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ISCR Case 15-07876.h1 — CASE

ISCR Case 15-07876.h1denied

Case Headnote

ISCR Case No. 15-07876.h1

deniedAug 11, 2017· Hon. Richard A. Cefola· hearing

Summary

A 44-year-old defense contractor employee was denied a security clearance due to concerns under Guideline B (Foreign Influence) and Guideline C (Foreign Preference), stemming from his extensive ties to Australia. The applicant has continuously resided in Australia since 2004, where his wife, three children, and step-son are all citizens and residents. Additionally, his mother-in-law and father-in-law are Australian citizens and residents, with his mother-in-law running a non-profit and his father-in-law working as a banker.

The applicant also maintains significant financial interests in Australia, including two houses valued at approximately $1,800,000 with about $300,000 in equity, and an Australian bank account holding around $50,000. Although the applicant is solely a U.S. citizen working for a U.S. contractor, his long-term residency and family connections in Australia raised disqualifying conditions.

The judge determined that these connections, including his foreign spouse and children, substantial property, and financial interests, created a risk of foreign influence and divided allegiance that was not sufficiently mitigated. Consequently, the security clearance was denied.

Why the Applicant Was Denied

The applicant has resided in Australia since 2004, creating significant foreign ties.
The applicant's wife and children are Australian citizens, raising concerns of divided allegiance.
The applicant owns substantial property and financial interests in Australia, increasing the risk of foreign influence.

Conditions Referenced

Disqualifying

AG ¶ 7(a)raisedContact with Foreign Family Members
AG ¶ 7(b)raisedConnections to Foreign Persons Creating Potential Conflict of Interest
AG ¶ 7(e)raisedShared Living Quarters with Foreign Nationals
AG ¶ 7(f)raisedSubstantial Business, Financial, or Property Interests in a Foreign Country

Key Rule Quoted

“Any doubt concerning personnel being considered for national security eligibility will be resolved in favor of national security.”

Procedural Posture

SOR issuedApr 5, 2016Amended on July 18, 2016
Answer filedMay 17, 2016
Hearing heldDec 16, 2016Originally scheduled for September 12, 2016, but rescheduled due to applicant's ship assignment.
Decision dateAug 11, 2017

Cite For

Disqualifying Conditions Under Guideline B Due to Foreign Influence
Impact of Foreign Financial Interests on Security Clearance Eligibility
Consideration of Family Ties in Security Clearance Decisions

Editorial summary generated for research. Not legal advice; not a prediction. Verify against the full decision before relying on any quoted language.

Standardized Decision Profile

SEAD-4 Guideline B (Foreign Influence) · descriptive summary of a decided case

Posture: Decision on RecordDecided: denied

The judge found against the applicant on all allegations under Guideline B concerning foreign influence due to the applicant's significant ties to Australia, including a spouse, children, and substantial financial interests. The applicant's relationships and interests in Australia raised security concerns that were not mitigated by any claimed conditions.

¶	Allegation	Finding	Relationship	Country	Response	Disqualifying (¶7)	Mitigating applied (¶8)	Mitigation
1.a	Applicant has resided in Australia continuously since 2004.	Against Applicant	Unspecified Foreign Relationship Other	Australia	Admitted	(a) contact with a foreign family member/associate/friend creating a heightened risk of exploitation (b) connections creating a potential conflict of interest (e) shared living quarters creating a heightened risk (f) substantial foreign business, financial, or property interests	—	—
1.b	Applicant’s wife is a citizen and resident of Australia.	Against Applicant	Spouse Dual or Foreign Citizen Immediate Family	Australia	Admitted	(a) contact with a foreign family member/associate/friend creating a heightened risk of exploitation (b) connections creating a potential conflict of interest (e) shared living quarters creating a heightened risk (f) substantial foreign business, financial, or property interests	—	—
1.c	Applicant has three children who are dual nationals of Australia and the United States.	Against Applicant	Extended Family in Foreign Country Immediate Family	Australia	Admitted	(a) contact with a foreign family member/associate/friend creating a heightened risk of exploitation (b) connections creating a potential conflict of interest (e) shared living quarters creating a heightened risk (f) substantial foreign business, financial, or property interests	—	—
1.d	Applicant’s step-son is a citizen and resident of Australia.	Against Applicant	Extended Family in Foreign Country Immediate Family	Australia	Admitted	(a) contact with a foreign family member/associate/friend creating a heightened risk of exploitation (b) connections creating a potential conflict of interest (e) shared living quarters creating a heightened risk (f) substantial foreign business, financial, or property interests	—	—
1.e	Applicant’s mother-in-law and father-in-law are citizens and residents of Australia.	Against Applicant	In Law in Foreign Country Immediate Family	Australia	Admitted	(a) contact with a foreign family member/associate/friend creating a heightened risk of exploitation (b) connections creating a potential conflict of interest (e) shared living quarters creating a heightened risk (f) substantial foreign business, financial, or property interests	—	—
1.f	His mother-in-law runs a non-profit organization in Australia. His father-in-law is a banker at a private bank.	Against Applicant	In Law in Foreign Country Immediate Family	Australia	Admitted	(a) contact with a foreign family member/associate/friend creating a heightened risk of exploitation (b) connections creating a potential conflict of interest (e) shared living quarters creating a heightened risk (f) substantial foreign business, financial, or property interests	—	—
1.g	Applicant owns two houses in Australia worth about $1,800,000, with equity of about $300,000.	Against Applicant	Foreign Real Estate Financial or Property Interest	Australia	Admitted	(a) contact with a foreign family member/associate/friend creating a heightened risk of exploitation (b) connections creating a potential conflict of interest (e) shared living quarters creating a heightened risk (f) substantial foreign business, financial, or property interests	—	—
1.h	He maintains an Australian bank account valued at about $50,000.	Against Applicant	Foreign Bank Account or Investment Financial or Property Interest	Australia	Admitted	(a) contact with a foreign family member/associate/friend creating a heightened risk of exploitation (b) connections creating a potential conflict of interest (e) shared living quarters creating a heightened risk (f) substantial foreign business, financial, or property interests	—	—

