Court Opinion

ID: 2969592
Source: CourtListenerOpinion
Date Created: 2015-09-22 15:52:36.236098+00
Date Added: 2024-06-11T11:43:25.377306
License: Public Domain

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
     0XOOLVY8QLWHG6WDWHV                                   1R                    3XUVXDQW WR 6L[WK &LUFXLW 5XOH 

                                                                                        (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU

&RQJUHVV LQWHQGHG WKDW IHGHUDO FRXUWV GHYRWH WKHLU MXGLFLDO                                  )LOH 1DPH DS

UHVRXUFHV WR FRQVLGHUnRQ D PRUH OLPLWHG UHFRUG WKDQ WKDW
EHIRUHWKH$7)nWKHZHLJKW\TXHVWLRQRIZKHWKHUDIHORQjV
ILUHDUPULJKWVVKRXOGEHUHVWRUHG$FFRUGLQJO\ZHMRLQZLWK                   81,7('67$7(6&28572)$33($/6
WKH6HFRQG)LIWK1LQWKDQG7HQWK&LUFXLWVLQFRQFOXGLQJ                                         )257+(6,;7+&,5&8,7
WKDW&RQJUHVVWKURXJKLWVDSSURSULDWLRQVDFWKDVFKRVHQWRDW                                      BBBBBBBBBBBBBBBBB
OHDVW WHPSRUDULO\ VXVSHQG WKH RSHUDWLRQ RI  F LQ LWV
HQWLUHW\WKHUHE\UHPRYLQJVXEMHFWPDWWHUMXULVGLFWLRQIURPWKH
GLVWULFWFRXUW
                                                                                 s$0(6 0,&+$(/ 08//,6            ;
                                    ,,,                                                   3ODLQWLII$SSHOOHH     
                                                                                                                   
  )RUWKHIRUHJRLQJUHDVRQVZH5(9(56(WKHGLVWULFWFRXUWjV                                                          1R
FRQFOXVLRQWKDWLWKDGVXEMHFWPDWWHUMXULVGLFWLRQWRFRQVLGHU                              Y                     
SODLQWLIIjVSHWLWLRQWRKDYHKLVILUHDUPULJKWVUHVWRUHGSXUVXDQW                                                   !
                                                                                                                   
WR  F  :KLOH SODLQWLIIjV FRPSODLQW DOVR UHIHUV WR                81,7(' 67$7(6 2) $0(5,&$ 
UHVWRUDWLRQRIKLVFLYLOULJKWVLWLVFOHDUWKDWKLVULJKWWREHDU                       'HIHQGDQW$SSHOODQW 
DUPVLVWKHRQO\ULJKWVRXJKW7KHFDVHLVGLVPLVVHGIRUODFN                                                    1
RIVXEMHFWPDWWHUMXULVGLFWLRQ
                                                                                       $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
                                                                                    IRUWKH:HVWHUQ'LVWULFWRI7HQQHVVHHDW0HPSKLV
                                                                                   1RnsRQ3KLSSV0F&DOOD'LVWULFWsXGJH
                                                                                                     $UJXHG$XJXVW
                                                                                              'HFLGHGDQG)LOHG2FWREHU
                                                                                %HIRUH.(11('<DQG1255,6&LUFXLWsXGJHV.$7=
                                                                                                 'LVWULFWsXGJH
                                                                                                       BBBBBBBBBBBBBBBBB
     FDVHV
         )RUWXQDWHO\   DQRWKHU   GHFLVLRQ   E\   WKH    )LIWK   &LUFXLW   LQ                                &2816(/
     >0F*LOO@ IRXQG WKDW FRQJUHVVLRQDO LQWHQW WR SURKLELW DQ\ )HGHUDO
     UHOLHIHLWKHU WKURXJK $7) RU WKH FRXUWVLV FOHDU 7KH )LIWK
                                                                                $5*8('  7KRPDV 0 %RQG\ 81,7(' 67$7(6
                                                                                '(3$570(17 2) s867,&( &,9,/ ',9,6,21
     &LUFXLW FRQFOXGHG WKDW FRQYLFWHG IHORQV DUH WKHUHIRUH QRW HOLJLEOH
     IRU MXGLFLDO UHYLHZ RI WKHLU UHOLHI DSSOLFDWLRQV
         *LYHQ WKLV FRQIOLFW LQ WKH FLUFXLW FRXUWV LW LV LPSRUWDQW WKDW        :DVKLQJWRQ '& IRU $SSHOODQW  /HV sRQHV %85&+
     ZH RQFH DJDLQ FODULI\ RXU RULJLQDO DQG VXVWDLQLQJ LQWHQWLRQ 7KH
     JRDO RI WKLV SURYLVLRQ KDV DOZD\V EHHQ WR SURKLELW FRQYLFWHG
     IHORQV IURP JHWWLQJ WKHLU JXQV EDFNZKHWKHU WKURXJK $7) RU WKH
                                                                                    
     FRXUWV ,W ZDV QHYHU RXU LQWHQWLRQ WR VKLIW WKH EXUGHQ WR WKH                   7KH +RQRUDEOH 'DYLG $ .DW] 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH
     FRXUWV                                                                    1RUWKHUQ 'LVWULFW RI 2KLR VLWWLQJ E\ GHVLJQDWLRQ

