Court Opinion

ID: 2970169
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:06:20.435743+00
Date Added: 2024-06-11T11:43:28.711029
License: Public Domain

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
    0DUWLQY0LWFKHOO                     1RV                     3XUVXDQW WR 6L[WK &LUFXLW 5XOH 

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

IRFXVHV RQ WKH IDFWRUV ZH RXWOLQHG LQ%\UG Y &ROOLQV                    )LOH 1DPH DS

)GWK&LUIRUDQDO\VLVRIVXFKFODLPV
  7KLV&LUFXLWKDVH[SODLQHGWKDWZHZLOOQRWILQGmPDQLIHVW          81,7('67$7(6&28572)$33($/6
  LQWHQWl ZKHUH VRPH RWKHU H[SODQDWLRQV IRU WKH
  SURVHFXWRU
V FRPPHQWV DUH HTXDOO\ SRVVLEOH  8QLWHG                         )257+(6,;7+&,5&8,7
  6WDWHVY8UVHU\)GWK&LU,Q                           BBBBBBBBBBBBBBBBB
  DGGLWLRQ ZH KDYH PDGH FOHDU WKDW WKH TXHVWLRQ LV QRW
  ZKHWKHUWKHMXU\SRVVLEO\RUHYHQSUREDEO\ZRXOGYLHZ
  WKHVWDWHPHQWVDVFRPPHQWVRQWKHGHIHQGDQW
VIDLOXUHWR             (51(67 0$57,1                   ;
  WHVWLI\ mEXW ZKHWKHU WKH MXU\ QHFHVVDULO\ ZRXOG KDYH                3HWLWLRQHU$SSHOODQW      
  GRQHVRl,G                                                                                        
                                                                                                           1RV
,GDW                                                                     Y                      
                                                                                                          !
  0DUWLQjVDUJXPHQWLVZLWKRXWPHULW$VWKHGLVWULFWFRXUW                                             
                                                                       %(77< 0,7&+(//:DUGHQ           
IRXQGWKHHQWLUHTXRWHVKRZVWKDWmVRPHRWKHUH[SODQDWLRQV                    5HVSRQGHQW$SSHOOHH 
IRUWKHSURVHFXWRUjVFRPPHQWVDUHHTXDOO\SRVVLEOHl,G7KH
FRPPHQW ZDV LVRODWHG DV WKLV LV WKH RQO\ FRPPHQW                                               1
FRPSODLQHG RI E\ 0DUWLQ  (YLGHQFH RI JXLOW ZDV                     $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
RYHUZKHOPLQJ)LQDOO\WKHFRXUWLQVWUXFWHGWKHMXU\WRGUDZ              IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW&OHYHODQG
QRLQIHUHQFHDERXW0DUWLQjVGHFLVLRQQRWWRWHVWLI\                      1Rn'RQDOG&1XJHQW'LVWULFWsXGJH
  $)),50('                                                                           $UJXHG$XJXVW
                                                                                'HFLGHGDQG)LOHG)HEUXDU\
                                                                        %HIRUH1255,66,/(5DQG'$8*+75(<&LUFXLW
                                                                                             sXGJHV
                                                                                        BBBBBBBBBBBBBBBBB
                                                                                             &2816(/
                                                                      $5*8('  7LPRWK\ 5 3D\QH 2+,2 38%/,&
                                                                      '()(1'(5j6 2)),&( &ROXPEXV 2KLR IRU $SSHOODQW
                                                                      1RUPDQ(3ODWH2)),&(2)7+($77251(<*(1(5$/
                                                                      2) 2+,2 &ROXPEXV 2KLR IRU $SSHOOHH  21 %5,()
                                                                      7LPRWK\ 5 3D\QH .\OH ( 7LPNHQ 2+,2 38%/,&
                                                                      '()(1'(5j62)),&(&ROXPEXV2KLRIRU$SSHOODQWsRQ
                                                                      :2HENHU2)),&(2)7+($77251(<*(1(5$/2)

                                                                                                  
      0DUWLQY0LWFKHOO                        1RV      1RV                              0DUWLQY0LWFKHOO          

2+,2 &ROXPEXV 2KLR IRU $SSHOOHH  (UQHVW 0DUWLQ              YLRODWLRQVm(YHU\ERG\DYDLODEOHWHVWLILHG(YHU\ERG\
0DQVILHOG2KLRSURVH                                                FRXOGLGHQWLI\WKHGHIHQGDQWDVWKHSHUSHWUDWRURIWKHFULPH
                                                                        (YHU\ERG\WHVWLILHGDQGWKHUHLVQRLQGLFDWLRQV>VLF@ZKHQWKH
                        BBBBBBBBBBBBBBBBB                               SROLFHRIILFHUWHVWLILHGWKDWDQ\RQHRWKHUWKDQWKHGHIHQGDQW
                                                                        FRPPLWWHGWKHFULPHl0DUWLQDUJXHVWKDWKHZDVWKHRQO\
                            23,1,21                                     SHUVRQWKDWFRXOGKDYHUHIXWHGWKHSURVHFXWRUjVVWDWHPHQWDQG
                        BBBBBBBBBBBBBBBBB                               WKDWWKHODFNRIHYLGHQFHRIKLVJXLOWPDNHVLWOLNHO\WKDWWKH
                                                                        VWDWHPHQWFRQWULEXWHGWRKLVSURVHFXWLRQ
   6,/(5&LUFXLWsXGJH3HWLWLRQHU(UQHVW0DUWLQDQ2KLR
GHDWKURZLQPDWH DSSHDOVWKHGLVWULFWFRXUWjVGHQLDORIKLV              7KHJRYHUQPHQWUHLWHUDWHVWKHGLVWULFWFRXUWjVFRQFOXVLRQ
SHWLWLRQ IRU D ZULW RI KDEHDV FRUSXV ILOHG SXUVXDQW WR      WKDWZKHQUHDGLQFRQWH[WLWLVDSSDUHQWWKDWWKHSURVHFXWRUjV
86&D7KHUHVSRQGHQWZDUGHQZLOOEHUHIHUUHGWR            VWDWHPHQWVZHUHUHIHUULQJWRWKHWKRURXJKQDWXUHRIWKHSROLFH
DVWKHm6WDWHl7KLVFRXUWJUDQWHG0DUWLQjVDSSOLFDWLRQIRUD          LQYHVWLJDWLRQDQGWKHSUHVHQWDWLRQRIWKHHYLGHQFHJHQHUDWHG
FHUWLILFDWHRIDSSHDODEOLW\m&2$lDOORZLQJUHYLHZRIKLV             WKHUHIURP7KHGLVWULFWFRXUWDOVRIRXQGWKDWWKHSURVHFXWRU
FODLPVRISURVHFXWRULDOPLVFRQGXFWLQHIIHFWLYHDVVLVWDQFHRI           mZDV QRW GHVFULELQJ WKH HYLGHQFH DV XQFRQWUDGLFWHG E\ WKH
FRXQVHODQGVXIILFLHQF\RIWKHHYLGHQFHVXESDUWVRIWKRVH             GHIHQVHl(PSKDVLVLQRULJLQDO7KH6WDWHjVDUJXPHQWDOVR
LVVXHVDQGWKHTXHVWLRQRISURFHGXUDOGHIDXOWDVLWUHODWHVWR
WKHVHLVVXHV)RUWKHUHDVRQVVWDWHGKHUHDIWHUZHDIILUP
                         %$&.*5281'                                         
                                                                             7KH UHOHYDQW SDUW RI WKH SURVHFXWRUjV VWDWHPHQW LV DSSDUHQWO\ QRW

  2QGLUHFWDSSHDOWKH2KLR6XSUHPH&RXUWVXPPDUL]HGWKH               LQFOXGHG LQ WKH MRLQW DSSHQGL[ LQ WKH IRUP RI WULDO WUDQVFULSW 7KH GLVWULFW

UHOHYDQWIDFWVDVIROORZV                                              FRXUW TXRWHG WKH VWDWHPHQW DV IROORZV
                                                                            >3URVHFXWRU@   7KH GHWHFWLYHV LQYHVWLJDWHG WKLV FDVH DW OHQJWK   ,

       2Q'HFHPEHU(UQHO)RVWHUDVHFXULW\JXDUG                GDUH VD\ WKDW GHIHQVH FRXQVHO FDQQRW WHOO \RX D ZLWQHVV ZKR VDZ
                                                                            VRPHWKLQJ RU GLG VRPHWKLQJ LQ WKLV FDVH WKDW WKH 6WDWH FRXOG QRW
    ZDVUREEHGRIKLVFDOLEHU6PLWK	:HVVRQUHYROYHU                  SUHVHQW DV ZH KDYH KHUH 
    0RGHO6HULDO1R'E\DEODFNPDOHZKLOH                    >'HIHQVH &RXQVHO@ 2EMHFWLRQ \RXU +RQRU WR WKDW VWDWHPHQW

    ZDLWLQJDWDEXVVWRSRQ(DVWUG6WUHHWDQG.LQVPDQ                   &RXUW   2YHUUXOHG

    $YHQXH)RVWHUWHVWLILHGWKDWKHFKDVHGWKHRIIHQGHUIRU               >3URVHFXWRU@   (YHU\ERG\ DYDLODEOH WHVWLILHG   (YHU\ERG\ FRXOG

    D EORFN DQG D KDOI DQG ZDV DEOH WR VHH KLV IDFH  +H       WHVWLI\ WKH GHIHQGDQW DV WKH SHUSHWUDWRU RI WKH FULPH (YHU\ERG\
                                                                            WHVWLILHG DQG WKHUH LV QRW LQGLFDWLRQV ZKHQ WKH SROLFH RIILFHU
    IXUWKHUQRWHGWKDWWKHRIIHQGHU
VKDLUZDVLQVPDOOEUDLGV             WHVWLILHG WKDW DQ\RQH RWKHU WKDQ WKH GHIHQGDQW FRPPLWWHG WKH
    2Q)HEUXDU\)RVWHUZDVVXPPRQHGWRWKHSROLFH                  FULPH 7KDWjV ZK\ , DP VD\LQJ ZKHQ WKH GHIHQVH FRXQVHO DUJXHV

    VWDWLRQWRYLHZDOLQHXSFRPSRVHGRIVL[EODFNPDOHV                  WR \RX , ZDQW \RX WR EH WKLQNLQJ LI \RX DJUHH WKDW WKLV LV

    )RVWHU ZDV DEOH WR LGHQWLI\ WKH GHIHQGDQWDSSHOODQW              UHDVRQDEOH WKDW ZRXOG DQ\ FRXQVHO IURP P\ VWDQGSRLQW GHIHQVH

    (UQHVW 0DUWLQ QRWLQJ WKDW KLV KDLU ZDV EUDLGHG LQ WKH         FRXQVHO VD\V ZH SUHVHQWHG HYLGHQFH LQ WKLV FDVH DVN PH LQ P\

    VDPH PDQQHU DV LW DSSHDUHG RQ 'HFHPEHU  
                                                                            PLQGjV H\H RU WKHP ZKHUH LV WKH HYLGHQFH WKDW VXEVWDQWLDWHV WKH
                                                                            SRVLWLRQ WKDW \RX DUH DVNLQJ XV WR WDNH
    /DWHU)RVWHULGHQWLILHGDSSHOODQWLQWKHFRXUWURRPDVWKH
    PDQZKRKDGWDNHQKLVZHDSRQ                                           :KHUH LV WKH HYLGHQFH WKDW VXSSRUWV \RXU DUJXPHQW"       $QG , DP

       $SSHOODQW
VJLUOIULHQGsRVHSKLQH3HGURWHVWLILHGWKDW              JRLQJ WR JR WKURXJK WKH HYLGHQFH QRZ DQG \RX ZLOO ILQG WKDW

    KHKDGWKUHDWHQHGKHUZLWKDJXQHDUOLHUWKDW\HDUWHOOLQJ             WKHUH DUH IDFWV JLYHQ WR \RX E\ YDULRXV ZLWQHVVHV VRPH XQNQRZQ

    KHUWKDWKHKDGVWROHQWKHZHDSRQIURPDVHFXULW\JXDUG                 WR RQH DQRWKHU DQG VR LQWHUUHODWHG DQG VR SRLQWLQJ DW 0U 0DUWLQ
                                                                            WKDW WKHUH LV QRW GRXEW LQ WKLV FDVH
    0DUWLQY0LWFKHOO                      1RV        1RV                      0DUWLQY0LWFKHOO          

              ,,,6XIILFLHQF\RIWKH(YLGHQFH                    DW(DVWUGDQG.LQVPDQ3HGURZURWHGRZQWKHVHULDO
                                                                        QXPEHURIWKHJXQRQWKHEDFNRIDQHQYHORSHER[7KH
   ,QKDEHDVFDVHVZHUHYLHZWKHVXIILFLHQF\RIWKHHYLGHQFH            QXPEHU ZDV LGHQWLFDO WR WKH VHULDO QXPEHU RI )RVWHU
V
VXSSRUWLQJ D MXU\ YHUGLFW WKURXJK WKH IUDPHZRUN RI              ZHDSRQ H[FHSW WKDW WKH OHWWHU m'l KDG EHHQ SXUSRVHO\
GWRGHWHUPLQHZKHWKHUDIWHUYLHZLQJWKHHYLGHQFH             WUDQVIRUPHGLQWRDml3HGURWHVWLILHGWKDWWKLVZDVGRQH
LQWKHOLJKWPRVWIDYRUDEOHWRWKHJRYHUQPHQWDQ\UDWLRQDO             WR PDNH WKH QXPEHU VHTXHQFH ORRN OLNH D WHOHSKRQH
WULHURIIDFWFRXOGKDYHIRXQGWKHHVVHQWLDOHOHPHQWVRIWKH            QXPEHULQRUGHUWRZDUGRIIDQ\VXVSLFLRQ
FULPHEH\RQGDUHDVRQDEOHGRXEW6HHsDFNVRQY9LUJLQLD                 3HGUR IXUWKHU WHVWLILHG WKDW LQ WKH HDUO\ KRXUV RI
86                                             sDQXDU\   DSSHOODQW UHYHDOHG D SODQ WR URE
                                                                        5RELQVRQ
V'UXJ6WRUH6KHDWWHPSWHGWRGLVVXDGHKLP
  0DUWLQDUJXHVWKDWWKHHYLGHQFHVXSSRUWLQJKLVFRQYLFWLRQ             EXWWKHDSSHOODQWWKUHDWHQHGKHULIVKHGLGQRWFRRSHUDWH
ZDVLQVXIILFLHQWEHFDXVH)RVWHUjVLGHQWLILFDWLRQRIKLPDW         LQ WKH UREEHU\  $SSHOODQW WKHQ OHIW WKH DSDUWPHQW DQG
WKHOLQHXSZDVXQUHOLDEOHDQGWDLQWHGE\SROLFHFRPPHQWVWR            UHWXUQHGDSSUR[LPDWHO\WHQPLQXWHVODWHUZLWKWKHJXQKH
)RVWHU WKDW mZH >KDYH@ WKH JX\ WKDW UREEHG \RXl  WKH      KDGWDNHQIURP)RVWHU
JRYHUQPHQW SUHVHQWHG YHU\ OLWWOH SK\VLFDO HYLGHQFH                   $SSHOODQWGHYLVHGDSODQZKHUHE\3HGURZDVWRJRWR
ZLWQHVVHV3HGURDQG+HQGHUVRQZHUHXQUHOLDEOHEHFDXVH               WKHVWRUHDQGDWWHPSWWREX\PHGLFLQHIRUDFROG:KHQ
3HGURZDVQRWFKDUJHGIRUKHULQYROYHPHQWDQG+HQGHUVRQ                 5REHUW5RELQVRQRZQHURIWKHVWRUHXQORFNHGWKHGRRU
KDG D JUXGJH DJDLQVW KLP DQG  WKH HYLGHQFH GLG QRW        WRDOORZ3HGUR
VHQWUDQFHDSSHOODQWSODQQHGWRIROORZKHU
VXSSRUW D ILQGLQJ WKDW KH KDG WKH VSHFLILF LQWHQW WR NLOO     LQDQGUREWKHSUHPLVHV7KHDSSHOODQWZRUHJUD\SDQWV
5RELQVRQ                                                              WHQQLVVKRHVDQGDZDLVWOHQJWKEODFNOHDWKHUMDFNHW+H
                                                                        FRYHUHGKLVIDFHZLWKDEURZQNQLWFDSLQZKLFKKHFXW
  $V DQ LQLWLDO PDWWHU LW PXVW EH QRWHG WKDW mDWWDFNV RQ     KROHV IRU KLV H\HV WR DYRLG LGHQWLILFDWLRQ  $W
ZLWQHVVFUHGLELOLW\DUHVLPSO\FKDOOHQJHVWRWKHTXDOLW\RIWKH         DSSUR[LPDWHO\DP3HGURDUULYHGDWWKHVWRUHDQG
JRYHUQPHQW
V HYLGHQFH DQG QRW WR WKH VXIILFLHQF\ RI WKH         NQRFNHGRQWKHGRRU8SRQUHFRJQL]LQJ3HGUR5RELQVRQ
HYLGHQFHl8QLWHG6WDWHVY$GDPR)GWK               XQORFNHGWKHGRRUWROHWKHULQ+RZHYHUKHORFNHGWKH
&LU7KXV0DUWLQjVDUJXPHQWVZLWKUHJDUGWR3HGUR               GRRU DJDLQ EHIRUH WKH DSSHOODQW KDG D FKDQFH WR JDLQ
DQG+HQGHUVRQDUHPLVSODFHG7KHGLVWULFWFRXUWjVRSLQLRQ              HQWUDQFH$V5RELQVRQVWRRGLQIURQWRIWKHGRRUDIWHU
FRQWDLQV DQ H[KDXVWLYH UHYLHZ RI WKH WULDO HYLGHQFH WKDW        ORFNLQJLWWZRVKRWVZHUHILUHGWKURXJKWKHGRRUIDWDOO\
SURYHG0DUWLQjVJXLOW7KLVUHFLWDWLRQLVFRQVLVWHQWZLWKWKH          ZRXQGLQJ KLP  $IWHU ILULQJ WKH VKRWV WKH DSSHOODQW
UHFRUGDQGGHPRQVWUDWHVWKDWDUDWLRQDOMXURUFRXOGFRQFOXGH            DOOHJHGO\ZHQWWRWKHDSDUWPHQWWRFKDQJHKLVFORWKHVDQG
WKDW0DUWLQFRPPLWWHGWKHFULPHVEH\RQGDUHDVRQDEOHGRXEW              WKHQUHWXUQHGWRWKHVWRUHWRILQLVKWKHUREEHU\
FRQVLVWHQWZLWKsDFNVRQ7KXV0DUWLQjVDUJXPHQWLVZLWKRXW               0RQW\3DUNH\DQHPSOR\HHRI5RELQVRQZDVLQWKH
PHULW                                                                  EDFNURRPDWWKHWLPHRIWKHVKRRWLQJ$IWHUKHDULQJWKH
                                                                        VKRWV DQG VHHLQJ ZKDW KDG RFFXUUHG 3DUNH\ FDOOHG DQ
                ,93URVHFXWRULDO0LVFRQGXFW                         DPEXODQFHDQGWKHSROLFH+HWKHQLQVWUXFWHG3HGURWR
   0DUWLQDUJXHVWKDWmWKH6WDWHjVFRPPHQWRQ0U0DUWLQjV              JR WR 5RELQVRQ
V KRXVH WR JHW 0UV 5RELQVRQ  3HGUR
IDLOXUH WR WHVWLI\ YLRODWHG 0DUWLQjV ULJKWV XQGHU WKH )LIWK    FRPSOLHG DQG XSRQ UHWXUQLQJ ZDV LQWHUYLHZHG E\ WKH
6L[WK (LJKWK DQG )RXUWHHQWK $PHQGPHQWV WR WKH 8QLWHG           SROLFHFRQFHUQLQJWKHHYHQWV6KHJDYHWKHPKHUQDPH
6WDWHV &RQVWLWXWLRQl  0DUWLQ FRPSODLQV WKDW WKH IROORZLQJ       DQG DGGUHVV DQG VWDWHG VKH NQHZ QRWKLQJ DERXW WKH
VWDWHPHQW E\ SURVHFXWRU LQ FORVLQJ DUJXPHQW FDXVHG WKHVH         VKRRWLQJ7KHDSSHOODQWZDVDOVRSUHVHQWDWWKLVWLPHDQG
      0DUWLQY0LWFKHOO                      1RV      1RV                        0DUWLQY0LWFKHOO       

