        5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
             3XUVXDQW WR 6L[WK &LUFXLW 5XOH 

     (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU
                 )LOH 1DPH DS




81,7('67$7(6&28572)$33($/6
               )257+(6,;7+&,5&8,7
                 BBBBBBBBBBBBBBBBB


 0$85,&( $ 0$621               ;
        3HWLWLRQHU$SSHOODQW     
                                  
                                    1R
           Y                     
                                   !
                                  
 %(77< 0,7&+(//                  
        5HVSRQGHQW$SSHOOHH 
                                 1
      $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
      IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW7ROHGR
     1Rn'DYLG$.DW]'LVWULFWsXGJH
                $UJXHG2FWREHU
           'HFLGHGDQG)LOHG)HEUXDU\
  %HIRUH%2**60225(DQG&/$<&LUFXLWsXGJHV
                   BBBBBBBBBBBBBBBBB
                        &2816(/
$5*8('  'DYLG & 6WHEELQV &ROXPEXV 2KLR IRU
$SSHOODQW0DWWKHZ&+HOOPDQ$77251(<*(1(5$/j6
2)),&( 2) 2+,2 &$3,7$/ &5,0(6 6(&7,21
&ROXPEXV 2KLR IRU $SSHOOHH  21 %5,()  'DYLG &
6WHEELQV&ROXPEXV2KLR&DURO:ULJKW&ROXPEXV2KLR
IRU $SSHOODQW  0DWWKHZ & +HOOPDQ &KDUOHV / :LOOH
$77251(<*(1(5$/j62)),&(2)2+,2&$3,7$/
&5,0(66(&7,21&ROXPEXV2KLRIRU$SSHOOHH

                             
     0DVRQY0LWFKHOO                             1R       1R                           0DVRQY0LWFKHOO      

  0225(sGHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK             OHDVWWREHWKHPRVWHIILFDFLRXVLQDFKLHYLQJGHIHQGDQWjVJRDO
&/$< s MRLQHG  %2**6 s SS  GHOLYHUHG D        RIFRQWLQXHGOLIH
VHSDUDWHGLVVHQWLQJRSLQLRQ
                                                                        7KHIDFWWKDWDWULDOVWUDWHJ\GLGQRWZRUNGRHVQRWPDNHWKH
                     BBBBBBBBBBBBBBBBB                                H[ DQWH GHFLVLRQ WR HPSOR\ LW XQGHU FLUFXPVWDQFHV ZKHUH
                                                                      KDUGO\ DQ\ WULDO VWUDWHJLHV ZRXOG VHHP DWWUDFWLYH
                         23,1,21                                      FRQVWLWXWLRQDOO\ GHIHFWLYH ODZ\HULQJ  *LYHQ WKH 6XSUHPH
                     BBBBBBBBBBBBBBBBB                                &RXUWjVDGPRQLVKPHQWVDJDLQVWXVLQJWKHSHQDOW\SKDVHDQG
                                                                      WKH6L[WK$PHQGPHQWDVDOHYHULQGHDWKSHQDOW\FDVHVDQG
   .$5(1 1(/621 0225( &LUFXLW sXGJH  3HWLWLRQHU              WKH VRXQG VWUDWHJLF UHDVRQV IRU WKH RPLVVLRQ RI 0DVRQjV
$SSHOODQW0DXULFH$OOHQ0DVRQm0DVRQlZDVFRQYLFWHGE\              EDFNJURXQGE\KLVFRXQVHO,UHVSHFWIXOO\GLVVHQW
DQ2KLRMXU\RIDJJUDYDWHGIHORQ\PXUGHUUDSHDQGKDYLQJD
ZHDSRQZKLOHXQGHUGLVDELOLW\KHZDVDOVRIRXQGJXLOW\RIWKH
GHDWKSHQDOW\ VSHFLILFDWLRQ RI FRPPLWWLQJ PXUGHU LQ WKH
FRXUVH RI D UDSH DQG IXUWKHU VSHFLILFDWLRQV WKDW LQYROYHG
ILUHDUPVSULRUIHORQ\DQGSULRURIIHQVHRIYLROHQFH0DVRQ
ZDV VHQWHQFHG WR GHDWK  0DVRQ QRZ DSSHDOV WKH GLVWULFW
FRXUWjVGHQLDORIKLVSHWLWLRQIRUDZULWRIKDEHDVFRUSXVDQG
KLV UHTXHVW IRU DQ HYLGHQWLDU\ KHDULQJ  :H KDYH FDUHIXOO\
FRQVLGHUHG DOO RI WKH HLJKW FODLPV WKDW 0DVRQ UDLVHV DQG
$)),50WKHGLVWULFWFRXUWjVGHFLVLRQWRGHQ\KDEHDVFRUSXV
UHOLHIEXWZLWKRQHLPSRUWDQWH[FHSWLRQ0DVRQFRQWHQGVWKDW
KH ZDV GHQLHG WKH HIIHFWLYH DVVLVWDQFH RI FRXQVHO DW WKH
VHQWHQFLQJ SKDVH  %HFDXVH WKH UHFRUG DV LW QRZ VWDQGV LV
LQVXIILFLHQWIRUXVWRGHWHUPLQHZKHWKHUWKLVFODLPKDVPHULW
ZH5(0$1'WKLVFDVHWRWKHGLVWULFWFRXUWIRUDQHYLGHQWLDU\
KHDULQJRQWKLVRQHLVVXH
                     ,%$&.*5281'
  2Q )HEUXDU\   5RELQ 'HQQLV m5RELQl WKH
QLQHWHHQ\HDUROG ZLIH RI &KULV 'HQQLV m&KULVl
GLVDSSHDUHG(DUOLHUWKDWGD\5RELQDQG&KULVKDGVRFLDOL]HG
ZLWK 0DVRQ DQG RWKHU IULHQGV DQG &KULV DQG 0DVRQ KDG
GLVFXVVHG WUDGLQJ &KULVjV  FDOLEHU &ROW )URQWLHU 6FRXW
UHYROYHUIRU0DVRQjVWHOHYLVLRQ7KHQH[WGD\5RELQZDV
UHSRUWHG DV PLVVLQJ WR WKH 8QLRQ &RXQW\ 6KHULIIjV
'HSDUWPHQWWKHUHSRUWVWDWHGWKDW0DVRQZDVWKHODVWSHUVRQ
VHHQZLWK5RELQ
    0DVRQY0LWFKHOO                               1R       1R                                 0DVRQY0LWFKHOO      

$QWL7HUURULVP DQG (IIHFWLYH 'HDWK 3HQDOW\ $FW RI              2Q)HEUXDU\'HSXW\6KHULIIsDFN/DXWHQVODJHU
m$('3$lH[SOLFLWO\OLPLWVWKHFLUFXPVWDQFHVXQGHUZKLFK               m/DXWHQVODJHUlUHFHLYHGDUHSRUWDERXWDQDEDQGRQHGFDULQ
DQHYLGHQWLDU\KHDULQJPD\EHJUDQWHGLQKDEHDVSURFHHGLQJV            D UXUDO DUHD RI 0DULRQ &RXQW\  7ZR GD\V HDUOLHU
6HH  86&  H  ,I 0DVRQ IDLOHG WR GHYHORS D    /DXWHQVODJHUKDGGULYHQWKURXJKWKDWDUHDDQGVHHQDEODFN
VXIILFLHQW mIDFWXDO EDVLV RI D FODLP LQ 6WDWH FRXUW             PDQZDONLQJZKRPKHODWHULGHQWLILHGDV0DVRQ&KHYURQ
SURFHHGLQJVlWKLVFRXUWPXVWGLVPLVVWKHFODLPDQGFDQQRW              VW\OHVKRHLPSUHVVLRQVVLPLODUWRWKRVHPDGHE\VKRHVWKDW
RUGHUDQHYLGHQWLDU\KHDULQJXQOHVVWKHFODLPUHOLHVRQDmQHZ          0DVRQDQG5RELQRZQHGZHUHIRXQGRQWKHRXWVLGHRIWKH
UXOH RI FRQVWLWXWLRQDO ODZ PDGH UHWURDFWLYHO\ DSSOLFDEOH WR      SDVVHQJHUGRRUDQGRQWKHSDVVHQJHUjVVLGHRIWKHGDVK7\SH
FDVHV RQ FROODWHUDO UHYLHZ E\ WKH 6XSUHPH &RXUW WKDW ZDV      %EORRG5RELQjVEORRGW\SHZDVIRXQGRQWKHLQVLGHRIWKH
SUHYLRXVO\XQDYDLODEOHRUDIDFWXDOSUHGLFDWHWKDWFRXOGQRW           SDVVHQJHUGRRU$VHWRINH\VLQFOXGLQJFDUNH\VWKDWILWD
KDYHEHHQSUHYLRXVO\GLVFRYHUHGWKURXJKWKHH[HUFLVHRIGXH             &KU\VOHURZQHGE\0DVRQjVZLIHZDVRQWKHFDUjVIURQW
GLOLJHQFHl   86&  H  1HLWKHU RI WKHVH         SDVVHQJHUVHDW
FRQGLWLRQVREWDLQLQWKLVFDVH7KLVFRXUWPDNHVFOHDUWKDW
0DVRQUDLVHGWKHVHDUJXPHQWVLQ2KLRVWDWHFRXUWV0DVRQ                 $IHZKRXUVDIWHUWKLVGLVFRYHU\'HQQLV3RWWVm3RWWVlRI
DOVRKDGDQRSSRUWXQLW\WRLQWURGXFHH[WHQVLYHHYLGHQFHRI             WKH0DULRQ&RXQW\6KHULIIjV'HSDUWPHQWTXHVWLRQHG0DVRQ
ZKLFKKHVRPHZKDWDYDLOHGKLPVHOIUHJDUGLQJZKDWGHIHQVH               DERXW5RELQjVGLVDSSHDUDQFH7KLVLQWHUYLHZWRRNSODFHDWWKH
FRXQVHOFRXOGKDYHGRQH$Q\IDFWXDOGHILFLHQF\LQ0DVRQjV             GHWHFWLYHjVRIILFHRIWKH6KHULIIjV'HSDUWPHQWDQGODVWHGIRU
FODLPWKDWSUHYHQWVXVIURPDFFHSWLQJLWPD\QRWEHFXUHGE\            HLJKWHHQPLQXWHV2Q)HEUXDU\IROORZLQJXSRQ
D IHGHUDO FRXUW LQ KDEHDV SURFHHGLQJV ZKHQ WKHUH LV QR         LQIRUPDWLRQIURPRWKHULQWHUYLHZV3RWWVTXHVWLRQHG0DVRQ
HYLGHQFHLQWKHUHFRUGWKDW2KLRFRXUWVSUHYHQWHG0DVRQIURP            DJDLQ  7KH VHFRQG LQWHUYLHZ WRRN SODFH LQ D EDVHPHQW
PDNLQJ D VXIILFLHQW IDFWXDO UHFRUG  7KLV FRXUWjV FXUUHQW       LQWHUURJDWLRQURRPDQGODVWHGZLWKSDXVHVLQWKHTXHVWLRQLQJ
UHPHG\RI RUGHULQJDQHYLGHQWLDU\KHDULQJLVLQYDOLGXQGHU             IRUIRXUKRXUV0DVRQDSSHDUVWRKDYHXQGHUVWRRGWKDWKHZDV
6HFWLRQHRI$('3$                                            QRW XQGHU DUUHVW DW WKLV WLPH  $IWHU WKH VHFRQG LQWHUYLHZ
                                                                        0DVRQjV SDUROH RIILFHU WRRN KLP LQWR FXVWRG\ IRU D SDUROH
   ,URQLFDOO\LIFRXQVHOjVWUXHDLPLVWRVHHWKDWKLVFOLHQWjVOLIH   YLRODWLRQ
LVVSDUHGWKHPRVWHIIHFWLYHWDFWLFXQGHUFDVHVVXFKDVWKHRQH
WRGD\LVWRRPLWVRPHVWHSVRWKDWRXUFRXUWZLOOODWHUILQG              2Q)HEUXDU\5RELQjVERG\ZDVIRXQGLQVLGHDQ
FRXQVHO ZDV QRW mHIIHFWLYHl  &UHDWLYH KDEHDV FRXQVHO FDQ       DEDQGRQHG EXLOGLQJ WKDW ZDV ZLWKLQ HLJKWHHQ PLQXWHVj
FRQMXUHXSP\ULDGSRVVLEOHVFHQDULRVLQZKLFKDFODLPFDQ               ZDONLQJGLVWDQFHIURPZKHUHKHUFDUKDGEHHQIRXQG6KH
QRZ EH PDGH WKDW VRPH LQIRUPDWLRQ ZRXOG VXUHO\ KDYH             ZDV O\LQJ IDFH GRZQ ZHDULQJ RQO\ D EUD KHU MHDQV DQG
FRQYLQFHG D MXU\ WR VSDUH WKH OLIH RI D KHLQRXV PXUGHUHU     XQGHUZHDUZHUHSXOOHGGRZQWRKHUDQNOHV5RELQjV7VKLUW
ZLWKRXW KDYLQJ WR IDFH WKH DFWXDO FRQVHTXHQFH WKDW VXFK         DQGFDUNH\VZHUHXQGHUKHUMDFNHWZKLFKZDVIRXQGHLJKW
LQIRUPDWLRQFRXOGHDVLO\KDYHEHHQLQHIIHFWLYHRUZRUVH,Q           IHHWIURPKHUERG\ZLWKEXUUVDQGGHEULVRQLW7KHDSSDUHQW
IDFWLIWULDOFRXQVHOZHUHWRXVHWKHmNLWFKHQVLQNlDSSURDFK          PXUGHUZHDSRQDEORRGVWDLQHGERDUGZLWKSURWUXGLQJQDLOV
VHHPLQJO\DGYDQFHGE\UHVSRQGHQWjVFRXQVHODQGLQWURGXFH
HYHU\ VFUDS RI LQIRUPDWLRQ QRZ FODLPHG WR EH KHOSIXO
LQFOXGLQJ KLV EHFRPLQJ mFHUWLILHG LQ +HDWLQJ DQG $LU                
                                                                             $QRWKHU ZLWQHVV WHVWLILHG WR VHHLQJ     D SHUVRQ ZKR ILW 0DVRQjV

&RQGLWLRQLQJl VHH 0DVRQjV %U DW  Q RQH FRXOG           GHVFULSWLRQ ZDONLQJ LQ WKH JHQHUDO DUHD DW WKDW WLPH

SUREDEO\ILQGWKDWDSSURDFKmLQHIIHFWLYHlIRUGHSULYLQJWKH                 
GHIHQGDQWRIWKHDUJXPHQWWKDWKDVSURYHQLQWKLVFLUFXLWDW                7\SH% EORRG ZDV ODWHU IRXQG RQ WKH VLGH RI D WHQQLV VKRH WKDW
                                                                        0DVRQ ZDV ZHDULQJ RQ )HEUXDU\  
       0DVRQY0LWFKHOO                                1R   1R                             0DVRQY0LWFKHOO       

ZDVIRXQGWZHQW\IHHWIURPKHUERG\$QRWKHUSLHFHRIZRRG            PRUHWKDQDQDVVHUWLRQm7HVWLPRQ\WKDWVLPSO\SXW0DVRQjV
IRXQGDWWKHVFHQHKDGVWUDQGVRIKDLUWKDWPDWFKHG5RELQjV            FKLOGKRRGLQWRFRQWH[WZLWKRXWPLVLQWHUSUHWLQJLWZRXOGQRW
KDLU2Q)HEUXDU\GHWHFWLYHVIRXQGDVPDOOEORRG           KDYHEHHQWKHVXEMHFWWRWKHSURVHFXWRUjVUHEXWWDOHYLGHQFH
VWDLQHGSLHFHRIPHWDODWWKHFULPHVFHQHZKLFKDILUHDUPV            ZKLFKPRVWO\FRQFHUQHG0DVRQjVFKDUDFWHUl6OLSRSDW
H[DPLQHUODWHUFRQFOXGHGZDVLGHQWLFDOWRDJULSIUDPHIURP            7KHFRXUWjVFXUVRU\RSLQLRQRI2KLRHYLGHQFHODZQDUURZO\
DFDOLEHU&ROW)URQWLHU6FRXWUHYROYHUDQGZDVFRQVLVWHQW          FRQVWUXHVWKHWULDOFRXUWjVH[SOLFLWUXOLQJRQWKLVPDWWHU6HH
ZLWKKDYLQJFRPHIURPWKHKDQGOHRIVXFKDUHYROYHU                   7UDW7KHWULDOFRXUWLQGLFDWHGWKDWH[WUHPHO\GDPDJLQJ
                                                                       HYLGHQFH FRXOG KDYH EHHQ LQWURGXFHG mKDG WKH 'HIHQVH
  2Q )HEUXDU\   SDWKRORJLVW 'U .HLWK 1RUWRQ            HOHFWHG WR SURFHHG ZLWK D PRUH H[SDQVLYH PLWLJDWLRQ
m1RUWRQlFRQGXFWHGDQDXWRSV\DQGFRQFOXGHGWKDW5RELQ               VWUDWHJ\ls$DW0DVRQFRQFHGHVWKDWm>W@KHWULDOFRXUW
KDGGLHGDVDUHVXOWRIEOXQWIRUFHWUDXPDFDXVLQJPXOWLSOH            UXOHGWKDWVXFKHYLGHQFHlUHIHUULQJWRHYLGHQFHRI0DVRQjV
VNXOOIUDFWXUHV'U1RUWRQGHWHUPLQHGWKDWWKHEORRGVWDLQHG         SDVWFULPLQDOEHKDYLRUmZRXOGEHDGPLVVLEOHl0DVRQjV%U
ERDUGIRXQGDWWKHVFHQHDQGWKHEXWWRIDUHYROYHUFRXOGKDYH         DW'HIHQVHFRXQVHOXQGRXEWHGO\FRXOGKDYHSUHVHQWHGWKH
FDXVHG 5RELQjV LQMXULHV  'U 1RUWRQ DOVR IRXQG VSHUP LQ      HYLGHQFH QRWZLWKVWDQGLQJ WKH WULDO FRXUWjV GHWHUPLQDWLRQ
5RELQjVYDJLQDWKDW'1$H[SHUWVODWHUPDWFKHGWR0DVRQjV               LQYLWLQJWKHLQWURGXFWLRQRI0DVRQjVSULRUFULPLQDOUHFRUGE\
'1$'1$PDWHULDOIURP5RELQjVXQGHUZHDUDOVRPDWFKHG                 WKH SURVHFXWLRQ DQG DSSHDOHG D GLVWULFW FRXUW GHFLVLRQ WR
0DVRQjV'1$7KHH[SHUWVGLGQRWILQG'1$IURPDQ\RQH                 DGPLW0DVRQjVQHJDWLYHKLVWRU\DVUHEXWWDOHYLGHQFH<HWZH
RWKHUWKDQ5RELQDQG0DVRQ                                            KDYH QHYHU KHOG WKDW GHIHQVH FRXQVHO LV FRQVWLWXWLRQDOO\
                                                                       REOLJDWHGWRWDNHVXFKDULVNHVSHFLDOO\ZKHQWKHWULDOFRXUWjV
  2Q 6HSWHPEHU   0DVRQ ZDV FKDUJHG ZLWK                 UXOLQJLVIDUIURPFOHDUO\WKHDEXVHRIGLVFUHWLRQWKDWZRXOGEH
DJJUDYDWHGPXUGHUZLWKDGHDWKSHQDOW\VSHFLILFDWLRQWKDW         UHTXLUHGWRRYHUWXUQLWVHYLGHQWLDU\GHWHUPLQDWLRQ
WKH PXUGHU RFFXUUHG GXULQJ WKH FRPPLVVLRQ RI D UDSH
 UDSH ZLWK D SULRU DJJUDYDWHG IHORQ\ VSHFLILFDWLRQ DQG       ,QGHHG WKH WULDO FRXUWjV UXOLQJ PDNHV DPSOH VHQVH  %\
KDYLQJDZHDSRQZKLOHXQGHUGLVDELOLW\ZLWKDQRIIHQVHRI         UDLVLQJ WKH IDFWXDO TXHVWLRQ RI KLV EDFNJURXQG DQG SULRU
YLROHQFH VSHFLILFDWLRQ  0DVRQ SOHDGHG QRW JXLOW\  ,Q        DFWLYLWLHVWKHGHIHQGDQWPDNHVKLVHQWLUHEDFNJURXQGUHOHYDQW
2FWREHUWKHWULDOFRXUWIRXQG0DVRQWREHLQGLJHQWDQG           $IWHUDOOWKHPLWLJDWLRQFDVHZLWKWKLVHYLGHQFHZRXOGKDYH
DSSRLQWHG /DZUHQFH $ :LQNILHOG m:LQNILHOGl RI                  EHHQWKDW0DVRQZDVDYLFWLPRIKLVSDUHQWVjYLROHQFHDQG
&ROXPEXV 2KLR DV OHDG FRXQVHO DQG 7HG , &RXOWHU RI         GUXJ DFWLYLWLHV DQG WKDW WKLV VRUURZIXO FKLOGKRRG OHG DQ
0DULRQ2KLRDVFRFRXQVHO                                           RWKHUZLVHLQQRFHQWER\LQWRSHUVRQDOGUXJXVHDQGXOWLPDWHO\
                                                                       WR FRPPLW D KRUULEO\ YLROHQW FULPH  7KH HYLGHQFH RI KLV
  0DVRQjV DWWRUQH\V ILOHG QXPHURXV SUHWULDO PRWLRQV              FULPLQDOUHFRUGZRXOGKDYHEHHQGLUHFWO\UHOHYDQWWRUHEXWWKLV
LQFOXGLQJ D UHTXHVW IRU H[SHUW DVVLVWDQFH DQG D PRWLRQ WR     VWRU\ VKRZLQJ D \RXQJ PDQ IDU IURP LQQRFHQW ZKR KDV
VXSSUHVVERWKRIZKLFKWKHWULDOFRXUWGHQLHGDIWHUKHDULQJ           HQJDJHGLQDFRQVLVWHQWFDPSDLJQRIYLROHQWFULPHLQFOXGLQJ
RUDODUJXPHQW7KHZHHNEHIRUHWULDOGHIHQVHFRXQVHOPRYHG           D UDSH HHULO\ VLPLODU WR WKDW IRU ZKLFK KH KDG MXVW EHHQ
IRU D FRQWLQXDQFH FODLPLQJ WKDW WKH\ QHHGHG PRUH WLPH WR     FRQYLFWHG
UHYLHZWKHSDJHVRIGRFXPHQWVWKDWWKHSURVHFXWRUKDG
GHOLYHUHGWRWKHPRQ0D\7KHWULDOFRXUWUHIXVHGWR           )LQDOO\ JLYHQ WKH LQILUPLW\ RI WKLV FRXUWjV GHWHUPLQDWLRQ
                                                                       UHJDUGLQJGHIHQVHFRXQVHOjVSRWHQWLDOLQHIIHFWLYHQHVVWKHUHLV
                                                                       HYHQOHVVOHJDOIRXQGDWLRQIRULWVGHFLVLRQWRUHPDQGWKLVFDVH
    
     2Q 'HFHPEHU   0DVRQ ZDV UHLQGLFWHG RQ WKH VDPH FKDUJHV   IRUDQHYLGHQWLDU\KHDULQJRQKLVLQHIIHFWLYHQHVVFODLP7KH
EXW ZLWK D ILUHDUP VSHFLILFDWLRQ DGGHG WR HDFK RI WKH WKUHH FRXQWV
    0DVRQY0LWFKHOO                               1R       1R                              0DVRQY0LWFKHOO         

   ,EHOLHYHWKDWFRXQVHOjVGHFLVLRQQRWWRSUHVHQWHYLGHQFHRI         JUDQWDFRQWLQXDQFHDQGWKUHDWHQHGWRUHPRYHGHIHQVHFRXQVHO
0DVRQjVFKLOGKRRGZDVUHDVRQDEOHRUWKDWDWWKHYHU\OHDVW            ZLWKRXWSD\LQJDQ\IHHV2Q0D\0DVRQSURFHHGHG
WKH2KLR6XSUHPH&RXUWjVGHQLDORI0DVRQjVFODLPZDVQRW               WR D WKUHHZHHNORQJ MXU\ WULDO KH ZDV IRXQG JXLOW\ RQ DOO
DQXQUHDVRQDEOHDSSOLFDWLRQRI6WULFNODQGY:DVKLQJWRQ           WKUHHFRXQWV
86DVLWPXVWEHIRUWKLVFRXUWWRRYHUWXUQLWV
GHFLVLRQ6HH86&G7KHFRXUWDVVXPHVWKDW            2QsXQHWKHWULDOHQWHUHGWKHVHQWHQFLQJSKDVH
DQ\GHIHQVHFRXQVHOZKRZRXOGQRWKDYHSUHVHQWHGWKHGHWDLOV            0DVRQjVPLWLJDWLRQFDVHFRQVLVWHGRIWKHWHVWLPRQ\RIVHYHQ
RI0DVRQjVSDVWWRWKHMXU\ZRXOGKDYHEHHQHLWKHULQGLIIHUHQW          ZLWQHVVHV DQG 0DVRQjV XQVZRUQ VWDWHPHQW  2Q sXQH 
WRKLVFOLHQWjVIDWHRULQFRPSHWHQW$VWKHFRXUWVWDWHVm+DG          WKH MXU\ UHFRPPHQGHG WKDW 0DVRQ EH VHQWHQFHG WR
WULDO FRXQVHO FRQGXFWHG DQ DGHTXDWH LQYHVWLJDWLRQ WKH MXU\      GHDWK ZKLFK UHFRPPHQGDWLRQ WKH WULDO FRXUW DGRSWHG  2Q
ZRXOGKDYHKHDUGVXEVWDQWLDOHYLGHQFHDERXWKRZGUXJXVH                $XJXVWWKHWULDOFRXUWKHDUGRUDODUJXPHQWRQDQG
DQGYLROHQFHSHUYDGHG0DVRQjVEDFNJURXQGDQGOLIHKLVWRU\l             WKHQGHQLHG0DVRQjVPRWLRQIRUDQHZWULDO
6OLSRSDW
                                                                          0DVRQWKHQILOHGDWLPHO\DSSHDOWRWKH&RXUWRI$SSHDOV
   7RPHWKHUHFRUGLVFOHDUWKDWGHIHQVHFRXQVHOQRWRQO\ZDV         IRU WKH 7KLUG $SSHOODWH 'LVWULFW DVVHUWLQJ WZHQW\IRXU
DZDUHRI0DVRQjVEDFNJURXQGEXWDOVRPDGHDUHDVRQDEOH                 DVVLJQPHQWVRIHUURU  2Q'HFHPEHUWKH&RXUWRI
VWUDWHJLF GHFLVLRQ QRW WR SUHVHQW HYLGHQFH RI 0DVRQjV            $SSHDOVDIILUPHGWKHWULDOFRXUWjVMXGJPHQW6WDWHY0DVRQ
EDFNJURXQGWRWKHMXU\'HIHQVHFRXQVHOjVGHFLVLRQDGGUHVVHV            :/  DW  2KLR &W $SS 'HF  
WKHIXQGDPHQWDOGLOHPPDIRUSHQDOW\SKDVHSUHVHQWDWLRQV7R            0DVRQWKHUHDIWHUILOHGDQRWLFHRIDSSHDODQGDEULHILQWKH
VRPHUHFRXQWLQJDFKLOGKRRGILOOHGZLWKGUXJXVHDQGFULPH             2KLR6XSUHPH&RXUW2QsXQHWKH2KLR6XSUHPH
ZRXOG DURXVH V\PSDWK\ DQG SURYLGH DQ H[SODQDWLRQ IRU             &RXUW DIILUPHG 0DVRQjV FRQYLFWLRQ DQG GHDWK VHQWHQFH RQ
RWKHUZLVHKHLQRXVO\YLROHQWFULPHVEXWWRRWKHUVLWZRXOGWHOO         GLUHFWDSSHDO6WDWHY0DVRQ1(G2KLR
DVWRU\RIZDVWHOLIHORQJPRUDOWXUSLWXGHDQGLQFRUULJLELOLW\        
7KH RPLWWHG HYLGHQFH KHUH LV IDU OHVV PLWLJDWLQJ WKDQ WKH
UHOHYDQWHYLGHQFHLQ%HOOY&RQHWKDWWKHGHIHQGDQWKDGEHHQ            :KLOHKLVGLUHFWDSSHDOZDVSHQGLQJ0DVRQILOHGDVWDWH
WUDXPDWL]HGGXULQJKRQRUDEOHPLOLWDU\VHUYLFHWRKLVFRXQWU\           FROODWHUDO DWWDFN LQ WKH &RXUW RI &RPPRQ 3OHDV RI 0DULRQ
WKHRPLVVLRQRIZKLFKWKH6XSUHPH&RXUWGHWHUPLQHGQRWWR               &RXQW\DVVHUWLQJVHYHQDVVLJQPHQWVRIHUURU6WDWHY0DVRQ
EH XQFRQVWLWXWLRQDOO\ LQHIIHFWLYH DVVLVWDQFH  7KH HYLGHQFH       :/DW2KLR&W$SSsXQH2Q
RPLWWHGKHUHLVSRWHQWLDOO\DJJUDYDWLQJLQWKHPLQGVRIVRPH            1RYHPEHUWKHFRXUWGHQLHGUHOLHIZLWKRXWKROGLQJ
MXURUVDQGLWVSUREDEOHHIIHFWLVDMXGJPHQWFDOOIRUFRXQVHOLQ       DQHYLGHQWLDU\KHDULQJ,G0DVRQDSSHDOHGWKHGLVPLVVDORI
WKHFRQWH[WRIKLVXQGHUVWDQGLQJRIWKHMXU\jVFRPSRVLWLRQ             KLVSRVWFRQYLFWLRQSHWLWLRQWRWKH&RXUWRI$SSHDOVIRUWKH
'HIHQVHFRXQVHOjVFKRLFHWRRPLW0DVRQjVEDFNJURXQGDQG                7KLUG$SSHOODWH'LVWULFWZKLFKDIILUPHGWKHMXGJPHQWRIWKH
LW ZDV D FKRLFH LV D TXLQWHVVHQWLDO VWUDWHJLF GHFLVLRQ WKDW   &RXUWRI&RPPRQ3OHDVRQsXQH,GDW0DVRQ
FDQQRWIRUPWKHEDVLVRID6WULFNODQGFKDOOHQJH                        WKHQILOHGDWLPHO\DSSHDOWRWKH2KLR6XSUHPH&RXUWZKLFK
                                                                        GLVPLVVHGWKHDSSHDORQ2FWREHUDVQRWLQYROYLQJ
  7KLVFRXUWDOVRIODWO\VXJJHVWVWKDWWKLVSDUWLFXODUHYLGHQFH        DQ\VXEVWDQWLDOFRQVWLWXWLRQDOTXHVWLRQ
RI0DVRQjVWURXEOHGFKLOGKRRGDQGHDUO\GUXJXVHZRXOGQRW
KDYHSHUPLWWHGWKHSURVHFXWLRQWRLQWURGXFHUHEXWWDOHYLGHQFH              2Q sXO\   0DVRQ ILOHG D SHWLWLRQ IRU D ZULW RI
UHJDUGLQJ0DVRQjVH[WHQVLYHYLROHQWDQGFRQWHPSRUDQHRXV               KDEHDVFRUSXVSXUVXDQWWR86&UDLVLQJWZHQW\
KLVWRU\RIFULPLQDODFWLYLW\7KHFRXUWjVFODLPKHUHLVQRWKLQJ        ILYHFKDOOHQJHVWRKLVFRQYLFWLRQDQGVHQWHQFH2Q0D\
                                                                        WKHGLVWULFWFRXUWGHQLHG0DVRQjVKDEHDVSHWLWLRQDQG
      0DVRQY0LWFKHOO                               1R      1R                               0DVRQY0LWFKHOO        

