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ISCR Case 11-14431.a1 — CASE

ISCR Case 11-14431.a1denied

Case Headnote

ISCR Case No. 11-14431.a1

Dec 13, 2013· Hon. Jeffrey D. Billett· appeal

Summary

A security clearance applicant, represented by counsel, was denied under Guideline F (Financial Considerations) due to significant past-due debts, including a delinquent mortgage of approximately $75,000. The applicant attributed these financial difficulties to her husband's job loss and health issues.

However, the applicant failed to demonstrate a good-faith effort to resolve her financial obligations. The judge found that the applicant did not provide sufficient evidence of such efforts, and her circumstances did not adequately mitigate the financial concerns.

Consequently, the applicant's security clearance was denied, primarily due to the unresolved $75,000 past-due debt and the lack of demonstrated effort to address her financial responsibilities.

Conditions Referenced

Disqualifying

F1raisedFinancial Considerations

Procedural Posture

SOR issuedFeb 25, 2013
Answer filed—
Hearing heldSep 24, 2013
Decision dateDec 13, 2013

Cite For

Failure to Demonstrate Good-faith Effort in Resolving Financial Obligations
Significant Past-due Debts as a Basis for Security Clearance Denial
Impact of Financial Difficulties on Security Clearance Eligibility

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 under Guideline F. The Applicant argued that the Judge erred in finding a second mortgage debt and in not applying mitigating factors. The Board affirmed the Judge's decision, finding no harmful error in the Judge's conclusions regarding the Applicant's financial situation and the lack of mitigating circumstances.

Appealed bythe applicant

Applicant representationAttorney

Judge belowRichard A. Cefola — denied the clearance

Decided ona hearing

Guidelines belowGuideline F

What the Board reviewed

Erroneous finding of fact — raised by the applicantRejected
Applicant argued that the Judge made an erroneous finding of fact regarding the existence of a second mortgage debt.
Mitigation wrongly applied / not applied — raised by the applicantRejected
Applicant contended that the Judge erred in concluding that no mitigating factors applied to her case.

Why the Board ruled this way

The Board found that the Judge's findings were supported by substantial evidence and that the Judge did not err in concluding that the Applicant had not mitigated the security concerns related to her financial issues.

Standard of review applied

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

Appeal Board panel

Michael Y. Ra’anan — Chair
Jeffrey D. Billett
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: The basis of the Judge’s adverse decision was Applicant’s failure to address responibily a substantial, long delinquent debt. Adverse decision affirmed. CASENO: 11-14431.a1 DATE: 12/13/2013 DATE: December 13, 2013 In Re: ----------- Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 11-14431