    WDONHG WR WKH SROLFH  8SRQ FRPSOHWLQJ KHU LQWHUYLHZ     DVVLVWDQFHRIFRXQVHO7KH6WDWHSRLQWVRXWWKDWRQFHVXFKD
    3HGURUHWXUQHGWRKHUDSDUWPHQW                                  UHSRUWLVUHTXHVWHG2KLR5HY&RGH'UHTXLUHV
       :KHQ 3HGUR UHDFKHG WKH DSDUWPHQW VKH FDOOHG KHU         WKDWLWEHIXUQLVKHGWRWKHFRXUWWKHWULDOMXU\LIDSSOLFDEOHWKH
    QHLJKERU/DUU\.LGG$SSHOODQWUHWXUQHGDSSUR[LPDWHO\            SURVHFXWRUDQGWKHRIIHQGHURUKLVFRXQVHO7KLVUHTXLUHPHQW
    WKLUW\ILYHPLQXWHVODWHU3HGURDVNHGDSSHOODQWZKHWKHU         DOVRDSSOLHVWRWKHSV\FKLDWULFUHSRUW7KXVDUHTXHVWIRUWKH
    WKHHYHQLQJ
VHYHQWVKDGEHHQZRUWKLW+HVKRZHGKHUD          UHSRUWVLQYROYHVWKHW\SHRIVWUDWHJLFGHFLVLRQWKDW6WULFNODQG
    SLOHRIELOOVXQGHUDEODQNHWZKLFKKHWKHQWRRNLQWRWKH          86 DW  KROGV VKRXOG QRW EH VHFRQGJXHVVHG
    EDWKURRPDQGH[SODLQHGWKDWKHKDGVWROHQEHWZHHQ             0DUWLQjV FRXQVHO GLG QRW NQRZ WKDW WKLV VSHFLILF VWDWHPHQW
    DQGIURPWKHVWRUH                                           ZRXOG EH LQ WKH SUHVHQWHQFH UHSRUW DQG WKHLU VWUDWHJLF
       $SSHOODQW WKHQ GURYH .LGG DQG 3HGUR WR DQ mDIWHU       GHFLVLRQ WR UHTXHVW LW VKRXOG QRW EH VHFRQGJXHVVHG  7KH
    KRXUVlVSRWIRUGULQNV$IWHUWKH\VDWGRZQDWWKHWDEOH        VDPH UHDVRQLQJ LV DSSOLFDEOH WR WKH FRQFOXVLRQV RI WKH
    DSSHOODQWWRRNWZRVSHQWFDUWULGJHVIURPKLVSRFNHWDQG           SV\FKRORJLFDOUHSRUW%HFDXVHUDLVLQJWKHHIIHFWLYHQHVVRIKLV
    SODFHGWKHPRQWKHWDEOH.LGGUHPDUNHGm


>0@XVW            WULDO FRXQVHO ZLWK UHJDUG WR WKHVH UHSRUWV RQ GLUHFW DSSHDO
    EHDQLJKWRIWKHGXFHV>VLF@\RXJRWDGXFH>VLF@DQGD       ZRXOGKDYHEHHQIUXLWOHVVZHFDQQRWIDXOW0DUWLQjVDSSHOODWH
    TXDUWHUDQG0U5RELQVRQJRWVKRWWZLFHDQG\RXJRW             FRXQVHOIRUQRWGRLQJVR
    WZR FDUWULGJHVl  $SSHOODQW GLG QRW UHVSRQG WR WKLV
    FRPPHQW                                                            &$SSHOODWH&RXQVHO
       6HYHUDO GD\V DIWHU WKH VKRRWLQJ WKH SROLFH DJDLQ
    TXHVWLRQHG3HGURDQGDSSHOODQW%\WKLVWLPHWKHWZRKDG           0DUWLQ DUJXHV WKDW KLV DSSHOODWH FRXQVHO UHQGHUHG
    SXWWRJHWKHUDVWRU\IRUWKHSROLFHWKDW3HGURKDGJRQHWR        LQHIIHFWLYHDVVLVWDQFHE\IDLOLQJWRPDNHWKHWUDQVFULSWRIWKH
    WKHVWRUHWRJHWFRXJKPHGLFLQHZKHQWKHGHFHDVHGZDV             SURFHHGLQJVRQKLVPRWLRQIRUDQHZWULDOSDUWRIWKHUHFRUGRQ
    VKRWDQGWKDWDSSHOODQWRQO\FDPHWRWKHVWRUHDIWHUVKH          KLV GLUHFW DSSHDO  9LHZLQJ WKLV FODLP LQ WKH IUDPHZRUN
    KDGEHHQJRQHIRUDQXQXVXDOO\ORQJWLPH2QsDQXDU\             RXWOLQHGLQ0DSHVTXRWHGDERYHLWODFNVPHULWEHFDXVHLWV
      WKH SROLFH UHWXUQHG DQG DUUHVWHG 3HGUR DQG      XQGHUO\LQJ SUHPLVHV WKDW FRXQVHO LQHIIHFWLYHO\ IDLOHG WR
    DSSHOODQWIRUWKHPXUGHURI5RELQVRQ$IWHUVHYHUDOGD\V         SURFXUH5LHYHV%H\jVWHVWLPRQ\DQGWKDWWKHWHVWLPRQ\ZRXOG
    LQMDLO3HGURWROGWKHSROLFHWKDWVKHKDGKHOSHGVHWXS         KDYHFKDQJHGWKHRXWFRPHRIWKHWULDOLVLQFRUUHFW
    WKHUREEHU\E\JRLQJWRWKHVWRUHDQGWKDWWKHDSSHOODQW
    KDG VKRW WKH GHFHDVHG  6RRQ DIWHUZDUGV DSSHOODQW
V          $VGLVFXVVHGSUHYLRXVO\ERWKSDUWLHVDWWHPSWHGWRORFDWH
    IDWKHU FRQWDFWHG 3HGUR DVNLQJ KHU WR FKDQJH KHU            5LHYHV%H\LQWLPHWRWHVWLI\DWWULDO+HJDYHLQFRQVLVWHQW
    VWDWHPHQW :KLOH YLVLWLQJ DSSHOODQW LQ MDLO DSSHOODQW
V    VWDWHPHQWVDQGWHVWLPRQ\DERXWWKHSK\VLFDOGHVFULSWLRQRIWKH
    IDWKHUDJDLQDVNHG3HGURWRFKDQJHKHUVWRU\'XULQJWKH          PDQKHVDZIOHHIURPWKHFULPHVFHQHVWDWHGWKDW0DUWLQZDV
    WULDO WKH VWDWH LQWURGXFHG D OHWWHU GDWHG )HEUXDU\    QRWWKHIOHHLQJPDQDQGWKDWWKHSROLFHKDGWKHZURQJPDQ
    ZKHUHLQDSSHOODQWDVNHG3HGURWRmWHOOWKHWUXWKl           KRZHYHUKLVRWKHUWHVWLPRQ\FRUURERUDWHG3HGURjVYHUVLRQ
    DQG LPSOLFDWH D PDQ QDPHG m6OLPl IRU WKH                   DQGVHTXHQFHRIWKHHYHQWVZKLFKZDVKLJKO\LQFULPLQDWLQJ
    PXUGHUUREEHU\RI5RELQVRQ$QDGGLWLRQDOOHWWHUGDWHG           $WEHVWKHZDVDSUREOHPDWLFZLWQHVVEHFDXVHRIKLVDGPLWWHG
    )HEUXDU\LQZKLFKDSSHOODQWDJDLQDVNHGKHUWR          GUXJ XVH DQG WKH HIIHFW KH DGPLWV LW KDG RQ KLV PHPRU\
    LPSOLFDWH m6OLPl ZDV DOVR LQWURGXFHG LQWR HYLGHQFH        0DUWLQFDQQRWVKRZSUHMXGLFHDV5LHYHV%H\jVWHVWLPRQ\ZDV
    3HGURKDVFRQWLQXDOO\GHQLHGWKDWm6OLPlKDGDQ\WKLQJWR          LQFULPLQDWLQJ DQG ZRXOG QRW KDYH DLGHG KLV GHIHQVH
    GRZLWKWKHVHFULPHV                                             $FFRUGLQJO\WKLVFODLPLVZLWKRXWPHULW
    0DUWLQY0LWFKHOO                    1RV        1RV                       0DUWLQY0LWFKHOO           

  86DW6&W.RUGHQEURFN)GDW                  7KH VWDWH DOVR RIIHUHG DQRWKHU OHWWHU LQWR HYLGHQFH
  $V0DSHVSRLQWVRXWWKLVLQVWUXFWLRQDFFXUDWHO\             ZKLFKKDGEHHQZULWWHQE\WKHDSSHOODQWWR3HGURZKHQ
  GHVFULEHV2KLRODZ7KHUHLVQRHUURUZLWKUHJDUGWRWKLV          KH ZDV LQ MDLO LQ )HEUXDU\  IRU DQRWKHU RIIHQVH
  LQVWUXFWLRQ                                                        3HGURLGHQWLILHGWKHOHWWHUDQGUHDGLWLQWRWKHUHFRUG7KH
                                                                      OHWWHUDVNHG3HGURWROLHIRUDSSHOODQWDQGWRLPSOLFDWH
,G7KLVKROGLQJDOVRUHIOHFWVWKHVWDWHRI2KLRODZDWWKHWLPH     VRPHRQH HOVH IRU WKH FRPPLVVLRQ RI WKH RIIHQVH IRU
RI0DUWLQjVVHQWHQFLQJDQGWKXVWKLVDUJXPHQWLVZLWKRXW           ZKLFKWKHDSSHOODQWZDVFKDUJHG3HGURDGPLWWHGO\LQJ
PHULW                                                               IRU WKH DSSHOODQW SXUVXDQW WR WKH OHWWHU LQ WKH SUHYLRXV
                                                                      WULDOIRUWKHRWKHURIIHQVH
     3UHVHQWHQFHLQYHVWLJDWLRQDQGSV\FKLDWULFFOLQLFUHSRUW         )LQDOO\$QWRLQHWWH+HQGHUVRQWHVWLILHGWKDWVKHOLYHG
                                                                      ZLWK3HGURIRUDERXWILYHRUVL[PRQWKVXQWLOWKHPLGGOH
  ,Q 0DUWLQjV ILQDO VXEFODLP LQYROYLQJ DOOHJDWLRQV RI           RI 'HFHPEHU   'XULQJ 'HFHPEHU VKH KHDUG WKH
LQHIIHFWLYH DVVLVWDQFH RI WULDO FRXQVHO DW VHQWHQFLQJ KH      DSSHOODQW VD\ KH ZDV JRLQJ WR URE 5RELQVRQ
V VWRUH
FRQWHQGV WKDW KLV FRXQVHO LQHIIHFWLYHO\ DJUHHG WR WKH          $SSHOODQWWKUHDWHQHGKHUZLWKDJXQZDUQLQJKHUWKDWVKH
SURGXFWLRQ RI D SUHVHQWHQFH UHSRUW DQG SV\FKRORJLFDO            KDGEHWWHUQRWWHOODQ\RQHRIKLVSODQ
HYDOXDWLRQ7KHSUHVHQWHQFHLQYHVWLJDWLRQUHSRUWFRQWDLQHG              'XULQJWKHWULDOWKHGHIHQVHSUHVHQWHGQRZLWQHVVHVEXW
WKHIROORZLQJVWDWHPHQWFRQFHUQLQJWKHLPSDFWRIWKHFULPHRQ         VRXJKWWRLQWURGXFHLQWRHYLGHQFHZULWWHQVWDWHPHQWVRI
WKHYLFWLPjVZLIHm0UV5RELQVRQZDVYHU\DEUXSWLQKHU             3HGUR DQG +HQGHUVRQ 7KH FRXUW GHQLHG WKLV UHTXHVW
FRPPHQWVDQGYHU\GUDPDWLFLQGLFDWLQJµ+HVKRWP\KXVEDQG            ILQGLQJWKHZULWWHQVWDWHPHQWVZHUHQRWLQFRQVLVWHQWDV
LQWKHEDFNKHLVDVNXQNDQGKHQHHGVWRJHWWKHHOHFWULF          DOOHJHGE\WKHGHIHQVH
FKDLUjl0DUWLQDUJXHVWKDWWKLVVWDWHPHQWLVXQFRQVWLWXWLRQDO         7KHMXU\IRXQGWKHDSSHOODQWJXLOW\RIWKHDJJUDYDWHG
XQGHU 3D\QH Y 7HQQ  86    ZKLFK        UREEHU\RI(UQHO)RVWHU DQGRIWKHDJJUDYDWHGUREEHU\
RYHUUXOHG%RRWKY0DU\ODQG86EXWOHIW            DQG DJJUDYDWHG PXUGHU RI 5REHUW 5RELQVRQ ZLWK WKH
LQWDFWLWVSURKLELWLRQDJDLQVWVXFKVWDWHPHQWV$OWKRXJK0UV        VSHFLILFDWLRQ RI EHLQJ WKH SULQFLSDO RIIHQGHU RI WKH
5RELQVRQjV VWDWHPHQW ZDV VRPHZKDW LQIODPPDWRU\ WKH              DJJUDYDWHG PXUGHU ZKLOH FRPPLWWLQJ RU DWWHPSWLQJ WR
SUHVHQWDWLRQRIWKHUHSRUWVDOVRDOORZHG0DUWLQWRSUHVHQWKLV        FRPPLWDJJUDYDWHGUREEHU\$IWHUWKHPLWLJDWLRQKHDULQJ
GHIHQVH RI WKH FKDUJHV ZLWKRXW EHLQJ VXEMHFWHG WR FURVV       ZDV FRQGXFWHG WKH MXU\ UHFRPPHQGHG WKDW DSSHOODQW
H[DPLQDWLRQ  %RWK UHSRUWV UHODWH WKDW 0DUWLQ GHQLHG WKH      UHFHLYHWKHGHDWKSHQDOW\2QsXO\WKHWULDOFRXUW
UREEHU\DQGWKHKRPLFLGH7KHSUHVHQWHQFHLQYHVWLJDWLRQDOVR         VHQWHQFHGDSSHOODQWWRGHDWK2QsXO\DSSHOODQW
HODERUDWHGRQPRUHVSHFLILFSDUWVRIKLVGHIHQVHVXFKDVWKH         ILOHG D PRWLRQ IRU D QHZ WULDO  2Q 0D\   WKH
DSSHDUDQFHRIm6OLPlZLWK3HGURQHDUWKHWLPHRIWKHFULPH           PRWLRQZDVGHQLHG2Q0D\WKHFRXUWILOHGLWV
                                                                      UHTXLUHGMXGJPHQWHQWU\DQGVHSDUDWHRSLQLRQSXUVXDQW
   :HDUHFDUHIXOWRSRLQWRXWWKDW0DUWLQKDVDUJXHGWKLVLVVXH      WR 5& ) ILQGLQJ WKDW WKH DJJUDYDWLQJ
LQ WHUPV RI ZKHWKHU KLV WULDO FRXQVHO UHQGHUHG LQHIIHFWLYH    FLUFXPVWDQFHVRXWZHLJKHGWKH PLWLJDWLQJIDFWRUV7KH
DVVLVWDQFHE\UHTXHVWLQJWKHVHUHSRUWVDQGZKHWKHUDSSHOODWH          IROORZLQJ GD\ WKH WULDO FRXUW ILOHG LWV RSLQLRQ RQ WKH
FRXQVHO UHQGHUHG LQHIIHFWLYH DVVLVWDQFH E\ QRW PDNLQJ DQ       PRWLRQIRUDQHZWULDO
LVVXHRIWKHUHTXHVWVIRUWKHUHSRUWVRQDSSHDO,QWKLVFRQWH[W       2Q$XJXVWDSSHOODQWDSSHDOHGKLVFRQYLFWLRQ
HYHQ LI ZH DVVXPHG WKDW WKH LQFOXVLRQ RI 0UV 5RELQVRQjV     WRWKHFRXUWRIDSSHDOV7KHFRXUWRIDSSHDOVDIILUPHGWKH
VWDWHPHQWUDQDIRXORI3D\QHDQG%RRWKWKLVFODLPLVZLWKRXW         VHQWHQFHRIWKHWULDOFRXUWDQGLVVXHGDVHSDUDWHRSLQLRQ
PHULW LQ WKH IRUP LQ ZKLFK LW LV SUHVHQWHG  LQHIIHFWLYH    DVUHTXLUHGE\5&$RQ6HSWHPEHU
     0DUWLQY0LWFKHOO                    1RV        1RV                      0DUWLQY0LWFKHOO      

