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Summary

The applicant, a 66-year-old CEO of a privately-held corporation, faced security concerns under Guideline B (Foreign Influence), Guideline E (Personal Conduct), and Guideline L (Outside Activities). While he successfully mitigated concerns related to Outside Activities, he failed to address issues stemming from his foreign financial interests and personal conduct, leading to a denial of his security clearance.

Under Guideline B (Foreign Influence), Guideline E (Personal Conduct), and Guideline L (Outside Activities), the Statement of Reasons alleged the following: Applicant's wife has a sister who is a citizen and resident of South Korea. Applicant's sister-in-law is a lay religious worker serving the poor. Until January 2004, Applicant and his wife sent approximately $1,000 a month to the wife's sister for her support. (Answer to SOR at 9.) (4) Applicant surmised his wife likely continues to send money to her sister without his knowledge. (Tr. 62.) (3.a). Applicant travels to South Korea at least once a year, and sometimes more often. (Tr. 96-97.) When his visits South Korea, Applicant regularly sees his sister-in-law, cousin-in-law, and former high school and college classmates, who are now retired and with whom he has maintained friendships. (Tr. 96-97.) These individuals are all citizens and residents of South Korea (3.b). Applicant failed to disclose his business relationships with South Korean entities on his security clearance application (SF-86) (2.a). Applicant was president and chief executive officer of a company with revenues of approximately $45 million a year (1.a). The company, founded by Applicant in 1986, provides information technology and information services to private, state, and federal clients and employs approximately 400 people (1.b). In partnership with his corporation, Applicant provided approximately $500,000 in about 1999 to form a U.S. company that partnered with a U.S. university and a South Korean university for a work site in South Korea to carry out product research and development (1.c). Applicant owed 36% of the company, and that 9% was owned by a U.S. citizen; 5% was owned by a South Korean partner of Applicant, 16% and 14% interests were owned by South Korean nationals, and the ownership of 20% was unknown (1.d). That Applicant provided funding for the company because he wanted to help his South Korean friend, a professor and research dean, start a business (1.e). The company funded by Applicant was granted $300,000 from May 1, 2002 through April 30, 2003, by an entity of the South Korean government (1.f). The company funded by Applicant was granted $63,000 during the period April 1, 2002, through March 30, 2003, by an entity of the South Korean government (1.g). The company funded by Applicant was granted $62,000 during the period August 1, 2003, through July 31, 2004, by an entity of the South Korean government (1.h). Applicant travels frequently to Korea, in part to obtain updates from the company's offices in South Korea (1.i). Applicant donated at least $100,000 to a South Korean university in at least 2000 (1.j). A South Korean university paid Applicant's U.S. company about $1,700 monthly to employ six South Korean citizens at the company (1.k). Applicant received an honorary doctorate degree from a South Korean university in April 2004 (1.l).

The judge denied the clearance. The government raised disqualifying conditions E2.A12.1.2, E2.A12.1.2.1, E2.A12.1.2.2, E2.A12.1.2.3. The judge applied mitigating conditions E2.A12.1.3. The decision turned on the following: The applicant failed to mitigate security concerns related to Guideline E, Personal Conduct, due to omissions on his security clearance application regarding foreign business interests; The applicant's ties to foreign nationals and financial interests in South Korea raised significant concerns under Guideline B, Foreign Influence.

Why the Applicant Was Denied

• The applicant failed to mitigate security concerns related to Guideline E, Personal Conduct, due to omissions on his security clearance application regarding foreign business interests.
• The applicant's ties to foreign nationals and financial interests in South Korea raised significant concerns under Guideline B, Foreign Influence.

Conditions Referenced

Key Rule Quoted

“"[N]o one has a 'right' to a security clearance."”

Procedural Posture

• SOR issuedMar 18, 2005
• Answer filedApr 13, 2005
• Hearing heldOct 19, 2005
• Decision dateMar 30, 2006

Cite For

• Failure to Disclose Foreign Financial Interests Under Guideline B
• Mitigation of Security Concerns Related to Outside Activities Under Guideline L
• Impact of Personal Conduct on Security Clearance Eligibility Under Guideline E