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ISCR Case 14-06686.a1 — CASE

ISCR Case 14-06686.a1denied

Case Headnote

ISCR Case No. 14-06686.a1

Apr 27, 2016· Hon. Michael Y. Ra'anan· appeal

Summary

A defense contractor employee was denied a security clearance under Guideline F (Financial Considerations) due to unresolved tax delinquencies and a prior bankruptcy. The applicant had outstanding federal and state tax liens dating back to 2006.

The judge determined there was insufficient evidence of the applicant's efforts to resolve these financial issues. Specifically, the applicant provided only a vague attorney letter and no other documentary proof of attempts to address the tax problems. The judge also concluded that the applicant's favorable work reputation did not mitigate the security concerns raised by the financial issues.

Consequently, the security clearance was denied, and this adverse decision was affirmed on appeal.

Conditions Referenced

Disqualifying

F1raisedFinancial ConsiderationsFailure to comply with Federal and/or state tax laws suggests that an applicant has a problem with abiding by well-established Government rules and systems.

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 issuedFeb 10, 2015
Answer filed—
Hearing heldFeb 19, 2016
Decision dateApr 27, 2016

Cite For

Insufficient Evidence of Financial Responsibility Under Guideline F
Impact of Unresolved Tax Issues on Security Clearance Eligibility
The Importance of Compliance with Federal and State Tax Laws in Security 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 who was denied a security clearance due to financial considerations under Guideline F. The applicant argued that the Judge erred in weighing the evidence regarding his tax delinquencies. The Board affirmed the Judge's decision, finding no harmful error in the weighing of evidence.

Appealed bythe applicant

Applicant representationAttorney

Judge belowRoger C. Wesley — denied the clearance

Decided ona hearing

Guidelines belowGuideline F

What the Board reviewed

Judge mis-weighed or ignored evidence — raised by the applicantRejected
Applicant argued that the Judge erred in his application of the pertinent mitigating conditions.

Why the Board ruled this way

The Board found that the Judge's weighing of the evidence was not arbitrary or capricious and that the applicant's failure to comply with tax laws raised significant security concerns.

Standard of review applied

No de-novo re-decisionNo new evidence on appealSubstantial-evidence reviewArbitrary-and-capricious review

Appeal Board panel

Michael Ra’anan — Chair
James E. Moody
James F. Duffy

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: Applicant’s appeal argument consists in essence of a disagreement with the Judge’s weighing of the evidence, which is not sufficient to show that the Judge weighed the evidence in a manner that was arbitrary, capricious, or contrary to law. Failure to comply with Federal and/or state tax laws suggests that an applicant has a problem with abiding by well-established Government rules and systems. Adverse decision affirmed. CASENO: 14-06686.a1 DATE: 04/27/2016 DATE: April 27, 2016 In Re: -------------------------------- Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 14-06686

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT James B. Norman, Esq., Chief Department Counsel FOR APPLICANT Christopher N. Davis, Esq. The Department of Defense (DoD) declined to grant Applicant a security clearance. On February 10, 2015, 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 February 19, 2016, after the hearing, Defense Office of Hearings and Appeals (DOHA) Administrative Judge Roger C. Wesley 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 erred in his application of the pertinent mitigating conditions. Consistent with the following, we affirm. The Judge’s Findings of Fact Applicant has been employed by a Defense contractor since 2008, and between 2006 and 2010 he worked part-time for another company. He has been employed steadily since 1998. In 1999, Applicant filed for Chapter 7 bankruptcy protection as a result of a failed business that he and his wife had operated. Applicant provided no documentary evidence concerning this matter. Applicant has both Federal and state liens for tax delinquencies that go back to 2006. These liens had not been resolved as of the close of the record. Applicant has made no voluntary payments on either of these liens, although the IRS has garnished his wages. By the close of the hearing, Applicant’s debt to the IRS exceeded $60,000. He has a monthly remainder of $2,300 left over after expenses. In early 2015, Applicant retained a law firm to assist him in resolving his tax problems. The Judge gave him additional time after the close of the hearing to provide evidence of progress. Applicant’s attorney provided a letter to the effect that Applicant had been proactive in addressing his tax debts but included no information about the nature or extent of negotiations with the IRS or with state authorities. Applicant enjoys an excellent reputation for the quality of his work performance. He is considered to be honest, and his colleagues believe that he will resolve his tax problems. The Judge’s Analysis The Judge noted that there was a paucity of evidence to show that Applicant was addressing his tax problems, beyond the letter by the attorney to the effect that he was being proactive. The Judge stated that the failed business was a circumstance beyond Applicant’s control that led to his bankruptcy but commented that, without more detailed evidence, he could not draw conclusions about Applicant’s taxes. In the whole-person analysis, the Judge noted Applicant’s having hired an attorney to assist him in resolving his liens. He also noted Applicant’s character references. However, he concluded that this favorable evidence was not sufficient to overcome the security concerns raised by Applicant’s failure to pay his taxes.

DISCUSSION

Applicant’s appeal brief includes a substantial amount of evidence from outside the record, which we cannot consider. Directive ¶ E3.1.29. Applicant argues that the Judge should have found his security concerns mitigated. This argument consists in essence of a disagreement with the Judge’s weighing of the evidence, which is not sufficient to show that the Judge weighed the evidence in a manner that was arbitrary, capricious, or contrary to law. See, e.g., ISCR Case No. 14-06440 at 4 (App. Bd. Jan. 8, 2016). Failure to comply with Federal and/or state tax laws suggests that an applicant has a problem with abiding by well-established Government rules and systems. Voluntary compliance with rules and systems is essential for protecting classified information. See, e.g., ISCR Case No. 01-05340 at 3 (App. Bd. Dec. 20, 2002). Evidence that Applicant has had tax delinquencies for many years that he failed to address by the close of the record supports the Judge’s ultimate conclusion.

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 James E. Moody James E. Moody Administrative Judge Member, Appeal Board James F. Duffy James F. Duffy Administrative Judge Member, Appeal Board