6WDWHY0DUWLQ1(G2KLR               )DLOXUHWRREMHFWWRMXU\LQVWUXFWLRQV
  (s5LHYHV%H\OLYHGDFURVVWKHVWUHHWIURPWKHYLFWLPjV            7KLVFODLPGRHVQRWLQYROYHHYLGHQFHGHKRUVWKHUHFRUG
VWRUHDQGZLWQHVVHGVRPHRQHUXQQLQJDZD\IURPWKHVFHQH              ZDV QRW UDLVHG RQ 0DUWLQjV GLUHFW DSSHDO DQG WKXV LV
DIWHUKHDULQJVKRWVILUHG:LWKLQWZRZHHNVRIWKHNLOOLQJKH      SURFHGXUDOO\GHIDXOWHG+RZHYHUZHZLOOUHYLHZWKHPHULWV
JDYHDVWDWHPHQWWRWKH&OHYHODQGSROLFHGHVFULELQJWKHPDQ          RIWKHVHLVVXHVIRUSXUSRVHVRIFDXVHDQGSUHMXGLFHDQDO\VLV
KHVDZIOHHLQJDV
DQGOEVURXJKO\PDWFKLQJ0DUWLQ
$SSUR[LPDWHO\ D PRQWK ODWHU KH WROG D FRXUWDSSRLQWHG           0DUWLQ DUJXHV WKDW KLV FRXQVHO UHQGHUHG LQHIIHFWLYH
LQYHVWLJDWRU WKDW WKH PDQ ZDV m$ERXW VL[ IRRW WZR PD\EH    DVVLVWDQFHE\IDLOLQJWRREMHFWWRMXU\LQVWUXFWLRQVZKLFKKH
WKUHH0D\EHDERXWSRXQGVl+HDOVRVWDWHGm,       FRQWHQGVZHUHFRQVWLWXWLRQDOO\LQILUPSXUVXDQWWR&DOGZHOOY
NQRZ KHjV WDOOHU WKDQ (UQHVW 0DUWLQ DQG (UQHVW 0DUWLQ LV   0LVVLVVLSSL  86   EHFDXVH WKH\ DOOHJHGO\
VPDOOHUZD\VPDOOHUl                                            LPSURSHUO\ OHG WKH MXU\ WR EHOLHYH WKDW WKH XOWLPDWH
                                                                     UHVSRQVLELOLW\IRUWKHLPSRVLWLRQRIGHDWKOD\HOVHZKHUH E\
   7KH6WDWHVXESRHQDHG5LHYHV%H\WRWHVWLI\EXWKHDUULYHG        VWDWLQJWKDWWKHMXU\RQO\UHFRPPHQGHGWKHGHDWKSHQDOW\WR
MXVWDVMXU\GHOLEHUDWLRQVEHJDQ7KH6WDWHVRXJKWWRUHRSHQ        WKHMXGJH2XUFRXUWUHFHQWO\UHMHFWHGWKLVDUJXPHQWLQ6FRWW
LWVFDVHDQGSUHVHQWWKHWHVWLPRQ\RI5LHYHV%H\7KHGHIHQVH       Y0LWFKHOO)GWK&LUDVIROORZV
VXFFHVVIXOO\REMHFWHGDQGGHOLEHUDWLRQVFRQWLQXHG
                                                                          :HIXUWKHUFRQFOXGHKRZHYHUWKDWWKHGLVWULFWFRXUW
  $WWKHKHDULQJRQ0DUWLQjVPRWLRQIRUDQHZWULDO5LHYHV           FRUUHFWO\ GHWHUPLQHG WKDW QHLWKHU RI WKHVH FODLPV KDG
%H\ GHVFULEHG WKH PDQ KH VDZ IOHHLQJ IURP WKH VFHQH DV       PHULW  7KH WULDO MXGJH LQVWUXFWHG WKH MXU\ WKDW LWV
mDERXWVL[IRRWSRXQGVl+HDOVRVWDWHGWKDWWKHPDQZDV         UHFRPPHQGDWLRQ RI GHDWK ZRXOG EH mMXVW WKDWD
ZHDULQJmDEODFNFRDWDQGDEURZQPDVNDQGVRUWRIDKDWl            UHFRPPHQGDWLRQl ZKLOH D UHFRPPHQGDWLRQ RI OLIH
+HWHVWLILHGWKDWVHYHUDOPLQXWHVDIWHUKHVDZWKHIOHHLQJPDQ        LPSULVRQPHQW mLV ELQGLQJ XSRQ WKH &RXUW DQG , WKH
KHVDZ0DUWLQZDONLQJWRZDUGWKHFULPHVFHQHDQGWKDWKH              sXGJHPXVWLPSRVHWKHVSHFLILFOLIHVHQWHQFHZKLFK\RX
ZDV ZHDULQJ m>D@ EURZQ ORQJ FRDW OLJKWHU D EURZQ FRDWl     UHFRPPHQGl6FRWWFODLPVWKDWWKLVYLRODWHVWKHSULQFLSOH
7KLVGHVFULSWLRQFRUURERUDWHG3HGURjVWHVWLPRQ\WKDW0DUWLQ            HVWDEOLVKHGLQ&DOGZHOOY0LVVLVVLSSL86
ZRUHDEODFNOHDWKHUMDFNHWDQGEURZQPDVNZLWKKROHVFXWIRU          6&W/(GGWKDWFRXUWVPXVWQRW
H\HVSULRUWRDQGGXULQJWKHFULPHDQGWKDWZKHQKHUHWXUQHG         PLVOHDGWKHMXU\LQWREHOLHYLQJLWKDVOHVVUHVSRQVLELOLW\
WRWKHVWRUHDIWHUWKHVKRRWLQJKHZRUHDmORQJJUH\FRDWl         WKDQLWDFWXDOO\GRHVIRUFKRRVLQJWKHGHDWKVHQWHQFH
                                                                          :H UHFHQWO\ UHMHFWHG WKLV SUHFLVH FODLP LQ 0DSHV Y
  5LHYHV%H\ JDYH D  GHSRVLWLRQ IRU SXUSRVHV RI             &R\OH)GWK&LU0RUHRYHU
0DUWLQjVKDEHDVDFWLRQ+HZDVLQFDUFHUDWHGDWWKHWLPH+H          DVWKHGLVWULFWFRXUWFRUUHFWO\KHOG&DOGZHOOLVOLPLWHGWR
LQVLVWHGWKDW0DUWLQmZDVQjWWKHPDQlWKDWKHVDZIOHHLQJWKH          VLWXDWLRQVLQZKLFKWKHMXU\LVPLVOHGDVWRLWVUROHmLQD
VFHQH'XULQJWKHGHSRVLWLRQKHDGPLWWHGWKDWKLVFRFDLQH         ZD\WKDWDOORZV>LW@WRIHHOOHVVUHVSRQVLEOHWKDQLWVKRXOG
DGGLFWLRQ KDG LPSDLUHG KLV PHPRU\ DQG WKDW KH FRXOGQjW        IRUWKHVHQWHQFLQJGHFLVLRQ7KXVWRHVWDEOLVKD&DOGZHOO
UHPHPEHUJLYLQJWHVWLPRQ\LQDERXWWKHFDVH                  YLRODWLRQ D GHIHQGDQW QHFHVVDULO\ PXVW VKRZ WKDW WKH
                                                                       UHPDUNV WR WKH MXU\ LPSURSHUO\ GHVFULEHG WKH UROH
  7KH8QLWHG6WDWHV6XSUHPH&RXUWGHQLHG0DUWLQjVSHWLWLRQ             DVVLJQHGWRWKHMXU\E\ORFDOODZl5RPDQRY2NODKRPD
IRUDZULWRIFHUWLRUDULVHH 0DUWLQY2KLR86            86    6&W   /(GG  
DQGODWHUKLVSHWLWLRQIRUUHKHDULQJ6HH0DUWLQY          FLWDWLRQVDQGDOWHUDWLRQVRPLWWHGVHHDOVR'XJJHU
2KLR  86    7KHUHDIWHU 0DUWLQ
    0DUWLQY0LWFKHOO                     1RV        1RV                      0DUWLQY0LWFKHOO       

     %WKHIDFWVXQGHUO\LQJWKHFODLPZRXOGEHVXIILFLHQW           XQVXFFHVVIXOO\H[KDXVWHGKLVUHPDLQLQJSRVWFRQYLFWLRQVWDWH
  WRHVWDEOLVKE\FOHDUDQGFRQYLQFLQJHYLGHQFHWKDWEXWIRU          FRXUWUHPHGLHVDQGDSSHDOV
  FRQVWLWXWLRQDOHUURUQRUHDVRQDEOHIDFWILQGHUZRXOGKDYH
  IRXQGWKHDSSOLFDQWJXLOW\RIWKHXQGHUO\LQJRIIHQVH                  ,Q0DUWLQILOHGDPRWLRQIRUVWD\RIH[HFXWLRQDQG
                                                                      DSSRLQWPHQWRITXDOLILHGIHGHUDOFRXQVHOLQWKHGLVWULFWFRXUW
  $V VWDWHG DERYH WKHVH LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO     ,Q0DUWLQILOHGKLVSHWLWLRQIRUDZULWRIKDEHDVFRUSXV
FODLPVZHUHQRWUDLVHGGXULQJ0DUWLQjVGLUHFWDSSHDO7KH            LQWKHGLVWULFWFRXUW7KHGLVWULFWFRXUWGHQLHGKLVSHWLWLRQDQG
2KLRFRXUWVGHFOLQHGWRUHYLHZWKHVHFODLPVIRUWKLVIDLOXUH         D FHUWLILFDWH RI DSSHDODELOLW\ RQ 1RYHPEHU    ,Q
6HH3HUU\1(GDW&ROH1(GDW              )HEUXDU\LWGHQLHGKLVPRWLRQIRUDPHQGHGMXGJPHQW
0DUWLQ KDV mIDLOHG WR GHYHORS WKH IDFWXDO EDVLV RI >WKHVH@   ,Q 1RYHPEHU  ZH JUDQWHG 0DUWLQjV DSSOLFDWLRQ IRU D
FODLP>V@LQ6WDWHFRXUWSURFHHGLQJVlHDQGWKXV        FHUWLILFDWH RI DSSHDODEOLW\ WR UHYLHZ KLV FODLPV RI
DKHDULQJLVRQO\ZDUUDQWHGLIKHKDVVKRZQWKDWKLVFODLPVILW       SURVHFXWRULDO PLVFRQGXFW LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO
WKHH[FHSWLRQVLQH$RU%                           DQGVXIILFLHQF\RIWKHHYLGHQFH
  6HFWLRQ
V6XEVHFWLRQH$LLVQRWDSSOLFDEOHWR           ,QVXP0DUWLQPDNHVWKHIROORZLQJFODLPV$LQHIIHFWLYH
WKLVFODLP7KHUHIRUHDKHDULQJZRXOGEHZDUUDQWHGRQO\LI          DVVLVWDQFHRIWULDOFRXQVHO+HUEHUW$GULQHDQGsDPHV&DUQHV
0DUWLQKDVSURYLGHGWKHUHTXLVLWHVKRZLQJWKDWm>WKLV@FODLP        IRUWKHLUIDLOXUHWRFKDOOHQJH0DUWLQjVZDUUDQWOHVVDUUHVW
UHOLHVRQLLDIDFWXDOSUHGLFDWHWKDWFRXOGQRWKDYHEHHQ     LQYHVWLJDWHDQGRWKHUZLVHSUHSDUHIRUWULDOLQWHUYLHZ
SUHYLRXVO\GLVFRYHUHGWKURXJKWKHH[HUFLVHRIGXHGLOLJHQFH          ZLWQHVVHV  VXESRHQD 5LHYHV%H\  HIIHFWLYHO\ FURVV
DQG%WKHIDFWVXQGHUO\LQJWKHFODLPZRXOGEHVXIILFLHQWWR         H[DPLQHZLWQHVVHVLQYHVWLJDWHDQGRWKHUZLVHSUHSDUHIRU
HVWDEOLVK E\ FOHDU DQG FRQYLQFLQJ HYLGHQFH WKDW EXW IRU       WKHPLWLJDWLRQSKDVHREMHFWWRMXU\LQVWUXFWLRQVREMHFW
FRQVWLWXWLRQDO HUURU QR UHDVRQDEOH IDFWILQGHU ZRXOG KDYH       WRWKHXVHRISUHVHQWHQFHLQYHVWLJDWLRQDQGSV\FKLDWULFFOLQLF
IRXQGWKHDSSOLFDQWJXLOW\RIWKHXQGHUO\LQJRIIHQVHl             UHSRUWVDWPLWLJDWLRQ%LQHIIHFWLYHDVVLVWDQFHRIDSSHOODWH
                                                                      FRXQVHOIRUIDLOLQJWRPDNHWKHWUDQVFULSWRIKLVKHDULQJRQKLV
  0DUWLQKDVQRWDWWHPSWHGWRVKRZWKDWWKHIDFWXDOSUHGLFDWH         PRWLRQIRUDQHZWULDOSDUWRIWKHUHFRUGRQKLVGLUHFWDSSHDO
WR KLV FODLP RI LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO DW WKH     & SURVHFXWRULDO PLVFRQGXFW DW WULDO E\ LPSURSHUO\
PLWLJDWLRQSKDVHFRXOGmQRWKDYHEHHQSUHYLRXVO\GLVFRYHUHG           FRPPHQWLQJRQKLVIDLOXUHWRWHVWLI\DQG'LQVXIILFLHQF\RI
WKURXJKWKHH[HUFLVHRIGXHGLOLJHQFHl+LVEULHIDWWHPSWHGQR       WKHHYLGHQFHVXSSRUWLQJKLVFRQYLFWLRQ
VXFKVKRZLQJDQGDWRUDODUJXPHQWKLVFRXQVHOFRXOGQRW
H[SODLQZK\QHDUO\\HDUVKDGSDVVHGZLWKRXWDQDWWHPSWWR                           67$1'$5'2)5(9,(:
GHSRVHLQWHUYLHZRURWKHUZLVHFRQWDFW0DUWLQjVWULDOFRXQVHO
/LNHZLVH0DUWLQjVIDLOXUHWRSRLQWWRPLWLJDWLQJHYLGHQFHWKDW         %HFDXVH0DUWLQILOHGKLVKDEHDVSHWLWLRQRQsXQH
SUHVXPDEO\ VKRXOG KDYH EHHQ EXW ZDV QRW SUHVHQWHG DW        RXU UHYLHZ LV JRYHUQHG E\ WKH $QWLWHUURULVP DQG (IIHFWLYH
VHQWHQFLQJLHKLVIDLOXUHWRVKRZSUHMXGLFHPDNHVLWFOHDU       'HDWK3HQDOW\$FWRI3XE/1R6WDW
WKDWKHKDVQRWPHWWKHUHTXLUHPHQWRIH%7KXV        m$('3$l6HH/LQGKY0XUSK\86
0DUWLQLVQRWHQWLWOHGWRDQHYLGHQWLDU\KHDULQJZLWKUHJDUGWR       
WKLVFODLP
                                                                          $IHGHUDOFRXUWLVDXWKRUL]HGWRJUDQWDZULWRIKDEHDV
                                                                        FRUSXVWRDSHUVRQLQFXVWRG\SXUVXDQWWRDVWDWHFRXUW
                                                                        MXGJPHQWEXWRQO\LIWKHDGMXGLFDWLRQRIWKHFODLP
       0DUWLQY0LWFKHOO                       1RV        1RV                       0DUWLQY0LWFKHOO       

