5(&200(1'(' )25 )8//7(;7 38%/,&$7,21 :LOOLDPVY&R\OH 1R 3XUVXDQW WR 6L[WK &LUFXLW 5XOH (/(&7521,& &,7$7,21 )(' $SS 3 WK &LU UHFRPPHQGHGDOLIHVHQWHQFHKDG:LOOLDPVjVFRXQVHOSURSHUO\ )LOH 1DPH D S LQYHVWLJDWHG KLV EDFNJURXQG SUHSDUHG KLV ZLWQHVVHV DQG SURYLGHG WKH MXU\ D PRUH GHWDLOHG ORRN LQWR :LOOLDPVjV EDFNJURXQG 81,7('67$7(6&28572)$33($/6 ,,,&21&/86,21 )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB , EHOLHYH WKDW WKH 2KLR &RXUW RI $SSHDOV XQUHDVRQDEO\ DSSOLHGFOHDUO\HVWDEOLVKHG6XSUHPH&RXUWSUHFHGHQWZKHQLW KHOGWKDW:LOOLDPVKDGQRWVDWLVILHGHLWKHUWKHSHUIRUPDQFHRU /(:,6 :,//,$06 s5 ; WKHSUHMXGLFHSURQJVRIWKHWZRSDUW6WULFNODQGWHVW,QP\ 3HWLWLRQHU$SSHOODQW RSLQLRQ :LOOLDPV VDWLVILHG WKHVH WZR SURQJV E\ GHPRQVWUDWLQJWKDWKLVDWWRUQH\VQHJOHFWHGWRFRQGXFWDSURSHU 1R LQYHVWLJDWLRQLQWRKLVEDFNJURXQGIDLOHGWRLQIRUPPLWLJDWLRQ Y ZLWQHVVHVRIWKHSXUSRVHRISUHVHQWLQJPLWLJDWLQJHYLGHQFH ! GXULQJWKHVHQWHQFLQJSKDVHDQGWRSUHSDUHVXFKZLWQHVVHVIRU 5$/3+ &2W@KH FRQVHTXHQFH RI FRXQVHOjV IDLOXUHWRFRQGXFWWKHUHTXLVLWHGLOLJHQWLQYHVWLJDWLRQLQWRKLV 23,1,21 FOLHQWjV WURXEOLQJ EDFNJURXQG DQG XQLTXH SHUVRQDO BBBBBBBBBBBBBBBBB FLUFXPVWDQFHV PDQLIHVWHG LWVHOI GXULQJ KLV JHQHULF XQDSRORJHWLFFORVLQJDUJXPHQWZKLFKSURYLGHGWKHMXU\ZLWK .(11('<&LUFXLWsXGJH3HWLWLRQHU/HZLV:LOOLDPVsU QR UHDVRQV WR VSDUH SHWLWLRQHUjV OLIHl ,G DW sXVWLFH ZDV LQGLFWHG DQG FRQYLFWHG RI ILUVW GHJUHH PXUGHU DQG 2j&RQQRUWKHQH[SODLQHGWKDWWKH9LUJLQLD6XSUHPH&RXUWjV VHQWHQFHG WR GHDWK $IWHU XQVXFFHVVIXO GLUHFW DSSHDOV DQG GHFLVLRQ LQYROYHG DQ XQUHDVRQDEOH DSSOLFDWLRQ RI FOHDUO\ VHYHUDOVWDWHSRVWFRQYLFWLRQSURFHHGLQJV:LOOLDPVILOHGWKLV HVWDEOLVKHGODZEHFDXVHLWmUHYHDO>HG@DQREYLRXVIDLOXUHWR SHWLWLRQIRUDZULWRIKDEHDVFRUSXV$IWHUUXOLQJWKDWWKH FRQVLGHUWKHWRWDOLW\RIWKHRPLWWHGPLWLJDWLRQHYLGHQFHl,G $QWLWHUURULVPDQG(IIHFWLYH'HDWK3HQDOW\$FWRI 3XE DW /1R6WDW $('3$ JRYHUQHG :LOOLDPVjV SHWLWLRQ WKH GLVWULFW FRXUW HQWHUHG MXGJPHQW ,QWKLVFDVHWKH2KLR&RXUWRI$SSHDOVGLVSOD\HGLWVIDLOXUH GLVPLVVLQJWKHSHWLWLRQ7KHGLVWULFWFRXUWLVVXHGDFHUWLILFDWH WRFRQVLGHUWKHWRWDOLW\RIWKHPLWLJDWLQJHYLGHQFH+DG/HZLV RIDSSHDODELOLW\RQO\RQWKHTXHVWLRQRIZKHWKHU:LOOLDPVjV :LOOLDPVjVDWWRUQH\VFRQGXFWHGDSURSHULQYHVWLJDWLRQWKH\ SHWLWLRQZDVJRYHUQHGE\WKH$('3$2Q:LOOLDPVjVDSSHDO ZRXOG KDYH XQFRYHUHG PLWLJDWLQJ HYLGHQFH WKDW LV TXLWH ZHKHOGWKDWLWZDV6HH:LOOLDPVY&R\OH)G VLPLODU WR WKDW QRWHG LQ :LOOLDPV Y 7D\ORU LQFOXGLQJ WK&LU 2QKLVDSSHDORIWKHGHQLDORIDFHUWLILFDWHRQ PROHVWDWLRQDWILYHRUVL[\HDUVROG :LOOLDPVjVZLWQHVVLQJWKH WKH RWKHU LVVXHV KH KDG UDLVHG LQ KLV SHWLWLRQ ZH LVVXHG D VHULRXVSK\VLFDODEXVHRIKLVPRWKHUE\KLVVWHSIDWKHU WKHXVH FHUWLILFDWHRIDSSHDODELOLW\RQIRXULVVXHV7KRVHDUHZKHWKHU RIFRFDLQHDVHDUO\DVWKLUWHHQ\HDUVROG WKHUHJXODUVDOHRI WKHGLVWULFWFRXUWHUUHGE\ GHQ\LQJ:LOOLDPVjVUHTXHVWIRU PDULMXDQDE\:LOOLDPVjVIDWKHU IUHTXHQWEHDWLQJVRI:LOOLDPV DQ HYLGHQWLDU\ KHDULQJ ILQGLQJ WKDW WKH 2KLR FRXUWjV ZLWKREMHFWVVXFKDVH[WHQVLRQFRUGV :LOOLDPVjVIDLOXUHWR UXOLQJRQ:LOOLDPVjVLQHIIHFWLYHDVVLVWDQFHRIFRXQVHODWWKH FRPSOHWH VFKRROLQJ KLJKHU WKDQ WKH QLQWK JUDGH DQG VHQWHQFLQJVWDJHFODLPZDVQRWFRQWUDU\WRRUDQXQUHDVRQDEOH :LOOLDPVjVORZ,4/LNHWKHVL[MXVWLFHPDMRULW\LQ:LOOLDPV DSSOLFDWLRQRIWKHODZ ILQGLQJWKDWWKH2KLRFRXUWjVUXOLQJ Y 7D\ORU , EHOLHYH WKDW D GHVFULSWLRQ RI /HZLV :LOOLDPVjV RQ :LOOLDPVjV %UDG\ YLRODWLRQ FODLP DV LW UHODWHG WR WKH FKLOGKRRGILOOHGZLWKVH[XDODEXVHDQGGUXJXVHDQGH[SRVXUH WHVWLPRQ\RI$QGHUVRQDQG%URRNVZDVQRWFRQWUDU\WRRUDQ WRGUXJVDWD\RXQJDJHDQGSDUHQWDOQHJOHFWPLJKWZHOOKDYH XQUHDVRQDEOHDSSOLFDWLRQRIWKHODZDQG ILQGLQJWKDWWKH LQIOXHQFHG WKH MXU\jV DSSUDLVDO RI :LOOLDPVjV PRUDO 2KLRFRXUWjVUXOLQJRQ:LOOLDPVjV(LJKWK$PHQGPHQWFODLP FXOSDELOLW\ ,Q VXP , ZRXOG KROG WKDW :LOOLDPV ZDV WKDWWKHWULDOFRXUWLQFRUUHFWO\LQVWUXFWHGWKHMXU\RQWKH2KLRjV SUHMXGLFHGE\KLVFRXQVHOjVGHILFLHQWSHUIRUPDQFHGXULQJWKH GHDWKSHQDOW\VWDWXWHZDVQRWFRQWUDU\WRRUDQXQUHDVRQDEOH VHQWHQFLQJSKDVHDQGWKDWLWZDVREMHFWLYHO\XQUHDVRQDEOHIRU DSSOLFDWLRQRIWKHODZ,QUHVSRQVHWRWKH(LJKW$PHQGPHQW WKH2KLR&RXUWRI$SSHDOVWRFRQFOXGHXQGHU6WULFNODQGWKDW DQG%UDG\FODLPVWKH:DUGHQDFWLQJRQEHKDOIRIWKH6WDWH WKHUHZDVQRUHDVRQDEOHSUREDELOLW\WKDWWKHMXU\ZRXOGKDYH DUJXHVWKDW:LOOLDPVSURFHGXUDOO\GHIDXOWHGWKHVHE\IDLOLQJ WRUDLVHWKHPDWWKHHDUOLHVWRSSRUWXQLW\$QGPRUHRYHURQ WKHZKROH:LOOLDPVjVFODLPVLQFOXGLQJWKHRQHVWKH:DUGHQ FODLPV:LOOLDPVGHIDXOWHGDUHZLWKRXWPHULW 2QO\ WKH GLVWULFW FRXUW ZDV DZDUH RI :LOOLDPVjV ORZ ,4 :LOOLDPVY&R\OH 1R 1R :LOOLDPVY&R\OH SUHMXGLFH UHVXOWLQJ WKHUHIURP ZDV ERWK FRQWUDU\ WR DQG DQ :H DJUHH WKDW WKH GLVWULFW FRXUWjV MXGJPHQW VKRXOG EH XQUHDVRQDEOHDSSOLFDWLRQRILWVSUHFHGHQW DIILUPHG,QVSLWHRIWKH:DUGHQjVDVVHUWLRQVKRZHYHUZH UHDFKWKHPHULWVRI:LOOLDPVjV(LJKWK$PHQGPHQWDQG%UDG\ ,Q :LOOLDPV Y 7D\ORU sXVWLFH 6WHYHQV ZULWLQJ IRU VL[ FODLPVEHFDXVHLWLVXQFOHDUZKHWKHU:LOOLDPVSURFHGXUDOO\ sXVWLFHV LQ 3DUW ,9 RI KLV RSLQLRQ KHOG WKDW WKH GHIHQGDQW GHIDXOWHGWKHP2QWKHLVVXHRIWKHHYLGHQWLDU\KHDULQJZH 7HUU\:LOOLDPVKDGEHHQSUHMXGLFHGE\KLVFRXQVHOjVIDLOXUH EHOLHYH:LOOLDPVZDVLQIDFWSURYLGHGDIHGHUDOHYLGHQWLDU\ WR LQYHVWLJDWH DQG XQFRYHU mH[WHQVLYH UHFRUGV JUDSKLFDOO\ KHDULQJ DQG LV DFWXDOO\ UHTXHVWLQJ D VHFRQG IHGHUDO GHVFULELQJ >7HUU\@ :LOOLDPVj QLJKWPDULVK FKLOGKRRGl HYLGHQWLDU\KHDULQJ+HKDVRIIHUHGQRDUJXPHQWWRSHUVXDGH LQFOXGLQJWKHIDFWVWKDWmWKDW>7HUU\@:LOOLDPVZDVµERUGHUOLQH XV WKDW KH LV HQWLWOHG WR D VHFRQG VXFK KHDULQJ :H UHMHFW PHQWDOO\ UHWDUGHGj DQG GLG QRW DGYDQFH EH\RQG WKH VL[WK :LOOLDPVjV(LJKWK$PHQGPHQWMXU\LQVWUXFWLRQFODLPEHFDXVH JUDGH lWKDWm>7HUU\@:LOOLDPVjSDUHQWVKDGEHHQLPSULVRQHG 2KLRjV 6XSUHPH &RXUW KDG UXOHG WKDW WKH WULDO FRXUWjV IRUWKHFULPLQDOQHJOHFWRI>7HUU\@:LOOLDPVDQGKLVVLEOLQJV LQVWUXFWLRQ ZDV D FRUUHFW LQWHUSUHWDWLRQ RI 2KLRjV GHDWK WKDW>7HUU\@:LOOLDPVKDGEHHQVHYHUHO\EHDWHQE\KLVIDWKHU SHQDOW\VWDWXWH/LNHZLVHZHILQGWKHLQHIIHFWLYHDVVLVWDQFH WKDW KH KDG EHHQ FRPPLWWHG WR WKH FXVWRG\ RI WKH VRFLDO RI FRXQVHO FODLP ZLWKRXW PHULW EHFDXVH :LOOLDPV IDLOHG WR VHUYLFHVEXUHDXIRUWZR\HDUVGXULQJKLVSDUHQWVjLQFDUFHUDWLRQ HVWDEOLVKWKDWLWZDVXQUHDVRQDEOHIRUWKHVWDWHFRXUWVWRILQG LQFOXGLQJRQHVWLQWLQDQDEXVLYHIRVWHUKRPH DQGWKHQDIWHU KLVWULDOFRXQVHOjVIDLOXUHWRLQYHVWLJDWHDQGSUHVHQWIXUWKHU KLVSDUHQWVZHUHUHOHDVHGIURPSULVRQKDGEHHQUHWXUQHGWR PLWLJDWLQJHYLGHQFHZDVEHORZWKHSURIHVVLRQDOVWDQGDUGVRI KLVSDUHQWVjFXVWRG\l WKDW7HUU\:LOOLDPVZDVFRPPHQGHG WKHWLPH)LQDOO\RQWKH%UDG\FODLPDOWKRXJKWKHGLVWULFW IRU KHOSLQJ WR FUDFN D SULVRQ GUXJ ULQJ DQG IRU UHWXUQLQJ D FRXUWVKRXOGQRWKDYHDSSOLHGWKH$('3$jVVWDQGDUGVWRWKDW JXDUGjV PLVVLQJ ZDOOHW DQG WKDW 7HUU\ :LOOLDPV ZDV FODLPLWZDVFRUUHFWWRGLVPLVVWKHFODLPDV:LOOLDPVIDLOHG FRQVLGHUHGE\SULVRQRIILFLDOVDVWKHLQPDWHmµOHDVWOLNHO\WR WRSURYHWKHH[LVWHQFHRIDQ\H[FXOSDWRU\HYLGHQFHRUWKDWWKH DFWLQDYLROHQWGDQJHURXVRUSURYRFDWLYHZD\jl:LOOLDPV DOOHJHGHYLGHQFHZDVPDWHULDO 86DW FLWDWLRQRPLWWHG sXVWLFH6WHYHQVIXUWKHU ZURWHWKDWVXFKIDLOXUHWRLQYHVWLJDWHZDVQRWEHFDXVHRIDQ\ $ JHQHUDO GHVFULSWLRQ RI WKH IDFWXDO DQG SURFHGXUDO VWUDWHJLF FDOFXODWLRQ DQG WKDW WKH VWDWH VXSUHPH FRXUW EDFNJURXQG SUHFHGHV RXU DQDO\VLV ZKLFK ZLOO LQFOXGH XQUHDVRQDEO\ DSSOLHG FOHDUO\ HVWDEOLVKHG 6XSUHPH &RXUW DGGLWLRQDOEDFNJURXQGDVQHFHVVDU\ SUHFHGHQWWRWKHIDFWVRIWKHFDVHE\IDLOLQJWRmHYDOXDWHWKH WRWDOLW\ RI WKH DYDLODEOH PLWLJDWLRQ HYLGHQFH n ERWK WKDW ,)DFWV DGGXFHG DW WULDO DQG WKH HYLGHQFH DGGXFHG LQ WKH KDEHDV SURFHHGLQJ n LQ UHZHLJKLQJ LW DJDLQVW WKH HYLGHQFH LQ 2Q )HEUXDU\ D &X\DKRJD &RXQW\ *UDQG sXU\ DJJUDYDWLRQl ,G DW )LQDOO\ sXVWLFH 6WHYHQV LQGLFWHG :LOOLDPV IRU UREEHU\ WKHIW DJJUDYDWHG UREEHU\ FRQFOXGHGWKDWmWKHJUDSKLFGHVFULSWLRQRI>7HUU\@:LOOLDPVj DJJUDYDWHG EXUJODU\ DQG DJJUDYDWHG PXUGHU ZLWK FKLOGKRRGILOOHGZLWKDEXVHDQGSULYDWLRQRUWKHUHDOLW\WKDW VSHFLILFDWLRQVLQFRQQHFWLRQZLWKWKHUREEHU\DQGPXUGHURI KH ZDV µERUGHUOLQH PHQWDOO\ UHWDUGHGj PLJKW ZHOO KDYH /HRQD&KPLHOHZVNL6HHsRLQW$SSHQGL[ s$ DW LQIOXHQFHGWKHMXU\jVDSSUDLVDORIKLVPRUDOFXOSDELOLW\l,G :LOOLDPVSOHDGHGQRWJXLOW\DQGSURFHHGHGWRWULDOZKHUHKH DW /LNHZLVHsXVWLFH2j&RQQRUZKRFRQFXUUHGRQWKH ZDVUHSUHVHQWHGE\)OR\G2OLYHUDQG$UWKXU/DPEURV 6WULFNODQGDQDO\VLVMXVWGHVFULEHGDQGZKRZDVDOVRMRLQHGE\ sXVWLFH.HQQHG\LQ3DUW,,,RIKHURSLQLRQDOVRFRQFOXGHGWKDW FRXQVHOIRU7HUU\:LOOLDPVZDVFRQVWLWXWLRQDOO\LQHIIHFWLYHRQ VLPLODUJURXQGVDQGWKDWVWDWHVXSUHPHFRXUWjVGHWHUPLQDWLRQ 7KH VWDWH FKRVH QRW WR SURVHFXWH :LOOLDPV RQ WKH DJJUDYDWHG EXUJODU\ DQG WKHIW FRXQWV :LOOLDPVY&R\OH 1R 1R :LOOLDPVY&R\OH $W WULDO WKH SURVHFXWLRQ FDOOHG DV ZLWQHVVHV VHYHUDO RI ZKHQKHIDLOHGWRDFNQRZOHGJHKLVDEVHQFHIURP:LOOLDPVjV :LOOLDPVjVIULHQGVDQGUHODWLYHVZKRZHUHZLWKKLPRQWKH OLIHDQGKRZVXFKDEVHQFHFRQWULEXWHGWR:LOOLDPVjVWURXEOHG QLJKW RI WKH PXUGHU 7KH\ WHVWLILHG WKH\ VDZ :LOOLDPV FKLOGKRRGDQGOLIHRIFULPH/HZLV6UVWDWHGWKDWmZKHQHYHU VWDQGLQJLQWKHGRRUZD\RI&KPLHOHZVNLjVKRXVHDVWKH\ZHUH >:LOOLDPV@FDOOHG>KLP@RUDQ\WKLQJ>KH@ZDVWKHUHls$DW OHDYLQJWKHQHLJKERUKRRG:KHQWKH\UHWXUQHGDERXWDQKRXU +HDOVRFODLPHGm:HOODVKLVIDWKHU,VSHQWDVPXFK ODWHUWKH\QRWLFHGWKDW&KPLHOHZVNLjVGRRUZDVRSHQ8SRQ WLPHDV,SRVVLEO\FRXOGDV,VDLG:KHQ KH ZDVDZD\RU LQYHVWLJDWLQJWKH\GLVFRYHUHGKHUERG\RQWKHIORRULQVLGHWKH ZDVQjWKRPH,ZRXOGJRRYHUWRYLVLWKLPDQGNHHSDFORVH GRRUZD\$WWKDWSRLQWWKH\FDOOHGWKHSROLFH7KHSROLFH FRQWDFWZLWKKLPDVPXFKDV,SRVVLEO\FRXOGZKHQLWZDV GLVFRYHUHGWKDW&KPLHOHZVNLKDGEHHQEHDWHQDURXQGWKHKHDG SRVVLEOHls$DW$GGLWLRQDOO\ZLWKRXWWKHPLWLJDWLQJ DQGQHFNDQGVKRWWKURXJKWKHPRXWK$GGLWLRQDOO\KHUSXUVH IDFWXDO VXSSRUW WR VKRZ ZK\ :LOOLDPV ZDV OHG WR D OLIH RI KDGEHHQRYHUWXUQHGDQGKHUZDOOHWZDVPLVVLQJ7KHSROLFH FULPHRUKRZWKHFULPLQDOMXVWLFHV\VWHPKDGIDLOHG:LOOLDPV DUUHVWHG:LOOLDPV WKHDWWRUQH\VjSUHVHQWDWLRQRI:LOOLDPVj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jV REMHFWLRQV WKH SURVHFXWLRQ FDOOHG FRQVWLWXWHGHIIHFWLYHDVVLVWDQFHRIFRXQVHO$VWKH6XSUHPH 0LFKDHO $QGHUVRQ DQG %URRNV 1DYDUUR WZR MDLOKRXVH &RXUWQRWHGLQ6WULFNODQGm>W@KDWDSHUVRQZKRKDSSHQVWREH LQIRUPDQWV WR WHVWLI\ 7KH\ WHVWLILHG WKDW ZKLOH LQ MDLO DODZ\HULVSUHVHQWDWWULDODORQJVLGHWKHDFFXVHGKRZHYHULV :LOOLDPVDGPLWWHGWRWKHPKHNLOOHG&KPLHOHZVNL$FFRUGLQJ QRW HQRXJK WR VDWLVI\ WKH FRQVWLWXWLRQDO FRPPDQGl WR$QGHUVRQ:LOOLDPVWROG$QGHUVRQWKDWKHmVWXFNWKHJXQ 6WULFNODQG 86 DW 7KH ODZ\HU PXVW DVVLVW WKH LQKHUPRXWKl%URRNVWHVWLILHGWKDW:LOOLDPVWROG%URRNVKH GHIHQGDQWLQKLVWULDODQGEHDQDGYRFDWHIRUKLVFDXVH,GDW ZDVZRUULHGDERXWWKHEORRGRQKLVVKRHV:LOOLDPVDWWRUQH\V FURVVH[DPLQHG$QGHUVRQDQG%URRNVLQTXLULQJZKHWKHUWKH\ FXUUHQWO\KDGDGHDOZLWKSURVHFXWLRQWRH[FKDQJHWHVWLPRQ\ ,QHVVHQFHLQWKLVFDVHZKHUHFRXQVHOQHJOHFWHGWRSHUIRUP IRU PRUH OHQLHQW VHQWHQFHV RU KRSHG WKH 6WDWH ZRXOG ODWHU DQ DGHTXDWH LQYHVWLJDWLRQ RI :LOOLDPVjV EDFNJURXQG WR FRQVLGHU OHQLHQF\ RQ DFFRXQW RI WKHLU WHVWLPRQ\ (DFK LGHQWLI\PLWLJDWLQJHYLGHQFHDQGSUHSDUHZLWQHVVHVDQGDVD DQVZHUHG WKDW ZKLOH KH GLG QRW KDYH D GHDO ZLWK WKH UHVXOWHVVHQWLDOO\SUHVHQWHGQRPLWLJDWLQJHYLGHQFHWRWKHMXU\ SURVHFXWLRQ KH GLG KRSH WKH VWDWH ZRXOG UHPHPEHU KLV IRU:LOOLDPVLWZDVDQXQUHDVRQDEOHDSSOLFDWLRQRIWKHODZ FRRSHUDWLRQ/LNHZLVHWKHSURVHFXWRUVWDWHGWKDWKHZRXOG HVWDEOLVKHGLQ6WULFNODQGWRKROGWKDWWKHUHZDVQRUHDVRQDEOH OLNHO\WDNH$QGHUVRQjVDQG%URRNVjVFRRSHUDWLRQLQWRDFFRXQW SUREDELOLW\ WKDW WKH MXU\ ZRXOG KDYH DUULYHG DW D GLIIHUHQW 2Q 2FWREHU WKH MXU\ IRXQG :LOOLDPV JXLOW\ RI RXWFRPHKDGFRXQVHOjVSHUIRUPDQFHQRWEHHQGHILFLHQW,Q DJJUDYDWHGPXUGHUDQGDJJUDYDWHGUREEHU\WKHUHE\PDNLQJ IDFW,EHOLHYHWKDWWKLVFDVHLVVWULNLQJO\VLPLODUWR:LOOLDPVY KLPHOLJLEOHIRUWKHGHDWKSHQDOW\7KHWULDOWKHQSURFHHGHGWR 7D\ORU LQ ZKLFK WKH 6XSUHPH &RXUW FRQFOXGHG WKDW WKH WKHVHQWHQFLQJVWDJH 9LUJLQLD 6XSUHPH &RXUWjV GHFLVLRQ UHJDUGLQJ GHIHQVH FRXQVHOjVSHUIRUPDQFHGXULQJWKHVHQWHQFLQJSKDVHDQGWKH :LOOLDPVY&R\OH 1R 1R :LOOLDPVY&R\OH GHILFLHQW WKDW LW XQGHUPLQHG FRQILGHQFH LQ WKH MXU\jV $WWKHVHQWHQFLQJKHDULQJ:LOOLDPVjVFRXQVHOLQWURGXFHG UHFRPPHQGDWLRQRIWKHGHDWKSHQDOW\ PLWLJDWLQJ HYLGHQFH LQ WKH IRUP RI WHVWLPRQ\ IURP WKUHH ZLWQHVVHVKLVIDWKHUKLVVLVWHUDQGDIDPLO\IULHQGDQGDQ $V,SUHYLRXVO\QRWHGDMXU\PXVWEHSHUPLWWHGWRFRQVLGHU