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ISCR Case 20-01230 — CASE

ISCR Case 20-01230denied

Case Headnote

ISCR Case No. 20-01230

Jul 12, 2023· Hon. Gregg A. Cervi· appeal

Summary

A mid-40s male applicant, with prior military service and a history of holding a security clearance, was denied a U.S. DOHA security clearance under Guideline F (Financial Considerations). The denial stemmed from multiple delinquent accounts totaling approximately $29,000 and a mortgage foreclosure.

Specifically, the applicant failed to responsibly address significant debts, including a motorcycle loan charged off for over $15,000. Despite some favorable findings on certain allegations, the majority of his debts remained unresolved.

The applicant provided no evidence of voluntary payments or established payment plans for any of the outstanding debts. His claims of mitigating circumstances were deemed insufficiently substantiated, leading to the ultimate denial of his security clearance.

Conditions Referenced

Disqualifying

AG ¶ 19raisedFinancial Considerations

Mitigating

AG ¶ 20(a)rejectedMitigating Condition 1The judge found that the applicant's financial problems were not unlikely to recur.
AG ¶ 20(b)rejectedMitigating Condition 2The applicant did not act responsibly regarding his 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 issuedJun 3, 2022
Answer filed—
Hearing held—
Decision dateJul 12, 2023Decision affirmed on appeal.

Cite For

Denial of Security Clearance Based on Unresolved Financial Delinquencies
Insufficient Substantiation of Mitigating Circumstances
Application of AG ¶ 20 Mitigating Conditions in Financial 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 a denial of security clearance based on financial considerations. The Applicant argued that the Judge's decision was arbitrary and failed to apply mitigating conditions. The Board affirmed the Judge's decision, finding no harmful error in the analysis of the evidence and the application of the law.

Appealed bythe applicant

Applicant representationAttorney

Judge belowLeRoy F. Foreman — denied the clearance (split findings)

Decided ona hearing

Guidelines belowGuideline F

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.
Mitigation wrongly applied / not applied — raised by the applicantRejected
Applicant contended that the Judge failed to properly apply the mitigating conditions.
Whole-person analysis — raised by the applicantRejected
Applicant asserted that the Judge did not properly apply the Whole-Person Concept.

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 concluded that the Applicant's arguments did not demonstrate harmful error in the Judge's decision.

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

James F. Duffy — Chair
Gregg A. Cervi
Allison Marie

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. 20-01230

)

) Applicant for Security Clearance ) _______________________________________) Date: July 12, 2023

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT James B. Norman, Esq., Chief Department Counsel FOR APPLICANT Christopher Snowden, Esq. The Department of Defense (DoD) declined to grant Applicant a security clearance. On June 3, 2022, DoD issued a Statement of Reasons (SOR) advising Applicant of the basis of that decision – security concerns raised under Guideline F (Financial Considerations) of the National Security Adjudicative Guidelines (AG) in Appendix A of Security Executive Agent Directive 4 (effective June 8, 2017) and DoD Directive 5220.6 (Jan. 2, 1992, as amended) (Directive). On May 10, 2023, after the record closed, Defense Office of Hearings and Appeals Administrative Judge LeRoy F. Foreman denied Applicant’s security clearance eligibility. Applicant appealed pursuant to Directive ¶¶ E3.1.28 and E3.1.30. The SOR alleged 14 financial concerns, including delinquent accounts that were placed for collection or charged off for approximately $29,000 and a 2016 mortgage foreclosure. The Judge found in favor of Applicant on seven of the allegations, including the foreclosure, but against him on the remaining debts, which totaled approximately $20,000. On appeal, Applicant asserts that the Judge failed to properly consider all available evidence, rendering his adverse decision

arbitrary, capricious, or contrary to law, and failed to properly apply the mitigating conditions and whole-person analysis. Consistent with the following, we affirm. Judge’s Findings of Fact and Analysis Applicant, in his mid-40s, is twice married and divorced and has one adult and two minor children. He served in the military from 2000 until his honorable discharge in 2010 and has held a security clearance since 2007. Since his military discharge, Applicant has worked consistently for federal contractors and private employers with the exception of about five months’ unemployment in early 2012 and again in mid-2015, both due to contracts ending. His income was approximately $76,000 in 2014, dropped to $37,700 in 2015, and ranged between $65,000 and $75,000 in 2016 and 2017. The Judge found that none of the mitigating conditions were fully applicable. Applicant’s delinquent debts are numerous and recent. Although he encountered circumstances largely beyond his control, he failed to act responsibly regarding the most significant debt alleged in the SOR, namely a motorcycle loan charged off for over $15,000, and he presented no evidence of voluntary payments or payment plans for any of the debts. The Judge concluded that, in consideration of the foregoing, Applicant had not mitigated the security concerns raised by his financial delinquencies.

