Court Opinion

ID: 2969481
Source: CourtListenerOpinion
Date Created: 2015-09-22 15:49:51.385319+00
Date Added: 2024-06-11T11:40:58.990979
License: Public Domain

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

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

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

 s$0(6 '$9,' &$57(5              ;
          3HWLWLRQHU$SSHOODQW 
                                   
                                      1R
            Y                     
                                    !
                                   
 5,&.< %(//:DUGHQ3$8/          
 6800(56$WWRUQH\*HQHUDO        
        5HVSRQGHQWV$SSHOOHHV 
                                   
                                  1
       $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
   IRUWKH(DVWHUQ'LVWULFWRI7HQQHVVHHDW*UHHQHYLOOH
     1Rn7KRPDV*+XOO'LVWULFWsXGJH
                 $UJXHG0DUFK
             'HFLGHGDQG)LOHGsXO\
%HIRUH1(/621&/$<DQG*,/0$1&LUFXLWsXGJHV
                   BBBBBBBBBBBBBBBBB
                       &2816(/
$5*8('  *DU\ & 6KRFNOH\ %$.(5 '21(/621
%($50$1 	 &$/':(// 1DVKYLOOH 7HQQHVVHH IRU
$SSHOODQW'DU\Os%UDQG2)),&(2)7+($77251(<
*(1(5$/ 1DVKYLOOH 7HQQHVVHH IRU $SSHOOHHV
21 %5,()  *DU\ & 6KRFNOH\ %$.(5 '21(/621
%($50$1 	 &$/':(// 1DVKYLOOH 7HQQHVVHH IRU

                             
     &DUWHUY%HOOHWDO                        1R       1R                           &DUWHUY%HOOHWDO     

$SSHOODQW'DU\Os%UDQG *OHQQ53UXGHQ2)),&(2)               HYDOXDWLYHMXGJPHQWRQWKHUHODWLYHKRUURURIRQHPXUGHURYHU
7+( $77251(< *(1(5$/ 1DVKYLOOH 7HQQHVVHH IRU                  DQRWKHU$UDYHY&UHHFK866HFWLRQ
$SSHOOHHV                                                            L GRHV QRW IDFLDOO\ YLRODWH WKH (LJKWK
                                                                      $PHQGPHQW
                     BBBBBBBBBBBBBBBBB
                                                                        )RUWKHVHUHDVRQVZH$)),50LQSDUWDQG5(9(56(LQ
                         23,1,21                                      SDUW WKH MXGJPHQW RI WKH GLVWULFW FRXUW ZH DIILUP LQ DOO
                     BBBBBBBBBBBBBBBBB                                UHVSHFWV WKH MXGJPHQW RI JXLOW HQWHUHG RQ WKH MXU\jV JXLOW\
                                                                      YHUGLFW EXW UHYHUVH WKH MXGJPHQW RI WKH VHQWHQFH RI GHDWK
   &/$< &LUFXLW sXGJH  3HWLWLRQHU sDPHV 'DYLG &DUWHU         EHFDXVH RI WKH LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO DW WKH
DSSHDOV IURP WKH RUGHU RI WKH GLVWULFW FRXUW DGRSWLQJ DQG   VHQWHQFLQJSKDVHRIWKHWULDO:H5(0$1'WKHFDVHWRWKH
DSSURYLQJWKHPDJLVWUDWHMXGJHjVUHSRUWDQGUHFRPPHQGDWLRQ           GLVWULFW FRXUW ZLWK LQVWUXFWLRQV WR LVVXH D ZULW RI KDEHDV
VWDWLQJ DGGLWLRQDO ILQGLQJV DQG GHQ\LQJ &DUWHUjV FODLPV        FRUSXVYDFDWLQJ&DUWHUjVGHDWKVHQWHQFHGXHWRWKHLQHIIHFWLYH
UHJDUGLQJLQHIIHFWLYHDVVLVWDQFHRIFRXQVHO)RUWKHUHDVRQV         DVVLVWDQFHRIFRXQVHOKHUHFHLYHGDWWKHVHQWHQFLQJSKDVHRI
VHWIRUWKEHORZZH5(9(56(LQSDUWDQG$)),50LQSDUW               WKHWULDOXQOHVVWKHVWDWHFRQGXFWVDQHZSHQDOW\SURFHHGLQJ
                                                                      ZLWKLQGD\VDIWHUUHPDQG
                                ,
  :H VXPPDUL]H WKH IROORZLQJ IDFWV IURP WKH 7HQQHVVHH
6XSUHPH &RXUWjV RSLQLRQ RQ GLUHFW DSSHDO  6HH 6WDWH Y
&DUWHU6:G7HQQ
  2Q)HEUXDU\&DUWHUGURYHZLWK'DQQ\3ULFHWRWKH
,QWHUVWDWH  UHVW DUHD QHDU %DLOH\WRQ 7HQQHVVHH  7KH\
SODQQHGWRVWHDODFDUWKDWWKH\FRXOGXVHLQDUREEHU\WKHQH[W
GD\,GDW
   &ODUHQFH$/LOHD\HDUROG2NODKRPDUHVLGHQWVWRSSHG
DWWKHUHVWDUHDMXVWDIWHUPLGQLJKW$V3ULFHZDWFKHG&DUWHU
HQWHUHGWKHUHVWURRPDQGHPHUJHGVKRUWO\ZLWK/LOH7KHWZR
JRWLQWR/LOHjVSLFNXSWUXFNDQGOHIWWKHDUHD3ULFHIROORZHG
LQ&DUWHUjVFDU&DUWHUIRUFHG/LOHWRGULYHWRDVHFOXGHGDUHD
NQRZQDVWKH%OXIIVZKLFKRYHUORRNHG&KHURNHH/DNH3ULFH
ZDWFKHG&DUWHUVKRRW/LOHIRXUWLPHVDWFORVHUDQJHDQGUROO
/LOHjVERG\RIIWKHFOLII7KHERG\ZDVIRXQGDIRRWVKRUWRI
WKHODNHWKHQH[WGD\,G
   7KH+DPEOHQ&RXQW\JUDQGMXU\LQGLFWHG&DUWHUDQG3ULFH
LQ0DUFKRIFKDUJLQJ&DUWHULQ&RXQWV,DQG,,,ZLWK
ILUVWGHJUHHPXUGHURI/LOHDQGDVDKDELWXDOFULPLQDOXQGHU
7HQQHVVHH &RGH $QQRWDWHG    UHSHDOHG
    &DUWHUY%HOOHWDO                        1R       1R                            &DUWHUY%HOOHWDO     

DJJUDYDWLQJFLUFXPVWDQFHVmLVQRWVXVFHSWLEOHRIPDWKHPDWLFDO         &RXQW,,FKDUJHG3ULFHZLWKDLGLQJDQGDEHWWLQJ/LOHjV
SUHFLVLRQl IHGHUDO FRXUW YDJXHQHVV UHYLHZ LV mTXLWH            PXUGHU
GHIHUHQWLDOl  ,G DW   $Q DJJUDYDWLQJ IDFWRU mLV QRW
XQFRQVWLWXWLRQDO LI LW KDV VRPH µFRPPRQVHQVH FRUH RI            ,Q sXO\ RI  SROLFH LQYHVWLJDWRUV FRQWDFWHG 0LFKDHO
PHDQLQJ    WKDW FULPLQDO MXULHV VKRXOG EH FDSDEOH RI     *DUEHU WKH PDLQWHQDQFH PDQ RQ WKH ODWHQLJKW VKLIW DW WKH
XQGHUVWDQGLQJjl,G7KHVWDWHVPD\DGRSWFDSLWDOVHQWHQFLQJ         ,QWHUVWDWHUHVWDUHD7KH\LQIRUPHG*DUEHUWKDWWKH\ZHUH
SURFHVVHVWKDWUHO\RQWKHMXU\jVMXGJPHQWWRH[HUFLVHZLGH           LQYHVWLJDWLQJ D KRPLFLGH DQG VKRZHG KLP SKRWRJUDSKV RI
GLVFUHWLRQLQLQGLYLGXDOL]HGVHQWHQFLQJ,GDW7KHIHZ        &DUWHU 3ULFH /LOH &DUWHUjV FDU DQG /LOHjV SLFNXS WUXFN
DJJUDYDWLQJIDFWRUVWKDWKDYHEHHQIRXQGXQFRQVWLWXWLRQDOO\           *DUEHUUHVSRQGHGWKDWKHKDGVHHQWKHWKUHHPHQWRJHWKHUDW
YDJXH ZHUH WKRVH VWDWHG WR WKH MXU\ LQ WHUPV LQFOXGLQJ       WKHUHVWDUHDEXWKHFRXOGQRWSODFH WKH GDWH RWKHUWKDQWR
SHMRUDWLYHDGMHFWLYHVGHVFULELQJWKHFULPHDVDZKROHRULQD        UHFDOOLWZDVDFROGQLJKW*DUEHUVDLGKHKDGNHSWDQH\HRQ
IRUPUHTXLULQJD\HVRUQRDQVZHUWRVSHFLILFTXHVWLRQ,GDW       &DUWHU DQG 3ULFH EHFDXVH KH KDG EHHQ DOHUWHG WR D UDVK RI
  $V H[DPSOHV RI WKH UDUH XQFRQVWLWXWLRQDOO\ YDJXH     UHFHQWWKHIWVDWWKHUHVWDUHD+HUHFDOOHGWKDWRQHRIWKHWZR
IDFWRU WKH FRXUW LQ 7XLODHSD QRWHG LQVWDQFHV ZKHUH            PHQOHIWZLWK/LOHLQDSLFNXSWUXFNWKDWQLJKW
DJJUDYDWLQJ FLUFXPVWDQFHV ZHUH WKRVH GHILQHG DV D PXUGHU
WKDWZDVmHVSHFLDOO\KHLQRXVDWURFLRXVRUFUXHOl0D\QDUG             &DUWHUZDVGHFODUHGLQGLJHQWDQGWKHFRXUWDSSRLQWHG0LQG\
 86 DW  RU DV mRXWUDJHRXVO\ RU ZDQWRQO\ YLOH    1RUWRQ6HDOVDQG'RXJODV5%HLHUWRGHIHQGKLP$WWULDORQ
KRUULEOH DQG LQKXPDQl *RGIUH\  86 DW             WKHFKDUJHRIPXUGHULQWKHILUVWGHJUHH3ULFHWHVWLILHGDJDLQVW
7XLODHSD86DW                                            &DUWHU  3ULFH KDG SUHYLRXVO\ SOHG JXLOW\ WR VHFRQGGHJUHH
                                                                      PXUGHULQUHWXUQIRUDVHQWHQFHRIWKLUW\ILYH\HDUV
   7KH 7XLODHSD FRXUW DSSURYHG RI DJJUDYDWLQJ IDFWRUV
IRFXVLQJRQWKHmFLUFXPVWDQFHVRIWKHFULPHlDQGRQm>W@KH               &DUWHUUHOLHGRQDQDOLELGHIHQVHZKLFKZDVVXSSRUWHGE\
SUHVHQFH RU DEVHQFH RI FULPLQDO DFWLYLW\ E\ WKH GHIHQGDQW     WKHWHVWLPRQ\RIRQHZLWQHVV7KHMXU\FRQYLFWHG&DUWHURI
>ZKLFKLQYROYHG@WKHXVHRUDWWHPSWHGXVHRIIRUFHRUYLROHQFH        ILUVWGHJUHHPXUGHUE\DJHQHUDOYHUGLFW
RUWKHH[SUHVVRULPSOLHGWKUHDWWRXVHIRUFHRUYLROHQFHl,G
DW   )ROORZLQJ WKH VDPH DQDO\VLV WKH GLVWULFW FRXUW       8QGHU WKH ELIXUFDWHG 7HQQHVVHH V\VWHP WKH VDPH MXU\
SURSHUO\UHMHFWHG&DUWHUjVYDJXHQHVVFKDOOHQJHE\ILQGLQJWKDW        ZKLFKFRQYLFWHG&DUWHUGHWHUPLQHGKLVVHQWHQFH'XULQJWKH
WKH DYRLGDQFH RI DUUHVW RU SURVHFXWLRQ IDFWRU FRQWDLQV QR     VHQWHQFLQJSKDVHRIWKHWULDOERWKWKH6WDWHDQGWKHGHIHQVH
SHMRUDWLYHODQJXDJHGHVFULELQJWKHFULPHDVDZKROHLVQRW           ZHUHRIIHUHGWKHRSSRUWXQLW\WRSUHVHQWSURRIRIDJJUDYDWLQJ
SKUDVHGLQWHUPVUHTXLULQJD\HVRUQRDQVZHUIRFXVHVWKH            DQG PLWLJDWLQJ FLUFXPVWDQFHV XQGHU WKHQ 7HQQHVVHH &RGH
MXU\jV DWWHQWLRQ RQ VSHFLILF FLUFXPVWDQFHV UDWKHU WKDQ WKH     $QQRWDWHG   UHSHDOHG   7KH 6WDWH
FULPH DV D ZKROH DQG LPSDUWV D FRPPRQVHQVH PHDQLQJ          UHVWHGRQWKHHYLGHQFHLWKDGSUHVHQWHGGXULQJWKHJXLOWSKDVH
FDSDEOHRIXQGHUVWDQGLQJE\DMXU\                                   UHOHYDQW WR WKH DJJUDYDWLQJ FLUFXPVWDQFHV  7KH GHIHQVH
                                                                      QHLWKHULQYHVWLJDWHGQRULQWURGXFHGDQ\HYLGHQFHRIPLWLJDWLQJ
  :H DJUHH ZLWK WKH GLVWULFW FRXUW DQG ILQG WKDW      IDFWRUVEDVLQJLWVDUJXPHQWRQDWKHRU\RIUHVLGXDOGRXEWE\
L FRQWDLQV D mFRPPRQVHQVH FRUH RI PHDQLQJ        DSSHDOLQJ WR DQ\ OLQJHULQJ GRXEW WKH MXU\ PLJKW KDYH KDG
FULPLQDO MXULHV VKRXOG EH FDSDEOH RI XQGHUVWDQGLQJl            UHJDUGLQJWKHFRQYLFWLRQLQDQDWWHPSWWRGLVVXDGHWKHMXU\
7XLODHSD86DW7KHVWDWXWHGHILQLWLRQGRHVQRW           IURPLPSRVLQJWKHGHDWKSHQDOW\7KHMXU\VHQWHQFHG&DUWHU
FRQWDLQmSHMRUDWLYHDGMHFWLYHVWKDWGHVFULEHDFULPHDVD       WRGHDWKSXUVXDQWWR7HQQHVVHH&RGHILQGLQJQR
ZKROHl RU ODQJXDJH ZKLFK LQYLWHV WKH MXU\ WR PDNH DQ         PLWLJDWLQJHYLGHQFHDQGWZRVWDWXWRU\DJJUDYDWLQJIDFWRUV
                                                                      WKDWWKHPXUGHUZDVFRPPLWWHGIRUWKHSXUSRVHRIDYRLGLQJ
     &DUWHUY%HOOHWDO                           1R       1R                            &DUWHUY%HOOHWDO     

LQWHUIHULQJZLWKRUSUHYHQWLQJDODZIXODUUHVWRUSURVHFXWLRQ             7KHUHLVQRWKLQJLQWKRVHIHZZRUGVVWDQGLQJDORQHWKDW
RI WKH GHIHQGDQW RU DQRWKHU DQG  WKDW WKH PXUGHU ZDV          LPSOLHV DQ\ LQKHUHQW UHVWUDLQW RQ WKH DUELWUDU\ DQG
FRPPLWWHGZKLOHWKHGHIHQGDQWZDVHQJDJHGLQFRPPLWWLQJ                    FDSULFLRXVLQIOLFWLRQRIWKHGHDWKVHQWHQFH$SHUVRQRI
ODUFHQ\ DQG NLGQDSSLQJ  6HH 7HQQ &RGH $QQ                RUGLQDU\VHQVLELOLW\FRXOGIDLUO\FKDUDFWHUL]HDOPRVWHYHU\
L    7KH MXGJPHQW ZDV DIILUPHG E\ WKH          PXUGHUDVmRXWUDJHRXVO\RUZDQWRQO\YLOHKRUULEOHDQG
7HQQHVVHH 6XSUHPH &RXUW DQG WKH 8QLWHG 6WDWHV 6XSUHPH               LQKXPDQl6XFKDYLHZPD\LQIDFWKDYHEHHQRQHWR
&RXUWGHQLHGFHUWLRUDUL6HH6WDWHY&DUWHU6:G              ZKLFKPHPEHUVRIWKHMXU\LQWKLVFDVHVXEVFULEHG
7HQQFHUWGHQLHG86
                                                                         86DW
   &DUWHUILOHGDSURVHSHWLWLRQIRUVWDWHSRVWFRQYLFWLRQUHOLHI
UDLVLQJDFODLPRILQHIIHFWLYHDVVLVWDQFHRIFRXQVHODQGRWKHU              7KH 7HQQHVVHH 6XSUHPH &RXUW KDV FRQVWUXHG  
LVVXHV  7KH WULDO FRXUW GHQLHG UHOLHI DIWHU DQ HYLGHQWLDU\     L DV UHTXLULQJ RQO\ WKDW DYRLGDQFH RI DUUHVW RU
KHDULQJ DQG WKH 7HQQHVVHH &RXUW RI &ULPLQDO $SSHDOV               SURVHFXWLRQEHRQHRIWKHSXUSRVHVPRWLYDWLQJWKHPXUGHUQRW
DIILUPHG WKH GHQLDO RI UHOLHI LQ 6HSWHPEHU RI   7KH       WKH VROH RU SUHGRPLQDQW PRWLYH  6HH 6WDWH Y %XVK 
7HQQHVVHH6XSUHPH&RXUWGHQLHGSHUPLVVLRQWRDSSHDO                     6:G7HQQ6WDWHY6PLWK6:G
                                                                           7HQQ  &DUWHU  6:G DW 
  :KLOHWKHDSSHDOIURPGHQLDORIKLVILUVWSRVWFRQYLFWLRQ              7HQQHVVHH &RXUWV GR QRW DSSO\  L ZKHQ WKH
SHWLWLRQZDVSHQGLQJ&DUWHUILOHGDVHFRQGSRVWFRQYLFWLRQ              6WDWHjV WKHRU\ LV WKDW WKH YLFWLP ZDV NLOOHG WR SUHYHQW WKH
SHWLWLRQ7KHWULDOFRXUWGLVPLVVHGWKHSHWLWLRQDQGWKH&RXUW          GHIHQGDQWjV DUUHVW RU SURVHFXWLRQ IRU WKH NLOOLQJ LH WR
RI&ULPLQDO$SSHDOVDIILUPHGWKHGLVPLVVDORQWKHJURXQGV                SUHYHQWWKHYLFWLPIURPEHLQJDZLWQHVVWRKLVRZQPXUGHU
WKDWWKHWULDOFRXUWODFNHGMXULVGLFWLRQWRFRQVLGHUWKHVHFRQG          6HH %XVK  6:G DW   +RZHYHU WKH DJJUDYDWLQJ
SHWLWLRQ ZKLOH WKH ILUVW SHWLWLRQ UHPDLQHG RQ DSSHDO  6HH      FLUFXPVWDQFHDSSOLHVZKHQWKHHYLGHQFHVXSSRUWVDILQGLQJ
&DUWHUY6WDWH6:G7HQQ&ULP$SS                 WKDW WKH YLFWLP ZDV NLOOHG WR SUHYHQW WKH GHIHQGDQWjV
2Q sDQXDU\   WKH 7HQQHVVHH 6XSUHPH &RXUW GHQLHG           DSSUHKHQVLRQ DQG SURVHFXWLRQ IRU D VHSDUDWH RIIHQVH  ,G
SHUPLVVLRQWRDSSHDO                                                    7KHUHIRUH &DUWHUjV LQWHUSUHWDWLRQ RI WKH VWDWXWH LV QRW
                                                                         VXSSRUWHGE\ODZ
  ,Q0DUFKRI&DUWHUILOHGDSHWLWLRQIRUZULWRIKDEHDV
FRUSXV LQ WKH 8QLWHG 6WDWHV 'LVWULFW &RXUW IRU WKH 0LGGOH          &DUWHUHPSKDVL]HVWKDWWKH7HQQHVVHH6XSUHPH&RXUWDWRQH
'LVWULFW RI 7HQQHVVHH  7KH GLVWULFW FRXUW LVVXHG D VWD\ RI    SRLQWUHIHUUHGWR&DUWHUjVRYHUDOOFRQGXFWLQFOXGLQJGLVSRVLQJ
H[HFXWLRQDSSRLQWHGFRXQVHODQGVXDVSRQWHWUDQVIHUUHGWKH             RI/LOHjVERG\DVPRWLYDWHGE\DGHVLUHWRDYRLGGHWHFWLRQDQG
FDVH WR WKH 8QLWHG 6WDWHV 'LVWULFW &RXUW IRU WKH (DVWHUQ        DSSUHKHQVLRQIRUWKH/LOHPXUGHU+RZHYHU&DUWHULJQRUHV
'LVWULFW RI 7HQQHVVHH  2Q 1RYHPEHU   WKH GLVWULFW       WKHFRXUWjVILQGLQJWKDW&DUWHUZDVPRWLYDWHGWRNLOO/LOHLQ
FRXUWJUDQWHGVXPPDU\MXGJPHQWIRU5HVSRQGHQWVRQVHYHUDO                RUGHUWRDYRLGGHWHFWLRQDQGDUUHVWIRUVWHDOLQJ/LOHjVWUXFN
RI &DUWHUjV FODLPV LQFOXGLQJ KLV DOOHJDWLRQ WKDW D SUHWULDO     DQG IRU WKH SODQQHG UREEHU\ WR EH DFFRPSOLVKHG LQ /LOHjV
SKRWR LGHQWLILFDWLRQ SURFHGXUH ZDV XQFRQVWLWXWLRQDOO\                WUXFN6HH&DUWHU6:GDW
VXJJHVWLYH KLV FODLP UHJDUGLQJ IDLOXUH RI WKH WULDO FRXUW WR
UHLQVWUXFWWKHMXU\DWWKHVHQWHQFLQJKHDULQJDVWRWKHHOHPHQWV           &DUWHUjV DUJXPHQW WKRXJK FRXFKHG LQ WKH WHUPV RI
RIWKHXQGHUO\LQJIHORQLHVIRUIHORQ\PXUGHUDQGKLVFODLP              YDJXHQHVV GRHV QRW LPSOLFDWH WKH VHFRQG UHTXLUHPHQW ,Q
WKDWWKHmDYRLGDQFHRIDUUHVWlDJJUDYDWLQJFLUFXPVWDQFHZDV              UHMHFWLQJ &DUWHUjV YDJXHQHVV FKDOOHQJH WKH GLVWULFW FRXUW
XQFRQVWLWXWLRQDOO\YDJXH2Q'HFHPEHUWKHGLVWULFW            DSSOLHG WKH SULQFLSOHV HQXQFLDWHG LQ 7XLODHSD  86 DW
                                                                           %HFDXVH mWKH SURSHU GHJUHH RI GHILQLWLRQl RI
    &DUWHUY%HOOHWDO                        1R      1R                            &DUWHUY%HOOHWDO      

