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ISCR Case ISCR Case No. 25-00021 · CASE

ISCR Case ISCR Case No. 25-00021granted

Case Headnote

ISCR Case No. ISCR Case No. 25-00021

grantedJan 21, 2026· Hon. Charles C. Hale· hearing

Synopsis

The applicant, a 41-year-old aircraft mechanic helper, faced security concerns under Guideline F due to delinquent taxes and a past bankruptcy. He demonstrated a commitment to resolving his financial issues through established payment plans and recent mortgage approval, leading to a favorable decision for security clearance.

Why the Applicant Prevailed

The applicant has been making consistent payments on both federal and state tax debts, demonstrating a good-faith effort to resolve his financial obligations.
He qualified for a mortgage, indicating improved financial stability and responsibility since his bankruptcy discharge.
Character references from his supervisor and wife highlighted his commitment to meeting financial obligations.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(c)raisedA History of Not Meeting Financial Obligations
AG ¶ 19(f)raisedFailure 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

Mitigating

AG ¶ 20(b)appliedConditions That Resulted in the Financial Problem Were Largely Beyond the Person's Control
AG ¶ 20(d)appliedGood-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts
AG ¶ 20(g)appliedArrangements with the Appropriate Tax Authority to File or Pay the Amount Owed and Compliance with Those Arrangements
AG ¶ 20(a)rejectedBehavior Happened so Long Ago, Was so Infrequent, or Occurred Under Such Circumstances That It Is Unlikely to RecurThe applicant's delinquent tax debts were recent and ongoing.
AG ¶ 20(c)rejectedReceived or Is Receiving Financial CounselingInsufficient information about the counseling received during bankruptcy.

Key Rule Quoted

“The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision.”

Procedural Posture

SOR issuedFeb 14, 2025
Answer filedFeb 28, 2025
Hearing heldDec 17, 2025Rehearing due to transcription issues.
Decision dateJan 21, 2026

Cite For

Demonstrating Good-faith Efforts to Resolve Financial Obligations Under Guideline F
Impact of Recent Financial Stability on Security Clearance Eligibility
Consideration of Character References in Financial Mitigation Cases

Editorial summary generated for research. Not legal advice; not a prediction. Verify against the full decision before relying on any quoted language.

Standardized Decision Profile

SEAD-4 Guideline F · descriptive summary of a decided case

Posture: Decision on RecordDecided: granted

The judge found that the applicant had significant financial concerns, including delinquent taxes owed to the Federal Government and the state, totaling approximately $39,000, and a Chapter 7 bankruptcy that was discharged in 2018. However, the applicant demonstrated good-faith efforts to address these debts through payment plans and provided evidence of financial stability, leading to a favorable decision for the applicant under Guideline F.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	indebted to the Federal Government for delinquent taxes in the approximate amount of $24,000 $24,000	For Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (f) failure to file / fraudulent filing of tax returns or unpaid tax	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts (g) arrangements made with the tax authority; in compliance	Documented Payment Plan with IRS
1.b	indebted to his state for delinquent taxes in the approximate amount of $15,000 $15,000	For Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations (f) failure to file / fraudulent filing of tax returns or unpaid tax	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts (g) arrangements made with the tax authority; in compliance	Documented Payment Plan with IRS
1.c	a November 2017 Chapter 7 Bankruptcy filing that was discharged in 2018	For Applicant	Bankruptcy Filing	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	Credited Chapter 7 Bankruptcy

Descriptive standardized rendering of a decided public case (Guideline F). The verbatim source decision is shown in full below.

Full decision

The complete, official text, footnotes and signatures included, is in the original PDF.

