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ISCR Case 16-02246.a1 — CASE

ISCR Case 16-02246.a1denied

Case Headnote

ISCR Case No. 16-02246.a1

Dec 8, 2017· Hon. Michael Y. Ra'anan· appeal

Summary

A separated military veteran was denied a security clearance under Guideline F (Financial Considerations) due to over $33,000 in delinquent debt and non-compliance with a tax repayment plan. The appeal board affirmed the denial, citing the applicant's failure to provide evidence that these financial issues were beyond their control.

Specifically, Disqualifying Condition F.3 was raised, indicating a history of not meeting financial obligations. While Mitigating Conditions F.2 and F.3 were considered, they were ultimately not sufficient to overcome the security concerns.

The judge determined there was no evidence to support that the financial problems stemmed from circumstances outside the applicant's control. The denial underscored the necessity for individuals with access to classified information to demonstrate sound judgment, which was not sufficiently evidenced in this financial context.

Conditions Referenced

Disqualifying

F.3raisedInability or Unwillingness to Satisfy Debts

Mitigating

F.2rejectedThe Conditions That Resulted in the Financial Problems Were Beyond the Person's ControlThe judge found no evidence that the financial problems were caused by circumstances outside the applicant's control.
F.3rejectedThe Person Has Received or Is Receiving Counseling for the Financial ProblemThe applicant provided no evidence of financial counseling or a budget.

Key Rule Quoted

“A person who fails to comply with legal obligations, such as filing and/or paying taxes when due, does not exhibit the good judgment and reliability expected of those with access to classified information.”

Procedural Posture

SOR issuedOct 31, 2016
Answer filed—
Hearing held—
Decision dateDec 8, 2017

Cite For

Denial Based on Financial Considerations Under Guideline F
Importance of Demonstrating Compliance with Tax Obligations
Consideration of Underlying Circumstances Affecting Judgment and Reliability

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 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, citing bankruptcy law. The Board affirmed the Judge's decision, finding that the applicant did not adequately explain his financial delinquencies and failed to meet his burden of persuasion.

Appealed bythe applicant

Applicant representationAttorney

Judge belowRoger C. Wesley — denied the clearance (split findings)

Decided onthe written record

Guidelines belowGuideline F

What the Board reviewed

Decision arbitrary, capricious, or contrary to law — raised by the applicantRejected
Applicant contends 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 failed to meet his burden of persuasion regarding his financial delinquencies. The Judge's analysis was not arbitrary or capricious, and the applicant's arguments did not compel a different outcome.

Standard of review applied

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

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 cites to the bankruptcy code in support of his challenge to the Judge’s analysis. However, even if Applicant is correct as a matter of law that all of the SOR debts were covered, it would not compel a favorable result. Furthermore, as Department Counsel notes, Applicant has not explained the circumstances in which the delinquencies arose. Although debts may have been paid or discharged in bankruptcy, a Judge may still consider the underlying circumstances for what they may reveal about an applicant’s judgment and reliability. Adverse decision affirmed. CASENO: 16-02246.a1 DATE: 12/8/2017 DATE: December 8, 2017 In Re: -----------------

Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 16-02246

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT James B. Norman, Esq., Chief Department Counsel FOR APPLICANT Kenneth M. Roberts Esq. The Department of Defense (DoD) declined to grant Applicant a security clearance. On October 31, 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 August 11, 2017, after considering the record, Defense Office of Hearings and Appeals (DOHA) Administrative Judge Roger C. Wesley 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 is separated from his wife. He has no children from the marriage. He separated from the U.S. military in 2010 and has worked for his current employer since 2015. His SOR alleges over $33,000 in delinquent debt. Without otherwise addressing these financial delinquencies, Applicant filed for Chapter 7 bankruptcy protection. His debts were discharged in late 2016. The Judge stated that it is unclear whether the debts that were not listed in his schedule of non-priority claims were discharged. He stated that more documentation is needed regarding these debts. Applicant filed his 2014 Federal income tax return late. In addition, he owed over $1,700 in back taxes. He entered into an installment agreement whereby he would play $100 per month in resolution of his tax delinquency. He provided no documentation to show that he was adhering to the terms of this plan. Applicant’s monthly income is about $3,600. After expenses he has $6.00 left over. He did not present more recent information about his income than was included in his bankruptcy petition. Applicant provided no evidence of financial counseling or of the creation of a budget to assist him in managing his finances. The Judge’s Analysis The Judge resolved some of Applicant’s SOR debts, as well as his late tax return, in his favor. However, for other debts, including his delinquent income tax obligation, the Judge entered adverse findings. He stated that there is no evidence that Applicant’s financial problems were caused by circumstances outside his control. Moreover, he reiterated his finding that Applicant did not provide evidence of compliance with his tax repayment plan. Though noting Applicant’s bankruptcy discharge, he stated that Applicant’s debts go back many years and that the record does not contain evidence of a reasonable basis for these debts. The Judge stated that Applicant’s financial and tax problems reflect poorly upon his judgment and reliability.

DISCUSSION

Applicant contends that all of his delinquent debts were discharged through bankruptcy. He cites to the bankruptcy code in support of his challenge to the Judge’s analysis.1 However, even if Applicant is correct as a matter of law that all of the SOR debts were covered, it would not compel

FOOTNOTES

1 The record contains Applicant’s discharge order, which states that not all debts are necessarily covered by a bankruptcy discharge. Item 1, Discharge Order, included in Answer to SOR. a favorable result. Furthermore, as Department Counsel notes (Reply Brief, p. 9), Applicant has not explained the circumstances in which the delinquencies arose. Although debts may have been paid or discharged in bankruptcy, a Judge may still consider the underlying circumstances for what they may reveal about an applicant’s judgment and reliability. See, e.g., ISCR Case No. 14-02394 at 3-4 (App. Bd. Aug. 17, 2015). By the same token, even if debts have been resolved or discharged, a Judge may consider any paucity of mitigating evidence in determining whether the applicant had met his or her burden of persuasion. Here, for example, Applicant did not adequately explain what efforts he took to resolve the debts short of bankruptcy. We resolve this assignment of error adversely to Applicant. Applicant’s brief includes documents from outside the record and that post-date the Judge’s decision, which we cannot consider. Directive ¶ E3.1.29. Applicant believes that he has mitigated concerns arising from his tax delinquency. However, the Judge’s comment that the record contains no evidence to excuse this failure is supportable. In a DOHA proceeding, it is the applicant’s job to present evidence in mitigation of the concerns raised in the SOR. Directive ¶ E3.1.15. After considering the record as a whole, we find no reason to disturb the Judge’s conclusion that Applicant had failed to meet his burden of persuasion. The Judge examined the relevant evidence and articulated a satisfactory explanation for the decision. A person who fails to comply with legal obligations, such as filing and/or paying taxes when due, does not exhibit the good judgment and reliability expected of those with access to classified information. See, e.g., ISCR Case No. 15-06707 at 3 (App. Bd. Aug. 15, 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: James E. Moody James E. Moody Administrative Judge Member, Appeal Board Signed: James F. Duffy James F. Duffy Administrative Judge Member, Appeal Board