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ISCR Case 21-00880 — CASE

ISCR Case 21-00880denied

Case Headnote

ISCR Case No. 21-00880

Jun 22, 2023· Hon. Gregg A. Cervi· appeal

Summary

A security clearance applicant, represented by counsel, was denied a clearance primarily due to significant delinquent tax debt totaling approximately $159,000, falling under Guideline F (Financial Considerations). The appeal board upheld this denial.

The board found that the applicant failed to demonstrate a good-faith effort to pay the delinquent taxes and did not show that the debt was actively being resolved. The applicant's arguments concerning the circumstances that led to the debt were deemed insufficient to overcome the presumption that the judge had thoroughly considered all presented evidence.

Ultimately, the denial was affirmed because the applicant did not adequately mitigate the financial concerns raised by the substantial outstanding tax obligations.

Conditions Referenced

Disqualifying

AG ¶ 20(a)raisedFinancial Considerations

Key Rule Quoted

“The general standard is that a clearance may be granted only when ‘clearly consistent with national security.’”
— Department of the Navy v. Egan, 484 U.S. 518, 528 (1988)

Procedural Posture

SOR issuedSep 21, 2021
Answer filed—
Hearing heldMay 9, 2023
Decision dateJun 22, 2023

Cite For

Affirmation of Denial Based on Financial Considerations Under Guideline F
Insufficient Demonstration of Good-faith Efforts to Resolve Tax Debts
Importance of National Security in Clearance Determinations

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 a denial of a security clearance based on financial considerations. The applicant argued that the Judge failed to consider all evidence and apply mitigating factors. The Board affirmed the Judge's decision, finding no harmful error in the weighing of evidence or application of the law.

Appealed bythe applicant

Applicant representationAttorney

Judge belowPaul J. Mason — denied the clearance

Decided ona hearing

Guidelines belowGuideline F

What the Board reviewed

Judge mis-weighed or ignored evidence — raised by the applicantRejected
Applicant contended the Judge failed to consider all evidence and properly apply mitigating conditions.

Why the Board ruled this way

The Board found no harmful error in the Judge's decision, affirming that the Judge properly considered the evidence and articulated a satisfactory explanation for the denial of the security clearance.

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

James F. Duffy — Chair
Moira Modzelewski
Gregg A. Cervi

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

APPEARANCES

_______________________________________________ ) In the matter of: )

)

----- )

ISCR Case No. 21-00880

)

) Applicant for Security Clearance ) _______________________________________) DEPARTMENT OF DEFENSE DEFENSE LEGAL SERVICES AGENCY DEFENSE OFFICE OF HEARINGS AND APPEALS APPEAL BOARD POST OFFICE BOX 3656 ARLINGTON, VIRGINIA 22203 (703) 696-4759 Date: June 22, 2023

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT James B. Norman, Esq., Chief Department Counsel FOR APPLICANT Brittany D. Forrester, Esq. The Department of Defense (DoD) declined to grant Applicant a security clearance. On September 21, 2021, DoD issued a statement of reasons (SOR) advising Applicant of the basis of that decision―security concerns raised under Guideline F (Financial Considerations) of the National Security Adjudicative Guidelines (AG) in Appendix A of Security Executive Agent Directive 4 (effective Jun. 8, 2017) and DoD Directive 5220.6 (January 2, 1992, as amended) (Directive). Applicant requested a hearing. On May 9, 2023, after the hearing, Defense Office of Hearings and Appeals (DOHA) Administrative Judge Paul J. Mason denied Applicant’s request for a security clearance. Applicant appealed pursuant to Directive ¶¶ E3.1.28 and E3.1.30, essentially challenging the Judge’s weighing of the evidence. The SOR alleged that Applicant owed the Federal Government approximately $159,000 in delinquent taxes for 2009, 2010, and 2013. The Judge found against Applicant on this sole allegation. Consistent with the following, we affirm the Judge’s decision.

The alleged tax debt arose from two businesses that Applicant owned. One business failed in 2010 and the other was sold before he filed Chapter 7 bankruptcy in 2014. As his businesses declined during an economic recession, Applicant tried to keep his employees on the payroll instead of laying them off. His office secretary informed him that she was paying the taxes, but he was also aware of the IRS auctioning off his business equipment. His financial problems were also exacerbated by clients failing to pay their bills and by his divorce in 2013. Although he received a bankruptcy discharge in 2014, the IRS had filed a secured claim for over $150,000 in that proceeding. He has not made any voluntary payments towards that debt, but the IRS withheld about $47,000 of his tax refunds between 2010 and 2020. He did not explain why the tax refund withholdings stopped in 2020, and he did not know the current balance of this debt. He failed to establish a good-faith effort to pay the delinquent taxes or to show this debt is being resolved. The Judge concluded the alleged security concerns were not mitigated. On appeal, Applicant does not challenge any of the Judge’s specific findings of fact. Rather, he contends the Judge failed to comply with the provisions of Executive Order 10865 and the Directive by not considering all the evidence and by not properly applying the mitigating conditions and whole-person concept. His arguments, for example, highlight the circumstances that led to his tax delinquency, the poor tax advice he received from trusted individuals, the IRS’s collection actions, and the lack of any new financial problems since his bankruptcy discharge. However, these were matters that the Judge addressed. None of Applicant’s arguments are enough to rebut the presumption that the Judge considered all of the record evidence or to demonstrate the Judge weighed the evidence in a manner that was arbitrary, capricious, or contrary to law. See, e.g., ISCR Case No. 19-01400 at 2 (App. Bd. Jun. 3, 2020). Applicant failed to establish that the Judge committed any harmful error or that he should be granted any relief on appeal. The Judge examined the relevant evidence and articulated a satisfactory explanation for the decision. The decision is sustainable on the record. “The general standard is that a clearance may be granted only when ‘clearly consistent with national security.’” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). See also AG ¶ 2(b): “Any doubt concerning personnel being considered for national security eligibility will be resolved in favor of the national security.”

ORDER

The decision is AFFIRMED. Signed: James F. Duffy James F. Duffy Administrative Judge Chairperson, Appeal Board Signed: Moira Modzelewski Moira Modzelewski Administrative Judge Member, Appeal Board Signed: Gregg A. Cervi Gregg A. Cervi Administrative Judge Member, Appeal Board