                                                                                                                   
     0XOOLVY8QLWHG6WDWHV                         1R       1R                           0XOOLVY8QLWHG6WDWHV        

3257(5	s2+16210HPSKLV7HQQHVVHHIRU$SSHOOHH                       YLROHQWFULPH7KHUHIRUHWKH&RPPLWWHHKDVLQFOXGHG
21 %5,()  7KRPDV 0 %RQG\ 81,7(' 67$7(6                          ODQJXDJHLQWKHELOOZKLFKSURKLELWVWKHXVHRIIXQGVIRU
'(3$570(17 2) s867,&( &,9,/ ',9,6,21                                $7)WRLQYHVWLJDWHDQGDFWXSRQDSSOLFDWLRQVIURPUHOLHI
:DVKLQJWRQ'&IRU$SSHOODQW/HVsRQHV:s0LFKDHO                IURP)HGHUDOILUHDUPVGLVDELOLWLHV
&RG\ 6XVDQ 0 &ODUN %85&+ 3257(5 	 s2+1621
0HPSKLV7HQQHVVHHIRU$SSHOOHH                                       65HS1RQG&RQJG6HVVDFFRUG6
                                                                        5HS 1R  G &RQJ VW 6HVV  
                      BBBBBBBBBBBBBBBBB                                 H[SODLQLQJWKDWLWZDVLPSRVLQJDEDQRQ$7)LQYHVWLJDWLRQV
                                                                        EHFDXVH D GHFLVLRQ WR JUDQW UHOLHI mFRXOG KDYH GHYDVWDWLQJ
                          23,1,21                                       FRQVHTXHQFHVIRULQQRFHQWFLWL]HQVLIWKHZURQJGHFLVLRQLV
                      BBBBBBBBBBBBBBBBB                                 PDGHl,QVWHDG&RQJUHVVGHWHUPLQHGWKDWWKH$7)jVVFDUFH
                                                                        UHVRXUFHVmZRXOGEHEHWWHUXWLOL]HGlRQPRUHSUHVVLQJPDWWHUV
   .(11('<&LUFXLWsXGJH7KH8QLWHG6WDWHVDSSHDOVWKH               VXFKDVmFUDFN>LQJ@GRZQRQYLROHQWFULPHl65HS1R
GLVWULFW FRXUWjV RUGHU JUDQWLQJ SODLQWLIIjV SHWLWLRQ IRU WKH     G&RQJVW6HVV65HS1R
UHPRYDORIWKHILUHDUPVGLVDELOLWLHV LPSRVHGRQKLPE\              G&RQJG6HVVo,QUHHQDFWLQJWKHEDQIRU
86&   J  7KH %XUHDX RI $OFRKRO 7REDFFR 	        WKH IRXUWK FRQVHFXWLYH \HDU &RQJUHVV UHHPSKDVL]HG WKLV
)LUHDUPVm$7)lLVWKHRQO\DJHQF\DXWKRUL]HGWRJUDQWUHOLHI          SRLQW VWDWLQJ mWKRVH ZKR FRPPLW IHORQLHV VKRXOG QRW EH
IURPILUHDUPVGLVDELOLWLHVXQGHUF&RQJUHVVLQLWVODVW       DOORZHG WR KDYH WKHLU ULJKW WR RZQ D ILUHDUP UHVWRUHG   
HLJKW DSSURSULDWLRQV DFWV KDV SURKLELWHG WKH $7) IURP           7KHUH LV QR UHDVRQ WR VSHQG WKH *RYHUQPHQWjV WLPH RU
H[SHQGLQJIXQGVWRSURFHVVDSSOLFDWLRQVIRUWKHUHPRYDORI              WD[SD\HUjVPRQH\WRUHVWRUHDFRQYLFWHGIHORQjVULJKWWRRZQ
ILUHDUPGLVDELOLWLHV7KHGLVWULFWFRXUWKHOGWKDWGXHWRWKH          DILUHDUPl+55HS1RWK&RQJVW6HVV
LQDELOLW\RIWKH$7)WRDFWLWKDGVXEMHFWPDWWHUMXULVGLFWLRQ         *LYHQWKLVKLVWRU\LWLVXQUHDVRQDEOHWREHOLHYHWKDW
XQGHUFWRJUDQWUHOLHIIURPWKHGLVDELOLW\DQGUHVWRUHG
SODLQWLIIjV ULJKW WR SRVVHVV ILUHDUPV DQG DPPXQLWLRQ  7KH
JRYHUQPHQW DVVHUWV WKDW WKH GLVWULFW FRXUW ODFNHG VXEMHFW            
PDWWHU MXULVGLFWLRQ WR FRQVLGHU SODLQWLIIjV SHWLWLRQ IRU WKH           6HH DOVR  &RQJ 5HF 6  2FW   VWDWHPHQW RI 6HQ
UHVWRUDWLRQRIILUHDUPULJKWVXQGHU86&F)RU            6LPRQ ,Q WKH FRQWH[W RI WKH  YHUVLRQ RI WKH $SSURSULDWLRQV $FW

WKHUHDVRQVGHWDLOHGEHORZZHDJUHHDQGUHYHUVHWKHMXGJPHQW           6HQDWRU 6LPRQ ZKR DORQJ ZLWK 6HQDWRU /DXWHQEHUJ SURSRVHG WKH
                                                                        SURYLVLRQ EDUULQJ WKH $7) IURP SURFHVVLQJ DSSOLFDWLRQV IRU WKH UHPRYDO
RIWKHGLVWULFWFRXUWDQGGLVPLVVWKHFDVH                            RI ILUHDUPV GLVDELOLWLHV LQ DQG DGYRFDWHG LWV LQFOXVLRQ LQ HDFK
                                                                        IROORZLQJ \HDU VWDWHG DV IROORZV
                                 ,                                               ,Q >5LFH @ WKH 7KLUG &LUFXLW &RXUW RI $SSHDOV IRXQG WKDW WKH
                                                                             FXUUHQW IXQGLQJ SURKLELWLRQ GRHV QRW PDNH FOHDU FRQJUHVVLRQDO
  ,QsDPHV0LFKDHO0XOOLVmSODLQWLIIlSOHGJXLOW\WR                 LQWHQW WR EDU DOO DYHQXHV RI UHOLHI IRU FRQYLFWHG IHORQV %\ WKHLU

