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ISCR Case 20-03548 — CASE

ISCR Case 20-03548denied

Case Headnote

ISCR Case No. 20-03548

Jan 27, 2022· Hon. Moira D. Modzelewski· appeal

Summary

A defense contractor in his early sixties was denied a security clearance under Guideline F (Financial Considerations) due to significant financial issues. The applicant had seven charged-off debts totaling approximately $94,000, which raised disqualifying conditions F1 and F3.

While mitigating conditions F2 and F3 were considered, the denial was upheld. The decision highlighted the applicant's poor judgment in accumulating excessive debt and relying on questionable financial advice. Despite possessing substantial assets, his financial mismanagement was a primary factor.

The applicant's claims of due process violations were unsubstantiated and did not alter the outcome. The denial underscored the importance of an applicant's judgment and reliability in relation to national security, affirming the initial decision to deny the security clearance.

Conditions Referenced

Disqualifying

F1raisedInability or Unwillingness to Satisfy Debts
F3raisedDelinquent Debts

Mitigating

F2rejectedThe Conditions That Resulted in the Financial Difficulties Were Largely Beyond the Person's ControlThe applicant's poor judgment in managing finances was a significant factor.
F3rejectedThe Person Has Made a Good Faith Effort to Repay Overdue Creditors or Otherwise Resolve DebtsThe applicant's reliance on ineffective debt resolution strategies did not demonstrate good faith.

Key Rule Quoted

“The general standard is that a clearance may be granted only when ‘clearly consistent with national security.’”
— Department of the Navy v. Egan, 484 U.S. 518, 528 (1988)

Procedural Posture

SOR issuedMay 4, 2021
Answer filed—
Hearing heldOct 22, 2021
Decision dateJan 27, 2022Decision affirmed on appeal.

Cite For

Evaluation of Financial Considerations Under Guideline F
Impact of Poor Financial Judgment on Security Clearance Eligibility
Due Process Claims in Security Clearance Proceedings

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. The applicant raised issues of due process and alleged that the Judge's decision was arbitrary and capricious. The Board affirmed the decision, finding no harmful error in the Judge's findings or procedures.

Appealed bythe applicant

Applicant representationPro se (self-represented)

Judge belowJohn Bayard Glendon — denied the clearance

Decided ona hearing

Guidelines belowGuideline F

What the Board reviewed

Due-process / fairness — raised by the applicantRejected
Applicant contended he was denied due process during the hearing.
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 no harmful error in the Judge's decision, which was supported by substantial evidence and articulated a satisfactory explanation for the denial of the security clearance.

Standard of review applied

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

Appeal Board panel

James F. Duffy — Chair
James E. Moody
Moira D. Modzelewski

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

APPEARANCES

_______________________________________________ ) In the matter of: )

)

------------------------- )

ISCR Case No. 20-03548

)

) Applicant for Security Clearance ) _______________________________________) DEPARTMENT OF DEFENSE DEFENSE LEGAL SERVICES AGENCY DEFENSE OFFICE OF HEARINGS AND APPEALS APPEAL BOARD POST OFFICE BOX 3656 ARLINGTON, VIRGINIA 22203 (703) 696-4759 Date: January 27, 2022

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 May 4, 2021, DoD issued a statement of reasons (SOR) advising Applicant of the basis for that decision―security concerns raised under Guideline F (Financial Considerations) of DoD Directive 5220.6 (January 2, 1992, as amended) (Directive). Applicant requested a hearing. On October 22, 2021, after the hearing, Defense Office of Hearings and Appeals (DOHA) Administrative Judge John Bayard Glendon 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 Applicant was denied due process 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 and Analysis Applicant, who is in his early sixties, has worked for a defense contractor for about 24 years and has held a security clearance for about 15 years. He and his wife incurred significant debt by borrowing money and using credit cards. Their financial obligations also increased when their oldest son and his family moved back into their home. In May 2018, Applicant and his wife hired a credit-counseling company to assist them with their debt. The company advised him to stop paying on the accounts so settlements could be negotiated. When only one debt was resolved in a six-month period, Applicant stopped working with that company and began working with a law firm to help resolve the debts. He also sold non-essential assets to reduce the debt. The SOR alleged that Applicant had seven charged-off debts totaling about $94,000. In responding to the SOR, he admitted each allegation. Applicant has assets to pay the alleged debts, including over $500,000 in a retirement account, about $500,000 in home equity, and about $1,500 as a net monthly income remainder. He also “has an ‘unvested’ interest in his employer’s public stock with a value of over $345,000 and vested shares worth about $28,000.” Decision at 5. The Judge found for Applicant on the three debts he resolved and against him on the four remaining unresolved debts. Three of the unresolved debts are no longer collectible due to the expiration of the statute of limitations, while the fourth is being disputed “under an unspecified legal theory.” Decision at 4. Applicant has resolved other delinquent debts that were not alleged in the SOR. [Applicant] exercised poor judgment through excessive spending using multiple credit cards. His poor judgment continued by his reliance on his counselor’s advice to stop paying his credit cards when he could have continued to pay them and seek to negotiate settlements of all of his debts over time. Instead, he waited for time to elapse and render some of his debts unenforceable under applicable state statute of limitations. [Decision at 9.]

