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ISCR Case 14-03301.a1 — CASE

ISCR Case 14-03301.a1denied

Case Headnote

ISCR Case No. 14-03301.a1

Dec 7, 2016· Hon. Michael Y. Ra'anan· appeal

Summary

The applicant, a military retiree and defense contractor, was denied a security clearance under Guideline F (Financial Considerations) due to unresolved financial issues. Disqualifying conditions F.2 and F.3 were raised, stemming from significant debts owed to the IRS and other creditors, as well as two dismissed bankruptcy cases.

Despite the applicant's claims of improved financial management following a divorce, the judge found these assertions lacked sufficient supporting evidence. The denial was based on the applicant's failure to demonstrate a good-faith effort to pay his debts and a finding that his financial situation had worsened since his bankruptcy filings.

Furthermore, the applicant did not provide credible evidence of resolving his tax debts. These factors collectively led to concerns regarding the applicant's financial responsibility and trustworthiness, resulting in the denial of the security clearance.

Conditions Referenced

Disqualifying

F.3raisedInability or Unwillingness to Satisfy Debts
F.2raisedDeliberately Failing to File or Pay Taxes

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 issuedFeb 27, 2015
Answer filed—
Hearing heldSep 13, 2016
Decision dateDec 7, 2016

Cite For

Denial of Security Clearance Due to Unresolved Financial Issues Under Guideline F
Insufficient Evidence of Financial Responsibility
Impact of Personal Circumstances on Financial Obligations

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 was from a denial of a security clearance based on financial considerations under Guideline F. The applicant argued that the Judge's decision was arbitrary and capricious. The Board affirmed the decision, finding no harmful error in the Judge's analysis and conclusions.

Appealed bythe applicant

Applicant representationPro se (self-represented)

Judge belowEdward W. Loughran — denied the clearance

Decided ona hearing

Guidelines belowGuideline 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.

Why the Board ruled this way

The Board found that the Judge considered all evidence and articulated a satisfactory explanation for the decision, which was sustainable on the record.

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
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: Applicant failed to rebut the presumption that the Judge considered all of the evidence in the record, nor has he shown that the Judge mis-weighed the evidence. CASE NO: 14-03301.a1 DATE: 12/07/2016 DATE: December 7, 2016 In Re: ------------ Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 14-03301

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 February 27, 2015, 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 September 13, 2016, after the hearing, Defense Office of Hearings and Appeals (DOHA) Administrative Judge Edward W. Loughran 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 served in the military, retiring in 2003, after which he began working for his current employer, a Defense contractor. He has held a clearance since he was in the military. Applicant and his wife separated in 2008 and went through a contentious and costly divorce and custody battle. The decree of divorce was entered in mid-2016, and Applicant was awarded custody of their child. Applicant did not pay his bills and taxes during the separation and divorce. Applicant filed for Chapter 13 bankruptcy protection twice, and both times it was dismissed. He claimed that he had to dismiss the second action in order to proceed with the divorce. During the pendency of the second bankruptcy, nearly $41,000 was disbursed to the IRS, but none of the other creditors received anything. Applicant’s SOR alleges the two bankruptcy cases and numerous other debts. Applicant’s debts include $59,000 owed to the IRS and about $108,000 owed to other creditors. Applicant earns about $102,000 a year in addition to his military retirement. He has about $79,000 in a retirement account. Except for payments that he made to the IRS, he has resolved none of the SOR debts, including a $65 returned check to a pizza restaurant. Applicant contends that, now that his divorce is final, he can pay his debts. He states that he is making payments on an installment plan with the IRS and that his tax issues have been resolved. The Judge found, however, that the evidence did not support this last assertion. He stated that Applicant did not provide evidence of how much he paid through the installment agreement before it was terminated. His final property settlement from his divorce action required him to pay his Federal income taxes for 2009 through 2014. The Judge did not find credible Applicant’s post- hearing claim that he had reduced his IRS debt to about $45,000. The Judge’s Analysis The Judge found that two of the allegations were duplicates of one another and that other SOR debts were either not established or were of doubtful security significance. However, for the majority of Applicant’s debts, including the one to the IRS, he entered adverse formal findings. Though noting Applicant’s marital problems, which were beyond Applicant’s control, he concluded that Applicant had not acted responsibly under the circumstances. He stated that Applicant’s problems were recent and ongoing and that he had not made a good-faith effort to pay his debts. He also stated that amounts Applicant owes the IRS are increasing, insofar as he is not paying his taxes in the year that they become due. The Judge noted Applicant’s military service, steady employment, and his divorce and custody case. However, he stated that Applicant is now actually in worse shape financially than he was when he filed for bankruptcy protection. He stated that Applicant’s tax debts will never be solved unless he changes his habit of not paying them when due.

DISCUSSION

Applicant cites to record evidence, such as his contentious divorce, his having custody of his son, his service in the military, his employment record, his having held a clearance for many years without incident or concern, and his effort to reduce his debts. He argues that he has mitigated the concerns arising from his financial problems. The Judge made findings about the matters Applicant has cited in his appeal and discussed it in his analysis. Applicant has not rebutted the presumption that the Judge considered all of the evidence in the record, nor has he shown that the Judge mis- weighed the evidence. See, e.g., ISCR Case No. 14-05795 at 2-3 (App. Bd. Apr. 26, 2016). 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, 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 Decision is AFFIRMED. Signed: Michael Y. Ra’anan Michael Y. 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