1 - DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-03117 ) Applicant for Security Clearance ) Appearances For Government: Dave Hayes, Esq., Department Counsel For Applicant: Pro se ______________ Decision ______________ KILMARTIN, Robert J., Administrative Judge: Applicant did not mitigate the security concerns under Guideline F, financial considerations. Applicant’s eligibility for access to classified information is denied. Statement of the Case Applicant submitted a security clearance application (SCA) on February 19, 2013. On November 22, 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. The DOD CAF acted 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 (AGs) implemented by DOD on September 1, 2006. On December 10, 2016, the Director of National Intelligence signed Security Executive Agent Directive 4 (SEAD 4), implementing new AGs effective within the DOD on June 8, 2017. Accordingly, I have applied the June 8, 2017 AGs in this decision.1 1 Although I have decided this case under the adjudicative guidelines (AG) effective June 8, 2017, I also considered the case under the former AG effective on September 1, 2006, and my decision would be the same under either version. 2 Applicant answered the SOR on December 9, 2016, admitting all of the SOR allegations and electing to have his case decided on the written record. Department Counsel submitted the Government’s file of relevant material (FORM) on January 9, 2017. Applicant received the FORM on January 16, 2017, and had 30 days to file objections and submit material in refutation, extenuation, or mitigation. Applicant provided a two-page, handwritten response to the FORM. The Government’s evidence, identified as Items 1 through 6, is admitted into evidence without objection. The case was assigned to me on October 1, 2017. Findings of Fact2 Applicant is 57 years old. He was married in 1992 and divorced in 2011, and he has two adult sons. He graduated from high school in 1979, and enlisted in the U.S. Air Force (USAF). He served on active duty in the USAF from 1979 to 1990 as a security policeman, and he received an honorable discharge. Applicant was self-employed as President and CEO of a small private-investigative agency from March 2003 to March 2015. Applicant was the sole owner of his private investigative agency. He fell behind on company payroll taxes after the economic collapse of 2008. He had to dissolve the company in March 2015. Applicant has been pending employment as a security officer for a federal contractor since January 2013. He disclosed some of his delinquent debts in section 26 of his February 2013 SCA, including a foreclosure on his home in November 2012. Pursuant to his divorce agreement, Applicant’s ex-wife lived in the house and she was supposed to continue making mortgage payments. She did not do so. He also disclosed that he did not file federal or state income tax returns in 2010 and 2011 due to a business slowdown, inadequate accounts receivable, divorce and the costs associated with putting two children through college. In his clearance interview in July 2016, Applicant stated that he only filed his 2012, 2013, 2014, and 2015 state income tax returns after his SCA was completed. Applicant listed 12 tax liens filed against him between 2010 and 2015. He estimated that he owes between $40,000 to $45,000 in back taxes, which he intends to pay in full. Applicant has produced no evidence of any payment plan or any track record of actual payments in accordance with the plan. The SOR alleged 14 delinquent debts, including seven federal tax liens totaling approximately $262,000, and four state tax liens totaling approximately $21,250 plus three delinquent medical debts. Applicant admitted to these delinquent debts in his Answer to the SOR. In his FORM response, Applicant stated that when he went on active duty in the USAF and was deployed to Operation Desert Storm in 1991, he supposedly took a reduction in income and had to file for Chapter 13 Bankruptcy relief. He was unable to file or pay his taxes due to insufficient income from his business, 2 Unless stated otherwise, the source of the information in this section is Applicant’s February 19, 2013 security clearance application (SCA) and the summary of his security clearance interview on July 14, 2016. 3 which was crowded out by larger competitors, and expenses related to his divorce and college tuitions. He served as a civilian security officer for a federal contractor in the Marshall Islands from March 2013 to March 2014, and earned a substantial salary. He now has a similar opportunity wherein he could earn in excess of $90,000, conditional on his obtaining a security clearance. Applicant produced no evidence to show that he has satisfied his numerous tax liens, entered into a payment plan with the state tax authority or IRS, or paid any of his delinquent debts alleged in the SOR. He provided no evidence that he obtained credit or debt consolidation counseling or has any budget. Policies When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations, the adjudicative guidelines 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, Appendix A, ¶ 2(a), the adjudicative process is an examination of a sufficient period and a careful weighing of a number of variables of an individual’s life to make an affirmative determination that the individual is an acceptable security risk. This is 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, Appendix A, ¶ 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 mitigate facts admitted by applicant or proven by Department Counsel, and has the ultimate burden of persuasion as to obtaining a favorable security 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 4 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. Section 7 of EO 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.” Analysis Guideline F, Financial Considerations The security concern relating to 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 abuse, 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 . . . . This concern is broader than the possibility that an individual might knowingly compromise classified information in order to raise money. It encompasses concerns about an individual’s self-control, judgment, and other qualities essential to protecting classified information. An individual who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information. AG ¶ 19 provides conditions that could raise security concerns. The following apply here: (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 of failure to pay annual federal, state or local income tax as required. Applicant’s delinquent debts alleged in the SOR are confirmed by his credit reports, clearance interview and answer to the SOR. The Government produced 5 substantial evidence to support the disqualifying conditions in AG ¶¶ 19(a), 19(b), and 19(c), thereby shifting the burden to Applicant to produce evidence to rebut, explain, extenuate, or mitigate the facts.3 Applicant has not met that burden. The guideline also includes conditions that could mitigate security concerns arising from 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 . . ., 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 appropriate tax authority to file or pay the amount owed and is in compliance with those arrangements. Applicant has longstanding financial problems going back to 1991. He disclosed that his recent tax problems resulted from a business slowdown, divorce and the costs associated with college educations for his two sons. He provided no other explanation for his inability or unwillingness to pay his delinquent debts and numerous tax liens. Arguably, the business failure was due to conditions that were beyond his control. Nevertheless, he has not produced relevant and responsive documentation, demonstrating that he acted responsibly under the circumstances. Applicant has not met his burden to provide sufficient evidence to show that his financial problems are under control, and that his debts were incurred under circumstances making them unlikely to recur. The fourteen delinquent debts and tax liens have not been resolved. The mitigating conditions enumerated above do not 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 conduct and all the circumstances. The administrative judge should consider the nine adjudicative process factors listed at AG, Appendix A, ¶ 2(d): 3 Directive ¶ E3.1.15. See ISCR Case No. 02-31154 at 5 (App. Bd. Sep 22, 2005) (An applicant has the burden of proving a mitigating condition, and the burden of disproving it never shifts to the Government). 6 (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, Appendix A, ¶ 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 the 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, Appendix A, ¶ 2(d) were addressed under that guideline. Most importantly, Applicant has not addressed the specific allegations in the SOR and has not met his burden of production. Applicant’s finances remain a security concern. There is insufficient evidence to conclude that Applicant’s financial problems are under control. The record evidence leaves me with questions and doubts as to Applicant’s suitability for a security clearance. For all these reasons, I conclude Applicant has not mitigated the security concerns arising under Guideline F, financial considerations. 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 Subparagraphs 1.a through 1.n: Against Applicant Conclusion In light of all of the circumstances presented by the record in this case, it is not clearly consistent with the interests of national security to grant Applicant a security clearance. Eligibility for access to classified information is denied. ________________________ Robert J. Kilmartin Administrative Judge