LUHSHDOHG7KHMXU\IRXQGWKLV         FRXUWJUDQWHGVXPPDU\MXGJPHQWLQIDYRURI5HVSRQGHQWVRQ
DJJUDYDWRUDSSOLFDEOHWRWKHIDFWVLQ&DUWHUjVVHQWHQFLQJ           &DUWHUjVFODLPVWKDWWKHSURVHFXWLRQIDLOHGWRGLVFORVHUHOHYDQW
                                                                     HYLGHQFH7KHGLVWULFWFRXUWUHIHUUHGWKHFDVHWRDPDJLVWUDWH
  2QGLUHFWDSSHDOWKH7HQQHVVHH6XSUHPH&RXUWIRXQGWKDW           MXGJHIRUDQHYLGHQWLDU\KHDULQJRQ&DUWHUjVUHPDLQLQJFODLPV
WKH HYLGHQFH VXSSRUWHG D ILQGLQJ WKDW &DUWHUjV PRWLYH LQ     RILQHIIHFWLYHDVVLVWDQFHRIFRXQVHO
NLOOLQJ/LOHDQGGLVSRVLQJRIKLVERG\ZDVWRmDYRLGGHWHFWLRQ
DQGDSSUHKHQVLRQIRUWKHPXUGHUDQGWKHSODQQHGUREEHU\WR              7KH SURRI SUHVHQWHG DW WKH HYLGHQWLDU\ KHDULQJ RQ
EHDFFRPSOLVKHGLQ/LOHjVWUXFNl&DUWHU6:GDW        LQHIIHFWLYHDVVLVWDQFHRIFRXQVHODWVHQWHQFLQJVKRZHGWKDWDW
)XUWKHUWKHVWDWHFRXUWIRXQGWKDWRQO\3ULFHjVWHVWLPRQ\WKDW      WKH WLPH RI DSSRLQWPHQW %HLHU KDG EHHQ OLFHQVHG DV DQ
KHDQG&DUWHUQHHGHGDFOHDQFDUWRXVHLQDSODQQHGUREEHU\         DWWRUQH\ IRU VHYHQ \HDUV DQG 6HDOV IRU WKUHH  %HLHU KDG
H[SODLQHG WKH FULPH  m1R RWKHU PRWLYH ZDV H[SUHVVHG RU     KDQGOHGEHWZHHQWKUHHDQGILYHSULRUFDSLWDOFDVHV6HDOVKDG
FRXOG EH LPSOLHG IURP WKH HYLGHQFH LQ WKLV FDVH IRU WKH    EHHQFRXQVHORIUHFRUGLQRQHVXFKFDVHDQGKDGDVVLVWHGKHU
DFWLYLWLHVRI3ULFHDQGGHIHQGDQWDWWKH,QWHUVWDWHUHVWVWRS     HPSOR\HU LQ DQRWKHU  1HLWKHU KDG SUHYLRXVO\ SUHSDUHG RU
RUIRUWKHPXUGHUDQGDWWHPSWWRGLVSRVHRIWKHERG\LQWKH          SUHVHQWHG D VHQWHQFLQJ SKDVH GHIHQVH XQGHU 7HQQHVVHHjV
ODNHl,GDW                                                  ELIXUFDWHGFDSLWDOWULDOVFKHPH
  8QGHUFRQWUROOLQJODZmWKHFKDQQHOLQJDQGOLPLWLQJRIWKH            $W WKH WLPH RI WKHLU DSSRLQWPHQW %HLHU ZDV D sXYHQLOH
VHQWHQFHUjV GLVFUHWLRQ LQ LPSRVLQJ WKH GHDWK SHQDOW\ LV D    &RXUW sXGJH IRU +DPEOHQ &RXQW\ DQG 6HDOV ZDV sXYHQLOH
IXQGDPHQWDO FRQVWLWXWLRQDO UHTXLUHPHQW IRU VXIILFLHQWO\          &RXUW 2IILFHU ZKHUH KHU GXWLHV LQFOXGHG SURVHFXWLRQ RI
PLQLPL]LQJ WKH ULVN RI ZKROO\ DUELWUDU\ DQG FDSULFLRXV        MXYHQLOHVFKDUJHGZLWKGHOLQTXHQF\IRUWKH6WDWH%HFDXVHRI
DFWLRQl0D\QDUGY&DUWZULJKW86           %HLHUjVVHQWHQFLQJRI&DUWHUjVFRXVLQDQGIRURWKHUUHDVRQV
6WDWXWRU\DJJUDYDWLQJFLUFXPVWDQFHVDUHFRQVWLWXWLRQDOVRORQJ       &DUWHUDQG%HLHUGLGQRWJHWDORQJ&RQVHTXHQWO\6HDOVZDV
DVWKH\PHHWWZRUHTXLUHPHQWVm)LUVWWKHFLUFXPVWDQFHPD\        WKHSULPDU\FRQWDFWZLWK&DUWHUZKLOH%HLHUSXUVXHGIDFWXDO
QRWDSSO\WRHYHU\GHIHQGDQWFRQYLFWHGRIDPXUGHULWPXVW          LQYHVWLJDWLRQ RI WKH RIIHQVH DQG &DUWHUjV DOLEL GHIHQVH  ,Q
DSSO\RQO\WRDVXEFODVVRIGHIHQGDQWVFRQYLFWHGRIPXUGHU          GLYLGLQJXSWULDOSUHSDUDWLRQWDVNV%HLHUSUHSDUHGDOLVWRI
6HFRQG WKH DJJUDYDWLQJ FLUFXPVWDQFH PD\ QRW EH                WZHQW\VHYHQGLIIHUHQWWDVNV WR EHSXUVXHG%HLHUWHVWLILHG
XQFRQVWLWXWLRQDOO\YDJXHl7XLODHSDY&DOLIRUQLD86         WKDW KH DQG 6HDOV PHW DQG ZHQW RYHU WKH OLVW SODFLQJ WKH
                                                   LQLWLDOVRIWKHUHVSRQVLEOHDWWRUQH\QH[WWRHDFKWDVN2IWKH
                                                                     WZHQW\VHYHQLWHPVRQWKHOLVWRQO\RQHOLVWHGDVmDJJUDYDWHG
   7KHVXEVWDQFHRI&DUWHUjVDUJXPHQWLVWKDWWKH7HQQHVVHH          FLUFXPVWDQFHVl ZDV UHODWHG WR WKH VHQWHQFLQJ SKDVH RI WKH
VWDWXWHFDQEHLQWHUSUHWHGDVDFDWFKDOOLQYLRODWLRQRIWKHILUVW   WULDO%HLHUWHVWLILHGWKDWWKLVWDVNZDVDVVLJQHGWRKLPDQG
UHTXLUHPHQW$QDJJUDYDWLQJFLUFXPVWDQFHLVFRQVWLWXWLRQDOO\        ZRXOGKDYHLQFOXGHGDQ\LQYHVWLJDWLRQRIERWKDJJUDYDWLQJ
LQYDOLG m>L@I WKH VHQWHQFHU IDLUO\ FRXOG FRQFOXGH WKDW DQ    FLUFXPVWDQFHVDQGPLWLJDWLQJFLUFXPVWDQFHV
DJJUDYDWLQJFLUFXPVWDQFHDSSOLHVWRHYHU\GHIHQGDQWHOLJLEOH
IRUWKHGHDWKSHQDOW\l$UDYH86DW                        %HLHU DOVR WHVWLILHG WKDW 6HDOV PLJKW KDYH GRQH VRPH
                                                                     VHQWHQFLQJ SKDVH LQYHVWLJDWLRQ RU UHVHDUFK  %HLHU WHVWLILHG
  ,Q *RGIUH\ WKH 6XSUHPH &RXUW KHOG WKDW *HRUJLDjV           WKDW KH UHYLHZHG WKH OLVW RI DJJUDYDWLQJ FLUFXPVWDQFHV DQG
mRXWUDJHRXVO\ RU ZDQWRQO\ YLOH KRUULEOH RU LQKXPDQl           VWDWXWRU\PLWLJDWLQJFLUFXPVWDQFHVVHWRXWLQWKHVWDWXWH6HH
DJJUDYDWLQJFLUFXPVWDQFHZDVXQFRQVWLWXWLRQDOEHFDXVH               7HQQ &RGH $QQ    %HLHU GLG QRW UHFDOO
                                                                     LQYHVWLJDWLQJDQ\QRQVWDWXWRU\PLWLJDWLQJFLUFXPVWDQFHVEXW
     &DUWHUY%HOOHWDO                           1R       1R                            &DUWHUY%HOOHWDO     

VXJJHVWHGWKDW6HDOVPLJKWKDYHGRQHVR6HDOVWHVWLILHGWKDW           ZLWQHVV  &DUWHU FODLPV WKDW LW VXIIHUV IURP WKH VDPH
VKHGLGQRW%HLHUDOVRWHVWLILHGWKDWKHGLVFXVVHGZLWK&DUWHU         XQFRQVWLWXWLRQDO YDJXHQHVV FRQGHPQHG LQ *RGIUH\ Y
ZKHWKHU KH ZDQWHG WR WHVWLI\ DW WKH VHQWHQFLQJ SKDVH            *HRUJLD  86   DQG WKHUHIRUH YLRODWHV WKH
$OWKRXJK%HLHUWHVWLILHGWKDWKHGLGPHHWZLWK&DUWHUjVPRWKHU           (LJKWK$PHQGPHQW7KHGLVWULFWFRXUWKHOGWKDW&DUWHUKDG
DQG RWKHU PHPEHUV RI &DUWHUjV IDPLO\ KH FRXOG QRW UHFDOO       IDLOHGWRSUHVHQWWKLVFODLPWRWKHVWDWHFRXUWVRQGLUHFWDSSHDO
ZKHWKHU SRWHQWLDO PLWLJDWLQJ HYLGHQFH ZDV GLVFXVVHG QRU           DQGWKHUHIRUHKHKDGGHIDXOWHGIHGHUDOUHYLHZRQLWVPHULWV
ZKLFKIDPLO\PHPEHUVZHUHSUHVHQW%HLHUjVWLPHUHFRUGVGLG             'HVSLWHWKHSURFHGXUDOEDUWKHGLVWULFWFRXUWGHWHUPLQHGWKDW
QRWVKHGDQ\OLJKWRQHLWKHUSRLQW%HLHUWHVWLILHGWKDWKHVSHQW       WKH FODLP ZDV PHULWOHVV ILQGLQJ WKDW WKH VWDWXWH LPSDUWV D
RIKLVSUHWULDOWLPHRQJXLOWSKDVHLVVXHV                       FRPPRQVHQVHPHDQLQJZKLFKDMXURUZRXOGXQGHUVWDQG
  6HDOV FRQILUPHG WKDW VKH ZDV WKH SULQFLSDO FRQWDFW ZLWK           :HGRQRWDJUHHZLWKWKHGLVWULFWFRXUWjVKROGLQJWKDW&DUWHU
&DUWHU DQG WKDW &DUWHU DQG %HLHU GLG QRW JHW DORQJ  6HDOV    KDVGHIDXOWHGIHGHUDOUHYLHZRIWKLVFODLP&DUWHUjVILUVWSRVW
WHVWLILHG WKDW VKH ZDV QRW DZDUH RI DQ\ LQYHVWLJDWLRQ RI        FRQYLFWLRQ SHWLWLRQ FRQWDLQHG D FKDOOHQJH WR WKH VWDWXWH DV
SRWHQWLDOVWDWXWRU\RUQRQVWDWXWRU\PLWLJDWLQJFLUFXPVWDQFHV            XQFRQVWLWXWLRQDO  +LV VHFRQG SRVWFRQYLFWLRQ SHWLWLRQ
E\FRXQVHO6HDOVUHFDOOHGPHHWLQJZLWK&DUWHUjVPRWKHUEXW             LQFOXGHG D FODLP WKDW WKH HQWLUH VWDWXWH IDLOHG WR JHQXLQHO\
FRXOGQRWUHFDOOWKHVXEVWDQFHRIKHUGLVFXVVLRQV6HDOVDOVR           QDUURZWKHFODVVRIGHDWKHOLJLEOHPXUGHUV(YHQLIZHDJUHHG
SRLQWHG RXW WKDW KHU WLPH UHFRUGV VKRZHG D VLQJOH PHHWLQJ       ZLWK WKH GLVWULFW FRXUW WKDW VXFK DOOHJDWLRQV ZHUH mEDOGl RU
ZLWKRQHRI&DUWHUjVVLVWHUVEXWFRXOGQRWUHFDOOZKRWKLVZDV           mJHQHUDOlZHILQGWKDWWKH\DUHVXEVWDQWLYHO\WKHVDPHFODLP
RU ZKDW ZDV GLVFXVVHG  6HDOV DOVR FRQILUPHG WKDW FRXQVHO       DV WKDW PDGH WR XV  :H GR QRW UHTXLUH ZRUGIRUZRUG
QHLWKHUREWDLQHGDUHOHDVHIURP&DUWHUWRYLHZKLVSHUVRQDORU           UHSOLFDWLRQRIWKHVWDWHFODLPLQWKHKDEHDVFRUSXVSHWLWLRQLQ
SULVRQUHFRUGVQRUVRXJKWDQ\DYDLODEOHUHFRUGVRI&DUWHURU             RUGHUWRDGGUHVVWKHPHULWVWKHUHLQRQO\WKDW WKHSHWLWLRQHU
KLVIDPLO\6HDOVWHVWLILHGWKDWRIKHUWLPHZDVVSHQWRQ           IDLUO\ SUHVHQW WKH VXEVWDQFH RI HDFK RI KLV IHGHUDO
JXLOWSKDVHLVVXHV                                                      FRQVWLWXWLRQDO FODLPV WR WKH VWDWH FRXUWV   6HH +DQQDK Y
                                                                         &RQOH\)GWK&LU/HYLQHY7RUYLN
  $W RQH SRLQW &DUWHUjV FRXQVHO ILOHG D QRWLFH RI LQVDQLW\      )GWK&LU$SHWLWLRQHU
IDLUO\
GHIHQVH ZLWK WKH FRXUW  %HLHU WHVWLILHG WKDW &DUWHU GLG QRW   SUHVHQWV
KLVFODLPWRWKHVWDWHFRXUWVE\FLWLQJDSURYLVLRQRI
DSSURYH RI WKH ILOLQJ RI QRWLFH RI DQ LQVDQLW\ GHIHQVH DQG    WKH &RQVWLWXWLRQ IHGHUDO GHFLVLRQV XVLQJ FRQVWLWXWLRQDO
WKHUHIRUHWKHGHIHQVHZDVQRWSXUVXHG&RXQVHODOVRILOHGD            DQDO\VLVRUVWDWHGHFLVLRQVHPSOR\LQJFRQVWLWXWLRQDODQDO\VLV
PRWLRQVHHNLQJDSSRLQWPHQWRIDSV\FKRORJLVWRUSV\FKLDWULVW             LQVLPLODUIDFWSDWWHUQV,GDWFLWLQJ)UDQNOLQY5RVH
WRDVVLVWLQWKHGHIHQVHDWERWKJXLOWDQGVHQWHQFLQJSKDVHV            )GWK&LU:HEHOLHYHWKDW&DUWHU
%HLHU DQG 6HDOV WHVWLILHG KRZHYHU WKDW WKLV PRWLRQ ZDV         KDV PHW WKHVH UHTXLUHPHQWV E\ DVVHUWLQJ LQ KLV VWDWH SRVW
SUREDEO\QRWSXUVXHGEHIRUHWKHWULDOFRXUW7KHGHIHQVHZDV            FRQYLFWLRQSHWLWLRQVWKDWWKHVWDWXWHIDLOHGWRQDUURZWKHFODVV
DVVLVWHGE\DYROXQWHHUSV\FKRORJLVW'U&KDUOHV%HEEHULQ             RISHUVRQVHOLJLEOHIRUWKHGHDWKSHQDOW\LQYLRODWLRQRIKLV
MXU\ VHOHFWLRQ 'U %HEEHU ZDV QRW DVNHG WR H[DPLQH RU          (LJKWK$PHQGPHQWULJKWV:HWKHUHIRUHWXUQWRWKHPHULWVRI
HYDOXDWH &DUWHU DQG GLG QRW DVVLVW LQ SUHSDUDWLRQ RU             KLVFODLP
SUHVHQWDWLRQRIDVHQWHQFLQJSKDVHGHIHQVH
                                                                           8QGHUDSSOLFDEOH7HQQHVVHHODZDJJUDYDWLQJFLUFXPVWDQFHV
  %HLHUWHVWLILHGWKDWWKHGHIHQVHVWUDWHJ\DWWKHJXLOWSKDVH           DUHSUHVHQWLIm>W@KHPXUGHUZDVFRPPLWWHGIRUWKHSXUSRVHRI
ZDV WR FUHDWH D UHDVRQDEOH GRXEW WKURXJK LPSHDFKPHQW RI          DYRLGLQJ LQWHUIHULQJ ZLWK RU SUHYHQWLQJ D ODZIXO DUUHVW RU
&DUWHUjV FRGHIHQGDQW 3ULFH  %HLHU DOVR WHVWLILHG WKDW WKH     SURVHFXWLRQRIWKHGHIHQGDQWRUDQRWKHUl7HQQ&RGH$QQ
    &DUWHUY%HOOHWDO                            1R       1R                           &DUWHUY%HOOHWDO     

