02a0131p.06

7KH +RQRUDEOH *HUDOG ( 5RVHQ 8QLWHG 6WDWHV 'LVWULFW -XGJH IRU WKH
(DVWHUQ 'LVWULFW RI 0LFKLJDQ VLWWLQJ E\ GHVLJQDWLRQ

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
Y
0217(/ /$9(//(
+803+5(<
'HIHQGDQW$SSHOODQW
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW&OHYHODQG
1R²3DWULFLD$*DXJKDQ'LVWULFW-XGJH
$UJXHG$XJXVW
'HFLGHGDQG)LOHG$SULO
%HIRUH0225(DQG&2/(&LUFXLW-XGJHV526(1
'LVWULFW-XGJH
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' 0LFKDHO - %HQ]D &OHYHODQG 2KLR IRU
$SSHOODQW 5RQDOG % %DNHPDQ $66,67$17 81,7('

-- 1 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
67$7(6 $77251(< &OHYHODQG 2KLR IRU $SSHOOHH
21 %5,() 0LFKDHO - %HQ]D &OHYHODQG 2KLR IRU
$SSHOODQW 5RQDOG % %DNHPDQ $66,67$17 81,7('
67$7(6$77251(<&OHYHODQG2KLRIRU$SSHOOHH
&2/( - GHOLYHUHG WKH RSLQLRQ RI WKH FRXUW LQ ZKLFK
0225(-MRLQHG526(1'- SS GHOLYHUHGD
VHSDUDWHRSLQLRQFRQFXUULQJLQSDUWDQGGLVVHQWLQJLQSDUW
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
5*8<&2/(-5&LUFXLW-XGJH
,,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\¶V %DWVRQ
FKDOOHQJHUDLVHGGXULQJWKHFRXUVHRIYRLUGLUH WKHMXU\
LQVWUXFWLRQV IDLOHG WR SURSHUO\ JXLGH WKH MXU\ LQ LWV
FRQVLGHUDWLRQRIWKHPXOWLSOHFRQVSLUDFLHVDOOHJHGLQWKLVFDVH
IDLOHGWRHQVXUHMXU\XQDQLPLW\RQHOHPHQWVRIWKHRIIHQVH
DQGIDLOHGWRGLUHFWWKHMXU\WRGHWHUPLQHWKHW\SHRIGUXJV
VROGE\+XPSKUH\ WKHGLVWULFWFRXUWYLRODWHG$SSUHQGLY
1HZ-HUVH\86 ZKHQLWIDLOHGWRLQVWUXFW
WKHMXU\WRILQGGUXJTXDQWLWLHVEH\RQGDUHDVRQDEOHGRXEW
+XPSKUH\¶V 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

-- 2 of 44 --

1R 8QLWHG6WDWHVY+XPSKUH\
PLVFRQGXFW DW FULWLFDO VWDJHV RI WULDO DQG WKH
*RYHUQPHQW¶VSOHDDJUHHPHQWVZLWKDOOHJHGFRFRQVSLUDWRUV
+HQU\ (DWRQ DQG 7\URQH &URPLW\ SXUVXDQW WR ZKLFK ERWK
ZHUH³SDLG´IRUWKHLUWHVWLPRQ\YLRODWHGWKHH[SUHVVWHUPVRI
86&† F DQG'LVFLSOLQDU\5XOH F RIWKH
2KLR&RGHRI3URIHVVLRQDO5HVSRQVLELOLW\
)RUWKHUHDVRQVWKDWIROORZZH$)),50WKHMXGJPHQWRI
WKHGLVWULFWFRXUWZLWKWKHH[FHSWLRQRIWKHVHQWHQFH%HFDXVH
WKH GLVWULFW FRXUW¶V GUXJ TXDQWLW\ ILQGLQJ UHVXOWHG LQ DQ
HQKDQFHG VWDWXWRU\ SHQDOW\ ZH FRQFOXGH WKDW +XPSKUH\¶V
VHQWHQFH YLRODWHG WKH 6XSUHPH &RXUW¶V UXOH HVWDEOLVKHG LQ
$SSUHQGL Y 1HZ -HUVH\ :H DFFRUGLQJO\ 9$&$7(
+XPSKUH\¶VVHQWHQFHDQG5(0$1'WKLVFDVHWRWKHGLVWULFW
FRXUWIRUUHVHQWHQFLQJ
,,%$&.*5281'
7KH &DULEEHDQ *DQJ 7DVN )RUFH ³7DVN )RUFH´ 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\¶VSRVVHVVLRQ,WQHYHUWKHOHVV
VHFXUHG VXIILFLHQW HYLGHQFH WR H[HFXWH VHDUFK DQG DUUHVW
ZDUUDQWV RQ -XQH RQ QXPHURXV LQGLYLGXDOV DQG
ORFDWLRQVLQFOXGLQJ+XPSKUH\DQGKLVSURSHUW\7KLVVHDUFK
UHYHDOHG QR GUXJV RU GUXJ SDUDSKHUQDOLD LQ +XPSKUH\¶V
SRVVHVVLRQ 2Q -XO\ 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
0RUURZERWKRIZKRPSURFHHGHGWRWULDOEHIRUH-XGJH6DP
+%HOORQ-XQH

-- 3 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
7HVWLPRQ\DWWULDOUHYHDOHGWKDW(DWRQILUVWPHW+XPSKUH\
LQ$ODEDPDLQ6HSWHPEHU7KHUHDIWHU(DWRQDOOHJHGO\
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)URP6HSWHPEHUWKURXJK0DUFK
+XPSKUH\GLVWULEXWHGFRFDLQHWR(DWRQ³DSSUR[LPDWHO\WHQWR
WZHOYHWLPHV´(DWRQDOVRWHVWLILHG WKDWKHDQG+XPSKUH\
FRPPXQLFDWHGZLWKHDFKRWKHUE\WHOHSKRQHDQGSDJHUXVLQJ
SUHGHWHUPLQHGFRGHV
7DVN)RUFHPHPEHUDQG6KDNHU+HLJKWV2KLR'HWHFWLYH
0DUYLQ/D0LHOOHWHVWLILHGWKDWIURP-DQXDU\WKURXJK
-XQH WKH 7DVN )RUFH XQGHUWRRN FRXUWDXWKRUL]HG
LQWHUFHSWLRQVRIHOHFWURQLFDQGZLUHFRPPXQLFDWLRQVEHWZHHQ
+XPSKUH\ DQG RWKHU LQGLYLGXDOV XQGHU LQYHVWLJDWLRQ
/D0LHOOHDOVRWHVWLILHGWKDWKHREWDLQHG+XPSKUH\¶VFHOOXODU
WHOHSKRQHUHFRUGVZKLFKLQFRQMXQFWLRQZLWKWKHLQWHUFHSWHG
FRPPXQLFDWLRQV UHYHDOHG WKDW VKRUWO\ DIWHU (DWRQ ZRXOG
DUUDQJHWKHVDOHRIFRFDLQHWRWKLUGSDUWLHV(DWRQZRXOGSDJH
+XPSKUH\ZLWKWKHDSSURSULDWHFRGHVRVWHQVLEO\WRSXUFKDVH
VRPHTXDQWLW\RIFRFDLQH
&URPLW\WHVWLILHGWKDWKHPHW+XPSKUH\VRPHWLPHLQ
RU DQG WKDW WKHLU ILUVW GUXJ WUDQVDFWLRQ RFFXUUHG LQ
1RYHPEHU &URPLW\ VWDWHG WKDW RQ WKLV RFFDVLRQ KH
SDJHG+XPSKUH\DQGHQWHUHGKLVKRPHWHOHSKRQHQXPEHUWKH
DSSURSULDWH FRGH WR LGHQWLI\ KLPVHOI DV WKH FDOOHU DQG WKH
DPRXQW RI PRQH\ KH KDG WR SXUFKDVH FRFDLQH 7KH WZR
VXEVHTXHQWO\ PHW ZKHUHXSRQ +XPSKUH\ DOOHJHGO\ VROG
&URPLW\RQHKDOINLORJUDPRIFRFDLQHIRU&URPLW\
DOVRWHVWLILHGWKDW+XPSKUH\FRQWLQXHGWRVXSSO\KLPZLWK
GUXJVWKURXJK)HEUXDU\GXULQJZKLFKWLPHKHUHFHLYHG
³SUREDEO\ EHWZHHQ VHYHQ DQG QLQH´ NLORJUDPV RI FRFDLQH
+XPSKUH\¶V SKRQH UHFRUGV FRXSOHG ZLWK LQIRUPDWLRQ
LQWHUFHSWHGIURP+XPSKUH\¶VSDJHULQGLFDWHGWKDWRQPRUH
WKDQ RQH RFFDVLRQ &URPLW\ SDJHG +XPSKUH\ VHHNLQJ WR
1R 8QLWHG6WDWHVY+XPSKUH\
, GR QRW XQGHUVWDQG WKH PDMRULW\¶V FRQIXVLRQ DV WR WKH RXWFRPH , DP
DGYRFDWLQJ LQ WKLV FDVH 6SHFLILFDOO\ , EHOLHYH WKDW 'HIHQGDQW¶V $SSUHQGL
FKDOOHQJH VKRXOG EH UHMHFWHG DQG KLV VHQWHQFH DIILUPHG LQ DOO UHVSHFWV $V
DXWKRULW\ IRU WKLV , ZRXOG ORRN WR 3DJH 0XQR] DQG RXU RWKHU LQLWLDO SRVW
$SSUHQGL UXOLQJV WKDW , KDYH VXUYH\HG DERYH 7R WKH H[WHQW WKDW WKLV
DSSURDFK UHTXLUHV XV WR ³LJQRUH´ FHUWDLQ RI RXU SXEOLVKHG GHFLVLRQV WKLV
LV E\ QR PHDQV XQSUHFHGHQWHG 5DWKHU DV , REVHUYHG DW WKH RXWVHW ZH
KDYH DGRSWHG D UXOH WR JRYHUQ WKLV SUHFLVH VLWXDWLRQ UHTXLULQJ WKDW ZH
DGKHUH WR RXU ILUVW SXEOLVKHG UXOLQJ RQ D VXEMHFW RYHU D ODWHU EXW
FRQIOLFWLQJ GHFLVLRQ 6HH 'DUUDK VXSUD )G DW
,Q FRQWUDVW LW LV LQWHUHVWLQJ WR FRQVLGHU ZKDW PLJKW RFFXU XSRQ WKH
UHPDQG RUGHUHG E\ WKH PDMRULW\ $W KLV LQLWLDO VHQWHQFLQJ 'HIHQGDQW
IDFHG D 6HQWHQFLQJ *XLGHOLQHV UDQJH RI WR PRQWKV DQG WKH
PDMRULW\ ILQGV QR HUURU LQ WKLV GHWHUPLQDWLRQ 2Q UHPDQG WKHQ 'HIHQGDQW
VWDQGV WR DFKLHYH DW PRVW D PRQWK UHGXFWLRQ LQ KLV VHQWHQFH <HW KLV
VHQWHQFH DOVR FRXOG EH HQKDQFHG VLQFH DV WKH PDMRULW\ SRLQWV RXW RXU
SRVW$SSUHQGL MXULVSUXGHQFH SHUPLWV WKH LPSRVLWLRQ RI D VHQWHQFH WKDW
H[FHHGV EXW GRHV QRW HTXDO DQ HQKDQFHG VWDWXWRU\ PLQLPXP VR ORQJ DV LW
GRHV QRW H[FHHG WKH GHIDXOW VWDWXWRU\ PD[LPXP XQGHU † E & ²
LQ WKLV FDVH \HDUV 6HH .LQJ )G DW
PDMRULW\¶V GLVSRVLWLRQ RI 'HIHQGDQW¶V $SSUHQGL FODLP DQG
IURPLWVGHFLVLRQWRUHPDQGWKLVFDVHIRUUHVHQWHQFLQJ

-- 4 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
,QWKHHQG,WDNH3DJHWRPHDQZKDWLWOLWHUDOO\VD\VQR
PRUHDQGQROHVV$GHIHQGDQWZKR³IDLO>V@WRREMHFWWRWKH
GLVWULFWMXGJHPDNLQJWKHGHWHUPLQDWLRQRIGUXJTXDQWLWLHV´
IDFHV SODLQ HUURU UHYLHZ RI KLV $SSUHQGL FODLP RQ DSSHDO
3DJH)GDW7REHVXUHWKHUHFDQEHFDVHVIDOOLQJ
DWWKHPDUJLQVRIWKLVUXOHDQGDVWKHPDMRULW\SRLQWVRXWZH
UHTXLUHQRSDUWLFXODU³PDJLFZRUGV´WRSUHVHUYHDQ$SSUHQGL
EDVHGFKDOOHQJH<HWLQP\YLHZWKLVFDVHOLHVQRZKHUHQHDU
DQ\JUH\DUHDLQ3DJH¶VUXOH'HIHQGDQWQRWRQO\IDLOHGWR
REMHFWWRWKH'LVWULFW-XGJHPDNLQJWKHGHWHUPLQDWLRQRIGUXJ
TXDQWLWLHVE\DSUHSRQGHUDQFHRIWKHHYLGHQFHKHH[SUHVVO\
DJUHHGWKDWWKLVSURFHGXUHJRYHUQHGKLVVHQWHQFLQJDQGKH
IUDPHGKLVREMHFWLRQVDFFRUGLQJO\LQYLWLQJWKH'LVWULFW&RXUW
LQ LWV UROH DV IDFWILQGHU WR GLVFRXQW WKH *RYHUQPHQW¶V
HYLGHQFHRIGUXJTXDQWLWLHVDVXQUHOLDEOH2QWKLVUHFRUG,
WKLQNLWFOHDUWKDW'HIHQGDQW¶VSUHVHQW$SSUHQGLFODLPVKRXOG
EHUHYLHZHGRQO\IRUSODLQHUURU
,,,
7KH PDMRULW\¶V GHFLVLRQ WR UHPDQG WKLV FDVH IRU
UHVHQWHQFLQJ UHVWV XSRQ WZR XQGHUO\LQJ GHWHUPLQDWLRQV
L WKDWWKHUXOHRI$SSUHQGLLVYLRODWHGZKHQHYHUD'LVWULFW
&RXUW¶VIDFWXDOILQGLQJE\DSUHSRQGHUDQFHRIWKHHYLGHQFH
DOWHUVWKHUDQJHRISHQDOWLHVWRZKLFKDGHIHQGDQWLVH[SRVHG
DQG LL WKDW$SSUHQGLFODLPVDUHUHYLHZHGGHQRYRZKHQHYHU
DGHIHQGDQWUDLVHVDQ\VRUWRIFKDOOHQJHDWVHQWHQFLQJWRWKH
'LVWULFW&RXUW¶VIDFWXDOILQGLQJVDVWRGUXJTXDQWLW\%RWKRI
WKHVHXQGHUO\LQJSURSRVLWLRQV,EHOLHYHDUHGHPRQVWUDEO\LQ
HUURU ZKHWKHU RQH SURFHHGV E\ ILUVW SULQFLSOHV IURP WKH
UHOHYDQW6XSUHPH&RXUWSUHFHGHQWVRUZKHWKHURQHVLPSO\
UHYLHZVWKHLQLWLDO DQGSUHVXPDEO\VWLOOELQGLQJ 6L[WK&LUFXLW
SUHFHGHQWV RQ HDFK RI WKHVH SRLQWV $FFRUGLQJO\ ZKLOH ,
FRQFXULQDOORWKHUUHVSHFWV,UHVSHFWIXOO\GLVVHQWIURPWKH
1R 8QLWHG6WDWHVY+XPSKUH\
$ GHIHQGDQW LV HQWLWOHG WR D KHDULQJ WR FKDOOHQJH WKH YDOLGLW\ RI D
VHDUFK ZDUUDQW LI KH ³PDNHV D VXEVWDQWLDO SUHOLPLQDU\ VKRZLQJ WKDW D IDOVH
VWDWHPHQW NQRZLQJO\ DQG LQWHQWLRQDOO\ RU ZLWK UHFNOHVV GLVUHJDUG IRU WKH
WUXWK ZDV LQFOXGHG E\ WKH DIILDQW LQ WKH ZDUUDQW DIILGDYLW DQG WKH
DOOHJHGO\ IDOVH VWDWHPHQW LV QHFHVVDU\ WR WKH ILQGLQJ RI SUREDEOH FDXVH´
)UDQNV Y 'HODZDUH 86
SXUFKDVH FRFDLQH IURP KLP DIWHU ZKLFK +XPSKUH\ FDOOHG
&URPLW\WRPDNHSD\PHQWDUUDQJHPHQWV
2Q-XQHDMXU\DFTXLWWHG0RUURZRIDOOFRXQWV
+XPSKUH\ KRZHYHU ZDV FRQYLFWHG RI FRQVSLULQJ WR
GLVWULEXWH FRFDLQH &RXQWV 2QH DQG 7ZR XQODZIXO
SRVVHVVLRQ RI D ILUHDUP E\ D SUHYLRXVO\ FRQYLFWHG IHORQ
&RXQW7ZHOYH DQGFRQVSLULQJWRFRPPLWPRQH\ODXQGHULQJ
&RXQW 6HYHQWHHQ KH ZDV DFTXLWWHG RI WZR VXEVWDQWLYH
PRQH\ODXQGHULQJFRXQWV &RXQWV(LJKWHHQDQG1LQHWHHQ
2Q 0DUFK WKH GLVWULFW FRXUW GHQLHG +XPSKUH\¶V
SRVWWULDOPRWLRQVIRUD)UDQNVKHDULQJDQGDQHZWULDODQG
KLV PRWLRQ WR VHW DVLGH KLV VWDWH FRQYLFWLRQ IRU VHQWHQFLQJ
SXUSRVHV$W+XPSKUH\¶VUHTXHVW-XGJH%HOOUHFXVHGKLPVHOI
RQ6HSWHPEHUWKHFDVHZDVWKHQWUDQVIHUUHGWR-XGJH
3DWULFLD$*DXJKDQ
'DYLG 'XGOH\ +XPSKUH\¶V FRXQVHO UDLVHG D SRVVLEOH
FRQIOLFW RI LQWHUHVW VKRUWO\ EHIRUH +XPSKUH\¶V VFKHGXOHG
VHQWHQFLQJ7KHJRYHUQPHQWILOHGDPRWLRQUHTXHVWLQJWKDW
WKH GLVWULFW FRXUW FRQVXOW ZLWK +XPSKUH\ DQG 'XGOH\
UHJDUGLQJ'XGOH\¶VFRQWLQXHGUHSUHVHQWDWLRQRI+XPSKUH\
7KHGLVWULFWFRXUWUHYLHZHGDWUDQVFULSWRIDQHDUOLHUKHDULQJ
KHOGEHIRUH-XGJH%HOORQWKLVLVVXHDQGFRQFOXGHGWKDWQR
DGGLWLRQDOLQTXLU\ZDVZDUUDQWHG2Q0DUFKWKH
GLVWULFWFRXUWVHQWHQFHG+XPSKUH\WRDPDQGDWRU\PRQWK
WHUPRILPSULVRQPHQWSXUVXDQWWR86&† E $
DWHQ\HDUSHULRGRIVXSHUYLVHGUHOHDVHDILQHDQGD
VSHFLDODVVHVVPHQW7KLVWLPHO\DSSHDOIROORZHG

