United States v. Zidell

Summarize Case

Related Cases

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21 3XUVXDQW WR 6L[WK &LUFXLW 5XOH  (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU )LOH 1DPH DS 81,7('67$7(6&28572)$33($/6 )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB 81,7(' 67$7(6 2) $0(5,&$ ; 3ODLQWLII$SSHOOHH    1R Y  !  %2%%< 0$56+$// =,'(//  'HIHQGDQW$SSHOODQW  1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH:HVWHUQ'LVWULFWRI7HQQHVVHHDW0HPSKLV 1RnsXOLD6*LEERQV'LVWULFWsXGJH $UJXHG$XJXVW 'HFLGHGDQG)LOHG0DUFK %HIRUH0225(DQG*,/0$1&LUFXLWsXGJHV526(1 'LVWULFWsXGJH BBBBBBBBBBBBBBBBB &2816(/ $5*8('7KRPDV(GZDUGV+DQVRP/$:2)),&(62) 7+20$6 ( +$1620 0HPSKLV 7HQQHVVHH IRU $SSHOODQW  7KRPDV / 3DUNHU $66,67$17 81,7(' 7KH +RQRUDEOH *HUDOG ( 5RVHQ 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ VLWWLQJ E\ GHVLJQDWLRQ   8QLWHG6WDWHVY=LGHOO 1R 1R 8QLWHG6WDWHVY=LGHOO  67$7(6$77251(<0HPSKLV7HQQHVVHHIRU$SSHOOHH BBBBBBBBBBBBBBBBBBBB 21%5,()7KRPDV(GZDUGV+DQVRP/$:2)),&(62) 7+20$6 ( +$1620 0HPSKLV 7HQQHVVHH IRU &21&855(1&( $SSHOODQW  7KRPDV / 3DUNHU $66,67$17 81,7(' BBBBBBBBBBBBBBBBBBBB 67$7(6$77251(<0HPSKLV7HQQHVVHHIRU$SSHOOHH .$5(11(/6210225(&LUFXLWsXGJHFRQFXUULQJ, 526(1'sDQQRXQFHGWKHMXGJPHQWRIWKHFRXUWDQG FRQFXULQWKHUHVXOWDQGWKHUHDVRQLQJRIDOOSDUWVRIWKHOHDG GHOLYHUHGDQRSLQLRQLQZKLFK0225(DQG*,/0$1ss RSLQLRQRWKHUWKDQ3DUW,,,&$VWR3DUW,,,&,FRQFXULQ FRQFXUUHG H[FHSW DV WR 3DUW ,,,&  $V WR 3DUW ,,,& WKHUHVXOWDQGLQWKHUHDVRQLQJWRWKHH[WHQWWKDWLWUHOLHVRQWKH 0225( DQG *,/0$1 ss FRQFXUUHG LQ WKH UHVXOW DQG GRFWULQH RI KDUPOHVV HUURU WR XSKROG WKH GHIHQGDQWjV UHDVRQLQJRIWKDW3DUWRQO\WRWKHH[WHQWWKDWLWUHOLHVRQWKH FRQYLFWLRQDQGVHQWHQFH,QGHHGWKDWVHFWLRQRIWKHRSLQLRQ GRFWULQH RI KDUPOHVV HUURU WR XSKROG WKH GHIHQGDQWjV VLPSO\ KROGV WKDW LI WKHUH ZHUH HUURU m>L@W LV FOHDU WKDW FRQYLFWLRQ DQG VHQWHQFH  0225( s S   GHOLYHUHG D 'HIHQGDQWVXIIHUHGQRDGYHUVHFRQVHTXHQFHZKDWVRHYHUDVD VHSDUDWHFRQFXUULQJRSLQLRQLQZKLFK*,/0$1sMRLQHG UHVXOWRIWKH'LVWULFW&RXUWjVGHWHUPLQDWLRQWKDWGUXJTXDQWLW\ ZDV VRPHWKLQJ RWKHU WKDQ DQ HOHPHQW RI WKH FKDUJHG BBBBBBBBBBBBBBBBB RIIHQVHVl /HDG 2S  ,UHIUDLQIURPMRLQLQJLQWKH UHPDLQLQJ GLVFXVVLRQ ZLWKLQ 3DUW ,,,& EHFDXVH LW LV 23,1,21 XQQHFHVVDU\WRWKHUHVXOWUHDFKHGDQGEHFDXVH,GRQRWVKDUH BBBBBBBBBBBBBBBBB WKHOHDGRSLQLRQjVPXVLQJVUHJDUGLQJZKHWKHUGUXJTXDQWLW\ LVDQHOHPHQWRIWKHRIIHQVH 526(1'LVWULFWsXGJH ,,1752'8&7,21 'HIHQGDQW$SSHOODQW %REE\ 0DUVKDOO =LGHOO DSSHDOV KLV FRQYLFWLRQDQGVHQWHQFHIRUFRQVSLUDF\WRSRVVHVVZLWKLQWHQW WRGLVWULEXWHPHWKDPSKHWDPLQHDQGDWWHPSWWRSRVVHVVZLWK LQWHQWWRGLVWULEXWHPHWKDPSKHWDPLQHERWKLQYLRODWLRQRI 86& †   )ROORZLQJ D WULDO WKH MXU\ UHWXUQHG JXLOW\ YHUGLFWV DJDLQVW 'HIHQGDQW RQ ERWK RI WKHVH FKDUJHV  2Q 'HFHPEHU'HIHQGDQWZDVVHQWHQFHGWRDPRQWK WHUPRILPSULVRQPHQWDQG\HDUVRIVXSHUYLVHGUHOHDVH7KLV WLPHO\DSSHDOIROORZHG 'HIHQGDQWKDVLGHQWLILHGIRXULVVXHVRQDSSHDO)LUVWKH DUJXHV WKDW YHQXH ZDV LPSURSHUO\ SODFHG LQ WKH :HVWHUQ 'LVWULFWRI7HQQHVVHHRQWKHDWWHPSWFKDUJHVHWIRUWKLQ&RXQW 7ZR RI WKH LQGLFWPHQW EHFDXVH LQ 'HIHQGDQWjV YLHZ WKH *RYHUQPHQWj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jV UHPDLQLQJ WZR FKDOOHQJHV DULVH IURP WKH HYLGHQFH DW WULDO FRQWUDGLFWHG WKLV WHVWLPRQ\ DV WR GUXJ 6XSUHPH&RXUWjVUXOLQJLQ$SSUHQGLY1HZsHUVH\86 TXDQWLW\6LPLODUO\DWVHQWHQFLQJ'HIHQGDQWFKDOOHQJHGWKH   6 &W    D GHFLVLRQ KDQGHG GRZQ MXVW SUHVHQWHQFHUHSRUWjVDVVHUWLRQWKDWWKH&RXQW2QHFRQVSLUDF\ GD\VEHIRUH'HIHQGDQWjVWULDO)LUVW'HIHQGDQWFRQWHQGVWKDW LQYROYHGWRNLORJUDPVRIPHWKDPSKHWDPLQHDQGKHPRUH WKH 'LVWULFW &RXUWjV LQVWUXFWLRQV WR WKH MXU\ UHJDUGLQJ GUXJ JHQHUDOO\FRQWLQXHGWRGHQ\WKDWKHKDGHQJDJHGLQDQ\GUXJ TXDQWLWLHVIDLOHGWRFRPSRUWZLWK$SSUHQGL ZKHUHWKHMXU\ WUDIILFNLQJRIIHQVHVEXWKHRIIHUHGQRWKLQJWRVXJJHVWWKDWWKH ZDVDVNHGWRPDNHGUXJTXDQWLW\ILQGLQJVEXWZDVWROGWKDW RIIHQVHFKDUJHGLQ&RXQW7ZRPLJKWKDYHLQYROYHGDTXDQWLW\ WKHVH TXDQWLWLHV ZHUH QRW mHOHPHQWVl RI WKH FKDUJHG GUXJ RI GUXJV GLIIHUHQW IURP WKH RQH SRXQG FKDUJHG LQ WKH RIIHQVHV DQG ZKHUH WKH LQVWUXFWLRQV DV WR &RXQW 7ZR LQGLFWPHQW UHIHUHQFHGDTXDQWLW\GLIIHUHQWIURP DQGORZHUWKDQ WKHGUXJ DPRXQWVHWIRUWKLQWKHLQGLFWPHQW)LQDOO\'HIHQGDQWDUJXHV 8QGHU WKLV UHFRUG WKHQ WKH MXU\ PLJKW KDYH FUHGLWHG WKDW WKH 'LVWULFW &RXUW HUUHG LQ FDOFXODWLQJ DQG LPSRVLQJ D 'HIHQGDQWjVWHVWLPRQ\SURFODLPLQJKLVLQQRFHQFHRULWPLJKW PRQWK VHQWHQFH EDVHG XSRQ DQ DPRXQW RI LQVWHDG KDYH DFFHSWHG n DQG HYLGHQWO\ GLG DFFHSW n WKH PHWKDPSKHWDPLQHLQH[FHVVRIWKHTXDQWLWLHVFKDUJHGLQWKH DFFRXQWVRIIHUHGE\&UDQIRUGDQG5RRN1RUHDVRQDEOHMXURU LQGLFWPHQWDQGHVWDEOLVKHGWKURXJKWKHMXU\jVYHUGLFW KRZHYHUFRXOGKDYHIRXQG'HIHQGDQWJXLOW\RIDQDWWHPSWWR SRVVHVV ZLWK LQWHQW WR GLVWULEXWH VRPHWKLQJ OHVV WKDQ RQH )RU WKH UHDVRQV VWDWHG EHORZ ZH DIILUP 'HIHQGDQWjV SRXQGRIPHWKDPSKHWDPLQH6WDWHGGLIIHUHQWO\DMXU\FRXOG FRQYLFWLRQDQGVHQWHQFH QRW UHDVRQDEO\ KDYH YRWHG WR DFTXLW DV WR WKH RQHSRXQG DWWHPSWRIIHQVHFKDUJHGLQWKHLQGLFWPHQW\HWVWLOOHOHFWHGWR ,,)$&78$/$1'352&('85$/%$&.*5281' FRQYLFW DV WR WKH JUDP RIIHQVH VWDWHG LQ WKH MXU\ LQVWUXFWLRQV$FFRUGLQJO\WKH'LVWULFW&RXUWj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mDQDPRXQWLQH[FHVVRINLORJUDPRID 86  5DWKHUWKH'LVWULFW&RXUWjVHUURUZDV PL[WXUH DQG VXEVWDQFH FRQWDLQLQJ D GHWHFWDEOH DPRXQW RI KDUPOHVVDQGGRHVQRWZDUUDQWUHYHUVDORI'HIHQGDQWjV&RXQW PHWKDPSKHWDPLQHl s$DW &RXQW7ZRFKDUJHGWKDW 7ZRFRQYLFWLRQRUKLVRYHUDOOVHQWHQFH IURP $SULO  WR $SULO   'HIHQGDQW DQG &UDQIRUG DWWHPSWHGWRSRVVHVVZLWKLQWHQWWRGLVWULEXWHmDSSUR[LPDWHO\ ,9&21&/86,21  SRXQG RI D PL[WXUH RU VXEVWDQFH FRQWDLQLQJ D GHWHFWDEOH DPRXQWRIPHWKDPSKHWDPLQHl s$DW &RGHIHQGDQWV )RUWKHUHDVRQVVHWIRUWKDERYHZH$)),50WKHFRQYLFWLRQ 6PLWK DQG &UDQIRUG ERWK HQWHUHG JXLOW\ SOHDV DV WR &RXQW DQGVHQWHQFHRI'HIHQGDQW%REE\0DUVKDOO=LGHOO 2QHDQGWKHQWHVWLILHGDW'HIHQGDQWjVWULDO  8QLWHG6WDWHVY=LGHOO 1R 1R 8QLWHG6WDWHVY=LGHOO  $ 7KH*RYHUQPHQWjV3URRIVDW7ULDO