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                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 11-02216
)
)
Applicant for Security Clearance )
Appearances
For Government: Jeff Nagel, Esquire, Department Counsel
For Applicant: Craig S. King, Esquire, Applicant’s Counsel
October 22, 2013
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Decision
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CEFOLA, Richard A., Administrative Judge:
Applicant submitted his Electronic Questionnaires for Investigations Processing
(e-QIP) on June 21, 2010.  On November 9, 2012, the Department of Defense (DOD)
issued a Statement of Reasons (SOR) detailing the security concerns under Guidelines
E and B 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 after
September 1, 2006. 
Applicant acknowledged receipt of the SOR on December 3, 2012.  He answered
the SOR in writing through counsel on December 21, 2012, and requested a hearing
before an Administrative Judge.  DOHA received the request on December 27, 2012,
and I received the case assignment on April 1, 2013.  DOHA issued a notice of hearing
the next day on April 2, 2013, and I convened the hearing as scheduled on May 15,
2013.  The Government offered Exhibits (GXs) 1 through 6, which were received
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without objection.  Applicant testified on his own behalf and submitted Exhibits (AppXs)
A through R, which were received without objection.  DOHA received the transcript of
the hearing (TR) on June 4, 2013.  I granted Applicant’s requests, one made at his
hearing and one made after his hearing, to keep the record open until July 24, 2013, to
submit a closing statement and additional matters.  In a timely fashion he submitted a
closing statement and Exhibit S, which was received without objection.  As Department
Counsel was on sick leave recovering from an operation, the record closed on August
23, 2013.  Based upon a review of the pleadings, exhibits, and testimony, eligibility for
access to classified information is granted.
Procedural and Evidentiary Rulings
Motion to Amend SOR
Department Counsel moved to amend the SOR by adding ¶ 2.g., alleging
Applicant has “contracts with Indian Government entities valued at about $6 million
dollars over a period of two years.”  (TR at page 115 line 8 to page 117 at line 21, and
at page 146 line 15 to page 147 line 8).  Applicant’s counsel objected to the motion,
arguing that Department Counsel had not shown good cause for failing to raise the
allegation sooner and that the lack of notice denied Applicant the opportunity to
prepare to respond to the allegation at the hearing.  This objection was denied, but
Applicant was given an additional four weeks to respond to the new matter, as required
by ¶ E3.1.17 of the Directive.  (TR at page 157 at line 25 to page 158 line 20).
Request for Administrative Notice
Department Counsel submitted a formal request that I take administrative notice
of certain facts relating to Republic of India.  The request was granted.  The request,
and 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
In his Answer to the SOR, Applicant admitted the factual allegations in all the
Subparagraphs of the SOR, with explanations.
Guideline E - Personal Conduct
Applicant, a native of India, attended college there; but came to the United
States at the age of 21, where he received a Master’s Degree in 1974 and a Doctoral
Degree in 1977.  (TR at page 55 line 8 to page 56 line 5, and at page 122 lines 8~13.)
After completing a Post-Doctoral Thesis, he began work in U.S. defense industries,
becoming a U.S. citizen in 1982 and receiving a security clearance soon thereafter.
(TR at page 56 line 6 to page 61 line 19.)  He has lived and worked in the United
States for the last 42 years.  (TR at page 122 lines 8~13.)
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1.a.  From 1984 to 2010, Applicant was the CEO and one of the owners of a
research and development company (Company 1).  (TR at page 61 line 20 to page 63
line 2.)  At the behest of the U.S. Air Force, Company 1's function was the following:
“what it entailed was hiring students with the help and guidance of all the Air Force
Labs across the country, for them to come for interviews as to see whether they get
selected, to pay for their travel and for their summer studies.”  (TR at page 76 lines
10~16.)  However, it quickly became evident that Company 1 could not survive when
incurring these up front travel and study expenses.  (TR at page 76 line 21 to page 77
line 19.)  As a result, Applicant and his program manager met with the Air Force’s
program manager and the Air Force’s contracting officer.  (TR at page 78 line 1 to page
80 line 17, and GX 4 at page 3.)  They were advised by the Air Force’s representatives
that Company 1 “could pre-bill” the Air Force for its up front expenses.  (Id.)  Though
well meaning, this advice turned out to be wrong, and resulted in illegal conduct.  (TR
at page 80 line 20 to page 83 line 1, see also TR at page 131 line 7 to page 138 line 4.)
