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&28572)$33($/6 )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB 81,7(' 67$7(6 2) $0(5,&$ ; 3ODLQWLII$SSHOOHH 1R Y ! +(15< *$5&,$ 'HIHQGDQW$SSHOODQW 1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW 1R n5REHUW+&OHODQG'LVWULFWsXGJH $UJXHG 0DUFK 'HFLGHGDQG)LOHG sXQH %HIRUH .583$16.<%2**6DQG%$7&+(/'(5 &LUFXLWsXGJHV BBBBBBBBBBBBBBBBB &2816(/ $5*8(' 'DYLG%+HUULQJWRQ%DG$[H0LFKLJDQIRU $SSHOODQW .DWKOHHQ 0RUR 1HVL $66,67$17 81,7(' 67$7(6 $77251(< 'HWURLW 0LFKLJDQ IRU $SSHOOHH 21%5,() 'DYLG%+HUULQJWRQ%DG$[H0LFKLJDQIRU $SSHOODQW 'DYLG s 'HEROG $66,67$17 81,7(' 67$7(6$77251(<'HWURLW0LFKLJDQIRU$SSHOOHH 8QLWHG6WDWHVY*DUFLD 1R 1R 8QLWHG6WDWHVY*DUFLD BBBBBBBBBBBBBBBBB WKDQSULRUFRQYLFWLRQ WKDWLQFUHDVHVWKHPD[LPXPSHQDOW\IRU DFULPHPXVWEHFKDUJHGLQDQLQGLFWPHQWl WKHGLVWULFW 23,1,21 FRXUWjVIDLOXUHWRQRWLFHDQ\GHIHFWFDQQRWEHFKDUJHGDVSODLQ BBBBBBBBBBBBBBBBB HUURU *DUFLD SOHG JXLOW\ WR WKH LQGLFWPHQWjV FKDUJH RI FRQVSLUDF\WRSRVVHVVZLWKLQWHQWWRGLVWULEXWHPDULMXDQD KH $/,&( 0 %$7&+(/'(5 &LUFXLW sXGJH $SSHOODQW H[SOLFLWO\DGPLWWHGWUDIILFNLQJLQDQDPRXQWVXIILFLHQWWRSODFH +HQU\*DUFLDDSSHDOVKLVVHQWHQFHIURPWKHGLVWULFWFRXUWjV KLPZLWKLQWKHOLPLWVRI86& E % DQGKHZDV RUGHU GHQ\LQJ KLP D UHGXFWLRQ IRU DFFHSWDQFH RI VHQWHQFHGZLWKLQWKHOLPLWVRIWKDWVHFWLRQ&OHDUO\*DUFLDjV UHVSRQVLELOLW\$SSHOODQWDOVRFODLPVWKDWWKHGLVWULFWFRXUW FRQYLFWLRQDQGVHQWHQFHSXUVXDQWWRWKDWLQGLFWPHQWDQGSOHD LPSURSHUO\LQFUHDVHGKLVVHQWHQFHE\PDNLQJILQGLQJVRIIDFW GLG QRW DIIHFW KLV VXEVWDQWLDO ULJKWV 6HH 8QLWHG 6WDWHV Y UHJDUGLQJWKHDPRXQWRIGUXJVWUDQVSRUWHGLQYLRODWLRQRIWKH 2ODQR86 6XSUHPH &RXUWjV GHFLVLRQ LQ$SSUHQGL Y 1HZ s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sDQXDU\ *DUFLDFKDQJHGKLVSOHDWRJXLOW\SXUVXDQW WRD5XOH3OHD$JUHHPHQW7KH&RXUWVHQWHQFHGKLPWR