        UHVXOWHG LQ D GHFLVLRQ WKDW ZDV FRQWUDU\ WR RU       mSV\FKRORJLFDOZRUNXSlLVDOVRLQFOXGHGLQWKHTXDQWXPRI
       LQYROYHG DQ XQUHDVRQDEOH DSSOLFDWLRQ RI FOHDUO\              FRXQVHOjVSUHSDUDWLRQIRUDQGSHUIRUPDQFHDWWKHPLWLJDWLRQ
       HVWDEOLVKHG )HGHUDO ODZ DV GHWHUPLQHG E\ WKH                SKDVH
       6XSUHPH&RXUWRIWKH8QLWHG6WDWHVRUUHVXOWHG
       LQ D GHFLVLRQ WKDW ZDV EDVHG RQ DQ XQUHDVRQDEOH              7KH DIILGDYLWV RI 0DUWLQjV IDPLO\ PHPEHUV VWDWH WKHLU
       GHWHUPLQDWLRQRIWKHIDFWVLQOLJKWRIWKHHYLGHQFH                ZLOOLQJQHVVWRWHVWLI\DWKLVVHQWHQFLQJEXWGRQRWVKRZZKDW
       SUHVHQWHGLQWKH6WDWHFRXUWSURFHHGLQJ                          PLWLJDWLQJ HYLGHQFH ZRXOG KDYH EHHQ SUHVHQWHG KDG WKH\
    86&G                                                 WHVWLILHG  $OWKRXJK 0DUWLQ KDV PDGH DQ DWWHPSW WR VKRZ
       7KH6XSUHPH&RXUWKDVGHFODUHGWKDWmDIHGHUDOKDEHDV              SUHMXGLFH ZLWK UHJDUG WR PLWLJDWLQJ HYLGHQFH DERXW KLV
    FRXUW PDNLQJ WKH µXQUHDVRQDEOH DSSOLFDWLRQj LQTXLU\              EDFNJURXQG DQG SV\FKRORJLFDO PDNHXS HYLGHQFH RI KLV
    VKRXOGDVNZKHWKHUWKHVWDWHFRXUW
VDSSOLFDWLRQRIFOHDUO\           EDFNJURXQG ZDV SUHVHQWHG DQG KH KDV QRW SRLQWHG WR
    HVWDEOLVKHGIHGHUDOODZZDVREMHFWLYHO\XQUHDVRQDEOHl                PLWLJDWLQJ SV\FKRORJLFDO HYLGHQFH WKDW VKRXOG KDYH EHHQ
    :LOOLDPV Y 7D\ORU  86     ,Q LWV       SUHVHQWHG7KXVKHKDVQRWVKRZQSUHMXGLFHDQGKLVFODLPV
    HODERUDWLRQ RQ WKH PHDQLQJ RI WKH WHUP mREMHFWLYHO\            DUHZLWKRXWPHULW
    XQUHDVRQDEOHl WKH &RXUW VWDWHG WKDW mD IHGHUDO KDEHDV
    FRXUWPD\QRWLVVXHWKHZULWVLPSO\EHFDXVHWKDWFRXUW                  0DUWLQjV EULHIV GLG QRW WDNH LVVXH ZLWK WKH ODFN RI DQ
    FRQFOXGHVLQLWVLQGHSHQGHQWMXGJPHQWWKDWWKHUHOHYDQW               HYLGHQWLDU\KHDULQJLQWKHGLVWULFWFRXUWZLWKUHJDUGWRWKHVH
    VWDWHFRXUW GHFLVLRQ DSSOLHG FOHDUO\ HVWDEOLVKHG IHGHUDO         VSHFLILF FODLPV  ,Q KLV 5XOH H PRWLRQ IRU DQ DPHQGHG
    ODZHUURQHRXVO\RULQFRUUHFWO\5DWKHUWKDWDSSOLFDWLRQ              MXGJPHQWKHFRPSODLQHGJHQHUDOO\DERXWWKHGLVWULFWFRXUWjV
    PXVW DOVR EH XQUHDVRQDEOHl  ,G DW    )LQDOO\ D      DSSOLFDWLRQ RI $('3$ WR KLV SHWLWLRQ DQG VWDWHG WKDW WKH
    GLVWULFW FRXUW
V GHQLDO RI WKH ZULW LV VXEMHFW WRGH QRYR    DSSOLFDWLRQRIWKHVWDQGDUGVIRUGHFLGLQJWKHQHFHVVLW\RIDQ
    UHYLHZ6HH 5RJHUV Y +RZHV  )G   WK           HYLGHQWLDU\KHDULQJLQHmSUHVHQW>HG@WKHSRWHQWLDO
    &LU                                                            IRUUHWURDFWLYHHIIHFWVl$WRUDODUJXPHQW0DUWLQjVFRXQVHO
                                                                          LQ D OLPLWHG ZD\ DUJXHG WKDW KH VKRXOG EH HQWLWOHG WR DQ
:LOVRQY0LWFKHOO)GWK&LU:H             HYLGHQWLDU\KHDULQJZLWKUHJDUGWRKLVFODLPVRILQHIIHFWLYH
UHYLHZWKHGLVWULFWFRXUWjVILQGLQJVRIIDFWRQDGLVSRVLWLRQRI         DVVLVWDQFHRIFRXQVHODWWKHPLWLJDWLRQSKDVH
D SHWLWLRQ IRU D ZULW RI KDEHDV FRUSXV IRU FOHDU HUURU 6HH
&RQHY%HOO)GWK&LU                           7KHDSSOLFDEOHYHUVLRQRIHSURYLGHV

   +DEHDVFRUSXVUHOLHILVDYDLODEOHRQO\LIWKHDSSOLFDQWILUVW            ,IWKHDSSOLFDQWKDVIDLOHGWRGHYHORSWKHIDFWXDOEDVLV
H[KDXVWV UHPHGLHV DYDLODEOH LQ VWDWH FRXUW  6HH  86&         RIDFODLPLQ6WDWHFRXUWSURFHHGLQJVWKHFRXUWVKDOOQRW
E$m,IWKHVWDWHFRXUWDGMXGLFDWHVDQGUHMHFWVD             KROG DQ HYLGHQWLDU\ KHDULQJ RQ WKH FODLP XQOHVV WKH
FODLPRQDGHTXDWHDQGLQGHSHQGHQWVWDWHJURXQGVVXFKDVD                  DSSOLFDQWVKRZVWKDW
VWDWHSURFHGXUDOUXOHWKDWSUHFOXGHVDGMXGLFDWLQJWKHFODLPRQ                $WKHFODLPUHOLHVRQ
WKHPHULWVWKHSHWLWLRQHULVEDUUHGE\WKLVSURFHGXUDOGHIDXOW               LDQHZUXOHRIFRQVWLWXWLRQDOODZPDGHUHWURDFWLYHWR
IURPVHHNLQJIHGHUDOKDEHDVUHYLHZRIVXFKFODLPXQOHVVWKH                FDVHV RQ FROODWHUDO UHYLHZ E\ WKH 6XSUHPH &RXUW WKDW
SHWLWLRQHU FDQ VKRZ µFDXVH DQG SUHMXGLFHj IRU WKH GHIDXOWl         ZDVSUHYLRXVO\XQDYDLODEOHRU
6HH&RQH)GDWFLWLQJ&ROHPDQY7KRPSVRQ                    LL D IDFWXDO SUHGLFDWH WKDW FRXOG QRW KDYH EHHQ
86:DLQZULJKWY6\NHV86                  SUHYLRXVO\ GLVFRYHUHG WKURXJK WKH H[HUFLVH RI GXH
                                                            GLOLJHQFHDQG
    0DUWLQY0LWFKHOO                      1RV         1RV                        0DUWLQY0LWFKHOO           

  SURYLGHV FRQVLGHUDEOH HYLGHQFH WRZDUG D ILQGLQJ RI D               +RZHYHU WKHUH DUH VHYHUDO SUHUHTXLVLWHV EHIRUH WKH
  SV\FKRORJLFDOGLVRUGHUWKDWIXOILOOVWKHFKDUDFWHULVWLFVRI             FDXVHDQGSUHMXGLFHWHVWLVDSSOLHGLQDIHGHUDOFRXUWWR
  VWDWXWRU\PLWLJDWLQJIDFWRUVXQGHU5&%DQG               DQ\ NLQG RI VWDWH SURFHGXUDO GHIDXOW  m)LUVW WKH FRXUW
  7KLVGLDJQRVLVZDVQRWGHYHORSHGLQWKHFXUVRU\DQG               PXVWGHWHUPLQHWKDWWKHUHLVDVWDWHSURFHGXUDOUXOHWKDWLV
  LQFRPSOHWH SV\FKRORJLFDO ZRUNXS FRPSOHWHG E\ WKH                   DSSOLFDEOHWRWKHSHWLWLRQHU
VFODLPDQGWKDWWKHSHWLWLRQHU
  &OHYHODQG&RXUW&OLQLF                                               IDLOHGWRFRPSO\ZLWKWKHUXOHl0DXSLQY6PLWK
                                                                          )GWK&LUm6HFRQGWKHFRXUWPXVW
   $VLVHYLGHQWIURPWKHVXPPDULHVDERYHWKHWHVWLPRQ\RI               GHFLGHZKHWKHUWKHVWDWHFRXUWVDFWXDOO\HQIRUFHGWKHVWDWH
0DUWLQjVPRWKHUDQGJUDQGPRWKHUGLGGLVFXVVPRVWLIQRWDOO             SURFHGXUDOVDQFWLRQl,G7KLUGWKHSURFHGXUDOGHIDXOW
RIWKHIDFWRUVLQWKHDIILGDYLW*UDQWHGGHIHQVHFRXQVHOGLG            PXVWEHDQmLQGHSHQGHQWDQGDGHTXDWHlVWDWHJURXQGRQ
QRWSURGXFHH[SHUWWHVWLPRQ\WRGUDZFRQFOXVLRQVIURPWKH                 ZKLFKWKHVWDWHFDQUHO\WRIRUHFORVHUHYLHZRIDIHGHUDO
IDFWVSUHVHQWHGE\WKHVHWZRZLWQHVVHVEXWWKHLUWHVWLPRQLHV             FRQVWLWXWLRQDO FODLP  &RXQW\ &RXUW RI 8OVWHU &RXQW\
GLGUHFRXQWIDFWVDQGRFFXUUHQFHVVKRZLQJHYHU\WKLQJWKDW'U             1HZ<RUNY$OOHQ86,IWKHVH
6FKPLGWJRHVVOLQJFRQWHQGVZDVQRWEXWVKRXOGKDYHEHHQ                  WKUHH SUHUHTXLVLWHV DUH PHW D IHGHUDO FRXUW PXVW
SUHVHQWHG  6RPH RI WKLV LQIRUPDWLRQ LV DOVR IRXQG LQ WKH       GHWHUPLQHZKHWKHUWKHSHWLWLRQHULVDEOHWRPHHWWKHFDXVH
SUHVHQWHQFHLQYHVWLJDWLRQDQGWKHSV\FKRORJLFDOUHSRUWJLYHQ              DQGSUHMXGLFHWHVWWRH[FXVHWKHVWDWHSURFHGXUDOGHIDXOW
WR WKH MXU\  'U 6FKPLGWJRHVVOLQJjV DIILGDYLW DOVR IDLOV WR       7KHFDXVHDQGSUHMXGLFHVWDQGDUGLVDWZRSDUWWHVWLQ
VSHFLI\ WKH mVHYHUH SV\FKRORJLFDO GLVRUGHUl IURP ZKLFK              ZKLFK WKH SHWLWLRQHU PXVW  SUHVHQW D VXEVWDQWLDO
0DUWLQDOOHJHGO\VXIIHUV7KXVWKLVmGLDJQRVLVlLVQRPRUH              UHDVRQWRH[FXVHWKHGHIDXOW&ROHPDQ86DW
WKDQ D FRQFOXVRU\ VWDWHPHQW IURP D SV\FKRORJLVW ZKR KDV           DQGVKRZWKDWKHZDVDFWXDOO\SUHMXGLFHGDVDUHVXOW
QHYHU H[DPLQHG 0DUWLQ  7KLV SDUW RI WKH DIILGDYLW PDNHV         RI WKH FODLPHG FRQVWLWXWLRQDO HUURU 8QLWHG 6WDWHV Y
UHIHUHQFH WR WKH IDFW WKDW WKH m&OHYHODQG &RXUW &OLQLFl           )UDG\86
FRPSOHWHGDSV\FKRORJLFDOZRUNXSRI0DUWLQIRUSXUSRVHVRI                  ,IWKHFODLPVSUHVHQWHGLQWKHIHGHUDOFRXUWZHUHQHYHU
PLWLJDWLRQ  7KH UHSRUW JHQHUDWHG IURP WKLV ZRUNXS ZDV            DFWXDOO\ SUHVHQWHG LQ WKH VWDWH FRXUWV EXW D VWDWH
DWWDFKHGWR0DUWLQjVPRWLRQWRVXSSOHPHQWWKHUHFRUG7KXV              SURFHGXUDO UXOH QRZ SURKLELWV WKH VWDWH FRXUW IURP
DSV\FKRORJLFDOH[DPLQDWLRQRI0DUWLQZDVFRQGXFWHGDQGD                 FRQVLGHULQJWKHPWKHFODLPVDUHFRQVLGHUHGH[KDXVWHG
UHSRUWRIWKHH[DPLQDWLRQZDVSURYLGHGWRWKHMXGJHDQGMXU\              EXW DUH SURFHGXUDOO\ EDUUHG &ROHPDQ  86 DW
GXULQJWKHPLWLJDWLRQSKDVH0DUWLQDUJXHVWKDWWKHUHSRUWjV             
FRQFOXVLRQV ZHUH VHOIVHUYLQJ WR WKH 6WDWH DQG ODFNHG
FUHGLELOLW\ PHUHO\ EHFDXVH LW ZDV JHQHUDWHG E\ D 6WDWH         ,G,Q&ROHPDQY0LWFKHOO)GWK&LUZH
HPSOR\HGSVFK\RDQDO\VW:HKDYHQHYHUIRXQGFRXQVHOWREH              H[SODLQHG WKH ODVW UHVRUW IRU KDEHDV SHWLWLRQHUV ZKR IDLO WR
LQHIIHFWLYHVROHO\EHFDXVHWKHH[SHUWXVHGZDVRQWKH6WDWH             VKRZFDXVHDQGSUHMXGLFHIRUSURFHGXUDOGHIDXOW
SD\UROO  $IWHU DOO WKH H[SHUW 'U  6FKPLGWJRHVVOLQJ QRZ
EHLQJWRXWHGE\0DUWLQLVDSSDUHQWO\DJRYHUQPHQWHPSOR\HH                :KHQDKDEHDVSHWLWLRQHUKDVIDLOHGWRVKRZFDXVHIRU
0DUWLQ DOVR DUJXHV WKDW KLV FRXQVHO ZDV LQHIIHFWLYH IRU           QRW DVVHUWLQJ KLV LQHIIHFWLYH DVVLVWDQFH RI DSSHOODWH
DJUHHLQJWRKDYHWKHUHSRUWSUHSDUHGDVGLVFXVVHGLQIUDEXW             FRXQVHOFODLPSURSHUO\LQWKH2KLRFRXUWVDIHGHUDOFRXUW
LQWUXWKKLVDUJXPHQWUHVWVRQWKHIDFWWKDWKHGLGQRWOLNHWKH         PD\QRWUHDFKWKHPHULWVRIWKHKDEHDVFODLPXQOHVVWKH
FRQFOXVLRQVLWFRQYH\HG$VGLVFXVVHGEHORZRQFHWKHUHSRUW             SHWLWLRQHU FDQ VKRZ WKDW UHIXVDO WR FRQVLGHU KLV FODLP
ZDVUHTXHVWHG2KLRODZUHTXLUHGWKDWWKHVHQWHQFLQJMXGJH               ZRXOGUHVXOWLQDIXQGDPHQWDOPLVFDUULDJHRIMXVWLFH7KH
WKHMXU\DQGERWKSDUWLHVREWDLQFRSLHVIRUUHYLHZ7KXVWKLV          IXQGDPHQWDOPLVFDUULDJHRIMXVWLFHH[FHSWLRQUHTXLUHVD
    0DUWLQY0LWFKHOO                    1RV      1RV                       0DUWLQY0LWFKHOO      