FRQYLFWLRQVDQGVHQWHQFHVGHVSLWHD'LVWULFW&RXUWjVRXWULJKW IDLOXUHWRLQVWUXFWWKHMXU\DVWRGUXJTXDQWLWLHV,Q%XUQVIRU 7KH *RYHUQPHQWjV FDVH UHVWHG SULQFLSDOO\ XSRQ WKH H[DPSOH WKH LQGLFWPHQW OLVWHG WKH TXDQWLWLHV DOOHJHGO\ WHVWLPRQ\RIFRGHIHQGDQWV6PLWKDQG&UDQIRUGDQGDWKLUG LQYROYHGLQWKHYDULRXVFKDUJHGGUXJRIIHQVHVEXWWKHWULDO LQGLYLGXDO 5REHUW 5RRN ZKR ZDV LGHQWLILHG DV D FR FRXUW GLG QRW LQVWUXFW WKH MXU\ WR GHWHUPLQH WKHVH DPRXQWV FRQVSLUDWRULQWKHLQGLFWPHQWEXWQRWFKDUJHGLQH[FKDQJHIRU EH\RQGDUHDVRQDEOHGRXEWDQGLQVWHDGPDGHWKHVHILQGLQJV KLVFRRSHUDWLRQ7KURXJKWKHVHZLWQHVVHVWKH*RYHUQPHQW DWVHQWHQFLQJE\DSUHSRQGHUDQFHRIWKHHYLGHQFH6HH%XUQV VRXJKW WR HVWDEOLVK WKDW 'HIHQGDQW D UHVLGHQW RI 'DOODV )GDW:HUHYLHZHGWKHGHIHQGDQWVj$SSUHQGL 7H[DVKDGVXSSOLHGPHWKDPSKHWDPLQHWR6PLWKDQDWLYHRI FKDOOHQJHVXQGHUDmKDUPOHVVHUURUlVWDQGDUGDQGFRQFOXGHG 0HPSKLV7HQQHVVHHZKRKDGPRYHGWR'DOODVDQG&UDQIRUG WKDW WKH\ ZHUH QRW HQWLWOHG WR UHOLHI   )G DW  DQG5RRNZKRVWLOOOLYHGLQ0HPSKLV6PLWKWHVWLILHGWKDWKH 6LPLODUO\LQ6WHZDUWZHDSSOLHGKDUPOHVVHUURUDQDO\VLVWRDQ EHJDQWRVXSSO\PHWKDPSKHWDPLQHWR&UDQIRUGLQ0DUFKRI $SSUHQGLEDVHG FODLP WKDW GUXJ TXDQWLWLHV ZHUH QHLWKHU DQGWKDWKLVVRXUFHVRIVXSSO\LQ'DOODVZHUH'HIHQGDQW VSHFLILHG LQ WKH LQGLFWPHQW QRU VXEPLWWHG IRU WKH MXU\jV DQG mD FRXSOH RI GLIIHUHQW 0H[LFDQVl  s$ DW  GHWHUPLQDWLRQDQGDJDLQIRXQGWKDWWKHGHIHQGDQWVZHUHQRW 6PLWK HVWLPDWHG WKDW KH VHUYHG DV WKH PLGGOHPDQ EHWZHHQ HQWLWOHGWRUHOLHIXQGHUWKLVVWDQGDUG6HH6WHZDUW)GDW 'HIHQGDQWDQG&UDQIRUGmDERXWWKUHHRUIRXUWLPHVlDQGWKDW  HDFKWUDQVDFWLRQZLWK'HIHQGDQWLQYROYHGmWRSRXQGVlRI PHWKDPSKHWDPLQH s$DW &RQVHTXHQWO\ LI WKH 'LVWULFW &RXUW KHUH KDG DOWRJHWKHU UHPRYHG DQ\ UHIHUHQFH WR GUXJ TXDQWLWLHV IURP LWV MXU\ 6PLWKWHVWLILHGWKDWKHEHJDQWRIDOOEHKLQGLQKLVSD\PHQWV LQVWUXFWLRQVRULIWKHLQGLFWPHQWLWVHOIKDGIDLOHGWRVSHFLI\ WR 'HIHQGDQW DQG WKDW DV D VROXWLRQ WR WKLV SUREOHP KH VXFKTXDQWLWLHVZHZRXOGKDYHDVNHGZKHWKHUWKLVHUURUZDV SURSRVHG LQ 2FWREHU RI  WKDW 'HIHQGDQW DQG &UDQIRUG KDUPOHVV DQG LI VR ZRXOG KDYH DIILUPHG 'HIHQGDQWjV GHDOGLUHFWO\ZLWKHDFKRWKHU6PLWKLQWURGXFHG'HIHQGDQWWR FRQYLFWLRQDQGVHQWHQFH,WQHFHVVDULO\IROORZVWKDWWKLVVDPH &UDQIRUG DW D FDVLQR LQ 7XQLFD 0LVVLVVLSSL DQG &UDQIRUG VWDQGDUG JRYHUQV WKH DQDORJRXV EXW DUJXDEO\ OHVV VHYHUH WHVWLILHG WKDW 'HIHQGDQW VXSSOLHG KLP ZLWK IRXU SRXQGV RI mUHGXFWLRQLQTXDQWLW\lHUURUDFWXDOO\FRPPLWWHGE\WKHFRXUW PHWKDPSKHWDPLQH RQ WKDW RFFDVLRQ LQ WKH IDOO RI  EHORZnWKLVHUURUFDQKDUGO\EHGHHPHGPRUHmVWUXFWXUDOlRU &UDQIRUG IXUWKHU WHVWLILHG WKDW KH SDLG 'HIHQGDQW D IHZ OHVV DPHQDEOH WR KDUPOHVVHUURU UHYLHZ WKDQ LI WKH 'LVWULFW WKRXVDQGGROODUVDWWKHWLPHRIWKHLUPHHWLQJDQGWKDWKHVHQW &RXUWKDGVLPSO\LJQRUHG$SSUHQGLDQGDSSOLHGWKLV&LUFXLWjV WKH EDODQFH RI WKH  SD\PHQW DIWHUZDUG YLD )HGHUDO WKHQH[LVWLQJUXOHWKDWGUXJTXDQWLWLHVQHHGQRWEHVXEPLWWHG ([SUHVV WR WKH MXU\  6HH 6WHZDUW  )G DW   8QGHU WKLV VWDQGDUG DQ HUURU LV GHHPHG KDUPOHVV RQO\ LI mLW DSSHDUV )ROORZLQJWKLVLQLWLDOPHHWLQJ&UDQIRUGVWDWHGWKDWKHKDG EH\RQGDUHDVRQDEOHGRXEWWKDWWKHHUURUFRPSODLQHGRIGLG VHYHUDOWHOHSKRQHFRQYHUVDWLRQVZLWK'HIHQGDQWRYHUWKHQH[W QRW FRQWULEXWH WR WKH YHUGLFW REWDLQHGl  1HGHU Y 8QLWHG IHZZHHNVUHJDUGLQJWKHSD\PHQWVWLOORZHGE\&UDQIRUGDQG 6WDWHV866&W  VHHDOVR DUUDQJHPHQWVIRUWKHQH[WVKLSPHQW$FFRUGLQJWR&UDQIRUG 6WHZDUW)GDW DQG 5REHUW 5RRN WKLV QH[W WUDQVDFWLRQ RFFXUUHG LQ ODWH 2FWREHU RU HDUO\ 1RYHPEHU RI  ZKHQ 'HIHQGDQW PHW :HUHDGLO\FRQFOXGHWKDWWKH'LVWULFW&RXUWjVFKDQJHIURP ZLWKWKHWZRPHQDWD:DIIOH+RXVHLQ0HPSKLV&UDQIRUG RQHSRXQGWRJUDPVLQLWV&RXQW7ZRMXU\LQVWUXFWLRQV DQG5RRNERWKWHVWLILHGWKDWXSRQDUULYLQJDWWKHUHVWDXUDQW SOD\HGQRUROHZKDWVRHYHULQWKHMXU\jVJXLOW\YHUGLFWRQWKLV 'HIHQGDQWLQVWUXFWHG5RRNWRUHWULHYHVRPHSDFNDJHVIURP FRXQW  7KH WHVWLPRQ\ DW WULDO ZDV ZKROO\ XQLIRUP DQG  8QLWHG6WDWHVY=LGHOO 1R 1R 8QLWHG6WDWHVY=LGHOO  WKHLQGLFWPHQWGHWHUPLQHGE\WKHMXU\EH\RQGDUHDVRQDEOH KLV FDU DQG SODFH WKHP LQWR &UDQIRUGjV YHKLFOH  8SRQ GRXEW DQG IXUWKHU UHILQHG E\ WKH 'LVWULFW &RXQW LQ LWV UHWXUQLQJ WR &UDQIRUGjV DSDUWPHQW &UDQIRUG DQG 5RRN DSSOLFDWLRQ RI WKH 6HQWHQFLQJ *XLGHOLQHV  8QGHU WKHVH GLVFRYHUHGWKDW'HIHQGDQWKDGSURYLGHGRQO\QLQHSRXQGVRI FLUFXPVWDQFHV$SSUHQGLDQGLWVSURJHQ\GRQRWUHTXLUHWKDW PHWKDPSKHWDPLQHDQGQRWWKHWZHOYHSRXQGVWKDW&UDQIRUG GUXJ TXDQWLW\ EH WUHDWHG DV DQ HOHPHQW RI WKH &RXQW 7ZR KDG DQWLFLSDWHG  &UDQIRUG DOVR WHVWLILHG WKDW KH ZDV RIIHQVH6HHHJ&RWWRQ6&WDW FKDUDFWHUL]LQJ GLVVDWLVILHG ZLWK WKH TXDOLW\ RI WKH GUXJV VXSSOLHG E\ WKHHUURULQWKDWFDVHDVmWKHLQGLFWPHQWjVIDLOXUHWRDOOHJHD 'HIHQGDQW IDFW GUXJ TXDQWLW\ WKDW LQFUHDVHG WKH VWDWXWRU\ PD[LPXP VHQWHQFHl 8QLWHG6WDWHVY0DUWLQH])GQ %HFDXVHRIWKLVODWWHUSUREOHP&UDQIRUGVWDWHGWKDWKHZDV WK &LU   m$SSUHQGL RQO\ UHTXLUHV WKRVH VHQWHQFLQJ RQO\ DEOH WR VHOO DERXW WZR RI WKH QLQH SRXQGV RI IDFWRUV WKDW LQFUHDVH WKH SHQDOW\ EH\RQG WKH VWDWXWRU\ PHWKDPSKHWDPLQH SURYLGHG E\ 'HIHQGDQW  $V IRU WKH PD[LPXP WR EH VXEPLWWHG IRU SURRI EH\RQG D UHDVRQDEOH UHPDLQLQJVHYHQSRXQGV&UDQIRUGDQG5RRNGHOLYHUHGWKHP GRXEWl  6WUD\KRUQ  )G DW  LQGLFDWLQJ WKDW GUXJ WR6PLWKLQ/LWWOH5RFN$UNDQVDVLQ'HFHPEHURIZLWK TXDQWLW\PXVWEHWUHDWHGDVDQHOHPHQWRID†RIIHQVHDV WKH XQGHUVWDQGLQJ WKDW 6PLWK ZRXOG UHWXUQ WKHVH GUXJV WR RSSRVHGWRDVHQWHQFLQJIDFWRURQO\ZKHUHmLWVXEMHFWVWKH 'HIHQGDQW DQG WKDW &UDQIRUG ZRXOG WKHQ VHWWOH XS ZLWK GHIHQGDQWWRDQHQKDQFHGVHQWHQFHl  'HIHQGDQWDVWRDQ\DPRXQWVRZHGIRUWKHWZRSRXQGVKHKDG UHWDLQHG6PLWKKRZHYHUQHYHUUHWXUQHGWKHVHYHQSRXQGVRI 9LHZHGLQWKLVZD\WKH'LVWULFW&RXUWj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mD YDULDQFH QRW D FRQVWUXFWLYH DPHQGPHQW &UDQIRUGWHVWLILHGWKDWKHQH[WKHDUGIURP'HIHQGDQWDWWKH EHFDXVHWKHVSHFLILFW\SHRIILUHDUPLVQRWDQHVVHQWLDO HQGRIsDQXDU\ZKHQ'HIHQGDQWFDOOHGWRGHPDQGKLV HOHPHQW RI WKH FULPHl8QLWHG 6WDWHV Y 5RELVRQ  )G PRQH\IRUWKH:DIIOH+RXVHWUDQVDFWLRQ&UDQIRUGH[SODLQHG  WK&LU FHUWGHQLHG86  7R WR 'HIHQGDQW ZKDW KDG KDSSHQHG DQG WKH WZR PHQ REWDLQ UHOLHI 'HIHQGDQW ZRXOG KDYH WR HVWDEOLVK WKDW WKLV SXUSRUWHGO\ DJUHHG