KLV PRWLRQ IRU DQ HYLGHQWLDU\ KHDULQJ RQ YDULRXV FODLPV        9LGHRWDSH'HSRVLWLRQRI'U5REHUW76SDUHDW30
0DVRQ Y 0LWFKHOO  ) 6XSS G   1' 2KLR         $FFRUGLQJWR6SDUH0DVRQEHJDQH[WHQVLYHLQYROYHPHQWLQ
7KHGLVWULFWFRXUWVXEVHTXHQWO\JUDQWHGDFHUWLILFDWHRI        KLVSDUHQWVjGUXJEXVLQHVVLQmWKHPLGGOHHOHPHQWDU\JUDGHVl
DSSHDODELOLW\DVWRDOOFODLPV7KLVWLPHO\DSSHDOIROORZHG           DQGVWDUWHGXVLQJGUXJVUHJXODUO\mDERXWWKHVDPHWLPHl,G
                                                                        DW306SDUHDOVRWHVWLILHGWKDW0DVRQVDLGWKDWKHKDG
                          ,,$1$/<6,6                                 EHHQUHJXODUO\EHDWHQE\KLVIDWKHU,ELG
   :HUHYLHZGHQRYRWKHOHJDOFRQFOXVLRQVRIDGLVWULFWFRXUW             6SDUH IXUWKHU WHVWLILHG DV WR VHYHUDO mH[KLELWV RIIHUHG IRU
LQDKDEHDVSURFHHGLQJ0LW]HOY7DWH)G              PLWLJDWLRQSXUSRVHVlWKDWKHKDGUHYLHZHGLQWKHFRXUVHRIKLV
WK&LU%HFDXVH0DVRQILOHGKLVKDEHDVSHWLWLRQRQ            WUHDWPHQWRI0DVRQ7KHVHH[KLELWVZHUHLQWKHUHFRUGRIWKH
sXO\   DIWHU WKH $QWLWHUURULVP DQG (IIHFWLYH 'HDWK      GHSRVLWLRQDQGLQFOXGHGVHYHUDOUHSRUWVIURPVRFLDOVHUYLFHV
3HQDOW\$FWRIm$('3$lEHFDPHHIIHFWLYHWKLVFDVH               DJHQFLHV WKDW LQFOXGHG H[WHQVLYH UHFRUGV RI GRPHVWLF DQG
LVJRYHUQHGE\$('3$,G8QGHU$('3$jVSURYLVLRQVZH                FKLOGDEXVHLQ0DVRQjVKRPHDQGWKHGUXJVHHNLQJDFWLYLWLHV
PD\QRWJUDQWDZULWRIKDEHDVFRUSXVIRUDQ\FODLPWKDWZDV            RI0DVRQjVSDUHQWV7KHGHIHQGDQWZDVSUHVHQWGXULQJWKH
DGMXGLFDWHG RQ WKH PHULWV LQ VWDWH FRXUW XQOHVV WKH             GHSRVLWLRQLGDW30DQGWKXVZRXOGKDYHEHHQDEOHWR
DGMXGLFDWLRQ                                                           DGYLVHKLVDWWRUQH\RIDQ\DGGLWLRQDOPDWHULDOWKDWPLJKWKDYH
                                                                        EHHQUHOHYDQW,QDQ\HYHQWWKHGHSRVLWLRQVKRZVWKDW'U
     UHVXOWHG LQ D GHFLVLRQ WKDW ZDV FRQWUDU\ WR RU         6SDUHZDVDZDUHRIDQGIXOO\UHODWHGWRFRXQVHOWKHJLVWRI
        LQYROYHG DQ XQUHDVRQDEOH DSSOLFDWLRQ RI FOHDUO\           WKHPDWHULDORQ0DVRQjVEDFNJURXQGDVWRZKLFKWKHFRXUW
        HVWDEOLVKHG )HGHUDO ODZ DV GHWHUPLQHG E\ WKH             QRZDSSHDUVWREHXQFHUWDLQ
        6XSUHPH&RXUWRIWKH8QLWHG6WDWHVRU
                                                                          ,Q VKRUW 6SDUHjV GHSRVLWLRQ H[SOLFLWO\ FRYHUV DOO RI WKH
     UHVXOWHG LQ D GHFLVLRQ WKDW ZDV EDVHG RQ DQ             LQIRUPDWLRQ WR ZKLFK GHIHQVH FRXQVHO ZDV DOOHJHGO\ QRW
        XQUHDVRQDEOHGHWHUPLQDWLRQRIWKHIDFWVLQOLJKWRI             H[SRVHGGXHWRVKRGG\LQYHVWLJDWLRQLQWRPLWLJDWLQJHYLGHQFH
        WKHHYLGHQFHSUHVHQWHGLQWKH6WDWHFRXUWSURFHHGLQJ           $FFRUGLQJO\ WKLV FDVH VHHPV LQGLVWLQJXLVKDEOH IURP SULRU
                                                                        FDVHV LQ ZKLFK ZH KDYH GHQLHG FODLPV RI LQHIIHFWLYH
86&G,QDGGLWLRQWKHILQGLQJVRIIDFW          DVVLVWDQFHEDVHGRQDOOHJHGIDLOXUHWRLQYHVWLJDWHPLWLJDWLQJ
PDGHE\DVWDWHFRXUWDUHSUHVXPHGWREHFRUUHFWDQGFDQEH             HYLGHQFH  6SHFLILFDOO\ WKH GHIHQGDQW KDV LGHQWLILHG QR
FRQWUDYHQHGRQO\LIWKHKDEHDVSHWLWLRQHUFDQVKRZE\FOHDU             HYLGHQFHRIZKLFKGHIHQVHFRXQVHOZDVQRWDOUHDG\DZDUHDW
DQGFRQYLQFLQJHYLGHQFHWKDWWKHVWDWHFRXUWjVIDFWXDOILQGLQJV         WKH WLPH RI WKH SHQDOW\ SKDVH SURFHHGLQJV  6HH %XHOO Y
ZHUH HUURQHRXV  ,G  H  7KLV SUHVXPSWLRQ RI        0LWFKHOO)GWK&LU
FRUUHFWQHVVDOVRDSSOLHVWRWKHIDFWXDOILQGLQJVPDGHE\DVWDWH
DSSHOODWH FRXUW EDVHG RQ WKH VWDWH WULDO UHFRUG  6XPQHU Y     7KH UHOHYDQW TXHVWLRQ LV WKH RQH WKDW WKLV FRXUW GHFOLQHV
0DWD86                                      WRGD\WRDQVZHUZKHWKHUGHIHQVHFRXQVHOjVGHFLVLRQQRWWR
                                                                        SUHVHQW FHUWDLQ HYLGHQFH RI WKH GUXJUHODWHG DFWLYLWLHV RI
 $('3$SURYLGHVWKHIROORZLQJVWDQGDUGIRUGHWHUPLQLQJ                  0DVRQjVSDUHQWVRI0DVRQjVORQJKLVWRU\RIGUXJXVHDQGRI
ZKHWKHUDSHWLWLRQHULVHQWLWOHGWRDQHYLGHQWLDU\KHDULQJ             WKH SK\VLFDO DEXVH WR ZKLFK 0DVRQ ZDV VXEMHFWHG ZDV D
                                                                        UHDVRQDEOHVWUDWHJLFFKRLFHRIFRXQVHORUZDVZLWKLQWKHZLGH
    H ,IWKHDSSOLFDQWKDVIDLOHGWRGHYHORSWKHIDFWXDO           UDQJH RI GHFLVLRQV WKDW FRQVWLWXWH FRQVWLWXWLRQDOO\ HIIHFWLYH
           EDVLV RI D FODLP LQ 6WDWH FRXUW SURFHHGLQJV WKH     UHSUHVHQWDWLRQ
       0DVRQY0LWFKHOO                                  1R        1R                              0DVRQY0LWFKHOO         

DGHTXDF\ RI 0DVRQjV UHSUHVHQWDWLRQ  ,QVWHDG WKH FRXUW                           FRXUWVKDOOQRWKROGDQHYLGHQWLDU\KHDULQJRQWKH
FRQWHQGVWKDWGHIHQVHFRXQVHOGLGQRWVXIILFLHQWO\LQYHVWLJDWH                           FODLPXQOHVVWKHDSSOLFDQWVKRZVWKDWn
0DVRQjVmKLVWRU\FKDUDFWHURUEDFNJURXQGl$FFRUGLQJWR
WKH FRXUW DQ\ LQYHVWLJDWLRQ ZRXOG KDYH UHYHDOHG 0DVRQjV                          $ WKHFODLPUHOLHVRQn
WUDXPDWLFFKLOGKRRGKLVOLYLQJZLWKSDUHQWVZKRZHUHGUXJ
GHDOHUVDQGXVHUVWKHUHJXODUEHDWLQJVWKDWKHUHFHLYHGIURP                                 L D QHZ UXOH RI FRQVWLWXWLRQDO ODZ
KLVIDWKHUDQGWKHUHVXOWLQJGUXJDGGLFWLRQWKDW0DVRQKLPVHOI                                   PDGH UHWURDFWLYH WR FDVHV RQ
GHYHORSHGIURPWKHDJHRIHOHYHQ7KHFRXUWVXJJHVWVWKDW                                        FROODWHUDO UHYLHZ E\ WKH 6XSUHPH
FRXQVHOjVIDLOXUHWRSUHVHQWWKLVWDOHRIZRHWRWKHMXU\ZDVQRW                                 &RXUW WKDW ZDV SUHYLRXVO\
WKHUHVXOWRIDVWUDWHJLFFKRLFHLQWKHKHDWRIOLWLJDWLRQEXWD                                 XQDYDLODEOHRU
ODFNRINQRZOHGJHUHJDUGLQJ0DVRQjVEDFNJURXQG7KHFRXUW
DUJXHV WKDW m>K@DG WULDO FRXQVHO FRQGXFWHG DQ DGHTXDWH                                LL D IDFWXDO SUHGLFDWH WKDW FRXOG QRW
LQYHVWLJDWLRQWKHMXU\ZRXOGKDYHKHDUGVXEVWDQWLDOHYLGHQFH                                      KDYH EHHQ SUHYLRXVO\ GLVFRYHUHG
DERXW KRZ GUXJ XVH DQG YLROHQFH SHUYDGHG 0DVRQjV                                            WKURXJK WKH H[HUFLVH RI GXH
EDFNJURXQG DQG OLIH KLVWRU\l  6OLS RS DW   HPSKDVLV                                GLOLJHQFHDQG
DGGHG  ,QGHHG WKH FRXUW QRWHV 0DVRQjV SRVWFRQYLFWLRQ
WHVWLPRQ\ WKDW KH GLG QRW UHFDOO GHIHQVH FRXQVHO HYHU                            % WKH IDFWV XQGHUO\LQJ WKH FODLP ZRXOG EH
LQWHUYLHZLQJKLPUHJDUGLQJKLVEDFNJURXQGPXFKOHVVWKDWRI                                 VXIILFLHQWWRHVWDEOLVKE\FOHDUDQGFRQYLQFLQJ
DQ\RIKLVIDPLO\PHPEHUV6OLSRSDW                                               HYLGHQFHWKDWEXWIRUFRQVWLWXWLRQDOHUURUQR
                                                                                             UHDVRQDEOHIDFWILQGHUZRXOGKDYHIRXQGWKH
   7KH H[LVWLQJ UHFRUG LQ WKLV FDVH FRQWUDGLFWV WKH FRXUWjV                          DSSOLFDQWJXLOW\RIWKHXQGHUO\LQJRIIHQVH
ILQGLQJ WKDW GHIHQVH FRXQVHO KDG QR NQRZOHGJH RI WKHVH
SDUWLFXODUO\WUDJLFIHDWXUHVRI0DVRQjVEDFNJURXQG$VWKH                    86&H
FRXUW LQGLFDWHG GHIHQVH FRXQVHO ZDV SURYLGHG ZLWK WKH                     ,Q:LOOLDPVY7D\ORU86WKH6XSUHPH
VHUYLFHVRI'U5REHUW76SDUHDSV\FKRORJLVWZKRH[DPLQHG                   &RXUW LQWHUSUHWHG  G DV UHTXLULQJ D GLVWLQFWLRQ
WKH GHIHQGDQW WR GHWHUPLQH DPRQJ RWKHU WKLQJV KLV IXWXUH             EHWZHHQ GHFLVLRQV WKDW DUH mFRQWUDU\ WRl DQG WKRVH WKDW
GDQJHURXVQHVV6SDUHDOVRWRRNDQUHODWLYHO\H[WHQVLYHRUDO                   LQYROYHDQmXQUHDVRQDEOHDSSOLFDWLRQRIlFOHDUO\HVWDEOLVKHG
KLVWRU\ IURP 0DVRQ  8QGHU GHSRVLWLRQ TXHVWLRQLQJ E\                    6XSUHPH&RXUWSUHFHGHQW,GDW$VWDWHFRXUWGHFLVLRQ
GHIHQVHFRXQVHO6SDUHUHFRXQWHGHVVHQWLDOO\DOORIWKHIDFWV                  LVmFRQWUDU\WRl6XSUHPH&RXUWSUHFHGHQWmLIWKHVWDWHFRXUW
WKDWDFFRUGLQJWRWKLVFRXUWZHUHQRWGLVFRYHUHGE\GHIHQVH                  DUULYHV DW D FRQFOXVLRQ RSSRVLWH WR WKDW UHDFKHG E\ >WKH
FRXQVHO6SDUHWHVWLILHGWKDW0DVRQWROGKLPWKDWKLVIDPLO\                 6XSUHPH@&RXUWRQDTXHVWLRQRIODZlRUmLIWKHVWDWHFRXUW
OLIHZDVmUDWKHUXQXVXDOlZLWKKLVSDUHQWVLQYROYHGLQmGUXJ                  FRQIURQWVIDFWVWKDWDUHPDWHULDOO\LQGLVWLQJXLVKDEOHIURPD
UHODWHG DFWLYLWLHV DV ORQJ DV KH FRXOG UHPHPEHUl  6HH                UHOHYDQW6XSUHPH&RXUWSUHFHGHQWlDQGDUULYHVDWDGLIIHUHQW
                                                                               UHVXOW  ,G  $ VWDWH FRXUW GHFLVLRQ LV DOVR mFRQWUDU\ WRl
                                                                               6XSUHPH&RXUWSUHFHGHQWLIWKHVWDWHFRXUWmDSSOLHVDUXOHWKDW
                                                                              FRQWUDGLFWVWKHJRYHUQLQJODZVHWIRUWKlLQWKDWSUHFHGHQW,G
      7KH GHSRVLWLRQ ZDV FRQGXFWHG GXULQJ WKH JXLOW SKDVH RI WKH WULDO LQ
DQWLFLSDWLRQ RI 'U 6SDUHjV SRWHQWLDO DEVHQFH IRU D SRVVLEOH SHQDOW\ SKDVH
7KH DFWXDO YLGHR WDSH RI WKH GHSRVLWLRQ RI 'U 6SDUH LV LQ RXU UHFRUG DV         $ VWDWH FRXUW GHFLVLRQ LQYROYHV DQ mXQUHDVRQDEOH
UHFRUG HQWU\  LQ WKH GLVWULFW FRXUW UHIHUHQFHG DV $SSHQGL[ 9RO  WR WKH
                                                                               DSSOLFDWLRQRIlFOHDUO\HVWDEOLVKHG6XSUHPH&RXUWSUHFHGHQW
UHWXUQ RI ZULW E\ WKH UHVSRQGHQW UHFRUG HQWU\ 
DSSHDUV WR EH WKDW DVVLJQHG LQ WKH VWDWH WULDO FRXUW
                                                        7KH YROXPH QXPEHU
                                                                               mLIWKHVWDWHFRXUWLGHQWLILHVWKHFRUUHFWJRYHUQLQJOHJDOUXOH
      0DVRQY0LWFKHOO                                   1R        1R                              0DVRQY0LWFKHOO        

IURP>WKH6XSUHPH@&RXUWjVFDVHVEXWXQUHDVRQDEO\DSSOLHVLW                  WKDW&RQHjVWULDODWWRUQH\SUHVHQWHGQRPLWLJDWLQJHYLGHQFHDW
WRWKHIDFWVRIWKHSDUWLFXODUFDVHl,GDW            DOODQGPDGHQRILQDODUJXPHQWKHGLGQRWHYHQDVNWKHMXU\
:H PD\ QRW RYHUWXUQ D VWDWH GHFLVLRQ VLPSO\ EHFDXVH ZH               WRVSDUHKLVFOLHQWjVOLIHl&RQHY%HOO)G
FRQFOXGH WKDW WKH VWDWH FRXUW LQFRUUHFWO\ DSSOLHG 6XSUHPH              WK&LU5\DQs,Q&RQHGHIHQVHFRXQVHOIDLOHGWR
&RXUW SUHFHGHQW  7KH VWDWH FRXUW PXVW KDYH DSSOLHG WKH              FDOO D VLQJOH ZLWQHVV WR SUHVHQW PLWLJDWRU\ HYLGHQFH DQG
UHOHYDQW 6XSUHPH &RXUW SUHFHGHQW LQ DQ REMHFWLYHO\                      RIIHUHGQRFORVLQJVWDWHPHQWDOWKRXJKGHIHQVHFRXQVHOGLG
XQUHDVRQDEOHPDQQHU,GDW                                             EULHIO\FURVVH[DPLQHVRPHRIWKHVWDWHjVZLWQHVVHV&RQH
                                                                              6&WDW1HYHUWKHOHVVWKH6XSUHPH&RXUWZLWK
  ,QUHYLHZLQJDVWDWHFRXUWGHFLVLRQXQGHU$('3$ZHPXVW                    RQO\RQHGLVVHQWKHOGWKDWGHIHQVHFRXQVHOjVUHSUHVHQWDWLRQ
ORRNRQO\WRWKH6XSUHPH&RXUWKROGLQJVWKDWH[LVWHGDWWKH                   GXULQJ WKH SHQDOW\ SKDVH ZDV QRW XQFRQVWLWXWLRQDOO\
WLPHRIWKHVWDWHFRXUWjVGHFLVLRQ,GDW:HPD\QRW                  LQDGHTXDWH XQGHU LWV VWDQGDUG LQ6WULFNODQG Y :DVKLQJWRQ
EDVHRXUGHFLVLRQRQ6XSUHPH&RXUWGLFWDRUWKHGHFLVLRQVRI                  86
WKHFRXUWVRIDSSHDOV6HHLG0LW]HO)GDW
                                                                                 'HWHUPLQLQJWKHEHVWWDFWLFIRUDSHQDOW\SKDVHSUHVHQWDWLRQ
$'HQLDORI([SHUW$VVLVWDQFH                                               LV H[WUHPHO\ GLIILFXOW LQ WKH ZDNH RI D MXU\jV ILQGLQJ WKH
                                                                              GHIHQGDQW JXLOW\ RI D KRUULEO\ EUXWDO DFW DFFRUGLQJ WR WKH
    7ULDO3KDVH                                                           &RXUW&RQH6&WDW7KLVFRXUWjVGHWHUPLQDWLRQ
                                                                              WKDWDGHIHQVHFRXQVHOjVIDLOXUHWRSUHVHQWDQ\DIILUPDWLYHFDVH
   0DVRQ ILUVW DUJXHV WKDW WKH 2KLR 6XSUHPH &RXUW                      IRU PLWLJDWLRQ LQ WKH SHQDOW\ SKDVH ZDV XQFRQVWLWXWLRQDO
XQUHDVRQDEO\ DSSOLHG FOHDUO\ HVWDEOLVKHG 6XSUHPH &RXUW                   LQHIIHFWLYH UHSUHVHQWDWLRQ IDLOHG WR LQGXOJH WKH mµVWURQJ
SUHFHGHQW LQ m>S@UHPLVLQJ >DQ LQGLJHQW GHIHQGDQW@jV                      SUHVXPSWLRQj WKDW FRXQVHOjV FRQGXFW IDOOV ZLWKLQ WKH ZLGH
FRQVWLWXWLRQDO ULJKW WR H[SHUW DQG LQYHVWLJDWLYH DVVLVWDQFH             UDQJHRIUHDVRQDEOHSURIHVVLRQDODVVLVWDQFHEHFDXVHLWLVDOO
VROHO\ RQ WKH GLVFUHWLRQ RI WKH WULDO FRXUW ZLWKRXW IXUWKHU          WRR HDV\ WR FRQFOXGH WKDW WKH SDUWLFXODU DFW RU RPLVVLRQ RI
UHYLHZl  3HWLWLRQHUjV %U DW   ,QGLJHQW SULVRQHUV DUH            FRXQVHOZDVXQUHDVRQDEOHLQWKHKDUVKOLJKWRIKLQGVLJKWl,G
FRQVWLWXWLRQDOO\ HQWLWOHG WR mWKH EDVLF WRROV RI DQ DGHTXDWH          DW6HHDOVR6WULFNODQG86DW
GHIHQVHRUDSSHDOZKHQWKRVHWRROVDUHDYDLODEOHIRUDSULFH
WRRWKHUSULVRQHUVl%ULWWY1RUWK&DUROLQD86                     ,QWKLVFDVHGHIHQVHFRXQVHOSUHVHQWHGDVLJQLILFDQWO\PRUH
  FLWLQJ*ULIILQ Y ,OOLQRLV  86            UREXVW PLWLJDWRU\ FDVH WKDQ WKH FRXQVHO LQ &RQH  'HIHQVH
%RWK%ULWWDQG*ULIILQLQYROYHGUHTXHVWVIRUIUHHWUDQVFULSWVRI              FRXQVHOFDOOHGWZRPHPEHUVRIWKHVKHULIIjVGHSDUWPHQWWR
WULDOSURFHHGLQJV6HH%ULWW86DW*ULIILQ86             FRPPHQWRQ0DVRQjVJRRGEHKDYLRUDVDSULVRQHU&RXQVHO
DW   7KH 6XSUHPH &RXUW KDV DOVR KHOG WKDW SV\FKLDWULF            DOVRFDOOHG0DVRQjVPRWKHUKLVWZREURWKHUVKLVFRXVLQDQG
DVVLVWDQFH LV D EDVLF WRRO RI DQ DGHTXDWH GHIHQVH LQ WZR            ILQDOO\KLVZLIHWRWHVWLI\UHJDUGLQJKRZPHDQLQJIXO0DVRQ
JHQHUDOFLUFXPVWDQFHVmZKHQD GHIHQGDQWKDVPDGHD                     KDG EHHQ LQ WKHLU OLYHV DQG WR DVN WKH MXU\ WR VSDUH WKH
SUHOLPLQDU\VKRZLQJWKDWKLVVDQLW\DWWKHWLPHRIWKHRIIHQVH                GHIHQGDQWjVOLIH)LQDOO\0DVRQKLPVHOIWHVWLILHGDERXWWKH
LV OLNHO\ WR EH D VLJQLILFDQW IDFWRU DW WULDOl DQG  mLQ WKH   DUWZRUN DQG SRHWU\ KH KDG FRPSRVHG LQ SULVRQ  8QOLNH
FRQWH[W RI D FDSLWDO VHQWHQFLQJ SURFHHGLQJ ZKHQ WKH 6WDWH            GHIHQVH FRXQVHO LQ &RQH 0DVRQjV FRXQVHO GHOLYHUHG DQ
SUHVHQWV SV\FKLDWULF HYLGHQFH RI WKH GHIHQGDQWjV IXWXUH                 H[WHQVLYHFORVLQJVWDWHPHQW
GDQJHURXVQHVVl  $NH Y 2NODKRPD  86   
2QDSSHDO0DVRQFODLPVWKDW$NHUHTXLUHG2KLRWR                      'HIHQVHFRXQVHOjVSUHVHQWDWLRQLQWKHSHQDOW\SKDVHLVQRW
SURYLGH KLP ZLWK WKH IROORZLQJ W\SHV RI H[SHUW DVVLVWDQFH            WKH SULQFLSDO WKUXVW RI WKH FRXUWjV FRQFHUQ UHJDUGLQJ WKH
DVRLODQGGHEULVH[SHUWWRH[DPLQHWKHVRLOIRXQGRQWKH
    0DVRQY0LWFKHOO                             1R       1R                             0DVRQY0LWFKHOO           

                       BBBBBBBBBBBBBBB                                FORWKLQJDQGVKRHVRI5RELQ0DVRQDQG&KULVDVKRH
                                                                      SULQW H[SHUW WR LGHQWLI\ DQG FRPSDUH WKH SULQWV IRXQG LQ
                          ',66(17                                     5RELQjVFDUZLWKWKRVHPDGHE\WKHVKRHVRI0DVRQ5RELQ
                       BBBBBBBBBBBBBBB                                DQG&KULVDPLWLJDWLRQLQYHVWLJDWLRQH[SHUWWRH[DPLQH
                                                                      0DVRQjVEDFNJURXQGIRUSRWHQWLDOPLWLJDWLRQHYLGHQFHDQG
   %2**6&LUFXLWsXGJHGLVVHQWLQJLQSDUW,ODUJHO\DJUHH         mDQLQGHSHQGHQWFRPSHWHQWIRUHQVLFPHQWDOKHDOWKH[SHUWl
ZLWKWKHFRXUWjVDQDO\VLVRI0DVRQjVDUJXPHQWVLQWKLVFDVH          WRKHOSGHIHQVHFRXQVHODWWKHVHQWHQFLQJSKDVH3HWLWLRQHUjV
,FDQQRWDJUHHKRZHYHUZLWKWKHFRXUWjVGHFLVLRQWRUHPDQG          %UDW
WKLVDFWLRQWRWKHGLVWULFWFRXUWIRUDQHYLGHQWLDU\KHDULQJRQ
WKH DGHTXDF\ RI 0DVRQjV FRXQVHOjV LQYHVWLJDWLRQ DQG               ,QWKLVFDVHWKH2KLR6XSUHPH&RXUW XQGHUVWRRG$NHWR
SUHVHQWDWLRQRIHYLGHQFHLQPLWLJDWLRQGXULQJWKHVHQWHQFLQJ          mUHTXLUH WKDW D FULPLQDO GHIHQGDQW EH SURYLGHG
SKDVHRI0DVRQjVWULDO7KHFRXUWjVDFWLRQERWKLJQRUHVWKH          >QRQSV\FKLDWULF@H[SHUWDVVLVWDQFHZKHQQHFHVVDU\WRSUHVHQW
FOHDU6XSUHPH&RXUWSUHFHGHQWHVWDEOLVKLQJWKHVWDQGDUGVIRU          DQDGHTXDWHGHIHQVHl0DVRQ1(GDW7KLVLV
HYDOXDWLQJ WKH FRQVWLWXWLRQDOO\ UHTXLUHG HIIHFWLYHQHVV RI        FRQVLVWHQWZLWKWKHSULQFLSOHVXPPDUL]HGLQ$NHWKDW
GHIHQVHFRXQVHODQGFRQWUDYHQHVWKHVWDWXWRU\OLPLWDWLRQVRQ
RXU UHYLHZ RI VWDWH FRQYLFWLRQV WKURXJK KDEHDV FRUSXV            0HDQLQJIXO DFFHVV WR MXVWLFH KDV EHHQ WKH FRQVLVWHQW
SURFHHGLQJV  $FFRUGLQJO\ , UHVSHFWIXOO\ GLVVHQW IURP WKH       WKHPHRIWKHVHFDVHV:HUHFRJQL]HGORQJDJRWKDWPHUH
FRXUWjV GHFLVLRQ WR UHYHUVH WKH GLVWULFW FRXUWjV GHQLDO RI      DFFHVVWRWKHFRXUWKRXVHGRRUVGRHVQRWE\LWVHOIDVVXUH
0DVRQjVSHWLWLRQIRUDZULWRIKDEHDVFRUSXVDQGWRUHPDQG              DSURSHUIXQFWLRQLQJRIWKHDGYHUVDU\SURFHVVDQGWKDWD
IRUDQHYLGHQWLDU\KHDULQJRQIXUWKHUPLWLJDWRU\HYLGHQFHWKDW          FULPLQDO WULDO LV IXQGDPHQWDOO\ XQIDLU LI WKH 6WDWH
GHIHQVHFRXQVHOFRXOGKDYHRIIHUHG                                     SURFHHGVDJDLQVWDQLQGLJHQWGHIHQGDQWZLWKRXWPDNLQJ
                                                                        FHUWDLQWKDWKHKDVDFFHVVWRWKHUDZPDWHULDOVLQWHJUDOWR
   7KLV FRXUW KDV UHYHUVHG FDSLWDO VHQWHQFHV IRU IDLOXUH WR     WKH EXLOGLQJ RI DQ HIIHFWLYH GHIHQVH  7KXV ZKLOH WKH
SUHVHQWRUWRLQYHVWLJDWHPLWLJDWRU\HYLGHQFHRQQRIHZHUWKDQ          &RXUW KDV QRW KHOG WKDW D 6WDWH PXVW SXUFKDVH IRU WKH
VHYHQ RFFDVLRQV6HHHJ&ROHPDQY0LWFKHOO)G             LQGLJHQWGHIHQGDQWDOOWKHDVVLVWDQFHWKDWKLVZHDOWKLHU
WK&LU*UHHUY0LWFKHOO)GWK          FRXQWHUSDUW PLJKW EX\ LW KDV RIWHQ UHDIILUPHG WKDW
&LU&RQHY%HOO)GWK&LUUHYjG          IXQGDPHQWDOIDLUQHVVHQWLWOHVLQGLJHQWGHIHQGDQWVWRmDQ
6&W6NDJJVY3DUNHU)GWK            DGHTXDWHRSSRUWXQLW\WRSUHVHQWWKHLUFODLPVIDLUO\ZLWKLQ
&LU5LFNPDQY%HOO)GWK&LU             WKHDGYHUVDU\V\VWHPl7RLPSOHPHQWWKLVSULQFLSOHZH
$XVWLQY%HOO)GWK&LU*OHQQY7DWH           KDYH IRFXVHG RQ LGHQWLI\LQJ WKH mEDVLF WRROV RI DQ
 )G  WK &LU   7KH 6XSUHPH &RXUW LQ WKH     DGHTXDWHGHIHQVHRUDSSHDOlDQGZHKDYHUHTXLUHGWKDW
FRXUVHRIUHYHUVLQJRQHVXFKGHFLVLRQRIWKLVFRXUWKDVPDGH           VXFKWRROVEHSURYLGHGWRWKRVHGHIHQGDQWVZKRFDQQRW
DEXQGDQWO\FOHDUWKHH[WUHPHO\KLJKVWDQGDUGWKDWPXVWEHPHW           DIIRUGWRSD\IRUWKHP
IRU FRXQVHOjV UHSUHVHQWDWLRQ LQ WKH SHQDOW\ SKDVH WR EH
FRQVLGHUHGFRQVWLWXWLRQDOO\LQDGHTXDWH7KH6XSUHPH&RXUW            $NH86DWLQWHUQDOFLWDWLRQVRPLWWHG7KH2KLR
LQ%HOOY&RQH6&WUHYHUVHGRQHLWHUDWLRQ       6XSUHPH&RXUWWKHQKHOGWKDWQRQSV\FKLDWULFH[SHUWDVVLVWDQFH
RIWKLVFRXUWjVILQGLQJRILQDGHTXDF\RIFRXQVHOGXULQJWKH           VKRXOGEHSURYLGHGmRQO\ZKHUHWKHWULDOFRXUWILQGVLQWKH
SHQDOW\SKDVH,QRXU&RQHGHFLVLRQWKLVFRXUWREVHUYHGWKDW        H[HUFLVHRIDVRXQGGLVFUHWLRQWKDWWKHGHIHQGDQWKDVPDGHD
FRXQVHOjV SUHVHQWDWLRQ ZDV QRW RQO\ SRRU EXW D FRPSOHWH      SDUWLFXODUL]HGVKRZLQJRIDUHDVRQDEOHSUREDELOLW\WKDWWKH
DEGLFDWLRQRIWKHGHIHQVHDWWRUQH\jVUROHm,WLVLQGLVSXWDEOH       UHTXHVWHGH[SHUWZRXOGDLGLQKLVGHIHQVHDQGWKDWGHQLDO
    0DVRQY0LWFKHOO                               1R       1R                              0DVRQY0LWFKHOO       

