1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-02526 ) Applicant for Security Clearance ) Appearances For Government: Chris Morin, Esq., Department Counsel For Applicant: Pro se October 13, 2017 ______________ Decision ______________ GOLDSTEIN, Jennifer I., Administrative Judge: Applicant failed to mitigate the security concerns arising under Guideline F, Financial Considerations. She failed to timely pay quarterly Federal business taxes, medical debts, and consumer debts. National security eligibility for access to classified information is denied. Statement of the Case On September 30, 2016, the Department of Defense Consolidated Adjudications Facility (DOD CAF) issued to Applicant a Statement of Reasons (SOR) detailing security concerns under Guideline F, Financial Considerations. The action was taken under Executive Order (EO) 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) effective within the DOD on September 1, 2006. Applicant submitted her Answer to the SOR on October 29, 2016, and elected to have her case decided on the written record in lieu of a hearing. Department Counsel 2 submitted the Government’s File of Relevant Material (FORM) on November 18, 2016. Applicant received it on December 8, 2016. The Government’s evidence is identified as Items 1 through 4. The FORM notified Applicant that she had an opportunity to file objections and submit material in refutation, extenuation, or mitigation within 30 days of her 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 she was afforded. Items 1 through 4 are admitted into the record. The case was assigned to me on October 1, 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 (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 admitted SOR allegations 1.a through 1.d, with explanations. Applicant failed to specifically admit or deny SOR allegations 1.e through 1.l. She noted SOR allegation 1.e was a duplicate of allegation 1.c. She noted SOR allegations 1.f through 1.l had been resolved. In the absence of clear admissions, SOR allegations 1.e through 1.l will be treated as denials. (Item 2.) After a thorough and careful review of the pleadings and exhibits, I make the following findings of fact: Applicant is 47 years old. She is divorced and has one adult son. She is a high school graduate. She has worked for the same company since 1994. She also worked as a cashier at a gas station from June 2012 to July 2015. Additionally, she is a partner in a business. She attributed her financial delinquencies to a business downturn. (Item 2; Item 3.) SOR allegations 1.a and 1.b relate to the same Federal tax debt, which Applicant reported on her February 1, 2016 Electronic Questionnaires for Investigations Processing (e-QIP). (Item 3.) In response to questions about her financial record, she disclosed that the Internal Revenue Service (IRS) had filed a “$50,000” tax lien against her personal property “because her business got behind on pay roll taxes.” (Item 3.) Item 4, a credit report dated February 17, 2016, reflects a Federal tax lien in the amount of $20,548 was filed against Applicant in April 2014 and was “unreleased.” (Item 4 at 3.) Applicant 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 explained on her e-QIP that her elderly mother handled the company’s books and Applicant was unaware that the payroll taxes were not being paid every quarter. On her e-QIP, Applicant claimed to have a payment agreement with the IRS to remit $300 monthly on this debt. She indicated she was current on her payments in her Answer. However, she produced no documentation on the current status of this tax obligation, a repayment agreement with the IRS, or proof of payments toward the debt, other than her statements. This debt is unresolved. (Item 2; Item 3.) Additionally, Applicant’s credit report, dated February 17, 2016, reflects nine other delinquent accounts totaling $6,046, as alleged in SOR allegations 1.c, 1.d, and 1.f through 1.l.2 (Item 4 at 3, 16, 17.) They were reported delinquent between 2014 and 2016. (Item 4.) While Applicant averred in her Answer that she was either paying or had paid allegations 1.c, and 1.f through 1.l, she failed to submit proof to substantiate her claim. She further indicated that allegation 1.d had been “charged off on [her] credit.” (Item 2.) SOR allegations 1.c, 1.d, and 1.f through 1.l remain unresolved. Applicant did not document any financial counseling or provide budget information from which to predict her future solvency. She offered no evidence to support findings concerning her character or trustworthiness, the quality of her professional performance, the level of responsibility her duties entail, or her track record with respect to handling sensitive information and observation of security procedures. I was unable to evaluate her credibility, demeanor, or character in person since she elected to have her case decided without a hearing. Policies When evaluating an applicant’s national security eligibility, the administrative judge must consider the AG. In addition to brief introductory explanations for each guideline, the AG list potentially disqualifying conditions and mitigating conditions, which are used 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, these guidelines are applied in conjunction with the factors listed in the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶ 2(c), 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 2 SOR allegation 1.e refers to the collection account that formed the basis for the judgment debt in allegation 1.c. Allegation 1.e will be found for Applicant to avoid counting it twice. 