1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-02862 ) Applicant for Security Clearance ) Appearances For Government: Tara R. Karoian, Esq., Department Counsel For Applicant: Pro se __________ Decision __________ RIVERA, Juan J., Administrative Judge: After he was made aware of the security concerns raised by his failure to timely file his income tax returns and to pay his taxes, Applicant filed the delinquent income tax returns and paid his back taxes. He has timely filed and paid his taxes since 2012. He understands that he has to maintain his financial responsibility to be eligible for a clearance. Eligibility for access to classified information is granted. Statement of the Case Applicant submitted a security clearance application (SCA) before his May 30, 2012 interview with a government background investigator. Apparently, the prior SCA was recertified on May 31, 2016. After reviewing the SCA and the information gathered during a background investigation, the Department of Defense (DOD) issued him a Statement of Reasons (SOR) on November 23, 2016, alleging security concerns under Guideline F (financial considerations). Applicant answered the SOR on December 22, 2016, and requested a decision based on the written record in lieu of a hearing. A copy of the Government’s file of relevant material (FORM), submitting the evidence prompting the security concerns, was provided to Applicant by letter dated February 10, 2017. Applicant received the FORM on February 15, 2017. He was 2 allowed 30 days to submit any objections to the FORM and to provide material to refute, extenuate, and mitigate the concerns. Applicant timely responded to the FORM with a one-page statement and six documents, which are part of the record. The case was assigned to me on October 1, 2017. Procedural Issue In the FORM, Department Counsel advised Applicant that the FORM included his unauthenticated summary of interview with a government background investigator from May 30, 2012. (FORM, Item 4) Applicant was informed he could object to the summary of his interview, and it would not be admitted or considered by me, or that he could make corrections, additions, deletions, and update the document to make it accurate. He was told that his failure to respond to the FORM, or to raise any objections, could be construed as a waiver and the proposed FORM evidence would be considered by me. Applicant responded to the FORM and raised no objections. I admitted the FORM with its proffered evidence, and considered it. Department Counsel moved to amend SOR ¶ 1.a by deleting the year “2012” and substituting the year “2011.” Applicant raised no objections, and I granted the motion as requested. Findings of Fact Applicant admitted SOR ¶ 1.a, but added that he had filed his late income tax returns. He denied SOR ¶ 1.b, and said he paid his back taxes. His SOR admission, and those in his response to the FORM, are incorporated as findings of fact. After a thorough review of the record evidence, I make the following additional findings of fact: Applicant is a 39-year-old employee of a federal contractor. He graduated from high school in 1997. He married his spouse in 2005, and they have two teenagers, ages 16 and 13. Applicant’s employment history indicates that he was employed as a utility clerk between 1999 and 2006. He quit that job seeking better employment opportunities. His current employer and clearance sponsor hired Applicant in May 2005. He has been fully employed since. In his response to Section 26 (Financial Record) of his SCA, Applicant disclosed that he did not file his income tax returns for tax years 2009 through 2011. He stated that he was seeking legal advice from a tax lawyer on how to handle his problem. During his May 2012 interview, Applicant stated that his wife was in charge of managing the household finances. He believed the problem resulted from having insufficient tax withholdings. When they were about to file their 2009 income tax return, they realized they did not have the money to pay the delinquent taxes and decided not to file until they came up with a plan. For the same reason, they failed to file income tax returns for tax years 2010 and 2011. 3 In May 2012, Applicant’s wife adjusted the withholdings to prevent further tax debt. He believes she started consultations with the IRS and the state’s tax authorities shortly thereafter. Applicant told the investigator he intended to pay his tax debt as soon as possible, but wanted to consult with an attorney first. At the time of the interview, Applicant described his financial situation as stable. He stated he was capable of meeting all of his financial obligations, and did not have any delinquent accounts except for the tax debts. Applicant stated that his car loan would be paid by September 2012, and then he would have $800 at his disposal to pay his tax debt. Applicant submitted documentary evidence with his answer to the SOR, and attached to the FORM response, showing he paid the U.S. Treasury $5,777 for back taxes for tax years 2009 through 2011. Additionally, he submitted documents from his tax preparer showing that his federal and state 2013 through 2015 income tax returns were e-filed. The file contains no other evidence to show Applicant has or had any other financial problems. Policies The SOR was issued 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 (Directive) (January 2, 1992), as amended; and the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information (AG), implemented by the DOD on September 1, 2006. While the case was pending a decision, the Security Executive Agent implemented Security Executive Agent Directive (SEAD) 4, National Security Adjudicative Guidelines (AG), effective 8 June 2017, which replaced the 2006 AG. I decided this case under the AG implemented by SEAD 4 in June 2017. Eligibility for access to classified information may be granted “only upon a finding that it is clearly consistent with the national interest to do so.” Exec. Or. 10865, Safeguarding Classified Information within Industry § 2 (Feb. 20, 1960), as amended. The U.S. Supreme Court has recognized the substantial discretion of the Executive Branch in regulating access to information pertaining to national security, emphasizing that “no one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). The AG list disqualifying and mitigating conditions for evaluating a person’s suitability for access to classified information. Any one disqualifying or mitigating condition is not, by itself, conclusive. However, the AG should be followed where a case can be measured against them, as they represent policy guidance governing access to classified information. Each decision must