ISCR Case No. 25-01370

APPEARANCES FOR GOVERNMENT Andrea M. Corrales, Esq., Deputy Chief Department Counsel FOR APPLICANT William C. Smith, Jr., Esq. The Department of Defense (DoD) declined to grant Applicant a security clearance. On January 5, 2026, DoD issued a Statement of Reasons (SOR) advising Applicant of the basis of that decision – security concerns raised under Guideline F (Financial Considerations) of the National Security Adjudicative Guidelines (AG) in Appendix A of Security Executive Agent Directive 4 (effective June 8, 2017) and DoD Directive 5220.6 (Jan. 2, 1992, as amended) (Directive). On July 30, 2026, Defense Office of Hearings and Appeals Administrative Judge Erin C. Hogan denied Applicant national security eligibility. Applicant appealed pursuant to Directive ¶¶ E3.1.28 and E3.1.30. Background Applicant, in his mid-60s, immigrated to the United States in 1988 and served honorably in the U.S. military from November 1988 to July 1996. He married in January 2009 and divorced in June 2017. He was previously granted a top secret clearance in October 1997 and April 2001, and he seeks national security eligibility for his employment with a government contractor, for whom he has worked since July 1996.

The SOR alleged security concerns arising from Applicant’s delinquent federal income taxes for 2018 ($3,067), 2019 ($13,198), and 2020 ($13,916), delinquent state income taxes for the same tax years, and July 2018 Chapter 13 bankruptcy. The Judge found for Applicant concerning his delinquent state taxes, and the facts and analysis surrounding those allegations will only be discussed in the context of the Judge’s adverse findings on the remaining allegations. In his response to the SOR, Applicant admitted all allegations. On July 31, 2018, Applicant filed a Chapter 13 bankruptcy petition after having incurred significant debts – including student loans co-signed on behalf of his former stepchildren and the mortgage on the marital residence – that became delinquent due to the 2017 divorce. The bankruptcy petition listed his total assets as approximately $449,000 and his total liabilities as approximately $389,000. A monthly budget included in the petition reflected $4,996 in income, $4,653 in expenses, and a $342 remainder. The debts were discharged in December 2023. At hearing, Applicant explained that, after his divorce, he felt depressed and “kept putting off” some of his obligations. Transcript at 17. He stated that he was also under the mistaken belief that he was relieved of his tax-filing obligations during his Chapter 13 bankruptcy case. Upon submission of his January 2024 security clearance application (SCA), Applicant realized he owed federal and state tax debts. He filed his federal income tax return for 2018 in September 2019, and, with the aid of a tax firm, he filed his 2019 and 2020 returns in late October 2025. As of the hearing, however, no payment plan had been established. Applicant testified, without corroborating evidence, that he made payments to the Internal Revenue Service (IRS) totaling approximately $1,500 on a delinquent balance of over $30,000. In addition to the alleged federal tax debts, Applicant admitted that he owed federal taxes for tax years after 2020. Although he did not specify the tax years or the amounts owed, he estimated that he owed approximately $50,000 in total for 2018 and after. No information concerning tax years 2021 through 2024 was included in the record. Applicant submitted his 2025 federal return reflecting a calculated refund of approximately $13,257. Applicant also provided updated monthly financial information – $3,900 in income, $3,360 in expenses, and $540 in discretionary income. He has taken online courses and viewed online lectures about personal finances; however, he does not adhere to a monthly budget. He expressed his intent to incur a home equity loan to pay off his federal taxes after a payment agreement has been established. He admitted his bad judgment and neglect in his handling of his federal and state taxes. For his state tax debt, Applicant established a payment plan in September 2025, adhered to $230 monthly payments from October 2025 to April 2026, and resolved the remaining balance upon the application of his 2025 state tax refund in April 2026. The Judge found for Applicant concerning the state tax allegations; however, resolution of Applicant’s state tax debt is relevant and material within the mosaic of his debt resolution efforts on his federal taxes and bankruptcy. 2

