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 1RV Y ! 5,&+$5' &+$5/(6 %$57+2/20(: :$55(1 *(1( +$55,6 DQGs8/((1 1,&2/( +(15< 'HIHQGDQWV$SSHOODQWV 1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW)OLQW 1Rn3DXO9*DGROD'LVWULFWsXGJH $UJXHG6HSWHPEHU 'HFLGHGDQG)LOHG1RYHPEHU %HIRUH6,/(5'$8*+75(<DQG*,/0$1&LUFXLW sXGJHV 8QLWHG6WDWHVY 1RV %DUWKRORPHZHWDO BBBBBBBBBBBBBBBBB &2816(/ $5*8('sRDQ(0RUJDQ7UR\0LFKLJDQ0LFKDHO0 /RVDYLR/RXLVYLOOH.HQWXFN\sDPHV/)HLQEHUJ'HWURLW 0LFKLJDQ IRU $SSHOODQWV 0DUN & sRQHV $66,67$17 81,7(' 67$7(6 $77251(< )OLQW 0LFKLJDQ IRU $SSHOOHH21%5,()sRDQ(0RUJDQ7UR\0LFKLJDQ 0LFKDHO 0 /RVDYLR /RXLVYLOOH .HQWXFN\ sDPHV / )HLQEHUJ'HWURLW0LFKLJDQIRU$SSHOODQWV0DUN&sRQHV $66,67$17 81,7(' 67$7(6 $77251(< )OLQW 0LFKLJDQIRU$SSHOOHH BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB 521$/'/((*,/0$1&LUFXLWsXGJH5LFKDUG&KDUOHV %DUWKRORPHZ:DUUHQ*HQH+DUULVDQGs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jV VHQWHQFH DQG 5(0$1'KLVFDVHIRUUHVHQWHQFLQJ ,%$&.*5281' $ )DFWXDOEDFNJURXQG 2Q'HFHPEHUWKH8QLWHG3DUFHO6HUYLFH836 RIILFHLQ)OLQW0LFKLJDQUHFHLYHGDSDFNDJHWKDWDURXVHGWKH VXVSLFLRQ RI 836 HPSOR\HH %ULDQ /D)DOFH +H FRQWDFWHG 8QLWHG6WDWHVY 1RV 1RV 8QLWHG6WDWHVY %DUWKRORPHZHWDO %DUWKRORPHZHWDO LPSULVRQPHQWXQGHUWKHVHFLUFXPVWDQFHVVHULRXVO\DIIHFWVWKH 6HUJHDQW$s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jV VHQWHQFHDQG5(0$1'KLVFDVHIRUUHVHQWHQFLQJ /DZ HQIRUFHPHQW RIILFLDOV GHFLGHG WR PDNH D FRQWUROOHG GHOLYHU\RIWKHSDFNDJH$QXQGHUFRYHUSROLFHRIILFHUSRVLQJ DV D 836 GULYHU GHOLYHUHG WKH SDFNDJH WR :HVW 'DUWPRXWK )OLQW 0LFKLJDQ WKH DGGUHVV VSHFLILHG RQ WKH ODEHO$VRWKHUODZHQIRUFHPHQWRIILFLDOVVHWXSVXUYHLOODQFH DPDQODWHULGHQWLILHGDV+DUULVHPHUJHGIURPWKHKRXVHDW :HVW'DUWPRXWKWRDQVZHUWKHNQRFNRIWKHXQGHUFRYHU RIILFHU+DUULVVLJQHGWKHQDPHm%LOO\sRQHVlDQGDFFHSWHG WKHSDFNDJH 0LQXWHV DIWHU DFFHSWLQJ GHOLYHU\ +DUULV OHIW WKH KRXVH WKURXJKDEDFNGRRU+HWUDYHUVHGWKHQHLJKERUKRRGVWUHHWV IRUWKLUWHHQPLQXWHVDQGVSRNHZLWKQRRQHGXULQJWKLVWLPH 3ROLFH RIILFHUV ZKR ZHUH FRQWLQXLQJ WR REVHUYH +DUULV VXVSHFWHGWKDWKHZDVWU\LQJWRDVFHUWDLQZKHWKHUKHZDVLQ IDFWXQGHUVXUYHLOODQFH $IWHU+DUULVFLUFOHGEDFNWR:HVW'DUWPRXWKDIRXU GRRU FDU DUULYHG DQG +DUULV JRW LQWR WKH EDFN VHDW RQ WKH SDVVHQJHUVLGH7KHFDUZDVGULYHQE\sDMXDQ*DUGQHUZLWK %DUWKRORPHZ DQG &KHUURQ :ULJKW DV SDVVHQJHUV 3ROLFH RIILFHUVIROORZHGWKHFDULQDQXQPDUNHGYDQ*DUGQHUDQG +DUULVVRRQQRWLFHGWKDWWKH\ZHUHEHLQJIROORZHG7KH\VSHG XSEXWZHUHXQDEOHWRHOXGHWKHYDQVR*DUGQHUSXOOHGLQWR D WLUH VWRUH DQG VWRSSHG WKH FDU 7KH FDUjV RFFXSDQWV DOO MXPSHGRXWDQGVWDUWHGUXQQLQJ $GGLWLRQDO SROLFH RIILFHUV DUULYHG RQ WKH VFHQH DQG DSSUHKHQGHG %DUWKRORPHZ *DUGQHU +DUULV DQG :ULJKW %DUWKRORPHZKDGLQFDVKRQKLVSHUVRQ*DUGQHUZDV FDUU\LQJDQG+DUULVSRVVHVVHG,QDGGLWLRQ+DUULV 8QLWHG6WDWHVY 1RV 1RV 8QLWHG6WDWHVY %DUWKRORPHZHWDO %DUWKRORPHZHWDO ZDV FDUU\LQJ D SDJHU WKDW KDG YHU\ UHFHQWO\ UHFHLYHG D WKHTXDQWLW\KDGQRWEHHQSURYHGWRDMXU\PHWWKHILUVWWZR WHOHSKRQHFDOOIURPWKHQHDUE\%XGJHWHO,QQ%DUWKRORPHZ FULWHULDRISODLQHUURUDQDO\VLV7KHHUURUDOVRDIIHFWHGKLV DOVRKDGRQKLVSHUVRQDPRQJRWKHUWKLQJVDWUDIILFFLWDWLRQ mVXEVWDQWLDO ULJKWVl EHFDXVH LW PDGH D GLIIHUHQFH LQ mWKH WKDW OLVWHG KLV DGGUHVV LQ +RXVWRQ 7H[DV DQ DGGUHVV ERRN RXWFRPHRIWKHGLVWULFWFRXUWSURFHHGLQJVl&RWWRQ6&W FRQWDLQLQJPDQ\QDPHVDQGDSLHFHRISDSHUZLWKQXPHULFDO DW ,Q &RWWRQ WKH 6XSUHPH &RXUW DVVXPHG WKDW WKH FDOFXODWLRQVWKDWWKHRIILFHUVEHOLHYHGZHUHGUXJWDEXODWLRQV GLVWULFWFRXUWjVIDLOXUHWRUHTXLUHWKHMXU\WRGHWHUPLQHWKHGUXJ +H LQIRUPHG WKH DUUHVWLQJ RIILFHUV WKDW KH ZDV VWD\LQJ LQ TXDQWLW\EH\RQGDUHDVRQDEOHGRXEWZDVDQREYLRXVHUURUWKDW 5RRPRIWKH%XGJHWHO,QQZKLFKZDVFRQILUPHGE\WKH DIIHFWHG WKH GHIHQGDQWjV VXEVWDQWLDO ULJKWV EXW KHOG WKDW KRWHOjVUHFRUGV7KHUHFRUGVDOVRVKRZHGWKDW5RRPKDG EHFDXVHHYLGHQFHRIWKHGUXJTXDQWLW\ZDVmRYHUZKHOPLQJl