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$SSHOOHH 1R Y ! 75$&(< $//(1 &$03%(// 'HIHQGDQW$SSHOODQW 1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW$QQ$UERU 1R n*HRUJH&6WHHK'LVWULFWsXGJH $UJXHG 0DUFK 'HFLGHGDQG)LOHG 0D\ %HIRUH .583$16.<%2**6DQG%$7&+(/'(5 &LUFXLWsXGJHV BBBBBBBBBBBBBBBBB &2816(/ $5*8(' sRQDWKDQ 0 (SVWHLQ )('(5$/ 38%/,& '()(1'(56 2)),&( 'HWURLW 0LFKLJDQ IRU $SSHOODQW 7KLV GHFLVLRQ ZDV RULJLQDOO\ LVVXHG DV DQ mXQSXEOLVKHG GHFLVLRQl ILOHG RQ 0D\ 2Q 0D\ WKH FRXUW GHVLJQDWHG WKH RSLQLRQ DV RQH UHFRPPHQGHG IRU IXOOWH[W SXEOLFDWLRQ 8QLWHG6WDWHVY&DPSEHOO 1R sHQQLIHU s 3HUHJRUG $66,67$17 81,7(' 67$7(6 $77251(<'HWURLW0LFKLJDQIRU$SSHOOHH21%5,() sRQDWKDQ 0 (SVWHLQ )('(5$/ 38%/,& '()(1'(56 2)),&( 'HWURLW 0LFKLJDQ IRU $SSHOODQW sHQQLIHU s 3HUHJRUG $66,67$17 81,7(' 67$7(6 $77251(< 'HWURLW0LFKLJDQIRU$SSHOOHH BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB %2**6&LUFXLWsXGJH7UDFH\$OOHQ&DPSEHOODSSHDOVKLV FRQYLFWLRQRQDSOHDRIJXLOW\WRSRVVHVVLRQRIDILUHDUPE\D IHORQ LQ YLRODWLRQ RI 86& J &DPSEHOO SOHDGHGJXLOW\DIWHUKLVPRWLRQWRVXSSUHVVFHUWDLQHYLGHQFH DQGKLVPRWLRQWRGLVPLVVZHUHGHQLHG+HQRZFKDOOHQJHV WKHUXOLQJVRIWKHGLVWULFWFRXUWGHQ\LQJWKRVHPRWLRQVDVZHOO DV WKH GLVWULFW FRXUWjV FDOFXODWLRQ RI KLV VHQWHQFH )RU WKH IROORZLQJUHDVRQVZHDIILUP , 2Q0DUFK DEUHDNLQJDQGHQWHULQJRFFXUUHGDWD KRPHLQ/HQDZHH&RXQW\0LFKLJDQ)LUHDUPVDQGYDULRXV RWKHULWHPVZHUHVWROHQGXULQJWKHEUHDNLQ 2QsXO\ WKH0LFKLJDQ6WDWH3ROLFHUHFHLYHGDWLS WKDW WKH VWROHQ SURSHUW\ FRXOG EH IRXQG DW sHQQLQJV 'ULYHLQ/HRQL7RZQVKLSsDFNVRQ&RXQW\0LFKLJDQ7KH WLSVWHU ZKR KDG SUHYLRXVO\ VXSSOLHG UHOLDEOH LQIRUPDWLRQ UHJDUGLQJQDUFRWLFVYLRODWLRQVWRODZHQIRUFHPHQWRIILFLDOV DJUHHG WR SDUWLFLSDWH DV DQ LQIRUPDQW LQ EX\LQJ RQH RI WKH VWROHQILUHDUPVDFDOLEHUKDQGJXQ 2Q sXO\ WKH LQIRUPDQW ZDV VWULS VHDUFKHG IRU FRQWUDEDQG DQG ZHDSRQV JLYHQ SUHUHFRUGHG IXQGV IRU WKH SXUFKDVHDQGSODFHGXQGHUVXUYHLOODQFH7KHLQIRUPDQWZHQW GLUHFWO\ WR s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jV PRELOH KRPH WKH DGMDFHQWVPDOOHUWUDLOHUDQGDVKHGDWsHQQLQJV'ULYH 7KHZDUUDQWDXWKRUL]HGDVHDUFKIRUmDQ\DQGDOOILUHDUPV DQGQDUFRWLFVDQGQDUFRWLFSDUDSKHUQDOLDl 7KHVHDUFKZDUUDQWZDVDXWKRUL]HGE\DVWDWHFRXUWMXGJH DQGZDVH[HFXWHGRQsXO\ 7KHSROLFHVHL]HGDWRWDO RI ILIWHHQ ILUHDUPV LQFOXGLQJ WZR ZHDSRQV WKDW KDG EHHQ VWROHQ2QsXO\ &DPSEHOOZDVDUUHVWHGDQGFKDUJHG LQ sDFNVRQ &RXQW\ &LUFXLW &RXUW ZLWK UHFHLYLQJ DQG FRQFHDOLQJ VWROHQ SURSHUW\ RYHU 2Q 6HSWHPEHU &DPSEHOOSOHDGHGJXLOW\WRWKHFKDUJH2Q2FWREHU KH ZDV VHQWHQFHG WR WKLUW\ WR QLQHW\ PRQWKV RI LPSULVRQPHQWRQWKHVWDWHFKDUJH $ RQHFRXQW LQIRUPDWLRQ ZDV ILOHG DJDLQVW &DPSEHOO LQ IHGHUDOGLVWULFWFRXUWRQ$SULO FKDUJLQJKLPZLWK XQODZIXOO\SRVVHVVLQJDILUHDUPRQRUDERXWsXO\ 2QsXO\ &DPSEHOOPRYHGWRVXSSUHVVWKHHYLGHQFH VHL]HGSXUVXDQWWRWKHVHDUFKZDUUDQWIRUKLVUHVLGHQFHRQWKH EDVLVWKDWWKHZDUUDQWODFNHGSUREDEOHFDXVHIRUWKHVHDUFKRI KLVKRPH&DPSEHOODOVRPRYHGWRGLVPLVVWKHLQIRUPDWLRQ RQWKHJURXQGWKDWKLVILUHDUPVSULYLOHJHVKDGEHHQUHVWRUHG XQGHU0LFKLJDQODZVRWKDWKHZDVQRORQJHU D FRQYLFWHG IHORQIRUSXUSRVHVRI J 2Q $XJXVW WKH JRYHUQPHQW ILOHG D VXSHUVHGLQJ LQIRUPDWLRQ FKDQJLQJ WKH FKDUJHG GDWH IURP sXO\ WR sXO\ 2Q6HSWHPEHU WKHGLVWULFWFRXUWKHOG DKHDULQJRQWKHWZRRXWVWDQGLQJPRWLRQV2Q6HSWHPEHU WKHGLVWULFWFRXUWGHQLHG&DPSEHOOjVPRWLRQWRVXSSUHVV2Q sDQXDU\ WKH FRXUW GHQLHG &DPSEHOOjV PRWLRQ WR 8QLWHG6WDWHVY&DPSEHOO 1R 1R 8QLWHG6WDWHVY&DPSEHOO GLVPLVVWKHLQIRUPDWLRQGHWHUPLQLQJWKDWWKHVWDWHKDGQRW 9 UHVWRUHG&DPSEHOOjVILUHDUPVSULYLOHJHVDVDUHVXOWRIKLV FRQYLFWLRQ IRU DWWHPSWHG GHOLYHU\ RI FRFDLQH DQG KLV )RUWKHIRUHJRLQJUHDVRQVWKHMXGJPHQWRIWKHGLVWULFWFRXUW FRQYLFWLRQIRUFULPLQDOVH[XDOFRQGXFW LV$)),50(' 2Q )HEUXDU\ &DPSEHOO SOHDGHG JXLOW\ WR WKH VXSHUVHGLQJ LQIRUPDWLRQ UHVHUYLQJ WKH ULJKW WR DSSHDO WKH FRXUWjV UXOLQJV UHJDUGLQJ KLV VXSSUHVVLRQ DQG GLVPLVVDO PRWLRQV 2Q 0D\ &DPSEHOO ILOHG D VHQWHQFLQJ PHPRUDQGXPDUJXLQJWKDWKLVEDVHRIIHQVHOHYHOVKRXOGEH UHGXFHG EHFDXVH LW ZDV LPSURSHUO\ EDVHG RQ KLV KDYLQJ FRPPLWWHGDSULRUmFULPHRIYLROHQFHl2Q0D\WKH GLVWULFW FRXUW UHMHFWHG &DPSEHOOjV DUJXPHQW WKDW KLV EDVH .4:79 KHOG WKDW WKH GHIHQGDQWj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jV VHQWHQFH 7KH 7KLVFRXUWUHYLHZVIRUFOHDUHUURUWKHGLVWULFWFRXUWjVIDFWXDO FRXUW VWDWHG WKDW WKH JRYHUQPHQW KDG QRW FLWHG VHFRQGDU\ HYLGHQFH RI WKH ILQGLQJVUHJDUGLQJDPRWLRQWRVXSSUHVVHYLGHQFH6HH8QLWHG ULVN RI SK\VLFDO LQMXU\ WR D VL[WHHQ \HDU ROG LQ MXVWLI\LQJ WKH GHIHQGDQWjV VHQWHQFH DQG WKDW HYHQ LI VXFK HYLGHQFH ZDV XVHG mLW UHTXLUHV DQ 6WDWHVY.LQJ)G WK&LU 7KHGLVWULFW HVVHQWLDOO\ OHJLVODWLYH MXGJPHQW LQ D ILHOG LQ ZKLFK WKH UHVSRQVLELOLW\ IRU FRXUWjVFRQFOXVLRQVRIODZDUHUHYLHZHGGHQRYR6HHLELG PDNLQJ VXFK MXGJPHQWV UHVWV ZLWK &RQJUHVV DQG WKH 86 6HQWHQFLQJ 