Court of Appeals for the Sixth Circuit
Document Info
DocketNumber: 99-3374
Filed Date: 4/17/2002
Status: Precedential
Modified Date: 3/3/2016
-
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 DS 81,7('67$7(6&28572)$33($/6 )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB 81,7(' 67$7(6 2) $0(5,&$ ; 3ODLQWLII$SSHOOHH 1R Y ! 0217(/ /$9(//( +803+5( V@WRREMHFWWRWKH &URPLW\WRPDNHSD\PHQWDUUDQJHPHQWV GLVWULFWMXGJHPDNLQJWKHGHWHUPLQDWLRQRIGUXJTXDQWLWLHVl IDFHV SODLQ HUURU UHYLHZ RI KLV $SSUHQGL FODLP RQ DSSHDO 2QsXQHDMXU\DFTXLWWHG0RUURZRIDOOFRXQWV 3DJH)GDW7REHVXUHWKHUHFDQEHFDVHVIDOOLQJ +XPSKUH\ KRZHYHU ZDV FRQYLFWHG RI FRQVSLULQJ WR DWWKHPDUJLQVRIWKLVUXOHDQGDVWKHPDMRULW\SRLQWVRXWZH GLVWULEXWH FRFDLQH &RXQWV 2QH DQG 7ZR XQODZIXO UHTXLUHQRSDUWLFXODUmPDJLFZRUGVlWRSUHVHUYHDQ$SSUHQGL SRVVHVVLRQ RI D ILUHDUP E\ D SUHYLRXVO\ FRQYLFWHG IHORQ EDVHGFKDOOHQJH KDV@ D OLPLWHG SRZHU WR H[SUHVVKROGLQJ1RUGRHVLWDIIRUGDQ\RSSRUWXQLW\LQP\ FRUUHFW HUURUV WKDW ZHUH IRUIHLWHG EHFDXVH >WKH\ ZHUH@ QRW YLHZIRUDODWHUSDQHOWRVHL]HXSRQ3DJHjVVLOHQFHDVDEDVLV WLPHO\UDLVHGLQGLVWULFWFRXUWl8QLWHG6WDWHVY2ODQR IRU GUDZLQJ D GLVWLQFWLRQ ZKLFK DV D PDWWHU RI EUXWH IDFW 86,QGHHGZHZLOOQRWLFHVXFKDQHUURU PLJKW QRW HYHQ H[LVW DQG DV D PDWWHU RI MXGLFLDO RQO\LQmH[FHSWLRQDOFLUFXPVWDQFHVlRUZKHQWKHIDLOXUHWRGR LQWHUSUHWDWLRQ PXVW KDYH ODFNHG OHJDO VLJQLILFDQFH WR WKH VRZRXOGSURGXFHDmSODLQPLVFDUULDJHRIMXVWLFHl6HH8QLWHG &RXUWLQWKDWFDVH 6WDWHVY3LFNHWW)GWK&LU :HKDYHGHYHORSHGDIRXUSDUWDQDO\VLVWRUHYLHZIRUIHLWHG FODLPV:HFRQVLGHUILUVWZKHWKHUWKHUHZDVHUURU8QLWHG 6WDWHVY9LQFHQW)GWK&LU,IWKHUH $V QRWHG HDUOLHU WKH GLVWLQFWLRQ 6WUD\KRUQ VHHNV WR GUDZ EHWZHHQ WKH FLUFXPVWDQFHV SUHVHQWHG LQ WKDW FDVH DQG WKH FLUFXPVWDQFHV LQ ZDVHUURUWKHQZHGHWHUPLQHLIWKHHUURUZDVSODLQ,G,IWKH 1HXKDXVVHU GRHV QRW LQ IDFW H[LVW 7KXV ZH DUH LQ WKH VDPH SUHGLFDPHQW HUURUZDVSODLQZHQH[WGHFLGHZKHWKHUWKHHUURUDIIHFWHGWKH LQ RXU SRVW$SSUHQGL VWDQGDUG RI UHYLHZ MXULVSUXGHQFH DV , GLVFXVVHG GHIHQGDQWjV VXEVWDQWLDO ULJKWV ,G )LQDOO\ ZH FRQVLGHU HDUOLHU ZLWK UHJDUG WR RXU GHFLVLRQV DGGUHVVLQJ WKH VXEVWDQWLYH VFRSH RI ZKHWKHUWKHHUURUVHULRXVO\DIIHFWHGWKHmIDLUQHVVLQWHJULW\RU $SSUHQGL QDPHO\ WKDW OLNH FDVHV DUH EHLQJ GHFLGHG GLIIHUHQWO\ ZLWK SXEOLFUHSXWDWLRQlRIWKHMXGLFLDOSURFHHGLQJV,G2QO\XSRQ 6WUD\KRUQ KDYLQJ HIIHFWLYHO\ RYHUUXOHG 1HXKDXVVHU DW OHDVW DQG DUJXDEO\ DOVR 3DJH RQ WKH VWDQGDUG RI UHYLHZ LVVXH $QG DJDLQ DQ\ HIIRUW WR VXFK D ILQGLQJ PD\ ZH WKHQ H[HUFLVH RXU GLVFUHWLRQDU\ LGHQWLI\ D FRKHUHQW VWDWHPHQW RI RXU &LUFXLWjV SUHVHQW UXOH RQ WKLV LVVXH DXWKRULW\WRQRWLFHWKHHUURU6HHLG UXQV DIRXO RI WKH FDVH ODZ ZKHUH PDQ\ RI RXU UHFHQW GHFLVLRQV FRQWLQXH WR FLWH 3DJH DV DXWKRULW\ IRU DSSO\LQJ D SODLQ HUURU VWDQGDUG ZLWKRXW HYHU 3UHVHUYHG REMHFWLRQV WR D GLVWULFW FRXUWj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jVPLVFRQGXFWDWWULDO GHFLVLRQV UHYHDOV WKDW VRPH RI WKH GHIHQGDQWV GLG UDLVH IDFWXDO REMHFWLRQV WR WKH VHQWHQFLQJ MXGJHjV GHWHUPLQDWLRQV DQG \HW ZH VWLOO DSSOLHG SODLQ GHSULYHGKLPRIKLVULJKWDJDLQVWVHOILQFULPLQDWLRQDVZHOODV HUURU UHYLHZ 6HH *UDKDP :/ DW 0F/HPRUH KLVULJKWVWRDIDLUWULDODQXQELDVHGMXU\DQGGXHSURFHVVRI :/ DW )G DW .LQJ :/ 'H3D] ODZ6SHFLILFDOO\+XPSKUH\DOOHJHVWKDWWKH*RYHUQPHQW DW $UEHODH]$JXGHOR :/ DW Q LPSURSHUO\VKLIWHGWKHEXUGHQRISURRIWRKLPE\VXJJHVWLQJ 7KHVH FDVHV OLNH 1HXKDXVVHU DUH LQ GLUHFW FRQIOLFW ZLWK jV UXOH 6WUD\KRUQ WRWKHMXU\WKDW+XPSKUH\jVXQH[SODLQHGZHDOWKGHPRQVWUDWHG RI GH QRYR UHYLHZ $JDLQ , ZRXOG VXJJHVW WKDW WKH 6XSUHPH &RXUW KLVSDUWLFLSDWLRQLQQDUFRWLFVDQGPRQH\ODXQGHULQJDFWLYLWLHV WKURXJK LWV GHFLVLRQ LQ VKRXOG VHUYH DV WKH mWLHEUHDNHUl LQ sRKQVRQ UHVROYLQJ WKLV FRQIOLFW 8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\ 1H[W HYHQ DVVXPLQJ WKH IDFWXDO GLVWLQFWLRQV SRVLWHG LQ WKDWWKH*RYHUQPHQWLPSURSHUO\XVHG+XPSKUH\jVLQFRPH 6WUD\KRUQ DFWXDOO\ H[LVWHG , IDLO WR VHH KRZ D IDFWEDVHG WD[UHWXUQVDQGWKHWHVWLPRQ\RIDQ,QWHUQDO5HYHQXH6HUYLFH REMHFWLRQWRDVHQWHQFLQJMXGJHjVGUXJTXDQWLW\FRPSXWDWLRQ m,56lDJHQWWRVXJJHVWWKDW+XPSKUH\jVFRPPLVVLRQRIDQ FRXOGSURSHUO\EHFRQVWUXHGDVSUHVHUYLQJWKHIDUGLIIHUHQWVRUW XQLQGLFWHGFULPHWD[HYDVLRQZDVHYLGHQFHRIJXLOWWKDW RI FKDOOHQJH WKDW DULVHV IURP $SSUHQGL n QDPHO\ D OHJDO WKHSURVHFXWRULPSURSHUO\YRXFKHGIRUKLVZLWQHVVDQGVWDWHG FKDOOHQJHLPSOLFDWLQJWKHGLYLVLRQRIODERUEHWZHHQMXGJHDQG KLV SHUVRQDO EHOLHI LQ +XPSKUH\jV JXLOW WKDW WKH MXU\ DV ZHOO DV WKH VWULQJHQW mEH\RQG D UHDVRQDEOH GRXEWl *RYHUQPHQWLPSURSHUO\H[HUFLVHGLWVSHUHPSWRU\FKDOOHQJHV EXUGHQRISURRIDWWHQGDQWWRDMXU\VXEPLVVLEOHLVVXH7KH WRH[FOXGH$IULFDQ$PHULFDQVIURP WKHMXU\WKDWWKH UHFRUG LQ WKLV FDVH DPSO\ GHPRQVWUDWHV WKH GLVWLQFWLRQ *RYHUQPHQW DUJXHG IDFWV QRW LQ HYLGHQFH WKDW WKH EHWZHHQIDFWXDODQG$SSUHQGLEDVHGREMHFWLRQVWRD'LVWULFW *RYHUQPHQWFRQIXVHGWKHMXU\E\PLVVWDWLQJWKHGHILQLWLRQRI &RXUWjVGHWHUPLQDWLRQRIGUXJTXDQWLWLHVn'HIHQGDQWKHUH D mEX\HUVHOOHU UHODWLRQVKLSl WKDW WKH *RYHUQPHQW TXLWH SODLQO\ DVVHUWHG WKH IRUPHU W\SH RI REMHFWLRQ DW LQWHQWLRQDOO\ VXEPLWWHG LUUHOHYDQW HYLGHQFH WR WKH MXU\ DQG VHQWHQFLQJEXWH[SUHVVO\GLVDYRZHGDQ\FODLPRIWKHODWWHU SUHYHQWHG D IDLU UHEXWWDO E\ +XPSKUH\ RI WKDW HYLGHQFH VRUWDQGLQVWHDGDFNQRZOHGJHGWKH'LVWULFW&RXUWjVDXWKRULW\ WKDWWKH*RYHUQPHQWLPSURSHUO\DUJXHGWKDW+XPSKUH\jV WR PDNH VXFK D GHWHUPLQDWLRQ E\ D SUHSRQGHUDQFH RI WKH FRXQVHO NQHZ WKDW KLV FOLHQW ZDV JXLOW\ DQG WKDW WKH HYLGHQFH ,W ZRXOG EH VWUDQJH LQGHHG LI D GHIHQGDQWjV FXPXODWLYHLPSDFWRIHDFKRIWKHDIRUHPHQWLRQHGLQVWDQFHVRI FKDOOHQJH WR D 'LVWULFW &RXUWjV IDFWXDO ILQGLQJV ZKLFK ZH PLVFRQGXFWLVVXIILFLHQWWRZDUUDQWUHYHUVDO(DFKDUJXPHQW UHYLHZ IRU FOHDU HUURU VHH 1HXKDXVVHU )G DW ZLOOEHDGGUHVVHGLQWXUQ$OOXOWLPDWHO\IDLO VRPHKRZ WULJJHUHG GH QRYR UHYLHZ RI D GLIIHUHQW VRUW RI FKDOOHQJH WKDW ZDV QRW SUHVHQWHG WR WKH VHQWHQFLQJ FRXUW D8QH[SODLQHG:HDOWK $QGDJDLQ6WUD\KRUQVWDQGVDORQHLQLWVIDLOXUHWRREVHUYH WKLV GLVWLQFWLRQ VHYHUDO RWKHU &LUFXLWV LQ FRQWUDVW KDYH +XPSKUH\VXEPLWVWKDWWKH*RYHUQPHQWjVFDVHDJDLQVWKLP H[SUHVVO\KHOGWKDWWKHSODLQHUURUVWDQGDUGDSSOLHVHYHQZKHUH ZDV SUHGLFDWHG RQ WKH VHOIVHUYLQJ WHVWLPRQ\ RI (DWRQ DQG WKHUH ZHUH IDFWXDO REMHFWLRQV WR WKH VHQWHQFLQJ FRXUWjV &URPLW\ERWKDGPLWWHGGUXJGHDOHUVDQGRQWHVWLPRQ\WKDW GHWHUPLQDWLRQRIGUXJTXDQWLWLHV6HHHJ)LHOGV)G LQVLQXDWHGD\RXQJ$IULFDQ$PHULFDQPDOHLVLQFDSDEOHRI DW0RMLFD%DH])GDW Q1RUGE\ RSHUDWLQJDVXFFHVVIXOEXVLQHVVXQOHVVKHLVHQJDJHGLQLOOHJDO )GDW QDUFRWLFV DFWLYLW\ 7R GULYH KRPH WKLV SRLQW +XPSKUH\ FRQWHQGVWKDWWKH*RYHUQPHQWUHOLHGLPSURSHUO\RQHYLGHQFH ,QGHHG,UHDG3DJHDVRXU&LUFXLWjVGHILQLWLYHVWDWHPHQWRQ RI+XPSKUH\jVXQH[SODLQHGZHDOWKLQFRQWUDYHQWLRQRIKLV WKHVXEMHFWOHDYLQJQRURRPIRUWKHGLVWLQFWLRQWKDW6WUD\KRUQ )LIWK$PHQGPHQWULJKWDJDLQVWVHOILQFULPLQDWLRQWRVXJJHVW VHHNVWRGUDZ3DJHGRHVQRWVD\PXFKRQWKHVXEMHFWnZH WKDWEHFDXVH+XPSKUH\KDGIDLOHGWRLGHQWLI\WKHVRXUFHRIKLV VHOGRP GR ZKHQ VHWWLQJ IRUWK WKH DSSOLFDEOH VWDQGDUG RI ZHDOWK WKHQ KH QHFHVVDULO\ PXVW KDYH EHHQ JXLOW\ RI GUXJ UHYLHZnEXWZKDWLWVD\VLVSODLQHQRXJKQDPHO\WKDWD WUDIILFNLQJ +XPSKUH\PDLQWDLQVWKDWLQPDNLQJVXFKDQDUJXPHQWWKH *RYHUQPHQWLPSURSHUO\VKLIWHGLWVEXUGHQRISURRIWRKLP WKH GHIHQGDQW GLG SUHVHQW IDFWXDO FKDOOHQJHV WR WKH 'LVWULFW sXGJHjV GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHV ERWK LQ ZULWWHQ REMHFWLRQV WR WKH SUHVHQWHQFH UHSRUW DQG DW KLV VHQWHQFLQJ KHDULQJ $V LQGLFDWHG EHORZ LI WKLV SRUWLRQ RI WKH UHFRUG ZDV QRW PHQWLRQHG LQ WKH SDQHOjV RSLQLRQ LW ZDV 7KH *RYHUQPHQWjV DOOHJHG XVH RI LWV SHUHPSWRU\ FKDOOHQJHV WR EHFDXVH ZH GHHPHG LW LUUHOHYDQW WR HLWKHU WKH LVVXHV EHIRUH WKH &RXUW RU H[FOXGH $IULFDQ$PHULFDQV IURP WKH MXU\ DQG WKH GLVWULFW FRXUWjV IDLOXUH WKH VWDQGDUG RI UHYLHZ WR EH DSSOLHG LQ UHVROYLQJ WKRVH LVVXHV WR VR ILQG DUH DGGUHVVHG LQ 3DUW ,,,%E 8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\ ZKLFKZDVHVSHFLDOO\SUHMXGLFLDOLQOLJKWRIWKHIDFWWKDWWKH GLVWULFWFRXUWjVIDFWXDOILQGLQJZLWKUHVSHFWWRGUXJTXDQWLW\l RQO\ HYLGHQFH OLQNLQJ KLP WR LOOHJDO GUXJ DFWLYLW\ ZDV WKH 6WUD\KRUQ)GDW7KHSDQHOFRQWUDVWHGWKLVZLWK WHVWLPRQ\RI(DWRQDQG&URPLW\,QIDFW+XPSKUH\QRWHV WKH VLWXDWLRQ SUHVHQWHG LQ 3DJH ZKHUH WKH GHIHQGDQWV WKH*RYHUQPHQWQHYHUREVHUYHGGUXJVLQKLVSRVVHVVLRQRUKLV SXUSRUWHGO\mIDLOHGWRREMHFWZKHQ>WKH@GLVWULFWFRXUWPDGHLWV UHVLGHQFHV QHYHU GLVFRYHUHG ODUJH VXPV RI FDVK LQ KLV GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHVl 6WUD\KRUQ )G DW SRVVHVVLRQQHYHUZLWQHVVHGKLPHQJDJHLQGUXJDFWLYLW\DQG QHYHUDWWHPSWHGWRFRRUGLQDWHDFRQWUROOHGGUXJEX\IURPKLP +XPSKUH\REMHFWHGWRWKHDGPLVVLRQRIWD[HYLGHQFHs$DW 7KLVDWWHPSWHGGLVWLQFWLRQKRZHYHUIDLOVRQDWOHDVWWZR WKHUHIRUHZHUHYLHZWKHGLVWULFWFRXUWjVGHFLVLRQIRUDQ VFRUHV)LUVWDVDIDFWXDOPDWWHUDQGDVERWKWKHPDMRULW\DQG DEXVHRIGLVFUHWLRQ , KDYH SRLQWHG RXW LQ RXU UHVSHFWLYH RSLQLRQV 3DJH VD\V DOPRVW QRWKLQJ DW DOO DERXW ZKDW REMHFWLRQV LI DQ\ ZHUH ,Q 8QLWHG 6WDWHV Y &DUWHU ZH UHMHFWHG DV LUUHOHYDQW WKH SUHVHQWHGWRWKH'LVWULFW&RXUWLQWKDWFDVH7KHORQHEUHDN *RYHUQPHQWjVXVHRIILQDQFLDOLQIRUPDWLRQLQLWVSURVHFXWLRQ IURP WKLV VLOHQFH DV , QRWHG HDUOLHU LV WKH &RXUWjV SRLQWHG RIDGHIHQGDQWIRUYLRODWLRQRIIHGHUDOQDUFRWLFVODZV REVHUYDWLRQWKDWWKHGHIHQGDQWVmGLGQRWREMHFWWRWKHGLVWULFW )GWK&LU:HQHYHUWKHOHVVREVHUYHGWKDW FRXUWPDNLQJWKHGHWHUPLQDWLRQRIGUXJTXDQWLWLHVl3DJH HYLGHQFH RI mWKH ODFN RI D IHGHUDO WD[ ILOLQJ RU )GDW)RUDOOZHNQRZWKHQWKHGHIHQGDQWVLQ XQGHUUHSRUWLQJ LQ FRPELQDWLRQ ZLWK SURRI RI YDOXDEOH 3DJHUDLVHGSUHFLVHO\WKHVDPHVRUWVRIIDFWXDOFKDOOHQJHVWR WDQJLEOH SRVVHVVLRQV RU H[WUDYDJDQW SXUFKDVHV FUHDWHV WKH WKH 'LVWULFW &RXUWjV GUXJ TXDQWLW\ GHWHUPLQDWLRQV DV ZHUH LQIHUHQFH WKDW WKH GHIHQGDQW GRHV QRW SRVVHVV D OHJLWLPDWH PDGHLQ6WUD\KRUQ VRXUFH RI LQFRPH WR VXSSRUW KLV DIIOXHQW OLIHVW\OH DQG WKHUHIRUH WKH LQFRPH PXVW RULJLQDWH IURP QDUFRWLFV RSHUDWLRQVlLGDWDQGWKDWmWKHUHDUHFDVHVWKDWDOORZWKH 6WUD\KRUQ FRPPLWV WKH VDPH HUURU ZLWK UHVSHFW WR RXU GHFLVLRQ LQ JRYHUQPHQWWRXVHDGHIHQGDQWjVWD[UHWXUQVDQGHYLGHQFHRI 1HXKDXVVHU YLHZLQJ WKDW FDVH OLNH 3DJH DV GLVWLQJXLVKDEOH RQ WKH KLV VSHQGLQJ KDELWV LQ RUGHU WR REWDLQ D FRQYLFWLRQ LQ D JURXQG WKDW WKH GHIHQGDQW SXUSRUWHGO\ mIDLOHG WR REMHFW ZKHQ >WKH@ GLVWULFW QDUFRWLFVFDVHl,G FRXUW PDGH LWV GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHVl 6WUD\KRUQ )G DW FLWLQJ 1HXKDXVVHU )G DW ,Q IDFW 1HXKDXVVHU VWDWHV DW %HIRUHXVLVVXFKDFDVH7KHUHZDVXQUHEXWWHGWHVWLPRQ\ WKH RXWVHW WKDW WKH GHIHQGDQW ZDV FKDOOHQJLQJ KLV VHQWHQFH DV mXQODZIXOO\ EDVHG LQ SDUW RQ WKH WULDO FRXUWjV GHWHUPLQDWLRQV RI GUXJ W\SHV DQG DWWULDOWKDW+XPSKUH\jVWRWDOH[SHQGLWXUHVIRUDQG TXDQWLWLHV DW VHQWHQFLQJ XQGHU WKH µSUHSRQGHUDQFH RI WKH HYLGHQFHj DPRXQWHGWRGHVSLWHWKHIDFWWKDWKHKDGEHHQ VWDQGDUGl DQG WKDW EHFDXVH WKH GHIHQGDQW mIDLOHG WR