EHHQ DVVLJQHG WR m0F*DUWKD sRKQVRQl DQ DOLDV IRU sDMXDQ DQGmHVVHQWLDOO\XQFRQWURYHUWHGlWKHHUURUGLGQRWVXUPRXQW *DUGQHU WKHILQDOKXUGOHRIVHULRXVO\DIIHFWLQJWKHIDLUQHVVLQWHJULW\RU SXEOLFUHSXWDWLRQRIWKHMXGLFLDOSURFHHGLQJV,G 6HYHUDOSROLFHRIILFHUVDFFRPSDQLHG%DUWKRORPHZWR5RRP DW WKH KRWHO %DUWKRORPHZ FRQVHQWHG WR WKH SROLFH 7KH FLUFXPVWDQFHV RI WKH SUHVHQW FDVH DUH GLIIHUHQW VHDUFKLQJWKHURRPEXWWKHFDUGNH\LQWKHLUSRVVHVVLRQIDLOHG (YLGHQFH FRQFHUQLQJ WKH DPRXQW RI PDULMXDQD WKDW WRXQORFNWKHGRRU7KHRIILFHUVKRZHYHUmKDGLQIRUPDWLRQl %DUWKRORPHZ FRQVSLUHG WR GLVWULEXWH ZDV QHLWKHU WKDWWKHDGMDFHQWURRPPLJKWEHLQYROYHGLQGUXJWUDIILFNLQJ RYHUZKHOPLQJQRUHVVHQWLDOO\XQFRQWURYHUWHG)RUH[DPSOH 7KH\ WKHUHIRUH NQRFNHG RQ WKH GRRU WR 5RRP DQG WKH JRYHUQPHQWjV ZLWQHVVHV FRXOG QRW VWDWH ZLWK FHUWDLQW\ DQQRXQFHG WKDW WKH\ ZHUH WKH SROLFH $ PDQ LQVLGH ODWHU ZKHWKHU WKH IRXU DGGLWLRQDO WXEV LQ +DUULVjV UHVLGHQFH KDG LGHQWLILHGDV2WLVsDPHVs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jV VHQWHQFH LW ZRXOG QRW QHFHVVDULO\ 7KHRIILFHUVLQVWUXFWHGKHUWRSXWRQKHUFORWKHVZKLFKVKH DPRXQWWRSURRIRIGUXJTXDQWLW\EH\RQGDUHDVRQDEOHGRXEW SURPSWO\ GLG s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jV VHQWHQFH FRXOG QRW KDYH D FRXSRQ IRU :HVWHUQ 8QLRQ EXVLQHVV FDUGV IURP H[FHHGHGPRQWKVjLPSULVRQPHQW,QVXPZHFRQFOXGH 3KLODGHOSKLDDQGsDPDLFDSUHSDLGWHOHSKRQHFDUGVVHYHUDO WKDW VHQWHQFLQJ %DUWKRORPHZ WR D WHUP RI PRQWKVj FDUGVWKDWWKH\UHFRJQL]HGDVGUXJWDEXODWLRQOHGJHUVDSLHFH 8QLWHG6WDWHVY 1RV 1RV 8QLWHG6WDWHVY %DUWKRORPHZHWDO %DUWKRORPHZHWDO DW WK &LU 0D\ SHU FXULDP RI SDSHU RQ ZKLFK ZDV ZULWWHQ m:KHQ \RX JR WKURXJK XQSXEOLVKHG WDEOH GHFLVLRQ m7KH VWDWXWRU\ PD[LPXP IRU LPPLJUDWLRQV JR WR WKH EDJJDJH FODLP DQG FROOHFW \RXU GLVWULEXWLQJ DQ XQGHWHUPLQHG DPRXQW RI PDULMXDQD LV ILYH EDJJDJHl DQG D SLHFH RI SDSHU RQ ZKLFK ZDV ZULWWHQ WKH \HDUVl +DUULVjV VHQWHQFH RI PRQWKVj LPSULVRQPHQW QDPH m0LFKDHO /HZLVl DQG WKH DGGUHVV m :HVW WKHUHIRUHGRHVQRWLPSOLFDWHKLV)LIWKRU6L[WK$PHQGPHQW 'DUWPRXWKl ULJKWV:HQRWHWKDWLQDQ\HYHQWWKHHYLGHQFHDWWULDOZDV RYHUZKHOPLQJWKDW+DUULVjVFULPLQDOFRQGXFWLQYROYHGDWOHDVW 2WKHURIILFHUVVHDUFKHGWKHKRXVHDW:HVW'DUWPRXWK SRXQGVRIPDULMXDQDZKLFKLVFOHDUO\PRUHWKDQDmVPDOO SXUVXDQWWRWKHVHDUFKZDUUDQWWKDWWKH\KDGREWDLQHGHDUOLHU DPRXQWl WKDWGD\,QWKHEDVHPHQWZHUHIRXUWXEVWKDWZHUHVLPLODUWR WKHRQHLQWKH836SDFNDJHWKDWWKHXQGHUFRYHURIILFHUKDG , 7KH GLVWULFW FRXUW SODLQO\ HUUHG LQ VHQWHQFLQJ MXVW GHOLYHUHG $ FORVHW QH[W WR WKH VWDLUV OHDGLQJ WR WKH %DUWKRORPHZWRPRQWKVjLPSULVRQPHQW EDVHPHQWFRQWDLQHGDVKRWJXQDQGORRVHDPPXQLWLRQ2WKHU ILUHDUPVZHUHIRXQGLQDQXSVWDLUVEHGURRP7KHRIILFHUVDOVR %DUWKRORPHZLQFRQWUDVWWR+DUULVGLGUHFHLYHDVHQWHQFH GLVFRYHUHGDQRWHERRNWKDWFRQWDLQHGZKDWWKH\EHOLHYHGZHUH RI LPSULVRQPHQW LQ H[FHVV RI WKH PRQWK PD[LPXP GUXJOHGJHUV SUHVFULEHGE\86&E'%XWEHFDXVHKHGLG QRW REMHFW DW KLV VHQWHQFLQJ WR mWKH SURSULHW\ RI WKH % 3URFHGXUDOEDFNJURXQG HYLGHQWLDU\VWDQGDUGXVHGE\WKHGLVWULFWFRXUWLQGHWHUPLQLQJ GUXJTXDQWLW\lZHZLOOYDFDWHKLVVHQWHQFHRQO\LILWVDWLVILHV 2QsDQXDU\WKHIHGHUDOJUDQGMXU\LQWKH(DVWHUQ WKH mSODLQ HUURUl VWDQGDUG VHW IRUWK LQ 5XOH E RI WKH 'LVWULFWRI0LFKLJDQLQGLFWHG%DUWKRORPHZ*DUGQHU+DUULV )HGHUDO 5XOHV RI &ULPLQDO 3URFHGXUH 8QLWHG 6WDWHV Y +HQU\DQGsDFNVRQIRUFRQVSLUDF\WRGLVWULEXWHPDULMXDQDLQ 6WHZDUWBB)GBB1RV YLRODWLRQRI86&DQGD,WDOVRLQGLFWHG :/DW WK&LU +DUULVIRUSRVVHVVLRQZLWKLQWHQWWRGLVWULEXWHPDULMXDQDLQ 6HSWm8QGHUWKDWWHVWEHIRUHDQDSSHOODWHFRXUW YLRODWLRQRI86&DDQG86&DQGIRU FDQFRUUHFWDQHUURUQRWUDLVHGDWWULDOWKHUHPXVWEHHUURU EHLQJDIHORQLQSRVVHVVLRQRIDILUHDUPLQYLRODWLRQRI WKDW LV SODLQ DQG WKDW DIIHFW>V@ VXEVWDQWLDO ULJKWVl 86&J7KHJUDQGMXU\UHWXUQHGDILUVWVXSHUFHGLQJ 8QLWHG 6WDWHV Y &RWWRQ 6 &W LQGLFWPHQWRQ$SULOZKLFKUHSHDWHGWKHFKDUJHVRI LQWHUQDO TXRWDWLRQ PDUNV RPLWWHG DOWHUDWLRQ LQ RULJLQDO