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                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
------------------------- )       ISCR Case No. 08-04409
SSN: ----------------- )
)
Applicant for Security Clearance )
Appearances
For Government: Eric H. Borgstrom, Esq., Department Counsel
For Applicant: Pro Se
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Decision
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MATCHINSKI, Elizabeth M., Administrative Judge:
While serving as the executor of an estate, he illegally invested assets of the
estate into his own software company. He is on probation until 2028 after pleading nolo
contendere to felony embezzlement. Clearance is denied.
Statement of the Case
Applicant submitted a Security Clearance Application (SF 86) on January 22,
2004. On November 5, 2008, the Defense Office of Hearings and Appeals (DOHA)
issued to Applicant a Statement of Reasons (SOR) detailing the security concern under
Guideline J that provided the basis for its action to deny him a security clearance and
refer the matter to an administrative judge. 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
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revised adjudicative guidelines (AG) promulgated by the President on December 29,
2005, and effective within the Department of Defense as of September 1, 2006. 
 
Applicant answered the SOR in writing on November 17, 2008, and requested a
hearing before a DOHA administrative judge. The case was assigned to me on January
6, 2009. On January 29, 2009, I scheduled a hearing for February 19, 2009.
I convened the hearing as scheduled. Before the introduction of any evidence, on
the government’s motion, and with no objection from Applicant, SOR ¶ 1.a was
amended to allege that Applicant was charged with four counts of felony embezzlement
on March 3, 2006. The government submitted five exhibits (Ex. 1-5) which were
admitted into evidence. Applicant objected to Exhibit 5, a court docket report, as it did
not reflect the dismissal of the criminal case. His objection was overruled and the
document accepted to reflect the case status as of the date of the report. Three
Applicant exhibits (Ex. A-C) were admitted without any objections, including as Exhibit C
the disposition of the case proceedings reported in Exhibit 5. Applicant also testified, as
reflected in a transcript (Tr.) received on March 3, 2009.
Findings of Fact
In the amended SOR, DOHA alleged under Guideline J (criminal conduct) that
Applicant was charged on March 3, 2006, with four felony counts of embezzlement over
$100, and that on or about February 13, 2008, he pleaded nolo contendere to one count
and was sentenced to pay restitution and to 20 years probation. Applicant admitted the
charge and sentence and explained that heirs of an estate for which he was an executor
felt he was not justified in investing estate funds into his own software company. A f t e r
consideration of the pleadings, exhibits, and hearing testimony, I make the following
findings of fact.
Applicant is a 59-year-old computer programmer who has been employed by a
defense contractor since January 2004 (Ex. 1). He seeks a secret-level security
clearance for his duties (Tr. 5).
Applicant married in October 1971. He completed one year of college at a
prestigious university in the U.S. in June 1974, and in February 1979, he started his
own computer software consulting company, developing custom software for banks and
brokerage firms (Tr. 53). He and his spouse held the company jointly and were the sole
stockholders (Tr. 47). Applicant employed contract programmers that came and went,
and he employed his brother-in-law at one point, but he had no regular full-time
employees that worked for him (Tr. 47). The business provided sufficient income for
Applicant to support his spouse, their five children born during the 1987 to 1998 time
frame (Ex. 1), and apparently also her mother (Tr. 61).
In January 1999, a cousin of his by marriage died (Tr. 54). Applicant had a close
relationship with this cousin (“he and I were like brothers,” Tr. 32). Under the terms of
the will, Applicant was named the executor of his estate, which exceeded $1 million in
Applicant estimated that he invested between $200,000 and $400,000 in his computer consulting1
business (Ex. 2). The court ordered him to pay restitution of $398,000 (Tr. 38), a figure that was arrived at by
reviewing the estate’s books (Tr. 48). W hile some of the funds may well be for legitimate expenses in traveling
to France for example, the amount misappropriated is closer to $400,000 than $200,000.
As to when he began to write checks from the estate’s money market fund to his company, Applicant2
testified he had definitely done so by 2000. He did not believe he had written any before 2000, but also
testified that he was charged with four counts of embezzlement, one for each year that he had diverted the
estate’s assets to his business (Tr. 54).
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value and included a trust as well as an apartment property in France that would have
to be sold and the proceeds distributed to his cousin’s heirs (Ex. 1, 2, Tr. 30, 45). That
April, Applicant traveled to France to clean out the apartment (Ex. 1, Tr. 54). He initially
disbursed “a considerable amount” of bank stock assets to the heirs (Tr. 29), but held
the estate’s money market assets to pay taxes and maintenance fees and other
necessary expenses associated with the foreign property (Tr. 53-54). Applicant was not
himself a beneficiary of the estate but his children and spouse were heirs (Tr. 34).
Applicant read the will as giving him the power to invest estate assets as he saw
fit (Tr. 33). His computer consulting business was doing well at that time, and Applicant
began in 1999 to invest estate funds in his own company with the intent of increasing
the value of the estate for its heirs (Ex. 2, Tr. 28-29), and because he was not certain of
the costs associated with the maintenance and sale of the foreign property (Tr. 57).