RIWKHUHTXHVWHGH[SHUWDVVLVWDQFHZRXOGUHVXOWLQDQXQIDLU            WULDO FRXUW WKHQ JDYH WKH $OOHQ FKDUJH  $OWKRXJK WKH
WULDOl,GDW                                                    IRUHSHUVRQLQLWLDOO\GLVPLVVHGWKHSRVVLELOLW\RIDXQDQLPRXV
                                                                        DJUHHPHQW ZH QRWH WKDW KLV VXEVHTXHQW GLVFXVVLRQ RI WKH
   :HDUHQRWSHUVXDGHGWKDWWKH2KLR6XSUHPH&RXUWDSSOLHG             VXSSOHPHQWDOLQVWUXFWLRQZLWKWKHMXU\ZDVIROORZHGE\DOPRVW
$NH LQ DQ REMHFWLYHO\ XQUHDVRQDEOH PDQQHU  ,Q $NH WKH        IRXUPRUHKRXUVRIMXU\GHOLEHUDWLRQLQVWHDGRIKLVUHWXUQWR
6XSUHPH&RXUWZHLJKHGWKUHHIDFWRUVLQGHWHUPLQLQJZKHWKHU              WKHWULDOFRXUWZLWKDFRQILUPDWLRQRIWKHMXU\jVLQDELOLW\WR
DFFHVV WR FRPSHWHQW SV\FKLDWULF DVVLVWDQFH ZDV UHTXLUHG          UHDFKDXQDQLPRXVGHFLVLRQ7KLVIDFWSHUVXDGHVXVWKDWWKH
mWKHSULYDWHLQWHUHVWWKDWZLOOEHDIIHFWHGE\WKHDFWLRQRI        WULDOFRXUWGLGQRWHUULQJLYLQJDQ$OOHQFKDUJH
WKH6WDWHlmWKHJRYHUQPHQWDOLQWHUHVWWKDWZLOOEHDIIHFWHG
LI WKH VDIHJXDUG LV WR EH SURYLGHGl DQG  mWKH SUREDEOH       :HDOVREHOLHYHWKDWWKHMXU\ZDVQRWFRHUFHGLQWRUHWXUQLQJ
YDOXHRIWKHDGGLWLRQDORUVXEVWLWXWHSURFHGXUDOVDIHJXDUGVWKDW        D XQDQLPRXV GHDWK VHQWHQFH  )LUVW WKH WULDO FRXUWjV
DUHVRXJKWDQGWKHULVNRIDQ HUURQHRXVGHSULYDWLRQRIWKH            LQVWUXFWLRQVGLGQRWUHTXLUHWKHMXU\WRUHMHFWWKHGHDWKSHQDOW\
DIIHFWHGLQWHUHVWLIWKRVHVDIHJXDUGVDUHQRWSURYLGHGl$NH          XQDQLPRXVO\EHIRUHFRQVLGHULQJWKHOLIHVHQWHQFHV,QGHHG
86DW,QWKLVFDVHWKH2KLR6XSUHPH&RXUWVLPSO\            WKH FRQWHQW RI WKH MXU\jV QRWH n ZKLFK LQGLFDWHG ODFN RI
VWDWHGWKDWWULDOFRXUWVKDYHGLVFUHWLRQLQHYDOXDWLQJWKHWKLUG        XQDQLPLW\ mRQ DQ\ RQH RI WKH VHQWHQFLQJ RSWLRQVl s$ DW
IDFWRU:HGRQRWEHOLHYHWKDWWKLVDSSOLFDWLRQRI$NHZDV             nVWURQJO\VXJJHVWVWKDWWKHMXU\GLVFXVVHGWKHWKUHH
REMHFWLYHO\XQUHDVRQDEOH7KHUHIRUHERXQGDVZHDUHE\WKH            SRVVLEOHYHUGLFWVDWWKHVDPHWLPH0RUHRYHUWKHWULDOFRXUW
GLFWDWHV RI $('3$ ZH KROG WKDW 0DVRQ LV QRW HQWLWOHG WR      GLG QRW LQVWUXFW WKH MXU\ WR FRQWLQXH GHOLEHUDWLRQV EXW WR
KDEHDVUHOLHIRQWKLVFODLP                                            GLVFXVVZKHWKHULWFRXOGGRVR)LQDOO\WKHMXU\GHOLEHUDWHG
                                                                        IRUPRUHWKDQWKUHHKRXUVDIWHUWKHWULDOFRXUWJDYHWKH$OOHQ
  6HQWHQFLQJ3KDVH                                                  FKDUJH7KH/RZHQILHOGMXU\GHOLEHUDWHGIRURQO\WKLUW\PRUH
                                                                        PLQXWHV*LYHQWKHVHFLUFXPVWDQFHVZHFRQFOXGHWKDWWKH
   (YHQLIKLVVDQLW\ZHUHQRWDVLJQLILFDQWLVVXHGXULQJWKH           WULDOFRXUWjVVXSSOHPHQWDOLQVWUXFWLRQZDVQRWLPSHUPLVVLEO\
WULDODQLQGLJHQWGHIHQGDQWRQWULDOIRUKLVOLIHKDVWKHULJKWWR     FRHUFLYH:HWKHUHIRUHGHQ\KDEHDVUHOLHIZLWKUHVSHFWWRWKLV
SV\FKLDWULFRUSV\FKRORJLFDODVVLVWDQFHGXULQJWKHVHQWHQFLQJ           FODLP
SKDVHmZKHQWKH6WDWHSUHVHQWVSV\FKLDWULFHYLGHQFHRIWKH
GHIHQGDQWjV IXWXUH GDQJHURXVQHVVl  $NH  86 DW                              ,,,&21&/86,21
6NDJJVY3DUNHU)GWK&LUFHUW
GHQLHG  6 &W    7KH 6WDWH RI 2KLR GLG QRW     )RUWKHIRUHJRLQJUHDVRQVZH$)),50WKHGLVWULFWFRXUWjV
SUHVHQWVXFKHYLGHQFHLQWKLVFDVH7KHUHIRUH0DVRQGLGQRW           GHQLDORI0DVRQjVSHWLWLRQIRUDZULWRIKDEHDVFRUSXVZLWK
KDYHDFOHDUO\HVWDEOLVKHGULJKWWRDQ\SV\FKLDWULFDVVLVWDQFH          UHVSHFW WR KLV FRQYLFWLRQ EXW 5(0$1' WKH FDVH IRU DQ
DWVHQWHQFLQJ5HJDUGOHVVRIWKHIDFWWKDWKHZDVQRWHQWLWOHG         HYLGHQWLDU\ KHDULQJ UHJDUGLQJ WKH FODLP RI LQHIIHFWLYH
WRVXFKDVVLVWDQFH0DVRQDOOHJHVWKDWWKHSV\FKLDWULVWWKDWWKH        DVVLVWDQFH RI FRXQVHO DW VHQWHQFLQJ DQG IRU IXUWKHU
WULDOFRXUWGLGSURYLGHZDVLQDGHTXDWH+RZHYHUZHKDYH               SURFHHGLQJVFRQVLVWHQWZLWKWKLVRSLQLRQ
SUHYLRXVO\ UHDG $NH QDUURZO\ KROGLQJ WKDW WKH LVVXH LV
ZKHWKHUDGHIHQGDQWKDGmDFFHVVWRDFRPSHWHQWSV\FKLDWULVW
LQSUHSDUDWLRQRIKLVGHIHQVHl6NDJJV)GDWQ
LQWHUQDOTXRWDWLRQPDUNVRPLWWHGDQGQRWZKHWKHUWKHH[SHUW
ZDVLQIDFWFRPSHWHQW,GDW:HGLGQRWHLQ6NDJJVWKDW
WKH IDLOXUH RI GHIHQVH FRXQVHO WR HQJDJH D FRPSHWHQW
     0DVRQY0LWFKHOO                                    1R        1R                                  0DVRQY0LWFKHOO         

0DVRQ1(GDW7KH2KLR6XSUHPH&RXUWWKHQ                       SV\FKLDWULVW ZRXOG EH UHOHYDQW LQ GHWHUPLQLQJ ZKHWKHU D
UHLWHUDWHG LWV DSSURYDO RI mXVLQJ VXSSOHPHQWDO LQVWUXFWLRQV              GHIHQGDQWUHFHLYHGLQHIIHFWLYHDVVLVWDQFHRIFRXQVHO,GDW
XUJLQJ MXURUV WR FRQWLQXH GHOLEHUDWLRQV WR WU\ WR UHDFK D             Q:LWKUHVSHFWWR0DVRQjV$NHFODLPKRZHYHUZH
XQDQLPRXVSHQDOW\YHUGLFWlDQGVSHFLILFDOO\VWDWHGWKDWVXFK                   FRQFOXGH WKDW 6XSUHPH &RXUW SUHFHGHQW KDV QRW FOHDUO\
LQVWUXFWLRQV LQ D GHDWK SHQDOW\ FDVH ZRXOG QRW YLRODWH GXH            HVWDEOLVKHGDGHIHQGDQWjVULJKWWRPRUHWKDQPHUHDFFHVVWR
SURFHVV  ,G FLWLQJ /RZHQILHOG  1RWLQJ WKDW /RZHQILHOG             FRPSHWHQWSV\FKLDWULFDVVLVWDQFH
mH[SUHVVO\DSSURYHGWKHXVHRI$OOHQFKDUJHVLQFDSLWDOFDVHVl
WKHGLVWULFWFRXUWFRQFOXGHGWKDWWKHWULDOFRXUWGLGQRWHUULQ               %,QHIIHFWLYH$VVLVWDQFHRI&RXQVHO
JLYLQJmDVLQJOH$OOHQFKDUJHl0DVRQ)6XSSGDW
                                                                                  0DVRQDUJXHVWKDWWKH2KLR6XSUHPH&RXUWXQUHDVRQDEO\
   8QGHU $('3$ WKH VFRSH RI RXU UHYLHZ LV OLPLWHG WR                 DSSOLHGFOHDUO\HVWDEOLVKHGIHGHUDOODZLQFRQFOXGLQJWKDWKH
GHWHUPLQLQJZKHWKHUDVWDWHFRXUWjVGHFLVLRQVDUHmFRQWUDU\WR                ZDV QRW GHSULYHG RIKLV FRQVWLWXWLRQDO ULJKW WR HIIHFWLYH
RULQYROYHGDQXQUHDVRQDEOHDSSOLFDWLRQRIFOHDUO\HVWDEOLVKHG                DVVLVWDQFH RI FRXQVHO   7R HVWDEOLVK WKDW FRXQVHO DIIRUGHG
)HGHUDOODZl86&G%HFDXVHYLRODWLRQVRI                  LQHIIHFWLYH DVVLVWDQFH D SHWLWLRQHU PXVW VKRZ WKDW KLV
VWDWHODZDUHQRWZLWKLQRXUSXUYLHZZHZLOOUHYLHZ0DVRQjV                  DWWRUQH\jV SHUIRUPDQFH ZDV GHILFLHQW IDOOLQJ EHORZ DQ
$OOHQ FODLP RQO\ WR GHWHUPLQH ZKHWKHU WKH WULDO FRXUWjV                REMHFWLYHVWDQGDUGRIUHDVRQDEOHQHVVDQGWKDWVXFKGHILFLHQF\
VXSSOHPHQWDO LQVWUXFWLRQ ZDV FRHUFLYH mLQ LWV FRQWH[W DQG               SUHMXGLFHGKLVGHIHQVH6WULFNODQGY:DVKLQJWRQ86
XQGHUDOOWKHFLUFXPVWDQFHVlsHQNLQV86DW:H                   7KHREMHFWLYHVWDQGDUGRIUHDVRQDEOHQHVVLV
KROG WKDW WKH $OOHQ FKDUJH ZDV QRW VR FRHUFLYH DV WR GHQ\           DKLJKO\GHIHUHQWLDORQHDQGLQFOXGHVmDVWURQJSUHVXPSWLRQ
0DVRQKLVGXHSURFHVVULJKWV                                                  WKDW FRXQVHOjV FRQGXFW IDOOV ZLWKLQ WKH ZLGH UDQJH RI
                                                                               UHDVRQDEOHSURIHVVLRQDODVVLVWDQFHl,GDW8QLWHG6WDWHV
   $VDSUHOLPLQDU\PDWWHUZHDJUHHZLWKWKH2KLR6XSUHPH                     Y 3LHUFH  )G   WK &LU  SODFLQJ WKH
&RXUW WKDW WKH MXU\ ZDV QRW mLUUHFRQFLODEO\ GHDGORFNHGl                EXUGHQ RQ WKH GHIHQGDQW WR GHPRQVWUDWH D FRQVWLWXWLRQDO
0DVRQ1(GDW7KHMXURUVLQWKLVFDVHVLPSO\                      YLRODWLRQFHUWGHQLHG867RVDWLVI\WKH
VWDWHGWKDWWKH\ZHUHmXQDEOHWRUHDFKDXQDQLPRXVGHFLVLRQ                    SUHMXGLFHUHTXLUHPHQWDGHIHQGDQWmPXVWVKRZWKDWWKHUHLV
RQDQ\RQHRIWKHVHQWHQFLQJRSWLRQVls$DWDQGWKH                   DUHDVRQDEOHSUREDELOLW\WKDWEXWIRUFRXQVHOjVXQSURIHVVLRQDO


                                                                                 
       ,Q 6WDWH Y +RZDUG       1(G  2KLR  WKH 2KLR                 7KH 6WDWH RI 2KLR FRQWHQGV WKDW YDULRXV VXESDUWV RI 0DVRQjV
6XSUHPH &RXUW VWURQJO\ FULWLFL]HG WKH mWUDGLWLRQDOl $OOHQ FKDUJH IRU           LQHIIHFWLYH DVVLVWDQFH FODLP ZHUH QRW UDLVHG RQ GLUHFW DSSHDO DQG WKXV ZHUH
SODFLQJ VXFK HPSKDVLV RQ WKH MXU\jV UHDFKLQJ D GHFLVLRQ ,G DW            SURFHGXUDOO\ GHIDXOWHG 5HVSRQGHQWjV %U DW  0DVRQ UHSOLHV WKDW KH
$FFRUGLQJ WR WKH +RZDUG FRXUW D WUDGLWLRQDO $OOHQ FKDUJH HVVHQWLDOO\          UDLVHG WKHVH LVVXHV WR WKH 2KLR 6XSUHPH &RXUW LQ KLV EULHI )LQDO 5HSO\
SUHVVXUHV GLVVHQWLQJ MXURUV WR FKDQJH WKHLU PLQGV DQG WKXV mVXEWO\ FKDQJHV     %U DW  VHH DOVR s$ DW  FRQWLQXDQFH  H[SHUW
WKH UHTXLUHPHQW WKDW WKH MXU\ YHUGLFW EH XQDQLPRXV WR RQH PRUH FORVHO\         DVVLVWDQFH  VXSSUHVVLRQ PRWLRQ  MXU\ VHOHFWLRQ 7KH
UHVHPEOLQJ PDMRULW\ UXOHl ,G 7KH 2KLR 6XSUHPH &RXUW WKXV SURSRVHG            SUREOHP DULVHV EHFDXVH 0DVRQ ILOHG KLV SHWLWLRQ IRU SRVWFRQYLFWLRQ UHOLHI
D VXSSOHPHQWDO LQVWUXFWLRQ WKDW LW EHOLHYHG ZRXOG UHVXOW LQ WKH mHYHQ         ZKLOH KLV GLUHFW DSSHDO ZDV SHQGLQJ %HFDXVH WKH WULDO FRXUW IRXQG
KDQGHG WUHDWPHQW RI DOO MXURUVl ,G DW  0XFK RI WKH VXSSOHPHQWDO          0DVRQjV LQHIIHFWLYH DVVLVWDQFH FODLPV WR EH EDUUHG E\ UHV MXGLFDWD EHIRUH
LQVWUXFWLRQ LQ WKLV FDVH IROORZV WKH SURSRVHG +RZDUG FKDUJH YHUEDWLP          WKH 2KLR FRXUWV KDG GHFLGHG KLV GLUHFW DSSHDO DQG EHFDXVH WKH 2KLR
,QGHHG WKH WULDO FRXUW VFUXSXORXVO\ PDLQWDLQHG LWV QHXWUDOLW\ E\ DGGUHVVLQJ   6XSUHPH &RXUW HYHQWXDOO\ DGGUHVVHG WKH PHULWV RI 0DVRQjV LQHIIHFWLYH
WKH MXURUV DV mMXURUVl s$ DW  UDWKHU WKDQ GLVWLQJXLVKLQJ EHWZHHQ       DVVLVWDQFH FODLPV ZH GR QRW ILQG SURFHGXUDO GHIDXOW DQG ZLOO UHYLHZ
m>M@XURUV IRU DFTXLWWDOl DQG mMXURUV IRU FRQYLFWLRQl DV WKH +RZDUG FRXUW      ZKHWKHU WKH VWDWH FRXUWVj DGMXGLFDWLRQ ZDV FRQWUDU\ WR RU LQYROYHG DQ
KDG GRQH +RZDUG  1(G DW                                            XQUHDVRQDEOH DSSOLFDWLRQ RI 6WULFNODQG DQG LWV SURJHQ\
    0DVRQY0LWFKHOO                                 1R       1R                               0DVRQY0LWFKHOO        

HUURUVWKHUHVXOWRIWKHSURFHHGLQJZRXOGKDYHEHHQGLIIHUHQW             0U0F*XLUH <HV
$ UHDVRQDEOH SUREDELOLW\ LV D SUREDELOLW\ VXIILFLHQW WR
XQGHUPLQHFRQILGHQFHLQWKHRXWFRPHl:LOOLDPV86                   7KH&RXUW         7DNHWKHMXU\SOHDVH
DWTXRWLQJ6WULFNODQG86DWm7KHHVVHQFHRI
DQ LQHIIHFWLYHDVVLVWDQFH FODLP LV WKDW FRXQVHOjV                    s$ DW   'HIHQVH FRXQVHO REMHFWHG WR WKH
XQSURIHVVLRQDOHUURUVVRXSVHWWKHDGYHUVDULDOEDODQFHEHWZHHQ            VXSSOHPHQWDOLQVWUXFWLRQ7KHMXU\FRQWLQXHGWRGHOLEHUDWH
GHIHQVHDQGSURVHFXWLRQWKDWWKHWULDOZDVUHQGHUHGXQIDLUDQG            XQWLO  SP ZKHQ LW EURNH IRU WKH HYHQLQJ  7KH MXU\
WKHYHUGLFWUHQGHUHGVXVSHFWl.LPPHOPDQY0RUULVRQ                UHWXUQHGWRLWVGHOLEHUDWLRQVDWDPRQ:HGQHVGD\sXQH
86                                                        $IWHU ILIWHHQ PLQXWHV WKH MXU\ UHWXUQHG D
                                                                          XQDQLPRXV UHFRPPHQGDWLRQ WKDW 0DVRQ EH VHQWHQFHG WR
  7ULDO3KDVH                                                         GHDWK  7KH WULDO FRXUW WKHQ SROOHG WKH MXU\ DQG HDFK MXURU
                                                                          LQGLFDWHGDJUHHPHQWZLWKWKDWVHQWHQFH
   0DVRQ FODLPV WKDW KLV DWWRUQH\V SURYLGHG LQHIIHFWLYH
DVVLVWDQFH EHIRUH WULDO LQ WKH IROORZLQJ DUHDV   FRXQVHO       0DVRQDUJXHVWKDWWKHWULDOFRXUWjV$OOHQFKDUJHIRUFHGD
IDLOHGWRREWDLQFHUWDLQH[SHUWDQGLQYHVWLJDWLYHDVVLVWDQFH             GHDGORFNHGMXU\WRFRQWLQXHGHOLEHUDWLRQLQYLRODWLRQRIKLV
 FRXQVHO IDLOHG WR REWDLQ WKH VXSSUHVVLRQ RI 0DVRQjV           FRQVWLWXWLRQDOULJKWVDQGFRQWUDU\WR2KLRODZ7KH6WDWHRI
VWDWHPHQWV WR WKH SROLFH GXULQJ WKH )HEUXDU\  DQG            2KLRFODLPVWKDWWKH$OOHQFKDUJHZDVQRWXQGXO\FRHUFLYH
LQWHUYLHZV  FRXQVHO IDLOHG WR REWDLQ D FRQWLQXDQFH DQG       )XUWKHUPRUHLWFRQWHQGVWKDW2KLRODZGLGQRWSUHFOXGHWKH
OHDGFRXQVHOZDVDEVHQWGXULQJSDUWVRIMXU\VHOHFWLRQ+H           VXSSOHPHQWDOLQVWUXFWLRQDQGWKDWDQ\YLRODWLRQRIVWDWHODZ
DOVRFODLPVWKDWKHUHFHLYHGLQHIIHFWLYHDVVLVWDQFHGXULQJWKH            FRXOGQRWSURSHUO\EHUDLVHGLQDKDEHDVSHWLWLRQ
WULDOGXHWRGHIHQVHFRXQVHOjVIDLOXUHWRSUHSDUHDGHTXDWHO\
6SHFLILFDOO\KHDUJXHVWKDWGHIHQVHFRXQVHOmIDLO>HG@WR                ,Q HYDOXDWLQJ WKH $OOHQ FKDUJH WKH 2KLR 6XSUHPH &RXUW
SURYLGHDQ\JXLGDQFHRUGLUHFWLRQWRWKHMXU\LQ>KLV@RSHQLQJ            ILUVWWXUQHGWR6WDWHY6SULQJHU1(G2KLR
VWDWHPHQWlDQGmIDLO>HG@WRREMHFWWRLQIODPPDWRU\SRUWLRQVRI            ZKLFK UHTXLUHV D WULDO FRXUW WR LPSRVH DQ DSSURSULDWH OLIH
WKH VWDWHjV RSHQLQJ VWDWHPHQWl  mIDLOHG WR GHYHORS DQG        VHQWHQFHLQWKHHYHQWRIDQmLUUHFRQFLODEO\GHDGORFNHGlMXU\
FRPPXQLFDWH D WKHRU\ RI GHIHQVH DQG KRZ VXFK D WKHRU\            ,GDW7KHVWDWHVXSUHPHFRXUWH[SODLQHG
UHODWHG WR PLWLJDWLRQl  mIDLOHG WR HIIHFWLYHO\ OLWLJDWH WKH
VWDWHjVIDLOXUHWRUHYHDOH[FXOSDWRU\HYLGHQFHlEHKDYHGLQ                1RH[DFWOLQHFDQEHGUDZQDVWRKRZORQJDMXU\PXVW
DQRYHUO\DJJUHVVLYHPDQQHUDQGIDLOHGWRREMHFWWRWKH                GHOLEHUDWHLQWKHSHQDOW\SKDVHEHIRUHDWULDOFRXUWVKRXOG
SURVHFXWRUjVEODWDQWPLVFRQGXFW3HWLWLRQHUjV%UDW                LQVWUXFWWKHMXU\WROLPLWLWVHOIWRWKHOLIHVHQWHQFHRSWLRQV
                                                                            RUWDNHWKHFDVHDZD\IURPWKHMXU\DVGRQHLQ6SULQJHU
  :HILUVWREVHUYHWKDW0DVRQjVDWWRUQH\VKDGFORVHWRHLJKW                (DFK FDVH PXVW EH GHFLGHG EDVHG XSRQ WKH SDUWLFXODU
PRQWKVWRSUHSDUHIRUWKHWULDOGXULQJZKLFKWLPHWKH\ILOHG               FLUFXPVWDQFHV+HUHDIWHURQO\IRXUDQGRQHKDOIKRXUV
PRUHWKDQILIW\SUHWULDOPRWLRQVDQGDUJXHGDWVHYHUDOSUHWULDO             RI GHOLEHUDWLRQV WKH WULDO FRXUW DFWHG DSSURSULDWHO\ E\
KHDULQJV0DVRQ1(GDW0DVRQjVLQHIIHFWLYH                   JLYLQJDPRGLILHG+RZDUGFKDUJH>LWVHOIDPRGLILHG$OOHQ
DVVLVWDQFHFODLPWKHUHIRUHUHODWHVWRGHIHQVHFRXQVHOjVIDLOXUH             FKDUJH@7KHFLUFXPVWDQFHVVKRZWKDWWKHMXU\ZDVQRW
WR DFKLHYH VXEVWDQWLYH UHVXOWV UDWKHU WKDQ D IDLOXUH WR ILOH       LUUHFRQFLODEO\ GHDGORFNHG DQG WKH PRGLILHG +RZDUG
SURFHGXUDO PRWLRQV&IHJ2OGHQY8QLWHG6WDWHV                FKDUJHGLGQRWFRHUFHDGHDWKYHUGLFW
)G   WK &LU   +RZHYHU 6WULFNODQGjV
REMHFWLYHVWDQGDUGRIUHDVRQDEOHQHVVGRHVQRWUHTXLUHODZ\HUV
    0DVRQY0LWFKHOO                             1R      1R                              0DVRQY0LWFKHOO        

    <RX VKDOO UHFRPPHQG WKH VHQWHQFH RI GHDWK LI \RX         WREHSHUIHFW%HFDXVHGHIHQVHFRXQVHODGYRFDWHGZLWKYLJRU
  XQDQLPRXVO\DOOWZHOYHMXURUVILQGE\SURRIEH\RQGD             RQ 0DVRQjV EHKDOI ZH KROG WKDW 0DVRQ GLG QRW UHFHLYH
  UHDVRQDEOH GRXEW WKDW WKH DJJUDYDWLQJ FLUFXPVWDQFHV           LQHIIHFWLYH DVVLVWDQFH ZLWK UHVSHFW WR WKH ILOLQJ RI YDULRXV
  RXWZHLJKWKHPLWLJDWLQJIDFWRUV                                   SURFHGXUDOPRWLRQV$VIRUWKHIDFWWKDW:LQNILHOGZDVDEVHQW
                                                                     GXULQJSDUWVRIMXU\VHOHFWLRQZHDJUHHZLWKWKHGLVWULFWFRXUW
     ,I \RX GR QRW VR ILQG \RX VKDOO XQDQLPRXVO\ DOO      WKDW WKLV DUJXPHQW LV QRW FRPSHOOLQJ EHFDXVH 0DVRQ
  WZHOYH UHFRPPHQG HLWKHU D OLIH VHQWHQFH ZLWK SDUROH        FRQVHQWHG WR WKH DEVHQFHV mDQG FRFRXQVHO FRQGXFWHG DQ
  HOLJLELOLW\DIWHUVHUYLQJWZHQW\\HDUVRILPSULVRQPHQWRU          HIIHFWLYHYRLUGLUHlGXULQJWKDWWLPH0DVRQ)6XSSG
  DOLIHVHQWHQFHZLWKSDUROHHOLJLELOLW\DIWHUVHUYLQJWKLUW\       DW
  \HDUVRILPSULVRQPHQW
                                                                        0DVRQjVDUJXPHQWWKDWGHIHQVHFRXQVHOIDLOHGWRSUHSDUH
s$DW7KHWULDOFRXUWWKHQUHDGWKHWKUHHYHUGLFWIRUPV     DGHTXDWHO\IRUWKHWULDOLVVRPHZKDWVWURQJHUEXWWKHUHFRUG
WKDWWKHMXU\ZRXOGFRQVLGHUZLWKWKHH[SUHVVLQVWUXFWLRQWKDW      GRHV QRW FRQWDLQ D JUHDW GHDO RI LQIRUPDWLRQ RQ WKLV LVVXH
WKHMXU\QRWDWWDFKVLJQLILFDQFHWRWKHRUGHULQZKLFKWKHIRUPV     /HDGFRXQVHO:LQNILHOGDSSDUHQWO\DFNQRZOHGJHGDVODWHDV
ZHUH UHDG  7KH ILUVW YHUGLFW IRUP UHFRPPHQGHG D GHDWK      D ZHHN RU WZR EHIRUH WKH WULDO WKDW KH KDG QRW SHUVRQDOO\
VHQWHQFHWKHVHFRQGUHFRPPHQGHGDOLIHVHQWHQFHZLWKSDUROH         LQWHUYLHZHGDQ\RIWKHZLWQHVVHVIRUHLWKHUSKDVHRIWKHWULDO
HOLJLELOLW\DIWHUWZHQW\\HDUVDQGWKHWKLUGUHFRPPHQGHGDOLIH     s$DW+HDG$IIDW+HDOVRGHFODUHGOHVVWKDQD
VHQWHQFHZLWKSDUROHHOLJLELOLW\DIWHUWKLUW\\HDUV7KHMXU\       ZHHNEHIRUHWKHWULDOVWDUWHGWKDWmLWZRXOGEHJUHDWHUURUIRU
EHJDQLWVGHOLEHUDWLRQLQWKHSHQDOW\SKDVHRIWKHWULDODW     >KLP@WRFRQWLQXHls$DWEHFDXVHKHZDVQRWSUHSDUHG
SPRQ0RQGD\sXQHDQGEURNHIRUWKHHYHQLQJDW          WRJRIRUZDUGDQGm>FRXOGQRW@GRVRLQJRRGFRQVFLHQFHDQG
SP7KHMXU\UHWXUQHGWRWKHFRXUWKRXVHWRFRQWLQXH           XQGHUWKHSURIHVVLRQDOVWDQGDUGVRIWKHFRGHRIUHVSRQVLELOLW\
GHOLEHUDWLRQVDWDPRQ7XHVGD\sXQH$IWHU         WR>KLV@FOLHQWls$DW&RFRXQVHOVWDWHGWKDWKHKDG
DOXQFKEUHDNIURPQRRQWRSPWKHMXU\LQIRUPHG        SUHSDUHGKLVSDUWRIWKHFDVHEXWWKDWKHFRXOGQRWJRIRUZDUG
WKH WULDO FRXUW WKDW LW ZDV mXQDEOH WR UHDFK D XQDQLPRXV   ZLWKRXW:LQNILHOG$WWKLVSRLQWWKHWULDOFRXUWGLVWUXVWLQJ
GHFLVLRQRQDQ\RQHRIWKHVHQWHQFLQJRSWLRQVls$DW       GHIHQVH FRXQVHOjV PRWLYHV DVNHG :LQNILHOG ZKHWKHU KH
$IWHUJLYLQJWKHMXU\DVWDQGDUG$OOHQFKDUJHWKHWULDOFRXUW       ZDQWHG WR ZLWKGUDZ  :KHQ :LQNILHOG DQVZHUHG WKDW KH
HQJDJHGLQWKHIROORZLQJFROORTX\ZLWKWKHMXU\IRUHPDQ             mG>LG@QjW FDUH WR ZLWKGUDZl WKH WULDO FRXUW VWDWHG LWV
                                                                     ZLOOLQJQHVVWRUHPRYH:LQNILHOGDQGLPSRVHVDQFWLRQVE\QRW
  7KH&RXUW       ,VWKHUHDSRVVLELOLW\0U0F*XLUHWKDW         SD\LQJDQ\IHHVs$DW$IWHUDWKLUW\PLQXWHFRQIHUHQFH
                   DIWHU DQ DGGLWLRQDO SHULRG RI WLPH \RX      ZLWK 0DVRQ DQG FRFRXQVHO :LQNILHOG LQIRUPHG WKH WULDO
                   PD\ UHDFK DQ DJUHHPHQW"  $QG WKLV           FRXUWWKDWKHZRXOGVWD\RQWKHFDVH7UDW
                   LQVWUXFWLRQ WKDW , KDYH JLYHQ \RX DQG
                   FRQVLGHULQJ WKDW ZLWK WKH UHVW RI WKH          $OWKRXJKZHDFNQRZOHGJHWKDWDWWRUQH\VjFRQFHUQVDERXW
                   LQVWUXFWLRQV"                                     FRPSHQVDWLRQ PD\ DGYHUVHO\ DIIHFW WKHLU UHSUHVHQWDWLRQ RI
                                                                     FOLHQWVZHDUHQRWSHUVXDGHGWKDW:LQNILHOGjVSHUIRUPDQFHLQ
  0U0F*XLUH 1R                                                   WKLVFDVHZDVVRGHILFLHQWDVWREHREMHFWLYHO\XQUHDVRQDEOH
                                                                     &I 5LFNPDQ Y %HOO  )G   WK &LU 
  7KH&RXUW       :RXOG \RX ZLVK WR UHWXUQ WR WKHMXU\        KROGLQJ WKDW GHIHQVH FRXQVHO ZKRVH SUHSDUDWLRQ IRU WULDO
                   URRPDQGGLVFXVVLWWKLVLQVWUXFWLRQZLWK       FRQVLVWHG VROHO\ RI VL[WHHQ KRXUV RI LQWHUYLHZV ZLWK WKH
                   WKHMXURUVDQGWKHQUHWXUQDQGUHVSRQGWR         GHIHQGDQWmWRWDO>O\@IDLO>HG@WRDFWLYHO\DGYRFDWHKLVFOLHQWjV
                   WKDWTXHVWLRQ"
    0DVRQY0LWFKHOO                            1R      1R                                              0DVRQY0LWFKHOO               