WKH HDUOLHU ELOO EXW VSHFLILHG WKDW WKH FRQVSLUDF\ H[LVWHG :HPD\H[HUFLVHRXUGLVFUHWLRQWRQRWLFHWKHHUURULIWKHVH EHWZHHQDSSUR[LPDWHO\DQG'HFHPEHURI WKUHHFRQGLWLRQVDUHPHWmEXWRQO\LIWKHHUURUVHULRXVO\ DIIHFW>V@WKHIDLUQHVVLQWHJULW\RUSXEOLFUHSXWDWLRQRIMXGLFLDO $OOGHIHQGDQWVSOHGQRWJXLOW\*DUGQHUSURFHHGHGWRWULDO SURFHHGLQJVl,GDOWHUDWLRQLQRULJLQDO ILUVWDQGZDVFRQYLFWHGRQ0D\7KHUHPDLQLQJIRXU GHIHQGDQWVZHUHWULHGWRJHWKHUsXVWEHIRUHWKHYRLUGLUHDW ,QOLJKWRI$SSUHQGLVHQWHQFLQJ%DUWKRORPHZWRDWHUPRI WKHLUMRLQWWULDOWKHSURVHFXWRUDJUHHGWRGLVPLVVWKHILUHDUP LPSULVRQPHQW LQ H[FHVV RI PRQWKV ZLWKRXW WKH MXU\ FRXQW DJDLQVW +DUULV 7KH MXU\ WKHQ KHDUG WHVWLPRQ\ IURP GHWHUPLQLQJWKHTXDQWLW\RIGUXJVLQYROYHGZDVDQREYLRXV YDULRXV ODZ HQIRUFHPHQW RIILFHUV WKDW GHWDLOHG WKHLU HUURU8QLWHG6WDWHVY&OHDYHV)GWK&LU REVHUYDWLRQV IURP WKH KRWHO DQG KRXVH VHDUFKHV 7KLV KROGLQJWKDWVHQWHQFLQJDGHIHQGDQWLQH[FHVVRIWKH WHVWLPRQ\FDWDORJXHGWKHLWHPVWKDWWKHRIILFHUVGLVFRYHUHG VWDWXWRU\PD[LPXPIRUDQXQGHWHUPLQHGGUXJTXDQWLW\ZKHUH DQG H[SODLQHG KRZ WKRVH LWHPV FRQQHFWHG %DUWKRORPHZ 8QLWHG6WDWHVY 1RV 1RV 8QLWHG6WDWHVY %DUWKRORPHZHWDO %DUWKRORPHZHWDO *DUGQHU+DUULV+HQU\DQGsDFNVRQWRHDFKRWKHUWKURXJK PDUNVRPLWWHG7KHILUVWTXHVWLRQWKHQLVZKHWKHUDWHUPRI QDPHV QLFNQDPHV DQG WHOHSKRQH QXPEHUV DV ZHOO DV PRQWKVH[FHHGVWKHVWDWXWRU\PD[LPXPIRUDPDULMXDQD FRPPRQSODFHVDQGEXVLQHVVHV7KHMXURUVDOVRKHDUGIURP FRQVSLUDF\ FRQYLFWLRQ ZKHUH WKH DPRXQW RI WKH GUXJ LV *DUGQHUZKRZDVFDOOHGDVDJRYHUQPHQWZLWQHVV XQGHWHUPLQHG *DUGQHUWROGWKHMXU\RIKLVGHDOLQJVZLWK%DUWKRORPHZ +DUULV DUJXHV WKDW 86& E IXUQLVKHV WKH +DUULVDQGsDFNVRQ+HGHVFULEHGWKUHHRFFDVLRQVLQ2FWREHU DSSOLFDEOHVWDWXWRU\PD[LPXP7KDWVXEVHFWLRQSURYLGHVWKDW DQG1RYHPEHURIZKHQKHSXUFKDVHGPDULMXDQDIURP DQ\ SHUVRQ ZKR YLRODWHV WKH SURKLELWLRQ RQ SRVVHVVLQJ RU sDFNVRQLQWKHEDVHPHQWRI+DUULVjVUHVLGHQFHDW:HVW GLVWULEXWLQJ PDULMXDQD mE\ GLVWULEXWLQJ D VPDOO DPRXQW RI 'DUWPRXWK$OWKRXJKsDFNVRQKDQGOHGWKHPDULMXDQD+DUULV PDULKXDQDIRUQRUHPXQHUDWLRQVKDOOEHWUHDWHGDVSURYLGHGLQ SDUWLFLSDWHGLQHDFKWUDQVDFWLRQHLWKHUE\GLUHFWLQJ*DUGQHUWR VHFWLRQ RIWKLVWLWOHDQGVHFWLRQRI7LWOHl WKHEDVHPHQWRUDFFHSWLQJSD\PHQW*DUGQHUHVWLPDWHGWKDW 86& E 7KH PD[LPXP WHUP RI LPSULVRQPHQW GXULQJWKHWLPHKHZDVGHDOLQJZLWK%DUWKRORPHZ+DUULVDQG XQGHULVRQH\HDU,QFRQWUDVWWKHJRYHUQPHQWFRQWHQGV sDFNVRQ WKRVH WKUHH LQGLYLGXDOV DQG D FRXSOH RI RWKHUV WKDW 86& E' ZKLFK SURYLGHV IRU D WUDIILFNHG LQ D WRWDO RI EHWZHHQ DQG SRXQGV RI PD[LPXPVHQWHQFHRIILYH\HDUVm>L@QWKHFDVHRIOHVVWKDQ PDULMXDQD NLORJUDPVRIPDULKXDQDlLVWKHVWDWXWRU\PD[LPXP 7KHMXU\DOVRKHDUGWHVWLPRQ\FRQFHUQLQJHYHQWVWKDWWRRN :H EHOLHYH WKDW WKH JRYHUQPHQW LV FRUUHFW %HFDXVH SODFHRXWVLGHRI0LFKLJDQ)RXUDUHSHUWLQHQWWRWKLVDSSHDO $SSUHQGLLVFRQFHUQHGZLWKWKHIDFWVWKDWDMXU\PXVWGHFLGH )LUVW3HQQV\OYDQLD6WDWH3ROLFH2IILFHU&DUOWRQ:DWVRQWROG mWKH SURSHU µEDVHOLQHj RU µGHIDXOWj SURYLVLRQ LV QRW WKH WKHMXURUVWKDWZKLOHZRUNLQJXQGHUFRYHULQ3KLODGHOSKLDLQ SURYLVLRQZLWKWKHORZHVWSHQDOW\EXWUDWKHUWKHRQHZKLFK WKH VXPPHU RI KH WZLFH SXUFKDVHG PDULMXDQD IURP VWDWHVDFRPSOHWHFULPHXSRQWKHIHZHVWIDFWVl8QLWHG6WDWHV sDFNVRQ 6HFRQG sXOLHW %URZQ ZKR ZDV PDUULHG WR Y 2XWHQ )G G &LU HPSKDVLV LQ %DUWKRORPHZ IURP WR WHVWLILHG WKDW ZKHQ WKH\ RULJLQDO6HFWLRQEWKHUHIRUHFDQQRWEHWKHGHIDXOW ZHUHOLYLQJWRJHWKHULQ+RXVWRQ7H[DVLQVKHREVHUYHG SURYLVLRQIRUPDULMXDQDYLRODWLRQVZKHUHWKHTXDQWLW\RIWKH ODUJH TXDQWLWLHV RI PDULMXDQD LQ WKHLU KRPH RQ VHYHUDO GUXJ LV XQGHWHUPLQHG EHFDXVH LW UHTXLUHV SURRI RI DQ RFFDVLRQV6KHDOVRKHDUG%DUWKRORPHZGLUHFWDWKLUGSDUW\WR DGGLWLRQDO IDFWnWKH DEVHQFH RI UHPXQHUDWLRQ ,G DW WUDQVSRUW WKH GUXJV WR ,QGLDQD RQ DW OHDVW RQH RI WKHVH DFFRUG 8QLWHG 6WDWHV Y 6HOODUV 1R :/ RFFDVLRQV7KLUGVHYHUDOZLWQHVVHVUHODWHGWKHLUH[SHULHQFHV DW WK &LU 'HF XQSXEOLVKHG WDEOH DVFRXULHUVIRU%DUWKRORPHZDQGsDFNVRQ5RELQ&DOGZHOO GHFLVLRQ GHFOLQLQJ WR