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ISCR Case 10-08560.a1 — CASE

ISCR Case 10-08560.a1denied

Case Headnote

ISCR Case No. 10-08560.a1

Dec 5, 2011· Hon. Jeffrey D. Billett· appeal

Summary

A married defense contractor with two minor children was denied a security clearance under Guideline F, Financial Considerations. The denial stemmed from significant delinquent debts and inconsistent statements about his financial situation, raising concerns about his credibility and financial management.

Specifically, the applicant had substantial outstanding debts that were not adequately documented or resolved. Furthermore, his statements regarding these financial obligations were inconsistent, and he failed to provide sufficient evidence of repayment plans. These issues invoked Disqualifying Conditions AG ¶ 20(a) and AG ¶ 20(c).

While Mitigating Conditions AG ¶ 20(d) and AG ¶ 20(e) were considered, the applicant's efforts to resolve some debts were insufficient without proper documentation. The appeal board affirmed the denial, emphasizing the necessity of clear financial accountability for national security.

Conditions Referenced

Disqualifying

AG ¶ 20(a)raisedFinancial Considerations
AG ¶ 20(c)raisedFinancial Considerations

Mitigating

AG ¶ 20(d)rejectedFinancial ConsiderationsThe applicant did not provide sufficient documentation to support claims of debt resolution.
AG ¶ 20(e)rejectedFinancial ConsiderationsThe applicant's inconsistent statements undermined claims of responsible financial management.

Key Rule Quoted

“Any doubt concerning personnel being considered for access to classified information will be resolved in favor of the national security.”
— Directive, Enclosure 2 ¶ 2(b)

Procedural Posture

SOR issuedMay 25, 2011
Answer filed—
Hearing heldSep 9, 2011
Decision dateDec 5, 2011

Cite For

Credibility Concerns Due to Inconsistent Financial Statements Under Guideline F
Insufficient Documentation for Debt Repayment Plans as a Basis for Denial
Affirmation of Adverse Decisions Based on National Security Interests

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 seeking a security clearance who was denied due to financial considerations under Guideline F. The applicant raised several issues on appeal, including credibility determinations and due process concerns. The Board affirmed the Administrative Judge's decision, finding no harmful error in the Judge's analysis and conclusions.

Appealed bythe applicant

Applicant representationAttorney

Judge belowEdward W. Loughran — denied the clearance

Decided ona hearing

Guidelines belowGuideline F

What the Board reviewed

Credibility determination — raised by the applicantRejected
The Judge erred in his credibility determination.
Due-process / fairness — raised by the applicantRejected
The Judge denied Applicant due process.
Mitigation wrongly applied / not applied — raised by the applicantRejected
The Judge erred in his application of the mitigating conditions.
Whole-person analysis — raised by the applicantRejected
The Judge’s whole-person analysis was erroneous.

Why the Board ruled this way

The Board found that the Judge's findings were supported by substantial evidence and that the Judge properly applied the relevant legal standards. The Board affirmed the adverse decision based on the credibility determinations and the lack of sufficient evidence to mitigate the financial concerns raised.

Standard of review applied

Harmful-error gatekeeperSubstantial-evidence reviewArbitrary-and-capricious reviewProcedural complianceNo de-novo re-decisionDeference to the judge’s credibility calls

Appeal Board panel

Jeffrey D. Billett
William S. Fields
James E. Moody

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: Conduct not alleged in the SOR may be considered limited purposes such as credibility and evaluation of the case in mitigation. Adverse decision affirmed. CASENO: 10-08560.a1 DATE: 12/05/2011 DATE: December 5, 2011 In Re: -------

Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 10-08560

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT Julie R. Mendez, Esq., Department Counsel FOR APPLICANT Terry L. Elling, Esq. The Defense Office of Hearings and Appeals (DOHA) declined to grant Applicant a security clearance. On May 25, 2011, DOHA 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 hearing. On September 9, 2011, after the hearing, Administrative Judge Edward W. Loughran 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 the Judge erred in his credibility determination; whether the Judge denied Applicant due process; whether the Judge erred in his application of the mitigating conditions; and whether the Judge’s whole-person analysis was erroneous. Consistent with the following, we affirm. The Judge made the following pertinent findings of fact: Applicant is employed by a Defense contractor. Married with two minor children, he has a bachelor’s degree. Applicant enjoyed a large income in the early 2000s. However, he lost his job due to a reorganization of the company, and his new one was not so remunerative. He experienced unemployment before he was hired by his current employer. In addition, he has a child who requires extensive medical treatment, along with modifications to the family home. Applicant was unable to pay his bills, and they became delinquent. In the mid-2000s, Applicant incorporated a side business for the purposes of buying and selling real estate, although the company never actually bought any. Applicant guaranteed some of the business’s debts, and these were among his delinquencies. Applicant retained a law firm to assist him in resolving his financial problems, but the firm did not pay any creditors. Applicant terminated his relationship with the firm. He did settle several of his delinquent debts and restructured the mortgages on his house. The SOR alleged two debts, one for $9,998 and another for $16,702. Applicant claimed that he had a payment plan for the first one and that he had settled the second. However, he did not provide documentary corroboration for these claims, and, during the course of his security clearance investigation, he made inconsistent statements about the debts. Applicant is currently living within his means and is not accumulating any additional delinquent debt. His wife has a part-time job. Applicant enjoys an excellent reputation for his job performance, trustworthiness, responsibility, and honesty. In the Analysis, the Judge noted that Applicant had resolved several of his debts. He also cited to Applicant’s evidence of good character. However, the Judge stated that Applicant failed to provide documentation to support his claims of a repayment plan for one of the alleged debts and settlement of the other.1 Additionally, the Judge noted Applicant’s inconsistent statements and his failure to provide an explanation for them. The Judge stated that the record left him with “significant unanswered questions” about the extent to which Applicant’s finances are under control. “Under AG ¶ 2(b),2 I am required to resolve my doubt in favor of national security.” Decision at 10. On appeal, Applicant contends that the Judge erred in his assessment of Applicant’s credibility. He argues that he has never “misled or knowingly misstated any of the facts and circumstances surrounding his financial circumstances.” He also asserts, in a footnote, that, by considering Applicant’s inconsistent statements, the Judge was raising Guideline E security concerns without giving him appropriate notice and an opportunity to respond, as required by the Executive Order and the Directive.3 Applicant Brief at 6. We defer to a Judge’s credibility determination, unless it is not supported by the record evidence. See, e.g., ISCR Case No. 99-0007 at 2-3 (App. Bd. Nov. 28, 2000). We have examined the Judge’s treatment of inconsistencies in Applicant’s accounts of his debts. The Judge’s comments are supported by the record. Applicant made inconsistent statements concerning important aspects of the repayment plan pertaining to the $9,998 debt.4 His presentation concerning the other debt likewise contained inconsistencies.5 Applicant’s brief, viewed in light of the record, provides no reason to disturb the Judge’s credibility determination. Concerning the due process argument, conduct not alleged in a SOR may be considered for certain limited purposes, such as a credibility determination and evaluating an applicant’s case for mitigation. See, e.g., ISCR Case No. 08-06859 at 4 (App. Bd. Oct. 20, 2010). In the case under consideration here, the Judge addressed Applicant’s inconsistencies as they bore on Applicant’s credibility and on whether he had met his burden of persuasion as to mitigation under Guideline F. The Judge considered the inconsistent statements in their proper context. He did not deny Applicant the due process rights afforded by the Directive. The record supports a conclusion that the Judge examined the relevant data and articulated a satisfactory explanation for the decision, “including a ‘rational connection between the facts found and the choice made,’” both as to the mitigating conditions and the whole-person factors. Motor Vehicle Mfrs. Ass’n of the United States v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)(quoting Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962)). The Judge’s adverse 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, Enclosure 2 ¶ 2(b): “Any doubt concerning personnel being considered for access to classified information will be resolved in favor of the national security.”

ORDER

The Judge’s adverse security clearance decision is AFFIRMED. Signed: Jeffrey D. Billett Jeffrey D. Billett Administrative Judge Member, Appeal Board Signed: William S. Fields William S. Fields Administrative Judge Member, Appeal Board Signed: James E. Moody James E. Moody Administrative Judge Member, Appeal Board

FOOTNOTES

1 Applicant presented evidence of a check in the amount of $750, which he claimed had been paid toward one of the SOR debts. However, the Judge concluded that this check actually pertained to another, non-alleged, debt. The evidence supports this conclusion by the Judge.

2 Directive, Enclosure 2 ¶ 2(b): “Any doubt concerning personnel being considered for access to classified information will be resolved in favor of the national security.”

3 Executive Order 10865 is included in the Directive as Enclosure 1. It provides, at Section 3, that an applicant is entitled to a written statement of reasons for denial of a clearance, opportunity to reply in writing, and an opportunity to appear personally before a Department Official. In preparing for such an appearance, an applicant is entitled to a reasonable time to prepare, to be represented by counsel, to cross examine witnesses, and to a written decision. The Directive provides that a hearing before a DOHA Administrative Judge satisfies the provision for a personal appearance. Directive ¶ E3.1.8.

4 The Judge found that Applicant’s discussion of this debt, for example in his answers to interrogatories and in his clearance interview, did not agree as to the amount he was supposed to pay each month, as well as to the length of time during which he claimed to have been making payments. Decision at 3. Government Exhibit (GE) 4, Personal Subject Interview, conducted in March and June 2010, and Answers to Interrogatories, signed March 9, 2011, support the Judge’s finding.

5 The Judge found that Applicant, in his answers to interrogatories, stated that he did not recognize the acronym of the alleged debtor. He told the security clearance interviewer that he owed $20,000 on this debt, but, during a re- interview three months later, he stated that the debt was paid off. Applicant testified that he could not explain this discrepancy, except that the day of the interview was a long one. GE 4 and Tr. at 57 support the Judge’s finding.