Court Opinion

ID: 2970350
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:10:22.803622+00
Date Added: 2024-06-11T11:43:29.500246
License: Public Domain

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

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

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

 :,//,$0 ' =$&.             ;
        3HWLWLRQHU$SSHOODQW 
                               
                                  1R
           Y                  
                                !
                               
 &200,66,21(5 2) ,17(51$/ 
 5(9(18(                      
       5HVSRQGHQW$SSHOOHH 
                               
                              1
      2Q$SSHDOIURPWKH8QLWHG6WDWHV7D[&RXUW
      1Rn'DYLG/DUR7D[&RXUWsXGJH
                 6XEPLWWHG0D\
            'HFLGHGDQG)LOHG0D\
  %HIRUH0(55,7768+5+(,15,&+DQG*,/0$1
                   &LUFXLWsXGJHV
                   BBBBBBBBBBBBBBBBB
                        &2816(/
21 %5,()  sRVHSK )DOFRQH )$/&21( 	 52/)(
6RXWKILHOG 0LFKLJDQ IRU $SSHOODQW  $QQ % 'XUQH\
5DQGROSK / +XWWHU 86 '(3$570(17 2) s867,&(
7$;',9,6,21:DVKLQJWRQ'&IRU$SSHOOHH

                             
     =DFNY&RPPLVVLRQHU                             1R

                      BBBBBBBBBBBBBBBBB
                          23,1,21
                      BBBBBBBBBBBBBBBBB
  521$/'/((*,/0$1&LUFXLWsXGJH:LOOLDP'=DFN
FKDOOHQJHVWKHGHWHUPLQDWLRQPDGHE\WKH&RPPLVVLRQHURI
,QWHUQDO 5HYHQXH WKDW =DFN LV OLDEOH  IRU LQFRPH WD[
GHILFLHQFLHV IRU WKH WD[ \HDUV  DQG  EDVHG XSRQ
XQUHSRUWHGLQFRPHDQGIRUDGGLWLRQVWRWD[IRUIUDXGDQG
VXEVWDQWLDO XQGHUVWDWHPHQW RI WD[ ZLWK UHJDUG WR WKH
GHILFLHQFLHVIRUWKRVH\HDUV$OWKRXJK=DFNGRHVQRWFRQWHQG
WKDWKLVLQFRPHWD[UHWXUQVIRUDQGZHUHDFFXUDWH
KH DUJXHV WKDW WKH DPRXQW RI KLV XQUHSRUWHG LQFRPH ZDV
VXEVWDQWLDOO\ RIIVHW E\ WKH EULEHV WKDW KH KDG SDLG WR WKLUG
SDUWLHV LQ RUGHU WR REWDLQ ZRUN IRU KLV EXVLQHVV HQWLWLHV
)ROORZLQJDWZRGD\WULDOWKHWD[FRXUWFRQFOXGHGWKDW=DFN
ZDV HQWLWOHG WR UHGXFH KLV WRWDO XQUHSRUWHG LQFRPH RI
E\WKHWKDWKHZDVIRXQGWRKDYHSDLGLQ
EULEHVGXULQJWKH\HDUVLQTXHVWLRQ7KHWD[FRXUWDOVRXSKHOG
WKH&RPPLVVLRQHUjVGHWHUPLQDWLRQWKDW=DFNZDVOLDEOHIRU
DGGLWLRQVWRWD[IRUDQGRQDFFRXQWRIIUDXGDQG
VXEVWDQWLDOXQGHUVWDWHPHQWRIWD[)RUWKHUHDVRQVVHWIRUWK
EHORZZH$)),50WKHMXGJPHQWRIWKHWD[FRXUW
                      ,%$&.*5281'
$ )DFWXDOEDFNJURXQG
  =DFN DQG KLV EXVLQHVV SDUWQHU /HVWHU s 6RYD EHJDQ
RSHUDWLQJDWRRODQGGLHEXVLQHVVFDOOHG=DFKRYD7RRO	'LH
,QF=7'LQ7KH\IRUPHG=DFKRYD,QGXVWULHV,QF
=,LQWRDFFRPPRGDWHWKHRYHUIORZZRUNIURP=7'
=DFNDQG6RYDHDFKRZQHGSHUFHQWRIWKHFRUSRUDWHVWRFN
RI =7' DQG =, WKH =DFKRYD HQWLWLHV DQG WKH\ VHUYHG DV
SUHVLGHQW DQG YLFHSUHVLGHQW UHVSHFWLYHO\ RI WKHVH
FRUSRUDWLRQV
  ,QWKHPLGV=DFNDQG6RYDIRUPHGIRXUDGGLWLRQDO
EXVLQHVVHV6RYDFN3DUWQHUVKLS6RYDFN&ROW7RRO	'LH
,QF &ROW 6\QFKURQL]HG 'HVLJQ 	 'HYHORSPHQW ,QF
    =DFNY&RPPLVVLRQHU                             1R       1R                         =DFNY&RPPLVVLRQHU          