-- 5 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
,,,',6&866,21
$*RYHUQPHQW0LVFRQGXFW
6WDQGDUGRI5HYLHZ
:KHUH D GHIHQGDQW IDLOV WR UDLVH DQ REMHFWLRQ EHIRUH WKH
GLVWULFW FRXUW ³D FRXUW RI DSSHDOV >KDV@ D OLPLWHG SRZHU WR
FRUUHFW HUURUV WKDW ZHUH IRUIHLWHG EHFDXVH >WKH\ ZHUH@ QRW
WLPHO\UDLVHGLQGLVWULFWFRXUW´8QLWHG6WDWHVY2ODQR
86 ,QGHHGZHZLOOQRWLFHVXFKDQHUURU
RQO\LQ³H[FHSWLRQDOFLUFXPVWDQFHV´RUZKHQWKHIDLOXUHWRGR
VRZRXOGSURGXFHD³SODLQPLVFDUULDJHRIMXVWLFH´6HH8QLWHG
6WDWHVY3LFNHWW)G WK&LU
:HKDYHGHYHORSHGDIRXUSDUWDQDO\VLVWRUHYLHZIRUIHLWHG
FODLPV:HFRQVLGHUILUVWZKHWKHUWKHUHZDVHUURU8QLWHG
6WDWHVY9LQFHQW)G WK&LU ,IWKHUH
ZDVHUURUWKHQZHGHWHUPLQHLIWKHHUURUZDVSODLQ,G,IWKH
HUURUZDVSODLQZHQH[WGHFLGHZKHWKHUWKHHUURUDIIHFWHGWKH
GHIHQGDQW¶V VXEVWDQWLDO ULJKWV ,G )LQDOO\ ZH FRQVLGHU
ZKHWKHUWKHHUURUVHULRXVO\DIIHFWHGWKH³IDLUQHVVLQWHJULW\RU
SXEOLFUHSXWDWLRQ´RIWKHMXGLFLDOSURFHHGLQJV,G2QO\XSRQ
VXFK D ILQGLQJ PD\ ZH WKHQ H[HUFLVH RXU GLVFUHWLRQDU\
DXWKRULW\WRQRWLFHWKHHUURU6HHLG
3UHVHUYHG REMHFWLRQV WR D GLVWULFW FRXUW¶V HYLGHQWLDU\
GHFLVLRQVDUHUHYLHZHGIRUDEXVHRIGLVFUHWLRQ:HZLOORQO\
UHYHUVH LI WKH GHFLVLRQ FDXVHG PRUH WKDQ D KDUPOHVV HUURU
&RROH\Y&DUPLNH&LQHPDV,QF)G WK
&LU
$QDO\VLV
+XPSKUH\DUJXHVWKDWWKH*RYHUQPHQW¶VPLVFRQGXFWDWWULDO
GHSULYHGKLPRIKLVULJKWDJDLQVWVHOILQFULPLQDWLRQDVZHOODV
KLVULJKWVWRDIDLUWULDODQXQELDVHGMXU\DQGGXHSURFHVVRI
ODZ6SHFLILFDOO\+XPSKUH\DOOHJHV WKDWWKH*RYHUQPHQW
LPSURSHUO\VKLIWHGWKHEXUGHQRISURRIWRKLPE\VXJJHVWLQJ
WRWKHMXU\WKDW+XPSKUH\¶VXQH[SODLQHGZHDOWKGHPRQVWUDWHG
KLVSDUWLFLSDWLRQLQQDUFRWLFVDQGPRQH\ODXQGHULQJDFWLYLWLHV
1R 8QLWHG6WDWHVY+XPSKUH\
$V QRWHG HDUOLHU WKH GLVWLQFWLRQ 6WUD\KRUQ VHHNV WR GUDZ EHWZHHQ
WKH FLUFXPVWDQFHV SUHVHQWHG LQ WKDW FDVH DQG WKH FLUFXPVWDQFHV LQ
1HXKDXVVHU GRHV QRW LQ IDFW H[LVW 7KXV ZH DUH LQ WKH VDPH SUHGLFDPHQW
LQ RXU SRVW$SSUHQGL VWDQGDUG RI UHYLHZ MXULVSUXGHQFH DV , GLVFXVVHG
HDUOLHU ZLWK UHJDUG WR RXU GHFLVLRQV DGGUHVVLQJ WKH VXEVWDQWLYH VFRSH RI
$SSUHQGL QDPHO\ WKDW OLNH FDVHV DUH EHLQJ GHFLGHG GLIIHUHQWO\ ZLWK
6WUD\KRUQ KDYLQJ HIIHFWLYHO\ RYHUUXOHG 1HXKDXVVHU DW OHDVW DQG DUJXDEO\
DOVR 3DJH RQ WKH VWDQGDUG RI UHYLHZ LVVXH $QG DJDLQ DQ\ HIIRUW WR
LGHQWLI\ D FRKHUHQW VWDWHPHQW RI RXU &LUFXLW¶V SUHVHQW UXOH RQ WKLV LVVXH
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
FRQVLGHULQJ ZKHWKHU D IDFWXDO FKDOOHQJH DW VHQWHQFLQJ PLJKW LQVWHDG
WULJJHU GH QRYR UHYLHZ 6HH HJ 8QLWHG 6WDWHV Y *UDKDP :/
DW WK &LU 'HF 8QLWHG 6WDWHV Y 0DUWLQ
:/ DW WK &LU 'HF 0F/HPRUH VXSUD :/
DW .LQJ VXSUD )G DW 8QLWHG 6WDWHV Y 'H3D]
:/ DW WK &LU 2FW $UEHODH]$JXGHOR
VXSUD :/ DW Q &RRN VXSUD :/ DW
0DUWLQH] VXSUD )G DW 8QLWHG 6WDWHV Y 7D\ORU :/
DW WK &LU 0D\ ,QGHHG D UHYLHZ RI WKHVH
GHFLVLRQV UHYHDOV WKDW VRPH RI WKH GHIHQGDQWV GLG UDLVH IDFWXDO REMHFWLRQV
WR WKH VHQWHQFLQJ MXGJH¶V GHWHUPLQDWLRQV DQG \HW ZH VWLOO DSSOLHG SODLQ
HUURU UHYLHZ 6HH *UDKDP :/ DW 0F/HPRUH
:/ DW .LQJ )G DW 'H3D] :/
DW $UEHODH]$JXGHOR :/ DW Q
7KHVH FDVHV OLNH 1HXKDXVVHU DUH LQ GLUHFW FRQIOLFW ZLWK 6WUD\KRUQ¶V UXOH
RI GH QRYR UHYLHZ $JDLQ , ZRXOG VXJJHVW WKDW WKH 6XSUHPH &RXUW
WKURXJK LWV GHFLVLRQ LQ -RKQVRQ VKRXOG VHUYH DV WKH ³WLHEUHDNHU´ LQ
UHVROYLQJ WKLV FRQIOLFW
GHIHQGDQWZKRGRHVQRW³REMHFWWRWKHGLVWULFWMXGJHPDNLQJ
WKHGHWHUPLQDWLRQRIGUXJTXDQWLWLHV´IDFHVSODLQHUURUUHYLHZ
RQDSSHDO3DJH)GDW HPSKDVLVDGGHG 7KH
&RXUW¶VIDLOXUHWRH[SUHVVO\FDWDORJHDFKDQGHYHU\REMHFWLRQ
WKDWZDVPDGHDWVHQWHQFLQJLQWKDWFDVHDQGWRH[SODLQZK\
HDFK GLG QRW RSHUDWH WR SUHVHUYH WKH GHIHQGDQWV¶ $SSUHQGL
FKDOOHQJHVGRHVQRWLQDQ\ZD\GLPLQLVKWKHIRUFHRI3DJH¶V
H[SUHVVKROGLQJ1RUGRHVLWDIIRUGDQ\RSSRUWXQLW\LQP\
YLHZIRUDODWHUSDQHOWRVHL]HXSRQ3DJH¶VVLOHQFHDVDEDVLV
IRU GUDZLQJ D GLVWLQFWLRQ ZKLFK DV D PDWWHU RI EUXWH IDFW
PLJKW QRW HYHQ H[LVW DQG DV D PDWWHU RI MXGLFLDO
LQWHUSUHWDWLRQ PXVW KDYH ODFNHG OHJDO VLJQLILFDQFH WR WKH
&RXUWLQWKDWFDVH

-- 6 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
WKH GHIHQGDQW GLG SUHVHQW IDFWXDO FKDOOHQJHV WR WKH 'LVWULFW -XGJH¶V
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 SDQHO¶V RSLQLRQ LW ZDV
EHFDXVH ZH GHHPHG LW LUUHOHYDQW WR HLWKHU WKH LVVXHV EHIRUH WKH &RXUW RU
WKH VWDQGDUG RI UHYLHZ WR EH DSSOLHG LQ UHVROYLQJ WKRVH LVVXHV
1H[W HYHQ DVVXPLQJ WKH IDFWXDO GLVWLQFWLRQV SRVLWHG LQ
6WUD\KRUQ DFWXDOO\ H[LVWHG , IDLO WR VHH KRZ D IDFWEDVHG
REMHFWLRQWRDVHQWHQFLQJMXGJH¶VGUXJTXDQWLW\FRPSXWDWLRQ
FRXOGSURSHUO\EHFRQVWUXHGDVSUHVHUYLQJWKHIDUGLIIHUHQWVRUW
RI FKDOOHQJH WKDW DULVHV IURP $SSUHQGL ² QDPHO\ D OHJDO
FKDOOHQJHLPSOLFDWLQJWKHGLYLVLRQRIODERUEHWZHHQMXGJHDQG
MXU\ DV ZHOO DV WKH VWULQJHQW ³EH\RQG D UHDVRQDEOH GRXEW´
EXUGHQRISURRIDWWHQGDQWWRDMXU\VXEPLVVLEOHLVVXH7KH
UHFRUG LQ WKLV FDVH DPSO\ GHPRQVWUDWHV WKH GLVWLQFWLRQ
EHWZHHQIDFWXDODQG$SSUHQGLEDVHGREMHFWLRQVWRD'LVWULFW
&RXUW¶VGHWHUPLQDWLRQRIGUXJTXDQWLWLHV²'HIHQGDQWKHUH
TXLWH SODLQO\ DVVHUWHG WKH IRUPHU W\SH RI REMHFWLRQ DW
VHQWHQFLQJEXWH[SUHVVO\GLVDYRZHGDQ\FODLPRIWKHODWWHU
VRUWDQGLQVWHDGDFNQRZOHGJHGWKH'LVWULFW&RXUW¶VDXWKRULW\
WR PDNH VXFK D GHWHUPLQDWLRQ E\ D SUHSRQGHUDQFH RI WKH
HYLGHQFH ,W ZRXOG EH VWUDQJH LQGHHG LI D GHIHQGDQW¶V
FKDOOHQJH WR D 'LVWULFW &RXUW¶V IDFWXDO ILQGLQJV ZKLFK ZH
UHYLHZ IRU FOHDU HUURU VHH 1HXKDXVVHU )G DW
VRPHKRZ WULJJHUHG GH QRYR UHYLHZ RI D GLIIHUHQW VRUW RI
FKDOOHQJH WKDW ZDV QRW SUHVHQWHG WR WKH VHQWHQFLQJ FRXUW
$QGDJDLQ6WUD\KRUQVWDQGVDORQHLQLWVIDLOXUHWRREVHUYH
WKLV GLVWLQFWLRQ VHYHUDO RWKHU &LUFXLWV LQ FRQWUDVW KDYH
H[SUHVVO\KHOGWKDWWKHSODLQHUURUVWDQGDUGDSSOLHVHYHQZKHUH
WKHUH ZHUH IDFWXDO REMHFWLRQV WR WKH VHQWHQFLQJ FRXUW¶V
GHWHUPLQDWLRQRIGUXJTXDQWLWLHV6HHHJ)LHOGV)G
DW0RMLFD%DH])GDW Q1RUGE\
)GDW
,QGHHG,UHDG3DJHDVRXU&LUFXLW¶VGHILQLWLYHVWDWHPHQWRQ
WKHVXEMHFWOHDYLQJQRURRPIRUWKHGLVWLQFWLRQWKDW6WUD\KRUQ
VHHNVWRGUDZ3DJHGRHVQRWVD\PXFKRQWKHVXEMHFW²ZH
VHOGRP GR ZKHQ VHWWLQJ IRUWK WKH DSSOLFDEOH VWDQGDUG RI
UHYLHZ²EXWZKDWLWVD\VLVSODLQHQRXJKQDPHO\WKDWD
1R 8QLWHG6WDWHVY+XPSKUH\
7KH *RYHUQPHQW¶V DOOHJHG XVH RI LWV SHUHPSWRU\ FKDOOHQJHV WR
H[FOXGH $IULFDQ$PHULFDQV IURP WKH MXU\ DQG WKH GLVWULFW FRXUW¶V IDLOXUH
WR VR ILQG DUH DGGUHVVHG LQ 3DUW ,,,%E
WKDWWKH*RYHUQPHQWLPSURSHUO\XVHG+XPSKUH\¶VLQFRPH
WD[UHWXUQVDQGWKHWHVWLPRQ\RIDQ,QWHUQDO5HYHQXH6HUYLFH
³,56´ DJHQWWRVXJJHVWWKDW+XPSKUH\¶VFRPPLVVLRQRIDQ
XQLQGLFWHGFULPHWD[HYDVLRQZDVHYLGHQFHRIJXLOW WKDW
WKHSURVHFXWRULPSURSHUO\YRXFKHGIRUKLVZLWQHVVDQGVWDWHG
KLV SHUVRQDO EHOLHI LQ +XPSKUH\¶V JXLOW WKDW WKH
*RYHUQPHQWLPSURSHUO\H[HUFLVHGLWVSHUHPSWRU\FKDOOHQJHV
WRH[FOXGH$IULFDQ$PHULFDQVIURPWKHMXU\ WKDWWKH
*RYHUQPHQW DUJXHG IDFWV QRW LQ HYLGHQFH WKDW WKH
*RYHUQPHQWFRQIXVHGWKHMXU\E\PLVVWDWLQJWKHGHILQLWLRQRI
D ³EX\HUVHOOHU UHODWLRQVKLS´ WKDW WKH *RYHUQPHQW
LQWHQWLRQDOO\ VXEPLWWHG LUUHOHYDQW HYLGHQFH WR WKH MXU\ DQG
SUHYHQWHG D IDLU UHEXWWDO E\ +XPSKUH\ RI WKDW HYLGHQFH
WKDWWKH*RYHUQPHQWLPSURSHUO\DUJXHGWKDW+XPSKUH\¶V
FRXQVHO NQHZ WKDW KLV FOLHQW ZDV JXLOW\ DQG WKDW WKH
FXPXODWLYHLPSDFWRIHDFKRIWKHDIRUHPHQWLRQHGLQVWDQFHVRI
PLVFRQGXFWLVVXIILFLHQWWRZDUUDQWUHYHUVDO(DFKDUJXPHQW
ZLOOEHDGGUHVVHGLQWXUQ$OOXOWLPDWHO\IDLO
D8QH[SODLQHG:HDOWK
+XPSKUH\VXEPLWVWKDWWKH*RYHUQPHQW¶VFDVHDJDLQVWKLP
ZDVSUHGLFDWHGRQWKHVHOIVHUYLQJWHVWLPRQ\RI(DWRQDQG
&URPLW\ERWKDGPLWWHGGUXJGHDOHUVDQGRQWHVWLPRQ\WKDW
LQVLQXDWHGD\RXQJ$IULFDQ$PHULFDQPDOHLVLQFDSDEOHRI
RSHUDWLQJDVXFFHVVIXOEXVLQHVVXQOHVVKHLVHQJDJHGLQLOOHJDO
QDUFRWLFV DFWLYLW\ 7R GULYH KRPH WKLV SRLQW +XPSKUH\
FRQWHQGVWKDWWKH*RYHUQPHQWUHOLHGLPSURSHUO\RQHYLGHQFH
RI+XPSKUH\¶VXQH[SODLQHGZHDOWKLQFRQWUDYHQWLRQRIKLV
)LIWK$PHQGPHQWULJKWDJDLQVWVHOILQFULPLQDWLRQWRVXJJHVW
WKDWEHFDXVH+XPSKUH\KDGIDLOHGWRLGHQWLI\WKHVRXUFHRIKLV
ZHDOWK WKHQ KH QHFHVVDULO\ PXVW KDYH EHHQ JXLOW\ RI GUXJ
WUDIILFNLQJ
+XPSKUH\PDLQWDLQVWKDWLQPDNLQJVXFKDQDUJXPHQWWKH
*RYHUQPHQWLPSURSHUO\VKLIWHGLWVEXUGHQRISURRIWRKLP

-- 7 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
ZKLFKZDVHVSHFLDOO\SUHMXGLFLDOLQOLJKWRIWKHIDFWWKDWWKH
RQO\ HYLGHQFH OLQNLQJ KLP WR LOOHJDO GUXJ DFWLYLW\ ZDV WKH
WHVWLPRQ\RI(DWRQDQG&URPLW\,QIDFW+XPSKUH\QRWHV
WKH*RYHUQPHQWQHYHUREVHUYHGGUXJVLQKLVSRVVHVVLRQRUKLV
UHVLGHQFHV QHYHU GLVFRYHUHG ODUJH VXPV RI FDVK LQ KLV
SRVVHVVLRQQHYHUZLWQHVVHGKLPHQJDJHLQGUXJDFWLYLW\DQG
QHYHUDWWHPSWHGWRFRRUGLQDWHDFRQWUROOHGGUXJEX\IURPKLP
+XPSKUH\REMHFWHGWRWKHDGPLVVLRQRIWD[HYLGHQFH-$DW
WKHUHIRUHZHUHYLHZWKHGLVWULFWFRXUW¶VGHFLVLRQIRUDQ
DEXVHRIGLVFUHWLRQ
,Q 8QLWHG 6WDWHV Y &DUWHU ZH UHMHFWHG DV LUUHOHYDQW WKH
*RYHUQPHQW¶VXVHRIILQDQFLDOLQIRUPDWLRQLQLWVSURVHFXWLRQ
RIDGHIHQGDQWIRUYLRODWLRQRIIHGHUDOQDUFRWLFVODZV
)G WK&LU :HQHYHUWKHOHVVREVHUYHGWKDW
HYLGHQFH RI ³WKH ODFN RI D IHGHUDO WD[ ILOLQJ RU
XQGHUUHSRUWLQJ LQ FRPELQDWLRQ ZLWK SURRI RI YDOXDEOH
WDQJLEOH SRVVHVVLRQV RU H[WUDYDJDQW SXUFKDVHV FUHDWHV WKH
LQIHUHQFH WKDW WKH GHIHQGDQW GRHV QRW SRVVHVV D OHJLWLPDWH
VRXUFH RI LQFRPH WR VXSSRUW KLV DIIOXHQW OLIHVW\OH DQG
WKHUHIRUH WKH LQFRPH PXVW RULJLQDWH IURP QDUFRWLFV
RSHUDWLRQV´LGDWDQGWKDW³WKHUHDUHFDVHVWKDWDOORZWKH
JRYHUQPHQWWRXVHDGHIHQGDQW¶VWD[UHWXUQVDQGHYLGHQFHRI
KLV VSHQGLQJ KDELWV LQ RUGHU WR REWDLQ D FRQYLFWLRQ LQ D
QDUFRWLFVFDVH´,G
%HIRUHXVLVVXFKDFDVH7KHUHZDVXQUHEXWWHGWHVWLPRQ\
DWWULDOWKDW+XPSKUH\¶VWRWDOH[SHQGLWXUHVIRUDQG
DPRXQWHGWRGHVSLWHWKHIDFWWKDWKHKDGEHHQ
³XQHPSOR\HGWKHSDVWHLJKWPRQWKV´GXHWRDGLVDELOLW\,W
ZDV ZHOO ZLWKLQ WKH SUHURJDWLYH RI WKH *RYHUQPHQW WR
HQFRXUDJHWKHMXU\WRFRQVLGHUKRZ+XPSKUH\PDLQWDLQHGWKLV
DIIOXHQWOLIHVW\OHSDUWLFXODUO\LQOLJKWRIWKHGHFODUDWLRQVRIWKH
GLVWULFWFRXUWDQGWKH*RYHUQPHQWWKDWWKHEXUGHQRISURRIDW
DOOWLPHVUHPDLQHGZLWKWKH*RYHUQPHQW7KH*RYHUQPHQW¶V
FORVLQJDQGUHEXWWDODUJXPHQWVZHUHHQWLUHO\SURSHUFRPPHQWV
RQWKHTXDOLW\DQGFUHGLELOLW\RI+XPSKUH\¶VHYLGHQFH
1R 8QLWHG6WDWHVY+XPSKUH\
6WUD\KRUQ FRPPLWV WKH VDPH HUURU ZLWK UHVSHFW WR RXU GHFLVLRQ LQ
1HXKDXVVHU YLHZLQJ WKDW FDVH OLNH 3DJH DV GLVWLQJXLVKDEOH RQ WKH
JURXQG WKDW WKH GHIHQGDQW SXUSRUWHGO\ ³IDLOHG WR REMHFW ZKHQ >WKH@ GLVWULFW
FRXUW PDGH LWV GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHV´ 6WUD\KRUQ )G DW
FLWLQJ 1HXKDXVVHU )G DW ,Q IDFW 1HXKDXVVHU VWDWHV DW
WKH RXWVHW WKDW WKH GHIHQGDQW ZDV FKDOOHQJLQJ KLV VHQWHQFH DV ³XQODZIXOO\
EDVHG LQ SDUW RQ WKH WULDO FRXUW¶V GHWHUPLQDWLRQV RI GUXJ W\SHV DQG
TXDQWLWLHV DW VHQWHQFLQJ XQGHU WKH μSUHSRQGHUDQFH RI WKH HYLGHQFH¶
VWDQGDUG´ DQG WKDW EHFDXVH WKH GHIHQGDQW ³IDLOHG WR UDLVH WKLV REMHFWLRQ
LQ WKH FRXUW EHORZ ZH UHYLHZ KLV VHQWHQFH RQO\ IRU SODLQ HUURU´ )G
DW HPSKDVLV DGGHG 7KHQ LQ WKH SDVVDJH FLWHG LQ 6WUD\KRUQ
1HXKDXVVHU VXUYH\V WKH GHFLVLRQ LQ 3DJH DQG VWDWHV WKDW ³LQ 3DJH DV
KHUH WKH GHIHQGDQWV IDLOHG WR REMHFW ZKHQ WKH 'LVWULFW &RXUW LQLWLDOO\ PDGH
LWV GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHV´ 1HXKDXVVHU )G DW )URP
WKH FRQWH[W DV ZHOO DV WKH UHIHUHQFH WR 3DJH LW LV HYLGHQW WKDW 1HXKDXVVHU
LV VSHDNLQJ RI D SDUWLFXODU ³IDLO>XUH@ WR REMHFW´ ² QDPHO\ WKH ODFN RI DQ\
REMHFWLRQ WKDW GUXJ W\SH DQG TXDQWLW\ PXVW EH GHWHUPLQHG E\ D MXU\ EH\RQG
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 -XGJH LQ
1HXKDXVVHU , DP DEOH WR JR EDFN WR WKH UHFRUG DQG FRQILUP WKDW LQ IDFW
GLVWULFWFRXUW¶VIDFWXDOILQGLQJZLWKUHVSHFWWRGUXJTXDQWLW\´
6WUD\KRUQ)GDW7KHSDQHOFRQWUDVWHGWKLVZLWK
WKH VLWXDWLRQ SUHVHQWHG LQ 3DJH ZKHUH WKH GHIHQGDQWV
SXUSRUWHGO\³IDLOHGWRREMHFWZKHQ>WKH@GLVWULFWFRXUWPDGHLWV
GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHV´ 6WUD\KRUQ )G DW

