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Todd R. Haebe, a Special Agent with the Drug Enforcement Agency (“DEA”) in San Jose, California, appeals a decision of the Merit Systems Protection Board (“MSPB” or “Board” or “board”). In a split decision, *fn1 the MSPB reversed certain elements of an initial decision by an MSPB Administrative Judge (“AJ”). See Haebe v. Dep’t of Justice, 81 M.S.P.R. 167, 176 (1999) (“Final Decision”). The AJ overturned the DEA’s decision to remove Mr. Haebe from his position as a Criminal Investigator and ordered the DEA to reinstate Mr. Haebe and provide back pay. Haebe v. Dep’t of Justice, No. SF-0752-97-0426-I-1, slip op. at 1, 21 (MSPB, August 8, 1997) (Hughes, Admin. J.) (“Initial Decision”). The DEA had removed Mr. Haebe because it determined that he wrongly falsified statements on a report and failed to follow written instructions with respect to that report. Final Decision at 170. Because the MSPB substituted its credibility findings in lieu of the AJ’s demeanor-based credibility findings without sufficiently sound reasons for doing so, and misapplied the intent element of the falsification charge, the MSPB’s decision in the Final Decision is arbitrary, capricious, and unsupported by substantial evidence. Accordingly, we reverse.

I. BACKGROUND

This case arises from Mr. Haebe’s law enforcement efforts on the morning of March 30, 1995, and the report he filed several weeks later describing the events of that morning. The incident in question on the morning of March 30 resulted in Mr. Haebe reporting to authorities in Portland, Oregon that a Mr. Ricardo Ortiz Alcala would be arriving in Portland on a flight that morning. This resulted in the arrest of Mr. Alcala at the Portland airport and he was found to be carrying four pounds of methamphetamine. Mr. Haebe reported the incident on a DEA Form 6 that he signed on April 18, 1995 (the “Report”). Initial Decision at 2-3.

 
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