ÿWPC‡ üV©Õ™ïAqÕ]nﻋ®•Úv]d*$‘±óAqÕÕ)!ÚCØÓÀü³•Ðx¢¹ã,gè´Á®ñMu2Ù:¦¾Ÿ7æx`­÷CòüË4A¸™¿Ei§×C~r€j9@Yoõ7¾Hg•à²X á/H‹ã›a{Àá´\‚˜ñ‹‘D©Æ£“Ûÿ¥‰2|0F‡vUË‹Ø(fn»YâéD ÜÞÅu¥0¸ïõ{¡ lŸúD¨ þŽÜpï^C&üä);Ư±Vãµr Q#Xfí «íãW#ÉÂUN‹ %Ù 0:ß àZ ^ s w 4ƒ — ¦ m¨ 0©¿ ¿ àZh 0D N E  ƒ  0NŸ?í>,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, Bj˜HP LaserJet 400 color M451dn UPD PCL 6ÈÈÈÈÈÈÈÈ0(ÖÃ9 Z‹6Times New Roman RegularX(üœ$¡¡ÔUSUS.,Ô8DocumentManagement::ModifiedBooleanTRUEkvJà„7J3|xÿU‹ÿÿÿÿ(Y(2Ï$¤¤Ý ƒüœ!ÝÔUSUS.,ÔÝ  ÝÔ€ôôòXXÔÓ  Óà  àòòÚ  Ú0Ú  Úóó8DocumentManagement::ModifiedBooleanTRUE(#Ã$òòÚ  Ú0Ú  Úóó Ý ƒ Ï$ÝÔUSUS.,ÔÔ€ô dòXXÔÓ  Óà  àòòÚ  Ú3Ú  ÚóóÝ  ÝÔ_Ô€The€Ô_ÔSORÔ_Ô€did€not€allege€that€Applicant€did€not€file€his€tax€returns€as€required€by€law.€ yÝ ƒ Ï$ÝÔUSUS.,ÔÔ€ô dòXXÔÓ  Óà  àòòÚ  Ú2Ú  ÚóóÝ  ÝÔ_Ô€In€a€CAC€adjudication,€ð ðthe€overriding€factor€.€.€.€is€unacceptable€risk.ðð€€Instruction,€Enclosure€4€ðð€1(b).€Ð ° Ðð ðUnacceptable€riskðð€is€defined€as€ð ð[a]€threat€to€life,€safety,€or€health€of€employees,€contractors,€vendors,€or€visitors;€toÐ tÄ Ðthe€U.S.€Government[ððs]€physical€assets€or€information€systems;€to€personal€property;€to€records,€including€classified,Ð 8ˆ Ðprivileged,€proprietary,€financial,€and€medical€records;€or€to€the€privacy€rights€established€by€The€Privacy€Act€of€1974,Ð üL Ðas€amended,€or€other€law€that€is€deemed€unacceptable€when€making€risk€management€determinations.ðð€€Instruction,Ð À ÐGlossary,€Part€II,€Definitions.(ÍO$——ÔÿÔòòóóÔÿÔ 5Ý ƒ Ï$ÝÔUSUS.,ÔÔ€ô dòXXÔÓ  Óà  àòòÚ  Ú1Ú  ÚóóÝ  ÝÔ_Ô€Instruction,€Enclosure€4€ðð€6€provides€that€appeals€to€DOHA€of€CAC€cases€are€accorded€the€establishedÐ ° Ðadministrative€procedures€set€out€in€the€Directive.€€Since€its€inception,€the€Appeal€Board€has€been€issuing€decisions€thatÐ tÄ Ðinterpret€and€analyze€the€administrative€procedures€set€forth€in€the€Directive.€€Because€those€same€administrativeÐ 8ˆ Ðprocedures€are€used€in€appeals€of€CAC€revocations,€our€decisions€interpreting€and€analyzing€those€procedures€applyÐ üL Ðequally€here€for€reviewing€a€judgeððs€actions,€rulings,€findings,€and€conclusions€in€CAC€cases.€€Decisions€of€the€AppealÐ À ÐBoard€are€available€to€the€public€at€DOHAððs€website:€Ô4‚Ý ÆÔÝ‚ÍOÝÔÿÔòòÝ  ÝÔ5  Ôhttp://www.dod.mil/dodgc/doha/Ô6qÔÝ‚ÍO…ƒÝóóÔÿÔÝ  ÝÔ7Ý >³Ô.http://www.dod.mil/dodgc/doha/ dÝ ƒüœ!ÝÔUSUS.,ÔÝ  ÝÔ_ÔKEYWORD:€€CACÐ ° ÐÌDIGEST:€€Based€upon€our€review€of€the€record,€we€do€not€find€persuasive€Department€CounselððsÐ ˆØ Ðarguments€that€Applicantððs€debts€clearly€evidence€a€lack€of€honesty.