DISCUSSION

Due Process Issues Applicant’s appeal brief raises various due process issues. First, he contends that he emailed evidentiary exhibits to DOHA that were not presented to the Judge prior to the hearing. To the extent he is contending this was a procedural error that prejudiced him, we conclude no relief on appeal is warranted. About eight days before the hearing, Applicant emailed 14 exhibits to DOHA. The email and exhibits are included in the record. Correspondence File. At the hearing, the Judge noted he was presented with 17 exhibits prior to going on the record (Tr. at 26), which included the 14 exhibits provided in the email. The 17 exhibits were admitted into evidence as Applicant’s Exhibits G-W.1 Since the Judge had the exhibits in question prior to rendering his decision, Applicant has failed to show how he was prejudiced by the delay in presenting them to the Judge. 1 One page of the 14 exhibits is not included in the admitted exhibits. The missing page is a summary of a bank statement (Exhibit 13, page 1). The admitted pages of that exhibit (Exhibit 13, pages 2 and 3) contain the information that is in the missing page. The omission of the summary page from the admitted exhibit did not result in harmful error.

Second, Applicant claims Department Counsel made statements to him that “created an unfair hearing process.” Appeal Brief at 1. Coming from outside the record, these claims constitute new evidence, which we are generally prohibited from considering. Directive ¶ E3.1.29. We will, however, consider them because they raise due process claims. See, e.g., ISCR Case No. 17-01472 at 2 (App. Bd. Aug. 6, 2018). Applicant claims Department Counsel “provided recommendations to [him] on how to present evidence prior to hearing start which created an unfair hearing process and confusion for [him.]” Appeal Brief at 1. In making this generalized claim, Applicant provides no specific explanation as to how he may have been confused or prejudiced by Department Counsel’s purported statements. Prior to the hearing, Applicant was provided the Chief Administrative Judge’s Prehearing Guidance for DOHA Industrial Security Clearance (ISCR) Hearings and Trustworthiness (ADP) Hearings, dated January 15, 2019.2 This guidance advised Applicant that he had a right to present evidence and witnesses; that he had a right to cross-examine witnesses against him, and that he had the right to object to evidence. Applicant has not claimed or shown that Department Counsel’s purported statements contradicted the Chief Judge’s guidance. Regarding this claim, it also merits noting there is a rebuttable presumption that Federal officials and employees carry out their duties in good faith, and a party seeking to rebut that presumption has a heavy burden of persuasion on appeal. See, e.g., ISCR Case No. 00-0030 at 5 (App. Bd. Sep. 20, 2001). Applicant has not met that heavy burden in that he fails to identify anything in the record below that indicates or suggests a basis for a reasonable person to conclude that Department Counsel misled him or otherwise acted improperly, unfairly, or unprofessionally. Applicant also claims Department Counsel “stated most people represent themselves and to just tell your story[.]” Appeal Brief at 1. To the extent Applicant is claiming Department Counsel somehow misled him by that statement and thereby caused him not to hire counsel or obtain personal representation, we do not find that argument persuasive. The record contains a letter that Department Counsel sent to Applicant more than a month before the hearing. It advised him that “[y]ou may represent yourself, retain an attorney, or obtain the help of a personal representative who could be a union representative, family adviser, knowledgeable friend, or anyone else. In making this decision, you should consider the Government is represented by an attorney and that any adverse determination could negatively affect your current job and your future employability.” Correspondence File, Department Counsel’s letter of July 1, 2021. The Chief Judge’s guidance also advised Applicant of his right to employ counsel, or to have some other person represent him during the proceeding. At the beginning of the hearing, Judge also asked Applicant if he understood that he had a right to have a lawyer. Applicant responded that he understood this right and indicated that he decided to represent himself. Tr. at 8-9. During the hearing, Applicant presented documentary evidence and testified on his own behalf. Applicant points to nothing in the record which he likely would have done differently had he been represented by counsel, or anything likely to have produced a different result. See, e.g., ISCR Case No. 08 07352 at 2 (App. Bd. Jul. 28, 2009). Applicant has failed to show his right to counsel or a personal representation was impeded or infringed. 2 A DOHA email of July 19, 2021 provided Applicant the prehearing guidance. Correspondence File. The prehearing guidance is also located on the DOHA website. See https://doha.ogc.osd.mil/Industrial-Security-Program/ Prehearing- Guidance.

