ISCR Case No. 26-00052

______________ ______________ DEFENSE LEGAL SERVICES AGENCY DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: Applicant for Security Clearance ) ) ) ) ) ISCR Case No. 26-00052 Appearances For Government: Alison O’Connell, Esq., Department Counsel For Applicant: Pro se 09/21/2026 Decision OLMOS, Bryan J., Administrative Judge: Applicant did not mitigate the security concerns raised under Guideline F (Financial Considerations). Eligibility for access to classified information is denied. Statement of the Case On February 19, 2026, the Defense Counterintelligence and Security Agency (DCSA) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guideline F. The DCSA issued the SOR 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 Security Executive Agent Directive 4 (SEAD 4), National Security Adjudicative Guidelines (AG), effective June 8, 2017. On April 27, 2026, Applicant answered the SOR (Answer) and requested a hearing before an administrative judge from the Defense Office of Hearings and Appeals (DOHA). The hearing was convened as scheduled on July 28, 2026. Department Counsel offered into evidence Government Exhibits (GX) 1-6, which were admitted without objection. Applicant testified and the record closed at the conclusion of the hearing. DOHA received the hearing transcript (Tr.) on August 4, 2026.

Findings of Fact The SOR alleges that Applicant had eight delinquent financial accounts that were charged off, totaling approximately $142,119 (SOR ¶¶ 1.a-1.h). In his Answer to the SOR, Applicant admitted all the allegations and provided extenuating and mitigating information. His admissions are incorporated into my findings of fact. After a review of the pleadings and evidence submitted, I make the following additional findings of fact. Applicant is 44 years old. He married in January 2016, separated in about November 2023, and divorced in July 2025. He has one five-year-old son from this relationship and splits custody of his son with his ex-wife. He also has a 15-year-old daughter from a previous relationship who lives with her mother in another state. He provides $901 per month in child support for his daughter and sees her several times throughout the year. He owns his home and his son is currently living with him. (GX 1-2, 6; Tr. 9-25) From February 2001 through February 2021, Applicant served on active duty in the Army and participated in multiple combat deployments overseas, including in Iraq and Afghanistan. He retired as a sergeant first class (E-7). He does not currently hold a security clearance but held one for most of his military career. He began working part- time with his current employer in January 2025 and went full-time in August 2025. (GX 1- 2; 6; Tr. 25-30) Applicant considers himself to be an investor, entrepreneur, and businessman. In 2015, he purchased his first investment property. At the time, he planned to supplement his eventual military benefits with investment income so that he would not need to work. He believed, “investing in properties was going to allow for that.” By his retirement in February 2021, he owned two rental properties and a duplex in which he lived in one unit and rented out the other unit. He estimated that, in 2021, he was earning about $3,000 per month in rental income. (GX 1-2, 6; Tr. 30-33) In August 2021, Applicant’s mother became terminally ill and moved in with Applicant. He described this as a challenging period for himself and his marriage. His mother passed away in December 2021, and he received an inheritance of about $500,000. Beginning in 2022, he began using these funds, as well as credit cards, to invest in several start-up companies. (GX 1-2, 6; Tr. 34-39) In June 2022, Applicant invested $50,000 and became a partner in Company A, a start-up beverage company. Over the next two years, he invested another $150,000 in travel expenses, marketing and entertaining clients on behalf of Company A. Towards the end of 2022, he invested $100,000 in Company B, a start-up sports marketing company. In 2022 and 2023, he spent $20,000 purchasing equipment and setting up Company C, a podcast program that he intended on running with his friend. He also invested $40,000 in setting up Company D, a dropshipping company. He testified that he has not yet made money from these investments. (GX 1-3, 6; Tr. 35-49, 63-66) 2

