Court Opinion

ID: 2969771
Source: CourtListenerOpinion
Date Created: 2015-09-22 15:56:52.329662+00
Date Added: 2024-06-11T11:40:21.835103
License: Public Domain

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

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

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

 81,7(' 67$7(6 2) $0(5,&$        ;
           3ODLQWLII$SSHOOHH     
                                   
                                      1R
            Y                     
                                    !
                                   
 s$0(6 $ .,0(6                   
          'HIHQGDQW$SSHOODQW 
                                  1
       $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
   IRUWKH(DVWHUQ'LVWULFWRI7HQQHVVHHDW*UHHQHYLOOH
     1Rn7KRPDV*+XOO'LVWULFWsXGJH
                $UJXHG'HFHPEHU
             'HFLGHGDQG)LOHG$SULO
   %HIRUH0(55,771(/621DQG%$7&+(/'(5
                   &LUFXLWsXGJHV
                    BBBBBBBBBBBBBBBBB
                         &2816(/
$5*8('  1LNNL & 3LHUFH )('(5$/ '()(1'(5
6(59,&(6 2) ($67(51 7(11(66(( *UHHQHYLOOH
7HQQHVVHH IRU $SSHOODQW  6DUDK 5 6KXOWV $66,67$17
81,7('67$7(6$77251(<*UHHQHYLOOH7HQQHVVHHIRU
$SSHOOHH  21 %5,()  1LNNL & 3LHUFH )('(5$/
'()(1'(5 6(59,&(6 2) ($67(51 7(11(66((
*UHHQHYLOOH 7HQQHVVHH IRU $SSHOODQW  6DUDK 5 6KXOWV

                              
     8QLWHG6WDWHVY.LPHV                           1R       1R                         8QLWHG6WDWHVY.LPHV        

$66,67$1781,7('67$7(6$77251(<*UHHQHYLOOH                           LQWHQW7KXVLWVHHPVWRPHWKDWWKHSUHFLVHPHQWDOVWDWHRIWKH
7HQQHVVHHIRU$SSHOOHH                                               DFFXVHGEHFRPHVLPSRUWDQWLQVXFKDVVDXOWFDVHV
  1(/621sGHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK                 8S XQWLO WKH ODVW WZR GHFDGHV GXULQJ ZKLFK WKH IHGHUDO
%$7&+(/'(5 s MRLQHG  0(55,77 s SS                  FULPLQDO ODZ KDV EHFRPH LQFUHDVLQJO\ KDUVK DQG ULJLG WKH
GHOLYHUHGDVHSDUDWHGLVVHQWLQJRSLQLRQ                                 SUHVXPSWLRQ ZDV LQ IDYRU RI D PHQV UHD UHTXLUHPHQW IRU
                                                                         IHGHUDOFULPHV,Q'HQQLVY8QLWHG6WDWHV86
                      BBBBBBBBBBBBBBBBB                                  WKH6XSUHPH&RXUWVDLGWKDWmWKHH[LVWHQFHRIDPHQV
                                                                         UHDLVWKHUXOHRIUDWKHUWKDQWKHH[FHSWLRQWRWKHSULQFLSOHV
                          23,1,21                                        RI$QJOR$PHULFDQFULPLQDOMXULVSUXGHQFHl:KDWHYHUZH
                      BBBBBBBBBBBBBBBBB                                  GHFLGH WR FDOO WKH PHQWDO HOHPHQW UHTXLUHG IRU D IHGHUDO
                                                                         DVVDXOWZKHWKHUmJHQHUDOlmVSHFLILFlRURWKHUZLVHDGLVWLQFW
   '$9,' $ 1(/621 &LUFXLW sXGJH  7KLV LV DQ DSSHDO           PHQWDOHOHPHQWUHTXLULQJVRPHGHOLEHUDWLRQDQGPRUHWKDQ
IURP FULPLQDO FRQYLFWLRQV IRU DQ DVVDXOW RQ RIILFHUV RI WKH     VLPSO\DQLQWHQWWRGRDQDFWPXVWEHSUHVHQW,WKHUHIRUH
'HSDUWPHQW RI 9HWHUDQV $IIDLUV D YLRODWLRQ RI  86&         DJUHHZLWKWKRVH&LUFXLWVZKLFKKDYHUHDFKHGWKHRSSRVLWH
DDQGSRVVHVVLRQRQ9$SURSHUW\RIDNQLIHZLWK             UHVXOWIURPRXU&RXUWLQWKLVFDVH8QLWHG6WDWHVY6LPPRQGV
D EODGH OHQJWK H[FHHGLQJ WKUHH LQFKHV  6XFK SRVVHVVLRQ         )GWK&LU8QLWHG6WDWHVY7D\ORU
YLRODWHV D UXOH VHW IRUWK LQ  &)5  E DQG     )GWK&LU8QLWHG6WDWHVY&DUXDQD)G
YLRODWLRQRIWKDWUXOHLVDFULPHXQGHU86&F             VW&LU
  7KHGHIHQGDQWSUHVHQWVIRXUDVVLJQPHQWVRIHUURUWKDW              , ZRXOG SHUPLW D GHIHQGDQW WR LQWURGXFH HYLGHQFH RI
WKH GLVWULFW FRXUW HUUHG LQ IDLOLQJ WR VXSSUHVV HYLGHQFH         GLPLQLVKHGFDSDFLW\WRIRUPWKHLQWHQWWRFRPPLWWKHIHGHUDO
FRQVLVWLQJ RI WZR NQLYHV IRXQG LQ WKH GHIHQGDQWjV YHKLFOH       DVVDXOW  ,I ZH DJUHH WKDW D PHQWDO HOHPHQW LV UHTXLUHG WR
WKDWWKHGLVWULFWFRXUWDEXVHGLWVGLVFUHWLRQLQH[FOXGLQJ           FRPPLWWKHFULPHnDVLWVHHPVWRPHZHPXVWnWKHQZH
SURIIHUHGH[SHUWWHVWLPRQ\FRQFHUQLQJWKHGHIHQGDQWjVPHQWDO             VKRXOGSHUPLWDGHIHQGDQWWRVKRZWKDWKHGLGQRWSRVVHVVWKH
FRQGLWLRQ  WKDW WKH HYLGHQFH SUHVHQWHG DW WULDO ZDV          QHFHVVDU\ VWDWH RI PLQG  2WKHUZLVH DVVDXOW DQG EDWWHU\ LQ
LQVXIILFLHQWWRVXVWDLQDFRQYLFWLRQDQGWKDWWKHGLVWULFW          IHGHUDO ODZ QRZ EHFRPHV D PLQGOHVV VWULFW OLDELOLW\ FULPH
FRXUWDEXVHGLWVGLVFUHWLRQLQGHQ\LQJUHTXHVWVIRUDVSHFLDO            FRQWUDU\WRLWVFRPPRQODZRULJLQDQGWKHHQOLJKWHQHGSROLF\
YHUGLFWIRUPDQGDMXU\LQVWUXFWLRQRQXQDQLPLW\                       UHVSHFWLQJPHQVUHDIROORZHGLQIHGHUDOODZGXULQJPRVWRI
                                                                         WKHODVWWZRFHQWXULHV+HQFHLI,FRUUHFWO\XQGHUVWDQGZKDW
  3HUKDSV WKH PRVW VLJQLILFDQW LVVXH LV WKH VHFRQG ZKLFK        RXU&RXUWKDVKHOGLQWKLVFDVH,GLVDJUHHDQGUHVSHFWIXOO\
WXUQVRQWKHTXHVWLRQZKHWKHUDVVDXOWLQJDIHGHUDORIILFHULVD          GLVVHQW
mJHQHUDOLQWHQWFULPHlRUDmVSHFLILFLQWHQWFULPHl7KLVKDV
KHUHWRIRUHEHHQDQRSHQTXHVWLRQLQRXUFLUFXLW
  sRLQLQJ WKH PDMRULW\ RI FLUFXLWV WKDW KDYH H[SUHVVHG DQ
RSLQLRQRQWKHPDWWHUZHFRQFOXGHDVGLGWKHGLVWULFWFRXUW
WKDW DVVDXOW RQ D IHGHUDO RIILFHU LV D JHQHUDO LQWHQW FULPH
'LPLQLVKHGPHQWDOFDSDFLW\LVQRWDGHIHQVHWRVXFKDFULPH
VR WKH GLVWULFW FRXUW GLG QRW HUU LQ GHFOLQLQJ WR UHFHLYH
HYLGHQFH RI WKH GHIHQGDQWjV DOOHJHGO\ GLPLQLVKHG FDSDFLW\
    8QLWHG6WDWHVY.LPHV                          1R       1R                          8QLWHG6WDWHVY.LPHV       