PRQWKVLPSULVRQPHQWRQ6HSWHPEHU 'XULQJWKHFRXUVHRID'($LQYHVWLJDWLRQRIDGUXJULQJ GLVWULEXWLQJ PDULMXDQD EHWZHHQ 7H[DV DQG 0LFKLJDQ D FRQILGHQWLDOLQIRUPDQWSURYLGHGLQIRUPDWLRQWR'($6SHFLDO $JHQW&DU\)UHHPDQUHJDUGLQJ*DUFLDjVLQYROYHPHQWLQWKH ULQJ7KHLQYHVWLJDWRUVOHDUQHGWKDW*DUFLDKDGEHHQKLUHGE\ 5RQDOG &DUERQL D FRFRQVSLUDWRU DQG RZQHU RI D XVHG FDU GHDOHUVKLS WR WUDQVSRUW FDUV WR ORFDWLRQV WKURXJKRXW WKH FRXQWU\ &DUERQL DQG *DUFLD KLG PDULMXDQD ZUDSSHG LQ JUHDVHGSDFNDJHVWRIUXVWUDWHGHWHFWLRQHIIRUWVLQVRPHRIWKH FDUVWREHWUDQVSRUWHG7KHFDUVZHUHWKHQORDGHGRQWRDFDU KDXOHUZKLFKWUDQVSRUWHGWKHPWRWKHLQWHQGHGGHVWLQDWLRQ *DUFLDZRXOGPHHWWKHFDUKDXOHUWKHUHSD\WKHGULYHUDQG VHHWKDWWKHFDUVJRWWRWKHLULQWHQGHGEX\HUV7KHPDULMXDQD 8QLWHG6WDWHVY*DUFLD 1R 1R 8QLWHG6WDWHVY*DUFLD DGPLWVDOORIWKHIDFWVWKDWFRPSULVHWKHHOHPHQWVRIWKHFULPH GHOLYHULHVZHUHFORDNHGDVOHJLWLPDWHWUDQVDFWLRQVEHWZHHQFDU ,IZHDUHWRDSSO\$SSUHQGLLQWKHFRQWH[WRIDJXLOW\SOHDZH GHDOHUVKLSVDQGFDUEX\HUV$SHUVRQZLVKLQJWR SXUFKDVH PXVWYLHZWKHVWDWXWRU\VFKHPHDXWKRUL]HGE\WKHVHFWLRQRU PDULMXDQDLQEXONIURP&DUERQLZRXOGSXUFKDVHRQHRIKLV VHFWLRQVRIWKHFULPLQDOODZWRZKLFKWKHGHIHQGDQWKDVSOHG XVHGFDUVDWDPDUNXS WKHKLGGHQPDULMXDQDZDVLQFOXGHGLQ JXLOW\DVWKHDQDORJWRWKHMXU\jVYHUGLFW,QWKLVFDVHWKDW WKH SULFH RI WKH FDU $IWHU WKH GHOLYHU\ RI WKH FDUV ZDV VHFWLRQ DW PLQLPXP ZRXOG EH 86& E % FRPSOHWHG *DUFLD ZRXOG IO\ EDFN WR +RXVWRQ DQG WKH ZKLFKHQFRPSDVVHVWKHTXDQWLW\RIPDULMXDQDWRZKLFK*DUFLD UHFLSLHQWV RI WKH FDUV ZRXOG UHPRYH DQG GLVWULEXWH WKH H[SUHVVO\DGPLWWHGLQKLVVWDWHPHQWVWRWKH'($*DUFLDjV PDULMXDQD 8VLQJ WKLV VFKHPH *DUFLD DQG &DUERQL SOHDWKXVDGPLWVWKDWKHFRQVSLUHGWRSRVVHVVZLWKLQWHQWWR WUDQVSRUWHGODUJHDPRXQWVRIPDULMXDQDIURP+RXVWRQ7H[DV GLVWULEXWHWKHTXDQWLW\RIPDULMXDQDZKRVHPD[LPXPVWDWXWRU\ WR 0LFKLJDQ 1RUWK &DUROLQD )ORULGD 0LQQHVRWD DQG SHQDOW\ LV \HDUV LQ SULVRQ $QG DOWKRXJK WKH VHQWHQFH $ODEDPD LPSRVHGLQWKLVFDVHGLGQRWH[FHHGWKHVWDWXWRU\PD[LPXP SHQDOW\IRUWKHTXDQWLW\RIPDULMXDQDWRZKLFK*DUFLDSOHG 7KHSUHVHQWHQFHUHSRUWEDVHGODUJHO\RQDGPLVVLRQV*DUFLD JXLOW\ KLV DGPLVVLRQ RI WKLV TXDQWLW\ VDWLVILHV HYHQ WKH PDGHWRWKH'($DIWHUKHZDVLQGLFWHGDQGEHIRUHKHHQWHUHG mEH\RQGDUHDVRQDEOHGRXEWl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mNQRZLQJO\RULQWHQWLRQDOO\SRVVHVVZLWKLQWHQW PDULMXDQDLV\HDULQSULVRQ WR PDQXIDFWXUH GLVWULEXWH RU GLVSHQVH D FRQWUROOHG VXEVWDQFHl86& D *DUFLDSOHGJXLOW\WRDOO 7KH JRYHUQPHQW REMHFWHG WR WKH SUHVHQWHQFH UHSRUWjV WKHPDWHULDOHOHPHQWVRIWKLVRIIHQVH FDOFXODWLRQ RI TXDQWLW\ DQG VXEPLWWHG D VXPPDU\ RI DQ LQWHUYLHZ ZLWK &DUERQL LQ ZKLFK &DUERQL FODLPHG WKDW WKH *DUFLD DOVR DUJXHV WKDW WKH JUDQG MXU\ LQGLFWPHQW PXVW DPRXQWRIPDULMXDQDWUDQVSRUWHGZDVDWOHDVWNLORJUDPV FRQWDLQ WKH GHWDLOV UHJDUGLQJ WKH DPRXQW RI mFRFDLQH >VLF@ ZKLFKFRUUHVSRQGVWRDEDVHVHQWHQFLQJOHYHORIXQGHUWKH DPRXQWVWRFKDUJHRIWKHW\SHDQGTXDQWLW\RIWKHFRQWUROOHG *XLGHOLQHV7KLVDPRXQWZDVFRQVLVWHQWZLWKWKHTXDQWLWLHV VXEVWDQFH LQYROYHG LV VRPHKRZ VXIILFLHQW WR DGGUHVV WKH DOOHJHGE\WKHJRYHUQPHQWLQWKHZRUNVKHHWVDWWDFKHGWRWKH 'HIHQGDQWjV)LIWK$PHQGPHQWULJKWVl7RWKHH[WHQWWKDW SOHD DJUHHPHQW WKDW *DUFLD KDG H[HFXWHG *DUFLD ILOHG D ZHXQGHUVWDQGWKLVFODLPZHILQGLWZLWKRXWPHULW(YHQLI UHVSRQVHWRWKHJRYHUQPHQWjVREMHFWLRQVVSHFLILFDOO\DJUHHLQJ ZHZHUHWRILQGWKDWWKHLQGLFWPHQWLVGHIHFWLYHVHHsRQHVY WRWKHTXDQWLW\UHFRPPHQGHGLQWKHSUHVHQWHQFHUHSRUW7KH 8QLWHG6WDWHV86Q m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jVFODLPV UHJDUGLQJWUDQVSRUWLQJODUJHEXONDPRXQWVRIPDULMXDQDDQG 7KHVHQWHQFHILQDOO\LPSRVHGE\WKHGLVWULFWFRXUWGRHVQRW RQO\ UHOXFWDQWO\ DGPLWWHG WR SLFNLQJ XS WKH SURFHHGV IURP