7KLVDWWHPSWHGGLVWLQFWLRQKRZHYHUIDLOVRQDWOHDVWWZR
VFRUHV)LUVWDVDIDFWXDOPDWWHUDQGDVERWKWKHPDMRULW\DQG
, KDYH SRLQWHG RXW LQ RXU UHVSHFWLYH RSLQLRQV 3DJH VD\V
DOPRVW QRWKLQJ DW DOO DERXW ZKDW REMHFWLRQV LI DQ\ ZHUH
SUHVHQWHGWRWKH'LVWULFW&RXUWLQWKDWFDVH7KHORQHEUHDN
IURPWKLVVLOHQFHDV,QRWHGHDUOLHULVWKH&RXUW¶VSRLQWHG
REVHUYDWLRQWKDWWKHGHIHQGDQWV³GLGQRWREMHFWWRWKHGLVWULFW
FRXUWPDNLQJWKHGHWHUPLQDWLRQRIGUXJTXDQWLWLHV´3DJH
)GDW)RUDOOZHNQRZWKHQWKHGHIHQGDQWVLQ
3DJHUDLVHGSUHFLVHO\WKHVDPHVRUWVRIIDFWXDOFKDOOHQJHVWR
WKH 'LVWULFW &RXUW¶V GUXJ TXDQWLW\ GHWHUPLQDWLRQV DV ZHUH
PDGHLQ6WUD\KRUQ

-- 8 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
7KRXJK 6WUD\KRUQ ORRNV WR )ORZDO DQG 5DPLUH] IRU JXLGDQFH LQ
FRQVWUXLQJ $SSUHQGL LW FDQQRW UHO\ XSRQ WKHVH GHFLVLRQV DV DXWKRULW\ IRU
GH QRYR UHYLHZ RI $SSUHQGL FODLPV IRU WKH VLPSOH UHDVRQ WKDW )ORZDO DQG
5DPLUH] DUH FRPSOHWHO\ VLOHQW DV WR WKH VWDQGDUG RI UHYLHZ IRU VXFK FODLPV
WK &LU /OR\G KRZHYHU DSSOLHG WKH GH QRYR
VWDQGDUGWRIDFLDODWWDFNVRQWKHFRQVWLWXWLRQDOLW\RIDIHGHUDO
VWDWXWH²VSHFLILFDOO\HTXDOSURWHFWLRQDQGVXEVWDQWLYHGXH
SURFHVV FKDOOHQJHV WR WKH VWDWXWRU\ WR VHQWHQFLQJ
GLVSDULW\XQGHU† E IRUGUXJRIIHQVHVLQYROYLQJFUDFN
YHUVXVSRZGHUFRFDLQH6XFKTXHVWLRQVRIODZLPSOLFDWLQJ
WKHVFRSHRIFRQJUHVVLRQDODXWKRULW\XQGHUWKH&RQVWLWXWLRQ
FOHDUO\ZDUUDQWGHQRYRUHYLHZ
,Q FRQWUDVW 'HIHQGDQW KHUH KDV QRW PRXQWHG D
FRQVWLWXWLRQDO DWWDFN XSRQ D IHGHUDO VWDWXWH EXW LQVWHDG
FKDOOHQJHVWKH'LVWULFW&RXUW¶VGHFLVLRQDVWRZKLFKHOHPHQWV
RIDGUXJFRQVSLUDF\RIIHQVHPXVWEHVXEPLWWHGWRWKHMXU\IRU
GHWHUPLQDWLRQEH\RQGDUHDVRQDEOHGRXEWDQGZKLFKPD\EH
GHWHUPLQHGE\WKH&RXUWDWVHQWHQFLQJE\DSUHSRQGHUDQFHRI
WKHHYLGHQFH7KLVRIFRXUVHZDVWKHYHU\VRUWRIFKDOOHQJH
SUHVHQWHG WR XV LQ 3DJH DQG WR WKH 6XSUHPH &RXUW LQ
-RKQVRQ DQG WKH FRXUWV LQ ERWK FDVHV GHWHUPLQHG WKDW WKH
SODLQ HUURU VWDQGDUG JRYHUQHG WKHLU LQTXLULHV ZKHUH WKH
GHIHQGDQWVKDGQRWUDLVHGWKHLUDUJXPHQWVLQWKHORZHUFRXUW
SURFHHGLQJV5HPDUNDEO\6WUD\KRUQHYHQFLWHV3DJHDQG
H[SUHVVO\ DFNQRZOHGJHV WKDW WKH SODLQ HUURU VWDQGDUG ZDV
DSSOLHGLQWKDWFDVH6HH6WUD\KRUQ)GDW<HW
UDWKHU WKDQ VLPSO\ IROORZLQJ 3DJH ZLWK LWV KLJKO\ VLPLODU
IDFWV6WUD\KRUQUHDFKHVRXWWR/OR\GDVDXWKRULW\IRUDSSO\LQJ
GHQRYRUHYLHZ
$UJXDEO\6WUD\KRUQHQGHDYRUVWRGLVWLQJXLVK3DJHDQGLWV
DSSOLFDWLRQRISODLQHUURUUHYLHZE\VXJJHVWLQJWKDWWKHWZR
FDVHVLQYROYHGGLIIHUHQWVRUWVRIREMHFWLRQVLQWKHFRXUWEHORZ
,Q6WUD\KRUQWKHGHIHQGDQW³UHSHDWHGO\REMHFW>HG@WRWKHGUXJ
TXDQWLW\ GHWHUPLQDWLRQ DW KLV SOHD KHDULQJ DQG DW KLV
VHQWHQFLQJKHDULQJDVZHOODVLQDZULWWHQREMHFWLRQWRWKH
FDOFXODWLRQ RI KLV EDVH RIIHQVH OHYHO LQ KLV SUHVHQWHQFH
UHSRUW´ DQG KH ³PDGH LW ZHOO NQRZQ WKDW KH GLVSXWHG WKH
1R 8QLWHG6WDWHVY+XPSKUH\
E7D[(YLGHQFH
+XPSKUH\DOVRFRQWHQGVWKDWWKH*RYHUQPHQWLPSURSHUO\
XVHGKLVLQFRPHWD[UHWXUQVDQGWKHWHVWLPRQ\RI,56$JHQW
*DU\5DVROHWWLWRRXWOLQH+XPSKUH\¶VVSHQGLQJKDELWVRYHU
WKHHLJKWHHQPRQWKVWKDWKHZDVXQGHULQYHVWLJDWLRQ%HFDXVH
LWZDVXQGLVSXWHGWKDW+XPSKUH\KDGOHJLWLPDWHVRXUFHVRI
LQFRPHIURPUHQWDOSURSHUW\DQGWHHVKLUWVDOHV+XPSKUH\
DUJXHVWKDWWKH*RYHUQPHQW¶VLQWURGXFWLRQRIWD[UHFRUGVDQG
5DVROHWWL¶VWHVWLPRQ\SUHMXGLFHGWKHMXU\DJDLQVWKLPDQGZDV
LQFOHDUGLVUHJDUGRIRXUGHFLVLRQLQ&DUWHUZKLFKJHQHUDOO\
SURKLELWV WKH XVH RI WD[ UHFRUGV DQG VSHQGLQJ KDELWV LQ
QDUFRWLFV FDVHV 7KH &DUWHU UXOH LV VXEMHFW WR FHUWDLQ
H[FHSWLRQVDPRQJWKHPHYLGHQFHRIH[WUDYDJDQWVSHQGLQJ
KDELWVE\WKHGHIHQGDQWRUHYLGHQFHWKDWKHSRVVHVVHVODUJH
DPRXQWV RI XQUHSRUWHG ZHDOWK 1HYHUWKHOHVV +XPSKUH\
DUJXHVWKDWWKHMXU\¶VUHIXVDOWRRUGHUWKHIRUIHLWXUHRIWKHYDVW
PDMRULW\RIKLVUHDOSURSHUW\DQGSRVVHVVLRQVLVHYLGHQFHWKDW
WKHMXU\EHOLHYHGWKHPWREHWKHSURFHHGVRIODZIXODFWLYLW\
+XPSKUH\ IXUWKHU VXEPLWV WKDW DOWKRXJK 5DVROHWWL WHVWLILHG
DERXW UHFHLSWV IRU KLV SXUFKDVHV DOOHJHGO\ PDGH ZLWK GUXJ
SURFHHGVWKH*RYHUQPHQWVRXJKWRQO\WKHIRUIHLWXUHRIRQHRI
WKRVH SXUFKDVHV D WHOHYLVLRQ ZKLFK WKH MXU\ XOWLPDWHO\
FRQFOXGHG ZDV D OHJLWLPDWH SXUFKDVH 7KXV +XPSKUH\
PDLQWDLQV WKH *RYHUQPHQW¶V XVH RI KLV WD[ UHWXUQV DQG
5DVROHWWL¶VWHVWLPRQ\VHUYHGQRSXUSRVHEXWWRSXWHYLGHQFH
RIDQXQFKDUJHGFULPHWD[HYDVLRQRUIUDXGEHIRUHWKHMXU\
ZKLFK LV WKH H[DFW VLWXDWLRQ SURKLELWHG E\ &DUWHU 7KH
*RYHUQPHQW¶VIDLOXUHWROLQN+XPSKUH\¶VXQH[SODLQHGZHDOWK
WRGUXJDFWLYLW\FRXSOHGZLWKWKHLQWURGXFWLRQRIXQLQGLFWHG
WD[ FKDUJHV ZDV XQGXO\ SUHMXGLFLDO DQG +XPSKUH\
FRQFOXGHVZDUUDQWVUHYHUVDO
+XPSKUH\¶V DUJXPHQW LV IRUHFORVHG E\ RXU GHFLVLRQ LQ
8QLWHG 6WDWHV Y &RSHODQG )G WK &LU
7KHUH D GHIHQGDQW FKDUJHG ZLWK YLRODWLRQ RI IHGHUDO GUXJ
FRQVSLUDF\ ODZV UDLVHG D UHOHYDQF\ FKDOOHQJH WR WKH
*RYHUQPHQW¶VLQWURGXFWLRQRIFHUWDLQVWRUHUHFHLSWV,GDW
7KRVH UHFHLSWV GHPRQVWUDWHG WKDW WKH GHIHQGDQW KDG
SXUFKDVHG LQ VWHUHR HTXLSPHQW RYHU D WZHQW\VL[

-- 9 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
PRQWKSHULRGGXULQJZKLFKWLPHKHUHSRUWHGQRVRXUFHRI
LQFRPH,G,QILQGLQJWKHUHFHLSWVUHOHYDQWDQGDIILUPLQJWKH
GLVWULFWFRXUW¶VDGPLVVLRQRIWKHHYLGHQFHZHIRXQG&DUWHU
GLVWLQJXLVKDEOHLQVHYHUDOUHVSHFWV)LUVW&DUWHUSXUFKDVHG
IHZHULWHPVWKDQ&RSHODQG6HFRQG&DUWHUXVHGKLVJLYHQ
QDPHZKHQSXUFKDVLQJWKHLWHPVLQTXHVWLRQ&RSHODQGGLG
QRW UHO\LQJ LQVWHDG RQ YDULRXV DOLDVHV )LQDOO\ FHUWDLQ
UHFHLSWVOLQNHG&RSHODQGWRDOOHJHGLQVWUXPHQWDOLWLHVRIWKH
FRQVSLUDF\WKDWZHUHUHIHUUHGWRLQWULDOWHVWLPRQ\
7KH IDFWV RI WKH LQVWDQW FDVH DUH DQDORJRXV WR WKRVH RI
&RSHODQG+XPSKUH\SXUFKDVHGLQH[FHVVRIZRUWK
RIJRRGVRYHUDWZR\HDUSHULRGZKHQKHZDVXQHPSOR\HGIDU
PRUHWKDQWKHDWLVVXHLQ&RSHODQG)XUWKHUPRUHWKH
UHFHLSWVUHOLHGXSRQE\WKH*RYHUQPHQWLQWKLVFDVHUHIHUHQFHG
IUXLWVRIWKHDOOHJHGFRQVSLUDF\(YHQZHUHZHLQFOLQHGWR
ILQG+XPSKUH\¶VFDVHIDFWXDOO\VLPLODUWR&DUWHUWKHGLVSXWHG
UHFHLSWVDUHHYLGHQFHRIWDQJLEOHSRVVHVVLRQVGHPRQVWUDWLQJ
³H[WUDYDJDQW VSHQGLQJ´ IRU ZKLFK ILQDQFLDO LQIRUPDWLRQ
JHQHUDOO\PD\EHLQWURGXFHG&DUWHU)GDW:H
DUHIXUWKHUSHUVXDGHGWKDWWKHGLVWULFWFRXUW¶VLQVWUXFWLRQRIWKH
MXU\WRZKLFK+XPSKUH\UDLVHGQRREMHFWLRQFXUHGDQ\HUURU
6HH -$ DW ³7KH GHIHQGDQW LV QRW RQ WULDO IRU QRW
UHSRUWLQJ LQFRPH RU DQ\ RWKHU FULPHV QRW FKDUJHG LQ WKH
LQGLFWPHQW´
F9RXFKLQJ
+XPSKUH\DUJXHVWKDWWKH*RYHUQPHQWLPSURSHUO\VWDWHGLWV
SHUVRQDOEHOLHILQ(DWRQ¶VFUHGLELOLW\6SHFLILFDOO\+XPSKUH\
SRLQWV WR WKH *RYHUQPHQW¶V FORVLQJ DUJXPHQW ZKHQ LW
REVHUYHG
1RZMXVWUHDOTXLFNO\<RXNQRZDQG,GRQ¶WKDYHWLPH
\RXFDQFRQVLGHUWKHJRYHUQPHQWEHOLHYHVWKDWDIWHUDOO
WKDWFRUURERUDWLRQWKHWHVWLPRQ\RI+HQU\(DWRQWKDWLV
FUHGLEOHUHODWLYHWRKLVUHODWLRQVKLSZLWK'DUU\O0RUURZ
DWOHDVWWKDWZKLFKLVRQWDSH
-$DW
1R 8QLWHG6WDWHVY+XPSKUH\
7R WKH PDMRULW\¶V VXJJHVWLRQ WKDW LW ZRXOG EH XQIDLU WR SHQDOL]H D
GHIHQGDQW IRU IDLOLQJ WR DQWLFLSDWH D FKDQJH LQ WKH ODZ WKURXJK D QRW\HW
LVVXHG 6XSUHPH &RXUW UXOLQJ , FDQ RQO\ VD\ WKDW WKH UHTXLUHPHQW RI
FRQWHPSRUDQHRXV REMHFWLRQ VHH )HG 5 &ULP 3 DQG WKH OLPLWHG
H[FHSWLRQ LQ FDVHV RI SODLQ HUURU VHH )HG 5 &ULP 3 E UHIOHFW ³D
FDUHIXO EDODQFLQJ RI RXU QHHG WR HQFRXUDJH DOO WULDO SDUWLFLSDQWV WR VHHN D
IDLU DQG DFFXUDWH WULDO WKH ILUVW WLPH DURXQG DJDLQVW RXU LQVLVWHQFH WKDW
REYLRXV LQMXVWLFH EH SURPSWO\ UHGUHVVHG´ 8QLWHG 6WDWHV Y )UDG\
86 6 &W IRRWQRWH RPLWWHG 7KXV WKH
DYDLODELOLW\ RI SODLQ HUURU UHYLHZ LV LQWHQGHG WR PLWLJDWH WKH YHU\
XQIDLUQHVV RI ZKLFK WKH PDMRULW\ FRPSODLQV ,Q DQ\ HYHQW WKH 6XSUHPH
&RXUW¶V DSSOLFDWLRQ RI WKH SODLQ HUURU VWDQGDUG LQ -RKQVRQ XQGHU OHJDOO\
LQGLVWLQJXLVKDEOH IDFWV DQG FLUFXPVWDQFHV ² DQG RI FRXUVH 3DJH¶V
DSSOLFDWLRQ RI WKH VDPH VWDQGDUG XQGHU HYHQ PRUH VLPLODU FLUFXPVWDQFHV
WR WKRVH FRQIURQWLQJ XV KHUH ² GLFWDWHV RXU FRXUVH RI DFWLRQ LQ WKLV FDVH
QR PDWWHU KRZ PXFK ZH PLJKW SUHIHU D GLIIHUHQW FDOLEUDWLRQ RI WKH
FRPSHWLQJ SROLF\ FRQFHUQV
TXHVWLRQHGWKH'LVWULFW-XGJH¶VDXWKRULW\WRGHWHUPLQHGUXJ
TXDQWLWLHVIRUSXUSRVHVRIVHQWHQFLQJDQGPDGHRQO\DVLQJOH
UHIHUHQFHWRD³KLJKHUVWDQGDUG´ -$DW DVSDUWRIKLV
DUJXPHQW WKDW WKH LQIRUPDQW WHVWLPRQ\ RIIHUHG E\ WKH
*RYHUQPHQW ZDV LQKHUHQWO\ XQUHOLDEOH ,W VHHPV WR PH
XQQHFHVVDU\WRGHFLGHZKHWKHUWKHSRUWLRQVRIWKHUHFRUGFLWHG
E\ WKH PDMRULW\ FRQWDLQ VRPHWKLQJ WKDW FRXOG SRVVLEO\ EH
FRQVWUXHGDVDQ$SSUHQGLOLNHDUJXPHQWZKHQWKHSDVVDJHV
,TXRWHGHDUOLHU²DQGZKLFKWKHPDMRULW\GRHVQRW²IHDWXUH
H[SUHVVVWDWHPHQWVRI'HIHQGDQW¶VSRVLWLRQVQDPHO\WKDWLW
ZDV WKH GXW\ RI WKH 'LVWULFW &RXUW WR GHWHUPLQH WKH GUXJ
TXDQWLWLHVIRUZKLFKKHZDVWREHKHOGUHVSRQVLEOHDQGWKDWLW
ZDVWKH*RYHUQPHQW¶VEXUGHQWRHVWDEOLVKWKHVHTXDQWLWLHVE\
DSUHSRQGHUDQFHRIWKHHYLGHQFH
$OWHUQDWLYHO\WKHPDMRULW\FLWHV6WUD\KRUQ)GDW
IRUWKHSURSRVLWLRQWKDWDQREMHFWLRQDVWRGUXJTXDQWLW\DW
VHQWHQFLQJ ² ZKLFK REMHFWLRQ 'HIHQGDQW SODLQO\ GLG UDLVH
KHUH²VXIILFHVWRSUHVHUYHGHQRYRUHYLHZRIDQ$SSUHQGL
FODLPRQDSSHDO6WUD\KRUQLQWXUQUHVWVLWVGHQRYRUHYLHZ
RQWKHDXWKRULW\RI8QLWHG6WDWHVY/OR\G)G