From about late 1999 through 2002, Applicant took almost $400,000  out of the estate1
(primarily money market account funds) and invested it in his business (Ex. 2, Tr. 31,
45).  Profits from his consulting business were not repaid to the estate. Rather, they2
went toward the next contract, and toward soliciting more work for his company (Tr. 64).
Applicant’s software business suffered a significant downturn in the 2001/02 time frame,
and funds were diverted from the estate in an effort to keep his software consulting
business afloat. He wrote checks from the estate directly for the health insurance
provided as a company benefit (Tr. 33, 46), paid wages with some of the funds (Ex. 2),
and some business travel expenses (Tr. 62). Applicant did not inform the beneficiaries,
including his spouse, that he had diverted assets of the estate to his business (Tr. 32,
49), and he did not seek any legal advice about the propriety of his conduct (Tr. 33-34).
He did not see a need to inform the heirs and there was no directive that required it (Tr.
34).
Applicant closed down his software business in January 2003 (Tr. 35). Realizing
that he had made poor investment decisions and that he would be unable to repay the
estate, Applicant became seriously depressed. Facing an audit of the estate by its
attorney at the request of the probate court because the estate had been in probate for
a longer period than normal (Tr. 46, 57), he attempted suicide twice in 2002, and again
in January 2003 (Ex. 2, Tr. 46). He voluntarily admitted himself to a mental health
treatment facility for the month of February 2003, where he received inpatient treatment
for severe depression (Ex. 2). Applicant has been under the care of his treating
psychiatrist since his hospitalization (Ex. 2, Ex. C).
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Applicant’s misappropriation of estate assets was discovered during an audit of
the estate in 2003. A civil suit was filed to have him removed as executor. The case was
dropped when Applicant resigned voluntarily, and a new executor was appointed (Ex.
2).
In late April 2003, Applicant went to work as a programmer/analyst for a
company. In June 2003, Applicant and his spouse divorced, and he was ordered to pay
child support for his five children. He quit his job in late July 2003, because it was not
suited to his training. In September 2003, he became employed as a desktop support
specialist for a local school system, but he resigned at the request of the school
department in early November 2003. He held a second job as a sales consultant with an
electronics retailer for about a month before he lost his job at the school, and remained
at that job until January 2004. He also worked part-time in 2003 as an adjunct professor
at a community college, and as a crew trainer at a restaurant (Ex. 1).
After commencing employment with the defense contractor in January 2004,
Applicant continued to work a second job. He gave his entire check from his defense
contractor employment to his ex-wife (about $900 a week) for her and the children
because he felt bad about what he had done. He supported himself on the income from
his second job (Tr. 60).
In early September 2005, his ex-wife and her two sisters, all heirs to their
cousin’s estate, filed a complaint with the police about his handling of the estate. On the
advice of the state police, Applicant turned himself in and he was released on personal
recognizance. On March 3, 2006, he was formally charged with four counts of felony
embezzlement over $100 (Exs. 2, 3), and in April 2006, his case was transferred to
superior court (Ex. 3). Applicant pleaded not guilty at his arraignment in June 2006.
Pursuant to a plea bargain, he retracted his not guilty plea and pleaded nolo contendere
in February 2008 to one count of felony embezzlement over $100. He was convicted
and sentenced to 20 years in prison, suspended, and placed on 20 years probation. He
was also ordered to pay restitution of $398,000, $75,000 in a lump sum followed by
$300 per week for the next 20 years (Exs. 2, 4, Tr. 38). Applicant obtained advances of
$50,000 from his mother and $25,000 from a close friend to cover the $75,000 lump
sum payment. His friend also paid his legal expenses for him. Applicant has continued
to make his $300 weekly restitution payments from his employment income (Tr. 55-56).
In November 2007, Applicant reduced the amount of money sent to his ex-wife to
cover only what he is required to pay in court-ordered child support (Tr. 60), which has
caused some custody issues with his spouse. He is seeking joint custody of his children
(Tr. 30). The amount of his restitution is under court review because his spouse had
already benefitted from the estate (Exs. 2, 4, Tr. 48). Applicant plans to show the court
in a deposition that his restitution should be reduced by one-third and that he has
already paid his ex-wife well over $100,000 (Tr. 48, 60).
On December 9, 2008, Applicant was charged with misdemeanor simple
assault/domestic after he shook his fianceé during an argument (Ex. 5, Tr. 39). Since he
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was on probation for the felony embezzlement, he was held in jail for one week. He
admitted to violating his probation (Tr. 40), and a no contact order was issued before he
was released (Ex. 4). On January 6, 2009, the no contact order was rescinded and the
simple assault charge was dismissed. His probation for the felony offense was not
revoked (Ex. A, Tr. 39-41). Applicant informed his manager at work about his felony
embezzlement and domestic assault offenses (Tr. 42).
Applicant does not have the same financial pressures that contributed to his
diversion of estate funds to his personal business. His previously had a jumbo mortgage
with monthly payments close to $3,000 (Tr. 51). He currently has a $46,000 mortgage
for a mobile home (Tr. 56). He is paying child support for three minor children, and as of
May 2009, will be paying for two of his children (Tr. 28).
