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

                                                                        (/(&7521,& &,7$7,21  )(' $SS $ WK &LU
    8QLWHG6WDWHVY                     1RV                       )LOH 1DPH DD
      6WHZDUWHWDO                    

GLVSRVLWLRQRIWKH$SSUHQGLLVVXHQRULVLWQHFHVVDU\IRUXVWR
                                                                     81,7('67$7(6&28572)$33($/6
UHVROYHWKHTXHVWLRQRIZKHWKHU5DPLUH]UHPDLQVJRRGODZ                         )257+(6,;7+&,5&8,7
1HYHUWKHOHVVLQP\YLHZFRQWLQXHGUHOLDQFHXSRQ5DPLUH]                           BBBBBBBBBBBBBBBBB
LVTXHVWLRQDEOHDWEHVW
  5HWXUQLQJ WR WKH PDLQ SRLQW RI WKLV VHSDUDWH RSLQLRQ ,
EHOLHYHWKDWWKHHYLGHQFHLVRYHUZKHOPLQJWKDW5HQD%HQIRUG          81,7(' 67$7(6 2) $0(5,&$     ;
FRQVSLUHGWRSRVVHVVDWOHDVWJUDPVRIFUDFNFRFDLQHRU                 3ODLQWLII$SSHOOHH   
JUDPV RI FRFDLQH SRZGHU  , WKHUHIRUH EHOLHYH WKDW D                                       
UHDVRQDEOH MXU\ ZRXOG KDYH IRXQG KHU JXLOW\ EH\RQG D                                             1RV
                                                                                 Y                      
UHDVRQDEOHGRXEWRIEHLQJLQYROYHGZLWKDWOHDVWRQHRIWKHVH                                        !
PLQLPXP TXDQWLWLHV RI FRFDLQH  )RU WKLV UHDVRQ , ZRXOG                                        
DIILUP WKH GLVWULFW FRXUWjV VHQWHQFH RI 5HQD %HQIRUG XQGHU   68=(77( 0,5$1'$ 67(:$57 
E%                                                       &$/9,1 1(/621       
                                                                     75$0%/(              
                                                                     &+$5/(6 5266(//DOVR          
                                                                     NQRZQDV'RJDOVRNQRZQDV 
                                                                                                    
                                                                     6QRRS\7,027+< 
                                                                     '(0$5&86 /$1;7(5DOVR         
                                                                     NQRZQDV/LWWOH0DQ            
                                                                     1$7+$1              
                                                                     %(1)25'DOVRNQRZQDV         
                                                                     )UHGDOVRNQRZQDV1DWH       
                                                                                                    
                                                                     5(1$ <9211(         
                                                                     %(1)25'DOVRNQRZQDV         
                                                                     <YRQQH5HGGLQJDOVRNQRZQ 
                                                                     DV*UDQQ\DOVRNQRZQDV       
                                                                     5HQHH5HGGLQJDOVRNQRZQ      
                                                                     DV5HQD5HGGLQJDOVRNQRZQ 
                                                                     DV5HQD%HQIRUG     
                                                                            'HIHQGDQWV$SSHOODQWV 
                                                                                                   1



                                                                                                
       8QLWHG6WDWHVY                        1RV
        6WHZDUWHWDO                       
                                                                         1RV                          8QLWHG6WDWHVY      
                                                                                                   6WHZDUWHWDO
         $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
    IRUWKH(DVWHUQ'LVWULFWRI7HQQHVVHHDW&KDWWDQRRJD
    1Rn5$OODQ(GJDU&KLHI'LVWULFWsXGJH                  VLJQLILFDQFHRIWKHHYLGHQFHWKDWGLGLPSOLFDWHKHULQWKHGUXJ
                                                                         WUDIILFNLQJ DFWLYLWLHV  $Q\ RQH RI WKH IRXU LQFLGHQFHV
        $UJXHGsXO\                  GHVFULEHGDERYHIRUH[DPSOHSURYLGHVVXIILFLHQWSURRILQDQG
           6XEPLWWHGsXO\                      RI LWVHOI WR HVWDEOLVK WKDW 5HQD %HQIRUG ZDV LQYROYHG LQ
                                                                         SRVVHVVLQJRUWUDIILFNLQJLQDWOHDVWJUDPVRIFUDFNFRFDLQH
             'HFLGHGDQG)LOHG6HSWHPEHU                       RUJUDPVRIFRFDLQHSRZGHU7KLVLVHVSHFLDOO\WUXHLQ
                                                                         OLJKWRIWKHIDFWWKDW5HQD%HQIRUGSUHVHQWHGQRHYLGHQFHWR
    %HIRUH&/$<*,/0$1DQG:$//$&(&LUFXLW                          FRQWHVWWKHGUXJTXDQWLWLHVDWWULEXWDEOHWRKHU:KHQWKHVH
                       sXGJHV                                          IRXULQFLGHQWVDUHFRQVLGHUHGFXPXODWLYHO\,ILQGLWGLIILFXOW
                                                                         WR LPDJLQH DQ\ VFHQDULR LQ ZKLFK WKH MXU\ ZRXOG KDYH
                       BBBBBBBBBBBBBBBBB                                 UHWXUQHG D JXLOW\YHUGLFWDJDLQVW5HQD%HQIRUGDQG\HWQRW
                                                                         IRXQG WKDW WKH HYLGHQFH VXSSRUWLQJ KHU LQYROYHPHQW LQ WKH
                             &2816(/                                     TXDQWLW\RIGUXJVZDVVXIILFLHQWEH\RQGDUHDVRQDEOHGRXEW
                                                                         WRSODFHKHUZLWKLQWKHVHQWHQFLQJUDQJHRIE%
$5*8('  &OD\WRQ 0 :KLWWDNHU )267(5 )267(5
$//(1	'855(1&(&KDWWDQRRJD7HQQHVVHH1HDO/                           ,EHOLHYHWKDWRQHILQDOPDWWHUWDQJHQWLDOO\UHODWHGWR5HQD
7KRPSVRQ&KDWWDQRRJD7HQQHVVHHsLPP\)5RGJHUVsU                 %HQIRUGjVVHQWHQFHPHULWVDEULHIFRPPHQW7KHOHDGRSLQLRQ
6800(56	:<$77&KDWWDQRRJD7HQQHVVHH:LOOLDP                         UHOLHVXSRQ8QLWHG6WDWHVY5DPLUH])GWK&LU
+ 2UWZHLQ 257:(,1 	 $662&,$7(6 &KDWWDQRRJD                       DW VHYHUDO SRLQWV LQ LWV GLVFXVVLRQ RI WKH $SSUHQGL
7HQQHVVHHIRU$SSHOODQWV*UHJJ/6XOOLYDQ$66,67$17                 LVVXH,Q5DPLUH]WKLVFRXUWKHOGWKDWZKHUHWKHTXDQWLW\RI
81,7('67$7(6$77251(<&KDWWDQRRJD7HQQHVVHH                          GUXJVLQFUHDVHVDGHIHQGDQWjVPDQGDWRU\PLQLPXPVHQWHQFH
IRU$SSHOOHH21%5,()&OD\WRQ0:KLWWDNHU)267(5                  HYHQLILWGRHVQRWLQFUHDVHWKHSRWHQWLDOSHQDOW\DERYHWKH
)267(5$//(1	'855(1&(&KDWWDQRRJD7HQQHVVHH                        VWDWXWRU\PD[LPXPVHQWHQFHWKHTXDQWLW\PXVWEHVHWIRUWKLQ
1HDO / 7KRPSVRQ &KDWWDQRRJD 7HQQHVVHH sLPP\ )                 WKHLQGLFWPHQWVXEPLWWHGWRWKHMXU\DQGSURYHGEH\RQGD
5RGJHUV sU sHUU\ + 6XPPHUV 6800(56 	 :<$77                  UHDVRQDEOH GRXEW  ,G DW   %XW LQ +DUULV Y 8QLWHG
&KDWWDQRRJD 7HQQHVVHH 3DXO ' &URVV 0RQWHDJOH                   6WDWHV6&WWKH6XSUHPH&RXUWKHOGWKDW
7HQQHVVHH :LOOLDP + 2UWZHLQ 257:(,1 	                            $SSUHQGLGRHVQRWDSSO\WRPDQGDWRU\PLQLPXPVHQWHQFHV
$662&,$7(6&KDWWDQRRJD7HQQHVVHH:*HUDOG7LGZHOO                   VRORQJDVWKHUHTXLUHGPLQLPXPVHQWHQFHUHPDLQVEHORZWKH
sU &KDWWDQRRJD 7HQQHVVHH IRU $SSHOODQWV  *UHJJ /            VWDWXWRU\ PD[LPXP SHQDOW\ IRU WKH RIIHQVH FRPPLWWHG
6XOOLYDQ $66,67$17 81,7(' 67$7(6 $77251(<                          +DUULV6&WDWKROGLQJWKDW$SSUHQGLGLG
&KDWWDQRRJD7HQQHVVHHIRU$SSHOOHH                                  QRW DSSO\ WR WKH WZR\HDU LQFUHDVH LQ WKH GHIHQGDQWjV
                                                                         PDQGDWRU\ PLQLPXP VHQWHQFH IRU EUDQGLVKLQJ D ILUHDUP
  &/$< s GHOLYHUHG WKH RSLQLRQ RI WKH FRXUW LQ ZKLFK        GXULQJ D GUXJWUDIILFNLQJ FULPH EHFDXVH mWKH IDFWV JXLGLQJ
*,/0$1 s DQG :$//$&( s MRLQHG H[FHSW DV WR                 MXGLFLDOGLVFUHWLRQEHORZWKHVWDWXWRU\PD[LPXPQHHGQRWEH
                                                                         DOOHJHG LQ WKH LQGLFWPHQW VXEPLWWHG WR WKH MXU\ RU SURYHG
                                                                        EH\RQGDUHDVRQDEOHGRXEWl7KLVDSSDUHQWFRQIOLFWEHWZHHQ
     7KH +RQRUDEOH s &OLIIRUG :DOODFH &LUFXLW sXGJH RI WKH 8QLWHG
                                                                         +DUULV DQG 5DPLUH] GRHV QRW DIIHFW WKH OHDG RSLQLRQjV
6WDWHV &RXUW RI $SSHDOV IRU WKH 1LQWK &LUFXLW VLWWLQJ E\ GHVLJQDWLRQ
                                                                      1RV                          8QLWHG6WDWHVY       
                                                                                                6WHZDUWHWDO
    8QLWHG6WDWHVY                      1RV
      6WHZDUWHWDO                     
                                                                      'HIHQGDQW5HQD<YRQQH%HQIRUGjVVHQWHQFHZLWKUHVSHFWWR
                                                                      ZKLFK*,/0$1sSSGHOLYHUHGDVHSDUDWHRSLQLRQ
   7KH WHVWLPRQ\ RI *UHJ 9LQVRQ SURYLGHV VWLOO DQRWKHU         FRQFXUULQJ LQ SDUW DQG GLVVHQWLQJ LQ SDUW MRLQHG E\
H[DPSOHRI5HQD%HQIRUGjVLQYROYHPHQWLQSRVVHVVLQJDQG               :$//$&(s
GLVWULEXWLQJ D TXDQWLW\ RI FRFDLQH SRZGHU WKDW SODFHV KHU
ZLWKLQ WKH VHQWHQFLQJ UDQJH RI  E%  9LQVRQ                          BBBBBBBBBBBBBBBBBBBBBB
WHVWLILHGWKDW5HQD%HQIRUGDFFRPSDQLHG1DWKDQ%HQIRUGWR
/RXLVYLOOH.HQWXFN\ZKHUHWKH\UHWULHYHGDERXWJUDPV                               $0(1'('23,1,21
RI FRFDLQH SRZGHU  7KH\ WKHQ WRRN WKH FRFDLQH EDFN WR                        BBBBBBBBBBBBBBBBBBBBBB
&KDWWDQRRJD7HQQHVVHH$VZLWK%LOOLQJVOH\jVWHVWLPRQ\,
EHOLHYHWKDW5HQD%HQIRUGZRXOGKDYHKDGHYHU\UHDVRQWR                &/$<&LUFXLWsXGJH7KLVFRQVROLGDWHGFDVHLQYROYLQJ
FDVWGRXEWXSRQ9LQVRQjVFUHGLELOLW\5HQD%HQIRUGjVWULDO           VL[PHPEHUVRIDGUXJWUDIILFNLQJFRQVSLUDF\LQ&KDWWDQRRJD
VWUDWHJ\LIVKHKRSHGWREHDFTXLWWHGZRXOGKDYHUHTXLUHGKHU       7HQQHVVHH SUHVHQWV VHYHUDO LVVXHV IRU FRQVLGHUDWLRQ  7KH
WRGHQ\DQ\LQYROYHPHQWZLWKWUDQVSRUWLQJWKLV TXDQWLW\RI           'HIHQGDQWVDSSHDOWKHLUMXGJPHQWVDIWHUEHLQJFRQYLFWHGLQWHU
GUXJVIURP/RXLVYLOOHWR&KDWWDQRRJD7KHDEVHQFHRIDMXU\          DOLD RI FRQVSLUDF\ WR GLVWULEXWH DQG SRVVHVV ZLWK LQWHQW WR
GHWHUPLQDWLRQ RI GUXJ TXDQWLW\ WKHUHIRUH GRHV QRW QHJDWH     GLVWULEXWH FRFDLQH K\GURFKORULGH DQGRU FRFDLQH EDVH
ZKDW 5HQD %HQIRUG KDG WR DFFRPSOLVK DW WULDO LQ RUGHU WR    VSHFLILFDOO\mFUDFNlLQYLRODWLRQRI86&D
DYRLGEHLQJFRQYLFWHG                                                DQGEHLQJVHQWHQFHGWRYDULRXVWHUPVRILPSULVRQPHQWDQG
                                                                      VXSHUYLVHGUHOHDVH
   <HWDQRWKHUSLHFHRIHYLGHQFHWKDWOHDGVPHWREHOLHYHWKDW
DMXU\ZRXOGKDYHIRXQGEH\RQGDUHDVRQDEOHGRXEWWKDW5HQD              ,Q&DVH1R6X]HWWH0LUDQGD6WHZDUWm6WHZDUWl
%HQIRUG FRQVSLUHG WR SRVVHVV RU WUDIILF LQ WKH TXDQWLW\ RI   EULQJVDQ$SSUHQGLFKDOOHQJHWRKHUVHQWHQFHHQWHUHGSXUVXDQW
LOOHJDOGUXJVQHFHVVDU\IRUVHQWHQFLQJXQGHUE%LV        WRDJXLOW\SOHDRQWKHGUXJFRQVSLUDF\FKDUJH6WHZDUWDOVR
WKDWWKHDXWKRULWLHVVHL]HGLQFDVKIURPKHUUHVLGHQFH       DSSHDOVWKHWZROHYHOHQKDQFHPHQWRIKHUEDVHRIIHQVHOHYHO
$V WKH OHDG RSLQLRQ DFNQRZOHGJHV 5HQD %HQIRUG GLG QRW        XQGHU 8QLWHG 6WDWHV 6HQWHQFLQJ &RPPLVVLRQ *XLGHOLQHV
GHQ\WKDWWKLVPRQH\ZDVFRQQHFWHGWRGUXJDFWLYLW\0\URQ           0DQXDOm866*l'E,Q&DVH1R&DOYLQ
+LOWjVWHVWLPRQ\HVWDEOLVKHGWKDWWKH%HQIRUGVZHUHEX\LQJ            1HOVRQ 7UDPEOH m7UDPEOHl DSSHDOV KLV FRQYLFWLRQ XSRQ
DQGVHOOLQJFRFDLQHSRZGHUDWSULFHVUDQJLQJIURPWR          SOHDGLQJJXLOW\WRDLGLQJDQGDEHWWLQJPRQH\ODXQGHULQJLQ
SHUNLORJUDP5HQD%HQIRUGjVDFNQRZOHGJPHQWWKDW             YLRODWLRQ RI  86&  D$L  7UDPEOH DOVR
WKHLQFDVKIRXQGLQKHUUHVLGHQFHZDVUHODWHGWRGUXJ        DSSHDOV KLV VHQWHQFH DIWHU SOHDGLQJ JXLOW\ WR WKH GUXJ
WUDQVDFWLRQVLVWKHUHIRUHVXIILFLHQWSURRIE\LWVHOIWRVKRZWKDW     FRQVSLUDF\FKDUJHUDLVLQJDQ$SSUHQGLFKDOOHQJHDVZHOODV
VKHZDVLQYROYHGLQDFRQVSLUDF\WRSRVVHVVRUWUDIILFLQPRUH        FKDOOHQJLQJWKHWKUHHOHYHOHQKDQFHPHQWIRUKLVUROHLQWKH
WKDQJUDPVRIFRFDLQHSRZGHU                                  RIIHQVH XQGHU 866*  %F  ,Q &DVH 1R 
                                                                      &KDUOHV5RVVHOOm5RVVHOOlDSSHDOVKLVVHQWHQFHSXUVXDQWWR
   7KHOHDGRSLQLRQQRWHVWKDW5HQD%HQIRUGjVFRXQVHOZRXOG           D JXLOW\ SOHD RQ WKH GUXJ FRQVSLUDF\ FKDUJHV RQ VHYHUDO
IUHTXHQWO\ KDYH QR QHHG WR FURVVH[DPLQH ZLWQHVVHV IRU         JURXQGVLQFOXGLQJDQ$SSUHQGLFKDOOHQJHWKHGLVWULFW
VHYHUDOGD\VEHFDXVHWKHWHVWLPRQ\GLGQRWUHODWHWRKLVFOLHQW      FRXUWjV UHIXVDO WR UHGXFH KLV VWDWXWRU\ PLQLPXP VHQWHQFH
%XW WKH UHODWLYHO\ IHZ UHIHUHQFHV WR 5HQD %HQIRUG LQ          XQGHUWKHmVDIHW\YDOYHlRI866*&DQG86&
FRPSDULVRQWRWKRVHLQYROYLQJKHUKXVEDQGGRQRWQHJDWHWKH           IDWZROHYHOHQKDQFHPHQWRIKLVEDVHRIIHQVH
     8QLWHG6WDWHVY                      1RV         1RV                        8QLWHG6WDWHVY     
      6WHZDUWHWDO                                                       6WHZDUWHWDO

OHYHO XQGHU 866*  'E DQG  WKH GLVWULFW FRXUWjV       ,LQLWLDOO\QRWHWKDWWKHJRYHUQPHQWjVSURRI DJDLQVW5HQD
UHIXVDOWRJUDQWDGRZQZDUGGHSDUWXUHXQGHU866*.               %HQIRUG LQYROYHG VRPH RI WKH YHU\ HYLGHQFH WKDW WKH OHDG
IRU mH[FHSWLRQDO FLUFXPVWDQFHVl  ,Q &DVH 1R           RSLQLRQUHOLHVXSRQWRFRQFOXGHWKDW1DWKDQ %HQIRUGmZDV
7LPRWK\'HPDUFXV/DQ[WHUm/DQ[WHUlDSSHDOVKLVVHQWHQFH              LQYROYHG ZLWK TXDQWLWLHV RI GUXJV ZHOO DERYH WKH UHTXLVLWH
SXUVXDQW WR D SOHD RI JXLOW\ WR WKH GUXJ FRQVSLUDF\ FKDUJH   DPRXQWVQHHGHGIRUVHQWHQFLQJXQGHUE$l/HDG
EDVHGXSRQWKHGLVWULFWFRXUWjVGHFLVLRQWRVHQWHQFHKLPWRD          2SDW7KHWULDOWHVWLPRQ\RI0\URQ+LOWIRUH[DPSOH
WHUPRILPSULVRQPHQWDERYHWKHDSSOLFDEOHUDQJHXQGHUWKH              HVWDEOLVKHGWKDW5HQD%HQIRUGDSSURDFKHG+LOWDQG1DWKDQ
VHQWHQFLQJ JXLGHOLQHV DIWHU GHSDUWLQJ GRZQZDUG IURP WKH          %HQIRUGZKHQWKH\ZHUHFRXQWLQJRXWLQFDVKWKDW
VWDWXWRU\PLQLPXPVHQWHQFHSXUVXDQWWR86&H            WKH\KDGREWDLQHGWKURXJKWKHVDOHRIDNLORJUDPRIFRFDLQH
,Q&DVH1R1DWKDQ%HQIRUGm%HQIRUGlFKDOOHQJHV             $OWKRXJK5HQD%HQIRUGGLGQRWDVVLVWWKHPLQFRXQWLQJWKH
KLVFRQYLFWLRQEDVHGXSRQWKHGLVWULFWFRXUWjVGHQLDORIKLV           SURFHHGVVKHZDVWKHRQHZKRSODFHGWKHPRQH\LQDVDIH
PRWLRQWRVXSSUHVVZLUHWDSHYLGHQFHDVZHOODVWKHFRXUWjVXVH         ORFDWHGDWWKH8SWRZQ6XSSHU&OXE0RUHRYHU5HQD%HQIRUG
RIFKDOOHQJHGMXU\LQVWUXFWLRQV%HQIRUGDOVRFKDOOHQJHVKLV          ZDVLQVWUXFWHGE\KHUKXVEDQGWRJLYHWKHPRQH\WR9LFWRU
VHQWHQFHRQWKHGUXJFRQVSLUDF\FKDUJHXQGHUWKH$SSUHQGL              )UHHPDQ ZKHQ KH DUULYHG DW WKH 6XSSHU &OXE DV SDUWLDO
OLQH RI FDVHV  )LQDOO\ LQ &DVH 1R  1DWKDQ          SD\PHQW IRU WKH SXUFKDVH RI WZR NLORJUDPV RI FRFDLQH
%HQIRUGjVZLIH5HQD%HQIRUGm0UV%HQIRUGlDOVRDSSHDOV            SRZGHU  7KLV VLQJOH WUDQVDFWLRQ LQYROYHG HQRXJK FRFDLQH
WKH GHQLDO RI D PRWLRQ WR VXSSUHVV ZLUHWDS HYLGHQFH  ,Q     SRZGHU WR MXVWLI\ VHQWHQFLQJ 5HQD %HQIRUG XQGHU
DGGLWLRQWRUDLVLQJDQ$SSUHQGLFKDOOHQJHWRKHUVHQWHQFHRQ           E%
WKHGUXJFRQVSLUDF\FKDUJH0UV%HQIRUGDOVRFKDOOHQJHVD
WZROHYHOHQKDQFHPHQWRIKHUEDVHRIIHQVHOHYHOXQGHU866*               7KH UHFRUG DOVR LQFOXGHV WHVWLPRQ\ UHJDUGLQJ 5HQD
'E                                                            %HQIRUGjVLQYROYHPHQWLQSRVVHVVLQJDQGGLVWULEXWLQJDFWXDO
                                                                       GUXJVUDWKHUWKDQVLPSO\KDQGOLQJ WKHSURFHHGVIURPGUXJ
  )RUWKHUHDVRQVWKDWIROORZZH$)),50WKHFRQYLFWLRQV               VDOHV  )RU H[DPSOH &OHYHODQG %LOOLQJVOH\ REVHUYHG 5HQD
DQGVHQWHQFHVRIDOO'HIHQGDQWV+RZHYHUDVH[SODLQHGLQ             %HQIRUGWDNHDTXDQWLW\RIFRFDLQHSRZGHUDQGmFRRNlLWLQWR
6HFWLRQ ,9( RI WKH OHDG RSLQLRQ sXGJH &OD\ ZRXOG            RQHRXQFHRIFUDFNFRFDLQH7KLVLQFLGHQWDORQHOLNH5HQD
9$&$7(0UV%HQIRUGjVVHQWHQFHDQG5(0$1'IRUUH                      %HQIRUGjVDFWLRQVLQFRQQHFWLRQZLWKFRXQWLQJKHUKXVEDQGjV
VHQWHQFLQJZLWKLQWKHVWDWXWRU\UDQJHSURYLGHGE\86&            GUXJVDOH SURFHHGV LQYROYHG D VXIILFLHQW DPRXQW RI FUDFN
E&                                                        FRFDLQHnJUDPVnWRZDUUDQWVHQWHQFLQJ5HQD%HQIRUG
                                                                       XQGHU  E%  $OWKRXJK 5HQD %HQIRUG PLJKW QRW
                       %$&.*5281'                                      KDYHUHDOL]HGWKHQHFHVVLW\RIFRQWHVWLQJWKHTXDQWLW\RIFUDFN
                                                                       FRFDLQH WKDW VKH DOOHJHGO\ FRRNHG VKH VXUHO\ ZRXOG KDYH
   ,QWKHPLGV)%,DJHQWVLQ&KDWWDQRRJD7HQQHVVHH             NQRZQWKDWDQ\KRSHIRUDQDFTXLWWDOZRXOGUHTXLUHKHUWRFDVW
HQJDJHG LQ D ORQJWHUP LQYHVWLJDWLRQ LQWR D SRVVLEOH GUXJ      GRXEWXSRQ%LOOLQJVOH\jVWHVWLPRQ\,WKHUHIRUHEHOLHYHWKDW
WUDIILFNLQJ FRQVSLUDF\ LQYROYLQJ 1DWKDQ %HQIRUG KLV ZLIH       5HQD%HQIRUGZRXOGKDYHXVHGHYHU\PHDQVDWKHUGLVSRVDO
5HQD<YRQQH%HQIRUGDQGVHYHUDORIWKHLUDVVRFLDWHV7KH             WRFKDOOHQJH%LOOLQJVOH\jVFUHGLELOLW\
DJHQWVREWDLQHGDXWKRUL]DWLRQIRUHOHFWURQLFVXUYHLOODQFHRI
ODQGEDVHG WHOHSKRQH OLQHV DW VHYHUDO SUHPLVHV DV ZHOO DV
    8QLWHG6WDWHVY                         1RV          1RV                         8QLWHG6WDWHVY      
      6WHZDUWHWDO                                                            6WHZDUWHWDO

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB                            PRELOHSKRQHVZKLFKZDVFRQGXFWHGEHWZHHQ$SULO
                                                                           DQG sXO\    7KHVH ZLUHWDSV LQ FRQMXQFWLRQ ZLWK
  &21&855,1*,13$57',66(17,1*,13$57                                   WUDGLWLRQDOVXUYHLOODQFHDQGLQYHVWLJDWRU\PHWKRGVUHYHDOHG
 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB                            D YDVW GUXJ WUDIILFNLQJ FRQVSLUDF\ LQ WKH &KDWWDQRRJD
                                                                           7HQQHVVHH DQG /RXLVYLOOH .HQWXFN\ DUHDV LQYROYLQJ
   521$/'/((*,/0$1&LUFXLWsXGJHFRQFXUULQJLQSDUW                    'HIHQGDQWV  7KH LOOHJDO RSHUDWLRQV ZHUH FRQGXFWHG XVLQJ
DQG GLVVHQWLQJ LQ SDUW  , FRQFXU LQ DOO DVSHFWV RI WKH OHDG   VHYHUDOSUHPLVHVLQFOXGLQJWKH8SWRZQ6XSSHU&OXEZKLFK
RSLQLRQRWKHUWKDQLWVGHFLVLRQWRYDFDWHWKHVHQWHQFHRI5HQD             LVDQLJKWFOXERSHUDWHGE\WKH%HQIRUGVWKH6	60DUNHWD
%HQIRUG DQGWRUHPDQGWKHFDVHLQRUGHUWRUHVHQWHQFHKHU                 FRQYHQLHQFH VWRUH PDQDJHG E\ 6WHZDUW DQG RZQHG E\ KHU
ZLWKLQ WKH VWDWXWRU\ UDQJH SURYLGHG E\  86&                    IDWKHU DV ZHOO DV VHYHUDO RI 'HIHQGDQWVj UHVLGHQFHV
 E&  ,Q P\ RSLQLRQ WKH HYLGHQFH DW WULDO ZDV        7KURXJKRXW WKH LQYHVWLJDWLRQ )%, DJHQWV DFWHG RQ WKH
RYHUZKHOPLQJWKDW5HQD%HQIRUGFRQVSLUHGWRSRVVHVVDWOHDVW               LQIRUPDWLRQWKH\UHFHLYHGIURPWKHZLUHWDSVXUYHLOODQFH$W
JUDPVRIFUDFNFRFDLQHRUJUDPVRIFRFDLQHSRZGHU,                RQH SRLQW DQ XQGHUFRYHU DJHQW SRVHG DV RQH RI %HQIRUGjV
ZRXOG WKHUHIRUH DIILUP WKH GLVWULFW FRXUWjV GHFLVLRQ WKDW           DVVRFLDWHVDQGZDVDEOHWRSLFNXSDSDFNDJHRIFUDFNFRFDLQH
VHQWHQFHG5HQD%HQIRUGXQGHUWKHVWDWXWRU\UDQJHVHWIRUWKLQ              IURPRQHRIWKHFRGHIHQGDQWV
86&E%
                                                                              2Q$XJXVW'HIHQGDQWVZHUHFKDUJHGDORQJZLWK
   7KHOHDGRSLQLRQFRPSDUHVWKHHYLGHQFHWKDWZDVSUHVHQWHG               WZHQW\IRXUFRGHIHQGDQWVZLWKRQHFRXQWRIFRQVSLUDF\WR
DW WULDO UHJDUGLQJ 1DWKDQ %HQIRUGjV LQYROYHPHQW LQ GUXJ             mGLVWULEXWH DQG SRVVHVV ZLWK LQWHQW WR GLVWULEXWH FRFDLQH
WUDIILFNLQJZLWKWKHWHVWLPRQ\WKDWLPSOLFDWHG5HQD%HQIRUG                K\GURFKORULGHDQGFRFDLQHEDVHµFUDFNjlLQYLRODWLRQRI
LQWKLVLOOHJDODFWLYLW\$OWKRXJK,UHFRJQL]HWKDWWKHTXDQWLW\          86&DDQG86&2QHPRQWKODWHU D
RI WKH JRYHUQPHQWjV SURRI DJDLQVW 1DWKDQ %HGIRUG ZDV                VXSHUVHGLQJLQGLFWPHQWUHWDLQHGWKHGUXJFRQVSLUDF\FKDUJHLQ
VXEVWDQWLDOO\JUHDWHUWKDQLWVHYLGHQFHDJDLQVW5HQD%HQIRUG              &RXQW 2QH DQG DGGHG FKDUJHV RI PRQH\ ODXQGHULQJ LQ
WKLVIDFWGRHVQRWLQP\RSLQLRQSUHFOXGHXVIURPFRQFOXGLQJ             YLRODWLRQRI86&D$LDJDLQVWWKH%HQIRUGV
WKDWDMXU\ZRXOGKDYHIRXQGEH\RQGDUHDVRQDEOHGRXEWWKDW                DQG7UDPEOH+RZHYHUWKHVXSHUVHGLQJLQGLFWPHQWIDLOHGWR
5HQD%HQIRUGFRQVSLUHGWRSRVVHVVDWOHDVWJUDPVRIFUDFN                DOOHJHWKHTXDQWLW\RIGUXJVDWWULEXWDEOHWRHDFK'HIHQGDQW
FRFDLQHRUJUDPVRIFRFDLQHSRZGHU7RSXWLWVLPSO\                 6WHZDUW7UDPEOH5RVVHOODQG/DQ[WHUDOOSOHDGHGJXLOW\WR
ZHQHHGQRWEHFRQFHUQHGZLWKZKHWKHUWKHHYLGHQFHDJDLQVW                 WKHGUXJFRQVSLUDF\FKDUJH7UDPEOHDOVRSOHDGHGJXLOW\WR
5HQD %HQIRUG ZDV mVXSHURYHUZKHOPLQJl RU MXVW mEDUHO\                WKH PRQH\ ODXQGHULQJ FKDUJH  7KHLU SOHD DJUHHPHQWV DOVR
RYHUZKHOPLQJlVRORQJDVLWZDVLQGHHGRYHUZKHOPLQJ6HH                 IDLOHGWRVSHFLI\WKHUHOHYDQWGUXJTXDQWLWLHV7KH%HQIRUGV
1HGHUY8QLWHG6WDWHV86H[SODLQLQJWKDW             SURFHHGHG WR WULDO DIWHU ZKLFK WKH\ ZHUH FRQYLFWHG RQ WKH
mZKHUH D UHYLHZLQJ FRXUW FRQFOXGHV EH\RQG D UHDVRQDEOH              GUXJ FRQVSLUDF\ FKDUJH DQG RQH RI WKH PRQH\ ODXQGHULQJ
GRXEWWKDWWKHRPLWWHGHOHPHQWZDVXQFRQWHVWHGDQGVXSSRUWHG
E\RYHUZKHOPLQJHYLGHQFHVXFKWKDWWKHMXU\YHUGLFWZRXOG
KDYHEHHQWKHVDPHDEVHQWWKHHUURUWKHHUURQHRXVLQVWUXFWLRQ
LVSURSHUO\IRXQGWREHKDUPOHVVl
       8QLWHG6WDWHVY                      1RV          1RV                         8QLWHG6WDWHVY      
        6WHZDUWHWDO                                                         6WHZDUWHWDO