GHILFLHQF\IRUDQG.ROOVPDQ,QVWUXPHQW&RUSY              6\QFKURQL]HGDQGsDFO\Q/HDVLQJ,QFsDFO\Q6RYDFN
&RPPjU)GG&LUm$QHWRSHUDWLQJ                 RZQHGWKHPDFKLQHU\DQGHTXLSPHQWWKDWWKH=DFKRYDHQWLWLHV
ORVVLQDVXEVHTXHQWWD[\HDUPD\FDUU\EDFNWRWKHWD[\HDULQ          XVHGDQGWKHEXLOGLQJLQZKLFKWKH\ZHUHORFDWHG&ROWOLNH
TXHVWLRQDQGGLUHFWO\DIIHFWWKHDPRXQWRIWD[RZHGIRUWKDW             =7' DQG =, ZDV HQJDJHG LQ WKH WRRO DQG GLH EXVLQHVV
WD[ \HDU WKXV GLUHFWO\ DIIHFWLQJ WKH DPRXQW RI WKH              6\QFKURQL]HGGHVLJQHGWKHGLHVWKDWZHUHXVHGE\=7'=,
GHILFLHQF\l:HWKHUHIRUHFRQFOXGHWKDWWKHWD[FRXUWGLG             DQG&ROWsDFO\QRZQHGDEXLOGLQJWKDWLWUHQWHGWRWKHRWKHU
QRWH[FHHGLWVMXULVGLFWLRQE\GHWHUPLQLQJWKDW=DFNODFNHGD            EXVLQHVVHQWLWLHVRSHUDWHGE\=DFNDQG6RYD=DFNDQG6RYD
QHWRSHUDWLQJORVVLQWKHWD[\HDUWKDWFRXOGKDYHEHHQ             HDFKRZQHGRQHWKLUGRIWKHVWRFNRI&ROWDQG6\QFKURQL]HG
XVHG WR UHGXFH KLV WD[ OLDELOLW\ IRU WKH WD[ \HDUV  DQG   RQHKDOIRIsDFO\QDQGGXULQJWKH\HDUVDWLVVXHLQWKHSUHVHQW
                                                                    FDVHRQHKDOIRI6RYDFN
                      ,,,&21&/86,21                                     ,Q=DFNDQG6RYDGHYLVHGDIDOVHLQYRLFHVFKHPHWKDW
                                                                         HQDEOHGWKHPWRUHFHLYHPRQH\IURPWKH=DFKRYDHQWLWLHVWKDW
  )RU DOO RI WKH UHDVRQV VHW IRUWK DERYH ZH $)),50 WKH        WKH\GLGQRWUHSRUWDVLQFRPHIRUWD[SXUSRVHV7KLUGSDUWLHV
MXGJPHQWRIWKHWD[FRXUW                                               ZRXOGLVVXHLQYRLFHVWRWKH=DFKRYDHQWLWLHVIRUZRUNWKDWKDG
                                                                         QRWDFWXDOO\EHHQSHUIRUPHGDQGZRXOGUHFHLYHSD\PHQWIURP
                                                                         WKH HQWLWLHV  7KH WKLUGSDUW\ SD\HHV ZRXOG WKHQ FDVK WKH
                                                                         FKHFNVNHHSSHUFHQWDVDIHHIRUWKHLUVHUYLFHVDQGJLYH
                                                                         WKHUHPDLQLQJSHUFHQWRIWKHSD\PHQWEDFNWR=DFNDQG
                                                                         6RYDZKRZRXOGVSOLWWKHSURFHHGVHYHQO\3D\PHQWVWKDW
                                                                         ZHUH PDGH WR WKH WKLUG SDUWLHV ZHUH LQLWLDOO\ GHVLJQDWHG DV
                                                                         H[SHQVHVDQGGHGXFWHGDFFRUGLQJO\RQWKHWD[UHWXUQVRIWKH
                                                                         =DFKRYDHQWLWLHV
                                                                            ,Q DGGLWLRQ WR WKH IDOVHLQYRLFH VFKHPH =DFN DQG 6RYD
                                                                         PDGHLPSURYHPHQWVDQGUHSDLUVWRWKHLUSHUVRQDOUHVLGHQFHV
                                                                         WKDWZHUHELOOHGWR6RYDFN6RYDFNUHFRUGHGWKHVHSD\PHQWV
                                                                         HLWKHUDVGHGXFWLEOHH[SHQVHVRUDVFDSLWDOH[SHQGLWXUHVWKDW
                                                                         ZHUHGHSUHFLDWHG
                                                                           7KH=DFKRYDHQWLWLHVVWDUWHGGRLQJEXVLQHVVZLWKWKH)RUG
                                                                         0RWRU&RPSDQ\LQ,QRUGHUWRREWDLQRUGHUVIURP)RUG
                                                                         =DFN DQG 6RYD EHJDQ SD\LQJ EULEHV WR (G &RRSHU D )RUG
                                                                         HPSOR\HH$FFRUGLQJWR=DFNjVWHVWLPRQ\DWWULDOWKHEULEHV
                                                                         WRWDOHG6RYDLQFRQWUDVWWHVWLILHGWKDWWKH=DFKRYD
                                                                         HQWLWLHV SDLG RQO\  LQ EULEHV  'XULQJ DQ HDUOLHU
                                                                         LQWHUYLHZ ZLWK D )RUG LQYHVWLJDWRU DERXW WKH EULEHV =DFN
                                                                         DJUHHGZLWKWKHILJXUH
                                                                            ,Q 0DUFK RI  'HQQLV 0HDJKHU EHFDPH WKH FKLHI
                                                                         ILQDQFLDORIILFHURIWKH=DFKRYDHQWLWLHV+HOHDUQHGRIWKH
     =DFNY&RPPLVVLRQHU                          1R      1R                          =DFNY&RPPLVVLRQHU          