RYHU WKH FRXUVH RI VHYHUDO VXEVHTXHQW YDULDQFHDIIHFWHGKLVmVXEVWDQWLDOULJKWVl6HH&KLOLQJLULDQ WHOHSKRQHFRQYHUVDWLRQVWRUHVXPHWKHLUGLUHFWUHODWLRQVKLS )GDW5RELVRQ)GDW+HFDQQRWPDNH ZLWKRXW 6PLWKjV LQYROYHPHQW  $FFRUGLQJ WR &UDQIRUG VXFKDVKRZLQJKHUHJLYHQWKHODFNRIDQ\LPSDFWXSRQKLV 'HIHQGDQW VHQW KLP D TXDUWHU RXQFH RI mJRRG TXDOLW\l VHQWHQFH6HHHJ%XUQV)GDW8QLWHG6WDWHVY PHWKDPSKHWDPLQHYLD)HGHUDO([SUHVVDVDmVDPSOHRIZKDW 6WDIIRUG)G WK&LU FHUWGHQLHG >'HIHQGDQW@FRXOGGRl s$DW DQG&UDQIRUGDQG 6&W   5RRNWKHQIOHZWR'DOODVRQ$SULOWRREWDLQDGGLWLRQDO PHWKDPSKHWDPLQH IURP 'HIHQGDQW  &UDQIRUG VWDWHG WKDW (YHQLIWKHGUXJTXDQWLWLHVLQ&RXQWV2QHDQG7ZRDOLNH 'HIHQGDQWZDVRQO\DEOHWRSURYLGHIRXURXQFHVRIGUXJVRQ ZHUHHQWLWOHGWRWUHDWPHQWDVWKHmIXQFWLRQDOHTXLYDOHQWlRI WKLV WULS ZKLFK &UDQIRUG TXLFNO\ VROG XSRQ KLV UHWXUQ WR HOHPHQWV ZH VWLOO ZRXOG ILQG QR EDVLV IRU RYHUWXUQLQJ 0HPSKLV 'HIHQGDQWjV FRQYLFWLRQ RU VHQWHQFH  7KLV FRQFOXVLRQ LV GLFWDWHG E\ RXU GHFLVLRQV XSKROGLQJ GUXJ WUDIILFNLQJ  8QLWHG6WDWHVY=LGHOO 1R 1R 8QLWHG6WDWHVY=LGHOO  $ IHZ GD\V ODWHU RQ $SULO   &UDQIRUG DQG 5RRN ,WUHPDLQVRQO\WRFKDUDFWHUL]HWKLVHUURUDQGGHWHUPLQHLWV DJDLQ IOHZ GRZQ WR 'DOODV WR REWDLQ DGGLWLRQDO FRQVHTXHQFHV7KHILUVWRIWKHVHTXHVWLRQVOHDGVXVULJKWEDFN PHWKDPSKHWDPLQHIURP'HIHQGDQW5RRNDQG&UDQIRUGERWK WR WKH HOHPHQWVHQWHQFLQJ IDFWRU TXDQGDU\ EHFDXVH WKH WHVWLILHGWKDWWKH\GURYHGLUHFWO\WR'HIHQGDQWj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jV PRGLILFDWLRQ RI WKH &RXQW 7ZR 'HIHQGDQWFDOOHGWZRZLWQHVVHVDWWULDODQGDOVRWHVWLILHGRQ GUXJTXDQWLW\PLJKWIDOORQWKLVFRQWLQXXPEHFDXVHLWPDNHV KLVRZQEHKDOI,QKLVWHVWLPRQ\'HIHQGDQWIODWO\GHQLHGWKDW QR GLIIHUHQFH WR WKH RXWFRPH KHUH  )LUVW ZKLOH ZH KDYH KHKDGHYHUFRQVSLUHGZLWK&UDQIRUG6PLWKRU5RRNWREX\ UHFRJQL]HGWKDWGUXJTXDQWLW\ZDVWKHmIXQFWLRQDOHTXLYDOHQWl RUVHOOPHWKDPSKHWDPLQH$OWKRXJK'HIHQGDQWFRQFHGHGWKDW RI DQ HOHPHQW RI &RXQW 2QH LQ OLJKW RI LWV VHQWHQFLQJ KHKDGPHWZLWK&UDQIRUGRQWKHHYHQLQJRI$SULOKH FRQVHTXHQFHV WKH VDPH FDQQRW EH VDLG IRU &RXQW 7ZR VWDWHG WKDW WKH WZR KDG GLVFXVVHG WKH mPRUWJDJH EURNHUDJH 5DWKHU WKH MXU\jV GHWHUPLQDWLRQ RI WKH DPRXQW RI GUXJV EXVLQHVVlRQWKLVRFFDVLRQDQGQRWDQ\WUDQVDFWLRQVLQYROYLQJ LQYROYHGLQWKH&RXQW7ZRRIIHQVHKDGQRLPSDFWZKDWVRHYHU PHWKDPSKHWDPLQH s$DW XSRQ'HIHQGDQWjVVHQWHQFHEHFDXVHKLVPRQWKWHUPRI LPSULVRQPHQW UHVWV VROHO\ XSRQ WKH &RXQW 2QH FRQVSLUDF\ 2QH RI WKH LVVXHV RQ DSSHDO FRQFHUQV D SRUWLRQ RI WKH FRQYLFWLRQLQFOXGLQJWKDWFRXQWjVGUXJTXDQWLW\DVFKDUJHGLQ *RYHUQPHQWjVFURVVH[DPLQDWLRQRI'HIHQGDQWDWWULDO7KH  8QLWHG6WDWHVY=LGHOO 1R 1R 8QLWHG6WDWHVY=LGHOO  LQVWUXFWLRQVWRWKHMXU\VRORQJDVWKHVHDGMXVWPHQWVGLGQRW *RYHUQPHQW ILUVW HVWDEOLVKHG WKDW D ZRPDQ QDPHG 'LWD DIIHFWWKHVWDWXWRU\VHQWHQFLQJUDQJHVIDFHGE\'HIHQGDQW,Q *KDHPLZDVDIULHQGRI'HIHQGDQWjVDQGWKDW0V*KDHPLLQ SDUWLFXODU WKH WULDO FRXUW UHDVRQHG WKDW WKH MXU\jV ILQGLQJV WXUQ ZDV IULHQGV ZLWK &KDQGUD 6PLWK WKH ZLIH RI FR VKRXOGEHFDOLEUDWHGWRWKHGUXJTXDQWLW\UDQJHVVHWIRUWKLQ GHIHQGDQW%REE\6PLWK 6HHs$DW 7KH*RYHUQPHQW †† E  $ DQG % UDWKHUWKDQWKHDPRXQWVVWDWHGLQWKH WKHQLQTXLUHGZKHWKHU'HIHQGDQWKDGmDVNHG'LWD*KDHPLWR LQGLFWPHQW$VWR&RXQW2QHWKLVFRXUVHRIDFWLRQPDGHQR FRQWDFW&KDQGUDWRVHHLI&KDQGUD6PLWKZRXOGOLHIRU\RX GLIIHUHQFH n WKH WKUHVKROG TXDQWLW\ RI PHWKDPSKHWDPLQH DQG WHVWLI\ WKDW \RX KDG QRWKLQJ WR GR ZLWK WKH VDOH RI QHFHVVDU\ WR WULJJHU WKH †  E  $  \HDUVWROLIH QDUFRWLFVl s$DW 'HIHQGDQWHPSKDWLFDOO\GHQLHGWKLV VHQWHQFLQJUDQJHKDSSHQHGWREHRQHNLORJUDP DVRILW FKDUJH+HDFNQRZOHGJHGWKDW0V*KDHPLKDGRIIHUHGWR LVQRZJUDPV WKHVDPHDPRXQWDFWXDOO\VHWIRUWKLQWKH WDONWR0V6PLWKEXWKHWHVWLILHGWKDWKHUHVSRQGHGWRWKLV LQGLFWPHQW7KHVDPHFDQQRWEHVDLGKRZHYHUIRU&RXQW RIIHUE\VWDWLQJWKDWWKLVmZRXOGEHDQREVWUXFWLRQRIMXVWLFHl 7ZR n WKH LQGLFWPHQW VWDWHG WKDW WKLV DWWHPSW RIIHQVH DQGE\LQVWUXFWLQJ0V*KDHPLQRWWRSURFHHGmLQP\EHKDOI LQYROYHG mDSSUR[LPDWHO\  SRXQGl RI PHWKDPSKHWDPLQH LQDQ\ZD\VKDSHIRUPRUIDVKLRQl s$DW 'HIHQVH s$DW RUURXJKO\JUDPVEXWWKHMXU\ZDVLQVWUXFWHG FRXQVHO PDGH QR REMHFWLRQ WR WKLV OLQH RI LQTXLU\ EXW GLG WR GHWHUPLQH ZKHWKHU WKH RIIHQVH LQYROYHG m JUDPV RU REMHFW WR D VXEVHTXHQW TXHVWLRQ LQ ZKLFK WKH *RYHUQPHQW PRUHlRIPHWKDPSKHWDPLQH s$DW DVWKLVZDV DVRI DSSDUHQWO\ZDVDERXWWRDVNZK\0V*KDHPLKDGQRWEHHQ   WKH ORZHU ERXQG RI WKH TXDQWLW\ UDQJH IRXQG DW FDOOHGDVDZLWQHVV 6HHs$DW † E  %  & 3URFHGXUDO%DFNJURXQG ,QFRQWUDVWWRWKH'LVWULFW&RXUWjVHOHPHQWVHQWHQFLQJIDFWRU GHWHUPLQDWLRQWKLVPRGLILFDWLRQRIWKH&RXQW7ZRTXDQWLW\LV 7KHWULDOLQWKLVFDVHFRPPHQFHGRQsXO\MXVWD PRUHUHDGLO\FKDUDFWHUL]HGDVHUURQHRXV7KHUHLVQRDSSDUHQW IHZGD\VDIWHUWKH6XSUHPH&RXUWGHFLGHG$SSUHQGLY1HZ VRXUFHIURPZKLFKD'LVWULFW&RXUWFRXOGGHULYHWKHDXWKRULW\ sHUVH\866&W  $FFRUGLQJO\ WRLQHVVHQFHmUHYHUVHHQJLQHHUl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jV DUJXPHQWV RI FRXQVHO RQ WKLV PDWWHU DQG WKHQ DUULYHG DW D FRQFHVVLRQLQWKDWFDVHWKDWmWKHLQGLFWPHQWjVIDLOXUHWRDOOHJH VROXWLRQ VRPHZKDW GLIIHUHQW IURP WKDW SURSRVHG E\ HLWKHU DIDFWGUXJTXDQWLW\WKDWLQFUHDVHGWKHVWDWXWRU\PD[LPXP SDUW\  $V WR &RXQW 2QH WKH &RXUW UHDG D WUDGLWLRQDO GUXJ VHQWHQFH UHQGHUHG >WKH GHIHQGDQWVj@ HQKDQFHG VHQWHQFHV FRQVSLUDF\ LQVWUXFWLRQ WR WKH MXU\ DQG WKHQ DGGUHVVHG WKH HUURQHRXVXQGHUWKHUHDVRQLQJRI$SSUHQGLl $SSUHQGLVXUHO\ LVVXHRIGUXJTXDQWLW\DVIROORZV GRHV QRW UHOLHYH WKH *RYHUQPHQW RI LWV IXQGDPHQWDO SUH H[LVWLQJREOLJDWLRQWRSURYHWKHPDWHULDODOOHJDWLRQVDFWXDOO\ WHG@ WKH LVVXHV DQG DSSOLFDEOH ODZ WR WKH MXU\l D PL[WXUH RU VXEVWDQFH FRQWDLQLQJ D GHWHFWDEOH DPRXQW RI $OYDUH])GDWDQGWKLVLVDOOWKDWLVUHTXLUHGXQGHU PHWKDPSKHWDPLQHl  s$ DW    7KLV RQHSRXQG ILJXUH RXUSUHFHGHQWV ZRXOGWUDQVODWHLQWRDSSUR[LPDWHO\JUDPV7KH&RXUW KRZHYHU LQVWUXFWHG WKH MXU\ WKDW WKH UHOHYDQW TXDQWLW\ ZDV  7KH 'LVWULFW &RXUW (UUHG LQ $OWHULQJ WKH 'UXJ mJUDPVRUPRUHlDQGWKDWLWZDVWKLVDPRXQWDQGQRWD 4XDQWLW\ 6HW )RUWK LQ &RXQW 7ZR RI WKH SRXQG WKDW WKH MXU\ VKRXOG DGGUHVV LQ LWV GHOLEHUDWLRQV ,QGLFWPHQW%XW7KLV(UURU:DV+DUPOHVV