DATE: June 17, 2002
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SSN: -----------
Applicant for Security Clearance
DECISION OF ADMINISTRATIVE JUDGE
ELIZABETH M. MATCHINSKI
APPEARANCES
FOR GOVERNMENT
Marc E. Curry, Esq., Department Counsel
FOR APPLICANT
Rose I. Liciaga, Personal Representative
SYNOPSIS
Applicant owes back property taxes on a parcel of real estate which has been vacant since a 1991 fire destroyed the building in which his spouse had operated a small café. Unaware the city continued to assess real estate taxes on the vacant lot or that liens had been placed on the lot because of back taxes, Applicant denied on his July 1999 security clearance application any financial delinquencies or tax liens. Since learning of the tax debt, which had accrued to more than $24,000.00 as of 2002, Applicant has been working with an attorney to resolve the matter. Clearance is granted.
The Defense Office of Hearings and Appeals (DOHA), pursuant to Executive Order 10865 (as amended by Executive Orders 10909, 11328 and 12829) and Department of Defense Directive 5220.6 (Directive), dated January 2, 1992 (as amended by Change 4), issued a Statement of Reasons (SOR), dated November 2, 2001, to the Applicant which detailed reasons why DOHA could not make the preliminary affirmative finding under the Directive that it is clearly consistent with the national interest to grant or continue a security clearance for the Applicant. DOHA recommended referral to an Administrative Judge to conduct proceedings and determine whether clearance should be granted, continued, denied or revoked. The SOR was based on financial considerations (guideline F) related to an unresolved property tax debt of about $24,003.69 and on personal conduct (guideline E) because of Applicant's failure to disclose the tax delinquency on a July 1999 security clearance application.
On January 4, 2002, Applicant, through legal counsel, responded to the allegations set forth in the SOR and requested a hearing before a DOHA Administrative Judge. The case was assigned to me on February 7, 2002. Pursuant to formal notice dated April 2, 2002, the hearing was scheduled for April 17, 2002. (1) At the hearing on April 17, 2002, Applicant appeared with his spouse, who served as his personal representative. The Government's case consisted of four documentary exhibits. Applicant submitted four exhibits and testified on his behalf. With the receipt on April 25, 2002, of the transcript of the hearing, this case is ripe for a decision.
After a thorough review of the evidence, and on due consideration of the same, I render the following findings of fact:
Applicant is a 55-year-old aircraft painter who has been employed by a defense contractor since November 1967. Applicant seeks to retain a Secret security clearance which was granted to him in September 1998 in connection with that employ.
Circa February 1979, Applicant purchased for about $65,000.00 a home at address X which he made his personal residence. In 1985, Applicant bought a three-story brick building at address Y for his spouse in which she established a café. (2) The neighborhood deteriorated over the subsequent years to where it became an area of reputed drug dealing. In summer 1991, the building at address Y sustained several small fires as well as vandalism. (3) In August 1991, unknown persons used an accelerant to torch the premises and the third story of the building was gutted by fire, with substantial water damage to the remaining floors. The damaged structure was boarded up and left vacant. In December 1991, the real estate taxes owed for 1988, 1989, and 1990, were paid out of the insurance proceeds. (4) In late January 1992, the insurance company paid $80,823.39 on Applicant's claim of loss by fire, with subsequent disbursement of $41,151.77 in a payoff of the first mortgage on the premises, $4,600.00 in attorney fees, $9,067.66 in adjuster fees and repairs, and $30,603.96 to Applicant. The mortgage deed was released on payment of the funds.