Decision text, by section

DEFENSE OFFICE OF HEARINGS AND APPEALS

HEARING

APPEARANCES

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DECISION

the matter of: )

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ISCR Case No. 25-00021

) Applicant for Security Clearance ) Appearances For Gove

STATEMENT OF CASE

nment: Alison P. O’Connell, Esq., Department Counsel Carroll J. Connelley, Esq., Department Counsel For Applicant: Pro se 01/21/2026 Decision HALE, Charles C., Administrative Judge: This case involves security concerns raised under Guideline F (Financial Considerations). Eligibility for access to classified information is granted. Statement of the Case Applicant submitted a security clearance application (SCA) on May 23, 2024. On February 14, 2025, the Department of Defense (DoD) sent him a Statement of Reasons (SOR) alleging security concerns under Guideline F. The DoD acted under Executive Order (Exec. Or.) 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) promulgated in Security Executive Agent Directive 4, National Security Adjudicative Guidelines (December 10, 2016). Applicant answered the SOR on February 28, 2025, and requested a hearing before an administrative judge. Department Counsel was ready to proceed on April 2, 2025, and the case was assigned to me on August 5, 2025. On August 6, 2025, the Defense Office of Hearings and Appeals

FINDINGS OF FACT

(DOHA) notified Applicant that the hearing was scheduled for October 9, 2025, but that hearing was cancelled due to a lapse in Federal Government funding. The hearing was rescheduled on November 28, 2025, for December 17, 2025. I convened the hearing as scheduled. Government Exhibits (GE) 1 through 10 were admitted in evidence without objection. Applicant testified and offered 1

Applicant Exhibit (AE) A, which was admitted without objection. AE A were documents included with his Answer. On December 19, 2025, DOHA was informed the court reporter had failed to record a significant portion of the hearing. DoD Directive 5220.6 (Enclosure 3) E3.1.24 states: A verbatim transcript shall be made of the hearing. The applicant shall be furnished one copy of the transcript, less the exhibits, without cost. In accordance with DoD Directive 5220.6 (Enclosure 3) E3.1.24, a rehearing was scheduled for January 8, 2026. I convened the rehearing as scheduled. Applicant offered AE B, which was admitted without objection. DOHA received the first transcript (Tr.) on December 29, 2025 and the second transcript (Tr2.) on January 20, 2025. The record remained open after the rehearing and Applicant timely submitted AE D on January 15, 2026, and AE C, a character letter, which had been submitted earlier, which were admitted without objection. Findings of Fact In Applicant’s Answer he admits that for tax years 2010 through 2023 he is indebted to the Federal

POLICIES

overnment for delinquent taxes in the approximate amount of $24,000 (SOR ¶ 1.a) and to his state for delinquent taxes in the approximate amount of $15,000 (SOR ¶ 1.b). He stated both were on a payment plans. He also admitted SOR ¶ 1.c, which alleged a November 2017 Chapter 7 Bankruptcy filing that was discharged in 2018. With his Answer he provided his tax payment plans for both his Federal and state tax debts. (AE A at 5-8.) Based on my review of the pleadings, evidence submitted, and testimony, I make the following findings of fact. Applicant is 41 years old. He graduated high school in 2001 and has lived in the state in question his whole life. He married in 2017. He has a child of his own and three stepchildren, two of whom are out of the home. He provides financial support for his child. He works two fulltime jobs, one for a school district since 2013 in the evenings as an assistant manager, and during the day since 2023 for his sponsor as an aircraft mechanic helper. He acknowledged that since 2013, he had not experienced any periods of unemployment. (GE 1 at 9; Tr. 16-19; Tr2. 18.) Applicant’s Federal tax payment plan consists of biweekly payments. With his Answer he provided evidence of his payment plan. The payments initially totaled $420 a month and increased to $554. He has not missed a payment. (Tr. 28-32; GE 2; AE A.) He owed taxes in tax years 2022 and 2023. (GE 2 at 10, 12.) The Government in response to his testimony during the first hearing requested he show his most recent payment history. At the rehearing he provided his Federal payment history from August 2025 through December 2025. (AE B at 6-9; Tr. 26; Tr2. 12-13.) Applicant provided his state tax payment plan with his Answer. He originally paid approximately $200 a month, but that payment increased to $351 a month. (Tr2. 8-10; AE A; AE B at 15.) He had been challenged by the Government at the initial hearing to provide additional payment history, which he did with AE B. At the rehearing, the Government requested he provide his next payment, which he did in his post-hearing submission. (AE B at 15-17; AE D; Tr2. 8-11.) 2