SURYLGHGWKDWLWILUVWGHWHUPLQHGWKDW'HIHQGDQWZDVJXLOW\RI WKHDWWHPSWRIIHQVHFKDUJHGLQWKHLQGLFWPHQW s$DW 7KH'LVWULFW&RXUWjVLQVWUXFWLRQVRQWKH&RXQW7ZRRIIHQVH KRZHYHU DGG DQRWKHU ZULQNOH WR RXU LQTXLU\  +DYLQJ ,QH[SODLQLQJWKHVHLQVWUXFWLRQVRQ&RXQW7ZRWKH'LVWULFW GHWHUPLQHGWKDWWKHGUXJTXDQWLWLHVVHWIRUWKLQWKHLQGLFWPHQW &RXUWUHDVRQHGWKDWm>W@KHLPSDFWRI$SSUHQGLLVWKDWWKHMXU\ ZHUHQRWHOHPHQWVRIWKHFKDUJHGRIIHQVHVWKH'LVWULFW&RXUW KDV WR ILQG WKH VWDWXWRU\ >VHQWHQFLQJ@ IDFWRU EH\RQG D DSSDUHQWO\EHOLHYHGLWVHOIIUHHWRDOWHUWKHVHTXDQWLWLHVLQLWV UHDVRQDEOH GRXEWl  s$ DW    %HFDXVH WKH JUDP DPRXQW FKDUJHG LQ WKH LQGLFWPHQW H[FHHGHG WKH JUDP TXDQWLW\WKDWWULJJHUHGDQHQKDQFHGVWDWXWRU\VHQWHQFLQJUDQJH , HPSKDVL]H WKDW WKLV LV PHUHO\ P\ RZQ YLHZ RQ WKLV VXEMHFW DQG WKDW XQGHU  86& †  E  %  EXW ZDV OHVV WKDQ WKH  P\ FROOHDJXHV RQ WKH SDQHO GR QRW MRLQ LQ LW $FFRUGLQJO\ ZH GR QRW NLORJUDPDPRXQWWKDWZRXOGWULJJHUWKHPD[LPXPVHQWHQFLQJ GHFLGH ZKHWKHU GUXJ TXDQWLW\ LV DQ mHOHPHQWl RI WKH RIIHQVHV FKDUJHG LQ UDQJH XQGHU †  E  $  WKH &RXUW FRQFOXGHG WKDW WKH LQGLFWPHQW EXW DVN RQO\ ZKHWKHU WKH 'LVWULFW &RXUW VXIILFLHQWO\ WUHDWHG GUXJ TXDQWLW\ DV WKH mIXQFWLRQDO HTXLYDOHQWl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††  E  $ YLLL  LQ WKH FKDUJHG RIIHQVHV  8QLWHG6WDWHVY=LGHOO 1R 1R 8QLWHG6WDWHVY=LGHOO  KDG@SURYHGEH\RQGDUHDVRQDEOHGRXEWWKDW RU D VHQWHQFLQJ IDFWRU XQGHU  86& †  8SRQ XQGHUWDNLQJ WKLV DQDO\VLV ZH KDYH KHOG WKDW †  E mVHWV IRUWK SHQDOW\ SURYLVLRQV RQO\ NLORJUDP RU PRUH RI D PL[WXUH RU VXEVWDQFH FRQWDLQLQJ D DQG QRW VHSDUDWH µOHVVHU LQFOXGHGj RIIHQVHVl 8QLWHG 6WDWHV Y 0RUHQR GHWHFWDEOHDPRXQWRIPHWKDPSKHWDPLQHlZDVLQYROYHGLQWKH  )G   WK &LU   7KH 'LVWULFW &RXUW SURSHUO\ FRXOG FRQVSLUDF\ s$DW 6LPLODUO\DVWR&RXQW7ZRWKHMXU\ KDYH UHOLHG RQ WKLV SUHFHGHQW LQ LQVWUXFWLQJ WKH MXU\ WKDW GUXJ TXDQWLW\ ZDV ZDVDVNHGWRGHWHUPLQHZKHWKHU'HIHQGDQWZDVJXLOW\RIWKH QRW DQ HOHPHQW RI WKH FKDUJHG RIIHQVHV FKDUJHGDWWHPSWRIIHQVHDQGLIVRZKHWKHUWKH*RYHUQPHQW , GR QRW UHDG $SSUHQGL DV KDYLQJ DQ\ LPSDFW XSRQ WKLV LVVXH RI KDG SURYHG EH\RQG D UHDVRQDEOH GRXEW WKDW WKLV RIIHQVH VWDWXWRU\ LQWHUSUHWDWLRQ 5DWKHU DV +DUULV H[SODLQV $SSUHQGL UHFRJQL]HV LQYROYHGJUDPVRUPRUHRIPHWKDPSKHWDPLQH 6HHs$ RQO\ D VSHFLILF FRQVWLWXWLRQDO FKHFN XSRQ WKH OHJLVODWXUHjV SRZHU WR DW ,QDYHUGLFWUHWXUQHGRQsXO\WKHMXU\IRXQG GHVLJQDWH IDFWV DV VHQWHQFLQJ IDFWRUV UDWKHU WKDQ HOHPHQWV n WKH 'HIHQGDQW JXLOW\ RQ &RXQWV 2QH DQG 7ZR DQG DQVZHUHG OHJLVODWLYH SUHURJDWLYH LV RYHUULGGHQ ZKHUH WKH IDFW LQ TXHVWLRQ mLQFUHDVHV DIILUPDWLYHO\ WKDW WKH FKDUJHG RIIHQVHV KDG LQYROYHG WKH SHQDOW\ IRU D FULPH EH\RQG WKH SUHVFULEHG VWDWXWRU\ PD[LPXPl UHVSHFWLYHO\ DW OHDVW  NLORJUDP DQG DW OHDVW  JUDPV RI +DUULV  6 &W DW  TXRWLQJ $SSUHQGL  86 DW   6 &W DW   ,Q WKLV HYHQW D VHQWHQFLQJ IDFWRU PXVW EH WUHDWHG OLNH DQ PHWKDPSKHWDPLQH HOHPHQW n WKDW LV VXEPLWWHG WR WKH MXU\ IRU GHWHUPLQDWLRQ EH\RQG D UHDVRQDEOH GRXEW 7KLV RI FRXUVH LV SUHFLVHO\ ZKDW WKH 'LVWULFW &RXUW GLG $ SUHVHQWHQFH UHSRUW SUHSDUHG DIWHU WKHVH FRQYLFWLRQV KHUH UHFRPPHQGHG D VHQWHQFLQJ UDQJH RI  PRQWKV WR OLIH LPSULVRQPHQWEDVHGRQDGHWHUPLQDWLRQWKDWWKH&RXQW2QH ,QGHHG , YLHZ RXU RZQ SRVW$SSUHQGL GHFLVLRQV DV UHFRJQL]LQJ WKLV FRQVSLUDF\ KDG LQYROYHG  WR  NLORJUDPV RI SRLQW DOEHLW RQO\ LPSOLFLWO\ 2Q RQH RFFDVLRQ IRU H[DPSOH ZH VWDWHG WKDW WKH WKUHH VXEVHFWLRQV RI  86& †  E  VHW IRUWK mWKUHH GLIIHUHQW PHWKDPSKHWDPLQH SOXV D IRXUOHYHO HQKDQFHPHQW IRU FULPHV ZLWK WKUHH GLIIHULQJ HOHPHQWV ZHLJKW RI GUXJV l 8QLWHG 6WDWHV Y )ORZDO  )G   WK &LU   RYHUUXOHG RQ RWKHU JURXQGV E\ /HDFKPDQ   )G DW  W@KH&RQVWLWXWLRQSHUPLWVOHJLVODWXUHVWRPDNH 7KH 'LVWULFW &RXUW DGGUHVVHG WKHVH REMHFWLRQV DW D WKHGLVWLQFWLRQEHWZHHQHOHPHQWVDQGVHQWHQFLQJIDFWRUVEXW VHQWHQFLQJKHDULQJKHOGRQ'HFHPEHU 7KH&RXUW LWLPSRVHVVRPHOLPLWDWLRQVDVZHOOl+DUULV6&WDW DGKHUHG WR LWV SULRU YLHZ RI$SSUHQGL DQG RSLQHG WKDW WKH   7KH &RXUW YLHZHG $SSUHQGL DV VWDWLQJ RQH VXFK FKDUDFWHUL]DWLRQRIGUXJTXDQWLW\DVDQHOHPHQWRUVHQWHQFLQJ OLPLWDWLRQmµ2WKHUWKDQWKHIDFWRIDSULRUFRQYLFWLRQDQ\ IDFWRUZDVmFRPSOHWHO\LPPDWHULDOlZKHUHmWKHMXU\LQWKLV IDFW WKDW LQFUHDVHV WKH SHQDOW\ IRU D FULPH EH\RQG WKH FDVH ZDV WROG >WKDW@ WKH IDFW >RI GUXJ DPRXQW@ KDG WR EH SUHVFULEHGVWDWXWRU\PD[LPXPjZKHWKHUWKHVWDWXWHFDOOVLWDQ SURYHGEH\RQGDUHDVRQDEOHGRXEWl s$DW 7KH HOHPHQWRUDVHQWHQFLQJIDFWRUµPXVWEHVXEPLWWHGWRDMXU\ &RXUW QRWHG WKDW WKH MXU\jV GHWHUPLQDWLRQ RQ WKLV SRLQW DQGSURYHGEH\RQGDUHDVRQDEOHGRXEWjl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mLQFUHDV>H@ SXQLVKPHQW EH\RQG WKH UDQJHRIWRPRQWKV'HIHQGDQWWKHQZDVVHQWHQFHG PD[LPXPDXWKRUL]HGE\DJXLOW\YHUGLFWVWDQGLQJDORQHl DW WKH ERWWRP RI WKLV UDQJH D PRQWK WHUP RI LPSULVRQPHQWIROORZHGE\DILYH\HDUSHULRGRIVXSHUYLVHG 8QGHU WKLV VWDQGDUG UHJDUGOHVV RI ZKHWKHU &RQJUHVV UHOHDVH GHQRPLQDWHGGUXJTXDQWLW\DVDQmHOHPHQWlRUDmVHQWHQFLQJ IDFWRUlXQGHUWKHIHGHUDOGUXJVWDWXWHVLWLVHYLGHQWWKDWWKH $ MXGJPHQW HPERG\LQJ WKLV VHQWHQFH ZDV HQWHUHG RQ GUXJTXDQWLW\VHWIRUWKLQ&RXQW2QHRIWKHLQGLFWPHQWKHUH 'HFHPEHU'HIHQGDQWQRZDSSHDOVKLVFRQYLFWLRQ ZDVWKHmIXQFWLRQDOHTXLYDOHQWlRIDQHOHPHQWRI'HIHQGDQWj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mHOHPHQWlRIWKH&RXQW2QHRIIHQVHLQWKH ZDVQRWSURSHUO\SODFHGLQWKH:HVWHUQ'LVWULFWRI7HQQHVVHH VHQVHWKDWLWKDGWREHVXEPLWWHGWRWKHMXU\LQRUGHUWRVXVWDLQ DVWR&RXQW7ZRRIWKHLQGLFWPHQWDQGWKDWWKH'LVWULFW&RXUW DQHQKDQFHGVHQWHQFH HUUHGLQIDLOLQJWRJUDQWKLVPRWLRQIRUMXGJPHQWRIDFTXLWWDO  8QLWHG6WDWHVY=LGHOO 1R 1R 8QLWHG6WDWHVY=LGHOO  8QLWHG6WDWHVY6LPPV)G WK&LU  RQWKLVJURXQG:HUHYLHZGHQRYRWKHWULDOFRXUWjVGHQLDORI 8QLWHG 6WDWHV Y 0RUHFL  )G   WK &LU DPRWLRQIRUMXGJPHQWRIDFTXLWWDO6HH8QLWHG6WDWHVY:DOO  8QLWHG6WDWHVY%URZQ)6XSSG )G WK&LU ,QFRQGXFWLQJWKLVUHYLHZ (' 0LFK    7KXV ZH FRQFOXGH WKDW WKH mVSHFLILF ZH YLHZ WKH HYLGHQFH LQ WKH OLJKW PRVW IDYRUDEOH WR WKH TXDQWLW\RUPRUHlILQGLQJVPDGHE\WKHMXU\LQWKLVFDVHGLG SURVHFXWLRQDQGLQTXLUHZKHWKHUDUDWLRQDOWULHURIIDFWFRXOG