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ISCR Case 15-08255.a1 — CASE

ISCR Case 15-08255.a1denied

Case Headnote

ISCR Case No. 15-08255.a1

Aug 22, 2017· Hon. Michael Y. Ra'anan· appeal

Summary

A security clearance applicant, represented by counsel, was denied clearance under Guideline E (Personal Conduct) and Guideline F (Financial Considerations). The denial was based on the applicant's intentional falsification of his security clearance application, specifically by failing to disclose charged-off debts.

Further concerns arose from the applicant's financial history, which included the misappropriation of funds from a fraternal lodge. This issue, alongside the undisclosed debts, raised significant questions about the applicant's judgment and trustworthiness. The appeal board affirmed the denial, noting that the applicant failed to demonstrate sufficient reform or responsible action regarding his financial obligations.

The board cited Disqualifying Conditions AG ¶ 18 and AG ¶ 15 in its decision, concluding that the applicant's actions warranted the denial of his security clearance.

Conditions Referenced

Disqualifying

AG ¶ 18raisedFinancial Considerations
AG ¶ 15raisedPersonal Conduct

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 8, 2016
Answer filed—
Hearing heldMay 18, 2017
Decision dateAug 22, 2017

Cite For

Failure to Disclose Financial Issues Under Guideline F
Intentional Falsification of Security Clearance Application Under Guideline E
Impact of Financial Mismanagement on Trustworthiness and Judgment

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 and personal conduct. The Applicant argued due process violations and that the Judge's decision was arbitrary. The Board affirmed the denial, finding no harmful error in the Judge's decision-making process.

Appealed bythe applicant

Applicant representationAttorney

Judge belowElizabeth M. Matchinski — denied the clearance

Decided ona hearing

Guidelines belowGuideline FGuideline E

What the Board reviewed

Due-process / fairness — raised by the applicantRejected
Applicant contended that the Judge erred in considering a 2007 misappropriation incident that was not alleged in the SOR.
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 supported by substantial evidence and that the adverse decision was not arbitrary or capricious. The Judge's consideration of the 2007 incident was deemed not materially prejudicial to the Applicant.

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; Guideline E DIGEST: When he completed his security clearance application (SCA), Applicant did not disclose that he had charged-off debts. During his subsequent interview, the investigator asked Applicant about his financial situation, and Applicant answered each question negatively. When reminded that he was under oath and when confronted with his credit record, Applicant admitted his delinquent debts. He stated that he had intentionally falsified his SCA and lied about his financial difficulties because he was embarrassed. Adverse decision affirmed. CASENO: 15-08255.a1 DATE: 08/22/2017 DATE: August 22, 2017 In Re: ----------------

Applicant for Security Clearance ) ) ) ) ) ) ) ) ISCR Case No. 15-08255

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT John Bayard Glendon, Esq., Deputy Chief Department Counsel FOR APPLICANT Daniel J. MacKinnon, Esq. The Department of Defense (DoD) declined to grant Applicant a security clearance. On July 8, 2016, DoD issued a statement of reasons (SOR) advising Applicant of the basis for that decision–security concerns raised under Guideline F (Financial Considerations) and Guideline E (Personal Conduct) of Department of Defense Directive 5220.6 (Jan. 2, 1992, as amended) (Directive). Applicant requested a hearing. On May 18, 2017, after the hearing, Defense Office of Hearings and Appeals (DOHA) Administrative Judge Elizabeth M. Matchinski 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 Applicant was denied due process 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 had some delinquent debts. These included a charged-off balance owed to a credit union. Applicant offered to settle the debt, but the creditor demanded full payment. Applicant did not set aside funds to resolve this debt. Applicant also had a charged-off debt to a bank in the amount of $485, which he has paid. In December 2009, Applicant was affiliated with a fraternal lodge. He asked the treasurer if he could borrow $2,400 to cover a paint job at his personal residence. Applicant was seeking a home equity loan (HELOC) on his house, but the painter wanted his money immediately. The treasurer agreed, notifying the lodge of the loan. Applicant was master of the lodge, a position that entailed a fiduciary duty to the other members. The next day, Applicant was contacted by a lodge official. Applicant promised that he would repay the loan within a week. During December 2009, Applicant’s HELOC was approved in the amount of nearly $82,000. On December 7, Applicant met with lodge officials, who advised that he did not follow proper procedures in seeking a loan. For example, he presented his request to the treasurer rather than to the lodge members themselves. These officials reminded Applicant that he had previously received a $1,500 loan from the lodge in 2007, which was not done according to lodge rules. The lodge had no proof that Applicant had paid the $1,500, and Applicant could not substantiate payment. Neither did he substantiate payment of the 2009 loan. He resigned from the lodge on December 7, 2009. When he completed his security clearance application (SCA), Applicant did not disclose that he had charged-off debts. During his subsequent interview, the investigator asked Applicant about his financial situation, and Applicant answered each question negatively. When reminded that he was under oath and when confronted with his credit record, Applicant admitted his delinquent debts. He stated that he had intentionally falsified his SCA and lied about his financial difficulties because he was embarrassed. Applicant’s financial problems arose from funeral expenses resulting from his mother’s death. In addition, Applicant’s sister did not pay property taxes on a house they inherited. His difficulties were also associated with the expenses of his wedding. Applicant has had counseling from a licensed certified social worker to help resolve emotional repercussions from deaths in the family and from his financial problems. Applicant has an annual income of about $47,000, and his wife’s is about $34,000. They have about $1,000 left over at the end of each month. Applicant enjoys a good reputation for the quality of his work performance and for his trustworthiness. The Judge’s Analysis The Judge concluded that Applicant’s charged-off debts and his two misappropriations of lodge funds raised concerns under Guideline F. Though noting certain things that were outside his control that affected his debts, the Judge concluded that Applicant had not shown responsible action. She stated that, given Applicant’s history of late payments on various obligations and a lack of proof that he had repaid his lodge, he had failed to mitigate the concerns arising from his debts. The Judge also concluded that Applicant had failed to mitigate the concerns arising from his false statements on his SCA and during his interview. She stated that these falsifications were not minor and that they impugn his judgment and trustworthiness. She stated that he had not demonstrated sufficient reform, in that he attempted to minimize the significance of his false statement by contending that they resulted in some way from stressors that he had been experiencing. She also stated that, in obtaining money from his lodge outside the proper channels, Applicant had put his own needs over those to whom he owed a fiduciary obligation.

