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ISCR 08-11940.h1: Guideline F security clearance hearing, granted, reversed on appeal (2009) · CASE

Case record

A decided public DOHA case, shown for research, not advice or a prediction.

Decision Date12/15/2009
StatusgrantedReversed on appeal
LevelHEARING
TypeSTANDARD ISCR
Reversed on appeal — clearance denied
The judge granted eligibility below, but the DOHA Appeal Board reversed that decision. The applicant did not keep the clearance. The Appeal Board decided on 12/2/2010.
Read the appeal decision →
Related decisionsSee the appeal decision (Case 08-11940.a2) →See the hearing decision (Case 08-11940.h2) →See the hearing decision (Case 08-11940.a1) →
From the decisionFacts this decision states. Hover a value to see the exact sentence.
Delinquent debt cited$344,000
Participants
Judge: Richard A. Cefola
Applicant's Counsel: Alan V. Edmunds
Guidelines Evaluated
- FFinancial Considerations · For Applicant
Other decisions whose allegations most closely resemble this one’s. Similarity of the allegations only.
Finding similar decisions…

ISCR Case 08-11940.h1grantedReversed on appeal

Case headnote

ISCR Case No. 08-11940.h1

grantedReversed on appealDec 15, 2009· Hon. Richard A. Cefola· hearing

Summary

This security clearance case, decided under Guideline F (Financial Considerations), involved an applicant who experienced significant financial difficulties. The Statement of Reasons alleged four specific debts totaling over $1.1 million across two properties: a $344,000 first mortgage and an $86,000 second mortgage on Property #1, and a $567,000 first mortgage and a $140,000 second mortgage on Property #2. These allegations raised Disqualifying Conditions AG ¶ 19(a) and AG ¶ 19(c).

The judge found that the applicant's financial issues stemmed from circumstances largely beyond their control, specifically the real estate market collapse and the loss of their spouse's employment. All alleged debts related to the foreclosed properties were resolved, meaning the applicant no longer owed anything on them, and they were current with all other financial obligations.

Mitigating Conditions AG ¶ 20(a) and AG ¶ 20(b) were applied. Supportive testimonies from colleagues and superiors affirmed the applicant's trustworthiness and good character. Based on the resolution of the debts and the mitigating factors, the security clearance was GRANTED.

Why the applicant prevailed

The applicant's financial difficulties arose from circumstances beyond his control, including the real estate market collapse and loss of employment of his spouse.
The applicant has resolved all debts related to foreclosures and is current with all financial obligations.
Supportive testimonies from colleagues and superiors indicated the applicant's trustworthiness and good character.

Conditions referenced

Disqualifying

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

Mitigating

AG ¶ 20(a)appliedBehavior Happened so Long Ago, Was Infrequent, or Occurred Under Circumstances Unlikely to Recur
AG ¶ 20(b)appliedConditions That Resulted in Financial Problems Were Largely Beyond the Person's Control

Key rule quoted

“The protection of the national security is the paramount consideration.”

Procedural posture

SOR issuedJun 22, 2009
Answer filedJul 8, 2009
Hearing heldSep 16, 2009
Decision dateDec 15, 2009

Cite for

Mitigation of Financial Issues Under Guideline F Due to External Circumstances
Importance of Supportive Character References in Security Clearance Cases
Resolution of Debts as a Factor in Granting Security Clearance

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

From the decision

Facts this decision states, each with the exact sentence it comes from. Descriptive of the record, not an assessment.

Delinquent debt cited: $344,000: “It is alleged that the Applicant owes $344,000 and $86,000, respectively on a first and a second mortgage on Property #1.”

Standardized Decision Profile

SEAD-4 Guideline F · descriptive summary of a decided case

Posture: Decision on RecordDecided: granted

The judge found that the applicant's financial difficulties were primarily due to circumstances beyond his control, including the collapse of the real estate market and loss of employment. All debts alleged in the Statement of Reasons were either resolved or did not exist, leading to a decision in favor of the applicant on all financial considerations.

