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ISCR Case ISCR Case No. 21-00948 — CASE

ISCR Case ISCR Case No. 21-00948denied

Case Headnote

ISCR Case No. ISCR Case No. 21-00948

Jun 13, 2023· Hon. Gregg A. Cervi· appeal

Summary

A military veteran in his early 30s was denied a security clearance under Guideline F, Financial Considerations. The denial stemmed from ten delinquent debts totaling approximately $23,900 and the applicant's failure to file his 2017 Federal income tax return.

While the applicant presented evidence of some debt resolution and cited PTSD as a mitigating factor, the appeal board upheld the denial. Disqualifying conditions under AG ¶ 19 were raised, and mitigating conditions AG ¶ 20(a) and AG ¶ 20(c) were considered.

The denial was ultimately based on the applicant's failure to file his 2017 Federal income tax return, two remaining unresolved debts totaling approximately $2,900, and inconsistent statements regarding his tax filings, which undermined his credibility and raised reliability concerns.

Conditions Referenced

Disqualifying

AG ¶ 19raisedFinancial Considerations

Mitigating

AG ¶ 20(a)rejectedThe Behavior Was Not RecentThe applicant's ongoing unpaid debts demonstrate a continuing course of conduct.
AG ¶ 20(c)rejectedThe Individual Has Received Counseling or Treatment for the ProblemThe applicant's PTSD was considered but did not mitigate the financial concerns.

Key Rule Quoted

“"Any doubt concerning personnel being considered for national security eligibility will be resolved in favor of the national security."”
— AG ¶ 2(b)

Procedural Posture

SOR issuedMay 10, 2022
Answer filed—
Hearing heldApr 6, 2023
Decision dateJun 13, 2023Appeal decision affirmed.

Cite For

Financial Reliability Concerns Under Guideline F
Impact of Unresolved Debts on Security Clearance Eligibility
Consideration of PTSD in Financial Mitigation Cases

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 was filed by the Applicant after the Administrative Judge denied his request for a security clearance based on financial considerations and failure to file a tax return. The Applicant argued that the Judge erred in his findings and did not properly weigh evidence related to his debts and PTSD. The Board affirmed the Judge's decision, finding no harmful error in the ruling.

Appealed bythe applicant

Applicant representationPro se (self-represented)

Judge belowEdward W. Loughran — denied the clearance (split findings)

Decided ona hearing

Guidelines belowGuideline F

What the Board reviewed

Erroneous finding of fact — raised by the applicantRejected
Applicant argued that the Judge erred in finding that he failed to file his 2017 Federal income tax return.
Judge mis-weighed or ignored evidence — raised by the applicantRejected
Applicant contended that the Judge failed to properly weigh his resolved debts and consider his PTSD.
Decision arbitrary, capricious, or contrary to law — raised by the applicantRejected
Applicant claimed the Judge's decision was arbitrary and capricious.

Why the Board ruled this way

The Board found that the Judge's decision was supported by substantial evidence and that the Applicant did not demonstrate any harmful error. The Judge adequately considered the evidence, including the Applicant's personal circumstances and PTSD, and articulated a satisfactory explanation for the decision.

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. 21-00948

)

) Applicant for Security Clearance ) _______________________________________) Date: June 13, 2023

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT James B. Norman, Esq., Chief Department Counsel FOR APPLICANT Pro Se The Department of Defense (DoD) declined to grant Applicant a security clearance. On May 10, 2022, DoD issued a statement of reasons (SOR) advising Applicant of the basis for 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 June 8, 2017) and DoD Directive 5220.6 (Jan. 2, 1992, as amended) (Directive). Applicant requested a hearing. On April 6, 2023, Defense Office of Hearings and Appeals Administrative Judge Edward W. Loughran denied Applicant’s request for a security clearance. Applicant appealed pursuant to Directive ¶¶ E3.1.28 and E3.1.30. For the reasons set forth below, we affirm. The SOR alleged ten delinquent debts totaling approximately $23,900, and Applicant’s failure to file a Federal income tax return for tax year 2017, as required. The Judge found in favor of Applicant on eight debts totaling about $21,000, and against him on two debts totaling about $2,900, and for failing to file his 2017 Federal income tax return. On appeal, Applicant asserts new evidence in the form of a narrative updating the current status of his 2017 tax return, and argues the Judge improperly weighed the evidence and failed to consider relevant evidence in mitigation. The Board’s authority to review a case is limited to matters in which the appealing party has alleged that the Judge committed harmful error. To that end, Applicant takes issue with the Judge’s finding that Applicant failed to file his 2017 Federal income tax return when due, and whether the