7KHLVVXHRISUREDEOHFDXVHIRUWKHLVVXDQFHRIDZDUUDQWLV &RPPLVVLRQl ,G DW FLWLQJ 8QLWHG 6WDWHV Y 0HDGHU )G GLUHFWHGLQLWLDOO\WRWKHLVVXLQJMXGJH6HH8QLWHG6WDWHVY VW &LU 6SLNHV)G WK&LU 7KHMXGJHPXVW 3ULRU WR 7KRPDV LQ 8QLWHG 6WDWHV Y 6KDQQRQ )G WK &LU mPDNHDSUDFWLFDOFRPPRQVHQVHGHFLVLRQZKHWKHUJLYHQDOO WKH HQ EDQF FRXUW RI WKH 6HYHQWK &LUFXLW VSRNH H[WHQVLYHO\ DERXW WKHFLUFXPVWDQFHVVHWIRUWKLQWKHDIILGDYLWWKHUHLVDIDLU WKH UHODWLYH GLIIHUHQFHV LQ WKH OLNHOLKRRG RI SK\VLFDO LQMXU\ WR FKLOGUHQ SUREDELOLW\ WKDW FRQWUDEDQG RU HYLGHQFH RI D FULPH ZLOO EH WKLUWHHQ WR VL[WHHQ DV D FRQVHTXHQFH RI VH[XDO FRQWDFW ,QWHUSUHWLQJ D IRXQGLQDSDUWLFXODUSODFHl,OOLQRLVY*DWHV86 :LVFRQVLQ VWDWXWH PDNLQJ LW D IHORQ\ IRU DQ\RQH WR KDYH mVH[XDO FRQWDFW $ ZDUUDQW ZLOO EH XSKHOG LI WKHUH ZDV D RU VH[XDO LQWHUFRXUVH ZLWK D SHUVRQ ZKR KDV QRW DWWDLQHG WKH DJH RI l mVXEVWDQWLDOEDVLVIRUFRQFOXG>LQJ@WKDWDVHDUFKZRXOG WKH FRXUW KHOG WKDW VH[XDO LQWHUFRXUVH ZLWK D WKLUWHHQ \HDU ROG ZDV D FULPH RI YLROHQFH EXW OHIW XQUHVROYHG WKH LVVXH RI ZKHWKHU VH[XDO FRQWDFW ZLWK XQFRYHUHYLGHQFHRIZURQJGRLQJl,GDW D SHUVRQ RYHU WKLUWHHQ ZDV D FULPH RI YLROHQFH ,G DW ,QWKHVHDUFKZDUUDQWDIILGDYLWIRUsHQQLQJV'ULYHWKH :KLOH ZH FRQFOXGH WKDW &DPSEHOOjV FRQYLFWLRQ FRQVWLWXWHV D FULPH RI SROLFHUHOLHGRQWKHIROORZLQJ LQIRUPDWLRQUHJDUGLQJDQ YLROHQFH ZH DJUHH ZLWK WKH )LUVW DQG 6HYHQWK &LUFXLWV WKDW m>W@KHVH DUH LQYHVWLJDWLRQLQWRDEUHDNLQJDQGHQWHULQJLQ/HQDZHH&RXQW\ LVVXHV WKDW FRXUWV DQG SDUWLFXODUO\ DSSHDOV FRXUWV KDYH QHLWKHU WKH 0LFKLJDQLQZKLFKILUHDUPVDQGRWKHULWHPVZHUHVWROHQ D H[SHUWLVH QRU WKH DXWKRULW\ WR UHVROYH LQ WKH ILUVW LQVWDQFH DQG WKDW LQ OLJKW RI WKH JURZLQJ QXPEHU RI FDVHV LQ WKH DUHD VKRXOG EH KDQGOHG WLS WKDW WKH VWROHQ LWHPV ZRXOG EH IRXQG DW sHQQLQJV H[SHGLWLRXVO\ E\ WKH 6HQWHQFLQJ &RPPLVVLRQ DQG &RQJUHVVl 0HDGHU )G DW DFFRUG 6KDQQRQ )G DW 8QLWHG6WDWHVY&DPSEHOO 1R 1R 8QLWHG6WDWHVY&DPSEHOO TXDOLILHGDVDFULPHRIYLROHQFH8QLWHG6WDWHVY$UQROG1R 'ULYH WKHGHYHORSPHQWRIDQLQIRUPDQWZKRZRXOGDVVLVW :/DW WK&LU$XJ WKHSROLFHLQUHFRYHULQJWKHVWROHQSURSHUW\ DFRQWUROOHG SXUFKDVH E\ WKH LQIRUPDQW RI D FDOLEHU KDQGJXQ IURP 6LPLODUO\LQWKLVFDVHWKHFULPHRIVHFRQGGHJUHHFULPLQDO 7UDFH\&DPSEHOODWsHQQLQJV'ULYH WKHUHFRYHU\RI VH[XDOFRQGXFWLQYROYLQJmVH[XDOFRQWDFWlZLWKDSHUVRQDJH WKHKDQGJXQE\&DPSEHOOIURPLQVLGHWKHWUDLOHUDGMDFHQWWR WR RI WKH VDPH EORRG DIILQLW\ SUHVHQWV D mVHULRXV WKHPRELOHKRPHDWsHQQLQJV'ULYH WKHLQIRUPDQWjV SRWHQWLDO ULVN RI SK\VLFDO LQMXU\ WR DQRWKHUl 866* SUHYLRXVUHFRUGRIVXSSO\LQJUHOLDEOHLQIRUPDWLRQUHJDUGLQJ % D 6LQFHWKHFKDUJLQJGRFXPHQWLVQRWLQWKHUHFRUG QDUFRWLFVYLRODWLRQVWKDWZHUHLQYHVWLJDWHGDQGFRQILUPHG DQG mRXULQTXLU\UHPDLQVOLPLWHGWRWKHVWDWXWRU\IRUPXODWLRQRI WKHUHVXOWVRIDUHFRUGVFKHFNUHYHDOLQJWKDW&DPSEHOOKDG WKHSULRURIIHQVHl8QLWHG6WDWHVY6KHUZRRG)G WZRSULRUIHORQ\FRQYLFWLRQV VW&LU m,QGHFLGLQJZKHWKHUWKHVWDWXWRU\FULPH FRQVWLWXWHVDµFULPHRIYLROHQFHjZHH[DPLQHµWKHW\SLFDOUXQ &DPSEHOO FODLPV WKDW EHFDXVH WKH SROLFH ODFNHG RIFRQGXFWjIRUWKLVVRUWRIRIIHQVHl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mW\SLFDOO\RFFXULQFORVHTXDUWHUV $ DQGDUHJHQHUDOO\SHUSHWUDWHGE\DQDGXOWXSRQDYLFWLPZKR LVQRWRQO\VPDOOHUZHDNHUDQGOHVVH[SHULHQFHGEXWLVDOVR &DPSEHOODVVHUWVWKDWWKHVHDUFKZDUUDQWDIILGDYLWODFNHG JHQHUDOO\ VXVFHSWLEOH WR DFFHGLQJ WR WKH FRHUFLYH SRZHU RI SUREDEOHFDXVHIRUWKHVHDUFKRI&DPSEHOOjVUHVLGHQFHDW DGXOW DXWKRULW\ ILJXUHVl ,ELG TXRWLQJ 8QLWHG 6WDWHV Y sHQQLQJV 'ULYH &DPSEHOO FODLPV WKDW WKH DIILGDYLW ZDV 9HOD]TXH]2YHUD )G WK &LU GHILFLHQWLQVHYHUDOUHVSHFWV LWIDLOHGWRVWDWHHYLGHQFHRI 9HOD]TXH]2YHUDLVSDUWLFXODUO\UHOHYDQWLQWKDWLWFRQVWUXHG ZURQJGRLQJDWsHQQLQJV'ULYH LWZDVLPSURSHUO\ D7H[DVVWDWXWHWKDWSURKLELWHGmVH[XDOFRQWDFWlmZLWKDFKLOG EDVHGRQDQDQRQ\PRXVWLSDQG LWLPSURSHUO\LQFOXGHG \RXQJHU WKDQ \HDUVl FRQGXFW VLPLODU WR WKDW IRU ZKLFK LQIRUPDWLRQUHJDUGLQJ&DPSEHOOjVSUHYLRXVIHORQ\UHFRUG &DPSEHOOZDVFRQYLFWHG&DPSEHOODOVRFRPPLWWHGKLVFULPH XSRQ D \RXQJHU IDPLO\ PHPEHU ZKLFK LQKHUHQWO\ FUHDWHG &DPSEHOODUJXHVWKDWWKHZDUUDQWDIILGDYLWIDLOHGWRVWDWH DGGLWLRQDO ULVN RI FRHUFLRQ DQG YLROHQFH 7KHUHIRUH ZH WKDW WKH FDOLEHU KDQGJXQ SXUFKDVHG DW s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sHQQLQJV'ULYH FRQYLFWHGE\LWVQDWXUHSUHVHQWHGDVHULRXVSRWHQWLDO ULVNRISK\VLFDOLQMXU\WRDQRWKHU &DPSEHOO DVVHUWV WKDW WKH WLS ZDV SURYLGHG E\ DQ DQRQ\PRXV DQG XQLGHQWLILHG LQGLYLGXDO QRW D WUXVWHG DQG ,Q GHWHUPLQLQJ ZKHWKHU D SDUWLFXODU RIIHQVH FRQVWLWXWHV D UHOLDEOH SROLFH LQIRUPDQW &DPSEHOO FRPSDUHV KLV FDVH WR mFULPHRIYLROHQFHlXQGHUWKH*XLGHOLQHVWKLVFRXUWIROORZV WKRVHLQZKLFKWKLVFRXUWUXOHGWKDWDIILGDYLWVODFNHGSUREDEOH DFDWHJRULFDODSSURDFKmOLPLWHGWRDQH[DPLQDWLRQRIWKHIDFW FDXVHZKHQWKH\ZHUHEDVHGVROHO\RQDQRQ\PRXVWLSVWKDW RI FRQYLFWLRQ DQG