ISCR Case No. 24-01222

______________ ______________ DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: Applicant for Security Clearance ) ) ) ) ) ISCR Case No. 24-01222 Appearances For Government: Cassie L. Ford, Esq., Department Counsel For Applicant: Pro se 12/18/2025

LAFAYE, Gatha, Administrative Judge: Applicant failed to provide sufficient evidence to mitigate security concerns raised under Guideline F (financial considerations). Eligibility for access to classified information is denied. Statement of the Case Applicant submitted a security clearance application (SCA) on September 8, 2023. On October 8, 2024, the Department of Defense (DOD) issued a Statement of Reasons (SOR) alleging security concerns under Guideline F. Applicant answered the SOR on November 19, 2024, and requested a hearing before an administrative judge. The case was assigned to me on May 29, 2025. On June 5, 2025, the Defense Office of Hearings and Appeals (DOHA) notified Applicant his hearing was scheduled to be conducted at the Defense Office of Hearings and Appeals (DOHA), in Arlington, Virginian on July 17, 2025. The hearing was convened as scheduled. At the hearing, the Government offered six exhibits, Government Exhibit (GE) 1 through GE 6, which were admitted in evidence without objection.

Applicant and two character witnesses testified. Applicant offered one exhibit, which I labeled as Applicant’s Exhibit (AE) A and admitted in evidence without objection. I re-labeled the documents Applicant submitted with his SOR Answer (Answer) as AE B for ease of reference in this decision. I left the record open until August 1, 2025 to allow Applicant more time to submit additional evidence. Applicant timely submitted AE C, which was admitted in evidence without objection. DOHA received the hearing transcript (Tr.) on July 28, 2025.

In his Answer, Applicant admitted the al

legations in SOR ¶¶ 1a., 1.c through 1.g, 1.i through 1.k, partially denied the allegation in SOR ¶ 1.b., and denied the allegation in SOR ¶ 1.h. His admissions are incorporated in my findings of fact. After thorough review of the evidence, I make the following additional findings of fact. Applicant is 56 years old. He earned his high school diploma in 1986, attended college from the summer of 1986 through 1987. In 1987, he enrolled in an information technology (IT) technical program and completed his certification in 1988. He married in 2008, separated in 2018, and divorced in May 2020. Applicant and his ex-wife share a 13-year-old daughter who resides with him half the time through a shared custody agreement. He currently receives $315 monthly in child support. (GE 1; Tr. 33-50, 78) Applicant worked as an IT professional for a defense contractor from 1988 until he was laid off in 1989. He worked for various nonprofit organizations from about 1990 until about 1998. From about 1998 until about June 2011, he worked as a contractor for a state government and earned about $99,000 annually until he was laid off. Applicant was unemployed from June 2011 until about October 2022. His said his wife experienced complications during pregnancy, which prevented him from accepting a job requiring extensive travel in late 2011. He became a stay-at-home dad and the primary caretaker of his daughter. His father passed away in mid-2011 and he seriously injured his back while preparing his father’s home for resale. He used the proceeds from his 401(k) retirement plan and funds from an insurance policy received after his father’s death to contribute to the household budget during the long unemployment. He also used funds he inherited from his father’s 401(k) retirement plan and proceeds from the sale of his father’s home to contribute to the monthly household budget. (GE 1; Tr. 33-50, 78) Applicant discussed his health problems over the last 20 years. In November 2017, he was diagnosed with major depressive disorder (MDD) and anxiety disorder and remains under treatment. (AE A) His application for Social Security Administration (SSA) disability benefits was denied, but he said his doctors consider him “a disabled person” because of post-surgical complications with his left foot. He has undergone multiple surgeries to include three rotator-cuff procedures and spinal fusion procedures on his neck in 2021 and lower back in 2023. He said he still needs about five surgeries, including a spinal stimulator implant in his back, shoulder replacement, cataract, and corrective

back surgery. He takes medications for nerve damage and anxiety but no longer takes opioids for his back pain. (Tr. 41- 50, 75; AE A) In October 2022, Applicant began working as

