ISCR Case No. 25-01574

______________ ______________ DEFENSE LEGAL SERVICES AGENCY DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 25-01574 ) Applicant for Security Clearance ) Appearances For Government: Brian L. Farrell, Esq., Department Counsel For Applicant: Applicant’s spouse [name redacted] 09/28/2026 Decision FOREMAN, LeRoy F., Administrative Judge: This case involves security concerns raised under Guideline F (Financial Considerations). Clearance is denied. Statement of the Case Applicant submitted a security clearance application (SCA) on May 8, 2024. On April 14, 2026, the Defense Counterintelligence and Security Agency (DCSA) sent him a Statement of Reasons (SOR) alleging security concerns under Guideline F. The DCSA acted under Executive Order (Exec. Or.) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; Department of Defense (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), which became effective on June 8, 2017. Applicant answered the SOR on May 19, 2026, and requested a hearing before an administrative judge. He submitted an additional response on June 8, 2026. Department Counsel amended the SOR on June 8, 2026, and was ready to proceed on June 9, 2026. Applicant did not object to the amendment of the SOR. 1

The case was assigned to me on June 17, 2026. On July 1, 2026, the Defense Office of Hearings and Appeals (DOHA) notified Applicant that the hearing was scheduled to be conducted by video teleconference on August 25, 2026. Applicant responded to the amended SOR on August 24, 2026, and submitted Applicant’s Exhibits (AX) A, B, and C. I convened the hearing as scheduled. Government Exhibits (GX) 1 through 3 and AX A, B, and C were admitted in evidence without objection. GX 4, an unauthenticated summary of an interview with a security investigator conducted in June 2025 was not admitted, because Applicant declined to waive the requirement that it be authenticated. (Tr. 13) Applicant and his personal representative both testified. DOHA received the transcript on September 8, 2026. I kept the record open until September 11, 2026, to enable Applicant to submit additional documentary evidence. He timely submitted AX D, E, and F, which were admitted without objection. He also submitted a cover letter explaining the significance of AX D, E, and F, which I have admitted as AX G. Findings of Fact In Applicant’s answer to the amended SOR, he admitted all the allegations. His admissions are incorporated in my findings of fact. Applicant is a 62-year-old senior calibration coordinator employed by a federal contractor since November 2024. He was a federal employee from September 1994 to September 2023, when he retired. Shortly after he retired, he was employed by a federal contractor. He was laid off in May or June 2024. At some time in 2023 or 2024, he worked as a security officer for a casino. In November 2024, he was hired by his current employer, who is sponsoring him for a security clearance. His SCA reflects that he has never held a security clearance. However, he testified that he has held a clearance in the past, which is likely in light of his long employment by the federal government. (Tr. 8) Applicant received a bachelor’s degree in December 1987 and a master’s degree in May 1998. He married in August 2002. He has a 24-year-old child and a 30-year-old stepchild. The amended SOR alleges that Applicant is indebted for federal taxes in the amount of $3,971 for tax year 2024 (SOR ¶ 1.a); indebted for federal taxes in the amount of $8,359 for tax year 2023 (SOR ¶ 1.b); and indebted for state taxes in the amount of $9,841 for tax year 2023 (SOR ¶ 1.c) and in the amount of $2,922 for tax year 2024 (SOR ¶ 1.d). When Applicant was interviewed by a security investigator in June 2025, he attributed his tax debts to several factors. His wife underwent surgery in 2019 and was unable to work, and she ultimately was laid off during COVID-19. She returned to work in 2022 for a short time but became ill again. Her medical expenses were covered by 2

insurance. (Tr. 42) She is disabled and unable to return to work. (AX F) She receives $2,900 per month in disability pay from the state. (Tr. 48-49) In 2024, Applicant and his wife incurred a repair expense of about $33,000 for their home sewage system and repair of damage to the home caused by the broken sewage system. (Tr. 35-36) They also incurred additional expenses to add safety features to the home, such as railings and a ramp, which were necessary because of his wife’s partial disability. (Tr. 59) They did not submit evidence of the cost of the safety features that were added to their home. Shortly before the hearing, Applicant and his wife obtained a second mortgage loan on their home for $60,000, which they used to pay for the repairs to their home, the addition of safety features, and their credit-card debts. They are making payments of $700 per month on the second mortgage loan. (Tr. 51-52) In January 2023, Applicant withdrew $80,000 from his retirement account, knowing that the withdrawal would trigger a tax liability. (Tr. 59) Applicant and his wife filed their federal tax returns for 2023 and 2024, after receiving extensions of time to file. In June 2026, after learning that they owed federal and state taxes, they contacted the IRS and entered a payment agreement for the 2023 and 2024 taxes, which total $12,398 for both tax years. The agreement provides for monthly $300 payments. They made the first payment on August 20, 2026. Applicant and his wife testified that they filed their state income tax returns for 2023 and 2024 on April 17, 2026, but they did not provide copies of the returns. They testified that they requested copies of their federal and state income tax returns from their tax preparer, but they had not received them as of the date when the record closed. (AX G) They contacted the state tax authority regarding their state debt and received tax computation notices for 2023 and 2024. (GX 2 at 6-7) The tax computation notices reflect the balances alleged in the SOR. On August 28, 2026, Applicant and his wife sent a letter to the state tax authority and requested confirmation that their income tax returns for tax years 2023, 2024, and 2025 had been received. They also asked for an account statement for the balances owed, if any, for each tax year, and they asked for information about available payment arrangements if there was a balance due. (AX D) As of the date the record closed, they had provided documentation of the amount of state income taxes due, but they had not provided any evidence of efforts to pay the amounts due. Applicant and his wife submitted credit reports dated August 21, 2024. They reflect that all accounts are current and paid as agreed, with no delinquent balances, collections, or charge-offs. (AX B and C) 3

