Loading case…

ISCR 07-16427.a1: Guideline F security clearance appeal (2010) · CASE

ISCR Case 07-16427.a1unknown

Case headnote

ISCR Case No. 07-16427.a1

Feb 4, 2010· Hon. Jeffrey D. Billett· appeal

Summary

This case concerns an applicant's attempt to retain a security clearance, initially granted in 1996 and 2003, under Guideline F (Financial Considerations). The applicant, representing himself, faced significant financial issues, primarily a $55,000 tax debt and a history of failing to file tax returns.

Disqualifying conditions under Guideline F.1 were raised due to these financial irresponsibilities. While mitigating conditions F.20(a), F.20(c), and F.20(d) were considered, the Appeal Board ultimately reversed a favorable decision.

The reversal was based on insufficient evidence to support the judge's conclusion that the $55,000 tax debt had been forgiven. The debt was still accruing interest and had not been officially forgiven by the IRS, indicating ongoing financial irresponsibility. Consequently, the applicant did not retain the security clearance.

Conditions referenced

Disqualifying

AG ¶ F.1raisedFinancial Considerations

Mitigating

AG ¶ F.20(a)rejectedBehavior Occurred Long Ago or InfrequentlyThe applicant's tax issues date back to 1977 and were not infrequent.
AG ¶ F.20(c)rejectedCounseling Received for Financial ProblemsNo evidence of effective counseling was presented.
AG ¶ F.20(d)rejectedGood-faith Effort to Repay DebtsThe applicant relied on the belief that the debt was forgiven, which was not substantiated.

Key rule quoted

“Once a concern arises regarding an Applicant’s security clearance eligibility, there is a strong presumption against the grant or maintenance of a security clearance.”
Dorfmont v. Brown, 913 F. 2d 1399, 1401 (9th Cir. 1990), cert. denied, 499 U.S. 905 (1991)

Procedural posture

SOR issuedMar 12, 2009
Answer filed—
Hearing heldOct 22, 2009
Decision dateFeb 4, 2010Appeal Board reversed the decision.

Cite for

Reversal of Favorable Security Clearance Decisions Due to Unsubstantiated Claims of Debt Forgiveness
Significant Tax Issues as a Disqualifying Factor Under Guideline F
The Strong Presumption Against Granting Security Clearances When Concerns Arise.

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

Reversed

The appeal involved a security clearance decision where the Administrative Judge granted the Applicant a clearance despite significant tax issues. The Department Counsel appealed, arguing that the Judge erred in applying mitigating conditions and in the whole-person analysis. The Appeal Board found merit in the government's arguments and reversed the favorable decision.

Appealed bythe Government (Department Counsel)

Applicant representationPro se (self-represented)

Judge belowWilford H. Ross granted the clearance

Decided ona hearing

Guidelines belowGuideline F

What the Board reviewed

Judge mis-weighed or ignored evidence, raised by the Government (Department Counsel)Error sustained
The Judge's application of the pertinent mitigating conditions was erroneous.
Decision arbitrary, capricious, or contrary to law, raised by the Government (Department Counsel)Error sustained
The Judge's whole-person analysis was erroneous.

Why the Board ruled this way

The Board found that the Judge's conclusion regarding the Applicant's tax debt was not supported by the record, and that the Judge failed to consider significant contrary evidence. The Board determined that the Judge's favorable decision was arbitrary and capricious, leading to a reversal of the decision.

Ignored material evidenceNo rational connection between facts and conclusion

Standard of review applied

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

Appeal Board panel

Michael Y. Ra’anan (Chair)
Jeffrey D. Billett
James E. Moody

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: The record does not support the Judge’s conclusion that Applicant’s tax debt had been forgiven . There is record evidence of Applicant having an extensive history of tax problems. Favorable decision reversed. CASENO: 07-16427.a1 DATE: 02/04/2010 DATE: February 4, 2010 In Re: ------- Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 07-16427

