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ISCR Case 14-05728.a1 — CASE

ISCR Case 14-05728.a1denied

Case Headnote

ISCR Case No. 14-05728.a1

Oct 9, 2015· Hon. Michael Y. Ra'anan· appeal

Summary

A security clearance applicant, representing himself, was denied under Guideline F (Financial Considerations) due to recent and significant financial issues. The denial was based on disqualifying conditions F3 and F2, which address a history of not meeting financial obligations and an inability or unwillingness to satisfy debts.

The applicant's financial problems were deemed recent and substantial, with judges noting a lack of responsible action regarding his debts until he filed for bankruptcy. Although mitigating conditions F3 and F4 were applied, indicating that the financial problems were not recent or that the individual had initiated a good-faith effort to resolve them, these were insufficient to overcome the concerns.

Ultimately, the applicant failed to demonstrate a good-faith effort to resolve his debts and had not received adequate credit counseling beyond bankruptcy requirements. The absence of a budget or evidence of future financial stability further contributed to the decision, leading to the denial of his security clearance.

Conditions Referenced

Disqualifying

F3raisedInability or Unwillingness to Satisfy Debts
F2raisedA History of Not Meeting Financial Obligations

Mitigating

F3rejectedThe Conditions That Resulted in the Financial Difficulties Were Largely Beyond the Person's ControlThe judge found that the applicant's financial issues were recent and significant.
F4rejectedThe Person Has Received or Is Receiving Counseling for the Financial ProblemsThe applicant received no credit counseling beyond bankruptcy requirements.

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 15, 2015
Answer filed—
Hearing heldJul 21, 2015
Decision dateOct 9, 2015

Cite For

Recent Financial Issues Under Guideline F
Insufficient Evidence of Responsible Debt Management
Impact of Bankruptcy on Security Clearance Eligibility

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 a security clearance based on financial considerations under Guideline F. The applicant argued that the Judge made errors in fact-finding and in applying mitigating conditions. The Board affirmed the Judge's decision, finding no harmful errors and that the decision was supported by substantial evidence.

Appealed bythe applicant

Applicant representationPro se (self-represented)

Judge belowJohn Grattan Metz, Jr. — denied the clearance

Decided ona hearing

Guidelines belowGuideline F

What the Board reviewed

Judge mis-weighed or ignored evidence — raised by the applicantRejected
Applicant argued that the Judge extended too much weight to his more recent financial circumstances.
Mitigation wrongly applied / not applied — raised by the applicantRejected
Applicant contended that the Judge's application of mitigating conditions was erroneous.
Decision arbitrary, capricious, or contrary to law — raised by the applicantRejected
Applicant claimed 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 supported by substantial evidence and that any alleged errors were harmless. The Judge's conclusions regarding the applicant's financial situation and the application of mitigating conditions were not arbitrary or capricious.

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
William S. Fields
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 Judge’s finding that Applicant received no credit counseling beyond that required for his bankruptcy is consistent with the record evidence and refuted Applicant’s argument on appeal. Adverse decision affirmed. CASENO: 14-05728.a1 DATE: 10/09/2015 DATE: October 9, 2015 In Re: ---------

Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 14-05728

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT James B. Norman, Esq., Chief Department Counsel FOR APPLICANT Pro se The Department of Defense (DoD) declined to grant Applicant a security clearance. On January 15, 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 July 21, 2015, after the hearing, Defense Office of Hearings and Appeals (DOHA) Administrative Judge John Grattan Metz, 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’s findings of fact contained errors; whether the Judge’s application of the mitigating conditions was erroneous; 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 From 2002 until 2012 Applicant worked for a company that he and others had founded. Due to financial problems, the company reorganized in such a way that Applicant became an employee. Eventually, management laid Applicant off. During the time leading up to his layoff, Applicant earned less money, so he relied on credit accounts for routine expenses. Subsequently, Applicant obtained a diploma in a specialized, technical field of study. He borrowed money for his tuition, a debt that grew to $31,000. While in school, Applicant relied on credit accounts for living expenses. He was unemployed until late 2013. During his unemployment, he did not attempt to communicate with creditors in resolving his delinquent debts. After he completed his security clearance application, he filed for bankruptcy protection. His SOR lists five debts, four credit accounts and the loan for his educational expenses. These debts, along with others, were discharged through Chapter 7 bankruptcy. Applicant makes about $80,000 annually, and his wife about $20,000. He has received no credit counseling beyond what was required during the bankruptcy process. He did not provide a budget to show how he will avoid financial difficulty in the future. The Judge’s Analysis The Judge concluded that Applicant’s financial problems were recent and could not be classified as infrequent. The Judge also concluded that Applicant did not demonstrate responsible action in regard to his debts until his bankruptcy petition. He also noted Applicant’s having taken out a $31,000 education loan while unemployed. He concluded that Applicant’s failure to address his debts except through bankruptcy did not constitute a good-faith effort to pay his debts. The Judge concluded that Applicant had not demonstrated a track record of debt resolution. He stated that it is still an open questions as to whether Applicant’s problems are actually under control.

DISCUSSION

Applicant challenges some of the Judge’s findings of fact. He contends that he did not live off of his credit cards and that he did receive financial counseling. However, examining the challenged findings in light of the record as a whole, we conclude that they are supported by “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. Applicant notes that he received credit counseling as part of the bankruptcy process. However, the Judge’s finding was that Applicant had received no credit counseling beyond that which was required for his bankruptcy, which is consistent with the record that was before him and is not refuted by Applicant’s argument on appeal. In addition, the finding about Applicant’s having used credit accounts for living expenses is a reasonable inference from his hearing testimony.1 We find no error in the Judge’s findings of fact. Even if the findings contain errors, they did not likely affect the outcome of the case and, therefore, are harmless. The Judge’s material findings of security concern are based upon substantial record evidence or constitute such inferences as a reasonable person might draw from the evidence. See, e.g., ISCR Case No. 11-10255 at 4 (App. Bd. Jul. 28, 2014). Applicant argues that, on the whole, he has been financially sound throughout his life. To the extent that he is arguing that the Judge extended too much weight to his more recent circumstances, we find no reason to conclude that the Judge weighed the evidence in a manner that was arbitrary, capricious, or contrary to law. See, e.g., ISCR Case No. 14-00251 at 4 (App. Bd. Oct. 10, 2014). Applicant has cited to other Hearing Office cases that, he contends, are similar to his own and support his effort to obtain a clearance. We have considered these cases as persuasive authority. However, Hearing Office cases are binding neither on other Hearing Office Judges or on the Appeal Board. See, e.g., ISCR Case No. 11-14723 at 3 (App. Bd. Oct. 3, 2014). In any event, the cases that Applicant cites have significant differences from his own. We find in them no reason to conclude that the Judge’s overall decision was erroneous. The Judge examined the relevant data and articulated a satisfactory explanation for the decision. The decision is sustainable on this record. Even if an applicant has actually resolved debts, whether through payment, bankruptcy, or some other means, a Judge may still consider the circumstances underlying the debts for what they may reveal about the applicant’s eligibility for a clearance. See, e.g., ISCR Case No. 14-02394 a 3 (App. Bd. Aug. 17, 2015). “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; Michael Ra’anan Michael Ra’anan Administrative Judge Chairperson, Appeal Board Signed: William S. Fields William S. Fields Administrative Judge Member, Appeal Board Signed: James E. Moody James E. Moody Administrative Judge Member, Appeal Board

FOOTNOTES

1 “[Q]: Is it safe to say that during this period you were using the accounts listed in the [SOR] to supplement your living expenses? [A]: [C]ertainly at certain points. I wouldn’t say that it was the entire time.” Tr. at 52.