QRUGLG0RUUHOORU6KHOODVNIRUKLVLQGHSHQGHQWUHFROOHFWLRQ             GHIHQVH VWUDWHJ\ ZDV WKH VDPH DW WKH VHQWHQFLQJ SKDVH WR
RIHYHQWV                                                                VKRZWKDW3ULFHjVWHVWLPRQ\ZDVQRWVXIILFLHQWO\UHOLDEOHWR
                                                                          HVWDEOLVKDQDJJUDYDWLQJFLUFXPVWDQFH%RWK%HLHUDQG6HDOV
   :HUHFRJQL]HWKDWmSKRWRLGHQWLILFDWLRQSURFHGXUHVUHTXLUH             WHVWLILHGWKDWWKHDOWHUQDWLYHSUHPHGLWDWHGDQGIHORQ\PXUGHU
FORVHVFUXWLQ\DQGPXVWEHFRQGXFWHGFDUHIXOO\WRHQVXUH            WKHRULHV VHW RXW LQ &RXQW , RI WKH LQGLFWPHQW SUHVHQWHG D
WKHUHOLDELOLW\RIH\HZLWQHVVLQFRXUWLGHQWLILFDWLRQl8QLWHG           SUREOHP WR WKH GHIHQVH LQ LQWHUSUHWLQJ WKH MXU\jV JHQHUDO
6WDWHV Y 7\OHU  )G   WK &LU   7KLV      YHUGLFWRIJXLOW\DWWKHJXLOWSKDVH7KH\DJUHHGWKDWWKHUHZDV
&RXUWKRZHYHUKDVXSKHOGDQXPEHURISKRWRLGHQWLILFDWLRQV              DWOHDVWDFKDQFHWKDWWKHMXU\KDGDOUHDG\IRXQGDWOHDVW
ZKHQWKH\FRQWDLQRWKHULQGLFDWRUVRIUHOLDELOLW\6HHHJ            RQH DJJUDYDWLQJ FLUFXPVWDQFH ZKHQ LW UHWXUQHG LWV JHQHUDO
8QLWHG 6WDWHV Y 0RQVRXU  )G  WK &LU            YHUGLFWDWWKHJXLOWSKDVH
SKRWRDUUD\SOXVSULRULQGHSHQGHQWGHVFULSWLRQRIVXVSHFW
8QLWHG 6WDWHV Y &DXVH\  )G  WK &LU               7KHRQO\HYLGHQFHRQWKHVWDQGDUGIRUUHDVRQDEO\HIIHFWLYH
VLQJOHSKRWRLGHQWLILFDWLRQSOXVSULRULQGHSHQGHQWGHVFULSWLRQ           FRXQVHO LQ 7HQQHVVHH LQ  ZKLFK ZDV SUHVHQWHG DW WKH
RI VXVSHFWjV FDU 6PLWK Y 3HULQL  )G  WK &LU      IHGHUDO HYLGHQWLDU\ KHDULQJ ZDV WKDW RI &DUWHUjV H[SHUW
SKRWRDUUD\LQSHUVRQVKRZXSSOXVSULRULQGHSHQGHQW             &KDUOHV :% )HOV D IRUPHU 7HQQHVVHH $VVLVWDQW 'LVWULFW
GHVFULSWLRQ8QLWHG6WDWHVY7\OHU)GWK&LU              $WWRUQH\*HQHUDODIRUPHU$VVLVWDQW86$WWRUQH\DQGDQ
WZRVHSDUDWHSKRWRDUUD\VSOXVGHWDLOHGGHVFULSWLRQ             H[SHULHQFHGGHIHQVHFRXQVHO+HKDGOHFWXUHGRQFULPLQDO
                                                                          GHIHQVH LQ RYHU D GR]HQ VWDWHV DW WKH )%, $FDGHP\ LQ
   :H ILQG WKDW VXIILFLHQW LQGLFLD RI UHOLDELOLW\ RI *DUEHUjV     4XDQWLFR 9LUJLQLD DQG DW WKH 1DWLRQDO &ULPLQDO 'HIHQVH
LGHQWLILFDWLRQ H[LVW LQ VSLWH RI WKH LPSURSHU SKRWR                &ROOHJH LQ 0DFRQ *HRUJLD VHUYHG RQ WKH %RDUG RI WKH
LGHQWLILFDWLRQ SURFHGXUH  *DUEHU WHVWLILHG WKDW KH YLHZHG         1DWLRQDO $VVRFLDWLRQ RI &ULPLQDO 'HIHQVH /DZ\HUV DQG
&DUWHUDQG3ULFHDWWKHUHVWVWRSIRUDVORQJDVDQKRXU+H             SUHSDUHGDQGWULHGFDSLWDOFDVHVDVERWKDVWDWHSURVHFXWRUDQG
VDZWKHPVWDQGLQJLQDZHOOOLJKWHGDUHDRQO\WKLUW\WRWKLUW\           D GHIHQVH DWWRUQH\  $OWKRXJK KH KDG QRW FRQGXFWHG D
ILYHIHHWIURPZKHUH*DUEHUZDVFOHDQLQJWKHOREE\*DUEHU               VHQWHQFLQJKHDULQJGHIHQVHKHKDGSUHSDUHGVHQWHQFLQJSKDVH
VWDWHGWKDWKHIRFXVHGRQ&DUWHUjVDQG3ULFHjVIDFHVZKLOHKH             FDVHVDVERWKDSURVHFXWRUDQGGHIHQVHFRXQVHO
ZDVZDWFKLQJWKHPEHFDXVHKHZDVFRQFHUQHGWKH\PLJKWEH
VXVSHFWV LQ WKH UHFHQW WKHIWV DW WKH UHVW VWRS  $OWKRXJK KH     7KHGLVWULFWFRXUWIRXQG)HOVWREHTXDOLILHGWRWHVWLI\DVDQ
FRXOGQRWSODFHWKHGDWHRIKLVVLJKWLQJ*DUEHUZDVFHUWDLQ              H[SHUW RQ WKH VWDQGDUG IRU UHDVRQDEO\ HIIHFWLYH FRXQVHO LQ
WKDW KH KDG VHHQ &DUWHU 3ULFH DQG /LOH WRJHWKHU DW WKH UHVW   LQYHVWLJDWLRQSUHSDUDWLRQDQGSUHVHQWDWLRQRIDGHIHQVHDWWKH
VWRS:HDJUHHWKDWWKLVLVDGLIILFXOWTXHVWLRQEXWILQGWKDW          VHQWHQFLQJSKDVHRID7HQQHVVHHFDSLWDOWULDO)HOVWHVWLILHG
WKHDERYHIDFWVGLFWDWHWKDW *DUEHUjVLQFRXUWLGHQWLILFDWLRQ            WKDWLWZDVFXVWRPDU\IRUGHIHQVHFRFRXQVHOWRGLYLGHSUHWULDO
ZDV UHOLDEOH  :H WKHUHIRUH DIILUP WKH GLVWULFW FRXUWjV           LQYHVWLJDWLRQLQWRJXLOWDQGVHQWHQFLQJSKDVHLVVXHVDQGIRU
GHWHUPLQDWLRQWKDWWKHXVHRIWKLVLGHQWLILFDWLRQGLGQRWYLRODWH         RQHDWWRUQH\WREHUHVSRQVLEOHIRUHDFK$FFRUGLQJWR)HOVLW
&DUWHUjVGXHSURFHVVULJKWV                                              ZDV DOVR FXVWRPDU\ WR REWDLQ WKH GHIHQGDQWjV HGXFDWLRQDO
                                                                          IDPLO\VRFLDOFRXUWPHGLFDOSULVRQDQGVLPLODUUHFRUGVDQG
                                9,,                                      WR LQWHUYLHZ WKH GHIHQGDQWjV IDPLO\ PHPEHUV WR VHDUFK IRU
                                                                          SRWHQWLDOVWDWXWRU\DQGQRQVWDWXWRU\PLWLJDWLQJFLUFXPVWDQFHV
  &DUWHU DVVHUWV WKDW WKH 7HQQHVVHH VWDWXWH GHILQLQJ                HYLGHQFH  )HOV WHVWLILHG WKDW WKH VHQWHQFLQJ SKDVH
DJJUDYDWLQJ FLUFXPVWDQFHV LV XQFRQVWLWXWLRQDOO\ YDJXH                 LQYHVWLJDWLRQ SHUIRUPHG E\ UHDVRQDEO\ HIIHFWLYH FRXQVHO
EHFDXVHLWFRXOGEHFRQVWUXHGWRLQFOXGHDOOPXUGHUVDVDOO
PXUGHUVLQYROYHWKHHOLPLQDWLRQRIWKHYLFWLPDVDSRWHQWLDO
     &DUWHUY%HOOHWDO                            1R       1R                             &DUWHUY%HOOHWDO     

UHTXLUHG DSSUR[LPDWHO\ WKH VDPH DPRXQW RI WLPH DV JXLOW           SURFHGXUHLVVRµLPSHUPLVVLEO\VXJJHVWLYHDVWRJLYHULVHWR
SKDVHLQYHVWLJDWLRQDQGSUHSDUDWLRQ                                      D YHU\ VXEVWDQWLDO OLNHOLKRRG RI LUUHSDUDEOH
                                                                          PLVLGHQWLILFDWLRQjl7KLJSHQY&RU\)GWK
   )HOVDOVRWHVWLILHGWKDWUHDVRQDEO\HIIHFWLYHFRXQVHOGLGQRW          &LUTXRWLQJ6LPPRQVY8QLWHG6WDWHV86
UHO\ VROHO\ RQ WKH GHIHQGDQW WR OHDG WKHP WR PLWLJDWLQJ             7KH SDUDPRXQW LVVXH LV ZKHWKHU WKH
FLUFXPVWDQFHVHYLGHQFHVLQFHWKHGHIHQGDQWPLJKWEHXQDEOH                VXJJHVWLYHQHVV VR XQGHUPLQHV WKH UHOLDELOLW\ RI WKH
WRUHFRJQL]HDQGLGHQWLI\VXFKHYLGHQFH)HOVFRQILUPHGWKDW             LGHQWLILFDWLRQ DV WR RIIHQG GXH SURFHVV 6HH )RVWHU Y
DFDSLWDOFDVHLQ7HQQHVVHHLVUHDOO\WZRVHSDUDWHWULDOVJXLOW          &DOLIRUQLD86:HORRNWRWKHUHOLDELOLW\RI
DQG VHQWHQFLQJ DQG WKDW WKH VHQWHQFLQJ SKDVH LV D XQLTXH        WKH LGHQWLILFDWLRQ LQ GHWHUPLQLQJ LWV DGPLVVLELOLW\ LI DQ
SURFHHGLQJDWZKLFKYHU\GLIIHUHQWUXOHVDSSO\)HOVWHVWLILHG           LGHQWLILFDWLRQ LV UHOLDEOH LW ZLOO EH DGPLVVLEOH HYHQ LI WKH
WKDW WULDO FRXQVHO FRXOG QRW PDNH UHDVRQDEOH VWUDWHJLF             FRQIURQWDWLRQSURFHGXUHZDVVXJJHVWLYH6HH0DQVRQ
GHFLVLRQVUHJDUGLQJSUHVHQWDWLRQRIDVHQWHQFLQJGHIHQVHXQWLO            86DW%LJJHUV86DW)ROORZLQJ%LJJHUVZH
D UHDVRQDEOH LQYHVWLJDWLRQ KDG EHHQ FRPSOHWHG  +H DOVR           FRQVLGHUWKHIROORZLQJIDFWRUVLQHYDOXDWLQJUHOLDELOLW\WKH
WHVWLILHG WKDW XQGHU WKH VSHFLILF IDFWV RI WKLV FDVH FRXQVHO   RSSRUWXQLW\RIWKHZLWQHVVWRYLHZWKHGHIHQGDQWDWWKHLQLWLDO
FRXOG QRW PDNH D UHDVRQDEOH VWUDWHJLF GHFLVLRQ WR IRUJR           REVHUYDWLRQ  WKH ZLWQHVVj GHJUHH RI DWWHQWLRQ  WKH
SUHVHQWDWLRQRIDYDLODEOHPLWLJDWLQJFLUFXPVWDQFHVHYLGHQFH               DFFXUDF\RIWKHZLWQHVVjSULRUGHVFULSWLRQRIWKHGHIHQGDQW
LQWKHIDFHRIDSUREDEOHPDQGDWRU\GHDWKVHQWHQFH%DVHGRQ             WKH OHYHO RI FHUWDLQW\ VKRZQ E\ WKH ZLWQHVV DW WKH SUHWULDO
DOOWKHVHIDFWRUV)HOVFRQFOXGHGWKDWWULDOFRXQVHOGLGQRWRIIHU        LGHQWLILFDWLRQDQGWKHOHQJWKRIWLPHEHWZHHQWKHLQLWLDO
HIIHFWLYH DVVLVWDQFH LQ WKH LQYHVWLJDWLRQ SUHSDUDWLRQ DQG         REVHUYDWLRQDQGWKHLGHQWLILFDWLRQ86DW7KH
SUHVHQWDWLRQRIDVHQWHQFLQJGHIHQVHLQWKLVFDVH                        GHJUHHRIUHOLDELOLW\RIWKHLGHQWLILFDWLRQDVLQGLFDWHGE\WKH
                                                                          DERYHVWDWHGIDFWRUVLVWREHFRQVLGHUHGLQOLJKWRIWKHGHJUHH
  'HIHQVH LQYHVWLJDWRU DQG SDUDOHJDO 'RQQD 7RWK WHVWLILHG           RIVXJJHVWLYHQHVVRIWKHLGHQWLILFDWLRQSURFHGXUHDQGRIWKH
WKDWDVSDUWRI&DUWHUjVKDEHDVFRUSXVFDVHVKHZDVDEOHWR             WRWDOLW\ RI WKH FLUFXPVWDQFHV LQ GHWHUPLQLQJ ZKHWKHU GXH
FRPSLOH D GHWDLOHG IDPLO\ KLVWRU\ WKURXJK LQWHUYLHZV ZLWK          SURFHVV UHTXLUHV VXSSUHVVLRQ RI WKH LGHQWLILFDWLRQ  6HH
&DUWHUjV IDPLO\ PHPEHUV LQ WKH 0RUULVWRZQ DUHD  7RWK             0DQVRQ86DW
WHVWLILHGWKDWVKHKDGEHHQDEOHWRDPDVVDVLJQLILFDQWYROXPH
RIIDPLO\VRFLDOPHGLFDOSV\FKRORJLFDOPLOLWDU\DQGOHJDO               :H ILQG WKDW WKH *DUEHU SKRWR LGHQWLILFDWLRQ ZDV
UHFRUGVUHJDUGLQJ&DUWHUWKURXJKWKHXVHRIDZULWWHQUHFRUGV             VXJJHVWLYH,QsXO\RI*DUEHUNQHZWKDWWKHRIILFHUV
UHOHDVH7KUHHPHPEHUVRI&DUWHUjVIDPLO\WHVWLILHG&DUWHUjV           ZHUHLQYHVWLJDWLQJDKRPLFLGHUHODWHGWRWKH,QWHUVWDWHUHVW
DXQW +D]HOsLQNV&DUWHUjVVHFRQGFRXVLQ7HUULsLQNVDQG              VWRS*DUEHUZDVVKRZQRQO\WKHSLFWXUHVRIWKHWZRVXVSHFWV
&DUWHUjV VLVWHU %HWW\ sHDQ +ROW  $OO WKUHH OLYHG LQ WKH       DQGWKHYLFWLPLQWKHSKRWRJUDSKLFHTXLYDOHQWRIWKHZLGHO\
0RUULVWRZQDUHDLQ1RYHPEHUEXWQRQHZHUHFRQWDFWHG                  FRQGHPQHGVKRZXSLGHQWLILFDWLRQ6HH6LPPRQV86
E\WULDOFRXQVHO$OOWKUHHVWDWHGWKDWWKH\ZRXOGKDYHEHHQ             DWm7KLVGDQJHUZLOOEHLQFUHDVHGLIWKHSROLFHGLVSOD\WR
ZLOOLQJDQGDEOHWRWHVWLI\RQ&DUWHUjVEHKDOILIDVNHGWRGRVR         WKH ZLWQHVV RQO\ WKH SLFWXUH RI D VLQJOH LQGLYLGXDO ZKR
                                                                          JHQHUDOO\UHVHPEOHVWKHSHUVRQKHVDZRULIWKH\VKRZKLP
  $IWHU DOORZLQJ WKH SDUWLHV DQ RSSRUWXQLW\ WR VXEPLW              WKHSLFWXUHVRIVHYHUDOSHUVRQVDPRQJZKLFKWKHSKRWRJUDSK
SURSRVHG )LQGLQJV RI )DFW DQG &RQFOXVLRQV RI /DZ WKH             RI D VLQJOH VXFK LQGLYLGXDO UHFXUV RU LV LQ VRPH ZD\
PDJLVWUDWHMXGJHLVVXHGDUHSRUWDQGUHFRPPHQGDWLRQILQGLQJ               HPSKDVL]HGl 6WRYDOO Y 'HQQR  86  
WKDWWULDOFRXQVHOKDGQRWEHHQGHILFLHQWLQIDLOLQJWRFRQGXFW           *DUEHUZDVQRWDVNHGWRGHVFULEHDQ\VXVSLFLRXVSHUVRQVDW
DQ LQYHVWLJDWLRQ LQWR SRWHQWLDO PLWLJDWLQJ FLUFXPVWDQFHV             WKHUHVWVWRSLQ)HEUXDU\EHIRUHEHLQJVKRZQWKHSKRWRV
       &DUWHUY%HOOHWDO                           1R        1R                            &DUWHUY%HOOHWDO      

WKDW WKH RIILFHUV ZHUH LQYHVWLJDWLQJ D KRPLFLGH  *DUEHU            HYLGHQFH7KHPDJLVWUDWHMXGJHIRXQGWKDWVLQFHWKH6WDWH
LQGLFDWHGWKDWKHKDGVHHQWKHWKUHHLQGLYLGXDOVWRJHWKHUDWWKH             FRXOGUHEXWDQ\PLWLJDWLQJFLUFXPVWDQFHVHYLGHQFHZLWKSURRI
UHVWVWRSEXWFRXOGQRWVD\ZKLFKQLJKWQRUFRXOGKHLGHQWLI\               RI&DUWHUjVDOOHJHGEDGFKDUDFWHUSULRUEDGDFWVDQGFULPLQDO
WKH YHKLFOHV VKRZQ LQ WKH SKRWRV  2Q FURVVH[DPLQDWLRQ             FRQYLFWLRQV WKHUH ZDV QR SUHMXGLFH IURP DQ\ LQHIIHFWLYH
0RUUHOODGPLWWHGWKDWKHGLGQRWDVN*DUEHUWRLQGHSHQGHQWO\                 DVVLVWDQFHRIFRXQVHODWVHQWHQFLQJ&DUWHUILOHGREMHFWLRQVWR
GHVFULEHWKHLQGLYLGXDOVSULRUWRVKRZLQJKLPWKHVXVSHFWVj                  WKH PDJLVWUDWH MXGJHjV UHSRUW DQG UHFRPPHQGDWLRQ DQG
SKRWRVDQGWKDW*DUEHUFRXOGQRWGHVFULEHWKHFORWKLQJZRUQ                  VXEPLWWHGDEULHILQVXSSRUWRIWKRVHREMHFWLRQV
E\WKHWKUHHSHUVRQVVKRZQLQWKHP
                                                                                ,Q sDQXDU\  &DUWHU ILOHG D WKLUG SRVWFRQYLFWLRQ
   *DUEHUWHVWLILHGDWWKHVXSSUHVVLRQKHDULQJWKDWKHZRUNHG                SHWLWLRQIRUUHOLHIIURPMXGJPHQWLQWKHVWDWHFRXUWV2Q$SULO
DW WKH UHVW VWRS LQ )HEUXDU\ RI  DV D FDUHWDNHU DQG             WKH IHGHUDO PDJLVWUDWH MXGJH ILOHG D UHSRUW DQG
PDLQWHQDQFHPDQ*DUEHUZDVXQDEOHWRUHFDOOKRZORQJKH                    UHFRPPHQGDWLRQFRQFOXGLQJWKDWWKHFODLPVRILQHIIHFWLYHQHVV
KDGREVHUYHGWKHWZRPHQKHLGHQWLILHGDV3ULFHDQG&DUWHU                   RIFRXQVHOVKRXOGEHGLVPLVVHG%HFDXVH&DUWHUjVWKLUGSRVW
DQGZKHQSUHVVHGE\WKHFRXUWJXHVVHGWKDWWKH\ZHUHDWWKH                FRQYLFWLRQSHWLWLRQLQVWDWHFRXUWZDVVWLOOSHQGLQJWKHGLVWULFW
UHVWVWRSIRUDWOHDVWDQKRXU*DUEHUFRXOGQRWUHFDOOZKDWWKH            FRXUWGLVPLVVHGWKHIHGHUDOKDEHDVFDVHIRUIDLOXUHWRH[KDXVW
PHQZHUHZHDULQJQRUFRXOGKHVSHFLI\ZKLFKRIWKHWZRJRW                  VWDWH UHPHGLHV  7KH 7HQQHVVHH 6XSUHPH &RXUW XOWLPDWHO\
LQWR WKH WUXFN ZLWK /LOH  2Q FURVVH[DPLQDWLRQ *DUEHU              DIILUPHGWKHGHQLDORIUHOLHIRQ&DUWHUjVWKLUGVWDWHSHWLWLRQ
UHLWHUDWHGWKDWKHFRXOGQRWEHPRUHVSHFLILFDERXWWKHGDWH                 6HH&DUWHUY6WDWH6:G7HQQ2Q0D\
ZKHQKHVDZWKHWKUHHPHQDWWKHUHVWVWRSRWKHUWKDQWKDWmLW               WKLV&RXUWILOHGDSHUFXULDPRSLQLRQYDFDWLQJWKH
ZDV\HWFRROZHDWKHUl$WWKHWLPH*DUEHUZDVLQVLGHWKHUHVW              GLVWULFWFRXUWjVRUGHUDQGUHPDQGHGWKHFDVHIRUGHWHUPLQDWLRQ
VWRS OREE\ DQG YLHZHG WKH PHQ WKURXJK LWV JODVV ZLQGRZV             RI&DUWHUjVFODLPVRQWKHPHULWV6HH&DUWHUY%HOO1R
ZKLOHFOHDQLQJWKHOREE\6KHOOFRQILUPHGWKDW*DUEHUZDV                   :/WK&LU0D\
QRWVKRZQDPXJERRNRUSKRWRVRIDQ\RQHRWKHUWKDQ3ULFH
&DUWHUDQG/LOH                                                                2Q sDQXDU\   WKH GLVWULFW FRXUW HQWHUHG DQ RUGHU
                                                                             DGRSWLQJ DQG DSSURYLQJ WKH PDJLVWUDWH MXGJHjV UHSRUW DQG
   7KH'XH3URFHVV&ODXVHSURKLELWVWKHXVHRILGHQWLILFDWLRQV               UHFRPPHQGDWLRQ VWDWLQJ DGGLWLRQDO ILQGLQJV DQG GHQ\LQJ
ZKLFK XQGHU WKH WRWDOLW\ RI WKH FLUFXPVWDQFHV DUH                     &DUWHUjVFODLPVUHJDUGLQJLQHIIHFWLYHQHVVRIFRXQVHO,QLWV
LPSHUPLVVLEO\VXJJHVWLYHDQGSUHVHQWDQXQDFFHSWDEOHULVNRI                 0HPRUDQGXP DFFRPSDQ\LQJ WKH RUGHU WKH GLVWULFW FRXUW
LUUHSDUDEOHPLVLGHQWLILFDWLRQ6HH0DQVRQY%UDWKZDLWH                IRXQGWKDWWULDOFRXQVHOjVSHUIRUPDQFHZDVGHILFLHQWLQWKHLU
861HLOY%LJJHUV86m$                    IDLOXUH WR LQYHVWLJDWH GLVFRYHU DQG SUHVHQW PLWLJDWLQJ
FRQYLFWLRQ EDVHG RQ LGHQWLILFDWLRQ WHVWLPRQ\ IROORZLQJ                  HYLGHQFH DW WKH VHQWHQFLQJ KHDULQJ  +RZHYHU WKH GLVWULFW
SUHWULDOLGHQWLILFDWLRQYLRODWHVWKHGHIHQGDQWjVFRQVWLWXWLRQDO              FRXUWZHQWRQWRILQGWKDWKDGVXFKHYLGHQFHEHHQDGPLWWHG
ULJKW WR GXH SURFHVV ZKHQHYHU WKH SUHWULDO LGHQWLILFDWLRQ             LW ZRXOG KDYH RSHQHG WKH GRRU WR XQOLPLWHG EDG FKDUDFWHU
                                                                             HYLGHQFHDQGWKHUHIRUHZRXOGQRWKDYHPDGHDGLIIHUHQFHLQ
                                                                             WKHRXWFRPHRIWKHVHQWHQFLQJKHDULQJ7KHGLVWULFWFRXUWDOVR
                                                                            JUDQWHG D FHUWLILFDWH RI SUREDEOH FDXVH  2Q )HEUXDU\ 
      5HVSRQGHQWV DVVHUW WKDW *DUEHU WHVWLILHG WKDW ZKHQ KH ILUVW VSRNH      &DUWHUILOHGWKLVWLPHO\DSSHDO
ZLWK WKH LQYHVWLJDWRUV DQG ORRNHG DW WKH SKRWRJUDSKV KH GLG QRW NQRZ WKDW
WKH\ ZHUH LQYHVWLJDWLQJ D PXUGHU EXW RQO\ WKDW WKH\ ZHUH FKHFNLQJ mDERXW
VRPHWKLQJ WKDW KDSSHQHG DW WKH UHVW DUHDl +RZHYHU 0RUUHOO WHVWLILHG WKDW
KH WROG *DUEHU KH ZDV LQYHVWLJDWLQJ D KRPLFLGH EHIRUH KH VKRZHG *DUEHU
WKH SKRWRV
    &DUWHUY%HOOHWDO                           1R       1R                            &DUWHUY%HOOHWDO    

