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
!
0217(/ /$9(//(
+803+5(<
'HIHQGDQW$SSHOODQW 1
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW&OHYHODQG
1R n3DWULFLD$*DXJKDQ'LVWULFWsXGJH
$UJXHG $XJXVW
'HFLGHGDQG)LOHG $SULO
%HIRUH 0225(DQG&2/(&LUFXLWsXGJHV 526(1
'LVWULFWsXGJH
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' 0LFKDHO s %HQ]D &OHYHODQG 2KLR IRU
$SSHOODQW 5RQDOG % %DNHPDQ $66,67$17 81,7('
7KH +RQRUDEOH *HUDOG ( 5RVHQ 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH
(DVWHUQ 'LVWULFW RI 0LFKLJDQ VLWWLQJ E\ GHVLJQDWLRQ
8QLWHG6WDWHVY+XPSKUH\ 1R
67$7(6 $77251(< &OHYHODQG 2KLR IRU $SSHOOHH
21 %5,() 0LFKDHO s %HQ]D &OHYHODQG 2KLR IRU
$SSHOODQW 5RQDOG % %DNHPDQ $66,67$17 81,7('
67$7(6$77251(<&OHYHODQG2KLRIRU$SSHOOHH
&2/( s GHOLYHUHG WKH RSLQLRQ RI WKH FRXUW LQ ZKLFK
0225(sMRLQHG526(1's SS GHOLYHUHGD
VHSDUDWHRSLQLRQFRQFXUULQJLQSDUWDQGGLVVHQWLQJLQSDUW
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
5*8<&2/(s5&LUFXLWsXGJH
,,1752'8&7,21
0RQWHO/+XPSKUH\DSSHDOVKLVFRQYLFWLRQDQGVHQWHQFH
IRU FRQVSLULQJ WR SRVVHVV ZLWK LQWHQW WR GLVWULEXWH FRFDLQH
SRVVHVVLRQRIDILUHDUPDIWHUDSULRUIHORQ\FRQYLFWLRQDQG
FRQVSLULQJWRFRPPLWPRQH\ODXQGHULQJ+XPSKUH\DVVLJQV
VL[SRLQWVRIHUURU WKH*RYHUQPHQWUHOLHGRQLQFRPSHWHQW
HYLGHQFH DQG DUJXPHQW DW WULDO DQG LPSURSHUO\ XVHG LWV
SHUHPSWRU\FKDOOHQJHVWRH[FOXGH$IULFDQ$PHULFDQVIURP
WKHMXU\ WKHGLVWULFWFRXUWIDLOHGWRH[DPLQHDFRQIOLFWRI
LQWHUHVWUDLVHGE\WULDOFRXQVHOSULRUWRVHQWHQFLQJDQGIDLOHG
WR FRQGXFW D SURSHU LQTXLU\ LQWR +XPSKUH\jV %DWVRQ
FKDOOHQJHUDLVHGGXULQJWKHFRXUVHRIYRLUGLUH WKHMXU\
LQVWUXFWLRQV IDLOHG WR SURSHUO\ JXLGH WKH MXU\ LQ LWV
FRQVLGHUDWLRQRIWKHPXOWLSOHFRQVSLUDFLHVDOOHJHGLQWKLVFDVH
IDLOHGWRHQVXUHMXU\XQDQLPLW\RQHOHPHQWVRIWKHRIIHQVH
DQGIDLOHGWRGLUHFWWKHMXU\WRGHWHUPLQHWKHW\SHRIGUXJV
VROGE\+XPSKUH\ WKHGLVWULFWFRXUWYLRODWHG$SSUHQGLY
1HZsHUVH\86 ZKHQLWIDLOHGWRLQVWUXFW
WKHMXU\WRILQGGUXJTXDQWLWLHVEH\RQGDUHDVRQDEOHGRXEW
+XPSKUH\jV WULDO FRXQVHO IDLOHG WR SURYLGH HIIHFWLYH
DVVLVWDQFH EHFDXVH FRXQVHO IDLOHG WR UDLVH D WLPHO\ %DWVRQ
FKDOOHQJHRSHUDWHGXQGHUDFRQIOLFWRILQWHUHVWIDLOHGWRDUJXH
IRU RU SUHVHQW D PLWLJDWLRQ DUJXPHQW LQ VXSSRUW RI D
GRZQZDUG GHSDUWXUH DQG IDLOHG WR REMHFW WR *RYHUQPHQW
1R 8QLWHG6WDWHVY+XPSKUH\
PLVFRQGXFW DW FULWLFDO VWDJHV RI WULDO DQG WKH
*RYHUQPHQWjVSOHDDJUHHPHQWVZLWKDOOHJHGFRFRQVSLUDWRUV
+HQU\ (DWRQ DQG 7\URQH &URPLW\ SXUVXDQW WR ZKLFK ERWK
ZHUHmSDLGlIRUWKHLUWHVWLPRQ\YLRODWHGWKHH[SUHVVWHUPVRI
86& F DQG'LVFLSOLQDU\5XOH F RIWKH
2KLR&RGHRI3URIHVVLRQDO5HVSRQVLELOLW\
)RUWKHUHDVRQVWKDWIROORZZH$)),50WKHMXGJPHQWRI
WKHGLVWULFWFRXUWZLWKWKHH[FHSWLRQRIWKHVHQWHQFH%HFDXVH
WKH GLVWULFW FRXUWjV GUXJ TXDQWLW\ ILQGLQJ UHVXOWHG LQ DQ
HQKDQFHG VWDWXWRU\ SHQDOW\ ZH FRQFOXGH WKDW +XPSKUH\jV
VHQWHQFH YLRODWHG WKH 6XSUHPH &RXUWjV UXOH HVWDEOLVKHG LQ
$SSUHQGL Y 1HZ sHUVH\ :H DFFRUGLQJO\ 9$&$7(
+XPSKUH\jVVHQWHQFHDQG5(0$1'WKLVFDVHWRWKHGLVWULFW
FRXUWIRUUHVHQWHQFLQJ
,,%$&.*5281'
7KH &DULEEHDQ *DQJ 7DVN )RUFH m7DVN )RUFHl RI WKH
6KDNHU +HLJKWV 2KLR 3ROLFH 'HSDUWPHQW FRQGXFWHG DQ
HLJKWHHQ PRQWK LQYHVWLJDWLRQ LQWR WKH GUXJGLVWULEXWLRQ
DFWLYLWLHV RI +HQU\ (DWRQ DQG 7\URQH &URPLW\ 2YHU WKH
FRXUVHRIWKLVLQYHVWLJDWLRQWKH*RYHUQPHQWPDGHFRQWUROOHG
EX\VIURPERWKLQGLYLGXDOVDQGLQWHUFHSWHGSKRQHFDOOVDQG
SDJHVPDGHE\WKHPWR0RQWHO+XPSKUH\7KH7DVN)RUFH
QHYHU PDGH DQ\ FRQWUROOHG EX\V IURP +XPSKUH\ QHYHU
ZLWQHVVHG DQ\ GUXJ GHDOV LQYROYLQJ +XPSKUH\ DQG QHYHU
REVHUYHGGUXJVLQ+XPSKUH\jVSRVVHVVLRQ,W QHYHUWKHOHVV
VHFXUHG VXIILFLHQW HYLGHQFH WR H[HFXWH VHDUFK DQG DUUHVW
ZDUUDQWV RQ sXQH RQ QXPHURXV LQGLYLGXDOV DQG
ORFDWLRQVLQFOXGLQJ+XPSKUH\DQGKLVSURSHUW\7KLVVHDUFK
UHYHDOHG QR GUXJV RU GUXJ SDUDSKHUQDOLD LQ +XPSKUH\jV
SRVVHVVLRQ 2Q sXO\ D IHGHUDO JUDQG MXU\ LQ WKH
1RUWKHUQ'LVWULFWRI2KLRUHWXUQHGDVXSHUVHGLQJLQGLFWPHQW
DJDLQVW+XPSKUH\DQGIRXUWHHQRWKHULQGLYLGXDOVFKDUJLQJ
YLRODWLRQV RI IHGHUDO QDUFRWLFV ILUHDUPV DQG PRQH\
ODXQGHULQJ ODZV 7KH *RYHUQPHQW HQWHUHG LQWR SOHD
DJUHHPHQWVZLWKDOOGHIHQGDQWVH[FHSW+XPSKUH\DQG'DUU\O
0RUURZERWKRIZKRPSURFHHGHGWRWULDOEHIRUHsXGJH6DP
+%HOORQsXQH
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
7HVWLPRQ\DWWULDOUHYHDOHGWKDW(DWRQILUVWPHW+XPSKUH\ PDMRULW\jV GLVSRVLWLRQ RI 'HIHQGDQWjV $SSUHQGL FODLP DQG
LQ$ODEDPDLQ6HSWHPEHU 7KHUHDIWHU(DWRQDOOHJHGO\ IURPLWVGHFLVLRQWRUHPDQGWKLVFDVHIRUUHVHQWHQFLQJ
PHW +XPSKUH\ LQ &OHYHODQG 2KLR ZKHUH +XPSKUH\
GLVFXVVHG VXSSO\LQJ (DWRQ ZLWK FRFDLQH (DWRQ UHFHLYHG
DSSUR[LPDWHO\ RQHHLJKWK RI D NLORJUDP RI FRFDLQH IURP
+XPSKUH\DVDUHVXOWRIWKDWFRQYHUVDWLRQDQGFRQWLQXHGWR
UHFHLYHSHULRGLFVKLSPHQWVRIFRFDLQHIURP+XPSKUH\XQWLO
0DUFK )URP6HSWHPEHU WKURXJK0DUFK
+XPSKUH\GLVWULEXWHGFRFDLQHWR(DWRQmDSSUR[LPDWHO\WHQWR
WZHOYH WLPHVl (DWRQ DOVR WHVWLILHG WKDW KH DQG +XPSKUH\
FRPPXQLFDWHGZLWKHDFKRWKHUE\WHOHSKRQHDQGSDJHUXVLQJ
SUHGHWHUPLQHGFRGHV
7DVN)RUFHPHPEHUDQG6KDNHU+HLJKWV2KLR'HWHFWLYH
0DUYLQ/D0LHOOHWHVWLILHGWKDWIURPsDQXDU\ WKURXJK
sXQH WKH 7DVN )RUFH XQGHUWRRN FRXUWDXWKRUL]HG
LQWHUFHSWLRQVRIHOHFWURQLFDQGZLUHFRPPXQLFDWLRQVEHWZHHQ
+XPSKUH\ DQG RWKHU LQGLYLGXDOV XQGHU LQYHVWLJDWLRQ
/D0LHOOHDOVRWHVWLILHGWKDWKHREWDLQHG+XPSKUH\jVFHOOXODU
WHOHSKRQHUHFRUGVZKLFKLQFRQMXQFWLRQZLWKWKHLQWHUFHSWHG
FRPPXQLFDWLRQV UHYHDOHG WKDW VKRUWO\ DIWHU (DWRQ ZRXOG
DUUDQJHWKHVDOHRIFRFDLQHWRWKLUGSDUWLHV(DWRQZRXOGSDJH
+XPSKUH\ZLWKWKHDSSURSULDWHFRGHVRVWHQVLEO\WRSXUFKDVH
VRPHTXDQWLW\RIFRFDLQH , GR QRW XQGHUVWDQG WKH PDMRULW\jV FRQIXVLRQ DV WR WKH RXWFRPH , DP
DGYRFDWLQJ LQ WKLV FDVH 6SHFLILFDOO\ , EHOLHYH WKDW 'HIHQGDQWjV $SSUHQGL
&URPLW\WHVWLILHGWKDWKHPHW+XPSKUH\VRPHWLPHLQ FKDOOHQJH VKRXOG EH UHMHFWHG DQG KLV VHQWHQFH DIILUPHG LQ DOO UHVSHFWV $V
RU DQG WKDW WKHLU ILUVW GUXJ WUDQVDFWLRQ RFFXUUHG LQ DXWKRULW\ IRU WKLV , ZRXOG ORRN WR 3DJH 0XQR] DQG RXU RWKHU LQLWLDO SRVW
$SSUHQGL
1RYHPEHU &URPLW\ VWDWHG WKDW RQ WKLV RFFDVLRQ KH
UXOLQJV WKDW , KDYH VXUYH\HG DERYH 7R WKH H[WHQW WKDW WKLV
DSSURDFK UHTXLUHV XV WR mLJQRUHl FHUWDLQ RI RXU SXEOLVKHG GHFLVLRQV WKLV
SDJHG+XPSKUH\DQGHQWHUHGKLVKRPHWHOHSKRQHQXPEHUWKH LV E\ QR PHDQV XQSUHFHGHQWHG 5DWKHU DV , REVHUYHG DW WKH RXWVHW ZH
DSSURSULDWH FRGH WR LGHQWLI\ KLPVHOI DV WKH FDOOHU DQG WKH KDYH DGRSWHG D UXOH WR JRYHUQ WKLV SUHFLVH VLWXDWLRQ UHTXLULQJ WKDW ZH
DPRXQW RI PRQH\ KH KDG WR SXUFKDVH FRFDLQH 7KH WZR DGKHUH WR RXU ILUVW SXEOLVKHG UXOLQJ RQ D VXEMHFW RYHU D ODWHU EXW
VXEVHTXHQWO\ PHW ZKHUHXSRQ +XPSKUH\ DOOHJHGO\ VROG FRQIOLFWLQJ GHFLVLRQ 6HH 'DUUDK VXSUD )G DW
&URPLW\RQHKDOINLORJUDPRIFRFDLQHIRU&URPLW\ ,Q FRQWUDVW LW LV LQWHUHVWLQJ WR FRQVLGHU ZKDW PLJKW RFFXU XSRQ WKH
DOVRWHVWLILHGWKDW+XPSKUH\FRQWLQXHGWRVXSSO\KLPZLWK UHPDQG RUGHUHG E\ WKH PDMRULW\ $W KLV LQLWLDO VHQWHQFLQJ 'HIHQGDQW
GUXJVWKURXJK)HEUXDU\ GXULQJZKLFKWLPHKHUHFHLYHG IDFHG D 6HQWHQFLQJ *XLGHOLQHV UDQJH RI WR PRQWKV DQG WKH
mSUREDEO\ EHWZHHQ VHYHQ DQG QLQHl NLORJUDPV RI FRFDLQH PDMRULW\ ILQGV QR HUURU LQ WKLV GHWHUPLQDWLRQ 2Q UHPDQG WKHQ 'HIHQGDQW
+XPSKUH\jV SKRQH UHFRUGV FRXSOHG ZLWK LQIRUPDWLRQ VWDQGV WR DFKLHYH DW PRVW D PRQWK UHGXFWLRQ LQ KLV VHQWHQFH V@WRREMHFWWRWKH &URPLW\WRPDNHSD\PHQWDUUDQJHPHQWV
GLVWULFWMXGJHPDNLQJWKHGHWHUPLQDWLRQRIGUXJTXDQWLWLHVl
IDFHV SODLQ HUURU UHYLHZ RI KLV $SSUHQGL FODLP RQ DSSHDO 2QsXQH DMXU\DFTXLWWHG0RUURZRIDOOFRXQWV
3DJH)GDW7REHVXUHWKHUHFDQEHFDVHVIDOOLQJ +XPSKUH\ KRZHYHU ZDV FRQYLFWHG RI FRQVSLULQJ WR
DWWKHPDUJLQVRIWKLVUXOHDQGDVWKHPDMRULW\SRLQWVRXWZH GLVWULEXWH FRFDLQH &RXQWV 2QH DQG 7ZR XQODZIXO
UHTXLUHQRSDUWLFXODUmPDJLFZRUGVlWRSUHVHUYHDQ$SSUHQGL SRVVHVVLRQ RI D ILUHDUP E\ D SUHYLRXVO\ FRQYLFWHG IHORQ
EDVHGFKDOOHQJHKDV@ D OLPLWHG SRZHU WR H[SUHVVKROGLQJ1RUGRHVLWDIIRUGDQ\RSSRUWXQLW\LQP\
FRUUHFW HUURUV WKDW ZHUH IRUIHLWHG EHFDXVH >WKH\ ZHUH@ QRW YLHZIRUDODWHUSDQHOWRVHL]HXSRQ3DJHjVVLOHQFHDVDEDVLV
WLPHO\UDLVHGLQGLVWULFWFRXUWl8QLWHG6WDWHVY2ODQR IRU GUDZLQJ D GLVWLQFWLRQ ZKLFK DV D PDWWHU RI EUXWH IDFW
86 ,QGHHGZHZLOOQRWLFHVXFKDQHUURU PLJKW QRW HYHQ H[LVW DQG DV D PDWWHU RI MXGLFLDO
RQO\LQmH[FHSWLRQDOFLUFXPVWDQFHVlRUZKHQWKHIDLOXUHWRGR LQWHUSUHWDWLRQ PXVW KDYH ODFNHG OHJDO VLJQLILFDQFH WR WKH
VRZRXOGSURGXFHDmSODLQPLVFDUULDJHRIMXVWLFHl6HH8QLWHG &RXUWLQWKDWFDVH
6WDWHVY3LFNHWW )G WK&LU
:HKDYHGHYHORSHGDIRXUSDUWDQDO\VLVWRUHYLHZIRUIHLWHG
FODLPV:HFRQVLGHUILUVWZKHWKHUWKHUHZDVHUURU8QLWHG
6WDWHVY9LQFHQW)G WK&LU ,IWKHUH $V QRWHG HDUOLHU WKH GLVWLQFWLRQ 6WUD\KRUQ VHHNV WR GUDZ EHWZHHQ
WKH FLUFXPVWDQFHV SUHVHQWHG LQ WKDW FDVH DQG WKH FLUFXPVWDQFHV LQ
ZDVHUURUWKHQZHGHWHUPLQHLIWKHHUURUZDVSODLQ,G,IWKH 1HXKDXVVHU GRHV QRW LQ IDFW H[LVW 7KXV ZH DUH LQ WKH VDPH SUHGLFDPHQW
HUURUZDVSODLQZHQH[WGHFLGHZKHWKHUWKHHUURUDIIHFWHGWKH LQ RXU SRVW$SSUHQGL VWDQGDUG RI UHYLHZ MXULVSUXGHQFH DV , GLVFXVVHG
GHIHQGDQWjV VXEVWDQWLDO ULJKWV ,G )LQDOO\ ZH FRQVLGHU HDUOLHU ZLWK UHJDUG WR RXU GHFLVLRQV DGGUHVVLQJ WKH VXEVWDQWLYH VFRSH RI
ZKHWKHUWKHHUURUVHULRXVO\DIIHFWHGWKHmIDLUQHVVLQWHJULW\RU $SSUHQGL QDPHO\ WKDW OLNH FDVHV DUH EHLQJ GHFLGHG GLIIHUHQWO\ ZLWK
SXEOLFUHSXWDWLRQlRIWKHMXGLFLDOSURFHHGLQJV,G2QO\XSRQ 6WUD\KRUQ KDYLQJ HIIHFWLYHO\ RYHUUXOHG 1HXKDXVVHU DW OHDVW DQG DUJXDEO\
DOVR 3DJH RQ WKH VWDQGDUG RI UHYLHZ LVVXH $QG DJDLQ DQ\ HIIRUW WR
VXFK D ILQGLQJ PD\ ZH WKHQ H[HUFLVH RXU GLVFUHWLRQDU\ LGHQWLI\ D FRKHUHQW VWDWHPHQW RI RXU &LUFXLWjV SUHVHQW UXOH RQ WKLV LVVXH
DXWKRULW\WRQRWLFHWKHHUURU6HHLG UXQV DIRXO RI WKH FDVH ODZ ZKHUH PDQ\ RI RXU UHFHQW GHFLVLRQV FRQWLQXH
WR FLWH 3DJH DV DXWKRULW\ IRU DSSO\LQJ D SODLQ HUURU VWDQGDUG ZLWKRXW HYHU
3UHVHUYHG REMHFWLRQV WR D GLVWULFW FRXUWjV HYLGHQWLDU\ FRQVLGHULQJ ZKHWKHU D IDFWXDO FKDOOHQJH DW VHQWHQFLQJ PLJKW LQVWHDG
GHFLVLRQVDUHUHYLHZHGIRUDEXVHRIGLVFUHWLRQ:HZLOORQO\ WULJJHU GH QRYR UHYLHZ 6HH HJ 8QLWHG 6WDWHV Y *UDKDP :/
UHYHUVH LI WKH GHFLVLRQ FDXVHG PRUH WKDQ D KDUPOHVV HUURU DW
WK &LU 'HF 8QLWHG 6WDWHV Y 0DUWLQ
:/ DW
WK &LU 'HF 0F/HPRUH VXSUD :/
&RROH\Y&DUPLNH&LQHPDV,QF)G WK DW
.LQJ VXSUD )G DW 8QLWHG 6WDWHV Y 'H3D]
&LU :/ DW
WK &LU 2FW $UEHODH]$JXGHOR
VXSUD :/ DW
Q &RRN VXSUD :/ DW
$QDO\VLV
0DUWLQH] VXSUD )G DW 8QLWHG 6WDWHV Y 7D\ORU :/
DW
WK &LU 0D\ ,QGHHG D UHYLHZ RI WKHVH
+XPSKUH\DUJXHVWKDWWKH*RYHUQPHQWjVPLVFRQGXFWDWWULDO GHFLVLRQV UHYHDOV WKDW VRPH RI WKH GHIHQGDQWV GLG UDLVH IDFWXDO REMHFWLRQV
WR WKH VHQWHQFLQJ MXGJHjV GHWHUPLQDWLRQV DQG \HW ZH VWLOO DSSOLHG SODLQ
GHSULYHGKLPRIKLVULJKWDJDLQVWVHOILQFULPLQDWLRQDVZHOODV HUURU UHYLHZ 6HH *UDKDP :/ DW
0F/HPRUH
KLVULJKWVWRDIDLUWULDODQXQELDVHGMXU\DQGGXHSURFHVVRI :/ DW
)G DW
.LQJ :/
'H3D]
ODZ6SHFLILFDOO\+XPSKUH\DOOHJHV WKDWWKH*RYHUQPHQW DW
$UEHODH]$JXGHOR :/ DW
Q
LPSURSHUO\VKLIWHGWKHEXUGHQRISURRIWRKLPE\VXJJHVWLQJ 7KHVH FDVHV OLNH 1HXKDXVVHU DUH LQ GLUHFW FRQIOLFW ZLWK jV UXOH
6WUD\KRUQ
WRWKHMXU\WKDW+XPSKUH\jVXQH[SODLQHGZHDOWKGHPRQVWUDWHG RI GH QRYR UHYLHZ $JDLQ , ZRXOG VXJJHVW WKDW WKH 6XSUHPH &RXUW
KLVSDUWLFLSDWLRQLQQDUFRWLFVDQGPRQH\ODXQGHULQJDFWLYLWLHV WKURXJK LWV GHFLVLRQ LQ VKRXOG VHUYH DV WKH mWLHEUHDNHUl LQ
sRKQVRQ
UHVROYLQJ WKLV FRQIOLFW
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
1H[W HYHQ DVVXPLQJ WKH IDFWXDO GLVWLQFWLRQV SRVLWHG LQ WKDWWKH*RYHUQPHQWLPSURSHUO\XVHG+XPSKUH\jVLQFRPH
6WUD\KRUQ DFWXDOO\ H[LVWHG , IDLO WR VHH KRZ D IDFWEDVHG WD[UHWXUQVDQGWKHWHVWLPRQ\RIDQ,QWHUQDO5HYHQXH6HUYLFH
REMHFWLRQWRDVHQWHQFLQJMXGJHjVGUXJTXDQWLW\FRPSXWDWLRQ m,56l DJHQWWRVXJJHVWWKDW+XPSKUH\jVFRPPLVVLRQRIDQ
FRXOGSURSHUO\EHFRQVWUXHGDVSUHVHUYLQJWKHIDUGLIIHUHQWVRUW XQLQGLFWHGFULPHWD[HYDVLRQZDVHYLGHQFHRIJXLOW WKDW
RI FKDOOHQJH WKDW DULVHV IURP $SSUHQGL n QDPHO\ D OHJDO WKHSURVHFXWRULPSURSHUO\YRXFKHGIRUKLVZLWQHVVDQGVWDWHG
FKDOOHQJHLPSOLFDWLQJWKHGLYLVLRQRIODERUEHWZHHQMXGJHDQG KLV SHUVRQDO EHOLHI LQ +XPSKUH\jV JXLOW WKDW WKH
MXU\ DV ZHOO DV WKH VWULQJHQW mEH\RQG D UHDVRQDEOH GRXEWl *RYHUQPHQWLPSURSHUO\H[HUFLVHGLWVSHUHPSWRU\FKDOOHQJHV
EXUGHQRISURRIDWWHQGDQWWRDMXU\VXEPLVVLEOHLVVXH7KH WRH[FOXGH$IULFDQ$PHULFDQVIURP WKHMXU\ WKDWWKH
UHFRUG LQ WKLV FDVH DPSO\ GHPRQVWUDWHV WKH GLVWLQFWLRQ *RYHUQPHQW DUJXHG IDFWV QRW LQ HYLGHQFH WKDW WKH
EHWZHHQIDFWXDODQG$SSUHQGLEDVHGREMHFWLRQVWRD'LVWULFW *RYHUQPHQWFRQIXVHGWKHMXU\E\PLVVWDWLQJWKHGHILQLWLRQRI
&RXUWjVGHWHUPLQDWLRQRIGUXJTXDQWLWLHVn'HIHQGDQWKHUH D mEX\HUVHOOHU UHODWLRQVKLSl WKDW WKH *RYHUQPHQW
TXLWH SODLQO\ DVVHUWHG WKH IRUPHU W\SH RI REMHFWLRQ DW LQWHQWLRQDOO\ VXEPLWWHG LUUHOHYDQW HYLGHQFH WR WKH MXU\ DQG
VHQWHQFLQJEXWH[SUHVVO\GLVDYRZHGDQ\FODLPRIWKHODWWHU SUHYHQWHG D IDLU UHEXWWDO E\ +XPSKUH\ RI WKDW HYLGHQFH
VRUWDQGLQVWHDGDFNQRZOHGJHGWKH'LVWULFW&RXUWjVDXWKRULW\ WKDWWKH*RYHUQPHQWLPSURSHUO\DUJXHGWKDW+XPSKUH\jV
WR PDNH VXFK D GHWHUPLQDWLRQ E\ D SUHSRQGHUDQFH RI WKH FRXQVHO NQHZ WKDW KLV FOLHQW ZDV JXLOW\ DQG WKDW WKH
HYLGHQFH ,W ZRXOG EH VWUDQJH LQGHHG LI D GHIHQGDQWjV FXPXODWLYHLPSDFWRIHDFKRIWKHDIRUHPHQWLRQHGLQVWDQFHVRI
FKDOOHQJH WR D 'LVWULFW &RXUWjV IDFWXDO ILQGLQJV ZKLFK ZH PLVFRQGXFWLVVXIILFLHQWWRZDUUDQWUHYHUVDO(DFKDUJXPHQW
UHYLHZ IRU FOHDU HUURU VHH 1HXKDXVVHU )G DW ZLOOEHDGGUHVVHGLQWXUQ$OOXOWLPDWHO\IDLO
VRPHKRZ WULJJHUHG GH QRYR UHYLHZ RI D GLIIHUHQW VRUW RI
FKDOOHQJH WKDW ZDV QRW SUHVHQWHG WR WKH VHQWHQFLQJ FRXUW D8QH[SODLQHG:HDOWK
$QGDJDLQ6WUD\KRUQVWDQGVDORQHLQLWVIDLOXUHWRREVHUYH
WKLV GLVWLQFWLRQ VHYHUDO RWKHU &LUFXLWV LQ FRQWUDVW KDYH +XPSKUH\VXEPLWVWKDWWKH*RYHUQPHQWjVFDVHDJDLQVWKLP
H[SUHVVO\KHOGWKDWWKHSODLQHUURUVWDQGDUGDSSOLHVHYHQZKHUH ZDV SUHGLFDWHG RQ WKH VHOIVHUYLQJ WHVWLPRQ\ RI (DWRQ DQG
WKHUH ZHUH IDFWXDO REMHFWLRQV WR WKH VHQWHQFLQJ FRXUWjV &URPLW\ERWKDGPLWWHGGUXJGHDOHUVDQGRQWHVWLPRQ\WKDW
GHWHUPLQDWLRQRIGUXJTXDQWLWLHV6HHHJ)LHOGV)G LQVLQXDWHGD\RXQJ$IULFDQ$PHULFDQPDOHLVLQFDSDEOHRI
DW 0RMLFD%DH] )GDW Q 1RUGE\ RSHUDWLQJDVXFFHVVIXOEXVLQHVVXQOHVVKHLVHQJDJHGLQLOOHJDO
)GDW QDUFRWLFV DFWLYLW\ 7R GULYH KRPH WKLV SRLQW +XPSKUH\
FRQWHQGVWKDWWKH*RYHUQPHQWUHOLHGLPSURSHUO\RQHYLGHQFH