RIIHQGWKLVFRXUWjVKROGLQJLQ8QLWHG6WDWHVY5DPLUH] PDULMXDQDVDOHV+HDOVRGHQLHGPDNLQJFHUWDLQVWDWHPHQWVWR )G WK &LU $OWKRXJK WKH GLVWULFW FRXUWjV WKH '($ UHJDUGLQJ WKH H[WHQW RI KLV LQYROYHPHQW ZLWK WKH ILQGLQJV KHUH EURXJKW WKH GHIHQGDQW ZLWKLQ WKH VHQWHQFLQJ FRQVSLUDF\WRGLVWULEXWHPDULMXDQD UDQJHRI E $ VSHFLI\LQJ\HDUVWROLIH ZKLFKLV DKLJKHUUDQJHWKDQKHH[SOLFLWO\DGPLWWHGWRDWKLVDOORFXWLRQ )ROORZLQJ WKH KHDULQJ sXGJH &OHODQG LVVXHG ILQGLQJV RI VHH E % VSHFLI\LQJ \HDUV WKH VHQWHQFH IDFWLQZKLFKKHFUHGLWHG&DUERQLjVYHUVLRQRIWKHDPRXQWV LPSRVHGKHUHZDVQRWDWWKHERWWRPRIWKHKLJKHUVWDWXWRU\ VKLSSHGDQGFRQFOXGHGWKDW*DUFLDKDGEHHQLQYROYHGLQWKH UDQJHDVLWZDVLQ5DPLUH]7KXVQRWKLQJLQGLFDWHVWKDWWKH VKLSPHQWRI NLORJUDPVRIPDULMXDQD7KHFRXUWDOVR GLVWULFWFRXUWWKRXJKWLWVHOIFRQVWUDLQHGE\DVSHFLILFVWDWXWHWR IRXQGWKDW*DUFLDjVHTXLYRFDWLRQUHJDUGLQJWKHDPRXQWVKH LPSRVH WKH VHQWHQFH LW GLG 7KH ILQDO VHQWHQFH o LPSRVHG FDUULHG GLVTXDOLILHG KLP IURP UHFHLYLQJ DQ mDFFHSWDQFH RI SXUVXDQWWRWKH*XLGHOLQHVDQGVXSSRUWHGE\ILQGLQJVRIIDFW UHVSRQVLELOLW\lDGMXVWPHQWXQGHU866*( D $WOHDVW DSSURSULDWHO\ IRXQG E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH o EXW OHVV WKDQ NJ RI PDULMXDQD UHTXLUHV D EDVH RIIHQGVQHLWKHU$SSUHQGLRU5DPLUH] RIIHQVHOHYHORIXQGHUWKH6HQWHQFLQJ*XLGHOLQHV XQGHU 86& E $ WKHPD[LPXPSHQDOW\IRUPRUHWKDQ )LQDOO\LWLVLPSRUWDQWWRQRWHWKDWZKHQDSSOLHGWRDJXLOW\ NJLVOLIHLQSULVRQ7KHFRXUWVHQWHQFHG*DUFLDXVLQJ SOHDWKH6XSUHPH&RXUWjVKROGLQJLQ$SSUHQGLGRHVQRWPDNH WKHEDVHRIIHQVHOHYHORIDQGDFULPLQDOKLVWRU\FDWHJRU\ H[SOLFLWVHQVH7KH&RXUWVSHFLILFDOO\OLPLWHGLWVKROGLQJWR RI,,7KHUHVXOWLQJVHQWHQFHZDVPRQWKVZKLFKRFFXSLHV FDVHVLQZKLFKmDQRQMXU\IDFWXDOGHWHUPLQDWLRQLQFUHDVHVWKH WKHERWWRPUXQJRIWKHDSSOLFDEOHUDQJH PD[LPXPVHQWHQFHEH\RQGWKHVWDWXWRU\UDQJHDXWKRUL]HGE\ WKHMXU\jVYHUGLFWl$JXLOW\SOHDRIFRXUVHHOLPLQDWHVDQ\ MXU\YHUGLFWDQGKHQFHDQ\VWDWXWRU\UDQJHDXWKRUL]HGE\WKH MXU\jV YHUGLFW %\ HQWHULQJ D SOHD RI JXLOW\ D GHIHQGDQW 7KH ZLWQHVVHV GLVFXVV WKH TXDQWLWLHV RI GUXJV VKLSSHG LQ ERWK SRXQGV DQG NLORJUDPV 7KH PHDVXUHPHQW PDWHULDO WR VHQWHQFLQJ LV NLORJUDPV 3RXQGV FDQ EH FRQYHUWHG LQWR NLORJUDPV E\ GLYLGLQJ E\ )RUW\ \HDUV LQFDUFHUDWLRQ LV WKH PD[LPXP SHQDOW\ DXWKRUL]HG E\ E % 8QLWHG6WDWHVY*DUFLD 1R 1R 8QLWHG6WDWHVY*DUFLD SRVVHVVLQJZLWKWKHLQWHQWWRGLVWULEXWHDFRQWUROOHGVXEVWDQFH *DUFLD KDV DSSHDOHG WKURXJK FRXQVHO WKH GHQLDO RI WKH SURKLELWHGE\86& D +HGRHVQRWFKDOOHQJH DFFHSWDQFHRIUHVSRQVLELOLW\DQGKDVUDLVHGSURVHWKHYDOLGLW\ WKHYDOLGLW\RIWKLVSOHDDQGWKHUHFRUGGLVFORVHVQREDVLVRQ RIWKHVHQWHQFHLQOLJKWRIWKH8QLWHG6WDWHV6XSUHPH&RXUWjV ZKLFK KH FRXOG GR VR 7KH LQGLFWPHQW GLG QRW DOOHJH D GHFLVLRQLQ$SSUHQGLY1HZsHUVH\866&W VSHFLILF TXDQWLW\ RI GUXJV UDWKHU LW FKDUJHG *DUFLD ZLWK FRQVSLUDF\WRSRVVHVVmYDULRXVTXDQWLWLHVlRIPDULMXDQD7KH SOHD DJUHHPHQW H[SOLFLWO\ UHFLWHG *DUFLDjV DJUHHPHQW WKDW ,,$FFHSWDQFHRI5HVSRQVLELOLW\ m>W@KH ZRUNVKHHWV DWWDFKHG WR WKLV DJUHHPHQW UHSUHVHQW WKH SRVLWLRQRIWKHJRYHUQPHQWRQWKHIDFWRUVWREHFRQVLGHUHGLQ :HZLOOQRWGLVWXUEDGLVWULFWFRXUWjVIDFWXDOILQGLQJVDVWR FDOFXODWLQJ WKH DSSURSULDWH VHQWHQFLQJ UDQJH l 7KRVH ZKHWKHU D GHIHQGDQW KDV DFFHSWHG UHVSRQVLELOLW\ IRU KLV ZRUNVKHHWVVSHFLILHGWKHJRYHUQPHQWjVSRVLWLRQWKDW*DUFLD FULPLQDOFRQGXFWXQOHVVWKRVHILQGLQJVDUHFOHDUO\HUURQHRXV ZDV UHVSRQVLEOH IRU m NJ RU PRUH PDULMXDQDl 7KH 8QLWHG6WDWHVY:LOVRQ )G WK&LU DJUHHPHQWDOVRH[SOLFLWO\VWDWHGWKDW*DUFLDmDFNQRZOHGJHG FLWLQJ8QLWHG6WDWHVY%UDGVKDZ)G WK&LU WKDW WKH FRXUW ZLOO LQGHSHQGHQWO\ GHWHUPLQH WKH DSSOLFDEOH $ILQGLQJLVFOHDUO\HUURQHRXVZKHQWKHmUHYLHZLQJ VHQWHQFLQJIDFWRUVDWVHQWHQFLQJl$WWKHSOHDKHDULQJWKH FRXUWRQWKHHQWLUHHYLGHQFHLVOHIWZLWKWKHGHILQLWHDQGILUP