analysis. ISCR Case No. 03-20327 at 4 (App. Bd. Oct. 26, 2006). I have considered his earlier failures to timely file his tax returns for these limited purposes. 8 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