In addition to these business ventures, Applicant admitted he “was not spending money properly at all” during this time. He purchased several luxury items including two watches that cost $11,000 each, and a purse for his wife that cost $5,000. He also spent about $10,000 on each of several vacations and remembered spending $25,000 on one trip. As his marriage deteriorated, he also starting “going out a lot” with friends. He estimated that, by the end of 2024, he had spent his inheritance and accumulated significant credit-card debt. (GX 2, 6; Tr. 39-49) Applicant did not disclose any delinquent debts in his November 2024 security clearance application (SCA). However, during his January 2025 interview with a government investigator, he volunteered that his “finances look bad at this time.” He described that he had used credit cards as a tool to support his investments and to cover his living expenses. He also noted that he did not work while caring for his mother and that there had been unexpected expenditures surrounding his divorce, particularly regarding the custody of his son. He acknowledged he was “not the best at budgeting,” and realized that his military pension and the disability payments he received through the Department of Veterans Affairs (VA) were insufficient to cover his expenditures. He hoped his eventual investment income and return to work would allow him to resolve his delinquent accounts. (GX 1, 6) During the January 2025 interview, Applicant was confronted with information that the creditor associated with the accounts listed in SOR ¶¶ 1.a ($77,267), 1.c ($16,685), 1.e ($4,662), 1.f ($3,485), and 1.h ($2,468) had pursued multiple civil court actions against him seeking financial judgments. He claimed he was not aware of the court filings but would go to court once he received notification and set up a payment plan if needed. When asked about the remaining debts, he described the accounts associated with SOR ¶¶ 1.b ($24,741), 1.d ($10,088), and 1.g ($2,723) as credit cards he had used to cover personal and living expenses when he experienced inadequate income. He believed that his new employment and eventual returns on his investments would allow him to bring these accounts into good standing. (GX 6) In his October 2025 response to interrogatories, Applicant acknowledged the delinquent accounts reflected in the SOR. However, he did not detail any payments he sent or efforts he made to contact the creditors or otherwise resolve the debts. The debts are reflected in his December 2024 and December 2025 credit reports. His December 2025 credit report also reflects that he took out an auto loan of about $38,000 to purchase a new vehicle in April 2025. (GX 2-5) Following receipt of the February 2026 SOR, Applicant filed for Chapter 13 bankruptcy in April 2026. In his bankruptcy petition, he disclosed $158,804 in unsecured debt, mostly relating to the SOR accounts. He also disclosed that he had one pending and three concluded civil debt collection cases filed against him. He listed $10,001 in monthly gross wages from his employment as well as $2,954 from his military pension and $4,567 in VA benefits. Although he calculated a monthly net income of $5,119 and a monthly disposable income of $2,076, he proposed a bankruptcy payment plan of $550 3

per month for 60 months, totaling $33,000. He also disclosed that he had taken the required credit counseling course. (Answer; GX 3; Tr. 49-65) A week after filing for bankruptcy, Applicant submitted his Answer to the SOR and admitted all the delinquent debts. He stated: These debts arose during a lengthy divorce process and during a period in which I was attempting to keep my business operational by using available credit to cover legitimate business expenses, preserve operations, and maintain cash flow. He stated his commitment to resolving all the debts through the bankruptcy process. (Answer) During the hearing, Applicant testified he went through a “really rough period” after his mother passed away and in leading up to his divorce. He acknowledged he experienced a period of “excessive spending” and was “not necessarily concerned with the repayment of any of that.” When asked what efforts he took to resolve his delinquent debts prior to filing for bankruptcy, he stated “just to be c lear, I didn’t do anything t o r ectify any of those accounts. … Until I started getting things in the mail and I was like, all right, you need to face this.” The mail he referenced included correspondence regarding the civil suits and financial judgments against him as well as his receipt of the SOR. (Tr. 55- 56, 65-68) Applicant testified that he researched, through artificial intelligence (AI) models, options to address his financial issues. Bankruptcy was the recommended option. Since his bankruptcy filing in April 2026, he has sent monthly payments of $550 to the trustee but acknowledged that a payment plan has not been approved by the bankruptcy court. While he has funds to pay some of the smaller debts, he has chosen to resolve all his debts through the bankruptcy process. (Tr. 69-74, 80-84) In 2025, Applicant inherited about $12,000 after his father passed away. In April 2025, he purchased a new vehicle that cost about $60,000 and he is making monthly payments of $630 on the loan. He remains current on his monthly child support payments of $901. Through the bankruptcy process, he believes he can resolve his delinquent debts, and he is in a better financial position than he was a few years ago. While he continues to believe that his investments will pay off, he is not actively spending money on any of his start-up companies. He stated he can maintain a budget and has not experienced any recent delinquent accounts. (Tr. 69-79) Applicant submitted two reference letters, one from his employing company’s owner and another from a business partner. Both individuals spoke to Applicant’s professionalism, integrity, and demonstrated service to the United States. They believed that he maintained high ethical standards and exhibited the judgment, trustworthiness, and reliability necessary to hold a security clearance. His military record also reflects that 4

he received numerous awards and decorations during his service including the Bronze Star Medal, Purple Heart, Meritorious Service Medal, and Joint Service Achievement Medal, along with multiple Army Commendation and Achievement medals. (GX 1-3) Policies It is well established that no one has a right to a security clearance. As the Supreme Court held in Department of the Navy v. Egan, “the clearly consistent standard indicates that security determinations should err, if they must, on the side of denials.” 484 U.S. 518, 531 (1988) 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 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, these guidelines are applied 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(a), the entire process is a conscientious scrutiny of several 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 m

aking 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.” In reaching this decision, I have drawn only those conclusions that are reasonable, logical, and based on the evidence contained in the record. Likewise, I have not drawn inferences grounded on mere speculation or conjecture. Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, an “applicant is responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by applicant or proven by Department Counsel and has the ultimate burden of persuasion to obtain a favorable security decision.” A person who seeks access to classified information enters 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 5