a self-employed U ber and Lyft driver. He initially worked three days a w

eek due to health problems, but when his earning decreased by 50% two years ago, he began working six or seven days weekly to cover his expenses. He said his current income is insufficient to support all expenses and he receives occasional financial support from nonprofit organizations. His business vehicle failed recently and he was unable to work for two weeks. He now rents a newer vehicle of a class that qualifies him for more work. Overall, he earns an extra $50 to $100 weekly with the change but only qualifies to do contract work with one company (Uber). (Tr. 38- 46) Applicant said his gross earnings are between $3,500 and $4,500 monthly. He receives Supplemental Nutrition Assistance Program (SNAP) and said his benefit recently dropped from $350 to $200 monthly. The balance of his 401(k) retirement account is about $600 and his checking account balance is about $150. The estimated value of his home is about $650,000 and he owes about $100,000 between his two mortgages. He has requested to refinance his mortgage, but due to past late payments, his primary lender will not allow him to refinance. He said he received about $49,000 through a mortgage program he applied for during the COVID-19 pandemic, which enabled him to remove his home from foreclosure. (Tr. 76-91) Applicant is conscientious about his household expenses and asks for financial help when needed. His rental vehicle costs $550 weekly and he spends about $200 weekly for gas but earns enough to cover expenses with a profit that varies weekly. He said he currently lives paycheck-to-paycheck and is seeking employment that will allow him to pay his debts and save for the future. His current employment offer with a defense contractor pays $120,000 annually and requires a security clearance. (Tr. 76-84) In September 2023, Applicant completed his SCA and in Section 26 – Financial Record, he said he had “$193,000 in secured debts and $19,000 in unsecured debts.” (GE 1 at 25) He filed Chapter 13 bankruptcy in March 2023 (SOR ¶ 1.a), failed to file and pay federal and state income tax returns for tax years 2019, 2020, 2021, and 2022 (SOR ¶¶ 1.c and 1.b, in part), which he attributed to “divorce and medical issues.” Applicant also listed several delinquent consumer debts to include a debt for $322 (SOR ¶ 1.h), $16,382 (SOR ¶ 1.i), $80,000 (SOR ¶ 1.j), $2,673 (SOR ¶ 1.k), and other debts he either paid or that were not alleged in the SOR. (GE 1 at 24-33) The SOR alleges 11 financial considerations security concerns, generally supported by Applicant’s admissions and statements in the SCA, a response to interrogatories, background interviews (GE 1-2); bankruptcy court documents (GE 3), and three credit bureau reports (GE 4-6). Additional evidence regarding the SOR allegations is summarized below.

SOR ¶ 1.a alleges Applicant filed for Chapter 13 bankruptcy in March 2023 and the action was dismissed in July 2023, which he admits. He said he filed bankruptcy because he was struggling financially and was scheduled to undergo back surgery. He knew he would be unable to work for at least six weeks and he would not have sufficient funds to pay his mortgages. He consulted lawyers and accountants and was advised that his best option to avoid foreclosure was to file for Chapter 13 bankruptcy, and he did. He said he missed a mortgage payment during the bankruptcy after his surgery, his primary mortgage lender filed an objection to the bankruptcy and court dismissed his bankruptcy petition. (Answer; GE 2 at 21, GE 3; Tr. 51-56) SOR ¶ 1.b alleges Applicant failed to file Federal income tax returns for tax years 2014, 2017, and 2018. He denied failing to file income tax returns for tax years 2014 and 2017, but admitted he did not file his return for tax year 2018. Applicant said he and his wife had filed joint income tax returns since 2007, with him listed as the primary taxpayer through 2011. They filed joint tax returns in subsequent tax years, including 2014 and 2017, with his wife listed as the primary taxpayer. Applicant provided tax account transcripts for these years as proof. (AE B) Though his 2014 tax account transcript lists him as a “single” taxpayer on page 1, and reads “return not present for this account,” page 2 of the transcript lists code 594 and confirms a “tax return [was] previously filed April 6, 2015.” He also provided a portion of his 2014 return from a tax preparer as evidence he filed though he did not include the Form 1040. (AE C) Applicant’s 2017 tax account transcript clearly shows he filed a “married filing joint” tax return, which was received by the Internal Revenue Service (IRS) on April 15, 2018. (Answer; GE 1, 2; Tr. 56-61; AE B, C) Applicant’s tax account transcript for 2018 shows he filed as a “single” taxpayer on September 16, 2024, and the IRS charged him interest and penalties for filing and paying late. (AE B) He said he did not timely file his 2018 returns because he was going through a divorce. His wife agreed they would file a joint return, but she filed separately and used their child tax credit without his knowledge. He said he did not file his 2018 federal and state (SOR ¶ 1.e) income tax returns after this because he thought he would owe a huge tax obligation that he could not pay. He said during the hearing that he filed his 2018 and 2019 federal tax returns together. (GE 2; Tr. 59-67; AE B) He made the following statement about his 2018 state income tax return in his response to interrogatories, presumably prepared with his 2018 federal return: My 2018 return was completed by a tax accountant on October 13, 2022, with my 2019, 2020, and 2021 returns. The return was not filed by my accountant. My 2018 return has been mailed by certified mail on September 10, 2024. My 2018 return should have been submitted [in] October 2022 and January 2024 by my accountant. (GE 2 at 6) SOR ¶¶ 1.c and 1.f allege Applicant failed to file federal and state income tax returns for tax years 2019 and 2020, which he admits. He was unemployed for medical reasons, using 401(k) retirement funds, and was unable to make payments on taxes. He

