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ISCR Case 04-12494.a1 — CASE

ISCR Case 04-12494.a1denied

Case Headnote

ISCR Case No. 04-12494.a1

Jul 20, 2007· Hon. Michael Y. Ra'anan· appeal

Summary

A security clearance applicant, represented by counsel, was denied a clearance primarily due to concerns under Guideline J (Criminal Conduct) and Guideline F (Financial Considerations). The denial stemmed from a history of untimely Federal tax filings and significant tax liabilities.

Specifically, the applicant failed to file Federal tax returns for multiple years until January 2005, incurring substantial tax debts. This pattern of late filings dated back to the 1990s and included instances of wage garnishments for unpaid taxes.

While the applicant presented evidence of good character and work performance, and some mitigating conditions were considered, the explanations provided for the late filings were not deemed persuasive enough to overcome the security concerns. Consequently, the clearance was denied.

Conditions Referenced

Disqualifying

AG ¶ 20raisedCriminal Conduct
AG ¶ 19raisedFinancial Considerations

Mitigating

AG ¶ 21rejectedCriminal ConductThe applicant's evidence of good character and work performance did not sufficiently mitigate the concerns.
AG ¶ 20rejectedFinancial ConsiderationsThe applicant's history of late tax filings outweighed the mitigating evidence presented.

Key Rule Quoted

“The applicant is responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by the applicant or proven by Department Counsel, and has the ultimate burden of persuasion as to obtaining a favorable clearance decision.”
— Directive ¶ E3.1.15

Procedural Posture

SOR issuedAug 12, 2005
Answer filed—
Hearing heldDec 13, 2006
Decision dateJul 20, 2007

Cite For

Failure to Mitigate Security Concerns Related to Tax Issues Under Guideline J
Impact of Historical Tax Filing Issues on Security Clearance Decisions
Burden of Persuasion Lies with the Applicant in Clearance Cases

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 failure to file timely Federal tax returns. The applicant argued that the Judge erred in concluding that he had not mitigated the security concerns and that the decision was arbitrary and capricious. The Board affirmed the Judge's decision, finding no harmful error.

Appealed bythe applicant

Applicant representationAttorney

Judge belowWilford H. Ross — denied the clearance

Decided ona hearing

Guidelines belowGuideline JGuideline F

What the Board reviewed

Judge mis-weighed or ignored evidence — raised by the applicantRejected
Applicant argued that the Judge erred in concluding that he had not mitigated the security concerns raised under Guideline J.
Decision arbitrary, capricious, or contrary to law — raised by the applicantRejected
Applicant contended that the Judge's adverse security clearance decision was arbitrary, capricious, or contrary to law.

Why the Board ruled this way

The Board found no error in the Judge's conclusion that the applicant failed to mitigate security concerns related to his failure to file timely Federal tax returns. The Board determined that the Judge's decision was supported by substantial evidence and articulated a rational connection between the facts found and the adverse clearance decision.

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 Y. Ra’anan — Chair
William S. Fields
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 J DIGEST: Applicant failed to mitigate the security concerns raised by his failure to file timely Federal tax returns. Adverse decision affirmed. CASENO: 04-12494.a1 DATE: 07/20/2007 DATE: July 20, 2007 In Re: -------- SSN: ------ Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 04-12494

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT James B. Norman, Esq., Chief Department Counsel FOR APPLICANT Alan V. Edmunds, Esq. The Defense Office of Hearings and Appeals (DOHA) declined to grant Applicant a security clearance. On August 12, 2005, DOHA issued a statement of reasons advising Applicant of the basis for that decision–security concerns raised under Guideline J (Criminal Conduct) and Guideline F (Financial Considerations) of Department of Defense Directive 5220.6 (Jan. 2, 1992, as amended) The Judge’s favorable decision under Guideline F is not at issue in this appeal. (Directive). Applicant requested a hearing. On December 13, 2006, after the hearing, Administrative Judge Wilford H. Ross denied Applicant’s request for a security clearance. Applicant filed a timely appeal pursuant to Directive ¶¶ E3.1.28 and E3.1.30. Applicant raises the following issues on appeal: whether the Judge erred in concluding that Applicant had not mitigated the security concerns raised under Guideline J; and whether the Judge’s adverse security clearance decision is arbitrary, capricious, or contrary to law. Finding no error, we affirm. The Judge made the following findings of fact: Applicant did not file Federal tax returns for tax years 1999 through 2003 until January 2005. As a consequence, he had to pay $73, 419.18 in taxes, interest, and penalties. He owes no more back taxes to the Federal government. Applicant has a history of failing to file tax returns in a timely fashion. His 1994, 1995, and 1996 taxes were not filed until December 1998. The government attached his wages due to unpaid taxes in the 1980's. Applicant was aware of his obligation to file tax returns. He stated that his problems were due to his wife’s interior design business. She would get behind in her paperwork, making it difficult to file timely returns. Applicant and his wife have hired a tax professional to assist him in the future. Applicant submitted numerous documents and witnesses, attesting to his high character and to his excellent work performance. In light of the unchallenged findings, we find no error in the Judge’s conclusion that applicant had failed to mitigate the security concerns raised by his failure to file timely Federal tax returns. See Directive ¶ E3.1.15 (“The applicant is responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by the applicant or proven by Department Counsel, and has the ultimate burden of persuasion as to obtaining a favorable clearance decision.”) Viewed in light of the record evidence as a whole, we conclude that the Judge has articulated a “rational connection between the facts found” and his ultimate adverse clearance decision. See Motor Vehicle Mfrs. Ass’n of the United States v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)(quoting Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962)). The mitigating evidence cited by Applicant on appeal is not sufficient to compel as a matter of law a favorable decision. Accordingly, we hold that the Judge’s decision is not arbitrary, capricious, or contrary to law.

ORDER

The Judge’s decision denying Applicant a security clearance is AFFIRMED. Signed: Michael Y. Ra’anan Michael Y. Ra’anan Administrative Judge Chairman, Appeal Board Signed: William S. Fields William S. Fields Administrative Judge Member, Appeal Board Signed: James E. Moody James E. Moody Administrative Judge Member, Appeal Board