FKDUJHV$W'HIHQGDQWVjUHVSHFWLYHVHQWHQFLQJKHDULQJVWKH             GHWHUPLQHG WKDW WKH DSSURSULDWH VWDUWLQJ SRLQW IRU WKH
GLVWULFWFRXUWUHFHLYHGHYLGHQFHZKLFKZDVXVHGWRGHWHUPLQH              GHIHQGDQWjV GRZQZDUG GHSDUWXUH ZDV KLV PDQGDWRU\
WKHTXDQWLW\RIGUXJVDWWULEXWDEOHWRHDFKRIWKHP7KHFRXUW            PLQLPXPVHQWHQFH2WKHUFLUFXLWVKDYHIROORZHGWKHVDPH
KDQGHGGRZQVHQWHQFHVVSHFLI\LQJWHUPVRILPSULVRQPHQWDQG                ORJLFXVHGLQ+D\HV6HHHJ8QLWHG6WDWHVY/L)G
VXSHUYLVHGUHOHDVHDVZHOO DVVSHFLDODVVHVVPHQWVIRUHDFK              VW&LUKROGLQJWKDWWKHSURSHUVWDUWLQJSRLQW
'HIHQGDQW$OO'HIHQGDQWVILOHGWLPHO\QRWLFHVRIDSSHDO                IURPZKLFKDGHSDUWXUHLVWREHVXEWUDFWHGRUWRZKLFKLWPXVW
                                                                          EH DGGHG LV WKH JUHDWHU RI WKH JXLGHOLQH UDQJH RU WKH
                           ',6&866,21                                     PDQGDWRU\PLQLPXP8QLWHG6WDWHVY+HDG)G
                                                                          WK&LU
,027,2167268335(66:,5(7$3(9,'(1&(
                                                                             :HILQGWKLVORJLFSHUVXDVLYHDVZHOO7RKROGRWKHUZLVH
  $WWKHWULDORI1DWKDQDQG5HQD%HQIRUGWKHJRYHUQPHQW                 ZRXOGDIIRUGGHIHQGDQWVDGRXEOHEHQHILWE\ILUVWSHUPLWWLQJ
LQWURGXFHGLQWRHYLGHQFHUHFRUGHGWHOHSKRQHFRQYHUVDWLRQVE\              WKHP WR DYRLG D KLJKHU PDQGDWRU\ PLQLPXP VHQWHQFH DQG
VHYHUDOPHPEHUVRIWKHGUXJFRQVSLUDF\7KH%HQIRUGVERWK                WKHQ JUDQWLQJ D GHSDUWXUH IURP DQ HYHQ ORZHU VHQWHQFLQJ
PRYHGWRVXSSUHVVWKHZLUHWDSLQIRUPDWLRQSULRUWRWULDODQG             JXLGHOLQHVUDQJH:HGRQRWEHOLHYHWKDW&RQJUHVVLQWHQGHG
DOVRUHTXHVWHGDQHYLGHQWLDU\KHDULQJRQWKHLVVXHKRZHYHU              VXFK D UHVXOW  )RU WKHVH UHDVRQV ZH QRZ MRLQ RXU VLVWHU
WKHGLVWULFWFRXUWGHQLHGWKHPRWLRQVWRVXSSUHVVZLWKRXWWKH             FLUFXLWV DQG KROG WKDW WKH DSSURSULDWH VWDUWLQJ SRLQW IRU
EHQHILWRIDKHDULQJ2QDSSHDOWKH%HQIRUGVFRQWHQGWKDWWKH           FDOFXODWLQJDGRZQZDUGGHSDUWXUHXQGHU86&H
DIILGDYLWXVHGWRREWDLQWKHZLUHWDSZDUUDQWGLGQRWVDWLVI\WKH          LVWKHPDQGDWRU\PLQLPXPVHQWHQFHLWVHOI
UHTXLUHPHQWVRI86&FDQGIXUWKHUWKDWWKH\
ZHUHLPSURSHUO\GHQLHGDQHYLGHQWLDU\KHDULQJRQWKLVPDWWHU                                      &21&/86,21
LQ YLRODWLRQ RI )UDQNV Y 'HODZDUH  86  
EHFDXVHVRPHRIWKHVWDWHPHQWVLQWKHDIILGDYLWZHUHHLWKHU                 )RU WKH UHDVRQV ZH KDYH GLVFXVVHG ZH $)),50 WKH
NQRZLQJO\IDOVHRUPDGHZLWKUHFNOHVVGLVUHJDUGDVWRWKHLU               MXGJPHQWVRIWKHGLVWULFWFRXUWLQDOOUHVSHFWV
YHUDFLW\:HUHMHFWERWKRIWKHVHFODLPV
                                 $
  $VDJHQHUDOPDWWHUWKLV&RXUWUHYLHZVWKHGLVWULFWFRXUWjV
IDFWXDOILQGLQJVRQVXSSUHVVLRQLVVXHVIRUFOHDUHUURUDQGLWV
OHJDOFRQFOXVLRQVXQGHUWKHGHQRYRVWDQGDUG8QLWHG6WDWHV


    
     1DWKDQ %HQIRUG ZDV DFTXLWWHG RI &RXQW 7KUHH RI WKH 6XSHUVHGLQJ
,QGLFWPHQW ZKLFK ZDV DQ DGGLWLRQDO   FRQVSLUDF\ FKDUJH       5HQD
%HQIRUG ZDV DFTXLWWHG RI &RXQWV )RXU DQG )LYH RI WKH 6XSHUVHGLQJ
,QGLFWPHQW ZKLFK ZHUH DOVR DGGLWLRQDO   FRQVSLUDF\ FKDUJHV   7KH
%HQIRUGV ZHUH DOVR DFTXLWWHG RI WKUHH RWKHU PRQH\ ODXQGHULQJ FKDUJHV
    8QLWHG6WDWHVY                      1RV         1RV                         8QLWHG6WDWHVY      
      6WHZDUWHWDO                                                        6WHZDUWHWDO

UHJDUGLQJ WKH LQWHUSUHWDWLRQ RI D VWDWXWH DQG WKH VHQWHQFLQJ   Y+LOO)GWK&LU%XWWKHFLUFXLWVDUH
JXLGHOLQHVWKXVZHDSSO\WKHGHQRYRVWDQGDUGRIUHYLHZ             VSOLWDVWRWKHSURSHUVWDQGDUGRIUHYLHZRIWKHGHQLDORIDQ
8QLWHG6WDWHVY5XWDQD)GWK&LU             HYLGHQWLDU\ KHDULQJ XQGHU )UDQNV  6HH 8QLWHG 6WDWHV Y
                                                                       )LHOGV 1R   :/  DW  WK &LU
                                %                                     $XJ   8QLWHG 6WDWHV Y 3DOODGLQR 1R 
                                                                       :/DWQWK&LUsXO\8QLWHG
   /DQ[WHU FRQWHQGV WKDW RQFH WKH GLVWULFW FRXUW JUDQWV D      6WDWHVY'DOH)GQ'&&LU,Q
 H PRWLRQ WR GHSDUW IURP D VWDWXWRU\ PLQLPXP            'DOHRXUVLVWHUFLUFXLWQRWHGWKDWIRXUFLUFXLWVHPSOR\FOHDU
VHQWHQFHWKHUHVXOWLQJVHQWHQFHPD\EHQRKLJKHUWKDQWKH             HUURUUHYLHZIRUDGHQLDORID)UDQNVKHDULQJ8QLWHG6WDWHV
XSSHUHQGRIWKHRWKHUZLVHDSSOLFDEOHJXLGHOLQHUDQJH+H             Y%XFKDQDQ)GWK&LU8QLWHG
WKHUHIRUH FODLPV WKDW DIWHU WKH GRZQZDUG GHSDUWXUH KLV         6WDWHVY6NLQQHU)GWK&LU8QLWHG
UHVXOWLQJVHQWHQFHVKRXOGKDYHEHHQVRPHZKHUHZLWKLQWKH               6WDWHVY+DGILHOG)GVW&LU8QLWHG
JXLGHOLQHUDQJHRIILIW\RQHWRVHYHQW\RQHPRQWKV7KLVLVDQ        6WDWHVY2QH3DUFHORI3URSHUW\)GG&LU
LVVXHRIILUVWLPSUHVVLRQLQWKLV&LUFXLW+RZHYHUWKHRWKHU         DQG WZR FLUFXLWV UHYLHZ GH QRYR8QLWHG 6WDWHV Y
DSSHOODWHFRXUWVWKDWKDYHFRQVLGHUHGWKLVLVVXHKDYHUHMHFWHG         +RPLFN)GWK&LU8QLWHG6WDWHVY
VLPLODUDUJXPHQWV                                                     0XHOOHU)GWK&LUGHQLDORISRVW
                                                                       FRQYLFWLRQ UHOLHI YDFDWHG E\  )G  WK &LU 
   ,Q8QLWHG6WDWHVY+D\HV)GWK&LU         +RZHYHU DV ZDV WKH FDVH LQ )LHOGV DQG 'DOH mWKH PRUH
WKH6HYHQWK&LUFXLWFRQVLGHUHGDFDVHRQDOOIRXUVZLWKWKH           H[DFWLQJ>GHQRYR@VWDQGDUGRIUHYLHZLVVDWLVILHGDQGLWLV
LQVWDQWFDVH,QWKDWFDVHDGHIHQGDQWZKRIDFHGDPDQGDWRU\         XQQHFHVVDU\IRUXVWRIXUWKHUGLVFXVVWKHLVVXHl)LHOGV
PLQLPXP VHQWHQFH RI  PRQWKV XQGHU  86&                   :/DW
E%REWDLQHGDGRZQZDUGGHSDUWXUHPRWLRQIURP
WKHJRYHUQPHQWXQGHU86&H7KHGHIHQGDQW                                              %
FODLPHGWKDWHUHTXLUHGWKDWKLVUHVXOWLQJVHQWHQFHIDOO
ZLWKLQ KLV VHQWHQFLQJ JXLGHOLQH UDQJH RI WZHQW\RQH WR             ,QRUGHUWRFRQGXFWHOHFWURQLFVXUYHLOODQFHXVLQJDZLUHWDS
WZHQW\VHYHQ PRQWKV  7KH FRXUW UHMHFWHG WKLV DUJXPHQW         IHGHUDOODZHQIRUFHPHQWRIILFLDOVPXVWVHFXUHDXWKRUL]DWLRQ
ILQGLQJ LQVWHDG WKDW WKH GHIHQGDQWjV UHVXOWLQJ VHQWHQFH RI      E\ PDNLQJ DQ DSSOLFDWLRQ FRQWDLQLQJ D mIXOO DQG FRPSOHWH
IRUW\VHYHQ PRQWKV ZDV LPSRVHG LQ DFFRUGDQFH ZLWK WKH           VWDWHPHQWDVWRZKHWKHURUQRWRWKHULQYHVWLJDWLYHSURFHGXUHV
JXLGHOLQHV,QGUDZLQJWKLVFRQFOXVLRQWKHFRXUWSRLQWHGWR          KDYHEHHQWULHGDQGIDLOHGRUZK\WKH\UHDVRQDEO\DSSHDUWREH
ODQJXDJH LQ 866*  *E SURYLGLQJ WKDW m>Z@KHUH D          XQOLNHO\WRVXFFHHGLIWULHGRUWREHWRRGDQJHURXVl86&
VWDWXWRULO\ UHTXLUHG PLQLPXP VHQWHQFH LV JUHDWHU WKDQ WKH        F  7KLV VWDWXWRU\ mQHFHVVLW\ UHTXLUHPHQWl ZDV
PD[LPXPRIWKHDSSOLFDEOHJXLGHOLQHUDQJHWKHVWDWXWRULO\             GHVLJQHGWRLQVXUHWKDWmZLUHWDSSLQJLVQRWUHVRUWHGWRLQD
UHTXLUHGPLQLPXPVHQWHQFHVKDOOEHWKHJXLGHOLQHVHQWHQFHl            VLWXDWLRQ LQ ZKLFK WUDGLWLRQDO LQYHVWLJDWLYH WHFKQLTXHV ZLOO
+D\HV)GDW%DVHGXSRQLWVLQWHUSUHWDWLRQRIWKLV        VXIILFHWRH[SRVHWKHFULPHl8QLWHG6WDWHVY$OIDQR
ODQJXDJH WKH FRXUW KHOG WKDW mWKH VWDWXWRU\ PDQGDWRU\          )GWK&LU*HQHUDOO\DGLVWULFWFRXUWjV
PLQLPXPVHQWHQFHEHFDPH>WKHGHIHQGDQWjV@JXLGHOLQHV             ILQGLQJWKDWWKHUHTXLUHPHQWVRIFKDYHEHHQPHW
UDQJHDOEHLWDQDUURZRQHl,GDW7KHFRXUWWKHUHIRUH
     8QLWHG6WDWHVY                       1RV         1RV                            8QLWHG6WDWHVY       
      6WHZDUWHWDO                                                            6WHZDUWHWDO

DUH DIIRUGHG mFRQVLGHUDEOH GLVFUHWLRQl  8QLWHG 6WDWHV Y        UHGXFHG /DQ[WHUjV VHQWHQFH EXW WKH UHVXOWLQJ VHQWHQFH RI
/DQGPHVVHU)GWK&LU                            QLQHW\WZRPRQWKVLPSULVRQPHQWIHOOEHWZHHQWKHVWDWXWRU\
                                                                        PLQLPXPPRQWKVDQGWKHXSSHUHQGRIWKHJXLGHOLQH
   ,Q )UDQNV WKH 6XSUHPH &RXUW UHFRJQL]HG D GHIHQGDQWjV         UDQJH VHYHQW\RQH PRQWKV  /DQ[WHU QRZ DSSHDOV WKDW
ULJKWWRFKDOOHQJHWKHVXIILFLHQF\RIDSUHYLRXVO\LVVXHGDQG           GHFLVLRQ
H[HFXWHG ZDUUDQW E\ DWWDFNLQJ WKH VWDWHPHQWV PDGH LQ DQ
DIILGDYLW LQ VXSSRUW RI WKH ZDUUDQW  ,Q RUGHU WR REWDLQ D                                     $
KHDULQJWKHGHIHQGDQWPXVWPDNHDVXEVWDQWLDOSUHOLPLQDU\
VKRZLQJWKDWDIDOVHVWDWHPHQWNQRZLQJO\DQGLQWHQWLRQDOO\RU              7KHJRYHUQPHQWFRQWHQGVWKDW/DQ[WHULVFKDOOHQJLQJWKH
ZLWK UHFNOHVV GLVUHJDUG IRU WKH WUXWK ZDV LQFOXGHG LQ WKH     H[WHQWRIWKHFRXUWjVGRZQZDUGGHSDUWXUHZKLFKZRXOGPHDQ
DIILGDYLW)UDQNV86DW,IWKHDOOHJHGO\IDOVH         WKDWZHODFNMXULVGLFWLRQRYHUKLVDSSHDO6HH8QLWHG6WDWHVY
VWDWHPHQWLVQHFHVVDU\WRWKHILQGLQJRISUREDEOHFDXVHWKH            *UHJRU\)GWK&LUKROGLQJWKDW
)RXUWK $PHQGPHQW UHTXLUHV WKDW D KHDULQJ EH KHOG DW WKH        WKLV&RXUWmVKRXOGQRWDFFHSWMXULVGLFWLRQRYHUDSSHDOVEDVHG
GHIHQGDQWjV UHTXHVW  ,G DW   7KH GHIHQGDQW PXVW          RQIDFWRUVZKLFKWKHDSSHOODQWDUJXHVVKRXOGKDYHLQIOXHQFHG
VSHFLILFDOO\SRLQWWRWKHGLVSXWHGSRUWLRQVRIWKHFKDOOHQJHG           WKH GHJUHH RI D GRZQZDUG GHSDUWXUHl XQGHU  86&
DIILGDYLW DQG PXVW VXSSRUW WKHVH FKDUJHV ZLWK DQ RIIHU RI     H +RZHYHULQWKHFDVHDWEDU/DQ[WHUGRHVQRW
SURRI,G,IWKHGHIHQGDQWPHHWVWKLVEXUGHQWKHFRXUWPXVW         DUJXH WKDW FHUWDLQ IDFWRUV VKRXOG KDYH OHG WR D JUHDWHU
WKHQUHFRQVLGHUWKHDIILGDYLWZLWKRXWWKHGLVSXWHGSRUWLRQVDQG         GRZQZDUGGHSDUWXUHUDWKHUKHFKDOOHQJHVWKHPHWKRGXVHG
GHWHUPLQH ZKHWKHU SUREDEOH FDXVH VWLOO H[LVWV  ,I SUREDEOH     WR FDOFXODWH WKH GRZQZDUG GHSDUWXUH IRU VXEVWDQWLDO
FDXVHGRHVQRWH[LVWWKHFRXUWPXVWKROGDIXOOHYLGHQWLDU\            DVVLVWDQFH  6HFWLRQ H SURYLGHV WKDW DIWHU WKH
KHDULQJ WR GHWHUPLQH ZKHWKHU WKH DIILGDYLW ZDV SURSHUO\          JRYHUQPHQWILOHVDGRZQZDUGGHSDUWXUHPRWLRQDXWKRUL]LQJ
VXEPLWWHG                                                              WKH GLVWULFW FRXUW WR mLPSRVH D VHQWHQFH EHORZ D OHYHO
                                                                        HVWDEOLVKHG E\ VWDWXWH DV D PLQLPXP VHQWHQFH    > VXFK@
   ,QWKHLQVWDQWFDVHODZHQIRUFHPHQWRIILFLDOVDOOHJHGWKDW         VHQWHQFHVKDOOEHLPSRVHGLQDFFRUGDQFHZLWKWKHJXLGHOLQHV
ZLUHWDS VXUYHLOODQFH ZDV WKH RQO\ LQYHVWLJDWLYH WHFKQLTXH         DQGSROLF\VWDWHPHQWVLVVXHGE\WKH6HQWHQFLQJ&RPPLVVLRQ
UHDVRQDEO\ OLNHO\ WR HVWDEOLVK WKH IXOO VFRSH RI WKH DOOHJHG      l   86&  H  /DQ[WHUjV DSSHDO DVNV XV WR
FULPLQDOHQWHUSULVH,QDSDJHDIILGDYLWWKH\SURYLGHGD          GHWHUPLQH ZKHWKHU E\ XVLQJ KLV  PRQWK PDQGDWRU\
WUHPHQGRXV DPRXQW RI LQIRUPDWLRQ VXSSRUWLQJ WKLV FODLP           PLQLPXP VHQWHQFH DV WKH VWDUWLQJ SRLQW IRU LWV GRZQZDUG
LQFOXGLQJDVWDWHPHQWDVWRWKHHOHPHQWRIGDQJHULQYROYHG              GHSDUWXUHFDOFXODWLRQWKHGLVWULFWFRXUWLJQRUHGWKHODQJXDJH
DQGVSHFLILFLQYHVWLJDWLYHWHFKQLTXHVWKDWKDGEHHQXWLOL]HG           LQHGLUHFWLQJWKHFRXUWWRUHO\XSRQWKHJXLGHOLQHVLQ
LQFOXGLQJFRQILGHQWLDOLQIRUPDQWVDQGFRRSHUDWLQJZLWQHVVHV            FDOFXODWLQJ UHGXFHG VHQWHQFHV  7KLV LV DQ LVVXH RI ODZ
FRQWUROOHGSXUFKDVHVRIGUXJVFRQVHQVXDOUHFRUGLQJVSK\VLFDO
VXUYHLOODQFH DQG WHOHSKRQH UHFRUGV  %DVHG  XSRQ  WKLV
DIILGDYLW WKH GLVWULFW FRXUW GHWHUPLQHG WKDW WKH QHHG IRU      GHSDUW EHORZ D VWDWXWRU\ PLQLPXP   6HH HJ 8QLWHG 6WDWHV Y :RUNLQJ
HOHFWURQLFVXUYHLOODQFHKDGEHHQHVWDEOLVKHGIXOILOOLQJLWVGXW\        )G  WK &LU  HQ EDQF 8QLWHG 6WDWHV Y 6DQWLDJR 
XQGHU  86&  F  1HLWKHU RI WKH %HQIRUGV         )G   G &LU  8QLWHG 6WDWHV Y 3RODQFR  )G  WK
SUHVHQWHGWKHGLVWULFWFRXUWZLWKDQ\DIILGDYLWVWRVXSSRUWWKHLU       &LU  8QLWHG 6WDWHV Y %ULJKDP  )G   WK &LU 
                                                                        8QLWHG 6WDWHV Y 5H\QROGV  )G   WK &LU 
       8QLWHG6WDWHVY                         1RV           1RV                         8QLWHG6WDWHVY         
         6WHZDUWHWDO                                                             6WHZDUWHWDO

TXRWLQJ 2ZXVX  )G DW   %HDUGHQ  )G DW              FODLPWKDWWKHDIILGDYLWZDVIDOVHLQDQ\UHVSHFW,QVWHDGWKH\
  :H EHOLHYH WKDW WKH GLVWULFW FRXUW UHFRJQL]HG LWV              PHUHO\DUJXHGWKDWHOHFWURQLFVXUYHLOODQFHZDVQRWQHFHVVDU\
GLVFUHWLRQ WR GHSDUW GRZQZDUG EXW EDVHG RQ WKH HYLGHQFH               XQGHU WKH FLUFXPVWDQFHV EHFDXVH RWKHU ODZ HQIRUFHPHQW
SUHVHQWHG WR LW HYHQ LQ WKH DJJUHJDWH EHOLHYHG WKDW VXFK            WHFKQLTXHVZHUHVXFFHVVIXODQGWKHWZRPDMRUFRFRQVSLUDWRUV
GHSDUWXUHZDVXQZDUUDQWHG:HWKHUHIRUHPD\QRWUHYLHZWKH                    ZKRZHUHSXUSRUWHGWREHGDQJHURXVZHUHQRWHYHQFKDUJHG
GLVWULFWFRXUWjVGHFLVLRQQRWWRGHSDUWGRZQZDUG                              LQWKHFDVH7KLV&RXUWKDVH[SODLQHG
          9,6(17(1&,1*$)7(5'2:1:$5'                                         $GHIHQGDQWZKRFKDOOHQJHVWKHYHUDFLW\RIVWDWHPHQWV
                      '(3$5785(                                                  PDGHLQDQDIILGDYLWWKDWIRUPHGWKHEDVLVIRUDZDUUDQW
                                                                                 KDVDKHDY\EXUGHQ+LVDOOHJDWLRQVPXVWEHPRUHWKDQ
  7KH VROH LVVXH SUHVHQWHG LQ 7LPRWK\ /DQ[WHUjV DSSHDO                    FRQFOXVRU\ +H PXVW SRLQW WR VSHFLILF IDOVH VWDWHPHQWV
FRQFHUQVWKHSURSHUPHWKRGRIVHQWHQFLQJGHIHQGDQWVZKRDUH                      WKDWKHFODLPVZHUHPDGHLQWHQWLRQDOO\RUZLWKUHFNOHVV
JUDQWHG GRZQZDUG GHSDUWXUHV IURP VWDWXWRU\ PLQLPXP                          GLVUHJDUG IRU WKH WUXWK +H PXVW DFFRPSDQ\ KLV
VHQWHQFHV$OWKRXJK/DQ[WHUjVVHQWHQFLQJUDQJHXQGHUWKH                        DOOHJDWLRQV ZLWK DQ RIIHU RI SURRI  0RUHRYHU KH DOVR
JXLGHOLQHV ZDV IURP ILIW\RQH WR VHYHQW\RQH PRQWKV WKH                  VKRXOG SURYLGH VXSSRUWLQJ DIILGDYLWV RU H[SODLQ WKHLU
GLVWULFW FRXUWjV GUXJ TXDQWLW\ FDOFXODWLRQ DQG /DQ[WHUjV                   DEVHQFH ,I KH PHHWV WKHVH UHTXLUHPHQWV WKHQ WKH
SUHYLRXV IHORQ\ GUXJ FRQYLFWLRQ WULJJHUHG D VWDWXWRU\                      TXHVWLRQ EHFRPHV ZKHWKHU DEVHQW WKH FKDOOHQJHG
PLQLPXP VHQWHQFH RI PRQWKV LPSULVRQPHQW XQGHU                      VWDWHPHQWV WKHUH UHPDLQV VXIILFLHQW FRQWHQW LQ WKH
86&E% +RZHYHUWKHGLVWULFWFRXUWGHSDUWHG                    DIILGDYLWWRVXSSRUWDILQGLQJRISUREDEOHFDXVH
EHORZ WKDW VWDWXWRU\ PLQLPXP XSRQ D PRWLRQ E\ WKH
JRYHUQPHQWSXUVXDQWWR86&HEDVHGXSRQWKH                      8QLWHG6WDWHVY%HQQHWW)GWK&LU
VXEVWDQWLDODVVLVWDQFH/DQ[WHUSURYLGHGWRWKHJRYHUQPHQWLQ                   FLWDWLRQVRPLWWHG
WKH LQYHVWLJDWLRQ RI RWKHU VXVSHFWV  7KH GLVWULFW FRXUW
                                                                                  ,QDGGLWLRQWREHLQJFRQFOXVRU\WKH%HQIRUGVjDUJXPHQWV
                                                                               DUHVLPSO\ZURQJDVDPDWWHURIODZ,QHQGHDYRULQJWRVHFXUH
     
      $W VHQWHQFLQJ WKH GLVWULFW FRXUW DGRSWHG WKH UHFRPPHQGDWLRQ LQ WKH
                                                                               D ZLUHWDS ZDUUDQW WKH JRYHUQPHQW QHHG QRW SURYH WKH
36,5 ZKLFK GHWHUPLQHG WKDW /DQ[WHU ZDV UHVSRQVLEOH IRU  JUDPV RI
                                                                               LPSRVVLELOLW\ RI RWKHU PHDQV RI REWDLQLQJ LQIRUPDWLRQ
SRZGHU FRFDLQH /DQ[WHU KDV QRW DVVHUWHG DQ        $SSUHQGLFKDOOHQJH RQ        ,QVWHDG WKH QHFHVVLW\ SURYLVLRQV PHUHO\ UHTXLUH WKDW ODZ
DSSHDO                                                                        HQIRUFHPHQW RIILFLDOV mJLYH VHULRXV FRQVLGHUDWLRQ WR WKH
     
                                                                               QRQZLUHWDSWHFKQLTXHVSULRUWRDSSO\LQJIRUZLUHWDSDXWKRULW\
        :KHQ D GHIHQGDQW IDFHV D VWDWXWRU\ PLQLPXP VHQWHQFH WKH GLVWULFW      DQG WKDW WKH FRXUW EH LQIRUPHG RI WKH UHDVRQV IRU WKH
FRXUWjV DELOLW\ WR GHSDUW GRZQZDUG EHORZ WKDW PLQLPXP LV OLPLWHG WR WZR        LQYHVWLJDWRUVjEHOLHIWKDWVXFKQRQZLUHWDSWHFKQLTXHVKDYH
SURYLVLRQV 86&  H ZKLFK DOORZV IRU GHSDUWXUHV EDVHG XSRQ
                                                                               EHHQRUZLOOOLNHO\EHLQDGHTXDWHl8QLWHG6WDWHVY/DPEHUW
WKH JRYHUQPHQWjV PRWLRQ LQGLFDWLQJ WKDW D GHIHQGDQW KDV SURYLGHG
VXEVWDQWLDO DVVLVWDQFH LQ WKH LQYHVWLJDWLRQ RI RWKHU VXVSHFWV DQG  86&
                                                                               )GWK&LU7KLVSUHFLVHLQIRUPDWLRQZDV
 I ZKLFK LV NQRZQ DV WKH mVDIHW\ YDOYHl SURYLVLRQ ,Q       8QLWHG     SURYLGHGLQWKHLQVWDQWFDVH6HH8QLWHG6WDWHVY&RRSHU
6WDWHV Y %XUNH  )G   WK &LU  ZH UHFRJQL]HG WKDW DOO     )GWK&LUKROGLQJWKDWXQGHUFRYHU
RI WKH FRXUWV WKDW KDYH DGGUHVVHG WKH LVVXH KDYH GHWHUPLQHG WKDW WKHVH WZR     RSHUDWLRQV LQFOXGLQJ FRQWUROOHG SXUFKDVHV FRQVHQVXDO
SURYLVLRQV UHSUHVHQW WKH H[FOXVLYH PHDQV E\ ZKLFK D GLVWULFW FRXUW PD\
    8QLWHG6WDWHVY                     1RV        1RV                         8QLWHG6WDWHVY      
      6WHZDUWHWDO                                                      6WHZDUWHWDO