reflect a fair, impartial, and commonsense consideration of the whole person and the factors listed in SEAD 4, App. A ¶¶ 2(d) and 4 2(f). All available, reliable information about the person, past and present, favorable and unfavorable, must be considered. Security clearance decisions resolve whether it is clearly consistent with the national interest to grant or continue an applicant’s security clearance. The Government must prove, by substantial evidence, controverted facts alleged in the SOR. If it does, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. The applicant bears the heavy burden of demonstrating that it is clearly consistent with the national interest to grant or continue his or her security clearance. Persons with access to classified information enter into a fiduciary relationship with the Government based on trust and confidence. Thus, the Government has a compelling interest in ensuring each applicant possesses the requisite judgment, reliability, and trustworthiness of those who must protect national interest as their own. The “clearly consistent with the national interest” standard compels resolution of any reasonable doubt about an applicant’s suitability for access in favor of the Government. “[S]ecurity clearance determinations should err, if they must, on the side of denials.” Egan, 484 U.S. at 531; SEAD 4, ¶ E(4); SEAD 4, App. A, ¶¶ 1(d) and 2(b). Clearance decisions are not a determination of the loyalty of the applicant concerned. They are merely an indication that the applicant has or has not met the strict guidelines the Government has established for issuing a clearance. Analysis Financial Considerations AG ¶ 18 articulates the security concern relating to financial problems: Failure or inability 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 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. Applicant failed to timely file his income tax returns for tax years 2009 through 2011, and acquired a tax deficiency that he did not pay until July 2013. AG ¶ 19 provides four disqualifying conditions that could raise a security concern 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 “(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 5 required.” The record established the above disqualifying conditions, requiring additional inquiry about the possible applicability of mitigating conditions. Five 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, 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 person has received or is receiving 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;1 (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. 1 The Appeal Board has previously explained what constitutes a “good faith” effort to repay overdue creditors or otherwise resolve debts: In order to qualify for application of [the “good faith” mitigating condition], an applicant must present evidence showing either a good-faith effort to repay overdue creditors or some other good-faith action aimed at resolving the applicant’s debts. The Directive does not define the term “good-faith.” However, the Board has indicated that the concept of good-faith “requires a showing that a person acts in a way that shows reasonableness, prudence, honesty, and adherence to duty or obligation.” Accordingly, an applicant must do more than merely show that he or she relied on a legally available option (such as bankruptcy) in order to claim the benefit of [the “good faith” mitigating condition]. (internal citation and footnote omitted) ISCR Case No. 02-30304 at 3 (App. Bd. Apr. 20, 2004) (quoting ISCR Case No. 99-9020 at 5-6 (App. Bd. June 4, 2001)). 6 The Appeal Board concisely explained Applicant’s responsibility for proving the applicability of mitigating conditions as follows: Once a concern arises regarding an Applicant’s security clearance eligibility, there is a strong presumption against the grant or maintenance of a security clearance. See Dorfmont v. Brown, 913 F. 2d 1399, 1401 (9th Cir. 1990), cert. denied, 499 U.S. 905 (1991). After the Government presents evidence raising security concerns, the burden shifts to the applicant to rebut or mitigate those concerns. See Directive ¶ E3.1.15. The standard applicable in security clearance decisions is that articulated in Egan, supra. “Any doubt concerning personnel being considered for access to classified information will be resolved in favor of the national security.” Directive, Enclosure 2 ¶ 2(b). ISCR Case No. 10-04641 at 4 (App. Bd. Sept. 24, 2013). AG ¶¶ 20(a), (c), (d), and (g) apply. A government investigator made Applicant aware of the security concerns raised by his failure to file his income tax returns and to pay his taxes during his May 2012 interview. By July 2013, Applicant had filed his late income tax returns and paid his back taxes. There is no evidence of Applicant having any additional financial problems. I believe Applicant learned his lesson. He now understands the importance of maintaining financial responsibility to be eligible for a security clearance. Applicant last failed to file his income tax returns in 2011, about six years ago. He filed his taxes and paid his back taxes by July 2013. Applicant sought the assistance of a professional tax preparer to help him timely file his 2013 through 2015 income tax returns. I find clear indications that Applicant’s financial problem was resolved in 2013. Applicant was financially irresponsible when he failed to timely file his income tax returns. Notwithstanding, his evidence is sufficient to show a good-faith effort to resolve his financial problem. I find that his financial irresponsibility is unlikely to recur. Whole-Person Concept I considered the potentially disqualifying and mitigating conditions in light of all the facts and circumstances surrounding this case, and under the whole-person concept. SEAD 4, App. A, ¶¶ 2(a), 2(d) and 2(f). I have incorporated my comments under Guideline F in my whole-person analysis. Some of these factors were addressed under that guideline, but some warrant additional comment. Applicant is a 39-year-old employee of a federal contractor. He presented sufficient evidence of efforts to resolve his financial problems, and they are currently resolved. The financial considerations security concerns are mitigated. 7 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: FOR APPLICANT Subparagraphs 1.a and 1.b: For Applicant Conclusion In light of all the circumstances presented by the record in this case, it is clearly consistent with the national security interests of the United States to grant eligibility for a security clearance to Applicant. Clearance is granted. ____________________________ JUAN J. RIVERA Administrative Judge