Court Opinion

ID: 2970502
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:14:51.60402+00
Date Added: 2024-06-11T11:43:30.608004
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                      
                                     !
                                    
 3+,/,3 $ &+$1&(                  
          'HIHQGDQW$SSHOODQW 
                                   1
       $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
      IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW&OHYHODQG
     1Rn.DWKOHHQ0F'RQDOG2j0DOOH\
                      'LVWULFWsXGJH
                  $UJXHG6HSWHPEHU
            'HFLGHGDQG)LOHG6HSWHPEHU
    %HIRUH%$7&+(/'(5DQG&2/(&LUFXLWsXGJHV
               %(&.:,7+'LVWULFWsXGJH
                       BBBBBBBBBBBBBBBBB
                             &2816(/
$5*8('3HWHU'*ROGEHUJHU/$:2)),&(2)3(7(5
*2/'%(5*(5 $UGPRUH 3HQQV\OYDQLD IRU $SSHOODQW

    
     7KH +RQRUDEOH 6DQGUD 6 %HFNZLWK 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU
WKH 6RXWKHUQ 'LVWULFW RI 2KLR VLWWLQJ E\ GHVLJQDWLRQ

                                    
     8QLWHG6WDWHVY&KDQFH                        1R

)UDQN s 0DULQH 81,7(' 67$7(6 '(3$570(17 2)
s867,&( :DVKLQJWRQ '& IRU $SSHOOHH  21 %5,()
3HWHU ' *ROGEHUJHU /$: 2)),&( 2) 3(7(5
*2/'%(5*(5 $UGPRUH 3HQQV\OYDQLD IRU $SSHOODQW
)UDQN s 0DULQH 81,7(' 67$7(6 '(3$570(17 2)
s867,&(:DVKLQJWRQ'&&UDLJ60RUIRUG$66,67$17
81,7(' 67$7(6 $77251(< &OHYHODQG 2KLR IRU
$SSHOOHH
                     BBBBBBBBBBBBBBBBB
                         23,1,21
                     BBBBBBBBBBBBBBBBB
   %(&.:,7+'LVWULFWsXGJH'HIHQGDQW$SSHOODQW3KLOLS
$&KDQFHDSSHDOVKLVFRQYLFWLRQDQGVHQWHQFHRQRQHFRXQW
RIFRQGXFWLQJWKHDIIDLUVRIDQHQWHUSULVHWKURXJKDSDWWHUQRI
UDFNHWHHULQJDFWLYLW\LQYLRODWLRQRI86&FRQH
FRXQW RI FRQVSLULQJ WR FRQGXFW WKH DIIDLUV RI DQ HQWHUSULVH
WKURXJKDSDWWHUQRIUDFNHWHHULQJDFWLYLW\LQYLRODWLRQRI
86&GWZRFRXQWVRIFRQVSLULQJWRREVWUXFWGHOD\
RU DIIHFW FRPPHUFH WKURXJK H[WRUWLRQ LQ YLRODWLRQ RI WKH
+REEV$FW86&DDQGRQHFRXQWRIFRQVSLULQJ
WR REVWUXFWWKHHQIRUFHPHQWRIWKHFULPLQDOODZVRIDVWDWH
ZLWKWKHLQWHQWWRIDFLOLWDWHDQLOOHJDOJDPEOLQJEXVLQHVVLQ
YLRODWLRQRI86&7KHGLVWULFWMXGJHVHQWHQFHG
$SSHOODQWWRPRQWKVRILPSULVRQPHQWDQGWZR\HDUVRI
VXSHUYLVHGUHOHDVHDQGLPSRVHGDPDQGDWRU\VSHFLDO
DVVHVVPHQW  ,Q VHQWHQFLQJ $SSHOODQW WR  PRQWKV RI
LPSULVRQPHQW WKH GLVWULFW MXGJH XSZDUGO\ GHSDUWHG WKUHH
OHYHOVIURPWKHDSSOLFDEOHILQDORIIHQVHOHYHORQWKHJURXQGV
WKDWWKHIDFWWKDW$SSHOODQWjVFRQGXFWZDVXQGHUWDNHQDVFKLHI
ODZHQIRUFHPHQWRIILFHURI0DKRQLQJ&RXQW\2KLRZDVQRW
WDNHQLQWRFRQVLGHUDWLRQE\WKH6HQWHQFLQJ*XLGHOLQHV7KH
GLVWULFWFRXUWDOVRLPSRVHGDWZROHYHOLQFUHDVHLQWKHRIIHQVH
OHYHOSXUVXDQWWR866*&IRUREVWUXFWLRQRIMXVWLFH
RQWKHJURXQGVWKDW$SSHOODQWFRPPLWWHGSHUMXU\GXULQJWKH
WULDO2QDSSHDO$SSHOODQWFKDOOHQJHVWKHVXIILFLHQF\RIWKH
HYLGHQFH VXSSRUWLQJ WKH FRQYLFWLRQV WKH GLVWULFW FRXUWjV
GHFLVLRQWRLPSRVHDVHQWHQFLQJHQKDQFHPHQWIRUREVWUXFWLRQ
RIMXVWLFHDQGWKHGLVWULFWFRXUWjVGHFLVLRQWRXSZDUGO\GHSDUW
     8QLWHG6WDWHVY&KDQFH                                1R         1R                         8QLWHG6WDWHVY&KDQFH           

ZHOODVWKHGLVWULFWFRXUW
VVWDWHGUHDVRQVIRUWKHLPSRVLWLRQRI                 IURP WKH JXLGHOLQH VHQWHQFH  $SSHOODQW DOVR FODLPV WKH
WKHSDUWLFXODUVHQWHQFH8QLWHG6WDWHVY&URXVH)G                       GLVWULFWFRXUWHUUHGE\SHUPLWWLQJWKHSURVHFXWLRQWRFRQGXFW
WK&LU:HZLOOUHPDQGIRUUHVHQWHQFLQJLI                     FURVVH[DPLQDWLRQ UHJDUGLQJ FULPLQDO FRQYLFWLRQV RU
WKHGLVWULFWFRXUWIDLOVWRMXVWLI\WKHH[WHQWRIWKHGHSDUWXUH                  LQGLFWPHQWV RI RWKHU HPSOR\HHV RI WKH 0DKRQLQJ &RXQW\
6HH%DUDMDV1XQH])GDW,QWKLVFDVH$SSHOODQW                    6KHULIIjV'HSDUWPHQW)RUWKHUHDVRQVVHWIRUWKEHORZZH
DUJXHVWKDWWKHGLVWULFWFRXUWZKLOHH[SODLQLQJZK\WKHILYH                    DIILUP$SSHOODQWjVFRQYLFWLRQVRQ&RXQWVDQGRIWKH
OHYHO GHSDUWXUH UHTXHVWHG E\ WKH JRYHUQPHQW ZDV                             LQGLFWPHQW:HUHYHUVH$SSHOODQWjVFRQYLFWLRQVRQ&RXQWV
LQDSSURSULDWHGLGQRWH[SODLQZK\WKHWKUHHOHYHOGHSDUWXUH                      DQGRIWKHLQGLFWPHQW,QDGGLWLRQZHDIILUPWKHGLVWULFW
LWXOWLPDWHO\LPSRVHGZDVDSSURSULDWH:HDUHFRPSHOOHGWR                       FRXUWjV GHFLVLRQ WR XSZDUGO\ GHSDUW IURP WKH JXLGHOLQH
DJUHH ZLWK $SSHOODQW RQ WKLV LVVXH  $V ZH UHDG WKH WULDO              VHQWHQFLQJUDQJHEXWUHPDQGWKHFDVHIRUWKHGLVWULFWFRXUWWR
WUDQVFULSWWKHGLVWULFWFRXUWjVVWDWHPHQWVLQVXSSRUWRIDWKUHH                MXVWLI\WKHH[WHQWRIWKHGHSDUWXUH
OHYHOGHSDUWXUHDSSHDUPRUHOLNHUHDVRQVZKLFKPLWLJDWHD
ILYHOHYHOGHSDUWXUHUDWKHUWKDQH[SODLQWKHDSSURSULDWHQHVVRI                                                      ,
DWKUHHOHYHOGHSDUWXUH$FFRUGLQJO\ZHUHPDQGWKLVFDVHWR
WKHGLVWULFWFRXUWLQRUGHUWRMXVWLI\WKHH[WHQWRIWKHGHSDUWXUH                 $VWKHHYLGHQFHSUHVHQWHGLQWKLVFDVHZLOOEHGLVFXVVHGLQ
                                                                                  JUHDWHUGHWDLOLQ3DUW,,LQIUDDWWKLVWLPHZHZLOORQO\JLYHD
                                &RQFOXVLRQ                                        EULHIUHFRXQWLQJRIWKHIDFWVLQWKLVFDVH
   ,Q FRQFOXVLRQ WKH MXGJPHQW RI WKH GLVWULFW FRXUW LV                      ,Q$SSHOODQW3KLOLS$&KDQFHUDQIRUWKHRIILFHRI
$)),50(',13$57$1'5(9(56(',13$57:H                                        0DKRQLQJ &RXQW\ 6KHULII     EXW ORVW LQ WKH SULPDULHV WR
DIILUP$SSHOODQWjVFRQYLFWLRQVDVWR&RXQWVDQGRIWKH                    LQFXPEHQW(G1HPHWK$SSHOODQWGLGKRZHYHUJDUQHUIRUW\
LQGLFWPHQW:HUHYHUVH$SSHOODQWjVFRQYLFWLRQVDVWR&RXQWV                      SHUFHQW RI WKH YRWHV LQ WKH SULPDU\  %XR\HG E\ WKLV
 DQG  RI WKH LQGLFWPHQW 6LQFH &RXQWV  DQG  GLG QRW               DFKLHYHPHQW$SSHOODQWGHFLGHGWRUXQIRU6KHULIIDJDLQLQ
FRQWURO WKH RIIHQVH OHYHO IRU SXUSRVHV RI FDOFXODWLQJ WKH                 0LVVLQJIURPKLVFDPSDLJQKRZHYHUZDVDNH\
VHQWHQFHIRUWKHJURXSHGFRXQWVZHQHHGQRWUHPDQGWKHFDVH                      LQJUHGLHQW RI KLV  FDPSDLJQoWKH ILQDQFLDO VXSSRUW RI
IRU UHVHQWHQFLQJ DV D UHVXOW RI WKH UHYHUVDO RI WKRVH                    <RXQJVWRZQ PDOO GHYHORSHU $QWKRQ\ &DIDUR )LQDQFLDOO\
FRQYLFWLRQV  ,Q DGGLWLRQ ZH DIILUP WKH GLVWULFW FRXUWjV                 VWUDSSHGDQGZLWKKLVFDPSDLJQLQQHHGRIIXQGV$SSHOODQW
GHFLVLRQWRXSZDUGO\GHSDUWIURPWKH6HQWHQFLQJ*XLGHOLQHV                       WXUQHGWR<RXQJVWRZQ0DILDERVV/HQLQHm/HQQ\l6WUROORIRU
+RZHYHUWKLVFDVHLV5(0$1'('WRWKHGLVWULFWFRXUWWR                           KHOS
MXVWLI\WKHH[WHQWRIWKHGHSDUWXUH
                                                                                     /HQQ\6WUROORZDVKDYLQJSUREOHPV RIKLVRZQLQ
                                                                                  6WUROORZDVDPHPEHURIWKH3LWWVEXUJKEUDQFKRI/D&RVD
                                                                                  1RVWUD7KDQNVWRH[WHQVLYHSD\RIIVWRSROLWLFLDQVDQGKLJK
                                                                                  UDQNLQJODZHQIRUFHPHQWRIILFLDOV6WUROORFRQWUROOHGDOOWKH
                                                                                  LOOHJDOJDPEOLQJRSHUDWLRQVLQWKHFRPPXQLWLHVDQGVXEXUEV

                                                                                      
                                                                                       $SSHOODQW KDG EHHQ D GHSXW\ VKHULII IRU 0DKRQLQJ &RXQW\ IURP
     
       7KH FRXUW SRLQWHG WR $SSHOODQWjV ODFN RI NQRZOHGJH RI WKH YLROHQW           WR  DWWDLQLQJ WKH KLJKHVW UDQN RI GHWHFWLYH   $SSHOODQW KDG D
DFWLYLWLHV RI WKH 6WUROOR HQWHUSULVH DQG WKH OHWWHUV RI VXSSRUW LQGLFDWLQJ WKDW   QXPEHU RI MREV EHWZHHQ  DQG  LQFOXGLQJ ZRUNLQJ IRU D VHFXULW\
$SSHOODQW RWKHUZLVH UHGXFHG YLROHQW VWUHHW FULPH                                 DJHQF\ LQ <RXQJVWRZQ DQG RSHUDWLQJ D ILUHZRUNV VWRUH LQ )ORULGD
       8QLWHG6WDWHVY&KDQFH                          1R        1R                        8QLWHG6WDWHVY&KDQFH         

VXUURXQGLQJ <RXQJVWRZQ  *DPEOLQJ RSHUDWLRQV ZLWKLQ                    $SSHOODQWFRXOGKDYHEHHQKHOGDFFRXQWDEOHWKHGLVWULFWFRXUW
<RXQJVWRZQLWVHOIKRZHYHUZHUHDGLIIHUHQWPDWWHU+HUH                 DSSURSULDWHO\WRRNWKLVFRQGXFWLQWRFRQVLGHUDWLRQ
6WUROORKDGWZRLQWHUUHODWHGSUREOHPV2QHSUREOHPZDVWKDW
KH KDG FRPSHWLWLRQ QRW RQO\ IURP LQGHSHQGHQW JDPEOLQJ                  ,QOLJKWRIWKHIRUHJRLQJLWUHPDLQVWREHGHFLGHGZKHWKHU
RSHUDWLRQVEXWDOVRIURPWKH&OHYHODQGEUDQFKRI/D&RVD                   WKH GLVWULFW FRXUW HUUHG LQ FRQFOXGLQJ WKDW WKH HQXQFLDWHG
1RVWUD  7KH VHFRQG SUREOHP ZDV WKDW WKH SROLFH FKLHI LQ         IDFWRUVWDNHWKLVFDVHRXWVLGHWKHKHDUWODQGRIEULEHU\FDVHV
<RXQJVWRZQZDVXQEX\DEOHDQG6WUROORjVDJUHHPHQWZLWKWKH                   (YHQWKRXJKZHKDYHIRXQGWKDWWKHGLVWULFWFRXUWLPSURSHUO\
LQFXPEHQWVKHULII(G1HPHWKKDGDSSDUHQWO\UXQLWVFRXUVH                UHOLHGRQRQHIDFWRUZHPD\VWLOODIILUPWKHGHFLVLRQWRGHSDUW
7KXV6WUROORKDGQRLQIOXHQFHZLWKLQ<RXQJVWRZQSURSHU                    IURP WKH *XLGHOLQHV DV ORQJ DV WKH UHPDLQLQJ UHDVRQV DUH
7RLOOXVWUDWHRQHRI6WUROORjVHDUO\HIIRUWVWRH[WRUWDmVWUHHW           VXIILFLHQWWRMXVWLI\WKHGHSDUWXUH:LOOLDPVY8QLWHG6WDWHV
WD[lIURPWKHLQGHSHQGHQWERRNPDNHUVIRUWKHSULYLOHJHRI                  86:HILQGWKDWWKHUHPDLQLQJIDFWRUV
RSHUDWLQJLQ<RXQJVWRZQZDVODUJHO\XQVXFFHVVIXOEHFDXVHRI                 ZHUHVXIILFLHQWWRMXVWLI\WKHGLVWULFWFRXUWjVFRQFOXVLRQWKDWDQ
ODFNRIFRRSHUDWLRQIURPORFDOODZHQIRUFHPHQW7KHUHIRUH                 XSZDUGGHSDUWXUHZDVZDUUDQWHGLQWKLVFDVH:HDJUHHZLWK
6WUROORGHFLGHGWREDFN$SSHOODQWLQWKHHOHFWLRQIRUFRXQW\                WKH GLVWULFW FRXUW WKDW WKLV FDVH ZDV QRW D mJDUGHQ YDULHW\l
VKHULIIDQGWKHQXVHWKH$SSHOODQWjVGHSDUWPHQWWRFORVHGRZQ               EULEHU\ FDVH  7KLV FDVH ZDV IDU IURP D VWUHHW FRS WDNLQJ
WKRVHJDPEOLQJRSHUDWLRQVZKRUHIXVHGWRSD\XS                            PRQH\WRORRNWKHRWKHUZD\5DWKHU$SSHOODQWjVDFFHSWDQFH
                                                                            RIEULEHVIURP/HQQ\6WUROORSHUPLWWHGDQRWRULRXVFULPLQDO
   7KHRWKHUSULQFLSDOSOD\HUVLQWKLVFULPHGUDPDZHUHsRKQ                HQWHUSULVH WR FRQWURO WKH ODZ HQIRUFHPHQW DFWLYLWLHV RI DQ
&KLFDVH /DZUHQFH msHHSl *DURQR DQG &KDUOHV 2j1HVWL                 HQWLUHGHSDUWPHQW,QHIIHFW$SSHOODQWJDYHWKH0DILDLWVRZQ
&KLFDVHDOVRDIRUPHUGHSXW\VKHULIIZDVDFORVHIULHQGRI                SROLFHIRUFH7KHUHIRUHZHWKLQN$SSHOODQWjVLQYROYHPHQW
$SSHOODQWjVDQGDNH\PHPEHURI$SSHOODQWjVFDPSDLJQVWDII                 ZLWKRUJDQL]HGFULPHILJXUHVDQGWKHQDWXUHRIKLVDJUHHPHQW
$OWKRXJKDIWHUOHDYLQJWKH6KHULIIjV'HSDUWPHQW&KLFDVHUDQ                 ZLWKWKHPLVVXIILFLHQWWRWDNHWKLVFDVHRXWVLGHWKHKHDUWODQG
DOHJLWLPDWHVHFXULW\EXVLQHVVKHDOVRSDUWLFLSDWHGLQ6WUROORjV           RIEULEHU\FDVHV)XUWKHUPRUH$SSHOODQWjVDEXVHRIWKHVWDWH
FULPLQDORSHUDWLRQV,WZDV&KLFDVHDORQJZLWKDFROOHFWRU                FDPSDLJQ ODZV LQ RUGHU WR DVVXPH SRZHU ZDV DOVR DQ
QDPHG7RQ\=DSSLDZKRFDUULHGRXW6WUROORjVLQLWLDODWWHPSW                DJJUDYDWLQJ FLUFXPVWDQFH WKDW WRRN WKLV FDVH RXWVLGH WKH
WR H[WRUW D VWUHHW WD[ IURP WKH LQGHSHQGHQW JDPEOLQJ                KHDUWODQGRIEULEHU\FDVHV&RQVHTXHQWO\ZHILQGWKDWWKH
RSHUDWLRQV&RLQFLGHQWDOO\DQGIRUWXLWRXVO\sHHS*DURQRDQG               GLVWULFWFRXUWGLGQRWDEXVHLWVGLVFUHWLRQLQGHFLGLQJWRGHSDUW
&KLFDVH ZHUH ILUVW FRXVLQV  *DURQR RZQHG D OHJLWLPDWH              XSZDUGO\IURPWKHJXLGHOLQHVHQWHQFLQJUDQJH
ODQGVFDSLQJEXVLQHVVEXWZDVDOVRRQHRIWKHWRSOLHXWHQDQWV
LQ/HQQ\6WUROORjVJDPEOLQJRUJDQL]DWLRQ&KDUOHV2j1HVWL                    )LQDOO\ ZH PXVW GHWHUPLQH ZKHWKHU WKH DPRXQW RI WKH
D ORQJWLPH IULHQG RI /HQQ\ 6WUROOR ZDV DQ DLGH WR 86          GHSDUWXUH ZDV UHDVRQDEOH  $IWHU GHWHUPLQLQJ WKDW WKH
5HSUHVHQWDWLYH sDPHV 7UDILFDQW DQG KDG D ZHOONQRZQ                   GHSDUWXUHE\WKHGLVWULFWFRXUWZDVQRWEDVHGRQLPSHUPLVVLEOH
UHSXWDWLRQIRUEHLQJWKHPREjVmEDJPDQlLQ<RXQJVWRZQ                    IDFWRUVWKLV&RXUWUHYLHZVDQ\VHQWHQFHWKDWLVRXWVLGHWKH
                                                                            DSSOLFDEOHJXLGHOLQHUDQJHIRUUHDVRQDEOHQHVV8QLWHG6WDWHV
                                                                            Y%DUDMDV1XQH])GWK&LU86&
                                                                            H7KHUHDVRQDEOHQHVVGHWHUPLQDWLRQORRNVWRWKH
                                                                           DPRXQWDQGH[WHQWRIWKHGHSDUWXUHLQOLJKWRIWKHJURXQGVIRU
     <RXQJVWRZQ LV DSSUR[LPDWHO\ HTXLGLVWDQW EHWZHHQ &OHYHODQG DQG
3LWWVEXUJK FDXVLQJ PDILRVL IURP ERWK FLWLHV WR ZDJH D EORRG\ ZDU IRU
                                                                            GHSDUWLQJ,QDVVHVVLQJUHDVRQDEOHQHVVXQGHUIWKH
FRQWURO   RI   LWV  FULPLQDO  DFWLYLWLHV     $00 &ULPHWRZQ 86$        $FWGLUHFWVDFRXUWRIDSSHDOVWRH[DPLQHWKHIDFWRUV WREH
KWWSDEFQHZVJRFRPRQDLU1LJKWOLQHQOKWPO YLVLWHG sDQXDU\     FRQVLGHUHGLQLPSRVLQJDVHQWHQFHXQGHUWKH*XLGHOLQHVDV
 VWDWLQJ WKDW WKH PRE ZDU UHVXOWHG LQ  FDUERPELQJV LQ  \HDUV
    8QLWHG6WDWHVY&KDQFH                       1R       1R                         8QLWHG6WDWHVY&KDQFH           

LQ UHO\LQJ RQ WKH IDFW WKDW $SSHOODQW ZDV WKH FKLHI ODZ       7HVWLPRQ\ DW WULDO VKRZHG WKDW GXULQJ WKH HOHFWLRQ
HQIRUFHPHQW RIILFHU RI WKH FRXQW\ ZLWKRXW IXUWKHU              FDPSDLJQ$SSHOODQWDVNHG&KLFDVHWRDSSURDFKsHHS*DURQR
H[SODQDWLRQDVDEDVLVIRUDQXSZDUGGHSDUWXUH                      DERXW VROLFLWLQJ PRQH\ RQ KLV EHKDOI IURP /HQQ\ 6WUROOR
                                                                      GHVSLWH&KLFDVHjVZDUQLQJVWKDWLIKHWRRNPRQH\IURP6WUROOR
  )LQDOO\ZHWKLQNWKHGLVWULFWFRXUWFRXOGSURSHUO\UHO\RQ         KHmZRXOGEHVHOOLQJKLVVRXOWRWKH'HYLOl$SSHOODQWDOVR
WKH IDFW WKDW $SSHOODQW YLRODWHG VWDWH FDPSDLJQ ODZV LQ       DVNHG 2j1HVWL WR DVN 6WUROOR IRU PRQH\ IRU KLV FDPSDLJQ
XSZDUGO\GHSDUWLQJIURPWKH6HQWHQFLQJ*XLGHOLQHV6HFWLRQ           6WUROOR WHVWLILHG WKDW LQLWLDOO\ KH DQG $SSHOODQW PHW DW KLV
%SURYLGHV                                                     KRXVH VHYHUDO WLPHV DQG WKDW $SSHOODQW XQGHUVWRRG ZKDW
                                                                      ZRXOGEHUHTXLUHGZKHQKHWRRNRIILFH7KHXQGHUVWDQGLQJ
  ,QGHWHUPLQLQJWKHVHQWHQFHWRLPSRVHZLWKLQDJXLGHOLQH            RI FRXUVH ZDV WKDW $SSHOODQW ZRXOG XVH WKH 6KHULIIjV
  UDQJH RU ZKHWKHU D GHSDUWXUH IURP WKH JXLGHOLQHV LV        'HSDUWPHQW WR VKXW GRZQ WKH QRQFRRSHUDWLQJ JDPEOLQJ
  ZDUUDQWHG WKH FRXUW PD\ FRQVLGHU ZLWKRXW OLPLWDWLRQ        RSHUDWLRQVLGHQWLILHGE\6WUROOREXWOHDYHXQPROHVWHG6WUROORjV
  DQ\LQIRUPDWLRQFRQFHUQLQJWKHEDFNJURXQGFKDUDFWHURU            RZQRSHUDWLRQV$IWHUWKHLQLWLDOIHZIDFHWRIDFHPHHWLQJV
  FRQGXFWRIWKHGHIHQGDQWXQOHVVRWKHUZLVHSURKLELWHGE\            $SSHOODQWDQG6WUROORXVHG&KLFDVH*DURQRDQG2j1HVWLDV
  ODZ6HH86&                                         JREHWZHHQV VR WKH WZR ZRXOG QRW EH FRQQHFWHG DQG UXLQ
                                                                      $SSHOODQWjVELGWREHFRPHVKHULII7HVWLPRQ\DWWULDOIXUWKHU
0RUHRYHULQGHYHORSLQJDQDSSURSULDWHVHQWHQFHDGLVWULFW           VKRZHG WKDW 6WUROOR XVHG *DURQR 2j1HVWL DQG &KLFDVH WR
FRXUWPD\WDNHLQWRFRQVLGHUDWLRQXQFKDUJHGFRQGXFWRUHYHQ           IXQQHO RYHU  WR $SSHOODQW IRU KLV FDPSDLJQ  ,Q
FRQGXFWIRUZKLFKWKHGHIHQGDQWKDVEHHQDFTXLWWHGVRORQJDV         DGGLWLRQ 6WUROOR SDLG IRU WKH FRVW RI FDWHULQJ RQH RI
WKDW FRQGXFW KDV EHHQ SURYHQ E\ D SUHSRQGHUDQFH RI WKH       $SSHOODQWjVIXQGUDLVHUVE\IRUJLYLQJDJDPEOLQJGHEW
HYLGHQFH  8QLWHG 6WDWHV Y :DWWV  86      RZHGWRKLPE\WKHFDWHUHUjVQHSKHZ,QDGGLWLRQDIWHUWKH
  7KHUHIRUH LQ WKLV FDVH WKH GLVWULFW FRXUW FRXOG   HOHFWLRQ6WUROORSDLGIRUDJDPEOLQJMXQNHWWR$WODQWLF&LW\
SURSHUO\WDNHLQWRDFFRXQWWKHIDFWWKDW$SSHOODQWjVFRXUVHRI        WDNHQE\$SSHOODQWDQG&KLFDVH
FRQGXFWLQFOXGHGYLRODWLRQVRIVWDWHFDPSDLJQODZVSURYLGHG
WKHJRYHUQPHQWSURYHGVXFKFRQGXFWE\DSUHSRQGHUDQFHRI                $SSHOODQW ZRQ WKH HOHFWLRQ DQG LQVWDOOHG &KLFDVH DV WKH
WKHHYLGHQFH,QWKLVFDVH$SSHOODQWGRHVQRWDUJXHWKDWKH         KHDG RI WKH YLFH GHSDUWPHQW  $FFRUGLQJ WR &KLFDVHjV
GLGQRWYLRODWHDQ\VWDWHFDPSDLJQODZVKHRQO\DUJXHVWKDW          WHVWLPRQ\*DURQRLGHQWLILHGWZRJDPEOLQJRSHUDWLRQVRQHRQ
WKLV FRQGXFW LV VXEVXPHG LQ WKH mSDWWHUQ RI UDFNHWHHULQJ      /DQH 6WUHHW LQ <RXQJVWRZQ DQG RQH DW WKH 2SHQ +HDUWK
DFWLYLW\l(YHQLIWKHVHYLRODWLRQVZHUHSDUWRIWKHSDWWHUQRI      5HVWDXUDQWZKLFK6WUROORZDQWHGWKH6KHULIIjV'HSDUWPHQWWR
UDFNHWHHULQJDFWLYLW\$SSHOODQWVWLOOFRXOGKDYHEHHQFKDUJHG       UDLG&KLFDVHWHVWLILHGWKDW$SSHOODQWJDYHKLPSHUPLVVLRQWR
FRQYLFWHGDQGVHQWHQFHGIRUWKHVHLQGLYLGXDOYLRODWLRQV6HH        FRQGXFWWKHUDLGVZLWKWKHIXOONQRZOHGJHWKDWWKHUHTXHVWVIRU
8QLWHG6WDWHVY/LFDYROL)GWK&LU         WKHUDLGVFDPHIURP6WUROOR2QDQRWKHURFFDVLRQ2j1HVWL
m7KHUHLVQRWKLQJLQWKH5,&2VWDWXWRU\VFKHPHZKLFKZRXOG           DVNHG &KLFDVH WR UDLG D EDUEXW JDPH DW DQ HVWDEOLVKPHQW
VXJJHVW WKDW &RQJUHVV LQWHQGHG WR SUHFOXGH VHSDUDWH
FRQYLFWLRQVRUFRQVHFXWLYHVHQWHQFHVIRUD5,&2RIIHQVHDQG
WKH XQGHUO\LQJ SUHGLFDWH FULPHV ZKLFK PDNH XS WKH                  
UDFNHWHHULQJSDWWHUQlTXRWLQJ8QLWHG6WDWHVY5RQH                ,Q DQRWKHU FDVH WKLV &RXUW GHVFULEHG EDUEXW DV IROORZV
)G   WK &LU   %HFDXVH WKH FDPSDLJQ            7KH JDPEOLQJ DFWLYLW\ FDUULHG RQ DW WKH 0LGZD\ &OXE ZDV D IRUP
YLRODWLRQV ZHUH VHSDUDWH FKDUJHDEOH FRQGXFW IRU ZKLFK              RI GLFH JDPH NQRZQ DV m%DUEXWl D JDPH LQ ZKLFK FXVWRPHUV EHW
                                                                          DJDLQVW RQH DQRWKHU EXW QRW DJDLQVW WKH KRXVH 7KH SURRIV
                                                                          VKRZHG WKDW LQ D %DUEXW JDPH WKH KRXVH GRHV QRW LWVHOI JDPEOH
       8QLWHG6WDWHVY&KDQFH                            1R     1R                          8QLWHG6WDWHVY&KDQFH           

FDOOHGWKH*UHHN&RIIHH+RXVH,WWXUQHGRXWKRZHYHUWKDW               HQIRUFHPHQWRIILFHUl,QDGGLWLRQ$SSHOODQWZDVDQmHOHFWHG
WKLV SDUWLFXODU JDPH ZDV RSHUDWHG E\ %HUQLH $OWVKXOHU              RIILFLDOl:HWKLQNWKHFRPELQDWLRQRIWKRVHWZRHOHPHQWV
DQRWKHU RQH RI 6WUROORjV WRS PHQ  7KHUHIRUH *DURQR WROG         HQFRPSDVVHVWKHGLVWULFWFRXUWjVUDWLRQDOHWKDW$SSHOODQWZDV
&KLFDVHWROHDYHLWDORQH)DFHGZLWKFRQIOLFWLQJLQVWUXFWLRQV           WKHFKLHIODZHQIRUFHPHQWRIILFHULQWKHFRXQW\DQGWKHUHIRUH
&KLFDVHZHQWWR$SSHOODQWZKRWROGKLPQRWWRUDLGWKHJDPH               LVWDNHQLQWRFRQVLGHUDWLRQE\WKH*XLGHOLQHV
DQGVDLGWKDWKHZRXOGmWDNHFDUHRIl2j1HVWL$VDUHVXOWWKH
6KHULIIjV'HSDUWPHQWQHYHUUDLGHGWKH*UHHN&RIIHH+RXVH                     0RUHRYHUZHGLVDJUHHZLWKWKHJRYHUQPHQWWKDWWKHGLVWULFW
JDPH                                                                      FRXUWXSZDUGO\GHSDUWHGSXUVXDQWWR$SSOLFDWLRQ1RWHRI
                                                                           &:KLOHWKHGLVWULFWMXGJHGLGVD\WKDWVKHDJUHHGZLWK
   ,QDGGLWLRQWRKLVDJUHHPHQWZLWK/HQQ\6WUROOR$SSHOODQW              WKHJRYHUQPHQWWKDWWKHFDVHGLGQRWLQYROYHmJDUGHQYDULHW\
KDG KLV RZQ SODQ WR H[WRUW FDPSDLJQ FRQWULEXWLRQV IURP             EULEHU\l WKHUH ZDV QR ILQGLQJ WKDW WKH FRUUXSWLRQ ZDV
<RXQJVWRZQILUHZRUNVPLOOLRQDLUH%UXFH=ROGDQ=ROGDQZDV                 SHUYDVLYH RU V\VWHPLF RU FRXOG FDXVH D ORVV RI SXEOLF
D VXSSRUWHU RI $SSHOODQWjV RSSRQHQW DQG WKHUHIRUH GLG QRW          FRQILGHQFH  7KH FDVHV FLWHG WR XV E\ WKH JRYHUQPHQW LQ
FRQWULEXWH WR $SSHOODQWjV FDPSDLJQ  &KLFDVH WHVWLILHG WKDW         VXSSRUWRILWVSRVLWLRQDUHGLVWLQJXLVKDEOHIRURQHUHDVRQRU
GXULQJWKHHOHFWLRQKHDQG$SSHOODQWGLVFXVVHGVKXWWLQJGRZQ              DQRWKHU7KHUHIRUHZHFRQFOXGHWKDWWKHGLVWULFWFRXUWHUUHG
=ROGDQjVEXVLQHVVDIWHUWDNLQJRIILFHSUHVXPDEO\RQERJXV
VDIHW\YLRODWLRQVLQUHVSRQVHWRKLVODFNRIVXSSRUW$IWHU
$SSHOODQW WRRN RIILFH &KLFDVH ZDV LQYROYHG LQ D PHHWLQJ                 
UHJDUGLQJ WUDQVIHUULQJ VRPH SULVRQHUV IURP &ROXPELDQD                         ,Q 8QLWHG 6WDWHV Y +DUW  )G  WK &LU  WKH GLVWULFW
&RXQW\WR0DKRQLQJ&RXQW\ZLWK=ROGDQjVFKLHIRIVHFXULW\                 FRXUW ZKLOH QRW FLWLQJ $SSOLFDWLRQ 1RWH  VWDWHG WKDW WKH FRQVHTXHQFHV
5REHUW 0DUWLQR  0DUWLQR WHVWLILHG WKDW ZKHQ WKDW PHHWLQJ          RI WKH GHIHQGDQWjV HPEH]]OHPHQW mDUH VR FUXHO DQG KXUWIXO WR WKH UHVLGHQWV
EURNHXS&KLFDVHSXOOHGKLPDVLGHWRWHOOKLPWRWHOO=ROGDQ
                                                                           RI WKLV FRPPXQLW\ WKDW WKH\ DORQH ZDUUDQW DQ XSZDUG GHSDUWXUH LQ WKH
                                                                           VHQWHQFHl ,G DW  :H WKLQN WKLV VWDWHPHQW LV WKH HTXLYDOHQW RI ILQGLQJ
WKDWLI=ROGDQmGLGQjWFRPHDFURVVKHZDVJRLQJWRVKXWKLV
                                                                                        )G  WK &LU  WKH GLVWULFW FRXUW VSHFLILFDOO\
                                                                           D ORVV RI SXEOLF FRQILGHQFH LQ WKH JRYHUQPHQW        ,Q 8QLWHG 6WDWHV Y
RSHUDWLRQGRZQl0DUWLQRUHOD\HGWKHPHVVDJHWR=ROGDQDQG
                                                                           IRXQG WKDW WKH GHIHQGDQWjV FRQGXFW mXQGHUPLQ>HG@ WKH V\VWHP RI MXVWLFH
                                                                           6KHQEHUJ

DVDUHVXOW=ROGDQSXUFKDVHGDSSUR[LPDWHO\LQWLFNHWV
WRDJROIRXWLQJEHLQJKHOGWRUHGXFH$SSHOODQWjVFDPSDLJQ                 LQ 'DGH &RXQW\ DQG LQ WKLV FRXQWU\l DW  6LPLODUO\ LQ
                                                                                               )G  WK &LU  WKH GLVWULFW FRXUW
                                                                                                                   ,G                        8QLWHG

GHEW                                                                     VSHFLILFDOO\ IRXQG WKDW WKH GHIHQGDQWjV FRQGXFW mUHVXOWHG LQ LUUHSDUDEOH
                                                                           6WDWHV     Y   +DWFK

                                                                           KDUP WR SXEOLF FRQILGHQFH LQ ODZ HQIRUFHPHQWl DW  ,Q
                                                                                                    )G  WK &LU  WKH GLVWULFW FRXUW
                                                                                                                              ,G             8QLWHG

                                                                           LPSRVHG D WZROHYHO HQKDQFHPHQW IRU DEXVH RI D SRVLWLRQ RI SXEOLF WUXVW
                                                                           6WDWHV Y %XVWDPDQWH

    EXW SURYLGHV WKH IDFLOLW\ DQG WKH GHDOHUV ZKR DFWXDOO\ KDQGOH WKH      SXUVXDQW WR  % EXW VSHFLILFDOO\ GLG QRW FRQVLGHU WKH DSSOLFDELOLW\ RI
    GLFH 7KH KRXVH WDNHV D SHUFHQWDJH RI WKH ZLQQLQJV RI HDFK              & EHFDXVH WKH EDVH RIIHQVH OHYHO ZDV GHWHUPLQHG XQGHU  (D
    JDPH 7KH PLQLPXP EHW LQ DQ\ JLYHQ JDPH DW WKH 0LGZD\ &OXE                 DW  	  Q ,Q                           )G  WK &LU
                                                                            WKH &RXUW LQ DGGUHVVLQJ  & VWDWHG WKDW m>Z@H ILQG QRWKLQJ
                                                                           ,G                      8QLWHG 6WDWHV Y 5HHYHV
    ZDV  RQ D VLQJOH WKURZ RI WKH GLFH DQG WKH SRW VL]H YDULHG
    JUHDWO\ 7KH ZLQQHU ZRXOG SD\ WR WKH KRXVH  DQG . SHUFHQW RI          REMHFWLRQDEOH LQ D GHWHUPLQDWLRQ WKDW FHUWDLQ RIILFH KROGHUV FKDUJHG ZLWK
    WKH DPRXQW KH ZRQ H[FOXVLYH RI KLV RZQ EHW                           FHUWDLQ UHVSRQVLELOLWLHV ZDUUDQW D GHSDUWXUH IURP WKH JXLGHOLQHVl DW
                                                                            7KH &RXUW FRQFOXGHG KRZHYHU WKDW WKH XSZDUG GHSDUWXUH ZDV
                                                                                                                                                ,G

6HH 8QLWHG 6WDWHV Y 0DWWXFFL     )G   WK &LU        MXVWLILHG VROHO\ XQGHU $SSOLFDWLRQ 1RWH  EHFDXVH WKH PRQHWDU\ YDOXH RI
                                                                           WKH EULEH ZDV XQNQRZQ DQG GLG QRW DGHTXDWHO\ UHIOHFW WKH VHULRXVQHVV RI
    
      =ROGDQ ZDV D ORQJWLPH YLFWLP RI H[WRUWLRQ ,Q WKH HDUO\ 
V     WKH RIIHQVH         7KXV WKH &RXUWjV LQLWLDO VWDWHPHQW HQGRUVLQJ WKH
                                                                           JRYHUQPHQWjV SRVLWLRQ LV QRW RQO\ GLFWD EXW FRQIOLFWV ZLWK RXU RZQ
                                                                                              ,G
=ROGDQ GUHZ WKH LUH RI D 3KLODGHOSKLD PREVWHU QDPHG %LOO\ 'j(OLD IRU
VHOOLQJ ILUHZRUNV LQ WKH 1HZ <RUN &LW\ DUHD ZLWKRXW 'j(OLDjV SHUPLVVLRQ   DQDO\VLV WKDW  &E% DOUHDG\ WDNHV LQWR FRQVLGHUDWLRQ
'j(OLD GHPDQGHG =ROGDQ SD\ KLP  DV D SHQDOW\ (YHQWXDOO\          $SSHOODQWjV SRVLWLRQ
    8QLWHG6WDWHVY&KDQFH                         1R       1R                         8QLWHG6WDWHVY&KDQFH           

  :H WKLQNWKDW$SSHOODQWjVILUVWDUJXPHQWWKDWWKH5,&2                2Q)HEUXDU\DJUDQGMXU\IRUWKH1RUWKHUQ'LVWULFW
VHQWHQFLQJ JXLGHOLQH 866*  ( DOUHDG\ WDNHV LQWR       RI2KLRUHWXUQHGDVL[FRXQWLQGLFWPHQWDJDLQVW$SSHOODQWDQG
FRQVLGHUDWLRQ WKH IDFW WKDW WKH RIIHQVH ZLOO RIWHQ LQYROYH      sRKQ &KLFDVH  $SSHOODQW ZDV FKDUJHG LQ ILYH RI WKRVH VL[
RUJDQL]HG FULPH KDV VRPH VXSHUILFLDO DSSHDO  $IWHU DOO       FRXQWV&KLFDVHODWHUHQWHUHGLQWRDSOHDDJUHHPHQWZLWKWKH
&RQJUHVVj SXUSRVH LQ HQDFWLQJ WKH 5,&2 VWDWXWHV ZDV WR          JRYHUQPHQWDQGWHVWLILHGDJDLQVW$SSHOODQWDWWULDO&RXQW
HUDGLFDWHRUJDQL]HGFULPH6HH5XVVHOORY8QLWHG6WDWHV          RI WKH LQGLFWPHQW FKDUJHG $SSHOODQW ZLWK FRQGXFWLQJ WKH
867KXVE\VKHHUIRUFHRIUHDVRQLWZRXOG             DIIDLUV RI DQ HQWHUSULVH WKURXJK D SDWWHUQ RI UDFNHWHHULQJ
VHHPWKDWWKH6HQWHQFLQJ&RPPLVVLRQPXVWKDYHFRQVLGHUHG                DFWLYLW\LQYLRODWLRQRIWKH5DFNHWHHU,QIOXHQFHGDQG&RUUXSW
WKLVIDFWRULQGHYHORSLQJDQDSSURSULDWHVHQWHQFLQJJXLGHOLQH           2UJDQL]DWLRQV $FW m5,&2l  86&  F  $V
IRU5,&2RIIHQVHV%XWVHH8QLWHG6WDWHVY5DLQRQH)G           SUHGLFDWH DFWV RI WKH 5,&2 FKDUJH WKH LQGLFWPHQW DOOHJHG
WK&LUKROGLQJWKDWXSZDUGGHSDUWXUH               WKUHH VHSDUDWHDFWVRIEULEHU\LQYLRODWLRQRI2KLR5HYLVHG
EDVHGRQLQYROYHPHQWZLWKRUJDQL]HGFULPHZDVDSSURSULDWH               &RGHWZRVHSDUDWHDFWVRIH[WRUWLRQLQYLRODWLRQRI
EHFDXVH DSSOLFDWLRQ RI 5,&2 LV QRW OLPLWHG WR mRUJDQL]HG        WKH+REEV$FW86&DQGRQHDFWRIREVWUXFWLRQ
FULPHl DQG QRWLQJ WKDW mUXQ RI WKH PLOO FULPLQDO                RIORFDOODZHQIRUFHPHQWLQYLRODWLRQRI86&
DFWLYLWLHVDUHWKHURXWLQHJULVWRI5,&2SURVHFXWLRQVl          &RXQW  FKDUJHG $SSHOODQW ZLWK FRQVSLUDF\ WR FRPPLW D
:HQRWHKRZHYHUWKDWHYHQWKRXJK$SSHOODQWZDVFRQYLFWHG              5,&2YLRODWLRQXQGHU86&G&RXQWVDQG
RID5,&2RIIHQVHSXUVXDQWWR(DWKHVHQWHQFLQJ           RI WKH LQGLFWPHQW ZHUH VXEVWDQWLYH +REEV $FW FKDUJHV IRU
FRXUWDSSOLHGWKHJXLGHOLQHIRUWKHSUHGLFDWHDFWRIEULEHU\           FRQVSLULQJ WR H[WRUW FDPSDLJQ FRQWULEXWLRQV IURP %UXFH
&EHFDXVHLWSURYLGHGWKHJUHDWHUWRWDORIIHQVHOHYHO           =ROGDQDQGFRQVSLULQJWRH[WRUWDVWUHHWWD[IURPLQGHSHQGHQW
(YHQLIZHDVVXPHWKDW(DOUHDG\WDNHVLQYROYHPHQWLQ             JDPEOLQJ RSHUDWLRQV  &RXQW  RI WKH LQGLFWPHQW ZDV WKH
RUJDQL]HG FULPH LQWR FRQVLGHUDWLRQ  & WKH JXLGHOLQH       VXEVWDQWLYHFKDUJHIRUREVWUXFWLRQRIORFDOODZHQIRUFHPHQWLQ
XOWLPDWHO\ DSSOLHG E\ WKH VHQWHQFLQJ FRXUW GRHV QRW            YLRODWLRQRI86&
7KHUHIRUHZHWKLQNWKDWWKHGLVWULFWFRXUWFRXOGDSSURSULDWHO\
FRQVLGHUWKHIDFWWKDW$SSHOODQWWRRNEULEHVIURPRUJDQL]HG               7KHFDVHSURFHHGHGWRDWHQGD\WULDOEHJLQQLQJRQsXQH
FULPHILJXUHVLQGHWHUPLQLQJZKHWKHUWRXSZDUGO\GHSDUWIURP              'XULQJ WULDO DQG RYHU $SSHOODQWjV REMHFWLRQV WKH
WKHJXLGHOLQHUDQJH                                                    GLVWULFW FRXUW SHUPLWWHG WKH SURVHFXWLRQ WR FURVVH[DPLQH
                                                                        $SSHOODQW FRQFHUQLQJ WKH FULPLQDO LQGLFWPHQWV RI RWKHU
   :HGRKRZHYHUDJUHHZLWK$SSHOODQWWKDWWKHHLJKWOHYHO            GHSXWLHV ZRUNLQJ XQGHU $SSHOODQW RQ WKH 6KHULIIjV
HQKDQFHPHQWXQGHU&E%WRRNLQWRFRQVLGHUDWLRQ              'HSDUWPHQW7KHWULDOFRXUWDOVRGHQLHG$SSHOODQWjV5XOH
WKH IDFW WKDW $SSHOODQW ZDV WKH KLJKHVW ODZ HQIRUFHPHQW         PRWLRQV IRU MXGJPHQW RI DFTXLWWDO DW WKH FORVH RI WKH
RIILFLDOLQWKHFRXQW\,QWKLVFDVHWKHGLVWULFWFRXUWVWDWHGWKDW   JRYHUQPHQWjVFDVHLQFKLHIDQGDWWKHFORVHRIHYLGHQFH2Q
WKH6HQWHQFLQJ*XLGHOLQHVmGRQRWWDNHLQWRFRQVLGHUDWLRQWKH
IDFWWKDW>$SSHOODQW@ZDVWKHFKLHIODZHQIRUFHPHQWRIILFHUIRU
WKHFRXQW\l)RUSXUSRVHVRIWKLVVHFWLRQ$SSOLFDWLRQ1RWH
 WR  & VWDWHV WKDW mµ2IILFLDO KROGLQJ D KLJKOHYHO       6WUROOR DFWHG DV D PHGLDWRU DQG QHJRWLDWHG WKH GHPDQG GRZQ WR 
GHFLVLRQPDNLQJRUVHQVLWLYHSRVLWLRQjLQFOXGHVIRUH[DPSOH           ZKLFK =ROGDQ SDLG 7KHUHDIWHU =ROGDQ SDLG 6WUROOR SURWHFWLRQ PRQH\ RI
SURVHFXWLQJ DWWRUQH\V MXGJHV DJHQF\ DGPLQLVWUDWRUV                SHU \HDU ,Q DGGLWLRQ WR PRE H[WRUWLRQ =ROGDQ WHVWLILHG WKDW LQ
                                                                         WKHQ6KHULII sDPHV 7UDILFDQW FORVHG GRZQ KLV ILUHZRUNV RSHUDWLRQ
VXSHUYLVRU\ODZHQIRUFHPHQWRIILFHUVDQGRWKHUJRYHUQPHQWDO            RQ sXO\ UG DW WKH EHKHVW RI D FRPSHWLQJ RSHUDWLRQ $SSHOODQW DV D
RIILFLDOVZLWKVLPLODUOHYHOVRIUHVSRQVLELOLW\l$VWKHVKHULII       GHSXW\ OHG WKH UDLG WKDW GD\ =ROGDQ VXHG WKH FRXQW\ RQ YDULRXV
RI WKH FRXQW\ $SSHOODQW FOHDUO\ ZDV D mVXSHUYLVRU\ ODZ         FRQVWLWXWLRQDO YLRODWLRQV DQG UHFHLYHG D mODUJH VXP RI PRQH\l IURP WKH
                                                                        FRXQW\ WR VHWWOH WKH FDVH
     8QLWHG6WDWHVY&KDQFH                        1R       1R                          8QLWHG6WDWHVY&KDQFH           

sXO\WKHMXU\UHWXUQHGYHUGLFWVFRQYLFWLQJ$SSHOODQW         WKDW$SSHOODQWKDGRWKHUZLVHUHGXFHGYLROHQWVWUHHWFULPHLQ
RQDOOFRXQWV                                                       0DKRQLQJ&RXQW\6HHLGDW
  7KH GLVWULFW FRXUW KHOG D VHQWHQFLQJ KHDULQJ RQ                  $SSHOODQWDUJXHVWKDWWKHGLVWULFWFRXUWHUUHGLQGHSDUWLQJ
1RYHPEHU)RUSXUSRVHVRIVHQWHQFLQJ$SSHOODQWjV            EDVHG RQ WKH VWDWHG IDFWRUV EHFDXVH  ZLWK UHVSHFW WR WKH
FRQYLFWLRQVZHUHJURXSHGSXUVXDQWWR866*'7KH            IDFWRURIWDNLQJEULEHVIURPDPHPEHURIRUJDQL]HGFULPHLQ
GLVWULFW FRXUW WKHQ XVHG WKH JXLGHOLQH IRU EULEHU\ 866*   HVWDEOLVKLQJWKHDSSURSULDWHRIIHQVHOHYHOIRU5,&2YLRODWLRQV
&EHFDXVHSXUVXDQWWRWKH5,&2JXLGHOLQH866*              WKH 6HQWHQFLQJ &RPPLVVLRQ KDV DOUHDG\ WDNHQ LQWR
(LWSURYLGHGWKHKLJKHVWRIIHQVHOHYHO7KHEULEHU\           FRQVLGHUDWLRQ WKDW 5,&2 RIIHQVHV ZLOO RIWHQ LQYROYHG
JXLGHOLQHHVWDEOLVKHGDEDVHRIIHQVHOHYHORIWHQ7KHGLVWULFW       RUJDQL]HG FULPH  WKH DSSOLFDEOH VHQWHQFLQJ JXLGHOLQH
FRXUWWKHQDGGHGOHYHOVEHFDXVHWKHRIIHQVHLQYROYHGPRUH            &E%DOUHDG\WRRNLQWRFRQVLGHUDWLRQWKHIDFWWKDW
WKDQ RQH EULEH DQG  OHYHOV EHFDXVH WKH RIIHQVH LQYROYHG      $SSHOODQWZDVWKHKLJKHVWFRXQW\ODZHQIRUFHPHQWRIILFLDOE\
SD\PHQWVIRUWKHSXUSRVHRILQIOXHQFLQJDQHOHFWHGRIILFLDORU         LPSRVLQJ DQ HLJKWOHYHO HQKDQFHPHQW IRU EHLQJ DQ HOHFWHG
DQ RIILFLDO KROGLQJ D KLJKOHYHO GHFLVLRQPDNLQJ SRVLWLRQ       RIILFLDORUDQRIILFLDOKROGLQJDKLJKOHYHOGHFLVLRQPDNLQJ
7KH VXEWRWDO IURP  & ZDV   2YHU $SSHOODQWjV           SRVLWLRQDQGWKHIDFWWKDW$SSHOODQWDEXVHGDQGRUYLRODWHG
REMHFWLRQVWKHGLVWULFWFRXUWWKHQDGGHGDOHYHOHQKDQFHPHQW        WKHHOHFWLRQODZVZDVPHUHO\DILQGLQJWKDW$SSHOODQWHQJDJHG
XQGHU&IRUREVWUXFWLRQRIMXVWLFHRQWKHJURXQGVWKDW           LQ mD SDWWHUQ RI UDFNHWHHULQJ DFWLYLW\l DQG WKDW WKH 5,&2
$SSHOODQW FRPPLWWHG SHUMXU\ GXULQJ WULDO  7KXV WKRVH          JXLGHOLQHV DOVR WDNH WKLV IDFWRU LQWR FRQVLGHUDWLRQ  ,Q
FDOFXODWLRQVFRPELQHGZLWKDFULPLQDOKLVWRU\FDWHJRU\RI,            RSSRVLWLRQ WKH JRYHUQPHQW HVVHQWLDOO\ DUJXHV WKDW WKH
SURYLGHGDJXLGHOLQHVHQWHQFLQJUDQJHRIWRPRQWKVRI            VHQWHQFLQJFRXUWDGRSWHGWKHSRVLWLRQWKHJRYHUQPHQWWRRNLQ
LPSULVRQPHQW  7KH WULDO MXGJH KRZHYHU IRXQG WKDW             LWV VHQWHQFLQJ PHPRUDQGXP WKDW DQ XSZDUG GHSDUWXUH ZDV
$SSHOODQWjVFDVHZDVmRXWVLGHWKHKHDUWODQGlRIEULEHU\FDVHV          DSSURSULDWH SXUVXDQW WR $SSOLFDWLRQ 1RWH  RI  &
DQGWKHUHIRUHDJDLQRYHU$SSHOODQWjVREMHFWLRQVXSZDUGO\            EHFDXVH $SSHOODQWjV RIIHQVH      PD\ FDXVH ORVV RI SXEOLF
GHSDUWHGWKUHHOHYHOVWRDILQDORIIHQVHOHYHORI$ILQDO         FRQILGHQFHLQJRYHUQPHQW,QVXSSRUWRILWVSRVLWLRQWKH
RIIHQVHOHYHORISURGXFHGDVHQWHQFLQJUDQJHRIWR            JRYHUQPHQW FLWHV D QXPEHU RI FDVHV XSKROGLQJ XSZDUG
PRQWKVRILPSULVRQPHQW7KHGLVWULFWFRXUWWKHQVHQWHQFHG             GHSDUWXUHVLQ5,&2FDVHVRQWKHJURXQGVRI ORVVRISXEOLF
$SSHOODQW WR  PRQWKV RI LPSULVRQPHQW WZR \HDUV RI           FRQILGHQFH$SSHOODQWQRWHVLQKLVUHSO\EULHIKRZHYHUWKDW
VXSHUYLVHGUHOHDVHKRXUVRIFRPPXQLW\VHUYLFHDQGD              WKH GLVWULFW FRXUW QHYHU PDGH D ILQGLQJ WKDW WKH RIIHQVH
VSHFLDODVVHVVPHQW                                               LQYROYHG V\VWHPDWLF RU SHUYDVLYH FRUUXSWLRQ RU WKDW WKH
                                                                       RIIHQVHPLJKWFDXVHDORVVRISXEOLFFRQILGHQFH
  $SSHOODQWQRZDSSHDOVIURPWKHMXGJPHQWRIWKHGLVWULFW
FRXUW6SHFLILFDOO\$SSHOODQWFKDOOHQJHVWKHVXIILFLHQF\RI
WKHHYLGHQFHVXSSRUWLQJWKHFRQYLFWLRQVWKHGLVWULFWFRXUWjV
GHFLVLRQUHJDUGLQJWKHSURSHUVFRSHRIFURVVH[DPLQDWLRQWKH
                                                                           
GLVWULFWFRXUWjVGHFLVLRQWRLPSRVHDWZROHYHOHQKDQFHPHQW                  $SSOLFDWLRQ 1RWH  SURYLGHV
IRUREVWUXFWLRQRIMXVWLFHDQGWKHGLVWULFWFRXUWjVGHFLVLRQWR
XSZDUGO\ GHSDUW IURP WKH JXLGHOLQH VHQWHQFLQJ UDQJH  :H           :KHUH WKH FRXUW ILQGV WKDW WKH GHIHQGDQW
V FRQGXFW ZDV SDUW RI D
                                                                           V\VWHPDWLF RU SHUYDVLYH FRUUXSWLRQ RI D JRYHUQPHQWDO IXQFWLRQ
WDNHXSWKHVHLVVXHVVHULDWLP                                             SURFHVV RU RIILFH WKDW PD\ FDXVH ORVV RI SXEOLF FRQILGHQFH LQ
                                                                           JRYHUQPHQW DQ XSZDUG GHSDUWXUH PD\ EH ZDUUDQWHG
                                                                       866*  & $SSOLFDWLRQ 1RWH 
    8QLWHG6WDWHVY&KDQFH                      1R      1R                          8QLWHG6WDWHVY&KDQFH             

WK&LU:KHUHDVLQWKLVFDVHWKHVHQWHQFLQJ                                         ,,
FRXUWSURYLGHVPXOWLSOHUHDVRQVIRUDQXSZDUGGHSDUWXUHWKLV
&RXUWZLOODIILUPLILWLVVDWLVILHGWKDWDQ\RQHRIWKHIDFWRUV                      $6XIILFLHQF\RIWKH(YLGHQFH
ZRXOGMXVWLI\WKHGHSDUWXUH8QLWHG6WDWHVY+DUW)G
WK&LU                                              $V QRWHG $SSHOODQW FKDOOHQJHV WKH VXIILFLHQF\ RI WKH
                                                                    HYLGHQFHVXSSRUWLQJKLVFRQYLFWLRQV,QSDUWLFXODU$SSHOODQW
  ,QXSZDUGO\GHSDUWLQJIURPWKH*XLGHOLQHVVHQWHQFLQJUDQJH        DUJXHVWKDWWKHHYLGHQFHIDLOHGWRHVWDEOLVKWKDWWKH5,&2
LQWKLVFDVHWKHGLVWULFWFRXUWVWDWHG                            HQWHUSULVHGHVFULEHGLQWKHLQGLFWPHQWKDGDQH[LVWHQFHDSDUW
                                                                    IURP WKH DOOHJHG SDWWHUQ RI UDFNHWHHULQJ DFWLYLW\  WKH
  6RPHDGMXVWPHQWLVFOHDUO\DSSURSULDWHLQWKLVFDVH$           DFWLYLWLHV RI WKH DOOHJHG 5,&2 HQWHUSULVH KDG D FRJQL]DEOH
  GHSDUWXUHIURPWKHJXLGHOLQHVLVDSSURSULDWH:KLOHLWLV        HIIHFW RQ LQWHUVWDWH FRPPHUFH  WKH DOOHJHG +REEV $FW
  WUXHWKDWWKHJXLGHOLQHVGRWDNHLQWRFRQVLGHUDWLRQWKHIDFW      H[WRUWLRQVKDGDFRJQL]DEOHHIIHFWRQLQWHUVWDWHFRPPHUFH
  WKH GHIHQGDQW LV D SXEOLF RIILFLDO LQ WKH LQLWLDO         $SSHOODQWKDGDQ\FXOSDEOHLQYROYHPHQWLQDFRQVSLUDF\WR
  FDOFXODWLRQVWKH\GRQRWWDNHLQWRDFFRXQWWKHIDFWWKDWKH      FRPPLWH[WRUWLRQXQGHUWKH+REEV$FWDQGWKHUHZDVDQ
  ZDVWKHFKLHIODZHQIRUFHPHQWRIILFLDORIWKHFRXQW\             mLOOHJDOJDPEOLQJEXVLQHVVlDVGHILQHGLQ86&
                                                                    7KLV&RXUWUHYLHZVWKHVXIILFLHQF\RIWKHHYLGHQFHVXSSRUWLQJ
  7KH\DOVRGRQRWWDNHLQWRDFFRXQWWKDWDV0U0RUIRUG           D FULPLQDO FRQYLFWLRQ mE\ GHWHUPLQLQJ ZKHWKHU DIWHU
  VDLG WKLV LV QRW D JDUGHQ YDULHW\ EULEHU\ LQ ZKLFK      UHYLHZLQJ WKH HYLGHQFH LQ WKH OLJKW PRVW IDYRUDEOH WR WKH
  VRPHRQHWDNHVDVPDOODPRXQWRIPRQH\IURPVRPHRQH                SURVHFXWLRQDQ\UDWLRQDOWULHURIIDFWFRXOGKDYHIRXQGWKH
  RQWKHVWUHHWEXWZKHUHVRPHRQHWDNHVPRQH\IURPDQ              HVVHQWLDOHOHPHQWVRIWKHFULPHEH\RQGDUHDVRQDEOHGRXEWl
  LQGLYLGXDO WKH\ NQRZ WR EH LQYROYHG ZLWK RUJDQL]HG         8QLWHG 6WDWHV Y :DQJ  )G   WK &LU 
  FULPHDQGWKHQLQWXUQDLGVWKDWLQGLYLGXDOLQIXUWKHULQJ      LQWHUQDO TXRWDWLRQ PDUNV RPLWWHG  %HIRUH UHYLHZLQJ WKH
  DWOHDVWVRPHSRUWLRQRIWKHLUEXVLQHVV                          VXIILFLHQF\ RI WKH HYLGHQFH KRZHYHU ZH PXVW GHWHUPLQH
                                                                    ZKHWKHU$SSHOODQWKDVSUHVHUYHGWKHVHLVVXHVIRUDSSHDO7KH
  7KHJXLGHOLQHVDOVRFRXOGQRWSRVVLEO\WDNHLQWRDFFRXQW          JRYHUQPHQW DUJXHV WKDW $SSHOODQW IDLOHG WR SUHVHUYH WKHVH
  WKHH[WHQWWRZKLFKWKLVGHIHQGDQWWKRXJKWKHFKLHIODZ          FKDOOHQJHVWRWKHVXIILFLHQF\RIWKHHYLGHQFHE\IDLOLQJWRUDLVH
  HQIRUFHPHQWRIWKHFRXQW\LJQRUHGWKHZD\VWKHODZZDV           WKHPLQPRWLRQVIRUMXGJPHQWRIDFTXLWWDOPDGHXQGHU5XOH
  VXSSRVHG WR DSSO\ WR KLP LQ WHUPV RI KRZ KH ZDV         RIWKH)HGHUDO5XOHVRI&ULPLQDO3URFHGXUHDWWKHHQGRI
  SHUPLWWHGWRUDLVHPRQH\KRZKHZDVSHUPLWWHGWRUXQ             WKHSURVHFXWLRQjVFDVHLQFKLHIDQGDWWKHFORVHRIHYLGHQFH
  IRURIILFHDQGKRZKHZDVSHUPLWWHGWRFRQGXFWKLPVHOI
  GXULQJWKHFRXUVHRIWKDWSURFHVV
  $OORIWKRVHIDFWRUVPHDQWKDWVRPHXSZDUGDGMXVWPHQW                 
  LVDSSURSULDWH                                                         5XOH  RI WKH )HGHUDO 5XOHV RI &ULPLQDO 3URFHGXUH SURYLGHV LQ
                                                                    SHUWLQHQW SDUW
sW $SS[ DW   7KH GLVWULFW FRXUW WKHQ UHMHFWHG WKH       7KH FRXUW RQ PRWLRQ RI D GHIHQGDQW RU RI LWV RZQ PRWLRQ VKDOO
JRYHUQPHQWjVUHTXHVWIRUDILYHOHYHOGHSDUWXUHDQGLQVWHDG             RUGHU WKH HQWU\ RI MXGJPHQW RI DFTXLWWDO RI RQH RU PRUH RIIHQVHV
GHSDUWHGRQO\WKUHHOHYHOVEHFDXVHDVQHDUDVZHFDQGLVFHUQ          FKDUJHG LQ WKH LQGLFWPHQW RU LQIRUPDWLRQ DIWHU WKH HYLGHQFH RQ
WKHUHZDVQRHYLGHQFHWKDW$SSHOODQWZDVDZDUHRIRUDVVLVWHG           HLWKHU VLGH LV FORVHG LI WKH HYLGHQFH LV LQVXIILFLHQW WR VXVWDLQ D
LQWKHYLROHQWDFWLYLWLHVRIWKH6WUROORHQWHUSULVHDQGEHFDXVH         FRQYLFWLRQ RI VXFK RIIHQVH RU RIIHQVHV
PHPEHUVRIWKHFRPPXQLW\VHQWOHWWHUVRIVXSSRUWLQGLFDWLQJ         )HG 5 &ULP 3 D
    8QLWHG6WDWHVY&KDQFH                        1R       1R                       8QLWHG6WDWHVY&KDQFH        

  7KLV&RXUWZLOOQRWFRQVLGHUFKDOOHQJHVWRWKHVXIILFLHQF\           IRXUVWHSSURFHVVUHTXLULQJWKHVHQWHQFLQJFRXUWWRDVNDQG
RI WKH HYLGHQFH LI WKH GHIHQGDQW IDLOHG WR PDNH D 5XOH    DQVZHUWKHIROORZLQJTXHVWLRQV
PRWLRQ IRU MXGJPHQW RI DFTXLWWDO DW WKH HQG RI WKH
SURVHFXWLRQjVFDVHLQFKLHIDQGDWWKHFORVHRIWKHHYLGHQFH            :KDWIHDWXUHVRIWKLVFDVHSRWHQWLDOO\WDNHLWRXWVLGH
8QLWHG6WDWHVY'DQG\)GWK&LU             WKH*XLGHOLQHV
mKHDUWODQGl
DQGPDNHRILWDVSHFLDORU
)DLOXUHWRPDNHWKHUHTXLUHGPRWLRQVFRQVWLWXWHVDZDLYHURI             XQXVXDOFDVH"
REMHFWLRQVWRWKHVXIILFLHQF\RIWKHHYLGHQFH,G$OWKRXJK
VSHFLILFLW\ LQ D 5XOH  PRWLRQ LV QRW UHTXLUHG ZKHUH WKH     +DVWKH&RPPLVVLRQIRUELGGHQGHSDUWXUHVEDVHGRQ
GHIHQGDQWPDNHVD5XOHPRWLRQRQVSHFLILFJURXQGVDOO                WKRVHIHDWXUHV"
JURXQGVQRWVSHFLILHGLQWKHPRWLRQDUHZDLYHG,GDW
,QWKLVFDVHVLQFHWKHUHFRUGLVFOHDUWKDW$SSHOODQWGLG           ,I QRW KDV WKH &RPPLVVLRQ HQFRXUDJHG GHSDUWXUHV
PDNH5XOHPRWLRQVDWWKHDSSURSULDWHWLPHWKHLVVXHLV               EDVHGRQWKRVHIHDWXUHV"
ZKHWKHUDVWKHJRYHUQPHQWFRQWHQGV$SSHOODQWjV5XOH
PRWLRQVZHUHEDVHGRQVSHFLILFJURXQGVZKLFKGLGQRWLQFOXGH              ,I QRW KDV WKH &RPPLVVLRQ GLVFRXUDJHG GHSDUWXUHV
WKH FODLPV RI LQVXIILFLHQF\ QRZ DVVHUWHG  ,Q RSSRVLWLRQ        EDVHGRQWKRVHIHDWXUHV"
$SSHOODQW DUJXHV WKDW KLV 5XOH  PRWLRQV ZHUH EDVHG RQ       .RRQY8QLWHG6WDWHV86,IWKHVSHFLDO
JHQHUDO JURXQGV DQG WKDW WULDO FRXQVHO PHUHO\ KLJKOLJKWHG       IDFWRURIWKHFDVHLVDIRUELGGHQIDFWRUWKHVHQWHQFLQJFRXUW
VSHFLILFDUHDVRIDOOHJHGLQVXIILFLHQF\RQO\DVH[DPSOHV,Q          FDQQRWXVHLWDVDJURXQGIRUGHSDUWXUH,IWKHVSHFLDOIDFWRU
IDFW$SSHOODQWDUJXHVWKHUHFRUGGHPRQVWUDWHVWKDWWKHWULDO         LVDQHQFRXUDJHGIDFWRUWKHVHQWHQFLQJFRXUWPD\GHSDUWLIWKH
MXGJHXQGHUVWRRGWKDWKLVPRWLRQVZHUHJHQHUDOLQQDWXUHDQG           DSSOLFDEOH *XLGHOLQH GRHV QRW DOUHDG\ WDNH WKH IDFWRU LQWR
FRXOGSRWHQWLDOO\EHFKDOOHQJHVWRHDFKHOHPHQWRIWKHRIIHQVH         FRQVLGHUDWLRQ,IWKHVSHFLDOIDFWRULVDGLVFRXUDJHGIDFWRURU
FKDUJHGLQHDFKFRXQWRIWKHLQGLFWPHQW                               DQ HQFRXUDJHG IDFWRU DOUHDG\ WDNHQ LQWR DFFRXQW E\ WKH
 7KHUHFRUGUHIOHFWVWKHIROORZLQJGLVFXVVLRQRQ$SSHOODQWjV           *XLGHOLQHV WKH VHQWHQFLQJ FRXUW VKRXOG GHSDUW RQO\ LI WKH
5XOHPRWLRQDWWKHHQGRIWKHJRYHUQPHQWjVFDVHLQFKLHI           IDFWRULVSUHVHQWWRDGHJUHHWKDWPDNHVWKHFDVHGLIIHUHQWIURP
                                                                       WKHRUGLQDU\FDVHZKHUHWKHIDFWRULVSUHVHQW,GDW,I
  0U<HOVN\>$SSHOODQWjVWULDOFRXQVHO@,DJUHH%XWDW             WKHIDFWRULVQRWPHQWLRQHGE\WKH*XLGHOLQHVWKHVHQWHQFLQJ
  DQ\UDWHMXVWWRPDNHWKHUHFRUGFRPSOHWH,ZRXOGVWLOO            FRXUWPXVWmDIWHUFRQVLGHULQJWKHVWUXFWXUHDQGWKHRU\RIERWK
  PDNHD5XOHPRWLRQ3DUWLFXODUO\,ILQGQRHYLGHQFH             WKH UHOHYDQW LQGLYLGXDO JXLGHOLQHV DQG WKH *XLGHOLQHV DV D
  WKDWDQ\RQHVDLGWKDW3KLO&KDQFHKHOSHGH[WRUW=ROGDQ              ZKROHGHFLGHZKHWKHULWLVVXIILFLHQWWRWDNHWKHFDVHRXWRI
  DVDQH[DPSOH$QGDOVRWKHRQO\GRFXPHQWDU\HYLGHQFH              WKH*XLGHOLQHjVKHDUWODQGl,GDW
  DERXWDQ\PRQH\RIIHUHGE\WKHJRYHUQPHQWWXUQHGRXW
  WREHDFRPSOHWHIDEULFDWLRQE\0U2j1HVWLDQGWKDWKH                :H UHYLHZ D GLVWULFW FRXUWjV GHFLVLRQ WR GHSDUW IURP WKH
  WHVWLILHGYHU\H[SOLFLWO\WKDWKHFDUULHGGROODUVRI           *XLGHOLQHVVHQWHQFLQJUDQJHIRUDEXVHRIGLVFUHWLRQ8QLWHG
  FDVKWKDWZDVJLYHQE\0U6WUROORWRKLPDQGWKDWKH               6WDWHVY%DUEHU)GWK&LU$GLVWULFW
  YHU\H[SOLFLWO\VWDWHGWKDWKHSXWWKLVFDVKLQWRKLV         FRXUWKDVDEXVHGLWVGLVFUHWLRQLIWKHDSSHOODWHFRXUW LV OHIW
  EDQNDFFRXQWDQGKHVKRZHGXVKLVEDQNDFFRXQW                     ZLWK D GHILQLWH DQG ILUP FRQYLFWLRQ WKDW WKH FRXUW EHORZ
                                                                       FRPPLWWHGDFOHDUHUURURIMXGJPHQW8QLWHG6WDWHVY*X\
  :KDWLWUHDOO\WXUQHGRXWWREHZDVDFRPSOHWHIUDXG                )GWK&LU:KHWKHUDVWDWHGJURXQG
                                                                       LVDSHUPLVVLEOHEDVLVIRUGHSDUWXUHLVDTXHVWLRQRIODZZH
                                                                       UHYLHZ GH QRYR  8QLWHG 6WDWHV Y 6DELQR  )G 
    8QLWHG6WDWHVY&KDQFH                        1R       1R                      8QLWHG6WDWHVY&KDQFH        

FRQYLFWLRQV WKRVH GHFLVLRQV ZHUH EDVHG RQ MXULVGLFWLRQDO         7KH&RXUW7KDWJRHVWRWKHFUHGLELOLW\RIWKDWZLWQHVV
JURXQGV LH WKH IDLOXUH WR SURYH D QH[XV ZLWK LQWHUVWDWH    DQG FUHGLELOLW\ LV D GHWHUPLQDWLRQ WKDW WKH MXU\ KDV WR
FRPPHUFH DQG WKH IDLOXUH WR SURYH WKH UHTXLVLWH LOOHJDO         PDNH
JDPEOLQJEXVLQHVV:HKDYHQRGRXEWWKDWWKHUHFRUGDPSO\
GHPRQVWUDWHV WKDW $SSHOODQW GLG LQ IDFW HQJDJH LQ DFWV RI      0U<HOVN\,XQGHUVWDQGDOOWKDW,KDYHWRPDNHP\
H[WRUWLRQ DQG REVWUXFWLRQ DV WKRVH FRXQWV DOOHJH  7KXV        PRWLRQ
EHFDXVH DV ZH KDYH VWDWHG HVWDEOLVKLQJ $SSHOODQWjV
UHODWLRQVKLS ZLWK /HQQ\ 6WUROOR ZDV WKH O\QFK SLQ WR WKH       7KH&RXUW7KHZLWQHVVILUPO\WHVWLILHGXQGHURDWKWKDWKH
JRYHUQPHQWjVHQWLUHFDVHDJDLQVW$SSHOODQWZHDJUHHZLWKWKH           WUDQVIHUUHG WKRVH IXQGV  :KHWKHU WKH MXU\ XOWLPDWHO\
GLVWULFWFRXUWWKDW$SSHOODQWjVWHVWLPRQ\ZDVPDWHULDOO\IDOVH          EHOLHYHVKLPRUQRWLVIRUWKHPWRFRQFOXGH
DQGZDVLQWHQGHGWRKDYHDPDWHULDOLPSDFWRQWKHSURVHFXWLRQ
RIWKHFDVH                                                            0U<HOVN\,KDYHWRPDNHP\PRWLRQsXGJH

  $FFRUGLQJO\ZHILQG$SSHOODQWjVFKDOOHQJHWRWKHGLVWULFW            7KH &RXUW , XQGHUVWDQG  , DFWXDOO\ ZHQW WKURXJK WKH
MXGJHjV GHFLVLRQ WR LPSRVH D WZROHYHO VHQWHQFLQJ                 LQGLFWPHQW WKLV PRUQLQJ DQG DVVHVVHG HDFK RI WKH
HQKDQFHPHQWIRUREVWUXFWLRQRIMXVWLFHWREHZLWKRXWPHULW             HOHPHQWVLQDQWLFLSDWLRQRID5XOHPRWLRQDQG,WKLQN
                                                                        WKDW \RX DUH SUREDEO\ FRUUHFW WKDW RQH RI WKH ZHDNHVW
8SZDUG'HSDUWXUHIURPWKH*XLGHOLQH6HQWHQFLQJ5DQJH                 SODFHVLQWKHJRYHUQPHQWjVFDVHLVWKHUHIHUHQFHWRWKH
                                                                        H[WRUWLRQ RI 0U =ROGDQ EXW WR WKH H[WHQW WKDW sRKQ
  7KH ILQDO LVVXH LV ZKHWKHU WKH GLVWULFW FRXUW HUUHG LQ       &KLFDVHFDQEHFKDUDFWHUL]HGDVDQDJHQWIRU0U&KDQFH
XSZDUGO\ GHSDUWLQJ IURP WKH *XLGHOLQH 6HQWHQFLQJ UDQJH           ZLWKUHVSHFWWRWKRVHVWDWHPHQWVWKHUHLVWHVWLPRQ\IURP
7KH GLVWULFW FRXUW IRXQG WKDW DQ XSZDUG GHSDUWXUH RI WKUHH     0U &KLFDVH DQG WHVWLPRQ\ IURP 0U 6WUROOR DQG
OHYHOVZDVDSSURSULDWHEHFDXVHWKH6HQWHQFLQJ*XLGHOLQHVGLG            WHVWLPRQ\ IURP 0U =ROGDQ WKDW WKRVH VWDWHPHQWV
QRWWDNHLQWRFRQVLGHUDWLRQWKHIDFWVWKDW$SSHOODQWZDVWKH            WKUHDWHQLQJ VWDWHPHQWV ZHUH PDGH DQG WKDW WKH\ ZHUH
FKLHI ODZ HQIRUFHPHQW RIILFHU IRU WKH FRXQW\  WKH EULEHU\     SDVVHGRQWR0U=ROGDQ
RIIHQVHVLQYROYHGPHPEHUVRIRUJDQL]HGFULPHDQG$SSHOODQW
YLRODWHGWKHVWDWHHOHFWLRQODZVLQUXQQLQJIRURIILFH               0U 0RUIRUG >$86$@ $QG 0U 0DUWLQR DQG 0U
                                                                        2j1HVWL
  7KH6HQWHQFLQJ*XLGHOLQHVSURYLGH
                                                                        0U<HOVN\,GOHFKDWWHU
  >7@KHVHQWHQFLQJFRXUWPD\LPSRVHDVHQWHQFHRXWVLGH
  WKHUDQJHHVWDEOLVKHGE\WKHDSSOLFDEOHJXLGHOLQHVLIWKH            7KH&RXUW7KHUHDOLVVXHZLOOEHZKHWKHURUQRWWKHMXU\
  FRXUWILQGVWKDWWKHUHH[LVWVDQDJJUDYDWLQJRUPLWLJDWLQJ            XOWLPDWHO\FRQFOXGHVWKDW0U&KDQFHGLUHFWHGRUHYHQ
  FLUFXPVWDQFHRIDNLQGRUWRDGHJUHH QRW DGHTXDWHO\              UHTXHVWHGRUDGRSWHGWKRVHVWDWHPHQWV
  WDNHQLQWRFRQVLGHUDWLRQE\WKH6HQWHQFLQJ&RPPLVVLRQ
  LQ IRUPXODWLQJ WKH JXLGHOLQHV WKDW VKRXOG UHVXOW LQ D         0U <HOVN\ %XW LQ UHVSRQVH ,jG OLNH WR VD\ WKDW 0U
  VHQWHQFHGLIIHUHQWIURPWKDWGHVFULEHG                               &KDQFH WKDW 0U =ROGDQ KLPVHOI WHVWLILHG WKDW ZKHQ D
                                                                        IRUPHUVKHULIIFORVHGKLPGRZQKHVXHGWKHFRXQW\DQG
866*  . LQWHUQDO TXRWDWLRQ PDUNV RPLWWHG              ZRQDFRQVLGHUDEOHVXPRIPRQH\DQGWKDW3KLO&KDQFH
$SSURSULDWHO\GHSDUWLQJIURPWKH6HQWHQFLQJ*XLGHOLQHVLVD             XQGHUWKHGLUHFWLRQVRIDIRUPHUVKHULIIE\WKHQDPHRI
                                                                        7UDILFDQWDSRORJL]HGWRKLPIRUGRLQJWKLVWKDWKHNQHZ
   8QLWHG6WDWHVY&KDQFH                        1R    1R                      8QLWHG6WDWHVY&KDQFH       

 LWZDVZURQJ7KDWjVFRPLQJULJKWRXWRIWKHPRXWKRI            RILGHQWLI\LQJWKHSDUWLFXODUSRUWLRQVRI$SSHOODQWjVWHVWLPRQ\
 RQH RI WKH ZLWQHVVHV WKDWjV TXRWLQJ ZKDW 3KLO &KDQFH      VKHIRXQGWREHSHUMXULRXV
 VDLG
                                                                      )XUWKHUPRUH ZH DJUHH ZLWK WKH GLVWULFW FRXUW WKDW
 0U0RUIRUG.QHZZKDWZDVZURQJ"                                 $SSHOODQWjVWHVWLPRQ\LQWKHDUHDVLGHQWLILHGZDVXQWUXWKIXO
                                                                   DQG PDWHULDO WR WKH FDVH  7KH WKUHH DUHDV RI WHVWLPRQ\
 7KH&RXUW,jPQRWVXUHWKDWjVDQH[DFWFKDUDFWHUL]DWLRQ         LGHQWLILHG E\ WKH GLVWULFW FRXUW DUH UHODWHG DQG PDWHULDO
                                                                   EHFDXVHZLWKRXWSURRIRIDUHODWLRQVKLSEHWZHHQ/HQQ\6WUROOR
 0U 0RUIRUG (YHQ LI LW ZDV HYHQ LI WKDWjVoKH            DQG$SSHOODQWWKHUHLVQRIDFWXDOSUHGLFDWHIRUILQGLQJWKDW
 >$SSHOODQW@ NQHZ ZKDW ZDV JRLQJ RQ KH NQHZ LW ZDV       $SSHOODQW WRRN EULEHV IURP 6WUROOR RU DJUHHG WR SURWHFW
 ZURQJ WR JR LQ DQG FRQGXFW WKH UDLG DQG KH GLG LW      6WUROORjV JDPEOLQJ RSHUDWLRQV ZKLOH UDLGLQJ WKRVH RI KLV
 DQ\ZD\>@2ND\"                                                   FRPSHWLWRUV7KHJRYHUQPHQWjVHQWLUHSURVHFXWLRQZDVEDVHG
                                                                   RQSURYLQJ$SSHOODQWjVUHODWLRQVKLSZLWK6WUROOR7KXVZKLOH
 0U<HOVN\+HGLGLWXQGHULQVWUXFWLRQV+HDSRORJL]HG         $SSHOODQW DGPLWWHG RQO\ WR DQ LQFRQVHTXHQWLDO ILYH PLQXWH
                                                                   PHHWLQJZLWK6WUROORDQGGHQLHGWDNLQJDQ\SD\PHQWVIURP
 7KH&RXUW7KDWVDPHZLWQHVVDOVRVDLGWKDW0U&KDQFH            6WUROOR6WUROORWHVWLILHGWKDWKHPHWZLWK$SSHOODQWVHYHUDO
 VDLG \RX NQRZ m, NQRZ LWjV ZURQJ EXW , DOVR           WLPHV LQ KLV KRXVH JDYH $SSHOODQW FDPSDLJQ DGYLFH DQG
 V\PSDWKL]HZLWKZK\ZHjUHGRLQJLWl                              SHUVRQDOO\KDQGHG$SSHOODQW6WUROORIXUWKHUWHVWLILHG
 7KHMXU\FDQWDNHDOOWKDWLQWRFRQVLGHUDWLRQ,WKLQNWKH       WKDWKHDQG$SSHOODQWKDGDQXQGHUVWDQGLQJDERXWZKDWZRXOG
 JRYHUQPHQWKDVHVWDEOLVKHGHQRXJKHYLGHQFHWRJRWRWKH           EH UHTXLUHG LI $SSHOODQW ZRQ WKH HOHFWLRQ  sRKQ &KLFDVH
 MXU\RQHDFKRILWVFODLPV,WKLQNWKDWZLWKUHVSHFWWRWKH     WHVWLILHGWKDW$SSHOODQWDVNHGKLPWRDSSURDFK/HQQ\6WUROOR
 5,&2WKHUHLVVWURQJHUHYLGHQFHZLWKUHVSHFWWRFHUWDLQRI        IRUPRQH\ZDVDZDUHRIDQGDSSURYHGWKHSODQWRH[WRUWD
 WKH DOOHJHG SUHGLFDWH DFWV EXW DOO WKH MXU\ QHHGV WR    VWUHHW WD[ IURP LQGHSHQGHQW ERRNPDNHUV DQG NQRZLQJO\
 FRQFOXGH XQDQLPRXVO\ LV WKDW DW OHDVW WZR RI WKHVH        DSSURYHGUDLGVRQJDPEOLQJHVWDEOLVKPHQWVLGHQWLILHGE\sHHS
 SUHGLFDWHDFWVRFFXUUHGEXWWKHUHLVFHUWDLQO\HQRXJKRQ         *DURQR&KDUOHV2j1HVWLDOVRWHVWLILHGWKDW$SSHOODQWDVNHG
 HDFKRIWKHFODLPVWRJRWRWKHMXU\                             KLP RQ QXPHURXV RFFDVLRQV WR DSSURDFK /HQQ\ 6WUROOR IRU
                                                                   PRQH\DQGWKDWRQWZRRFFDVLRQVKHGHOLYHUHGWR$SSHOODQWD
 ,WKLQNVRPHFODLPVWKHHYLGHQFHRQVRPHLVSUREDEO\             SDFNDJHRIPRQH\IURP6WUROOR6HHsW$SS[DW
 ZHDNHUWKDQRQRWKHUVEXWWKDWjVQRWDFRQFOXVLRQIRUPH            )XUWKHUPRUH FRQWUDU\ WR $SSHOODQWjV DVVHUWLRQV WKH
 WR GHWHUPLQH  , RQO\ QHHG WR GHWHUPLQH DV WR ZKHWKHU   HYLGHQFHRQWKHVHLVVXHVGLGQRWVLPSO\LQYROYHDVZHDULQJ
 HDFKHOHPHQWRIHDFKRIWKHRIIHQVHVWKHJRYHUQPHQWKDV           FRQWHVWEHWZHHQ$SSHOODQWDQGWKHJRYHUQPHQWjVLPPXQL]HG
 HVWDEOLVKHGSURRIDQGZLWKWKHGLUHFWWHVWLPRQ\RIWKH           ZLWQHVVHV  0RVW RI WKH GHWDLOV RI 6WUROORjV *DURQRjV
 ZLWQHVVHV DOO RI ZKRP \RX FDQ DUJXH DV WR WKHLU         &KLFDVHjV DQG 2j1HVWLjV WHVWLPRQ\ LV FRUURERUDWHG E\ WKH
 FUHGLELOLW\ EXW ZLWK WKHLU GLUHFW WHVWLPRQ\ RI VZRUQ      FRQWHPSRUDQHRXV)%,VXUYHLOODQFHWDSHV)RULQVWDQFHRQH
 WHVWLPRQ\RIZLWQHVVHVDQGWKHDGPLVVLEOHRXWRIFRXUW            WUDQVFULSW UHIOHFWV 6WUROORjV DQG 2j1HVWLjV LUULWDWLRQ WKDW
 VWDWHPHQWV DV ZHOO DV WKH DGPLVVLEOH DGPLVVLRQV            $SSHOODQWNHSWDVNLQJIRUPRUHPRQH\6HHsW$SS[DW
 DWWULEXWHG WR 0U &KDQFH KLPVHOI WKHUH LV FHUWDLQO\       $QRWKHUWUDQVFULSWFRUURERUDWHV$SSHOODQWjVLQWHQWLRQWRH[WRUW
 HQRXJK IRU WKH MXU\ WR FRQVLGHU HDFK RI WKH FKDUJHV      %UXFH =ROGDQ IRU FDPSDLJQ FRQWULEXWLRQV  6HH LG DW 
 DJDLQVWWKHGHIHQGDQW                                            :KLOH LQ WKLV RUGHU ZH KDYH UHYHUVHG WZR RI $SSHOODQWjV
    8QLWHG6WDWHVY&KDQFH                         1R       1R                       8QLWHG6WDWHVY&KDQFH        

  KDYHKDGDPDWHULDOLPSDFWRQDQGZDVLQWHQGHGWRKDYH                  6R\RXU5XOHPRWLRQLVGHQLHG
  DPDWHULDOLPSDFWRQWKLVSURVHFXWLRQ
                                                                        sW$SS[
  6RIRUDOORIWKRVHUHDVRQV,FRQFOXGHWKDWDWZROHYHO
  DGMXVWPHQWIRUREVWUXFWLRQRIMXVWLFHLVDSSURSULDWHLQWKLV           $W WKH FORVH RI HYLGHQFH WKH IROORZLQJ GLVFXVVLRQ RQ
  FDVHDQG,jPJRLQJWRDSSO\LW                                      $SSHOODQWjVUHQHZHG5XOHPRWLRQWRRNSODFH
sW$SS[DW:HGRREVHUYHWKDWLQLWVVHQWHQFLQJ               0U<HOVN\2QHODVWWKLQJ<RXU+RQRU,ZRXOGOLNHWR
PHPRUDQGXP WKH JRYHUQPHQW LGHQWLILHG ZLWK JUHDW                     UHQHZRXU5XOHPRWLRQWRPDNHWKHUHFRUGFRPSOHWH
VSHFLILFLW\ $SSHOODQWjV VWDWHPHQWV ZKLFK LW EHOLHYHG WR EH         DQGDOVR,ZRXOGOLNHWRDVNWKDWWKH&RXUWVSHFLILFDOO\UH
PDWHULDOO\ IDOVH  6HH LG DW   +RZHYHU ZH ILQG QR     H[DPLQHWKH=ROGDQFRXQWRIH[WRUWLRQ
FOHDU LQGLFDWLRQ RQ WKLV UHFRUG WKDW WKH GLVWULFW FRXUW
LQGHSHQGHQWO\ DGRSWHG WKH JRYHUQPHQWjV YHUVLRQ RI WKH               2WKHUWKDQWKDWWKDWjVZKDWZHKDYHDWWKLVSRLQW
DOOHJHG SHUMXULRXV VWDWHPHQWV  7KHUHIRUH RXU UHYLHZ LV
OLPLWHGWRGHWHUPLQLQJZKHWKHUWKHILQGLQJVMXVWTXRWHGZHUH              7KH&RXUW5HH[DPLQHWKH=ROGDQFRXQWEHFDXVH\RX
VXIILFLHQWWRVXSSRUWDILQGLQJIRUREVWUXFWLRQRIMXVWLFHEDVHG          WKLQNWKHUHKDVQRWEHHQo
RQSHUMXU\1RQHWKHOHVVGHVSLWHWKLVOLPLWDWLRQRQWKHVFRSH
RI RXU UHYLHZ ZH ILQG WKDW WKH GLVWULFW IXOILOOHG WKH           0U <HOVN\ 3URRI VXIILFLHQW WR JR WR WKH MXU\ RQ WKDW
UHTXLUHPHQWV QHFHVVDU\ IRU DQ REVWUXFWLRQ RI MXVWLFH                SRLQW
HQKDQFHPHQW                                                              7KH&RXUW,jPJRLQJWRGHQ\WKHPRWLRQ,GRWKLQNWKDW
  $VDQLQLWLDOPDWWHUZHILQGWKDWWKHGLVWULFWFRXUWVDWLVILHG         WKH=ROGDQFRXQWEHFDXVHWKH\GRQjWKDYHDQ\ZLWQHVVHV
WKHUHTXLUHPHQWRILGHQWLI\LQJSDUWLFXODUDUHDVRI$SSHOODQWjV            RWKHU WKDQ sRKQ &KLFDVH WKDW WHVWLILHG WKDW WKDW
WHVWLPRQ\ VKH GHHPHG WR EH SHUMXULRXV  6SHFLILFDOO\ WKH         LQIRUPDWLRQFDPHGLUHFWO\IURP3KLO&KDQFH
GLVWULFW MXGJH IRXQG WKDW $SSHOODQW SHUMXUHG KLPVHOI ZLWK          0U0RUIRUG$QG&KXFN2j1HVWL
UHJDUG WR  GHQ\LQJ KDYLQJ DQ\ UHODWLRQVKLS ZLWK /HQQ\
6WUROORWDNLQJPRQH\IURP/HQQ\6WUROORDQGsHHS*DURQR              7KH&RXUW:HOO,WKRXJKW&KXFN2j1HVWLWHVWLILHGWKDW
DQG  VHOHFWLYHO\ HQIRUFLQJ WKH JDPEOLQJ ODZV LQ IDYRU RI       LWFDPHIURPsRKQ&KLFDVH,QRWKHUZRUGV\RXKDYH
/HQQ\6WUROOR,QDGGLWLRQWKHGLVWULFWFRXUWDSSHDUHGWRPDNH          &KXFN2j1HVWL\RXKDYHZKDWjVKLVQDPH0DULQR>VLF@
D ILQGLQJ WKDW $SSHOODQWjV WHVWLPRQ\ ZDV SHUYDVLYHO\
SHUMXULRXV VWDWLQJ WKDW $SSHOODQW mGHQLHG YLUWXDOO\ HYHU\          0U0RUIRUG5LJKW
VLQJOH IDFW WKDW RWKHU ZLWQHVVHV WHVWLILHG WR   GHVSLWH
VXEVWDQWLDOHYLGHQFHWRWKHFRQWUDU\lsW$SS[DWVHH             7KH&RXUW%RWKRIZKRPVD\WKDWsRKQ&KLFDVHo
DOVRLGm>7@KHGHIHQGDQWOLHGDERXWVRPDQ\WKLQJVXQGHU
RDWKWKDWKHHYHQJRWWRWKHSRLQWDERXWO\LQJDERXWLPPDWHULDO           0U 0RUIRUG 2j1HVWL DFWXDOO\ HYHQ VD\V ULJKW RQ WKH
WKLQJVl6LQFHWKHVHQWHQFLQJMXGJHLVQRWUHTXLUHGWRULJLGO\         WDSH3KLO&KDQFHWROGPHWKDWKHjVJRLQJ WR VKXWKLP
DGKHUH WR WKH SURFHGXUHV VHW IRUWK LQ 6DVVDQHOOL VHH             GRZQIRUWKHWKRIsXO\DQGKHVDLGWKDWjV ZKDW3KLO
6DVVDQHOOL)GDWZHEHOLHYHWKDWWKHGLVWULFWFRXUW          &KDQFHKDGWROGKLP
LQ LGHQWLI\LQJ WKH VSHFLILF VXEMHFW PDWWHU DERXW ZKLFK
$SSHOODQWZDVXQWUXWKIXOVXIILFLHQWO\FDUULHGRXWLWVEXUGHQ             7KH&RXUW2ND\,QDQ\HYHQW,WKLQNWKHUHLVDVWURQJ
                                                                          DUJXPHQW\RXFDQPDNHWRWKHMXU\WKDWLW KDVQjWEHHQ
    8QLWHG6WDWHVY&KDQFH                        1R       1R                      8QLWHG6WDWHVY&KDQFH         

  HVWDEOLVKHG E\ SURRI EH\RQG D UHDVRQDEOH GRXEW EXW ,         RIWKH&RXUWFDQHDVLO\FRQFOXGHWKDWWKHGHIHQGDQWGLG
  WKLQN WKDW ZLWK WKH WHVWLPRQ\ RI sRKQ &KLFDVH &KXFN          LQIDFWFRPPLWSHUMXU\RQWKHVWDQG
  2j1HVWLDQG0U0DUWLQRDQG0U=ROGDQKLPVHOIWKDW
  WKHUHLVHQRXJKWRJRWRWKHMXU\RQWKDWTXHVWLRQ                   7KHGHIHQGDQWDV0U0RUIRUGVWDWHVWRRNWKHVWDQGDQG
                                                                        GHQLHGMXVWQRWKLVJXLOWRULQQRFHQFHEXWGHQLHGYLUWXDOO\
  6R,jPJRLQJWRGHQ\WKH5XOHPRWLRQVDQGVHQGWKH                 HYHU\ VLQJOH IDFW WKDW RWKHU ZLWQHVVHV WHVWLILHG WR  +H
  LVVXHVWRWKHMXU\                                                   GHQLHGDQ\UHODWLRQVKLSZLWK0U6WUROOR+HGHQLHGHYHU
                                                                        WDNLQJ DQ\ PRQH\ IURP 0U 6WUROOR RU WKURXJK 0U
sW$SS[DW                                                    *DURQR+HGHQLHGWKHDFWLYLWLHVRIWKHVKHULIIjVRIILFH
                                                                        ZLWKUHVSHFWWRUDLGLQJRUQRWUDLGLQJFHUWDLQLQVWLWXWLRQV
   :HWKLQNWKDW$SSHOODQWLVFRUUHFWZKHQKHDUJXHVWKDWKLV           LQDZD\WKDWZRXOGEHQHILW0U6WUROOR
5XOHPRWLRQVZHUHJHQHUDOLQQDWXUHDQGWKDWWKHWULDOFRXUW
XQGHUVWRRGWKHPRWLRQVWREHJHQHUDO:KLOHLWLVWUXHWKDWWKH        $QG KH GHQLHG DOO RI WKHVH WKLQJV GHVSLWH VXEVWDQWLDO
PXFKRIWKHFROORTX\RQWKHPRWLRQVFHQWHUHGDURXQGVSHFLILF            HYLGHQFH WR WKH FRQWUDU\  ,QGHHG LQ UHYLHZLQJ WKH
DUHDV RI HYLGHQFH SDUWLFXODUO\ ZKHWKHU $SSHOODQW PDGH            GHIHQGDQWjVWHVWLPRQ\WRUHIUHVKWKH&RXUWjVUHFROOHFWLRQ
WKUHDWHQLQJVWDWHPHQWVWR0U=ROGDQLWLVFOHDUWKDWWKHWULDO        RI WKH VFRSH RI WKH WHVWLPRQ\ LW ZDV FOHDU WKDW WKH
FRXUWjV UXOLQJV RQ WKH PRWLRQV ZHUH QRW DGGUHVVHG WR WKH       GHIHQGDQWOLHGDERXWVRPDQ\WKLQJVXQGHURDWKWKDWKH
H[WRUWLRQFKDUJHRQO\)RULQVWDQFHGXULQJWKHILUVWFROORTX\        HYHQJRWWRWKHSRLQWDERXWO\LQJDERXWLPPDWHULDOWKLQJV
WKHWULDOMXGJHVWDWHGWKDWVKHmZHQWWKURXJKWKHLQGLFWPHQWl           $QG ZKLOH WKH &RXUW FDQQRW UHO\ RQ WKH MXU\jV
DQG mDVVHVVHG HDFK HOHPHQW LQ DQWLFLSDWLRQ RI D 5XOH         GHWHUPLQDWLRQ LWjV REYLRXV IURP WKH IDFW WKDW WKH
PRWLRQl6HHsW$SS[DWHPSKDVLVDGGHG,QDGGLWLRQ         GHIHQGDQW WRRN WKH VWDQG DQG VDLG WKDW HYHU\RQH ZKR
WKH WULDO MXGJH VWDWHG RQ WKUHH VHSDUDWH RFFDVLRQV WKDW WKH    WHVWLILHGKDGEHHQXQWUXWKIXODQGWKDWKHKDGQRWHQJDJHG
JRYHUQPHQWKDGDGGXFHGVXIILFLHQWHYLGHQFHRQHDFKRIWKH               LQDQ\RIWKLVFRQGXFWWKDWWKHMXU\GLVEHOLHYHGDOORIKLV
FKDUJHVWRSUHVHQWWKHFDVHWRWKHMXU\6HHLGDWm,WKLQN       WHVWLPRQ\ ZKHQ LW FRQFOXGHG WKDW KH ZDV JXLOW\ ZLWK
WKHJRYHUQPHQWKDVHVWDEOLVKHGHQRXJKHYLGHQFHWR JR WKH              UHVSHFW WR HYHU\ VLQJOH RQH RI WKH FRXQWV LQ WKH
MXU\RQHDFKRILWVFODLPVlm>7@KHUHFHUWDLQO\LVHQRXJKRQ           LQGLFWPHQW
HDFKRIWKHFODLPVWRJRWKHMXU\lm7KHUHLVFHUWDLQO\HQRXJK
IRU WKH MXU\ WR FRQVLGHU HDFK RI WKH FKDUJHV DJDLQVW WKH      $QG DJDLQ ZKLOH WKH MXU\ FDQoZKLOH WKH &RXUW FDQQRW
GHIHQGDQWl HPSKDVLV DGGHG  :H ILQG WKDW HYHQ WKRXJK        UHO\RQWKHMXU\jVGHWHUPLQDWLRQDQGPXVWPDNHLWVRZQ
PRVWRIWKHGLVFXVVLRQFHQWHUHGRQRQHDOOHJHGIODZLQWKH              LQGHSHQGHQWGHWHUPLQDWLRQDJDLQ,VLPSO\QRWHWKDWP\
HYLGHQFHRQRQHSDUWLFXODUFKDUJHWULDOFRXQVHOGLGQRWLQWHQG         GHWHUPLQDWLRQLVFRQVLVWHQWZLWKWKDWUHDFKHGE\WKHMXU\
DQG WKH WULDO MXGJH GLG QRW LQWHUSUHW $SSHOODQWjV 5XOH 
PRWLRQWREHOLPLWHGWRMXVWWKDWRQHFKDUJH)DLUO\UHDGWKH         ,jYH KDG WKH RSSRUWXQLW\ WR YLHZ WKH GHIHQGDQW ZKLOH
WULDOMXGJHjVVWDWHPHQWVLQGLFDWHWKDWVKHFRQVLGHUHGWKH5XOH          WHVWLI\LQJ  ,jYH KDG WKH RSSRUWXQLW\ WR UHUHYLHZ KLV
PRWLRQZLWKUHVSHFWWRDOORIWKHFKDUJHVDJDLQVW$SSHOODQW         WHVWLPRQ\$QGLQDOOWKHZD\VWKDW,jYHDOUHDG\QRWHGDV
)XUWKHUPRUHDWWKHFORVHRIHYLGHQFHZHEHOLHYHWKDWWULDO            ZHOODVLQFRQQHFWLRQZLWKKLVGHVFULSWLRQRIZKHUHKH
FRXQVHODGHTXDWHO\UHQHZHGDQGLQFRUSRUDWHGE\UHIHUHQFHWKH            UHFHLYHGPRQH\IRUKLVFDPSDLJQDQGLQKLVDWWHPSWHG
ILUVW 5XOH  PRWLRQ HYHQ WKRXJK DJDLQ VRPH GLVFXVVLRQ         MXVWLILFDWLRQ IRU KRZ KH GHVFULEHG WKDW PRQH\ RQ KLV
FHQWHUHG RQ WKH DGHTXDF\ RI WKH HYLGHQFH VXSSRUWLQJ WKH         FDPSDLJQILQDQFHUHFRUGVDQGRWKHUZLVHLQDOORIWKRVH
FKDUJHIRUH[WRUWLQJ0U=ROGDQ:HILQGKRZHYHUWKDWWKH            ZD\VWKHGHIHQGDQWWHVWLILHGXQGHURDWKLQDZD\WKDWZDV
                                                                        PDWHULDOO\IDOVHDQGZRXOGKDYHLIEHOLHYHGE\WKHMXU\
    8QLWHG6WDWHVY&KDQFH                         1R       1R                          8QLWHG6WDWHVY&KDQFH              

VSHFLILF ILQGLQJV DV WR HDFK HOHPHQW RI SHUMXU\ RU PDNH D     GLVFXVVLRQ RQ WKLV LVVXH ZDV VLPSO\ WRR DEEUHYLDWHG WR EH
ILQGLQJWKDWmHQFRPSDVVHVDOORIWKHIDFWXDOSUHGLFDWHVIRUD           FRQVWUXHGDVD5XOHPRWLRQEDVHGRQVSHFLILFJURXQGVDQG
ILQGLQJRISHUMXU\l,G:LWKUHVSHFWWRWKHILUVWUHTXLUHPHQW       WKDWLWZRXOGEHXQUHDVRQDEOHWRLQWHUSUHWWKLVFROORTX\DVD
LGHQWLI\LQJZLWKSDUWLFXODULW\SHUMXULRXVWHVWLPRQ\WKH6L[WK          ZDLYHU RI IXUWKHU FKDOOHQJHV WR WKH VXIILFLHQF\ RI WKH
&LUFXLWKDVmQHYHULQVLVWHGRQULJLGDGKHUHQFHWRLWVWHUPVVR         HYLGHQFH$FFRUGLQJO\ZHILQGWKDW$SSHOODQWSUHVHUYHGIRU
ORQJ DV WKH UHFRUG EHORZ LV VXIILFLHQW WR LQGLFDWH WKRVH       DSSHDOKLVFKDOOHQJHVWRWKHVXIILFLHQF\RIWKHHYLGHQFH
VWDWHPHQWVWKDWWKHGLVWULFWFRXUWFRQVLGHUHGWREHSHUMXULRXV
DQGWKDWWKHGLVWULFWFRXUWIRXQGWKDWWKRVHVWDWHPHQWVVDWLVILHG         :HQRZWXUQWRWKHPHULWVRI$SSHOODQWjVFKDOOHQJHVWRWKH
HDFKHOHPHQWRISHUMXU\l6DVVDQHOOL)GDW7KH            VXIILFLHQF\RIWKHHYLGHQFH
GLVWULFWFRXUWPD\UHO\RQDGHWDLOHGOLVWRIDOOHJHGSHUMXULRXV
VWDWHPHQWVSURIIHUHGE\WKHJRYHUQPHQWDWVHQWHQFLQJZLWKRXW                                     5,&2(QWHUSULVH
UHSHDWLQJWKHOLVWLIWKHUHFRUGFOHDUO\LQGLFDWHVWKDWWKHWULDO
FRXUWKDVLQGHSHQGHQWO\DGRSWHGWKHJRYHUQPHQWjVYHUVLRQ                 &RXQW  RI WKH LQGLFWPHQW FKDUJHG $SSHOODQW ZLWK
,G  :KHUH WKH WHVWLPRQ\ DSSHDUV WR EH mSHUYDVLYHO\             FRQGXFWLQJWKHDIIDLUVRIDQHQWHUSULVHWKURXJKDSDWWHUQRI
SHUMXULRXVlWKHWULDOFRXUWLVQRWUHTXLUHGWRFLWHWKHSHUMXU\         UDFNHWHHULQJ DFWLYLW\ LQ YLRODWLRQ RI  86&  F
OLQHE\OLQHLILWVILQGLQJVHQFRPSDVVWKHIDFWXDOSUHGLFDWHV           5,&2GHILQHVDQmHQWHUSULVHlDVmDQ\LQGLYLGXDOFRUSRUDWLRQ
IRUILQGLQJSHUMXU\,G,IKRZHYHUWKHUHLVQRLQGLFDWLRQLQ       DVVRFLDWLRQRURWKHUOHJDOHQWLW\DQGDQ\XQLRQRUJURXSRI
WKHUHFRUGDVWRWKHVWDWHPHQWVWKHGLVWULFWFRXUWFRQVLGHUHGWR        LQGLYLGXDOVDVVRFLDWHGLQIDFWDOWKRXJKQRWDOHJDOHQWLW\l
EHXQWUXWKIXOWKHVHQWHQFHPXVWEHUHYHUVHG,G:HDUHQRW          86&8QGHU5,&2DQmHQWHUSULVHlPD\SOD\D
SHUPLWWHG WR UHYLHZ WKH UHFRUG LQGHSHQGHQWO\ WR PDNH RXU        GLIIHUHQW UROH GHSHQGLQJ RQ WKH VXEVHFWLRQ LPSOLFDWHG 6HH
RZQ ILQGLQJV DQG WKHQ LQIHU WKDW WKH GLVWULFW FRXUW KDG WKH   1DWLRQDO2UJIRU:RPHQ,QFY6FKHLGOHU86
VDPH VWDWHPHQWV LQ PLQG  ,G  &RQWUDU\ WR $SSHOODQWjV         8QGHUVXEVHFWLRQVDDQGEWKHmHQWHUSULVHlLV
DVVHUWLRQZHILQGQRWKLQJLQWKHFDVHODZZKLFKUHTXLUHVWKH           VRPHWKLQJ DFTXLUHG WKURXJK LOOHJDO DFWLYLWLHV RU E\ PRQH\
VHQWHQFLQJFRXUWWRJLYHWKHGHIHQGDQWSULRUQRWLFHDVWRWKH           REWDLQHGWKURXJKLOOHJDODFWLYLWLHV,GDW)RUSXUSRVHV
WHVWLPRQ\WKHGLVWULFWFRXUWEHOLHYHVPLJKWEHSHUMXULRXVVR            RIVXEVHFWLRQFKRZHYHUWKHmHQWHUSULVHlLVWKHLQVWUXPHQW
ORQJDVWKHSUHVHQWHQFHLQYHVWLJDWLRQUHSRUWLQGLFDWHVDVLWGLG       WKURXJKZKLFKLOOHJDODFWLYLW\LVFRQGXFWHG,G,QRUGHUWR
LQ WKLV FDVH WKDW DQ REVWUXFWLRQ HQKDQFHPHQW PLJKW EH          HVWDEOLVKWKHH[LVWHQFHRIDQmHQWHUSULVHlXQGHUVXEVHFWLRQF
DSSURSULDWHEHFDXVHRISHUMXU\                                         WKH JRYHUQPHQW ZDV UHTXLUHG WR SURYH  DQ RQJRLQJ
                                                                        RUJDQL]DWLRQZLWKVRPHVRUWRIIUDPHZRUNRUVXSHUVWUXFWXUH
  ,QWKLVFDVHLQILQGLQJWKDWDQREVWUXFWLRQHQKDQFHPHQWZDV          IRUPDNLQJDQGFDUU\LQJRXWGHFLVLRQVWKDWWKHPHPEHUVRI
DSSOLFDEOHWKHGLVWULFWFRXUWVWDWHG                                  WKHHQWHUSULVHIXQFWLRQHGDVDFRQWLQXLQJXQLWZLWKHVWDEOLVKHG

  7KH&RXUWKDVOLWWOHWURXEOHLQFRQFOXGLQJWKDWDWZROHYHO
  HQKDQFHPHQWIRUREVWUXFWLRQRIMXVWLFHLVDSSURSULDWHLQ                  
                                                                             7KLV VHFWLRQ SURYLGHV
  WKLVFDVH7KLVLVQRWDVLWXDWLRQLQZKLFKDGHIHQGDQWLV
  EHLQJSXQLVKHGIRUH[HUFLVLQJKLVFRQVWLWXWLRQDOULJKWWR                 ,W VKDOO EH XQODZIXO IRU DQ\ SHUVRQ HPSOR\HG E\ RU DVVRFLDWHG
  JRWRWULDORUFRQVWLWXWLRQDOULJKWWRWHVWLI\                           ZLWK DQ\ HQWHUSULVH HQJDJHG LQ RU WKH DFWLYLWLHV RI ZKLFK DIIHFW
                                                                            LQWHUVWDWH RU IRUHLJQ FRPPHUFH WR FRQGXFW RU SDUWLFLSDWH GLUHFWO\
                                                                            RU LQGLUHFWO\ LQ WKH FRQGXFW RI VXFK HQWHUSULVH
V DIIDLUV WKURXJK
  ,WjVDVLWXDWLRQLQZKLFKKDYLQJOLVWHQHGWRWKHWHVWLPRQ\               D SDWWHUQ RI UDFNHWHHULQJ DFWLYLW\ RU FROOHFWLRQ RI XQODZIXO GHEW
  KDYLQJUHYLHZHGWKHWHVWLPRQ\ZKLFK,KDYHDWUDQVFULSW
                                                                         86&  F
    8QLWHG6WDWHVY&KDQFH                         1R       1R                       8QLWHG6WDWHVY&KDQFH        

GXWLHV DQG  WKDW WKH HQWHUSULVH ZDV VHSDUDWH DQG GLVWLQFW   GLVWULFWFRXUWKDVGHWHUPLQHGWKDWWKHGHIHQGDQWKDVREVWUXFWHG
IURPWKHSDWWHUQRIUDFNHWHHULQJDFWLYLW\LQZKLFKLWHQJDJHG          MXVWLFH WKH DSSOLFDWLRQ RI WKH WZR OHYHO HQKDQFHPHQW LV
)UDQNY'j$PEURVL)GWK&LU,Q              PDQGDWRU\DQGZHUHYLHZWKHHQKDQFHPHQWGHQRYR,G
WKLV FDVH $SSHOODQW DUJXHV WKDW WKH JRYHUQPHQW IDLOHG WR
SURYH WKDW WKH DOOHJHG HQWHUSULVH ZDV VHSDUDWH DQG GLVWLQFW        ,QWKLVFDVHWKHGLVWULFWMXGJHIRXQGWKDWDQREVWUXFWLRQRI
IURPWKHSDWWHUQRIUDFNHWHHULQJDFWLYLW\:HGLVDJUHH                MXVWLFHHQKDQFHPHQWZDVDSSURSULDWHEHFDXVHVKHIRXQGWKDW
                                                                        $SSHOODQWFRPPLWWHGSHUMXU\RQWKHVWDQG7KHGLVWULFWFRXUW
  7KH LQGLFWPHQW DOOHJHG DQ HQWHUSULVH FRQVLVWLQJ RI              PD\ QRW UHO\ VROHO\ RQ WKH MXU\jV YHUGLFW LQ DSSO\LQJ DQ
$SSHOODQW sRKQ &KLFDVH /HQQ\ 6WUROOR %HUQLH $OWVKXOHU         REVWUXFWLRQ HQKDQFHPHQW IRU SHUMXU\  8QLWHG 6WDWHV Y
sHHS *DURQR &KDUOHV 2j1HVWL DQG RWKHU XQVSHFLILHG               6DVVDQHOOL  )G   WK &LU   5DWKHU LQ
PHPEHUVRIWKH3LWWVEXUJKEUDQFKRI/D&RVD1RVWUD7KH                RUGHU WR LPSRVH DQ REVWUXFWLRQ RI MXVWLFH HQKDQFHPHQW IRU
SXUSRVH RI WKH HQWHUSULVH WKH LQGLFWPHQW DOOHJHG ZDV WR       SHUMXU\WKHWULDOFRXUWPXVWILQGWKDWWKHGHIHQGDQWFRPPLWWHG
FRQWUROFULPLQDODFWLYLW\LQ0DKRQLQJ&RXQW\RQEHKDOIRIWKH           SHUMXU\ZLWKLQWKHPHDQLQJRI86&WKDWLVWKDW
3LWWVEXUJKIDPLO\DQGWRSUHVHUYHDQGHQULFKWKH3LWWVEXUJK            WKHGHIHQGDQWWHVWLILHGIDOVHO\mFRQFHUQLQJDPDWHULDOPDWWHU
IDPLO\jVSRZHUDQGSURILWV7KHLQGLFWPHQWIXUWKHUGHVFULEHG           ZLWKWKHZLOOIXOLQWHQWWRSURYLGHIDOVHWHVWLPRQ\UDWKHUWKDQ
HDFKSDUWLFLSDQWjVUROHLQWKHHQWHUSULVH/HQQ\6WUROORZDVWKH        DVDUHVXOWRIFRQIXVLRQPLVWDNHRUIDXOW\PHPRU\l8QLWHG
ERVV RI WKH HQWHUSULVH DQG GLUHFWHG LWV DIIDLUV  %HUQLH       6WDWHVY'XQQLJDQ86DEURJDWHGRQ
$OWVKXOHUsHHS*DURQR&KDUOHV2j1HVWLDQGsRKQ&KLFDVH               RWKHUJURXQGV8QLWHG6WDWHVY:HOOV86
ZHUHOLDLVRQVRUJREHWZHHQVEHWZHHQ$SSHOODQWDQG6WUROOR             7KH GLVWULFW FRXUW LV UHTXLUHG WR mUHYLHZ WKH HYLGHQFH DQG
DQG $SSHOODQW ZDV WR HQIRUFH WKH ODZV LQ D PDQQHU ZKLFK       PDNH LQGHSHQGHQW ILQGLQJV QHFHVVDU\ WR HVWDEOLVK D ZLOOIXO
IXUWKHUHGWKHSXUSRVHVRIWKHHQWHUSULVH:HEHOLHYHWKDWWKH          LPSHGLPHQWWRRUREVWUXFWLRQRIMXVWLFHRUDQDWWHPSWWRGR
LQGLFWPHQWGHVFULEHVDQHQWHUSULVHZKLFKLVVHSDUDWHIURPWKH           WKHVDPHXQGHUWKHSHUMXU\GHILQLWLRQ>WKH&RXUWKDV@VHWRXWl
SDWWHUQ RI UDFNHWHHULQJ DFWLYLW\ DQG WKDW WKH JRYHUQPHQW         ,GDW:KLOHmLWLVSUHIHUDEOHIRUDGLVWULFWFRXUWWRDGGUHVV
SURYHGWKHH[LVWHQFHRIWKLVHQWHUSULVHDWWULDO                       HDFKHOHPHQWRIWKHDOOHJHGSHUMXU\LQDVHSDUDWHDQGFOHDU
                                                                        ILQGLQJlDGHWHUPLQDWLRQWKDWDQHQKDQFHPHQWLVUHTXLUHGLV
  )LUVWZHILQGWKHUHZDVHYLGHQFHWRILUPO\HVWDEOLVKWKDW            VXIILFLHQWLImWKHFRXUWPDNHVDILQGLQJRIDQREVWUXFWLRQRI
/HQQ\ 6WUROOR ZDV WKH OHDGHU RI WKH HQWHUSULVH  6WUROOR       RULPSHGLPHQWWRMXVWLFHWKDWHQFRPSDVVHVDOORIWKHIDFWXDO
WHVWLILHGWKDWE\WKHWLPHWKHHOHFWLRQVDSSURDFKHGKH             SUHGLFDWHVIRUDILQGLQJRISHUMXU\l,G7KXVLQ'XQQLJDQ
HVVHQWLDOO\KDGKDGDIDOOLQJRXWZLWKWKHLQFXPEHQWVKHULII           WKHGLVWULFWFRXUWjVILQGLQJRISHUMXU\ZDVVXIILFLHQWZKHUHLW
(G1HPHWKLQWKDW1HPHWKQRORQJHUIHOWREOLJDWHGWRZRUN              VWDWHGWKDWmWKHGHIHQGDQWZDVXQWUXWKIXODWWULDOZLWKUHVSHFW
ZLWK6WUROORWRVKXWGRZQFRPSHWLQJLQGHSHQGHQWJDPEOLQJ                WR PDWHULDO PDWWHUV LQ WKLV FDVHl DQG WKDW WKH XQWUXWKIXO
RSHUDWLRQV  7KHUHIRUH 6WUROOR WHVWLILHG ZKLOH KH IDFLDOO\      WHVWLPRQ\RQPDWHULDOPDWWHUVmZDVGHVLJQHGWRVXEVWDQWLDOO\
VXSSRUWHG1HPHWKjVFDPSDLJQLQRUGHUWRKHGJHKLVEHWVKH              DIIHFWWKHRXWFRPHRIWKHFDVHl,GHPSKDVLVLQRULJLQDO
GHYRWHGWKHPDMRULW\RIKLVVXSSRUWWR$SSHOODQW6WUROORPHW
ZLWK $SSHOODQW VHYHUDO WLPHV GXULQJ WKH SULPDU\ FDPSDLJQ            7KH 6L[WK &LUFXLW LQWHUSUHWV 'XQQLJDQ WR LPSRVH WZR
DQGSHUVRQDOO\JDYH$SSHOODQWDWOHDVW,QH[FKDQJH            UHTXLUHPHQWVRQWKHGLVWULFWFRXUWLQLPSRVLQJDQREVWUXFWLRQ
IRU KLV ILQDQFLDO VXSSRUW 6WUROOR WHVWLILHG WKDW $SSHOODQW      RIMXVWLFHHQKDQFHPHQWEDVHGRQSHUMXU\)LUVWWKHFRXUWPXVW
XQGHUVWRRGWKDWDPRQJRWKHUWKLQJVKHZRXOGEHUHTXLUHGWR            LGHQWLI\WKHSDUWLFXODUSRUWLRQVRIWKHGHIHQGDQWjVWHVWLPRQ\
ZRUNZLWK6WUROORWRHQIRUFHDQGFROOHFWWKHVWUHHWWD[DPRQJ           LWFRQVLGHUVWREHSHUMXULRXV8QLWHG6WDWHVY0LVH)G
WKHLQGHSHQGHQWJDPEOLQJRSHUDWLRQV,QRUGHUWRDFFRPSOLVK              WK &LU    6HFRQG WKH FRXUW PXVW PDNH
     8QLWHG6WDWHVY&KDQFH                             1R    1R                       8QLWHG6WDWHVY&KDQFH        

                         &6HQWHQFLQJ,VVXHV                             WKLV JRDO 6WUROOR DQG &KDQFH DJUHHG WKDW &KDQFH ZRXOG
                                                                          DSSRLQW &KLFDVH WR OHDG WKH YLFH GHSDUWPHQW  $V IXUWKHU
   $SSHOODQWQH[WFKDOOHQJHVWKHGLVWULFWFRXUWjVGHFLVLRQVWR            HYLGHQFHRI6WUROORjVFRQWURORYHU&KDQFH6WUROORWHVWLILHG
LPSRVHDWZROHYHOHQKDQFHPHQWIRUREVWUXFWLRQRIMXVWLFHDQG             WKDW KH LQVWUXFWHG &KDQFH QRW WR DFFHSW DQ\ FDPSDLJQ
WRXSZDUGO\GHSDUWIURPWKHJXLGHOLQHVHQWHQFLQJUDQJH:H               FRQWULEXWLRQVIURPWKHULYDO&HQWHU6WUHHWPREEHFDXVHWKH\
WDNHXSWKHVHLVVXHVVHULDWLP                                            ZRXOG WU\ WR FRQWURO KLP RU RWKHUZLVH ZHDNHQ 6WUROORjV
                                                                          LQIOXHQFHRYHUKLP6WUROORDOVRWHVWLILHGWKDWKHXVHG&KXFN
             2EVWUXFWLRQRIsXVWLFH(QKDQFHPHQW                        2j1HVWLDQGsHHS*DURQRDVLQWHUPHGLDULHVWRFRPPXQLFDWH
                                                                          ZLWK$SSHOODQWDQGWKDWRQRQHRFFDVLRQKHGHDOWGLUHFWO\ZLWK
   ,Q FDOFXODWLQJ $SSHOODQWjV RIIHQVH OHYHO WKH WULDO MXGJH       sRKQ&KLFDVHsW$SS[DW2QWZRRFFDVLRQV6WUROOR
LPSRVHGDWZROHYHOHQKDQFHPHQWIRUREVWUXFWLRQRIMXVWLFH                DVNHG*DURQRWRDVN&KLFDVHWRVKXWGRZQWZRLQGHSHQGHQW
SXUVXDQWWR6HFWLRQ&RIWKH      8QLWHG6WDWHV6HQWHQFLQJ           JDPEOLQJRSHUDWLRQVRQHRQ/DQH6WUHHWDQGRQHDWWKH2SHQ
*XLGHOLQHVRQWKHJURXQGVWKDW$SSHOODQWFRPPLWWHGSHUMXU\              +HDUWK5HVWDXUDQW,GDW&KLFDVHFRQILUPHGWKDW
GXULQJ WULDO  $SSHOODQW FODLPV WKDW WKH WULDO MXGJH HUUHG LQ   *DURQRDVNHGKLPWRVKXWGRZQERWKRSHUDWLRQVDQGWKDWKH
DSSO\LQJDVHQWHQFLQJHQKDQFHPHQWIRUREVWUXFWLRQRIMXVWLFH              UHFHLYHGDXWKRUL]DWLRQIURP$SSHOODQWWRFRQGXFWUDLGVDQG
EDVHGRQSHUMXU\EHFDXVHVKHGLGQRWLGHQWLI\DQ\SDUWLFXODU              WKDW$SSHOODQWZDVDZDUHWKDWWKHUHTXHVWFDPHIURP*DURQR
DQVZHUV WR DQ\ SDUWLFXODU TXHVWLRQV ZKLFK ZHUH PDWHULDOO\          ,GDW2QDQRWKHURFFDVLRQ2j1HVWLDVNHG&KLFDVHWR
IDOVH)XUWKHUPRUH$SSHOODQWDUJXHVWKHWULDOMXGJHHUUHGE\           VKXWGRZQWKHJDPEOLQJRSHUDWLRQDWWKH*UHHN&RIIHH+RXVH
IDLOLQJ WR JLYH VSHFLILF QRWLFH RI WKH SRUWLRQV RI WKH WULDO    EXWWKDW*DURQRRUGHUHGKLPWROHDYHLWDORQHEHFDXVHLWZDV
WUDQVFULSWVKHUHOLHGXSRQLQUHDFKLQJKHUFRQFOXVLRQV                   %HUQLH$OWVKXOHUjVRSHUDWLRQ:KHQ&KLFDVHWROG$SSHOODQW
                                                                          RI WKH FRQIOLFWLQJ UHTXHVWV $SSHOODQW WROG &KLFDVH WKDW KH
   5HYLHZ RI D GLVWULFW MXGJHjV GHFLVLRQ WR LPSRVH DQ             ZRXOGWDNHRI2j1HVWL,G,QIDFWWKH6KHULIIjV'HSDUWPHQW
REVWUXFWLRQRIMXVWLFHHQKDQFHPHQWSXUVXDQWWR&LVD               GLGQRWFORVHGRZQWKH*UHHN&RIIHH+RXVHJDPH,G
WKUHHVWHS SURFHVV  )LUVW ZH UHYLHZ WKH GLVWULFW FRXUWjV
ILQGLQJRIIDFWVXQGHUO\LQJWKHHQKDQFHPHQWIRUFOHDUHUURU                ,Q DGGLWLRQ WR RUGHUV IORZLQJ GRZQZDUG IURP 6WUROOR
8QLWHG6WDWHVY0LGGOHWRQ)GWK&LU            WKURXJK *DURQR RU 2j1HVWL WR &KLFDVH WR $SSHOODQW WKH
1H[WWKHGLVWULFWFRXUWjVFRQFOXVLRQWKDWDJLYHQVHWRIIDFWV           HYLGHQFHVKRZHGWKDWWKHOLQHVRIFRPPXQLFDWLRQIORZHGWKH
FRQVWLWXWHVREVWUXFWLRQRIMXVWLFHLVDPL[HGTXHVWLRQRIODZ             RWKHUZD\&KLFDVHWHVWLILHGWKDWZKHQ$SSHOODQWjVFDPSDLJQ
DQG IDFW ZKLFK ZH UHYLHZ GH QRYR  ,G  )LQDOO\ RQFH WKH     QHHGHG FDVK $SSHOODQW LQVWUXFWHG &KLFDVH WR DSSURDFK
                                                                          *DURQRWRDVN6WUROORIRUPRQH\,GDW$SSHOODQWDOVR
                                                                          DSSURDFKHG 2j1HVWL WR DVN 6WUROOR IRU PRQH\  ,G DW 
     
       7KLV VHFWLRQ SURYLGHV
                                                                          )XUWKHUPRUH $SSHOODQW ZDV DZDUH WKDW &KLFDVH VROLFLWHG
                                                                          PRQH\IURP6WUROORWKURXJK*DURQRDQG2j1HVWLWRSD\IRU
     ,I $ WKH GHIHQGDQW ZLOOIXOO\ REVWUXFWHG RU LPSHGHG RU             JDPEOLQJMXQNHWVWR$WODQWLF&LW\,GDW$SSHOODQW
     DWWHPSWHG WR REVWUXFW RU LPSHGH WKH DGPLQLVWUDWLRQ RI MXVWLFH       DOVRDVNHG&KLFDVHWRDVN*DURQRIRUWKHQDPHRIDODZ\HU
     GXULQJ WKH FRXUVH RI WKH LQYHVWLJDWLRQ SURVHFXWLRQ RU VHQWHQFLQJ   $SSHOODQWFRXOGFRQVXOWDERXWVXLQJKLVFDPSDLJQRSSRQHQW
     RI WKH LQVWDQW RIIHQVH RI FRQYLFWLRQ DQG % WKH REVWUXFWLYH
     FRQGXFW UHODWHG WR L WKH GHIHQGDQW
V RIIHQVH RI FRQYLFWLRQ DQG
                                                                          ,GDW
     DQ\ UHOHYDQW FRQGXFW RU LL D FORVHO\ UHODWHG RIIHQVH LQFUHDVH
     WKH RIIHQVH OHYHO E\  OHYHOV                                         ,Q VKRUW ZH ILQG WKDW WKH HYLGHQFH VKRZHG WKDW WKH
                                                                          HQWHUSULVH LQYROYHG LQ WKLV FDVH KDG D YHU\ FOHDUO\ GHILQHG
866*  &
    8QLWHG6WDWHVY&KDQFH                       1R       1R                          8QLWHG6WDWHVY&KDQFH            

VWUXFWXUHZKLFKZDVVHSDUDWHIURPWKHSDWWHUQRIUDFNHWHHULQJ         LQVWUXFWLRQ ZDV PLQLPDO  7KH JRYHUQPHQWjV LQTXLU\ ZDV
DFWLYLW\7KHJURXSZDVVWUXFWXUHGWRPLQLPL]HWKHOLNHOLKRRG        OLPLWHGWRWZRVSHFLILFLQVWDQFHVRIFRQGXFWE\RWKHUGHSXWLHV
WKDWDQ\RQHZRXOGGLVFRYHUWKDW$SSHOODQWZDVFRQQHFWHGWR            WKDWZHUHXQUHODWHGWRWKHFULPHVFKDUJHGLQWKHLQGLFWPHQW
/HQQ\6WUROOR6WUROORGHVLJQDWHGWKHJDPEOLQJRSHUDWLRQVKH          0RUHRYHU DV WKH JRYHUQPHQW SRLQWV RXW LQ LWV EULHI WKH
ZDQWHGVKXWGRZQDQGSDVVHGWKRVHLQVWUXFWLRQVWR*DURQR             SURVHFXWRUGLGQRWH[SORLWWKLVWHVWLPRQ\E\UHHPSKDVL]LQJ
*DURQRWKHQLGHQWLILHGWKHRSHUDWLRQVIRU&KLFDVH&KLFDVH           LWGXULQJFORVLQJDUJXPHQW$OWKRXJKZHKDYHUHYHUVHGWZR
WKHQUHFHLYHGDSSURYDOIURP$SSHOODQWWRFRQGXFWUDLGVRQWKH         RIWKHFRXQWVRQZKLFK$SSHOODQWZDVFRQYLFWHGZHEHOLHYH
RSHUDWLRQV  $SSHOODQW DOVR WRRN RUGHUV IURP 6WUROOR RQ       LWLVPRUHOLNHO\WKDQQRWWKDWWKHMXU\ZRXOGKDYHUHDFKHGWKH
DFFHSWLQJ FDPSDLJQ FRQWULEXWLRQV  &RQYHUVHO\ ZKHQ              VDPHYHUGLFWVRQWKHRWKHUFKDUJHVRQZKLFKZHKDYHKHOGWKH
$SSHOODQW QHHGHG DVVLVWDQFH ZKHWKHU LW EH ILQDQFLDO            HYLGHQFHZDVVXIILFLHQWWRVXSSRUWWKHFRQYLFWLRQVHYHQLQWKH
DVVLVWDQFHRURWKHUZLVHKHXVHG&KLFDVHWRDSSURDFK6WUROOR          DEVHQFHRIWKHFKDOOHQJHGWHVWLPRQ\7KHUHIRUHZHWKLQNDQ\
WKURXJK*DURQRRU$SSHOODQWZRXOGDSSURDFK6WUROORKLPVHOI            HUURU LI LQGHHG WKH WULDO FRXUW GLG HUU ZDV KDUPOHVV  6HH
WKURXJK 2j1HVWL  6WUROOR WKHQ VHQW PRQH\ WR $SSHOODQW        8QLWHG6WDWHVY0DUWLQ)GWK&LU
WKURXJK 2j1HVWL RU *DURQR WR &KLFDVH  :KHQ WKHUH ZHUH       m:KHUH DQ HUURU LV QRW RI FRQVWLWXWLRQDO GLPHQVLRQV LW LV
FRQIOLFWLQJ LQVWUXFWLRQV $SSHOODQW EHFDPH SHUVRQDOO\             KDUPOHVV XQOHVV LW LV PRUH SUREDEOH    WKDQ QRW WKDW WKH HUURU
LQYROYHG LQ UHVROYLQJ WKH GLVSXWH  7KLV ZDV QR DG KRF      PDWHULDOO\DIIHFWHGYHUGLFWl
DVVRFLDWLRQRIFULPLQDOV
                                                                        $FFRUGLQJO\LQVXPPDU\ZHILQGWKLVDVVLJQPHQWRIHUURU
   $FFRUGLQJO\ ZH ILQG WKDW $SSHOODQWjV FKDOOHQJH WR WKH      WREHZLWKRXWPHULW
VXIILFLHQF\ RI WKH HYLGHQFH UHJDUGLQJ WKH 5,&2 HQWHUSULVH
DOOHJHGLQWKHLQGLFWPHQWLVZLWKRXWPHULW
               (IIHFWRQ,QWHUVWDWH&RPPHUFH
   $SSHOODQWQH[WFRQWHQGVWKDWWKHHYLGHQFHZDVLQVXIILFLHQW
WRVXSSRUWDILQGLQJWKDWWKH5,&2HQWHUSULVHDQGWKHDOOHJHG             
+REEV$FWH[WRUWLRQVKDGDQHIIHFWRQLQWHUVWDWHFRPPHUFH                   5HJDUGLQJ HUURUV RI FRQVWLWXWLRQDO GLPHQVLRQ YHUVXV HUURUV RI QRQ
                                                                      FRQVWLWXWLRQDO GLPHQVLRQ WKH 1LQWK &LUFXLW H[SODLQHG
$VLGHQWLILHGE\$SSHOODQWWKHUDFNHWHHULQJDFWLYLWLHVZHUH
WKHFDPSDLJQFRQWULEXWLRQVIURP/HQQ\6WUROORZKLFKWKH                7UDGLWLRQDOO\ WKH FRXUWV KDYH YLHZHG DV FRQVWLWXWLRQDO HUURUV
MXU\IRXQGWREHDEULEHVROLFLWDWLRQRIH[SHQVHPRQH\WR             WKRVH HUURUV YLRODWLQJ VSHFLILF SURYLVLRQV RI WKH %LOO RI 5LJKWV
WUDYHO WR $WODQWLF &LW\  D FRQVSLUDF\ WR H[WRUW D mIHZ       VXFK DV WKH VHOILQFULPLQDWLRQ FODXVH WKH FRQIURQWDWLRQ FODXVH
WKRXVDQGGROODUVlIURP%UXFH=ROGDQE\WKUHDWHQLQJWRVKXW                DQG WKH H[FOXVLRQDU\ UXOH EDVHG RQ WKH )RXUWK $PHQGPHQW
                                                                          SURKLELWLRQ DJDLQVW XQUHDVRQDEOH VHDUFKHV (UURUV LQ VXFK PDWWHUV
GRZQ KLV ILUHZRUNV EXVLQHVV ZKLFK $SSHOODQW DUJXHV ZDV            DV MXU\ LQVWUXFWLRQV UXOLQJV RQ WKH DGPLVVLELOLW\ RI HYLGHQFH
RQO\ D WKUHDW WR WKH LQGLYLGXDO QRW WKH EXVLQHVV  D         ZKHUH )RXUWK $PHQGPHQW FODLPV DUH QRW LQYROYHG DQG
FRQVSLUDF\WRH[WRUWDIHZWKRXVDQGGROODUVDSLHFHIURPORFDO             FRPPHQWV E\ FRXQVHO JHQHUDOO\ KDYH EHHQ FRQVLGHUHG
ERRNPDNHUV DQG  DQG WKH REVWUXFWLRQ RI MXVWLFH FKDUJH          QRQFRQVWLWXWLRQDO
UHODWHG WR JDPEOLQJ DFWLYLWLHV DW WKH *UHHN &RIIHH +RXVH
$FFRUGLQJWR$SSHOODQWQRQHRIWKHUDFNHWHHULQJDFWLYLWLHV           8QLWHG 6WDWHV Y 9DOOH9DOGH]  )G   WK &LU LQWHUQDO
                                                                      FLWDWLRQV RPLWWHG 6LQFH KHUH WKH FODLP RI HUURU LQYROYHG LQVWUXFWLRQV WR
DOOHJHGLQWKHLQGLFWPHQWDQGIRXQGWRKDYHEHHQSURYHGE\            WKH MXU\ DQG D UXOLQJ RQ WKH DGPLVVLELOLW\ RI HYLGHQFH QRW LQYROYLQJ WKH
                                                                      )RXUWK $PHQGPHQW WKH DOOHJHG HUURU ZDV RI QRQFRQVWLWXWLRQDO
                                                                      GLPHQVLRQV
    8QLWHG6WDWHVY&KDQFH                         1R       1R                        8QLWHG6WDWHVY&KDQFH         

LQWURGXFWLRQRIWKHHYLGHQFHRUGXULQJILQDOLQVWUXFWLRQV6HH        WKH MXU\ KDG DQ HIIHFW RQ LQWHUVWDWH FRPPHUFH VXIILFLHQW WR
HJ 8QLWHG 6WDWHV Y 'DELVK  )G   WK &LU    VXSSRUWWKHFRQYLFWLRQV
,Q'DELVKWKH&RXUWQRWHGWKDWDFRQWHPSRUDQHRXV
OLPLWLQJLQVWUXFWLRQPD\XQGXO\HPSKDVL]HWKHHYLGHQFHLQWKH              )RUSXUSRVHVRIDFRQYLFWLRQXQGHU86&F	
PLQGVRIWKHMXU\6HHLG,Q8QLWHG6WDWHVY0LOOHU)G        G WKH JRYHUQPHQW QHHG RQO\ SURYH WKDW WKH HQWHUSULVHjV
WK&LUWKH&RXUWKHOGWKDWWKHGHIHQGDQWZDVQRW          UDFNHWHHULQJ DFWLYLWLHV KDG D GH PLQLPLV FRQQHFWLRQ ZLWK
VXEVWDQWLDOO\SUHMXGLFHGZKHUHWKHWULDOMXGJHGLGQRWJLYHD           LQWHUVWDWHFRPPHUFH8QLWHG6WDWHVY5LGGOH)G
FRQWHPSRUDQHRXVOLPLWLQJLQVWUXFWLRQEXWLQVWHDGLQFRUSRUDWHG           WK&LU,Q5LGGOHDFDVHLQYROYLQJPDQ\RIWKH
WKHLQVWUXFWLRQLQLWVILQDOLQVWUXFWLRQVWRWKHMXU\6HHLG,Q     FDVWPHPEHUVRIWKLVFDVHWKHFRXUWKHOGWKDWWKLVGHPLQLPLV
8QLWHG 6WDWHV Y /DWRXI  )G  WK &LU  WKH    VWDQGDUG ZDV VDWLVILHG ZKHUH  WKH HQWHUSULVH SXUFKDVHG
&RXUW GLG KROG WKDW WKH WULDO MXGJH HUUHG E\ QRW JLYLQJ DQ   ORWWHU\ WLFNHWV LQ 3HQQV\OYDQLD WR SURWHFW DJDLQVW ORVVHV LQ
DSSURSULDWH OLPLWLQJ LQVWUXFWLRQ XQWLO DIWHU D ZHHNHQG KDG       2KLR  VROG LQ 3HQQV\OYDQLD D ULQJ WDNHQ IURP DQ 2KLR
SDVVHG EHWZHHQ WKH LQWURGXFWLRQ RI WKH HYLGHQFH DQG WKH         PXUGHU YLFWLP  H[WRUWHG PRQH\ IURP D YLFWLP ZKR VROG
JLYLQJ RI WKH LQVWUXFWLRQ  ,G DW   7KH &RXUW UXOHG    ILUHZRUNVLQ1HZ<RUNDQGWKHJRYHUQPHQWDOOHJHGWKDW
KRZHYHUWKDWWKHWULDOFRXUWjVHUURUZDVKDUPOHVVJLYHQWKH            WKH3LWWVEXUJKPDILDZDVLQYROYHGLQWKHHQWHUSULVH,G,Q
ZHLJKW RI WKH RWKHU HYLGHQFH HVWDEOLVKLQJ WKH GHIHQGDQWjV        OLJKWRIWKHGHFLVLRQLQ5LGGOHZHEHOLHYHWKDWWKHJRYHUQPHQW
JXLOW,G0RUHUHFHQWO\WKLV&RXUWDOEHLWLQDQXQUHSRUWHG         DGHTXDWHO\HVWDEOLVKHGWKHUHTXLVLWHGHPLQLPLVFRQQHFWLRQLQ
GHFLVLRQUHLWHUDWHGWKDWDWULDOMXGJHPD\DSSURSULDWHO\JLYH          WKLVFDVH
WKH OLPLWLQJ LQVWUXFWLRQ GXULQJ ILQDO LQVWUXFWLRQV ZKHUH WKH
GHIHQGDQWLVQRWVXEVWDQWLDOO\SUHMXGLFHGE\WKHWLPLQJ6HH              $SSHOODQWVROLFLWHGDQGUHFHLYHGIURP/HQQ\6WUROOREULEH
8QLWHG6WDWHVY5XJJOHV1R:/DW               PRQH\LQRUGHUWRWUDYHOWR$WODQWLF&LW\WRJDPEOH&OHDUO\

WK&LU0DU                                           WKLVDFWKDGDQHIIHFWRQLQWHUVWDWHFRPPHUFH$SSHOODQWjV
                                                                        FKDUDFWHUL]DWLRQ RI WKLV SD\PHQW IURP 6WUROOR DV D
   ,Q WKLV FDVH DOWKRXJK WKH WULDO MXGJH GLG QRW JLYH D      UHLPEXUVHPHQW RI H[SHQVHV DV RSSRVHG WR DQ XS IURQW
FRQWHPSRUDQHRXV OLPLWLQJ LQVWUXFWLRQ ZH GR REVHUYH WKDW          SD\PHQWZHILQGWREHDGLVWLQFWLRQZLWKRXWDGLIIHUHQFH7KH
GXULQJILQDOLQVWUXFWLRQVWKHFRXUWUHPLQGHGWKHMXU\WKDWLW           SRLQW LV WKDW WKH SD\PHQW RU UHLPEXUVHPHQW IDFLOLWDWHG WKH
KDGKHDUGHYLGHQFHWKDWRWKHUSHUVRQVPD\KDYHFRPPLWWHG                RSSRUWXQLW\IRULQWHUVWDWHWUDYHO$SSHOODQWH[WRUWHGFDPSDLJQ
RWKHU LOOHJDO DFWV DQG WKDW VXFK HYLGHQFH FRXOG QRW EH         FRQWULEXWLRQV IURP %UXFH =ROGDQ     ZKRVH FRPSDQ\ VROG
FRQVLGHUHGDVHYLGHQFHWKDW$SSHOODQWFRPPLWWHGWKHFULPHV              ILUHZRUNVLQLQWHUVWDWHFRPPHUFH)XUWKHUPRUHDVLQ5LGGOH
FKDUJHGLQWKHLQGLFWPHQW6HHsW$SS[DW7KHWULDO            WKHLQGLFWPHQWDOOHJHGWKDWWKHHQWHUSULVHLQYROYHGPHPEHUV
FRXUWIXUWKHUJDYHDQDSSURSULDWHLQVWUXFWLRQWRWKHMXU\RQWKH        RIWKH3LWWVEXUJK/D&RVD1RVWUD/HQQ\6WUROORWHVWLILHGWKDW
SURSHUSXUSRVHVIRUZKLFKVXFKHYLGHQFHFRXOGEHFRQVLGHUHG            KHZDVDPHPEHURIWKH3LWWVEXUJKIDPLO\DQGWKDWSURFHHGV
,GDW$OWKRXJKWKHLQVWUXFWLRQZDVQRWSDUWLFXODUO\           IURPKLVLOOHJDOJDPEOLQJRSHUDWLRQVZHUHWUDQVIHUUHGDFURVV
WDLORUHG WR WKH WHVWLPRQ\ WKH JRYHUQPHQW HOLFLWHG IURP           VWDWHOLQHVsW$SS[&RPSDUH8QLWHG6WDWHV
$SSHOODQWZHGRQRWILQGRQWKLVUHFRUGDQ\LQGLFDWLRQWKDW            Y7XUQHU)GWK&LUKROGLQJXQGHU
$SSHOODQW UHTXHVWHG WKH WULDO FRXUW WR JLYH D PRUH VSHFLILF    +REEV$FWFRQQHFWLRQWRLQWHUVWDWHFRPPHUFHQRWHVWDEOLVKHG
LQVWUXFWLRQGXULQJILQDOLQVWUXFWLRQV7KHUHIRUHZHEHOLHYH
WKDW$SSHOODQWKDVZDLYHGDQ\FODLPWRWKHDGHTXDF\RIWKH
LQVWUXFWLRQDFWXDOO\JLYHQ,QDQ\HYHQWZHWKLQNWKDWDQ\                
SUHMXGLFH$SSHOODQWVXIIHUHGDVDUHVXOWRIWKHWLPLQJRIWKH                :H DGGUHVV PRUH IXOO\ EHORZ ZK\ ZH EHOLHYH WKH H[WRUWLRQ RI %UXFH
                                                                        =ROGDQ KDG DQ HIIHFW RQ LQWHUVWDWH FRPPHUFH
    8QLWHG6WDWHVY&KDQFH                       1R       1R                       8QLWHG6WDWHVY&KDQFH         

ZKHUH QR HYLGHQFH VXJJHVWHG WKDW UREEHU\ YLFWLPjV LOOHJDO         :HDOVRUHMHFW$SSHOODQWjVFRQWHQWLRQWKDWWKHWULDOMXGJH
JDPEOLQJ RSHUDWLRQ FURVVHG RYHU WKH 0LFKLJDQ ERUGHU LQWR       DOORZHGWKHJRYHUQPHQWWRDGGXFHWKHFRQWHVWHGHYLGHQFHDV
2KLR7KXVZHDUHVDWLVILHGLQWKLVFDVHWKDWWKHJRYHUQPHQW       DSXQLWLYHPHDVXUHIRUWKHSHUFHLYHGH[FHVVHVRIWULDOFRXQVHO
PHW LWV EXUGHQ RI GHPRQVWUDWLQJ WKDW WKH DFWLYLWLHV RI WKH   :KLOHWKHMXGJHGLGFRPPHQWWKDWWULDOFRXQVHOKDGDEXVHG
HQWHUSULVHKDGDWOHDVWDGHPLQLPLVFRQQHFWLRQZLWKLQWHUVWDWH       KHU SULRU UXOLQJV DERXW HOLFLWLQJ FKDUDFWHU HYLGHQFH ZH
FRPPHUFH                                                            EHOLHYHLQWRWRWKDWWKHVLGHEDUFROORTX\PHUHO\LQGLFDWHVD
                                                                      UHFRJQLWLRQRQWKHSDUWRIWKHGLVWULFWMXGJHWKDWFRXQVHOZDV
   7XUQLQJ WR WKH +REEV $FW FKDUJHV ZH ILQG WKDW WKH        DWWHPSWLQJWRFUHDWHDIDOVHLPSUHVVLRQRI$SSHOODQWWKDWWKH
JRYHUQPHQW FDUULHG LWV EXUGHQ RI HVWDEOLVKLQJ WKH UHTXLUHG     JRYHUQPHQWZDVHQWLWOHGWRUHEXW6HH6HJLQHV)GDW
FRQQHFWLRQ ZLWK LQWHUVWDWH FRPPHUFH ZLWK UHVSHFW WR WKH          7KHUHIRUH ZH ILQG WKDW WKH WULDO FRXUWjV HYLGHQWLDU\
H[WRUWLRQ RI %UXFH =ROGDQ DV DOOHJHG LQ &RXQW  RI WKH      UXOLQJ ZDV QRW VLPSO\ D UHWDOLDWRU\ JHVWXUH DV $SSHOODQW
LQGLFWPHQW  /LNH 5,&2 WKH +REEV $FW RQO\ UHTXLUHV D        FRQWHQGV
VKRZLQJ RI D GH PLQLPLV FRQQHFWLRQ ZLWK LQWHUVWDWH
FRPPHUFH8QLWHG6WDWHVY+DUGLQJ)GWK             7KHRQO\LVVXHZKLFKJLYHVXVVRPHSDXVHLVWKHGLVWULFW
&LU$QH[FHSWLRQWRWKHGHPLQLPLVVWDQGDUGDSSOLHV         FRXUWjVUHIXVDOWRJLYHWKHMXU\DFRQWHPSRUDQHRXVOLPLWLQJ
DV$SSHOODQWFRUUHFWO\SRLQWVRXWZKHUHWKHDOOHJHG+REEV            LQVWUXFWLRQXQGHU)HGHUDO5XOHRI(YLGHQFHRQWKHSURSHU
$FWUREEHU\RUH[WRUWLRQLVGLUHFWHGDWDQLQGLYLGXDODQGQRW         XVHVRIWKHFKDOOHQJHGWHVWLPRQ\DV$SSHOODQWjVWULDOFRXQVHO
DEXVLQHVV6HH8QLWHG6WDWHVY:DQJ)G          UHTXHVWHG5XOHSURYLGHV
WK&LU$SSHOODQWDUJXHVWKDWWKHDFWRIH[WRUWLRQZDV
GLUHFWHGDW=ROGDQDVDQLQGLYLGXDODQGQRWDWKLVEXVLQHVV            :KHQHYLGHQFHZKLFKLVDGPLVVLEOHDVWRRQHSDUW\RUIRU
%HFDXVH$SSHOODQWDUJXHVWKHH[WRUWLRQZDVGLUHFWHGDWDQ             RQHSXUSRVHEXWQRWDGPLVVLEOHDVWRDQRWKHUSDUW\RUIRU
LQGLYLGXDO WKH JRYHUQPHQW ZDV UHTXLUHG WR SURYH D               DQRWKHU SXUSRVH LV DGPLWWHG WKH FRXUW XSRQ UHTXHVW
VXEVWDQWLDO UDWKHU WKDQ GH PLQLPLV HIIHFW RQ LQWHUVWDWH        VKDOOUHVWULFWWKHHYLGHQFHWRLWVSURSHUVFRSHDQGLQVWUXFW
FRPPHUFH6HHLG6LQFHDFFRUGLQJWR$SSHOODQWWKHDPRXQW             WKHMXU\DFFRUGLQJO\
WR EH H[WRUWHG IURP =ROGDQ ZDV UHODWLYHO\ VPDOO D IHZ
WKRXVDQG GROODUV KH DUJXHV WKDW WKH JRYHUQPHQW IDLOHG WR     )HG5(YLG$OWKRXJKWKH5XOHVWDWHVWKDWDOLPLWLQJ
HVWDEOLVK D VLJQLILFDQW FRQQHFWLRQ WR LQWHUVWDWH FRPPHUFH      LQVWUXFWLRQVKDOOEHJLYHQXSRQUHTXHVWZKHQVXFKHYLGHQFH
(YHQLIZHDGRSW$SSHOODQWjVUHDVRQLQJDVWRWKHDSSOLFDEOH           mLVDGPLWWHGlWKHWH[WLWVHOIGRHVQRWFOHDUO\UHTXLUHWKHWULDO
VWDQGDUGZHGLVDJUHHWKDWWKH=ROGDQH[WRUWLRQGLGQRWKDYH          FRXUW WR JLYH WKH LQVWUXFWLRQ DW WKH VDPH WLPH WKH MXU\ LV
DVXEVWDQWLDOFRQQHFWLRQWRLQWHUVWDWHFRPPHUFH,Q:DQJ            H[SRVHG WR WKH HYLGHQFH  7KH SKUDVH mLV DGPLWWHGl PD\
WKLV&RXUWDOVRQRWHGWKDWDVXEVWDQWLDOFRQQHFWLRQFRXOGEH          UHDVRQDEO\EHLQWHUSUHWHGWRUHTXLUHVLPSO\WKDWWKHWULDOFRXUW
HVWDEOLVKHG E\ SURRI WKDW WKH GHIHQGDQW NQHZ RI RU ZDV       JLYHWKHUHTXHVWHGLQVWUXFWLRQGXULQJILQDOLQVWUXFWLRQVDVWKH
PRWLYDWHGE\WKHYLFWLPjVFRQQHFWLRQWRLQWHUVWDWHFRPPHUFH          WULDOMXGJHLQGLFDWHGVKHZRXOGGRLQWKLVFDVH%XWVHH
6HHLGDWFLWLQJ8QLWHG6WDWHVY0LOOV)G      :ULJKW 	 *UDKDP )('(5$/ 35$&7,&( 	 352&('85(
WK&LU,QWKLVFDVH$SSHOODQWWKURXJK&KLFDVH          DW	6XSSVWDWLQJWKDW5XOH
WKUHDWHQHGWRFORVHGRZQ=ROGDQjVILUHZRUNVEXVLQHVVLIKH            UHTXLUHV WULDO MXGJH WR JLYH FRQWHPSRUDQHRXV LQVWUXFWLRQ LI
GLGQRWPDNHDFDPSDLJQFRQWULEXWLRQ:HEHOLHYHWKHIDFW            UHTXHVWHG,QWKHFRQWH[WRI5XOHEZKLFKJRYHUQVWKH
WKDWWKHWKUHDWZDVGLUHFWHGDW=ROGDQjVEXVLQHVVDQGQRWDW         DGPLVVLELOLW\RISULRUDFWVHYLGHQFHWKLV&RXUWKDVKHOGWKDW
=ROGDQSHUVRQDOO\HYHQLIWKHPRQH\ZDVWRKDYHEHHQSDLG            LWLVZLWKLQWKHWULDOMXGJHjVGLVFUHWLRQWRGHFLGHZKHWKHUWR
IURP=ROGDQjVSHUVRQDODVVHWVVKRZVWKDW$SSHOODQWNQHZRI           JLYH WKH OLPLWLQJ LQVWUXFWLRQ FRQWHPSRUDQHRXV ZLWK WKH
    8QLWHG6WDWHVY&KDQFH                       1R      1R                          8QLWHG6WDWHVY&KDQFH           

LPSURSHUO\H[SDQGHGWKHVFRSHRIUHFURVVH[DPLQDWLRQ:H            DQG ZDV PRWLYDWHG  E\ =ROGDQjV FRQQHFWLRQ WR LQWHUVWDWH
WKLQNQRW                                                           FRPPHUFH7KHUHIRUHHYHQLIZHZHUHWRFRQFOXGHWKDWWKH
                                                                     JRYHUQPHQWZDVUHTXLUHGWRSURYHDVXEVWDQWLDOFRQQHFWLRQWR
   ,QLWLDOO\ZHGRDJUHHWKDWFRXQVHOjVTXHVWLRQm'LG\RXDOVR     LQWHUVWDWHFRPPHUFHLQWKLVFDVHZHEHOLHYHWKDWVWDQGDUGKDV
NQRZWKHPWREHFRPSHWHQWKDUGZRUNLQJIRONV"lDVSRVHG            EHHQVDWLVILHGZLWKUHVSHFWWR&RXQW
WR$SSHOODQWZDVLQWHQGHGWREHOLPLWHGWREHWRWKHVSHFLILF
SHUVRQVLGHQWLILHG2VPDQ5XVVR&ROXFFLDQG)DULQD:H             :HDJUHHZLWK$SSHOODQWKRZHYHUWKDWWKHHYLGHQFHZDV
EHOLHYH KRZHYHU WKDW $SSHOODQWjV DQVZHU m7KH\ DOO ZHUH     LQVXIILFLHQWWRHVWDEOLVKHYHQDGHPLQLPLVFRQQHFWLRQZLWK
YHU\ FRPSHWHQW H[FHSW IRU sRKQ>@l H[SDQGHG XSRQ WKH        UHVSHFWWRWKH+REEV$FWH[WRUWLRQRIWKHORFDOERRNPDNHUV
TXHVWLRQ DQG LPSOLHG WKDW HYHU\RQH LQ WKH GHSDUWPHQW EXW     7KHVSHFLILFRYHUWDFWVRIH[WRUWLRQLQFOXGHGLQWKHLQGLFWPHQW
&KLFDVHZDVDFRPSHWHQWHPSOR\HH7KHUHIRUHWKHWULDOMXGJH        DUHWKHUDLGVRQWKH/DQH6WUHHWJDPEOLQJRSHUDWLRQDQGWKH
GLGQRWDEXVHKHUGLVFUHWLRQE\DOORZLQJWKHSURVHFXWLRQWR          JDPEOLQJVWDJDWWKH2SHQ+HDUWK5HVWDXUDQW5HYLHZLQJWKH
FURVVH[DPLQH $SSHOODQW DERXW WKH SHUIRUPDQFH RI RWKHU         UHFRUGVXSSOLHGWRXVZHILQGQRHYLGHQFHWKDWHLWKHURIWKHVH
GHSXWLHVZLWKLQWKHGHSDUWPHQW)XUWKHUPRUHWKHWHVWLPRQ\          RSHUDWLRQV DIIHFWHG LQWHUVWDWH FRPPHUFH QRU GR ZH ILQG
WKH JRYHUQPHQW HOLFLWHG IURP $SSHOODQW IDLUO\ UHEXWV WKH      HYLGHQFH VXIILFLHQW WR HVWDEOLVK D mUHDOLVWLF SUREDELOLW\ WKDW
LPSOLFDWLRQ FRQWDLQHG LQ KLV DQVZHU WR WKH TXHVWLRQ  7KH   >HLWKHURIWKHVHRSHUDWLRQVZRXOG@KDYHDQHIIHFWRQLQWHUVWDWH
SKUDVH mFRPSHWHQW KDUGZRUNLQJ SHRSOHl VXJJHVWV WKDW WKH       FRPPHUFHl:DQJ)GDWTXRWLQJ8QLWHG6WDWHVY
SHUVRQV LGHQWLILHG ZHUH ZKROHVRPHO\ LQGXVWULRXV FLWL]HQV       3HHWH)GWK&LU5HJDUGLQJWKH
:H GR QRW WKLQN WKDW ZKROHVRPHO\ LQGXVWULRXV ODZ              /DQH 6WUHHW RSHUDWLRQ WKHUH ZDV QR HYLGHQFH UHJDUGLQJ LWV
HQIRUFHPHQW RIILFHUV SODQW HYLGHQFH PLVWDNH IORXU IRU         VL]HDPRXQWRISURILWVZKRLWVFXVWRPHUVZHUHRUZKHWKHU
FRFDLQHRUVZHDURXWIDOVHDIILGDYLWVLQVXSSRUWRIVHDUFKDQG      PRQH\ HLWKHU LQFRPLQJ RU RXWJRLQJ WUDYHOHG DFURVV VWDWH
DUUHVW ZDUUDQWV  &RQVHTXHQWO\ ZH UHMHFW $SSHOODQWjV          OLQHV7KHRQO\HYLGHQFHSUHVHQWHGZDVWKDWWKHRSHUDWLRQZDV
FRQWHQWLRQWKDWWKHWHVWLPRQ\HOLFLWHGGRHVQRWLPSHDFKWKH          ORFDWHGLQDEDUFDOOHGm&KXFNjV3ODFHlDQGWKDW/HQQ\6WUROOR
FODLP                                                               ZDQWHGLWFORVHGGRZQ6HHsW$SS[DW7KHVDPH
                                                                     NLQGRIHYLGHQFHLVODFNLQJUHJDUGLQJWKHJDPEOLQJVWDJDWWKH
   :HUHFRJQL]HWKDWWKHWHVWLPRQ\VKRZHGWKDW$SSHOODQWjV           2SHQ+HDUWK5HVWDXUDQW:HEHOLHYHWKDWWKHODFNRIHYLGHQFH
EURWKHUZDVRQO\LQGLFWHGDQGQRWFRQYLFWHGRIDQ\FULPHIRU       SUHVHQWHG RQ WKHVH RSHUDWLRQVj FRQQHFWLRQ ZLWK LQWHUVWDWH
WKHIORXUFRFDLQHLQFLGHQW$SSHOODQWKRZHYHUDGPLWWHGWKDW       FRPPHUFHSUHVHQWVDVLWXDWLRQQHDUO\LGHQWLFDOWRWKHVLWXDWLRQ
WKH IDFWV XQGHUO\LQJ WKH LQGLFWPHQW ZHUH WUXH  IORXU ZDV   LQ7XUQHUZKHUHWKLV&RXUWKHOGWKDWWKHJRYHUQPHQWIDLOHGWR
LGHQWLILHGDVFRFDLQHDQGWKHHYLGHQFHZDVODWHUORVWDQGRU         HVWDEOLVKWKDWWKHYLFWLPjVJDPEOLQJRSHUDWLRQKDGHYHQDGH
GHVWUR\HG  7KHUHIRUH WKH W\SLFDO UHDVRQ IRU H[FOXGLQJ       PLQLPLVFRQQHFWLRQZLWKLQWHUVWDWHFRPPHUFH6HH7XUQHU
LQGLFWPHQWHYLGHQFHWKHLQGLFWPHQWLVRQO\DQDFFXVDWLRQQRW       )GDW
IDFW LV QRW LPSOLFDWHG EHFDXVH $SSHOODQWjV DGPLVVLRQ
HVWDEOLVKHGWKHLPSHDFKLQJIDFWWKDWVRPHGHSXWLHVRQKLV            7KH JRYHUQPHQW UHOLHV RQ WZR FDVHV LQ VXSSRUW RI WKH
VWDIIZHUHQRWFRPSHWHQWKDUGZRUNLQJSHRSOH,QWKHIDOVH          SURSRVLWLRQ WKDW D FRQQHFWLRQ ZLWK LQWHUVWDWH FRPPHUFH LV
DIILGDYLW LQFLGHQW WKH GHSXW\ DFWXDOO\ SOHG JXLOW\ WR WKH   HVWDEOLVKHGZKHUHWKHJDPEOLQJEXVLQHVVVROGJRRGVSURGXFHG
FKDUJH  7KXV KHUH WKH JRYHUQPHQW GLG QRW HOLFLW DQ\
LQGLFWPHQWHYLGHQFHDWDOO
                                                                         
                                                                           $OWHUQDWLYHO\ WKH WKUHDW FRXOG UHDVRQDEO\ EH LQWHUSUHWHG DV D WKUHDW
                                                                     DJDLQVW WKH EXVLQHVV LWVHOI LQ ZKLFK FDVH WKH GH PLQLPLV VWDQGDUG ZDV
                                                                     HDVLO\ VDWLVILHG
    8QLWHG6WDWHVY&KDQFH                        1R       1R                          8QLWHG6WDWHVY&KDQFH             

LQLQWHUVWDWHFRPPHUFH8QLWHG6WDWHVY%URZQ)G           WKDWWKHWULDOMXGJHSURSHUO\GHWHUPLQHGWKDWWKHSURVHFXWLRQ
WK&LUDQG8QLWHG6WDWHVY5LFKDUGVRQ             ZDVHQWLWOHGWRDGGXFHVRPHHYLGHQFHWRUHEXWWKHLPSOLFDWLRQ
)G   WK &LU   %RWK FDVHV DUH             WKDW $SSHOODQW ZDV D UHVSRQVLEOH ODZ HQIRUFHPHQW RIILFHU
GLVWLQJXLVKDEOHIURPWKHSUHVHQWFDVHKRZHYHU,Q%URZQ             7KH RQO\ TXHVWLRQ WKDW UHPDLQV LV ZKHWKHU WKH WULDO MXGJH
ZKLFKLQYROYHGD+REEV$FWSURVHFXWLRQIRUWKHUREEHU\RID
EDUWKHLQWHUVWDWHFRPPHUFHFRQQHFWLRQZDVVDWLVILHGE\WKH
WHVWLPRQ\RIDOLTXRUGLVWULEXWHUZKRWHVWLILHGWKDWDOORIWKH
EHHUVROGE\WKHEDUZDVPDQXIDFWXUHGRXWVLGHRIWKHVWDWH
6HH%URZQ)GDW1RVXFKWHVWLPRQ\ZDVSUHVHQWHG                RI DUUHVWV RI GDQJHURXV GUXJ GHDOHUV LQ YHU\ GDQJHURXV VLWXDWLRQV
LQWKLVFDVHDERXWWKHJRRGVVROGDW&KXFNjV3ODFHRUWKH2SHQ             DQG WKH\ KDG WR FRXQW RQ HDFK RWKHU IRU WKHLU YHU\ VXUYLYDO WR
                                                                           ZDWFK WKHLU EDFN $QG EDFN LQ WKRVH GD\V sRKQ &KLFDVH KDG D
+HDUWK5HVWDXUDQW,Q5LFKDUGVRQZKLFKDOVRLQYROYHGODZ                 UHSXWDWLRQ DV EHLQJ D JRRG FRS +H SXW D ORW RI GUXJ GHDOHUV RII
HQIRUFHPHQWRIILFHUVLQYROYHGLQDQH[WRUWLRQVFKHPHWKHUH                WKH VWUHHW 2Q RQH RFFDVLRQ KH VDYHG 3KLO &KDQFHjV OLIH
ZDVHYLGHQFHWKDWDOFRKROLFEHYHUDJHVVROGE\WKHYLFWLPEDUV
ZHUH IRU WKH PRVW SDUW PDQXIDFWXUHG RXW RI VWDWH  6HH           

5LFKDUGVRQ)GDW$JDLQQRVXFKWHVWLPRQ\ZDV                 >&KLFDVH@ GHYHORSHG WKLV GHWHFWLYH DJHQF\ DQG VHFXULW\ FRPSDQ\
SUHVHQWHGDERXWWKHJDPEOLQJRSHUDWLRQVLQYROYHGLQWKLVFDVH             ZKLFK SXW D KXQGUHG PHQ RQ WKH VWUHHWV ZLWK FRPSDQLHV OLNH
:HGRQRWHWKDWWKHUHZDVWHVWLPRQ\IURPsHIIUH\&KU\VWDO                 JURFHU\ VWRUHV PDOOV VKRSSLQJ FHQWHUV 7KH\ REWDLQHG D
ZKRWKUHZWKHJDPEOLQJVWDJDWWKH2SHQ+HDUWK5HVWDXUDQW                 FRQWUDFW WKH sRKQ &KLFDVH &RPSDQ\ VWDWHZLGH ZLWK WKH FLW\ RI
WKDW WKH IRRG VHUYHG DW WKH SDUW\ WUDYHOHG LQ LQWHUVWDWH          <RXQJVWRZQ WR SURYLGH VDIHW\ DQG VHFXULW\ IRU SRROV DQG SDUNV
FRPPHUFH&KU\VWDOWHVWLILHGKRZHYHUWKDWKHFDWHUHGWKH                DQG WKHLU FKLOGUHQ
IRRGIRUWKHSDUW\KLPVHOIIURPKLVRZQUHVWDXUDQW6HHsW               7KLV ZDV WKH VLGH RI sRKQ &KLFDVH WKDW 3KLO NQHZ sRKQ &KLFDVH
$SS[DW:HILQGQRHYLGHQFHWKDWWKHIRRGZKLFK                  KDG D ELJ FRQWUDFW ZLWK *HQHUDO 0RWRUV DW /RUGVWRZQ WR SURYLGH
&KU\VWDO WHVWLILHG KDG WUDYHOHG LQ LQWHUVWDWH FRPPHUFH ZDV          LQYHVWLJDWLYH ZRUN WR VHUYLFH :RUNPDQjV &RPSHQVDWLRQ IUDXG
SURYLGHGE\HLWKHUWKHRSHUDWRUVRIWKHVWDJRUWKHRZQHUVRI              ZLWK VXUYHLOODQFH DQG UHSRUWV DQG XQGHUFRYHU DFWLYLW\ +H
WKH2SHQ+HDUWK5HVWDXUDQW,WGRHVQRWDSSHDUWKDW&KU\VWDO              RUFKHVWUDWHG DOO RI WKDW DQG WKDWjV WKH VLGH WKDW 3KLO NQHZ
RUDQ\RIWKHVWDJjVDWWHQGHHVZHUHWDUJHWVIRUH[WRUWLRQQR             +H ZRXOG FRPH WR 3KLOjV KRPH DQG SURYLGHG 3KLO ZLWK ZRUN
DUUHVWVZHUHPDGHQRFLWDWLRQVZHUHLVVXHGDQGQRWKLQJZDV               ZKHQ 3KLO ZDV RXW RI ZRUN 3URYLGHG KLP ZLWK D OLYLQJ :RXOG
FRQILVFDWHG  ,G DW   7KHUHIRUH ZH GR QRW WKLQN WKH       EULQJ IRRG WR KLV KRPH /RYHG 3KLOjV PRWKHU DV VKH ORYHG KLP
LQWHUVWDWHFRPPHUFHFRQQHFWLRQLVVDWLVILHGIRUSXUSRVHVRI
WKH+REEV$FWHYHQXQGHUWKHGHPLQLPLVVWDQGDUGZKHUHWKH               7KLV PDQ EURNH WKLV IDPLO\jV KHDUW IRU ZKDW KH GLG LQ WKLV FDVH
RQO\FRQQHFWLRQWRFRPPHUFHLVWKDWWKHSDWURQVEURXJKWWKHLU              DQG VXUH KH ZDV sHHS *DURQRjV FRXVLQ EXW sHHS *DURQR \RX
                                                                           ZLOO DOVR OHDUQ ODGLHV DQG JHQWOHPHQ KDG DQ HQRUPRXV
RZQIRRGWRWKHVWDJ                                                      ODQGVFDSLQJ EXVLQHVV ZLWK FLW\ FRQWUDFWV VWDWH FRQWUDFWV IHGHUDO
                                                                           FRQWUDFWV FRPPHUFLDO DQG UHDO HVWDWH $QG sRKQ &KLFDVH ZDV
  7KH JRYHUQPHQW DUJXHV WKDW RQH ERRNPDNHU 0LFNH\                   DOVR YHU\ FORVH DQG UHODWHG WR DQ )%, DJHQW %REE\ &ODUN 7KLV
0XUSK\WHVWLILHGWKDWKHJRWWKHRGGVIRUKLVRSHUDWLRQIURP              ZDV WKH sRKQ &KLFDVH WKDW 3KLO NQHZ
DZLUHVHUYLFHORFDWHGLQ1HZ<RUNRU/DV9HJDV6HHsW
$SS[DW7KHJRYHUQPHQWFRQWHQGVWKDWWKLVHYLGHQFH                  $QG \RX ZLOO OHDUQ KRZ WKLV RQHH\HG sDFN ODGLHV DQG
                                                                           JHQWOHPHQ SOD\HG 3KLO OLNH D ILGGOH LQ VFKHPLQJ ZLWK KLV FRXVLQ
DOVR GHPRQVWUDWHV WKH UHTXLVLWH FRQQHFWLRQ ZLWK LQWHUVWDWH           EHKLQG KLV EDFN WR WU\ WR HQGHDU KLPVHOI IRU KLV RZQ SHUVRQDO
FRPPHUFH :H GLVDJUHH ZLWK WKH JRYHUQPHQWjV                           JDLQ
FKDUDFWHUL]DWLRQRI0XUSK\jVWHVWLPRQ\7KHUHLVQRWKLQJLQ
                                                                       $00 sW $SS[ 
     8QLWHG6WDWHVY&KDQFH                            1R    1R                          8QLWHG6WDWHVY&KDQFH             

  )RUH[DPSOHXQOLNH3HDUVRQWKHJRYHUQPHQWZDVQRWLQ                0XUSK\jV WHVWLPRQ\ ZKLFK LQGLFDWHV ZKHUH WKH VHUYLFH KH
JHQHUDODWWHPSWLQJWRLPSHDFKDZLWQHVVWKURXJKHYLGHQFHRI             XVHG ZDV ORFDWHG  ,W IXUWKHU DSSHDUV WKDW 0XUSK\ RQO\
DQLQGLFWPHQWRQDSULRUXQUHODWHGFKDUJH,QDGGLWLRQXQOLNH         DVVXPHGWKDWWKHLQIRUPDWLRQFDPHIURP1HZ<RUNRU/DV
WKHFDVHLQ%RZHQWKHSURVHFXWLRQGLGQRWFRPPHQWXSRQWKH              9HJDVEDVHGRQZKDWHPSOR\HHVDWKLVVHUYLFHWROGKLP,Q
IDFWRI$SSHOODQWjVLQGLFWPHQWDVSURRIWKDWKHZDVJXLOW\RI            DQ\HYHQWZHWKLQNWKHIDFWWKDWWKHEHWWLQJOLQHRULJLQDOO\
WKHFULPHVFKDUJHG*LEEVLVGLVWLQJXLVKDEOHIURPWKHSUHVHQW           HPDQDWHG IURP 1HZ <RUN RU /DV 9HJDV LV LQVXIILFLHQW WR
FDVHEHFDXVHLQWKDWFDVHZKLFKFRQFHUQHGDGUXJFRQVSLUDF\             HVWDEOLVK HYHQ D GH PLQLPLV FRQQHFWLRQ ZLWK LQWHUVWDWH
SURVHFXWLRQ WKH WULDO FRXUW SHUPLWWHG WKH JRYHUQPHQW WR          FRPPHUFH6HH7XUQHU)GDWKROGLQJFRQQHFWLRQ
HVWDEOLVKSDUWLFLSDWLRQLQWKHFRQVSLUDF\VLPSO\WKURXJKSURRI           ZLWK LQWHUVWDWH FRPPHUFH QRW HVWDEOLVKHG ZKHUH YLFWLPjV
WKDWWKHGHIHQGDQWDVVRFLDWHGZLWKRWKHUJDQJPHPEHUVZKR                LOOHJDO ORWWHU\ ZDV EDVHG RQ ZLQQLQJ ORWWHU\ QXPEHUV IURP
VROG GUXJV  6HH *LEEV  )G DW   ,Q .LUE\ ZKLFK    0LFKLJDQDQG2KLR
LQYROYHGDSURVHFXWLRQIRUUHFHLYLQJVWROHQSRVWDJHVWDPSV
WKH WULDO FRXUW SHUPLWWHG WKH JRYHUQPHQW WR SURYH WKDW WKH         7KHJRYHUQPHQWUDLVHVVHYHUDORWKHUDUJXPHQWVLQVXSSRUW
SRVWDJHVWDPSVZHUHVWROHQE\VXEPLWWLQJWKHWUDQVFULSWRIDQ            RILWVFRQWHQWLRQWKDWDFRQQHFWLRQZLWKLQWHUVWDWHFRPPHUFH
HDUOLHUWULDOLQZKLFKWKUHHRWKHUPHQSOHGJXLOW\WRVWHDOLQJ           ZDV HVWDEOLVKHG ZLWK UHVSHFW WR WKH H[WRUWLRQ RI WKH
WKH VWDPSV LQ TXHVWLRQ  6HH .LUE\  86 DW   ,Q   LQGHSHQGHQWERRNPDNHUVZKLFKZHILQGXQSHUVXDVLYH7KH
FRQWUDVWZHGRQRWWKLQNWKDWWKHWHVWLPRQ\HOLFLWHGE\WKH             JRYHUQPHQWUHOLHVRQ8QLWHG6WDWHVY&DUPLFKDHO)G
JRYHUQPHQW WHQGHG WR HVWDEOLVK GLUHFWO\ JXLOW WKURXJK              WK&LUIRUWKHSURSRVLWLRQWKDWWKHUHTXLVLWH
DVVRFLDWLRQ ZLWK RWKHUV LQYROYHG LQ WKH VDPH RU VLPLODU          FRQQHFWLRQLVHVWDEOLVKHGZKHUHWKHUHLVDUHDOLVWLFSUREDELOLW\
FRQGXFW DV ZDV WKH FDVH LQ *LEEV  1RU GLG WKH WHVWLPRQ\     WKDWVRPHRIWKHPRQH\WRSD\WKHH[WRUWLRQZRXOGFRPHIURP
GLUHFWO\HVWDEOLVKDQHOHPHQWRIDQ\RIWKHRIIHQVHVDVZDVWKH         WKHSURFHHGVRILQWHUVWDWHJDPEOLQJ:KLOHZHDJUHHWKDWWKLV
FDVHZLWKWKHWULDOWUDQVFULSWLQ.LUE\                                 LV D FRUUHFW SURSRVLWLRQ RI ODZ WKLV FDVH LV GLVWLQJXLVKDEOH
                                                                         IURP&DUPLFKDHOEHFDXVHLQ&DUPLFKDHOWKHUHZDVVSHFLILF
   $OWKRXJK ZH KDYH QRW EHHQ IXUQLVKHG WKH HQWLUH WULDO          HYLGHQFH WKDW WKH ERRNPDNLQJ RSHUDWLRQ WRRN EHWV IURP
WUDQVFULSWRQWKLVDSSHDOWKHGLVFXVVLRQGXULQJWKHVLGHEDU            JDPEOHUVLQ.HQWXFN\$ODEDPDDQG7HQQHVVHH6HHLGDW
FRQIHUHQFH ZH TXRWHG VXSUD LQGLFDWHV WKDW WKURXJKRXW WKH
WULDO $SSHOODQWjV FRXQVHO DWWHPSWHG WR SDLQW D SLFWXUH RI
$SSHOODQW DV D JRRG ODZ HQIRUFHPHQW RIILFLDO ZKR ZDV
                                                                             
EHWUD\HGE\DWUXVWHGDVVRFLDWH,QGHHGWKDWZDVWKHWKHPHRI               0XUSK\ WHVWLILHG DV IROORZV
WULDOFRXQVHOjVRSHQLQJDUJXPHQW7KHUHIRUHZHEHOLHYH
                                                                             4 $QG \RX VDLG , EHOLHYH WKDW \RXjYH JRW \RXU OLQH RU RGGV
                                                                             IURP D ZLUH VHUYLFH WKDW \RX SDLG IRU"

     
       ,Q SDUW FRXQVHO VWDWHG                                               $ <HV VLU

     >'HIHQGDQW DQG sRKQ &KLFDVH@ ZRUNHG IRU 6KHULII 7UDILFDQW LQ            4 7R \RXU XQGHUVWDQGLQJ ZKHUH GLG WKDW LQIRUPDWLRQ XOWLPDWHO\
     WKH 6KHULIIjV 'HSDUWPHQW LQ WKH V ,Q WKH  WR               FRPH IURP"
     SHULRG \RX ZLOO OHDUQ WKH\ ZHUH SDUW RI DQ HOLWH GUXJ WDVN IRUFH
     XQLW WKDW JDLQHG TXLWH D UHSXWDWLRQ IRU LWVHOI DORQJ ZLWK DQ            $ +HDULQJ IURP YDULRXV SHRSOH WKH\ VDLG WKDW WKH\ JRW WKHLU OLQH
     LQGLYLGXDO WKH\ ZRUNHG ZLWK E\ WKH QDPH RI 3DXO %UDGOH\ ZKR             IURP /DV 9HJDV RU 1HZ <RUN &LW\ GHSHQGLQJ RQ ZKR \RX
     \RX ZLOO PHHW 7KLV WULR JDLQHG D UHSXWDWLRQ RI EHLQJ IHDUOHVV         WDONHG WR LQ WKH RIILFH ,W ZDV HLWKHU 1HZ <RUN RU /DV 9HJDV

     7KH\ ZHUH UHVSRQVLEOH IRU GR]HQV RI GUXJ UDLGV PDNLQJ GR]HQV       sW $SS[ DW 
     8QLWHG6WDWHVY&KDQFH                               1R    1R                         8QLWHG6WDWHVY&KDQFH          

  $V QRWHG DERYH LQ WKLV FDVH WKHUH ZDV QR HYLGHQFH        WKDW WKH WULDO FRXUW IDLOHG WR JLYH WKH MXU\ D SURSHU OLPLWLQJ
SUHVHQWHG UHJDUGLQJ WKH FOLHQW EDVH RI WKH LQGHSHQGHQW               LQVWUXFWLRQ GXULQJ ILQDO LQVWUXFWLRQV  :KLOH ZH DJUHH ZLWK
ERRNPDNHUV7KXVWKHUHZDVQREDVLVXSRQZKLFKDMXURU                    VRPH RI $SSHOODQWjV DUJXPHQWV DV D PDWWHU RI JHQHUDO
FRXOGFRQFOXGHWKDWPRQH\WRSD\WKHH[WRUWLRQZRXOGFRPH                   SULQFLSOH ZH GLVDJUHH WKDW WKH WULDO MXGJH FRPPLWWHG
IURP WKH SURFHHGV RI LQWHUVWDWH JDPEOLQJ  7KHUHIRUH                UHYHUVLEOHHUURUZLWKUHVSHFWWRWKHVHHYLGHQWLDU\UXOLQJV
&DUPLFKDHOLVLQDSSOLFDEOHLQWKLVFDVH
                                                                              7KHWULDOFRXUWKDVEURDGGLVFUHWLRQUHJDUGLQJWKHVFRSHRI
   )LQDOO\WKHJRYHUQPHQWUHOLHVRQ8QLWHG6WDWHVY$EOHV                FURVVH[DPLQDWLRQ8QLWHG6WDWHVY0RKQH\)G
)GWK&LUDQG8QLWHG6WDWHVY:DOO                  WK &LU   0RUHRYHU ZKHUH RQH SDUW\ KDV
)GWK&LUIRUWKHSURSRVLWLRQWKDWLWLVQRW               mRSHQHG WKH GRRUl RQ DQ LVVXH WKH RSSRQHQW LQ WKH WULDO
QHFHVVDU\WRSURYHDQHIIHFWRQLQWHUVWDWHFRPPHUFHRQDFDVH              FRXUWjVGLVFUHWLRQPD\LQWURGXFHHYLGHQFHRQWKHVDPHLVVXH
E\FDVHEDVLVEHFDXVH&RQJUHVVKDVDOUHDG\GHWHUPLQHGWKDW                  WRUHEXWDQ\IDOVHLPSUHVVLRQWKDWPD\KDYHEHHQFUHDWHGE\
LOOHJDOJDPEOLQJLWVHOIKDVDQHIIHFWRQLQWHUVWDWHFRPPHUFH               WKH HDUOLHU DGPLVVLRQ RI HYLGHQFH  6HH 8QLWHG 6WDWHV Y
:HDJUHHZLWK$SSHOODQWWKDWWKHVHFDVHVDUHLQDSSRVLWH%RWK              6HJLQHV)GWK&LU:HUHYLHZDWULDO
$EOHV DQG :DOO DGGUHVVHG &RQJUHVVj DXWKRULW\ XQGHU  WKH              FRXUWjV UXOLQJV RQ WKH VFRSH RI FURVVH[DPLQDWLRQ DQG
&RPPHUFH &ODXVH WR HQDFW  86&  
 ZKLFK                  DGPLVVLEOHUHEXWWDOHYLGHQFHIRUDEXVHRIGLVFUHWLRQ6HHLG
                                                                            0RKQH\)GDW

                                                                            $V VWDWHG ZH DJUHH ZLWK $SSHOODQW RQ VHYHUDO SRLQWV DV
       7KLV VHFWLRQ SURYLGHV LQ UHOHYDQW SDUW                              PDWWHUVRIJHQHUDOSULQFLSOH:HGLVDJUHHKRZHYHUDVWRWKH
                                                                            DSSOLFDWLRQ RI VRPH RI WKRVH SULQFLSOHV WR WKLV FDVH  )RU
     D :KRHYHU FRQGXFWV ILQDQFHV PDQDJHV VXSHUYLVHV GLUHFWV RU
     RZQV DOO RU SDUW RI DQ LOOHJDO JDPEOLQJ EXVLQHVV VKDOO EH ILQHG
                                                                            LQVWDQFHZHREVHUYHWKDWDZLWQHVVPD\QRWEHLPSHDFKHGE\
     XQGHU WKLV WLWOH RU LPSULVRQHG QRW PRUH WKDQ ILYH \HDUV RU ERWK      HYLGHQFH WKDW KH RU VKH ZDV LQGLFWHG IRU D FULPH VLQFH DQ
                                                                            LQGLFWPHQW LV QRW DQ\ HYLGHQFH RI JXLOW  6HH 3HDUVRQ Y
     E $V XVHG LQ WKLV VHFWLRQ                                          8QLWHG6WDWHV)GWK&LU:HDOVR
                                                                            DJUHHWKDWWKHSURVHFXWLRQPD\QRWFRPPHQWRQWKHIDFWWKDW
        LOOHJDO JDPEOLQJ EXVLQHVV PHDQV D JDPEOLQJ EXVLQHVV
     
     ZKLFK
                                                                            WKHGHIHQGDQWKDVEHHQLQGLFWHGRQWKHFULPHVEHLQJWULHGDV
                                                                            SURRI RI JXLOW  6HH 8QLWHG 6WDWHV Y %RZHQ  )G 
     L LV D YLRODWLRQ RI WKH ODZ RI D 6WDWH RU SROLWLFDO VXEGLYLVLRQ LQ   QWK&LU:HIXUWKHUDJUHHWKDWHVWDEOLVKLQJJXLOW
     ZKLFK LW LV FRQGXFWHG                                                 E\DVVRFLDWLRQLVDOVRDQLPSURSHUPDQQHUE\ZKLFKWRREWDLQ
                                                                            DFRQYLFWLRQ8QLWHG6WDWHVY*LEEV)GWK
     LL LQYROYHV ILYH RU PRUH SHUVRQV ZKR FRQGXFW ILQDQFH PDQDJH       &LU  DQG WKDW WKH SURVHFXWLRQ PD\ QRW XVH SURRI RI
     VXSHUYLVH GLUHFW RU RZQ DOO RU SDUW RI VXFK EXVLQHVV DQG
                                                                            DQRWKHUjV FRQYLFWLRQ DV HYLGHQFH DJDLQVW WKH DFFXVHG  6HH
     LLL KDV EHHQ RU UHPDLQV LQ VXEVWDQWLDOO\ FRQWLQXRXV RSHUDWLRQ        .LUE\Y8QLWHG6WDWHV86:HWKLQN
     IRU D SHULRG LQ H[FHVV RI WKLUW\ GD\V RU KDV D JURVV UHYHQXH RI        KRZHYHUWKDWLQJHQHUDOWKHFDVHVDQGSULQFLSOHVFLWHGWRXVE\
      LQ DQ\ VLQJOH GD\                                              $SSHOODQWDUHLQDSSOLFDEOHWRWKLVFDVH
      JDPEOLQJ LQFOXGHV EXW LV QRW OLPLWHG WR SRROVHOOLQJ
     ERRNPDNLQJ PDLQWDLQLQJ VORW PDFKLQHV URXOHWWH ZKHHOV RU GLFH
     WDEOHV DQG FRQGXFWLQJ ORWWHULHV SROLF\ EROLWD RU QXPEHUV JDPHV
     RU VHOOLQJ FKDQFHV WKHUHLQ
                                                                            RI WKHLU TXDOLILFDWLRQV
     8QLWHG6WDWHVY&KDQFH                             1R        1R                         8QLWHG6WDWHVY&KDQFH             

ZDUUDQW,GDW$WWKDWSRLQW$SSHOODQWPRYHGIRUD                FULPLQDOL]HVWKHRSHUDWLRQRILOOHJDOJDPEOLQJEXVLQHVVHVLQ
PLVWULDORQWKHJURXQGVWKDWWKH$86$jVTXHVWLRQVH[FHHGHG                    OLJKWRIWKH866XSUHPH&RXUWjVGHFLVLRQLQ8QLWHG6WDWHVY
WKHSHUPLVVLEOHVFRSHRIFURVVH[DPLQDWLRQDQGWKDWWKH&RXUW                 /RSH]86,Q/RSH]WKH&RXUWKHOGWKDW
KDGSHUPLWWHGHYLGHQFHRIDQLQGLFWPHQWWREHSURRIRIJXLOW                 &RQJUHVV ODFNHG DXWKRULW\ XQGHU WKH &RPPHUFH &ODXVH WR
7ULDO FRXQVHO DOVR DVNHG WKH &RXUW WR LVVXH D FDXWLRQDU\             HQDFWWKH*XQ)UHH6FKRRO=RQHV$FW86&T
LQVWUXFWLRQWRWKHMXU\VWDWLQJWKDWWKHIDFWRIDQLQGLFWPHQWLV             EHFDXVHLQWHUDOLDWKHVWDWXWHGLGQRWFRQWDLQmDMXULVGLFWLRQDO
QRW SURRI RI JXLOW  ,G DW   7KH GLVWULFW FRXUW GHQLHG       HOHPHQWZKLFKZRXOGHQVXUHWKURXJKFDVHE\FDVHLQTXLU\
$SSHOODQWjV PRWLRQ IRU D PLVWULDO RQ WKH JURXQGV WKDW WULDO          WKDW WKH ILUHDUP SRVVHVVLRQ LQ TXHVWLRQ DIIHFWV LQWHUVWDWH
FRXQVHOKDGUHSHDWHGO\DEXVHGWKHOLPLWDWLRQVDQGUXOLQJVRQ                  FRPPHUFHl/RSH]86DW7KH&RXUWIXUWKHUQRWHG
HYLGHQFHLWKDGJLYHQLQ$SSHOODQWjVIDYRU7KHFRXUWDOVR                   WKDWmQHLWKHUWKHVWDWXWHQRULWVOHJLVODWLYHKLVWRU\FRQWDLQ>V@
GHFOLQHGWRLVVXHWKHUHTXHVWHGFDXWLRQDU\LQVWUXFWLRQRQWKH                 H[SUHVV FRQJUHVVLRQDO ILQGLQJV UHJDUGLQJ WKH HIIHFWV XSRQ
JURXQGV WKDW WKH MXU\ KDG DOUHDG\ EHHQ LQVWUXFWHG WKDW DQ            LQWHUVWDWHFRPPHUFHRIJXQSRVVHVVLRQLQDVFKRRO]RQHl,G
LQGLFWPHQWLVQRWHYLGHQFHRIJXLOWDQGWKDWLWZRXOGLQVWUXFW                DWVHHDOVR:DOO)GDWDQDO\]LQJ/RSH],Q
WKHMXU\RQWKDWSRLQWDJDLQGXULQJWKHFORVLQJLQVWUXFWLRQV                 DSSO\LQJ/RSH]WRWKH:DOO&RXUWREVHUYHGWKDWOLNH
,GDW                                                                TGRHVQRWKDYHDMXULVGLFWLRQDOHOHPHQWWR
                                                                              HQVXUH RQ D FDVHE\FDVH EDVLV WKDW WKH LOOHJDO JDPEOLQJ LQ
   2QDSSHDO$SSHOODQWDUJXHVWKDWWKHWULDOMXGJHFRPPLWWHG                 TXHVWLRQKDVDQHIIHFWRQLQWHUVWDWHFRPPHUFH:DOO)G
SUHMXGLFLDOHUURUE\DOORZLQJWKHSURVHFXWLRQWRVXJJHVWWKDW                 DW8QOLNHTKRZHYHUWKH&RXUWQRWHGWKDWWKH
KHZDVJXLOW\RIWKHFULPHVFKDUJHWKURXJKDVVRFLDWLRQZLWK                   OHJLVODWLYHKLVWRU\RIFRQWDLQVmUHDPVlRILQIRUPDWLRQ
IDPLO\PHPEHUVDQGHPSOR\HHVRIWKH6KHULIIjV'HSDUWPHQW                     VXSSRUWLQJ D VSHFLILF ILQGLQJ E\ &RQJUHVV WKDW LOOHJDO
$SSHOODQWDUJXHVWKDWKLVTXHVWLRQLQJZDVOLPLWHGWRWKHIRXU                 JDPEOLQJ PDNHV ZLGHVSUHDG XVH RI DQG KDV DQ HIIHFW RQ
SHUVRQVVSHFLILFDOO\LGHQWLILHGE\WULDOFRXQVHODQGWKDWWKH                 LQWHUVWDWH FRPPHUFH  ,G  $V D UHVXOW WKH :DOO &RXUW
WULDO FRXUW PLVFKDUDFWHUL]HG KLV WHVWLPRQ\ DV D EURDG                  FRQFOXGHG WKDW m 86&   LV D SURSHU H[HUFLVH RI
HQGRUVHPHQW RI DOO RI WKH SHUVRQV KH KLUHG  0RUHRYHU               FRQJUHVVLRQDOSRZHUXQGHUWKH8QLWHG6WDWHV&RQVWLWXWLRQl
$SSHOODQW DUJXHV HYLGHQFH WKDW RWKHU HPSOR\HHV ZHUH                    ,G DW   7KH &RXUW LQ $EOHV HVVHQWLDOO\ IROORZHG WKH
LQGLFWHGGRHVQRWUHEXWKLVWHVWLPRQ\WKDWWKHIRXUSHUVRQVKH                UHDVRQLQJRIWKHSDQHOLQ:DOO
PHQWLRQHGZHUHFRPSHWHQWDQGKDUGZRUNLQJ$SSHOODQWDOVR
FRQWHQGVWKDWWKHWULDOFRXUWDOORZHGWKHSURVHFXWLRQWRLQTXLUH
DERXW RWKHU GHSXWLHV VLPSO\ DV D   SXQLWLYH PHDVXUH IRU
SHUFHLYHGH[FHVVHVRIWULDOFRXQVHO$SSHOODQWDOVRFODLPV
                                                                                   6WDWH PHDQV DQ\ 6WDWH RI WKH 8QLWHG 6WDWHV WKH 'LVWULFW RI
                                                                                  &ROXPELD WKH &RPPRQZHDOWK RI 3XHUWR 5LFR DQG DQ\ WHUULWRU\
                                                                                RU SRVVHVVLRQ RI WKH 8QLWHG 6WDWHV
       $SSHOODQW DOVR SRLQWV RXW WKDW WKH JRYHUQPHQW ILUVW UDLVHG RQ FURVV
H[DPLQDWLRQ WKH LVVXH RI WKH SHUVRQV KH KLUHG DQG SURPRWHG :H DJUHH              F ,I ILYH RU PRUH SHUVRQV FRQGXFW ILQDQFH PDQDJH VXSHUYLVH
ZLWK WKDW REVHUYDWLRQ :H QRWH WKDW RQ FURVVH[DPLQDWLRQ WKH JRYHUQPHQW          GLUHFW RU RZQ DOO RU SDUW RI D JDPEOLQJ EXVLQHVV DQG VXFK
DVNHG $SSHOODQW ZKHWKHU KH KDG KLUHG 5XVVHOO 2VPDQ 5RFN\ 5XVVRjV                 EXVLQHVV RSHUDWHV IRU WZR RU PRUH VXFFHVVLYH GD\V WKHQ IRU WKH
VRQ 0DUN &ROXFFL DQG 5LFN )DULQD 6HH sW $SS[ DW  7KH                  SXUSRVH RI REWDLQLQJ ZDUUDQWV IRU DUUHVWV LQWHUFHSWLRQV DQG
JRYHUQPHQWjV FURVVH[DPLQDWLRQ KRZHYHU ZDV OLPLWHG WR HOLFLWLQJ IURP            RWKHU VHDUFKHV DQG VHL]XUHV SUREDEOH FDXVH WKDW WKH EXVLQHVV
$SSHOODQW DGPLVVLRQV WKDW KH KDG KLUHG WKHVH SHUVRQV 7KH JRYHUQPHQW              UHFHLYHV JURVV UHYHQXH LQ H[FHVV RI  LQ DQ\ VLQJOH GD\
GLG QRW LQTXLUH LQWR WKHLU TXDOLILFDWLRQV RU MRE SHUIRUPDQFH 6HH LG             VKDOO EH GHHPHG WR KDYH EHHQ HVWDEOLVKHG
$OWKRXJK RQ WKLV UHFRUG ZH DUH XQVXUH RI WKH RYHUDOO UHOHYDQFH RI WKLV
WHVWLPRQ\ LW ZDV LQ IDFW $SSHOODQW ZKR ILUVW EURXJKW WR WKH IRUH WKH LVVXH    86&  
     8QLWHG6WDWHVY&KDQFH                       1R       1R                      8QLWHG6WDWHVY&KDQFH        

   ,Q FRQWUDVW DV $SSHOODQW FRUUHFWO\ SRLQWV RXW WKH LVVXH     0U<HOVN\+HGLGVD\WKDW
SUHVHQWHG KHUH GRHV QRW LQYROYH D FKDOOHQJH WR &RQJUHVVj
SRZHUXQGHUWKH&RPPHUFH&ODXVHWRHQDFWWKH+REEV$FW                  7KH&RXUW3DUWRIP\SUREOHP0U/RQDUGRLVWKDW,
0RUHRYHUXQOLNHERWKTDQGWKH+REEV$FW                 KDYHJLYHQ\RXDORWRISODFHVLQZKLFK,KDYHDWWHPSWHG
FRQWDLQVDVSHFLILFMXULVGLFWLRQDOHOHPHQWZKLFKHQVXUHVWKH             WROLPLWWKHJRYHUQPHQWDQGHDFKWLPHLQP\YLHZ\RX
DFWLQTXHVWLRQDIIHFWVLQWHUVWDWHFRPPHUFHRQDFDVHE\FDVH            DEXVHWKRVHOLPLWDWLRQV:LWKUHVSHFWWRWKLVZKROHWKLQJ
EDVLV6HH86&m:KRHYHULQDQ\ZD\RUGHJUHH               DERXW%UXFH=ROGDQ,VDLGWKH\ZHUHQjWDOORZHGWREULQJ
REVWUXFWVGHOD\VRUDIIHFWVFRPPHUFHRUWKHPRYHPHQWRIDQ\            RXW KH ILUHG KLP EHFDXVH KH GLGQjW WUXVW KLP DQG \RX
DUWLFOHRUFRPPRGLW\LQFRPPHUFHlHPSKDVLVDGGHG             EULQJRXWHYLGHQFHDQGWHVWLPRQ\VD\LQJWKDWKHJDYHKLP
7KXVEHFDXVHWKHVWDWXWHFRQWDLQVDMXULVGLFWLRQDOHOHPHQW             DFRPSOHWHO\GLIIHUHQWMRERIIHU
WKHUH LV QR QHHG WR H[DPLQH FRQJUHVVLRQDO ILQGLQJV WR
GHWHUPLQHZKHWKHUWKH+REEV$FWLVDQDSSURSULDWHH[HUFLVH               <RXSDLQWHGDFRPSOHWHO\GLIIHUHQWSLFWXUHZLWKUHVSHFW
RIOHJLVODWLYHSRZHUXQGHUWKLV&RXUWjVGHFLVLRQVLQ$EOHVDQG           WRWKHsXDQLWD5LFKWKLQJ,OLPLWHGWKHJRYHUQPHQWDQG
:DOO+RZHYHUZKDW$EOHVDQG:DOOGRQRWVWDQGIRULVWKH              \RX LQ RSHQLQJ VWDWHPHQW DQG WKURXJKRXW \RXU FURVV
SURSRVLWLRQ WKDW WKH JRYHUQPHQW UHDOO\ DVVHUWV  WKDW WKH        H[DPLQDWLRQRI0U6WUROORNHSWKROGLQJKHURXWGHVSLWH
SURVHFXWLRQLVUHOLHYHGIURPSURYLQJDQHVVHQWLDOHOHPHQWRI             WKHOLPLWDWLRQV,SODFHGRQWKHJRYHUQPHQW
WKH RIIHQVH E\ SURRI EH\RQG D UHDVRQDEOH GRXEW ZKHUH
&RQJUHVV KDV PDGH ILQGLQJV RI IDFW FRQFHUQLQJ WKH DUHD           <RXNQRZ,FDQjWEHLQDSRVLWLRQZKHUH,JLYH\RXWKH
UHJXODWHG2IFRXUVHXQGHUWKH+REEV$FWWKHJRYHUQPHQW               EHQHILWRIUXOLQJVDQGWKHQ\RXDEXVHWKHP
LVUHTXLUHGWRSURYHEH\RQGDUHDVRQDEOHGRXEWWKHLQWHUVWDWH
FRPPHUFH HOHPHQW  6HH 7XUQHU  )G DW   1R            


FRQJUHVVLRQDOILQGLQJVRIIDFWFDQVXEVWLWXWHIRUSURRIRQWKLV          ,jP JRLQJ WR DOORZ \RX WR UHFURVV WR WDON DERXW WKH
HOHPHQW                                                               LQGLYLGXDOVWKDWKHKLUHG
   )RU WKH UHDVRQV VWDWHG DERYH ZH ILQG WKH HYLGHQFH ZLWK    sW$SS[DW
UHJDUG WR WKH LQWHUVWDWH FRPPHUFH FRQQHFWLRQ VXIILFLHQW WR
VXVWDLQ WKH FRQYLFWLRQV RQ &RXQWV   DQG  RI WKH           2QUHFURVVH[DPLQDWLRQWKHJRYHUQPHQWTXHULHG$SSHOODQW
LQGLFWPHQW  :LWK UHVSHFW WR &RXQW  RI WKH LQGLFWPHQW       DERXW WZR VSHFLILF LQVWDQFHV RI PLVFRQGXFW LQYROYLQJ
KRZHYHUZHILQGWKDWWKHHYLGHQFHZDVLQVXIILFLHQWWRVXSSRUW         PHPEHUVRIWKH$SSHOODQWjVGHSDUWPHQW7KHILUVWLQYROYHG
DFRQQHFWLRQZLWKLQWHUVWDWHFRPPHUFHXQGHUWKH+REEV$FW             DGUXJUDLGOHGE\sHII&KDQFH$SSHOODQWjVEURWKHULQZKLFK
$FFRUGLQJO\ $SSHOODQWjV FRQYLFWLRQ RQ &RXQW  RI WKH           DEDJRISRZGHUZDVVHL]HG%DVHGRQLQIRUPDWLRQSURYLGHG
LQGLFWPHQWLVUHYHUVHG                                                WR KLP $SSHOODQW UHSUHVHQWHG WR WKH PHGLD WKDW WKH EDJ
                                                                       FRQWDLQHGFRFDLQHZKHQLQIDFWLWFRQWDLQHGIORXU7KHEDJ
     $SSHOODQWjV,QYROYHPHQWLQ([WRUWLRQ&RQVSLUDFLHV              ZDVQHYHUERRNHGLQWRHYLGHQFH7KHWULDOFRXUWSHUPLWWHGWKH
   $SSHOODQWjV QH[W DVVLJQPHQW RI HUURU FKDUJHV WKDW WKH        JRYHUQPHQWWRHOLFLWWHVWLPRQ\IURP$SSHOODQWWKDWKLVEURWKHU
HYLGHQFHZDVLQVXIILFLHQWWRHVWDEOLVKWKDWKHKDGDQ\FXOSDEOH        ZDV XQGHU LQGLFWPHQW IURP WKLV LQFLGHQW RQ XQVSHFLILHG
LQYROYHPHQWLQH[WRUWLQJFDPSDLJQFRQWULEXWLRQVIURP%UXFH             FKDUJHVsW$SS[DW7KHJRYHUQPHQWDOVRDGGXFHG
=ROGDQDVDOOHJHGLQ&RXQWRIWKHLQGLFWPHQWRUH[WRUWLQJ          WHVWLPRQ\IURP$SSHOODQWWKDWDQRWKHURQHRIKLVGHSXWLHV
D VWUHHW WD[ IURP LQGHSHQGHQW ERRNPDNHUV DV DOOHJHG LQ        $QWRQLR 2ZHQV KDG SOHG JXLOW\ WR REVWUXFWLQJ MXVWLFH IRU
                                                                       IDOVHO\ VZHDULQJ RXW DQ DIILGDYLW LQ VXSSRUW RI D VHDUFK
   8QLWHG6WDWHVY&KDQFH                        1R     1R                          8QLWHG6WDWHVY&KDQFH          

 7KH&RXUW<RXKDYHRSHQHGDORWRIGRRUVDQG,WKLQN             &RXQW  RI WKH LQGLFWPHQW  $V ZH KDYH DOUHDG\ UHYHUVHG
 WKHJRYHUQPHQWFRXOGKDYHGULYHQWKURXJKDORWRIWKHP             $SSHOODQWjVFRQYLFWLRQDVWR&RXQWZHQHHGRQO\DGGUHVV
 DQGWKH\KDYHQjW                                                  ZKHWKHUWKHHYLGHQFHZDVVXIILFLHQWWRVXVWDLQDFRQYLFWLRQIRU
                                                                    WKHFRQVSLUDF\WRH[WRUW%UXFH=ROGDQ$OWKRXJKZHDJUHH
 , WKLQN DW WKLV SRLQW LW SUREDEO\ ZRXOG KDYH EHHQ IDLU   ZLWK WKH GLVWULFW FRXUW WKDW WKH HYLGHQFH VXSSRUWLQJ WKLV
 JDPHIRUWKHPWRJRLQWRDOOWKDWVWXIIDQGLWLVFHUWDLQO\       FRQYLFWLRQ ZDV QRW VWURQJ ZH GR EHOLHYH WKDW WKHUH ZDV
 IDLUJDPHDWWKLVSRLQWIRUWKHPWRDGGUHVV                       VXIILFLHQWHYLGHQFHIRUWKHMXU\WRLQIHUWKDW$SSHOODQW ZDV
                                                                    LQYROYHGLQDVFKHPHWRH[WRUWFDPSDLJQFRQWULEXWLRQVIURP
 0U<HOVN\>'HIHQVHFRFRXQVHO@,QGLFWPHQWV"                      =ROGDQ
 7KH&RXUW<RXMXVWKDGKLPWHVWLI\WRWKHFKDUDFWHUDQG             =ROGDQWHVWLILHGWKDWKLVFKLHIVHFXULW\RIILFHU%RE0DUWLQR
 WKHTXDOLW\RIWKHLQGLYLGXDOVKHKLUHGDQGo                     WROGKLPWKDW&KLFDVHWROG0DUWLQRWRWHOOKLPWKDWKH=ROGDQ
                                                                    mGLGQRWWUHDWWKH&KDQFHFDPSDLJQIDLUO\DQGGLGQRWJLYH
 0U<HOVN\+HGLGQjWKLUHsHII&KDQFH                            ZKDW >KH@ ZDV DEOH WR DIIRUG WR JLYH DQG WKDW LW ZRQjW EH
                                                                    IRUJRWWHQDERXWZRQjWEHIRUJRWWHQDQGWKDW>KH@ZLOOSD\WKH
 0U0RUIRUG+HSURPRWHGKLP                                      SULFHlsW$SS[DW0DUWLQRWHVWLILHGWKDW&KLFDVHWROG
 7KH&RXUW<RXVDLGKLUHG                                         KLPWRUHOD\DPHVVDJHWR=ROGDQm>,@I%UXFHGLGQjWFRPH
                                                                    DFURVVKH>&KLFDVH@ZDVJRLQJWRVKXWKLVRSHUDWLRQGRZQl
 0U0RUIRUG<RXRSHQHGWKHGRRU                                  ,GDW&KLFDVHVWDWHGWKDWGXULQJWKHFDPSDLJQKHDQG
                                                                    $SSHOODQW GLVFXVVHG FORVLQJ GRZQ =ROGDQjV ILUHZRUNV
 0U<HOVN\:DLWDPLQXWH+HGLGQRWKLUHsHII&KDQFH           EXVLQHVV RQ WKH WK RI sXO\ EHFDXVH =ROGDQ KDG QRW
 :HGLGQjWPHQWLRQKLVQDPH                                        FRQWULEXWHGWRWKHFDPSDLJQDOWKRXJKmLWZDVQjWDGHILQLWH
                                                                    WKLQJl,GDW&KLFDVHFRXOGQRWUHPHPEHULIKHWROG
 0U/RQDUGRsXVWVRWKHUHFRUGLVFOHDUWKHUHFRUGZLOO          0DUWLQR WKDW $SSHOODQW ZDV FRQVLGHULQJ VKXWWLQJ GRZQ
 VSHDNIRULWVHOI,PHQWLRQHGWKHVHIRXUSHRSOH,ILWjV          =ROGDQEXWGLGDGPLWWKDWKHPLJKWKDYHVDLGWKDW,GDW
 FRQVWUXHG,jPWDONLQJDERXWKLVHQWLUHGHSDUWPHQWWKDW           2j1HVWLWHVWLILHGWKDW$SSHOODQWWROGKLPWKDWLI=ROGDQ
 ZDVQRWP\LQWHQW                                                 GLGQRWmFRPHXSZLWKKRZPDQ\WKRXVDQGVVFUHZKLPKHjV
                                                                    JRWWKHIRXUWKRIsXO\DQGHYHU\WKLQJJRHVGRZQ,ZLOOVKXW
 0U0RUIRUG%\PHQWLRQLQJWKDWHYHQLIWKDWjVDOO\RX            KLP GRZQl  ,G DW   $OWKRXJK WKHUH DUH JDSV LQ WKH
 GLGDQG,GRQjWWKLQNWKDWjVZKDW\RXGLGE\PHQWLRQLQJ         HYLGHQFHWKHUHDUHHQRXJKGHWDLOVWRVXSSRUWDQLQIHUHQFHWKDW
 WKDWWKHVH IRXURIWKHSHRSOHKHKLUHGRUSURPRWHGDUH            $SSHOODQW DQG &KLFDVH FRQVSLUHG WR H[WRUW FDPSDLJQ
 YHU\ KDUGZRUNLQJ FRPSHWHQW JRRG SHRSOH \RXjYH               FRQWULEXWLRQVIURP=ROGDQ:HWKLQNWKHIDFWWKDWWKHWKUHDWV
 RSHQHGWKHGRRUWRDERXWWKHIDFWWKDWNH\SHRSOHKHKLUHG         &KLFDVHDQG$SSHOODQWPDGHDJDLQVW=ROGDQPLUURUWKHLU
 DUHQRWLQoDQGKLVODVWFRPPHQWZDVWKDWsRKQ&KLFDVH
 ZDVWKHRQO\EDGSHUVRQKHKLUHG
                                                                        
                                                                            :H UHFRJQL]H WKDW $SSHOODQW PDGH KLV VWDWHPHQW WR 2j1HVWL DQG QRW
 7KH&RXUW7KHRQO\EDGSHUVRQWKDWjVZKDWKHVDLG               =ROGDQ 7KDW $SSHOODQW PDGH WKH WKUHDW DW DOO KRZHYHU LV LQGLFDWLYH RI D
                                                                    VWDWH RI PLQG WR UHWDOLDWH DJDLQVW =ROGDQ IRU QRW VXSSRUWLQJ KLV FDPSDLJQ
 0U0RUIRUG7KDWjVZKDWLWZDV1RZKHjVRSHQHGWKH              ,Q DQ\ HYHQW WKH RYHUDOO HYLGHQFH LQGLFDWHG WKDW &KLFDVH ZDV $SSHOODQWjV
 GRRU                                                              FRPPXQLFDWLRQV OLDLVRQ 7KHUHIRUH ZH GR QRW WKLQN LW LPSRUWDQW WKDW
                                                                    $SSHOODQW GLG QRW FRPPXQLFDWH WKLV WKUHDW GLUHFWO\ WR =ROGDQ RU
    8QLWHG6WDWHVY&KDQFH                           1R   1R                     8QLWHG6WDWHVY&KDQFH        

LQLWLDO FRQYHUVDWLRQ RQ WKH VXEMHFW GXULQJ WKH FDPSDLJQ         DOVRPHQWLRQHGoZKRZDVWKHWKLUGRQH,PHQWLRQHGoLWLV
LQGLFDWHVWKDWDWVRPHSRLQWLQWLPHDIWHUWKLV FRQYHUVDWLRQ          QRERG\XQGHULQGLFWPHQWRUDQ\ERG\WKDWLVLQWURXEOH
$SSHOODQWDQG&KLFDVHUHDFKHGDQDJUHHPHQWWRH[WRUW=ROGDQ
IRUFDPSDLJQPRQH\)XUWKHUPRUHZHEHOLHYHLWLUUHOHYDQW            7KH&RXUW<RXNQRZ0U/RQDUGRWKHJRYHUQPHQWKDV
WKDW&KLFDVHGLGQRWPDNHWKHWKUHDWXQWLODIWHUWKHFDPSDLJQ          KHOG EDFN H[WUHPHO\  <RX KDYH EURXJKW RXW VR PDQ\
ZDVRYHUVLQFH=ROGDQWHVWLILHGWKDWKLVFRQWULEXWLRQVZHUH            UHIHUHQFHVRIWU\LQJWRPDNHWKLVPDQRXWWREHWKHPRVW
PDGH WR KHOS SD\ RII $SSHOODQWjV FDPSDLJQ GHEWV 6HH sW     KRQRUDEOHPDQWKDWHYHUZDONHGGRZQWKHSLNH
$SS[DW
                                                                       <RX KDYH WDONHG DERXW FKDUDFWHU HYLGHQFH \RX KDYH
  $FFRUGLQJO\IRUWKHUHDVRQVVWDWHGZHEHOLHYHWKHHYLGHQFH         WDONHGDERXWsXDQLWD5LFKEHLQJWKHVDYLRURI0DKRQLQJ
ZDVVXIILFLHQWWRVXSSRUWWKHMXU\jVFRQFOXVLRQWKDW$SSHOODQW         9DOOH\7KH\KDYHQjWGLUHFWO\DSSURDFKHGDQ\RIWKRVH
ZDVLQYROYHGLQDFRQVSLUDF\WRH[WRUWFDPSDLJQFRQWULEXWLRQV          EXW\RXRSHQHGWKHGRRUWRWKLVDQG,DPJRLQJWRDOORZ
IURP%UXFH=ROGDQLQYLRODWLRQRIWKH+REEV$FW7KHUHIRUH           VRPHOLPLWHGFURVV
WKLVDVVLJQPHQWRIHUURULVQRWZHOOWDNHQ
                                                                       ,jPQRWJRLQJWRDOORZ,jPQRWJRLQJWRRSHQWKLVWULDO
     2EVWUXFWLRQRI6WDWHRU/RFDO/DZ(QIRUFHPHQW                  DQGKDYHDPLQLWULDORQDOOWKHVHLQGLYLGXDOVEXWKHKDV
                                                                       WKH ULJKW WR TXHVWLRQ KLP DERXW WKH FKDUDFWHU RI WKHVH
   $SSHOODQWQH[WFRQWHQGVWKDWWKHHYLGHQFHZDVLQVXIILFLHQW          SHRSOH
WRVXSSRUWDFRQFOXVLRQWKDWWKH*UHHN&RIIHH+RXVHZDVDQ
mLOOHJDOJDPEOLQJEXVLQHVVlZLWKLQWKHPHDQLQJRI86&            0U0RUIRUG7KHUHLVRQHRWKHUSRLQWoDQG,jPQRWJRLQJ
   7KHUHIRUH $SSHOODQW DUJXHV KLV FRQYLFWLRQ IRU       WRSXUVXHLWEXWLIKHFRQWLQXHVWRRSHQGRRUVWKHQ,jP
YLRODWLQJ   DV DOOHJHG LQ WKH LQGLFWPHQW VKRXOG EH       JRLQJ WR FRQWLQXH WR SXUVXH WKHVHoKH DVNHG DERXW
UHYHUVHG                                                              ZKHWKHU0U&KDQFHjVRSSRQHQWVZHUHVPHDULQJKLVJRRG
                                                                       UHSXWDWLRQ NQRZLQJ WKDW RQH RI WKH WKLQJV WKDW WKH\
  6HFWLRQSURYLGHVLQUHOHYDQWSDUW                              DFFXVHGKLPRIZDVIDLOLQJDSRO\JUDSKZKHQWKHUHZHUH
                                                                       GRFXPHQWVWRVKRZLWDQGWKH&RXUWKDVDVNHGXVWRVWD\
  D ,W VKDOO EH XQODZIXO IRU WZR RU PRUH SHUVRQV WR        DZD\IURPWKDW
  FRQVSLUHWRREVWUXFWWKHHQIRUFHPHQWRIWKHFULPLQDOODZV
  RID6WDWHRUSROLWLFDOVXEGLYLVLRQWKHUHRIZLWKWKHLQWHQW         7KHVHDUHWKHNLQGVRIWKLQJVWKH\jUHGRLQJDQGLIWKH\jUH
  WRIDFLOLWDWHDQLOOHJDOJDPEOLQJEXVLQHVVLI                      JRLQJ WR RSHQ WKRVH GRRUV ZHjUH JRLQJ WR VWDUW JRLQJ
                                                                       WKURXJKWKHP
  RQHRUPRUHRIVXFKSHUVRQVGRHVDQ\DFWWRHIIHFWWKH
  REMHFWRIVXFKDFRQVSLUDF\                                         :HKDYHEHHQYHU\FDUHIXOQRWWRGRWKRVHNLQGRIWKLQJV
                                                                       DQGDV\RXVDLGDERXWsXDQLWD5LFKWKHGHIHQGDQWWKURXJK
   RQH RU PRUH RI VXFK SHUVRQV LV DQ RIILFLDO RU          KLVFRXQVHO\HVWHUGD\FRQFHGHGWRXVWKDW0U&KDQFHGLG
  HPSOR\HHHOHFWHGDSSRLQWHGRURWKHUZLVHRIVXFK6WDWH            PHHWZLWKKHULQKRWHOURRPVDQGKDGVH[XDOHQFRXQWHUV
  RUSROLWLFDOVXEGLYLVLRQDQG                                        %XW LI WKH\ FRQWLQXH GRZQ WKLV URDG DQG FRQWLQXH WR
                                                                       SUHVHQW WKLV PDQ DV VRPHWKLQJ KHjV QRW WKHQ WKH\jUH
                                                                       RSHQLQJWKHGRRUDQGZHjOOEHJLQWRUHVSRQGLQNLQG

VSHFLILFDOO\ RUGHU WKDW LW EH FRPPXQLFDWHG WR =ROGDQ
   8QLWHG6WDWHVY&KDQFH                     1R    1R                         8QLWHG6WDWHVY&KDQFH          

 0U /RQDUGR >GHIHQVH FRXQVHO@ , GLGQjW PHQWLRQ KLV        RQH RU PRUH RI VXFK SHUVRQV FRQGXFWV ILQDQFHV
 EURWKHU                                                         PDQDJHVVXSHUYLVHVGLUHFWVRURZQVDOORUSDUWRIDQ
                                                                  LOOHJDOJDPEOLQJEXVLQHVV
 0U 0RUIRUG <RX DVNHG DERXW HPSOR\HHV ZKR DUH
 FRPSHWHQW                                                       E$VXVHGLQWKLVVHFWLRQ
 7KH&RXUW&RPSHWHQWKDUGZRUNLQJSHRSOH$UH\RX                LOOHJDO JDPEOLQJ EXVLQHVV PHDQV D JDPEOLQJ
 FUD]\"<RXMXVWRSHQHGWKHELJJHVWGRRUWREULQJDWUXFN        EXVLQHVVZKLFK
 WKURXJK
                                                                  L LV D YLRODWLRQ RI WKH ODZ RI D 6WDWH RU SROLWLFDO
 0U0RUIRUG0D\EH,VKRXOGGULYHWKHWUXFNWKURXJK,          VXEGLYLVLRQLQZKLFKLWLVFRQGXFWHG
 ZRXOG OLNH WR OHDYH WKH DQVZHU DQG SXUVXH WKDW RQ
 UHFURVV                                                         LLLQYROYHVILYHRUPRUHSHUVRQVZKRFRQGXFWILQDQFH
                                                                  PDQDJH VXSHUYLVH GLUHFW RU RZQ DOO RU SDUW RI VXFK
 0U/RQDUGR,DVNHGDERXW5XVVHOO2VPDQ                        EXVLQHVVDQG
 0U 0RUIRUG <RX DVNHG DERXW WKH HPSOR\HHV ZHUH           LLL KDV EHHQ RU UHPDLQV LQ VXEVWDQWLDOO\ FRQWLQXRXV
 FRPSHWHQW SHRSOH WKDW KH >$SSHOODQW@ SURPRWHG  +H        RSHUDWLRQIRUDSHULRGLQH[FHVVRIWKLUW\GD\VRUKDVD
 SURPRWHGKLVEURWKHU                                            JURVVUHYHQXHRILQDQ\VLQJOHGD\
 0U /RQDUGR , VSHFLILFDOO\ DVNHG DERXW IRXU SHRSOH    86&$SSHOODQWDUJXHVWKDWWKHHYLGHQFHZDV
 5XVVHOO2VPDQo                                                 LQVXIILFLHQWWRVXSSRUWDFRQFOXVLRQWKDWILYHRUPRUHSHUVRQV
                                                                FRQGXFWHGRUPDQDJHGWKHDOOHJHGLOOHJDOJDPEOLQJEXVLQHVV
 


                                                          IRUWKHFRQWLQXRXVWKLUW\GD\SHULRG7KHUHIRUH$SSHOODQW
                                                                DUJXHVKLVFRQYLFWLRQRQ&RXQWRIWKHLQGLFWPHQWVKRXOGEH
 7KH&RXUW<RXDVNHGLIWKHHPSOR\HHVWKDWKHKLUHGZHUH        UHYHUVHG  :H DJUHH ZLWK $SSHOODQW WKDW WKH HYLGHQFH ZDV
 DOOFRPSHWHQWKDUGZRUNLQJo                                    LQVXIILFLHQW WR VXSSRUW D ILQGLQJ WKDW ILYH RU PRUH SHUVRQV
                                                                FRQGXFWHG DQ LOOHJDO JDPEOLQJ EXVLQHVV RU WKDW LW ZDV LQ
 0U/RQDUGR1R,MXVWDVNHGDERXWWKRVHIRXU                VXEVWDQWLDOO\ FRQWLQXRXV RSHUDWLRQ IRU PRUH WKDQ WKLUW\
                                                                FRQWLQXRXVGD\V
 


                                                                  ,QLWLDOO\ ZH QRWH WKDW LQ RUGHU WR GHWHUPLQH ZKHWKHU WKH
 0U 0RUIRUG <RX WULHG WR FUHDWH WKH LPSUHVVLRQ WKDW   JRYHUQPHQWKDVHVWDEOLVKHGWKHmLOOHJDOJDPEOLQJEXVLQHVVl
 WKHVH SHRSOH KH KLUHG DQG SURPRWHG DUH KRQHVW KDUG
 ZRUNLQJSHRSOHDQG\RXNQRZWKH\jUHQRW
                                                                    
 0U /RQDUGR 1R , DVNHG WKH TXHVWLRQ UHJDUGLQJ IRXU           $SSHOODQW FRUUHFWO\ SRLQWV RXW WKDW DOWKRXJK WKH JRYHUQPHQW FRXOG
 SHRSOH WKDW KHo\RX PHQWLRQHG 5XVVHOO 2VPDQ ,           DOVR SURYH D YLRODWLRQ RI   E\ VKRZLQJ WKDW WKH LOOHJDO JDPEOLQJ
                                                                EXVLQHVV JURVVHG PRUH WKDQ  LQ DQ\ GD\ WKHUH ZDV QR HYLGHQFH
 PHQWLRQHG 5XVVHOO 2VPDQ <RX PHQWLRQHG 5RFN\              SUHVHQWHG UHJDUGLQJ WKH FDVK IORZ RI WKH EDUEXW JDPH KHOG DW WKH *UHHN
 5XVVRjVVRQ,PHQWLRQHG5RFN\5XVVRjVVRQ,WKLQN,         &RIIHH +RXVH 7KHUHIRUH WKH JRYHUQPHQW ZDV UHTXLUHG WR SURYH WKDW WKH
                                                                LOOHJDO JDPEOLQJ EXVLQHVV ZDV LQ VXEVWDQWLDOO\ FRQWLQXRXV RSHUDWLRQ IRU
                                                                WKLUW\ RU PRUH GD\V
    8QLWHG6WDWHVY&KDQFH                         1R       1R                        8QLWHG6WDWHVY&KDQFH         

HOHPHQWRIZHPD\FRQVXOWFDVHODZLQWHUSUHWLQJ                 4 ZKR LV D IULHQG RI \RXUV ZRUNHG LQ WKH FDPSDLJQ
86&ZKLFKLQFOXGHVDVDQHOHPHQWRIWKHRIIHQVH                5RFN\5XVVRjVVRQo
WKHLGHQWLFDOO\GHILQHGmLOOHJDOJDPEOLQJEXVLQHVVl6HH
86&EVHHDOVR8QLWHG6WDWHVY0DUULILHOG            $<HV
)GWK&LUVWDWLQJWKDWDQG
KDYHEHHQFRQVWUXHGLQSDULPDWHULD:HDUHQRWVDWLVILHG               4 ZKR ZDV KLUHG DV D GHSXW\  0DUN &ROXFFL DV D
WKDW WKH HYLGHQFH GHPRQVWUDWHG WKDW WKH JRYHUQPHQW                  SHUVRQQHODGYLVHUFRUUHFW"
HVWDEOLVKHG E\ SURRI EH\RQG D UHDVRQDEOH GRXEW WKH ILYH
SHUVRQUHTXLUHPHQWRI7KHILYHSHUVRQUHTXLUHPHQW                $&RUUHFW
FDQmEHVDWLVILHGDWDQ\SRLQWGXULQJWKHWKLUW\GD\VUHJDUGOHVV
RIWKHGXUDWLRQRIWKHSHUVRQjVLQYROYHPHQWLQWKHEXVLQHVVVR           4<RXUFRXVLQ5LFN)DULQDFRUUHFW"
ORQJDVKLVRUKHUSDUWLFLSDWLRQLVHLWKHUUHJXODUO\KHOSIXORU           $&RUUHFW
QHFHVVDU\ WR WKH RSHUDWLRQ RI WKH JDPEOLQJ HQWHUSULVHl
8QLWHG 6WDWHV Y 0LFN  )G   WK &LU         4'LG\RXHYHUFRQVLGHUKLULQJ\RXUSROLWLFDOHQHPLHV"
HPSKDVLVDGGHGLQWHUQDOTXRWDWLRQRPLWWHG
                                                                          $1RVLU
   7KHRQO\HYLGHQFHVXEPLWWHGLQVXSSRUWRI&RXQWZDVWKH
WHVWLPRQ\RIsHHS*DURQRDQG/HQQ\6WUROOR*DURQRWHVWLILHG             4 +DYH WKHVH LQGLYLGXDOV WKDW , MXVW PHQWLRQHG ZHUH
WKDWZKHQKHFRQWUROOHGWKHEDUEXWJDPHDWWKH*UHHN&RIIHH               WKH\OR\DOFDPSDLJQZRUNHUVLQ\RXUFDPSDLJQ"
+RXVH WKH SDUWLFLSDQWV ZHUH *DURQR 9LFWRU 0DOLV ZLWK
ZKRP*DURQRVSOLWSURILWV9LFWRU0DOLVjVEURWKHUZKRZDV                $7KHPDMRULW\RIWKHP\HV
DGHDOHUDQGmDQRWKHU*UHHNNLGZKRGHDOWWKHUHl6HHsW
$SS[DW*DURQRjVWHVWLPRQ\HVWDEOLVKHVRQO\WKDW                4 'LG \RX DOVR NQRZ WKHP WR EH FRPSHWHQW KDUG
IRXUSHUVRQVSDUWLFLSDWHGLQWKHJDPEOLQJEXVLQHVVZKHQKH                ZRUNLQJIRONV"
ZDVLQFKDUJH*DURQRGLGWHVWLI\WKDW*DU\*RRGULFNGHDOWDW
WKH*UHHN&RIIHH+RXVHEXWQRWXQWLODIWHUKHKDGWXUQHGWKH             $<HVWKH\ZHUHDOOYHU\FRPSHWHQWH[FHSWIRUsRKQ
JDPH RYHU WR %HUQLH $OWVKXOHU  ,G DW   /HQQ\ 6WUROOR     >&KLFDVH@KHEHFDPHDGLVDSSRLQWPHQW
WHVWLILHGWKDWKHVSOLWWKHSURILWVIURPWKHJDPHZLWK%HUQLH
$OWVKXOHU DQG 9LFWRU 0DOLV DQG WKDW (GGLH 3UXQHVNL ZDV D       sW$SS[DW$WWKDWSRLQWWKH$86$DVNHGWRDSSURDFK
GHDOHUDQGWKDW*DU\*RRGULFNGHDOWWKHUHmRQRFFDVLRQl,G           WKHEHQFKIRUDVLGHEDUFRQIHUHQFH
DW   $OWKRXJK FOHDUO\ PRUH WKDQ ILYH SHRSOH ZHUH
LQYROYHGRYHUWKHOLIHRIWKHRSHUDWLRQZHILQGQRHYLGHQFH            7KH IROORZLQJ GLVFXVVLRQ ZKLFK ZH TXRWH DW OHQJWK WRRN
WKDW ILYH RU PRUH SHRSOH ZHUH LQYROYHG GXULQJ DQ\ VLQJOH       SODFHGXULQJWKHVLGHEDU
WKLUW\GD\SHULRG&RPSDUHZLWK0DUULILHOG)GDW
XQGHUKROGLQJWKDWILYHSHUVRQUHTXLUHPHQWPHW                0U 0RUIRUG >$86$@ ,jP JRLQJ WR DVN WKDW WKDW ODVW
HYHQWKRXJKRQO\IRXUSHUVRQVZHUHSUHVHQWDWEXVLQHVVDWRQH             TXHVWLRQDQGDQVZHUEHVWULFNHQRUKHjVRSHQHGWKHGRRU
WLPHEHFDXVHWKHHYLGHQFHVKRZHGWKDWWKHUHZHUHILYHDFWLYH              IRU PH WR JHW LQWR WKH IDFW WKDW KDOI WKH GHSDUWPHQW LV
SDUWLFLSDQWV ZKR URWDWHG WKURXJK IRXU SRVLWLRQV  )RU             XQGHULQGLFWPHQWWKDWWKH\JRRXWDQGWKH\SODQWGUXJVLQ
LQVWDQFHDOWKRXJK6WUROORVKDUHGSURILWVZLWK%HUQLH$OWVKXOHU           UDLGVLQFOXGLQJKLVEURWKHU
ZKHQ $OWVKXOHU KDG WKH JDPH WKHUH ZDV QR HYLGHQFH WKDW
    8QLWHG6WDWHVY&KDQFH                       1R      1R                       8QLWHG6WDWHVY&KDQFH         

LVVXHZHUHVXIILFLHQWWRFDUU\WKHGD\LQWKDWWKHEDUEXWJDPH       6WUROOR VKDUHG SURILWV ZLWK *DURQR ZKHQ *DURQR UDQ WKH
DW WKH *UHHN &RIIHH +RXVH SUREDEO\ PHHWV WKH WKLUW\ GD\     JDPH,QDGGLWLRQDOWKRXJK6WUROORjVWHVWLPRQ\LGHQWLILHVILYH
UHTXLUHPHQW,QDFULPLQDOFDVHKRZHYHUWKHJRYHUQPHQW            SHRSOHZKRZHUHLQYROYHGLQWKHJDPHZKHQKHVKDUHGSURILWV
FDQQRW PHHW LWV EXUGHQ RI SURRI E\ LPSDUWLQJ D JHQHUDO      ZLWK%HUQLH$OWVKXOHUKHWHVWLILHGWKDW*DU\*RRGULFNGHDOW
LPSUHVVLRQ WKDW WKH GHIHQGDQWjV FRQGXFW PHHWV RQH RI WKH     RQO\ mRQ RFFDVLRQl  :H GR QRW EHOLHYH WHVWLPRQ\ WKDW
HOHPHQWV RI WKH RIIHQVH SDUWLFXODUO\ ZKHUH WKHUH LV QR      *RRGULFNGHDOWmRQRFFDVLRQlZLWKRXWIXUWKHUDPSOLILFDWLRQ
DSSDUHQW UHDVRQ RWKHU WKDQ FDUHOHVVQHVV IRU QRW DGGXFLQJ    DV WR WKH IUHTXHQF\ RI WKH RFFDVLRQV LV VXIILFLHQW WR VKRZ
PRUHVSHFLILFWHVWLPRQ\RQWKHLVVXH                                HLWKHU UHJXODU RU QHFHVVDU\ SDUWLFLSDWLRQ LQ WKH DOOHJHG
                                                                     JDPEOLQJEXVLQHVV6HHHJ8QLWHG6WDWHVY0XUUD\
  $FFRUGLQJO\ IRU WKH UHDVRQV VWDWHG ZH ILQG WKDW WKH      )GVW&LUKROGLQJWKDWILYHSHUVRQ
HYLGHQFHZDVLQVXIILFLHQWIRUWKHMXU\WRILQGWKDWWKHEDUEXW       UHTXLUHPHQWQRWVDWLVILHGZKHUHEDUWHQGHUWRRNEHWVRQRQO\
JDPHDWWKH*UHHN&RIIHH+RXVHPHHWVHLWKHUWKHILYHSHUVRQ          IRXURFFDVLRQVRYHUILIW\VL[GD\SHULRG7KHUHIRUH6WUROORjV
UHTXLUHPHQW RU WKH WKLUW\ GD\ UHTXLUHPHQW RI           WHVWLPRQ\ ZH ILQG HVWDEOLVKHV WKDW RQO\ IRXU SHUVRQV
7KHUHIRUH WKH JRYHUQPHQW IDLOHG WR SURYH WKDW WKH EDUEXW    SDUWLFLSDWHGLQRSHUDWLQJWKHEDUEXWJDPHGXULQJWKHWLPHWKDW
JDPHZDVDQmLOOHJDOJDPEOLQJEXVLQHVVlXQGHUDQG             KHSDUWLFLSDWHGLQWKHRSHUDWLRQ
WKXV IDLOHG WR SURYH DQ HVVHQWLDO HOHPHQW RI WKH RIIHQVH
&RQVHTXHQWO\ $SSHOODQWjV FRQYLFWLRQ RQ &RXQW  RI WKH          0RUHRYHUZHILQGWKDWWKHILYHSHUVRQUHTXLUHPHQWLVQRW
LQGLFWPHQWPXVWEHUHYHUVHG                                         VDWLVILHG E\ HYLGHQFH WKDW WKH FXPXODWLYH QXPEHU RI
                                                                     SDUWLFLSDQWVLQWKHDOOHJHGLOOHJDOJDPEOLQJEXVLQHVVZDVILYH
                %6FRSHRI&URVV([DPLQDWLRQ                        RUPRUH7KHOHJLVODWLYHKLVWRU\WRLQGLFDWHVWKDWLQ
                                                                     HQDFWLQJ   DQG  &RQJUHVV LQWHQGHG RQO\ WR
  $SSHOODQWQH[WFODLPVWKDWKHZDVGHQLHGDIDLUWULDOZKHQ         UHJXODWH LOOHJDO JDPEOLQJ DFWLYLWLHV RI D SDUWLFXODU VL]H RU
WKH GLVWULFW MXGJH SHUPLWWHG FURVVH[DPLQDWLRQ ZKLFK            VFRSH6HH8QLWHG6WDWHVY7DUWHU)GWK
VXJJHVWHG JXLOW WKURXJK DVVRFLDWLRQ  7KLV DOOHJHG HUURU     &LUH[SODLQLQJOHJLVODWLYHKLVWRU\7KHIDFWWKDWDQ
$SSHOODQWDUJXHVPHULWVUHYHUVDORIHDFKRIKLVFRQYLFWLRQV         RSHUDWLRQ KDV HPSOR\HG PRUH WKDQ IRXU SHRSOH RYHU WKH
DQGUHPDQGIRUDQHZWULDO                                         FRXUVHRILWVH[LVWHQFHGRHVQRWQHFHVVDULO\LQFUHDVHWKHVL]H
                                                                     RUVFRSHRILWVDFWLYLWLHVLQRUGHUWREULQJLWZLWKLQWKHUHDFKRI
  7KLVDVVLJQPHQWRIHUURUVWHPVIURPWKHWULDOMXGJHjVUXOLQJ       WKHVWDWXWH)RULQVWDQFHRYHUDSHULRGRIWLPHWKUHHSULQFLSDO
WKDWRQUHGLUHFWH[DPLQDWLRQRI$SSHOODQW$SSHOODQWjVWULDO        RSHUDWRUVRIDFDUGJDPHPD\HPSOR\ILIWHHQGLIIHUHQWGHDOHUV
FRXQVHOmRSHQHGWKHGRRUlIRUWKHSURVHFXWLRQWRLQTXLUHLQWR        EXWRQO\RQHDWDWLPHDQGRQO\LQVXFFHVVLRQ,QVXFKDFDVH
WKH FULPLQDO LQGLFWPHQWV DQG SURVHFXWLRQV RI FHUWDLQ           WKHFDUGJDPHZRXOGQRWEHDQmLOOHJDOJDPEOLQJEXVLQHVVl
VXERUGLQDWHV RI $SSHOODQWjV ZLWKLQ WKH 0DKRQLQJ &RXQW\         EHFDXVHLWQHYHUKDGPRUHWKDQIRXUDFWLYHSDUWLFLSDQWVDWDQ\
6KHULIIjV'HSDUWPHQW2QUHGLUHFWH[DPLQDWLRQ$SSHOODQW           RQHWLPH7KHHYLGHQFHDGGXFHGLQWKHSUHVHQWFDVHSDUDOOHOV
WHVWLILHGDVIROORZV                                                RXU H[DPSOH  $OWKRXJK WKH HYLGHQFH SUHVHQWHG E\ WKH
                                                                     JRYHUQPHQWVXJJHVWVWKDWRYHUWLPHSHUKDSVDVPDQ\DVQLQH
  4 1RZ >$86$@ 0RUIRUG DOVR DVNHG \RX VRPH                  SHUVRQVZHUHLQYROYHGLQWKHEDUEXWJDPHDWWKH*UHHN&RIIHH
  TXHVWLRQVUHJDUGLQJHPSOR\HHVWKDW\RXKLUHG'R\RX              +RXVH WKHLU SDUWLFLSDWLRQ ZDV VXFFHVVLYH DQG QRW
  UHFDOOWKDW"<RXVDLGWKDW5XVVHOO2VPDQo                         VLPXOWDQHRXV$WPRVWWKHWHVWLPRQ\HVWDEOLVKHVWKDWIRXU
  $&RUUHFW                                                        SHUVRQV *DURQR 9LFWRU 0DOLV 0DOLVjV EURWKHU DQG mWKH
                                                                     *UHHNNLGlZHUHLQYROYHGZKHQ*DURQRFRQWUROOHGWKHJDPH
   8QLWHG6WDWHVY&KDQFH                      1R      1R                      8QLWHG6WDWHVY&KDQFH       

DQGWKDWKHWXUQHGWKHJDPHRYHUWR%HUQLH$OWVKXOHUDQGWKHQ     7UXSLDQR  )G   WK &LU  VWDWLQJ
HVVHQWLDOO\ D GLIIHUHQW FDVW RI IRXU SHUVRQV H[FOXGLQJ     mVXEVWDQWLDOO\FRQWLQXRXVlGRHVQRWPHDQHYHU\GD\UDWKHU
*RRGULFNUDQWKHRSHUDWLRQ$OWVKXOHU6WUROOR 0DOLVDQG       mWKHRSHUDWLRQPXVWEHRQHWKDWZDVFRQGXFWHGXSRQD
3UXQHVNL7KXVZHUHLWHUDWHWKHHYLGHQFHSUHVHQWHGE\WKH      VFKHGXOHRIUHJXODULW\VXIILFLHQWWRWDNHLWRXWRIWKHFDVXDO
JRYHUQPHQW ZDV LQVXIILFLHQW WR HVWDEOLVK WKH ILYH SHUVRQ    QRQEXVLQHVVFDWHJRU\lTXRWLQJ8QLWHG6WDWHVY1HURQH
UHTXLUHPHQWRIELL                                   )GWK&LU
  )XUWKHUPRUH ZH DUH XQFRQYLQFHG WKDW WKH JRYHUQPHQW          /HQQ\6WUROORjVWHVWLPRQ\RQWKLVSRLQWLVVLPLODUO\QRQ
SURYHGEH\RQGDUHDVRQDEOHGRXEWWKDWWKHEDUEXWJDPHDWWKH       VSHFLILF DQG ZH WKLQN WKH JRYHUQPHQW H[DJJHUDWHV LI QRW
*UHHN &RIIHH +RXVH ZDV LQ VXEVWDQWLDOO\ FRQWLQXRXV           GLVWRUWV KLV WHVWLPRQ\ E\ DUJXLQJ WKDW KH WHVWLILHG WKDW
RSHUDWLRQ IRU WKLUW\ RU PRUH GD\V DV LV UHTXLUHG E\      JDPEOLQJKDGEHHQJRLQJRQDWWKH*UHHN&RIIHH+RXVHmIRU
ELLL$VZHUHDGWKHWULDOWUDQVFULSWSURYLGHG      \HDUVl6HH*RYjWjVEULHIDW6WUROORWHVWLILHGDVIROORZV
WKHUHLVDJHQHUDOVHQVHLPSDUWHGIURPWKHWHVWLPRQ\WKDWWKH
EDUEXW JDPH PD\ KDYH EHHQ LQ H[LVWHQFH IRU D QXPEHU RI     4:KDWLVWKH*UHHN&RIIHH+RXVH"
\HDUV7KHJRYHUQPHQWKRZHYHUQHYHUHOLFLWHGWHVWLPRQ\
ZKLFKGHVFULEHGWKHVSHFLILFWLPHSHULRGVWKHJDPHZDVLQ            $,WjVDFRIIHHKRXVHWKDWWKH*UHHNVKDYHKDGIRU\HDUV
RSHUDWLRQ)RULQVWDQFHsHHS*DURQRWHVWLILHGDVIROORZV          WKDWWKH\FRQJUHJDWHWRJHWKHUDQGWKH\SOD\VKRUWFDUGV
                                                                     DQGZKHQ,VD\VKRUWFDUGV\RXNQRZWKH\KDYH*UHHN
  4:KDWNLQGRIDFWLYLW\WRRNSODFHDWWKH*UHHN&RIIHH            JDPHVOLNH*UHHNUXPP\$QGMXVWWRSDVVWKHWLPHDQG
  +RXVH"                                                             WKH\VHOOWKHLU7XUNLVKFRIIHH
  $$UHZHWDONLQJ
V"                                            4:KDWKDSSHQVDWQLJKWDIWHUKRXUV"
  4/HWjVWDON
VDQGPRUHUHFHQWWLPHZKDWjVWKHPDLQ           $%DUEXWH>VLF@DQGWKHJDPHEDUEXWH>VLF@LVD*UHHN
  JDPHWKH\SOD\HG"                                                  JDPH,WjVDGLFHJDPH
  $%DUEXWH>VLF@                                                  4,VLWDJDPEOLQJJDPH"
6HHsW$SS[DW*DURQRWKHQJRHVRQWRWHVWLI\DERXW          $<HV
KRZEDUEXWLVSOD\HGDQGVWDWHVODWHUWKDWKHWXUQHGWKHJDPH
RYHUWR%HUQLH$OWVKXOHUDIWHUWKH)%,UDLGHGD6XSHU%RZO         sW$SS[DW,QIDFW6WUROORWHVWLILHGRQO\WKDWWKH*UHHNV
SDUW\ LQ   5HDGLQJ *DURQRjV WHVWLPRQ\ ZH ILQG LW     KDYHRZQHGWKHFRIIHHKRXVHIRU\HDUVQRWWKDWJDPEOLQJKDG
XQFOHDUZKHWKHUEDUEXWZDVLQIDFWSOD\HGDWWKH*UHHN         JRQHRQWKHUHIRU\HDUV/LNH*DURQRjVWHVWLPRQ\6WUROORjV
&RIIHH+RXVHLQWKH
VZKHQsHHS*DURQRDVVXPHG           RYHUDOOWHVWLPRQ\LVODFNLQJLQGHWDLOVDVWRWKHIUHTXHQF\ZLWK
FRQWURORIWKHJDPHLIWKHJDPHZDVLQH[LVWHQFHEHWZHHQ       ZKLFKWKHJDPHZDVFRQGXFWHGDOWKRXJKDVVWDWHGWKHUHLV
WKH
VDQGWKHWLPH*DURQRDVVXPHGFRQWURORIWKHJDPH        DJHQHUDOVHQVHWKDWWKHEDUEXWJDPHZDVKHOGRQDUHJXODU
DQGZKHWKHUWKHJDPHZDVKHOGRQDUHJXODU EDVLVDIWHU         EDVLVIRUDQXPEHURI\HDUV)UDQNO\ZHILQGWKHJDSVLQWKH
*DURQRDVVXPHGFRQWURORIWKHJDPH6HH7DUWHU)GDW       HYLGHQFHDVWRXQGLQJJLYHQWKDWWKHJRYHUQPHQWFDOOHGRQWZR
 m7KH SURYLVLRQV RI >VHFWLRQV  DQG @ GR QRW   RI WKH JDPHjV SURSULHWRUV ZKR SUHVXPDEO\ NQHZ DOO WKH
DSSO\WRJDPEOLQJWKDWLVVSRUDGLFRURILQVLJQLILFDQWPRQHWDU\    GHWDLOVRIWKHRSHUDWLRQWRSURYLGHWHVWLPRQ\LQVXSSRUWRIWKH
SURSRUWLRQVlTXRWLQJOHJLVODWLYHKLVWRU\8QLWHG6WDWHVY     FKDUJH:HUHWKLVDFLYLOPDWWHUZHWKLQNWKHSURRIVRQWKLV