GLVWULFW FRXUW FDUHIXOO\ DGYLVHG *DUFLD WKDW WKH PD[LPXP FRQYLFWLRQWKDWDPLVWDNHKDVEHHQFRPPLWWHGl8QLWHG6WDWHV VHQWHQFHIRUWUDIILFNLQJLQPDULMXDQDLVOLIHLPSULVRQPHQW Y8QLWHG6WDWHV*\SVXP&R86 DQGWKDWmWKHJRYHUQPHQWjVFDOFXODWLRQVRIGUXJTXDQWLWLHVLQ \RXUFLUFXPVWDQFHLQGLFDWHWKDW\RXDUHIDFLQJWKHSRVVLELOLW\ 5HYLHZLQJ WKH WUDQVFULSW ZH ILQG QR FOHDU HUURU LQ WKH DW WKH ZRUVW RI OLIH LPSULVRQPHQW XQGHU WKLV JXLOW\ SOHDl GLVWULFWFRXUWjVGHFLVLRQWREHOLHYH&DUERQLUDWKHUWKDQ*DUFLD *DUFLDVDLGWKDWKHXQGHUVWRRGWKLVIDFW)XUWKHUWKHGLVWULFW &DUERQLjV VWRU\ RI PDVVLYH PDULMXDQD GHOLYHULHV ZDV FRXUWDGYLVHG*DUFLDWKDWKHZDVIUHHWRWU\WRSHUVXDGHWKH FRQVLVWHQW WKURXJKRXW FURVVH[DPLQDWLRQ +H H[SODLQHG DW FRXUWWKDWKHZDVQRWUHVSRQVLEOHIRUWKHTXDQWLW\RIGUXJVWKH OHQJWKZK\KLVYHUVLRQRIWKHDPRXQWVVKLSSHGLVFUHGLEOHDQG JRYHUQPHQWFODLPHGLQWKHZRUNVKHHWVEXWWKDWRQO\WKHFRXUW *DUFLDjV LV QRW XVLQJ VSHFLILF TXDQWLWLHV DQG SULFHV WR ZRXOGPDNHWKHXOWLPDWHGHFLVLRQ*DUFLDLQGLFDWHGWKDWKH LOOXVWUDWHWKDWDVDEXVLQHVVPDQDOEHLWDQLOOHJLWLPDWHRQHKH XQGHUVWRRG )LQDOO\ EHIRUH DFFHSWLQJ *DUFLDjV SOHD WKH VLPSO\FRXOGQRWPDNHDSURILWRQWKHGUXJWUDQVDFWLRQVXQOHVV GLVWULFW FRXUW DGYLVHG *DUFLD WKDW LI KDYLQJ KDG DOO RI WKH KHVKLSSHGEXONDPRXQWVRIDWOHDVWSRXQGV:KHQDVNHG IRUHJRLQJH[SODLQHGWRKLPKHZDQWHGWREDFNRXWDQGSHUVLVW ZK\ /XLV *DUFLD DQRWKHU FRFRQVSLUDWRU PLJKW SURYLGH D LQKLVSOHDRIQRWJXLOW\KHZDVIUHHWRGRVR*DUFLDGHFOLQHG GLIIHUHQW DFFRXQW RI WKH DPRXQWV RI PDULMXDQD WUDQVSRUWHG DQGHQWHUHGDSOHDRIJXLOW\ &DUERQLDQVZHUHG m7RNHHSKLVVHQWHQFLQJJXLGHOLQHVGRZQ ZKLFKZRXOGEHW\SLFDORIDOOWKHVHJX\VWRGRl&DUERQLDOVR $IWHUWKHHYLGHQWLDU\KHDULQJRQWKHTXDQWLW\RIPDULMXDQD VXJJHVWHG WKDW +HQU\ *DUFLDjV PHPRU\ RI HYHQWV PLJKW EH IRUZKLFK*DUFLDVKRXOGEHKHOGUHVSRQVLEOHWKHGLVWULFWFRXUW XQUHOLDEOH VWDWLQJ m+HQU\ UHDOO\ FRXOGQjW WKLQN