ISCR Case No. 15-01907.h1

DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS

In the matter of: ) ) XXXXXXXXXXXXXXXXXXX ) ISCR Case No. 15-01907 ) Applicant for Security Clearance )

For Government: Nicole A. Smith, Esquire, Department Counsel For Applicant: Roger Schlossberg, Esquire

03/28/2017 ______________

______________

METZ, John Grattan, Jr., Administrative Judge:

Based on the record in this case, I deny Applicant’s clearance.

On 17 October 2015, the Department of Defense (DoD) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guideline F, Financial Considerations. Applicant timely answered the SOR, requesting a hearing before the Defense Office of Hearings and Appeals (DOHA). DOHA assigned the case to me 11 April 2016, and I convened a hearing 19 May 2016. DOHA received the transcript (Tr.) 1 June 2016, and the record closed.

Applicant denied the SOR financial allegation. He is a 66-year-old company owner who requires a clearance for his company to provide training for classified Government missions. He is a successful businessman (AE A-J; Tr. 71-90). This is a periodic reinvestigation of a clearance he claims to have received in 2008 or 2009 (GE 1; Tr. 31).

The SOR alleges, and Government exhibits (GE 1-3) establish, one delinquent time-share account totaling $22,254. Applicant did not report this account on his July 2014 clearance application (GE 1), and initially denied having any financial accounts he was required to disclose during his October 2014 interview with a Government investigator (GE 2). When he was confronted with the debt, Applicant stated that it was for unpaid maintenance fees related to the purchase of a time share in a foreign country in April 2005. Applicant stated that he had no intention of paying the debt.

In 2004 or 2005, while on a family vacation in a foreign country, Applicant attended a time-share solicitation. Impressed with the presentation, he bought two time shares for $30,000 each, charging $30,000 to his credit card, and paying the balance when he returned home. (Tr. 33-34). He signed a contract, but does not remember what he signed, and did not read the fine print (Tr. 41-42). He first experienced problems with using the time share the next year (Tr. 35-36). When he experienced the same problems the following year, he concluded that he had been duped. He paid the yearly maintenance fee for two or three years (about $3,000 annually for the two units) (Tr. 43- 44, 48), but then decided to stop paying. He has not made any payments in about seven years (Tr. 38).

Although Applicant has received telephone solicitations to sell his interest in the time share, he has not done so. Nor has he considered taking legal action against the time share (Tr. 39). He has never tried to contact the creditor (Tr. 49), although he still receives annual invoices for the maintenance fees (Tr. 44). The foreign country has contacted him by telephone on several occasions about a fraud investigation into the time share company, but Applicant has not been interested (Tr. 48, 53). In January 2016, the foreign country sent Applicant the necessary form to participate in the fraud investigation (AE K). Applicant never followed up with the investigation, and he could not say why not (Tr. 55).

Applicant has documented no credit or financial counseling, but his financial documents and tax returns (AE B-J) prove that money is not the limiting factor. He provided no work or character references, or any evidence of community involvement.

The adjudicative guidelines (AG) list factors to evaluate a person’s suitability for access to classified information. Administrative judges must assess disqualifying and mitigating conditions under each issue fairly raised by the facts and situation presented. Each decision must also show a fair, impartial, and commonsense consideration of the factors listed in AG ¶ 2(a). The applicability of a disqualifying or mitigating condition is not, by itself, conclusive. However, specific guidelines should be followed when a case can be measured against them, as they are policy guidance governing the grant or denial of a clearance. Considering the SOR allegations and the evidence as a whole, the relevant adjudicative guideline is Guideline F (Financial Considerations).

Security clearance decisions resolve whether it is clearly consistent with the national interest to grant or continue an applicant’s security clearance. The Government must prove, by substantial evidence, disputed facts alleged in the SOR. If it does, the burden shifts to applicant to refute, extenuate, or mitigate the Government’s case. Because no one has a right to a security clearance, the applicant bears a heavy burden of persuasion.

Persons with access to classified information enter into a fiduciary relationship with the Government based on trust and confidence. Therefore, the Government has a compelling interest in ensuring each applicant possesses the required judgement, reliability, and trustworthiness of those who must protect national interests as their own. The “clearly consistent with the national interest” standard compels deciding any reasonable doubt about an Applicant’s suitability for access in favor of the Government.7

The Government established a case for disqualification under Guideline F, and Applicant did not mitigate the security concerns. The Government established over $22,000 in delinquent debt that Applicant simply walked away from. In this instance, Applicant has the means to satisfy this debt, but is unwilling to do so. In addition, Applicant does not fully meet any of the mitigating conditions for financial considerations. His financial issue is recent, recurrent, and unlikely to recur.9 The financial issue was not due to circumstances beyond control, and his handling of the issue was not responsible. He pursued none of the potential remedies available to him, including the foreign government fraud investigation he was invited to participate in January 2016. He has made no effort to satisfy this debt, much less a good-faith effort. Applicant’s financial history suggests that he would not benefit from financial or credit counseling. Moreover this is a case of unwillingness, not inability, to pay. Nevertheless, this debt has clearly not been resolved. Finally, he provided no favorable character and work references to establish a “whole-person” analysis supporting a favorable clearance action. Accordingly, I conclude Guideline F against Applicant.

Paragraph 1. Guideline F: AGAINST APPLICANT

Subparagraph a: Against Applicant

Under the circumstances presented by the record in this case, it is not clearly consistent with the national interest to grant or continue a security clearance for Applicant. Clearance denied.

JOHN GRATTAN METZ, JR Administrative Judge

Consisting of the transcript (Tr.), Government exhibits (GE) 1-3, and Applicant exhibits (AE) A-K.

DoD acted under Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; DoD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) effective within the DoD on 1 September 2006. Applicant’s August 2014 credit report (GE 3), states that the account was opened in November 2004, and last acted upon in January 2008. The creditor is located in the United States (U.S.).

The account does not appear on Applicant’s September 2012 (AE E), June 2014 (AE F), and May 2015 (AE G) credit reports because each of those reports are by a different credit bureau than the one that reported the debt on his August 2014 credit report (GE 3).

During his interview, Applicant stated that he paid $60,000 for the time share, using his credit card. He described in detail that he thought he had been the victim of fraud in purchasing the time share. He also stated that he was contesting the fees with the time share company. He did not know if the time share was owned by a foreign or U.S. company.

Believing, perhaps correctly, that the solicitations were more scam than legitimate offer. See, Department of the Navy v. Egan, 484 U.S. 518 (1988).

¶19(a) inability or unwillingness to satisfy debts; ¶20(a) the behavior happened so long ago, was so infrequent, or occurred under such circumstances that it is unlikely to recur . . . ;

¶20(b) the conditions that resulted in the financial problem were largely beyond the person’s control . . . and the individual acted responsibly under the circumstances;

¶20(d) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts;

¶20(c) the person has received or is receiving counseling for the problem and there are clear indications that the problem is being resolved or is under control;

His only witness, his banker, established that Applicant was a good credit risk with a long banking history.