DSSO\ E EHFDXVH WKH IRU H[DPSOH WROG KRZ %DUWKRORPHZ SDLG KHU WR WUDQVSRUW VXSHUVHGLQJLQGLFWPHQWFKDUJHGWKHGHIHQGDQWZLWKLQWHQWWR ODUJHVXPVRIFDVKEHWZHHQ,QGLDQDDQG7H[DVLQWKHVXPPHU GLVWULEXWHDPHDVXUDEOHTXDQWLW\RIPDULMXDQDQRWZLWKHLWKHU DQGIDOORIWRIDFLOLWDWHKLVGUXJWUDQVDFWLRQV7ZRRWKHU VLPSOH SRVVHVVLRQ RU WKH LQWHQW WR GLVWULEXWH ZLWKRXW FRXULHUV %HDWULFH %ROHU DQG .DKOLD 0RRUH VWDWHG WKDW RQ UHPXQHUDWLRQ VHSDUDWHRFFDVLRQVLQHDFKKDGFDUULHGEXQGOHVRIFDVK IURP)OLQW0LFKLJDQWR+RXVWRQ7H[DVDWWKHEHKHVWRIDQG :HWKHUHIRUHFRQFOXGHWKDWE'LVWKHVWDWXWHWKDW DFFRPSDQLHG E\ %DUWKRORPHZ DQG sDFNVRQ )LQDOO\ WKH SUHVFULEHV WKH PD[LPXP VHQWHQFH IRU SRVVHVVLQJ RU JRYHUQPHQWSUHVHQWHGHYLGHQFHFRQFHUQLQJWKHDFWLYLWLHVRI FRQVSLULQJ WR GLVWULEXWH DQ XQGHWHUPLQHG DPRXQW RI 5RKDQ(GZDUGVLQ3KRHQL[$UL]RQD2QsXO\ODZ PDULMXDQD8QLWHG6WDWHVYsDFNVRQ1R:/ 8QLWHG6WDWHVY 1RV 1RV 8QLWHG6WDWHVY %DUWKRORPHZHWDO %DUWKRORPHZHWDO PLQLPDOl866HQWHQFLQJ*XLGHOLQHV0DQXDO%FPW HQIRUFHPHQW RIILFLDOV ORFDWHG D VXEVWDQWLDO DPRXQW RI QQ7KHGHWHUPLQDWLRQRIDGHIHQGDQWjVFXOSDELOLW\ PDULMXDQDDW(GZDUGVjVWRZQKRXVH,PPHGLDWHO\SULRUWRKLV mLVKHDYLO\GHSHQGHQWXSRQWKHIDFWVDQGWKHGHIHQGDQWKDV DUUHVW(GZDUGVKDGEHHQWDNHQE\DVVRFLDWHVWRDKRWHOURRP WKHEXUGHQRISURYLQJPLWLJDWLQJIDFWRUVE\DSUHSRQGHUDQFH LQ7HPSH$UL]RQDWKDWKDGEHHQUHVHUYHGE\+HQU\ RIWKHHYLGHQFHl8QLWHG6WDWHVY3HUU\)GWK &LULQWHUQDOFLWDWLRQDQGTXRWDWLRQPDUNVRPLWWHG 2Q )HEUXDU\ WKH MXU\ FRQYLFWHG WKH UHPDLQLQJ GHIHQGDQWVRQDOOSHQGLQJFKDUJHV7KHGLVWULFWFRXUWWKHQ +DUULVZDVDIXOO\LQWHJUDWHGPHPEHURIDVXEVWDQWLDOGUXJ VHQWHQFHG%DUWKRORPHZWRPRQWKVjLPSULVRQPHQW+DUULV FRQVSLUDF\WKDWXVHGKLVUHVLGHQFHDVDEDVHRIRSHUDWLRQV+H UHFHLYHG WZR FRQFXUUHQW PRQWK VHQWHQFHV +HQU\ ZDV SDUWLFLSDWHGLQVHYHUDOGUXJWUDQVDFWLRQVWKDWWRRNSODFHLQKLV VHQWHQFHG WR GD\Vj LPSULVRQPHQW sDFNVRQjV WHUP RI EDVHPHQWVWRUHGDVKRWJXQDQGDPPXQLWLRQLQWKHFORVHWQHDU LPSULVRQPHQWZDVVHWDWPRQWKV WKHVWDLUVWRKLVEDVHPHQWDQGSHUVRQDOO\UHFHLYHGDWOHDVWRQH ODUJHVKLSPHQWRIPDULMXDQD+DUULVZDVWKHUHIRUHQRWHQWLWOHG %DUWKRORPHZ+DUULV+HQU\DQGsDFNVRQWLPHO\DSSHDOHG WRHLWKHUDPLQRUUROHRUDPLQLPDOUROHUHGXFWLRQRQWKHVH WKHMXGJPHQWVDJDLQVWWKHP$SUHYLRXVSDQHORIWKLVFRXUW IDFWV7KHGLVWULFWFRXUWGLGQRWHUULQUHIXVLQJWRJUDQWKLP KDV DOUHDG\ GLVSRVHG RI sDFNVRQjV DSSHDO E\ YDFDWLQJ KLV VXFKDUHGXFWLRQ VHQWHQFHDQGUHPDQGLQJ WKH FDVHIRUUHVHQWHQFLQJ8QLWHG 6WDWHVYsDFNVRQ1R:/WK&LU + 7KHGLVWULFWFRXUWGLGQRWHUULQVHQWHQFLQJ+DUULVWR 0D\XQSXEOLVKHGWDEOHGHFLVLRQ7KLVOHDYHVXV PRQWKVjLPSULVRQPHQW ZLWKWKHDSSHDOVRI%DUWKRORPHZ+DUULVDQG+HQU\ +DUULV ILQDOO\ DUJXHV WKDW WKH GLVWULFW FRXUW YLRODWHG KLV ,,$1$/<6,6 ULJKWVXQGHUWKH)LIWKDQG6L[WK$PHQGPHQWVE\QRWUHTXLULQJ WKH LQGLFWPHQW WR DOOHJH DQG WKH MXU\ WR ILQG EH\RQG D $ 7KH GLVWULFW FRXUW GLG QRW HUU LQ GHQ\LQJ UHDVRQDEOHGRXEWWKHSUHFLVHTXDQWLW\RIPDULMXDQDWKDWKH %DUWKRORPHZjVPRWLRQWRVXSSUHVV SRVVHVVHG RU FRQVSLUHG WR GLVWULEXWH ,QVWHDG WKH MXGJH GHWHUPLQHGWKHDPRXQWDWVHQWHQFLQJ+DUULVPDNHVWKHVDPH :HEHJLQZLWKDFKDOOHQJHWRDUXOLQJE\WKHGLVWULFWFRXUW DUJXPHQWZLWKUHVSHFWWRWKHHQKDQFHPHQWRIKLVEDVHRIIHQVH LQDGYDQFHRIWKHMRLQWWULDO%DUWKRORPHZPRYHGWKHGLVWULFW OHYHOIRUSRVVHVVLQJDILUHDUPEHFDXVHWKHMXGJHQRWWKHMXU\ FRXUWWRVXSSUHVVWKHHYLGHQFHREWDLQHGE\WKHSROLFHLQFLGHQW IRXQGWKHIDFWRI+DUULVjVILUHDUPSRVVHVVLRQ WRKLVDUUHVW+HDUJXHGWKDWKLV)RXUWK$PHQGPHQWULJKWV ZHUHYLRODWHGEHFDXVHWKHSROLFHKDGQHLWKHUDZDUUDQWQRU 7KH6XSUHPH&RXUWKDVKHOGWKDWm>R@WKHUWKDQWKHIDFWRI SUREDEOHFDXVHWRDUUHVWKLP7KHGLVWULFWFRXUWGLVDJUHHG DSULRUFRQYLFWLRQDQ\IDFWWKDWLQFUHDVHVWKHSHQDOW\IRUD ILQGLQJ WKDW WKH SROLFH KDG SUREDEOH FDXVH WR DUUHVW FULPH EH\RQG WKH SUHVFULEHG VWDWXWRU\ PD[LPXP PXVW EH %DUWKRORPHZ m$ GLVWULFW FRXUWjV GHQLDO RI D PRWLRQ WR VXEPLWWHGWRDMXU\DQGSURYHGEH\RQGDUHDVRQDEOHGRXEWl VXSSUHVVHYLGHQFHLVUHYLHZHGXQGHUDK\EULGVWDQGDUG,WV $SSUHQGL Y 1HZ sHUVH\ 86 m%XW