ISCR Case No. 25-01201

______________ ______________ DEFENSE LEGAL SERVICES AGENCY DEFENSE OFFICE OF HEARINGS AND APPEALS _______________________________ In the matter of: )

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ISCR Case No. 25-01201

) Applicant for Security Clearance ) ___________________________________) Appearances For Government: Brian L. Farrell, Esq., Department Counsel For Applicant: Pro se 09/14/2026 Decision ROSS, Wilford H., Administrative Judge: Applicant did not mitigate the security concerns under Guideline F (Financial Considerations). Eligibility for access to classified information is denied. Statement of the Case On December 2, 2025, the Defense Counterintelligence and Security Agency (DCSA) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guideline F (Financial Considerations). The action was taken 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) implemented by the DOD on June 8, 2017. Applicant responded to the SOR in writing (Answer) on December 31, 2025, and requested a hearing before an administrative judge. Department Counsel was prepared to proceed on January 23, 2026. The case was assigned to me on February 9, 2026. The Defense Office of Hearings and Appeals (DOHA) issued a Notice of Hearing on February 13, 2026. I convened the hearing as scheduled on April 22, 2026. The Government offered Government Exhibits 1 through 8, which were admitted without objection.

Applicant testified on his own behalf and submitted Applicant Exhibits A through H, which were also admitted without objection. The record remained open until May 29, 2026, for the receipt of additional documentation from Applicant. He timely submitted Applicant Exhibit I (May 29, 2026 email); Applicant Exhibit J (2021 federal tax return); Applicant Exhibit K (2022 federal tax return); Applicant Exhibit L (2023 federal tax return); Applicant Exhibit M (IRS tax year 2021 account transcript); Applicant Exhibit N (IRS tax year 2022 account transcript); Applicant Exhibit O (email exchange with current accountant); Applicant Exhibit P (IRS confirmation of payment transaction for tax year 2023, dated May 28, 2026); and Applicant Exhibit Q (spreadsheet of Applicant’s work-related trips from October 2023 through May 2026). The additional exhibits were admitted without objection. DOHA received the transcript of the hearing on April 23, 2026. The record closed on May 29, 2026. Amendment to SOR After the case in chief was completed Department Counsel moved to amend the SOR in accordance with DoD Directive 5220.6; Enclosure 3, Additional Procedural Guidance; ¶ E3.1.17. Applicant had no objection to the amendment and admitted the allegation. (Tr. 71-73.) The SOR was amended to add subparagraph 1.c, which reads as follows: You failed to timely file your State [. . . ] Tax Returns for Tax Years 2023 and 2024. As of the date of the hearing, these tax returns remain unfiled. Findings of Fact Applicant is 63 years old, married, and has three stepchildren. He has a master’s degree. He has worked for his current employer since 2022 as a software engineer. He has worked for other contractors on the same project since 1999. He currently has a secret clearance and wishes to retain in connection with his work for his current employer. (Government Exhibit 1 at Sections 12, 13A, 17, and 18; Tr. 9-10, 21-24, 50-51.) Paragraph 1 (Guideline F, Financial Considerations) The Government alleges in this paragraph that Applicant is ineligible for clearance because he has failed to satisfy his debts and meet his financial responsibilities. He is therefore potentially unreliable, untrustworthy, or at risk of having to engage in illegal acts to generate funds. Applicant admitted both original allegations (SOR 1.a and 1.b) with explanations. As stated, he also admitted the amended SOR 1.c. 2

1.a. Applicant admitted in his Answer that he had failed to file his federal income tax returns for the tax years 2019 through 2024. As of the date of the SOR, the 2021 through 2024 returns had not been filed. The 2019 and 2020 tax returns were filed on December 5, 2022. His 2021 and 2022 tax returns were filed on approximately April 6,

2026, and the back taxes were paid at that time. Applicant’s 2023 income tax return was completed by Applicant’s accountant on May 28, 2026. This was the day before the record closed. In Applicant’s email of May 29, 2026, he stated that he had paid the 2023 taxes as well. However, Applicant admits in the same email, “The 2024 tax returns are forthcoming.” The Government received nothing further from Applicant. (Government Exhibit 2; Applicant Exhibits G, J, K, L, M, N, and P; Tr. 54-7.) Applicant admitted being habitually late in filing his taxes. He explained that it was related to work-related travel overseas, difficulty gathering documents, the complexity of his tax situation, and procrastination. In addition, he had difficulties working with his two tax preparers. That being said, it appears that Applicant attempted to schedule an appointment with his current accountant in June 2023, but did not retain her until December 2025. (Applicant Exhibits A, B, O. and Q; Tr. 57-60.)

