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ISCR Case 14-03836.a1 — CASE

ISCR Case 14-03836.a1denied

Case Headnote

ISCR Case No. 14-03836.a1

Mar 17, 2016· Hon. Jeffrey D. Billett· appeal

Summary

A Ph.D. holder and long-time defense contractor employee was denied a security clearance under Guideline F (Financial Considerations) due to significant financial issues. The applicant's debts exceeded $88,000, including a construction loan balance of over $45,500, primarily stemming from real estate investments.

The denial was based on the applicant's failure to demonstrate responsible action regarding these debts. The Judge found the applicant's statements concerning his financial obligations to be contradictory, which undermined his credibility. Furthermore, the applicant did not provide corroborating evidence for his claims that he was disputing the legitimacy of these debts.

The Appeal Board affirmed the denial, emphasizing the applicant's inconsistent statements and lack of corroboration. Disqualifying condition AG ¶ 20(a) was raised, while mitigating conditions AG ¶ 20(c) and AG ¶ 20(d) were applied, but ultimately did not overcome the security concerns.

Conditions Referenced

Disqualifying

AG ¶ 20(a)raisedFinancial Considerations

Mitigating

AG ¶ 20(c)rejectedFinancial ConsiderationsThe applicant's claims of disputing the debts were not corroborated.
AG ¶ 20(d)rejectedFinancial ConsiderationsThe applicant's inaction regarding debts was not viewed as a good-faith effort to resolve them.

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 issuedJan 23, 2015
Answer filed—
Hearing heldDec 2, 2015
Decision dateMar 17, 2016

Cite For

Evaluation of Financial Considerations Under Guideline F
Credibility Determinations Based on Inconsistent Statements
Requirements for Corroboration in Disputing Debts

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 considerations under Guideline F. The applicant challenged the credibility determination made by the Administrative Judge and argued that the decision was arbitrary and capricious. The Appeal Board affirmed the Judge's decision, finding no harmful error in the credibility assessment or the overall decision-making process.

Appealed bythe applicant

Applicant representationAttorney

Judge belowPaul J. Mason — denied the clearance

Decided ona hearing

Guidelines belowGuideline F

What the Board reviewed

Credibility determination — raised by the applicantRejected
Applicant argued that the Judge erred in his credibility determination.
Decision arbitrary, capricious, or contrary to law — raised by the applicantRejected
Applicant contended that the Judge's adverse decision was arbitrary, capricious, or contrary to law.

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 credibility determination was supported by substantial evidence and that the Judge did not err in applying the relevant mitigating conditions. The Board also noted that any potential error regarding the inclusion of the applicant's wife's 401(k) was harmless, as the applicant had sufficient assets to address his debts.

Standard of review applied

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

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 DIGEST: The Appeal Board gives deference to a Judge’s credibility determination. Applicant failed to rebut the presumption that the Judge considered all of the evidence in the record. A Judge need not reject a witness’s testimony due to a lack of corroboration. However, such a lack may be relevant in evaluating the testimony. Adverse decision affirmed. CASE NO: 14-03836.a1 DATE: 03/17/2016 DATE: March 17, 2016 In Re: ----------------

Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 14-03836

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT James B. Norman, Esq., Chief Department Counsel FOR APPLICANT Sheldon I. Cohen, Esq. The Department of Defense (DoD) declined to grant Applicant a security clearance. On January 23, 2015, 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 December 2, 2015, after the hearing, Defense Office of Hearings and Appeals (DOHA) Administrative Judge Paul J. Mason 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 and whether the Judge’s adverse decision was arbitrary, capricious, or contrary to law. Consistent with the following, we affirm. The Judge’s Findings of Fact Applicant has a Ph.D. He has worked continuously for a Defense contractor since 2000 and has held a clearance since 2003. His financial problems resulted in large measure from his efforts at real estate investment. In the early 2000s, Applicant purchased and renovated real estate. He was able to sell two properties but a third went into foreclosure. The foreclosure sale left no deficiency judgment. In 2005, he purchased five properties. Debts arising from three of them were alleged in the SOR and debts from two resulted in adverse findings by the Judge. Applicant could not find reliable tenants for one of these SOR properties, nor was he able to sell it or engage in a short sale. It was eventually the subject of a foreclosure sale. Applicant believes that his responsibilities for the property ended with the sale. The debt outstanding from these two properties is in excess of $88,000. Decision at 4. The two SOR debts arising from this real estate transaction are not resolved. Applicant bought another property in 2006, using a construction loan of about $260,000. The property went into foreclosure when Applicant’s partner was not able to make his share of the payments. Applicant’s wages were garnished, but the garnishment was lifted in 2014. Applicant’s partner resumed making payments on his share of the mortgage. Applicant still owes a balance of over $45,500 on the construction loan. This debt was not alleged in the SOR, but the Judge stated that he was considering it as part of his whole-person analysis. In addition to Applicant’s real estate problems, he owed a small debt to a medical provider. Applicant disputed this debt but provided no corroboration regarding the basis for the dispute. Applicant has sought financial counseling from two or three sources, but these programs had hidden fees which discouraged him from retaining a debt consolidation company. Applicant’s and his wife’s savings, retirement, and investment accounts total about $236,000. Applicant enjoys an excellent reputation for his work performance, his colleagues supporting him for a promotion. He is valued for his leadership and for his problem-solving ability. The Judge’s Analysis The Judge cited to evidence that Applicant owes over $88,000 in connection with the delinquent accounts referenced above. In concluding that Applicant had not met his burden of persuasion as to mitigation, the Judge found that Applicant made contradictory statements at the hearing concerning his intent to pay his debts. He stated that Applicant’s apparent inaction regarding his delinquent debts resulted from his belief that they will be removed from his credit reports after seven years. Though noting evidence of circumstances outside Applicant’s control that affected his financial difficulties, the Judge concluded that Applicant had not demonstrated responsible action in regard to his debts. He cited to evidence that Applicant has sufficient assets which could be used to pay the amounts owed but has done nothing because he does not believe that he is responsible for the debts. The Judge stated that merely waiting for the statute of limitations to run does not equate to a good-faith effort to resolve debts. The Judge noted that Applicant provided no corroboration for his denial of responsibility for the debts at issue. In the whole-person analysis, the Judge stated that Applicant’s financial circumstances had improved by the lifting of the garnishment and by his partner’s resumption of payments. Despite this, and despite sufficient assets, Applicant had not contacted creditors to attempt a payment plan.