UDLVH WKLV REMHFWLRQ mXQHPSOR\HGWKHSDVWHLJKWPRQWKVlGXHWRDGLVDELOLW\,W LQ WKH FRXUW EHORZ ZH UHYLHZ KLV VHQWHQFH RQO\ IRU SODLQ HUURUl )G ZDV ZHOO ZLWKLQ WKH SUHURJDWLYH RI WKH *RYHUQPHQW WR DW HPSKDVLV DGGHG 7KHQ LQ WKH SDVVDJH FLWHG LQ 6WUD\KRUQ HQFRXUDJHWKHMXU\WRFRQVLGHUKRZ+XPSKUH\PDLQWDLQHGWKLV 1HXKDXVVHU VXUYH\V WKH GHFLVLRQ LQ 3DJH DQG VWDWHV WKDW mLQ 3DJH DV KHUH WKH GHIHQGDQWV IDLOHG WR REMHFW ZKHQ WKH 'LVWULFW &RXUW LQLWLDOO\ PDGH DIIOXHQWOLIHVW\OHSDUWLFXODUO\LQOLJKWRIWKHGHFODUDWLRQVRIWKH LWV GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHVl 1HXKDXVVHU )G DW )URP GLVWULFWFRXUWDQGWKH*RYHUQPHQWWKDWWKHEXUGHQRISURRIDW WKH FRQWH[W DV ZHOO DV WKH UHIHUHQFH WR 3DJH LW LV HYLGHQW WKDW1HXKDXVVHU DOOWLPHVUHPDLQHGZLWKWKH*RYHUQPHQW7KH*RYHUQPHQWjV LV VSHDNLQJ RI D SDUWLFXODU mIDLO>XUH@ WR REMHFWl n QDPHO\ WKH ODFN RI DQ\ FORVLQJDQGUHEXWWDODUJXPHQWVZHUHHQWLUHO\SURSHUFRPPHQWV REMHFWLRQ WKDW GUXJ W\SH DQG TXDQWLW\ PXVW EH GHWHUPLQHG E\ D MXU\ EH\RQG RQWKHTXDOLW\DQGFUHGLELOLW\RI+XPSKUH\jVHYLGHQFH D UHDVRQDEOH GRXEW DQG QRW E\ D MXGJH E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH 1HXKDXVVHU OLNH 3DJH LV XWWHUO\ VLOHQW DV WR ZKHWKHU DQ\ RWKHU VRUWV RI REMHFWLRQV ZHUH UDLVHG DW WULDO RU VHQWHQFLQJ 3DUHQWKHWLFDOO\ DV D PHPEHU RI WKH SDQHO DQG WKH ZULWLQJ sXGJH LQ 1HXKDXVVHU , DP DEOH WR JR EDFN WR WKH UHFRUG DQG FRQILUP WKDW LQ IDFW 8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\ WK &LU /OR\G KRZHYHU DSSOLHG WKH GH QRYR E7D[(YLGHQFH VWDQGDUGWRIDFLDODWWDFNVRQWKHFRQVWLWXWLRQDOLW\RIDIHGHUDO VWDWXWHnVSHFLILFDOO\HTXDOSURWHFWLRQDQGVXEVWDQWLYHGXH +XPSKUH\DOVRFRQWHQGVWKDWWKH*RYHUQPHQWLPSURSHUO\ SURFHVV FKDOOHQJHV WR WKH VWDWXWRU\ WR VHQWHQFLQJ XVHGKLVLQFRPHWD[UHWXUQVDQGWKHWHVWLPRQ\RI,56$JHQW GLVSDULW\ XQGHU E IRU GUXJ RIIHQVHV LQYROYLQJ FUDFN *DU\5DVROHWWLWRRXWOLQH+XPSKUH\jVVSHQGLQJKDELWVRYHU YHUVXVSRZGHUFRFDLQH6XFKTXHVWLRQVRIODZLPSOLFDWLQJ WKHHLJKWHHQPRQWKVWKDWKHZDVXQGHULQYHVWLJDWLRQ%HFDXVH WKHVFRSHRIFRQJUHVVLRQDODXWKRULW\XQGHUWKH&RQVWLWXWLRQ LWZDVXQGLVSXWHGWKDW+XPSKUH\KDGOHJLWLPDWHVRXUFHVRI FOHDUO\ZDUUDQWGHQRYRUHYLHZ LQFRPHIURPUHQWDOSURSHUW\DQGWHHVKLUWVDOHV+XPSKUH\ DUJXHVWKDWWKH*RYHUQPHQWjVLQWURGXFWLRQRIWD[UHFRUGVDQG ,Q FRQWUDVW 'HIHQGDQW KHUH KDV QRW PRXQWHG D 5DVROHWWLjVWHVWLPRQ\SUHMXGLFHGWKHMXU\DJDLQVWKLPDQGZDV FRQVWLWXWLRQDO DWWDFN XSRQ D IHGHUDO VWDWXWH EXW LQVWHDG LQFOHDUGLVUHJDUGRIRXUGHFLVLRQLQ&DUWHUZKLFKJHQHUDOO\ FKDOOHQJHVWKH'LVWULFW&RXUWj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jVUHIXVDOWRRUGHUWKHIRUIHLWXUHRIWKHYDVW s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jV DUJXPHQW LV IRUHFORVHG E\ RXU GHFLVLRQ LQ UHSRUWl DQG KH mPDGH LW ZHOO NQRZQ WKDW KH GLVSXWHG WKH 8QLWHG 6WDWHV Y &RSHODQG )G WK &LU 7KHUH D GHIHQGDQW FKDUJHG ZLWK YLRODWLRQ RI IHGHUDO GUXJ FRQVSLUDF\ ODZV UDLVHG D UHOHYDQF\ FKDOOHQJH WR WKH 6WUD\KRUQ ORRNV WR )ORZDO DQG 5DPLUH] IRU JXLGDQFH LQ 7KRXJK *RYHUQPHQWjVLQWURGXFWLRQRIFHUWDLQVWRUHUHFHLSWV,G DW FRQVWUXLQJ $SSUHQGL LW FDQQRW UHO\ XSRQ WKHVH GHFLVLRQV DV DXWKRULW\ IRU 7KRVH UHFHLSWV GHPRQVWUDWHG WKDW WKH GHIHQGDQW KDG GH QRYR UHYLHZ RI $SSUHQGL FODLPV IRU WKH VLPSOH UHDVRQ WKDW )ORZDO DQG SXUFKDVHG LQ VWHUHR HTXLSPHQW RYHU D WZHQW\VL[ 5DPLUH] DUH FRPSOHWHO\ VLOHQW DV WR WKH VWDQGDUG RI UHYLHZ IRU VXFK FODLPV 8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\ PRQWKSHULRGGXULQJZKLFKWLPHKH UHSRUWHGQRVRXUFHRI TXHVWLRQHGWKH'LVWULFWsXGJHjVDXWKRULW\WRGHWHUPLQHGUXJ LQFRPH,G,QILQGLQJWKHUHFHLSWVUHOHYDQWDQGDIILUPLQJWKH TXDQWLWLHVIRUSXUSRVHVRIVHQWHQFLQJDQGPDGHRQO\DVLQJOH GLVWULFWFRXUWjVDGPLVVLRQRIWKHHYLGHQFHZHIRXQG&DUWHU UHIHUHQFHWRDmKLJKHUVWDQGDUGls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nDQGZKLFKWKHPDMRULW\GRHVQRWnIHDWXUH H[SUHVVVWDWHPHQWVRI'HIHQGDQWjVSRVLWLRQVQDPHO\WKDWLW 7KH IDFWV RI WKH LQVWDQW FDVH DUH DQDORJRXV WR WKRVH RI ZDV WKH GXW\ RI WKH 'LVWULFW &RXUW WR GHWHUPLQH WKH GUXJ &RSHODQG+XPSKUH\SXUFKDVHGLQH[FHVVRIZRUWK TXDQWLWLHVIRUZKLFKKHZDVWREHKHOGUHVSRQVLEOHDQGWKDWLW RIJRRGVRYHUDWZR\HDUSHULRGZKHQKHZDVXQHPSOR\HGIDU ZDVWKH*RYHUQPHQWjVEXUGHQWRHVWDEOLVKWKHVHTXDQWLWLHVE\ PRUHWKDQWKHDWLVVXHLQ&RSHODQG)XUWKHUPRUHWKH DSUHSRQGHUDQFHRIWKHHYLGHQFH UHFHLSWVUHOLHGXSRQE\WKH*RYHUQPHQWLQWKLVFDVHUHIHUHQFHG IUXLWVRIWKHDOOHJHGFRQVSLUDF\(YHQZHUHZHLQFOLQHGWR $OWHUQDWLYHO\WKHPDMRULW\FLWHV6WUD\KRUQ)GDW ILQG+XPSKUH\jVFDVHIDFWXDOO\VLPLODUWR&DUWHUWKHGLVSXWHG IRU WKH SURSRVLWLRQ WKDW DQ REMHFWLRQ DV WR GUXJ TXDQWLW\ DW UHFHLSWVDUHHYLGHQFHRIWDQJLEOHSRVVHVVLRQVGHPRQVWUDWLQJ VHQWHQFLQJ n ZKLFK REMHFWLRQ 'HIHQGDQW SODLQO\ GLG UDLVH mH[WUDYDJDQW VSHQGLQJl IRU ZKLFK ILQDQFLDO LQIRUPDWLRQ KHUHnVXIILFHVWRSUHVHUYHGHQRYRUHYLHZRIDQ$SSUHQGL JHQHUDOO\PD\EHLQWURGXFHG&DUWHU)GDW:H FODLPRQDSSHDO6WUD\KRUQLQWXUQUHVWVLWVGHQRYRUHYLHZ DUHIXUWKHUSHUVXDGHGWKDWWKHGLVWULFWFRXUWjVLQVWUXFWLRQRIWKH RQWKHDXWKRULW\RI8QLWHG6WDWHVY/OR\G)G MXU\WRZKLFK+XPSKUH\UDLVHGQRREMHFWLRQFXUHGDQ\HUURU 6HH s$ DW m7KH GHIHQGDQW LV QRW RQ WULDO IRU QRW UHSRUWLQJ LQFRPH RU DQ\ RWKHU FULPHV QRW FKDUJHG LQ WKH LQGLFWPHQWl F9RXFKLQJ 7R WKH PDMRULW\jV VXJJHVWLRQ WKDW LW ZRXOG EH XQIDLU WR SHQDOL]H D GHIHQGDQW IRU IDLOLQJ WR DQWLFLSDWH D FKDQJH LQ WKH ODZ WKURXJK D QRW\HW +XPSKUH\DUJXHVWKDWWKH*RYHUQPHQWLPSURSHUO\VWDWHGLWV LVVXHG 6XSUHPH &RXUW UXOLQJ , FDQ RQO\ VD\ WKDW WKH UHTXLUHPHQW RI SHUVRQDOEHOLHILQ(DWRQjVFUHGLELOLW\6SHFLILFDOO\+XPSKUH\ FRQWHPSRUDQHRXV REMHFWLRQ VHH )HG 5 &ULP 3 DQG WKH OLPLWHG SRLQWV WR WKH *RYHUQPHQWjV FORVLQJ DUJXPHQW ZKHQ LW H[FHSWLRQ LQ FDVHV RI SODLQ HUURU VHH )HG 5 &ULP 3 E UHIOHFW mD REVHUYHG FDUHIXO EDODQFLQJ RI RXU QHHG WR HQFRXUDJH DOO WULDO SDUWLFLSDQWV WR VHHN D IDLU DQG DFFXUDWH WULDO WKH ILUVW WLPH DURXQG DJDLQVW RXU LQVLVWHQFH WKDW REYLRXV LQMXVWLFH EH SURPSWO\ UHGUHVVHGl 8QLWHG 6WDWHV Y )UDG\ 1RZMXVWUHDOTXLFNO\ @ DW FRQVXPSWLRQRIRUJUDPVRIFRFDLQHFRQVWLWXWHVSHUVRQDO VHQWHQFLQJWKDW'HIHQGDQWEHVHQWHQFHGWRDPDQGDWRU\ XVH PLQLPXP WHUP RI ILYH \HDUV LPSULVRQPHQW IRU KLV VDOH RI EHWZHHQJUDPVDQGILYHNLORJUDPVRISRZGHUFRFDLQHl +XPSKUH\jVDUJXPHQWZKLFKZHUHYLHZIRUSODLQHUURULV LG DW HPSKDVLV DGGHG DQG LL WKDW mLW LV WKH ZLWKRXWPHULW)LUVWWKHIDFWVUHOLHGXSRQE\WKH*RYHUQPHQW JRYHUQPHQWjVEXUGHQWRSURYHE\DSUHSRQGHUDQFHRIWKH ZHUHDGGXFHGE\0RUURZjVFRXQVHOLQKLVFURVVH[DPLQDWLRQ HYLGHQFH WKH TXDQWLW\ RI QDUFRWLFV IRU ZKLFK D GHIHQGDQW RI(DWRQ6HHs$DW(DWRQjVWHVWLPRQ\ ZDV WKDWWKH VKRXOGEHKHOGUHVSRQVLEOHlLGDWHPSKDVLVDGGHG VPDOOHVWDPRXQWVKHHYHUVROGZHUHmWZRRUWKUHHWHQWKVRID /LNHZLVHDWVHQWHQFLQJGHIHQVHFRXQVHOmDVN>HG@WKH&RXUWl JUDPlDQGWKDWSHRSOHEX\WHQWKVRIDJUDPRIGUXJVIRUWKHLU WRILQGWKDW'HIHQGDQWjVmWRWDOUHOHYDQWFRQGXFWLVOHVVWKDQ RZQSHUVRQDOXVH6HFRQGWKH*RYHUQPHQWjVDUJXPHQWZDV ILYHNLORVlUHVXOWLQJLQDmWHQ\HDUPDQGDWRU\VHQWHQFHlLG D GLUHFW UHVSRQVH WR 0RUURZjV VXJJHVWLRQ WKDW WKH GUXJ DW DQG WKHQ VWDWHG ZLWK UHJDUG WR WKH LQIRUPDQW TXDQWLWLHVGLVWULEXWHGE\(DWRQWRKLPZHUHIRUSHUVRQDOXVH WHVWLPRQ\LQGLFDWLQJJUHDWHUGUXJTXDQWLWLHV )LQDOO\DV+XPSKUH\KLPVHOIFRQFHGHVWKH*RYHUQPHQWjV DUJXPHQWZDVGLUHFWHGDW0RUURZRQO\ >7@KLV &RXUW DV WKH &RXUW NQRZV KDV LWV RZQ LQGHSHQGHQWGLVFUHWLRQWRGHFLGHRQFHDJDLQORZHU:H Hm%X\HU6HOOHUl5HODWLRQVKLS DJUHHZLWKWKDWSUHSRQGHUDQFHRIWKHHYLGHQFHEXWLWjV VWLOO n SUHSRQGHUDQFH RI HYLGHQFH PHDQV WKH 'XULQJ LWV FORVLQJ DUJXPHQW WKH *RYHUQPHQW VXJJHVWHG *RYHUQPHQWjVJRWWRVKRZPRUHOLNHO\WKDQQRW,Wj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jV DQDORJ\ VHQWHQFH RI \HDUV WR OLIH LPSULVRQPHQW XQGHU E% 'HIHQGDQW DFNQRZOHGJHG WKLV LQ KLV ZULWWHQ REMHFWLRQV WR WKH SUHVHQWHQFH PLVVWDWHGWKHODZVHH8QLIRUP&RPPHUFLDO&RGH UHSRUW DQG DJDLQ DW VHQWHQFLQJ 6HH LG DW mµ%X\LQJj PD\ EH FDVK RU RQ VHFXUHG RU XQVHFXUHG 8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\ FUHGLWlDQGUHGXFHGWKHMXU\jVUHVSRQVLELOLW\WRRQHVWULFWO\ WKHLQVWUXFWLRQVWRWKHMXU\VLQFHLWGLFWDWHVLQFDVHVLQYROYLQJ RI GHWHUPLQLQJ ZKHWKHU +XPSKUH\ HQJDJHG LQ D GUXJ GUXJRIIHQVHVWKDWGUXJW\SHDQGTXDQWLW\GHWHUPLQDWLRQVWKDW WUDQVDFWLRQ IRU ZKLFK D SXUFKDVH ZDV PDGH RQ FUHGLW ,Q UHVXOWLQDVHQWHQFHEH\RQGWKHGHIDXOWVWDWXWRU\PD[LPXP VXSSRUWRIWKLVDUJXPHQWKHUHOLHVRQ8QLWHG6WDWHVY:DUG PXVW EH PDGH E\ D MXU\ XQGHU WKH mEH\RQG D UHDVRQDEOH LQ ZKLFK ZH GHFODUHG WKDW mIURQWLQJ FRFDLQH ZLWKRXW GRXEWlVWDQGDUGsRKQVRQOLNHZLVHLQYROYHGDQLVVXHWKDW DGGLWLRQDO HOHPHQWV RI FRQWURO LV QRWKLQJ PRUH WKDQ D ZDVGHFLGHGE\WKHWULDOMXGJHEXWVKRXOGKDYHEHHQVXEPLWWHG YDULDWLRQRQWKHWUDGLWLRQDOEX\HUVHOOHUUHODWLRQVKLSl)G WR D MXU\ )LQDOO\ LQ sRKQVRQ DV LQ 3DJH DQG KHUH QR WK &LU +H QRWHV WKDW EHFDXVH WKH REMHFWLRQZDVUDLVHGDWWULDOWRWKH'LVWULFWsXGJHPDNLQJWKH *RYHUQPHQWIDLOHGWRGHPRQVWUDWHWKDW+XPSKUH\H[HUFLVHG GHWHUPLQDWLRQLQTXHVWLRQSUHVXPDEO\EHFDXVHWKLVSUDFWLFH DQ\ OHYHO RI FRQWURO RYHU WKH DOOHJHG FRQVSLUDF\ KDG DQ\ ZDVLQDFFRUGDQFHZLWKWKHVHWWOHGODZDWWKHWLPH&I.LQJ LQWHUHVWLQWKHGUXJRSHUDWLRQRUGLVSOD\HGDQ\FRQFHUQIRU )G DW Q QRWLQJ WKDW WKLV &LUFXLW KDV UHYLHZHG ZKDWKDSSHQHGWRWKHGUXJVDIWHUWKHLUVDOHDQGGLVWULEXWLRQLWV $SSUHQGLEDVHG FKDOOHQJHV IRU SODLQ HUURU mHYHQ ZKHQ SURRIPHUHO\VHWIRUWKDEX\HUVHOOHUUHODWLRQVKLSDQGQRWD $SSUHQGLKDGQRWEHHQGHFLGHGDWWKHWLPHDGHIHQGDQWZDV GUXJFRQVSLUDF\ WULHGDQGVHQWHQFHGl ,QUHMHFWLQJ+XPSKUH\jVDUJXPHQWVZHQRWHILUVWWKDWKLV ,Q WKH SUHVHQW FDVH GXULQJ WKH SURFHHGLQJV LQ WKH FRXUW UHOLDQFHRQWKH8QLIRUP&RPPHUFLDO&RGHLVPLVSODFHGDVLW EHORZ'HIHQGDQWXQGHQLDEO\UDLVHGIDFWXDOFKDOOHQJHVWRWKH KDV QR DSSOLFDWLRQ LQ WKLV FULPLQDO QDUFRWLFV FDVH GUXJTXDQWLW\UHFRPPHQGDWLRQVVHWIRUWKLQWKHSUHVHQWHQFH +XPSKUH\jVDUJXPHQWWKDWSXUFKDVLQJRQFUHGLWFRQVWLWXWHV LQYHVWLJDWLRQUHSRUWDQGWKHQUHDVVHUWHGWKHVHFKDOOHQJHVDW EX\LQJZLWKLQWKHPHDQLQJRIDEX\HUVHOOHUUHODWLRQVKLSLV WKH VHQWHQFLQJ KHDULQJ 7KHVH FKDOOHQJHV UHVWHG RQ WKH OLNHZLVHZLWKRXWPHULW&I8QLWHG6WDWHVY1HVELWW)G FRQWHQWLRQWKDWWKH*RYHUQPHQWjVSURRIVDVWRGUXJTXDQWLWLHV WK&LUm:HILQGWKDWWKHWUXVWLQYROYHGLQ UHOLHG KHDYLO\ RQ WKH XQFRUURERUDWHG WHVWLPRQ\ RI WZR WKLVNLQGRIGHOD\HGSD\PHQW>RUFUHGLW@DUUDQJHPHQWVXJJHVWV FRRSHUDWLQJZLWQHVVHVZKRVHFUHGLELOLW\ZDVRSHQWRTXHVWLRQ PRUHWKDQDEX\HUVHOOHUUHODWLRQVKLSEHWZHHQ>WKHSDUWLHV@l 6HH s$ DW )RU H[DPSOH LQ KLV ZULWWHQ )LQDOO\ ZH QRWH WKDW :DUG RQ ZKLFK +XPSKUH\ UHOLHV LV REMHFWLRQVWRWKHSUHVHQWHQFHUHSRUW'HIHQGDQWFKDUDFWHUL]HG IDFWXDOO\GLVVLPLODUIURPWKHLQVWDQWFDVHDVQRFRQWLQXLQJ WKHVHZLWQHVVHVDVmKLJKO\PRWLYDWHGLQIRUPDQWVlZLWKRQH FULPLQDOHQWHUSULVHLVDWLVVXHKHUH EHLQJmDQDGPLWWHGGUXJDGGLFWlDQGWKHRWKHUmDQDGPLWWHG OLDUZLWKDSHUVRQDOYHQGHWWDDJDLQVWl'HIHQGDQW,GDW I,UUHOHYDQW(YLGHQFH ,Q OLJKW RI WKH VLJQLILFDQW VHQWHQFLQJ FRQVHTXHQFHV LI WKH WHVWLPRQ\RIWKHVHZLWQHVVHVZHUHFUHGLWHG'HIHQGDQWDQGKLV 7KH*RYHUQPHQWDUJXHGDWWULDOWKDWZKHQODZHQIRUFHPHQW FRXQVHOXUJHGWKH'LVWULFW&RXUWWRmH[HUFLVHVRPHFDXWLRQl