                        BBBBBBBBBBBBBB                                  $FFRUGLQJO\ DQG EHFDXVH ZH ILQG QRQH RI WKH GHIHQGDQWjV
                                                                        UHPDLQLQJDVVLJQPHQWVRIHUURUSHUVXDVLYHZHVKDOODIILUPWKH
                           ',66(17                                      FRQYLFWLRQV
                        BBBBBBBBBBBBBB
                                                                                                         ,
   0(55,77&LUFXLWsXGJHGLVVHQWLQJ,WVHHPVWRPHWKDW
LQGHWHUPLQLQJWKHLQWHQWUHTXLUHPHQWRUHOHPHQWRIPHQVUHD               7KH GHIHQGDQW sDPHV .LPHV LV D YHWHUDQ RI WKH ZDU LQ
IRU DVVDXOWLQJ D IHGHUDO RIILFHU ZH VKRXOG UHWXUQ WR WKH      9LHWQDP,QsXO\RIDIWHUH[SHULHQFLQJV\PSWRPVRI
FRPPRQ ODZ FULPH RI DVVDXOW IRU HQOLJKWHQPHQW DQG                GHSUHVVLRQ DQG SRVWWUDXPDWLF VWUHVV GLVRUGHU KH VRXJKW
GHWHUPLQH ZKHWKHU DVVDXOW DQG EDWWHU\ DW FRPPRQ ODZ              WUHDWPHQW DW WKH 9$ 0HGLFDO &HQWHU DW 0RXQWDLQ +RPH
UHTXLUHGDVSHFLILFPHQWDOVWDWHDEVHQWZKLFKWKHUHZRXOGEH           7HQQHVVHH
QRFULPH$WFRPPRQODZ
                                                                          $SV\FKRORJ\LQWHUQDWWKH0HGLFDO&HQWHUDZRPDQQDPHG
  7KH YLROHQFH RU IRUFH DWWHPSWHG RU GRQH PXVW EH               &KULVWLQH *HUHW\ FRQGXFWHG  FRXQVHOLQJ VHVVLRQV ZLWK 0U
  XQODZIXO$FFRUGLQJO\LWZRXOGQRWEHDQDVVDXOWQRUDQ             .LPHVRQDZHHNO\EDVLV$WDVHVVLRQKHOGRQ0DUFK
  DVVDXOWDQGEDWWHU\LIWKHIRUFHLVMXVWLILDEOHLQSXUVXDQFH          0U .LPHV DFNQRZOHGJHG WKRXJKWV RI VXLFLGH  0V
  RI ODZIXO SXEOLF RU GRPHVWLF DXWKRULW\ HJ ZKHUH DQ        *HUHW\FRQFOXGHGWKDWKHGLGQRWSRVHDQLPPHGLDWHGDQJHUWR
  RIILFHUPDNHVDODZIXODUUHVWRUDSDUHQWRUWHDFKHU            KLPVHOIRURWKHUVVRUDWKHUWKDQKDYLQJKLPDGPLWWHGWRWKH
  PRGHUDWHO\ FRUUHFWV KLV FKLOG RU SXSLO RU ZKHUH LW LV       KRVSLWDOVKHSURSRVHGDmYHUEDOVDIHW\FRQWUDFWl0U.LPHV
  DSSOLHG LQ QHFHVVDU\ DQG UHDVRQDEOH GHIHQVH RI RQHjV           DFFHSWHGSURPLVLQJWKDWLIKHZHUHDERXWWRKXUWKLPVHOIRU
  SHUVRQRUSURSHUW\                                            RWKHUVKHZRXOGLPPHGLDWHO\FDOO0V*HUHW\RUFRPHWRWKH
                                                                        9$0HGLFDO&HQWHUHPHUJHQF\URRP
  &RQVHQWRIWKHSHUVRQDJDLQVWRUXSRQZKRPWKHYLROHQFH
  LVDWWHPSWHGRULQIOLFWHGLVDGHIHQVHLIWKH FRQVHQWLV              )ROORZLQJ WKH 0DUFK  VHVVLRQ 0U .LPHV DSSDUHQWO\
  YDOLG                                                         PRYHG RXW RI KLV KRPH DQG EHJDQ OLYLQJ LQ KLV WUXFN  $W
                                                                        DSSUR[LPDWHO\ QRRQ RQ 0DUFK   WZR 9$ SROLFH
&ODUNDQG0DUVKDOO&ULPHVWKHG                          RIILFHUV &UDLJ 'RXJKHUW\ DQG 3DPHOD (QVRU REVHUYHG WKH
                                                                        GHIHQGDQWjVWUXFNZLWKDEODQNHWRYHUWKHZLQGVKLHOGSDUNHG
  &HUWDLQO\PRUHFRQVFLRXVQHVVRIZURQJGRLQJWKDQVLPSO\               LQDEDFNFRUQHURIWKH0HGLFDO&HQWHUSDUNLQJORW6HHLQJ
DQLQWHQWWRGRDQDFWLVQHFHVVDU\IRUWKHFULPH7KHFULPHRI        PRYHPHQWLQVLGHWKHWUXFN2IILFHU'RXJKHUW\NQRFNHGRQWKH
DVVDXOW QRUPDOO\ UHTXLUHV D IRUP RI JXLOW\ NQRZOHGJH n          ZLQGRZDVNHG0U.LPHVZKDWKHZDVGRLQJDQGRIIHUHG
ZKHWKHUZHFDOOLWVFLHQWHUPDOLFHVSHFLILFLQWHQWRUJLYHLW        DVVLVWDQFH
VRPHRWKHUODEHO3UHVXPDEO\DODZHQIRUFHPHQWRIILFHUZKR
DVVDXOWV D IHGHUDO RIILFHU ZKR LV UHVLVWLQJ DUUHVW ZRXOG QRW     0U.LPHVJRWRXWRIWKHWUXFNDQGVODPPHGWKHGRRU+H
KDYHWKHUHTXLVLWHLQWHQWWRGRKDUPWRDQRWKHUWRTXDOLI\DVD         WKHQEHJDQ\HOOLQJDWWKHRIILFHUVVFUHDPLQJWKDWKHKDGGRQH
FULPH XQGHU WKH IHGHUDO VWDWXWH  $ GRFWRU ZKR RWKHUZLVH       QRWKLQJ ZURQJ DQG WKDW KH ZDQWHG WR JR WR WKH HPHUJHQF\
DVVDXOWVVXFKDQRIILFLDOE\DPSXWDWLQJKLVIRRWZLWKFRQVHQW           URRP
ZRXOG QRW KDYH WKH UHTXLVLWH VWDWH RI PLQG  3URWHFWLRQ RI
KRPH DQG IDPLO\ IURP D IHGHUDO RIILFLDO ZKR LV  LOOHJDOO\        2IILFHU'RXJKHUW\DSSURDFKHGWKHGHIHQGDQWDQGSODFHGDQ
EUHDNLQJ DQG HQWHULQJ ZRXOG QRW JLYH ULVH WR WKH UHTXLVLWH     RSHQKDQGRQKLVVKRXOGHULQDQDWWHPSWWRFDOPKLP$Q
                                                                        DOWHUFDWLRQHQVXHGDQGERWK0U.LPHVDQGWKHWZRRIILFHUV
       8QLWHG6WDWHVY.LPHV                            1R        1R                        8QLWHG6WDWHVY.LPHV       

