1 DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ---------------------- ) ISCR Case No. 16-00204 ) Applicant for Security Clearance ) Appearances For Government: Carroll J. Connelly, Esq., Department Counsel For Applicant: Pro se ______________ Decision ______________ KATAUSKAS, Philip J., Administrative Judge: Applicant contests the Defense Department’s intent to revoke his eligibility for access to classified information. He presented sufficient evidence to explain, extenuate, or mitigate the security concerns stemming from his current financial status, his ties to the country of India, and his personal conduct during the security clearance process. Accordingly, this case is decided for Applicant. Statement of the Case Applicant completed and submitted a Questionnaire for National Security Positions (SF 86 format) on January 28, 2015. This document is commonly known as a security clearance application. On August 20, 2016, after reviewing the application and the information gathered during a background investigation, the Department of Defense Consolidated Adjudications Facility sent Applicant a statement of reasons (SOR), explaining it was unable to find that it was clearly consistent with the national interest to 2 grant him eligibility for access to classified information.1 The SOR is similar to a complaint in a civil court action. It detailed the factual reasons for the action under the security guidelines known as Guidelines F, B, and E for financial considerations, foreign preference, and personal conduct, respectively. Applicant answered the SOR on September 8, 2016, and requested a decision based on the written record without a hearing. On October 24, 2016, Department Counsel submitted a file of relevant material (FORM).2 The FORM was mailed to Applicant on that same day. He was given an opportunity to file objections and submit material to refute, extenuate, or mitigate the Government’s evidence. Applicant received the FORM on November 1, 2016.3 He did not respond to the FORM. The case was assigned to me on April 7, 2017. On May 24, 2017, via email to Applicant and Department Counsel, I reopened the record sua sponte until June 7, 2017, to solicit additional information from Applicant about the Guidelines F and B allegations. On May 25, 2017, Applicant responded to my email and provided documents, to which Department Counsel did not object. The email exchange among me and the parties is marked at Exhibit A, and the set of documents provided by Applicant is marked as Exhibit B. Procedural Matters Included in the FORM were six items of evidence, five of which are marked as Government Exhibits 1 through 5.4 Exhibits 1 and 3 through 5 are admitted into evidence. Exhibit 2 is a report of investigation (ROI) summarizing Applicant’s interview that took place during the March 2015 background investigation. The ROI is not authenticated as required under ¶ E3.1.20 of the Directive.5 Because the record was reopened on May 24, 2017, as noted above, on May 25, 2017, I asked Applicant via email if he had any 1 This action was taken under Executive Order (E.O.) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended, as well as Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive). In addition, the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information (AG), effective within the Defense Department on September 1, 2006, apply here. The AG were published in the Federal Register and codified in 32 C.F.R. § 154, Appendix H (2006). 2 The file of relevant material consists of Department Counsel’s written brief and supporting documents, some of which are identified as evidentiary exhibits in this decision. 3 The Defense Office of Hearings and Appeals’ (DOHA) transmittal letter is dated December 27, 2016, and Applicant’s receipt is dated November 1, 2016. The DOHA transmittal letter informed Applicant that he had 30 days after receiving it to submit information. 4 Items 2 through 6 of the FORM are marked as Exhibits 1 through 5. 5 See generally ISCR Case No. 12-10933 (App. Bd. Jun. 29, 2016) In a concurring opinion in that case, Judge Ra’anan noted the historical concern about reports of investigation in that they were considered by some to present a heightened problem in providing due process in security clearance cases. Judge Ra’anan raised a number of pertinent questions about using an unauthenticated ROI in a non-hearing case with a pro se applicant. 3 objections to the ROI. In reply, he asked if we may speak by telephone, so he could better understand my question about the ROI. On May 31, 2017, Applicant, Department Counsel, and I held a conference call, in which I explained that since the ROI was not authenticated, Applicant could object to it being considered as evidence, or, alternatively, he could correct the ROI, if necessary, and not object to it being considered by me in making my decision. Applicant responded that he had no corrections or objections. Therefore, Exhibit 2 is admitted. I closed the record on May 31, 2017. Findings of Fact In his Answer to the SOR, Applicant admitted SOR ¶¶ 2.a-d. Those admissions are incorporated in my findings of fact. Applicant denied the Guideline F and E allegations, as discussed below. Applicant is 49 years old and has a doctoral degree. He was born in India, came to the United States in 1991, and was naturalized in 2002. His spouse is a natural-born United States citizen to whom he has been married for almost 21 years. He has two children (15 and 12) who were born in the United States. Since April 2010, he has been employed by a defense contractor.6 According to Applicant’s employer, his professional record is impressive, and he has upheld the highest levels of integrity, ethics, and has adhered strictly to the rules for handling classified information. Applicant’s expertise is critical to the development of technologies that will protect certain important Department of Defense assets. His employer is aware of Applicant’s parents in India and nevertheless urges that Applicant continue to have a security clearance.7 Under Guideline F, the SOR alleges that Applicant is indebted on a charged-off account in the amount of $33,790. Under Guideline B, the SOR alleges that (1) Applicant’s father and mother are citizens and residents of India, (2) Applicant’s father served as an Indian diplomat and was employed by an Indian intelligence agency, (3) Applicant has a bank account in India with a value of $19,285, and (4) Applicant has a property interest in a home in India valued at $165,000. Under Guideline E, the SOR alleges that Applicant falsified his security clearance application by failing to disclose the charged-off account.8 In denying the Guideline F allegation, Applicant explained that the charged-off account relates to a home he and his spouse owned until mid-2007. At that time they had to put the home on the market because of a job-related move by Applicant’s spouse. Not long after they placed their home on the market, the national housing market crash hit, which was unanticipated by Applicant. As a result, the value of their home declined sharply. In 2009, they eventually received an offer for their home. That offer, however, 6 Exhibit 1. 7 September 2, 2016 character reference letter submitted by Applicant’s employer attached to Applicant’s Answer. 8 SOR ¶¶ 1., 2., and 3. Under Guideline B, the SOR alleged that Applicant’s sister is a citizen and resident of Singapore. SOR ¶ 2.b. The Government moved to withdraw that allegation. That motion is granted. 4 was less than the home’s value, because the home was “underwater.” The lender agreed to a short sale. Applicant’s spouse handled the details of the short sale, and at the time she explained to Applicant that the lender had agreed that Applicant and his spouse would not be liable for the deficiency.9 That deficiency has been reported since August 2009, but Applicant’s other credit accounts are in order as of the March 2015 credit report.10 In response to my email to Applicant reopening the record, he stated that he and his spouse searched their personal records, and because the sale was in 2009, they no longer had paperwork relating to that sale; any such paperwork had been discarded in the normal course several years ago. Applicant admitted the Guideline B allegations with explanations. Applicant’s father is nearly 80 years old and retired from his government job about 20 years ago. His mother is a homemaker and was never employed outside the home. Applicant’s parents are financially independent and do not rely on Applicant for their financial needs. Applicant’s bank account in India is an emergency medical fund for his parents. For example, in 2016 Applicant’s mother required double knee-replacement surgery. This fund was used to defray some of the medical costs of that surgery. He speaks to his parents via telephone about weekly. Applicant’s property interest in India is as a co-owner with his parents of their family home. Applicant might inherit that property upon his parents’ deaths, but that property interest has no bearing on his current solvent financial condition, which includes substantial retirement assets and personal savings.11 In response to my email reopening the record, Applicant produced documents from two savings accounts and two retirement accounts. The total of those accounts is just under $520,000.12 Applicant has not visited his parents since 2014.13 Applicant denied the Guideline E allegation with explanations. When he filled out his security clearance application, he was unaware that the short sale had left a delinquency. Applicant first became aware of that account being reported delinquent during his interview. He has never been contacted by the lender about any delinquent account.14 At the time of the short sale, there was no mention of a delinquency being associated with that sale. Applicant answered the question to the best of his knowledge at the time of his security clearance application, and his answer was not a deliberate 9 Answer. 