In February 1992, Applicant moved out of his personal residence at address X, which had been listed for sale since 1990. (5) Circa October/November 1992, Applicant filed for Chapter 7 bankruptcy, listing about $164,762.00 in liabilities, including his mortgage on address X. In December 1992, he filed to abandon the property at address X as well as an investment property which was located on the same street as the premises destroyed by the fire. (6)
After the fire, the city continued to assess local real estate taxes for the property at address Y. With the building uninhabitable, the real estate was assessed in October 1991 at $37,758.00, which was down from $53,382.00 a year earlier. For each of the tax years 1991, 1992, and 1993, Applicant was assessed $2,560.00 in local real estate taxes on the property at address Y. In September 1993, Applicant was granted a destruction permit by the city, and the building at address Y was demolished. The assessed value of the property decreased to $8,708.00. With the diminished value, Applicant's real estate tax obligation dropped as well to $590.40 for 1994, $587.80 for 1995, $579.08 for 1996, $570.38 for 1997. With a small increase in the value of the vacant lot to $9,579.00 for 1998 and 1999, Applicant's real estate taxes saw a slight increase to $622.64 for those tax years. Applicant was billed for these real estate taxes at address X after he had moved from this location into his sister's home. Unaware of any outstanding tax obligation, as he thought he no longer had any tax liability since the premises had been gutted by fire and he had received no tax bills, Applicant paid no taxes on the property. Consequently, interest charges continued to accrue to where he owed as of February 2000, $10,289.00 in interest on unpaid taxes of $10,289.00 for tax years 1990 through 1998.
The city continued to assess water pollution and control charges for the property owned at address Y, even after the water had been shut off in September 1993. Notices of water/sewer charges were mailed to an incorrect address. Circa summer 1999, Applicant learned he had been assessed some $7,562.30 in water/sewer charges for address Y, as the city commenced garnishment of his wages. In October 1999, Applicant's spouse consulted a local attorney about the garnishment, as the building had been vacant from August 1991 and was completely demolished in September 1993. This attorney arranged with a city attorney to have the water/sewer charges reduced to $3,129.69 and the garnishment released in November 1991. In February 2000, Applicant began $50.00 weekly payments directly to the water pollution and control authority.
In conjunction with a periodic reinvestigation into his suitability for continued access to classified information, Applicant in early July 1999 filled out a security clearance application (SF 86), which he subsequently signed later in the month. Applicant disclosed he had filed for a Chapter 7 bankruptcy in late October 1992 with a reported $164,762.00 in liabilities. Applicant admitted his wages had been garnished in the last seven years, in August 1996 by the state to recover $5,635.00 (in unpaid personal income taxes) and in August 1994 for $261.00 pursuant to superior court order. Unaware at that time that tax liens had been placed on his property at address Y, Applicant responded "No" to question 36 ["In the last 7 years, have you had a lien placed against your property for failing to pay taxes or other debts."].
In late March 2000, Applicant was interviewed by a special agent of the Defense Security Service (DSS) regarding his finances. Regarding a personal property (automobile) tax debt of $1,785.17, Applicant provided the agent with a receipt of a recent $300.00 payment. Applicant was informed by the agent city records reflected a $21,209.05 tax debt for the property at address Y. Applicant related insurance settled after a fire and the mortgage was included on a bankruptcy discharge. Ignorant as to any responsibility for ongoing tax obligations on the property after the fire, Applicant indicated tax bills had not been properly forwarded to his current residence. Aware he had been assessed water/sewer taxes, Applicant indicated his attorney was attempting to have the city accept title to the property in lieu of any payment of owed taxes. Applicant related he would make no payment toward any owed taxes on the property until the issue was mediated. (7) Asked about the wage garnishment action brought by the water pollution control authority, Applicant explained water and sewer charges continued to be assessed after the building was destroyed by fire in 1991. He denied receipt of any notices of the tax obligation, and indicated that the garnishment had been lifted in November 1999. Applicant attributed the omission from his SF 86 of the garnishment to the fact that it had not been executed at the time he completed the form. Asked about the omission of the local real estate tax debt from his SF 86, Applicant, thinking of the water/sewer charges, signed a statement indicating he made a judgment it was not necessary to list the debt since it was being mediated by his attorney with the city. In conjunction with his interview, Applicant executed a Personal Financial Statement on which he reported a $3,000.00 debt to the water pollution control authority and a $28,000.00 car loan debt.
