1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 07-07976 ) ) Applicant for Security Clearance ) Appearances For Government: Emilio Jaksetic, Esquire, Department Counsel For Applicant: Pro Se ______________ Decision ______________ RIVERA, Juan J., Administrative Judge: Applicant failed to mitigate the foreign influence security concerns arising from his relationship and contacts with Indian citizens and his financial interests in India. Eligibility for access to classified information is denied. Statement of the Case Applicant submitted his Questionnaire for Sensitive Positions or Standard Form (SF) 86 on October 2, 2006. On January 14, 2008, the Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR) detailing the Government’s security concerns under Guideline B (Foreign Influence) and Guideline E (Personal Conduct).1 The SOR detailed reasons why DOHA could not make the preliminary 1 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. 2 affirmative finding under the Directive that it is clearly consistent with the national interest to grant or continue a security clearance for him, and recommended referral to an administrative judge to determine whether a clearance should be granted, continued, denied, or revoked. Applicant answered the SOR on March 8, 2008, and requested a hearing before an administrative judge. The case was assigned to me on June 23, 2008. DOHA issued a notice of hearing on July 3, 2008. The hearing was convened as scheduled on August 4, 2008. The government offered exhibits (GE) 1 through 7, which were admitted without objections (Tr. 27).2 Applicant testified on his own behalf and presented no witnesses and no exhibits. DOHA received the transcript of the hearing (Tr.) on August 12, 2008. Procedural Issue The Government elected not to pursue the allegations in SOR ¶ 2.a (1)-(5) (Tr. 14). I entered findings “For Applicant” on these allegations. The allegations will not be discussed further. Findings of Fact Applicant admitted all SOR allegations under SOR ¶ 1, except for SOR ¶¶ 1.b, 1.p, and 1.q, which he denied. His admissions are incorporated herein as findings of fact. After a thorough review of all evidence of record, I make the following findings of fact. Applicant is a 48-year-old entrepreneur. One of his companies won a contract for services with a Government agency and he requires access to classified information to manage his company. He was born, raised, and educated in India. He completed a “diploma degree” in India, which Applicant described as equivalent to a U.S. master’s degree (Tr. 38, 96). In 1982, at age 23, he travelled to the United States for educational purposes (Tr. 33). In 1983, he received his bachelor’s degree in business administration from a U.S. university. He also has taken professional courses in real estate and information technology. After receiving his U.S. college degree, he established his own company and has been successful in his business. He came to the United States with little or no assets and has become a respected U.S. citizen. He became a naturalized U.S. citizen in 1994 and is proud to be an American and of his accomplishments. He surrendered his Indian passport when he became a naturalized U.S. citizen. Applicant testified he is loyal only to the United States and not to any other country or foreign interests (Tr. 22). The Government has not alleged and there is no evidence to show Applicant has been involved in any criminal or civil misconduct. He considers himself to be respected and trusted by friends and colleagues. 2 GE 7 was marked for identification and considered for administrative notice purposes only. 3 Applicant’s wife was born and raised in India. She came to the United States in 1983 under a student visa seeking a graduate degree (Tr. 22, 38). In 1984, she received a master’s degree in computer engineering from a U.S. university. Applicant married his wife in 1985, and they have two children, ages 16 and 15 (Tr. 95, 22, 41). Both children were born in the United States and attend high school in the United States. Applicant’s wife worked 12 years for an international organization in the United States. She is respected and trusted in that organization. She has been a legal resident alien in the United States since 2005. Applicant believes she will qualify for naturalization in 2009, at which time she will become a naturalized U.S. citizen (Tr. 22). Applicant has two brothers who were born and raised in India. His brother “H” is a citizen and resident of India. According to Applicant, H spends 50% of his time in the United States and 50% in India (Tr. 41). Brother “R” recently became a citizen of Singapore, where he resides (Tr. 42). The remainder of Applicant’s and his wife’s immediate and extended family members are residents and citizens of India. Between 1983 and 1997, Applicant travelled to India approximately four times to visit his and his wife’s family (Tr. 98). In 1997, he started to travel more frequently to India because of his mother’s health condition. From January 1998 to April 2004, Applicant moved his wife and children back to India to take care of his mother who was ill (Tr. 45). While in India, he and his family stayed in an apartment owned by his parents-in-law (Tr. 46). During this period, Applicant worked with his wife establishing her businesses in India (Tr. 46-47). Applicant and his wife have established several closely-related