IHOOWRWKHJURXQG'XULQJWKHVWUXJJOH0U.LPHVDWWHPSWHG                    $VSHFLILFXQDQLPLW\LQVWUXFWLRQLVRUGLQDULO\XQQHFHVVDU\
WR UHPRYH 2IILFHU 'RXJKHUW\jV JXQ IURP LWV KROVWHU  0U            XQOHVV m D FRXQW LV H[WUHPHO\ FRPSOH[  WKHUH LV
.LPHV ZDV WKHQ KDQGFXIIHG DQG WDNHQ WR WKH 9$ SROLFH              YDULDQFH EHWZHHQ WKH LQGLFWPHQW DQG WKH SURRI DW WULDO RU
VWDWLRQ                                                                     WKHUHLVDWDQJLEOHULVNRIMXU\FRQIXVLRQl8QLWHG6WDWHV
                                                                             Y 6DQGHUVRQ  )G   WK &LU  FLWLQJ
  7KHUH 0U .LPHV ZDV TXHVWLRQHG E\ 9$ 2IILFHU .HQ                 8QLWHG 6WDWHV Y 'XQFDQ  )G   WK
:DUUHQ  ,Q WKH FRXUVH RI WKH TXHVWLRQLQJ 0U .LPHV                 &LU$GHIHQGDQWFKDUJHGZLWKYLRODWLQJLVQRW
PHQWLRQHGWKDWKHKDGVRPHWRROVLQKLVWUXFNDQGZDQWHGWKH                 HQWLWOHG WR D VSHFLILF XQDQLPLW\ LQVWUXFWLRQ XQOHVV WKH
YHKLFOHWREHVHFXUHG2IILFHU:DUUHQZDVJLYHQWKHNH\VWR                 GHIHQGDQWjV FRQGXFW FRQVWLWXWHG mWZR VHSDUDWH DQG GLVWLQFW
WKHWUXFNVRWKDWWKLVFRXOGEHGRQH                                        RIIHQVHVlQRWPHUHO\mWZRSKDVHVRIDVLQJOHDVVDXOWl8QLWHG
                                                                             6WDWHVY+RRG)GWK&LUTXRWLQJ
   2IILFHU:DUUHQWXUQHGWKHNH\VRYHUWR2IILFHU(QVRUDQG                  8QLWHG 6WDWHV Y 6HJLHQ  )G   WK &LU
WROGKHUWRUHWXUQWRWKHKRVSLWDODQGFRQGXFWDVHDUFKRIWKH               1RQHRIWKHVHFRQGLWLRQVZDVPHWLQWKHFDVHDWEDU
WUXFN6KHGLGVR7KH VHDUFKGLVFORVHGDED\RQHWRQWKH                  WKHUHZDVQRLQVWUXFWLRQDOHUURUDQGREYLRXVO\QRHUURULQQRW
IORRUERDUG DQG D ILOHW NQLIH RQ D VHDW FXVKLRQ  %RWK              UHTXLULQJDVSHFLDOYHUGLFW$VWRWKHODWWHUSRLQWZHQRWH
LPSOHPHQWVKDGEODGHVRYHUWKUHHLQFKHVORQJ2IILFHU(QVRU                 DOVRWKDWWKLVFRXUWKDVREVHUYHGWKDWm>L@QJHQHUDOVSHFLDO
UHPRYHG WKH NQLYHV IURP WKH WUXFN EHIRUH WKH YHKLFOH ZDV            YHUGLFW IRUPV DUH QRW IDYRUHG DQG µPD\ LQ IDFW EH PRUH
LPSRXQGHGDQGWRZHGDZD\                                                    SURGXFWLYH RI FRQIXVLRQ WKDQ FODULW\jl  8QLWHG 6WDWHV Y
                                                                             :LOVRQ  )G   WK &LU  TXRWLQJ $
  0U .LPHV ZDV LQGLFWHG D PRQWK ODWHU DQG WKH FDVH                0RRUH
V)HGHUDO3UDFWLFHDQG3URFHGXUHDW
XOWLPDWHO\ZHQWWRWULDO$VSDUWRIKLVGHIHQVH0U.LPHV
VRXJKWWRLQWURGXFHPHGLFDOHYLGHQFHUHJDUGLQJKLVWUHDWPHQW                   $)),50('
IRUGHSUHVVLRQDQGSRVWWUDXPDWLFVWUHVVGLVRUGHU0U.LPHVj
PHGLFDOH[SHUWVZHUHSUHSDUHGWRWHVWLI\WKDWZKHQ2IILFHU
'RXJKHUW\WRXFKHGKLP0U.LPHVFRXOGKDYHH[SHULHQFHG
DmK\SHUVWDUWOHGUHDFWLRQlWKDWUREEHGKLPRIWKHDELOLW\WR
FRQWURO KLV DFWLRQV  7KH GHIHQGDQWjV WKHRU\ ZDV WKDW WKLV
SUHYHQWHGKLPIURPIRUPLQJWKHQHFHVVDU\PHQVUHDWRYLRODWH
86&D
  7KH GLVWULFW FRXUW UXOHG WKH SURIIHUHG WHVWLPRQ\
LQDGPLVVLEOHRQWZRJURXQGV)LUVWDQVZHULQJDTXHVWLRQOHIW
RSHQE\WKLVFRXUWLQ8QLWHG6WDWHVY)DUURZ)G
WK &LU  WKH GLVWULFW FRXUW KHOG WKDW DQ DVVDXOW RQ D
IHGHUDORIILFHULQYLRODWLRQRILVDJHQHUDOLQWHQWFULPH
DV WR ZKLFK GLPLQLVKHG FDSDFLW\ LV QRW D GHIHQVH  ,Q WKH

    
     m:KLOH WKLV &RXUW KDV QRW \HW DGGUHVVHG WKH TXHVWLRQl RXU   )DUURZ
RSLQLRQ REVHUYHG mRWKHU FRXUWV KDYH FRQFOXGHG WKDW  D VHWV IRUWK
D µJHQHUDO LQWHQWj UDWKHU WKDQ D µVSHFLILF LQWHQW FULPHj 7R HVWDEOLVK
    8QLWHG6WDWHVY.LPHV                         1R       1R                             8QLWHG6WDWHVY.LPHV        

WKH NQLYHV LQ HYLGHQFH  2XU UHVROXWLRQ RI WKH HYLGHQWLDU\    DOWHUQDWLYH WKH GLVWULFW FRXUW KHOG WKH SURIIHUHG WHVWLPRQ\
TXHVWLRQGLVSRVHVRIWKLVEUDQFKRIWKHLQVXIILFLHQF\FODLP           LQDGPLVVLEOHXQGHU5XOHE)HG5(YLGLQVRIDUDVWKH
                                                                       ZLWQHVVHVSURSRVHGWRH[SUHVVDQRSLQLRQWKDWWKHGHIHQGDQW
  ' 6SHFLDO9HUGLFW)RUPVDQG,QVWUXFWLRQVRQ8QDQLPLW\              ODFNHGWKHUHTXLVLWHPHQVUHD
  'XULQJ KLV WULDO 0U .LPHV SRLQWV RXW WKH JRYHUQPHQW          'HSULYHGRIKLVGLPLQLVKHGFDSDFLW\GHIHQVH0U.LPHV
SUHVHQWHG HYLGHQFH DV WR DOO VL[ PRGDOLWLHV DVVDXOWLQJ        IHOOEDFNRQDFODLPRIVHOIGHIHQVHKHPDLQWDLQHGWKDWKHZDV
UHVLVWLQJRSSRVLQJLPSHGLQJLQWLPLGDWLQJDQGLQWHUIHULQJ          VLPSO\ UHVSRQGLQJ WR D XVH RI H[FHVVLYH IRUFH E\ 2IILFHU
E\ZKLFKDGHIHQGDQWFDQYLRODWHD,WIROORZV0U         'RXJKHUW\7KHMXU\UHMHFWHGWKLVFODLPDQGIRXQG0U.LPHV
.LPHVDVVHUWVWKDWWKHMXU\VKRXOGKDYHEHHQWROGLWFRXOG            JXLOW\RQERWKFRXQWVRIWKHLQGLFWPHQW7KHGLVWULFWFRXUW
FRQYLFWKLPRQO\LIWKHMXURUVZHUHXQDQLPRXVRQZKLFKW\SH            VHQWHQFHG KLP WR SD\ D  ILQH DQG VHUYH WZR \HDUV RI
RIFRQGXFWRFFXUUHGoDQGWKHDOOHJHGXQDQLPLW\UHTXLUHPHQW            SUREDWLRQRQWKHDVVDXOWFRXQW7KHFRXUWVHQWHQFHGKLPWR
VKRXOG KDYH EHHQ WHVWHG KH VXJJHVWV E\ D VSHFLDO YHUGLFW    mWLPHVHUYHGlWKHIRXUGD\VKHKDGVSHQWLQWKHORFDOMDLORQ
IRUP                                                                  WKHZHDSRQVFRXQW
  m7KH WULDO FRXUW LV µYHVWHG ZLWK EURDG GLVFUHWLRQ LQ                                            ,,
IRUPXODWLQJ LWV FKDUJH DQG ZLOO QRW EH UHYHUVHG XQOHVV WKH
FKDUJHIDLOVDFFXUDWHO\WRUHIOHFWWKHODZjl8QLWHG6WDWHVY          $ 0RWLRQWR6XSSUHVVWKH.QLYHV
%XVDFFD)GWK&LUFLWDWLRQRPLWWHG
$FFRUGLQJO\MXU\LQVWUXFWLRQVDUHUHYLHZHGIRUDQDEXVHRI              3ULRUWRWULDOWKHGHIHQGDQWPRYHGIRUVXSSUHVVLRQRIWKH
GLVFUHWLRQ6HH8QLWHG6WDWHVY+RRG)GWK         NQLYHVRQWKHJURXQGWKDWWKHZDUUDQWOHVVVHDUFKLQZKLFK
&LU$QGWKHWULDOFRXUWjVLQVWUXFWLRQVVKRXOGEHUHDG         WKH\KDGEHHQGLVFRYHUHGYLRODWHGWKH)RXUWK$PHQGPHQW$
mDVDZKROHWRGHWHUPLQHZKHWKHUWKH\IDLUO\DQGDGHTXDWHO\            PDJLVWUDWHMXGJHDJUHHGWKDWWKHUHKDGEHHQDYLRODWLRQRIWKH
VXEPLWWHG WKH LVVXHV DQG DSSOLFDEOH ODZ WR WKH MXU\l  6HH   )RXUWK $PHQGPHQW DQG WKLV  ZRXOG QRUPDOO\ KDYH EHHQ
8QLWHG 6WDWHV Y :LOOLDPV  )G   WK &LU      VXIILFLHQWWRWULJJHUWKHH[FOXVLRQDU\UXOHDGRSWHGLQ0DSSY
                                                                2KLR  86     7KH PDJLVWUDWH IXUWKHU
                                                                       FRQFOXGHGKRZHYHUWKDWWKHNQLYHVZHUHDGPLVVLEOHXQGHU
  :HFRQFOXGHWKDWWKHLQVWUXFWLRQVLQWKHFDVHDWEDUZHUH            WKHmLQHYLWDEOHGLVFRYHU\lH[FHSWLRQWRWKHH[FOXVLRQDU\UXOH
DGHTXDWHDVJLYHQ7KHMXU\ZDVWROGWKDWLQHQDFWLQJ           7KH PDJLVWUDWHjV FRQFOXVLRQV ZHUH DGRSWHG E\ WKH GLVWULFW
m&RQJUHVVFUHDWHGDVLQJOHFULPHRIKDUPLQJRUWKUHDWHQLQJD           MXGJH
IHGHUDO RIILFLDO DQG VSHFLILHG VL[ ZD\V E\ ZKLFK WKH FULPH
FRXOGEHFRPPLWWHG1RZSURRIEH\RQGDUHDVRQDEOHGRXEW                1HLWKHUWKHPDJLVWUDWHQRUWKHGLVWULFWMXGJHDGGUHVVHGWKH
RIDQ\RIWKHVHVL[PHWKRGVZLOOVXSSRUWDILQGLQJRIJXLOWLQ         REYLRXVSRVVLELOLW\WKDWWKHVHDUFKZDVFRQVHQVXDO7KLVLVVXH
UHJDUG WR WKLV FULPHl  7KH MXU\ ZDV DOVR WROG m1RZ \RXU   KDVQRWEHHQEULHIHGRUDUJXHGRQDSSHDO)RUSXUSRVHVRIWKLV
YHUGLFWZKHWKHULWjVJXLOW\RUQRWJXLOW\PXVWEHXQDQLPRXV         RSLQLRQWKHQZHVKDOODVVXPHZLWKRXWVRGHFLGLQJWKDWD
7RILQGWKHGHIHQGDQWJXLOW\HYHU\RQHRI\RXPXVWDJUHHWKDW         YLRODWLRQ RI WKH )RXUWK $PHQGPHQW GLG RFFXU  6XFK D
WKHJRYHUQPHQWKDVRYHUFRPHWKHSUHVXPSWLRQRILQQRFHQFH
ZLWKHYLGHQFHWKDWSURYHVKLVJXLOWEH\RQGDUHDVRQDEOHGRXEW



