The Department of Defense, Office of Hearings and Appeals (DOHA) has now become the nation’s bill-collector-in-chief. Since the collapse of the housing market in 2008, debt resulting from job losses and home foreclosures have had a devastating effect on people holding national security clearances. That, more than any other factor today, is causing the revocation or denial of security clearances, resulting in the loss of good paying jobs, and putting skilled workers further and further behind in their effort to dig out of debt.
DOHA Appeal Board
In writing this article, all DOHA Appeal Board cases based primarily on Guideline F, “Financial Considerations” between 2006 and June 2010, were reviewed, as well as all Administrative Judge initial decisions dealing with foreclosures and “short sales” during the same period. A listing of these cases is found as Appendices A through D to this article. A few Appeal Board decisions which also considered Guideline E are included.
From 2000 to 2002, there was one reported case at DOHA dealing with foreclosure. Between 2003 and 2006, there averaged three cases per year. In 2007 and 2008, the number of cases dealing with foreclosures jumped to nine each year. In 2009, there were twenty-four such cases, and in the first five months of 2010, which looks like a record year, there have been nine foreclosure cases thus far.5 While DOHA and the Department of Energy are the only adjudicative bodies for clearances that publish their decisions, there is no reason to believe that any of the other nine federal Adjudication Authorities come to different results.
In March, 2009 I wrote an article entitled, “The Department of Defense Says if You Lose Your Home, You will Lose your Clearance”. That article was prescient of the worst yet to come. Since then, the number of security clearance denials and revocations has kept pace with the number of foreclosures, defaults, and short sales in the country, and the trend continues. Decisions of the DOHA Appeal Board were examined to determine what standards of review the Board applied to Guideline F cases, what was the likelihood of success at the Appeal Board, and how having counsel affected the outcome of a case. Decisions of the administrative judges were also reviewed to see whether there was a commonality of facts and circumstances leading to clearances being granted, or conversely, leading to clearances being denied. Administrative Judge decisions were also reviewed to see what factors caused Department Counsel to appeal, or not to appeal, an administrative judge’s decision granting a clearance.
Twenty-two administrative judge decisions dealing with foreclosures and short sales were reviewed, where clearances were granted and not appealed. These were examined to see what facts were sufficient to meet the initial challenge of convincing an Administrative Judge while at the same time were sufficient to satisfy Department Counsel not to appeal. The common thread in all of these cases is that: (1) applicants were victims of circumstances not of their own doing; (2) they had not been speculators in the housing market who were caught when the bubble burst; (3) they had not succumbed to fraudulent schemes “too good to be true” as a result of their own greed; and (4) they had made good faith efforts to meet their other debts after the loss of their homes by foreclosure or short sale.
Also reviewed were twenty Administrative Judge initial decisions concerning mortgage foreclosures and short sales in which a clearance was denied and not appealed by Department Counsel. These were examined to see what, if anything, distinguished them from the cases where clearances were granted by an Administrative Judge. In this latter group of cases, generally, the applicants had no plan to pay their remaining debts, their losses were the result of misguided greed, or they were real estate speculators who mistimed the market.
Finally, sixteen Administrative Judge initial decisions were reviewed where the applicant was granted a clearance, but where Department Counsel appealed to the Appeal Board. In this group, twelve of these favorable decisions were reversed and four were sustained. In only one case where an Administrative Judge denied a clearance did the Appeal Board reverse and remand for further review. In that case the judge, on remand, acquiesced to the Board’s view and granted the clearance.
In comparing the favorable decisions which the Appeal Board sustained to the favorable decisions it has reversed, one can only conclude that the odds of a reversal are unpredictable. The Board’s decisions are a reflection of what it thinks, in any given case, support a finding of good faith and moral behavior. On that slender thread hangs the government’s defense contractor workforce.
Reprinted with permission from Sheldon I. Cohen, a prominent Washington D.C. area attorney specializing in national security clearance.
The entire 37-page study (DEBT AND HOME FORECLOSURES: THEIR EFFECT ON NATIONAL SECURITY CLEARANCES) covers the regulations involved, decisions of the DOHA Appeal board, bankruptcy, efforts to repay debt, evidence of payment, financial counseling, tax returns, value of legal counsel, and more.