€€While€Applicant€couldÐ tÄ Ðpossibly€have€taken€greater€steps€to€resolve€his€debts,€any€shortcoming€in€Applicantððs€handling€ofÐ `° Ðthe€debts€do€not,€on€this€record,€equate€to€or€establish€a€lack€of€honesty.€€Favorable€decisionÐ L œ ÐÔ_Ôaffirmed.Ô_ÔÐ 8 ˆ ÐÌCASE€NO:€€15„02333.a1Ð  ` ÐÌDATE:€€03/22/2017Ð è 8  ÐÌÌà  àà ` àà ¸ àà  àà h àà À àà  àà p àDATE:€€€March€22,€2017Ð ¬ü  ÐÌÌÌÒ.؉ð7r°(#°(#.ÒßA€V) °°xdE°[gAßÐ \¬ ÐÌIn€Re:Ð W§ ÐÌà  à„„„„„„„„„„„„Ìà  àÌÌApplicant€for€CAC€EligibilityÐ óC ÐÌßA€V) °°xdE°ÊgAßÐ Ë Ð)Ð \¬ Ð)Ð H˜ Ð)Ð 4„ Ð)Ð  p Ð)Ð  \ Ð)Ð øH Ð)Ð ä4  Ð)Ð Ð ! ÐÐ ¼ " ÐÓp°œXÓÌÌÌà p à€CAC€Case€No.€15„02333Ð  p% ÐÐ  \& ÐÒ.؉ð7r°°.ÒÓ °\X›XpÓÐ ”ä& Ðò òÓ  ÓAPPEAL€BOARD€DECISIONÐ €Ð' ÐÌÌòòAPPEARANCESóóÐ D!”* Ðó óÌÔ‡&â£%XXÔò òFOR€GOVERNMENTó óÐ #l, ÐJohn€Ô_ÔBayardÔ_Ô€Ô_ÔGlendonÔ_Ô,€Esq.,€Deputy€Chief€Department€CounselÐ ô#D- ÐÌò òFOR€APPLICANTó óÐ ¤%ô / ÐHal€Baird,€Esq.Ð |&Ì!0 ÐÌÌÓ  Óà  àÔ#†XöpX%&⣜#ÔThe€Department€of€Defense€(DoD)€declined€to€grant€Applicant€eligibility€for€CommonÐ )T$3 ÐAccess€Card€(CAC)€credentialing.€€On€May€20,€2015,€DoD€issued€a€statement€of€reasons€(Ô_ÔSORÔ_Ô)Ð ð)@%4 Ðadvising€Applicant€of€the€basis€for€that€decisionð!ðcriminal€and€dishonest€conduct€concerns€raisedÐ Ü*,&5 Ðunder€the€adjudicative€standards€in€the€appendices€of€DoD€Instruction€5200.46€(Sep.€9,€2014)Ð È+'6 Ð(Instruction).€€Applicant€requested€a€hearing.€€On€June€20,€2016,€after€the€hearing,€Defense€OfficeÐ ´,(7 Ðof€Hearings€and€Appeals€(DOHA)€Administrative€Judge€Edward€W.€Ô_ÔLoughranÔ_Ô€denied€ApplicantððsÐ  -ð(8 Ðrequest€for€CAC€eligibility.€€Applicant€appealed€the€decision.€€On€November€16,€2016,€the€AppealÐ ° ÐÔ_ÔBoard€remanded€the€case€to€the€Judge€for€further€processing.€€On€December€5,€2017,€the€JudgeÐ œì Ðissued€a€remand€decision€granting€Applicant€CAC€eligibility.€€Department€Counsel€appealedÐ ˆØ Ðpursuant€to€Instruction,€Enclosure€4€ðð€6.Ð tÄ ÐÌà  àDepartment€Counsel€raised€the€following€issue€on€appeal:€whether€the€Judgeððs€favorable€Ð L œ Ðdecision€was€arbitrary,€capricious,€or€contrary€to€law.€€Consistent€with€the€following,€we€affirm.Ð 8 ˆ ÐÌà  àò òThe€Judgeððs€Finding€of€Factó óÐ  ` ÐÌà  àApplicant€has€worked€for€his€current€employer€since€2014.€€He€served€in€the€military€fromÐ è 8  Ð1981€until€1987€and€has€a€masterððs€degree.€€He€is€married€with€three€adult€children.Ð Ô$  ÐÌà  àApplicant€has€a€history€of€financial€problems.€€He€was€granted€a€Chapter€7€bankruptcyÐ ¬ü  Ðdischarge€in€2011,€but€his€student€loans€and€delinquent€taxes€were€not€discharged€in€that€proceeding.