IUDXGXOHQWLQYRLFHVDIWHUZRUNLQJWKHUHIRUVHYHUDOPRQWKV            )RUDOORIWKHUHDVRQVGLVFXVVHGDERYHZHFRQFOXGHWKDWWKH
0HDJKHUSURFHHGHGWRFRQVXOWZLWK)ROOPHU5XGFHZLF]	              WD[FRXUWVHWIRUWKVXIILFLHQWILQGLQJVRIIDFWWRVDWLVI\5XOH
&R)ROOPHUWKHDFFRXQWLQJILUPWKDWDXGLWHGWKH=DFKRYD          DDQGWKDWLWVILQGLQJVZHUHQRWFOHDUO\HUURQHRXV
HQWLWLHVDQGZLWKWKHHQWLWLHVjDWWRUQH\$FWLQJSXUVXDQWWR
)ROOPHUjVDGYLFH0HDJKHUUHYLVHGWKHUHFRUGVRIWKH=DFKRYD         & sXULVGLFWLRQRYHU=DFNjVFODLPHGQHWRSHUDWLQJORVV
HQWLWLHVE\WUHDWLQJWKHIDOVHLQYRLFHVDVDGYDQFHVWR=DFNDQG         IURP
6RYDDQGGHVLJQDWLQJWKHDGYDQFHVDVQRWHVUHFHLYDEOH
                                                                        =DFNDOVRFRQWHQGVWKDWKHZDVHQWLWOHGWRDQHWRSHUDWLQJ
   )ROOPHU SUHSDUHG DXGLWHG ILQDQFLDO VWDWHPHQWV IRU WKH       ORVVFDUU\EDFNIURPWKHWD[\HDUWRWKHWD[\HDUV
=DFKRYDHQWLWLHVZKLFKZHUHLVVXHGRQsXQH7KHVH         DQG   7KH WD[ FRXUW UHMHFWHG =DFNjV SRVLWLRQ RQ WKLV
VWDWHPHQWVOLVWHG WKHQRWHVUHFHLYDEOHDFFRXQWVDVDQDVVHW        LVVXHFRQFOXGLQJWKDWKHIDLOHGWRHVWDEOLVKDQHWRSHUDWLQJ
)ROOPHU ODWHU LQVWUXFWHG 0HDJKHU WR WUHDW WKH IDOVHLQYRLFH   ORVVLQ2QDSSHDO=DFNFRQWHQGVWKDWWKHWD[ FRXUW
SD\PHQWV DV GLYLGHQGV WR =DFN DQG 6RYD  $V D UHVXOW      ODFNHGMXULVGLFWLRQWRUHQGHUDGHFLVLRQRQPDWWHUVSHUWDLQLQJ
0HDJKHU UHYLVHG WKH ERRNV RI WKH =DFKRYD HQWLWLHV DQG        WRKLVWD[\HDUEHFDXVHWKH&RPPLVVLRQHUjVQRWLFHRI
FKDUJHGWKHDPRXQWVRIWKHIUDXGXOHQWLQYRLFHVDVGLYLGHQGV          GHILFLHQF\UHODWHGRQO\WRDQG
WR=DFNDQG6RYD7KH=DFKRYDHQWLWLHVVXEVHTXHQWO\ILOHG
DPHQGHGIHGHUDOFRUSRUDWHLQFRPHWD[UHWXUQVIRUWD[\HDUV              :KHQ D WD[SD\HU FKDOOHQJHV WKH &RPPLVVLRQHUjV
DQG7KHVHDPHQGHGUHWXUQVUHFODVVLILHGH[SHQVHV          GHWHUPLQDWLRQWKDWDQLQFRPHWD[GHILFLHQF\H[LVWVmWKH7D[
WKDWKDGEHHQGHGXFWHGRQWKHHQWLWLHVjRULJLQDOWD[UHWXUQV       &RXUWPD\QHHGWRFRQVLGHUµIDFWVZLWKUHODWLRQWRWD[HVIRU
                                                                     RWKHU\HDUV RU RWKHUFDOHQGDUTXDUWHUVDVPD\EHQHFHVVDU\
  2Q 0D\   2[IRUG ,QYHVWPHQW *URXS 7RROLQJ            FRUUHFWO\WRUHGHWHUPLQHWKHDPRXQWRIVXFKGHILFLHQF\EXWLQ
&RUSRUDWLRQ2,*SXUFKDVHGWKHDVVHWVRI=7'=,6RYDFN           VRGRLQJVKDOOKDYHQRMXULVGLFWLRQWRGHWHUPLQHZKHWKHURU
DQG&ROW&HUWDLQRIILFHUVjQRWHVUHFHLYDEOHUHPDLQHGRQWKH        QRWWKHWD[IRUDQ\RWKHU\HDURUFDOHQGDUTXDUWHUKDVEHHQ
ERRNVDQGUHFRUGVRIWKH=DFKRYDHQWLWLHVDWWKHWLPHRIWKH         RYHUSDLGRUXQGHUSDLGjl(VWDWHRI0XHOOHUY&RPPjU
SXUFKDVH7KHVHQRWHVKDGQRUHODWLRQWRWKHIDOVHLQYRLFH          )GWK&LUHPSKDVLVLQRULJLQDOTXRWLQJ
VFKHPH EXW UDWKHU UHSUHVHQWHG OHJLWLPDWH ORDQV WKDW WKH      86&E7KHWD[FRXUWjVMXULVGLFWLRQWKHUHIRUH
HQWLWLHVKDGPDGHWR=DFNDQG6RYD,QVWHDGRISXUFKDVLQJ           mH[WHQGVQRIXUWKHUWKDQWKHDPRXQWRIWKHGHILFLHQF\EHIRUH
WKHVHQRWHV2,*UHGXFHGLWVFDVKGRZQSD\PHQWIRUWKHIRXU          LWl,G
SXUFKDVHGFRPSDQLHVE\WKHDPRXQWRIWKHQRWHV
                                                                        &RQWUDU\WR=DFNjVEHOLHIWKHWD[FRXUWLQWKHSUHVHQWFDVH
% 3URFHGXUDOEDFNJURXQG                                             GLGQRWGHWHUPLQHZKHWKHU=DFNKDGSDLGPRUHRUOHVVLQFRPH
                                                                     WD[WKDQKHVKRXOGKDYHIRUWKHWD[\HDU,QVWHDGWKHWD[
  2Q 0D\   =DFN ZDV FRQYLFWHG RQ RQH FRXQW RI      FRXUWjV HYDOXDWLRQ RI ZKHWKHU =DFN ZDV HQWLWOHG WR D QHW
FRQVSLUDF\WRGHIUDXGWKH8QLWHG6WDWHVRQWZRFRXQWVRIWD[        RSHUDWLQJ ORVV IRU WKH WD[ \HDU  UHODWHG GLUHFWO\ WR LWV
HYDVLRQ DQG RQ VHYHQ FRXQWV RI ILOLQJ IDOVH WD[ UHWXUQV   GHWHUPLQDWLRQRIZKHWKHU=DFNZDVHQWLWOHGWRUHGXFHKLVWD[
=DFNjVFRQYLFWLRQDQGVHQWHQFHZHUHDIILUPHGE\WKLVFRXUWRQ        OLDELOLW\IRUWD[\HDUVDQGnWKH\HDUVLQTXHVWLRQLQ
GLUHFWDSSHDO8QLWHG6WDWHVY=DFN1RV        WKHSUHVHQWFDVHnEDVHGXSRQDFODLPHGQHWRSHUDWLQJORVVLQ
:/WK&LUsDQXQSXEOLVKHGWDEOH             
GHFLVLRQ  +LV YDULRXV PRWLRQV WR YDFDWH KLV FRQYLFWLRQ
SXUVXDQW WR  86&   ZHUH DOVR GHQLHG  =DFN Y     7KHFODLPHGQHWRSHUDWLQJORVVIURPWKHUHIRUHGLUHFWO\
                                                                     DIIHFWHGWKHWD[FRXUWjVUHGHWHUPLQDWLRQRI=DFNjVLQFRPHWD[
    =DFNY&RPPLVVLRQHU                              1R       1R                        =DFNY&RPPLVVLRQHU          