XQVZRUQRUDOVWDWHPHQWIURP:LOOLDPV:LOOLDPVjVIDWKHUDQG PLWLJDWLQJ HYLGHQFH SURIIHUHG E\ D GHIHQGDQW GXULQJ WKH VLVWHUWHVWLILHGWKDW:LOOLDPVKDGDWURXEOHGFKLOGKRRG7KH VHQWHQFLQJSKDVHRIDFDSLWDOWULDODQGGHIHQVHFRXQVHOPXVW IULHQGRIWKHIDPLO\DOVRVSRNHRIVHYHUDOHYHQWVLQ:LOOLDPVjV PHHW PLQLPDO VWDQGDUGV RI LQYHVWLJDWLRQ WR REWDLQ VXFK FKLOGKRRG WKDW LQGLFDWHG KH ZDV UDLVHG LQ D KRVWLOH HYLGHQFHIRUWKHMXU\/RFNHWW86DW .LPPHOPDQ HQYLURQPHQW:LOOLDPVPDGHVWDWHPHQWVWRDVLPLODUHIIHFW 86 DW UHO\LQJ RQ 6WULFNODQG ,Q WKLV FDVH DQG DOVR VWDWHG WKDW KH KDG EHHQ LQYROYHG ZLWK WKH ODZ RQ :LOOLDPVjVDWWRUQH\VIDLOHGWRPHHWWKHVHPLQLPDOVWDQGDUGV VHYHUDO RFFDVLRQV $SSDUHQWO\ FRXQVHOjV VWUDWHJ\ LQ RILQYHVWLJDWLRQE\XQQHFHVVDULO\OLPLWLQJWKHLULQYHVWLJDWLRQ LQWURGXFLQJWKLVHYLGHQFHZDVWRGHPRQVWUDWHWRWKHMXU\WKDW WR WZR IDPLO\ PHPEHUV RQH IDPLO\ IULHQG DQG RQH UHSRUW EHFDXVHRIKLVXSEULQJLQJ:LOOLDPVGLGQRWKDYHmPXFKRID IURPWKHFRXUWFOLQLF$V,H[SODLQHGDERYHWKLVLQHIIHFW FKDQFHlLQOLIH$IDFWZKLFKFRXQVHODSSDUHQWO\KRSHGZRXOG GHSULYHG:LOOLDPVRIWKHRSSRUWXQLW\WRSUHVHQWDQ\YDOXDEOH HQJHQGHUIHHOLQJVRIPHUF\IURPWKHMXU\$FFRUGLQJWRWKH PLWLJDWLQJHYLGHQFHDOORIZKLFKZDVHDVLO\DFFHVVLEOHWRWKH GLVWULFWFRXUWFRXQVHOZDVDOVRDWWHPSWLQJWRVKRZWKDWWKH MXU\GXULQJWKHVHQWHQFLQJSKDVHDQGOHIWQRWKLQJIRUWKHMXU\ OHJDOV\VWHPKDGIDLOHG:LOOLDPV WR ZHLJK DJDLQVW WKH SURVHFXWLRQjV SURRI RI DJJUDYDWLQJ IDFWRUV*LYHQWKHZHDOWKRILQIRUPDWLRQWKDWWKHDWWRUQH\V $WWKHFORVHRIWKHSURFHHGLQJWKHMXGJHLQVWUXFWHGWKHMXU\ FRXOGKDYHSUHVHQWHGUHJDUGLQJ:LOOLDPVjVWURXEOHGOLIHVHH WKDWXQGHU2KLRjV5HYLVHG&RGHVHFWLRQV DQGLW VXSUD DQG WKH HDVH ZLWK ZKLFK WKH DWWRUQH\V FRXOG KDYH FRXOGUHWXUQRQHRIWKUHHVHQWHQFHUHFRPPHQGDWLRQVGHDWKRU REWDLQHGVXFKLQIRUPDWLRQLWLVGLIILFXOWWRLPDJLQHKRZWKH RQHRIWZROLIHVHQWHQFHVEDVHGXSRQZKHWKHULWIRXQGWKDW DWWRUQH\VjIDLOXUHWRFRQGXFWDSURSHULQYHVWLJDWLRQDQGWKHQ WKH DJJUDYDWLQJ FLUFXPVWDQFHV RXWZHLJKHG WKH PLWLJDWLQJ SUHVHQW PHDQLQJIXO PLWLJDWLQJ HYLGHQFH GLG QRW SUHMXGLFH FLUFXPVWDQFHV $Q\ RI WKHVH UHFRPPHQGDWLRQV WKH MXGJH :LOOLDPV$IWHUDOOWKHYHU\UHDVRQIRUDOORZLQJDFDSLWDO LQVWUXFWHGPXVWEHEDVHGRQDXQDQLPRXVGHFLVLRQ6HHs$ GHIHQGDQWWRSUHVHQWPLWLJDWLQJHYLGHQFHWRDMXU\LVVRWKDW DW :LOOLDPVjV FRXQVHO GLG QRW REMHFW WR WKH WKH MXU\ PD\ FRQVLGHU DQG ZHLJK WKHVH IDFWRUV DJDLQVW WKH LQVWUXFWLRQ $IWHU GHOLEHUDWLQJ WKH MXU\ UHFRPPHQGHG D DJJUDYDWLQJ FLUFXPVWDQFHV RI WKH GHIHQGDQWjV RIIHQVH WR VHQWHQFHRIGHDWKZKLFKWKHFRXUWDFFHSWHG2Q1RYHPEHU GHWHUPLQHZKHWKHUWKHGHIHQGDQWjVOLIHVKRXOGEHVSDUHG,Q WKHFRXUWHQWHUHGLWVMXGJPHQWWKDW:LOOLDPVZDV WKLV FDVH DOWKRXJK GHIHQVH FRXQVHO KDG WZR WKHRULHV RI VHQWHQFHGWRGHDWK6HHs$DW PLWLJDWLRQ WKH\ IDLOHG WR SURYLGH UHDGLO\ DYDLODEOH IDFWXDO VXSSRUWIRUERWKRIWKHLUWKHRULHVDQGDVDUHVXOWHVVHQWLDOO\ :LOOLDPVUHSUHVHQWHGE\2OLYHUDSSHDOHGWKHMXGJPHQWDQG OHIW WKH MXU\ ZLWK QR FKRLFH EXW WR UHFRPPHQG WKH GHDWK VHQWHQFH2Q2FWREHU DQ2KLR&RXUWRI$SSHDOV SHQDOW\ DIILUPHGWKHFRQYLFWLRQDQGVHQWHQFH6HH6WDWHY:LOOLDPV 1R :/ 2KLR&W$SS2FW 1RW RQO\ GLG :LOOLDPVjV DWWRUQH\V IDLO WR SUHVHQW DQ\ XQSXEOLVKHG MRXUQDO HQWU\ DQG RSLQLRQ :LOOLDPV WKHQ PHDQLQJIXOPLWLJDWLQJHYLGHQFHDWWKHVHQWHQFLQJSKDVHWKH\ DSSHDOHG WR WKH 2KLR 6XSUHPH &RXUW ZKHUH KH ZDV DOVRSODFHGKDUPIXODQGGDPDJLQJHYLGHQFHEHIRUHWKHMXU\ UHSUHVHQWHG E\ 0DULO\Q 'DPHOLR DQG 5LFKDUG *LGHRQ )RU H[DPSOH EHFDXVH WKH DWWRUQH\V IDLOHG WR H[SODLQ WKH )LQGLQJ QR PHULW WKH 2KLR 6XSUHPH &RXUW DIILUPHG KLV SXUSRVHRIPLWLJDWLQJHYLGHQFHWR:LOOLDPVj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jV IDPLO\ DOO :LOOLDPV ILOHG ILYH VWDWH SRVWFRQYLFWLRQ UHOLHI 3&5 PHPEHUVDQGWRREWDLQKLVVFKRRODQGSV\FKRORJLFDOUHFRUGV SHWLWLRQVDQGWRRNDSSHDOVIURPIRXURIWKHILYHGLVPLVVDOV /LNHZLVH WKHLU VHFRQG WKHRU\ ZDV PHDQLQJOHVV ZLWKRXW DQ $GGLWLRQDOO\ :LOOLDPV ILOHG DQ DSSOLFDWLRQ IRU GHOD\HG LQYHVWLJDWLRQDQGUHYLHZRI:LOOLDPVjVMXYHQLOHDQGSULVRQ UHFRQVLGHUDWLRQRIKLVLQHIIHFWLYHDVVLVWDQFHRIFRXQVHOFODLP UHFRUGVZKLFKZRXOGKDYHUHYHDOHGPRUHLQIRUPDWLRQDERXW LQKLVFDVHDVLVUHTXLUHGXQGHU2KLRjV0XUQDKDQUXOH6HH :LOOLDPVjVLQFDUFHUDWLRQLQVWDWHIDFLOLWLHVLQFOXGLQJGHWDLOV 6WDWHY0XUQDKDQ1(G 2KLR FRQFHUQLQJDQ\IDLOHGDWWHPSWVRIUHKDELOLWDWLRQ,QHVVHQFH ZLWKRXW SUHVHQWLQJ HYLGHQFH RI D WURXEOHG FKLOGKRRG DQG 3URFHHGLQJSURVH:LOOLDPVILOHGKLVILUVWSHWLWLRQIRU3&5 LQIRUPDWLRQRQWKHDFWXDOIDLOXUHVRIWKHVWDWHFULPLQDOMXVWLFH RQ$SULO 7KHUHKHDOOHJHGLQHIIHFWLYHDVVLVWDQFHRI V\VWHP WKH DWWRUQH\Vj TXHVWLRQLQJ RI :LOOLDPV DQG FRXQVHODQGZKDWKHQRZDUJXHVZDVD%UDG\YLRODWLRQ7KH SUHVHQWDWLRQ RI PLWLJDWLQJ HYLGHQFH ZKLFK UHYHDOHG WULDOFRXUWGLVPLVVHGZLWKRXWRSLQLRQDQG:LOOLDPVGLGQRW :LOOLDPVjVORQJKLVWRU\RIMXYHQLOHDQGWKHQDGXOWFULPHVDQG DSSHDO+HILOHGDVHFRQG3&5UHODWHGWRWKHUREEHU\ZKLFK FRXQVHOjVFORVLQJDUJXPHQW VSDQQLQJQRPRUHWKDQWKUHHDQG ZDVDOVRGLVPLVVHG$JDLQ:LOOLDPVGLGQRWDSSHDO DKDOIWUDQVFULSWSDJHV LQZKLFKFRXQVHOUHLWHUDWHGWKLVORQJ KLVWRU\ WHQGHG RQO\ WR VXSSRUW D GHDWK VHQWHQFH ,QVWHDGUHSUHVHQWHGE\5REHUW,QJHUVROOKHILOHGKLVWKLUG UHFRPPHQGDWLRQ DV WKH\ GLG QRWKLQJ WR VKLIW PRUDO SHWLWLRQIRU3&5RQ1RYHPEHU ,QLWKHDOOHJHG FXOSDELOLW\ DZD\ IURP :LOOLDPV ,Q IDFW WKH GLVWULFW FRXUW DPRQJRWKHUWKLQJVWKDWKHZDVGHSULYHGRIHIIHFWLYHFRXQVHO VXJJHVWHGDVPXFKZKHQLWVWDWHGmWKDWWKHGHIHQVHSUHVHQWHG DWWKHJXLOWDQGVHQWHQFLQJSKDVHVRIKLVWULDODVZHOODVRQ OLWWOH LIDQ\ UHOHYDQWPLWLJDWLQJHYLGHQFHWRWKHMXU\DWWKH DSSHDO+HGLGQRWDOOHJHD%UDG\YLRODWLRQ$JDLQWKHWULDO KHDULQJl s$ DW HPSKDVLV DGGHG ,Q FRQFOXVLRQ FRXUW GLVPLVVHG 7KH 2KLR &RXUW RI $SSHDOV DIILUPHG RQ EHFDXVHRIKLVDWWRUQH\VjIDLOXUHWRSUHSDUHZLWQHVVHVDQGWR sXO\ VHH6WDWHY:LOOLDPV1(G 2KLR&W JDWKHU QHFHVVDU\ EDFNJURXQG LQIRUPDWLRQ WR VXSSRUW WKHLU $SS DQG WKH 2KLR 6XSUHPH &RXUW GLVPLVVHG WKH PLWLJDWLRQ WKHRULHV , ZRXOG DOVR KROG WKDW :LOOLDPV KDV DSSHDORQ1RYHPEHU ILQGLQJWKDWmQRVXEVWDQWLDO VXIILFLHQWO\VKRZQWKDWKLVDWWRUQH\VjGHILFLHQWSUHVHQWDWLRQRI FRQVWLWXWLRQDOTXHVWLRQl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jV SHUIRUPDQFH GXULQJ WKH VHQWHQFLQJ SKDVH ,Q P\ RSLQLRQ WKH SHUIRUPDQFH RI :LOOLDPVjV VHFRQG 3&5 SURFHHGLQJ GRHV QRW FRQFHUQ KLV PXUGHU :LOOLDPVjV DWWRUQH\V GXULQJ WKH VHQWHQFLQJ SKDVH ZDV VR FRQYLFWLRQ :LOOLDPVY&R\OH 1R 1R :LOOLDPVY&R\OH 7KH ERG\ RI FRXQVHOjV SUHVHQWDWLRQ RI WKH ZLWQHVVHVj GRFWULQHRIUHVMXGLFDWDDQGUHMHFWHGWKHLQHIIHFWLYHDVVLVWDQFH WHVWLPRQ\ GXULQJ WKH VHQWHQFLQJ KHDULQJ ZDV HTXDOO\ RIFRXQVHOFODLPVRQWKHPHULWV7KDWUXOLQJZDVDIILUPHGE\ GHSORUDEOH DQG UHIOHFWHG OLWWOH SUHSDUDWLRQ )RU H[DPSOH WKH 2KLR &RXUW RI $SSHDOV RQ $SULO VHH 6WDWH Y GHIHQVHFRXQVHOjVIDLOXUHWRSUHSDUH'HERUDK:LOOLDPVIRUKHU :LOOLDPV1R :/ 2KLR&W$SS$SULO WHVWLPRQ\DQGWRH[SODLQWKHSXUSRVHRIPLWLJDWLQJHYLGHQFH DQG WKH 2KLR 6XSUHPH &RXUW GLVPLVVHG RQ WR KHU VLJQLILFDQWO\ KXUW :LOOLDPV EHFDXVH LW UHVXOWHG LQ 6HSWHPEHU ZLWKRXWRSLQLRQVHH6WDWHY:LOOLDPV 'HERUDKjVRPLVVLRQRIYDOXDEOHPLWLJDWLQJHYLGHQFH WKDWVKH 1(G 2KLR XQSXEOLVKHGRSLQLRQ LQFOXGHGLQKHUSRVWFRQYLFWLRQDIILGDYLW IURPKHUWHVWLPRQ\ LQFOXGLQJ LQIRUPDWLRQ FRQFHUQLQJ /HZLV :LOOLDPV 6UjV 8QGHWHUUHGE\KLVODFNRIVXFFHVV:LOOLDPVILOHGDILIWK DEVHQFH IURP DQG ODFN RI LQYROYHPHQW LQ WKH OLYHV RI KLV SHWLWLRQIRU3&5RQsXO\ $JDLQKHDVVHUWHGWKDWKLV FKLOGUHQ VHH s$ DW 'HERUDK :LOOLDPV $II FRXQVHOZHUHLQHIIHFWLYHDQGWKDWWKHSURVHFXWLRQYLRODWHGKLV :LOOLDPVjV ZLWQHVVLQJ WKH DEXVH RI KLV PRWKHU E\ KLV GXHSURFHVVULJKWVE\IDLOLQJWRGLVFORVHH[FXOSDWRU\HYLGHQFH VWHSIDWKHULQFOXGLQJRQHLQVWDQFHWKDWUHVXOWHGLQKLVPRWKHUjV $QG DJDLQ WKH WULDO FRXUW GLVPLVVHG RQ WKH JURXQGV RI UHV KRVSLWDOL]DWLRQ VHH s$ DW 'HERUDK :LOOLDPV $II MXGLFDWD DQG WKH &RXUW RI $SSHDOV DIILUPHG VHH 6WDWH Y /HZLV :LOOLDPV 6UjV XVH RI PDULMXDQD VHH s$ DW :LOOLDPV1R :/ 2KLR&W$SSsDQ 'HERUDK:LOOLDPV$II DQG:LOOLDPVjVHDUO\XVHRIFRFDLQH XQSXEOLVKHGRSLQLRQ DQGWKH2KLR6XSUHPH&RXUW DW DJH VHH s$ DW 'HERUDK :LOOLDPV $II GLVPLVVHGZLWKRXWRSLQLRQVHH6WDWHY:LOOLDPV1(G /LNHZLVH WKH SURVHFXWLRQjV FURVVH[DPLQDWLRQ RI 0V 2KLR XQSXEOLVKHGWDEOHRSLQLRQ 3DFNQHWWUHYHDOHGWKDWGHIHQVHFRXQVHOKDGQRNQRZOHGJHRI 0V 3DFNQHWWjV IDPLOLDULW\ ZLWK :LOOLDPV $V WKH 2QsXQH ZKLOHOLWLJDWLQJKLVILIWK3&5:LOOLDPV SURVHFXWLRQjV FURVVH[DPLQDWLRQ UHYHDOHG 0V 3DFNQHWW ILOHGDQ$SSOLFDWLRQIRU'HOD\HG5HFRQVLGHUDWLRQLQWKHFRXUW KDUGO\ NQHZ DQ\ IDFWV UHJDUGLQJ :LOOLDPVjV OLIH DIWHU KLV RIDSSHDOVRQKLVLQHIIHFWLYHDVVLVWDQFHRIDSSHOODWHFRXQVHO FKLOGKRRG DQG ZDV FRPSOHWHO\ XQDZDUH RI :LOOLDPVjV FODLPDVLVUHTXLUHGE\2KLRODZ7KHFRXUWGLVPLVVHGWKH FULPLQDO KLVWRU\ 0V 3DFNQHWWj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mH[FHOOHQWIHOORZlEHFDXVHRIKHUFRPSOHWH GLVPLVVDOWRWKH2KLR6XSUHPH&RXUWZKLFKRQ)HEUXDU\ ODFNRINQRZOHGJHUHJDUGLQJ:LOOLDPVjVFULPLQDOKLVWRU\,Q DIILUPHG WKH FRXUW RI DSSHDOV RQ WKH JURXQG WKDW HVVHQFH WKH MXU\ OLNHO\ IHOW WKDW 0V 3DFNQHWWjV VXSSRUWLYH :LOOLDPVIDLOHGWRGHPRQVWUDWHJRRGFDXVHIRUKLVXQWLPHO\ WHVWLPRQ\IRU:LOOLDPVZDVFRPSOHWHO\QHJDWHGE\WKHIDFW ILOLQJ WKDWVKHZDVQRWHYHQIDPLOLDUHQRXJKZLWK:LOOLDPVWRNQRZ WKDWKHKDGVSHQWWLPHLQMDLO &RPLQJWRWKHUHDOL]DWLRQWKDWKHZDVQRWJRLQJWRREWDLQ DQ\ VWDWH SRVWFRQYLFWLRQ UHOLHI :LOOLDPV ILOHG D QRWLFH RI 0RUHLPSRUWDQWO\,EHOLHYHWKDWDVDUHVXOWRIWKHDWWRUQH\Vj LQWHQWWRILOHD3HWLWLRQIRUD:ULWRI+DEHDV&RUSXVRQ$SULO IDLOXUHWRLQYHVWLJDWH:LOOLDPVjVEDFNJURXQGSURSHUO\WKH\ 7KHQ RQ 1RYHPEHU :LOOLDPV ILOHG D IDLOHG WR SUHVHQW PHDQLQJIXO HYLGHQFH WR VXSSRUW WKHLU WZR 3HWLWLRQ IRU D :ULW RI +DEHDV &RUSXV FKDOOHQJLQJ KLV WKHRULHVRIPLWLJDWLRQGXULQJWKHVHQWHQFLQJSKDVH WKDW FRQYLFWLRQDQGVHQWHQFH:LOOLDPVjVSHWLWLRQUDLVHGWKLUW\WZR :LOOLDPVjVWURXEOHGFKLOGKRRGKDGOHGKLPWRDOLIHRIFULPH JURXQGV IRU UHOLHI LQFOXGLQJ FODLPV RI LQHIIHFWLYH :LOOLDPVY&R\OH 1R 1R :LOOLDPVY&R\OH DVVLVWDQFHRIFRXQVHODWWKHWULDODQGDSSHOODWHSKDVHVRIKLV DSSOLFDWLRQRIFOHDUO\HVWDEOLVKHG6XSUHPH&RXUWSUHFHGHQWLQ FDVH D%UDG\YLRODWLRQDQG DYLRODWLRQRIKLV(LJKWK 6WULFNODQGZKHUHm>W@KHUHFRUGHVWDEOLVKH>G@WKDWFRXQVHOGLG $PHQGPHQW ULJKWV DV D UHVXOW RI WKH WULDO MXGJHjV MXU\ QRW EHJLQ WR SUHSDUH IRU >WKH VHQWHQFLQJ@ SKDVH RI WKH LQVWUXFWLRQ UHJDUGLQJ 2KLRjV GHDWK SHQDOW\ VWDWXWH 2KLRjV SURFHHGLQJ XQWLO D ZHHN EHIRUH WKH WULDOl DQG mIDLOHG WR 5HYLVHG &RGH VHFWLRQ ,Q DGGLWLRQ :LOOLDPV FRQGXFWDQLQYHVWLJDWLRQWKDWZRXOGKDYHXQFRYHUHGH[WHQVLYH UHTXHVWHGDQHYLGHQWLDU\KHDULQJWRSUHVHQWQHZHYLGHQFHRQ UHFRUGVJUDSKLFDOO\GHVFULELQJ>WKHGHIHQGDQWjV@QLJKWPDULVK WKH%UDG\DQGLQHIIHFWLYHDVVLVWDQFHRIFRXQVHOFODLPV7KH FKLOGKRRG QRW EHFDXVH RI DQ\ VWUDWHJLF FDOFXODWLRQ EXW :DUGHQ UHVSRQGHG DUJXLQJ LQ SDUW WKDW :LOOLDPV KDG EHFDXVHWKH\LQFRUUHFWO\WKRXJKWWKDWVWDWHODZEDUUHGDFFHVV SURFHGXUDOO\ GHIDXOWHG KLV %UDG\ DQG (LJKWK $PHQGPHQW WRVXFKUHFRUGVl FODLPV %3UHVHQWDWLRQ2I(YLGHQFH'XULQJ6HQWHQFLQJ3KDVH 7KH GLVWULFW FRXUW JUDQWHG :LOOLDPVjV UHTXHVW IRU DQ HYLGHQWLDU\KHDULQJ$WWKHKHDULQJ:LOOLDPVLQWURGXFHGWKH ,DOVREHOLHYHWKDW:LOOLDPVKDVVXIILFLHQWO\GHPRQVWUDWHG WHVWLPRQ\ RI D EDOOLVWLFV H[SHUW DQG D PLWLJDWLRQ H[SHUW WR WKDW KLV DWWRUQH\Vj SUHVHQWDWLRQ RI HYLGHQFH GXULQJ WKH VXSSRUWWKHLQHIIHFWLYHDVVLVWDQFHRIFRXQVHODWWKHJXLOWDQG VHQWHQFLQJ SKDVH ZDV LQDGHTXDWH XQGHU WKH SHUIRUPDQFH VHQWHQFLQJVWDJHVRIKLVWULDOFODLPDQGWRVXSSRUWKLV%UDG\ SURQJRIWKH6WULFNODQGWHVW6SHFLILFDOO\,EHOLHYHWKDWDVD FODLP DQ DIILGDYLW IURP $QGHUVRQ VWDWLQJ WKDW KH WHVWLILHG UHVXOWRIWKHLUSRRULQYHVWLJDWLRQDQGSUHSDUDWLRQRIPLWLJDWLQJ DJDLQVW:LOOLDPVDVSDUWRIDGHDOZLWKWKHSURVHFXWLRQ+H HYLGHQFH :LOOLDPVjV DWWRUQH\V JDYH DQ REMHFWLYHO\ GLGQRWFDOOHLWKHU$QGHUVRQRU%URRNVWRWHVWLI\:LOOLDPV XQUHDVRQDEOHSUHVHQWDWLRQRIWKHPLWLJDWLQJHYLGHQFHGXULQJ DOVRVXESRHQDHGKLVIRUPHUFRXQVHOEXWGLGQRWWDNHIRUPHU WKHVHQWHQFLQJSKDVHRI:LOOLDPVjVWULDO FRXQVHOjVGHSRVLWLRQRUFDOOKLPWRWHVWLI\,QUHVSRQVHWKH 6WDWHFDOOHGWKHSURVHFXWRUVZKRWULHG:LOOLDPVjVFDVH%RWK 7REHJLQWKHRSHQLQJVWDWHPHQWRI:LOOLDPVj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sU FRXOGQRWPDNHWKHVKRZLQJUHTXLUHGXQGHUVHFWLRQ H ,ZLOODVN\RXWROLVWHQWRWKHLUWHVWLPRQ\FDUHIXOO\,WLV WRREWDLQDQHYLGHQWLDU\KHDULQJWKHGLVWULFWFRXUWFRQFOXGHG