1
 
                                                             
                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
[Redacted] )       ISCR Case No. 13-00485
)
Applicant for Security Clearance )
Appearances
For Government: Braden Murphy, Esquire, Department Counsel
For Applicant: Pablo A. Nichols, Esquire
______________
Decision
______________
HENRY, Mary E., Administrative Judge:
Based upon a review of the pleadings, exhibits, and testimony, Applicant’s
eligibility for access to classified information is granted.
Statement of the Case
Applicant completed and certified an Electronic Questionnaire for Investigations
Processing (e-QIP) on November 6, 2008. The Department of Defense (DOD) issued
Applicant a Statement of Reasons (SOR) on June 5, 2013, detailing security concerns
under Guideline B, foreign influence. The action was taken under Executive Order
10865, Safeguarding Classified Information within Industry (February 20, 1960), as
amended; DOD Directive 5220.6, Defense Industrial Personnel Security Clearance
Review Program (January 2, 1992), as amended (Directive); and the Adjudicative
Guidelines For Determining Eligibility for Access to Classified Information (AG),
implemented on September 1, 2006. 
 
Hearing Exhibit 1 - XV was not included with the documents submitted by Department Counsel for1
administrative notice.
W hen  SOR allegations are controverted, the Government bears the burden of producing evidence sufficient2
to prove controverted allegations. Directive, ¶ E3.1.14. “That burden has two components. First, the
Government must establish by substantial evidence that the facts and events alleged in the SOR indeed took
place. Second, the Government must establish a nexus between the existence of the established facts and
events and a legitimate security concern.” See ISCR Case No. 07-18525 at 4 (App. Bd. Feb. 18, 2009),
(concurring and dissenting, in part) (citations omitted). The guidelines presume a nexus or rational connection
between proven conduct under any of the criteria listed therein and an applicant’s security suitability. See
ISCR Case No. 08-06605 at 3 (App. Bd. Feb. 4, 2010); ISCR Case No. 08-07290 at 2 (App. Bd. Nov. 17,
2009).
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Applicant received the SOR on June 10, 2013, and he answered it on June 20,
2013. Applicant requested a hearing before an administrative judge with the Defense
Office of Hearings and Appeals (DOHA). Department Counsel was prepared to proceed
on August 1, 2013, and I received the case assignment on August 26, 2013. DOHA
issued a Notice of Hearing on September 16, 2013 for a hearing scheduled on October
9, 2013. Due to the Government shutdown, the hearing was cancelled. A second Notice
of Hearing was issued on October 30, 2013, and I convened the hearing as scheduled
on November 20, 2013. The Government offered exhibits (GE) marked as GE 1 through
GE 4, which were received and admitted into evidence without objection. Applicant
testified. He submitted exhibits (AE) marked as AE A through AE J, which were
received and admitted into evidence without objection. DOHA received the hearing
transcript (Tr.) on December 3, 2013. I held the record open until December 12, 2013,
for Applicant to submit additional matters. Applicant timely submitted AE K - AE M,
which were received and admitted without objection. The record closed on December
12, 2013.
Request for Administrative Notice
Department Counsel submitted a request that I take administrative notice of
certain facts relating to the People’s Republic of China (PRC). The request was granted.
The request and attached documents were not admitted into evidence, but were
included in the record as Hearing Exhibit 1.  The facts administratively noticed are1
limited to matters of general knowledge and matters not subject to reasonable dispute,
and are set out in the Findings of Fact below. 
Findings of Fact
In his Answer to the SOR, Applicant admitted the factual allegations in ¶¶ 1.a and
1.b of the SOR. His admissions are incorporated herein as findings of fact. He denied
the factual allegations in ¶ 1.c of the SOR.  He also provided additional information to2
support his request for eligibility for a security clearance. After a complete and thorough
review of the evidence of record, I make the following findings of fact.  
Applicant, who is 71 years old, is the President and Chief Executive Officer of a
company he and his brother formed (Company 1). Applicant is seeking a facility
GE 1; AE A; AE B; AE I; Tr. 69-71. 3
GE 1; GE 2; Tr. 23-25. 4
GE 1; Tr. 27.5
GE 1; GE 2; Tr. 41-44.6
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clearance for this company. Company 1 held a facility clearance from 1990 until 2012.
Because it did not have a pending or current requirement for access to classified
information and no classified procurement was planned, Company 1 requested
immediate termination of its facility clearance in February 2012. Company 1’s facility
security clearance was terminated on February 15, 2012. Applicant holds a security
clearance and has since 1990.3
Applicant was born in the PRC. His father was the chief of police in a small town.