feared owing a tax obligation that he could not pay. He filed his 2019 federal income tax return in September 2023 and did not owe a tax debt. He filed his 2020 federal income tax return in November 2022 for the same reasons and received a refund of $1,800. (Answer, GE 2 at 20-24; Tr. 61-62) SOR ¶ 1.d alleges Applicant owes the IRS about $2,325 for unpaid taxes for at least tax year 2023, which he admits. He said he “has not been fully employed since 2012 due to chronic health issues” and that once he becomes employed full-time, he will “work to fully resolve this debt.” He said he finally hired a tax preparer to complete his tax returns and learned he owed this tax debt to the IRS. He spoke to the IRS about it in 2025 and the IRS is not collecting at this time due to a personal hardship delay granted. The debt is not accruing interest and fees but he still owes the debt. He does not have a settlement agreement with the IRS and said the IRS would revisit the matter in two years. Though no documents were submitted to show his communications with the IRS, Applicant’s 2023 tax account transcript lists code 530, which reads “balance due [on] account currently not collectable - due to hardship.” (Answer; GE 2; Tr. 62-64) SOR ¶ 1.g alleges Applicant owes the state about $7,675 for unpaid taxes for tax years 2018, 2019, and 2023, which he admits. He said he contacted the state in 2025 to discuss his tax debt and to request a hardship delay. The state requested documents but he has not submitted them. He said he is focused on working and staying current on bills and that no payments have been made on the debt. He did not submit any documents to show his communications with the state. (GE 2; Tr. 64-65, 86-87) During the hearing, Applicant said the state could garnish his wages or levy his property at any time to collect on the debt. I have to provide documentation and paperwork to [the state]. I do not have an agreement that [the debt is] settled. They can garnish me or levy [my home]. (Tr. at 64) SOR ¶ 1.h alleges a delinquent consumer debt of $322 that was assigned in October 2000 and ultimately charged off. Applicant consistently denied this debt, stating it involved an unapproved charge for an internet service he cancelled and did not use. He disputed this debt through the merchant and the creditor long ago, as soon as he noticed the unapproved charge. (GE 2, 4; Tr. 65-67) SOR ¶ 1.i alleges a delinquent credit card debt of $40,896 that was charged off. Applicant admits the debt but denies the amount alleged. He opened the account in 1996, and the card’s maximum credit limit exceeded $40,000. He said he stopped using the credit card when it became too difficult to pay the bill. The past due amount was $16,382 and final charged-off amount was $16,569. (GE 6) He tried to pay on the debt after his bankruptcy case was dismissed but said he was not allowed to. The creditor has reopened the account and offered to settle the debt, but Applicant was unable to accept the offer due to insufficient earnings. He says he will pay the debt when he is able to and remains in communication with the creditor. (GE 2, 4, 5, 6 at 2; Tr. 67-73)

SOR ¶¶ 1.j and 1.k allege are delinquent debts of $74,957 (of a $192,890 balance) and $2,202 (of a $24,370 balance), on Applicant’s first and second mortgages on his home. Applicant made extraordinary efforts to keep his home from being sold in foreclosure. SOR ¶ 1.j, his primary home mortgage, has a remaining loan balance of about $96,000 as of June 2025. (AE C at 15). He provided a long track record of timely payments since March 2024. He is currently two months late but working to catch up and plans to apply to refinance his mortgage again through his lender in the near future. (GE 2, 4, 5, 6; Tr. 73-75; AE C at 15-19) For SOR ¶ 1.k, the second mortgage, Applicant provided a long track record of payments since February 2024 and said the account is less than 30-days past due. (GE 2, 4, 5, 6; Tr. 73-75; AE C at 15-19) Applicant has actively participated in community service in the past, often serving in leadership roles. He participated in volunteer work with his local county official where he offered support and ideas on issues involving local land-use. He also organized the Independence Day parade for his local community, and has served as a board member for his homeowner’s association. Applicant’s health and financial issues have prevented him from actively participating in community services in recent years. (Tr. 40-41) Applicant’s friend of 40 years attested to his integrity, dependability, and his strong moral character. She commented favorably on his reliability, presence, and the nurturing relationship he has with his daughter. Applicant’s prospective employer, a retired military officer and defense contractor who he worked with in the late 1990s, also testified on his behalf. He commented favorably on Applicant’s reliability, judgment, and truthfulness. Both witnesses endorsed Applicant personally and favored his application for a security clearance. (Tr. 21-31)