(LWKHUZD\JXLOW\RUQRWJXLOW\\RXUYHUGLFWPXVWEH          JHQHUDO LQWHQW WKH *RYHUQPHQW QHHG QRW VKRZ WKDW WKH GHIHQGDQW LQWHQGHG
XQDQLPRXVl7KHVHLQVWUXFWLRQVZHUHVXIILFLHQWWRDSSULVHWKH         WR LQMXUH D IHGHUDO RIILFHU EXW RQO\ µWKH NQRZLQJ FRPPLVVLRQ RI DQ DFW
MXU\RIWKHDSSOLFDEOHODZ                                            WKDW WKH ODZ PDNHV D FULPHjl ,G   DW  Q  FLWDWLRQV RPLWWHG
     8QLWHG6WDWHVY.LPHV                        1R      1R                         8QLWHG6WDWHVY.LPHV        

YLRODWLRQZRXOGUHTXLUHVXSSUHVVLRQRIWKHNQLYHVXQOHVVWKH\        RIILFLDO VWLOO ZRXOG EH LPSHGHG LQ WKH SHUIRUPDQFH RI KLV
ZHUHGHVWLQHGWRKDYHEHHQGLVFRYHUHGoODZIXOO\oLQDQ\           RIILFLDOGXWLHVl8QLWHG6WDWHVYsHQQLQJV)6XSS
HYHQW                                                               0'3D
  m7KH LQHYLWDEOH GLVFRYHU\ GRFWULQH DQ H[FHSWLRQ WR WKH        ,QVXPZHFRQFOXGHWKDWWKHFULPHHVWDEOLVKHGLQ86&
H[FOXVLRQDU\UXOHDOORZVXQODZIXOO\REWDLQHGHYLGHQFHWREH          D LV D JHQHUDO LQWHQW FULPH DV WR ZKLFK HYLGHQFH RI
DGPLWWHG DW WULDO LI WKH JRYHUQPHQW FDQ SURYH E\             GLPLQLVKHG FDSDFLW\ LV QRW DGPLVVLEOH  7KLV FRQFOXVLRQ
SUHSRQGHUDQFHWKDWWKHHYLGHQFHLQHYLWDEO\ZRXOGKDYHEHHQ           REYLDWHV DQ\ QHHG IRU XV WR DGGUHVV WKH GLVWULFW FRXUWjV
DFTXLUHGWKURXJKODZIXOPHDQVl8QLWHG6WDWHVY.HQQHG\           DOWHUQDWLYHKROGLQJZKLFKZDVWKDWDGPLVVLRQRIWKHSURIIHUHG
)GWK&LUFLWLQJ1L[Y:LOOLDPV        HYLGHQFHZDVSUHFOXGHGE\5XOHE)HG5(YLG
86      3URRI RI LQHYLWDEOH GLVFRYHU\
mLQYROYHV QR VSHFXODWLYH HOHPHQWV EXW IRFXVHV RQ                 & 6XIILFLHQF\RIWKH(YLGHQFH
GHPRQVWUDWHGKLVWRULFDOIDFWVFDSDEOHRIUHDG\YHULILFDWLRQRU
LPSHDFKPHQWl1L[86DWQm7KHH[FHSWLRQ          7KHGHIHQGDQWPDLQWDLQVWKDWWKHHYLGHQFHRIIHUHGDWWULDO
UHTXLUHVWKHFRXUWWRGHWHUPLQHYLHZLQJDIIDLUVDVWKH\       ZDVLQVXIILFLHQWWRVXSSRUWDFRQYLFWLRQRQHLWKHUFRXQWRIWKH
H[LVWHGDWWKHLQVWDQWEHIRUHWKHXQODZIXOVHDUFKZKDWZRXOG        LQGLFWPHQW,QUHYLHZLQJWKHVXIILFLHQF\RIWKHHYLGHQFHIRU
KDYH KDSSHQHG KDG WKH XQODZIXO VHDUFK QHYHU RFFXUUHGl        D FULPLQDO FRQYLFWLRQ WKLV FRXUW PXVW GHWHUPLQH ZKHWKHU
8QLWHG6WDWHVY(QJ)GG&LUFHUW         WDNLQJ WKH HYLGHQFH LQ WKH OLJKW PRVW IDYRUDEOH WR WKH
GHQLHG86                                      SURVHFXWLRQDQ\UDWLRQDOWULHURIIDFWFRXOGKDYHIRXQGWKH
                                                                     HVVHQWLDOHOHPHQWVRIWKHFULPHEH\RQGDUHDVRQDEOHGRXEW
   9LHZLQJ WKH VLWXDWLRQ DV LW H[LVWHG MXVW EHIRUH 2IILFHU   6HHsDFNVRQY9LUJLQLD868QLWHG
(QVRUjVVHDUFKZHWKLQNLWFOHDUWKDWWKHJRYHUQPHQWKDVPHW        6WDWHVY5XVVHOO)GWK&LU
LWV EXUGHQ RI GHPRQVWUDWLQJ WKDW WKH HYLGHQFH ZRXOG
LQHYLWDEO\ KDYH EHHQ GLVFRYHUHG WKURXJK ODZIXO PHDQV            $V WR WKH ILUVW FRXQW ZKLFK FKDUJHG KLP ZLWK IRUFLEO\
(VWDEOLVKHGSROLF\FDOOHGIRUWKHUHPRYDORIYHKLFOHVSDUNHG         DVVDXOWLQJ 9$ SROLFH RIILFHUV LQ YLRODWLRQ RI  86&
RQ9$SURSHUW\DQGQRWEHORQJLQJWRSDWLHQWVRUYLVLWRUV          D0U.LPHVDUJXHVWKDWWKHHYLGHQFHVKRZHGKH
7KDWVXFKDSROLF\LVFRQVLVWHQWZLWKOHJLWLPDWHSXEOLFVDIHW\       ZDVGHIHQGLQJKLPVHOIDJDLQVWDQH[FHVVLYHXVHRIIRUFHE\
DQGFRPPXQLW\FDUHWDNLQJSXUSRVHVLVEH\RQGTXHVWLRQ6HH           2IILFHU 'RXJKHUW\  7KH RQO\ HYLGHQFH VXSSRUWLQJ WKLV
6RXWK'DNRWDY2SSHUPDQ86+HUH           FRQWHQWLRQZDVWKHWHVWLPRQ\RI%XUW&ORQLQJHUDUHWLUHG)%,
WKH JRYHUQPHQW KDV VKRZQ ZLWKRXW FRQWUDGLFWLRQ WKDW WKH       DJHQWZKRRSLQHGWKDW2IILFHU'RXJKHUW\KDGXVHGH[FHVVLYH
KRVSLWDO SDUNLQJ ORW ZDV QRW D VHFXUH SODFH DQG WKDW WKH   IRUFHE\SODFLQJKLVKDQGRQWKHGHIHQGDQWjVVKRXOGHU7KLV
LQWHJULW\ RI WKH WUXFN FRXOG QRW EH HQVXUHG WKHUH  7KH    WHVWLPRQ\ ZDV UHEXWWHG E\ )%, $JHQW /DQH 5XVKLQJ ZKR
JRYHUQPHQWKDVIXUWKHUVKRZQDJDLQZLWKRXWFRQWUDGLFWLRQ           H[SUHVVHG WKH RSLQLRQ WKDW 2IILFHU 'RXJKHUW\ DFWHG
WKDW OHDYLQJ WKH WUXFN LQ WKH SDUNLQJ VSDFH IRU DQ          DSSURSULDWHO\([DPLQLQJWKHFRQIOLFWLQJHYLGHQFHLQWKHOLJKW
XQGHWHUPLQHG SHULRG RI WLPH ZRXOG KDYH PHDQW GHQLDO RI       PRVWIDYRUDEOHWRWKHSURVHFXWLRQZHVHHQRUHDVRQZK\D
DFFHVVWRWKHSDUNLQJVSDFHE\RWKHUYLVLWRUV                       UDWLRQDOWULHURIIDFWFRXOGQRWKDYHFKRVHQWRDFFHSW$JHQW
                                                                     5XVKLQJjVWHVWLPRQ\DQGUHMHFW0U&ORQLQJHUjV
  (VWDEOLVKHG9$SROLF\DOVRSUHVFULEHGDQLQYHQWRU\VHDUFK
SULRUWRUHPRYDORIDYHKLFOH2IILFHU1RUZRRGWHVWLILHGWKDW         $VWRWKHFRXQWUHODWLQJWRWKHNQLIHSRVVHVVLRQ0U.LPHV
WKH SXUSRVH RI FRQGXFWLQJ VXFK D VHDUFK ZDV WR SURWHFW      DUJXHV VLPSO\ WKDW WKHUH ZRXOG KDYH EHHQ QR HYLGHQFH WR
                                                                     VXSSRUWDFRQYLFWLRQEXWIRUWKHDOOHJHGO\LPSURSHUUHFHLSWRI
    8QLWHG6WDWHVY.LPHV                         1R       1R                        8QLWHG6WDWHVY.LPHV         

