1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 16-03632 ) Applicant for Security Clearance ) Appearances For Government: Daniel F. Crowley, Esq., Department Counsel For Applicant: Pro se ______________ Decision ______________ NOEL, Nichole L., Administrative Judge: Applicant contests the Department of Defense’s (DOD) intent to deny his eligibility for a security clearance. Applicant failed to mitigate the security concerns raised by his failure to timely file federal and state tax returns as required. Statement of the Case On December 29, 2016, the DOD issued a Statement of Reasons (SOR) detailing security concerns under the financial considerations guideline.1 DOD adjudicators were unable to find that it is clearly consistent with the national interest to grant Applicant’s security clearance and recommended his case be submitted to an administrative judge for consideration. 1 The DOD CAF acted under Executive Order (EO) 10865, Safeguarding Classified Information within Industry, signed by President Eisenhower on February 20, 1960, as amended; as well as DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program, dated January 2, 1992, as amended (Directive), and the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information, implemented on September 1, 2006. 2 Applicant answered the SOR and requested a decision without a hearing.2 The Government submitted its written case on February 25, 2017. A complete copy of the file of relevant material (FORM) and the Directive were provided to Applicant. He received the FORM on March 17, 2017, and did not respond. The documents appended to the FORM are admitted as Government’s Exhibits (GE) 1 through 8, without objection. Procedural Matters While the case was pending decision, the Director of National Intelligence (DNI) issued Security Executive Agent Directive 4, establishing the National Security Adjudicative Guidelines (AG) applicable to all covered individuals who require initial or continued eligibility for access to classified information or eligibility to hold a sensitive position. The 2017 AG superseded the AG implemented in September 2006, and they are effective for any adjudication made on or after June 8, 2017. Accordingly, I have applied them in this case. Findings of Fact Applicant has worked for a federal contractor since December 2004. He was initially granted access to classified information in 2007. He completed his most recent security clearance application in September 2015, disclosing that he failed to file Federal and state tax returns from 2010 to 2015. He also disclosed two delinquent accounts. Applicant’s investigation revealed that he filed for bankruptcy protection in 2001 and 2003. Both petitions were dismissed. The SOR alleges the 2001 and 2003 failed bankruptcy petitions (SOR ¶¶ 1.a. and 1.b), a charged off account for $8,120 (SOR ¶ 1.c), and Applicant’s failure to file and pay Federal and state taxes from 2010 to 2015 (SOR ¶¶ 1.d and 1.e). Applicant admits all of the allegations expect for SOR ¶ 1.c, which he settled in May 2016. Applicant’s financial problems date back to 2001. Applicant was facing a balloon payment on his mortgage. Following the advice of a credit counselor, Applicant filed for bankruptcy protection. After filing the petition, Applicant received a promotion, earning enough money to resolve his delinquent accounts. He asked for the petition to be dismissed. Applicant filed for bankruptcy protection again in 2003, after he and his wife experienced periods of unemployment. Applicant was recovering from an injury and his wife experienced pregnancy complications. When they returned to work, they were behind on their bills and decided to file for bankruptcy protection a second time. Instead of completing the bankruptcy process, the couple elected to sell their home, which resolved their delinquent accounts and the bankruptcy petition was dismissed. Applicant admits that he did not file and pay Federal and state income taxes from 2010 to 2015. He blames his failure to do so on not being able to find a trustworthy tax preparer. Applicant claims to have engaged a tax preparer to file his 2014 and 2015 income tax returns. In his answer to the SOR, Applicant provided documentation from 2 GE 1. 3 the tax preparer, but it did not clearly indicate that the returns were actually filed. He did not provide any documentation regarding the status of the 2010 to 2013 returns. Policies When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines. 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 the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. 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. Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, the 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.” The applicant has the ultimate burden of persuasion to obtain a favorable security decision. 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 Failure to live within one’s means, satisfy debts, and meet financial obligations may indicate poor self-control, lack of judgement, or willingness 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.3 The record establishes the Government’s prima facie case, that Applicant has a history of not meeting his financial obligations and an inability to do so.4 The record also establishes that Applicant has failed to file his Federal and state income tax returns as 3 AG ¶ 18. 4 AG ¶¶ 19(a) inability to satisfy debts; and (c) a history of not meeting financial obligations. 4 required.5 Applicant’s financial problems in the early 2000s were caused by events beyond his control and he acted responsibly to resolve them.6 He directed his higher earnings from a promotion to resolve his 2001 financial problems and sold his home to repay debts he incurred during an extended period of unemployment in 2003. Applicant has resolved the $8,000 delinquent account alleged in SOR ¶ 1.c and it is resolved in his favor.7 However, Applicant failed to mitigate the security concerns related to his failure to file Federal and state income tax returns between 2010 and 2015. Accordingly, doubts remain about Applicant’s continued suitability for access to classified information. In reaching this decision, I have considered the whole-person factors at AG ¶ 2(d). Applicant failed to meet his burden of production and persuasion to refute or mitigate the SOR allegations. He did not provide any evidence to tax his tax problem is under control or that he is currently in compliance with Federal and state income tax filing requirement for the most recent tax year. Accordingly, his request for access to classified information is denied. 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, Financial Considerations: AGAINST APPLICANT Subparagraphs 1.a – 1.c: For Applicant Subparagraphs 1.d – 1.e: Against Applicant Conclusion Based on the record, it is not clearly consistent with the national interest to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is denied. ________________________ Nichole L. Noel Administrative Judge 5 AG ¶ 19(f) failure to file . . .Federal, state, or local income tax returns or failure to pay annual Federal, state, or local income tax as required. 6 AG ¶ 20(b) the conditions the resulted in the financial problems were largely beyond the person’s control . . ., and the person acted responsibly under the circumstances. 7 AG ¶ 20(d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts.