Court Opinion

ID: 2969784
Source: CourtListenerOpinion
Date Created: 2015-09-22 15:57:07.93977+00
Date Added: 2024-06-11T11:40:38.057605
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

s$0(6 : 3(5.,16                  ;
         3ODLQWLII$SSHOODQW       
                                    
                                      1R
s8',7+ /<11 3(5.,16                
                      3ODLQWLII !
                                    
                                    
            Y                      
                                    
$0(5,&$1 (/(&75,& 32:(5             
)8(/ 6833/< ,1& ,1',$1$          
                                    
0,&+,*$1 32:(5 &203$1< 
,1& 5,9(5 75$163257$7,21 
',9,6,21                           
         'HIHQGDQWV$SSHOOHHV 
                                    
                                    
                                   1
       $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
      IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW&LQFLQQDWL
  1Rn6DQGUD6%HFNZLWK'LVWULFWsXGJH
             $UJXHG1RYHPEHU
           'HFLGHGDQG)LOHG$SULO
 %HIRUH1(/6216,/(5DQG&/$<&LUFXLWsXGJHV

                           
       3HUNLQVHWDOY$P                      1R
        (OHFWULF3RZHUHWDO

                      BBBBBBBBBBBBBBBBB
                          &2816(/
$5*8('sDPHV%+HOPHUsU+(/0(50$57,16	
025*$1 &LQFLQQDWL 2KLR IRU $SSHOODQW  7RGG 0
3RZHUV 6&+52('(5 0$81'5(// %$5%,(5( 	
32:(56 &LQFLQQDWL 2KLR IRU $SSHOOHH  21 %5,()
sDPHV%+HOPHUsU+(/0(50$57,16	025*$1
&LQFLQQDWL2KLR0HUHGLWK/\QQ/DZUHQFH/$:5(1&(	
6&+/(7.(5:DUVDZ.HQWXFN\IRU$SSHOODQW7RGG0
3RZHUV 6&+52('(5 0$81'5(// %$5%,(5( 	
32:(56&LQFLQQDWL2KLRIRU$SSHOOHH
  &/$< s GHOLYHUHG WKH RSLQLRQ RI WKH FRXUW LQ ZKLFK
1(/621sMRLQHG6,/(5sSGHOLYHUHGDVHSDUDWH
FRQFXUULQJRSLQLRQ
                      BBBBBBBBBBBBBBBBB
                          23,1,21
                      BBBBBBBBBBBBBBBBB
   &/$< &LUFXLW sXGJH  3ODLQWLII sDPHV 3HUNLQV DSSHDOV
IURPWKHGLVWULFWFRXUWjVRUGHUHQWHULQJMXGJPHQWLQIDYRURI
'HIHQGDQWV $PHULFDQ (OHFWULF 3RZHU )XHO 6XSSO\ ,QF
m$(3lDQG,QGLDQD0LFKLJDQ3RZHU&RPSDQ\,QF5LYHU
7UDQVSRUWDWLRQ 'LYLVLRQ DIWHU D EHQFK WULDO RQ 3ODLQWLIIjV
FODLPVIRUQHJOLJHQFHXQGHUWKHsRQHV$FW86&
DQGXQVHDZRUWKLQHVVXQGHUJHQHUDOPDULWLPHODZ3ODLQWLII
DOVRDSSHDOVWKHGLVWULFWFRXUWjVRUGHUGHQ\LQJ3ODLQWLIIjVSUH
WULDOPRWLRQWRFRQWLQXHWKHWULDOGDWHH[WHQGGLVFRYHU\DQG
DPHQG KLV FRPSODLQW  )RU WKH UHDVRQV WKDW IROORZ ZH
5(9(56(LQSDUWDQG$)),50LQSDUWWKHGLVWULFWFRXUWjV
RUGHU HQWHULQJ MXGJPHQW DJDLQVW 3ODLQWLII DQG 5(0$1'

    
    'HIHQGDQW $(3 RZQV DQG RSHUDWHV 'HIHQGDQW ,QGLDQD 0LFKLJDQ
3RZHU &RPSDQ\ ,QF
    3HUNLQVHWDOY$P                           1R       1R                           3HUNLQVHWDOY$P        
      (OHFWULF3RZHUHWDO                                                                                   (OHFWULF3RZHUHWDO

                    BBBBBBBBBBBBBBBBBBBB                                 KRZHYHU ZH $)),50 WKH GLVWULFW FRXUWjV RUGHU GHQ\LQJ
                                                                         3ODLQWLIIjVSUHWULDOPRWLRQ
                      &21&855(1&(
                    BBBBBBBBBBBBBBBBBBBB                                                         %$&.*5281'

   6,/(5&LUFXLWsXGJHFRQFXUULQJ,FRQFXULQPRVWRIWKH               3ODLQWLIIZRUNHGIRU'HIHQGDQW$(3IURPXQWLOWKH
FRQFOXVLRQVUHDFKHGE\WKHPDMRULW\LQWKLVFDVH+RZHYHU,            GDWHRIKLVDFFLGHQW3ODLQWLIIZRUNHGDVDGHFNKDQGIURP
GLVDJUHH ZLWK WKH FRQFOXVLRQ WKDW WKH GLVWULFW FRXUW FOHDUO\     WRRQFRPPHUFLDOULYHUYHVVHOV,QKHZDV
HUUHGLQGHQ\LQJUHFRYHU\XQGHUWKHsRQHV$FW$OWKRXJKWKH            SURPRWHGWRVHFRQGPDWHWKHSRVLWLRQKHKHOGXQWLOKLVLQMXU\
PDMRULW\PDNHVRXWDJRRGFDVHIRUFRQFOXGLQJWKDWGHIHQGDQW             ZKLFKLVWKHVXEMHFWRIWKLVOLWLJDWLRQ'HIHQGDQW$(3LVD
ZDV QHJOLJHQW LQ IDLOLQJ WR SURYLGH DGHTXDWH VDIHW\               ULYHUWUDQVSRUWDWLRQFRPSDQ\WUDQVSRUWLQJEXONFRPPRGLWLHV
SUHFDXWLRQVWKLVLVDILQGLQJRIIDFW7KHUHZDVDEDVLVIRUWKH       SULPDULO\ FRDO RQ WKH 2KLR 5LYHU DQG LWV WULEXWDULHV
GLVWULFWFRXUWWRILQGWKDWWKHVKLSRZQHUZDVQRWQHJOLJHQWE\          'HIHQGDQWV ZHUH WKH RSHUDWRUV RI WKH 09 &s %U\DQ DQG
IDLOLQJWRKDYHVDIHW\URSHVRUKDQGUDLOVm:KHUHWKHUHDUH             EDUJH$(3
WZRSHUPLVVLEOHYLHZVRIWKHHYLGHQFHWKHIDFWILQGHUjVFKRLFH
EHWZHHQ WKHP FDQQRW EH  FOHDUO\ HUURQHRXVl  $QGHUVRQ Y           3ODLQWLIIjVGXWLHVDVVHFRQGPDWHLQFOXGHGVHHLQJWKDWZLUHV
&LW\RI%HVVHPHU&LW\866LPLODUO\             UDWFKHWV DQG ULJJLQJ ZHUH SURSHUO\ SODFHG RQ WKH WRZ LQ
, ZRXOG QRW ILQG WKDW WKH YHVVHO DQG WKH EDUJH ZHUH            DFFRUGDQFHZLWKWKHFDSWDLQjVRUGHUVDQGLQVSHFWHGSULRUWR
XQVHDZRUWK\EHFDXVHWKHUHZDVQRWDGHTXDWHVDIHW\HTXLSPHQW              XVH3ODLQWLIIZDVLQMXUHGRQ'HFHPEHUZKHQKH
DV WKH IDLOXUH WR KDYH FHUWDLQ VDIHW\ HTXLSPHQW ZDV DOVR D     IHOOIURPEDUJH$(3WRWKHGHFNRIWKH09&s%U\DQ
ILQGLQJRIIDFWZKLFK,WKLQNZDVQRWFOHDUO\HUURQHRXV                DGLVWDQFHRIDERXWHLJKWRUQLQHIHHW:KHQ3ODLQWLIIIHOOKH
                                                                         ZDVDWWHPSWLQJWRmOD\lDmURFNDQGUROOlRUmMRFNH\lZLUH
  1HYHUWKHOHVV,DJUHHZLWKWKHPDMRULW\LQLWVFRQFOXVLRQWKDW         IURP DQ RXWVLGH EDUJH WR WKH 09 &s %U\DQ  $OWKRXJK
WKHYHVVHODQGEDUJHZHUHXQVHDZRUWK\EHFDXVHWKHUDWFKHW                3ODLQWLIIKDGODLGGR]HQVRIZLUHVRQLQVLGHEDUJHVEHIRUHKH
ZDV QRW UHDVRQDEO\ ILW IRU LWV LQWHQGHG XVH  7UXO\ OLNH      KDG QHYHU SHUIRUPHG WKLV VSHFLILF WDVN  3ODLQWLII ZDV
QHJOLJHQFHVHDZRUWKLQHVVLVXVXDOO\DILQGLQJRIIDFW6HH             DWWHPSWLQJWROD\WKHZLUHE\WLJKWHQLQJLWXVLQJDVWDWLRQDU\
0DKQLFKY6RXWKHUQ66&R86               UDFKHWORFDWHGRQWKHSRUWVWHUQRIEDUJH$(3FUDQNLQJ
+RZHYHUWKHPDOIXQFWLRQRIWKHUDWFKHWVKRZVWKDWLWZDVQRW            WKH UDWFKHW RXWERDUG ZLWK D FKHDWHU SLSH VOLSSHG RYHU WKH
UHDVRQDEO\ ILW IRU LWV LQWHQGHG XVH VR WKH YHVVHO ZDV QRW     UDWFKHWKDQGOHIRUDGGHGOHYHUDJH3ODLQWLIIKDGJRWWHQWKH
VHDZRUWK\6HH+XEEDUGY)DURV)LVKHULHV,QF)G              ZLUHVXEVWDQWLDOO\WLJKWZKHQWKHmGRJlRIWKHUDWFKHWIDLOHG
VW&LU7KHUHIRUHWKHPDOIXQFWLRQRIWKH            WRFDWFKSURSHUO\FDXVLQJWKHWHQVLRQRQWKHFKHDWHUSLSHWR
UDFKHW ZDV D VXEVWDQWLDO DQG GLUHFW FDXVH RI WKH LQMXULHV WR   JLYH ZD\  7KHQ 3ODLQWLII ZDV SURSHOOHG IRUZDUG ORVW KLV
3HUNLQV                                                                 EDODQFHDQGIHOORYHUWKHHGJHRIWKHEDUJHRQWRWKHGHFNRI
                                                                         WKH 09 &s %U\DQ  7KH HYLGHQFH DW WULDO UHYHDOHG WKDW
  ,QFRQFOXVLRQ,ZRXOGDOVRUHYHUVHDQGUHPDQGEXWRQO\RQ
DQDUURZHUEDVLVWKDQGHWHUPLQHGE\WKHPDMRULW\
                                                                             
                                                                               7KH mGRJl LV WKH EUDNHOLNH FRPSRQHQW RI WKH UDWFKHW GHVLJQHG WR
                                                                         HQJDJH WKH WHHWK RI RQH RI WKH JHDUV WR SUHYHQW WKH JHDU IURP WXUQLQJ
                                                                         s$ DW  
       3HUNLQVHWDOY$P                        1R       1R                          3HUNLQVHWDOY$P      
        (OHFWULF3RZHUHWDO                                                                               (OHFWULF3RZHUHWDO

3ODLQWLIIZDVVWUDGGOLQJWKHUDWFKHWZKLOHDWWHPSWLQJWROD\WKH        FODLPV WKDW 3ODLQWLII ZDV LQDGHTXDWHO\ WUDLQHG RU WKDW WKH
ZLUH                                                                  UDWFKHW KH ZRUNHG ZLWK ZDV GHIHFWLYH QRU FDQ 3ODLQWLII
                                                                        UHFRYHU XQGHU WKH XQVHDZRUWKLQHVV GRFWULQH EDVHG RQ KLV
   3ODLQWLIIVXVWDLQHGH[WHQVLYHLQMXULHVIURPWKHIDOOLQFOXGLQJ       LQDGHTXDWHWUDLQLQJWKHRU\+RZHYHUZHFRQFOXGHWKDWWKH
SHUPDQHQWGLVDEOLQJLQMXULHV3ODLQWLIIVXIIHUVIURPFKURQLF           GLVWULFW FRXUW HUUHG LQ GHQ\LQJ 3ODLQWLII UHFRYHU\ XQGHU WKH
SDLQ DQG SHUPDQHQW SK\VLFDO OLPLWDWLRQV  +H KDV KDG ILYH      sRQHV $FW VLQFH 3ODLQWLII SURYHG WKDW 'HIHQGDQWV ZHUH
VXUJHULHVKLVULJKWNQHHLVSHUPDQHQWO\IXVHGKLVULJKWOHJ           QHJOLJHQWLQIDLOLQJWRSURYLGHDGHTXDWHVDIHW\SUHFDXWLRQVWR
VWDQGVDKDOILQFKRIIWKHJURXQGDQGKLVOHIWDQNOHLVILWWHG         SUHYHQW3ODLQWLIIjVLQMXULHVDQGWKDW'HIHQGDQWVjQHJOLJHQFH
ZLWKDVWHHOSODWHDQGPD\UHTXLUHIXVLRQRUHYHQDPSXWDWLRQ           ZDVDFDXVHRI3ODLQWLIIjVLQMXULHV/LNHZLVHWKHGLVWULFWFRXUW
                                                                        HUUHGLQGHQ\LQJ3ODLQWLIIUHFRYHU\XQGHUWKHXQVHDZRUWKLQHVV
  3ODLQWLII DQG KLV ZLIH sXGLWK 3HUNLQV ILOHG VXLW DJDLQVW    GRFWULQHLQDVPXFKDVWKHUHFRUGLQGLFDWHVWKDW3ODLQWLIISURYHG
'HIHQGDQWV IRU KLV LQMXULHV RQ sDQXDU\    7KH          WKDW'HIHQGDQWVIDLOHGWRSURYLGHYHVVHOHTXLSPHQWLQWKLV
FRPSODLQWDOOHJHGWKDW'HIHQGDQWVZHUHOLDEOHIRUQHJOLJHQFH            FDVHDUDWFKHWUHDVRQDEO\ILWIRULWVLQWHQGHGSXUSRVHDQGWDNH
XQGHUWKHsRQHV$FWDQGIRUWKHXQVHDZRUWKLQHVVRIWKH09              DGHTXDWHVDIHW\SUHFDXWLRQVIRU3ODLQWLIIjVVDIHW\7KHIDLOXUH
&s%U\DQDQGRUWKH$(3EDUJHXQGHUJHQHUDODGPLUDOW\             RIWKHUDWFKHWDQGWKHLQDGHTXDWHVDIHW\SUHFDXWLRQVZHUHD
ODZEHFDXVHWKHUDWFKHW3ODLQWLIIXVHGZDVGHIHFWLYHDQGZDV            SUR[LPDWH RU GLUHFW DQG VXEVWDQWLDO FDXVH RI 3ODLQWLIIjV
WKH FDXVH RI KLV LQMXULHV DQG 'HIHQGDQWV IDLOHG WR WDNH      LQMXULHVWKHUHE\PDNLQJ'HIHQGDQWVVWULFWO\OLDEOHXQGHUWKH
DGHTXDWHVDIHW\SUHFDXWLRQVDQGSURYLGHWUDLQLQJIRU3ODLQWLII         XQVHDZRUWKLQHVVGRFWULQHIRU3ODLQWLIIjVLQMXULHV
  3ULRUWRWULDORQsXO\3ODLQWLIIILOHGDPRWLRQWR             :HIXUWKHUFRQFOXGHWKDW3ODLQWLIIIDLOHGWRHVWDEOLVKWKDWWKH
FRQWLQXHWKHWULDODPHQGKLVFRPSODLQWDQGH[WHQGGLVFRYHU\          GLVWULFWFRXUWDEXVHGLWVGLVFUHWLRQLQGHQ\LQJKLVPRWLRQWR
7KHGLVWULFWFRXUWGHQLHGWKHPRWLRQRQ$XJXVWDQG            DPHQGKLVFRPSODLQWWRH[WHQGGLVFRYHU\DQGFRQWLQXHWKH
WKHPDWWHUZHQWWRWULDORQ6HSWHPEHU                       WULDOGDWH
   $IWHUDWKUHHGD\EHQFKWULDOWKHGLVWULFWFRXUWIRXQGWKDW           $FFRUGLQJO\ZH5(9(56(LQSDUWDQG$)),50LQSDUW
'HIHQGDQWVZHUHQRWQHJOLJHQWDQGWKDWWKH09&s%U\DQ               WKH GLVWULFW FRXUWjV MXGJPHQW HQWHUHG DJDLQVW 3ODLQWLII DQG
DQG$(3EDUJHZHUHVHDZRUWK\0RUHRYHUDOWKRXJKQRW               5(0$1'IRUDKHDULQJRQWKHLVVXHRIGDPDJHVWRWKHH[WHQW
QHFHVVDU\WRLWVGHFLVLRQWKHGLVWULFWFRXUWFRQFOXGHGZLWKRXW        QHFHVVDU\ZHDOVR$)),50WKHGLVWULFWFRXUWjVRUGHUGHQ\LQJ
H[SODQDWLRQ WKDW 3ODLQWLII ZDV QHJOLJHQW LQ VWUDGGOLQJ WKH      3ODLQWLIIjVPRWLRQWRDPHQGKLVFRPSODLQWH[WHQGGLVFRYHU\
UDWFKHWLQYLRODWLRQRI$(3SROLF\DQGWKDWKLVQHJOLJHQFHZDV          DQGFRQWLQXHWKHWULDO
OLNHO\WKHVROHSUR[LPDWHFDXVHRIKLVLQMXULHV7KLVDSSHDO
IROORZHG

    
     3ODLQWLII DOOHJHG DQ DGGLWLRQDO FODLP XQGHU WKH $PHULFDQV ZLWK
'LVDELOLWLHV $FW $'$ DQG KLV ZLIH DOOHJHG D FODLP IRU ORVV RI
FRQVRUWLXP 7KH GLVWULFW FRXUW JUDQWHG VXPPDU\ MXGJPHQW WR 'HIHQGDQWV
RQ WKH ORVV RI FRQVRUWLXP FODLP RQ $XJXVW   DQG GLVPLVVHG WKH
$'$ FODLP DIWHU 3ODLQWLII IDLOHG WR DQVZHU D VKRZ FDXVH RUGHU 7KHVH
FODLPV DUH QRW EHIRUH WKH &RXUW LQ WKLV DSSHDO
    3HUNLQVHWDOY$P                            1R        1R                             3HUNLQVHWDOY$P         
      (OHFWULF3RZHUHWDO                                                                                       (OHFWULF3RZHUHWDO

UHTXLUHV6HH)HG5&LY3D,QGHFLGLQJZKHWKHUWR                                          $1$/<6,6
DOORZDQDPHQGPHQWWKHFRXUWVKRXOGFRQVLGHUWKHGHOD\LQ
ILOLQJWKHODFNRIQRWLFHWRWKHRSSRVLQJSDUW\EDGIDLWKE\                                                ,
WKH PRYLQJ SDUW\ UHSHDWHG IDLOXUH WR FXUH GHILFLHQFLHV E\
SUHYLRXVDPHQGPHQWVXQGXHSUHMXGLFHWRWKHRSSRVLQJSDUW\                   :HUHYLHZWKHGLVWULFWFRXUWjVOHJDOFRQFOXVLRQVGHQRYR
DQGIXWLOLW\RIDPHQGPHQW6HH*HQ(OHF&R)GDW                6HH6FKUR\HUY)UDQNHO)GWK&LU
+HUHWKHUHLVHYLGHQFHRIGHOD\EXW'HIHQGDQWVKDYH               7KHIDFWXDOILQGLQJVRIWKHGLVWULFWFRXUWIROORZLQJDEHQFK
QRWDOOHJHGWKDWWKH\KDYHEHHQSUHMXGLFHGE\DQ\SURSRVHG                 WULDODUHUHYLHZHGIRUFOHDUHUURU6HHLG,QRXUUHYLHZRIWKH
DPHQGPHQW1HYHUWKHOHVVZHQRWHWKDWWKHFRXUWRQO\IRXU                 GLVWULFWFRXUWjVIDFWXDOILQGLQJVWKLV&RXUWJLYHVGXHUHJDUG
PRQWKV HDUOLHU JDYH 3ODLQWLII DQ RSSRUWXQLW\ WR FXUH                WRWKHGLVWULFWFRXUWjVRSSRUWXQLW\WRMXGJHWKHFUHGLELOLW\RI
GHILFLHQFLHVLQKLVFRPSODLQWDQG3ODLQWLIIGHFOLQHGWRGRVR             WKHZLWQHVVHV6HH$GDPV&RXQW\5HJjO:DWHU'LVWY9LOORI
+DYLQJIRXQGWKDW3ODLQWLIIKDGQRWVKRZQMXVWLILFDWLRQIRUDQ             0DQFKHVWHU 2KLR  )G   WK &LU   $
DPHQGPHQW WR DGG QHZ FODLPV RU QHZ SDUWLHV WR KLV                 ILQGLQJRIIDFWLVFOHDUO\HUURQHRXVmµZKHQDOWKRXJKWKHUHLV
FRPSODLQW WKH GLVWULFW FRXUW GLG QRW DEXVH LWV GLVFUHWLRQ LQ     HYLGHQFH WR VXSSRUW LW WKH UHYLHZLQJ FRXUW RQ WKH HQWLUH
GHQ\LQJWKHPRWLRQWRDPHQG                                               HYLGHQFHLVOHIWZLWKWKHGHILQLWHDQGILUPFRQYLFWLRQWKDWD
                                                                           PLVWDNHKDVEHHQFRPPLWWHGjl,GTXRWLQJ8QLWHG6WDWHVY
   ,QDGGLWLRQWKHGLVWULFWFRXUWGLGQRWDEXVHLWVGLVFUHWLRQLQ         8QLWHG6WDWHV*\SVXP&R86
GHQ\LQJ 3ODLQWLIIjV PRWLRQ WR FRQWLQXH WKH WULDO DQG H[WHQG
GLVFRYHU\$VWRGLVFRYHU\WKHFRXUWQRWHGWKDW3ODLQWLIIKDG              7KLVDFWLRQDULVHVXQGHUWKHsRQHV$FW86&
QRW VKRZQ ZKDW LQIRUPDWLRQ RU GLVFRYHU\ ZDV QHHGHG DQG             DQGJHQHUDODGPLUDOW\ODZ3ODLQWLII'HIHQGDQWVjHPSOR\HH
KRZ LW ZRXOG EH UHOHYDQW RU EHQHILFLDO WR 3ODLQWLIIjV FDVH       DQGDVHDPDQFODLPVWKDW'HIHQGDQWVZHUHQHJOLJHQWDQG
0RUHRYHUWKHGLVFRYHU\SHULRGLQWKLVFDVHKDGDOUHDG\ODVWHG             'HIHQGDQWVjYHVVHOVWKH09&s%U\DQDQG$(3ZHUH
RYHUD\HDU$QG3ODLQWLIIZDLWHGXQWLOOHVVWKDQWKUHHPRQWKV            XQVHDZRUWK\ EHFDXVH WKH HTXLSPHQW DSSXUWHQDQW WKHUHWR
SULRU WR WKH VWDUW RI WULDO WR ILOH KLV PRWLRQ  8QGHU WKHVH   QDPHO\WKHUDWFKHWPDOIXQFWLRQHGXQGHUSURSHUDQGLQWHQGHG
FLUFXPVWDQFHVWKHGLVWULFWFRXUWGLGQRWDEXVHLWVGLVFUHWLRQLQ          XVH DQG 'HIHQGDQWV IDLOHG WR SURYLGH DGHTXDWH VDIHW\
GHQ\LQJIXUWKHUGLVFRYHU\6HHHJ/HZLVY$&%%XV6HUY             PHDVXUHVDQGWUDLQLQJIRU3ODLQWLII
,QF)GWK&LU$VWR3ODLQWLIIjV
PRWLRQWRFRQWLQXHWKHWULDO3ODLQWLIIKDVIDLOHGWRVKRZWKDW               3ODLQWLIIFRQWHQGVRQDSSHDOWKDWWKHGLVWULFWFRXUWHUUHGLQ
KH ZDV DFWXDOO\ SUHMXGLFHG E\ GLVWULFW FRXUWjV GHQLDO RI KLV      LWVIDFWXDOILQGLQJVDQGDSSOLFDWLRQRIWKHODZ6SHFLILFDOO\
PRWLRQWKDWDGGLWLRQDOWLPHZRXOGKDYHSURGXFHGDGGLWLRQDO                3ODLQWLIIFODLPVWKDWWKHGLVWULFWFRXUWHUUHGLQILQGLQJWKDWWKH
ZLWQHVVHV RU HYLGHQFH IRU 3ODLQWLIIjV FDVH DEVHQW VXFK D          UDWFKHWZDVQRWGHIHFWLYHWKDW3ODLQWLIIKDGUHFHLYHGDGHTXDWH
VKRZLQJ3ODLQWLIIFDQQRWFODLPWKDWWKHGLVWULFWFRXUWDEXVHG             WUDLQLQJWKDW'HIHQGDQWVZHUHQRWQHJOLJHQWLQIDLOLQJWRWDNH
LWVGLVFUHWLRQ6HH8QLWHG6WDWHVY0DUWLQ)G               FHUWDLQ VDIHW\ SUHFDXWLRQV WR SUHYHQW 3ODLQWLIIjV LQMXU\ DQG
WK&LU                                                  WKDW WKH 09 &s %U\DQ DQG $(3 EDUJH ZHUH QRW
                                                                           XQVHDZRUWK\  3ODLQWLII DOVR FODLPV WKDW WKH GLVWULFW FRXUW
                         &21&/86,21                                        GLVUHJDUGHG3ODLQWLIIjVVWDWXVDVDZDUGRIWKHFRXUWDQGHUUHG

  :HWKHUHIRUHFRQFOXGHWKDWWKHGLVWULFWFRXUWGLGQRWHUULQ
                                                                               
GHQ\LQJ 3ODLQWLII UHFRYHU\ XQGHU WKH sRQHV $FW EDVHG RQ                 1HLWKHU SDUW\ FRQWHVWV WKDW 3ODLQWLII LV D VHDPDQ ZLWKLQ WKH PHDQLQJ
                                                                           DQG FRYHUDJH RI WKH sRQHV $FW
      3HUNLQVHWDOY$P                       1R       1R                          3HUNLQVHWDOY$P      
       (OHFWULF3RZHUHWDO                                                                              (OHFWULF3RZHUHWDO

LQLWVDSSOLFDWLRQRIWKHSURRIRIQHJOLJHQFHUHTXLUHGXQGHUWKH        7KH GLVWULFW FRXUW LVVXHG DQ RUGHU GHQ\LQJ 3ODLQWLIIjV
sRQHV $FW DQG WKH VWDQGDUG RI OLDELOLW\ XQGHU WKH             PRWLRQ7KHFRXUWjVRUGHUVWDWHGLWKDGDGYLVHG3ODLQWLIIRI
VHDZRUWKLQHVVGRFWULQH$QGDOWKRXJKQRWQHFHVVDU\WRWKH            WKH GHILFLHQFLHV LQ KLV FRPSODLQW IRXU PRQWKV SULRU WR KLV
GLVWULFWFRXUWjVGHFLVLRQ3ODLQWLIIDOVRFKDOOHQJHVWKHGLVWULFW     PRWLRQDQGLQYLWHG3ODLQWLIIWRDPHQGKLVFRPSODLQWDWWKDW
FRXUWjVILQGLQJWKDW3ODLQWLIIZDVQHJOLJHQWLQVWUDGGOLQJWKH        WLPHEXW3ODLQWLIIGHFOLQHGWRGR VR7KHFRXUWQRWHGWKDW
UDWFKHW DQG WKDW 3ODLQWLIIjV QHJOLJHQFH ZDV OLNHO\ WKH VROH   m3ODLQWLIIVKDYHZDLWHGXQWLOWKHHOHYHQWKKRXUWRPRYHIRUDQ
FDXVHRIKLVLQMXULHV:HKROGWKDWWKHGLVWULFWFRXUWHUUHGLQ      H[WHQVLRQ D FRQWLQXDQFH DQG D OHDYH WR DPHQG WKHLU
FRQFOXGLQJWKDW3ODLQWLIIZDVQRWHQWLWOHGWRUHFRYHUHLWKHURQ       FRPSODLQW  1RQH RI WKH PDWWHUV UDLVHG LQ VXSSRUW RI WKHLU
WKHsRQHV$FWFODLPRUWKHXQVHDZRUWKLQHVVFODLP                     0RWLRQVKRXOGKDYHFRPHDVDVXUSULVHWR3ODLQWLIIVls$DW
                                                                      7KH&RXUWDOVRIRXQGWKDW
                                $
                                                                        7KH\ DVVHUW WKDW 3ODLQWLII sDPHV : 3HUNLQVj PHGLFDO
  ,W LV D ZHOOVHWWOHG SULQFLSOH RI ODZ WKDW VHDPHQ DUH        FRQGLWLRQKDVFKDQJHGDQGZLOOFRQWLQXHWRFKDQJHWKDW
mHPSKDWLFDOO\WKHZDUGVRIWKHDGPLUDOW\l&KUDQGLV,QFY           WKHGLVFRYHU\LVQRW\HWFRPSOHWHDQGWKDWDQDPHQGPHQW
/DWVLV86FLWDWLRQDQGTXRWDWLRQ             RI WKH FRPSODLQW ZRXOG SHUPLW WKHP WR DGG VSHFLILF
RPLWWHGDFFRUG6RFRQ\9DFXXP2LO&RY6PLWK86               DOOHJDWLRQVUHODWHGWRPDWWHUVOHDUQHGLQUHFHQWGLVFRYHU\
'DYLVY$P&RPPHUFLDO/LQHV,QF               7R WKH H[WHQW WKDW WKHVH PDWWHUV OHDUQHG LQ UHFHQW
)GWK&LU                                      GLVFRYHU\ DUH JHUPDQH WR 3ODLQWLIIVj H[LVWLQJ FODLPV
                                                                        3ODLQWLIIV QHHG QRW DPHQG WKHLU FRPSODLQW DGG WKRVH
    7KH SDWHUQDO UHJDUG RI WKH &RXUWV DQG &RQJUHVV IRU          PDWWHUV7RWKHH[WHQWWKDW3ODLQWLIIVZLVKWRDVVHUWQHZ
    VHDPHQKDVIRUWKHPRVWSDUWJURZQRXWRIWKHSHFXOLDU           FODLPVWKH\KDYHQRWLGHQWLILHGWKRVHFODLPVRUSURYLGHG
    FRQGLWLRQVRIWKHLUHPSOR\PHQW7KHVHFRQGLWLRQVE\               DMXVWLILFDWLRQIRUWKHLUIDLOXUHWRVHHNOHDYHWRGRVRDWDQ
    WKHLUYHU\QDWXUHULJRURXVDQGVXEMHFWLQJWKHVHDPDQWR             HDUOLHU WLPH  :LWK WKH H[FHSWLRQ RI PDWWHU UHODWHG WR
    XQXVXDOO\VHYHUHGLVFLSOLQHIRUH[WHQGHGSHULRGVRIWLPH           3ODLQWLIIsDPHV:3HUNLQVjPHGLFDOFRQGLWLRQ3ODLQWLIIV
    DUHTXLWHXQOLNHWKHFRQGLWLRQVZKLFKDWWHQGODQGODERU            KDYHQRWLGHQWLILHGPDWWHUVFRQFHUQLQJZKLFKDGGLWLRQDO
    DQGKDYHUHVXOWHGLQH[WUDRUGLQDU\UHPHGLHVEHLQJPDGH              GLVFRYHU\VKRXOGEHSHUPLWWHG:LWKUHJDUGWRPDWWHUV
    DYDLODEOHWRWKRVHZKRDFFHSWWKLVFDOOLQJ                         UHODWHGWR0U3HUNLQVjPHGLFDOFRQGLWLRQ3ODLQWLIIVZLOO
                                                                        EH UHTXLUHG DV LV RIWHQ WKH FDVH LQ DFWLRQV LQYROYLQJ
3DXOY8QLWHG6WDWHV)GG&LUm,WLV          ERGLO\LQMXULHVWRSUHVHQWHYLGHQFHUHODWHGWRWKHLQMXULHV
IRU WKLV UHDVRQ WKDW UHPHGLDO OHJLVODWLRQ >HQDFWHG@ IRU WKH     0U 3HUNLQVj FXUUHQW FRQGLWLRQ DQG KLV SURJQRVLV
EHQHILWDQGSURWHFWLRQRIVHDPHQKDVEHHQOLEHUDOO\FRQVWUXHG           3ODLQWLIIVKDYHQRWGHPRQVWUDWHGWKH\ZLOOEHXQDEOHWR
WRDWWDLQWKDWHQGl6RFRQ\9DFFXP86DWDFFRUG           GRVRLIWKH&RXUWGRHVQRWJUDQWWKHUHTXHVWHGH[WHQVLRQ
,VEUDQGWVHQ&RYsRKQVRQ86                   DQG FRQWLQXDQFH  )RU DOO RI WKRVH UHDVRQV 3ODLQWLIIVj
                                                                        0RWLRQLVGHQLHG
  2QH VXFK UHPHGLDO PHDVXUH LV WKH sRQHV $FW  86&
ZKLFKSURYLGHVLQSHUWLQHQWSDUW                              s$DW
    $Q\ VHDPDQ ZKR VKDOO VXIIHU SHUVRQDO LQMXU\ LQ WKH          5XOHDRIWKH)HGHUDO5XOHVRI&LYLO3URFHGXUHSURYLGHV
    FRXUVHRIKLVHPSOR\PHQWPD\DWKLVHOHFWLRQPDLQWDLQ           WKDWOHDYHWRDPHQGVKRXOGEHIUHHO\JUDQWHGZKHQMXVWLFHVR
    DQDFWLRQIRUGDPDJHVDWODZZLWKWKHULJKWRIWULDOE\
    3HUNLQVHWDOY$P                         1R       1R                           3HUNLQVHWDOY$P           
      (OHFWULF3RZHUHWDO                                                                                 (OHFWULF3RZHUHWDO

WR VKRZ WKH FRUUHFW ZD\ RI OD\LQJ WKH ZLUH WKH GHFN KDQG     MXU\DQGLQVXFKDFWLRQDOOVWDWXWHVRIWKH8QLWHG6WDWHV
WKHUHSXVKHGWKHUDWFKHWEH\RQGYHUWLFDO                                PRGLI\LQJRUH[WHQGLQJWKHFRPPRQODZULJKWRUUHPHG\
                                                                         LQ FDVHV RI SHUVRQDO LQMXU\ WR UDLOZD\ HPSOR\HHV VKDOO
  +RZHYHUHYHQLIWKHGLVWULFWFRXUWKDGSURSHUO\FRQFOXGHG             DSSO\DQGLQFDVHRIGHDWKRIDQ\VHDPDQDVDUHVXOWRI
WKDW3ODLQWLIIZDVQHJOLJHQWZHILQGWKDWKLVQHJOLJHQFHZRXOG          DQ\VXFKSHUVRQDOLQMXU\WKHSHUVRQDOUHSUHVHQWDWLYHRI
QRWEDUKLVUHFRYHU\EXWRQO\UHGXFHKLVGDPDJHVXQGHUWKH              VXFKVHDPDQPD\PDLQWDLQDQDFWLRQIRUGDPDJHVDWODZ
WKHRU\RIFRPSDUDWLYHQHJOLJHQFHXQGHUWKHsRQHV$FW                    ZLWK WKH ULJKW RI WULDO E\ MXU\ DQG LQ VXFK DFWLRQ DOO
                                                                         VWDWXWHVRIWKH8QLWHG6WDWHVFRQIHUULQJRUUHJXODWLQJWKH
                                ,,                                      ULJKWRIDFWLRQIRUGHDWKLQWKHFDVHRIUDLOZD\HPSOR\HHV
                                                                         VKDOOEHDSSOLFDEOH
  3ODLQWLII QH[W FRQWHQGV WKDW WKH GLVWULFW FRXUW DEXVHG LWV
GLVFUHWLRQLQGHQ\LQJKLVPRWLRQWRDPHQGKLVFRPSODLQWWR            86&8QGHUWKHsRQHV$FWVHDPDQDUHDIIRUGHG
H[WHQGGLVFRYHU\DQGWRFRQWLQXHWKHWULDOGDWH:HILQGQR           ULJKWVSDUDOOHOWRWKRVHJLYHQWRUDLOZD\HPSOR\HHVXQGHUWKH
VXFKDEXVHRIGLVFUHWLRQ                                              )HGHUDO(PSOR\HUV/LDELOLW\$FWm)(/$l86&HW
                                                                       VHT7KH)(/$SURYLGHVLQSHUWLQHQWSDUW
  :HUHYLHZWKHGLVWULFWFRXUWjVGHQLDORI3ODLQWLIIjVPRWLRQ
WR DPHQG KLV FRPSODLQW IRU DEXVH RI GLVFUHWLRQ  6HH *HQ      (YHU\FRPPRQFDUULHUE\UDLOURDGVKDOOEHOLDEOHLQ
(OHF&RY6DUJHQW	/XQG\)GWK&LU              GDPDJHV WR DQ\ SHUVRQ VXIIHULQJ LQMXU\ ZKLOH KH LV
  6LPLODUO\ ZH UHYLHZ WKH GLVWULFW FRXUWjV GHQLDO RI     HPSOR\HGE\VXFK FDUULHUIRUVXFKLQMXU\RUGHDWK
GLVFRYHU\IRUDEXVHRIGLVFUHWLRQ6HH8QLWHG6WDWHVYsRQHV          UHVXOWLQJLQZKROHRULQSDUWIURPWKHQHJOLJHQFHRIDQ\
)GWK&LU/LNHZLVHWKHGHQLDORID            RIWKHRIILFHUVDJHQWVRUHPSOR\HHVRIVXFKFDUULHURUE\
PRWLRQ IRU FRQWLQXDQFH RI WULDO LV UHYLHZHG IRU DEXVH RI        UHDVRQ RI DQ\ GHIHFW RU LQVXIILFLHQF\ GXH WR LWV
GLVFUHWLRQ6HH6FKROOY)HOPRQW2LO&RUS)G             QHJOLJHQFHLQLWVFDUVHQJLQHVDSSOLDQFHVPDFKLQHU\
WK&LU                                                     WUDFN URDGEHG ZRUNV ERDWV ZKDUYHV RU RWKHU
                                                                         HTXLSPHQW
  3ODLQWLII ILOHG KLV FRPSODLQW RQ sDQXDU\    $
FDOHQGHURUGHUHQWHUHG$SULOVHWWKHGHDGOLQHIRU           86&7KHUHIRUHLQVXLWVXQGHUWKHsRQHV$FWWKH
DPHQGLQJWKHFRPSODLQWIRU0D\DQGWKHGHDGOLQH              FRXUW PXVW GHWHUPLQH ZKHWKHU WKH HYLGHQFH MXVWLILHV WKH
IRU GLVFRYHU\ IRU 'HFHPEHU    7KH SDUWLHV ODWHU       FRQFOXVLRQ WKDW WKH HPSOR\HU ZDV QHJOLJHQW DQG WKDW WKH
HQWHUHGDVWLSXODWLRQH[WHQGLQJGLVFRYHU\WRsXO\            HPSOR\HUjV QHJOLJHQFH SOD\HG DQ\ SDUW KRZHYHU VOLJKW LQ
3ODLQWLII ILOHG KLV PRWLRQ WR DPHQG KLV FRPSODLQW H[WHQG      SURGXFLQJ WKH LQMXU\ WR WKH VHDPDQ  6HH 6ZHHQH\ Y $P
GLVFRYHU\DQGFRQWLQXHWKHWULDORQsXO\3ODLQWLII          6WHDPVKLS&R)GWK&LU
DUJXHGWKDWKHVKRXOGEHDOORZHGWRDPHQGKLVFRPSODLQWWR
UHIOHFW LQIRUPDWLRQ IRXQG WKURXJK GLVFRYHU\  6SHFLILFDOO\         3URRI RI QHJOLJHQFH GXW\ DQG EUHDFK LV HVVHQWLDO WR
3ODLQWLIIVWDWHGWKDWKHOHDUQHGWKDWWKHFKHDWHUSLSH3ODLQWLII       UHFRYHU\XQGHUWKHsRQHV$FW6HHsDFREY&LW\RI1HZ<RUN
XVHG KDG EHHQ PDQXIDFWXUHG E\ 'HIHQGDQW $(3 KH KDG            86:KHWKHUDQHPSOR\HULVQHJOLJHQW
OHDUQHGWKHLGHQWLW\RIWKHPDQXIDFWXUHURIWKHUDWFKHWZKRP          LV GHWHUPLQHG XQGHU WKH mRUGLQDU\ SUXGHQFHl VWDQGDUG
KHZDQWHGWRDGGDVDSDUW\DQGWKDWGHSRVLWLRQVZHUHVWLOOQRW       QRUPDOO\DSSOLFDEOHLQQHJOLJHQFHFDVHV6HH*DXWUHDX[Y
FRPSOHWHGXHLQSDUWWRWKHGHELOLWDWLQJKHDOWKRI3ODLQWLII        6FXUORFN 0DULQH ,QF  )G   WK &LU 
     3HUNLQVHWDOY$P                        1R       1R                         3HUNLQVHWDOY$P      
      (OHFWULF3RZHUHWDO                                                                              (OHFWULF3RZHUHWDO