Within the Guideline F mitigation analysis, the Judge determined that AG ¶ 20(a)1 applied because Applicant’s divorce contributed to his financial delinquencies and bankruptcy; however, the Judge afforded “less weight” to AG ¶ 20(a) due to his ongoing delinquent federal taxes. Decision at 7. Similarly, although the evidence established the first prong of AG ¶ 20(b),2 this condition was also due “less weight” because Applicant had not acted responsibly when his delinquent federal and state taxes for 2018, 2019, and 2020 lingered for several years. The Judge concluded that AG ¶ 20(c) did not apply because there are “no clear indications that the problem is being resolved or under control.” Id. Finally, the Judge concluded that AG ¶ 20(g)3 did not apply to Applicant’s federal taxes: While Applicant hired a tax firm to help him resolve his federal tax debts in 2025, he is still waiting for the IRS to come up with a payment plan. Questions remain about whether Applicant also owes federal taxes for additional tax years because the total balance of his federal tax debts increased from approximately $30,000 as alleged in the SOR to approximately $50,000 based on his testimony at the hearing. He neglected his delinquent federal tax debts for years. He did not begin to resolve these tax debts until 2025 after submitting his security clearance application in January 2024. Decision at 8. As to the Whole-Person analysis, the Judge noted that Applicant needed to show “continued effort to resolve his tax debts and establish and maintain his financial responsibilit[ies].” Id. at 9. Discussion Applicant raises four issues on appeal: (1) the Judge committed harmful error by relying on matters not alleged in the SOR – the failure to file tax returns and the federal tax debt for tax years after 2020; (2) the Judge’s conclusion that Applicant’s bankruptcy was not mitigated was arbitrary and capricious; (3) the Judge’s analysis under AG ¶¶ 20(b), 20(c), and 20(g) was arbitrary and capricious in light of evidence to the contrary; and (4) the Judge’s Whole-Person analysis failed to address the factors required by AG ¶ 2(d). For the following reasons, Applicant’s arguments are not persuasive, and we affirm the Judge’s decision. 1 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. 2 AG ¶ 20(b): the conditions that resulted in the financial problem were largely beyond the person’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. 3 AG ¶ 20(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. 3

Turning first to Applicant’s argument regarding the Judge’s reliance on unalleged conduct in her disqualification analysis, the Judge applied AG ¶ 19(f)4 due to “Applicant’s failure to file and [pay] his federal and state income taxes for tax years 2018, 2019, and 2020.” Decision at 6. Although the Judge arguably erred to the extent she considered Applicant’s unalleged failure to timely file his returns, any error is harmless because the Judge’s disqualification and mitigation analyses centered on the alleged delinquent federal tax balances and not the untimely filings. See DISCR OSD Case No. 91-0129, 1992 WL 388334 at *3 (App. Bd. Jul. 23, 1992) (“Considering the record as a whole, there is not a significant chance that but for the factual errors identified above the Administrative Judge would have reached a different result.”). Applicant also challenges the Judge’s reliance upon unalleged matters, including his untimely tax filings and his delinquent balance for tax years after 2020, within the mitigating analysis. Contrary to Applicant’s argument, the Judge’s consideration of these two factors, although unalleged, was entirely permissible in evaluating Applicant’s case in mitigation and his financial responsibility. See ISCR Case No. 02-07218 at 3 (App. Bd. Mar. 15, 2004). Applicant’s next argument on appeal – that his completed Chapter 13 bankruptcy was mitigated independent of his outstanding tax debts – is also unpersuasive. The Judge noted that Applicant had completed the Chapter 13 bankruptcy plan, but she afforded that resolution “limited weight” in mitigation due to the ongoing tax debts and Applicant’s “neglect of his state and federal income taxes over a period of several years.” Decision at 7. The Judge was required to consider the record evidence as a whole, rather than in a piecemeal fashion, and she properly considered Applicant’s discharged bankruptcy within the context of his lengthy history of tax-filing delays and unpaid taxes to find that the continuing course of financial concerns were unmitigated. See ISCR Case No. 01-08390 at 3 (App. Bd. Feb. 12, 2002). Applicant next contends that, having found some responsible action in Applicant’s resolution of the state tax concerns, the Judge erred in concluding that AG ¶ 20(b) was not fully applicable, especially in light of the Judge’s ultimate favorable resolution of the state tax concerns. We disagree. As noted above, the Judge afforded AG ¶ 20(b) only limited weight on both the state and federal tax allegations due to Applicant’s inaction for several years and the recency of his resolution efforts, which began in September 2025, nearly two years after he submitted his SCA. The Judge thereafter relied on AG ¶¶ 20(d) and 20(g)5 to conclude that Applicant’s state tax problems were mitigated following a payment plan, a track record of completed payments, and resolution of the state tax debt after the application of a recent tax refund. None of those circumstances existed regarding Applicant’s delinquent federal taxes, and the Judge properly interpreted dissimilar facts concerning the federal and state taxes disparately. Applicant also challenges the Judge’s conclusion that there are “no clear indications that the problem is being resolved or under control” under AG ¶ 20(c). Decision at 7. We are not persuaded. In the findings of fact, the Judge noted both Applicant’s limited disposable income and 4 AG ¶ 19(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. 5 The Judge identified and quoted AG ¶ 20(g) as one of the potentially applicable mitigating conditions, but she referenced “AG ¶ 20(f)” in her subsequent analysis of the condition’s applicability. The secondary reference was merely a typographical error and therefore harmless. 4