ILQGLQJVRIIDFWDUHUHYLHZHGXQGHUWKHµFOHDUO\HUURQHRXVj $SSUHQGLLVQRWWULJJHUHGZKHUHWKHGHIHQGDQWUHFHLYHVDWHUP VWDQGDUGEXWLWVFRQFOXVLRQVRIODZDUHUHYLHZHGGHQRYRl RILPSULVRQPHQWZLWKLQWKHVWDWXWRU\PD[LPXPWKDWZRXOG 8QLWHG6WDWHVY2UODQGR)GWK&LUFHUW KDYHDSSOLHGHYHQZLWKRXWWKHHQKDQFLQJIDFWRUVXFKDVWKH GHQLHG 1R :/ 86 2FW GUXJDPRXQWl%XUQV)GDWLQWHUQDOTXRWDWLRQ 8QLWHG6WDWHVY 1RV 1RV 8QLWHG6WDWHVY %DUWKRORPHZHWDO %DUWKRORPHZHWDO $IWHUDSROLFHRIILFHUGHOLYHUHGWKHVKLSPHQWRIPDULMXDQD FULPH LV D IDFWXDO ILQGLQJ VXEMHFW WR WKH FOHDUO\ HUURQHRXV WR+DUULVRWKHURIILFHUVREVHUYHG+DUULVH[LWKLVKRXVHDQG VWDQGDUGRIUHYLHZl8QLWHG6WDWHVY(OGHU)G VWUROOWKHQHLJKERUKRRGLQDPDQQHUVXJJHVWLQJWKDWKHZDV WK&LU WU\LQJWRGHWHUPLQHZKHWKHUKHZDVXQGHUVXUYHLOODQFH7KHQ DFDUGURYHE\DQG+DUULVJRWLQ3ROLFHRIILFHUVIROORZHGWKH 7KHFRPPHQWDU\WRWKH6HQWHQFLQJ*XLGHOLQHVH[SODLQVWKDW YHKLFOH LQ DQ XQPDUNHG YDQ 7KH FDU FRQWDLQLQJ +DUULV m>W@KH DGMXVWPHQW VKRXOG EH DSSOLHG LI WKH ZHDSRQ ZDV VWRSSHGDQGLWVRFFXSDQWVIOHG2QHRIWKHIOHHLQJRFFXSDQWV SUHVHQWXQOHVVLWLVFOHDUO\LPSUREDEOHWKDWWKHZHDSRQZDV ZDV%DUWKRORPHZ%DUWKRORPHZFRQWHVWVQRQHRIWKHVHIDFWV FRQQHFWHG ZLWK WKH RIIHQVHl 86 6HQWHQFLQJ *XLGHOLQHV DVIRXQGE\WKHGLVWULFWFRXUW7KH\DUHVXIILFLHQWWRVXSSRUW 0DQXDO'FPWQ8QLWHG6WDWHVY6WHZDUWBB WKHFRXUWjVGHWHUPLQDWLRQWKDWWKHSROLFHRIILFHUVKDGSUREDEOH )GBB1RV FDXVH WR DUUHVW %DUWKRORPHZ 6HH HJ 8QLWHG 6WDWHV Y :/DW WK&LU6HSW +XJKHV)GWK&LUILQGLQJWKDWDQ UHFLWLQJDQGDSSO\LQJWKLVFRPPHQWDU\2Q'HFHPEHU DUUHVW IRU LOOHJDO GUXJ DFWLYLW\ ZDV VXSSRUWHG E\ SUREDEOH DVKRWJXQDQGORRVHDPPXQLWLRQZHUHIRXQGLQDFORVHW FDXVH ZKHUH WKH VXVSHFW ZDV SUHVHQW LQ DQ DUHD NQRZQ IRU QH[WWRWKHVWDLUZD\WKDWOHGWR+DUULVjVEDVHPHQW0DULMXDQD GUXJ WUDIILFNLQJ HQJDJHG LQ HYHQWV FRQVLVWHQW ZLWK GUXJ VDOHV ZHUH FRQGXFWHG LQ WKH EDVHPHQW $W OHDVW DV WR WKH WUDIILFNLQJIOHGDIWHUVHHLQJWKHSROLFHDQGWULHGWRFRQFHDO VKRWJXQ +DUULV KDV IDLOHG WR VKRZ WKDW LW ZDV mFOHDUO\ WKHVXEMHFWRIKHUDFWLYLWLHV LPSUREDEOHWKDWWKHZHDSRQZDVFRQQHFWHGZLWKWKHRIIHQVHl % 7KH GLVWULFW FRXUW GLG QRW HUU LQ SHUPLWWLQJ WKH * 7KHGLVWULFWFRXUWGLGQRWHUULQUHIXVLQJWRUHGXFH SURVHFXWRUWRH[HUFLVHSHUHPSWRU\FKDOOHQJHVDJDLQVW +DUULVjVEDVHRIIHQVHOHYHOIRUKLVUROHLQWKHRIIHQVH SRWHQWLDOMXURUV$GDPV&KDWPRQDQG+LFNV +DUULVDOVRFODLPVWKDWWKHGLVWULFWFRXUWFOHDUO\HUUHGZKHQ :HWXUQQH[WWRWKHGHIHQGDQWVjREMHFWLRQVUHODWLQJWRWKH LWUHIXVHGKLVUHTXHVWIRUDPLQLPDOUROHUHGXFWLRQLQKLVEDVH FRPSRVLWLRQ RI WKH MXU\ %DUWKRORPHZ +DUULV DQG +HQU\ RIIHQVH OHYHO $OWKRXJK KH DUJXHV RQ DSSHDO WKDW KH ZDV FODLPWKDWWKHSURVHFXWRUH[HUFLVHGKLVSHUHPSWRU\FKDOOHQJHV HQWLWOHG WR HLWKHU D PLQLPDOUROH RU PLQRUUROH UHGXFWLRQ LQDUDFLDOO\DQGVH[XDOO\GLVFULPLQDWRU\PDQQHULQYLRODWLRQ +DUULV GLG QRW VHHN WKH ODWWHU DW WKH GLVWULFW FRXUW OHYHO RIWKH(TXDO3URWHFWLRQ&ODXVH6HHs(%Y$ODEDPDH[UHO 8QLWHG 6WDWHV 6HQWHQFLQJ *XLGHOLQHV 0DQXDO % 7%86SURKLELWLQJWKHH[HUFLVHRIVH[ LQVWUXFWVWKHVHQWHQFLQJFRXUWWRGHFUHDVHDGHIHQGDQWjVEDVH EDVHGSHUHPSWRU\FKDOOHQJHV%DWVRQY.HQWXFN\86 RIIHQVHOHYHOE\IRXUSRLQWVLIKHZDVDPLQLPDOSDUWLFLSDQWLQ SURKLELWLQJWKHH[HUFLVHRIUDFHEDVHGSHUHPSWRU\ WKH FULPLQDO DFWLYLW\ RU E\ WZR SRLQWV LI KH ZDV D PLQRU FKDOOHQJHV7KHSURVHFXWRUH[HUFLVHGSHUHPSWRU\FKDOOHQJHV SDUWLFLSDQW m:H ZLOO UHYHUVH D GLVWULFW FRXUWjV ILQGLQJ WR H[FOXGH WKUHH EODFN IHPDOHV IURP WKH MXU\ YHQLUH sHDQ UHJDUGLQJ D GHIHQGDQWjV UROH LQ DQ RIIHQVH RQO\ LI ZH $GDPV*HUDOGLQH&KDWPRQDQG.LPHUO\+LFNV)LQGLQJWKDW GHWHUPLQHWKDWWKHILQGLQJLVFOHDUO\HUURQHRXVl8QLWHG6WDWHV WKH SURVHFXWRU GLG QRW VWULNH WKHVH SRWHQWLDO MXURUV IRU Y%XUQV)GWK&LU GLVFULPLQDWRU\ UHDVRQV WKH GLVWULFW FRXUW SHUPLWWHG WKHLU UHPRYDO:KHWKHUDSDUW\H[HUFLVHGLWVSHUHPSWRU\FKDOOHQJHV $ PLQLPDO SDUWLFLSDQW LV RQH ZKR LV mSODLQO\ DPRQJ WKH LQ D GLVFULPLQDWRU\ PDQQHU LV D ILQGLQJ RI IDFW ZKLFK ZH OHDVWFXOSDEOHRIWKRVHLQYROYHGLQWKHFRQGXFWRIDJURXSl