Third, Applicant further asserts Department Counsel “used [her] expert knowledge against [him.]” This claim raises no appealable issue. The Chief Judge’s prehearing guidance advised Applicant that the hearing was an adversarial proceeding. See also ISCR Case No. 03-06174 at 9 (App. Bd. Feb. 28, 2005). Department Counsel was responsible for representing the Government’s interests―not Applicant’s―in the proceeding. Finally, Applicant contends that the Judge offered him only a short period of time to address the debts and notes that financial problems can take up to seven years to resolve. As the Judge indicated in his decision, a security clearance adjudication is not a proceeding aimed at collecting an applicant’s debts. Instead, it is a proceeding aimed at evaluating an applicant’s judgment, reliability, and trustworthiness. See, e.g., ISCR Case No. 07-08049 at 5 (App. Bd. Jul. 22, 2008). An applicant is not entitled to delay or defer adjudication of security eligibility to resolve debts. See, e.g., ISCR Case No. 06-22044 at 2 (App. Bd. Feb. 28, 2008). In this case, the Judge decided to keep the record open for about a month after the hearing to provide Applicant an opportunity to present additional evidence. When the Judge informed him of that decision, Applicant responded, “That would be fine.” Tr. at 93-94. The record does not reflect that Applicant submitted any request to extend the period for post-hearing submissions. Applicant has not shown the Judge’s decision regarding this issue was arbitrary, capricious, or contrary to law. In summary, under the facts of this case, there is no basis to conclude that Applicant was denied the due process afforded by the Directive. Analytical Issues For three of the unresolved debts, Applicant argues that he exercised his consumer rights regarding them. He contends no further action need be taken regarding them, noting they have been charged off and the creditors have not requested further action from him. However, even if delinquent debts are legally unenforceable because the state statute of limitations has expired, a Judge may still consider the circumstances surrounding the debts, including any irresponsible actions in incurring or handling them, for what they reveal about an applicant’s worthiness for a clearance. See, e.g., ISCR Case No. 02-26018 at 4 (App. Bd. Jun. 2, 2005). For the fourth unresolved debt, Applicant makes assertions from outside the record, which we cannot consider. Directive ¶ E3.1.29 (“No new evidence shall be received or considered by the Appeal Board.”). Applicant’s remaining arguments are, in effect, a challenge to the way in which the Judge weighed the evidence. None of his arguments are sufficient to demonstrate the Judge weighed the evidence in a manner that was arbitrary, capricious, or contrary to law. See, e.g., ISCR Case No. 18-02592 at 5 (App. Bd. Jan. 6, 2021). Applicant also notes the Judge’s unfavorable decision will have a negative impact on him. The Directive, however, does not permit us to consider such consequences. See, e.g., ISCR Case No. 19-02020 at 2 (App. Bd. Oct. 26, 2020).

CONCLUSION

Applicant has failed to establish the Judge committed any harmful error. The Judge examined the relevant evidence and articulated a satisfactory explanation for the decision. The decision is sustainable on the record. “The general standard is that a clearance may be granted

only when ‘clearly consistent with 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 national security.”

ORDER

The decision is AFFIRMED. Signed: James F. Duffy James F. Duffy Administrative Judge Chairperson, Appeal Board Signed: James E. Moody James E. Moody Administrative Judge Member, Appeal Board Signed: Moira D. Modzelewski Moira D. Modzelewski Administrative Judge Member, Appeal Board