,QGHHG,UHDG3DJHDVRXU&LUFXLWjVGHILQLWLYHVWDWHPHQWRQ RI+XPSKUH\jVXQH[SODLQHGZHDOWKLQFRQWUDYHQWLRQRIKLV
WKHVXEMHFWOHDYLQJQRURRPIRUWKHGLVWLQFWLRQWKDW6WUD\KRUQ )LIWK$PHQGPHQWULJKWDJDLQVWVHOILQFULPLQDWLRQWRVXJJHVW
VHHNVWRGUDZ3DJHGRHVQRWVD\PXFKRQWKHVXEMHFWnZH WKDWEHFDXVH+XPSKUH\KDGIDLOHGWRLGHQWLI\WKHVRXUFHRIKLV
VHOGRP GR ZKHQ VHWWLQJ IRUWK WKH DSSOLFDEOH VWDQGDUG RI ZHDOWK WKHQ KH QHFHVVDULO\ PXVW KDYH EHHQ JXLOW\ RI GUXJ
UHYLHZnEXWZKDWLWVD\VLVSODLQHQRXJK QDPHO\WKDWD WUDIILFNLQJ
+XPSKUH\PDLQWDLQVWKDWLQPDNLQJVXFKDQDUJXPHQWWKH
*RYHUQPHQWLPSURSHUO\VKLIWHGLWVEXUGHQRISURRIWRKLP
WKH GHIHQGDQW GLG SUHVHQW IDFWXDO FKDOOHQJHV WR WKH 'LVWULFW sXGJHjV
GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHV ERWK LQ ZULWWHQ REMHFWLRQV WR WKH
SUHVHQWHQFH UHSRUW DQG DW KLV VHQWHQFLQJ KHDULQJ $V LQGLFDWHG EHORZ LI
WKLV SRUWLRQ RI WKH UHFRUG ZDV QRW PHQWLRQHG LQ WKH SDQHOjV RSLQLRQ LW ZDV
7KH *RYHUQPHQWjV DOOHJHG XVH RI LWV SHUHPSWRU\ FKDOOHQJHV WR
EHFDXVH ZH GHHPHG LW LUUHOHYDQW WR HLWKHU WKH LVVXHV EHIRUH WKH &RXUW RU H[FOXGH $IULFDQ$PHULFDQV IURP WKH MXU\ DQG WKH GLVWULFW FRXUWjV IDLOXUH
WKH VWDQGDUG RI UHYLHZ WR EH DSSOLHG LQ UHVROYLQJ WKRVH LVVXHV WR VR ILQG DUH DGGUHVVHG LQ 3DUW ,,,%E
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
ZKLFKZDVHVSHFLDOO\SUHMXGLFLDOLQOLJKWRIWKHIDFWWKDWWKH GLVWULFWFRXUWjVIDFWXDOILQGLQJZLWKUHVSHFWWRGUXJTXDQWLW\l
RQO\ HYLGHQFH OLQNLQJ KLP WR LOOHJDO GUXJ DFWLYLW\ ZDV WKH 6WUD\KRUQ)GDW7KHSDQHOFRQWUDVWHGWKLVZLWK
WHVWLPRQ\RI(DWRQDQG&URPLW\,QIDFW+XPSKUH\QRWHV WKH VLWXDWLRQ SUHVHQWHG LQ 3DJH ZKHUH WKH GHIHQGDQWV
WKH*RYHUQPHQWQHYHUREVHUYHGGUXJVLQKLVSRVVHVVLRQRUKLV SXUSRUWHGO\mIDLOHGWRREMHFWZKHQ>WKH@GLVWULFWFRXUWPDGHLWV
UHVLGHQFHV QHYHU GLVFRYHUHG ODUJH VXPV RI FDVK LQ KLV GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHVl 6WUD\KRUQ )G DW
SRVVHVVLRQQHYHUZLWQHVVHGKLPHQJDJHLQGUXJDFWLYLW\DQG
QHYHUDWWHPSWHGWRFRRUGLQDWHDFRQWUROOHGGUXJEX\IURPKLP
+XPSKUH\REMHFWHGWRWKHDGPLVVLRQRIWD[HYLGHQFHs$DW 7KLVDWWHPSWHGGLVWLQFWLRQKRZHYHUIDLOVRQDWOHDVWWZR
WKHUHIRUHZHUHYLHZWKHGLVWULFWFRXUWjVGHFLVLRQIRUDQ VFRUHV)LUVWDVDIDFWXDOPDWWHUDQGDVERWKWKHPDMRULW\DQG
DEXVHRIGLVFUHWLRQ , KDYH SRLQWHG RXW LQ RXU UHVSHFWLYH RSLQLRQV 3DJH VD\V
DOPRVW QRWKLQJ DW DOO DERXW ZKDW REMHFWLRQV LI DQ\ ZHUH
,Q 8QLWHG 6WDWHV Y &DUWHU ZH UHMHFWHG DV LUUHOHYDQW WKH SUHVHQWHGWRWKH'LVWULFW&RXUWLQWKDWFDVH7KHORQHEUHDN
*RYHUQPHQWjVXVHRIILQDQFLDOLQIRUPDWLRQLQLWVSURVHFXWLRQ IURP WKLV VLOHQFH DV , QRWHG HDUOLHU LV WKH &RXUWjV SRLQWHG
RIDGHIHQGDQWIRUYLRODWLRQRIIHGHUDOQDUFRWLFVODZV REVHUYDWLRQWKDWWKHGHIHQGDQWVmGLGQRWREMHFWWRWKHGLVWULFW
)G WK&LU :HQHYHUWKHOHVVREVHUYHGWKDW FRXUWPDNLQJWKHGHWHUPLQDWLRQRIGUXJTXDQWLWLHVl3DJH
HYLGHQFH RI mWKH ODFN RI D IHGHUDO WD[ ILOLQJ RU )GDW)RUDOOZHNQRZWKHQWKHGHIHQGDQWVLQ
XQGHUUHSRUWLQJ LQ FRPELQDWLRQ ZLWK SURRI RI YDOXDEOH 3DJHUDLVHGSUHFLVHO\WKHVDPHVRUWVRIIDFWXDOFKDOOHQJHVWR
WDQJLEOH SRVVHVVLRQV RU H[WUDYDJDQW SXUFKDVHV FUHDWHV WKH WKH 'LVWULFW &RXUWjV GUXJ TXDQWLW\ GHWHUPLQDWLRQV DV ZHUH
LQIHUHQFH WKDW WKH GHIHQGDQW GRHV QRW SRVVHVV D OHJLWLPDWH PDGHLQ6WUD\KRUQ
VRXUFH RI LQFRPH WR VXSSRUW KLV DIIOXHQW OLIHVW\OH DQG
WKHUHIRUH WKH LQFRPH PXVW RULJLQDWH IURP QDUFRWLFV
RSHUDWLRQVlLGDWDQGWKDWmWKHUHDUHFDVHVWKDWDOORZWKH
6WUD\KRUQ FRPPLWV WKH VDPH HUURU ZLWK UHVSHFW WR RXU GHFLVLRQ LQ
JRYHUQPHQWWRXVHDGHIHQGDQWjVWD[UHWXUQVDQGHYLGHQFHRI 1HXKDXVVHU YLHZLQJ WKDW FDVH OLNH 3DJH DV GLVWLQJXLVKDEOH RQ WKH
KLV VSHQGLQJ KDELWV LQ RUGHU WR REWDLQ D FRQYLFWLRQ LQ D JURXQG WKDW WKH GHIHQGDQW SXUSRUWHGO\ mIDLOHG WR REMHFW ZKHQ >WKH@ GLVWULFW
QDUFRWLFVFDVHl,G FRXUW PDGH LWV GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHVl 6WUD\KRUQ )G DW
FLWLQJ 1HXKDXVVHU )G DW ,Q IDFW 1HXKDXVVHU VWDWHV DW
%HIRUHXVLVVXFKDFDVH7KHUHZDVXQUHEXWWHGWHVWLPRQ\ WKH RXWVHW WKDW WKH GHIHQGDQW ZDV FKDOOHQJLQJ KLV VHQWHQFH DV mXQODZIXOO\
EDVHG LQ SDUW RQ WKH WULDO FRXUWjV GHWHUPLQDWLRQV RI GUXJ W\SHV DQG
DWWULDOWKDW+XPSKUH\jVWRWDOH[SHQGLWXUHVIRU DQG TXDQWLWLHV DW VHQWHQFLQJ XQGHU WKH µSUHSRQGHUDQFH RI WKH HYLGHQFHj
DPRXQWHGWRGHVSLWHWKHIDFWWKDWKHKDGEHHQ VWDQGDUGl DQG WKDW EHFDXVH WKH GHIHQGDQW mIDLOHG WR UDLVH WKLV REMHFWLRQ
mXQHPSOR\HGWKHSDVWHLJKWPRQWKVlGXHWRDGLVDELOLW\,W LQ WKH FRXUW EHORZ ZH UHYLHZ KLV VHQWHQFH RQO\ IRU SODLQ HUURUl )G
ZDV ZHOO ZLWKLQ WKH SUHURJDWLYH RI WKH *RYHUQPHQW WR DW HPSKDVLV DGGHG 7KHQ LQ WKH SDVVDJH FLWHG LQ 6WUD\KRUQ
HQFRXUDJHWKHMXU\WRFRQVLGHUKRZ+XPSKUH\PDLQWDLQHGWKLV 1HXKDXVVHU VXUYH\V WKH GHFLVLRQ LQ 3DJH DQG VWDWHV WKDW mLQ 3DJH DV
KHUH WKH GHIHQGDQWV IDLOHG WR REMHFW ZKHQ WKH 'LVWULFW &RXUW LQLWLDOO\ PDGH
DIIOXHQWOLIHVW\OHSDUWLFXODUO\LQOLJKWRIWKHGHFODUDWLRQVRIWKH LWV GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHVl 1HXKDXVVHU )G DW )URP
GLVWULFWFRXUWDQGWKH*RYHUQPHQWWKDWWKHEXUGHQRISURRIDW WKH FRQWH[W DV ZHOO DV WKH UHIHUHQFH WR 3DJH LW LV HYLGHQW WKDW1HXKDXVVHU
DOOWLPHVUHPDLQHGZLWKWKH*RYHUQPHQW7KH*RYHUQPHQWjV LV VSHDNLQJ RI D SDUWLFXODU mIDLO>XUH@ WR REMHFWl n QDPHO\ WKH ODFN RI DQ\
FORVLQJDQGUHEXWWDODUJXPHQWVZHUHHQWLUHO\SURSHUFRPPHQWV REMHFWLRQ WKDW GUXJ W\SH DQG TXDQWLW\ PXVW EH GHWHUPLQHG E\ D MXU\ EH\RQG
RQWKHTXDOLW\DQGFUHGLELOLW\RI+XPSKUH\jVHYLGHQFH D UHDVRQDEOH GRXEW DQG QRW E\ D MXGJH E\ D SUHSRQGHUDQFH RI WKH
HYLGHQFH 1HXKDXVVHU OLNH 3DJH LV XWWHUO\ VLOHQW DV WR ZKHWKHU DQ\ RWKHU
VRUWV RI REMHFWLRQV ZHUH UDLVHG DW WULDO RU VHQWHQFLQJ
3DUHQWKHWLFDOO\ DV D PHPEHU RI WKH SDQHO DQG WKH ZULWLQJ sXGJH LQ
1HXKDXVVHU , DP DEOH WR JR EDFN WR WKH UHFRUG DQG FRQILUP WKDW LQ IDFW
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
WK &LU /OR\G KRZHYHU DSSOLHG WKH GH QRYR E7D[(YLGHQFH
VWDQGDUGWRIDFLDODWWDFNVRQWKHFRQVWLWXWLRQDOLW\RIDIHGHUDO
VWDWXWHnVSHFLILFDOO\HTXDOSURWHFWLRQDQGVXEVWDQWLYHGXH +XPSKUH\DOVRFRQWHQGVWKDWWKH*RYHUQPHQWLPSURSHUO\
SURFHVV FKDOOHQJHV WR WKH VWDWXWRU\ WR VHQWHQFLQJ XVHGKLVLQFRPHWD[UHWXUQVDQGWKHWHVWLPRQ\RI,56$JHQW
GLVSDULW\ XQGHU E IRU GUXJ RIIHQVHV LQYROYLQJ FUDFN *DU\5DVROHWWLWRRXWOLQH+XPSKUH\jVVSHQGLQJKDELWVRYHU
YHUVXVSRZGHUFRFDLQH6XFKTXHVWLRQVRIODZLPSOLFDWLQJ WKHHLJKWHHQPRQWKVWKDWKHZDVXQGHULQYHVWLJDWLRQ%HFDXVH
WKHVFRSHRIFRQJUHVVLRQDODXWKRULW\XQGHUWKH&RQVWLWXWLRQ LWZDVXQGLVSXWHGWKDW+XPSKUH\KDGOHJLWLPDWHVRXUFHVRI
FOHDUO\ZDUUDQWGHQRYRUHYLHZ LQFRPHIURPUHQWDOSURSHUW\DQGWHHVKLUWVDOHV+XPSKUH\
DUJXHVWKDWWKH*RYHUQPHQWjVLQWURGXFWLRQRIWD[UHFRUGVDQG
,Q FRQWUDVW 'HIHQGDQW KHUH KDV QRW PRXQWHG D 5DVROHWWLjVWHVWLPRQ\SUHMXGLFHGWKHMXU\DJDLQVWKLPDQGZDV
FRQVWLWXWLRQDO DWWDFN XSRQ D IHGHUDO VWDWXWH EXW LQVWHDG LQFOHDUGLVUHJDUGRIRXUGHFLVLRQLQ&DUWHUZKLFKJHQHUDOO\
FKDOOHQJHVWKH'LVWULFW&RXUWjVGHFLVLRQDVWRZKLFKHOHPHQWV SURKLELWV WKH XVH RI WD[ UHFRUGV DQG VSHQGLQJ KDELWV LQ
RIDGUXJFRQVSLUDF\RIIHQVHPXVWEHVXEPLWWHGWRWKHMXU\IRU QDUFRWLFV FDVHV 7KH &DUWHU UXOH LV VXEMHFW WR FHUWDLQ
GHWHUPLQDWLRQEH\RQGDUHDVRQDEOHGRXEWDQGZKLFKPD\EH H[FHSWLRQV DPRQJ WKHP HYLGHQFH RI H[WUDYDJDQW VSHQGLQJ
GHWHUPLQHGE\WKH&RXUWDWVHQWHQFLQJE\DSUHSRQGHUDQFHRI KDELWVE\WKHGHIHQGDQWRUHYLGHQFHWKDWKHSRVVHVVHVODUJH
WKHHYLGHQFH7KLVRIFRXUVHZDVWKHYHU\VRUWRIFKDOOHQJH DPRXQWV RI XQUHSRUWHG ZHDOWK 1HYHUWKHOHVV +XPSKUH\
SUHVHQWHG WR XV LQ 3DJH DQG WR WKH 6XSUHPH &RXUW LQ DUJXHVWKDWWKHMXU\jVUHIXVDOWRRUGHUWKHIRUIHLWXUHRIWKHYDVW
sRKQVRQ DQG WKH FRXUWV LQ ERWK FDVHV GHWHUPLQHG WKDW WKH PDMRULW\RIKLVUHDOSURSHUW\DQGSRVVHVVLRQVLVHYLGHQFHWKDW
SODLQ HUURU VWDQGDUG JRYHUQHG WKHLU LQTXLULHV ZKHUH WKH WKHMXU\EHOLHYHGWKHPWREHWKHSURFHHGVRIODZIXODFWLYLW\
GHIHQGDQWVKDGQRWUDLVHGWKHLUDUJXPHQWVLQWKHORZHUFRXUW +XPSKUH\ IXUWKHU VXEPLWV WKDW DOWKRXJK 5DVROHWWL WHVWLILHG
SURFHHGLQJV5HPDUNDEO\6WUD\KRUQHYHQFLWHV3DJHDQG DERXW UHFHLSWV IRU KLV SXUFKDVHV DOOHJHGO\ PDGH ZLWK GUXJ
H[SUHVVO\ DFNQRZOHGJHV WKDW WKH SODLQ HUURU VWDQGDUG ZDV SURFHHGVWKH*RYHUQPHQWVRXJKWRQO\WKHIRUIHLWXUHRIRQHRI
DSSOLHGLQWKDWFDVH6HH6WUD\KRUQ)GDWHG@WRWKHGUXJ WD[ FKDUJHV ZDV XQGXO\ SUHMXGLFLDO DQG +XPSKUH\
TXDQWLW\ GHWHUPLQDWLRQ DW KLV SOHD KHDULQJ DQG DW KLV FRQFOXGHVZDUUDQWVUHYHUVDO
VHQWHQFLQJKHDULQJDVZHOODVLQDZULWWHQREMHFWLRQWRWKH
FDOFXODWLRQ RI KLV EDVH RIIHQVH OHYHO LQ KLV SUHVHQWHQFH +XPSKUH\jV DUJXPHQW LV IRUHFORVHG E\ RXU GHFLVLRQ LQ
UHSRUWl DQG KH mPDGH LW ZHOO NQRZQ WKDW KH GLVSXWHG WKH 8QLWHG 6WDWHV Y &RSHODQG )G WK &LU
7KHUH D GHIHQGDQW FKDUJHG ZLWK YLRODWLRQ RI IHGHUDO GUXJ
FRQVSLUDF\ ODZV UDLVHG D UHOHYDQF\ FKDOOHQJH WR WKH
6WUD\KRUQ ORRNV WR )ORZDO DQG 5DPLUH] IRU JXLGDQFH LQ
7KRXJK
*RYHUQPHQWjVLQWURGXFWLRQRIFHUWDLQVWRUHUHFHLSWV,G DW
FRQVWUXLQJ $SSUHQGL LW FDQQRW UHO\ XSRQ WKHVH GHFLVLRQV DV DXWKRULW\ IRU 7KRVH UHFHLSWV GHPRQVWUDWHG WKDW WKH GHIHQGDQW KDG
GH QRYR UHYLHZ RI $SSUHQGL FODLPV IRU WKH VLPSOH UHDVRQ WKDW )ORZDO DQG SXUFKDVHG LQ VWHUHR HTXLSPHQW RYHU D WZHQW\VL[
5DPLUH] DUH FRPSOHWHO\ VLOHQW DV WR WKH VWDQGDUG RI UHYLHZ IRU VXFK FODLPV
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
PRQWKSHULRGGXULQJZKLFKWLPHKH UHSRUWHGQRVRXUFHRI TXHVWLRQHGWKH'LVWULFWsXGJHjVDXWKRULW\WRGHWHUPLQHGUXJ
LQFRPH,G,QILQGLQJWKHUHFHLSWVUHOHYDQWDQGDIILUPLQJWKH TXDQWLWLHVIRUSXUSRVHVRIVHQWHQFLQJDQGPDGHRQO\DVLQJOH
GLVWULFWFRXUWjVDGPLVVLRQRIWKHHYLGHQFHZHIRXQG&DUWHU UHIHUHQFHWRDmKLJKHUVWDQGDUGl s$DW DVSDUWRIKLV
GLVWLQJXLVKDEOHLQVHYHUDOUHVSHFWV)LUVW&DUWHUSXUFKDVHG DUJXPHQW WKDW WKH LQIRUPDQW WHVWLPRQ\ RIIHUHG E\ WKH
IHZHULWHPVWKDQ&RSHODQG6HFRQG&DUWHUXVHGKLVJLYHQ *RYHUQPHQW ZDV LQKHUHQWO\ XQUHOLDEOH ,W VHHPV WR PH
QDPHZKHQSXUFKDVLQJWKHLWHPVLQTXHVWLRQ &RSHODQGGLG XQQHFHVVDU\WRGHFLGHZKHWKHUWKHSRUWLRQVRIWKHUHFRUGFLWHG
QRW UHO\LQJ LQVWHDG RQ YDULRXV DOLDVHV )LQDOO\ FHUWDLQ E\ WKH PDMRULW\ FRQWDLQ VRPHWKLQJ WKDW FRXOG SRVVLEO\ EH
UHFHLSWVOLQNHG&RSHODQGWRDOOHJHGLQVWUXPHQWDOLWLHVRIWKH FRQVWUXHGDVDQ$SSUHQGLOLNHDUJXPHQWZKHQWKHSDVVDJHV
FRQVSLUDF\WKDWZHUHUHIHUUHGWRLQWULDOWHVWLPRQ\ ,TXRWHGHDUOLHUnDQGZKLFKWKHPDMRULW\GRHVQRWnIHDWXUH
H[SUHVVVWDWHPHQWVRI'HIHQGDQWjVSRVLWLRQV QDPHO\WKDWLW
7KH IDFWV RI WKH LQVWDQW FDVH DUH DQDORJRXV WR WKRVH RI ZDV WKH GXW\ RI WKH 'LVWULFW &RXUW WR GHWHUPLQH WKH GUXJ
&RSHODQG+XPSKUH\SXUFKDVHGLQH[FHVVRIZRUWK TXDQWLWLHVIRUZKLFKKHZDVWREHKHOGUHVSRQVLEOHDQGWKDWLW
RIJRRGVRYHUDWZR\HDUSHULRGZKHQKHZDVXQHPSOR\HGIDU ZDVWKH*RYHUQPHQWjVEXUGHQWRHVWDEOLVKWKHVHTXDQWLWLHVE\
PRUHWKDQWKHDWLVVXHLQ&RSHODQG)XUWKHUPRUHWKH DSUHSRQGHUDQFHRIWKHHYLGHQFH
UHFHLSWVUHOLHGXSRQE\WKH*RYHUQPHQWLQWKLVFDVHUHIHUHQFHG
IUXLWVRIWKHDOOHJHGFRQVSLUDF\(YHQZHUHZHLQFOLQHGWR $OWHUQDWLYHO\WKHPDMRULW\FLWHV6WUD\KRUQ)GDW
ILQG+XPSKUH\jVFDVHIDFWXDOO\VLPLODUWR&DUWHUWKHGLVSXWHG IRU WKH SURSRVLWLRQ WKDW DQ REMHFWLRQ DV WR GUXJ TXDQWLW\ DW
UHFHLSWVDUHHYLGHQFHRIWDQJLEOHSRVVHVVLRQVGHPRQVWUDWLQJ VHQWHQFLQJ n ZKLFK REMHFWLRQ 'HIHQGDQW SODLQO\ GLG UDLVH
mH[WUDYDJDQW VSHQGLQJl IRU ZKLFK ILQDQFLDO LQIRUPDWLRQ KHUHnVXIILFHVWRSUHVHUYHGHQRYRUHYLHZRIDQ$SSUHQGL
JHQHUDOO\PD\EHLQWURGXFHG&DUWHU )GDW:H FODLPRQDSSHDO6WUD\KRUQLQWXUQUHVWVLWVGHQRYRUHYLHZ
DUHIXUWKHUSHUVXDGHGWKDWWKHGLVWULFWFRXUWjVLQVWUXFWLRQRIWKH RQWKHDXWKRULW\RI8QLWHG6WDWHVY/OR\G)G
MXU\WRZKLFK+XPSKUH\UDLVHGQRREMHFWLRQFXUHGDQ\HUURU
6HH s$ DW m7KH GHIHQGDQW LV QRW RQ WULDO IRU QRW
UHSRUWLQJ LQFRPH RU DQ\ RWKHU FULPHV QRW FKDUJHG LQ WKH
LQGLFWPHQWl
F9RXFKLQJ
7R WKH PDMRULW\jV VXJJHVWLRQ WKDW LW ZRXOG EH XQIDLU WR SHQDOL]H D
GHIHQGDQW IRU IDLOLQJ WR DQWLFLSDWH D FKDQJH LQ WKH ODZ WKURXJK D QRW\HW
+XPSKUH\DUJXHVWKDWWKH*RYHUQPHQWLPSURSHUO\VWDWHGLWV LVVXHG 6XSUHPH &RXUW UXOLQJ , FDQ RQO\ VD\ WKDW WKH UHTXLUHPHQW RI
SHUVRQDOEHOLHILQ(DWRQjVFUHGLELOLW\6SHFLILFDOO\+XPSKUH\ FRQWHPSRUDQHRXV REMHFWLRQ VHH )HG 5 &ULP 3 DQG WKH OLPLWHG
SRLQWV WR WKH *RYHUQPHQWjV FORVLQJ DUJXPHQW ZKHQ LW H[FHSWLRQ LQ FDVHV RI SODLQ HUURU VHH )HG 5 &ULP 3 E UHIOHFW mD
REVHUYHG FDUHIXO EDODQFLQJ RI RXU QHHG WR HQFRXUDJH DOO WULDO SDUWLFLSDQWV WR VHHN D
IDLU DQG DFFXUDWH WULDO WKH ILUVW WLPH DURXQG DJDLQVW RXU LQVLVWHQFH WKDW
REYLRXV LQMXVWLFH EH SURPSWO\ UHGUHVVHGl 8QLWHG 6WDWHV Y )UDG\
1RZMXVWUHDOTXLFNO\@ DW FRQVXPSWLRQRIRUJUDPVRIFRFDLQHFRQVWLWXWHVSHUVRQDO
VHQWHQFLQJWKDW'HIHQGDQWEHVHQWHQFHGWRDPDQGDWRU\ XVH
PLQLPXP WHUP RI ILYH \HDUV LPSULVRQPHQW IRU KLV VDOH RI
EHWZHHQJUDPVDQGILYHNLORJUDPVRISRZGHUFRFDLQHl +XPSKUH\jVDUJXPHQWZKLFKZHUHYLHZIRUSODLQHUURULV
LG DW HPSKDVLV DGGHG DQG LL WKDW mLW LV WKH ZLWKRXWPHULW)LUVWWKHIDFWVUHOLHGXSRQE\WKH*RYHUQPHQW
JRYHUQPHQWjVEXUGHQWRSURYHE\DSUHSRQGHUDQFHRIWKH ZHUHDGGXFHGE\0RUURZjVFRXQVHOLQKLVFURVVH[DPLQDWLRQ
HYLGHQFH WKH TXDQWLW\ RI QDUFRWLFV IRU ZKLFK D GHIHQGDQW RI(DWRQ6HHs$DW (DWRQjVWHVWLPRQ\ ZDV WKDWWKH
VKRXOGEHKHOGUHVSRQVLEOHl LGDW HPSKDVLVDGGHG VPDOOHVWDPRXQWVKHHYHUVROGZHUHmWZRRUWKUHHWHQWKVRID
/LNHZLVHDWVHQWHQFLQJGHIHQVHFRXQVHOmDVN>HG@WKH&RXUWl JUDPlDQGWKDWSHRSOHEX\WHQWKVRIDJUDPRIGUXJVIRUWKHLU
WRILQGWKDW'HIHQGDQWjVmWRWDOUHOHYDQWFRQGXFWLVOHVVWKDQ RZQSHUVRQDOXVH 6HFRQGWKH*RYHUQPHQWjVDUJXPHQWZDV
ILYHNLORVlUHVXOWLQJLQDmWHQ\HDUPDQGDWRU\VHQWHQFHl LG D GLUHFW UHVSRQVH WR 0RUURZjV VXJJHVWLRQ WKDW WKH GUXJ
DW DQG WKHQ VWDWHG ZLWK UHJDUG WR WKH LQIRUPDQW TXDQWLWLHVGLVWULEXWHGE\(DWRQWRKLPZHUHIRUSHUVRQDOXVH
WHVWLPRQ\LQGLFDWLQJJUHDWHUGUXJTXDQWLWLHV )LQDOO\DV+XPSKUH\KLPVHOIFRQFHGHVWKH*RYHUQPHQWjV
DUJXPHQWZDVGLUHFWHGDW0RUURZRQO\
>7@KLV &RXUW DV WKH &RXUW NQRZV KDV LWV RZQ
LQGHSHQGHQWGLVFUHWLRQWRGHFLGHRQFHDJDLQORZHU:H Hm%X\HU6HOOHUl5HODWLRQVKLS
DJUHHZLWKWKDWSUHSRQGHUDQFHRIWKHHYLGHQFHEXWLWjV
VWLOO n SUHSRQGHUDQFH RI HYLGHQFH PHDQV WKH 'XULQJ LWV FORVLQJ DUJXPHQW WKH *RYHUQPHQW VXJJHVWHG
*RYHUQPHQWjVJRWWRVKRZPRUHOLNHO\WKDQQRW,WjVQRW WKDWDQH[WHQVLRQRIFUHGLWE\DGUXJVHOOHUWRDGUXJEX\HUIRU
D FORVH FDOO EXW VKRZ PRUH OLNHO\ WKDQ QRW WKHVH WKH SXUFKDVH RI GUXJV ZDV ZLWKRXW PRUH VXIILFLHQW WR
TXDQWLWLHVDUHFUHGLEOHTXDQWLWLHVWRKROG0U+XPSKUH\ HOLPLQDWHDEX\HUVHOOHUUHODWLRQVKLS7KHMXU\LQWKHDEVHQFH
DFFRXQWDEOHIRU RIVXFKDVXJJHVWLRQZRXOGKDYHEHHQSHUPLWWHGWRFRQVLGHU