companies to take advantage of the United States and the Indian markets. Applicant established the U.S. side of the companies. His wife established the Indian side of the companies with Applicant’s assistance. In 1996, Applicant and his wife registered a web domain (X.com) with a view of creating an Internet portal in the United States where they could list items for sale in India (Tr. 47).3 In 1999, Applicant established the Internet portal that is maintained and serviced by him in the United States (Tr. 49). At the same time, his wife opened a business in India (Y) to list Indian items for sale in Applicant’s web site (Tr. 48). From 1998 to 2004, Applicant was the chief executive officer and director of his wife’s business in India (Y) (Tr. 62). In 2004, his wife became the chairperson of Y. Applicant claimed his current role in Y is that of advisor, assisting his wife to build business for her company, helping her to find a professional management team, and to sell her business (Tr. 62). A brochure from Applicant’s wife’s company identified her as the chair of Y (GE 3). That same brochure identified Applicant as a “professional in India” working for his wife’s company and listed Applicant’s personal contact information in India, including a physical address, e-mail address, and telephone number. A print out of the web site for X.com shows that during an interview of Applicant in May 2008, he was identified as the CEO of X.com (GE 4, Tr. 78-79). At his hearing, Applicant 3 Specific information concerning Applicant’s business enterprises has been withheld to protect his right to privacy. Such information is available in the transcript of the hearing and evidence submitted. 4 claimed that information was incorrect (Tr. 79). A “2007 Backgrounder” for X.com identified Applicant as the CEO and spokesperson for X.com, and Applicant’s wife was identified as the Chief Technology Officer for X.com (GE 5, Tr. 79). Applicant and his wife advertized their investment properties in India in X.com. Applicant also was the chairman and advisor of an Indian institute, a business established by his wife in India with Applicant’s assistance (Tr. 65-67). He testified his wife is now the chair of the institute, and that he only works with the institute in an advisory capacity (Tr. 69). He is in the process of severing all ties with the institute, however, he steps in and acts as the chairman for the institute when his wife is absent or he is asked (Tr. 88). Applicant is the owner, president, and chief executive officer (CEO) of “A Inc.,” a U.S. company he created around 1994 (Tr. 87). He worked for A Inc. from 1994 to 2007 (GE 1). A Inc. registered X.com (Applicant’s wife’s Indian company) in the United States (Tr. 85). His wife owns and is the director of “A Technologies Private Limited” (ATPL) a software developing company located in India with a marketing office in the United States (Tr. 69, 84-85). ATPL shares a web site with Applicant’s company A Inc (Tr. 89- 90). Applicant manages and services the server for both his company and his wife’s foreign company (Tr. 89-90). His wife conducts business for ATPL -- communicates with her Indian company and with clients of that company -- from Applicant’s home in the United States. At his hearing, Applicant testified that in November 2007, he resigned his position as president and CEO of A Inc., to distance himself from the day-to-day operations of that business company. He claimed he has not represented A Inc., since then (Tr. 6, 21). Most of Applicant’s trips to India since 2004 were for assisting his wife to establish her businesses. He sought and received Indian government permits and approvals for her businesses. Since 2007, Applicant has been helping his wife to merge her business with another Indian company. His latest trip was five weeks before his hearing (Tr. 90). He will continue his business travels to India until his wife’s company is sold or merged with another company (Tr. 90). He believes that after the merge is completed he will be able to shut down completely one of his wife’s businesses (Tr. 70). In 2001-2002, Applicant and his wife purchased an apartment in India for investment purposes. His wife owns two apartments in India (Tr. 104-106). Applicant personally manages all their real estate investments in India. As of his hearing day, Applicant and his wife still owned their apartments in India (Tr. 54). They rented one apartment to an Indian software developing company from 2001-2002 to 2007. As of 2007, the apartment has been vacant (Tr. 55). He estimated the value of the apartment to be around $35,000. When Applicant’s parents passed in 2002, he and his brothers inherited their parent’s home. Applicant purchased his brother’s interest in the property for $150,000. He estimated the value of this property at $250,000. As of the hearing date, he still owned his parent’s home and it was being rented to a U.S. company doing business in India (Tr. 55-58). Applicant’s rental properties in India generate approximately $49,500 a year. He estimated the total value of his properties in India at 5 $409,000 (Tr. 61). Applicant has a bank account in India worth approximately $43,000 (Tr. 62). He keeps the bank account in India for emergencies and to conduct business in India. In 2004, Applicant and his wife moved back to the United States because their children were growing too quickly and they wanted their