Loading case…

ISCR 14-04202.a1: Guideline F security clearance appeal, denied (2015) · CASE

ISCR Case 14-04202.a1denied

Case headnote

ISCR Case No. 14-04202.a1

Dec 24, 2015· Hon. Jeffrey D. Billett· appeal

Summary

A security clearance was denied under Guideline F (Financial Considerations) for an applicant who was a long-time employee and independent consultant. The denial stemmed from significant tax delinquencies and a failure to file tax returns between 2008 and 2012.

The judge identified disqualifying conditions under AG ¶ 20(a) due to the applicant's failure to file tax returns for multiple years and substantial tax debts. Although the applicant made recent efforts to resolve these tax issues, these actions were deemed insufficient to fully mitigate the concerns, despite the application of mitigating conditions under AG ¶ 20(c).

Ultimately, the judge concluded that the applicant's financial mismanagement raised significant concerns regarding his judgment and reliability, leading to the denial of his security clearance.

Conditions referenced

Disqualifying

AG ¶ 20(a)raisedFinancial Considerations

Mitigating

AG ¶ 20(c)rejectedFinancial ConsiderationsThe applicant's recent efforts to resolve tax issues were not sufficient to mitigate concerns.

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 issuedDec 8, 2014
Answer filed—
Hearing heldSep 30, 2015
Decision dateDec 24, 2015

Cite for

Financial Mismanagement as a Basis for Clearance Denial Under Guideline F
Insufficient Mitigation of Financial Issues Despite Efforts to Resolve Them
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 an applicant seeking a security clearance who was denied due to financial considerations under Guideline F. The applicant argued that the Judge's decision was arbitrary and capricious. The Board affirmed the Judge's decision, finding it supported by substantial evidence and consistent with the law.

Appealed bythe applicant

Applicant representationPro se (self-represented)

Judge belowJuan J. Rivera denied the clearance

Decided ona hearing

Guidelines belowGuideline F

What the Board reviewed

Decision arbitrary, capricious, or contrary to law, raised by the applicantRejected
Applicant argued 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 was not arbitrary, capricious, or contrary to law. The Judge properly considered the totality of the Applicant's circumstances and made findings consistent with the 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 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: Appplicant had one attorney representing him at the hearing. One of his witnesses was an attorney but that attorney did not represent Applicant at the hearing. Adverse decision affirmed. CASENO: 14-04202.a1 DATE: 12/24/2015 DATE: December 24, 2015 In Re: ---------

Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 14-04202

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 December 8, 2014, 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 September 30, 2015, after the hearing, Defense Office of Hearings and Appeals (DOHA) Administrative Judge Juan J. Rivera 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 Applicant worked as an employee of a company from 2002 to 2005. For those tax years he filed and paid his taxes in a timely manner. In 2006, he established his own company and became an independent consultant, a job he has performed for various Federal contractors since. Except for two four-month periods of unemployment he has worked steadily since 2002. He has held a security clearance for about 33 years without incident of concern. His yearly earnings rose from $120,000 in 2005 to about $250,000 at the present. Applicant did not file his Federal or state income tax returns for tax years 2008 through 2012. He eventually filed them in 2012. In addition, he did not pay his Federal or state taxes for tax years 2006 through 2012. He disclosed these failures in his security clearance application (SCA), attributing his delinquencies to lack of funds. Applicant was discharged in Chapter 7 bankruptcy in 1994 and in Chapter 13 bankruptcy in 2002. He stated that he had experienced unemployment, a marital separation, and expenses due to his father-in-law’s funeral. In 2012 the IRS filed a lien against Applicant for $93,000 and two liens in 2013 for about $120,000. He owed his state about $2,700 in back taxes as well. Applicant supplied a number of reasons for his failure to have filed and paid his taxes. He had set up a restaurant that depleted his savings, he acquired extra expenses during his separation from his first wife, his children had medical problems and he had no insurance, his in-laws lived with him, and he paid his father-in-law’s medical and burial expenses. He also noted his periods of unemployment. From 1996 on, Applicant made several purchases. He bought two time-shares, a boat and trailer, a 55-acre farm in another state, and three automobiles. He bought the farm as a retirement and investment property, intending to sell the gas rights in exchange for substantial royalties. However, political events intervened to make this not possible. In 2010, Applicant began paying his taxes. The next year, the IRS undertook its collection efforts, and Applicant hired an attorney to assist him in resolving his tax problems. He established a payment plan, after which the IRS suspended its garnishment actions. Applicant also established a payment plan with his state taxing authorities and is making payments on it. Applicant intends to sell some of his property to enable him to pay off his tax debt. Applicant expressed remorse for his tax problems and admitted that he had not managed his finances properly. He testified that his knowledge and expertise make him a valuable asset, and his current employer supports his effort to remain eligible for a clearance. The Judge’s Analysis The Judge resolved some of the SOR allegations in Applicant’s favor. However, he entered adverse findings regarding Applicant’s tax deficiencies. The Judge characterized them as ongoing and that the circumstances under which they were acquired continue to cast doubt upon Applicant’s judgment and reliability. He noted that Applicant’s problems had been affected by circumstances outside his control, such as a divorce and unemployment. He also noted that Applicant has earned a substantial salary for the past several years. He also stated that Applicant’s having lacked medical insurance was due to his own decision. The Judge found Applicant’s testimony that he had not been aware of the tax laws with which he was expected to comply to be lacking in credibility. Applicant had filed timely returns until 2007, evidencing an understanding of his responsibility to comply with the law. He also spent funds on various purchases, such as a boat, several cars, and a farm, that could have been directed toward paying his taxes. The Judge concluded that Applicant’s recent efforts at resolving his tax problems are not enough to mitigate concerns about his judgment and reliability.