RIILFLDOV VHDUFKHG +XPSKUH\jV KRPH WKH\ GLVFRYHUHG D LQDVVHVVLQJWKLVWHVWLPRQ\,GDW ZLUHWDSDIILGDYLWXQUHODWHGWRWKHFRQGXFWFKDUJHGLQWKLVFDVH 7KHUHDIWHULWVXJJHVWHGWKDW+XPSKUH\jVSRVVHVVLRQRIWKLV DIILGDYLW ZDV HYLGHQFH WKDW KH ZDV D GUXJ GHDOHU :KHQ +XPSKUH\jVFRXQVHOEHJDQWRGLVFXVVWKHDIILGDYLWGXULQJKLV FORVLQJDUJXPHQWWKH*RYHUQPHQWREMHFWHGDQGUHTXHVWHGD VLGHEDUDIWHUZKLFKWKHGLVWULFWFRXUWLQVWUXFWHGWKHMXU\m +XPSKUH\jV@JRWDQDIILGDYLW sRKQVRQZRXOGGLFWDWHWKDWZHDSSO\SODLQHUURUUHYLHZWRDQ LQKLVKRXVHDQGZKDWGR\RXWKLQNWKHDIILGDYLWSUREDEO\ $SSUHQGLEDVHGFODLPUDLVHGIRUWKHILUVWWLPHRQDSSHDO$V VD\VWKHUH"7KDWULJKWO\RUZURQJO\KHjVEHLQJLQYHVWLJDWHGl WKHPDMRULW\UHFRJQL]HVDQGDVZHKDYHREVHUYHGHOVHZKHUH s$ DW 7KH *RYHUQPHQW SURPSWO\ REMHFWHG WR WKLV VHHHJ.LQJ)GDW Q$SSUHQGLLPSOLFDWHV 8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\ PLVVWDWHPHQWRIWKHHYLGHQFHDQGWKHGLVWULFWFRXUWVXVWDLQHG IRUFODLPVRI$SSUHQGLYLRODWLRQV3DJHVTXDUHO\DGGUHVVHV WKHREMHFWLRQ7KHUHZDVQRHUURU n DQG LQ P\ YLHZ GHILQLWLYHO\ UHVROYHV n WKLV LVVXH 6SHFLILFDOO\ZHKHOG J,PSURSHU&ORVLQJ$UJXPHQW 'HIHQGDQWV IDLOHG WR REMHFW WR WKH GLVWULFW MXGJH ,Q LWV UHEXWWDO FORVLQJ DUJXPHQW WKH *RYHUQPHQW DUJXHG PDNLQJ WKH GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHV :KHUH WKDW HYHQ +XPSKUH\jV FRXQVHO 'DYLG 'XGOH\ NQHZ WKDW WKHUHKDVEHHQQRREMHFWLRQUHYLHZLVIRUSODLQHUURU +XPSKUH\jVFRQYHUVDWLRQVZLWKKLVDFFRXQWDQWDPRXQWHGWR D FRQIHVVLRQ m'DYLG 'XGOH\ NQRZV WKDW FRQYHUVDWLRQ 3DJH)GDWFLWLQJ)HG5&ULP3E >EHWZHHQ +XPSKUH\ DQG KLV DFFRXQWDQW@ LV DV FORVH WR D FRQIHVVLRQDVDQ\WKLQJLQWKLVZKROHFRXUWURRPDQGKHKDVWR 2QFHDJDLQ3DJHjVUXOLQJRQWKLVSRLQWLVLQDFFRUGZLWKWKH GHDOZLWKLWEHFDXVHKHNQRZV\RXDUHJRLQJWRVHHWKDWls$ GHFLVLRQVRIDOORIRXUVLVWHU&LUFXLWV6HH8QLWHG6WDWHVY DW+XPSKUH\VXJJHVWVWKDWWKLVDUJXPHQWLPSURSHUO\ 7LWFKHOO)GG&LU8QLWHG6WDWHVY UHOLHG XSRQ +XPSKUH\jV FRXQVHO WR YRXFK IRU WKH )LHOGV )G '& &LU 8QLWHG *RYHUQPHQWjVYLHZRI+XPSKUH\jVJXLOW 6WDWHV Y :KLWH )G G &LU 8QLWHG 6WDWHVY6WXUJLV)GWK&LU8QLWHG 7KH*RYHUQPHQWUHVSRQGVWKDWmWKDWFRQYHUVDWLRQlUHIHUUHG 6WDWHVY:KLWH)GWK&LU8QLWHG WRDQLQWHUFHSWHGWHOHSKRQHFRQYHUVDWLRQEHWZHHQ+XPSKUH\ 6WDWHVY1DQFH)GWK&LU8QLWHG DQGKLVDFFRXQWDQWLQZKLFK+XPSKUH\DOOHJHGO\H[SUHVVHG 6WDWHVY.HHOLQJ)GWK&LU8QLWHG VRPH FRQFHUQ RYHU SDSHUZRUN UHODWHG WR KLV SXUFKDVH RI D 6WDWHVY*HUURZ)GWK&LU8QLWHG EXVLQHVVEHFDXVHWKHEXVLQHVVRZQHUKDGKDGSULRUGHDOLQJV 6WDWHVY0RMLFD%DH])GVW&LU ZLWK WKH 'UXJ (QIRUFHPHQW $GPLQLVWUDWLRQ m'($l 8QLWHG6WDWHVY1RUGE\)GWK&LU )XUWKHUWKH*RYHUQPHQWPDLQWDLQVWKDWLWVUHIHUHQFHWRWKH 8QLWHG6WDWHVY0HVKDFN)GWK&LU FRQYHUVDWLRQ DV D mFRQIHVVLRQl ZDV PHUHO\ DQ DWWHPSW WR DPHQGHG RQ UHKjJ )G WK &LU GLVFUHGLW'XGOH\jVmVSLQRQWKHFRQYHUVDWLRQlE\VXJJHVWLQJ WKDWDOHJLWLPDWHEXVLQHVVRZQHUZLWKOHJLWLPDWHVRXUFHVRI LQFRPHZRXOGKDYHQRFRQFHUQDERXWDQ\'($LQYROYHPHQW LQRQHRIKLVEXVLQHVVYHQWXUHV $V LW KDSSHQV WKH VWDQGDUG RI UHYLHZ ZDV QRW GHWHUPLQDWLYH LQ &RUUDGR DQG 5HEPDQQ ,Q WKH IRUPHU FDVH WKH &RXUW IRXQG QR $SSUHQGL 2Q WKLV UHFRUG ZH GR QRW ILQG WKDW WKH SURVHFXWRUjV YLRODWLRQ DQG WKH GHIHQGDQW FRXOG QRW KDYH SUHYDLOHG HYHQ XQGHU GH QRYR FRPPHQWV FDQ EH UHDVRQDEO\ FRQVWUXHG DV LPSO\LQJ WKDW UHYLHZ ,Q WKH ODWWHU WKH GHIHQGDQWjV VHQWHQFH H[FHHGHG WKH VWDWXWRU\ GHIHQVHFRXQVHOEHOLHYHGKLVFOLHQWZDVJXLOW\:HILQGQR PD[LPXP IRU WKH RIIHQVH WR ZKLFK VKH KDG SOHG JXLOW\ DQG KHU FODLP HUURULQWKHFORVLQJDUJXPHQW WKHUHIRUH FRXOG KDYH VDWLVILHG WKH PRUH VWULQJHQW SODLQ HUURU VWDQGDUG K&XPXODWLYH,PSDFW 2Q DSSHDO DW OHDVW RQH RI WKH IRXU GHIHQGDQWV LQ 3DJH TXHVWLRQHG WKH 'LVWULFW &RXUWjV PHWKRG RI FRPSXWLQJ GUXJ TXDQWLWLHV :H UHMHFWHG WKLV FKDOOHQJH DQG VWDWHG WKDW m>R@WKHU LVVXHV UHJDUGLQJ GUXJ TXDQWLW\ :KHQWKHDIRUHPHQWLRQHGHUURUVDOOHJHGE\+XPSKUH\DUH DUH DGGUHVVHG LQ WKH XQSXEOLVKHG DSSHQGL[ WR WKLV RSLQLRQl 3DJH YLHZHGLQWKHFRQWH[WRIWKHHQWLUHWULDO+XPSKUH\DUJXHVWKDW )G DW Q $V REVHUYHG E\ WKH PDMRULW\ KRZHYHU 3DJH GRHV WKHLUFXPXODWLYHLPSDFWPDQGDWHVUHYHUVDOHYHQLIDQ\RQH QRW LQGLFDWH ZKDW VRUWV RI FKDOOHQJHV LI DQ\ ZHUH RU ZHUH QRW UDLVHG HUURU LQ LVRODWLRQ GRHV QRW 7KHVH HUURUV +XPSKUH\ EHIRUH WKH 'LVWULFW &RXUW n WKDW LV DSDUW IURP RXU GLUHFW VWDWHPHQW WKDW PDLQWDLQV ZHUH SDUWLFXODUO\ SUHMXGLFLDO JLYHQ WKDW KLV WULDO WKH GHIHQGDQWV GLG QRW UDLVH DQ $SSUHQGL LVVXH LQ WKH FRXUW EHORZ WKHUHE\ WULJJHULQJ SODLQ HUURU UHYLHZ 8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\ SUHVHQWVWKHLVVXHRIWKHSURSHULQWHUSUHWDWLRQRI$SSUHQGL ZDVEXLOWRQZHDNFLUFXPVWDQWLDOHYLGHQFHRIJXLOWLQZKLFK $V GLVFXVVHG EHORZ WKLV LV QRW VXFK D FDVH n RU PRUH KHZDVFRQYLFWHGRQO\RIFRQVSLUDF\DQGQRWRIDQ\RIWKH DFFXUDWHO\LW ZRXOGQRWEHLI'HIHQGDQWjV$SSUHQGLFODLP XQGHUO\LQJ VXEVWDQWLYH FRXQWV EDVHG RQ WKH WHVWLPRQ\ RI ZHUH HYDOXDWHG XQGHU WKH SURSHU VWDQGDUG RI UHYLHZ 7KH DOOHJHGFRFRQVSLUDWRUV:HGLVDJUHH([DPLQLQJWKHUHFRUG PDMRULW\jVGHFLVLRQWRDSSO\GHQRYRUHYLHZKRZHYHUOHQGV DV D ZKROH ZH IDLO WR ILQG DQ\ HUURU LQ WKH IRUHJRLQJ WKDW QHZ DQG XQGXH VLJQLILFDQFH WR LWV H[SDQVLYH UHDGLQJ RI VLQJXODUO\RUFXPXODWLYHO\PDQGDWHVUHYHUVDO $SSUHQGLDQGFRPSRXQGVHUURUZLWKIXUWKHUHUURU %'LVWULFW&RXUW0LVFRQGXFW ,, 6WDQGDUGRI5HYLHZ %\ QRZ P\ YLHZV UHJDUGLQJ WKH FRUUHFW FRQVWUXFWLRQ RI $SSUHQGL VKRXOG EH HYLGHQW $V FRQFHGHG DW WKH RXWVHW :HUHYLHZGHQRYRZKHWKHUDGLVWULFWFRXUWjVDOOHJHGIDLOXUH KRZHYHUWKH&RXUWjVRSLQLRQLQWKDWFDVHFRQWDLQVODQJXDJH WR FRQGXFW D KHDULQJ WR LQTXLUH LQWR D FRQIOLFW RI LQWHUHVW WKDWDUJXDEO\VXSSRUWVDIHZFRPSHWLQJLQWHUSUHWDWLRQV,Q EHWZHHQ D GHIHQGDQW DQG KLV WULDO FRXQVHO YLRODWHG D DQ\HYHQWZKHWKHURQHVXEVFULEHVWRWKHmPD[LPXPSHQDOW\l GHIHQGDQWjV 6L[WK $PHQGPHQW ULJKW WR HIIHFWLYH FRXQVHO RUmVHQWHQFLQJUDQJHlYLHZRI$SSUHQGLWKHRXWFRPHRIWKH 8QLWHG6WDWHVY+DOO)GWK&LU:H SUHVHQW FDVH VKRXOG EH QR GLIIHUHQW EHFDXVH UHYLHZ IRU FOHDU HUURU D GLVWULFW FRXUWjV IDFWXDO ILQGLQJV 'HIHQGDQW$SSHOODQW+XPSKUH\FDQQRWSRVVLEO\VDWLVI\WKH FRQFHUQLQJ ZKHWKHU D SDUW\ KDV LPSURSHUO\ XVHG LWV JRYHUQLQJmSODLQHUURUlVWDQGDUG @ WKH PLVFDUULDJHRIMXVWLFHl8QLWHG6WDWHVY6DQGHUVRQ)G PD[LPXP SHQDOW\ IRU WKH FULPH FRPPLWWHG QRU FUHDWH>@ D VHSDUDWH RIIHQVH WK&LU FDOOLQJ IRU D VHSDUDWH SHQDOW\jl 6WUD\KRUQ )G DW TXRWLQJ 0F0LOODQ 86 DW 6 &W DW 7KH TXRWHG SDVVDJH $QDO\VLV 0F0LOODQ IURP KRZHYHU PHUHO\ GHVFULEHV WKH 3HQQV\OYDQLD ODZ DW LVVXH LQ WKDW FDVH DQG GRHV QRW SXUSRUW WR VHW IRUWK WKH HVVHQWLDO UHTXLUHPHQWV +XPSKUH\DUJXHVWKDWWKHGLVWULFWFRXUWjVLQVWUXFWLRQRIWKH IRU DQ\ PDQGDWRU\ PLQLPXP VHQWHQFLQJ VFKHPH WR SDVV FRQVWLWXWLRQDO MXU\ ZDV IODZHG LQ WKUHH UHVSHFWV )LUVW WKH GLVWULFW FRXUW PXVWHU IDLOHG WR LQIRUP WKH MXU\ WKDW LW ZDV UHTXLUHG WR UHDFK 0RUHRYHU LI LW RQFH ZDV SRVVLEOH WR GHILQH 0F0LOODQ jV KROGLQJ E\ XQDQLPLW\RQHYHU\HOHPHQWRIWKHFKDUJHGRIIHQVHV6HFRQG UHIHUHQFH WR VXFK QRWLRQV DV mVHSDUDWH RIIHQVHVl RU mVHSDUDWH SHQDOWLHVl WKH GLVWULFW FRXUW IDLOHG WR LQVWUXFW WKH MXU\ WR GHWHUPLQH $SSUHQGL WKH GHFLVLRQ DQG DQDO\VLV LQ QRZ SUHFOXGH VXFK DQ HIIRUW $V ZH ZKHWKHUWKHUHZDVRQHFRQVSLUDF\RUPXOWLSOHFRQVSLUDFLHV UHFRJQL]HG LQ 5HEPDQQ $SSUHQGL PDUNV D mUDGLFDO GHSDUWXUHl LQ WKH 7KLUGWKHGLVWULFWFRXUWIDLOHGWRLQVWUXFWWKHMXU\WRGHWHUPLQH 6XSUHPH &RXUWjV PHWKRG RI GHWHUPLQLQJ WKH mHOHPHQWVl RI DQ RIIHQVH 5HEPDQQ )G DW 4XHVWLRQV RI VWDWXWRU\ VWUXFWXUH DQG WKH W\SH RI GUXJV WKDW +XPSKUH\ FRQVSLUHG WR SRVVHVV RU OHJLVODWLYH LQWHQW KDYH JLYHQ ZD\ WR SXUHO\ IXQFWLRQDO FRQVLGHUDWLRQV DQG GLVWULEXWH mWKH UHOHYDQW LQTXLU\ LV RQH QRW RI IRUP EXW RI HIIHFW n GRHV WKH UHTXLUHG ILQGLQJ H[SRVH WKH GHIHQGDQW WR D JUHDWHU SXQLVKPHQW WKDQ WKDW DXWKRUL]HG :HUHMHFW+XPSKUH\jVDUJXPHQWV E\ WKH MXU\jV JXLOW\ YHUGLFW"l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sXGJH6LOHUFRQFXUUHGILQGLQJWKDWWKH PXWXDO XQGHUVWDQGLQJ HLWKHU VSRNHQ RU XQVSRNHQ SDQHOZDVERXQGE\WKHGHFLVLRQLQ)ORZDOEXWTXHVWLRQLQJ EHWZHHQ WZR RU PRUH SHRSOH WR FRRSHUDWH ZLWK HDFK ZKHWKHU$SSUHQGLmLVDVIDUUHDFKLQJDVZHGHWHUPLQHLQWKLV RWKHUWRFRPPLWWKHFULPHRIGLVWULEXWLRQRIQDUFRWLFVRU FDVHIROORZLQJ)ORZDOlDQGRSLQLQJWKDW0F0LOODQVKRXOG SRVVHVVLRQZLWKLQWHQWWRGLVWULEXWHQDUFRWLFVDVWR&RXQWV JRYHUQ FKDOOHQJHV WR PDQGDWRU\ PLQLPXP VHQWHQFHV DQGRUWRHQJDJHLQPRQH\ODXQGHULQJDVWR&RXQW 5DPLUH])GDW6LOHUsFRQFXUULQJ 0RVWUHFHQWO\LQ6WUD\KRUQWKHSDQHODGGUHVVHGD\HDU s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mWZR RU PRUH SHRSOHl DV D ,QWHUHVWLQJO\6WUD\KRUQVWDWHVWKDWm>L@Q)ORZDOZHH[SODLQHG SUHFRQGLWLRQWRFRQYLFWLRQSDUWLFXODUO\JLYHQWKDW&RXQW2QH WKDWHDFKSHQDOW\SURYLVLRQRIEFRQVWLWXWHVDGLIIHUHQW RIWKHLQGLFWPHQWLGHQWLILHGVHYHQSHRSOHE\QDPHDQGmRWKHUV FULPHZLWKGLIIHUHQWHOHPHQWVLQFOXGLQJGUXJZHLJKWZKLFK NQRZQ DQG XQNQRZQ WR WKH *UDQG sXU\l &RXQW 7ZR PXVWEHSURYHGEH\RQGDUHDVRQDEOHGRXEWZKHQVHQWHQFLQJ LGHQWLILHG VL[ SHRSOH E\ QDPH DQG mRWKHUV NQRZQ DQG DGHIHQGDQWLQH[FHVVRIWKHGHIDXOWVWDWXWRU\PD[LPXPVHW XQNQRZQWRWKH*UDQGsXU\lDQG&RXQW6HYHQWHHQLGHQWLILHG RXWLQE&IRUDOOGUXJVH[FHSWPDULMXDQDRULQ IRXUSHRSOHE\QDPHDQGmRWKHUVNQRZQDQGXQNQRZQWRWKH E'IRUPDULMXDQDlDQGWKDWm>R@XUVLVWHUFLUFXLWV *UDQGsXU\l+HUHDVRQVWKDWVLQFHDFRQVSLUDF\QHFHVVDULO\ KDYHXQLIRUPO\DJUHHGZLWKlWKLVUXOH6WUD\KRUQ)G LQYROYHVDWOHDVWWZRSHRSOHWKHQWKHVSHFLILFLGHQWLW\RID DWHPSKDVLVDGGHG GHIHQGDQWjVFRFRQVSLUDWRUPXVWEHDQHOHPHQWRIWKHRIIHQVH 2IFRXUVHLIWKLVZHUHWKHUXOHDQQRXQFHGLQ)ORZDORXU +XPSKUH\j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mDJJUDYDWLQJ IDFWRUVl E\ D FLUFXPVWDQFHVZKHQWKHQDWXUHRIWKHHYLGHQFHLVSDUWLFXODUO\ SUHSRQGHUDQFHRIWKHHYLGHQFHWKDWWULJJHUDmKLJKHUSHQDOW\ FRPSOH[ZKHQWKHUHLVDYDULDQFHEHWZHHQWKHLQGLFWPHQWDQG WKH SURRI DGGXFHG DW WULDO RU ZKHQ WKHUH LV VRPH WDQJLEOH HYLGHQFH RI MXU\ FRQIXVLRQ DV ZKHQ WKH MXU\ KDV DVNHG TXHVWLRQVRIWKHFRXUW8QLWHG6WDWHVY:DVKLQJWRQ)G 1RWDEO\ WKH UXOH VWDWHG LQ5DPLUH] LV UHPDUNDEO\ VLPLODU WR WKH WK&LU1RQHRIWKHVHVFHQDULRVH[LVWVLQ VWDQGDUG DGYRFDWHG E\ sXVWLFH 7KRPDV LQ KLV FRQFXUUHQFH LQ $SSUHQGL QDPHO\ WKDW mD µFULPHj LQFOXGHV HYHU\ IDFW WKDW LV E\ ODZ D EDVLV IRU WKLV FDVH )LQDOO\ +XPSKUH\jV UHOLDQFH RQ 5LFKDUGVRQ LV LPSRVLQJ RU LQFUHDVLQJ SXQLVKPHQW LQ FRQWUDVW ZLWK D IDFW WKDW PLWLJDWHV PLVSODFHG DV DW LVVXH LQ WKDW FDVH ZDV D MXU\ LQVWUXFWLRQ SXQLVKPHQWl 86 DW 6 &W DW 7KRPDV s FRQFXUULQJ 8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\ UHDVRQLQJKLVRSLQLRQLVLQWKHHQGRQO\DFRQFXUUHQFHDQG UHODWLQJWRDSURVHFXWLRQXQGHU86&FRQWLQXLQJ QRW D UXOLQJ RI WKH &RXUW n DQG HYHQ sXVWLFH 7KRPDV FULPLQDOHQWHUSULVHDQGQRWXQGHU86&DVLQWKH UHFRJQL]HG WKDW KLV SURSRVHG UXOH ZRXOG UHTXLUH WKDW LQVWDQWFDVH 0F0LOODQ EH RYHUWXUQHG ZKLOH WKH $SSUHQGL PDMRULW\ H[SUHVVO\ GHFOLQHG WR JR VR IDU $V VWDWHG E\ WKH )RXUWK E1XPEHURI&RQVSLUDFLHV &LUFXLWLWLVmQRWRXUUROHlWRRYHUWXUQ0F0LOODQZKHUHWKH 6XSUHPH&RXUWKDVHOHFWHGQRWWRGRVR+DUULVVXSUD +XPSKUH\FRQWHQGVWKDWHYHQLIWKHLGHQWLW\RIKLVDOOHJHG )GDW)LQDOO\DQGPRVWVLJQLILFDQWO\)ORZDOjVEURDG FRFRQVSLUDWRULVQRWDQHOHPHQWRIWKHRIIHQVHWKHGLVWULFW UHDGLQJRI$SSUHQGLLVIODWO\DWRGGVZLWKRXUHDUOLHUGHFLVLRQ FRXUW QHYHUWKHOHVV VKRXOG KDYH LQVWUXFWHG WKH MXU\ WR LQ0XQR]LQZKLFKZHVTXDUHO\KHOGWKDW$SSUHQGLGLGQRW GHWHUPLQHZKHWKHUWKHUHZHUHPXOWLSOHFRQVSLUDFLHVRURQO\ DSSO\WRDVHQWHQFLQJMXGJHjVILQGLQJVE\DSUHSRQGHUDQFHRI RQH +H UHDVRQV WKDW EHFDXVH (DWRQ ZDV QDPHG DV D FR WKHHYLGHQFHWKDWWULJJHUHGDQHOHYDWHGVHQWHQFLQJUDQJHVR FRQVSLUDWRULQERWKFRQVSLUDF\FRXQWV&RXQWV2QHDQG7ZR ORQJDVWKHUHVXOWLQJVHQWHQFHGLGQRWH[FHHGWKHPD[LPXP DQG WKH MXU\ ZDV QRW LQVWUXFWHG WR LGHQWLI\ VSHFLILFDOO\ DFKLHYDEOHDEVHQWWKHMXGJHjVDGGLWLRQDOGHWHUPLQDWLRQV7KH +XPSKUH\j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mVWDWXWRU\PD[LPXPlUXOH LQGLFWHGLQDFDVHLQYROYLQJPXOWLSOHFRQVSLUDFLHVDQGWKDWKH RI 0XQR] 3DJH DQG 5HEPDQQ 7KH PRVW SURPLQHQW ZDVQRWHQWLWOHGWRDQLQVWUXFWLRQRIWKHMXU\UHTXLULQJLWWR PHPEHUVRIWKH)ORZDOOLQHDQGWKHRQHVUHOLHGXSRQE\WKH GHWHUPLQH WKH QXPEHU RI FRQVSLUDFLHV $OWKRXJK WKH PDMRULW\KHUHDUHWKHGHFLVLRQVLQ8QLWHG6WDWHVY5DPLUH] LQGLFWPHQW GRHV QRW VR DOOHJH WKH *RYHUQPHQW DUJXHV WKDW )GWK&LUDQG8QLWHG6WDWHVY6WUD\KRUQ &RXQW 2QH FKDUJHG D mKXEl RU mZKHHOl FRQVSLUDF\ ZLWK )G WK &LU ,Q 5DPLUH] DV KHUH WKH +XPSKUH\ DV GUXJ VXSSOLHU SRVLWLRQHG DW WKH FHQWHU DQG GHIHQGDQWZDVFRQYLFWHGE\DMXU\RIFRQVSLUDF\WRGLVWULEXWH (DWRQDQGRWKHUPLGGOHPHQDVVSRNHVRIWKHZKHHO&RXQW FRFDLQH DQG WKH 'LVWULFW &RXUW LPSRVHG D PDQGDWRU\ 7ZR DFFRUGLQJ WR WKH *RYHUQPHQW FKDUJHG D FKDLQ PLQLPXP VHQWHQFH RI \HDUVj LPSULVRQPHQW XQGHU FRQVSLUDF\ZLWKQDUFRWLFVIORZLQJIURP+XPSKUH\WKURXJK E$XSRQILQGLQJWKDWLWKHGHIHQGDQWKDGDSULRU (DWRQ WR 0RUURZ DQG RWKHUV ZRUNLQJ GLUHFWO\ ZLWK (DWRQ IHORQ\ GUXJ FRQYLFWLRQ DQG LL WKH DPRXQW RI FRFDLQH +XPSKUH\LQUHVSRQVHDUJXHVZLWKVRPHIRUFHWKDWLIKHZDV LQYROYHGLQWKHRIIHQVHH[FHHGHGNLORJUDPV7KHSDQHOGLG LQYROYHGLQDKXEFRQVSLUDF\ZLWK(DWRQWKHQWKDWFRQVSLUDF\ QRWFLWH3DJHRU0XQR]EXWLQVWHDGIRXQG)ORZDOFRQWUROOLQJ QHFHVVDULO\LQFOXGHGDQ\FKDLQFRQVSLUDF\ZLWK(DWRQDQGKLV VWDWLQJ WKDW m>D@JJUDYDWLQJ IDFWRUV RWKHU WKDQ D SULRU EX\HUV HJ 0RUURZ DQG WKXV WKHUH H[LVWHG RQO\ RQH FRQYLFWLRQ WKDW LQFUHDVH WKH SHQDOW\ IURP D QRQPDQGDWRU\ FRQVSLUDF\ PLQLPXP VHQWHQFH WR D PDQGDWRU\ PLQLPXP VHQWHQFH RU IURP D OHVVHU WR D JUHDWHU PLQLPXP VHQWHQFH DUH QRZ :H QRWH WKDW EHFDXVH +XPSKUH\ QHLWKHU UHTXHVWHG D HOHPHQWVRIWKHFULPHWREHFKDUJHGDQGSURYHQl5DPLUH] PXOWLSOH FRQVSLUDF\ LQVWUXFWLRQ QRU REMHFWHG WR WKH GLVWULFW FRXUWjVXVHRIDJHQHUDOLQVWUXFWLRQRQWKHODZRIFRQVSLUDF\ ZH UHYLHZ WKLV FODLP IRU SODLQ HUURU 6HH 8QLWHG 6WDWHV Y 8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\ 0DFN)GWK&LU7KH*RYHUQPHQWjV RFFDVLRQIRUDGRSWLQJVXFKDFRQVWUXFWLRQRI$SSUHQGLDVWKH VXJJHVWLRQWKDW+XPSKUH\HQWHUHGLQWRDKXEFRQVSLUDF\ZLWK VHQWHQFHV LQ ERWK FDVHV YLRODWHG WKH QDUURZHU mVWDWXWRU\ (DWRQ DQG RWKHUV IRU FHUWDLQ WUDQVDFWLRQV RQO\ WR HQG WKDW PD[LPXPlYDULDQWRI$SSUHQGLjVmUXOHl FRQVSLUDF\WRIRUPDQHZFKDLQFRQVSLUDF\WRVXSSO\GUXJV IURP+XPSKUH\WR(DWRQWR0RUURZVHHPVGXELRXVDWEHVW 7KHUHDUHDQXPEHURIRWKHUIODZVDVZHOOLQWKHDQDO\VLV $VZHREVHUYHGLQ8QLWHG6WDWHVY*DLWDQ$FHYHGRm>W@KH WKURXJKZKLFKWKHSDQHOLQ)ORZDOVRXJKWWRVXSSRUWLWVEURDG NH\ WR HVWDEOLVKLQJ ZKHWKHU GLVWLQFW VXEDJUHHPHQWV DUH UHDGLQJ RI $SSUHQGL )LUVW WKURXJKRXW LWV GLVFXVVLRQ RI HQFRPSDVVHGZLWKLQRQHVLQJOHFRQVSLUDF\LVWRGHWHUPLQH PDQGDWRU\PLQLPXPVHQWHQFHVDQGWKHUHVXOWLQJGLPLQXWLRQ ZKHWKHUWKHGLIIHUHQWVXEJURXSVDUHDFWLQJLQIXUWKHUDQFHRI RI D VHQWHQFLQJ FRXUWjV GLVFUHWLRQ )ORZDO QHYHU RQFH RQH RYHUDUFKLQJ SODQl )G WK &LU PHQWLRQV WKH 6XSUHPH &RXUWjV FRQWUROOLQJ VWDWHPHQW RQ LQWHUQDOTXRWDWLRQPDUNVRPLWWHGTXRWLQJ8QLWHG6WDWHVY PDQGDWRU\ PLQLPXPV LQ 0F0LOODQ QRU WKH ODQJXDJH LQ *KD]DOHK)GWK&LU+HUHZLWKWKH $SSUHQGLH[SUHVVO\FRQILUPLQJWKDW0F0LOODQFRQWLQXHVWR EHQHILW RI KLQGVLJKW LW VHHPV FOHDU WKDW WKHUH ZDV RQH JRYHUQ LQ mFDVHV WKDW GR QRW LQYROYH WKH LPSRVLWLRQ RI D RYHUDUFKLQJ SODQ IRU +XPSKUH\ WR GLVWULEXWH QDUFRWLFV WR VHQWHQFH PRUH VHYHUH WKDQ WKH VWDWXWRU\ PD[LPXP IRU WKH (DWRQZKRZRXOGWKHQUHVHOOWKHPDWDSURILWWRWKLUGSDUWLHV RIIHQVHHVWDEOLVKHGE\WKHMXU\jVYHUGLFWl$SSUHQGL86 :KLOH D PXOWLSOH FRQVSLUDF\ LQVWUXFWLRQ OLNHO\ ZRXOG KDYH DWQ6&WDWQ1H[W)ORZDOPLVUHDGV UHPRYHGDQ\GRXEWFRQFHUQLQJWKHQXPEHURIFRQVSLUDFLHV WKHSRVW$SSUHQGLGHFLVLRQVRIRWKHU&LUFXLWVFODLPLQJWKDW WKDWWKHMXU\IRXQGWREHDWLVVXHZHDUHXQFRQYLQFHGWKDW WKH(LJKWK&LUFXLWKHOGLQ$JXD\R'HOJDGRVXSUDWKDWmLWLV VXFKDQLQVWUXFWLRQZDVUHTXLUHG LPSURSHUIRUDMXGJHWRGHWHUPLQHDQ\IDFWVRWKHUWKDQDSULRU FRQYLFWLRQWKDWZRXOGLQFUHDVHWKHSHQDOW\UDQJHEH\RQGWKDW $OWKRXJK WKH SDUWLHV GR QRW UDLVH WKLV LVVXH DQ\ HUURU DSSOLFDEOHWRWKHFULPHIRUZKLFKWKHMXU\KDVFRQYLFWHGWKH DSSHDUV WR OLH QRW LQ WKH MXU\jV LQVWUXFWLRQ EXW LQ WKH GHIHQGDQWl)ORZDO)GDWQ,QIDFW$JXD\R LQGLFWPHQWjV VHHPLQJO\ GXSOLFDWLYH FRXQWV DV &RXQW 2QH 'HOJDGRH[SUHVVO\UHMHFWVDSURSRVHGUHDGLQJRI$SSUHQGLDV FKDUJHVWKHVDPHFRQGXFW IRUWKHVDPHWLPHSHULRGDVWKDW HQFRPSDVVLQJ PDQGDWRU\ PLQLPXP VHQWHQFHV UHFRJQL]LQJ FKDUJHG LQ &RXQW 7ZR 7KDW WKH RYHUW DFWV RI &RXQW 2QH WKDW 0F0LOODQ SURYLGHV WKH mJRYHUQLQJ FRQVWLWXWLRQDO IRFXVRQ+XPSKUH\DQGWKHRYHUWDFWVRI&RXQW7ZRIRFXVRQ VWDQGDUGlRQWKLVLVVXH$JXD\R'HOJDGR)GDW 0RUURZGRHVQRWFKDQJHWKHIDFWWKDWERWKUHODWHWRWKHVDPH FRQVSLUDF\ ,QGHHG WKH *RYHUQPHQWjV FRQFHVVLRQ WKDW m>&RXQW 2QH@ ZRXOG KDYH EHHQ WKH RQO\ GUXJ FRQVSLUDF\ )XUWKHULWLVQRWHZRUWK\WKDW)ORZDOUHOLHVRQDQGTXRWHV FRXQW DV DJDLQVW +XPSKUH\ ZHUH LW QRW IRU WKH IDFW WKDW H[WHQVLYHO\IURPsXVWLFH7KRPDVjVFRQFXUUHQFHLQ$SSUHQGL +XPSKUH\ZDVMRLQHGDWWULDOE\'DU\O0RUURZlVWUHQJWKHQV :LWKRXWLQDQ\ZD\GHQ\LQJWKHIRUFHRIsXVWLFH7KRPDVjV RXU VXVSLFLRQ WKDW &RXQW 7ZR ZDV VXUSOXVDJH %HFDXVH KRZHYHU +XPSKUH\ ZRXOG KDYH EHHQ VXEMHFW WR WKH VDPH VWDWXWRU\DQG*XLGHOLQHVSHQDOWLHVLQHLWKHUFDVHZKHWKHUKH ,Q $JXD\R'HOJDGR DV LQ WKH FDVH EHIRUH XV WKH GHIHQGDQW ZDV ZDVFRQYLFWHGRI&RXQW2QHRU&RXQW7ZRRUERWKZHPXVW VHQWHQFHG WR D \HDU WHUP RI LPSULVRQPHQW 7KH (LJKWK &LUFXLW IRXQG FRQFOXGHWKDWDQ\HUURULQWKHGLVWULFWFRXUWjVLQVWUXFWLRQRIWKH WKDW WKLV VHQWHQFH ZDV mSHUPLVVLEOH XQGHU $SSUHQGL DQG 0F0LOODQl MXU\ RU LQ WKH *RYHUQPHQWjV LQGLFWPHQW RI +XPSKUH\ ZDV EHFDXVH LW IHOO mZLWKLQ WKH VWDWXWRU\ UDQJH DXWKRUL]HG E\ E& ZLWKRXW UHIHUHQFH WR GUXJ TXDQWLW\l )G DW ,W LV LURQLF WKDW KDUPOHVV $JXD\R'HOJDGR DV WUDQVIRUPHG WKURXJK LWV PLVUHDGLQJ E\ WKH SDQHO LQ )ORZDO QRZ LV DQ LQGLUHFW SDUW RI WKH FKDLQ RI DXWKRULW\ LQ WKLV &LUFXLW IRU D UHVXOW GLUHFWO\ RSSRVLWH WKDW UHDFKHG E\ WKH (LJKWK &LUFXLW XQGHU LGHQWLFDO IDFWV 8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\ $SSUHQGL WKH SDQHO FRQFOXGHG WKDW LW KDG DGRSWHG WKH F'UXJ7\SH'HWHUPLQDWLRQ SULQFLSOH VHW IRUWK LQ WKH 6XSUHPH &RXUWjV SULRU sRQHV GHFLVLRQ QDPHO\ WKDW mDQ\ IDFW RWKHU WKDQ D SULRU +XPSKUH\DUJXHVWKDWWKHGLVWULFWFRXUWHUUHGE\IDLOLQJWR FRQYLFWLRQWKDWLQFUHDVHVWKHPD[LPXPSHQDOW\IRUDFULPH LQVWUXFWWKHMXU\WRUHWXUQDVSHFLDOYHUGLFWRQWKHGUXJW\SHIRU PXVWEHFKDUJHGLQDQLQGLFWPHQWVXEPLWWHGWRDMXU\DQG ZKLFK KH ZDV FULPLQDOO\ UHVSRQVLEOH +H PDLQWDLQV WKDW SURYHQEH\RQGDUHDVRQDEOHGRXEWl)ORZDO)GDW ZKHUHDVKHUHDGHIHQGDQWLVFKDUJHGZLWKDPXOWLSOHGUXJ TXRWLQJsRQHV86DWQ6&WDWQ FRQVSLUDF\IRUZKLFKWKHPD[LPXPVWDWXWRU\SHQDOW\IRUHDFK VHH DOVR )ORZDO )G DW TXRWLQJ $SSUHQGLjV GUXJLVGLIIHUHQWDQGDMXU\UHWXUQVRQO\DJHQHUDOYHUGLFWRI mLQFUHDVH>@EH\RQGWKHSUHVFULEHGVWDWXWRU\PD[LPXPl JXLOW\ WKDW GHIHQGDQW LV HQWLWOHG WR EH VHQWHQFHG XQGHU WKH YDULDQW RI LWV UXOLQJ 7KH SDQHO WKHQ DGGUHVVHG 5HEPDQQ OHVVHUVWDWXWRU\SHQDOW\7KLVLVSDUWLFXODUO\VRLQKLVFDVH DOEHLW LQ D IRRWQRWH DQG UHFRJQL]HG WKDW WKH GLVSRVLWLYH +XPSKUH\ FRQWHQGV EHFDXVH WKHUH ZDV HYLGHQFH WKDW KH IHDWXUH RI WKDW FDVH ZDV WKH VHQWHQFLQJ FRXUWjV IDFWXDO GLVWULEXWHGRQVHSDUDWHRFFDVLRQVERWKSRZGHUFRFDLQHDQG GHWHUPLQDWLRQE\DSUHSRQGHUDQFHRIWKHHYLGHQFHZKLFKKDG FUDFNFRFDLQH mVLJQLILFDQWO\ LPSDFW>HG@ WKH PD[LPXP SHQDOW\l )ORZDO )G DW Q 6HHPLQJO\ WKHQ WKH SDQHO ZDV :HUHMHFW+XPSKUH\jVDUJXPHQWWKDWKHZDVHQWLWOHGWRD KHDGHGWRZDUGDFRQILUPDWLRQRI6L[WK&LUFXLWSUHFHGHQWWKDW VSHFLDOYHUGLFW6HH2OGHQY8QLWHG6WDWHV)G $SSUHQGLLPSOLFDWHVRQO\VHQWHQFLQJPD[LPXPV WK&LUILQGLQJQRHQWLWOHPHQWWRDVSHFLDOYHUGLFW EHFDXVH 86& D JRYHUQV WKH GLVWULEXWLRQ RI $WWKLVSRLQWKRZHYHU)ORZDOWDNHVDQXQH[SHFWHGDQG mFRQWUROOHGVXEVWDQFHVlDQGZKHUHDVKHUHWKHGUXJVDWLVVXH XQZDUUDQWHG WXUQ $IWHU DOO WKLV GLVFXVVLRQ RI VHQWHQFLQJ DUHERWKSURVFULEHGFRQWUROOHGVXEVWDQFHV:HIXUWKHUQRWH PD[LPXPVWKH&RXUWVWDWHGWKDW$SSUHQGLZDVYLRODWHGLQWKH WKDWKLVUHOLDQFHRQ8QLWHG6WDWHVY'DOH)G FDVHEHIRUHLWEHFDXVHmDILQGLQJDVWRWKHZHLJKWRIWKHGUXJV WK&LULVPLVSODFHG$VZHQRWHGLQ8QLWHG6WDWHV GHWHUPLQHG WKH UDQJH RI SHQDOWLHV WKDW ZRXOG DSSO\ WR >WKH Y1HXKDXVVHUm'DOHJRYHUQVLQFDVHVZKHUHDMXU\jVJHQHUDO GHIHQGDQW@l DQG EHFDXVH WKH VHQWHQFLQJ MXGJHjV YHUGLFW LV DPELJXRXV VXFK WKDW LW FDQQRW EH GHWHUPLQHG mGHWHUPLQDWLRQ HIIHFWLYHO\ OLPLWHG WKH UDQJH RI DSSOLFDEOH ZKHWKHUWKHMXURUVXQDQLPRXVO\DJUHHGDVWRRQHRUDQRWKHURI SHQDOWLHVlE\UHPRYLQJmDQ\GLVFUHWLRQLQWHUPVRILPSRVLQJ WKHPXOWLSOHGUXJVDOOHJHGO\LQYROYHGLQDFRQVSLUDF\l DVKRUWHUVHQWHQFHlWKDQOLIHLPSULVRQPHQW)GDW )GWK&LU:KLOHZHUHFRJQL]HWKDWWKH 5HPDUNDEO\ WKH SDQHO FODLPHG WKDW LWV KROGLQJ MXU\jV JHQHUDO YHUGLFW LQ WKLV FDVH ZDV DPELJXRXV ZH mUHDIILUP>HG@WKHORJLFRI5HEPDQQDIDFWWKDWLQFUHDVHVWKH FRQFOXGHWKDWDQ\HUURUZDVKDUPOHVV8QOLNH+XPSKUH\WKH DSSOLFDEOHVWDWXWRU\SHQDOW\UDQJHIRUDSDUWLFXODUFULPHPXVW GHIHQGDQWV LQ 'DOH DQG 1HXKDXVVHU ZHUH FKDUJHG ZLWK EHSURYHGEH\RQGDUHDVRQDEOHGRXEWWRWKHWULHURIIDFWl FRQVSLULQJ WR GLVWULEXWH FRFDLQH RU FUDFN FRFDLQH DQG )G DW Q $V GLVFXVVHG HDUOLHU KRZHYHU QHLWKHU PDULMXDQDFRQWUROOHGVXEVWDQFHVVXEMHFWWRGLIIHUHQWVWDWXWRU\ 5HEPDQQjVmORJLFlQRUPRUHLPSRUWDQWO\LWVH[SUHVVKROGLQJ SURYLVLRQV DQG IRU ZKLFK GLIIHUHQW SHQDOW\ UDQJHV DUH SURYLGHVDQ\DXWKRULW\IRUDEURDGmVHQWHQFLQJUDQJHl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nKDGPDQLIHVWO\ VDPHVWDWXWRU\SHQDOW\ HVWDEOLVKHGDVWKHODZRIWKLV&LUFXLWWKDW$SSUHQGLDGGUHVVHV RQO\VHQWHQFLQJPD[LPXPV:KDWLVPRUHWKHPDMRULW\LV ''UXJ4XDQWLW\'HWHUPLQDWLRQ$SSUHQGL DEOHWRLGHQWLI\DOLQHRI6L[WK&LUFXLWFDVHVLQVXSSRUWRILWV FRQFOXVLRQ 7R IXOO\ DSSUHFLDWH WKH KDYRF WKHVH ODWWHU :LWKUHVSHFWWRMXU\LQVWUXFWLRQV+XPSKUH\PDNHVDIRXUWK GHFLVLRQVKDYHZUHDNHGZLWKWKHSULQFLSOHRIVWDUHGHFLVLV DUJXPHQW WKDW WKH GLVWULFW FRXUW YLRODWHG WKH 6XSUHPH DQGWKHFKDRWLFVWDWHRIRXUSRVW$SSUHQGLODZLQWKHZDNHRI &RXUWjV GHFLVLRQ LQ $SSUHQGL Y 1HZ s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jV$SSUHQGLFKDOOHQJH PRUH WKDQ NLORJUDPV RI FRFDLQH WULJJHULQJ WKH HOHYDWHG LVWRGHWHUPLQHWKHDSSURSULDWHVWDQGDUGRIUHYLHZ+XPSKUH\ VHQWHQFLQJUDQJHIRXQGDWD$0RUHRYHULQOLJKW