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ISCR Case 14-02403.a1 — CASE

ISCR Case 14-02403.a1denied

Case Headnote

ISCR Case No. 14-02403.a1

Aug 18, 2015· Hon. Jeffrey D. Billett· appeal

Summary

A 51-year-old applicant was denied a security clearance primarily under Guideline F (Financial Considerations) and Guideline E (Personal Conduct). The denial stemmed from significant overdue debts, specifically a second mortgage over 120 days past due totaling $58,916, and a primary mortgage also over 120 days past due, totaling $204,273.

The applicant's claims of credit report inaccuracies and financial difficulties due to a divorce were considered, but ultimately deemed insufficient to mitigate the security concerns. The decision highlighted that the applicant failed to demonstrate responsible financial behavior or take necessary steps to resolve these substantial debts.

Specifically, the applicant did not take responsible actions to resolve his debts or contact mortgage holders regarding the status of his obligations. These factors led to the denial of the security clearance.

Conditions Referenced

Disqualifying

AG ¶ 20raisedFinancial Considerations

Mitigating

AG ¶ 21rejectedFinancial ConsiderationsThe applicant failed to demonstrate a good-faith effort to repay overdue creditors or resolve debts.

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 issuedAug 22, 2014
Answer filed—
Hearing heldMay 28, 2015
Decision dateAug 18, 2015

Cite For

Denial of Security Clearance Due to Unresolved Financial Obligations
Insufficient Mitigation of Financial Concerns Stemming From Personal Circumstances
Failure to Demonstrate Responsible Financial Behavior in the Context of Security Clearance Evaluations

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 and personal conduct issues. The applicant argued that the Judge's decision was arbitrary and capricious. The Board affirmed the Judge's decision, finding no harmful error and that the Judge's conclusions were supported by substantial evidence.

Appealed bythe applicant

Applicant representationPro se (self-represented)

Judge belowMartin H. Mogul — denied the clearance

Decided ona hearing

Guidelines belowGuideline FGuideline E

What the Board reviewed

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 that the Judge's decision was supported by substantial evidence and articulated a rational connection between the facts and the decision made. The Board concluded that the Judge's findings were sustainable and that the applicant did not demonstrate harmful error.

Standard of review applied

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

Appeal Board panel

Michael 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; Guideline E DIGEST: Applicant’s concern regarding Department Counsel’s characterization of a document (which was neither put in evidence nor served on Applicant) is not frivolous. However, there is no reason to believe that it factored into the Judge’s decision. Adverse decision affirmed. CASENO: 14-02403.a1 DATE: 08/18/2015 DATE: August 18, 2015 In Re: ------- Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 14-02403

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 August 22, 2014, DoD issued a statement of reasons (SOR) advising Applicant of the basis for that decision—security concerns raised under Guideline F (Financial Considerations) and Guideline E (Personal Conduct) of Department of Defense Directive 5220.6 (Jan. 2, 1992, as amended) (Directive). Applicant requested a hearing. On May 28, 2015, after the close of the record, Defense Office of Hearings and Appeals (DOHA) Administrative Judge Martin H. Mogul denied Applicant’s request for a security clearance. Applicant appealed, pursuant to the Directive ¶¶ E3.1.28 and E3.1.30.1 Applicant raises the following issue on appeal: whether the Judge’s decision is arbitrary, capricious, or contrary to law. For the following reasons, the Board affirms the Judge’s unfavorable security clearance decision. The Judge made the following findings: Applicant is 51 years old. He has an overdue debt for a second mortgage that is more then 120 days past due in the amount of $58,916, with a balance in the approximate amount of $130,000. Credit reports admitted into evidence establish the debt and the fact that it has not been resolved. Applicant also has an overdue mortgage account that is more than 120 days past due in the amount of $204,273, with a balance in the approximate amount of $640,626. The credit reports in evidence also establish this debt and the fact that it has not been resolved. Applicant purchased a home in 2003 or 2004. In 2008 he experienced financial difficulties because of a pending divorce and his inability to pay all his bills. He was unable to make payments on his mortgage. Attempts to resolve matters through a short sale of the house failed, in part because of the poor economy. He stopped making payments on the house in 2009, at which time he moved out of the premises. When he left the home, he understood that he still owed money on the two mortgages. At some point after he left the home, he sold his interest in the home to another individual (Purchaser), and to a representative of the purchaser (Purchaser). Applicant never received any money for the sale from Purchaser, and got just the promise that he would receive some payment from Purchaser if she was able to resolve the mortgage with the mortgage holder. Applicant has received no notice, either in written or oral form, informing him that he does not owe the mortgage holders on the mortgages. Applicant concedes that he never received approval from the mortgage holder for the transfer of the home to the Purchaser, and no evidence of same appears in the record. There is also no evidence that Purchaser has made any payments on either mortgage to the mortgage holder.