                                 ,,                                     ZH ILQG WKDW WKH GLVWULFW FRXUW SURSHUO\ JUDQWHG VXPPDU\
                                                                         MXGJPHQWRQWKLVFODLP
   :H UHYLHZ GH QRYR WKH GLVWULFW FRXUW
V GLVSRVLWLRQ RI D
SHWLWLRQIRUZULWRIKDEHDVFRUSXVEXWZHUHYLHZWKHGLVWULFW                                           9,
FRXUW
VIDFWXDOILQGLQJVRQO\IRUFOHDUHUURU6HH0F4XHHQY
6FURJJ\)GWK&LU,QWKHFRQWH[W                 &DUWHUDUJXHVWKDWWKH*DUEHUSKRWRLGHQWLILFDWLRQSURFHGXUH
RI KDEHDV FRUSXV SHWLWLRQV ZH PXVW GHIHU WR VWDWH FRXUW        ZDV VR LPSHUPLVVLEO\ VXJJHVWLYH WKDW *DUEHUjV LQFRXUW
IDFWXDOILQGLQJVDFFRUGLQJWKHPDSUHVXPSWLRQRIFRUUHFWQHVV            LGHQWLILFDWLRQ VKRXOG KDYH EHHQ VXSSUHVVHG  7KH 6WDWH
WKDWWKHSHWLWLRQHUPD\UHEXWRQO\ZLWKFOHDUDQGFRQYLQFLQJ             FRQWHQGV WKDW LQ OLJKW RI WKH WRWDOLW\ RI WKH FLUFXPVWDQFHV
HYLGHQFH6HHLG+RZHYHUWKDWSUHVXPSWLRQRQO\DSSOLHV              VXSSRUWLQJWKHUHOLDELOLW\RI*DUEHUjVLGHQWLILFDWLRQ&DUWHUjV
WREDVLFSULPDU\IDFWVDQGQRWWRPL[HGTXHVWLRQVRIODZDQG           FRQVWLWXWLRQDOULJKWVZHUHQRWLPSLQJHG2QGLUHFWDSSHDOWKH
IDFW,G  :H UHYLHZ D PL[HG TXHVWLRQ RI ODZ DQG IDFWGH      7HQQHVVHH 6XSUHPH &RXUW FRQFOXGHG WKDW WKH SURFHGXUH
QRYR6HH5LFNPDQY%HOO)GWK&LU                VDWLVILHGWKHGXHSURFHVVDQDO\VLVRI1HLOY%LJJHUV86
                                                                   6HH&DUWHU6:GDW7KHFRXUW
                                                                         IRXQG WKDW HYHQ DVVXPLQJ WKDW WKH LGHQWLILFDWLRQ SURFHGXUH
   $VDIHGHUDOFRXUWUHYLHZLQJDVWDWHFULPLQDOMXGJPHQWZH            XVHG E\ 7HQQHVVHH SROLFH RIILFHUV ZDV VXJJHVWLYH mWKH
GRQRWFRQVLGHUDVWDWHFRXUWFRQFOXVLRQWKDWFRXQVHOUHQGHUHG           SURFHGXUH GLG QRW JLYH ULVH WR D VXEVWDQWLDO OLNHOLKRRG RI
HIIHFWLYHDVVLVWDQFHWREHDILQGLQJRIIDFWELQGLQJRQXV6HH          LUUHSDUDEOHPLVLGHQWLILFDWLRQDQGWKDWXQGHUWKHWRWDOLW\RIWKH
6WULFNODQG Y :DVKLQJWRQ  86                  FLUFXPVWDQFHV WKH LQFRXUW LGHQWLILFDWLRQ ZDV UHOLDEOH DQG
m,QHIIHFWLYHQHVV LV QRW D TXHVWLRQ RI µEDVLF SULPDU\ RU        LQGHSHQGHQW RI DQ\ SUHYLRXV VXVSHFW LGHQWLILFDWLRQl  
KLVWRULFDOIDF>W@jl,GFLWDWLRQVRPLWWHG:HUHFRJQL]HWKDW       6:GDW7KHGLVWULFWFRXUWDOVRUHMHFWHG&DUWHUjVFODLP
WKH6XSUHPH&RXUWKDVIRXQGWKDWmERWKWKHSHUIRUPDQFHDQG               $FFHSWLQJWKH6XSUHPH&RXUWRI7HQQHVVHHjVIDFWXDOILQGLQJV
SUHMXGLFHFRPSRQHQWVRIWKHLQHIIHFWLYHQHVVLQTXLU\DUHPL[HG            WKHGLVWULFWFRXUWKHOGWKDWWKHSKRWRLGHQWLILFDWLRQSURFHGXUH
TXHVWLRQV RI ODZ DQG IDFWl  ,G  $ FODLP RI LQHIIHFWLYH      XVHGZLWK*DUEHUGLGQRWXQGHUPLQHWKHLQGHSHQGHQFHDQG
DVVLVWDQFHRIFRXQVHOSUHVHQWVDPL[HGTXHVWLRQRIODZDQG               UHOLDELOLW\RIKLVVXEVHTXHQWLQFRXUWLGHQWLILFDWLRQRI&DUWHU
IDFW WKHUHIRUH ERWK WKH VWDWH FRXUW DQG GLVWULFW FRXUW          DQGWKHUHIRUHGLGQRWHQFURDFKRQ&DUWHUjVGXHSURFHVVULJKWV
GHWHUPLQDWLRQVDUHVXEMHFWWRGHQRYRUHYLHZE\WKLVFRXUW
6HH5LFNPDQ)GDW6LPVY/LYHVD\)G                   ,QWKLVFDVHDKHDULQJRQ&DUWHUjVPRWLRQWRVXSSUHVVWKH
WK&LU$OOHJDWLRQVRIYLRODWLRQVRI%UDG\           *DUEHULGHQWLILFDWLRQZDVKHOGRQ1RYHPEHU$WWKH
Y0DU\ODQG86SUHVHQWPL[HGTXHVWLRQVRI              KHDULQJ 7HQQHVVHH %XUHDX RI ,QYHVWLJDWLRQ $JHQW 5LFN
ODZDQGIDFWZKLFKWKLV&RXUWUHYLHZVGHQRYR6HH1RUULVY            0RUUHOO7RP6KHOORIWKH'LVWULFW$WWRUQH\*HQHUDOjV2IILFH
6FKRWWHQ)GWK&LU8QLWHG6WDWHVY            DQG*DUEHUWHVWLILHG0RUUHOOVWDWHGWKDWKHDQG6KHOOILUVW
3KLOOLS)GWK&LU                           LQWHUYLHZHG*DUEHUVRPHILYHPRQWKVDIWHU/LOHjVDEGXFWLRQ
                                                                         DQG PXUGHU  $W WKDW LQLWLDO LQWHUYLHZ 0RUUHOO DQG 6KHOO
   :H DSSO\ WKHVH VWDQGDUGV LQ OLJKW RI WKH IDFW WKDW &DUWHU   VKRZHG*DUEHUWHQSKRWRJUDSKVRI3ULFH&DUWHU/LOH&DUWHUjV
ILOHGKLVSHWLWLRQIRUKDEHDVUHYLHZSULRUWRWKHHQDFWPHQWRI           &KHYUROHW&KHYHWWHDQG/LOHjV*0&SLFNXS*DUEHUZDVWROG
WKH$QWLWHUURULVPDQG(IIHFWLYH'HDWK3HQDOW\$FW3XE/1R
6WDWm$('3$l6HH/LQGKY
0XUSK\86:KLOHZHVWLOOGHIHUWRWKH
VWDWHFRXUWVjIDFWXDOGHWHUPLQDWLRQVZHDUHSHUPLWWHGJUHDWHU
    &DUWHUY%HOOHWDO                         1R       1R                           &DUWHUY%HOOHWDO    

  7KH GLVWULFW FRXUW DJUHHG ZLWK WKH 7HQQHVVHH 6XSUHPH          ODWLWXGH LQ H[DPLQLQJ WKH SURFHHGLQJV WKDQ LV SHUPLVVLEOH
&RXUW QRWLQJ WKDW WKH UHFRUG FRQWDLQHG VXIILFLHQW SURRI WR    XQGHU$('3$JRYHUQHGFDVHV6HH:LOOLDPVY7D\ORU
HVWDEOLVKWKDW&DUWHUZDVJXLOW\RIODUFHQ\DQGNLGQDSSLQJEXW        6&WDSSO\LQJWKHVWULFWHU$('3$VWDQGDUGWR
QRW RI UREEHU\ VLQFH WKHUH ZDV QR HYLGHQFH WR VKRZ WKDW     SHWLWLRQVILOHGDIWHU$SULO
&DUWHUKDGUREEHG/LOHSULRUWRNLOOLQJKLP7KHGLVWULFWFRXUW
FRQFOXGHGWKDWDQ\HUURUZKLFKGLGRFFXUZDVKDUPOHVVDQG                                             ,,,
KDGQRVXEVWDQWLDORULQMXULRXVLPSDFWXSRQWKHMXU\jVYHUGLFW
                                                                         7RHVWDEOLVKDYLRODWLRQRIWKH6L[WK$PHQGPHQWULJKWWR
   7KH 6XSUHPH &RXUW KDV LQGLFDWHG WKDW m>W@R UHQGHU D         HIIHFWLYHDVVLVWDQFHRIFRXQVHODGHIHQGDQWPXVWGHPRQVWUDWH
GHIHQGDQWHOLJLEOHIRUWKHGHDWKSHQDOW\WKHWULHURIIDFW       WKDWFRXQVHOjVUHSUHVHQWDWLRQIHOOEHORZDQREMHFWLYHVWDQGDUG
PXVW FRQYLFW WKH GHIHQGDQW RI PXUGHU DQG ILQG RQH              RIUHDVRQDEOHQHVVDQGWKDWWKHGHIHQGDQWZDVSUHMXGLFHGE\
µDJJUDYDWLQJ FLUFXPVWDQFHj RU LWV HTXLYDOHQW DW HLWKHU WKH    WKH LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO  6HH 6WULFNODQG Y
JXLOWRUSHQDOW\SKDVHl7XLODHSDY&DOLIRUQLD86        :DVKLQJWRQ  86     5HSUHVHQWDWLRQ LV
VHH/RZHQILHOGY3KHOSV86            GHILFLHQWZKHQmFRXQVHOPDGHHUURUVVRVHULRXVWKDWFRXQVHO
   0RUHRYHU WKH HOHPHQWV RI WKH DJJUDYDWLQJ          ZDVQRWIXQFWLRQLQJDVWKHµFRXQVHOjJXDUDQWHHGWKHGHIHQGDQW
FLUFXPVWDQFHmPD\EHFRQWDLQHGLQWKHGHILQLWLRQRIWKHFULPH          E\WKH6L[WK$PHQGPHQWl86DW,QFRQVLGHULQJ
RULQDVHSDUDWHVHQWHQFLQJIDFWRURUERWKl7XLODHSD          WKHVHFRQGmSUHMXGLFHlIDFWRUWKH6WULFNODQG&RXUWQRWHGWKDW
86DWVHH/RZHQILHOG86DW7KXVLIWKH         HYHQSURIHVVLRQDOO\XQUHDVRQDEOHHUURUVmGRQRWZDUUDQW
MXU\ LV LQVWUXFWHG RQ WKH VWDWXWRU\ HOHPHQWV RI XQGHUO\LQJ     VHWWLQJ DVLGH WKH MXGJPHQW RI D FULPLQDO SURFHHGLQJ LI WKH
FULPHVSHUWDLQLQJWRDJJUDYDWLQJFLUFXPVWDQFHVWKHUHLVQR            HUURU>V@ KDG QR HIIHFW RQ WKH MXGJPHQWl  ,G DW 
FRQVWLWXWLRQDOGLIIHUHQFHZKHWKHUWKHLQVWUXFWLRQVDUHJLYHQDW        0RUHRYHU m>W@KH GHIHQGDQW PXVW VKRZ WKDW WKHUH LV D
WKHJXLOWSKDVHRUWKHVHQWHQFLQJSKDVH:HDUHDZDUHRIQR           UHDVRQDEOHSUREDELOLW\WKDWEXWIRUFRXQVHOjVXQSURIHVVLRQDO
DXWKRULW\VWDWLQJWKDWWKH(LJKWK$PHQGPHQWUHTXLUHVWKHWULDO         HUURUVWKHUHVXOWRIWKHSURFHHGLQJZRXOGKDYHEHHQGLIIHUHQW
FRXUWWRUHVWDWHWKHHOHPHQWVRIXQGHUO\LQJIHORQLHVDGYDQFHG          $ UHDVRQDEOH SUREDELOLW\ LV D SUREDELOLW\ VXIILFLHQW WR
DVDJJUDYDWLQJFLUFXPVWDQFHVDWWKHVHQWHQFLQJSKDVHZKHUH             XQGHUPLQHFRQILGHQFHLQWKHRXWFRPHl,GDW:H
WKHVDPHMXU\UHPDLQVLPSDQHOHGDQGWKHVHQWHQFLQJSKDVHVR            QRWH WKDW WKH 6XSUHPH &RXUW KDV GHWHUPLQHG WKDW LWV ODWHU
FORVHO\IROORZVWKHJXLOWSKDVHRIWKHWULDO                          GHFLVLRQ LQ /RFNKDUW Y )UHWZHOO  86  
                                                                       mGR>HV@ QRW MXVWLI\ D GHSDUWXUH IURP D VWUDLJKWIRUZDUG
   8SRQFORVHUHYLHZ&DUWHUjVDUJXPHQWZRXOGFRQVWLWXWHD             DSSOLFDWLRQ RI 6WULFNODQG ZKHQ FRXQVHOjV LQHIIHFWLYHQHVV
QHZ UXOH RI (LJKWK $PHQGPHQW ODZ  $ QHZ UXOH RI             GHSULYHVWKHGHIHQGDQWRIDVXEVWDQWLYHRUSURFHGXUDOULJKWWR
FRQVWLWXWLRQDOODZVKRXOGQRWEHDSSOLHGRQFROODWHUDOUHYLHZ          ZKLFKWKHODZHQWLWOHVKLPl:LOOLDPV6&WDW
LQDIHGHUDOKDEHDVFRUSXVFDVHXQOHVVWRGRVRZRXOGVDWLVI\          7KLV&RXUWKDVUHJXODUO\DSSOLHGWKH6WULFNODQGVWDQGDUGVLQ
WKHQDUURZH[FHSWLRQVRIGHFULPLQDOL]LQJDFODVVRIFRQGXFW            KDEHDVFRUSXVFDVHV6HHHJ5LFNPDQ)GDW
RU SURKLELW LQIOLFWLRQ RI FDSLWDO SXQLVKPHQW RQ D SDUWLFXODU   *URVHFORVHY%HOO)GWK&LU
FODVV RI SHUVRQV RU GHYLVLQJ D QHZ UXOH ZKLFK  LV D
mZDWHUVKHG UXOH RI FULPLQDO SURFHGXUH LPSOLFDWLQJ WKH              &DUWHUDUJXHVWKDWKLVWULDOFRXQVHOZHUHLQHIIHFWLYHLQWZR
IXQGDPHQWDO IDLUQHVV DQG DFFXUDF\ RI WKH FULPLQDO                ZD\VE\IDLOLQJWRLQYHVWLJDWHKLVEDFNJURXQGIRUPLWLJDWLQJ
SURFHHGLQJl  6DIIOH Y 3DUNV  86         HYLGHQFH DQG E\ FRQVHTXHQWO\ IDLOLQJ WR LQWURGXFH DW WKH
1RQHRIWKHVHH[FHSWLRQVDSSO\KHUH$FFRUGLQJO\            VHQWHQFLQJ KHDULQJ WKH PLWLJDWLQJ HYLGHQFH ZKLFK SURSHU
                                                                       LQYHVWLJDWLRQZRXOGKDYHGLVFRYHUHG&DUWHUPDLQWDLQVWKDW
    &DUWHUY%HOOHWDO                       1R      1R                            &DUWHUY%HOOHWDO     

KLVFRXQVHOjVIDLOXUHWRGLVFRYHUDQGSUHVHQWVXFKPLWLJDWLQJ                                        9
HYLGHQFH DW VHQWHQFLQJ ZDV XQUHDVRQDEOH JLYHQ WKDW WKH
SUHVHQWDWLRQRIPLWLJDWLQJIDFWRUVZRXOGKDYHKXPDQL]HGKLP            &DUWHUDUJXHVWKDWWKHWULDOFRXUWIDLOHGWRUHLQVWUXFWWKHMXU\
EHIRUHWKHMXU\VXFKWKDWDWOHDVWRQHMXURUFRXOGKDYHIRXQG       DW WKH VHQWHQFLQJ SKDVH DV WR WKH VWDWXWRU\ HOHPHQWV RI WKH
KHGLGQRWGHVHUYHWKHGHDWKSHQDOW\                             IHORQ\ RIIHQVHV UHOLHG XSRQ WR HVWDEOLVK WKH IHORQ\ PXUGHU
                                                                    DJJUDYDWLQJ FLUFXPVWDQFHV DVVHUWLQJ WKDW WKH WULDO FRXUWjV
   8QGHU7HQQHVVHHODZDWWKHWLPHRI&DUWHUjVWULDOQRGHDWK      IDLOXUHWRUHSHDWDWWKHVHQWHQFLQJSKDVHLQVWUXFWLRQVJLYHQOHVV
SHQDOW\FRXOGEHLPSRVHGDEVHQWDQXQDQLPRXVILQGLQJWKDW           WKDQWZHQW\IRXUKRXUVHDUOLHUDWWKHJXLOWSKDVHZDVVXFKD
RQH RI WKH IROORZLQJ VWDWXWRU\ DJJUDYDWLQJ FLUFXPVWDQFHV      IXQGDPHQWDOHUURUWKDWLWFDQQRWEHKDUPOHVV7KH6WDWHQRWHV
H[LVWHGWKHPXUGHUZDVFRPPLWWHGDJDLQVWDSHUVRQOHVVWKDQ       WKDW &DUWHU GRHV QRW SRLQW WR DQ\ DXWKRULW\ VXSSRUWLQJ DQ
WZHOYH\HDUVRIDJHWKHGHIHQGDQWZDVSUHYLRXVO\FRQYLFWHG         (LJKWK $PHQGPHQW UHTXLUHPHQW WKDW WKH WULDO FRXUW DW WKH
RIRQHRUPRUHIHORQLHVZKLFKLQYROYHGWKHXVHRUWKUHDWRI         VHQWHQFLQJSKDVHUHLWHUDWHLQVWUXFWLRQVDOUHDG\JLYHQ WR WKH
YLROHQFH WKH GHIHQGDQW NQRZLQJO\ FUHDWHG D JUHDW ULVN RI   MXU\
GHDWKWRWZRRUPRUHSHUVRQVRWKHUWKDQWKHYLFWLPGXULQJKLV
DFW RI PXUGHU WKH GHIHQGDQW FRPPLWWHG WKH PXUGHU IRU         7KH WULDO FRXUW FKDUJHG WKH MXU\ DV WR WKH HOHPHQWV RI
UHPXQHUDWLRQWKHPXUGHUZDVHVSHFLDOO\KHLQRXVDWURFLRXV         NLGQDSSLQJUREEHU\DQGODUFHQ\DVXQGHUO\LQJIHORQLHVDQG
RUFUXHOLQWKDWLWLQYROYHGWRUWXUHRUGHSUDYLW\RIPLQGWKH      GLGVRODWHRQWKHDIWHUQRRQRI1RYHPEHUMXVWEHIRUH
PXUGHU ZDV FRPPLWWHG IRU WKH SXUSRVH RI DYRLGLQJ            WKHMXU\EHJDQGHOLEHUDWLRQVRQWKHJXLOWSKDVH7KHQH[WGD\
LQWHUIHULQJZLWKRUSUHYHQWLQJDODZIXODUUHVWRUSURVHFXWLRQ      WKH FRXUW FRQGXFWHG WKH VHQWHQFLQJ SKDVH DQG WKH MXU\
RIWKHGHIHQGDQWRUDQRWKHUWKHPXUGHUZDVFRPPLWWHGZKLOH         UHWXUQHG LWV YHUGLFW DW  DP ILQGLQJ DV RQH RI WKH
WKHGHIHQGDQWZDVHQJDJHGLQFRPPLWWLQJDQRWKHUIHORQ\WKH         DJJUDYDWLQJFLUFXPVWDQFHVWKDWmWKHPXUGHUZDVFRPPLWWHG
PXUGHU ZDV FRPPLWWHG E\ WKH GHIHQGDQW ZKLOH KH ZDV LQ      ZKLOHWKHGHIHQGDQWZDVHQJDJHGLQFRPPLWWLQJODUFHQ\DQG
ODZIXOFXVWRG\RUGXULQJKLVHVFDSHIURPODZIXOFXVWRG\WKH        NLGQDSSLQJlEXWQRWUREEHU\
PXUGHUZDVFRPPLWWHGDJDLQVWDQ\SHDFHRIILFHUFRUUHFWLRQV
RIILFLDOFRUUHFWLRQVHPSOR\HHRUILUHPDQZKRZDVHQJDJHGLQ          2QGLUHFWDSSHDOWKH7HQQHVVHH6XSUHPH&RXUWUXOHGWKDW
WKHSHUIRUPDQFHRIKLVGXWLHVDQGGHIHQGDQWNQHZ WKDWWKH          DQ\HUURULQIDLOLQJWRUHFKDUJHWKHMXU\DWWKHVHQWHQFLQJSKDVH
YLFWLP ZDV VR HQJDJHG WKH YLFWLP ZDV D MXGJH GLVWULFW    ZDV KDUPOHVV EHFDXVH WKH WULDO FRXUW KDG VXIILFLHQWO\
DWWRUQH\ RU DWWRUQH\ JHQHUDO WKH PXUGHU ZDV FRPPLWWHG      LQVWUXFWHG WKH MXU\ DW WKH JXLOW SKDVH OHVV WKDQ  KRXUV
DJDLQVWDQHOHFWHGRIILFLDOGXHWRWKDWRIILFLDOjVODZIXOGXWLHV    HDUOLHUDQGEHFDXVHFLUFXPVWDQFHVFOHDUO\LQGLFDWHGWKDWWKH
RUVWDWXVRUWKHPXUGHUZDVSDUWRIDPDVVPXUGHU6HH7HQQ      MXU\FRQWLQXHGWRIROORZWKRVHLQVWUXFWLRQVLQLWVVHQWHQFLQJ
&RGH$QQLUHSHDOHG                        GHWHUPLQDWLRQ  6HH &DUWHU  6:G DW   7KH
                                                                    7HQQHVVHH 6XSUHPH &RXUW IRXQG LW VLJQLILFDQW WKDW HYHQ
   7KHVDPHODZOLVWHGHLJKWFDWHJRULHVRIVWDWXWRU\PLWLJDWLQJ     WKRXJK WKH MXU\ KDG EHHQ JLYHQ WKH FRPSOHWH VWDWXWRU\
FLUFXPVWDQFHVEXWQRWHGWKDWWKHVHZHUHQRQLQFOXVLYHQR          GHILQLWLRQRIODUFHQ\UREEHU\DQGNLGQDSSLQJWKHGD\EHIRUH
VLJQLILFDQWKLVWRU\RISULRUFULPLQDODFWLYLW\GHIHQGDQWZDV       WKHMXU\KDGHOLPLQDWHGUREEHU\IURPLWVILQDOGHWHUPLQDWLRQ
XQGHU WKH LQIOXHQFH RI H[WUHPH PHQWDO RU HPRWLRQDO           RI WKH DSSOLFDEOH DJJUDYDWLQJ FLUFXPVWDQFHV RQ WKH GD\ RI
GLVWXUEDQFH YLFWLP ZDV D SDUWLFLSDQW LQ WKH GHIHQGDQWjV     VHQWHQFLQJm7KLVGHPRQVWUDWHVWKDWWKHMXU\KDGFOHDUO\LQ
FRQGXFW RU FRQVHQWHG WR WKH DFW WKH GHIHQGDQW UHDVRQDEO\   PLQGWKHHOHPHQWVQHFHVVDU\WRFRQYLFWRIWKHFULPHRIWKH
EHOLHYHGWRKDYHPRUDOMXVWLILFDWLRQIRUKLVFRQGXFWGHIHQGDQW     IHORQ\RIUREEHU\DQGTXLWHSURSHUO\GHFOLQHGWRLQFOXGHLWl
DFWHG XQGHU H[WUHPH GXUHVV RU XQGHU WKH VXEVWDQWLDO          ,G
    &DUWHUY%HOOHWDO                          1R       1R                                &DUWHUY%HOOHWDO       

WKHHYLGHQFHZDVPDWHULDOWKHGLVWULFWFRXUWSURSHUO\JUDQWHG          GRPLQDWLRQRIDQRWKHUSHUVRQ\RXWKRUDGYDQFHGDJHRIWKH
VXPPDU\MXGJPHQWIRUWKH5HVSRQGHQWVRQWKLVLVVXH                     GHIHQGDQW DW WKH WLPH RI WKH FULPH RU WKH FDSDFLW\ RI WKH
                                                                        GHIHQGDQWWRDSSUHFLDWHWKHZURQJIXOQHVVRIKLVFRQGXFWRUWR
   /DVW&DUWHUDUJXHVWKDWWKHSURVHFXWLRQIDLOHGWRGLVFORVHWR       FRQIRUP KLV FRQGXFW WR WKH UHTXLUHPHQWV RI WKH ODZ ZDV
KLPWKDWDVWDWHGRFWRUKDGUHFRPPHQGHGOHVVWKDQDPRQWK              VXEVWDQWLDOO\LPSDLUHGDVDUHVXOWRIPHQWDOGLVHDVHRUGHIHFW
EHIRUHWKH1RYHPEHUWULDOWKDW&DUWHUEHWUDQVIHUUHGWR           RU LQWR[LFDWLRQ  6HH 7HQQ &RGH $QQ M
DPHQWDOKHDOWKIDFLOLW\7KHGLVWULFWFRXUW IRXQG IURPWKH          UHSHDOHG
UHFRUG WKDW WKH UHFRPPHQGDWLRQ FDPH DIWHU &DUWHU KLPVHOI
UHTXHVWHGWKDWKHEHJLYHQVRPHWKLQJWRKHOSKLPVOHHSWKDW              7KH GLVWULFW FRXUW IRXQG WKDW WULDO FRXQVHOjV IDLOXUH WR
WKHSK\VLFLDQGLGQRWHYHQH[DPLQH&DUWHUDQGWKDWKHPDGH             LQYHVWLJDWHGLVFRYHUDQGSUHVHQWPLWLJDWLQJHYLGHQFHLQWKH
QR FRPPHQW DERXW &DUWHUjV VDQLW\ RU FRPSHWHQF\ WR VWDQG         IDFH RI D SUREDEOH PDQGDWRU\ GHDWK VHQWHQFH FRQVWLWXWHG
WULDO+HQFHWKHGLVWULFWFRXUWIRXQGWKHLQIRUPDWLRQWREH           GHILFLHQWSHUIRUPDQFHXQGHU6WULFNODQG+RZHYHUWKHGLVWULFW
LPPDWHULDO                                                             FRXUW IRXQG WKDW &DUWHU ZDV QRW SUHMXGLFHG E\ WKHVH
                                                                        RPLVVLRQV FRQFOXGLQJ WKDW WKH LQWURGXFWLRQ RI PLWLJDWLQJ
  :KHUH D GHIHQGDQW NQHZ RU VKRXOG KDYH NQRZQ WKH               HYLGHQFHE\&DUWHUZRXOGRSHQWKHGRRUWRDQ\FRQFHLYDEOH
HVVHQWLDOIDFWVSHUPLWWLQJKLPWRWDNHDGYDQWDJHRISRWHQWLDOO\         HYLGHQFHRIEDGFKDUDFWHULQUHEXWWDO
XVHIXOLQIRUPDWLRQWKHSURVHFXWLRQjVIDLOXUHWRGLVFORVHVXFK
LQIRUPDWLRQGRHVQRWYLRODWH%UDG\6HH0XOOLQV)GDW               ,Q&DUWHUjVHYLGHQWLDU\KHDULQJEHIRUHWKH0DJLVWUDWHsXGJH
 &ODUN  )G DW   (YHQ DVVXPLQJ WKDW WKH         KH SUHVHQWHG HYLGHQFH RI PLWLJDWLQJ FLUFXPVWDQFHV WKDW KH
PHGLFDOHQWU\WRZKLFK&DUWHUUHIHUVLVSRWHQWLDOO\PLWLJDWLQJ          DOOHJHGKLVWULDOFRXQVHOVKRXOGKDYHSUHVHQWHGDWVHQWHQFLQJ
LQIRUPDWLRQKHLVQRWHQWLWOHGWRUHOLHI$VFDQEHVHHQIURP         LQFOXGLQJ DVVHUWLRQV RI LOOHJLWLPDF\ H[WUHPH FKLOGKRRG
WKHQXUVHjVQRWHVFRUUHVSRQGLQJWRWKHSK\VLFLDQjVRUGHULQ             SRYHUW\DQGQHJOHFWIDPLO\YLROHQFHDQGLQVWDELOLW\ GXULQJ
TXHVWLRQ &DUWHU ZDV HVVHQWLDOO\ VHOIUHIHUUHG WR WKH SULVRQ     FKLOGKRRG SRRU HGXFDWLRQ PHQWDO GLVDELOLW\ DQG GLVRUGHU
PHGLFDOSHUVRQQHO,WFDQQRWEHHUURUIRUWKHSURVHFXWLRQWR           PLOLWDU\KLVWRU\DQGSRVLWLYHUHODWLRQVKLSVZLWKVWHSFKLOGUHQ
IDLOWRGLVFORVH&DUWHUjVRZQNQRZLQJDFWLRQV                          DGXOWIDPLO\DQGIULHQGV:HVXPPDUL]HWKLVHYLGHQFHKHUH
   7KHUHFRUGVKRZVWKDW&DUWHUKDGUHTXHVWHGVRPHWKLQJWR
KHOSKLPVOHHS+HDSSHDUHGYHU\QHUYRXVZKLFKWKHQXUVH
RQGXW\DWWULEXWHGWRWKHIDFWWKDW&DUWHUm>K@DVUHWXUQHGIURP
FRXUW	UHFHLYHGPRUHWLPHl7KHQXUVHFRQWDFWHG'U&DVWHU                
ZKRSUHVFULEHGWKDW&DUWHUEHJLYHQDVHGDWLYHEHIRUHEHGDQG                  3HWLWLRQHUjV H[WHQVLYH FULPLQDO UHFRUG ZKLFK LQFOXGHV ERWK VWDWH DQG
DVUHTXLUHGHYHU\IRXUWRVL[KRXUVDQGUHFRPPHQGHGWUDQVIHU           IHGHUDO FRQYLFWLRQV FRQWDLQV WKH IROORZLQJ EXUJODU\ DQG ODUFHQ\ 

WRDPHQWDOKHDOWKIDFLOLW\([DPLQDWLRQRIWKHSK\VLFLDQjV            ILUVW DQG WKLUG GHJUHH EXUJODU\  PDLO WKHIW  WKLUG GHJUHH
                                                                        EXUJODU\ DWWHPSW WR SDVV D IRUJHG LQVWUXPHQW HVFDSH DQG ODUFHQ\ IURP
RUGHUUHYHDOVWKDW'U&DVWHUQHYHUVDZ&DUWHUKHVSRNHWRWKH         WKH SHUVRQ  WKUHH FRXQWV RI DUPHG UREEHU\ DQG RQH FRXQW RI DVVDXOW
QXUVHRYHUWKHWHOHSKRQH&DUWHUQHYHUVXEPLWWHGHYLGHQFH              ZLWK LQWHQW WR FRPPLW DUPHG UREEHU\ 
WKDWDUHFRPPHQGHGWUDQVIHUHYHUDFWXDOO\WRRNSODFHDQGLI                 7ULDO FRXQVHO ZHUH DOVR IDPLOLDU ZLWK 3HWLWLRQHUjV RWKHU DFWV RI
LWRFFXUUHGZKDWILQGLQJVZHUHUHQGHUHGIURPDQ\UHVXOWLQJ             PLVFRQGXFW ZKLFK KDG QRW UHVXOWHG LQ FULPLQDO FKDUJHV 5HVSRQGHQWV

HYDOXDWLRQV  :H ILQG QR HUURU WKHUHIRUH  LQ WKH GLVWULFW   SRLQW WR FODLPV WKDW KH SK\VLFDOO\ DVVDXOWHG KLV IRUPHU ZLYHV VWUXFN KLV
                                                                        VWHSGDXJKWHU VWDEEHG D IHOORZ LQPDWH LQ D GLVSXWH RYHU D WULYLDO PDWWHU
FRXUWjVDQDO\VLVRIWKLVFODLP                                         ZKLOH LQFDUFHUDWHG DZDLWLQJ WULDO RQ WKH FXUUHQW PXUGHU FKDUJH DQG
                                                                        DWWDFNHG 3ULFH GXULQJ D EUHDN LQ DQRWKHU WULDO LQ ZKLFK 3ULFH ZDV DOVR
                                                                        WHVWLI\LQJ DJDLQVW KLP
    &DUWHUY%HOOHWDO                        1R       1R                           &DUWHUY%HOOHWDO     

   7KH HYLGHQFH VKRZV WKDW &DUWHU JUHZ XS LQ D SRRU DQG     GLVDJUHHGFRQFOXGLQJWKDWHYHQWVWKDWRFFXUUHGGXULQJ3ULFHjV
WURXEOHGKRXVHKROG&DUWHUZDVWKHVHFRQGRI0DGJH&DUWHUjV          PLOLWDU\WHQXUHLQWKH
VZHUHWRRUHPRWHLQWLPHWREHRI
QLQHFKLOGUHQ7KHVHFKLOGUHQKDGILYHGLIIHUHQWIDWKHUVRQO\       DQ\SUREDWLYHYDOXHUHJDUGLQJ3ULFHjVFUHGLELOLW\LQ6HH
RQHRIZKRP0DGJH&DUWHUPDUULHG2QHVLEOLQJGLHGLQD              7HQQ5(YLGEDQGE)HG5(YLGEDQG
KRXVH ILUH VHW E\ RQH RI 0DGJHjV OLYHLQ ER\IULHQGV  7ZR   E6WDWHY0RUJDQ6:G7HQQ
RWKHUVGLHGIURPELUWKGHIHFWVDVLQIDQWV$OORIWKHUHPDLQLQJ
VL[KDYHFULPLQDOUHFRUGV&DUWHUjVPRWKHUDQGVLVWHUZHUH             3ULFHZDVRQDFWLYHPLOLWDU\GXW\IURPWR,Q
ERWK KRVSLWDOL]HG LQ PHQWDO KHDOWK LQVWLWXWLRQV  +LV          3ULFHjV GHSRVLWLRQ KH DGPLWWHG WR UHFHLYLQJ GLVFLSOLQDU\
JUDQGIDWKHU IDWKHU PRWKHU VWHSIDWKHU DQG EURWKHU DOO       DFWLRQIRUVWDWHVLGHDEVHQFHVZLWKRXWOHDYHDQGIRUGULQNLQJ
VXIIHUHG IURP DOFRKROLVP WKRXJK &DUWHU KDV QHYHU DEXVHG       HSLVRGHV  1RQH RI WKH RIIHQVHV IRU ZKLFK 3ULFH PD\ KDYH
DOFRKRORUXVHGLOOHJDOGUXJV&DUWHUjVIDPLO\ZDVH[WUHPHO\          EHHQGLVFLSOLQHGLQWKH$UP\PHHWWKHFULWHULDRI7HQQHVVHHjV
SRRUGXULQJKLVFKLOGKRRGZLWKQRHOHFWULFLW\UXQQLQJZDWHU        HYLGHQFHUXOHVUHJDUGLQJLPSHDFKPHQWRIZLWQHVVHVE\SULRU
RULQGRRUSOXPELQJ7KHIDPLO\GLHWFRQVLVWHGSULPDULO\RI           EDGDFWVRUFRQYLFWLRQVWKH\DUHQRWSUREDWLYHRIWUXWKIXOQHVV
ZKLWH EHDQV DQG FRUQEUHDG DQG WKH FKLOGUHQ ZRUH XVHG          RUXQWUXWKIXOQHVVQRUGLGWKH\RFFXUZLWKLQWKHSUHFHGLQJWHQ
FORWKLQJGRQDWHGE\WKHZHOIDUHGHSDUWPHQW7KHIDPLO\QHYHU         \HDUV6HH0RUJDQ6:GDWDGRSWLQJ)HG5
FHOHEUDWHG WKH FKLOGUHQjV ELUWKGD\V &KULVWPDV RU RWKHU         (YLGEDQGE
KROLGD\V
                                                                         'XULQJ WULDO &DUWHUjV FRXQVHO XVHG 3ULFHjV VL[ IHORQ\
  $OOWKHHYLGHQFHGHPRQVWUDWHVWKDW&DUWHUjVFKLOGKRRGKRPH          FRQYLFWLRQV IRU IRUJHU\ ODUFHQ\ DQG DVVDXOW ZLWK LQWHQW WR
ZDV YLROHQW DQG XQVWDEOH  7KHUH ZHUH IUHTXHQW ILVWILJKWV     FRPPLWPXUGHUWRLPSHDFK3ULFHjVFUHGLELOLW\6HH&DUWHU
EHWZHHQ IDPLO\ PHPEHUV DQG YLVLWRUV H[FHVVLYH GULQNLQJ        6:GDW,QOLJKWRIWKDWLPSHDFKPHQWHYLGHQFH
JDPEOLQJ DQG FRQVLVWHQW PDQXIDFWXUH DQG VDOH RI                ZH GR QRW VHH KRZ HYLGHQFH RI XQVSHFLILHG \HDUROG
mKRPHEUHZl  &DUWHUjV PRWKHU ZDV EHDWHQ E\ KHU IDWKHU        PLOLWDU\GLVFLSOLQHZRXOGKDYHEHHQPDWHULDOWR&DUWHUjVFDVH
&DUWHUjV JUDQGIDWKHU IRU EHFRPLQJ SUHJQDQW ZLWK RQH RI        :HILQGWKDWWKHGLVWULFWFRXUWFRUUHFWO\FRQFOXGHGWKDW3ULFHjV
&DUWHUjVKDOIVLEOLQJV&DUWHUjVIDWKHUZKRPKLVPRWKHUQHYHU        PLOLWDU\GLVFLSOLQDU\UHFRUGZRXOGQRWKDYHSURYLGHGPDWHULDO
PDUULHGSK\VLFDOO\DVVDXOWHGKHU&DUWHUjVVLVWHUVWDWHVWKDW       LPSHDFKPHQWHYLGHQFHIRU&DUWHUEHFDXVHRILWVVWDOHQHVVDQG
WKH IDPLO\ QHYHU OLYHG LQ RQH SODFH PRUH WKDQ WZR \HDUV    LWVODFNRISUREDWLYHYDOXH
PRYLQJRQWRDYRLGWKHZHOIDUHGHSDUWPHQWDQGVD\VLWZDV
QRWXQFRPPRQIRUWKHLUPRWKHUWRGULQNXSKHUZHOIDUHFKHFN             &DUWHU DOVR FODLPV WKDW WKH SURVHFXWLRQ VKRXOG KDYH
DQGWKHFKLOGUHQWRJRKXQJU\                                        GLVFORVHG WKDW 3ULFH ZDV LQVWLWXWLRQDOL]HG DW (DVWHUQ 6WDWH
                                                                      3V\FKLDWULF +RVSLWDO LQ   7KH GLVWULFW FRXUW UHMHFWHG
   &DUWHUjV PRWKHU ZDV DUUHVWHG RQ VHYHUDO RFFDVLRQV IRU       &DUWHUjVFODLPILQGLQJLWWRRUHPRWHLQWLPHIURPWKH
SXEOLF LQWR[LFDWLRQ PDQXIDFWXUH RI PRRQVKLQH DQG FKLOG         PXUGHUDQGWULDOWREHPDWHULDORQDQ\LVVXH&DUWHUGRHVQRW
QHJOHFW$WWKHDJHRIWKUHH&DUWHUDQGKLVWKHQILYH\HDUROG      GHPRQVWUDWH WKDW WKH LQIRUPDWLRQ FRQFHUQLQJ 3ULFHjV
VLVWHUZHUHDEDQGRQHGE\WKHLUPRWKHUIRUPRUHWKDQDZHHN           KRVSLWDOL]DWLRQ DW (DVWHUQ 6WDWH ZDV LQ HLWKHU DFWXDO RU
VXEVLVWLQJRQPLONVWROHQIURPWKHQHLJKERUVjSRUFKHV7KH           FRQVWUXFWLYHSRVVHVVLRQRIWKHSURVHFXWLRQSULRUWRRUGXULQJ
ZHOIDUHGHSDUWPHQWSODFHGWKHWZRLQDFKLOGUHQjVKRPHIRU            WKHWULDO&DUWHUKDVQRWDOOHJHGRUVKRZQDQ\IDFWVLQGLFDWLQJ
VHYHUDOZHHNV7KH\VXEVHTXHQWO\OLYHGZLWKWKHLUDXQWXQWLO         WKDWWKHSURVHFXWLQJDWWRUQH\NQHZRUVKRXOGKDYHNQRZQWKDW
WKHLUPRWKHUUHJDLQHGFXVWRG\D\HDUODWHU                           VXFKLQIRUPDWLRQH[LVWHG%HFDXVH&DUWHUIDLOHGWRVKRZWKDW
    &DUWHUY%HOOHWDO                           1R       1R                          &DUWHUY%HOOHWDO   

ZDVDYDLODEOHWRKLPIURPDQRWKHUVRXUFH6HH&RHY%HOO                 &DUWHUVXIIHUHGVHULRXVO\IURPFKLOGKRRGUKHXPDWLFIHYHU
)GWK&LU8QLWHG6WDWHVY&ODUN           +HZDVZKLSSHGDQGEHDWHQDVDQLQIDQWIRUFU\LQJIURPWKH
)GWK&LU                                           LOOQHVV  &DUWHU DOVR VXIIHUHG IUHTXHQW VHULRXV EUHDWKLQJ
                                                                         SUREOHPV DV D FKLOG WKDW OHG WR QXPHURXV WULSV WR WKH
  :HQRWHWKDWLWLVFOHDUWKDW&DUWHUjVFRXQVHOZDVDZDUHWKDW          HPHUJHQF\URRP7KHUHFRUGVVKRZERWKFKLOGKRRGDQGDGXOW
3ULFHZDVWHVWLI\LQJLQH[FKDQJHIRUDSOHDDJUHHPHQWZKLFK              KHDGLQMXULHVIURPDFFLGHQWVDQGILJKWV&DUWHUZDVGLDJQRVHG
ZRXOG DOORZ 3ULFH WR SOHDG JXLOW\ WR WKH OHVVHU LQFOXGHG        ZLWKGLDEHWHVLQZKHQKHDSSDUHQWO\ZDVEURXJKWWRWKH
RIIHQVHRIVHFRQGGHJUHHPXUGHULQH[FKDQJHIRUDVHQWHQFH               KRVSLWDOLQDFRPD
RI WKLUW\ ILYH \HDUV ZLWK HOLJLELOLW\ IRU SDUROH LQ IRXUWHHQ
\HDUV  7KH UHFRUG DOVR VKRZV WKDW 3ULFH KDG UHDFKHG DQ           &DUWHUUHFHLYHGOLPLWHGVFKRROLQJDWEHVW7KHUHFRUGVRI
DJUHHPHQW ZLWK *UDLQJHU &RXQW\ DXWKRULWLHV E\ ZKLFK KH            WKH+DPEOHQ&RXQW\VFKRROV\VWHPVKRZRQO\YHU\VSRUDGLF
ZRXOGUHFHLYHDWKLUW\ILYH\HDUVHQWHQFHIRUDUPHGUREEHU\              DWWHQGDQFHIRUDIHZPRQWKVLQWKHVHFRQGDQGVL[WKJUDGHV
DQGWKHUHZDVDGLVWLQFWSRVVLELOLW\WKLVVHQWHQFHZRXOGUXQ             DQGQRRWKHUHGXFDWLRQDOUHFRUGVZHUHORFDWHG7KHUHLVVRPH
FRQFXUUHQWO\ ZLWK KLV VHQWHQFH LQ WKH /LOH PXUGHU  7KLV        HYLGHQFHWRVKRZWKDW&DUWHUDWWHQGHGDSRUWLRQRIWKHQLQWK
LQIRUPDWLRQ ZDV EURXJKW EHIRUH WKH MXU\ GXULQJ FURVV             JUDGHZKHQWKHIDPLO\OLYHGLQ,QGLDQD&DUWHUjV,4WHVWHGLQ
H[DPLQDWLRQRI3ULFH                                                    WKHERUGHUOLQHPHQWDOO\UHWDUGHGUDQJHLQZLWKDVFRUH
                                                                         RID%HWD,4WHVWIURPVKRZHGDQ,4RISODFLQJ
  &DUWHUSUHVHQWVWKHGLVFXVVLRQEHWZHHQWULDOFRXQVHODQGWKH           &DUWHULQWKHWKSHUFHQWLOHDWWKHWLPHRIKLVWULDO
6WDWHDVWRZKHWKHUWKHUHZDVDQDJUHHPHQWIRU3ULFHWRVHUYH
WLPHLQVWDWHRUIHGHUDOSULVRQ:KLOHWKHUHFRUGVKRZVVRPH               ,Q2FWREHURIVKRUWO\EHIRUHKLVWULDOD7HQQHVVHH
FRQIXVLRQDVWRZKHWKHUVXFKDQDJUHHPHQWH[LVWHG&DUWHU                'HSDUWPHQW RI &RUUHFWLRQV SK\VLFLDQ UHFRPPHQGHG WKDW
GRHV QRW GHPRQVWUDWH KRZ WKLV PLVUHSUHVHQWDWLRQ LI DQ\           &DUWHUEHFRQVLGHUHGIRUSV\FKLDWULFKRVSLWDOL]DWLRQDQGQRWHG
DFWXDOO\H[LVWHGZDVDVXSSUHVVLRQRIPDWHULDOHYLGHQFH                WKDWKLVQHUYHVVHHPHGVWUHWFKHGWRWKHEUHDNLQJSRLQW&DUWHU
                                                                         ZDVGLDJQRVHGDVVFKL]RSKUHQLFE\7HQQHVVH'HSDUWPHQWRI
  :H DJUHH ZLWK &DUWHU WKDW 3ULFH LV FULWLFDO WR WKH            &RUUHFWLRQV SV\FKLDWULVWV LQ   'U 3DPHOD $XEOH D
SURVHFXWLRQjVFDVH+DGWKHIDFWWKDW3ULFHHQWHUHGLQWRDSOHD         FOLQLFDO SV\FKRORJLVW HYDOXDWHG &DUWHU LQ  DQG
DJUHHPHQWQRWEHHQGLVFORVHGDWDOOZHZRXOGDJUHHWKDWD               GHWHUPLQHG WKDW KH KDG SV\FKRWLF V\PSWRPV LQYROYLQJ
%UDG\ YLRODWLRQ KDG RFFXUUHG  6HH 6FKOHGZLW] )G DW        KDOOXFLQDWLRQV SDUDQRLG GHOXVLRQV DQG WKRXJKW GLVRUGHUV
%XWRQWKHVHIDFWVWKHUHLVQRLQGLFDWLRQWKDWWKHMXU\          FRQVLVWHQW ZLWK SDUDQRLG VFKL]RSKUHQLD RU DQ RUJDQLF
ZRXOG KDYH UHWXUQHG D GLIIHUHQW YHUGLFW KDG WKH\ EHHQ            GHOXVLRQDOGLVRUGHU6KHQRWHGWKDW&DUWHUKDGDVVHUWHGWKDW
LQIRUPHGRIDQDJUHHPHQWDVWRZKHUH3ULFHZRXOGEHVHUYLQJ              RWKHU SHRSOH KDG EHHQ FRQWUROOLQJ KLV PLQG SOD\LQJ DXGLR
KLVVHQWHQFH  7ULDOFRXQVHODUJXHGWKHHOHPHQWVRI3ULFHjV            SURJUDPVZKLFKVFUHDPHGDWKLPDWDOOWLPHVDQGWKDWWKHVH
SOHDDJUHHPHQWWRWKHMXU\GXULQJFORVLQJDUJXPHQWVDWERWK              SURJUDPVFRXOGIROORZKLPZKHUHYHUKHZHQW6KHDOVRIRXQG
WKHJXLOWDQGVHQWHQFLQJSKDVHVZLWKFRXQVHODVVHUWLQJWKDW             WKDWKHKDGDKLVWRU\RISDUWLDOVHL]XUHV'U$XEOHVWDWHGWKDW
3ULFHKDGVDYHGKLPVHOIIURPDILUVWGHJUHHPXUGHUFRQYLFWLRQ            DOWKRXJK&DUWHUPD\QRWKDYHDSSHDUHGGHOXVLRQDOWRDOD\
DQG D GHDWK VHQWHQFH E\ WHVWLI\LQJ IRU WKH VWDWH  2Q WKHVH   SHUVRQDWWKHWLPHRIKLVWULDODWUDLQHGSURIHVVLRQDOZRXOG
IDFWVZHIDLOWRILQGPDWHULDOLW\                                      KDYH EHHQ DEOH WR UHFRJQL]H PHQWDO FRPSURPLVH DQG
                                                                         DEQRUPDO SHUVRQDOLW\ WUDLWV LQ H[FHVV RI DQ DQWLVRFLDO
  &DUWHU QH[W DVVHUWV WKDW KH ZDV GHQLHG LPSHDFKPHQW              SHUVRQDOLW\GLVRUGHU'U$XEOHLGHQWLILHGVHYHUDOLQVWDQFHV
HYLGHQFH ZKHQ WKH SURVHFXWLRQ IDLOHG WR GLVFORVH 3ULFHjV          SULRUWR1RYHPEHUZKHQ&DUWHUZDVUHFRPPHQGHGIRU
PLOLWDU\GLVFLSOLQDU\UHFRUGIURPWKHV7KHGLVWULFWFRXUW
    &DUWHUY%HOOHWDO                            1R        1R                            &DUWHUY%HOOHWDO     

SV\FKLDWULFRUSV\FKRORJLFDOFRXQVHOLQJUHFHLYHGPHGLFDWLRQ               LQIRUPDWLRQ ZDV RI QR XVH WR KLP UHODWHG WR LQFLGHQWV WRR
IRU KLV mQHUYHVl H[KLELWHG SDUDQRLG LGHDV RU EHKDYLRU RU         UHPRWHWREHPDWHULDORUZDVRITXHVWLRQDEOHUHOLDELOLW\7KH
VXIIHUHGKDOOXFLQDWLRQVRUGHOXVLRQV                                     GLVWULFWFRXUWDOVRIRXQGWKDW3ULFHKDGWHVWLILHGWKDWQRVXFK
                                                                           DJUHHPHQW KDG EHHQ PDGH DQG WKDW WKH RWKHU DVSHFWV RI
   &DUWHUZDVPDUULHGWZLFHSULRUWRDQGKDGVWHSFKLOGUHQ             3ULFHjVSOHDEDUJDLQZHUHSUHVHQWHGWRWKHMXU\
IURP HDFK PDUULDJH  +LV VWHSFKLOGUHQ VWDWH WKDW WKHLU
UHODWLRQVKLSV ZLWK KLP ZHUH SRVLWLYH  ,Q DGGLWLRQ WR KLV            m>6@XSSUHVVLRQE\WKHSURVHFXWLRQRIHYLGHQFHIDYRUDEOHWR
VWHSFKLOGUHQ&DUWHUKDGJRRGUHODWLRQVKLSVZLWKVHYHUDORIWKH            DQ DFFXVHG XSRQ UHTXHVW YLRODWHV GXH SURFHVV ZKHUH WKH
RWKHUFKLOGUHQLQKLVOLIH7KHVHLQFOXGHKLVQLHFH7HUULsLQNV         HYLGHQFH LV PDWHULDO HLWKHU WR JXLOW RU WR SXQLVKPHQW
ZKRZDV\HDUVROGLQ0VsLQNVWHVWLILHGWKDW&DUWHU             LUUHVSHFWLYHRIWKHJRRGIDLWKRUEDGIDLWKRIWKHSURVHFXWLRQl
UHSODFHGWKHORFNVRQWKHLUGRRUDQGERXJKWJURFHULHVIRUKHU              %UDG\86DWm>(@YLGHQFHLVPDWHULDORQO\LIWKHUH
DIWHUQHLJKERUVEURNHLQWRKHUPRWKHUjVDSDUWPHQWDQGVWROH                LV D UHDVRQDEOH SUREDELOLW\ WKDW KDG WKH HYLGHQFH EHHQ
WKHLUIRRG+HDOVRERXJKWFORWKHVDQGVKRHVIRU0VsLQNV                GLVFORVHGWRWKHGHIHQVHWKHUHVXOWRIWKHSURFHHGLQJZRXOG
DQGVHQWKHUFDUGVDQGSKRWRV                                             KDYH EHHQ GLIIHUHQW  $ µUHDVRQDEOH SUREDELOLW\j LV D
                                                                           SUREDELOLW\ VXIILFLHQW WR XQGHUPLQH FRQILGHQFH LQ WKH
  &DUWHUVHUYHGIRUDSHULRGRIDSSUR[LPDWHO\VL[PRQWKVLQ                RXWFRPHl8QLWHG6WDWHVY%DJOH\86
WKH ,QGLDQD 1DWLRQDO *XDUG LQ   +H ZDV JLYHQ DQ             8QLWHG6WDWHVY0XOOLQV)GWK&LU
KRQRUDEOH GLVFKDUJH GXH DW OHDVW LQ SDUW WR KLV ORZ              (YHQDEVHQWDVSHFLILF%UDG\UHTXHVWWKHSURVHFXWLRQPXVW
LQWHOOLJHQFHDQGLQDSWLWXGHIRUWKHVHUYLFH                               GLVFORVH H[FXOSDWRU\ HYLGHQFH WKDW ZKHQ YLHZHG LQ WKH
                                                                           FRQWH[WRIWKHHQWLUHUHFRUGmFUHDWHVDUHDVRQDEOHGRXEWWKDW
  $WWKHHYLGHQWLDU\KHDULQJ&DUWHUSUHVHQWHGWKLVHYLGHQFH               GLGQRWRWKHUZLVHH[LVWl8QLWHG6WDWHVY$JXUV86
WR VKRZ PLWLJDWLQJ FLUFXPVWDQFHV ZKLFK KH DOOHJHG ZRXOG             m>,@WLVZHOOVHWWOHGWKDWWKLVGLVFORVXUHREOLJDWLRQ
KDYHLQIOXHQFHGWKHMXU\WRJUDQWDOHVVHUSHQDOW\,QOLJKWRI           LQFOXGHV HYLGHQFH WKDW FRXOG EH XVHG WR LPSHDFK WKH
WKLV HYLGHQFH ZH ORRN WR WKH ODZ RQ WKH LQWURGXFWLRQ RI         FUHGLELOLW\RIDZLWQHVVl 6FKOHGZLW]Y8QLWHG6WDWHV
PLWLJDWLQJIDFWRUVDWVHQWHQFLQJLQFDSLWDOFDVHV7KH(LJKWK             )GWK&LU
DQG)RXUWHHQWK$PHQGPHQWVWRWKH8QLWHG6WDWHV&RQVWLWXWLRQ
GLFWDWH WKDW WKH VHQWHQFHU LQ D FDSLWDO FDVH PD\ QRW EH             7R HVWDEOLVK D YLRODWLRQ RI %UDG\ WKH SHWLWLRQHU KDV WKH
SUHFOXGHGIURPFRQVLGHULQJDQ\UHOHYDQWFLUFXPVWDQFHDVD                  EXUGHQ RI HVWDEOLVKLQJ WKDW WKH SURVHFXWRU VXSSUHVVHG
PLWLJDWLQJIDFWRU6HH0LOOVY0DU\ODQG86               HYLGHQFHWKDWVXFKHYLGHQFHZDVIDYRUDEOHWRWKHGHIHQVH
  m7KH &RQVWLWXWLRQ UHTXLUHV 6WDWHV WR DOORZ                 DQGWKDWWKHVXSSUHVVHGHYLGHQFHZDVPDWHULDO6HH0RRUHY
FRQVLGHUDWLRQRIPLWLJDWLQJHYLGHQFHLQFDSLWDOFDVHV$Q\                ,OOLQRLV  86     7KH LQTXLU\ LV
EDUULHUWRVXFKFRQVLGHUDWLRQPXVWWKHUHIRUHIDOOl0F.R\Y              REMHFWLYHLQGHSHQGHQWRIWKHLQWHQWRIWKHSURVHFXWRUV6HH
1RUWK&DUROLQD86m:KDWHYHUWKH                   %UDG\86DW
FDXVH    WKH >VHQWHQFHU
V@ IDLOXUH WR FRQVLGHU DOO RI WKH
PLWLJDWLQJHYLGHQFHULVNVHUURQHRXVLPSRVLWLRQRIWKHGHDWK                  7KLV&RXUWKDVUHFRJQL]HGWKDWm%UDG\LVFRQFHUQHGRQO\
VHQWHQFHl,G0LWLJDWLQJHYLGHQFHLQFOXGHVmDQ\DVSHFWRID             ZLWKFDVHVLQZKLFKWKHJRYHUQPHQWSRVVHVVHVLQIRUPDWLRQ
GHIHQGDQWjVFKDUDFWHURUUHFRUGDQGDQ\RIWKHFLUFXPVWDQFHV               ZKLFKWKHGHIHQGDQWGRHVQRWl6HH0XOOLQV)GDW
RI WKH RIIHQVH WKDW WKH GHIHQGDQW SURIIHUV DV D EDVLV IRU D     )XUWKHUWKHUHLVQR%UDG\YLRODWLRQLIWKHGHIHQGDQWNQHZRU
VHQWHQFHOHVVWKDQGHDWKl/RFNHWWY2KLR86            VKRXOGKDYHNQRZQWKHHVVHQWLDOIDFWVSHUPLWWLQJKLPWRWDNH
  )XUWKHU VWDWHV FDQQRW LQIULQJH XSRQ WKH FRXUWjV          DGYDQWDJHRIWKHLQIRUPDWLRQLQTXHVWLRQRULIWKHLQIRUPDWLRQ
    &DUWHUY%HOOHWDO                         1R       1R                            &DUWHUY%HOOHWDO    

UHDVRQDEOH SUREDELOLW\ WKDW D MXU\ ZRXOG KDYH UHWXUQHG WKH     FRQVLGHUDWLRQRIDQ\UHOHYDQWFLUFXPVWDQFHWKDWPD\GHWHUWKH
VDPHVHQWHQFHKDGWKHHYLGHQFHEHHQLQWURGXFHG                        LPSRVLWLRQRIWKHGHDWKSHQDOW\6HH0F&OHVN\Y.HPS
                                                                       867KH6XSUHPH&RXUWUHFHQWO\QRWHGWKDW
   7KHVHQWHQFLQJSKDVHRIWKHWULDOXQGHU7HQQHVVHHODZLV            mLWLVXQGLVSXWHGWKDW>WKHSHWLWLRQHU@KDGDULJKWoLQGHHGD
REYLRXVO\DFULWLFDOVWDJHRIWKHFULPLQDOSURFHHGLQJZKLFK            FRQVWLWXWLRQDOO\SURWHFWHGULJKWoWRSURYLGHWKHMXU\ZLWKWKH
FDQUHVXOWLQWKHVHQWHQFHRIGHDWKDQGGLGVRLQWKLVFDVH<HW      PLWLJDWLQJ HYLGHQFH WKDW KLV WULDO FRXQVHO HLWKHU IDLOHG WR
&DUWHUjV ODZ\HUV SHUIRUPHG QR LQYHVWLJDWLRQ WR SUHSDUH D        GLVFRYHURUIDLOHGWRRIIHUl:LOOLDPV6&WDW
GHIHQVH7KH\SUHVHQWHGQRPHDQLQJIXOHYLGHQFHE\ZD\RI
PLWLJDWLRQ DV D UHVXOW RI WKHLU IDLOXUH WR LQYHVWLJDWH DQG       $V WKH H[FOXVLRQ RI PLWLJDWLQJ HYLGHQFH SRWHQWLDOO\
SUHSDUH QRW DV D UHVXOW RI WULDO VWUDWHJ\ DIWHU WKRURXJK     XQGHUPLQHVWKHUHOLDELOLW\RIVHQWHQFLQJGHWHUPLQDWLRQVWKH
UHVHDUFK,WLVQRWMXVWWKDWWKHGHIHQVHSUHVHQWHGRQ&DUWHUjV       EXUGHQLVRQWKHVWDWHWRSURYHWKDWWKHHUURUZDVKDUPOHVV
EHKDOIDWWKHVHQWHQFLQJSKDVHZDVLQHIIHFWLYHUDWKHU&DUWHUjV       EH\RQG D UHDVRQDEOH GRXEW  6HH 6DWWHUZKLWH Y 7H[DV 
DWWRUQH\V GLG QRW HYHQ DWWHPSW WR SUHVHQW D GHIHQVH DW WKH   866NLSSHUY6RXWK&DUROLQD86
VHQWHQFLQJSKDVH:HILQGWKDWWKHUHLVSUHMXGLFHWR&DUWHU            &KDSPDQY&DOLIRUQLD86
IURPWKHIDLOLQJVRIKLVWULDOFRXQVHODQGZHWKHUHIRUHUHYHUVH       7KH7HQQHVVHH6XSUHPH&RXUWKDVVSHFLILFDOO\UHLWHUDWHGWKH
WKH SRUWLRQ RI WKH GLVWULFW FRXUWjV GHFLVLRQ ZKLFK IRXQG QR   LPSRUWDQFH RI WKH VHQWHQFHU mKHDULQJ HYLGHQFH DERXW WKH
LQHIIHFWLYHDVVLVWDQFHRIFRXQVHODWWKHVHQWHQFLQJSKDVHRIKLV       GHIHQGDQWjV EDFNJURXQG UHFRUG DQG FKDUDFWHU DQG DQ\
WULDO)RUWKLVUHDVRQZHGRQRWQHHGWRGHWHUPLQHZKHWKHU           FLUFXPVWDQFHVDERXWWKHRIIHQVHWKDWPD\PLWLJDWHDJDLQVWWKH
WULDOFRXQVHOjVIDLOXUHWRLQYHVWLJDWHPLWLJDWLQJFLUFXPVWDQFHV        GHDWK SHQDOW\l  6WDWH Y &DXWKHUQ  6:G  
FRQVWLWXWHGGHILFLHQFLHVVRVHYHUHDVWRGLVSHQVHZLWKWKHQHHG        7HQQ
WRHVWDEOLVKSUHMXGLFH
                                                                         ,W LV FOHDU WR XV WKDW WULDO FRXQVHOjV SHUIRUPDQFH ZDV
                                ,9                                    GHILFLHQW XQGHU WKH ILUVW SDUW RI WKH 6WULFNODQG WHVW  ,Q
                                                                       :LOOLDPV WKH 6XSUHPH &RXUW IRXQG WKDW WULDO FRXQVHOjV
   &DUWHU DUJXHV QH[W WKDW WKH 6WDWH YLRODWHG LWV REOLJDWLRQ   UHSUHVHQWDWLRQRIWKHSHWLWLRQHUGXULQJWKHVHQWHQFLQJSKDVH
XQGHU %UDG\ Y 0DU\ODQG  86   WR GLVFORVH      IHOOVKRUWRISURIHVVLRQDOVWDQGDUGVZKHQ
HYLGHQFHIDYRUDEOHWRWKHGHIHQVHE\QRWGLYXOJLQJWKDW
3ULFH KDG VRXJKW IHGHUDO FRQILQHPHQW DV SDUW RI KLV SOHD        7KH UHFRUG HVWDEOLVKHV WKDW FRXQVHO GLG QRW EHJLQ WR
DJUHHPHQW3ULFHKDGEHHQKRVSLWDOL]HGIRUPHQWDOLOOQHVV            SUHSDUH IRU WKDW SKDVH RI WKH SURFHHGLQJ XQWLO D ZHHN
LQ  DQG KDG EHHQ GLVFLSOLQHG ZKLOH LQ WKH PLOLWDU\ LQ      EHIRUHWULDO7KH\IDLOHGWRFRQGXFWDQLQYHVWLJDWLRQWKDW
DQGDVWDWHGRFWRUKDGUHFRPPHQGHGWKDW&DUWHUEH              ZRXOG KDYH XQFRYHUHG H[WHQVLYH UHFRUGV JUDSKLFDOO\
LQVWLWXWLRQDOL]HGGXHWRPHQWDOSUREOHPVWKUHHZHHNVEHIRUH              GHVFULELQJ:LOOLDPVjQLJKWPDULVKFKLOGKRRG+DG
WULDO&DUWHUDOVRFODLPVWKDWWKHSURVHFXWRUUHSUHVHQWHGWRWKH        WKH\GRQHVRWKHMXU\ZRXOGKDYHOHDUQHGWKDW:LOOLDPVj
WULDOFRXUWDQGFRXQVHOWKDW3ULFHjVSOHDEDUJDLQFRQWDLQHGQR           SDUHQWVKDGEHHQLPSULVRQHGIRUWKHFULPLQDOQHJOHFWRI
JRYHUQPHQWDJUHHPHQWWRDVVLVWLQSODFLQJ3ULFHLQDIHGHUDO             :LOOLDPV DQG KLV VLEOLQJV WKDW :LOOLDPV KDG EHHQ
SULVRQIDFLOLW\GHVLJQHGIRUZLWQHVVSURWHFWLRQZKHQLQIDFW            VHYHUHO\DQGUHSHDWHGO\EHDWHQE\KLVIDWKHUWKDWKHKDG
VXFKDQDJUHHPHQWZDVXQGHUVWRRG&DUWHUPDLQWDLQVWKDWWKLV            EHHQ FRPPLWWHG WR WKH FXVWRG\ RI WKH VRFLDO VHUYLFH
LQIRUPDWLRQZDVLPSRUWDQWLPSHDFKPHQWHYLGHQFH7KH6WDWH               EXUHDX IRU WZR \HDUV GXULQJ KLV SDUHQWVj LQFDUFHUDWLRQ
FRQWHQGVWKDWVXFKLQIRUPDWLRQZDVLPPDWHULDO7KHGLVWULFW             
FRXUWUHMHFWHG&DUWHUjVFODLPVVWDWLQJWKDWHLWKHUWKHVRXJKW
    &DUWHUY%HOOHWDO                          1R       1R                              &DUWHUY%HOOHWDO      