FDXVHl*URVHFORVHY%HOO)GWK&LU       FRQVLGHUDWLRQRIUHVLGXDOGRXEWGXULQJWKHVHQWHQFLQJSKDVH
 GHVFULELQJ GHIHQVH FRXQVHOjV mIDLOXUH WR KDYH DQ\     ,GDW	QSOXUDOLW\RSLQLRQLGDW2j&RQQRU
GHIHQVH WKHRU\ ZKDWVRHYHUl DQG mIDLOXUH WR FRQGXFW DQ\       sFRQFXUULQJLQWKHMXGJPHQWVHHDOVR3HQU\Y/\QDXJK
PHDQLQJIXODGYHUVDULDOFKDOOHQJHlDVmHVSHFLDOO\DSSDOOLQJl       86%HFDXVH6XSUHPH&RXUWSUHFHGHQW
FHUWGHQLHG86)LUVWGHVSLWH:LQNILHOGjV     FOHDUO\ HVWDEOLVKHV WKDW 0DVRQ FDQQRW VXSSRUW KLV UHVLGXDO
SURWHVWDWLRQV WKH WRWDOLW\ RI WKH FLUFXPVWDQFHV GRHV QRW    GRXEWDUJXPHQWZHGHQ\KDEHDVUHOLHIZLWKUHVSHFWWRWKLV
VXJJHVW WKDW GHIHQVH FRXQVHO ZDV XQSUHSDUHG IRU WKH WULDO   FODLP
SKDVH8QOLNHWKHmFRPSOHWHODFNRISUHWULDOSUHSDUDWLRQlWKDW
WKH.LPPHOPDQ&RXUWGHFULHG86DW:LQNILHOG               )DLOXUHWR5HPRYHWKH'HDWK6HQWHQFHIURPWKHsXU\
DQGFRFRXQVHOILOHGQXPHURXVSUHWULDOPRWLRQVDQGDUJXHG
VHYHUDOSUHWULDOKHDULQJV$OWKRXJKDWWRUQH\VFDQDOZD\VGR          ,Q$OOHQY8QLWHG6WDWHV86WKH6XSUHPH
PRUH LQ SUHSDUDWLRQ IRU D WULDO ZH FDQQRW FRQFOXGH WKDW   &RXUW KHOG WKDW WKH WULDO FRXUW GLG QRW HUU LQ JLYLQJ D
0DVRQjVDWWRUQH\VGLGQRWSUHSDUHHQRXJK                           VXSSOHPHQWDO LQVWUXFWLRQ WR D GHDGORFNHG MXU\  ,G DW 
                                                                    7KHFRQVWLWXWLRQDOLW\RIDQ$OOHQFKDUJHVRPHWLPHVUHIHUUHG
  6HFRQGZHDUHQRWSHUVXDGHGWKDWWKHDFWVDQGRPLVVLRQVRI       WR DV D mG\QDPLWHl FKDUJH WXUQV RQ ZKHWKHU WKH FKDUJH LQ
GHIHQVHFRXQVHOWKDW0DVRQLGHQWLILHVDVHYLQFLQJDODFNRI         TXHVWLRQZDVmFRHUFLYHl/RZHQILHOGY3KHOSV86
UHDVRQDEOHSURIHVVLRQDOMXGJPHQWLQIDFWYLRODWHGSUHYDLOLQJ           $Q $OOHQ FKDUJH PXVW EH UHYLHZHG mLQ LWV
SURIHVVLRQDOQRUPV:HKDYHUHDGWKHRSHQLQJVWDWHPHQWVRI         FRQWH[WDQGXQGHUDOOWKHFLUFXPVWDQFHVl,GDWTXRWLQJ
ERWK WKH SURVHFXWLRQ DQG WKH GHIHQVH DQG GLVDJUHH ZLWK      sHQNLQV Y 8QLWHG 6WDWHV  86    SHU
0DVRQjVFKDUDFWHUL]DWLRQVRIWKHP:HFDQQRWLGHQWLI\DQ\          FXULDP0DVRQDUJXHVWKDWWKHWULDOFRXUWjVVXSSOHPHQWDO
mLQIODPPDWRU\ SRUWLRQVl RI WKH SURVHFXWRUjV VWDWHPHQW         LQVWUXFWLRQWRWKHMXU\GXULQJLWVGHOLEHUDWLRQVDWWKHSHQDOW\
3HWLWLRQHUjV%UDWFRQYHUVHO\ZHFRQFOXGHWKDWGHIHQVH        SKDVHRIWKHWULDOZDVDQLPSURSHU$OOHQFKDUJH
FRXQVHO SURYLGHG DGHTXDWH JXLGDQFH WR WKH MXU\ E\ FOHDUO\
DUWLFXODWLQJWKHWKHRU\WKDW&KULVUDWKHUWKDQ0DVRQVKRXOGEH        7KHWULDOFRXUWJDYHWKHIROORZLQJSUHOLPLQDU\LQVWUXFWLRQWR
RQWULDOIRU5RELQjVPXUGHU0DVRQjV%UDG\GHULYHGFODLPRI        WKHMXU\
LQHIIHFWLYHDVVLVWDQFHLVVLPSO\WRRVXPPDU\IRUXVWRUHYLHZ
$V IRU WKH GHSLFWLRQ RI GHIHQVH FRXQVHO DV DEXVLYH DQG
DUJXPHQWDWLYH ZH UHFRJQL]H WKDW WKH UHFRUG UHYHDOV                 
                                                                             ,Q /RZHQILHOG WKH MXU\ UHTXHVWHG DGGLWLRQDO LQVWUXFWLRQV DIWHU LW
FRQVLGHUDEOHDQLPRVLW\EHWZHHQWKHSURVHFXWRUDQGGHIHQVH           EHFDPH XQDEOH WR UHDFK D GHFLVLRQ RQ WKH VHFRQG GD\ RI GHOLEHUDWLRQV

FRXQVHOEXWIDLOWRVHHKRZWKHODWWHUjVDGYRFDF\SUHMXGLFHG        86 DW  7KH WULDO FRXUW WKHQ DVNHG WKH LQGLYLGXDO MXURUV WR DQVZHU

0DVRQjV GHIHQVH  )LQDOO\ DQ\ IDLOXUH WR REMHFW WR         LQ ZULWLQJ ZKHWKHU mIXUWKHU GHOLEHUDWLRQV ZRXOG EH KHOSIXO LQ REWDLQLQJ D

SURVHFXWRULDO PLVFRQGXFW GLG QRW FRQVWLWXWH LQHIIHFWLYH        YHUGLFWl ,G (LJKW MXURUV UHVSRQGHG LQ WKH DIILUPDWLYH ,G $IWHU GHQ\LQJ
                                                                    D GHIHQVH PRWLRQ IRU D PLVWULDO WKH WULDO FRXUW GLUHFWHG WKH MXU\ WR UHWXUQ
DVVLVWDQFHRIFRXQVHOEHFDXVHDVGLVFXVVHGEHORZZHGRQRW        WR WKH FRXUWURRP IRU IXUWKHU LQVWUXFWLRQV             ,G    $W WKLV WLPH WKH MXU\ JDYH
EHOLHYHWKDWWKHSURVHFXWRUDFWHGLPSURSHUO\:HWKHUHIRUH         WKH   WULDO   FRXUW   D   QHZ   QRWH   WKDW   VWDWHG   WKDW   VRPH   RI   WKH   MXURUV   KDG

GHQ\KDEHDVUHOLHIZLWKUHVSHFWWRWKLVFODLP                      PLVXQGHUVWRRG KLV RULJLQDO TXHVWLRQ               ,G       7KH WULDO FRXUW SROOHG WKH
                                                                    LQGLYLGXDO MXURUV DJDLQ EXW DVNHG ZKHWKHU WKH\ IHOW WKDW mDQ\ IXUWKHU

  6HQWHQFLQJ3KDVH                                              GHOLEHUDWLRQV ZLOO HQDEOH \RX WR DUULYH DW D YHUGLFW"l                ,G   (OHYHQ MXURUV
                                                                    UHVSRQGHG LQ WKH DIILUPDWLYH ,G DW  7KH WULDO FRXUW WKHQ JDYH WKH MXU\


 8QGHU WKH (LJKWK $PHQGPHQW WKH MXU\ LQ D FDSLWDO FDVH    DQ $OOHQ FKDUJH ,G 7KLUW\ PLQXWHV ODWHU WKH MXU\ UHWXUQHG D VHQWHQFH RI
                                                                    GHDWK     ,G   7KH 6XSUHPH &RXUW KHOG WKDW WKH SROOLQJ RI WKH MXU\ DQG WKH
PD\ mQRW EH SUHFOXGHG IURP FRQVLGHULQJ DV D PLWLJDWLQJ     VXSSOHPHQWDO LQVWUXFWLRQ ZHUH QRW FRHUFLYH DV WR YLRODWH WKH SHWLWLRQHUjV
                                                                    FRQVWLWXWLRQDO ULJKWV      ,G DW 
    0DVRQY0LWFKHOO                              1R       1R                               0DVRQY0LWFKHOO       

mPLWLJDWLQJFLUFXPVWDQFHVlDVmFLUFXPVWDQFHVQRWFRQVWLWXWLQJ          IDFWRUDQ\DVSHFWRIDGHIHQGDQWjVFKDUDFWHURUUHFRUGDQGDQ\
MXVWLILFDWLRQRUH[FXVHIRUWKHRIIHQVHLQTXHVWLRQEXWZKLFK        RIWKHFLUFXPVWDQFHVRIWKHRIIHQVHWKDWWKHGHIHQGDQWSURIIHUV
LQIDLUQHVVDQGPHUF\PD\EHFRQVLGHUHGDVH[WHQXDWLQJRU             DVDEDVLVIRUDVHQWHQFHOHVVWKDQGHDWKl/RFNHWWY2KLR
UHGXFLQJWKHGHJUHHRIPRUDOFXOSDELOLW\RUSXQLVKPHQWlLG           862KLRODZWKXVSURYLGHVWKDWRQFH
DW  LQWHUQDO TXRWDWLRQ PDUNV RPLWWHG WKH TXHVWLRQ      WKHSURVHFXWLRQKDVSURYHQRQHRUPRUHVWDWXWRU\DJJUDYDWLQJ
EHIRUHWKH6XSUHPH&RXUWZDVZKHWKHUDVHQWHQFHRIGHDWKIRU           FLUFXPVWDQFHV EH\RQG D UHDVRQDEOH GRXEW WKH MXU\ PXVW
WKH FULPH RI UDSH ZDV FUXHO DQG XQXVXDO SXQLVKPHQW             ZHLJKWKHDJJUDYDWLQJFLUFXPVWDQFHVDJDLQVWWKHHYLGHQFHLQ
SURKLELWHGE\WKH(LJKWK$PHQGPHQW,GDW,QGHHGWKH          PLWLJDWLRQ EHIRUH LPSRVLQJ D GHDWK VHQWHQFH  2+,2 5(9
WULDOFRXUWJDYHWKHLQVWUXFWLRQSXUVXDQWWRVWDWHVWDWXWH,GDW    &2'( $11%sXULHVPD\FRQVLGHUDVPLWLJDWLQJ
&RNHUWKHUHIRUHSURYLGHVQRVXSSRUWIRUWKHGXHSURFHVV          HYLGHQFH mWKH KLVWRU\ FKDUDFWHU DQG EDFNJURXQG RI WKH
FODLPWKDW0DVRQPXVWVXFFHVVIXOO\PDNHIRUXVWRUHYLHZD             RIIHQGHUlFHUWDLQVSHFLILHGIDFWRUVDQGm>D@Q\RWKHUIDFWRUV
FKDOOHQJHGMXU\LQVWUXFWLRQ                                           WKDWDUHUHOHYDQWWRWKHLVVXHRIZKHWKHUWKHRIIHQGHUVKRXOGEH
                                                                       VHQWHQFHGWRGHDWKl,G0RUHRYHUDGHIHQGDQWLVHQWLWOHGWR
   0DVRQ DOVR FRQWHQGV WKDW mWKH MXU\jV GLVFUHWLRQ ZDV QRW     mJUHDW ODWLWXGHl LQ SUHVHQWLQJ HYLGHQFH RI DQ\ DQG DOO
VXIILFLHQWO\ JXLGHG XQGHU *UHJJ Y *HRUJLD  86        PLWLJDWLQJIDFWRUV,G&
l  3HWLWLRQHUjV %U DW  *UHJJ KRZHYHU VLPSO\
UHFRPPHQGHGWKDWMXULHVLQGHDWKSHQDOW\FDVHVEHmDSSULVHG              7KHVROHDJJUDYDWLQJFLUFXPVWDQFHLQWKLVFDVHZDVWKHUDSH
RIWKHLQIRUPDWLRQUHOHYDQWWRWKHLPSRVLWLRQRI>WKHGHDWK@           6HH2+,2 5(9 &2'( $11$:KHQWKHWULDO
VHQWHQFHDQGSURYLGHGZLWKVWDQGDUGVWRJXLGHLWVXVHRIWKH           FRXUWFRQYHQHGWKHSHQDOW\SKDVHRI0DVRQjVWULDORQsXQH
LQIRUPDWLRQl  *UHJJ  86 DW   7KH WULDO FRXUW       GHIHQVH FRXQVHO RIIHUHG WKH WHVWLPRQ\ RI VHYHQ
SURYLGHGVXFKJXLGDQFHLQWKLVFDVHLWLQVWUXFWHGWKHMXU\RI         ZLWQHVVHVDVZHOODV0DVRQjVXQVZRUQWHVWLPRQ\EXWGLGQRW
LWVGXW\WRZHLJKDJJUDYDWLQJFLUFXPVWDQFHVDJDLQVWPLWLJDWLQJ         LQTXLUH LQWR PLWLJDWLQJ HYLGHQFH  7KH ILUVW WZR ZLWQHVVHV
IDFWRUVWKHODWWHUmLQFOXGLQJEXWQRWOLPLWHGWRWKHQDWXUHDQG     ZHUHGHSXW\VKHULIIVIURPWKH0DULRQ&RXQW\sDLOZKRVWDWHG
FLUFXPVWDQFHVRIWKHRIIHQVHDQGWKHKLVWRU\FKDUDFWHUDQG           WKDW 0DVRQ KDG QRW EHHQ D SUREOHP SULVRQHU  'HIHQVH
EDFNJURXQGRIWKH'HIHQGDQWDQGDQ\RWKHUIDFWRUVWKDWDUH            FRXQVHOWKHQFDOOHGIRXUPHPEHUVRI0DVRQjVIDPLO\*LYHQ
UHOHYDQW WR WKH LVVXH RI ZKHWKHU WKH 'HIHQGDQW VKRXOG EH      QRPRUHGLUHFWLRQWKDQWRVSHDNRQ0DVRQjVEHKDOI0DVRQjV
VHQWHQFHGWRGHDWKls$DW:HDJUHHZLWKWKH2KLR            PRWKHUEURWKHUVLVWHUDQGFRXVLQVLPSO\DVNHGWKHMXU\QRW
6XSUHPH&RXUWWKDWmWKHLQVWUXFWLRQVFRQVLGHUHGDVDZKROH           WRUHFRPPHQGWKHGHDWKSHQDOW\
DGHTXDWHO\ JXLGHG WKH MXU\ DQG GLG QRW UHVWULFW LWV
FRQVLGHUDWLRQRIPLWLJDWLQJHYLGHQFHl0DVRQ1(GDW             'HIHQVHFRXQVHOjVGLUHFWH[DPLQDWLRQRI0DVRQjVZLIH7HUUL
  :H WKHUHIRUH GHQ\ KDEHDV UHOLHI ZLWK UHVSHFW WR WKLV   m7HUULlZDVDOPRVWDVSHUIXQFWRU\$VNHGZKHWKHUVKHKDG
FODLP                                                                 DQ\WKLQJ WR WHOO WKH MXU\ 7HUUL PDGH DQ HPRWLRQDO SOHD IRU
                                                                       PHUF\&RXQVHOWKHQDVNHG7HUULWRLGHQWLI\DIHZSLFWXUHV
  )DLOXUHWR,QVWUXFWRQ5HVLGXDO'RXEW                            WKDW 0DVRQ KDG GUDZQ IRU KHU  2Q FURVVH[DPLQDWLRQ WKH
                                                                       SURVHFXWRU TXHVWLRQHG 7HUUL DERXW 0DVRQjV DUW DQG KLV
  0DVRQDUJXHVWKDWKHZDVGHQLHGGXHSURFHVVE\WKHWULDO             DFWLYLWLHV RQ WKH GD\ WKDW 5RELQ GLVDSSHDUHG  5HGLUHFW
FRXUWjV UHIXVDO WR JLYH D SURSRVHG LQVWUXFWLRQ RQ UHVLGXDO
GRXEW  ,Q )UDQNOLQ Y /\QDXJK  86   D
PDMRULW\RIWKH6XSUHPH&RXUWDJUHHGWKDWFDSLWDOGHIHQGDQWV
GR QRW KDYH D FRQVWLWXWLRQDO ULJKW WR GHPDQG MXU\                  
                                                                            $V 0DVRQ QRWHV GHIHQVH FRXQVHO GLG QRW LQTXLUH DERXW 0DVRQjV
                                                                       LQYROYHPHQW LQ VDYLQJ D IHOORZ LQPDWH IURP DWWHPSWHG VXLFLGH
    0DVRQY0LWFKHOO                             1R       1R                                  0DVRQY0LWFKHOO          

UHFURVVDQGIXUWKHUUHGLUHFWH[DPLQDWLRQFRQFHUQHG7HUULjV          UHYLHZHUURUVRQLQVWUXFWLRQVDUHQRWUHYLHZDEOHXQOHVVWKH\
LQWHUYLHZZLWKWKHSROLFH'HIHQVHFRXQVHOGLGQRWTXHVWLRQ          GHSULYHDGHIHQGDQWRIFRQVWLWXWLRQDOGXHSURFHVVl*DOOY
7HUULDJDLQDERXWPLWLJDWLQJHYLGHQFH                                3DUNHU)GWK&LUFHUWGHQLHG
                                                                      86   7KH TXHVWLRQ EHIRUH XV LV mZKHWKHU WKH DLOLQJ
  0DVRQKLPVHOIVSRNHDVWKHODVWPLWLJDWLQJZLWQHVV,QKLV         LQVWUXFWLRQ E\ LWVHOI VR LQIHFWHG WKH HQWLUH WULDO WKDW WKH
XQVZRUQVWDWHPHQWKHGHFODUHGKLVLQQRFHQFHDQGUHTXHVWHG            UHVXOWLQJ FRQYLFWLRQ YLRODWHV GXH SURFHVVl  (VWHOOH Y
WKDW WKH MXU\ mJLYH PH WKH FKDQFH WR WDNH LW WKURXJK WKH   0F*XLUH86TXRWLQJ&XSSY1DXJKWHQ
$SSHDOV&RXUWVls$DW'HIHQVHFRXQVHOTXHVWLRQHG           86
0DVRQDERXWKLVGUDZLQJVDQGWKHQUHVWHG7KHSURVHFXWRU
RIIHUHGQRHYLGHQFHLQUHEXWWDOEXWHPSKDVL]HG GXULQJKLV             )DLOXUHWR'HILQH0LWLJDWLRQ
FORVLQJDUJXPHQWWKDWGHIHQVHFRXQVHOKDGQRWSUHVHQWHGDQ\
PLWLJDWLQJ HYLGHQFH DERXW 0DVRQjV KLVWRU\ FKDUDFWHU RU           0DVRQFRPSODLQVWKDWWKHWULDOFRXUWIDLOHGWRH[SODLQWKH
EDFNJURXQG                                                           PHDQLQJRImPLWLJDWLRQlRUmPLWLJDWLQJIDFWRUlOHDYLQJWKH
                                                                      MXU\mWRVSHFXODWHWKURXJKRXWWKHWULDODVWRZKDWLWZDVWKH\
     D)DLOXUHWR,QYHVWLJDWHRUWR3UHSDUH:LWQHVVHV               ZHUHVXSSRVHGWREHFRQVLGHULQJl3HWLWLRQHUjV%UDW
                                                                      :HQRWHDVDQLQLWLDOPDWWHUWKDWFRQWUDU\WR0DVRQjVFODLPV
  0DVRQ DUJXHV WKDW GHIHQVH FRXQVHO UHQGHUHG LQHIIHFWLYH        WKH6XSUHPH&RXUWSUHFHGHQWWKDWH[LVWHGSULRUWR0DVRQjV
DVVLVWDQFHE\IDLOLQJWRFRQGXFWDQLQGHSHQGHQWDQGWKRURXJK          FRQYLFWLRQGLGQRWFOHDUO\HVWDEOLVKDGHIHQGDQWjVGXHSURFHVV
LQYHVWLJDWLRQRIKLVOLIHKLVWRU\DQGSV\FKRORJLFDOEDFNJURXQG        ULJKWWRDMXU\LQVWUXFWLRQRQWKHGHILQLWLRQRIPLWLJDWLRQ
ZKHQ KLV IDPLO\ PHPEHUV ZHUH DYDLODEOH IRU LQWHUYLHZV         0DVRQjVUHOLDQFHRQ&RNHUY*HRUJLD86
WKHUHE\ IRUHFORVLQJ WKH GLVFRYHU\ RI SRWHQWLDO PLWLJDWLQJ       LVXQDYDLOLQJ$OWKRXJKWKHWULDOFRXUWLQWKDWFDVHGLGGHILQH
HYLGHQFH  +H DOVR FRQWHQGV WKDW GHIHQVH FRXQVHOjV
SHUIRUPDQFH LQ SUHSDULQJ 0DVRQjV IDPLO\ PHPEHUV EHIRUH
FDOOLQJ WKHP DV PLWLJDWLRQ ZLWQHVVHV ZDV FRQVWLWXWLRQDOO\           
                                                                              8QGHU %XFKDQDQ Y $QJHORQH  86   WKH VWDQGDUG
GHILFLHQW                                                            IRU UHYLHZLQJ MXU\ LQVWUXFWLRQV IURP WKH VHOHFWLRQ SKDVH RI D FDSLWDO
                                                                      VHQWHQFLQJ SURFHVV LV mZKHWKHU WKHUH LV D UHDVRQDEOH OLNHOLKRRG WKDW WKH
  ,QH[DPLQLQJ0DVRQjVFODLPRILQHIIHFWLYHDVVLVWDQFHDWWKH         MXU\ KDV DSSOLHG WKH FKDOOHQJHG LQVWUXFWLRQ LQ D ZD\ WKDW SUHYHQWV WKH

VHQWHQFLQJVWDJHWKH2KLR6XSUHPH&RXUWLQIHUUHGIURPWKH            FRQVLGHUDWLRQ RI FRQVWLWXWLRQDOO\ UHOHYDQW HYLGHQFHl ,G DW  TXRWLQJ
                                                                      %R\GH Y &DOLIRUQLD  86    7KH 6XSUHPH &RXUW KDV
UHFRUGmWKDWGHIHQVHFRXQVHOKDGYROXPLQRXVUHFRUGVDERXW             WKXV KHOG WKDW WKH (LJKWK DQG )RXUWHHQWK $PHQGPHQWV GR QRW UHTXLUH D
>0DVRQjV@KLVWRU\DQGEDFNJURXQGlDQGQRWHGWKDWm>F@RXQVHO           WULDO FRXUW WR JLYH D VSHFLILF LQVWUXFWLRQ RQ PLWLJDWLQJ HYLGHQFH PXFK OHVV
SUHSDUHG WZHOYH H[KLELWV GRFXPHQWLQJ DVSHFWV RI 0DVRQjV         GHILQH ZKDW LW PHDQV ,G DW  KROGLQJ WKDW D MXU\ LQVWUXFWLRQ WR EDVH
FKLOGKRRGVXFKDVUHSRUWVWKDWKHZDVEHDWHQE\KLVIDWKHUDQG       WKH GHFLVLRQ RQ mDOO WKH HYLGHQFHl ZDV FRQVWLWXWLRQDOO\ VXIILFLHQW EHFDXVH
UHOHDVHGE\KLVSDUHQWVWRMXYHQLOHDXWKRULWLHVDVZHOODVHDUO\     LW mDIIRUGHG MXURUV DQ RSSRUWXQLW\ WR FRQVLGHU PLWLJDWLQJ HYLGHQFHl 7KH
                                                                      RQO\ FRQVWLWXWLRQDO UHTXLUHPHQW LV WKDW WKH LQVWUXFWLRQV GR QRW SUHFOXGH D
SV\FKRORJLFDO HYDOXDWLRQV EXW GLG QRW SUHVHQW WKHP WR WKH    FDSLWDO MXU\ IURP FRQVLGHULQJ PLWLJDWLQJ HYLGHQFH ,G DW  VHH DOVR
MXU\l0DVRQ1(GDW7KHGLVWULFWFRXUWVLPLODUO\       :HHNV Y $QJHORQH  86   
GHHPHG PHULWOHVV 0DVRQjV FODLP mWKDW KLV WULDO FRXQVHO               :H QRWH WKDW WKH LQVWUXFWLRQ FKDOOHQJHG LQ WKLV FDVH FRPSOLHG ZLWK WKH
LPSURSHUO\ IDLOHG WR LQYHVWLJDWH SRVVLEOH SV\FKRVRFLDO           %XFKDQDQ PDQGDWH WKDW D WULDO FRXUW VKRXOG QRW UHVWULFW D MXU\jV

PLWLJDWLQJ IDFWRUV WKDW FRXOG KDYH VSDUHG KLP WKH GHDWK       FRQVLGHUDWLRQ RI PLWLJDWLQJ HYLGHQFH          +RZHYHU %XFKDQDQ LV QRW

SHQDOW\l0DVRQ)6XSSGDW                              FRQWUROOLQJ EHFDXVH LW ZDV GHFLGHG WKUHH DQG D KDOI \HDUV DIWHU 0DVRQjV
                                                                      FRQYLFWLRQ DQG XQGHU $('3$ 6XSUHPH &RXUW SUHFHGHQW PXVW EH LQ
                                                                      H[LVWHQFH SULRU WR D FRQYLFWLRQ WR FRQWURO D KDEHDV FRXUWjV DQDO\VLV 6HH
                                                                      :LOOLDPV  )G DW 
    0DVRQY0LWFKHOO                              1R       1R                              0DVRQY0LWFKHOO        

  ([WULQVLF(YLGHQFH                                                 0XFKKDVEHHQPDGHLQWKLVFDVHRIWKHWZHOYHH[KLELWVWKDW
                                                                       GHIHQVHFRXQVHOSUHSDUHGLQFRQMXQFWLRQZLWKWKHYLGHRWDSHG
  7KLVFDVHLQYROYHVDQRXWRIFRXUWLQYHVWLJDWLRQVLPLODUWR          GHSRVLWLRQRI'UsRVHSK76SDUHm6SDUHlWKHSV\FKLDWULVW
WKHRQHLQ'RDQLQZKLFKDMXURUSXWOLSVWLFNRQKHUDUPWR           DSSRLQWHG E\ WKH WULDO FRXUW WR DVVLVW WKH GHIHQVH ZLWK WKH
VLPXODWHDEUXLVHDQGWKHQGHWHUPLQHGWKDWVXFKDEUXLVHFRXOG         PLWLJDWLRQSKDVH7KHPHUHH[LVWHQFHRIPLWLJDWLRQH[KLELWV
EHVHHQLQDGDUNHQHGURRP'RDQ)GDW,QWKLV           KRZHYHU LV QRW FRQFOXVLYH EHFDXVH WKH TXHVWLRQ XQGHU
FDVH MXURU 0DU\ 'RZQV m'RZQVl GLVDVVHPEOHG KHU                6WULFNODQG LV ZKHWKHU GHIHQVH FRXQVHOjV LQYHVWLJDWLRQ LQWR
KXVEDQGjVUHYROYHUWRVHHZKHWKHUWKHJULSORRNHGOLNHWKHRQH         SRWHQWLDOPLWLJDWLRQHYLGHQFHZDVFRQVWLWXWLRQDOO\DGHTXDWH
VKRZQ LQ FRXUW 7KH MXURU VWDWHG WKDW VKH FRQGXFWHG WKLV
H[SHULPHQW DQG LQIRUPHG RWKHU MXURUV DIWHU WKH MXU\ KDG          >6@WUDWHJLFFKRLFHVPDGHDIWHUWKRURXJKLQYHVWLJDWLRQRI
UHWXUQHGDJXLOW\YHUGLFW+RZHYHU%HFNKROWZKRGLGQRW               ODZDQGIDFWVUHOHYDQWWRSODXVLEOHRSWLRQVDUHYLUWXDOO\
SDUWLFLSDWH LQ WKH MXU\jV GHOLEHUDWLRQV WHVWLILHG WKDW 'RZQV     XQFKDOOHQJHDEOH DQG VWUDWHJLF FKRLFHV PDGH DIWHU OHVV
UHSRUWHGKHUUHVXOWVGXULQJWKHWULDO7KHWULDOFRXUWIRXQGWKDW       WKDQFRPSOHWHLQYHVWLJDWLRQDUHUHDVRQDEOHSUHFLVHO\WR
'RZQVjVDFWLRQVmGLGQRWLQIOXHQFHWKHYHUGLFWLQWKLVFDVH              WKHH[WHQWWKDWUHDVRQDEOHSURIHVVLRQDOMXGJPHQWVVXSSRUW
DQGDVVXFK>0DVRQ@ZDVQRWSUHMXGLFHGE\WKLVFRQGXFWl                WKHOLPLWDWLRQVRQLQYHVWLJDWLRQ,QRWKHUZRUGVFRXQVHO
s$DW                                                         KDVDGXW\WRPDNHUHDVRQDEOHLQYHVWLJDWLRQVRUWRPDNH
                                                                         DUHDVRQDEOHGHFLVLRQWKDWPDNHVSDUWLFXODULQYHVWLJDWLRQV
   :H UHYLHZ FRQVWLWXWLRQDO HUURUV DW WULDO VXFK DV 6L[WK        XQQHFHVVDU\  ,Q DQ\ LQHIIHFWLYHQHVV FDVH D SDUWLFXODU
$PHQGPHQW YLRODWLRQV XQGHU D KDUPOHVV HUURU VWDQGDUG              GHFLVLRQQRWWRLQYHVWLJDWHPXVWEHGLUHFWO\DVVHVVHGIRU
%UHFKWY$EUDKDPVRQ86'RDQ                UHDVRQDEOHQHVVLQDOOWKHFLUFXPVWDQFHVDSSO\LQJDKHDY\
)GDW7KHKDEHDVSHWLWLRQHUPXVWVKRZWKDWWKHWULDO             PHDVXUHRIGHIHUHQFHWRFRXQVHOjVMXGJPHQWV
HUURU mKDG VXEVWDQWLDO DQG LQMXULRXV HIIHFW RU LQIOXHQFH LQ      
GHWHUPLQLQJ WKH MXU\jV YHUGLFWl  'RDQ  )G DW          >:@KDWLQYHVWLJDWLRQ GHFLVLRQVDUHUHDVRQDEOHGHSHQGV
TXRWLQJ %UHFKW  86 DW   $OWKRXJK 'RZQVjV             FULWLFDOO\ RQ >WKH LQIRUPDWLRQ WKDW WKH GHIHQGDQW
SUHVHQWDWLRQ RI KHU RXWRIFRXUW ILQGLQJV PD\ KDYH EHHQ           VXSSOLHV@)RUH[DPSOHZKHQWKHIDFWVWKDWVXSSRUWD
FRQVWLWXWLRQDO HUURU 0DVRQ FDQQRW GHPRQVWUDWH WKDW LW             FHUWDLQSRWHQWLDOOLQHRIGHIHQVHDUHJHQHUDOO\NQRZQWR
VXEVWDQWLDOO\DIIHFWHGRULQIOXHQFHGWKHMXU\jVYHUGLFW7KH            FRXQVHOEHFDXVHRIZKDWWKHGHIHQGDQWKDVVDLGWKHQHHG
HYLGHQFHDWWULDOZDVPRUHH[WHQVLYHWKDQWKHJXQJULSWKDW              IRUIXUWKHULQYHVWLJDWLRQPD\EHFRQVLGHUDEO\GLPLQLVKHG
ZDVWKHVXEMHFWRI'RZQVjVH[SHULPHQWLQIDFWWKHDOOHJHG              RU HOLPLQDWHG DOWRJHWKHU  $QG ZKHQ D GHIHQGDQW KDV
PXUGHUZHDSRQZDVWKHZRRGHQERDUGZLWKQDLOVDWWDFKHGWR                JLYHQ FRXQVHO UHDVRQ WR EHOLHYH WKDW SXUVXLQJ FHUWDLQ
LW:HWKHUHIRUHGHQ\KDEHDVUHOLHIZLWKUHVSHFWWRWKLVFODLP         LQYHVWLJDWLRQV ZRXOG EH IUXLWOHVV RU HYHQ KDUPIXO
                                                                         FRXQVHOjVIDLOXUHWRSXUVXHWKRVHLQYHVWLJDWLRQVPD\QRW
+6HQWHQFLQJ3KDVH,QVWUXFWLRQV                                        ODWHU EH FKDOOHQJHG DV XQUHDVRQDEOH  ,Q VKRUW LQTXLU\
                                                                         LQWRFRXQVHOjVFRQYHUVDWLRQVZLWKWKHGHIHQGDQWPD\EH
  0DVRQFODLPVWKDWWKHWULDOFRXUWjVLQVWUXFWLRQVWRWKHMXU\           FULWLFDOWRDSURSHUDVVHVVPHQWRIFRXQVHOjVLQYHVWLJDWLRQ
OHGWRmDQXQUHOLDEOHVHQWHQFLQJGHWHUPLQDWLRQl3HWLWLRQHUjV           GHFLVLRQV
%U DW   6SHFLILFDOO\ KH DUJXHV WKDW WKH WULDO FRXUW
FRPPLWWHG FRQVWLWXWLRQDO HUURU E\  IDLOLQJ WR GHILQH         6WULFNODQG86DW:HKDYHSUHYLRXVO\KHOGWKDW
mPLWLJDWLRQlRUmPLWLJDWLQJIDFWRUlUHIXVLQJWRLQVWUXFWWKH      WKH FRPSOHWH IDLOXUH WR LQYHVWLJDWH PLWLJDWLQJ HYLGHQFH
MXU\RQUHVLGXDOGRXEWDQGIDLOLQJWRUHPRYHWKHGHDWK            FRQVWLWXWHVLQHIIHFWLYHDVVLVWDQFHRIFRXQVHO6HH$XVWLQY
VHQWHQFH IURP DQ DOOHJHGO\ GHDGORFNHG MXU\  m2Q KDEHDV
       0DVRQY0LWFKHOO                                1R        1R                              0DVRQY0LWFKHOO        