WKDWWKHFRFDLQHDWWULEXWDEOHWR+XPSKUH\ZDVIRUKLVSHUVRQDO
FRQVXPSWLRQDQGQRWIRUWKHSXUSRVHRIVDOHRUGLVWULEXWLRQ
LQDGUXJFRQVSLUDF\,QPDNLQJWKLVSRLQWWKHSURVHFXWRU
UHOLHGXSRQDQDQDORJ\DUJXLQJWKDWLIKHKDGDGHSDUWPHQW
VWRUHFUHGLWFDUGWKHQDWVXFKWLPHDVKHXVHGWKDWFUHGLWFDUG
KHDQGWKHGHSDUWPHQWVWRUHZRXOGKDYHSURFHHGHGEH\RQGD
*LYHQ WKLV DGPLVVLRQ LQ KLV ZULWWHQ REMHFWLRQV DQG LQ OLJKW RI KLV EX\HUVHOOHUUHODWLRQVKLSDQGHQWHUHGLQWRDFRQVSLUDF\
SULRU IHORQ\ GUXJ FRQYLFWLRQ ZKLFK KH DUJXHG XQVXFFHVVIXOO\ VKRXOG QRW
EH XVHG LQ FRPSXWLQJ KLV VHQWHQFH 'HIHQGDQW FOHDUO\ ZDV VXEMHFW WR D +XPSKUH\ VXEPLWV WKDW WKH *RYHUQPHQWjV DQDORJ\
VHQWHQFH RI \HDUV WR OLIH LPSULVRQPHQW XQGHU E %
'HIHQGDQW DFNQRZOHGJHG WKLV LQ KLV ZULWWHQ REMHFWLRQV WR WKH SUHVHQWHQFH
PLVVWDWHGWKHODZVHH8QLIRUP&RPPHUFLDO&RGH
UHSRUW DQG DJDLQ DW VHQWHQFLQJ 6HH LG DW
mµ%X\LQJj PD\ EH FDVK RU RQ VHFXUHG RU XQVHFXUHG
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
FUHGLWl DQGUHGXFHGWKHMXU\jVUHVSRQVLELOLW\WRRQHVWULFWO\ WKHLQVWUXFWLRQVWRWKHMXU\VLQFHLWGLFWDWHVLQFDVHVLQYROYLQJ
RI GHWHUPLQLQJ ZKHWKHU +XPSKUH\ HQJDJHG LQ D GUXJ GUXJRIIHQVHVWKDWGUXJW\SHDQGTXDQWLW\GHWHUPLQDWLRQVWKDW
WUDQVDFWLRQ IRU ZKLFK D SXUFKDVH ZDV PDGH RQ FUHGLW ,Q UHVXOWLQDVHQWHQFHEH\RQGWKHGHIDXOWVWDWXWRU\PD[LPXP
VXSSRUWRIWKLVDUJXPHQWKHUHOLHVRQ8QLWHG6WDWHVY:DUG PXVW EH PDGH E\ D MXU\ XQGHU WKH mEH\RQG D UHDVRQDEOH
LQ ZKLFK ZH GHFODUHG WKDW mIURQWLQJ FRFDLQH ZLWKRXW GRXEWlVWDQGDUGsRKQVRQOLNHZLVHLQYROYHGDQLVVXHWKDW
DGGLWLRQDO HOHPHQWV RI FRQWURO LV QRWKLQJ PRUH WKDQ D ZDVGHFLGHGE\WKHWULDOMXGJHEXWVKRXOGKDYHEHHQVXEPLWWHG
YDULDWLRQRQWKHWUDGLWLRQDOEX\HUVHOOHUUHODWLRQVKLSl)G WR D MXU\ )LQDOO\ LQ sRKQVRQ DV LQ 3DJH DQG KHUH QR
WK &LU +H QRWHV WKDW EHFDXVH WKH REMHFWLRQZDVUDLVHGDWWULDOWRWKH'LVWULFWsXGJHPDNLQJWKH
*RYHUQPHQWIDLOHGWRGHPRQVWUDWHWKDW+XPSKUH\H[HUFLVHG GHWHUPLQDWLRQLQTXHVWLRQSUHVXPDEO\EHFDXVHWKLVSUDFWLFH
DQ\ OHYHO RI FRQWURO RYHU WKH DOOHJHG FRQVSLUDF\ KDG DQ\ ZDVLQDFFRUGDQFHZLWKWKHVHWWOHGODZDWWKHWLPH&I.LQJ
LQWHUHVWLQWKHGUXJRSHUDWLRQRUGLVSOD\HGDQ\FRQFHUQIRU )G DW Q QRWLQJ WKDW WKLV &LUFXLW KDV UHYLHZHG
ZKDWKDSSHQHGWRWKHGUXJVDIWHUWKHLUVDOHDQGGLVWULEXWLRQLWV $SSUHQGLEDVHG FKDOOHQJHV IRU SODLQ HUURU mHYHQ ZKHQ
SURRIPHUHO\VHWIRUWKDEX\HUVHOOHUUHODWLRQVKLSDQGQRWD $SSUHQGLKDGQRWEHHQGHFLGHGDWWKHWLPHDGHIHQGDQWZDV
GUXJFRQVSLUDF\ WULHGDQGVHQWHQFHGl
,QUHMHFWLQJ+XPSKUH\jVDUJXPHQWVZHQRWHILUVWWKDWKLV ,Q WKH SUHVHQW FDVH GXULQJ WKH SURFHHGLQJV LQ WKH FRXUW
UHOLDQFHRQWKH8QLIRUP&RPPHUFLDO&RGHLVPLVSODFHGDVLW EHORZ'HIHQGDQWXQGHQLDEO\UDLVHGIDFWXDOFKDOOHQJHVWRWKH
KDV QR DSSOLFDWLRQ LQ WKLV FULPLQDO QDUFRWLFV FDVH GUXJTXDQWLW\UHFRPPHQGDWLRQVVHWIRUWKLQWKHSUHVHQWHQFH
+XPSKUH\jVDUJXPHQWWKDWSXUFKDVLQJRQFUHGLWFRQVWLWXWHV LQYHVWLJDWLRQUHSRUWDQGWKHQUHDVVHUWHGWKHVHFKDOOHQJHVDW
EX\LQJZLWKLQWKHPHDQLQJRIDEX\HUVHOOHUUHODWLRQVKLSLV WKH VHQWHQFLQJ KHDULQJ 7KHVH FKDOOHQJHV UHVWHG RQ WKH
OLNHZLVHZLWKRXWPHULW&I8QLWHG6WDWHVY1HVELWW )G FRQWHQWLRQWKDWWKH*RYHUQPHQWjVSURRIVDVWRGUXJTXDQWLWLHV
WK&LU m:HILQGWKDWWKHWUXVWLQYROYHGLQ UHOLHG KHDYLO\ RQ WKH XQFRUURERUDWHG WHVWLPRQ\ RI WZR
WKLVNLQGRIGHOD\HGSD\PHQW>RUFUHGLW@DUUDQJHPHQWVXJJHVWV FRRSHUDWLQJZLWQHVVHVZKRVHFUHGLELOLW\ZDVRSHQWRTXHVWLRQ
PRUHWKDQDEX\HUVHOOHUUHODWLRQVKLSEHWZHHQ>WKHSDUWLHV@l 6HH s$ DW )RU H[DPSOH LQ KLV ZULWWHQ
)LQDOO\ ZH QRWH WKDW :DUG RQ ZKLFK +XPSKUH\ UHOLHV LV REMHFWLRQVWRWKHSUHVHQWHQFHUHSRUW'HIHQGDQWFKDUDFWHUL]HG
IDFWXDOO\GLVVLPLODUIURPWKHLQVWDQWFDVHDVQRFRQWLQXLQJ WKHVHZLWQHVVHVDVmKLJKO\PRWLYDWHGLQIRUPDQWVlZLWKRQH
FULPLQDOHQWHUSULVHLVDWLVVXHKHUH EHLQJmDQDGPLWWHGGUXJDGGLFWlDQGWKHRWKHUmDQDGPLWWHG
OLDUZLWKDSHUVRQDOYHQGHWWDDJDLQVWl'HIHQGDQW ,GDW
I,UUHOHYDQW(YLGHQFH ,Q OLJKW RI WKH VLJQLILFDQW VHQWHQFLQJ FRQVHTXHQFHV LI WKH
WHVWLPRQ\RIWKHVHZLWQHVVHVZHUHFUHGLWHG'HIHQGDQWDQGKLV
7KH*RYHUQPHQWDUJXHGDWWULDOWKDWZKHQODZHQIRUFHPHQW FRXQVHOXUJHGWKH'LVWULFW&RXUWWRmH[HUFLVHVRPHFDXWLRQl
RIILFLDOV VHDUFKHG +XPSKUH\jV KRPH WKH\ GLVFRYHUHG D LQDVVHVVLQJWKLVWHVWLPRQ\ ,GDW
ZLUHWDSDIILGDYLWXQUHODWHGWRWKHFRQGXFWFKDUJHGLQWKLVFDVH
7KHUHDIWHULWVXJJHVWHGWKDW+XPSKUH\jVSRVVHVVLRQRIWKLV
DIILGDYLW ZDV HYLGHQFH WKDW KH ZDV D GUXJ GHDOHU :KHQ
+XPSKUH\jVFRXQVHOEHJDQWRGLVFXVVWKHDIILGDYLWGXULQJKLV
FORVLQJDUJXPHQWWKH*RYHUQPHQWREMHFWHGDQGUHTXHVWHGD
VLGHEDUDIWHUZKLFKWKHGLVWULFWFRXUWLQVWUXFWHGWKHMXU\ m+XPSKUH\jV@JRWDQDIILGDYLW
sRKQVRQZRXOGGLFWDWHWKDWZHDSSO\SODLQHUURUUHYLHZWRDQ LQKLVKRXVHDQGZKDWGR\RXWKLQNWKHDIILGDYLWSUREDEO\
$SSUHQGLEDVHGFODLPUDLVHGIRUWKHILUVWWLPHRQDSSHDO$V VD\VWKHUH"7KDWULJKWO\RUZURQJO\KHjVEHLQJLQYHVWLJDWHGl
WKHPDMRULW\UHFRJQL]HVDQGDVZHKDYHREVHUYHGHOVHZKHUH s$ DW 7KH *RYHUQPHQW SURPSWO\ REMHFWHG WR WKLV
VHHHJ.LQJ)GDW Q$SSUHQGLLPSOLFDWHV
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
PLVVWDWHPHQWRIWKHHYLGHQFHDQGWKHGLVWULFWFRXUWVXVWDLQHG IRUFODLPVRI$SSUHQGLYLRODWLRQV3DJHVTXDUHO\DGGUHVVHV
WKHREMHFWLRQ7KHUHZDVQRHUURU n DQG LQ P\ YLHZ GHILQLWLYHO\ UHVROYHV n WKLV LVVXH
6SHFLILFDOO\ZHKHOG
J,PSURSHU&ORVLQJ$UJXPHQW
'HIHQGDQWV IDLOHG WR REMHFW WR WKH GLVWULFW MXGJH
,Q LWV UHEXWWDO FORVLQJ DUJXPHQW WKH *RYHUQPHQW DUJXHG PDNLQJ WKH GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHV :KHUH
WKDW HYHQ +XPSKUH\jV FRXQVHO 'DYLG 'XGOH\ NQHZ WKDW WKHUHKDVEHHQQRREMHFWLRQUHYLHZLVIRUSODLQHUURU
+XPSKUH\jVFRQYHUVDWLRQVZLWKKLVDFFRXQWDQWDPRXQWHGWR
D FRQIHVVLRQ m'DYLG 'XGOH\ NQRZV WKDW FRQYHUVDWLRQ 3DJH)GDW FLWLQJ)HG5&ULP3 E
>EHWZHHQ +XPSKUH\ DQG KLV DFFRXQWDQW@ LV DV FORVH WR D
FRQIHVVLRQDVDQ\WKLQJLQWKLVZKROHFRXUWURRPDQGKHKDVWR 2QFHDJDLQ3DJHjVUXOLQJRQWKLVSRLQWLVLQDFFRUGZLWKWKH
GHDOZLWKLWEHFDXVHKHNQRZV\RXDUHJRLQJWRVHHWKDWls$ GHFLVLRQVRIDOORIRXUVLVWHU&LUFXLWV6HH8QLWHG6WDWHVY
DW +XPSKUH\VXJJHVWVWKDWWKLVDUJXPHQWLPSURSHUO\ 7LWFKHOO)G G&LU 8QLWHG6WDWHVY
UHOLHG XSRQ +XPSKUH\jV FRXQVHO WR YRXFK IRU WKH )LHOGV )G '& &LU 8QLWHG
*RYHUQPHQWjVYLHZRI+XPSKUH\jVJXLOW 6WDWHV Y :KLWH )G G &LU 8QLWHG
6WDWHVY6WXUJLV)G WK&LU 8QLWHG
7KH*RYHUQPHQWUHVSRQGVWKDWmWKDWFRQYHUVDWLRQlUHIHUUHG 6WDWHVY:KLWH)G WK&LU 8QLWHG
WRDQLQWHUFHSWHGWHOHSKRQHFRQYHUVDWLRQEHWZHHQ+XPSKUH\ 6WDWHVY1DQFH)G WK&LU 8QLWHG
DQGKLVDFFRXQWDQWLQZKLFK+XPSKUH\DOOHJHGO\H[SUHVVHG 6WDWHVY.HHOLQJ)G WK&LU 8QLWHG
VRPH FRQFHUQ RYHU SDSHUZRUN UHODWHG WR KLV SXUFKDVH RI D 6WDWHVY*HUURZ)G WK&LU 8QLWHG
EXVLQHVVEHFDXVHWKHEXVLQHVVRZQHUKDGKDGSULRUGHDOLQJV 6WDWHVY0RMLFD%DH] )G VW&LU
ZLWK WKH 'UXJ (QIRUFHPHQW $GPLQLVWUDWLRQ m'($l 8QLWHG6WDWHVY1RUGE\)G WK&LU
)XUWKHUWKH*RYHUQPHQWPDLQWDLQVWKDWLWVUHIHUHQFHWRWKH 8QLWHG6WDWHVY0HVKDFN)G WK&LU
FRQYHUVDWLRQ DV D mFRQIHVVLRQl ZDV PHUHO\ DQ DWWHPSW WR DPHQGHG RQ UHKjJ )G WK &LU
GLVFUHGLW'XGOH\jVmVSLQRQWKHFRQYHUVDWLRQlE\VXJJHVWLQJ
WKDWDOHJLWLPDWHEXVLQHVVRZQHUZLWKOHJLWLPDWHVRXUFHVRI
LQFRPHZRXOGKDYHQRFRQFHUQDERXWDQ\'($LQYROYHPHQW
LQRQHRIKLVEXVLQHVVYHQWXUHV $V LW KDSSHQV WKH VWDQGDUG RI UHYLHZ ZDV QRW GHWHUPLQDWLYH LQ
&RUUDGR DQG 5HEPDQQ ,Q WKH IRUPHU FDVH WKH &RXUW IRXQG QR $SSUHQGL
2Q WKLV UHFRUG ZH GR QRW ILQG WKDW WKH SURVHFXWRUjV YLRODWLRQ DQG WKH GHIHQGDQW FRXOG QRW KDYH SUHYDLOHG HYHQ XQGHU GH QRYR
FRPPHQWV FDQ EH UHDVRQDEO\ FRQVWUXHG DV LPSO\LQJ WKDW UHYLHZ ,Q WKH ODWWHU WKH GHIHQGDQWjV VHQWHQFH H[FHHGHG WKH VWDWXWRU\
GHIHQVHFRXQVHOEHOLHYHGKLVFOLHQWZDVJXLOW\:HILQGQR PD[LPXP IRU WKH RIIHQVH WR ZKLFK VKH KDG SOHG JXLOW\ DQG KHU FODLP
HUURULQWKHFORVLQJDUJXPHQW
WKHUHIRUH FRXOG KDYH VDWLVILHG WKH PRUH VWULQJHQW SODLQ HUURU VWDQGDUG
K&XPXODWLYH,PSDFW
2Q DSSHDO DW OHDVW RQH RI WKH IRXU GHIHQGDQWV LQ 3DJH TXHVWLRQHG
WKH 'LVWULFW &RXUWjV PHWKRG RI FRPSXWLQJ GUXJ TXDQWLWLHV :H UHMHFWHG
WKLV FKDOOHQJH DQG VWDWHG WKDW m>R@WKHU LVVXHV UHJDUGLQJ GUXJ TXDQWLW\
:KHQWKHDIRUHPHQWLRQHGHUURUVDOOHJHGE\+XPSKUH\DUH DUH DGGUHVVHG LQ WKH XQSXEOLVKHG DSSHQGL[ WR WKLV RSLQLRQl 3DJH
YLHZHGLQWKHFRQWH[WRIWKHHQWLUHWULDO+XPSKUH\DUJXHVWKDW )G DW Q $V REVHUYHG E\ WKH PDMRULW\ KRZHYHU 3DJH GRHV
WKHLUFXPXODWLYHLPSDFWPDQGDWHVUHYHUVDOHYHQLIDQ\RQH QRW LQGLFDWH ZKDW VRUWV RI FKDOOHQJHV LI DQ\ ZHUH RU ZHUH QRW UDLVHG
HUURU LQ LVRODWLRQ GRHV QRW 7KHVH HUURUV +XPSKUH\ EHIRUH WKH 'LVWULFW &RXUW n WKDW LV DSDUW IURP RXU GLUHFW VWDWHPHQW WKDW
PDLQWDLQV ZHUH SDUWLFXODUO\ SUHMXGLFLDO JLYHQ WKDW KLV WULDO WKH GHIHQGDQWV GLG QRW UDLVH DQ $SSUHQGL LVVXH LQ WKH FRXUW EHORZ WKHUHE\
WULJJHULQJ SODLQ HUURU UHYLHZ
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
SUHVHQWVWKHLVVXHRIWKHSURSHULQWHUSUHWDWLRQRI$SSUHQGL ZDVEXLOWRQZHDNFLUFXPVWDQWLDOHYLGHQFHRIJXLOWLQZKLFK
$V GLVFXVVHG EHORZ WKLV LV QRW VXFK D FDVH n RU PRUH KHZDVFRQYLFWHGRQO\RIFRQVSLUDF\ DQGQRWRIDQ\RIWKH
DFFXUDWHO\LW ZRXOGQRWEHLI'HIHQGDQWjV$SSUHQGLFODLP XQGHUO\LQJ VXEVWDQWLYH FRXQWV EDVHG RQ WKH WHVWLPRQ\ RI
ZHUH HYDOXDWHG XQGHU WKH SURSHU VWDQGDUG RI UHYLHZ 7KH DOOHJHGFRFRQVSLUDWRUV:HGLVDJUHH([DPLQLQJWKHUHFRUG
PDMRULW\jVGHFLVLRQWRDSSO\GHQRYRUHYLHZKRZHYHUOHQGV DV D ZKROH ZH IDLO WR ILQG DQ\ HUURU LQ WKH IRUHJRLQJ WKDW
QHZ DQG XQGXH VLJQLILFDQFH WR LWV H[SDQVLYH UHDGLQJ RI VLQJXODUO\RUFXPXODWLYHO\PDQGDWHVUHYHUVDO
$SSUHQGLDQGFRPSRXQGVHUURUZLWKIXUWKHUHUURU
%'LVWULFW&RXUW0LVFRQGXFW
,,
6WDQGDUGRI5HYLHZ
%\ QRZ P\ YLHZV UHJDUGLQJ WKH FRUUHFW FRQVWUXFWLRQ RI
$SSUHQGL VKRXOG EH HYLGHQW $V FRQFHGHG DW WKH RXWVHW :HUHYLHZGHQRYRZKHWKHUDGLVWULFWFRXUWjVDOOHJHGIDLOXUH
KRZHYHUWKH&RXUWjVRSLQLRQLQWKDWFDVHFRQWDLQVODQJXDJH WR FRQGXFW D KHDULQJ WR LQTXLUH LQWR D FRQIOLFW RI LQWHUHVW
WKDWDUJXDEO\VXSSRUWVDIHZFRPSHWLQJLQWHUSUHWDWLRQV,Q EHWZHHQ D GHIHQGDQW DQG KLV WULDO FRXQVHO YLRODWHG D
DQ\HYHQWZKHWKHURQHVXEVFULEHVWRWKHmPD[LPXPSHQDOW\l GHIHQGDQWjV 6L[WK $PHQGPHQW ULJKW WR HIIHFWLYH FRXQVHO
RUmVHQWHQFLQJUDQJHlYLHZRI$SSUHQGLWKHRXWFRPHRIWKH 8QLWHG6WDWHVY+DOO)G WK&LU :H
SUHVHQW FDVH VKRXOG EH QR GLIIHUHQW EHFDXVH UHYLHZ IRU FOHDU HUURU D GLVWULFW FRXUWjV IDFWXDO ILQGLQJV
'HIHQGDQW$SSHOODQW+XPSKUH\FDQQRWSRVVLEO\VDWLVI\WKH FRQFHUQLQJ ZKHWKHU D SDUW\ KDV LPSURSHUO\ XVHG LWV
JRYHUQLQJmSODLQHUURUlVWDQGDUG@ WKH
PLVFDUULDJHRIMXVWLFHl8QLWHG6WDWHVY6DQGHUVRQ )G
PD[LPXP SHQDOW\ IRU WKH FULPH FRPPLWWHG QRU FUHDWH>@ D VHSDUDWH RIIHQVH WK&LU
FDOOLQJ IRU D VHSDUDWH SHQDOW\jl 6WUD\KRUQ )G DW TXRWLQJ
0F0LOODQ 86 DW 6 &W DW 7KH TXRWHG SDVVDJH $QDO\VLV
0F0LOODQ
IURP KRZHYHU PHUHO\ GHVFULEHV WKH 3HQQV\OYDQLD ODZ DW LVVXH
LQ WKDW FDVH DQG GRHV QRW SXUSRUW WR VHW IRUWK WKH HVVHQWLDO UHTXLUHPHQWV +XPSKUH\DUJXHVWKDWWKHGLVWULFWFRXUWjVLQVWUXFWLRQRIWKH
IRU DQ\ PDQGDWRU\ PLQLPXP VHQWHQFLQJ VFKHPH WR SDVV FRQVWLWXWLRQDO
MXU\ ZDV IODZHG LQ WKUHH UHVSHFWV )LUVW WKH GLVWULFW FRXUW
PXVWHU
IDLOHG WR LQIRUP WKH MXU\ WKDW LW ZDV UHTXLUHG WR UHDFK
0RUHRYHU LI LW RQFH ZDV SRVVLEOH WR GHILQH 0F0LOODQ jV KROGLQJ E\ XQDQLPLW\RQHYHU\HOHPHQWRIWKHFKDUJHGRIIHQVHV6HFRQG
UHIHUHQFH WR VXFK QRWLRQV DV mVHSDUDWH RIIHQVHVl RU mVHSDUDWH SHQDOWLHVl WKH GLVWULFW FRXUW IDLOHG WR LQVWUXFW WKH MXU\ WR GHWHUPLQH
$SSUHQGL
WKH GHFLVLRQ DQG DQDO\VLV LQ QRZ SUHFOXGH VXFK DQ HIIRUW $V ZH ZKHWKHUWKHUHZDVRQHFRQVSLUDF\RUPXOWLSOHFRQVSLUDFLHV
UHFRJQL]HG LQ 5HEPDQQ $SSUHQGL
PDUNV D mUDGLFDO GHSDUWXUHl LQ WKH 7KLUGWKHGLVWULFWFRXUWIDLOHGWRLQVWUXFWWKHMXU\WRGHWHUPLQH
6XSUHPH &RXUWjV PHWKRG RI GHWHUPLQLQJ WKH mHOHPHQWVl RI DQ RIIHQVH
5HEPDQQ )G DW 4XHVWLRQV RI VWDWXWRU\ VWUXFWXUH DQG
WKH W\SH RI GUXJV WKDW +XPSKUH\ FRQVSLUHG WR SRVVHVV RU
OHJLVODWLYH LQWHQW KDYH JLYHQ ZD\ WR SXUHO\ IXQFWLRQDO FRQVLGHUDWLRQV DQG GLVWULEXWH
mWKH UHOHYDQW LQTXLU\ LV RQH QRW RI IRUP EXW RI HIIHFW n GRHV WKH UHTXLUHG
ILQGLQJ H[SRVH WKH GHIHQGDQW WR D JUHDWHU SXQLVKPHQW WKDQ WKDW DXWKRUL]HG :HUHMHFW+XPSKUH\jVDUJXPHQWV
E\ WKH MXU\jV JXLOW\ YHUGLFW"l $SSUHQGL 86 DW 6 &W DW
VHH DOVR 5HEPDQQ )G DW $V WKH 6HYHQWK &LUFXLW D8QDQLPLW\
UHFHQWO\ H[SODLQHG LQ UHMHFWLQJ WKH FRQWHQWLRQ WKDW 86& LV
XQFRQVWLWXWLRQDO
$WWKHFORVHRIWKHHYLGHQFHWKHGLVWULFWFRXUWSURYLGHGWKH
,I &RQJUHVV KDG VSHFLILHG WKDW RQO\ MXGJHV PD\ PDNH WKH
IROORZLQJLQVWUXFWLRQWRWKHMXU\FRQFHUQLQJWKHUHTXLVLWHOHJDO
ILQGLQJV UHTXLUHG E\ E RU WKDW WKHVH ILQGLQJV PXVW EH HOHPHQWVRIDFULPLQDOFRQVSLUDF\
PDGH E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKHQ ZRXOG
FUHDWH D FRQVWLWXWLRQDO SUREOHP %XW WKH VWDWXWH GRHV QRW VD\ ZKR :LWKUHJDUGWRWKHILUVWHOHPHQWWKHFULPLQDODJUHHPHQW
PDNHV WKH ILQGLQJV RU ZKLFK SDUW\ EHDUV ZKDW EXUGHQ RI WKH JRYHUQPHQW PXVW SURYH WKDW WZR RU PRUH SHUVRQV
SHUVXDVLRQ ,QVWHDG WKH ODZ DWWDFKHV HIIHFWV WR IDFWV OHDYLQJ LW
WR WKH MXGLFLDU\ WR VRUW RXW ZKR GHWHUPLQHV WKH IDFWV XQGHU ZKDW
FRQVSLUHG RU DJUHHG WR FRRSHUDWH ZLWK HDFK RWKHU WR
EXUGHQ ,W PDNHV QR FRQVWLWXWLRQDO GLIIHUHQFH ZKHWKHU D VLQJOH FRPPLW WKH FULPH RI GLVWULEXWLRQ RI QDUFRWLFV RU
VXEVHFWLRQ FRYHUV ERWK HOHPHQWV DQG SHQDOWLHV ZKHWKHU WKHVH DUH SRVVHVVLRQ ZLWK LQWHQW WR GLVWULEXWH QDUFRWLFV RU WR
GLYLGHG DFURVV PXOWLSOH VXEVHFWLRQV DV GRHV RU HYHQ FRPPLWWKHFULPHRIPRQH\ODXQGHULQJ
ZKHWKHU WKH\ DUH VFDWWHUHG DFURVV PXOWLSOH VWDWXWHV $SSUHQGL
KROGV WKDW WKH GXH SURFHVV FODXVH RI WKH ILIWK DQG IRXUWHHQWK
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
:KDW WKH JRYHUQPHQW PXVW SURYH LV WKDW WKHUH ZDV D )GDW
sXGJH6LOHUFRQFXUUHGILQGLQJWKDWWKH
PXWXDO XQGHUVWDQGLQJ HLWKHU VSRNHQ RU XQVSRNHQ SDQHOZDVERXQGE\WKHGHFLVLRQLQ)ORZDOEXWTXHVWLRQLQJ
EHWZHHQ WZR RU PRUH SHRSOH WR FRRSHUDWH ZLWK HDFK ZKHWKHU$SSUHQGLmLVDVIDUUHDFKLQJDVZHGHWHUPLQHLQWKLV
RWKHUWRFRPPLWWKHFULPHRIGLVWULEXWLRQRIQDUFRWLFVRU FDVHIROORZLQJ)ORZDOlDQGRSLQLQJWKDW0F0LOODQVKRXOG
SRVVHVVLRQZLWKLQWHQWWRGLVWULEXWHQDUFRWLFVDVWR&RXQWV JRYHUQ FKDOOHQJHV WR PDQGDWRU\ PLQLPXP VHQWHQFHV
DQGRUWRHQJDJHLQPRQH\ODXQGHULQJDVWR&RXQW 5DPLUH])GDW 6LOHUsFRQFXUULQJ
0RVWUHFHQWO\LQ6WUD\KRUQWKHSDQHODGGUHVVHGD\HDU
s$DW PDQGDWRU\ PLQLPXP VHQWHQFH XQGHU E % IRU D
PDULMXDQDGLVWULEXWLRQFRQVSLUDF\LQYROYLQJNLORJUDPVRU
%HFDXVHWKHGLVWULFWFRXUWIDLOHGWRLQVWUXFWWKHMXU\WKDWLW PRUH RI PDULMXDQD WKDW SUHFLVHO\ PDWFKHG WKH \HDU