In late November 2000, a check of Applicant's credit was run which reflected the car, on which he claimed he owed $28,000.00 as of March 2000, had been repossessed in late February 2000. Two accounts with another lender were listed as having been charged off and/or placed for collection in the amount of $1,465.00.
In March 2001, Applicant was reinterviewed by the special agent about his financial situation, including the status of his back property taxes and water/sewer debt. Applicant acknowledged the repossession of his spouse's automobile for her failure to carry and pay for insurance on the car. (8) Following sale of the car, Applicant was left owing a deficiency balance of almost $7,000.00 on which he commenced repayment in January 2001. As of the interview, Applicant indicated the debt was $6,790.00. Applicant admitted he continued to owe property taxes for 1990 to 1998 for the property at address Y. Applicant indicated the attorney he had named during his earlier interview was supposed to negotiate a settlement on his behalf, but he discharged him. Applicant acknowledged he had made no payments toward the contested debt, which the special agent informed him had reached $24,003.69 because of interest. As for his balance owed the water and sewer pollution control authority, Applicant informed the agent he had been making $50.00 payments weekly, thereby reducing the debt to $640.00 as of February 2001. Applicant executed an updated Personal Financial Statement (PFS) on which he reported a net monthly negative balance of $676.00, exclusive of any payments on the back real estate taxes. He explained the negative balance was temporary, as he had to make a lump sum payment of $948.00 on a credit card. Applicant did not list on the PFS as an owed debt the real estate property taxes on address Y.
Sometime in 2001, Applicant's spouse consulted with another lawyer, who confirmed during a title search that tax liens had been placed on the property at address Y. The attorney began negotiations with the city for either a payment program or acceptance of the real estate in lieu of payment of the taxes. (9)
As of April 2002, Applicant had paid in full the water/sewer charges assessed for the property at address Y. A company holding a tax lien on the property at address Y had received full payment and was issuing a release of the lien. (10) Applicant continued to owe back real estate taxes for tax years 1994 through 2000 totaling $7,258.16, including interest charges and lien fees. (11) Applicant and his spouse plan to seek adjustment of the interest charges since the property was a vacant lot. They are also pursuing the possible transfer by quitclaim deed of the real estate to Habitat for Humanity, with the understanding that they would not be held responsible for any back taxes after the transfer.
POLICIES
The adjudication process is based on the whole person concept. All available, reliable information about the person, past and present, favorable and unfavorable, is to be taken into account in reaching a decision as to whether a person is an acceptable security risk. Enclosure 2 to the Directive sets forth adjudicative guidelines which must be carefully considered according to the pertinent criterion in making the overall common sense determination required. Each adjudicative decision must also include an assessment of the nature, extent, and seriousness of the conduct and surrounding circumstances; the frequency and recency of the conduct; the individual's age and maturity at the time of the conduct; the motivation of the individual applicant and extent to which the conduct was negligent, willful, voluntary or undertaken with knowledge of the consequences involved; the absence or presence of rehabilitation and other pertinent behavioral changes; the potential for coercion, exploitation and duress; and the probability that the circumstances or conduct will continue or recur in the future. See Directive 5220.6, Section 6.3 and Enclosure 2, Section E2.2. Because each security case presents its own unique facts and circumstances, it should not be assumed that the factors exhaust the realm of human experience or that the factors apply equally in every case. Moreover, although adverse information concerning a single criterion may not be sufficient for an unfavorable determination, the individual may be disqualified if available information reflects a recent or recurring pattern of questionable judgment, irresponsibility or emotionally unstable behavior. See Directive 5220.6, Enclosure 2, Section E2.2.4.
Considering the evidence as a whole, this Administrative Judge finds the following adjudicative guidelines to be most pertinent to this case:
Financial Considerations
E2.A6.1.1. The Concern: An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds. Unexplained affluence is often linked to proceeds from financially profitable criminal acts.