WKH VWDWXWRU\ GHILQLWLRQ RI WKH SUHGLFDWH FRXUWVGHHPHGXQUHOLDEOH6HH8QLWHG6WDWHVY/HDNH RIIHQVHl8QLWHG6WDWHVY$UQROG)G WK )G WK &LU ZDUUDQW DIILGDYLW KHOG &LU 8QGHU WKLV DSSURDFK mLW LV QRW RQO\ ODFNLQJLQSUREDEOHFDXVHZKHUHEDVHGVROHO\RQDQRQ\PRXV LPSHUPLVVLEOHEXWSRLQWOHVVIRUWKHFRXUWWRORRNWKURXJKWR SKRQHFDOOHUjVWLSWKDWWKHFDOOHUHQWHUHGGHIHQGDQWjVKRPH WKHGHIHQGDQWjVDFWXDOFULPLQDOFRQGXFWl,ELG VPHOOHG PDULMXDQD DQG REVHUYHG ZKDW DSSHDUHG WR EH PDULMXDQDVWDFNHGLQWKHEDVHPHQW 8QLWHG6WDWHVY%D[WHU ,Q WKLV FDVH &DPSEHOOjV SUHGLFDWH IHORQ\ ZDV D )G WK &LU ZDUUDQW DIILGDYLW KHOG FRQYLFWLRQIRUVHFRQGGHJUHHFULPLQDOVH[XDOFRQGXFWXQGHU ODFNLQJLQSUREDEOHFDXVHZKHUHEDVHGVROHO\RQDQRQ\PRXV 0&/ F 7KH SDUWLHV GR QRW GLVSXWH WKDW WKH SKRQHFDOOHUjVWLSWKDWWKHFDOOHUKDGEHHQWRSDUWLFXODUDGGUHVV FRQYLFWLRQ ZDV SXUVXDQW WR 0&/ F E LL DQGREVHUYHGGHIHQGDQWVHOOFRFDLQHWRXQNQRZQZKLWHPDOH ZKLFKSURKLELWVmVH[XDOFRQWDFWlZLWKDSHUVRQDJHWR &DPSEHOO FODLPV WKDW KLV FDVH LV GLVVLPLODU IURP FDVHV LQ RIWKHVDPHEORRGDIILQLW\&DPSEHOODUJXHVWKDWVLQFHWKLV ZKLFKWKLVFRXUWXSKHOGVHDUFKZDUUDQWVEDVHGRQLQIRUPDWLRQ RIIHQVHFDQRFFXUWKURXJKPHUHFRQVHQWHGWRXFKLQJDQGGRHV IURP LQIRUPDQWV ZKR ZHUH NQRZQ DQG UHOLDEOH DQG ZKR QRW FRQWDLQ DQ HOHPHQW RI SK\VLFDO IRUFH LW VKRXOG QRW EH RIIHUHG GHWDLOHG SHUVRQDO REVHUYDWLRQV RI WKH GHIHQGDQWjV FRQVLGHUHGDFULPHRIYLROHQFH&DPSEHOOUHOLHVRQ$UQROG FULPLQDODFWLYLW\6HH8QLWHG6WDWHVY.LQJ)G LQZKLFKWKLVFRXUWKHOGWKDWDGHIHQGDQWjVSULRUFRQYLFWLRQIRU WK&LU 8QLWHG6WDWHVY:LOOLDPV)G WK DVVDXOW ZLWK LQWHQW WR FRPPLW VH[XDO EDWWHU\ ZDV QRW &LU DQG8QLWHG6WDWHVY$OOHQ)G WK&LU QHFHVVDULO\DmFULPHRIYLROHQFHlZLWKLQWKHPHDQLQJRIWKH HQEDQF 6HQWHQFLQJ *XLGHOLQHV UHYHUVLQJ WKH GLVWULFW FRXUW DQG UHPDQGLQJ WKH FDVH IRU UHFRQVLGHUDWLRQ )G DW &DPSEHOOFRQFHGHVWKDWWKHVHDUFKZDUUDQWDIILGDYLWGLGQRW &DPSEHOO DVVHUWV WKDW VLQFH KH GLG QRW FRPPLW D FULPH RI UHO\VROHO\RQWKHWLSEXWDOVRLQFOXGHGLQIRUPDWLRQIURPWKH YLROHQFHKLVVHQWHQFHVKRXOGEHYDFDWHGDQGWKHFDVHVKRXOG LQIRUPDQW ZKR KDG VXSSOLHG UHOLDEOH LQIRUPDWLRQ WR ODZ EHUHPDQGHGIRUUHVHQWHQFLQJ HQIRUFHPHQWLQWKHSDVWDQGZKRPDGHDFRQWUROOHGSXUFKDVH RI D FDOLEHU KDQGJXQ DW sHQQLQJV 'ULYH 7KH &DPSEHOOjVUHOLDQFHRQ$UQROGLVPLVSODFHG7KLVFRXUW JRYHUQPHQWVWDWHVWKDWWKHWLSVWHUDQGWKHLQIRUPDQWDUHWKH UHPDQGHG WKH FDVH WR WKH GLVWULFW FRXUW IRU IXUWKHU ILQGLQJV VDPH LQGLYLGXDO &DPSEHOO SRLQWV RXW KRZHYHU WKDW WKH EHFDXVH WKH GLVWULFW FRXUW LPSURSHUO\ GHOYHG LQWR WKH DIILGDYLW GRHV QRW PDNH WKLV FOHDU 7KHUHIRUH &DPSEHOO XQGHUO\LQJIDFWVRIWKHGHIHQGDQWjVSUHGLFDWHVWDWHFRQYLFWLRQ DUJXHVWKDWZKLOHWKHLQIRUPDQWPD\KDYHVXSSOLHGUHOLDEOH IRUDVVDXOWZLWKLQWHQWWRFRPPLWVH[XDOEDWWHU\VRPHWKLQJ LQIRUPDWLRQWRODZHQIRUFHPHQWLQWKHSDVWLWLVQRWFOHDUIURP WKDW GLG QRW RFFXU LQ WKLV FDVH 0RUHRYHU WKLV FRXUW ODWHU WKHDIILGDYLWWKDWWKHWLSVWHUKDGGRQHVRDVZHOO XSKHOG WKH GLVWULFW FRXUWjV DSSOLFDWLRQ RI WKH FDWHJRULFDO DSSURDFK RQ UHPDQG DQG LWV GHWHUPLQDWLRQ WKDW WKH FULPH LQYROYHG WKH SRWHQWLDO ULVN RI SK\VLFDO LQMXU\ VXFK WKDW LW 8QLWHG6WDWHVY&DPSEHOO 1R 1R 8QLWHG6WDWHVY&DPSEHOO *LOOLDPLVDOVRLQDSSRVLWH*LOOLDPZDVFKDUJHGDVDIHGHUDO &DPSEHOODOVRFKDOOHQJHVWKHGHJUHHWRZKLFKWKHLQFOXVLRQ IHORQLQSRVVHVVLRQ LQ RQH \HDU EHIRUH 0&/ RI&DPSEHOOjVSULRUIHORQ\UHFRUGLQWKHDIILGDYLWFDQVXSSRUW IZDVSDVVHG0RUHRYHUKLVXQGHUO\LQJFRQYLFWLRQ DILQGLQJRISUREDEOHFDXVHUHO\LQJRQWKLVFRXUWjVVWDWHPHQW ZDV D FRQYLFWLRQ IRU ILUVWGHJUHH FULPLQDO VH[XDO WKDWmPHUHO\YHULI\LQJLQIRUPDWLRQVXFKDVDGGUHVVHVSKRQH FRQGXFW$OWKRXJKWKHFDVHGRHVQRWVWDWHZKHQ*LOOLDPZDV QXPEHUVOLFHQVHQXPEHUVDQGHYHQFULPLQDOUHFRUGVLVQRW UHOHDVHGIURPSULVRQLWLVOLNHO\WKDWWKHH[LVWLQJHLJKW\HDU VXIILFLHQWWRFRUURERUDWHDQLQIRUPDQWjVVWDWHPHQWl8QLWHG UHVWULFWLRQRQ*LOOLDPjVULJKWWRSRVVHVVDSLVWROLQ KDG 6WDWHVY,QJUDP1R :/ DW WK&LU DOUHDG\H[SLUHGE\WKHWLPH*LOOLDPZDVFKDUJHGDVDIHORQLQ sDQ FLWLQJ%D[WHU )GDW SRVVHVVLRQLQ :KHQUHYLHZLQJ&DPSEHOOjVFODLPVUHJDUGLQJWKHSUREDEOH ,9 FDXVHIRUWKHVHDUFKRIKLVUHVLGHQFHZHQRWHWKDWDVWDWHFRXUW MXGJHjVGHWHUPLQDWLRQRISUREDEOHFDXVHLVHQWLWOHGWRmJUHDW &DPSEHOOjVILQDODUJXPHQWLVWKDWWKHGLVWULFWFRXUWHUUHG GHIHUHQFHlRQUHYLHZ*DWHV86DW7KHUHYLHZLQJ ZKHQLWVHQWHQFHGKLPRQWKHEDVLVWKDWKHKDGFRPPLWWHGD FRXUW PXVW H[DPLQH WKH WRWDOLW\ RI WKH FLUFXPVWDQFHV DQG SULRU mFULPH RI YLROHQFHl XQGHU 866* . D $ GHWHUPLQHLIWKHVWDWHFRXUWMXGJHKDGDmVXEVWDQWLDOEDVLVlIRU UHTXLULQJWKHLPSRVLWLRQRIDEDVHRIIHQVHOHYHORI FRQFOXGLQJ WKDW D mVHDUFK ZRXOG XQFRYHU HYLGHQFH RI ZURQJGRLQJl8QLWHG6WDWHVY6RQDJHUH)G WK 7KHWHUPmFULPHRIYLROHQFHlDVXVHGLQ. D $ &LU TXRWLQJ*DWHV86DW LVGHILQHGE\866*% D ZKLFKVWDWHVWKDW ,QWKLVFDVHWKHUHZDVDVXEVWDQWLDOEDVLVIRUFRQFOXGLQJ 7KHWHUPmFULPHRIYLROHQFHlPHDQVDQ\RIIHQVHXQGHU WKDWDVHDUFKRI&DPSEHOOjVUHVLGHQFHZRXOGXQFRYHUHYLGHQFH IHGHUDORUVWDWHODZSXQLVKDEOHE\LPSULVRQPHQWIRUD