  VKRZLQJ WKDW mLQ OLJKW RI WKH QHZ HYLGHQFH QR MXURU   DQGIDPLO\PHPEHUVDQGKLVFRXQVHOUHTXHVWHGDSUHVHQWHQFH
  DFWLQJUHDVRQDEO\ZRXOGKDYHYRWHGWRILQGKLPJXLOW\           UHSRUW ZKLFK GHWDLOHG KLV EDFNJURXQG DQG D SV\FKLDWULF
  EH\RQGDUHDVRQDEOHGRXEWl6FKOXSY'HOR86             UHSRUW ZKLFK UHFRXQWHG KLV KLVWRU\ RI SV\FKRORJLFDO
                                                   HYDOXDWLRQV DQG LQFOXGHG D mPHQWDO VWDWXV H[DPLQDWLRQl
                                                                   &RXQVHO HOLFLWHG WKH WHVWLPRQ\ RI 0DUWLQjV PRWKHU DQG
,GDW                                                   JUDQGPRWKHULQZKLFKWKH\SURYLGHGGHWDLOVRIKLVWURXEOHG
                                                                   \RXWK:KLOHFHUWDLQO\QRWH[KDXVWLYHWKLVDFWLRQFRQVWLWXWHV
  $VUHOHYDQWKHUHZHKDYHUHFRJQL]HGWKDW2KLRDSSOLHVUHV       DQLQYHVWLJDWLRQ7KXV0DUWLQFDQQRWVKRZWKDWKHVXIIHUHG
MXGLFDWDWREDUWKHFRQVLGHUDWLRQRIFRQVWLWXWLRQDOLVVXHVWKDW    FRQVWUXFWLYH GHQLDO RI FRXQVHO VR KH PXVW VKRZ KRZ KLV
ZHUHQRWEXWFRXOGKDYHEHHQUDLVHGRQGLUHFWDSSHDO          FRXQVHOjV GHILFLHQFLHV SUHMXGLFHG WKH RXWFRPH RI KLV
                                                                   VHQWHQFLQJSURFHHGLQJ6HH6WULFNODQG86DW
     ,Q  WKH 2KLR 6XSUHPH &RXUW KHOG WKDW
  m>F@RQVWLWXWLRQDO LVVXHV FDQQRW EH FRQVLGHUHG LQ               0DUWLQjV LQLWLDO EULHI FRPSOHWHO\ IDLOV WR SRLQW WR ZKDW
  SRVWFRQYLFWLRQ SURFHHGLQJV XQGHU 6HFWLRQ  HW        PLWLJDWLQJHYLGHQFHIXUWKHUDFWLRQRQWKHSDUWRIKLVFRXQVHO
  VHT 5HYLVHG &RGH ZKHUH WKH\ KDYH DOUHDG\ EHHQ RU      ZRXOG KDYH XQFRYHUHG  7KH DIILGDYLWV RI WKRVH KH FODLPV
  FRXOG KDYH EHHQ IXOO\ OLWLJDWHG E\ WKH SULVRQHU ZKLOH    VKRXOGKDYHEHHQZLWQHVVHVDWWKHKHDULQJGRQRWVWDWHZKDW
  UHSUHVHQWHG E\ FRXQVHO HLWKHU EHIRUH KLV MXGJPHQW RI     WKH\ZRXOGKDYHRIIHUHGRQKLVEHKDOI0DUWLQjVUHSO\EULHI
  FRQYLFWLRQRURQGLUHFWDSSHDOIURPWKDWMXGJPHQWDQG           UHIHUHQFHVWKHDIILGDYLWRI'U1DQF\6FKPLGWJRHVVOLQJZKLFK
  WKXVKDYHEHHQDGMXGLFDWHGDJDLQVWKLPl6WDWHY3HUU\        VWDWHVmWKHWUDQVFULSWPDWHULDOVXJJHVWVWKDWWKHGHIHQVHFRXOG
  1(G2KLRV\OODEXVSDUD           QRWKDYHSXWRQDZHOOWKRXJKWRXWZHOOGHYHORSHGPLWLJDWLRQ
  ,Q6WDWHY&ROH1(G2KLRWKHVWDWH          DVWKH\ODFNHGWKHGDWDWRGRVRl7KHDIILGDYLWDOVRVWDWHV
  VXSUHPHFRXUWDUWLFXODWHGKRZWKLVSURFHGXUDOUXOHZRXOG
  DSSO\ ZLWK UHVSHFW WR LQHIIHFWLYH DVVLVWDQFH RI WULDO       $PRQJWKHVLJQLILFDQWIDFWRUVWKDWGHIHQVHFRXQVHOIDLOHG
  FRXQVHOFODLPV7KHFRXUWH[SODLQHGm:KHUHGHIHQGDQW            WRSUHVHQWWRWKHMXU\LQPLWLJDWLRQRIWKHVHQWHQFHDUHWKH
  UHSUHVHQWHGE\QHZFRXQVHOXSRQGLUHFWDSSHDOIDLOVWR            IROORZLQJH[WUHPHO\VLJQLILFDQWSV\FKRORJLFDOGDWD
  UDLVHWKHUHLQWKHLVVXHRIFRPSHWHQWWULDOFRXQVHODQGVDLG        $IDPLO\KLVWRU\RIDOFRKROLVP
  LVVXHFRXOGIDLUO\KDYHEHHQGHWHUPLQHGZLWKRXWUHVRUWWR          %IDPLO\KLVWRU\RISK\VLFDODEXVH
  HYLGHQFHGHKRUV>LHRXWVLGH@WKHUHFRUGUHVMXGLFDWDLV        &SDUHQWDOG\VIXQFWLRQDODQGFKDRVWKDWKDGDVLJQLILFDQW
  D SURSHU EDVLV IRU GLVPLVVLQJ GHIHQGDQW
V SHWLWLRQ IRU      LPSDFW RQ (UQHVW 0DUWLQjV DGXOW SV\FKRORJLFDO
  SRVWFRQYLFWLRQUHOLHIl,GDWV\OODEXV                   IXQFWLRQLQJ
                                                                     'WKHLPSDFWRI0DUWLQjVOHVVWKDQDYHUDJHLQWHOOHFWXDO
%\UGY&ROOLQV)GWK&LUHPSKDVLV         IXQFWLRQLQJDVQRWHGLQVFKRROUHFRUGVLQKLVDGDSWDWLRQ
DGGHG                                                              ( WKH KLVWRU\ RI LQDSSURSULDWH EHKDYLRU DQG WURXEOHG
                                                                     HPRWLRQDOVWDWXVWKDWZDVUHFRJQL]HGDQGHYHQDWWHPSWHG
                                                                     WREHWUHDWHGGXULQJ0DUWLQjVFKLOGKRRG\HDUV
                                                                                                 



                                                                        3HUKDSVPRVWVLJQLILFDQWO\KRZHYHUWKHWULDOGHIHQVH
                                                                     IDLOHGLQDQ\ZD\WRGHYHORSWKHIDFWWKDW(UQHVW0DUWLQ
                                                                     VXIIHUVDVHYHUHSV\FKRORJLFDOGLVRUGHUWKDWVXEVWDQWLDOO\
                                                                     LPSDLUV KLV IXQFWLRQLQJ LQ VRFLHW\  7KLV GLDJQRVLV
       0DUWLQY0LWFKHOO                   1RV       1RV                         0DUWLQY0LWFKHOO      

  LQZKLFKGHIHQVHFRXQVHOKDYHWRWDOO\IDLOHGWRFRQGXFW                                       ',6&866,21
  VXFK DQ LQYHVWLJDWLRQ  ,Q FRQWUDVW LI D KDEHDV FODLP
  µGRHV QRW LQYROYH D IDLOXUH WR LQYHVWLJDWH EXW UDWKHU                           ,3URFHGXUDO'HIDXOW
  SHWLWLRQHUjV GLVVDWLVIDFWLRQ ZLWK WKH GHJUHH RI KLV
  DWWRUQH\
V LQYHVWLJDWLRQj WKH SUHVXPSWLRQ RI                     $6XIILFLHQF\RIWKH(YLGHQFH
  UHDVRQDEOHQHVV LPSRVHG E\ 6WULFNODQG ZLOO EH KDUG WR
  RYHUFRPH                                                             0DUWLQjVVXIILFLHQF\RIWKHHYLGHQFHFODLPZDVUDLVHGLQKLV
                                                                      GLUHFWDSSHDODQGWKXVSUHVHUYHGIRUIHGHUDOKDEHDVUHYLHZ
,GDW
FLWLQJ/HZLVY$OH[DQGHU)GWK
&LUHPSKDVLVDGGHG7KHFRXUWWKHQUHMHFWHGWKH              %,QHIIHFWLYH$VVLVWDQFHRI$SSHOODWH&RXQVHO
SHWLWLRQHUjV FODLPV RI LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO DW
VHQWHQFLQJZKLFKZHUHEDVHGXSRQWKHDOOHJHGIDLOXUHRIKLV             7KHGLVWULFWFRXUWIRXQGWKDW0DUWLQKDGQRWSURFHGXUDOO\
FRXQVHOWRGLVFRYHUWKDWKHVXIIHUHGIURPSRVWWUDXPDWLFVWUHVV       GHIDXOWHG KLV FODLP RI LQHIIHFWLYH DVVLVWDQFH RI DSSHOODWH
GLVRUGHUm376'lEHFDXVHWKHSHWLWLRQHUKDGQRWSRLQWHGWR          FRXQVHO7KLVFODLPWRRNLVVXHZLWKFRXQVHOjVIDLOXUHWRPDNH
DQ\WKLQJLQWKHUHFRUGWKDWVKRZHGKHVXIIHUHGIURP376'RU           WKHWUDQVFULSWRIWKHKHDULQJRQ0DUWLQjVPRWLRQIRUDQHZWULDO
DQ\RWKHUSV\FKRORJLFDOGLVRUGHU,GDW7KHFRXUWVWDWHG      SDUWRIWKHUHFRUGIRUKLVGLUHFWDSSHDO7KLVDUJXPHQWDQG
                                                                      RWKHU LQHIIHFWLYH DVVLVWDQFH RI DSSHOODWH FRXQVHO FODLPV DV
     :HDOVRQRWHWKDWXQOLNHLQ6HLGHO>Y0HUNOH)G         GLVFXVVHG LQIUD ZHUH UDLVHG LQ 0DUWLQjV SRVWFRQYLFWLRQ
    WK &LU @ DQG *OHQQ >FLWHG VXSUD@          DSSOLFDWLRQIRUGHOD\HGUHFRQVLGHUDWLRQDVDXWKRUL]HGE\6WDWH
  &DPSEHOOKDVQRWSRLQWHGWRDQ\WKLQJLQKLVFKLOGKRRG               Y 0XUQDKDQ  1( G   2KLR   7KH
  PHGLFDO UHFRUGV LQGLFDWLQJ WKDW KH KDV HLWKHU 376' RU       DSSOLFDWLRQ ZDV GHQLHG E\ WKH 2KLR &RXUW RI $SSHDOV LQ D
  VRPH IRUP RI EUDLQ GDPDJH  +H KDV QHYHU EHHQ              RQHVHQWHQFHRSLQLRQWKDWGLGQRWVWDWHZKHWKHUWKHGHFLVLRQ
  GLDJQRVHG RU WUHDWHG IRU 376' ZKHUHDV WKH PHGLFDO           ZDVRQWKHPHULWVRUEDVHGXSRQSURFHGXUDOJURXQGV7KH
  UHFRUGVLQ6HLGHOH[SOLFLWO\QRWHGWKHGHIHQGDQW
VPHQWDO           GLVWULFW FRXUW ZKLOH UHFRJQL]LQJ WKLV FRXUWjV KROGLQJ LQ
  DIIOLFWLRQV 6HH 6HLGHO  )G DW   $W PRVW    6LPSVRQY6SDUNPDQ)GWK&LUZKHQ
  &DPSEHOO
V FKLOGKRRG PHGLFDO UHFRUGV ZRXOG KDYH                DVWDWHFRXUWRIDSSHDOVGHFLVLRQLVVLOHQWDVWRWKHJURXQGVIRU
  SURYLGHG DQRWKHU OLVW RI SHRSOH WR LQWHUYLHZ  7KHVH        GHQ\LQJDFODLPLWLVDVVXPHGWKDWWKHFRXUWREVHUYHGLWVRZQ
  IRUPHU SK\VLFLDQV DQG KHDOWKFDUH ZRUNHUV &DPSEHOO             SURFHGXUDO EDU QRQHWKHOHVV UXOHG WKDW LW ZDV LPSURSHU WR
  DUJXHV ZRXOG KDYH EHHQ DEOH WR H[SRVH KLV PHQWDO           DVVXPHWKDWWKHFODLPZDVUHMHFWHGXSRQDSURFHGXUDOJURXQG
  FRQGLWLRQ                                                        EHFDXVH0XUQDKDQKDGMXVWEHHQGHFLGHGDQGWKHEULHI&RXUW
     7KLV LV PXFK WRR WHQXRXV D FODLP WR VXSSRUW WKH         RI $SSHDOV RSLQLRQ GLG QRW VWDWH WKH EDVLV RI LWV GHQLDO DV
  FRQFOXVLRQ WKDW &DPSEHOO ZDV SUHMXGLFHG E\ KLV                UHTXLUHG E\ 0XUQDKDQ  7KH 6WDWH GRHV QRW FKDOOHQJH WKLV
  DWWRUQH\V
 IDLOXUH WR ORRN LQWR KLV FKLOGKRRG PHGLFDO        ILQGLQJRURWKHUZLVHDUJXHWKDWWKLVFODLPZDVQRWSUHVHUYHG
  UHFRUGV                                                           IRUIHGHUDOKDEHDVUHYLHZ

,G                                                                  & ,QHIIHFWLYH$VVLVWDQFHRI7ULDO&RXQVHO3URVHFXWRULDO
                                                                           0LVFRQGXFW
  +HUHWKHUHZDVmVRPHWKLQJ>@l&ROHPDQ)GDW
RI D PLWLJDWLQJ QDWXUH SUHVHQWHG DW WKH KHDULQJ E\ GHIHQVH     0DUWLQUDLVHGKLVFODLPVRILQHIIHFWLYHDVVLVWDQFHRIWULDO
FRXQVHO7KHUHZDVOLPLWHGFRQWDFWEHWZHHQGHIHQVHFRXQVHO           FRXQVHOLQSRVWFRQYLFWLRQSURFHHGLQJVUDWKHUWKDQE\GLUHFW
                                                                      DSSHDO  7KXV WKHVH FODLPV ZHUH EDUUHG E\ UHV MXGLFDWD
    0DUWLQY0LWFKHOO                       1RV         1RV                        0DUWLQY0LWFKHOO      

SXUVXDQWWR3HUU\6HH%\UG)GDW1RQHWKHOHVV              REWDLQVDQGSUHVHQWVVRPHWKLQJLQPLWLJDWLRQPLQLPDO
KH DUJXHV WKDW WKHVH FODLPV DUH QRW SURFHGXUDOO\ GHIDXOWHG         VWDQGDUGVUHTXLUHVRPHLQYHVWLJDWLRQl,G5HFHQWO\LQ
EHFDXVHWKHODVWVWDWHFRXUWUHQGHULQJMXGJPHQWRQWKHFDVHGLG            &DUWHU Y %HOO  )G   WK &LU DQG
QRWFOHDUO\DQGH[SUHVVO\VWDWHWKDWLWVMXGJPHQWUHVWHGRQD              6NDJJVY3DUNHU)GWK&LU
SURFHGXUDOEDU6HH+DUULVY5HHG86              WKLV FRXUW KDV KHOG WKDW IDLOXUH WR LQYHVWLJDWH SRVVLEOH
7KLV FRQWHQWLRQ LV QRW DFFXUDWH  :KHQ DGGUHVVLQJ WKHVH            PLWLJDWLQJ IDFWRUV DQG IDLOXUH WR SUHVHQW PLWLJDWLQJ
FODLPVWKHFRXUWKHOG                                                   HYLGHQFH DW VHQWHQFLQJ FDQ FRQVWLWXWH LQHIIHFWLYH
                                                                           DVVLVWDQFHRIFRXQVHOXQGHUWKH6L[WK$PHQGPHQW
  :HILQGWKDWWKHVHZHUHDOOPDWWHUVWKDWFRXOGKDYHEHHQ                                               