ZDV UHTXLUHG WR GHFLGH XQDQLPRXVO\ WKDW WKH *RYHUQPHQW VWDWXWRU\PD[LPXPVHQWHQFHXQGHU E ' IRUDSULRU
SURYHGHDFKHOHPHQWEH\RQGDUHDVRQDEOHGRXEW+XPSKUH\ GUXJIHORQFRQYLFWHGRIDQRIIHQVHLQYROYLQJDQLQGHWHUPLQDWH
DUJXHV WKDW KLV FRQYLFWLRQ FDQQRW VWDQG 6SHFLILFDOO\ KH DPRXQW RI PDULMXDQD $JDLQ WKH SDQHO FKRVH WR IROORZ
VXEPLWVWKDWWKHGLVWULFWFRXUWVKRXOGKDYHLQVWUXFWHGWKHMXU\ )ORZDO DQG 5DPLUH] DQG GLG QRW GLVFXVV 3DJH RU 0XQR]
WKDW LW ZDV WR LGHQWLI\ WKH mWZR RU PRUH SHRSOHl DV D ,QWHUHVWLQJO\6WUD\KRUQVWDWHVWKDWm>L@Q)ORZDOZHH[SODLQHG
SUHFRQGLWLRQWRFRQYLFWLRQSDUWLFXODUO\JLYHQWKDW&RXQW2QH WKDWHDFKSHQDOW\SURYLVLRQRI E FRQVWLWXWHVDGLIIHUHQW
RIWKHLQGLFWPHQWLGHQWLILHGVHYHQSHRSOHE\QDPHDQGmRWKHUV FULPHZLWKGLIIHUHQWHOHPHQWVLQFOXGLQJGUXJZHLJKWZKLFK
NQRZQ DQG XQNQRZQ WR WKH *UDQG sXU\l &RXQW 7ZR PXVWEHSURYHGEH\RQGDUHDVRQDEOHGRXEWZKHQVHQWHQFLQJ
LGHQWLILHG VL[ SHRSOH E\ QDPH DQG mRWKHUV NQRZQ DQG DGHIHQGDQWLQH[FHVVRIWKHGHIDXOWVWDWXWRU\PD[LPXPVHW
XQNQRZQWRWKH*UDQGsXU\lDQG&RXQW6HYHQWHHQLGHQWLILHG RXWLQ E & IRUDOOGUXJVH[FHSWPDULMXDQDRULQ
IRXUSHRSOHE\QDPHDQGmRWKHUVNQRZQDQGXQNQRZQWRWKH E ' IRUPDULMXDQDlDQGWKDWm>R@XUVLVWHUFLUFXLWV
*UDQGsXU\l+HUHDVRQVWKDWVLQFHDFRQVSLUDF\QHFHVVDULO\ KDYHXQLIRUPO\DJUHHGZLWKlWKLVUXOH6WUD\KRUQ)G
LQYROYHVDWOHDVWWZRSHRSOHWKHQWKHVSHFLILFLGHQWLW\RID DW HPSKDVLVDGGHG
GHIHQGDQWjVFRFRQVSLUDWRUPXVWEHDQHOHPHQWRIWKHRIIHQVH
2IFRXUVHLIWKLVZHUHWKHUXOHDQQRXQFHGLQ)ORZDORXU
+XPSKUH\jVDUJXPHQWLVQRWZHOOWDNHQ)LUVWWKHGLVWULFW VLVWHUFLUFXLWVZRXOGEHLQDJUHHPHQWDQGWKHVHQWHQFHDWLVVXH
FRXUWSURYLGHGDWKRURXJKLQVWUXFWLRQRQZKDWFRQVWLWXWHVD LQ6WUD\KRUQZRXOGKDYHEHHQXSKHOGDVQRWLQH[FHVVRIWKH
FRQVSLUDF\OLVWLQJDQGGHILQLQJHDFKRIWKHHOHPHQWVWKDWWKH GHIDXOW VWDWXWRU\ PD[LPXP IRXQG DW E ' 7KH
*RYHUQPHQW ZDV UHTXLUHG WR SURYH EH\RQG D UHDVRQDEOH 6WUD\KRUQSDQHOTXLFNO\FRQILUPHGKRZHYHUWKDW)ORZDODQG
GRXEW6HFRQGWKHVSHFLILFXQDQLPLW\LQVWUXFWLRQVRXJKWE\ 5DPLUH]JRDJRRGGHDOIDUWKHUHQFRPSDVVLQJDQ\FDVHLQ
+XPSKUH\ LV JHQHUDOO\ UHTXLUHG RQO\ LQ RQH RI WKUHH ZKLFK D VHQWHQFLQJ FRXUW ILQGV mDJJUDYDWLQJ IDFWRUVl E\ D
FLUFXPVWDQFHV ZKHQWKHQDWXUHRIWKHHYLGHQFHLVSDUWLFXODUO\ SUHSRQGHUDQFHRIWKHHYLGHQFHWKDWWULJJHUDmKLJKHUSHQDOW\
FRPSOH[ ZKHQWKHUHLVDYDULDQFHEHWZHHQWKHLQGLFWPHQWDQG
WKH SURRI DGGXFHG DW WULDO RU ZKHQ WKHUH LV VRPH WDQJLEOH
HYLGHQFH RI MXU\ FRQIXVLRQ DV ZKHQ WKH MXU\ KDV DVNHG
TXHVWLRQVRIWKHFRXUW8QLWHG6WDWHVY:DVKLQJWRQ)G 1RWDEO\ WKH UXOH VWDWHG LQ5DPLUH] LV UHPDUNDEO\ VLPLODU WR WKH
WK&LU 1RQHRIWKHVHVFHQDULRVH[LVWVLQ VWDQGDUG DGYRFDWHG E\ sXVWLFH 7KRPDV LQ KLV FRQFXUUHQFH LQ $SSUHQGL
QDPHO\ WKDW mD µFULPHj LQFOXGHV HYHU\ IDFW WKDW LV E\ ODZ D EDVLV IRU
WKLV FDVH )LQDOO\ +XPSKUH\jV UHOLDQFH RQ 5LFKDUGVRQ LV LPSRVLQJ RU LQFUHDVLQJ SXQLVKPHQW LQ FRQWUDVW ZLWK D IDFW WKDW PLWLJDWHV
PLVSODFHG DV DW LVVXH LQ WKDW FDVH ZDV D MXU\ LQVWUXFWLRQ SXQLVKPHQW l 86 DW 6 &W DW 7KRPDV s
FRQFXUULQJ
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
UHDVRQLQJKLVRSLQLRQLVLQWKHHQGRQO\DFRQFXUUHQFHDQG UHODWLQJWRDSURVHFXWLRQXQGHU86& FRQWLQXLQJ
QRW D UXOLQJ RI WKH &RXUW n DQG HYHQ sXVWLFH 7KRPDV FULPLQDOHQWHUSULVH DQGQRWXQGHU86&DVLQWKH
UHFRJQL]HG WKDW KLV SURSRVHG UXOH ZRXOG UHTXLUH WKDW LQVWDQWFDVH
0F0LOODQ EH RYHUWXUQHG ZKLOH WKH $SSUHQGL PDMRULW\
H[SUHVVO\ GHFOLQHG WR JR VR IDU $V VWDWHG E\ WKH )RXUWK E1XPEHURI&RQVSLUDFLHV
&LUFXLWLWLVmQRWRXUUROHlWRRYHUWXUQ0F0LOODQZKHUHWKH
6XSUHPH&RXUWKDVHOHFWHGQRWWRGRVR+DUULVVXSUD +XPSKUH\FRQWHQGVWKDWHYHQLIWKHLGHQWLW\RIKLVDOOHJHG
)GDW )LQDOO\DQGPRVWVLJQLILFDQWO\)ORZDOjVEURDG FRFRQVSLUDWRULVQRWDQHOHPHQWRIWKHRIIHQVHWKHGLVWULFW
UHDGLQJRI$SSUHQGLLVIODWO\DWRGGVZLWKRXUHDUOLHUGHFLVLRQ FRXUW QHYHUWKHOHVV VKRXOG KDYH LQVWUXFWHG WKH MXU\ WR
LQ0XQR]LQZKLFKZHVTXDUHO\KHOGWKDW$SSUHQGLGLGQRW GHWHUPLQHZKHWKHUWKHUHZHUHPXOWLSOHFRQVSLUDFLHVRURQO\
DSSO\WRDVHQWHQFLQJMXGJHjVILQGLQJVE\DSUHSRQGHUDQFHRI RQH +H UHDVRQV WKDW EHFDXVH (DWRQ ZDV QDPHG DV D FR
WKHHYLGHQFHWKDWWULJJHUHGDQHOHYDWHGVHQWHQFLQJUDQJHVR FRQVSLUDWRULQERWKFRQVSLUDF\FRXQWV &RXQWV2QHDQG7ZR
ORQJDVWKHUHVXOWLQJVHQWHQFHGLGQRWH[FHHGWKHPD[LPXP DQG WKH MXU\ ZDV QRW LQVWUXFWHG WR LGHQWLI\ VSHFLILFDOO\
DFKLHYDEOHDEVHQWWKHMXGJHjVDGGLWLRQDOGHWHUPLQDWLRQV7KH +XPSKUH\jV DOOHJHG FRFRQVSLUDWRU WKH MXU\ FRXOG KDYH
SDQHO LQ )ORZDO KDG QHLWKHU WKH DXWKRULW\ QRU WKH VWDWHG FRQFOXGHGWKDW+XPSKUH\FRQVSLUHGRQO\ZLWK(DWRQZKLFK
LQWHQWLRQWRRYHUUXOH0XQR]EXWWKDWZDVWKHFOHDULPSRUWRI ZRXOGKDYHFRPSHOOHGLWWRFRQYLFW+XPSKUH\RIERWKFRXQWV
LWVGHFLVLRQ GHVSLWHWKHIDFWWKDW&RXQWV2QHDQG7ZRUHTXLUHGSURRIRI
WKHVDPHHOHPHQWVDQGUHOLHGRQWKHVDPHIDFWV6XFKDUHVXOW
'HVSLWHLWVPDQ\IODZVDQGTXHVWLRQDEOHOHJLWLPDF\)ORZDO +XPSKUH\VXJJHVWVZRXOGRIIHQGGXHSURFHVV
KDVWDNHQRQDOLIHRILWVRZQLQWKLV&LUFXLWVSDZQLQJDOLQH
RI FDVHV SDUDOOHO WR EXW ZKROO\ LQFRQVLVWHQW ZLWK DQRWKHU 7KH*RYHUQPHQWPDLQWDLQVWKDW+XPSKUH\ZDVSURSHUO\
GLVWLQFWOLQHRIFDVHVIROORZLQJWKHmVWDWXWRU\PD[LPXPlUXOH LQGLFWHGLQDFDVHLQYROYLQJPXOWLSOHFRQVSLUDFLHVDQGWKDWKH
RI 0XQR] 3DJH DQG 5HEPDQQ 7KH PRVW SURPLQHQW ZDVQRWHQWLWOHGWRDQLQVWUXFWLRQRIWKHMXU\UHTXLULQJLWWR
PHPEHUVRIWKH)ORZDOOLQHDQGWKHRQHVUHOLHGXSRQE\WKH GHWHUPLQH WKH QXPEHU RI FRQVSLUDFLHV $OWKRXJK WKH
PDMRULW\KHUHDUHWKHGHFLVLRQVLQ8QLWHG6WDWHVY5DPLUH] LQGLFWPHQW GRHV QRW VR DOOHJH WKH *RYHUQPHQW DUJXHV WKDW
)G WK&LU DQG8QLWHG6WDWHVY6WUD\KRUQ &RXQW 2QH FKDUJHG D mKXEl RU mZKHHOl FRQVSLUDF\ ZLWK
)G WK &LU ,Q 5DPLUH] DV KHUH WKH +XPSKUH\ DV GUXJ VXSSOLHU SRVLWLRQHG DW WKH FHQWHU DQG
GHIHQGDQWZDVFRQYLFWHGE\DMXU\RIFRQVSLUDF\WRGLVWULEXWH (DWRQDQGRWKHUPLGGOHPHQDVVSRNHVRIWKHZKHHO&RXQW
FRFDLQH DQG WKH 'LVWULFW &RXUW LPSRVHG D PDQGDWRU\ 7ZR DFFRUGLQJ WR WKH *RYHUQPHQW FKDUJHG D FKDLQ
PLQLPXP VHQWHQFH RI \HDUVj LPSULVRQPHQW XQGHU FRQVSLUDF\ZLWKQDUFRWLFVIORZLQJIURP+XPSKUH\WKURXJK
E $ XSRQILQGLQJWKDW L WKHGHIHQGDQWKDGDSULRU (DWRQ WR 0RUURZ DQG RWKHUV ZRUNLQJ GLUHFWO\ ZLWK (DWRQ
IHORQ\ GUXJ FRQYLFWLRQ DQG LL WKH DPRXQW RI FRFDLQH +XPSKUH\LQUHVSRQVHDUJXHVZLWKVRPHIRUFHWKDWLIKHZDV
LQYROYHGLQWKHRIIHQVHH[FHHGHGNLORJUDPV7KHSDQHOGLG LQYROYHGLQDKXEFRQVSLUDF\ZLWK(DWRQWKHQWKDWFRQVSLUDF\
QRWFLWH3DJHRU0XQR]EXWLQVWHDGIRXQG)ORZDOFRQWUROOLQJ QHFHVVDULO\LQFOXGHGDQ\FKDLQFRQVSLUDF\ZLWK(DWRQDQGKLV
VWDWLQJ WKDW m>D@JJUDYDWLQJ IDFWRUV RWKHU WKDQ D SULRU EX\HUV HJ 0RUURZ DQG WKXV WKHUH H[LVWHG RQO\ RQH
FRQYLFWLRQ WKDW LQFUHDVH WKH SHQDOW\ IURP D QRQPDQGDWRU\ FRQVSLUDF\
PLQLPXP VHQWHQFH WR D PDQGDWRU\ PLQLPXP VHQWHQFH RU
IURP D OHVVHU WR D JUHDWHU PLQLPXP VHQWHQFH DUH QRZ :H QRWH WKDW EHFDXVH +XPSKUH\ QHLWKHU UHTXHVWHG D
HOHPHQWVRIWKHFULPHWREHFKDUJHGDQGSURYHQl5DPLUH] PXOWLSOH FRQVSLUDF\ LQVWUXFWLRQ QRU REMHFWHG WR WKH GLVWULFW
FRXUWjVXVHRIDJHQHUDOLQVWUXFWLRQRQWKHODZRIFRQVSLUDF\
ZH UHYLHZ WKLV FODLP IRU SODLQ HUURU 6HH 8QLWHG 6WDWHV Y
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
0DFN)G WK&LU 7KH*RYHUQPHQWjV RFFDVLRQIRUDGRSWLQJVXFKDFRQVWUXFWLRQRI$SSUHQGLDVWKH
VXJJHVWLRQWKDW+XPSKUH\HQWHUHGLQWRDKXEFRQVSLUDF\ZLWK VHQWHQFHV LQ ERWK FDVHV YLRODWHG WKH QDUURZHU mVWDWXWRU\
(DWRQ DQG RWKHUV IRU FHUWDLQ WUDQVDFWLRQV RQO\ WR HQG WKDW PD[LPXPlYDULDQWRI$SSUHQGLjVmUXOHl
FRQVSLUDF\WRIRUPDQHZFKDLQFRQVSLUDF\WRVXSSO\GUXJV
IURP+XPSKUH\WR(DWRQWR0RUURZVHHPVGXELRXVDWEHVW 7KHUHDUHDQXPEHURIRWKHUIODZVDVZHOOLQWKHDQDO\VLV
$VZHREVHUYHGLQ8QLWHG6WDWHVY*DLWDQ$FHYHGRm>W@KH WKURXJKZKLFKWKHSDQHOLQ)ORZDOVRXJKWWRVXSSRUWLWVEURDG
NH\ WR HVWDEOLVKLQJ ZKHWKHU GLVWLQFW VXEDJUHHPHQWV DUH UHDGLQJ RI $SSUHQGL )LUVW WKURXJKRXW LWV GLVFXVVLRQ RI
HQFRPSDVVHGZLWKLQRQHVLQJOHFRQVSLUDF\LVWRGHWHUPLQH PDQGDWRU\PLQLPXPVHQWHQFHVDQGWKHUHVXOWLQJGLPLQXWLRQ
ZKHWKHUWKHGLIIHUHQWVXEJURXSVDUHDFWLQJLQIXUWKHUDQFHRI RI D VHQWHQFLQJ FRXUWjV GLVFUHWLRQ )ORZDO QHYHU RQFH
RQH RYHUDUFKLQJ SODQl )G WK &LU PHQWLRQV WKH 6XSUHPH &RXUWjV FRQWUROOLQJ VWDWHPHQW RQ
LQWHUQDOTXRWDWLRQPDUNVRPLWWHG TXRWLQJ8QLWHG6WDWHVY PDQGDWRU\ PLQLPXPV LQ 0F0LOODQ QRU WKH ODQJXDJH LQ
*KD]DOHK)G WK&LU +HUHZLWKWKH $SSUHQGLH[SUHVVO\FRQILUPLQJWKDW0F0LOODQFRQWLQXHVWR
EHQHILW RI KLQGVLJKW LW VHHPV FOHDU WKDW WKHUH ZDV RQH JRYHUQ LQ mFDVHV WKDW GR QRW LQYROYH WKH LPSRVLWLRQ RI D
RYHUDUFKLQJ SODQ IRU +XPSKUH\ WR GLVWULEXWH QDUFRWLFV WR VHQWHQFH PRUH VHYHUH WKDQ WKH VWDWXWRU\ PD[LPXP IRU WKH
(DWRQZKRZRXOGWKHQUHVHOOWKHPDWDSURILWWRWKLUGSDUWLHV RIIHQVHHVWDEOLVKHGE\WKHMXU\jVYHUGLFWl$SSUHQGL86
:KLOH D PXOWLSOH FRQVSLUDF\ LQVWUXFWLRQ OLNHO\ ZRXOG KDYH DWQ6&WDWQ1H[W)ORZDOPLVUHDGV
UHPRYHGDQ\GRXEWFRQFHUQLQJWKHQXPEHURIFRQVSLUDFLHV WKHSRVW$SSUHQGLGHFLVLRQVRIRWKHU&LUFXLWVFODLPLQJWKDW
WKDWWKHMXU\IRXQGWREHDWLVVXHZHDUHXQFRQYLQFHGWKDW WKH(LJKWK&LUFXLWKHOGLQ$JXD\R'HOJDGRVXSUDWKDWmLWLV
VXFKDQLQVWUXFWLRQZDVUHTXLUHG LPSURSHUIRUDMXGJHWRGHWHUPLQHDQ\IDFWVRWKHUWKDQDSULRU
FRQYLFWLRQWKDWZRXOGLQFUHDVHWKHSHQDOW\UDQJHEH\RQGWKDW
$OWKRXJK WKH SDUWLHV GR QRW UDLVH WKLV LVVXH DQ\ HUURU DSSOLFDEOHWRWKHFULPHIRUZKLFKWKHMXU\KDVFRQYLFWHGWKH
DSSHDUV WR OLH QRW LQ WKH MXU\jV LQVWUXFWLRQ EXW LQ WKH GHIHQGDQWl)ORZDO)GDW Q,QIDFW$JXD\R
LQGLFWPHQWjV VHHPLQJO\ GXSOLFDWLYH FRXQWV DV &RXQW 2QH 'HOJDGRH[SUHVVO\UHMHFWVDSURSRVHGUHDGLQJRI$SSUHQGLDV
FKDUJHVWKHVDPHFRQGXFW IRUWKHVDPHWLPHSHULRGDVWKDW HQFRPSDVVLQJ PDQGDWRU\ PLQLPXP VHQWHQFHV UHFRJQL]LQJ
FKDUJHG LQ &RXQW 7ZR 7KDW WKH RYHUW DFWV RI &RXQW 2QH WKDW 0F0LOODQ SURYLGHV WKH mJRYHUQLQJ FRQVWLWXWLRQDO
IRFXVRQ+XPSKUH\DQGWKHRYHUWDFWVRI&RXQW7ZRIRFXVRQ VWDQGDUGlRQWKLVLVVXH$JXD\R'HOJDGR)GDW
0RUURZGRHVQRWFKDQJHWKHIDFWWKDWERWKUHODWHWRWKHVDPH
FRQVSLUDF\ ,QGHHG WKH *RYHUQPHQWjV FRQFHVVLRQ WKDW
m>&RXQW 2QH@ ZRXOG KDYH EHHQ WKH RQO\ GUXJ FRQVSLUDF\ )XUWKHULWLVQRWHZRUWK\WKDW)ORZDOUHOLHVRQDQGTXRWHV
FRXQW DV DJDLQVW +XPSKUH\ ZHUH LW QRW IRU WKH IDFW WKDW H[WHQVLYHO\IURPsXVWLFH7KRPDVjVFRQFXUUHQFHLQ$SSUHQGL
+XPSKUH\ZDVMRLQHGDWWULDOE\'DU\O0RUURZlVWUHQJWKHQV :LWKRXWLQDQ\ZD\GHQ\LQJWKHIRUFHRIsXVWLFH7KRPDVjV
RXU VXVSLFLRQ WKDW &RXQW 7ZR ZDV VXUSOXVDJH %HFDXVH
KRZHYHU +XPSKUH\ ZRXOG KDYH EHHQ VXEMHFW WR WKH VDPH
VWDWXWRU\DQG*XLGHOLQHVSHQDOWLHVLQHLWKHUFDVHZKHWKHUKH ,Q $JXD\R'HOJDGR DV LQ WKH FDVH EHIRUH XV WKH GHIHQGDQW ZDV
ZDVFRQYLFWHGRI&RXQW2QHRU&RXQW7ZRRUERWKZHPXVW VHQWHQFHG WR D \HDU WHUP RI LPSULVRQPHQW 7KH (LJKWK &LUFXLW IRXQG
FRQFOXGHWKDWDQ\HUURULQWKHGLVWULFWFRXUWjVLQVWUXFWLRQRIWKH WKDW WKLV VHQWHQFH ZDV mSHUPLVVLEOH XQGHU $SSUHQGL DQG 0F0LOODQl
MXU\ RU LQ WKH *RYHUQPHQWjV LQGLFWPHQW RI +XPSKUH\ ZDV EHFDXVH LW IHOO mZLWKLQ WKH VWDWXWRU\ UDQJH DXWKRUL]HG E\ E &
ZLWKRXW UHIHUHQFH WR GUXJ TXDQWLW\l )G DW ,W LV LURQLF WKDW
KDUPOHVV $JXD\R'HOJDGR DV WUDQVIRUPHG WKURXJK LWV PLVUHDGLQJ E\ WKH SDQHO LQ
)ORZDO QRZ LV DQ LQGLUHFW SDUW RI WKH FKDLQ RI DXWKRULW\ LQ WKLV &LUFXLW IRU
D UHVXOW GLUHFWO\ RSSRVLWH WKDW UHDFKHG E\ WKH (LJKWK &LUFXLW XQGHU LGHQWLFDO
IDFWV
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
$SSUHQGL WKH SDQHO FRQFOXGHG WKDW LW KDG DGRSWHG WKH F'UXJ7\SH'HWHUPLQDWLRQ
SULQFLSOH VHW IRUWK LQ WKH 6XSUHPH &RXUWjV SULRU sRQHV
GHFLVLRQ QDPHO\ WKDW mDQ\ IDFW RWKHU WKDQ D SULRU +XPSKUH\DUJXHVWKDWWKHGLVWULFWFRXUWHUUHGE\IDLOLQJWR
FRQYLFWLRQ WKDWLQFUHDVHVWKHPD[LPXPSHQDOW\IRUDFULPH LQVWUXFWWKHMXU\WRUHWXUQDVSHFLDOYHUGLFWRQWKHGUXJW\SHIRU
PXVWEHFKDUJHGLQDQLQGLFWPHQWVXEPLWWHGWRDMXU\DQG ZKLFK KH ZDV FULPLQDOO\ UHVSRQVLEOH +H PDLQWDLQV WKDW
SURYHQEH\RQGDUHDVRQDEOHGRXEWl)ORZDO)GDW ZKHUHDVKHUHDGHIHQGDQWLVFKDUJHGZLWKDPXOWLSOHGUXJ
TXRWLQJsRQHV86DWQ 6&WDWQ FRQVSLUDF\IRUZKLFKWKHPD[LPXPVWDWXWRU\SHQDOW\IRUHDFK
VHH DOVR )ORZDO )G DW TXRWLQJ $SSUHQGLjV GUXJLVGLIIHUHQWDQGDMXU\UHWXUQVRQO\DJHQHUDOYHUGLFWRI
mLQFUHDVH>@EH\RQGWKHSUHVFULEHGVWDWXWRU\PD[LPXPl JXLOW\ WKDW GHIHQGDQW LV HQWLWOHG WR EH VHQWHQFHG XQGHU WKH
YDULDQW RI LWV UXOLQJ 7KH SDQHO WKHQ DGGUHVVHG 5HEPDQQ OHVVHUVWDWXWRU\SHQDOW\7KLVLVSDUWLFXODUO\VRLQKLVFDVH
DOEHLW LQ D IRRWQRWH DQG UHFRJQL]HG WKDW WKH GLVSRVLWLYH +XPSKUH\ FRQWHQGV EHFDXVH WKHUH ZDV HYLGHQFH WKDW KH
IHDWXUH RI WKDW FDVH ZDV WKH VHQWHQFLQJ FRXUWjV IDFWXDO GLVWULEXWHGRQVHSDUDWHRFFDVLRQVERWKSRZGHUFRFDLQHDQG
GHWHUPLQDWLRQE\DSUHSRQGHUDQFHRIWKHHYLGHQFHZKLFKKDG FUDFNFRFDLQH
mVLJQLILFDQWO\ LPSDFW>HG@ WKH PD[LPXP SHQDOW\l )ORZDO
)G DW Q 6HHPLQJO\ WKHQ WKH SDQHO ZDV :HUHMHFW+XPSKUH\jVDUJXPHQWWKDWKHZDVHQWLWOHGWRD
KHDGHGWRZDUGDFRQILUPDWLRQRI6L[WK&LUFXLWSUHFHGHQWWKDW VSHFLDOYHUGLFW6HH2OGHQY8QLWHG6WDWHV)G
$SSUHQGLLPSOLFDWHVRQO\VHQWHQFLQJPD[LPXPV WK&LU ILQGLQJQRHQWLWOHPHQWWRDVSHFLDOYHUGLFW
EHFDXVH 86& D JRYHUQV WKH GLVWULEXWLRQ RI
$WWKLVSRLQWKRZHYHU)ORZDOWDNHVDQXQH[SHFWHG DQG mFRQWUROOHGVXEVWDQFHVlDQGZKHUHDVKHUHWKHGUXJVDWLVVXH
XQZDUUDQWHG WXUQ $IWHU DOO WKLV GLVFXVVLRQ RI VHQWHQFLQJ DUHERWKSURVFULEHGFRQWUROOHGVXEVWDQFHV :HIXUWKHUQRWH
PD[LPXPVWKH&RXUWVWDWHGWKDW$SSUHQGLZDVYLRODWHGLQWKH WKDWKLVUHOLDQFHRQ8QLWHG6WDWHVY'DOH)G
FDVHEHIRUHLWEHFDXVHmDILQGLQJDVWRWKHZHLJKWRIWKHGUXJV WK&LU LVPLVSODFHG$VZHQRWHGLQ8QLWHG6WDWHV
GHWHUPLQHG WKH UDQJH RI SHQDOWLHV WKDW ZRXOG DSSO\ WR >WKH Y1HXKDXVVHUm'DOHJRYHUQVLQFDVHVZKHUHDMXU\jVJHQHUDO
GHIHQGDQW@l DQG EHFDXVH WKH VHQWHQFLQJ MXGJHjV YHUGLFW LV DPELJXRXV VXFK WKDW LW FDQQRW EH GHWHUPLQHG
mGHWHUPLQDWLRQ HIIHFWLYHO\ OLPLWHG WKH UDQJH RI DSSOLFDEOH ZKHWKHUWKHMXURUVXQDQLPRXVO\DJUHHGDVWRRQHRUDQRWKHURI
SHQDOWLHVlE\UHPRYLQJmDQ\GLVFUHWLRQLQWHUPVRILPSRVLQJ WKHPXOWLSOHGUXJVDOOHJHGO\LQYROYHGLQDFRQVSLUDF\l
DVKRUWHUVHQWHQFHlWKDQOLIHLPSULVRQPHQW)GDW )G WK&LU :KLOHZHUHFRJQL]HWKDWWKH
5HPDUNDEO\ WKH SDQHO FODLPHG WKDW LWV KROGLQJ MXU\jV JHQHUDO YHUGLFW LQ WKLV FDVH ZDV DPELJXRXV ZH
mUHDIILUP>HG@WKHORJLFRI5HEPDQQ DIDFWWKDWLQFUHDVHVWKH FRQFOXGHWKDWDQ\HUURUZDVKDUPOHVV8QOLNH+XPSKUH\WKH
DSSOLFDEOHVWDWXWRU\SHQDOW\UDQJHIRUDSDUWLFXODUFULPHPXVW GHIHQGDQWV LQ 'DOH DQG 1HXKDXVVHU ZHUH FKDUJHG ZLWK
EHSURYHGEH\RQGDUHDVRQDEOHGRXEWWRWKHWULHURIIDFWl FRQVSLULQJ WR GLVWULEXWH FRFDLQH RU FUDFN FRFDLQH DQG
)G DW Q $V GLVFXVVHG HDUOLHU KRZHYHU QHLWKHU PDULMXDQDFRQWUROOHGVXEVWDQFHVVXEMHFWWRGLIIHUHQWVWDWXWRU\