€Ð ˜è  ÐIn€April€2016,€he€owed€over€$150,000€in€defaulted€student€loans,€but€entered€into€a€rehabilitationÐ „Ô  Ðagreement€in€which€he€agreed€to€make€nine€monthly€payments€of€$380.€€If€he€makes€those€payments,Ð pÀ Ðthe€student€loans€will€be€in€good€standing.€Ð \¬ ÐÌà  àApplicant€owes€his€state€about€$10,300€for€an€overpayment€of€unemployment€compensationÐ 4„ Ðfrom€2013.€€No€evidence€was€presented€that€the€overpayment€was€due€to€fraud.€€He€is€contesting€thisÐ  p Ðdebt.€€If€it€is€determined€that€he€owes€the€money,€he€indicated€he€would€pay€the€debt.€€He€made€aÐ  \ Ð$100€payment€to€the€state€in€early€2016.€€Ð øH ÐÌà  àApplicant€owes€the€IRS€around€$20,000€in€past„due€income€taxes€for€2009€through€2011.€Ð Ð  ÐHe€attributed€his€tax€delinquencies€to€a€contentious€divorce€from€a€previous€spouse.€€He€stated€thatÐ ¼  Ðhe€followed€the€advice€of€his€attorney€and€his€CPA€by€claiming€only€the€minimal€exemptions€so€asÐ ¨ø Ðnot€to€conflict€with€his€divorce€proceeding,€resulting€in€greater€tax€liability€than€he€otherwise€wouldÐ ”ä Ðhave€owed.€€He€states€that€his€CPA€is€in€the€process€of€filing€amended€returns€and€that€he€willÐ €Ð Ðactually€receive€a€refund.€€Ð l¼ ÐÌà  àThe€CPA€provided€a€letter€in€which€he€stated€that€he€had€prepared€tax€returns€for€2011Ð D!” Ðthrough€2014.€€The€returns€for€2011€through€2013€had€yet€to€be€filed.€€The€CPA€stated€that€he€wasÐ 0"€  Ðin€discussions€with€the€IRS€regarding€an€offer€in€compromise.€€He€also€stated€that€Applicant€wouldÐ #l! Ðhave€a€hard€time€paying€any€amounts€due€for€returns€filed€prior€to€2011.Ð $X" ÐÌà  àApplicantððs€IRS€transcripts€show€that€his€2010€return€resulted€in€a€refund€that€was€creditedÐ à%0!$ Ðtoward€an€earlier€yearððs€liability.€€The€transcripts€do€not€reveal€whether€the€2011€through€2013Ð Ì&"% Ðreturns€have€been€filed.€€Applicant€did€not€establish€that€he€filed€all€of€his€tax€returns,€so€the€exactÐ ¸'#& Ðamount€he€may€owe€the€IRS€cannot€be€determined.€€The€Judge€noted€that€he€was€not€convinced€thatÐ ¤(ô#' ÐApplicantððs€conduct€constituted€a€crime€under€26€U.S.C€ðð€7201,€which€requires€a€defendant€ð ðactedÐ )à$( Ðwillfully€and€knowingly€with€specific€intent€to€evade€his€income€tax€obligation.ðð€€Decision€at€3,Ð |*Ì%) Ðciting€òòU.S.€v€Danielsóó,€617€F.2d€146€at€148€(5òòthóó€Cir.€1980).Ð h+¸&* ÐÌà  àApplicantððs€supervisor€testified€on€his€behalf€and€has€provided€a€character€letter€commendingÐ @-(, Ðhis€outstanding€job€performance,€trustworthiness,€reliability,€and€judgment.Ð ° ÐÌÌÌà  àò òThe€Judgeððs€Analysisó óÐ `° ÐÌà  àThe€Judge€concluded€that€Applicantððs€debts€do€not€raise€a€disqualifying€condition.