Applicant admitted

ANALYSIS

hat he filed for Chapter 7 Bankruptcy in 2017, and that it was discharged in 2018. He testified, “I was young and really didn't know the responsibilities of bills. I didn't have nobody guiding me coming up. And when I met my wife, she came together to help me, so she just told me it's best I file bankruptcy and start fresh.” He filed for bankruptcy shortly after he met his wife. (Tr. 20; AE D at 3.) In 2022, Applicant took out a $14,000 personal loan to get his car fixed and resolve some credit card debts. He is current on the loan. He uses automatic payments on his bank account. He is current on his car payment for a 2017 truck. He recently qualified for a mortgage. (GE 9; Tr2. 14- 15, 21.) This allegation is resolved in Applicant’s favor. Applicant provided two character letters. His supervisor describes him as a team player, who had made a significant impact on their team’s success. His wife in her letter attested to Applicant’s “strong commitment to meeting all his financial obligations.” Applicant also included his mortgage approval paperwork and testified that he will be moving into his home in the next couple of weeks. It was evident from his testimony he took great pride at having improved his finances to where he qualified for a mortgage and would be a homeowner. The transaction was scheduled for closing a week from the date of the rehearing. The mortgage was solely in his name because his wife had not been in her current job for two years. (AE B; AE C; AE D; Tr2. 15-16.) Policies 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.” 3

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

ANALYSIS

stified, “I was young and really didn't know the responsibilities of bills. I didn't have nobody guiding me coming up. And when I met my wife, she came together to help me, so she just told me it's best I file bankruptcy and start fresh.” He filed for bankruptcy shortly after he met his wife. (Tr. 20; AE D at 3.) In 2022, Applicant took out a $14,000 personal loan to get his car fixed and resolve some credit card debts. He is current on the loan. He uses automatic payments on his bank account. He is current on his car payment for a 2017 truck. He recently qualified for a mortgage. (GE 9; Tr2. 14- 15, 21.) This allegation is resolved in Applicant’s favor. Applicant provided two character letters. His supervisor describes him as a team player, who had made a significant impact on their team’s success. His wife in her letter attested to Applicant’s “strong commitment to meeting all his financial obligations.” Applicant also included his mortgage approval paperwork and testified that he will be moving into his home in the next couple of weeks. It was evident from his testimony he took great pride at having improved his finances to where he qualified for a mortgage and would be a homeowner. The transaction was scheduled for closing a week from the date of the rehearing. The mortgage was solely in his name because his wife had not been in her current job for two years. (AE B; AE C; AE D; Tr2. 15-16.) Policies 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.” 3

WHOLE PERSON CONCEPT

lationship 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). Analysis Financial Considerations AG ¶ 18 articulates the security concern for financial problems: 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. The Appeal Board explained the scope and rationale for the financial considerations security concern in ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012) (citation omitted) as follows: This concern is broader than the possibility that an applicant might knowingly compromise classified information in order to raise money in satisfaction of his or her debts. Rather, it requires a Judge to examine the totality of an applicant’s financial history and circumstances. The Judge must consider pertinent evidence regarding the applicant’s self-control, judgment, and other qualities essential to protecting the national s

FORMAL FINDINGS

crets as well as the vulnerabilities inherent in the circumstances. The Directive 4

presumes a nexus between proven conduct under any of the Guidelines and an applicant’s security eligibility. AG ¶ 19 includes disqualifying conditions that could raise a security concern and may be disqualifying 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

CONCLUSION

local income tax returns or failure to pay annual Federal, state, or local income tax as required.” The record establishes the disqualifying conditions in AG ¶¶ 19(a), 19(c), and 19(f), requiring additional inquiry about the possible applicability of mitigating conditions. Discussion of the disqualifying conditions is cont