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ISCR Case 14-01771.a1 — CASE

ISCR Case 14-01771.a1denied

Case Headnote

ISCR Case No. 14-01771.a1

Sep 21, 2016· Hon. Michael Y. Ra'anan· appeal

Summary

A retired military member working in the defense industry was denied a security clearance under Guideline F, Financial Considerations, due to a history of significant financial problems. The applicant admitted to nearly $50,000 in delinquent debts, which had been outstanding since at least 2006.

The decision highlighted that most of these debts remained unresolved at the time of the ruling, indicating a continuing pattern of financial irresponsibility. This ongoing conduct raised concerns under disqualifying conditions 19(a) and 19(c).

Despite the applicant's assertions of improved financial management, the judge found insufficient evidence to demonstrate that the financial difficulties were under control. Consequently, the judge concluded that these unresolved financial issues cast doubt on the applicant's ability to protect classified information, leading to the denial of the security clearance.

Conditions Referenced

Disqualifying

19(a)raisedInability or Unwillingness to Satisfy Debts
19(c)raisedA History of Not Meeting Financial Obligations

Key Rule Quoted

“The general standard is that a clearance may be granted only when ‘clearly consistent with the interests of the national security.’”
— Egan, supra, at 528.

Procedural Posture

SOR issuedJun 20, 2014
Answer filed—
Hearing heldJun 29, 2016
Decision dateSep 21, 2016

Cite For

Denial of Security Clearance Due to Unresolved Financial Obligations Under Guideline F
Importance of Demonstrating Control Over Financial Difficulties for Security Clearance Eligibility
The Presumption of Nexus Between Financial Issues and Security Concerns.

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 issues under Guideline F. The applicant argued that the Judge erred in concluding that his financial history raised security concerns and that the Judge misapplied mitigating conditions. The Board affirmed the Judge's decision, finding no harmful error in the analysis or conclusions reached.

Appealed bythe applicant

Applicant representationAttorney

Judge belowMichael H. Leonard — denied the clearance

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.
Judge mis-weighed or ignored evidence — raised by the applicantRejected
Applicant contended that the Judge failed to consider all evidence in the record.
Mitigation wrongly applied / not applied — raised by the applicantRejected
Applicant claimed the Judge erred in applying the mitigating conditions.
Erroneous finding of fact — raised by the applicantRejected
Applicant argued that the Judge erred in concluding that his case raised security concerns.

Why the Board ruled this way

The Board found that the Judge's conclusions were supported by substantial evidence and that the Judge did not err in applying the relevant legal standards. The Board affirmed the decision based on the applicant's history of unresolved debts and the implications for national security.

Standard of review applied

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

Appeal Board panel

Michael Y. 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: Given that Applicant’s delinquent debts have been in existence since at least 2006 and that most of them were unresolved as of the close of the record, a reasonable person could conclude that Applicant has exhibited a history of debt problems. Adverse decision affirmed. CASE NO: 14-01771.a1 DATE: 09/21/2016 DATE: September 21, 2016 In Re: ------------

Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 14-01771

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT James B. Norman, Esq., Chief Department Counsel FOR APPLICANT William Ferris, Esq. The Department of Defense (DoD) declined to grant Applicant a security clearance. On June 20, 2014, 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 29, 2016, after the hearing, Defense Office of Hearings and Appeals (DOHA) Administrative Judge Michael H. Leonard 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 concluding that Applicant’s case raised security concerns; whether the Judge failed to consider all of the evidence in the record; whether the Judge weighed the evidence in a manner that was arbitrary, capricious, or contrary to law; whether the Judge erred in his application of the mitigating conditions, 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 is employed in the Defense industry. Since early 2010, he has worked in support of U.S. objectives overseas. He previously served in the military, retiring as an E-9. Applicant has a history of financial problems. He admitted to owing all of the nearly $50,000 worth of delinquent debt alleged in the SOR. In addition, documentary evidence substantiates the debts. Applicant had a period of unemployment and underemployment from 2005 to 2010. In 2005, he retired from a Government job but realized that he needed more income. He accepted a job as a salesman, but he did not earn any commissions, so he quit. During this time he incurred indebtedness for business-related expenses, as well as for personal expenses. He also worked for about five months as a Defense contractor overseas and then as a substitute teacher. Throughout this period he performed duties in the Reserves. After quitting his sales position, Applicant consulted with an attorney who advised him to file for bankruptcy. The attorney also advised him to stop paying bills in advance of a bankruptcy filing. However, Applicant’s contractor job gave him enough income so that he could no longer qualify for bankruptcy. After returning stateside, Applicant discussed his options with his attorney. They waited for creditors to file collection lawsuits and then attempted to settle. Applicant has also used his current attorney in an effort to resolve debts. In all, Applicant resolved five of the thirteen debts alleged in the SOR. However, Applicant presented no evidence that he had resolved the remaining debts. Since 2010, Applicant has consistently earned over $100,000 annually. He has about $7,000 in a savings account and about $15,000 in an investment account. He stated that he has spent money on various family members over the years. The Judge’s Analysis Noting that Guideline F includes within its scope the possible connection between an applicant’s financial problems and his or her ability to protect classified information, the Judge concluded that Applicant’s circumstances raised two disqualifying conditions: 19(a) and (c).1 In addressing Applicant’s case for mitigation, the Judge noted evidence of Applicant’s unemployment and business-related expenses, which were circumstances not within his control. However, he also