IDOVLI\LQJWUDYHOH[SHQVHVLQFRQQHFWLRQZLWKKLVEXVLQHVVLQ               UHDVRQLQJ VLQFH $7) LV XQDEOH WR FRQVLGHU DSSOLFDWLRQV IRU
                                                                             UHOLHI IHORQV DUH HQWLWOHG WR DVN WKH FRXUWV WR UHYLHZ WKHLU
YLRODWLRQRI86&ZKLFKFDUULHVDPD[LPXPWHUP                  DSSOLFDWLRQV
RILPSULVRQPHQWRIILYH\HDUV$VDFRQVHTXHQFHSODLQWLII                       7KLV PLVJXLGHG GHFLVLRQ FRXOG IORRG WKH FRXUWV ZLWK IHORQV
ZDVSURKLELWHGIURPSRVVHVVLQJILUHDUPVE\86&                   VHHNLQJ WKH UHVWRUDWLRQ RI WKHLU JXQ ULJKWV HIIHFWLYHO\ VKLIWLQJ
J ZKLFK SURYLGHV LQ UHOHYDQW SDUW WKDW m>L@W VKDOO EH        IURP $7) WR WKH FRXUWV WKH EXUGHQ RI FRQVLGHULQJ WKHVH
XQODZIXOIRUDQ\SHUVRQZKRKDVEHHQFRQYLFWHGLQDQ\                  DSSOLFDWLRQV ,QVWHDG RI ZDVWLQJ WD[SD\HU PRQH\ DQG WKH WLPH RI
                                                                             $7) DJHQWV ZKLFK FRXOG EH PXFK EHWWHU VSHQW RQ LPSRUWDQW ODZ
FRXUW RI D FULPH SXQLVKDEOH E\ LPSULVRQPHQW IRU D WHUP             HQIRUFHPHQW HIIRUWV  ZH ZRXOG QRZ EH ZDVWLQJ FRXUW UHVRXUFHV
H[FHHGLQJ RQH \HDU    WR SRVVHVV DQ\ ILUHDUP RU                 DQG GLVWUDFWLQJ WKH FRXUWV IURP FRQVLGHUDWLRQ RI VHULRXV FULPLQDO
       0XOOLVY8QLWHG6WDWHV                          1R        1R                         0XOOLVY8QLWHG6WDWHV         

