CASE · Clearance Adjudication Search EngineCASE

Loading case…

ISCR Case 15-08751.a1 — CASE

ISCR Case 15-08751.a1denied

Case Headnote

ISCR Case No. 15-08751.a1

Jul 12, 2017· Hon. Michael Y. Ra'anan· appeal

Summary

A 46-year-old independent contractor was denied a security clearance under Guideline F (Financial Considerations) due to a history of unresolved financial issues. Specifically, the applicant failed to file federal and state income tax returns from 2007 to 2014. This non-compliance led to a federal tax lien of over $38,000 being filed against him in 2010.

The judge identified disqualifying conditions related to the applicant's failure to meet financial obligations and a pattern of financial irresponsibility. While mitigating conditions were considered, the applicant's long history of non-compliance and failure to timely file tax returns raised significant concerns about his reliability and judgment.

Ultimately, the judge determined that the applicant's actions demonstrated a pattern of failing to meet legal financial obligations, which undermined confidence in his trustworthiness. Consequently, the security clearance was denied.

Conditions Referenced

Disqualifying

AG ¶ 20(a)raisedFailure to File or Pay Taxes
AG ¶ 20(c)raisedDeliberate Failure to Comply with Tax Obligations

Mitigating

AG ¶ 20(d)rejectedThe Individual Has Made a Good Faith Effort to Repay Overdue TaxesWhile the applicant made efforts to rectify his tax issues, the judge found that these efforts did not outweigh the long history of non-compliance.
AG ¶ 20(e)rejectedThe Individual Has Received Financial CounselingThe judge determined that the applicant's recent actions did not mitigate the concerns raised by his past behavior.

Key Rule Quoted

“A person who fails repeatedly to fulfill his or her legal obligations does not demonstrate the high degree of good judgment and reliability required of those granted access to classified information.”
— ISCR Case No. 15-08885 at 3 (App. Bd. Jun. 21, 2017)

Procedural Posture

SOR issuedJun 10, 2016
Answer filed—
Hearing heldApr 21, 2017
Decision dateJul 12, 2017

Cite For

Denial of Security Clearance Due to Unresolved Financial Issues Under Guideline F
Importance of Fulfilling Legal Obligations for National Security Eligibility
Impact of a History of Non-compliance on Reliability and Judgment 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 was from a denial of a security clearance based on financial considerations under Guideline F. The applicant argued that the Judge ignored significant evidence and that the decision was arbitrary and capricious. The Board affirmed the decision, finding the Judge's conclusions were supported by substantial evidence and properly considered the applicant's financial history.

Appealed bythe applicant

Applicant representationPro se (self-represented)

Judge belowJennifer I. Goldstein — denied the clearance

Decided ona hearing

Guidelines belowGuideline F

What the Board reviewed

Judge mis-weighed or ignored evidence — raised by the applicantRejected
Applicant contended that the Judge disregarded significant record evidence.
Decision arbitrary, capricious, or contrary to law — raised by the applicantRejected
Applicant argued that the Judge's decision was arbitrary, capricious, or contrary to law.

Why the Board ruled this way

The Board found that the Judge's findings and conclusions were based on substantial evidence and articulated a satisfactory explanation for the decision. The Judge properly considered the applicant's financial history and the implications for reliability and judgment.

Standard of review applied

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

Appeal Board panel

Michael Ra’anan — Chair
William S. Fields
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: The Judge was required to consider not only the actions Applicant had taken to resolve his financial problems, but also the circumstances underlying those problems that impugn his reliability and judgment. Adverse decision affirmed. CASENO: 15-08751.a1 DATE: 07/12/2017 DATE: July 12, 2017 In Re: ---------------- Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 15-08751

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 June 10, 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 April 21, 2017, after the hearing, Defense Office of Hearings and Appeals (DOHA) Administrative Judge Jennifer I. Goldstein 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 disregard significant record evidence and whether the Judge’s decision was arbitrary, capricious, or contrary to law. Consistent with the following, we affirm. The Judge’s Findings of Fact Applicant is a 46-year-old independent contractor who seeks to perform business with defense contractors. The SOR alleged that Applicant failed to file his Federal and state income tax returns for 2007 through 2014 in a timely manner and had a Federal tax lien for over $38,000 filed against him in 2010.1 In his SOR response, Applicant admitted he failed to file his Federal and state tax returns for the years in question. He attributed those tax filing deficiencies to poor record keeping and lack of structure to keep track of business expenses. In 2014 and 2015, he hired an accountant who has helped him organize his records. His delinquent tax returns were filed in August 2016. In his SOR response, Applicant denied the Federal tax lien. The lien was for unpaid taxes in 2001, 2006, and 2007. In October 2016, he set up a plan to make monthly payments of $750 to the IRS and provided proof that he made three payments under the plan. The Federal tax lien was released in early 2017. The total amount of his unpaid Federal taxes was not disclosed in the record. He owes no Federal taxes for 2007-2011, but owes about $54,000 for 2012, $18,000 for 2013, $12,000 for 2014, and $14,000 for 2015. He plans to take out a home equity loan to resolve his tax debt. He earns about $230,000 per year and lists assets over $1,800,000. The Judge’s Analysis Applicant has a long history of unwillingness to satisfy his Federal and state tax obligations. He waited until after receipt of the SOR to file his income tax returns and to start payments on his Federal taxes. “While his recent efforts to rectify his Federal and state taxes are notable, his failure to comply with legal obligations for years casts doubt on his current judgment.” Decision at 6.