€€NotingÐ 8 ˆ Ðthat€financial€debt€should€not€in€and€of€itself€be€cause€for€denial€of€a€CAC,€the€Judge€stated€that€thereÐ $ t Ðwas€no€evidence€that€the€unemployment€compensation€overpayment€was€due€to€fraud,€and€that€heÐ  ` Ðwas€not€convinced€that€Applicant€had€the€specific€intent€to€evade€his€income€tax€obligations.€€Ð ü L  Ðà  àÌà  àò òDiscussionó óÐ Ô$  ÐÌà  àThere€is€no€presumption€of€error€below,€and€the€appealing€party€has€the€burden€of€raisingÐ ¬ü  Ðclaims€of€harmful€error€with€specificity€and€demonstrating€factual€or€legal€error€that€warrants€remandÐ ˜è  Ðor€reversal.€€DoD€Directive€5220.6,€òòDefense€Industrial€Personnel€Security€Clearance€ReviewÐ „Ô  ÐProgram€óó(Jan.€2,€1992,€as€amended)€(Directive)€€ðð€E3.1.32.€€òòSee€alsoóó€ISCR€Case€No.€03„19011€atÐ pÀ Ð2€(App.€Bd.€Jul.€27,€2005).׃×Ý ƒ#ÃÝòòÚ  Ú1Ú  ÚóóÝ  Ý×  ×€€In€this€case,€Department€Counsel€contends€that€the€Judgeððs€analysis€isÐ \¬ Ðflawed€because€the€decision€relies€upon€an€erroneously€limited€interpretation€of€the€applicableÐ H˜ Ðadjudicative€standards€and€upon€a€piecemeal€analysis€of€the€concerns€raised€by€Applicantððs€actionsÐ 4„ Ðover€the€years.€€He€specifically€argues€that€each€of€Applicantððs€debts€reflect€a€lack€of€honesty.Ð  p ÐÌà  àThe€applicable€Supplemental€Adjudicative€Standards€for€determining€Applicantððs€eligibilityÐ øH Ðfor€a€CAC€are€set€forth€in€Instruction,€Enclosure€4,€Appendix€2€ð¶ ð€2,€which€provide:Ð ä4 ÐÌà8  àA€CAC€will€not€be€issued€to€a€person€if€there€is€a€reasonable€basis€to€believe,€basedÐ ¼  Ðon€the€individualððs€criminal€or€dishonest€conduct,€that€issuance€of€a€CAC€poses€anÐ ¨ø Ðunreasonable€risk.׃(×Ý ƒ#ÃÝòòÚ  Ú2Ú  ÚóóÝ  Ý×  ×ДäÐ Ð  ÐÌà8  àa.€€An€individualððs€conduct€involving€questionable€judgment,€lack€of€candor,Ð l¼ Ðdishonesty,€or€unwillingness€to€comply€with€rules€and€regulations€can€raise€questionsÐ X ¨ Ðabout€his€or€her€reliability€or€trustworthiness€and€may€put€people,€property,€orÐ D!” Ðinformation€systems€at€risk.€€An€individualððs€past€criminal€or€dishonest€conduct€mayÐ 0"€  Ðput€people,€property,€or€information€systems€at€risk.аРР Ðà  àà ` àà ¸ àà  àÌÌà8  àb.€€Therefore,€conditions€that€may€be€disqualifying€include:ÐtÄÐ Ð  ÐÌÓ  Ó*€*€*Ð L œ ÐÌÓ  ÓÓ-°\X‚X4¸ —X°\X›X-Óà8  à€€€€€€(4)€Deceptive€or€illegal€financial€practices€such€as€embezzlement,€employee€theft,Ð $ t Ðcheck€fraud,€income€tax€evasion,€expense€account€fraud,€filing€deceptive€loanÐ  ` Ðstatements,€or€other€intentional€financial€breaches€of€trust;€[and]Ðü L Ð Ð  ÐÌÓ  Ó*€*€*Ð Ô$  ÐÌÓ  Óà8  à€€€€€€(6)€Financial€irresponsibly€may€raise€questions€about€the€individualððs€honesty€andÐ ¬ü  Ðput€people,€property€or€information€systems€at€risk,€although€financial€debt€shouldÐ ˜è  Ðnot€in€and€of€itself€be€cause€for€denial[.]