  :KHQDWD[SD\HULVFRQYLFWHGIRUFULPLQDOWD[IUDXGXQGHU               8QLWHG6WDWHV1R:/WK&LU0D\
 86&   LVVXH SUHFOXVLRQ SUHYHQWV WKDW WD[SD\HU         XQSXEOLVKHGWDEOHGHFLVLRQ
IURPODWHUGHQ\LQJOLDELOLW\IRUFLYLOIUDXGXQGHUEIRU
WKHVDPHWD[\HDU*UD\Y&RPPjU)G                     2Q$XJXVWWKH&RPPLVVLRQHULVVXHGDQRWLFHRI
WK&LUDIILUPLQJWKHWD[FRXUWjVGHFLVLRQWKDWDVD            GHILFLHQF\ WR =DFN IRU WKH WD[ \HDUV  DQG   7KH
UHVXOWRILVVXHSUHFOXVLRQWKHSHWLWLRQHUjVFULPLQDOWD[IUDXG           &RPPLVVLRQHUGHWHUPLQHGWKDWDVDUHVXOWRIWKHIDOVHLQYRLFH
FRQYLFWLRQEDUUHGKLPIURPFRQWHVWLQJWKH&RPPLVVLRQHUjV                  VFKHPH=DFNIDLOHGWRUHSRUWRILQFRPHIRUWD[\HDU
GHFLVLRQ WR LPSRVH DGGLWLRQDO WD[HV RQ KLP IRU FLYLO IUDXG       DQGRILQFRPHIRUWD[\HDU,QDGGLWLRQ
XQGHUE=DFNZDVFRQYLFWHGRIFULPLQDOWD[IUDXG              WKH&RPPLVVLRQHUGHWHUPLQHGWKDW=DFNVKRXOGKDYHUHSRUWHG
LQYLRODWLRQRIIROORZLQJDMXU\WULDOLQ$VD             DQDGGLWLRQDODQGRILQFRPHIURP6RYDFNRQ
UHVXOW =DFN FDQQRW QRZ FKDOOHQJH WKH &RPPLVVLRQHUjV                KLVDQGIHGHUDOLQFRPHWD[UHWXUQVUHVSHFWLYHO\
GHFLVLRQWRLPSRVHDGGLWLRQDOWD[HVRQKLPXQGHUE                =DFNjVDOOHJHGIDLOXUHWRUHSRUWWKLVLQFRPHUHVXOWHG LQ WKH
IRUWKHVDPHWD[\HDU                                                   &RPPLVVLRQHUjV DVVHVVLQJ IHGHUDO LQFRPH WD[ GHILFLHQFLHV
                                                                          DJDLQVW=DFNRIDQGIRUWKHVHWZRWD[\HDUV
   7KH WD[ FRXUW DOVR FRQFOXGHG EDVHG XSRQ WKH                    7KH &RPPLVVLRQHU DOVR LQFUHDVHG =DFNjV WD[ OLDELOLW\ IRU
&RPPLVVLRQHUjVSURRIWKDW=DFNjVHQWLUHXQGHUSD\PHQWZDV                 IUDXG DQG VXEVWDQWLDO XQGHUVWDWHPHQW RI WD[ IRU D WRWDO
DWWULEXWDEOHWRIUDXG=DFNKDVQRWSURGXFHGDQ\HYLGHQFH                DVVHVVPHQWRI
LQGLFDWLQJWKDWWKHWD[FRXUWjVILQGLQJZDVFOHDUO\HUURQHRXV
8QGHUWKHVHFLUFXPVWDQFHVESODFHVWKHEXUGHQRQ                =DFN ILOHG D SHWLWLRQ LQ WKH WD[ FRXUW UHTXHVWLQJ D
WKHWD[SD\HUWRHVWDEOLVKZKDWSRUWLRQRIWKHXQGHUSD\PHQWLI            UHGHWHUPLQDWLRQRIKLVLQFRPHWD[GHILFLHQF\RQ0D\
DQ\ ZDV QRW DWWULEXWDEOH WR IUDXG  =DFNjV IDLOXUH WR GR VR   ,QKLVSHWLWLRQ=DFNGLGQRWGLVSXWHWKDWKHZDVLQYROYHGLQ
SUHFOXGHGWKHQHFHVVLW\RIDGGLWLRQDOILQGLQJVRIIDFWE\WKH             WKHIDOVHLQYRLFHVFKHPH,QVWHDGKHDUJXHGWKDWKHVKRXOGEH
WD[FRXUW                                                               SHUPLWWHGWRUHGXFHWKHDPRXQWRIXQUHSRUWHGLQFRPHE\WKH
                                                                          EULEHV KH SDLG WR &RRSHU  +H DOVR FODLPHG WKDW KH ZDV
   7KHVL[WKDQGILQDOFKDOOHQJHWKDW=DFNPDNHVWRWKHWD[               HQWLWOHGWRDQHWRSHUDWLQJORVVFDUU\EDFNIURPWKHWD[\HDU
FRXUWjVIDFWXDOILQGLQJVFRQFHUQVKLVDUJXPHQWWKDWWKHLQFRPH            WKDWFRXOGEHDSSOLHGWRUHGXFHKLVWD[OLDELOLW\IRUWKH
VKRXOGKDYHEHHQUHSRUWHGLQQRWLQDQG7R              WD[\HDUVDQG=DFNjVSHWLWLRQFODLPHGDVLPLODU
VXSSRUWWKLVFRQWHQWLRQ=DFNUHOLHVXSRQWKHDOWHUDWLRQVLQWKH          QHWRSHUDWLQJORVVFDUU\EDFNIRUWKHWD[\HDUEXWZLWK
UHFRUGVRIWKH=DFKRYDHQWLWLHVWKDWZHUHPDGHE\0HDJKHU                WKHH[FHSWLRQRIDVLQJOHVHQWHQFHFRPSODLQLQJDERXWWKHWD[
7KHVH FKDQJHV KRZHYHU ZHUH PDGH IRU WKH SXUSRVH RI              FRXUWjVIDLOXUHWRPHQWLRQKLVEULHIVIRFXVH[FOXVLYHO\
FRUUHFWLQJLPSURSHUSDVWDFFRXQWLQJSURFHGXUHV7KH\GLGQRW             RQ:HVKDOOGRWKHVDPH
DOWHU WKH FKDUDFWHU RI WKH XQUHSRUWHG LQFRPH QRU GLG WKH\
FKDQJHWKH\HDULQZKLFKWKHLQFRPHZDVUHFHLYHGE\=DFN                   2Q sXQH   WKH WD[ FRXUW JUDQWHG SDUWLDO VXPPDU\
7KHVWLSXODWHGIDFWVDPSO\VXSSRUWWKLVFRQFOXVLRQ6RHYHQ              MXGJPHQW WR WKH &RPPLVVLRQHU ZLWK UHVSHFW WR WKH
WKRXJKWKHWD[FRXUWGLGQRWVSHFLILFDOO\DGGUHVVWKLVFODLPLWV         DVVHVVPHQWVIRUIUDXGIRUWKHWD[\HDUVDQGWKDW
LPSOLFLWWUHDWPHQWRILWZDVQHLWKHUFOHDUO\HUURQHRXVQRUD              ZHUH OHYLHG SXUVXDQW WR  86&    7KH FRXUW
YLRODWLRQRI5XOHD                                                  H[SODLQHGWKDWEHFDXVH=DFNKDGEHHQFRQYLFWHGIRULQFRPH
                                                                          WD[ HYDVLRQ WKH GRFWULQH RI FROODWHUDO HVWRSSHO EDUUHG KLP
                                                                          IURPGHQ\LQJWKDWKLVXQGHUSD\PHQWVRILQFRPHWD[LQ
                                                                          DQGZHUHGXHWRIUDXG
     =DFNY&RPPLVVLRQHU                           1R       1R                         =DFNY&RPPLVVLRQHU          