RIZURQJGRLQJ7KHIROORZLQJLQIRUPDWLRQLQFOXGHGLQWKH WHUPH[FHHGLQJRQH\HDUWKDWo VHDUFKZDUUDQWDIILGDYLWLQGLFDWHVWKDWWKHUHZDVDVXEVWDQWLDO EDVLV IRU VHDUFKLQJ &DPSEHOOjV UHVLGHQFH D UHOLDEOH KDV DV DQ HOHPHQW WKH XVH DWWHPSWHG XVH RU FRQILGHQWLDOLQIRUPDQW WKHLQIRUPDQWjVWUDFNUHFRUGRI WKUHDWHQHG XVH RI SK\VLFDO IRUFH DJDLQVW WKH SHUVRQRIDQRWKHURU LV EXUJODU\ RI D GZHOOLQJ DUVRQ RU H[WRUWLRQ $OWKRXJK WKH VHDUFK ZDUUDQW DIILGDYLW GRHV QRW FOHDUO\ LQGLFDWH WKDW WKH WLSVWHU DQG LQIRUPDQW ZHUH WKH VDPH SHUVRQ WKLV LQIRUPDWLRQ FDQ LQYROYHV XVH RI H[SORVLYHV RU RWKHUZLVH SRWHQWLDOO\ EH LQIHUUHG IURP WKH DIILGDYLW 0RUHRYHU &DPSEHOO KDV QRW LQYROYHV FRQGXFW WKDW SUHVHQWV D VHULRXV GLVSXWHG WKH JRYHUQPHQWjV VWDWHPHQW WKDW WKH WLSVWHU DQG LQIRUPDQW ZHUH SRWHQWLDOULVNRISK\VLFDOLQMXU\WRDQRWKHU WKH VDPH LQGLYLGXDO HPSKDVLVDGGHG $SSOLFDWLRQQRWHRI% D VWDWHVWKDW ,Q DGGLWLRQ WKH SROLFH PD\ KDYH KDG YDOLG UHDVRQV IRU REVFXULQJ WKH D mFULPH RI YLROHQFHl LQFOXGHV mIRUFLEOH VH[ RIIHQVHVl ,Q LGHQWLW\ RI WKH LQIRUPDQW LQ WKH ZDUUDQW DIILGDYLW 7KH LQIRUPDQW ZDV DQ DFFRPSOLFH LQ WKH UREEHU\ RI WKH KRPH LQ /HQDZHH &RXQW\ DQG KDG DGGLWLRQWKHDSSOLFDWLRQQRWHVWDWHVWKDW SUHYLRXVO\ VROG WZR RI WKH VWROHQ JXQV IURP WKH UREEHU\ WR &DPSEHOO 7KH JRYHUQPHQW DVVHUWV WKDW ZKLOH WKH SROLFH RIILFHUV ZKR SUHSDUHG WKH 2WKHURIIHQVHVDUHLQFOXGHGDVµFULPHVRIYLROHQFHjLI $ DIILGDYLW ZHUH DZDUH RI WKLV DGGLWLRQDO LQIRUPDWLRQ UHJDUGLQJ WKH WKDWRIIHQVHKDVDVDQHOHPHQWWKHXVHDWWHPSWHGXVHRU LQIRUPDQW WKH\ PD\ KDYH RPLWWHG WKH LQIRUPDWLRQ IURP WKH DIILGDYLW WR WKUHDWHQHG XVH RI SK\VLFDO IRUFH DJDLQVW WKH SHUVRQ RU SURWHFW WKH LGHQWLW\ RI WKH LQIRUPDQW GXULQJ WKH FRXUVH RI WKH GHYHORSLQJ DQRWKHU RU % WKH FRQGXFW VHW IRUWK LH H[SUHVVO\ LQYHVWLJDWLRQ 6HH 8QLWHG 6WDWHV Y 6PLWK )G Q WK &LU mOLPLWHG SULYLOHJH H[LVWV WR ZLWKKROG LQIRUPDWLRQ ZKLFK FRXOG 8QLWHG6WDWHVY&DPSEHOO 1R 1R 8QLWHG6WDWHVY&DPSEHOO SURYLGLQJ DFFXUDWH LQIRUPDWLRQ LQ SUHYLRXV QDUFRWLFV )LUVWZLWKUHJDUGWR+DPSWRQWKHJRYHUQPHQWQRWHVWKDW LQYHVWLJDWLRQV WKHLQIRUPDQWjVWLSWKDWmLWHPVVWROHQIURP WKHVROHLVVXHLQWKHFDVHZDVZKHWKHUWKHGHIHQGDQWjVFLYLO 62FFLGHQWDOl ZKHUHDSUHYLRXVEXUJODU\KDGLQIDFW ULJKWVZHUHUHVWRUHGLQJHQHUDO7KHmXQOHVV FODXVHlLQ RFFXUUHG mZRXOGEHORFDWHGDWsHQQLQJV'Ul WKH 86& D ZDVQRWGLVFXVVHGLQWKHFRXUWjVRSLQLRQ7KH LQIRUPDQWjV YROXQWHHULQJ WR DVVLVW WKH SROLFH E\ PDNLQJ D FRXUW DSSHDUHG WR LQGLFDWH WKDW +DPSWRQjV ILUHDUPV ULJKWV FRQWUROOHGSXUFKDVHRIDVWROHQZHDSRQIURPsHQQLQJV ZHUHUHVWRUHGDORQJZLWKKLVRWKHUFLYLOULJKWV7KHFRXUWGLG 'ULYH WKH IDFW WKDW ZLWKLQ WKH SUHYLRXV KRXUV D QRWVSHFLILFDOO\DGGUHVVWKHUHVWRUDWLRQRI+DPSWRQjVILUHDUP FRQWUROOHGSXUFKDVHRIDFDOLEHUKDQGJXQIURPWKHVXVSHFW ULJKWV$FORVHUHDGLQJRI+DPSWRQLQGLFDWHVWKDWDWWKHWLPH DWWKHVSHFLILHGDGGUHVVHGKDGRFFXUUHG DQG WKHSROLFHjV RI +DPSWRQjV LQGLFWPHQW XQGHU J PRUH WKDQ LQGHSHQGHQWLQYHVWLJDWLRQWRGHWHUPLQHWKDWWKHVXVSHFWZDV WKUHH\HDUVKDGSDVVHGVLQFHKLV VWDWHFRQYLFWLRQDQGKLV DFRQYLFWHGIHORQ GLVFKDUJHIURPSUREDWLRQRQ0D\ 6LQFH+DPSWRQjV XQGHUO\LQJ VWDWH FRQYLFWLRQ RI DWWHPSWHG SRVVHVVLRQ RI D 7KHVH IDFWV GHPRQVWUDWH WKDW WKH SROLFH VXVSHFWHG WKDW ZHDSRQ RWKHU WKDQ D ILUHDUP IHOO LQWR WKH mQRQVSHFLILHGl VWROHQ SURSHUW\ ZRXOG EH ORFDWHG DW sHQQLQJV 'ULYH FDWHJRU\RI0&/I KLVULJKWVZRXOGKDYHEHHQ VLQFHWKHSROLFHKDGLQIRUPDWLRQIURPDUHOLDEOHLQIRUPDQWWKDW UHVWRUHG LQ WKUHH \HDUV DIWHU KLV GLVFKDUJH IURP VWROHQSURSHUW\ZRXOGEHORFDWHGDWWKHUHVLGHQFHDQG WKHQ SUREDWLRQ 7KLV LV EHFDXVH WKHUH LV QR UHTXLUHPHQW XQGHU FRUURERUDWHG WKDW LQIRUPDWLRQ E\ RUJDQL]LQJ D FRQWUROOHG 0&/I XQOLNHXQGHU0&/I SXUFKDVHDWWKDWORFDWLRQDQGREWDLQLQJDGGLWLRQDOLQIRUPDWLRQ WKDWDFRQYLFWHGIHORQDSSO\IRUUHVWRUDWLRQRIKLVZHDSRQV DERXWWKHVXVSHFWZKRUHVLGHGWKHUH&RQWUDU\WR&DPSEHOOjV SULYLOHJHVIURPKLVORFDOJXQERDUG$VDUHVXOWWKHUHZDVQR DVVHUWLRQVLWZDVQRWQHFHVVDU\IRUWKHSROLFHWRVWDWHWKDWWKH QHHGIRUWKH+DPSWRQFRXUWWRDGGUHVVWKHmXQOHVVFODXVHl KDQGJXQSXUFKDVHGDWsHQQLQJV'ULYHZDVIRXQGWREH D VWROHQ LWHP WR OLQN WKH KDQGJXQ WR WKH /HQDZHH &RXQW\ )XUWKHUPRUHWKHHLJKW\HDUUHVWULFWLRQRQ+DPSWRQjVULJKW EUHDNLQJDQGHQWHULQJRUWRLQGLFDWHWKDWRWKHUVWROHQLWHPV WRDSRVVHVVDSLVWROWKDWZDVLQHIIHFWZKHQ+DPSWRQZDV PD\ EH IRXQG DW WKH UHVLGHQFH 7KH SROLFH HVWDEOLVKHG FRQYLFWHG LQ ZRXOG KDYH H[SLUHG E\ WKH WLPH KH ZDV VXIILFLHQWSUREDEOHFDXVHWKURXJKWKHWLSDQGWKHVXEVHTXHQW FKDUJHGDVDIHORQLQSRVVHVVLRQRQ2FWREHU 7KH FRUURERUDWLRQ RI WKH WLS E\ WKH FRQWUROOHG SXUFKDVH RI D FRXUWLQ+DPSWRQGRHVQRWVWDWHWKHGDWHRI+DPSWRQjV KDQGJXQDW&DPSEHOOjVUHVLGHQFH FRQYLFWLRQ EXW WKH FRXUW GRHV VWDWH WKDW +DPSWRQ mZDV VHQWHQFHGWRRQH\HDURISUREDWLRQIRUWKHSUHGLFDWHRIIHQVH $OWKRXJK &DPSEHOO DWWHPSWV WR DUJXH WKDW KLV FDVH LV DQGZDVGLVFKDUJHGIURPVXFKSUREDWLRQRQ0D\ l VLPLODU WR WKRVH LQ ZKLFK WKH