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ISCR Case 21-02033 — CASE

ISCR Case 21-02033denied

Case Headnote

ISCR Case No. 21-02033

Apr 11, 2022· Hon. Moira D. Modzelewski· appeal

Summary

An applicant, an engineer in his early fifties with advanced degrees, was denied a security clearance under Guideline F (Financial Considerations). The denial stemmed from three delinquent accounts totaling approximately $21,700, which the applicant admitted to owing.

The applicant claimed he was acting on legal advice to allow the statute of limitations to expire on these debts. However, the appeal board determined this did not constitute a good faith effort to resolve his financial difficulties. Furthermore, the applicant failed to provide evidence of financial counseling or a personal budget, which would have demonstrated a commitment to financial responsibility.

Consequently, the board found that the applicant had not mitigated the financial concerns raised by his delinquent accounts. The denial of his security clearance was affirmed, citing Disqualifying Condition AG ¶ 20(a).

Conditions Referenced

Disqualifying

AG ¶ 20(a)raisedFinancial Considerations

Key Rule Quoted

“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)

Procedural Posture

SOR issuedSep 29, 2021
Answer filed—
Hearing heldFeb 8, 2022Applicant requested a decision on the written record.
Decision dateApr 11, 2022Appeal affirmed the denial.

Cite For

Failure to Mitigate Financial Concerns Under Guideline F
Reliance on Legal Advice Does Not Constitute a Good Faith Effort to Resolve Debts
The Importance of Demonstrating Financial Responsibility in Security Clearance Cases.

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 an applicant who was denied a security clearance due to financial concerns under Guideline F. The applicant argued that the Judge erred in his findings and that he was not a security risk. The Board affirmed the decision, finding no harmful error that would change the outcome.

Appealed bythe applicant

Applicant representationPro se (self-represented)

Judge belowRobert Robinson Gales — denied the clearance

Decided onthe written record

Guidelines belowGuideline F

What the Board reviewed

Judge mis-weighed or ignored evidence — raised by the applicantRejected
The Judge erred in his findings of fact by overlooking the Personal Financial Statement.
Decision arbitrary, capricious, or contrary to law — raised by the applicantRejected
The Judge's decision was arbitrary and capricious in failing to consider the applicant's financial situation.
No specific harmful error alleged — raised by the applicantNot reached
No specific harmful error was alleged that would warrant a different outcome.

Error found, but harmless. The Board agreed the judge made a mistake but affirmed anyway, because it did not change the outcome.

Why the Board ruled this way

The Board found that the Judge's decision was supported by substantial evidence and that any errors identified were harmless, not affecting the outcome of the case.

Standard of review applied

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

Appeal Board panel

James F. Duffy — Chair
James E. Moody
Moira 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. 21-02033

)

) 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: April 11, 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 September 29, 2021, DoD issued a statement of reasons (SOR) advising Applicant of the basis of that decision—security concerns raised under Guideline F (Financial Considerations) of DoD Directive 5220.6 (January 2, 1992, as amended) (Directive). Applicant requested a decision on the written record. On February 8, 2022, after the record closed, Defense Office of Hearings and Appeals (DOHA) Administrative Judge Robert Robinson Gales denied Applicant’s request for a security clearance. Applicant appealed pursuant to Directive ¶¶ E3.1.28 and E3.1.30. Under Guideline F, the SOR alleged three delinquent consumer accounts that totaled about $21,700. In responding to the SOR, Applicant admitted the debts, and the Judge found against Applicant on all three allegations. On appeal, Applicant notes that the Judge erred in his findings of fact, asserts that he was acting upon advice of counsel, submits new evidence, and argues that he is not a security risk. Consistent with the following, we affirm.

The Judge’s Findings of Fact:

Applicant is in his early fifties and holds both a bachelor’s and master’s degree in engineering. He has worked steadily in his field since at least 1999, with a brief two-month period of unemployment in 2019. After a divorce in 2014, Applicant was responsible for several debts but could not pay initially. In the years that followed, various creditors attempted to collect. However, on the advice of an attorney, Applicant elected to allow the statute of limitations to run on the delinquent accounts. In 2019, he contacted the creditor who held two of the three alleged accounts to negotiate a settlement. That attempt was unsuccessful: the creditor offered to settle for 55% of the delinquencies, but Applicant was unwilling to pay more than 25%. In his Answer to the SOR, Applicant and his attorney noted that the statute of limitations had now run, freeing him from legal liability for the debts. He submitted a credit report from October 2021 which indicated several of the debts would be removed in the coming year. The three delinquent debts were for bank credit cards and a line of credit that were used for family expenses during his first marriage. Applicant has refused to pay the balances despite now having the ability to do so. The accounts no longer appear on the most recent credit reports. While the statute of limitations may have run and the accounts are no longer being reported, the accounts remain unresolved. There is no evidence of financial counseling, a budget, or anything to describe with any specificity Applicant’s current financial situation. . . . Applicant did not report his net monthly income, his monthly household expenses, or any monthly debt payments. In the absence of such information, I am unable to determine if he has any monthly remainder available for savings or spending. There is a paucity of evidence to indicate that his financial problems are now under control, and it is difficult to determine if Applicant is currently in a better position financially than he had been, or if he has the funds available to pay his debts but is simply choosing not to do so. [Decision at 4.] The Judge’s Analysis: The Judge’s analysis is quoted below, in pertinent part. Because [Applicant] was in the process of rebuilding his life with his new wife, on the advice of an attorney, he decided to allow the statute of limitations to run so that he would be no longer legally liable for the debts. Instead of accepting his financial responsibilities and resolving those debts – debts incurred by him in receiving things of benefit from the creditors while married to his first wife – he chose to ignore those debts. In 2019, one creditor of two separate debts offered to settle those accounts for 55 per cent of the unpaid balance, but Applicant was only willing to pay 25 per cent. . . . While he may not be legally liable for those delinquent debts because of the statute of limitations, and those debts may have been removed from his credit reports,