  $IWHUFRQGXFWLQJDQRQMXU\WULDORQsXQHDQG           PDGHWRKLVSHUVRQDOUHVLGHQFHWKDWZHUHELOOHGWR6RYDFNGLG
WKH WD[ FRXUW IRXQG WKDW =DFN KDG SDLG  LQ EULEHV     QRWFRQVWLWXWHLQFRPHIRU=DFN7KLVDUJXPHQWLVEDVHGXSRQ
GXULQJWKHWD[\HDUVDQG2QWKHWKHRU\WKDW=DFN           WKH IDFW WKDW WKH &RPPLVVLRQHU GLVDOORZHG  DQG
ZDV VLPSO\ D FRQGXLW EHWZHHQ WKH =DFKRYD HQWLWLHV DQG           RI IDOVH H[SHQVHV IRU 6RYDFN LQ  DQG 
&RRSHUIRUWKHDPRXQWRIEULEHVSDLGWKHWD[FRXUWDOORZHG            UHVSHFWLYHO\=DFNjVUHSRUWDEOHLQFRPHZDVLQFUHDVHGLQWKRVH
=DFNWRUHGXFHWKHDPRXQWRIXQUHSRUWHGLQFRPHE\              \HDUVWRUHIOHFWWKLVGLVDOORZDQFH
IRU HDFK RI WKH WZR \HDUV LQ TXHVWLRQ  =DFNjV XQUHSRUWHG
LQFRPHWKHUHIRUHGHFUHDVHGIURPWRIRU                 $FFRUGLQJ WR =DFN 6RYDFNjV SD\PHQWV IRU WKHVH
DQGIURPWRIRU                           LPSURYHPHQWVUHGXFHG=DFNjVEDVLVLQ6RYDFNDQGWKHUHIRUH
                                                                       ZHUH UHWXUQV RI FDSLWDO QRW LQFRPH  7KH VWLSXODWHG IDFWV
  :LWKUHVSHFWWR=DFNjVFODLPWKDWKHZDVHQWLWOHGWRFDUU\           KRZHYHULQGLFDWHWKHHUURURI=DFNjVSRVLWLRQ6SHFLILFDOO\
EDFNDQHWRSHUDWLQJORVVIURPWKHWD[\HDUWRWKHWD[            6RYDFNjV UHFRUGV VKRZ WKDW LWV H[SHQVHV IRU WKHVH
\HDUVDQGWKHWD[FRXUWFRQFOXGHGWKDWWKHUHFRUG           LPSURYHPHQWV DQG UHSDLUV ZHUH GHGXFWHG IURP WKH
GLGQRWVXSSRUW=DFNjVDUJXPHQW7KHWD[FRXUWDOVRXSKHOG            SDUWQHUVKLSjVLQFRPHDQGSDVVHGWKURXJKWRWKHSDUWQHUVLQWKH
WKH&RPPLVVLRQHUjVGHWHUPLQDWLRQWKDW=DFNZDVOLDEOHIRU              IRUPRIUHGXFHGLQFRPHQRWFKDUJHGWRWKHSDUWQHUVjFDSLWDO
DGGLWLRQDOWD[HVEDVHGXSRQKLVVXEVWDQWLDOXQGHUVWDWHPHQWRI          DFFRXQW0RUHRYHUWKHWD[FRXUWDGGUHVVHG=DFNjVREMHFWLRQ
WD[IRUWKHWD[\HDUVDQGSXUVXDQWWR86&             WR WKH LQFUHDVH LQ LQFRPH DWWULEXWDEOH WR 6RYDFN E\
7KLVWLPHO\DSSHDOIROORZHG                                  UHFRJQL]LQJ WKDW =DFN GLG QRW FRQWHVW WKH &RPPLVVLRQHUjV
                                                                       SURSRVHGILQGLQJVRIIDFW,WIXUWKHUFRQFOXGHGWKDWWKHUHFRUG
                        ,,$1$/<6,6                                  VXSSRUWHG WKRVH ILQGLQJV WKHUHE\ HOLPLQDWLQJ WKH QHHG IRU
                                                                       DGGLWLRQDO GLVFXVVLRQ  :H FRQFOXGH WKDW WKH WD[ FRXUWjV
$ 6WDQGDUGRIUHYLHZ                                                  IDFWXDOILQGLQJVZLWKUHVSHFWWR=DFNjVLQFUHDVHGLQFRPHIURP
                                                                       6RYDFNQRWRQO\VDWLVILHGWKHUHTXLUHPHQWVRI5XOHDEXW
  :HUHYLHZWKHWD[FRXUWjVOHJDOFRQFOXVLRQVGHQRYRDQGLWV          DOVRZHUHQRWFOHDUO\HUURQHRXV
IDFWXDOILQGLQJVXQGHUWKHmFOHDUO\HUURQHRXVlVWDQGDUG076
,QWjO,QFY&RPPjU)GWK&LU               =DFNjV ILIWK REMHFWLRQ WR WKH WD[ FRXUWjV IDFWXDO ILQGLQJV
)DFWXDOILQGLQJVDUHFOHDUO\HUURQHRXVLIEDVHGXSRQWKHHQWLUH       UHODWHV WR KLV PRWLYDWLRQ IRU HYDGLQJ WD[HV  7KH
UHFRUGWKHUHYLHZLQJFRXUWLVmOHIWZLWKWKHGHILQLWHDQGILUP        &RPPLVVLRQHULPSRVHGDGGLWLRQDOWD[OLDELOLW\SXUVXDQWWR
FRQYLFWLRQWKDWDPLVWDNHKDVEHHQFRPPLWWHGl6DQIRUGY             86&  E RQ WKH EDVLV RI =DFNjV IUDXG  6HFWLRQ
+DUYDUG,QGXV,QF)GWK&LU             ESURYLGHVWKDWm>L@IDQ\SDUWRIDQ\XQGHUSD\PHQW
                                                                       RIWD[UHTXLUHGWREHVKRZQRQDUHWXUQLVGXHWRIUDXG
% $GHTXDF\ DQG SURSULHW\ RI WKH WD[ FRXUWjV IDFWXDO            WKHUHVKDOOEHDGGHGWRWKHWD[DQDPRXQWHTXDOWRSHUFHQW
   ILQGLQJV                                                            RIWKHSRUWLRQRIWKHXQGHUSD\PHQWZKLFKLVDWWULEXWDEOHWR
                                                                       IUDXGl2QFHWKH&RPPLVVLRQHUHVWDEOLVKHVWKDWDQ\SRUWLRQ
   =DFNFRQWHQGVWKDWWKHWD[FRXUWIDLOHGWRDGGUHVVVHYHUDORI       RI WKH XQGHUSD\PHQW LV DWWULEXWDEOH WR IUDXG mWKH HQWLUH
WKHLVVXHVUDLVHGLQKLVSHWLWLRQDQGWKDWDVDUHVXOWLWVIDFWXDO   XQGHUSD\PHQWVKDOOEHWUHDWHGDVDWWULEXWDEOHWRIUDXGH[FHSW
ILQGLQJVZHUHHLWKHUQRQH[LVWHQWRUVROLPLWHGDVWRSUHYHQW           ZLWKUHVSHFWWRDQ\SRUWLRQRIWKHXQGHUSD\PHQWZKLFKWKH
WKHSRVVLELOLW\RIPHDQLQJIXODSSHOODWHUHYLHZ,QSDUWLFXODU        WD[SD\HUHVWDEOLVKHVLVQRWDWWULEXWDEOHWRIUDXGl86&
KHDUJXHVWKDWWKHWD[FRXUWIDLOHGWRFRPSO\ZLWK5XOHD          E
RI WKH )HGHUDO 5XOHV RI &LYLO 3URFHGXUH ZKLFK UHTXLUHV D
FRXUW WR mILQG WKH IDFWV VSHFLDOO\ DQG VWDWH VHSDUDWHO\ LWV
    =DFNY&RPPLVVLRQHU                             1R       1R                          =DFNY&RPPLVVLRQHU            