%HOO)GWK&LUFHUWGHQLHG86              DQG,IHOWWKDWSHRSOHZHUHPDNLQJnLIWKH\ZHUHMXGJLQJn
 DQG  86   FI 6FRWW Y 0LWFKHOO           PDNLQJMXGJPHQWDOFRPPHQWVRIWKDWVRUWKRZFRXOGWKH\
)GWK&LUm:LWKRXWHIIHFWLYHUHVHDUFKLQWRWKH               IDLUO\MXGJHWKHFDVH"ls$DW%HFNKROWKRZHYHUGLG
DYDLODEOH PLWLJDWLQJ WHVWLPRQ\ RI FRXUVH LW ZRXOG EH                QRWSDUWLFLSDWHLQWKHMXU\jVGHOLEHUDWLRQV%HFDXVH0DVRQ
LPSRVVLEOHIRUWKHODZ\HUVWRKDYHPDGHDQLQIRUPHGGHFLVLRQ                 GRHV QRW RIIHUDQ\HYLGHQFHRWKHUWKDQWKDWZKLFKWKHWULDO
HLWKHUZD\lFHUWGHQLHG86:HKDYH                  FRXUW KDG DW WKH WLPH LW PDGH LWV IDFWXDO ILQGLQJ ZH GHQ\
DOVR HPSKDVL]HG WKH LPSRUWDQFH RI DQ LQGHSHQGHQW                       KDEHDVUHOLHIZLWKUHVSHFWWRWKLVFODLP
LQYHVWLJDWLRQm7KHVROHVRXUFHRIPLWLJDWLQJIDFWRUVFDQQRW
SURSHUO\ EH WKDW LQIRUPDWLRQ ZKLFK >D@ GHIHQGDQW PD\                    3UHVXPSWLRQRI*XLOW
YROXQWHHU FRXQVHO PXVW PDNH VRPH HIIRUW DW LQGHSHQGHQW
LQYHVWLJDWLRQLQRUGHUWRPDNHDUHDVRQHGLQIRUPHGGHFLVLRQ                   0DVRQDOOHJHVWKDWMXURU5XVVHOO/'HQQLVH[SUHVVHGEHOLHI
DVWRWKHLUXWLOLW\l&DUWHUY%HOO)GWK&LU           LQ0DVRQjVJXLOWEHIRUHIRUPDOGHOLEHUDWLRQVEHJDQ:KHQ
                                                                       TXHVWLRQHGDERXWVXFKDVWDWHPHQWWKHMXURUDFNQRZOHGJHG
                                                                             VD\LQJ m0D\EH KHjV SOHDGLQJ JXLOW\l s$ DW  EXW
   7KHUHFRUGEHIRUHXVLVLQDGHTXDWHIRUDPHDQLQJIXOUHYLHZ                WHVWLILHGWKDWKHmUHDOO\KDGQjWIRUPHGDQRSLQLRQ,WZDV
RI0DVRQjVFODLPRILQHIIHFWLYHDVVLVWDQFHRIFRXQVHO:H                   MXVW ZLVKIXO WKLQNLQJ EHFDXVH LW ZDV ODWH LQ WKH GD\ DQG
UHFRJQL]HWKDWWKH6WULFNODQG&RXUWGLUHFWHGVWDWHFRXUWVmWR                HYHU\ERG\ZDVWLUHGls$DW7KHWULDOFRXUWIRXQGmQR
DQDO\]HHIIHFWLYHQHVVEDVHGRQWKHWKHQSUHYDLOLQJQRUPVDQG                 VXEVWDQWLDOHYLGHQFHWKDWDQ\MXURUPDGHDQ\FRPPHQWGXULQJ
FRXQVHOjV SHUVSHFWLYH DW WKH WLPHl :LOOLDPV Y &R\OH            WKHWULDOZKLFKGHPRQVWUDWHGWKDWKHRUVKHKDGIDLOHGWRNHHS
)G   WK &LU  ZKLFK HQWDLOV D mKLJKO\              DQRSHQPLQGVRDVWREHDEOHWRIDLUO\GHFLGHWKHHYLGHQFHLQ
GHIHUHQWLDOlVWDQGDUG6WULFNODQG86DW+RZHYHU               WKLV FDVHl  s$ DW   $EVHQW FOHDU DQG FRQYLQFLQJ
LQRUGHUIRUXVWRHYDOXDWHZKHWKHUGHIHQVHFRXQVHOUHQGHUHG                 HYLGHQFHWRWKHFRQWUDU\ZHPXVWGHIHUWRWKHVWDWHFRXUWjV
FRQVWLWXWLRQDOO\LQHIIHFWLYHDVVLVWDQFHDWVHQWHQFLQJZHPXVW               IDFWXDOILQGLQJDQGWKHUHIRUHGHQ\KDEHDVUHOLHIZLWKUHVSHFW
NQRZPRUHDERXWWKHH[WHQWRIFRXQVHOjVLQYHVWLJDWLRQDQG                    WRWKLVFODLP
SUHSDUDWLRQ RI PLWLJDWLQJ HYLGHQFH  7KHUH LV D VLJQLILFDQW
OLNHOLKRRGWKDWGHIHQVHFRXQVHODFWHGXQUHDVRQDEO\LQIDLOLQJ                  6OHHSLQJ'XULQJ7ULDO
WR FRQGXFW DQ LQGHSHQGHQW DQG WKRURXJK LQYHVWLJDWLRQ RI
0DVRQjVEDFNJURXQG%HFDXVHWKHUHFRUGDVLWQRZVWDQGV                        0DVRQ DOOHJHV WKDW MXURU :DQGD 6WUDXE m6WUDXEl IHOO
UHIOHFWVGLVSXWHVDERXWGHIHQVHFRXQVHOjVSHUIRUPDQFHZLWK                   DVOHHSGXULQJWKHWULDO7KHUHFRUGLVXQFOHDUDVWRZKHWKHUWKH
UHVSHFWWRWKHVHQWHQFLQJSKDVHRI0DVRQjVWULDOZHUHPDQG                  MXURU VOHSW GXULQJ SURFHHGLQJV LQ WKH FRXUWURRP RU GXULQJ
WKHFDVHWRWKHGLVWULFWFRXUWIRUDQHYLGHQWLDU\KHDULQJRQWKLV            EUHDNVLQWKHMXU\URRP+RZHYHU6WUDXEDYHUUHGWKDWVKH
LVVXH                                                                      mZDVDZDNHDQGDWWHQWLYHGXULQJDOOSURFHHGLQJVRIWKHWULDOl
                                                                             s$DW6WUDXE$IIDW7KHWULDOFRXUWPDGHWKH
                                                                             VDPHILQGLQJZLWKUHVSHFWWRDOOWZHOYHMXURUV$EVHQWFOHDU
                                                                             DQGFRQYLQFLQJHYLGHQFHWRWKHFRQWUDU\ZHPXVWGHIHUWRWKH
     
      sXGJH %RJJV VXJJHVWV WKDW 0DVRQ GRHV QRW PHHW WKH UHTXLUHPHQWV         VWDWHFRXUWjVIDFWXDOILQGLQJDQGWKHUHIRUHGHQ\KDEHDVUHOLHI
IRU DQ HYLGHQWLDU\ KHDULQJ DV ODLG RXW LQ  86&  H $OWKRXJK   ZLWKUHVSHFWWRWKLVFODLP
VXEVHFWLRQ HjV FRQGLWLRQV DUH LQGHHG RQHURXV mRQO\ D SULVRQHU ZKR
KDV QHJOHFWHG KLV ULJKWV LQ VWDWH FRXUW QHHG VDWLVI\ WKHVH FRQGLWLRQVl
0LFKDHO :LOOLDPV Y 7D\ORU  86    ,Q GHWHUPLQLQJ
ZKHWKHU  H DSSOLHV WKH TXHVWLRQ LV QRW ZKHWKHU WKH SHWLWLRQHU
KDV VXFFHHGHG LQ GHYHORSLQJ WKH UHFRUG EXW ZKHWKHU WKH SHWLWLRQHU KDV
     0DVRQY0LWFKHOO                                   1R        1R                                    0DVRQY0LWFKHOO           

LPSDLU 0DVRQjV DELOLW\ WR UHFHLYH D IDLU WULDO  :H PXVW               :H EHJLQ RXU DQDO\VLV RI 0DVRQjV LQHIIHFWLYH DVVLVWDQFH
SUHVXPH WKDW WKH WULDO FRXUWjV IDFWXDO GHWHUPLQDWLRQV DUH              FODLPE\UHYLHZLQJWKHLQYHVWLJDWLRQWKDWDSSDUHQWO\GLGWDNH
FRUUHFWXQOHVV0DVRQUHEXWVWKDWSUHVXPSWLRQZLWKFOHDUDQG                   SODFH,QWKHIDOORIVRRQDIWHU0DVRQZDVFKDUJHGZLWK
FRQYLQFLQJHYLGHQFH                                                          WKH UDSH DQG DJJUDYDWHG PXUGHU RI 5RELQ WKH WULDO FRXUW
                                                                              LVVXHGDQRUGHUDSSRLQWLQJDQLQYHVWLJDWRUIRUWKHGHIHQVHDQG
  5DFLDO6OXUV                                                            DXWKRUL]LQJ LQGHSHQGHQW '1$ WHVWLQJ  s$ DW 
                                                                              $FFRUGLQJWRWKH2KLR6XSUHPH&RXUW
   0DVRQDUJXHVWKDWKHZDVGHQLHGDIDLUWULDOEHFDXVHRIWKH
UDFLDOSUHMXGLFHRIDQDOOZKLWHMXU\ZKLFKPDQLIHVWHGLWVHOI                  7KH GHIHQVH WHDP RI WZR ODZ\HUV DQG DQ LQYHVWLJDWRU
WKURXJK
       
          JHQHUDOL]DWLRQV DERXW UDFH DQG WKH XVH RI EODFN              ORRNHGIXOO\LQWR0DVRQjVEDFNJURXQG0RUHRYHUWKH
VODQJ   ,QGLYLGXDO MXURUV ZHUH GLVWXUEHG E\ WKH UDFLVW                 VWDWHKDGFROOHFWHGDQGUHOHDVHGWRWKHGHIHQVHLQsDQXDU\
FRPPHQWVEXWDSSDUHQWO\GLGQRWXQGHUVWDQGWKDWWKH\FRXOG                      YROXPLQRXVUHFRUGVFRQFHUQLQJ0DVRQLQFOXGLQJ
GR DQ\WKLQJ DERXW LW  $IWHU UHYLHZLQJ WKH DIILGDYLWV RI DOO          UHFRUGVDERXWKLVODVWQLQH\HDUVLQDQGRXWRISULVRQDV
WZHOYHMXURUVDQGKHDULQJWHVWLPRQ\IURPWKHFRXUWEDLOLII                   ZHOODVVFKRROUHFRUGVDQGMXYHQLOHLQFDUFHUDWLRQV
WKUHHMXURUVDQGDQDOWHUQDWHMXURUWKHWULDOFRXUWIRXQGWKDW
m>D@WQRWLPHGXULQJWKHWULDOGLGDQ\RIWKHMXURUVSDUWLFLSDWH              0DVRQ1(GDW7KHUHFRUGKRZHYHUVXJJHVWV
LQDQ\DFWVRIUDFLVPZKLFKFRXOGKDYHLPSDLUHG>0DVRQjV@                     WKDWWKHLQYHVWLJDWRUjVDVVLJQPHQWZDVOLPLWHGWRLQWHUYLHZLQJ
DELOLW\WRUHFHLYHDIDLUWULDOls$DW                              ZLWQHVVHVDQGWDNLQJPHDVXUHPHQWVDWWKHFULPHVFHQH7UDW
                                                                                %HFDXVH WKH FDVH DJDLQVW 0DVRQ ZDV EDVHG RQ
   7KH TXHVWLRQ RQ KDEHDV LV ZKHWKHU 0DVRQ FDQ UHEXW WKH             FLUFXPVWDQWLDO HYLGHQFH ZH LQIHU IURP WKH UHFRUG WKDW WKH
SUHVXPSWLRQWKDWWKHVWDWHFRXUWjVIDFWXDOILQGLQJVDUHFRUUHFW              ZLWQHVVLQWHUYLHZVZHUHSULPDULO\DERXWWKHIDFWVVXUURXQGLQJ
$OWHUQDWHMXURU0DU\%HFNKROWm%HFNKROWlWHVWLILHGWKDWWKH                 5RELQjV GLVDSSHDUDQFH DQG PXUGHU  'HIHQVH FRXQVHO
UDFLVWFRPPHQWVLQKHURSLQLRQFRXOGKDYHYLRODWHG0DVRQjV                  LQGLFDWHGDVPXFKZKHQWKHWULDOFRXUWDVNHGZK\DPLWLJDWLRQ
ULJKWWRDIDLUWULDOm,IHOWLWZDVXQIDLU,IHOWLWZDVZURQJ          H[SHUW ZDV QHFHVVDU\ JLYHQ WKH DSSRLQWPHQW RI DQ
                                                                              LQYHVWLJDWRU7UDW)XUWKHUPRUH0DVRQDYHUUHGWKDWKLV
                                                                              FRQYHUVDWLRQVZLWKGHIHQVHFRXQVHODQGWKHLQYHVWLJDWRUmZHUH
     
        $OWHUQDWH MXURU 0DU\ %HFNKROW WHVWLILHG WR MXURUVj FRPPHQWV GXULQJ
WKH WULDO WKDW mDOO EODFN SHRSOH GLG ZDV GULQN DQG SDUW\ DQG GR EHHU UXQVl
s$ DW 
                                                                              GLOLJHQWO\ DWWHPSWHG WR GR VR 6HH 0 :LOOLDPV  86 DW  m>$@
                                                                              IDLOXUH WR GHYHORS WKH IDFWXDO EDVLV RI D FODLP LV QRW HVWDEOLVKHG XQOHVV
     
        0DVRQ DSSDUHQWO\ ZHDUV D mGHZ UDJl RU EDQGDQD RQ D GDLO\ EDVLV       WKHUH LV ODFN RI GLOLJHQFH RU VRPH JUHDWHU IDXOW DWWULEXWDEOH WR WKH SULVRQHU
s$ DW  sXURU .DWK\ +DQH\ WHVWLILHG WKDW D MXURU PDGH mUDFLVW UHPDUNV    RU WKH SULVRQHUjV FRXQVHOl 0DVRQ KHUH KDV EHHQ VXIILFLHQWO\ GLOLJHQW
DQG >WDONHG@ LQ D MLYH PDQQHUl DERXW mGHZ UDJVl DV ZHOO DV ULGLFXOHG         DV WKH 6XSUHPH &RXUW H[SODLQHG m'LOLJHQFH ZLOO UHTXLUH LQ WKH XVXDO FDVH
0DVRQjV VSHHFK s$ DW  sXURU sDVRQ 0DKDIIH\ m0DKDIIH\l            WKDW WKH SULVRQHU DW D PLQLPXP VHHN DQ HYLGHQWLDU\ KHDULQJ LQ VWDWH FRXUW
WHVWLILHG WKDW WKH VDPH MXURU KDG mVDLG KH KDG WR JR JHW KLV GHZ UDJ FDXVH   LQ WKH PDQQHU SUHVFULEHG E\ VWDWH ODZl ,G DW  0DVRQ UHTXHVWHG DQG
KH GRHVQjW KDYH D KDW KH MXVW KDV D GHZ UDJl s$ DW  +RZHYHU      ZDV GHQLHG D KHDULQJ LQ VWDWH FRXUW DQG KDV DFWLYHO\ VRXJKW WR H[SDQG WKH
0DKDIIH\ GLG QRW FKDUDFWHUL]H WKH FRPPHQW DV mUDFLDOl s$ DW           UHFRUG :H VHH QR ODFN RI GLOLJHQFH VR ZH GR QRW DSSO\  H

                                                                                
       7KH SURVHFXWRU DQG GHIHQVH FRXQVHO REWDLQHG WKHVH DIILGDYLWV                 7KH WULDO FRXUW ODWHU DXWKRUL]HG LQGHSHQGHQW ODERUDWRU\ WHVWLQJ RQ D
ZLWKRXW FRQVXOWLQJ WKH WULDO FRXUW 7KH MRLQW DSSHQGL[ FRQWDLQV WKH           VDPSOH RI WKH IHWXV WKDW 5RELQ ZDV FDUU\LQJ DW WKH WLPH RI KHU PXUGHU DQG
DIILGDYLWV RI WHQ MXURUV ZKR GHQLHG SDUWLFLSDWLQJ LQ RU REVHUYLQJ DQ\         LQGHSHQGHQW EORRG WHVWLQJ RI WKH EORRG IRXQG RQ 0DVRQjV VKRH s$ DW
UDFLVP                                                                       
       0DVRQY0LWFKHOO                               1R        1R                            0DVRQY0LWFKHOO       

DOPRVW H[FOXVLYHO\ DERXW WULDO SKDVH LVVXHV n FRQFHUQLQJ             *sXURU%LDV0LVFRQGXFW
ZLWQHVVHVP\ZKHUHDERXWV&KULV'HQQLVDQGRWKHUWKHRULHV
RIZKRKDGNLOOHG5RELQ'HQQLVl0DXULFH$0DVRQ$IIDW                     7KH6L[WKDQG)RXUWHHQWK$PHQGPHQWVWRWKH&RQVWLWXWLRQ
   0DVRQjV IDPLO\ PHPEHUV ZHUH DOVR QRW LQWHUYLHZHG             JXDUDQWHHDFULPLQDOGHIHQGDQWWKHULJKWWRDQLPSDUWLDOMXU\
DERXW0DVRQjVEDFNJURXQGs$DW7HUUL$0DVRQ                     0RUJDQY,OOLQRLV868QGHUFOHDUO\
$IIDWs$DWsDPHV0LFKDHO0DVRQ$IIDW              HVWDEOLVKHG 6XSUHPH &RXUW SUHFHGHQW D GHIHQGDQW ZKR
s$DW0LRVKL0DVRQ$IIDW                              DOOHJHVLPSOLHGMXURUELDVLVHQWLWOHGWRDKHDULQJLQZKLFKKH
                                                                            KDVmWKHRSSRUWXQLW\WRSURYHDFWXDOELDVl6PLWKY3KLOOLSV
  $VIRUWKHGRFXPHQWVREWDLQHGGXULQJGLVFRYHU\WKHWULDO                 86'HQQLVY8QLWHG6WDWHV86
FRXUWIRXQGWKDWGHIHQVHFRXQVHOmKDGLQWKHLUSRVVHVVLRQDQG                   +RZHYHU SXUVXDQW WR 2KLR 5XOH RI
KDG UHYLHZHG SULRU WR WULDO RYHU  SDJHV RI                   (YLGHQFH % HYLGHQFH RI VWDWHPHQWV PDGH GXULQJ WKH
FRPSUHKHQVLYHUHFRUGVDQGGRFXPHQWVUHJDUGLQJ>0DVRQ@jV                     FRXUVH RI MXU\ GHOLEHUDWLRQV LV QRW DGPLVVLEOH D UXOH LQ
VRFLDO KLVWRU\ LQFOXGLQJ UHFRUGV IURP WKH 0DULRQ &LW\               NHHSLQJZLWKWKHJHQHUDOWKHRU\WKDWMXURUVDUHLQFRPSHWHQW
6FKRROV 0DULRQ $UHD &RXQVHOLQJ &HQWHU 0DULRQ &RXQW\                 ZLWQHVVHVRIWKHLURZQPLVFRQGXFW$MXURUPD\WHVWLI\DERXW
&KLOGUHQjV 6HUYLFHV 0DULRQ &RXQW\ $GXOW 3UREDWLRQ                     mH[WUDQHRXVSUHMXGLFLDOLQIRUPDWLRQlRUmRXWVLGHLQIOXHQFHl
'HSDUWPHQW $GXOW 3DUROH $XWKRULW\ DQG 2KLR 'HSW RI                ,G:HUHFHQWO\KHOGWKDWWKH2KLRFRXUWVjDSSOLFDWLRQRIWKLV
5HKDELOLWDWLRQDQG&RUUHFWLRQVl6WDWHY0DVRQ1R&5                VWDWXWH WR GLVSRVH RI ELDVHG MXU\ FODLPV YLRODWHG FOHDUO\
 VOLS RS DW  2KLR &W &RP 3O 1RY          HVWDEOLVKHG 6XSUHPH &RXUW SUHFHGHQW WKDW UHFRJQL]HV WKH
1RQHRIWKHVHGRFXPHQWVLVLQWKHUHFRUGEHIRUHXV                         IXQGDPHQWDOLPSRUWDQFHRIDGHIHQGDQWjVFRQVWLWXWLRQDOULJKW
                                                                            WRDIDLUWULDO'RDQY%ULJDQR)GWK&LU
  ,Q0D\EHIRUHWKLVFDVHZHQWWRWULDOWKHWULDOFRXUW              ,Q'RDQZHFRQFOXGHGWKDWDMXURUjVSUHVHQWDWLRQRI
DSSRLQWHG'U6SDUHDQGDIRUHQVLFSDWKRORJLVWWRDVVLVWWKH                DQRXWRIFRXUWH[SHULPHQWWRRWKHUMXURUVZDVFRQVWLWXWLRQDO
GHIHQVHs$DW'U6SDUHWKHQH[DPLQHG0DVRQDQG                  HUURUEXWWKDWWKLVHUURUZDVKDUPOHVV,GDW
SUHSDUHG D ILYHSDJH SV\FKLDWULF UHSRUW  s$ DW   2Q
sXQHGXULQJWKHWULDOGHIHQVHFRXQVHOGHSRVHG'U                   ,QWKLVFDVH0DVRQDOOHJHVWKDWMXURUELDVRUPLVFRQGXFW
6SDUHRQYLGHRWDSHXVLQJWZHOYHPLWLJDWLRQH[KLELWV7KHVH                UHVXOWHG ZKHQ YDULRXV MXURUV  PDGH UDFLDO VOXUV
H[KLELWVDFFRUGLQJWRWKHUHFRUGDVLWVWDQGVDSSHDUWRKDYH               SUHVXPHG 0DVRQjV JXLOW  VOHSW GXULQJ WULDO DQG
EHHQ EDVHG ODUJHO\ RQ WKH GLVFRYHU\       SURYLGHG E\ WKH            FRQGXFWHG DQG WKHQ SUHVHQWHG DQ RXWRIFRXUW
SURVHFXWLRQ WR GHIHQVH FRXQVHO  $V QRWHG DERYH GHIHQVH           LQYHVWLJDWLRQ7KHILUVWWKUHHLQYROYHLQWHUQDOLQIOXHQFHVDQG
                                                                            XQGHU 7DQQHU Y 8QLWHG 6WDWHV  86  
                                                                            WHVWLPRQ\RQWKRVHVXEMHFWVVKRXOGKDYHEHHQEDUUHGE\WKH
                                                                            HYLGHQWLDU\ UXOH SURKLELWLQJ MXURU LPSHDFKPHQW RI D MXU\
     
      /HDG FRXQVHO DFNQRZOHGJHG OHVV WKDQ D ZHHN EHIRUH WKH WULDO EHJDQ     YHUGLFW,GDWFI8QLWHG6WDWHVY/RJDQ)G
mWKDW KH KDG QRW SHUVRQDOO\ LQWHUYLHZHG DQ\ RI WKH ZLWQHVVHV IRU HLWKHU      Q WK &LU UHFRJQL]LQJ WKH GLIIHUHQFH LQ KRZ WKH
SKDVH RI WKH WULDOl s$ DW   +HDG $II DW    0RUHRYHU
                                                                            'RDQDQG/RJDQSDQHOVIUDPHGWKHLVVXHFHUWGHQLHG
FRXQVHO    DSSDUHQWO\   QHYHU    VWXGLHG  0DVRQjV     mSV\FKRORJLFDO  RU
HQYLURQPHQWDO KLVWRU\l DQG IDLOHG WR SUHSDUH WKH mVRFLDO KLVWRU\l WKDW
                                                                            86    +RZHYHU XQGHU 'RDQ WKH TXHVWLRQ LV
ZRXOG KDYH KXPDQL]HG 0DVRQ EHIRUH WKH MXU\ s$ DW  6FKXPDFKHU        ZKHWKHU 0DVRQ UHFHLYHG D IDLU WULDO  0DVRQ GLG KDYH DQ
$II DW  & (                                                       RSSRUWXQLW\WR SURYHDFWXDOELDVZKHQWKHWULDOFRXUWKHDUG
                                                                            RUDODUJXPHQWVRQKLVPRWLRQIRUDQHZWULDO7KHWULDOFRXUW
     
      $OWKRXJK WKH WULDO FRXUW RUGHUHG WKH UHWHQWLRQ RI WKHVH H[KLELWV DV   GHQLHGWKHPRWLRQILQGLQJWKDWWKHMXURUVjFRQGXFWGLGQRW
SDUW RI WKH UHFRUG WKH H[KLELWV DUH QRW LQ WKH UHFRUG EHIRUH XV
    0DVRQY0LWFKHOO                                1R       1R                                  0DVRQY0LWFKHOO         

LPSURSHUO\  0DVRQ  1(G DW   0DVRQ KDV WKXV         FRXQVHO DSSDUHQWO\ QHYHU LQWHUYLHZHG DQ\RQH LQFOXGLQJ
ZDLYHGWKHULJKWWRIHGHUDOKDEHDVUHYLHZRQDOOEXWRQHRIKLV          0DVRQKLPVHOIDERXWSRVVLEOHPLWLJDWLQJDVSHFWVRI0DVRQjV
SURVHFXWRULDOPLVFRQGXFWFODLPVXQOHVVKHFDQGHPRQVWUDWH                EDFNJURXQGHYHQWKRXJKYDULRXVIDPLO\PHPEHUVZHUHUHDG\
FDXVHDQGSUHMXGLFH RU PDNHmDVKRZLQJRIDIXQGDPHQWDO                DQGZLOOLQJWRGLVFXVVKLVOLIHKLVWRU\
PLVFDUULDJH RI MXVWLFHl  +LQNOH  )G DW  TXRWLQJ
6LPSVRQ)GDW                                                  $OWKRXJKWKH2KLR6XSUHPH&RXUWGLGQRWPDNHDQH[SOLFLW
                                                                         ILQGLQJ DERXW WKH H[WHQW RI GHIHQVH FRXQVHOjV LQGHSHQGHQW
   0DVRQ DUJXHV WKDW mWKH SURVHFXWRU HQJDJHG LQ RQJRLQJ           LQYHVWLJDWLRQ RI PLWLJDWLQJ HYLGHQFH LW GLG FRQFOXGH WKDW
PLVFRQGXFWl GXULQJ FURVVH[DPLQDWLRQ E\ mDWWDFNLQJ                   GHIHQVH FRXQVHO LQ FKRRVLQJ QRW WR SUHVHQW ZKDWHYHU
FRXQVHOjV GHIHQVH VWUDWHJLHV>@ RYHU ZKLFK 0DVRQ KDG QR           PLWLJDWLQJHYLGHQFHZDVNQRZQPDGHDVWUDWHJLFGHFLVLRQWR
FRQWUROl  3HWLWLRQHUjV %U DW   2QH RI WKH SURVHFXWRUjV   IRUHFORVH WKH VWDWH IURP LQWURGXFLQJ QHJDWLYH HYLGHQFH LQ
TXHVWLRQVFRQFHUQHG0DVRQjVH[WUDPDULWDOUHODWLRQVKLSZLWK               UHEXWWDO  0DVRQ  1(G DW   8QGHU 6WULFNODQG
5RELQm,VWKDWWKHVDPHUHDVRQWKDWZKHQWKLVFDVHVWDUWHGLQ         KRZHYHU FRXUWV PXVW ILUVW GHWHUPLQH ZKHWKHU GHIHQVH
RUGHUWRFRQWHVWWKH'1$UHVXOWV\RXKDG\RXUDWWRUQH\VGR              FRXQVHOjVLQYHVWLJDWLRQGHFLVLRQVZHUHUHDVRQDEOH2QO\WKHQ
LQGHSHQGHQWWHVWLQJWRVHHLIRXU'1$UHVXOWVZHUHULJKW"l               PD\ WKH\ UHMHFW D GHIHQGDQWjV FKDOOHQJH WR DQ\ GHFLVLRQ
s$DW'HIHQVHFRXQVHOUDLVHGDQREMHFWLRQZKLFKWKH            FKDUDFWHUL]HGDVVWUDWHJLFE\GHIHQVHFRXQVHO
WULDOFRXUWRYHUUXOHG:HDJUHHZLWKWKHGLVWULFWFRXUWWKDWWKLV
TXHVWLRQ ZDV QRW LPSURSHU  7KH FUHGLELOLW\ RI D FULPLQDO         +DGWULDOFRXQVHOFRQGXFWHGDQDGHTXDWHLQYHVWLJDWLRQWKH
GHIHQGDQWZKRWHVWLILHVPD\EHLPSHDFKHGOLNHWKDWRIDQ\                MXU\ZRXOGKDYHKHDUGVXEVWDQWLDOHYLGHQFHDERXWKRZGUXJ
RWKHUZLWQHVV*UHHU)GDW7KHTXHVWLRQDERXW              XVH DQG YLROHQFH SHUYDGHG 0DVRQjV EDFNJURXQG DQG OLIH
0DVRQjV UHDVRQ IRU FRQGXFWLQJ LQGHSHQGHQW '1$ WHVWLQJ              KLVWRU\)URPWKHUHFRUGEHIRUHXVZHKDYHOHDUQHGWKDW
IROORZHG KLV WHVWLPRQ\ DERXW D VWDWHPHQW WR WKH SROLFH LQ       0DVRQjVDOFRKROLFSDUHQWVZHUHKHDY\PDULMXDQDXVHUVDQG
ZKLFKKHGHQLHGNQRZLQJ5RELQRUHYHUEHLQJDORQHZLWKKHU              GUXJGHDOHUVIURPWKHWLPH0DVRQZDVIRXURUILYH\HDUVROG
7KH SURVHFXWRU ZDV WKXV LPSHDFKLQJ 0DVRQ E\ VKRZLQJ               ,QGHHG 0DVRQjVPRWKHUDGPLWWHGmWKDWIRUWKHPDMRULW\RI
LQFRQVLVWHQFLHVEHWZHHQKLVSUHWULDOVWDWHPHQWWRWKHSROLFH
DQGKLVWHVWLPRQ\DWWULDO
                                                                             