DISCUSSION

Applicant argues that the Judge did not consider the testimony of his tax attorney concerning his plan to resolve his tax delinquencies. He states that the Judge did not mention this witness’s name as having made an appearance on Applicant’s behalf. Applicant argues that this is “a major flaw” in the Decision, insofar as this witness provided most of the facts about his repayment plan. Appeal Brief at 1. Applicant cites to other evidence, such as the circumstances underlying his debts, his various efforts at addressing them, his having held a clearance for many years, and the quality of his job performance in contending that the Judge’s decision was erroneous. Applicant was represented at the hearing by an attorney, whose name appears under the heading “Appearances” on the first page of the Decision. She identified herself at the beginning of the hearing, stating “I’m representing the Applicant.” Tr. at 6. The tax attorney did not represent Applicant. Rather, he served as a witness. Applicant’s attorney called him, stating “I would like to call my first witness[.]” Tr. at 25. This person did not make an appearance in the sense of providing representation and, therefore, was not listed as if he had. The Judge accepted the tax attorney as an expert witness, permitted him a wide latitude in testifying, and asked questions of him after Applicant’s attorney had finished direct examination. Moreover, the Judge made findings about Applicant’s repayment plan that appear to have been based, in large measure, upon the testimony of this witness. Concerning the other evidence that Applicant has cited, the Judge made findings about it also and discussed the evidence in the Analysis portion of the Decision. Applicant’s good prior security record is a matter that the Judge was required to consider, along with all the other evidence in the record. However, even those with good prior records can encounter circumstances in which their judgment and reliability might be compromised. See, e.g., ISCR Case No. 14-04648 at 3 (App. Bd. Sep. 9, 2015); Adams v. Laird, 420 F. 2d 230, 238-239 (D. C. Cir. 1969), cert. denied 397 U.S. 1039 (1970). Applicant has not rebutted the presumption that the Judge considered all of the evidence in the record. See, e.g., ISCR Case No. 12-08412 at 2 (App. Bd. Sep. 11, 2015). Applicant’s disagreement with the Judge’s weighing of the evidence is not sufficient to demonstrate the Judge weighed the evidence or reached conclusions in a manner that was arbitrary, capricious, or contrary to law. See, e.g., ISCR Case No. 14-05251 at 3 (App. Bd. Dec. 9, 2015). Applicant challenges the Judge’s whole-person analysis. We conclude that the Judge satisfied the requirements of the Directive in that he considered the totality of Applicant’s conduct and circumstances. See, e.g., ISCR Case No. 14-02806 at 4 (App. Bd. Sep. 9, 2015). Applicant cites to the effect that a clearance denial will have on him and those who rely on him. The Directive does not permit us to consider the impact of an unfavorable decision. See, e.g., ISCR Case No. 11-13180 at 3 (App. Bd. Aug. 21, 2013). The Judge examined the relevant data 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: Jeffrey D. Billett Jeffrey D. Billett Administrative Judge Member, Appeal Board Signed: James E. Moody James E. Moody Administrative Judge Member, Appeal Board