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT James B. Norman, Esq., Chief Department Counsel FOR APPLICANT Gregory A. Schnitzer, Esq. The Department of Defense (DoD) declined to grant Applicant a security clearance. On February 25, 2013, DoD 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 24, 2013, after the hearing, Defense Office of Hearings and Appeals (DOHA) Administrative Judge Richard A. Cefola denied Applicant’s request for a security clearance. Applicant appealed, pursuant to the Directive ¶¶ E3.1.28 and E3.1.30. Applicant raises the following issues on appeal: (1) whether the Judge made an erroneous finding of fact when he determined that Applicant owed a second mortgage debt; and (2) whether the Judge erred in his conclusion that no mitigating factors applied to the case. For the following reasons, the Board affirms the Judge’s unfavorable security clearance decision. The Judge found: Applicant’s husband lost his job in 2009 and had two knee operations in 2009, which caused him to be disabled and unable to work. This, coupled with the crash of the housing market in 2008, has caused Applicant’s current financial difficulties. In her answer to the SOR, Applicant admitted owing a delinquent refinanced mortgage debt in the amount of about $75,000. At the hearing, she deferred to her husband’s testimony, as he handled matters relating to the property. The husband indicated that they could not keep up with the payments on their rental property, which they had refinanced four or five times. They made a decision to “let the house go.” The husband indicated that he has made a good faith effort to follow up on this foreclosure debt, but Applicant did not submit anything in writing in support of this contention. A realtor who had worked with Applicant and her husband testified that in her conversations with the creditor, she was informed that there was no balance due on the loan. An IRS Form 1099-A which purportedly showed taxable income of $70,500 was referenced by the realtor in her testimony, but no such form is contained in Applicant’s tax filing for 2010 or anywhere else in the record. Instead, the 2010 tax records include a declared loss of $31,113 under “Sales of Business Property” on IRS Form 4797. The $75,000 second mortgage debt is still outstanding.1 The Judge concluded: Applicant has a significant past-due debt, which she has not yet resolved. No countervailing mitigating conditions are applicable. Although Applicant’s past-due indebtedness can be attributed to the crash of the housing market in 2008 and her husband’s unemployment and disability in 2009, she has failed to show a good-faith effort to address her substantial debt on the second mortgage. Applicant, her husband, and their realtor testified as to how this admitted past-due debt was addressed. However, the documentation submitted by the Government and by Applicant “belie” their assertions. Applicant has not met her burden of persuasion. As Applicant has over $75,000 in past-due indebtedness that she has yet to address, there are questions and doubts as to Applicant’s eligibility and suitability for a security clearance. Applicant has not mitigated the security concerns under the whole-person concept arising from her financial considerations. Several of Applicant’s arguments on appeal are based on her assertion that the Judge disregarded testimony and documentary evidence. A Judge is presumed to have considered all the evidence in the record unless he specifically states otherwise. See, e.g., ISCR Case No. 07-00196 at 3 (App. Bd. Feb. 20, 2009). After a review of the entire record and the Judge’s decision, the Board concludes Applicant fails to overcome this presumption. In support of her appeal, Applicant has submitted new matters in the form of a credit report that post-dated the close of the record below. The Board may not receive or consider new evidence on appeal. See Directive ¶ E3.1.29. Applicant argues that the Judge erred in making his finding that Applicant still owed the $75,000 debt on the second mortgage. Applicant asserts that the Government did not establish this fact by substantial evidence. After a review of the record and the Judge’s decision, the Board finds no error. When a Judge’s factual findings are challenged, the Board must determine whether “[t]he Administrative Judge’s findings of fact are supported by such relevant evidence as a reasonable mind might accept as adequate to support a conclusion in light of all the contrary evidence in the same record. . . .” Directive ¶ E3.1.32.1. The Board must consider not only whether there is record evidence supporting a Judge’s findings, but also whether there is evidence that fairly detracts from the weight of the evidence supporting those findings and whether the Judge’s findings reflect a reasonable interpretation of the record evidence as a whole. See, e.g., ISCR Case No. 03-05647 at 2 (App. Bd. Dec. 30, 2004). A party’s disagreement with the Judge’s weighing of the evidence, or an ability to argue for a different interpretation of the evidence, is not sufficient to demonstrate the Judge weighed the evidence or reached conclusions in a manner that is arbitrary, capricious, or contrary to law. See, e.g., ISCR Case No. 06-17409 at 3 (App. Bd. Oct. 12, 2007). In this case the Judge was called upon to resolve a conflict in the evidence regarding whether or not the debt alleged in SOR subparagraph 1.a. was outstanding and delinquent. The Judge noted the conflicting evidence in some detail in his decision before finding that the $75,000 debt was still outstanding, including a specific statement as to why the evidence he discounted was less worthy of belief. Moreover, Applicant admitted the debt in her response to the SOR, stating, “[s]aid amount owed to [bank] has been listed as a charge-off and remains outstanding.” This admission alone is sufficient to support the challenged finding. The Board concludes that the Judge’s finding is reasonably supported by the record using the substantial evidence standard. Applicant cites to several aspects of her overall credit rating and the circumstances under which the second mortgage debt fell delinquent in support of her arguments that the Judge erred when he did not apply mitigating factors in Applicant’s favor and did not find in her favor under a whole-person analysis. Applicant fails to establish error on the part of the Judge. The presence of some mitigating evidence does not alone compel the Judge to make a favorable security clearance decision. As the trier of fact, the Judge has to weigh the evidence as a whole and decide whether the favorable evidence outweighs the unfavorable evidence or vice versa. See, e.g., ISCR Case No. 06-10320 at 2 (App. Bd. Nov. 7, 2007). We have considered the totality of Applicant’s arguments on appeal and find no error in the Judge’s ultimate conclusions regarding mitigation. The gravamen of the Judge’s decision was his conclusion that there were unmitigated security concerns based on Applicant’s failure to responsibly address a very substantial, long-delinquent debt . His findings in this regard are supported by the record evidence. Given this fact, the Judge was not compelled ultimately to conclude in Applicant’s favor notwithstanding otherwise positive evidence regarding her credit history.

The Board does not review a case de novo. The favorable evidence cited by Applicant is not sufficient to demonstrate the Judge’s decision is arbitrary, capricious, or contrary to law. See, e.g., ISCR Case No. 06-11172 at 3 (App. Bd. Sep. 4, 2007). After reviewing the record, the Board concludes 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.’” 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 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). Therefore, the Judge’s ultimate unfavorable security clearance decision is sustainable.

ORDER

The decision of the Judge is AFFIRMED. Signed: Michael Y. Ra’anan Michael Y. Ra’anan Administrative Judge Chairperson, Appeal Board Signed: Jeffrey D. Billett Jeffrey D. Billett Administrative Judge Member, Appeal Board Signed: James E. Moody James E. Moody Administrative Judge Member, Appeal Board

FOOTNOTES

1 A second allegation of indebtedness contained in the SOR concerned a past-due principal mortgage on the same property in the amount of $357,000. This loan was modified, and the Judge found that Applicant is current with this modified loan.