    &RXQVHO IDLOHG WR LQWURGXFH DYDLODEOH HYLGHQFH WKDW           PLWLJDWLQJIDFWRUDFWXDOO\SUHVHQWHG6HH%DWHV6:GDW
  :LOOLDPVZDVmERUGHUOLQHPHQWDOO\UHWDUGHGlDQGGLGQRW               &R]]ROLQR6:GDW7HDJXH6:G
  DGYDQFHEH\RQGVL[WKJUDGHLQVFKRRO                                DW   $V 7HQQHVVHH ODZ FOHDUO\ HVWDEOLVKHV WKH 6WDWHjV
                                                                        GHPRQVWUDWLRQRIDGHIHQGDQWjVSUHVHQWFULPLQDOSURFOLYLWLHV
:LOOLDPV6&WDWLQWHUQDOFLWDWLRQVRPLWWHG              LVQRWUHOHYDQWWRWKHGHIHQGDQWjVDWWHPSWWRVKRZWKHRULJLQ
                                                                        LQDWURXEOHGFKLOGKRRGRIWKHGHIHQGDQWjVFULPLQDODFWV6HH
   ,Q0DSHVY&R\OH)GWK&LUWKLV           &R]]ROLQR6:GDW:HWKHUHIRUHILQGWKDW6FRWW
&RXUWQRWHGWKDWmZKHQDFOLHQWIDFHVWKHSURVSHFWRIEHLQJ             GRHVQRWJRYHUQWKHUHVXOWLQWKLVFDVH
SXWWRGHDWKXQOHVVFRXQVHOREWDLQVDQGSUHVHQWVVRPHWKLQJLQ
PLWLJDWLRQ PLQLPDO VWDQGDUGV UHTXLUH VRPH LQYHVWLJDWLRQl            ,Q FRQVLGHULQJ WKLV FDVH ZH QRWH FDUHIXOO\ WKH 6XSUHPH
0RUHRYHU LQ 5LFNPDQ WKLV &RXUW IRXQG GHILFLHQFLHV VR           &RXUWjV ILQGLQJ LQ :LOOLDPV WKDW WKH SUHVHQFH RI MXYHQLOH
VHYHUHDVWRGLVSHQVHZLWKWKHQHHGIRUDVKRZLQJRISUHMXGLFH          UHFRUGV RI WKH SHWLWLRQHU ZKLFK ZHUH QRW IDYRUDEOH GLG QRW
XQGHU6WULFNODQG)GDW7KH&RXUWQRWHGWKDW              MXVWLI\mWKHIDLOXUHWRLQWURGXFHWKHFRPSDUDWLYHO\YROXPLQRXV
WULDOFRXQVHOmGLGQRWLQWHUYLHZDQ\ZLWQHVVHVFRQGXFWDQ\             DPRXQWRIHYLGHQFHWKDWGLGVSHDNLQ>SHWLWLRQHUjV@IDYRUl
OHJDOUHVHDUFKRUREWDLQDQGUHYLHZDQ\UHFRUGVLQFOXGLQJ              6&W DW   7KH &RXUW IRXQG WKDW mWKH JUDSKLF
WKRVHUHJDUGLQJ>SHWLWLRQHUjV@HPSOR\PHQWHGXFDWLRQPHQWDO            GHVFULSWLRQRI>SHWLWLRQHUjV@FKLOGKRRGILOOHGZLWKDEXVHDQG
KHDOWK VRFLDO VHUYLFHV FRQWDFWV PLOLWDU\ VHUYLFH RU SULVRQ    SULYDWLRQ RU WKH UHDOLW\ WKDW KH ZDV µERUGHUOLQH PHQWDOO\
H[SHULHQFHl  ,G  )XUWKHU WULDO FRXQVHOjV WULDO SUHSDUDWLRQ   UHWDUGHGjPLJKWZHOOKDYHLQIOXHQFHGWKHMXU\jVDSSUDLVDORI
mFRQVLVWHG VROHO\ RI LQWHUYLHZV KH FRQGXFWHG ZLWK >WKH           KLV PRUDO FXOSDELOLW\l  ,G DW  FLWLQJ %R\GH Y
SHWLWLRQHU@l  ,G  $OWKRXJK ZH QRWH WKDW XQOLNH 5LFNPDQ     &DOLIRUQLD867KH6XSUHPH&RXUW
WKHUHZDVQRKRVWLOLW\RQWKHSDUWRIWULDOFRXQVHOLQWKLVFDVH       FRQFOXGHG WKDW m>P@LWLJDWLQJ HYLGHQFH XQUHODWHG WR
ZHILQGWKDW5LFNPDQVWDQGVIRUWKHUHOHYDQWSURSRVLWLRQWKDW           GDQJHURXVQHVVPD\DOWHUWKHMXU\jVVHOHFWLRQRISHQDOW\HYHQ
WKHFRPSOHWHIDLOXUHWRLQYHVWLJDWHOHWDORQHSUHVHQWH[LVWLQJ        LI LW GRHV QRW XQGHUPLQH RU UHEXW WKH SURVHFXWLRQjV GHDWK
PLWLJDWLQJ HYLGHQFH LV EHORZ DQ REMHFWLYH VWDQGDUG RI            HOLJLELOLW\FDVHl,GDW
UHDVRQDEOHUHSUHVHQWDWLRQDQGPD\LQIDFWEHVRVHYHUHDVWR
SHUPLWXVWRLQIHUSUHMXGLFH                                              /LNH:LOOLDPV&DUWHUKDVSUHVHQWHGVXEVWDQWLDOHYLGHQFHRI
                                                                        DFKLOGKRRGLQZKLFKDEXVHQHJOHFWDQGKXQJHUZHUHQRUPDO
   ,Q*URVHFORVHY%HOOWKLV&RXUWFRQVLGHUHGD7HQQHVVHH             ,QOLJKWRIWKHTXDQWLW\RIPLWLJDWLRQHYLGHQFHDYDLODEOHDQG
FDVH LQ ZKLFK WULDO FRXQVHO mDOPRVW HQWLUHO\ IDLOHG WR          WKHOLPLWVGLVFXVVHGDERYHRQZKDWWKH6WDWHFRXOGLQWURGXFH
LQYHVWLJDWHWKHFDVHKHQHYHUIRUH[DPSOHLQWHUYLHZHGWKH            LQ UHEXWWDO ZH ILQG RXUVHOYHV XQSHUVXDGHG WKDW WKHUH LV D
FULPHLQFLGHQWZLWQHVVHVRUDQ\IDPLO\PHPEHUVl)G
  WK &LU   ,Q *URVHFORVH WULDO FRXQVHO
IDLOHGWRSUHVHQWPLWLJDWLQJHYLGHQFHGXULQJWKHVHQWHQFLQJ
VWDJHRIWKHSURFHHGLQJV$PRQJRWKHUWKLQJVWULDOFRXQVHO                
                                                                              :H QRWH WKDW 6FRWW SUHGDWHG WKH 6XSUHPH &RXUWjV GHFLVLRQ LQ
IDLOHGWRSUHVHQWWKHGHIHQGDQWjVPLOLWDU\UHFRUGUHOLJLRXVDQG        :LOOLDPV E\ DSSUR[LPDWHO\ WZR ZHHNV $V :LOOLDPV FRQWDLQV VXEVWDQWLDO
YROXQWHHU DFWLYLWLHV RU H[SHUWV ZKR FRXOG WHVWLI\ DERXW         ODQJXDJH FRQFHUQLQJ WKH JHQHUDOO\ SUHMXGLFLDO QDWXUH RI WULDO FRXQVHOjV
VRFLRORJLFDORUSV\FKRORJLFDOIDFWRUV6HHLG8QGHUWKHVH            IDLOXUH WR UHVHDUFK DQG SUHVHQW PLWLJDWLQJ HYLGHQFH LQ GHDWK SHQDOW\
                                                                        VHQWHQFLQJ ZH ILQG WKDW :LOOLDPV PD\ OLPLW 6FRWW WR WKH QDUURZ IDFWV RI
FLUFXPVWDQFHV WKH &RXUW IRXQG WKH UHSUHVHQWDWLRQ ZDV             D IHGHUDO FRXUW FRQWHPSODWLQJ D KDEHDV SHWLWLRQ DIWHU D VWDWH FRXUW KDV
REMHFWLYHO\XQUHDVRQDEOH6HHLGDW                          FRQGXFWHG DQ HYLGHQWLDU\ KHDULQJ DQG PDGH D ILQGLQJ RI IDFW WKDW    KDG
                                                                        PLWLJDWLQJ HYLGHQFH EHHQ LQWURGXFHG WKH GHIHQGDQWjV UHFHQW FULPLQDO
                                                                        KLVWRU\ ZRXOG KDYH EHHQ SUHVHQWHG WR WKH MXU\ LQ UHEXWWDO
    &DUWHUY%HOOHWDO                         1R       1R                             &DUWHUY%HOOHWDO    

SRVLWLYHUHODWLRQVKLSVZLWKFKLOGUHQ0HUHO\EHFDXVH&DUWHU             ,Q$XVWLQY%HOO)GWK&LUWKLV
KDV D OHQJWK\ FULPLQDO UHFRUG KDUGO\ VHUYHV WR mH[SODLQ RU    &RXUWKHOGWKDWWKHIDLOXUHRIWULDOFRXQVHOmWRLQYHVWLJDWHDQG
FRQWURYHUWlWKHVHIDFWRUV&R]]ROLQR6:GDW1R          SUHVHQWDQ\PLWLJDWLQJHYLGHQFHGXULQJWKHVHQWHQFLQJSKDVH
UHDVRQ KDV EHHQ VKRZQ WKDW D 7HQQHVVHH WULDO FRXUW ZRXOG      VR XQGHUPLQHG WKH DGYHUVDULDO SURFHVV WKDW >GHIHQGDQWjV@
DOORZVXFKHYLGHQFHLQDFDSLWDOVHQWHQFLQJKHDULQJ+HQFH           GHDWK VHQWHQFH ZDV QRW UHOLDEOHl  5HO\LQJ RQ WKLV &RXUWjV
WKH GLVWULFW FRXUWjV FRQFOXVLRQ LJQRUHG WKH SURSHU VFRSH RI    KROGLQJLQ*OHQQY7DWH)G WK&LU
UHEXWWDO HYLGHQFH XQGHU 7HQQHVVHH ODZ  ,Q GRLQJ VR WKH       WKDW FRXQVHO SURYLGHG LQHIIHFWLYH DVVLVWDQFH ZKHUH
GLVWULFWFRXUWHUURQHRXVO\FRQFOXGHGWKDW&DUWHUKDGQRWVKRZQ         LQIRUPDWLRQ ZDV QRW SUHVHQWHG WR WKH MXU\ DW VHQWHQFLQJ
KH KDG VXIIHUHG DQ\ SUHMXGLFH IURP WKH PLVVLQJ PLWLJDWLRQ      EHFDXVH FRXQVHO PDGH OLWWOH DWWHPSW WR SUHSDUH IRU WKH
HYLGHQFH                                                              VHQWHQFLQJ SKDVH WKH $XVWLQ FRXUW IRXQG WKDW mJLYHQ WKDW
                                                                       VHYHUDO RI >GHIHQGDQWjV@ UHODWLYHV IULHQGV GHDWK SHQDOW\
   :H GLVWLQJXLVK WKLV &RXUWjV UHFHQW GHFLVLRQ LQ 6FRWW Y     H[SHUWVDQGDPLQLVWHUZHUHDYDLODEOHDQGZLOOLQJWRWHVWLI\RQ
0LWFKHOO)GWK&LURQWKLVSRLQW,Q6FRWW      KLVEHKDOIlIDLOXUHWRSUHVHQWDQ\PLWLJDWLQJHYLGHQFHmGRHV
WKLV &RXUW GHWHUPLQHG WKDW WKH GHIHQGDQW FRXOG QRW VKRZ        QRW UHIOHFW D VWUDWHJLF GHFLVLRQ EXW UDWKHU DQ DEGLFDWLRQ RI
SUHMXGLFH XQGHU 6WULFNODQG ZKHQ mWKH PLWLJDWLQJ                   DGYRFDF\l$XVWLQ)GDW
FLUFXPVWDQFHV>GHIHQGDQW@ZLVKHVKLVFRXQVHOKDGSUHVHQWHG
DUHODUJHO\HYHQRYHUZKHOPLQJO\QHJDWHGE\HYLGHQFH              ,Q WKLV FDVH WULDO FRXQVHO DWWHPSWHG DW WKH HYLGHQWLDU\
WKDWKLVEDFNJURXQGLQFOXGHVFRPPLVVLRQRIUREEHU\DVVDXOW           KHDULQJWRH[FXVHWKHLUSHUIRUPDQFHE\FODLPLQJWKDW&DUWHU
NLGQDSSLQJDQGRWKHUYLROHQWDFWVXSRQLQQRFHQWFLWL]HQVDQG         UHDFWHGYLROHQWO\WRWKHLGHDRIDPHQWDOKHDOWKGHIHQVH&DUWHU
WKDWSURVHFXWRUVZRXOGKDYHHOLFLWHGVXFKLQIRUPDWLRQIURP             QHYHU YROXQWHHUHG DQ\ LQIRUPDWLRQ DERXW KLV IDPLO\
DQ\IDPLO\PHPEHUVZKRWHVWLILHGIRU>GHIHQGDQW@l)G           EDFNJURXQGRUFKLOGKRRGWKDWWKHUHZHUHQRLQGLFDWLRQVEDVHG
DW,Q6FRWWKRZHYHUXQOLNHWKLVFDVHWKH2KLR&RXUWRI        RQ&DUWHUjVGHPHDQRUWRVXSSRUWDQDUJXPHQWEDVHGRQPHQWDO
&RPPRQ3OHDVKDGFRQGXFWHGDQHYLGHQWLDU\KHDULQJRQWKH               GHIHFW DQG WKDW  PHPEHUV RI &DUWHUjV IDPLO\ ZHUH
LVVXHRIWKHLQHIIHFWLYHQHVVRIFRXQVHOLQIDLOLQJWRSUHVHQW          XQFRRSHUDWLYH&RXQVHOFODLPHGWKDWWKH\ZHUHDZDUHWKDW
PLWLJDWLQJHYLGHQFHDQGKDGFRQFOXGHGWKDWmKDG>GHIHQGDQW@           &DUWHU VXIIHUHG IURP GLDEHWHV EXW EDVHG RQ SHUVRQDO
FKRVHQWRKDYHDSUHVHQWHQFHLQYHVWLJDWLRQUHSRUWSUHSDUHGRU         H[SHULHQFHZLWKRWKHUGLDEHWLFVWKH\VDZQRWKLQJDERXWWKDW
KDGWKHIDPLO\PHPEHUVWHVWLILHGWKHMXU\ZRXOGKDYHOHDUQHG          FRQGLWLRQ WKDW ZRXOG EH D FUHGLEOH PLWLJDWLQJ IDFWRU IRU
RI >GHIHQGDQWjV@ H[WHQVLYH FULPLQDO KLVWRU\l  ,G DW      &DUWHU7KH\DOVRVWDWHGWKDW&DUWHUGLGQRWZDQWWRWHVWLI\DW
8SRQ KDEHDV UHYLHZ WKLV &RXUW JDYH GHIHUHQFH WR WKLV          WKHVHQWHQFLQJKHDULQJ$VDUHVXOWFRXQVHOGLGQRWIXUWKHU
FRQFOXVLRQDQGWKHUHIRUHKHOGWKDWWKHGHIHQGDQWFRXOGQRW            LQYHVWLJDWHDQ\QRQVWDWXWRU\PLWLJDWLQJIDFWRUV
HVWDEOLVKSUHMXGLFHQRWLQJWKDWmXQOLNHLQ$XVWLQWKHVH
ODZ\HUVKDGDFUHGLEOHUHDVRQIRUQRWSUHVHQWLQJWHVWLPRQ\D             7ULDOFRXQVHOWHVWLILHGWKDWWKH\ZHUHQRWDZDUHRIDOOWKH
GHVLUHWRNHHS>GHIHQGDQWjV@H[WHQVLYHFULPLQDOKLVWRU\IURP           SRWHQWLDOQRQVWDWXWRU\PLWLJDWLQJHYLGHQFHRXWOLQHGDERYH
WKHMXU\l,GDW                                                %HLHUWHVWLILHGWKDWKDGKHEHHQDZDUHRIWKHPWKH\ZRXOG
                                                                       FHUWDLQO\ KDYH SXUVXHG WKHP LQ SUHWULDO LQYHVWLJDWLRQ DQG
   +HUH QR VWDWH HYLGHQWLDU\ KHDULQJ ZDV HYHU KHOG RQ WKLV   EDVHGRQWKHUHVXOWVRIWKDWLQYHVWLJDWLRQWKH\ZRXOGKDYH
LVVXH  0RUH LPSRUWDQWO\ KRZHYHU LV WKH 7HQQHVVHH             PDGHDQLQIRUPHGGHFLVLRQRQZKHWKHUWRRIIHUVXFKHYLGHQFH
HYLGHQWLDU\ODZRQUHOHYDQF\GXULQJVHQWHQFLQJZKLFKXQOLNH          DWVHQWHQFLQJ7ULDOFRXQVHOWHVWLILHGWKDWWKH\ZHUHFRQFHUQHG
WKH 2KLR ODZ LQ 6FRWW OLPLWV WKH LQWURGXFWLRQ E\ WKH         DERXWRSHQLQJWKHGRRUWR&DUWHUjVVXEVWDQWLDOFULPLQDOUHFRUG
SURVHFXWLRQ WR QHJDWLYH HYLGHQFH ZKLFK LV UHOHYDQW WR D        DQGRWKHUEDGDFWVDWWKHVHQWHQFLQJSKDVH
    &DUWHUY%HOOHWDO                             1R        1R                          &DUWHUY%HOOHWDO    