children to receive an American education (Tr. 44). After establishing his family back in the United States, Applicant travelled to India twice in 2005 (Tr. 43, 51); once in 2006; four times in 2007 (he stayed in India approximately three weeks on each trip); and in 2008 he spent about 30% of this time in India (Tr. 107). His visits to India had several purposes: to assist his wife to locate professional management to run her business (Tr. 45, 51); to find a buyer for his wife’s business in India and his Internet company in the United States (Tr. 53); and to establish/continue his business relationships. Applicant and his wife own only one real estate property in the United States – their home. He estimated the value of their home to be around $1.5 million (Tr. 112). During his trips to India, Applicant was acted as spokesperson for a U.S. national association of businessmen seeking to extend their outreach into India and other countries. Because of his heritage, language ability, and professional reputation, Applicant was chosen to assist the association in its outreach program promoting U.S. interests in India. At his hearing, Applicant indicated he is beginning to distance himself from his duties with the association. I take administrative notice of the following facts. India is a democratic republic with a cooperative relationship with the United States. The United States recognizes India as a key to strategic U.S. interests, and has sought to strengthen its relationship with India. The United States and India have been committed to a strategic partnership that has seen expanded cooperation in the areas of civilian nuclear activities, civilian space programs, and technology trade. The United States is India's largest trading partner and investment partner. Notwithstanding, differences remain between the two countries, including concerns about India’s nuclear weapons program, abuses of human rights (although, the Indian government is considered to generally respect the human rights of its citizens), and its refusal to sign weapons non-proliferation treaties. Of grave concern is India’s increasing cooperation and partnership with Iran and its military forces. Despite advancements in the United States-Indian relations, India has been identified by the U.S. intelligence community as one of the most active collectors of sensitive U.S. economic, industrial, and proprietary information. The United States has sanctioned Indian scientists and chemical companies for transferring to Iran weapons of mass destruction (WMD)-related equipment and/or technology. Additionally, there are numerous documented cases involving the illegal export, or attempted illegal export of U.S. restricted, dual use technology to India. 6 Policies The purpose of a security clearance decision is to resolve whether it is clearly consistent with the national interest to grant or continue an applicant’s eligibility for access to classified information.4 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 controlling adjudicative goal is a fair, impartial and common sense 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 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.”5 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 4 See Department of the Navy v. Egan, 484 U.S. 518, 531 (1988). 5 Egan, supra, at 528, 531. 7 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 B, Foreign Influence Under Guideline B, the government’s security concern is that: Foreign contacts and interests may be a security concern if the individual has divided loyalties or foreign financial interests, he or she may be manipulated or induced to help a foreign person, group, organization, or government in a way that is not in U.S. interests, or is vulnerable to pressure or coercion by any foreign interest. Adjudication under this Guideline can and should consider the identity of the foreign country in which the foreign contact or financial interest is located, including, but not limited to, such considerations as whether the foreign country is known to target United States citizens to obtain protected information and/or is associated with a risk of terrorism. AG ¶ 6. AG ¶ 7 sets out three conditions that could raise a security concern and may be disqualifying in this case, including: (a) contact 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 sensitive information or technology and the individual’s desire to help a foreign person, group, or country by providing that information; and (e) a substantial business, financial, or property interest in a foreign country, or in any foreign own or foreign operated business, which could subject the individual to heightened risk of foreign influence or exploitation. The mere possession of close family ties with a person in a foreign country is not, as a matter of law, disqualifying under Guideline B. However, if only one relative lives in 8 a foreign country and an applicant has contacts with that relative, this factor alone is sufficient to create the potential for foreign influence and could potentially result in the compromise of classified information.6 Applicant has frequent contacts and a close relationship of affection and/or obligation with his in-laws, friends, and colleagues who are citizens and residents of India, and with his brother who is an Indian citizen and part time U.S. resident. The closeness of the relationship is shown by