RXUYLHZWKDWLWLVH[WUHPHO\LPSRUWDQWWKDW\RXGRDQG LWZRXOGUXOHRQWKHSHWLWLRQZLWKRXWUHOLDQFHRQWKHHYLGHQFH WKDW\RXZHLJKLWDV\RXGRRWKHUHYLGHQFHDQGIROORZWKH SUHVHQWHG DW WKH KHDULQJ 1HYHUWKHOHVV LW GLG FRQVLGHU WKH LQVWUXFWLRQ WKDW WKH &RXUW ZLOO JLYH \RX DERXW /HZLV HYLGHQFHLQLWVUXOLQJ :LOOLDPVsU7KDQN\RX ,Q UXOLQJ RQ WKH SHWLWLRQ WKH GLVWULFW FRXUW GHFOLQHG WR s$DW,QH[SOLFDEO\FRXQVHOGLGQRWHYHQEHJLQWKH DGGUHVV ZKHWKHU :LOOLDPV SURFHGXUDOO\ GHIDXOWHG RQ KLV VHQWHQFLQJKHDULQJZLWKDUHTXHVWIRUPHUF\RQ:LOOLDPV %UDG\DQG(LJKWK$PHQGPHQWFODLPVDQGLQVWHDGEDVHGLWV GHFLVLRQRQWKHPHULWVRIWKRVHFODLPV,WIRXQGERWKFODLPV ZDQWLQJPHULWZLWKRUZLWKRXWWKHHYLGHQFHSUHVHQWHGDWWKH HYLGHQWLDU\KHDULQJ,WDOVRIRXQGWKDW:LOOLDPVjVLQHIIHFWLYH (YHQ WKH GLVWULFW FRXUW FRQFHGHG WKDW mWKH GHIHQVH DW :LOOLDPVjV PLWLJDWLRQ KHDULQJ ZDV VSDUVH DQG RI TXHVWLRQDEOH YDOXHl s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s$DW :LOOLDPV ILOHG D PRWLRQ WR UHFRQVLGHU 8SRQ 6FKPLGW*RHVVOLQJ$II SURYLGLQJDQH[SODQDWLRQIRU UHFRQVLGHUDWLRQ WKH FRXUW DPHQGHG LWV RUGHU DQG LVVXHG D ZK\ MXYHQLOH IDFLOLWLHV UHLQIRUFHG :LOOLDPVjV FULPLQDO FHUWLILFDWH RI DSSHDODELOLW\ RQ WKH TXHVWLRQ RI ZKHWKHU EHKDYLRUUDWKHUWKDQUHKDELOLWDWHGKLP :LOOLDPVjVSHWLWLRQZDVJRYHUQHGE\WKH$('3$:LOOLDPV DSSHDOHGWKDWLVVXHWRWKLVFRXUWDQGUHTXHVWHGDFHUWLILFDWHRI ,Q VXP KDG WKH DWWRUQH\V PHW WKH PLQLPDO VWDQGDUGV RI DSSHDODELOLW\RQDOOLVVXHVUDLVHGLQKLVSHWLWLRQ:HKHOGWKDW LQYHVWLJDWLRQ QHFHVVDU\ WR REWDLQ UHOHYDQW PLWLJDWLQJ WKH$('3$JRYHUQHG:LOOLDPVj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jLQDGHTXDWHLQYHVWLJDWLRQDQG %HIRUHZHUHDFKWKHPHULWVRIDQ\RI:LOOLDPVjVFODLPVZH SUHSDUDWLRQ RI PLWLJDWLRQ HYLGHQFH FRQVWLWXWHG GHILFLHQW PXVW DGGUHVV WKH :DUGHQjV DUJXPHQW WKDW :LOOLDPV SHUIRUPDQFHXQGHUWKHILUVWSURQJRIWKH6WULFNODQGWHVW6HH SURFHGXUDOO\ GHIDXOWHG KLV %UDG\ DQG (LJKWK $PHQGPHQW HJ :LOOLDPV 86 DW FRQFOXGLQJ WKDW WKH VWDWH FODLPVE\IDLOLQJWRUDLVHWKHPDWWKHHDUOLHVWRSSRUWXQLW\ VXSUHPHFRXUWjVGHFLVLRQZDVFRQWUDU\WRDQGDQXQUHDVRQDEOH :KHQ D VWDWH SULVRQHU GHIDXOWV RQ KLV mIHGHUDO FODLPV LQ VWDWH FRXUW SXUVXDQW WR DQ LQGHSHQGHQW DQG DGHTXDWH VWDWH SURFHGXUDOUXOHIHGHUDOKDEHDVUHYLHZRIWKHFODLPLVEDUUHG $V , SUHYLRXVO\ LQGLFDWHG :LOOLDPVjV VFKRRO UHFRUGV DOVR UHYHDOHG WKDW :LOOLDPV VFRUHG D RQ DQ ,4 WHVW DW DJH DQG WKDW :LOOLDPV ZDV XQOHVVWKHSULVRQHUFDQGHPRQVWUDWHFDXVHIRUWKHGHIDXOWDQG RQ WKH ERUGHUOLQH OHYHO RI KXPDQ LQWHOOLJHQFH RSHUDWLQJ DW DSSUR[LPDWHO\ DFWXDOSUHMXGLFHRUGHPRQVWUDWHWKDWIDLOXUHWRFRQVLGHUWKH WKH VL[WK ORZHVW PHDVXUDEOH SHUFHQWLOH $00 'HS RI 'U (LVHQEHUJ S FODLPVZLOOUHVXOWLQDIXQGDPHQWDOPLVFDUULDJHRIMXVWLFHl 'LVWULFW &RXUW +HDULQJ 7U S 7KH 2KLR &RXUW RI $SSHDOV ZDV &ROHPDQY7KRPSVRQ86 FLWDWLRQV QRW SUHVHQWHG ZLWK WKLV LQIRUPDWLRQ 7KH GLVWULFW FRXUW KHOG WKDW WKLV RPLWWHG ,Q0DXSLQY6PLWK)G WK&LU ZDV mµVLPSO\ PRUH RI WKH VDPH W\SH RI HYLGHQFH ZKLFK WKH LQIRUPDWLRQ 2KLR 6XSUHPH &RXUW DOUHDG\ KHOG GRHV QRW PLWLJDWH WKH DJJUDYDWLQJ ZHVHWIRUWKDIRXUSDUWWHVWIRUGHWHUPLQLQJZKHWKHUD FLUFXPVWDQFH RI D µVHQVHOHVVO\ FUXHO DJJUDYDWHG PXUGHU LQ WKH FRXUVH RI FRXUWLVSURFHGXUDOO\EDUUHGIURPUHYLHZLQJDVWDWHSULVRQHUjV DQ DJJUDYDWHG UREEHU\jl s$ DW TXRWLQJ 6WDWH Y :LOOLDPV IHGHUDO FRQVWLWXWLRQDO FODLPV )LUVW WKH IHGHUDO FRXUW PXVW 1(G 2KLR &W $SS 8QGHU 2KLRjV GHDWK SHQDOW\ GHWHUPLQH ZKHWKHU WKHUH LV D VWDWH SURFHGXUDO UXOH WKDW LV VWDWXWH KRZHYHU WKLV PD\ KDYH EHHQ UHOHYDQW HYLGHQFH RI D PHQWDO GHIHFW DSSOLFDEOHWRWKHSHWLWLRQHUj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nWKDW:LOOLDPVjVIDWKHUZDVQRWmWKHUHlIRUDQ\RI ILUPO\HVWDEOLVKHGDQGUHJXODUO\IROORZHGDWWKHWLPHLWZDV KLVFKLOGUHQ6HHHJs$DW 'HERUDK:LOOLDPV DSSOLHG6HH5RJHUVY+RZHV)G WK&LU $II m0\IDWKHUZDVQjWWKHUHIRUXV'DGZDVQHYHUWKHUH 7KH UXOH ZRXOG EH DQ LQGHSHQGHQW EDVLV IRU IRU XVl )XUWKHUPRUH KLV DWWRUQH\V OLNHO\ ZRXOG KDYH GLVSRVLWLRQRIDFDVHLIWKHVWDWHFRXUWVDFWXDOO\UHOLHGRQWKH GLVFRYHUHGDGGLWLRQDOLQIRUPDWLRQWKDW'U6FKPLGW*RHVVOLQJ SURFHGXUDOEDU6HH+DUULVY5HHG 86 KDG OHDUQHG LQ WKH SURFHVV RI UHYLHZLQJ :LOOLDPVjV OLIH )RXUWK LI WKH IHGHUDO FRXUW DQVZHUV WKH ILUVW WKUHH KLVWRU\VXFKDVWKHIDFWWKDW:LOOLDPVZDVVH[XDOO\PROHVWHG TXHVWLRQV LQ WKH DIILUPDWLYH LW ZRXOG QRW UHYLHZ WKH E\ D FRXVLQ ZKHQ KH ZDV ILYH RU VL[ \HDUV ROG DQG WKDW SHWLWLRQHUjVSURFHGXUDOO\GHIDXOWHGFODLPXQOHVVWKHSHWLWLRQHU :LOOLDPVKDGSURVWLWXWHGKLPVHOIZLWKPHQIRUPRQH\ZKHQ FDQVKRZFDXVHIRUQRWIROORZLQJWKHSURFHGXUDOUXOHDQGWKDW KHZDVDWHHQDJHU6HHs$DW 6FKPLGW*RHVVOLQJ$II IDLOXUH WR UHYLHZ WKH FODLP ZRXOG UHVXOW LQ SUHMXGLFH RU D PLVFDUULDJHRIMXVWLFH6HH0DXSLQ)GDW%DVHG )LQDOO\KDG:LOOLDPVjVDWWRUQH\WDNHQWKHWLPHWRREWDLQ RQ WKLV WHVW ZH GR QRW EHOLHYH ZH FDQ ILQG WKDW :LOOLDPV :LOOLDPVjV VFKRRO MXYHQLOH DQG WUHDWPHQW UHFRUGV WKH\ SURFHGXUDOO\GHIDXOWHGRQKLV%UDG\RU(LJKWK$PHQGPHQW ZRXOG KDYH GLVFRYHUHG WKDW :LOOLDPVj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mFRQVWLWXWLRQDO ULJKW WR D IDLU DQG LPSDUWLDO WULDO ZKHQ WKH VWDQGDUGV RI WKH WLPH mUHFRUGV VKRXOG >KDYH EHHQ@ REWDLQHG IURP VFKRROV SURVHFXWRU XVHG DJDLQVW KLP WHVWLPRQ\ >RI $QGHUVRQ DQG WUHDWPHQW VLWHV FRXUWV DQG HPSOR\HUVl WR SUHSDUH IRU :LOOLDPVj %URRNV@ ZKLFK ZDV NQRZ WR EH IDOVH DQG ZKLFK ZDV VHQWHQFLQJ KHDULQJ s$ DW 6FKPLGW*RHVVOLQJ $II HPSKDVLV SURGXFHGE\SURPLVHVPDGHE\WKHSURVHFXWRUWR>$QGHUVRQ DGGHG 6HH DOVR :LOOLDPV 86 DW QRWLQJ LQ WKH UHYLHZ RI D DQG%URRNV@ls$DW7KHWULDOFRXUWGLVPLVVHGWKLV FRQYLFWLRQ WKDW EHFDPH ILQDO LQ WKDW WKH GHIHQGDQWjV VFKRRO UHFRUGV FRQWDLQHG PLWLJDWLQJ HYLGHQFH SHWLWLRQ ZLWKRXW RSLQLRQ DQG :LOOLDPV QHYHU DSSHDOHG WKH 7KH PDMRULW\ DOVR QRWHV WKDW WKHUH LV QR HYLGHQFH WKDW :LOOLDPVjV GLVPLVVDO DWWRUQH\V IDLOHG WR REWDLQ :LOOLDPVjV VFKRRO DQG MXYHQLOH UHFRUGV +RZHYHU HYHQ LI :LOOLDPVjV DWWRUQH\V KDG WKHVH UHFRUGV LQ WKHLU SRVVHVVLRQ WKHUH LV QR VWUDWHJLF UHDVRQ IRU HOHFWLQJ QRW WR SUHVHQW DW OHDVW :LOOLDPVjV VFKRRO UHFRUGV ZKLFK FRQVLVWHG RI LQIRUPDWLRQ RQ KLV ORZ ,4 RI HYHQ LQ OLJKW RI :LOOLDPVjV ODFN RI FRRSHUDWLRQ DQG HVSHFLDOO\ VLQFH 5HDG LQ FRQWH[W :LOOLDPVjV SHWLWLRQ IRU 3&5 VXJJHVWV KH ZDV QRW VXFK HYLGHQFH PD\ KDYH EHHQ UHOHYDQW WR VKRZLQJ D PHQWDO GHIHFW RU DOOHJLQJ D %UDG\ YLRODWLRQ UDWKHU KH ZDV DUJXLQJ WKDW ZLWQHVVHV WHVWLILHG GLVHDVH RQH RI WKH PLWLJDWLQJ IDFWRUV XQGHU 2 +,2 5 (9 & 2'( IDOVHO\ % :LOOLDPVY&R\OH 1R 1R :LOOLDPVY&R\OH SV\FKRORJLVW DQG WKHQ WR GHYHORS D FRKHVLYH WKHRU\ RI :LOOLDPVGLGQRWUDLVHWKHLVVXHDVVXPLQJKLVILUVW3&5 PLWLJDWLRQl SHWLWLRQGLGUDLVHLWLQHLWKHUKLVVHFRQGRUWKLUGSHWLWLRQVIRU 3&5 7KLV GHVSLWH WKH IDFW WKDW KLV WKLUG SHWLWLRQ IRU 3&5 ,QOLJKWRIDOOWKLVHYLGHQFHWKHDWWRUQH\VjSUHSDUDWLRQZDV FRQWDLQHGLQIRUPDWLRQWKDWZRXOGVXJJHVWDSRVVLEOH%UDG\ ZKROO\LQDGHTXDWH:LOOLDPVj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jV WKHFRQYHUVDWLRQWRRNSODFHSULRUWRWKHHQGRI:LOOLDPVjVWULDO PRWKHUQRUGLGWKH\FRQWDFWKLVRWKHUVLVWHU3DPHODRUKLV ZKLFKZRXOGPHDQ:LOOLDPVZDVDZDUHRIWKHDOOHJHGGHDO PRWKHUjVVLVWHUDQGKLVDXQW6KLUOH\%R\NLQZKRKDGOLYHG SULRUWRWKHHQGRIKLVWULDO5DWKHUWKDQUDLVLQJWKHFODLP ZLWK :LOOLDPV DQG KLV IDPLO\ DW RQH SRLQW DOO RI ZKRP WKHUH:LOOLDPVFKRVHWRZDLWXQWLOKLVIRXUWK3&5SURFHHGLQJ DVVHUWHGWKDWWKH\ZRXOGKDYHWHVWLILHGRQ:LOOLDPVjVEHKDOI WRUDLVHWKH%UDG\FODLP LIDVNHG ,QDOOHJLQJWKH%UDG\YLRODWLRQLQKLVIRXUWK3&5SHWLWLRQ +DG:LOOLDPVjVDWWRUQH\VVLPSO\GLVFXVVHG:LOOLDPVjVOLIH :LOOLDPVSRLQWHGWRVHYHUDOIDFWVWKDWOHG KLP WREHOLHYHD ZLWK FRUH IDPLO\ PHPEHUV VXFK DV KLV PRWKHU KLV VLVWHU GHDO H[LVWHG EHWZHHQ WKH SURVHFXWLRQ DQG WKH ZLWQHVVHV 3DPHOD DQG KLV DXQW 6KLUOH\ DQG LQWHUYLHZHG :LOOLDPVjV QDPHO\ WKDW DIWHU WKHLU WHVWLPRQ\ HDFK ZLWQHVV UHFHLYHG D VLVWHU'HERUDKIRUPRUHWKDQDPHUHILYHPLQXWHVWKH\OLNHO\ UHGXFHG VHQWHQFH 7KH SHWLWLRQ DOVR LQFOXGHG DQ DIILGDYLW ZRXOG KDYH GLVFRYHUHG WKH IROORZLQJ SRVVLEOH PLWLJDWLQJ IURP sHII /D\PDQ DQ LQYHVWLJDWRU KLUHG E\ :LOOLDPVjV LQIRUPDWLRQ WKDW:LOOLDPVjVPRWKHURIWHQFKRVHDEXVLYH FRXQVHO ZKLFK VWDWHG WKDW ZKLOH YLVLWLQJ $QGHUVRQ DW WKH SDUWQHUVLQFOXGLQJ:LOOLDPVjVVWHSIDWKHUDQGWKDW:LOOLDPV 0DULRQ &RUUHFWLRQDO )DFLOLW\ $QGHUVRQ LQIRUPHG /D\PDQ ZLWQHVVHGVRPHRIWKLVDEXVHLQFOXGLQJDWOHDVWRQHLQVWDQFH WKDW WKH SURVHFXWLRQ SURPLVHG WR UHFRPPHQG D UHGXFHG LQZKLFK:LOOLDPVjVPRWKHUZDVKRVSLWDOL]HGVHHs$DW VHQWHQFHLIKHWHVWLILHGDJDLQVW:LOOLDPV6HHs$DW 6FKPLGW*RHVVOLQJ $II 'HERUDK :LOOLDPV $II &XULRXVO\WKHSHWLWLRQGLGQRWLQFOXGH(QJOLVKjVDIILGDYLWQRU 6KLUOH\%R\NLQ$II WKDW:LOOLDPVjVIDWKHUVPRNHG GLG LW LQFOXGH DQ DIILGDYLW IURP $QGHUVRQ 7KH WULDO FRXUW PDULMXDQDDQGVROGODUJHTXDQWLWLHVRIPDULMXDQDLQKLVVWRUH VHH s$ DW 'HERUDK :LOOLDPV $II 5REHUW 7KRPDV$II 6KLUOH\%R\NLQ$II WKDW:LOOLDPV ZDVXVLQJGUXJVDVVHULRXVDVFRFDLQHE\DJHWKLUWHHQVHHs$ 6SHFLILFDOO\ WKH DIILGDYLW UHDGV DW 'HERUDK:LOOLDPV$II WKDWRQO\RQHRIWKHILYH $QGHUVRQ WROG PH DIWHU WDONLQJ WR WKH SROLFH WKDW KH NQHZ DERXW >:LOOLDPV@ EHFDXVH WKH SROLFH WROG KLP DERXW WKH FDVH $QGHUVRQ :LOOLDPVFKLOGUHQKDGJUDGXDWHGIURPKLJKVFKRROVHHs$ VDLG WKDW KH PLJKW DV ZHOO VLQN >:LOOLDPV@ IRU ZKDW >:LOOLDPV@ DW %RQQLH:LOOLDPV$II 3DPHOD:LOOLDPV$II KDG GRQH WR KLP DQG WKDWDVDFKLOG:LOOLDPVZDVZKLSSHGDVRIWHQDV WKUHH RU IRXU WLPHV D ZHHN E\ KLV IDWKHU LQFOXGLQJ ZLWK D $QGHUVRQ WROG >:LOOLDPV@ WKDW WKH SURVHFXWRUV ZHUH JRLQJ WR VZLWFK EHOW DQG H[WHQVLRQ FRUGVHH s$ DW 3DPHOD JLYH KLP $QGHUVRQ D ELOO PHDQLQJ OHVVHU WLPH $QGHUVRQ VDLG >:LOOLDPV@ VKRXOG QHYHU KDYH FURVVHG KLP :LOOLDPV $II 7KH DWWRUQH\V PD\ KDYH DOVR REWDLQHG LQIRUPDWLRQ IURP :LOOLDPVjV UHODWLYHV WKDW LV LQ GLUHFW $IWHU $QGHUVRQ JRW EDFN IURP FRXUW >:LOOLDPV@ WROG $QGHUVRQ FRQWUDGLFWLRQ WR WKH KDUPIXO WHVWLPRQ\ JLYHQ E\ /HZLV WKDW KH KDG OLHG $QGHUVRQ VDLG m%HWWHU \RX WKDQ PHl s$ DW :LOOLDPVY&R\OH 1R 1R :LOOLDPVY&R\OH GLVPLVVHG WKH FODLP ILQGLQJ LW ZDV EDUUHG E\ UHV MXGLFDWD $Q\ SUHSDUDWLRQ IRU D FDSLWDO FDVH VKRXOG LQYROYH EHFDXVHLWmVKRXOGKDYHEHHQFRQVLGHUHGRQGLUHFWDSSHDOl REWDLQLQJ H[WHQVLYH EDFNJURXQG RI WKH GHIHQGDQW 7KHFRXUWRIDSSHDOVDQGWKHVWDWHVXSUHPHFRXUWDIILUPHGRQ LQFOXGLQJWKHGHIHQGDQWjVGHYHORSPHQWDOH[SHULHQFHVWKH WKDWUHDVRQLQJ IDPLO\ RI RULJLQjV IXQFWLRQLQJ DQG G\QDPLFV WKH SDUHQWLQJ FDSDFLWLHV RI WKH GHIHQGDQWjV SDUHQWV WKH 1HYHUWKHOHVV:LOOLDPVUDLVHGWKHFODLPDJDLQLQKLVILIWK GHIHQGDQWjV LQWHOOHFWXDO IXQFWLRQLQJ LQFOXGLQJ EXW QRW SHWLWLRQ IRU 3&5 WKLV WLPH LQFOXGLQJ DQ DIILGDYLW IURP OLPLWHG WR DFDGHPLF DQG ZRUN SHUIRUPDQFH WKH $QGHUVRQVWDWLQJWKDWKHPDGHDGHDOZLWKWKHSURVHFXWLRQ GHIHQGDQWjV ZRUN FDSDFLWLHV DQG H[SHULHQFHV WKH $JDLQWKHWULDOFRXUWGLVPLVVHGWKH%UDG\FODLPRQWKHJURXQG GHIHQGDQWjVDELOLW\WRUHODWHWRRWKHUVERWKLQLQWLPDWHDQG WKDWLWZDVEDUUHGE\UHVMXGLFDWD,WWKHQZHQWRQWRVWDWH VRFLDO VLWXDWLRQV WKH GHIHQGDQWjV VH[XDO DQG PDULWDO m>I@XUWKHUWKHVHH[KLELWVIDLOWRSUHVHQWVXEVWDQWLYHJURXQGV KLVWRU\ WKH GHIHQGDQWjV PHGLFDO KLVWRU\ DQG WKH XSRQZKLFKUHOLHIFDQEHJUDQWHGl,QKLVDSSHDOIURPWKDW GHIHQGDQWjVSV\FKRORJLFDOIXQFWLRQLQJDFURVVKLVOLIHWLPH GLVPLVVDO:LOOLDPVDOOHJHGWKDWLWZDVHUURUIRUWKHWULDOFRXUW WRGLVPLVVWKHSHWLWLRQRQWKHJURXQGRIUHVMXGLFDWDEHFDXVH s$DW $IIRI'U1DQF\6FKPLGW*RHVVOLQJ KLV FODLP ZDV EDVHG XSRQ HYLGHQFH RXWVLGH WKH UHFRUGDQ 'U 6FKPLGW*RHVVOLQJ IXUWKHU H[SODLQHG WKDW VXFK DIILGDYLW IURP $QGHUVRQDQG 2KLR ODZ GLG QRW DSSO\ WKH LQIRUPDWLRQVKRXOGEHSXUVXHGWKURXJKmH[WHQVLYHLQWHUYLHZV GRFWULQHWRFODLPVVXSSRUWHGE\HYLGHQFHRXWVLGHWKHUHFRUG RIIDPLO\PHPEHUVLQFOXGLQJDXQWVDQGXQFOHVJUDQGSDUHQWV :LOOLDPV DOVR VWDWHG WKDW WKH WULDO FRXUW HUUHG E\ IDLOLQJ WR FRXVLQVHWFDVZHOODVWKHQXFOHDUIDPLO\lDQGWKDWmUHFRUGV JUDQWKLVSHWLWLRQDVWRWKH%UDG\FODLP7KHFRXUWRIDSSHDOV VKRXOGEHREWDLQHGIURPVFKRROVWUHDWPHQWVLWHVFRXUWVDQG UHMHFWHG :LOOLDPVjV FRQWHQWLRQ WKDW HYLGHQFH RXWVLGH WKH HPSOR\HUVl s$ DW $II RI 'U 1DQF\ 6FKPLGW UHFRUG SUHYHQWV D FRXUW IURP DSSO\LQJ UHV MXGLFDWD WR *RHVVOLQJ $FFRUGLQJWR'U6FKPLGW*RHVVOLQJLQWKLV SURFHGXUDOO\EDUDFODLP,WVWDWHG FDVHGHIHQVHFRXQVHOIDLOHGDGHTXDWHO\WRUHVHDUFK:LOOLDPVjV EDFNJURXQGIRUSRVVLEOHPLWLJDWLQJLQIRUPDWLRQE\IDLOLQJWR 'HIHQGDQWjV VHYHQWK DVVLJQPHQW RI HUURU FRQWHQGV WKH PDNHFROODWHUDOFRQWDFWZLWK:LOOLDPVjVIDPLO\IULHQGV SURVHFXWLRQ SUHVHQWHG IDOVH WHVWLPRQ\ IURP 0LFKDHO WHDFKHUVHPSOR\HUVDQGVLJQLILFDQWRWKHUV REWDLQUHFRUGV $QGHUVRQDQGFRQFHDOHGDGHDOWRREWDLQKLVWHVWLPRQ\ RISULRUWUHDWPHQWVLWHVIRU:LOOLDPVDQG:LOOLDPVjVVFKRRO WKHUHE\ GHSULYLQJGHIHQGDQWRIHIIHFWLYHFRXQVHO DQG ZRUN UHFRUGV DQG REWDLQ DQ LQGHSHQGHQW 'HIHQGDQWFRQWHQGVKHLVHQWLWOHGWRILOHVXFFHVVLYH3&5 SV\FKLDWULFSV\FKRORJLFDO HYDOXDWLRQ RI :LOOLDPV s$ DW 3HWLWLRQVGHVSLWHWKHGHQLDORISULRU3&53HWLWLRQVUDVLQJ VHH DOVR s$ DW $II RI *HUDOG * WKHVDPHJURXQGVZKHQHYHUKHSUHVHQWVQHZHYLGHQFHWR 6LPPRQV(VT QRWLQJWKDWWKHSHUIRUPDQFHRI:LOOLDPVjV VXSSRUWWKHFODLPV DWWRUQH\V DW WKH VHQWHQFLQJ SKDVH FRQVWLWXWHG LQHIIHFWLYH &RQWUDU\WRGHIHQGDQWjVDUJXPHQW2KLRODZGRHVQRW DVVLVWDQFH RI FRXQVHO EHFDXVH WKH DWWRUQH\V IDLOHG WR JUDQW FDUWH EODQFKH WR ILOH VXFFHVVLYH 3&5 3HWLWLRQV LQYHVWLJDWH :LOOLDPVjV IDPLO\ OLIH DQG IDLOHG WR KLUH D HQGOHVVO\7ULDOFRXUWVDUHQRWUHTXLUHGWRHQWHUWDLQ SV\FKRORJLFDOH[SHUWWRH[SODLQ:LOOLDPVjVEHKDYLRULQOLJKW VXFFHVVLYHSHWLWLRQVZKLFKDOOHJHWKH VDPHJURXQGVDV RISV\FKRVRFLDOGHYHORSPHQW s$DW $II HDUOLHUSHWLWLRQV'HIHQGDQWKDVIDLOHGWRVKRZWKDW RI'U6XVDQ'6FKRUU DVVHUWLQJWKDW:LOOLDPVjVDWWRUQH\V WKHWULDOFRXUWDEXVHGLWVGLVFUHWLRQE\GLVPLVVLQJWKHVH IDLOHGWRGHYHORSDFRPSOHWHOLIHKLVWRU\RI:LOOLDPVWKURXJK FODLPVLQKLVILIWK3&5 LQWHUYLHZVIDLOHGWRFROOHFWQHFHVVDU\UHFRUGVRUGRFXPHQWDU\ HYLGHQFH DQG mIXUWKHU IDLOHG WR SUHVHQW WKLV WR D OLFHQVHG :LOOLDPVY&R\OH 1R 1R :LOOLDPVY&R\OH $GGLWLRQDOO\,GRQRWEHOLHYHWKDWWKHLQYHVWLJDWRU\DFWLRQV 'HIHQGDQWUDLVHGWKHVDPHFODLPVLQKLVIRXUWK3&5 RI :LOOLDPVjV DWWRUQH\V FDQ UHDVRQDEO\ EH FRQVLGHUHG D 3HWLWLRQ DQG PDGH QR DWWHPSW WR VKRZ JRRG FDXVH IRU mVWUDWHJLF FKRLFH>@ PDGH DIWHU >D@ OHVV WKDQ FRPSOHWH SHUPLWWLQJ KLP WR UDLVH WKHP DJDLQ EHODWHGO\ ZLWK LQYHVWLJDWLRQ >VXFK@ WKDW UHDVRQDEOH SURIHVVLRQDO DGGLWLRQDOHYLGHQFH7KDW0LFKDHO$QGHUVRQWHVWLILHG MXGJPHQWV VXSSRUW>HG@ WKH OLPLWDWLRQV RQ >WKHLU@ IDOVHO\DWWULDODQGWKHSURVHFXWLRQFRQFHDOHGSURPLVHVRI LQYHVWLJDWLRQl 6WULFNODQG 86 DW HPSKDVLV OHQLHQW VHQWHQFLQJ WR LQGXFH KLV WHVWLPRQ\ ZHUH DGGHG ,QGHHG RQH ZRXOG EH KDUGSUHVVHG WR ILQG DQ\ DUJXPHQWV UDLVHG EHIRUH 'HIHQGDQWjV IRXUWK 3&5 VLWXDWLRQLQZKLFKLWZRXOGEHVRXQGSURIHVVLRQDOMXGJPHQW 3HWLWLRQ ZDV EDVHG RQ DQ DIILGDYLW RI LQYHVWLJDWRU sHII IRUDQDWWRUQH\QRWWRLQIRUPDZLWQHVVLQDFDSLWDOVHQWHQFLQJ /D\PDQDQG'HIHQGDQWjVILIWK3HWLWLRQPHUHO\DGGV KHDULQJ RI WKH YHU\ SXUSRVH RI WKH KHDULQJ $QG \HW DQ DIILGDYLW LQ ZKLFK $QGHUVRQ UHFDQWV KLV WULDO :LOOLDPVjVDWWRUQH\VIDLOHGWRH[SODLQVXFKSXUSRVHWRWZR WHVWLPRQ\+RZHYHUUHFDQWHGWHVWLPRQ\LVVXVSHFWDQG NH\ VHQWHQFLQJ ZLWQHVVHV :LOOLDPVjV IDWKHU DQG KLV VLVWHU GRHVQRWJHQHUDOO\ZDUUDQWDKHDULQJ 'HERUDKs$DW $IIRI/HZLV:LOOLDPV6U QRWLQJ WKDWWKHDWWRUQH\VmGLGQRWIXOO\H[SODLQWR>KLP@WKHSXUSRVH 6WDWHY:LOOLDPV1R :/DW 2KLR&W RI>KLV@WHVWLPRQ\RUWRZKDW>KH@ZRXOGEHWHVWLI\LQJl s$ $SSsDQ XQSXEOLVKHGRSLQLRQ LQWHUQDOFLWDWLRQV DW $IIRI'HERUDK:LOOLDPV VWDWLQJWKDWm>D@OWKRXJK RPLWWHG 7KHFRXUWGLGQRWJRRQWRDGGUHVVWKHPHULWVRIWKH >VKH@ZDVFRQWDFWHGE\/HZLVjVWULDODWWRUQH\>KH@VSHQW FODLP7KH6XSUHPH&RXUWRI2KLRDIILUPHGZLWKRXWRSLQLRQ RQO\DERXWILYHPLQXWHVLQWHUYLHZLQJ>KHU@lDQGm>W@KLVZDV MXVWSULRUWR>KHU@WHVWLPRQ\l 6XFKIDLOXUHWRLQIRUPWZRRI 7KRVHGLVPLVVDOVWKH:DUGHQDUJXHVHVWDEOLVKDSURFHGXUDO :LOOLDPVjVWKUHH ZLWQHVVHV HVSHFLDOO\ WKH RQO\ WZR IDPLO\ EDUWRWKLVFRXUWKHDULQJ:LOOLDPVjV%UDG\FODLP3RLQWLQJWR PHPEHUVWRWHVWLI\GXULQJWKHVHQWHQFLQJKHDULQJQHJDWHGWKH RXU GHFLVLRQV LQ :RQJ Y 0RQH\ )G WK &LU YHU\UHDVRQIRU KDYLQJWKHVHZLWQHVVHVWHVWLI\RQEHKDOIRI DQG1RUULVY6FKRWWHQ)G WK&LU :LOOLDPV LQ WKH ILUVW SODFH EHFDXVH LW GLG QRW DOORZ HLWKHU WKH :DUGHQ DVVHUWV WKDW WKH GRFWULQH RI UHV MXGLFDWD LV DQ ZLWQHVVDQRSSRUWXQLW\WRWKLQNRIWKHHYHQWVRUGLVDGYDQWDJHV DGHTXDWH DQG LQGHSHQGHQW VWDWH JURXQG IRU EDUULQJ IHGHUDO LQ:LOOLDPVjVOLIHWKDWZRXOGKDYHKHOSHGWRVXSSRUWDOLIH UHYLHZ VHQWHQFHUHFRPPHQGDWLRQDVRSSRVHGWRDGHDWKVHQWHQFH $IWHU UHYLHZLQJ 2KLRjV GRFWULQH RI UHV MXGLFDWD ZH )XUWKHUPRUH , GR QRW EHOLHYH WKDW WKHUH LV DQ\ EDVLV IRU FRQFOXGH WKDW ZKLOH LW VHHPV OLNHO\ WKDW :LOOLDPV GLG FRQFOXGLQJWKDWWKHDWWRUQH\VjGHFLVLRQVOLPLWLQJZKLFKIDPLO\ SURFHGXUDOO\GHIDXOWKLV%UDG\FODLPWKH2KLRFRXUWVKDYHQRW PHPEHUV WR LQWHUYLHZ RU WKH DWWRUQH\Vj IDLOXUH WR UHTXHVW SURYLGHG XV ZLWK HQRXJK DQDO\VLV WR KROG WKDW :LOOLDPV SHUWLQHQW UHFRUGV FRQFHUQLQJ :LOOLDPVjV SV\FKRVRFLDO DQG GHIDXOWHG KLV FODLP 8QGHU 2KLR ODZ WKH GRFWULQH RI UHV LQWHOOHFWXDO GHYHORSPHQW UHVXOWHG IURP WKH H[HUFLVH RI MXGLFDWD ZLOO EDU D SDUW\ IURP UDLVLQJ LVVXHV WKDW LW KDG DQ UHDVRQDEOH SURIHVVLRQDO MXGJPHQW RU VRXQG VWUDWHJ\ &I RSSRUWXQLW\ WR UDLVH DW DQ HDUOLHU SURFHHGLQJ 6HH 6WDWH Y :LOOLDPV 86DW QRWLQJWKHLPSRUWDQFHRIWKH 5REHUWV1(G 2KLR VWDWLQJWKDWmWKH GHIHQGDQWjV VFKRRO DQG MXYHQLOH UHFRUGV 'U 1DQF\ SHWLWLRQHULVSUHFOXGHGE\WKHGRFWULQHRIUHVMXGLFDWDIURP 6FKPLGW*RHVVOLQJDSV\FKRORJLVWZKRZDVIDPLOLDUZLWKWKH DVVHUWLQJ FRQVWLWXWLRQDO LVVXHV LQ WKLV SRVW FRQYLFWLRQ W\SHRISUHSDUDWLRQUHTXLUHGLQFDSLWDOFDVHVDVVHUWHGLQKHU SURFHHGLQJVLQFHVKHIDLOHGWRUDLVHWKHVHLVVXHVDWWKHHDUOLHVW DIILGDYLWRIsDQXDU\ WKDWDFFRUGLQJWRWKHVWDQGDUGVDW SRVVLEOH WLPH l 6WDWH Y sRKQVRQ 1R WKHWLPH :/ DW 2KLR &W $SS $XJ 6WDWHY5HVK1(G 2KLR&W$SS :LOOLDPVY&R\OH 1R 1R :LOOLDPVY&R\OH 7KLV GRFWULQH DSSOLHV HTXDOO\ LQ SRVWFRQYLFWLRQ WKHVHQWHQFLQJKHDULQJ$VDUHVXOWWKHFRXUWDOVRIDLOHGWR SURFHHGLQJV EDUULQJ FODLPV IRU UHOLHI ZKHQ WKH SHWLWLRQHU XQFRYHU KRZ WKH DWWRUQH\Vj IDLOXUH WR FRQGXFW D SURSHU FRXOGKDYHUDLVHGWKHLVVXHRQGLUHFWDSSHDOEXWGLGQRWVHH LQYHVWLJDWLRQSUHYHQWHGWKHPIURPOD\LQJWKHYHU\IRXQGDWLRQ 6WDWHY3HUU\1(G 2KLR WRFODLPVUDLVHG IRU WKHLU PLWLJDWLRQ WKHRULHV DQG HIIHFWLYHO\ OHIW :LOOLDPV LQIHGHUDOKDEHDVSURFHHGLQJVWKDWZHUHQRWUDLVHGRQDSSHDO ZLWKRXWDQ\WKHRU\RIPLWLJDWLRQDWDOO IURPDWULDOFRXUWjVGLVPLVVDORIDSHWLWLRQIRUSRVWFRQYLFWLRQ UHOLHIEXWFRXOGKDYHEHHQVHH%URRNVY(GZDUGV1R $$QDO\VLV2I3UH+HDULQJ,QYHVWLJDWLRQ :/DW WK&LU6HSW DQGWR FODLPV WKDW D VXFFHVVLYH SHWLWLRQ IRU SRVWFRQYLFWLRQ UHOLHI )LUVW,EHOLHYHWKDWWKH2KLR&RXUWRI$SSHDOVXQUHDVRQDEO\ UDLVHVWKDWFRXOGKDYHEHHQUDLVHGLQDQHDUOLHUSRVWFRQYLFWLRQ GHWHUPLQHG WKDW :LOOLDPV GLG QRW GHPRQVWUDWH WKDW KLV SURFHHGLQJEXWZHUHQRWVHH6WDWHY6ODJOH1R DWWRUQH\Vj SUHKHDULQJ LQYHVWLJDWLRQ DQG SUHSDUDWLRQ IHOO :/ DW 2KLR&W$SS$XJ 6WDWHY EHORZDQREMHFWLYHVWDQGDUGRIUHDVRQDEOHQHVV$WWKHRXWVHW 0XOOLQV 1R :/ DW 2KLR&W$SS , QRWH WKDW WKH ODFN RI LQYHVWLJDWRU\ DFWLRQV E\ :LOOLDPVjV $SULO :KHQWKHFODLPUDLVHGLVEDVHGRQHYLGHQFH DWWRUQH\V FDQQRW UHDVRQDEO\ EH FRQVLGHUHG D mVWUDWHJLF RXWVLGHWKHUHFRUGWKHUXOHVFKDQJHDELW%XWKRZWKHUXOHV FKRLFH>@PDGHDIWHUWKRURXJKLQYHVWLJDWLRQRIODZDQGIDFWV FKDQJH DSSHDUV WR GHSHQG RQ ZKLFK RSLQLRQ \RX H[DPLQH UHOHYDQWWRSODXVLEOHRSWLRQVl6WULFNODQG86DW )RULQVWDQFHVRPHFRXUWVDSSHDUWRVXJJHVWDOOWKDWPDWWHUVLV HPSKDVLVDGGHG 7KHLQYHVWLJDWLRQE\:LOOLDPVjVDWWRUQH\V ZKHWKHUWKHFODLPLVEDVHGRQHYLGHQFHRXWVLGHWKHUHFRUGDQG ZDVDQ\WKLQJEXWWKRURXJKFRQVLVWLQJVROHO\RIRQHWKLUW\ FRXOG QRW KDYH EHHQ DSSHDOHG RQ WKH RULJLQDO UHFRUG PLQXWHLQWHUYLHZZLWK:LOOLDPVjVIDWKHUEHIRUHWKHVHQWHQFLQJ m>(@YLGHQFH PXVW VKRZ WKDW WKH SHWLWLRQHU FRXOG QRW KDYH KHDULQJ RQH ILYHPLQXWH GLVFXVVLRQ ZLWK :LOOLDPVjV VLVWHU DSSHDOHGWKHFRQVWLWXWLRQDOFODLPEDVHGRQWKHLQIRUPDWLRQLQ 'HERUDKMXVWLPPHGLDWHO\EHIRUHVKHJDYHKHUWHVWLPRQ\DW WKHRULJLQDOWULDOUHFRUGl6WDWHY&RPEV1(G WKHKHDULQJ DQLQWHUYLHZRIXQVSHFLILHGWLPHZLWKWKHPRWKHU 2KLR&W$SS 7KXVDQDUURZUHDGLQJRIWKRVH RIRQHRI:LOOLDPVjVFKLOGKRRGIULHQGVDQGDUHTXHVWIRUmD FDVHV VXJJHVWV WKDW WKH TXHVWLRQ RI ZKHWKHU WKH SHWLWLRQHU YHU\OLPLWHGSV\FKLDWULFHYDOXDWLRQIURPWKH&OHYHODQG&RXUW FRXOGKDYHREWDLQHGWKHHYLGHQFHHDUOLHULVRIQRFRQVHTXHQFH &OLQLF >LQ @ WKDW GLG QRW PHHW WKH XVXDO VWDQGDUGV RI 2WKHUVILQGWKDWTXHVWLRQLPSRUWDQWDQGUHTXLUHQRWRQO\WKDW LQYHVWLJDWLRQ IRU D PLWLJDWLRQ SV\FKLDWULFSV\FKRORJLFDO WKH HYLGHQFH LV RXWVLGH WKH UHFRUG EXW DOVR WKDW WKH SDUW\ HYDOXDWLRQl s$ DW $II RI 'U 1DQF\ 6FKPLGW SUHVHQWHG WKH FODLP ZKHQ WKH SDUW\ FRXOG KDYH UHDVRQDEO\ *RHVVOLQJ 7RFRQFOXGHWKDWVXFKLQYHVWLJDWRU\DFWLRQVZHUH REWDLQHGWKHHYLGHQFH6HH0DSOHVY&R\OH)G FRQVWLWXWLRQDOO\DGHTXDWHLVQRWRQO\FRPSOHWHO\HUURQHRXVEXW WK&LU 6ODJOHDW 5HVK1(GDW REMHFWLYHO\XQUHDVRQDEOH$IWHUDOOWKHYHU\FRUHRIDFDSLWDO m5HVMXGLFDWDGRHVQRWDSSO\ EHFDXVH>WKHGHIHQGDQW@ VHQWHQFLQJ KHDULQJ LV WKH MXU\jV EDODQFLQJ RI HYLGHQFH RI FRXOGQRWKDYHUHDVRQDEO\GLVFRYHUHGWKHDWWDFKHGHYLGHQWLDU\ PLWLJDWLQJ DQG DJJUDYDWLQJ IDFWRUV ,I RQO\ D PLQLPDO PDWHULDOVDWRUEHIRUHWULDOl 6WLOORWKHUVRXUFHVKDYHVWDWHG LQYHVWLJDWLRQ LV FRPSOHWHG E\ GHIHQVH FRXQVHO WR JDWKHU WKHLVVXHDVZKHWKHUWKHSDUW\mFRXOGKDYHNQRZQRIWKHHUURU HYLGHQFHRIPLWLJDWLQJIDFWRUVWKHQWKHUHLVQRWKLQJWRSODFH LQWLPHWRUDLVHLWDWWULDORURQDSSHDOl%DOGZLQjV2KLR LQWKHEDODQFHEHIRUHWKHMXU\WRWKHWLSWKHVFDOHVLQIDYRURI 3UDF&ULP/ :HVW DOLIHVHQWHQFH :LOOLDPVGRHVQRWDGGUHVVWKHYDU\LQJLQWHUSUHWDWLRQVRIWKH GRFWULQHFKRRVLQJVLPSO\WRDGRSWWKHRQHPRVWIDYRUDEOHWR KLP$SSO\LQJWKDWLQWHUSUHWDWLRQKHDUJXHVWKDWEHFDXVHKLV 7KLV ZLWQHVV 0V 3DFNQHWW GLG QRW SUHSDUH DQG VLJQ DQ DIILGDYLW IRU :LOOLDPVjV VWDWH SRVWFRQYLFWLRQ SURFHHGLQJV RU IRU WKH GLVWULFW FRXUW :LOOLDPVY&R\OH 1R 1R :LOOLDPVY&R\OH WKDWEXWIRUFRXQVHOjVXQSURIHVVLRQDOHUURUVWKHUHVXOWV FODLPLVEDVHGRQHYLGHQFHRXWVLGHWKHUHFRUGWKHGHOLQTXHQF\ RIWKHSURFHHGLQJZRXOGKDYHEHHQGLIIHUHQWjl LQUDLVLQJLWLVDEVROYHG$SSDUHQWO\WKH2KLRFRXUWVGLGQRW DJUHH 7KH FRXUW RI DSSHDOV LQ GLVPLVVLQJ KLV IRXUWK 3&5 s$DW FLWLQJ6WULFNODQG86DW DSSHDOKHOGm7KHFODLPVUDLVHGLQWKLVDVVLJQPHQWRIHUURU FRXOG KDYH EHHQ UDLVHG RQ DSSHDO RU WKURXJK WKH SUHYLRXV ,,$1$/<6,6 SHWLWLRQV IRU SRVWFRQYLFWLRQ UHOLHIl :LOOLDPV :/ DW 7KHWULDOFRXUWjVUXOLQJZDVVLPLODU7KHFRXUWV $IWHU FDUHIXO UHYLHZ , FRQFOXGH WKDW WKH 2KLR &RXUW RI SUHVXPDEO\EDVHGWKHVHKROGLQJVRQWKHJURXQGWKDW:LOOLDPV $SSHDOVj GHFLVLRQ RQ :LOOLDPVj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jVDWWRUQH\VZDV LVSURFHGXUDOO\EDUUHG QRWGHILFLHQWEHFDXVHWKHDWWRUQH\VKDGDWKHRU\RIPLWLJDWLRQ DQGSUHVHQWHGVRPH DOWKRXJKYHU\OLWWOH HYLGHQFHLQVXSSRUW %s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jV MXU\ PLWLJDWLQJIDFWRUV7KXV:LOOLDPVj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jVDWWRUQH\V VKRXOG KDYH EHHQ LQVWUXFWHG WKDW D OLIH LPSULVRQPHQW ZHUH GHILFLHQW LQ FROOHFWLQJ UHDGLO\ DYDLODEOH HYLGHQFH RI VHQWHQFHGRHVQRWUHTXLUHDXQDQLPRXVYRWH1RWRQO\ PLWLJDWLQJ IDFWRUV WKDW :LOOLDPVjV DWWRUQH\V SURYLGHG KLP ZDVWKLVLVVXHQRWEULHIHG DQGGHFLGHGEHORZEXWWKLV HIIHFWLYHDVVLVWDQFHRIFRXQVHOGXULQJWKHVHQWHQFLQJSKDVHRI DOOHJHG UHDGLQJ RI 5& ' LJQRUHV WKH KLV WULDO ,Q RWKHU ZRUGV WKH 2KLR &RXUW RI $SSHDOV ZDV REMHFWLYHO\ XQUHDVRQDEOH LQ IDLOLQJ WR UHFRJQL]H WKDW WKH DIILGDYLWV LQWURGXFHG LQ WKH SRVWFRQYLFWLRQ SURFHHGLQJV UHYHDOHG WKH IDLOXUH E\ :LOOLDPVjV DWWRUQH\V DGHTXDWHO\ WR 7KH IDLOXUH LV DOVR WURXEOLQJ LQ OLJKW RI 2KLRjV UHTXLUHPHQW WKDW ZKHQ D WULDO FRXUW mGLVPLVVHV >D@ SHWLWLRQ LW PDNH DQG ILOH ILQGLQJV RI IDFW LQYHVWLJDWHKLVEDFNJURXQGIRUPHDQLQJIXOPLWLJDWLQJIDFWRUV DQG FRQFOXVLRQV RI ODZ ZLWK UHVSHFW WR VXFK GLVPLVVDOl 2KLR 5HY &RGH DQGWRSUHSDUHPLWLJDWLRQZLWQHVVHVIRUWKHLUWHVWLPRQ\GXULQJ $QQ & VHH DOVR 6WDWH Y /HVWHU 1(G 2KLR :LOOLDPVY&R\OH 1R 1R :LOOLDPVY&R\OH UHTXLUHPHQWVHWIRUWKLQ&ULP5 $ WKDWDOOYHUGLFWV DQDWWRUQH\WRSURYLGHHIIHFWLYHDVVLVWDQFHRIFRXQVHOlDQG LQFULPLQDOSURFHHGLQJVEHXQDQLPRXV)XUWKHUPRUHZH WKDW m:LOOLDPV µIDLO>HG@ WR H[SODLQ KRZ WKH ODFN RI UHMHFWHGWKLVDUJXPHQWLQsHQNLQVDQGKHOGWKDW m,Q FRQVXOWDWLRQDIIHFWHGWKHRXWFRPHRIWKH>KHDULQJ@jls$DW UHWXUQLQJ D VHQWHQFH RI OLIH LPSULVRQPHQW XQGHU 5& FLWDWLRQRPLWWHG 7KHGLVWULFWFRXUWDOVRGHWHUPLQHGWKDW ' WKHMXU\jVYHUGLFWPXVWEHXQDQLPRXVl :LOOLDPV KDG IDLOHG WR mLGHQWLI\ WKH LQIRUPDWLRQ LQ >KLV@ UHFRUGV >IURP VFKRRO DQG WKH MXYHQLOH DQG FRUUHFWLRQDO :LOOLDPV 1(GDW FLWDWLRQRPLWWHG :HGRQRW IDFLOLWLHVLQZKLFKKHKDGEHHQLQFDUFHUDWHG@WKDWZRXOGKDYH EHOLHYH WKDW ZH FDQ UHDG WKLV GHFLVLRQ DV UHVWLQJ RQ D FRQYLQFHG D MXU\ WR VSDUH KLV OLIHl DQG WKDW :LOOLDPVjV SURFHGXUDO EDU DV LW VLPSO\ VD\V LQ SDVVLQJ WKDW :LOOLDPV DWWRUQH\VZHUHQRWmLQHIIHFWLYHIRUQRWUHTXHVWLQJDVVLVWDQFH IDLOHG WR FRPSO\ ZLWK WKH SURFHGXUDO UXOHV $FFRUGLQJO\ RIµDSV\FKRORJLFDOH[SHUWjlLQOLJKWRI:LOOLDPVjVUHIXVDOWR :LOOLDPVLVQRWEDUUHGIURPUDLVLQJWKHLVVXHQRZ FRRSHUDWHZLWKSV\FKRORJLVWVGXULQJDSUHWULDOFRPSHWHQF\ KHDULQJ DQG KLV UHIXVDO mWR VSHDN LOO RI KLV IDPLO\l DW KLV %HFDXVHZHILQGWKDWZHDUHQRWSURFHGXUDOO\EDUUHGIURP VHQWHQFLQJKHDULQJs$DW UHYLHZLQJHLWKHUFODLPZHPRYHWR:LOOLDPVjVDVVLJQPHQWV RIHUURU )LQDOO\ WKH GLVWULFW FRXUW KHOG WKDW WKH SUHVHQWDWLRQ RI PLWLJDWLQJ HYLGHQFH E\ :LOOLDPVjV DWWRUQH\V ZDV QRW ,,,:LOOLDPVjV&ODLPV LQHIIHFWLYH ,Q VR GRLQJ WKH GLVWULFW FRXUW QRWHG WKDW :LOOLDPVjV DWWRUQH\V SUHVHQWHG WZR WKHRULHV RI PLWLJDWLRQ $(YLGHQWLDU\+HDULQJ WKDW:LOOLDPVjVWURXEOHGFKLOGKRRGKDGOHGKLPWRDOLIHRI FULPHDQGWKDWWKHFULPLQDOMXVWLFHV\VWHPKDGOHW:LOOLDPV ,QKLVILUVWDVVLJQPHQWRIHUURU:LOOLDPVDOOHJHVWKHGLVWULFW GRZQ E\ QRW UHKDELOLWDWLQJ KLP 7KH GLVWULFW FRXUW IXUWKHU FRXUWVKRXOGKDYHJUDQWHGKLPDQHYLGHQWLDU\KHDULQJRQKLV VWDWHG WKDW m:LOOLDPV KLPVHOI WKZDUWHG WKH IRUFH RI WKHVH %UDG\DQGLQHIIHFWLYHDVVLVWDQFHRIFRXQVHOFODLPV,QSRLQW DUJXPHQWVE\UHIXVLQJWRGLVFORVHDQ\UHOHYDQWLQIRUPDWLRQl RI IDFW WKH GLVWULFW FRXUW GLG JUDQW DQG SURFHHG ZLWK DQ s$DW7KHGLVWULFWFRXUWFRQFHGHGWKHZHDNQHVVHVRIWKH HYLGHQWLDU\ KHDULQJ $W WKH KHDULQJ :LOOLDPV LQWURGXFHG SUHKHDULQJLQYHVWLJDWLRQDQGWKHSUHVHQWDWLRQRIPLWLJDWLQJ WKLUW\H[KLELWVLQFOXGLQJDQDIILGDYLWIURP$QGHUVRQFODLPLQJ HYLGHQFHKRZHYHUVWDWLQJ WKDW KH OLHG DW :LOOLDPVjV WULDO :LOOLDPV DOVR FDOOHG WZR ZLWQHVVHV LQFOXGLQJ D PLWLJDWLRQ H[SHUW ZKR WHVWLILHG WKDW ,QWKHHQGWKH&RXUWDJUHHVWKDWWKHGHIHQVHSUHVHQWHG :LOOLDPVjVWULDOFRXQVHOZHUHLQHIIHFWLYHLQSUHSDULQJIRUWKH OLWWOH LIDQ\ UHOHYDQWPLWLJDWLQJHYLGHQFHWRWKHMXU\DW PLWLJDWLRQVWDJHRIWKHWULDO:LOOLDPVGLGQRWKRZHYHUFDOO WKHKHDULQJ+RZHYHUWKLVDEVHQFHUHVXOWHGPRUHIURP $QGHUVRQDVDZLWQHVV+LVFRXQVHOLQIRUPHGWKHFRXUWDWD WKHODFNRIVXFKHYLGHQFHWKDQIURPWKHLQHIIHFWLYHQHVVRI SUHKHDULQJFRQIHUHQFHWKDW$QGHUVRQZDVXQDYDLODEOHLQD :LOOLDPVjFRXQVHO7REHVXUHGHIHQVHFRXQVHOFRXOG SV\FKLDWULF ZDUG DW $OOHQ &RUUHFWLRQDO ,QVWLWXWLRQ $V LW KDYHEHHQPRUHWKRURXJKLQWKHSUHKHDULQJLQYHVWLJDWLRQ WXUQHGRXW$QGHUVRQZDVQRWLQDSV\FKLDWULFZDUGEXWLQWKH DQGWKHSUHVHQWDWLRQRIHYLGHQFH7KHGHIHQVHWKHRULHVRI PLWLJDWLRQ FRXOG KDYH EHHQ EHWWHU GHYHORSHG 1HYHUWKHOHVV LQ OLJKW RI WKH DEVHQFH RI DQ\ PLWLJDWLQJ HYLGHQFH WKH &RXUW FRQFOXGHV WKDW HYHQ LI FRXQVHOjV :LOOLDPVjV EULHI WR WKH FRXUW RI DSSHDOV LV QRW LQ WKH DSSHQGL[ EXW WKH SHUIRUPDQFH µIHOO EHORZ DQ REMHFWLYH VWDQGDUG RI 2KLR &RXUW RI $SSHDOVjV GHFLVLRQ LQ KLV GLUHFW DSSHDO GHFLVLRQ GLVFXVVHV UHDVRQDEOHQHVVj WKHUH LV QRW µ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jV FODLPV 6SHFLILFDOO\ WKH FRXUW IRXQG WKDW WKHOHJLVODWXUHFRQVLGHUHGWREHPLWLJDWLQJ7KHUHIRUH :LOOLDPVKDGIDLOHGWRGHYHORSWKHVWDWHUHFRUGDQGGLGQRW ZH GR QRW EHOLHYH WKDW FRXQVHOjV SHUIRUPDQFH ZDV PHHWRQHRIWKHH[FHSWLRQVLQ H IRUREWDLQLQJDQ GHILFLHQWE\IDLOLQJWRSUHVHQWFHUWDLQHYLGHQFHGXULQJWKH HYLGHQWLDU\ KHDULQJ XQGHU WKRVH FLUFXPVWDQFHV WKH UHTXHVW PLWLJDWLRQ SKDVH RI WKH WULDO 7KH DEVHQFH RI VXFK ZDVQRWEDVHGXSRQDQHZFRQVWLWXWLRQDOUXOHQRUZDVLWEDVHG WHVWLPRQ\GLGQRWSUHMXGLFH:LOOLDPVVRDVWRUHQGHUWKH XSRQQHZO\GLVFRYHUHGHYLGHQFHm7KHHYLGHQFHSUHVHQWHGDW UHVXOWXQUHOLDEOH WKH>HYLGHQWLDU\@KHDULQJZDVQRWQHZO\GLVFRYHUHGPDWHULDO HYLGHQFHDWEHVWLWFRQVLVWHGRIQHZLQWHUSUHWDWLRQVRI 6WDWHY:LOOLDPV1(G 2KLR&W$SS HYLGHQFH SUHVHQWHG RU QRW SUHVHQWHG DW :LOOLDPVj WULDO FLWDWLRQVRPLWWHG HPSKDVLVDGGHG :KLOH WKH LQWHUSUHWDWLRQV DUH DUJXDEO\ QHZ WKH µIDFWXDO SUHGLFDWHjIURPZKLFKWKH\DUHGHULYHGLVQRWls$DW 7KH GLVWULFW FRXUW DOVR FRQFOXGHG WKDW :LOOLDPV KDG QRW EHHQ GHQLHG HIIHFWLYH DVVLVWDQFH RI FRXQVHO GXULQJ WKH 'HVSLWHWKHFRXUWjVFRQFOXVLRQWKDWLWZDVSURKLELWHGIURP VHQWHQFLQJSKDVHRIKLVWULDO6SHFLILFDOO\WKHGLVWULFWFRXUW XVLQJ WKH HYLGHQFH SUHVHQWHG DW WKH HYLGHQWLDU\ KHDULQJ LW GHWHUPLQHGWKDW SURFHHGHG WR HYDOXDWH WKH HYLGHQFH ,W EHJDQ LQ IRRWQRWH WZHQW\VL[ m$V D SUDFWLFDO PDWWHU ZKHWKHU WKH &RXUW WKH LQIRUPDWLRQ FRQWDLQHG LQ >WKH SRVWFRQYLFWLRQ@ GLVUHJDUGV WKH HYLGHQFH UHFHLYHG DW WKH KHDULQJ LV RI QR DIILGDYLWV>RIIDPLO\PHPEHUVIULHQGVDQGSURIHVVLRQDOV FRQVHTXHQFHIRUDVZLOOVKRUWO\EHGLVFXVVHG:LOOLDPVLVQRW ZDV@VLPSO\DGGLWLRQDOHYLGHQFHRI:LOOLDPVjWURXEOHG HQWLWOHGWRUHOLHIHYHQXSRQFRQVLGHUDWLRQRIVXFKHYLGHQFHl FKLOGKRRG n D WRSLF WKDW FRXQVHO SUHVHQWHG DW WKH s$ *LYLQJ :LOOLDPV HYHU\ SRVVLEOH DGYDQWDJH WKH PLWLJDWLRQKHDULQJ7KDW>FRXQVHO@FKRVHWRFDOODV GLVWULFWFRXUWLQFOXGHGWKHKHDUVD\DIILGDYLWLQLWVHYDOXDWLRQ ZLWQHVVHV WKRVH SHUVRQV GLUHFWO\ LQYROYHG LQ KLV DV ZHOO VWDWLQJ m$QGHUVRQjV DIILGDYLW HYHQ LI LW ZHUH QRW XSEULQJLQJ KLV IDWKHU DQG VLVWHU WR HVWDEOLVK WKH KHDUVD\ PXVW EH YLHZHG ZLWK H[WUHPH VXVSLFLRQ FRQGLWLRQVRIKLVFKLOGKRRGUDWKHUWKDQUHO\LQJXSRQWKH >$QGHUVRQjV@LQDGPLVVLEOHDIILGDYLWLVLQVXIILFLHQWWRHVWDEOLVK WHVWLPRQ\RIPRUHH[WHQGHGIDPLO\DQGIULHQGVZDVD WKDW WKH 6WDWH KDG SURPLVHG KLP D UHGXFHG VHQWHQFH LQ UHDVRQDEOH WDFWLFDO FKRLFH (YHQ DVVXPLQJ WKDW H[FKDQJH IRU WHVWLPRQ\ DJDLQVW :LOOLDPVl s$ DW FRXQVHOjVIDLOXUHWRLQWHUYLHZPRUHRI:LOOLDPVjIDPLO\ IRRWQRWHVRPLWWHG ,QHYDOXDWLQJWKHLQHIIHFWLYHDVVLVWDQFH PHPEHUVDQGIULHQGVZDVXQUHDVRQDEOHWKHUHLVQRWKLQJ RIFRXQVHODUJXPHQWWKHGLVWULFWFRXUWVDLGm:LOOLDPVZRXOG LQ WKH UHFRUG WR VXJJHVW WKDW KDG WKLV DGGLWLRQDO IDLU VLF QR EHWWHU HYHQ ZHUH WKH &RXUW WR FRQVLGHU WKH LQIRUPDWLRQ EHHQ SUHVHQWHG WR WKH MXU\ WKHLU HYLGHQFHSUHVHQWHGDWWKHHYLGHQWLDU\KHDULQJls$DW UHFRPPHQGDWLRQZRXOGKDYHEHHQGLIIHUHQW Q,WWKHQZHQWRQWRFRQVLGHUWKDWHYLGHQFHILQGLQJWKDW WKHPLWLJDWLRQH[SHUWjVWHVWLPRQ\GLGQRWVXSSRUWDILQGLQJRI s$DW :LWKUHJDUGWRWKHDOOHJDWLRQVWKDW:LOOLDPVjV GHILFLHQWSHUIRUPDQFHE\:LOOLDPVjVFRXQVHORUWKHSUHMXGLFH DWWRUQH\VIDLOHGWRSUHSDUHZLWQHVVHVIRUWKHLUWHVWLPRQ\WKH UHTXLUHGWRRYHUWXUQWKHVHQWHQFH GLVWULFW FRXUW KHOG WKDW mWKHUH LV QR PLQLPXP QXPEHU RI PHHWLQJVEHWZHHQFRXQVHODQGZLWQHVVHVQHFHVVDU\WRSUHSDUH :LOOLDPVY&R\OH 1R 1R :LOOLDPVY&R\OH 1HYHUWKHOHVV :LOOLDPV DUJXHV WKDW KH LV HQWLWOHG WR DQ WKDWKHZDVWZHQW\IRXU\HDUVROGVHHs$DW WKDWKH HYLGHQWLDU\KHDULQJ,JQRULQJWKH RQO\FRQFOXVLRQRQHFDQ ILUVWEHFDPHLQYROYHGZLWKWKHODZDWDJHQLQHIRUUXQQLQJ UHDFKIURPUHDGLQJWKHGLVWULFWFRXUWjVRSLQLRQWKDWWKHFRXUW DZD\IURPKRPHVHHs$DW WKDWKHVSHQWPDQ\RI FRQVLGHUHGWKHHYLGHQFH:LOOLDPVEHJLQVE\REVHUYLQJWKDW KLVIRUPDWLYH\HDUVDWGLIIHUHQWER\VjLQVWLWXWLRQVVHHs$DW KLVFDVHLVRXWVLGHWKHVFRSHRI H EHFDXVHKHGLG DQGWKDWWKHKLJKHVWJUDGHKHKDGFRPSOHWHGZDVWKH QRW IDLO WR GHYHORS WKH UHFRUG LQ VWDWH FRXUW 5DWKHU KH QLQWKJUDGHVHHs$DW:LOOLDPVDOVRWHVWLILHGWKDW DVVHUWVWKHVWDWHFRXUWVLQFRUUHFWO\UHIXVHGWRDOORZKLPWR DOWKRXJKKHKDGWKHRSWLRQRIJRLQJWRMDLORUVWD\LQJDWKRPH GHYHORS WKH UHFRUG %HFDXVH WKH FDVH LV QRW JRYHUQHG E\ ZKHQKHZDVDUUHVWHGIRUWKHILUVWWLPHDVDQDGXOWKHZHQWWR H KHUHDVRQVZHPXVWDQDO\]HKLVUHTXHVWIRUDQ MDLOmWRWU\DQGKXUW>KLV@IDPLO\WRVHHLIWKH\UHDOO\FDUHGl HYLGHQWLDU\KHDULQJXQGHUWKHUXOHVWKDWJRYHUQHGSUH$('3$ s$DW UHTXHVWV QDPHO\ 7RZQVHQG Y 6DLQ 86 $QG XQGHU WKRVH UXOHV KH FRQFOXGHV KH LV HQWLWOHG WR DQ 7KH ODVW VWDWH FRXUW WR UHQGHU D ZULWWHQ GHFLVLRQ RQ HYLGHQWLDU\KHDULQJRQERWKLVVXHV:HGLVDJUHH :LOOLDPVj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jV FRXQVHO SHUIRUPDQFH ZDV QRW GHILFLHQW ,W GRQH,QKRSHZHVXSSRVHWKDWWKHGLVWULFWFRXUWZRXOGORRN H[SODLQHG PRUHIDYRUDEO\RQ$QGHUVRQjVVWDWHPHQWLIKHZHUHWKHUHLQ SHUVRQ%XWWKHGLVWULFWFRXUWjVRSLQLRQVXJJHVWVRWKHUZLVH +HUH:LOOLDPVSUHVHQWHGDYDULHW\RIZLWQHVVHVLQWKH ,W GLG QRW VD\ WKDW $QGHUVRQjV VWDWHPHQW ZDV LQFUHGLEOH SHQDOW\ SKDVH 2OLYLD 3DFNQHWW WKH PRWKHU RI RQH RI EHFDXVH$QGHUVRQZDVQRWEHIRUHWKHFRXUW UDWKHULWIRXQGWKH :LOOLDPVj IULHQGV WHVWLILHG WKDW :LOOLDPV KDV DOZD\V VWDWHPHQWODFNHGFUHGLELOLW\EHFDXVH$QGHUVRQZDLWHGQLQH EHHQ ZHOOEHKDYHG DQG UHVSHFWIXO DW KRPH 'HEUD :LOOLDPV GHIHQGDQWjV VLVWHU WHVWLILHG DERXW WKH LQVWDELOLW\RIGHIHQGDQWjVKRPHOLIH/HZLV:LOOLDPV6U GHIHQGDQWjVIDWKHUWHVWLILHGWKDWKHGLGQRWVSHQGPXFK 8QGHU 7RZQVHQG D SHWLWLRQHU LV HQWLWOHG WR DQ HYLGHQWLDU\ KHDULQJ WLPHZLWKGHIHQGDQWDQGWKDWGHIHQGDQWjVPRWKHUUHMHFWHG LI KLP'HIHQGDQWKLPVHOISURIIHUHGXQVZRUQWHVWLPRQ\RI WKH PHULWV RI WKH IDFWXDO GLVSXWH ZHUH QRW UHVROYHG LQ WKH VWDWH KHDULQJ WKH VWDWH IDFWXDO GHWHUPLQDWLRQ LV QRW IDLUO\ KLVFULPLQDOFRQGXFWWKDWVWDUWHGDWWKHDJHRIQLQHZKLFK VXSSRUWHG E\ WKH UHFRUG DV D ZKROH WKH IDFWILQGLQJ ZDVGHVLJQHGWRJHWKLVIDPLO\jVDWWHQWLRQ+HVWDWHGWKDW SURFHGXUH HPSOR\HG E\ WKH VWDWH FRXUW ZDV QRW DGHTXDWH WR KHZDVEODPHGIRUDOORIWKHIDPLO\j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jVKRXVHDQGZKHQKLV KDYH ZH IRXQG DQ\ WKDW ZRXOG LQGLFDWH VXFK D KHDULQJ LV PRWKHUSXWKLPRXW WKDWVKHKDGQHYHUNQRZQ:LOOLDPVWREH UHTXLUHG 7KH SULQFLSOHV DSSOLFDEOH WR WKLV VLWXDWLRQ YLROHQW DQGWKDWVKHEHOLHYHG:LOOLDPVWREHDUHVSHFWIXODQG PRUHRYHUPLOLWDWHDJDLQVWVXFKDKHDULQJ6HH0F'RQDOGY mH[FHOOHQWIHOORZlsRLQW$SSHQGL[ ms$l DW2Q sRKQVRQ )G WK&LU :LOOLDPVKDV FURVVH[DPLQDWLRQKRZHYHU0V3DFNQHWWUHYHDOHGWKDWVKH KDGWKHRSSRUWXQLW\IRUDIXOODQGIDLUKHDULQJLQIHGHUDOFRXUW ZDVXQDZDUHRI:LOOLDPVjVUHSHDWHGWURXEOHVLQMXYHQLOHFRXUW ,IZHZHUHWRDQDORJL]H:LOOLDPVjVUHTXHVWWRRQHJRYHUQHG DQG KLV DUUHVWV DV DQ DGXOW IRU JUDQG WKHIW DQG DJJUDYDWHG E\ H PRUHRYHU:LOOLDPVZRXOGQRWEHHQWLWOHGWRD UREEHU\s$DW VHFRQG KHDULQJ $Q\ XQGHYHORSHG IDFWXDO DOOHJDWLRQVWKH DEVHQFHRIWHVWLPRQ\E\$QGHUVRQDUHDUHVXOWRI:LOOLDPVjV 'HERUDK:LOOLDPVZDVWKHVHFRQGZLWQHVVWRWHVWLI\6KH IDLOXUH:LOOLDPVGRHVQRWPHHWRQHRIWKHOLVWHGH[FHSWLRQV WHVWLILHGWKDWKHUSDUHQWVVHSDUDWHGZKHQ:LOOLDPVZDVDERXW $FFRUGLQJO\ZHUHMHFW:LOOLDPVjVDUJXPHQWWKDWKHLVHQWLWOHG VL[\HDUVROG WKDW:LOOLDPVKDGQRVWDEOHKRPH DQGWKDWKH WRDVHFRQGIHGHUDOHYLGHQWLDU\KHDULQJ RIWHQVOHSWRYHUDWIULHQGVjKRPHVRULQKHUFDUs$DW $FFRUGLQJWR'HERUDK:LOOLDPVKHUEURWKHUjVDWWRUQH\V %6WDQGDUGVRI5HYLHZ ZHUHGHUHOLFWLQSUHSDULQJKHUWRJLYHWHVWLPRQ\EHIRUHWKH MXU\KDYLQJRQO\VSRNHQWRKHUIRUILYHPLQXWHVLPPHGLDWHO\ %HFDXVH WKH $('3$ DSSOLHV WR :LOOLDPVjV SHWLWLRQ VHH EHIRUH VKH WHVWLILHG DQG DGYLVLQJ KHU RQO\ WR mH[SODLQ :LOOLDPVY&R\OH)G WK&LU ZHUHYLHZ >:LOOLDPVjV@OLIHlDWWKHKHDULQJs$DW KLV SHWLWLRQ XQGHU WKH VWDQGDUGV VHW IRUWK LQ 86& G 7KDWVHFWLRQSURYLGHV /HZLV :LOOLDPV 6U IROORZHG 'HERUDK :LOOLDPV DW WKH VHQWHQFLQJ KHDULQJ +H WHVWLILHG WKDW KH mZDVQjW ZLWK WKH $QDSSOLFDWLRQIRUDZULWRIKDEHDVFRUSXVRQEHKDOIRI IDPLO\ DV PXFK DV PD\EH >KH@ VKRXOG KDYH EHHQ EXW DSHUVRQLQFXVWRG\SXUVXDQWWRWKHMXGJPHQWRID6WDWH ZKHQHYHU>:LOOLDPV@FDOOHG>KLP@RUDQ\WKLQJ>KH@ZDVWKHUH FRXUWVKDOOQRWEHJUDQWHGZLWKUHVSHFWWRDQ\FODLPWKDW :KHQHYHU>KH@FRXOGEHZLWK>KLP@ls$DW /HZLV ZDVDGMXGLFDWHGRQWKHPHULWVLQ6WDWHFRXUWSURFHHGLQJV :LOOLDPV6UDOVRWHVWLILHGWKDWKHIHOWWKDW:LOOLDPVmFDUHG XQOHVVWKHDGMXGLFDWLRQRIWKHFODLP PRUHIRUKLVPRWKHUWKHQ>VLF@KHGLGKLPVHOIEXWWLPHVDVLI UHVXOWHG LQ D GHFLVLRQ WKDW ZDV FRQWUDU\ WR RU KHZDVEHLQJUHMHFWHGE\KLVPRWKHUIRUVRPHUHDVRQls$DW LQYROYHG DQ XQUHDVRQDEOH DSSOLFDWLRQ RI FOHDUO\ $FFRUGLQJWR/HZLV:LOOLDPV6UKLVVRQjVDWWRUQH\V HVWDEOLVKHG)HGHUDOODZDVGHWHUPLQHGE\WKH6XSUHPH mGLGQRWIXOO\H[SODLQWR>KLP@WKHSXUSRVHRI>KLV@WHVWLPRQ\ &RXUWRIWKH8QLWHG6WDWHV RU RUWRZKDW>KH@ZRXOGEHWHVWLI\LQJls$DW2QWRSRI UHVXOWHG LQ D GHFLVLRQ WKDW ZDV EDVHG RQ DQ WKDW /HZLV :LOOLDPV 6U FODLPHG WKDW WKH DWWRUQH\V XQUHDVRQDEOH GHWHUPLQDWLRQ RI WKH IDFWV LQ OLJKW RI WKH LQWHUYLHZHGKLPIRUWZHQW\ILYHWRWKLUW\PLQXWHVRQO\DQG HYLGHQFHSUHVHQWHGLQWKH6WDWHFRXUWSURFHHGLQJV DVNHGKLPYHU\IHZTXHVWLRQVDERXW:LOOLDPVjVEDFNJURXQG s$DW 86& G 7KXV WKH 6XSUHPH &RXUW KDV KHOG m>W@KHWKUHVKROGTXHVWLRQXQGHU>WKLVVHFWLRQ@LVZKHWKHU>WKH :LOOLDPVZDVWKHODVWSHUVRQWRWDNHWKHVWDQGDQGJDYHDQ SHWLWLRQHU@ VHHNV WR DSSO\ D UXOH RI ODZ WKDW ZDV FOHDUO\ XQVZRUQVWDWHPHQWWRWKHMXU\2QWKHVWDQG:LOOLDPVVWDWHG HVWDEOLVKHG