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT Jennifer I. Goldstein, Esq., Department Counsel FOR APPLICANT Pro Se The Defense Office of Hearings and Appeals (DOHA) declined to grant Applicant a security clearance. On March 12, 2009, DOHA issued a statement of reasons (SOR) advising Applicant of Applicant was subsequently granted a security clearance in 1996 and again in 2003. Government Exhibit 1, Security Clearance Application, at 33; Department Counsel Brief at 4. 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 October 22, 2009, after the hearing, Administrative Judge Wilford H. Ross granted Applicant’s request for a security clearance. Department Counsel appealed pursuant to Directive ¶¶ E3.1.28 and E3.1.30. Department Counsel raised the following issues on appeal: whether the Judge’s application of the pertinent mitigating conditions was erroneous and whether the Judge’s whole-person analysis was erroneous. Finding error, we reverse. Facts The Judge made the following pertinent findings of fact: Applicant is employed by a Defense contractor and is currently making $61,000 a year. He seeks to retain a previously granted security clearance. Applicant failed to file his state and Federal income tax returns in a timely manner for several years between 1982 and 1990. As a result of this, Applicant was denied a security clearance in 1993. He accrued a tax debt to the IRS of $55,000. He consulted with three different tax resolution specialists and made payments to the IRS. However, he found repayment of the amount to be difficult. He received a document from the IRS to the effect that his taxes “were not collectable at this time.” Decision at 3. He also stated that he no longer owed the debt under the statute of limitations. Applicant enjoys an excellent reputation for efficiency at his job.

