1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case: 16-01761 ) Applicant for Security Clearance ) Appearances For Government: Chris Morin, Esquire, Department Counsel For Applicant: Pro se October 12, 2017 ______________ Decision ______________ GOLDSTEIN, Jennifer I., Administrative Judge: Applicant owes more than $394,893 in unresolved consumer, educational, and medical debt. Additionally, he failed to pay his 2009 and 2010 Federal income taxes, and his 2010 state income taxes. He further failed to file his 2012 and 2013 Federal and state income tax returns or pay the resulting taxes, as required. Resulting security concerns were not mitigated. Based upon a review of the pleadings and exhibits, national security eligibility is denied. Statement of Case On September 3, 2014, Applicant submitted a security clearance application. (Item 3.) On September 20, 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. (Item 1.) 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 2 Adjudicative Guidelines for Determining Eligibility for Access to Classified Information, effective within the DoD after September 1, 2006. Applicant answered the SOR on January 5, 2017, and requested that his case be decided by an administrative judge on the written record without a hearing. (Item 2.) On January 27, 2017, Department Counsel submitted the Government’s written case. A complete copy of the File of Relevant Material (FORM), containing five Items, was mailed to Applicant on January 30, 2017, and received by him on February 14, 2017. The FORM notified Applicant that he had an opportunity to file objections and submit material in refutation, extenuation, or mitigation within 30 days of his receipt of the FORM. Applicant did not submit additional information in response to the FORM, did not file any objection to its contents, and did not request additional time to respond beyond the 30-day period he was afforded. Items 1 through 5 are admitted into the record. 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 (December 10, 2016), implements new adjudicative guidelines, effective June 8, 2017. All national security eligibility decisions1 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 in Appendix A of SEAD 4. I considered the previous adjudicative guidelines, as well as the new AG, 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 promulgated in SEAD 4. Findings of Fact Applicant is 45 years old. He is married. He earned a doctorate degree in December 2005. He has worked for his current employer, a Federal contractor, since March 2014. He previously held a security clearance in connection with prior employment by another government contractor. (Item 3.) In his answer to the SOR, Applicant admitted the allegations in SOR ¶¶ 1.a through 1.j, with some explanations, and denied the allegations in SOR ¶¶ 1.k through 1.dd. (Item 2.) His delinquent debts are also documented in record credit bureau reports from 2014 and 2016. (Items 4 and 5.) Applicant reported on his security clearance application, and confirmed in his answer to the SOR, that he failed to pay his 2009 and 2010 Federal income taxes and his 2010 state income taxes as required, as alleged in SOR ¶¶ 1.a and 1.b. He further failed to file his 2012 and 2013 Federal and state income tax returns or pay the resulting 1 SEAD 4 ¶ D.7 defines “National Security Eligibility” as, “Eligibility for access to classified information or eligibility to hold a sensitive position, to include access to sensitive compartmented information, restricted data, and controlled or special access program information.” 3 taxes, as required, as alleged in SOR ¶¶ 1.c and 1.d. He claimed that he had paid his 2009 and 2010 Federal income tax debt in full and was setting up payments on his remaining state and Federal tax debts. He claimed to have “recently” filed all delinquent tax returns. However, he failed to provide documentation to substantiate his claims. (Item 2; Item 3.) Applicant admitted he was indebted on a judgment entered against him in 2011 in the amount of $152,345, as alleged in SOR ¶ 1.e. He claimed in his Answer: The creditor had told me that they had withdrawn the request for judgment and that I did not need to respond to the court. The creditor behaved as if this were the case an[d] treated the loan as if it were a standard student loan. I have subsequently had the creditor move to withdraw the judgment and am repaying the debt under the terms of the original loan. (Item 2.) However, Applicant failed to present any documentation to support his claim. This debt is unresolved. (Item 2; Item 4; Item 5 at 6.) Applicant admitted he was indebted on a delinquent mortgage account in the amount of $11,920, as alleged in SOR ¶ 1.f. This debt became delinquent in approximately 2015. He claimed that he had restructured the mortgage under a government home preservation plan. However, he failed to produce documentation to support his claim. This debt is unresolved. (Item 2; Item 4; Item 5 at 1.) Applicant admitted he was indebted on a delinquent credit-card account in the amount of $6,493, as alleged in SOR ¶ 1.g. This debt has been delinquent since 2013. Applicant claimed this debt was charged off by the creditor in 2014. He claimed that he entered into a repayment plan with this creditor. However, at the end of the repayment plan, he “was informed that there was a large remaining balance.” (Item 2.) He was unable to pay that remaining balance at that time. He claimed to have disputed the remaining balance, as he believed that the repayment plan would satisfy the debt. Applicant provided no documentation of payments made under the repayment plan, or other action taken on this debt. It remains unresolved. (Item 2; Item 3; Item 4; Item 5 at 2.) Applicant admitted he was indebted to a university in the amount of $4,663, as alleged in SOR ¶ 1.h. He indicated that he intended to repay this debt, but had not yet been able to address it. (Item 2; Item 3; Item 5.) It remains unresolved. Applicant admitted he was indebted on a collection account in the amount of $4,365, as alleged in SOR ¶ 1.i. This debt was placed for collections in 2011. He stated, “This is an old debt. It is no longer collectable. Given my current situation it is a low priority to address this debt.” (Item 2; Item 4; Item 5.) It is unresolved. 