DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
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--------------------------------- )       ISCR Case No. 10-07194
)
)
Applicant for Security Clearance )
Appearances
For Government: Jeff Nagel, Department Counsel
For Applicant: Joseph Testan, Attorney At Law
August 15, 2011
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Decision
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LOKEY-ANDERSON, Darlene, Administrative Judge:
Applicant submitted his Electronic Questionnaires for Investigations Processing
(e-QIP), on March 29, 2010.  (Government Exhibit 1.)  On January 31, 2011, the
Defense Office of Hearings and Appeals (DOHA) issued a Statement of Reasons (SOR)
detailing the security concerns under Guidelines B and 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 adjudicative guidelines (AG) effective within the
Department of Defense for SORs issued after September 1, 2006. 
 
The Applicant responded to the SOR on February 28, 2011, and he requested a
hearing before a DOHA Administrative Judge.  This case was assigned to the
undersigned on April 4, 2011.  A notice of hearing was issued on April 19, 2011,
scheduling the hearing for May 17, 2011.  At the hearing the Government presented five
exhibits, referred to as Government Exhibits 1 through 5.  The Applicant called five
witnesses, and presented eleven exhibits, referred to as Applicant’s Exhibits A through
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K.  He also testified on his own behalf.  The record remained open until close of
business on May 24, 2011, to allow the Applicant to submit additional documentation.
He submitted one Post-Hearing Exhibit, referred to as Applicant’s Post-Hearing Exhibit
A, which was admitted without objection.  The official transcript (Tr.) was received on
May 26, 2011.  Based upon a review of the pleadings, exhibits, and testimony, eligibility
for access to classified information is granted.
Request for Administrative Notice
Department Counsel requested that I take administrative notice of certain facts
concerning the current political conditions in Taiwan.  (Tr. pp. 16-23)  Applicant’s
Counsel had no objection.  (Tr. p. 24.)  The attached documents were not admitted into
evidence but were included in the record. The facts administratively noticed are set out
in the Findings of Fact, below. 
FINDINGS OF FACT
The following Findings of Fact are based on Applicant's Answer to the SOR, the
testimony and the exhibits.  The Applicant is 56 years of age and married with two adult
children.  He has a Master’s Degree in Business Administration.  He is employed as a
Systems Administrator/Engineer Specialist for a defense contractor.  He seeks a
security clearance in connection with his employment in the defense industry.
Paragraph 1 (Guideline B - Foreign Influence).  The Government alleges in this
paragraph that the Applicant is ineligible for clearance because he has foreign contacts
that could create the potential for foreign influence that could result in the compromise
of classified information.
The Applicant admits allegations 1(a), 1(b), and 1(c) of the SOR.  He denies
allegation 1(d).  He was born in Taiwan in 1955, and grew up in a rural area.  At the age
of fourteen, he moved away from home to attend his last year of junior high school, and
then high school where he lived in the dorms.  After graduating from high school, he
attended the University of Taipei and obtained his Bachelor’s Degree in Law.  He
served his compulsory duty in the Taiwanese Marines from July 1977 to June 1979,
where he held the rank of second lieutenant.  He has had no contacts with the
Taiwanese military since 1979.  
In 1982, at the age of twenty-seven, he immigrated to the United States to fulfill a
dream.  He wanted to come to the land of opportunity and earn his own fortune.  Since
then, he has lived and worked in the United States and made it his permanent home.
He became a naturalized United States citizen in 1996.  He is married to an American
citizen and has two children who are native-born American citizens.  The Applicant also
has a sister who resides in the United States with her family.  (Tr. p. 88-89.)  In March
2010, he began working as a Consultant for his current employer and became an
employee of the company in March 2011.  (Tr. p. 80.)    
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The Applicant’s mother, sister, two brothers, and in-laws are citizens and
residents of Taiwan.  His father has passed away.  His mother, who is 78 years old this
year and currently ill, was a farmer before she retired.  She receives the equivalent of
social security from the Taiwanese Government, and the Applicant sends her a few
hundred dollars every couple of months  (Tr. p. 126-127.)  She has no other affiliations
with the Taiwanese Government.  (Tr. p. 84.)  The Applicant contacts her by telephone
about once a month or once every two months.  (Tr. p. 85.)   
        One brother in Taiwan has a green card and has already applied to come to the
United States.  His other brother in Taiwan is planning to move to the United States
when his son graduates from high school.  Both of his brothers in Taiwan are being
sponsored by the Applicant’s sister who lives in the United States.  None of his family in
Taiwan have any connection with the Taiwanese Government.  (Tr. p. 89.)               