IXQGV REWDLQHG WKURXJK WKH IDOVHLQYRLFH VFKHPH QHYHU              FRQFOXVLRQVRIODZWKHUHRQlZKHUHWKHFDVHLVWULHGZLWKRXWD
FRQVWLWXWHG OHJLWLPDWH H[SHQVHV RU ORDQV E\ WKH =DFKRYD           MXU\)HG5&LY3D
HQWLWLHV$VDUHVXOW2,*jVUHGXFWLRQRILWVSXUFKDVHSULFHWR
UHIOHFW WKH SUHVHQFH RI ORDQV WR =DFN DQG 6RYD GRHV QRW         :KHQHYDOXDWLQJZKHWKHUWKHUHTXLUHPHQWVRI5XOHD
VXSSRUWDILQGLQJWKDW=DFNLVHQWLWOHGWRDQHWRSHUDWLQJORVV          KDYHEHHQVDWLVILHGZHGRQRWLQVLVWWKDWWULDOFRXUWVPDNH
IRU:HWKHUHIRUHFRQFOXGHWKDWWKHWD[FRXUWjVILQGLQJ            IDFWXDOILQGLQJVGLUHFWO\DGGUHVVLQJHDFKLVVXHWKDWDOLWLJDQW
WKDW =DFN IDLOHG WR HVWDEOLVK WKDW KH ZDV HQWLWOHG WR D QHW   UDLVHV,QUH)RUGX)GWK&LUm:H
RSHUDWLQJORVVIRUZDVQRWFOHDUO\HUURQHRXV                       KDYH QRW LQWHUSUHWHG >5XOH@  WR UHTXLUH WULDO FRXUWV WR
                                                                         H[SOLFLWO\WUHDWHDFKLVVXHUDLVHGl*URYHU+LOO*UDLQ&RY
   =DFNjV WKLUG REMHFWLRQ WR WKH WD[ FRXUWjV IDFWXDO ILQGLQJV    %DXJKPDQ2VWHU,QF)GWK&LUm,W
SHUWDLQVWRKLVFODLPWKDWWKHGRFWULQHRIHTXLWDEOHUHFRXSPHQW          LV QRW QHFHVVDU\ IRU WKH 'LVWULFW &RXUW sXGJH WR SUHSDUH
VKRXOGRSHUDWHLQKLVIDYRUDQGUHGXFHKLVLQFRPHWD[OLDELOLW\          HODERUDWHILQGLQJVRQHYHU\SRVVLEOHLVVXHUDLVHGDWWULDOl
IRUDQG:KHUHDmVLQJOHWUDQVDFWLRQRUWD[DEOH               :H LQVWHDG DGKHUH WR mD OLEHUDO VWDQGDUG IRU UHYLHZLQJ WKH
HYHQWKD>V@EHHQVXEMHFWHGWRWZRWD[HVRQLQFRQVLVWHQWOHJDO            DGHTXDF\RIWKH>WULDOFRXUWjV@ILQGLQJVl*URYHU+LOO*UDLQ
WKHRULHVl WKH GRFWULQH RI HTXLWDEOH UHFRXSPHQW SHUPLWV D         &R)GDW$VDUHVXOWmILQGLQJVDUHWREHOLEHUDOO\
WD[SD\HUWRRIIVHWDQDGMXGLFDWHGLQFRPHWD[GHILFLHQF\E\               FRQVWUXHGLQVXSSRUWRIDMXGJPHQWHYHQLIWKHILQGLQJVDUH
UHFRYHULQJ D UHIXQG WKDW ZRXOG RWKHUZLVH EH EDUUHG E\ WKH       QRWDVH[SOLFLWRUGHWDLOHGDVPLJKWEHGHVLUHGl,QUH)RUGX
VWDWXWH RI OLPLWDWLRQV  5RWKHQVLHV Y (OHF 6WRUDJH %DWWHU\     )GDW
&R  86    (VWDWH RI %UDQVRQ Y
&RPPjU)GWK&LUm7KHGRFWULQH                    'HVSLWHWKLVOLEHUDODSSURDFKWKHWULDOFRXUWjVILQGLQJVPXVW
SHUPLWVDSDUW\WRDWD[GLVSXWHWRUDLVHDWLPHEDUUHGFODLPLQ         VXSSRUWWKHXOWLPDWHOHJDOFRQFOXVLRQVUHDFKHG*URYHU+LOO
RUGHUWRUHGXFHRUHOLPLQDWHWKHPRQH\RZHGRQWKHWLPHO\                *UDLQ&R)GDWH[SODLQLQJWKDWmWKHUHPXVWEH
FODLPl                                                               ILQGLQJVLQVXFKGHWDLODQGH[DFWQHVVDVWKHQDWXUHRIWKHFDVH
                                                                         SHUPLWVRIVXEVLGLDU\IDFWVRQZKLFKDQXOWLPDWHFRQFOXVLRQ
  =DFNjVHTXLWDEOHUHFRXSPHQWFODLPUHOLHVXSRQWKHVDPH                 FDQUDWLRQDOO\EHSUHGLFDWHGl7KHILQGLQJVDUHQHFHVVDU\QRW
IDFWVWKDWZHUHFHQWUDOWRKLVQHWRSHUDWLQJORVVDUJXPHQW$V          RQO\WRUHYHDOWKHORJLFEHKLQGWKHWULDOFRXUWjVGHFLVLRQEXW
SUHYLRXVO\ GLVFXVVHG KRZHYHU =DFN LV XQDEOH WR HVWDEOLVK        DOVR WR HQDEOH DQ DSSHOODWH FRXUW WR FRQGXFW D PHDQLQJIXO
WKDWKHZDVHQWLWOHGWRDQHWRSHUDWLQJORVVLQ+HLVDOVR        UHYLHZRIWKHWULDOFRXUWjVRUGHU,GDWm7KHILQGLQJV
PLVWDNHQLQKLVEHOLHIWKDWKLVUHFRXSPHQWFODLPLVEROVWHUHG            VKRXOG EH H[SOLFLW VR DV WR JLYH WKH DSSHOODWH FRXUW D FOHDU
E\WKHIDFWWKDW2,*UHGXFHGLWVSXUFKDVHSULFHE\GLVFODLPLQJ           XQGHUVWDQGLQJRIWKHEDVLVRIWKHWULDOFRXUWjVGHFLVLRQDQGWR
DQ\ULJKWWRWKHOHJLWLPDWHORDQVPDGHE\WKH=DFKRYDHQWLWLHV           HQDEOHLWWRGHWHUPLQHWKHJURXQGVRQZKLFKWKHWULDOFRXUW
WR =DFN DQG 6RYD  0RUHRYHU =DFNjV FRQWHQWLRQ WKDW KH          UHDFKHGLWVGHFLVLRQl1HYHUWKHOHVVLQDFFRUGDQFHZLWKD
VKRXOGQRWKDYHSDLGLQFRPHWD[RQWKHLQORQJWHUP              OLEHUDOUHYLHZRIWKHIDFWVVXSSRUWLQJWKHWULDOFRXUWjVGHFLVLRQ
FDSLWDOJDLQVWKDWZDVQRWRIIVHWE\KLVORVVHVLQKDVQR           WKLVFRXUWKDVH[SODLQHGWKDWm>L@IIURPWKHIDFWVIRXQGRWKHU
EHDULQJRQKLVDUJXPHQWIRUUHFRXSPHQW:HWKXVFRQFOXGH                IDFWVPD\EHLQIHUUHGZKLFKZLOOVXSSRUWWKHMXGJPHQWVXFK
WKDW WKH WD[ FRXUWjV WUHDWPHQW RI WKLV LVVXH ZDV QRW FOHDUO\   LQIHUHQFHV VKRXOG EH GHHPHG WR KDYH EHHQ GUDZQ E\ WKH
HUURQHRXV                                                               'LVWULFW&RXUWl,GDW:LWKWKHVHSULQFLSOHVLQPLQGZH
                                                                         ZLOOQRZSURFHHGWRUHYLHZ=DFNjVFODLPVRIHUURU
  7KH IRXUWK DOOHJHG GHILFLHQF\ LQ WKH WD[ FRXUWjV RSLQLRQ
SHUWDLQVWR=DFNjVFODLPWKDWWKHLPSURYHPHQWVDQGUHSDLUV
     =DFNY&RPPLVVLRQHU                            1R       1R                        =DFNY&RPPLVVLRQHU          