The sub-allegation breakdown is part of the Professional plan. See what it includes.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation

Descriptive standardized rendering of a decided public case. 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. 08-11940 SSN: ) ) Applicant for Security Clearance )

For Government: Jennifer Goldstein, Esquire, Department Counsel For Applicant: Alan V. Edmunds, Esquire Stephanie N. Mendez, Esquire

December 15, 2009

______________

STATEMENT OF CASE

______________

CEFOLA, Richard A., Administrative Judge:

Applicant submitted his Electronic Questionnaires for Investigations Processing (e-QIP), on September 2, 2008. On June 22, 2009, the Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) detailing the security concerns under Guideline F for Applicant. The action was taken under Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the revised adjudicative guidelines (AG) promulgated by the President on December 29, 2005, and effective within the Department of Defense for SORs issued after September 1, 2006.

Applicant acknowledged receipt of the SOR on June 25, 2009. He answered the SOR in writing through counsel on July 8, 2009, and requested a hearing before an Administrative Judge. DOHA received the request soon thereafter, and I received the case assignment on August 4, 2009. I granted Applicant’s request for a delay until September 16, 2009, in order for his counsel to be available. DOHA issued a notice of hearing on August 5, 2009, and I convened the hearing as scheduled on September 16, 2009. The Government offered Exhibits (GXs) 1 through 8, which were received without objection. Applicant testified on his own behalf, as did four other witnesses, and submitted Exhibits (AppXs) A through BB, without objection. DOHA received the transcript of the hearing (TR) on September 23, 2009. The record closed on September 16, 2009, the date of the hearing. Based upon a review of the case file, pleadings, exhibits, and testimony, eligibility for access to classified information is granted.

FINDINGS OF FACT

In his Answer to the SOR, Applicant through counsel denied the factual allegations in all of the subparagraphs of the SOR.

Guideline F - Financial Considerations

In 2003, the Applicant purchased Property #1 as a residence; and in 2005 he purchased Property #2 for a new residence, thus turning Property #1 into a rental (TR at page 57 line 3 to page 59 line 16, and at page 59 line 17 to page 61 line 15). The original appraisal price for Property #1 was fraudulently set high by the original lender, and the Applicant sued successfully in this regard (TR at page 48 line 16 to page 49 line 4, and AppXs A and B). This is evidenced by a Declaration by his former Counsel, who represented him in this matter, and by a Stipulation of Settlement from the lender (AppXs A and B).

In 2008, the real estate market collapsed, and the Applicant’s spouse lost her job (TR at page 53 lines 3–11, and at page 61 line 16 to page 62 line 2). In addition, the renter of Property #1 moved out, and he was unable to rent the property (Id). This caused the Applicant financial difficulties.

1.a. and 1.d. It is alleged that the Applicant owes $344,000 and $86,000, respectively on a first and a second mortgage on Property #1. This property was foreclosed on by the lenders, and the Applicant now owes nothing on these debts (TR at page 47 lines 1–9 and 22–25, at page 52 lines 18–24, and AppXs A, C, D, J, Y and BB). This is evidenced by a Declaration by his former Counsel, a Notice of Trustee’s Sale, a Home Loan 1099-A Tax Form, a Grant Deed, a Trustee’s deed Upon Sale, and a June 2009 Credit Report (AppXs A, C, D, J, Y and BB).

1.b. and 1.c. It is alleged that the Applicant owes $567,000 and $140,000, respectively on a first and a second mortgage on Property #2. This property was also foreclosed on by the lenders, and the Applicant, again, owes nothing on these debts (TR at page 47 lines 10–21, at page 52 line 25 to page 53 line 2, and AppXs J, Z, and AA). This is evidenced by a Grant Deed, a Trustee’s deed Upon Sale, and a June 2009 Credit Report ( AppXs J, Z, and AA).

The Applicant is now current with all of his debts (see AppX J). He has savings bonds with a current redemption in excess of $27,000 (AppX K); an investment portfolio valued at about $9,800 (AppX L); and about $2,255 and about $6,331 in two IRAs (AppXs N and O).