This case is adjudicated under Executive Order (EO) 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 (AG), which became effective on June 8, 2017. 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 disqualifying conditions and mitigating conditions, which are to be 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, administrative judges apply the guidelines 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 national security eligibility will be resolved in favor of the national security.” Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, the applicant is responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by the applicant or proven by Department Counsel.” The applicant has the ultimate burden of persuasion to obtain 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 safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation of potential, rather than actual, risk of compromise of classified information. Section 7 of EO 10865 provides that adverse 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).

Guideline F, Financial Considerations The security concern under this guideline is set out in AG ¶ 18: Failure 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 or sensitive information. Financial distress can also be caused or exacerbated by, and thus can be a possible indicator of, other issues of personnel security concern such as excessive gambling, mental health conditions, substance misuse, or alcohol abuse or dependence. An individual who is financially overextended is at greater risk of having to engage in illegal or otherwise questionable acts to generate funds.

This concern is broader than the possibility that a person might knowingly compromise classified information to raise money. It encompasses concerns about a person’s self-control, judgment, and other qualities essential to protecting classified information. A person who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information. See ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012). The guideline notes several conditions that could raise security concerns under AG ¶ 19. The following are potentially applicable in this case: (a) inability to satisfy debts; (c) a history of not meeting financial obligations; and (f) failure to file or fraudulently filing annual Federal, state, or local income tax returns or failure to pay annual Federal, state, or local income tax as required. Applicant’s admissions and the evidence in the record establish the above disqualifying conditions. AG ¶¶ 19(a), 19(c), and 19(f) apply. The following mitigating conditions under AG ¶ 20 are potentially applicable: (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; (b) the conditions that resulted in the financial problem were largely beyond the per

son's control (e.g., loss of employment, a business downturn, unexpected medical emergency, a death, divorce or separation, clear victimization by

predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances; (c) the individual has received or is receiving financial counseling for the problem from a legitimate and credible source, such as a non-profit credit counseling service, and there are clear indications that the problem is being resolved or is under control; (d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts; (e) the individual has a reasonable basis to dispute the legitimacy of the past-due debt which is the cause of the problem and provides documented proof to substantiate the basis of the dispute or provides evidence of actions to resolve the issue; and

(g) the individual has made arrangements with the appropriate tax authority to file or pay the amount owed and is in compliance with those arrangements. Applicant’s financial problems are, in part, due to circumstances beyond his control, including debilitating health problems spanning 20 years. He had surgeries on his back and neck in 2021 and 2023, and more surgeries are required. He experienced the unexpected breakup of his marriage, and in 2017, he was diagnosed with MDD and anxiety disorder and remains under a doctor’s care. He was also unemployed from 2011 until 2022. Applicant’s actions to address the debts alleged in the SOR are evaluated below. Applicant consulted attorneys and financial advisor’s before he filed for Chapter 13bankruptcy in March 2023 (SOR ¶ 1.a), primarily to protect his home from being sold in a foreclosure pursued by the primary lender. He was having major back surgery and knew that he would be unable to work and unable to pay his mortgages as he recovered from surgery for six or more weeks. He ultimately missed a bankruptcy payment while in recovery, which caused the primary lender to object to bankruptcy and the court to dismiss the case in July 2023. Applicant’s actions in seeking and following the recommendations of professional advisors were reasonable and responsible under the circumstances. SOR ¶ 1.a is mitigated under AG ¶ 20(b). Applicant denied the debt in SOR ¶ 1.h. He disputed it with the merchant and creditor long ago when he noticed the charge for a service he did not use. His detailed explanation and consistent denial of this debt provide credible proof of the dispute. AG ¶ 20(e) is established. AG ¶ 20(a) is also established because the debt occurred under circumstances unlikely to recur and does not cast doubt on his trustworthiness. Regarding SOR ¶ 1.i, Applicant opened the account in 1996 and had a long successful history with the creditor. His credit limit exceeded $40,000, but he stopped using the card when he experienced difficulty paying the debt, which was well under the credit limit. He listed the account in bankruptcy, tried to pay it after his bankruptcy was dismissed, but was not allowed. The creditor reopened the debt, and he remains in communication with the creditor though he is currently unable to accept the settlement offer. He plans to pay when he can. Applicant’s actions were reasonable and responsible under the circumstances. The debt is mitigated under AG ¶ 20(b). Applicant provided sufficient evidence to mitigate debts alleged in SOR ¶¶ 1.j and 1.k, his two mortgages. His track record of consistent payments since early 2024 on both mortgages demonstrate the debts are being resolved. He actively maintains communications with both creditors, receives legal and financial advice through professional advisors, and used special funds he received during the pandemic to pay his mortgage debts. SOR ¶¶ 1.j and 1.k are mitigated under AG ¶¶ 20(b), 20(c), and 20(d). Applicant provided sufficient evidence to establish he filed federal and state income tax returns with his wife for tax years 2014 and 2017, and AG ¶ 20(g) is