In 1948, Applicant’s family fled the PRC during the communist revolution because his
father feared he would be executed. The family immigrated to Taiwan. Applicant grew
up in Taiwan, where he graduated from college with a bachelor’s degree. After college
he served one year of mandatory military service in the Taiwanese military. In 1968,
Applicant immigrated to the United States through his job. He obtained a masters of
business administration degree from a major U.S. university.4
Applicant and his wife married in 1969. Applicant and his wife became United
States citizens in 1979. They have two daughters, ages 38 and 35, who are United
States citizens by birth and reside in the United States. They also have two
grandchildren, who are citizens and residents of the United States.5
Applicant’s parents are deceased. His sister is 72 years old and a widow. She is
a citizen of Taiwan, and she lives in Taiwan part of the year and in the PRC part of the
year. His sister has not worked. Her husband left her with sufficient income to provide
for her living expenses. She does not know that Applicant holds a security clearance or
that he is seeking a facility security clearance as he does not discuss his work or
business with her. He talks with her one or two times a year, usually on her birthday and
maybe on Christmas. He last visited her in 2010 in Taiwan, but not the PRC, and she
last came to the United States in 2011. She has never worked for a foreign government
nor does she have contacts with a foreign government.6
Applicant’s brother is 65 years old. His brother was born in the PRC just prior to
his parents’ departure. His brother grew up in Taiwan and was educated in Taiwan. His
brother also served one year of mandatory military service for the Taiwanese military
many years ago. His brother immigrated to the United States and later became a U.S.
citizen. Applicant’s brother is currently living in Taiwan while caring for his wife, who is
receiving medical treatment for leukemia. As will be explained infra, Applicant’s brother
has lived in Southeast Asia for some time and has spent time in the PRC. His brother
GE 1; GE 2; Tr. 44, 48.7
GE 1; Tr. 26, 28, 50, 70-71.8
GE 2; Tr. 35-37, 67, 74.9
GE 4; AE E- AE H; AE K; Tr. 37-40, 57-59, 72.10
AE L; AE M; Tr. 40, 59-62, 65-66.11
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owns property in the United States. Applicant discusses business matters with his
brother when necessary.7
 
In 1974, Applicant and his brother formed Company 1, their first business.
Applicant continues to work for Company 1, which employs approximately 45 workers.
As employees of this business, Applicant, his wife, and his brother have held security
clearances. His wife and brother are not seeking a security clearance. As previously
stated, Applicant is seeking a new facility security clearance for this business.8
In 1989, Applicant’s brother formed Company 2, a global manufacturing
company, and incorporated it outside the United States. By 2001, Company 2 had two
manufacturing plants in an Asian country and one in the PRC. Because of the location
of these plants, Applicant’s brother began living overseas and traveling to the plant in
the PRC. Applicant acquired a 45% equity interest, valued at approximately [redacted],
in Company 2 in 2001. Company 2 has never been a DOD contractor.9
In 2010, a Southeast Asia company, not a PRC company, approached Company
2 about purchasing it. After two years of negotiations, Company 2 and the Southeast
Asia company reached an agreement for the sale of Company 2 to the Southeast Asia
company.  The actual transfer of ownership occurred on June 25, 2013. The registration
office for the country of incorporation for the new owners verified that Company 2 had
one shareholder, the Southeast Asia company, and identified the Board of Directors.
Applicant and his brother are not identified as members of the Board of Directors for
Company 2.10
As a result of the sale of Company 2, Applicant no longer has any equity interest
in the company. He also has no legal rights in Company 2. The Southeast Asia
company has paid him more than [redacted] for his equity interest. The company still
owes him about 15% of the purchase price of his equity shares. Applicant anticipates
the money will be paid shortly. Applicant now has no foreign investments. He does not
have foreign bank accounts nor does he own any foreign property. His property
ownership is solely in the United States, and he has an estimated net worth of
[redacted].11
Applicant’s brother works as a consultant for the Southeast Asia company. At this
time, his brother is President and Executive Director of a subsidiary, which was formerly
part of Company 2 and is now part of the Southeast Asia company. His brother agreed
AE M; Tr. 45-47.12
AE C; AE D; AE J.13
Tr. 52-55.14
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to work for two years in this position to help facilitate the transition to the new company.