WHOHSKRQHPRQLWRULQJDQGSK\VLFDOVXUYHLOODQFHHVWDEOLVKHG          HYLGHQFHEHIRUHLWQRWWRGHSDUWGRZQZDUGm$GLVWULFWFRXUW
WKDWmQRUPDOLQYHVWLJDWLYHSURFHGXUHVlKDGEHHQH[WHQVLYHO\          MXGJH KDV QR GXW\ µWR VWDWH DIILUPDWLYHO\ WKDW KH NQRZV KH
FRQGXFWHG DQG WKDW WKH UHTXHVWHG LQWHUFHSWLRQ RI ZLUH DQG   SRVVHVVHV WKH SRZHU WR PDNH D GRZQZDUG GHSDUWXUH EXW
RUDOFRPPXQLFDWLRQVZDVQRWmHPSOR\HGDVWKHLQLWLDOVWHSLQ         GHFOLQHVWRGRVRjl2ZXVX)GDWFLWLQJ8QLWHG
FULPLQDOLQYHVWLJDWLRQl                                            6WDWHV Y %\UG  )G   WK &LU  $IWHU
                                                                     FRQVLGHULQJ5RVVHOOjVDUJXPHQWVFRQFHUQLQJKLVUHKDELOLWDWLYH
   )XUWKHUPRUH WKH PHUH IDFW WKDW VRPH LQYHVWLJDWLYH          HIIRUWVWKHGLVWULFWFRXUWH[SODLQHG
WHFKQLTXHV ZHUH VXFFHVVIXO LQ XQFRYHULQJ HYLGHQFH RI
ZURQJGRLQJGRHVQRWPDQGDWHWKDWDFRXUWQHJDWHWKHQHHGIRU           6RZLWKUHVSHFWWRWKHGUXJUHKDE,PHDQLWjVFHUWDLQO\
ZLUHWDS VXUYHLOODQFH  :H KDYH SUHYLRXVO\ UHFRJQL]HG WKDW       FRPPHQGDEOHWKDWWKHGHIHQGDQWKDVJRQHWRJRQHDQG
mZLUHWDSSLQJLVSDUWLFXODUO\DSSURSULDWHZKHQWKHWHOHSKRQHLV         VRXJKWWUHDWPHQWLWZLOOFHUWDLQO\KHOSKLPDVWLPHJRHV
URXWLQHO\UHOLHGRQWRFRQGXFWWKHFULPLQDOHQWHUSULVHXQGHU           RQLIKHPDLQWDLQVWKDW$QG,KRSHKHGRHV%XW,GRQjW
LQYHVWLJDWLRQl8QLWHG6WDWHVY/DQGPHVVHU)G          WKLQNLWjVH[WUDRUGLQDU\:HKDYHPDQ\SHRSOHZKRRQFH
WK&LUTXRWLQJ8QLWHG6WDWHVY6WHLQEHUJ)G         WKH\JHWFDXJKWJRLQWRGUXJUHKDE$QG,jPDOZD\VJODG
  G &LU   7KH HYLGHQFH UHIOHFWV WKDW       WR VHH LW EXW , GRQjW WKLQN LW ZDUUDQWV D GRZQZDUG
YDULRXV PHPEHUV RI WKH GUXJ FRQVSLUDF\ IDFLOLWDWHG WKH          GHSDUWXUH$QGFHUWDLQO\LQWKLVFDVHLWGRHVQRWMXVWLI\
FULPLQDOHQWHUSULVHWKURXJKPXOWLSOHWHOHSKRQHFRQYHUVDWLRQV           DGRZQZDUGGHSDUWXUH$QGLQDQ\HYHQWHYHQLILWZDV
IURPVHYHUDOORFDWLRQV,QDGGLWLRQLWGRHVQRWDSSHDUWKDWWKH      H[WUDRUGLQDU\ , GR QRW EHOLHYH LW ZRXOG ZDUUDQW D
JRYHUQPHQW FRXOG KDYH XQFRYHUHG WKH IXOO VFRSH RI WKH          VHQWHQFH EHORZ WKH PDQGDWRU\PLQLPXP ZLWKRXW D
FRQVSLUDF\HVSHFLDOO\QRWLQDUHODWLYHO\VDIHPDQQHUZLWKRXW        PRWLRQE\WKHJRYHUQPHQWXQGHUH
WKHZLUHWDSV%\WKHWLPHWKHHOHFWURQLFVXUYHLOODQFHEHJDQLQ
WKLV FDVH WKH LQYHVWLJDWLRQ KDG EHHQ JRLQJ RQ IRU           s$DW
DSSUR[LPDWHO\WKUHH\HDUV<HWWKHVXUYHLOODQFHSHUPLWWHG
DXWKRULWLHV WR GLVFRYHU QXPHURXV DGGLWLRQDO SDUWLFLSDQWV LQ       'HIHQVH FRXQVHO ODWHU DUJXHG WKDW FRQVLGHULQJ WKH
WKLVIDUUHDFKLQJFRQVSLUDF\7KH%HQIRUGVKDYHSURYLGHGQR         FRPELQDWLRQRIIDFWRUVDGRZQZDUGGHSDUWXUHZDVMXVWLILHG
HYLGHQFH WR FRQWHVW WKH JRYHUQPHQWjV FRQWHQWLRQ WKDW           'HIHQVHFRXQVHOVWDWHGmZHUHVSHFWIXOO\UHTXHVWWKDW\RXGR
WUDGLWLRQDOPHWKRGVZRXOGKDYHEHHQGDQJHURXV7KHIDFWWKDW        KDYHWKHDXWKRULW\XQGHU.WRPDNHDVHQWHQFHOHVVWKDQ
WZR LQGLYLGXDOV ZKRP WKH JRYHUQPHQW SDUWLFXODUO\ IHDUHG        WKHJXLGHOLQHVls$DW7RWKDWWKHGLVWULFW FRXUW
ZHUH QRW HYHQWXDOO\ LQGLFWHG LV QRW UHOHYDQW WR WKLV         UHVSRQGHGm>Z@HOO,jYHQRWEHHQPDGHDZDUHRIDQ\WKLQJWKDW
GHWHUPLQDWLRQ&I8QLWHG6WDWHVY*XHUUD0DUH])G          ZRXOGZDUUDQWDGRZQZDUGGHSDUWXUHIRUDVHQWHQFHOHVVWKDQ
  WK &LU  m7KH JRYHUQPHQW FRXOG KDYH         WKHJXLGHOLQHVFROOHFWLYHO\RULQGLYLGXDOO\ls$DW
UHDVRQDEO\ FRQFOXGHG WKDW DWWHPSWLQJ WR HOLFLW IXUWKHU         m>$@Q DSSHOODWH FRXUW VKRXOG EH UHOXFWDQW WR WUHDW DV
LQIRUPDWLRQZRXOGKDYHDURXVHGWKHVXVSLFLRQVRIRWKHU         DPELJXRXVDUXOLQJZKLFKGRHVQRWDIILUPDWLYHO\VWDWHWKDWWKH
SDUWLFLSDQWV WKXV HQGDQJHULQJ ERWK LWV LQIRUPDQW DQG WKH     MXGJHNQHZKHFRXOGGHSDUWGRZQZDUGEXWIDLOHGWRGRVR
LQYHVWLJDWLRQl                                                    :HVKRXOGWKHUHIRUHDVVXPHWKDWDGLVWULFWFRXUWLVH[HUFLVLQJ
                                                                     LWV SURSHU GLVFUHWLRQ ZKHQ LW FRQFOXGHV WKDW D GRZQZDUG
                                                                     GHSDUWXUH LV XQZDUUDQWHGl  0F*DKHH  )G DW 
    8QLWHG6WDWHVY                        1RV          1RV                           8QLWHG6WDWHVY      
      6WHZDUWHWDO                                                             6WHZDUWHWDO

VLJQLILFDQFHZKHQFRQVLGHUHGLQWKHDJJUHJDWHRIPLWLJDWLQJ               )RUWKHVHUHDVRQVZHKROGWKDWWKHGLVWULFWFRXUWGLGQRWHUU
IDFWRUVWKDWKHDOOHJHVZDUUDQWHGDGRZQZDUGGHSDUWXUHXQGHU              LQGHFOLQLQJWRKROGD)UDQNVKHDULQJRUE\GHWHUPLQLQJWKDW
WKH 6HQWHQFLQJ *XLGHOLQHV  :H UHYLHZ D GLVWULFW FRXUWjV          WKH HYLGHQFH ZDV VXIILFLHQW WR VDWLVI\ WKH JRYHUQPHQWjV
GHFLVLRQ WR JUDQW D GRZQZDUG GHSDUWXUH IRU DEXVH RI               REOLJDWLRQWRVKRZQHFHVVLW\IRUHOHFWURQLFVXUYHLOODQFHXQGHU
GLVFUHWLRQ8QLWHG6WDWHVY0F*DKHH)GWK             F
&LU+RZHYHUWKLV&RXUWKDVmFRQVLVWHQWO\KHOGWKDW
WKHGHFLVLRQE\DGLVWULFWFRXUWQRWWRGHSDUWGRZQZDUGVIURP                        ,,m5($621$%/('28%7ls85<
WKH*XLGHOLQHVLVQRWUHYLHZDEOHRQDSSHDOXQOHVVWKHUHFRUG                                  ,16758&7,216
UHIOHFWV WKDW WKH GLVWULFW FRXUW ZDV QRW DZDUH RI RU GLG QRW
XQGHUVWDQGLWVGLVFUHWLRQWRPDNHVXFKDGHSDUWXUHl8QLWHG                1DWKDQ %HQIRUG DOVR FODLPV RQ DSSHDO WKDW WKH MXU\
6WDWHV Y %HDUGHQ  )G   WK &LU            LQVWUXFWLRQVGHOLYHUHGDWKLVWULDOUHJDUGLQJWKHmUHDVRQDEOH
TXRWLQJ8QLWHG6WDWHVY%XWOHU)GWK&LU             GRXEWl VWDQGDUG ZHUH IODZHG  7KLV &RXUW UHYLHZV MXU\
 0F*DKHH  )G DW  H[SODLQLQJ WKDW RQO\            LQVWUXFWLRQVDVDZKROHWRGHWHUPLQHZKHWKHUWKH\DGHTXDWHO\
ZKHUH WKH GLVWULFW FRXUW LQFRUUHFWO\ EHOLHYHG WKDW LW ODFNHG      LQIRUPWKHMXU\RIUHOHYDQWFRQVLGHUDWLRQVDQGSURYLGHDEDVLV
GLVFUHWLRQ WR GHSDUW PD\ ZH UHYLHZ WKH GLVWULFW FRXUWjV           LQ ODZ IRU WKH MXU\ WR UHDFK LWV GHFLVLRQ  ,QQHV Y +RZHOO
GHFLVLRQ QRW WR GHSDUW GRZQZDUG FLWLQJ 8QLWHG 6WDWHV Y         &RUS)GWK&LU:HPD\UHYHUVHWKH
&ROHPDQ  )G   WK &LU HQ EDQF             GLVWULFWFRXUWRQO\LIWKHLQVWUXFWLRQVYLHZHGDVDZKROHZHUH
8QLWHG 6WDWHV Y %URZQ  )G   WK &LU         FRQIXVLQJPLVOHDGLQJRUSUHMXGLFLDO,G
VDPH
                                                                            7KHGLVWULFWFRXUWLQVWUXFWHGWKHMXU\LQSDUWDVIROORZV
  5RVVHOODUJXHVWKDWDGRZQZDUGGHSDUWXUHZDVZDUUDQWHG
EHFDXVH  KH PDGH H[WUDRUGLQDU\ HIIRUWV WRZDUG                      3URRIEH\RQGDUHDVRQDEOHGRXEWPHDQVSURRIZKLFKLV
UHKDELOLWDWLRQ IURP DOFRKRO DQG GUXJ GHSHQGHQFH  KH              VRFRQYLQFLQJWKDW\RXZRXOGQRWKHVLWDWHWRUHO\DQGDFW
FRRSHUDWHG ZLWK WKH JRYHUQPHQW E\ SURYLGLQJ VXEVWDQWLDO               RQLWLQPDNLQJWKHPRVWLPSRUWDQWGHFLVLRQVLQ\RXURZQ
LQIRUPDWLRQ UHJDUGLQJ KLV DFWLYLWLHV DQG WKH DFWLYLWLHV RI           OLYHV ,I \RX DUH FRQYLQFHG WKDW WKH JRYHUQPHQW KDV
RWKHUV  KH ZDV VXEMHFWHG WR DQ HQKDQFHG PLQLPXP                 SURYHGWKHGHIHQGDQWJXLOW\EH\RQGDUHDVRQDEOHGRXEW
VHQWHQFH IRU  PRQWKV LQ SULVRQ GXH WR WZR SULRU IHORQ\         VD\ VR E\ UHWXUQLQJ D JXLOW\ YHUGLFW ,I \RX DUH QRW
FRQYLFWLRQV ZKLFK RFFXUUHG PRUH WKDQ \HDUV HDUOLHU               FRQYLQFHGVD\VRE\UHWXUQLQJDQRWJXLOW\YHUGLFW
WKHDPRXQWRIGUXJVDWWULEXWHGWRKLPZDVRYHUVWDWHGDQG
WKHORDGHGKDQGJXQXVHGWRHQKDQFHKLVVHQWHQFHXQGHU                    $WWULDOWKHGLVWULFWFRXUWGHQLHG%HQIRUGjVUHTXHVWWRGHOHWH
866*  'E ZDV YROXQWDULO\ UHYHDOHG DQG ZDV                WKHILUVWVHQWHQFHRIWKHDERYHTXRWHGSDUDJUDSK  :LWKRXW
SRVVHVVHGIRUVHQWLPHQWDOUHDVRQV                                       FLWLQJDQ\UHOHYDQWOHJDODXWKRULW\%HQIRUGQRZFODLPVWKDW
                                                                          WKHMXU\LQVWUXFWLRQVVKRXOGQRWKDYHLQFOXGHGWKDWVHQWHQFH
  7KHJRYHUQPHQWFRXQWHUVWKDWWKHGLVWULFWFRXUWjVGHFLVLRQ              EHFDXVH LW GLOXWHV WKH UHDVRQDEOH GRXEW VWDQGDUG WKHUHE\
QRW WR JUDQW D GRZQZDUG GHSDUWXUH LV XQUHYLHZDEOH LQ WKLV        YLRODWLQJWKH'XH3URFHVV&ODXVHRIWKH)LIWK$PHQGPHQW
FDVH LQDVPXFK DV WKH GLVWULFW FRXUW FRQVLGHUHG DOO RI WKH        +HQRWHVWKDWVHYHUDOFRXUWVKDYHGLVFRXUDJHGDQ\DWWHPSWWR
DUJXPHQWV 5RVVHOO QRZ UDLVHV DQG GHFLGHG EDVHG RQ WKH             GHILQHmUHDVRQDEOHGRXEWlGXHWRWKHGLIILFXOW\RIVXFKDWDVN
    8QLWHG6WDWHVY                        1RV         1RV                          8QLWHG6WDWHVY      
      6WHZDUWHWDO                                                           6WHZDUWHWDO

+RZHYHUWKHUHLVQRLQGLFDWLRQWKDWWKHMXU\LQVWUXFWLRQVDUH           RQWKHSUHPLVHVLQFOXGLQJWLPHVZKHQWKHGUXJVZHUHEHLQJ
FRQIXVLQJ6HH+ROODQGY8QLWHG6WDWHV86              GHDOW RXW RI WKH VWRUH  5RELQVRQ DOVR WHVWLILHG WKDW ZKHQ
VXJJHVWLQJWKDWMXU\LQVWUXFWLRQVRIUHDVRQDEOHGRXEW            7UDPEOHFDPHWRWKHVWRUHKHZRXOGRIWHQEULQJDORQJD
VKRXOGEHVWDWHGmLQWHUPVRIWKHNLQGRIGRXEWWKDWZRXOG               PDJQXPDQGDVN6WHZDUWRU5RELQVRQWRmSXWLWXSlIRUKLP
PDNHDSHUVRQKHVLWDWHWRDFWUDWKHUWKDQWKHNLQGRQZKLFKKH          $IWHUKHDULQJDOORIWKHHYLGHQFHWKHGLVWULFWFRXUWIRXQGWKDW
ZRXOGEHZLOOLQJWRDFWlEXWmWKHLQVWUXFWLRQDVJLYHQZDVQRW          WKHILUHDUPVZHUHSUHVHQWDWWKHWLPH6WHZDUWDQGWKHRWKHUV
RI WKH W\SH WKDW FRXOG PLVOHDG WKH MXU\ LQWR ILQGLQJ QR        ZHUHHQJDJHGLQFRFDLQHWUDQVDFWLRQV:HDJUHH$VDSHUVRQ
UHDVRQDEOH GRXEW ZKHQ LQ IDFW WKHUH ZDV VRPHl LQWHUQDO         RSHUDWLQJWKHVWRUH6WHZDUWKDGFRQVWUXFWLYHSRVVHVVLRQRIWKH
FLWDWLRQVRPLWWHG0RUHRYHUWKHFRQWHVWHGODQJXDJHLVWDNHQ           ZHDSRQV  6KH DUJXHV KRZHYHU WKDW VKH GLG QRW KDYH
YHUEDWLPIURPWKLV&LUFXLWjV3DWWHUQsXU\,QVWUXFWLRQVZKLFK            FRQVWUXFWLYHSRVVHVVLRQEHFDXVHVKHGLGQRWKDYHGRPLQLRQ
KDYHQRWEHHQKHOGWREHXQFRQVWLWXWLRQDO6HH3DWWHUQsXU\             DQGFRQWURORYHUWKHSUHPLVHVZKHUHWKHILUHDUPVZHUHORFDWHG
LQVWUXFWLRQVWK&LU(G:HWKHUHIRUHKROGWKDW            DW WKH WLPH WKH VHDUFK ZDUUDQW ZDV LVVXHG DQG H[HFXWHG
WKHMXU\LQVWUXFWLRQVZHUHQRWIODZHG                                   +RZHYHU%U\GLHWHVWLILHGWKDW 6WHZDUWZRUNHGDWWKHVWRUH
                                                                         HYHU\ GD\ IURP DSSUR[LPDWHO\ VL[ Rj FORFN LQ WKH PRUQLQJ
        ,,,:,7+'5$:$/2)*8,/7<3/($                                  XQWLOVL[RjFORFNDWQLJKW$VWKHPDQDJHURIWKHVWRUHZKR
                                                                         ZDV SUHVHQW IRU VR PXFK RI WKH GD\ ZKR NQHZ ZKHUH WKH
   'HIHQGDQW7UDPEOHVHHNVWRYDFDWHKLVSOHDRIJXLOW\WRWKH           ZHDSRQVZHUHORFDWHGDQGZKRZDVLQYROYHGZLWKGLVWULEXWLQJ
FKDUJHRIDLGLQJDQGDEHWWLQJPRQH\ODXQGHULQJLQYLRODWLRQ              GUXJVIURPWKHVWRUHLWLVLQFRQFHLYDEOHWKDW6WHZDUWGLGQRW
RI86&$L,QDVPXFKDVKHGLGQRWUDLVH              KDYHGRPLQLRQDQGFRQWURORYHUWKHZHDSRQVGXULQJWKHGUXJ
WKLV LVVXH EHIRUH WKH GLVWULFW FRXUW DQG HYHQ QRZ GRHV QRW    WUDIILFNLQJ DFWLYLW\  +LOO  )G DW   ,Q DGGLWLRQ
FODLPWKDWKLVSOHDZDVQRWNQRZLQJDQGYROXQWDU\ZHUHYLHZ             6WHZDUW PD\ EH KHOG UHVSRQVLEOH IRU WKH SRVVHVVLRQ RI WKH
WKH FRXUWjV DFFHSWDQFH RI 7UDPEOHjV SOHD IRU SODLQ HUURU        JXQV E\ KHU FRGHIHQGDQWV EHFDXVH LW ZDV UHDVRQDEO\
)(' 5 &5,0 3E&I8QLWHG6WDWHVY7LPEDQD              IRUHVHHDEOH WKDW WKH\ SRVVHVVHG WKH ZHDSRQV LQ FRQQHFWLRQ
)GWK&LUKROGLQJWKDWYROXQWDULQHVVRI             ZLWKWKHGUXJFRQVSLUDF\7KLVLVSDUWLFXODUO\WUXHZLWKUHJDUG
DJXLOW\SOHDLVUHYLHZHGGHQRYRHYHQLIDGHIHQGDQWIDLOVWR           WR 7UDPEOH LQDVPXFK DV WKHUH ZDV HYLGHQFH DW 6WHZDUWjV
PRYHWRYDFDWHDMXGJPHQWRUZLWKGUDZKLVJXLOW\SOHDEHIRUH             VHQWHQFLQJKHDULQJWKDWVKHDVVLVWHGKLPLQGLVWULEXWLQJGUXJV
WKH GLVWULFW FRXUW  7KH DXWKRULW\ FUHDWHG E\ 5XOH E LV   DQGWKDWKHZRXOGRIWHQLQVWUXFWKHUWRSXWDZD\KLVJXQZKHQ
FLUFXPVFULEHG7KHUHPXVWILUVWEHDQHUURUDQGVHFRQGWKDW          KH ZDV LQ WKH VWRUH  7KHUHIRUH WKH GLVWULFW FRXUW GLG QRW
HUURU PXVW EH FRQVLGHUHG mSODLQl  ,Q DGGLWLRQ WKH mSODLQ      FOHDUO\HUULQHQKDQFLQJ6WHZDUWjVEDVHRIIHQVHOHYHOE\WZR
HUURUlPXVWDIIHFWDGHIHQGDQWjVVXEVWDQWLDOULJKWV,IDOOWKUHH       SRLQWVSXUVXDQWWR866*'E
IDFWRUV DUH SUHVHQW ZH PXVW GHWHUPLQH ZKHWKHU WKLV LV DQ
DSSURSULDWHFDVHLQZKLFKWRH[HUFLVHRXUGLVFUHWLRQWRFRUUHFW                                           %
WKH IRUIHLWHG HUURU EHFDXVH WKH HUURU WKUHDWHQV WKH EDVLF
IDLUQHVVLQWHJULW\RUSXEOLFUHSXWDWLRQRIWKHGLVWULFWFRXUW             5RVVHOODOVRDSSHDOVWKHGLVWULFWFRXUWjVGHQLDORIKLVPRWLRQ
SURFHHGLQJV  8QLWHG 6WDWHV Y 2ODQR  86           IRUDGRZQZDUGGHSDUWXUHRIKLV VHQWHQFHIRUmH[FHSWLRQDO
8QLWHG6WDWHVY+D\HV)GWK                FLUFXPVWDQFHVlXQGHU866*.'HIHQGDQWFODLPVWKDW
&LU8QLWHG6WDWHVY.RHEHUOHLQ)G               WKH GLVWULFW FRXUW IDLOHG WR DSSUHFLDWH WKH H[FHSWLRQDO
    8QLWHG6WDWHVY                      1RV        1RV                           8QLWHG6WDWHVY       
      6WHZDUWHWDO                                                         6WHZDUWHWDO

IRXQG QH[W WR FDVK SURFHHGV DQG LQ FORVH SUR[LPLW\ WR KLV   WK&LUFHUWGHQLHG6&W$IWHU
FHOOXODU SKRQH ZKLFK 0UV %HQIRUG KDG KHUVHOI XVHG DQG      UHYLHZLQJ 7UDPEOHjV DUJXPHQWV ZH ILQG QR HUURU LQ KLV
ZKLFKZLUHWDSUHFRUGLQJVUHYHDOHGKDGEHHQXVHGWRIDFLOLWDWH         FRQYLFWLRQ
DQGFRQFHDOGUXJWUDQVDFWLRQV%HFDXVH0UV%HQIRUGNQHZ
WKHJXQZDVLQKHUKRPHDQGDGPLWVWKDWKHUKXVEDQGZDVLQ              7UDPEOHGRHVQRWFRQWHVWKLVDFWXDOJXLOWRUWKHYDOLGLW\RI
SRVVHVVLRQRIWKHZHDSRQLWZDVUHDVRQDEO\IRUHVHHDEOHWRKHU        KLVJXLOW\SOHDRQWKHFKDUJHRIDLGLQJDQGDEHWWLQJPRQH\
WKDW KHU KXVEDQG ZRXOG XVH LW LQ IXUWKHUDQFH RI WKH GUXJ    ODXQGHULQJ<HWKHFODLPVWKDWWKHPRQH\ODXQGHULQJFKDUJH
FRQVSLUDF\,QGHHGLQKHUEULHIVKHFRQWHQGVWKDWLWLVKLJKO\      VKRXOGKDYHEHHQGLVPLVVHGIURPWKHLQGLFWPHQWEHFDXVHKLV
SUREDEOH WKDW KHU KXVEDQG SRVVHVVHG WKH JXQ  7KXV LW LV   FRGHIHQGDQW &DURO\Q 0LOODUG ZKRP 7UDPEOH ODEHOV WKH
FHUWDLQO\QRWFOHDUO\LPSUREDEOHWKDWKHXVHGWKHZHDSRQWR           mSULQFLSDOl SHUSHWUDWRU ZDV DFTXLWWHG RQ WKLV FRXQW DIWHU D
VHFXUHWKHFRFDLQHWUDGHGXULQJVKLSPHQWDQGWRSURWHFWWKH           MXU\WULDO7UDPEOHDFNQRZOHGJHVWKDWKHDVNVWKLV&RXUWWR
FDVKSURFHHGVIURPLWVVDOHDQGDVVWDWHGWKDWKLVDFWLYLW\ZDV     HVWDEOLVKDQHZOHJDOUXOHKROGLQJWKDWFRXUWVVKRXOGGLVPLVV
UHDVRQDEO\IRUHVHHDEOHWRKHU                                        WKHLQGLFWPHQWRIDGHIHQGDQWZKRSOHDGVJXLOW\SULRUWRRU
                                                                      DIWHUKLVFRFRQVSLUDWRULVDFTXLWWHGRIWKHVDPHRIIHQVHE\D
  )LQDOO\6WHZDUWDOVRFRQWHVWVWKHGLVWULFWFRXUWjVLPSRVLWLRQ      MXU\+RZHYHUE\7UDPEOHjVRZQDGPLVVLRQWKHUHLVQROHJDO
RI D WZROHYHO HQKDQFHPHQW WR KHU EDVH RIIHQVH OHYHO DV D   SUHFHGHQWWKDWVXSSRUWVKLVFODLP
UHVXOWRILWVILQGLQJWKDWVKHSRVVHVVHGDILUHDUPLQFRQQHFWLRQ
ZLWKKHUGUXJWUDIILFNLQJRIIHQVH2QsXQHRIILFHUV            ,WLVLUUHOHYDQWWKDW7UDPEOHFKDUDFWHUL]HV&DURO\Q0LOODUG
VHDUFKHGWKH6	60DUNHWWKHVWRUHRZQHGE\KHUIDWKHUDQG            DVWKHmSULQFLSDOlLQWKHRIIHQVH8QGHU86&DQ\
ZKLFK VKH PDQDJHG  7KH RIILFHUV UHFRYHUHG D  FDOLEHU     LQGLYLGXDO ZKR HLWKHU HQJDJHV LQ RU DLGV DEHWV FRXQVHOV
KDQGJXQ ORDGHG ZLWK WZR URXQGV RI DPPXQLWLRQ D           FRPPDQGVLQGXFHVRUSURFXUHVFRQGXFWYLRODWLQJDIHGHUDO
PDJQXPUHYROYHUZLWKILYHURXQGVRIDPPXQLWLRQDQGD             FULPLQDOVWDWXWHLVSXQLVKDEOHDVDmSULQFLSDOlm$VVXFKWKH\
FDOLEHU ULIOH ZLWK RQH URXQG RI DPPXQLWLRQ  2IILFHUV DOVR   DUHSXQLVKDEOHIRUWKHLUFULPLQDOFRQGXFWWKHIDWHRIRWKHU
IRXQGJUDPVRIFUDFNLQWKHVWRUH6WHZDUWFRQWHQGVWKDW        SDUWLFLSDQWVLVLUUHOHYDQWl6WDQGHIHU Y 8QLWHG6WDWHV
WKHUH ZDV QR HYLGHQFH WKDW VKH KDG DFWXDO RU FRQVWUXFWLYH    86,Q8QLWHG6WDWHVY<RVW)GWK
SRVVHVVLRQ RI WKH ZHDSRQV RU WKDW VKH HYHQ KDG DQ\          &LURXUVLVWHUFLUFXLWKDVUHFRJQL]HGWKDWEHFDXVHWKH
NQRZOHGJHWKDWWKH\ZHUHRQWKHSUHPLVHV7KHVHFRQWHQWLRQV          VWDWXWHWUHDWVDLGLQJDQGDEHWWLQJDVSULQFLSDOOLDELOLW\mWKHUH
ODFNDQ\PHULW                                                     LVQRUHTXLUHPHQWWKDWDGHIDFWRSULQFLSDOEHFRQYLFWHGRIDQ
                                                                      RIIHQVHSULRUWRFRQYLFWLQJVRPHRQHDVDQDLGHUDQGDEHWWRU
  6WHZDUWDGPLWWHGWKDWVKHNQHZWKHKDQGJXQVZHUHLQWKH             QRULVWKHUHHYHQDEDUWRSURVHFXWLQJVRPHRQHDVDQDLGHUDQG
VWRUHDQGNHSWXQGHUWKHFRXQWHUZKLFKLVZKHUHGUXJVZHUH           DEHWWRUDIWHUDQDOOHJHGGHIDFWRSULQFLSDOLVDFTXLWWHGl,GDW
NHSW  &R'HIHQGDQW 2VVLH msDFNLHl %U\GLH ZRUNHG DW WKH       QFLWLQJ6WDQGHIHU86DW
6	60DUNHWXQWLOWKHWLPHWKHFRGHIHQGDQWVZHUHDUUHVWHG
%U\GLHWHVWLILHGWKDWVKH6WHZDUWDQGFRGHIHQGDQWVsHIIUH\            ,Q OLJKW RI WKLV OHJDO SUHFHGHQW ZH KROG WKDW WKH GLVWULFW
5RELQVRQ DQG 7UDPEOH ZHUH DOO LQYROYHG LQ GLVWULEXWLQJ       FRXUWGLGQRWFRPPLWHUURUE\GHFOLQLQJWRYDFDWH7UDPEOHjV
GUXJVIURPWKH6	60DUNHWIRUEHWZHHQRQHDQGWZR\HDUV              SOHDRIJXLOW\:HDOVRQRWHWKDWHYHQLIKLVFRQYLFWLRQGLG
%U\GLHDOVRWHVWLILHGWKDWWKHJXQVUHFRYHUHGZHUHIUHTXHQWO\         FRQVWLWXWH HUURU WKH HUURU FRXOG QRW KDYH DIIHFWHG KLV
    8QLWHG6WDWHVY                     1RV       1RV                           8QLWHG6WDWHVY      
      6WHZDUWHWDO                                                       6WHZDUWHWDO

