ISCR Case No. 26-00404

______________ ______________ DEFENSE LEGAL SERVICES AGENCY DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 26-00404 ) Applicant for Security Clearance ) For Government: Rhett Petcher, Esq., Department Counsel For Applicant: Pro se 09/28/2026 Decision GOLDSTEIN, J., Administrative Judge: This case involves security concerns raised under Guideline F (Financial Considerations). Clearance is denied. Statement of the Case On July 22, 2025, Applicant submitted a security clearance application (SCA). On April 16, 2026, the Department of Defense (DOD) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guideline F, Financial Considerations. The action was taken under Executive Order 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 for Determining Eligibility for Access to Classified Information, effective within the DOD after June 8, 2017. Applicant answered the SOR on May 4, 2026, and requested a hearing before an administrative judge. The case was assigned to me on June 27, 2026. The Defense Office of Hearings and Appeals (DOHA) issued a notice of hearing on August 5, 2026, and the hearing convened as scheduled on September 2, 2026. Government Exhibits (GE) 1, 3, and 4 were admitted into evidence, over Applicant’s objections. The Government withdrew GE 2. Applicant testified and presented Applicant Exhibits (AE) A through N. AE A and AE H through AE N were admitted without objection. Department Counsel objected to AE B through AE G, which were admitted over the Government’s objection. The record was left open until September 23, 2026, for either party to submit additional evidence. Applicant submitted AE O through DD. Department Counsel objected to AE Q, and it was

admitted over his objection. DOHA received the hearing transcript (Tr.) on September 8, 2026. Findings of Fact Applicant is 65 years old. He is married and has four adult children. His wife is employed but does not contribute much towards paying their family’s bills. Her take-home pay is approximately $900 every two weeks. Applicant has worked for his current employer, a government contractor, since January 2020. That first year he earned about $45,000, including pay from a part-time job he took to help make ends meet. Between 2020 and 2022, he worked a reduced number of hours due to COVID-19-related reductions in staffing. He also reported having reduced work hours related to medical problems in 2023. He noted that he incurred medical bills totaling around $25,000. He testified that his annual income is now approximately $80,000, and that for the past three to four months, he was working about 60 hours a week between his two jobs. (AE L, AE O, AE BB; Tr. 40-52, 54) SOR ¶¶ 1.a through 1.k alleged that Applicant had 11 delinquent debts totaling approximately $90,000. Applicant denied all of the allegations and indicated that the credit report incorrectly listed the amounts owed on the alleged debts. (Answer; Tr. 10) SOR ¶ 1.a alleged Applicant was indebted to a credit union for an account that was charged off in the approximate amount of $37,062. Applicant’s July 2026 credit report reflected this account was reported as a loss. He presented an August 17, 2026 letter from this creditor offering to settle this debt for one payment of $12,971. As of the close of the record, no payment was documented. This debt remains unresolved. (AE A; GE 3 at 3, GE 4 at 2; Tr. 56-58) SOR ¶ 1.b alleged Applicant was indebted on a bank credit card for an account that was charged off in the approximate amount of $16,654. He testified that this debt became delinquent because his work hours were reduced. He indicated that he established a payment agreement to resolve this debt for $5,000. Applicant’s July 2026 credit report reflected this account was reported as a loss. He has not yet made a payment on this debt. This debt is not resolved. (GE 3 at 3, GE 4 at 6; Tr. 65-68) SOR ¶ 1.c alleged Applicant was indebted to a credit union on an account that was charged off in the approximate amount of $14,404. His July 2026 credit report reflected that this account was reported as a loss. However, it was placed for collections with another creditor, and he established a payment plan to resolve this debt through monthly payments of $240. He claimed to have started making monthly payments in January 2026. As of July 2026, the balance due was reduced to $12,722. He documented a $240 payment made on August 31, 2026. Applicant is resolving this debt. (AE J, AE P; GE 3 at 4, GE 4 at 7; Tr. 58-64) SOR ¶ 1.d alleged Applicant was indebted on a bank credit card for an account that was charged off in the approximate amount of $5,239. This debt became delinquent