DISCUSSION

Applicant contends that he has demonstrated mitigation of the Guideline E concerns. He cites to his many years of holding a clearance without incident or concern, the counseling that he has received, his efforts to resolve his debts, etc. He argues that he has taken steps to eliminate any vulnerability to coercion that his false statements may have entailed. However, the Directive provides that failure to provide truthful answers during national security investigations is of special concern. It also states that refusal to provide full, frank, and truthful answers to lawful questions will normally result in an unfavorable determination. Directive, Encl. 2, App. A ¶ 15. Given Applicant’s admission that he deliberately withheld his financial delinquencies due to embarrassment, we find no reason to conclude that the Judge’s unfavorable findings were arbitrary, capricious, or contrary to law. Applicant raises an issue of due process. Specifically, he argues that the Judge erred in concluding that the earlier misappropriation from the lodge, which occurred in 2007, raised security concerns. He notes that the SOR only alleged the incident in 2009 and that neither the Judge nor Department Counsel sought to amend it. He argues that by treating the 2007 incident as she did, the Judge went beyond the scope of the SOR and that Applicant’s testimony regarding that incident should not have been considered. An SOR is an administrative pleading that does not have to allege every relevant fact. To the contrary, an SOR is sufficient if it places an applicant on notice of the concerns to be addressed at the hearing so that he or she can prepare a case for mitigation. See, e.g., ISCR Case No. 14-06440 at 3-4 (App. Bd. Jan. 8, 2016). Variances between SOR allegations and a Judge’s findings may occur from time to time. They are material only when the extent of the variance is so great that the SOR fails to serve as reasonable notice, subjecting the Applicant to unfair surprise. See, e.g., ISCR Case No. 12-01266 at 3 (App. Bd. Apr. 4, 2014). In this case, the Judge’s findings about two misappropriations from Applicant’s lodge constitute a variance from her formal finding on the SOR allegation, which refers only to one. However, we conclude that this variance was not material for the following reasons. First, in 2009, the lodge members discussed the 2007 incident with Applicant in the meeting that led to his resignation. The earlier incident, therefore, was part of the operative facts or res gestae underlying the 2009 incident alleged in the SOR and is therefore within the general scope of that allegation. Second, the 2007 incident cannot plausibly have caused Applicant unfair surprise, insofar as he addressed it in detail during his clearance interview and during the hearing. Third, Applicant did not state or otherwise indicate to the Judge that consideration of this earlier incident was unfair to him. Moreover, although the Judge stated that she would give Applicant time after the hearing to submit additional evidence, he never requested for her to do so. Tr. at 25. Although pro se applicants are not held to the standards of lawyers, they are expected to take reasonable and timely steps to protect their rights. See, e.g., ISCR Case No. 12-02371 at 3 (App. Bd. Jun. 30, 2014). Because the variance between pleading and proof on this issue is not material, we conclude that the Judge did not err in citing both incidents in her analysis of the disqualifying conditions. However, even if she did err, it was harmless, given that her adverse decision is independently supportable based upon the Guideline E allegations discussed above. See, e.g., ISCR Case No. 15-00535 at 3 (App. Bd. Mar. 13, 2017) for definition of harmless error. Applicant argues that he has shown mitigation of the Guideline F concerns. However, this argument is essentially a disagreement with the Judge’s weighing of the evidence, which is not enough 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. 15-08842 at 3 (App. Bd. Feb. 14, 2017). Applicant takes issue with the Judge’s characterization of his loans as misappropriations. Given the totality of the evidence, the Judge’s use of that term is supportable. 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, Encl. 2, App. A ¶ 2(b): “Any doubt concerning personnel being considered for national security eligibility 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: James E. Moody James E. Moody Administrative Judge Member, Appeal Board Signed: James F. Duffy James F. Duffy Administrative Judge Member, Appeal Board