VXEVWDQWLDOULJKWVEHFDXVH7UDPEOHGRHVQRWGHQ\WKHYDOLGLW\      $XWKRULWLHV DOVR VHL]HG PRUH WKDQ  LQ FDVK ZKLFK
RIWKHIDFWXDOEDVLVIRUKLVJXLOW\SOHD+LVFRQYLFWLRQFRXOG     0UV %HQIRUG KDV QRW GHQLHG ZDV FRQQHFWHG WR KHU GUXJ
QRWWKHUHIRUHXQGHUPLQHWKHIDLUQHVVRULQWHJULW\RIWKHGLVWULFW   DFWLYLW\  ,Q DQ DJUHHG RUGHU RI IRUIHLWXUH WKH JRYHUQPHQW
FRXUWSURFHHGLQJV                                                  FRQILVFDWHGWKHDORQJZLWKRWKHUSURSHUW\RZQHGE\
                                                                    WKH %HQIRUGV  6KH DOVR GRHV QRW FRQWHQG WKDW VKH GLG QRW
      ,9$335(1',&+$//(1*(672'58*                             NQRZ WKDW WKH ILUHDUP ZDV SUHVHQW LQ WKH KRXVH  )XUWKHU
             &2163,5$&<6(17(1&(6                                   UHFRUGHGFRQYHUVDWLRQVUHYHDOHGWKDWWKHUHVLGHQFHZDVXVHG
                                                                    WRFROOHFWGUXJPRQH\UHODWHGWRWKHGUXJWUDIILFNLQJRIIHQVH
  'HIHQGDQWV 1DWKDQ %HQIRUG 5HQD %HQIRUG &DOYLQ              7KHJRYHUQPHQWFRQWHQGVWKDWWKHVHIDFWVVXIILFLHQWO\VKRZ
7UDPEOH6X]HWWH0LUDQGD6WHZDUWDQG&KDUOHV5RVVHOODUJXH         WKDWWKHZHDSRQZDVMRLQWO\SRVVHVVHGE\ERWKRIWKH%HQIRUGV
RQDSSHDOWKDWWKHGLVWULFWFRXUWFRPPLWWHGFRQVWLWXWLRQDOHUURU    DQGZDVXVHGWRSURWHFWWKHPVHOYHVDQGWKHLUGUXJVSURFHHGV
XQGHU$SSUHQGLE\VHQWHQFLQJWKHPWRWHUPVRILPSULVRQPHQW          7KH JRYHUQPHQW DOWHUQDWLYHO\ DUJXHV WKDW HYHQ LI 0UV
DQGVXSHUYLVHGUHOHDVHEDVHGXSRQWKHFRXUWjVILQGLQJRIGUXJ       %HQIRUG GLG QRW DFWXDOO\ SRVVHVV WKH JXQ WKH WZROHYHO
TXDQWLWLHVE\DSUHSRQGHUDQFHRIWKHHYLGHQFH:HDUHILUVW        HQKDQFHPHQW ZDV SURSHU EHFDXVH VKH FRXOG UHDVRQDEO\
FDOOHG XSRQ WR FODULI\ WKH SURSHU PHWKRG RI SUHVHUYLQJ      IRUHVHH KHU KXVEDQGjV SRVVHVVLRQ RI WKH JXQ GXULQJ DQG LQ
$SSUHQGLFODLPVSULRUWRWKHWLPHWKDWFDVHZDVGHFLGHG:H        FRQQHFWLRQ ZLWK WKH GUXJ FRQVSLUDF\  :H EHOLHYH WKH
EHJLQZLWKDEULHIUHFLWDWLRQRIWKHGHYHORSPHQWRI$SSUHQGL        JRYHUQPHQWSUHYDLOVXQGHUHLWKHUWKHRU\
MXULVSUXGHQFH LQ WKLV &LUFXLW  :H ZLOO WKHQ DSSO\ WKRVH
GHFLVLRQV WR 'HIHQGDQWV  $QG ILQDOO\ ZH ZLOO GHWHUPLQH       0UV%HQIRUGDWDPLQLPXPKDGFRQVWUXFWLYHSRVVHVVLRQ
ZKHWKHUWRWKHH[WHQW$SSUHQGLHUURUKDVRFFXUUHGVXFKHUURU      RYHUWKHZHDSRQZKLFKLVHVWDEOLVKHGLIWKHHYLGHQFHVKRZV
ZDVKDUPOHVV                                                       WKDW VKH KDG RZQHUVKLS GRPLQLRQ RU FRQWURO RYHU WKH
                                                                    ZHDSRQ2ZXVX)GDW0UV%HQIRUGGRHVQRW
                               $                                   GHQ\ WKDW VKH NQHZ WKDW WKH ORDGHG ZHDSRQ ZDV LQ KHU
                                                                    EHGURRPGUHVVHUGUDZHU6KHDOVRFDQQRWGHQ\WKDWFXUUHQF\
   ,QsRQHVY8QLWHG6WDWHV86WKH         UHODWHGWRKHUGUXJWUDIILFNLQJRIIHQVHZDVIRXQGLQWKHVDPH
6XSUHPH &RXUW VXJJHVWHG SRVVLEOH YLRODWLRQV RI WKH )LIWK     ORFDWLRQ DV WKH ZHDSRQ  8QGHU WKHVH IDFW LW LV QRW FOHDUO\
$PHQGPHQWjV 'XH 3URFHVV &ODXVH DQG WKH 6L[WK                  LPSUREDEOH WKDW WKH ZHDSRQ ZDV UHODWHG WR KHU GUXJ
$PHQGPHQWjVQRWLFHLQGLFWPHQWDQGMXU\WULDOJXDUDQWHHV           WUDIILFNLQJRIIHQVH)XUWKHULQDFRQVSLUDF\WKHJRYHUQPHQW
VWHPPLQJIURPWKHmGLPLQLVKPHQWRIWKHMXU\jVVLJQLILFDQFH          GRHV QRW KDYH WR VKRZ WKDW WKH GHIHQGDQW ZDV LQ DFWXDO RU
E\ UHPRYLQJ FRQWURO RYHU IDFWV GHWHUPLQLQJ D VWDWXWRU\       FRQVWUXFWLYH SRVVHVVLRQ RI WKH ZHDSRQ LQ RUGHU IRU WKH
VHQWHQFLQJ UDQJHl  sRQHV KDG EHHQ GHFLGHG DW WKH WLPH     HQKDQFHPHQWWRDSSO\7KHHQKDQFHPHQWLVSURSHUZKHUHLW
'HIHQGDQWVZHUHVHQWHQFHG$IWHUDOORIWKHMXGJPHQWVZHUH         ZDVIRUHVHHDEOHWRDGHIHQGDQWWKDWKHUFRFRQVSLUDWRUZRXOG
HQWHUHG KRZHYHU WKH 6XSUHPH &RXUW GHFLGHG $SSUHQGL         SRVVHVV WKH ZHDSRQ LQ FRQQHFWLRQ ZLWK KLV RU KHU GUXJ
ZKLFKFRQILUPHGWKHVXJJHVWLRQLQsRQHVWKDWm>R@WKHUWKDQWKH      WUDIILFNLQJDFWLYLW\,G3ULRUWRVHQWHQFLQJ0UV%HQIRUGWKH
IDFWRIDSULRUFRQYLFWLRQDQ\IDFWWKDWLQFUHDVHVWKHSHQDOW\     GLVWULFWFRXUWDSSOLHGWKHVDPHWZROHYHOHQKDQFHPHQWWRKHU
IRUDFULPHEH\RQGWKHSUHVFULEHGVWDWXWRU\PD[LPXPPXVWEH         KXVEDQG1DWKDQ,WZDVFOHDUWKDWKHSRVVHVVHGWKHJXQLQ
VXEPLWWHGWRDMXU\DQGSURYHGEH\RQGDUHDVRQDEOHGRXEWl         FRQQHFWLRQ ZLWK GUXJ WUDIILFNLQJ EHFDXVH WKH ZHDSRQ ZDV
     8QLWHG6WDWHVY                           1RV            1RV                            8QLWHG6WDWHVY       
       6WHZDUWHWDO                                                                   6WHZDUWHWDO

  0UV%HQIRUGFRQWHQGVWKDWWKHWZROHYHOHQKDQFHPHQWIRU                       86 DW   7KH &RXUW GLVPLVVHG WKH WKHQ FRPPRQ
SRVVHVVLRQ RI D ILUHDUP ZDV LPSURSHU EHFDXVH ZKHQ                        DUJXPHQWWKDWDQHQKDQFLQJIDFWPD\EHFRQVLGHUHGPHUHO\D
DXWKRULWLHV VHDUFKHG KHU KRPH WKH\ IRXQG QR FRFDLQH RU                 mVHQWHQFLQJIDFWRUlDQGLQVWHDGKHOGWKDWmWKHUHOHYDQWLQTXLU\
FRFDLQHSDUDSKHUQDOLD:KHQDXWKRULWLHVH[HFXWHGDVHDUFK                      LV QRW RQH RI IRUP EXW RI HIIHFWGRHV WKH UHTXLUHG ILQGLQJ
ZDUUDQW RI WKH %HQIRUGVj UHVLGHQFH WKH\ IRXQG D ORDGHG                H[SRVH WKH GHIHQGDQW WR D JUHDWHU SXQLVKPHQW WKDQ WKDW
PLOOLPHWHU SLVWRO LQ WKH PDVWHU EHGURRP GUHVVHU GUDZHU                  DXWKRUL]HG E\ WKH MXU\jV JXLOW\ YHUGLFW"l   86 DW 
                                                                                HPSKDVLVDGGHG
                                                                                  ,QWKHLQVWDQWFDVH'HIHQGDQWVZHUHVHQWHQFHGXQGHUWKH
 RU RWKHU HQXPHUDWHG VWDWXWHV VKDOO EH VHQWHQFHG ZLWKRXW UHJDUG WR DQ\       VXEVHFWLRQV RI  86&  E  7KLV VWDWXWH FUHDWHV D
VWDWXWRU\ PLQLPXP VHQWHQFH LI WKH GHIHQGDQW PHHWV ILYH FULWHULD 2QH RI
WKRVH FULWHULRQ LV WKDW WKH mGHIHQGDQW GLG QRW XVH YLROHQFH RU     SRVVHVV D    WKUHHWLHUHG VHQWHQFLQJ V\VWHP EDVHG XSRQ GUXJ TXDQWLWLHV
ILUHDUP  RU RWKHU GDQJHURXV ZHDSRQ RU LQGXFH DQRWKHU SDUWLFLSDQW WR GR
                                                                                'HIHQGDQWV IDFH D VHQWHQFH RI ILYH WR IRUW\ \HDUV XQGHU 
VR LQ FRQQHFWLRQ ZLWK WKH RIIHQVH      l 866*  & HPSKDVLV        86&E%LIWKH\DUHUHVSRQVLEOHIRUEHWZHHQ
DGGHG 7KH GHIHQGDQW EHDUV WKH EXUGHQ RI VKRZLQJ HOLJLELOLW\ IRU WKH           DQGJUDPVRImFRFDLQHEDVHlRUEHWZHHQJUDPVDQG
VDIHW\ YDOYH E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH          8QLWHG    6WDWHV Y   NLORJUDPVRIFRFDLQHK\GURFKORULGHSRZGHUFRFDLQH8QGHU
6DOJDGR  )G   WK &LU  FLWDWLRQ RPLWWHG (YHU\
FLUFXLW WKXV IDU WKDW KDV FRQVLGHUHG WKH LVVXH KDV KHOG WKDW ZKHUH D
                                                                                 86&  E$ GHIHQGDQWV IDFH D PLQLPXP
GHIHQGDQW KDG DFWXDO RU FRQVWUXFWLYH SRVVHVVLRQ RYHU D ILUHDUP VXFK WKDW
                                                                                VHQWHQFHRIWHQ\HDUVDQGDPD[LPXPRIOLIHLPSULVRQPHQWLI
DQ LQFUHDVH WR KLV RU KHU EDVH RIIHQVH OHYHO XQGHU  ' LV DSSURSULDWH      WKH\DUHFRQQHFWHGWRJUDPVRUPRUHRIFRFDLQHEDVHRU
VXFK SRVVHVVLRQ mGHIHDWV DSSOLFDWLRQ RI WKH VDIHW\ YDOYHl 8QLWHG 6WDWHV        NLORJUDPV RU PRUH RI FRFDLQH K\GURFKORULGH  +RZHYHU
Y 6PLWK  )G   WK &LU  FROOHFWLQJ FDVHV ,QGHHG
LQ DQ XQSXEOLVKHG GHFLVLRQ ZH KDYH LQGLFDWHG WKH VDPH 6HH 8QLWHG
6WDWHV Y %XUVH\ 1RV    :/  DW  WK
&LU 0D\   H[SODLQLQJ WKDW mFRQVWUXFWLYH RU DFWXDO SRVVHVVLRQ RI           
D ILUHDUP E\ D GHIHQGDQW ZLOO SUHYHQW DSSOLFDWLRQ RI WKH VDIHW\ YDOYHl $W
                                                                                        $SSUHQGL
                                                                                       ,Q           WKH GHIHQGDQW KDG EHHQ FRQYLFWHG LQ D 1HZ sHUVH\
                                                                                FRXUW RI SRVVHVVLRQ RI D ILUHDUP IRU DQ XQODZIXO SXUSRVH DQ RIIHQVH
5RVVHOOjV VHQWHQFLQJ KHDULQJ WKH GLVWULFW FRXUW FRQVLGHUHG DSSOLFDWLRQ RI
                                                                                SXQLVKDEOH E\ LPSULVRQPHQW IRU EHWZHHQ ILYH WR WHQ \HDUV $W KLV
WKH VDIHW\ YDOYH VHSDUDWHO\ IURP WKH WZROHYHO HQKDQFHPHQW XQGHU 
                                                                                VHQWHQFLQJ KHDULQJ WKH GLVWULFW FRXUW MXGJH IRXQG E\ D SUHSRQGHUDQFH RI
'E DQG IRXQG DV WR WKH VDIHW\ YDOYH SURYLVLRQ WKDW 5RVVHOO KDG
                                                                                WKH HYLGHQFH WKDW WKH GHIHQGDQW KDG FRPPLWWHG WKH FULPH ZLWK D SXUSRVH
IDLOHG WR VKRZ E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW WKH JXQ ZDV QRW
                                                                                WR LQWLPLGDWH LQGLYLGXDOV EHFDXVH RI WKHLU UDFH 8QGHU 1HZ sHUVH\jV KDWH
XVHG LQ FRQQHFWLRQ ZLWK KLV GUXJ RIIHQVH 6LPLODU WR KLV DUJXPHQW ZLWK
                                                                                FULPH ODZ WKLV ILQGLQJ LQFUHDVHG WKH GHIHQGDQWjV VHQWHQFH WR
UHVSHFW WR WKH  ' HQKDQFHPHQW 5RVVHOO FRQWHQGV WKDW WKH HYLGHQFH
                                                                                LPSULVRQPHQW EH\RQG WKH VWDWXWRU\ PD[LPXP IRU WKH FULPH IRU ZKLFK KH
VKRZV WKDW KH SRVVHVVHG WKH JXQ IRU VHQWLPHQWDO UHDVRQV LQDVPXFK DV LW
ZDV D JLIW IURP KLV IDWKHU DQG LQWHQGHG IRU KLV VRQ IRU VRPHWLPH LQ WKH
                                                                                ZDV IRXQG JXLOW\ 7KH FODLP LQ    $SSUHQGL    ZDV XQGHU WKH 'XH 3URFHVV
                                                                                &ODXVH RI WKH )RXUWHHQWK $PHQGPHQW WKH DQDORJRXV 'XH 3URFHVV &ODXVH
IXWXUH +RZHYHU DV WKH GLVWULFW FRXUW IRXQG LI WKH JXQ ZHUH WUXO\ NHSW IRU
                                                                                RI WKH )LIWK $PHQGPHQW DSSOLHV LQ WKH LQVWDQW FDVH
RQO\ mVHQWLPHQWDOl UHDVRQV DQG LQWHQGHG IRU KLV VRQ 5RVVHOO IDLOV WR
H[SODLQ ZK\ LW ZDV ORDGHG DQG VWDVKHG XQGHU KLV RZQ PDWWUHVV :H KDYH
                                                                                    
DOUHDG\ FRQFOXGHG WKDW WKH GLVWULFW FRXUW GLG QRW FOHDUO\ HUU LQ ILQGLQJ WKDW         7KH PD[LPXP SHQDOWLHV XQGHU VXEVHFWLRQV E$ DQG % DUH
5RVVHOO SRVVHVVHG WKH  FDOLEHU UHYROYHU LQ FRQQHFWLRQ ZLWK KLV GUXJ          PRUH VHYHUH LI FHUWDLQ DJJUDYDWLQJ IDFWRUV DUH SUHVHQW VXFK DV EHLQJ D
WUDIILFNLQJ RIIHQVH IRU SXUSRVHV RI  ' :H DOVR EHOLHYH WKDW WKH           SULRU IHORQ\ GUXJ RIIHQGHU RU LI WKH XVH RI WKH FRQWUROOHG VXEVWDQFHV
GLVWULFW FRXUW GLG QRW HUU LQ ILQGLQJ WKDW 5RVVHOO IDLOHG WR VKRZ E\ D          UHVXOWV LQ GHDWK RU VHULRXV ERGLO\ LQMXU\ 7KH IDFW RI D SULRU FRQYLFWLRQ
SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW KH ZDV HOLJLEOH IRU WKH VDIHW\ YDOYH         ZDV VSHFLILFDOO\ H[FOXGHG IURP WKH VFRSH RI WKH 6XSUHPH &RXUWjV GHFLVLRQ
SURYLVLRQ XQGHU  & 6DOJDGR  )G DW                            LQ$SSUHQGL   
       8QLWHG6WDWHVY                         1RV           1RV                              8QLWHG6WDWHVY       
         6WHZDUWHWDO                                                                  6WHZDUWHWDO

ZKHUHQRDPRXQWRIGUXJVLVVSHFLILHGLQWKHLQGLFWPHQWRU                     WKDWWKHILUHDUPZDVFRQQHFWHGWRWKHFULPH+HFRQWHQGVWKDW
GHWHUPLQHGE\WKHMXU\EH\RQGDUHDVRQDEOHGRXEWVXEVHFWLRQ                   KHKDGJLYHQWKHJXQWRKLVIDWKHUDVDJLIWDQGWKDWXSRQKLV
E& SURYLGHV WKH GHIDXOW PD[LPXP SHQDOWLHV RI                   IDWKHUjV GHDWK WKH JXQ ZDV UHWXUQHG WR 5RVVHOO VR WKDW KH
WZHQW\\HDUVRUWKLUW\\HDUVLQWKHFDVHRIDUHSHDWIHORQ\GUXJ              FRXOGJLYHLWWRKLVRZQVRQRQFHWKHER\WXUQHG\HDUVROG
RIIHQGHU86&E&                                           5RVVHOODUJXHVWKDWWKHGLVWULFWFRXUWHUUHGLQILQGLQJWKDWWKHUH
                                                                               ZDV D QH[XV EHWZHHQ KLV GUXJ RIIHQVH DQG WKH UHYROYHU
    ,Q8QLWHG6WDWHVY5HEPDQQ)GWK&LU                   EHFDXVHWKHDIILGDYLWLQVXSSRUWRIWKHZDUUDQWWRVHDUFKKLV
 DQG 8QLWHG 6WDWHV Y 3DJH  )G  WK &LU            KRPHGLGQRWPHQWLRQDILUHDUPQRFRFDLQHZDVIRXQGLQVLGH
ZHGHWHUPLQHGWKDWm>S@XUVXDQWWRWKHSURYLVLRQVRI                     KLVKRPHDQGQRQHRIKLVFRFRQVSLUDWRUVLQGLFDWHGWKDWKH
WKHTXDQWLW\RIGUXJVLVDIDFWXDOGHWHUPLQDWLRQWKDW                   KDGEUDQGLVKHGDILUHDUP+RZHYHUWKHIDFWVRIWKHLQVWDQW
VLJQLILFDQWO\LPSDFWVWKHVHQWHQFHLPSRVHGl3DJH)G                   FDVH UHIOHFW WKDW WKHUH ZDV D VXIILFLHQW QH[XV EHWZHHQ WKH
DW,QDGGLWLRQLQ8QLWHG6WDWHVY5DPLUH])G                    ILUHDUPDQGWKHGUXJDFWLYLW\7KHORDGHGILUHDUPZKLFKDV
WK&LUZHGHWHUPLQHGWKDWWKHJRYHUQPHQW                    D FRQYLFWHG IHORQ 5RVVHOO VKRXOG QRW KDYH KDG LQ WKH ILUVW
PXVWQDPHLQWKHLQGLFWPHQWWKHTXDQWLW\RIGUXJVIRUZKLFK                    SODFHZDVLQ5RVVHOOjVEHGURRP0DULMXDQDZDVDOVRIRXQG
LW VHHNV WR KROG D GHIHQGDQW UHVSRQVLEOH XQGHU  86&              LQWKHEHGURRPFORVHW5RVVHOODGPLWWHGWKDWKHZRXOGWUDGH
 D LI LW VHHNV DQ HQKDQFHG VHQWHQFH EDVHG RQ GUXJ              PDULMXDQD WR KLV FRFDLQH VXSSOLHUV LQ RUGHU WR REWDLQ D
TXDQWLW\:HIXUWKHUH[SODLQHGLQ8QLWHG6WDWHVY6WUD\KRUQ                 GLVFRXQWHGSULFH)XUWKHURIILFHUVIRXQGSODVWLFEDJJLHVDQG
)GWK&LUWKDWmHDFKSHQDOW\SURYLVLRQRI                  VFDOHVLWHPVRIWHQXVHGLQWKHLOOHJDOGUXJWUDGHLQ5RVVHOOjV
EFRQVWLWXWHVDGLIIHUHQWFULPHZLWKGLIIHUHQWHOHPHQWV                JDUDJH  5RVVHOO DQG KLV ZLIH DOVR DGPLWWHG DQG ZLUHWDS
LQFOXGLQJ GUXJ ZHLJKW ZKLFK PXVW EH SURYHG EH\RQG D                    UHFRUGLQJVFRQILUPWKDWGUXJWUDQVDFWLRQVZHUHDUUDQJHGIURP
UHDVRQDEOHGRXEWZKHQVHQWHQFLQJDGHIHQGDQWLQH[FHVVRI                      WKHUHVLGHQFH0RUHRYHU5RVVHOODGPLWWHGWKDWKHKDGVWRUHG
WKHGHIDXOWVWDWXWRU\PD[LPXPVHWRXWLQE&IRU                    WHQRXQFHVRISRZGHUFRFDLQHRXWVLGHRIKLVUHVLGHQFHLQD
DOOGUXJVH[FHSWPDULMXDQDl,GDW                               SLFQLFWDEOH7KHGLVWULFWFRXUWUHMHFWHG5RVVHOOjVDUJXPHQW
                                                                               WKDWKHNHSWWKHZHDSRQIRUVHQWLPHQWDOUHDVRQV7KHFRXUW
  ,QWKHLQVWDQWFDVHWKHLQGLFWPHQWGLGQRWVSHFLI\WKHGUXJ                 QRWHGWKDWWKHJXQZDVORDGHGNHSWXQGHU5RVVHOOjVPDWWUHVV
TXDQWLW\DWWULEXWDEOHWRHDFK'HIHQGDQW:LWKUHVSHFWWRWKH                  GUXJVDQGGUXJSDUDSKHUQDOLDZHUHIRXQGLQDQGRUDURXQGWKH
%HQIRUGV WKH GLVWULFW FRXUW QHYHU LQVWUXFWHG WKH MXU\ WR              UHVLGHQFHDQGWKDWGUXJUHODWHGDFWLYLW\KDGRFFXUUHGDWWKH
                                                                               UHVLGHQFH8QGHUWKHVHIDFWV5RVVHOOKDVQRWPHWKLVEXUGHQ
                                                                               RIVKRZLQJWKDWLWZDVFOHDUO\LPSUREDEOHWKDWWKHZHDSRQZDV
                                                                              FRQQHFWHGWRKLVGUXJWUDIILFNLQJRIIHQVH       +LOO)GDW
       ,Q 5HEPDQQ   D GHIHQGDQW SOHDGHG JXLOW\ WR GLVWULEXWLRQ RI KHURLQ LQ
                                                                               
YLRODWLRQ RI  86&   7KH JXLOW\ SOHD H[SRVHG WKH GHIHQGDQW WR D
PD[LPXP VHQWHQFH RI WZHQW\ \HDUV EXW   UHTXLUHV D IDFWXDO
GHWHUPLQDWLRQ DV WR ZKHWKHU WKH RIIHQVH LQYROYHG GHDWK RU VHULRXV ERGLO\
LQMXU\ ZKLFK ZRXOG LQFUHDVH WKH PD[LPXP VHQWHQFH WR OLIH LPSULVRQPHQW
                                                                                   
 86&  E$ 7KH GLVWULFW FRXUW GHWHUPLQHG WKDW WKHVH FULWHULD           :H DOVR EHOLHYH WKDW 5RVVHOO KDV IDLOHG WR PHHW KLV EXUGHQ RI
ZHUH PHW DQG VHQWHQFHG WKH GHIHQGDQW WR OLIH LPSULVRQPHQW %HFDXVH WKLV        VKRZLQJ WKDW KH ZDV HQWLWOHG WR D UHGXFWLRQ LQ KLV VHQWHQFH SXUVXDQW WR WKH
IDFWXDO GHWHUPLQDWLRQ LQFUHDVHG WKH GHIHQGDQWjV PD[LPXP LW ZDV PDGH LQ        VDIHW\ YDOYH SURYLVLRQ RI 866*  & 8QGHU WKDW SURYLVLRQ RI WKH
YLRODWLRQ RI $SSUHQGL                                                         6HQWHQFLQJ *XLGHOLQHV D GHIHQGDQW FRQYLFWHG XQGHU  86&  
    8QLWHG6WDWHVY                      1RV        1RV                           8QLWHG6WDWHVY      
      6WHZDUWHWDO                                                         6WHZDUWHWDO

                                $                                    GHWHUPLQHWKHGUXJDPRXQWVUDWKHUWKHMXU\PHUHO\IRXQGWKDW
                                                                      'HIHQGDQWV KDG FRQVSLUHG WR GLVWULEXWH DQG SRVVHVV VRPH
   m$ GLVWULFW FRXUWjV ILQGLQJ WKDW D GHIHQGDQW SRVVHVVHG D   XQGHWHUPLQHGDPRXQWRIFUDFNFRFDLQH6LPLODUO\WKHSOHD
ILUHDUPGXULQJDGUXJFULPHLVDIDFWXDOILQGLQJVXEMHFWWRWKH       DJUHHPHQWV HQWHUHG E\ 7UDPEOH DQG 5RVVHOO DOVR IDLOHG WR
FOHDUO\HUURQHRXVVWDQGDUGRIUHYLHZl8QLWHG6WDWHVY(OGHU       VSHFLI\GUXJTXDQWLWLHV+RZHYHUWKHGLVWULFWFRXUWIRXQGE\
)GWK&LUFLWDWLRQVRPLWWHG7KH          D SUHSRQGHUDQFH RI WKH HYLGHQFH WKH TXDQWLW\ RI GUXJV IRU
6HQWHQFLQJ*XLGHOLQHVSURYLGHWKDWWKHEDVHRIIHQVHOHYHORI          ZKLFKHDFK'HIHQGDQWZDVDFFRXQWDEOH7KHFRXUWWKHQXVHG
DGHIHQGDQWFRQYLFWHGRIDGUXJRIIHQVHVKRXOGEHLQFUHDVHG           WKHVHGUXJTXDQWLWLHVWRVHQWHQFHWKH'HIHQGDQWVWRYDULRXV
E\WZROHYHOVm>L@IDGDQJHURXVZHDSRQLQFOXGLQJDILUHDUP          WHUPV RI LPSULVRQPHQW DQG VXSHUYLVHG UHOHDVH XQGHU WKH
ZDVSRVVHVVHGl8QLWHG6WDWHVY2ZXVX)G            VXEVHFWLRQVRI86&E%HORZZHZLOOGLVFXVV
WK&LUFLWLQJ866*'E7RDSSO\WKH            ZKHWKHUDQ\FODLPHG$SSUHQGLHUURUZDUUDQWVYDFDWLQJDQ\RI
HQKDQFHPHQW WKH JRYHUQPHQW PXVW HVWDEOLVK WKDW  WKH        WKH'HIHQGDQWVjVHQWHQFHV
GHIHQGDQWDFWXDOO\RUFRQVWUXFWLYHO\mSRVVHVVHGlWKHZHDSRQ
DQGWKDWVXFKSRVVHVVLRQZDVGXULQJWKHFRPPLVVLRQRI                                              %
WKHRIIHQVH8QLWHG6WDWHVY+LOO)GWK
&LU FHUW GHQLHG  86    m2QFH LW LV        7KHSDUWLHVGLVSXWHWKHDSSURSULDWHPHWKRGRISUHVHUYLQJDQ
HVWDEOLVKHGWKDWDGHIHQGDQWZDVLQSRVVHVVLRQRIDZHDSRQ            $SSUHQGLFKDOOHQJHDQGWKHUHIRUHWKHDSSOLFDEOHVWDQGDUGRI
GXULQJWKHFRPPLVVLRQRIDQRIIHQVHDSUHVXPSWLRQDULVHV             UHYLHZ7KHJRYHUQPHQWFKDUDFWHUL]HV'HIHQGDQWVj$SSUHQGL
WKDWVXFKSRVVHVVLRQZDVFRQQHFWHGWRWKHRIIHQVHl,G7KH         FODLPVDVDOOHJLQJDQRPLVVLRQIURPDMXU\LQVWUXFWLRQDQG
EXUGHQ WKHQ VKLIWV WR WKH GHIHQGDQW WR VKRZ WKDW mLW ZDV    FRQWHQGVWKDWWKHLUFODLPVVKRXOGEHUHYLHZHGRQO\IRUSODLQ
FOHDUO\ LPSUREDEOH WKDW WKH ZHDSRQ ZDV FRQQHFWHG WR WKH       HUURUEHFDXVHWKH\GLGQRWREMHFWWRWKHGUXJDPRXQWVXQWLO
RIIHQVHl  ,G FLWLQJ 866*  ' FRPPHQW Q         DIWHUWKHMXU\UHWXUQHGLWVYHUGLFW,QVXSSRUWRIWKLVDUJXPHQW
m&RQVWUXFWLYH SRVVHVVLRQ RI DQ LWHP LV WKH µRZQHUVKLS RU     WKHJRYHUQPHQWFLWHV)(' 5 &5,03ZKLFKSURYLGHVWKDW
GRPLQLRQRUFRQWUROjRYHUWKHLWHPLWVHOIµRUGRPLQLRQRYHU          DSDUW\PD\QRWmDVVLJQDVHUURUDQ\SRUWLRQRIWKHFKDUJHRU
WKH SUHPLVHVj ZKHUH WKH LWHP LV ORFDWHGl  ,G FLWDWLRQ     RPLVVLRQWKHUHIURPXQOHVVWKDWSDUW\REMHFWVWKHUHWREHIRUHWKH
RPLWWHGm,IWKHRIIHQVHFRPPLWWHGLVSDUWRIDFRQVSLUDF\         MXU\UHWLUHVWRFRQVLGHULWVYHUGLFWl+RZHYHUWKLVUXOHLV
KRZHYHU WKH JRYHUQPHQW GRHV QRW KDYH WR SURYH WKDW WKH      LQDSSOLFDEOHLQWKHLQVWDQWFDVHEHFDXVHDQ$SSUHQGLYLRODWLRQ
GHIHQGDQW DFWXDOO\ SRVVHVVHG WKH ZHDSRQ EXW LQVWHDG PD\       FDQRFFXURXWVLGHRIWKHFRQWH[WRIDQRPLVVLRQRIDQHOHPHQW
HVWDEOLVK WKDW D PHPEHU RI WKH FRQVSLUDF\ SRVVHVVHG WKH       RIDFULPHIURPWKHMXU\FKDUJH)RULQVWDQFHZHKDYHKHOG
ILUHDUP DQG WKDW WKH PHPEHUjV SRVVHVVLRQ ZDV UHDVRQDEO\        WKDWDQ$SSUHQGLLVVXHPLJKWDULVHZKHQDGHIHQGDQWSOHDGV
IRUHVHHDEOHE\RWKHU PHPEHUVLQWKHFRQVSLUDF\l2ZXVX             JXLOW\WRDGUXJRIIHQVHMXVWDVLWPLJKWZKHQKHFKRRVHVWR
)GDWFLWDWLRQRPLWWHG                                   WDNH KLV FDVH WR WULDO  6WUD\KRUQ  )G DW  FLWLQJ
                                                                      8QLWHG 6WDWHV Y +DUSHU  )G   WK &LU
  $XWKRULWLHV IRXQG D  FDOLEHU UHYROYHU ORDGHG ZLWK VL[      :H H[SODLQHG RXU EDVLV IRU DSSO\LQJ $SSUHQGL WR
KROORZSRLQWURXQGVVWXIIHGEHWZHHQ5RVVHOOjVPDWWUHVVDQG            JXLOW\SOHDVDVIROORZV
ER[VSULQJ5RVVHOOGRHVQRWFRQWHQGWKDWKHGLGQRWSRVVHVV
WKHILUHDUPEXWUDWKHUWKDWWKHGLVWULFWFRXUWHUUHGLQILQGLQJ
    8QLWHG6WDWHVY                       1RV        1RV                               8QLWHG6WDWHVY        
      6WHZDUWHWDO                                                              6WHZDUWHWDO