DW WKH WLPH KLV VWDWHFRXUW FRQYLFWLRQ EHFDPH :LOOLDPVY&R\OH 1R 1R :LOOLDPVY&R\OH ILQDOl:LOOLDPVY7D\ORU 86 $UXOH % 7KHVWDWXWRU\PLWLJDWLQJIDFWRUVWKDW RI ODZ LV FOHDUO\ HVWDEOLVKHG LI LW LV GLUHFWO\ EDVHG RQ D PD\ FRQVLGHUHG E\ WKH MXU\ LQ D FDSLWDO FDVH LQFOXGH WKH mKROGLQJ>@DVRSSRVHGWRWKHGLFWDRI>WKH6XSUHPH&RXUW@DV IROORZLQJ RIWKHWLPHlWKHFRQYLFWLRQEHFDPHILQDO,GDW :KHWKHU WKH YLFWLP RI WKH RIIHQVH LQGXFHG RU $GHFLVLRQFDQEHFRQWUDU\WRVXFKODZLQRQHRIWZRZD\V IDFLOLWDWHGLW )LUVWZKHQWKHVWDWHFRXUWFRQIURQWVIDFWVWKDWDUHPDWHULDOO\ LQGLVWLQJXLVKDEOHIURPDGHFLVLRQRIWKH6XSUHPH&RXUWDQG :KHWKHULWLVXQOLNHO\WKDWWKHRIIHQVHZRXOGKDYH QHYHUWKHOHVVDUULYHVDWDUHVXOWGLIIHUHQWIURPLWVSUHFHGHQW EHHQFRPPLWWHGEXWIRUWKHIDFWWKDWWKH RIIHQGHU 6HHLGDW6HFRQGZKHQWKHVWDWHFRXUWmDSSOLHVDUXOH ZDVXQGHUGXUHVVFRHUFLRQRUVWURQJSURYRFDWLRQ WKDWFRQWUDGLFWVWKHJRYHUQLQJODZVHWIRUWKLQl6XSUHPH&RXUW FDVHV,GDW :KHWKHUDWWKHWLPHRIFRPPLWWLQJWKHRIIHQVHWKH RIIHQGHU EHFDXVH RI D PHQWDO GLVHDVH RU GHIHFW $ GHFLVLRQ LV DQ XQUHDVRQDEOH DSSOLFDWLRQ RI FOHDUO\ ODFNHG VXEVWDQWLDO FDSDFLW\ WR DSSUHFLDWH WKH HVWDEOLVKHGIHGHUDOODZLILWLGHQWLILHVWKHFRUUHFWSULQFLSOHRI FULPLQDOLW\RIKLVFRQGXFWRUWRFRQIRUPKLVFRQGXFW ODZ EXW XQUHDVRQDEO\ DSSOLHV LW 6HH LG DW m>$@Q WRWKHUHTXLUHPHQWVRIWKHODZ XQUHDVRQDEOHDSSOLFDWLRQRIIHGHUDOODZLVGLIIHUHQWIURPDQ LQFRUUHFWDSSOLFDWLRQRIIHGHUDOODZ8QGHU G jV 7KH\RXWKRIWKHRIIHQGHU µXQUHDVRQDEOHDSSOLFDWLRQjFODXVHWKHQDIHGHUDOKDEHDVFRXUW PD\QRWLVVXH>D@ZULWVLPSO\EHFDXVHWKDWFRXUWFRQFOXGHVLQ 7KHRIIHQGHUjVODFNRIDVLJQLILFDQWKLVWRU\RISULRU LWVLQGHSHQGHQWMXGJPHQWWKDWWKHUHOHYDQWVWDWHFRXUWGHFLVLRQ FULPLQDOFRQYLFWLRQVDQGGHOLQTXHQF\DGMXGLFDWLRQV DSSOLHG FOHDUO\ HVWDEOLVKHG IHGHUDO ODZ HUURQHRXVO\ RU LQFRUUHFWO\ 5DWKHU WKDW DSSOLFDWLRQ PXVW DOVR EH ,IWKHRIIHQGHUZDVDSDUWLFLSDQWLQWKHRIIHQVHEXW XQUHDVRQDEOHl,GDW RULJLQDOHPSKDVLV QRW WKH SULQFLSDO RIIHQGHU WKH GHJUHH RI WKH RIIHQGHUjVSDUWLFLSDWLRQLQWKHRIIHQVHDQGWKHGHJUHH :HSDXVHKHUHWRHPSKDVL]HWKDWWKH&RXUWGLGQRWFRQWUDU\ RIWKHRIIHQGHUjVSDUWLFLSDWLRQLQWKHDFWVWKDWOHGWR WR VRPH RSLQLRQV IURP WKLV DQG RWKHU FLUFXLWV KROG WKDW D WKHGHDWKRIWKHYLFWLP $Q\ RWKHU IDFWRUV WKDW DUH UHOHYDQW WR WKH LVVXH RI :H SDXVH KHUH WR QRWH DQ DSSDUHQW GLVFUHSDQF\ LQ WKH 6XSUHPH ZKHWKHUWKHRIIHQGHUVKRXOGEHVHQWHQFHGWRGHDWK 2+,2 5(9 &2'( % &RXUWjV RSLQLRQV sXVWLFH 6WHYHQV ZURWH IRU WKH PDMRULW\ LQ SDUWV , ,,, DQG ,9 RI WKH RSLQLRQ DQG sXVWLFH 2j&RQQRU ZURWH IRU WKH PDMRULW\ LQ SDUW ,, RI WKH RSLQLRQ :LOOLDPV Y 7D\ORU GHDOW ZLWK WKH 9LUJLQLD 6XSUHPH &RXUWjV RSLQLRQ RQ FROODWHUDO UHYLHZ $V QRWHG DERYH LQ SDUW ,,, RI KLV 'XULQJ WKH VHQWHQFLQJ SKDVH RI :LOOLDPVjV WULDO KLV RSLQLRQ sXVWLFH 6WHYHQV ZURWH WKDW D ODZ LV FOHDUO\ HVWDEOLVKHG LI LW ZDV DWWRUQH\VSUHVHQWHGWKHWHVWLPRQ\RIWKUHHSHUVRQV 2OLYLD GHFLGHG DW WKH WLPH :LOOLDPVjV FRQYLFWLRQ EHFDPH ILQDO ,Q SDUW ,, RI KHU 6PLWK3DFNQHWWWKHPRWKHURIRQHRI:LOOLDPVjVFKLOGKRRG RSLQLRQ DOVR IRU WKH PDMRULW\ sXVWLFH 2j&RQQRU ZURWH WKDW ZH ORRN WR WKH IULHQGV 'HERUDK:LOOLDPV:LOOLDPVjV\RXQJHUVLVWHU DQG /HZLV:LOOLDPV6U:LOOLDPVjVELUWKIDWKHU:LOOLDPV mUHOHYDQW VWDWH FRXUWGHFLVLRQl WR VHH ZKHWKHU D ODZ ZDV FOHDUO\ HVWDEOLVKHG ,Q :LOOLDPV Y 7D\ORU WKH UHOHYDQW FDVH SUHVXPDEO\ ZDV WKH 9LUJLQLD 6XSUHPH &RXUWjV GHFLVLRQ RQ FROODWHUDO UHYLHZ 7KHVH WKHQ JDYH XQVZRUQ WHVWLPRQ\ EHIRUH WKH MXU\ RQ KLV RZQ VWDWHPHQWV ERWK IRU WKH PDMRULW\ DSSHDU LQFRQVLVWHQWDW OHDVW LQ WKH FDVH EHKDOI RI :LOOLDPV Y 7D\ORU DQG LQ WKH SUHVHQW FDVH %HFDXVH sXVWLFH 6WHYHQVj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jVEDFNJURXQG DSSOLFDWLRQRIWKHODZ7KH&RXUWEHJDQ DQGFKDUDFWHUGXULQJWKHVHQWHQFLQJSKDVHRIDFDSLWDOWULDO /RFNHWWY2KLR86 $VWKH6XSUHPH 7KH)RXUWK&LUFXLWjVLQWHUSUHWDWLRQRIWKHmXQUHDVRQDEOH &RXUW KDV UHSHDWHGO\ UHFRJQL]HG EHFDXVH WKH DGYHUVDULDO DSSOLFDWLRQlFODXVHRI G LVJHQHUDOO\FRUUHFW WHVWLQJSURFHVVmJHQHUDOO\ZLOOQRWIXQFWLRQSURSHUO\XQOHVV 7KDWFRXUWKHOGLQ*UHHQWKDWDVWDWHFRXUWGHFLVLRQFDQ GHIHQVHFRXQVHOKDVGRQHVRPHLQYHVWLJDWLRQµFRXQVHOKDV LQYROYH DQ mXQUHDVRQDEOH DSSOLFDWLRQl RI WKLV &RXUWjV D GXW\ WR PDNH UHDVRQDEOH LQYHVWLJDWLRQV RU WR PDNH D FOHDUO\HVWDEOLVKHGSUHFHGHQWLQWZRZD\V6HFRQG UHDVRQDEOH GHFLVLRQ WKDW PDNHV SDUWLFXODU LQYHVWLJDWLRQV D VWDWHFRXUW GHFLVLRQ DOVR LQYROYHV DQ XQUHDVRQDEOH XQQHFHVVDU\jl.LPPHOPDQY0RUULVRQ86 DSSOLFDWLRQ RI WKLV &RXUWjV SUHFHGHQW LI WKH VWDWH FRXUW TXRWLQJ 6WULFNODQG 86 DW VHH DOVR HLWKHUXQUHDVRQDEO\H[WHQGVDOHJDOSULQFLSOHIURPRXU :LOOLDPV 86 DW DFNQRZOHGJLQJ WKDW WKH SUHFHGHQWWRDQHZFRQWH[WZKHUHLWVKRXOGQRWDSSO\RU GHIHQGDQWjV WULDO FRXQVHO KDG DQ mREOLJDWLRQ WR FRQGXFW D XQUHDVRQDEO\UHIXVHVWRH[WHQGWKDWSULQFLSOHWRDQHZ WKRURXJK LQYHVWLJDWLRQ RI WKH GHIHQGDQWjV EDFNJURXQGl FRQWH[WZKHUHLWVKRXOGDSSO\ 7KHUHIRUH LI FRXQVHOjV IDLOXUH WR LQYHVWLJDWH LV QRW GXH WR VWUDWHJLF FRQFHUQV DQG LV XQUHDVRQDEOH FRQVLGHULQJ DOO WKH ,GDW FLWDWLRQVRPLWWHG %XWWKH&RXUWWKHQZHQWRQWR FLUFXPVWDQFHV VXFK IDLOXUH WR LQYHVWLJDWH PD\ FRQVWLWXWH HPSKDVL]H WKDW LW ZDV QRW UXOLQJ RQ WKH XQUHDVRQDEOH LQHIIHFWLYHDVVLVWDQFHRIFRXQVHO6HH6WULFNODQG86DW H[WHQVLRQSULQFLSOH 7KH)RXUWK&LUFXLWDOVRKHOGLQ*UHHQ>WKDW@VWDWHFRXUW 8QGHU2KLRjVGHDWKSHQDOW\VWDWXWHDVHQWHQFLQJMXU\PXVW GHFLVLRQV WKDW XQUHDVRQDEO\ H[WHQGHG D OHJDO SULQFLSOH ZHLJKWKHDJJUDYDWLQJFLUFXPVWDQFHVRIDGHIHQGDQWjVFDSLWDO IURPRXUSUHFHGHQWWRDQHZFRQWH[WZKHUHLWVKRXOGQRW RIIHQVHDJDLQVWWKHmQDWXUHDQGFLUFXPVWDQFHVRIWKHRIIHQVH DSSO\ RUXQUHDVRQDEO\UHIXVHWRH[WHQGDOHJDOSULQFLSOH >DQG@WKHKLVWRU\FKDUDFWHUDQGEDFNJURXQGRIWKHRIIHQGHUl WR D QHZ FRQWH[W ZKHUH LW VKRXOG DSSO\ VKRXOG EH EHIRUH UHFRPPHQGLQJ D GHDWK VHQWHQFH 2+,2 5 ' & DQDO\]HG XQGHU G jV mXQUHDVRQDEOH DSSOLFDWLRQlFODXVH$OWKRXJKWKDWKROGLQJPD\SHUKDSV EHFRUUHFWWKHFODVVLILFDWLRQGRHVKDYHVRPHSUREOHPVRI SUHFLVLRQ 7RGD\jV FDVH GRHV QRW UHTXLUH XV WR $OWKRXJK :LOOLDPV Y 7D\ORU ZDV GHFLGHG DIWHU /HZLV:LOOLDPVjV GHFLGH KRZ VXFK mH[WHQVLRQ RI OHJDO SULQFLSOHl FDVHV VKRXOG EH WUHDWHG XQGHU G )RU QRZ LW LV FRQYLFWLRQ EHFDPH ILQDO DQG WKXV FDQQRW VHUYH DV GLUHFW VXSSRUW RI P\ DQDO\VLV LW LV VWLOO KLJKO\ UHOHYDQW WR WKLV FDVH /LNH WKLV FDVH :LOOLDPV Y 7D\ORU FRQFHUQV WKH KDEHDV UHYLHZ RI DQ LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO VXIILFLHQW WR KROG WKDW ZKHQ D VWDWHFRXUW GHFLVLRQ FODLP LQ D FDVH LQ ZKLFK WKH GHIHQGDQWjV FRQYLFWLRQ EHFDPH ILQDO LQ XQUHDVRQDEO\DSSOLHVWKHODZRIWKLV&RXUWWRWKHIDFWVRI 6HH :LOOLDPV Y9LUJLQLD 6(G 9D FHUW GHQLHG DSULVRQHUjVFDVHDIHGHUDOFRXUWDSSO\LQJ G 86 7KHUHIRUH WKH 6XSUHPH &RXUWjV DQDO\VLV XQGHU 6WULFNODQG RI WKH GHIHQGDQWjV LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO FODLP LQ PD\FRQFOXGHWKDWWKHVWDWHFRXUWGHFLVLRQIDOOVZLWKLQ :LOOLDPV Y 7D\ORU VKHGV OLJKW QRW RQO\ RQ ZKDW PD\ EH FRQVLGHUHG WKDWSURYLVLRQjVmXQUHDVRQDEOHDSSOLFDWLRQlFODXVH UHDVRQDEOH SURIHVVLRQDO QRUPV DW WKH UHOHYDQW WLPH EXW DOVR RQ ZKDW FRQGXFW E\ FRXQVHO VKRXOG ZLWKVWDQG VFUXWLQ\ XQGHU 6WULFNODQG ,GDW HPSKDVLVDGGHG LQWHUQDOFLWDWLRQRPLWWHG :LOOLDPVY&R\OH 1R 1R :LOOLDPVY&R\OH :HZLOOUHYLHZ:LOOLDPVjVMXU\LQVWUXFWLRQDQGLQHIIHFWLYH PXVWEHKLJKO\GHIHUHQWLDODQGPXVWEHFDUHIXOmWRHOLPLQDWH DVVLVWDQFHRIFRXQVHOFODLPVXQGHUWKHVWDQGDUGVHWIRUWKLQ WKH GLVWRUWLQJ HIIHFWV RI KLQGVLJKW WR UHFRQVWUXFW WKH G %HFDXVHWKH2KLR6XSUHPH&RXUWUHYLHZHGWKH FLUFXPVWDQFHV RI FRXQVHOjV FKDOOHQJHG FRQGXFW DQG WR MXU\LQVWUXFWLRQFODLPRQGLUHFWDSSHDORXUUHYLHZZLOOIRFXV HYDOXDWHWKHFRQGXFWIURPFRXQVHOjVSHUVSHFWLYHDWWKHWLPHl RQ WKDW RSLQLRQ 7KH LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO ,G DW m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l,GDW HPSKDVLVDGGHG DVVXPHG ZH UHYLHZ WKH FODLP GH QRYR 1HYHUWKHOHVV ZH ,QHVVHQFHDmGHIHQGDQWPXVWRYHUFRPHWKHSUHVXPSWLRQWKDW KDYHOLWWOHGRXEWWKDWWKH$('3$jVVWDQGDUGVDSSO\WRVWDWH XQGHU WKH FLUFXPVWDQFHV WKH FKDOOHQJHG DFWLRQ µPLJKW EH FROODWHUDOGHFLVLRQVDVZHOODVWKRVHRQGLUHFWDSSHDO6HFWLRQ FRQVLGHUHGVRXQGWULDOVWUDWHJ\jlWRVDWLVI\WKHSHUIRUPDQFH G GUDZV QR GLVWLQFWLRQ EHWZHHQ GHFLVLRQV RQ GLUHFW SURQJRIWKH6WULFNODQGWHVW,GDW :LWKUHJDUGWRWKH DSSHDODQGWKRVHLQVWDWHFROODWHUDOSURFHHGLQJVUHTXLULQJRQO\ SUHMXGLFHSURQJRIWKHWZRSDUW6WULFNODQGWHVWDmGHIHQGDQW WKDWWKHFODLPmZDVDGMXGLFDWHGRQWKHPHULWVLQ6WDWHFRXUW PXVWVKRZWKDWWKHUHLVDUHDVRQDEOHSUREDELOLW\WKDWEXWIRU SURFHHGLQJVl G )XUWKHUDWOHDVWWZRRIRXUVLVWHU FRXQVHOjVXQSURIHVVLRQDOHUURUVWKHUHVXOWRIWKHSURFHHGLQJ FLUFXLWVKDYHDSSOLHGWKHVWDQGDUGVWRVWDWHSRVWFRQYLFWLRQ ZRXOG KDYH EHHQ GLIIHUHQW $ UHDVRQDEOH SUREDELOLW\ LV D SURFHHGLQJV6HH%HOOYsDUYLV)G WK&LU SUREDELOLW\ VXIILFLHQW WR XQGHUPLQH FRQILGHQFH LQ WKH HQEDQF 0RRUHY*LEVRQ )G WK RXWFRPHl,GDW m,WLVQRWHQRXJKIRUWKHGHIHQGDQWWR &LU $QG PRUH LPSRUWDQWO\ WKH 6XSUHPH &RXUWjV VKRZ WKDW WKH HUURUV KDG VRPH FRQFHLYDEOH HIIHFW RQ WKH UHYLHZ LQ :LOOLDPV Y 7D\ORU ZDV RI D VWDWH FRXUWjV SRVW RXWFRPHRIWKHSURFHHGLQJl,GDW FRQYLFWLRQGHFLVLRQ7KHTXHVWLRQVWLOOUHPDLQVZKLFKVWDWH SRVWFRQYLFWLRQGHFLVLRQZHVKRXOGUHYLHZ7KH2KLRFRXUWV ,%$&.*5281' ODVWDGGUHVVHGWKHPHULWVRI:LOOLDPVjVLQHIIHFWLYHDVVLVWDQFH RIFRXQVHOFODLPLQKLVWKLUG3&5SURFHHGLQJV7KHFRXUWRI ,Q WKH VWDWH FRXUWV :LOOLDPV DUJXHG WKDW KH ZDV GHQLHG DSSHDOV DUWLFXODWHG LWV UHDVRQLQJ ZKLOH WKH 2KLR 6XSUHPH HIIHFWLYHDVVLVWDQFHRIFRXQVHOGXULQJWKHVHQWHQFLQJSKDVHRI &RXUWDIILUPHGZLWKRXWRSLQLRQ%HFDXVHERWKFRXUWVUHDFKHG KLV WULDO EHFDXVH KLV FRXQVHO IDLOHG WR LQYHVWLJDWH SRVVLEOH WKHVDPHFRQFOXVLRQDQGLWLVWKHFRQFOXVLRQUDWKHUWKDQWKH PLWLJDWLQJ IDFWRUV DGHTXDWHO\ DQG IDLOHG WR GHYHORS DQG DQDO\VLV WKDW PDWWHUV VHH %HOO )G DW ZH WKLQN SUHVHQW D FRKHUHQW WKHRU\ RI PLWLJDWLRQ WR WKH MXU\ ZKLFK GHFLVLRQ ZH UHYLHZ LV RI OLWWOH LPSRUW ZKHWKHU ZH 6SHFLILFDOO\ :LOOLDPV FODLPHG WKDW KLV DWWRUQH\V IDLOHG WR UHYLHZ WKH GHFLVLRQ RI WKH FRXUW RI DSSHDOV RU WKH 2KLR REWDLQSHUWLQHQWEDFNJURXQGLQIRUPDWLRQRQKLPE\QHJOHFWLQJ 6XSUHPH&RXUW$OWKRXJKZHUHYLHZWKHVWDWHFRXUWFROODWHUDO WR LQWHUYLHZ IDPLO\ PHPEHUV RWKHU WKDQ KLV IDWKHU DQG KLV GHFLVLRQZHVWLOOORRNWRWKHFOHDUO\ HVWDEOLVKHGODZDWWKH VLVWHU 'HERUDK DQG E\ QHJOHFWLQJ WR UHTXHVW VFKRRO DQG WLPH:LOOLDPVjVFRQYLFWLRQEHFDPHILQDO:LOOLDPV 86 MXYHQLOH IDFLOLW\ UHFRUGV UHOHYDQW WR KLV SV\FKRVRFLDO DW GHYHORSPHQW WKDWKLVDWWRUQH\VIDLOHGWRSUHSDUHZLWQHVVHVIRU WKHWHVWLPRQ\WKH\ZHUHWRJLYHGXULQJWKHVHQWHQFLQJSKDVH RI KLV WULDO DQG WKDW KLV DWWRUQH\V IDLOHG WR UHTXHVW WKH DSSRLQWPHQWRIDSV\FKRORJLFDOH[SHUWZKRFRXOGFRPPHQW :LOOLDPVY&R\OH 1R 1R :LOOLDPVY&R\OH HVWDEOLVKHG6XSUHPH&RXUWSUHFHGHQWZKHQLWLVmRSSRVLWHWR &sXU\,QVWUXFWLRQ WKDWUHDFKHGE\WKLV&RXUWRQDTXHVWLRQRIODZlRUIDFHVDVHW RIIDFWVWKDWDUHmPDWHULDOO\LQGLVWLQJXLVKDEOHIURPDUHOHYDQW $IWHUUHDGLQJWKHSRVVLEOHYHUGLFWVWKHWULDOFRXUWLQVWUXFWHG 6XSUHPH&RXUWSUHFHGHQWlDQGDUULYHVDWDQRSSRVLWHUHVXOW WKHMXU\DVIROORZV ,GDW7KH6XSUHPH&RXUWIXUWKHUH[SODLQHGWKDWDVWDWH FRXUWGHFLVLRQLQYROYHVDQXQUHDVRQDEOHDSSOLFDWLRQRIFOHDUO\ ,I DOO WZHOYH RI WKH MXU\ ILQG E\ SURRI EH\RQG D HVWDEOLVKHG 6XSUHPH &RXUW SUHFHGHQW ZKHQ LW FRUUHFWO\ UHDVRQDEOH GRXEW WKDW WKH DJJUDYDWLQJ FLUFXPVWDQFHV LGHQWLILHVWKHJRYHUQLQJOHJDOSULQFLSOHLQWKHFDVHEXWDSSOLHV ZKLFK /HZLV :LOOLDPV sU ZDV IRXQG JXLOW\ RI WKDW SULQFLSOH WR WKH IDFWV RI WKH GHIHQGDQWjV FDVH LQ DQ FRPPLWWLQJ PXUGHU RXWZHLJKV WKH PLWLJDWLQJ IDFWRUV REMHFWLYHO\ XQUHDVRQDEOH PDQQHU ,G DW VHH DOVR WKHQ\RXPXVWUHWXUQVXFKILQGLQJWRWKH&RXUW,LQVWUXFW 3HQU\n866&WDW \RXDVDPDWHURIODZWKDWLI\RXPDNHVXFKDILQGLQJ WKDW \RX KDYH QR FKRLFH DQG PXVW UHFRPPHQG WR WKH m7KHEHQFKPDUNIRUMXGJLQJDQ\FODLPRILQHIIHFWLYHQHVV &RXUW WKDW WKH VHQWHQFH RI GHDWK EH LPSRVHG XSRQ WKH PXVWEHZKHWKHUFRXQVHOjVFRQGXFWVRXQGHUPLQHGWKHSURSHU GHIHQGDQW/HZLV:LOOLDPVsU IXQFWLRQLQJRIWKHDGYHUVDULDOSURFHVVWKDWWKHWULDOFDQQRWEH UHOLHGRQDVKDYLQJSURGXFHGDMXVWUHVXOWl6WULFNODQG 2QWKHRWKHUKDQGLIDIWHUFRQVLGHULQJDOORIWKHUHOHYDQW 86 DW 7KH 6XSUHPH &RXUW KDV UHFRJQL]HG WKDW m>D@ HYLGHQFHUDLVHGDWWKHWULDO\RXILQGWKDWWKH6WDWHRI FDSLWDOVHQWHQFLQJSURFHHGLQJ OLNHWKHRQHLQYROYHGLQWKLV 