1.b.~1.e.  In July of 2006, Criminal Information was filed in federal district court
against Company 1 for a violation of 18 U.S.C. Section 1001 - False Statements, for
over billing the United States regarding the above mentioned contact.  (TR at page 83
line 2 to page 85 line 2, and GX 5.)  In September of 2006, Company 1 pled guilty to
one count of a violation of 18 U.S.C. Section 1001 - False Statement, and was placed
on probation for three years and fined $400.  (Id.)  Applicant was also debarred for
three years from conducting contract actions with the U.S. Government.  (TR at page
83 line 2 to page 85 line 2, and GX 5.)
In June of 2007, Applicant started a new research and development company
(Company 2).  (TR at page 63 line 17 to page 65 line 17, and AppX D.)  As a result of
Company 2's contribution to national security, Applicant’s debarment was lifted after
two years.  (TR at Page 67 line 15 to page 70 line 11, at page 75 lines 4~19, page 86
line 22 to page 87 line 6, at page 94 line 10 to page 97 line 9, and AppXs A~M.)  An
Independent Monitor was put in place from June of 2007 to June of 2010 to monitor
“the Administrative Agreement between . . . [Company 2] and the United States Air
Force.”  (AppX C.)  This Independent Monitor avers, in part, the following: “Following
the lifting of his disbarment, . . . [Applicant] resumed his position as president of . . .
[Company 2].  During that period . . . [Applicant] demonstrated a firm commitment to
honesty and integrity.”  (Id.)
Guideline B - Foreign Influence
2.a.  Applicant’s sister is a citizen and resident of India.  She is a retired school
teacher.  They have a somewhat strained relationship, but “more recently,” he has
seen her “one to three times a year.”  He provides no financial support for her.  (TR at
page 102 lines 8~18, and at page 121 line 24 to page 123 line 19.)
2.b.  Applicant’s mother-in-law is a citizen and resident of India.  She “is 86
years old, . . in the final stages of her life,” and “she cannot talk.”  He provides no
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financial support for her.  (TR at page 102 line 19 to page 103 line 5, and at page 123
line 20 to page 124 line 8.)
2.c.  Applicant’s sister-in-law is a citizen and resident of India.  She “is a
housewife,” and he “very rarely” contacts her.  He provides no financial support for her.
(TR at page 103 lines 5~10, and at page 124 lines 9~24.)
2.d. and 2.e.  Applicant’s two brothers-in-law are citizens and residents of India.
Both are retired from the Indian Army.  One retired as a Lieutenant Colonel and the
other as a Colonel.  He has little contact with his brothers-in-law, at most “once every
four or five years.”  (TR at page 103 lines 11~21, and at page 124 line 25 to page 126
line 24.)  He provides no financial support for either of them.
2.f.  Applicant owns land in India worth “between $100,000 to $200,000,” and a
condominium apartment worth about “$60,000.”  (TR at page 105 line 16 to page 107
line 9, and at page 126 line 25 to page 128 line 8.)  His net worth in the United States
is between $8,000,000 to $10,000,000.  (Id.)
2.g.  Applicant has contracts with Indian Government entities valued at about $6
million dollars over a period of two years.  These contracts have been approved by the
U.S. “State Department,” as evidenced by State Department documents.  (TR at page
107 line 14 to page 109 line 22, and AppXs J~M.)  In 2012, Applicant’s company’s
business dealings with Indian Government entities represented only “7.2% of the
combined revenues from these companies.”  (AppX S.)  In 2013, Applicant’s
company’s business dealings with Indian Government entities represented only “12.8%
of the combined revenues from these companies.”  (Id.)  No contracts have been
signed “to be performed after 2013.”  (AppX S).
Applicant avers, credibly, that he is not subject to coercion vis-a-vis his Indian
relatives or his foreign financial interests.  (TR at page 103 line 22 to page 128 line 8.)
I also take administrative notice of the following facts.  India is among the most
active collectors of U.S. economic and proprietary information.  It also continues to
experience terrorist and insurgent activities that may affect U.S. citizens.  Also, many of
India’s more than one billion citizens suffer from oftentimes serious human rights
abuses.  Constraints on religious freedom are another matter of concern.  Finally,
although the United States has sought to strengthen its relationship with India, there
are some differences between the United States and India, including differences over
India’s nuclear weapons program, and the pace of India’s economic reforms.