WHQGHQF\WRZDUGYLROHQFHRUXVHRIGUXJVDQGDOFRKRO7KHVH                DPPXQLWLRQl  3ODLQWLII ZKR LV DSSDUHQWO\ DQ DYLG KXQWHU
LQVWLWXWLRQDO GLVDGYDQWDJHV PDNH LW KLJKO\ XQOLNHO\ WKDW               VRXJKWWRUHPRYHWKHILUHDUPUHVWULFWLRQVLPSRVHGRQKLPE\
&RQJUHVV LQWHQGHG GLVWULFW FRXUW WR UHYLHZ DQ DSSOLFDQWV              J$FFRUGLQJO\SODLQWLIIREWDLQHGOHJDOFRXQVHO
GDQJHURXVQHVVWRVRFLHW\LQWKHILUVWLQVWDQFH1RUZRXOGWKH               DQGLQ2FWREHU RI UHTXHVWHGDQDSSOLFDWLRQIURPWKH
FRVWVWRWKHFRXUWVLQPDNLQJDQLQYHVWLJDWLRQEHOHVVWKDQWKH              $7) IRU UHOLHI IURP KLV ILUHDUPV GLVDELOLWLHV SXUVXDQW WR
FRVWV WR WKH $7)  7KH\ PLJKW ZHOO EH JUHDWHU VLQFH WKHUH         86&F7KH$7)UHVSRQGHGWKDWLWZDVXQDEOHWR
ZRXOGEHQRLQYHVWLJDWLRQRUWHVWLPRQ\E\WUDLQHGDJHQWVIRU                 HYHQ SURYLGH SODLQWLII ZLWK DQ DSSOLFDWLRQ GXH WR ODQJXDJH
WKHFRXUWWRUHO\RQ                                                        &RQJUHVVLQVHUWHGLQDQDSSURSULDWLRQVDFWZKLFKIRUEDGWKH
                                                                             $7)IURPXVLQJDQ\DSSURSULDWHGIXQGVWRHYDOXDWHRUSURFHVV
  )LQDOO\ WKH OHJLVODWLYH KLVWRU\ RQO\ VHUYHV WR IXUWKHU             VXFKDSSOLFDWLRQV
UHLQIRUFH WKH FRQFOXVLRQ WKDW &RQJUHVV GLG QRW LQWHQG WR
PRGLI\  F WR SHUPLW GH QRYR MXGLFLDO UHYLHZ RI                   8QGHWHUUHG SODLQWLII ILOHG DQ DFWLRQ LQ WKH GLVWULFW FRXUW
DSSOLFDWLRQVIRUWKHUHLQVWDWHPHQWRIILUHDUPSULYLOHJHV$V                VHHNLQJWKHUHVWRUDWLRQRIKLVFLYLOULJKWVRULQWKHDOWHUQDWLYH
REVHUYHGLQ0F*LOO)GDWLQDUHSRUWWRWKH6HQDWH                WKHUHPRYDORIKLVIHGHUDOILUHDUPGLVDELOLW\XQGHUF
WKH$SSURSULDWLRQV&RPPLWWHHH[SODLQHGZK\LWILUVWZLWKKHOG                 7KHGLVWULFWFRXUWGHQLHGSODLQWLIIjVSHWLWLRQZLWKRXWSUHMXGLFH
IXQGV LQ WKH  $SSURSULDWLRQV $FW IRU $7) DFWLRQ RQ              VWDWLQJ WKDW SODLQWLII PXVW ILUVW H[KDXVW KLV DGPLQLVWUDWLYH
DSSOLFDWLRQVIRUFUHOLHI                                          UHPHGLHV E\ VXEPLWWLQJ DQ DSSOLFDWLRQ PDGH SXUVXDQW WR
                                                                             FWRWKH$7)DWOHDVWWZR\HDUVDIWHUWKHWHUPLQDWLRQRI
     $IWHU $7) DJHQWV VSHQG PDQ\ KRXUV LQYHVWLJDWLQJ D                KLVSUREDWLRQ3ODLQWLIIDJDLQZURWHWKH$7)RQ2FWREHU
  SDUWLFXODU DSSOLFDQW>@ WKH\ PXVW GHWHUPLQH ZKHWKHU RU               DQGZDVDJDLQWROGWKDWWKHDJHQF\ZDVQRWDFFHSWLQJ
  QRWWKDWDSSOLFDQWLVVWLOODGDQJHUWRSXEOLFVDIHW\7KLV               DSSOLFDWLRQV
  LVDYHU\GLIILFXOWDQGVXEMHFWLYHWDVNZKLFKFRXOGKDYH
  GHYDVWDWLQJ FRQVHTXHQFHV IRU LQQRFHQW FLWL]HQV LI WKH                   ,Q sDQXDU\ RI  SODLQWLII ILOHG WKLV DFWLRQ IRU WKH
  ZURQJGHFLVLRQLVPDGH7KH&RPPLWWHHEHOLHYHVWKDW                       UHVWRUDWLRQRIKLVFLYLOULJKWVRULQWKHDOWHUQDWLYHIRUUHPRYDO
  WKH DSSUR[LPDWHO\  PDQ\HDUV VSHQW DQQXDOO\ WR                     RIKLVIHGHUDOILUHDUPGLVDELOLW\7KH8QLWHG6WDWHVDUJXHG
  LQYHVWLJDWH DQG DFW XSRQ WKHVH LQYHVWLJDWLRQV DQG                    WKDW WKH GLVWULFW FRXUW ZDV ZLWKRXW MXULVGLFWLRQ WR FRQVLGHU
  DSSOLFDWLRQVZRXOGEHEHWWHUXWLOL]HGWRFUDFNGRZQRQ                     SODLQWLIIjVUHTXHVW7KHGLVWULFWFRXUWGLVDJUHHGFRQFOXGLQJ
                                                                             WKDW&RQJUHVVjDSSURSULDWLRQVDFWVGLGQRWVXVSHQGWKHMXGLFLDO
                                                                             UHOLHIDYDLODEOHXQGHUF7KHFRXUWUHIHUUHGWKHPHULWV
                                                                            RI SODLQWLIIjV SHWLWLRQ WR D PDJLVWUDWH MXGJH mWR GHYHORS D
       7KH 8QLWHG 6WDWHV HPSKDVL]HG WKLV SRLQW LQ LWV 0RWLRQ IRU             UHFRUG PDNH DQ\ IDFWXDO ILQGLQJV DQG PDNH D
5HFRQVLGHUDWLRQ EHIRUH WKH GLVWULFW FRXUW SRLQWLQJ RXW WKDW LQ FRQQHFWLRQ
                                                                             UHFRPPHQGDWLRQ    UHJDUGLQJ WKH UHOLHI VRXJKWl  7KH
ZLWK LWV LQYHVWLJDWLRQ $7) ZRXOG LQWHUYLHZ WKH DSSOLFDQW WKH OLVWHG
FKDUDFWHU UHIHUHQFHV LQGHSHQGHQWO\ GHYHORSHG UHIHUHQFHV HPSOR\HUV
                                                                             PDJLVWUDWH MXGJH UHYLHZHG WKH 3UHVHQWHQFH ,QYHVWLJDWLRQ
PHPEHUV RI WKH FRPPXQLW\ DQG QHLJKERUKRRG ZKHUH WKH DSSOLFDQW OLYHV         5HSRUWSUHSDUHGLQDWWKHWLPHRISODLQWLIIjVFRQYLFWLRQ
WKH DSSOLFDQWjV SUREDWLRQ RIILFHUV DQG RWKHU ODZ HQIRUFHPHQW RIILFHUV      OHWWHUV DQG UHFRPPHQGDWLRQV IURP ILYH XQUHODWHG SHUVRQV
7KH $7) ZRXOG DOVR FRQGXFW D ODZ HQIRUFHPHQW UHFRUGV FKHFN %DVHG RQ         VXSSOLHG E\ SODLQWLII DQG FRQVXOWHG ZLWK WKH SUREDWLRQ
DOO RI WKLV DFFXPXODWHG LQIRUPDWLRQ WKH $7) ZRXOG GHWHUPLQH ZKHWKHU RU       GHSDUWPHQW WR GHWHUPLQH LI SODLQWLII KDG DQ\ LQWHUYHQLQJ
QRW UHOLHI VKRXOG EH JUDQWHG EDVHG RQ SXEOLF VDIHW\ DQG SXEOLF LQWHUHVW
FRQFHUQV 6HH HJ 6PLWK Y %UDG\  ) 6XSS  o ('
                                                                             FULPLQDO DFWLYLW\  $IWHU FRQVLGHULQJ WKLV LQIRUPDWLRQ WKH
:LV  GHVFULELQJ WKH LQYHVWLJDWLRQV WKH $7) FRQGXFWHG SXUVXDQW WR      PDJLVWUDWH MXGJH FRQFOXGHG WKDW SODLQWLII ZDV QRW OLNHO\ WR
 F &OHDUO\ WKLV PD\ UHVXOW LQ D YHU\ GLIIHUHQW SLFWXUH WKDQ WKDW
JOHDQHG VROHO\ IURP LQIRUPDWLRQ KDQG VHOHFWHG E\ DQ DSSOLFDQW
      0XOOLVY8QLWHG6WDWHV                          1R     1R                        0XOOLVY8QLWHG6WDWHV       