RXW WKHUH FRQFOXGHGWKDW*DUFLDKDGSDUWLFLSDWHGLQWKHWUDQVSRUWLQJRI EHFDXVHKHZDVVPRNLQJODUJHDPRXQWVRIFUDFNFRFDLQHl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jVFULPHV LQGHHG UHODWHG WR PDULMXDQD +H VDLG QR LW ZDVQjW KDG EHHQ UDFLDOO\ PRWLYDWHG DQG DSSOLHG D VHQWHQFH PDULMXDQDLWZDVQjWWKLV,WZDVoDVWKRXJKWRLPSO\LW HQKDQFHPHQW IRU UDFHEDVHG FULPHV :KHQ WKH VHQWHQFLQJ ZDV DQ LQQRFHQW EXVLQHVV WULS RU SOHDVXUH WULS RU IDFWRU ZDV DGGHG $SSUHQGL IDFHG \HDUV LQ SULVRQ VRPHWKLQJ%XWFRPHWRILQGRXWLWZDVWRSLFNXSVRPH VLJQLILFDQWO\ PRUH WLPH WKDQ WKH XQHQKDQFHG PD[LPXP PRQH\:KDWZDVWKHPRQH\IRU3DUNHU>WKHSURVHFXWRU@ SHQDOW\IRUWKHRIIHQVHVWRZKLFKKHKDGSOHG7KH6XSUHPH VDLG*DUFLDDQVZHUHGZHOO,JDYHLWWR/XLVZKLFKRI &RXUWIRXQGWKH1HZsHUVH\VWDWXWHXQFRQVWLWXWLRQDOXQGHUWKH FRXUVHGRHVQjWDQVZHUWKHTXHVWLRQ%XWZKDWZDVWKH 'XH3URFHVV&ODXVHEXWOLPLWHGLWVKROGLQJWRFDVHVZKHUHD PRQH\ IRU VKH VDLG :HOO LW ZDV IRU SD\LQJ IRU mQRQMXU\ IDFWXDO GHWHUPLQDWLRQ LQFUHDVHV WKH PD[LPXP PDULMXDQD 6R WKH WULS ZDV UHODWHG WR PDULMXDQD WKHQ VHQWHQFHEH\RQGWKHVWDWXWRU\UDQJHDXWKRUL]HGE\WKHMXU\jV ZDVQjWLW":HOO\HVKHVD\V:HOOWKDWLVQRWWKHNLQG YHUGLFWl,G6&WDW RISURILOHRQHZRXOGH[SHFWLQDIRUWKFRPLQJVLQFHUH FUHGLEOHZLWQHVVls$ 7KLVFLUFXLWKDVDSSOLHG$SSUHQGLWRGUXJFDVHVUHTXLULQJ WKDW IDFWXDO GHWHUPLQDWLRQV ZKLFK LQFUHDVH WKH PD[LPXP *LYHQ*DUFLDjVHTXLYRFDWLRQRQWKHVWDQGDQGWKHGLIIHULQJ VHQWHQFH IRU WKH FULPH FKDUJHG LQ WKH LQGLFWPHQW PXVW EH DFFRXQWVKHVXSSOLHGWRWKHSUREDWLRQGHSDUWPHQWWKHGLVWULFW PDGH mEH\RQG D UHDVRQDEOH GRXEWl 6HH 8QLWHG 6WDWHV Y FRXUW GLG QRW FOHDUO\ HUU LQ ILQGLQJ &DUERQLjV LQWHUQDOO\ 5HEPDQ)G WK&LU KROGLQJWKDW5XOH FRQVLVWHQW WHVWLPRQ\ PRUH FUHGLEOH WKDQ *DUFLDjV DQG LQ DJUHHPHQWGLGQRWZDLYHULJKWWRKDYHFRXUWGHFLGHEH\RQG UHIXVLQJWRJLYH*DUFLDFUHGLWIRUDFFHSWDQFHRIUHVSRQVLELOLW\ DUHDVRQDEOHGRXEWLVVXHRIZKHWKHUGHDWKUHVXOWHGIURPGUXJ GLVWULEXWLRQ VHHDOVR8QLWHG6WDWHVY3DJH)G ,,,7KH$SSUHQGL,VVXH WK&LU VHQWHQFHYDFDWHGIRUSODLQHUURUZKHQ DPRXQWVXEMHFWLQJGHIHQGDQWWRKLJKHUPD[LPXPSHQDOW\ZDV 1H[W ZH H[DPLQH ZKHWKHU WKH GLVWULFW FRXUW VHQWHQFHG QRWGHWHUPLQHGEH\RQGUHDVRQDEOHGRXEW 7KH5HEPDQFRXUW *DUFLDLQDSSURSULDWHO\LQOLJKWRIWKH6XSUHPH&RXUWjVUHFHQW VHW IRUWK WKH UHVSRQVLELOLW\ RI DQ DSSHOODWH FRXUW UHYLHZLQJ GHFLVLRQLQ$SSUHQGLY1HZsHUVH\866&W LPSRVLWLRQRImHQKDQFHPHQWVlSRVW$SSUHQGLVD\LQJm>R@XU ,Q$SSUHQGLWKH866XSUHPH&RXUWKHOGWKDW GXW\LVWRH[DPLQHZKHWKHUWKHVHQWHQFLQJIDFWRULQWKLV mRWKHU WKDQ WKH IDFW RI D SULRU FRQYLFWLRQ DQ\ IDFW WKDW FDVH ZDV D IDFWXDO GHWHUPLQDWLRQ DQG ZKHWKHU WKDW LQFUHDVHVWKHSHQDOW\EH\RQGWKHVWDWXWRU\PD[LPXPPXVWEH GHWHUPLQDWLRQLQFUHDVHGWKHPD[LPXPSHQDOW\IRUWKHFULPH VXEPLWWHGWRWKHMXU\DQGSURYHGEH\RQGDUHDVRQDEOHGRXEWl FKDUJHGLQWKHLQGLFWPHQWl5HEPDQ)GDW ,G6&WDW$SSUHQGLLQYROYHGWKHDSSOLFDWLRQRID 1HZ sHUVH\ KDWHFULPH VWDWXWH WKDW SHUPLWWHG D MXGJH WR $SSUHQGLH[SOLFLWO\DSSOLHVRQO\LQWKRVHVLWXDWLRQVZKHUH HQKDQFH D VHQWHQFH LI KH IRXQG E\ D SUHSRQGHUDQFH RI WKH DIDFWXDOGHWHUPLQDWLRQPDGHXQGHUDOHVVHUVWDQGDUGRISURRI HYLGHQFH WKDW WKH FULPH LQ TXHVWLRQ KDG EHHQ UDFLDOO\ WKDQWKHUHDVRQDEOHGRXEWVWDQGDUGmLQFUHDVHVWKHSHQDOW\IRU PRWLYDWHG$SSUHQGLKDGILUHGDZHDSRQDWWKHKRPHRIDQ D FULPH EH\RQG WKH VWDWXWRU\ PD[LPXPl $SSUHQGL $IULFDQ$PHULFDQ IDPLO\ WKDW KDG UHFHQWO\ PRYHG LQWR KLV 6&WDW$VZHVKDOOH[SODLQWKLVFDVHGRHVQRW QHLJKERUKRRG+HZDVDUUHVWHGDQGSOHGJXLOW\WRWZRFRXQWV SUHVHQWDQ$SSUHQGLSUREOHP RI VHFRQGGHJUHH SRVVHVVLRQ RI D ILUHDUP IRU DQ XQODZIXO SXUSRVH DQG RQH FRXQW RI XQODZIXO SRVVHVVLRQ RI DQ *DUFLDNQRZLQJO\DQGYROXQWDULO\SOHGJXLOW\WRDYLRODWLRQ DQWLSHUVRQQHOERPE2QWKHLURZQWKHVHYLRODWLRQVZRXOG RI 86& FRQVSLUDF\ WR FRPPLW WKH RIIHQVH RI