Applicant’s frequent contacts with his in-laws and his brother, and the fact he stayed with his in-laws during his trips to India. These contacts create a risk of foreign pressure or attempted exploitation because there is always the possibility that Indian agents may exploit the opportunity to obtain information about the United States. His connection to his in-laws, brother, and Indian friends and business colleagues also creates a potential conflict of interest because his relationships are sufficiently close to raise a security concern about his desire to help them or their businesses by providing sensitive or classified information. Applicant’s frequent travel to India also creates a higher risk of foreign inducement, manipulation, pressure, or coercion by the Indian government, friends, and business colleagues working for or with his wife in her businesses. Applicant has substantial business, financial, or proprietary interests in India. He has a bank account in India with approximately $43,000. He and his wife own several investment properties in India that generate approximately $49,500 a year in rent revenue with an approximate value of $409,000. He inherited his parents’ home in India with an approximate value of $300,000. His wife established three companies in India with Applicant’s direct support and assistance. He has held positions as chair, CEO, and advisor in his wife’s businesses and still performs does duties when his wife is not available or he is called to substitute for his wife. Her Indian companies are directed related to Applicant’s business and company in the United States. His wife conducts business for her Indian companies from their marital home in the United States. Both Indian and American companies share a web site serviced and managed by Applicant. Applicant has invested a significant amount of his time and effort traveling to India during the last three years trying to establish, manage, and to sell his wife businesses. The government produced substantial evidence raising these three potentially disqualifying conditions, and the burden shifted to Applicant to produce evidence and prove a mitigating condition. The burden of disproving a mitigating condition never shifts to the government. Six Foreign Influence Mitigating Conditions under AG ¶ 8 are potentially applicable: (a) the nature of the relationships with foreign persons, the country in which these persons are located, or the positions or activities of those 6 See ISCR Case No. 03-02382 at 5 (App. Bd. Feb. 15, 2006); ISCR Case No. 99-0424 (App. Bd. Feb. 8, 2001). 9 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 U. S.; (b) there is no conflict of interest, either because the individual’s sense of loyalty or obligation to the foreign person, group, government, or country is so minimal, or the individual has such deep and longstanding relationships and loyalties in the U.S., 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 cognizant security authority; (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. After considering the totality of the facts and circumstances in Applicant’s case, I conclude that AG ¶ 8(a) partially applies. Applicant did not establish that “it is unlikely [he] will be placed in a position of having to choose between the interests of [his Indian family – in-laws, wife, friends and colleagues] and the interests of the U.S.” His frequent contacts and close relationships with his Indian family members could potentially force him to choose between the United States and India. He did not meet his burden of showing there is “little likelihood that [his relationships with his Indian family members] could create a risk for foreign influence or exploitation.” Applicant has traveled to India approximately four times between 1983 and 1997. Since 1997 he substantially increased his travels to India. Initially, he traveled to take care of his ill mother. After 2004, he increased his travels to India to promote and establish businesses for his wife in India, to take care of his investment properties, and to promote the business interests of a U.S. business organization seeking to expand its charter into India. He has contacts and close relationships with his brother, in-laws, and with his and his wife’s business associates who are citizens and residents of India. The nature of India’s government, its relationship with the United States, and its human rights record are relevant in assessing the likelihood that Applicant’s family members are vulnerable to government coercion. The risk of coercion, persuasion, or 10 duress is significantly greater if the foreign country has an authoritarian government, a family member is associated with or dependent upon the government, or the country is known to conduct intelligence operations against the United States. I considered that the Indian government is a democratic republic with a cooperative relationship with the United States. India generally respects the human rights of its citizens. India is not a hostile country nor are its interests inimical to the United States. The United States and India enjoy good relations and the United States is India's largest trading partner. Notwithstanding, India’s aggressive collection of proprietary and economic information, its industrial espionage against the United States and its partnership with Iran raises the burden of persuasion on Applicant to