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ISCR Case 17-03784.a1 — CASE

ISCR Case 17-03784.a1denied

Case Headnote

ISCR Case No. 17-03784.a1

Aug 22, 2018· Hon. Michael Y. Ra'anan· appeal

Summary

A 46-year-old defense contractor was denied a security clearance under Guideline F (Financial Considerations) due to a history of delinquent debts and tax obligations. The applicant had previously filed for bankruptcy, which was dismissed, and demonstrated a pattern of irresponsible financial management.

Specifically, the applicant failed to make timely payments on tax obligations despite possessing significant savings and investments. The judge determined that the applicant's financial statement did not reflect responsible handling of these tax debts.

While some payments were made towards outstanding debts, the judge ultimately found that the applicant's overall financial conduct warranted denial. This decision was subsequently upheld on appeal, citing the persistent pattern of financial irresponsibility.

Conditions Referenced

Disqualifying

F.3raisedInability or Unwillingness to Satisfy Debts
F.2raisedDelinquent Debts

Mitigating

F.3rejectedThe Conditions That Resulted in the Financial Difficulties Were Largely Beyond the Person's ControlThe applicant's financial issues were attributed to a pattern of irresponsible financial management.
F.2rejectedThe Individual Has Made a Good Faith Effort to Repay Overdue Creditors or Has Otherwise Resolved DebtsPayments were made after debts were due and did not demonstrate a consistent pattern of responsibility.

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 issuedNov 14, 2017
Answer filed—
Hearing heldJun 4, 2018Decision made on the written record.
Decision dateAug 22, 2018Appeal affirmed.

Cite For

Financial Irresponsibility Under Guideline F
Impact of Delinquent Debts on Security Clearance Eligibility
Standard for Evaluating National Security Interests in Clearance Decisions

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 challenge to the denial of a security clearance based on financial considerations under Guideline F. The applicant contended that the Judge's findings were erroneous, particularly regarding state tax payments. The Board affirmed the Judge's decision, finding any error harmless and the overall decision sustainable based on the evidence presented.

Appealed bythe applicant

Applicant representationPro se (self-represented)

Judge belowGregg A. Cervi — denied the clearance

Decided onthe written record

Guidelines belowGuideline F

What the Board reviewed

Decision arbitrary, capricious, or contrary to law — raised by the applicantRejected
Applicant argued that the Judge's 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 any error made by the Judge regarding the applicant's state tax payments was harmless and did not affect the outcome of the case. The applicant's arguments did not demonstrate that the Judge's decision was arbitrary or capricious.

Standard of review applied

Harmful-error gatekeeperSubstantial-evidence reviewArbitrary-and-capricious reviewNo de-novo re-decisionNo new evidence on appealDeference to the judge’s credibility calls

Appeal Board panel

Michael Ra’anan — Chair
Charles C. Hale
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 challenges the Judge’s finding that “Applicant’s personal financial statement shows a monthly net remainder of $2,116, but it does not reflect any payments to the state or Federal tax authorities.” Applicant notes that he no longer has any past-due state taxes. Even though the Judge may have erred in addressing state tax authorities in the challenged finding, we find that error is harmless because it did not likely affect the outcome of the case. Adverse decision affirmed. CASENO: 17-03784.a1 DATE: 08/22/2018 DATE: August 22, 2018 In Re: --------------------------- Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 17-03784

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 November 14, 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 decision on the written record. On June 4, 2018, after considering the record, Defense Office of Hearings and Appeal (DOHA) Administrative Judge Gregg A. Cervi 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 Finding of Fact Applicant, 46, has been working for a defense contractor since 2004. He served in the military for four years, is married, and has a child. The SOR alleged that Applicant had eight delinquent debts and filed Chapter 7 bankruptcy in 2001, which was later dismissed. Seven of the debts are for past-due taxes. In his 2016 security clearance application, he disclosed he owed the IRS about $42,000 for 2009-2014 and noted his wife was receiving worker’s compensation and his finances were tight. His Answer to the SOR reflected he had purchased a house a year and a half earlier, and he had an IRS installment agreement in which he was making monthly payments of $600. His Response to Department Counsel’s File of Relevant Material (FORM) reflected that he paid his state tax debts and paid the IRS over $10,000 for 2009-2010 between December 2017 and January 2018. As of February 2018, he still owed the IRS about $38,000 for 2011, 2013, and 2014. He did not provide copies of the IRS installment agreement or its payment history. His Federal tax transcripts for 2005 and 2006 reflected that he had a tax lien filed against him for those years in 2008, entered into an installment agreement for the past-due taxes in 2016, but the IRS “wrote off” nearly $14,000 of that debt in August 2017 and cancelled the installment agreement. Decision at 3. His employer noted that he set up a wage garnishment in 2016 to repay over $9,000 in delinquent state taxes. His credit report for 2016 and 2017 reflected Federal and state tax liens; however, his 2018 credit report does not list any tax liens. He has a net monthly remainder of about $2,100 and savings and investments of about $186,000. The Judge’s Analysis Applicant has paid some of his delinquent debts but well after they were due and after the SOR was issued. He failed to pay his past-due debts even though he has sizable savings and investments and not long ago purchased a home. He has a history of not handling his taxes in a responsible manner.

DISCUSSION

Applicant’s brief includes matters that are not contained in the record. We cannot consider new evidence on appeal. Directive ¶ E3.1.29. Applicant challenges the Judge’s finding that “Applicant’s personal financial statement shows a monthly net remainder of $2,116, but it does not reflect any payments to the state or Federal tax authorities.” Decision at 3. Applicant notes that he no longer has any past-due state taxes. Even though the Judge may have erred in addressing state tax authorities in the challenged finding, we find that error is harmless because it did not likely affect the outcome of the case. See, e.g., ISCR Case No. 16-01329 at 3 (App. Bd. Apr. 11, 2018). In his appeal brief, Applicant explains the reason why he filed bankruptcy, discusses his efforts to resolve his Federal tax issues, and states he has no tax liens on his credit report. His arguments amount to a disagreement with the Judge’s weighing of the evidence and are not sufficient to show that the Judge weighed the evidence in a manner that is arbitrary, capricious, or contrary to law. See, e.g., ISCR Case No. 14-06634 at 2 (App. Bd. Apr. 28, 2016). Applicant also notes that his job requires him to have a security clearance. The Directive does not permit us to consider the impact of an unfavorable decision. See, e.g., ISCR Case No. 14-04202 at 4 (App. Bd. Dec. 24, 2015). Applicant has not identified any harmful error in the Judge’s decision. 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: Michael Ra’anan Michael Ra’anan Administrative Judge Chairperson, Appeal Board Signed: Charles C. Hale Charles C. Hale Administrative Judge Member, Appeal Board Signed: James F. Duffy James F. Duffy Administrative Judge Member, Appeal Board