Descriptive standardized rendering of a decided public case (Guideline B). The verbatim source decision is shown in full below.

Standardized Decision Profile

SEAD-4 Guideline C (Foreign Preference) · descriptive summary of a decided case

Posture: Decision on RecordDecided: denied

The judge found that the applicant did not exhibit any foreign preference that would raise security concerns. Specifically, the applicant is solely a U.S. citizen and has not applied for or acquired foreign citizenship, nor has he engaged in any activities that would indicate a preference for a foreign country over the United States. Therefore, the judge ruled in favor of the applicant on the allegations under Guideline C.

¶	Allegation	Finding	Type	Response	Disqualifying (¶10)	Mitigating applied (¶11)	Mitigation
2.a	Applicant is solely a U.S. citizen, working for a U.S. contractor, but does live in Australia with his family.	For Applicant	Unspecified Foreign Preference	Admitted	—	—	—

Descriptive standardized rendering of a decided public case (Guideline C). The verbatim source decision is shown in full below.

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

HEARING

APPEARANCES

DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS

In the matter of: ) ) ) ISCR Case No. 15-07876 ) ) Applicant for Security Clearance )

For Government: Andrew Henderson, Esq., Department Counsel For Applicant: Pro se

August 11, 2017 ______________

STATEMENT OF CASE

______________

CEFOLA, Richard A., Administrative Judge:

Statement of the Case

On April 5, 2016, as amended on July 18, 2016, in accordance with DoD Directive 5220.6, as amended (Directive), the Department of Defense issued Applicant a Statement of Reasons (SOR) alleging facts that raise security concerns under Guidelines B and C.1 The SOR further informed Applicant that, based on information available to the government, DoD adjudicators could not make the preliminary affirmative finding it is clearly consistent with the national interest to grant or continue Applicant’s security clearance.

Applicant answered the SOR on May 17, 2016 and on August 5, 2016, and requested a hearing before an administrative judge. (Answer.) The case was assigned to me on September 12, 2016. The Defense Office of Hearings and Appeals (DOHA) issued an initial notice of hearing on September 12, 2016. However, as Applicant was onboard a ship at sea, that notice was amended on November 29, 2016, scheduling the hearing for December 16, 2016. The hearing was convened as scheduled. The Government offered Exhibits (GXs) 1 through 3, which were admitted without objection, but no request to take Administrative Notice of the country of Australia was provided. Applicant testified on his own behalf. Applicant presented no documentation. The record was closed on December 16, 2016. DOHA received the transcript of the hearing (TR) on December 27, 2016.

FINDINGS OF FACT

Applicant admitted all the allegations in Paragraph 1 of the SOR, but denied the allegation of Paragraph 2. After a thorough and careful review of the pleadings, exhibits, and testimony, I make the following findings of fact.

Applicant is a 44-year-old employee of a defense contractor. (TR at page 12 lines 10–15, and GX 1 at page 5.) He has been employed with the defense contractor since September of 2007. (GX 1 at page 11.) He has held a security clearance while serving as a reservist in the Merchant Marines from 1999–2007. (TR at page 12 line 25 to page 13 line 8, and GX 1 at pages 45–46.) He is married to an Australian citizen, has three dual national children, and an Australian step-son. (GX 1 at pages 27–30.)

Guideline B – Foreign Influence & Guideline C - Foreign Preference

1.a. and 2.a. Applicant has resided in Australia continuously since 2004. (TR at page 15 lines 2–6.) Although he obtained permanent residence status in 2012, he remains a U.S. citizen. (TR at page 20 line 22 to page 21 line 14, and at page 23 line 15 to page 24 line 9.)

1.b. Applicant’s wife is a citizen and resident of Australia. (TR at page 26 lines 15–25.)

1.c. and 1.d. As noted above, Applicant has three children who are dual nationals of Australia and the United States. (TR at page 15 line 7 to page 16 line 15.) They live with Applicant and his wife in Australia. (Id., and GX 1 at pages 27–29.) Applicant’s step-son is a citizen and resident of Australia. (TR at page 19 line 3 to page 20 line 1, at page 27 lines 1–17, and GX 1 at pages 29–30.)

1.e. and 1.f. Applicant mother-in-law and father-in-law are citizens and residents of Australia. (TR at page 22 lines 5–9, and at page 27 line 18 to page 28 line 5.) His mother-in-law “runs . . . a non-profit . . . organization in Australia.” (TR at page 27 lines 18–22.) His father-in-law is “a banker . . . a private bank . . . more of an investment company.” (TR at page 27 line 23 to page 28 line 5.)

1.g. and 1.h. Applicant owns two houses in Australia worth about $1,800,000, with equity of about $300,000. (TR at page 18 line 8 to page 19 line 2, and at page 28 line 6 to page 29 line 1.) He maintains an Australian bank account valued at about $50,000. (TR at page 21 line 15 to page 22 line 4.)

POLICIES

When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines (AG). In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which are to be used in evaluating an applicant’s eligibility for access to classified information.

These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, administrative judges apply the guidelines in conjunction with the factors listed in AG ¶ 2 describing the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶ 2(a), the entire process is a conscientious scrutiny of a number of variables known as the whole-person concept. The administrative judge must consider all available, reliable information about the person, past and present, favorable and unfavorable, in making a decision.

The protection of the national security is the paramount consideration. AG ¶ 2(b) requires that “[a]ny doubt concerning personnel being considered for national security eligibility will be resolved in favor of national security.” In reaching this decision, I have drawn only those conclusions that are reasonable, logical, and based on the evidence contained in the record.

Directive ¶ E3.1.14, requires the Government to present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, the “applicant is responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by the applicant or proven by Department Counsel, and has the ultimate burden of persuasion as to obtaining a favorable clearance decision.”

A person who applies for access to classified information seeks to enter into a fiduciary relationship with the Government predicated upon trust and confidence. This relationship transcends normal duty hours and endures throughout off-duty hours. The Government reposes a high degree of trust and confidence in individuals to whom it grants access to classified information. Decisions include, by necessity, consideration of the possible risk the applicant may deliberately or inadvertently fail to protect or safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation as to potential, rather than actual, risk of compromise of classified information.

Section 7 of Executive Order (EO) 10865 provides that adverse decisions shall be “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information).

ANALYSIS

Guideline B - Foreign Influence

The security concern relating to the guideline for Foreign Influence is set out in AG ¶ 6:

Foreign contacts and interests, including, but not limited to, business, financial, and property interests, are a national security concern if they result in divided allegiance. They may also be a national security concern if they create circumstances in which the individual may be manipulated or induced to help a foreign person, group, organization, or government in a way inconsistent with U.S. interests or otherwise made vulnerable to pressure or coercion by any foreign interest. Assessment of foreign contacts and interests should consider the country in which the foreign contact or interest is located, including, but not limited to, considerations such as whether it is known to target U.S. citizens to obtain classified or sensitive information or is associated with a risk of terrorism.

The guideline notes several conditions that could raise security concerns under AG ¶ 7. Four are potentially applicable in this case:

(a) contact, regardless of method, with a foreign family member, business or professional associate, friend, or other person who is a citizen of or resident in a foreign country if that contact creates a heightened risk of foreign exploitation, inducement, manipulation, pressure, or coercion;

(b) connections to a foreign person, group, government, or country that create a potential conflict of interest between the individual's obligation to protect classified or sensitive information or technology and the individual's desire to help a foreign person, group, or country by providing that information or technology;

(e) shared living quarters with a person or persons, regardless of citizenship status, if that relationship creates a heightened risk of foreign inducement, manipulation, pressure, or coercion; and

(f) substantial business, financial, or property interests in a foreign country, or in any foreign owned or foreign-operated business that could subject the individual to a heightened risk of foreign influence or exploitation or personal conflict of interest.

Applicant’s wife, children and financial interests all are in Australia. The evidence is sufficient to raise these disqualifying conditions.