UHYLHZXQGHUWKHFOHDUO\HUURQHRXVVWDQGDUG8QLWHG6WDWHVY DQGDPLQRUSDUWLFLSDQWLVRQHZKRmLVOHVVFXOSDEOHWKDQPRVW RWKHUSDUWLFLSDQWVEXWZKRVHUROHFRXOGQRWEHGHVFULEHGDV 8QLWHG6WDWHVY 1RV 1RV 8QLWHG6WDWHVY %DUWKRORPHZHWDO %DUWKRORPHZHWDO LV D UHDVRQDEOH RQHl +HLJKWV &PW\ &RQJUHVV Y +LOOWRS D@FR $QDO\VLVRID%DWVRQFODLPLVDWKUHHVWHSSURFHVV)LUVW FRQVSLUDWRULVQRWQHFHVVDULO\UHVSRQVLEOHIRUWKHWRWDODPRXQW WKH GHIHQGDQWV PXVW PDNH D SULPD IDFLH VKRZLQJ WKDW WKH RI >PDULMXDQD@ LQYROYHG LQ WKH FRQVSLUDF\ IRU SXUSRVHV RI SURVHFXWRU UHPRYHG D SRWHQWLDO MXURU IRU D GLVFULPLQDWRU\ HVWDEOLVKLQJKLVEDVHRIIHQVHOHYHO5DWKHUDSDUWLFLSDQWLV UHDVRQ,IWKHGHIHQGDQWVPDNHWKLVVKRZLQJWKHSURVHFXWRU UHVSRQVLEOH IRU RWKHU FRQVSLUDWRUVj FRQGXFW RQO\ LI WKDW KDVWKHEXUGHQWRDUWLFXODWHDQRQGLVFULPLQDWRU\UHDVRQIRUWKH FRQGXFWZDVUHDVRQDEO\IRUHVHHDEOHWRKLPDQGLQIXUWKHUDQFH UHPRYDO$VVXPLQJWKDWWKHSURVHFXWRUGRHVVRWKHWULDOFRXUW RIWKHH[HFXWLRQRIWKHMRLQWO\XQGHUWDNHQFULPLQDODFWLYLW\l PXVWWKHQGHWHUPLQHZKHWKHUWKHRSSRQHQWRIWKHSHUHPSWRU\ 8QLWHG6WDWHVYsHQNLQV)GWK&LU VWULNHVKDVSURYHQSXUSRVHIXOGLVFULPLQDWLRQ,GDW VHHDOVR866HQWHQFLQJ*XLGHOLQHV0DQXDO%FPW Q7KHHYLGHQFHDWWULDOHVWDEOLVKHGWKDW+DUULVDFFHSWHGD ,Q WKLV FDVH WKH SURVHFXWRU RIIHUHG GLIIHUHQW UHDVRQV IRU SDFNDJHFRQWDLQLQJDWXEZLWKDSSUR[LPDWHO\SRXQGVRI HDFKRIWKHWKUHHSHUHPSWRU\FKDOOHQJHV+HVRXJKWWRVWULNH PDULMXDQDLQVLGHDQGWKDWIRXUVLPLODUWXEVZHUHIRXQGLQKLV $GDPVEHFDXVHVKHKDGVKRWKHUKXVEDQGDQGKDGDVRQZKR UHVLGHQFH7KLVDORQHVXIILFHVWRVXSSRUWWKHGLVWULFWFRXUWjV KDG EHHQ FRQYLFWHG RI D IHORQ\ &KDWPRQ KDG JDWKHUHG GHWHUPLQDWLRQ WKDW KH ZDV UHVSRQVLEOH IRU SRXQGV RI PRQH\ WR KLUH WKH DWWRUQH\ UHSUHVHQWLQJ sDFNVRQ IRU KHU PDULMXDQD WXEV [ SRXQGVWXE SRXQGV 7KH JUDQGVRQ+LFNVKDGDORXGYRLFHZDVSK\VLFDOO\ODUJHDQG WHVWLPRQ\ RI %URZQ DQG *DUGQHU DV ZHOO DV WKDW RI ODZ LPSUHVVHGWKHSURVHFXWRUDVDKLJKO\RSLQLRQDWHGSHUVRQ HQIRUFHPHQW RIILFHUV FRQFHUQLQJ GUXJ WDEXODWLRQV IRXQG LQ %DUWKRORPHZjV SRVVHVVLRQ VXSSRUW D ILQGLQJ WKDW 7KHGHIHQGDQWVFKDUDFWHUL]HWKHSURVHFXWRUjVH[SODQDWLRQV %DUWKRORPHZ ZDV UHVSRQVLEOH IRU DW OHDVW DQ DGGLWLRQDO IRUH[FXVLQJ$GDPVDQG&KDWPRQDVUHO\LQJmLQSDUWlRQWKH SRXQGV:HDUHWKXVXQDEOHWRFRQFOXGHWKDWWKHGLVWULFWFRXUW IDFWWKDWmWKH\KDGUHODWLYHVLQWKHFULPLQDOMXVWLFHV\VWHPl FOHDUO\ HUUHG LQ GHWHUPLQLQJ WKH DPRXQWV RI PDULMXDQD IRU $FFRUGLQJ WR %DUWKRORPHZ +DUULV DQG +HQU\ ZH QHHG ZKLFK%DUWKRORPHZDQG+DUULVZHUHUHVSRQVLEOH SURFHHG QR IXUWKHU 7KH\ FRQWHQG WKDW EHFDXVH D GLVSURSRUWLRQDWH QXPEHU RI EODFN SHRSOH DUH LQFDUFHUDWHG ) 7KHGLVWULFWFRXUWGLGQRWHUULQHQKDQFLQJ+DUULVjV VXFKDQH[SODQDWLRQLVQRWUDFHQHXWUDO7KH6XSUHPH&RXUW EDVH RIIHQVH OHYHO IRU SRVVHVVLRQ RI D ILUHDUP LQ KRZHYHUKDVUHMHFWHGWKLVYLHZm>'@LVSDUDWHLPSDFWVKRXOG FRQQHFWLRQZLWKWKHRIIHQVH EH JLYHQ DSSURSULDWH ZHLJKW LQ GHWHUPLQLQJ ZKHWKHU WKH SURVHFXWRUDFWHGZLWKDIRUELGGHQLQWHQW EXWLWZLOOQRWEH +DUULV QH[W FKDOOHQJHV WKH GLVWULFW FRXUWjV GHFLVLRQ WR FRQFOXVLYH LQ WKH SUHOLPLQDU\ UDFHQHXWUDOLW\ VWHS RI WKH LQFUHDVH KLV EDVH RIIHQVH OHYHO E\ WZR SRLQWV SXUVXDQW WR %DWVRQ LQTXLU\ $Q DUJXPHQW UHODWLQJ WR WKH LPSDFW RI D 8QLWHG6WDWHV6HQWHQFLQJ*XLGHOLQHV0DQXDO'E FODVVLILFDWLRQGRHVQRWDORQHVKRZLWVSXUSRVHl+HUQDQGH] EHFDXVHLWIRXQGWKDWKHSRVVHVVHGILUHDUPVLQFRQQHFWLRQZLWK Y1HZ7@KHGLVWULFWFRXUWKDVWKHUHVSRQVLELOLW\ EDVHPHQWDQGWKDW+DUULVSDUWLFLSDWHGLQWKHVHWUDQVDFWLRQV WRDVVHVVWKHSURVHFXWRUjVFUHGLELOLW\XQGHUDOORIWKHSHUWLQHQW *LYHQ WKDW mWKH FRQQHFWLRQ EHWZHHQ WKH GHIHQGDQW DQG WKH FLUFXPVWDQFHVl8QLWHG6WDWHVY+LOO)GWK FRQVSLUDF\QHHGRQO\EHVOLJKWlDQGWKDWDmFRQVSLUDF\PD\EH &LU$PRQJWKRVHFLUFXPVWDQFHVLVWKHmILQDOPDNHXS LQIHUUHGIURPFLUFXPVWDQWLDOHYLGHQFHZKLFKPD\UHDVRQDEO\ RIWKHMXU\l(@YLGHQWLDU\UXOLQJVDUHVXEMHFWWRWKHDEXVHRIGLVFUHWLRQ 6WDWHVY%XUQV)GWK&LUSHWLWLRQIRUFHUW VWDQGDUG RI UHYLHZl 8QLWHG 6WDWHV Y +D\ZRRG )G ILOHG 1R 86 2FW m>7@KH WHVW LV WK&LU8QGHUWKLVVWDQGDUGZHZLOOOHDYH