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ISCR Case 15-05158.a1 — CASE

ISCR Case 15-05158.a1denied

Case Headnote

ISCR Case No. 15-05158.a1

Aug 17, 2017· Hon. Michael Y. Ra'anan· appeal

Summary

A retired military member was denied a security clearance under Guideline F (Financial Considerations) due to significant financial irresponsibility. The applicant failed to file federal income tax returns for both 2009 and 2010, which resulted in an outstanding state tax lien.

While the applicant claimed financial hardship and stated efforts were made to resolve these tax issues, insufficient documentation was provided to substantiate these assertions. This lack of verifiable evidence raised concerns regarding the applicant's financial responsibility and its potential impact on national security interests.

Specifically, the denial cited the applicant's failure to timely file federal tax returns for the specified years and the unresolved state tax lien. Despite the applicant raising mitigating conditions, the adjudicator found the disqualifying conditions outweighed them, leading to the denial of the security clearance.

Conditions Referenced

Disqualifying

AG ¶ 20(a)raisedFailure to File or Pay Taxes

Mitigating

AG ¶ 20(c)rejectedFinancial Difficulties Due to Circumstances Beyond the Person's ControlApplicant did not provide sufficient evidence to support claims of financial hardship.
AG ¶ 20(d)rejectedThe Individual Initiated a Good Faith Effort to Repay Overdue Creditors or Otherwise Resolve DebtsApplicant's claims of efforts to resolve tax issues were not substantiated with adequate documentation.

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 issuedMar 7, 2016
Answer filed—
Hearing heldMay 31, 2017
Decision dateAug 17, 2017

Cite For

Failure to File Federal Income Tax Returns as a Disqualifying Condition Under Guideline F
Insufficient Documentation to Support Claims of Financial Hardship
The Standard for Granting Security Clearance Related to National Security Interests

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 timely file Federal income tax returns and an outstanding tax lien. 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.

Appealed bythe applicant

Applicant representationPro se (self-represented)

Judge belowRobert J. Kilmartin — denied the clearance

Decided onthe written record

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's decision was supported by substantial evidence and that the applicant did not demonstrate that the Judge's analysis was arbitrary or capricious. The applicant's failure to provide documentary evidence to support his claims contributed to the affirmation of the adverse decision.

Standard of review applied

Harmful-error gatekeeperSubstantial-evidence reviewArbitrary-and-capricious reviewProcedural complianceNo de-novo re-decisionNo new evidence on appeal

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: Applicant failed to timely file his Federal income tax returns for 2009 and 2010. He has an outstanding tax lien against him by his state. Adverse decision affirmed. CASENO: 15-05158.a1 DATE: 08/17/2017 DATE: August 17, 2017 In Re: ----------------

Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 15-05158

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 March 7, 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 decision on the written record. On May 31, 2017, after considering the record, Defense Office of Hearings and Appeals (DOHA) Administrative Judge Robert J. Kilmartin 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 retired from the military in 2001 and obtained a college degree in 2006. He has worked for a Federal contractor since 2010. Later that same year, Applicant was discharged in Chapter 7 bankruptcy. Applicant failed to timely file his Federal income tax returns for 2009 and 2010. He has an outstanding tax lien against him by his state. Applicant first disclosed his Federal filing delinquencies on his 2012 security clearance application (SCA). In a subsequent clearance interview, he expressed optimism that his returns would be filed and taxes paid soon. In his 2014 SCA, he stated that he was working to file his returns and pay his taxes. In the clearance interview, he stated that he had started a payment plan to resolve his 2009 taxes and expected to have them paid by 2015. He admitted that he had not yet filed his 2010 Federal returns. In his response to the SOR, he advised that he had filed Federal returns for 2009 and 2010 and was working on a plan to address a tax debt to the IRS. He also stated that he owed his state over $4,000 for taxes due in 2014. Applicant attributed his tax delinquencies to a failed business. He mortgaged his home and used credit cards to invest in what turned out to be a Ponzi scheme. He failed to produce corroborating evidence of this scheme or documentary proof that he had filed his returns, entered into payment plans, or paid the taxes in question. The Judge’s Analysis The Judge noted Applicant’s claims to have filed his tax returns. However, he also noted that Applicant did not provide documentary proof that he had done so or that he had paid delinquent taxes. The Judge cited to Applicant’s military career and his claims to have been defrauded through the failed business venture. However, he concluded that Applicant’s finances remain a security concern.

DISCUSSION

Applicant’s brief includes reference to matters from outside the record, which we cannot consider. Directive ¶ E3.1.29. Applicant contends that the Decision relies on outdated information. He states that there was no method for him to provide updates to the Judge since April 2016, “unless I was requested to provide such, which request was never received by me.” Appeal Brief at 1. The record shows that DOHA sent Applicant a copy of the File of Relevant Material (FORM) on June 20, 2016. The FORM was accompanied by a cover letter of the same date that notified Applicant of his right to provide a documentary response that could consist of “any material you wish the Administrative Judge to consider[.]” The record shows that Applicant acknowledged receipt of the FORM and cover letter on July 11, 2016. Despite this, Applicant did not make a documentary response to the FORM. There is nothing in the record to show that Applicant actually sought to supplement the FORM with more up-to-date information, nor does Applicant contend in his Appeal Brief that he submitted documents that did not make it into the record. The record demonstrates that Applicant received adequate notice of his right to provide a response to the FORM. His failure to have done so cannot be attributed to DOHA. Beyond this, Applicant cites to efforts he had undertaken to resolve his tax problems. Applicant has not demonstrated that the Judge weighed the evidence in a manner that was arbitrary, capricious, or contrary to law. See, e.g., ISCR Case No. 15-08842 at 3 (App. Bd. Feb. 14, 2017). 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, Encl. 2, App. A ¶ 2(b): “Any doubt concerning personnel being considered for national security eligibility 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