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ISCR Case 18-01447.a1 — CASE

ISCR Case 18-01447.a1denied

Case Headnote

ISCR Case No. 18-01447.a1

May 15, 2019· Hon. Michael Y. Ra'anan· appeal

Summary

A 62-year-old woman with prior security clearances was denied a security clearance under Guideline F, Financial Considerations, due to significant and ongoing financial issues. The primary concerns included her failure to file timely federal income tax returns for multiple years and an outstanding federal tax debt exceeding $300,000, alongside other delinquent debts.

While the applicant presented mitigating factors, including efforts to resolve her financial difficulties, these were not deemed sufficient. The judges determined that her financial problems remained ongoing and had not been adequately mitigated.

Consequently, the denial of her security clearance was affirmed on appeal, based on the persistent nature of her financial obligations and the lack of full resolution.

Conditions Referenced

Disqualifying

AG ¶ 19raisedFinancial Considerations

Mitigating

AG ¶ 20(a)rejectedThe Behavior Was Not RecentThe applicant's financial problems were ongoing.
AG ¶ 20(b)rejectedThe Conditions That Resulted in the Financial Problems Were Beyond the Person's ControlThe applicant's husband's unemployment did not explain her former tax filing delinquencies.
AG ¶ 20(c)rejectedThe Person Has Received Counseling for the ProblemThe applicant was just beginning to deal with her federal tax debt.
AG ¶ 20(d)rejectedThe Person Has Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve DebtsThe applicant's efforts to resolve her debts were not sufficient to mitigate the ongoing financial issues.

Key Rule Quoted

“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)

Procedural Posture

SOR issuedAug 24, 2018
Answer filed—
Hearing heldMar 6, 2019
Decision dateMay 15, 2019Decision affirmed on appeal.

Cite For

Denial of Security Clearance Due to Significant Financial Issues Under Guideline F
Ongoing Financial Problems Not Sufficiently Mitigated
Failure to File Tax Returns as a Disqualifying Condition

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 significant financial issues, including delinquent federal taxes exceeding $300,000. The applicant argued that the Judge's decision was arbitrary and capricious. The Board affirmed the Judge's decision, finding no harmful error and that the decision was consistent with national security interests.

Appealed bythe applicant

Applicant representationAttorney

Judge belowErin C. Hogan — denied the clearance (split findings)

Decided ona hearing

Guidelines belowGuideline F

What the Board reviewed

Decision arbitrary, capricious, or contrary to law — raised by the applicantRejected
Applicant contended that the Judge's adverse decision was arbitrary, capricious, or contrary to law.

Why the Board ruled this way

The Board found that the Judge's decision was supported by substantial evidence and articulated a satisfactory explanation for the adverse decision, affirming that the applicant did not demonstrate that the Judge committed any harmful error.

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 E. Moody
James F. Duffy

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: Applicant failed to file timely her 2008-2009 and 2011-2015 Federal income tax returns and had delinquent Federal taxes totaling over $300,000 for 2008, 2010, 2011, 2012, 2014, and 2015. Adverse decision affirmed. CASENO: 18-01447.a1 DATE: 05/15/2019 DATE: May 15, 2019 ) In Re: ) ) -------------------------- ) ISCR Case No. 18-01447

) ) Applicant for Security Clearance ) )

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 August 24, 2018, 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 hearing. On March 6, 2019, after the hearing, Defense Office of Hearings and Appeals (DOHA) Administrative Judge Erin C. Hogan 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 and Analysis Applicant, who is 62 years old, has been working for her current employer since 2016. Over the past 20 years, she held security clearances while working for other employers. She is married with two minor children and an adult step-son. The SOR alleged that Applicant failed to file timely her 2008-2009 and 2011-2015 Federal income tax returns; had delinquent Federal taxes totaling over $300,000 for 2008, 2010, 2011, 2012, 2014, and 2015; had a second mortgage past-due for about $24,100; had a credit card account past- due for $4,000; had a line of credit past-due for about $2,100; had two Federal tax liens totaling over $120,000; had a collection account over $25,900; and had two other delinquent debts totaling less than $1,000. She encountered financial problems when her husband, who was earning about $150,000 annually, became unemployed in 2008. She is now the sole source of income for the family and has an annual income of about $191,000. She indicated that they are unable to pay their current debts on her income. Her household operates with a negative monthly balance of about $5,600. At the time of the hearing, her husband had received an offer for a job with an annual salary of about $154,000. Applicant has filed the delinquent tax returns. During most of those years, she operated a business that ran into tax problems due to inadequate record keeping and reliance on her husband to file the tax returns. She discovered the tax issues around the time she submitted her security clearance application in 2016. She admits she owes Federal taxes, but disputes the amount. In 2016, she and her husband hired a tax attorney to help file their tax returns and negotiate a settlement with the IRS. About a month before the hearing, they were unsuccessful in their efforts to contact the attorney. They hired a tax relief company about two weeks before the hearing. The tax relief company will soon negotiate a settlement agreement with the IRS. She intends to pay her Federal tax debt. Applicant claimed the past-due second mortgage, the credit card account, and the line of credit were combined into one loan that she is making payments towards and is now current. She paid the two smallest debts and does not recall the Federal tax liens. The $25,900 collection account was entered on her credit report in error and has been removed. She is taking a more active role in the family finances. She plans to begin resolving her debts when her husband becomes employed again. She has received accolades for her excellent job performance. The Judge’s Analysis Applicant’s financial problems are ongoing. Although she has filed her delinquent tax returns, a significant Federal tax debt remains. She and her husband recently hired a tax firm to help with disputing the amount of the Federal tax debt and in instituting a repayment plan, but the status of that debt is uncertain. Given her current financial situation, the tax debt is not likely to be resolved in the near future. Her husband’s unemployment does not explain her former tax filing delinquencies. She has not established that she acted responsibly under the circumstances. She is just beginning to deal with her Federal tax debt and other financial problems . The Judge found in favor of Applicant on the two paid debts, two Federal tax liens, and collection account that was listed in error on her credit report. The Judge found against her on the remaining SOR allegations.

DISCUSSION

Applicant contends that the Judge did not consider all of the record evidence and did not properly apply the facts of the case to the mitigating conditions. In doing so, she highlights such matters as the circumstances beyond her control that contributed to her financial problems and her efforts to resolve those problems, including her hiring of a tax firm to establish an IRS payment plan. The Judge, however, addressed many of those matters in her decision. Applicant’s arguments are neither sufficient to rebut the presumption that the Judge considered all of the evidence in the record nor 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. 17-03978 at 3-4 (App. Bd. Mar. 6, 2019). We give due consideration to the Hearing Office case that Applicant has cited in support of her arguments, but it is neither binding precedent on the Appeal Board nor sufficient to undermine the Judge’s decision. Id. Applicant has not established that the Judge committed any harmful error. The Judge examined the relevant evidence and articulated a satisfactory explanation for the decision. 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 E. Moody James E. Moody Administrative Judge Member, Appeal Board Signed: James F. Duffy James F. Duffy Administrative Judge Member, Appeal Board