HQGDQJHUSXEOLFVDIHW\DQGWKDWJUDQWLQJSODLQWLIIjVUHTXHVWHG          PLVFDUULDJHRIMXVWLFHLWGRHVQRWSHUPLWDGLVWULFWFRXUWWR
UHOLHIZDVQRWFRQWUDU\WRSXEOLFLQWHUHVW                             FRQGXFWDGHQRYRUHYLHZRIDQ$7)GHQLDO,QIDFWHYHU\
                                                                        FLUFXLWWRDGGUHVVWKHPDWWHUKDVFRQFOXGHGWKDWDGLVWULFWFRXUW
   7KHGLVWULFWFRXUWUHYLHZHGWKHPDJLVWUDWHMXGJHjV5HSRUW            VKRXOGRQO\UHYLHZ$7)GHQLDOVWRGHWHUPLQHLIWKHGHFLVLRQ
DQG5HFRPPHQGDWLRQDQGIRXQGWKDWWKHPDJLVWUDWHMXGJHKDG              ZDVDUELWUDU\DQGFDSULFLRXV6HH%DJDGRQDVY$7))G
DGHTXDWHO\FRQVLGHUHGDOOIDFWRUVRWKHUWKDQSODLQWLIIjVPHQWDO           WK &LU  %UDGOH\ Y $7)  )G 
KHDOWK$FFRUGLQJO\WKHGLVWULFWFRXUWUHTXLUHG SODLQWLIIWR         WK&LU.LWFKHQVY$7))G
VXEPLW WR DQ H[DPLQDWLRQ E\ D SV\FKRORJLVW  7KH GLVWULFW      WK&LUVHHDOVR'XQODSY$7)1R
FRXUW WKHQ UHIHUUHG FRQVLGHUDWLRQ RI WKH UHVXOWLQJ PHQWDO         :/  WK &LU 0DU   XQSXEOLVKHG
KHDOWKUHSRUWWRWKHPDJLVWUDWHMXGJHZKRDJDLQFRQFOXGHG              7KXV ZH FRQFOXGH IURP WKH SODLQ WH[W RI  F WKDW
WKDW SODLQWLIIjV ILUHDUP GLVDELOLW\ VKRXOG EH UHPRYHG  7KH     &RQJUHVV VXVSHQGHG WKH SURYLVLRQ LQ LWV HQWLUHW\ ZKHQ LW
GLVWULFW FRXUW DFFHSWHG WKH PDJLVWUDWH MXGJHjV 5HSRUW DQG        SURKLELWHGWKH$7)IURPWDNLQJDQ\DFWLRQRQDSSOLFDWLRQV
5HFRPPHQGDWLRQ DQG RUGHUHG WKH UHPRYDO RI SODLQWLIIjV             PDGHSXUVXDQWWRFDVWKHVWDWXWHPDNHVQRSURYLVLRQ
ILUHDUPGLVDELOLWLHVSXUVXDQWWRF7KH8QLWHG6WDWHV           IRUGHQRYRUHYLHZE\DGLVWULFWFRXUW6HH0F+XJKY5XELQ
EURXJKWWKLVWLPHO\DSSHDO                                             1R   :/  DW 
o
G &LU sXO\ 
                                                                        %XUWFK)GDW
                                  ,,
                                                                           (YHQLIWKHUHZHUHDQ\GRXEWFRQFHUQLQJ&RQJUHVVjLQWHQW
  7KH 8QLWHG 6WDWHV FRQWHQGV WKDW WKH ODQJXDJH DQG               WKHSUDFWLFDOLWLHVRIFRQGXFWLQJWKHUHTXLVLWHLQYHVWLJDWLRQRQO\
OHJLVODWLYHKLVWRU\RIFDQG&RQJUHVVjVDSSURSULDWLRQV           VHUYHWRUHLQIRUFHWKHFRQFOXVLRQWKDW&RQJUHVVLQWHQGHGWR
DFWV VKRZ WKDW LQ ZLWKGUDZLQJ IXQGLQJ IURP $7)                   VXVSHQGFjVRSHUDWLRQ$VWKH8QLWHG6WDWHVDUJXHV
LQYHVWLJDWLRQVXQGHUF&RQJUHVVPHDQWWRVXVSHQGWKH            WKHRQO\ZD\WRUHOLDEO\GHWHUPLQHZKHWKHUDFRQYLFWHGIHORQ
SURYLVLRQjVRSHUDWLRQLQLWVHQWLUHW\:HUHYLHZWKHGLVWULFW          PD\VDIHO\EHHQWUXVWHGZLWKDILUHDUPSXUVXDQWWRFLV
FRXUWjV GHWHUPLQDWLRQ RI LWV VXEMHFW PDWWHU MXULVGLFWLRQ GH      WRFRQGXFWH[WHQVLYHILHOGLQYHVWLJDWLRQVLQFOXGLQJLQWHUYLHZV
QRYR6HHHJ0LFKLJDQ3HDWY(QYLURQPHQWDO3URWHFWLRQ             RIIDPLO\IULHQGVQHLJKERUVDQGFRZRUNHUV:KLOHGLVWULFW
$JHQF\)GWK&LU                              FRXUWVDUHZHOOHTXLSSHGWRPDNHFUHGLELOLW\MXGJPHQWVDQG
                                                                        IDFWXDOGHWHUPLQDWLRQVWKH\DUHZLWKRXWWKHWRROVQHFHVVDU\WR
  :HEHJLQDVLQDOOFDVHVRIVWDWXWRU\LQWHUSUHWDWLRQZLWKWKH       FRQGXFWDV\VWHPDWLFLQTXLU\LQWRDQDSSOLFDQWjVEDFNJURXQG
ODQJXDJH RI WKH VWDWXWH LWVHOI  6HFWLRQ F DOORZV WKH     $QDSSOLFDQWZLOOOLNHO\SURYLGHWKHGLVWULFWFRXUWRQO\ZLWK
6HFUHWDU\ RI WKH 7UHDVXU\ WR JUDQW UHOLHI IURP WKH ILUHDUP     FRQWDFWVZKRZLOOVXSSO\SRVLWLYHLQIRUPDWLRQFRQFHUQLQJWKH
GLVDELOLWLHVLPSRVHGE\JVWDWLQJ                              DSSOLFDQWjVUHFRUGDQGUHSXWDWLRQ7KXVDVLQWKHFDVHDWEDU
                                                                        WKH FRXUW ZRXOG RQO\ EH DEOH WR FRQGXFW D YHU\ RQH VLGHG
    $SHUVRQZKRLVSURKLELWHGIURPSRVVHVVLQJILUHDUPV          LQTXLU\ UHO\LQJ ODUJHO\ RQ OHWWHUV RI UHFRPPHQGDWLRQ DQG
    RUDPPXQLWLRQPD\PDNHDSSOLFDWLRQWRWKH6HFUHWDU\IRU             WHVWLPRQ\ IURP LQGLYLGXDOV KDQG VHOHFWHG E\ DQ DSSOLFDQW
    UHOLHIIURPWKHGLVDELOLWLHVLPSRVHGE\)HGHUDOODZV         8QOLNH WKH $7) WKH FRXUW FDQQRW FDQYDV WKH FLUFOH RI
    DQGWKH6HFUHWDU\PD\JUDQWVXFKUHOLHILILWLVHVWDEOLVKHG        QHLJKERUV DQG DFTXDLQWDQFHV ZKR PD\ KDYH QHJDWLYH
    WRKLVVDWLVIDFWLRQWKDWWKHFLUFXPVWDQFHVUHJDUGLQJWKH            LQIRUPDWLRQ FRQFHUQLQJ VXFK WKLQJV DV WKH DSSOLFDQWjV
    GLVDELOLW\DQGWKHDSSOLFDQW
VUHFRUGDQGUHSXWDWLRQDUH
    VXFK WKDW WKH DSSOLFDQW ZLOO QRW EH OLNHO\ WR DFW LQ D
    PDQQHUGDQJHURXVWRSXEOLFVDIHW\DQGWKDWWKHJUDQWLQJ
    RIWKHUHOLHIZRXOGQRWEHFRQWUDU\WRWKHSXEOLFLQWHUHVW
     0XOOLVY8QLWHG6WDWHV                         1R       1R                         0XOOLVY8QLWHG6WDWHV        