QRW WULJJHU D YLRODWLRQ RI $SSUHQGL ZKHUH WKHVH ILQGWKDWYHQXHLVSURSHU6HH:DOO)GDW7KH GHWHUPLQDWLRQVVHUYHGWRIL[WKHVWDWXWRU\VHQWHQFLQJUDQJH *RYHUQPHQWjVVKRZLQJRQWKLVSRLQWQHHGRQO\EHVXSSRUWHG IDFHGE\'HIHQGDQWDQGQRDGGLWLRQDOILQGLQJVDWVHQWHQFLQJ E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH  6HH 8QLWHG 6WDWHV Y H[SDQGHGWKLVUDQJHLQDQ\ZD\ 7KRPDV)G WK&LU FHUWGHQLHG86     $Q\(UURULQWKH'LVWULFW&RXUWjV&KDUDFWHUL]DWLRQ RI'UXJ4XDQWLW\+DG1R(IIHFWXSRQ'HIHQGDQWjV %HIRUHUHDFKLQJWKHPHULWVRIWKLVLVVXHZHILUVWDGGUHVVWKH &RQYLFWLRQRU6HQWHQFH *RYHUQPHQWjV FRQWHQWLRQ WKDW 'HIHQGDQW ZDLYHG DQ\ REMHFWLRQ WR LPSURSHU YHQXH E\ IDLOLQJ WR WLPHO\ UDLVH WKLV 1HYHUWKHOHVVWZRRWKHUDVSHFWVRIWKHMXU\LQVWUXFWLRQVLQ LVVXH LQ WKH FRXUW EHORZ  $V WKH *RYHUQPHQW SRLQWV RXW WKLVFDVHZDUUDQWIXUWKHUGLVFXVVLRQ)LUVWXSRQGHWHUPLQLQJ 'HIHQGDQWGLGQRWVSHFLILFDOO\LGHQWLI\YHQXHDVDQLVVXHLQ LQOLJKWRI$SSUHQGLWKDWWKHLVVXHRIGUXJTXDQWLW\VKRXOGEH KLVLQLWLDOPRWLRQIRUMXGJPHQWRIDFTXLWWDODWWKHFORVHRIWKH VXEPLWWHGWRWKHMXU\WKH'LVWULFW&RXUWLQVWUXFWHGWKDWGUXJ *RYHUQPHQWjVSURRIV,QVWHDGKLVFRXQVHOJHQHUDOO\VWDWHG TXDQWLW\ZDVQRWDQmHOHPHQWlRIWKHFKDUJHGRIIHQVHVEXW LQVWHDGKDGWREHHVWDEOLVKHGmIRURWKHUSXUSRVHVl s$DW 9HU\ EULHIO\ mVHQWHQFLQJIDFWRUl@DSSURSULDWHO\GHVFULEHVD 7KH ODZ RI WKLV &LUFXLW LQGLFDWHV RWKHUZLVH WKRXJK QRW FLUFXPVWDQFH ZKLFK PD\ EH HLWKHU DJJUDYDWLQJ RU GHILQLWLYHO\  7R EH VXUH ZKLOH 'HIHQGDQW FKDOOHQJHG WKH PLWLJDWLQJLQFKDUDFWHUWKDWVXSSRUWVDVSHFLILFVHQWHQFH *RYHUQPHQWjVSXUSRUWHGIDLOXUHWRmPDNHRXWHDFKDQGHYHU\ ZLWKLQWKHUDQJHDXWKRUL]HGE\WKHMXU\jVILQGLQJWKDWWKH HOHPHQWlRIWKHFKDUJHGRIIHQVHV s$DW WKLVFDQQRWEH GHIHQGDQWLVJXLOW\RIDSDUWLFXODURIIHQVH2QWKHRWKHU YLHZHGDVDGLUHFWFKDOOHQJHWRYHQXHEHFDXVHYHQXHLVQRW KDQGZKHQWKHWHUPmVHQWHQFHHQKDQFHPHQWlLVXVHGWR SURSHUO\FRQVLGHUHGDWUXHmHOHPHQWlRIDFULPLQDORIIHQVH GHVFULEH DQ LQFUHDVH EH\RQG WKH PD[LPXP DXWKRUL]HG 6HH8QLWHG6WDWHVY6FDLIH)G WK&LU   8QLWHG6WDWHVY=LGHOO 1R 1R 8QLWHG6WDWHVY=LGHOO  8QLWHG6WDWHVY%UDQDQ)G WK&LU )RU VLPLODU UHDVRQV ZH ILQG QR PHULW LQ WKH FRQWHQWLRQ  1HYHUWKHOHVVWKLV&RXUWKDVLQGLFDWHGDOEHLWRQO\LQ DUJXDEO\ UDLVHG LQ 'HIHQGDQWjV EULHI RQ DSSHDO WKDW WKH GLFWDWKDWDJHQHUDOFKDOOHQJHWRWKH*RYHUQPHQWjVSURRIVLQ 'LVWULFW&RXUWHUUHGLQIDLOLQJWRLQVWUXFWWKHMXU\WRGHWHUPLQH D 5XOH  PRWLRQ IRU MXGJPHQW RI DFTXLWWDO VXIILFHV WR WKHSUHFLVHTXDQWLWLHVRIPHWKDPSKHWDPLQHLQYROYHGLQWKH SUHVHUYH WKH LVVXH RI YHQXH DQG WKDW RQO\ D PRUH VSHFLILF FKDUJHG RIIHQVHVDQGLQVWHDGDOORZLQJWKHMXU\WRUHWXUQD 5XOHPRWLRQRSHUDWHVWRZDLYHDOOJURXQGVQRWVSHFLILHG YHUGLFWEDVHGRQWKUHVKROGDPRXQWVRIGUXJVnQDPHO\m 6HH8QLWHG6WDWHVY'DQG\)G WK&LU NLORJUDP RU PRUHl DV WR &RXQW 2QH DQG m JUDPV RU   FHUW GHQLHG  86     ,Q VWDWLQJ WKLV PRUHlDVWR&RXQW7ZR 6HHs$DW 7KLV&RXUWKDV YLHZZHTXRWHGZLWKDSSURYDOIURP8QLWHG6WDWHVY5LYHUD KHOGDOEHLWZLWKRXWGLVFXVVLRQWKDWVHQWHQFHVEDVHGXSRQD  )G   G &LU  FHUW GHQLHG  86  MXU\jVILQGLQJRImDWOHDVWlDWKUHVKROGGUXJTXDQWLW\GRQRW   ZKLFK GLVWLQJXLVKHG EHWZHHQ JHQHUDO DQG VSHFLILF YLRODWH$SSUHQGL6HH8QLWHG6WDWHVY+RXJK)G PRWLRQVWRDFTXLWDQGIRXQGWKDWWKHIRUPHUW\SHRIPRWLRQ  WK&LU FHUWGHQLHG6&W  8QLWHG mPLJKW>EH@DVVXPH>G@lWRHQFRPSDVVYHQXH6HH'DQG\ 6WDWHV Y $OYDUH]  )G   WK &LU   FHUW )G DW   ,Q WKLV FDVH 'HIHQGDQWjV LQLWLDO PRWLRQ LV GHQLHG6&W  :HH[SODLQHGLQ+RXJKWKDW UHDGLO\FKDUDFWHUL]HGDVJHQHUDOnLQGHHGLWLVKDUGWRVHH $SSUHQGLGRHVQRWUHTXLUHmWKDWWKHSUHFLVHDPRXQWRIGUXJV KRZLWFRXOGEHPRUHVRnDQGWKXVGRHVQRWSUHFOXGHXV PXVWDOZD\VEHVXEPLWWHGWRWKHMXU\lUDWKHULWVXIILFHVWKDW IURPFRQVLGHULQJKLVFKDOOHQJHWRYHQXH WKH MXU\ ILQGV EH\RQG D UHDVRQDEOH GRXEW mWKH PLQLPXP DPRXQW RI GUXJV VSHFLILHG LQ WKH LQGLFWPHQWl DQG WKDW WKH 7XUQLQJWRWKHPHULWVRIWKLVLVVXHKRZHYHUZHILQGWKDW XOWLPDWHVHQWHQFHGRHVQRWH[FHHGWKHVWDWXWRU\PD[LPXPIRU WKHUHFRUGDPSO\VXSSRUWVWKH*RYHUQPHQWjVGHWHUPLQDWLRQWR WKLVDPRXQW+RXJK)GDW SURVHFXWH 'HIHQGDQW LQ WKH :HVWHUQ 'LVWULFW RI 7HQQHVVHH &RXQW 7ZR RI WKH LQGLFWPHQW FKDUJHG WKDW 'HIHQGDQW DQG ,QGHHGDGHPDQGIRUJUHDWHUVSHFLILFLW\LQGUXJTXDQWLW\ .HYLQ&UDQIRUGmHDFKEHLQJDLGHGDQGDEHWWHGE\WKHRWKHU GHWHUPLQDWLRQV ZRXOG EH LPSRVVLEOH WR VTXDUH ZLWK RXU DQGE\5REHUW5RRNGLGDWWHPSWWRSRVVHVVZLWKWKHLQWHQWWR GHFLVLRQVUHMHFWLQJ$SSUHQGLEDVHGFKDOOHQJHVZKHUHWKHMXU\ GLVWULEXWHDQGDWWHPSWWRFDXVHWKHSRVVHVVLRQZLWKLQWHQWWR IRXQGRQO\DGHWHFWDEOHRUXQVSHFLILHGDPRXQWRIDFRQWUROOHG GLVWULEXWHDSSUR[LPDWHO\SRXQGRIDPL[WXUHRUVXEVWDQFH VXEVWDQFH RU ZDV QRW HYHQ DVNHG WR PDNH D GUXJ TXDQWLW\ FRQWDLQLQJDGHWHFWDEOHDPRXQWRIPHWKDPSKHWDPLQHl s$ ILQGLQJ EXW ZKHUH WKH UHVXOWLQJ VHQWHQFH IHOO EHORZ WKH DW )URPWKH*RYHUQPHQWjVSURRIVDWWULDODQGIURPWKH GHIDXOW PD[LPXP VHW IRUWK DW †  E  &   6HH HJ UHIHUHQFHLQWKHLQGLFWPHQWWRWKHWLPHSHULRGEHWZHHQ$SULO &RSHODQG)GDW8QLWHG6WDWHVY%XUQV DQG$SULOLWLVHYLGHQWWKDWWKHRIIHQVHFKDUJHGLQ )G WK&LU +RXJK)GDW &RXQW7ZRDURVHIURPWKH$SULOWUDQVDFWLRQLQZKLFK 7KHVH FDVHV LQYROYH LQ HVVHQFH D m]HUR RU PRUHl &UDQIRUGDQG5RRNWUDYHOHGWR'HIHQGDQWjVKRPHLQ'DOODV GHWHUPLQDWLRQE\WKHMXU\ZKLFKLVOHJDOO\LQGLVWLQJXLVKDEOH 7H[DV DQG ZHUH JLYHQ DSSUR[LPDWHO\ D SRXQG RI IURPWKHmRQHNLORJUDPRUPRUHlDQGmJUDPVRUPRUHl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†† E  $ RU % LVVXIILFLHQWWRVXVWDLQDVHQWHQFHDWRU EHORZ WKH UHOHYDQW VXEVHFWLRQjV VWDWXWRU\ PD[LPXP  6HH  8QLWHG6WDWHVY=LGHOO 1R 1R 8QLWHG6WDWHVY=LGHOO  WULJJHUHG DQ HQKDQFHG \HDUVWROLIH VWDWXWRU\ VHQWHQFLQJ ,QDUJXLQJWKDWYHQXHZDVLPSURSHUO\SODFHGLQWKH:HVWHUQ UDQJH VHH  86& †  E  $  DQG 'HIHQGDQWjV 'LVWULFWRI7HQQHVVHHDVWRWKLVFKDUJH'HIHQGDQWQRWHVWKDW VHQWHQFH OLHV ZLWKLQ WKLV UDQJH  0RUHRYHU WKH MXU\ ZDV WKH *RYHUQPHQWjV SURRIV HVWDEOLVKHG WKDW KH VXSSOLHG WKH LQVWUXFWHGWRGHWHUPLQHLQDmVHSDUDWHILQGLQJlZKHWKHUWKH GUXJVLQTXHVWLRQVROHO\LQ7H[DVDQGZLWKRXWWUDYHOLQJWR *RYHUQPHQWKDGmSURYHGEH\RQGDUHDVRQDEOHGRXEWWKDW 0HPSKLV%HWKDWDVLWPD\WKHHYHQWVRIUHOHYDQFHWRWKLV NLORJUDP RU PRUH RI D PL[WXUH RU VXEVWDQFH FRQWDLQLQJ D DWWHPSWHG GUXJ GLVWULEXWLRQ RIIHQVH DUH QRW VR