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ISCR Case 09-08505.a1 — CASE

ISCR Case 09-08505.a1denied

Case Headnote

ISCR Case No. 09-08505.a1

Jun 14, 2012· Hon. Jean E. Smallin· appeal

Summary

An applicant, represented by counsel, was denied a security clearance under Guidelines E (Personal Conduct) and F (Financial Considerations). The denial stemmed primarily from the applicant's failure to file federal and state income tax returns for six years.

The applicant's explanation, citing ignorance of tax obligations, was deemed insufficient to mitigate the security concerns. The decision highlighted that the applicant did not credibly explain the prolonged delays in filing these required returns.

Ultimately, the Adjudicative Guidelines' Disqualifying Conditions AG ¶ 20 and AG ¶ 15 were raised, leading to the denial. The decision underscored the critical importance of compliance with tax laws as it relates to national security interests.

Conditions Referenced

Disqualifying

AG ¶ 20raisedFinancial Considerations
AG ¶ 15raisedPersonal Conduct

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 issuedDec 2, 2011
Answer filed—
Hearing heldMar 28, 2012
Decision dateJun 14, 2012

Cite For

Security Concerns Related to Failure to File Tax Returns Under Guideline F
Impact of Personal Conduct on Security Clearance Under Guideline E
Importance of Compliance with Tax Laws in National Security Assessments

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 tax returns for multiple years. The applicant argued that the Judge's decision was arbitrary and capricious. The Board affirmed the Judge's decision, finding it supported by substantial evidence and consistent with national security interests.

Appealed bythe applicant

Applicant representationAttorney

Judge belowLeRoy F. Foreman — denied the clearance

Decided ona hearing

Guidelines belowGuideline FGuideline E

What the Board reviewed

Decision arbitrary, capricious, or contrary to law — raised by the applicantRejected
Applicant argued that the Judge's adverse security clearance decision was arbitrary, capricious, or contrary to law.

Why the Board ruled this way

The Board found that the Judge's decision was supported by substantial evidence and articulated a satisfactory explanation for the adverse ruling, including a rational connection between the facts and the decision made.

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

Jean E. Smallin
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 F; Guideline E DIGEST: Applicant failed ti file tax returns six for six years since 2000. Adverse decision affirmed. CASENO: 09-08505.a1 DATE: 06/14/2012 DATE: June 14, 2012 In Re: -------

Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 09-08505

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 December 2, 2011, DOHA 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 March 28, 2012, after the hearing, Administrative Judge LeRoy F. Foreman 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 security clearance decision was arbitrary, capricious, or contrary to law. Consistent with the following, we affirm. The Judge found that Applicant did not file federal or state income tax returns for the years 2000 through 2003 and 2005 through 2008. Applicant did file his federal return in 2004, receiving a refund. When asked on the security clearance application (SCA) if he had failed to file his federal, state, or other taxes “when required by law or ordinance,” he replied “no.” He did not disclose the failures mentioned above. He finally filed his delinquent returns after receiving DOHA interrogatories inquiring about them. After submitting his SCA, he told an investigator that he did not file his returns because he did not believe he needed to in years in which he owed no further tax liability. He stated that he thought the only penalty for not filing was that he forfeited his refund. At the hearing, he stated that he believed that the law did not require one to file returns in years in which no further liability was owed. He stated that he learned otherwise after reading an IRS web site. He stated that he never contacted federal or state tax authorities, nor did they get in touch with him over this issue. He also failed to file personal property taxes on his automobile for 2003 and 2008. In each case, the taxing authority put liens on his house. Applicant earns $112,750 per year, and his spouse earns $90,500 per year. His net worth is about $258,459. He has no difficulty meeting his financial obligations and paying their taxes as required. Applicant enjoys an excellent reputation for the quality of his work performance, as well as his honesty, loyalty, and trustworthiness. In the Analysis, the Judge found that Applicant’s claim of ignorance concerning his obligation to file his tax returns was credible. He found in Applicant’s favor regarding an allegation of deliberate falsehood on the SCA. However, he found that Applicant’s failure to file his tax returns raised security concerns under both Guidelines E and F. He concluded that Applicant appeared to regard tax filing as an “inconvenience to be avoided.” Decision at 7. The Judge noted evidence that Applicant did not file his federal returns for more than a year after discovering his obligation to do so and that he waited to file his state tax returns for more than two years after that discovery. The Judge concluded that Applicant did not credibly explain why he waited so long to meet his legal obligations. He also noted that the failures to file his returns were numerous. The Judge concluded that Applicant had failed to meet the security concerns under Guidelines E and F which were raised by his dilatory tax filings. In support of his appeal, Applicant has submitted other Hearing Office decisions, which he contends support his case for a security clearance. As Applicant himself acknowledges, Hearing Office decisions are not binding on other Hearing Office Judges or on the Appeal Board. See, e.g., ISCR Case No. 10-03701 at 3 (App. Bd. Mar. 14, 2012). We give these cases due consideration as persuasive authority. However, the cases which Applicant has cited have significant factual differences from his own. They do not demonstrate that the Judge’s adverse findings were arbitrary, capricious, or contrary to law.

The record supports a conclusion that the Judge examined the relevant data and articulated a satisfactory explanation for the decision, “including a ‘rational connection between the facts found and the choice made.’” 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 Judge’s adverse 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 Judge’s adverse security clearance decision is AFFIRMED. Signed: Jean E. Smallin Jean E. Smallin Administrative Judge Member, 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