-- 10 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
7KH FRQFXUUHQFH LQ 6WDIIRUG LV LQVWUXFWLYH RQ WKLV SRLQW -XGJH &OD\
HQGRUVHG WKH EURDGHU ³VHQWHQFLQJ UDQJH´ UHDGLQJ RI $SSUHQGL VHH
6WDIIRUG )G DW &OD\ - FRQFXUULQJ ² QRW VXUSULVLQJO\
VLQFH KH ZDV D PHPEHU RI WKH SDQHO LQ 6WUD\KRUQ 1HYHUWKHOHVV -XGJH
&OD\ UHFRJQL]HG WKDW WKH SODLQ HUURU VWDQGDUG JRYHUQHG WKH GHIHQGDQW¶V
$SSUHQGL FKDOOHQJH +H WKHQ FRQFXUUHG LQ WKH PDMRULW\¶V UXOLQJ WKDW WKLV
FODLP GLG QRW VXUYLYH SODLQ HUURU UHYLHZ DJUHHLQJ WKDW WKH GHIHQGDQW¶V
VXEVWDQWLDO ULJKWV ZHUH QRW DIIHFWHG E\ D VHQWHQFH ZKLFK ZDV OHVV WKDQ WKH
VWDWXWRU\ PD[LPXP XQGHU † E & IRU FRFDLQH DPRXQWV XQGHU
JUDPV 6WDIIRUG )G DW Q &OD\ - FRQFXUULQJ
1HYHUWKHOHVVHYHQDFFHSWLQJWKHPDMRULW\¶VYLHZIROORZLQJ
)ORZDODQGLWVSURJHQ\WKDW$SSUHQGLLPSOLFDWHVVHQWHQFLQJ
UDQJHVDQGQRWPHUHO\VWDWXWRU\PD[LPXPVWKLVILQGLQJRIDQ
$SSUHQGL HUURU ZRXOG VDWLVI\ DW PRVW RQO\ WKH ILUVW WZR
SURQJVRIWKHIRXUSDUWSODLQHUURUWHVW,QWKDWHYHQWZHVWLOO
FRXOG QRW FRQFOXGH WKDW WKLV SXUSRUWHG HUURU DIIHFWV
'HIHQGDQW¶VVXEVWDQWLDOULJKWV5DWKHULWLVZHOOHVWDEOLVKHG
LQ WKLV &LUFXLW DQG RWKHUV WKDW VXEVWDQWLDO ULJKWV DUH QRW
DIIHFWHG DQG WKH SODLQ HUURU VWDQGDUG LV QRW VDWLVILHG E\ D
VHQWHQFHWKDWFRXOGKDYHEHHQDFKLHYHG VROHO\WKURXJKWKH
MXU\¶VYHUGLFW RUDGHIHQGDQW¶VJXLOW\SOHD DQGDEVHQWWKH
DGGLWLRQDO ILQGLQJV RI WKH VHQWHQFLQJ FRXUW XQGHU WKH WRR
OHQLHQWSUHSRQGHUDQFHVWDQGDUG6HH8QLWHG6WDWHVY6WDIIRUG
)G WK&LU 0DUWLQH])GDW
Q 3DJH )G DW VHH DOVR 8QLWHG
6WDWHV Y 3HDVH )G WK &LU
8QLWHG 6WDWHV Y 6WXUJLV )G WK &LU
8QLWHG6WDWHVY:KLWH)G WK&LU
$JDLQWKLVLVWKHFDVHKHUHZKHUH'HIHQGDQW¶V
\HDUVHQWHQFHOLHVZLWKLQWKHSHUPLWWHGVWDWXWRU\UDQJHIRUWKH
LQGHWHUPLQDWHDPRXQWGUXJFRQVSLUDF\RIIHQVHHVWDEOLVKHGE\
WKHMXU\¶VYHUGLFW
7KH PDMRULW\ LV DEOH WR FRQFOXGH RWKHUZLVH RQO\ E\
DOWRJHWKHUDYRLGLQJD³VXEVWDQWLDOULJKWV´LQTXLU\DQGLQVWHDG
UHYLHZLQJ'HIHQGDQW¶V$SSUHQGLFODLPGHQRYR$VWKHEDVLV
IRUWKLVWKHPDMRULW\ILUVWHQGHDYRUVWRVKRZWKDW'HIHQGDQW
UDLVHGVRPHWKLQJDNLQWRDQ$SSUHQGLFKDOOHQJHEHIRUHWKH
'LVWULFW &RXUW ,Q DOO RI WKH PDQ\ SDVVDJHV RI WKH UHFRUG
TXRWHG E\ WKH PDMRULW\ KRZHYHU 'HIHQGDQW QHYHU RQFH
1R 8QLWHG6WDWHVY+XPSKUH\
$OWKRXJK +XPSKUH\ FRQFHGHV WKDW WKH *RYHUQPHQW¶V
VWDWHPHQW ZDV GLUHFWHG PRUH DW WKH FUHGLELOLW\ RI (DWRQ¶V
WHVWLPRQ\ ZLWK UHVSHFW WR 'DUU\O 0RUURZ KH QHYHUWKHOHVV
FRQWHQGVWKDWEHFDXVH(DWRQ¶VFUHGLELOLW\DVWRERWK0RUURZ
DQGKLPVHOIZDVDWLVVXHDQ\YRXFKLQJE\WKH*RYHUQPHQWDV
WRRQHSDUWRI(DWRQ¶VWHVWLPRQ\QHFHVVDULO\DSSOLHGWRDOORI
KLVWHVWLPRQ\
+XPSKUH\ DOVR DUJXHV WKDW WKH *RYHUQPHQW LPSURSHUO\
VWDWHGLWVSHUVRQDOEHOLHILQKLVJXLOW
, WKLQN GXULQJ WKH FRXUVH RI 0U 'XGOH\¶V ILQDO
DUJXPHQW LW EHFDPH SUHWW\ DSSDUHQW , VWDUWHG JHWWLQJ
DJLWDWHG
:HOOOHWPHWHOO\RXP\SHUVSHFWLYHRQWKLVFDVHEDVHG
RQWKHHYLGHQFH

1RZIRONV,WKLQNWKHHYLGHQFHLVRYHUZKHOPLQJWKDW
0RQWHO +XPSKUH\ LV JXLOW\ RI WKH FULPHV WKDW KH LV
FKDUJHG ZLWK +H KDV QRW SURYLGHG \RX ZLWK DQ\
H[SODQDWLRQ
-$DW
,WLVZHOOHVWDEOLVKHGWKDWDSURVHFXWRUPD\QRWDUJXHKLV
SHUVRQDOEHOLHILQDZLWQHVV¶VFUHGLELOLW\RULQDGHIHQGDQW¶V
JXLOWVHH8QLWHG6WDWHVY.UHEV)G WK
&LU DVMXULHV³ZLOOQRUPDOO\SODFHJUHDWFRQILGHQFHLQ
WKH IDLWKIXO H[HFXWLRQ RI WKH REOLJDWLRQV RI D SURVHFXWLQJ
DWWRUQH\LPSURSHULQVLQXDWLRQVRUVXJJHVWLRQVDUHDSWWRFDUU\
PRUH ZHLJKW DJDLQVW D GHIHQGDQW WKDQ VXFK VWDWHPHQWV E\
ZLWQHVVHV´ 8QLWHG 6WDWHV Y 6ROLYDQ )G
WK &LU 7R FRQVWLWXWH HUURU KRZHYHU WKH
SURVHFXWRU¶VDOOHJHGPLVFRQGXFWPXVWEHIODJUDQW6HH8QLWHG
6WDWHVY&DUUROO)GQ WK&LU $
SURVHFXWRULDO FRPPHQW LV GHHPHG IODJUDQW LI LW WHQGV WR
PLVOHDGWKHMXU\RUSUHMXGLFHWKHGHIHQGDQWLILWLVRQHRID
VHULHVRILQDSSURSULDWHFRPPHQWVLILWZDVGHOLEHUDWHO\SODFHG
EHIRUHWKHMXU\DQGLIWKHRWKHUHYLGHQFHRIJXLOWLVZHDN6HH

-- 11 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
8QLWHG 6WDWHV Y )UDQFLV )G WK &LU

+XPSKUH\ IDLOHG WR REMHFW EHORZ WR WKHVH DOOHJHGO\
LPSURSHUFRPPHQWVDQGWKHUHIRUHZHUHYLHZWKLVFODLPIRU
SODLQHUURU:LWKUHVSHFWWRWKHILUVWFRPPHQWFRQFHUQLQJWKH
SURVHFXWRU¶VVWDWHPHQWWKDW(DWRQ¶VWHVWLPRQ\ZDVFUHGLEOH
+XPSKUH\FDQQRWGHPRQVWUDWHWKDWWKHFRPPHQWZDVRQHRI
D VHULHV RI LQDSSURSULDWH FRPPHQWV 7R WKH FRQWUDU\ WKH
FRPPHQWDSSHDUVWRKDYHEHHQWKHRQO\VXFKFRPPHQWPDGH
E\ WKH *RYHUQPHQW 1HLWKHU GRHV WKH FRPPHQW DSSHDU WR
KDYHEHHQDGHOLEHUDWHHIIRUWWRPLVOHDGRUSUHMXGLFHWKHMXU\
)LQDOO\WKHFRPPHQWZDVPDGHLQWKHFRQWH[WRIDGLVFXVVLRQ
RIRWKHUFRUURERUDWLQJHYLGHQFHRIJXLOWZHUHZHWRVHWDVLGH
(DWRQ¶VWHVWLPRQ\RWKHULQFXOSDWRU\HYLGHQFHZRXOGUHPDLQ
7KXV+XPSKUH\FDQGHPRQVWUDWHQRHUURU
/LNHZLVH RQ WKH TXHVWLRQ RI ZKHWKHU WKH *RYHUQPHQW
LPSURSHUO\FRPPHQWHGRQLWVYLHZRI+XPSKUH\¶VJXLOWRQH
ZH UHYLHZ IRU SODLQ HUURU +XPSKUH\ KDV DJDLQ IDLOHG WR
HVWDEOLVK WKDW WKH FRPPHQW ZDV IODJUDQW :KLOH WKH
*RYHUQPHQW DUJXDEO\ VNLUWHG WKH OLPLWV RI SHUPLVVLEOH
DUJXPHQWE\HIIHFWLYHO\VXJJHVWLQJWKDWLWEHOLHYHG+XPSKUH\
ZDV JXLOW\ ZH DUH XQSHUVXDGHG E\ WKH *RYHUQPHQW¶V
DUJXPHQWWKDWLWZDVPHUHO\FRPPHQWLQJRQWKHTXDOLW\DQG
WKHTXDQWLW\RIWKHHYLGHQFHWKHGLVWULFWFRXUW¶VLQVWUXFWLRQ
WRWKHMXU\WKDWFRXQVHOV¶DUJXPHQWVZHUHQRWHYLGHQFHVHUYHG
WR FRXQWHUEDODQFH DQ\ SRWHQWLDO MXU\ FRQIXVLRQ 7KDW WKH
FRPPHQW ZDV PDGH LQ LVRODWLRQ PRUHRYHU FRQILUPV WKLV
SRLQW$FFRUGLQJO\+XPSKUH\¶VDUJXPHQWPXVWIDLO
G$UJXLQJ)DFWV1RWLQ(YLGHQFH
+XPSKUH\DVVHUWVWKDWWKH*RYHUQPHQWFRPPLWWHGIXUWKHU
PLVFRQGXFWE\DUJXLQJWRWKHMXU\IDFWVQRWLQHYLGHQFH
1RZLI\RXWDNHWKDWVDPHHLJKWKRIDNLORJUDPDQG\RX
ZDQWWRORRNDWLWLQWHUPVRIVKHOIOLIHIRUSHUVRQDOXVH
DJDLQ\RXXVHSRLQWRUSRLQWJUDPVRIFRFDLQHDGD\
VRWKDWPHDQVDJUDPZLOOODVW\RXDSSUR[LPDWHO\WKUHH
1R 8QLWHG6WDWHVY+XPSKUH\
7KH *RYHUQPHQW¶V FRXQVHO SODLQO\ VKDUHG WKLV YLHZ REVHUYLQJ DW
VHQWHQFLQJ IROORZLQJ WKH DERYHTXRWHG VWDWHPHQW E\ GHIHQVH FRXQVHO WKDW
³0U 'XGOH\ KDV DFFXUDWHO\ UHODWHG WR WKH &RXUW ZKDW RXU EXUGHQ LV DQG
WKDW¶V WKH OHVVHU EXUGHQ SUHSRQGHUDQFH´ ,G DW
$V QRWHG HDUOLHU WKLV \HDU VWDWXWRU\ PD[LPXP LV UDLVHG WR
\HDUV ZKHUH DV KHUH WKH GHIHQGDQW KDV D SULRU FRQYLFWLRQ IRU D IHORQ\
GUXJ RIIHQVH 6HH 86& † E &
$QG,ZRXOGVD\JLYHQLWDIIHFWVKLVOLEHUW\SHUKDSVKLV
OLIH WKDW WKH *RYHUQPHQW KDVQ¶W PHW WKDW EXUGHQ ZLWK
UHVSHFWWRWKHVHZLWQHVV¶WHVWLPRQ\
,GDW HPSKDVLVDGGHG ,GRQRWVHHKRZWKHUHFRUG
FRXOG EH PRUH FOHDU LQ GHPRQVWUDWLQJ 'HIHQGDQW¶V
DFNQRZOHGJPHQWRIWKHUROHRIWKH'LVWULFW&RXUWWRGHWHUPLQH
GUXJ TXDQWLWLHV XQGHU D SUHSRQGHUDQFHRIWKHHYLGHQFH
VWDQGDUG 7KLV LV KDUGO\ VXUSULVLQJ RI FRXUVH ZKHUH
$SSUHQGLKDGQRW\HWEHHQGHFLGHGDQGZKHUHDWWKHWLPHRI
WULDOWKHVHWWOHGODZGLFWDWHGSUHFLVHO\WKHSUDFWLFHIROORZHG
LQWKLVFDVH
&RQVHTXHQWO\ XQGHU 3DJH DQG -RKQVRQ 'HIHQGDQW¶V
$SSUHQGLEDVHGFKDOOHQJHUDLVHGIRUWKHILUVWWLPHRQDSSHDO
VKRXOGEHUHYLHZHGRQO\IRUSODLQHUURU8QGHUWKLVVWDQGDUG
'HIHQGDQWLVHQWLWOHGWRUHOLHIRQO\LIZHLGHQWLI\ DQHUURU
WKDWLVSODLQ WKDWDIIHFWVVXEVWDQWLYHULJKWVDQG WKDW
VHULRXVO\DIIHFWVWKHIDLUQHVVLQWHJULW\RUSXEOLFUHSXWDWLRQRI
MXGLFLDOSURFHHGLQJV-RKQVRQ86DW6&W
DW )RU WKH UHDVRQV GLVFXVVHG HDUOLHU , EHOLHYH WKDW
'HIHQGDQWFDQQRWVDWLVI\HYHQWKHILUVWHOHPHQWRIWKLVWHVW
EHFDXVHWKH'LVWULFW&RXUW¶VILQGLQJVDVWRGUXJTXDQWLW\GLG
QRW UHVXOW LQ WKH LPSRVLWLRQ RI SXQLVKPHQW EH\RQG WKH
VWDWXWRU\PD[LPXPIRUWKHRIIHQVHHVWDEOLVKHGE\WKHMXU\¶V
YHUGLFW ² QDPHO\ D GUXJ FRQVSLUDF\ LQYROYLQJ DQ
LQGHWHUPLQDWH DPRXQW RI FRFDLQH ZLWK D \HDU VWDWXWRU\
PD[LPXPVHQWHQFHXQGHU† E & ,QP\YLHZWKHQ
WKHUHZDVQRYLRODWLRQRI$SSUHQGLDWDOOLQWKLVFDVH

