CASE · Clearance Adjudication Search EngineCASE

Loading case…

ISCR Case 14-06948.a1 — CASE

ISCR Case 14-06948.a1denied

Case Headnote

ISCR Case No. 14-06948.a1

Mar 28, 2017· Hon. Michael Y. Ra'anan· appeal

Summary

A defense contractor's security clearance was denied under Guideline E (Personal Conduct) and Guideline F (Financial Considerations), primarily due to significant financial issues. The applicant failed to file federal tax returns for multiple years, leading to substantial tax liabilities.

Disqualifying conditions F.2 and F.3 were raised, indicating a history of not meeting financial obligations and an unwillingness to resolve them. While mitigating conditions F.1 and F.4 were applied, acknowledging some efforts to address the debts and that the issues were not recent, they were deemed insufficient.

The judge determined that the applicant's prolonged neglect and procrastination in resolving these financial obligations were significant concerns. Despite some attempts to rectify the tax issues, these efforts were not enough to overcome the established pattern of financial irresponsibility, resulting in the denial of the security clearance.

Conditions Referenced

Disqualifying

F.3raisedFailure to File or Pay Federal Taxes
F.2raisedDelinquent Debts

Mitigating

F.4rejectedThe Individual Has Made a Good Faith Effort to Repay Overdue Creditors or Otherwise Resolve DebtsThe judge concluded that the applicant's efforts were not sufficient to overcome concerns arising from years of neglect.
F.1appliedThe Conditions That Resulted in the Financial Problems Were Largely Beyond the Person's ControlThe judge acknowledged external factors affecting the applicant's financial situation but still found the neglect significant.

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 issuedMay 28, 2015
Answer filed—
Hearing heldOct 25, 2016
Decision dateMar 28, 2017

Cite For

Denial of Security Clearance Based on Financial Considerations Under Guideline F
Impact of Prolonged Neglect on Security Clearance Eligibility
Judicial Discretion in Weighing Evidence and Mitigating Circumstances

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 regarding the denial of a security clearance based on financial considerations and personal conduct. The Applicant argued that the Judge's decision was arbitrary and capricious. The Board affirmed the Judge's decision, finding no harmful error in the weighing of evidence.

Appealed bythe applicant

Applicant representationAttorney

Judge belowMichael H. Leonard — 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 decision regarding tax delinquencies was arbitrary, capricious, and contrary to law.

Why the Board ruled this way

The Board found that the Judge's treatment of the allegations constituted a reasonable interpretation of the record and that the Applicant's arguments were merely disagreements with the Judge's weighing of the evidence, which did not demonstrate harmful error.

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; Guideline E DIGEST: The Judge’s treatment of the allegations constitutes a reasonable interpretation of the record. Applicant’s arguments amount to a disagreement with the Judge’s weighing of the evidence, which is not enough to show harmful error. Adverse decision affirmed. CASENO: 14-06948.a1 DATE: 03/28/2017 DATE: March 28, 2017 In Re: --------

Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 14-06948

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT James B. Norman, Esq., Chief Department Counsel FOR APPLICANT Molly Schmidt-Nowara, Esq. The Department of Defense (DoD) declined to grant Applicant a security clearance. On May 28, 2015, DoD 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 October 25, 2016, after the hearing, Defense Office of Hearings and Appeals (DOHA) Administrative Judge Michael H. Leonard 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. Department Counsel withdrew the Guideline E allegation at the beginning of the hearing. Accordingly, it is not at issue in this appeal. Consistent with the following, we affirm. The Judge’s Findings of Fact Applicant has worked for a Defense contractor since 2014. He previously held a clearance from 2008 through 2014. His SOR alleged concerns regarding a state tax lien; failure to file Federal income tax returns; delinquent Federal taxes; and a past-due mortgage loan. Applicant’s Federal tax issues formed the basis of the Judge’s adverse decision. Applicant attributed them to complex circumstances surrounding the interplay of corporate and personal tax obligations and to his having hired several accountants who failed to perform as agreed. Applicant admitted that he failed to file Federal returns for 2005 through 2012. After contacting the IRS himself, he filed for 2010 through 2015. In addition, he owes the IRS an estimated $42,000 in back taxes. He did not provide evidence from the IRS as to the amount he owes. The Judge’s Analysis The Judge cleared Applicant for the state tax lien, which he had resolved, and the mortgage. He concluded that Applicant had demonstrated a reasonable basis to dispute the mortgage debt. However, he resolved the allegations of failure to file and pay Federal income taxes adversely to Applicant. He noted that Applicant had undertaken efforts to resolve his tax problems and that his difficulties were affected by circumstances outside his control, such as the malfeasance of his accountants. Nevertheless, he concluded that Applicant’s efforts were not sufficient to overcome concerns arising from many years of neglect or procrastination.

DISCUSSION

Applicant argues that his conduct regarding his tax problems is not qualitatively different from that underlying the allegations that the Judge resolved in his favor. He argues that, as a consequence, the adverse decision regarding the tax delinquencies is arbitrary, capricious, and contrary to law. However, it is within a Judge’s discretion to conclude that an applicant has mitigated some of the allegations against him but not others. So long as the Judge has articulated a reasonable basis for his or her conclusions, we will not disturb them on appeal. See, e.g., ISCR Case No. 14-03747 at 2 (App. Bd. Nov. 13, 2015). In this case, the Judge’s treatment of the various allegations constitutes a reasonable interpretation of the record that was before him. Applicant’s argument amounts to a disagreement with the Judge’s weighing of the evidence, which is not enough to show that the Judge weighed the evidence in a manner that was arbitrary, capricious, or contrary to law. 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