QDUURZO\ GHWHFWDEOHDPRXQWRIPHWKDPSKHWDPLQHZDVWKHDPRXQWRI FLUFXPVFULEHG  7KLV &RXUW DQG RWKHUV KDYH REVHUYHG WKDW FRQWUROOHGVXEVWDQFHWKDWGHIHQGDQWFRQVSLUHGWRSRVVHVVZLWK m>S@RVVHVVLRQZLWKLQWHQWWRGLVWULEXWHDFRQWUROOHGVXEVWDQFH LQWHQW WR GLVWULEXWH RU WR GLVWULEXWHl  s$ DW    7KH LVDFRQWLQXLQJRIIHQVHl8QLWHG6WDWHVY0HGLQD)G YHUGLFWIRUPUHIOHFWVWKHMXU\jVDIILUPDWLYHUHVSRQVHWRWKLV  WK&LU FHUWGHQLHG86   TXHU\ 6HHs$DW VHHDOVR8QLWHG6WDWHVY8ULEH)G VW&LU  8QLWHG6WDWHVY%DVNLQ)G '&&LU *LYHQWKLVMXU\ILQGLQJEH\RQGDUHDVRQDEOHGRXEWWKDWWKH  FHUWGHQLHG86  8QLWHG6WDWHVY &RXQW2QHFRQVSLUDF\LQYROYHGDGUXJTXDQWLW\LQH[FHVVRI 6WLW]HU  )G   WK &LU  FHUW GHQLHG  RQHNLORJUDP'HIHQGDQWjVVHQWHQFHSURSHUO\UHVWVXSRQWKLV 86  6HHJHQHUDOO\8QLWHG6WDWHVY&RORQ SRUWLRQRIWKHYHUGLFWDORQHHYHQZLWKRXWFRQVLGHUDWLRQRIWKH )G WK&LU  KROGLQJWKDWmGLVWULEXWLRQlRI MXU\jVJXLOW\YHUGLFWDVWR&RXQW7ZR%H\RQGWKLVLWGRHV DFRQWUROOHGVXEVWDQFHXQGHUIHGHUDOGUXJODZmLQFOXGHVRWKHU QRWPDWWHUZKHWKHUDV'HIHQGDQWDUJXHVLQKLVIRXUWKLVVXHRQ DFWVSHUSHWUDWHGLQIXUWKHUDQFHRIDWUDQVIHURUVDOHVXFKDV DSSHDO WKH WHUP RI LPSULVRQPHQW LPSRVHG E\ WKH 'LVWULFW DUUDQJLQJRUVXSHUYLVLQJWKH GHOLYHU\RUQHJRWLDWLQJIRURU &RXUWUHIOHFWVIXUWKHUGUXJTXDQWLW\ILQGLQJVDWVHQWHQFLQJE\ UHFHLYLQJ WKH SXUFKDVH SULFHl   $FFRUGLQJO\ WKH D SUHSRQGHUDQFH RI WKH HYLGHQFH n VSHFLILFDOO\  WR  GHWHUPLQDWLRQ RI YHQXH LV JRYHUQHG E\ WKH mFRQWLQXLQJ NLORJUDPV RI PHWKDPSKHWDPLQH VHH s$ DW   n WKDW RIIHQVHlVWDWXWHZKLFKSURYLGHVWKDWmDQ\RIIHQVHDJDLQVWWKH WULJJHUHGDQHQKDQFHG6HQWHQFLQJ*XLGHOLQHUDQJHRIWR 8QLWHG6WDWHVEHJXQLQRQHGLVWULFWDQGFRPSOHWHGLQDQRWKHU PRQWKV5DWKHUZHKDYHUHSHDWHGO\KHOGWKDW$SSUHQGL RUFRPPLWWHGLQPRUHWKDQRQHGLVWULFWPD\EHSURVHFXWHG SHUPLWV VXFK D SURFHGXUH DW VHQWHQFLQJ VR ORQJ DV WKH LQDQ\GLVWULFWLQZKLFKVXFKRIIHQVHZDVEHJXQFRQWLQXHGRU UHVXOWLQJVHQWHQFHGRHVQRWH[FHHGWKHVWDWXWRU\PD[LPXP FRPSOHWHGl86&† D VHHDOVR0HGLQD)G HVWDEOLVKHGWKURXJKWKHMXU\YHUGLFWDORQH6HH/DZUHQFH DW8QLWHG6WDWHVY7XUQHU)G WK&LU )GDW&RSHODQG)GDW8QLWHG6WDWHVY   VWDWLQJ WKDW GUXJ WUDIILFNLQJ RIIHQVHV mDUH QRW *DUFLD)G WK&LU 6XFKLVWKHFDVH FRPSOHWHGXQWLOWKHGUXJVUHDFKWKHLUILQDOGHVWLQDWLRQDQG KHUH ZKHUH WKH ILQGLQJV DW VHQWHQFLQJ RSHUDWHG VROHO\ WR >WKDW@YHQXHLVSURSHULQDQ\GLVWULFWDORQJWKHZD\l LQWHUQDO QDUURZ WKH \HDUVWROLIH VWDWXWRU\ VHQWHQFLQJ UDQJH TXRWDWLRQVDQGFLWDWLRQRPLWWHG 7RVDWLVI\WKHWHUPVRIWKLV SUHYLRXVO\ WULJJHUHG E\ WKH MXU\jV GUXJ TXDQWLW\ ILQGLQJV VWDWXWHLWLVQRWHVVHQWLDOWKDWWKHGHIHQGDQWHYHUKDYHEHHQ $FFRUGLQJO\ZHUHMHFWWKLVDVSHFWRI'HIHQGDQWjVDSSHDOWR SK\VLFDOO\SUHVHQWLQWKHGLVWULFWLQTXHVWLRQVRORQJDVmWKH $SSUHQGL RIIHQVHFRQWLQXHGLQWRlWKLVGLVWULFW0HGLQD)GDW 7KHWULDOUHFRUGYLHZHGPRVWIDYRUDEO\WRWKHSURVHFXWLRQ OHDYHV QR URRP IRU GRXEW WKDW WKH :HVWHUQ 'LVWULFW RI  &XUUHQWO\ DPRXQWV LQ H[FHVV RI  JUDPV WULJJHU WKH VWDWXWRU\ 7HQQHVVHH ZDV DPRQJ WKH GLVWULFWV LQ ZKLFK WKH RIIHQVH PD[LPXP RI OLIH LPSULVRQPHQW XQGHU †  E  $  +RZHYHU WKH FKDUJHGLQ&RXQW7ZRZDVmEHJXQFRQWLQXHGRUFRPSOHWHGl 'LVWULFW &RXUW XVHG WKH RQHNLORJUDP DPRXQW VHW IRUWK LQ WKH VWDWXWH SULRU $FFRUGLQJWRWKH*RYHUQPHQWjVZLWQHVVHV'HIHQGDQWWUDYHOHG WR 2FWREHU RI  DQG WKH *RYHUQPHQW GRHV QRW FRQWHVW WKLV UXOLQJ  8QLWHG6WDWHVY=LGHOO 1R 1R 8QLWHG6WDWHVY=LGHOO  WR 0HPSKLV LQ WKH ODWWHU SDUW RI  SURYLGLQJ  'HIHQGDQWjV 6HQWHQFH 'RHV 1RW ([FHHG WKH PHWKDPSKHWDPLQHWR5RRNDQG&UDQIRUGGXULQJDPHHWLQJDW 0D[LPXP$XWKRUL]HGE\WKHsXU\9HUGLFW$ORQH D :DIIOH +RXVH  7KLV WUDQVDFWLRQ DSSDUHQWO\ VWUDLQHG WKH UHODWLRQVKLS EHWZHHQ WKH SDUWLHV ZLWK &UDQIRUG H[SUHVVLQJ ,QFDVHVOLNHWKLVRQHLQYROYLQJGUXJWUDIILFNLQJRIIHQVHV GLVVDWLVIDFWLRQ ZLWK WKH TXDQWLW\ DQG TXDOLW\ RI WKH GUXJV WULHGEHIRUHDMXU\ZHKDYHLQWHUSUHWHG$SSUHQGLDVUHTXLULQJ ZKLOH'HIHQGDQWUHSRUWHGO\FRPSODLQHGWKDWKHKDGQRWEHHQ WKDW D GHIHQGDQW EH VHQWHQFHG ZLWKLQ WKH GHIDXOW UDQJH VHW SDLG'HIHQGDQWHYHQWXDOO\UHHVWDEOLVKHGWKHUHODWLRQVKLSZLWK IRUWKDW86&† E  & nLHQRWPRUHWKDQ &UDQIRUGWKURXJKDVHULHVRIWHOHSKRQHFDOOVEHWZHHQ'DOODV \HDUVjLPSULVRQPHQWLQFUHDVHGWRD\HDUPD[LPXPLIWKH DQG0HPSKLVEHJLQQLQJLQsDQXDU\RIDQGWKURXJKD GHIHQGDQWKDVDSULRUIHORQ\GUXJFRQYLFWLRQnXQOHVVWKH WULDOVKLSPHQWRIDTXDUWHURXQFHRIPHWKDPSKHWDPLQHIURP MXU\GHWHUPLQHVEH\RQGDUHDVRQDEOHGRXEWWKDWWKHRIIHQVH 'DOODVWR0HPSKLVYLD)HGHUDO([SUHVV&UDQIRUGWHVWLILHG LQYROYHG D TXDQWLW\ RI GUXJV WKDW WULJJHUV DQ HQKDQFHG WKDWWKHVHGHDOLQJVHVVHQWLDOO\GHILQHGWKHWHUPVRIWKHSDUWLHVj VWDWXWRU\PD[LPXPXQGHU†† E  $ RU % 6HHHJ VXEVHTXHQWWUDQVDFWLRQVLQHDUO\$SULORInQDPHO\WKDW 8QLWHG6WDWHVY/DZUHQFH)G WK&LU  'HIHQGDQWZRXOGSURYLGHmJRRGTXDOLW\lPHWKDPSKHWDPLQH 8QLWHG6WDWHVY3DJH)G WK&LU ,Q DQG WKDW&UDQIRUGZRXOGVHOOWKHVHGUXJVLQ0HPSKLVDVD WKHSUHVHQWFDVHWKH'LVWULFW&RXUWLPSRVHGDPRQWKWHUP PHDQVRIUHSD\LQJKLVRXWVWDQGLQJGHEWWR'HIHQGDQW 6HH RI LPSULVRQPHQW D VHQWHQFH ZKLFK H[FHHGV WKH \HDU s$DW %DVHGRQWKLVXQGHUVWDQGLQJ&UDQIRUGDQG GHIDXOWVWDWXWRU\PD[LPXPIRUDGUXJRIIHQVHLQYROYLQJDQ 5RRNWUDYHOHGIURP0HPSKLVWR'DOODVRQWZRRFFDVLRQVLQ LQGHWHUPLQDWHDPRXQWRIPHWKDPSKHWDPLQH6HH86& FORVHVXFFHVVLRQRQ$SULODQG$SULOLQRUGHUWR † E  &  REWDLQ DGGLWLRQDO VXSSOLHV RI PHWKDPSKHWDPLQH IURP 'HIHQGDQWIRUGLVWULEXWLRQLQ0HPSKLV 8QGHUWKHVHFLUFXPVWDQFHV$SSUHQGLGHPDQGVWKDWZHDVN ZKHWKHU WKLV VHQWHQFH FDQ EH DFKLHYHG VROHO\ WKURXJK WKH )URP WKLV HYLGHQFH D IDFWILQGHU UHDVRQDEO\ FRXOG KDYH ILQGLQJVRIWKHMXU\EH\RQGDUHDVRQDEOHGRXEW7KHUHLVQR FRQFOXGHGWKDWWKHDWWHPSWHGGLVWULEXWLRQRIIHQVHFKDUJHGLQ GRXEWWKDWLWFDQ&RXQW2QHRIWKHLQGLFWPHQWFKDUJHGWKDW &RXQW 7ZR KDG LWV EHJLQQLQJV LQ 'HIHQGDQWjV WULS WR WKH 'HIHQGDQWFRQVSLUHGWRSRVVHVVZLWKWKHLQWHQWWRGLVWULEXWH :DIIOH +RXVH LQ 0HPSKLV DV ZHOO DV WKH SULQFLSDOVj mDQ DPRXQW LQ H[FHVV RI  NLORJUDP RI D PL[WXUH DQG VXEVHTXHQWQHJRWLDWLRQVEHWZHHQ'DOODVDQG0HPSKLVDVWKH\ VXEVWDQFH FRQWDLQLQJ D GHWHFWDEOH DPRXQW RI DLUHG WKHLU UHVSHFWLYH FRPSODLQWV DERXW WKH :DIIOH +RXVH PHWKDPSKHWDPLQHl s$DW 7KLVRQHNLORJUDPDPRXQW WUDQVDFWLRQ  7KH WULDO UHFRUG DOVR ZRXOG VXSSRUW WKH FRQFOXVLRQWKDWWKHRIIHQVHFRQWLQXHGLQ0HPSKLVDWOHDVWLQ SDUWDVWKLVZDVWKHSRLQWRIGHSDUWXUHIRU&UDQIRUGDQG5RRN  RQ$SULODQG7KHWZRPHQLQGLFDWHGDWWULDOWKDWWKH\ 8QWLO UHFHQWO\ WKLV &RXUW KDG UHDG $SSUHQGL DV DSSO\LQJ WR VWDWXWRU\ PLQLPXP DV ZHOO DV PD[LPXP VHQWHQFHV VR WKDW D GHIHQGDQW FRXOG QRW EH ZHUH LQGXFHG WR WUDYHO WR 'DOODV E\ 'HIHQGDQWjV RIIHU WR VHQWHQFHG WR D PDQGDWRU\ PLQLPXP WHUP RI LPSULVRQPHQW HYHQ RQH VXSSO\ WKHP ZLWK PHWKDPSKHWDPLQH n DQG LQGHHG ZKLFK ZDV DW RU EHORZ D SHUPLVVLEOH VWDWXWRU\ PD[LPXP LI WKLV VHQWHQFH 'HIHQGDQWDSSDUHQWO\PDGHJRRGRQWKLVSURPLVHGXULQJERWK ZDV WULJJHUHG E\ WKH WULDO FRXUWjV GUXJ TXDQWLW\ ILQGLQJV E\ D RIWKHVHWULSV)LQDOO\DOWKRXJKWKHSODQVRI&UDQIRUGDQG SUHSRQGHUDQFH RI WKH HYLGHQFH 6HH HJ 8QLWHG 6WDWHV Y +XPSKUH\  5RRNZHUHWKZDUWHGE\WKHLUDUUHVWVWKHLUWHVWLPRQ\SODLQO\ )G   WK &LU   8QLWHG 6WDWHV Y 6WUD\KRUQ  )G   WK &LU   :H KDYH VLQFH FRQFOXGHG KRZHYHU WKDW WKLV HYLGHQFHV WKHLU DLP WR UHWXUQ WR 0HPSKLV WR FRPSOHWH WKH PRUH H[SDQVLYH UHDGLQJ RI $SSUHQGL GLG QRW VXUYLYH WKH 6XSUHPH &RXUWjV LQWHQGHG RIIHQVH n LH WKH GLVWULEXWLRQ RI WKH UHFHQW UXOLQJ LQ +DUULV Y 8QLWHG 6WDWHV  6 &W    6HH HJ PHWKDPSKHWDPLQHUHFHLYHGIURP'HIHQGDQWnDQG'HIHQGDQW 8QLWHG 6WDWHV Y /HDFKPDQ  )G   WK &LU   /DZUHQFH  )G DW  &RSHODQG  )G DW   8QLWHG6WDWHVY=LGHOO 1R 1R 8QLWHG6WDWHVY=LGHOO  & $Q\ (UURUV LQ WKH 'LVWULFW &RXUWjV $SSOLFDWLRQ RI VXUHO\ ZRXOG KDYH EHHQ DZDUH RI WKLV SODQ IURP KLV SDVW $SSUHQGL:HUH+DUPOHVV GHDOLQJVZLWK&UDQIRUG,QVKRUWWKHUHFRUGHVWDEOLVKHVYHQXH LQWKH:HVWHUQ'LVWULFWRI7HQQHVVHHXQGHUDQ\RIWKHmEHJXQ 'HIHQGDQWjVILQDOWZRDUJXPHQWVRQDSSHDOERWKLQYROYHWKH FRQWLQXHGRUFRPSOHWHGlSURQJVRI86&† D  LPSDFWRIWKH6XSUHPH&RXUWjVGHFLVLRQLQ$SSUHQGLY1HZ sHUVH\  86   6 &W    XSRQ KLV 0RUH JHQHUDOO\ ZH KDYH HYDOXDWHG FKDOOHQJHV WR YHQXH FRQYLFWLRQDQGVHQWHQFH,QSDUWLFXODU'HIHQGDQWFRQWHQGV XQGHU D mVXEVWDQWLDO FRQWDFWVl WHVW ZKLFK FDOOV IRU WKDWWKHMXU\LQVWUXFWLRQVEHDULQJXSRQGUXJTXDQWLW\IDLOHGWR FRQVLGHUDWLRQRImWKHVLWHRIWKHGHIHQGDQWjVDFWVWKHHOHPHQWV FRPSRUWZLWK$SSUHQGLDQGWKDWWKH'LVWULFW&RXUWHUUHGLQ DQGQDWXUHRIWKHFULPHWKHORFXVRIWKHHIIHFWRIWKHFULPLQDO VHQWHQFLQJKLPE\UHIHUHQFHWRDTXDQWLW\RIGUXJVLQH[FHVV FRQGXFWDQGWKHVXLWDELOLW\RIHDFKGLVWULFWIRUDFFXUDWHIDFW RI WKDW GHWHUPLQHG E\ WKH MXU\ EH\RQG D UHDVRQDEOH GRXEW ILQGLQJl8QLWHG6WDWHVY:LOOLDPV)G WK 7KHVHLVVXHVDUHUHODWHGDQGZLOOEHDGGUHVVHGWRJHWKHU &LU  LQWHUQDOTXRWDWLRQVDQGFLWDWLRQVRPLWWHG (YHQ DVVXPLQJWKDW'HIHQGDQWFRXOGEHYLHZHGDVDFWLQJVROHO\LQ $VQRWHG$SSUHQGLZDVGHFLGHGVKRUWO\EHIRUH'HIHQGDQWjV 'DOODV n D VXSSRVLWLRQ WKDW ZRXOG LJQRUH WKH VHYHUDO WULDODQGWKH'LVWULFW&RXUWDQGFRXQVHOH[SUHVVO\DGGUHVVHG RFFDVLRQV RQ ZKLFK KH UHDFKHG RXW RU HYHQ WUDYHOHG WR WKLVUXOLQJjVHIIHFWXSRQWKHMXU\LQVWUXFWLRQVDQGVHQWHQFLQJ 0HPSKLV LQFOXGLQJ WKH :DIIOH +RXVH WUDQVDFWLRQ KLV $FFRUGLQJO\ZHUHYLHZGHQRYRWKHORZHUFRXUWjVUHVROXWLRQ WHOHSKRQH QHJRWLDWLRQV ZLWK &UDQIRUG DQG WKH )HGHUDO RIWKH$SSUHQGLUHODWHGLVVXHV DW WULDODQGVHQWHQFLQJ6HH ([SUHVVVKLSPHQWnWKLVIDFWRUZRXOGEHFRXQWHUEDODQFHGE\ 8QLWHG6WDWHVY6WHZDUW)G WK&LU  FRQVLGHUDWLRQ RI WKH QDWXUH RI WKH FKDUJHG RIIHQVH ZKLFK 5HJDUGLQJWKHVSHFLILFPDWWHURIMXU\LQVWUXFWLRQVWKLVUHYLHZ HQWDLOVERWKSRVVHVVLRQDQGLQWHQWWRGLVWULEXWH7KHHIIHFWVRI HQWDLOVFRQVLGHUDWLRQmZKHWKHUWKHFKDUJHWDNHQDVDZKROH WKHDWWHPSWHGGLVWULEXWLRQLIVXFFHVVIXOZRXOGKDYHEHHQIHOW IDLUO\DQGDGHTXDWHO\VXEPLWVWKHLVVXHVDQGDSSOLFDEOHODZWR LQ0HPSKLVDQGWKLVIDFWRUKDVVXIILFLHQWZHLJKWLQWKLVFDVH WKHMXU\l8QLWHG6WDWHVY$OYDUH])G WK WRVDWLVI\RXUmVXEVWDQWLDOFRQWDFWVlLQTXLU\ &LU  LQWHUQDOTXRWDWLRQVDQGFLWDWLRQVRPLWWHG FHUW GHQLHG6&W   7KH '& &LUFXLWjV GHFLVLRQ LQ 8QLWHG 6WDWHV Y .ZRQJ :DK)G '&&LU LVLQVWUXFWLYHIRU ERWKLWVVLPLODULWLHVWRDQGLWVGLVWLQFWLRQVIURPWKHSUHVHQW FDVH,QWKDWFDVHDVKHUHWKHGHIHQGDQWZDVFKDUJHGZLWK  RQHFRXQWRIFRQVSLULQJWRGLVWULEXWHDFRQWUROOHGVXEVWDQFH ,W LV WUXH DV WKH *RYHUQPHQW SRLQWV RXW WKDW GHIHQVH FRXQVHO ZDV VRPHZKDW YDJXH LQ REMHFWLQJ WR WKH 'LVWULFW &RXUWjV SURSRVHG WUHDWPHQW DQG DOVRDVXEVWDQWLYHFRXQWRIDWWHPSWHGGLVWULEXWLRQRID RI WKH $SSUHQGL GHFLVLRQ $W WKH FORVH RI SURRIV GHIHQVH FRXQVHO FRQWUROOHGVXEVWDQFH7KHGHIHQGDQWFKDOOHQJHGYHQXHLQWKH SURIHVVHG WKDW m,jP VWLOO XQFOHDU DV WR >$SSUHQGLjV@ LPSDFW DQG SHUKDSV 'LVWULFWRI&ROXPELDDVWRWKHDWWHPSWHGGLVWULEXWLRQFKDUJH ,jP XQFOHDU DV WR LWV PHDQLQJl DQG WKHQ mREMHFW>HG@ JHQHUDOO\ WR WKH FRXUWjV SURSRVHG LQVWUXFWLRQl ZLWKRXW LGHQWLI\LQJ DQ\ VSHFLILF GHIHFWV ZKHUHWKHDWWHPSWHGWUDQVDFWLRQWRRNSODFHLQ1HZsHUVH\DQG s$ DW  1HYHUWKHOHVV WKH LVVXH XQGHQLDEO\ ZDV UDLVHG GXULQJ WKH mDOO RI >WKH GHIHQGDQWjV@ FRQGXFW LQ FRQQHFWLRQ ZLWK WKH WULDO SURFHHGLQJV n DQG RI FRXUVH GHIHQVH FRXQVHO LV KDUGO\ WR EH IDXOWHG DWWHPSWRFFXUUHGHLWKHUWKHUHRULQ1HZWKHGHIHQGDQW@KLPVHOI>ZDV@ 6WDWHV Y &RSHODQG  )G   WK &LU    8QLWHG6WDWHVY=LGHOO 1R 1R 8QLWHG6WDWHVY=LGHOO  IDWDOWRWKHJRYHUQPHQWjVDVVHUWLRQRIYHQXHWKHUHl)G ,QDQ\HYHQW'HIHQGDQWKDVIDLOHGWRGHPRQVWUDWHWKDWWKH DW *RYHUQPHQWjVTXHVWLRQLQJURVHWRWKHOHYHORImSODLQHUURUl WKDW SUHMXGLFHG WKH IDLUQHVV RI KLV WULDO  7KH *RYHUQPHQW $OWKRXJKWKH'&&LUFXLWDJUHHGWKDWYHQXHZDVLPSURSHU H[SORUHGWKHWRSLFRIZLWQHVVWDPSHULQJRQO\EULHIO\DQGLQ LWVUHDVRQLQJZRXOGVXSSRUWDFRQWUDU\FRQFOXVLRQKHUH)LUVW DFFRUGDQFHZLWK5XOH E DFFHSWHG'HIHQGDQWjVIODWGHQLDO WKH &RXUW IRXQG VXIILFLHQW HYLGHQFH WKDW mWKH DWWHPSWHG RQLWVIDFHZLWKRXWVHHNLQJWRLQWURGXFHH[WULQVLFHYLGHQFH GLVWULEXWLRQZDVµEHJXQjLQ'&ZKHQ>WKHGHIHQGDQWjV@FR WKDWPLJKWFRQWUDGLFWKLVWHVWLPRQ\,QRUGHUWRILQGSUHMXGLFH FRQVSLUDWRUVQHJRWLDWHGWKHWHUPVRIWKHGHDODQG>SURYLGHG@ LQ WKLV H[FKDQJH EHWZHHQ WKH *RYHUQPHQWjV FRXQVHO DQG VDPSOHVRIWKHKHURLQWKH\LQWHQGHGWRGLVWULEXWHl 'HIHQGDQW ZH ZRXOG KDYH WR FRQFOXGH WKDW WKH MXU\ )G DW   7KLV LQ WKH &RXUWjV YLHZ mZDV VXIILFLHQW WR QHFHVVDULO\ FUHGLWHG WKH *RYHUQPHQWjV TXHVWLRQV RYHU FRQVWLWXWH D µVXEVWDQWLDO VWHSj WRZDUG WKH DWWHPSWHG 'HIHQGDQWjVUHVSRQVHVDQGWKDWDPHUHLQTXLU\DERXWZLWQHVV GLVWULEXWLRQl)GDWWKHGHIHQGDQW@ Y$JXZD)G WK&LU 