+RZHYHURQFHWKHSODLQWLIISURYHVQHJOLJHQFHKHQHHGRQO\                  WKDWGRLQJVRZDVGDQJHURXVEHFDXVHLWLQFUHDVHVWKH
VKRZWKDWKLVHPSOR\HUjVQHJOLJHQFHLVWKHFDXVHLQZKROHRU                OLNHOLKRRGRIWKHGRJVOLSSLQJDQGWKHRSHUDWHGEHLQJ
LQSDUWRIKLVLQMXULHV6HH'DXJKHQEDXJKY%HWKOHKHP6WHHO               WKURZQ RII EDODQFH  3ODLQWLII GHQLHG SXVKLQJ WKH
&RUS)GWK&LU,QHVVHQFHWKHUH               SLSHSDVWYHUWLFDOWKHQLJKWRIKLVLQMXU\HYHQWKRXJK
LVDUHGXFHGVWDQGDUGIRUFDXVDWLRQEHWZHHQWKHHPSOR\HUjV                   KH WHVWLILHG DW KLV GHSRVLWLRQ WKDW KH FRXOG QRW
QHJOLJHQFHDQGWKHHPSOR\HHjVLQMXU\6HH*DXWUHDX[                    UHPHPEHU ZKHWKHU KH KDG SXVKHG WKH SLSH SDVW
)GDW0RUHRYHUEHFDXVHWKHFRPSDUDWLYHQHJOLJHQFH                   YHUWLFDO
SULQFLSOHDSSOLHVWRQHJOLJHQFHDFWLRQVXQGHUWKHsRQHV$FW
DQ\QHJOLJHQFHRQWKHSDUWRIWKHHPSOR\HHRSHUDWHVRQO\WR           s$DW
PLWLJDWH WKH GDPDJHV GXH WR WKH HPSOR\HH XQOHVV KLV
QHJOLJHQFHLVWKHVROHFDXVHRIKLVLQMXULHV6HHsDFRE            :HEHOLHYHWKDWWKHGLVWULFWFRXUWjVILQGLQJVLQWKLVUHVSHFW
86DW                                                          DUHXQVXSSRUWHGE\WKHHYLGHQFHDQGFOHDUO\HUURQHRXV(YHQ
                                                                      WKRXJK3ODLQWLIIZDVVWUDGGOLQJWKHUDWFKHWWKHUHLVQRWHQRXJK
  7RUHFRYHUWKHSODLQWLIIPXVWILUVWHVWDEOLVKmWKHEUHDFKRI       LQIRUPDWLRQ LQ WKH WHVWLPRQ\ WR FRQFOXGH WKDW WKLV SRVLWLRQ
D GXW\ WR SURWHFW DJDLQVW IRUHVHHDEOH ULVNV RI KDUPl         ZDVQHJOLJHQWDQGWKDWLWFRQWULEXWHGWR3ODLQWLIIjVLQMXULHV
+HUQDQGH]Y7UDZOHU0LVV9HUWLH0DH,QF)G             3ODLQWLIIjVH[SHUWWHVWLILHGWKDW3ODLQWLIIjVVWUDGGOLQJSRVLWLRQ
WK&LU,QWKHLQVWDQWFDVH3ODLQWLIIDOOHJHGWKDW     ZDVDPRUHVWDEOHSRVLWLRQWKDQLIKHKDGQRWVWUDGGOHGWKH
'HIHQGDQWV ZHUH QHJOLJHQW LQ VHYHUDO UHVSHFWV    LQ      UDWFKHW  'HIHQGDQWVj H[SHUW WHVWLILHG WKDW VWUDGGOLQJ WKH
SURYLGLQJ D GHIHFWLYH UDWFKHW ZLWK ZKLFK 3ODLQWLII KDG WR     UDWFKHWZDVLPSURSHUEXWRQFURVVH[DPLQDWLRQDGPLWWHGWKDW
ZRUNLQIDLOLQJWRSURYLGH3ODLQWLIIZLWKDGHTXDWHWUDLQLQJ     LQKLVGHSRVLWLRQKHWHVWLILHGWKDWVWUDGGOLQJWKHUDWFKHWLH
DQGLQIDLOLQJWRWDNHFHUWDLQVDIHW\SUHFDXWLRQVWRSUHYHQW      SODFLQJ3ODLQWLIIjVOHJVIDUWKHUDSDUWSURYLGHGDPRUHVWDEOH
3ODLQWLIIjVLQMXU\:HFRQFOXGHWKDW3ODLQWLIIPHWKLVEXUGHQ        SODWIRUP,QWKHIDFHRIWKLVXQFRQWUDGLFWHGHYLGHQFHIURP
RISURRIZLWKUHVSHFWWRWKHVDIHW\SUHFDXWLRQVDQGWKDWWKH          3ODLQWLIIjVH[SHUWDQG'HIHQGDQWVjH[SHUWjVPRUHFRQWUDGLFWRU\
GLVWULFWFRXUWFOHDUO\HUUHGLQWKLVUHVSHFW$VWRWKHRWKHUWZR    VWDWHPHQWVZHEHOLHYHWKDWWKHGLVWULFWFRXUWFOHDUO\HUUHGLQ
FODLPVRIQHJOLJHQFHWKHGHIHFWLYHUDWFKHWDQGWKHWUDLQLQJ         ILQGLQJWKDW3ODLQWLIIZDVQHJOLJHQWLQVWUDGGOLQJWKHUDWFKHW
ZHDUHQRWVLPLODUO\FRQYLQFHGWKDW3ODLQWLIIPHWKLVEXUGHQRI       VLPSO\EHFDXVHLWYLRODWHG$(3SROLF\7KHUHDSSHDUVWREH
SURRI:HZLOODGGUHVVHDFKLQWXUQ                                 QRVXSSRUWLQWKHODZIRUWKHSURSRVLWLRQWKDWWKHYLRODWLRQRI
                                                                      FRPSDQ\SROLF\DORQHFRQVWLWXWHVQHJOLJHQFH
   :HFRQFOXGHWKDW3ODLQWLIIKDVIDLOHGWRHVWDEOLVKWKHEUHDFK
RIDGXW\ZLWKUHVSHFWWRKLVILUVWWKHRU\RIQHJOLJHQFHWKDWWKH       :HGHFOLQHWRHQWHUWDLQ'HIHQGDQWVjDUJXPHQWWKDW3ODLQWLII
UDWFKHW ZDV GHIHFWLYH LQDVPXFK DV 3ODLQWLII KDV IDLOHG WR    ZDVQHJOLJHQWLQSXVKLQJWKHUDWFKHWSDVWYHUWLFDOEHFDXVHWKH
HVWDEOLVKWKHHPSOR\HUjVSULRUQRWLFHRIWKHGHIHFWRUWKDWWKH       GLVWULFWFRXUWGLGQRWGUDZVXFKDFRQFOXVLRQ$WPRVWWKHUH
ULVNRIKDUPIURPDGHIHFWLYHUDWFKHWZDVIRUHVHHDEOH,WLVD       LV RQO\ HYLGHQFH WKDW 3ODLQWLII GLG QRW NQRZ ZKHWKHU KH
IXQGDPHQWDOSULQFLSOHWKDWXQGHUWKHsRQHV$FWDQHPSOR\HU          SXVKHGWKHUDWFKHWSDVWYHUWLFDOWKHUHLVQRHYLGHQFHWRVKRZ
mPXVWKDYHQRWLFHDQGWKHRSSRUWXQLW\WRFRUUHFWDQXQVDIH            WKDWKHDFWXDOO\SXVKHGWKHUDWFKHWSDVWYHUWLFDO)XUWKHUPRUH
FRQGLWLRQEHIRUHOLDELOLW\ZLOODWWDFKl+DYHQVY)73RODU         WKHHYLGHQFHRQWKHUHFRUGVKRZVWKDWHYHQLI3ODLQWLIIKDG
0LVW  )G   WK &LU   m7KHUH PXVW EH   DFWXDOO\ SXVKHG WKH UDWFKHW SDVW YHUWLFDO LW ZRXOG QRW
VRPHHYLGHQFHIURPZKLFKWKHWULHURIIDFWFDQLQIHUWKDWWKH         FRQVWLWXWHQHJOLJHQFH,Q'HIHQGDQWVjRZQH[KLELWSXUSRUWLQJ
RZQHUHLWKHUNQHZRULQWKHH[HUFLVHRIGXHFDUHVKRXOGKDYH
    3HUNLQVHWDOY$P                        1R      1R                          3HUNLQVHWDOY$P       
      (OHFWULF3RZHUHWDO                                                                              (OHFWULF3RZHUHWDO

