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ISCR Case 16-04094.a1 — CASE

ISCR Case 16-04094.a1denied

Case Headnote

ISCR Case No. 16-04094.a1

Apr 20, 2018· Hon. Michael Y. Ra'anan· appeal

Summary

An applicant, representing himself, was denied a security clearance under Guideline F (Financial Considerations). The denial stemmed from his failure to file Federal income tax returns for the years 2011 through 2014. Additionally, the applicant had unresolved Federal tax debts totaling approximately $213,000.

The judges determined that the applicant did not demonstrate responsible steps to resolve these significant financial issues. Specifically, the applicant failed to establish that he had taken adequate measures to address his delinquent tax debts.

The decision emphasized the importance of fulfilling legal obligations, such as timely tax filing and debt resolution, for eligibility for a national security clearance. The applicant's actions raised disqualifying conditions under AG ¶ 20(a) and AG ¶ 20(c), leading to the denial of his security clearance.

Conditions Referenced

Disqualifying

AG ¶ 20(a)raisedFailure to File or Pay Taxes
AG ¶ 20(c)raisedDelinquent Accounts

Key Rule Quoted

“A person who fails repeatedly to fulfill his or her legal obligations, such as filing tax returns and paying taxes when due, does not demonstrate the high degree of good judgment and reliability required of those granted access to classified information.”
— ISCR Case No. 15-08782 at 3 (App. Bd. Apr. 5, 2017)

Procedural Posture

SOR issuedMar 10, 2017
Answer filed—
Hearing heldJan 19, 2018
Decision dateApr 20, 2018

Cite For

Failure to File Tax Returns as a Disqualifying Condition Under Guideline F
Importance of Demonstrating Responsible Financial Behavior for Security Clearance Eligibility
The Standard of Good Judgment and Reliability Required for Access to Classified Information

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 a denial of a security clearance based on financial considerations under Guideline F. The applicant challenged the Judge's findings of fact and argued that the decision was arbitrary and capricious. The Board affirmed the decision, finding that any errors made by the Judge were harmless and did not change the outcome of the case.

Appealed bythe applicant

Applicant representationPro se (self-represented)

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 contended that the Judge erred in weighing his financial obligations against his expenditures on travel and vehicles.
Erroneous finding of fact — raised by the applicantRejected
Applicant challenged the Judge's finding regarding his yearly gross income.
Erroneous finding of fact — raised by the applicantRejected
Applicant argued that the Judge erred in stating he has held a security clearance since 1992.
Judge mis-weighed or ignored evidence — raised by the applicantRejected
Applicant claimed the Judge mischaracterized his efforts to resolve his tax debts.

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 while the Judge may have erred in some findings of fact, those errors were harmless and did not affect the outcome of the case. The Board affirmed the Judge's decision based on the applicant's failure to timely file tax returns and resolve tax debts, which raised significant security concerns.

Standard of review applied

Harmful-error gatekeeperSubstantial-evidence reviewArbitrary-and-capricious reviewProcedural complianceNo de-novo re-decisionNo new evidence on appeal

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: While the Judge may have erred in some of the challenged findings of fact, such errors were harmless because they likely had no affect on the outcome of the case. We note that Applicant has not shown the Judge committed any harmful error in his material findings involving the key security concerns, i.e., Applicant failed to file his Federal income tax returns for 2011-2014 in a timely manner and he failed to establish that he took responsible steps to resolve his delinquent Federal tax debts. Adverse decision affirmed. CASENO: 16-04094.a1 DATE: 04/20/2018 DATE: April 20, 2018 In Re: ------------------------------

Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 16-04094

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 March 10, 2017, 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 19, 2018, 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 issues on appeal: whether the Judge erred in his findings of fact 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 and Analysis The SOR alleged that Applicant failed to file his Federal income tax returns for 2011-2014 in a timely manner and he had four Federal tax liens filed against him between 2010 and 2016 totaling about $213,000. In his response to the SOR, Applicant admitted each of the SOR allegations with explanations. He also claimed he filed his delinquent tax returns in December 2016 and was working with an Internal Revenue Service (IRS) agent to establish an installment agreement to pay his taxes. He has held a security clearance since 1992. Between 2010 and 2013, Applicant was a self-employed consultant. He attributed his tax filing lapses to not having sufficient income to pay the taxes he owed. His and his wife’s efforts to satisfy quarterly tax payments “were consistently weakened by their competing financial commitments to travel and buying expensive vehicles.” Decision at 3. He filed the delinquent tax returns after submitting his security clearance application (SCA) and undergoing a background interview. He filed his 2015 and 2016 Federal tax returns in a timely manner. For the years 2010-2014, Applicant documented voluntary payments to the IRS of around $41,000. Since late 2016, the IRS has been levying $400 a month from his social security account. His current gross income is about $140,000. His wife earns about $103,000 annually. “Without an installment agreement in place with the IRS, it is unclear whether Applicant has formally applied for an installment agreement or whether the IRS would be willing to enter into a payment agreement with him, given the sizeable amount of back taxes owed.” Decision at 3-4. The back taxes reflected in the alleged Federal tax liens remain unresolved. Applicant did not file his delinquent tax returns or apply for a installment agreement for his back taxes until the security clearance process was initiated. He has made only modest progress in paying his past-due taxes. His efforts preclude a conclusion that he has acted responsibly under the circumstances or that he initiated, and is adhering to, a good-faith effort to resolve these financial problems. His efforts are not enough to support favorable findings and conclusions regarding the alleged security concerns.

DISCUSSION

Applicant challenges some of the Judge’s findings of fact. When a Judge’s finding are challenged, we examine them to see if they are supported by substantial evidence, i.e., “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion in light of all the contrary evidence in the same record.” Directive ¶ E3.1.32.1. See, e.g., ISCR Case No. 12- 03420 at 3 (App. Bd. Jul. 25, 2014). First, Applicant contends the Judge erred in finding he has held a security clearance since 1992. Applicant states that he was initially granted a security clearance in 1975 and, except for a voluntary leave of absence of about four years, has continued to maintain security clearance eligibility. Second, Applicant challenges the Judge finding that his ability to meet his financial obligations was weakened by his travel and buying expensive vehicles. He essentially argues his expenditures on travel and vehicles were reasonable given his use of timeshare exchanges and airline miles. We note his SCA reflects that he traveled on eight occasions to foreign countries for tourism purposes between 2010 and 2015. Government Exhibit 1. He also testified that he purchased a vehicle for about $32,000 in 2015. Tr. at 39. Third, Applicant challenges the Judge’s finding that his yearly gross income is about $140,000. He claims that figure is overstated and points to his W-2 statements from 2013-2016 that reflect his salary ranged from about $104,000 to $129,000 during that period. Finally, Applicant challenges the Judge’s findings about his efforts to resolve his tax debts, noting that he entered into an installment agreement with the IRS in December 2017 and he has been making regular payments under that agreement. However, since the record in this proceeding closed in August 2017, information about this installment agreement constitutes new evidence that the Appeal Board cannot consider. Directive ¶ E3.1.29. While the Judge may have erred in some of the challenged findings of fact, such errors were harmless because they likely had no affect on the outcome of the case. See, e.g., ISCR Case No. 11- 15184 at 3 (App. Bd. Jul. 25, 2013). In this regard, we note that Applicant has not shown the Judge committed any harmful error in his material findings or conclusions involving the key security concerns, i.e., Applicant failed to file his Federal income tax returns for 2011-2014 in a timely manner and he failed to establish that he took responsible steps to resolve his delinquent Federal tax debts. To the extent that he is arguing the Judge mis-weighed the evidence, his arguments are not sufficient to show 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). The Judge examined the relevant evidence and articulated a satisfactory explanation for the decision. A person who fails repeatedly to fulfill his or her legal obligations, such as filing tax returns and paying taxes when due, does not demonstrate the high degree of good judgment and reliability required of those granted access to classified information. See, e.g., ISCR Case No. 15- 08782 at 3 (App. Bd. Apr. 5, 2017). 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: Michael Ra’anan Michael Ra’anan Administrative Judge Chairperson, Appeal Board Signed: James E. Moody James E. Moody Administrative Judge Member, Appeal Board Signed: James F. Duffy James F. Duffy Administrative Judge Member, Appeal Board