POLICIES

When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the revised adjudicative guidelines (AG). In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which are useful 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, these guidelines are applied in conjunction with the factors listed in the adjudicative process. The administrative judge’s over-arching adjudicative goal is a fair, impartial and commonsense decision. According to AG ¶ 2(c), 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 access to classified information 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. Likewise, I have avoided drawing inferences grounded on mere speculation or conjecture.

Under Directive ¶ E3.1.14, the Government must 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 applicant or proven by Department Counsel. . . .” The applicant has the ultimate burden of persuasion as to obtaining a favorable security decision.

A person who seeks access to classified information enters 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 10865 provides that 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 F - Financial Considerations

The security concern relating to the guideline for Financial Considerations is set out in AG ¶ 18:

Failure or inability to live within one's means, satisfy debts, and meet financial obligations may indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which can raise questions about an individual's reliability, trustworthiness and ability to protect classified information. An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds.

The guideline notes several conditions that could raise security concerns. Under AG ¶ 19(a), an Ainability or unwillingness to satisfy debts@ is potentially disqualifying. Similarly under AG ¶ 19(c), Aa history of not meeting financial obligations@ may raise security concerns. With the collapse of the real estate market, the Applicant became delinquent as to first and second mortgages on two separate properties. The evidence is thus sufficient to raise these potentially disqualifying conditions, requiring a closer examination.

The guideline also includes examples of conditions that could mitigate security concerns arising from financial difficulties. Under AG ¶ 20(a), the disqualifying condition may be mitigated where Athe behavior happened so long ago, was so infrequent, or occurred under such circumstances that it is unlikely to recur and does not cast doubt on the individual's current reliability, trustworthiness, or good judgment.@ All of the Applicant’s financial difficulties arose from the recent collapse of the real estate market, which was exacerbated by his spouse losing her job, and by the loss of a tenant. I find the behavior occurred under such unusual circumstances that it is unlikely to recur, and it does not raise concerns about his current reliability, trustworthiness, or good judgment. The evidence raises this potentially mitigating condition.

Under AG ¶ 20(b), it may be mitigating where Athe conditions that resulted in the financial problem were largely beyond the person's control (e.g., loss of employment, a business downturn, unexpected medical emergency, or a death, divorce or separation), and the individual acted responsibly under the circumstances.@ As noted above, the Applicant’s spouse lost her job, and his tenant moved out of his rental property. He now owes nothing on these debts. I find this potentially mitigating condition is a factor for consideration in this case.

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 the circumstances. 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.

The Administrative Judge should consider the nine adjudicative process factors listed at AG ¶ 2(a):

(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.

The Applicant has offered the very supportive testimonies of a colleague, of his Human Resources Manager, of the Vice President of his employer’s operations, and of the CEO and President of his employer’s firm (TR at page 23 line 23 to page 45 line 10). He has also offered Personal Letters of Reference from three colleagues, from the Facility Security Officer, and from the before mentioned CEO (AppXs Q~U). The CEO avers, in part, the following:

[The Applicant] . . . is a professional with an excellent reputation within the Navy C4I community as well as the Navy Information Assurance community. I have known [the Applicant] for over 3 years now and trust his judgment, value his advice and know him to be of fine character. I have been aware of his security clearance issues since 2009 and that has not changed my opinion of him nor altered our business relationship (AppX T).

During his testimony, the CEO further averred that the Applicant was trustworthy; and as such, should be granted a security clearance (TR at page 42 line 10 to page 45 line 10).

I considered all of the evidence, including the potentially disqualifying and mitigating conditions surrounding this case. Overall, the record evidence leaves me without questions or doubts as to Applicant’s eligibility and suitability for a security clearance. For all these reasons, I conclude Applicant has mitigated the security concerns arising from his financial considerations.

FORMAL FINDINGS

Formal findings for or against Applicant on the allegations set forth in the SOR, as required by section E3.1.25 of Enclosure 3 of the Directive, are:

Paragraph 1, Guideline F: FOR APPLICANT

Subparagraph 1.a: For Applicant

Subparagraph 1.b: For Applicant

Subparagraph 1.c: For Applicant

Subparagraph 1.d: For Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is clearly consistent with national security to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is granted.

Richard A. Cefola Administrative Judge