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ISCR Case 11-07447.a1 — CASE

ISCR Case 11-07447.a1denied

Case Headnote

ISCR Case No. 11-07447.a1

Apr 11, 2013· Hon. Michael Y. Ra'anan· appeal

Summary

The applicant, a divorced individual with a history of medical issues, was denied a security clearance under Guideline F (Financial Considerations). The denial stemmed primarily from tax debts and inconsistent statements made by the applicant regarding his tax filings, including a failure to file taxes on time.

While the applicant demonstrated a good work record and made efforts to address his debts, these mitigating factors were not sufficient to overcome the security concerns identified. The judge concluded that the financial issues, particularly the inconsistent statements and late filings, raised significant security risks that could not be overlooked.

Disqualifying conditions under Guideline F, specifically AG ¶ 19, were raised. Although mitigating conditions AG ¶ 20(a), AG ¶ 20(b), AG ¶ 20(c), and AG ¶ 20(d) were applied, they did not fully resolve the judge's concerns, ultimately leading to the denial of the security clearance.

Conditions Referenced

Disqualifying

AG ¶ 19raisedFinancial Considerations

Mitigating

AG ¶ 20(a)rejectedBehavior Happened Long AgoThe judge concluded that the applicant's financial issues were ongoing and not resolved.
AG ¶ 20(b)rejectedConditions Largely Beyond ControlThe judge found that the applicant's divorce and other difficulties were not reasonable excuses for failing to file taxes.
AG ¶ 20(c)rejectedReceived CounselingThe judge determined that the applicant did not demonstrate that his financial problems were being resolved.
AG ¶ 20(d)rejectedGood-faith Effort to Repay DebtsThe judge concluded that the applicant's repayment plans were established only after tax authorities secured liens against him.

Key Rule Quoted

“Any doubt concerning personnel being considered for access to classified information will be resolved in favor of the national security.”
— Directive, Enclosure 2 ¶ 2(b)

Procedural Posture

SOR issuedAug 10, 2012
Answer filed—
Hearing heldJan 28, 2013
Decision dateApr 11, 2013

Cite For

Inconsistent Statements Regarding Financial Obligations Under Guideline F
Ongoing Financial Issues as a Basis for Security Clearance Denial
The Importance of Timely Tax Filings in Security Clearance Evaluations

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 failed to consider all evidence and that the decision was arbitrary. The Board affirmed the Judge's decision, finding it supported by substantial evidence and consistent with national security interests.

Appealed bythe applicant

Applicant representationAttorney

Judge belowFrancisco Mendez — denied the clearance

Decided ona hearing

Guidelines belowGuideline F

What the Board reviewed

Judge mis-weighed or ignored evidence — raised by the applicantRejected
The Judge failed to consider all of the record evidence.
Decision arbitrary, capricious, or contrary to law — raised by the applicantRejected
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 conclusions were supported by substantial evidence, including the applicant's inconsistent statements regarding his tax debts and the timing of his repayment efforts. The Judge's analysis was not arbitrary or capricious, and the decision was consistent with national security interests.

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 Y. Ra’anan — Chair
Jean E. Smallin
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 Judge relied on Applicant’s tax debts inconsistent statements to reach adverse conclusions. Adverse decision affirmed. CASENO: 11-07447.a1 DATE: 04/11/2013 DATE: April 11, 2013 In Re: ----------

Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 11-07447

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT James B. Norman, Esq., Chief Department Counsel FOR APPLICANT Paula W. Phinney, Esq. The Department of Defense (DoD) declined to grant Applicant a security clearance. On August 10, 2012, 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 January 28, 2013, after the hearing, Defense Office of Hearings and Appeals (DOHA) Administrative Judge Francisco Mendez denied Applicant’s request for a security clearance. Applicant appealed pursuant to Directive ¶¶ E3.1.28 and E3.1.30. Applicant raised the following issues on appeal: whether the Judge failed to consider all of the record evidence and 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 is divorced. He has had medical problems, which resulted in unemployment. Applicant failed to file his federal income taxes on time for a number of years, and he failed to deduct enough taxes from his wages, with the result that a tax lien was issued against him. He also had a tax lien filed by his state.1 Regarding his federal taxes, Applicant made inconsistent statements. He told a clearance interviewer that he first learned of his debt to the IRS in 2007 or 2008 and that he had been making payments since then. At the hearing, he testified that he first became aware of his tax liabilities in 2010 and began making payments the next year. He did not explain these inconsistencies. Applicant entered into a repayment agreement with the IRS in 2012 and has been making monthly payments in accordance with it. However, he did not provide evidence of timely filing and payment for tax years 2010 and 2011. Later in 2012, he entered into a repayment agreement with his home state. At the hearing, he testified that he had been making payments to the state prior to entering into the agreement, but he did not corroborate this claim. Applicant attributed his tax problems to his former spouse having claimed their children on her tax return every year instead of every other year, as required by their agreement. Applicant’s divorce decree is silent on this matter. Applicant has taken several financial counseling courses and has hired a credit counseling service. He has held a security clearance since 1997 without incident or concern. He enjoys a good reputation for the quality of his work, as well as for his trustworthiness and reliability. The Judge’s Analysis The Judge concluded that Applicant’s financial circumstances raised security concerns under Guideline F. He cleared Applicant of all the allegations except the two pertaining to his federal and state taxes. The Judge concluded that Applicant’s divorce and other difficulties were not reasonable excuses for his having failed to file his tax returns.2 Moreover, he stated that Applicant had been aware of his tax debts for years before he undertook corrective action, and the debts were ongoing as of the close of the record.3 The Judge stated that Applicant submitted no evidence of voluntary repayment prior to his current repayment agreement. Given that Applicant’s repayment plans were established after tax authorities had secured liens against him and garnished his wages, the Judge concluded that Applicant had not demonstrated a good-faith effort to pay off his debts. Neither did he demonstrate that his financial problems were otherwise being resolved.4 In the whole-person analysis, the Judge noted Applicant’s favorable evidence regarding the circumstances of his debts, his good security record, and his good work performance. However, he stated that Applicant’s failure to meet his duty as a citizen to file and pay taxes raises reasonable concerns that he may fail to protect national security. The Judge concluded that the evidence was such that he had to resolve the case in favor of national security and against Applicant.

DISCUSSION

Applicant contends that the Judge erred insofar as he failed to consider all of Applicant’s evidence. He contends that the Judge ignored evidence that Applicant was in the process of paying off his debts. He cites to his character references and also contends that the Judge erred in stating that Applicant had submitted no evidence of voluntary repayment to federal and state tax authorities prior to entering into his agreements. A Judge is presumed to have considered all of the evidence in the record. See, e.g., ISCR Case No. 09-03370 at 3-4 (App. Bd. Sep. 7, 2011). The Judge did make findings about the evidence Applicant has cited, and he discussed the evidence in the Analysis. We interpret the statement that Applicant had submitted no evidence of voluntary repayment to refer to a lack of corroborating evidence. Applicant has not rebutted the presumption that the Judge considered all of the evidence in the record. Neither has he provided a reason to conclude that the Judge weighed the evidence in a manner that was arbitrary, capricious, or contrary to law. Applicant has cited to some Hearing Office cases which, he contends, support his effort to obtain a security clearance. We have given these cases due consideration as persuasive authority. However, as Applicant himself notes, Hearing Office decisions are not binding on other Hearing Office Judges or on the Appeal Board. See, e.g., ISCR Case No. 11-04176 at 3 (App. Bd. Dec. 18, 2012). The cases that Applicant cites contain significant factual differences from his own. Moreover, one of the favorable decisions described in his brief was reversed on appeal. These cases are not sufficient to demonstrate that the Judge’s decision was erroneous. The Decision rested in large measure on the Judge’s findings and the underlying record evidence of Applicant’s extensive tax debts, the relative recency of his efforts to pay the debts off, and his inconsistent statements concerning when he learned of his debts and when he began his repayment efforts. The record supports a conclusion that the Judge examined the relevant data and articulated 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 Judge’s adverse 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 Y. Ra’anan Michael Y. Ra’anan Administrative Judge Chairperson, Appeal Board Signed: Jean E. Smallin Jean E. Smallin Administrative Judge Member, Appeal Board Signed: James E. Moody James E. Moody Administrative Judge Member, Appeal Board

FOOTNOTES

1 The Judge’s favorable findings regarding other debts are not at issue in this appeal.

2 See Directive, Enclosure 2 ¶ 20(b): “the conditions that resulted in the financial problem were largely beyond the person’s control . . . and the individual acted responsibly under the circumstances[.]”

3 See Directive, Enclosure 2 ¶ 20(a): “ the behavior happened so long ago . . . that it is unlikely to recur and does not cast doubt on the individual’s current reliability, trustworthiness, or good judgment[.]”

4 See Directive, Enclosure 2 ¶ 20(c): “the person has received or is receiving counseling for the problem and/or there are clear indications that the problem is being resolved or is under control[;]” Directive, Enclosure 2 ¶ 20(d): “the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts[.]”