ZKHWKHUWKHUHLVHYLGHQFHLQWKHUHFRUGWRVXSSRUWWKHORZHU UXOLQJVDERXWDGPLVVLELOLW\RIHYLGHQFHXQGLVWXUEHGXQOHVVZH FRXUWjVILQGLQJDQGZKHWKHULWVFRQVWUXFWLRQRIWKDWHYLGHQFH DUH mOHIW ZLWK WKH GHILQLWH DQG ILUP FRQYLFWLRQ WKDW WKH 8QLWHG6WDWHVY 1RV 1RV 8QLWHG6WDWHVY %DUWKRORPHZHWDO %DUWKRORPHZHWDO XQSHUVXDVLYH :H WKHUHIRUH ILQG QR DEXVH RI WKH GLVWULFW >GLVWULFW@FRXUWFRPPLWWHGDFOHDUHUURURIMXGJPHQWLQWKH FRXUWjVGLVFUHWLRQLQDGPLWWLQJWKHHYLGHQFHFRQFHUQLQJWKH FRQFOXVLRQLWUHDFKHGXSRQDZHLJKLQJRIWKHUHOHYDQWIDFWRUV $UL]RQDGUXJWUDQVDFWLRQ RUZKHUHLWLPSURSHUO\DSSOLHVWKHODZRUXVHVDQHUURQHRXV OHJDO VWDQGDUGl ,G LQWHUQDO TXRWDWLRQ PDUNV RPLWWHG ' 7KH GLVWULFW FRXUW GLG QRW HUU LQ GHQ\LQJ+DUULVjV DOWHUDWLRQLQRULJLQDO PRWLRQIRUDMXGJPHQWRIDFTXLWWDO %DUWKRORPHZ+DUULVDQG+HQU\DVVHUWWKRXJKZLWKOLWWOH $W WKH FORVH RI WULDO +DUULV PRYHG IRU D MXGJPHQW RI VSHFLILFLW\WKDWWKHGLVWULFWFRXUWHUUHGLQDGPLWWLQJHYLGHQFH DFTXLWWDO RQ WKH FRQVSLUDF\ FRXQW ZKLFK WKH GLVWULFW FRXUW RI sDFNVRQjV SXUFKDVH RI PDULMXDQD LQ IURP DQ GHQLHG +H FRQWHQGV WKDW WKH GHQLDO ZDV LQ HUURU ,Q XQGHUFRYHUSROLFHRIILFHULQ3HQQV\OYDQLD7KH\DOVRFODLP UHYLHZLQJDFKDOOHQJHWRWKHVXIILFLHQF\RIWKHHYLGHQFHZH DJDLQZLWKRXWVLJQLILFDQWGHWDLOWKDWWKHGLVWULFWFRXUWVKRXOG GHWHUPLQHZKHWKHUDIWHUYLHZLQJDOORIWKHHYLGHQFHLQWKH KDYHH[FOXGHG%URZQjVWHVWLPRQ\WKDWVKHZLWQHVVHGODUJH OLJKWPRVWIDYRUDEOHWRWKHJRYHUQPHQWmDQ\UDWLRQDOWULHURI TXDQWLWLHV RI PDULMXDQD LQ WKH KRXVH WKDW VKH VKDUHG ZLWK IDFW FRXOG KDYH IRXQG WKH HVVHQWLDO HOHPHQWV RI WKH FULPH %DUWKRORPHZLQDQG&DOGZHOOjVWHVWLPRQ\WKDWLQ EH\RQGDUHDVRQDEOHGRXEWlsDFNVRQY9LUJLQLD86 DQG VKH WUDQVSRUWHG ODUJH DPRXQWV RI FDVK DW HPSKDVLVLQRULJLQDO7KLVLQTXLU\SURKLELWV %DUWKRORPHZjV UHTXHVW WR IDFLOLWDWH KLV GUXJ WUDQVDFWLRQV XVIURPHYDOXDWLQJWKHVWUHQJWKRIWKHHYLGHQFHSUHVHQWHGDW 7KLVHYLGHQFHZDVRIIHUHGWRSURYHWKHH[LVWHQFHDQGH[WHQW WULDORUDVVHVVLQJWKHFUHGLELOLW\RIZLWQHVVHV8QLWHG6WDWHVY RIWKHFRQVSLUDF\FKDUJHGLQWKHLQGLFWPHQW :ULJKW)GWK&LUH[SODLQLQJWKDW m>L@QFDVHVLQZKLFKZHDVVHVVWKHVXIILFLHQF\RIWKHHYLGHQFH 7KHGHIHQGDQWVFRQFHGHWKDWVXFKSURRIPD\EHHYLGHQFHRI ZHGRQRWZHLJKWKHHYLGHQFHDVVHVVWKHFUHGLELOLW\RIWKH DQRWKHUGUXJFRQVSLUDF\RUFRQVSLUDFLHVEXWWKH\DUJXHWKDW ZLWQHVVHVRUVXEVWLWXWHRXUMXGJPHQWIRUWKDWRIWKHMXU\l HYHQWVWKDWKDSSHQHGLQ,QGLDQD3HQQV\OYDQLDDQG7H[DVKDG QRWKLQJ WR GR ZLWK WKLV FRQVSLUDF\ 7KH\ DVVHUW WKDW WKH m,QRUGHUWRVKRZDFRQVSLUDF\XQGHUWKHJRYHUQPHQW HYLGHQFHZDVWRWDOO\LUUHOHYDQWDQGKLJKO\SUHMXGLFLDO:KHQ PXVWSURYHEH\RQGDUHDVRQDEOHGRXEWDQDJUHHPHQWWR GHIHQGDQWV FODLP WKDW WKH GLVWULFW FRXUW DGPLWWHG HYLGHQFH YLRODWH GUXJ ODZV NQRZOHGJH DQG LQWHQW WR MRLQ WKH ZKRVHSUREDWLYHYDOXHZDVVXEVWDQWLDOO\RXWZHLJKHGE\WKH FRQVSLUDF\DQGSDUWLFLSDWLRQLQWKHFRQVSLUDF\l8QLWHG GDQJHURIXQIDLUSUHMXGLFHmZHYLHZWKHHYLGHQFHLQWKHOLJKW 6WDWHVY*LEEV)GWK&LULQWHUQDO PRVWIDYRUDEOHWRWKHSURVHFXWLRQ$VVXFKZHPD[LPL]HWKH TXRWDWLRQPDUNVRPLWWHG+DUULVDUJXHVLQJHQHUDOWHUPVWKDW SUREDWLYH YDOXH RI WKH HYLGHQFH DQG PLQLPL]H LWV SRWHQWLDO WKHHYLGHQFHGLGQRWVKRZKLVNQRZOHGJHRIRUDJUHHPHQWWR SUHMXGLFHWRWKHGHIHQGDQW>V@l8QLWHG6WDWHVY/RJDQ MRLQWKHFKDUJHGFRQVSLUDF\ )G WK &LU LQWHUQDO FLWDWLRQ RPLWWHG FHUW GHQLHG6&WDQGFHUWGHQLHG6&W $VGHVFULEHGLQ3DUW,$DERYHWKHMXU\KHDUGDJUHDWGHDO RIHYLGHQFHGHWDLOLQJ+DUULVjVSDUWLFLSDWLRQLQWKHFRQVSLUDF\ 7KLVLQFOXGHGWHVWLPRQ\WKDWRQ'HFHPEHU+DUULV 7KH WHVWLPRQ\ RI %URZQ &DOGZHOO DQG 2IILFHU :DWVRQ DFFHSWHG ZLWKRXW VXUSULVH D 836 SDFNDJH FRQWDLQLQJ GHVFULEHG DFWV E\ SHUVRQV ZKR ZHUH DOOHJHG FRQVSLUDWRUV DSSUR[LPDWHO\SRXQGVRIPDULMXDQD+HVLJQHGIRULWZLWK 7KHVHDFWVWRRNSODFHGXULQJWKHUHOHYDQWWLPHSHULRGDQGWKH\ DIDOVHQDPH+DUULVQRZDUJXHVWKDWWKHHYLGHQFHLGHQWLI\LQJ FRQFHUQHG WUDIILFNLQJ LQ PDULMXDQD ,Q DGGLWLRQ WKH KLP DV WKH SDFNDJHjV UHFLSLHQW ZDV GHIHFWLYH EHFDXVH JHRJUDSKLFDOUDQJHRIWKHHYHQWVGHVFULEHGE\WKHVHZLWQHVVHV 8QLWHG6WDWHVY 