demonstrate that his contact with family members in India, friends, colleagues, and his business ties in India do not pose a security risk and that he will not be placed into a position to be forced to choose between loyalty to the United States and his Indian family members.7 Applicant keeps in contact with friends and colleagues concerning his investments in India, as well as his wife businesses and financial interests in India. He also assisted a U.S. association to set up a charter association in India; and he worked with Indian authorities to obtain permits and approval for some of his wife’s businesses. Thus, it is more likely the Indian government is monitoring Applicant’s work, his trips to India, and his communications with family and friends. AG ¶ 8(b) partially applies because Applicant has developed a sufficient relationship and loyalty to the United States, that he can be expected to resolve any conflict of interest in favor of the United States’ interests. He has lived in the United States for approximately 26 years. He has been a naturalized U.S. citizen for about 14 years. His children are U.S. citizens born in the United States and are have inculcated U.S. values. Applicant has established himself as a successful and respected American citizen. Applicant worked for his own company (A Inc.) from 1994 to 2007. A Inc., is closely related to and conduct business with Applicant’s wife’s three businesses in India. Aside from his work for A Inc., rents received from his Indian investment properties, and his work for his wife’s Indian companies, Applicant disclosed no other work or source of income. He is in the process of severing all ties with his wife’s Indian companies to avoid security clearance issues. On balance, I find Applicant has substantial businesses, financial, or proprietary interest in India. AG ¶ 8(f) does not apply. 7 See ISCR Case No. 02-13595 at 3 (App. Bd. May 10, 2005) (stating an applicant has “a very heavy burden of persuasion to overcome the security concerns” when parents and siblings live in Iran). See also ISCR Case No. 04-11463 at 4 (App. Bd. Aug. 4, 2006) (articulating “very heavy burden” standard when an applicant has family members living in Iran). 11 Whole Person Concept Under the whole person concept, an 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. 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. 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. Applicant strongly averred he and his children are loyal Americans. His wife is in the process of applying for U.S. citizenship. Applicant has lived in the United States for 26 years and has been a naturalized citizen for 14 years. When he became a U.S. citizen, he swore allegiance to the United States. His two sons are also U.S. citizens and they are being raised and educated in the United States as Americans. Applicant’s statement about his loyalty to the United States is credible. There is no reason to believe that he would take any action that could cause potential harm to his sons’ and his lifestyle in the United States. There is no evidence he has ever taken any action that could cause potential harm to the United States, or that he lacks honesty and integrity. He has the respect and trust of his friends and colleagues in the United States. Numerous circumstances weigh against Applicant in the whole person analysis: he and his wife were born and educated in India; his wife is an Indian citizen; he and his wife have significant business connections, property, and financial interests in India; and he maintains contact with Indian family, friends and colleagues. In sum, he had significant connections to India before he immigrated to the United States, and through his wife’s family and businesses connections Applicant continues to maintain significant financial and property interests in India. Applicant has frequent and non-casual contact with his family members living in India. These contacts create a risk of foreign pressure or attempted exploitation because there is always the possibility that Indian agents or others hostile to U.S. interests may attempt to use Applicant’s family members living in India or his significant financial/property interests to obtain information about the United States. 12 “Because of the extreme sensitivity of security matters, there is a strong presumption against granting a security clearance. Whenever any doubt is raised . . . it is deemed best to err on the side of the government’s compelling interest in security by denying or revoking [a] clearance.” Dorfmont v. Brown, 913 F.2d 1399, 1401 (9th Cir. 1990). After weighing the disqualifying and mitigating conditions, all the facts and circumstances, in the context of the whole person, I conclude he has not mitigated the security concerns pertaining to foreign preference. The evidence leaves me with doubts as to Applicant’s security eligibility and suitability. For all these reasons, I conclude Applicant has failed to mitigate the concerns arising from his foreign influence security concerns. 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 B: AGAINST APPLICANT Subparagraphs 1.a-1.c: Against Applicant Subparagraph 1.d: For Applicant Subparagraphs 1.e-1.s: Against 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’s security clearance. Eligibility for access to classified information is denied. _________________ JUAN J. RIVERA Administrative Judge