  DGGUHVVHGRQGHIHQGDQWjVGLUHFWDSSHDOVLQFHGHIHQGDQW                      :KLOH UHFHQW GHFLVLRQV IURP WKLV FRXUW KDYH
  ZDV UHSUHVHQWHG E\ QHZ DSSHOODWH FRXQVHO DQG DUH                  HPSKDVL]HGWKDWIDLOXUHWRSUHVHQWPLWLJDWLQJHYLGHQFHDW
  WKHUHIRUHEDUUHGE\WKHGRFWULQHRIUHVMXGLFDWDDVIRXQG                VHQWHQFLQJ PD\ FRQVWLWXWH LQHIIHFWLYH DVVLVWDQFH RI
  E\WKHWULDOFRXUW                                                 FRXQVHO XQGHU WKH 6L[WK $PHQGPHQW FRXQVHO PD\
                                                                           QHYHUWKHOHVV PDNH D UHDVRQDEOH GHFLVLRQ WKDW
6WDWH Y 0DUWLQ  :/  
 2KLR $SS               LQYHVWLJDWLRQLVQRWQHFHVVDU\6HH6WULFNODQG86
0DUWLQVLPSO\LJQRUHVWKLVRSLQLRQDQGIRFXVHVRQDORZHU                  DW,QGHHG WKH6WULFNODQG&RXUWQRWHGWKDWm>W@KH
FRXUW RSLQLRQ WKDW ZDV QRW WKH ODVW VWDWH FRXUW UHQGHULQJ         UHDVRQDEOHQHVVRIFRXQVHO
VDFWLRQVPD\EHGHWHUPLQHGRU
MXGJPHQWRQWKHFDVH7KXVWKLVDUJXPHQWLVZLWKRXWPHULW               VXEVWDQWLDOO\ LQIOXHQFHG E\ WKH GHIHQGDQW
V RZQ
                                                                           VWDWHPHQWV RU DFWLRQV &RXQVHOjV DFWLRQV DUH XVXDOO\
  0DUWLQ DOVR DUJXHV WKDW WKH LQHIIHFWLYH DVVLVWDQFH RI KLV        EDVHGTXLWHSURSHUO\RQLQIRUPHGVWUDWHJLFFKRLFHVPDGH
DSSHOODWHFRXQVHOLVFDXVHDQGSUHMXGLFHIRUQRWUDLVLQJKLV               E\ WKH GHIHQGDQW DQG RQ LQIRUPDWLRQ VXSSOLHG E\ WKH
FODLPV RI LQHIIHFWLYH DVVLVWDQFH RI WULDO FRXQVHO RQ GLUHFW        GHIHQGDQWl,G
DSSHDO,Q0DUWLQjVSRVWFRQYLFWLRQDSSOLFDWLRQIRUGHOD\HG
UHFRQVLGHUDWLRQKHUDLVHGFODLPVRILQHIIHFWLYHDVVLVWDQFHRI           ,GHPSKDVLVLQRULJLQDO:HWKHQUHMHFWHG&ROHPDQjVFODLP
DSSHOODWH FRXQVHO EDVHG XSRQ WKH IDLOXUH RI KLV DSSHOODWH       WKDW WKH IDLOXUH RI KLV FRXQVHO WR LQYHVWLJDWH PLWLJDWLQJ
FRXQVHO WR UDLVH WKH LQHIIHFWLYHQHVV RI WULDO FRXQVHO IRU QRW   HYLGHQFHDPRXQWHGWRLQHIIHFWLYHDVVLVWDQFHEHFDXVH&ROHPDQ
FKDOOHQJLQJ KLV ZDUUDQWOHVV DUUHVW REMHFWLQJ WR MXU\              KDG EHHQ XQFRRSHUDWLYH DQG KDG GLUHFWHG KLV FRXQVHO WR
LQVWUXFWLRQV REWDLQLQJ WKH DWWHQGDQFH RI 5LHYHV%H\ DQG          SUHVHQWOLPLWHGHYLGHQFHDWWKHKHDULQJLQVWUXFWLQJKLPmQRW
SHUIRUPLQJHIIHFWLYHO\DWWKHPLWLJDWLRQSKDVH,I0DUWLQFDQ           WRLQYHVWLJDWHPLWLJDWLQJIDFWRUVl,GDW
VKRZ WKDW KH UHFHLYHG LQHIIHFWLYH DVVLVWDQFH RI DSSHOODWH
FRXQVHO WKDW URVH WR WKH OHYHO RI D YLRODWLRQ RI KLV 6L[WK      &DPSEHOOY&R\OHBBB)GBBBB:/WK
$PHQGPHQWULJKWVLWZRXOGH[FXVHKLVSURFHGXUDOGHIDXOW                &LUDQRWKHUFDVHLQYROYLQJDKDEHDVSHWLWLRQILOHGE\
6HH6H\PRXUY:DONHU)GWK&LU                 DQ2KLRGHDWKURZLQPDWHIXUWKHULOOXPLQDWHVWKHVWDQGDUGV
FLWLQJ 0XUUD\ Y &DUULHU  86     ,Q      DSSOLFDEOH WR LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO DUJXPHQWV
0DSHVY&R\OH)GWK&LUZHSURYLGHG                UHODWHG WR FDSLWDO VHQWHQFLQJ SURFHHGLQJV  7KH &DPSEHOO
JXLGDQFHRQFRQVLGHUDWLRQVUHOHYDQWWRFODLPVRILQHIIHFWLYH             FRXUWVWDWHG
DVVLVWDQFHRIDSSHOODWHFRXQVHO
                                                                           >:@HQRWHWKDWWKHFDVHVZKHUHWKLVFRXUWKDVJUDQWHGWKH
  7KHFDVHVGHFLGHGE\WKLVFRXUWRQWKHLVVXHRILQHIIHFWLYH              ZULW IRU IDLOXUH RI FRXQVHO WR LQYHVWLJDWH SRWHQWLDO
  DVVLVWDQFH RI DSSHOODWH FRXQVHO VXJJHVW WKH IROORZLQJ              PLWLJDWLQJHYLGHQFHKDYHEHHQOLPLWHGWRWKRVHVLWXDWLRQV
  FRQVLGHUDWLRQV WKDW RXJKW WR EH WDNHQ LQWR DFFRXQW LQ
   0DUWLQY0LWFKHOO                       1RV      1RV                       0DUWLQY0LWFKHOO       

  $PRQJRWKHUWKLQJVWULDOFRXQVHOIDLOHGWRSUHVHQWWKH              GHWHUPLQLQJ ZKHWKHU DQ DWWRUQH\ RQ GLUHFW DSSHDO
  GHIHQGDQW
V PLOLWDU\ UHFRUG UHOLJLRXV DQG YROXQWHHU            SHUIRUPHGUHDVRQDEO\FRPSHWHQWO\
  DFWLYLWLHVRUH[SHUWVZKRFRXOGWHVWLI\DERXWVRFLRORJLFDO
  RU SV\FKRORJLFDO IDFWRUV  6HH LG  8QGHU WKHVH              :HUHWKHRPLWWHGLVVXHVVLJQLILFDQWDQGREYLRXV"
  FLUFXPVWDQFHVWKH&RXUWIRXQGWKHUHSUHVHQWDWLRQZDV                :DVWKHUHDUJXDEO\FRQWUDU\DXWKRULW\RQWKHRPLWWHG
  REMHFWLYHO\XQUHDVRQDEOH6HHLGDW                        LVVXHV"
     ,Q$XVWLQY%HOO)GWK&LUWKLV         :HUHWKHRPLWWHGLVVXHVFOHDUO\VWURQJHUWKDQWKRVH
  &RXUWKHOGWKDWWKHIDLOXUHRIWULDOFRXQVHOmWRLQYHVWLJDWH         SUHVHQWHG"
  DQG SUHVHQW DQ\ PLWLJDWLQJ HYLGHQFH GXULQJ WKH                 :HUHWKHRPLWWHGLVVXHVREMHFWHGWRDWWULDO"
  VHQWHQFLQJSKDVHVRXQGHUPLQHGWKHDGYHUVDULDOSURFHVV               :HUHWKHWULDOFRXUW
VUXOLQJVVXEMHFWWRGHIHUHQFHRQ
  WKDW >GHIHQGDQW
V@ GHDWK VHQWHQFH ZDV QRW UHOLDEOHl           DSSHDO"
  5HO\LQJRQWKLV&RXUW
VKROGLQJLQ*OHQQY7DWH)G             'LG DSSHOODWH FRXQVHO WHVWLI\ LQ D FROODWHUDO
    WK &LU WKDW FRXQVHO SURYLGHG            SURFHHGLQJDVWRKLVDSSHDOVWUDWHJ\DQGLIVRZHUHWKH
  LQHIIHFWLYH DVVLVWDQFH ZKHUH LQIRUPDWLRQ ZDV QRW                MXVWLILFDWLRQVUHDVRQDEOH"
  SUHVHQWHGWRWKHMXU\DWVHQWHQFLQJEHFDXVHFRXQVHOPDGH             :KDWZDVDSSHOODWHFRXQVHO
VOHYHORIH[SHULHQFHDQG
  OLWWOH DWWHPSW WR SUHSDUH IRU WKH VHQWHQFLQJ SKDVH WKH      H[SHUWLVH"
  $XVWLQ FRXUW IRXQG WKDW mJLYHQ WKDW VHYHUDO RI                'LGWKHSHWLWLRQHUDQGDSSHOODWHFRXQVHOPHHWDQGJR
  >GHIHQGDQW
V@UHODWLYHVIULHQGVGHDWKSHQDOW\H[SHUWVDQG         RYHUSRVVLEOHLVVXHV"
  D PLQLVWHU ZHUH DYDLODEOH DQG ZLOOLQJ WR WHVWLI\ RQ KLV     ,VWKHUHHYLGHQFHWKDWFRXQVHOUHYLHZHGDOOWKHIDFWV"
  EHKDOIlIDLOXUHWRSUHVHQWDQ\PLWLJDWLQJHYLGHQFHmGRHV             :HUH WKH RPLWWHG LVVXHV GHDOW ZLWK LQ RWKHU
  QRWUHIOHFWDVWUDWHJLFGHFLVLRQEXWUDWKHUDQDEGLFDWLRQRI        DVVLJQPHQWVRIHUURU"
  DGYRFDF\l$XVWLQ)GDW                                  :DVWKHGHFLVLRQWRRPLWDQLVVXHDQXQUHDVRQDEOH
                                                                       RQHZKLFKRQO\DQLQFRPSHWHQWDWWRUQH\ZRXOGDGRSW"
,GDW,Q&ROHPDQY0LWFKHOO)GWK
&LUZHFODULILHGWKHLPSRUWRIVRPHRIWKHVHUHFHQW          ,GDW
FDVHVDVIROORZV
                                                                       7KHJRYHUQPHQWUHVSRQGVE\DUJXLQJWKDW0DUWLQZDLYHG
  :H UHFRJQL]HG LQ 0DSHV Y &R\OH  )G  WK        WKLV LVVXH E\ QRW DUJXLQJ FDXVH DQG SUHMXGLFH EHIRUH WKH
  &LUFHUWGHQLHG86                         GLVWULFWFRXUW0DUWLQVXEPLWWHGSURSRVHGILQGLQJVRIIDFWDQG
    8QGHU WKH 2KLR VWDWXWH D FDSLWDO GHIHQGDQW IRXQG         FRQFOXVLRQVRIODZWRWKHGLVWULFWFRXUWZKLFKLQFOXGHGWKH
    JXLOW\RIDGHDWKVSHFLILFDWLRQKDVWRSUHVHQWVRPH              JHQHUDOVWDWHPHQWm,QWKLVFDVHWKHLQHIIHFWLYHUHSUHVHQWDWLRQ
    PLWLJDWLQJ HYLGHQFH LQ RUGHU WR DYRLG WKH GHDWK           UHFHLYHG E\ (UQHVW 0DUWLQ ERWK DW WULDO DQG LQ KLV GLUHFW
    SHQDOW\,IDMXU\KDVQRWKLQJWRZHLJKDJDLQVWWKH              DSSHDOVUHVXOWHGLQDQ\SURFHGXUDOGHIDXOWIRXQGWRH[LVWDQG
    DJJUDYDWLQJFLUFXPVWDQFHLWDOPRVWFHUWDLQO\PXVW               ZDVVRHJUHJLRXVDVWRSURGXFHDPLVFDUULDJHRIMXVWLFHDQGWR
    ILQGWKDWWKHDJJUDYDWLQJFLUFXPVWDQFHRXWZHLJKVWKH             MXVWLI\ WKH H[HUFLVH RI WKLV &RXUWjV HTXLWDEOH GLVFUHWLRQ WR
    QRQH[LVWHQW PLWLJDWLQJ FLUFXPVWDQFHV DQG                   JUDQW KDEHDV UHYLHZ RI DQ\ DQG DOO FODLPV IRXQG WR EH
    UHFRPPHQGGHDWK                                                RWKHUZLVH GHIDXOWHGl  +RZHYHU KLV FODLPV RI LQHIIHFWLYH
  ,GDW                                                        DVVLVWDQFHRIDSSHOODWHFRXQVHORQKLVKDEHDVSHWLWLRQZHUH
    $QGWKH0DSHVFRXUWDOVRVWDWHGWKDWmZKHQDFOLHQW             OLPLWHG WR WKH IDLOXUH RI DSSHOODWH FRXQVHO WR KDYH WKH
  IDFHVWKHSURVSHFWRIEHLQJSXWWRGHDWKXQOHVVFRXQVHO
    0DUWLQY0LWFKHOO                     1RV        1RV                        0DUWLQY0LWFKHOO       

WUDQVFULSWRIWKHKHDULQJRQKLVQHZWULDOPRWLRQPDGHSDUWRI          ,Q VXSSRUW RI WKHVH SURSRVLWLRQV KH FLWHV VHYHUDO UHFHQW
WKHUHFRUGRQDSSHDO                                               FDVHVIURPWKLVFLUFXLWLQZKLFKKDEHDVUHOLHIKDVEHHQJUDQWHG
                                                                      IRUWKHIDLOXUHRIFRXQVHOWRLQYHVWLJDWHDWPLWLJDWLRQ7KLV
   ([FXVLQJSURFHGXUDOGHIDXOWIRUmFDXVHDQGSUHMXGLFHlDQG          FRXUWjV RSLQLRQ LQ &DUWHU Y %HOO   )G  WK &LU
DJUDQWRIUHOLHIIRULQHIIHFWLYHDVVLVWDQFHRIFRXQVHOLQYROYHV      UHYLHZHGWKHVHFDVHVDQG:LOOLDPVY7D\ORU86
DQH[DPLQDWLRQRIZKHWKHUSUHMXGLFHRFFXUUHGVHH)UDG\          DVIROORZV
86DW6WULFNODQGY:DVKLQJWRQ86
7KXVLI0DUWLQjVXQGHUO\LQJLQHIIHFWLYHDVVLVWDQFHRI         ,Q:LOOLDPVWKH6XSUHPH&RXUWIRXQGWKDWWULDOFRXQVHO
V
WULDOFRXQVHODUJXPHQWVODFNPHULWKHFDQQRWVKRZmFDXVHDQG           UHSUHVHQWDWLRQ RI WKH SHWLWLRQHU GXULQJ WKH VHQWHQFLQJ
SUHMXGLFHlYLDLQHIIHFWLYHDVVLVWDQFHRIDSSHOODWHFRXQVHO2I         SKDVHIHOOVKRUWRISURIHVVLRQDOVWDQGDUGV
FRXUVH RXU SURFHGXUDO GHIDXOW DQDO\VLV LV XOWLPDWHO\                                         



FRPSOLFDWHG E\ WKH IDFW WKDW DOWKRXJK 0DUWLQ DSSDUHQWO\           ,Q0DSHVY&R\OH)GWK&LU
SUHVHUYHG LQHIIHFWLYH DVVLVWDQFH RI DSSHOODWH FRXQVHO              WKLV&RXUWQRWHGWKDWmZKHQDFOLHQWIDFHVWKHSURVSHFWRI
DUJXPHQWV IRU IHGHUDO UHYLHZ WKURXJK KLV 0XUQDKDQ                 EHLQJSXWWRGHDWKXQOHVVFRXQVHOREWDLQVDQGSUHVHQWV
DSSOLFDWLRQ KH RQO\ SUHVHQWHG RQH VXFK DUJXPHQW ZLWK            VRPHWKLQJLQPLWLJDWLRQPLQLPDOVWDQGDUGVUHTXLUHVRPH
VSHFLILFLW\RQKLVKDEHDVSHWLWLRQDQGWKDWDUJXPHQWGLGQRW            LQYHVWLJDWLRQl0RUHRYHULQ5LFNPDQ>Y%HOO)G
LQFOXGHKLVFODLPWKDWDSSHOODWHFRXQVHOVKRXOGKDYHUDLVHG             WK&LU@WKLV&RXUWIRXQGGHILFLHQFLHVVR
LQHIIHFWLYHDVVLVWDQFHRIWULDOFRXQVHOZLWKUHJDUGWRWKHPHULWV       VHYHUH DV WR GLVSHQVH ZLWK WKH QHHG IRU D VKRZLQJ RI
KHDWWHPSWVWRSUHVHQWLQWKLVDFWLRQ                                SUHMXGLFHXQGHU6WULFNODQG)GDW7KH&RXUW
                                                                        QRWHGWKDWWULDOFRXQVHOmGLGQRWLQWHUYLHZDQ\ZLWQHVVHV
  sXVWSULRUWRWKH0DSHVFRXUWjVUHFLWDORIWKHFRQVLGHUDWLRQV         FRQGXFW DQ\ OHJDO UHVHDUFK RU REWDLQ DQG UHYLHZ DQ\
UHOHYDQW WR WKH FRQVWLWXWLRQDO HIIHFWLYHQHVV RI DSSHOODWH         UHFRUGV LQFOXGLQJ WKRVH UHJDUGLQJ >SHWLWLRQHU
V@
FRXQVHOLWQRWHGWKDW0DSHVjVFODLPRILQHIIHFWLYHDVVLVWDQFH          HPSOR\PHQW HGXFDWLRQ PHQWDO KHDOWK VRFLDO VHUYLFHV
RI WULDO FRXQVHO DW WKH PLWLJDWLRQ VWDJH ZDV SURFHGXUDOO\       FRQWDFWV PLOLWDU\ VHUYLFH RU SULVRQ H[SHULHQFHl  ,G
GHIDXOWHG EXW FRXOG EH DGGUHVVHG LQ FRQVLGHULQJ ZKHWKHU         )XUWKHUWULDOFRXQVHO
VWULDOSUHSDUDWLRQmFRQVLVWHGVROHO\
DSSHOODWHFRXQVHOZDVLQHIIHFWLYHLQIDLOLQJWRUDLVHLWRQGLUHFW      RI LQWHUYLHZV KH FRQGXFWHG ZLWK >WKH SHWLWLRQHU@l  ,G
DSSHDO0DSHV)GDW/LNH0DUWLQ0DSHVUDLVHG             $OWKRXJK ZH QRWH WKDW XQOLNH 5LFNPDQ WKHUH ZDV QR
LQHIIHFWLYH DVVLVWDQFH RI DSSHOODWH FRXQVHO ZLWK UHJDUG WR      KRVWLOLW\RQWKHSDUWRIWULDOFRXQVHOLQWKLVFDVHZHILQG
PLWLJDWLRQ LQ D SRVWFRQYLFWLRQ SURFHHGLQJ LG DW          WKDW5LFNPDQVWDQGVIRUWKHUHOHYDQWSURSRVLWLRQWKDWWKH
KRZHYHUXQOLNHKHUH0DSHVjVKDEHDVSHWLWLRQDOVRVRXJKW               FRPSOHWHIDLOXUHWRLQYHVWLJDWHOHWDORQHSUHVHQWH[LVWLQJ
UHOLHIRQWKLVVSHFLILFJURXQG                                     PLWLJDWLQJ HYLGHQFH LV EHORZ DQ REMHFWLYH VWDQGDUG RI
                                                                        UHDVRQDEOHUHSUHVHQWDWLRQDQGPD\LQIDFWEHVRVHYHUHDV
  $QRWKHUFRQFHUQLQWKLVUHJDUGLVWKHIDFWWKDWRXU&2$GLG           WRSHUPLWXVWRLQIHUSUHMXGLFH
QRW JUDQW UHYLHZ RI WKH LQHIIHFWLYH DVVLVWDQFH RI DSSHOODWH       ,Q *URVHFORVH Y %HOO WKLV &RXUW FRQVLGHUHG D
FRXQVHO FODLPV WKDW FKDUJHG LQHIIHFWLYH DVVLVWDQFH RI WULDO      7HQQHVVHHFDVHLQZKLFKWULDOFRXQVHOmDOPRVWHQWLUHO\
FRXQVHO2IFRXUVHZHZRXOGKDYHQRUHDVRQWRGRVRVLQFH           IDLOHG WR LQYHVWLJDWH WKH FDVH KH QHYHU IRU H[DPSOH
WKHVHVSHFLILFLVVXHVZHUHQRWUDLVHGLQWKHKDEHDVSHWLWLRQRU         LQWHUYLHZHGWKHFULPHLQFLGHQWZLWQHVVHVRUDQ\IDPLO\
FRQVLGHUHGE\WKHGLVWULFWFRXUW7KH&2$GLGSURYLGHWKDW             PHPEHUVl  )G   WK &LU  ,Q
WKHSDUWLHVFRXOGDGGUHVVWKHTXHVWLRQRISURFHGXUDOGHIDXOW            *URVHFORVH WULDO FRXQVHO IDLOHG WR SUHVHQW PLWLJDWLQJ
UHODWHGWRWKHPHULWLVVXHVXSRQZKLFKWKH&2$ZDVJUDQWHG             HYLGHQFHGXULQJWKHVHQWHQFLQJVWDJHRIWKHSURFHHGLQJV
    0DUWLQY0LWFKHOO                      1RV         1RV                        0DUWLQY0LWFKHOO       