Policies “[N]o one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). As Commander in Chief, the President has the authority to “control access to information bearing on national security and to determine whether an individual is sufficiently trustworthy” to have access to such information. Id. at 527. The President has authorized the Secretary of Defense or his designee to grant applicants eligibility for access to classified information “only upon a finding that it is clearly consistent with the national interest to do so.” Exec. Or. 10865 § 2. Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, an administrative judge applies these guidelines in conjunction with an evaluation of the whole person. An administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. An administrative judge must consider all available and reliable information about the person, past and present, favorable and unfavorable. The Government reposes a high degree of trust and confidence in persons with access to classified information. This relationship transcends normal duty hours and endures throughout off-duty hours. Decisions include, by necessity, consideration of the possible risk that the applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation about potential, rather than actual, risk of compromise of classified information. Clearance decisions must be made “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” Exec. Or. 10865 § 7. Thus, a decision to deny a security clearance is merely an indication the applicant has not met the strict guidelines the President and the Secretary of Defense have established for issuing a clearance. Initially, the Government must establish, by substantial evidence, conditions in the personal or professional history of the applicant that may disqualify the applicant from being eligible for access to classified information. The Government has the burden of establishing controverted facts alleged in the SOR. See Egan at 531. Substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion in light of all the contrary evidence in the same record.” See ISCR Case No. 17-04166 at 3 (App. Bd. Mar. 21, 2019). It is “less than the weight of the evidence, and the possibility of drawing two inconsistent conclusions from the evidence does not prevent [a Judge’s] finding from being supported by substantial evidence.” Consolo v. Federal Maritime Comm’n, 383 U.S. 607, 620 (1966). “Substantial evidence” is “more than a scintilla but less than a preponderance.” See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994). The guidelines presume a nexus or 4

rational connection between proven conduct under any of the criteria listed therein and an applicant’s security suitability. ISCR Case No. 15-01253 at 3 (App. Bd. Apr. 20, 2016). Once the Government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. Directive ¶ E3.1.15. An applicant has the burden of proving a mitigating condition, and the burden of disproving it never shifts to the Government. See ISCR Case No. 02- 31154 at 5 (App. Bd. Sep. 22, 2005). An applicant “has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue his security clearance.” ISCR Case No. 01- 20700 at 3 (App. Bd. Dec. 19, 2002). “[S]ecurity clearance determinations should err, if they must, on the side of denials.” Egan at 531. Analysis 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. . . . 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). Applicant’s admissions and the evidence submitted at the hearing establish the following disqualifying conditions under this guideline: AG ¶ 19(a): inability to satisfy debts; AG ¶ 19(c): a history of not meeting financial obligations; and AG ¶ 19(f): failure to f ile 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 following mitigating conditions are potentially applicable: 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; AG ¶ 20(b): the conditions that resulted in the financial problem were largely beyond the p

erson’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; AG ¶ 20(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; AG ¶ 20(d): the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts; and 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. AG ¶ 20(a) is not established. Applicant’s tax debts are recent and were not incurred under circumstances making recurrence unlikely. AG ¶ 20(b) is not fully established. The flood damages to Applicant’s home and his wife’s injuries and disability were conditions largely beyond his control. He has acted responsibly regarding his federal tax debt, but he has not acted responsibly regarding his state tax debt. AG ¶¶ 20(c), 20(d), and 20(g) are established for the federal tax debt, because it is being resolved through a payment agreement. They are not established for the state tax debt, because Applicant has provided no evidence showing that it is being resolved. Whole-Person Analysis Under AG ¶ 2(c), the ultimate determination of whether to grant a security clearance must be an overall commonsense judgment based upon careful consideration of the guidelines and the whole-person concept. An 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): 6

(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. I have incorporated my comments under Guideline F in my whole-person analysis and applied the adjudicative factors in AG ¶ 2(d). After weighing the disqualifying and mitigating conditions under Guideline F and evaluating all the evidence in the context of the whole person, I conclude Applicant has mitigated the security concern raised by his federal income tax debt, but he has not mitigated the concerns raised by his state income tax debt. Formal Findings I make the following formal findings on the allegations in the SOR: Paragraph 1, Guideline F (Financial Considerations): AGAINST APPLICANT Subparagraphs 1.a and 1.b: For Applicant Subparagraphs 1.c and 1.d: Against Applicant Conclusion I conclude that it not clearly consistent with the national security interests of the United States to grant Applicant eligibility for access to classified information. Clearance is denied. LeRoy F. Foreman Administrative Judge 7