6XFKLVFOHDUO\ RQWKHWKHRU\WKDWKHZDVDQDLGHUDQGDEHWWRUDVRSSRVHGWR WKH FDVH KHUH ZKHUH QR UHFRUG H[LVWV DV WR ZKHWKHU IRU DSULQFLSDOlDQGZKHUHmWKHMXU\ZDVQRWLQVWUXFWHGRQWKH H[DPSOHWKH*RYHUQPHQWKDGDJRRGIDLWKEDVLVIRUEHOLHYLQJ LVVXHl)GDW8QGHUWKLVUHFRUGWKH&RXUWZDV WKDW 'HIHQGDQW PLJKW KDYH HQJDJHG LQ ZLWQHVV WDPSHULQJ mXQDEOHWRLQIHUWKDWDGHIHQGDQWDFFXVHGRQO\RIDWWHPSW %HFDXVHWKHUHVROXWLRQRI'HIHQGDQWjVFKDOOHQJHWXUQVXSRQ DLGHGRUDEHWWHGWKHSULRUDFWLRQVRIRWKHUSHUVRQVLQRWKHU IDFWVDQGFRQVLGHUDWLRQVRXWVLGHWKHSUHVHQWUHFRUGZHDGKHUH MXGLFLDO GLVWULFWVl   )G DW   m,I WKH JRYHUQPHQW WR RXU XVXDO SUDFWLFH OHDYLQJ 'HIHQGDQW WR UHDVVHUW WKLV ZLVKHVWRHVWDEOLVKYHQXHIRUDQDWWHPSWLQDGLVWULFWZKHUHWKH DUJXPHQWLIKHZLVKHVLQDSRVWFRQYLFWLRQSURFHHGLQJXQGHU GHIHQGDQWGLGQRWKLQJEXWZKHUHWKHGHIHQGDQWjVFRQIHGHUDWHV 86&† FRPPLWWHGFULPLQDODFWVLWLVUHTXLUHGWRDUJXHDQGSURYHWKDW WKHGHIHQGDQWVSHFLILFDOO\DLGHGDQGDEHWWHGWKRVHDFWVDQGWR UHTXHVWWKDWWKHMXU\EHLQVWUXFWHGRQWKHLVVXHl)GDW   8QLWHG6WDWHVY=LGHOO 1R 1R 8QLWHG6WDWHVY=LGHOO  s$DW $VQRWHGGHIHQVHFRXQVHOGLGQRWLQWHUSRVH $JDLQWKHVLWXDWLRQLVGLIIHUHQWKHUHHYHQLILWLVDVVXPHG DQ\REMHFWLRQWRWKLVOLQHRITXHVWLRQLQJ WKDW 'HIHQGDQW mGLG QRWKLQJl LQ WKH :HVWHUQ 'LVWULFW RI 7HQQHVVHHZLWKUHJDUGWRWKHRIIHQVHFKDUJHGLQ&RXQW7ZR 2Q LWV IDFH WKH *RYHUQPHQWjV LQTXLU\ ZDV ZKROO\ )LUVWWKHLQGLFWPHQWLQWKLVFDVHFKDUJHGWKDW'HIHQGDQWDQG SHUPLVVLEOHXQGHU)HG5(YLG E ZKLFKDXWKRUL]HVmLQ &UDQIRUGmHDFK>ZHUH@DLGHGDQGDEHWWHGE\WKHRWKHUDQGE\ WKHGLVFUHWLRQRIWKHFRXUWlFURVVH[DPLQDWLRQRIDZLWQHVV 5REHUW 5RRNl s$ DW   DQG WKLV ODQJXDJH ZDV mFRQFHUQLQJ WKH ZLWQHVVj FKDUDFWHU IRU WUXWKIXOQHVV RU LQFRUSRUDWHG LQWR WKH MXU\ LQVWUXFWLRQV VHH s$ DW   XQWUXWKIXOQHVVl  7KH *RYHUQPHQW DVVHUWV ZLWKRXW $UJXDEO\ WKHQ WKLV FRXOG EULQJ 'HIHQGDQW ZLWKLQ WKH UXOH FRQWUDGLFWLRQE\'HIHQGDQWWKDWDQDWWHPSWWRVHFXUHSHUMXUHG WKDWSHUPLWVYHQXHIRUDQDLGLQJDQGDEHWWLQJRIIHQVHWREH WHVWLPRQ\ ZRXOG EHDU XSRQ 'HIHQGDQWjV FKDUDFWHU IRU GHWHUPLQHGE\UHIHUHQFHWRWKHDFWVRIWKHSULQFLSDO2QWKH WUXWKIXOQHVVRU XQWUXWKIXOQHVV6HH8QLWHG6WDWHVY+XUVW RWKHUKDQGZHQRWHWKDWWKHmDLGLQJDQGDEHWWLQJlDVSHFWRI )G WK&LU  XSKROGLQJWKHFURVV &RXQW7ZRZDVQRWIXUWKHUDPSOLILHGLQWKHUHPDLQGHURIWKH H[DPLQDWLRQRIDGHIHQGDQWUHJDUGLQJFRQGXFWDPRXQWLQJWR MXU\LQVWUXFWLRQVDQGWKH*RYHUQPHQWjVSURRIVFDQQRWUHDGLO\ VXERUQDWLRQRISHUMXU\ FHUWGHQLHG86   EH YLHZHG DV FDVWLQJ 'HIHQGDQW LQ WKH UROH RI DLGHU DQG $OWKRXJKWKHFRXUWVKDYHUHTXLUHGWKDWWKHUHEHDmJRRGIDLWK DEHWWRUUDWKHUWKDQSULQFLSDO EDVLVlIRUFURVVH[DPLQDWLRQXQGHU5XOH E 'HIHQGDQWjV ODFNRIREMHFWLRQDWWULDOGHSULYHGWKH'LVWULFW&RXUWRIDQ\ 0RUHLPSRUWDQWO\WKHLQGLFWPHQWLQWKLVFDVHFKDUJHGWKDW RSSRUWXQLW\WRGHWHUPLQHZKHWKHUVXFKDEDVLVH[LVWHGDQG 'HIHQGDQW ERWK mDWWHPSW>HG@ WR SRVVHVV ZLWK WKH LQWHQW WR KHQFHSUHFOXGHVDQ\PHDQLQJIXOFRQVLGHUDWLRQRIWKLVTXHVWLRQ GLVWULEXWHlDQGmDWWHPSWHGWRFDXVHWKHSRVVHVVLRQZLWKLQWHQW E\WKLV&RXUW6HH8QLWHG6WDWHVY6LPRQHOOL)G WR GLVWULEXWHl PHWKDPSKHWDPLQH  s$ DW  HPSKDVLV VW&LU FHUWGHQLHG6&W  /LNHZLVHZH DGGHG    7KLV mFDXVHl ODQJXDJH GHULYHV IURP D VHFRQG DUHKLQGHUHGLQRXUHIIRUWWRGHWHUPLQHZKHWKHUWKH'LVWULFW VXEVHFWLRQLQWKHIHGHUDODLGHUDQGDEHWWRUVWDWXWH86& &RXUWDEXVHGLWVGLVFUHWLRQLQSHUPLWWLQJWKLVOLQHRILQTXLU\ †ZKLFKSURYLGHVWKDWm>Z@KRHYHUZLOOIXOO\FDXVHVDQDFW ZKHUH'HIHQGDQWQHYHUFDOOHGXSRQWKHWULDOFRXUWWRH[HUFLVH WR EH GRQH ZKLFK LI GLUHFWO\ SHUIRUPHG E\ KLP RU DQRWKHU LWVGLVFUHWLRQLQWKLVPDWWHU ZRXOGEHDQRIIHQVHDJDLQVWWKH8QLWHG6WDWHVLVSXQLVKDEOH DV D SULQFLSDOl   86& †  E   7KLV SURYLVLRQ ZDV GHVLJQHGLQWKHZRUGVRIRQHFRXUWWRmUHPRYH>@DOOGRXEW  WKDWRQHZKRVHWVDQLOOHJDOFRXUVHLQPRWLRQEXWLQWHQWLRQDOO\ &RXQVHO GLG REMHFW KRZHYHU WR D VXEVHTXHQW TXHVWLRQ LQ ZKLFK WKH *RYHUQPHQW DSSDUHQWO\ ZDV DERXW WR LQTXLUH ZK\ 'HIHQGDQW KDG QRW UHIUDLQVIURPWKHGLUHFWDFWFRQVWLWXWLQJWKHFRPSOHWHGRIIHQVH FDOOHG 0V *KDHPL DV D ZLWQHVV 6HH s$ DW  7KH 'LVWULFW &RXUW VKDOOQRWHVFDSHSXQLVKPHQWl8QLWHG6WDWHVY6DEDWLQR H[SUHVVHG VRPH VNHSWLFLVP DERXW WKLV REMHFWLRQ ERWK EHFDXVH WKH )G VW&LU  LQWHUQDOTXRWDWLRQVDQGFLWDWLRQ *RYHUQPHQW KDG QRW \HW FRPPHQWHG RQ WKH IDLOXUH WR FDOO WKLV ZLWQHVV EXW KDG RQO\ mDVNHG KDOI D TXHVWLRQl DQG EHFDXVH LQ WKH &RXUWjV YLHZ WKH RPLWWHG  *RYHUQPHQW KDG WKH mULJKW WR DUJXH DERXW WKH TXDOLW\ RI WK>H@ SURRIl SXW IRUZDUG E\ 'HIHQGDQW s$ DW  7KH 'LVWULFW &RXUW ZDV QRW 7KHMXU\LQWKLVFDVHZDVH[SUHVVO\DQGVHSDUDWHO\LQVWUXFWHG FDOOHG XSRQ WR UHVROYH WKLV LVVXH KRZHYHU VLQFH WKH *RYHUQPHQW DJUHHG RQWKLVmFDXVHWKHSRVVHVVLRQlWKHRU\RIFULPLQDOFXOSDELOLW\ WR DEDQGRQ WKLV OLQH RI LQTXLU\ 6HHs$DW ,QDGGLWLRQWKH*RYHUQPHQWjVSURRIV ZHUHZKROO\FRQVLVWHQWZLWKWKHWKHRU\WKDW'HIHQGDQWWKRXJK ,W LV QRW FOHDU IURP KLV EULHI RQ DSSHDO ZKHWKHU 'HIHQGDQW PHDQV WR FKDOOHQJH WKH WULDO FRXUWjV KDQGOLQJ RI WKLV PDWWHU $Q\ VXFK FKDOOHQJH ZRXOG ODFN PHULW KRZHYHU LQ OLJKW RI GHIHQVH FRXQVHOjV SURPSW REMHFWLRQ EHIRUH WKH *RYHUQPHQW FRXOG HYHQ ILQLVK LWV TXHVWLRQ DQG LQ OLJKW RI WKH  *RYHUQPHQWjV DJUHHPHQW QRW WR SURFHHG ZLWK WKLV LQTXLU\ 7KLV VWDWXWH ZDV H[SUHVVO\ FLWHG LQ &RXQW 7ZR RI WKH LQGLFWPHQW  8QLWHG6WDWHVY=LGHOO 1R 1R 8QLWHG6WDWHVY=LGHOO  KH PLJKW QRW KDYH SODQQHG WR SHUVRQDOO\ GLVWULEXWH 4 6KHjVDIULHQGRI\RXUV" PHWKDPSKHWDPLQHRQWKHRFFDVLRQLQTXHVWLRQVXUHO\VHWWKLV mLOOHJDOFRXUVHLQPRWLRQlE\VXSSO\LQJPHWKDPSKHWDPLQHWR $ LHWKHZLIH &URVV([DPLQDWLRQRI'HIHQGDQW RIFRGHIHQGDQW%REE\6PLWK@LVQjWVKH" $VKLVQH[WDVVLJQPHQWRIHUURU'HIHQGDQWDVVHUWVWKDWKH $ V@WKHIDLUQHVVLQWHJULW\RUSXEOLFUHSXWDWLRQ RIMXGLFLDOSURFHHGLQJVl2ODQR86DW6&W $ 1RVLUWKDWjVQRWZKDW,VDLG,VDLG,GLGQRWDVN DW LQWHUQDOTXRWDWLRQVDQGFLWDWLRQRPLWWHG  KHUWRFDOOFKDQJHDQ\WHVWLPRQ\RUDQ\WKLQJHOVH ,H[SODLQHGWRKHUVKHDVNHGPHZKDWZDVJRLQJRQ 'HIHQGDQWjV SUHVHQW FKDOOHQJH DULVHV IURP WKH IROORZLQJ ,EHJDQWRH[SODLQLWWRKHU6KHVDLGm:RXOG\RX H[FKDQJHGXULQJKLVFURVVH[DPLQDWLRQDWWULDO OLNHPHWRWDONWR&KDQGUD"l,WROGKHUWKDWZRXOGEH DQ REVWUXFWLRQ RI MXVWLFH QRW LQ P\ EHKDOI LQ DQ\ 4 0U=LGHOOGR\RXNQRZ'LWD*KDHPL" ZD\VKDSHIRUPRUIDVKLRQ $