10 Exhibit 4. 11 Answer; Exhibit 1. 12 Exhibit B. 13 Exhibit 1. 14 Exhibit 2. 5 falsification.15 That delinquency was not reported on Applicant’s security clearance application.16 Administrative Notice (Republic of India) In response to the Government’s request, to which Applicant did not object, I have taken administrative notice of the following relevant facts about the Republic of India:  The 2000 and 2008 Annual Reports to Congress on Foreign Economic Collection and Industrial Espionage identified India as being involved in economic collection and industrial espionage.  In June 2013, a member of parliament in India and a close advisor to a now- deceased chief minister was among those indicted by the U.S. Department of Justice for allegedly soliciting bribes for himself and other government officials in India in return for approving licenses to mine titanium minerals.  As of March 2016, India continued to experience terrorist and insurgent activities. Anti-Western terrorist groups active in India, some of which are on the U.S. government’s list of foreign terrorist organizations, include Islamist extremist groups Harkat-ul-Jihad, Harakat ul-Mujahidin, Indian Myjahideen, Jaish-e-Mohammed, and Lashker-e Tayyiba.  As of 2015, the most significant human rights problems involved police and security force abuses, including extrajudicial killings, torture, and rape: corruption remained widespread and contributed to ineffective responses to crimes, including those against women, children, and members of scheduled castes or tribes, and societal violence based on gender, religious affiliation, and caste or tribe. Other human rights problems included disappearances, hazardous prison conditions, arbitrary arrest and detention, and lengthy pretrial detention. A lack of accountability for misconduct at all levels of government persisted, contributing to widespread impunity. Law and Policies It is well-established law that no one has a right to a security clearance.17 As noted by the Supreme Court in Department of the Navy v. Egan, “the clearly consistent standard 15 Answer. 16 Exhibit 1. 17 Department of Navy v. Egan, 484 U.S. 518, 528 (1988) (“it should be obvious that no one has a ‘right’ to a security clearance”); Duane v. Department of Defense, 275 F.3d 988, 994 (10th Cir. 2002) (no right to a security clearance). 6 indicates that security clearance determinations should err, if they must, on the side of denials.”18 Under Egan, Executive Order 10865, and the Directive, any doubt about whether an applicant should be allowed access to classified information will be resolved in favor of protecting national security. A favorable clearance decision establishes eligibility of an applicant to be granted a security clearance for access to confidential, secret, or top-secret information.19 An unfavorable clearance decision (1) denies any application, (2) revokes any existing security clearance, and (3) prevents access to classified information at any level.20 There is no presumption in favor of granting, renewing, or continuing eligibility for access to classified information.21 The Government has the burden of presenting evidence to establish facts alleged in the SOR that have been controverted.22 An applicant is responsible for presenting evidence to refute, explain, extenuate, or mitigate facts that have been admitted or proven.23 In addition, an applicant has the ultimate burden of persuasion to obtain a favorable clearance decision.24 In Egan, the Supreme Court stated that the burden of proof is less than a preponderance of evidence.25 The Appeal Board has followed the Court’s reasoning, and a judge’s findings of fact are reviewed under the substantial-evidence standard.26 Discussion Guideline F (Financial Considerations) Under Guideline F for financial considerations,27 the suitability of an applicant may be questioned or put into doubt when that applicant has a history of excessive indebtedness or financial problems or difficulties. The overall concern is: 18 484 U.S. at 531. 19 Directive, ¶ 3.2. 20 Directive, ¶ 3.2. 21 ISCR Case No. 02-18663 (App. Bd. Mar. 23, 2004). 22 Directive, Enclosure 3, ¶ E3.1.14. 23 Directive, Enclosure 3, ¶ E3.1.15. 24 Directive, Enclosure 3, ¶ E3.1.15. 25 Egan, 484 U.S. at 531. 26 ISCR Case No. 01-20700 (App. Bd. Dec. 19, 2002) (citations omitted). 27 AG ¶¶ 18, 19, and 20 (setting forth the concern and the disqualifying and mitigating conditions). 