in 2022. His July 2026 credit report reflected that this account was reported as a loss. He indicated that he established a payment agreement to resolve this debt for $1,300. He has not yet made a payment on this debt. This debt is not resolved. (GE 4 at 6; Tr. 65- 67) SOR ¶ 1.e alleged Applicant was indebted to a collection agent for an account placed for collection by a retail-store rewards credit card in the approximate amount of $3,226. (GE 3 at 4) In April 2026, Applicant reached an agreement with a collection agency holding this debt, agreeing to pay $1,614 to resolve it. He presented a letter dated May 2026 from an attorney representing this creditor that said, “thank you for your payment. Your file is now closed.” This debt is resolved. (AE D, AE V; GE 3 at 15, GE 4 at 8; Tr. 69-70) SOR ¶ 1.f alleged Applicant was indebted to a bank for a delinquent credit card that was charged off in the approximate amount of $3,065. This debt became delinquent in 2022. Applicant’s July 2026 credit report reflects this account was reported as a loss. However, he testified that he has been making payments for the past year and a half. His July 2026 credit report reflects a reduced balance of $2,371. Applicant is resolving this debt. (GE 3 at 5, GE 4 at 7; Tr. 70-72) SOR ¶ 1.g alleged Applicant was indebted on a revolving charge account that was charged off in the approximate amount of $3,010. Applicant’s July 2026 credit report reflected this account was reported as a loss. However, Applicant testified that he has a payment agreement with this creditor. He makes payments of $133.81 per month to this creditor. He produced an August 2026 bank statement showing his most recent payment and a letter from the creditor confirming that payment. His July 2026 balance on this debt has decreased to $2,475. Applicant is resolving this debt. (AE A, AE R; GE 3 at 5, GE 4 at 7; Tr. 72) SOR ¶ 1.h alleged Applicant was indebted to a bank on an account that was charged off in the approximate amount of $2,439. At hearing, he testified that he paid this account in 2022. Applicant documented one $60 payment to this creditor. His July 2026 credit report shows no decrease in the amount delinquent. This debt is unresolved. (AE X; GE 3 at 5, GE 4 at 6; Tr. 73) SOR ¶ 1.i alleged Applicant was indebted to a debt collector for an account placed for collection in the approximate amount of $2,133. Applicant’s July 2026 credit report reflects this account was reported as seriously past due since January 2025. On September 18, 2026, he paid $746.75 to this creditor. The payment receipt does not establish whether this was a partial payment or a full payoff of the amount owed. However, it demonstrates that he is resolving this debt. (AE AA; GE 3 at 6, GE 4 at 6) SOR ¶ 1.j alleged Applicant was indebted on a bank credit card account that was charged off in the approximate amount of $1,402. Applicant’s July 2026 credit report reflected this account was legally paid in February 2026 for less than the full balance. He

presented a letter from this creditor documenting that the debt was settled. This debt is resolved. (AE H, AE I; GE 3 at 6, GE 4 at 7; Tr. 75-76) SOR ¶ 1.k alleged Applicant was indebted to a furniture store on an account that had been charged off in the approximate amount of $1,392. Applicant’s July 2026 credit report reflected this account was reported as a loss. He produced a January 2020 receipt from the initial creditor showing a balance of $0 due, but there is no account number that establishes the receipt was for the same account. The evidence does not establish that this debt is resolved, despite his having previously resolved a furniture debt. (AE Q; GE 3 at 6, GE 4 at 6-7; Tr. 76-77) This debt is not resolved. Applicant noted several other accounts that are in good standing and provided excerpts of a credit report to demonstrate that not all of his accounts are delinquent. He indicated he was looking into debt consolidation loans or other debt resolution programs, but did not follow through because he thought it might be a scam. (AE B – AE G, AE DD) He testified: My reasoning was what I've mentioned, that I've always been a type to get out. Like I said, I started off paying bills by walking or driving up to the car company and paying it personally, because I didn't want it to be lost in the mail. Because if you go back in the '80s, you used to mail bills off. And I actually drove up and made the payment. That's my personality is not to not pay someone. (Tr. 82-83) Applicant produced four written recommendations and called two witnesses. He is known as a devoted and responsible husband, father, and employee. Professionally, he exceeds performance expectations and is known to have outstanding interpersonal and leadership skills. He is known to be diligent and professional in maintaining safety and security. (AE S, AE T, AE Y, AE Z) 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 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 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. . . . An individual who is financially overextended is at greater risk of having to engage in illegal or otherwise questionable acts to generate funds. . . . The guideline sets forth several conditions that could raise security concerns under AG ¶ 19. The following are applicable in this case: (a) inability to satisfy debts; and (c) a history of not meeting financial obligations. AG ¶¶ 19(a) and 19(c) are applicable. From 2020 through 2023, Applicant was unable to pay his financial obligations due to reduced work hours. His debts listed on the SOR and established by credit reports in the record demonstrate that from 2020 to 2025, he had a history of not addressing his delinquent debts. Conditions that could mitigate financial considerations security concerns are provided under AG ¶ 20. The following are potentially applicable in this case: (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; (d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts; and (e) the individual has a reasonable basis to dispute the legitimacy of the past-due debt which is the cause of the problem and provides documented