decisions entail a certain degree of legally permissible extrapolation of potential, rather than actual, risk of compromise of classified information. Analysis Guideline F, Financial Considerations The security concern for financial considerations 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. The financial security concern is broader than the possibility that an individual might knowingly compromise classified information to raise money. It encompasses concerns about an individual’s self-control, judgment, and other qualities essential to protecting classified information. An individual who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information. See ISCR Case No. 11-05365 (App. Bd. May 1, 2012). I have considered the disqualifying conditions for financial considerations under AG ¶ 19 and the following are potentially applicable: (a) inability to satisfy debts; and (c) a history of not meeting financial obligations. Applicant’s admissions, testimony, and record evidence, including credit reports from December 2024 and December 2025, as well as bankruptcy records, establish the delinquent debts as alleged in the SOR. Security concerns under AG ¶¶ 19(a) and 19(c) are established for SOR ¶¶ 1.a through 1.h. Once delinquent debts are established, an applicant has the burden of presenting evidence to refute, explain, extenuate, or mitigate the security concerns arising from those debts. See ISCR 20-03146 at 3 (App. Bd. June 6, 2022). A debt that became delinquent several years ago is still considered recent because “an applicant’s ongoing, unpaid debts evidence a continuing course of conduct and, therefore, can be viewed as recent for purposes of the Guideline F mitigating conditions.” ISCR Case No. 20-02971 at 4 (App. 6

Bd. June 15, 2023). An applicant must do more than merely show that they relied on a legally available option such as bankruptcy to claim the benefit of mitigation. See ISCR Case No. 02-30304 at 3 (App. Bd. Apr. 20, 2004). The degree to which a Chapter 13 bankruptcy plan makes an applicant’s creditors whole is a factor that an administrative judge is entitled to consider when evaluating whether an applicant is acting responsibly to rectify his financial difficulties. See ISCR Case No. 09-03764 at 3 (App. Bd. Apr. 1, 2010). I have considered the mitigating conditions for financial considerations under AG ¶ 20 and the following 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 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; (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; and (d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts. Following his 2021 retirement from the Army, Applicant experienced several unexpected and significant personal hardships, including the terminal illness and subsequent passing of his mother in December 2021, followed by his marital separation in 2023 and divorce in 2025. However, his financial difficulties occurred after his receipt of a $500,000 inheritance from his mother and primarily arose from his over-leveraged investments in multiple speculative business opportunities and his own reckless spending. These conditions were largely within his control. With his purchase of a $60,000 vehicle in 2025, he continued to prioritize other expenditures over the resolution of his delinquent debts. Applicant stated that he did not take any action to pay or otherwise resolve his delinquent accounts until after receiving the SOR. He then filed for Chapter 13 bankruptcy. Although he disclosed a monthly disposable income of $2,076 in his bankruptcy petition, he submitted a bankruptcy payment plan of $550 per month for 60 months in which he would pay $33,000 toward a total unsecured debt of $158,804. This reflects a significant disparity between his total liabilities and his claimed repayment 7

capacity. Given his ongoing financial issues and only recent corrective efforts, it cannot be said that his financial difficulty occurred long ago or is unlikely to recur. He has not taken sufficient responsible action to address his delinquent accounts. Mitigation under AG ¶¶ 20(a) and 20(b) is not applicable. Applicant believes that he has learned from these events and is more financially responsible. Through his recent bankruptcy filing, he has started to resolve his delinquent debts. He has not incurred any new delinquent accounts and has completed the required financial counseling through the bankruptcy proceedings. To establish good faith in resolving his accounts, he began sending monthly payments of $550 to the bankruptcy trustee while the final payment plan is finalized. These are favorable actions in mitigation. However, given the extent of the financial concerns, these actions are insufficient to establish responsible action to repay overdue creditors or show that the problem is under control. Mitigation under AG ¶¶ 20(c) and 20(d) is not applicable. Considering the totality of the circumstances, Applicant has not mitigated the security concerns related to financial considerations. While he has recently started addressing his delinquent accounts through bankruptcy, more time is necessary for him to establish a track record of responsible action in resolving his financial concerns. Whole-Person Concept Under the whole-person concept, the administrative judge must evaluate an applicant’s eligibility for a security clearance 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 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 considering all the facts and circumstances surrounding this case. I have incorporated my comments under Guideline F in my whole- person analysis. Applicant served twenty years on active duty in the Army and participated in multiple combat deployments overseas, including in Iraq and Afghanistan. He received 8

________________________ numerous awards and decorations during his service. He also exhibited the trust, reliability, and judgment necessary to have held a security clearance for most of his military career. Two character-references stated that he maintained high ethical standards, professionalism, and integrity. In the last five years, Applicant experienced several personal hardships including the passing of his mother in 2021 and his separation in 2023, resulting in his divorce in 2025. At the hearing, he candidly admitted he poorly managed his spending for several years. Through bankruptcy, he intends to address his delinquent accounts. He expressed his desire to better manage his financial circumstances. While he has taken some positive steps toward that goal, more time is necessary for him to reestablish that he can maintain the trustworthiness, reliability, and exercise of good judgment necessary to hold a security clearance. Overall, the record evidence leaves me with questions and doubts as to Applicant’s eligibility and suitability for a security clearance. I conclude that he did not mitigate the security concerns for financial considerations. Formal Findings 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 – 1.h: Against Applicant Conclusion 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. Bryan J. Olmos Administrative Judge 9