1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-02908 ) ) Applicant for Security Clearance ) Appearances For Government: Adrienne Driskill, Esq., Department Counsel For Applicant: Catie E. Young, Esq. September 13, 2017 ______________ Decision ______________ GOLDSTEIN, Jennifer I., Administrative Judge: Applicant was alleged to be delinquent on a Federal tax lien entered against him in 2014, in the amount of $38,114. He was also alleged to have failed to satisfy a collection account in the amount of $1,395. He has resolved his Federal tax debt and the collection account. Eligibility for access to classified information is granted. Statement of the Case On October 24, 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. 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 Applicant answered the SOR on December 30, 2016, and requested a hearing before an administrative judge. (Answer.) The case was assigned to me on April 17, 2017. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on May 4, 2017, scheduling the hearing for July 26, 2017. The hearing was convened as scheduled. The Government offered Exhibits (GE) 1 through 3, which were admitted without objection. Applicant testified on his own behalf, and presented six documents, which I marked Applicant’s Exhibits (AE) A through F. They were admitted into evidence without objection. DOHA received the transcript of the hearing (Tr.) on August 2, 2017. Findings of Fact Applicant admitted to the allegations in SOR ¶¶ 1.a, and 1.b. After a thorough and careful review of the pleadings, exhibits, and testimony, I make the following findings of fact. Applicant is a 48-year-old employee of a defense contractor. He has been employed with the defense contractor since August 2015. He is married, and has two children, ages 16 and 21. (GE 1; Tr. 16-18.) Applicant was alleged to be indebted on a Federal tax lien filed against him in 2014 in the amount of $38,114. This debt was the result of unpaid payroll taxes from 2011, 2012, and 2013, that accrued as his rental car business slowly failed. It closed in 2013. During those years, he made small payments when he could and attempted to contact agents from the IRS, and make an installment agreement on this debt, but he received no return calls. (Tr. 23, 42-43.) As a result, he hired an advertised “Tax Expert” in 2014 to negotiate an installment agreement with the IRS on his behalf. He testified: I tried to make a settlement as soon as possible. I called [Tax Experts] to get the installment plan. But there was a delay. Because the business tax was tied to my personal name. The business was not formed as a corporation. It was strictly under my name. . . So they had a hard time pulling information from the IRS. And I told them, then can we - - can I contact the IRS to find out the information for you guys? . . . for [Tax Experts]? But they said, it’s not recommended. They said, it’s in the process. It’s a work in progress. And then you will get a phone call from us regarding the tax installment plan soon. But it took almost two years to get . . . And then I asked them then can I at least make a payment to the IRS? Because the interest is going up every month, every day. And they said to hold onto it until we get the installment plan, So I was - - that’s why there was a delay on that. (Tr. 44-45.) Frustrated that the Tax Experts had taken his money for three years without result, Applicant decided to refinance his home mortgage and pay off the tax lien in full.2 Applicant produced documentation that shows this debt was paid in full on June 14, 2017, 2 Applicant had substantial equity in his home. The refinance actually lowered his monthly mortgage payment, because the interest rate was lower. (Tr. 49.) 3 and the lien has been released. He paid and filed his 2016 Federal Income tax returns in a timely manner. (AE A; Tr. 20-28.) Applicant was alleged to have failed to satisfy a collection account in the amount of $1,395. He incurred this debt as the result of an early termination fee and unreturned equipment on a merchant account related to his failed business. Applicant had been disputing this debt with the creditor, because he was also being charged for unreturned equipment, which he believed he had returned. Despite his dispute, Applicant paid this debt in full. It is resolved. (AE B; Tr. 28-32.) Applicant estimated that his net worth is $250,000. He follows a budget and he intends to closely monitor his finances to avoid delinquencies in the future. (Tr. 32-39, 54- 55.) Applicant is respected by those that wrote letters on his behalf. His supervisor finds him sincere, hardworking, and an asset to the team. His coworkers report he is reliable and “willing to go above and beyond.” He has an exceptional work ethic and is considered to be trustworthy. (AE D.) 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 useful 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 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. Likewise, I have avoided drawing inferences grounded on mere speculation or conjecture. Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, an “applicant is responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or 4 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 seeks access to classified information enters 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 Executive Order 10865 provides that 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). 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; (c) 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. A Federal tax lien was entered against Applicant in 2014 for unpaid payroll taxes, from 2011, 2012, and 2013, in the amount of $38,114. He was also indebted on a collection account in the amount of $1,395. 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; (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 financial problems were the result of a business downturn. That decline led Applicant to close his business and incur debt. He was unable to resolve his Federal tax debt and an early termination fee at the time of the business’ failure. He did his best to address the Federal tax debt, first by trying to work with the IRS himself through 2014, and then hiring a tax advisor to help him in 2014 through 2017. He relied on the “Tax Expert” during that time frame and followed its advice. However, he was disappointed in the poor results of that Tax Expert and chose to resolve the debt in full in 2017. He had a legitimate dispute relating to returned equipment with other business debt, but decided to pay it in full. Under the circumstances, Applicant has acted responsibly. He made a good faith effort to repay his debts. His budget shows that he can afford all of his current expenses. Future financial problems are unlikely. All of the above mitigating conditions apply. 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 6 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. 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 distinguished work history and is respected by those that wrote letters on his behalf. He performs well at his job. Overall, the record evidence leaves me without questions or doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant mitigated 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: FOR APPLICANT Subparagraph 1.a: For Applicant Subparagraph 1.b: For Applicant Conclusion In light of all of the circumstances presented by the record in this case, it is clearly consistent with the national interest to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is granted. ________________________ Jennifer I. Goldstein Administrative Judge