The Applicant also has in-laws who are citizens and residents of Taiwan.  The
Applicant is not close to his in-laws in Taiwan.  (Tr. p. 91-92.)  He does not plan to
communicate with them at all, and he has no feelings of obligation or loyalty to them.
(Tr. p. 93.)
In April 2010, the Applicant formally renounced his Taiwanese citizenship even
though he felt that he was no longer a Taiwanese citizen when he became a United
States citizen.  (Applicant’s Exhibit K and Tr. p. 94.)  
I have taken official notice of the following facts concerning Taiwan.  Taiwan is a
multi-party democracy with a population of about 23 million. It is one of the most active
collectors of sensitive United States information and technology.  Numerous individuals
and companies have been subjected to civil penalties and/or prosecuted for illegally
exporting, or attempting to illegally export, sensitive United States technology to Taiwan.
One United States official was recently convicted of crimes relating to his improper
relationship with a Taiwanese intelligence official.
Paragraph 2 (Guideline F - Financial Considerations)  The Government alleges that the
Applicant is ineligible for clearance because he is financially overextended and at risk of
having to engage in illegal acts to generate funds.      
The Applicant denied each of the delinquent debts set forth in the SOR.  (See,
Applicant’s Answer to SOR.)  Credit Reports of the Applicant dated April 23, 2010, and
November 29, 2010, indicate that he was indebted to two creditors for outstanding
mortgage loans listed in the SOR, which totaled in excess of $400,000.00.
(Government Exhibits 3 and 4.) 
In 2005, the Applicant’s home was paid off and he decided to invest in the real
estate market.  Searching out of state for reasonable priced property, and what he
believed at the time was a good deal, he purchased five separate single family
properties with a $400,000 loan he took out against his primary residence worth
$750,000.00 at the time.  (Tr. p. 95.)  He hired a property management company to help
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rent them.  In 2006, the economy took a downturn.  By 2007, the real estate market
plunged, and the Applicant realized that he could no longer sustain his investments and
was operating in the negative.  In November 2007, he was laid off from his job due to a
work force reduction.  
Realizing that he had to do something to mitigate his increasing financial
indebtedness, he decided that three of his properties must be returned to the lenders as
he could not afford to make the payments.  He contacted the mortgage holders to
arrange to deed the property back, but was unsuccessful.  (Applicant’s Exhibits C and
D.)  As a result, he became indebted on a mortgage account that was past due in the
approximate amount of $18,608.00.   In 2008, the house was foreclosed upon with a
total loan balance of $197,00.00.  He also became also indebted on a mortgage
account that was past due in the approximate amount of $11,147.00.  In 2008, the
second house was foreclosed upon with a total balance of $222,000.00.  (Tr. p. 100.)
The Applicant contends that he has no liability under either one of the two mortgage
contracts according to the applicable state statute.  He submitted a copy of the states
anti-deficiency statute.  (Applicant’s Exhibit I.)  Title 33, Chapter 6.1, Article 1, Title 33-
814, subsection G, of the state statute indicates that the lender may not go after
property owner for any losses on a home after foreclosure.  Applying the provisions of
this statute, under these particular circumstances, the Applicant has no liability to the
lender.  He also determined that he has no tax implications as cancellation of a
nonrecourse debt does not result in taxable income.  (See Applicant’s Post-Hearing
Exhibit A.)  A third house was also foreclosed upon, but was not alleged in the SOR.      
In regard to the Applicant’s two remaining investment properties, the Applicant
has paid off the second loan with his cash reserves, and he has refinanced the first
loans.  (Applicant’s Exhibits F and G.)  Both houses are being rented and the rent is
covering the mortgage payments.  (Tr. p. 130.)  He is current on the payments on both
houses.  His intentions are to keep them both and eventually pay them off.  (Tr. p. 103.)
He is also current with the mortgage payments on his primary resident.  (Applicant’s
Exhibit H.)         
Five witnesses, including his second level supervisor, his immediate supervisor,
his past neighbors, and a college instructor who was the Applicant’s boss at one point,
collectively testified that the Applicant is a hard worker, reliable, honest and trustworthy.
He is recommended for a security clearance.  (Tr. pp. 27-70.)    
Letters from the Applicant’s daughter and son indicate that they were raised as
typical American children.  They believe that their father is loyal to the United States and
they plan to live in the United States the rest of their lives.  (Applicant’s Exhibit A.)  
Numerous letters of recommendation from the Principal Director of the Company,
a City Councilperson, and other professional associates, coworkers, friends and
neighbors attest to the Applicant’s character, ethics, professionalism, reliability,
trustworthiness, outstanding work performance, great technical skills, and his
commitment to properly safeguarding data.  He is considered a tremendous asset to the
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organization.  He is also described as respectful, kind and sincere.  (Applicant’s Exhibit
B.)