IRUWKHLUIDLOXUHWRSURYLGHDVHDZRUWK\YHVVHO3ODLQWLIIDOVR     NQRZQRIWKHXQVDIHFRQGLWLRQl,G7KHHYLGHQFHRQUHFRUG
VKRZHGWKDWWKHIDLOXUHWRSURYLGHDGHTXDWHVDIHW\HTXLSPHQW         IDLOVWRVKRZWKDW'HIHQGDQWVNQHZRUVKRXOGKDYHNQRZQRI
ZDVDWOHDVWRQHRIWKHSUR[LPDWHFDXVHVRI3ODLQWLIIjVLQMXULHV     DQ\SRVVLEOHGHIHFWLQWKHSDUWLFXODUUDWFKHW3ODLQWLIIZDVXVLQJ
LQDVPXFKDVLWZDVIRUHVHHDEOHJLYHQWKHSUHYLRXVIDOOWKDW        RUWKDWWKH\KDGDQRSSRUWXQLW\WRFRUUHFWVXFKDGHIHFW,Q
3ODLQWLIIFRXOGEHLQMXUHGIURPDIDOORQWKHYHVVHOLQOLJKWRI     IDFW WKH HYLGHQFH GHPRQVWUDWHV WKDW 3ODLQWLII KLPVHOI
WKHIDLOXUHWRSURYLGHVDIHW\URSHRUVLPLODUHTXLSPHQW             LQVSHFWHGWKHUDWFKHWSULRUWRXVLQJLWDQGGLGQRWGHWHFWDQ\
                                                                     GHIHFWV0RUHRYHU3ODLQWLIIjVVXSHUYLVRUFRQGXFWHGDQRWKHU
                               &                                    YLVXDOLQVSHFWLRQRIWKHUDWFKHWDIWHU3ODLQWLIIjVDFFLGHQWDQG
                                                                     GLG QRW GHWHFW DQ\ GHIHFWV LQ WKH UDWFKHW WKLV FRQVWLWXWHV
  :H QRZ FRQVLGHU 3ODLQWLIIjV FRQWHQWLRQ WKDW WKH GLVWULFW    HYLGHQFHWKDW'HIHQGDQWVGLGQRWKDYHQRWLFHRIDQ\GHIHFWLQ
FRXUWHUUHGLQGHWHUPLQLQJWKDWKHZDVQHJOLJHQWLQVWUDGGOLQJ       WKH UDWFKHW  $EVHQW HYLGHQFH VXIILFLHQW WR VKRZ WKDW
WKHUDWFKHW:HQHHGQRWDGGUHVVWKHGLVWULFWFRXUWjVGLFWDWKDW    'HIHQGDQWVNQHZRUVKRXOGKDYHNQRZQWKDWWKHUDWFKHWZDV
3ODLQWLIIjV QHJOLJHQFH ZDV WKH VROH SUR[LPDWH FDXVH RI KLV   GHIHFWLYH 3ODLQWLII KDV IDLOHG WR HVWDEOLVK WKDW 'HIHQGDQWV
LQMXULHV LQDVPXFK DV ZH KDYH SUHYLRXVO\ FRQFOXGHG WKDW        EUHDFKHGDGXW\WRSURWHFW3ODLQWLIIIURPDIRUHVHHDEOHULVN
'HIHQGDQWVjQHJOLJHQFHFRQWULEXWHGWR3ODLQWLIIjVLQMXULHV        6HH5LELW]NLY&DQPDU5HDGLQJ	%DWHV/WG)G
                                                                     WK&LU
  7KHGLVWULFWFRXUWQRWHGWKDW
                                                                       6LPLODUO\ZHFRQFOXGHWKDW3ODLQWLIIKDVIDLOHGWRHVWDEOLVK
   $WWKHWLPHRIKLVLQMXU\3ODLQWLIIZDVVWUDGGOLQJWKH        WKDW'HIHQGDQWVZHUHQHJOLJHQWLQHQVXULQJWKDW3ODLQWLIIZDV
      UDWFKHWZLWKRQHIRRWIOXVKWRWKHFRDPLQJDQGWKH             DGHTXDWHO\WUDLQHGWROD\WKHMRFNH\ZLUH:LWKUHVSHFWWRWKH
      RWKHUEHVLGHWKHRXWVLGHHGJHRIWKHUDWFKHW$(3             DGHTXDF\RI3ODLQWLIIjVWUDLQLQJWKHGLVWULFWFRXUWIRXQG
      VDIHW\UXOHLQVWUXFWVHPSOR\HHVQRWWRmVWUDGGOH
      ZLUHRUUDWFKHWVZKHQWLJKWHQLQJEDUJHOLQHVl,QWKLV           3ODLQWLIIZDVDQH[SHULHQFHGVHDPDQ+HUHFHLYHG
      FRQWH[W WKH &RXUW ILQGV WKHUH LV QR VLJQLILFDQW              RQWKHMRE WUDLQLQJ ZKLFK LV FRQVLVWHQW ZLWK WKH
      GLIIHUHQFH EHWZHHQ WLJKWHQLQJ EDUJH mOLQHVl DQG                 FXVWRP DQG SUDFWLFH LQ WKH ULYHU LQGXVWU\  ,Q
      WLJKWHQLQJ EDUJH mZLUHVl DV 3ODLQWLII ZDV GRLQJ               DGGLWLRQ GXULQJ KLV VHYHQWHHQ \HDU ZLWK $(3
      3ODLQWLIIjV RZQ H[SHUW WHVWLILHG WKDW LW ZRXOG EH             3ODLQWLII DWWHQGHG VDIHW\ PHHWLQJV RQ DW OHDVW D
      mFRPPRQVHQVHlLQWKHLQGXVWU\QRWWRVWUDGGOHWKH                   PRQWKO\ EDVLV  :KHQ &DSWDLQ +DUULQJWRQ ZDV
      UDWFKHW5XOHIXUWKHUSURYLGHVWKDWmHPSOR\HHV                 DERDUGWKHYHVVHO3ODLQWLIIDWWHQGHGVDIHW\PHHWLQJV
      VKDOO RSHUDWH WKH UDWFKHW OHYHU IURP WKH LQERDUG              RQDZHHNO\EDVLV6RPHRIWKHVHPHHWLQJVLQFOXGHG
      VLGHl  7KLV PHDQV IURP WKH VLGH RI WKH UDWFKHW             LQVWUXFWLRQDQGZDUQLQJVUHJDUGLQJWKHVDIHXVHRI
      FORVHVWWRWKHFHQWHURI WKHYHVVHOXSRQZKLFKWKH                  UDWFKHWVFKHDWHUSLSHVDQGRWKHUULJJLQJ
      HPSOR\HH LV VWDQGLQJ  :KHQ DQ HPSOR\HH LV                 0RUHRYHU 3ODLQWLII KDG VLJQLILFDQW H[SHULHQFH LQ
      VWUDGGOLQJWKHUDWFKHWKHLVQRWWRWKHLQERDUGVLGHRI             OD\LQJDQGWLJKWHQLQJMRFNH\ZLUHV+DYLQJODLG
      WKHUDWFKHWDQGLVOLNHZLVHLQYLRODWLRQRIWKLVODWWHU              VXFKZLUHVEHIRUHWKHQLJKWRIKLVLQMXU\KHZDV
      SRUWLRQRIWKHUXOH                                                 IDPLOLDUZLWKWKHULVNVDQGGDQJHUVDVVRFLDWHGZLWK
   $(3SROLF\DOVRSURKLELWVSXVKLQJWKHFKHDWHUSLSH                   WKDWW\SHRIZLUH$OWKRXJK3ODLQWLIIWHVWLILHGWKDW
      SDVW YHUWLFDO ZKHQ WLJKWHQLQJ D ZLUH  3ODLQWLII              WKLVZDVWKHILUVWWLPHKHKDGODLGWKHZLUHVWRWKH
      OHDUQHGWKURXJKRQWKHMREWUDLQLQJDQGH[SHULHQFH                   RXWVLGH EDUJHV DV RSSRVHG WR D FHQWHU EDUJH WKH
    3HUNLQVHWDOY$P                          1R       1R                               3HUNLQVHWDOY$P         
      (OHFWULF3RZHUHWDO                                                                                      (OHFWULF3RZHUHWDO