5HEPDQQjVmORJLFlQRUPRUHLPSRUWDQWO\LWVH[SUHVVKROGLQJ SURYLVLRQV DQG IRU ZKLFK GLIIHUHQW SHQDOW\ UDQJHV DUH
SURYLGHVDQ\DXWKRULW\IRUDEURDGmVHQWHQFLQJUDQJHlYLHZRI DYDLODEOH+HUHVLJQLILFDQWO\UHJDUGOHVVRIZKHWKHUDMXU\
$SSUHQGL,QIDFWQHLWKHU)ORZDOQRU5HEPDQQSURYLGHGWKH GHWHUPLQHG WKDW +XPSKUH\ FRQVSLUHG WR GLVWULEXWH FUDFN
FRFDLQHSRZGHUFRFDLQHRUERWKKHVWLOOZRXOGKDYHEHHQ
)ORZDO PLVVWDWHV WKH IDFWV LQ 5HEPDQQ KRZHYHU FODLPLQJ WKDW WKH
GHIHQGDQW LQ WKDW FDVH ZDV VHQWHQFHG WR OLIH LPSULVRQPHQW ,Q IDFW DV
QRWHG HDUOLHU WKH FKDOOHQJHG VHQWHQFH LQ 5HEPDQQ ZDV \HDUV DQG
PRQWKV VWLOO EH\RQG WKH GHIDXOW VWDWXWRU\ PD[LPXP RI \HDUV
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
VXEMHFWWRVHQWHQFLQJXQGHU E & DQGVXEMHFWWRWKH WKHSULRUUXOLQJVLQ&RUUDGRDQG5HEPDQQnKDGPDQLIHVWO\
VDPHVWDWXWRU\SHQDOW\ HVWDEOLVKHGDVWKHODZRIWKLV&LUFXLWWKDW$SSUHQGLDGGUHVVHV
RQO\VHQWHQFLQJPD[LPXPV:KDWLVPRUHWKHPDMRULW\LV
''UXJ4XDQWLW\'HWHUPLQDWLRQ$SSUHQGL DEOHWRLGHQWLI\DOLQHRI6L[WK&LUFXLWFDVHVLQVXSSRUWRILWV
FRQFOXVLRQ 7R IXOO\ DSSUHFLDWH WKH KDYRF WKHVH ODWWHU
:LWKUHVSHFWWRMXU\LQVWUXFWLRQV+XPSKUH\PDNHVDIRXUWK GHFLVLRQVKDYHZUHDNHGZLWKWKHSULQFLSOHRIVWDUHGHFLVLV
DUJXPHQW WKDW WKH GLVWULFW FRXUW YLRODWHG WKH 6XSUHPH DQGWKHFKDRWLFVWDWHRIRXUSRVW$SSUHQGLODZLQWKHZDNHRI
&RXUWjV GHFLVLRQ LQ $SSUHQGL Y 1HZ sHUVH\ E\ IDLOLQJ WR WKHVH UXOLQJV D EULHI KLVWRU\ RI WKH ZD\ZDUG MRXUQH\ LV LQ
LQVWUXFWWKHMXU\WRILQGGUXJTXDQWLWLHVEH\RQGDUHDVRQDEOH RUGHU
GRXEW%HFDXVHRIWKHFRPSOH[LW\RIWKLVLVVXHDQGEHFDXVH
ZH XOWLPDWHO\ ILQG WKLV FODLP PHULWRULRXV ZH UHYLHZ WKLV 7KHWURXEOHEHJDQLQ8QLWHG6WDWHVY)ORZDO)G
DVVLJQPHQWRIHUURUVHSDUDWHO\ WK&LU ZKLFKZDVGHFLGHGDIWHU3DJHDQG0XQR]EXW
PHQWLRQVQHLWKHU,Q)ORZDOWKHGHIHQGDQWZDVFRQYLFWHGE\
6WDQGDUGRI5HYLHZ DMXU\RISRVVHVVLRQZLWKLQWHQWWRGLVWULEXWHFRFDLQHDQGWKH
'LVWULFW&RXUWIRXQGDWVHQWHQFLQJWKDWWKLVRIIHQVHLQYROYHG
2XUILUVWWDVNLQHYDOXDWLQJ+XPSKUH\jV$SSUHQGLFKDOOHQJH PRUH WKDQ NLORJUDPV RI FRFDLQH WULJJHULQJ WKH HOHYDWHG
LVWRGHWHUPLQHWKHDSSURSULDWHVWDQGDUGRIUHYLHZ+XPSKUH\ VHQWHQFLQJUDQJHIRXQGDW D $ 0RUHRYHULQOLJKW
ZDVVHQWHQFHGLQ SULRUWR$SSUHQGLDQGRQO\PDGHD RI WKH GHIHQGDQWjV WZR SULRU IHORQ\ FRQYLFWLRQV IRU GUXJ
IRUPDO $SSUHQGL REMHFWLRQ LQ KLV DSSHOODWH EULHI LQ RIIHQVHV KH ZDV VXEMHFW WR PDQGDWRU\ OLIH LPSULVRQPHQW
%HFDXVH KLV DSSHDO ZDV SHQGLQJ DW WKH WLPH$SSUHQGL ZDV XQGHU D $ DQG WKH 'LVWULFW &RXUW LPSRVHG WKLV
GHFLGHG+XPSKUH\LVHQWLWOHGWRUHWURDFWLYHDSSOLFDWLRQRID VHQWHQFH7KHSDQHOQHHGQRWKDYHORRNHGDQ\IXUWKHUWKDQ
QHZUXOHRIFULPLQDOSURVHFXWLRQ*ULIILWKY.HQWXFN\ 3DJHnRUHYHQ5HEPDQQZKLFK)ORZDOGRHVFLWHnWRILQG
86 :KHUHDGHIHQGDQWUDLVHVDFRJQL]DEOH WKDW WKLV VHQWHQFH YLRODWHG $SSUHQGL ,Q SDUWLFXODU WKH
$SSUHQGL FKDOOHQJH LQ GLVWULFW FRXUW DQG UDLVHV LW DJDLQ RQ GHIHQGDQWjV OLIH VHQWHQFH H[FHHGHG WKH PD[LPXP \HDU
DSSHDOZHUHYLHZWKH$SSUHQGLLVVXHGHQRYR6HH8QLWHG WHUP RI LPSULVRQPHQW KH IDFHG XQGHU E & DV D
6WDWHVY6WUD\KRUQ)G WK&LU ,I SULRUGUXJIHORQZKRVHODWHVWRIIHQVHDVGHWHUPLQHGVROHO\E\
KRZHYHU D GHIHQGDQW IDLOV WR UDLVH WKH LVVXH LQ WKH GLVWULFW WKH MXU\jV YHUGLFW LQYROYHG DQ LQGHWHUPLQDWH DPRXQW RI
FRXUW RU DEDQGRQV LW RQ DSSHDO ZH UHYLHZ IRU SODLQ HUURU FRFDLQH
RQO\6HH8QLWHG6WDWHVY*UDKDP)G WK
&LU KROGLQJWKDWDFRXUWPD\QRWLFH$SSUHQGLHUURUV 1RWZLWKVWDQGLQJWKLVUHDGLO\GLVFHUQLEOHRXWFRPHXQGHUWKLV
VXDVSRQWHXQGHUSODLQHUURUUHYLHZHYHQLIWKHLVVXHLVQRW &LUFXLWjVRZQSRVW$SSUHQGLSUHFHGHQWVWKHSDQHOLQ)ORZDO
GHHPHGLWQHFHVVDU\WRLQWHUSUHW$SSUHQGLDQHZ,WVDQDO\VLV
XQIRUWXQDWHO\LVDQ\WKLQJEXWFOHDU)LUVWXSRQ UHYLHZLQJ
7KLV FRQFOXVLRQ DOVR UHQGHUV PRRW +XPSKUH\jV RWKHU DOOHJDWLRQ WKDW
WKH GLVWULFW FRXUW GLG QRW ILQG E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW KH 'HVSLWH WKLV $SSUHQGL YLRODWLRQ WKH *RYHUQPHQW DUJXHG WKDW WKH
VROG FUDFN DQG QRW VRPH RWKHU W\SH RI FRFDLQH $V GLVFXVVHG LQ 3DUW ,,,' GHIHQGDQWjV VHQWHQFH FRXOG EH XSKHOG DV ZLWKLQ WKH UDQJH VHW IRUWK LQ
EHORZ EHFDXVH +XPSKUH\jV VHQWHQFH YLRODWHV $SSUHQGL XSRQ UHPDQG E % WHQ \HDUV WR OLIH LQ OLJKW RI WKH GHIHQGDQWjV DGPLVVLRQ WR
+XPSKUH\ FDQQRW EH VHQWHQFHG XQGHU DQ\ SURYLVLRQ RWKHU WKDQ D TXDQWLW\ RI FRFDLQH MXVW XQGHU NLORJUDPV 7KH SDQHO LQ )ORZDO UHMHFWHG
E & ZKLFK GRHV QRW UHTXLUH D IDFWXDO ILQGLQJ RI DQ\ SDUWLFXODU WKLV DUJXPHQW ZLWKRXW HYHU VWDWLQJ WKH VWDQGDUG RI UHYLHZ WKDW JRYHUQHG
VFKHGXOH , RU ,, FRQWUROOHG VXEVWDQFH LWV FRQVLGHUDWLRQ 7KLV DGGLWLRQDO GHIHFW LQ )ORZDO LV GLVFXVVHG EHORZ
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
FKDUJHG'HIHQGDQW$SSHOODQW0RQWHO+XPSKUH\DQGVHYHUDO UDLVHGRQDSSHDOE\WKHGHIHQGDQW VHHDOVR8QLWHG6WDWHVY
FR'HIHQGDQWVZLWKWKUHHFRXQWVRIFRQVSLULQJWRGLVWULEXWH .LQJ)G WK&LU
DQGWRSRVVHVVZLWKLQWHQWWRGLVWULEXWHDmGHWHFWDEOHDPRXQWl
RIFRFDLQHDQGRUFRFDLQHEDVH FUDFN VHHs$DW ,Q KLV ZULWWHQ REMHFWLRQV WR WKH SUHVHQWHQFH UHSRUW
DVZHOODVRWKHURIIHQVHV7KHMXU\UHWXUQHGDJXLOW\ +XPSKUH\jVODZ\HUVWDWHG
YHUGLFWRQWZRRIWKHWKUHHFRQVSLUDF\FRXQWVEXWGLGQRW
GHWHUPLQHWKHTXDQWLWLHVRIGUXJVFKDUJHDEOHWR'HIHQGDQWLQ 7R ILQG +XPSKUH\ JXLOW\ RI FRQVSLUDF\ DOO WKH MXU\
FRQQHFWLRQ ZLWK WKHVH GUXJ RIIHQVHV ,QVWHDG WKH 'LVWULFW QHHGHGWRILQGZDVWKDWWKHUHZDVDQDJUHHPHQWDVWRDW
&RXUW GHWHUPLQHG DW VHQWHQFLQJ WKDW 'HIHQGDQW ZDV OHDVWRQHVDOHRIFRFDLQH$OWKRXJKWKHMXU\IRXQGWKDWD
DFFRXQWDEOH IRU DW OHDVW EXW OHVV WKDQ NLORJUDPV RI FRQVSLUDF\H[LVWHGWKHUHLVQREDVLVWRJDWKHUIURPWKH
FRFDLQHUHVXOWLQJLQDEDVHRIIHQVHOHYHORIXQGHUWKH86 MXU\jV YHUGLFW WKDW LW EHOLHYHG (DWRQjV NLORJUDP
6HQWHQFLQJ *XLGHOLQHV DQG WULJJHULQJ WKH HQKDQFHG HVWLPDWH WR EH DFFXUDWH RU WKDW LW HYHQ EHOLHYHG WKDW
VHQWHQFLQJUDQJHRI\HDUVWROLIHLPSULVRQPHQWXQGHU PXOWLSOH VDOHV EHWZHHQ (DWRQ DQG +XPSKUH\ DFWXDOO\
86& E $ IRU GUXJ RIIHQVHV LQYROYLQJ WRRN SODFH 7KHUHIRUH DV D UHVXOW RI WKH ODFN RI
NLORJUDPV RU PRUH RI FRFDLQH ,Q WKH HQG KRZHYHU VXIILFLHQWFUHGLELOLW\UHJDUGLQJ(DWRQjVWHVWLPRQ\DVWR
'HIHQGDQW ZDV VHQWHQFHG WR D WHUP RI \HDUVj WKHDPRXQWRIFRFDLQHWUDQVDFWHG'HIHQGDQW+XPSKUH\
LPSULVRQPHQWZKLFKDVQRWHGLQ3DJHGRHVQRWH[FHHGWKH VXJJHVWVWKH&RXUWUHMHFWWKHUHFRPPHQGDWLRQVWDWHGLQ
\HDU PD[LPXP VHW IRUWK LQ E & IRU GUXJ WKH 365 DV WR WKH UHOHYDQW FRQGXFW LQ &RXQW ,, DQG
RIIHQVHV LQYROYLQJ DQ LQGHWHUPLQDWH DPRXQW RI FRFDLQH LQVWHDGDGRSWWKHPLQLPXPDPRXQWZKLFKWKHMXU\PXVW
8QGHU3DJHDQG0XQR]WKHQ'HIHQGDQWjVVHQWHQFHGRHVQRW KDYHQHFHVVDULO\IRXQGWRVXSSRUWLWVYHUGLFWRIJXLOW\
YLRODWHWKHUXOHRI$SSUHQGL VSHFLILFDOO\NLORJUDPRIFRFDLQHZKLFKFRQVWLWXWHV
WKHORZHVWDPRXQWRIFRFDLQHSXUFKDVHGE\(DWRQGXULQJ
7KH PDMRULW\ UHFRJQL]HV DV PXFK DOEHLW ZLWKRXW FLWLQJ DJLYHQVDOH
3DJH3UREOHPDWLFDOO\KRZHYHUWKHPDMRULW\JRHVRQWRKROG
WKDW 'HIHQGDQWjV VHQWHQFH YLRODWHV D VHFRQG mUXOHl RI s$DW
$SSUHQGL RQH ZKLFK LPSOLFDWHV VHQWHQFLQJ UDQJHV HYHQ
WKRXJKRXUGHFLVLRQVLQ3DJHDQG0XQR]nQRWWRPHQWLRQ +HFRQWLQXHVLQWKHZULWWHQREMHFWLRQVVWDWLQJ
$VZLWK(DWRQWKHRQO\WKLQJZHFDQEHVXUHRIZLWK
UHJDUGVWR&URPLW\jVWHVWLPRQ\LVWKDWWKHMXU\IRXQGWKDW
7KH WKLUG FKDUJH RI FRQVSLUDF\ ZDV GLVPLVVHG EHIRUH WULDO
DQDJUHHPHQWGLGH[LVWWRSXUFKDVHFRFDLQH$VWKHUHLV
LQVXIILFLHQW HYLGHQFH WR VXSSRUW DQ DPRXQW RI FRFDLQH
7KLV UDQJH EHFRPHV \HDUV WR OLIH LPSULVRQPHQW LI DV LV WKH FDVH
KLJKHU WKDQ WKDW ZKLFK WKH MXU\ PXVW QHFHVVDULO\ KDYH
KHUH D GHIHQGDQW SUHYLRXVO\ KDV EHHQ FRQYLFWHG RI D IHORQ\ GUXJ RIIHQVH IRXQG WR VXSSRUW +XPSKUH\jV FRQYLFWLRQ 'HIHQGDQW
6HH 86& E $ 7KH PDMRULW\ KROGV DQG , DJUHH WKDW UHTXHVWVWKDWWKH&RXUWUHMHFWWKH365jVUHFRPPHQGDWLRQ
'HIHQGDQWjV FKDOOHQJH WR KLV SULRU FRQYLFWLRQ LV ZLWKRXW PHULW UHJDUGLQJ UHOHYDQW FRQGXFW DQG WKDW WKH &RXUW LQVWHDG
KROG+XPSKUH\DFFRXQWDEOHLQ&RXQWIRUWKHVDOHRI.
,Q IDFW WKLV VWDWXWRU\ PD[LPXP LQFUHDVHV WR \HDUV ZKHUH DV KHUH NLORJUDP RI SRZGHU FRFDLQH o D TXDQWLW\ ZKLFK
WKH GHIHQGDQW KDV D SULRU FRQYLFWLRQ IRU D IHORQ\ GUXJ RIIHQVH 6HH
UHSUHVHQWV WKH PLQLPXP DPRXQW ZKLFK &URPLW\
86& E & 7KXV 'HIHQGDQWjV \HDU VHQWHQFH DFWXDOO\ LV
ZHOO EHORZ WKH VWDWXWRU\ PD[LPXP HYHQ ZKHQ GUXJ TXDQWLWLHV DUH RPLWWHG
LQGLFDWHGKHKDGSXUFKDVHGIURP+XPSKUH\
IURP WKH GHWHUPLQDWLRQ
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
s$DW >,@Q WKH SUHVHQW FDVH GHIHQGDQWjV VHQWHQFH LV LQYDOLG
XQGHU$SSUHQGLRQO\LIWKHGLVWULFWFRXUWjVILQGLQJWKDW
$WWKHVHQWHQFLQJFROORTX\+XPSKUH\jVDWWRUQH\UHLWHUDWHG GHIHQGDQW FRQVSLUHG WR GLVWULEXWH PHWKDPSKHWDPLQH
KLVREMHFWLRQVDQGPDGHWKHIROORZLQJUHTXHVW UHVXOWHGLQGHIHQGDQWUHFHLYLQJDVHQWHQFHLQH[FHVVRI
WKH PD[LPXP VWDWXWRU\ SHQDOW\ IRU FRQVSLUDF\ WR
,IWKH&RXUWILQGVDVZHZRXOGDVNWKH&RXUWWRGR GLVWULEXWH FRFDLQH WKH FULPH WR ZKLFK GHIHQGDQW SOHG
WKDWWKHWRWDOUHOHYDQWFRQGXFWLVOHVVWKDQILYHNLORVLW JXLOW\
ZRXOGEHDWHQ\HDUPDQGDWRU\VHQWHQFHDQG,ZRXOGDVN
WKH&RXUWWRFRQVLGHUWKDWWKLVLVDoWKLVLVWHQ\HDUVRID 7KLVFDVHLQYROYHVJUDPVRIFRFDLQHDQG
PDQjV OLIH SHUKDSV PRUH XQGHU WKH JXLGHOLQH JUDPV RI HLWKHU DPSKHWDPLQH R>U@ PHWKDPSKHWDPLQH
FDOFXODWLRQVPD\EHDVPXFKDV\HDUVRIDPDQjVOLIH 7LWOH 86& SURYLGHV WKDW WKH SHQDOW\ IRU
WKDWjV JRLQJ WR EH GHFLGHG E\ WKH WHVWLPRQ\ RI WKHVH FRQVSLUDF\WRGLVWULEXWHDQ\GUXJZLOOEHLGHQWLFDOWRWKH
LQGLYLGXDOV >(DWRQ DQG &URPLW\@ $QG WKH WHVWLPRQ\ SHQDOWLHV IRU GLVWULEXWLRQ 8QGHU 86&
VLPSO\ZKLOHLWPD\KDYHEHHQHQRXJKLWPD\KDYHEHHQ E & WKHVWDWXWRU\SHQDOW\IRUGLVWULEXWLRQRI
HQRXJKWRDMXU\WRVD\FOHDUO\WKHUHZDVDQDJUHHPHQW JUDPVRIFRFDLQHUDQJHVIURP]HURWRWZHQW\\HDUV
SHUKDSV DQ RQJRLQJ DJUHHPHQW IRU D FHUWDLQ SHULRG RI LPSULVRQPHQW7KHVWDWXWRU\SHQDOW\IRUGLVWULEXWLRQRI
WLPH EHWZHHQ 0U +XPSKUH\ DQG 0U &URPLW\ LQ RQH JUDPV RI PHWKDPSKHWDPLQH XQGHU 86&
FRXQWDQG0U+XPSKUH\DQG0U(DWRQLQDQRWKHUFRXQW E % LVILYHWRIRUW\\HDUVLPSULVRQPHQW7KH
WR GLVWULEXWH FRFDLQH WKDWjV DOO WKH MXU\ KDG WR EHOLHYH VWDWXWRU\ SHQDOW\ IRU GLVWULEXWLRQ RI JUDPV RI
EH\RQGDUHDVRQDEOHGRXEWZDVWKDWWKHUHZDVVXFKDQ DPSKHWDPLQHD6FKHGXOH,,GUXJLV]HURWRWZHQW\\HDUV
DJUHHPHQW>@ >7@KH\ GLGQjW HYHQ KDYH WR EHOLHYH D XQGHU86& E & 'HIHQGDQWSOHGJXLOW\
WUDQVDFWLRQWRRNSODFH WRFRQVSLUDF\WRGHOLYHUWKHVSHFLILHGDPRXQWRIFRFDLQH
7KH RQO\ FRRSHUDWLRQ >VLF@ WKDW H[LVWHG IRU WKHLU )RUWKHFRFDLQHDORQHWKHVWDWXWHDXWKRUL]HVDPD[LPXP
WHVWLPRQ\ZHUHFHUWDLQWDSHVDQGFHUWDLQSKRQHFDOOVEXW VHQWHQFH RI WZHQW\ \HDUV 'HIHQGDQW ZDV DFWXDOO\
WKH\GRQjWFRUURERUDWHWKLVZKROHDPRXQWRIGUXJVWKH VHQWHQFHGWRVHUYHPRQWKVDSSUR[LPDWHO\WHQ\HDUV
*RYHUQPHQWjVWU\LQJWRSXWLQWRSOD\KHUHDWVHQWHQFLQJ 'HIHQGDQWjV VHQWHQFH GLG QRW H[FHHG WKH VWDWXWRU\
PD[LPXPIRUWKHSRUWLRQRIWKHLQGLFWPHQWWRZKLFKKH
$QG , ZRXOG DVN WKH &RXUW WKDW o WR DSSO\ SHUKDSV D YDOLGO\SOHGJXLOW\7KHVHQWHQFLQJMXGJHjVGHWHUPLQDWLRQ
KLJKHU VWDQGDUG WR WKH W\SH RI UHOHYDQW FRQGXFW E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW GHIHQGDQW
ZKDWHYHU\RXZDQWWRFDOOLWLQWKLVFDVH$QGLILW FRQVSLUHG WR GLVWULEXWH PHWKDPSKHWDPLQH UDWKHU WKDQ
GRHV WKDW LW ZLOO ILQG WKH *RYHUQPHQWjV QRW PHW LWV DPSKHWDPLQH GLG QRW LQFUHDVH KLV SHQDOW\ EH\RQG WKH
EXUGHQ DQG LW ZLOO LPSRVH D PDQGDWRU\ PLQLPXP SUHVFULEHG VWDWXWRU\ PD[LPXP IRU FRQVSLUDF\ WR
VHQWHQFHEDVHGRQDTXDQWLW\RIOHVVWKDQILYHNLORVDQGD GLVWULEXWHJUDPVRIFRFDLQH7KXVWKH$SSUHQGL
JXLGHOLQHVHQWHQFHEDVHGXSRQWKDWVDPHTXDQWLW\ UXOLQJ LV QRW DSSOLFDEOH KHUH DQG GRHV QRW LPSDFW
GHIHQGDQWjVVHQWHQFH
s$DW
)GDW HPSKDVLVDGGHG IRRWQRWHRPLWWHG
+XPSKUH\ FRXOG QRW KDYH NQRZQ DW WKH WLPH RI KLV
VHQWHQFLQJ WKDW $SSUHQGL ZRXOG EH GHFLGHG D \HDU ODWHU 7KHDERYHTXRWHGSDVVDJHVIURP3DJHDQG0XQR]FRXOGEH
1HYHUWKHOHVV+XPSKUH\REMHFWHGDWWKHVHQWHQFLQJKHDULQJWR UHSHDWHGYHUEDWLPLQWKLVFDVH7KHVXSHUVHGLQJLQGLFWPHQW
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
RI GUXJV IRU ZKLFK HDFK GHIHQGDQW ZDV DFFRXQWDEOH ERWKWKHDPRXQWRIGUXJVDWWULEXWHGWRKLPDQGWKHVWDQGDUGRI
%DVHG RQ WKLV GUXJ TXDQWLW\ GHWHUPLQDWLRQ HDFK SURRI UHTXLUHG WR VXSSRUW WKDW DPRXQW +H UHLWHUDWHG WKLV
GHIHQGDQW ZDV VHQWHQFHG WR D WHUP RI LPSULVRQPHQW REMHFWLRQDVDIRUPDO$SSUHQGLREMHFWLRQRQDSSHDO
H[FHHGLQJ WKH \HDU PD[LPXP VHW IRUWK LQ
E & +RZHYHUDVLQVWUXFWHGLQ$SSUHQGLD 7KH GLVVHQW GLVPLVVHV WKHVH SDVVDJHV IURP WKH UHFRUG DV
GHIHQGDQWPD\QRWEHH[SRVHGWRDJUHDWHUSXQLVKPHQW PHUH mIDFWXDO FKDOOHQJHVl WR WKH GUXJ TXDQWLW\
WKDQWKDWDXWKRUL]HGE\WKHMXU\jVJXLOW\YHUGLFW7KHMXU\ UHFRPPHQGDWLRQV LQ WKH SUHVHQWHQFH UHSRUW 7KH GLVVHQW
PHUHO\IRXQGWKDWGHIHQGDQWVFRQVSLUHGWRGLVWULEXWHDQG FKDUJHV WKDW DEVHQW VRPH VSHFLILF FKDOOHQJH WR WKH GLVWULFW
SRVVHVVWRGLVWULEXWHVRPHXQGHWHUPLQHGDPRXQWRIFUDFN FRXUWjVDXWKRULW\WRILQGGUXJDPRXQWVE\DSUHSRQGHUDQFHRI
FRFDLQH$VVXFKGHIHQGDQWVFDQQRWEHVXEMHFWHGWRWKH WKHHYLGHQFHZHPD\UHYLHZ+XPSKUH\jV$SSUHQGLFKDOOHQJH
KLJKHUSHQDOWLHVXQGHU D $ RU % 5DWKHUWKH IRUSODLQHUURURQO\
PD[LPXPVHQWHQFHWKDWPD\EHLPSRVHGRQWKLVFRXQWLV
\HDUVSXUVXDQWWR E & :HGLVDJUHH7KHSUHVHUYDWLRQRIDFRQVWLWXWLRQDOULJKWLV
QRW D SDUORU JDPH 'HIHQGDQWV VKRXOG QRW EH UHTXLUHG RQ
)GDW%HFDXVHHDFKRIWKHGHIHQGDQWVLQ3DJHZDV SHQDOW\RIIRUIHLWXUHWRJXHVVQRWRQO\ZKLFKVXEVWDQWLDOULJKW
VHQWHQFHGWRDWHUPRILPSULVRQPHQWLQH[FHVVRI\HDUVZH ZLOOEHLPSDFWHGE\DSHQGLQJ6XSUHPH&RXUWGHFLVLRQEXW
KHOGWKDW$SSUHQGLKDGEHHQYLRODWHG DOVRZKLFK SUHFLVHVHTXHQFHRIZRUGVZLOOEHQHFHVVDU\WR
SUHVHUYHWKDWULJKWRQDSSHDO1HLWKHUGRZHILQGWKH)HGHUDO
:HDSSOLHGWKLVVDPHUXOHDIRXUWKWLPHLQ8QLWHG6WDWHVY 5XOHVRI&ULPLQDO3URFHGXUHRUSUHFHGHQWWRUHTXLUHVXFKD
0XQR] )G WK &LU D FDVH ZKHUH LQ VWDQGDUG
FRQWUDVWWR3DJHWKHGHIHQGDQWjVVHQWHQFHGLGQRWH[FHHGWKH
GHIDXOW\HDUPD[LPXPXQGHU E & 'HIHQGDQW 5XOHRIWKH)HGHUDO5XOHVRI&ULPLQDO3URFHGXUHVWDWHV
=DIHULQR0XQR]SOHGJXLOW\WRDVLQJOHFRXQWRIFRQVSLUDF\WR
GLVWULEXWH FRFDLQH DQG PHWKDPSKHWDPLQH EXW mZLWK WKH ([FHSWLRQV WR UXOLQJV RU RUGHUV RI WKH FRXUW DUH
H[SOLFLW UHVHUYDWLRQ WKDW KH GLG QRW DGPLW WR FRQVSLULQJ WR XQQHFHVVDU\DQGIRUDOOSXUSRVHVIRUZKLFKDQH[FHSWLRQ
GHOLYHUPHWKDPSKHWDPLQHEXWRQO\DGPLWWHGWRWKHFRFDLQH KDVKHUHWRIRUHEHHQQHFHVVDU\LWLVVXIILFLHQWWKDWDSDUW\
DQGDPSKHWDPLQHWKDWZDVDFWXDOO\GHOLYHUHGl0XQR] DW WKH WLPHWKHUXOLQJRURUGHURIWKHFRXUWLVPDGHRU
)GDW7KH'LVWULFW&RXUWWKHQLPSRVHGDPRQWK VRXJKWPDNHVNQRZQWRWKHFRXUWWKHDFWLRQZKLFKWKDW
VHQWHQFHmEDVHGLQSDUWRQKLVFRQFOXVLRQWKDWGHIHQGDQWGLG SDUW\GHVLUHVWKHFRXUWWRWDNHRUWKDWSDUW\jVREMHFWLRQWR
FRQVSLUHWRGLVWULEXWHPHWKDPSKHWDPLQHl)GDW WKHDFWLRQRIWKHFRXUWDQGWKHJURXQGVWKHUHIRU EXWLID
:HUHFRJQL]HGWKDWWKLVGHWHUPLQDWLRQE\DSUHSRQGHUDQFHRI SDUW\KDVQRRSSRUWXQLW\WRREMHFWWRDUXOLQJRURUGHUWKH
WKH HYLGHQFH WULJJHUHG DQ HQKDQFHG VWDWXWRU\ VHQWHQFLQJ
UDQJH ERWK PLQLPXP DQG PD[LPXP EXW QHYHUWKHOHVV
IROORZHG&RUUDGRLQFRQFOXGLQJWKDWWKHUXOHRI$SSUHQGLKDG
QRWEHHQYLRODWHG ,QGHHG ZH EHOLHYH WRR KLJK D KXUGOH IRU GH QRYR UHYLHZ ZLOO UDLVH
WKH VSHFWHU RI GHIHQGDQWjV FRXQVHO mPDNLQJ D ORQJ DQG YLUWXDOO\ XVHOHVV
ODXQGU\ OLVW RI REMHFWLRQV WR UXOLQJV WKDW ZHUH SODLQO\ VXSSRUWHG E\
H[LVWLQJ SUHFHGHQWl sRKQVRQ Y 8QLWHG 6WDWHV 86
1HYHUWKHOHVV DV GLVFXVVHG EHORZ ZH XSKHOG WKH VHQWHQFHV RI WKUHH LQ RUGHU WR SUHVHUYH WKH LVVXH IRU DSSHDO $OWKRXJK WKH sRKQVRQ GHFLVLRQ
RI WKH IRXU GHIHQGDQWV XQGHU WKH mSODLQ HUURUl VWDQGDUG RI UHYLHZ mVLQFH FRQFHUQHG WKH WLPLQJ RI SODLQ HUURU ZKHWKHU DQ HUURU PXVW EH SODLQ DW WKH
DEVHQW WKH >$SSUHQGL @ HUURU WKHLU VHQWHQFHV ZRXOG KDYH EHHQ WKH VDPH DV WLPH RI WULDO RU DW WKH WLPH RI DSSHOODWH FRQVLGHUDWLRQ ZH EHOLHYH WKDW
WKRVH ZKLFK ZHUH LPSRVHGl )G DW VLPLODU FRQFHUQV DULVH LQ WKH SUHVHUYDWLRQ RI GH QRYR UHYLHZ
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
DEVHQFHRIDQREMHFWLRQGRHVQRWWKHUHDIWHUSUHMXGLFHWKDW VHQWHQFLQJUDQJHRI\HDUVWROLIHDQGDQDFWXDOVHQWHQFHRI
SDUW\ \HDUVDQGPRQWKV8SRQUHYLHZLQJ$SSUHQGLZHVWDWHG
WKDWm>R@XUGXW\LQOLJKWRIWKLVFOHDUGLFWDWHIURPWKH&RXUW
:HDJUHHZLWKWKH6HFRQG&LUFXLWWKDWm>7@RFRPPXQLFDWH LVWRH[DPLQHZKHWKHUWKHVHQWHQFLQJIDFWRULQWKLVFDVHZDV
WKH µQDWXUHj RI D FODLP D SDUW\ GRHV QRW KDYH WR SUHVHQW D IDFWXDO GHWHUPLQDWLRQ DQG ZKHWKHU WKDW GHWHUPLQDWLRQ
SUHFLVHRUGHWDLOHGOHJDODUJXPHQWVl8QLWHG6WDWHVY6SUHL LQFUHDVHGWKHPD[LPXPSHQDOW\IRUWKHFULPHFKDUJHGLQWKH
)G G&LU LQWHUQDOTXRWDWLRQPDUNV LQGLFWPHQWl)GDW%HFDXVHWKH'LVWULFW&RXUWjV
RPLWWHG $OOWKDWLVUHTXLUHGLVWKDWWKHSDUW\mPDNH>@NQRZQ IDFWXDOILQGLQJDWVHQWHQFLQJKDGmLQFUHDVH>G@WKHPD[LPXP
WRWKHFRXUWWKHDFWLRQZKLFKWKDWSDUW\GHVLUHVWKHFRXUWWR SHQDOW\WRZKLFK>WKHGHIHQGDQW@ZDVH[SRVHGlZHKHOGWKDW
WDNHRUWKDWSDUW\jVREMHFWLRQWRWKHDFWLRQRIWKHFRXUWDQGWKH WKLVZDVDQmHOHPHQW>@RIWKHRIIHQVHZKLFKPXVWEHSURYHQ
JURXQGV WKHUHIRUl )HG 5 &ULP 3 FI &RRO Y 8QLWHG EH\RQG D UHDVRQDEOH GRXEWl DQG ZH UHPDQGHG IRU D
6WDWHV 86Q QRWLQJWKDWDGHIHQVH UHGHWHUPLQDWLRQRIWKLVTXHVWLRQXQGHUWKHSURSHUVWDQGDUGRI
REMHFWLRQWRMXU\LQVWUXFWLRQVZKLOHQRWDmPRGHORIFODULW\l SURRI)GDW
ZDVVXIILFLHQWWRSUHVHUYHWKHREMHFWLRQRQDSSHDO 7RROHY
%D[WHU +HDOWKFDUH &RUS )G WK &LU 0RUH WR WKH SRLQW RI WKH SUHVHQW DSSHDO ZH UHDFKHG WKH
KROGLQJ WKDW DQ REMHFWLRQ DV WR mIRXQGDWLRQl RI VDPHFRQFOXVLRQLQ8QLWHG6WDWHVY3DJH)G
HYLGHQFH VXIILFLHQW WR SUHVHUYH D 'DXEHUW REMHFWLRQ RQ WK &LU D FDVH ZKLFK OLNH WKLV RQH LQYROYHG D
DSSHDO FKDOOHQJH WR WKH VHQWHQFLQJ FRXUWjV GHWHUPLQDWLRQ RI GUXJ
TXDQWLW\E\DSUHSRQGHUDQFHRIWKHHYLGHQFHIROORZLQJDMXU\
+XPSKUH\jVDWWRUQH\PD\KDYHFRQFHGHGWKDWXQGHUWKHQ FRQYLFWLRQ RQ D GUXJ FRQVSLUDF\ FKDUJH $IWHU H[DPLQLQJ
FXUUHQWODZLWZDVZLWKLQWKHGLVWULFWFRXUWjVDXWKRULW\WRILQG $SSUHQGLDQG5HEPDQQZHVWDWHG
GUXJ TXDQWLWLHV XVLQJ WKH SUHSRQGHUDQFH RI WKH HYLGHQFH
VWDQGDUG QHYHUWKHOHVV LW LV DSSDUHQW IURP WKH UHFRUG WKDW 7KH&RXUWILQGVWKHSULQFLSOHVVHW IRUWKLQ$SSUHQGL
+XPSKUH\jV DWWRUQH\ FKDOOHQJHG WKH SURSULHW\ RI WKDW DSSOLFDEOH WR GHIHQGDQWVj FDVHV ,Q FRXQW RQH RI WKH
VWDQGDUG $OWKRXJK +XPSKUH\jV DWWRUQH\ DUWLFXODWHG KLV LQGLFWPHQWGHIHQGDQWVZHUHFKDUJHGZLWKFRQVSLUDF\WR
REMHFWLRQRQWKHEDVLVRIVXIILFLHQF\RIWKHHYLGHQFHKHXUJHG GLVWULEXWHDQGSRVVHVVZLWKWKHLQWHQWWRGLVWULEXWHFUDFN
WKHGLVWULFWFRXUWWRFRQVLGHURQO\WKRVHIDFWVWKDWZHUHSURYHG FRFDLQH 7KHUH LV QR PHQWLRQ RI TXDQWLW\ LQ WKH
WR D MXU\ EH\RQG D UHDVRQDEOH GRXEW 7KH GLVWULFW FRXUW LQGLFWPHQW DQG WKH MXU\ PDGH QR ILQGLQJV UHJDUGLQJ
LPSOLFLWO\DFNQRZOHGJHGWKHREMHFWLRQGXULQJWKHVHQWHQFLQJ TXDQWLW\ 3XUVXDQW WR WKH SURYLVLRQV RI > 86&@
FROORTX\VWDWLQJ WKHTXDQWLW\RIGUXJVLVDIDFWXDOGHWHUPLQDWLRQ
WKDWVLJQLILFDQWO\LPSDFWVWKHVHQWHQFHLPSRVHG6HFWLRQ
7KLV&RXUWILQGVE\DSUHSRQGHUDQFHRIWKHHYLGHQFHWKDW E & SURYLGHV IRU D PD[LPXP SHQDOW\ RI
WKH TXDQWLW\ RI GUXJV WKDW LV UHDVRQDEO\ IRUHVHHDEOH LQ \HDUVXQOHVVWKHFULPHLQYROYHVDTXDQWLW\RIGUXJVDVVHW
IXUWKHUDQFHRIWKHMRLQWO\XQGHUWDNHQFULPLQDODFWLYLW\LV IRUWK LQ VXEVHFWLRQV $ RU % 7KHVH VXEVHFWLRQV
DWOHDVWEXWOHVVWKDQNLORJUDPVRIFRFDLQH SURYLGHIRUDPD[LPXPSHQDOW\RI\HDUVLIWKHFULPH
7KH 'HIHQGDQWjV DUJXPHQW JRHV GLUHFWO\ WR WKH LQYROYHG JUDPV RU PRUH RI FUDFN FRFDLQH VHH
FUHGLELOLW\ RI (DWRQ DQG &URPLW\ %DVLFDOO\ WKH E % DQG D PD[LPXP SHQDOW\ RI OLIH
DUJXPHQWLVWKH\DUHQRWUHOLDEOHDQGFDQQRWEHEHOLHYHG LPSULVRQPHQWLIWKHFULPHLQYROYHGJUDPVRUPRUHRI
$OWKRXJKWKHMXU\LQWKLVFDVHZDVQRWFDOOHGXSRQWR FUDFN FRFDLQH VHH E $ 7KH GLVWULFW MXGJH
IRXQGE\DSUHSRQGHUDQFHRIWKHHYLGHQFHWKHTXDQWLW\
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
PD[LPXPVHQWHQFHEH\RQGWKHVWDWXWRU\UDQJHDXWKRUL]HGE\ GHWHUPLQH TXDQWLW\ RI FRFDLQH RU FUDFN WKH MXU\ ZDV
WKHMXU\jVYHUGLFWl FDOOHGXSRQWRSDVVRQWKHFUHGLELOLW\RIWKHZLWQHVVHV
0RUHLPSRUWDQWO\RXURZQ&LUFXLWLPPHGLDWHO\DGRSWHGWKH s$DW HPSKDVLVDGGHG
mVWDWXWRU\PD[LPXPlLQWHUSUHWDWLRQRI$SSUHQGL,QRXUYHU\
ILUVWSRVW$SSUHQGLGHFLVLRQ8QLWHG6WDWHVY&RUUDGR 7KHGLVVHQWHPSKDWLFDOO\FLWHV8QLWHG6WDWHVY3DJH
)G WK &LU ZHFRQIURQWHGDFDVHLQ )G WK &LU DV IRUHFORVLQJ GH QRYR UHYLHZ
ZKLFKWKHGHIHQGDQWVjVHQWHQFHVIRUD5,&2FRQVSLUDF\ZHUH XQOHVVWKHGHIHQGDQWH[SUHVVO\FKDOOHQJHVWKHGLVWULFWFRXUWjV
EDVHGLQSDUWXSRQWKH'LVWULFW&RXUWjVILQGLQJWKDWDPXUGHU DXWKRULW\ WR GHWHUPLQH GUXJ TXDQWLWLHV +RZHYHU VXFK D
SORWZDVRQHRIWKHREMHFWVRIWKLVFRQVSLUDF\EXWWKHMXU\jV IRUPDOREMHFWLRQUHTXLUHPHQWLJQRUHVWKHIDFWWKDW$SSUHQGL
JHQHUDOYHUGLFWGLGQRWLQGLFDWHZKHWKHULWKDGUHDFKHGWKLV ZDVGHFLGHGXSRQERWKWKH6L[WK$PHQGPHQWMXU\DQGQRWLFH
VDPHIDFWXDOFRQFOXVLRQ'HVSLWHWKHVHQWHQFLQJLPSOLFDWLRQV SURYLVLRQV DQG WKH 'XH 3URFHVV &ODXVHV RI WKH )LIWK DQG
RIWKH'LVWULFW&RXUWjVIDFWILQGLQJXQGHUDSUHSRQGHUDQFHRI )RXUWHHQWK$PHQGPHQWV6HH$SSUHQGL86DW m$W
WKHHYLGHQFHVWDQGDUGZHIRXQGQRYLRODWLRQRI$SSUHQGL VWDNHLQWKLVFDVHDUHFRQVWLWXWLRQDOSURWHFWLRQVRIVXUSDVVLQJ
LPSRUWDQFH WKH SURVFULSWLRQ RI DQ\ GHSULYDWLRQ RI OLEHUW\
,QWKLVFDVH>WKHGHIHQGDQWV@IDFHGDPD[LPXPVHQWHQFH ZLWKRXW GXH SURFHVV RI ODZ DQG WKH JXDUDQWHH WKDW LQ DOO
RI WZHQW\ \HDUV RQ WKH 5,&2 FRQVSLUDF\ FRXQWV FULPLQDOSURVHFXWLRQVWKHDFFXVHGVKDOOHQMR\WKHULJKWWRD
GLVUHJDUGLQJWKHPXUGHUFRQVSLUDF\%HFDXVHWKHGLVWULFW VSHHG\ DQG SXEOLF WULDO E\ DQ LPSDUWLDO MXU\l HPSKDVLV
FRXUWGLGQRWVHQWHQFHHLWKHUGHIHQGDQWWRDWHUPRIPRUH DGGHG LQWHUQDOTXRWDWLRQPDUNVDQGFLWDWLRQVRPLWWHG 7KH
WKDQWZHQW\\HDUVRQWKH5,&2FRXQWV$SSUHQGLLVQRW 'XH3URFHVV&ODXVHmSURWHFWVWKHDFFXVHGDJDLQVWFRQYLFWLRQ
WULJJHUHGDQGWKHH[LVWHQFHRIDPXUGHUFRQVSLUDF\GLG H[FHSWXSRQSURRIEH\RQGDUHDVRQDEOHGRXEWRIHYHU\IDFW
QRWKDYHWREHGHFLGHGE\DMXU\XQGHUWKH UHDVRQDEOH QHFHVVDU\WRFRQVWLWXWHWKHFULPHZLWKZKLFKKHLVFKDUJHGl
GRXEWVWDQGDUG ,QUH:LQVKLS 86 $OWKRXJKUHODWHG
WKH 6L[WK $PHQGPHQW ULJKW WR WULDO E\ MXU\ DQG WKH GXH
)GDW FLWDWLRQRPLWWHG SURFHVVULJKWWREHFRQYLFWHGE\HYLGHQFHEH\RQGDUHDVRQDEOH
GRXEW DUH LQGHSHQGHQW OHJDO HQWLWOHPHQWV 6HH $SRGDFD Y
6RRQ WKHUHDIWHU ZH FRQVLGHUHG $SSUHQGL DW OHQJWK DQG 2UHJRQ86 m:HDUHTXLWHVXUH
DJDLQIRXQGWKDWLWDGGUHVVHGPD[LPXPSHQDOWLHV,Q8QLWHG WKDW WKH 6L[WK $PHQGPHQW LWVHOI KDV QHYHU EHHQ KHOG WR
6WDWHVY5HEPDQQ)G WK&LU WKH UHTXLUHSURRIEH\RQGDUHDVRQDEOHGRXEWLQFULPLQDOFDVHV
GHIHQGDQWSOHGJXLOW\WRKHURLQGLVWULEXWLRQDQRIIHQVHZLWK 7KH UHDVRQDEOHGRXEW VWDQGDUG GHYHORSHG VHSDUDWHO\ IURP
DPD[LPXPVHQWHQFHRI\HDUVEXWWKH'LVWULFW&RXUWIRXQG ERWKWKHMXU\WULDODQGWKHXQDQLPRXVYHUGLFWl ,QIDFWZH
DW VHQWHQFLQJ E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW D FRQILUPHGWKLVSRLQWLQ8QLWHG6WDWHVY5HEPDQQ)G
GHDWKKDGUHVXOWHGIURPWKLVGLVWULEXWLRQOHDGLQJWRDVWDWXWRU\ WK&LU ZKHQZHIRXQGWKDWDGHIHQGDQWZKRKDG
ZDLYHGKHUULJKWWRDWULDOE\MXU\mGLGQRWZDLYHWKHULJKWWR
KDYHDFRXUWGHFLGHDQ\UHPDLQLQJHOHPHQWVRIWKHRIIHQVH
EH\RQGDUHDVRQDEOHGRXEWl,GDW
7KH '& &LUFXLW DSSDUHQWO\ KDV QRW VTXDUHO\ DGGUHVVHG WKH
DSSOLFDWLRQ RI $SSUHQGL WR VWDWXWRU\ VHQWHQFLQJ UDQJHV EXW KDV KHOG ZLWK
UHJDUG WR VHQWHQFLQJ HQKDQFHPHQWV XQGHU WKH 86 6HQWHQFLQJ *XLGHOLQHV
7KHSUHVHUYDWLRQRIDFRQVWLWXWLRQDOREMHFWLRQVKRXOGQRW
WKDW m$SSUHQGL GRHV QRW DSSO\ WR VHQWHQFLQJ ILQGLQJV WKDW HOHYDWH D UHVW RQ PDJLF ZRUGV LW VXIILFHV WKDW WKH GLVWULFW FRXUW EH
GHIHQGDQWjV VHQWHQFH ZLWKLQ WKH DSSOLFDEOH VWDWXWRU\ OLPLWVl 8QLWHG 6WDWHV DSSULVHGRIWKHREMHFWLRQDQGRIIHUHGDQRSSRUWXQLW\WRFRUUHFW
Y )LHOGV )G '& &LU
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
LW+XPSKUH\jVDWWRUQH\QHYHUIRUPHGWKHZRUGVm$SSUHQGLl m$SSUHQGL KDV QR DSSOLFDWLRQ KHUHl DV LW mGHDOW ZLWK WKH
EXWZHILQGWKHVXEVWDQFHRIKLVREMHFWLRQWRWKHGUXJTXDQWLW\ FRQVLGHUDWLRQRIIDFWVLQVHQWHQFLQJHQKDQFHPHQWEH\RQGWKH
GHWHUPLQDWLRQFRPELQHGZLWKKLVREMHFWLRQWRWKHVWDQGDUGRI VWDWXWRU\PD[LPXPlZKLOHm>L@QWKHLQVWDQWFDVHWKHVHQWHQFH
HYLGHQFHWREHXVHGVXIILFLHQWWRQRWLI\WKHGLVWULFWFRXUWRI LPSRVHG ZDV EHORZ WKH VWDWXWRU\ PD[LPXPl 8QLWHG
WKHEDVLVIRUWKHREMHFWLRQDQGVXIILFLHQWWRSUHVHUYHWKHLVVXH 6WDWHV Y :LOOLDPV )G WK &LU
IRUGHQRYRUHYLHZRQDSSHDO6HH6WUD\KRUQ)GDW m>:@KHQDGHIHQGDQWLVVHQWHQFHGWRDWHUPRILPSULVRQPHQW
m$OWKRXJK >WKH GHIHQGDQW@ GLG QRW XWWHU WKH ZRUGV µGXH ZLWKLQWKHVWDWXWRU\PD[LPXPIRUWKHFULPHRIZKLFKKHZDV
SURFHVVjDWHLWKHU>WKHSOHDRUVHQWHQFLQJKHDULQJ@KHPDGHLW FRQYLFWHG$SSUHQGLLVEHVLGHWKHSRLQWl LQWHUQDOTXRWDWLRQV
ZHOONQRZQWKDWKHGLVSXWHGWKHGLVWULFWFRXUWjVIDFWXDOILQGLQJ DQGFLWDWLRQRPLWWHG 8QLWHG6WDWHVY%DOWDV)G
ZLWKUHVSHFWWRGUXJTXDQWLW\l 8QLWHG6WDWHVY6WRNHV VW &LU m7KH UXOH LQ $SSUHQGL RQO\ DSSOLHV LQ
)G WK&LU ILQGLQJWKH$SSUHQGLLVVXH VLWXDWLRQV ZKHUH WKH MXGJHPDGH IDFWXDO GHWHUPLQDWLRQ
SUHVHUYHG IRU KDUPOHVV HUURU UHYLHZ ZKHUH D GHIHQGDQW LQFUHDVHV WKH PD[LPXP VHQWHQFH EH\RQG WKH VWDWXWRU\
REMHFWHGWRMXU\LQVWUXFWLRQVWKDWDOORZHGFRQYLFWLRQIRUDQ\ PD[LPXP DQG QRW LQ VLWXDWLRQV ZKHUH WKH 'HIHQGDQW
V
mPHDVXUDEOH DPRXQWl RI GUXJV UDWKHU WKDQ WKH LQGLFWHG SRWHQWLDOH[SRVXUHLVLQFUHDVHGZLWKLQWKHVWDWXWRU\UDQJHl
DPRXQW 8QLWHG6WDWHVY0F&XOOLJDQ)G G 8QLWHG6WDWHVY:LOOLDPV)G G&LU
&LU KROGLQJ WKDW ZKHUH D MXU\jV ILQGLQJ ILW WKH m>7@KRXJKWKH'LVWULFW&RXUWjVILQGLQJUHJDUGLQJWKHDPRXQW
GHILQLWLRQRIRQHFULPHDQGQRWDQRWKHUDQGWKHGHIHQGDQW RI GUXJV VXEVWDQWLDOO\ LQFUHDVHG WKH SRVVLEOH VWDWXWRU\
DUJXHGWKDWKHVKRXOGEHVHQWHQFHGXQGHUWKHFRUUHFWVWDWXWRU\ PD[LPXPVHQWHQFHXQGHU86& E ZHKROGWKDW
PD[LPXP mLQWRQDWLRQ RI WKH ZRUG µ$SSUHQGLj LV $SSUHQGL LV QRW DSSOLFDEOH WR >WKH GHIHQGDQWjV@ VHQWHQFH
XQQHFHVVDU\lWRSUHVHUYHWKHLVVXHIRUDSSHDO EHFDXVHWKHVHQWHQFHDFWXDOO\LPSRVHGZDVZHOOXQGHUWKH
RULJLQDOVWDWXWRU\PD[LPXPRI\HDUVl 8QLWHG6WDWHVY
)XUWKHUPRUH3DJHFDQEHGLVWLQJXLVKHG,Q3DJHZHIRXQG +LVKDZ)G WK&LU m>$@VORQJDV
WKDWGHIHQGDQWVZKRUDLVHGWKHLU$SSUHQGLFKDOOHQJHIRUWKH WKH GHIHQGDQWjV VHQWHQFH IDOOV ZLWKLQ WKH PD[LPXP
ILUVWWLPHRQDSSHDOZHUHHQWLWOHGRQO\WRSODLQHUURUUHYLHZRI HVWDEOLVKHG E\ VWDWXWH $SSUHQGL GRHV QRW IRUHFORVH
WKHLUFODLPV,GDW&RQWUDU\WRWKHGLVVHQWjVHIIRUWWR FRQVLGHUDWLRQ RI GUXJ TXDQWLWLHV EH\RQG WKH RIIHQVH RI
ZUHQFK HYHU\ RXQFH RI LQIHUHQFH IURP WKDW FDVH KRZHYHU FRQYLFWLRQl 8QLWHG6WDWHVY.HLWK)G WK
QRWKLQJLQ3DJHLQGLFDWHVZKDWW\SHRIREMHFWLRQLIDQ\ &LU KROGLQJWKDWEHFDXVHWKHGHIHQGDQWjVmVHQWHQFHGLG
WKHGHIHQGDQWVUHJLVWHUHGLQWKHGLVWULFWFRXUW3DJHPD\KDYH QRWH[FHHGWKHPD[LPXPVHQWHQFHRIWKLUW\\HDUVXQGHU>
DGGUHVVHGWKHVWDQGDUGRIUHYLHZDSSOLFDEOHZKHQDSDUW\IDLOV 86&@ E & WKHRIIHQVHHVWDEOLVKHGE\WKHMXU\jV
WRREMHFWLQWKHGLVWULFWFRXUWEXW3DJHRIIHUVQRJXLGDQFHDV YHUGLFW LW GRHV QRW UXQ DIRXO RI $SSUHQGLjV FRQVWLWXWLRQDO
WRZKDWW\SHRIREMHFWLRQLVVXIILFLHQWWRSUHVHUYHDQ$SSUHQGL OLPLWDWLRQVl 8QLWHG6WDWHVY5RJHUV)G
FKDOOHQJHRQDSSHDO WK &LU m$SSO\LQJ $SSUHQGLjV FRQVWLWXWLRQDO
SULQFLSOHWRVHFWLRQFDVHVLWLVFOHDUWKDWWKHSULQFLSOHLV
YLRODWHGLIDGHIHQGDQWLVVHQWHQFHGWRDJUHDWHUVHQWHQFHWKDQ
WKHVWDWXWRU\PD[LPXPEDVHGXSRQWKHTXDQWLW\RIGUXJVLI
7KH GLVVHQW DEVWUDFWV RQH OLQH IURP WKDW RSLQLRQ m'HIHQGDQWV
VXFKTXDQWLW\LVGHWHUPLQHGE\WKH VHQWHQFLQJMXGJHUDWKHU
WKDQWKHWULDOMXU\l 8QLWHG6WDWHVY$JXD\R'HOJDGR
IDLOHG WR REMHFW WR WKH GLVWULFW MXGJH PDNLQJ WKH GHWHUPLQDWLRQ RI GUXJ
TXDQWLWLHVl 3DJH )G DW DV SURRI WKDW 3DJH UHTXLUHV D VSHFLILF
REMHFWLRQ WR WKH MXGJHjV DXWKRULW\ 7KLV LV DW EHVW D ZHDN IRUP RI WKH )G WK&LU m7KHUXOHRI$SSUHQGLRQO\
IDPLOLDU PD[LP LQFOXVLR XQLXV HVW H[FOXVLR DOWHULXV mWKH LQFOXVLRQ RI RQH DSSOLHVZKHUHWKHQRQMXU\IDFWXDOGHWHUPLQDWLRQLQFUHDVHVWKH
LV WKH H[FOXVLRQ RI WKH RWKHUl (7KH GLVVHQWjV FLWDWLRQ WR 8QLWHG 6WDWHV Y
1HXKDXVVHU )G WK &LU LV PHUHO\ DQRWKHU H[DPSOH RI
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
PDMRULW\jV VWDQGDUG E\ HVWDEOLVKLQJ DQ HOHYDWHG VWDWXWRU\ ,QGHHGWKHILUVWVXFKFDVHLQRXU&LUFXLWWRDGGUHVVZKHWKHU
PD[LPXP IRU D FROOHFWLRQ RI SUHYLRXVO\ VHSDUDWH DQG DQREMHFWLRQWRWKHTXDQWLW\RIGUXJVDWWULEXWHGWRDGHIHQGDQW
VHSDUDWHO\SXQLVKDEOH RIIHQVHVDQGWKHQGHILQLQJDYDULHW\RI LVVXIILFLHQWWRSUHVHUYHWKH$SSUHQGLHUURULVRXURSLQLRQLQ
VHQWHQFLQJIDFWRUVIRXQGE\WKHMXGJHE\DSUHSRQGHUDQFHRI 6WUD\KRUQZKLFKKHOGWKDWLWZDVVXIILFLHQW6HH6WUD\KRUQ
WKH HYLGHQFH WKDW ZRXOG PRUH VSHFLILFDOO\ GHWHUPLQH D )GDW7KHGLVVHQWLVFRUUHFWWKDWVHYHUDORIRXU
GHIHQGDQWjV VHQWHQFH ZLWKLQ WKLV H[SDQGHG VWDWXWRU\ UDQJH VLVWHU FLUFXLWV KDYH DGRSWHG D GLIIHUHQW DSSURDFK DQG KDYH
6HH86DW 6 &WDW 2j&RQQRUs KHOGWKDWIDFWXDOFKDOOHQJHVWRWKHFDOFXODWLRQRIGUXJDPRXQWV
FRQFXUULQJ 7HOOLQJO\WKH&RXUWGLGQRWGHQ\WKDWVXFKD LQWKHGLVWULFWFRXUWE\LWVHOIPD\EHLQVXIILFLHQWWRSUHVHUYH
VFKHPH ZRXOG SDVV FRQVWLWXWLRQDO PXVWHU EXW LQVWHDG WKH $SSUHQGL LVVXH RQ DSSHDO 6HH HJ 8QLWHG 6WDWHV Y
FRQFHGHG WKDW mD 6WDWH FRXOG K\SRWKHWLFDOO\ XQGHUWDNH WR &DQGHODULR)G WK&LU VWDWLQJ
UHYLVH LWV HQWLUH FULPLQDO FRGH LQ WKH PDQQHU WKH GLVVHQW WKDWm>D@GHIHQGDQWjVREMHFWLRQWRWKHTXDQWLW\RIGUXJVWKDW