E2.A6.1.2. Conditions that could raise a security concern and may be disqualifying include:
E2.A6.1.2.1. A history of not meeting financial obligations
E2.A6.1.3. Conditions that could mitigate security concerns include:
E2.A6.1.3.3. The conditions that resulted in the behavior were largely beyond the person's control
E2.A6.1.3.6. The individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts
Personal Conduct
E2.A5.1.1. The Concern: Conduct involving questionable judgment, untrustworthiness, unreliability, lack of candor, dishonesty, or unwillingness to comply with rules and regulations could indicate that the person may not properly safeguard classified information.
E2.A5.1.2. Conditions that could raise a security concern and may be disqualifying also include:
None applicable.
Under the provisions of Executive Order 10865 as amended and the Directive, a decision to grant or continue an applicant's clearance may be made only upon an affirmative finding that to do so is clearly consistent with the national interest. In reaching the fair and impartial overall common sense determination required, the Administrative Judge can only draw those inferences and conclusions which have a reasonable and logical basis in the evidence of record. In addition, as the trier of fact, the Administrative Judge must make critical judgments as to the credibility of witnesses. Decisions under the Directive include consideration of the potential as well as the actual risk that an applicant may deliberately or inadvertently fail to properly safeguard classified information.
Initially, the Government has the burden of proving any controverted fact(s) alleged in the Statement of Reasons. If the Government meets its burden and establishes conduct cognizable as a security concern under the Directive, the burden of persuasion then shifts to the applicant to present evidence in refutation, extenuation or mitigation sufficient to demonstrate that, despite the existence of criterion conduct, it is clearly consistent with the national interest to grant or continue his security clearance.
A person who seeks access to classified information enters into a fiduciary relationship with the Government predicated upon trust and confidence. Where the facts proven by the Government raise doubts about an applicant's judgment, reliability or trustworthiness, the applicant has a heavy burden of persuasion to demonstrate that he is nonetheless security worthy. As noted by the United States Supreme Court in Department of Navy v. Egan, 484 U.S. 518, 531 (1988), "the clearly consistent standard indicates that security clearance determinations should err, if they must, on the side of denials." Any doubt as to whether access to classified information is clearly consistent with national security will be resolved in favor of the national security. See Enclosure 2 to the Directive, Section E2.2.2.
CONCLUSIONS
Having considered the evidence of record in light of the appropriate legal precepts and factors, and having assessed the credibility of the Applicant, I conclude the following with respect to guidelines F and E:
Applicant suffered a significant property loss at the hands of an unknown arsonist in August 1991. With the insurance proceeds, Applicant satisfied the first mortgage on the property as well as the real estate taxes. Since the structure was uninhabitable, Applicant mistakenly assumed real estate taxes as well as water/sewer charges were no longer being assessed by the city. With notices being sent to an old address, Applicant had no knowledge of accumulating real estate taxes or water/sewer charges. Sometime in summer 1999, Applicant learned that he owed assessed water/sewer fees, and in September 1999, the city sought to garnish his wages to collect $7,562.30. With the aid of a local attorney, Applicant successfully had the garnishment released. Following a reassessment by the city whereby the debt was reduced to $3,129.69, Applicant in February 2000 began repayment of the debt, which has since been satisfied. Informed by the DSS agent in late March 2000 that liens had been placed on his vacant lot at address Y because of his failure to pay local real estate taxes since 1991, Applicant made no effort to determine at that juncture whether he owed more than the $3,000.00 to the city. With interest, his delinquent local real estate taxes had reached approximately $24,003.69 by March 2001. Disqualifying condition E.2.A6.1.2.1., a history of not meeting financial obligations, must be considered in this case.
