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ISCR Case 12-12188.a1 — CASE

ISCR Case 12-12188.a1denied

Case Headnote

ISCR Case No. 12-12188.a1

Sep 12, 2016· Hon. Michael Y. Ra'anan· appeal

Summary

A 47-year-old applicant with a long-standing security clearance was denied renewal under Guideline F (Financial Considerations) due to approximately $108,000 in unresolved financial debts. The judge cited Disqualifying Condition AG ¶ 19, emphasizing the applicant's failure to provide sufficient evidence of debt resolution.

Despite a history of income fluctuations and some attempts to settle outstanding amounts, the judge determined these efforts were sporadic and inadequate. The applicant's claims regarding debt resolution lacked supporting documentary evidence.

Ultimately, the judge found that the applicant had not demonstrated the necessary financial responsibility to mitigate the security concerns, leading to the denial of the security clearance.

Conditions Referenced

Disqualifying

AG ¶ 19raisedFinancial Considerations

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 issuedJul 9, 2015
Answer filed—
Hearing heldJun 20, 2016
Decision dateSep 12, 2016

Cite For

Insufficient Evidence of Debt Resolution Under Guideline F
Importance of Financial Responsibility in Security Clearance Determinations
Affirmation of Adverse Decisions Based on Substantial Evidence

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 Judge erred in findings of fact and that the decision was arbitrary and capricious. The Board affirmed the Judge's decision, finding no harmful error in the proceedings.

Appealed bythe applicant

Applicant representationAttorney

Judge belowArthur E. Marshall, Jr. — denied the clearance (split findings)

Decided ona hearing

Guidelines belowGuideline F

What the Board reviewed

Judge mis-weighed or ignored evidence — raised by the applicantRejected
Applicant contended that the Judge did not weigh and consider all relevant evidence.
Decision arbitrary, capricious, or contrary to law — raised by the applicantRejected
Applicant argued 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 findings were based on substantial evidence and that the applicant did not demonstrate that the Judge's decision was arbitrary, capricious, or contrary to law. The applicant's arguments did not sufficiently rebut the presumption that the Judge considered all evidence.

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
James E. Moody
James F. Duffy

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: Applicant’s arguments are neither enough to rebut the presumption that the Judge considered all of the evidence in the record nor are they sufficient to show that the Judge weighed the evidence in a manner that was arbitrary, capricious, or contrary to law. Adverse decision affirmed. CASE NO: 12-12188.a1 DATE: 09/12/2016 DATE: September 12, 2016 In Re: ------------

Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 12-12188

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT James B. Norman, Esq., Chief Department Counsel FOR APPLICANT Ryan C. Nerney, Esq. The Department of Defense (DoD) declined to grant Applicant a security clearance. On July 9, 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 June 20, 2016, after the hearing, Defense Office of Hearings and Appeals (DOHA) Administrative Judge Arthur E. Marshall, Jr., 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 findings of fact 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, who is 47 years old, has worked in the same position for over six years. He is married with three children and three stepchildren. His wife does not work, and he earns about $149,000 annually. He has maintained a security clearance since about 1996. Between about 2007 and 2008, Applicant’s salary was reduced from about $135,000 to about $85,000 because of a change in his employer’s contract. Due to the salary reduction, he found it difficult to support his family and manage his obligation. About a year later, his salary increased to approximately $127,000. The alleged debts (SOR ¶¶ 1.a through 1.f) total about $108,000 and include two mortgages, a vehicle repossession, and an adverse judgment. Applicant requested permission for short sale of his home to resolve the primary and secondary mortgages on that property, but his request was denied. The home was foreclosed. He did not remember receiving an IRS Form 1099 for any deficiency. He addressed these debts in a sporadic manner over the years, and no actual payments have been made toward them. He testified that he was recently offered an opportunity to settle the mortgages for about $6,000. In a footnote, the Judge noted there was no evidence showing the offer was accepted and also pointed out there was a letter from the creditor indicating a payment was to be drafted in the amount of the offer on March 16, 2016.

Applicant admits the charged-off account for about $9,100 (SOR ¶ 1.c) is a valid debt. Although he has not made any payments toward that debt, it no longer appears on his credit report. He prefers to be “saving [his] money and knocking [his debts] off one at a time.” Decision at 3. SOR ¶ 1.dis an adverse judgment for about $5,000 that he initially reported he planned to have satisfied by August 2015, but did not investigate it until the following month. At the hearing, he presented a cashier’s check that he intended to send to the collection agent to satisfy the debt. Although the record was held open after the hearing, no evidence was presented showing that the cashier’s check was mailed or transacted. Applicant did provide proof that the debt for about $2,600 in SOR ¶ 1.e was paid in full. The charged-off debt for about $29,800 in SOR ¶ 1.frelated to a repossessed vehicle. Applicant first started to investigate this matter about four years ago, but has not checked on it since. He disagrees with the amount at issue. A confirmation settlement agreement dated the day after the hearing states a lump-sum payment of about $6,000 was due in June 2016. No evidence of that payment was provided. Applicant’s salary has incrementally increased since his salary was reduced several years ago. He has sufficient income to cover his current financial obligations and has a monthly net remainder of approximately $1,300. He has no notable reserves in savings or checking accounts. The Judge’s Analysis The Judge found for Applicant on the debt in SOR ¶ 1.e that was satisfied and against him on the remaining debts. While Applicant suffered a dramatic decrease in his salary several years ago, he provided no examples of what he did to make it though that difficult time other than contacting his mortgagors. The Judge noted that, besides the proof that the debt in SOR ¶ 1.e was paid, no other documentary evidence was provided to show that any other debts have gone beyond the settlement negotiation phase or establish that significant progress has occurred.