DISCUSSION

On appeal, Applicant challenges the Judge’s finding that he presented no evidence of financial counseling, arguing instead that he testified that he engaged in financial counseling following his foreclosure and that he was advised by a friend and financial advisor to track and prioritize making consistent debt payments. Appeal Brief at 9, 13, 15. The transcript reflects that Applicant testified that he received financial counseling following his 2016 foreclosure and had recently reached a point where he could apply some of what he learned. Tr. at 78. When questioned about the type of counseling he received, however, Applicant testified that he did not attend a formal class but that his friend, who is a financial advisor, gave him advice on how to improve his finances. He described his friend as “a mentor who went through the same thing with his finances, and over time . . . he has done a lot better because he was horrible with his money.” Tr. at 79-80. Considering the informal nature of the counseling that Applicant described and the lack of proof that his friend was a “legitimate and credible source” for financial counseling per AG ¶ 20(e), we find no harmful error in the Judge’s finding. Applicant also contends that the Judge erred in failing to comply with the provisions in Executive Order 10865 and the Directive by not considering all the evidence, and by not properly applying the mitigating conditions and Whole-Person Concept. For example, Applicant argues that the Judge erred in failing to apply mitigating condition AG ¶ 20(a) once he found that Applicant’s financial circumstances were largely beyond his control, primarily relying on his periods of under and unemployment. Appeal Brief at 11. This argument conflates the requirements of AG ¶ 20(a), which contemplates financial problems that are unlikely to recur due to age, frequency, or unusual circumstances, with those of AG ¶ 20(b), which contemplates financial problems resulting from circumstances largely beyond an applicant’s control. The Judge’s finding that “Applicant

encountered circumstances largely beyond his control” (Decision at 6) did not necessitate a finding that those circumstances are unlikely to recur or that AG ¶ 20(a) applies. Applicant next argues that AG ¶ 20(a) applied because his debts are neither recent nor recurring, noting that, subsequent to his unemployment that occurred “around ten . . . years ago,” he has maintained his finances and has increased his income. Appeal Brief at 11. Contrary to Applicant’s argument, debts that remain outstanding and unaddressed represent a continuing course of conduct, which undermines any argument that his debts are not recent or are unlikely to recur. See ISCR Case No. 09-01309 at 4 (App. Bd. Apr. 29, 2010). Applicant also takes issue with the Judge’s assessment that AG ¶ 20(b) did not fully apply because, aside from the motorcycle loan, the Judge “provides no analysis for whether [Applicant] acted responsibly for the six other debts that were not mitigated in the SOR.” Appeal Brief at 12. AG ¶ 20(b) is a two-prong mitigating condition that applies when 1) the conditions that resulted in the financial problem were largely beyond the person’s control, and 2) the individual acted responsibly under the circumstances. Of the seven debts found adversely, Applicant discussed six during his November 2017 security clearance interview. See Government Exhibit (GE) 2 at 9-13. He asserted that he began making payments on the motorcycle debt sometime in 2017 but provided no documentation to support said payments, and his credit report reflects that he stopped paying on the account in mid-2015 and it was charged off in late 2015 with no subsequent activity. See GE 2 at 9; GE 3 at 3; GE 6 at 3. With respect to the remaining debts, he indicated his plans to contact the lenders and attempt to resolve the accounts by early 2018. GE 2 at 11-13. By his June 2022 SOR response, however, Applicant was either still researching the debts or had shifted his position to deny liability for some. As of the hearing, Applicant remained unable to document any resolution efforts. See Tr. at 53-57, 61-67. While Applicant is correct that the Judge declined to analyze those six adverse debts under the second, responsible action prong of AG ¶ 20(b), that is likely because there is no evidence corroborating that Applicant took any action on any of those debts at any point since the start of the security clearance process or before. Applicant’s arguments on appeal simply advocate for an alternative weighing of the evidence, which is not enough to show that 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). Our review of the record reflects that the Judge examined the relevant evidence and articulated a satisfactory explanation for the decision, which 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). “Any doubt concerning personnel being considered for national security eligibility will be resolved in favor of the national security.” AG ¶ 2(b).

ORDER

The decision is AFFIRMED. Signed: James F. Duffy James F. Duffy Administrative Judge Chair, Appeal Board Signed: Gregg A. Cervi Gregg A. Cervi Administrative Judge Member, Appeal Board Signed: Allison Marie Allison Marie Administrative Judge Member, Appeal Board