7 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 a [person’s] reliability, trustworthiness, and ability to protect classified information.28 The concern is broader than the possibility that a person might knowingly compromise classified information to obtain money or something else of value. It encompasses concerns about a person’s self-control, judgment, and other important qualities. A person who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information. In analyzing the facts of this case, I considered the following disqualifying and mitigating conditions or factors: AG ¶ 19(a) inability or unwillingness to satisfy debts; AG ¶ 19(c) a history of not meeting financial obligations; AG ¶ 20(a) the behavior happened so long ago, was so infrequent, or occurred under such circumstances that it is unlikely to recur and does not cast doubt on the individual’s current reliability, trustworthiness, or good judgment: AG ¶ 20(b) the conditions that resulted in the financial problems were largely beyond the person’s control (e.g., loss of employment, a business downturn, unexpected medical emergency, or a death, divorce, or separation), and the individual acted responsibly under the circumstances; AG ¶ 20(c) [t]here are clear indications that the problem is being resolved or is under control; and AG ¶ 20(d) the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts. The mortgage account deficiency that arose from the 2009 short sale of his home has been reported as delinquent since August 2009. This is sufficient to raise a security concern under AG ¶ 19(c). The next inquiry is whether any mitigating conditions apply. Applicant’s isolated indebtedness arose out of the confluence of two circumstances. First, in 2007 his wife’s new job necessitated a move, and as a result they placed their home on the market. Second, in 2008 the crash of the housing market drove the value of their home down. It was not until 2009 that Applicant received a purchase offer, which was less than he owed 28 AG ¶ 18. 8 on his mortgage, the home being “underwater” by that time. Applicant and his wife opted to do a short sale, which the lender approved. The circumstances that led to Applicant’s charge-off began in 2007 and culminated in 2009, between eight to ten years ago.29 The circumstances happened so long ago, were isolated incidents, are unlikely to recur, and were largely beyond Applicant’s control. The behavior does not cast doubt on Applicant’s current reliability, trustworthiness, or good judgment. Opting for a short sale was common in that time period and was a responsible step. Applicant’s other credit accounts are all current as of March 2015. Mitigating conditions AG ¶¶ 20(a) and (b) apply. Guideline B (Foreign Influence) The security concern under Guideline B (Foreign Influence) is set out in AG ¶ 6, as follows: 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. Three disqualifying conditions under this Guideline are relevant: AG ¶ 7(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; AG ¶ 7(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 AG ¶ 7(d): 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. 29 Assuming that Applicant’s income tax records might have had documents evidencing the lender’s forgiveness of any deficiency, it is not surprising that Applicant and his spouse could not locate such documents. The Internal Revenue Service guidance suggests that tax records in this circumstance need to be kept for only four years. See https://www.irs.gov/businesses/small-businesses-self-employed/how. 9 Applicant’s close family ties to his parents, who are citizens and residents of India, his bank account in India, and his co-ownership, with his parents, of real property in India establish AG ¶¶ 7(a), 7(b), and 7(d). A “heightened risk” is associated with India, given the significant human rights and terrorism problems existent there, and its history of economic collection and industrial espionage. Application of Guideline B is not a comment on an applicant’s patriotism but merely an acknowledgment that people may act in unpredictable ways when faced with choices that could be important to a loved one, such as a family member.30 Family relationships can involve matters of influence or obligation.31 Therefore, Applicant’s family ties and property ownership raise concerns for which he has the burden of persuasion to mitigate.32 The following mitigating conditions under this Guideline are potentially relevant: AG ¶ 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; AG ¶ 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; AG ¶ 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; and AG ¶ 8(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. 30 ISCR Case No. 08-10025 at 4 (App. Bd. Nov. 3, 2009). 