4 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. Directive ¶ E3.1.15 states an “applicant is 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 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 that an applicant may deliberately or inadvertently fail to 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. Finally, Section 7 of EO 10865 provides that adverse 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. AG ¶ 19 provides conditions that could raise security concerns. The following are potentially applicable: 5 (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 (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’s business failed to timely pay Federal payroll taxes, as required. As a result, a tax lien was filed against her. She also incurred nine other delinquent medical and consumer debts totaling $6,046, which appear to remain unresolved despite her claims of payment. There is sufficient evidence to support the application of the above disqualifying conditions. The guideline also includes conditions that could mitigate security concerns arising from Applicant’s financial difficulties. The following mitigating conditions under AG ¶ 20 are potentially applicable: (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; (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 or pay the amount owed and is in compliance with those arrangements. 6 Applicant was unable to pay Federal payroll taxes for an undisclosed period of time. As a result, a $20,548 Federal tax lien was filed against her in 2014. She failed to document proof of payments to the IRS. Additionally, she has nine other delinquent accounts that remain unresolved. Her debt is ongoing. AG ¶ 20(a) does not apply. Applicant’s financial problems began after she suffered a business downturn. That is a circumstance beyond her control. However, the record lacks documentation to show she reasonably and responsibly addressed her delinquencies. Mitigation under AG ¶ 20(b) is not established. Applicant provided no documentation of financial counseling. There is insufficient evidence to conclude that she is making a good-faith effort to repay her creditors because she did not provide credible evidence of payments on her Federal tax lien, medical debts, and consumer debts. The evidence does not establish mitigation under AG ¶¶ 20(c) or 20(d). Applicant did not provide evidence of a reasonable basis to dispute any of her alleged delinquencies. AG ¶ 20(e) does not apply. Applicant provided no evidence of arrangements with the IRS to resolve her Federal tax debt, other than her statements to that effect. Documentation of compliance with those arrangements is necessary. AG ¶ 20(g) does not fully mitigate the Government’s concern. 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 the 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 national security eligibility 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 pertinent facts and circumstances surrounding this case. Applicant is 47 years old. She 7 has been employed steadily since 1994. During an unspecified time period, Applicant’s business experienced a downturn. She subsequently failed to pay Federal payroll taxes and a tax lien was filed against her. She also incurred numerous unresolved medical and consumer debts. Applicant has not provided sufficient evidence about her overall financial stability to conclude further tax problems or financial delinquencies are unlikely. The record evidence leaves me with questions and doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant failed to mitigate the security concerns arising under Guideline F. Formal Findings Formal findings for or against Applicant on the allegations set forth in the SOR, as required by Section E3.1.25 of Enclosure 3 of the Directive, are: Paragraph 1, Guideline F: AGAINST APPLICANT Subparagraph 1.a: Against Applicant Subparagraph 1.b: Against Applicant Subparagraph 1.c: Against Applicant Subparagraph 1.d: Against Applicant Subparagraph 1.e: For Applicant Subparagraph 1.f: Against Applicant Subparagraph 1.g: Against Applicant Subparagraph 1.h: Against Applicant Subparagraph 1.i: Against Applicant Subparagraph 1.j: Against Applicant Subparagraph 1.k: Against Applicant Subparagraph 1.l: 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 access to classified information. National security eligibility is denied. _____________________________ Jennifer I. Goldstein Administrative Judge