-- 12 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
*LYHQ WKLV DGPLVVLRQ LQ KLV ZULWWHQ REMHFWLRQV DQG LQ OLJKW RI KLV
SULRU IHORQ\ GUXJ FRQYLFWLRQ ZKLFK KH DUJXHG XQVXFFHVVIXOO\ VKRXOG QRW
EH XVHG LQ FRPSXWLQJ KLV VHQWHQFH 'HIHQGDQW FOHDUO\ ZDV VXEMHFW WR D
VHQWHQFH RI \HDUV WR OLIH LPSULVRQPHQW XQGHU † E %
'HIHQGDQW DFNQRZOHGJHG WKLV LQ KLV ZULWWHQ REMHFWLRQV WR WKH SUHVHQWHQFH
UHSRUW DQG DJDLQ DW VHQWHQFLQJ 6HH LG DW
%XW 'HIHQGDQW DQG KLV FRXQVHO MXVW DV VXUHO\ GLG QRW
FRQWHVW WKH 'LVWULFW &RXUW¶V DXWKRULW\ WR PDNH WKH
GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHV GLG QRW DUJXH WKDW WKLV
GHWHUPLQDWLRQ VKRXOG EH PDGH EH\RQG D UHDVRQDEOH GRXEW
UDWKHUWKDQE\DSUHSRQGHUDQFHRIWKHHYLGHQFHDQGGLGQRW
REMHFWDWWULDOWKDWWKLVZDVDQLVVXHIRUWKHMXU\DQGQRWWKH
MXGJHWRGHFLGH7RWKHFRQWUDU\LQKLVZULWWHQREMHFWLRQVWR
WKHSUHVHQWHQFHUHSRUW'HIHQGDQW H[SUHVVO\VWDWHG L KLV
UHTXHVW WKDW ³WKH &RXUW PDNH WKH ILQGLQJ>@ DW
VHQWHQFLQJWKDW'HIHQGDQWEHVHQWHQFHGWRDPDQGDWRU\
PLQLPXP WHUP RI ILYH \HDUV LPSULVRQPHQW IRU KLV VDOH RI
EHWZHHQJUDPVDQGILYHNLORJUDPVRISRZGHUFRFDLQH´
LG DW HPSKDVLV DGGHG DQG LL WKDW ³LW LV WKH
JRYHUQPHQW¶VEXUGHQWRSURYHE\DSUHSRQGHUDQFHRIWKH
HYLGHQFH WKH TXDQWLW\ RI QDUFRWLFV IRU ZKLFK D GHIHQGDQW
VKRXOGEHKHOGUHVSRQVLEOH´ LGDW HPSKDVLVDGGHG
/LNHZLVHDWVHQWHQFLQJGHIHQVHFRXQVHO³DVN>HG@WKH&RXUW´
WRILQGWKDW'HIHQGDQW¶V³WRWDOUHOHYDQWFRQGXFWLVOHVVWKDQ
ILYHNLORV´UHVXOWLQJLQD³WHQ\HDUPDQGDWRU\VHQWHQFH´ LG
DW DQG WKHQ VWDWHG ZLWK UHJDUG WR WKH LQIRUPDQW
WHVWLPRQ\LQGLFDWLQJJUHDWHUGUXJTXDQWLWLHV
>7@KLV &RXUW DV WKH &RXUW NQRZV KDV LWV RZQ
LQGHSHQGHQWGLVFUHWLRQWRGHFLGHRQFHDJDLQORZHU:H
DJUHHZLWKWKDWSUHSRQGHUDQFHRIWKHHYLGHQFHEXWLW¶V
VWLOO ² SUHSRQGHUDQFH RI HYLGHQFH PHDQV WKH
*RYHUQPHQW¶VJRWWRVKRZPRUHOLNHO\WKDQQRW,W¶VQRW
D FORVH FDOO EXW VKRZ PRUH OLNHO\ WKDQ QRW WKHVH
TXDQWLWLHVDUHFUHGLEOHTXDQWLWLHVWRKROG0U+XPSKUH\
DFFRXQWDEOHIRU
1R 8QLWHG6WDWHVY+XPSKUH\
GD\V DQG \RX PXOWLSO\ WKUHH GD\V WLPHV DQG \RX
KDYHGD\V
-$DW
6SHFLILFDOO\KHDUJXHVWKDWWKHUHZDVQRWHVWLPRQ\SUHVHQWHG
DW WULDO HLWKHU WKDW DQ HLJKWK RI D NLORJUDP RI FRFDLQH
FRQVWLWXWHV D SHUVRQDO VXSSO\ ODVWLQJ IRU GD\V RU WKDW
FRQVXPSWLRQRIRUJUDPVRIFRFDLQHFRQVWLWXWHVSHUVRQDO
XVH
+XPSKUH\¶VDUJXPHQWZKLFKZHUHYLHZIRUSODLQHUURULV
ZLWKRXWPHULW)LUVWWKHIDFWVUHOLHGXSRQE\WKH*RYHUQPHQW
ZHUHDGGXFHGE\0RUURZ¶VFRXQVHOLQKLVFURVVH[DPLQDWLRQ
RI(DWRQ6HH-$DW (DWRQ¶VWHVWLPRQ\ZDVWKDWWKH
VPDOOHVWDPRXQWVKHHYHUVROGZHUH³WZRRUWKUHHWHQWKVRID
JUDP´DQGWKDWSHRSOHEX\WHQWKVRIDJUDPRIGUXJVIRUWKHLU
RZQSHUVRQDOXVH 6HFRQGWKH*RYHUQPHQW¶VDUJXPHQWZDV
D GLUHFW UHVSRQVH WR 0RUURZ¶V VXJJHVWLRQ WKDW WKH GUXJ
TXDQWLWLHVGLVWULEXWHGE\(DWRQWRKLPZHUHIRUSHUVRQDOXVH
)LQDOO\DV+XPSKUH\KLPVHOIFRQFHGHVWKH*RYHUQPHQW¶V
DUJXPHQWZDVGLUHFWHGDW0RUURZRQO\
H³%X\HU6HOOHU´5HODWLRQVKLS
'XULQJ LWV FORVLQJ DUJXPHQW WKH *RYHUQPHQW VXJJHVWHG
WKDWDQH[WHQVLRQRIFUHGLWE\DGUXJVHOOHUWRDGUXJEX\HUIRU
WKH SXUFKDVH RI GUXJV ZDV ZLWKRXW PRUH VXIILFLHQW WR
HOLPLQDWHDEX\HUVHOOHUUHODWLRQVKLS7KHMXU\LQWKHDEVHQFH
RIVXFKDVXJJHVWLRQZRXOGKDYHEHHQSHUPLWWHGWRFRQVLGHU
WKDWWKHFRFDLQHDWWULEXWDEOHWR+XPSKUH\ZDVIRUKLVSHUVRQDO
FRQVXPSWLRQDQGQRWIRUWKHSXUSRVHRIVDOHRUGLVWULEXWLRQ
LQDGUXJFRQVSLUDF\,QPDNLQJWKLVSRLQWWKHSURVHFXWRU
UHOLHGXSRQDQDQDORJ\DUJXLQJWKDWLIKHKDGDGHSDUWPHQW
VWRUHFUHGLWFDUGWKHQDWVXFKWLPHDVKHXVHGWKDWFUHGLWFDUG
KHDQGWKHGHSDUWPHQWVWRUHZRXOGKDYHSURFHHGHGEH\RQGD
EX\HUVHOOHUUHODWLRQVKLSDQGHQWHUHGLQWRDFRQVSLUDF\
+XPSKUH\ VXEPLWV WKDW WKH *RYHUQPHQW¶V DQDORJ\
PLVVWDWHGWKHODZVHH8QLIRUP&RPPHUFLDO&RGH†
³μ%X\LQJ¶ PD\ EH FDVK RU RQ VHFXUHG RU XQVHFXUHG

-- 13 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
FUHGLW´ DQGUHGXFHGWKHMXU\¶VUHVSRQVLELOLW\WRRQHVWULFWO\
RI GHWHUPLQLQJ ZKHWKHU +XPSKUH\ HQJDJHG LQ D GUXJ
WUDQVDFWLRQ IRU ZKLFK D SXUFKDVH ZDV PDGH RQ FUHGLW ,Q
VXSSRUWRIWKLVDUJXPHQWKHUHOLHVRQ8QLWHG6WDWHVY:DUG
LQ ZKLFK ZH GHFODUHG WKDW ³IURQWLQJ FRFDLQH ZLWKRXW
DGGLWLRQDO HOHPHQWV RI FRQWURO LV QRWKLQJ PRUH WKDQ D
YDULDWLRQRQWKHWUDGLWLRQDOEX\HUVHOOHUUHODWLRQVKLS´)G
WK &LU +H QRWHV WKDW EHFDXVH WKH
*RYHUQPHQWIDLOHGWRGHPRQVWUDWHWKDW+XPSKUH\H[HUFLVHG
DQ\ OHYHO RI FRQWURO RYHU WKH DOOHJHG FRQVSLUDF\ KDG DQ\
LQWHUHVWLQWKHGUXJRSHUDWLRQRUGLVSOD\HGDQ\FRQFHUQIRU
ZKDWKDSSHQHGWRWKHGUXJVDIWHUWKHLUVDOHDQGGLVWULEXWLRQLWV
SURRIPHUHO\VHWIRUWKDEX\HUVHOOHUUHODWLRQVKLSDQGQRWD
GUXJFRQVSLUDF\
,QUHMHFWLQJ+XPSKUH\¶VDUJXPHQWVZHQRWHILUVWWKDWKLV
UHOLDQFHRQWKH8QLIRUP&RPPHUFLDO&RGHLVPLVSODFHGDVLW
KDV QR DSSOLFDWLRQ LQ WKLV FULPLQDO QDUFRWLFV FDVH
+XPSKUH\¶VDUJXPHQWWKDWSXUFKDVLQJRQFUHGLWFRQVWLWXWHV
EX\LQJZLWKLQWKHPHDQLQJRIDEX\HUVHOOHUUHODWLRQVKLSLV
OLNHZLVHZLWKRXWPHULW&I8QLWHG6WDWHVY1HVELWW)G
WK&LU ³:HILQGWKDWWKHWUXVWLQYROYHGLQ
WKLVNLQGRIGHOD\HGSD\PHQW>RUFUHGLW@DUUDQJHPHQWVXJJHVWV
PRUHWKDQDEX\HUVHOOHUUHODWLRQVKLSEHWZHHQ>WKHSDUWLHV@´
)LQDOO\ ZH QRWH WKDW :DUG RQ ZKLFK +XPSKUH\ UHOLHV LV
IDFWXDOO\GLVVLPLODUIURPWKHLQVWDQWFDVHDVQRFRQWLQXLQJ
FULPLQDOHQWHUSULVHLVDWLVVXHKHUH
I,UUHOHYDQW(YLGHQFH
7KH*RYHUQPHQWDUJXHGDWWULDOWKDWZKHQODZHQIRUFHPHQW
RIILFLDOV VHDUFKHG +XPSKUH\¶V KRPH WKH\ GLVFRYHUHG D
ZLUHWDSDIILGDYLWXQUHODWHGWRWKHFRQGXFWFKDUJHGLQWKLVFDVH
7KHUHDIWHULWVXJJHVWHGWKDW+XPSKUH\¶VSRVVHVVLRQRIWKLV
DIILGDYLW ZDV HYLGHQFH WKDW KH ZDV D GUXJ GHDOHU :KHQ
+XPSKUH\¶VFRXQVHOEHJDQWRGLVFXVVWKHDIILGDYLWGXULQJKLV
FORVLQJDUJXPHQWWKH*RYHUQPHQWREMHFWHGDQGUHTXHVWHGD
VLGHEDUDIWHUZKLFKWKHGLVWULFWFRXUWLQVWUXFWHGWKHMXU\³<RX
DUHLQVWUXFWHGDQ\DIILGDYLWWKDWZDVPHQWLRQHGE\FRXQVHOKDV
QRWKLQJWRGRZLWKWKLVFDVH7KHDIILGDYLWZKLFKKDVEHHQ
1R 8QLWHG6WDWHVY+XPSKUH\
,Q DGGLWLRQ EHFDXVH WKH VHQWHQFLQJ MXGJH KDG QRW SUHVLGHG DW WULDO
GHIHQVH FRXQVHO ZHQW WR VRPH OHQJWKV DW VHQWHQFLQJ WR SRLQW RXW WKDW WKH
MXU\¶V JXLOW\ YHUGLFWV GLG QRW QHFHVVDULO\ PHDQ WKDW WKH MXU\ IRXQG WKH WZR
FRRSHUDWLQJ ZLWQHVVHV IXOO\ FUHGLEOH SDUWLFXODUO\ DV WR VSHFLILF GUXJ
WUDQVDFWLRQV DQG TXDQWLWLHV 6HH LG DW
WKHLQVWUXFWLRQVWRWKHMXU\VLQFHLWGLFWDWHVLQFDVHVLQYROYLQJ
GUXJRIIHQVHVWKDWGUXJW\SHDQGTXDQWLW\GHWHUPLQDWLRQVWKDW
UHVXOWLQDVHQWHQFHEH\RQGWKHGHIDXOWVWDWXWRU\PD[LPXP
PXVW EH PDGH E\ D MXU\ XQGHU WKH ³EH\RQG D UHDVRQDEOH
GRXEW´VWDQGDUG-RKQVRQOLNHZLVHLQYROYHGDQLVVXHWKDW
ZDVGHFLGHGE\WKHWULDOMXGJHEXWVKRXOGKDYHEHHQVXEPLWWHG
WR D MXU\ )LQDOO\ LQ -RKQVRQ DV LQ 3DJH DQG KHUH QR
REMHFWLRQZDVUDLVHGDWWULDOWRWKH'LVWULFW-XGJHPDNLQJWKH
GHWHUPLQDWLRQLQTXHVWLRQSUHVXPDEO\EHFDXVHWKLVSUDFWLFH
ZDVLQDFFRUGDQFHZLWKWKHVHWWOHGODZDWWKHWLPH&I.LQJ
)G DW Q QRWLQJ WKDW WKLV &LUFXLW KDV UHYLHZHG
$SSUHQGLEDVHG FKDOOHQJHV IRU SODLQ HUURU ³HYHQ ZKHQ
$SSUHQGLKDGQRWEHHQGHFLGHGDWWKHWLPHDGHIHQGDQWZDV
WULHGDQGVHQWHQFHG´
,Q WKH SUHVHQW FDVH GXULQJ WKH SURFHHGLQJV LQ WKH FRXUW
EHORZ'HIHQGDQWXQGHQLDEO\UDLVHGIDFWXDOFKDOOHQJHVWRWKH
GUXJTXDQWLW\UHFRPPHQGDWLRQVVHWIRUWKLQWKHSUHVHQWHQFH
LQYHVWLJDWLRQUHSRUWDQGWKHQUHDVVHUWHGWKHVHFKDOOHQJHVDW
WKH VHQWHQFLQJ KHDULQJ 7KHVH FKDOOHQJHV UHVWHG RQ WKH
FRQWHQWLRQWKDWWKH*RYHUQPHQW¶VSURRIVDVWRGUXJTXDQWLWLHV
UHOLHG KHDYLO\ RQ WKH XQFRUURERUDWHG WHVWLPRQ\ RI WZR
FRRSHUDWLQJZLWQHVVHVZKRVHFUHGLELOLW\ZDVRSHQWRTXHVWLRQ
6HH -$ DW )RU H[DPSOH LQ KLV ZULWWHQ
REMHFWLRQVWRWKHSUHVHQWHQFHUHSRUW'HIHQGDQWFKDUDFWHUL]HG
WKHVHZLWQHVVHVDV³KLJKO\PRWLYDWHGLQIRUPDQWV´ZLWKRQH
EHLQJ³DQDGPLWWHGGUXJDGGLFW´DQGWKHRWKHU³DQDGPLWWHG
OLDUZLWKDSHUVRQDOYHQGHWWDDJDLQVW´'HIHQGDQW ,GDW
,Q OLJKW RI WKH VLJQLILFDQW VHQWHQFLQJ FRQVHTXHQFHV LI WKH
WHVWLPRQ\RIWKHVHZLWQHVVHVZHUHFUHGLWHG'HIHQGDQWDQGKLV
FRXQVHOXUJHGWKH'LVWULFW&RXUWWR³H[HUFLVHVRPHFDXWLRQ´
LQDVVHVVLQJWKLVWHVWLPRQ\ ,GDW

-- 14 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
0RUHRYHU PDQ\ RI RXU RZQ VXEVHTXHQW GHFLVLRQV KDYH
DGKHUHGWR3DJH¶VSODLQHUURUVWDQGDUGLQDGGUHVVLQJ$SSUHQGL
FKDOOHQJHV6HHHJ8QLWHG6WDWHVY.LQJ)G
WK&LU 8QLWHG6WDWHVY0DUWLQH])G
WK&LU 8QLWHG6WDWHVY1HXKDXVVHU)G
WK&LU
,Q HOHFWLQJ WR DSSO\ SODLQ HUURU UHYLHZ 3DJH FLWHV WKH
6XSUHPH&RXUW¶VGHFLVLRQLQ-RKQVRQY8QLWHG6WDWHV
86 6 &W -RKQVRQ LV LQVWUXFWLYH
EHFDXVHLWOLNH3DJHDQGWKHSUHVHQWFDVHLQYROYHGDFODLP
WKDW D 'LVWULFW &RXUW KDG IDLOHG WR VXEPLW DQ HOHPHQW RI D
FULPLQDO RIIHQVH IRU WKH MXU\¶V GHWHUPLQDWLRQ EH\RQG D
UHDVRQDEOHGRXEW,QVWHDGWKHMXU\LQ-RKQVRQZDVLQVWUXFWHG
LQDFFRUGDQFHZLWKWKHQH[LVWLQJ(OHYHQWK&LUFXLWSUHFHGHQW
WKDWWKHHOHPHQWLQTXHVWLRQPDWHULDOLW\ZRXOGEHGHFLGHGE\
WKH'LVWULFW-XGJH$IWHUWKHGHIHQGDQWZDVFRQYLFWHGEXW
EHIRUH KHU DSSHDO ZDV KHDUG WKH 6XSUHPH &RXUW KHOG WKDW
PDWHULDOLW\ZDVDTXHVWLRQIRUWKHMXU\DQGQRWWKH&RXUWDQG
WKHGHIHQGDQWWKHQUDLVHGWKLVLVVXHLQKHUSHQGLQJDSSHDO
7KH&RXUWRI$SSHDOVUHYLHZHGWKLVPDWWHUIRUSODLQHUURU
DQG WKH 6XSUHPH &RXUW XSRQ JUDQWLQJ FHUWLRUDUL OLNHZLVH
FRQFOXGHGWKDWWKHSODLQHUURUVWDQGDUGJRYHUQHGLWVLQTXLU\
EHFDXVH WKH GHIHQGDQW ³GLG QRW REMHFW WR WKH WULDO FRXUW¶V
WUHDWPHQWRIPDWHULDOLW\´-RKQVRQ86DW
6&WDW7REHVXUHWKLVODFNRIREMHFWLRQZDVWREH
H[SHFWHG³DWWKHWLPHRIWULDOLWZDVVHWWOHGWKDWWKHLVVXHRI
PDWHULDOLW\ZDVWREHGHFLGHGE\WKHFRXUWQRWWKHMXU\´EXW
³E\WKHWLPHRIDSSHOODWHFRQVLGHUDWLRQWKHODZKDGFKDQJHG
DQGLWLVQRZVHWWOHGWKDWPDWHULDOLW\LVDQLVVXHIRUWKHMXU\´
86DW6&WDW1HYHUWKHOHVVWKLVODFNRI
REMHFWLRQ KRZHYHU XQGHUVWDQGDEOH WULJJHUHG SODLQ HUURU
UHYLHZ
&RQVHTXHQWO\ HYHQ LI 3DJH KDG QRW VHWWOHG WKH LVVXH
-RKQVRQZRXOGGLFWDWHWKDWZHDSSO\SODLQHUURUUHYLHZWRDQ
$SSUHQGLEDVHGFODLPUDLVHGIRUWKHILUVWWLPHRQDSSHDO$V
WKHPDMRULW\UHFRJQL]HVDQGDVZHKDYHREVHUYHGHOVHZKHUH
VHHHJ.LQJ)GDW Q$SSUHQGLLPSOLFDWHV
1R 8QLWHG6WDWHVY+XPSKUH\
PHQWLRQHGKDVDEVROXWHO\QRWKLQJWRGRZLWKWKHLQYHVWLJDWLRQ
KHUH RU WKLV FDVH 3OHDVH GLVUHJDUG LW´ -$ DW 7KLV
LQVWUXFWLRQ QRWZLWKVWDQGLQJ WKH *RYHUQPHQW¶V UHEXWWDO
FORVLQJDUJXPHQWDJDLQPDGHUHIHUHQFHWRWKHDIILGDYLWDQG
VXJJHVWHGWKDWLWZDVHYLGHQFHWKDW+XPSKUH\ZDVHQJDJHGLQ
LOOHJDO QDUFRWLFV DFWLYLW\ ,Q PDNLQJ VXFK DQ DUJXPHQW
+XPSKUH\PDLQWDLQVWKDWWKH*RYHUQPHQWVXFFHVVIXOO\SODFHG
EHIRUH WKH MXU\ RQO\ LWV LQWHUSUHWDWLRQ RI HYLGHQFH WKDW WKH
GLVWULFWFRXUWKDGDOUHDG\GHWHUPLQHGZDVLUUHOHYDQW
%HFDXVH+XPSKUH\IDLOHGWRUDLVHDQREMHFWLRQDWWULDOZH
UHYLHZWKLVFODLPIRUSODLQHUURU7KH*RYHUQPHQWUHVSRQGV
DQGZHDJUHHWKDWWKHZLUHWDSDIILGDYLWOLNHWKHJXQPRQH\
WHOHSKRQH VFUDPEOHU DQG ZLUHWDS GHWHFWRU VHL]HG IURP
+XPSKUH\¶VUHVLGHQFHZDVFLUFXPVWDQWLDOHYLGHQFHRIWKH
GHIHQGDQW¶VNQRZOHGJHUHJDUGLQJWKHPDQQHUDQGPHDQVLQ
ZKLFK ODZ HQIRUFHPHQW HQJDJHV LQ GUXJ WUDIILFNLQJ
LQYHVWLJDWLRQVDQGKLVNQRZLQJSDUWLFLSDWLRQLQDFRQVSLUDF\
WRGLVWULEXWHFRFDLQH:KLOHWKHZLUHWDSDIILGDYLWVWDQGLQJ
DORQHZRXOGOLNHO\QRWEHUHOHYDQWHYLGHQFHSDUWLFXODUO\VLQFH
LWUHIHUVLQQRZD\WR+XPSKUH\ZHEHOLHYHWKDWLWFRXSOHG
ZLWKWKHRWKHU³WRROVRIWKHWUDGH´LVSUREDWLYHRI+XPSKUH\¶V
NQRZOHGJHRIGUXJWUDIILFNLQJLQYHVWLJDWLRQV
:LWKUHVSHFWWR+XPSKUH\¶VDUJXPHQWWKDWWKH*RYHUQPHQW
YLRODWHG D FRXUW RUGHU QRW WR GLVFXVV WKH DIILGDYLW KLV
DUJXPHQWLVQRWZHOOWDNHQ)LUVWWKHGLVWULFWFRXUWPHUHO\
LQVWUXFWHGWKHMXU\WKDWWKHDIILGDYLWKDGQRWKLQJWRGRZLWK
+XPSKUH\RUWKHFKDUJHGFRQGXFWLQWKHFDVH2XUUHYLHZRI
WKH UHFRUG VXJJHVWV WKDW LW GLG QRW SURKLELW FRXQVHO IURP
UHIHUULQJWRLW7KH*RYHUQPHQWPDGHUHIHUHQFHLQLWVFORVLQJ
DUJXPHQW WR WKH DIILGDYLW EXW RQO\ WR GHPRQVWUDWH
+XPSKUH\¶V NQRZOHGJH RI FULPLQDO LQYHVWLJDWLRQV %\
FRQWUDVWZKHQ+XPSKUH\¶VFRXQVHOPHQWLRQHGWKHDIILGDYLW
KHVXJJHVWHGWKDWWKHDIILGDYLWZDVHYLGHQFHWKDW+XPSKUH\
ZDVEHLQJLQYHVWLJDWHG³:HOO>+XPSKUH\¶V@JRWDQDIILGDYLW
LQKLVKRXVHDQGZKDWGR\RXWKLQNWKHDIILGDYLWSUREDEO\
VD\VWKHUH"7KDWULJKWO\RUZURQJO\KH¶VEHLQJLQYHVWLJDWHG´
-$ DW 7KH *RYHUQPHQW SURPSWO\ REMHFWHG WR WKLV