ANALYSIS

A Judge is required to “examine the relevant data and articulate a satisfactory explanation for” the decision, “including a ‘rational connection between the facts found and the choice made.’” Motor Vehicle Mfrs. Ass’n of the United States v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)(quoting Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962)). “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). The Appeal Board may reverse the Judge’s decision to grant, deny, or revoke a security clearance if it is arbitrary, capricious, or contrary to law. Directive ¶¶ E3.1.32.3 and E3.1.33.3. Once a concern arises regarding an Applicant’s security clearance eligibility, there is a strong presumption against the grant or maintenance of a security clearance. See Dorfmont v. Brown, 913 F. 2d 1399, 1401 (9 Cir. 1990), cert. denied, 499 U.S. 905 (1991). After the Government presents th Directive ¶ E3.20(a): “[T]he behavior happened so long ago, was so infrequent, or occurred under such circumstances that it is unlikely to recur and does not case doubt on the individual’s current reliability, trustworthiness, or good judgement[.]” Directive ¶ E3.20(c): “[T]he person has received or is receiving counseling for the problems and/or there are clear indications that the problem is being resolved or is under control[.]” Directive ¶ E3.20(d): “[T]he individual initiated a good-faith effort to repay over due creditors or otherwise resolve debts[.]” evidence raising security concerns, the burden shifts to the applicant to rebut or mitigate those concerns. See Directive ¶ E3.1.15. “The application of disqualifying and mitigating conditions and whole person factors does not turn simply on a finding that one or more of them apply to the particular facts of a case. Rather, their application requires the exercise of sound discretion in light of the record evidence as a whole.” See, e.g., ISCR Case No. 05-03635 at 3 (App. Bd. Dec. 20, 2006). In deciding whether the Judge's rulings or conclusions are arbitrary or capricious, the Board will review the Judge's decision to determine whether: it does not examine relevant evidence; it fails to articulate a satisfactory explanation for its conclusions, including a rational connection between the facts found and the choice made; it does not consider relevant factors; it reflects a clear error of judgment; it fails to consider an important aspect of the case; it offers an explanation for the decision that runs contrary to the record evidence; or it is so implausible that it cannot be ascribed to a mere difference of opinion. In deciding whether the Judge's rulings or conclusions are contrary to law, the Board will consider whether they are contrary to provisions of Executive Order 10865, the Directive, or other applicable federal law. See e.g., ISCR Case No. 03-22861 at 2-3 (App. Bd. Jun. 2, 2006). The Judge concluded that Applicant had mitigated the security concerns in his case. In doing so, he applied three Financial Considerations Mitigating Conditions: 20(a) , 20(c), and 20(d). In applying these mitigating conditions, the Judge focused attention upon the extent to which Applicant’s tax debts were not collectible and upon Applicant’s efforts to resolve his debts, including the use of tax resolution firms and attempts to develop payment plans. Decision at 6. He also noted that Applicant currently files his returns and pays his taxes. Department Counsel argues that the Judge’s favorable decision did not take into account significant contrary record evidence. This argument is persuasive. The Judge’s decision rested in large measure upon his conclusion that Applicant’s tax debt had been “forgiven.” Decision at 6. However, Applicant’s own evidence casts doubt upon this conclusion. Applicant submitted a letter from the IRS, for example, in which he was advised that “[y]ou were in a not collectible at this time status, not never collectible.” The record contains no further elaboration on the meaning of this advice; however, this letter does not support a conclusion that the IRS had actually forgiven Applicant’s tax debt, as the Judge stated. Furthermore, we note Applicant’s own testimony that the debt is still gathering interest, from which a reasonable person could conclude that the IRS does not See Tr. at 31: “Q: Do you have . . . anything to support that claim? A: No, I do not. Q: No documentation from the IRS? A: No, I do not.” See ISCR Case No. 07-16841 at 4 (App. Bd. Dec. 19, 2008)(“[R]eliance upon the non-collectibility of a debt does not constitute a good-faith effort to resolve that debt within the meaning of the Directive.”) See also ISCR Case No. 06-14521 at 2 (App. Bd. Oct. 15, 2007)(“[T]he Board has indicated that the concept of good-faith ‘requires a showing that a person acts in a way that shows reasonableness, prudence, honesty, and adherence to duty or obligation.’ Accordingly, an applicant must do more than show that he or she relied on a legally available option (such as bankruptcy) in order to claim the benefit of this [mitigating condition.]” See also ISCR Case No. 03-20327 at 4-5 (App. Bd. Oct. 26, 2006). Applicant testified that he originally got into trouble with the IRS in 1977 and 1978 as a result of his employment outside the U.S. The IRS notified him that he owed taxes for those years. “Honestly, I did not properly rectify it. I ended up just ignoring their notifications. . . . Q: And did you decide to stop filing returns altogether for a period of time? A: Yes, I did, I think from sometime in the 80's[.]” Tr. at 25 - 26. “Q: And do you recall your reason for not filing taxes? A: Well, it’s not a reason . . . it was stupidity actually. I thought that they were wrong; that I was being unduly persecuted, and I just stopped filing my returns. It was a very, very bad decision, but that was basically it.” “Q: So, you preferred the alternative of just never paying [your tax]? A: Not a good decision; but, yes.” Tr. at 38. view the debt as having been extinguished. Tr. at 30-31. Tellingly, Applicant stated in his response to the SOR that the IRS would not seek to collect the monies owed “unless my financial situation changes drastically.” (emphasis added) The record contains no evidence of a written communication from the IRS absolving Applicant of the $55,000 tax liability or otherwise forswearing some kind of collection effort. Even assuming that judicial enforcement of the debt has been precluded by the statute of limitations, we have consistently held that reliance upon such a remedy is not normally a substitute for good-faith efforts to pay off debt. We also note other record evidence, for example Applicant’s testimony and other statements to the effect that his tax problems reach as far back as 1977 and that, when the IRS notified him of his tax liability, he simply ignored the warnings. He further testified that, when faced with mounting IRS debt, he elected not to pay his tax. This testimony is not consistent with Applicant’s claim of good judgement and reliability, nor does it establish that Applicant’s response to his financial problems demonstrates good-faith. Additionally, Applicant was previously denied a security clearance based, in part, upon his tax problems. Insofar as he was, therefore, on notice as to the security significance of these issues, his reliance upon a tenuous theory of debt forgiveness seriously undercuts his case for mitigation. To sum up, there is substantial record evidence that: Applicant became delinquent in his Federal taxes due to his own actions, which he himself characterized as foolish; he was denied a security clearance in 1993, due in part to his failure to pay his taxes. Despite this, Applicant permitted his tax delinquencies to remain; Applicant’s plan of addressing these debts was to rely upon his view that the tax debt has been forgiven. The record contains no corroboration for Applicant’s assertion that the IRS has forgiven the debt. The debt is, in fact, increasing through the accrual of interest. The record does not support a conclusion that Applicant has mitigated the security concerns arising from his tax delinquencies. Under the facts of this case, we conclude that the Judge’s favorable decision is not sustainable, because it fails to consider an important aspect of the case and that it offers an explanation for the decision that is contrary to the weight of the record evidence. ISCR Case No. 03-22861, supra. As a consequence, we conclude that the Judge’s decision is not sustainable upon this record.

ORDER

The Judge’s favorable security clearance decision is REVERSED. Signed: Michael Y. Ra’anan Michael Y. Ra’anan Administrative Judge Chairperson, Appeal Board Signed: Jeffrey D. Billett Jeffrey D. Billett Administrative Judge Member, Appeal Board Signed: James E. Moody James E. Moody Administrative Judge Member, Appeal Board