Applicant works directly with a government project engineer on a daily basis.
During 2008, he met and occasionally exceeded his employer’s expectations (Ex. B).
Applicant has been compliant with his treatment for his depression. His treating
psychiatrist sees no reason why Applicant should be denied full visitation or shared
custody of his children (Ex. C). For the past year, Applicant has been teaching
computer classes twice weekly for senior citizens (Tr. 30).
Policies
The U.S. Supreme Court has recognized the substantial discretion of the
Executive Branch in regulating access to information pertaining to national security
emphasizing, “no one has a ‘right’ to a security clearance.” Department of the Navy v.
Egan, 484 U.S. 518, 528 (1988). 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 overarching
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 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
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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 J—Criminal Conduct
AG ¶ 30 sets out the security concern about criminal conduct:
Criminal activity creates doubt about a person’s judgment, reliability, and
trustworthiness.  By its very nature, it calls into question a person’s ability
or willingness to comply with laws, rules and regulations.
In February 2008, Applicant pleaded nolo contendere and was convicted of one
count of felony embezzlement for diverting about $398,000 in assets of a deceased
relative’s estate to his personal business. A review of the estate’s books showed that
his criminal conduct spanned four years, from 1999 through 2002. AG ¶ 31(a), “a single
serious crime or multiple lesser offenses,” and AG ¶ 31(c), “allegation or admission of
criminal conduct, regardless of whether the person was formally charged, formally
prosecuted or convicted,” apply. Since he is on probation for the offense until 2028, AG
¶ 31(d), “individual is currently on parole or probation,” is also implicated. Furthermore,
he admitted that a simple assault of his fianceé in December 2008 was in violation of his
probation. So, even though the assault charge was dismissed, and his probation was
not revoked, his violation of a condition of a probation—that he remains on good
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behavior—implicates AG ¶ 31(e), “violation of parole or probation, or failure to complete
a court-mandated rehabilitation program.”
Applicant’s criminal conduct is too egregious and recent to apply mitigating
condition AG ¶ 32(a), “so much time has elapsed since the criminal behavior happened,
or it happened under such unusual circumstances that it is unlikely to recur and does
not cast doubt on the individual’s reliability, trustworthiness, or good judgment.” Any
violation of fiduciary obligations, such as an executor has to the heirs of an estate,
raises considerable judgment, reliability, and trustworthiness concerns.
Applicant’s case for mitigation under AG ¶ 32(b), “the person was pressured or
coerced into committing the act and those pressures are no longer present in the
person’s life,” is not persuasive. His financial situation has improved since he diverted
the estate funds to his business. His company ceased operations in January 2003, he
no longer has a high mortgage payment, and pays child support for only three children
at this point. As of May 2009, only two of his children will be eligible for support
payments. Yet, to apply AG ¶ 32(b), I would have to ignore the knowing and voluntary
nature of his criminal conduct and that it began even before his business downturn. 
AG ¶ 32(d), “there is evidence of successful rehabilitation; including but not
limited to the passage of time without recurrence of criminal activity, remorse or
restitution, job training or higher education, good employment record, or constructive
community involvement,” applies in only very limited part. Applicant has a good work
record with his present employer, as reflected in his annual performance appraisal for
2008 (Ex. B). He also teaches computer classes to senior citizens. But it would be
premature to conclude that he is successfully rehabilitated. His current probationary
status is not an automatic bar to a security clearance, but he has served only one year
of a 20-year term. Furthermore, his first year of probation was not without incident, as
evidenced by the simple assault of his fianceé. Applicant maintains that he is a different
person now than he was five years ago (Tr. 51), but despite the criminal charges and
his conviction on one count of felony embezzlement, he continues to believe that he had
broad investment powers (“I maintain it even until today, my reading of the will said I
could basically do and invest and use my judgment to invest the money.” Tr. 33). When
asked to comment about his failure to appreciate his ethical obligation as executor,
Applicant responded, “I also appreciated the obligation I had to five children, a wife, a
mother-in-law, a mortgage that was too high for us” (Tr. 51). Even if Applicant did not
mean to suggest that his misappropriation of estate funds was justified because of the
needs of his family, it raises doubts about whether he fully accepts responsibility for his
criminal conduct.
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. The administrative judge should consider the nine
adjudicative process factors listed at AG ¶ 2(a):
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(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’s judgment is called into serious question because of his
embezzlement of about $398,000 in estate funds when he served as executor of a
family member’s estate. He was sentenced for his felonious conduct to 20 years in
prison, suspended, and 20 years of probation with restitution. While he has been
making his restitution payments, initially with the help of his mother and a close friend,
he has yet to demonstrate the judgment, reliability, and trustworthiness that must be
demanded of those persons granted access to classified information.
 
Formal Findings
Formal findings for or against Applicant on the allegations set forth in the
amended SOR, as required by section E3.1.25 of Enclosure 3 of the Directive, are:
Paragraph 1, Guideline J: AGAINST APPLICANT
Subparagraph 1.a: Against Applicant
Conclusion
In light of 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.
ELIZABETH M. MATCHINSKI
Administrative Judge