Under the Directive, security significant financial indebtedness may be mitigated where the financial difficulties are not recent (E2.A6.1.3.1.), were isolated in nature (E2.A6.1.3.2.), the conditions that resulted in the behavior were largely beyond the person's control (E2.A6.1.3.3.), the person has received or is receiving counseling for the problem and there are clear indications that the problem is being resolved or is under control (E2.A6.1.3.4.), or the individual has initiated a good faith effort to repay overdue creditors or otherwise resolve debts (E2.A6.1.3.6.). Although not alleged by the Government, Applicant has had financial problems in the past, as evidenced by his bankruptcy filing. Applicant did not dispute a November 2000 credit report, which indicated two accounts had been charged off and/or placed for collection by the same lender in the amount of $1,465.00. While the real estate tax debt cannot be viewed as isolated, there is no recent evidence of financial irresponsibility on his part with regard to his handling of his monthly expenses. The Government presented no evidence to undermine Applicant's assertion that he had made regular monthly payments from July 1999 to February 2000 for an automobile which was subsequently repossessed because his spouse failed to carry and pay for insurance. Furthermore, although Applicant is legally responsible for the real estate taxes on address Y, circumstances beyond his control led to the delinquency. An arson victim, Applicant paid up the property taxes in December 1991 with insurance proceeds. Applicant failed to understand that he continued to owe property taxes after the fire and subsequent destruction by the city of the building. With tax bills for 1991 and subsequent years being forwarded to a prior address, Applicant did not receive notice of the accruing real estate tax delinquency.
In March 2000, Applicant learned from the DSS agent that city records reflected a delinquent real estate tax debt of $21,209.05. Aware since the summer of 1999 the city had continued to assess water/sewer charges on the vacant lot at address Y, Applicant knew the city had adjusted that debt to $3,129.69 from $7,562.30. Notwithstanding he lacked appreciation for the distinction between water/sewer charges and real estate taxes and was thinking only in terms of taxes assessed by the city, Applicant had a responsibility to investigate further, given the substantial difference between what he thought he owed and what the agent was telling him about the debt. He was negligent in failing to take any action by his DSS interview in 2001. However, following his second interview, Applicant and his spouse retained another attorney, who confirmed the existence of tax liens for failure to pay the taxes on address Y. Although Applicant still owes at least $7,258.16, he and his spouse are committed to resolving the matter, hoping to complete a transfer of the property by quitclaim deed to Habitat for Humanity. After considering the circumstances under which the real estate tax delinquency was incurred and the recent efforts Applicant has made to resolve the debt with the city, a favorable finding is warranted with respect to subparagraph 1.a. of the SOR.
It is undisputed Applicant did not disclose on his July 1999 security clearance application that tax liens had been placed against the property at address Y. Personal conduct (guideline E) concerns exist where the omission of relevant and material facts from any personnel security questionnaire was deliberate (see E2.A5.1.2.2.). Applicant having denied any intentional misrepresentation in this regard, the burden is on the Government to prove Applicant deliberately falsified his SF 86 when he responded "No" to whether in the last 7 years a lien had been placed against his property for failure to pay taxes or other debts. At the time Applicant executed his SF 86 in July 1999, he was aware he owed the city for water/sewer charges which had been assessed after the property was destroyed by fire in 1991. (12) Nothing in the letter from the city attorney assigned to collect the outstanding water/sewer charges indicates that a lien was placed against the property for failure to pay water/sewer charges. Citing Applicant's failure to respond affirmatively to the questions on the SF 86 regarding any financial delinquencies when he was aware at least of the water/sewer debt, (13) the Government submits an adverse outcome is merited, notwithstanding the absence of any specific allegation of falsification of questions 38 or 39 pertaining to financial delinquency. It is acknowledged it would not comport with common sense to find an applicant knowingly omitted a material delinquency but resolve the issue in his favor because the Government alleged only falsification of the tax lien question with regard to the same material delinquency. In this case, at the time Applicant completed his SF 86, he had limited knowledge of the water/sewer debt and no knowledge that he was being held separately responsible for real estate taxes. (14) Whereas he subsequently challenged the validity of the city's assessment of the water/sewer charges, it is not clear that he understood it to be a valid debt at the time he completed the SF 86. Given Applicant listed on his SF 86 his bankruptcy as well as the garnishments which had been levied against him in the past, he does not present as someone who was endeavoring to conceal his financial difficulties from the Government. Subparagraph 2.a. is resolved in his favor.