  0DVRQDUJXHVRQDSSHDOWKDWDQRWKHUTXHVWLRQSHUWDLQLQJWR                   7KLV IDFW GLVWLQJXLVKHV WKLV FDVH IURP 0DUWLQ Y 0LWFKHOO 1RV 
KLVIDLOXUHWRSURGXFHUHFRUGVWKDWVKRZHGKLVHPSOR\PHQWDW                :/  WK &LU )HE   ZKHUH ZH

WKH ORFDO IHVWLYDO ZKHUH KH PHW 5RELQ GHPRQVWUDWHV               UHFHQWO\ GHQLHG KDEHDV UHOLHI RQ D VLPLODU FODLP EHFDXVH WKH SHWLWLRQHU KDG
                                                                         QRW VKRZQ ZKDW SRWHQWLDO PLWLJDWLQJ ZLWQHVVHV mZRXOG KDYH WHVWLILHG WR
PLVFRQGXFWDVGRWKHSURVHFXWRUjVmULGLFXO>LQJ@HDFKRIWKH             RU KRZ VXFK WHVWLPRQ\ FRXOG KDYH DLGHG KLP DW VHQWHQFLQJl ,G DW 
GHIHQVHWKHRULHVlGXULQJKLVFORVLQJDUJXPHQWIRUWKHOLDELOLW\          FI %XHOO Y 0LWFKHOO  )G   WK &LU  7KH WHVWLPRQ\ LQ
SKDVH3HWLWLRQHUjV%UDWDQGKLVFORVLQJDUJXPHQWIRU             WKLV FDVH FRQFHUQHG 0DVRQjV WURXEOHG FKLOGKRRG DV GHVFULEHG EHORZ
WKHSHQDOW\SKDVH:HILUVWQRWHWKDWGHIHQVHFRXQVHOPDGHQR           ZKLFK ZRXOG KDYH DLGHG KLP DW VHQWHQFLQJ EHFDXVH LW GLG QRW JLYH WKH

FRQWHPSRUDQHRXV REMHFWLRQV  7KH 2KLR 6XSUHPH &RXUW                SURVHFXWRU WKH VDPH RSSRUWXQLW\ IRU UHEXWWDO WKDW HYLGHQFH DERXW JRRG
                                                                         FKDUDFWHU RU UHKDELOLWDWLRQ SRWHQWLDO FRXOG KDYH
UHYLHZHG IRU SODLQ HUURU 0DVRQ  1(G DW  WKXV
EDUULQJIHGHUDOKDEHDVUHYLHZDEVHQWDVKRZLQJRIFDXVHDQG                  
                                                                                $IILGDYLWV ZHUH VXEPLWWHG E\  sDPHV )UHGHULFN &UDWHV
SUHMXGLFH:HDUHQRWSHUVXDGHGWKDW0DVRQKDVVKRZQFDXVH              m&UDWHVl D PLWLJDWLRQ VSHFLDOLVW ZKR ZDV UHWDLQHG E\ SRVWFRQYLFWLRQ
DQGSUHMXGLFHWRH[FXVHWKHSURFHGXUDOGHIDXOWDQGWKHUHIRUH             FRXQVHO DQG ZKR LQWHUYLHZHG 0DVRQjV PRWKHU EHIRUH KHU GHDWK  'U
GHQ\KDEHDVUHOLHIZLWKUHVSHFWWRWKLVFODLP                           sHIIUH\ / 6PDOOGRQ m6PDOOGRQl D SV\FKRORJLVW  0DVRQjV IDWKHU DQG
                                                                          0DVRQjV VLVWHU
    0DVRQY0LWFKHOO                             1R      1R                              0DVRQY0LWFKHOO       

>0DVRQ@jVOLIHWKHIDPLO\KRPHZDVDµGUXJKRXVHjls$DW         UHTXLUHUHYHUVDO%R\OHY0LOOLRQ)GWK&LU
&UDWHV$IIDW6)RXU\HDUVODWHU0DVRQEHJDQWR       :HKDYHSUHYLRXVO\LGHQWLILHGIRXUIDFWRUVWKDWDUH
H[SHULPHQWZLWKGUXJVVWHDOLQJPDULMXDQDDQGSLOOVIURPKLV         UHOHYDQWLQDQDO\]LQJDFODLPRISURVHFXWRULDOPLVFRQGXFW
SDUHQWVjVXSSO\IRUKLVRZQXVHE\DJHHOHYHQKHKDGEHFRPH
D VLJQLILFDQW XVHU KLPVHOI  $ERXW WKLV WLPH 0DVRQ            ,Q HYHU\ FDVH ZH FRQVLGHU WKH GHJUHH WR ZKLFK WKH
DFFRPSDQLHGKLVIDWKHURQWULSVRXWRIVWDWHWREX\GUXJV%\         UHPDUNVFRPSODLQHGRIKDYHDWHQGHQF\WRPLVOHDGWKH
DJHIRXUWHHQ0DVRQEHJDQWRXVHGUXJVZLWKKLVSDUHQWVKH            MXU\ DQG WR SUHMXGLFH WKH DFFXVHG ZKHWKHU WKH\ DUH
DOVR UDQ DZD\ IURP KRPH  ,Q DGGLWLRQ WR GUXJV YLROHQFH     LVRODWHGRUH[WHQVLYHZKHWKHUWKH\ZHUHGHOLEHUDWHO\RU
RYHUUDQ WKH 0DVRQ KRXVHKROG  0DVRQjV SDUHQWV VWUXJJOHG         DFFLGHQWDOO\SODFHGEHIRUHWKHMXU\>@DQGWKHVWUHQJWKRI
WKURXJKUHSHDWHGERXWVRIGRPHVWLFYLROHQFHLQIURQWRIWKHLU          WKHFRPSHWHQWSURRIWRHVWDEOLVKWKHJXLOWRIWKHDFFXVHG
FKLOGUHQWKH\DOVREHDW0DVRQRQDUHJXODUEDVLVIRUVWHDOLQJ
WKHLUGUXJVDQGIRUWKHPLVFRQGXFWRIKLVVLEOLQJVIRUZKLFK        +LOOY%ULJDQR)GWK&LUTXRWDWLRQ
KHZDVEODPHG                                                       RPLWWHG:HUHYLHZDSURVHFXWRULDOPLVFRQGXFWFODLPIRU
                                                                     KDUPOHVVHUURU,G
   +DYLQJUHFHLYHGRIILFLDOGRFXPHQWVIURPWKHSURVHFXWLRQ
GXULQJGLVFRYHU\WULDOFRXQVHODSSHDUVWRKDYHEHHQDZDUHRI           :H ILUVW QRWH RXU SUHYLRXV KROGLQJ mWKDW 2KLRjV
VRPHRIWKLVHYLGHQFH0LWLJDWLRQ([KLELWIRUH[DPSOH          FRQWHPSRUDQHRXVREMHFWLRQUXOHFRQVWLWXWHVDQDGHTXDWHDQG
DSSDUHQWO\ FRQFHUQHG 0DVRQjV GUXJ XVH DV D WHHQDJHU VHH     LQGHSHQGHQW VWDWH JURXQG WKDW EDUV IHGHUDO KDEHDV UHYLHZ
0DVRQ1R&5VOLSRSDWEXWQRWKLVVLJQLILFDQW        DEVHQWDVKRZLQJRIFDXVHDQGSUHMXGLFHl+LQNOHY5DQGOH
XVHDWDPXFKHDUOLHUDJH:HHPSKDVL]HWKDWWKHGLVFRYHU\          )GWK&LUm0RUHRYHUZHYLHZD
GRFXPHQWV E\ WKHLU YHU\ QDWXUH RQO\ FRQFHUQHG WKH 0DVRQ      VWDWH DSSHOODWH FRXUWjV UHYLHZ IRU SODLQ HUURU DV WKH
IDPLO\jVOLPLWHGFRQWDFWVZLWKWKHDXWKRULWLHV)RUH[DPSOH        HQIRUFHPHQWRIDSURFHGXUDOGHIDXOWl,Gm,QGHWHUPLQLQJ
DUHFRUGIURP0DULRQ&RXQW\&KLOGUHQjV6HUYLFHVLQGLFDWHV            ZKHWKHUVWDWHFRXUWVKDYHUHOLHGRQDSURFHGXUDOUXOHWREDU
WKDW 0DVRQjV IDWKHU ZDV FKDUJHG ZLWK DVVDXOW LQ  IRU    UHYLHZRIDFODLPZHORRNWRWKHODVWUHDVRQHGRSLQLRQRIWKH
EHDWLQJ0DVRQs$DW&UDWHV$IIDW:7KLV        VWDWH FRXUWV DQG SUHVXPH WKDW ODWHU FRXUWV HQIRUFHG WKH EDU
FKDUJHKRZHYHUVWHPPHGIURPDPLVVLQJSHUVRQUHSRUWWKDW           LQVWHDGRIUHMHFWLQJWKH GHIDXOWHGFODLPRQLWVPHULWVl,G
0DVRQjVIDWKHUKLPVHOIILOHGZLWKWKHSROLFH0DVRQKDGUXQ          FLWLQJ<OVWY1XQQHPDNHU86
DZD\ ZKLOH EHLQJ GLVFLSOLQHG  s$ DW  sDPHV
0LFKDHO0DVRQ$IIDW7KHDXWKRULWLHVGRQRWDSSHDU             0DVRQ SUHVHQWHG QXPHURXV FODLPV RI SURVHFXWRULDO
WR KDYH EHHQ DZDUH RI WKH UHJXODU ZKLSSLQJV WKDW 0DVRQ      PLVFRQGXFW WR WKH GLVWULFW FRXUW ZKLFK IRXQG WKHP WR EH
VXIIHUHG  )XUWKHUPRUH 0DVRQjV PRWKHU QHYHU UHSRUWHG          SURFHGXUDOO\ EDUUHG  0DVRQ  ) 6XSS G DW 
HSLVRGHVRIGRPHVWLFDEXVHWRWKHSROLFHEHFDXVHLWZDVmD          'HIHQVHFRXQVHOIDLOHGWRPDNHFRQWHPSRUDQHRXVREMHFWLRQV
QRQRLQRXUIDPLO\WRFDOOWKHFRSV>:@HGLGQjWZDQW    WRPRVWRIWKHDOOHJHGLQVWDQFHVRISURVHFXWRULDOPLVFRQGXFW
WKHPDURXQGls$DW&UDWHV$IIDW+0DVRQjV         7KHUHIRUH LQ WKH ODVW UHDVRQHG RSLQLRQ E\ D VWDWH FRXUW
PRWKHUDOVRGLGQRWJRWRWKHKRVSLWDOZKHUHVRFLDOVHUYLFHV        UHYLHZLQJWKHVHFODLPVWKH2KLR6XSUHPH&RXUWH[SUHVVO\
PD\ KDYH LQWHUYHQHG DQG GRFXPHQWHG WKH 0DVRQ IDPLO\jV         HQIRUFHG 2KLRjV FRQWHPSRUDQHRXV REMHFWLRQ UXOH DQG
SOLJKW                                                              UHYLHZHGIRUSODLQHUURU0DVRQ1(GDW

  7KHUHIRUHWKHGRFXPHQWVSURYLGHGE\WKHSURVHFXWLRQWR              'HIHQVH FRXQVHO GLG REMHFW WR D TXHVWLRQ DERXW '1$
GHIHQVHFRXQVHOFRXOGQRWKDYHFRQWDLQHGDQ\WKLQJFORVHWR           WHVWLQJ  $GGUHVVLQJ WKLV FODLP RQ WKH PHULWV WKH 2KLR
                                                                     6XSUHPH &RXUW KHOG WKDW WKH SURVHFXWRU KDG QRW DFWHG
    0DVRQY0LWFKHOO                                1R        1R                                  0DVRQY0LWFKHOO         

WULDOFRXUWKDGDOORZHG0DVRQmWRSUHVHQWVRPHHYLGHQFHWKDW              WKHDPRXQWRIPLWLJDWLQJHYLGHQFHWKDWFRXOGKDYHEHHQDQG
WHQGHG WR VKRZ WKH FULPLQDO SURSHQVLW\ RI &KULV 'HQQLVl          ODWHU ZDV REWDLQHG     LQ DQ LQGHSHQGHQW DQG WKRURXJK
LQFOXGLQJWHVWLPRQ\DERXWWZRLQFLGHQWVZKHQ&KULVVWUXFN                 LQYHVWLJDWLRQ,QGHHGZHILQGLWSDUWLFXODUO\WHOOLQJWKDWQRW
5RELQLQWKHIDFH,G                                                   HYHQWKHWULDOFRXUWUHIHUUHGWRDQ\NQRZOHGJHRQWKHSDUWRI
                                                                          WULDOFRXQVHODERXW0DVRQjVWURXEOHGFKLOGKRRGRUWKHH[WHQW
   :HUHFHQWO\FRQVLGHUHGWKH&RQIURQWDWLRQ&ODXVHLQ%RJJV               WRZKLFKGUXJVDQGYLROHQFHUDYDJHG0DVRQDQGKLVIDPLO\
Y&ROOLQV )GWK&LUFHUWGHQLHG              :HEHOLHYHWKDWLWZDVMXVWWKLVHYLGHQFHZKLFKGLGQRWHQWHU
86$OWKRXJKWKDWFDVHZDVGHFLGHGXQGHUSUH               WKHUHFRUGXQWLOWKHSRVWFRQYLFWLRQVWDJHWKDWZDV0DVRQjV
$('3$ VWDQGDUGV LW LV VWLOO LQVWUXFWLYH  7KH %RJJV FRXUW       EHVWKRSH$VZHREVHUYHGLQ0DSHVY&R\OH)G
QRWHGWKDWFRXUWVKDGIRXQG&RQIURQWDWLRQ&ODXVHYLRODWLRQV               WK&LUFHUWGHQLHG86WKHLQIRUPDWLRQ
ZKHQGHIHQVHFRXQVHOKDGDGYDQFHGmDQDUWLFXODWHG WKHRU\                 DERXW0DVRQjVEDFNJURXQGPD\DPRXQWWROLWWOHPRUHWKDQ
WKDWDZLWQHVVKDGDPRWLYHWRIDEULFDWHl,GDW7KH              mVOLPHYLGHQFHRIPLWLJDWLRQEXWLWLVVRPHWKLQJ$QGZKDW
UHFRUGLQWKLVFDVHWRWKHH[WHQWWKDW0DVRQjVDWWRUQH\VEDVHG           LV PRVW LPSRUWDQW LW ZDV >KLV@ RQO\ VKLHOG IURP D GHDWK
WKHGHIHQVHRQUHVLGXDOGRXEWRQO\EDUHO\VXJJHVWVWKDWWKH\             VHQWHQFHl,GDW<HWWULDOFRXQVHOGRHVQRWDSSHDUWR
SXUVXHG D ELDV WKHRU\ DW WULDO  7KH WULDO FRXUW FRQVLVWHQWO\   KDYH PDGH DQ\ LQGHSHQGHQW HIIRUW WR LQYHVWLJDWH WKH
IUDPHGWKHTXHVWLRQDVRQHRISURSHQVLW\DQGGHIHQVHFRXQVHO             SDUWLFXODUVRI 0DVRQjVKLVWRU\FKDUDFWHURUEDFNJURXQG
GLGQRWVXJJHVWRWKHUZLVH:HWKXVFRQFOXGHWKDW0DVRQKDV
IDLOHG WR VKRZ WKDW WKH 2KLR 6XSUHPH &RXUW XQUHDVRQDEO\
DSSOLHG FOHDUO\ HVWDEOLVKHG 6XSUHPH &RXUW SUHFHGHQW LQ                  
                                                                                 &RQWUDU\ WR WKH GLVVHQWjV DQDO\VLV WKH SUREOHP KHUH LV QRW WKDW
XSKROGLQJWKHWULDOFRXUWjVH[FOXVLRQRIFHUWDLQHYLGHQFHRI              GHIHQVH FRXQVHO KDG QR NQRZOHGJH RI 0DVRQjV EDFNJURXQG EXW WKDW DIWHU
&KULVjVYLROHQFH                                                         UHFHLYLQJ D OLPLWHG DPRXQW RI WKDW LQIRUPDWLRQ LQ PDWHULDOV SURYLGHG E\
                                                                          WKH SURVHFXWLRQ GHIHQVH FRXQVHO PD\ QRW KDYH DGHTXDWHO\ LQYHVWLJDWHG WKH
)3URVHFXWRULDO0LVFRQGXFW                                              PDWWHU IXUWKHU WKHPVHOYHV 2XU FRQFHUQ LV WKDW WKH OLPLWHG LQIRUPDWLRQ
                                                                          REWDLQHG E\ GHIHQVH FRXQVHO GLG QRW GLVFKDUJH FRXQVHOjV GXW\ WR
                                                                          LQYHVWLJDWH EXW WULJJHUHG WKH GXW\ WR LQYHVWLJDWH
   0DVRQ DUJXHV WKDW m>W@KURXJKRXW WKH WULDO DQG SHQDOW\
SKDVHV WKH SURVHFXWRU HQJDJHG LQ HJUHJLRXV PLVFRQGXFW                  
GHVLJQHGWRSUHMXGLFH0DVRQDQGWRLQIODPHWKHSDVVLRQVRI                        :H ILQG LQH[SOLFDEOH WKH DSSDUHQW IDLOXUH RI WULDO FRXQVHO WR
                                                                          LQYHVWLJDWH PLWLJDWLQJ HYLGHQFH LQ WKLV FDVH )RXU PRQWKV EHIRUH WULDO WKH
WKHMXU\WKXVGHSULYLQJ0DVRQRIGXHSURFHVVDQGDIDLUWULDOl          WULDO FRXUW KHDUG RUDO DUJXPHQW RQ GHIHQVH FRXQVHOjV UHTXHVW IRU YDULRXV
3HWLWLRQHUjV %U DW   7KH UHOHYDQW TXHVWLRQ LQ FDVHV RI     H[SHUWV LQFOXGLQJ mD PLWLJDWLRQ H[SHUW WHDP RI 3V\FKRORJLVW 6RFLDO
DOOHJHGSURVHFXWRULDOPLVFRQGXFWLVmZKHWKHUWKHSURVHFXWRUVj             :RUNHU DQG 0LWLJDWLRQ ([SHUWl 7U DW  'HIHQVH FRXQVHO FDOOHG 'DOH
FRPPHQWVµVRLQIHFWHGWKHWULDOZLWKXQIDLUQHVVDVWRPDNHWKH            $ %DLFK m%DLFKl WKHQ DQ DVVLVWDQW SXEOLF GHIHQGHU IRU WKH 6WDWH RI
UHVXOWLQJ FRQYLFWLRQ D GHQLDO RI GXH SURFHVVjl  'DUGHQ Y       2KLR WR WHVWLI\ DERXW D GHIHQGDQWjV QHHG IRU PLWLJDWLRQ H[SHUWV %DLFK

:DLQZULJKW86TXRWLQJ'RQQHOO\Y                 GHVFULEHG WKH PLWLJDWLRQ H[SHUWjV UHVSRQVLELOLWLHV DV IROORZV
                                                                                     2QH VLJQLILFDQW UROH RI WKH PLWLJDWLRQ H[SHUW LV WR LQWHUYLHZ
'H&KULVWRIRUR  86     m>7@KH                        0U 0DVRQ DERXW KLV EDFNJURXQG DQG WKHQ JR RXW WR LQWHUYLHZ
PLVFRQGXFW PXVW EH VR SURQRXQFHG DQG SHUVLVWHQW WKDW LW                 IDPLO\ PHPEHUV IULHQGV DFTXDLQWDQFHV          ,Q DGGLWLRQ LWjV
SHUPHDWHV WKH HQWLUH DWPRVSKHUH RI WKH WULDO RU VR JURVV DV           LPSRUWDQW IRU WKH PLWLJDWLRQ H[SHUW WR JDWKHU UHFRUGV WKDW PD\ EH
SUREDEO\WRSUHMXGLFHWKHGHIHQGDQWl6LPSVRQYsRQHV                    H[LVWLQJ UHODWHG WR 0U 0DVRQ , KDYH QR LGHD DERXW 0U

)GWK&LULQWHUQDOTXRWDWLRQPDUNVDQG                     0DVRQjV EDFNJURXQG EXW WKHUH PD\ EH VRPH JRYHUQPHQWDO
                                                                                UHFRUGV UHODWHG WR KLP WKDW ZRXOG EH KHOSIXO WR WKH GHIHQVH +LV
FLWDWLRQ RPLWWHG  $ FODLPDQW PXVW HVWDEOLVK WKDW WKH                  VFKRRO UHFRUGV DQG ZRUN UHFRUGV PD\ EH LPSRUWDQW IRU WKH
FKDOOHQJHGVWDWHPHQWZDVERWKLPSURSHUDQGVRIODJUDQWDVWR                    PLWLJDWLRQ SKDVH
                                                                                     6R LQ D VHQVH WKH PLWLJDWLRQ H[SHUW LV WKH RQH WKDW JRHV RXW
     0DVRQY0LWFKHOO                                       1R        1R                              0DVRQY0LWFKHOO        

7KH DOOHJHG IDLOXUH RI GHIHQVH FRXQVHO WR SUHSDUH 0DVRQjV                 0DVRQ0DVRQZDVDOORZHGWRSUHVHQWHYLGHQFHRIDQGWR
IDPLO\ PHPEHUV IRU WKHLU WHVWLPRQ\ DW VHQWHQFLQJ IXUWKHU                   FURVVH[DPLQH&KULVDERXW&KULVjVKHDY\GULQNLQJDQGYLROHQW
GHPRQVWUDWHV WKDW FRXQVHO FRQGXFWHG DQ LQDGHTXDWH                            WHQGHQFLHV LQFOXGLQJ WZR LQFLGHQWV RI ZLIHEHDWLQJ  6HH
LQYHVWLJDWLRQRIPLWLJDWLQJHYLGHQFH                                             0DVRQ)6XSSGDW7KHWULDOFRXUWDOVRSHUPLWWHG
                                                                                  GHIHQVHFRXQVHOWRSUHVHQWHYLGHQFHRIDQGWRFURVVH[DPLQH
   7ULDO FRXQVHOjV IDLOXUH WR FRQGXFW DQ LQGHSHQGHQW DQG                   &KULVDERXWDQDOOHJHGWKUHDWWRNLOO5RELQRQWKHGD\WKDWVKH
WKRURXJK LQYHVWLJDWLRQ PD\ KDYH KDPSHUHG WKHLU DELOLW\ WR                  GLVDSSHDUHG7KHMXU\DOVROHDUQHGRQERWKGLUHFWDQGFURVV
PDNH VWUDWHJLF GHFLVLRQV DW VHQWHQFLQJ LW PD\ DOVR KDYH                  H[DPLQDWLRQ RI &KULV WKDW 5RELQ KDG PDGH KLP WKH
DIIHFWHGWKHLUDELOLW\WRJLYHFRPSHWHQWDGYLFHWR0DVRQDERXW                    EHQHILFLDU\RIKHUOLIHLQVXUDQFHSROLF\+RZHYHUWKHWULDO
WKH PHDQLQJ RI PLWLJDWLRQ HYLGHQFH DQG WKH DYDLODELOLW\ RI                FRXUWUXOHGWKDWHYLGHQFHDERXW&KULVjVKLVWRU\RIDVVDXOWVZDV
SRVVLEOHPLWLJDWLRQVWUDWHJLHV,QGHHGDFFRUGLQJWR0DVRQ                      LQDGPLVVLEOHEHFDXVHLWZDVSURIIHUHGE\0DVRQRQO\IRUWKH
WULDOFRXQVHOGLGQRWRIIHUDQ\VXFKDGYLFH                                      SXUSRVHRIVKRZLQJWKDW&KULVDFWHGLQFRQIRUPLW\ZLWKWKH
                                                                                  SULRUDFWVDQGZDVWKHUHIRUHOLNHO\WRKDYHPXUGHUHG5RELQ
  1HLWKHU RI P\ ODZ\HUV HYHU H[SODLQHG WR PH ZKDW WKH
  PLWLJDWLRQWULDOLVRUZKDWLWZDVLQWHQGHGWRSURYH,KDG                      0DVRQjV ILUVW &RQIURQWDWLRQ &ODXVH DUJXPHQW DSSHDUV WR
  QRNQRZOHGJHWKDWPLWLJDWLRQZDVLQWHQGHGWRVDYHP\                            KDYH EHHQ WKDW WKH HYLGHQFH VKRXOG EH DGPLWWHG WR SURYH
  OLIHRUWKDWWKLVZDVWREHWKHRQO\RSSRUWXQLW\IRUPHWR                     LGHQWLW\'HIHQVHFRXQVHODOOHJHGWKDW&KULVKDGSUHYLRXVO\
  GHPRQVWUDWHWRWKHMXU\ ZK\,VKRXOGQRWEHJLYHQWKH                          EHDWHQDSHUVRQDQGmOHIW>WKDWSHUVRQ@IRUGHDGLQDILHOGl
  GHDWKSHQDOW\                                                                  s$DWMXVWDV5RELQZDVOHIWLQDQDEDQGRQHGUXUDODUHD
                                                                                  +RZHYHUKHDOVRDUJXHGLQWKHDOWHUQDWLYHWKDW&KULVjVYLROHQW
0DXULFH$0DVRQ$IIDW7KHHYLGHQFHLQPLWLJDWLRQ                         DFWVVKRXOGEHDGPLWWHGmQRWDVVSHFLILFLQVWDQFHVWRLPSHDFK
WKDWZDVVRUHDGLO\DYDLODEOHLQWKLVFDVHRIIHUHGDQDUJXDEO\                    FUHGLELOLW\ EXW WR VKRZ SRVVLELOLW\ RI LQWHQW PRWLYH >DQG@
UHDVRQDEOH SUREDELOLW\ RI mKXPDQL]>LQJ 0DVRQ@ EHIRUH WKH                    VLPLODUPRGXVRSHUDQGLls$DW)LQDOO\GHIHQVH
MXU\VXFKWKDWDWOHDVWRQHMXURUFRXOGKDYHIRXQGKHGLGQRW                     FRXQVHO ZDQWHG WR LPSHDFK &KULVjV FUHGLELOLW\ E\ VKRZLQJ
GHVHUYHWKHGHDWKSHQDOW\l&DUWHU)GDW%HFDXVH                    mRWKHU LQFRQVLVWHQFLHV DQG ZKDW ZH EHOLHYH WR EH XQWUXWKV
ZHFDQQRWGHWHUPLQHIURPWKHUHFRUGEHIRUHXVZKHWKHUWKH                         DQGRUOLHVls$DWVHHDOVRs$DWFRQWHQGLQJ
2KLR6XSUHPH&RXUWDSSOLHG6WULFNODQGXQUHDVRQDEO\E\QRW                         GXULQJRSHQLQJDUJXPHQWWKDWm&KULV'HQQLVKDVOLHGDERXW
                                                                                  FHUWDLQDVSHFWVRIWKLVFDVHIURPWKHYHU\EHJLQQLQJl%XWVHH
                                                                                  s$DWDUJXLQJLQ0DVRQjVEULHIWRWKH2KLR6XSUHPH
     DQG   FRQGXFWV   D   FRPSOHWH   IDPLO\   DQG   SHUVRQDO   EDFNJURXQG         &RXUWWKDWm>W@KHMXU\ZDVQRWEHLQJDVNHGWRFRQVLGHUWKLV
     LQYHVWLJDWLRQ RQ WKH DFFXVHG
                                                                                  HYLGHQFHDVLPSHDFKLQJl
7U DW     7ULDO FRXQVHO XQGHUVWRRG WKDW UHO\LQJ RQ WKH GRFXPHQWV
SURGXFHG E\ WKH SURVHFXWLRQ ZDV LQDGHTXDWH EHFDXVH LQWHUYLHZV VWLOO KDG
WR EH WDNHQ RI 0DVRQ DQG WKH mVLJQLILFDQW RWKHUV LQ KLV OLIHl DQG WKH
                                                                                     1HLWKHU WKH 2KLR 6XSUHPH &RXUW QRU WKH GLVWULFW FRXUW
SURVHFXWLRQ    FRXOG KDYH PLVVHG VRPH UHFRUGV          7U DW       7KH   H[DPLQHG 0DVRQjV &RQIURQWDWLRQ &ODXVH FODLP DV VXFK
SURVHFXWRU DUJXHG WKDW GHIHQVH FRXQVHO KDG EHHQ SURYLGHG ZLWK DOO                 KROGLQJLQVWHDGWKDWWKHHYLGHQFHZDVQRWDGPLVVLEOHXQGHU
DYDLODEOH UHFRUGV DQG WKDW 0DVRQ ZDV IXOO\ DEOH WR DVVLVW LQ KLV GHIHQVH         2KLR 5XOH RI (YLGHQFH $ ZKLFK EDUV WKH XVH RI
7U DW     *LYHQ GHIHQVH FRXQVHOjV XQGHUVWDQGLQJ RI WKH QHHG
                                                                                  SURSHQVLW\WRSURYHFRQGXFW7KH2KLR6XSUHPH&RXUWILUVW
IRU IXUWKHU LQYHVWLJDWLRQ ZH VWURQJO\ EHOLHYH WKDW FRXQVHO PD\ KDYH
DIIRUGHG 0DVRQ LQHIIHFWLYH DVVLVWDQFH E\ XQUHDVRQDEO\ GHFLGLQJ QRW WR
                                                                                  UHMHFWHG0DVRQjVDUJXPHQWWKDW5XOHVKRXOGQRWDSSO\WR
LQYHVWLJDWH   :H OHDYH LW WR WKH GLVWULFW FRXUW LQ WKH ILUVW LQVWDQFH WR
                                                                                  &KULVEHFDXVHKHZDVDZLWQHVVUDWKHUWKDQDGHIHQGDQWRQ
GHWHUPLQH DIWHU KROGLQJ DQ HYLGHQWLDU\ KHDULQJ ZKHWKHU WKH SHUIRUPDQFH            WULDO0DVRQ1(GDW,WWKHQREVHUYHGWKDWWKH
RI GHIHQVH FRXQVHO LQ WKLV FDVH IDLOHG WR PHHW WKH FRQVWLWXWLRQDO PLQLPXP
    0DVRQY0LWFKHOO                              1R       1R                            0DVRQY0LWFKHOO       