4 Applicant admitted he was indebted on a delinquent credit-card account in the amount of $4,277, as alleged in SOR ¶ 1.j. In his Answer, he indicated he had not yet addressed this debt. This debt is unresolved. (Item 2; Item 3; Item 5.) Applicant denied he was indebted on the 20 delinquent medical debts totaling approximately $3,215, alleged in SOR ¶¶ 1.k through 1.dd. Applicant claimed that “at the time of service” his medical provider told him that he was “in network,” but later informed Applicant that he was not in network and tried to charge Applicant a different amount. Applicant claimed that he disputed the debt, but produced no documentation to support his claim. (Item 2; Item.) They remain unresolved. Applicant did not document any financial counseling or provide budget information from which to predict his future solvency. He offered no evidence to support findings concerning his character or trustworthiness, the quality of his professional performance, the level of responsibility his duties entail, or his track record with respect to handling sensitive information and observation of security procedures. I was unable to evaluate his credibility, demeanor, or character in person since he elected to have his case decided without a hearing. Policies When evaluating an applicant’s suitability for national security eligibility, the administrative judge must consider the pertinent adjudicative guidelines. In addition to brief introductory explanations of the security concern, the guidelines 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 5 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 Executive Order 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 personal 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 four conditions that could raise security concerns and may be disqualifying in this case: (a) inability to satisfy debts; (b) unwillingness to satisfy debts regardless of the ability to do so; (c) a history of not meeting financial obligations; and 6 (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 was unable or unwilling to repay all of his alleged delinquencies. These financial issues date back to 2011, and continue to date. He has not documented that his Federal and state tax returns for 2012 and 2013 have been filed, or that he has payment arrangements with the Federal or state taxation authorities for his delinquent taxes. Four of his unresolved debts involve less than $60. These facts establish prima facie support for the foregoing disqualifying conditions, and shift the burden to Applicant to mitigate the resulting security concerns. The guideline includes six conditions in AG ¶ 20 that could mitigate the security concerns arising from Applicant’s financial difficulties: (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, or a death, divorce or separation, clear victimization by predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances; (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; (d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts; (e) the individual has a reasonable basis to dispute the legitimacy of the past-due debt which is the cause of the problem and provides documented proof to substantiate the basis of the dispute or provides evidence of actions to resolve the issue; and (g) the individual has made arrangements with the appropriate tax authority to file and pay the amount owed and is in compliance with those arrangements. Applicant continues to owe more than $390,000 for debts that became delinquent beginning in 2011. He claimed, but did not document, that he had resolved his delinquent 7 Federal tax debt from 2009 and 2010. He offered no reasonable basis to conclude that such problems will not recur, so mitigation was not established under AG ¶ 20(a). Applicant neither asserted nor documented that his delinquent debts arose from conditions that were beyond his control, or that he acted responsibly under the circumstances, as required for mitigation under AG ¶ 20(b). He also failed to provide evidence of financial counseling or efforts to resolve the debts that could establish mitigation under the provisions of AG ¶¶ 20(c) or 20(d). Applicant claimed he disputed the debts alleged in SOR ¶¶ 1.g, and 1.k through 1.dd. However, he did not provide documented proof to substantiate the basis of his dispute or provide evidence of actions to resolve the issue. Application of AG ¶ 20(e) is not supported by the facts. Applicant claimed he was making arrangements with the state and Federal tax authorities to pay the amounts owed, but provided no documentation to substantiate any payment arrangements. He did not provide documentation of having filed his delinquent tax returns. Mitigation was not established under AG ¶ 20(g). Whole-Person Concept Under the whole-person concept, the administrative judge must evaluate an applicant’s national security eligibility 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. According to AG ¶ 2(c), the ultimate determination of whether to grant national security eligibility 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 is accountable for his choices. He continues to owe more than $390,000 in delinquent debt that he has accumulated since 2011, and either cannot or chooses not to repay. The potential for pressure, exploitation, or duress from his financial situation remains undiminished. Overall, the evidence creates significant doubt as to Applicant’s judgment, 8 eligibility, and suitability for a security clearance. He failed to meet 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 through 1.dd: Against 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. Jennifer I. Goldstein Administrative Judge