established to mitigate SOR ¶ 1.b for these years. However, he did not timely file his federal and state income tax returns for tax year 2018. His wife agreed to file their final joint income tax returns for tax year 2018, but she informed him in April 2019 that she had filed separately and had taken their child tax credit. The IRS received his 2018 income tax return in October 2024. He claimed he filed his 2018 and 2019 returns together in September 2023, and that he refiled his 2018 return in September 2024 when there was no record the IRS received the return. He filed late because he feared owing a large tax obligation that he was unable to pay. He is unable to mitigate the financial concerns for tax year 2018 alleged in SOR ¶¶ 1.b and 1.e through his evidence. Additionally, he did not timely file his 2019, and 2020 federal and state income tax returns for the same reasons and is unable to mitigate SOR ¶¶ 1.c and 1.f. Applicant provided satisfactory evidence that he is in active communications with the IRS, that his federal tax debt is has been deemed uncollectible, and is no longer accruing interest or fees due to a personal hardship. However, his actions, though steps in the right direction, are insufficient to establish that he has made arrangements with the IRS to pay his overdue taxes, or is in compliance with any arrangements to do so. AG ¶ 20(g) is not established to mitigate SOR ¶ 1.d. Moreover, he has not taken sufficient action to resolve overdue taxes of $7,676 owed to the state in SOR ¶ 1.g. He failed to provide required “paperwork and documentation” requested by the state to establish a debt repayment plan or to request a hardship deferment. He simply indicated that the state could “garnish” his earnings or “levy” his property to satisfy the debt. AG ¶ 20(g) is not established to mitigate SOR ¶ 1.g. Applicant is unable to fully mitigate financial considerations security concerns through his evidence.

Under the whole-person concept, the administrative judge must evaluate an Applicant’s security eligibility by considering the totality of the Applicant’s conduct and all the relevant circumstances. An administrative judge should consider the nine adjudicative process factors listed at AG ¶ 2(d): (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. 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. I considered the potentially

________________________ disqualifying and mitigating conditions in light of all the facts and circumstances of this case. In this regard, I considered Applicant’s personal hardships and health issues discussed throughout the decision, and his motivation and efforts to keep a stable home for himself and his daughter. I also considered Applicant’s failure to present documents requested by the state government to at least start the process of resolving his overdue state taxes, a delay that is irresponsible under the circumstances. I have incorporated my comments under Guideline F in my whole-person analysis. Overall, the record evidence leaves me with questions and doubts about Applicant’s eligibility and suitability for a security clearance at this time. I conclude Applicant did not mitigate the financial considerations security concerns and has not carried his burden of showing it is clearly consistent with the national interest to grant him eligibility for access to classified information.

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 F: AGAINST APPLICANT Subparagraphs 1.a: For Applicant Subparagraphs 1.b: For Applicant (tax years 2014 and 2017) Against Applicant (tax year 2018) Subparagraphs 1.c – 1.g: Against Applicant Subparagraphs 1.h – 1.k: For Applicant

It is not clearly consistent with the national interest to grant Applicant eligibility for a security clearance. Eligibility for access to classified information is denied. Gatha LaFaye Administrative Judge