Judge failed to consider his post-traumatic stress disorder (PTSD) as a source of his confusion during the hearing. He also asserted that the Judge did not properly weigh his resolved debts, consider the age of his debts, and his belief that he may have been a victim of financial fraud when applying the mitigating conditions. Judge’s Findings and Analysis Applicant is in his early 30sand employed by a defense contractor. He previously served honorably in the military and twice deployed to Afghanistan. He is rated as 70% disabled by the Department of Veterans Affairs and was diagnosed with PTSD after incurring an injury during one of the deployments. He was divorced in 2018 and remarried the same year. He has two children from his first marriage that live with him. Applicant provided contradictory statements with regard to the status of his 2017 Federal income tax return. He claimed that he filed his 2017 return in 2018. However, during his personal subject interview (PSI) by a government investigator in March 2019, Applicant admitted that he had not filed his 2017 tax return but planned to do so by the end of March 2019. He was again interviewed in October 2019 and stated that he still had not filed the 2017 return because he was gathering necessary documents. He said he filed his 2018 return and was audited by the Internal Revenue Service (IRS) who determined that he owed a penalty for withdrawal of funds from his Thrift Savings Plan (TSP). The Judge found that the 2018 IRS tax transcript showed that Applicant’s income tax return for that year was filed in March 2019, and an amended return was filed in September 2019. In testimony, Applicant said he filed his 2017 tax return in late 2018 or early 2019. He presented a 2018 IRS tax account transcript, but not one for tax year 2017. In a post-hearing submission, Applicant expressed his inability to obtain his 2017 account transcript from the IRS, but presented a 2017 wage and income transcript as proof that he filed his 2017 return and paid a penalty. The Judge noted that the wage and income transcript did not state whether a tax return had been filed. Decision at 2, 3. The Judge concluded that Applicant provided inconsistent explanations about his 2017 Federal tax return and surmised that Applicant had confused his 2017 tax year with his 2018 tax year return. The Judge held that Applicant failed to carry his burden to show that he filed his 2017 Federal income tax return, and therefore suggested a problem with abiding by well-established government rules and systems. In addition, the Judge found in Applicant’s favor for most of the alleged debts, often giving Applicant the benefit of the doubt, but held that two debts in collections for $1,896 and $986 were not resolved. The Judge noted that Applicant thought he closed the account to a telecommunications company for which he owed $1,896, paid the debt, and disputed the account. The Judge found that the account was listed as an individual account with the last activity in 2017, and that his credit report did not note a dispute on the account. The other debt for $986 resulted from Applicant financing a computer in 2015. Applicant said he did not pay the debt and agreed it likely fell off his credit report due to age. Decision at 3, 4.

The Judge noted that Applicant’s case was “disjointed and often inconsistent,” and that Applicant admitted that he was at times confused, possibly related to his PTSD. Decision at 9. The Judge also noted Applicant’s letters submitted on his behalf and said Applicant “provided an eloquent plea to retain his security clearance” in addressing his patriotism, disability, and unquestioned military service. Decision at 5.

DISCUSSION

On appeal, Applicant admitted that he did not file his 2017 Federal income tax return when it was due, but argues that he told the Judge that he filed his 2017 and 2018 income tax returns in March 2019. He contends that the Judge’s decision attempts to show him as a liar, and that his memory loss may result from his PTSD. He then reasserts all of the favorable findings in the record to argue that the Judge should have found in his favor. Applicant’s assertion that the Judge failed to weigh the evidence appropriately or consider all of the relevant evidence, including Applicant’s PTSD condition, is without merit. In his Answer to the SOR, Applicant admitted he did not file the tax return on time but argued that he was transitioning from the Army and did not have the necessary documents to file the return. His assertion on appeal that he filed his 2017 tax return in March 2019 is not supported by persuasive record evidence, as he merely reasserts substantially the same information that was presented to the Judge. The Appeal Board is prohibited from considering new evidence on appeal. Directive ¶ E3.1.29. Regardless, failure to file and pay taxes when due raises a concern that a person may be lacking in the reliability and judgement necessary for the protection of classified information. See, e.g., ISCR Case No. 15-06707 at 3 (App. Bd. Aug. 15, 2017). Applicant next asserts that payment of his delinquent credit card accounts and other debts shows the progress he is making toward repairing his credit status. He also argues he was a victim of fraud, divorced, and that his PTSD may have prevented him from resolving the debts, including the credit card debt alleged in SOR ¶ 1.f. The Judge found in favor of Applicant on most of the debts, including the debts he raised in his appeal, but found that two other debts in collections that Applicant had not provided evidence of voluntary payments, were not mitigated. Applicant stated in his answer to the SOR that these two debts the Judge found were unresolved, were “due to the spoils of divorce,” and that he was “seeking resolution with this account.” Nothing in Guideline F indicates that there is any particular threshold amount of delinquent or otherwise unresolved debts that must be reached before an applicant’s financial difficulties raise security concerns. See, e.g., ISCR Case No. 15-05289 at 2 (App. Bd. Jan. 12, 2017), citing ISCR Case No. 02-10168 (App. Bd. Aug. 1, 2003). It is well established, however, that an applicant’s ongoing, unpaid debts demonstrate a continuing course of conduct and can be viewed as recent for purposes of the Guideline F mitigating conditions. See, e.g., ISCR Case No. 15-06532 at 3 (App. Bd. Feb. 16, 2017). Finally, the evidence is clear that the Judge adequately considered Applicant’s personal circumstances and his PTSD condition, specifically noting his military service and “particularly his combat deployments,” and said Applicant is “on the right track financially, but for whatever reason, he did not provide documents that might have been able to mitigate the security concerns.” Decision at 9.

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 Chair, Appeal Board Signed: Moira Modzelewski Moira Modzelewski Administrative Judge Member, Appeal Board Signed: Gregg A. Cervi Gregg A. Cervi Administrative Judge Member, Appeal Board