While working in this position, his brother will live overseas, but not in the PRC. It does
not appear that his work will be in the PRC.12
Company 1 always received at least a satisfactory rating when its facility was
audited for its clearance procedures. Company 1 has received awards and certificates
of recognition for performance from industry or the Government. Two employees of
Company 1 wrote letters of recommendation on behalf of Applicant. They have known
him for many years. They praise his work ethic and work skills. Neither believe he would
disclose classified information for any reason. 13
At the hearing, Applicant stated that he would chose the United States over the
PRC because he has lived two-thirds of his life in the United States. The United States
is his country and home, which he must defend. He has no desire to live in the PRC,
and he has no loyalty to the PRC. He would report any individual who sought classified
information from him, including his siblings. He cannot be coerced by a foreign
government, even if there are threats to his siblings.14
Administrative Notice
People’s Republic of China
I take administrative notice of the following facts. The PRC is an authoritarian,
communist party-led state. Human rights violations continue to be problematic.
Concerns regarding the PRC’s weapons development, theft of classified technology
information between 1979 and 1999, and industrial espionage activities remain. The
PRC continues to have active intelligence operations in the U.S., which seek to obtain
military and industrial secrets through Americans of Chinese ancestry. On the other
hand, the PRC supports the U.S.’s anti-terrorism position and activities. The U.S. and
the PRC have developed joint trade agreements, resulting in the sale of goods to each
other, and work together on environmental issues. The PCR enjoys a most favored
nation status in trading with the U.S. The PRC has opened its doors to outside
investment.
Policies
When evaluating an applicant’s suitability for a security clearance, the
administrative judge must consider the adjudicative guidelines. 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 used 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 commonsense 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 the evidence contained in the record.
Under Directive ¶ E3.1.14, the Government must present evidence to establish
controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, an applicant is
responsible for presenting “witnesses and other evidence to rebut, explain, extenuate,
or mitigate facts admitted by applicant or proven by Department Counsel. . . .” An
applicant has the ultimate burden of persuasion for 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 an 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 B, Foreign Influence
AG ¶ 6 expresses the security concern regarding foreign influence:
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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.
AG ¶ 7 describes the disqualifying conditions that could raise security concerns. I
have considered all the conditions, and the following are potentially applicable:
(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-owned or foreign-operated business, which
could subject the individual to heightened risk of foreign influence or
exploitation.
Applicant’s wife, children, and grandchildren are citizens and residents of the
United States. Thus, no security concern is raised by these family members. Applicant’s
brother is a citizen of the United States, who resides and works in Southeast Asia, and
who has worked in the PRC. His sister is a citizen of Taiwan, a part-time resident of
Taiwan, and a part-time resident of the PRC. Applicant maintains a normal familial
relationship with his sister in Taiwan. He talks with her by telephone once or twice a
year. He talks with his brother on business matters when necessary, making his
contacts with his brother more frequent. His family relationships are not per se a reason
to deny Applicant a security clearance, but his contacts with his family members must
be considered in deciding whether to grant Applicant a clearance. The Government
must establish that these family relationships create a risk of foreign exploitation,
inducement, manipulation, pressure, or coercion by terrorists or would create a potential
conflict of interest between his obligations to protect sensitive information and his desire
to help his family members. 
In addition to his family contacts in Southeast Asia, Applicant invested in
Company 2, which he and his brother started in 1989. By 2001, Company 2 operated a
 The Government has not raised a concern about Taiwan.15
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manufacturing plant in the PRC. While Applicant is not involved in the day-to-day
operations of Company 2, he owned a 45% equity interest, valued at [redacted], in the
company, which had a substantial business, property, and financial interest in the PRC.
In determining if such a risk exists, I must look at Applicant’s relationships and
contacts with his family and Company 2, as well as the activities of the PRC
Government. The risk that an applicant could be targeted for manipulation or induced
into compromising classified information is real, not theoretical. Applicant’s relationship
and contacts with his family in Southeast Asia and the PRC raise a heightened risk and
a security concern because the monitoring and surveillance activities of the PRC
government intrude upon the privacy of its citizens and upon business operations. The
PRC government actively engages in espionage activities in the United States and
targets American-Chinese citizens by exploiting, manipulating, pressuring, or coercing
them to obtain protected information.  15
Under the guideline, the potentially conflicting loyalties must be weighed to
determine if an applicant can be expected to resolve any conflict in favor of U.S.
interests. In determining if Applicant’s contacts in the PRC cause security concerns, I
considered that the PRC and the United States have a relationship, which includes
working together on international security issues and trade. There is evidence that the
PRC targets U.S. citizens for protected information. The human rights issues in the PRC
continue to be a concern. While none of these considerations by themselves dispose of
the issue, they are all factors to be considered in determining Applicant’s vulnerability to
pressure or coercion because of his family in Southeast Asia and business in the PRC.
Applicant’s contacts with his family raise a heightened risk under AG ¶¶ 7(a) and (b)
and his ownership interests in Company 2 raise a heightened risk of foreign influence or
exploitation under AG ¶ 7(c).