The Judge reached the following conclusions: Applicant’s overdue finances occurred as a result of his divorce and the downturn in the economy. However, Applicant has not acted responsibly because he failed to contact the mortgage holder to seek approval for the transfer of his property, and he has never ascertained the status of his home and the two mortgages. Applicant has not initiated a good-faith effort to repay overdue creditors or otherwise resolve debts. No evidence was introduced to establish that his current financial situation is stable. Applicant has not mitigated the Government’s security concerns. Applicant argues that the credit reports relied upon by the Government were inaccurate and failed to establish that the mortgage accounts were still active, failed to establish that a balance remains due, and failed to establish that he owed the balance. He references a more recent credit report that supports his appeal position that he no longer owes on the mortgages. He then asserts that the arrangement he entered into with the Purchaser was a reasonable one as he was aided by a real estate expert who would maximize the chances that he and the Purchaser had toward reaching an agreement with the creditor. Applicant has failed to establish error on the part of the Judge.2 Applicant’s arguments rely largely on a credit report that post-dated the hearing. The Board cannot consider new evidence on appeal. Directive, ¶ E3.1.29. In this case, the Judge made sustainable findings that Applicant entered into an agreement with Purchaser to take title to his house and assume the mortgage payments without consulting the mortgage holders beforehand, and without subsequently taking any steps to ensure that the Purchaser was satisfying the obligations. There is absolutely no record evidence that contradicts the listing of the debts as delinquent on the credit reports in evidence.3 Regardless of the precise status of the debts, the gravamen of the Judge’s decision was that Applicant, in essence, simply walked away from his obligations. Regarding Applicant’s arrangements with Purchaser and a third party to transfer ownership of his house, the Judge’s conclusion that Applicant’s actions were not mitigating is sustainable. The Board does not review a case de novo. 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 Ra’anan Michael 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 The Judge made a favorable formal finding under the one allegation brought under Guideline E. That finding is not at issue on appeal.

2 Applicant began his brief with a due process argument. At the hearing, Department Counsel discussed an updated credit report on Applicant that he had obtained the night before. He did not serve it on Applicant. He stated for the record that it contained no updated information on Applicant’s finances. This report was never offered for inclusion in the record. Applicant asserts that the Government “relied” on the contents of the report, did not allow him to compare the report with those being offered into evidence, and he was therefore unfairly prejudiced. Applicant’s arguments are not frivolous given the fact that Department Counsel never provided the report to his party-opponent. Department Counsel’s characterization of the report was made verbally, on the record, and in front of the Judge, wherein it had the potential to influence. However, there is nothing in the record or the Judge’s decision to show that the report factored into the resolution of the case. The Board will not presume error below. See, e.g., ISCR Case No. 08-10644 at 2 (App. Bd. May 28, 2010). Applicant has failed to demonstrate how Department Counsel’s mentioning of the updated report had a deleterious effect upon his ability to present his case. Also, Applicant’s reliance on purported requirements of the Fair Credit Reporting Act is misplaced.

3 It is well-settled that adverse information from a credit report can normally meet the substantial evidence standard and the Government’s obligations under E3.1.14 for pertinent allegations. See, e.g., ISCR Case No. 03-20327 at 3 (App. Bd. Oct. 26, 2006). In this case, the credit reports were detailed and straightforward enough to establish the Government’s case regarding Applicant’s mortgage indebtedness.