his mistaken belief about his tax-filing obligations during bankruptcy. The Judge properly considered Applicant’s inaction for several years as to his tax-filing obligations, independent of his ability to pay. The Judge also considered that, despite his realization of his tax-filing and tax­ paying delinquencies when completing his January 2024 SCA, Applicant took no further action to address these obligations until September 2025. A judge is not required to cite every piece of favorable evidence, and, here, the Judge articulated a rational explanation for the limited weight applied under AG ¶ 20(b). See DISCR Case No. 92-0404, 1993 WL 221523 at *2 (App. Bd. May 25, 1993). As to Applicant’s argument under AG ¶ 20(c), the Judge noted within her findings of fact that, notwithstanding some online courses, Applicant has not followed a monthly budget. The Judge’s mitigation analysis as a whole explained how Applicant’s ongoing indebtedness and years of inaction reflected a continuing concern as to his financial responsibility. Applicant has not demonstrated harmful error within the Judge’s analysis under AG ¶¶ 20(b), 20(c), and 20(g). Applicant’s final argument is that the Judge failed to address the AG ¶ 2(d) factors within the Whole-Person analysis, and he recites a list of favorable evidence – including his military service, his lengthy employment for a government contractor, his prior favorable clearance determinations, and the absence of any security incidents – and contends that the Judge’s failure to explicitly discuss this evidence was harmful error. Contrary to Applicant’s argument, the Judge noted the foregoing favorable evidence in her findings of fact and was not required to address each circumstance again in a separate Whole-Person analysis. Analysis under the Whole-Person Concept does not require discussion of each enumerated factor but simply requires a judge to consider an applicant’s circumstances in light of the record evidence as a whole. See ISCR Case No. 11-08546, 2013 WL 1103047 at *3 (App. Bd. Feb. 27, 2013). The Judge articulated a rational explanation for concluding that doubts remain as to Applicant’s financial responsibility, and Applicant has not demonstrated any error within the Judge’s Whole-Person analysis. Conclusion Applicant has not established that the Judge’s conclusions were arbitrary, capricious, or contrary to law. The Judge examined the relevant evidence, weighed the disqualifying and mitigating conditions, and articulated a satisfactory explanation for the decision. The record is sufficient to support that the Judge’s findings and conclusions are sustainable. “The general standard is that a clearance may be granted only when ‘clearly consistent with the interests of the national security.’” Dep’t of the Navy v. Egan, 484 U.S. 518, 528 (1988). “Any doubt concerning personnel being considered for national security eligibility will be resolved in favor of the national security.” AG ¶ 2(b). 5

Order The decision in ISCR Case No. 25-01370 is AFFIRMED. Signed: Moira Modzelewski Moira Modzelewski Administrative Judge Chair, Appeal Board Signed: Allison Marie Allison Marie Administrative Judge Member, Appeal Board Signed: Eric H. Borgstrom Eric H. Borgstrom Administrative Judge Member, Appeal Board 6