DISCUSSION

Legal Advice and the Statute of Limitations

Error in the Findings of Fact

Applicant has not acted responsibly by failing to address those delinquent accounts while employed . . . . . . . There is no evidence of financial counseling, a budget, or current financial information. Applicant’s actions or in-action under the circumstances cast significant doubt on his current reliability, trustworthiness, and good judgment. [Decision at 6–9.] Applicant asserts that he acted upon legal advice in allowing the statute of limitations to run. First, the Board has repeatedly noted that reliance on a statute of limitations does not constitute a good faith effort to resolve financial difficulties. See, e.g., ISCR Case No. 03-04779 at 4 (App. Bd. Jul. 20, 2005). Second, Applicant’s reliance on legal advice is similarly misplaced, as he now recognizes: “I repeat that at this point I consider that the attorney advice was not the best.” Appeal Brief at 3. For years, Applicant did not heed valid collection efforts from various creditors: the fact that he did so upon legal advice in the context of a divorce proceeding does not extinguish the Government’s security concerns. A security clearance adjudication is a proceeding aimed at evaluating an applicant's judgment, reliability, and trustworthiness to make a decision about the applicant's security eligibility. The Federal government is entitled to consider the facts and circumstances surrounding an applicant’s conduct in incurring and failing to satisfy the debt in a timely manner. See, e.g., ISCR Case No. 01-09691 at 3 (Mar. 27, 2003). Applicant challenges the Judge’s finding that he did not submit a monthly budget, pointing to the completed Personal Financial Statement that is included in his response to the Government’s interrogatories. That document—admitted without objection as part of the Government’s case— details Applicant’s monthly income, monthly expenses, monthly remainder, debts, and assets. GE 3 at 48. From the Judge’s findings of fact and analysis, it appears clear that he overlooked this particular page in his review of the evidence. Having established that the Judge failed to consider this document, the Board must determine whether that error was harmful, requiring remand. If there is a significant chance that the case might have been decided differently, but for the error, that error is harmful. Conversely, an error that likely had no effect on the Judge’s decision is harmless. See, e.g., ISCR Case No. 00 0250 at 6 (App. Bd. Jul. 11, 2001). Reviewing the record in its entirety, the Board concludes that the error does not warrant remand because there is not a significant chance that the Judge would have reached a different decision had he reviewed the Personal Financial Statement. The Judge’s decision rests on Applicant’s failure to address his debts and his election, instead, to allow the statute of limitations

New Evidence and Lack of Security Risk

to run. The Judge specifically finds that he lacks current financial information and cannot “determine if [Applicant] has any monthly remainder available” and whether “he has the funds available to pay his debts but is simply choosing not to do so.” Decision at 4. Our review of Applicant’s Personal Financial Statement confirms that Applicant had available funds and assets to address these delinquencies. Inarguably, that information does not help Applicant’s case and would not result in a different decision by the Judge. We conclude that the error was harmless. Applicant makes no other assertion of harmful error on the part of the Judge but does submit additional details and background information to supplement the evidence that was before the Judge. Those matters constitute new evidence, which the Board is not authorized to consider. Directive ¶ E3.1.29. Finally, Applicant argues that the debts do not make him a security threat, as he could not be “forced to steal or do something wrong . . . to pay them.” Appeal Brief at 4. We do not find this argument persuasive. Guideline F security concerns are broader than the possibility that an applicant might knowingly compromise classified information in order to raise money to satisfy delinquent debts. Such security concerns also encompass the risk that applicants who are financially irresponsible might also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information. See, e.g., ISCR Case No. 16-04112 at 3–4 (App. Bd. May 28, 2019). Having admitted the delinquent debts, Applicant had the burden of mitigating the security concerns arising from those debts and failed to do so. The Judge examined the relevant evidence and articulated a satisfactory explanation for the decision. 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: 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 Modzelewski Moira Modzelewski Administrative Judge Member, Appeal Board