2KLRIDLOHGWRSURYHEH\RQGDUHDVRQDEOHGRXEWWKDWWKH FDVHLVVXIILFLHQWO\OLNHDWULDOLQLWVDGYHUVDULDOIRUPDWDQG DJJUDYDWLQJFLUFXPVWDQFHVZKLFKWKHGHIHQGDQWZDV LQWKHH[LVWHQFHRIVWDQGDUGVIRUGHFLVLRQWKDWFRXQVHOjV IRXQG JXLOW\ RI FRPPLWWLQJ RXWZHLJK WKH PLWLJDWLQJ UROHLQWKHSURFHHGLQJLVFRPSDUDEOHWRFRXQVHOjVUROHDWWULDOl IDFWRUVWKHQ\RXZLOOUHWXUQ\RXUYHUGLFWUHIOHFWLQJ\RXU ,GDW$VWKHPDMRULW\QRWHVDGHIHQGDQWPXVWVDWLVI\ GHFLVLRQ WKHZHOONQRZQWZRSDUWWHVWVHWIRUWKLQ6WULFNODQGWRSURYH DFODLPRILQHIIHFWLYHDVVLVWDQFHRIFRXQVHO 7KDWLV\RXPXVWILQGWKDWWKH6WDWHKDVIDLOHGWRSURYH EH\RQG D UHDVRQDEOH GRXEW WKDW WKH DJJUDYDWLQJ )LUVW WKH GHIHQGDQW PXVW VKRZ WKDW FRXQVHOjV FLUFXPVWDQFHVRIZKLFKWKHGHIHQGDQWZDVIRXQGJXLOW\ SHUIRUPDQFHZDVGHILFLHQW7KLVUHTXLUHVVKRZLQJWKDW RXWZHLJKWKHPLWLJDWLQJIDFWRUV,QWKLVHYHQW\RXZLOO FRXQVHO PDGH HUURUV VR VHULRXV WKDW FRXQVHO ZDV QRW WKHQSURFHHGWRGHWHUPLQHZKLFKRIWKHWZRSRVVLEOHOLIH IXQFWLRQLQJDVWKHmFRXQVHOlJXDUDQWHHGWKHGHIHQGDQWE\ LPSULVRQPHQWVHQWHQFHVWRUHFRPPHQGWRWKHFRXUW WKH6L[WK$PHQGPHQW6HFRQGWKHGHIHQGDQWPXVWVKRZ WKDW WKH GHILFLHQW SHUIRUPDQFH SUHMXGLFHG WKH GHIHQVH 6R\RXKDYHWKUHHRSWLRQVDV,KDYHLQGLFDWHGWR\RX2I 7KLV UHTXLUHV VKRZLQJ WKDW FRXQVHOjV HUURUV ZHUH VR FRXUVHZKLFKHYHU\RXFKRRVHDOOWZHOYHRIWKHMXURUV VHULRXVDVWRGHSULYHWKHGHIHQGDQWRIDIDLUWULDODWULDO KDYHWRDJUHHDQGVLJQLQLQN ZKRVHUHVXOWLVUHOLDEOH s$DW HPSKDVLVDGGHG 7KDWSDVVDJH:LOOLDPV ,GDW FRQWHQGV YLRODWHG KLV ULJKWV EHFDXVH LW HUURQHRXVO\ LQVWUXFWHG WKH MXU\ RQ WKH OHYHO RI DJUHHPHQW QHFHVVDU\ WR :LWKUHJDUGWRWKHSHUIRUPDQFHSURQJRIWKHWZRSDUWWHVW UHFRPPHQG D OLIH VHQWHQFH DQG WKDW WKLV HUURQHRXV DGHIHQGDQWPXVWVKRZWKDWKLVFRXQVHOjVUHSUHVHQWDWLRQIHOO LQVWUXFWLRQYLRODWHGKLV(LJKWK$PHQGPHQWULJKW EHORZDQREMHFWLYHVWDQGDUGRIUHDVRQDEOHQHVV,QUHYLHZLQJ WKH UHDVRQDEOHQHVV RI VXFK FRXQVHOjV SHUIRUPDQFH FRXUWV :LOOLDPVY&R\OH 1R 1R :LOOLDPVY&R\OH 2KLR 5& ' VLPSO\ GRHV QRW UHTXLUH BBBBBBBBBBBBBBB XQDQLPRXVDJUHHPHQWWRUHFRPPHQGDVHQWHQFHRWKHUWKDQ GHDWK:LOOLDPVFRQWHQGV,QGHHGKHDUJXHVWKHMXU\PXVW ',66(17 UHFRPPHQGDOLIHVHQWHQFHLIHYHQRQHMXURUGLVDJUHHVZLWKD BBBBBBBBBBBBBBB UHFRPPHQGDWLRQ RI GHDWK 7KH WULDO FRXUWjV LQVWUXFWLRQ RWKHUZLVHKHPDLQWDLQVPLVLQIRUPHGWKHMXU\DERXWLWVUROH .$5(1 1(/621 0225( &LUFXLW sXGJH GLVVHQWLQJ LQVHQWHQFLQJDFDSLWDOGHIHQGDQWDQGWKHUHIRUHYLRODWHGKLV %HFDXVH , GLVDJUHH ZLWK WKH PDMRULW\jV GHWHUPLQDWLRQ WKDW (LJKWK $PHQGPHQW ULJKWV DV GHVFULEHG LQ &DOGZHOO Y :LOOLDPVLVQRWHQWLWOHGWRDZULWRIKDEHDVFRUSXVEHFDXVHRI 0LVVLVVLSSL86 LQHIIHFWLYHDVVLVWDQFHRIFRXQVHOGXULQJWKHVHQWHQFLQJSKDVH RI KLV WULDO , UHVSHFWIXOO\ GLVVHQW IURP WKH FRUUHVSRQGLQJ 7KH2KLR6XSUHPH&RXUWUHMHFWHGWKDWDUJXPHQWDQGVRGR SRUWLRQ RI WKH PDMRULW\jV RSLQLRQ 8QOLNH WKH PDMRULW\ , ZH7KH2KLR6XSUHPH&RXUWKHOGWKDWLQDFFRUGZLWKLWV EHOLHYH WKDW WKH VWDWH FRXUWVj GHFLVLRQ RQ :LOOLDPVjV GHFLVLRQLQ6WDWHYsHQNLQV1(G 2KLR LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO FODLP LQYROYHG DQ DOO YHUGLFWV PXVW EH XQDQLPRXV XQGHU 5XOH 2KLR XQUHDVRQDEOH DSSOLFDWLRQ RI FOHDUO\ HVWDEOLVKHG 6XSUHPH &ULPLQDO5XOH $ DQGFRQVHTXHQWO\DUHFRPPHQGDWLRQRI &RXUWSUHFHGHQWVSHFLILFDOO\RIWKHOHJDOVWDQGDUGVVHWIRUWK DOLIHVHQWHQFHPXVWEHXQDQLPRXV6HH6WDWHY:LOOLDPV LQ6WULFNODQGY:DVKLQJWRQ86 1(G 2KLR sHQNLQVZDVFOHDUO\GHFLGHG EHIRUH:LOOLDPVjVFRQYLFWLRQZDVILQDO :HUHYLHZGHQRYRDGLVWULFWFRXUWjVGHFLVLRQRQDSHWLWLRQ IRUZULWRIKDEHDVFRUSXV6HH&DUWHUY%HOO)G ,Q WKH 2KLR 6XSUHPH &RXUW UHDFKHG D GHFLVLRQ WK&LU $VZHSUHYLRXVO\QRWHGLQ:LOOLDPVY FRQWUDU\WRsHQNLQVLQ6WDWHY%URRNV1(G &R\OH)G WK&LU WKLVFDVHLVJRYHUQHGE\ 2KLR $ RSLQLRQE\WKH2KLR6XSUHPHFRXUWDOVR WKH$QWLWHUURULVPDQG(IIHFWLYH'HDWK3HQDOW\$FWRI VXJJHVWV WKDW D UHFRPPHQGDWLRQ RI OLIH QHHG QRW EH m$('3$l DQGXQGHU86& G WKLVFRXUWPD\ XQDQLPRXV 6HH 6WDWH Y 6SULQJHU 1(G 2KLR QRWJUDQWDZULWRIKDEHDVFRUSXVIRUDQ\FODLPDGMXGLFDWHGRQ 7KH %URRNV FRXUW GLG QRW PHQWLRQ sHQNLQV EXW WKHPHULWVLQVWDWHFRXUWXQOHVVWKHDGMXGLFDWLRQ QHYHUWKHOHVVDSSHDUVWRRYHUUXOHLW7KH%URRNVGHFLVLRQZDV RYHU D PRQWK DIWHU :LOOLDPVjV ODVW 3&5 UHTXHVW ZDV UHVXOWHG LQ D GHFLVLRQ WKDW ZDV FRQWUDU\ WR RU GLVPLVVHG DQGERWK%URRNVDQG6SULQJHUZHUHGHFLGHGDIWHU LQYROYHG DQ XQUHDVRQDEOH DSSOLFDWLRQ RI FOHDUO\ :LOOLDPVj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sRKQVRQ866&W LPSRVHG RQ WKH RIIHQGHU $EVHQW VXFK D ILQGLQJ WKH MXU\ VKDOO ,Q :LOOLDPV Y 7D\ORU 86 WKH 6XSUHPH UHFRPPHQG WKDW WKH RIIHQGHU EH VHQWHQFHG WR OLIH LPSULVRQPHQW ZLWK SDUROH HOLJLELOLW\ DIWHU VHUYLQJ WZHQW\ IXOO \HDUV RI &RXUW H[SODLQHG WKH SUHFLVH PHDQLQJ RI WKH ODQJXDJH LQ LPSULVRQPHQW RU WR OLIH LPSULVRQPHQW ZLWK SDUROH HOLJLELOLW\ DIWHU G ZKLFK LV DW LVVXH KHUH 7KH 6XSUHPH &RXUW VHUYLQJ WKLUW\ IXOO \HDUV RI LPSULVRQPHQW H[SODLQHGWKDWDVWDWHFRXUWjVGHFLVLRQLVmFRQWUDU\WRlFOHDUO\ :LOOLDPVY&R\OH 1R 1R :LOOLDPVY&R\OH ,9&21&/86,21 WKHUHE\ GHSULYLQJ WKH 2KLR FRXUWV RI WKH RSSRUWXQLW\ WR DGGUHVVWKHDSSDUHQWFRQIOLFWEHWZHHQsHQNLQVDQG6SULQJHU )RU WKH IRUHJRLQJ UHDVRQV ZH DIILUP WKH GLVWULFW FRXUWjV GHQLDORIWKHSHWLWLRQIRUDZULWRIKDEHDVFRUSXV 7KHWLPLQJRIWKHVHGHFLVLRQVUHTXLUHVXVWRILQGWKDWWKH 2KLR 6XSUHPH &RXUWjV GHFLVLRQ ZDV QRW DQ XQUHDVRQDEOH DSSOLFDWLRQRIQRUZDVLWFRQWUDU\WRFOHDUO\HVWDEOLVKHGODZ LQ WKLV FDVH &DOGZHOO DW WKH WLPH :LOOLDPVjV FRQYLFWLRQ EHFDPH ILQDO &DOGZHOO SURKLELWV WKH MXGJH RU SURVHFXWRUV IURPPDNLQJPLVOHDGLQJVWDWHPHQWVWRWKHMXU\7KXVIRUWKH GHFLVLRQ WR KDYH EHHQ FRQWUDU\ WR RU DQ XQUHDVRQDEOH DSSOLFDWLRQRI&DOGZHOOLWZRXOGKDYHKDGWRDIILUPZKDWZDV WKHQ DQ HUURQHRXV VWDWHPHQW RI WKH ODZ E\ WKH MXGJH WKDW PLVOHGWKHMXU\7KDWLVWKHMXU\LQVWUXFWLRQZRXOGKDYHWR KDG EHHQ DQ HUURQHRXV VWDWHPHQW RI 2KLR ODZ DW WKH WLPH :LOOLDPVjVFRQYLFWLRQEHFDPHILQDO,ILWZDVQRWWKHQWKH LQVWUXFWLRQZDVQRWPLVOHDGLQJDQGWKHUHIRUHQRWLQYLRODWLRQ RI&DOGZHOO$WWKHWLPH:LOOLDPVjVFRQYLFWLRQEHFDPHILQDO 2KLRjV KLJKHVW FRXUW UHDG VHFWLRQ ' LQ FRQMXQFWLRQZLWK2KLR&ULPLQDO5XOHRI3URFHGXUH $ WR UHTXLUH MXU\ XQDQLPLW\ IRU OLIH LPSULVRQPHQW UHFRPPHQGDWLRQVLQFDSLWDOFDVHV7KHUHIRUHWKHGHFLVLRQ DIILUPLQJ :LOOLDPVjV VHQWHQFH ZDV QRW DQ XQUHDVRQDEOH DSSOLFDWLRQ RI RU FRQWUDU\ WR FOHDUO\ HVWDEOLVKHG 6XSUHPH &RXUWSUHFHGHQW :LOOLDPVjVVHFRQGFKDOOHQJHIDUHVQREHWWHU+HDOOHJHVWKH LQVWUXFWLRQ OHG WKH MXU\ WR EHOLHYH WKDW WKH\ PXVW UHWXUQ D XQDQLPRXVUHFRPPHQGDWLRQWKHUHE\SUHFOXGLQJWKHPIURP FRQVLGHULQJDQ\DQGDOOPLWLJDWLQJFLUFXPVWDQFHVLQYLRODWLRQ RI0LOOVY0DU\ODQG86 7KH 2KLR 6XSUHPH &RXUW GLG QRW DGGUHVV :LOOLDPVjV VHFRQGDUJXPHQW KRZHYHULWLVHDVLO\GLVSRVHGRI:HILUVW QRWHWKDW0LOOVZDVGHFLGHGDIWHUWKH8QLWHG6WDWHV6XSUHPH &RXUW GHQLHG FHUWLRUDUL IURP :LOOLDPVjV GLUHFW DSSHDO DQG WKHUHIRUH ZDV QRW FOHDUO\ HVWDEOLVKHG ODZ DW WKH WLPH :LOOLDPVj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jFRRSHUDWLRQLQGLVSRVLQJRIWKHLUSHQGLQJFDVHV TXHVWLRQRIZKHWKHUWKHDJJUDYDWLQJFLUFXPVWDQFHVDVDZKROH 7KHRWKHUHYLGHQFH:LOOLDPVRIIHUV$QGHUVRQjVDIILGDYLWLV RXWZHLJKHGWKHPLWLJDWLQJFLUFXPVWDQFHVDVDZKROH:HGR VXVSLFLRXVRQERWKDOHJDODQGDIDFWXDOEDVLVDVWKHGLVWULFW QRWVHHKRZWKDWLQVWUXFWLRQYLRODWHV0LOOV FRXUWIRXQG/HJDOO\UHFDQWLQJDIILGDYLWVDUHDOZD\VYLHZHG ZLWKmH[WUHPHVXVSLFLRQl8QLWHG6WDWHVY&KDPEHUV ',QHIIHFWLYH$VVLVWDQFHRI&RXQVHO )G WK &LU 7KH FLUFXPVWDQFHV VXUURXQGLQJ WKH FRQIHVVLRQ DUH DOVR GXELRXV :LOOLDPVjV ,IKLVGHDWKVHQWHQFHLVQRWWKHUHVXOWRIMXGLFLDOHUURULW FRXQVHO GLG QRW RIIHU $QGHUVRQ DV D ZLWQHVV LQ WKH GLVWULFW PXVWEHWKHUHVXOWRIKLVFRXQVHOjVHUURU:LOOLDPVFRQWHQGV FRXUWjVHYLGHQWLDU\KHDULQJEHFDXVHKHVWDWHG$QGHUVRQZDV 7KDWHUURUKHDUJXHVZDVKLVWULDOFRXQVHOjVIDLOXUHWRIXOO\ LQ D SV\FKLDWULF ZDUG DQG WKHUHIRUH XQDYDLODEOH $V LQYHVWLJDWH KLV EDFNJURXQG IRU LQIRUPDWLRQ WKDW WKH\ FRXOG 5HVSRQGHQWSRLQWVRXWKRZHYHU$QGHUVRQZDVDFWXDOO\LQ KDYH SUHVHQWHG DW WKH VHQWHQFLQJ VWDJH RI KLV WULDO DV WKHJHQHUDOSRSXODWLRQ%RWKSURVHFXWRUVPRUHRYHUWHVWLILHG PLWLJDWLQJ FLUFXPVWDQFHV ,I WKH\ KDG KH PDLQWDLQV WKH\ DWWKHHYLGHQWLDU\KHDULQJWKDWWKH\PDGHQRVXFKGHDOZLWK ZRXOGKDYHGLVFRYHUHGDGGLWLRQDOLQIRUPDWLRQWKDWVXSSRUWV $QGHUVRQRU%URRNV$OOWKHVHIDFWVOHGWKHGLVWULFWFRXUWWR :LOOLDPVjVFODLPWKDWWKHGHDWKSHQDOW\VKRXOGQRWKDYHEHHQ ILQG$QGHUVRQjVDIILGDYLWLQFUHGLEOHDQGUHTXLUHXVWRKROG LPSRVHG EHFDXVH RI KLV WURXEOHG FKLOGKRRG 6SHFLILFDOO\ WKDWWKDWILQGLQJZDVQRWFOHDUO\HUURQHRXV :LOOLDPVSRLQWVWRWHVWLPRQ\WKDWKLVVFKRROWHVWUHYHDOHGKH KDVDORZ,4DQGVWDWHPHQWVIURPIDPLO\PHPEHUVWKDWKHZDV (YHQLIZHDVVXPHVXFKDGHDOH[LVWHGZHGRQRWEHOLHYH DEXVHGDQGKLVIDWKHUZDVDKRPRVH[XDOZKRVSHQWOLWWOHWLPH WKH SURVHFXWLRQjV IDLOXUH WR GLVFORVH LW ZRXOG KDYH EHHQ ZLWK :LOOLDPV DQG EURXJKW RWKHU PHQ DURXQG :LOOLDPVjV PDWHULDO:KLOHWKHMXU\ZRXOGQRWKDYHEHHQDZDUHWKDWD KRPH&RXQVHOjVIDLOXUHWRSUHVHQWVXFKHYLGHQFHKHDOOHJHV GHDOH[LVWHGLWZDVIXOO\DZDUHRIWKHZLWQHVVHVjPRWLYDWLRQ ZDVGHILFLHQWSHUIRUPDQFH+DGWKH\SUHVHQWHGWKDWHYLGHQFH IRUWHVWLI\LQJWKHKRSHRIJHWWLQJIDYRUDEOHWUHDWPHQWIURP :LOOLDPV DUJXHV WKHUH LV D UHDVRQDEOH SUREDELOLW\ WKDW WKH WKH SURVHFXWLRQ LQ WKHLU RZQ FDVHV :LOOLDPVjV FRXQVHO MXU\jVUHFRPPHQGDWLRQZRXOGKDYHEHHQGLIIHUHQW H[WHQVLYHO\ FURVVH[DPLQHG WKH ZLWQHVVHV $QGHUVRQ DGPLWWHGWKDWKHKRSHGKLVWHVWLPRQ\ZRXOGEHQHILWKLPLQKLV 7KH 2KLR FRXUWV VDZ WKLQJV GLIIHUHQWO\ :LOOLDPV ILUVW FDVH $QG WKH SURVHFXWLRQ VWDWHG LW ZRXOG FRQVLGHU WKH UDLVHGWKHFODLPLQKLVWKLUG3&5SHWLWLRQ WKHFRXUWRIDSSHDOV ZLWQHVVHVjFRRSHUDWLRQLQGHWHUPLQLQJKRZWRGLVSRVHRIWKHLU ZDV WKH ODVW WR SURYLGH DQ DUWLFXODWHG GHFLVLRQ $SSO\LQJ FDVHV 7KXV WKH MXU\ NQHZ RI WKLV UHDVRQ WR TXHVWLRQ WKH 6WULFNODQGY:DVKLQJWRQ86 LWIRXQGWKDW YHUDFLW\RIWKHLU$QGHUVRQjVDQG%URRNVjVWHVWLPRQ\:HGR :LOOLDPVFRXOGQRWVKRZWKDWKLVDWWRUQH\VjGHFLVLRQQRWWR QRWEHOLHYHWKDWNQRZOHGJHRIWKHH[LVWHQFHRIDQDFWXDOGHDO FDOO FHUWDLQ ZLWQHVVHV ZDV GHILFLHQW SHUIRUPDQFH 7KH SULRU WR GHOLEHUDWLRQ ZRXOG KDYH JLYHQ WKH MXU\ D JUHDWHU ZLWQHVVHV:LOOLDPVFODLPVKLVFRXQVHOVKRXOGKDYHFDOOHGWR UHDVRQWRTXHVWLRQWKHYHUDFLW\RI$QGHUVRQjVDQG%URRNVjV WHVWLI\ZRXOGKDYHPHUHO\SURYLGHGVXSSRUWIRUWKHWKHRU\RI WHVWLPRQ\ $W OHDVW QRW WR WKH OHYHO WKDW QRW NQRZLQJ PLWLJDWLRQWKDWKLVFRXQVHOSUHVHQWHGDQGWKHMXU\UHMHFWHGWKH XQGHUPLQHVFRQILGHQFHLQWKHRXWFRPH6HH%\UGY&ROOLQV FRXUWUHDVRQHG$FFRUGLQJO\LWFRQFOXGHGFRXQVHOjVVWUDWHJLF )G WK&LU GHFLVLRQQRWWRFDOOWKHVHZLWQHVVHVGLGQRWFRQVWLWXWHGHILFLHQW SHUIRUPDQFH )XUWKHU LW VWDWHG WKH IDLOXUH WR SUHVHQW WKH FXPXODWLYHHYLGHQFHGLGQRWSUHMXGLFH:LOOLDPVDVWKHMXU\ :LOOLDPVY&R\OH 1R 1R :LOOLDPVY&R\OH WKHLUWHVWLPRQ\)LUVW$QGHUVRQZKRKDGEHHQFKDUJHGZLWK GLGQRWDFFHSWWKLVWKHRU\RIPLWLJDWLRQ7KH2KLR6XSUHPH DJJUDYDWHGUREEHU\ZDVDOORZHGWRSOHDGJXLOW\WRDOHVVHU &RXUW DIILUPHG ZLWKRXW RSLQLRQ ZH DVVXPH RQ WKH VDPH LQFOXGHGRIIHQVHRQHPRQWKDIWHUKLVWHVWLPRQ\LQ:LOOLDPVjV UDWLRQDOH WULDO +H ZDV VHQWHQFHG WR RQH DQG RQHKDOI \HDUV RI LQFDUFHUDWLRQIRUWKHRIIHQVH KRZHYHUWKHH[HFXWLRQRIWKH :H SDXVH KHUH WR VWUHVV WKH LPSRUW RI WKH $('3$jV VHQWHQFH ZDV VXVSHQGHG DQG KH ZDV SODFHG RQ ILYH \HDUV UHTXLUHPHQWV RQ RXU DQDO\VLV 7KH $('3$ UHTXLUHV XV WR SUREDWLRQ 6HFRQG %URRNV ZKR ZDV VHUYLQJ D RQH \HDU UHYLHZWKH2KLRFRXUWjVGHFLVLRQEDVHGRQFOHDUO\HVWDEOLVKHG VHQWHQFHZDVDOORZHGWRYDFDWHKLVSOHDDJUHHPHQWDQGSOHDG 6XSUHPH&RXUWSUHFHGHQWDWWKHWLPH:LOOLDPVjVFRQYLFWLRQ WRDOHVVHULQFOXGHGRIIHQVH$IWHUGRLQJVRKHUHFHLYHGD EHFDPHILQDO:HDUHQRWSHUPLWWHGWRUHO\RQ6XSUHPH&RXUW WKUHH PRQWKVXVSHQGHG VHQWHQFH DQG ZDV SODFHG RQ VL[ FDVHVGHFLGHGDIWHUWKHFRXUWjVGHFLVLRQQRUDUHZHSHUPLWWHG PRQWKVLQDFWLYHSUREDWLRQ,QDGGLWLRQWRWKLVFLUFXPVWDQWLDO WRUHO\RQDQ\GHFLVLRQE\DQ\FRXUWRWKHUWKDQWKH6XSUHPH HYLGHQFH :LOOLDPV DOVR RIIHUV DQ DIILGDYLW IURP $QGHUVRQ &RXUW LQ HYDOXDWLQJ WKH 2KLR FRXUWjV GHFLVLRQ 7KXV VWDWLQJWKDWKHGLGLQIDFWPDNHDGHDOZLWKWKHSURVHFXWLRQ :LOOLDPVjVUHIHUHQFHVWR6XSUHPH&RXUWGHFLVLRQVDIWHUWKH SULRUWRWHVWLI\LQJDQGWKDWKHOLHGGXULQJWKHWULDOZKHQKH WLPH :LOOLDPVjV FRQYLFWLRQ EHFDPH ILQDO DUH ODUJHO\ WHVWLILHGWKDWWKHUHZDVQRVXFKGHDO:LOOLDPVGRHVQRWDOOHJH LUUHOHYDQW6RWRRDUH:LOOLDPVjVUHIHUHQFHVWRIHGHUDOFLUFXLW WKDW %URRNV KDV UHFDQWHG KLV WULDO WHVWLPRQ\ WKDW QR GHDO FRXUWGHFLVLRQV H[LVWHGEHWZHHQKLPVHOIDQGWKHSURVHFXWLRQ1HYHUWKHOHVV