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ISCR Case 17-02583.a1 — CASE

ISCR Case 17-02583.a1denied

Case Headnote

ISCR Case No. 17-02583.a1

Jan 11, 2019· Hon. Michael Y. Ra'anan· appeal

Summary

A 56-year-old applicant with 18 years of security clearance experience was denied a clearance under Guideline F, Financial Considerations. The denial stemmed from significant financial issues, including $129,000 in unpaid taxes and a failure to file federal income tax returns from 2010 to 2015. This raised concerns about the applicant's judgment and reliability in meeting legal obligations.

The appeal board affirmed the denial, citing the applicant's failure to timely file federal income tax returns for six years as a disqualifying condition under AG ¶ 20(a). Furthermore, insufficient evidence was presented to demonstrate that unpaid federal and state taxes for 2016 and 2017 were being resolved.

The applicant's arguments did not successfully rebut the presumption that the judge had considered all evidence. Ultimately, the security clearance was denied.

Conditions Referenced

Disqualifying

AG ¶ 20(a)raisedFinancial Considerations

Key Rule Quoted

“A person who fails repeatedly to fulfill his or her legal obligations, such as filing tax returns and paying taxes when due, does not demonstrate the high degree of good judgment and reliability required of those granted access to classified information.”
— ISCR Case No. 15-08782 at 3 (App. Bd. Apr. 5, 2017)

Procedural Posture

SOR issuedDec 19, 2017
Answer filed—
Hearing heldOct 22, 2018decision on the written record
Decision dateJan 11, 2019

Cite For

Denial of Security Clearance Due to Significant Financial Issues Under Guideline F
Importance of Timely Tax Filing and Payment in Security Clearance Evaluations
Affirmation of a Judge's Decision When Evidence Is Deemed Sufficient and Properly Considered

Editorial summary generated for research. Not legal advice; not a prediction. Verify against the full decision before relying on any quoted language.

Appeal at a glance· Full written decision

Affirmed

The appeal involved an applicant who was denied a security clearance due to financial considerations under Guideline F. The applicant argued that the Judge mis-weighed evidence and did not apply mitigating conditions properly. The Board affirmed the Judge's decision, finding no harmful error in the analysis or conclusions reached.

Appealed bythe applicant

Applicant representationAttorney

Judge belowShari Dam — denied the clearance

Decided onthe written record

Guidelines belowGuideline F

What the Board reviewed

Decision arbitrary, capricious, or contrary to law — raised by the applicantRejected
Applicant contends that the Judge did not consider all of the record evidence, mis-weighed the evidence, and did not properly apply the mitigating conditions and whole-person concept.

Why the Board ruled this way

The Board found that the Judge considered all relevant evidence and articulated a satisfactory explanation for the decision. The applicant's arguments did not demonstrate that the Judge's decision was arbitrary, capricious, or contrary to law.

Standard of review applied

Harmful-error gatekeeperSubstantial-evidence reviewArbitrary-and-capricious reviewProcedural complianceNo de-novo re-decisionNo new evidence on appealDeference to the judge’s credibility calls

Appeal Board panel

Michael Ra’anan — Chair
James F. Duffy
Charles C. Hale

Descriptive structured reading of this decided, public Appeal Board decision — what the case says, not a prediction or advice.

Full decision

The complete, official text — footnotes and signatures included — is in the original PDF.

Decision text, by section

DEFENSE OFFICE OF HEARINGS AND APPEALS

APPEAL

SYNOPSIS

KEYWORD: Guideline F DIGEST: In 2010, the IRS audited Applicant for 2006 and 2007 and found he and his wife owed $129,000 in unpaid taxes, penalties, and interest. He attributed this debt to his wife’s business and a tax preparer’s errors. He failed to file his 2010-2015 Federal tax returns in a timely manner. Applicant contends that the Judge did not consider all of the record evidence, mis- weighed the evidence, and did not properly apply the mitigating conditions and whole-person concept. For example, he highlights that he has filed his tax returns for 2010-2015, timely filed his tax returns for 2016 and 2017, and established a payment plan for his tax debt through his Chapter 13 bankruptcy. The Judge, however, made finding about those matters and discussed them in her analysis. Applicant’s arguments are neither sufficient to rebut the presumption that the Judge considered all of the evidence in the record nor are they enough to show that the Judge weighed the evidence in a manner that was arbitrary, capricious, or contrary to law. Adverse decision affirmed. CASENO: 17-02583.a1 DATE: 01/11/2019 DATE: January 11, 2019 In Re: -------------------------

Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 17-02583

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT James B. Norman, Esq., Chief Department Counsel FOR APPLICANT Ryan C. Nerney, Esq. The Department of Defense (DoD) declined to grant Applicant a security clearance. On December 19, 2017, DoD issued a statement of reasons (SOR) advising Applicant of the basis for that decision—security concerns raised under Guideline F (Financial Considerations) of Department of Defense Directive 5220.6 (Jan. 2, 1992, as amended) (Directive). Applicant requested a decision on the written record. On October 22, 2018, after considering the record, Defense Office of Hearings and Appeals (DOHA) Administrative Judge Shari Dam denied Applicant’s request for a security clearance. Applicant appealed pursuant to Directive ¶¶ E3.1.28 and E3.1.30. Applicant raised the following issue on appeal: whether the Judge’s adverse decision was arbitrary, capricious, or contrary to law. Consistent with the following, we affirm. The Judge’s Findings of Fact Applicant, who is 56 years old, has held a security clearance for about 18 years while working for defense contractors. He is married with three children. He admitted the SOR allegations. In a 2014 background interview, he attributed his financial problems to a loss of his wife’s income around that time. In 2010, the IRS audited Applicant for 2006 and 2007 and found he and his wife owed $129,000 in unpaid taxes, penalties, and interest. He attributed this debt to his wife’s business and a tax preparer’s errors. He failed to file his 2010-2015 Federal tax returns in a timely manner because his wife did not receive the necessary documents on time. Those tax returns were eventually filed. He timely filed his 2016 and 2017 Federal tax returns. He owes the IRS about $15,700 for 2015, $14,000 for 2016, and $12,000 for 2017. He stated that he owes his state about $3,300 for all years through 2015 and owes it about $3,100 for 2016 and $3,500 for 2017.

In 2015, Applicant filed Chapter 13 bankruptcy. It required him to make monthly payments of $4,500. After making about eight payments and petitioning to reduce the amount of the monthly payments, the bankruptcy was dismissed. In late 2016, he again filed Chapter 13 bankruptcy. His monthly payments were reduced to $2,835. His bankruptcy liabilities total over $286,000, including over $177,000 in unpaid Federal and state taxes. Insufficient evidence was provided to establish that his unpaid Federal and state taxes for 2016 and 2017 are being resolved. The Judge’s Analysis Applicant did not provide a legitimate explanation for his tax filing deficiencies. His failure to file Federal income tax returns in a timely manner for six years casts doubt on his current judgment and reliability. Although he is making bankruptcy payments to address unpaid taxes, no evidence has been presented that he is resolving or paying his unpaid Federal and state taxes for 2016 and 2017.

DISCUSSION

Applicant contends that the Judge did not consider all of the record evidence, mis-weighed the evidence, and did not properly apply the mitigating conditions and whole-person concept. For example, he highlights that he has filed his tax returns for 2010-2015, timely filed his tax returns for 2016 and 2017, and established a payment plan for his tax debt through his Chapter 13 bankruptcy. The Judge, however, made finding about those matters and discussed them in her analysis. Applicant’s arguments are neither sufficient to rebut the presumption that the Judge considered all of the evidence in the record nor are they enough to show that the Judge weighed the evidence in a manner that was arbitrary, capricious, or contrary to law. See, e.g., ISCR Case No. 17-02488 at 3-4 (App. Bd. Aug. 30, 2018). We give due consideration to the Hearing Office case that Applicant has cited, but it is neither binding precedent on the Appeal Board nor sufficient to undermine the Judge’s decision. Id. Additionally, the Judge complied with the requirements of the Directive in her whole-persons analysis by considering the totality of the evidence in reaching her decision. The Judge examined the relevant evidence and articulated a satisfactory explanation for the decision. A person who fails repeatedly to fulfill his or her legal obligations, such as filing tax returns and paying taxes when due, does not demonstrate the high degree of good judgment and reliability required of those granted access to classified information. See, e.g., ISCR Case No. 15- 08782 at 3 (App. Bd. Apr. 5, 2017). The decision is sustainable on this record. “The general standard is that a clearance may be granted only when ‘clearly consistent with the interests of the national security.’” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). See also Directive, Enclosure 2 ¶ 2(b): “Any doubt concerning personnel being considered for access to classified information will be resolved in favor of the national security.”

ORDER

The Decision is AFFIRMED. Signed: Michael Ra’anan Michael Ra’anan Administrative Judge Chairperson, Appeal Board Signed: James F. Duffy James F. Duffy Administrative Judge Member, Appeal Board Signed: Charles C. Hale Charles C. Hale Administrative Judge Member, Appeal Board