DISCUSSION

Applicant challenges the Judge’s application of the Guideline F mitigating conditions. In doing so, he asserts that the Judge erred in stating that he had made contradictory statements that impugned his credibility. We give deference to a Judge’s credibility determinations. Directive ¶ E3.1.32.1. Inconsistent statements can undermine an applicant’s credibility. See, e.g., ISCR Case No. 14-01056 at 3 (App. Bd. Aug. 17, 2015). We have examined the transcript and conclude that the Judge’s credibility determination is supportable. Applicant testified that he believed that he did not owe the deficiency judgments because the property that secured the mortgage loans had been sold. He stated that the debts would drop off his credit reports after seven years. Tr. at 94. On the other hand, he also stated that he was going to try to pay back whatever he could. Tr. at 91. These statements are not consistent with one another, one denying the legitimacy of the debts and the other implicitly admitting it. We find nothing in the record that clearly resolves the apparent inconsistency so as to undermine the Judge’s credibility determination. Applicant’s argument is not sufficient to undermine the Judge’s credibility determination. Applicant cites to record evidence that he believes is favorable to him, such as the downturn in the real estate market, a circumstance that was beyond his control. He also cites to evidence that he had looked into some debt consolidation services, that he had experience with real estate investing, that he had stated an intention to repay his debts, among other things. Applicant’s arguments are not enough to rebut the presumption that the Judge considered all of the evidence in the record. See, e.g., ISCR Case No. 14-06093 at 3 (App. Bd. Dec. 4, 2015). As Department Counsel argues in his Reply Brief, Applicant’s arguments amount to an alternative interpretation of the evidence. This is not enough to show that the Judge weighed the evidence in a manner that was arbitrary, capricious, or contrary to law. See, e.g., ISCR Case No. 14-06440 at 4 (App. Bd. Jan. 8, 2016). Applicant challenges the Judge’s reliance on an absence of documentary support for his claim that he did not owe certain debts. He argues that his statements alone are sufficient to establish this mitigating condition. While there is no rule that a Judge must reject a witness’s testimony in the absence of corroboration, depending on the circumstances that is a factor that may be taken into account in assessing that testimony. See, e.g., ISCR Case No. 95-0578 at 2 (App. Bd. Oct. 2, 1996). In the case before us, we note that the Mitigating Condition in question actually includes documentary corroboration as an element.1 We find no error in the Judge having applied the plain language of the Directive in addressing Applicant’s case for mitigation. Applicant also challenges the Judge’s inclusion of Applicant’s wife’s 401(k) plan in evaluating the worth of Applicant’s assets. Even if this were an error, however, it would not undermine the Judge’s conclusion that Applicant had sufficient assets from which to pay his delinquent debts. Therefore, assuming without deciding that the Judge erred, the error was harmless. See, e.g., ISCR Case No. 14-03601 at 3 (App. Bd. Jul. 1, 2015) for explanation of harmless error.

The Judge examined the relevant data 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, 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 Decision is AFFIRMED. Signed: Micahel 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 Directive, Enclosure 2 ¶ 20(e): “the individual has a reasonable basis to dispute the legitimacy of the past-due debt . . . and provides documented proof to substantiate the basis of the dispute[.]”