Ð„Ô Ð Ð  ÐÌà  àIn€the€Appeal€Brief,€Department€Counsel€focuses€on€ð¶ ððð€2a€and€2b(6)€and€argues€thatÐ \¬ ÐApplicantððs€debts€evidence€a€lack€of€honesty,€integrity,€and€judgment.€€His€arguments€cite€to€theÐ H˜ Ðamount€of€the€debts,€the€nature€of€the€debts,€the€identity€of€the€creditors,€the€periods€that€the€debtsÐ 4„ Ðhave€been€delinquent,€the€absence€of€evidence€that€Applicant€filed€all€of€his€income€tax€returns,€andÐ  p ÐApplicantððs€actions€or€inactions€in€attempting€to€resolve€the€debts.׃×Ý ƒ#ÃÝòòÚ  Ú3Ú  ÚóóÝ  Ý×  ×€€While€these€cited€matters€mayÐ  \ Ðbe€relevant€in€evaluating€whether€financial€irresponsibility€poses€an€unacceptable€risk,€they€are€notÐ øH Ðòòóónecessarily€dispositive.€€As€provided€in€ðð€2a,€the€key€issue€is€whether€the€financial€irresponsibilityÐ ä4 Ðwas€the€result€of€illegal€or€deceptive€practices€or€raises€questions€about€an€individualððs€honesty.€Ð Ð  ÐÌà  àIn€this€case,€Applicant€attributed€his€financial€problems€to€his€divorce€from€his€first€wife.€Ð ¨ø ÐHe€testified€that€the€divorce€was€initiated€in€2004€and€not€finalized€until€2014.€€He€went€through€nineÐ ”ä Ðor€ten€rounds€of€litigation€that€ended€up€at€the€stateððs€supreme€court.€€He€maintained€custody€of€hisÐ €Ð Ðchildren€throughout€the€divorce€proceeding€and€testified€it€came€at€a€big€price.€€Transcript€(Tr.)€atÐ l¼ Ð19,€34.€€He€also€encountered€some€employment€difficulties.€òòId.óó€€He€was€granted€a€Chapter€7Ð X ¨ Ðbankruptcy€discharge€during€the€divorce€litigation.€€In€his€Declaration€of€Federal€Employment€signedÐ D!” Ðin€May€2014,€Applicant€disclosed€the€three€debts€and€stated€his€student€loans€fell€in€a€default€statusÐ 0"€  Ðafter€the€bankruptcy.€€Government€Exhibit€2.€€During€the€CAC€hearing,€he€provided€evidence€thatÐ #l! Ðhe€is€taking€steps€to€address€his€financial€problems.€€Based€upon€our€review€of€the€record,€we€do€notÐ $X" Ðfind€persuasive€Department€Counselððs€arguments€that€the€debts€clearly€evidence€a€lack€of€honesty.€Ð ô$D # ÐWhile€Applicant€could€possibly€have€taken€greater€steps€to€resolve€his€debts,€any€shortcoming€inÐ à%0!$ ÐApplicantððs€handling€of€the€debts€do€not,€on€this€record,€equate€to€or€establish€a€lack€of€honesty.