  2XUUDWLRQDOHLVVLPSOHWKHGHIHQGDQWZKRSOHDGVJXLOW\            PLJKW KDYH SRVHG GLIIHUHQW TXHVWLRQV RU DWWDFNHG ZLWQHVV
  WRDQXQVSHFLILHGDPRXQWRIGUXJVDQGLVWKHQVHQWHQFHG              WHVWLPRQ\UHJDUGLQJKHULQYROYHPHQWLQGUXJWUDIILFNLQJLQ
  XQGHUWKHSUHSRQGHUDQFHRIWKHHYLGHQFHVWDQGDUGPD\                 ZD\VWKDWPLJKWKDYHUDLVHGVXIILFLHQWGRXEWLQMXURUjVPLQGV
  MXVW DV HDVLO\ EH VXEMHFWHG WR DQ HQKDQFHG VHQWHQFH LQ      UHJDUGLQJWKHH[DFWTXDQWLWLHVRIGUXJVWKDW0UV%HQIRUGZDV
  H[FHVVRIWKHGHIDXOWVWDWXWRU\PD[LPXPDVWKHGHIHQGDQW             FKDUJHGZLWKFRRNLQJRUWUDQVSRUWLQJHWF6HHsRUGDQ
  ZKRWDNHVKLVFDVHWRWULDODQGLVWKHQVHQWHQFHG         )GDW'HWHUPLQLQJZKHWKHUWKHMXU\ZRXOGKDYH
  E \ W K H  G L V W U L F W  F R X UW  X Q G HU W K H V DP H    UHDFKHGWKHVDPHUHVXOWVDVWKHGLVWULFWFRXUWRQWKLVUHFRUG
  SUHSRQGHUDQFHRIWKHHYLGHQFHVWDQGDUG7KLVKROGLQJ                ZRXOGEHVSHFXODWLYHDWEHVW%HFDXVH,FDQQRWILQGWKDWWKH
  IROORZVLQH[RUDEO\IURP>8QLWHG6WDWHVY)ORZDO                $SSUHQGLHUURULQ0UV%HQIRUGjVFDVHZDVKDUPOHVVEH\RQG
  )GWK&LU@5DPLUH]DQG+DUSHUDQGLWV              DUHDVRQDEOHGRXEW,ZRXOGYDFDWH0UV%HQIRUGjVVHQWHQFH
  RXWFRPHLVGLFWDWHGE\$SSUHQGL                                     DQG UHPDQG KHU FDVH WR WKH GLVWULFW FRXUW IRU UHVHQWHQFLQJ
                                                                       XQGHU86&E&
6WUD\KRUQ)GDW7KHUHIRUHWKHMXU\LQVWUXFWLRQ
DQDORJ\PXVWIDLO                                                          93266(66,212)),5($506$1'
                                                                        '2:1:$5''(3$5785()25(;&(37,21$/
   :H DOVR HPSKDVL]H WKDW WKH FRQVWLWXWLRQDO HUURU OLNHZLVH                  &,5&8067$1&(6
GRHVQRWOLHLQWKHLQGLFWPHQWLWVHOI7KHJRYHUQPHQWjVIDLOXUH
WRDOOHJHDGUXJTXDQWLW\GRHVQRWUHQGHUDGUXJGLVWULEXWLRQ            5RVVHOO0UV%HQIRUGDQG6WHZDUWFRQWHQGWKDWWKHGLVWULFW
LQGLFWPHQW FRQVWLWXWLRQDOO\ LQILUP 6HH +DPOLQJ Y 8QLWHG       FRXUW HUUHG LQ HQKDQFLQJ WKHLU VHQWHQFHV E\ WZR SRLQWV
6WDWHV86m>$QLQGLFWPHQWLVVXIILFLHQW         SXUVXDQWWR866*'IRUSRVVHVVLRQRIDILUHDUPGXULQJ
LILWILUVWFRQWDLQVWKHHOHPHQWVRIWKHRIIHQVHFKDUJHGDQG         WKHFRPPLVVLRQRIWKHLUFULPHV5RVVHOODOVRDUJXHVWKDWWKH
IDLUO\ LQIRUPV D GHIHQGDQW RI WKH FKDUJH DJDLQVW ZKLFK KH     GLVWULFWFRXUWHUUHGLQGHWHUPLQLQJWKDWKHZDVQRWHOLJLEOHIRU
PXVWGHIHQGDQGVHFRQGHQDEOHVKLPWRSOHDGDQDFTXLWWDORU         WKHVDIHW\YDOYHSURYLVLRQRI866*&DQGLQIDLOLQJ
FRQYLFWLRQ LQ EDU RI IXWXUH SURVHFXWLRQV IRU WKH VDPH          WR GHSDUW GRZQZDUG GXH WR WKH H[FHSWLRQDO FLUFXPVWDQFHV
RIIHQVHl,QVWHDGZKHQVSHFLILFTXDQWLWLHVDUHQRWDOOHJHG        VXUURXQGLQJKLVFDVH)RUWKHUHDVRQVH[SODLQHGEHORZZH
D GHIHQGDQW VKRXOG EH VHQWHQFHG XQGHU  86&                 UHMHFWHDFKRIWKHVHDUJXPHQWV
 E& ZKLFK HVWDEOLVKHV WKH GHIDXOW VWDWXWRU\
PD[LPXPVHQWHQFHVDQGGRHVQRWUHTXLUHDVDQHOHPHQWRIWKH
RIIHQVHDVSHFLILFTXDQWLW\RIGUXJV6HH3DJH)GDW
KROGLQJWKDWEHFDXVHLQGLFWPHQWIDLOHGWRPHQWLRQGUXJ                
                                                                               $OWKRXJK WKH HYLGHQFH DW WKH %HQIRUGVj WULDO PD\ KDYH HVWDEOLVKHG
TXDQWLW\ DQG QR VXFK TXDQWLW\ ZDV IRXQG E\ WKH MXU\          WKDW WKH RYHUDOO FRQVSLUDF\ FRQWDLQHG TXDQWLWLHV RI GUXJV WKDW ZRXOG SHUPLW
GHIHQGDQWVFRXOGRQO\EHVXEMHFWHGWRWKHSHQDOWLHVSUHVFULEHG         DIILUPLQJ D VHQWHQFH LPSRVHG XQGHU  86&  E$ RU

XQGHU  E&  7KXV LW ZRXOG EH LPSUXGHQW IRU       E% ZH KDYH KHOG WKDW $SSUHQGL   UHTXLUHV WKDW D GHIHQGDQW LV HQWLWOHG
                                                                       WR KDYH GUXJ TXDQWLW\ FKDUJHG LQ WKH LQGLFWPHQW DQG SURYHG EH\RQG D
GHIHQVH FRXQVHO WR REMHFW WR DQ LQGLFWPHQW ZKLFK E\ DOO      UHDVRQDEOH GRXEW ZKHUH KLV RU KHU VHQWHQFH H[FHHGV WKDW SUHVFULEHG E\
ULJKWV LV IDFLDOO\ VRXQG  7R GR VR ZRXOG EH LQ GLUHFW      E&  6HH 1HXKDXVVHU     )G DW   $SSUHQGL  LV FOHDUO\
RSSRVLWLRQ WR KLV FOLHQWjV SHQDO LQWHUHVWV WKH RQO\ ORJLFDO   LPSOLFDWHG LQ 0UV %HQIRUGjV FDVH DQG , GR QRW ILQG WKH HUURU WR EH
RXWFRPHRIVXFKDFKDOOHQJHZRXOGEHIRUWKHJRYHUQPHQWWR             KDUPOHVV EH\RQG D UHDVRQDEOH GRXEW EDVHG RQ WKH UHFRUG 7KHUHIRUH ,
                                                                       ZRXOG ILQG WKDW VKH LV HQWLWOHG WR EH UHVHQWHQFHG
    8QLWHG6WDWHVY                         1RV          1RV                           8QLWHG6WDWHVY     
      6WHZDUWHWDO                                                              6WHZDUWHWDO

WHVWLPRQ\UHJDUGLQJ0UV%HQIRUGjVDFWXDOLQYROYHPHQWZLWK                 UHSODFHWKHFKDUJHXQGHU86&ZLWKDPRUHVSHFLILF
GUXJVZDVPLQLPDOFRPSDUHGWRKHUKXVEDQG$VKHUFRXQVHO                 FKDUJH VSHFLILFDOO\ DOOHJLQJ D GUXJ TXDQWLW\ ZKLFK PLJKW
QRWHGDWVHQWHQFLQJKHZRXOGJRDGD\RUWZRDWWULDOZLWKRXW             H[SRVH WKH GHIHQGDQW WR D KLJKHU VWDWXWRU\ SHQDOW\ UDQJH
FURVVH[DPLQLQJ ZLWQHVVHV EHFDXVH 0UV %HQIRUG ZDV QRW               ,QVWHDGRIREMHFWLQJWRDYDOLGLQGLFWPHQWRUMXU\LQVWUXFWLRQ
PHQWLRQHG  s$ DW   7KH GLVWULFW FRXUW EDVHG 0UV       WKH SURSHU WLPH IRU D GHIHQGDQW WR UDLVH D FKDOOHQJH WR KLV
%HQIRUGjVVHQWHQFHODUJHO\RQWHVWLPRQ\WKDWVKHRIIHUHGWR                VHQWHQFHLVDWWKHWLPHWKHDFWXDOYLRODWLRQRFFXUVDWWKHWLPH
DVVLVW FRXQWLQJ PRQH\ HDUQHG IURP VHOOLQJ D NLORJUDP RI            RIVHQWHQFLQJ6HH8QLWHG6WDWHVYsDFNVRQ)G
FRFDLQHSODFHGPRQH\LQDVDIHORFDWHGLQ8SWRZQ6XSSHU                   WK&LUm7KHHUURULVEHVWFKDUDFWHUL]HGDV
&OXEWKDWDFFRUGLQJWR+LOWKHDQG0U%HQIRUGSODQQHGWR                 VHQWHQFLQJ LQ H[FHVV RI WKH VWDWXWRU\ PD[LPXP SHQDOW\
ODWHUXVHWREX\DNLORJUDPRIFRFDLQHSRZGHUDQGKHOSHG                  DSSOLFDEOHWRWKHRIIHQVHRIFRQYLFWLRQl
WUDQVSRUWJUDPVRIFUDFNRQRQHRFFDVLRQ%LOOLQJVOH\
DOVRWHVWLILHGWKDWKHZLWQHVVHG0UV%HQIRUGFRRNFRFDLQH                   7KHJRYHUQPHQWDOVRFODLPVWKDWDOORIWKH'HIHQGDQWVKDYH
LQWRFUDFNRQRQHRFFDVLRQ,FDQQRWRQWKLVUHFRUGZLWKVR              IDLOHG WR SUHVHUYH WKHLU $SSUHQGL FKDOOHQJHV E\ QRW UDLVLQJ
IHZUHIHUHQFHVWR0UV%HQIRUGjVDFWXDOLQYROYHPHQWZLWKWKH               WKHPEHIRUHWKHGLVWULFWFRXUWDWWKHWLPHRIVHQWHQFLQJ:KLOH
GUXJ DPRXQWV LQ WKLV YDVW FRQVSLUDF\ GHWHUPLQH EH\RQG D           ZH GLVDJUHH ZLWK WKH JRYHUQPHQW DV WR WKH %HQIRUGVj
UHDVRQDEOHGRXEWWKDWWKHJUDQGMXU\ZRXOGKDYHLQGLFWHGKHU               $SSUHQGLFKDOOHQJHZHDJUHHWKDWWKHUHPDLQLQJ'HIHQGDQWV
IRUFRQVSLUDF\WRSRVVHVVJUDPVRUPRUHRIFUDFNRUILYH                IDLOHGWRSUHVHUYHWKHLUFODLPHGHUURUIRUDSSHDODQGZHZLOO
NLORJUDPV RI FRFDLQH  6HH sRUGDQ  )G DW            UHYLHZDQ\HUURUWKH\UDLVHRQO\IRUSODLQHUURU0RVWFLUFXLWV
0RUHLPSRUWDQWO\LQDVPXFKDV0UV%HQIRUGKDGQRQRWLFH                   KDYHKHOGWKDWWRSUHVHUYHDQ$SSUHQGLFKDOOHQJHIRUSXUSRVHV
WKDW GUXJ TXDQWLW\ ZDV DQ LVVXH DW WULDO WKHUH LV QR ZD\ RI   RIDSSHDODGHIHQGDQWPXVWUDLVHVRPHVRUWRIFRQVWLWXWLRQDO
NQRZLQJ ZKHWKHU VKH ZRXOG KDYH FRQWHVWHG GUXJ TXDQWLW\             REMHFWLRQEHIRUHWKHGLVWULFWFRXUW6HHHJ8QLWHG6WDWHVY
DQG LI VR RI DVVHVVLQJ WKH HYLGHQFH WKDW VKH ZRXOG KDYH         &DQGHODULR)GWK&LUGLVWLQJXLVKLQJ
SUHVHQWHGFRQWHVWLQJTXDQWLW\,WKHUHIRUHFDQQRWILQGEDVHG              EHWZHHQ WKH mHYLGHQWLDU\ REMHFWLRQl RI FKDOOHQJLQJ GUXJ
RQWKHSUHVHQWUHFRUGWKDWWKHIDLOXUHWRDOOHJHGUXJTXDQWLW\LQ          TXDQWLWLHVLQDSUHVHQWHQFHLQYHVWLJDWLRQUHSRUWDQGDIRUPDO
WKH LQGLFWPHQW RU WR KDYH WKH MXU\ GHWHUPLQH GUXJ TXDQWLW\        FRQVWLWXWLRQDO REMHFWLRQ WKDW WKH GUXJ TXDQWLW\ PXVW EH
EH\RQGDUHDVRQDEOHGRXEWZDVKDUPOHVVEH\RQGDUHDVRQDEOH                 GHWHUPLQHG EH\RQG D UHDVRQDEOH GRXEW XQGHU $SSUHQGL RU
GRXEW,G&RQWUDU\WRWKHJRYHUQPHQWjVDUJXPHQWVLWLVQRW             sRQHV  +RZHYHU WKLV &RXUW KDV KHOG WKDW D GHIHQGDQWjV
HQRXJKWKDWWKHUHPLJKWEHVRPHHYLGHQFHLQWKHUHFRUGWKDW                mUHSHDWHGlREMHFWLRQWRWKHPHWKRGRIGUXJFDOFXODWLRQEHORZ
PLJKWSHUPLWDIILUPLQJWKHVHQWHQFHWKHGLVWULFWFRXUWLPSRVHG             VXIILFHV WR SUHVHUYH$SSUHQGL HUURU RQ DSSHDO 6HH 8QLWHG
LQ0UV%HQIRUGjVFDVH5DWKHULQGHWHUPLQLQJZKHWKHU0UV               6WDWHVY6WUD\KRUQ)GWK&LU
%HQIRUGjVVXEVWDQWLDOULJKWVZHUHDIIHFWHGWKHHYLGHQFHPXVW
EHRYHUZKHOPLQJDQGHVVHQWLDOO\XQFRQWURYHUWHG6HH1HGHU                   6SHFLILFDOO\LQ6WUD\KRUQZHFRQVLGHUHGWKHDSSURSULDWH
 86 DW  &DQGHODULR  )G DW  HPSKDVLV            VWDQGDUGRIUHYLHZIRUWKHFDVHRIDGHIHQGDQWZKREURXJKWD
DGGHG)XUWKHUWKH&RXUWPXVWEHFRQYLQFHGWKDWWKHUHFRUG              VHHPLQJO\EHODWHGFRQVWLWXWLRQDOFKDOOHQJHWRKLVVHQWHQFHRQ
HYLGHQFHFRXOGQRWOHDGWRDFRQWUDU\ILQGLQJZLWKUHVSHFWWR              GLUHFWDSSHDO$SSUHQGLZDVGHFLGHGDIWHUWKH'HIHQGDQWjV
WKHHOHPHQWRPLWWHG,G+DG0UV%HQIRUGUHDOL]HGWKDWGUXJ             VHQWHQFLQJ KHDULQJ DQG VXEVHTXHQW WR EULHILQJ RQ DSSHDO
TXDQWLW\ZRXOGEHDQLVVXHDWWULDOVKHWKURXJKKHUFRXQVHO               7KXVKHUDLVHGWKHFRQVWLWXWLRQDOFKDOOHQJHWRKLVVHQWHQFHIRU
    8QLWHG6WDWHVY                        1RV         1RV                         8QLWHG6WDWHVY     
      6WHZDUWHWDO                                                          6WHZDUWHWDO

WKHILUVWWLPHDWRUDODUJXPHQW:HGLVPLVVHGWKHQRWLRQWKDW           KHZLWQHVVHG%HQIRUGSRVVHVVLQJRWKHUTXDQWLWLHVRIFRFDLQH
WKHFRQVWLWXWLRQDOLVVXHKDGEHHQZDLYHGDQGLQVWHDGKHOGWKDW          LQFOXGLQJ D NLORJUDP RI FRFDLQH SRZGHU WKDW %HQIRUG
EHFDXVHWKHGHIHQGDQWZDVDVVHUWLQJDQHZFRQVWLWXWLRQDOUXOH            GLVWULEXWHGWR%LOOLQJVOH\DQGWRRWKHUV&RGHIHQGDQW7UDF\
WKDWZDVGHFLGHGZKLOHKLVFDVHZDVSHQGLQJ$SSUHQGLVKRXOG             (OOLV WHVWLILHG WKDW VKH VWRUHG GUXJV LQ KHU DSDUWPHQW IRU
DSSO\UHWURDFWLYHO\WRKLVFDVH6WUD\KRUQ)GDW             %HQIRUG3XUVXDQWWRDVHDUFKZDUUDQWSROLFHUHFRYHUHG
FLWLQJ *ULIILWK Y .HQWXFN\  86              JUDPV RI FUDFN DQG  JUDPV RI FRFDLQH K\GURFKORULGH
KROGLQJ WKDW DSSHOODWH FRXUWV VKRXOG DSSO\ WKH QHZ               IURP (OOLVjV DSDUWPHQW  $IWHU UHYLHZLQJ WKH SUHVHQWHQFH
FRQVWLWXWLRQDO UXOHV UHWURDFWLYHO\ WR FDVHV VWLOO RQ GLUHFW       UHSRUW ZKLFK UHFRXQWHG WKH DERYHFLWHG HYHQWV UHJDUGLQJ
UHYLHZ:HIXUWKHUIRXQGWKDWEHFDXVHWKHGHIHQGDQWKDG               %HQIRUGjVFRFDLQHGHDOLQJVDQGQXPHURXVRWKHUVWKHGLVWULFW
VWHDGIDVWO\ FKDOOHQJHG WKH GLVWULFW FRXUWjV GUXJ TXDQWLW\          FRXUWIRXQGWKDWPRUHWKDQJUDPVRIFUDFNDQG
GHWHUPLQDWLRQ DQG WKH DPRXQWV DWWULEXWHG WR KLP LQ WKH           JUDPVRIFRFDLQHK\GURFKORULGHZHUHSURSHUO\DWWULEXWDEOHWR
SUHVHQWHQFH LQYHVWLJDWLRQ UHSRUW m36,5l KLV IDLOXUH WR          %HQIRUG  :H KDYH QR GRXEW EDVHG RQ WKLV XQFRQWURYHUWHG
DUWLFXODWH D FRQVWLWXWLRQDO FKDOOHQJH DW WULDO GLG QRW UHTXLUH   HYLGHQFHWKDWDMXU\ZRXOGKDYHIRXQGEH\RQGDUHDVRQDEOH
DSSOLFDWLRQRIWKHSODLQHUURUVWDQGDUGRIUHYLHZ                       GRXEWWKDW%HQIRUGZDVLQYROYHGZLWKTXDQWLWLHVRIGUXJVZHOO
                                                                         DERYH WKH UHTXLVLWH DPRXQWV QHHGHG IRU VHQWHQFLQJ XQGHU
  >7@KHUHFRUG PDNHVSODLQWKDW6WUD\KRUQSUHVHUYHGKLV                 E$6HH6DQFKH])GDWH[SODLQLQJ
  >FRQVWLWXWLRQDO@FKDOOHQJHE\UHSHDWHGO\REMHFWLQJWRWKH              WKDWRPLVVLRQIURPDLQGLFWPHQWLVVLPLODUWRWKHMXU\
  GUXJTXDQWLW\GHWHUPLQDWLRQDWKLVSOHDKHDULQJDQGDWKLV             LQVWUXFWLRQHUURULQ1HGHULQDVPXFKDVSDUWRIWKHGHIHQGDQWjV
  VHQWHQFLQJKHDULQJDVZHOODVLQDZULWWHQREMHFWLRQWR               DUJXPHQWLVWKDWTXDQWLW\PXVWEHFKDUJHGVRWKDWmLWFDQEH
  WKH FDOFXODWLRQ RI KLV EDVH RIIHQVH OHYHO LQ KLV               VXEPLWWHGWRWKHMXU\DQGSURYHQEH\RQGDUHDVRQDEOHGRXEWl
  SUHVHQWHQFHUHSRUW$OWKRXJKKHGLGQRWXWWHUWKHZRUGV               7KHUHIRUHZHEHOLHYHWKDWWKH$SSUHQGLHUURULQ%HQIRUGjV
  µGXHSURFHVVjDWHLWKHURIWKHVHKHDULQJVKHPDGHLWZHOO             FDVHZDVKDUPOHVVEH\RQGDUHDVRQDEOHGRXEW1HGHU
  NQRZQWKDWKHGLVSXWHGWKHGLVWULFWFRXUWjVIDFWXDOILQGLQJ            86DW
  ZLWKUHVSHFWWRGUXJTXDQWLW\
                                                                            +RZHYHUXQOLNHWKHSDQHOPDMRULW\RQWKLVLVVXH,EHOLHYH
6WUD\KRUQ)GDWHPSKDVLVDGGHG%DVHGXSRQ                 0UV %HQIRUGjV FDVH SUHVHQWV D GLIIHUHQW PDWWHU  0UV
WKLV UHDVRQLQJ ZH UHYLHZHG WKH GHIHQGDQWjV FRQVWLWXWLRQDO         %HQIRUGjVJXLGHOLQHUDQJHXQGHUWKH6HQWHQFLQJ*XLGHOLQHV
FKDOOHQJHGHQRYR,GFLWLQJ8QLWHG6WDWHVY/OR\G)G          ZDVWRPRQWKV7KHGLVWULFWFRXUWFRQFOXGHGWKDW
  WK &LU  KROGLQJ WKDW FRQVWLWXWLRQDO           mEHLQJ K\SHUVXSHUFRQVHUYDWLYHl WKH TXDQWLW\ RI GUXJV
FKDOOHQJHWRVHQWHQFHVSUHVHQWVDTXHVWLRQRIODZUHTXLULQJGH           DWWULEXWDEOHWR0UV%HQIRUGIHOOZLWKLQWKHVWDWXWRU\UDQJHRI
QRYRUHYLHZ                                                           86&E%DOWKRXJKKHUMXGJPHQWLQGLFDWHV
                                                                         WKDWVKHZDVDFWXDOO\VHQWHQFHGXQGHUWKHKLJKHUSURYLVLRQVRI
  7KLV &RXUWjV PRVW UHFHQW H[SOLFDWLRQ RI SUHVHUYLQJ                E$  s$ DW   7KH JRYHUQPHQW DOVR
$SSUHQGLFKDOOHQJHVLVIRXQGLQ8QLWHG6WDWHVY+XPSKUH\               DUJXHV RQ DSSHDO WKDW WKH HYLGHQFH ZDV VXIILFLHQW WR VKRZ
)G,QWKDWFDVHPXFKOLNH6WUD\KRUQWKH             0UV%HQIRUGjVLQYROYHPHQWZLWKTXDQWLWLHVRIFUDFNFRFDLQH
GHIHQGDQW GLG QRW UHO\ RQ $SSUHQGL LQ FKDOOHQJLQJ KLV            DQG FRFDLQH K\GURFKORULGH WR VXSSRUW D VHQWHQFH XQGHU
VHQWHQFHEHIRUHWKHGLVWULFWFRXUWDQGLQGHHGFRXOGQRWKDYH            E%+RZHYHUDUHYLHZRIWKHUHFRUGVKRZVWKDW
    8QLWHG6WDWHVY                      1RV        1RV                          8QLWHG6WDWHVY      
      6WHZDUWHWDO                                                        6WHZDUWHWDO

ZRXOGKDYHGRQH8QGHUWKLVFLUFXLWjVMXULVSUXGHQFHWKHUH           EHFDXVH$SSUHQGLZDVGHFLGHGDIWHUKHZDVVHQWHQFHG,GDW
PD\EHLQVWDQFHVZKHUHDFRXUWPLJKWILQGWKDWDGHIHQGDQWjV            +RZHYHU WKLV &RXUW KHOG WKDW KH KDG SUHVHUYHG KLV
VXEVWDQWLDO ULJKWV ZHUH QRW DIIHFWHG DOWKRXJK GUXJ TXDQWLW\    $SSUHQGL FKDOOHQJH VXFK WKDW GH QRYR UHYLHZ ZDV
ZDVQHLWKHUDOOHJHGQRUSURYHGEH\RQGDUHDVRQDEOHGRXEW             DSSURSULDWH LQDVPXFK DV KH mREMHFWHG DW WKH VHQWHQFLQJ
6HH.LQJ)GDWVHHDOVR6DQFKH])GDW           KHDULQJWRERWKWKHDPRXQWRIGUXJVDWWULEXWHGWRKLPDQGWKH
KROGLQJWKDWKDUPOHVVHUURUUHYLHZLVDSSURSULDWHZKHUH         VWDQGDUGRISURRIUHTXLUHGWRVXSSRUWWKDWDPRXQWl,G:H
GUXJTXDQWLW\LVQHLWKHUDOOHJHGLQWKHLQGLFWPHQWQRUSURYHQ         QRWHG LQ +XPSKUH\ WKDW ZKLOH WKH GHIHQGDQWjV FRXQVHO
EH\RQG D UHDVRQDEOH GRXEW  )XUWKHU LW DSSHDUV WKDW LQ     FRQFHGHG DW VHQWHQFLQJ WKDW WKH WKHQ FXUUHQW VWDQGDUG RI
sRUGDQWKHRQO\HYLGHQFHUHJDUGLQJGUXJTXDQWLW\ZDV           UHYLHZ ZLWK UHVSHFW WR GUXJ TXDQWLW\ GHWHUPLQDWLRQV ZDV
JUDPVRIPHWKDPSKHWDPLQHWKDWDXWKRULWLHVIRXQGRQSURSHUW\           SUHSRQGHUDQFH RI WKH HYLGHQFH FRXQVHO QHYHUWKHOHVV
OHDVHGWRWKHGHIHQGDQW,GDW                                mFKDOOHQJHGWKHSURSULHW\RIWKDWVWDQGDUGl,GDW:H
                                                                      IXUWKHUDFNQRZOHGJHGLQ+XPSKUH\WKDWZKHUHDGHIHQGDQW
   ,QWKHLQVWDQWFDVHKRZHYHU1DWKDQ%HQIRUGQRWRQO\IDLOV        KDVPHUHO\REMHFWHGWRWKHTXDQWLW\RIGUXJVDWWULEXWHGWRKLP
WRFKDOOHQJHWKHDPRXQWRIGUXJVDWWULEXWHGWRKLPEXWDOVR          6WUD\KRUQDSSHDUVWRVXSSRUWWKHSURSRVLWLRQWKDWWKDWDORQH
WKH XQFRQWURYHUWHG HYLGHQFHZLWQHVV WHVWLPRQ\ DQG                PLJKWVXIILFHWRILQGWKDWDQ$SSUHQGLFKDOOHQJHLVSUHVHUYHG
RWKHUZLVHSUHVHQWHGDWWULDOVKRZVWKDW%HQIRUGWUDIILFNHGLQ        IRU DSSHDO  ,G DW   +RZHYHU UDWKHU WKDQ UHO\LQJ RQ
TXDQWLWLHV IDU DERYH WKH  JUDPV RI FUDFN FRFDLQH RU      6WUD\KRUQZHKHOGLQ+XPSKUH\WKDWWKHGHIHQGDQWLQWKDW
NLORJUDPVRIFRFDLQHSRZGHUUHTXLUHGIRUVHQWHQFLQJXQGHU          FDVHKDGUDLVHGPXFKPRUHWKDQDQREMHFWLRQWRGUXJTXDQWLW\
86&  E$  1XPHURXV ZLWQHVVHV WHVWLILHG WKDW      EXW DOVR WR WKH VWDQGDUG RI SURRI XVHG LQ PDNLQJ WKDW
WKH\KDGEHHQLQYROYHGZLWK%HQIRUGLQGLVWULEXWLQJNLORJUDP          GHWHUPLQDWLRQDQGWKXVKLV$SSUHQGLFKDOOHQJHZDVSUHVHUYHG
TXDQWLWLHV RI FRFDLQH RU VWRULQJ ODUJH TXDQWLWLHV RI FUDFN    ,GDW
FRFDLQHIRUKLP%HQIRUGHYHQVWLSXODWHGWRWKHTXDQWLWLHVRI
VRPHRIWKHVHGUXJVVXFKDVWKHJUDPVRIFUDFNWKDWFR          ,Q GHWHUPLQLQJ WKH DSSURSULDWH VWDQGDUG RI UHYLHZ IRU
GHIHQGDQW (GGLH sRH 0LWFKHOO WHVWLILHG WKDW KH UHWULHYHG DW   SXUSRVHVRIWKLVDSSHDOWKLVSDQHOLVRIFRXUVHERXQGE\RXU
%HQIRUGjVGLUHFWLRQ0\URQ+LOWWHVWLILHGWKDWKHKDGRQFH           KROGLQJV LQ FDVHV VXFK DV +XPSKUH\ DQG 6WUD\KRUQ  6HH
GHOLYHUHG D NLORJUDP RI FRFDLQH WR 7UDPEOH DW %HQIRUGjV       8QLWHG 6WDWHV Y sHQNLQV  )G   Q WK &LU
GLUHFWLRQ  2Q DQRWKHU RFFDVLRQ %HQIRUG DQG +LOW ZHUH         H[SODLQLQJ WKDW RQH SDQHO RI WKH &RXUW LV ERXQG E\
FRXQWLQJ PRQH\ DIWHU VHOOLQJ D NLORJUDP RI FRFDLQH ZKHQ      DQRWKHUSDQHOjVKROGLQJVEXWQRWLWVGLFWD%RWK1DWKDQDQG
5HQD%HQIRUGDVNHGWKHPLIWKH\QHHGHGKHOS$OWKRXJKWKH\           5HQD %HQIRUG UDLVHG FRQVWLWXWLRQDO REMHFWLRQV WR WKHLU
WROGKHUWKH\GLGQRWWKH\GLUHFWHGWKDWVKHSXWWKHPRQH\LQ        UHVSHFWLYHVHQWHQFHVEDVHGXSRQWKH6XSUHPH&RXUWjVKROGLQJ
DVDIHORFDWHGLQWKH8SWRZQ6XSSHU&OXE+LOWDOVRWHVWLILHG        LQsRQHVZKLFKZDVGHFLGHGVXEVHTXHQWWRWULDOEXWSULRUWR
WKDW KH DQG %HQIRUG KDG RQFH SXUFKDVHG D NLORJUDP RI         WKHLU VHQWHQFLQJ DQG FOHDUO\ SUHVHUYHG WKHLU $SSUHQGL
FRFDLQHDQGWKDW5HQD%HQIRUGGHOLYHUHGVRPHRIWKHPRQH\            FKDOOHQJHIRURXUUHYLHZ+XPSKUH\)GDW:KLOH
WRKHUKXVEDQGLQRUGHUWKDWKHPLJKWPDNHWKHSXUFKDVH&R         EHIRUH WKH GLVWULFW FRXUW WKH %HQIRUGV FRQWHQGHG WKDW WKH
GHIHQGDQW&OHYHODQG%LOOLQJVOH\WHVWLILHGWKDWXSRQKLVUHOHDVH       sRQHVGHFLVLRQUHTXLUHGWKDWWKHGUXJDPRXQWVEHFKDUJHGLQ
IURPSULVRQLQKHUHFHLYHGVHYHUDORXQFHVRIFUDFNDQG          WKHLU LQGLFWPHQWV RU EH RWKHUZLVH SUHVHQWHG WR D MXU\ WR EH
SRZGHUFRFDLQHGLUHFWO\IURP%HQIRUG+HDOVRWHVWLILHGWKDW         GHFLGHG EH\RQG D UHDVRQDEOH GRXEW  7KH GLVWULFW FRXUW
       8QLWHG6WDWHVY                       1RV          1RV                          8QLWHG6WDWHVY      
         6WHZDUWHWDO                                                           6WHZDUWHWDO

