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ISCR Case 11-00046.a1 — CASE

ISCR Case 11-00046.a1denied

Case Headnote

ISCR Case No. 11-00046.a1

Feb 10, 2012· Hon. Michael Y. Ra'anan· appeal

Summary

The applicant was denied a security clearance under Guideline F, Financial Considerations, due to significant unresolved debts totaling approximately $202,000. A key factor in the denial was the applicant's poor judgment in co-signing a loan for a friend he did not know well, which contributed substantially to his financial difficulties.

Furthermore, the applicant failed to demonstrate responsible action in resolving these debts. Instead of actively working to pay them off, he chose to dispute them, which was viewed negatively by the judges. This approach indicated a lack of financial responsibility and a pattern of poor judgment regarding his financial obligations.

Despite some positive aspects of his overall record, the applicant's substantial financial mismanagement and his failure to take proactive steps to resolve his debts were deemed a security concern, leading to the denial of his clearance.

Conditions Referenced

Disqualifying

AG ¶ 20raisedFinancial Considerations

Key Rule Quoted

“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.”
— ISCR Case No. 08-12184 at 7 (App. Bd. Jan. 7, 2010)

Procedural Posture

SOR issuedMay 25, 2011
Answer filed—Applicant represented himself.
Hearing heldDec 9, 2011
Decision dateFeb 10, 2012

Cite For

Financial Mismanagement as a Disqualifying Factor Under Guideline F
Poor Judgment in Financial Decisions Impacting Security Clearance
Government's Burden of Production Regarding Financial Allegations

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 argued that the government did not meet its burden of proof and that the judge's decision was arbitrary. The Board affirmed the judge's decision, finding sufficient evidence to support the denial.

Appealed bythe applicant

Applicant representationPro se (self-represented)

Judge belowNoreen A. Lynch — denied the clearance

Decided ona hearing

Guidelines belowGuideline F

What the Board reviewed

No specific harmful error alleged — raised by the applicantRejected
Applicant contended that the Government failed to meet its burden of production.
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 Government met its burden of production and that the Judge's decision was supported by substantial evidence, including the applicant's financial history and judgment issues.

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 Y. Ra’anan — Chair
Jean E. Smallin
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: Adverse information from a credit report can normally meet the substantial evidence standard and the government’s obligations’ under the Directive ¶ E3.1.14 for pertinent allegations. Adverse decision affirmed. CASENO: 11-00046.a1 DATE: 02/10/2012 DATE: February 10, 2012 In Re: ------

Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 11-00046

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT James B. Norman, Esq., Chief Department Counsel FOR APPLICANT Pro se 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 December 9, 2011, after the hearing, Administrative Judge Noreen A. Lynch 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 Government failed to meet its burden of production and whether the Judge’s decision was arbitrary, capricious, or contrary to law. Consistent with the following, we affirm. Applicant and his wife purchased a home in 2003 for $257,000 with an adjustable rate mortgage. His intention was to refinance in 2006 for a fixed rate loan. In order to consolidate credit card debt, he obtained a home equity loan of $50,000. In 2006, he co-signed a car loan for a friend, who ultimately defrauded him.1 Applicant fell behind in his mortgage payments. However, in 2006 or 2007, he purchased investment property with his brother. Applicant considered filing for bankruptcy, but he concluded that it was too expensive. He found a program on line that explained how to understand credit reports. He wrote to creditors, requesting them to validate their claims, receiving some responses that he deemed inadequate. The SOR lists debts totaling about $202,000, which are confirmed by the credit reports. Applicant acknowledges the debts. He has satisfied one of the alleged debts, in the amount of $95. He has a wage garnishment in the amount of $34,000 for another of them. He attributed his financial problems to a two-week period of unemployment and to failure of tenants to pay rent. Applicant enjoys an excellent reputation for trustworthiness and dependability. In the Analysis, the Judge noted favorable aspects of Applicant’s record, including his steady employment history, his favorable reputation, and his having held a clearance for many years. However, she also stated that Applicant’s financial problems were not due entirely to circumstances beyond his control. For example, his having co-signed a car loan for a person whom he did not know reflected poorly upon his judgment. She also noted that, although he did not deny having delinquent debts, his plan was merely to dispute them rather than pay them off. She concluded that Applicant had not demonstrated responsible action in resolving his debts. Applicant contends that the Government failed to meet its burden of production, arguing that there was no evidence to show that the amounts cited in the SOR were correct. When an applicant denies an allegation contained in a SOR, the Government must produce substantial evidence of the truth of the allegation. Substantial evidence is “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. In this case, Applicant denied the allegations. The Government presented Applicant’s answers to the security clearance application; his answers to DOHA interrogatories; and two credit reports. When read in conjunction with the other evidence in the record, to include Applicant’s testimony, the Government’s evidence is sufficient to establish security concerns under Guideline F. See, e.g., ISCR Case No. 08-12184 at 7 (App. Bd. Jan. 7, 2010) (“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.”) Applicant contends that the Judge did not consider, or mis-weighed, evidence concerning his efforts to verify the amounts of his debt and the parties to whom the debts were owed. A Judge is presumed to have considered all of the evidence in the record. See, e.g., ISCR Case No. 10-10068 at 2 (App. Bd. Dec. 20, 2011). In this case, the Judge discussed evidence favorable to Applicant, and she discussed his testimony concerning his efforts to validate his debts. However, her adverse decision rested not only on evidence of the amounts and extent of Applicant’s debts, but also on underlying circumstances which impugned his judgment and reliability. Applicant has not rebutted the presumption that the Judge considered all of the evidence. Neither has he demonstrated that the Judge mis-weighed the evidence. 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.’” 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: Michael Y. Ra’anan Michael Y. Ra’anan Administrative Judge Chairperson, Appeal Board Signed: Jean E. Smallin Jean E. Smallin Administrative Judge Member, Appeal Board Signed; James E. Moody James E. Moody Administrative Judge Member, Appeal Board

FOOTNOTES

1 Applicant testified that the friend was the husband of a woman who offered daycare services. Although Applicant had not known the friend for a long time, he agreed to co-sign a loan so that the friend could purchase a car to assist in a proposed youth program business. The automobile was an expensive import brand. Applicant testified that, in fact, his friend had no money and had conned others. Tr. at 48-50.