KLV GLPLQLVKHG PHQWDO FDSDFLW\  7KH ILUVW SDUDJUDSK RI     SHUVRQDO SURSHUW\ LQVLGH WKH YHKLFOH ZKLOH LW ZDV LQ SROLFH
86&DEHJLQVWKXV                                          FXVWRG\DQGWRSURWHFWWKH9$IURPFODLPVRIORVWRUVWROHQ
                                                                       SURSHUW\8QGHU2SSHUPDQDVHDUFKFRQGXFWHGIRUVXFKD
  m:KRHYHU E\ IRUFH DQG YLROHQFH RU E\ LQWLPLGDWLRQ          SXUSRVHPHHWVWKHFRQVWLWXWLRQDOWHVWRIUHDVRQDEOHQHVV
  WDNHVRUDWWHPSWVWRWDNHIURPWKHSHUVRQRUSUHVHQFHRI
  DQRWKHURUREWDLQVRUDWWHPSWVWRREWDLQE\H[WRUWLRQDQ\              )LQDOO\WKHPDJLVWUDWHIRXQGWKDWWKHNQLYHVZHUHLQSODLQ
  SURSHUW\RUPRQH\RUDQ\RWKHUWKLQJRIYDOXHEHORQJLQJ              VLJKWZKHQ2IILFHU(QVRUHQWHUHGWKHWUXFN7KLVILQGLQJZDV
  WR RU LQ WKH FDUH FXVWRG\ FRQWURO PDQDJHPHQW RU         QRWFOHDUO\HUURQHRXV$FFHSWLQJLWDVWUXHZHFRQFOXGHWKDW
  SRVVHVVLRQRIDQ\EDQNFUHGLWXQLRQRUDQ\VDYLQJVDQG            LIWKHNQLYHVKDGQRWDOUHDG\EHHQUHPRYHGE\2IILFHU(QVRU
  ORDQDVVRFLDWLRQl                                            WKH\ZRXOGLQHYLWDEO\KDYHEHHQGLVFRYHUHGLQDQLQYHQWRU\
                                                                       VHDUFK FRQGXFWHG LQ FRQQHFWLRQ ZLWK WKH UHPRYDO RI WKH
,QFRQWUDVWWKHVHFRQGSDUDJUDSKEHJLQVWKXV                         YHKLFOH3URRIWKDWFRQWUDEDQGZRXOGKDYHEHHQGHWHFWHGLQ
                                                                       mDQLQYHQWRU\VHDUFKWKDWZRXOGLQHYLWDEO\IROORZVHL]XUHRI
  m:KRHYHU HQWHUV RU DWWHPSWV WR HQWHU DQ\ EDQN FUHGLW        D FDUl LV VXIILFLHQW WR LQYRNH WKH LQHYLWDEOH GLVFRYHU\
  XQLRQ RU DQ\ VDYLQJV DQG ORDQ DVVRFLDWLRQ RU DQ\           H[FHSWLRQWRWKHH[FOXVLRQDU\UXOH6HH.HQQHG\)GDW
  EXLOGLQJXVHGLQZKROHRULQSDUWDVDEDQNFUHGLWXQLRQ           
  RU DV D VDYLQJV DQG ORDQ DVVRFLDWLRQ ZLWK LQWHQW WR
  FRPPLWLQVXFKEDQNFUHGLWXQLRQRULQVXFKVDYLQJVDQG               7KH GHIHQGDQW FRQWHQGV WKDW WKH LQHYLWDEOH GLVFRYHU\
  ORDQDVVRFLDWLRQRUEXLOGLQJRUSDUWWKHUHRIVRXVHGDQ\         GRFWULQH VKRXOG QRW EH DSSOLHG LQ WKLV FDVH EHFDXVH 9$
  IHORQ\DIIHFWLQJVXFKEDQNFUHGLWXQLRQRUVXFKVDYLQJV            SROLFHRIILFHUVKDGWRRPXFKGLVFUHWLRQLQGHFLGLQJZKHWKHU
  DQGORDQDVVRFLDWLRQDQGLQYLRODWLRQRIDQ\VWDWXWHRIWKH          WRLPSRXQGWKHWUXFNDQGFRQGXFWDQLQYHQWRU\VHDUFK,QWKLV
  8QLWHG6WDWHVRUDQ\ODUFHQ\l(PSKDVLVVXSSOLHG          FRQQHFWLRQ0U.LPHVSRLQWVRXWWKDWRQVRPHRFFDVLRQVWKH
                                                                       9$ SHUPLWWHG IDPLO\ PHPEHUV RU IULHQGV WR UHPRYH D
%DVHGRQWKHGLIIHULQJODQJXDJHLQWKHWZRSDUDJUDSKVZH              YHKLFOHLILWVRZQHURURSHUDWRUZDVXQDEOHWRGRVR7KH
XSKHOG WKH GLVWULFW FRXUWjV HYLGHQWLDU\ UXOLQJ  EHFDXVH        GHIHQGDQWDOVRFRPSODLQVWKDWD9$RIILFHUFRQGXFWLQJDQ
m&RQJUHVVVKRZHGµFDUHIXOGUDIWVPDQVKLSjE\LQFOXGLQJDQ               LQYHQWRU\VHDUFKKDVGLVFUHWLRQWRUHIUDLQIURPUHFRUGLQJWKH
LQWHQWUHTXLUHPHQWLQWKHVHFRQGSDUDJUDSKEXWQRWWKHILUVW          SUHVHQFHRILWHPVQRWFRQVLGHUHGYDOXDEOH
SDUDJUDSKRIDZHKROGWKDWWKHILUVWSDUDJUDSKRI
 D GHVFULEHV D JHQHUDO LQWHQW FULPHl  *RQ\HD         7KHGHIHQGDQWjVDUJXPHQWVDUHQRWSHUVXDVLYH'LVFUHWLRQ
)GDW&LWDWLRQVRPLWWHG                                     DVWRLPSRXQGPHQWLVSHUPLVVLEOHmVRORQJDVWKDWGLVFUHWLRQ
                                                                       LVH[HUFLVHGDFFRUGLQJWRVWDQGDUGFULWHULDDQGRQWKHEDVLVRI
   &RQVLGHUDWLRQ RI WKH RYHUDOO SXUSRVH RI  D DOVR    VRPHWKLQJ RWKHU WKDQ VXVSLFLRQ RI HYLGHQFH RI FULPLQDO
VXSSRUWVWKHFRQFOXVLRQWKDWWKHVWDWXWHVHWVIRUWKDJHQHUDO          DFWLYLW\l&RORUDGRY%HUWLQH86
LQWHQWFULPH,QHQDFWLQJWKLVVHFWLRQDVWKH6XSUHPH&RXUW          +HUHDVZHJDWKHU9$SROLFHVRPHWLPHVSHUPLWWHGYHKLFOHV
KDVUHFRJQL]HGm&RQJUHVVLQWHQGHGWRSURWHFWERWKIHGHUDO             WREHSLFNHGXSE\DGULYHUjVIULHQGVDQGUHODWLRQVLIWKH\ZHUH
RIILFHUVDQGIHGHUDOIXQFWLRQVDQGIXUWKHUDQFHRIWKHRQH       DOUHDG\SUHVHQWRULIWKHGULYHUFRXOGFRQWDFW WKHPDQGJHW
SROLF\ DGYDQFHV WKH RWKHUl  )HROD  86 DW           WKHPWRFRPHWRWKHIDFLOLW\SURPSWO\0U.LPHVVXJJHVWV
&DWHJRUL]LQJDDVDJHQHUDOLQWHQWFULPHIXUWKHUVWKH        WKDW UDWKHU WKDQ WRZLQJ KLV WUXFN WKH RIILFHUV VKRXOG KDYH
FRQJUHVVLRQDOREMHFWLYHm,IDSHUVRQDFWVLQDPDQQHUZKLFK          WDNHQLWXSRQWKHPVHOYHVWRFDOOKLVZLIHDQGDVNKHUWRJHWWKH
LV DVVDXOWLYH WRZDUG D IHGHUDO RIILFLDO ZLWKRXW VSHFLILFDOO\
LQWHQGLQJKDUPRUWKHDSSUHKHQVLRQRILPPLQHQWKDUPWKH
      8QLWHG6WDWHVY.LPHV                        1R       1R                         8QLWHG6WDWHVY.LPHV        