GHFLVLRQVSHUPLWWHGE\86&$DQGWKHUHOHYDQW             $Q\SHUVRQZKRVHDSSOLFDWLRQIRUUHOLHIIURPGLVDELOLWLHV
OHJLVODWLYH KLVWRU\ FRQFOXGLQJ WKDW LW ZDV mDZDUH RI QR          LVGHQLHGE\WKH6HFUHWDU\PD\ILOHDSHWLWLRQZLWKWKH
DOFKHP\ FDSDEOH RI WUDQVIRUPLQJ UHYLHZ RI WKH $7)jV                8QLWHG6WDWHVGLVWULFWFRXUWIRUWKHGLVWULFWLQZKLFKKH
GHFLVLRQ XQGHU   LQWR WKH UHOLHI WKH SODLQWLII                UHVLGHVIRUDMXGLFLDOUHYLHZRIVXFKGHQLDO7KHFRXUW
VHHNVnSOHQDU\DGMXGLFDWLRQRIKLVDSSOLFDWLRQE\WKHGLVWULFW             PD\ LQ LWV GLVFUHWLRQ DGPLW DGGLWLRQDO HYLGHQFH ZKHUH
FRXUWl,GDW
                                                       IDLOXUHWRGRVRZRXOGUHVXOWLQDPLVFDUULDJHRIMXVWLFH
                                                                          
   :H DJUHH ZLWK WKH 6HFRQG &LUFXLW WKDW WKH VWDWXH
FRQWHPSODWHVMXGLFLDOUHYLHZRIWKHGLVFUHWLRQH[HUFLVHGE\WKH         86&F7KH6HFUHWDU\RIWKH7UHDVXU\GHOHJDWHG
6HFUHWDU\LQGHQ\LQJDQDSSOLFDWLRQQRWLQGHSHQGHQWMXGLFLDO           DXWKRULW\WRGHWHUPLQHZKHWKHUWKHJUDQWLQJRIUHOLHIZRXOGEH
GLVFUHWLRQH[HUFLVHGLQDGHQRYRUHYLHZRIDQDSSOLFDWLRQ$V         FRQWUDU\WRWKHSXEOLFLQWHUHVWWRWKH$7)ZKLFKFRQGXFWHG
WKH 0F+XJK FRXUW HPSKDVL]HG  F VWDWHV WKDW m>D@Q\        WKHQHFHVVDU\EDFNJURXQGFKHFNVDQGLQYHVWLJDWLRQV6HH
SHUVRQZKRVHDSSOLFDWLRQIRUUHOLHIIURPGLVDELOLWLHVLVGHQLHG         &)5+RZHYHUIRUHDFKILVFDO\HDUVLQFH
E\WKH6HFUHWDU\PD\ILOHDSHWLWLRQZLWKWKH8QLWHG 6WDWHV            &RQJUHVVKDVHQDFWHGDQDSSURSULDWLRQVELOOZKLFKVWDWHVWKDW
GLVWULFWFRXUWIRUWKHGLVWULFWLQZKLFKKHUHVLGHVIRUDMXGLFLDO      mQRQHRIWKHIXQGVDSSURSULDWHGKHUHLQVKDOOEHDYDLODEOHWR
UHYLHZRIVXFKGHQLDOl86&FHPSKDVLVDGGHG           LQYHVWLJDWHRUDFWXSRQDSSOLFDWLRQVIRUUHOLHIIURP)HGHUDO
,W LV WUXH WKDW &RQJUHVV KDV QRW VSHFLILFDOO\ DGGUHVVHG WKH    ILUHDUPV GLVDELOLWLHV XQGHU  86&  Fl  $V D
MXGLFLDU\ LQ DQ\ RI WKH DSSURSULDWLRQV DFWV GHDOLQJ ZLWK        FRQVHTXHQFH WKH $7) LV HIIHFWLYHO\ SURKLELWHG IURP
 F  +RZHYHU E\ SURKLELWLQJ WKH $7) IURP XVLQJ          SURFHVVLQJDSSOLFDWLRQVIRUUHOLHIXQGHUF
DSSURSULDWHG IXQGV WR SURFHVV DSSOLFDWLRQV &RQJUHVV KDV
FRQVWUDLQHG WKH $7) IURP LVVXLQJ WKH W\SH RI GHQLDOV              &RQJUHVV WKURXJK DSSURSULDWLRQV DFWV KDV WKH SRZHU WR
PHQWLRQHGLQWKHVWDWXWH2QHFRXOGDUJXHWKDWE\UHIXVLQJWR          VXVSHQG DPHQG RU UHSHDO D VWDWXWH VR ORQJ DV LW GRHV VR
SURFHVVDSSOLFDWLRQVWKH$7)LVHIIHFWLYHO\GHQ\LQJUHOLHI            FOHDUO\6HH5REHUWVRQY6HDWWOH$XGXERQ6RF86
KRZHYHUWKHUHPHG\LQVXFK D VLWXDWLRQLVQRWUHYLHZE\D             6&W/(GG8QLWHG
IHGHUDOFRXUW5DWKHUDVWKH8QLWHG6WDWHVSRLQWVRXWXQGHU          6WDWHVY'LFNHUVRQ866&W
 86&   D FRXUW UHYLHZLQJ DJHQF\ DFWLRQV LV RQO\
DXWKRUL]HGWRFRPSHODJHQF\DFWLRQXQODZIXOO\ZLWKKHOG
RUXQUHDVRQDEO\GHOD\HGRULQYDOLGDWHDJHQF\DFWLRQVDQG               
                                                                              $00 7UHDVXU\ 3RVWDO 6HUYLFH DQG *HQHUDO *RYHUQPHQW
ILQGLQJV WKDW DUH XQODZIXO  *LYHQ &RQJUHVVjV H[SOLFLW           $SSURSULDWLRQV $FW  3XE / 1R   6WDW  
LQVWUXFWLRQWKDWWKH$7)VKRXOGQRWVSHQGDQ\DSSURSULDWHG              7UHDVXU\ 3RVWDO 6HUYLFH DQG *HQHUDO *RYHUQPHQW $SSURSULDWLRQV $FW
IXQGV WR SURFHVV DSSOLFDWLRQV IRU WKH UHPRYDO RU ILUHDUP         3XE / 1R   6WDW   7UHDVXU\ 3RVWDO
                                                                        6HUYLFH DQG *HQHUDO *RYHUQPHQW $SSURSULDWLRQV $FW  3XE / 1R
GLVDELOLWLHV  SODLQWLII FRXOG KDUGO\ DUJXH WKDW WKH $7) KDV     6WDW    7UHDVXU\ 3RVWDO 6HUYLFH DQG
DFWHG XQODZIXOO\ RU XQUHDVRQDEO\ LQ IDLOLQJ WR SURFHVV KLV      *HQHUDO *RYHUQPHQW $SSURSULDWLRQV $FW  3XE / 1R  
DSSOLFDWLRQ  %HFDXVH &RQJUHVV FOHDUO\ KDV WKH SRZHU WR         6WDW    7UHDVXU\ 3RVWDO 6HUYLFH DQG *HQHUDO
SUHYHQW WKH $7) IURP DFWLQJ RQ DQ\ DSSOLFDWLRQV PDGH            *RYHUQPHQW $SSURSULDWLRQV $FW  3XE / 1R   6WDW
SXUVXDQWWRFLILWFKRRVHVWKHUHLVQRDJHQF\DFWLRQ              7UHDVXU\ 3RVWDO 6HUYLFH DQG *HQHUDO *RYHUQPHQW