VWDWHPHQWLQZKLFKKHDWWHPSWHGWRFRQYH\DPHWDSKRUZKLFK              ,QDVPXFK DV WKH PHULWV RI WKH LQHIIHFWLYH DVVLVWDQFH RI
DQDORJL]HG0DUWLQWRDNQRWW\mFRUGRIZRRGlWKDWVRFLHW\KDG           DSSHOODWHFRXQVHODUJXPHQWVDUHKRSHOHVVO\LQWHUWZLQHGZLWK
XQMXVWO\FDVWDVLGHDWDQHDUO\DJH+HFRQFOXGHGE\VWDWLQJ          WKHSURFHGXUDOGHIDXOWDUJXPHQWVUHJDUGLQJWKHPHULWFODLPV
                                                                        XSRQ ZKLFK ZH JUDQWHG UHYLHZ RXU JUDQW RI UHYLHZ RQ
     ,I(UQHVW0DUWLQLVJXLOW\RIWKLV,VD\OHWjVLPSURYH          SURFHGXUDOGHIDXOWHQFRPSDVVHVWKHVHFODLPV
  ,IKHLVJRLQJWRD>VLF@LQVWLWXWLRQOHWjVVHHLIZHFDQjWGR
  VRPHWKLQJWRFKDQJHWKHRXWORRNRUWKHYLHZRUPD\EH                    $W RUDO DUJXPHQW WKH 6WDWH FRQFHGHG WKDW 0DUWLQjV
  KLVOLNHWKDWFRUGRIZRRGDQGDOOKHLVZRUWKLVFDVWLQJ            LQHIIHFWLYHDVVLVWDQFHRIFRXQVHODUJXPHQWVWKDWUHODWHWRWKH
  DVLGHRUSXWWLQJLWLQDZRRGEXUQLQJVWRYH                       SHUIRUPDQFHRIKLVFRXQVHODWWKHPLWLJDWLRQVWDJHUHTXLUHGDQ
     ,GRQjWNQRZEXWWKLVZLOOEH\RXUFKRLVH>W\SR@0\             H[DPLQDWLRQ RI HYLGHQFH GHKRUV WKH UHFRUG DQG WKDW WKHVH
  %LEOHDOZD\VVD\VMXGJHDQGVD\VMXGJHWKHHQRWoZH                FODLPVWKHUHIRUHZHUHQRWSURFHGXUDOO\GHIDXOWHG
  KDYH WR EH FDUHIXO DV WR ZKHWKHU \RX ZDQW WKH VDPH
  MXGJPHQW                                                              0DUWLQ PDNHV HVVHQWLDOO\ WKH VDPH SURFHGXUDO GHIDXOW
     7KDQN\RXDJDLQ                                                   DUJXPHQW ZLWK UHJDUG WR KLV FODLP RI SURVHFXWRULDO
                                                                        PLVFRQGXFW,QFODLP2FRIKLVSRVWFRQYLFWLRQDSSOLFDWLRQ
  0DUWLQDUJXHVWKDWWKHFRXUVHRIWKHVHSURFHHGLQJVVKRZV              IRU GHOD\HG UHFRQVLGHUDWLRQ KH DUJXHG WKDW KH UHFHLYHG
KLV FRXQVHOjV FRPSOHWH IDLOXUH WR LQYHVWLJDWH PLWLJDWLQJ          LQHIIHFWLYHDVVLVWDQFHRIDSSHOODWHFRXQVHOEHFDXVHKLVFRXQVHO
HYLGHQFH DQG WKDW WKLV LQVXIILFLHQF\ ZDV VR VHYHUH WKDW ZH     KDGQRWDUJXHGWKDWWKHSURVHFXWRUKDGLPSURSHUO\FRPPHQWHG
VKRXOGLQIHUSUHMXGLFHSXUVXDQWWR8QLWHG6WDWHVY&URQLF             RQKLVIDLOXUHWRWHVWLI\+HDUJXHVWKDWDSSHOODWHFRXQVHOjV
86                                             LQHIIHFWLYHQHVVLQWKLVUHJDUGLVFDXVHDQGSUHMXGLFHDQGWKXV
                                                                        H[FXVHVKLVIDLOXUHWRUDLVHWKHLVVXHRQGLUHFWDSSHDO+HGLG
   ,QUHJDUGWRWKHFRRSHUDWLRQRI0DUWLQ&DUQHVVWDWHGm:H           QRWUDLVHWKLVDUJXPHQWEHIRUHWKHGLVWULFWFRXUW
IRXQGKLPWREH>D@YHU\GLIILFXOWXQFRRSHUDWLYHFOLHQWl&R
FRXQVHO $GULQH DGGHG m$QG HYHQ KRVWLOH DW WLPHVl  ,G         0DUWLQjVIDLOXUHWRUDLVHLQHIIHFWLYHDVVLVWDQFHRIFRXQVHO
0DUWLQDUJXHVWKDWWKLVVWDWHPHQWVKRZVWKDWm'HIHQVHFRXQVHO           DQG SURVHFXWRULDO PLVFRQGXFW RQ GLUHFW DSSHDO UHVXOWHG LQ
ZDV>VLF@VDERWDJLQJWKHLURZQFOLHQWjVFDVHl0DUWLQjVODFN           SURFHGXUDOGHIDXOW+HUDLVHGWKHPHULWVRIWKHVHFODLPVLQKLV
RI FRRSHUDWLRQ LV HYLGHQW IURP DQ H[FKDQJH EHWZHHQ KLV          LQHIIHFWLYHDVVLVWDQFHRIDSSHOODWHFRXQVHORQKLV0XUQDKDQ
FRXQVHO DQG WKH MXGJH LQ ZKLFK FRXQVHO VWDWHG WKDW 0DUWLQ      DSSOLFDWLRQ EXW KH GLG QRW SHWLWLRQ WKH GLVWULFW FRXUW IRU
ZDQWHG WR JLYH DQ RUDO VWDWHPHQW QRW XQGHU RDWK DW           KDEHDV UHOLHI LQ WKLV UHJDUG  7KXV RXU GLVFXVVLRQ RI WKH
VHQWHQFLQJEXWWKDWKHZDVXQZLOOLQJWRWHOOFRXQVHOZKDWWKH          PHULWVRIWKHVHFODLPVVDYHWKHHIIHFWLYHQHVVRIKLVFRXQVHODW
VWDWHPHQWZRXOGUHODWHHYHQWKRXJKWKH\KDGDGYLVHGKLPWKDW           PLWLJDWLRQLVOLPLWHGWRKLVFDXVHDQGSUHMXGLFHDUJXPHQWV
KHVKRXOGGRVR
                                                                                     ,,,QHIIHFWLYH$VVLVWDQFHRI&RXQVHO
  +H DOVR DUJXHV WKDW GHIHQVH FRXQVHO LPSHDFKHG KLV
FUHGLELOLW\ E\ WHOOLQJ WKH MXGJH MXVW DIWHU WKH H[FKDQJH         m7KHEHQFKPDUNIRUMXGJLQJDQ\FODLPRILQHIIHFWLYHQHVV
GHVFULEHGLPPHGLDWHO\DERYHWKDWKHKDGDGPLWWHGO\LQJWR             PXVWEHZKHWKHUFRXQVHO
VFRQGXFWVRXQGHUPLQHGWKHSURSHU
WKHP DERXW D OHWWHU mUHODWLQJ WR D GLIIHUHQW PDWWHUl  7KH\   IXQFWLRQLQJRIWKHDGYHUVDULDOSURFHVVWKDWWKHWULDOFDQQRWEH
DUJXHWKDWWKHVHWZRVWDWHPHQWVIXUWKHUSURYLGHHYLGHQFHRI             UHOLHG RQ DV KDYLQJ SURGXFHG D MXVW UHVXOWl  6WULFNODQG Y
mFRXQVHOjVDEDQGRQPHQWRI0U0DUWLQl                           :DVKLQJWRQ86
    0DUWLQY0LWFKHOO                     1RV        1RV                         0DUWLQY0LWFKHOO        

    )LUVW WKH GHIHQGDQW PXVW VKRZ WKDW FRXQVHO
V                  $IWHU0UV0DUWLQjVWHVWLPRQ\WKHGHIHQVHVWDWHGWKDWLWKDG
  SHUIRUPDQFHZDVGHILFLHQW7KLVUHTXLUHVVKRZLQJWKDW               QRWKLQJIXUWKHUWRRIIHU7KHMXGJHWKHQEHJDQFDOOLQJLQWRWKH
  FRXQVHO PDGH HUURUV VR VHULRXV WKDW FRXQVHO ZDV QRW         DXGLHQFHLQTXLULQJDVWRZKHWKHURWKHUIDPLO\PHPEHUVZHUH
  IXQFWLRQLQJDVWKHmFRXQVHOlJXDUDQWHHGWKHGHIHQGDQWE\            SUHVHQWDQGZLVKHGWRWHVWLI\7KLVFRQVWLWXWHVWKHRWKHUDFWLRQ
  WKH6L[WK$PHQGPHQW6HFRQGWKHGHIHQGDQWPXVWVKRZ               E\WKHMXGJHWKDW0DUWLQFRQWHQGVGHPRQVWUDWHVKLVFRXQVHOjV
  WKDW WKH GHILFLHQW SHUIRUPDQFH SUHMXGLFHG WKH GHIHQVH        LQHIIHFWLYHQHVVDWWKHKHDULQJ:KHQWKHMXGJHDVNHG0DUWLQjV
  7KLV UHTXLUHV VKRZLQJ WKDW FRXQVHO
V HUURUV ZHUH VR          IDWKHUm'RQjW\RXZDQWWRFRPHXSKHUHDQGVSHDNIRU\RXU
  VHULRXVDVWRGHSULYHWKHGHIHQGDQWRIDIDLUWULDODWULDO        VRQ"lKHUHSOLHGm<RXPHDQFRPHQRZ"l'HIHQVHFRXQVHO
  ZKRVHUHVXOWLVUHOLDEOH                                          WKHQVWDWHGWKDW0DUWLQjVIDWKHUGLGQRWZDQWWRWHVWLI\DQGWKH
                                                                      MXGJH DVNHG m<RX IHHO WKDW ZRXOG QRW EH KHOSIXO WR WKH
,GDW%RWKSURQJVRIWKHLQTXLU\DUHPL[HGTXHVWLRQVRI        GHIHQGDQW"lWRZKLFKFRXQVHOUHVSRQGHGm,WPLJKWQRWEHLQ
ODZDQGIDFWUHYLHZHGGHQRYR6HHLGDW                      WKHEHVWLQWHUHVWl7KHMXGJHWKHQLQTXLUHGZKHWKHU0DUWLQjV
                                                                      FRXQVHOZDQWHGWRWDONWRDODG\LQWKHFRXUWURRP&RXQVHO
  $,QHIIHFWLYH$VVLVWDQFHRI7ULDO&RXQVHO                         UHVSRQGHGm,ZRXOGOLNHWKHUHFRUGWRVKRZsXGJHWKDWWKLV
                                                                      LV QRW WKH ILUVW WLPH ZH KDYH WDONHG WR 0U :LONLQV DERXW
     )DLOXUHWRFKDOOHQJH0DUWLQjVZDUUDQWOHVVDUUHVW            WHVWLI\LQJ0U$GULQH>FRFRXQVHO@KDVEHHQLQFRQVWDQW
                                                                      FRPPXQLFDWLRQZLWKKLP8SWRWKLVSRLQWWKH\ZHUHILQH
   0DUWLQ DUJXHV WKDW KLV FRXQVHO VKRXOG KDYH PRYHG WR        EXWQRZWKHUHVHHPVWREHVRPHLQWHUHVWl$GULQHWKHQ
VXSSUHVV HYLGHQFH WKDW KH FRQWHQGV ZDV WKH IUXLW RI KLV      LQWHUUXSWHG  LQGLFDWLQJ WKDW 0DUWLQjV JUDQGPRWKHU ZRXOG
sDQXDU\ZDUUDQWOHVVDUUHVWDWWKHDSDUWPHQWKHVKDUHG        WHVWLI\  7KH MXGJH WKHQ VWDWHG m2ND\  %ULQJ LQ WKH MXU\l
ZLWK3HGUR7KHGLVWULFWFRXUWKHOGWKDWWKLVFKDOOHQJHIDLOHG       (DUOLHU LQ WKH SURFHHGLQJ $GULQH VWDWHG m<HV ZH PLJKW
EHFDXVH WKH SROLFH KDG SUREDEOH FDXVH WR DUUHVW 0DUWLQ       IXUWKHU VWDWH IRU WKH UHFRUG WKDW ZH KDYH EHHQ LQ FRQVWDQW
0DUWLQSRLQWVRXWWKDWDEVHQWH[LJHQWFLUFXPVWDQFHVSROLFH          FRQWDFWZLWKWKHIDPLO\RXWVLGHLQVLGHGXULQJWKHFRXUVHRI
RIILFHUV DUH UHTXLUHG WR VHFXUH DQ DUUHVW ZDUUDQW SULRU WR   WKHKHDULQJDQGZHKDYHGLVFXVVHGWKHPDWWHUVIXOO\ZLWKERWK
DUUHVWLQJDVXVSHFWLQKLVKRPH6HH3D\WRQY1HZ<RUN         PRWKHUDQGIDWKHUWKHEURWKHUVLVWHUDQGE\WHOHSKRQHZH
867KH6WDWHUHVSRQGVE\DUJXLQJWKDW          KDYHKDGVHYHUDOFRQYHUVDWLRQVl
1HZ<RUNY+DUULV86GHPRQVWUDWHV
WKDW0DUWLQjVZDUUDQWOHVVDUUHVWZRXOGQRWKDYHHQWLWOHGKLP            0DUWLQjVJUDQGPRWKHU+DWWLH0DHsRKQVRQWKHQWHVWLILHG
WRKDYHWKHVXEVHTXHQWLGHQWLILFDWLRQE\)RVWHUDQG3HGURjV           DERXWWKHIROORZLQJIDFWVVKHWRRNFDUHRI0DUWLQZKHQKH
VWDWHPHQWWRSROLFHVXSSUHVVHG                                     ZDVDEDE\DQGZKHQKHZDVILYHDQGVL[\HDUVROGKHZDQWHG
                                                                      WRJRWRFKXUFKZLWKKHUDWWKDWDJHVKHFRRNHGIRU0DUWLQ
   0DUWLQGRHVQRWDUJXHWKDWWKHSROLFHODFNHGSUREDEOHFDXVH        DQGKLVVLEOLQJVDQGWKHLUIUHTXHQWKXQJHUDVFKLOGUHQZDVGXH
WRDUUHVWKLP7KXVDOWKRXJK0DUWLQjVDUUHVWFRXOGKDYHEHHQ        WR D ODFN RI ILQDQFLDO VXSSRUW IURP WKHLU IDWKHU  0DUWLQjV
LOOHJDOKLVLGHQWLILFDWLRQE\)RVWHUDQG3HGURjVVWDWHPHQWWR        PRWKHUKDGDKDUGWLPHUDLVLQJKHUFKLOGUHQGXHWRKHUDVWKPD
SROLFHZHUHQRWVXSSUHVVLEOHIUXLWVRIWKLVWDLQWHGDFWLRQ6HH      DQGUHVXOWLQJLQDELOLW\WRZRUNVWHDGLO\DQG0DUWLQjVOLPLWHG
LG  $V DQ\ PRWLRQ WR VXSSUHVV WKLV HYLGHQFH ZRXOG KDYH     FRQWDFW ZLWK KLV IDWKHU DQG WKHLU UHODWLRQVKLS ZDV QRW D
IDLOHG 0DUWLQ FDQQRW VKRZ KRZ WKH IDLOXUH WR PDNH WKH       W\SLFDOO\mWLJKWlRQHEHWZHHQIDWKHUDQGFKLOG
PRWLRQZDVDUHVXOWRIKLVFRXQVHOjVGHILFLHQWSHUIRUPDQFHRU
WKDW WKH IDLOXUH UHVXOWHG LQ SUHMXGLFH WR KLV GHIHQVH          %RWKSDUWLHVWKHQLQGLFDWHGWKH\KDGQRWKLQJIXUWKHUDQG
$FFRUGLQJO\0DUWLQFDQQRWVKRZWKDWKLVDSSHOODWHFRXQVHO            FORVLQJVWDWHPHQWVIROORZHG'HIHQVHFRXQVHOJDYHDFORVLQJ
UHQGHUHGLQHIIHFWLYHDVVLVWDQFHE\IDLOLQJWRUDLVHWKLVLVVXHRQ
    0DUWLQY0LWFKHOO                      1RV        1RV                           0DUWLQY0LWFKHOO        