       &RXUW ILQGV WKLV FRQILJXUDWLRQ GLG QRW FKDQJH WKH         'HIHQGDQWVjH[SHUWFRQFOXGHGDQGWKHGLVWULFWFRXUWIRXQG
       ZD\LQZKLFKWKHZLUHVZHUHWLJKWHQHGRUWKHZD\                 WKDWWKHUDWFKHWPDOIXQFWLRQHG
       WKHUDWFKHWZDVSRVLWLRQHGDQGFUDQNHG0RUHRYHU
       3ODLQWLIIKDGODLGWKRXVDQGVRIRWKHUZLUHVDWOHDVW               )XUWKHUPRUH3ODLQWLIIHVWDEOLVKHGWKDWWKHPDOIXQFWLRQRI
       VRPH RI ZKLFK KDG UHTXLUHG KLP WR WLJKWHQ WKH            WKHUDWFKHWZDVDSUR[LPDWHRUDGLUHFWDQGVXEVWDQWLDOFDXVH
       UDWFKHWWRZDUGDQHPSW\FDUJRKRSSHURUWRZDUGWKH               RI KLV LQMXULHV  'HIHQGDQWVj H[SHUW WHVWLILHG WKDW WKH
       HGJHRIDEDUJHH[SRVLQJKLPWRFRPSDUDEOHGDQJHU               PDOIXQFWLRQRIWKHUDWFKHWZDVFRPPRQ*LYHQWKHPDQQHU
       ZKLFK ZRXOG KDYH JLYHQ KLP VLPLODU WUDLQLQJ DQG           LQZKLFKDZLUHLVODLGZHILQGWKDWLWZDVIRUHVHHDEOHWKDWLI
       H[SHULHQFH7KH&RXUWILQGV3ODLQWLIIKDGDGHTXDWH              DUDWFKHWPDOIXQFWLRQHGGXULQJWKHOD\LQJRIDZLUHWKHIRUFH
       WUDLQLQJDQGH[SHULHQFHWRVDIHO\OD\WKHMRFNH\ZLUH            UHVXOWLQJIURPWKHUDWFKHWFRXOGSURSHODVHDPDQIRUZDUGDQG
       RQWKHQLJKWRIKLVLQMXU\                                      FDXVH LQMXU\  ,W LV FOHDU IURP WKH HYLGHQFH WKDW WKH
                                                                        PDOIXQFWLRQRIWKHUDWFKHWZDVDVXEVWDQWLDODQGGLUHFWFDXVH
s$DW:HDUHQRWFRQYLQFHGWKDWWKHVHILQGLQJVDUH          RI3ODLQWLIIjVLQMXULHV7KHGLVWULFWFRXUWWKHUHIRUH HUUHGLQ
FOHDUO\HUURQHRXV                                                      GHWHUPLQLQJ WKDW GHVSLWH WKH WHVWLPRQ\ WKDW WKH UDWFKHW
                                                                        PDOIXQFWLRQHG XQGHU QRUPDO XVH WKH 09 &s %U\DQ DQG
   3ODLQWLII GRHV QRW GHQ\ WKDW KH KDG SUHYLRXVO\ ODLG          $(3 ZHUH VHDZRUWK\ 7R WKH FRQWUDU\ WKH UHFRUG
WKRXVDQGVRIZLUHVVDIHO\+LVWHVWLPRQ\UHYHDOVWKDWKHKDG           LQGLFDWHV WKDW 'HIHQGDQWV IDLOHG LQ WKHLU DEVROXWH GXW\ WR
QRUHDVRQWREHOLHYHWKDWKHFRXOGQRWSHUIRUPWKHSURFHGXUH            PDLQWDLQDVHDZRUWK\YHVVHOEHFDXVHWKHUDWFKHW3ODLQWLIIZDV
VDIHO\WKDWQLJKW3ODLQWLIIKRZHYHUDUJXHVWKDWKHKDGQHYHU        XVLQJRQWKHQLJKWRIKLVLQMXU\ZDVQRWUHDVRQDEO\ILWIRULWV
ODLGDMRFNH\ZLUHWRDQRXWVLGHEDUJHEHIRUH3ODLQWLIIDUJXHV        LQWHQGHGXVH6HH+XEEDUG)GDW7H[0HQKDGHQ
WKDWKHKDGH[SHULHQFHLQOD\LQJWKHZLUHWRWKHFHQWHUEDUJH          &R)GDW
QRWWKHRXWVLGHEDUJH7KHUHLVDGLIIHUHQFHEHWZHHQWKHWZR
3ODLQWLII DUJXHV VXFK WKDW KH QHHGHG DGGLWLRQDO WUDLQLQJ WR      :H IXUWKHU FRQFOXGH WKDW 3ODLQWLII FDQ UHFRYHU IRU
SHUIRUPWKHWDVN                                                     XQVHDZRUWKLQHVVRQWKHJURXQGWKDWWKH09&s%U\DQDQG
                                                                        $(3 GLG QRW KDYH DGHTXDWH VDIHW\ HTXLSPHQW DQG
   'HIHQGDQWVj H[SHUW KRZHYHU WHVWLILHG WKDW D UHYLHZ RI       WKHUHIRUHZHUHQRWILWIRUWKHLULQWHQGHGXVHV$VGLVFXVVHG
H[KLELWV DGPLWWHG LQWR HYLGHQFH UHYHDOHG WKDW 3ODLQWLII KDG      HDUOLHU'HIHQGDQWVNQHZRIWKHGDQJHUVRIWKHUDWFKHWIDLOLQJ
H[WHQVLYHWUDLQLQJVRPHDERYHDQGEH\RQGLQGXVWU\VWDQGDUG            DVZHOODVWKHGDQJHUVRIVHDPHQIDOOLQJRQWKHYHVVHOKDYLQJ
'HIHQGDQWVjH[SHUWIXUWKHUWHVWLILHGWKDW3ODLQWLIIZDVWUDLQHG         KDGDVHDPDQLQMXUHGRQWKHVDPHYHVVHOE\DIDOOMXVWDPRQWK
LQWLJKWHQLQJZLUHVUDWFKHWUHSODFHPHQWDQGSURSHUULJJLQJ            SULRU WR 3ODLQWLIIjV LQMXULHV  7KLV HYLGHQFH LV VXIILFLHQW WR
'HVSLWH WKDW 3ODLQWLII KDG QRW UHFHLYHG VSHFLILF LQVWUXFWLRQ     VKRZ WKDW WKH 09 &s %U\DQ DQG $(3 ZHUH
UHJDUGLQJOD\LQJMRFNH\ZLUHWRDQRXWVLGHEDUJH'HIHQGDQWVj           XQVHDZRUWK\DQGWKDW'HIHQGDQWVZHUHWKHUHIRUHVWULFWO\OLDEOH
H[SHUWWHVWLILHGWKDWWKHUHZDVQRDSSUHFLDEOHGLIIHUHQFHLQWKH
PHWKRGIRUOD\LQJMRFNH\ZLUHVWRDQRXWVLGHEDUJHDQGWKH
WKRXVDQGV RI RWKHU ZLUHV 3ODLQWLII ODLG WR WKH FHQWHU EDUJH       
                                                                              8QOLNH D FODLP XQGHU WKH sRQHV $FW ZKHUH D ILQGLQJ RI QHJOLJHQFH
'HIHQGDQWVjH[SHUWVWDWHGWKDWIURPWKHHYLGHQFHLQFOXGLQJ             LV QHFHVVDU\ WKH VRXUFH RI WKH PDOIXQFWLRQ LV LUUHOHYDQW WR DQ
3ODLQWLIIjV GHSRVLWLRQ DQG WUDLQLQJ LQIRUPDWLRQ 3ODLQWLIIjV       XQVHDZRUWKLQHVV FODLP m>8@QVHDZRUWKLQHVV LV D     FRQGLWLRQ   DQG KRZ WKDW
WUDLQLQJZDVDGHTXDWHWRDOORZKLPWROD\DMRFNH\ZLUHWRDQ           FRQGLWLRQ FDPH LQWR EHLQJZKHUH E\ QHJOLJHQFH RU RWKHUZLVHLV TXLWH
RXWVLGHEDUJH'HIHQGDQWVjH[SHUWjVWHVWLPRQ\VXSSRUWVWKH             LUUHOHYDQW WR WKH RZQHUjV OLDELOLW\ IRU SHUVRQDO LQMXULHV UHVXOWLQJ IURP LWl
                                                                        )HUUDUD   )G DW  HPSKDVLV LQ RULJLQDO
    3HUNLQVHWDOY$P                         1R       1R                          3HUNLQVHWDOY$P      
      (OHFWULF3RZHUHWDO                                                                                (OHFWULF3RZHUHWDO

KDYH KDG VRPHWKLQJ WR JUDE DQG KLV IDOO ZRXOG KDYH EHHQ      GLVWULFWFRXUWjVFRQFOXVLRQ*LYLQJGXHUHJDUGWRWKHGLVWULFW
SUHYHQWHG:HWKHUHIRUHFRQFOXGHWKDWWKHGLVWULFWFRXUWHUUHG        FRXUWjVRSSRUWXQLW\WRMXGJHWKHZLWQHVVjFUHGLELOLW\DVZH
LQGHWHUPLQLQJWKDW3ODLQWLIIZDVQRWHQWLWOHGWRUHFRYHUXQGHU        PXVWZHFRQFOXGHWKDWWKHGLVWULFWFRXUWjVILQGLQJVDVWRWKH
WKLVWKHRU\RIQHJOLJHQFH                                             DGHTXDF\RI3ODLQWLIIjVWUDLQLQJZHUHQRWFOHDUO\HUURQHRXV
                                %                                       :H QH[W WXUQ WR WKH GLVWULFW FRXUWjV ILQGLQJ RI IDFW DQG
                                                                       FRQFOXVLRQVRIODZDVWR3ODLQWLIIjVDOOHJDWLRQWKDW'HIHQGDQWV
   8QGHUWKHVHDZRUWKLQHVVGRFWULQHWKHUHLVDQDEVROXWHGXW\         ZHUH QHJOLJHQW LQ IDLOLQJ WR SURYLGH DGHTXDWH VDIHW\
WRPDLQWDLQDVHDZRUWK\VKLSWKHEUHDFKRIZKLFKLPSRVHV             SUHFDXWLRQV6SHFLILFDOO\WKHGLVWULFWFRXUWIRXQGWKDW
OLDELOLW\ZLWKRXWIDXOWLHVWULFWOLDELOLW\6HH%URZQY'UDYR
&RUS)GG&LU$VKLSRZQHUKDVDQ              $OWKRXJK WKH UDWFKHW RQ EDUJH $(3WKDW
REOLJDWLRQWRmµIXUQLVKDYHVVHODQGDSSXUWHQDQFHVUHDVRQDEO\                 3ODLQWLIIZDVXVLQJDWWKHWLPHRIWKHDFFLGHQWZDV
ILW IRU WKHLU LQWHQGHG XVHjl +DYHQV  )G DW                ROGHUKHGHWHUPLQHGSXUVXDQWWRKLVUHVSRQVLELOLW\DV
+RZHYHUDYHVVHOQHHGQRWEHmIUHHIURPDOOSRVVLELOLW\RI                   VHFRQGPDWHWKDWLWZDVQRWLQQHHGRIUHSODFHPHQW
PLVKDSIRUWKHVHDZRUWKLQHVVRIDVKLSLVDUHODWLYHFRQFHSW                RU UHSDLU  /LNHZLVH XSRQ LQVSHFWLRQ DIWHU WKH
GHSHQGHQWLQHDFKLQVWDQFHXSRQFLUFXPVWDQFHVl%URZQ                   DFFLGHQW&DSWDLQ+DUULQJWRQGHWHUPLQHGWKHUDWFKHW
)GDW7RSURYHDQXQVHDZRUWKLQHVVFODLPDSODLQWLII                  ZDVQRWLQQHHGRIUHSODFHPHQWRUUHSDLUDQGOHIWLW
PXVWVKRZWKDWWKHXQVHDZRUWK\FRQGLWLRQRIWKHYHVVHOZDV                    LQ VHUYLFH IRU WKH UHPDLQGHU RI WKH WRZ  7RZ
WKHVXEVWDQWLDODQGGLUHFWRUSUR[LPDWHFDXVHRIWKHSODLQWLIIjV              UDWFKHWV ZHUH UHPRYHG IURP EDUJH $(3 RQ
LQMXULHV6HH+DYHQV)GDW                                     sDQXDU\RQHRIZKLFKZDVGHWHUPLQHGWR
                                                                              EH LQ QHHG RI UHSODFHPHQW  +RZHYHU LW ZDV QRW
  ,WLVZHOOVHWWOHGODZWKDWHYHQDWHPSRUDU\RUXQIRUHVHHDEOH               HVWDEOLVKHGZKLFKUDWFKHW3ODLQWLIIZDVXVLQJRQWKH
IDLOXUH RI D SLHFH RI YHVVHO HTXLSPHQW XQGHU SURSHU DQG              QLJKWRIWKHDFFLGHQW$FFRUGLQJO\WKH&RXUWILQGV
H[SHFWHG XVH LV VXIILFLHQW WR HVWDEOLVK XQVHDZRUWKLQHVV                 WKDWEDUJH$(3ZDVUHDVRQDEO\VDIHDQGILWIRU
SURYLGHGWKDWWKHXQVHDZRUWK\FRQGLWLRQZDVWKHSUR[LPDWH                    LWVLQWHQGHGSXUSRVHRQWKHQLJKWRI'HFHPEHU
FDXVHRIWKHKDUPVXIIHUHGE\WKHSODLQWLII6HH)HUUDUDY$                 1R HYLGHQFH ZDV RIIHUHG WR HVWDEOLVK WKDW
	9)LVKLQJ,QF)GVW&LU+DYHQV                 EDUJH$(3GHSDUWHGLQDQ\ZD\IURPLQGXVWU\
)GDW+XEEDUGY)DURV)LVKHULHV,QF                     VWDQGDUG
)GVW&LU7H[0HQKDGHQ&RYsRKQVRQ              7KH&s%U\DQKDGSDVVHGLQVSHFWLRQE\WKH&RDVW
)GWK&LU3ODLQWLIIWHVWLILHGWKDWKH               *XDUG XQGHU WKH 5HVSRQVLEOH &DUULHU SURJUDP
XVHGWKHUDWFKHWDQGDWWHPSWHGWROD\WKHMRFNH\ZLUHLQWKH                  ZLWKRXW VXJJHVWLRQ WKDW DQ\ PRGLILFDWLRQ ZDV
VDPHPDQQHUDVDOZD\V,QDGGLWLRQ3ODLQWLIIjVVXSHUYLVRU                   QHHGHGWRWKHYHVVHOLQRUGHUIRULWWREHUHDVRQDEO\
WHVWLILHGWKDWKHVDZQRWKLQJDEQRUPDOLQFRUUHFWRUXQXVXDO                 VDIHDQGILWIRULWVLQWHQGHGSXUSRVH7KHLQVWDOODWLRQ
DERXW 3ODLQWLIIjV SHUIRUPDQFH GXULQJ WKH SHULRG WKDW KH                RI D mULJJLQJl RU mVDIHW\l GHFN EHWZHHQ WKH
REVHUYHGKLP,QWKHLQVWDQWFDVHWKHUHLVVXIILFLHQWHYLGHQFH              WRZNQHHV>VLF@LVQRWUHTXLUHGE\UHJXODWLRQQRULVLW
RQWKHUHFRUGWRFRQFOXGHWKDW3ODLQWLIIZDVSURSHUO\XVLQJWKH               FXVWRPDU\ RU FRPPRQ LQ WKH LQGXVWU\ RQ D YHVVHO
UDWFKHW IRU LWV LQWHQGHG SXUSRVH ZKHQ LW PDOIXQFWLRQHG                 OLNHWKH&s%U\DQ/LNHZLVHWKHLQVWDOODWLRQRID
                                                                              mVDIHW\FKDLQlRUJUDELURQVEHWZHHQWKHWRZNQHHV
                                                                              >VLF@ LV QRW UHTXLUHG RU FXVWRPDU\ LQ WKH LQGXVWU\
       3HUNLQVHWDOY$P                            1R        1R                         3HUNLQVHWDOY$P     
         (OHFWULF3RZHUHWDO                                                                                   (OHFWULF3RZHUHWDO