IRUDIHGHUDOFRXUWWRFRPSHORUUHYLHZ                               $SSURSULDWLRQV $FW  3XE / 1R   6WDW  
                                                                           7UHDVXU\   3RVWDO   6HUYLFH DQG   *HQHUDO    *RYHUQPHQW
                                                                        $SSURSULDWLRQV $FW  3XE / 1R   6WDW  
  )XUWKHU ZKLOH WKH VWDWXWH SHUPLWV GLVWULFW FRXUWV WR             7UHDVXU\   3RVWDO   6HUYLFH DQG   *HQHUDO    *RYHUQPHQW
VXSSOHPHQW WKH UHFRUG EHIRUH LW LI QHFHVVDU\ WR SUHYHQW D      $SSURSULDWLRQV $FW  3XE / 1R   6WDW  
                                                                        
     0XOOLVY8QLWHG6WDWHV                         1R       1R                        0XOOLVY8QLWHG6WDWHV       

/(G7KHGLVWULFWFRXUWUHFRJQL]HGWKLVIDFW         FRQVWLWXWLRQDOUHVWUDLQWVLWFRXOGSUHFOXGHMXGLFLDOUHYLHZRI
DQGSODLQWLIIGRHVQRWDUJXHWRWKHFRQWUDU\7KHTXHVWLRQWKDW        DGPLQLVWUDWLYHDFWLRQ6HH5LFH)GDW+RZHYHUWKH
PXVW EH DQVZHUHG WKHQ LV ZKDW ZDV &RQJUHVVj LQWHQW LQ          FRXUW REVHUYHG WKDW LQ RUGHU WR GR VR &RQJUHVVj LQWHQWLRQ
SUHFOXGLQJWKH$7)IURPVSHQGLQJIXQGVRQLQYHVWLJDWLQJRU              PXVWEHFOHDUO\VWDWHG6HHLG:LWKOLWWOHH[SODQDWLRQWKH
DFWLQJ XSRQ DSSOLFDWLRQV IRU UHOLHI XQGHU  F  6HH       FRXUW VWDWHG WKDW LW GLG QRW EHOLHYH WKDW &RQJUHVVj
'LFNHUVRQ86DWo6&WoUHYLHZLQJ             DSSURSULDWLRQDFWVHYLQFHGDFOHDULQWHQWWRUHSHDOFRU
DQDSSURSULDWLRQVDFWDQGWKHUHOHYDQWOHJLVODWLYHKLVWRU\WR           WR SUHFOXGH IHGHUDO FRXUWV IURP H[HUFLVLQJ MXULVGLFWLRQ WR
DVFHUWDLQ&RQJUHVVjVLQWHQW8QLWHG6WDWHVY0LWFKHOO            UHYLHZ $7) GHQLDOV RI UHOLHI IURP IHGHUDO ILUHDUPV
86    6 &W    / (G        GLVDELOLWLHV6HHLG
DQDO\]LQJWKHHIIHFWVRIDQDSSURSULDWLRQVDFWDQGVWDWLQJWKDW
m>W@KHZKROHTXHVWLRQGHSHQGVRQWKHLQWHQWLRQRI&RQJUHVV                 7KH RWKHU IRXU FLUFXLWV ZKLFK KDYH H[DPLQHG WKH LVVXH
DVH[SUHVVHGLQWKHVWDWXWHVl                                         FRQFOXGHGWKDW&RQJUHVVjDSSURSULDWLRQDFWVUHQGHUHGIHGHUDO
                                                                        FRXUWVZLWKRXWVXEMHFWPDWWHUMXULVGLFWLRQWRFRQVLGHUSHWLWLRQV
  3ODLQWLII GRHV QRW GLVSXWH WKDW WKURXJK LWV DSSURSULDWLRQV     IRU WKH UHVWRUDWLRQ RI ILUHDUPV  F SHWLWLRQV  6HH
PHDVXUHV&RQJUHVVLQWHQGHGWRVXVSHQGDOOUHOLHIDYDLODEOH             0F+XJK:/DW
2ZHQ)GDW%XUWFK
WKURXJKWKH$7)+RZHYHUSODLQWLIIDVVHUWVWKDWLQGRLQJVR          )GDW0F*LOO)GDW7KH6HFRQG&LUFXLW
&RQJUHVV OHIW WKH MXGLFLDU\jV UROH XQWRXFKHG  7KH GLVWULFW     LVWKHPRVWUHFHQWFRXUWRIDSSHDOVWRH[DPLQHWKHLVVXHRIWKH