VXJJHVWVnH[WHQGLQJDOOVWDWXWRU\PD[LPXPVHQWHQFHVWRIRU WKH *RYHUQPHQW DWWULEXWHV WR KLP LV QRW RQ LWV RZQ D
H[DPSOH\HDUVDQGJLYLQJMXGJHVJXLGHGGLVFUHWLRQDVWR FRQVWLWXWLRQDO REMHFWLRQl FHUW GHQLHG 6&W
DIHZVSHFLDOO\VHOHFWHGIDFWRUVZLWKLQWKDWUDQJHl86 +RZHYHULWLVE\QRPHDQVFOHDUWKDWWKLVUDWLRQDOHLV
DW Q6&WDWQ1HYHUWKHOHVVWKH&RXUW FRQVLVWHQWO\DSSOLHG6HH8QLWHG6WDWHVY9D]TXH])G
GLVPLVVHG WKLV SRVVLELOLW\ DV mUHPRWHl EHFDXVH m>D@PRQJ G&LU DSSO\LQJSODLQHUURUUHYLHZEHFDXVHWKH
RWKHU UHDVRQV VWUXFWXUDO GHPRFUDWLF FRQVWUDLQWV H[LVW WR GHIHQGDQWGLGQRWmFRQWHVWWKHGUXJTXDQWLW\HYLGHQFHDWDQ\
GLVFRXUDJH OHJLVODWXUHV IURP HQDFWLQJ SHQDO VWDWXWHV WKDW VWDJHRIWKHSURFHHGLQJVl HPSKDVLVDGGHG
H[SRVHHYHU\GHIHQGDQWFRQYLFWHGRIIRUH[DPSOHZHDSRQV
SRVVHVVLRQWRDPD[LPXPVHQWHQFHH[FHHGLQJWKDWZKLFKLV ,Q DQ\ HYHQW QRWZLWKVWDQGLQJ WKH ELQGLQJ HIIHFW RI
LQ WKH OHJLVODWXUHjV MXGJPHQW JHQHUDOO\ SURSRUWLRQDO WR WKH 6WUD\KRUQ HYHQ XQGHU D PRUH ULJRURXV UHTXLUHPHQW IRU DQ
FULPHl86DW Q6&WDWQ REMHFWLRQLWLVSODLQWKDW+XPSKUH\SUHVHUYHGWKH$SSUHQGL
$OORIWKLVLVFRPSHOOLQJHYLGHQFHWKDWWKHUXOHRI$SSUHQGL
LPSOLFDWHV RQO\ VHQWHQFLQJ PD[LPXPV DQG QRW VHQWHQFLQJ
UDQJHVJHQHUDOO\)XUWKHUDVQRWHGHDFKDQGHYHU\RQHRIRXU WKLVLQFOXVLR DUJXPHQW %XW DV WKH 'LVWULFW RI &ROXPELD &LUFXLW KDV
ZLVHO\ QRWHG m>W@KH PD[LPjV IRUFH LQ SDUWLFXODU VLWXDWLRQV GHSHQGV
VLVWHU&LUFXLWVWKDWKDVDGGUHVVHGWKHTXHVWLRQnLQDOOWHQRI HQWLUHO\ RQ FRQWH[W ZKHWKHU RU QRW WKH GUDIWVPHQjV PHQWLRQ RI RQH WKLQJ
WKHHOHYHQRWKHU&LUFXLWVnKDVDUULYHGDWWKLVFRQFOXVLRQ GRHV UHDOO\ QHFHVVDULO\ RU DW OHDVW UHDVRQDEO\ LPSO\ WKH SUHFOXVLRQ RI
6HH8QLWHG6WDWHVY+DUULV)G WK&LU DOWHUQDWLYHVl 6KRRN Y '& )LQ 5HVSRQVLELOLW\ 0JPW $VVLVWDQFH
m:KLOHWKH6XSUHPH&RXUWPD\FHUWDLQO\RYHUUXOH0F0LOODQ $XWK )G '& &LU *LYHQ WKDW WKH UHFRUG LQ 3DJH
LQWKHIXWXUHDQGDSSO\$SSUHQGLWRDQ\IDFWRUWKDWLQFUHDVHV LV GHYRLG RI DQ\ UHIHUHQFH WR WKH IRUP RI WKH REMHFWLRQ LQ WKH GLVWULFW FRXUW
DQG JLYHQ WKDW LW LV D SDQHO RI MXGJHV DQG QRW D OHJLVODWXUH ZH DUH
WKHPLQLPXPVHQWHQFHRUmUDQJHlRISXQLVKPHQWUDWKHUWKDQ LQWHUSUHWLQJ ZH GR QRW DJUHH WKDW LW LV UHDVRQDEOH WR DVVXPH WKDW WKH 3DJH
RQO\ WKH PD[LPXP SXQLVKPHQW WKDW LV QRW RXU UROHl FRXUW LQWHQGHG WR QDUURZ VR VHYHUHO\ WKH IRUP RI D FRJQL]DEOH $SSUHQGL
FLWDWLRQVRPLWWHG 8QLWHG6WDWHVY:KLWH)G REMHFWLRQ
G&LU m>:@HUHDG>$SSUHQGL@WRDSSO\RQO\ZKHQD 7KH GLVVHQWjV UHOLDQFH RQ sRKQVRQ Y 8QLWHG 6WDWHV LV HUURQHRXV IRU
VHQWHQFLQJFRXUWjVILQGLQJVLQFUHDVHWKHSHQDOW\IDFHGE\WKH D VLPLODU UHDVRQ sRKQVRQ GLG QRW LQGLFDWH ZKHWKHU WKH GHIHQGDQW UDLVHG
GHIHQGDQWDERYHWKHVWDWXWRU\PD[LPXPIRUDJLYHQFRXQW DQ REMHFWLRQ LQ WKH GLVWULFW FRXUW sRKQVRQ RQO\ QRWHV WKDW WKH GHIHQGDQW
KHUVHOI LQVLVWHG WKDW WKH GLVWULFW FRXUW FRPPLW WKH HUURU 86 DW
DQG QRW ZKHQ WKH\ PHUHO\ DIIHFW WKH OHQJWK RI D VHQWHQFH 0RUHRYHU sRKQVRQ FDQ EH GLVWLQJXLVKHG IURP WKH SUHVHQW FDVH
ZLWKLQ WKH VWDWXWRU\ UDQJHl 8QLWHG 6WDWHV Y *DUFLD EHFDXVH +XPSKUH\ FOHDUO\ REMHFWHG WR WKH HYLGHQWLDU\ VWDQGDUG WR EH XVHG
6DQFKH])G WK&LU ILQGLQJWKDW D OHJDO HQWLWOHPHQW VHSDUDWH IURP WKH ULJKW WR D MXU\ &I 5HEPDQQ
)G DW
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
HUURULQWKHGLVWULFWFRXUW6HH&DQGHODULR)GDW 1RGRXEWDGHIHQGDQWFRXOGXQGHUVXFKDVFKHPHILQG
LQGLFDWLQJWKDWDGHIHQGDQWZKRREMHFWVWRWKHSUHSRQGHUDQFH KLPVHOIVHQWHQFHGWRWKHVDPHWHUPWRZKLFKKHFRXOG
RIHYLGHQFHVWDQGDUGIRUGUXJTXDQWLW\FDOFXODWLRQVSUHVHUYHV KDYH EHHQ VHQWHQFHG DEVHQW WKH PDQGDWRU\ PLQLPXP
WKH $SSUHQGL FKDOOHQJH IRU DSSHDO FI 8QLWHG 6WDWHV Y 7KH UDQJH IRU KLV XQGHUO\LQJ FULPH FRXOG EH WR
%XFNODQG )G WK &LU DSSO\LQJ \HDUVZLWKWKHPDQGDWRU\PLQLPXPRI\HDUVDQGKH
SODLQHUURUEHFDXVHWKHGHIHQGDQWGLGQRWREMHFWWRWKHGLVWULFW FRXOGEHVHQWHQFHGWR 2IFRXUVHDVLPLODUVFHQDULRLV
FRXUWjVXVHRIWKHSUHSRQGHUDQFHRIWKHHYLGHQFHVWDQGDUGIRU SRVVLEOHZLWKDQLQFUHDVHGPD[LPXP %XWLWLVHTXDOO\
GHWHUPLQLQJGUXJTXDQWLW\ WUXH WKDW KLV H[SHFWHG SXQLVKPHQW KDV LQFUHDVHG DV D
UHVXOWRIWKHQDUURZHGUDQJHDQGWKDWWKHSURVHFXWLRQLV
+DYLQJGHWHUPLQHGWKDWGHQRYRUHYLHZJRYHUQVWKLVDSSHDO HPSRZHUHG E\ LQYRNLQJ WKH PDQGDWRU\ PLQLPXP WR
ZHSURFHHGWRWKHPHULWVRIWKHFKDOOHQJH UHTXLUHWKHMXGJHWRLPSRVHDKLJKHUSXQLVKPHQWWKDQKH
PLJKW ZLVK 7KH PDQGDWRU\ PLQLPXP HQWLWOHV WKH
$QDO\VLV JRYHUQPHQWWRPRUHWKDQLWZRXOGRWKHUZLVHEHHQWLWOHG
WR \HDUV UDWKHU WKDQ WR DQG WKH ULVN RI D
+XPSKUH\DUJXHVWKDWWKHTXDQWLW\RIGUXJVDWWULEXWDEOHWR VHQWHQFH EHORZ 7KXV WKH IDFW WULJJHULQJ WKH
KLP DV UHOHYDQW FRQGXFW LV DQ HOHPHQW RI WKH RIIHQVH WKDW PDQGDWRU\PLQLPXPLVSDUWRIWKHSXQLVKPHQWVRXJKWWR
VKRXOG SURSHUO\ KDYH EHHQ VXEPLWWHG WR WKH MXU\ IRU EHLQIOLFWHG LWXQGRXEWHGO\HQWHUVLQWRWKHSXQLVKPHQWVR
GHWHUPLQDWLRQEH\RQGDUHDVRQDEOHGRXEW7KHIDLOXUHRIWKH DVWRDJJUDYDWHLWDQGLVDQDFWWRZKLFKWKHODZDIIL[HV
MXU\WRPDNHVXFKDILQGLQJKHVXEPLWVYLRODWHGWKH6XSUHPH SXQLVKPHQW)XUWKHULWLVOLNHO\WKDWWKHFKDQJHLQ
&RXUWjVGHFLVLRQLQ$SSUHQGLDQGUHTXLUHVUHVHQWHQFLQJ7KH WKH UDQJH DYDLODEOH WR WKH MXGJH DIIHFWV KLV FKRLFH RI
FRQVHTXHQFHRIWKLVDOOHJHGYLRODWLRQ+XPSKUH\PDLQWDLQV VHQWHQFH )LQDOO\ LQ QXPHURXV FDVHV WKH
LVWKDWKHZDVVXEMHFWHGWRDQLQFUHDVHGSHQDOW\IRUFRQGXFW DJJUDYDWLQJIDFWUDLVHGWKHZKROHUDQJHnERWKWKHWRS
QRW FKDUJHG LQ WKH LQGLFWPHQW EDVHG RQ WKH GLVWULFW FRXUWjV DQGERWWRP7KRVHFRXUWVLQKROGLQJWKDWVXFKDIDFWZDV
ILQGLQJ E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW KH ZDV DQHOHPHQWGLGQRWERWKHUZLWKDQ\GLVWLQFWLRQEHWZHHQ
UHVSRQVLEOH IRU NLORJUDPV RI FRFDLQH $W RUDO FKDQJHV LQ WKH PD[LPXP DQG WKH PLQLPXP :KDW
DUJXPHQWWKH*RYHUQPHQWFRQFHGHGWKDWWKHGLVWULFWFRXUWjV PDWWHUHG ZDV VLPSO\ WKH RYHUDOO LQFUHDVH LQ WKH
VHQWHQFLQJRI+XPSKUH\RIIHQGHG$SSUHQGLDVFRQVWUXHGE\ SXQLVKPHQWSURYLGHGE\ODZ
RXUGHFLVLRQLQ8QLWHG6WDWHVY5DPLUH])G WK
&LU $VRXUGLVFXVVLRQEHORZUHYHDOVZHWRRFRQFOXGH 86 DW 6 &W DW
WKDW+XPSKUH\KDVGHPRQVWUDWHGDQ$SSUHQGLYLRODWLRQWKDW 7KRPDVsFRQFXUULQJ LQWHUQDOTXRWDWLRQVZLWKDOWHUDWLRQV
UHTXLUHVXVWRYDFDWHKLVVHQWHQFHDQGUHPDQGWKLVFDVHIRU DQGFLWDWLRQVRPLWWHG 3ODLQO\sXVWLFH7KRPDVZRXOGQRW
UHVHQWHQFLQJ KDYH GHHPHG LW QHFHVVDU\ WR DGYRFDWH D mEURDGHU UXOHl
HQFRPSDVVLQJ ZKROH VHQWHQFLQJ UDQJHV DQG QRW MXVW
7KH6XSUHPH&RXUWLQ$SSUHQGLKHOGWKDWm>R@WKHUWKDQWKH PD[LPXPV LI WKH PDMRULW\ KDG DOUHDG\ DGRSWHG VXFK D
IDFWRIDSULRUFRQYLFWLRQDQ\IDFWWKDWLQFUHDVHVWKHSHQDOW\ VWDQGDUG
IRUDFULPHEH\RQGWKHSUHVFULEHGVWDWXWRU\PD[LPXPPXVWEH
VXEPLWWHGWRDMXU\DQGSURYHGEH\RQGDUHDVRQDEOHGRXEWl $SSUHQGLjV OLPLWDWLRQ WR VWDWXWRU\ PD[LPXPV LV IXUWKHU
86DW $OWKRXJK+XPSKUH\ZDVLQGLFWHGIRUDQG FRQILUPHGE\WKHPDMRULW\jVUHVSRQVHWRsXVWLFH2j&RQQRUjV
FRQYLFWHGRIYLRODWLRQVRI86& D DQG VXJJHVWLRQ WKDW LWV KROGLQJ mUHVWV RQ D PHDQLQJOHVV
E $ WKHMXU\jVIDLOXUHWRGHWHUPLQHEH\RQGDUHDVRQDEOH IRUPDOLVPl VLQFH D OHJLVODWXUH VHHPLQJO\ FRXOG VDWLVI\ WKH
GRXEWWKHTXDQWLW\RIGUXJVIRUZKLFK+XPSKUH\VKRXOGEH
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
VHQWHQFHZKLFKPD\EHLPSRVHGZLWKLQWKHVWDWXWRU\SODQl KHOGUHVSRQVLEOHSURSHUO\UHTXLUHGKLPWREHVHQWHQFHGRQO\
86DW6&WDW IRRWQRWHRPLWWHG XQGHU86& E & 6HH5DPLUH])GDW
6HFWLRQ E & SURYLGHVIRUDPD[LPXPSHQDOW\
sXVWLFH2j&RQQRULQVLVWHGLQKHU$SSUHQGLGLVVHQWWKDWmLW RIWZHQW\\HDUVH[FHSWZKHUHDVKHUHDGHIHQGDQWKDVDSULRU
LVLQFXPEHQWRQWKH&RXUWWRDGPLWWKDWLWLVRYHUUXOLQJ IHORQ\GUXJFRQYLFWLRQLQZKLFKFDVHDGHIHQGDQWLVVXEMHFW
0F0LOODQl$SSUHQGL86DW6&WDW WR D WKLUW\\HDU PD[LPXP VWDWXWRU\ SHQDOW\ %HFDXVH WKH
2j&RQQRU s GLVVHQWLQJ ,Q UHVSRQVH WKH $SSUHQGL GLVWULFWFRXUWjVWZHQW\\HDUVHQWHQFHGLGQRWH[FHHGWKHWKLUW\
PDMRULW\HPSKDVL]HGWKDWm>Z@HGRQRWRYHUUXOH0F0LOODQl \HDU PD[LPXP VWDWXWRU\ SHQDOW\ RQ WKLV EDVLV DORQH
86DWQ6&WDWQ5DWKHUWKH +XPSKUH\FDQVWDWHQRHUURU
&RXUWVWDWHGWKDWm>Z@HOLPLW>0F0LOODQjV@KROGLQJWRFDVHV
WKDWGRQRWLQYROYHWKHLPSRVLWLRQRIDVHQWHQFHPRUHVHYHUH 2XU $SSUHQGL DQDO\VLV KRZHYHU GRHV QRW HQG ZLWK D
WKDQWKHVWDWXWRU\PD[LPXPIRUWKHRIIHQVHHVWDEOLVKHGE\WKH ILQGLQJ WKDW +XPSKUH\jV VHQWHQFH GLG QRW H[FHHG WKH
MXU\jV YHUGLFW n D OLPLWDWLRQ LGHQWLILHG LQ WKH 0F0LOODQ SUHVFULEHGVWDWXWRU\PD[LPXPSHQDOW\DVDGHIHQGDQWPD\
RSLQLRQLWVHOIl86DWQ6&WDWQ QHYHUWKHOHVV VWDWH DQ $SSUHQGL YLRODWLRQ ZKHUH KH FDQ
7KXV$SSUHQGLDQG0F0LOODQUHDGLQWDQGHPSODLQO\ZRXOG GHPRQVWUDWH WKDW WKH GLVWULFW FRXUWjV IDFWXDO GHWHUPLQDWLRQ
SHUPLWDVHQWHQFLQJMXGJHWRILQGE\DSUHSRQGHUDQFHRIWKH UHVXOWHG LQ DQ LQFUHDVH RI WKH UDQJH RI VWDWXWRU\ SHQDOWLHV
HYLGHQFHIDFWVZKLFKLQFUHDVHWKHPLQLPXPSHQDOW\IDFHGE\ DSSOLFDEOHWRWKHGHIHQGDQWIRUSXUSRVHVRIVHQWHQFLQJ&I
DGHIHQGDQWVRORQJDVWKHMXGJHjVILQGLQJVGRQRWOHDGWRWKH $SSUHQGL 86 DW m>,@W LV XQFRQVWLWXWLRQDO IRU D
LPSRVLWLRQRIDVHQWHQFHEH\RQGWKHVWDWXWRU\PD[LPXPIRU OHJLVODWXUHWRUHPRYHIURPWKHMXU\WKHDVVHVVPHQWRIIDFWV
WKH RIIHQVH HVWDEOLVKHG E\ WKH MXU\jV YHUGLFW DORQH 7KLV WKDW LQFUHDVH WKH SUHVFULEHG UDQJH RI SHQDOWLHV WR ZKLFK D
FRPSOHWHO\EHOLHVWKHEURDGmDOWHUWKHUDQJHlLQWHUSUHWDWLRQRI FULPLQDOGHIHQGDQWLVH[SRVHGl FLWDWLRQRPLWWHG :HKDYH
WKHUXOHRI$SSUHQGL UHFRJQL]HGWKDWVXFKDYLRODWLRQPD\EHVWDWHGZKHQDGLVWULFW
FRXUWjVGUXJTXDQWLW\GHWHUPLQDWLRQVXEMHFWVDGHIHQGDQWWRD
7KHUHDUHRWKHULQGLFDWLRQVZLWKLQ$SSUHQGLLWVHOIWKDWWKH PDQGDWRU\PLQLPXPWHUPRILPSULVRQPHQWZKLFKZRXOGQRW
PDMRULW\GLGQRWDGRSWVXFKDVZHHSLQJUXOH)RUH[DPSOH KDYHEHHQWULJJHUHGEXWIRUWKHGLVWULFWFRXUWjVILQGLQJV
sXVWLFH7KRPDVjVFRQFXUUHQFHGRHVHQGRUVHVRPHWKLQJDNLQ
WRWKHmDOWHUWKHUDQJHlVWDQGDUGLQOLJKWRIKLVmYLHZWKDWWKH ,Q 8QLWHG 6WDWHV Y )ORZDO ZH YDFDWHG WKH GHIHQGDQWjV
&RQVWLWXWLRQUHTXLUHVDEURDGHUUXOHWKDQWKH&RXUWDGRSWVl PDQGDWRU\ VHQWHQFH RI OLIH LPSULVRQPHQW ZLWKRXW WKH
86DW 6&WDW 7KRPDVsFRQFXUULQJ SRVVLELOLW\RISDUROHDQGUHPDQGHGIRUUHVHQWHQFLQJZKHUHWKH
6SHFLILFDOO\sXVWLFH7KRPDVRSLQHGWKDWmDµFULPHjLQFOXGHV GLVWULFW FRXUWjV GUXJ TXDQWLW\ ILQGLQJ DORQH UHQGHUHG WKH
HYHU\IDFWWKDWLVE\ODZDEDVLVIRULPSRVLQJRULQFUHDVLQJ GHIHQGDQWLQHOLJLEOHIRUDQRQPDQGDWRU\PLQLPXPVHQWHQFH
SXQLVKPHQW LQ FRQWUDVW ZLWK D IDFW WKDW PLWLJDWHV REVHUYLQJWKDW
SXQLVKPHQW l86DW6&WDW 7KRPDV
sFRQFXUULQJ sXVWLFH7KRPDVREVHUYHGWKDWWKHHIIHFWRIKLV 7KLVGLIIHUHQFH>EHWZHHQSRVVLEOHSHQDOWLHV@LVVLJQLILFDQW
SURSRVHG UXOH XSRQ WKH FRQWLQXLQJ YLWDOLW\ RI 0F0LOODQ LQWKLVFDVHEHFDXVHWKHWULDOMXGJHjVGHWHUPLQDWLRQRIWKH
mVKRXOGEHSODLQHQRXJKlEXWKHWKHQZHQWRQWRH[SODLQWKDW ZHLJKWRIWKHGUXJVWRRNDZD\DQ\GLVFUHWLRQLQWHUPVRI
WKLVUXOHZRXOGUHDFKDQGLQYDOLGDWHmWKH0F0LOODQVLWXDWLRQ LPSRVLQJ D VKRUWHU VHQWHQFH ,W LV QRW D IRUHJRQH
RI D PDQGDWRU\ PLQLPXP VHQWHQFHl EDVHG XSRQ D MXGJHjV FRQFOXVLRQ WKDW WKH WULDO MXGJH ZRXOG KDYH VHQWHQFHG
ILQGLQJVE\DSUHSRQGHUDQFHRIWKHHYLGHQFH )ORZDOWROLIHZLWKRXWWKHSRVVLELOLW\RIUHOHDVHLIDMXU\
KDGGHWHUPLQHGWKHGUXJVZHLJKHG NLORJUDPV,Q
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
IDFWLIWKHMXU\KDGGHWHUPLQHGWKDWWKHGUXJVZHLJKHG SURYHG EH\RQG D UHDVRQDEOH GRXEW RQO\ LI WKDW IDFW DV D
OHVVWKDQJUDPVDOLIHVHQWHQFHZRXOGQRWKDYHHYHQ IRUPDOPDWWHUH[WHQGVWKHUDQJHRISXQLVKPHQWEH\RQGWKH
EHHQ DQ RSWLRQ XQGHU 86& E & 7KH SUHVFULEHG VWDWXWRU\ PD[LPXPl RU LL mWKH &RQVWLWXWLRQ
MXGJHjV GHWHUPLQDWLRQ HIIHFWLYHO\ OLPLWHG WKH UDQJH RI UHTXLUHVWKDWDIDFWEHVXEPLWWHGWRDMXU\DQGSURYHGEH\RQG
DSSOLFDEOH SHQDOWLHV DQG GHSULYHG )ORZDO RI WKH D UHDVRQDEOH GRXEW LI LW DV D IRUPDO PDWWHU LQFUHDVHV WKH
RSSRUWXQLW\ WR UHFHLYH OHVV WKDQ OLIH LPSULVRQPHQW UDQJH RI SXQLVKPHQW EH\RQG WKDW ZKLFK FRXOG OHJDOO\ EH
ZLWKRXWWKHSRVVLELOLW\RIUHOHDVH LPSRVHGDEVHQWWKDWIDFWl86DW6&WDW
2j&RQQRU s GLVVHQWLQJ )LQDOO\ WKH &RXUWjV
)G WK&LU LQLWLDO VWDWHPHQW RI LWV KROGLQJ FRXOG EH FRQVWUXHG DV D
FRQVWLWXWLRQDOFRPPDQGWKDWD GHIHQGDQWjVDFWXDOVHQWHQFH
/LNHZLVHLQ5DPLUH]ZHYDFDWHGWKHGHIHQGDQWjVWZHQW\ QRWH[FHHGWKHSUHVFULEHGVWDWXWRU\PD[LPXPIRUWKHRIIHQVH
\HDUPDQGDWRU\VHQWHQFHXQGHU E $ DQGUHPDQGHG HVWDEOLVKHGE\WKHMXU\jVYHUGLFW
KLV FDVH IRU UHVHQWHQFLQJ ZKHUH WKH DSSOLFDEOH VWDWXWRU\
SHQDOW\ ZDV GHWHUPLQHG H[FOXVLYHO\ E\ WKH GLVWULFW FRXUWjV :KLOHDOORIWKHVHUHDGLQJV DQGSHUKDSVPRUH HQMR\VRPH
GUXJTXDQWLW\ILQGLQJ7KHUHZHREVHUYHGWKDWm>D@JJUDYDWLQJ GHJUHHRIVXSSRUWLQWKHEUXWHWH[WRIWKH$SSUHQGLGHFLVLRQ
IDFWRUVRWKHUWKDQDSULRUFRQYLFWLRQWKDWLQFUHDVHWKHSHQDOW\ WKHUH LV DPSOH UHDVRQ WR UHMHFW WKH EURDGHVW RI WKHVH
IURP D QRQPDQGDWRU\ PLQLPXP VHQWHQFH WR D PDQGDWRU\ LQWHUSUHWDWLRQV n LH WKDW IDFWV ZKLFK DOWHU WKH UDQJH RI
PLQLPXPVHQWHQFHRUIURPDOHVVHUWRDJUHDWHUPLQLPXP SHQDOWLHVPXVWEHSURYHGWRDMXU\EH\RQGDUHDVRQDEOHGRXEW
VHQWHQFHDUHQRZHOHPHQWVRIWKHFULPHWREHFKDUJHGDQG 0RVWVLJQLILFDQWO\ZHNQRZWKDWWKH6XSUHPH&RXUWGLGQRW
SURYHGl5DPLUH])GDW7KHIDLOXUHRIWKHMXU\ LQWHQGWKLVUHVXOWLQ$SSUHQGLEHFDXVHLWH[SUHVVO\GHFOLQHG
WRGHWHUPLQHEH\RQGDUHDVRQDEOHGRXEWWKHTXDQWLW\RIGUXJV WRRYHUWXUQDSULRUGHFLVLRQ0F0LOODQY3HQQV\OYDQLD
IRU ZKLFK 5DPLUH] ZDV FULPLQDOO\ UHVSRQVLEOH ZKHUH WKH 86 6&W ZKLFKLVGLDPHWULFDOO\ DW
*RYHUQPHQWKDGQHLWKHUFKDUJHGQRUVRXJKWWRSURYHWRWKH RGGV ZLWK WKLV H[SDQVLYH UHDGLQJ ,Q 0F0LOODQ WKH &RXUW
MXU\ D GUXJ TXDQWLW\ VXIILFLHQW WR WULJJHU D PDQGDWRU\ UHMHFWHG GXH SURFHVV DQG 6L[WK $PHQGPHQW FKDOOHQJHV WR
PLQLPXP VHQWHQFH ZH FRQFOXGHG UHTXLUHG KLP WR EH 3HQQV\OYDQLDjV0DQGDWRU\0LQLPXP6HQWHQFLQJ$FWXQGHU
VHQWHQFHGXQGHU E & ZKLFKmDQ\RQHFRQYLFWHGRIFHUWDLQHQXPHUDWHGIHORQLHVLV
VXEMHFW WR D PDQGDWRU\ PLQLPXP VHQWHQFH RI ILYH \HDUVj
,Q 8QLWHG 6WDWHV Y 6WUD\KRUQ ZH DJDLQ YDFDWHG D LPSULVRQPHQW LI WKH VHQWHQFLQJ MXGJH ILQGV E\ D
GHIHQGDQWjVVHQWHQFHDQGUHPDQGHGKLVFDVHIRUUHVHQWHQFLQJ SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW WKH SHUVRQ µYLVLEO\
DIWHUDGLVWULFWFRXUWjVDWWULEXWLRQRISRXQGVRIPDULMXDQD SRVVHVVHGDILUHDUPjGXULQJWKHFRPPLVVLRQRIWKHRIIHQVHl
WRWKHGHIHQGDQWUHVXOWHGLQDWHQ\HDUPDQGDWRU\PLQLPXP 0F0LOODQ86DW6&WDW,QVRUXOLQJ
VHQWHQFHXQGHU E % 6LJQLILFDQWWRWKLVFDVHWKH WKH &RXUW REVHUYHG WKDW HDFK RI WKH HQXPHUDWHG IHORQ\
LQGLFWPHQW LQ 6WUD\KRUQ OLNH WKRVH DW LVVXH LQ )ORZDO DQG RIIHQVHVFDUULHGDPD[LPXPVHQWHQFHRIDWOHDVW\HDUVDQG
5DPLUH]IDLOHGWRVSHFLI\WKHTXDQWLW\RIGUXJVIRUZKLFKWKH WKDW WKH PDQGDWRU\ PLQLPXP VWDWXWH GLG QRW DOWHU WKHVH
*RYHUQPHQW VRXJKW WR KROG WKH GHIHQGDQW FULPLQDOO\ PD[LPXPSHQDOWLHV86DW6&WDW