POLICIES
Security clearance decisions are not made in a vacuum.  Accordingly, the
Department of Defense, in Enclosure 2 of the 1992  Directive sets forth policy factors
and conditions that could raise or mitigate a security concern; which must be given
binding consideration in making security clearance determinations.  These factors
should be followed in every case according to the pertinent criterion.  However, the
conditions are neither automatically determinative of the decision in any case, nor can
they supersede the Administrative Judge’s reliance on her own common sense.
Because each security clearance case presents its own unique facts and
circumstances, it cannot be assumed that these factors exhaust the realm of human
experience, or apply equally in every  case.  Based on the Findings of Fact set forth
above, the factors most applicable to the evaluation of this case are:
Foreign Influence
6.  The Concern.  Foreign contacts and interests may be a security concern if the
individual has divided loyalties or foreign financial interests, 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. 
Condition that could raise a security concern:
7.(a) contact with a foreign family member, business or professional associate,
friend, or other person who is a citizen of or resident of a foreign country if that contact
creates a heightened risk of foreign exploitation, inducement, manipulation, pressure, or
coercion. 
Conditions that could mitigate security concerns:
8.(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 U.S.; 
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8.(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;
8.(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. 
Guideline F (Financial Considerations)
18.  The Concern.  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. 
Conditions that could raise a security concern:
19.(a) inability or unwillingness to satisfy debts; 
19.(c) a history of not meeting financial obligation. 
Conditions that could mitigate security concerns:
20.(c) the person has received or is receiving counseling for the problem and/or
there are clear indications that problem is being resolved or is under the control;
20.(d) the individual has initiated a good faith effort to repay overdue creditors or
otherwise resolve debts.
In addition, as set forth in Enclosure 2 of the Directive at pages 18-19, in
evaluating the relevance of an individual’s conduct, the Administrative Judge should
consider the following general factors:
a.  The nature, extent, and seriousness of the conduct;
b. The circumstances surrounding the conduct, to include knowledgeable
participation;
c.  The frequency and recency of the conduct;
d.  The individual’s age and maturity at the time of the conduct;
e.  The extent to which participation is voluntary;
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f.  The presence or absence of rehabilitation and other permanent behavioral
changes;
g.  The motivation for the conduct; 
h. The potential for pressure, coercion, exploitation or duress; and 
i.  The likelihood of continuation or recurrence.
The eligibility criteria established in the DoD Directive identify personal
characteristics and conduct, which are reasonably related to the ultimate question,
posed in Section 2 of Executive Order 10865, of whether it is “clearly consistent with the
national interest” to grant an Applicant’s request for access to classified information.
The DoD Directive states, “The adjudicative process is an examination of a
sufficient period of a person’s life to make an affirmative determination that the person is
eligible for a security clearance.  Eligibility for access to classified information is
predicated upon the individual meeting these personnel security guidelines.  The
adjudicative process is the careful weighing of a number of variables known as the
whole-person concept.  Available, reliable information about the person, past and
present, favorable and unfavorable should be considered in reaching a determination.
The Administrative Judge can draw only those inferences or conclusions that have
reasonable and logical basis in the evidence of record.  The Judge cannot draw
inferences or conclusions based on evidence which is speculative or conjectural in
nature.  Finally, as emphasized by President Eisenhower in Executive Order 10865,
“Any determination under this order . . . shall be a determination in terms of the national
interest and shall in no sense be a determination as to the loyalty of the Applicant
concerned.”
The Government must make out a case under Guideline B (Foreign Influence)
and Guideline F (Financial Considerations) that establishes doubt about a person's
judgment, reliability and trustworthiness.  While a rational connection, or nexus, must be
shown between Applicant's adverse conduct or situation and his ability to effectively
safeguard classified information, with respect to sufficiency of proof of a rational
connection, objective or direct evidence is not required.  Then, the Applicant must
remove that doubt with substantial evidence in refutation, explanation, mitigation or
extenuation, which demonstrates that the past adverse conduct or situation is unlikely to
be repeated, and that the Applicant presently qualifies for a security clearance.
An individual who is subject to foreign influence and has excessive indebtedness
may be prone to provide information or make decisions that are harmful to the interests
of the United States.  The Government must be able to place a high degree of
confidence in a security clearance holder to abide by all security rules and regulations,
at all times and in all places.
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CONCLUSIONS
Having considered the evidence of record in light of the appropriate legal
standards and factors, and having assessed the Applicant's credibility based on the
record, this Administrative Judge concludes that the Government has established its
case as to all allegations in the SOR.   