FRXUW DJUHHG ZLWK SODLQWLIIjV DUJXPHQW DQG FRQFOXGHG WKDW        VXEMHFWPDWWHUMXULVGLFWLRQFRQIHUUHGE\FDGGUHVVLQJ
&RQJUHVVKDGIDLOHGWRVKRZDFOHDULQWHQWWRUHSHDOF           WKHTXHVWLRQLQ0F+XJKY5XELQ1RWLQJWKDWWKHSODLQWLIIjV
LQ LWV HQWLUHW\ RU WR SUHFOXGH MXGLFLDO UHYLHZ RI WKH $7)jV   DSSOLFDWLRQ KDG QHYHU EHHQ GHQLHG E\ WKH $7) WKH FRXUW
mUHIXVDOlWRJUDQWUHOLHIIURPILUHDUPGLVDELOLWLHV                    REVHUYHG WKDW m>W@KH IHGHUDO GLVWULFW FRXUWV DUH QR PRUH
                                                                        HPSRZHUHG WKDQ LV WKH $7) WR UHYLHZ LQGLYLGXDOVj
  :KLOHLWLVDQLVVXHRIILUVWLPSUHVVLRQLQWKLVFLUFXLWWKH         DSSOLFDWLRQV IRU UHOLHI IURP IHGHUDO ILUHDUPV GLVDELOLWLHV
TXHVWLRQ RI ZKHWKHU GLVWULFW FRXUWV UHWDLQ VXEMHFW PDWWHU        6HFWLRQFPDNHVDQDJHQF\µGHQLDOjRIDQDSSOLFDWLRQD
MXULVGLFWLRQWRFRQVLGHUDSODLQWLIIjVSHWLWLRQIRUUHOLHIXQGHU        SUHGLFDWHWRGLVWULFWFRXUWMXULVGLFWLRQDQGQRVXFKGHQLDOKDV
FKDVEHHQDGGUHVVHGE\VHYHUDORWKHUFLUFXLWV6HH             EHHQLVVXHGKHUHl,GDW
$SSO\LQJWKHUXOHWKDW&RQJUHVV
0F+XJKY5XELQ1R:/G&LU                   KDVDOORFDWHGLQLWLDOUHYLHZWRDQDGPLQLVWUDWLYHERG\ZKHUH
sXO\2ZHQY0DJDZ)GWK&LU                 VXFKLQWHQWLVIDLUO\GLVFHUQLEOHLQWKHVWDWXWRU\VFKHPHVHHLG
 %XUWFK Y 8QLWHG 6WDWHV 'HSW RI WKH 7UHDVXU\       FLWLQJ DQG TXRWLQJ 7KXQGHU %DVLQ &RDO &R Y 5HLFK 
)GWK&LU8QLWHG6WDWHVY0F*LOO)G             866&W/(GGWKH
WK&LU5LFHY8QLWHG6WDWHV)GG&LU         FRXUW KHOG WKDW &RQJUHVV KDG PDGH VXFK DQ DOORFDWLRQ  ,W
  $OWKRXJK WKH FLUFXLWV KDYH XVHG VOLJKWO\ GLIIHUHQW      SRLQWHG RXW WKDW  VHFWLRQ F GRHV QRW JUDQW
UHDVRQLQJWKHRQO\FRXUWWRFRQFOXGHWKDWWKHGLVWULFWFRXUW           IUHHVWDQGLQJUHOLHIEXWUDWKHUUHTXLUHVDSHUVRQWRDSSO\WRWKH
UHWDLQVVXEMHFWPDWWHUMXULVGLFWLRQLVWKH7KLUG&LUFXLWLQ5LFH       6HFUHWDU\ ZKR PD\ JUDQW VXFK UHOLHI  WKH VWDQGDUG IRU
WKHFDVHSULPDULO\UHOLHGRQE\WKHGLVWULFWFRXUWLQWKHFDVHDW       JUDQWLQJ UHOLHI LV ZRUGHG VR EURDGO\ DV WR FRQQRWH
EDU                                                                    DGPLQLVWUDWLYH DJHQF\ GHFLVLRQ PDNLQJ  VHFWLRQ F
                                                                        RQO\SHUPLWVGLVWULFWFRXUWVWRFRQVLGHUQHZHYLGHQFHZKHUH
  ,Q5LFHWKHHDUOLHVWFLUFXLWFDVHWKHFRXUWUHFRJQL]HGWKDW         IDLOXUHWRGRVRZRXOGUHVXOWLQDPLVFDUULDJHRIMXVWLFH7KH
&RQJUHVVFRXOGXVHDSSURSULDWLRQVDFWVWRDPHQGRUUHSHDO               FRXUW WKHQ FRQVLGHUHG WKH VWUXFWXUH RI WKH VWDWXWH DQG
VXEVWDQWLYH OHJLVODWLRQ DQG IXUWKHU WKDW VXEMHFW WR             DSSURSULDWLRQVDFWVWKHVFRSHRIMXGLFLDO UHYLHZRIDJHQF\