The Foreign Influence guideline also includes examples of conditions that can
mitigate security concerns. I have considered mitigating factors AG ¶ 8(a) through ¶ 8(f),
and the following 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
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; and
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(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.
Applicant’s contacts with his sister are those which are made between family
members. She is not involved in his business nor is she aware of his request for a
security clearance. Their lives intertwine as family members not in business. She does
not, and has not, worked for the PRC government nor is she involved in political
activities. Applicant’s relationship with his brother is more complex because they have
developed businesses together and have worked together. His brother has lived
overseas for many years to manage the operations of Company 2, which required
frequent travel by him to the PRC.
In June 2013, after two years of negotiations, Applicant’s brother sold Company
2 to a Southeast Asia company. Applicant has been paid most of the value of his equity
interest in Company 2 and should receive the rest shortly. His brother works for the new
owners to help the transition of Company 2 to the new owner. In his new position,
Applicant’s brother is not involved with the manufacturing plant in the PRC, which
reduces his brother’s risk to be exploited, manipulated, or coerced by the PRC.
Applicant left the PRC as a six-year-old child. He grew up in Taiwan, but came to
the United States 45 years ago. He considers the United States his country and home,
which he must defend. He has spent almost two-thirds of his life in the United States
and very little of his life in the PRC. He lived in Taiwan, which considers itself a country
separate from the PRC. Given his limited connections with the PRC, his statements that
he would chose the interests of the United States over those of the PRC, even if the
PRC threatened his siblings, and that he would report any individual who sought
classified information from him, including his siblings, are credible. Applicant has
mitigated the security concerns raised by his family contacts and equity ownership in
Company 2.
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 an applicant’s
conduct and all relevant 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. 
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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 decision to grant or
deny a security clearance requires a careful weighing of all relevant factors, both
favorable and unfavorable. In so doing, an administrative judge must review all the
evidence of record, not a single item in isolation, to determine if a security concern is
established and then whether it is mitigated. A determination of an applicant’s eligibility
for a security clearance should not be made as punishment for specific past conduct,
but on a reasonable and careful evaluation of all the evidence of record to decide if a
nexus exists between established facts and a legitimate security concern. 
The evidence in support of granting a security clearance to Applicant under the
whole-person concept is more substantial than the evidence in support of denial.
Applicant was born in the PRC before the 1948 communist revolution. His family fled
the PRC in 1948 out of fear for their safety. He grew up in Taiwan. He immigrated to the
United States as a young college graduate in 1968. For the last 45 years, Applicant has
lived and worked in the United States. He married and raised his family in the United
States. He and his wife became U.S. citizens in 1979, and he considers the United
States his country, which he must defend. 
Applicant and his brother, also a U.S. citizen, formed two successful businesses,
one of which continues to operate in the United States under Applicant’s leadership. His
brother managed and operated Company 2, a separate enterprise, which operated a
manufacturing plant in the PRC. His brother recently sold Company 2 to a Southeast
Asian company. With the sale of Company 2, Applicant is divested of his equity interest
in the company. His brother will work in Southeast Asia for another 18 months to assist
with the transfer of Company 2 to its new owner, but plans to return to the United
States, where he owns property. 
Applicant’s personal contacts with the PRC are almost nonexistent, but his sister
lives part-time in the PRC. She lives quietly, and she lacks any governmental or political
connections in the PRC, which could raise a security concern. With the sale of
Company 2, Applicant’s brother will no longer need to travel to the PRC for business
reasons. His brother has no other connections with the PRC except their sister.
Company 2 did not perform work for the United States, The current business activities
of Applicant’s brother do not involve classified work for the United States, making it
unlikely that he can be placed in a position to pressure or coerce Applicant into
providing classified information. Applicant indicated he would report his brother to the
proper authorities should his brother try to obtain classified information. Applicant’s
limited contacts with the PRC are insufficient to raise a security concern. (See AG &
2(a)(1).)
Overall, the record evidence leaves me without questions or doubts as to
Applicant’s eligibility and suitability for a security clearance. For all these reasons, I
conclude Applicant mitigated the security concerns arising from his family members
under Guideline B.
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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: FOR APPLICANT
Subparagraph 1.a: For Applicant
Subparagraph 1.b: For Applicant
Subparagraph 1.c: For Applicant
Conclusion
In light of all of the circumstances presented by the record in this case, it is
clearly consistent with the national interest to grant Applicant eligibility for a security
clearance. Eligibility for access to classified information is granted.
                                                              
MARY E. HENRY
Administrative Judge