          1HLWKHUWKHDEVHQFHRIWKHVHVDIHJXDUGVQRUWKHODFN               YHVVHO  0RUHRYHU RWKHU YHVVHOV LQ 'HIHQGDQWVj IOHHW KDG
          RIUXEEHURQWKHWRZNQHHV>VLF@UHQGHUHGWKH&s                  VDIHW\DSSOLDQFHVEHWZHHQWKHWRZNQHHV'HIHQGDQWVjH[SHUW
          %U\DQ XQVDIH RU XQILW IRU VHUYLFH WKH QLJKW RI              WHVWLILHGDWWULDOWKDWWKHVL]HRIWKHYHVVHOZRXOGSURKLELWWKH
          'HFHPEHU                                                  LQVWDOODWLRQ RI D VDIHW\ GHFN EXW FRQFHGHG WKDW QRWKLQJ
                                                                              SUHYHQWVWKHLQVWDOODWLRQRIDVDIHW\FKDLQRQWRSRIWKHWRZ
s$DW+HUH3ODLQWLIIWDNHVLVVXHZLWKGLVWULFWFRXUWjV           NQHHV  'HIHQGDQWV DUJXH WKDW WKH LQVSHFWLRQV RI WKH
ILQGLQJV DQG DUJXHV WKDW WKH\ DUH EDVHG RQ IDFWV QRW LQ             5HVSRQVLEOH &DUULHU SURJUDP GLG QRW UHVXOW LQ
HYLGHQFH  :H DJUHH WKDW WKH GLVWULFW FRXUWjV ILQGLQJV DUH           UHFRPPHQGDWLRQVWKDWHLWKHUVDIHW\FKDLQVRUVDIHW\GHFNVEH
XQVXSSRUWHGE\WKHHYLGHQFHLQWKHUHFRUG                                   FRQVWUXFWHGRQWKHVKLS+RZHYHUWKHWHVWLPRQ\ GRHVQRW
                                                                              SRLQW WR WKH H[WHQW RI WKRVH LQVSHFWLRQV DQG ZKHWKHU WKH
  3ODLQWLII DUJXHV WKDW WKH GLVWULFW FRXUWjV ILQGLQJ WKDW09          LQVSHFWLRQVZHUHPHDQWWRFRQVLGHUZKHWKHUVDIHW\FKDLQVRU
&s %U\DQ KDG SDVVHG LQVSHFWLRQ E\ WKH &RDVW *XDUG DQG              VDIHW\GHFNVZHUHQHHGHG
XQGHU WKH 5HVSRQVLEOH &DUULHU SURJUDP ZLWKRXW VXJJHVWLRQ
WKDWPRGLILFDWLRQZDVQHHGHGWRWKHYHVVHOZDVQRWVXSSRUWHG                     ,Q DGGLWLRQ WKHUH ZDV WHVWLPRQ\ E\ 'HIHQGDQWVj VDIHW\
E\WKHUHFRUG6SHFLILFDOO\3ODLQWLIISRLQWVWRWKHIDFWWKDW               PDQDJHUWKDWRQHPRQWKSULRUWR3ODLQWLIIjVDFFLGHQWDQRWKHU
09&s%U\DQLVDQXQLQVSHFWHGYHVVHOPHDQLQJWKDWWKH                     ZRUNHURQWKH09&s%U\DQIHOOIURPWKHWRZNQHHDQGZDV
&RDVW*XDUGGRHVQRWLQVSHFWWKHYHVVHOIRURUUHJXODWHWKH                   LQMXUHG)XUWKHUPRUH'HIHQGDQWVjH[SHUWWHVWLILHGWKDWWKH
FRQVWUXFWLRQRIVDIHW\HTXLSPHQWVXFKDVWKHKDQGUDLOVVDIHW\                IDLOXUHRIWKHUDWFKHWZDVFRPPRQLQWKHLQGXVWU\%DVHGRQ
FKDLQVRUJXDUGUDLOVDERXWZKLFK3ODLQWLIIFRPSODLQV$VDQ                  WKHVH IDFWV ZH FRQFOXGH WKDW WKH GLVWULFW FRXUW HUUHG LQ
XQLQVSHFWHGYHVVHOIHGHUDOUHJXODWLRQVRQO\UHTXLUHWKDWWKH                 GHWHUPLQLQJWKDW'HIHQGDQWVZHUHQRWQHJOLJHQWLQIDLOLQJWR
YHVVHO KDYH PLQLPDO VDIHW\ UHTXLUHPHQWV VXFK DV OLIH                  SURYLGH DGHTXDWH VDIHW\ PHDVXUHV  7KHVH IDFWV VKRZ WKDW
SUHVHUYHUVHPHUJHQF\UDGLREHDFRQVILUHH[WLQJXLVKHUVHWF                 'HIHQGDQWVNQHZRIWKHULVNWKDWWKHUDWFKHWFRXOGIDLODQG
6HH&)53WV                                                    DOVRNQHZWKDWDVHDPDQFRXOGIDOOIURP WKHWRZNQHHDQG
                                                                              LQMXUHKLPVHOIQHYHUWKHOHVV'HIHQGDQWVIDLOHGWRDGHTXDWHO\
  $OWKRXJKWKHGLVWULFWFRXUWFRUUHFWO\SRLQWHGRXWWKDWWKHUH                JXDUG DJDLQVW WKHVH ULVNV IRU WKH VDIHW\ RI WKHLU VHDPHQ
ZHUH QR UHJXODWLRQV RU LQGXVWU\ SUDFWLFHV UHTXLULQJ WKH                0RUHRYHUWKDW'HIHQGDQWVKDGLQVWDOOHGVDIHW\URSHVLQRWKHU
SUHVHQFHRIVDIHW\URSHVRUKDQGUDLOVWKHUHZDVQRHYLGHQFH                  VKLSVDQGRWKHUDUHDVRIWKH09&s%U\DQLQGLFDWHVWKDWLW
WKDWVDIHW\URSHVRUKDQGUDLOVZHUHLQFRQVLVWHQWZLWKFXVWRP                  ZRXOGQRWKDYHEHHQH[FHVVLYHO\EXUGHQVRPHLQOLJKWRIWKH
DQGSUDFWLFH7KHHYLGHQFHDWWULDOUHYHDOVWKDW'HIHQGDQWV                  ULVNVWRWKHVHDPHQIRU'HIHQGDQWVWRLQVWDOOVDIHW\URSHVKHUH
LQVWDOOHGVDIHW\FKDLQVDQGUDLOVLQVHYHUDORWKHUDUHDVRIWKH               *LYHQ WKDW RQH PRQWK SULRU WR 3ODLQWLIIjV LQMXU\ DQRWKHU
                                                                              VHDPDQ ZDV LQMXUHG E\ D IDOO RQ WKH 09 &s %U\DQ ZH
                                                                              FRQFOXGH WKDW 'HIHQGDQWV ZHUH QHJOLJHQW LQ IDLOLQJ WR WDNH
                                                                             DGHTXDWHVDIHW\SUHFDXWLRQVLQWKHIDFHRIWKHQRWLFHRIWKH
       'HIHQGDQWV DUJXH WKDW WKH &RXUW VKRXOG QRW FRQVLGHU WKHVH              GDQJHUWRWKHLUVHDPHQ
UHJXODWLRQV EHFDXVH 3ODLQWLII GLG QRW LQWURGXFH WKHP LQWR HYLGHQFH EHORZ
+RZHYHU WKH FRXUW VHHV QR GLIIHUHQFH EHWZHHQ WKHVH UHJXODWLRQV DQG
DSSOLFDEOH FDVH ODZ ZKLFK WKLV &RXUW PD\ FRQVLGHU HYHQ WKRXJK QRW UHOLHG
                                                                                 6LPLODUO\ WKHUH LV VXIILFLHQW HYLGHQFH WR VKRZ WKDW
RQ E\ HLWKHU SDUW\ EHORZ ,Q DGGLWLRQ WKH UHFRUG LQGLFDWHG WR WKH GLVWULFW   'HIHQGDQWVjIDLOXUHWRSURYLGHWKHVDIHW\URSHVZDVWKHFDXVH
FRXUW WKDW WKH YHVVHO ZDV DQ XQLQVSHFWHG YHVVHO DQG WKH GLVWULFW FRXUW KDG    LQZKROHRUSDUWRI3ODLQWLIIjVLQMXULHV7KHWHVWLPRQ\DWWULDO
DW LWV GLVSRVDO WKH UHJXODWLRQV LQGLFDWLQJ WKH VDIHW\ UHTXLUHPHQWV RI DQ      ZDVWKDWLIDVDIHW\URSHKDGEHHQLQSODFH3ODLQWLIIZRXOG
XQLQVSHFWHG YHVVHO