31 ISCR Case No. 02-04786 (App. Bd. Jun. 27, 2003). 32 ISCR Case No. 99-0532 at 7 (App. Bd. Dec. 15, 2000) (When an applicant’s ties in a foreign country raise a prima facie security concern, the applicant is required to present evidence of rebuttal, extenuation, or mitigation sufficient to carry his burden of persuasion that it is “clearly consistent with the national interest” to grant or continue a security clearance on his behalf). 10 For the reasons set out in the discussion of AG ¶¶ 7(a), 7(b), and 7(d), above, AG ¶ 8(a) is not established. Applicant has lived in the United States for 26 years and was naturalized 15 years ago. He has been married to a natural-born United States citizen for almost 21 years, and his two children were born in the United States. Applicant’s father is nearing 80 years old, and although he did work for the Indian government, he retired from that position about 20 years ago. Applicant’s mother is a homemaker, and there is no evidence she worked for the Indian government. Applicant’s only communications with his parents are by weekly telephone calls. Applicant has not visited his parents since 2014. Applicant has such deep and longstanding relationships and loyalties in the U.S. that he can be expected to resolve any conflict of interest in favor of the U.S. interest. There is little likelihood that Applicant’s communications with his parents could create a risk for foreign influence or exploitation. Applicant’s bank account in India is an emergency medical fund to be used for his parents, if needed. Neither the bank account nor Applicant’s inheritance interest in his parents’ home are of any financial significance to Applicant, in light of his substantial retirement and savings accounts (an approximate total value of $520,000). Applicant’s financial and property interests in India are such that they are unlikely to result in a conflict and could not be used effectively to influence, manipulate, or pressure the individual. I find that mitigating conditions AG ¶¶ 8(b), (c), and (f) apply. Guideline E (Personal Conduct) Under Guideline E for personal conduct, the concern is that “[c]onduct involving questionable judgment, lack of candor, dishonesty, or unwillingness to comply with rules and regulations can raise questions about [a person’s] reliability, trustworthiness, and ability to protect [sensitive] information.”33 A statement is false or dishonest when it is made deliberately (knowingly and willfully). An omission of relevant and material information is not deliberate if, for example, the person genuinely forgot about it, inadvertently overlooked it, misunderstood the question, reasonably did not know the information, or genuinely thought the information did not need to be reported. There is no question that Applicant did not disclose the short sale deficiency in his security clearance application. In denying the falsification allegation, Applicant explained that at the time of the short sale, he understood that the terms were such that he and his spouse would not be obligated for any deficiency. When Applicant completed his security clearance application, he was unaware that the deficiency was being reported as a delinquent debt. He first learned during his interview that a deficiency related to the short sale was being reported as a delinquent debt. That explanation is plausible. Applicant reasonably did not know of that delinquent debt and, therefore, could not have reported it. I find that Applicant did not deliberately fail to disclose that information. 33 AG ¶ 15. 11 Conclusion The record does not create doubt about Applicant’s reliability, trustworthiness, good judgment, and ability to protect classified information. In reaching this conclusion, I weighed the evidence as a whole and considered if the favorable evidence outweighed the unfavorable evidence or vice versa. I also gave due consideration to the whole-person concept.34 Accordingly, I conclude that Applicant met his ultimate burden of persuasion to show that it is clearly consistent with the national interest to grant him eligibility for access to classified information. Formal Findings As required by section E3.1.25 of Enclosure 3 of the Directive, I make the following formal findings on the SOR allegations: Paragraph 1, Guideline F: For Applicant Subparagraph 1.a: For Applicant Paragraph 2, Guideline B: For Applicant Subparagraphs 2.a-d: For Applicant Paragraph 3, Guideline E: For Applicant Subparagraph 3.a: For Applicant Conclusion In light of the record as a whole, it is clearly consistent with the national interest to grant Applicant access to classified information. Philip J. Katauskas Administrative Judge 34 AG ¶ 2(a)(1)-(9). In that consideration, I gave positive weight to the highly complimentary character reference letter that Applicant’s employer submitted.