YHKLFOH+HFLWHVQRDXWKRULW\FRPSHOOLQJVXFKDFRQFOXVLRQ             7KLVTXHVWLRQLVDSSDUHQWO\RQHRIILUVWLPSUHVVLRQIRUXV
DQGZHDUHDZDUHRIQRQH                                            )RXU RI RXU VLVWHU FLUFXLWV KRZHYHU KDYH IRXQG WKDW QR
                                                                       DGGLWLRQDOSXUSRVHQHHGEHVKRZQXQGHUDWKHVH
   $V WR WKH FRPSUHKHQVLYHQHVV RI WKH LQYHQWRU\ OLVW DQ       FLUFXLWV KDYH KHOG WKDW WKH VWDWXWH FUHDWHV D JHQHUDO LQWHQW
RIILFHUjVXVHRIGLVFUHWLRQLQLPSOHPHQWLQJDJHQF\JXLGHOLQHV          FULPHZLWKUHVSHFWWRZKLFKHYLGHQFHRIGLPLQLVKHGFDSDFLW\
UHJDUGLQJ WKH FRQGXFW RI DQ LQYHQWRU\ VHDUFK GRHV QRW          LVQRWDGPLVVLEOH6HH8QLWHG6WDWHVY5LFNHWWV)G
QHFHVVDULO\YLRODWHWKH)RXUWK$PHQGPHQW6HH)ORULGDY              WK&LU8QLWHG6WDWHVY.OHLQEDUW)G
:HOOV  86    m>,@Q IRUELGGLQJ XQFDQDOL]HG      '&&LU8QLWHG6WDWHVY2DNLH)G
GLVFUHWLRQWRSROLFHRIILFHUVFRQGXFWLQJLQYHQWRU\VHDUFKHV           WK&LUDQG8QLWHG6WDWHVYsLP)G
WKHUHLVQRUHDVRQWRLQVLVWWKDWWKH\EHFRQGXFWHGLQDWRWDOO\       WK&LUFHUWGHQLHG867KUHHRWKHU
PHFKDQLFDOµDOORUQRWKLQJjIDVKLRQl7KH9$jVSROLF\RI           FLUFXLWVoZLWKRXWPXFKDQDO\VLVLWLVIDLUWRVD\oVHHPWR
OLVWLQJRQO\mYDOXDEOHlLWHPVLVQRWLPSHUPLVVLEOHDQGQHLWKHU        KDYH UHDFKHG WKH RSSRVLWH UHVXOW  6HH 8QLWHG 6WDWHV Y
LVDPHDVXUHRIIOH[LELOLW\UHJDUGLQJWKHLPSOHPHQWDWLRQRI            6LPPRQGV)GWK&LUFHUWGHQLHG
WKDWSROLF\7KHSRVWGLVFRYHU\OLVWLQJRILWHPVGLVFRYHUHGLQ        868QLWHG6WDWHVY7D\ORU)G
D VHDUFK PRUHRYHU KDV QR SHUWLQHQW FRQQHFWLRQ WR WKH         WK&LUDQG8QLWHG6WDWHVY&DUXDQD)G
GLVFRYHU\LWVHOI                                                      VW&LU
   0U.LPHVLPSOLHVWKDWWKHGHFLVLRQWRLPSRXQGWKHWUXFN              ,Q VLGLQJ ZLWK WKH FLUFXLWV WKDW KDYH UHDG  D DV
DQGFRQGXFWDQLQYHQWRU\VHDUFKLQWKHFDVHDWEDUZDVVLPSO\          GHILQLQJ D JHQHUDO LQWHQW FULPH ZH DUH JXLGHG ILUVW DQG
D SUHWH[W IRU VDQLWL]LQJ WKH SUHVXPSWLYHO\ LOOHJDO VHDUFK       IRUHPRVWE\WKHIDFWWKDWDFRQWDLQVQRODQJXDJH
FRQGXFWHGHDUOLHU7KHUHFRUGGRHVQRWFRPSHODILQGLQJRI            VXJJHVWLQJWKDWVSHFLILFLQWHQWPXVWEHVKRZQ,WLVSODLQIURP
SUHWH[W DQG WKH GLVWULFW FRXUW PDGH QR VXFK ILQGLQJ  7KH   DQH[DPLQDWLRQRIRWKHUIHGHUDOVWDWXWHVWKDW&RQJUHVVLVIXOO\
)RXUWK $PHQGPHQW SHUPLWV LPSRXQGPHQW GHFLVLRQV DQG                FRJQL]DQW RI WKH JHQHUDO LQWHQWVSHFLILF LQWHQW GLFKRWRP\
LQYHQWRU\VHDUFKHVWKDWDUHREMHFWLYHO\MXVWLILDEOHPRUHRYHU         :KHQLWLQWHQGVWRFUHDWHDVSHFLILFLQWHQWFULPH&RQJUHVV
UHJDUGOHVV RI DQ RIILFHUjV VXEMHFWLYH LQWHQW  6HH :KUHQ Y   H[SOLFLWO\VD\VVR6HHIRUH[DPSOH86&D
8QLWHG 6WDWHV  86     7KH                  ZKLFKSURYLGHVWKDWmDVVDXOWZLWKLQWHQWWRFRPPLWPXUGHUlLQ
LPSRXQGPHQWLQYHQWRU\ GHFLVLRQ LQ WKH FDVH DW EDU ZDV           WKHVSHFLDOPDULWLPHDQGWHUULWRULDOMXULVGLFWLRQRIWKH8QLWHG
REMHFWLYHO\MXVWLILDEOHDQGWKHWULDOFRXUWjVDSSOLFDWLRQRIWKH      6WDWHVLVDFULPHSXQLVKDEOHE\XSWR\HDUVLPSULVRQPHQW
LQHYLWDEOHGLVFRYHU\GRFWULQHZDVHQWLUHO\SURSHU                     (PSKDVLVVXSSOLHG8QGHU86&DVLPLODUO\
                                                                       m>D@VVDXOWZLWKDGDQJHURXVZHDSRQZLWKLQWHQWWRGRERGLO\
    % ([FOXVLRQRI([SHUW7HVWLPRQ\o*HQHUDOYV6SHFLILF            KDUP DQG ZLWKRXW MXVW FDXVH RU H[FXVH   l LV PDGH
       ,QWHQW                                                         SXQLVKDEOH E\ XS WR  \HDUV LPSULVRQPHQW  (PSKDVLV
                                                                       VXSSOLHG
   7KHGLVWULFWFRXUWjVGHFLVLRQQRWWRUHFHLYHWKHWHVWLPRQ\RI
PHGLFDOH[SHUWVZKRZRXOGKDYHVXJJHVWHGWKDWWKHGHIHQGDQW               2XU SUHFHGHQWV JLYH GXH FRQVLGHUDWLRQ WR WKH DELOLW\ RI
ODFNHG FRQWURO RYHU KLV DFWLRQV VWHPPHG LQ SDUW IURP WKH      &RQJUHVVWRGLVWLQJXLVKEHWZHHQJHQHUDOLQWHQWDQGVSHFLILF
FRXUWjVYLHZWKDWWKHFULPHGHILQHGLQ86&D           LQWHQW&RQVLGHU*RQ\HDZKHUHWKHWULDOFRXUWEHOLHYLQJWKDW
LVDJHQHUDOLQWHQWFULPHDVWRZKLFKGLPLQLVKHGFDSDFLW\LV           EDQNUREEHU\LQYLRODWLRQRIWKHILUVWSDUDJUDSKRI86&
QRWDGHIHQVH6HH8QLWHG6WDWHVY*RQ\HD)G              D LV D JHQHUDO LQWHQW FULPH KDG GHFOLQHG WR OHW D
 WK &LU  KROGLQJ WKDW GLPLQLVKHG FDSDFLW\ LV D    GHIHQGDQWFKDUJHGXQGHUWKDWSDUDJUDSKSUHVHQWHYLGHQFHRI
GHIHQVHRQO\WRVSHFLILFLQWHQWFULPHV0U.LPHVFRQWHQGV
       8QLWHG6WDWHVY.LPHV                           1R        1R                           8QLWHG6WDWHVY.LPHV           