PHQWDO KHDOWK HGXFDWLRQDO HPSOR\PHQW MXYHQLOH DQG             GLUHFW DSSHDO DQG WKHUHIRUH KH FDQQRW VKRZ FDXVH DQG
LQFDUFHUDWLRQKLVWRULHV,QKLVDUJXPHQWV0DUWLQSRLQWVWRWZR       SUHMXGLFHIRUKLVSURFHGXUDOGHIDXOWLQWKLVUHJDUG
LQVWDQFHVZKHUHWKHWULDOMXGJHWRRNDQH[FHSWLRQDOO\DFWLYH
UROHLQKLVYLHZWDNLQJWKHSODFHRIFRXQVHOXSRQUHDOL]LQJ               )DLOXUHWRLQYHVWLJDWHDQGSUHSDUHIRUWULDO
WKHLUGHILFLHQFLHVDWWKHPLWLJDWLRQKHDULQJ$VUHOHYDQWWR
WKLV DUJXPHQW KH SRLQWV WR WKH WULDO MXGJHjV LQGHSHQGHQW         0DUWLQDUJXHVWKDWKLVWULDOmFRXQVHOIDLOHGWRDGHTXDWHO\
SURFXUHPHQWRIKLVUHFRUGVIURPWKH0DQVILHOG5HIRUPDWRU\              SUHSDUHWKHFDVHDQGIDLOHGWRFRQGXFWPLQLPDOLQYHVWLJDWLRQl
DQG WKH m+XPDQ 6HUYLFHV $JHQF\l  $ GLVFXVVLRQ RI WKLV        6SHFLILFDOO\KHWDNHVLVVXHZLWKFRXQVHOjVDOOHJHGIDLOXUHWR
LQIRUPDWLRQRFFXUUHGRXWVLGHRIWKHSUHVHQFHRIWKHMXU\7KH         UHWDLQWKHVHUYLFHVRIH[SHUWVVXFKDVDEDOOLVWLFVH[SHUWRU
MXGJH FDOOHG WKH UHIRUPDWRU\jV ZDUGHQ ZKR LQIRUPHG WKH         D SV\FKRORJLVW IRU SXUSRVHV RI PLWLJDWLRQ  DGHTXDWHO\
MXGJHWKDWDSV\FKRORJLFDOSURILOHUHVXOWLQJIURPLQWHUYLHZV           SUHSDUHIRUFURVVH[DPLQDWLRQRIWKH6WDWHjVZLWQHVVHVWRZLW
DQGWHVWLQJUHYHDOHGmQRWKLQJH[WUDRUGLQDU\WKDWZRXOGWULJJHU         DWRH[DPLQHWKHVWDWHPHQWWKDW$QWRLQHWWH+HQGHUVRQJDYH
WKHLULQWHUHVWVLQKDYLQJIXUWKHUSV\FKLDWULFH[DPLQDWLRQVRI          WRSROLFHZKLFKSURYLGHGSUREDEOHFDXVHIRUKLVDUUHVWDQG
WUHDWPHQWGRQHRI>VLF@WKHPDQl7KHMXGJHODWHUSURYLGHG            EWRFRQWDFWDQGRULQWHUYLHZ0DUWLQjVPRWKHUEURWKHUDQ\
GHIHQVH FRXQVHO ZLWK D OHWWHU IURP WKH ZDUGHQ WKDW ZDV        RIWKH6WDWHjVZLWQHVVHVDQG5LHYHV%H\0DUWLQGLGQRWUDLVH
FRQVLVWHQWZLWKWKHLUSUHYLRXVFRQYHUVDWLRQDERXWWKHUHFRUGV         WKLV LVVXH LQ KLV GLUHFW DSSHDO WKXV WKHVH LVVXHV DUH
'HIHQVHFRXQVHOFRQFOXGHGWKDWWKHOHWWHUZDVRIQRYDOXHIRU          SURFHGXUDOO\GHIDXOWHG+RZHYHUZHZLOOUHYLHZWKHPHULWV
PLWLJDWLRQ EXW PDGH LW SDUW RI WKH UHFRUG IRU mDSSHOODWH     RIWKHVHLVVXHVIRUSXUSRVHVRIFDXVHDQGSUHMXGLFHDQDO\VLV
SXUSRVHVl
                                                                          $VHYLGHQFHRIKLVFRXQVHOjVIDLOLQJV0DUWLQSRLQWVWRDIHH
   0UV0DUWLQjVDIILGDYLWVWDWHVWKDWFRXQVHOGLGQRWSUHSDUH         DSSOLFDWLRQZKLFKVKRZVWKDWRQHRIWZRFRXQVHOVSHQW
KHUWRWHVWLI\DQGWKDWVKHGLGQRWNQRZWKDWVKHZRXOGWHVWLI\       KRXUVSUHSDULQJIRUWULDO:KDWKHGRHVQRWVKRZKRZHYHU
XQWLOWKHGD\RIWKHKHDULQJ$UHYLHZRIKHUWHVWLPRQ\VKRZV         LV KRZ WKH UHWHQWLRQ RI H[SHUWV DQ H[DPLQDWLRQ RI
WKDW LW GHVFULEHG WKH IROORZLQJ  0DUWLQjV SUREOHPV ZLWK       +HQGHUVRQjVVWDWHPHQWDQGFRQWDFWLQJDQGRULQWHUYLHZLQJ
MXYHQLOH FRXUW DQG VFKRRO KLV LQVWLWXWLRQDOL]DWLRQ  DV D      KLV IDPLO\ PHPEHUV ZRXOG KDYH EHHQ EHQHILFLDO WR KLV
MXYHQLOHKHUEHLQJRQZHOIDUHGXULQJKLV\RXWKWKHODFNRI           GHIHQVH7KXVKHKDVVKRZQQRSUHMXGLFHZLWKUHJDUGWRWKHVH
ILQDQFLDO VXSSRUW IURP 0DUWLQjV IDWKHU 0DUWLQjV DEQRUPDO        DOOHJHGIDLOLQJV
EHKDYLRU DW VFKRRO ZKLFK OHG WR KLV UHIHUUDO WR WKH &KLOG
*XLGDQFH&HQWHUKLVSV\FKLDWULFWHVWLQJDWVFKRROKLVDEXVH            +HDUJXHVWKDW5LHYHV%H\jVEHOLHIWKDW0DUWLQZDVQRWWKH
DW WKH KDQGV RI KHU DOFRKROLF KXVEDQG KLV SK\VLFDO DQG       PDQKHVDZIOHHLQJIURPWKHVFHQHRIWKHFULPHVKRZVWKDWWKH
SV\FKRORJLFDOLQMXULHVWKDWUHVXOWHGIURPDJDVH[SORVLRQKLV         IDLOXUHWRVHFXUHWKLVWHVWLPRQ\SUHMXGLFHGKLVFDVH$VVWDWHG
GURSSLQJ RXW RI VFKRRO WR ZRUN IRU PRQH\ WR SXUFKDVH          DERYH 5LHYHV%H\jV VWDWHPHQWV ZKLOH LQFRQVLVWHQW ZLWK
DGHTXDWH FORWKLQJ DQG RWKHU HPSOR\PHQW KLVWRU\  7KLV          UHJDUGWRWKHGHVFULSWLRQRIWKHIOHHLQJPDQFRUURERUDWHGWKH
WHVWLPRQ\DQGWKHSUREDWLRQUHSRUWDSSDUHQWO\SURYLGHGWKH             IDFWXDODFFRXQWRIHYHQWVWHVWLILHGWRE\3HGUR$OVR5LHYHV
IDFWXDOEDVLVIRUWKHRQHPLWLJDWLQJIDFWRUWKDWWKHWULDOMXGJH       %H\jVUHOLDELOLW\DVDZLWQHVVLVTXHVWLRQDEOHDWEHVWJLYHQWKH
IRXQG0DUWLQjVEDFNJURXQGDOWKRXJKWKHFRXUWFRQFOXGHG              LQFRQVLVWHQFLHV LQ KLV VWDWHPHQWV DQG WHVWLPRQ\ DQG KLV
WKDWLWZDVRXWZHLJKHGE\WKHDJJUDYDWLQJFLUFXPVWDQFHRIWKH
FULPH
                                                                           
                                                                            :H JUDQWHG D PRWLRQ SHUPLWWLQJ 0DUWLQ WR ILOH WKHVH GRFXPHQWV
                                                                       DOWKRXJK WKH\ ZHUH QRW EHIRUH WKH GLVWULFW FRXUW 7KHUH LV QR DVVHUWLRQ RI
                                                                       KRZ PDQ\ KRXUV ZHUH VSHQW E\ FRFRXQVHO RU WKH LQYHVWLJDWRU
    0DUWLQY0LWFKHOO                    1RV        1RV                       0DUWLQY0LWFKHOO       

DGPLVVLRQRIGUXJXVHDQGLWVHIIHFWRQKLVPHPRU\%RWKWKH          %0LWLJDWLRQ
6WDWH DQG WKH GHIHQVH VRXJKW WR VHFXUH 5LHYHV%H\jV
WHVWLPRQ\EXWKHFRXOGQRWEHORFDWHGLQWLPHWRDSSHDUDW            0DUWLQ PDNHV WKUHH LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO
WULDO+LVWHVWLPRQ\ZRXOGKDYHEHHQGHWULPHQWDOWR0DUWLQjV        DUJXPHQWV UHODWHG WR WKH PLWLJDWLRQ SKDVH RI KLV FDSLWDO
GHIHQVHDQGLWVDEVHQFHZLOOQRWVXSSRUWDILQGLQJWKDWKLVWULDO    FRQYLFWLRQIDLOXUHWRLQYHVWLJDWHRUSUHSDUHIRUPLWLJDWLRQ
FRXQVHO SHUIRUPHG LQHIIHFWLYHO\ WKDW KLV DSSHOODWH FRXQVHO    IDLOXUHWRREMHFWWRDMXU\LQVWUXFWLRQRQWKHUROHRIWKHMXU\
ZDVLQHIIHFWLYHIRUQRWUDLVLQJWKHLVVXHRQDSSHDORUWKDWKH      ZLWK UHJDUG WR WKH LPSRVLWLRQ RI WKH GHDWK VHQWHQFH DQG
VXIIHUHGSUHMXGLFHE\WKHVHDOOHJHGIDLOLQJV                      FRXQVHOjVUHTXHVWIRUDQGWKHSUHSDUDWLRQDQGLQWURGXFWLRQ
                                                                     RIDSUHVHQWHQFHLQYHVWLJDWLRQUHSRUWDQGDSV\FKLDWULFFOLQLF
     ,QHIIHFWLYHFURVVH[DPLQDWLRQ                               UHSRUW
  0DUWLQ DUJXHV WKDW KLV WULDO FRXQVHO UHQGHUHG LQHIIHFWLYH           )DLOXUHWRLQYHVWLJDWHDQGRWKHUZLVHSUHSDUHIRUWKH
DVVLVWDQFHE\IDLOLQJWRHIIHFWLYHO\FURVVH[DPLQH3HGUR                 PLWLJDWLRQSKDVH
UHJDUGLQJDWKHLQFRQVLVWHQF\EHWZHHQ3HGURjVDQG.LGGjV
WHVWLPRQ\DQG3HGURjVSUHYLRXVVWDWHPHQWFRQFHUQLQJZKHWKHU             0DUWLQ DUJXHV WKDW KLV FRXQVHOjV PRVW HJUHJLRXV IDLOLQJV
0DUWLQGURSSHGWKHWZRRIIRUZHQWLQVLGHZLWKWKHPDWDQ          RFFXUUHGGXULQJWKHPLWLJDWLRQVWDJHRIWKHWULDO+HFRQWHQGV
DIWHUKRXUV HVWDEOLVKPHQW E 3HGURjV mIDOOLQJ RXWl ZLWK      WKDWDQH[DPLQDWLRQRIZKDWRFFXUUHGRUGLGQRWRFFXUSULRU
+HQGHUVRQ DQG WKH TXHVWLRQ RI ZKHWKHU +HQGHUVRQ KHOG D       WRDQGDWWKHPLWLJDWLRQKHDULQJSURYHVWKDWKLVFRXQVHOIDLOHG
JUXGJHDJDLQVW3HGURDQG0DUWLQF3HGURjVUHQGLWLRQRIKRZ        WRLQYHVWLJDWHRURWKHUZLVHSUHSDUHIRUVHQWHQFLQJ&RXQVHO
VKHIRXQGPRQH\DW5RELQVRQjVVWRUHG3HGURjVWHVWLPRQ\           PDGHQRRSHQLQJDUJXPHQWDWPLWLJDWLRQ7KH\FDOOHGWKUHH
WKDWVKHKDGDUJXHGZLWK0DUWLQRQWKHGD\RIWKHLUDUUHVWV         ZLWQHVVHVSUREDWLRQRIILFHUsRDQQD+DLUVWRQZKRWHVWLILHGWR
DQG  HIIHFWLYHO\ FURVVH[DPLQH +HQGHUVRQ UHJDUGLQJ         SODFHKHUSUHVHQWHQFHUHSRUWLQWRHYLGHQFH0DUWLQjVPRWKHU
DKHUJUXGJHDJDLQVW0DUWLQDQGELQFRQVLVWHQF\EHWZHHQ        DQG KLV JUDQGPRWKHU  0DUWLQjV UHSO\ EULHI DOVR SRLQWV WR
KHU WHVWLPRQ\ DQG 3HGURjV WHVWLPRQ\ DERXW RYHUKHDULQJ          VWDWHPHQWVWKDWKLVFRXQVHOPDGHWRWKHMXGJHDVHYLGHQFHRI
GLVFXVVLRQVRIWKHSODQWRURE5RELQVRQ                           SUHMXGLFHDQGRUWRWDODEDQGRQPHQW
  0DUWLQjV DUJXPHQWV ZLWK UHJDUG WR HIIHFWLYH FURVV              0DUWLQ FODLPV WKDW KLV FRXQVHO IDLOHG WR SUHSDUH IRU WKH
H[DPLQDWLRQ RI 3HGUR DQG +HQGHUVRQ DUH ZLWKRXW PHULW         PLWLJDWLRQKHDULQJE\IDLOLQJWRFRQGXFWDQLQYHVWLJDWLRQLQWR
0DUWLQ SRLQWV RQO\ WR DWWHQXDWHG FROODWHUDO IDFWV DQG         KLVEDFNJURXQG+HSRLQWVWRWKHIDLOXUHRIFRXQVHOWRFRQWDFW
QRQH[LVWHQWLQFRQVLVWHQFLHVLQPDNLQJWKLVDUJXPHQW:KHUH          KLVLPPHGLDWHIDPLO\PHPEHUVVDYHFRXQVHOjVmWDONLQJlZLWK
DUJXDEO\PDWHULDOLQFRQVLVWHQFLHVH[LVWVXFKDV+HQGHUVRQjV         KLVIDWKHUDQGUHTXHVWLQJDZULWWHQVWDWHPHQWIURPKLVPRWKHU
DQG3HGURjVUHFROOHFWLRQVRIZKHQWKHUREEHU\ZDVGLVFXVVHG         +H GRHV QRWH WKH SRVVLELOLW\ RI mOLPLWHG FRQWDFW >EHWZHHQ
RWKHUHYLGHQFH)RVWHUjVWHVWLPRQ\DERXWWKHWKHIWRIWKHJXQ       FRXQVHODQG@RWKHUIDPLO\PHPEHUVDWWKHFRXUWKRXVHRQWKH
EDOOLVWLFV HYLGHQFH .LGGjV WHVWLPRQ\ DERXW 0DUWLQjV            GD\RIWKHKHDULQJl+HOLVWVHLJKWIDPLO\PHPEHUVWKDWKDYH
SRVVHVVLQJHPSW\VKHOOFDVLQJVFRUURERUDWHVRULQGHSHQGHQWO\        VWDWHGWKURXJKDIILGDYLWVWKDWWKH\ZHUHUHDG\DQGZLOOLQJWR
SURYHV WKH IDFWV WKDW 0DUWLQ FRQWHQGV HIIHFWLYH FURVV        WHVWLI\ DW PLWLJDWLRQ EXW ZHUH QRW LQWHUYLHZHG E\ FRXQVHO
H[DPLQDWLRQ ZRXOG KDYH TXHVWLRQHG  ,Q VXP WKH               0DUWLQGRHVQRWVKRZZKDWWKH\ZRXOGKDYHWHVWLILHGWRRU
RYHUZKHOPLQJ QDWXUH RI WKH HYLGHQFH RI JXLOW SUHFOXGHV        KRZVXFKWHVWLPRQ\FRXOGKDYHDLGHGKLPDWVHQWHQFLQJ
0DUWLQ IURP VKRZLQJ SUHMXGLFH UHVXOWLQJ IURP DQ\ DOOHJHG
GHILFLHQF\LQKLVFRXQVHOjVFURVVH[DPLQDWLRQ                       0DUWLQDOVRWDNHVLVVXHZLWKKLVFRXQVHOjVIDLOXUHWRFROOHFW
                                                                     UHFRUGVDQGGRFXPHQWDU\HYLGHQFHSHUWLQHQWWRKLVPHGLFDO