   ,Q KLV VHQWHQFLQJ SKDVH DUJXPHQW %HLHU VWUHVVHG WKDW                7KH FRXUW DOVR KHOG WKDW HYLGHQFH RI SULRU HVFDSH DQG
FRXQVHOjV HUURUV VKRXOG QRW EH KHOG DJDLQVW &DUWHU DQG              DVVDXOWDQGEDWWHU\FRQYLFWLRQVZHUHUHOHYDQWWRRQHRIWKH
SUHVHQWHGDJHQHUDOSOHDIRUPHUF\$OWKRXJKKHDOOXGHGWR                 DJJUDYDWLQJFLUFXPVWDQFHVRUZDVRWKHUZLVHKDUPOHVV6HHLG
3ULFHjV FUHGLELOLW\ DQG 3ULFHjV SOHD WR D WKLUW\ILYH \HDU          7KHGHIHQGDQWDUJXHGWKDWWKHSURVHFXWLRQLPSURSHUO\DVVHUWHG
VHQWHQFHIRUVHFRQGGHJUHHPXUGHUKHGLGQRWVXJJHVWWKDW                  WKDWWKHMXU\VKRXOGLPSRVHWKHGHDWKSHQDOW\GXHWRWKHULVN
WKHVHZHUHQRQVWDWXWRU\PLWLJDWLQJFLUFXPVWDQFHVWKDWVKRXOG               WKDWWKHGHIHQGDQWZRXOGNLOOLQSULVRQRUHVFDSHLIJLYHQDOLIH
EHZHLJKHGDJDLQVWDQ\DJJUDYDWLQJFLUFXPVWDQFHVIRXQGE\                   VHQWHQFH7KH7HQQHVVHH6XSUHPH&RXUWGHWHUPLQHGWKDWDV
WKHMXU\QRUGLGKHFRQWHQGWKDWWKH6WDWHKDGIDLOHGWRPHHW              mWKH GHIHQVH ZDV PROGHG DURXQG WKH WKHRU\ WKDW D OLIH
LWVEXUGHQRISURRIWRHVWDEOLVKDQDJJUDYDWLQJFLUFXPVWDQFH               VHQWHQFHZDVDSSURSULDWHEHFDXVHWKHGHIHQGDQWZDVPHQWDOO\
&RXQVHOjVWKHRU\ZDVWKDWHYHQWKRXJKWKHMXU\KDGFRQYLFWHG                GLVWXUEHGWRDGHJUHHWKDWLWOHVVHQHGKLVFXOSDELOLW\7KH
&DUWHUDWOHDVWLQSDUWRQWKHEDVLVRI3ULFHjVWHVWLPRQ\WKHUH            6WDWHjV DUJXPHQW ZDV LQ GLUHFW UHVSRQVH WR GHIHQGDQWjV
UHPDLQHGVXIILFLHQWGRXEWDERXW3ULFHjVFUHGLELOLW\WRSUHYHQW              PLWLJDWLQJ WKHRU\ DQG ZDV QRW LPSURSHU XQGHU WKH
LPSRVLWLRQRIWKHGHDWKSHQDOW\$WWHPSWLQJWRNHHS&DUWHUjV               FLUFXPVWDQFHVRIWKLVFDVHl,GDW
H[WHQVLYHFULPLQDOKLVWRU\DZD\IURPWKHMXU\FRXQVHODUJXHG
WKDW&DUWHUZDVDYLFWLPRIFLUFXPVWDQFHVFUHDWHGE\3ULFH                   &DUWHUDFNQRZOHGJHVWKDW%DWHVSHUPLWVWKHDGPLVVLRQRI
'HVSLWHWKLVWKHPHFRXQVHOGLGQRWUHTXHVWMXU\LQVWUXFWLRQV               DFWVFORVHO\UHODWHGWRWKHRIIHQVHRIFRQYLFWLRQDQGGLUHFWO\
RQUHVLGXDOGRXEWDERXWWKHFUHGLELOLW\RI3ULFHRULQHTXLW\LQ             UHOHYDQWWRVWDWXWRU\PLWLJDWLQJFLUFXPVWDQFHVEXWDUJXHVWKDW
WKH 3ULFH DQG &DUWHU VHQWHQFHV DV SRWHQWLDO QRQVWDWXWRU\            %DWHVGRHVQRWSHUPLWWKHDGPLVVLRQRIDOOW\SHVRIHYLGHQFH
PLWLJDWLQJFLUFXPVWDQFHV&RXQVHOjVFORVLQJDUJXPHQWILOOHG                DVIRUHFDVWE\WKHGLVWULFWFRXUW7KH6WDWHGLVDJUHHVDVVHUWLQJ
RQO\ VL[ SDJHV RI ZULWWHQ WUDQVFULSW ZKLFK UHTXLUHG                 WKDW%DWHVSHUPLWVWKHSUHVHQWDWLRQE\WKH6WDWHRIHYLGHQFH
DSSUR[LPDWHO\VL[DQGRQHKDOIPLQXWHVWRUHDGDORXGPXFK                  UHOHYDQWWRVSHFLILFGHWHUUHQFHDQGWKHIXWXUHGDQJHURXVQHVV
RI LW EDVHG RQ D SOHD WR WKH MXU\ WR QRW KROG WKH HUURUV RI   RIWKHGHIHQGDQWLQRUGHUWRUHEXWGHIHQVHWKHRULHVRIOHVVHQHG
&DUWHUjV FRXQVHO DJDLQVW &DUWHU DQG D GLVFRXUVH RQ WKH             FXOSDELOLW\ GXH WR PHQWDO FRQGLWLRQ DQG XQIRUWXQDWH VRFLDO
VDFUHGQHVV RI DOO OLIH LOOXVWUDWHG E\ D VWRU\ RI FRXQVHOjV        KLVWRU\
DWWHPSWVWRVDYHEDE\ELUGVZKRIHOORXWRIWKHLUQHVWV
                                                                              :HILQGWKDW%DWHVLVGLVWLQJXLVKDEOH:HUHDG%DWHVDV
  :KLOHZHXQGHUVWDQGWKHJUHDWEXUGHQVRQDSSRLQWHGWULDO                  FRQFHUQLQJ D GHIHQVH WKHRU\ RI UHGXFHG FXOSDELOLW\ GXH WR
FRXQVHOLQFDSLWDOFDVHVDQGWKHRIWHQOLPLWHGILQDQFLDOVXSSRUW            PHQWDOGHIHFWDWWKHWLPHRIWKHRIIHQVH&DUWHUjVSURSRVHG
WKH\UHFHLYHIRULQYHVWLJDWLRQDQGGLVFRYHU\MXVWLFHUHTXLUHV              PLWLJDWLQJHYLGHQFHGRHVQRWUHODWHWRWKHFLUFXPVWDQFHVRIWKH
WKDWFRXQVHOPXVWGRPRUHWKDQDSSHDULQFRXUWRUDUJXHWRWKH              FULPHKLVHYLGHQFHJRHVVROHO\WRHVWDEOLVKWKHFRQGLWLRQVRI
MXU\7ULDOFRXQVHOKHUHGLG&DUWHUDGLVVHUYLFHE\IDLOLQJWR             KLV FKLOGKRRG DQG GHYHORSPHQW ZKLFK KH DUJXHV ZHUH WKH
LQYHVWLJDWH PLWLJDWLQJ HYLGHQFH  :KLOH FRXQVHO DGYDQFHG              IXQGDPHQWDO RULJLQ RI KLV FULPLQDO DFWV  :H ILQG WKLV
VHYHUDOUHDVRQVIRUDGRSWLQJWKHLUVWUDWHJ\WKHLUUHDVRQVGR               HYLGHQFH WR EH WKH VDPH W\SH DQDO\]HG LQ &R]]ROLQR  :H
QRWH[FXVHWKHLUGHILFLHQF\7KHVROHVRXUFHRIPLWLJDWLQJ                 WKHUHIRUH KROG WKDW WKH 6WDWHjV HYLGHQFH GHPRQVWUDWLQJ
IDFWRUVFDQQRWSURSHUO\EHWKDWLQIRUPDWLRQZKLFKGHIHQGDQW                 &DUWHUjVFULPLQDOKLVWRU\GRHVQRWFRQWURYHUWWKHPLWLJDWLQJ
PD\YROXQWHHUFRXQVHOPXVWPDNHVRPHHIIRUWDWLQGHSHQGHQW                 IDFWRUVSUHVHQWHGDQGLVWKHUHIRUHQRWUHOHYDQW
LQYHVWLJDWLRQLQRUGHUWRPDNHDUHDVRQHGLQIRUPHGGHFLVLRQ
DVWRWKHLUXWLOLW\:HILQGWKDWUHOXFWDQFHRQ&DUWHUjVSDUWWR             &DUWHURIIHUHGHYLGHQFHRIVSHFLILFQRQVWDWXWRU\PLWLJDWLQJ
SUHVHQW D PHQWDO KHDOWK GHIHQVH RU WR WHVWLI\ VKRXOG QRW           IDFWRUV VXFK DV KLV LOOHJLWLPDF\ IDPLO\ KLVWRU\ OLPLWHG
SUHFOXGH FRXQVHOjV LQYHVWLJDWLRQ RI WKHVH SRWHQWLDO IDFWRUV          HGXFDWLRQ ORZ DQG GHFOLQLQJ ,4 PHQWDO FRQGLWLRQ DQG
    &DUWHUY%HOOHWDO                          1R       1R                          &DUWHUY%HOOHWDO   

   ,Q 6WDWH Y %DWHV  6:G  7HQQ  WKH         8QGHUWKH$PHULFDQ%DU$VVRFLDWLRQJXLGHOLQHVIRUDSSRLQWHG
6XSUHPH &RXUW RI 7HQQHVVHH UHYLVLWHG WKH &R]]ROLQR UXOH         GHDWK SHQDOW\ GHIHQVH FRXQVHO m>W@KH LQYHVWLJDWLRQ IRU
$IWHUEHLQJVHQWHQFHGWRGHDWKIRUPXUGHULQFRQQHFWLRQZLWK            SUHSDUDWLRQ RI WKH VHQWHQFLQJ SKDVH VKRXOG EH FRQGXFWHG
DFDUWKHIWWKHGHIHQGDQWLQ%DWHVREMHFWHGWRWKHDGPLVVLELOLW\       UHJDUGOHVVRIDQ\LQLWLDODVVHUWLRQE\WKHFOLHQWWKDWPLWLJDWLRQ
RIFHUWDLQHYLGHQFHDWVHQWHQFLQJ7KHGHIHQGHQWREMHFWHGWR           LVQRWWREHRIIHUHGl$PHULFDQ%DU$VVRFLDWLRQ*XLGHOLQHV
WHVWLPRQ\WKDWWKHGHIHQGDQWKDGFDVKHGVRPHRIWKHYLFWLPjV            IRUWKH$SSRLQWPHQWDQG3HUIRUPDQFHRI&RXQVHOLQ'HDWK
WUDYHOHUVjFKHFNV7KHFRXUWUXOHGWKDWDOWKRXJKWKHHYLGHQFH          3HQDOW\&DVHVF:HDJUHHWKHUHIRUHZLWK
ZDV LQWURGXFHG GXULQJ WKH JXLOW SKDVH WKH HYLGHQFH ZDV         WKHGLVWULFWFRXUWjVFRQFOXVLRQVWKDWGHIHQVHFRXQVHOPDGHQR
UHOHYDQWWRVHQWHQFLQJEHFDXVHLWERWKSURYLGHGSURRIRIDQ             LQYHVWLJDWLRQ LQWR &DUWHUjV IDPLO\ VRFLDO RU SV\FKRORJLFDO
DJJUDYDWLQJFLUFXPVWDQFHUREEHU\RUODUFHQ\LQFRQQHFWLRQ              EDFNJURXQG DQG WKDW WKH IDLOXUH WR GR VR FRQVWLWXWHG
ZLWKWKHPXUGHUDQGEHFDXVHmHYLGHQFHRI>WKHGHIHQGDQWjV@            UHSUHVHQWDWLRQ DW D OHYHO EHORZ DQ REMHFWLYH VWDQGDUG RI
EHKDYLRU VKRUWO\ DIWHU WKH KRPLFLGH ZRXOG KDYH EHHQ              UHDVRQDEOHQHVV
DGPLVVLEOH LQ UHEXWWDO WR WKH PLWLJDWLQJ HYLGHQFH WKDW
GHIHQGDQWZDVVXIIHULQJIURPDPHQWDOGLVHDVHRUGHIHFWRU               7KHVHFRQG6WULFNODQGIDFWRULQVWUXFWVWKLV&RXUWWRFRQVLGHU
H[WUHPHRUHPRWLRQDOGLVWUHVVDWWKHWLPHRIWKHRIIHQVHl         ZKHWKHU &DUWHU VXIIHUHG DQ\ SUHMXGLFH DV D UHVXOW RI WKH
6:GDW                                                       DEVHQFHRIVXFKPLWLJDWLQJIDFWRUVEHLQJH[SODLQHGWRWKHMXU\
                                                                        6HH6WULFNODQG86DW&DUWHUPXVWGHPRQVWUDWHWKDW
  7KHGHIHQGDQWQH[WREMHFWHGWRWKHWHVWLPRQ\RIDSROLFH              mFRXQVHOjVHUURUVZHUHVHULRXVHQRXJKWRGHSULYH>KLP@RID
RIILFHU ZKR GHVFULEHG WKH KLJKVSHHG FKDVH SULRU WR WKH         SURFHHGLQJWKHUHVXOWRIZKLFKZDVUHOLDEOHl*OHQQY7DWH
GHIHQGDQWjVDUUHVW7KHFRXUWIRXQGWKDWVXFKHYLGHQFHZDV             )GWK&LUILQGLQJSUHMXGLFHWREH
DGPLVVLEOHDVmSURRIHVWDEOLVKLQJODUFHQ\RIWKHDXWRPRELOHDV          mTXLWH FOHDUl ZKHQ FRXQVHO IDLOHG WR SUHVHQW SHUWLQHQW
DQ DJJUDYDWLQJ FLUFXPVWDQFHl  ,G  7KLUG WKH GHIHQGDQW        HYLGHQFHRIPHQWDOKLVWRU\DQGPHQWDOFDSDFLW\7KHGLVWULFW
FKDOOHQJHGWHVWLPRQ\ZKLFKDOOHJHGWKDWZKLOHKHZDVEHLQJ              FRXUWFRQFOXGHGWKDW&DUWHUIDLOHGWRVDWLVI\WKLVVHFRQGSURQJ
KHOGIROORZLQJDUUHVWKHKDGUHPRYHGSDUWVRIDJDUEDJHFDQ            UHDVRQLQJWKDWWKHLQWURGXFWLRQRIPLWLJDWLRQHYLGHQFHE\D
DQG KLG WKHP QHDU KLV FHOO DQG KDG WROG D MDLORU WKDW KH   FDSLWDOGHIHQGDQWZRXOGRSHQWKHGRRUWRUHEXWWDOHYLGHQFHRI
LQWHQGHGWRXVHWKHSDUWVWRNLOODJXDUG7KHFRXUWUXOHGWKDW        &DUWHUjVH[WHQVLYHFULPLQDOEDFNJURXQGDQGYLROHQWKLVWRU\
VXFKWHVWLPRQ\ZDVDGPLVVLEOHDWVHQWHQFLQJEHFDXVHLWZDV              ZKLFKZRXOGQHJDWHDQ\PLWLJDWLQJIDFWRUVRIIHUHG
UHODWHGWRPLWLJDWLQJFLUFXPVWDQFHVUDLVHGE\WKHGHIHQGDQW
7KHFRXUWUHDVRQHGWKDWEHFDXVHWKHmGHIHQGDQWLQWURGXFHG                 &DUWHU DVVHUWV WKDW QRQH RI WKH SURSRVHG EDG FKDUDFWHU
H[SHUWHYLGHQFHDQGLQVWLWXWLRQDOUHFRUGVWRFRQYH\WRWKHMXU\         HYLGHQFH H[SODLQV RU FRQWURYHUWV WKH VSHFLILF QRQVWDWXWRU\
WKDWKHZDVODERULQJXQGHUDSV\FKRORJLFDOFRQGLWLRQZKLFK              PLWLJDWLQJFLUFXPVWDQFHVDQGWKHUHIRUHZRXOGQRWKDYHEHHQ
FUHDWHG DQ H[WUHPH PHQWDO RU HPRWLRQDO GLVWXUEDQFH DW WKH       DGPLVVLEOH WR UHEXW WKH PLVVLQJ PLWLJDWLQJ HYLGHQFH
WLPHKHFRPPLWWHGWKHPXUGHUlWKH6WDWHZDVSHUPLWWHGWR               5HVSRQGHQWVFRQWHQGWKDW&DUWHUGLGQRWVXIIHUSUHMXGLFHIURP
LQWURGXFH UHEXWWLQJ HYLGHQFH mLQFOXGLQJ SURRI RI EDG             WKHGHILFLHQFLHVLQKLVWULDOFRXQVHOjVSHUIRUPDQFHEHFDXVHWKH
LQVWLWXWLRQDOEHKDYLRUWRGHPRQVWUDWHWKDWKHZDVDSHUVRQ             HYLGHQFHDGGXFHGDWWKHHYLGHQWLDU\KHDULQJLQFOXGHGQHJDWLYH
ZKRZRXOGWXUQWRYLROHQFHLQDQHIIRUWWRREWDLQKLVZD\              PDWHULDOWKDWZRXOGKDYHEHHQKDUPIXOUDWKHUWKDQKHOSIXOWR
UDWKHUWKDQDSHUVRQZKRFRPPLWWHGYLROHQWDFWVEHFDXVHKH              &DUWHUDQGEHFDXVHFURVVH[DPLQDWLRQRQWKHHYLGHQFHZRXOG
ZDV XQGHU WKH LQIOXHQFH RI H[WUHPH PHQWDO RU HPRWLRQDO          KDYHH[SRVHG&DUWHUjVSDVWFULPHVDQGYLROHQFH
GLVWXUEDQFHl,GDW
    &DUWHUY%HOOHWDO                           1R     1R                             &DUWHUY%HOOHWDO     

   )RUPHUVHFWLRQFRIWKH7HQQHVVHH&RGHSURYLGHV           ,GDW7KHUHIRUHXQGHU7HQQHVVHHODZm>H@YLGHQFHLV
WKHDSSOLFDEOHVWDQGDUGVIRUWKHDGPLVVLELOLW\RIHYLGHQFHLQ          UHOHYDQW WR SXQLVKPHQW RQO\ LI LW LV UHOHYDQW WR D VWDWXWRU\
&DUWHUjVVHQWHQFLQJKHDULQJ,WVWDWHVWKDWmHYLGHQFHPD\EH          DJJUDYDWLQJFLUFXPVWDQFHRUWRDPLWLJDWLQJIDFWRUUDLVHGE\
SUHVHQWHGDVWRDQ\PDWWHUWKDWWKHFRXUWGHHPVUHOHYDQWWRWKH        WKHGHIHQGDQWl6WDWHY7HDJXH6:G7HQQ
SXQLVKPHQWlDQGPD\LQFOXGHWKDWmHYLGHQFHWHQGLQJWR            
UHEXW PLWLJDWLQJ IDFWRUVl  7HQQ &RGH $QQ  F
QRZ7HQQ&RGH$QQF6XSS                ,Q&R]]ROLQRWKHGHIHQGDQWZDVVHQWHQFHGWRGHDWKIRUWKH
7KH&RGHSHUPLWVWKDWmHYLGHQFHZKLFKWKHFRXUWGHHPVWR               PXUGHURIDSROLFHRIILFHULQDVHQWHQFLQJKHDULQJZKHUHWKH
KDYH SUREDWLYH YDOXH RQ WKH LVVXH RI SXQLVKPHQW PD\ EH        6WDWHZDVSHUPLWWHGWRLQWURGXFHHYLGHQFHHVWDEOLVKLQJWKDW
UHFHLYHG UHJDUGOHVV RI LWV DGPLVVLELOLW\ XQGHU WKH UXOHV RI    WKHGHIHQGDQWKDGFRPPLWWHGVHYHUDODUPHGUREEHULHVDIWHUWKH
HYLGHQFHlDQGQRWHVWKDWmWKHGHIHQGDQW>PXVWEH@DFFRUGHG            PXUGHUEXWEHIRUHKLVFDSWXUHE\SROLFH6:GDW
D IDLU RSSRUWXQLW\ WR UHEXW DQ\ KHDUVD\ VWDWHPHQWVl  ,G     5HPDQGLQJ WKH FDVH IRU D QHZ VHQWHQFLQJ KHDULQJ WKH
)XUWKHUHYLGHQFHPD\QRWEHLQWURGXFHGDWVHQWHQFLQJmLQ             7HQQHVVHH6XSUHPH&RXUWIRXQGWKDW
YLRODWLRQ RI WKH FRQVWLWXWLRQ RI WKH 8QLWHG 6WDWHV RU WKH
FRQVWLWXWLRQRI7HQQHVVHHl,G                                       HYLGHQFH RI VXEVHTXHQW FULPHV ZDV QRW DGPLVVLEOH WR
                                                                         HVWDEOLVKDQ\RIWKHDJJUDYDWLQJFLUFXPVWDQFHVIRULW
  7KH 7HQQHVVHH 6XSUHPH &RXUW KDV UHMHFWHG DQ                      LV UHOHYDQW WR QRQH RI WKHP    )URP WKH OLPLWDWLRQV
LQWHUSUHWDWLRQ RI  F ZKLFK ZRXOG SHUPLW WKH            SODFHG RQ WKH XVH RI WKLV HYLGHQFH LQ WKH FRXUWjV
LQWURGXFWLRQ RI DQ\ HYLGHQFH UHOHYDQW WR SXQLVKPHQW                LQVWUXFWLRQVLWDSSHDUVWKDWWKHWULDOMXGJHSHUPLWWHGLWV
UHJDUGOHVV RI WKH HYLGHQFHjV UHOHYDQF\ WR WKH H[LVWHQFH RI       LQWURGXFWLRQRQWKHWKHRU\WKDWLWZDVUHOHYDQWWRUHEXW
DJJUDYDWLQJ FLUFXPVWDQFHV RU PLWLJDWLQJ IDFWRUV  6HH              HYLGHQFH RI PLWLJDWLQJ FLUFXPVWDQFHV WKDW PLJKW EH
&R]]ROLQRY6WDWH6:G7HQQ,Q             DGYDQFHG E\ WKH GHIHQGDQW  ,Q WKLV KH ZDV LQ HUURU
&R]]ROLQR WKH FRXUW REVHUYHG WKDW DOWKRXJK m>R@Q LWV IDFH      m5HEXWWLQJHYLGHQFHlLVWKDWZKLFKWHQGVWRH[SODLQRU
VHFWLRQFZRXOGVHHPWRSHUPLWWKHLQWURGXFWLRQRIHYLGHQFH            FRQWURYHUWHYLGHQFHSURGXFHGE\DQDGYHUVHSDUW\2QH
µUHOHYDQWWRWKHSXQLVKPHQWjLQDGGLWLRQWRWKDWµWHQGLQJWR             FDQQRWUHEXWDSURSRVLWLRQWKDWKDVQRWEHHQDGYDQFHG
HVWDEOLVKRUUHEXWWKHDJJUDYDWLQJFLUFXPVWDQFHVjRUµWHQGLQJ            :KLOH WKLV HUURU DGPLWWHGO\ PLJKW KDYH EHHQ PDGH
WR HVWDEOLVK RU UHEXW DQ\ PLWLJDWLQJ IDFWRUV    WKLV       KDUPOHVV E\ WKH ODWHU LQWURGXFWLRQ E\ WKH GHIHQGDQW RI
LQWHUSUHWDWLRQLVRQHWKDWZHFDQQRWDFFHSWl,GDW            HYLGHQFHWRZKLFKWKH6WDWHjVSURRIRIVXEVHTXHQWFULPHV
7KHFRXUWFRQWLQXHGWRVWDWHWKDWXSRQFRQVLGHUDWLRQRIWKH             ZDVUHOHYDQWLQUHEXWWDOWKDWGLGQRWRFFXULQWKHLQVWDQW
HQWLUHVWDWXWH                                                          FDVH7KHGHIHQGDQWjVSURRIZDVOLPLWHGWRDQDWWHPSWWR
                                                                         VKRZ WKH RULJLQ LQ D WURXEOHG FKLOGKRRG RI WKH
  LWLVFOHDUWKDWWKHRQO\LVVXHVWKDWWKHMXU\PD\SURSHUO\            GHIHQGDQWjV FULPLQDO DFWV  7KLV SURRI ZDV QRW
  FRQVLGHU LQ UHDFKLQJ D GHFLVLRQ RQ WKH VHQWHQFH WR EH         FRQWURYHUWHGE\WKH6WDWHjVGHPRQVWUDWLRQRIKLVSUHVHQW
  LPSRVHG DUH ZKHWKHU WKH 6WDWH KDV HVWDEOLVKHG RQH RU           FULPLQDOSURFOLYLWLHV
  PRUH RI WKH DJJUDYDWLQJ FLUFXPVWDQFHV EH\RQG D
  UHDVRQDEOH GRXEW DQG LI VR ZKHWKHU DQ\ PLWLJDWLQJ          ,GDWFLWDWLRQVRPLWWHGHPSKDVLVDGGHG:HILQGWKDW
  IDFWRUV KDYH EHHQ VKRZQ WKDW ZRXOG RXWZHLJK WKRVH             &R]]ROLQR UHTXLUHV WKH 6WDWH WR VKRZ WKDW LWV QHJDWLYH
  DJJUDYDWLQJFLUFXPVWDQFHV$Q\HYLGHQFHWKDWGRHVQRW               HYLGHQFH ZDV UHOHYDQW WR D PLWLJDWLQJ IDFWRU DFWXDOO\
  JR WR WKH SURRI RI RQH RU WKH RWKHU RI WKRVH LVVXHV LV   SUHVHQWHG E\ &DUWHU DQG QRW WKDW LW ZDV UHOHYDQW VROHO\ WR
  LUUHOHYDQWWRWKHMXU\jVGHOLEHUDWLRQ                               SXQLVKPHQW