ZDVVHQWHQFHGLQSULRUWR$SSUHQGLDQGRQO\PDGHD RI WKH GHIHQGDQWjV WZR SULRU IHORQ\ FRQYLFWLRQV IRU GUXJ IRUPDO $SSUHQGL REMHFWLRQ LQ KLV DSSHOODWH EULHI LQ RIIHQVHV KH ZDV VXEMHFW WR PDQGDWRU\ OLIH LPSULVRQPHQW %HFDXVH KLV DSSHDO ZDV SHQGLQJ DW WKH WLPH$SSUHQGL ZDV XQGHU D$ DQG WKH 'LVWULFW &RXUW LPSRVHG WKLV GHFLGHG+XPSKUH\LVHQWLWOHGWRUHWURDFWLYHDSSOLFDWLRQRID VHQWHQFH7KHSDQHOQHHGQRWKDYHORRNHGDQ\IXUWKHUWKDQ QHZUXOHRIFULPLQDOSURVHFXWLRQ*ULIILWKY.HQWXFN\ 3DJHnRUHYHQ5HEPDQQZKLFK)ORZDOGRHVFLWHnWRILQG 86:KHUHDGHIHQGDQWUDLVHVDFRJQL]DEOH WKDW WKLV VHQWHQFH YLRODWHG $SSUHQGL ,Q SDUWLFXODU WKH $SSUHQGL FKDOOHQJH LQ GLVWULFW FRXUW DQG UDLVHV LW DJDLQ RQ GHIHQGDQWjV OLIH VHQWHQFH H[FHHGHG WKH PD[LPXP \HDU DSSHDOZHUHYLHZWKH$SSUHQGLLVVXHGHQRYR6HH8QLWHG WHUP RI LPSULVRQPHQW KH IDFHG XQGHU E& DV D 6WDWHVY6WUD\KRUQ)GWK&LU,I SULRUGUXJIHORQZKRVHODWHVWRIIHQVHDVGHWHUPLQHGVROHO\E\ KRZHYHU D GHIHQGDQW IDLOV WR UDLVH WKH LVVXH LQ WKH GLVWULFW WKH MXU\jV YHUGLFW LQYROYHG DQ LQGHWHUPLQDWH DPRXQW RI FRXUW RU DEDQGRQV LW RQ DSSHDO ZH UHYLHZ IRU SODLQ HUURU FRFDLQH RQO\6HH8QLWHG6WDWHVY*UDKDP)GWK &LUKROGLQJWKDWDFRXUWPD\QRWLFH$SSUHQGLHUURUV 1RWZLWKVWDQGLQJWKLVUHDGLO\GLVFHUQLEOHRXWFRPHXQGHUWKLV VXDVSRQWHXQGHUSODLQHUURUUHYLHZHYHQLIWKHLVVXHLVQRW &LUFXLWjVRZQSRVW$SSUHQGLSUHFHGHQWVWKHSDQHOLQ)ORZDO GHHPHGLWQHFHVVDU\WRLQWHUSUHW$SSUHQGLDQHZ,WVDQDO\VLV XQIRUWXQDWHO\LVDQ\WKLQJEXWFOHDU)LUVWXSRQ UHYLHZLQJ 7KLV FRQFOXVLRQ DOVR UHQGHUV PRRW +XPSKUH\jV RWKHU DOOHJDWLRQ WKDW WKH GLVWULFW FRXUW GLG QRW ILQG E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW KH 'HVSLWH WKLV $SSUHQGL YLRODWLRQ WKH *RYHUQPHQW DUJXHG WKDW WKH VROG FUDFN DQG QRW VRPH RWKHU W\SH RI FRFDLQH $V GLVFXVVHG LQ 3DUW ,,,' GHIHQGDQWjV VHQWHQFH FRXOG EH XSKHOG DV ZLWKLQ WKH UDQJH VHW IRUWK LQ EHORZ EHFDXVH +XPSKUH\jV VHQWHQFH YLRODWHV $SSUHQGL XSRQ UHPDQG E% WHQ \HDUV WR OLIH LQ OLJKW RI WKH GHIHQGDQWj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mGHWHFWDEOHDPRXQWl RIFRFDLQHDQGRUFRFDLQHEDVHFUDFNVHHs$DW ,Q KLV ZULWWHQ REMHFWLRQV WR WKH SUHVHQWHQFH UHSRUW DVZHOODVRWKHURIIHQVHV7KHMXU\UHWXUQHGDJXLOW\ +XPSKUH\j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jV YHUGLFW WKDW LW EHOLHYHG (DWRQjV NLORJUDP 6HQWHQFLQJ *XLGHOLQHV DQG WULJJHULQJ WKH HQKDQFHG HVWLPDWH WR EH DFFXUDWH RU WKDW LW HYHQ EHOLHYHG WKDW VHQWHQFLQJUDQJHRI\HDUVWROLIHLPSULVRQPHQWXQGHU PXOWLSOH VDOHV EHWZHHQ (DWRQ DQG +XPSKUH\ DFWXDOO\ 86& E$ IRU GUXJ RIIHQVHV LQYROYLQJ WRRN SODFH 7KHUHIRUH DV D UHVXOW RI WKH ODFN RI NLORJUDPV RU PRUH RI FRFDLQH ,Q WKH HQG KRZHYHU VXIILFLHQWFUHGLELOLW\UHJDUGLQJ(DWRQjVWHVWLPRQ\DVWR 'HIHQGDQW ZDV VHQWHQFHG WR D WHUP RI \HDUVj WKHDPRXQWRIFRFDLQHWUDQVDFWHG'HIHQGDQW+XPSKUH\ LPSULVRQPHQWZKLFKDVQRWHGLQ3DJHGRHVQRWH[FHHGWKH VXJJHVWVWKH&RXUWUHMHFWWKHUHFRPPHQGDWLRQVWDWHGLQ \HDU PD[LPXP VHW IRUWK LQ E& IRU GUXJ WKH 365 DV WR WKH UHOHYDQW FRQGXFW LQ &RXQW ,, DQG RIIHQVHV LQYROYLQJ DQ LQGHWHUPLQDWH DPRXQW RI FRFDLQH LQVWHDGDGRSWWKHPLQLPXPDPRXQWZKLFKWKHMXU\PXVW 8QGHU3DJHDQG0XQR]WKHQ'HIHQGDQWjVVHQWHQFHGRHVQRW KDYHQHFHVVDULO\IRXQGWRVXSSRUWLWVYHUGLFWRIJXLOW\ YLRODWHWKHUXOHRI$SSUHQGL VSHFLILFDOO\NLORJUDPRIFRFDLQHZKLFKFRQVWLWXWHV WKHORZHVWDPRXQWRIFRFDLQHSXUFKDVHGE\(DWRQGXULQJ 7KH PDMRULW\ UHFRJQL]HV DV PXFK DOEHLW ZLWKRXW FLWLQJ DJLYHQVDOH 3DJH3UREOHPDWLFDOO\KRZHYHUWKHPDMRULW\JRHVRQWRKROG WKDW 'HIHQGDQWjV VHQWHQFH YLRODWHV D VHFRQG mUXOHl RI s$DW $SSUHQGL RQH ZKLFK LPSOLFDWHV VHQWHQFLQJ UDQJHV HYHQ WKRXJKRXUGHFLVLRQVLQ3DJHDQG0XQR]nQRWWRPHQWLRQ +HFRQWLQXHVLQWKHZULWWHQREMHFWLRQVVWDWLQJ $VZLWK(DWRQWKHRQO\WKLQJZHFDQEHVXUHRIZLWK UHJDUGVWR&URPLW\jVWHVWLPRQ\LVWKDWWKHMXU\IRXQGWKDW 7KH WKLUG FKDUJH RI FRQVSLUDF\ ZDV GLVPLVVHG EHIRUH WULDO DQDJUHHPHQWGLGH[LVWWRSXUFKDVHFRFDLQH$VWKHUHLV LQVXIILFLHQW HYLGHQFH WR VXSSRUW DQ DPRXQW RI FRFDLQH 7KLV UDQJH EHFRPHV \HDUV WR OLIH LPSULVRQPHQW LI DV LV WKH FDVH KLJKHU WKDQ WKDW ZKLFK WKH MXU\ PXVW QHFHVVDULO\ KDYH KHUH D GHIHQGDQW SUHYLRXVO\ KDV EHHQ FRQYLFWHG RI D IHORQ\ GUXJ RIIHQVH IRXQG WR VXSSRUW +XPSKUH\jV FRQYLFWLRQ 'HIHQGDQW 6HH 86& E$ 7KH PDMRULW\ KROGV DQG , DJUHH WKDW UHTXHVWVWKDWWKH&RXUWUHMHFWWKH365jVUHFRPPHQGDWLRQ 'HIHQGDQWjV FKDOOHQJH WR KLV SULRU FRQYLFWLRQ LV ZLWKRXW PHULW UHJDUGLQJ UHOHYDQW FRQGXFW DQG WKDW WKH &RXUW LQVWHDG KROG+XPSKUH\DFFRXQWDEOHLQ&RXQWIRUWKHVDOHRI. ,Q IDFW WKLV VWDWXWRU\ PD[LPXP LQFUHDVHV WR \HDUV ZKHUH DV KHUH NLORJUDP RI SRZGHU FRFDLQH o D TXDQWLW\ ZKLFK WKH GHIHQGDQW KDV D SULRU FRQYLFWLRQ IRU D IHORQ\ GUXJ RIIHQVH 6HH UHSUHVHQWV WKH PLQLPXP DPRXQW ZKLFK &URPLW\ 86& E& 7KXV 'HIHQGDQWjV \HDU VHQWHQFH DFWXDOO\ LV ZHOO EHORZ WKH VWDWXWRU\ PD[LPXP HYHQ ZKHQ GUXJ TXDQWLWLHV DUH RPLWWHG LQGLFDWHGKHKDGSXUFKDVHGIURP+XPSKUH\ IURP WKH GHWHUPLQDWLRQ 8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\ s$DW >,@Q WKH SUHVHQW FDVH GHIHQGDQWjV VHQWHQFH LV LQYDOLG XQGHU$SSUHQGLRQO\LIWKHGLVWULFWFRXUWjVILQGLQJWKDW $WWKHVHQWHQFLQJFROORTX\+XPSKUH\jVDWWRUQH\UHLWHUDWHG GHIHQGDQW FRQVSLUHG WR GLVWULEXWH PHWKDPSKHWDPLQH KLVREMHFWLRQVDQGPDGHWKHIROORZLQJUHTXHVW UHVXOWHGLQGHIHQGDQWUHFHLYLQJDVHQWHQFHLQH[FHVVRI WKH PD[LPXP VWDWXWRU\ SHQDOW\ IRU FRQVSLUDF\ WR ,IWKH&RXUWILQGVDVZHZRXOGDVNWKH&RXUWWRGR GLVWULEXWH FRFDLQH WKH FULPH WR ZKLFK GHIHQGDQW SOHG WKDWWKHWRWDOUHOHYDQWFRQGXFWLVOHVVWKDQILYHNLORVLW JXLOW\ ZRXOGEHDWHQ\HDUPDQGDWRU\VHQWHQFHDQG,ZRXOGDVN WKH&RXUWWRFRQVLGHUWKDWWKLVLVDoWKLVLVWHQ\HDUVRID 7KLVFDVHLQYROYHVJUDPVRIFRFDLQHDQG PDQjV OLIH SHUKDSV PRUH XQGHU WKH JXLGHOLQH JUDPV RI HLWKHU DPSKHWDPLQH R>U@ PHWKDPSKHWDPLQH FDOFXODWLRQVPD\EHDVPXFKDV\HDUVRIDPDQjVOLIH 7LWOH 86& SURYLGHV WKDW WKH SHQDOW\ IRU WKDWj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jV DOO WKH MXU\ KDG WR EHOLHYH VWDWXWRU\ SHQDOW\ IRU GLVWULEXWLRQ RI JUDPV RI EH\RQGDUHDVRQDEOHGRXEWZDVWKDWWKHUHZDVVXFKDQ DPSKHWDPLQHD6FKHGXOH,,GUXJLV]HURWRWZHQW\\HDUV DJUHHPHQW>@ >7@KH\ GLGQjW HYHQ KDYH WR EHOLHYH D XQGHU86&E&'HIHQGDQWSOHGJXLOW\ WUDQVDFWLRQWRRNSODFH WRFRQVSLUDF\WRGHOLYHUWKHVSHFLILHGDPRXQWRIFRFDLQH 7KH RQO\ FRRSHUDWLRQ >VLF@ WKDW H[LVWHG IRU WKHLU )RUWKHFRFDLQHDORQHWKHVWDWXWHDXWKRUL]HVDPD[LPXP WHVWLPRQ\ZHUHFHUWDLQWDSHVDQGFHUWDLQSKRQHFDOOVEXW VHQWHQFH RI WZHQW\ \HDUV 'HIHQGDQW ZDV DFWXDOO\ WKH\GRQjWFRUURERUDWHWKLVZKROHDPRXQWRIGUXJVWKH VHQWHQFHGWRVHUYHPRQWKVDSSUR[LPDWHO\WHQ\HDUV *RYHUQPHQWjVWU\LQJWRSXWLQWRSOD\KHUHDWVHQWHQFLQJ 'HIHQGDQWjV VHQWHQFH GLG QRW H[FHHG WKH VWDWXWRU\ PD[LPXPIRUWKHSRUWLRQRIWKHLQGLFWPHQWWRZKLFKKH $QG , ZRXOG DVN WKH &RXUW WKDW o WR DSSO\ SHUKDSV D YDOLGO\SOHGJXLOW\7KHVHQWHQFLQJMXGJHjVGHWHUPLQDWLRQ KLJKHU VWDQGDUG WR WKH W\SH RI UHOHYDQW FRQGXFW E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW GHIHQGDQW ZKDWHYHU\RXZDQWWRFDOOLWLQWKLVFDVH$QGLILW FRQVSLUHG WR GLVWULEXWH PHWKDPSKHWDPLQH UDWKHU WKDQ GRHV WKDW LW ZLOO ILQG WKH *RYHUQPHQWjV QRW PHW LWV DPSKHWDPLQH GLG QRW LQFUHDVH KLV SHQDOW\ EH\RQG WKH EXUGHQ DQG LW ZLOO LPSRVH D PDQGDWRU\ PLQLPXP SUHVFULEHG VWDWXWRU\ PD[LPXP IRU FRQVSLUDF\ WR VHQWHQFHEDVHGRQDTXDQWLW\RIOHVVWKDQILYHNLORVDQGD GLVWULEXWHJUDPVRIFRFDLQH7KXVWKH$SSUHQGL JXLGHOLQHVHQWHQFHEDVHGXSRQWKDWVDPHTXDQWLW\ UXOLQJ LV QRW DSSOLFDEOH KHUH DQG GRHV QRW LPSDFW GHIHQGDQWjVVHQWHQFH s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mIDFWXDO FKDOOHQJHVl WR WKH GUXJ TXDQWLW\ WKDQWKDWDXWKRUL]HGE\WKHMXU\jVJXLOW\YHUGLFW7KHMXU\ UHFRPPHQGDWLRQV LQ WKH SUHVHQWHQFH UHSRUW 7KH GLVVHQW PHUHO\IRXQGWKDWGHIHQGDQWVFRQVSLUHGWRGLVWULEXWHDQG FKDUJHV WKDW DEVHQW VRPH VSHFLILF FKDOOHQJH WR WKH GLVWULFW SRVVHVVWRGLVWULEXWHVRPHXQGHWHUPLQHGDPRXQWRIFUDFN FRXUWjVDXWKRULW\WRILQGGUXJDPRXQWVE\DSUHSRQGHUDQFHRI FRFDLQH$VVXFKGHIHQGDQWVFDQQRWEHVXEMHFWHGWRWKH WKHHYLGHQFHZHPD\UHYLHZ+XPSKUH\j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jVVHQWHQFHGLGQRWH[FHHGWKH GHIDXOW\HDUPD[LPXPXQGHUE&'HIHQGDQW 5XOHRIWKH)HGHUDO5XOHVRI&ULPLQDO3URFHGXUHVWDWHV =DIHULQR0XQR]SOHGJXLOW\WRDVLQJOHFRXQWRIFRQVSLUDF\WR GLVWULEXWH FRFDLQH DQG PHWKDPSKHWDPLQH EXW mZLWK WKH ([FHSWLRQV WR UXOLQJV RU RUGHUV RI WKH FRXUW DUH H[SOLFLW UHVHUYDWLRQ WKDW KH GLG QRW DGPLW WR FRQVSLULQJ WR XQQHFHVVDU\DQGIRUDOOSXUSRVHVIRUZKLFKDQH[FHSWLRQ GHOLYHUPHWKDPSKHWDPLQHEXWRQO\DGPLWWHGWRWKHFRFDLQH KDVKHUHWRIRUHEHHQQHFHVVDU\LWLVVXIILFLHQWWKDWDSDUW\ DQGDPSKHWDPLQHWKDWZDVDFWXDOO\GHOLYHUHGl0XQR] DW WKH WLPHWKHUXOLQJRURUGHURIWKHFRXUWLVPDGHRU )GDW7KH'LVWULFW&RXUWWKHQLPSRVHGDPRQWK VRXJKWPDNHVNQRZQWRWKHFRXUWWKHDFWLRQZKLFKWKDW VHQWHQFHmEDVHGLQSDUWRQKLVFRQFOXVLRQWKDWGHIHQGDQWGLG SDUW\GHVLUHVWKHFRXUWWRWDNHRUWKDWSDUW\jVREMHFWLRQWR FRQVSLUHWRGLVWULEXWHPHWKDPSKHWDPLQHl)GDW WKHDFWLRQRIWKHFRXUWDQGWKHJURXQGVWKHUHIRUEXWLID :HUHFRJQL]HGWKDWWKLVGHWHUPLQDWLRQE\DSUHSRQGHUDQFHRI SDUW\KDVQRRSSRUWXQLW\WRREMHFWWRDUXOLQJRURUGHUWKH WKH HYLGHQFH WULJJHUHG DQ HQKDQFHG VWDWXWRU\ VHQWHQFLQJ UDQJH ERWK PLQLPXP DQG PD[LPXP EXW QHYHUWKHOHVV IROORZHG&RUUDGRLQFRQFOXGLQJWKDWWKHUXOHRI$SSUHQGLKDG QRWEHHQYLRODWHG ,QGHHG ZH EHOLHYH WRR KLJK D KXUGOH IRU GH QRYR UHYLHZ ZLOO UDLVH WKH VSHFWHU RI GHIHQGDQWjV FRXQVHO mPDNLQJ D ORQJ DQG YLUWXDOO\ XVHOHVV ODXQGU\ OLVW RI REMHFWLRQV WR UXOLQJV WKDW ZHUH SODLQO\ VXSSRUWHG E\ H[LVWLQJ SUHFHGHQWl sRKQVRQ Y 8QLWHG 6WDWHV 86 1HYHUWKHOHVV DV GLVFXVVHG EHORZ ZH XSKHOG WKH VHQWHQFHV RI WKUHH LQ RUGHU WR SUHVHUYH WKH LVVXH IRU DSSHDO $OWKRXJK WKH sRKQVRQ GHFLVLRQ RI WKH IRXU GHIHQGDQWV XQGHU WKH mSODLQ HUURUl VWDQGDUG RI UHYLHZ mVLQFH FRQFHUQHG WKH WLPLQJ RI SODLQ HUURU ZKHWKHU DQ HUURU PXVW EH SODLQ DW WKH DEVHQW WKH >$SSUHQGL @ HUURU WKHLU VHQWHQFHV ZRXOG KDYH EHHQ WKH VDPH DV WLPH RI WULDO RU DW WKH WLPH RI DSSHOODWH FRQVLGHUDWLRQ ZH EHOLHYH WKDW WKRVH ZKLFK ZHUH LPSRVHGl )G DW VLPLODU FRQFHUQV DULVH LQ WKH SUHVHUYDWLRQ RI GH QRYR UHYLHZ 8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\ DEVHQFHRIDQREMHFWLRQGRHVQRWWKHUHDIWHUSUHMXGLFHWKDW VHQWHQFLQJUDQJHRI\HDUVWROLIHDQGDQDFWXDOVHQWHQFHRI SDUW\ \HDUVDQGPRQWKV8SRQUHYLHZLQJ$SSUHQGLZHVWDWHG WKDWm>R@XUGXW\LQOLJKWRIWKLVFOHDUGLFWDWHIURPWKH&RXUW :HDJUHHZLWKWKH6HFRQG&LUFXLWWKDWm>7@RFRPPXQLFDWH LVWRH[DPLQHZKHWKHUWKHVHQWHQFLQJIDFWRULQWKLVFDVHZDV WKH µQDWXUHj RI D FODLP D SDUW\ GRHV QRW KDYH WR SUHVHQW D IDFWXDO GHWHUPLQDWLRQ DQG ZKHWKHU WKDW GHWHUPLQDWLRQ SUHFLVHRUGHWDLOHGOHJDODUJXPHQWVl8QLWHG6WDWHVY6SUHL LQFUHDVHGWKHPD[LPXPSHQDOW\IRUWKHFULPHFKDUJHGLQWKH )GG&LULQWHUQDOTXRWDWLRQPDUNV LQGLFWPHQWl)GDW%HFDXVHWKH'LVWULFW&RXUWjV RPLWWHG$OOWKDWLVUHTXLUHGLVWKDWWKHSDUW\mPDNH>@NQRZQ IDFWXDOILQGLQJDWVHQWHQFLQJKDGmLQFUHDVH>G@WKHPD[LPXP WRWKHFRXUWWKHDFWLRQZKLFKWKDWSDUW\GHVLUHVWKHFRXUWWR SHQDOW\WRZKLFK>WKHGHIHQGDQW@ZDVH[SRVHGlZHKHOGWKDW WDNHRUWKDWSDUW\jVREMHFWLRQWRWKHDFWLRQRIWKHFRXUWDQGWKH WKLVZDVDQmHOHPHQW>@RIWKHRIIHQVHZKLFKPXVWEHSURYHQ JURXQGV WKHUHIRUl )HG 5 &ULP 3 FI &RRO Y 8QLWHG EH\RQG D UHDVRQDEOH GRXEWl DQG ZH UHPDQGHG IRU D 6WDWHV86QQRWLQJWKDWDGHIHQVH UHGHWHUPLQDWLRQRIWKLVTXHVWLRQXQGHUWKHSURSHUVWDQGDUGRI REMHFWLRQWRMXU\LQVWUXFWLRQVZKLOHQRWDmPRGHORIFODULW\l SURRI)GDW ZDVVXIILFLHQWWRSUHVHUYHWKHREMHFWLRQRQDSSHDO7RROHY %D[WHU +HDOWKFDUH &RUS )G WK &LU 0RUH WR WKH SRLQW RI WKH SUHVHQW DSSHDO ZH UHDFKHG WKH KROGLQJ WKDW DQ REMHFWLRQ DV WR mIRXQGDWLRQl RI VDPHFRQFOXVLRQLQ8QLWHG6WDWHVY3DJH)G HYLGHQFH VXIILFLHQW WR SUHVHUYH D 'DXEHUW REMHFWLRQ RQ WK &LU D FDVH ZKLFK OLNH WKLV RQH LQYROYHG D DSSHDO FKDOOHQJH WR WKH VHQWHQFLQJ FRXUWjV GHWHUPLQDWLRQ RI GUXJ TXDQWLW\E\DSUHSRQGHUDQFHRIWKHHYLGHQFHIROORZLQJDMXU\ +XPSKUH\jVDWWRUQH\PD\KDYHFRQFHGHGWKDWXQGHUWKHQ FRQYLFWLRQ RQ D GUXJ FRQVSLUDF\ FKDUJH $IWHU H[DPLQLQJ FXUUHQWODZLWZDVZLWKLQWKHGLVWULFWFRXUWjVDXWKRULW\WRILQG $SSUHQGLDQG5HEPDQQZHVWDWHG GUXJ TXDQWLWLHV XVLQJ WKH SUHSRQGHUDQFH RI WKH HYLGHQFH VWDQGDUG QHYHUWKHOHVV LW LV DSSDUHQW IURP WKH UHFRUG WKDW 7KH&RXUWILQGVWKHSULQFLSOHVVHW IRUWKLQ$SSUHQGL +XPSKUH\jV DWWRUQH\ FKDOOHQJHG WKH SURSULHW\ RI WKDW DSSOLFDEOH WR GHIHQGDQWVj FDVHV ,Q FRXQW RQH RI WKH VWDQGDUG $OWKRXJK +XPSKUH\j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j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jVYHUGLFWl FDOOHGXSRQWRSDVVRQWKHFUHGLELOLW\RIWKHZLWQHVVHV 0RUHLPSRUWDQWO\RXURZQ&LUFXLWLPPHGLDWHO\DGRSWHGWKH s$DWHPSKDVLVDGGHG mVWDWXWRU\PD[LPXPlLQWHUSUHWDWLRQRI$SSUHQGL,QRXUYHU\ ILUVWSRVW$SSUHQGLGHFLVLRQ8QLWHG6WDWHVY&RUUDGR 7KHGLVVHQWHPSKDWLFDOO\FLWHV8QLWHG6WDWHVY3DJH )GWK &LU ZHFRQIURQWHGDFDVHLQ )G WK &LU DV IRUHFORVLQJ GH QRYR UHYLHZ ZKLFKWKHGHIHQGDQWVjVHQWHQFHVIRUD5,&2FRQVSLUDF\ZHUH XQOHVVWKHGHIHQGDQWH[SUHVVO\FKDOOHQJHVWKHGLVWULFWFRXUWjV EDVHGLQSDUWXSRQWKH'LVWULFW&RXUWjVILQGLQJWKDWDPXUGHU DXWKRULW\ WR GHWHUPLQH GUXJ TXDQWLWLHV +RZHYHU VXFK D SORWZDVRQHRIWKHREMHFWVRIWKLVFRQVSLUDF\EXWWKHMXU\jV IRUPDOREMHFWLRQUHTXLUHPHQWLJQRUHVWKHIDFWWKDW$SSUHQGL JHQHUDOYHUGLFWGLGQRWLQGLFDWHZKHWKHULWKDGUHDFKHGWKLV ZDVGHFLGHGXSRQERWKWKH6L[WK$PHQGPHQWMXU\DQGQRWLFH VDPHIDFWXDOFRQFOXVLRQ'HVSLWHWKHVHQWHQFLQJLPSOLFDWLRQV SURYLVLRQV DQG WKH 'XH 3URFHVV &ODXVHV RI WKH )LIWK DQG RIWKH'LVWULFW&RXUWjVIDFWILQGLQJXQGHUDSUHSRQGHUDQFHRI )RXUWHHQWK$PHQGPHQWV6HH$SSUHQGL86DWm$W WKHHYLGHQFHVWDQGDUGZHIRXQGQRYLRODWLRQRI$SSUHQGL VWDNHLQWKLVFDVHDUHFRQVWLWXWLRQDOSURWHFWLRQVRIVXUSDVVLQJ LPSRUWDQFH WKH SURVFULSWLRQ RI DQ\ GHSULYDWLRQ RI OLEHUW\ ,QWKLVFDVH>WKHGHIHQGDQWV@IDFHGDPD[LPXPVHQWHQFH ZLWKRXW GXH SURFHVV RI ODZ DQG WKH JXDUDQWHH WKDW LQ DOO RI WZHQW\ \HDUV RQ WKH 5,&2 FRQVSLUDF\ FRXQWV FULPLQDOSURVHFXWLRQVWKHDFFXVHGVKDOOHQMR\WKHULJKWWRD GLVUHJDUGLQJWKHPXUGHUFRQVSLUDF\%HFDXVHWKHGLVWULFW VSHHG\ DQG SXEOLF WULDO E\ DQ LPSDUWLDO MXU\l HPSKDVLV FRXUWGLGQRWVHQWHQFHHLWKHUGHIHQGDQWWRDWHUPRIPRUH DGGHGLQWHUQDOTXRWDWLRQPDUNVDQGFLWDWLRQVRPLWWHG7KH WKDQWZHQW\\HDUVRQWKH5,&2FRXQWV$SSUHQGLLVQRW 'XH3URFHVV&ODXVHmSURWHFWVWKHDFFXVHGDJDLQVWFRQYLFWLRQ WULJJHUHGDQGWKHH[LVWHQFHRIDPXUGHUFRQVSLUDF\GLG H[FHSWXSRQSURRIEH\RQGDUHDVRQDEOHGRXEWRIHYHU\IDFW QRWKDYHWREHGHFLGHGE\DMXU\XQGHUWKH UHDVRQDEOH QHFHVVDU\WRFRQVWLWXWHWKHFULPHZLWKZKLFKKHLVFKDUJHGl GRXEWVWDQGDUG ,QUH:LQVKLS86$OWKRXJKUHODWHG WKH 6L[WK $PHQGPHQW ULJKW WR WULDO E\ MXU\ DQG WKH GXH )GDWFLWDWLRQRPLWWHG SURFHVVULJKWWREHFRQYLFWHGE\HYLGHQFHEH\RQGDUHDVRQDEOH GRXEW DUH LQGHSHQGHQW OHJDO HQWLWOHPHQWV 6HH $SRGDFD Y 6RRQ WKHUHDIWHU ZH FRQVLGHUHG $SSUHQGL DW OHQJWK DQG 2UHJRQ86m:HDUHTXLWHVXUH DJDLQIRXQGWKDWLWDGGUHVVHGPD[LPXPSHQDOWLHV,Q8QLWHG WKDW WKH 6L[WK $PHQGPHQW LWVHOI KDV QHYHU EHHQ KHOG WR 6WDWHVY5HEPDQQ)GWK&LUWKH UHTXLUHSURRIEH\RQGDUHDVRQDEOHGRXEWLQFULPLQDOFDVHV GHIHQGDQWSOHGJXLOW\WRKHURLQGLVWULEXWLRQDQRIIHQVHZLWK 7KH UHDVRQDEOHGRXEW VWDQGDUG GHYHORSHG VHSDUDWHO\ IURP DPD[LPXPVHQWHQFHRI\HDUVEXWWKH'LVWULFW&RXUWIRXQG ERWKWKHMXU\WULDODQGWKHXQDQLPRXVYHUGLFWl,QIDFWZH DW VHQWHQFLQJ E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW D FRQILUPHGWKLVSRLQWLQ8QLWHG6WDWHVY5HEPDQQ)G GHDWKKDGUHVXOWHGIURPWKLVGLVWULEXWLRQOHDGLQJWRDVWDWXWRU\ WK&LUZKHQZHIRXQGWKDWDGHIHQGDQWZKRKDG ZDLYHGKHUULJKWWRDWULDOE\MXU\mGLGQRWZDLYHWKHULJKWWR KDYHDFRXUWGHFLGHDQ\UHPDLQLQJHOHPHQWVRIWKHRIIHQVH EH\RQGDUHDVRQDEOHGRXEWl,GDW 7KH '& &LUFXLW DSSDUHQWO\ KDV QRW VTXDUHO\ DGGUHVVHG WKH DSSOLFDWLRQ RI $SSUHQGL WR VWDWXWRU\ VHQWHQFLQJ UDQJHV EXW KDV KHOG ZLWK UHJDUG WR VHQWHQFLQJ HQKDQFHPHQWV XQGHU WKH 86 6HQWHQFLQJ *XLGHOLQHV 7KHSUHVHUYDWLRQRIDFRQVWLWXWLRQDOREMHFWLRQVKRXOGQRW WKDW m$SSUHQGL GRHV QRW DSSO\ WR VHQWHQFLQJ ILQGLQJV WKDW HOHYDWH D UHVW RQ PDJLF ZRUGV LW VXIILFHV WKDW WKH GLVWULFW FRXUW EH GHIHQGDQWjV VHQWHQFH ZLWKLQ WKH DSSOLFDEOH VWDWXWRU\ OLPLWVl 8QLWHG 6WDWHV DSSULVHGRIWKHREMHFWLRQDQGRIIHUHGDQRSSRUWXQLW\WRFRUUHFW Y )LHOGV )G '& &LU 8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\ LW+XPSKUH\jVDWWRUQH\QHYHUIRUPHGWKHZRUGVm$SSUHQGLl m$SSUHQGL KDV QR DSSOLFDWLRQ KHUHl DV LW mGHDOW ZLWK WKH EXWZHILQGWKHVXEVWDQFHRIKLVREMHFWLRQWRWKHGUXJTXDQWLW\ FRQVLGHUDWLRQRIIDFWVLQVHQWHQFLQJHQKDQFHPHQWEH\RQGWKH GHWHUPLQDWLRQFRPELQHGZLWKKLVREMHFWLRQWRWKHVWDQGDUGRI VWDWXWRU\PD[LPXPlZKLOHm>L@QWKHLQVWDQWFDVHWKHVHQWHQFH HYLGHQFHWREHXVHGVXIILFLHQWWRQRWLI\WKHGLVWULFWFRXUWRI LPSRVHG ZDV EHORZ WKH VWDWXWRU\ PD[LPXPl 8QLWHG WKHEDVLVIRUWKHREMHFWLRQDQGVXIILFLHQWWRSUHVHUYHWKHLVVXH 6WDWHV Y :LOOLDPV )G WK &LU IRUGHQRYRUHYLHZRQDSSHDO6HH6WUD\KRUQ)GDW m>:@KHQDGHIHQGDQWLVVHQWHQFHGWRDWHUPRILPSULVRQPHQW m$OWKRXJK >WKH GHIHQGDQW@ GLG QRW XWWHU WKH ZRUGV µGXH ZLWKLQWKHVWDWXWRU\PD[LPXPIRUWKHFULPHRIZKLFKKHZDV SURFHVVjDWHLWKHU>WKHSOHDRUVHQWHQFLQJKHDULQJ@KHPDGHLW FRQYLFWHG$SSUHQGLLVEHVLGHWKHSRLQWlLQWHUQDOTXRWDWLRQV ZHOONQRZQWKDWKHGLVSXWHGWKHGLVWULFWFRXUWjVIDFWXDOILQGLQJ DQGFLWDWLRQRPLWWHG8QLWHG6WDWHVY%DOWDV)G ZLWKUHVSHFWWRGUXJTXDQWLW\l8QLWHG6WDWHVY6WRNHV VW &LU m7KH UXOH LQ $SSUHQGL RQO\ DSSOLHV LQ )GWK&LUILQGLQJWKH$SSUHQGLLVVXH VLWXDWLRQV ZKHUH WKH MXGJHPDGH IDFWXDO GHWHUPLQDWLRQ SUHVHUYHG IRU KDUPOHVV HUURU UHYLHZ ZKHUH D GHIHQGDQW LQFUHDVHV WKH PD[LPXP VHQWHQFH EH\RQG WKH VWDWXWRU\ REMHFWHGWRMXU\LQVWUXFWLRQVWKDWDOORZHGFRQYLFWLRQIRUDQ\ PD[LPXP DQG QRW LQ VLWXDWLRQV ZKHUH WKH 'HIHQGDQW V mPHDVXUDEOH DPRXQWl RI GUXJV UDWKHU WKDQ WKH LQGLFWHG SRWHQWLDOH[SRVXUHLVLQFUHDVHGZLWKLQWKHVWDWXWRU\UDQJHl DPRXQW8QLWHG6WDWHVY0F&XOOLJDQ)GG 8QLWHG6WDWHVY:LOOLDPV)GG&LU &LU KROGLQJ WKDW ZKHUH D MXU\jV ILQGLQJ ILW WKH m>7@KRXJKWKH'LVWULFW&RXUWjVILQGLQJUHJDUGLQJWKHDPRXQW GHILQLWLRQRIRQHFULPHDQGQRWDQRWKHUDQGWKHGHIHQGDQW RI GUXJV VXEVWDQWLDOO\ LQFUHDVHG WKH SRVVLEOH VWDWXWRU\ DUJXHGWKDWKHVKRXOGEHVHQWHQFHGXQGHUWKHFRUUHFWVWDWXWRU\ PD[LPXPVHQWHQFHXQGHU86&EZHKROGWKDW PD[LPXP mLQWRQDWLRQ RI WKH ZRUG µ$SSUHQGLj LV $SSUHQGL LV QRW DSSOLFDEOH WR >WKH GHIHQGDQWjV@ VHQWHQFH XQQHFHVVDU\lWRSUHVHUYHWKHLVVXHIRUDSSHDO EHFDXVHWKHVHQWHQFHDFWXDOO\LPSRVHGZDVZHOOXQGHUWKH RULJLQDOVWDWXWRU\PD[LPXPRI\HDUVl8QLWHG6WDWHVY )XUWKHUPRUH3DJHFDQEHGLVWLQJXLVKHG,Q3DJHZHIRXQG +LVKDZ)GWK&LUm>$@VORQJDV WKDWGHIHQGDQWVZKRUDLVHGWKHLU$SSUHQGLFKDOOHQJHIRUWKH WKH GHIHQGDQWjV VHQWHQFH IDOOV ZLWKLQ WKH PD[LPXP ILUVWWLPHRQDSSHDOZHUHHQWLWOHGRQO\WRSODLQHUURUUHYLHZRI HVWDEOLVKHG E\ VWDWXWH $SSUHQGL GRHV QRW IRUHFORVH WKHLUFODLPV,GDW&RQWUDU\WRWKHGLVVHQWjVHIIRUWWR FRQVLGHUDWLRQ RI GUXJ TXDQWLWLHV EH\RQG WKH RIIHQVH RI ZUHQFK HYHU\ RXQFH RI LQIHUHQFH IURP WKDW FDVH KRZHYHU FRQYLFWLRQl8QLWHG6WDWHVY.HLWK)GWK QRWKLQJLQ3DJHLQGLFDWHVZKDWW\SHRIREMHFWLRQLIDQ\ &LUKROGLQJWKDWEHFDXVHWKHGHIHQGDQWjVmVHQWHQFHGLG WKHGHIHQGDQWVUHJLVWHUHGLQWKHGLVWULFWFRXUW3DJHPD\KDYH QRWH[FHHGWKHPD[LPXPVHQWHQFHRIWKLUW\\HDUVXQGHU> DGGUHVVHGWKHVWDQGDUGRIUHYLHZDSSOLFDEOHZKHQDSDUW\IDLOV 86&@E&WKHRIIHQVHHVWDEOLVKHGE\WKHMXU\jV WRREMHFWLQWKHGLVWULFWFRXUWEXW3DJHRIIHUVQRJXLGDQFHDV YHUGLFW LW GRHV QRW UXQ DIRXO RI $SSUHQGLjV FRQVWLWXWLRQDO WRZKDWW\SHRIREMHFWLRQLVVXIILFLHQWWRSUHVHUYHDQ$SSUHQGL OLPLWDWLRQVl8QLWHG6WDWHVY5RJHUV)G FKDOOHQJHRQDSSHDO WK &LU m$SSO\LQJ $SSUHQGLjV FRQVWLWXWLRQDO SULQFLSOHWRVHFWLRQFDVHVLWLVFOHDUWKDWWKHSULQFLSOHLV YLRODWHGLIDGHIHQGDQWLVVHQWHQFHGWRDJUHDWHUVHQWHQFHWKDQ WKHVWDWXWRU\PD[LPXPEDVHGXSRQWKHTXDQWLW\RIGUXJVLI 7KH GLVVHQW DEVWUDFWV RQH OLQH IURP WKDW RSLQLRQ m'HIHQGDQWV VXFKTXDQWLW\LVGHWHUPLQHGE\WKH VHQWHQFLQJMXGJHUDWKHU WKDQWKHWULDOMXU\l8QLWHG6WDWHVY$JXD\R'HOJDGR IDLOHG WR REMHFW WR WKH GLVWULFW MXGJH PDNLQJ WKH GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHVl 3DJH )G DW DV SURRI WKDW 3DJH UHTXLUHV D VSHFLILF REMHFWLRQ WR WKH MXGJHjV DXWKRULW\ 7KLV LV DW EHVW D ZHDN IRUP RI WKH )GWK&LUm7KHUXOHRI$SSUHQGLRQO\ IDPLOLDU PD[LP LQFOXVLR XQLXV HVW H[FOXVLR DOWHULXV mWKH LQFOXVLRQ RI RQH DSSOLHVZKHUHWKHQRQMXU\IDFWXDOGHWHUPLQDWLRQLQFUHDVHVWKH LV WKH H[FOXVLRQ RI WKH RWKHUl (7KH GLVVHQWjV FLWDWLRQ WR 8QLWHG 6WDWHV Y 1HXKDXVVHU )G WK &LU LV PHUHO\ DQRWKHU H[DPSOH RI 8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\ PDMRULW\j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jV VHQWHQFH ZLWKLQ WKLV H[SDQGHG VWDWXWRU\ UDQJH VLVWHU FLUFXLWV KDYH DGRSWHG D GLIIHUHQW DSSURDFK DQG KDYH 6HH86DW6 &WDW2j&RQQRUs KHOGWKDWIDFWXDOFKDOOHQJHVWRWKHFDOFXODWLRQRIGUXJDPRXQWV FRQFXUULQJ 7HOOLQJO\WKH&RXUWGLGQRWGHQ\WKDWVXFKD LQWKHGLVWULFWFRXUWE\LWVHOIPD\EHLQVXIILFLHQWWRSUHVHUYH VFKHPH ZRXOG SDVV FRQVWLWXWLRQDO PXVWHU EXW LQVWHDG WKH $SSUHQGL LVVXH RQ DSSHDO 6HH HJ 8QLWHG 6WDWHV Y FRQFHGHG WKDW mD 6WDWH FRXOG K\SRWKHWLFDOO\ XQGHUWDNH WR &DQGHODULR)GWK&LUVWDWLQJ UHYLVH LWV HQWLUH FULPLQDO FRGH LQ WKH PDQQHU WKH GLVVHQW WKDWm>D@GHIHQGDQWjVREMHFWLRQWRWKHTXDQWLW\RIGUXJVWKDW VXJJHVWVnH[WHQGLQJDOOVWDWXWRU\PD[LPXPVHQWHQFHVWRIRU WKH *RYHUQPHQW DWWULEXWHV WR KLP LV QRW RQ LWV RZQ D H[DPSOH\HDUVDQGJLYLQJMXGJHVJXLGHGGLVFUHWLRQDVWR FRQVWLWXWLRQDO REMHFWLRQl FHUW GHQLHG 6&W DIHZVSHFLDOO\VHOHFWHGIDFWRUVZLWKLQWKDWUDQJHl86 +RZHYHULWLVE\QRPHDQVFOHDUWKDWWKLVUDWLRQDOHLV DWQ6&WDWQ1HYHUWKHOHVVWKH&RXUW FRQVLVWHQWO\DSSOLHG6HH8QLWHG6WDWHVY9D]TXH])G GLVPLVVHG WKLV SRVVLELOLW\ DV mUHPRWHl EHFDXVH m>D@PRQJ G&LUDSSO\LQJSODLQHUURUUHYLHZEHFDXVHWKH RWKHU UHDVRQV VWUXFWXUDO GHPRFUDWLF FRQVWUDLQWV H[LVW WR GHIHQGDQWGLGQRWmFRQWHVWWKHGUXJTXDQWLW\HYLGHQFHDWDQ\ GLVFRXUDJH OHJLVODWXUHV IURP HQDFWLQJ SHQDO VWDWXWHV WKDW VWDJHRIWKHSURFHHGLQJVlHPSKDVLVDGGHG H[SRVHHYHU\GHIHQGDQWFRQYLFWHGRIIRUH[DPSOHZHDSRQV SRVVHVVLRQWRDPD[LPXPVHQWHQFHH[FHHGLQJWKDWZKLFKLV ,Q DQ\ HYHQW QRWZLWKVWDQGLQJ WKH ELQGLQJ HIIHFW RI LQ WKH OHJLVODWXUHjV MXGJPHQW JHQHUDOO\ SURSRUWLRQDO WR WKH 6WUD\KRUQ HYHQ XQGHU D PRUH ULJRURXV UHTXLUHPHQW IRU DQ FULPHl86DWQ6&WDWQ REMHFWLRQLWLVSODLQWKDW+XPSKUH\SUHVHUYHGWKH$SSUHQGL $OORIWKLVLVFRPSHOOLQJHYLGHQFHWKDWWKHUXOHRI$SSUHQGL LPSOLFDWHV RQO\ VHQWHQFLQJ PD[LPXPV DQG QRW VHQWHQFLQJ UDQJHVJHQHUDOO\)XUWKHUDVQRWHGHDFKDQGHYHU\RQHRIRXU WKLVLQFOXVLR DUJXPHQW %XW DV WKH 'LVWULFW RI &ROXPELD &LUFXLW KDV ZLVHO\ QRWHG m>W@KH PD[LPjV IRUFH LQ SDUWLFXODU VLWXDWLRQV GHSHQGV VLVWHU&LUFXLWVWKDWKDVDGGUHVVHGWKHTXHVWLRQnLQDOOWHQRI HQWLUHO\ RQ FRQWH[W ZKHWKHU RU QRW WKH GUDIWVPHQjV PHQWLRQ RI RQH WKLQJ WKHHOHYHQRWKHU&LUFXLWVnKDVDUULYHGDWWKLVFRQFOXVLRQ GRHV UHDOO\ QHFHVVDULO\ RU DW OHDVW UHDVRQDEO\ LPSO\ WKH SUHFOXVLRQ RI 6HH8QLWHG6WDWHVY+DUULV)GWK&LU DOWHUQDWLYHVl 6KRRN Y '& )LQ 5HVSRQVLELOLW\ 0JPW $VVLVWDQFH m:KLOHWKH6XSUHPH&RXUWPD\FHUWDLQO\RYHUUXOH0F0LOODQ $XWK )G '& &LU *LYHQ WKDW WKH UHFRUG LQ 3DJH LQWKHIXWXUHDQGDSSO\$SSUHQGLWRDQ\IDFWRUWKDWLQFUHDVHV LV GHYRLG RI DQ\ UHIHUHQFH WR WKH IRUP RI WKH REMHFWLRQ LQ WKH GLVWULFW FRXUW DQG JLYHQ WKDW LW LV D SDQHO RI MXGJHV DQG QRW D OHJLVODWXUH ZH DUH WKHPLQLPXPVHQWHQFHRUmUDQJHlRISXQLVKPHQWUDWKHUWKDQ LQWHUSUHWLQJ ZH GR QRW DJUHH WKDW LW LV UHDVRQDEOH WR DVVXPH WKDW WKH 3DJH RQO\ WKH PD[LPXP SXQLVKPHQW WKDW LV QRW RXU UROHl FRXUW LQWHQGHG WR QDUURZ VR VHYHUHO\ WKH IRUP RI D FRJQL]DEOH $SSUHQGL FLWDWLRQVRPLWWHG8QLWHG6WDWHVY:KLWH)G REMHFWLRQ G&LUm>:@HUHDG>$SSUHQGL@WRDSSO\RQO\ZKHQD 7KH GLVVHQWjV UHOLDQFH RQ sRKQVRQ Y 8QLWHG 6WDWHV LV HUURQHRXV IRU VHQWHQFLQJFRXUWjVILQGLQJVLQFUHDVHWKHSHQDOW\IDFHGE\WKH D VLPLODU UHDVRQ sRKQVRQ GLG QRW LQGLFDWH ZKHWKHU WKH GHIHQGDQW UDLVHG GHIHQGDQWDERYHWKHVWDWXWRU\PD[LPXPIRUDJLYHQFRXQW DQ REMHFWLRQ LQ WKH GLVWULFW FRXUW sRKQVRQ RQO\ QRWHV WKDW WKH GHIHQGDQW KHUVHOI LQVLVWHG WKDW WKH GLVWULFW FRXUW FRPPLW WKH HUURU 86 DW DQG QRW ZKHQ WKH\ PHUHO\ DIIHFW WKH OHQJWK RI D VHQWHQFH 0RUHRYHU sRKQVRQ FDQ EH GLVWLQJXLVKHG IURP WKH SUHVHQW FDVH ZLWKLQ WKH VWDWXWRU\ UDQJHl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j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jVGHFLVLRQLQ$SSUHQGLDQGUHTXLUHVUHVHQWHQFLQJ7KH WKH UDQJH DYDLODEOH WR WKH MXGJH DIIHFWV KLV FKRLFH RI FRQVHTXHQFHRIWKLVDOOHJHGYLRODWLRQ+XPSKUH\PDLQWDLQV VHQWHQFH )LQDOO\ LQ QXPHURXV FDVHV WKH LVWKDWKHZDVVXEMHFWHGWRDQLQFUHDVHGSHQDOW\IRUFRQGXFW DJJUDYDWLQJIDFWUDLVHGWKHZKROHUDQJHnERWKWKHWRS QRW FKDUJHG LQ WKH LQGLFWPHQW EDVHG RQ WKH GLVWULFW FRXUWjV DQGERWWRP7KRVHFRXUWVLQKROGLQJWKDWVXFKDIDFWZDV ILQGLQJ E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW KH ZDV DQHOHPHQWGLGQRWERWKHUZLWKDQ\GLVWLQFWLRQEHWZHHQ UHVSRQVLEOH IRU NLORJUDPV RI FRFDLQH $W RUDO FKDQJHV LQ WKH PD[LPXP DQG WKH PLQLPXP :KDW DUJXPHQWWKH*RYHUQPHQWFRQFHGHGWKDWWKHGLVWULFWFRXUWjV PDWWHUHG ZDV VLPSO\ WKH RYHUDOO LQFUHDVH LQ WKH VHQWHQFLQJRI+XPSKUH\RIIHQGHG$SSUHQGLDVFRQVWUXHGE\ SXQLVKPHQWSURYLGHGE\ODZ RXUGHFLVLRQLQ8QLWHG6WDWHVY5DPLUH])GWK &LU$VRXUGLVFXVVLRQEHORZUHYHDOVZHWRRFRQFOXGH 86 DW 6 &W DW WKDW+XPSKUH\KDVGHPRQVWUDWHGDQ$SSUHQGLYLRODWLRQWKDW 7KRPDVsFRQFXUULQJLQWHUQDOTXRWDWLRQVZLWKDOWHUDWLRQV UHTXLUHVXVWRYDFDWHKLVVHQWHQFHDQGUHPDQGWKLVFDVHIRU DQGFLWDWLRQVRPLWWHG3ODLQO\sXVWLFH7KRPDVZRXOGQRW UHVHQWHQFLQJ KDYH GHHPHG LW QHFHVVDU\ WR DGYRFDWH D mEURDGHU UXOHl HQFRPSDVVLQJ ZKROH VHQWHQFLQJ UDQJHV DQG QRW MXVW 7KH6XSUHPH&RXUWLQ$SSUHQGLKHOGWKDWm>R@WKHUWKDQWKH PD[LPXPV LI WKH PDMRULW\ KDG DOUHDG\ DGRSWHG VXFK D IDFWRIDSULRUFRQYLFWLRQDQ\IDFWWKDWLQFUHDVHVWKHSHQDOW\ VWDQGDUG IRUDFULPHEH\RQGWKHSUHVFULEHGVWDWXWRU\PD[LPXPPXVWEH VXEPLWWHGWRDMXU\DQGSURYHGEH\RQGDUHDVRQDEOHGRXEWl $SSUHQGLjV OLPLWDWLRQ WR VWDWXWRU\ PD[LPXPV LV IXUWKHU 86DW$OWKRXJK+XPSKUH\ZDVLQGLFWHGIRUDQG FRQILUPHGE\WKHPDMRULW\jVUHVSRQVHWRsXVWLFH2j&RQQRUjV FRQYLFWHGRIYLRODWLRQVRI86&DDQG VXJJHVWLRQ WKDW LWV KROGLQJ mUHVWV RQ D PHDQLQJOHVV E$WKHMXU\jVIDLOXUHWRGHWHUPLQHEH\RQGDUHDVRQDEOH IRUPDOLVPl VLQFH D OHJLVODWXUH VHHPLQJO\ FRXOG VDWLVI\ WKH GRXEWWKHTXDQWLW\RIGUXJVIRUZKLFK+XPSKUH\VKRXOGEH 8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\ VHQWHQFHZKLFKPD\EHLPSRVHGZLWKLQWKHVWDWXWRU\SODQl KHOGUHVSRQVLEOHSURSHUO\UHTXLUHGKLPWREHVHQWHQFHGRQO\ 86DW6&WDWIRRWQRWHRPLWWHG XQGHU86&E&6HH5DPLUH])GDW 6HFWLRQE&SURYLGHVIRUDPD[LPXPSHQDOW\ sXVWLFH2j&RQQRULQVLVWHGLQKHU$SSUHQGLGLVVHQWWKDWmLW RIWZHQW\\HDUVH[FHSWZKHUHDVKHUHDGHIHQGDQWKDVDSULRU LVLQFXPEHQWRQWKH&RXUWWRDGPLWWKDWLWLVRYHUUXOLQJ IHORQ\GUXJFRQYLFWLRQLQZKLFKFDVHDGHIHQGDQWLVVXEMHFW 0F0LOODQl$SSUHQGL86DW6&WDW WR D WKLUW\\HDU PD[LPXP VWDWXWRU\ SHQDOW\ %HFDXVH WKH 2j&RQQRU s GLVVHQWLQJ ,Q UHVSRQVH WKH $SSUHQGL GLVWULFWFRXUWjVWZHQW\\HDUVHQWHQFHGLGQRWH[FHHGWKHWKLUW\ PDMRULW\HPSKDVL]HGWKDWm>Z@HGRQRWRYHUUXOH0F0LOODQl \HDU PD[LPXP VWDWXWRU\ SHQDOW\ RQ WKLV EDVLV DORQH 86DWQ6&WDWQ5DWKHUWKH +XPSKUH\FDQVWDWHQRHUURU &RXUWVWDWHGWKDWm>Z@HOLPLW>0F0LOODQjV@KROGLQJWRFDVHV WKDWGRQRWLQYROYHWKHLPSRVLWLRQRIDVHQWHQFHPRUHVHYHUH 2XU $SSUHQGL DQDO\VLV KRZHYHU GRHV QRW HQG ZLWK D WKDQWKHVWDWXWRU\PD[LPXPIRUWKHRIIHQVHHVWDEOLVKHGE\WKH ILQGLQJ WKDW +XPSKUH\jV VHQWHQFH GLG QRW H[FHHG WKH MXU\jV YHUGLFW n D OLPLWDWLRQ LGHQWLILHG LQ WKH 0F0LOODQ SUHVFULEHGVWDWXWRU\PD[LPXPSHQDOW\DVDGHIHQGDQWPD\ RSLQLRQLWVHOIl86DWQ6&WDWQ QHYHUWKHOHVV VWDWH DQ $SSUHQGL YLRODWLRQ ZKHUH KH FDQ 7KXV$SSUHQGLDQG0F0LOODQUHDGLQWDQGHPSODLQO\ZRXOG GHPRQVWUDWH WKDW WKH GLVWULFW FRXUWjV IDFWXDO GHWHUPLQDWLRQ SHUPLWDVHQWHQFLQJMXGJHWRILQGE\DSUHSRQGHUDQFHRIWKH UHVXOWHG LQ DQ LQFUHDVH RI WKH UDQJH RI VWDWXWRU\ SHQDOWLHV HYLGHQFHIDFWVZKLFKLQFUHDVHWKHPLQLPXPSHQDOW\IDFHGE\ DSSOLFDEOHWRWKHGHIHQGDQWIRUSXUSRVHVRIVHQWHQFLQJ&I DGHIHQGDQWVRORQJDVWKHMXGJHjVILQGLQJVGRQRWOHDGWRWKH $SSUHQGL 86 DW m>,@W LV XQFRQVWLWXWLRQDO IRU D LPSRVLWLRQRIDVHQWHQFHEH\RQGWKHVWDWXWRU\PD[LPXPIRU OHJLVODWXUHWRUHPRYHIURPWKHMXU\WKHDVVHVVPHQWRIIDFWV WKH RIIHQVH HVWDEOLVKHG E\ WKH MXU\jV YHUGLFW DORQH 7KLV WKDW LQFUHDVH WKH SUHVFULEHG UDQJH RI SHQDOWLHV WR ZKLFK D FRPSOHWHO\EHOLHVWKHEURDGmDOWHUWKHUDQJHlLQWHUSUHWDWLRQRI FULPLQDOGHIHQGDQWLVH[SRVHGlFLWDWLRQRPLWWHG:HKDYH WKHUXOHRI$SSUHQGL UHFRJQL]HGWKDWVXFKDYLRODWLRQPD\EHVWDWHGZKHQDGLVWULFW FRXUWjVGUXJTXDQWLW\GHWHUPLQDWLRQVXEMHFWVDGHIHQGDQWWRD 7KHUHDUHRWKHULQGLFDWLRQVZLWKLQ$SSUHQGLLWVHOIWKDWWKH PDQGDWRU\PLQLPXPWHUPRILPSULVRQPHQWZKLFKZRXOGQRW PDMRULW\GLGQRWDGRSWVXFKDVZHHSLQJUXOH)RUH[DPSOH KDYHEHHQWULJJHUHGEXWIRUWKHGLVWULFWFRXUWjVILQGLQJV sXVWLFH7KRPDVjVFRQFXUUHQFHGRHVHQGRUVHVRPHWKLQJDNLQ WRWKHmDOWHUWKHUDQJHlVWDQGDUGLQOLJKWRIKLVmYLHZWKDWWKH ,Q 8QLWHG 6WDWHV Y )ORZDO ZH YDFDWHG WKH GHIHQGDQWjV &RQVWLWXWLRQUHTXLUHVDEURDGHUUXOHWKDQWKH&RXUWDGRSWVl PDQGDWRU\ VHQWHQFH RI OLIH LPSULVRQPHQW ZLWKRXW WKH 86DW6&WDW7KRPDVsFRQFXUULQJ SRVVLELOLW\RISDUROHDQGUHPDQGHGIRUUHVHQWHQFLQJZKHUHWKH 6SHFLILFDOO\sXVWLFH7KRPDVRSLQHGWKDWmDµFULPHjLQFOXGHV GLVWULFW FRXUWjV GUXJ TXDQWLW\ ILQGLQJ DORQH UHQGHUHG WKH HYHU\IDFWWKDWLVE\ODZDEDVLVIRULPSRVLQJRULQFUHDVLQJ GHIHQGDQWLQHOLJLEOHIRUDQRQPDQGDWRU\PLQLPXPVHQWHQFH SXQLVKPHQW LQ FRQWUDVW ZLWK D IDFW WKDW PLWLJDWHV REVHUYLQJWKDW SXQLVKPHQWl86DW6&WDW7KRPDV sFRQFXUULQJsXVWLFH7KRPDVREVHUYHGWKDWWKHHIIHFWRIKLV 7KLVGLIIHUHQFH>EHWZHHQSRVVLEOHSHQDOWLHV@LVVLJQLILFDQW SURSRVHG UXOH XSRQ WKH FRQWLQXLQJ YLWDOLW\ RI 0F0LOODQ LQWKLVFDVHEHFDXVHWKHWULDOMXGJHjVGHWHUPLQDWLRQRIWKH mVKRXOGEHSODLQHQRXJKlEXWKHWKHQZHQWRQWRH[SODLQWKDW ZHLJKWRIWKHGUXJVWRRNDZD\DQ\GLVFUHWLRQLQWHUPVRI WKLVUXOHZRXOGUHDFKDQGLQYDOLGDWHmWKH0F0LOODQVLWXDWLRQ LPSRVLQJ D VKRUWHU VHQWHQFH ,W LV QRW D IRUHJRQH RI D PDQGDWRU\ PLQLPXP VHQWHQFHl EDVHG XSRQ D MXGJHjV FRQFOXVLRQ WKDW WKH WULDO MXGJH ZRXOG KDYH VHQWHQFHG ILQGLQJVE\DSUHSRQGHUDQFHRIWKHHYLGHQFH )ORZDOWROLIHZLWKRXWWKHSRVVLELOLW\RIUHOHDVHLIDMXU\ KDGGHWHUPLQHGWKHGUXJVZHLJKHGNLORJUDPV,Q 8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\ IDFWLIWKHMXU\KDGGHWHUPLQHGWKDWWKHGUXJVZHLJKHG SURYHG EH\RQG D UHDVRQDEOH GRXEW RQO\ LI WKDW IDFW DV D OHVVWKDQJUDPVDOLIHVHQWHQFHZRXOGQRWKDYHHYHQ IRUPDOPDWWHUH[WHQGVWKHUDQJHRISXQLVKPHQWEH\RQGWKH EHHQ DQ RSWLRQ XQGHU 86& E& 7KH SUHVFULEHG VWDWXWRU\ PD[LPXPl RU LL mWKH &RQVWLWXWLRQ MXGJHjV GHWHUPLQDWLRQ HIIHFWLYHO\ OLPLWHG WKH UDQJH RI UHTXLUHVWKDWDIDFWEHVXEPLWWHGWRDMXU\DQGSURYHGEH\RQG DSSOLFDEOH SHQDOWLHV DQG GHSULYHG )ORZDO RI WKH D UHDVRQDEOH GRXEW LI LW DV D IRUPDO PDWWHU LQFUHDVHV WKH RSSRUWXQLW\ WR UHFHLYH OHVV WKDQ OLIH LPSULVRQPHQW UDQJH RI SXQLVKPHQW EH\RQG WKDW ZKLFK FRXOG OHJDOO\ EH ZLWKRXWWKHSRVVLELOLW\RIUHOHDVH LPSRVHGDEVHQWWKDWIDFWl86DW6&WDW 2j&RQQRU s GLVVHQWLQJ )LQDOO\ WKH &RXUWjV )GWK&LU LQLWLDO VWDWHPHQW RI LWV KROGLQJ FRXOG EH FRQVWUXHG DV D FRQVWLWXWLRQDOFRPPDQGWKDWD GHIHQGDQWjVDFWXDOVHQWHQFH /LNHZLVHLQ5DPLUH]ZHYDFDWHGWKHGHIHQGDQWjVWZHQW\ QRWH[FHHGWKHSUHVFULEHGVWDWXWRU\PD[LPXPIRUWKHRIIHQVH \HDUPDQGDWRU\VHQWHQFHXQGHUE$DQGUHPDQGHG HVWDEOLVKHGE\WKHMXU\jVYHUGLFW KLV FDVH IRU UHVHQWHQFLQJ ZKHUH WKH DSSOLFDEOH VWDWXWRU\ SHQDOW\ ZDV GHWHUPLQHG H[FOXVLYHO\ E\ WKH GLVWULFW FRXUWjV :KLOHDOORIWKHVHUHDGLQJVDQGSHUKDSVPRUHHQMR\VRPH GUXJTXDQWLW\ILQGLQJ7KHUHZHREVHUYHGWKDWm>D@JJUDYDWLQJ GHJUHHRIVXSSRUWLQWKHEUXWHWH[WRIWKH$SSUHQGLGHFLVLRQ IDFWRUVRWKHUWKDQDSULRUFRQYLFWLRQWKDWLQFUHDVHWKHSHQDOW\ WKHUH LV DPSOH UHDVRQ WR UHMHFW WKH EURDGHVW RI WKHVH IURP D QRQPDQGDWRU\ PLQLPXP VHQWHQFH WR D PDQGDWRU\ LQWHUSUHWDWLRQV n LH WKDW IDFWV ZKLFK DOWHU WKH UDQJH RI PLQLPXPVHQWHQFHRUIURPDOHVVHUWRDJUHDWHUPLQLPXP SHQDOWLHVPXVWEHSURYHGWRDMXU\EH\RQGDUHDVRQDEOHGRXEW VHQWHQFHDUHQRZHOHPHQWVRIWKHFULPHWREHFKDUJHGDQG 0RVWVLJQLILFDQWO\ZHNQRZWKDWWKH6XSUHPH&RXUWGLGQRW SURYHGl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jV0DQGDWRU\0LQLPXP6HQWHQFLQJ$FWXQGHU VHQWHQFHGXQGHUE& ZKLFKmDQ\RQHFRQYLFWHGRIFHUWDLQHQXPHUDWHGIHORQLHVLV VXEMHFW WR D PDQGDWRU\ PLQLPXP VHQWHQFH RI ILYH \HDUVj ,Q 8QLWHG 6WDWHV Y 6WUD\KRUQ ZH DJDLQ YDFDWHG D LPSULVRQPHQW LI WKH VHQWHQFLQJ MXGJH ILQGV E\ D GHIHQGDQWjVVHQWHQFHDQGUHPDQGHGKLVFDVHIRUUHVHQWHQFLQJ SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW WKH SHUVRQ µYLVLEO\ DIWHUDGLVWULFWFRXUWjVDWWULEXWLRQRISRXQGVRIPDULMXDQD SRVVHVVHGDILUHDUPjGXULQJWKHFRPPLVVLRQRIWKHRIIHQVHl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jV VHQWHQFH ZH ,QVWHDGWKH3HQQV\OYDQLDODZmRSHUDWH>G@VROHO\WROLPLWWKH REVHUYHGWKDW VHQWHQFLQJFRXUWjVGLVFUHWLRQLQVHOHFWLQJDSHQDOW\ZLWKLQWKH UDQJH DOUHDG\ DYDLODEOH WR LW ZLWKRXW WKH VSHFLDO ILQGLQJ RI 8QGHU5DPLUH]LIWKHJRYHUQPHQWVHHNVWRFRQYLFWDQG YLVLEOHSRVVHVVLRQRIDILUHDUPlDQGmµXS>SHG@WKHDQWHjIRU VHQWHQFH6WUD\KRUQXQGHUE%IRUFRQVSLUDF\ WKH GHIHQGDQW RQO\ E\ UDLVLQJ WR ILYH \HDUV WKH PLQLPXP WRSRVVHVVPRUHWKDQNLORJUDPVRIPDULMXDQDLWPXVW 8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\ UXOHVIRUWKHFRQGXFWRIFULPLQDOSURVHFXWLRQV,ZLOOGLVFXVV LQGLFWKLPDSSURSULDWHO\DQGWKHQSURYHWKHHOHPHQWVRI HDFKRIWKHVHSRLQWVLQWXUQ WKDWRIIHQVHEH\RQGDUHDVRQDEOHGRXEW2WKHUZLVHWKH JRYHUQPHQWPD\LQGLFWDGHIHQGDQWXQGHUWKHSURYLVLRQ )LUVW LW XQIRUWXQDWHO\ LV WUXH WKDW $SSUHQGLjV FHQWUDO