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ISCR Case 15-08649.a1 — CASE

ISCR Case 15-08649.a1denied

Case Headnote

ISCR Case No. 15-08649.a1

Feb 26, 2018· Hon. Charles C. Hale· appeal

Summary

A federal contractor was denied a security clearance based on Guideline E (Personal Conduct) and Guideline F (Financial Considerations). The denial stemmed from the applicant's significant unpaid tax obligations, which exceeded $70,000. Additionally, the applicant failed to disclose pertinent financial information, specifically tax liens and judgments, during the clearance process.

The judge determined that the applicant demonstrated a lack of judgment and reliability. This was evidenced by the applicant prioritizing leisure travel over addressing their substantial tax debts. Disqualifying conditions under AG ¶ 20 and AG ¶ 15 were raised, while mitigating conditions under AG ¶ 21 and AG ¶ 17 were applied.

Ultimately, the applicant's failure to manage their financial responsibilities and their lack of candor regarding financial disclosures led to the denial of their security clearance.

Conditions Referenced

Disqualifying

AG ¶ 20raisedFinancial Considerations
AG ¶ 15raisedPersonal Conduct

Mitigating

AG ¶ 21rejectedFinancial ConsiderationsThe applicant did not provide sufficient evidence of financial counseling or consistent payment of debts.
AG ¶ 17rejectedPersonal ConductThe applicant's failure to disclose significant tax liabilities was deemed deliberate.

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 issuedJun 10, 2016
Answer filed—
Hearing heldNov 13, 2017
Decision dateFeb 26, 2018

Cite For

Failure to Disclose Significant Financial Obligations Under Guideline E
Lack of Judgment and Reliability Due to Financial Irresponsibility Under Guideline F
Insufficient Evidence of Mitigation Regarding Financial Issues.

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 after being denied due to financial and personal conduct issues. The applicant argued that the Judge's decision was arbitrary and capricious. The Board affirmed the Judge's decision, finding that the applicant's arguments did not demonstrate harmful error and that the Judge's findings were supported by substantial evidence.

Appealed bythe applicant

Applicant representationAttorney

Judge belowFrancisco Mendez — denied the clearance

Decided ona hearing

Guidelines belowGuideline EGuideline 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.

Error found, but harmless. The Board agreed the judge made a mistake but affirmed anyway, because it did not change the outcome.

Why the Board ruled this way

The Board found that the Judge's decision was supported by substantial evidence and that the applicant's arguments did not demonstrate that the Judge's weighing of the evidence was arbitrary or capricious. The adverse decision was affirmed based on the applicant's failure to mitigate security concerns related to financial considerations and personal conduct.

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

James E. Moody
James F. Duffy
Charles C. Hale

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 E; Guideline F DIGEST: Applicant’s arguments consist of disagreements with the Judge’s weighing of the evidence, which is not enough to show that the Judge weighed the evidence in a manner that was arbitrary, capricious, or contrary to law. Adverse decision affirmed. CASENO: 15-08649.a1 DATE: 02/26/2018 DATE: February 26, 2018 In Re: -------------------------- Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 15-08649

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT James B. Norman, Esq., Chief Department Counsel FOR APPLICANT John P. Mahoney, Esq. Sterling L. DeRamus, Esq. The Department of Defense (DoD) declined to grant Applicant a security clearance. On June 10, 2016, DoD issued a statement of reasons (SOR) advising Applicant of the basis for that decision–security concerns raised under Guideline F (Financial Considerations) and Guideline E (Personal Conduct) of Department of Defense Directive 5220.6 (Jan. 2, 1992, as amended) (Directive). Applicant requested a hearing. On November 13, 2017, 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 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 works for a Federal contractor. During a previous employment as a contractor, her building access was restricted due to “credit issues,” and she consequently lost her job. Decision at 2. Applicant has unpaid Federal and state tax obligations, totaling over $70,000, for tax years 2008-2010 and 2014. She attributed her problems to having made withdrawals from a 401(k) plan, inadequate withholding, and her husband’s failure to have had sufficient withholding from his own salary or to have made quarterly payments. Applicant entered into installment agreements with the IRS, but she submitted no documentation to show that she had actually made any of the payments. She did show, however, that a month after the hearing, she signed documentation to have Federal tax liabilities automatically deducted from her pay. Applicant’s tax liabilities are the subject of judgments and/or liens against her. She is refinancing her home, intending to use the equity to pay off consumer debt and her tax debt. She has refinanced her mortgage to pay off debts in the past. Despite claiming that she did not have enough funds to pay her taxes in 2014, she took a vacation in Mexico. In her security clearance application (SCA), Applicant failed to disclose her Federal tax liens and judgments. She also did not disclose a state tax lien. In responding to DOHA interrogatories, Applicant failed to disclose her back taxes or the judgments and liens resulting therefrom. Applicant has submitted no evidence of financial counseling. She did provide character references, which describe her as hard-working, reliable, and trustworthy. Applicant is active in her church. The Judge’s Analysis The Judge stated that Applicant had submitted some evidence in mitigation of the Guideline F concerns, in that she had paid some SOR allegations regarding consumer debt and had agreed to installment plans for some of her tax delinquencies. He also noted evidence that Applicant’s husband experienced unemployment, which was a circumstance outside her control. However, he concluded that Applicant had not met her burden of persuasion as to mitigation, citing to her having prioritized leisure travel over tax payments. He noted that Applicant undertook to resolve her tax debts only after receiving the SOR and that she had disregarded her financial obligations even after previously having lost a job due to similar problems. The Judge noted that Applicant’s tax problems were substantiated by liens and judgments, yet she only disclosed debts that she had already paid. He found that Applicant’s failure to have disclosed her significant tax liabilities was deliberate.

DISCUSSION

Applicant cites to an SOR allegation of about $887, for which the Judge entered adverse findings. She states that she had paid this debt. However, even if the Judge erred, it did not likely affect the outcome of the case. Therefore, any such error is harmless. See, e.g., ISCR Case No.15- 05047 at 4 (App. Bd. Nov. 8, 2017). Applicant argues that her omissions from the SCA and interrogatories were not deliberate. However, her argument consists of a disagreement with the Judge’s weighing of the evidence, which is not enough 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.15-07062 at 2 (App. Bd. Nov. 21, 2017). The Judge’s finding that Applicant had deliberately withheld material information is supported by substantial evidence. See Directive ¶ E3.1.32.1 for the standard applicable in DOHA proceedings for a Judge’s findings of fact. Applicant contends that she should be entitled to an “innocent spouse” exception regarding the tax liabilities that were due to her husband’s failure to make quarterly payments. However, even if this were so, it would not mitigate concerns arising from Applicant’s failure to have addressed tax obligations that resulted from her own actions, nor would it mitigate her Guideline E concerns. Moreover, legal defenses and exceptions that may be relevant in other kinds of proceedings, such as enforcement of Federal tax laws, do not necessarily apply in DOHA proceedings, which are directed toward evaluating an applicant’s judgment and reliability. See, e.g., ISCR Case No. 02- 12199 at 6, note 7 (App. Bd. Aug. 8, 2005). Applicant’s dilatory response to addressing her tax obligations supports the Judge’s overall conclusion that she may be lacking in the judgment expected of those who have access to national security information. The Judge examined the relevant evidence 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, Encl. 2, App. A ¶ 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 E. Moody James E. Moody Administrative Judge Member, Appeal Board Signed James F. Duffy James F. Duffy Administrative Judge Member, Appeal Board Signed: Charles C. Hale Charles C. Hale Administrative Judge Member, Appeal Board