1RV 1RV 8QLWHG6WDWHVY %DUWKRORPHZHWDO %DUWKRORPHZHWDO ZDVFRQVLVWHQWZLWKRWKHUHYLGHQFHDERXWWKHRSHUDWLRQRIWKH mWKHSUREDWLYHYDOXHRIWKHHYLGHQFHLV>QRW@VXEVWDQWLDOO\ FKDUJHGFRQVSLUDF\7KHGHIHQGDQWVjDVVHUWLRQRILUUHOHYDQFH RXWZHLJKHGE\LWVSRWHQWLDOSUHMXGLFLDOHIIHFWl8QLWHG6WDWHV LVVLPSO\DQXQVXSSRUWHGDUJXPHQW%HFDXVHWKHSUREDWLYH Y +D\ZRRG )G WK &LU LQWHUQDO YDOXHRIWKHFKDOOHQJHGHYLGHQFHZDVKLJKDQGWKHSRWHQWLDO TXRWDWLRQPDUNVRPLWWHG IRUXQIDLUSUHMXGLFHWRWKHGHIHQGDQWVZDVORZZHILQGQR HUURULQWKHGLVWULFWFRXUWjVGHFLVLRQWRDGPLWWKHHYLGHQFH %RWK%DUWKRORPHZDQG+HQU\DUJXHWKDWWKHGLVWULFWFRXUW HUUHG LQ DGPLWWLQJ HYLGHQFH DERXW WKH $UL]RQD WUDQVDFWLRQ +DUULV LQ FRQWUDVW WR KLV FRGHIHQGDQWV SUHVHQWV WKH XQGHU 5XOH E %DUWKRORPHZ DVVHUWV WKDW WKH GLVWULFW DOWHUQDWLYHDUJXPHQWWKDWHYHQLIWKHHYLGHQFHmZDVDGPLWWHG FRXUWmGLGQRWZHLJKWKHSUHMXGLFLDOHIIHFWRIWKHRWKHUDFWV DV SDUW RI WKH FRQVSLUDF\l WKH FRQVSLUDF\ mZDV QHYHU HYLGHQFHl+LVDVVHUWLRQLVVLPSO\ZURQJ7KHGLVWULFWFRXUW VXIILFLHQWO\HVWDEOLVKHGLQUHODWLRQWR+DUULVl3DUW,,'EHORZ VSHFLILFDOO\VWDWHGm,DOVRILQGWKDWWKHSUREDWLYHYDOXHRI FRQVLGHUVWKLVDUJXPHQWWRWKHH[WHQWWKDWLWLVDFRQWHQWLRQ >WKH HYLGHQFH LQYROYLQJ +HQU\@ DV EDG DFWV HYLGHQFH WR WKDWWKHHYLGHQFHDWWULDOZDVLQVXIILFLHQWWRVXSSRUW+DUULVjV HVWDEOLVKPRWLYHDQGDQLQWHQWDQGSODQDQGFRPPRQVFKHPH FRQYLFWLRQ%XWWKHDUJXPHQWFRXOGDOVREHFRQVWUXHGDVD RXWZHLJKVDQ\SUHMXGLFLDOHIIHFWl FODLPWKDWZKHQRQHZKRLVFKDUJHGZLWKFRQVSLUDF\MRLQVWKH FULPLQDOHQWHUSULVHDIWHULWVLQFHSWLRQRQO\HYLGHQFHRIHYHQWV +HQU\RQWKHRWKHUKDQGDUJXHVWKDWWKHJRYHUQPHQWIDLOHG WKDWWRRNSODFHDIWHUKHMRLQHGLVDGPLVVLEOH&RQWUROOLQJFDVH WRLGHQWLI\DQ\PDWHULDOLVVXHRWKHUWKDQFKDUDFWHUWKDWFRXOG ODZ KRZHYHU IRUHFORVHV VXFK D FODLP 8QLWHG 6WDWHV Y EH HVWDEOLVKHG E\ WKH FKDOOHQJHG HYLGHQFH 6KH IXUWKHU 8QLWHG6WDWHV*\SVXP&R86m:LWK FRQWHQGV WKDW QR VXFK LVVXH H[LVWHG WKXV PDNLQJ WKH WKHFRQVSLUDF\WKXVIXOO\HVWDEOLVKHGWKHGHFODUDWLRQVDQGDFWV LQWURGXFWLRQ RI WKH HYLGHQFH SUHMXGLFLDO DV WR KHU 7KHVH RIWKHYDULRXVPHPEHUVHYHQWKRXJKGRQHRUPDGHSULRUWR DUJXPHQWVDUHZLWKRXWPHULW)LUVWHYLGHQFHRIWKH$UL]RQD WKHDGKHUHQFHRIVRPHWRWKHFRQVSLUDF\EHFRPHDGPLVVLEOH WUDQVDFWLRQ ZDV DGPLVVLEOH WR SURYH WKDW +HQU\ ZDV DW WKH DJDLQVWDOODVGHFODUDWLRQVRUDFWVRIFRFRQVSLUDWRUVLQDLGRI )OLQW0LFKLJDQ%XGJHWHO,QQRQ'HFHPEHUDVSDUW WKHFRQVSLUDF\l8QLWHG6WDWHVY&DVVLW\)G RIDGUXJWUDIILFNLQJVFKHPHQRWIRUWKHSXUSRVHRIIXUWKHULQJ WK&LUm>:@HUHMHFWWKHDUJXPHQWE\DSSHOODQWVWKDW D VRFLDO RU LQWLPDWH UHODWLRQVKLS ZLWK sDFNVRQ DV VKH RQO\WKRVHFRFRQVSLUDWRUVWDWHPHQWVPDGHDIWHUWKH\MRLQHG FRQWHQGHG7KHSURVHFXWRUSURSHUO\LGHQWLILHGWKHSXUSRVHRI WKHFRQVSLUDF\DUHDGPLVVLEOHDJDLQVWWKHPl WKLVHYLGHQFHDWWULDO 7KH ILQDO FRQWHVWHG HYLGHQWLDU\ LVVXH FRQFHUQV +HQU\jV 6HFRQGRWKHUWKDQQRWLQJVRFLHWDOGLVIDYRUZLWKGHDOLQJLQ LQYROYHPHQWLQDQ$UL]RQDGUXJWUDQVDFWLRQ7KLVHYLGHQFH QDUFRWLFV +HQU\ KDV QRW H[SODLQHG KRZ WKH 5XOH E ZDVDGPLWWHGSXUVXDQWWR)HGHUDO5XOHRI(YLGHQFHE HYLGHQFH FUHDWHG D GDQJHU RI XQIDLU SUHMXGLFH $Q\ VXFK ZKLFKSURYLGHVWKDWDOWKRXJKHYLGHQFHRIRWKHUFULPHVRUDFWV SUHMXGLFHZDVPLQLPL]HGE\WKHGLVWULFWFRXUWLQVWUXFWLQJWKH LVQRWDGPLVVLEOHWRSURYHFKDUDFWHULWPD\mEHDGPLVVLEOHIRU MXU\ WKDW LW FRXOG FRQVLGHU HYLGHQFH DERXW WKH HYHQWV LQ RWKHUSXUSRVHVVXFKDVSURRIRIPRWLYHRSSRUWXQLW\LQWHQW $UL]RQDRQO\mLQGHFLGLQJ0V+HQU\jVLQWHQWSUHSDUDWLRQ SUHSDUDWLRQSODQNQRZOHGJHLGHQWLW\RUDEVHQFHRIPLVWDNH SODQNQRZOHGJHRUDEVHQFHRIPLVWDNHRUDFFLGHQWDVWKHVH RUDFFLGHQWl6XFKHYLGHQFHLVDGPLVVLEOHXQGHU5XOHE FRQFHSWVDSSO\WRWKHHYHQWVLQ)OLQW0LFKLJDQ7KHHYLGHQFH LI mWKHUH LV VXIILFLHQW HYLGHQFH WKDW WKH RWKHU DFW LQ LVQRWWREHFRQVLGHUHGIRUDQ\RWKHUSXUSRVHDQGLVRQO\WREH TXHVWLRQDFWXDOO\RFFXUUHGlmWKHHYLGHQFHRIWKHRWKHUDFW FRQVLGHUHG DV WR GHIHQGDQW sXOHHQ +HQU\l 8QGHU WKHVH LV SUREDWLYH RI D PDWHULDO LVVXH RWKHU WKDQ FKDUDFWHUl DQG FLUFXPVWDQFHV ZH ILQG +HQU\jV FODLP RI SUHMXGLFH