-- 15 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
PLVVWDWHPHQWRIWKHHYLGHQFHDQGWKHGLVWULFWFRXUWVXVWDLQHG
WKHREMHFWLRQ7KHUHZDVQRHUURU
J,PSURSHU&ORVLQJ$UJXPHQW
,QLWVUHEXWWDOFORVLQJDUJXPHQWWKH*RYHUQPHQWDUJXHG
WKDW HYHQ +XPSKUH\¶V FRXQVHO 'DYLG 'XGOH\ NQHZ WKDW
+XPSKUH\¶VFRQYHUVDWLRQVZLWKKLVDFFRXQWDQWDPRXQWHGWR
D FRQIHVVLRQ ³'DYLG 'XGOH\ NQRZV WKDW FRQYHUVDWLRQ
>EHWZHHQ +XPSKUH\ DQG KLV DFFRXQWDQW@ LV DV FORVH WR D
FRQIHVVLRQDVDQ\WKLQJLQWKLVZKROHFRXUWURRPDQGKHKDVWR
GHDOZLWKLWEHFDXVHKHNQRZV\RXDUHJRLQJWRVHHWKDW´-$
DW+XPSKUH\VXJJHVWVWKDWWKLVDUJXPHQWLPSURSHUO\
UHOLHG XSRQ +XPSKUH\¶V FRXQVHO WR YRXFK IRU WKH
*RYHUQPHQW¶VYLHZRI+XPSKUH\¶VJXLOW
7KH*RYHUQPHQWUHVSRQGVWKDW³WKDWFRQYHUVDWLRQ´UHIHUUHG
WRDQLQWHUFHSWHGWHOHSKRQHFRQYHUVDWLRQEHWZHHQ+XPSKUH\
DQGKLVDFFRXQWDQWLQZKLFK+XPSKUH\DOOHJHGO\H[SUHVVHG
VRPH FRQFHUQ RYHU SDSHUZRUN UHODWHG WR KLV SXUFKDVH RI D
EXVLQHVVEHFDXVHWKHEXVLQHVVRZQHUKDGKDGSULRUGHDOLQJV
ZLWK WKH 'UXJ (QIRUFHPHQW $GPLQLVWUDWLRQ ³'($´
)XUWKHUWKH*RYHUQPHQWPDLQWDLQVWKDWLWVUHIHUHQFHWRWKH
FRQYHUVDWLRQ DV D ³FRQIHVVLRQ´ ZDV PHUHO\ DQ DWWHPSW WR
GLVFUHGLW'XGOH\¶V³VSLQRQWKHFRQYHUVDWLRQ´E\VXJJHVWLQJ
WKDWDOHJLWLPDWHEXVLQHVVRZQHUZLWKOHJLWLPDWHVRXUFHVRI
LQFRPHZRXOGKDYHQRFRQFHUQDERXWDQ\'($LQYROYHPHQW
LQRQHRIKLVEXVLQHVVYHQWXUHV
2Q WKLV UHFRUG ZH GR QRW ILQG WKDW WKH SURVHFXWRU¶V
FRPPHQWV FDQ EH UHDVRQDEO\ FRQVWUXHG DV LPSO\LQJ WKDW
GHIHQVHFRXQVHOEHOLHYHGKLVFOLHQWZDVJXLOW\:HILQGQR
HUURULQWKHFORVLQJDUJXPHQW
K&XPXODWLYH,PSDFW
:KHQWKHDIRUHPHQWLRQHGHUURUVDOOHJHGE\+XPSKUH\DUH
YLHZHGLQWKHFRQWH[WRIWKHHQWLUHWULDO+XPSKUH\DUJXHVWKDW
WKHLUFXPXODWLYHLPSDFWPDQGDWHVUHYHUVDOHYHQLIDQ\RQH
HUURU LQ LVRODWLRQ GRHV QRW 7KHVH HUURUV +XPSKUH\
PDLQWDLQV ZHUH SDUWLFXODUO\ SUHMXGLFLDO JLYHQ WKDW KLV WULDO
1R 8QLWHG6WDWHVY+XPSKUH\
$V LW KDSSHQV WKH VWDQGDUG RI UHYLHZ ZDV QRW GHWHUPLQDWLYH LQ
&RUUDGR DQG 5HEPDQQ ,Q WKH IRUPHU FDVH WKH &RXUW IRXQG QR $SSUHQGL
YLRODWLRQ DQG WKH GHIHQGDQW FRXOG QRW KDYH SUHYDLOHG HYHQ XQGHU GH QRYR
UHYLHZ ,Q WKH ODWWHU WKH GHIHQGDQW¶V VHQWHQFH H[FHHGHG WKH VWDWXWRU\
PD[LPXP IRU WKH RIIHQVH WR ZKLFK VKH KDG SOHG JXLOW\ DQG KHU FODLP
WKHUHIRUH FRXOG KDYH VDWLVILHG WKH PRUH VWULQJHQW SODLQ HUURU VWDQGDUG
2Q DSSHDO DW OHDVW RQH RI WKH IRXU GHIHQGDQWV LQ 3DJH TXHVWLRQHG
WKH 'LVWULFW &RXUW¶V PHWKRG RI FRPSXWLQJ GUXJ TXDQWLWLHV :H UHMHFWHG
WKLV FKDOOHQJH DQG VWDWHG WKDW ³>R@WKHU LVVXHV UHJDUGLQJ GUXJ TXDQWLW\
DUH DGGUHVVHG LQ WKH XQSXEOLVKHG DSSHQGL[ WR WKLV RSLQLRQ´ 3DJH
)G DW Q $V REVHUYHG E\ WKH PDMRULW\ KRZHYHU 3DJH GRHV
QRW LQGLFDWH ZKDW VRUWV RI FKDOOHQJHV LI DQ\ ZHUH RU ZHUH QRW UDLVHG
EHIRUH WKH 'LVWULFW &RXUW ² WKDW LV DSDUW IURP RXU GLUHFW VWDWHPHQW WKDW
WKH GHIHQGDQWV GLG QRW UDLVH DQ $SSUHQGL LVVXH LQ WKH FRXUW EHORZ WKHUHE\
WULJJHULQJ SODLQ HUURU UHYLHZ
IRUFODLPVRI$SSUHQGLYLRODWLRQV3DJHVTXDUHO\DGGUHVVHV
² DQG LQ P\ YLHZ GHILQLWLYHO\ UHVROYHV ² WKLV LVVXH
6SHFLILFDOO\ZHKHOG
'HIHQGDQWVIDLOHGWRREMHFWWRWKHGLVWULFWMXGJH
PDNLQJ WKH GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHV :KHUH
WKHUHKDVEHHQQRREMHFWLRQUHYLHZLVIRUSODLQHUURU
3DJH)GDW FLWLQJ)HG5&ULP3 E
2QFHDJDLQ3DJH¶VUXOLQJRQWKLVSRLQWLVLQDFFRUGZLWKWKH
GHFLVLRQVRIDOORIRXUVLVWHU&LUFXLWV6HH8QLWHG6WDWHVY
7LWFKHOO)G G&LU 8QLWHG6WDWHVY
)LHOGV )G '& &LU 8QLWHG
6WDWHV Y :KLWH )G G &LU 8QLWHG
6WDWHVY6WXUJLV)G WK&LU 8QLWHG
6WDWHVY:KLWH)G WK&LU 8QLWHG
6WDWHVY1DQFH)G WK&LU 8QLWHG
6WDWHVY.HHOLQJ)G WK&LU 8QLWHG
6WDWHVY*HUURZ)G WK&LU 8QLWHG
6WDWHVY0RMLFD%DH])G VW&LU
8QLWHG6WDWHVY1RUGE\)G WK&LU
8QLWHG6WDWHVY0HVKDFN)G WK&LU
DPHQGHG RQ UHK¶J )G WK &LU

-- 16 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
2U SHUKDSV DV WKH PDMRULW\ VXJJHVWV WKH 6XSUHPH &RXUW ZLOO
UHVROYH WKH PDWWHU IRU XV DV LW DSSHDUV WKDW WKH &RXUW ZLOO UHYLVLW $SSUHQGL
LQ D IRUWKFRPLQJ RSLQLRQ
SUHVHQWVWKHLVVXHRIWKHSURSHULQWHUSUHWDWLRQRI$SSUHQGL
$V GLVFXVVHG EHORZ WKLV LV QRW VXFK D FDVH ² RU PRUH
DFFXUDWHO\LWZRXOGQRWEHLI'HIHQGDQW¶V$SSUHQGLFODLP
ZHUH HYDOXDWHG XQGHU WKH SURSHU VWDQGDUG RI UHYLHZ 7KH
PDMRULW\¶VGHFLVLRQWRDSSO\GHQRYRUHYLHZKRZHYHUOHQGV
QHZ DQG XQGXH VLJQLILFDQFH WR LWV H[SDQVLYH UHDGLQJ RI
$SSUHQGLDQGFRPSRXQGVHUURUZLWKIXUWKHUHUURU
,,
%\QRZ P\ YLHZVUHJDUGLQJWKHFRUUHFWFRQVWUXFWLRQRI
$SSUHQGL VKRXOG EH HYLGHQW $V FRQFHGHG DW WKH RXWVHW
KRZHYHUWKH&RXUW¶VRSLQLRQLQWKDWFDVHFRQWDLQVODQJXDJH
WKDWDUJXDEO\VXSSRUWVDIHZFRPSHWLQJLQWHUSUHWDWLRQV,Q
DQ\HYHQWZKHWKHURQHVXEVFULEHVWRWKH³PD[LPXPSHQDOW\´
RU³VHQWHQFLQJUDQJH´YLHZRI$SSUHQGLWKHRXWFRPHRIWKH
SUHVHQW FDVH VKRXOG EH QR GLIIHUHQW EHFDXVH
'HIHQGDQW$SSHOODQW+XPSKUH\FDQQRWSRVVLEO\VDWLVI\WKH
JRYHUQLQJ³SODLQHUURU´VWDQGDUG<HWWKHPDMRULW\FRQFOXGHV
RWKHUZLVHXSRQILUVWGHWHUPLQLQJWKDW'HIHQGDQW¶V$SSUHQGL
EDVHGFKDOOHQJHVKRXOGEHUHYLHZHGGHQRYR$FFRUGLQJWR
WKHPDMRULW\'HIHQGDQWVXIILFLHQWO\UDLVHGDQ$SSUHQGLLVVXH
DWVHQWHQFLQJWRSUHVHUYHWKHLVVXHRQDSSHDORUDOWHUQDWLYHO\
KLVIDFWXDOFKDOOHQJHVWRGUXJTXDQWLWLHVDWVHQWHQFLQJVXIILFHG
WRSUHVHUYHWKHLVVXH,WDNHDGLIIHUHQWYLHZERWKDVWRWKH
UHFRUG DQG DV WR WKH JRYHUQLQJ ODZ , DJDLQ PXVW
DFNQRZOHGJHKRZHYHUWKDWRXU&LUFXLWKDVSURYLGHGPL[HG
PHVVDJHV ² DQG DOO WRR RIWHQ QR JXLGDQFH DW DOO ² LQ
GHWHUPLQLQJWKHVWDQGDUGXQGHUZKLFK$SSUHQGLFKDOOHQJHV
VKRXOGEHUHYLHZHG
$OWKRXJKRXULQLWLDOSRVW$SSUHQGLGHFLVLRQVLQ&RUUDGR
DQG5HEPDQQGLGQRWFRQVLGHUWKHSURSHUVWDQGDUGRIUHYLHZ
1R 8QLWHG6WDWHVY+XPSKUH\
ZDVEXLOWRQZHDNFLUFXPVWDQWLDOHYLGHQFHRIJXLOWLQZKLFK
KHZDVFRQYLFWHGRQO\RIFRQVSLUDF\ DQGQRWRIDQ\RIWKH
XQGHUO\LQJ VXEVWDQWLYH FRXQWV EDVHG RQ WKH WHVWLPRQ\ RI
DOOHJHGFRFRQVSLUDWRUV:HGLVDJUHH([DPLQLQJWKHUHFRUG
DVDZKROHZHIDLOWRILQGDQ\HUURULQ WKHIRUHJRLQJWKDW
VLQJXODUO\RUFXPXODWLYHO\PDQGDWHVUHYHUVDO
%'LVWULFW&RXUW0LVFRQGXFW
6WDQGDUGRI5HYLHZ
:HUHYLHZGHQRYRZKHWKHUDGLVWULFWFRXUW¶VDOOHJHGIDLOXUH
WR FRQGXFW D KHDULQJ WR LQTXLUH LQWR D FRQIOLFW RI LQWHUHVW
EHWZHHQ D GHIHQGDQW DQG KLV WULDO FRXQVHO YLRODWHG D
GHIHQGDQW¶V 6L[WK $PHQGPHQW ULJKW WR HIIHFWLYH FRXQVHO
8QLWHG6WDWHVY+DOO)G WK&LU :H
UHYLHZ IRU FOHDU HUURU D GLVWULFW FRXUW¶V IDFWXDO ILQGLQJV
FRQFHUQLQJ ZKHWKHU D SDUW\ KDV LPSURSHUO\ XVHG LWV
SHUHPSWRU\FKDOOHQJHVRQWKHEDVLVRIUDFH8QLWHG6WDWHVY
7XFNHU)G WK&LU
$QDO\VLV
+XPSKUH\ DUJXHV WKDW WKH GLVWULFW FRXUW HUUHG LQ WZR
UHVSHFWV)LUVWLWIDLOHGWRFRQGXFWDQLQTXLU\LQWRWKHDFWXDO
FRQIOLFW RI LQWHUHVW EHWZHHQ +XPSKUH\ DQG KLV FRXQVHO
6HFRQG WKH GLVWULFW FRXUW LPSURSHUO\ UHYLHZHG KLV %DWVRQ
FKDOOHQJH1HLWKHUDUJXPHQWKDVPHULW
D&RQIOLFWRI,QWHUHVW
2Q)HEUXDU\HLJKWPRQWKVDIWHU+XPSKUH\¶VWULDO
'DYLG 'XGOH\ GLVFRYHUHG D FRQIOLFW RI LQWHUHVW EHWZHHQ
KLPVHOI DQG +XPSKUH\ SURPSWLQJ 'XGOH\ WR ILOH ZLWK WKH
GLVWULFWFRXUWDPRWLRQWRZLWKGUDZDVFRXQVHO6HH-$DW
GLVFXVVLQJ WKH ³DSSDUHQW´ FRQIOLFW FUHDWHG E\
+XPSKUH\¶VSURVHPRWLRQVDOOHJLQJLQWHUDOLDWKDW'XGOH\
ZDVLQFRPSHWHQWDQGQRW³UHJLVWHUHG´WRSUDFWLFHODZLQWKH
1RUWKHUQ 'LVWULFW RI 2KLR DQG WKDW 'XGOH\ ZDV DFWLYHO\
FRQVSLULQJWR³GHIUDXGDQGHQWUDS´+XPSKUH\ -$DW
GLVFXVVLQJWKH³DFWXDO´FRQIOLFWFUHDWHGE\+XPSKUH\¶VILOLQJ