EHIDFHGVHSDUDWHO\ZLWKUHVSHFWWRHDFKPDWHULDOHOHPHQWRI                 WKDWHYLGHQFH RIKLVGLPLQLVKHGFDSDFLW\VKRXOGKDYHEHHQ
WKHFULPHl&LWDWLRQVRPLWWHG6HFWLRQDFRQWDLQV                 DGPLWWHGEHFDXVHKLVDVVDXOWRQWKHRIILFHUVZDVQRWDFULPH
IRXU GLVWLQFW HOHPHQWV WKH JRYHUQPHQW PXVW VKRZ WKDW WKH            XQGHUDDEVHQWVSHFLILFLQWHQW
GHIHQGDQW  IRUFLEO\  DVVDXOWHG UHVLVWHG RSSRVHG
LPSHGHGLQWLPLGDWHGRULQWHUIHUHGZLWKDIHGHUDORIILFHU                 ,WLVLPSRUWDQWLQWKLVFRQQHFWLRQWRGLVWLQJXLVKEHWZHHQWZR
LQWKHSHUIRUPDQFHRIKLVGXWLHV)HRODPDNHVFOHDUWKDW                GLIIHUHQWW\SHVRIPHQWDOGHIHFWGHIHQVH7KHILUVWVRPHWLPHV
DWOHDVWDVWRWKHODWWHUWZRHOHPHQWVRQO\JHQHUDOLQWHQWLV               FDOOHGWKHmGLPLQLVKHGUHVSRQVLELOLW\lGHIHQVHDSSOLHVZKHUH
QHHGHG  7KH GHIHQGDQW QHHG KDYH QR VSHFLDO SXUSRVH WR              WKHGHIHQGDQWjVPHQWDOFRQGLWLRQmFRPSOHWHO\DEVROYHVKLPRI
DVVDXOWDIHGHUDORIILFHULQWKHSHUIRUPDQFHRIKLVGXWLHVLWLV            FULPLQDOUHVSRQVLELOLW\UHJDUGOHVVRIZKHWKHURUQRWJXLOWFDQ
HQRXJKWKDWWKHGHIHQGDQWLQWHQGVWRDVVDXOWVRPHRQH)HROD                 EHSURYHQl86Y)D]]LQL)GWK&LUFHUW
PD\OHDYHURRPIRUDUJXPHQWKRZHYHUDVWRZKDWPHQWDO                      GHQLHG867KHVHFRQGRIWHQUHIHUUHGWRDV
VWDWHLVUHTXLUHGLQFRQQHFWLRQZLWKWKHILUVWWZRHOHPHQWV                 WKH mGLPLQLVKHG FDSDFLW\l GHIHQVH DSSOLHV mZKHUH WKH
                                                                             GHIHQGDQWFODLPVRQO\WKDWKLVPHQWDOFRQGLWLRQLVVXFKWKDWKH
   +HUHWKHGHIHQGDQWIRFXVHVRQWKHmIRUFLEO\lHOHPHQWRI                  RUVKHFDQQRWDWWDLQWKHFXOSDEOHVWDWHRIPLQGUHTXLUHGE\WKH
DFRQWHQGLQJWKDWLWVLQFOXVLRQUHTXLUHVDVKRZLQJ                GHILQLWLRQRIWKHFULPHl)D]]LQL)GDW
RImLQWHQW GHOLEHUDWLRQDQGYROXQWDULQHVVl(YHQWRVKRZ
JHQHUDOLQWHQWKRZHYHUmWKH*RYHUQPHQWPXVWSURYHEH\RQG                     ,QZLWKSDVVDJHRIWKH,QVDQLW\'HIHQVH5HIRUP$FW
DUHDVRQDEOHGRXEWWKDWWKHGHIHQGDQWNQRZLQJO\FRQVFLRXVO\                 86&   &RQJUHVV LPSOLHGO\ SODFHG VLJQLILFDQW
DQG YROXQWDULO\ FRPPLWWHG DQ DFW ZKLFK WKH ODZ PDNHV D              UHVWULFWLRQVRQWKHXVHRIPHQWDOGHIHFWHYLGHQFH 7KHVWDWXWH
FULPHl.OHLQEDUW)GDWHPSKDVLVDGGHG:KDW                   PDNHVLQVDQLW\DGHIHQVHEXWUHTXLUHVWKHGHIHQGDQWWRVDWLVI\
VHWVJHQHUDOLQWHQWDSDUWIURPVSHFLILFLQWHQWLVWKDWmJHQHUDO             WKH0j1DJKWHQVWDQGDUGoLHWKHGHIHQGDQWPXVWVKRZE\
LQWHQW PD\ EH LQIHUUHG IURP WKH GRLQJ RI WKH DFWl  ,G  ,Q     FOHDU DQG FRQYLQFLQJ HYLGHQFH WKDW KH ZDV mXQDEOH WR
FRQWUDVWVSHFLILFLQWHQWUHTXLUHVDVKRZLQJRImEDGSXUSRVHl               DSSUHFLDWHWKHQDWXUHDQGTXDOLW\RUWKHZURQJIXOQHVVRIKLV
,GDWQ6HHDOVR*RQ\HD)GDWKROGLQJ                 DFWVl6HFWLRQIXUWKHUSURYLGHVWKDWm>P@HQWDOGLVHDVHRU
WKDWWRYLRODWHDVSHFLILFLQWHQWVWDWXWHWKHGHIHQGDQWPXVWDFW            GHIHFWGRHVQRWRWKHUZLVHFRQVWLWXWHDGHIHQVHl
mZLWKWKHSXUSRVHRIYLRODWLQJWKHODZl
                                                                               /LNHRWKHUFRXUWVoVHH8QLWHG6WDWHVY7ZLQH)G
  7KHTXHVWLRQZLWKZKLFKZHDUHOHIWLVWKLVIRUDYLRODWLRQ              WK&LUDQG8QLWHG6WDWHVY3RKORW
RIDWRRFFXULVLWVXIILFLHQWIRUDGHIHQGDQWWRDFW            )G   G &LU FHUW GHQLHG  86 
UHJDUGOHVVRIWKHUHDVRQIRUWKHDFWLRQLQVXFKDZD\DVWR
DVVDXOWUHVLVWRSSRVHLPSHGHLQWLPLGDWHRULQWHUIHUHZLWKD
IHGHUDORIILFHULQWKHSHUIRUPDQFHRIKLVGXWLHVRULVLWDOVR                 
                                                                                   86&   SURYLGHV
QHFHVVDU\IRUWKHGHIHQGDQWWRKDYHDVSHFLILFmEDGlSXUSRVH"
                                                                             mD $IILUPDWLYH GHIHQVH o ,W LV DQ DIILUPDWLYH GHIHQVH WR D SURVHFXWLRQ
                                                                             XQGHU DQ\ )HGHUDO VWDWXWH WKDW DW WKH WLPH RI WKH FRPPLVVLRQ RI WKH DFWV
                                                                             FRQVWLWXWLQJ WKH RIIHQVH WKH GHIHQGDQW DV D UHVXOW RI D VHYHUH PHQWDO
                                                                             GLVHDVH RU GHIHFW ZDV XQDEOH WR DSSUHFLDWH WKH QDWXUH DQG TXDOLW\ RU WKH
                                                                             ZURQJIXOQHVV RI KLV DFWV 0HQWDO GLVHDVH RU GHIHFW GRHV QRW RWKHUZLVH
     