Under Foreign Influence, Disqualifying Condition 7.(a) contact with a foreign
family member, business or professional associate, friend, or other person who is a
citizen of or resident of a foreign country if that contact creates a heightened risk of
foreign exploitation, inducement, manipulation, pressure, or coercion applies.  However,
Mitigating Conditions 8.(a) the nature of the relationships with foreign persons, the
country in which these persons are located, o 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 U.S.; 8.(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, and 8.(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 also apply.  
The evidence shows that the Applicant has no strong emotional attachment to his
siblings or his in-laws in Taiwan.  In regard to his siblings, age differences and the fact
that he left home at fourteen explain the distant relationship.  His permanent move to
the United States even furthered this distance.  He has no contact with his in-laws and
no intention to contact them in the future.  Admittedly, he does contact his mother in
Taiwan, who is elderly and ill, once every month or two by telephone.  He also sends
her a few hundred dollars every several months.  Even so, there is no close bond or
strong evidence of affection that could potentially cause the Applicant to become
subject to foreign exploitation, inducement, manipulation, pressure, or coercion.  His
immediate family, including his wife and children, who are American citizens, and his
sister all live in the United States, and have made it their permanent home.  
The Applicant is a naturalized United States who has formally renounced his
Taiwanese citizenship. He has cut his foreign ties.  He has demonstrated that his
loyalties are to the United States.  It is noted that the current political situation in Taiwan
elevates the cause for concern in this case.  However, based upon the evidence in total,
the possibility of foreign influence does not exist that could create the potential for
conduct resulting in the compromise of classified information.  Under the particular facts
of this case, I find that the Applicant is not vulnerable to foreign influence.  Accordingly, I
find for the Applicant under Guideline B (Foreign Influence).
In regard to his financial situation, the Applicant admittedly made some risky
decisions to purchase five investment properties at the same time.  Unfortunately,
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millions of Americans have been victims of the collapse in the real estate market.
However, without being able to predict the future, he took his chances.  After losing his
job, and finding it difficult to get tenants to pay the amount of rent needed, he realized
that he could not afford to keep all five investment properties.  He then used good
judgment and acted reasonably under the circumstances by trying to negociate with the
mortgage lender to reach some suitable agreement.  He was not successful, and three
houses were forced into foreclosure.  He has managed to keep two of his investments
and they are both in good financial standing.  He is also current with the payments on
his primary residence.      
Considering all of the evidence, the Applicant has introduced persuasive
evidence in rebuttal, explanation or mitigation that is sufficient to overcome the
Government's case. Under Guideline F (Financial Considerations), Disqualifying
Conditions 19.(a) inability or unwillingness to satisfy debts; and 19.(c) a history of not
meeting financial obligation apply.  However, Mitigating Conditions 20.(c) the person
has received or is receiving counseling for the problem and/or there are clear
indications that problem is being resolved or is under the control; and 20.(d) the
individual has initiated a good faith effort to repay overdue creditors or otherwise resolve
debts also apply.
Under the particular circumstances of this case, the Applicant has demonstrated
sufficient good judgment, and a good faith effort to resolve his indebtedness, and there
is sufficient evidence of financial rehabilitation.  He has demonstrated that he can
properly handle his financial affairs.  Accordingly, I find for the Applicant under Guideline
F (Financial Considerations).
    I have also considered the “whole-person concept” in evaluating the Applicant’s
eligibility for access to classified information.  Under the particular facts of this case, the
totality of the conduct set forth under all of the guidelines viewed as a whole, support a
whole-person assessment of good judgement, trustworthiness, reliability, candor, a
willingness to comply with rules and regulations, and/or other characteristics indicating
that the person may properly safeguard classified information.
  
I have considered all of the evidence presented, and it does mitigate the negative
effects of his foreign connections and financial indebtedness and its impact on his ability
to safeguard classified information.  On balance, it is concluded that the Applicant has
overcome the Government's case opposing his request for a security clearance.
Accordingly, the evidence supports a finding for the Applicant as to the factual and
conclusionary allegations expressed in Paragraphs 1 and 2 of the SOR.    
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     FORMAL FINDINGS
Formal findings For or Against the Applicant on the allegations in the SOR, as
required by Paragraph 25 of Enclosure 3 of the Directive are:
Paragraph 1: For the Applicant.
Subpara. 1.a.: For the Applicant
Subpara. 1.b.: For the Applicant
Subpara. 1.c.: For the Applicant
Subpara. 1.d.: For the Applicant
Paragraph 2: For the Applicant.
Subpara. 2.a.: For the Applicant
Subpara. 2.b.: For the Applicant
DECISION
In light of the circumstances presented by the record in this case, it is clearly
consistent with the national interests to grant or continue a security clearance for the
Applicant.
Darlene Lokey Anderson
Administrative Judge