Formal Findings as required by Section 3. Paragraph 7 of Enclosure 1 to the Directive are hereby rendered as follows:
Paragraph 1. Guideline F: FOR THE APPLICANT
Subparagraph 1.a.: For the Applicant
Paragraph 2. Guideline E: FOR THE APPLICANT
Subparagraph 2.a.: For the Applicant
DECISION
In light of all the circumstances presented by the record in this case, it is clearly consistent with the national interest to grant or continue a security clearance for Applicant.
1. The Notice of Hearing was sent to legal counsel of record at that time. At the hearing, Applicant appeared with his spouse, who served as his personal representative.
2. Applicant testified his spouse attended to all the paperwork on the property, including payment of real estate taxes, as he worked second shift. (Transcript p. 107).
3. Prior to the August 1991 blaze, Applicant filed claims of loss for damages to the property in July 1991 in the amount of $25,925.25 and in early August 1991 in the amount of $33,750.85. A second mortgage debt on the property of $26,629.11 may well have been paid from the insurance proceeds, but it is not clear from the record.
4. Applicant was subsequently billed for an underpayment of $97.75 on local real estate taxes assessed at $3,379.08 for tax year 1990.
5. In 1990, Applicant listed his home for sale at an asking price of $139,000.00.
6. In March 2000, Applicant informed a Defense Security Service (DSS) special agent that the mortgage on the building destroyed by arson was included in his 1992 bankruptcy discharge. The record includes a notice of proposed abandonment of a property on the same street but with a different building number than the unit at address Y. Not addressed at the hearing was whether Applicant owned another property on the same street, or whether there was an error in the bankruptcy filing. Law firm records confirm the first mortgage on the property was satisfied with insurance monies paid after the fire.
7. Applicant testified at the hearing that he was thinking only of taxes assessed by the city, which in his mind were being sought by the water pollution control authority. Information from the attorney retained to mediate with the city indicates he was consulted in October 1999 with respect to dealing with the water/sewer charges. There is no evidence that this attorney ever attempted to negotiate with the city on Applicant's behalf with regard to the real estate taxes-or indeed, that Applicant knew of the real estate taxes prior to the interview with the DSS agent. Although Applicant signed a statement during his interview in which he admitted he was remiss in not listing his real estate property taxes on his SF 86, he lacked understanding at the interview not only of the real estate taxes, but of when the attorney was retained to mediate on his behalf with respect to the water/sewer charges. It is noted the special agent facilitated much of the discussion regarding the taxes ["I have been informed by Special agent . . . that I am being carried on the books by the City for owing a total of $21,209.05 in back taxes ."; Agent . . .informed me that my Payroll Office had processed a wage garnishment action. . . ."]. The validity to be afforded those statements which Applicant signed and swore to must be evaluated in light of the fact that his spouse, who is more proficient in English, was handling the matters involving the city on his behalf.
8. Applicant and his spouse have resided apart following the death of a stepson in a motorcycle accident.
9. Real estate tax bills for 1994 through 2000 for address Y reflect the accounts are with attorney.
10. Attached to the notice of tax lien release, dated April 12, 2002, are copies of the real estate tax bills for 1990, 1991, 1992, and 1993 which reflect an aggregate outstanding balance of $19,921.16 as of April 11, 2002. There is indication in the record that Habitat for Humanity paid the taxes on the property (Transcript p. 88), warranting the release of the lien (Ex. B), but there is no confirmation from the city that those bills had been paid. Applicant acknowledges he has not paid the back taxes owed for 1994 through 2000, which with interest total $7,258.16 (see Ex. D).
11. Tax bills issued on April 11, 2002, for years 1994 through 1999, still bear Applicant's former address X while the bill for 2000, which was issued on the same date, bears his current address.
12. As of summer 1999, it is clear Applicant questioned the validity of the debt, given the property had been demolished as of September 1993. Approximately three months after he signed the SF 86, Applicant retained legal counsel to mediate with the city.
13. See question 38 ["In the last 7 years, have you been over 180 days delinquent on any debt(s)?"] and question 39 ["Are you currently over 90 days delinquent on any debt(s)?"].