  =DFNILUVWREMHFWVWRWKHWD[FRXUWjVILQGLQJWKDWKHDQG6RYD          =DFNjV VHFRQG DUJXPHQW ZLWK UHVSHFW WR WKH WD[ FRXUWjV
SDLGRQO\LQEULEHVWR&RRSHU$FFRUGLQJWR=DFN             IDFWXDO ILQGLQJV UHODWHV WR LWV FRQFOXVLRQ WKDW KH ZDV QRW
WKHWD[FRXUWIDLOHGWRJLYHDGHTXDWHFRQVLGHUDWLRQWRDUHFRUG         HQWLWOHGWRFDUU\EDFNDQHWRSHUDWLQJORVVIURPWRWD[
RI SD\PHQWV WKDW KH SUHVHQWHG DV DQ H[KLELW VKRZLQJ WRWDO      \HDUV  DQG   7KH WD[ FRXUW UHDFKHG WKLV GHFLVLRQ
SD\PHQWV WR &RRSHU RI   7KH ERWWRP RI WKH ILUVW      DIWHUILQGLQJWKDWWKHUHFRUGGLGQRWVXSSRUW=DFNjVFODLPWKDW
SDJHRIWKLVWULDOH[KLELWOLVWHGWKHILJXUHEXWWKH          KHUHDOL]HGDQHWRSHUDWLQJORVVLQ=DFNFRQWHQGVWKDW
VHFRQG SDJH VKRZHG WKDW DGGLWLRQDO SD\PHQWV WRWDOLQJ              WKHFRXUWIDLOHGWRPDNHVSHFLILFIDFWXDOILQGLQJVWRVXSSRUWLWV
ZHUHPDGH$GGLQJWKHILJXUHVIURPERWKSDJHVRI              FRQFOXVLRQ
WKLVH[KLELWFRUURERUDWHV=DFNjVWULDOWHVWLPRQ\WKDWKHSDLG
LQEULEHV                                                       $OWKRXJK WKH WD[ FRXUW GLG QRW GLVFXVV WKH HYLGHQFH
                                                                        VXSSRUWLQJLWVFRQFOXVLRQWKDW=DFNKDGIDLOHGWRSURYHKLV
   7KH WD[ FRXUW GLG QRW VSHFLILFDOO\ DGGUHVV WKH UHFRUG RI    HQWLWOHPHQWWRDQHWRSHUDWLQJORVVLQWKHFRXUWjVRSLQLRQ
SD\PHQWVWKDW=DFNSUHVHQWHGDWWULDOEXWLWGLGH[SUHVVWKH           LQFRUSRUDWHGWKHSDUWLHVjVWLSXODWLRQRIIDFWVDQGWKHH[KLELWV
RSLQLRQWKDW=DFNjVWHVWLPRQ\WKDWKHKDGSDLGLQ              VXEPLWWHG LQ FRQQHFWLRQ ZLWK WKHLU VWLSXODWLRQV  7KHVH
EULEHVZDVQRWFUHGLEOH,WVFRQFOXVLRQVXSSRUWVWKHLQIHUHQFH         H[KLELWV SURYLGH WKH IDFWXDO VXSSRUW IRU WKH WD[ FRXUWjV
WKDWWKHWD[FRXUWGLGQRWILQG=DFNjVWZRSDJHWULDOH[KLELW           FRQFOXVLRQ6SHFLILFDOO\=DFNjVDPHQGHGWD[UHWXUQIRU
SHUVXDVLYH  ,Q DGGLWLRQ WKH WD[ FRXUWjV VWDWHPHQW WKDW        UHIOHFWVFDSLWDOORVVHVQRWDQHWRSHUDWLQJORVV7KHWD[UHWXUQ
mFUHGLEOHHYLGHQFHlOHGLWWRFRQFOXGHWKDW=DFNjVVKDUHRIWKH         LQFOXGHV D 6FKHGXOH ' &DSLWDO *DLQV DQG /RVVHV ZKLFK
EULEHVSDLGWR&RRSHUZDVSHUPLWVDQLQIHUHQFHWKDW             VKRZVDQHWORQJWHUPFDSLWDOORVVRIDQGD)RUP
LWIRXQGWKHRWKHUHYLGHQFHUHJDUGLQJWKHDPRXQWRIPRQH\               6DOHVRI%XVLQHVV3URSHUW\LQVXSSRUWRI6FKHGXOH'