SROLFH UHOLHG VROHO\ RQ )G DW 7KHUH LV QR LQGLFDWLRQ WKDW +DPSWRQjV XQFRUURERUDWHG DQRQ\PRXV WLSV WKLV DUJXPHQW LV GLVFKDUJHIURPSUREDWLRQRFFXUUHGSULRUWRWKHFRPSOHWLRQRI XQSHUVXDVLYH 7KH SROLFH GLG QRW UHO\ VROHO\ RQ WKH WKHRQH\HDUSHULRGRISUREDWLRQWRZKLFKKHZDVVHQWHQFHG DQRQ\PRXV WLS WKDW WKH\ UHFHLYHG WKDW VWROHQ SURSHUW\ ZDV 7KHUHIRUHZHDVVXPHWKDWKLVGDWHRIFRQYLFWLRQZDV0D\ ORFDWHGDWsHQQLQJV'ULYH7KHSROLFHFRUURERUDWHGWKH 7KHHLJKW\HDUUHVWULFWLRQLQSODFHLQ UDQIURPWKH WLSWKURXJKDFRQWUROOHGSXUFKDVHDWWKHsHQQLQJV'ULYH WLPH RI FRQYLFWLRQ RU WKH HQG RI LQFDUFHUDWLRQ 6LQFH ORFDWLRQDQGDQLQYHVWLJDWLRQLQWR&DPSEHOOjVSUHYLRXVIHORQ\ +DPSWRQZDVQRWLQFDUFHUDWHGIRUKLV FRQYLFWLRQWKH UHFRUG7KHFDVHVWKDW&DPSEHOOUHOLHVXSRQGHWHUPLQHGWKDW HLJKW\HDUOLPLWDWLRQRQKLVULJKWWRSRVVHVVDSLVWROZRXOGUXQ IURPWKHGDWHRIKLVFRQYLFWLRQZKLFKWKHFRXUWLQGLFDWHVZDV 0D\ 7KHUHVWULFWLRQVZRXOGKDYHH[SLUHGRQ0D\ SULRUWR+DPSWRQjVFKDUJHDVDIHORQLQSRVVHVVLRQ LGHQWLI\ DQ LQIRUPDQWl 8QLWHG6WDWHVY&DPSEHOO 1R 1R 8QLWHG6WDWHVY&DPSEHOO UHJDUGOHVVRIZKHWKHU0&/IFRXOGEHDSSOLHGWR VHDUFK ZDUUDQWV ODFNHG SUREDEOH FDXVH EHFDXVH WKH\ ZHUH &DPSEHOODWWKHWLPHRIKLVFRQYLFWLRQKLVULJKWWRSRVVHVV EDVHGVROHO\RQDQRQ\PRXVWLSVWKDWZHUHGHHPHGXQUHOLDEOH ILUHDUPV ZRXOG VWLOO KDYH EHHQ UHVWULFWHG DQG KH ZRXOG EH 7KDWLVVLPSO\QRWWKHFDVHKHUH VXEMHFWWREHLQJDIHORQLQSRVVHVVLRQSXUVXDQWWR86& J DQGWKHmXQOHVVFODXVHlRI86& D )XUWKHUPRUHWKHVHDUFKZDUUDQWDIILGDYLWLQWKLVFDVHZDV EDVHGRQPRUHFRUURERUDWLRQWKDQLQRWKHUFDVHVLQZKLFKWKLV &DPSEHOODOVRUHOLHVXSRQ+DPSWRQDQG*LOOLDPLQZKLFK FRXUW XSKHOG ZDUUDQWV EDVHG RQ LQIRUPDWLRQ IURP DQ WKLVFRXUWGHWHUPLQHGWKDWIHORQ\FRQYLFWLRQVSUHGDWLQJWKH LQIRUPDQW)RUH[DPSOHLQ8QLWHG6WDWHVY)LQFK )G 2FWREHU HQDFWPHQW RI 0&/ I FRXOG QRW WK&LU WKLVFRXUWUXOHGWKDWSUREDEOHFDXVH VHUYH DV SUHGLFDWH RIIHQVHV IRU IHGHUDO IHORQLQSRVVHVVLRQ ZDVHVWDEOLVKHGVROHO\E\DUHOLDEOHLQIRUPDQWjVREVHUYDWLRQ FKDUJHVVLQFHLQHDFKFDVHWKHIHORQjVFLYLOULJKWVKDGEHHQ RIGUXJWUDIILFNLQJDWDQLGHQWLILHGUHVLGHQFHZLWKLQWKHSDVW UHVWRUHG XQGHU 0LFKLJDQ ODZ %RWK FDVHV FDQ EH ILYH GD\V ,Q DGGLWLRQ LQ 6PLWK )G D UHOLDEOH GLVWLQJXLVKHG FRQILGHQWLDOLQIRUPDQWKDGEHHQLQWKHVXVSHFWjVKRPHZLWKLQ WKHSDVWIRUW\HLJKWKRXUVDQGREVHUYHGZHDSRQVWKHUH/RFDO SROLFH RIILFHUV REWDLQHG D SKRWRJUDSK RI WKH VXVSHFW DQG REVHUYHG WKH VXVSHFW HQWHULQJ DQG OHDYLQJ WKH KRPH 7KH mXQOHVV FODXVHl RI 86& D 6HH 8QLWHG 6WDWHV Y &DUQHV RIILFHUVFRQILUPHGWKHVXVSHFWjVDGGUHVVDQGYHULILHGWKDWWKH ) 6XSS G (' 0LFK 8QLWHG 6WDWHV Y VXVSHFW ZDV D FRQYLFWHG IHORQ 7KH RIILFHUV REWDLQHG D %URZQ ) 6XSS G (' 0LFK 7KH %URZQ FRXUW ZDUUDQW IRXQG ZHDSRQV DQG FKDUJHG 6PLWK ZLWK EHLQJ D FRQFOXGHG WKDW m>X@QGHU &DURQ LW DSSDUHQWO\ GRHV QRW PDWWHU WKDW IHORQ LQ SRVVHVVLRQ RI ILUHDUPV 7KLV FRXUW UHYHUVHG WKH 'HIHQGDQW GLG QRW YLRODWH DQ\ RI WKH UHVWULFWLRQV 0LFKLJDQ FRQWLQXHV WR LPSRVH RQ FRQYLFWHG IHORQV RU WKDW WKHVH UHVWULFWLRQV DUH UHODWLYHO\ PLQRU GLVWULFWFRXUWjVILQGLQJWKDWWKHZDUUDQWZDVLQVXIILFLHQW7KH LQ VFRSH DOO WKDW PDWWHUV LV WKDW 0LFKLJDQ GRHV LQ IDFW LPSRVH VXFK OLPLWVl FRXUW VWDWHG WKDW mWKH LQIRUPDQWjV EDVLV RI NQRZOHGJH ZDV ) 6XSS G DW ILUVWKDQG DQG WKHUH ZDV QR QHHG IRU WKH LQIRUPDQW WR VSHFXODWHIXUWKHUDERXWZKHWKHUDFULPHZDVEHLQJFRPPLWWHG ,Q WKLV FDVH &DPSEHOO ZDV UHVWULFWHG IURP REWDLQLQJ D FRQFHDOHG EHFDXVHPHUHJXQSRVVHVVLRQE\DIHORQFRQVWLWXWHVDIHORQ\l ZHDSRQV OLFHQVH IURP HLJKW \HDUV EHJLQQLQJ RQ 1RYHPEHU ZKHQ ,G DW 7KH FRXUW KHOG WKDW mD ZDUUDQW DIILGDYLW ZKLFK KH ZDV UHOHDVHG IURP SULVRQ DIWHU KLV FRQYLFWLRQ IRU VHFRQGGHJUHH FULPLQDO VH[XDO FRQGXFW 0&/ 7KDW UHVWULFWLRQ ZDV VWLOO UHFLWHVWKDWUHFHQWFULPLQDODFWLYLW\ZDVSHUVRQDOO\REVHUYHG LQ H[LVWHQFH ZKHQ &DPSEHOO ZDV FKDUJHG DV D IHORQ LQ SRVVHVVLRQ RQ sXO\ E\ D KLJKO\ UHOLDEOH LQIRUPDQW DVSHFWV RI ZKLFK DUH 8QGHU WKH UHDVRQLQJ RI &DUQHV DQG %URZQ WKLV UHVWULFWLRQ FRUURERUDWHG E\ IXUWKHU SROLFH LQYHVWLJDWLRQ HVWDEOLVKHV ZRXOG KDYH EHHQ VXIILFLHQW WR FKDUJH &DPSEHOO DV D IHORQ LQ SRVVHVVLRQ SUREDEOHFDXVHl,GDW,QWKLVFDVHWKHSROLFHGLGQRW :H QRWH KRZHYHU WKDW WKHUH LV D GLIIHUHQFH EHWZHHQ WKH LVVXH RI WKH UHO\VROHO\RQREVHUYDWLRQVRILOOHJDODFWLYLW\E\WKHLQIRUPDQW HIIHFW RI D VWDWHjV ODZV JLYLQJ D IHORQ WKH ULJKW WR SRVVHVV FHUWDLQ W\SHV RI ZHDSRQV DQG QRW RWKHUVZKLFK WKH 6XSUHPH &RXUW UXOHG LQ &DURQ FDQ DQG E\ SROLFH ,QVWHDG WKH SROLFH UHOLHG RQ D WLS IURP D SURYLGH WKH EDVLV IRU D IHORQLQSRVVHVVLRQ FKDUJHDQG WKH LVVXH RI WKH UHOLDEOH LQIRUPDQW DQG FRUURERUDWHG WKH WLS E\ D FRQWUROOHG HIIHFW RI D VWDWHjV ODZV JLYLQJ D IHORQ WKH ULJKW WR SRVVHVV DOO W\SHV RI SXUFKDVH RI D ILUHDUP IURP WKH VXVSHFW DQG UHYLHZ RI WKH ZHDSRQV EXW QRW WKH ULJKW WR FRQFHDO VRPH RU DOO RI WKRVH ZHDSRQV 6LQFH VXVSHFWjVFULPLQDOUHFRUG7KLVLQIRUPDWLRQZDVVLPLODUWRLI ZH KROG