-- 17 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
RI FRPSODLQWV ZLWK WKH 6WDWH %DU RI *HRUJLD DOOHJLQJ WKDW
'XGOH\ ZDV QRW OLFHQVHG WR SUDFWLFH ODZ LQ D QXPEHU RI
IHGHUDO FULPLQDO PDWWHUV LQYROYLQJ SUHYLRXVO\ UHSUHVHQWHG
GHIHQGDQWV ,Q 'XGOH\¶V HVWLPDWLRQ WKH GLVFRYHU\ RI WKLV
FRQIOLFWPDGHLWLPSRVVLEOHIRUKLPWRDUJXHRQ'HIHQGDQW¶V
EHKDOILQIXUWKHUDQFHRIQHZWULDODQGVHQWHQFLQJLVVXHV
-XGJH*DXJKDQUHYLHZHGWKHWUDQVFULSWRIDSULRUKHDULQJRQ
WKLVLVVXHFRQGXFWHG E\ -XGJH%HOORQ6HSWHPEHU
)LQGLQJWKDWWKHLVVXHZDVIXOO\GLVFXVVHGDQGUHVROYHGE\
-XGJH %HOO WKH GLVWULFW FRXUW GHQLHG 'XGOH\¶V PRWLRQ
FRQFOXGLQJ WKDW LW ZRXOG EH SDWHQWO\ XQIDLU WR OHDYH WKH
GHIHQGDQWXQUHSUHVHQWHGDWWKHVHQWHQFLQJSDUWLFXODUO\LQOLJKW
RIWKHIDFWWKDWSRVWWULDOPRWLRQVKDGEHHQIXOO\EULHIHGDQG
SUHVHQWHQFHLQYHVWLJDWLRQUHSRUW ³365´ REMHFWLRQVDOUHDG\
ILOHG,WGLGQRWHKRZHYHUWKDW+XPSKUH\UHPDLQHGIUHHWR
ILUH 'XGOH\ DQG VHFXUH DQRWKHU DWWRUQH\ RU SURFHHG WR
VHQWHQFLQJSURVH+XPSKUH\GLGQHLWKHU+HQRZDVVLJQV
HUURUWRWKHGLVWULFWFRXUW¶VGHQLDORIDGGLWLRQDOWLPHIRUKLPWR
UHWDLQQHZFRXQVHODQGLWVIDLOXUHWRLQTXLUHLQWRWKHIDFWVRI
WKH DOOHJHG FRQIOLFW QRWZLWKVWDQGLQJ WKH *RYHUQPHQW¶V
PRWLRQVHHNLQJWRFRQGXFWMXVWVXFKDQLQTXLU\
$ GHIHQGDQW LV GHQLHG KLV 6L[WK $PHQGPHQW ULJKW WR
HIIHFWLYHFRXQVHOZKHQKLVDWWRUQH\RSHUDWHVXQGHUDFRQIOLFW
RI LQWHUHVW *ODVVHU Y 8QLWHG 6WDWHV 86
$WULDOFRXUWPRUHRYHUKDVDGXW\WRLQTXLUHLQWRWKH
QDWXUH RI D FRQIOLFW DW VXFK WLPH DV LW EHFRPHV DZDUH RI D
SRWHQWLDORUDFWXDOFRQIOLFWRILQWHUHVW:RRGY*HRUJLD
86 )DLOXUHRIDWULDOFRXUWWRFRQGXFW
VXFKDQLQTXLU\PDQGDWHVDUHYHUVDOLIWKHGHIHQGDQWFDQVKRZ
WKH FRQIOLFW DGYHUVHO\ DIIHFWHG KLV FRXQVHO¶V SHUIRUPDQFH
0LFNHQVY7D\ORU6&W
:HUHMHFW+XPSKUH\¶VDUJXPHQW)LUVW+XPSKUH\¶VFDVH
LV GLVWLQJXLVKDEOH IURP WKH *ODVVHU OLQH RI FDVHV DV WKRVH
FDVHVLQYROYHGDQDWWRUQH\¶VMRLQWUHSUHVHQWDWLRQRIPXOWLSOH
GHIHQGDQWV D VLWXDWLRQ QRW SUHVHQW LQ WKH LQVWDQW FDVH
6HFRQGLWZDVRQO\DIWHUWULDOWKDWDFRQIOLFWSUHVHQWHGLWVHOI
DQGWKDWRQO\DVDUHVXOWRI+XPSKUH\¶VILOLQJRIQXPHURXV
1R 8QLWHG6WDWHVY+XPSKUH\
:/ DW WK &LU 0D\ 8QLWHG 6WDWHV Y 2OGKDP
:/ DW WK &LU $SU 8QLWHG 6WDWHV Y
1HXKDXVVHU )G WK &LU 8QLWHG 6WDWHV Y
&DOGZHOO )G :/ DW WK &LU 'HF
1RW RQH RI WKHVH FDVHV DGGUHVVHV RU HYHQ PHQWLRQV D VWDWXWRU\
PLQLPXP VHQWHQFH DV ZRXOG EH QHFHVVDU\ LI )ORZDO ZHUH QRZ WKLV
&LUFXLW¶V VROH DQG GHILQLWLYH VWDWHPHQW RI WKH VFRSH RI $SSUHQGL
$OWKRXJK WKH PDMRULW\ SODFHV VLJQLILFDQFH RQ WKH IDFW WKDW PRVW RI WKHVH
FDVHV DUH XQSXEOLVKHG LW VHHPV WR PH WKDW WKH SDQHO LQ HDFK LQVWDQFH ZDV
ERXQG WR DVFHUWDLQ DQG IROORZ WKH ODZ RI WKLV &LUFXLW ZKHWKHU RU QRW LW
SODQQHG WR SXEOLVK LWV GHFLVLRQ ,QGHHG WKHUH ZDV QR QHHG IRU WKHVH
SDQHOV WR SXEOLVK WKHLU UXOLQJV DV WKH\ ZHUH PHUHO\ IROORZLQJ RXU SULRU
SXEOLVKHG SUHFHGHQWV LQ &RUUDGR 3DJH DQG 0XQR]
0RUH LPSRUWDQWO\ DV D OHJDO PDWWHU WKH PDMRULW\¶V ³GHYHORSPHQW RI
WKH ODZ´ WKHRU\ FDQQRW KRSH WR DFFRXQW IRU FDVHV ZLWK OHJDOO\
LQGLVWLQJXLVKDEOH IDFWV EXW GLIIHUHQW RXWFRPHV 0XQR] DQG 5DPLUH] IRU
H[DPSOH ERWK LQYROYHG GUXJUHODWHG ILQGLQJV E\ D 'LVWULFW -XGJH WKDW
WULJJHUHG DQ HQKDQFHG VWDWXWRU\ VHQWHQFLQJ UDQJH ERWK PLQLPXP DQG
PD[LPXP EXW WKH GHIHQGDQW LQ HDFK FDVH ZDV VHQWHQFHG ZLWKLQ WKH
GHIDXOW \HDU PD[LPXP RI † E & 0XQR] KHOG WKDW ³WKH
$SSUHQGL UXOLQJ LV QRW DSSOLFDEOH KHUH´ )G DW ZKLOH 5DPLUH]
IRXQG D YLRODWLRQ RI $SSUHQGL )G DW ,I 5DPLUH] LV GHHPHG
FRUUHFW ² RU PRUH WR WKH SRLQW ELQGLQJ RQ VXEVHTXHQW SDQHOV ² WKH
FRQFOXVLRQ LV LQHVFDSDEOH WKDW 0XQR] LV QRW 0XQR] WKHQ KDV EHHQ
RYHUUXOHG SODLQ DQG VLPSOH ² QRWZLWKVWDQGLQJ RXU &LUFXLW UXOH WKDW RQH
SDQHO PD\ QRW RYHUUXOH DQRWKHU
7KH TXHVWLRQ EHFRPHV ZKDW WR GR DERXW WKLV VWDWH RI DIIDLUV" 7KH
PDMRULW\ VXJJHVWV ² DOEHLW WDFLWO\ JLYHQ LWV DVVHUWLRQ WKDW RXU SRVW
$SSUHQGL GHFLVLRQV DUH QRW LQ FRQIOLFW ² WKDW WKH ODWHU GHFLVLRQV VKRXOG
SUHYDLO RYHU WKH HDUOLHU RQHV , DP XQFRPIRUWDEOH ZLWK WKLV DV LW VHHPV WR
VDQFWLRQ D ³RQH IUHH ELWH´ H[FHSWLRQ WR RXU UXOH RI VWDUH GHFLVLV ,Q
FRQWUDVW DGKHUHQFH WR WKH HDUOLHU FDVHV UHLQIRUFHV WKH SULQFLSOH RI VWDUH
GHFLVLV E\ GHPRQVWUDWLQJ RXU UHVROYH QRW WR SHUPLW RQH SDQHO WR RYHUWXUQ
WKH UXOLQJ RI DQRWKHU 8QGHU WKH SUHVHQW FLUFXPVWDQFHV PRUHRYHU WKHUH
LV WKH DGGLWLRQDO FRQVLGHUDWLRQ WKDW )ORZDO DQG LWV SURJHQ\ KDYH
HIIHFWLYHO\ RYHUUXOHG WKH 6XSUHPH &RXUW¶V 0F0LOODQ GHFLVLRQ DQG QRW
MXVW H[LVWLQJ 6L[WK &LUFXLW SUHFHGHQW 7KLV LQ P\ YLHZ LV WKH XOWLPDWH
³WLHEUHDNHU´
*LYHQWKLVVWDWHRIDIIDLUVSHUKDSVLWZRXOGEHKRRYHWKLV
&RXUW WR FRQVLGHU HQ EDQF UHYLHZ RI D FDVH WKDW VWDUNO\

-- 18 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
,Q FULWLFL]LQJ )ORZDO , PHDQ QR GLVUHVSHFW WR WKH SDQHO WKDW GHFLGHG
LW , KDYH DOUHDG\ DFNQRZOHGJHG WKDW $SSUHQGL LWVHOI LV QRW D PRGHO RI
FODULW\ 0RUHRYHU UHJDUGLQJ )ORZDO¶V IDLOXUH WR DFFRXQW IRU WKLV &LUFXLW¶V
H[LVWLQJ SRVW$SSUHQGL SUHFHGHQWV LW PXVW EH QRWHG WKDW 3DJH DQG 0XQR]
ZHUH GHFLGHG LQ 1RYHPEHU RI ZLWK )ORZDO IROORZLQJ VRRQ
WKHUHDIWHU RQ 'HFHPEHU 7KLV &LUFXLW¶V LQLWLDO IOXUU\ RI SRVW
$SSUHQGL GHFLVLRQV DGPLWWHGO\ SRVHG D FKDOOHQJH WR SDQHOV VHHNLQJ WR
HQVXUH WKDW WKHLU GHFLVLRQV ZHUH FRQVLVWHQW ZLWK RXU H[LVWLQJ ODZ RQ WKH
VXEMHFW 1HYHUWKHOHVV )ORZDO DQG LWV SURJHQ\ GR GHSDUW IURP WKH
GHFLVLRQV WKDW SUHFHGHG WKHP 7KXV , UHVSHFWIXOO\ GLIIHU IURP WKH
PDMRULW\¶V YLHZ WKDW )ORZDO 5DPLUH] DQG 6WUD\KRUQ PHUHO\ UHIOHFW WKH
IXUWKHU GHYHORSPHQW RI RXU SRVW$SSUHQGL MXULVSUXGHQFH UHVROYLQJ LVVXHV
OHIW RSHQ LQ RXU LQLWLDO GHFLVLRQV RQ WKH VXEMHFW , ILQG WKLV H[SODQDWLRQ
ZDQWLQJ ERWK IDFWXDOO\ DQG OHJDOO\
)LUVW LI RXU LQLWLDO ³VWDWXWRU\ PD[LPXP´ UHDGLQJ RI $SSUHQGL ZHUH
QRZ D GHDG OHWWHU VXSSODQWHG E\ WKH EURDGHU KROGLQJV RI )ORZDO DQG LWV
SURJHQ\ RQH ZRXOG H[SHFW WKDW SDQHOV ZRXOG QR ORQJHU FLWH RXU HDUOLHU
VWDWHPHQW RI WKH UXOH RI $SSUHQGL EXW LQVWHDG ZRXOG DVN ZKHWKHU D
'LVWULFW -XGJH¶V ILQGLQJV E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH DIIHFWHG WKH
VHQWHQFLQJ UDQJH IDFHG E\ WKH GHIHQGDQW <HW LQ WKH WLPH VLQFH )ORZDO
ZDV GHFLGHG VHYHUDO SDQHOV RI WKLV &RXUW KDYH FRQWLQXHG WR IROORZ WKH
QDUURZHU UXOH RI &RUUDGR 3DJH DQG 0XQR] KROGLQJ WKDW $SSUHQGL GRHV
QRW DSSO\ ZKHUH WKH GHIHQGDQW¶V VHQWHQFH OLHV ZLWKLQ WKH VWDWXWRU\
PD[LPXP IRU WKH RIIHQVH HVWDEOLVKHG E\ WKH MXU\ YHUGLFW RU JXLOW\ SOHD
DORQH 6HH HJ 8QLWHG 6WDWHV Y 0F/HPRUH :/ DW
WK &LU 'HF 8QLWHG 6WDWHV Y $UJR :/ DW
WK &LU 2FW 8QLWHG 6WDWHV Y 'HOJDGR :/ DW
WK &LU 6HSW 8QLWHG 6WDWHV Y $UEHODH]$JXGHOR
:/ DW Q WK &LU $XJ 8QLWHG 6WDWHV Y &RRN
:/ DW WK &LU -XO\ 8QLWHG 6WDWHV Y 5LGOH\
:/ DW WK &LU 0D\ 8QLWHG 6WDWHV Y 'HDWRQ
PD[LPXPVRUVHQWHQFLQJUDQJHVJHQHUDOO\,ZRXOGUHVSHFWWKH
SUHURJDWLYHRIWKHSDQHOLQWKDWFDVHWRUHDFKDGHFLVLRQZKLFK
ULJKWRUZURQJZRXOGELQGDOOVXEVHTXHQWSDQHOVLQFOXGLQJ
WKLVRQH$VPDWWHUVQRZVWDQGKRZHYHU,QRWRQO\KDUERU
VXEVWDQWLDOGRXEWDERXWWKHDQDO\VLVLQ)ORZDOEXW,IHDUWKDW
WKLV GHFLVLRQ DQG LWV SURJHQ\ UHQGHUHG ZLWKRXW VXIILFLHQW
UHJDUGIRUWKLV&LUFXLW¶VSUHH[LVWLQJSUHFHGHQWVKDYHUHGXFHG
WKHUXOHRIVWDUHGHFLVLVIURPDVHWWOLQJSULQFLSOHLQWRDQHPSW\
EURPLGH WKDW PD\ EH UHFLWHG DV ³UHTXLULQJ´ HLWKHU RI WZR
GLDPHWULFDOO\ RSSRVHG RXWFRPHV RI DQ $SSUHQGLEDVHG
FKDOOHQJH
1R 8QLWHG6WDWHVY+XPSKUH\
SURVHSOHDGLQJVDOOHJLQJPLVFRQGXFWE\'XGOH\7KLUGDWD
6HSWHPEHU KHDULQJ RQ WKH PDWWHU DW ZKLFK
+XPSKUH\ZDVVFKHGXOHGWREHVHQWHQFHG -XGJH%HOODVNHG
+XPSKUH\ ZKHWKHU KH ZLVKHG 'XGOH\ WR FRQWLQXH DV KLV
FRXQVHO DQG +XPSKUH\ UHVSRQGHG ³<HV´ )LQDOO\ -XGJH
*DXJKDQ SURSHUO\ UHYLHZHG WKH WUDQVFULSW RI -XGJH %HOO¶V
KHDULQJ DQG FRQFOXGHG WKDW QR DGGLWLRQDO KHDULQJ ZDV
QHFHVVDU\ DQG QR DGGLWLRQDO WLPH ZDV UHTXLUHG WR SHUPLW
'XGOH\WRUHWDLQQHZFRXQVHO7KHUHFRUGUHYHDOVWKDW'XGOH\
YLJRURXVO\ GHIHQGHG +XPSKUH\¶V LQWHUHVWV ILOHG QXPHURXV
SUHWULDO DQG SRVWWULDO PRWLRQV RQ KLV EHKDOI DQG DUJXHG
VXFFHVVIXOO\IRUWKHORZHVWVHQWHQFHSURYLGHGE\ODZ
E%DWVRQ&KDOOHQJH
+XPSKUH\DUJXHVWKDWWKH*RYHUQPHQWLPSURSHUO\XVHGLWV
SHUHPSWRU\FKDOOHQJHVGXULQJYRLUGLUHDJDLQVWWZR$IULFDQ
$PHULFDQ YHQLUHSHUVRQV MXURU QXPEHU IRXU +RZHOO DQG
DOWHUQDWHMXURUQXPEHUWKLUW\ /XFNLH LQDV\VWHPDWLFHIIRUW
WRH[FOXGH$IULFDQ$PHULFDQVIURPWKHMXU\
,QHYDOXDWLQJVXFKDFODLPZHDUHJXLGHGE\DWKUHHVWHS
LQTXLU\ILUVWDUWLFXODWHGLQ%DWVRQY.HQWXFN\86
7KHRSSRQHQWRIWKHVWULNH +XPSKUH\ PXVW
ILUVWHVWDEOLVKDSULPDIDFLHFDVHE\GHPRQVWUDWLQJWKDWWKH
VWULNHZDVPDGHRQWKHEDVLVRIUDFH$VXFFHVVIXOVKRZLQJ
E\WKHRSSRQHQWUHVXOWVLQDVKLIWRIWKHEXUGHQRISURGXFWLRQ
WRWKHVWULNHSURSRQHQW WKH*RYHUQPHQW WRVHWIRUWKDUDFH
QHXWUDO H[SODQDWLRQ IRU LWV FKDOOHQJH LQ WKLV UHJDUG WKH
*RYHUQPHQW¶V SURIIHUHG UHDVRQ QHHG QRW EH SHUVXDVLYH RU
HYHQSODXVLEOHVRORQJDVLWLVQHXWUDO6HH8QLWHG6WDWHVY
+DUULV)G WK&LU FLWLQJ3XUNHWWY
(OHP 86 )LQDOO\ WKH GLVWULFW
FRXUW PXVW GHWHUPLQH ZKHWKHU WKH RSSRQHQW KDV SURYHG
SXUSRVHIXOUDFLDOGLVFULPLQDWLRQPLQGIXOWKDW³WKHXOWLPDWH
EXUGHQRISHUVXDVLRQUHJDUGLQJUDFLDOPRWLYDWLRQUHVWVZLWK
DQGQHYHUVKLIWVIURPWKHRSSRQHQWRIWKHVWULNH´3XUNHWW
86DW
+XPSKUH\ DVVLJQV HUURU WR WKH GLVWULFW FRXUW¶V DQDO\VLV
XQGHU%DWVRQ¶VWKLUGSURQJFRQWHQGLQJWKDWWKHGLVWULFWFRXUW