proof to substantiate the basis of the dispute or provides evidence of actions to resolve the issue. Applicant’s reduction in work hours was due to COVID-19-related reductions in staffing. He also reported having reduced work hours related to subsequent medical problems. These were conditions beyond his control and negatively impacted his income. However, for AG ¶ 20(b) to provide full mitigation, he must demonstrate that he acted responsibly under the circumstances. Similarly, for AG ¶ 20(d) to provide mitigation he must show he is adhering to a good-faith effort to repay overdue creditors or otherwise resolve his debts. The Appeal Board has held: As a general rule, an applicant is not required to be debt-free nor to develop a plan for paying off all debts immediately or simultaneously. All that is required is that an applicant act responsibly given his circumstances and develop a reasonable plan for repayment, accompanied by “concomitant conduct,” that is, actions which evidence a serious intent to effectuate the plan. Depending on the facts of a given case, the fact that an applicant’s debts will not be paid off for a long time, in and of itself, may be of limited security concern. See, e.g., ISCR Case No. 08-06567 at 3 (App. Bd. Oct 29, 2009).” ISCR Case No. 09-08462 at 3 (App. Bd. May 31, 2011) In determining whether Applicant is making a good-faith effort and acting responsibly under the circumstances, I have considered the following: the debt in SOR ¶ 1.c was reduced to $12,722, supporting that Applicant made seven payments of $240 since January 2026; the debt in SOR ¶ 1.e was resolved for a payment of $1,614; the debt in SOR ¶ 1.f has been reduced by $694; the debt in S OR ¶ 1.g has been reduced by $535, which reflects about four payments according to his agreement; the debt in SOR ¶ 1.i has been reduced by at least $746; and the debt in SOR ¶ 1.j was resolved for less than the balance due. These ac

tions demonstrate a reasonable plan and concomitant conduct to resolve his debts as he is able. Applicant mitigated the financial concerns set out in SOR ¶¶ 1.c, 1.e, 1.f, 1.g, 1.i, and 1.j. However, the debts in SOR ¶¶ 1.a, 1.b, 1.d, 1.h, and 1.k remain unresolved and are ongoing. Excluding the disputed furniture debt, the remaining four undisputed debts represent approximately $61,394 (about 68%) of the $90,000 alleged debt. While Applicant contests the total amount of debt due because he has negotiated lower settlement agreements with the creditors, he has only made a single documented $60 payment on the debt in SOR ¶ 1.h. Merely establishing settlement agreements or communicating good-faith intentions without actual payments does not constitute "concomitant conduct" or a "good-faith effort" to repay overdue creditors. He has not participated in financial counseling. He continues to manage his household finances with little contribution from his wife, limiting his ability to resolve his debts while paying for their joint expenses. While he is credited for communicating with each of these creditors to work toward their resolution, he does not yet have a viable plan or to address SOR ¶¶ 1.a, 1,b, 1.d, and 1.h beyond his stated intent to possibly take a debt consolidation loan. He has not yet established mitigation under AG ¶¶ 20(a) through 20(d).

Further, AG ¶ 20(e) does not provide full mitigation. While Applicant disputes the final debt totals, he does not dispute the existence of the underlying debts for SOR ¶¶ 1.a, 1.b, 1.d, and 1.h. It applies to SOR ¶ 1.k because Applicant has documented a paid furniture debt that may relate to the debt in SOR ¶ 1.k. In contrast, it does not fully mitigate other debts (SOR ¶¶ 1.a, 1,b, 1.d, and 1.h), because he does not dispute the existence of the underlying debts. 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): (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). I considered the potentially disqualifying and mitigating conditions in light of all the facts and circumstances surrounding this case. These include Applicant’s recommendations and attempts to resolve his delinquent accounts. While this is positive evidence weighing in Applicant’s favor, he needs to demonstrate a longer track record of steady payments towards his debts under the settlement agreements he has reached with the creditors. Overall, the record evidence leaves me with questions and doubts about Applicant’s eligibility and suitability for a security clearance. I conclude Applicant has not mitigated the financial considerations security concerns. Formal Findings I make the following formal findings on the allegations in the SOR: Paragraph 1, Guideline F: AGAINST APPLICANT Subparagraphs 1.a – 1.b: Subparagraphs 1.c: Subparagraphs 1.d: Subparagraphs 1.e – 1.g: Against Applicant For Applicant Against Applicant For Applicant

Subparagraphs 1.h: Against Applicant Subparagraphs 1.i – 1.k: For Applicant Conclusion I conclude that it is not clearly consistent with the national security interests of the United States to grant Applicant eligibility for access to classified information. Clearance is denied. Jennifer Goldstein Administrative Judge