FRQVWUDLQWKHULJKWWRSUHVHQWHYLGHQFH0DVRQFODLPVWKDWKLV        H[DPLQLQJ WKH H[WHQW RI WULDO FRXQVHOjV LQYHVWLJDWLRQ LQWR
ULJKWWRDIDLUWULDOVKRXOGFRQWURO                                  PLWLJDWLQJHYLGHQFHZHUHPDQGWKHFDVHWRWKHGLVWULFWFRXUW
                                                                       ZLWKWKHLQVWUXFWLRQWRKROGDQHYLGHQWLDU\KHDULQJRQ0DVRQjV
  ,Q &KDPEHUV Y 0LVVLVVLSSL  86   WKH         FODLPRILQHIIHFWLYHDVVLVWDQFHDWWKHVHQWHQFLQJSKDVHRIKLV
6XSUHPH &RXUW SURFODLPHG WKDW m>I@HZ ULJKWV DUH PRUH            WULDO
IXQGDPHQWDOWKDQWKDWRIDQDFFXVHGWRSUHVHQWZLWQHVVHVLQ
KLVRZQGHIHQVHl,GDW7KHULJKWWRSUHVHQWZLWQHVVHV            E)DLOXUHWR3UHVHQW0LWLJDWLQJ(YLGHQFH
KRZHYHULVQRWDEVROXWHm,QWKHH[HUFLVHRIWKLVULJKWWKH
DFFXVHG DV LV UHTXLUHG RI WKH 6WDWH PXVW FRPSO\ ZLWK          1H[W 0DVRQ FKDOOHQJHV GHIHQVH FRXQVHOjV GHFLVLRQ WR
HVWDEOLVKHG UXOHV RI SURFHGXUH DQG HYLGHQFH GHVLJQHG WR         SUHVHQWDOLPLWHGPLWLJDWLRQFDVHZKHQWKHUHFRUGDVLWVWDQGV
DVVXUH ERWK IDLUQHVV DQG UHOLDELOLW\ LQ WKH DVFHUWDLQPHQW RI   EHIRUH XV LQGLFDWHV WKDW 0DVRQ JUHZ XS LQ D G\VIXQFWLRQDO
JXLOWDQGLQQRFHQFHl,G0DVRQGRHVQRWDUJXHWKDWWKH2KLR         IDPLO\DQGZDVUHSHDWHGO\H[SRVHGWRYLROHQFHDQGGUXJXVH
UXOHEDUULQJHYLGHQFHRISULRUEDGDFWVLVXQIDLURUXQUHOLDEOH       IURP FKLOGKRRG OHDGLQJ WR HPRWLRQDO DQG SV\FKRORJLFDO
,QVWHDG 0DVRQ FRQWHQGV WKDW WKLV UXOHjV SURWHFWLRQ VKRXOG      SUREOHPV:HKDYHQRWHGDERYHWKDWPXFKRIWKLVHYLGHQFH
H[WHQG WR GHIHQGDQWV EXW QRW WR ZLWQHVVHV  :H DUH QRW       GRHVQRWDSSHDUWRKDYHEHHQNQRZQWRWULDOFRXQVHOGXHWR
SHUVXDGHG WKDW DQ\ VXFK SURSRVLWLRQ LV FOHDUO\ HVWDEOLVKHG      WKHLUDOOHJHGIDLOXUHWRFRQGXFWDQLQGHSHQGHQWDQGWKRURXJK
IHGHUDO ODZ DV GHWHUPLQHG E\ WKH 6XSUHPH &RXUW DQG            LQYHVWLJDWLRQ RI SRWHQWLDO PLWLJDWLQJ HYLGHQFH  0DVRQ
WKHUHIRUHGHFOLQHWRJUDQWKDEHDVUHOLHIRQWKLVJURXQG               FRQWHQGVKRZHYHUWKDWKHZRXOGQRWKDYHUHFHLYHGWKHGHDWK
                                                                       SHQDOW\IURPDQ\MXU\WKDWKHDUGZKDWPLWLJDWLQJHYLGHQFHZDV
   0DVRQ DOVR DUJXHV WKDW HYLGHQFH RI &KULVjV YLROHQW           DYDLODEOH
WHQGHQFLHV ZDV DGPLVVLEOH WR VKRZ KLV ELDV RU PRWLYH LQ
WHVWLI\LQJ IRU WKH SURVHFXWLRQ  7KH 6XSUHPH &RXUW KDV            %\WKHWLPHRIVHQWHQFLQJGHIHQVHFRXQVHOKDGGHSRVHG'U
UHFRJQL]HG D GHIHQGDQWjV FRQVWLWXWLRQDO ULJKW WR WHVW WKH       6SDUH DQG SUHSDUHG WKH WZHOYH PLWLJDWLRQ H[KLELWV  7KH\
FUHGLELOLW\RIZLWQHVVHVWKURXJKFURVVH[DPLQDWLRQ6HH'DYLV         RULJLQDOO\ SODQQHG WR RIIHU DV PLWLJDWLQJ HYLGHQFH WKH
Y$ODVND86VHHDOVR&KDPEHUV             WHVWLPRQ\RI'U6SDUHZKRFRQFOXGHGEDVHGRQ0DVRQjV
86DW)RUELGGLQJLQTXLU\LQWRDZLWQHVVjVELDVFDQ         SDVWFRQGXFWWKDW0DVRQZDVXQOLNHO\WREHDUHSHDWYLROHQW
YLRODWHWKH&RQIURQWDWLRQ&ODXVH'HODZDUHY9DQ$UVGDOO            RIIHQGHU'HIHQVHFRXQVHOXOWLPDWHO\GHFLGHGQRWWRSUHVHQW
86+RZHYHUDWULDOFRXUWUHWDLQV           WKLVHYLGHQFHZKLFKDFFRUGLQJWRWKHSURVHFXWRUZDVRPLWWHG
GLVFUHWLRQWROLPLWWKHVFRSHRIFURVVH[DPLQDWLRQEDVHGRQ           LQRUGHUWRIRUHFORVHUHEXWWDOHYLGHQFHDERXW0DVRQjVKLVWRU\
FRQFHUQV VXFK DV mKDUDVVPHQW SUHMXGLFH FRQIXVLRQ RI WKH       RI YLROHQW FRQGXFW DOOHJHGO\ LQFOXGLQJ UDSH EUDQGLVKLQJ D
LVVXHVWKHZLWQHVVj>V@VDIHW\RULQWHUURJDWLRQWKDWLVUHSHWLWLYH    JXQUHVLVWLQJDUUHVWDQGEXUJODU\/HDGFRXQVHOLQIRUPHGWKH
RU RQO\ PDUJLQDOO\ UHOHYDQWl  ,G DW   ,Q VKRUW WKH   WULDOFRXUWWKDWWKHGHFLVLRQQRWWRSUHVHQWPLWLJDWLRQHYLGHQFH
&RQIURQWDWLRQ &ODXVH JXDUDQWHHV RQO\ mDQ RSSRUWXQLW\ IRU         ZDVVWUDWHJLF
HIIHFWLYH FURVVH[DPLQDWLRQ QRW FURVVH[DPLQDWLRQ WKDW LV
HIIHFWLYHLQZKDWHYHUZD\DQGWRZKDWHYHUH[WHQWWKHGHIHQVH           :HKDYHWKHFRQVLGHUDWLRQRI0DXULFH0DVRQjVOLIH\RX
PLJKWZLVKl'HODZDUHY)HQVWHUHU86             NQRZKHUHWRGD\DQGVRPHVWUDWHJLHVWKDWZHFDOFXODWHG
                                                                         DQGGHVLJQHGWRSURFXU>H@DQGDFKLHYHDOLIHYHUGLFWHYHQ
  ,QWKLVFDVH0DVRQjVGHIHQVHDWWULDOZDVWKDW&KULVKDG              ZLWKWKHGHFLVLRQWKDWZDVUHQGHUHGE\WKHMXU\:HDUH
PXUGHUHG 5RELQ  ,W ZDV WKXV LQ 0DVRQjV LQWHUHVW WR             QRWLQWHUHVWHGLQEULQJLQJXSFHUWDLQWKLQJVRURSHQLQJWKH
GHPRQVWUDWH &KULVjV ELDV DQG PRWLYH IRU WHVWLI\LQJ DJDLQVW        GRRUIRUFHUWDLQWKLQJVWKDWWKH3URVHFXWLRQKDVHYLGHQFH
                                                                         DJUHDWGHVLUHWREULQJEHIRUHWKHMXU\
    0DVRQY0LWFKHOO                            1R      1R                               0DVRQY0LWFKHOO        

s$DW                                                       YROXQWDULO\DJUHHGWRDQVZHUWKHSROLFHjVTXHVWLRQV0DVRQ
                                                                    KDV QRW GHPRQVWUDWHG WKDW WKLV GHWHUPLQDWLRQ ZDV DQ
  7KH 2KLR 6XSUHPH &RXUW KHOG WKDW GHIHQVH FRXQVHOjV         XQUHDVRQDEOHDSSOLFDWLRQRIIHGHUDOFRQVWLWXWLRQDOODZWRWKH
SHUIRUPDQFHDWWKHVHQWHQFLQJVWDJHZDVQRWGHILFLHQWEHFDXVH       IDFWVRIKLVFDVH:HWKXVGHQ\0DVRQKDEHDVFRUSXVUHOLHI
mWKHUHFRUGV>VKRZHG@SULRULQYROYHPHQWVZLWKWKHFULPLQDO          ZLWKUHVSHFWWRWKLVFODLP
DQGMXYHQLOHMXVWLFHV\VWHPVDQGRWKHUXQIDYRUDEOHPDWWHUV
0DVRQ FRXOG QRW KDYH SUHVHQWHG HYLGHQFH DV WR KLV JRRG        m$Q\VWDWHPHQWJLYHQIUHHO\DQGYROXQWDULO\ZLWKRXWDQ\
FKDUDFWHU DQG UHKDELOLWDWLRQ SRWHQWLDO ZLWKRXW ULVNLQJ WKH    FRPSHOOLQJLQIOXHQFHVLVRIFRXUVHDGPLVVLEOHLQHYLGHQFHl
LQWURGXFWLRQRIQHJDWLYHHYLGHQFHE\WKHVWDWHLQUHEXWWDOlLW     0LUDQGD  86 DW   7KH 2KLR FRXUWV IRXQG WKDW
DOVRFRQFOXGHGWKDW0DVRQKDGQRWVKRZQSUHMXGLFH0DVRQ          0DVRQjVVWDWHPHQWVZHUHYROXQWDU\0DVRQ1(GDW
1(GDW7KHGLVWULFWFRXUWIRFXVHGPRUHGLUHFWO\        %HFDXVH0DVRQKDVQRWSUHVHQWHGFOHDUDQGFRQYLQFLQJ
RQWKHmSRVVLEOHPLWLJDWLQJHIIHFWVRI>0DVRQjV@XQIRUWXQDWH        HYLGHQFHWRWKHFRQWUDU\ZHGHIHUWRWKHVWDWHFRXUWVjIDFWXDO
FKLOGKRRGl0DVRQ)6XSSGDWEXWUHDFKHGWKH           ILQGLQJDQGKROGWKDWWKHLUDSSOLFDWLRQRI0LUDQGDZDVQRW
VDPHFRQFOXVLRQ                                                    REMHFWLYHO\XQUHDVRQDEOH
  >0DVRQ@ KDV QRW VXJJHVWHG WKH H[LVWHQFH RI DQ\             (5LJKWWR&RQIURQW:LWQHVVHVDQGWR3UHVHQWD'HIHQVH
  PLWLJDWLQJIDFWRUWKDWLVQRWRYHUZKHOPLQJO\QHJDWHGE\
  KLVKLVWRU\RIYLROHQWFULPLQDOFRQGXFWLQFOXGLQJDSULRU          0DVRQ DUJXHV WKDW WKH WULDO FRXUW YLRODWHG KLV ULJKW WR
  UDSH DQG ILUHDUPV RIIHQVHV PXOWLSOH SDUROH YLRODWLRQV     FRQIURQWWKHSURVHFXWLRQjVZLWQHVVHVDQGWRSUHVHQWDGHIHQVH
  DQG PXOWLSOH GUXJ RIIHQVHV VWUHWFKLQJ DV IDU EDFN DV      E\UHVWULFWLQJFURVVH[DPLQDWLRQRI&KULVZKRKDGDKLVWRU\
  HOHPHQWDU\VFKRRO>0DVRQ@jVFRXQVHOjVVWUDWHJ\RIQRW           RIYLROHQWDVVDXOWVRQ5RELQDQGRWKHUV0DVRQDVVHUWVWKDW
  SUHVHQWLQJ PLWLJDWLQJ WHVWLPRQ\ LQ RUGHU WR NHHS            WKH2KLR6XSUHPH&RXUWjVGHFLVLRQWRXSKROGWKHWULDOFRXUWjV
  >0DVRQ@jVH[WHQVLYHFULPLQDOKLVWRU\IURPWKHMXU\ZDV            H[FOXVLRQRIWKLVHYLGHQFHZDVDQXQUHDVRQDEOHDSSOLFDWLRQRI
  REMHFWLYHO\ UHDVRQDEOH  1RU KDV >0DVRQ@ VKRZQ              WKHIROORZLQJSULQFLSOHVIURP:DVKLQJWRQY7H[DV86
  SUHMXGLFH RQ WKLV UHFRUG 0DVRQ FDQQRW VKRZ D             
  UHDVRQDEOHOLNHOLKRRGWKDWDQ\MXURUZKRZDVDSSULVHGRI
  >0DVRQ@jV FRPSOHWH SV\FKRVRFLDO KLVWRU\ n LQFOXGLQJ               7KHULJKWWRRIIHUWKHWHVWLPRQ\RIZLWQHVVHVDQGWR
  KLVSULRUFULPLQDOUHFRUGnZRXOGQRWKDYHYRWHGIRUWKH            FRPSHOWKHLUDWWHQGDQFHLIQHFHVVDU\LVLQSODLQWHUPV
  GHDWKSHQDOW\                                                      WKH ULJKW WR SUHVHQW D GHIHQVH WKH ULJKW WR SUHVHQW WKH
                                                                      GHIHQGDQWjV YHUVLRQ RI WKH IDFWV DV ZHOO DV WKH
,GDWLQWHUQDOFLWDWLRQRPLWWHG                               SURVHFXWLRQjVWRWKHMXU\VRLWPD\GHFLGHZKHUHWKHWUXWK
                                                                      OLHV  sXVW DV DQ DFFXVHG KDV WKH ULJKW WR FRQIURQW WKH
   ,Q UHMHFWLQJ 0DVRQjV FODLP RI LQHIIHFWLYH DVVLVWDQFH DW     SURVHFXWLRQjVZLWQHVVHVIRUWKHSXUSRVHRIFKDOOHQJLQJ
VHQWHQFLQJWKHGLVWULFWFRXUWUHOLHGRQ6FRWWLQZKLFKZHKHOG      WKHLU WHVWLPRQ\ KH KDV WKH ULJKW WR SUHVHQW KLV RZQ
WKDW GHIHQVH FRXQVHOjV GHFLVLRQ QRW WR SUHVHQW PLWLJDWLQJ      ZLWQHVVHV WR HVWDEOLVK D GHIHQVH  7KLV ULJKW LV D
HYLGHQFHZDVUHDVRQDEOHLQOLJKWRIWKHSHWLWLRQHUjVH[WHQVLYH        IXQGDPHQWDOHOHPHQWRIGXHSURFHVVRIODZ
FULPLQDO KLVWRU\ ZKLFK LQFOXGHG mFRPPLVVLRQ RI UREEHU\
DVVDXOW NLGQDSLQJ DQG RWKHU YLROHQW DFWV XSRQ LQQRFHQW     ,GDW7KH6WDWHRI2KLRGRHVQRWGLVSXWHWKDWDGHIHQGDQW
FLWL]HQVl6FRWW)GDW7KHSRWHQWLDOPLWLJDWLQJ       PD\RIIHUHYLGHQFHWRVKRZWKDWDWKLUGSDUW\FRPPLWWHGWKH
HYLGHQFHLQWKDWFDVHDVIRXQGE\WKHVWDWHFRXUWDIWHUDSRVW    FULPHEXWLWFRQWHQGVWKDWUXOHVRISURFHGXUHDQGHYLGHQFH
FRQYLFWLRQHYLGHQWLDU\KHDULQJFRQVLVWHGRIWHVWLPRQ\DERXW
    0DVRQY0LWFKHOO                                1R       1R                             0DVRQY0LWFKHOO       

SRLQWVWRWKHIROORZLQJIDFWRUVKHZDVWKHVROHVXVSHFWLQ         WKHSHWLWLRQHUjVmSHUVRQDOOR\DOW\WRKLVVLEOLQJVJLUOIULHQG
WKHLQYHVWLJDWLRQKHZDVWUDQVSRUWHGE\FDUWRWKHSROLFH           DQG FKLOGUHQ DQG DQ H[FHHGLQJO\ YLROHQW HQYLURQPHQW
VWDWLRQ IRU TXHVWLRQLQJ mSUHFOXGLQJ KLV DELOLW\ WR OHDYH       WKURXJKRXW KLV XSEULQJLQJl ,G  ,QVWHDG RI SUHVVLQJ WKRVH
ZLWKRXW WKH RIILFHUV>j@ SHUPLVVLRQ DQG ZLOOLQJQHVV WR GULYH       SRLQWVGHIHQVHFRXQVHOFKRVHDVWUDWHJ\RIUHVLGXDOGRXEWDQG
KLPKRPHlKHZDVTXHVWLRQHGDWWKHSROLFHVWDWLRQDQG               RQO\SUHVHQWHGWKHSHWLWLRQHUjVXQVZRUQVWDWHPHQW,G
mLQWHUURJDWHG IRU IRXU KRXUV LQ DQ LQFUHDVLQJO\ KRVWLOH
VHWWLQJl  KH ZDV mOLHG WR E\ WKH RIILFHUV UHJDUGLQJ           :HUHFRJQL]HWKHIDFWXDOVLPLODULWLHVEHWZHHQ6FRWWDQGWKLV
H\HZLWQHVVHV>j@SODFLQJ0DVRQDWWKHFULPHVFHQHlKHZDV            FDVH+RZHYHUDIWHUWKH6XSUHPH&RXUWGHFLGHG:LOOLDPV
mUHSHDWHGO\ WROG KH ZDV QRW XQGHU DUUHVW HYHQ WKRXJK KLV        ZHTXHVWLRQHGZKHWKHUWKHKROGLQJLQ6FRWWVKRXOGEHOLPLWHG
SDUROHRIILFHUVWRRGUHDG\WRLPPHGLDWHO\DUUHVWKLPDVVRRQ             mWRWKHQDUURZIDFWVRIDIHGHUDOFRXUWFRQWHPSODWLQJDKDEHDV
DV WKH LQWHUURJDWLRQ FHDVHGl DQG  KH ZDV DUUHVWHG IRU D    SHWLWLRQ DIWHU D VWDWH FRXUW KDV FRQGXFWHG DQ HYLGHQWLDU\
SDUROH YLRODWLRQ DIWHU WKH )HEUXDU\  LQWHUURJDWLRQ              KHDULQJ DQG PDGH D ILQGLQJ RI IDFW WKDW KDG PLWLJDWLQJ
3HWLWLRQHUjV%UDW                                               HYLGHQFH EHHQ LQWURGXFHG WKH GHIHQGDQWjV UHFHQW FULPLQDO
                                                                         KLVWRU\ZRXOGKDYHEHHQSUHVHQWHGWRWKHMXU\LQUHEXWWDOl
   +RZHYHU ZH DJUHH ZLWK WKH 6WDWH RI 2KLR WKDW WKHVH          &DUWHU)GDWQ$VZHKDYHQRWHGDERYHQR
FLUFXPVWDQFHVGRQRWGHPRQVWUDWHWKHIXQFWLRQDOHTXLYDOHQWRI            VWDWH RU IHGHUDO FRXUW KDV KHOG DQ HYLGHQWLDU\ KHDULQJ RQ
DQ DUUHVW  0DVRQjV ILUVW DUJXPHQW LV XQDYDLOLQJ  6HH          0DVRQjVLQHIIHFWLYHDVVLVWDQFHFODLP:HWKHUHIRUHEHOLHYH
6WDQVEXU\86DWm>$@QRIILFHUjVVXEMHFWLYHDQG               WKDW6FRWWLVOHVVUHOHYDQWWKDQLWPLJKWRWKHUZLVHEH
XQGLVFORVHG YLHZ FRQFHUQLQJ ZKHWKHU WKH SHUVRQ EHLQJ
LQWHUURJDWHG LV D VXVSHFW LV LUUHOHYDQW WR WKH DVVHVVPHQW          %DVHG RQ WKH UHFRUG EHIRUH XV ZH DJUHH ZLWK WKH 2KLR
ZKHWKHUWKHSHUVRQLVLQFXVWRG\l:HGHHPWKHPRGHLQ                6XSUHPH &RXUW WKDW GHIHQVH FRXQVHO H[HUFLVHG UHDVRQDEOH
ZKLFK0DVRQZDVWUDQVSRUWHGIRUTXHVWLRQLQJWREHLUUHOHYDQW            SURIHVVLRQDOMXGJPHQWLQGHFLGLQJQRWWRSUHVHQWPLWLJDWLQJ
EHFDXVH0DVRQKLPVHOIDGPLWVWKDWKHmYROXQWDULO\FDPHWR                HYLGHQFHDERXW0DVRQjVmJRRGFKDUDFWHUDQGUHKDELOLWDWLRQ
WKHSROLFHVWDWLRQWZLFHl3HWLWLRQHUjV%UDW7KHIDFW           SRWHQWLDOl0DVRQ1(GDWEXWZHUHLWHUDWHWKDW
WKDW0DVRQZDVTXHVWLRQHGLQDmFRHUFLYHHQYLURQPHQWlVXFK               FRXQVHOPD\KDYHUHQGHUHGLQHIIHFWLYHDVVLVWDQFHLQIDLOLQJWR
DVDSROLFHVWDWLRQGRHVQRWQHFHVVDULO\FRQVWLWXWHFXVWRGLDO            LQYHVWLJDWH DQG WKXV EHLQJ XQDEOH WR SUHVHQW SRWHQWLDO
LQWHUURJDWLRQ0DWKLDVRQ86DW8QLWHG6WDWHVY             PLWLJDWLQJHYLGHQFHDERXW0DVRQjVEDFNJURXQG:HEHJLQE\
6DOYR)GWK&LUFHUWGHQLHG86              QRWLQJWKDWZHKDYHSUHYLRXVO\GHHPHGWKHIDLOXUHWRSUHVHQW
0LUDQGDUHTXLUHVDVLJQLILFDQWGHSULYDWLRQRI              PLWLJDWLQJ HYLGHQFH ZKHQ LW ZDV DYDLODEOH WR EH mDQ
IUHHGRP  7KH SRVVLELOLW\ WKDW 0DVRQ PD\ QRW KDYH EHHQ          DEGLFDWLRQ RI DGYRFDF\l UDWKHU WKDQ D VWUDWHJLF GHFLVLRQ
DZDUH RI WKH FRQVHTXHQFHV RI KLV SDUWLFLSDWLRQ LQ WKH            $XVWLQ)GDW7KLVKROGLQJKRZHYHUQHFHVVDULO\
LQWHUYLHZV GRHV QRW PHDQ WKDW KH ZDV LQ FXVWRG\  6HH          UHTXLUHV DQ LQTXLU\ LQWR WKH PLWLJDWLQJ HYLGHQFH WKDW ZDV
%HKHOHU86DWQ0DVRQZDVUHSHDWHGO\WROG                DYDLODEOHDWWKHWLPHRIVHQWHQFLQJ
WKDWKHZDVIUHHWROHDYHZKHQKHZLVKHG7KHVWDWHFRXUWV
FRQFOXGHG WKDW 0DVRQ ZDV QRW LQ FXVWRG\ DW WKH WLPH RI           $V GLVFXVVHG DERYH WULDO FRXQVHOjV SUHSDUDWLRQ IRU
TXHVWLRQLQJ EHFDXVH KH ZDV QRW XQGHU DUUHVW DQG KH               VHQWHQFLQJ DSSHDUV WR KDYH EHHQ OLPLWHG WR UHYLHZLQJ WKH
                                                                         GRFXPHQWV WKDW WKH SURVHFXWLRQ GLVFORVHG WR WKHP DQG
                                                                         GHSRVLQJ'U6SDUHZKRWULHGmWRGHWHUPLQHPLWLJDWLRQlDQG
     
      0DVRQ QRWHV WKDW 3RWWV GURYH KLP IURP KLV KRPH WR WKH 6KHULIIjV
                                                                         mWRDWWHPSWWRGHWHUPLQHWKHOLNHOLKRRGRI>0DVRQ@EHLQJD
2IILFH LQ DQ XQPDUNHG SROLFH FDU ZLWK GRRUV WKDW FRXOG QRW EH XQORFNHG   UHSHDWYLROHQWRIIHQGHUDQGRUKLVSRWHQWLDOIRUUHKDELOLWDWLRQl
E\ SDVVHQJHUV
    0DVRQY0LWFKHOO                                1R       1R                                   0DVRQY0LWFKHOO         

6PDOOGRQ$IIDW'U6SDUHFRQFOXGHGKLVUHSRUWWR            WKHSROLFHVXVSHFWl&DOLIRUQLDY%HKHOHU86
GHIHQVH FRXQVHO E\ SUHGLFWLQJ 0DVRQjV IXWXUH EHKDYLRU             SHUFXULDPTXRWLQJ0DWKLDVRQ86DW
m%DVHGRQWKHDYDLODEOHHYLGHQFH0U0DVRQLVQRWOLNHO\WR             m>7@KHRQO\UHOHYDQWLQTXLU\LVKRZDUHDVRQDEOHPDQ
EHDUHSHDWYLROHQWRIIHQGHUXQGHURUGLQDU\FLUFXPVWDQFHV         LQ WKH VXVSHFWjV SRVLWLRQ ZRXOG KDYH XQGHUVWRRG KLV
>+LV@ SDWWHUQ LV WKDW RI DYRLGDQFH DQG UXQQLQJ DZD\ DV          VLWXDWLRQl%HUNHPHUY0F&DUW\86
RSSRVHG WR DJJUHVVLYH YLROHQFHl  6PDOOGRQ $II DW  
7KHUHIRUH WKH PLWLJDWLQJ HYLGHQFH DYDLODEOH WR GHIHQVH               ,QWKLVFDVH3RWWVTXHVWLRQHG0DVRQWZLFHDERXW5RELQjV
FRXQVHODWVHQWHQFLQJFRQFHUQHG0DVRQjVLQWHUDFWLRQVZLWK                GLVDSSHDUDQFH7KHILUVWLQWHUURJDWLRQZKLFKWRRNSODFHLQ
WKHVWDWHDQG'U6SDUHjVDVVHVVPHQWRI0DVRQjVFKDUDFWHU               WKH HDUO\ DIWHUQRRQ RI )HEUXDU\   DW WKH 6KHULIIjV
                                                                         2IILFH ZDV UHFRUGHG RQ DXGLRWDSH DQG ODVWHG HLJKWHHQ
   ,QGLVPLVVLQJ0DVRQjVSHWLWLRQIRUSRVWFRQYLFWLRQUHOLHI            PLQXWHV$WWKHKHDULQJRQ0DVRQjVPRWLRQWRVXSSUHVVWKH
WKH WULDO FRXUW UHIHUUHG WR WKH WZHOYH PLWLJDWLRQ H[KLELWV LQ   VWDWHPHQWV PDGH DW WKLV LQWHUURJDWLRQ DQG WKH LQWHUURJDWLRQ
ILQGLQJWKDWm>W@KHHYLGHQFHUHJDUGLQJ>0DVRQjV@EDFNJURXQG              WKDWIROORZHG3RWWVGHVFULEHG0DVRQDVmUHDOFRRSHUDWLYHl
ZKLFK KH QRZ FRQWHQGV VKRXOG KDYH EHHQ LQWURGXFHG ZDV           DQGWHVWLILHG WKDW0DVRQWROGKLPmWRFRPHEDFNE\lLIKH
FRQVLGHUHGE\'HIHQVH&RXQVHOl0DVRQ1R&5                  QHHGHGDQ\WKLQJHOVHs$DW0DVRQDJUHHGWKDWKH
VOLSRSDW7KHWULDOFRXUWWKHQOLVWHGWKHIROORZLQJHYLGHQFH       PDGHDmYROXQWDU\FKRLFHlWRDQVZHU3RWWVjVTXHVWLRQVDERXW
WKDWWKHSURVHFXWLRQFRXOGKDYHLQWURGXFHGLQUHEXWWDO                  5RELQs$DW
  $ 7KDW >0DVRQ@ KDG PXOWLSOH MXYHQLOH RIIHQVHV DQG                  7KHVHFRQGLQWHUURJDWLRQWRRNSODFHRQ)HEUXDU\
     ZDVFRPPLWWHGWRWKH2KLR<RXWK&RPPLVVLRQDVD                     LQDQLQWHUURJDWLRQURRPORFDWHGLQWKHEDVHPHQWRI&LW\+DOO
     MXYHQLOH0LWLJDWLRQ([KLELWV                            7KLVLQWHUYLHZZDVDOVRUHFRUGHGEXWLWODVWHGIRUDOPRVWIRXU
  % 7KDWDVDQDGXOWKHKDGEHHQLQDQGRXWRISULVRQDQG               KRXUV0DVRQZDVQRWIRUPDOO\DUUHVWHGRUWROGWKDWKHFRXOG
     WKDWZKLOHRQSDUROHKHFRPPLWWHGPXOWLSOHSDUROH                  QRWOHDYH+HDVNHGZKHWKHUKHZDVXQGHUDUUHVWVRPHWLPH
     YLRODWLRQV0LWLJDWLRQ([KLELWV                      DIWHUSPDQGZDVWROGWKDWKHZDVQRW0DVRQODWHU
  & 7KDW>0DVRQ@KDGEHHQDGUXJXVHUVLQFHDJHDQG                  WHVWLILHGWKDWKLVPRELOLW\ZDVKDPSHUHGE\EHLQJTXHVWLRQHG
     ZDVDOVRDGUXJGHDOHU0LWLJDWLRQ([KLELW                     LQWKHEDVHPHQW+HDOVRWHVWLILHGWKDWKHDVNHGWKHSROLFHWR
  ' >7KDW 0DVRQ@ HQJDJHG LQ RWKHU YLROHQW FRQGXFW                WDNH KLP EDFN KRPH DQG WR WHUPLQDWH WKH LQWHUYLHZ
     LQFOXGLQJ WKUHDWHQLQJ KLV H[JLUOIULHQG ZLWK D JXQ            +RZHYHU KH DFNQRZOHGJHG RQ FURVVH[DPLQDWLRQ WKDW KH
     0LWLJDWLRQ ([KLELWV   'HSRVLWLRQ RI 'U                FRXOGKDYHJRWWHQRXWRIWKHLQWHUURJDWLRQURRP$IWHUWKLV
     6SDUH                                                            LQWHUYLHZ0DVRQjVSDUROHRIILFHUWRRN0DVRQLQWRFXVWRG\IRU
  ( 7KDWKHOSZDVRIIHUHGWR>0DVRQ@DWDQHDUO\DJH                   YLRODWLQJWKHFRQGLWLRQVRIKLVSDUROH3RWWVWKHQJDYH0DVRQ
     LQFOXGLQJ FRXQVHOLQJ LQ ZKLFK KH UHIXVHG WR                  KLV 0LUDQGD ZDUQLQJV  7KH LQWHUYLHZ HQGHG ZKHQ 0DVRQ
     SDUWLFLSDWH0LWLJDWLRQ([KLELW                                 UHIXVHGWRZDLYHKLV0LUDQGDULJKWVDQGUHTXHVWHGDODZ\HU
  ) 7KDWKHUDSHG'DQLHOOH0LOOHURQ2FWREHU
     'U6SDUHGHSRVLWLRQ                                               0DVRQDUJXHVWKDWKHZDVLQFXVWRG\GXULQJWKHLQWHUYLHZV
  * 7KDW GXULQJ WKH WHQ \HDUV SULRU WR UDSLQJ DQG               RI)HEUXDU\DQGDQGWKDWKLVVWDWHPHQWVWRWKHSROLFH
     PXUGHULQJ5RELQ'HQQLV>0DVRQ@KDGVSHQWDOOEXW                   VKRXOGFRQVHTXHQWO\QRWKDYHEHHQDGPLWWHGDWWULDO0DVRQ
      PRQWKV LQ SULVRQ ZKLFK LQFOXGHG KLV SDUROH
     EHLQJ YLRODWHG RQ IRXU VHSDUDWH RFFDVLRQV
                                                                                 
     GHSRVLWLRQRI'U6SDUH                                                   0DVRQ DOVR LQGLFDWHG WKDW KH KDG WR OHDYH LQ RUGHU WR SD\ D XWLOLW\
                                                                         ELOO
    0DVRQY0LWFKHOO                             1R       1R                               0DVRQY0LWFKHOO        

