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ISCR Case 15-03978.a1 — CASE

ISCR Case 15-03978.a1denied

Case Headnote

ISCR Case No. 15-03978.a1

Mar 31, 2017· Hon. Michael Y. Ra'anan· appeal

Summary

A defense contractor with a military background was denied a security clearance under Guideline F (Financial Considerations) due to unresolved financial issues. Disqualifying conditions were raised, specifically concerning a Chapter 7 bankruptcy discharge and the failure to file tax returns for 2012 and 2013.

Despite evidence of the applicant's good character and intentions to resolve debts, these mitigating conditions were not sufficient to overcome the financial concerns. The judge found that the applicant had not fully resolved ongoing tax issues, including back taxes owed for multiple years.

Ultimately, the appeal board upheld the denial, emphasizing that the applicant did not demonstrate the high degree of good judgment and reliability required for access to classified information. The decision highlighted the necessity of compliance with legal obligations for security clearance eligibility.

Conditions Referenced

Disqualifying

AG ¶ 19raisedFinancial Considerations

Mitigating

AG ¶ 20rejectedFinancial ConsiderationsThe applicant's favorable evidence did not sufficiently mitigate the financial concerns.

Key Rule Quoted

“A person who fails repeatedly to fulfill his or her legal obligations, such as filing tax returns in a timely manner, does not demonstrate the high degree of good judgment and reliability required of those granted access to classified information.”
— Department of the Navy v. Egan, 484 U.S. 518, 528 (1988)

Procedural Posture

SOR issuedFeb 12, 2016
Answer filed—
Hearing heldJan 4, 2017
Decision dateMar 31, 2017

Cite For

Importance of Compliance with Legal Obligations Under Guideline F
Burden of Persuasion Lies with the Applicant
Whole-person Analysis in Evaluating Security 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 was filed by the applicant after the Department of Defense denied his request for a security clearance based on financial considerations. The applicant argued that the Judge's analysis was inconsistent and that the adverse decision was arbitrary and capricious. The Board affirmed the Judge's decision, finding that the applicant did not mitigate the security concerns despite some favorable evidence.

Appealed bythe applicant

Applicant representationAttorney

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
The Judge's whole-person analysis was erroneous and the adverse decision was arbitrary, capricious, or contrary to law.

Why the Board ruled this way

The Board found that the Judge's findings were supported by substantial evidence and that the Judge did not err in his analysis of the evidence presented, affirming the adverse decision.

Standard of review applied

Harmful-error gatekeeperSubstantial-evidence reviewArbitrary-and-capricious reviewProcedural complianceNo de-novo re-decisionDeference to the judge’s credibility calls

Appeal Board panel

Michael 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: It is not inconsistent for a judge to acknowledge favorable evidence yet conclude that, despite such evidence, an applicant has not mitigated the security concerns. An applicant bears the burden of persuasion. Adverse decision affirmed. CASENO: 15-03978.a1 DATE: 03/31/2017 DATE: March 31, 2017 In Re: ---------- Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 15-03978

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT James B. Norman, Esq., Chief Department Counsel FOR APPLICANT Ryan C. Nerney, Esq. The Department of Defense (DoD) declined to grant Applicant a security clearance. On February 12, 2016, 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 January 4, 2017, 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 issues on appeal: whether the Judge’s whole-person analysis was erroneous and 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 works for a Defense contractor. He served in the military from 2001 until 2004, when he received a General Discharge Under Honorable Conditions. Divorced and remarried, Applicant has five children and a stepchild. Applicant’s SOR alleges a Chapter 7 bankruptcy discharge that occurred in 2006, several delinquent debts, and an allegation that he failed to file Federal tax returns for 2012 and 2013. He filed these returns in 2015. He has installment agreements with the IRS for the payment of his tax obligations. Documentation from one installment agreement shows he owes a little over $17,200 in back taxes, penalties, and interest for 2010 and for 2012 through 2014. He also owes about $2,000 for 2015The Judge noted that Applicant’s failure to pay tax was not alleged. He stated that he would consider it on the issues of mitigation, the whole-person analysis, etc. Decision at 3, n.6. Applicant has received financial counseling. He stated that he is committed to paying his taxes and maintaining financial health. Applicant enjoys a good reputation for job performance, as well as for dependability, trustworthiness, honesty, reliability, and integrity. The Judge’s Analysis The Judge resolved the bankruptcy allegations in Applicant’s favor. He also entered favorable findings for Applicant’s delinquent debts, insofar as most had been resolved. However, he entered adverse findings regarding Applicant’s tax problems. He concluded that, despite Applicant’s having finally filed his returns and entered into installment agreements for the payment of amounts owed, Applicant’s problems are not fully under control, citing to the original failure to file and to evidence that Applicant owes back taxes for 2010 and 2012 through 2015. In the whole person analysis, the Judge considered Applicant’s military service, consistent employment, and favorable character evidence. He concluded, however, that Applicant’s ongoing tax issues raised doubts about his fitness for a clearance.

DISCUSSION

Applicant argues that the Judge’s analysis was not consistent. He notes that the Judge made findings about things that were favorable, such as his receipt of financial counseling, his announced intention to pay his taxes, and his belief that he will not owe further taxes for 2016. He argued that the Judge’s adverse decision runs contrary to these findings, resulting in a “fragmented” analysis. However, it is not inconsistent for a Judge to acknowledge favorable evidence yet conclude that, despite such evidence, an applicant has not succeeded in mitigating the concerns arising from his conduct or circumstances. See, e.g., ISCR Case No. 01-24504 at 3-4 (App. Bd. Feb. 11, 2003). In that case, we stated that a Judge’s general findings that an applicant was of good character and was trustworthy did not undermine his ultimate conclusion that the applicant was financially irresponsible and had not mitigated her delinquent debts. We stated that, in evaluating the whole- person, a Judge is “required . . . to evaluate both favorable and unfavorable evidence . . . . Absent a showing . . . that he did so in a manner that was arbitrary, capricious, or contrary to law, [we] will not disturb the Judge’s findings and conclusions on appeal.” By the same token, in the case before us there is no contradiction between the Judge’s findings about Applicant’s favorable evidence and his conclusion that this evidence was not entitled to such weight as to resolve the concerns arising from Applicant’s failure to file his tax returns. An applicant bears the burden of persuasion, and the Judge did not err in considering, on the issue of mitigation, evidence that Applicant continues to owe back taxes for several years. Under the facts of this case, the Judge’s weighing of the evidence is supportable. Despite Applicant’s argument to the contrary, the Judge complied with the requirements of the Directive, in that he considered the totality of the record evidence in reaching his decision. See, e.g., ISCR Case No. 14-06653 at 3 (App. Bd. Nov. 18, 2016). Applicant has cited to a Hearing Office case that he believes supports his effort to obtain a clearance. We give this case due consideration as persuasive evidence. However, Hearing Office decisions are not binding on other Hearing Office Judges or on the Appeal Board. See, e.g., ISCR Case No. 15-04096 at 2 (App. Bd. Nov. 22, 2016). Moreover, there are factual differences between the cited case and Applicant’s own. Applicant has not provided a reason to conclude that the Judge’s decision was in error. The Judge examined the relevant evidence and articulated a satisfactory explanation for the decision. A person who fails repeatedly to fulfill his or her legal obligations, such as filing tax returns in a timely manner, does not demonstrate the high degree of good judgment and reliability required of those granted access to classified information. Failure to file tax returns suggests that an applicant has a problem with complying with well-established rules and regulations. Id. 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 Ra’anan Michael 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