DISCUSSION

In his appeal brief, Applicant contends that he resolved the debts for which the Judge made unfavorable findings. First, he claims the mortgage in SOR ¶ 1.a was satisfied on the sale of the home. We cannot find evidence in the record supporting that claim. Second, he claims that he testified the second mortgage in SOR ¶ 1.bwas settled for about $6,000 and that confirmation of the agreement and payment were provided as an exhibit. At the hearing, he testified that he contacted the mortgage company about the debts in SOR ¶¶ 1.a and 1.b, that he worked out a settlement agreement initially but did not follow through on that agreement, and that he was expecting a call from the company in the near future. Tr. at 43-44, 46, and 49-50. In the decision, the Judge correctly noted that Applicant provided in his post-hearing submission a copy of the settlement offer and a letter from the creditor indicating the amount of the offer was to be drafted on March 16, 2016.1 Evidence confirming payment of the debt was not provided. Third, he claims that he testified he would resolve the debt in SOR ¶ 1.cand “has since resolved this debt.” Appeal Brief at 6. The record contains no documentary proof of that resolution. His statement in the appeal brief that he resolved this debt constitutes new evidence that the Appeal Board cannot receive or consider. Directive ¶ E3.1.29. Additionally, he claims the debt in SOR ¶ 1.fwas resolved through a lump-sum payment in accordance with a settlement agreement. No proof of that payment is contained in the record, and his assertion in the appeal brief that it has been paid constitutes new evidence that we cannot consider. Id. In summary, Applicant has failed to show there is a sufficient basis for challenging any of the Judge’s findings for the debts in SOR ¶¶ 1.a, 1.b, 1.c, and 1.f. Those findings are sustainable because they are based on substantial evidence or constitute reasonable inferences that could be drawn from the record. See, e.g., ISCR Case No. 12-03420 at 3 (App. Bd. Jul. 25, 2014). Appellant also claims the debt in SOR ¶ 1.dwas satisfied through the cashier’s check that he showed the Judge at the hearing. While the Judge’s finding that there was no evidence presented to show the cashier’s check was “mailed or transacted” is correct, we recognize that cashier’s checks are unique negotiable instruments in which a bank is both the drawer (the person who signs ordering 1 The settlement offer was dated September 15, 2015, and indicated it was time sensitive. The offer consisted of two pages, but only the first page was included in the record. the payment) and the drawee (the person ordered to make the payment).2 Under usual circumstances, the existence of a cashier’s check is strong evidence that the specified amount was committed for payment to the named payee. Nevertheless, even if the Judge erred regarding that finding, it did not likely affect the outcome of this case in view of the magnitude of Appellant’s other delinquencies. See, e.g., ISCR Case No. 12-03420 at 3 (App. Bd. Jul. 25, 2014). Applicant further contends that the Judge did not weigh and consider all relevant evidence. He cites to such things as his salary reduction in 2007, his character evidence, and the steps he has taken to resolve the debts. However, the Judge made findings about those matters. Applicant’s arguments are neither enough to rebut the presumption that the Judge considered all of the evidence in the record nor are they sufficient 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. 14-01284 at 3 (App. Bd. Apr. 6, 2015). We give due consideration to the Hearing Office case that Applicant has cited, but it is neither binding precedent on the Appeal Board nor sufficient to undermine the Judge’s decision. See, e.g., ISCR Case No. 14-03747 at 3 (App. Bd. Nov. 13, 2015). We also conclude the Judge’s the whole-person analysis complies with the requirements of Directive, Enclosure 2 ¶ 2. The Judge examined the relevant evidence 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

2 Uniform Commercial Code ¶ 3-104. Generally, a person transfers money to a bank before the bank will issue the cashier’s check that commits it to make the payment to a named payee. The Decision is AFFIRMED. Signed: Michael Ra’anan Michael Ra’anan Administrative Judge Chairperson, Appeal Board Signed: James E. Moody James E. Moody Administrative Judge Member, Appeal Board Signed: James F. Duffy James F. Duffy Administrative Judge Member, Appeal Board