1.b. Applicant admitted that he owes $100,882 for a charged-off debt. This debt was a home-equity mortgage that he obtained on a rental property. He used this loan to buy another investment property or for business expenses. According to Applicant, the house that secured the loan was damaged by a flood in approximately 2015. His insurance carriers declined coverage. He could no longer rent the property and made the conscious decision not to pay the note. He let the bank take back the property. The debt no longer shows up on his credit report. Applicant set forth at great length his view of the factual background of this debt, including the reasoning behind his decision to not pay the debt. He repeatedly stated that he h as no intention of paying this lawful debt. Applicant has taken no action on this account. This debt is not resolved. (Government Exhibit 2 at 27-28, Government Exhibits 4 and 5; Tr. 21-52.)

1.c. Applicant admitted that he had not filed his state tax returns for tax years 2023 and 2024 as of the date of the hearing in this case. He submitted evidence that prior years had been filed. (Government Exhibit 8; Tr. 55, 69-72.) Mitigation Applicant is an extremely well-respected employee as shown by his employee evaluation. Applicant’s manager described him as a “tenacious and goal-oriented software developer who persistently tackles challenges and capabilities until they meet the highest standards.” (Applicant Exhibits D and E; Tr. 73-74.) Applicant submitted documentation showing that his financial situation is stable. He is able to pay his monthly debts with his income as shown by the Personal Financial Statement attached to his Answer. He also has various investments. (Applicant Exhibits F and H; Tr 58, 67-68, 77.) 3

Policies When evaluating an applicant’s national security eligibility for a security clearance, the administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations for each guideline, the AG list potentially disqualifying conditions and mitigating conditions, which are to be used in evaluating an applicant’s national security eligibility. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, these guidelines are applied in conjunction with the factors listed in AG ¶ 2 describing the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. The entire process is a conscientious scrutiny of applicable guidelines in the context 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, “Any doubt concerning personnel being considered for national security eligibility will be resolved in favor of the national security.” In reaching this decision, I have drawn only those conclusions that are reasonable, logical, and based on the evidence contained in the record. I have not drawn inferences based on mere speculation or conjecture. Directive ¶ E3.1.14, requires the Government to 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, and has the ultimate burden of persuasion as to obtaining a favorable clearance 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 national security eligibility. Decisions include, by necessity, consideration of the possible risk the applicant may deliberately or inadvertently fail to protect or safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation as to potential, rather than actual, risk of compromise of classified or sensitive information. Finally, as emphasized in Section 7 of Executive Order 10865, “Any determination under this order adverse to an applicant shall be a determination in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See also Executive Order 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information.) 4

Analysis Paragraph 1 (Guideline F, Financial Considerations) The security concerns relating to the guideline for financial considerations are set out in AG ¶ 18, which reads in pertinent part: 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. AG ¶ 19 describes three conditions that could raise security concerns 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 local income tax returns or failure to pay annual Federal, state, or local income tax as required. Applicant has a large charged-off consumer loan that he willfully stopped paying. This was a business decision on his part. He had several years of unfiled federal and state tax returns. All three of the disqualifying conditions apply. The burden thereby shifts to Applicant to mitigate the adverse inference of his delinquent debts and unfiled or unpaid taxes. The guideline includes five conditions in AG ¶ 20 that could mitigate the security concerns arising from Applicant’s alleged financial difficulties: (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 person’s control (e.g., loss of employment, a business downturn, unexpected medical emergency, or a death, divorce or separation, clear 5

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; 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 situation shows extremely poor judgment on his part. He argues at length that his failure to pay a $100,000 debt, stemming from a contract he willfully entered into, was a valid business decision. That may well be true. However, the fact the debt may be “closed” or uncollectable is different than Applicant paying off or paying on it vis-à-vis the security clearance concerns. Such action does not show good judgment. As for his tax situation, his arguments are insufficient. He knows and acknowledges that he has a personal responsibility to file his taxes in a timely fashion. I have carefully considered the extent of his work-related travel and his accountant difficulties, but find that they are not sufficient reasons for the years of non-compliance. This is especially true when he admits a history of disregarding his responsibilities to both state and federal tax authorities. With knowledge of this case, and the date the record would close, Applicant still did not supply the information to show that all of his subject tax returns, state or Federal, had been filed. None of the mitigating conditions fully apply. Based on all of the available evidence, Applicant has not mitigated the security concerns of this guideline. Whole-Person Concept Under the whole-person concept, the administrative judge must evaluate an applicant’s eligibility for national security eligibility by considering the totality of the applicant’s conduct and all relevant circumstances. The 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 6

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 national security 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 pertinent facts and circumstances surrounding this case. Applicant is not currently eligible for national security eligibility because of his unresolved financial situation. If he resolves these concerns, he may be eligible for a security clearance in the future. Paragraph 1 is found against Applicant. Formal Findings Formal findings for or against Applicant on the allegations set forth in the SOR, as required by ¶ E3.1.25 of Enclosure 3 of the Directive, are: Paragraph 1, Guideline F: AGAINST APPLICANT Subparagraphs 1.a through 1.c: Against Applicant Conclusion In light of all of the circumstances presented by the record in this case, I conclude that it is not clearly consistent with the interests of national security to grant Applicant’s eligibility for a security clearance. Eligibility for access to classified information is denied. WILFORD H. ROSS Administrative Judge 7