Policies
When evaluating an applicant’s suitability for a security clearance, the
administrative judge must consider the adjudicative guidelines (AG).  In addition to brief
introductory explanations for each guideline, the adjudicative guidelines list potentially
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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
Paragraph 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.
Paragraph 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 Paragraph E3.1.14, the Government must present evidence to
establish controverted facts alleged in the SOR.  Under Directive Paragraph 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).
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Analysis
Guideline E - Personal Conduct
The security concern for Personal Conduct is set out in AG Paragraph 15:
Conduct involving questionable judgment, lack of candor, dishonesty, or
unwillingness to comply with rules and regulations can raise questions
about an individual’s reliability, trustworthiness and ability to protect
classified information.
The guideline notes several conditions that could raise security concerns.
Under Subparagraph 16(b), “deliberately providing false or misleading information
concerning relevant facts to an . . . other government representative” may be
disqualifying.  Arguably this is applicable, as Applicant’s Company 1 pre-billed for
services not yet rendered.  But this is clearly mitigated by Subparagraph 17(c), as “it
happened under such unique circumstances that it is unlikely to recur and does not
cast a doubt on the individual’s reliability, trustworthiness, or good judgment.”  Here,
the pre-billing, which occurred more than seven years ago, was done with the
concurrence of representatives of the U.S. Air Force.  Furthermore, Applicant’s
reliability, trustworthiness, and good judgment has been recognized to the extent that
his disbarment was lifted early so that his Company 2 might contribute the our national
security, and also shows rehabilitation.
Guideline B - Foreign Influence
Paragraph 6 of the adjudicative guidelines sets out the security concern relating
to Foreign Influence:
Foreign contacts and interests may be a security concern if the individual
has divided loyalties or foreign 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 a
foreign interest.
Here, Subparagraph 7(a) is applicable: “contacts with a foreign family member .
. . 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.”  Applicant’s sister and in-laws are citizens of and reside in India.  This is
countered, however, by the first mitigating condition, as “the nature of the relationships
with foreign persons, the country in which these persons are located . . . 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 . . . and the interests of the U.S.”  Applicant’s Indian in-
laws have little connection with the Indian government.  His brothers-in-law, who he
sees at most “once every four or five years,” are now retired from the Indian Army.  His
elderly mother-in-law is mute, one sister-in-law is a housewife, and he has a strained
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relationship with his own sister.  Furthermore, Applicant credibly avers that he would
not be subject to coercion vis-a-vis his Indian relatives.
The disqualifying condition found in Subparagraph 7(e) is also arguably
applicable.  Applicant has “substantial . . . financial, or property interest” in India.  He
owns real estate valued at most at about $260,000, but this pales in comparison to his
$8,000,000 to $10,000,000 net worth in the United States.  Furthermore, his
companies dealings with Indian, which are sanctioned by the our State Department,
are at most “12.8% of the combined revenues from . . . [his] companies.”  As such, I
find under Subparagraph 8(f) that “the value . . . of the foreign business . . . 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.”
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 also 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.
Applicant understands his responsibility to the U.S. while holding a security
clearance; and as such, meets the eligibility criterion.  Furthermore, he has the
unqualified support of those who know Applicant in the defense industry.  (AppXs
A~C).  A highly placed member with the Office of the Chief of Naval Operations avers,
in part, the following: “I know . . . [Applicant] as an energetic and loyal American;
dedicated to bringing advanced technology to the U.S. Armed Forces.  His dealings
with me have always been honest and decent.  I see no reason not to renew his
security clearance.”  (AppX B.)
I have 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
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clearance.  For all these reasons, I conclude Applicant mitigated the security concerns
arising from his alleged Personal Conduct and Foreign Influence.
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 E: FOR APPLICANT
Subparagraph 1.a: For Applicant
Subparagraph 1.b: For Applicant
Subparagraph 1.c: For Applicant
Subparagraph 1.d: For Applicant
Subparagraph 1.e: For Applicant
Paragraph 2, Guideline B: FOR APPLICANT
Subparagraph 2.a: For Applicant
Subparagraph 2.b: For Applicant
Subparagraph 2.c: For Applicant
Subparagraph 2.d: For Applicant
Subparagraph 2.e: For Applicant
Subparagraph 2.f: For Applicant
Subparagraph 2.g: For Applicant
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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