RYHUUXOHG WKHVH REMHFWLRQV DQG LQVWHDG GHWHUPLQHG WKH                                                 (
UHOHYDQWGUXJTXDQWLWLHVE\DSUHSRQGHUDQFHRIWKHHYLGHQFH
7KH%HQIRUGVQRZVHHNUHYHUVDOXQGHU$SSUHQGLDQGsRQHV                       7KH 1LQWK &LUFXLW UHFHQWO\ KDV QRWHG WKDW WKHUH LV OLWWOH
                                                                            mMXGLFLDOH[SHULHQFHlRQKRZWRDQDO\]HWKHKDUPOHVVQHVVRI
  5RVVHOO SOHDGHG JXLOW\ WR WKH GUXJ FRQVSLUDF\ FKDUJH              $SSUHQGL HUURU  sRUGDQ  )G DW   7KDW FRXUW
$OWKRXJK KH VXEPLWWHG ZULWWHQ FKDOOHQJHV WR WKH 36,5jV               UHFRJQL]HGWKDWWRGHWHUPLQHZKHWKHUHUURULVKDUPOHVVEH\RQG
FDOFXODWLRQRIFHUWDLQDPRXQWVRIGUXJTXDQWLWLHVDWWULEXWHGWR             DUHDVRQDEOHGRXEWZKHUHGUXJTXDQWLW\LVQHLWKHUDOOHJHGLQ
KLPKHDWQRWLPHmFKDOOHQJHGWKHSURSULHW\lRIWKHGLVWULFW               WKH LQGLFWPHQW QRU SURYHQ EH\RQG D UHDVRQDEOH GRXEW LV D
FRXUWjVXVLQJWKHSUHSRQGHUDQFHRIWKHHYLGHQFHVWDQGDUGRI                 IRUPLGDEOH WDVN  ,G DW  GLVWLQJXLVKLQJ SULRU FDVH
UHYLHZWRGHWHUPLQHGUXJTXDQWLW\+XPSKUH\)GDW                   ZKHUHFRXUWIRXQGWKDWGHIHQGDQWjVVXEVWDQWLDOULJKWVZHUHQRW
  /LNHZLVH 7UDPEOH DQG 6WHZDUW VXEPLWWHG ZULWWHQ                DIIHFWHG ZKHUH GUXJ TXDQWLW\ DOWKRXJK DOOHJHG LQ WKH
REMHFWLRQV WR WKHLU 36,5V FKDOOHQJLQJ FHUWDLQ VSHFLILF               LQGLFWPHQW ZDV QRW IRXQG E\ MXU\ EH\RQG D UHDVRQDEOH
TXDQWLWLHV RI GUXJV DWWULEXWHG WR  WKHP ZKLOH IDLOLQJ WR           GRXEW  7KH FRXUW H[SODLQHG LQ sRUGDQ WKDW EHFDXVH WKH
FKDOOHQJH RWKHU VXFK TXDQWLWLHV  :KLOH 6WUD\KRUQ PLJKW             LQGLFWPHQWGLGQRWDOOHJHTXDQWLW\WKHFRXUWZRXOGILUVWKDYH
                                                                            WR GHWHUPLQH WKDW WKH JUDQG MXU\ ZRXOG KDYH LQGLFWHG WKH
                                                                            GHIHQGDQW IRU SRVVHVVLQJ PRUH WKDQ  JUDPV RI
     
      )RU LQVWDQFH DFFRUGLQJ WR 5RVVHOOjV 36,5 FRGHIHQGDQW /RSH]
                                                                            PHWKDPSKHWDPLQH,GDW)XUWKHUDVWKHGHIHQGDQWKDG
sDFNVRQ LQGLFDWHG WKDW KH KDG VROG 5RVVHOO DERXW DQ RXQFH RI SRZGHU         QRQRWLFHRIWKHTXDQWLW\LVVXHDWWULDOWKHFRXUWZRXOGKDYHWR
FRFDLQH HYHU\ RWKHU ZHHN IURP sXO\  WR sXO\              5RVVHOO   GHWHUPLQH ZKHWKHU WKH GHIHQGDQW ZRXOG KDYH FRQWHVWHG
FRUURERUDWHG WKHVH DPRXQWV s$ DW  7DSHG SKRQH FRQYHUVDWLRQV       TXDQWLW\,G7KHFRXUWZRXOGDOVRKDYHWRGHWHUPLQHEH\RQG
UHYHDOHG WKDW sDFNVRQ DQG /RSH] H[FKDQJHG TXDQWLWLHV RI PRUH WKDQ DQ        DUHDVRQDEOHGRXEWWKDWFRQVLGHULQJWKHHYLGHQFHSUHVHQWHG
RXQFH RI FRFDLQH RQ WZR RFFDVLRQV $GGLWLRQDOO\ DQRWKHU WUDQVDFWLRQ ZDV
IRU WHQ RXQFHV     5RVVHOO VXEPLWWHG ZULWWHQ REMHFWLRQV WR KLV 36,5
                                                                            DQG QRW SUHVHQWHG WKDW WKH MXU\ ZRXOG KDYH FRQYLFWHG WKH
FRQWHVWLQJ WKH WUDQVDFWLRQ LQYROYLQJ WHQ RXQFHV DQG IXUWKHU DUJXLQJ WKDW   GHIHQGDQW RI WKH KLJKHU SHQDOW\ 86&  E$
DERXW RQHIRXUWK RI WKH FRFDLQH UHIHUHQFHG ZDV IRU KLV RZQ SHUVRQDO XVH    LQVWHDGRIE%RUE&7KHFRXUWKHOGWKDW
s$ DW     7UDPEOHjV 36,5 LQGLFDWHG WKDW KH VKRXOG EH KHOG          EDVHG RQ WKH UHFRUG WKRVH LVVXHV FRXOG QRW EH UHVROYHG
DFFRXQWDEOH IRU YDULRXV TXDQWLWLHV RI FRFDLQH DQG FRFDLQH K\GURFKORULGH    EH\RQGDUHDVRQDEOHGRXEW,G7KHFRXUWWKHQZHQWRQWR
LQFOXGLQJ  JUDPV RI FRFDLQH K\GURFKORULGH WKDW KH KDG VROG SULRU WR KLV
DUUHVW DQG DQRWKHU  JUDPV RI WKH VDPH W\SH RI GUXJ IRXQG RQ KLP ZKHQ
                                                                            DGRSWDSHUVHDSSURDFKWRWKHLVVXHLWIDFHGm:HKROGWKDW
KH ZDV DUUHVWHG s$ DW  7KH 36,5 DOVR LQGLFDWHV WKDW 7UDPEOH       WKHJRYHUQPHQWFDQQRWPHHWLWVEXUGHQXQGHUWKHKDUPOHVV
FRRUGLQDWHG WKH VDOH RI YDULRXV RWKHU VSHFLILF DPRXQWV RI FUDFN WR D        HUURUVWDQGDUGZKHQGUXJTXDQWLW\LVQHLWKHUFKDUJHGLQWKH
FRQILGHQWLDO LQIRUPDQW s$ DW      7UDPEOH FKDOOHQJHV   LQGLFWPHQWQRUSURYHGWRDMXU\EH\RQGUHDVRQDEOHGRXEWLI
QRQH RI WKHVH TXDQWLWLHV DOWKRXJK KH GRHV FKDOOHQJH RWKHU TXDQWLWLHV       WKHVHQWHQFHUHFHLYHGLVJUHDWHUWKDQWKHFRPELQHGPD[LPXP
DWWULEXWHG WR KLP s$ DW  $FFRUGLQJ WR 6WHZDUWjV 36,5 VKH
DPRQJ RWKHU WKLQJV DVVLVWHG FRGHIHQGDQW 2VVLH sDFNLH %U\GLH LQ VHOOLQJ
                                                                            VHQWHQFHVIRUWKHLQGHWHUPLQDWHTXDQWLW\RIIHQVHVFKDUJHGl
FUDFN $FFRUGLQJ WR %U\GLH 6WHZDUW ZRXOG GHOLYHU FUDFN WR %U\GLH ZKR
                                                                            ,GDW
ZRXOG WKHQ VHOO LW %U\GLH HVWLPDWHG WKDW VKH VROG DQ RXQFH RI FRFDLQH D
ZHHN IRU D SHULRG RI WZHOYH WR HLJKWHHQ PRQWKV DQG WKDW WKH GUXJV FDPH       7KLVFLUFXLWjVODZLVFRQWUDU\WRWKH1LQWK&LUFXLWjVSRVLWLRQ
IURP 7UDPEOH YLD 6WHZDUW :KLOH QRW H[DFWO\ FKDOOHQJLQJ WKHVH IDFWV        UHJDUGLQJ DIILUPLQJ D VHQWHQFH EDVHG RQ XQNQRZQV ZLWK
RXWULJKW LQ KHU ZULWWHQ REMHFWLRQV 6WHZDUW GLG FODLP WKDW VKH GLG QRW     UHVSHFWWRERWKZKDWWKHJUDQGMXU\DVZHOODVWKHSHWLWMXU\
GHOLYHU FRFDLQH WR %U\GLH IRU VHYHUDO PRQWKV GXULQJ WKH UHOHYDQW SHULRG
    8QLWHG6WDWHVY                      1RV         1RV                          8QLWHG6WDWHVY      
      6WHZDUWHWDO                                                         6WHZDUWHWDO

   +DYLQJPDGHWKHGHWHUPLQDWLRQWKDWKDUPOHVVHUURUDQDO\VLV          DSSHDU WR VXSSRUW WKH DUJXPHQW WKDW DQ\ FKDOOHQJH WR WKH
LVDSSURSULDWHKRZHYHUGRHVQRWHQGRXULQTXLU\:KHUHD            TXDQWLW\ RI GUXJV DWWULEXWHG WR D GHIHQGDQW LV VXIILFLHQW WR
UHYLHZLQJFRXUWDIWHUH[DPLQLQJWKHHQWLUHUHFRUGmFDQQRW            SUHVHUYH$SSUHQGLHUURU6WUD\KRUQLVGLVWLQJXLVKDEOHIURPWKH
FRQFOXGH EH\RQG D UHDVRQDEOH GRXEW WKDW WKH MXU\ YHUGLFW       LQVWDQWFDVH$VZHH[SODLQHGLQWKDWFDVHWKHGHIHQGDQWjV
ZRXOG KDYH EHHQ WKH VDPH DEVHQW WKH HUURUIRU H[DPSOH        DUJXPHQWZDVSUHVHUYHGDOWKRXJKmKHGLGQRWXWWHUWKHZRUGV
ZKHUHWKHGHIHQGDQWFRQWHVWHGWKHRPLWWHGHOHPHQWDQGUDLVHG           GXHSURFHVVjl)GDW,QGHHGLWZRXOGKDYHEHHQ
HYLGHQFHVXIILFLHQWWRVXSSRUWDFRQWUDU\ILQGLQJLWVKRXOGQRW       SRLQWOHVVIRUKLVFRXQVHOWRKDYHGRQHVRLQDVPXFKDVQHLWKHU
ILQGWKHHUURUKDUPOHVVl1HGHU86DW7KXVmD            $SSUHQGLQRUsRQHVKDGEHHQGHFLGHGE\WKHWLPH'HIHQGDQW
FRXUWUHYLHZLQJDGHIHQGDQWjVVHQWHQFHLQZKLFKLWILQGVDQ            ZDVVHQWHQFHG6HHHJ8QLWHG6WDWHVYsRUGDQ)G
$SSUHQGLHUURUPXVWORRNWRZKHWKHUWKHµRPLWWHGHOHPHQWLV            QWK&LUUHYLHZLQJ$SSUHQGLFKDOOHQJHGH
VXSSRUWHG E\ XQFRQWURYHUWHG HYLGHQFHj DQG DOVR µDVN> @         QRYR ZKHUH GHIHQGDQW DUJXHG LQ GLVWULFW FRXUW WKDW sRQHV
ZKHWKHU WKH UHFRUG FRQWDLQV HYLGHQFH WKDW FRXOG UDWLRQDOO\      UHTXLUHGWKDWGUXJTXDQWLW\EHDOOHJHGLQWKHLQGLFWPHQWDQG
OHDG WR D FRQWUDU\ ILQGLQJ ZLWK UHVSHFW WR WKH RPLWWHG        SURYHGEH\RQGDUHDVRQDEOHGRXEW8QLWHG6WDWHVY1DQFH
HOHPHQWjl&DQGHODULR)GDWFLWLQJ1HGHU            )GWK&LUUHYLHZLQJ$SSUHQGL
86DW.LQJ)GDWH[SODLQLQJWKDWmVRPH           FKDOOHQJH IRU SODLQ HUURU ZKHUH GHIHQGDQW FRXOG KDYH EXW
FLUFXLWVKDYHFRQFOXGHGWKDWDIDFWXDOILQGLQJWKDW$SSUHQGL           IDLOHGWRUHO\RQsRQHVWRSUHVHUYHDUJXPHQWIRUDSSHDO7KLV
ZRXOGRWKHUZLVHUHTXLUHWREHGHWHUPLQHGE\DMXU\EH\RQGD            FDVHKRZHYHULVVLPLODUWRRXUGHFLVLRQLQ8QLWHG6WDWHVY
UHDVRQDEOHGRXEWPD\EHKDUPOHVVLIWKHFRXUWFDQFRQFOXGH             .LQJ)GWK&LU,QWKDWFDVHDIWHUDMXU\
EH\RQGDUHDVRQDEOHGRXEWWKDWWKHMXU\YHUGLFWZRXOGKDYH             WULDO WKH GHIHQGDQWV ZHUH FRQYLFWHG RI DQG VHQWHQFHG IRU
EHHQ WKH VDPH DEVHQW WKH HUURUl  $V WKH &RXUW LQ 1HGHU   FRQVSLUDF\WRGLVWULEXWHDQGSRVVHVVZLWKLQWHQWWRGLVWULEXWH
H[SODLQHG                                                             PHWKDPSKHWDPLQH ,G DW   'UXJ TXDQWLW\ ZDV QHLWKHU
                                                                       DOOHJHG LQ WKH LQGLFWPHQW QRU VXEPLWWHG WR WKH MXU\ IRU D
  $ UHYLHZLQJ FRXUW PDNLQJ WKLV KDUPOHVVHUURU LQTXLU\           UHDVRQDEOHGRXEWGHWHUPLQDWLRQ,GDW'HVSLWHWKHIDFW
  GRHV QRW    mEHFRPH LQ HIIHFW D VHFRQG MXU\ WR        WKDWRQHRIWKHGHIHQGDQWVREMHFWHGLQWKHGLVWULFWFRXUWWRWKH
  GHWHUPLQHZKHWKHUWKHGHIHQGDQWLVJXLOW\l5DWKHUD           H[DFW TXDQWLW\ RI GUXJV DWWULEXWHG WR KLP DUJXLQJ WKDW WKH
  FRXUWLQW\SLFDODSSHOODWHFRXUWIDVKLRQDVNVZKHWKHUWKH          DSSURSULDWHO\ DWWULEXWDEOH DPRXQW ZDV FORVHU WR  JUDPV
  UHFRUGFRQWDLQVHYLGHQFHWKDWFRXOGUDWLRQDOO\OHDGWRD             WKDQRQHNLORJUDPZHUHYLHZHGKLV$SSUHQGLEDVHGFKDOOHQJH
  FRQWUDU\ILQGLQJZLWKUHVSHFWWRWKHRPLWWHGHOHPHQW,I            WRKLVVHQWHQFHIRUSODLQHUURULQDVPXFKDVKHIDLOHGWRUDLVH
  WKH DQVZHU WR WKDW TXHVWLRQ LV mQRl KROGLQJ WKH HUURU      DUJXPHQWVEDVHGRQsRQHVRU$SSUHQGLLQWKHGLVWULFWFRXUW
  KDUPOHVV GRHV QRW mUHIOHF>W@ D GHQLJUDWLRQ RI WKH
  FRQVWLWXWLRQDOULJKWVLQYROYHGl2QWKHFRQWUDU\LW
  mVHUYH>V@DYHU\XVHIXOSXUSRVHLQVRIDUDV>LW@EORFN>V@
  VHWWLQJDVLGHFRQYLFWLRQVIRUGHIHFWVWKDWKDYHOLWWOH        LQDVPXFK DV VKH DQG 7UDPEOH KDG EURNHQ XS GXULQJ WKDW WLPH s$ DW
  LI DQ\ OLNHOLKRRG RI KDYLQJ FKDQJHG WKH UHVXOW RI WKH      
  WULDOl                                                                 
                                                                            $SSUHQGL ZDV GHFLGHG D \HDU DIWHU sRQHV ZKLFK ZDV GHFLGHG RQ
1HGHU86DW                                                 0DUFK   6HH sRQHV  86  6WUD\KRUQ ZDV VHQWHQFHG LQ
                                                                       )HEUXDU\   )G DW 
       8QLWHG6WDWHVY                       1RV           1RV                           8QLWHG6WDWHVY      
         6WHZDUWHWDO                                                             6WHZDUWHWDO

,G DW   :H EHOLHYH WKH VDPH UHDVRQLQJ DSSOLHV WR           EDVLV,GDWm>$@FRQVWLWXWLRQDOHUURULVHLWKHUVWUXFWXUDO
5RVVHOO7UDPEOHDQG6WHZDUW$OWKRXJKDOOWKUHHFKDOOHQJHG                 RU LW LV QRWl  ,G  7KH 6XSUHPH &RXUWjV DSSURDFK WR VXFK
FHUWDLQ TXDQWLWLHV RI GUXJV DWWULEXWHG WR WKHP QRQH UDLVHG          HUURUVKDVEHHQFDWHJRULFDO,G,QDVPXFKDVRQO\DOLPLWHG
FRQVWLWXWLRQDO DUJXPHQWV RU RWKHUZLVH FKDOOHQJHG WKH                    FODVVRImIXQGDPHQWDOFRQVWLWXWLRQDOHUURUVlGHILHVKDUPOHVV
SURSULHW\RIWKHHYLGHQWLDU\VWDQGDUGXVHGE\WKHGLVWULFWFRXUW             HUURUUHYLHZDQGDOORWKHUFRQVWLWXWLRQDOHUURUVDUHVXEMHFWWR
LQGHWHUPLQLQJGUXJTXDQWLW\+XPSKUH\)GDW                   VXFKUHYLHZLGDWZHEHOLHYHKDUPOHVVHUURUDQDO\VLVLV
$OOWKUHHZHUHVHQWHQFHGDIWHUsRQHVZDVGHFLGHGDQGFRXOG                   DSSURSULDWHXQGHUWKHIDFWVRIWKLVFDVH
KDYH UHOLHG RQ WKDW FDVH DV GLG WKH %HQIRUGV WR FKDOOHQJH
WKHLU VHQWHQFHV ZLWK UHJDUG WR WKH GHWHUPLQDWLRQ RI GUXJ                 )LQDOO\ .LQJ  )G  VXSSRUWV WKH YLHZ WKDW
TXDQWLW\RQFRQVWLWXWLRQDOJURXQGV.LQJ)GDW               KDUPOHVVHUURUDQDO\VLVLVDSSURSULDWHZKHUHGUXJTXDQWLW\LV
sRUGDQ)GDWQ1DQFH  )GDW                   QHLWKHUFKDUJHGLQWKHLQGLFWPHQWQRUVXEPLWWHGWRWKHWULHURI
7KHUHIRUH ZH ZLOO UHYLHZ 5RVVHOO 7UDPEOH DQG 6WHZDUWjV              IDFW IRU SURRI EH\RQG D UHDVRQDEOH GRXEW  7KH $SSUHQGL
$SSUHQGLFODLPVIRUSODLQHUURU                                             EDVHGFKDOOHQJHLQ.LQJZDVUHYLHZHGIRUSODLQHUURU8QGHU
                                                                             WKDWVWDQGDUGRIUHYLHZEHIRUHDFRXUWPD\FRUUHFWDQHUURU
                                   &                                        LWPXVWGHWHUPLQHZKHWKHUWKHUHZDVHUURUWKDWZDV
                                                                             SODLQ DQG  WKDW DIIHFWHG VXEVWDQWLDO ULJKWV  ,G DW 
               1DWKDQ%HQIRUGDQG5HQD%HQIRUG                               (YHQ WKHQ WKH HUURU FDQ RQO\ EH FRUUHFWHG LI LW VHULRXVO\
                                                                             DIIHFWVWKHIDLUQHVVLQWHJULW\RUSXEOLFUHSXWDWLRQRIMXGLFLDO
   :LWKDQXQVSHFLILHGGUXJTXDQWLW\1DWKDQ%HQIRUGIDFHG                   SURFHHGLQJV  ,G  :H XOWLPDWHO\ GHWHUPLQHG WKDW WKH
DVWDWXWRU\PD[LPXPVHQWHQFHRIWKLUW\\HDUVDVDSULRUIHORQ\               GHIHQGDQWVj VXEVWDQWLDO ULJKWV ZHUH QRW DIIHFWHG E\ WKH
GUXJRIIHQGHUXQGHUE&+RZHYHUEDVHGRQWKH                   $SSUHQGLHUURU,GDW:HH[SODLQHGLQ.LQJWKDWWKH
GLVWULFW FRXUWjV GUXJ TXDQWLW\ GHWHUPLQDWLRQV %HQIRUG ZDV             VXEVWDQWLDOULJKWVSURQJRIWKHSODLQHUURUDQDO\VLVmLVDNLQWR
VHQWHQFHGWRDWHUPRILPSULVRQPHQWH[FHHGLQJWKHRWKHUZLVH                  WKHKDUPOHVVHUURUDQDO\VLVHPSOR\HGLQSUHVHUYHGHUURUFDVHV
DSSOLFDEOHGHIDXOWVWDWXWRU\PD[LPXP7KHGLVWULFWFRXUWKHOG               l,GDW7KHGLIIHUHQFHKRZHYHULVWKDWXQGHUSODLQ
%HQIRUGUHVSRQVLEOHIRUNLORJUDPVRISRZGHUFRFDLQHDQG                    HUURUUHYLHZWKHEXUGHQLVRQWKHGHIHQGDQWWRVKRZWKDWWKH
 NLORJUDPVRIFUDFNFRFDLQHWKHUHE\H[SRVLQJKLPWRWKH                   HUURU ZDV SUHMXGLFLDO LH WKDW KLV VXEVWDQWLDO ULJKWV ZHUH
SHQDOW\ SURYLVLRQV RI  E$ ZKLFK FDOOV IRU D              DIIHFWHG8QLWHG6WDWHVY9RQQ6&W
PDQGDWRU\ PLQLPXP WHUP RI WZHQW\ \HDUV  PRQWKV                   7KH WDEOHV DUH WXUQHG XQGHU KDUPOHVV HUURU UHYLHZ DV WKH
LPSULVRQPHQW IRU LQGLYLGXDOV ZKR DUH SULRU IHORQ\ GUXJ                JRYHUQPHQWEHDUVWKHEXUGHQRIVKRZLQJWKDWWKHHUURUKDGQR
RIIHQGHUV8VLQJLWVGUXJTXDQWLW\FDOFXODWLRQVWKHGLVWULFW               HIIHFWRQDGHIHQGDQWVjVXEVWDQWLDOULJKWV,G1HYHUWKHOHVV
FRXUW HYHQWXDOO\ VHQWHQFHG %HQIRUG WR D    PDQGDWRU\ OLIH             WKHIDFWWKDWZHIRXQGLQ.LQJWKDWWKHGHIHQGDQWVjVXEVWDQWLDO
VHQWHQFH XQGHU WKH VHQWHQFLQJ JXLGHOLQHV  7KH FRXUW DOVR           ULJKWV KDG QRW EHHQ DIIHFWHG E\ WKH IDLOXUH WR DOOHJH GUXJ
                                                                             TXDQWLW\LQWKHLQGLFWPHQWRUWRKDYHWKHTXDQWLW\LVVXHSURYHQ
     
                                                                             EH\RQGDUHDVRQDEOHGRXEWVXSSRUWVWKHYLHZWKDWVXFKHUURU
      7KH GLVWULFW FRXUW HVWDEOLVKHG D EDVH RIIHQVH OHYHO RI  EDVHG XSRQ   PD\EHKDUPOHVVLIWKHJRYHUQPHQWFDQVKRXOGHULWVEXUGHQ
D TXDQWLW\ RI  NLORJUDPV RI FUDFN FRFDLQH 6HH 866*  'F 'UXJ      9RQQ6&WDW
4XDQWLW\ 7DEOH 7KH EDVH RIIHQVH OHYHO ZDV HQKDQFHG E\ D WRWDO RI VL[
OHYHOV IRXU IRU %HQIRUGjV UROH LQ WKH RIIHQVH XQGHU 866*  %E DQG
    8QLWHG6WDWHVY                         1RV          1RV                              8QLWHG6WDWHVY        
      6WHZDUWHWDO                                                                 6WHZDUWHWDO

DIIHFWWKHIDLUQHVVLQWHJULW\RUSXEOLFUHSXWDWLRQRIMXGLFLDO           VHQWHQFHG%HQIRUGWRDILYH\HDUWHUPRIVXSHUYLVHGUHOHDVHRQ
SURFHHGLQJV,G+RZHYHUWKHIDFWWKDWWKH&RXUWGHFOLQHGWR            WKH GUXJ FRQVSLUDF\ FRQYLFWLRQ ZKLFK LV WKH PDQGDWRU\
QRWLFHWKHHUURUXQGHUSODLQHUURUUHYLHZVXSSRUWVWKHYLHZ                PLQLPXPXQGHUE$
WKDW VXFK HUURU ZDV QRW QHFHVVDULO\ mVWUXFWXUDOl UHTXLULQJ
DXWRPDWLFUHYHUVDOLQDVPXFKDVLWLVGLIILFXOWWRLPDJLQHWKDW               5HQD%HQIRUGIDFHGDGHIDXOWPD[LPXPVHQWHQFHRIWZHQW\
DQ HUURU WKDW mQHFHVVDULO\ UHQGHU>V@ D FULPLQDO WULDO               \HDUVXQGHUE&%XWWKHGLVWULFWFRXUWKHOGKHU
IXQGDPHQWDOO\XQIDLURUDQXQUHOLDEOHYHKLFOHIRUGHWHUPLQLQJ              UHVSRQVLEOH IRU  JUDPV  NLORJUDPV RI FUDFN DQG
JXLOWRULQQRFHQFHlVXFKWKDWmQRFULPLQDOSXQLVKPHQWPD\                 RYHUJUDPVRISRZGHUFRFDLQHWKHUHE\H[SRVLQJKHUWR
EHUHJDUGHGDVIXQGDPHQWDOO\IDLUl1HGHU86DW                SXQLVKPHQW XQGHU  E$ ZKLFK HVWDEOLVKHV D
GRHVQRWDOVRmVHULRXVO\DIIHFWWKHIDLUQHVVLQWHJULW\RUSXEOLF         PLQLPXPVHQWHQFHRIWHQ\HDUVPRQWKVLPSULVRQPHQW
UHSXWDWLRQRIMXGLFLDOSURFHHGLQJVl&RWWRQ6&WDW            DQGDPD[LPXPVHQWHQFHRIOLIHLPSULVRQPHQWIRUGHIHQGDQWV
                                                                           ZLWKRXWDSULRUIHORQ\GUXJFRQYLFWLRQ8VLQJWKHVHQWHQFLQJ
   7KLV UHDVRQLQJ LV EXWWUHVVHG E\ WKH 6XSUHPH &RXUWjV              JXLGHOLQHVWKHGLVWULFWFRXUWRUGHUHG0UV%HQIRUGWRVHUYHD
GHFLVLRQLQsRKQVRQY8QLWHG6WDWHV86LQ              WHUP RI  PRQWKV LPSULVRQPHQW RQ WKH GUXJ FRQVSLUDF\
ZKLFKWKHLVVXHRIPDWHULDOLW\LQDSHUMXU\SURVHFXWLRQZDV                FRQYLFWLRQDQGILYH\HDUVRIVXSHUYLVHGUHOHDVHZKLFKLVWKH
GHFLGHGE\WKHGLVWULFWFRXUWUDWKHUWKDQWKHMXU\,GDW           PLQLPXPXQGHUE$
8QGHU WKH ODZ WKDW H[LVWHG DW WKH WLPH RI WULDO WKH GLVWULFW
FRXUWLQVWUXFWHGWKHMXU\WKDWLWGLGQRWKDYHWRGHFLGHWKHLVVXH
RIPDWHULDOLW\,G5HYLHZLQJWKHLVVXHIRUSODLQHUURUWKH
6XSUHPH&RXUWUHVHUYHGWKHGHFLVLRQDVWRZKHWKHUWKHHUURU
DIIHFWHGVXEVWDQWLDOULJKWVEXWXOWLPDWHO\GHFLGHGQRWWRQRWLFH          WZR IRU KLV SRVVHVVLRQ RI D ZHDSRQ GXULQJ WKH GUXJ FRQVSLUDF\ SXUVXDQW
WKHHUURULQDVPXFKDVLWGLGQRWVHULRXVO\DIIHFWWKHIDLUQHVV            WR 866*  'E %HQIRUGjV UHVXOWLQJ RIIHQVH OHYHO ZDV  &URVV
LQWHJULW\RUSXEOLFUHSXWDWLRQRIMXGLFLDOSURFHHGLQJVEHFDXVH             UHIHUHQFHG ZLWK D FULPLQDO KLVWRU\ FDWHJRU\ RI 9, WKH JXLGHOLQHV FDOOHG IRU
WKHHYLGHQFHSHUWDLQLQJWRPDWHULDOLW\ZDVRYHUZKHOPLQJDQG                D PDQGDWRU\ OLIH VHQWHQFH 7KLV VHQWHQFH ZDV LPSRVHG WR UXQ FRQFXUUHQWO\