UHVSRQVLEOH ,Q VHWWLQJ DVLGH 6WUD\KRUQjV VHQWHQFH ZH ,QVWHDGWKH3HQQV\OYDQLDODZmRSHUDWH>G@VROHO\WROLPLWWKH
REVHUYHGWKDW VHQWHQFLQJFRXUWjVGLVFUHWLRQLQVHOHFWLQJDSHQDOW\ZLWKLQWKH
UDQJH DOUHDG\ DYDLODEOH WR LW ZLWKRXW WKH VSHFLDO ILQGLQJ RI
8QGHU5DPLUH]LIWKHJRYHUQPHQWVHHNVWRFRQYLFWDQG YLVLEOHSRVVHVVLRQRIDILUHDUPlDQGmµXS>SHG@WKHDQWHjIRU
VHQWHQFH6WUD\KRUQXQGHU E % IRUFRQVSLUDF\ WKH GHIHQGDQW RQO\ E\ UDLVLQJ WR ILYH \HDUV WKH PLQLPXP
WRSRVVHVVPRUHWKDQNLORJUDPVRIPDULMXDQDLWPXVW
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
UXOHVIRUWKHFRQGXFWRIFULPLQDOSURVHFXWLRQV,ZLOOGLVFXVV LQGLFWKLPDSSURSULDWHO\DQGWKHQSURYHWKHHOHPHQWVRI
HDFKRIWKHVHSRLQWVLQWXUQ WKDWRIIHQVHEH\RQGDUHDVRQDEOHGRXEW2WKHUZLVHWKH
JRYHUQPHQWPD\LQGLFWDGHIHQGDQWXQGHUWKHSURYLVLRQ
)LUVW LW XQIRUWXQDWHO\ LV WUXH WKDW $SSUHQGLjV FHQWUDO ZLWKWKHORZHVWVWDWXWRU\PD[LPXPVHQWHQFHDQGWKHQDV
mKROGLQJl LV VWDWHG LQ GLIIHUHQW ZD\V ,QGHHG WKH YHU\ LQWKLVFDVHUHO\RQUHOHYDQWFRQGXFWILQGLQJVWRDFKLHYH
SDUDJUDSK LQ ZKLFK WKH PDMRULW\ DQQRXQFHV LWV FRQFOXVLRQ ZKDWLWRWKHUZLVHPLJKWQRWLIKHOGWRDKLJKHUEXUGHQRI
LQFOXGHVWZRYDULDQWVRImWKHUXOHlRI$SSUHQGL SURRI QDPHO\ D VHQWHQFH XQGHU D VHSDUDWH RIIHQVHjV
HQKDQFHGSHQDOW\SURYLVLRQ
,QVXPRXUUHH[DPLQDWLRQRIRXUFDVHVLQWKLVDUHDDQG
RIWKHKLVWRU\XSRQZKLFKWKH\UHO\FRQILUPVWKHRSLQLRQ )GDW
WKDWZHH[SUHVVHGLQsRQHV>Y8QLWHG6WDWHV86
6&W @2WKHUWKDQWKHIDFWRID &RQVLVWHQW ZLWK RXU KROGLQJV LQ )ORZDO 5DPLUH] DQG
SULRUFRQYLFWLRQDQ\IDFWWKDWLQFUHDVHVWKHSHQDOW\IRUD 6WUD\KRUQZHILQGWKDWWKHGLVWULFWFRXUWYLRODWHG$SSUHQGL
FULPHEH\RQGWKHSUHVFULEHGVWDWXWRU\PD[LPXPPXVWEH ZKHQLWVHQWHQFHG+XPSKUH\WRDPDQGDWRU\VHQWHQFHRI
VXEPLWWHG WR D MXU\ DQG SURYHG EH\RQG D UHDVRQDEOH PRQWKV $OWKRXJK WKH GLVWULFW FRXUW SURSHUO\ IRXQG WKDW
GRXEW:LWKWKDWH[FHSWLRQZHHQGRUVHWKHVWDWHPHQWRI +XPSKUH\ZDVVXEMHFWWRD*XLGHOLQHVVHQWHQFLQJUDQJHRI
WKHUXOHVHWIRUWKLQWKHFRQFXUULQJRSLQLRQVLQWKDWFDVH WR PRQWKVLWQHYHUWKHOHVVHUURQHRXVO\EHOLHYHGWKDW
m>,@WLVXQFRQVWLWXWLRQDOIRUDOHJLVODWXUHWRUHPRYHIURP LW ZDV UHTXLUHG WR VHQWHQFH +XPSKUH\ WR D PDQGDWRU\
WKH MXU\ WKH DVVHVVPHQW RI IDFWV WKDW LQFUHDVH WKH PLQLPXP VHQWHQFH RI PRQWKV DV SURYLGHG IRU LQ
SUHVFULEHG UDQJH RI SHQDOWLHV WR ZKLFK D FULPLQDO E $ :HUHFRJQL]HWKDW5DPLUH]DQG6WUD\KRUQ
GHIHQGDQWLVH[SRVHG,WLVHTXDOO\FOHDUWKDWVXFKIDFWV DUH GLVWLQJXLVKDEOH LQDVPXFK DV WKRVH FDVHV LQYROYHG
PXVWEHHVWDEOLVKHGE\SURRIEH\RQGDUHDVRQDEOHGRXEWl VLWXDWLRQV LQ ZKLFK WKH VWDWXWRU\ PDQGDWRU\ PLQLPXP
86 DW 6&W RSLQLRQ RI LPSRVHG ZDV HTXLYDOHQW WR WKH VWDWXWRU\ PD[LPXP
6WHYHQVs VHHDOVRLGDW 6&W RSLQLRQ +XPSKUH\ E\ FRQWUDVW ZDV VHQWHQFHG WR D WZHQW\\HDU
RI6FDOLDs PDQGDWRU\PLQLPXPVHQWHQFHXQGHU E $ GHVSLWH
WKH IDFW WKDW KH VKRXOG KDYH EHHQ VHQWHQFHG XQGHU
$SSUHQGL86DW 6&WDW IRRWQRWH
RPLWWHG
$V REVHUYHG LQ sXVWLFH 2j&RQQRUjV GLVVHQW WKHVH WZR
IRUPXODWLRQVVHHPWRHPEUDFHDYDULHW\RIGLIIHUHQWmUXOHVl 7KH UHFRUG UHDGV DV IROORZV
)LUVWE\HQGRUVLQJWKHVWDWHPHQWVLQWKHFRQFXUULQJRSLQLRQV
LQ sRQHV mWKH &RXUW DSSHDUV WR KROG WKDW DQ\ IDFW WKDW 7+( &2857 7KLV &RXUW GRHV LQ IDFW DFFHSW WKH
LQFUHDVHVRUDOWHUVWKHUDQJHRISHQDOWLHVWRZKLFKDGHIHQGDQW ILQGLQJV DQG JXLGHOLQH DSSOLFDWLRQV FRQWDLQHG LQ WKH
SUHVHQWHQFH LQYHVWLJDWLRQ UHSRUW ZLWK WKH H[FHSWLRQ
LVH[SRVHGnZKLFKE\GHILQLWLRQPXVWLQFOXGHLQFUHDVHVRU WKDW WKLV &RXUW ZLOO QRW DIIRUG D WZROHYHO HQKDQFHPHQW
DOWHUDWLRQVWRHLWKHUWKHPLQLPXPRUPD[LPXPSHQDOWLHVn IRU WKH JXQ 7KHUHIRUH ZH DUH ORRNLQJ DW D FULPLQDO
PXVWEHSURYHGWRDMXU\EH\RQGDUHDVRQDEOHGRXEWl KLVWRU\ FDWHJRU\ RI D WRWDO RIIHQVH OHYHO RI ZKLFK
86DW6&WDW 2j&RQQRUsGLVVHQWLQJ DFFRUGLQJ WR WKH JXLGHOLQH LPSULVRQPHQW UDQJH ZHjUH
sXVWLFH 2j&RQQRU WKHQ VXJJHVWV WZR IXUWKHU mSODXVLEOH ORRNLQJ DW WR PRQWKV +RZHYHU ZH DUH LQ IDFW
LQWHUSUHWDWLRQVl RI WKH PDMRULW\jV KROGLQJ L mWKH
ORRNLQJ DW D PDQGDWRU\ PLQLPXP RI PRQWKV
&RQVWLWXWLRQUHTXLUHVWKDWDIDFWEHVXEPLWWHGWRDMXU\DQG s$ DW
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
E & ZKLFK SURYLGHV IRU D WKLUW\\HDU VWDWXWRU\ D GH QRYR VWDQGDUG WKDW DSSOLHV XQLTXHO\ WR VXFK FODLPV
PD[LPXPSHQDOW\ UHJDUGOHVV RI ZKHWKHU WKH\ ZHUH UDLVHG EHIRUH WKH 'LVWULFW
&RXUW
$ FORVH LQVSHFWLRQ RI )ORZDO 5DPLUH] DQG 6WUD\KRUQ
UHYHDOV WKDW VXFK D GLVWLQFWLRQ LV RI QR FRQVHTXHQFH 7KH ,Q UHVROYLQJ WKH $SSUHQGL FKDOOHQJH LQ WKLV FDVH WKH
UDWLRQDOHXQGHUO\LQJHDFKRIWKHVHSDQHOjVGHFLVLRQVZDVQRW PDMRULW\ IROORZV WKHVH ODWWHU SDQHOV ERWK LQ WKHLU VWUDLQHG
WKDWWKHPDQGDWRU\PLQLPXPVHQWHQFHRIRQHSURYLVLRQZDV UHDGLQJRI$SSUHQGLDQGLQWKHLUDSSOLFDWLRQRIDQLPSURSHU
OHVVWKDQRUHTXDOWRWKHVWDWXWRU\PD[LPXPRIDQRWKHUEXWD VWDQGDUG RI UHYLHZ $FFRUGLQJO\ ZKLOH , FRQFXU LQ WKH
FRQFHUQ WKDW WKH GLVWULFW FRXUW ZDV FRPSHOOHG WR LVVXH D UHPDLQGHURIWKHPDMRULW\jVGHFLVLRQ,GLVVHQWIURPLWVUXOLQJ
VHQWHQFHWKDWEXWIRULWVGUXJTXDQWLW\GHWHUPLQDWLRQLWZRXOG WKDWWKLVFDVHEHUHPDQGHGIRUUHVHQWHQFLQJ
QRWKDYHEHHQREOLJDWHG RUHYHQSHUPLWWHG WRLPSRVH6HH
6WUD\KRUQ )G DW m,W PDWWHUV QRW DFFRUGLQJ WR ,
5DPLUH]WKDWWKHVWDWXWRU\PD[LPXPIRU E ' LV
HTXLYDOHQW WR WKH VWDWXWRU\ PDQGDWRU\ PLQLPXP IRU $V LQGLFDWHG DERYH , KDYH WZR SULQFLSDO FRQFHUQV ZLWK
E % l 5DPLUH])GDW QRWLQJWKDWWKH HOHPHQWVRIWKLV&LUFXLWjVSRVW$SSUHQGLMXULVSUXGHQFH)LUVW
GLIIHUHQFH EHWZHHQ D VWDWXWRU\ PD[LPXP SHQDOW\ DQG D ZKLOH DV sXVWLFH 2j&RQQRU DSWO\ REVHUYHG WKH $SSUHQGL
PDQGDWRU\PLQLPXPSHQDOW\RIWKHVDPHOHQJWKLVVLJQLILFDQW PDMRULW\VWDWHGVHYHUDOIRUPXODWLRQVRILWVUXOLQJZKLFKDUH
EHFDXVHWKHWULDOMXGJHjVGHWHUPLQDWLRQRIWKHZHLJKWRIWKH VRPHZKDWLQWHQVLRQZLWKHDFKRWKHULWLVLQFXPEHQWXSRQXV
GUXJV mWRRN DZD\ DQ\ GLVFUHWLRQ LQ WHUPV RI LPSRVLQJ D QHYHUWKHOHVVWRDGRSWDQGDGKHUHWRRQHRIWKHVHIRUPXODWLRQV
VKRUWHUVHQWHQFHl TXRWLQJ)ORZDO)GDW DVWKHODZRIWKLV&LUFXLW,QVWHDGZHOLNHWKHPDMRULW\LQ
$SSUHQGLKDYHHQGRUVHGVHYHUDOGLIIHUHQWDQGLQFRQVLVWHQW
,QGHHGWKHGLVWULFWFRXUWLQWKHLQVWDQWFDVHHYHQLILWKDG VWDWHPHQWVRImWKHUXOHlRI$SSUHQGL7REHVXUHLI$SSUHQGL
EHHQVRLQFOLQHGZRXOGQRWKDYHVHQWHQFHG+XPSKUH\WR LWVHOILVDPELJXRXVWKHUHLVOLWWOHZHFDQGRWRRYHUFRPHWKLV
PRQWKV WKH ORZ HQG RI WKH *XLGHOLQHV VHQWHQFLQJ UDQJH SUREOHPG@WKDWWKHGLVWULFWFRXUWWKRXJKWLWVHOIFRQVWUDLQHGE\ PXVW DSSO\ $SSUHQGL LQ WKH ILUVW LQVWDQFH , DP HVSHFLDOO\
DVSHFLILFVWDWXWHWRLPSRVHWKHVHQWHQFHLWGLGl,G WURXEOHGE\WKLV&LUFXLWjVIDLOXUHWRHQGRUVHDVLQJOHmUXOHlRI
$SSUHQGLLQLWVGHFLVLRQVE\WKHKRSHOHVVMXPEOHWKDWLQVWHDG
$IWHU *DUFLD DQG .LQJ ZH DUH OHIW ZLWK DQ LQRUGLQDWHO\ SUHVHQWV LWVHOI DV WKH mSUHFHGHQWl RI WKLV &RXUW RQ WKLV
FRPSOLFDWHG$SSUHQGLGRFWULQH$OWKRXJKLWLVREYLRXVWKDW TXHVWLRQDQGE\WKHKDYRFWKLVVWDWHRIDIIDLUVSOD\VZLWKDQ\
WKHOLPLWDWLRQVSODFHGXSRQ5DPLUH]OHDGWRSHFXOLDUUHVXOWV SULQFLSOHG DWWHPSW WR DGKHUH WR WKH FDUGLQDO UXOH RI VWDUH
ZHDUHFRQVWUDLQHGE\WKHSULQFLSOHRIVWDUHGHFLVLVWRDELGHE\ GHFLVLV
WKRVH GHFLVLRQV 6HH 6DOPL Y 6HFj\ RI +HDOWK +XPDQ
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 6HUYV)G WK&LU ,WLVDOVRDSSDUHQW
WKDWPXFKRIRXUFXUUHQW$SSUHQGLMXULVSUXGHQFHDVLWUHODWHV
&21&855,1*,13$57',66(17,1*,13$57 WRPDQGDWRU\PLQLPXPVUHVWVXSRQZKDWZDVLQWKHPLQGRI
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB WKHGLVWULFWMXGJHZKHQVKHVHQWHQFHGWKHGHIHQGDQW8QGHU
RXUFXUUHQWGRFWULQHDGLVWULFWMXGJHPD\VHQWHQFHDGHIHQGDQW
526(1'LVWULFWsXGJHFRQFXUULQJLQSDUWDQGGLVVHQWLQJ WRDWHUPRILPSULVRQPHQWZKLFKH[FHHGVEXWGRHVQRWHTXDO
LQSDUW,FRQFXULQDOOEXW3DUW,,,VHFWLRQ'RIWKH&RXUWjV WKHPDQGDWRU\PLQLPXPRIDKLJKHUSHQDOW\UDQJHZLWKRXW
GHFLVLRQ+RZHYHU,UHVSHFWIXOO\GLVVHQWIURPWKHPDMRULW\jV FRQFHUQWKDWVXFKDVHQWHQFHZLOOUDLVHDQLQIHUHQFHWKDWVKH
GHWHUPLQDWLRQ WKDW WKLV FDVH EH UHPDQGHG IRU UHVHQWHQFLQJ IHOW KHUVHOI FRQVWUDLQHG E\ WKH PDQGDWRU\ PLQLPXP 6HH
XQGHUWKHDXWKRULW\RI$SSUHQGLY1HZsHUVH\86 *DUFLD)GDW+RZHYHULIHYLGHQFHLQWKHUHFRUG
6&W 7KLVUXOLQJLQP\YLHZMRLQVWKH LQGLFDWHV WKDW WKH MXGJH WKRXJKW KHUVHOI FRQVWUDLQHG WR
ZURQJ VLGH LQ DQ LQWUDFLUFXLW GHEDWH DV WR WKH SURSHU VHQWHQFHWKHGHIHQGDQWZLWKLQWKHKLJKHUVWDWXWRU\UDQJHVXFK
FRQVWUXFWLRQRI$SSUHQGL7REHVXUHWKHUHLV6L[WK&LUFXLW HYLGHQFHZLOOGHPRQVWUDWHDSRWHQWLDO$SSUHQGLYLRODWLRQ6HH
DXWKRULW\IRUWKHSRVLWLRQWDNHQE\WKHPDMRULW\nEXWWKLVLV 6WUD\KRUQ)GDW$SHQDOW\ZKLFKH[DFWO\HTXDOV
SUHFLVHO\WKHSUREOHPEHFDXVHWKHUHDOVRLVDXWKRULW\IRUWKH WKH ERWWRP RI WKH KLJKHU UDQJH LV SUREDWLYH RI VXFK D
QDUURZHU YLHZ , DGYRFDWH D SULRU VHULHV RI FDVHV ZKLFK SHUFHSWLRQRIFRQVWUDLQW6HH8QLWHG6WDWHVY6WDIIRUG
FRQWLQXH WR EH IROORZHG DQG KDYH QHYHU EHHQ RYHUUXOHG )G Q WK&LU
6XEVHTXHQWSDQHOVLQFOXGLQJWKLVRQHDUHERXQGWRIROORZ
WKHVHLQLWLDOSRVW$SSUHQGLGHFLVLRQVE\WKHGRFWULQHRIVWDUH :HDQWLFLSDWHWKDWWKLV$SSUHQGLFDFRSKRQ\VRRQZLOOEH
GHFLVLV E\ RXU &LUFXLW UXOH HPERG\LQJ WKLV SULQFLSOH VHH KDUPRQL]HG E\ WKH 6XSUHPH &RXUW 6HH +DUULV Y 8QLWHG
6L[WK&LUFXLW5XOH F DQGE\RXUH[SUHVVUHFRJQLWLRQWKDW 6WDWHV 1R :/ 'HF
mZKHQDODWHUGHFLVLRQRIWKLVFRXUWFRQIOLFWVZLWKRQHRIRXU JUDQWLQJ FHUWLRUDUL RQ WKH TXHVWLRQ RI ZKHWKHU IDFWXDO
SULRUSXEOLVKHGGHFLVLRQVZHDUHVWLOOERXQGE\WKHKROGLQJRI ILQGLQJV WKDW UHVXOW LQ DQ LQFUHDVHG PDQGDWRU\ PLQLPXP
WKHHDUOLHUFDVHl'DUUDKY&LW\RI2DN3DUN)G VHQWHQFHPXVWEHDOOHJHGLQDQLQGLFWPHQWDQGSURYHGEH\RQG
WK &LU ,I DQ\ DGGLWLRQDO mWLHEUHDNHUVl ZHUH DUHDVRQDEOHGRXEW ,QWKHPHDQWLPHZHDUHFDOOHGXSRQWR
QHHGHG,ZRXOGVXJJHVWWZR ILUVWWKDWWKHFDVHVIROORZHGE\ GHFLGHFDVHVLQFRQIRUPLW\ZLWKWKHODZ:KLOHZHUHFRJQL]H
WKH PDMRULW\ HVSRXVH D VZHHSLQJ FRQVWUXFWLRQ RI $SSUHQGL WKHIUXVWUDWLRQH[SUHVVHGLQWKHGLVVHQWZHILQGLWVVXJJHVWHG
ZKLFKLVDWRGGVZLWKDQ\WHQDEOHUHDGLQJRIWKDWFDVHDQG UHVROXWLRQWRWKLVFDVHZDQWLQJERWKDVDSUDFWLFDOPDWWHUDQG
VHFRQGWKDWWKLVEURDGUHDGLQJKDVEHHQUHMHFWHGE\DOOWHQ DVDPDWWHURIMXULVSUXGHQFH
RWKHU&LUFXLWVWKDWKDYHFRQVLGHUHGWKHTXHVWLRQOHDYLQJRXU
&LUFXLWDVDQDFNQRZOHGJHGmPLQRULW\RIRQHlRQWKLVSRLQW 7KH GLVVHQWjV DUJXPHQW UHOLHV RQ WZR LQWHUGHSHQGHQW
6HH8QLWHG6WDWHVY+LOO)G WK&LU DVVXPSWLRQV ILUVWWKDWRXUSUHFHGHQWLQWKLVDUHDLVQRWMXVW
FRPSOH[ EXW IXQGDPHQWDOO\ LUUHFRQFLODEOH VHFRQG WKDW
7KHPDMRULW\LQP\YLHZWKHQH[DFHUEDWHVWKHSUREOHPE\ EHFDXVHLWLVLUUHFRQFLODEOHZHDUHIUHHWRLJQRUHVRPHFDVHV
IROORZLQJDQRWKHUVHWRI6L[WK&LUFXLWGHFLVLRQVZKLFKFRQIHU LQ IDYRU RI RWKHUV 1HLWKHU RI WKHVH DVVXPSWLRQV FDQ
VSHFLDOVWDWXVRQ$SSUHQGLFODLPVH[HPSWLQJWKHPIURPWKH ZLWKVWDQG VFUXWLQ\ $V WKH GLVVHQW DFNQRZOHGJHV WKH
XVXDOUXOHRIZDLYHUWKDWLVDEHGURFNSULQFLSOHRIDSSHOODWH 6XSUHPH &RXUWjV $SSUHQGL GHFLVLRQ RIIHUV PRUH WKDQ RQH
ODZ QDPHO\WKDWDQREMHFWLRQLVIRUIHLWHGDQGKHQFHVXEMHFW IRUPXODWLRQ RI WKH WHVW o RQH WKDW DSSHDUV WR VXSSRUW D
RQO\WRSODLQHUURUUHYLHZLIQRWWLPHO\DVVHUWHGEHIRUHWKH mVWDWXWRU\ PD[LPXPl UXOH DQG DQRWKHU WKDW DSSHDUV WR
WULDOFRXUW,QVWHDGWKHPDMRULW\KROGVWKDWZHVKRXOGUHYLHZ VXSSRUWDQmLQFUHDVHGUDQJHlUXOH1HYHUWKHOHVVWKHGLVVHQW
8QLWHG6WDWHVY+XPSKUH\ 1R 1R 8QLWHG6WDWHVY+XPSKUH\
IDXOWVWKLV&RXUWIRUIDLOLQJWRDGKHUHWRZKDWLWGHVFULEHVDVD DFNQRZOHGJPHQWWKDWWKH\KDGEHHQXVHGWRIXUWKHUKLVGUXJ
mVWDWXWRU\PD[LPXPlLQWHUSUHWDWLRQRI$SSUHQGL7KHGLVVHQW VHOOLQJDFWLYLWLHV/LNHZLVH&URPLW\DGUXJGHDOHUZLWKDQ
H[WUDFWV IURP RXU GHFLVLRQV LQ 8QLWHG 6WDWHV Y 3DJH DQG HYHQPRUHH[WHQVLYHRSHUDWLRQWKDQ(DWRQjVHQWHUHGLQWRD
8QLWHG6WDWHVY0XQR])G WK&LU DPRQJ SOHD DJUHHPHQW ZLWK WKH *RYHUQPHQW LQ H[FKDQJH IRU KLV
RWKHUVDQH[FOXVLYHmVWDWXWRU\PD[LPXPlLQWHUSUHWDWLRQRI WHVWLPRQ\ ZKLFK UHVXOWHG LQ D VHQWHQFH RI PRQWKV
$SSUHQGL$VZLWKWKHVWDQGDUGRIUHYLHZKRZHYHUQRQHRI LPSULVRQPHQW ZLWKDWZHOYHPRQWKUHGXFWLRQIRUFRPSOHWLRQ
WKHVHGHFLVLRQVSUHFOXGHDFRPSDQLRQmLQFUHDVHGUDQJHlUXOH RIDGUXJWUHDWPHQWSURJUDP WREHVHUYHGDWDORZVHFXULW\
WKDW ZRXOG FRYHU PDQGDWRU\ PLQLPXPV 3DJH KHOG WKDW IDFLOLW\ZKHUHKLVEURWKHULVDOVRKRXVHGDQGZKLFKLVOHVVWKDQ
$SSUHQGLKDGEHHQYLRODWHGEHFDXVHWKHVHQWHQFHH[FHHGHG WZRKRXUVIURPKLVIDPLO\DQGIULHQGVLQ&OHYHODQG
WKH VWDWXWRU\ PD[LPXP o LW VDLG QRWKLQJ DERXW$SSUHQGLjV
DSSOLFDWLRQ WR PDQGDWRU\ PLQLPXPV 0XQR] KHOG WKDW +XPSKUH\UHDVRQVWKDWLIKHKDGRIIHUHG(DWRQDQG&URPLW\
$SSUHQGL KDG QRW EHHQ YLRODWHG ZKHUH D VHQWHQFH GLG QRW VRPHWKLQJRIYDOXHLQH[FKDQJHIRUWKHLUIDYRUDEOHWHVWLPRQ\
H[FHHG WKH VWDWXWRU\ PD[LPXP EXW DJDLQ ZH FDQQRW LQIHU KH ZRXOG KDYH EHHQ VXEMHFW WR LQGLFWPHQW IRU EULELQJ D
IURP0XQR]WKDWWKHSDQHOLQWHQGHGWRHQGRUVHDQH[FOXVLYH ZLWQHVVSXUVXDQWWR86& F VRZK\WKHQVKRXOG
mPD[LPXPRQO\lUXOH7KHGLVVHQWDUJXHVWKDWRXUGHFLVLRQ WKH*RYHUQPHQWEHDOORZHGWRGRWKDWZKLFKLIGRQHE\D
LQ)ORZDOZKLFKZDVDFWXDOO\DUJXHGEHIRUH0XQR]EXW SULYDWH FLWL]HQ FRXOG UHVXOW LQ FULPLQDO SURVHFXWLRQ +LV
GHFLGHGWZRZHHNVDIWHUZDUGWRRNDQmXQZDUUDQWHGlWXUQ FODLPLVIRUHFORVHGE\RXUGHFLVLRQLQ8QLWHG6WDWHVY:DUH
IURP WKH mPD[LPXP RQO\l UXOH RI 3DJH DQG0XQR] %XW LQ ZKLFK ZH KHOG WKDW IHGHUDO SURVHFXWRUV DUH EH\RQG WKH
WKHUHLVQRWKLQJIXQGDPHQWDOO\LUUHFRQFLODEOHDERXW$SSUHQGL VFRSHRI86& F )G WK
SURWHFWLQJ D GHIHQGDQW IURP D VHQWHQFH WKDW H[FHHGV WKH &LU
VWDWXWRU\PD[LPXPDQGDVHQWHQFHWKDWLQFUHDVHVWKHUDQJHRI
SHQDOWLHVE\UDLVLQJWKHPDQGDWRU\PLQLPXP &DVHVVKRXOG $OVR ZLWKRXW PHULW LV +XPSKUH\jV DUJXPHQW WKDW WKH
*RYHUQPHQWjV XVH RI (DWRQjV DQG &URPLW\jV WHVWLPRQ\
YLRODWHG 'LVFLSOLQDU\ 5XOH & RI WKH 2KLR &RGH RI
$V D PDWWHU RI IRUPDO ORJLF ODQJXDJH LQ 0XQR] FRXOG EH FRQVWUXHG
3URIHVVLRQDO5HVSRQVLELOLW\ZKLFKSURYLGHVWKDWm>D@ODZ\HU
WR H[FOXGH DQ\ $SSUHQGL YLRODWLRQ XQOHVV WKH GLVWULFW FRXUWjV ILQGLQJ
VKDOO QRW SD\ RIIHU WR SD\ RU DFTXLHVFH LQ WKH SD\PHQW RI
UHVXOWHG LQ D GHIHQGDQW UHFHLYLQJ D VHQWHQFH LQ H[FHVV RI WKH PD[LPXP FRPSHQVDWLRQWRDZLWQHVVFRQWLQJHQWXSRQWKHFRQWHQWRIKLV
VWDWXWRU\ SHQDOW\ 6XFK IRUPDOLVP KRZHYHU ZRXOG LQHYLWDEO\ OHDG WR WHVWLPRQ\RUWKHRXWFRPHRIWKHFDVHl+HFLWHVQRDXWKRULW\
DEVXUG UHVXOWV )RU H[DPSOH LI D GLVWULFW FRXUW LVVXHG D VHQWHQFH EHORZ WKH DQG ZH KDYH IRXQG QRQH IRU WKH SURSRVLWLRQ WKDW D SOHD
PDQGDWRU\ PD[LPXP XVLQJ WKH UHDVRQDEOH GRXEW VWDQGDUG EXW GLG VR DIWHU
KDYLQJ SHUHPSWRULO\ GLVPLVVHG WKH MXU\ WKHUH ZRXOG EH OLWWOH TXHVWLRQ WKDW
DJUHHPHQWLVEDUUHGE\'5 & :HDFFRUGLQJO\ILQGQR
D FRQVWLWXWLRQDO YLRODWLRQ KDG RFFXUUHG United States v. Humphrey
Combined Opinion