DISCUSSION

Applicant contends that the Judge did not mention a “$90,000 tax credit” reflected on his 2010 IRS tax transcript. The Judge, however, entered a finding that Applicant made an estimated tax payment of $94,000 for 2010. Decision at 3. His 2010 tax transcript reflects in two entries that a payment of $94,000 was made on a specific date, and each of those entries is followed by an entry indicating a payment of that amount was “removed.” Applicant’s Exhibit (AE) R. The 2010 tax transcript does not indicate that the $94,000 payment was applied to taxes for any other year. Applicant also argues that the $90,000 payment eliminated most of his subsequent tax liabilities for 2012 through 2015, and he owes about $9,000 for 2015. The tax transcripts for 2012 through 2015, however, do not support that argument. His 2011 tax transcript indicated he had a credit in his 1 In separate allegations, the SOR alleged that Applicant failed to file state income tax returns in two different states for 2007-2014. The Judge found in favor of Applicant on one of those allegations and against him on the other. The favorable finding is not an issue in this appeal and is not discussed further. “account balance” of about $6,000, but the tax transcripts for the following years indicate that, as of late 2016 or early 2017, he owed tax deficiencies as the Judge stated in her findings of fact. We also note that Applicant’s appeal brief argument contradicts his testimony that he owed the IRS about $50,000 to $60,000 at the time of he hearing. Tr. at 40-41. Based on our review of the record, we conclude that the Judge’s material findings and conclusions are based on substantial evidence, or constitute reasonable characterizations or inferences that could be drawn from the record. See, e.g., ISCR Case No. 12-03420 at 3 (App. Bd. Jul. 25, 2014). Applicant also contends the Judge did not acknowledge his accountant’s letter that indicated Applicant was “in full compliance with the Internal Revenue Service at this time.” AE B. The accountant’s letter noted that Applicant filed the delinquent tax returns, made an estimated payment of $94,000 in 2010, but still had a remaining tax liability for an unspecified amount that was being taken care of through an installment agreement. While the Judge cites to AE B (Decision at 3), she did not specifically reference the accountant’s statement about Applicant being in “full compliance” with IRS requirements. As Applicant states in his appeal brief, a Judge is not required to discuss each and every piece of evidence in rendering a decision. Appeal Brief at 5, citing ISCR Case No. 12-01500 at 3 (App. Bd. Aug. 25, 2015). We find the Judge did not err by not mentioning the accountant’s statement about Applicant “full compliance” with IRS requirements. While the Judge’s decision discussed the significant actions that Applicant had taken to resolve his tax problems, including those set forth in the accountant’s letter, those actions did not compel the Judge to issue a favorable security decision. In this regard, we note that the Judge was required to consider not only the actions Applicant had taken to resolve his financial problems, but also the circumstances underlying those problems that impugn his reliability and judgment. See, e.g., ISCR Case No. 14- 03392 at 3 (App. Bd. Apr. 15, 2015). Applicant further argues that he mitigated the Guideline F security concerns because, among other matters, he hired an accountant, completed financial counseling, and filed the delinquent tax returns. He contends his tax problems are under control. In essence, Applicant is challenging the amount of weight the Judge gave certain evidence. It is well established that a party’s disagreement with the Judge’s weighing of the evidence, or an ability to argue for a different interpretation of the evidence, is not sufficient to demonstrate the Judge weighed the evidence or reached conclusions in a manner that is arbitrary, capricious, or contrary to law. See, e.g., ISCR Case No. 14-06686 at 2 (App. Bd. Apr. 27, 2016).

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 does not demonstrate the high degree of good judgment and reliability required of those granted access to classified information. See, e.g., ISCR Case No. 15-08885 at 3 (App. Bd. Jun. 21, 2017). 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: William S. Fields William S. Fields Administrative Judge Member, Appeal Board Signed: James F. Duffy James F. Duffy Administrative Judge Member, Appeal Board