HVVHQWLDOO\XQFRQWURYHUWHG,GDW7KH&RXUWODWHU               ZLWK D PRQWK WHUP RI LPSULVRQPHQW RQ &RXQW 7ZR PRQH\
                                                                           ODXQGHULQJ ,Q DGGLWLRQ WKH ILYH\HDU WHUP RI VXSHUYLVHG UHOHDVH UDQ
QRWHG LQ 1HGHU ZKHQ DQDO\]LQJ ZKHWKHU RPLVVLRQ RI DQ              FRQFXUUHQWO\ ZLWK D WKUHH\HDU WHUP RI VXSHUYLVHG UHOHDVH VWHPPLQJ IURP
HOHPHQWRIWKHRIIHQVHIURPMXU\LQVWUXFWLRQVZDVVWUXFWXUDO               WKH PRQH\ ODXQGHULQJ FRQYLFWLRQ
HUURUWKDWWKHFRQFOXVLRQUHDFKHGLQsRKQVRQmFXWVDJDLQVWWKH
DUJXPHQW WKDW WKH RPLVVLRQ RI DQ HOHPHQW ZLOO DOZD\V >RU              
                                                                                 %DVHG XSRQ LWV GUXJ TXDQWLW\ FDOFXODWLRQV WKH GLVWULFW FRXUW
QHFHVVDULO\@ UHQGHU D WULDO XQIDLUl  1HGHU  86 DW        GHWHUPLQHG WKDW 0UV %HQIRUGjV EDVH RIIHQVH OHYHO VKRXOG EH  EHFDXVH
HPSKDVLVLQWKHRULJLQDO/LNHZLVHWKH6XSUHPH&RXUWjV                 VKH ZDV LQYROYHG ZLWK EHWZHHQ  JUDPV DQG  NLORJUDPV RI FUDFN
KROGLQJWKDWWKHHUURQHRXVRPLVVLRQRIGUXJTXDQWLW\IURPWKH              6HH 866*  'F +HU EDVH RIIHQVH OHYHO ZDV HQKDQFHG E\ WZR
                                                                           OHYHOV SXUVXDQW WR 866*  'E IRU SRVVHVVLRQ RI D ZHDSRQ GXULQJ
LQGLFWPHQWGRHVQRWVHULRXVO\DIIHFWWKHIDLUQHVVLQWHJULW\RU            WKH GUXJ RIIHQVH WKHUHE\ UDLVLQJ WKH RIIHQVH OHYHO WR  :LWK D FULPLQDO
SXEOLFUHSXWDWLRQRIMXGLFLDOSURFHHGLQJVOHQGVVWURQJVXSSRUW            KLVWRU\ FDWHJRU\ RI ,,, WKH VHQWHQFLQJ JXLGHOLQHV \LHOGHG D UDQJH RI 
IRUWKHSURSRVLWLRQWKDWVXFKHUURULVQRWVWUXFWXUDODQGZLOO              PRQWKV LPSULVRQPHQW 7KH GLVWULFW FRXUW VHQWHQFHG 0UV %HQIRUG WR
QRWDOZD\VRUQHFHVVDULO\UHQGHUDFULPLQDOWULDOXQIDLU$IWHU           WKH PD[LPXP RI  PRQWKV 6KH ZDV DOVR VHQWHQFHG WR FRQFXUUHQW WHUPV
DOOVWUXFWXUDOHUURULVQRWWREHGHWHUPLQHGRQDFDVHE\FDVH            RI  PRQWKV LPSULVRQPHQW DQG WKUHH \HDUV RI VXSHUYLVHG UHOHDVH RQ WKH
                                                                           PRQH\ ODXQGHULQJ FRXQW
    8QLWHG6WDWHVY                    1RV        1RV                           8QLWHG6WDWHVY     
      6WHZDUWHWDO                                                       6WHZDUWHWDO

   8QGHU $SSUHQGL D GHIHQGDQW PD\ QRW EH H[SRVHG WR D     MXULVGLFWLRQDO LQ WKH VHQVH WKDW LW DIIHFWV D FRXUWjV VXEMHFW
JUHDWHUSXQLVKPHQWWKDQWKDWDXWKRUL]HGE\WKHMXU\jVJXLOW\        PDWWHUMXULVGLFWLRQLHDFRXUWjVFRQVWLWXWLRQDORUVWDWXWRU\
YHUGLFW  1HXKDXVVHU  )G DW  TXRWLQJ 3DJH    SRZHUWRDGMXGLFDWH>WKH@FDVHl3UHQWLVV)GDW
)GDW%HFDXVHWKHMXU\GLGQRWGHWHUPLQHDTXDQWLW\RI     TXRWLQJ8QLWHG6WDWHVY0DUWLQ)GWK&LU
GUXJVEH\RQGDUHDVRQDEOHGRXEWWKH%HQIRUGVVKRXOGKDYH           
EHHQ VHQWHQFHG XQGHU WKH SHQDOWLHV SUHVFULEHG XQGHU
E&7KHJRYHUQPHQWFRQWHQGVWKDWWKHGLVWULFW             :H DOVR GHFOLQH WR FDWHJRUL]H WKH RPLVVLRQ IURP WKH
FRXUWLQIDFWGHWHUPLQHGWKHGUXJTXDQWLWLHVDWWULEXWDEOHWR      LQGLFWPHQW WKDW RFFXUUHG LQ WKHVH FDVHV DV VWUXFWXUDO HUURU
WKH%HQIRUGVEH\RQGDUHDVRQDEOHGRXEW7KLVDVVHUWLRQOLNHO\      7KH 6XSUHPH &RXUW KDV LGHQWLILHG mD OLPLWHG FODVV RI
VWHPVIURPVWDWHPHQWVWKHGLVWULFWFRXUWMXGJHPDGHDW1DWKDQ       IXQGDPHQWDO FRQVWLWXWLRQDO HUURUV WKDW GHI\ DQDO\VLV E\
%HQIRUGjVVHQWHQFLQJKHDULQJ                                       KDUPOHVV HUURU VWDQGDUGVl  1HGHU  86 DW  LQWHUQDO
                                                                    TXRWDWLRQPDUNVRPLWWHG6WUXFWXUDOHUURUVUHTXLUHDXWRPDWLF
  ,KHDUGDERXW>ZLUHWDS@SKRQHFDOOV,PHDQ,KHDUG         UHYHUVDOGHVSLWHWKHHIIHFWRIWKHHUURURQWKHWULDOjVRXWFRPH
  VRPXFKHYLGHQFHRIGUXJVLQWKHFRQVSLUDF\WKDW,PHDQ         ,G$VIRUDOORWKHUHUURUVmFRXUWVPXVWDSSO\)HG5&ULP
  DQGLWjVQRWRQO\WHVWLPRQ\,KHDUGWKHSKRQHFDOOV              3DjVKDUPOHVVHUURUVWDQGDUGVDQGGLVUHJDUGHUURUVWKDW
                                                                    DUHKDUPOHVVEH\RQGDUHDVRQDEOHGRXEWl1HGHU86DW
                                                              HPSKDVLVLQWKHRULJLQDO7KHHUURUFRPSODLQHGRILQWKH
                                                                    LQVWDQWFDVHLVQRWDPRQJWKRVHOLVWHGLQ1HGHUWKDWFODVVLI\DV
  :HDOOKHDUG D ORWRIRWKHUHYLGHQFHDVZHOO,PHDQ          VWUXFWXUDO  $V SUHYLRXVO\ PHQWLRQHG VWUXFWXUDO mHUURUV
  ZHjYHVHHQUHDOHYLGHQFHDQGRWKHUHYLGHQFHLQWKLVFDVH         LQIHFWWKHHQWLUHWULDOSURFHVVDQGµQHFHVVDULO\UHQGHUDWULDO
  ,I\RXZDQWPHWRVD\,jPFRQYLQFHGLI\RXZDQWPHWR            IXQGDPHQWDOO\XQIDLUjl1HGHU86DWFLWDWLRQV
  VD\ LW ,jP FRQYLQFHG EH\RQG D UHDVRQDEOH GRXEW WKDW      RPLWWHG  ,Q RWKHU ZRUGV VWUXFWXUDO HUURUV mGHSULYH
  WKHUHZDVGUXJTXDQWLWLHV,jYHDOUHDG\JRQHRYHUWKLV           GHIHQGDQWVRIµEDVLFSURWHFWLRQVjZLWKRXWZKLFKµDFULPLQDO
  DQG,GRQjWKDYHWRJRRYHUWKRVHTXDQWLWLHVDJDLQ,KRSH       WULDO FDQQRW UHOLDEO\ VHUYH LWV IXQFWLRQ DV D YHKLFOH IRU
  EXW,PHDQ,GRQjWNQRZZKDWWRGR,PHDQ,KHDUGLW          GHWHUPLQDWLRQ RI JXLOW RU LQQRFHQFH    DQG QR FULPLQDO
  DOO                                                              SXQLVKPHQWPD\EHUHJDUGHGDVIXQGDPHQWDOO\IDLUjl,GDW
                                                                    6DQFKH])GDW
                                                                      ,Q&RWWRQ6&WWKH6XSUHPH&RXUWGHFOLQHGWR
                                                                    DGGUHVV WKH GHIHQGDQWVj DUJXPHQW WKDW WKH IDLOXUH WR DOOHJH
                                                                    GUXJTXDQWLW\LQWKHLQGLFWPHQWZDVVWUXFWXUDOHUURU,GDW
                                                                    $VZHSUHYLRXVO\H[SODLQHGRQSODLQHUURUUHYLHZWKH
                                                                    &RXUW LQVWHDG DVVXPHG WKH HUURU DIIHFWHG WKH GHIHQGDQWVj
                                                                    VXEVWDQWLDOULJKWVEXWIRXQGWKDWWKHHUURUGLGQRWVHULRXVO\


                                                                        
                                                                          6HH 1HGHU VXSUD QRWH 
    8QLWHG6WDWHVY                       1RV         1RV                                     8QLWHG6WDWHVY         
      6WHZDUWHWDO                                                                     6WHZDUWHWDO

TXDQWLW\ GHSULYHV D FRXUW RI MXULVGLFWLRQ  8QLWHG 6WDWHV Y   1DWKDQ%HQIRUG6HQWHQFLQJ+HDULQJs$DWHPSKDVLV
/RQJRULD1RV:/WK                 DGGHG  7KH JRYHUQPHQW DUJXHV WKDW WKH %HQIRUGVj ULJKWV
&LUsXO\                                                    ZHUHQRWYLRODWHGHYHQWKRXJKWKHFRXUWUDWKHUWKDQWKHMXU\
                                                                        HVWDEOLVKHG WKH GUXJ TXDQWLWLHV WKDW SHUPLWWHG VHQWHQFLQJ
  $OWKRXJKPXFKDXWKRULW\VXJJHVWVWKDWDIDLOXUHWRDOOHJHDQ          EH\RQGWKHVWDWXWRU\PD[LPXP&RQWUDU\WRWKHJRYHUQPHQWjV
HVVHQWLDOHOHPHQWRIDFULPHLQWKH$SSUHQGLFRQWH[WLVVXEMHFW         DUJXPHQWV KRZHYHU VXFK D ILQGLQJ E\ WKH GLVWULFW FRXUW
WR KDUPOHVV HUURU UHYLHZ DW OHDVW RQH FRXUW KDV UHDFKHG D    ZRXOGQRWFXUHWKHIDLOXUHWRDOOHJHWKHGUXJTXDQWLWLHVLQWKH
GLIIHUHQWFRQFOXVLRQ7KH(LJKWK&LUFXLWKDVKHOGWKDWZKHUH           LQGLFWPHQW DQG KDYLQJ WKH LVVXH VXEPLWWHG WR D MXU\ ZKHUH
GUXJ TXDQWLW\ LV PLVVLQJ IURP WKH LQGLFWPHQW KDUPOHVV RU       WKHUHLVDMXU\WULDO5DPLUH])GDWFI6WUD\KRUQ
SODLQHUURUUHYLHZLVLQDSSURSULDWHDVWRVHQWHQFHVLPSRVHG             )GDWUHPDQGLQJFDVHWRWKHGLVWULFWFRXUWVRWKDW
EH\RQGWKDWDOORZHGE\86&E&6HH8QLWHG            FRXUWFRXOGGHWHUPLQHEH\RQGDUHDVRQDEOHGRXEWWKHLVVXHRI
6WDWHV Y 0D\QLH  )G   WK &LU          GUXJTXDQWLW\ZKHUHGHIHQGDQWSOHDGHGJXLOW\,QDGGLWLRQ
KROGLQJWKDW$SSUHQGLHUURULQLQGLFWPHQWLVmIXQGDPHQWDOl            GHVSLWHWKHFRXUWjVVWDWHPHQWVGXULQJWKHVHQWHQFLQJKHDULQJ
DQGWKDWZKHUHGUXJTXDQWLW\LVQRWDOOHJHGLQWKHLQGLFWPHQW          WKHUHFRUGUHIOHFWVWKDWWKHGLVWULFWFRXUWGHWHUPLQHGWKHGUXJ
HUURUPXVWEHFRUUHFWHG                                             TXDQWLWLHV DWWULEXWDEOH WR 1DWKDQ %HQIRUG E\ D PHUH
                                                                        SUHSRQGHUDQFHVWDQGDUGDQGQRWEH\RQGDUHDVRQDEOHGRXEW
  +RZHYHULWLVQRZVHWWOHGWKDWWKHRPLVVLRQRIWKHHOHPHQW           GXHWRLWVEHOLHIWKDWWKHTXHVWLRQGLGQRWKDYHWREHVXEPLWWHG
RI GUXJ TXDQWLW\ IURP WKH LQGLFWPHQW GLG QRW GHSULYH WKH       WRDMXU\7KXVWKH%HQIRUGVjVHQWHQFHVYLRODWHG$SSUHQGL
GLVWULFWFRXUWRIVXEMHFWPDWWHUMXULVGLFWLRQRYHUWKHFDVHVQRZ
EHIRUHXV6HH&RWWRQ6&WDWUHMHFWLQJ)RXUWK
&LUFXLWjV KROGLQJ WKDW IDLOXUH WR DOOHJH GUXJ TXDQWLW\ LQ DQ       
LQGLFWPHQWLVMXULVGLFWLRQDOVXFKWKDWLWGHSULYHVDFRXUWRI               $W %HQIRUGjV VHQWHQFLQJ WKH FRXUW VWDWHG

MXULVGLFWLRQWRLPSRVHDVHQWHQFHIRUDQRIIHQVHQRWFKDUJHG                $Q\ZD\ KHUHjV ZKDW , KDYH WR VD\ DERXW DOO RI WKHVH GUXJ
LQ WKH LQGLFWPHQW  msXULVGLFWLRQ LV WKH SRZHU WR GHFLGH D       TXDQWLWLHV     %DVHG XSRQ ZKDW DSSHDUV LQ 3DUDJUDSKV   
MXVWLFLDEOHFRQWURYHUV\DQGLQFOXGHVTXHVWLRQVRIODZDVZHOO                     RI WKH SUHVHQWHQFH UHSRUW , JHW RYHU

DVIDFW>DQG@HYHQWKHXQFRQVWLWXWLRQDOLW\RIWKHVWDWXWH              JUDPV RI FUDFN %DVHG XSRQ ZKDW DSSHDUV WKH LQIRUPDWLRQ

XQGHUZKLFKWKHSURFHHGLQJLVEURXJKWGRHVQRWRXVWDFRXUW                 DSSHDULQJ LQ 3DUDJUDSK          RI WKH

RIMXULVGLFWLRQl8QLWHG6WDWHVY:LOOLDPV86                SUHVHQWHQFH UHSRUW , JHW RYHU  JUDPV RI SRZGHU FRFDLQH


 FLWDWLRQV RPLWWHG &RWWRQ  6&W DW 
                                                                            SRZGHU FRFDLQH K\GURFKORULGH
                                                                                  1RZ RQ WRS RI WKDW LWjV HYLGHQW WKDW WKHUH ZDV D ZKROH ORW
H[SODLQLQJWKDWMXULVGLFWLRQPHDQVmWKHFRXUWVjVWDWXWRU\RU               PRUH SRZGHU JRLQJ RQ DQG GHDOW ZLWK WKDQ ZKDW DSSHDUV LQ WKRVH

FRQVWLWXWLRQDOSRZHUWRDGMXGLFDWHWKHFDVHl3XUVXDQWWR              SDUDJUDSKV $QG IRU H[DPSOH \RX KDYH LI 0U /RSH] sDFNVRQ

86&GLVWULFWFRXUWVmKDYHRULJLQDOMXULVGLFWLRQ            LV   WR   EH   FUHGLWHG   0U   %HQIRUG   ZRXOG   KDYH   JRWWHQ   VHUYHG

RYHUDOORIIHQVHVDJDLQVWWKHODZVRIWKH8QLWHG6WDWHVl,G              VRPHWKLQJ DURXQG VL[ NLORJUDPV RI SRZGHU             VRPHWLPH EHWZHHQ


m>(@UURUVLQDQRQIULYRORXVLQGLFWPHQWGRQRWVWULSWKHGLVWULFW           $SULO DQG sXQH RI  DQG WKDWjV WZR D PRQWK HYHU\ WZR
                                                                            ZHHNV $QG KH FRXOG KDYH JRWWHQ VRPH PRUH GLG PRUH WKDQ WKDW
FRXUW RI MXULVGLFWLRQ XQGHU  l  8QLWHG 6WDWHV Y             EHWZHHQ sXO\ sXO\  SUREDEO\ DV PXFK EHWZHHQ $SULO DQG
%MRUNPDQ)GWK&LU7KHUHIRUHm>DQ               WKH WLPH WKDW KH ZDV DUUHVWHG

LQGLFWPHQWjV IDLOXUH WR DOOHJH DQ HOHPHQW RI D FULPH LV QRW             ,WjV QRW UHDO HDV\ WR ILQG RXW LQ WKLV FDVH SUHFLVHO\ ZKDW
                                                                            SRZGHU ZDV ZKDW ZKDW FUDFN ZDV ZKDW EXW ,jP FRQYLQFHG WKDW
     8QLWHG6WDWHVY                            1RV       1RV                              8QLWHG6WDWHVY       
       6WHZDUWHWDO                                                                 6WHZDUWHWDO

                                                                            HUURULVMXULVGLFWLRQDO,GDWRYHUUXOLQJ8QLWHG6WDWHVY
                                                                            7UDQ  )G  G &LU   6LPLODUO\ WKH 7HQWK
                                                                            &LUFXLWLQLWLDOO\KHOGWKDWZKHUHWKHLQGLFWPHQWIDLOHGWRDOOHJH
                                                                            GUXJ TXDQWLW\ VXFK D GHIHFW ZDV QRW VXEMHFW WR SODLQ RU
     WKHUH ZDV DW OHDVW ILYH NLORJUDPV RI FRFDLQH SRZGHU KHUH WKDW
                                                                            KDUPOHVV HUURU UHYLHZ  6HH sDFNVRQ  )G DW 
                                                                            UHMHFWLQJ JRYHUQPHQWjV DUJXPHQW WKDW GHIHQGDQWjV \HDU
     DUH WKDW LV XQDFFRXQWHG IRU LQ WKLV DPRXQW RI FUDFN         GHDOW
     DVVXPLQJ    WKDW \RX JRW WR XVH FUDFN QRW WKH SRZGHU WKDW ZDV
     FRQYHUWHG LQWR FUDFN   ,jP QRW VXUH                                  VHQWHQFHZDVVXEMHFWWRKDUPOHVVRUSODLQHUURUUHYLHZZKHUH
                                                                            WKH LQGLFWPHQW IDLOHG WR LQFOXGH HVVHQWLDO HOHPHQW RI GUXJ
                                                                         TXDQWLW\  +RZHYHU WKDW FRXUW KDV UHYLVLWHG LWV SRVLWLRQ
                                                                            UHJDUGLQJLQGLFWPHQWVWKDWIDLOWRDOOHJHHVVHQWLDOHOHPHQWVRI
         , WKLQN ERWK SRZGHU DQG FUDFN FDQ EH FRXQWHG HYHQ LI \RX
     FRRN LW LQWR FUDFN    DQG WKHUH LV D ORW PRUH SRZGHU FUDFN
                                                                            DFULPH 6HH8QLWHG6WDWHVY3UHQWLVV)G
     FRFDLQH VR WKH FRFDLQH WKDW LW ZRXOG KDYH WDNHQ WR PDNH FUDFN         WK &LU  HQ EDQF KROGLQJ WKDW D mIDLOXUH RI DQ
     ZDV VWLOO ZDV VWLOO QRW DFFRXQWHG IRU LQ WKH QXPEHUV LQ WKH           LQGLFWPHQWWRDOOHJHDQHVVHQWLDOHOHPHQWRIDFULPHGRHVQRW
     SUHVHQWHQFH UHSRUW ,jP VDWLVILHG E\ FHUWDLQO\ D SUHSRQGHUDQFH         GHSULYHDGLVWULFWFRXUWRIVXEMHFWPDWWHUMXULVGLFWLRQUDWKHU
     RI WKH HYLGHQFH WKDW DW OHDVW D SUHSRQGHUDQFH RI WKH HYLGHQFH
                                                                            VXFKIDLOXUHLVVXEMHFWWRKDUPOHVVHUURUUHYLHZl7KH7HQWK
     WKDW 0U %HQIRUG LQ RQH ZD\ RU DQRWKHU ZDV LQYROYHG ZLWK WKH
                                                                            &LUFXLWIXUWKHUKHOGWKDWm>W@RWKHH[WHQWWKDWWKLV&RXUWjVSULRU
                                                                            GHFLVLRQVKROGRWKHUZLVHZHRYHUUXOHWKHPl,G7KH
     SXUFKDVH DQG VDOH RI RYHU ILYH NLORJUDPV RI SRZGHU DQG 
     JUDPV RI FUDFN
                                                                            7HQWK &LUFXLW DOVR H[SUHVVO\ UHMHFWHG WKH DUJXPHQW WKDW D
                                                                         IDLOXUH WR DOOHJH DQ HVVHQWLDO HOHPHQW RI D FULPH LQ DQ
                                                                            LQGLFWPHQW QHFHVVDULO\ IDOOV LQWR WKH FDWHJRU\ RI VWUXFWXUDO
         , GR QRW EHOLHYH WKDW GUXJ TXDQWLWLHV DUH HOHPHQWV RI WKH
                                                                            HUURUUHTXLULQJDXWRPDWLFUHYHUVDO,GDW)LQDOO\D
                                                                            SDQHORIWKH)LIWK&LUFXLWSUHYLRXVO\KHOGWKDWZKHUH$SSUHQGL
     RIIHQVH DQG , GR QRW     EHOLHYH WKDW GUXJ TXDQWLWLHV PXVW EH
     GHWHUPLQHG E\ WKH MXU\$V D PDWWHU RI IDFW WKHUH LV SOHQW\ RI WK
     &LUFXLW DXWKRULW\ WKDW VD\V GUXJ TXDQWLWLHV DUH QRW WR EH              HUURURFFXUVEHFDXVHRIDIDLOXUHWRFKDUJHGUXJTXDQWLW\LQWKH
     GHWHUPLQHG E\ D MXU\                                                  LQGLFWPHQWWKHHUURUPXVWEHFRUUHFWHGLQDVPXFKDVWKHHUURU
                                                                            LVMXULVGLFWLRQDODQGDGLVWULFWFRXUWRQO\KDVMXULVGLFWLRQWR
1DWKDQ %HQIRUG 6HQWHQFLQJ +HDULQJ s$ DW  HPSKDVLV DGGHG
7KH GLVWULFW FRXUW DSSOLHG WKH VDPH UDWLRQDOH LQ VHQWHQFLQJ 5HQD %HQIRUG
                                                                            VHQWHQFHDGHIHQGDQWWRDVHQWHQFHHTXDOWRRUOHVVWKDQWKH
                                                                            VWDWXWRU\PD[LPXP8QLWHG6WDWHVY*RQ]DOH])G
          :HOO OHW PH MXVW VD\ WKDW DV , KDYH MXVW DV , KDYH MXVW VDLG   	QWK&LU+RZHYHUUHO\LQJRQ&RWWRQ
     LQ FRQQHFWLRQ ZLWK 0U %HQIRUG WKDW , GRQjW EHOLHYH WKH sRQHV           6&W  WKH )LIWK &LUFXLW VLWWLQJ HQ EDQF UHFHQWO\
     FDVH FKDQJHV DQ\WKLQJ KHUH    >'@UXJ TXDQWLWLHV DUH QRW            RYHUUXOHG *RQ]DOH] WR WKH H[WHQW WKDW FDVH KHOG WKDW DQ
     HOHPHQWV RI WKH RIIHQVH DQG PXVW EH GHWHUPLQHG E\ D &RXUW LQ
                                                                            LQGLFWPHQWWKDWIDLOVWRDOOHJHWKHHVVHQWLDOHOHPHQWRIGUXJ
     FRQQHFWLRQ ZLWK VHQWHQFLQJ
          $QG DV , WKLQN , DOVR SRLQWHG RXW LQ FRQQHFWLRQ ZLWK 0U
     %HQIRUGjV FDVH WKH WK &LUFXLW KDV DFWXDOO\ VDLG LQ VHYHUDO FDVHV
     WKDW GUXJ TXDQWLWLHV VKRXOG QRW EH FKDUJHG LQ LQGLFWPHQWV $QG
                                                                                
     RI FRXUVH WKH MXU\ VKRXOG QRW EH LQVWUXFWHG            RQ PDNLQJ             6HH DOVR 0F&R\ Y 8QLWHG 6WDWHV  )G   Q WK
     GHWHUPLQDWLRQV RQ GUXJ TXDQWLWLHV                                  &LU  UHFRJQL]LQJ WKDW LQ 3UHQWLVV WKH 7HQWK &LUFXLW RYHUUXOHG SULRU
                                                                            FDVHV WKDW KDG KHOG IDLOXUH WR DOOHJH HOHPHQW RI GUXJ TXDQWLW\ FDQQRW EH
5HQD %HQIRUG 6HQWHQFLQJ +HDULQJ s$ DW                         UHYLHZHG IRU SODLQ RU KDUPOHVV HUURU
     8QLWHG6WDWHVY                           1RV           1RV                            8QLWHG6WDWHVY       
       6WHZDUWHWDO                                                                  6WHZDUWHWDO

FI8QLWHG6WDWHVY0RMLFD%DH])GVW                       &KDUOHV5RVVHOO&DOYLQ1HOVRQ7UDPEOHDQG6X]HWWH
&LUKROGLQJWKDWDIDLOXUHWRLQFOXGHLQWKHLQGLFWPHQW                                     0LUDQGD6WHZDUW
WKH W\SH RI ZHDSRQ LQYROYHG LQ WKH RIIHQVH XQGHU IHGHUDO
ILUHDUP VWDWXWH ZDV QRW VWUXFWXUDO HUURU HUURU GLG QRW VR               5RVVHOO 7UDPEOH DQG 6WHZDUW DOVR HDFK FODLP WKDW WKHLU
mLQWHUIHUH ZLWK VXFK EDVLF DQG IXQGDPHQWDO FRQVWLWXWLRQDO                VHQWHQFHVYLRODWHG$SSUHQGL:KLOHZHKDYHVRPHGRXEWDV
SURWHFWLRQVWKDWWKH\JRWRWKHVWUXFWXUHRIRXUFULPLQDOODZ                  WR ZKHWKHU $SSUHQGL ZDV LPSOLFDWHG DW DOO ZLWK UHVSHFW WR
V\VWHPl  7KHVH FRXUWV KDYH HVVHQWLDOO\ GHWHUPLQHG WKDW              VRPHRIWKHVH'HIHQGDQWVjVHQWHQFHVZHQHHGQRWUHDFKWKDW
ZKHUH$SSUHQGLHUURURFFXUVLQWKHLQGLFWPHQWVXFKHUURULV                   LVVXHEHFDXVH'HIHQGDQWVIDLOWRVKRZDQ\FODLPHG$SSUHQGL
DNLQWRWKHHUURULQ1HGHU6HHHJ6DQFKH])GDW                   HUURUZDUUDQWVFRUUHFWLRQXQGHUSODLQHUURUUHYLHZ

                                                                                 5RVVHOO SOHDGHG JXLOW\ WR WKH GUXJ FRQVSLUDF\ FKDUJH
   )XUWKHUWKH6HFRQG&LUFXLWKDVKHOGWKDWDIDLOXUHWRDOOHJH               ,QDVPXFK DV WKH GUXJ TXDQWLW\ ZDV QHLWKHU VSHFLILHG LQ KLV
GUXJTXDQWLW\LQDQLQGLFWPHQWRUVXEPLWWKHTXHVWLRQRIGUXJ                  LQGLFWPHQW QRU LQ KLV JXLOW\ SOHD KH IDFHG D PD[LPXP
W\SH RU TXDQWLW\ WR D MXU\ LV VXEMHFW WR SODLQ HUURU UHYLHZ        VHQWHQFHRIWKLUW\\HDUVLPSULVRQPHQWDVDUHSHDWIHORQ\GUXJ
SXUVXDQWWR)HG5&ULP3EZKHQWKHGHIHQGDQWIDLOHG                  RIIHQGHUXQGHU86&E&+RZHYHUZKHQWKH
WRREMHFWWRWKHVHHUURUVEHIRUHWKHGLVWULFWFRXUW6HH8QLWHG               GLVWULFWFRXUWGHWHUPLQHGE\DSUHSRQGHUDQFHRIWKHHYLGHQFH
6WDWHVY7KRPDV)GG&LUHQEDQF                  WKDW KLV GUXJ TXDQWLW\ ZDV   NLORJUDPV RI FRFDLQH
,Q 7KRPDV WKH 6HFRQG &LUFXLW RYHUUXOHG D SULRU FLUFXLW                K\GURFKORULGH5RVVHOOZDVVXEMHFWHGWRDVHQWHQFLQJUDQJHRI
SDQHOjVKROGLQJLQDQRWKHUFDVHZKLFKKDGKHOGWKDWZKHUHDQ                  PRQWKVWROLIHLPSULVRQPHQWDVDUHSHDWRIIHQGHUXQGHU
HOHPHQWRIWKHRIIHQVHLVQRWFKDUJHGLQWKHLQGLFWPHQWWKH                    E%     DQG ZDV VHQWHQFHG WR WHQ \HDUV
GHIHFWLVQRWVXEMHFWWRSODLQHUURUUHYLHZ LQDVPXFKDVWKH                   LPSULVRQPHQW
                                                                                 7UDPEOHDOVRSOHDGHGJXLOW\WRWKHGUXJFRQVSLUDF\FKDUJH
                                                                               +RZHYHUVLPLODUWRWKHLQGLFWPHQWKLVSOHDDJUHHPHQWGLG
                                                                             QRWVSHFLI\DGUXJTXDQWLW\IRUWKHGUXJFRQVSLUDF\FKDUJH
       7KH ILUHDUP VWDWXWH DW LVVXH LQ 0RMLFD%DH] LV VLPLODU WR WKH GUXJ
RIIHQVH VWDWXWH DW LVVXH LQ WKH LQVWDQW FDVH 7KH ILUHDUP VWDWXWH VHWV IRUWK   7KXV ZLWK KLV SULRU IHORQ\ GUXJ FRQYLFWLRQ 7UDPEOH ZDV
D PLQLPXP SHQDOW\ RI ILYH \HDUV IRU D GHIHQGDQW ZKR ZKLOH FRPPLWWLQJ          VXEMHFW WR D PD[LPXP VHQWHQFH RI  PRQWKV XQGHU
D FULPH RI YLROHQFH RU GUXJ WUDIILFNLQJ RIIHQVH XVHV RU FDUULHV D ILUHDUP
GXULQJ WKH FRPPLVVLRQ RI HLWKHU RI WKRVH FULPHV           6HH  86&
 F$L ,I RWKHU IDFWRUV DUH SURYHQ WKH ILYH\HDU PLQLPXP
VHQWHQFH LV HQKDQFHG )RU LQVWDQFH LI WKH ILUHDUP LV EUDQGLVKHG WKH
                                                                                   