      7KH WHUP mIRUFLEO\l KDV EHHQ GHILQHG WR PHDQ PDNLQJ mVXFK D WKUHDW     FRQVWLWXWH D GHIHQVH
RU GLVSOD\ RI SK\VLFDO DJJUHVVLRQ    DV WR LQVSLUH IHDU RI SDLQ ERGLO\
KDUP RU GHDWKl 6HH 8QLWHG 6WDWHV Y :DONHU  )G   G          E %XUGHQ RI SURRI o 7KH GHIHQGDQW KDV WKH EXUGHQ RI SURYLQJ WKH
&LU                                                                   GHIHQVH RI LQVDQLW\ E\ FOHDU DQG FRQYLQFLQJ HYLGHQFHl
    8QLWHG6WDWHVY.LPHV                        1R       1R                               8QLWHG6WDWHVY.LPHV            

 o  ZH KDYH FRQWLQXHG WR SHUPLW WKH LQWURGXFWLRQ RI   WKDW WKH ODZ SURVFULEHVjl   )G DW   &LWDWLRQV
HYLGHQFHRIGLPLQLVKHGFDSDFLW\IRUWKHSXUSRVHRIQHJDWLQJ           RPLWWHG,QRWKHUZRUGVmDJHQHUDOLQWHQWFULPHUHTXLUHVWKH
WKHPHQVUHDHOHPHQWRIFHUWDLQFULPHV6HH8QLWHG6WDWHVY         NQRZLQJFRPPLVVLRQRIDQDFWWKDWWKHODZPDNHVDFULPH$
1HZPDQ)GWK&LUFHUWGHQLHG             VSHFLILF LQWHQW FULPH UHTXLUHV DGGLWLRQDO µEDG SXUSRVHjl
86,QVRGRLQJKRZHYHUZHKDYHDGKHUHGWR            8QLWHG6WDWHVY.OHLQEDUW)G'&&LU
WKHYLHZWKDWmGLPLQLVKHGFDSDFLW\PD\EHXVHGRQO\WRQHJDWH         QFLWDWLRQVRPLWWHG
WKHPHQVUHDRIDVSHFLILFLQWHQWFULPHl*RQ\HD)GDW
HPSKDVLVDGGHG                                                   6HFWLRQDSURYLGHVDVIROORZVm:KRHYHUIRUFLEO\
                                                                      DVVDXOWVUHVLVWVRSSRVHVLPSHGHVLQWLPLGDWHVRULQWHUIHUHV
    +HUHWKHGHIHQGDQWSURIIHUHGH[SHUWSV\FKLDWULFWHVWLPRQ\         ZLWKDQ\>IHGHUDORIILFHURUDJHQF\HPSOR\HH@ZKLOHHQJDJHG
WHQGLQJ WR VKRZ WKDW KLV SV\FKRORJLFDO SUREOHPV OHIW KLP      LQRURQDFFRXQWRIWKHSHUIRUPDQFHRIRIILFLDOGXWLHVVKDOO
XQDEOH WR FRQWURO KLV DFWLRQV GXULQJ WKH DOWHUFDWLRQ ZLWK     EHILQHGXQGHUWKLVWLWOHRULPSULVRQHGl7KHUHZDVD
2IILFHUV 'RXJKHUW\ DQG (QVRU  2Q LWV IDFH WKH SURIIHUHG    WLPHZKHQWKLVODQJXDJHZRXOGKDYHOHIWQRSRVVLEOHURRPIRU
WHVWLPRQ\ PLJKW KDYH VHHPHG GHVLJQHG WR HVWDEOLVK WKH          GRXEWWKDWRQO\JHQHUDOLQWHQWZDVUHTXLUHG6HH8QLWHG6WDWHV
IRXQGDWLRQIRUDQLQVDQLW\GHIHQVH7KHGHIHQGDQWFKRVHQRW          Y)HROD86ZKHUHWKH6XSUHPH&RXUW
WRSXUVXHDQLQVDQLW\GHIHQVHKRZHYHURIIHULQJWKHWHVWLPRQ\        GHFODUHGWKDW
RQO\ WR mQHJDWH WKH PHQWDO VWDWHV UHTXLUHG IRU WKH RIIHQVH
l                                                              mLQ RUGHU WR HIIHFWXDWH WKH FRQJUHVVLRQDO SXUSRVH RI
                                                                        DFFRUGLQJ PD[LPXP SURWHFWLRQ WR IHGHUDO RIILFHUV E\
  7KH GLIIHUHQFH LV PRUH WKDQ VHPDQWLF  +DG 0U .LPHV         PDNLQJSURVHFXWLRQIRUDVVDXOWVXSRQWKHPFRJQL]DEOHLQ
HOHFWHGWRSXUVXHDQLQVDQLW\GHIHQVH86&ZRXOG             WKH IHGHUDO FRXUWV   FDQQRW EH FRQVWUXHG DV
KDYH DVVLJQHG KLP WKH EXUGHQ RI SURYLQJ E\ FOHDU DQG           HPERG\LQJDQXQH[SUHVVHGUHTXLUHPHQWWKDWDQDVVDLODQW
FRQYLQFLQJHYLGHQFHWKDWKHZDVLQIDFWLQVDQHDWWKHWLPHRI           EHDZDUHWKDWKLVYLFWLPLVDIHGHUDORIILFHU$OOWKDWWKH
WKH DOWHUFDWLRQ  8QGHU D WKHRU\ RI GLPLQLVKHG FDSDFLW\        VWDWXWHUHTXLUHVLVDQLQWHQWWRDVVDXOW QRWDQLQWHQWWR
KRZHYHUWKHWHVWLPRQ\LIDGPLVVLEOHQHHGRQO\KDYHFDVWD            DVVDXOWDIHGHUDORIILFHUl,G
UHDVRQDEOHGRXEWRQWKHJRYHUQPHQWjVSURRIWKDW0U.LPHV
KDGWKHQHFHVVDU\PHQVUHD                                           ,Q 8QLWHG 6WDWHV Y %DLOH\  86   
                                                                      KRZHYHUWKH6XSUHPH&RXUWKHOGWKDWLQGHWHUPLQLQJZKHWKHU
  $VZHKDYHVDLGHYLGHQFHRIGLPLQLVKHGFDSDFLW\PD\EH             DQRIIHQVHLVDJHQHUDOLQWHQWFULPHRUDVSHFLILFLQWHQWFULPH
XVHGWRQHJDWHWKHPHQVUHDRIVSHFLILFLQWHQWFULPHVRQO\           mFOHDU DQDO\VLV UHTXLUHV WKDW WKH TXHVWLRQ RI WKH NLQG RI
0U .LPHVj SURIIHUHG WHVWLPRQ\ ZDV RQO\ DGPLVVLEOH             FXOSDELOLW\UHTXLUHGWRHVWDEOLVKWKHFRPPLVVLRQRIDQRIIHQVH
WKHUHIRUHLIDUHTXLUHVDVKRZLQJRIVSHFLILFLQWHQW
7KHGLVWULFWFRXUWKHOGWKDWLWGRHVQRW
                                                                          
                                                                            6HH DOVR 8QLWHG 6WDWHV Y %RRQH  )G  WK &LU  D
  7KH GLIIHUHQFH EHWZHHQ D VSHFLILF LQWHQW FULPH DQG D        GHFLVLRQ DIILUPLQJ WKH FRQYLFWLRQ RI D PDQ DFFXVHG RI YLRODWLQJ  86&
JHQHUDO LQWHQW FULPH ZDV VSHOOHG RXW LQ *RQ\HD ZKHUH ZH       E\ NQRFNLQJ GRZQ D MXGJH RI WKLV FRXUW DQG VQDWFKLQJ KHU SXUVH DV
H[SODLQHGWKDWmDVSHFLILFLQWHQWFULPHLVRQHWKDWUHTXLUHVD        VKH ZDV ZDONLQJ WR WKH FRXUWKRXVH RQ D 6XQGD\ HYHQLQJ WR FRPSOHWH KHU

GHIHQGDQWWRGRPRUHWKDQNQRZLQJO\DFWLQYLRODWLRQRIWKH           SUHSDUDWLRQV IRU 0RQGD\jV RUDO DUJXPHQWV           0U %RRQH ZDV REYLRXVO\

ODZ  7KH GHIHQGDQW PXVW DOVR DFW ZLWK WKH SXUSRVH RI       XQDZDUH WKDW KLV YLFWLP ZDV D IHGHUDO MXGJH VR KH FRXOG KDYH KDG QR

YLRODWLQJWKHODZ7KHYLRODWLRQRIDJHQHUDOLQWHQWVWDWXWHE\
                                                                      VSHFLILF LQWHQW WR DVVDXOW   D MXGLFLDO RIILFHU o   EXW DV WKH FRXUW LPSOLFLWO\
                                                                      KHOG D VKRZLQJ RI VSHFLILF LQWHQW ZDV QRW UHTXLUHG          %RRQHjV JHQHUDO
FRQWUDVWUHTXLUHVRQO\WKDWDGHIHQGDQWµLQWHQGWRGRWKHDFW        LQWHQW WR FRPPLW DQ DVVDXOW ZDV VXIILFLHQW