FOOTNOTES

1 Directive, Enclosure 2 ¶19(a): “inability or unwillingness to satisfy debts;” and Directive, Enclosure 2 ¶ 19(c): “a history of not meeting financial obligations[.]” noted that these difficulties occurred several years ago and that Applicant has been fully employed for a number of years as well. The Judge stated that Applicant, despite his income, has done little to show that his financial difficulties are under control. He concluded that Applicant’s problems continue to cast doubt upon his ability to protect classified information. Discussion Applicant argues that the Judge erred in concluding that his case raised concerns under Guideline F. He states that his period of unemployment was not lengthy and did not qualify as a history of failing to pay his debts. He also denied that he had demonstrated an inability to pay his debts. The Directive presumes there is a nexus or rational connection between admitted or proven circumstances under any of its guidelines and an applicant’s security eligibility. See, e.g., ISCR Case No. 15-01253 at 3 (App. Bd. Apr. 20, 2016). In this case, Applicant admitted most of the SOR allegations, and the Judge found that the evidence presented by the Government was sufficient to constitute substantial evidence of the allegations as well.2 Given that Applicant’s delinquent debts have been in existence since at least 2006 and that most of them were unresolved as of the close of the record, a reasonable person could conclude that Applicant has exhibited a history of debt problems. See, e.g., ISCR Case No. 12-03984 at 3 (App. Bd. Jun. 10, 2014) for the proposition that unresolved debts are a continuing course of conduct for purposes of Guideline F analysis. Applicant’s brief has not provided a reason to rebut the presumption of nexus. Applicant does not specifically challenge the Judge’s findings of fact but provides a narrative description supplementing those findings. Applicant cites to his reliance upon the advice of the bankruptcy attorney, his military service, and the circumstances underlying his financial delinquencies. He argues, among other things, that the Judge did not extend sufficient weight to evidence concerning the bankruptcy attorney’s advice. The Judge made findings about these things, discussing much of it in the analysis. Applicant has not rebutted the presumption that the Judge considered all of the evidence in the record. Neither has he shown that the Judge weighed the evidence in a manner that was arbitrary, capricious, or contrary to law. See, e.g., ISCR Case No. 14-05795 at 2, 3 (App. Bd. Apr. 26, 2016). Applicant challenges the Judge’s treatment of the mitigating conditions and the whole-person factors. Among other things, he cites to evidence that some of Applicant’s debts that had been cancelled, resulting in additional tax liability. He argues that, under the circumstances, it was an error for the Judge to have expected Applicant to pay debts that have been cancelled. However, a DOHA proceeding it not an exercise in debt collection. See, e.g., ISCR Case No. 14-04437 at 3 (App. Bd. Apr. 15, 2016). Even if an applicant’s debts have been paid, or the creditor is no longer seeking payment, the Judge can still consider the underlying circumstances in order to evaluate the applicant’s trustworthiness and reliability. See, e.g., ISCR Case No. 14-02394 at 3-4 (App. Bd. Aug. 17, 2015). Given the totality of the evidence, we find no reason to disturb the Judge’s treatment of

2 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. See also ISCR Case No. 13- 01281 at 3 (App. Bd. Aug. 4, 2014). the mitigating conditions or his whole-person analysis. In making his arguments, Applicant cites to matters not contained within the record, including assertions about events that occurred after the Decision was issued. We cannot consider new evidence on appeal. Decision ¶ E3.1.29.3 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.’” Egan, supra, at 528. 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: Michael Y. Ra’anan Michael Y. 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

3 Applicant challenges the Judge’s interpretation of Department of the Navy v. Egan, 484 U.S. 518 (1988) and Duane v. Department of Defense, 275 F.3d 988 (10th Cir. 2002). He appears to understand the Judge to have cited these cases in support of the proposition that the Appeal Board’s scope of review is limited in the same manner as that of the Merit System Protection Board, which has no authority to address the substance of clearance adjudications. In fact, the Judge cited these cases in the Law and Policies section of the decision for the well-settled principle that no one has a due process right to a security clearance. Decision at 5. The Judge neither stated nor intimated anything about the authority of the Appeal Board, whose responsibilities are set forth in Directive ¶ E3.1.32.