ZLWKWKHORZHVWVWDWXWRU\PD[LPXPVHQWHQFHDQGWKHQDV mKROGLQJl LV VWDWHG LQ GLIIHUHQW ZD\V ,QGHHG WKH YHU\ LQWKLVFDVHUHO\RQUHOHYDQWFRQGXFWILQGLQJVWRDFKLHYH SDUDJUDSK LQ ZKLFK WKH PDMRULW\ DQQRXQFHV LWV FRQFOXVLRQ ZKDWLWRWKHUZLVHPLJKWQRWLIKHOGWRDKLJKHUEXUGHQRI LQFOXGHVWZRYDULDQWVRImWKHUXOHlRI$SSUHQGL SURRI QDPHO\ D VHQWHQFH XQGHU D VHSDUDWH RIIHQVHjV HQKDQFHGSHQDOW\SURYLVLRQ ,QVXPRXUUHH[DPLQDWLRQRIRXUFDVHVLQWKLVDUHDDQG RIWKHKLVWRU\XSRQZKLFKWKH\UHO\FRQILUPVWKHRSLQLRQ )GDW WKDWZHH[SUHVVHGLQs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m>,@WLVXQFRQVWLWXWLRQDOIRUDOHJLVODWXUHWRUHPRYHIURP LW ZDV UHTXLUHG WR VHQWHQFH +XPSKUH\ WR D PDQGDWRU\ WKH MXU\ WKH DVVHVVPHQW RI IDFWV WKDW LQFUHDVH WKH PLQLPXP VHQWHQFH RI PRQWKV DV SURYLGHG IRU LQ SUHVFULEHG UDQJH RI SHQDOWLHV WR ZKLFK D FULPLQDO E$:HUHFRJQL]HWKDW5DPLUH]DQG6WUD\KRUQ GHIHQGDQWLVH[SRVHG,WLVHTXDOO\FOHDUWKDWVXFKIDFWV DUH GLVWLQJXLVKDEOH LQDVPXFK DV WKRVH FDVHV LQYROYHG PXVWEHHVWDEOLVKHGE\SURRIEH\RQGDUHDVRQDEOHGRXEWl VLWXDWLRQV LQ ZKLFK WKH VWDWXWRU\ PDQGDWRU\ PLQLPXP 86 DW 6&W RSLQLRQ RI LPSRVHG ZDV HTXLYDOHQW WR WKH VWDWXWRU\ PD[LPXP 6WHYHQVsVHHDOVRLGDW6&WRSLQLRQ +XPSKUH\ E\ FRQWUDVW ZDV VHQWHQFHG WR D WZHQW\\HDU RI6FDOLDs PDQGDWRU\PLQLPXPVHQWHQFHXQGHUE$GHVSLWH WKH IDFW WKDW KH VKRXOG KDYH EHHQ VHQWHQFHG XQGHU $SSUHQGL86DW6&WDWIRRWQRWH RPLWWHG $V REVHUYHG LQ sXVWLFH 2j&RQQRUjV GLVVHQW WKHVH WZR IRUPXODWLRQVVHHPWRHPEUDFHDYDULHW\RIGLIIHUHQWmUXOHVl 7KH UHFRUG UHDGV DV IROORZV )LUVWE\HQGRUVLQJWKHVWDWHPHQWVLQWKHFRQFXUULQJRSLQLRQV LQ sRQHV mWKH &RXUW DSSHDUV WR KROG WKDW DQ\ IDFW WKDW 7+( &2857 7KLV &RXUW GRHV LQ IDFW DFFHSW WKH LQFUHDVHVRUDOWHUVWKHUDQJHRISHQDOWLHVWRZKLFKDGHIHQGDQW ILQGLQJV DQG JXLGHOLQH DSSOLFDWLRQV FRQWDLQHG LQ WKH SUHVHQWHQFH LQYHVWLJDWLRQ UHSRUW ZLWK WKH H[FHSWLRQ LVH[SRVHGnZKLFKE\GHILQLWLRQPXVWLQFOXGHLQFUHDVHVRU WKDW WKLV &RXUW ZLOO QRW DIIRUG D WZROHYHO HQKDQFHPHQW DOWHUDWLRQVWRHLWKHUWKHPLQLPXPRUPD[LPXPSHQDOWLHVn IRU WKH JXQ 7KHUHIRUH ZH DUH ORRNLQJ DW D FULPLQDO PXVWEHSURYHGWRDMXU\EH\RQGDUHDVRQDEOHGRXEWl KLVWRU\ FDWHJRU\ RI D WRWDO RIIHQVH OHYHO RI ZKLFK 86DW6&WDW2j&RQQRUsGLVVHQWLQJ DFFRUGLQJ WR WKH JXLGHOLQH LPSULVRQPHQW UDQJH ZHjUH sXVWLFH 2j&RQQRU WKHQ VXJJHVWV WZR IXUWKHU mSODXVLEOH ORRNLQJ DW WR PRQWKV +RZHYHU ZH DUH LQ IDFW LQWHUSUHWDWLRQVl RI WKH PDMRULW\jV KROGLQJ L mWKH ORRNLQJ DW D PDQGDWRU\ PLQLPXP RI PRQWKV &RQVWLWXWLRQUHTXLUHVWKDWDIDFWEHVXEPLWWHGWRDMXU\DQG s$ DW 8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\ E& ZKLFK SURYLGHV IRU D WKLUW\\HDU VWDWXWRU\ D GH QRYR VWDQGDUG WKDW DSSOLHV XQLTXHO\ WR VXFK FODLPV PD[LPXPSHQDOW\ UHJDUGOHVV RI ZKHWKHU WKH\ ZHUH UDLVHG EHIRUH WKH 'LVWULFW &RXUW $ FORVH LQVSHFWLRQ RI )ORZDO 5DPLUH] DQG 6WUD\KRUQ UHYHDOV WKDW VXFK D GLVWLQFWLRQ LV RI QR FRQVHTXHQFH 7KH ,Q UHVROYLQJ WKH $SSUHQGL FKDOOHQJH LQ WKLV FDVH WKH UDWLRQDOHXQGHUO\LQJHDFKRIWKHVHSDQHOjVGHFLVLRQVZDVQRW PDMRULW\ IROORZV WKHVH ODWWHU SDQHOV ERWK LQ WKHLU VWUDLQHG WKDWWKHPDQGDWRU\PLQLPXPVHQWHQFHRIRQHSURYLVLRQZDV UHDGLQJRI$SSUHQGLDQGLQWKHLUDSSOLFDWLRQRIDQLPSURSHU OHVVWKDQRUHTXDOWRWKHVWDWXWRU\PD[LPXPRIDQRWKHUEXWD VWDQGDUG RI UHYLHZ $FFRUGLQJO\ ZKLOH , FRQFXU LQ WKH FRQFHUQ WKDW WKH GLVWULFW FRXUW ZDV FRPSHOOHG WR LVVXH D UHPDLQGHURIWKHPDMRULW\jVGHFLVLRQ,GLVVHQWIURPLWVUXOLQJ VHQWHQFHWKDWEXWIRULWVGUXJTXDQWLW\GHWHUPLQDWLRQLWZRXOG WKDWWKLVFDVHEHUHPDQGHGIRUUHVHQWHQFLQJ QRWKDYHEHHQREOLJDWHGRUHYHQSHUPLWWHGWRLPSRVH6HH 6WUD\KRUQ )G DW m,W PDWWHUV QRW DFFRUGLQJ WR , 5DPLUH]WKDWWKHVWDWXWRU\PD[LPXPIRUE'LV HTXLYDOHQW WR WKH VWDWXWRU\ PDQGDWRU\ PLQLPXP IRU $V LQGLFDWHG DERYH , KDYH WZR SULQFLSDO FRQFHUQV ZLWK E%l5DPLUH])GDWQRWLQJWKDWWKH HOHPHQWVRIWKLV&LUFXLWjVSRVW$SSUHQGLMXULVSUXGHQFH)LUVW GLIIHUHQFH EHWZHHQ D VWDWXWRU\ PD[LPXP SHQDOW\ DQG D ZKLOH DV sXVWLFH 2j&RQQRU DSWO\ REVHUYHG WKH $SSUHQGL PDQGDWRU\PLQLPXPSHQDOW\RIWKHVDPHOHQJWKLVVLJQLILFDQW PDMRULW\VWDWHGVHYHUDOIRUPXODWLRQVRILWVUXOLQJZKLFKDUH EHFDXVHWKHWULDOMXGJHjVGHWHUPLQDWLRQRIWKHZHLJKWRIWKH VRPHZKDWLQWHQVLRQZLWKHDFKRWKHULWLVLQFXPEHQWXSRQXV GUXJV mWRRN DZD\ DQ\ GLVFUHWLRQ LQ WHUPV RI LPSRVLQJ D QHYHUWKHOHVVWRDGRSWDQGDGKHUHWRRQHRIWKHVHIRUPXODWLRQV VKRUWHUVHQWHQFHlTXRWLQJ)ORZDO)GDW DVWKHODZRIWKLV&LUFXLW,QVWHDGZHOLNHWKHPDMRULW\LQ $SSUHQGLKDYHHQGRUVHGVHYHUDOGLIIHUHQWDQGLQFRQVLVWHQW ,QGHHGWKHGLVWULFWFRXUWLQWKHLQVWDQWFDVHHYHQLILWKDG VWDWHPHQWVRImWKHUXOHlRI$SSUHQGL7REHVXUHLI$SSUHQGL EHHQVRLQFOLQHGZRXOGQRWKDYHVHQWHQFHG+XPSKUH\WR LWVHOILVDPELJXRXVWKHUHLVOLWWOHZHFDQGRWRRYHUFRPHWKLV PRQWKV WKH ORZ HQG RI WKH *XLGHOLQHV VHQWHQFLQJ UDQJH SUREOHP G@WKDWWKHGLVWULFWFRXUWWKRXJKWLWVHOIFRQVWUDLQHGE\ PXVW DSSO\ $SSUHQGL LQ WKH ILUVW LQVWDQFH , DP HVSHFLDOO\ DVSHFLILFVWDWXWHWRLPSRVHWKHVHQWHQFHLWGLGl,G WURXEOHGE\WKLV&LUFXLWjVIDLOXUHWRHQGRUVHDVLQJOHmUXOHlRI $SSUHQGLLQLWVGHFLVLRQVE\WKHKRSHOHVVMXPEOHWKDWLQVWHDG $IWHU *DUFLD DQG .LQJ ZH DUH OHIW ZLWK DQ LQRUGLQDWHO\ SUHVHQWV LWVHOI DV WKH mSUHFHGHQWl RI WKLV &RXUW RQ WKLV FRPSOLFDWHG$SSUHQGLGRFWULQH$OWKRXJKLWLVREYLRXVWKDW TXHVWLRQDQGE\WKHKDYRFWKLVVWDWHRIDIIDLUVSOD\VZLWKDQ\ WKHOLPLWDWLRQVSODFHGXSRQ5DPLUH]OHDGWRSHFXOLDUUHVXOWV SULQFLSOHG DWWHPSW WR DGKHUH WR WKH FDUGLQDO UXOH RI VWDUH ZHDUHFRQVWUDLQHGE\WKHSULQFLSOHRIVWDUHGHFLVLVWRDELGHE\ GHFLVLV WKRVH GHFLVLRQV 6HH 6DOPL Y 6HFj\ RI +HDOWK +XPDQ 8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 6HUYV)GWK&LU,WLVDOVRDSSDUHQW WKDWPXFKRIRXUFXUUHQW$SSUHQGLMXULVSUXGHQFHDVLWUHODWHV &21&855,1*,13$57',66(17,1*,13$57 WRPDQGDWRU\PLQLPXPVUHVWVXSRQZKDWZDVLQWKHPLQGRI BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB WKHGLVWULFWMXGJHZKHQVKHVHQWHQFHGWKHGHIHQGDQW8QGHU RXUFXUUHQWGRFWULQHDGLVWULFWMXGJHPD\VHQWHQFHDGHIHQGDQW 526(1'LVWULFWsXGJHFRQFXUULQJLQSDUWDQGGLVVHQWLQJ WRDWHUPRILPSULVRQPHQWZKLFKH[FHHGVEXWGRHVQRWHTXDO LQSDUW,FRQFXULQDOOEXW3DUW,,,VHFWLRQ'RIWKH&RXUWjV WKHPDQGDWRU\PLQLPXPRIDKLJKHUSHQDOW\UDQJHZLWKRXW GHFLVLRQ+RZHYHU,UHVSHFWIXOO\GLVVHQWIURPWKHPDMRULW\jV FRQFHUQWKDWVXFKDVHQWHQFHZLOOUDLVHDQLQIHUHQFHWKDWVKH GHWHUPLQDWLRQ WKDW WKLV FDVH EH UHPDQGHG IRU UHVHQWHQFLQJ IHOW KHUVHOI FRQVWUDLQHG E\ WKH PDQGDWRU\ PLQLPXP 6HH XQGHUWKHDXWKRULW\RI$SSUHQGLY1HZsHUVH\86 *DUFLD)GDW+RZHYHULIHYLGHQFHLQWKHUHFRUG 6&W7KLVUXOLQJLQP\YLHZMRLQVWKH LQGLFDWHV WKDW WKH MXGJH WKRXJKW KHUVHOI FRQVWUDLQHG WR ZURQJ VLGH LQ DQ LQWUDFLUFXLW GHEDWH DV WR WKH SURSHU VHQWHQFHWKHGHIHQGDQWZLWKLQWKHKLJKHUVWDWXWRU\UDQJHVXFK FRQVWUXFWLRQRI$SSUHQGL7REHVXUHWKHUHLV6L[WK&LUFXLW HYLGHQFHZLOOGHPRQVWUDWHDSRWHQWLDO$SSUHQGLYLRODWLRQ6HH DXWKRULW\IRUWKHSRVLWLRQWDNHQE\WKHPDMRULW\n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mZKHQDODWHUGHFLVLRQRIWKLVFRXUWFRQIOLFWVZLWKRQHRIRXU JUDQWLQJ FHUWLRUDUL RQ WKH TXHVWLRQ RI ZKHWKHU IDFWXDO SULRUSXEOLVKHGGHFLVLRQVZHDUHVWLOOERXQGE\WKHKROGLQJRI ILQGLQJV WKDW UHVXOW LQ DQ LQFUHDVHG PDQGDWRU\ PLQLPXP WKHHDUOLHUFDVHl'DUUDKY&LW\RI2DN3DUN)G VHQWHQFHPXVWEHDOOHJHGLQDQLQGLFWPHQWDQGSURYHGEH\RQG WK &LU ,I DQ\ DGGLWLRQDO mWLHEUHDNHUVl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mPLQRULW\RIRQHlRQWKLVSRLQW 7KH GLVVHQWj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jV $SSUHQGL GHFLVLRQ RIIHUV PRUH WKDQ RQH ODZQDPHO\WKDWDQREMHFWLRQLVIRUIHLWHGDQGKHQFHVXEMHFW IRUPXODWLRQ RI WKH WHVW o RQH WKDW DSSHDUV WR VXSSRUW D RQO\WRSODLQHUURUUHYLHZLIQRWWLPHO\DVVHUWHGEHIRUHWKH mVWDWXWRU\ PD[LPXPl UXOH DQG DQRWKHU WKDW DSSHDUV WR WULDOFRXUW,QVWHDGWKHPDMRULW\KROGVWKDWZHVKRXOGUHYLHZ VXSSRUWDQmLQFUHDVHGUDQJHlUXOH1HYHUWKHOHVVWKHGLVVHQW 8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\ IDXOWVWKLV&RXUWIRUIDLOLQJWRDGKHUHWRZKDWLWGHVFULEHVDVD DFNQRZOHGJPHQWWKDWWKH\KDGEHHQXVHGWRIXUWKHUKLVGUXJ mVWDWXWRU\PD[LPXPlLQWHUSUHWDWLRQRI$SSUHQGL7KHGLVVHQW VHOOLQJDFWLYLWLHV/LNHZLVH&URPLW\DGUXJGHDOHUZLWKDQ H[WUDFWV IURP RXU GHFLVLRQV LQ 8QLWHG 6WDWHV Y 3DJH DQG HYHQPRUHH[WHQVLYHRSHUDWLRQWKDQ(DWRQjVHQWHUHGLQWRD 8QLWHG6WDWHVY0XQR])GWK&LUDPRQJ SOHD DJUHHPHQW ZLWK WKH *RYHUQPHQW LQ H[FKDQJH IRU KLV RWKHUVDQH[FOXVLYHmVWDWXWRU\PD[LPXPlLQWHUSUHWDWLRQRI WHVWLPRQ\ ZKLFK UHVXOWHG LQ D VHQWHQFH RI PRQWKV $SSUHQGL$VZLWKWKHVWDQGDUGRIUHYLHZKRZHYHUQRQHRI LPSULVRQPHQWZLWKDWZHOYHPRQWKUHGXFWLRQIRUFRPSOHWLRQ WKHVHGHFLVLRQVSUHFOXGHDFRPSDQLRQmLQFUHDVHGUDQJHlUXOH RIDGUXJWUHDWPHQWSURJUDPWREHVHUYHGDWDORZVHFXULW\ WKDW ZRXOG FRYHU PDQGDWRU\ PLQLPXPV 3DJH KHOG WKDW IDFLOLW\ZKHUHKLVEURWKHULVDOVRKRXVHGDQGZKLFKLVOHVVWKDQ $SSUHQGLKDGEHHQYLRODWHGEHFDXVHWKHVHQWHQFHH[FHHGHG WZRKRXUVIURPKLVIDPLO\DQGIULHQGVLQ&OHYHODQG WKH VWDWXWRU\ PD[LPXP o LW VDLG QRWKLQJ DERXW$SSUHQGLjV DSSOLFDWLRQ WR PDQGDWRU\ PLQLPXPV 0XQR] KHOG WKDW +XPSKUH\UHDVRQVWKDWLIKHKDGRIIHUHG(DWRQDQG&URPLW\ $SSUHQGL KDG QRW EHHQ YLRODWHG ZKHUH D VHQWHQFH GLG QRW VRPHWKLQJRIYDOXHLQH[FKDQJHIRUWKHLUIDYRUDEOHWHVWLPRQ\ H[FHHG WKH VWDWXWRU\ PD[LPXP EXW DJDLQ ZH FDQQRW LQIHU KH ZRXOG KDYH EHHQ VXEMHFW WR LQGLFWPHQW IRU EULELQJ D IURP0XQR]WKDWWKHSDQHOLQWHQGHGWRHQGRUVHDQH[FOXVLYH ZLWQHVVSXUVXDQWWR86&FVRZK\WKHQVKRXOG mPD[LPXPRQO\lUXOH7KHGLVVHQWDUJXHVWKDWRXUGHFLVLRQ WKH*RYHUQPHQWEHDOORZHGWRGRWKDWZKLFKLIGRQHE\D LQ)ORZDOZKLFKZDVDFWXDOO\DUJXHGEHIRUH0XQR]EXW SULYDWH FLWL]HQ FRXOG UHVXOW LQ FULPLQDO SURVHFXWLRQ +LV GHFLGHGWZRZHHNVDIWHUZDUGWRRNDQmXQZDUUDQWHGlWXUQ FODLPLVIRUHFORVHGE\RXUGHFLVLRQLQ8QLWHG6WDWHVY:DUH IURP WKH mPD[LPXP RQO\l UXOH RI 3DJH DQG0XQR] %XW LQ ZKLFK ZH KHOG WKDW IHGHUDO SURVHFXWRUV DUH EH\RQG WKH WKHUHLVQRWKLQJIXQGDPHQWDOO\LUUHFRQFLODEOHDERXW$SSUHQGL VFRSHRI86&F)GWK SURWHFWLQJ D GHIHQGDQW IURP D VHQWHQFH WKDW H[FHHGV WKH &LU VWDWXWRU\PD[LPXPDQGDVHQWHQFHWKDWLQFUHDVHVWKHUDQJHRI SHQDOWLHVE\UDLVLQJWKHPDQGDWRU\PLQLPXP&DVHVVKRXOG $OVR ZLWKRXW PHULW LV +XPSKUH\jV DUJXPHQW WKDW WKH *RYHUQPHQWjV XVH RI (DWRQjV DQG &URPLW\jV WHVWLPRQ\ YLRODWHG 'LVFLSOLQDU\ 5XOH & RI WKH 2KLR &RGH RI $V D PDWWHU RI IRUPDO ORJLF ODQJXDJH LQ 0XQR] FRXOG EH FRQVWUXHG 3URIHVVLRQDO5HVSRQVLELOLW\ZKLFKSURYLGHVWKDWm>D@ODZ\HU WR H[FOXGH DQ\ $SSUHQGL YLRODWLRQ XQOHVV WKH GLVWULFW FRXUWjV ILQGLQJ VKDOO QRW SD\ RIIHU WR SD\ RU DFTXLHVFH LQ WKH SD\PHQW RI UHVXOWHG LQ D GHIHQGDQW UHFHLYLQJ D VHQWHQFH LQ H[FHVV RI WKH PD[LPXP FRPSHQVDWLRQWRDZLWQHVVFRQWLQJHQWXSRQWKHFRQWHQWRIKLV VWDWXWRU\ SHQDOW\ 6XFK IRUPDOLVP KRZHYHU ZRXOG LQHYLWDEO\ OHDG WR WHVWLPRQ\RUWKHRXWFRPHRIWKHFDVHl+HFLWHVQRDXWKRULW\ DEVXUG UHVXOWV )RU H[DPSOH LI D GLVWULFW FRXUW LVVXHG D VHQWHQFH EHORZ WKH DQG ZH KDYH IRXQG QRQH IRU WKH SURSRVLWLRQ WKDW D SOHD PDQGDWRU\ PD[LPXP XVLQJ WKH UHDVRQDEOH GRXEW VWDQGDUG EXW GLG VR DIWHU KDYLQJ SHUHPSWRULO\ GLVPLVVHG WKH MXU\ WKHUH ZRXOG EH OLWWOH TXHVWLRQ WKDW DJUHHPHQWLVEDUUHGE\'5&:HDFFRUGLQJO\ILQGQR D FRQVWLWXWLRQDO YLRODWLRQ KDG RFFXUUHG
Copyright © 2024 by eLaws. All rights reserved.