€€Ð Ì&"% Ðà  àà 4 àà ¸ àà  àÌà  àDepartment€Counsel€has€not€challenged€the€Judgeððs€conclusion€that€the€evidence€did€notÐ ¤(ô#' Ðsupport€a€determination€that€Applicant€had€the€specific€intent€to€evade€his€tax€obligations.€€In€aÐ )à$( Ðfootnote,€however,€Department€Counsel€contends€ð ð[i]n€essence,€Applicant€admitted€that€he€wasÐ |*Ì%) Ðseeking€to€manipulate€his€taxes€to€defraud€his€ex„wife€and€mislead€the€court€in€divorce€proceedings.ðð€Ð h+¸&* ÐAppeal€Brief€n.€11€at€4.€€We€do€not€view€the€reporting€of€fewer€tax€exemptions€than€one€is€eligibleÐ ° Ðto€claim,€particularly€when€based€on€the€advise€of€counsel€during€legal€proceedings,€as€a€fraudulentÐ œì Ðactivity.€Ð ˆØ Ѐ€€€€€à  àÐ tÄ Ðà  àWe€also€do€not€find€persuasive€Department€Counselððs€argument€that€the€Judge€engaged€inÐ `° Ða€piecemeal€analysis€of€the€evidence.€€As€provided€in€Supplemental€Adjudicative€Standard€€ð¶ ð€2b(6),Ð L œ Ðindebtedness€alone€is€not€a€cause€for€denial€of€CAC€eligibility.€€In€this€case,€the€SOR€only€allegedÐ 8 ˆ Ðdelinquent€debts€and€did€not€assert€that€Applicant€engaged€in€any€illegal€conduct,€deceptive€practice,Ð $ t Ðor€that€the€debts€raised€any€question€about€his€honesty.€€€By€admitting€the€SOR€debts,€Applicant€didÐ  ` Ðnot€admit€to€any€conduct€contained€in€the€disqualifying€conditions€and€the€burden€remained€onÐ ü L  ÐDepartment€Counsel€to€establish€that€Applicant€engaged€in€disqualifying€conduct.€€Based€on€ourÐ è 8  Ðreview€of€the€record€evidence,€the€Judgeððs€determination€that€the€evidence€failed€to€establish€any€ofÐ Ô$  Ðthe€disqualifying€conditions€is€supportable.€€€€Ð À  Ðà  àÌà  àDepartment€Counsel€has€not€identified€any€harmful€error€likely€to€change€the€outcome€of€theÐ ˜è  Ðcase.€€The€record€viewed€as€a€whole€supports€the€Judgeððs€decision.Ð „Ô  Ðà  àà 4 àà ¸ àà  àÌà@ââ(ìàò òOrderó óˆÐ \¬ ÐÌà  àThe€Decision€is€ò òAFFIRMEDó ó.€€Ð 4„ ÐÌÌÌà  àà 4 àà ¸ àà  àà h àà À àòòSigned:€€Michael€Raððanan€€€€€€€€€óóÐ è8 Ðà  àà 4 àà ¸ àà  àà h àà À àMichael€RaððananÐ Ô$ Ðà  àà 4 àà ¸ àà  àà h àà À àAdministrative€JudgeÐ À Ðà  àà 4 àà ¸ àà  àà h àà À àChairperson,€Appeal€BoardÐ ¬ü ÐÌÌÌà  àà 4 àà ¸ àà  àà h àà À àòòSigned:€€James€E.€Moody€€€€€€€€€€óóÐ \ ¬ Ðà  àà 4 àà ¸ àà  àà h àà À àJames€E.€MoodyÐ H!˜ Ðà  àà 4 àà ¸ àà  àà h àà À àAdministrative€JudgeÐ 4"„  Ðà  àà 4 àà ¸ àà  àà h àà À àMember,€Appeal€BoardÐ  #p! ÐÌÌÌà  àà 4 àà ¸ àà  àà h àà À àòòSigned:€James€F.€Duffy€€€€€€€€€€€€€óóÐ Ð& "% Ðà  àà 4 àà ¸ àà  àà h àà À àJames€F.€DuffyÐ ¼' #& Ðà  àà 4 àà ¸ àà  àà h àà À àAdministrative€JudgeÐ ¨(ø#' Ðà  àà 4 àà ¸ àà  àà h àà À àMember,€Appeal€Board