'0LUDQGD9LRODWLRQ                                                 ,GDW7KH2KLR6XSUHPH&RXUWGHWHUPLQHGWKDWGHIHQVH
                                                                      FRXQVHOUHDVRQDEO\FKRVHQRWWRSUHVHQWPLWLJDWLQJHYLGHQFH
   6LQFH 0LUDQGD Y $UL]RQD  86   FRXUWV      DERXW0DVRQjVmJRRGFKDUDFWHUDQGUHKDELOLWDWLRQSRWHQWLDOl
KDYH SURWHFWHG D GHIHQGDQWjV SULYLOHJH DJDLQVW VHOI            EHFDXVH WKH\ GLG QRW ZDQW WR UXQ WKH ULVN RI WKLV QHJDWLYH
LQFULPLQDWLRQE\VXSSUHVVLQJDQ\VWDWHPHQWmVWHPPLQJIURP             UHEXWWDO HYLGHQFH  0DVRQ  1(G DW   7KH VWDWH
FXVWRGLDOLQWHUURJDWLRQRIWKHGHIHQGDQWlLIWKHSROLFHIDLOHGWR     VXSUHPH FRXUW GLG QRW H[SOLFLWO\ EDVH LWV FRQFOXVLRQ DERXW
FRPSO\ZLWKFHUWDLQSURFHGXUDOVDIHJXDUGV,GDW$W           GHIHQVHFRXQVHOjVVWUDWHJLFPRWLYDWLRQVRQZKHWKHUVWDWHODZ
WULDOWKHSURVHFXWLRQLQWURGXFHGVWDWHPHQWVWKDW0DVRQKDG           ZRXOGKDYHDOORZHGWKHSURVHFXWRUWRXVHDOORIWKHQHJDWLYH
PDGHWRWKHSROLFHGXULQJLQWHUYLHZVRQ)HEUXDU\DQG           HYLGHQFHOLVWHGDERYH&IHJ6WDWHY+HQQHVV1(G
  0DVRQ FRQWHQGV WKDW WKH WULDO FRXUW VKRXOG KDYH       2KLROLPLWLQJDSURVHFXWRUjVULJKWWRmUHEXW
VXSSUHVVHGWKHVHVWDWHPHQWVEHFDXVHWKH\ZHUHPDGHZKLOHKH           IDOVH RU LQFRPSOHWH VWDWHPHQWV UHJDUGLQJ WKH GHIHQGDQWjV
ZDVLQFXVWRG\DQGEHIRUHKHUHFHLYHGDQ\0LUDQGDZDUQLQJV           FULPLQDOUHFRUGWRWKRVHLQVWDQFHVZKHUHWKHGHIHQVHRIIHUV
7KH 2KLR 6XSUHPH &RXUW GLVDJUHHG FRQFOXGLQJ IURP WKH          DVSHFLILFDVVHUWLRQE\DPLWLJDWLRQZLWQHVVRUE\GHIHQGDQW
FLUFXPVWDQFHVRIWKH)HEUXDU\LQWHUYLHZVWKDW0DVRQZDVQRW           WKDW PLVUHSUHVHQWV WKH GHIHQGDQWjV SULRU FULPLQDO KLVWRU\l
LQFXVWRG\GXULQJKLVLQWHUURJDWLRQDQGWKDWKHKDGPDGHWKH          %HFDXVHVWDWHODZJRYHUQVWKHVFRSHRIUHEXWWDOHYLGHQFHZH
VWDWHPHQWVYROXQWDULO\0DVRQ1(GDW%HFDXVH           DV D IHGHUDO KDEHDV FRXUW ZLOO DFFHSW WKH 2KLR 6XSUHPH
WKH VWDWH FRXUW FRUUHFWO\ LQYRNHG 0LUDQGD LQ WKLV FDVH ZH   &RXUWjVLQWHUSUHWDWLRQRIVWDWHODZ6HH*UHHUY0LWFKHOO
UHYLHZ LWV GHFLVLRQ XQGHU WKH mXQUHDVRQDEOH DSSOLFDWLRQl        )GWK&LUFHUWGHQLHGn86n
SURQJRIGVSHFLILFDOO\ZKHWKHULWVDSSOLFDWLRQRI        6 &W  0DU    +RZHYHU ZH REVHUYH RQFH
WKH OHJDO SULQFLSOHV ZDV mREMHFWLYHO\ XQUHDVRQDEOHl             DJDLQ WKDW WKLV UHDVRQLQJ GRHV QRW DSSO\ WR PLWLJDWLQJ
:LOOLDPV86DW:HPXVWSUHVXPHWKDWWKHVWDWH            HYLGHQFHDERXW0DVRQjVEDFNJURXQGDQGOLIHKLVWRU\ZKLFK
FRXUWjVIDFWXDOILQGLQJVDUHFRUUHFWXQOHVV0DVRQRIIHUVFOHDU        WULDOFRXQVHOGLGQRWLQYHVWLJDWHDQGWKXVKDGQRRSSRUWXQLW\
DQGFRQYLQFLQJHYLGHQFHWRUHEXWWKLVSUHVXPSWLRQ86&         WRSUHVHQWDWVHQWHQFLQJ7HVWLPRQ\WKDWVLPSO\SXW0DVRQjV
H                                                         FKLOGKRRGLQWRFRQWH[WZLWKRXWPLVUHSUHVHQWLQJLWZRXOGQRW
                                                                      KDYHEHHQVXEMHFWWRWKHSURVHFXWRUjVUHEXWWDOHYLGHQFHZKLFK
   7KH 0LUDQGD &RXUW GHILQHG FXVWRGLDO LQWHUURJDWLRQ DV         PRVWO\FRQFHUQHG0DVRQjVFKDUDFWHU
mTXHVWLRQLQJ LQLWLDWHG E\ ODZ HQIRUFHPHQW RIILFHUV DIWHU D
SHUVRQKDVEHHQWDNHQLQWRFXVWRG\RURWKHUZLVHGHSULYHGRI                F,QDGHTXDWH3V\FKLDWULF$VVLVWDQFH
KLVIUHHGRPRIDFWLRQLQDQ\VLJQLILFDQWZD\l0LUDQGD
86 DW   $ VXVSHFW LV mLQ FXVWRG\l IRU SXUSRVHV RI       0DVRQ DUJXHV WKDW KH UHFHLYHG LQHIIHFWLYH DVVLVWDQFH RI
UHFHLYLQJ 0LUDQGD SURWHFWLRQ LI WKHUH KDV EHHQ D mIRUPDO      FRXQVHO DW VHQWHQFLQJ EHFDXVH KLV DWWRUQH\V DFFHGHG WR
DUUHVW RU UHVWUDLQW RQ IUHHGRP RI PRYHPHQWl  2UHJRQ Y      LQDGHTXDWHSV\FKLDWULFDVVLVWDQFH6SHFLILFDOO\KHDUJXHVWKDW
0DWKLDVRQ  86     m>7@KH LQLWLDO          'U 6SDUH WKH SV\FKLDWULVW ZKR H[DPLQHG KLP IRU WKH
GHWHUPLQDWLRQ RI FXVWRG\ GHSHQGV RQ WKH REMHFWLYH               VHQWHQFLQJSKDVHIDLOHGWRGHYHORSPLWLJDWLQJHYLGHQFHDQG
FLUFXPVWDQFHV RI WKH LQWHUURJDWLRQ QRW RQ WKH VXEMHFWLYH      VKRXOGKDYHEHHQGLVTXDOLILHGGXHWRDFRQIOLFWRILQWHUHVWWKDW
YLHZV KDUERUHG E\ HLWKHU WKH LQWHUURJDWLQJ RIILFHUV RU WKH    VWHPPHGIURPKLVWUHDWPHQWRI0DVRQjVZLIH3HWLWLRQHUjV%U
SHUVRQEHLQJTXHVWLRQHGl6WDQVEXU\Y&DOLIRUQLD86          DW  Q  ,Q 6NDJJV ZH KHOG WKDW FRXQVHOjV XVH RI DQ
   SHU FXULDP  0LUDQGD ZDUQLQJV DUH QRW      LQFRPSHWHQW SV\FKLDWULF H[SHUW DW VHQWHQFLQJ FRQVWLWXWHG
UHTXLUHGmVLPSO\EHFDXVHWKHTXHVWLRQLQJWDNHVSODFHLQWKH           LQHIIHFWLYHDVVLVWDQFHRIFRXQVHO6NDJJV)GDW
VWDWLRQKRXVHRUEHFDXVHWKHTXHVWLRQHGSHUVRQLVRQHZKRP           +RZHYHU WKH GHIHQGDQW LQ 6NDJJV ZDV SURWHFWHG E\ $NH
    0DVRQY0LWFKHOO                                1R       1R                            0DVRQY0LWFKHOO      

EHFDXVHKHKDGFODLPHGLQVDQLW\DVDGHIHQVHDWWULDO,GDW              :H DJUHH ZLWK WKH GLVWULFW FRXUW WKDW 0DVRQ ZDV QRW
  0DVRQjV GHIHQVH UHVWHG RQ UHVLGXDO GRXEW DQG WKH          SUHMXGLFHGE\WKHQRQGLVFORVXUHRI+D\GHQjVQRWHV%RWKWKH
DUJXPHQWWKDW&KULVKDGPXUGHUHG5RELQWKHUHIRUH0DVRQ                 <RXQJVWHVWLILHGDW0DVRQjVWULDOWKDWRQWKHQLJKWRI5RELQjV
ZDV QRW HQWLWOHG WR SV\FKLDWULF DVVLVWDQFH GXULQJ WKH             GLVDSSHDUDQFH&KULVKDGVWDWHGKLVLQWHQWLRQWRNLOOKHULIKH
VHQWHQFLQJSKDVHXQGHU$NH0RUHRYHUWKHWZRFDVHVFDQEH              IRXQG KHU  0RUHRYHU GHIHQVH FRXQVHO FURVVH[DPLQHG
GLVWLQJXLVKHG EHFDXVH GHIHQVH FRXQVHO GLG QRW SUHVHQW DQ\         0LFKDHO<RXQJDERXW&KULVjVWKUHDWV&DURO\Q<RXQJDOVR
H[SHUW SV\FKLDWULF HYLGHQFH LQ WKLV FDVH  &I LG DW       WHVWLILHG RQ GLUHFW DQG FURVVH[DPLQDWLRQ DERXW 5RELQjV
KROGLQJ WKDW GHIHQVH FRXQVHO UHQGHUHG FRQVWLWXWLRQDOO\             +DUOH\'DYLGVRQVKLUWV$VIRUWKHVLJKWLQJRI5RELQRQWKH
LQHIIHFWLYHDVVLVWDQFHE\mIDLO>LQJ@WRLQYHVWLJDWHDQGSUHVHQW          QLJKWRIKHUGLVDSSHDUDQFH&DURO\Q<RXQJWHVWLILHGWKDWVKH
PHDQLQJIXOPLWLJDWLQJHYLGHQFHlDQGmXV>LQJ@DQLQFRPSHWHQW              EHOLHYHGWKDWVKHKDGVHHQ5RELQEHWZHHQDQGSP
DQG IUDXGXOHQW µSV\FKRORJLVWj DV WKH FHQWUDO PLWLJDWLRQ            EXWVWDWHGWKDWVKHKDGQRWZRUQKHUJODVVHVDQGFRXOGQRWEH
ZLWQHVVl                                                               FHUWDLQDERXWZKHWKHUVKHKDGDFWXDOO\VHHQ5RELQLQWKHFDU
                                                                         &KULVKLPVHOIWHVWLILHGRQERWKGLUHFWDQGFURVVH[DPLQDWLRQ
  +RZHYHUDFFRUGLQJWRWKHUHFRUGEHIRUHXVDFRPSHWHQW                DERXWEHLQJWKHEHQHILFLDU\RI5RELQjVOLIHLQVXUDQFHSROLF\
SV\FKLDWULFH[SHUWZRXOGKDYHmFRQGXFW>HG@DZLGHUDQJLQJ               ,QOLJKWRIWKHGLUHFWDQGFURVVH[DPLQDWLRQRIWKH<RXQJVZH
YHU\ WKRURXJK LQTXLU\ LQWR 0U 0DVRQjV SV\FKRVRFLDO                DJUHHZLWKWKHGLVWULFWFRXUWjVFRQFOXVLRQWKDW+D\GHQjVQRWHV
EDFNJURXQGl6PDOOGRQ$IIDW6XFKDQLQTXLU\ZRXOG              GRQRWSUHVHQWDUHDVRQDEOHSUREDELOLW\RIDGLIIHUHQWUHVXOWDW
QRGRXEWKDYHDPHOLRUDWHGWKHSUHMXGLFLDOHIIHFWVRIGHIHQVH             WULDO
FRXQVHOjVDOOHJHGIDLOXUHWRLQYHVWLJDWH0DVRQjVOLIHKLVWRU\
7KHUHIRUH DOWKRXJK 0DVRQ ZDV QRW HQWLWOHG WR SV\FKLDWULF            )LQDOO\0DVRQFODLPVWKDWKHVXIIHUHGSUHMXGLFHDVDUHVXOW
DVVLVWDQFH XQGHU $NH KH PD\ VWLOO KDYH DQ LQHIIHFWLYH           RIWKHSURVHFXWLRQjVIDLOXUHWRGLVFORVHSUHWULDOVWDWHPHQWVRI
DVVLVWDQFH FODLP IRU WKH GHILFLHQW SHUIRUPDQFH RI GHIHQVH         VHYHQZLWQHVVHVLQFOXGLQJWKH<RXQJVDQG&KULV$FFRUGLQJ
FRXQVHOLQDSSDUHQWO\UHO\LQJRQ'U6SDUHIRUDQLQGHSHQGHQW            WR0DVRQDOORIWKHVHZLWQHVVHVKDGVHHQ5RELQRQWKHGD\RI
LQYHVWLJDWLRQLQWRPLWLJDWLQJHYLGHQFH                                  KHUGLVDSSHDUDQFHDQGDOOmKDGJLYHQGLIIHUHQWYHUVLRQVRIWKH
                                                                         IDFWV VXUURXQGLQJ WKH GHDWK RI 5RELQ 'HQQLV >WKDW@ ZHUH
  0DVRQSXUVXHGKLVLQHIIHFWLYHDVVLVWDQFHRIFRXQVHOFODLP              LPSHDFKLQJDVZHOODVH[FXOSDWRU\DQGZHUHUHTXLUHGWREH
ZLWKGLOLJHQFHUDLVLQJLWLQDOORIKLVSOHDGLQJV+HKDV\HWWR       GLVFORVHGE\WKHVWDWHl3HWLWLRQHUjV%UDW:HDUHXQDEOH
UHFHLYHKLVUHTXHVWIRUDQHYLGHQWLDU\KHDULQJ:HWKHUHIRUH            WRILQGWKHH[LVWHQFHRIDQ\VXFKGRFXPHQWVLQWKHUHFRUG:H
UHPDQGWKLVFDVHWRWKHGLVWULFWFRXUWZLWKLQVWUXFWLRQVWRKROG         DOVRDJUHHZLWKWKHGLVWULFWFRXUWjVREVHUYDWLRQWKDWGHIHQVH
DQHYLGHQWLDU\KHDULQJDQGWRGHWHUPLQHLQOLJKWRIWKHIDFWRUV         FRXQVHOmFURVVH[DPLQHGHDFKRIWKHOLVWHGZLWQHVVHVLQGHWDLO
WKDW ZH KDYH GLVFXVVHG ZKHWKHU GHIHQVH FRXQVHO UHQGHUHG          DQGIUHTXHQWO\XVHGSUHWULDOVWDWHPHQWVIURPWKRVHZLWQHVVHV
FRQVWLWXWLRQDOO\ LQHIIHFWLYH DVVLVWDQFH ZLWK UHVSHFW WR WKH        IRULPSHDFKPHQWSXUSRVHVl0DVRQ)6XSSGDW
VHQWHQFLQJSKDVHRI0DVRQjVWULDO                                       %HFDXVH0DVRQIDLOHGWRLQGLFDWHWKHH[LVWHQFHRUORFDWLRQRI
                                                                         WKHVH VWDWHPHQWV ZH FRQFOXGH WKDW KH KDV EHHQ XQDEOH WR
&%UDG\9LRODWLRQ                                                      VKRZSUHMXGLFHIURPWKHLUQRQGLVFORVXUHDQGWKDWKHKDVIDLOHG
                                                                         WR RYHUFRPH KLV SURFHGXUDO GHIDXOW SUHFOXGLQJ KLP IURP
  $IWHU%UDG\Y0DU\ODQG86DSURVHFXWRU              DVVHUWLQJD%UDG\YLRODWLRQEHIRUHXV
ZKRVXSSUHVVHVHYLGHQFHWKDWLVERWKIDYRUDEOHWRDGHIHQGDQW
DQGmPDWHULDOHLWKHUWRJXLOWRUWRSXQLVKPHQWlYLRODWHVGXH
SURFHVV mLUUHVSHFWLYH RI WKH JRRG IDLWK RU EDG IDLWK RI WKH
SURVHFXWLRQl,GDW7KH%UDG\UXOHHQFRPSDVVHVERWK
    0DVRQY0LWFKHOO                                1R       1R                              0DVRQY0LWFKHOO        

   0DVRQ DOVR DVVHUWV WKDW KH VXIIHUHG SUHMXGLFH GXH WR WKH     H[FXOSDWRU\ DQG LPSHDFKPHQW HYLGHQFH  8QLWHG 6WDWHV Y
QRQGLVFORVXUH RI QRWHV WKDW +D\GHQ WRRN ZKLOH FRQGXFWLQJ          %DJOH\  86     )DYRUDEOH HYLGHQFH LV
WHOHSKRQHLQWHUYLHZVRIWKH<RXQJVVKRUWO\EHIRUH0DVRQjV                PDWHULDOXQGHU%UDG\mRQO\LIWKHUHLVDUHDVRQDEOHSUREDELOLW\
WULDO EHJDQ  7KH GLVWULFW FRXUW VXPPDUL]HG WKHVH QRWHV DV      WKDWKDGWKHHYLGHQFHEHHQGLVFORVHGWRWKHGHIHQVHWKHUHVXOW
IROORZV                                                                 RIWKHSURFHHGLQJZRXOGKDYHEHHQGLIIHUHQWl,GDW$
                                                                         UHDVRQDEOHSUREDELOLW\LVRQHWKDWLVmVXIILFLHQWWRXQGHUPLQH
    'XULQJ+D\GHQjVFRQYHUVDWLRQVZLWKWKH<RXQJVERWK                  FRQILGHQFHLQWKHRXWFRPHlRIWKHWULDO,Gm7KHTXHVWLRQLV
  0LFKDHO DQG &DURO\Q <RXQJ LQGLFDWHG WKDW WKH\ KDG               QRWZKHWKHUWKHGHIHQGDQWZRXOGPRUHOLNHO\WKDQQRWKDYH
  PRYHGIURP2KLRWR6RXWK&DUROLQDEHFDXVHWKH\ZHUH                    UHFHLYHGDGLIIHUHQWYHUGLFWZLWKWKHHYLGHQFHEXWZKHWKHULQ
  UHFHLYLQJ WKUHDWHQLQJ OHWWHUV DQG WHOHSKRQH FDOOV IURP           LWV DEVHQFH KH UHFHLYHG D IDLU WULDO XQGHUVWRRG DV D WULDO
  XQNQRZQSHRSOHLQFRQQHFWLRQZLWKWKHWULDO0LFKDHO                  UHVXOWLQJLQDYHUGLFWZRUWK\RIFRQILGHQFHl.\OHVY:KLWOH\
  <RXQJ WROG &DSWDLQ +D\GHQ WKDW ZKHQ &KULV 'HQQLV                86
  ZRNHXSODWHLQWKHHYHQLQJRQ)HEUXDU\KHZDV
  DQJU\ WKDW 5RELQ 'HQQLV ZDV QRW WKHUH DQG VDLG KH              0DVRQGLGQRWUDLVHD%UDG\FODLPRQGLUHFWDSSHDOEXWKH
  ZRXOGNLOOKHUZKHQKHIRXQGKHU&DURO\Q<RXQJVDLG                  GLGUDLVHRQHDVKLVWKLUGJURXQGIRUUHOLHILQKLVVWDWHSRVW
  VKHWKRXJKWVKHKDGVHHQVHYHUDOKRXUVDIWHU'HQQLVZDV               FRQYLFWLRQSHWLWLRQ7KHVWDWHWULDOFRXUWIRXQGWKDWWKH%UDG\
  ODVWVHHQDOLYHWKH+DUOH\'DYLGVRQ7VKLUW'HQQLVZDV                FODLPZDVEDUUHGE\UHVMXGLFDWD7KH2KLR&RXUWRI$SSHDOV
  ZHDULQJDWWKHWLPHRIWKHPXUGHU&DURO\Q<RXQJVDLG                 KHOG WKDW mQHDUO\ DOO RI WKH >%UDG\@ FODLPV VHW IRUWK LQ
  VKHWKRXJKWVKHKDGVHHQ5RELQ'HQQLVULGLQJLQDFDURQ               >0DVRQjV@ SHWLWLRQ ZHUH RU VKRXOG KDYH EHHQ>@ UDLVHG RQ
  WKHHYHQLQJRI)HEUXDU\VHYHUDOKRXUVDIWHUWKH               GLUHFW DSSHDO IURP KLV FRQYLFWLRQl DQG WKHQ UXOHG DJDLQVW
  SURVHFXWLRQ DUJXHG WKDW >0DVRQ@ NLOOHG 'HQQLV  %RWK            0DVRQRQWKHPHULWV0DVRQ:/DW7KH
  <RXQJVH[SUHVVHGFRQFHUQVWKDW&KULV'HQQLVPLJKWKDYH                 GLVWULFWFRXUWIRXQGWKDW0DVRQZDVLQSURFHGXUDOGHIDXOWRQ
  NLOOHGKLVZLIHLQRUGHUWRJDLQWKHSURFHHGVRIKHUOLIH              WKH %UDG\ FODLPV KDG QRW VKRZQ FDXVH RU SUHMXGLFH DQG
  LQVXUDQFH                                                             FRXOG QRW PDNH RXW D WUXH %UDG\ YLRODWLRQ  0DVRQ  )
                                                                         6XSSGDW
0DVRQ)6XSSGDW0DVRQFRQWHQGVWKDWWKHVH
VWDWHPHQWV ZHUH QHFHVVDU\ WR KLV GHIHQVH WKHRU\ WKDW &KULV          ,Q&ROHPDQY0LWFKHOO)GWK&LUZH
PXUGHUHG KLV ZLIH  7KH GLVWULFW FRXUWjV UHYLHZ RI WKH WULDO   UHLWHUDWHGWKDWWKHDSSOLFDWLRQRIUHVMXGLFDWDXQGHU2KLRODZ
WUDQVFULSW KRZHYHU UHVXOWHG LQ D ILQGLQJ WKDW mWKH UHFRUG      mLV DQ DGHTXDWH DQG LQGHSHQGHQW VWDWH JURXQG MXVWLI\LQJ
GHPRQVWUDWHVFRQFOXVLYHO\WKDW>0DVRQ@QRWRQO\KDGDFFHVV               IRUHFORVXUH RI FRQVWLWXWLRQDO FODLPV LQ KDEHDVl ,G DW 
WREXWDFWXDOO\DWWHPSWHGWRSURIIHUDWWULDOHYHU\SLHFHRI           FLWLQJ5XVWY=HQW)GWK&LUDQG5LJJLQV
H[FXOSDWRU\HYLGHQFHKHQRZDOOHJHVKHZDVXQIDLUO\GHSULYHG             Y 0F0DFNLQ  )G  WK &LU   +RZHYHU
RI E\ WKH VWDWHjV IDLOXUH WR GLVFORVH &DSWDLQ +D\GHQjV           IHGHUDO KDEHDV UHOLHI LV DYDLODEOH IRU FRQVWLWXWLRQDO FODLPV
WHOHSKRQHFRQYHUVDWLRQVZLWK0LFKDHODQG&DURO\Q<RXQJl                 GHIDXOWHGLQVWDWHFRXUWLIDSHWLWLRQHUGHPRQVWUDWHVFDXVHDQG
,G DW   %HFDXVH WKH GLUHFW DQG FURVVH[DPLQDWLRQ RI        SUHMXGLFH*UD\Y1HWKHUODQG86
ZLWQHVVHVLPSDUWHGWKHVXEVWDQFHRIWKHVHFRQYHUVDWLRQVWKH
GLVWULFW FRXUW FRQFOXGHG WKDW WKH GLVFORVXUH RI WKH QRWHV          0DVRQDWWHPSWVWRGLVSXWHWKHGLVWULFWFRXUWjVILQGLQJWKDW
WKHPVHOYHVZRXOGQRWKDYHFUHDWHGDUHDVRQDEOHSUREDELOLW\               WKH %UDG\ FODLPV ZHUH SURFHGXUDOO\ GHIDXOWHG EXW KLV
RIDGLIIHUHQWYHUGLFW,G                                             DUJXPHQWVHVVHQWLDOO\SRLQWWRFDXVH)LUVWFLWLQJ$PDGHRY
                                                                         =DQW860DVRQVXJJHVWVWKDWmWKH>VWDWHjV@
    0DVRQY0LWFKHOO                             1R      1R                              0DVRQY0LWFKHOO       

YHU\ DFW RI ZLWKKROGLQJ WKH HYLGHQFH LQ WKH ILUVW SODFH     ZLWQHVVHV WKDW ZHUH DOOHJHGO\ LQFRQVLVWHQW ZLWK WKHLU
HVWDEOLVKHV µFDXVHj IRU DQ\ DOOHJHG SURFHGXUDO GHIDXOWl       WHVWLPRQ\DWWULDO7KHGLVWULFWFRXUWUHYLHZHGWKHUHFRUGDQG
3HWLWLRQHUjV%UDW6HFRQGKHDUJXHVWKDWmWKHIDFWWKDWWKH   GHWHUPLQHGWKDWWKHUHZDVQRUHDVRQDEOHSUREDELOLW\WKDWWKH
GRFXPHQWVZHUHQRWDYDLODEOHXQWLOVWDWHSRVWFRQYLFWLRQDJDLQ       GLVFORVXUH RI WKHVH VWDWHPHQWV ZRXOG KDYH SURGXFHG D
HVWDEOLVKHV DGHTXDWH µFDXVHj IRU DQ\ DOOHJHG GHIDXOW  $     GLIIHUHQWUHVXOWDWWULDO0DVRQ)6XSSGDW:H
SHWLWLRQHULVQRWUHTXLUHGWRUDLVHRQGLUHFWDSSHDOFODLPVIRU      DJUHH
ZKLFKKHODFNVDEDVLVLQIDFWHVSHFLDOO\ZKHUHWKHVWDWHKDV
DFWXDOO\FRQFHDOHGWKHIDFWVl3HWLWLRQHUjV%UDWLQWHUQDO        5RGHIIHUZDVDUUHVWHGRQ)HEUXDU\IRXUGD\VDIWHU
FLWDWLRQRPLWWHG+RZHYHUDVWKHGLVWULFWFRXUWQRWHG0DVRQ      WKHGLVFRYHU\RI5RELQjVERG\IRUVWHDOLQJZKLVNH\IURPD
KDV QRW VKRZQ ZK\ WKH EDVLV IRU D %UDG\ FODLP ZDV QRW     FRQYHQLHQFHVWRUH$WWKHWLPHRIKLVDUUHVW5RGHIIHUZDV
DYDLODEOHRQGLUHFWDSSHDO&RQFOXVRU\VWDWHPHQWVDERXWVWDWH       ERWKLQWR[LFDWHGDQGVXLFLGDOKHKDGDSSDUHQWO\FRQVXPHG
FRQFHDOPHQWZLOOQRWVXSSRUWDILQGLQJRIFDXVH$PDGHR            WKUHHTXDUWHUVRIDILIWKRIZKLVNH\DQGVHYHQVOHHSLQJSLOOV
86DWm>7@KHH[LVWHQFHRIFDXVHIRUDSURFHGXUDO          6RRQDIWHUPDNLQJWKHDUUHVWWKHSROLFHWUDQVSRUWHG5RGHIIHU
GHIDXOWPXVWRUGLQDULO\WXUQRQZKHWKHUWKHSULVRQHUFDQVKRZ        WR0DULRQ*HQHUDO+RVSLWDOIRUDPHGLFDOHYDOXDWLRQ:KLOH
WKDWVRPHREMHFWLYHIDFWRUH[WHUQDOWRWKHGHIHQVHLPSHGHG           EHLQJH[DPLQHG5RGHIIHULQGLFDWHGWRWKHDUUHVWLQJRIILFHU
FRXQVHOjVHIIRUWVWRFRPSO\ZLWKWKH6WDWHjVSURFHGXUDOUXOHl      WKDW KH KDG LQIRUPDWLRQ DERXW 5RELQjV GHDWK ZKLFK KH
TXRWLQJ0XUUD\Y&DUULHU86               LQWLPDWHGZDVmVDWDQLFUHODWHGls$DW5RGHIIHUVWDWHG
                                                                     WKDW5RELQKDGEHHQRUGHUHGWRJHWRXWRIKHUFDUKLWLQWKH
  (YHQ DVVXPLQJ WKDW 0DVRQ GLG KDYH FDXVH IRU IDLOLQJ WR    EDFNRIWKHKHDGDQGWKHQmKXQJE\KHUQHFNZLWKDODUJHORJ
UDLVH KLV %UDG\ DUJXPHQWV RQ GLUHFW DSSHDO ZH DUH QRW      FKDLQl  s$ DW   $V WKH GLVWULFW FRXUW QRWHG WKLV
SHUVXDGHG WKDW KH FDQ VKRZ SUHMXGLFH  7R REWDLQ UHOLHI    GHVFULSWLRQ RI 5RELQjV LQMXULHV ZDV LQFRQVLVWHQW ZLWK KHU
0DVRQ mPXVW FRQYLQFH XV WKDW µWKHUH LV D UHDVRQDEOH          DFWXDOLQMXULHV0DVRQ)6XSSGDW
SUREDELOLW\j WKDW WKH UHVXOW RI WKH WULDO ZRXOG KDYH EHHQ
GLIIHUHQWLIWKHVXSSUHVVHGGRFXPHQWVKDGEHHQGLVFORVHGWR             $IWHUUHYLHZLQJ5RGHIIHUjVVWDWHPHQWVDQGWKHVXUURXQGLQJ
WKHGHIHQVHl6WULFNOHUY*UHHQH86        FLUFXPVWDQFHV WKH GLVWULFW FRXUW FRQFOXGHG WKDW mLW VWUDLQV
,QH[DPLQLQJWKHVXSSUHVVHGHYLGHQFHZHPXVWDVNmZKHWKHU           FUHGLELOLW\SDVWWKHEUHDNLQJSRLQWWRVXJJHVWWKDWWKHUHLVD
WKHIDYRUDEOHHYLGHQFHFRXOGUHDVRQDEO\EHWDNHQWRSXWWKH          UHDVRQDEOH SUREDELOLW\ 5RGHIIHUjV HYLGHQFH ZRXOG KDYH
ZKROH FDVH LQ VXFK D GLIIHUHQW OLJKW DV WR XQGHUPLQH        SURGXFHGDGLIIHUHQWYHUGLFWl0DVRQ)6XSSGDW
FRQILGHQFHLQWKHYHUGLFWl,G DW TXRWDWLRQRPLWWHG       0DVRQ FRQWHQGV WKDW WKH GLVWULFW FRXUWjV GLVPLVVDO RI
:H FRQFOXGH WKDW ZH FDQQRW DQVZHU WKLV TXHVWLRQ LQ WKH      5RGHIIHUjV VWDWHPHQWV DPRXQWHG WR mDQ LPSHUPLVVLEOH
DIILUPDWLYH                                                         FUHGLELOLW\GHWHUPLQDWLRQWKDWLVQRWVXSSRUWHGE\WKHHYLGHQFH
                                                                     DQG>@PRUHLPSRUWDQWO\LVQRWDIDFWRUSURSHUO\FRQVLGHUHGLQ
  0DVRQGHVFULEHVWKUHHJHQHUDOFDWHJRULHVRIHYLGHQFHWKDW          DQDO\]LQJ D %UDG\ YLRODWLRQl  3HWLWLRQHUjV %U DW   :H
ZDVDOOHJHGO\ZLWKKHOGIURPKLVGHIHQVHVWDWHPHQWVPDGH        GLVDJUHH%DJOH\LQVWUXFWVFRXUWVWRUHPHG\D%UDG\YLRODWLRQ
E\ 5REHUW 5RGHIIHU m5RGHIIHUl WR SROLFH DQG PHGLFDO         RQO\ LI WKH XQGLVFORVHG HYLGHQFH SUHVHQWV D UHDVRQDEOH
SHUVRQQHO WKDW KH KDG EHHQ SUHVHQW DW 5RELQjV PXUGHU        SUREDELOLW\RIDGLIIHUHQWUHVXOWDWWULDO%DJOH\86DW
 H[FXOSDWRU\ VWDWHPHQWV PDGH E\ 0LFKDHO DQG &DURO\Q        ,WZDVWKXVSURSHUIRUWKHGLVWULFWFRXUWWRFRQVLGHUWKH
<RXQJ IULHQGV RI WKH 'HQQLVHV WR &DSWDLQ $O +D\GHQ         FLUFXPVWDQFHVRI5RGHIIHUjVVWDWHPHQWV
m+D\GHQlZKRLQWHUYLHZHGWKHPWKUHHGD\VEHIRUHWKHMXU\
ZDV LPSDQHOHG DQG  SUHWULDO VWDWHPHQWV RI YDULRXV