WKDW &DPSEHOOjV ULJKWV WR SRVVHVV ILUHDUPV ZRXOG QRW KDYH EHHQ IXOO\ UHVWRUHG DW WKH WLPH KH ZDV FKDUJHG DV D IHORQ LQ SRVVHVVLRQ RQ sXO\ HYHQ LI WKH HQDFWPHQW RI 0&/ I DV DSSOLHG WR &DPSEHOO ZDV XQFRQVWLWXWLRQDO ZH GR QRW UHDFK WKH LVVXH RI ZKHWKHU WKH UHVWULFWLRQ RQ &DPSEHOOjV ULJKW WR FDUU\ FRQFHDOHG ZHDSRQV ZDV LQGHSHQGHQWO\ VXIILFLHQW WR XSKROG &DPSEHOOjV IHORQLQSRVVHVVLRQ FKDUJH 8QLWHG6WDWHVY&DPSEHOO 1R 1R 8QLWHG6WDWHVY&DPSEHOO QRWPRUHWKDQWKDWUHOLHGXSRQWRREWDLQWKHVHDUFKZDUUDQWV SULRUWRLWV2FWREHU HIIHFWLYHGDWHGRHVQRWFRQVWLWXWH XSKHOGLQ)LQFKDQG6PLWK DQH[SRVWIDFWRYLRODWLRQ6HHHJ+HUYH\Y8QLWHG6WDWHV ) 6XSS G (' 0LFK .UDPHU Y )LQDOO\WKHSROLFHGLGQRWLPSURSHUO\UHO\XSRQ&DPSEHOOjV 8QLWHG6WDWHV1R :/ ('0LFK SULRUIHORQ\UHFRUGLQHVWDEOLVKLQJSUREDEOHFDXVH7KLVLVQRW $SU 3HRSOHY6ZLQW1:G 0LFK DFDVHLQZKLFKWKHSROLFHmPHUHO\YHULI>LHG@LQIRUPDWLRQlWR &W $SS 3HRSOH Y 7LFH 1:G FRUURERUDWH DQ LQIRUPDQWjV VWDWHPHQW ,QJUDP :/ 0LFK &W $SS 1R FRXUW KDV \HW WR KROG WR WKH DW 5DWKHU WKH SROLFH FRQGXFWHG DGGLWLRQDO FRQWUDU\ LQYHVWLJDWLRQLQWR&DPSEHOOjVSULRUIHORQ\UHFRUGDQGXVHG WKLVDGGLWLRQDOLQIRUPDWLRQDVIXUWKHUVXSSRUWWRFRUURERUDWH ,Q 7LFH WKH FRXUW FRQFOXGHG WKDW I GRHV QRW WKHLQIRUPDQWjVWLSDQGWRGHPRQVWUDWHSUREDEOHFDXVH YLRODWH WKH ([ 3RVW )DFWR &ODXVHV RI WKH 8QLWHG 6WDWHV RU 0LFKLJDQ &RQVWLWXWLRQV EHFDXVH mWKH VWDWHjV SUHGRPLQDQW % LQWHUHVW LQ HQDFWLQJ 0&/ I ZDV QRW WKH LQIOLFWLRQ RI IXUWKHU SXQLVKPHQW RQ WKRVH ZKR KDG EHHQ &DPSEHOODOVRDUJXHVWKDWHYHQLIWKHUHZDVSUREDEOHFDXVH FRQYLFWHGRISUHYLRXVIHORQLHV>EXW@WRSURWHFWWKHSXEOLF IRUWKHLVVXDQFHRIWKHVHDUFKZDUUDQWSRUWLRQVRIWKHZDUUDQW E\ SUHFOXGLQJ FHUWDLQ FRQYLFWHG IHORQV IURP SRVVHVVLQJ ZHUHLQYDOLGEHFDXVHWKHZDUUDQWZDVRYHUEURDGLQWKDWLWGLG ILUHDUPVl1:GDW0RUHRYHUWKHFRXUWVWDWHGWKDW QRW VXIILFLHQWO\ GHVFULEH WKH SODFH WR EH VHDUFKHG DQG WKH WKHFRQGXFWEHLQJSXQLVKHGZDVQRWDQ\DFWWKDWSUHFHGHGWKH WKLQJVWREHVHL]HG GDWHWKHVWDWXWHWRRNHIIHFWEXWWKHGHIHQGDQWjVmUHFHQWDFWRI SRVVHVVLQJDILUHDUPl,ELG 7KH)RXUWK$PHQGPHQWWRWKH8QLWHG6WDWHV&RQVWLWXWLRQ UHTXLUHVWKDWDZDUUDQWGHVFULEHZLWKmSDUWLFXODU>LW\@WKH $OWKRXJKZHILQGWKLVUHDVRQLQJSHUVXDVLYHZHFKRRVHQRW SODFHWREHVHDUFKHGDQGWKHSHUVRQVRUWKLQJVWREHVHL]HGl WRDSSO\LWWRWKHIDFWVRIWKLVFDVH,QVWHDGZHKROGWKDWHYHQ 86 & $% DPHQG ,9 &RXUWV KDYH KHOG WKDW D ZDUUDQW LI WKH HQDFWPHQW RI 0&/ I DV DSSOLHG WR UHIHUULQJWRVWROHQSURSHUW\RIDFHUWDLQW\SHLVLQVXIILFLHQWLI &DPSEHOOZDVXQFRQVWLWXWLRQDO&DPSEHOOjVULJKWVWRSRVVHVV WKDWSURSHUW\LVFRPPRQ6HH8QLWHG6WDWHVY6SLORWUR DILUHDUPVWLOOZRXOGQRWKDYHEHHQIXOO\UHVWRUHGDWWKHWLPH )G WK&LU GHVFULSWLRQRImJHPVWRQHVDQG KHZDVFKDUJHGDVDIHORQLQSRVVHVVLRQRQsXO\ $W RWKHULWHPVRIMHZHOU\lQRWVXIILFLHQWO\SDUWLFXODULQVHDUFKRI WKHWLPHRI&DPSEHOOjVFRQYLFWLRQLQ 0&/ MHZHOU\VWRUH ,IWKHSXUSRVHRIWKHZDUUDQWLVWRVHL]HLOOLFLW LPSRVHGDQHLJKW\HDUUHVWULFWLRQRQ&DPSEHOOjVDELOLW\mWR SURSHUW\ RU FRQWUDEDQG KRZHYHU D JHQHUDO UHIHUHQFH LV SXUFKDVHFDUU\RUWUDQVSRUWDSLVWROl7KLVUHVWULFWLRQDSSOLHG SHUPLVVLEOH6HH8QLWHG6WDWHVY0RUULV )G WR &DPSEHOO ZKHQ KH ZDV UHOHDVHG IURP SULVRQ RQ VW&LU mGUXJVDQGQDUFRWLFVlVXIILFLHQW 1RYHPEHU 7KHUHVWULFWLRQZRXOGKDYHFRQWLQXHG XQWLO1RYHPEHU DSSUR[LPDWHO\IRXUPRQWKVDIWHU &DPSEHOOjV IHORQLQSRVVHVVLRQ FKDUJH 7KHUHIRUH ,W LV WUXH WKDW WKH ZDUUDQW DIILGDYLW GRHV QRW FOHDUO\ HVWDEOLVK WKDW WKH WLSVWHU DQG WKH LQIRUPDQW ZHUH WKH VDPH SHUVRQ &DPSEHOO KDV QRW :H QRWH WKDW DW OHDVW WZR IHGHUDO GLVWULFW FRXUWV LQ 0LFKLJDQ KDYH SUHVHQWHG DQ\ HYLGHQFH GLVSXWLQJ WKLV KRZHYHU (YHQ LI WKH\ ZHUH IRXQG 0LFKLJDQjV HLJKW\HDU OLPLWDWLRQ RQ D FRQYLFWHG IHORQj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jVULJKWWRmSRVVHVVXVHWUDQVSRUW GHWHUPLQHGWKDWZKHQH[HFXWLQJDZDUUDQWIRUmDOOILUHDUPV VHOO SXUFKDVH FDUU\ VKLS UHFHLYH RU GLVWULEXWH D ILUHDUPl DQGDPPXQLWLRQlWKHSROLFHKDGSUREDEOHFDXVHWRVHDUFKIRU ZRXOGEHUHVWULFWHGIRUILYH\HDUVDIWHUKLVUHOHDVHIURPSDUROH DFDOLEHUSLVWRODOOHJHGO\XVHGLQDPXUGHUEXWWKHRIILFHUV RQsDQXDU\ ,QDGGLWLRQDIWHUWKHILYH\HDUZDLWLQJ GLG QRW KDYH SUREDEOH FDXVH WR VHL]H D VDZHGRII VKRWJXQ SHULRG&DPSEHOOZRXOGKDYHWRDSSO\WRKLVFRXQW\FRQFHDOHG ZKLFKZDVVXSSUHVVHG ZHDSRQVOLFHQVLQJERDUGWRKDYHKLVJHQHUDOILUHDUPVULJKWV UHVWRUHG0&/ &DPSEHOO FODLPV WKDW LQ WKLV FDVH WKH SROLFH VRXJKW D ZDUUDQWWRUHFRYHUVSHFLILFILUHDUPVWKDWZHUHNQRZQWRKDYH 7KLVFRXUWKDVVWDWHGWKDWm>L@WLVWKHVWDWXVRIWKHGHIHQGDQW EHHQVWROHQ\HWWKHZDUUDQWVRXJKWWKHVHL]XUHRIm>D@Q\DQG RQ WKH GDWH KH SRVVHVVHG WKH ILUHDUP DV DOOHJHG LQ WKH DOOILUHDUPVORFDWHGDWWKHUHVLGHQFHDQGDQ\DQGDOOQDUFRWLFV LQGLFWPHQW WKDW FRQWUROV ZKHWKHU RU QRW KH KDV YLRODWHG DQGQDUFRWLFSDUDSKHUQDOLDl&DPSEHOOFRQWHQGVWKDWLQWKHLU > J @l8QLWHG6WDWHVY0RUJDQ)G VHDUFKZDUUDQWDIILGDYLWWKHSROLFHGLGQRWHVWDEOLVKSUREDEOH WK &LU &DPSEHOO ZDV FKDUJHG DV D IHORQ LQ FDXVHWRVHDUFKIRUILUHDUPVLQJHQHUDO,QDGGLWLRQ&DPSEHOO SRVVHVVLRQ RI D ILUHDUP RQ sXO\ $W WKDW WLPH DUJXHVWKDWWKHRQO\HYLGHQFHVXSSRUWLQJSUREDEOHFDXVHIRU &DPSEHOOjVULJKWWRSRVVHVVXVHWUDQVSRUWVHOOSXUFKDVH WKH SUHVHQFH RI QDUFRWLFV ZDV &DPSEHOOjV WZHQW\\HDUROG FDUU\ VKLS UHFHLYH RU GLVWULEXWH D ILUHDUP ZDV UHVWULFWHG QDUFRWLFVUHODWHGFRQYLFWLRQ$VDUHVXOW&DPSEHOOFODLPV XQGHU0&/DQG0&/I$OWKRXJKILYH WKDWWKHZDUUDQWZDVRYHUEURDG&DPSEHOODVVHUWV WKDW WKH \HDUVKDGSDVVHGVLQFH&DPSEHOOZDVUHOHDVHGIURPSDUROHRQ SRUWLRQVRIWKHVHDUFKZDUUDQWXQUHODWHGWRVWROHQLWHPVVKRXOG sDQXDU\ &DPSEHOO KDG QRW DSSOLHG WR KLV FRXQW\ EHLQYDOLGDWHGOHDGLQJWRVXSSUHVVLRQRIWKHILUHDUPVVHL]HG FRQFHDOHG ZHDSRQV ERDUG WR KDYH KLV ULJKWV UHVWRUHG DV IURPWKHKRXVHWKDWZHUHQRWNQRZQRUDOOHJHGWREH KDYH UHTXLUHGLQ0&/I E DQG0&/ EHHQVWROHQ &DPSEHOODUJXHVWKDW0&/ILVXQFRQVWLWXWLRQDO 7KLV FRXUW KDV PDGH LW FOHDU WKDW JHQHUDO ZDUUDQWV QRW DVDSSOLHGWRKLPSXUVXDQWWRWKH([3RVW)DFWR&ODXVHRIWKH GHVFULELQJZLWKSDUWLFXODULW\WKLQJVWREHVHDUFKHGFDQmFUHDWH 8QLWHG6WDWHV&RQVWLWXWLRQ&DPSEHOOEDVHVKLVDUJXPHQWRQ D GDQJHU RI XQOLPLWHG GLVFUHWLRQ LQ WKH H[HFXWLQJ RIILFHUjV WKHIDFWWKDW0&/IZDVHQDFWHGLQ2FWREHU GHWHUPLQDWLRQRIZKDWLVVXEMHFWWRVHL]XUHDQGDGDQJHUWKDW DIWHU&DPSEHOOjV FRQYLFWLRQDQGKLVUHOHDVHIURPSDUROH LWHPVZLOOEHVHL]HGZKHQWKHZDUUDQWUHIHUVWRRWKHULWHPVl RQsDQXDU\ 8QLWHG 6WDWHV Y 6DYRFD )G WK &LU D@Q\DQGDOOILUHDUPVl &DPSEHOOZDVSDUROHGRQKLVVHFRQGGHJUHHFULPLQDOVH[XDO &DPSEHOODOVRDUJXHVWKDWWKHZDUUDQWIDLOHGWRSDUWLFXODUL]H FRQGXFWFRQYLFWLRQRQ1RYHPEHU +LVSDUROHZDV WKH SODFH WR EH VHDUFKHG &DPSEHOO UHOLHV RQ 0DU\ODQG Y GLVFKDUJHGRQsDQXDU\ $WWKDWWLPH&DPSEHOOjVFLYLO *DUULVRQ 86 LQ ZKLFK WKH 6XSUHPH ULJKWVZHUHUHVWRUHGVLQFHDIHORQjVULJKWVDUHUHVWRUHGXQGHU &RXUW VWDWHG WKDW mSUREDEOH FDXVH WR EHOLHYH WKDW D VWROHQ 0LFKLJDQODZXSRQFRPSOHWLRQRIWKHIHORQjVVHQWHQFHZKLFK ODZQPRZHU PD\ EH IRXQG LQ D JDUDJH ZLOO QRW VXSSRUW D LQFOXGHVLQFDUFHUDWLRQSDUROHDQGSUREDWLRQ6HH+DPSWRQ ZDUUDQW WR VHDUFK DQ XSVWDLUV EHGURRPl ,Q WKLV FDVH )G DW )URHGH 1:G DW $OWKRXJK &DPSEHOOQRWHVWKDWWKHSROLFHKDGVSHFLILFLQIRUPDWLRQWKDW &DPSEHOOjVFLYLOULJKWVZHUHUHVWRUHGKLVULJKWVWRSRVVHVV RQHRIWKHILUHDUPVEHOLHYHGWRKDYHEHHQVWROHQZDVREVHUYHG ILUHDUPVUHPDLQHGOLPLWHG$WWKHWLPH&DPSEHOOjVSDUROH WRKDYHEHHQUHWULHYHGIURPLQVLGHWKHVPDOOHUWUDLOHUDGMDFHQW ZDVGLVFKDUJHG0LFKLJDQODZGLGQRWDOORZSRVVHVVLRQRID WR &DPSEHOOjV SULPDU\ UHVLGHQFH &DPSEHOO DUJXHV WKDW mSLVWROlE\LQGLYLGXDOVFRQYLFWHGRIDIHORQ\RULQFDUFHUDWHG LQVWHDGRIOLPLWLQJWKHLUVHDUFKZDUUDQWWKHSROLFHVRXJKWDQG DV D UHVXOW RI D IHORQ\ FRQYLFWLRQ GXULQJ WKH HLJKW \HDUV REWDLQHGDZDUUDQWIRUWKHSULPDU\UHVLGHQFHQRWZLWKVWDQGLQJ LPPHGLDWHO\SUHFHGLQJWKHLQGLYLGXDOjVGDWHRIDSSOLFDWLRQIRU WKH IDFW WKDW WKUHH VHSDUDWH VWUXFWXUHV ZHUH ORFDWHG RQ WKH DSLVWROOLFHQVH0&/ 6LQFHWKLVUHVWULFWLRQ SURSHUW\ WKHPRELOHKRPHUHVLGHQFHWKHVPDOOHUWUDLOHUDQG RQO\UHIHUVWRWKHGDWHVRIFRQYLFWLRQDQGLQFDUFHUDWLRQDQG DVKHG QRWWRSUREDWLRQSDUROHRURWKHUFRPSRQHQWVRIDFULPLQDO VHQWHQFH ZH LQWHUSUHW WKH HLJKW\HDU ZDLWLQJ SHULRG DV 7KH ZDUUDQW ZDV QRW RYHUEURDG DV WR WKH SRUWLRQV RI EHJLQQLQJDIWHUWKHIHORQLVUHOHDVHGIURPSULVRQ&I8QLWHG &DPSEHOOjVUHVLGHQFHWREHVHDUFKHG7KHDIILGDYLWGHVFULEHG 6WDWHV Y &DUQHV ) 6XSS G Q (' WKH UHVLGHQFH DV mD VLQJOH IDPLO\ GZHOOLQJ 0RELOH KRPH 0LFK ZKLWHLQFRORUZLWKDQDGGLWLRQDOVPDOOHUPRELOHKRPHDQGD VKHGZKLFKRFFXSLHVWKHVDPHORW WKHVHDGGLWLRQDOVWUXFWXUHV ,Q 0LFKLJDQDPHQGHG0&/DQGHQDFWHG DUHZLWKLQWKHFXUWLODJHRIsHQQLQJV'UDQGDUHXVHGE\ 0&/I6LQFH&DPSEHOOjV VHFRQGGHJUHH WKHVDPHRFFXSDQWl7KLVFDVHLVVLPLODUWR8QLWHG6WDWHVY FULPLQDOVH[XDOFRQGXFWFRQYLFWLRQTXDOLILHVDVDVSHFLILHG %HQQHWW )G WK &LU LQ ZKLFK D 7R WKH H[WHQW WKDW &DPSEHOO FKDOOHQJHV WKH ZDUUDQW RQ WKH EDVLV WKDW 8QGHU 0LFKLJDQ ODZ DW WKH WLPH mSLVWROl ZDV GHILQHG DV mDQ\ LW LQFOXGHG mQDUFRWLFV DQG QDUFRWLF SDUDSKHUQDOLDl WKLV LVVXH LV PRRW VLQFH ILUHDUP ORDGHG RU XQORDGHG WKDW LV LQFKHV RU OHVV LQ OHQJWK RU DQ\ QR QDUFRWLFV ZHUH VHL]HG IURP WKH UHVLGHQFH DQG &DPSEHOO ZDV QRW ILUHDUP ORDGHG RU XQORDGHG ZKLFK E\ LWV FRQVWUXFWLRQ DQG DSSHDUDQFH FKDUJHG ZLWK DQ\ GUXJ RIIHQVHV FRQFHDOV LW DV D ILUHDUPl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mWKHUHLVQRQHHGWRVHDUFKIRUHYLGHQFH E\WKH WLPHRIKLVIHORQLQSRVVHVVLRQFKDUJHRQ WROLQNWKHRXWEXLOGLQJWRWKHDOOHJDWLRQVLQWKHDIILGDYLW WKH sXO\ 7KHUHIRUH DOWKRXJK KH IXOILOOHG WKH RWKHU VKRS EXLOGLQJ DQG WKH UHVLGHQFH DUH VXIILFLHQWO\ FRQQHFWHG UHTXLUHPHQWVRI0&/I WKHGLVWULFWFRXUWUXOHG EHFDXVHWKH\DUHERWKZLWKLQWKHFXUWLODJHRIWKHGHIHQGDQWjV WKDW KH ZDV IRUELGGHQ WR SRVVHVV ILUHDUPV XQGHU 0LFKLJDQ SURSHUW\l,ELG6LPLODUO\VLQFHDOORIWKHEXLOGLQJVDW ODZ sHQQLQJV'ULYHZHUHZLWKLQWKHFXUWLODJHRIWKHSURSHUW\WKHUH ZDVQRQHHGWRGHPRQVWUDWHSUREDEOHFDXVHWRVHDUFKHDFK &DPSEHOODUJXHVWKDWWKHGLVWULFWFRXUWHUUHGEHFDXVHKLV EXLOGLQJRQWKHSURSHUW\ XQGHUO\LQJIHORQ\FRQYLFWLRQVLQ DQG SUHGDWHGWKH 2FWREHU HQDFWPHQWRI0&/I&DPSEHOO ,QDGGLWLRQ WKHUHZDVSUREDEOHFDXVHWREHOLHYHWKDWWKH UHOLHVRQWZRFDVHVLQZKLFKWKLVFRXUWUXOHGWKDWXQGHUWKH LWHPVWREHVHL]HGFRXOGKDYHEHHQIRXQGLQDQ\SRUWLRQRIWKH FLUFXPVWDQFHV RI HDFK FDVH IHORQV ZLWK SULRU FRQYLFWLRQV GHIHQGDQWjVSURSHUW\,QWKLVUHJDUGWKHVHDUFKRI&DPSEHOOjV SUHGDWLQJWKHHQDFWPHQWRI0&/IKDGKDGWKHLU SURSHUW\GLIIHUHGIURPWKHK\SRWKHWLFDOH[DPSOHLQ*DUULVRQ FLYLOULJKWVUHVWRUHGXQGHU0LFKLJDQODZ6HH+DPSWRQ DERXWWKHXVHRIDVHDUFKZDUUDQWIRUDODZQPRZHUWRVHDUFK )G *LOOLDPY8QLWHG6WDWHV1R :/ DQXSVWDLUVEHGURRPsXVWEHIRUHSURYLGLQJWKHH[DPSOHXSRQ WK&LU$SU ZKLFK&DPSEHOOUHOLHVWKH*DUULVRQ&RXUWVWDWHGWKDWmWKH VFRSHRIDODZIXOVHDUFKLVµGHILQHGE\WKHREMHFWRIWKHVHDUFK &DPSEHOOjVDUJXPHQWVDUHXQDYDLOLQJ7KHIHGHUDOIHORQLQ DQGWKHSODFHVLQZKLFKWKHUHLVSUREDEOHFDXVHWREHOLHYHWKDW SRVVHVVLRQ VWDWXWH LQYROYHV D WZRSDUW LQTXLU\ LI D LWPD\EHIRXQGjl86DW FLWDWLRQRPLWWHG 8QOLNH FRQYLFWHGIHORQjVFLYLOULJKWVKDYHEHHQUHVWRUHGXQGHUVWDWH WKHFDVHRIVHDUFKLQJDEHGURRPWRILQGDODZQPRZHULQWKLV ODZKHVKDOOQRORQJHUEHFRQVLGHUHGDIHORQIRUSXUSRVHVRI FDVHWKHUHZDVSUREDEOHFDXVHWREHOLHYHWKDWILUHDUPVFRXOG J H[FHSW LI SXUVXDQW WR WKH mXQOHVV FODXVHl RI EHIRXQGWKURXJKRXW&DPSEHOOjVSURSHUW\ D WKH IHORQ UHPDLQV SURKLELWHG IURP ILUHDUPV SRVVHVVLRQ 7KLV FRXUW KDV VWDWHG WKDW WKH mXQOHVV FODXVHl ,,, DSSOLHVLIWKHmUHVWRUDWLRQRIFLYLOULJKWVH[SUHVVO\SURYLGHV WKDWWKHSHUVRQPD\QRWVKLSWUDQVSRUWSRVVHVVRUUHFHLYH &DPSEHOODUJXHVWKDWKLVPRWLRQWRGLVPLVVKLVIHORQLQ ILUHDUPVl8QLWHG6WDWHVY&DVVLG\ )G SRVVHVVLRQFKDUJHVKRXOGKDYHEHHQJUDQWHGE\WKHGLVWULFW Q WK&LU QRWLQJWKDWWKHLQTXLU\LQYROYHVERWK FRXUW EHFDXVH DOWKRXJK KH KDG WZR SULRU VWDWH IHORQ\ mUHOHDVHG IHORQjV FLYLO ULJKWV DQG ILUHDUPV SULYLOHJHVl DQG FRQYLFWLRQV D FRQYLFWLRQ IRU VHFRQGGHJUHH FULPLQDO UXOLQJWKDWDOWKRXJKGHIHQGDQWjVFLYLOULJKWVKDGEHHQUHVWRUHG VH[XDOFRQGXFWDQGD FRQYLFWLRQIRUDWWHPSWHGGHOLYHU\ RU SURSHUW\ RI DQRWKHU RU WKDW E\ LWV QDWXUH LQYROYHV D &DPSEHOO DOVR DUJXHV WKDW WKH mJRRG IDLWKl H[FHSWLRQ LQ 8QLWHG VXEVWDQWLDO ULVN WKDW SK\VLFDO IRUFH DJDLQVW WKH SHUVRQ RU 6WDWHV Y /HRQ 86 GRHV QRW DSSO\ WR VDYH WKH LQDGHTXDWH SURSHUW\ RI DQRWKHU PD\ EH XVHG LQ WKH FRXUVH RI DIILGDYLW DQG ZDUUDQW IRU sHQQLQJV 'ULYH 6LQFH ZH KDYH GHWHUPLQHG FRPPLWWLQJ WKH RIIHQVH WKDW WKH DIILGDYLW DQG ZDUUDQW ZHUH DGHTXDWH ZH GR QRW QHHG WR UHDFK WKLV LVVXH 8QLWHG6WDWHVY&DPSEHOO 1R 1R 8QLWHG6WDWHVY&DPSEHOO RI FRFDLQH KLV FLYLO ULJKWV ZHUH UHVWRUHG E\ WKH 6WDWH RI ZKLFKDSHUVRQKDVKDGFLYLOULJKWVUHVWRUHGVKDOOQRWEH 0LFKLJDQ FRQVLGHUHGDFRQYLFWLRQXQOHVVVXFKUHVWRUDWLRQRI FLYLOULJKWVH[SUHVVO\SURYLGHVWKDWWKHSHUVRQPD\QRWVKLS &DPSEHOOZDVFKDUJHGZLWKEHLQJDIHORQLQSRVVHVVLRQRI WUDQVSRUW SRVVHVV RU UHFHLYH ILUHDUPVl 7KH GLVWULFW FRXUW DILUHDUPLQYLRODWLRQRI86& J ZKLFKVWDWHV FRQFOXGHGWKDW&DPSEHOOZDVSURKLELWHGIURPSRVVHVVLQJD ILUHDUP XQGHU WKH UHVWULFWLRQV FRQWDLQHG LQ 0&/ ,W VKDOO EH XQODZIXO IRU DQ\ SHUVRQ ZKR KDV EHHQ I6LQFH&DPSEHOOjV FRQYLFWLRQTXDOLILHGDV FRQYLFWHG LQ DQ\ FRXUW RI D FULPH SXQLVKDEOH E\ LPSULVRQPHQWIRUDWHUPH[FHHGLQJRQH\HDUWR SRVVHVV LQ RU DIIHFWLQJ FRPPHUFH DQ\ ILUHDUP RU DPPXQLWLRQ>@ 7KH UHOHYDQW SRUWLRQV RI 0&/ I VWDWH ([FHSW DV SURYLGHG LQ VXEVHFWLRQ D SHUVRQ FRQYLFWHG RI 7KHGHILQLWLRQRIZKDWPD\VHUYHDVDSUHGLFDWHmFRQYLFWLRQl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mWKHODZRIWKH6WDWHRIFRQYLFWLRQQRW FLUFXPVWDQFHV H[LVW IHGHUDO ODZ GHWHUPLQHV WKH UHVWRUDWLRQ RI FLYLO ULJKWV DV D L 7KH SHUVRQ KDV SDLG DOO ILQHV LPSRVHG IRU UXOHl&DURQY8QLWHG6WDWHV86 WKH YLRODWLRQ LL 7KH SHUVRQ KDV VHUYHG DOO WHUPV RI LPSULVRQPHQW LPSRVHG IRU WKH YLRODWLRQ ,Q J FDVHV WKLV FRXUW KDV GHWHUPLQHG WKDW LLL 7KH SHUVRQ KDV VXFFHVVIXOO\ FRPSOHWHG DOO HVVHQWLDOO\DOORIDIRUPHUIHORQjVFLYLOULJKWVLQFOXGLQJWKH FRQGLWLRQV RI SUREDWLRQ RU SDUROH LPSRVHG IRU ULJKWWRYRWHKROGSXEOLFRIILFHDQGVLWRQDMXU\DUHUHVWRUHG WKH YLRODWLRQ XQGHU 0LFKLJDQ ODZ XSRQ WKH IRUPHU IHORQjV UHOHDVH IURP E 7KH SHUVRQ V ULJKW WR SRVVHVV XVH WUDQVSRUW VHOO FXVWRG\6HH+DPSWRQY8QLWHG6WDWHV )G SXUFKDVH FDUU\ VKLS UHFHLYH RU GLVWULEXWH D ILUHDUP KDV EHHQ UHVWRUHG SXUVXDQW WR VHFWLRQ RI $FW 1R WK&LU FLWLQJ)URHGHY+ROODQG/DGGHU 0IJ&R RI WKH 3XEOLF $FWV RI EHLQJ VHFWLRQ RI WKH 1:G 0LFK&W$SS 0LFKLJDQ &RPSLOHG /DZV 7KHGLVWULFWFRXUWFRQFOXGHGWKDWDOWKRXJK&DPSEHOOjVFLYLO ULJKWVZHUHUHVWRUHGKHZDVVWLOODIHORQLQSRVVHVVLRQXQGHU $V XVHG LQ VXEVHFWLRQ VSHFLILHG IHORQ\ PHDQV D IHORQ\ J DVDUHVXOWRIWKHmXQOHVVFODXVHl LQ 86& LQ ZKLFK RU PRUH RI WKH IROORZLQJ FLUFXPVWDQFHV H[LVW L $Q HOHPHQW RI WKDW IHORQ\ LV WKH XVH DWWHPSWHG XVH D ZKLFK VWDWHV WKDW m>D@Q\ FRQYLFWLRQ IRU RU WKUHDWHQHG XVH RI SK\VLFDO IRUFH DJDLQVW WKH SHUVRQ