AG ¶ 8 provides conditions that could mitigate security concerns. I considered all of the mitigating conditions under AG ¶ 8 including: (a) the nature of the relationships with foreign persons, the country in which these persons are located, or the positions or activities of those persons in that country are such that it is unlikely the individual will be placed in a position of having to choose between the interests of a foreign individual, group, organization, or government and the interests of the United States;

(b) there is no conflict of interest, either because the individual’s sense of loyalty or obligation to the foreign person, or allegiance to the group, government, or country is so minimal, or the individual has such deep and longstanding relationships and loyalties in the United States, that the individual can be expected to resolve any conflict of interest in favor of the U.S. interest;

(c) contact or communication with foreign citizens is so casual and infrequent that there is little likelihood that it could create a risk for foreign influence or exploitation;

(d) the foreign contacts and activities are on U.S. Government business or are approved by the agency head or designee;

(e) the individual has promptly complied with existing agency requirements regarding the reporting of contacts, requests, or threats from persons, groups, or organizations from a foreign country; and

(f) the value or routine nature of the foreign business, financial, or property interests is such that they are unlikely to result in a conflict and could not be used effectively to influence, manipulate, or pressure the individual.

None of these apply. Save his parents and a sibling, all of his relationships and financial interests reside in Australia.

Guideline C - Foreign Preference

The security concern relating to the guideline for Foreign Preference is set out in AG ¶ 9:

When an individual acts in such a way as to indicate a preference for a foreign country over the United States, then he or she may provide information or make decisions that are harmful to the interests of the United States. Foreign involvement raises concerns about an individual's judgment, reliability, and trustworthiness when it is in conflict with U.S. national interests or when the individual acts to conceal it. By itself; the fact that a U.S. citizen is also a citizen of another country is not disqualifying without an objective showing of such conflict or attempt at concealment. The same is true for a U.S. citizen's exercise of any right or privilege of foreign citizenship and any action to acquire or obtain recognition of a foreign citizenship.

The guideline notes several conditions that could raise security concerns under AG ¶ 10, including:

(a) applying for and/or acquiring citizenship in any other country;

(b) failure to report, or fully disclose when required, to an appropriate security official, the possession of a passport or identity card issued by any country other than the United States;

(d) participation in foreign activities, including but not limited to:

(1) assuming or attempting to assume any type of employment, position, or political office in a foreign government or military organization; and

(2) otherwise acting to serve the interests of a foreign person, group, organization, or government in any way that conflicts with U.S. national security interests;

(e) using foreign citizenship to protect financial or business interests in another country in violation of U.S. law; and

(f) an act of expatriation from the United States such as declaration of intent to renounce U.S. citizenship, whether through words or actions.

However, I find that none of these are applicable, here. Applicant is solely a U.S. citizen, working for a U.S. contactor, but does live in Australia with his family.

WHOLE PERSON CONCEPT

Under the whole-person concept, the administrative judge must evaluate an applicant’s eligibility for a security clearance by considering the totality of the applicant’s conduct and all relevant circumstances. The administrative judge should consider the nine adjudicative process factors listed at AG ¶ 2(d):

(1) the nature, extent, and seriousness of the conduct; (2) the circumstances surrounding the conduct, to include knowledgeable participation; (3) the frequency and recency of the conduct; (4) the individual’s age and maturity at the time of the conduct; (5) the extent to which participation is voluntary; (6) the presence or absence of rehabilitation and other permanent behavioral changes; (7) the motivation for the conduct; (8) the potential for pressure, coercion, exploitation, or duress; and (9) the likelihood of continuation or recurrence.

Under AG ¶ 2(c), the ultimate determination of whether to grant eligibility for a security clearance must be an overall commonsense judgment based upon careful consideration of the guidelines and the whole-person concept.

I considered the potentially disqualifying and mitigating conditions in light of all facts and circumstances surrounding this case. I have incorporated my comments under Guidelines B and C in my whole-person analysis. Applicant has submitted nothing in this regard.

Overall, the record evidence leaves me with questions and doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant has not mitigated the Foreign Influence security concern.

FORMAL FINDINGS

Formal findings for or against Applicant on the allegations set forth in the SOR, as required by ¶ E3.1.25 of the Directive, are:

Paragraph 1, Guideline B: AGAINST APPLICANT

Subparagraphs 1.a.~1.h.: Against Applicant

Paragraph 2, Guideline C: FOR APPLICANT

Subparagraph 2.a.: For Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is not clearly consistent with the national interest to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is denied.

________________________ Richard A. Cefola Administrative Judge

FOOTNOTES

1 I considered the previous Adjudicative Guidelines, effective September 1, 2006, as well as the new Adjudicative Guidelines, effective June 8, 2017. My decision would be the same if the case was considered under the previous Adjudicative Guidelines, effective September 1, 2006.