SDLGDVEULEHVPRUHEHOLHYDEOHWKDQ=DFNjVWHVWLPRQ\DQGWULDO          ZKLFKUHSRUWVFDSLWDO JDLQV DQGORVVHVIURPWKHVDOHRIKLV
H[KLELW  7KLV RWKHU HYLGHQFH FRQVLVWHG RI  6RYDjV           FRUSRUDWLRQVDQGSDUWQHUVKLSV
WHVWLPRQ\WKDWRQO\ZDVSDLGWR&RRSHUDVEULEHV
WHVWLPRQ\IURP6RYDDQGIURPDQ,56UHYHQXHDJHQWZKR                  8QOLNHFDSLWDOJDLQVDQGORVVHVZKLFKDUHUHDOL]HGZKHQD
KDGH[DPLQHG =DFNjVUHFRUGVLQSUHSDULQJIRUKLVFULPLQDO              WD[SD\HUVHOOVFDSLWDODVVHWVQHWRSHUDWLQJORVVHVH[LVWZKHUH
WULDOWKDWWKH\KDGQHYHUVHHQWKHVHFRQGSDJHRI=DFNjVWULDO          DWD[SD\HUjVH[SHQVHVH[FHHGLWVLQFRPH86&F
H[KLELWDQG=DFNjVDJUHHPHQWZLWKWKHILJXUHLQ           GHILQLQJQHWRSHUDWLQJORVVDVmWKHH[FHVVRIWKHGHGXFWLRQV
DQHDUOLHULQWHUYLHZZLWKD)RUG0RWRU&RPSDQ\LQYHVWLJDWRU            DOORZHGE\WKLVFKDSWHURYHUWKHJURVVLQFRPHl1RWKLQJLQ
DQG  WKH IDFW WKDW )ROOPHU XVHG WKH ILJXUH  LQ     =DFNjVIHGHUDOLQFRPHWD[UHWXUQVXSSRUWVKLVDVVHUWLRQ
DPHQGLQJWKH=DFKRYDHQWLWLHVjVWDWHDQGIHGHUDOLQFRPHWD[             WKDWKHZDVHQWLWOHGWRDQHWRSHUDWLQJORVVIRU=DFN
UHWXUQVWRDFFRXQWIRUWKHEULEHVSDLGWR&RRSHU                     FODLPVWKDWKHLVHQWLWOHGWRVXFKDORVVEHFDXVH2,*UHGXFHG
                                                                        LWVSXUFKDVHSULFHIRU=7'=,6RYDFNDQG&ROWWRUHIOHFWWKH
  7KHWD[FRXUWjVVSHFLILFIDFWXDOILQGLQJVDQGWKHIDFWVWKDW          SUHVHQFHRIFHUWDLQQRWHVUHFHLYDEOHRQWKHVHHQWLWLHVjERRNV
PD\EHLQIHUUHGIURPWKHVHILQGLQJVDUHPRUHWKDQVXIILFLHQW            %XW WKHVH QRWHV UHSUHVHQWHG OHJLWLPDWH ORDQV WKDW KDG EHHQ
WRVXSSRUWWKHFRXUWjV FRQFOXVLRQWKDW=DFNZDVHQWLWOHGWR            PDGH  7KH SURFHHGV WKDW =DFN DQG 6RYD UHFHLYHG E\
UHGXFHKLVXQUHSRUWHGLQFRPHE\RQO\$VDUHVXOW             RSHUDWLQJWKHIDOVHLQYRLFHVFKHPHRQWKHRWKHUKDQGZHUH
ZH FRQFOXGH WKDW WKH WD[ FRXUWjV UXOLQJ ZLWK UHVSHFW WR WKH   ILUVW UHFRUGHG DV H[SHQVHV ODWHU FKDUDFWHUL]HG DV FRUSRUDWH
DPRXQW RI WKH EULEHV SDLG WR &RRSHU ZDV QRW FOHDUO\            ORDQV IRU DFFRXQWLQJ SXUSRVHV DQG ILQDOO\ GHVLJQDWHG DV
HUURQHRXV                                                              GLYLGHQGVWR=DFNDQG6RYD7KHVHDFFRXQWLQJFKDQJHVGLG
                                                                        QRWDOWHUWKHFKDUDFWHURIWKHXQUHSRUWHGLQFRPH,QGHHGWKH