GHIHQGDQW LV VHQWHQFHG WR D WHUP RI VHYHQ \HDUV                 86&             8QGHU WKH VHQWHQFLQJ JXLGHOLQHV 5RVVHOO RQO\ IDFHG LPSULVRQPHQW
 F$LL 7KH W\SH RI ILUHDUP PD\ DOVR DIIHFW WKH VHQWHQFH           IRU D UDQJH RI  PRQWKV 7KLV UDQJH ZDV GHULYHG IURP D FULPLQDO
LPSRVHG )RU LQVWDQFH LI WKH ILUHDUP LV D VKRUWEDUUHOHG ULIOH RU DQ          KLVWRU\ FDWHJRU\ RI , DQG D EDVH RIIHQVH OHYHO RI  IRU 5RVVHOOjV
DXWRPDWLF ZHDSRQ WKH GHIHQGDQW LV VXEMHFW WR D PDQGDWRU\ PLQLPXP WHQ         FRQQHFWLRQ WR EHWZHHQ  WR  JUDPV RI FUDFN VHH 866*  'F
\HDU VHQWHQFH  86&  F%L ,Q 0RMLFD%DH]  )G           'UXJ 4XDQWLW\ 7DEOH ZKLFK ZDV HQKDQFHG E\ WZR OHYHOV SXUVXDQW WR
 WKH GHIHQGDQWV DUJXHG WKDW WKHLU LQGLFWPHQW ZDV FRQVWLWXWLRQDOO\          866*  'E IRU SRVVHVVLRQ RI D ZHDSRQ LQ FRQQHFWLRQ ZLWK WKH GUXJ
LQILUP UHTXLULQJ mSHU VHl UHYHUVDO LQDVPXFK DV WKH LQGLFWPHQW GLG QRW        FRQVSLUDF\ DQG UHGXFHG E\ WKUHH OHYHOV IRU DFFHSWDQFH RI UHVSRQVLELOLW\
VSHFLI\ WKDW WKH ILUHDUP WKH\ XVHG LQ WKH XQGHUO\LQJ RIIHQVH ZDV D             SXUVXDQW WR 866*  ( WKHUHE\ \LHOGLQJ DQ DGMXVWHG RIIHQVH OHYHO RI
VHPLDXWRPDWLF DVVDXOW ZHDSRQ ,G DW                                    
    8QLWHG6WDWHVY                          1RV           1RV                                8QLWHG6WDWHVY        
      6WHZDUWHWDO                                                                     6WHZDUWHWDO

 E&  $W VHQWHQFLQJ KRZHYHU WKH GLVWULFW FRXUW          TXRWLQJ$UL]RQDY)XOPLQDQWH86
GHWHUPLQHGWKDW7UDPEOHZDVUHVSRQVLEOHIRUNLORJUDPV                   7KH &RXUW LQ 1HGHU UHFRJQL]HG WKDW mPRVW FRQVWLWXWLRQDO
RI FUDFN WKHUHE\ H[SRVLQJ KLP WR D PDQGDWRU\ PLQLPXP                HUURUVFDQEHKDUPOHVVl,GDWTXRWLQJ)XOPLQDQWH
VHQWHQFH RI WZHQW\ \HDUV DQG D PD[LPXP RI OLIH                       86DW,QGHHGmLIWKHGHIHQGDQWKDGFRXQVHODQGZDV
LPSULVRQPHQW XQGHU  86&  E$  8QGHU WKH              WULHGE\DQLPSDUWLDODGMXGLFDWRUWKHUHLVDVWURQJSUHVXPSWLRQ
VHQWHQFLQJJXLGHOLQHV7UDPEOHjVVHQWHQFLQJUDQJHZDV                   WKDWDQ\RWKHU>FRQVWLWXWLRQDO@HUURUVWKDWPD\KDYHRFFXUUHG
 PRQWKV  $IWHU WKH JRYHUQPHQW ILOHG D GRZQZDUG                 DUHVXEMHFWWRKDUPOHVVHUURUDQDO\VLVl5RVHY&ODUN
                                                                             86
                                                                             :LWK WKHVH SULQFLSOHV LQ PLQG WKH 6XSUHPH &RXUW
        +DYLQJ EHHQ GHHPHG UHVSRQVLEOH IRU  NLORJUDPV RI FUDFN
7UDPEOHjV EDVH RIIHQVH OHYHO XQGHU WKH JXLGHOLQHV ZDV  $00 866*
                                                                             GHWHUPLQHGWKDWDGLVWULFWFRXUWjVHUURULQIDLOLQJWRFKDUJHWKH
 'F 'UXJ 4XDQWLW\ 7DEOH 7KH GLVWULFW FRXUW WKHQ HQKDQFHG WKLV
                                                                             MXU\RQDQHOHPHQWRIDQRIIHQVHLVVLPSO\DQDEVHQFHRID
QXPEHU E\ WZR OHYHOV IRU SRVVHVVLRQ RI D ZHDSRQ GXULQJ WKH FULPH             mFRPSOHWH YHUGLFWl RQ HYHU\ HOHPHQW RI DQ RIIHQVH ZKLFK
SXUVXDQW WR 866*  ' DQG E\ WKUHH OHYHOV IRU 7UDPEOHjV UROH LQ WKH      YLRODWHVDGHIHQGDQWjV6L[WK$PHQGPHQWULJKWWRDMXU\WULDO
RIIHQVH XQGHU 866*  %E $IWHU D WKUHHOHYHO UHGXFWLRQ IRU             +RZHYHU WKH &RXUW KHOG WKDW IDLOXUH WR GHOLYHU D MXU\
DFFHSWDQFH RI UHVSRQVLELOLW\ 7UDPEOHjV UHVXOWLQJ RIIHQVH OHYHO ZDV 
7KH UDQJH RI  PRQWKV ZDV GHULYHG E\ FURVVUHIHUHQFLQJ WKDW
                                                                             LQVWUXFWLRQZDVVXEMHFWWRKDUPOHVVUHYLHZEHFDXVHWKHHUURU
RIIHQVH OHYHO ZLWK 7UDPEOHjV FULPLQDO KLVWRU\ FDWHJRU\ RI ,
                                                                             GLGQRWUHQGHUWKHWULDOIXQGDPHQWDOO\XQIDLU7KH&RXUWQRWHG
      2Q DSSHDO 7UDPEOH DOVR FRQWHVWV WKH GLVWULFW FRXUWjV GHWHUPLQDWLRQ    WKDWRPLVVLRQRIDMXU\LQVWUXFWLRQmGLIIHUVPDUNHGO\IURPWKH
WKDW KH ZDV D PDQDJHU RU VXSHUYLVRU LQ D GUXJ FRQVSLUDF\ LQYROYLQJ ILYH      FRQVWLWXWLRQDOYLRODWLRQV>LWKDV@IRXQGWRGHI\KDUPOHVVHUURU
RU PRUH SDUWLFLSDQWV DQG WKH UHVXOWLQJ WKUHHOHYHO HQKDQFHPHQW WR KLV EDVH   UHYLHZl1HGHU86DW
RIIHQVH OHYHO IRU KLV UROH LQ WKH RIIHQVH
      6HFWLRQ %E RI WKH JXLGHOLQHV SURYLGHV m>L@I WKH GHIHQGDQW ZDV
D PDQDJHU RU VXSHUYLVRU EXW QRW DQ RUJDQL]HU RU OHDGHU DQG WKH FULPLQDO
                                                                                $W OHDVW WZR FRXUWV RI DSSHDO KDYH KHOG WKDW D IDLOXUH WR
DFWLYLW\ LQYROYHG ILYH RU PRUH SDUWLFLSDQWV RU ZDV RWKHUZLVH H[WHQVLYH
                                                                             DOOHJHGUXJTXDQWLW\LQWKHLQGLFWPHQWLVVXEMHFWWRKDUPOHVV
LQFUHDVH >WKH EDVH RIIHQVH OHYHO@ E\  OHYHOVl 7UDPEOH ILOHG DQ REMHFWLRQ   HUURUUHYLHZ6HHHJ8QLWHG6WDWHVY$GNLQV)G
WR WKH SURSRVHG HQKDQFHPHQW ZKLFK WKH GLVWULFW FRXUW RYHUUXOHG +LV          WK &LU  m>,@W LV QRZ ZHOO HVWDEOLVKHG LQ WKLV
VHQWHQFLQJ UDQJH XQGHU WKH JXLGHOLQHV UDQJH FDOOHG IRU D VHQWHQFLQJ UDQJH    FLUFXLW WKDW$SSUHQGL HUURUV LQ ERWK WKH LQGLFWPHQW DQG WKH
RI  PRQWKV ZLWKRXW WKH HQKDQFHPHQW DQG  PRQWKV DIWHU
                                                                             FKDUJH WR WKH MXU\ DUH VXEMHFW WR KDUPOHVV HUURU DQDO\VLV
WKH HQKDQFHPHQW IRU KLV UROH LQ WKH RIIHQVH 2Q DSSHDO 7UDPEOH GRHV QRW
FRQWHVW KLV UROH LQ WKH RIIHQVH UDWKHU KH GLVSXWHV WKH QXPEHU RI
                                                                             6DQFKH]  )G DW  H[SODLQLQJ WKDW IDLOLQJ WR
LQGLYLGXDOV LQYROYHG m'HWHUPLQDWLRQ RI D GHIHQGDQWjV UROH LQ DQ RIIHQVH     VXEPLWGUXJTXDQWLW\WRWKHMXU\RULQFOXGHLWLQWKHLQGLFWPHQW
LV D IDFWXDO LQTXLU\ UHYLHZHG RQ DSSHDO IRU FOHDU HUURUl 8QLWHG 6WDWHV Y   LVMXVWDQHOHPHQWRIWKHWULDOSURFHVVDQGGRHVQRWULVHWRWKH
&DVHVORUHQWH  )G   WK &LU                              OHYHORIVWUXFWXUDOHUURUKDUPOHVVHUURUUHYLHZLVDSSURSULDWH
      7UDPEOHjV 36,5 VWDWHG WKDW m>G@XULQJ WKH FRXUVH RI KLV SDUWLFLSDWLRQ
LQ WKLV RIIHQVH &DOYLQ 7UDPEOH H[HUFLVHG KLV PDQDJHPHQW DQG VXSHUYLVLRQ
RYHU &DURO\Q 0LOODUG 0LUDQGD 6WHZDUW sHIIUH\ 5RELQVRQ .ZDPH *XVWXV
                                                                                 
DQG sDFNLH %U\GLHl 36,5 s$ DW  +H FODLPV WKDW EHFDXVH WKH                7KH &RXUW HYHQ UHFLWHG D VKRUW OLVW RI HUURUV LQFOXGLQJ WRWDO GHQLDO
FDVH DJDLQVW *XVWXV ZDV VXEVHTXHQWO\ GLVPLVVHG E\ WKH JRYHUQPHQW WKLV       RI FRXQVHO ELDVHG WULDO MXGJH UDFLDO GLVFULPLQDWLRQ LQ JUDQG MXU\ VHOHFWLRQ
&RXUW VKRXOG UHYHUVH WKH HQKDQFHPHQW EHFDXVH WKH JRYHUQPHQW FDQQRW           GHQLDO RI VHOIUHSUHVHQWDWLRQ DW WULDO GHQLDO RI SXEOLF WULDO DQG GHIHFWLYH
SURYH WKDW ILYH SHRSOH ZHUH LQYROYHG +RZHYHU 7UDPEOHjV DUJXPHQW            UHDVRQDEOH GRXEW LQVWUXFWLRQ DV H[DPSOHV RI VWUXFWXUDO HUURUV    6HH 1HGHU  
VHHPV WR PLVUHDG WKH UHTXLUHPHQWV RI WKH UHOHYDQW JXLGHOLQH $SSOLFDWLRQ      86 DW 
    8QLWHG6WDWHVY                         1RV          1RV                                8QLWHG6WDWHVY        
      6WHZDUWHWDO                                                                   6WHZDUWHWDO

                                  '                                       GHSDUWXUH PRWLRQ IRU VXEVWDQWLDO DVVLVWDQFH XQGHU 866*
                                                                            . 7UDPEOH ZDV VHQWHQFHG WR D WHUP RI  PRQWKV
   +DYLQJ GLVSRVHG RI 7UDPEOH 5RVVHOO DQG 6WHZDUWjV                 LPSULVRQPHQW DQG WHQ \HDUV RI VXSHUYLVHG UHOHDVH WR EH
$SSUHQGLFODLPVZHDUHOHIWZLWKGHFLGLQJKRZWRUHVROYHWKH              VHUYHG FRQFXUUHQWO\ ZLWK D PRQWK VHQWHQFH DQG WKUHH
%HQIRUGVj$SSUHQGLFKDOOHQJHV:HKDYHDOUHDG\GHWHUPLQHG                 \HDUVRIVXSHUYLVHGUHOHDVHDVDUHVXOWRI KLVJXLOW\SOHDWR
WKDW WKHLU VHQWHQFHV YLRODWHG $SSUHQGL  7KH JRYHUQPHQW             DLGLQJDQGDEHWWLQJPRQH\ODXQGHULQJ 
FRQWHQGV KRZHYHU WKDW HYHQ LI WKH 'HIHQGDQWV KDYH YDOLG
FODLPVXQGHU$SSUHQGLWKHLUMXGJPHQWVVKRXOGEHDIILUPHG
EHFDXVHWKHFRQVWLWXWLRQDOHUURUVZHUHKDUPOHVV,QSDUWLFXODU           1RWH WR 866*  % LQGLFDWHV WKDW LQ RUGHU WR TXDOLI\ IRU DQ DGMXVWPHQW
WKH JRYHUQPHQW DUJXHV LQWHU DOLD WKDW 'HIHQGDQWV FDQQRW           XQGHU WKLV VHFWLRQ WKH GHIHQGDQW QHHG RQO\ KDYH EHHQ WKH RUJDQL]HU
SRLQWWRDQ\HYLGHQFHWKH\ZRXOGKDYHSUHVHQWHGWRDMXU\WKDW             OHDGHU PDQDJHU RU VXSHUYLVRU RI RQH RU PRUH RWKHU SDUWLFLSDQWV 866*
FRXOG OHDG WR D ORZHU GUXJ DPRXQW GHWHUPLQDWLRQ EHFDXVH             % FRPPHQWDU\ Q 7KH GHIHQGDQW QHHG QRW KDYH GLUHFWHG WKH
WKHUHZDVmRYHUZKHOPLQJHYLGHQFHlRIWKHGUXJTXDQWLWLHV                  DFWLYLWLHV RI ILYH RU PRUH SHUVRQV UDWKHU ILYH SHUVRQV PXVW KDYH EHHQ
FI8QLWHG6WDWHVY'XDUWH)GVW&LU               LQYROYHG LQ WKH FRQVSLUDF\ 7KH GLVWULFW FRXUW GHWHUPLQHG DQG 7UDPEOH
                                                                           GRHV QRW GLVSXWH WKDW KH GLUHFWHG WKH DFWLYLWLHV RI DW OHDVW RQH PHPEHU RI
KROGLQJ XQGHU D SODLQ HUURU DQDO\VLV WKDW WKH SURRI RI D        WKH FRQVSLUDF\ (YHQ ZLWKRXW .ZDPH *XVWXV WKH PHPEHUV RI WKH
GHIHQGDQWjV mFRPSOLFLW\ LQ GLVWULEXWLQJ PRUH WKDQ               FRQVSLUDF\ VWLOO QXPEHUHG ZHOO PRUH WKDQ ILYH SDUWLFLSDQWV ,Q IDFW HDFK
NLORJUDPV RI PDULMXDQD LV VR RYHUZKHOPLQJ WKDW KLV                  'HIHQGDQW LQ WKLV FRQVROLGDWHG DFWLRQ ZDV D PHPEHU RI WKH FRQVSLUDF\
VXEVWDQWLDOULJKWVFRXOGQRWKDYHEHHQDIIHFWHGE\VHQWHQFLQJ              ZKLFK DFWXDOO\ LQYROYHG GR]HQV RI SDUWLFLSDQWV 7KHUHIRUH WKH GLVWULFW
KLPEDVHGRQWKDWTXDQWLW\l                                              FRXUW ZDV ZLWKLQ LWV ERXQGV WR VHW 7UDPEOHjV LQLWLDO JXLGHOLQHV VHQWHQFLQJ
                                                                           UDQJH DW  PRQWKV

  5XOH D RI WKH )HGHUDO 5XOHV RI &ULPLQDO 3URFHGXUH                
SURYLGHV WKDW m>D@Q\ HUURU GHIHFW LUUHJXODULW\ RU YDULDQFH                7UDPEOH DOVR FODLPV WKDW WKH JRYHUQPHQW GLG QRW SURYH WKDW WKH
                                                                           VXEVWDQFH LQ ZKLFK KH WUDIILFNHG ZDV FUDFN DV RSSRVHG WR VRPH RWKHU IRUP
ZKLFKGRHVQRWDIIHFWVXEVWDQWLDOULJKWVVKDOOEHGLVUHJDUGHGl            RI FRFDLQH EDVH +H DOVR DUJXHV WKDW WKH JRYHUQPHQW mGLG QRW DGGUHVV LQ
,Q 1HGHU Y 8QLWHG 6WDWHV  86   ZKLFK ZDV          PXFK GHWDLOl ZKHWKHU WKH VXEVWDQFH ZDV FRFDLQH EDVH DW DOO DV RSSRVHG WR
GHFLGHGVKRUWO\DIWHUsRQHVWKH6XSUHPH&RXUWGLVWLQJXLVKHG               FRFDLQH K\GURFKORULGH SRZGHU $OWKRXJK HYLGHQFH ZDV EURXJKW IRUWK
EHWZHHQmWULDOHUURUVlZKLFKPD\EHUHYLHZHGIRUKDUPOHVV                  DW 7UDPEOHjV VHQWHQFLQJ KHDULQJ WKDW FRXOG KDYH HVWDEOLVKHG WKDW WKH
HUURU DQG mVWUXFWXUDO HUURUVl ZKLFK DUH H[FOXGHG IURP               VXEVWDQFH ZDV FUDFN DQG QRW VRPH RWKHU IRUP RI FRFDLQH EDVH RU SRZGHU

KDUPOHVV HUURU UHYLHZ  6WUXFWXUDO HUURUV UHIOHFW D mGHIHFW        FRFDLQH WKH GHWHUPLQDWLRQ ZDV PDGH E\ WKH GLVWULFW FRXUW MXGJH E\ WKH
                                                                           SUHSRQGHUDQFHRIWKHHYLGHQFH VWDQGDUG +DG WKH FRXUW GHWHUPLQHG WKDW
DIIHFWLQJ WKH IUDPHZRUN ZLWKLQ ZKLFK WKH WULDO SURFHHGV            WKH  NLORJUDPV RI FUDFN ZHUH DFWXDOO\  NLORJUDPV RI SRZGHU
UDWKHUWKDQVLPSO\HUURULQWKHWULDOSURFHVVLWVHOIl,GDW           FRFDLQH 7UDPEOHjV EDVH RIIHQVH OHYHO XQGHU WKH JXLGHOLQHV ZRXOG KDYH
                                                                           EHHQ D  WKXV DIWHU UDLVLQJ WKLV QXPEHU E\ WKUHH OHYHOV IRU KLV UROH LQ WKH
                                                                           RIIHQVH DQG FURVVUHIHUHQFLQJ ZLWK D FULPLQDO KLVWRU\ FDWHJRU\ RI ,
                                                                           7UDPEOHjV VHQWHQFLQJ UDQJH ZRXOG KDYH EHHQ  PRQWKV +RZHYHU
                                                                           WKLV IDFW GRHV QRW LPSOLFDWH $SSUHQGL EHFDXVH WKH UXOH DQQRXQFHG LQ WKDW
                                                                           FDVH RQO\ LPSOLFDWHV WKRVH VHQWHQFLQJ IDFWRUV WKDW LPSDFW XSRQ D VWDWXWRU\
IDFW WKDW WKH GLVWULFW FRXUW LPSRVHG D WZROHYHO HQKDQFHPHQW WR KLV EDVH   VHQWHQFLQJ UDQJH ,I WKH GUXJ TXDQWLW\ KDG EHHQ FRUUHFWO\ GHWHUPLQHG
RIIHQVH OHYHO XQGHU WKH 6HQWHQFLQJ *XLGHOLQHV IRU REVWUXFWLRQ RI MXVWLFH   XQGHU WKH SURSHU VWDQGDUG 7UDPEOH FRXOG KDYH VWLOO EHHQ H[SRVHG WR WKH
GLG QRW LPSOLFDWH$SSUHQGL                                      VWDWXWRU\
                               UHVXOWLQJ VHQWHQFH GLG QRW H[FHHG          SHQDOWLHV SURYLGHG E\  E$ HYHQ LI WKH VXEVWDQFH LQ ZKLFK KH
PD[LPXP     IRU FULPH IRU ZKLFK GHIHQGDQW SOHDGHG JXLOW\                 WUDIILFNHG ZHUH SRZGHU FRFDLQH
     8QLWHG6WDWHVY                          1RV            1RV                                8QLWHG6WDWHVY        
       6WHZDUWHWDO                                                                      6WHZDUWHWDO

  :LWK DQ XQGHWHUPLQHG GUXJ TXDQWLW\ 6WHZDUW IDFHG D                   LQDVPXFKDVWKHVHGHIHQGDQWVZKRZHUHLQYROYHGLQDZLGH
PD[LPXP VHQWHQFH RI WZHQW\ \HDUV XQGHU  86&                        VSUHDG GUXJ FRQVSLUDF\ IDLOHG WR UDLVH WKHLU $SSUHQGL
E&%XWWKHGLVWULFWFRXUWGHWHUPLQHGWKDWVKHZDV                DUJXPHQW EHIRUH WKH GLVWULFW FRXUW WKH mUHDOl WKUHDW WR WKH
UHVSRQVLEOH IRU  JUDPV RI FUDFN FRFDLQH WKHUHE\                   MXGLFLDO SURFHHGLQJV ZRXOG EH WR DOORZ WKHP mWR UHFHLYH D
H[SRVLQJ KHU WR WKH SHQDOW\ SURYLVLRQV RI  E$              VHQWHQFHSUHVFULEHGIRUWKRVHFRPPLWWLQJOHVVVXEVWDQWLDOGUXJ
ZKLFK FDUULHV D PLQLPXP VHQWHQFH RI WHQ \HDUV DQG D                   RIIHQVHVl  ,G DW   /LNHZLVH WKH RYHUZKHOPLQJ DQG
PD[LPXP RI OLIH LPSULVRQPHQW  6WHZDUW ZDV HYHQWXDOO\                   ODUJHO\XQFRQWURYHUWHGHYLGHQFHUHJDUGLQJGUXJTXDQWLW\LQ
VHQWHQFHGWRDWHUPRIPRQWKVjLPSULVRQPHQWDQGILYH                       WKLVYDVWGUXJFRQVSLUDF\WRZKLFKHDFKRIWKHVH'HIHQGDQWV
\HDUVRIVXSHUYLVHGUHOHDVH2QDSSHDO6WHZDUWFODLPVWKDW                   SOHDGHG JXLOW\ FRQYLQFHV XV WKDW DIILUPLQJ WKHLU VHQWHQFHV
KHUFRQVWLWXWLRQDOULJKWVZHUHYLRODWHGEHFDXVHWKHLQGLFWPHQW                 ZRXOG QRW VHULRXVO\ DIIHFW WKH IDLUQHVV LQWHJULW\ RU SXEOLF
GLGQRWDOOHJHWKHGUXJTXDQWLW\                                              FRQILGHQFH RI WKH MXGLFLDO SURFHHGLQJV  ,G  %HFDXVH WKH
                                                                               6XSUHPH&RXUWKDVLQVWUXFWHGWKDWXQGHUSODLQHUURUUHYLHZ
    $VH[SODLQHGSUHYLRXVO\ZHQHHGQRWGHFLGHZLWKUHVSHFW                   ZHPD\RQO\FRUUHFWHUURUWKDWVHULRXVO\DIIHFWVWKHIDLUQHVV
WR WKH LVVXH RI GUXJ TXDQWLW\ ZKHWKHU 5RVVHOO 7UDPEOH RU            LQWHJULW\RUSXEOLFUHSXWDWLRQRIMXGLFLDOSURFHHGLQJVDQGZH
6WHZDUWjVVHQWHQFHVYLRODWHG$SSUHQGL(YHQDVVXPLQJWKDW                     ILQG QR VXFK HUURU LQ WKLV FDVH ZLWK UHVSHFW WR WKHVH WKUHH
WKHUHZDVHUURUWKDWZDVSODLQDQGWKDWDIIHFWHGVXEVWDQWLDO                  'HIHQGDQWVZHGHFOLQHWRFRUUHFWDQ\$SSUHQGLHUURUWKDWPD\
ULJKWV 2ODQR  86 DW  ZH VWLOO EHOLHYH WKHVH                KDYHRFFXUUHGLQWKHLPSRVLWLRQRIWKHLUVHQWHQFHV
'HIHQGDQWVZRXOGQRWEHHQWLWOHGWRUHOLHI7KLVLVVREHFDXVH
HYHQm>L@IDOOWKUHH>RIWKHVH@FRQGLWLRQVDUHPHWDQDSSHOODWH
FRXUWPD\H[HUFLVHLWVGLVFUHWLRQWRQRWLFHDIRUIHLWHGHUURU               
   RQO\ LI    WKH HUURU VHULRXVO\ DIIHFW>V@ WKH IDLUQHVV           6WHZDUW DOVR FRQWHQGV WKDW KHU GXH SURFHVV ULJKWV ZHUH YLRODWHG

LQWHJULW\ RU SXEOLF UHSXWDWLRQ RI MXGLFLDO SURFHHGLQJVl                XQGHU $SSUHQGL EHFDXVH WKH GLVWULFW FRXUW LQFUHDVHG KHU EDVHRIIHQVH OHYHO
                                                                               E\ WZR OHYHOV DIWHU ILQGLQJ E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW VKH
8QLWHG 6WDWHV Y &RWWRQ  6&W                      SRVVHVVHG D ILUHDUP SXUVXDQW WR 866*  'E 6KH IDLOHG WR UDLVH
HPSKDVLVDGGHG,Q&RWWRQWKH6XSUHPH&RXUWGHDOWZLWK                     WKLV LVVXH EHIRUH WKH GLVWULFW FRXUW ,Q DQ\ HYHQW ZH GR QRW EHOLHYH WKDW WKH
DQLVVXHLQDFDVHDQDORJRXVWRWKHRQHQRZEHIRUHWKLV&RXUW                 GLVWULFW FRXUWjV IDFWXDO ILQGLQJ LQ WKLV UHJDUG YLRODWHG 6WHZDUWjV GXH
ZKHUH GUXJ TXDQWLW\ LQ D YDVW GUXJ FRQVSLUDF\ FDVH ZDV                SURFHVV ULJKWV &I 0F0LOODQ Y 3HQQV\OYDQLD  86   

QHLWKHU FKDUJHG LQ WKH LQGLFWPHQW QRU SURYHQ EH\RQG D                  KROGLQJ WKDW GXH SURFHVV QRW RIIHQGHG E\ 3HQQV\OYDQLD VWDWXWH WKDW
                                                                               DOORZHG WULDO FRXUW WR LQFUHDVH D GHIHQGDQWjV VHQWHQFLQJ UDQJH XS WR D ILYH
UHDVRQDEOH GRXEW  7KH &RXUW KHOG WKDW EHFDXVH WKH                     \HDU PLQLPXP XSRQ ILQGLQJ E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW WKH
RYHUZKHOPLQJ HYLGHQFH LQ WKH UHFRUG VKRZHG WKDW WKH                     GHIHQGDQW YLVLEO\ SRVVHVVHG D ILUHDUP ZKLOH FRPPLWWLQJ DQ XQGHUO\LQJ
GHIHQGDQWVj GUXJ FRQVSLUDF\ LQYROYHG GUXJ TXDQWLWLHV ZHOO                RIIHQVH ZKLOH VWDWXWH DOORZHG FRXUW WR mXS WKH DQWHl RQ GHIHQGDQWjV
DERYHWKDWQHFHVVDU\WRLPSRVHVHQWHQFHVXQGHUWKH KLJKHU                     VHQWHQFH LW GLG QRW DOWHU WKH PD[LPXP SHQDOW\ IRU WKH XQGHUO\LQJ RIIHQVH
UDQJHV RI  86&  E WKHQ GHVSLWH WKH IDFW WKDW             )XUWKHU 6WHZDUW SOHDGHG JXLOW\ WR WKH GUXJ FRQVSLUDF\ DQG ZDV VXEMHFW WR
                                                                               D VWDWXWRU\ PD[LPXP \HDU VHQWHQFH XQGHU  E& :H DOVR
$SSUHQGL KDG EHHQ YLRODWHG DQG HYHQ DVVXPLQJ WKH                       KDYH DOUHDG\ KHOG WKDW WKH PRQWK VHQWHQFH VKH UHFHLYHG ZDV SURSHU
GHIHQGDQWVj VXEVWDQWLDO ULJKWV KDG EHHQ DIIHFWHG WKH &RXUW             XQGHU SODLQ HUURU UHYLHZ FRQVLGHULQJ WKH DPRXQW RI GUXJV LQYROYHG LQ WKH
ZRXOGQRWDGGUHVVWKHHUURUEHFDXVHWKHHUURUGLGQRWVHULRXVO\                FRQVSLUDF\ 7KH IDFW WKDW KHU VHQWHQFLQJ UDQJH XQGHU WKH 6HQWHQFLQJ
DIIHFWWKHIDLUQHVVLQWHJULW\RUSXEOLFUHSXWDWLRQRIMXGLFLDO               *XLGHOLQHV ZDV LQFUHDVHG EHFDXVH RI WKH GLVWULFW FRXUWjV IDFWXDO ILQGLQJ
SURFHHGLQJV  ,G DW   $FFRUGLQJ WR WKH &RXUW                GRHV QRW FKDQJH WKDW UHVXOW 6HH HJ +DUSHU  )G DW  Q
                                                                               KROGLQJ WKDW EHFDXVH GHIHQGDQWjV VHQWHQFH XQGHU  E ZDV SURSHU WKH