KHDUJXHVWKHUHZDVDGHDODQGWKHH[LVWHQFHRIWKDWGHDOZDV $WWKHWLPH:LOOLDPVjVFRQYLFWLRQEHFDPHILQDO6WULFNODQG PDWHULDO WKHUHIRUH WKH SURVHFXWLRQjV IDLOXUH WR GLVFORVH LW Y :DVKLQJWRQ ZDV WKUHH \HDUV ROG EXW VWLOO WKH PRVW YLRODWHGKLVGXHSURFHVVULJKW LQVWUXFWLYH 6XSUHPH &RXUW FDVH RQ KLV LVVXH 8QGHU 6WULFNODQG FRXQVHO LV GHHPHG LQHIIHFWLYH LI KLV 7KHGLVWULFWFRXUWGLVDJUHHGDQGKHOGWKHUHZDVQR%UDG\ SHUIRUPDQFHLVGHILFLHQWDQG WKLVGHILFLHQWSHUIRUPDQFH YLRODWLRQ:KLOHLWDJUHHGZLWK:LOOLDPVWKDWWKHSURVHFXWRUjV SUHMXGLFHG WKH GHIHQVH 86 DW $ FRXQVHOjV IDLOXUHWRGLVFORVHHYLGHQFHRIDGHDOEHWZHHQWKHVWDWHDQGWKH SHUIRUPDQFHLVGHILFLHQWLIKHFRPPLWWHGHUURUVVRVHULRXVWKDW ZLWQHVVHV ZRXOG DPRXQW WR D %UDG\ YLRODWLRQ LW UHMHFWHG KHZDVQRWSHUIRUPLQJDWDUHDVRQDEOHSURIHVVLRQDOOHYHO7KH :LOOLDPVjVDUJXPHQWWKDWWKHHYLGHQFHKHSUHVHQWHGUHYHDOV EXUGHQ LV RQ WKH GHIHQGDQW WR PDNH VXFK D VKRZLQJ E\ WKDWDGHDOEHWZHHQWKHSURVHFXWRUDQGWKHZLWQHVVHVH[LVWHG mLGHQWLI\>LQJ@WKHDFWVRURPLVVLRQVRIFRXQVHOWKDWDUHDOOHJHG SULRU WR WKH WULDO 7KH SRVW WULDO HYHQWV LW IRXQG DUH QRW QRW WR KDYH EHHQ WKH UHVXOW RI UHDVRQDEOH SURIHVVLRQDO HYLGHQFHWKDWDGHDOH[LVWHGSULRUWRWKHZLWQHVVHVWHVWLI\LQJ MXGJPHQWl,GDW 7KHFRXUWZDUQHGDJDLQVWWKHW\SHRI $QG$QGHUVRQjVDIILGDYLWLWUXOHGZDVQRWFUHGLEOH)XUWKHU KLQGVLJKWDQGVHFRQGJXHVVLQJLQZKLFK:LOOLDPVDVNVXVWR WKHUH ZDV QR HYLGHQFH WKDW %URRNV HYHU UHFDQWHG KLV HQJDJH WHVWLPRQ\$FFRUGLQJO\LWIRXQGQRYLRODWLRQDQGGLVPLVVHG WKHFODLP sXGLFLDO VFUXWLQ\ RI FRXQVHOjV SHUIRUPDQFH PXVW EH KLJKO\GHIHUHQWLDO,WLVDOOWRRWHPSWLQJIRUDGHIHQGDQW 7RFRQYLQFHXVWKDWWKHGLVWULFWFRXUWHUUHG:LOOLDPVPXVW WRVHFRQGJXHVVFRXQVHOjVDVVLVWDQFHDIWHUFRQYLFWLRQRU VKRZWKDWWKHFRXUWjVIDFWXDOILQGLQJWKDWQRGHDOH[LVWHGZDV DGYHUVH VHQWHQFH DQG LW LV DOO WRR HDV\ IRU D FRXUW FOHDUO\HUURQHRXV+HFDQQRWPDNHWKDWVKRZLQJ7KHPHUH H[DPLQLQJ FRXQVHOjV GHIHQVH DIWHU LW KDV SURYHG IDFWWKDW$QGHUVRQDQG%URRNjVVHQWHQFHVZHUHODWHUDOWHUHGLV XQVXFFHVVIXO WR FRQFOXGH WKDW D SDUWLFXODU DFW RU QRW HYLGHQFH WKDW D GHDO H[LVWHG SULRU WR WKHLU WHVWLPRQ\ DW RPLVVLRQ RI FRXQVHO ZDV XQUHDVRQDEOH $ IDLU WULDO,QIDFWDW:LOOLDPVjVWULDO$QGHUVRQWHVWLILHGKHKRSHG DVVHVVPHQWRIDWWRUQH\SHUIRUPDQFHUHTXLUHVWKDWHYHU\ :LOOLDPVY&R\OH 1R 1R :LOOLDPVY&R\OH HIIRUW EH PDGH WR HOLPLQDWH WKH GLVWRUWLQJ HIIHFWV RI $V :LOOLDPV KDV IDLOHG WR VKRZ WKDW WKH 2KLR FRXUWV KLQGVLJKWWRUHFRQVWUXFWWKHFLUFXPVWDQFHVRIFRXQVHOjV XQUHDVRQDEO\DSSOLHG6WULFNODQGLQGLVPLVVLQJKLVLQHIIHFWLYH FKDOOHQJHG FRQGXFW DQG WR HYDOXDWH WKH FRQGXFW IURP DVVLVWDQFH RI FRXQVHO FODLP ZH DIILUP WKH GLVWULFW FRXUWjV FRXQVHOjV SHUVSHFWLYH DW WKH WLPH %HFDXVH RI WKH GHFLVLRQ WR GLVPLVV :LOOLDPVjV LQHIIHFWLYH DVVLVWDQFH RI GLIILFXOWLHV LQKHUHQW LQ PDNLQJ WKH HYDOXDWLRQ D FRXUW FRXQVHOFODLP PXVWLQGXOJHDVWURQJSUHVXPSWLRQWKDWFRXQVHOjVFRQGXFW IDOOV ZLWKLQ WKH ZLGH UDQJH RI UHDVRQDEOH SURIHVVLRQDO (%UDG\9LRODWLRQ DVVLVWDQFH WKDW LV WKH GHIHQGDQW PXVW RYHUFRPH WKH SUHVXPSWLRQ WKDW XQGHU WKH FLUFXPVWDQFHV WKH 2XUUHYLHZRI:LOOLDPVjV%UDG\FODLPZLOOEHXQGHUSUH FKDOOHQJHG DFWLRQ mPLJKW EH FRQVLGHUHG VRXQG WULDO $('3$VWDQGDUGVEHFDXVHQRVWDWHFRXUWUHYLHZHGWKHPHULWV VWUDWHJ\l RI WKDW FODLP 8QGHU WKDW VWDQGDUG ZH UHYLHZ PL[HG TXHVWLRQVRIODZDQGIDFWGHQRYR6HH&DUWHUY%HOO ,QPDNLQJ>LWV@GHWHUPLQDWLRQWKHFRXUWVKRXOGNHHSLQ )G WK &LU $OOHJDWLRQV RI %UDG\ PLQGWKDWFRXQVHOjVIXQFWLRQDVHODERUDWHGLQSUHYDLOLQJ YLRODWLRQVDUHPL[HGTXHVWLRQVRIODZDQGIDFWDFFRUGLQJO\ SURIHVVLRQDO QRUPV LV WR PDNH WKH DGYHUVDULDO WHVWLQJ ZHUHYLHZWKHFODLPXQGHUWKDWVWDQGDUG6HHLG:HUHYLHZ SURFHVVZRUNLQWKHSDUWLFXODUFDVH$WWKHVDPHWLPH WKHGLVWULFWFRXUWjVIDFWXDOILQGLQJVRQO\IRUFOHDUHUURU6HHLG WKH FRXUW VKRXOG UHFRJQL]H WKDW FRXQVHO LV VWURQJO\ SUHVXPHGWRKDYHUHQGHUHGDGHTXDWHDVVLVWDQFHDQGPDGH 8QGHU%UDG\Y0DU\ODQG86 DQGLWV DOO VLJQLILFDQW GHFLVLRQV LQ WKH H[HUFLVH RI UHDVRQDEOH SURJHQ\DGHIHQGDQWj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mWKH WKDQFRPSOHWHLQYHVWLJDWLRQDUHUHDVRQDEOHSUHFLVHO\WR JRYHUQPHQWjV HYLGHQWLDU\ VXSSUHVVLRQ µXQGHUPLQHV WKHH[WHQWWKDWUHDVRQDEOHSURIHVVLRQDOMXGJPHQWVVXSSRUW FRQILGHQFHLQWKHRXWFRPHRIWKHWULDOjl.\OHV86DW WKHOLPLWDWLRQVRQLQYHVWLJDWLRQ,QRWKHUZRUGVFRXQVHO TXRWLQJ%DJOH\VXSUD KDVDGXW\WRPDNHUHDVRQDEOHLQYHVWLJDWLRQVRUWRPDNH DUHDVRQDEOHGHFLVLRQWKDWPDNHVSDUWLFXODULQYHVWLJDWLRQV $FFRUGLQJWR:LOOLDPVDGHDOWRH[FKDQJHOLJKWHUVHQWHQFHV XQQHFHVVDU\ ,Q DQ\ LQHIIHFWLYHQHVV FDVH D SDUWLFXODU IRU WHVWLPRQ\ DJDLQVW :LOOLDPV H[LVWHG EHWZHHQ WKH GHFLVLRQQRWWRLQYHVWLJDWHPXVWEHGLUHFWO\DVVHVVHGIRU SURVHFXWLRQ DQG $QGHUVRQ DQG %URRNV SULRU WR :LOOLDPVjV UHDVRQDEOHQHVVLQDOOWKHFLUFXPVWDQFHVDSSO\LQJDKHDY\ WULDO7KDWWKHSURVHFXWLRQGLGQRWGLVFORVHWKHH[LVWHQFHRI PHDVXUHRIGHIHUHQFHWRFRXQVHOjVMXGJPHQW WKH GHDO :LOOLDPV DVVHUWV YLRODWHG KLV )RXUWHHQWK $PHQGPHQWGXHSURFHVVULJKWVDVLQWHUSUHWHGE\%UDG\7R >:@KDWLQYHVWLJDWLRQGHFLVLRQV DUHUHDVRQDEOHGHSHQGV VXSSRUWWKLVFODLP:LOOLDPVSRLQWVWRVHYHUDOSRVWWULDOHYHQWV FULWLFDOO\RQ>LQIRUPDWLRQVXSSOLHGE\WKHGHIHQGDQW@)RU WKDWKHDOOHJHVUDLVHGRXEWDERXWWKHZLWQHVVHVjWHVWLPRQ\WKDW WKH\ZHUHQRWSURPLVHGDUHGXFHGVHQWHQFHLQH[FKDQJHIRU :LOOLDPVY&R\OH 1R 1R :LOOLDPVY&R\OH QHYHUGLUHFWO\H[SODLQHG:KLOHRQHRI:LOOLDPVjVDWWRUQH\V H[DPSOHZKHQWKHIDFWVWKDWVXSSRUWDFHUWDLQSRWHQWLDO ZDVGHFHDVHGDWWKHWLPHRIWKHHYLGHQWLDU\KHDULQJ:LOOLDPV OLQHRIGHIHQVHDUHJHQHUDOO\NQRZQWRFRXQVHOEHFDXVHRI GLGVXESRHQDWKHRWKHUDWWRUQH\EXWGLGQRWFDOOKLPLQWKH ZKDW WKH GHIHQGDQW VDLG WKH QHHG IRU IXUWKHU HYLGHQWLDU\KHDULQJQRUZDVDQ\DIILGDYLWIURPWKLVDWWRUQH\ LQYHVWLJDWLRQ PD\ EH FRQVLGHUDEO\ GLPLQLVKHG RU HYHUVXEPLWWHG:LOOLDPVPRUHRYHUZDVXQFRRSHUDWLYHZLWK HOLPLQDWHGDOWRJHWKHU$QGZKHQDGHIHQGDQWKDVJLYHQ WKHSV\FKRORJLVWVWKDWHYDOXDWHGKLP%DVHGRQ:LOOLDPVjV FRXQVHO UHDVRQ WR EHOLHYH WKDW SXUVXLQJ FHUWDLQ FRQGXFW FRXQVHO PD\ KDYH GHWHUPLQHG WKDW WKH\ ZRXOG EH LQYHVWLJDWLRQV ZRXOG EH IUXLWOHVV RU HYHQ KDUPIXO EHWWHUVHUYHGVLPSO\KDYLQJ:LOOLDPVH[SODLQKLVFKLOGKRRG FRXQVHOjVIDLOXUHWRSXUVXHWKRVHLQYHVWLJDWLRQVPD\QRW DWWKHPLWLJDWLRQKHDULQJ7KH2KLRFRXUWjVGHFLVLRQZDV ODWHU EH FKDOOHQJHG DV XQUHDVRQDEOH ,Q VKRUW LQTXLU\ QRW FRQWUDU\ WR RU DQ XQUHDVRQDEOH DSSOLFDWLRQ RI FOHDUO\ LQWRFRXQVHOjVFRQYHUVDWLRQVZLWKWKHGHIHQGDQWPD\EH HVWDEOLVKHGODZ FULWLFDO WR D SURSHU DVVHVVPHQW RI FRXQVHOjV RWKHU OLWLJDWLRQGHFLVLRQV 7KHVDPHLVWUXHZLWKUHVSHFWWRWKHSUHMXGLFHSURQJ$VWKH 2KLR&RXUWRI$SSHDOVQRWHGWKHHYLGHQFH:LOOLDPVFODLPV ,GDW $VVXPLQJDGHIHQGDQWRYHUFRPHVWKLVKLJK VKRXOGKDYHEHHQLQWURGXFHGJRHVWRDWKHRU\RIPLWLJDWLRQ EXUGHQKHPXVWVWLOOSUHYDLORQWKHVHFRQGSURQJEHIRUHKH WKDW WKH MXU\ IRXQG GLG QRW RXWZHLJK WKH DJJUDYDWLQJ ZLOOUHFHLYHUHOLHI FLUFXPVWDQFHV:LOOLDPVKDVPDGHQRVKRZLQJRWKHUWKDQ PHUHO\DOOHJLQJWKDWmWKHUHLVDUHDVRQDEOHSUREDELOLW\WKDW 7RSUHYDLORQWKHVHFRQGSURQJWKHGHIHQGDQWPXVWVKRZ EXW IRU FRXQVHOjV XQSURIHVVLRQDO HUURUV WKH UHVXOW RI WKH mWKDWWKHUHLVDUHDVRQDEOHSUREDELOLW\WKDWEXWIRUFRXQVHOjV SURFHHGLQJZRXOGKDYHEHHQGLIIHUHQWl,GDW XQSURIHVVLRQDOHUURUVWKHUHVXOWRIWKHSURFHHGLQJZRXOGKDYH EHHQ GLIIHUHQW $ UHDVRQDEOH SUREDELOLW\ LV D SUREDELOLW\ VXIILFLHQWWRXQGHUPLQHFRQILGHQFHLQWKHRXWFRPHl,GDW $JDLQZHQRWHWKDWLWLVLPSRUWDQWWREHDULQPLQGWKDW ZH DUH QRW SURFHHGLQJ GH QRYR LQVWHDG ZH DUH DVVHVVLQJ $V WKH GLVWULFW FRXUW QRWHG ZKHWKHU WKH 2KLR FRXUWjV DSSOLFDWLRQ RI WKH 6WULFNODQG >$@OWKRXJK :LOOLDPV DOOHJHV WKDW KLV FRXQVHO ZHUH LQHIIHFWLYH IRU VWDQGDUGoDQGRQO\WKH6WULFNODQGVWDQGDUGDVLWZDVGHVFULEHG QRW UHTXHVWLQJ WKH DVVLVWDQFH RI D µSV\FKRORJLFDO H[SHUW QHFHVVDU\ WR H[SODLQ >KLV@ EHKDYLRU LQ OLJKW RI KLV SV\FKRVRFLDO E\ WKH 6XSUHPH &RXUW LQ ZDV XQUHDVRQDEOH RU LWV GHYHORSPHQWj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jV :KHWKHULWLVXQOLNHO\WKDWWKHRIIHQVH ZRXOGKDYH FRQYLFWLRQ EHFDPH ILQDO :LOOLDPV 86 DW :H FDQQRW EHHQFRPPLWWHGEXWIRUWKHIDFWWKDWWKHRIIHQGHUZDV DJUHH PRUHRYHU WKDW :LOOLDPVjV FDVH DSSURDFKHV WKH IDFWV LQ :LOOLDPV Y XQGHUGXUHVVFRHUFLRQRUVWURQJSURYRFDWLRQ 7D\ORU RQ ZKLFK WKH GLVVHQW UHOLHV :LOOLDPVY&R\OH 1R 1R :LOOLDPVY&R\OH :KHWKHUDWWKHWLPHRIFRPPLWWLQJWKHRIIHQVHWKH 6WULFNODQGjV UHTXLUHPHQW WKDW ZH DQDO\]H FRXQVHOjV RIIHQGHUEHFDXVHRIDPHQWDOGLVHDVHRUGHIHFWODFNHG LQYHVWLJDWLRQ LQ OLJKW RI WKH GHIHQGDQWjV DFWLRQV DQG VXEVWDQWLDOFDSDFLW\WRDSSUHFLDWHWKHFULPLQDOLW\RIWKH VWDWHPHQWV $V WKH GLVWULFW FRXUW QRWHG :LOOLDPV ZDV RIIHQGHUjVFRQGXFWRUWRFRQIRUPWKHRIIHQGHUjVFRQGXFW XQFRRSHUDWLYH ZLWK D SV\FKRORJLVW LQ WKH SDVW DQG WKDW WRWKHUHTXLUHPHQWVRIWKHODZ EHKDYLRUPD\KDYHLQIOXHQFHGFRXQVHOjVGHFLVLRQQRWWRKDYH 7KH\RXWKRIWKHRIIHQGHU :LOOLDPVDQDO\]HGDJDLQ0RUHLPSRUWDQWO\:LOOLDPVKDG 7KHRIIHQGHUjVODFNRIDVLJQLILFDQWKLVWRU\RISULRU WKHRSSRUWXQLW\WRUDLVHZLWKKLVFRXQVHODOOWKHIDFWVKHDQG FULPLQDOFRQYLFWLRQVDQGGHOLQTXHQF\DGMXGLFDWLRQV WKH GLVVHQW FODLP FRXQVHO VKRXOG KDYH REWDLQHG WKURXJK ,IWKHRIIHQGHUZDVDSDUWLFLSDQWLQWKHRIIHQVHEXWQRW DQRWKHUPHWKRG,WLVQRWDSSDUHQWIURPWKHUHFRUGPRUHRYHU WKH SULQFLSDO RIIHQGHU WKH GHJUHH RI WKH RIIHQGHUjV WKDWFRXQVHOZHUHXQDZDUHRIWKRVHIDFWV 6HYHUDO WLPHV SDUWLFLSDWLRQ LQ WKH RIIHQVH DQG WKH GHJUHH RI WKH GXULQJ:LOOLDPVjVXQVZRUQVWDWHPHQWFRXQVHOWULHGWRHOLFLW RIIHQGHUjVSDUWLFLSDWLRQLQWKHDFWVWKDWOHGWRWKHGHDWKRI LQIRUPDWLRQIURP:LOOLDPVUHJDUGLQJKLVKRPHOLIH:LOOLDPV WKHYLFWLP KDG WKH RSSRUWXQLW\ WR UDLVH WKDW DQG RWKHU LVVXHV LQ WKH $Q\ RWKHU IDFWRUV WKDW DUH UHOHYDQW WR WKH LVVXH RI PLWLJDWLRQKHDULQJ+HFKRVHQRWWRGRVRFKRRVLQJLQVWHDG ZKHWKHUWKHRIIHQGHUVKRXOGEHVHQWHQFHGWRGHDWK WR UHPDUN KRZ KH EODPHG QR RQH IRU KRZ KH WXUQHG RXW VD\LQJ m, GRQjW ZDQW WR EH KXUWLQJ QRERG\ E\ VD\LQJ 2KLR5HY&RGH$QQ 7KHRQO\IDFWRUWKDWIDYRUHG DQ\WKLQJ \RX NQRZl s$ DW &RXQVHO WULHG WR JHW :LOOLDPV ZDV WKH FDWFKDOO FRQWDLQHG LQ VXEVHFWLRQ VHYHQ :LOOLDPVEDFNRQWUDFNEXW:LOOLDPVUHIXVHG :LOOLDPVjVFRXQVHOSUHVHQWHGHYLGHQFHRQWKLVIDFWRULQWKH IRUPRIWHVWLPRQ\WKDW:LOOLDPVKDGDWURXEOHG\RXWK7KH :LOOLDPVDOVRFRPSODLQVWKDWKDGKLVFRXQVHOLQYHVWLJDWHG FRXUWjV ILQGLQJ WKDW FRXQVHOjV GHFLVLRQ QRW WR LQWURGXFH IXUWKHUKHZRXOGKDYHGLVFRYHUHGWKDW:LOOLDPVZDVWHVWHGDV UHGXQGDQWHYLGHQFHDERXW/HZLV:LOOLDPVjVWURXEOHG\RXWK KDYLQJ D ORZ ,4 6SHFLILFDOO\ KDG FRXQVHO UHYLHZHG IROORZHGWKH6XSUHPH&RXUWjVJXLGDQFHDQGDSSOLHGmDVWURQJ :LOOLDPVjVUHFRUGVIURPVFKRROWKRXJKWKHUHLVQRLQGLFDWLRQ SUHVXPSWLRQ WKDW FRXQVHOjV FRQGXFW IDOOV ZLWKLQ WKH ZLGH WKDWFRXQVHOZHUHQRWDZDUHRIWKHLUFRQWHQWWKH\ZRXOGKDYH UDQJHRIUHDVRQDEOHSURIHVVLRQDODVVLVWDQFHlWKDWLWmPLJKWEH GLVFRYHUHGWKHWHVWUHVXOWV6XFKSUDFWLFHLVFRPPRQWRGD\ FRQVLGHUHG VRXQG WULDO VWUDWHJ\l 86 DW :KLOH :LOOLDPVjV H[SHUW WHVWLILHG EHIRUH WKH GLVWULFW FRXUW 7KLV IXUWKHUWHVWLPRQ\RQWKHPLWLJDWLQJIDFWRUSDUWLFXODUO\IURP DUJXPHQWOLNHPXFKRI:LOOLDPVjVDUJXPHQWJRHVWRZKDWLV SURIHVVLRQDOVPLJKWKDYHEHHQKHOSIXOZHGRQRWILQGWKH FRQVLGHUHG VWDQGDUG SUDFWLFH LQ PLWLJDWLRQ KHDULQJV WRGD\ FRXUWjVGHFLVLRQWKDW:LOOLDPVjVFRXQVHOZHUHHIIHFWLYHWREH %XWDVZHKDYHSRLQWHGRXWWKDWLVQRW WKH TXHVWLRQXQGHU DQXQUHDVRQDEOHDSSOLFDWLRQRI6WULFNODQG$VWKHFRXUWRI 6WULFNODQG QRU LV LW WKH TXHVWLRQ XQGHU WKH $('3$ DSSHDOV QRWHG :LOOLDPVjV FRXQVHO SUHVHQWHG D WKHRU\ RI 6WULFNODQG GLUHFWV WKH 2KLR FRXUW WR DQDO\]H HIIHFWLYHQHVV PLWLJDWLRQDQGSURYLGHGHYLGHQFHWRVXSSRUWWKDWWKHRU\7KH EDVHGRQWKHWKHQSUHYDLOLQJQRUPVDQGFRXQVHOjVSHUVSHFWLYH MXU\VLPSO\UHMHFWHGWKHWKHRU\WKDWLVLWUHMHFWHGWKHFDWFKDOO DWWKHWLPH,GDW 7KHTXHVWLRQLVZKHWKHU:LOOLDPVjV PLWLJDWLQJIDFWRUWKDWZRXOGLQFOXGHWURXEOHGFKLOGKRRGV FRXQVHO PHW WKH SURIHVVLRQDO VWDQGDUGV RI WKH WLPH DQG :LOOLDPVKDVSURYLGHGQRLQGLFDWLRQWKDWWKH\GLGQRW6HHLG 7KH GLVVHQW IRFXVHV RQ WKLV DV ZHOO UHDVRQLQJ WKDW KDG DW:KDWFRXQVHONQHZDQGZK\WKH\DFWHGDVWKH\GLGLV FRXQVHO LQYHVWLJDWHG IXUWKHUWKDW LV VSRNHQ WR PRUH RI :LOOLDPVjVUHODWLYHVWKH\FRXOGKDYHHDVLO\GHWHUPLQHGWKDW VRPHRIZKDW:LOOLDPVjVIDWKHUWHVWLILHGWRZDVQRWWUXH7KLV 7KXV ZH GR QRW NQRZ ZKHWKHU FRXQVHO ZHUH DZDUH RI :LOOLDPVjV PD\ZHOOEHWUXH7KHGLVVHQWjVDQDO\VLVKRZHYHURYHUORRNV IDWKHUjV FRQGXFW DQG FKRVH QRW WR SXUVXH WKDW DYHQXH DV WULDO VWUDWHJ\ IRU IHDU LW ZRXOG EH DGYHUVH UDWKHU WKDQ KHOSIXO