-- 19 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
IDLOHG WR HYDOXDWH WKH *RYHUQPHQW¶V H[SODQDWLRQ DQG WKH
FLUFXPVWDQFHVRIWKHFDVHWRGHWHUPLQHZKHWKHUSXUSRVHIXO
UDFLDOGLVFULPLQDWLRQLQIDFWKDGRFFXUUHG+HFRQFHGHVWKDW
DGLVWULFWFRXUW¶VUHVROXWLRQRID%DWVRQFKDOOHQJHLVHQWLWOHG
WRJUHDWGHIHUHQFHVHH%DWVRQ86DWEXWVXEPLWV
WKDWWKHGLVWULFWFRXUW¶VIDLOXUHWRFRQGXFWDQ\LQTXLU\UHTXLUHV
QRGHIHUHQFH
,QDQXQSXEOLVKHGGHFLVLRQZHVXJJHVWHGWKDWDGHIHQGDQW
ZKRIDLOVWRLQVLVWXSRQDQGUHFHLYHDGHILQLWLYHUXOLQJIURPD
WULDOFRXUWRQD%DWVRQFKDOOHQJHPD\EHVDLGWRKDYHZDLYHG
DQ\REMHFWLRQIRUSXUSRVHVRIDSSHDO6HH8QLWHG6WDWHVY
&RPSWRQ1RV:/DW
WK&LU-XO\ XQSXEOLVKHG ³7KHJRYHUQPHQWILUVW
DUJXHVDQGZHEHOLHYHFRUUHFWO\WKDW&RPSWRQKDVZDLYHG
KLV %DWVRQ FKDOOHQJH EHFDXVH KH IDLOHG WR JHW D GHILQLWLYH
UXOLQJE\WKHGLVWULFWFRXUWIRUWKLVFRXUWWRUHYLHZ´ :KLOH
&RPSWRQ DV DQ XQSXEOLVKHG RSLQLRQ LV QRW GLVSRVLWLYH LW
KLJKOLJKWVWKHGLIILFXOW\RIDVVHVVLQJDUXOLQJZKHUHDVKHUH
WKHUHLVDQLQFRPSOHWHUHFRUGXQGHUO\LQJLWWRUHYLHZ2QWKH
UHFRUGEHIRUHXVZHFRQFOXGHWKDW+XPSKUH\¶VFODLPDVWR
/XFNLH LV ZLWKRXW PHULW +XPSKUH\ IDLOHG WR UHEXW WKH
*RYHUQPHQW¶V UDFHQHXWUDO H[SODQDWLRQ IRU LWV GLVPLVVDO RI
/XFNLH ± WKDW WKH MXURU¶V K\SHUWHQVLRQ ZRXOG KDYH EHHQ
H[DFHUEDWHGKDG KHEHHQHPSDQHOHGRQWKHMXU\DQGWKH
GLVWULFWFRXUW¶VFRQFOXVLRQRYHUUXOLQJ+XPSKUH\¶VREMHFWLRQ
FDQQRWWKHUHIRUHEHVDLGWRKDYHEHHQFOHDUO\HUURQHRXV:LWK
UHVSHFWWR+RZHOOZHKDYHOLWWOHWRUHYLHZSUHFLVHO\EHFDXVH
+XPSKUH\ OLPLWHG KLV REMHFWLRQ WR /XFNLH %HFDXVH
+XPSKUH\¶VFRXQVHOUDLVHGD%DWVRQFKDOOHQJHORQJDIWHUWKH
MXURUKDGDOUHDG\EHHQH[FXVHGZLWKRXWREMHFWLRQWKHGLVWULFW
FRXUWFRQFOXGHGWKDWHYHQLILWVXVWDLQHGKLV%DWVRQFKDOOHQJH
+XPSKUH\ZRXOGEHXQDEOHWRVHDWKHURQWKHMXU\EHFDXVH
VKHKDGDOUHDG\H[LWHGWKHFRXUWURRP7KH*RYHUQPHQWQRZ
SURYLGHV DQ DIWHUWKHIDFW H[SODQDWLRQ IRU LWV GLVPLVVDO RI
+RZHOOKHUKLVWRU\DVDQXQVXFFHVVIXOSODLQWLIILQDIHGHUDO
UDFLDOGLVFULPLQDWLRQVXLWVXJJHVWHGDSRVVLEOHELDVDJDLQVWWKH
MXGLFLDOV\VWHPZKLFKLISUHVHQWHGDWWULDOOLNHO\ZRXOG
KDYHSURYHGDQDGHTXDWHUDFHQHXWUDOH[SODQDWLRQ%HFDXVH
KRZHYHULWLVDQDIWHUWKHIDFWH[SODQDWLRQZHDUHUHOXFWDQW
1R 8QLWHG6WDWHVY+XPSKUH\
DPHQGPHQWV PDNH WKH MXU\ WKH ULJKW GHFLVLRQPDNHU XQOHVV WKH
GHIHQGDQW HOHFWV D EHQFK WULDO DQG WKH UHDVRQDEOHGRXEW
VWDQGDUG WKH SURSHU EXUGHQ ZKHQ D IDFW UDLVHV WKH PD[LPXP
ODZIXO SXQLVKPHQW +RZ VWDWXWHV DUH GUDIWHG RU LPSOHPHQWHG
WR IXOILO WKDW UHTXLUHPHQW LV D VXEMHFW WR ZKLFK WKH &RQVWLWXWLRQ
GRHV QRW VSHDN
8QLWHG 6WDWHV Y %URXJK )G WK &LU FLWDWLRQ
RPLWWHG
7KXV LQ WKH ZDNH RI $SSUHQGL WKHUH LV QR FRQVWLWXWLRQDO VLJQLILFDQFH
LQ WKH TXHVWLRQ ZKHWKHU D \HDU VWDWXWRU\ PD[LPXP VHQWHQFH XQGHU
† E & LV ³UHDOO\´ D VHQWHQFH ZLWKLQ WKH \HDUVWROLIH UDQJH
JRYHUQLQJ WKH GLIIHUHQW ³RIIHQVH´ VHW IRUWK LQ † E $ ,QVWHDG WKH
RIIHQVH LV GHILQHG VROHO\ E\ UHIHUHQFH WR WKH MXU\¶V YHUGLFW DQG WKH
VHQWHQFLQJ FRXUW WKHQ LV IUHH WR GHWHUPLQH E\ D SUHSRQGHUDQFH RI WKH
HYLGHQFH RQH RU PRUH IDFWRUV WKDW LPSDFW XSRQ WKH VHQWHQFH IRU WKLV
RIIHQVH VR ORQJ DV WKHVH IDFWRUV GR QRW WDNH WKH VHQWHQFH EH\RQG WKH
VWDWXWRU\ PD[LPXP IRU WKH RIIHQVH 7KLV LV WKH SURFHVV XVHG E\ IHGHUDO
MXGJHV IRU VRPH WLPH QRZ WR GHWHUPLQH VHQWHQFHV XQGHU WKH 6HQWHQFLQJ
*XLGHOLQHV DQG LW VHHPV XQWHQDEOH WR VXJJHVW WKDW &RQJUHVV KDV OHVV
DXWKRULW\ WR HVWDEOLVK UHOHYDQW VHQWHQFLQJ FRQVLGHUDWLRQV E\ VWDWXWH DV LQ
† E WKDQ WKH 6HQWHQFLQJ &RPPLVVLRQ PD\ DFFRPSOLVK WKURXJK WKH
*XLGHOLQHV 0RUHRYHU , FDQQRW FRQFHLYH WKDW $SSUHQGL¶V IXQFWLRQDO
DSSURDFK ZDV PHDQW WR LQYLWH PRUH PLQGUHDGLQJ RI VHQWHQFLQJ MXGJHV WR
GHWHUPLQH ZKLFK RI D VHW RI RYHUODSSLQJ VWDWXWRU\ SURYLVLRQV GHILQHG WKH
UHDO ³RIIHQVH´ IRU ZKLFK D GHIHQGDQW ZDV VHQWHQFHG 5DWKHU D 'LVWULFW
&RXUW ³FUHDWHV D VHSDUDWH RIIHQVH´ LQ WKH SDUODQFH RI 0F0LOODQ RQO\ E\
VHQWHQFLQJ D GHIHQGDQW LQ H[FHVV RI WKH VWDWXWRU\ PD[LPXP IRU WKH RIIHQVH
HVWDEOLVKHG WKURXJK WKH MXU\¶V YHUGLFW
SULQFLSOH WKH SDQHO YDFDWHG WKH GHIHQGDQW¶V VHQWHQFH DQG
UHPDQGHGIRUUHVHQWHQFLQJ
5HDGSURSHUO\DQGDVDSSOLHGLQ5DPLUH]DQG6WUD\KRUQ
)ORZDOSODLQO\FDQQRWEHVDLGWREHLQDFFRUGZLWKWKHYLHZRI
$SSUHQGLDGRSWHGE\RXUVLVWHU&LUFXLWV7RWKHFRQWUDU\DQG
DVQRWHGDWWKHRXWVHW)ORZDOSODFHVXVLQ³DPLQRULW\RIRQH´
+LOOVXSUD)GDW,I,ZHUHFRQYLQFHGWKDW)ORZDO
KDGFRUUHFWO\FRQVWUXHG$SSUHQGL,ZRXOGKDYHIHZHUTXDOPV
DERXWRXUVROLWDU\SRVLWLRQRQWKLVSRLQW0RUHLPSRUWDQWO\
LI)ORZDOZHUHWKLV&LUFXLW¶VILUVWZRUGRQ$SSUHQGLRULILWDW
OHDVWFRXOGEHVDLGWKDW)ORZDOSUHVHQWHGWKHILUVWRFFDVLRQIRU
XV WR GHFLGH ZKHWKHU $SSUHQGL LPSOLFDWHV RQO\ VWDWXWRU\

-- 20 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
6WUD\KRUQ DW OHDVW DWWHPSWV WR DFFRXQW IRU WKH 6XSUHPH &RXUW¶V
GHFLVLRQ LQ 0F0LOODQ FLWLQJ WKDW FDVH IRU WKH SURSRVLWLRQ WKDW ³WKH
JRYHUQPHQW PD\ VWLOO UHO\ XSRQ D GLVWULFW FRXUW¶V ILQGLQJ RI UHOHYDQW
FRQGXFW E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH EXW RQO\ LQVRIDU DV LW
μRSHUDWHV VROHO\ WR OLPLW WKH VHQWHQFLQJ FRXUW¶V GLVFUHWLRQ LQ VHOHFWLQJ D
SHQDOW\ ZLWKLQ WKH UDQJH DOUHDG\ DYDLODEOH WR LW¶ DQG GRHV QRW μDOWHU>@ WKH
PD[LPXP SHQDOW\ IRU WKH FULPH FRPPLWWHG QRU FUHDWH>@ D VHSDUDWH RIIHQVH
FDOOLQJ IRU D VHSDUDWH SHQDOW\¶´ 6WUD\KRUQ )G DW TXRWLQJ
0F0LOODQ 86 DW 6 &W DW 7KH TXRWHG SDVVDJH
IURP 0F0LOODQ KRZHYHU PHUHO\ GHVFULEHV WKH 3HQQV\OYDQLD ODZ DW LVVXH
LQ WKDW FDVH DQG GRHV QRW SXUSRUW WR VHW IRUWK WKH HVVHQWLDO UHTXLUHPHQWV
IRU DQ\ PDQGDWRU\ PLQLPXP VHQWHQFLQJ VFKHPH WR SDVV FRQVWLWXWLRQDO
PXVWHU
0RUHRYHU LI LW RQFH ZDV SRVVLEOH WR GHILQH 0F0LOODQ¶V KROGLQJ E\
UHIHUHQFH WR VXFK QRWLRQV DV ³VHSDUDWH RIIHQVHV´ RU ³VHSDUDWH SHQDOWLHV´
WKH GHFLVLRQ DQG DQDO\VLV LQ $SSUHQGL QRZ SUHFOXGH VXFK DQ HIIRUW $V ZH
UHFRJQL]HG LQ 5HEPDQQ $SSUHQGL PDUNV D ³UDGLFDO GHSDUWXUH´ LQ WKH
6XSUHPH &RXUW¶V PHWKRG RI GHWHUPLQLQJ WKH ³HOHPHQWV´ RI DQ RIIHQVH
5HEPDQQ )G DW 4XHVWLRQV RI VWDWXWRU\ VWUXFWXUH DQG
OHJLVODWLYH LQWHQW KDYH JLYHQ ZD\ WR SXUHO\ IXQFWLRQDO FRQVLGHUDWLRQV DQG
³WKH UHOHYDQW LQTXLU\ LV RQH QRW RI IRUP EXW RI HIIHFW ² GRHV WKH UHTXLUHG
ILQGLQJ H[SRVH WKH GHIHQGDQW WR D JUHDWHU SXQLVKPHQW WKDQ WKDW DXWKRUL]HG
E\ WKH MXU\¶V JXLOW\ YHUGLFW"´ $SSUHQGL 86 DW 6 &W DW
VHH DOVR 5HEPDQQ )G DW $V WKH 6HYHQWK &LUFXLW
UHFHQWO\ H[SODLQHG LQ UHMHFWLQJ WKH FRQWHQWLRQ WKDW 86& † LV
XQFRQVWLWXWLRQDO
,I &RQJUHVV KDG VSHFLILHG WKDW RQO\ MXGJHV PD\ PDNH WKH
ILQGLQJV UHTXLUHG E\ † E RU WKDW WKHVH ILQGLQJV PXVW EH
PDGH E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKHQ † ZRXOG
FUHDWH D FRQVWLWXWLRQDO SUREOHP %XW WKH VWDWXWH GRHV QRW VD\ ZKR
PDNHV WKH ILQGLQJV RU ZKLFK SDUW\ EHDUV ZKDW EXUGHQ RI
SHUVXDVLRQ ,QVWHDG WKH ODZ DWWDFKHV HIIHFWV WR IDFWV OHDYLQJ LW
WR WKH MXGLFLDU\ WR VRUW RXW ZKR GHWHUPLQHV WKH IDFWV XQGHU ZKDW
EXUGHQ ,W PDNHV QR FRQVWLWXWLRQDO GLIIHUHQFH ZKHWKHU D VLQJOH
VXEVHFWLRQ FRYHUV ERWK HOHPHQWV DQG SHQDOWLHV ZKHWKHU WKHVH DUH
GLYLGHG DFURVV PXOWLSOH VXEVHFWLRQV DV † GRHV RU HYHQ
ZKHWKHU WKH\ DUH VFDWWHUHG DFURVV PXOWLSOH VWDWXWHV $SSUHQGL
KROGV WKDW WKH GXH SURFHVV FODXVH RI WKH ILIWK DQG IRXUWHHQWK
UDQJH´ HYHQ WKRXJK WKH UHVXOWLQJ VHQWHQFH PLJKW VWLOO OLH
ZLWKLQ WKH ORZHU VWDWXWRU\ ERXQGV IRU WKH RIIHQVH DV
GHWHUPLQHGE\WKHMXU\¶VYHUGLFW6HH6WUD\KRUQ)GDW
$ S S O \L Q J W K L V P X F K E U R D G H U
1R 8QLWHG6WDWHVY+XPSKUH\
WRFUHGLWLWDQGZHWKHUHIRUHGHFOLQHWRUHDFKWKLVLVVXHDVLW
UHODWHVWR+RZHOO
&-XU\,QVWUXFWLRQV
6WDQGDUGRI5HYLHZ
:KHQUHYLHZLQJDMXU\LQVWUXFWLRQ WRZKLFKDGHIHQGDQW
IDLOHG WR REMHFW DW WULDO ZH UHYLHZ IRU SODLQ HUURU ZKLFK
UHTXLUHV XV WR GHWHUPLQH ³ZKHWKHU WKH LQVWUXFWLRQV ZKHQ
WDNHQDVDZKROHZHUHVRFOHDUO\ZURQJDVWRSURGXFHDJUDYH
PLVFDUULDJHRIMXVWLFH´8QLWHG6WDWHVY6DQGHUVRQ)G
WK&LU
$QDO\VLV
+XPSKUH\DUJXHVWKDWWKHGLVWULFWFRXUW¶VLQVWUXFWLRQRIWKH
MXU\ ZDV IODZHG LQ WKUHH UHVSHFWV )LUVW WKH GLVWULFW FRXUW
IDLOHG WR LQIRUP WKH MXU\ WKDW LW ZDV UHTXLUHG WR UHDFK
XQDQLPLW\RQHYHU\HOHPHQWRIWKHFKDUJHGRIIHQVHV6HFRQG
WKH GLVWULFW FRXUW IDLOHG WR LQVWUXFW WKH MXU\ WR GHWHUPLQH
ZKHWKHUWKHUHZDVRQHFRQVSLUDF\RUPXOWLSOHFRQVSLUDFLHV
7KLUGWKHGLVWULFWFRXUWIDLOHGWRLQVWUXFWWKHMXU\WRGHWHUPLQH
WKH W\SH RI GUXJV WKDW +XPSKUH\ FRQVSLUHG WR SRVVHVV RU
GLVWULEXWH
:HUHMHFW+XPSKUH\¶VDUJXPHQWV
D8QDQLPLW\
$WWKHFORVHRIWKHHYLGHQFHWKHGLVWULFWFRXUWSURYLGHGWKH
IROORZLQJLQVWUXFWLRQWRWKHMXU\FRQFHUQLQJWKHUHTXLVLWHOHJDO
HOHPHQWVRIDFULPLQDOFRQVSLUDF\
:LWKUHJDUGWRWKHILUVWHOHPHQWWKHFULPLQDODJUHHPHQW
WKH JRYHUQPHQW PXVW SURYH WKDW WZR RU PRUH SHUVRQV
FRQVSLUHG RU DJUHHG WR FRRSHUDWH ZLWK HDFK RWKHU WR
FRPPLW WKH FULPH RI GLVWULEXWLRQ RI QDUFRWLFV RU
SRVVHVVLRQ ZLWK LQWHQW WR GLVWULEXWH QDUFRWLFV RU WR
FRPPLWWKHFULPHRIPRQH\ODXQGHULQJ

-- 21 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
:KDW WKH JRYHUQPHQW PXVW SURYH LV WKDW WKHUH ZDV D
PXWXDO XQGHUVWDQGLQJ HLWKHU VSRNHQ RU XQVSRNHQ
EHWZHHQ WZR RU PRUH SHRSOH WR FRRSHUDWH ZLWK HDFK
RWKHUWRFRPPLWWKHFULPHRIGLVWULEXWLRQRIQDUFRWLFVRU
SRVVHVVLRQZLWKLQWHQWWRGLVWULEXWHQDUFRWLFVDVWR&RXQWV
DQGRUWRHQJDJHLQPRQH\ODXQGHULQJDVWR&RXQW

-$DW
%HFDXVHWKHGLVWULFWFRXUWIDLOHGWRLQVWUXFWWKHMXU\WKDWLW
ZDV UHTXLUHG WR GHFLGH XQDQLPRXVO\ WKDW WKH *RYHUQPHQW
SURYHGHDFKHOHPHQWEH\RQGDUHDVRQDEOHGRXEW+XPSKUH\
DUJXHV WKDW KLV FRQYLFWLRQ FDQQRW VWDQG 6SHFLILFDOO\ KH
VXEPLWVWKDWWKHGLVWULFWFRXUWVKRXOGKDYHLQVWUXFWHGWKHMXU\
WKDW LW ZDV WR LGHQWLI\ WKH ³WZR RU PRUH SHRSOH´ DV D
SUHFRQGLWLRQWRFRQYLFWLRQSDUWLFXODUO\JLYHQWKDW&RXQW2QH
RIWKHLQGLFWPHQWLGHQWLILHGVHYHQSHRSOHE\QDPHDQG³RWKHUV
NQRZQ DQG XQNQRZQ WR WKH *UDQG -XU\´ &RXQW 7ZR
LGHQWLILHG VL[ SHRSOH E\ QDPH DQG ³RWKHUV NQRZQ DQG
XQNQRZQWRWKH*UDQG-XU\´DQG&RXQW6HYHQWHHQLGHQWLILHG
IRXUSHRSOHE\QDPHDQG³RWKHUVNQRZQDQGXQNQRZQWRWKH
*UDQG-XU\´+HUHDVRQVWKDWVLQFHDFRQVSLUDF\QHFHVVDULO\
LQYROYHVDWOHDVWWZRSHRSOHWKHQWKHVSHFLILFLGHQWLW\RID
GHIHQGDQW¶VFRFRQVSLUDWRUPXVWEHDQHOHPHQWRIWKHRIIHQVH
+XPSKUH\¶VDUJXPHQWLVQRWZHOOWDNHQ)LUVWWKHGLVWULFW
FRXUWSURYLGHGDWKRURXJKLQVWUXFWLRQRQZKDWFRQVWLWXWHVD
FRQVSLUDF\OLVWLQJDQGGHILQLQJHDFKRIWKHHOHPHQWVWKDWWKH
*RYHUQPHQW ZDV UHTXLUHG WR SURYH EH\RQG D UHDVRQDEOH
GRXEW6HFRQGWKHVSHFLILFXQDQLPLW\LQVWUXFWLRQVRXJKWE\
+XPSKUH\ LV JHQHUDOO\ UHTXLUHG RQO\ LQ RQH RI WKUHH
FLUFXPVWDQFHVZKHQWKHQDWXUHRIWKHHYLGHQFHLVSDUWLFXODUO\
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
WK&LU 1RQHRIWKHVHVFHQDULRVH[LVWVLQ
WKLV FDVH )LQDOO\ +XPSKUH\¶V UHOLDQFH RQ 5LFKDUGVRQ LV
PLVSODFHG DV DW LVVXH LQ WKDW FDVH ZDV D MXU\ LQVWUXFWLRQ
1R 8QLWHG6WDWHVY+XPSKUH\
1RWDEO\ WKH UXOH VWDWHG LQ 5DPLUH] LV UHPDUNDEO\ VLPLODU WR WKH
VWDQGDUG DGYRFDWHG E\ -XVWLFH 7KRPDV LQ KLV FRQFXUUHQFH LQ $SSUHQGL
QDPHO\ WKDW ³D μFULPH¶ LQFOXGHV HYHU\ IDFW WKDW LV E\ ODZ D EDVLV IRU
LPSRVLQJ RU LQFUHDVLQJ SXQLVKPHQW LQ FRQWUDVW ZLWK D IDFW WKDW PLWLJDWHV
SXQLVKPHQW ´ 86 DW 6 &W DW 7KRPDV -
FRQFXUULQJ
)GDW-XGJH6LOHUFRQFXUUHGILQGLQJWKDWWKH
SDQHOZDVERXQGE\WKHGHFLVLRQLQ)ORZDOEXWTXHVWLRQLQJ
ZKHWKHU$SSUHQGL³LVDVIDUUHDFKLQJDVZHGHWHUPLQHLQWKLV
FDVHIROORZLQJ)ORZDO´DQGRSLQLQJWKDW0F0LOODQVKRXOG
JRYHUQ FKDOOHQJHV WR PDQGDWRU\ PLQLPXP VHQWHQFHV
5DPLUH])GDW 6LOHU-FRQFXUULQJ
0RVWUHFHQWO\LQ6WUD\KRUQWKHSDQHODGGUHVVHGD\HDU
PDQGDWRU\ PLQLPXP VHQWHQFH XQGHU † E % IRU D
PDULMXDQDGLVWULEXWLRQFRQVSLUDF\LQYROYLQJNLORJUDPVRU
PRUH RI PDULMXDQD WKDW SUHFLVHO\ PDWFKHG WKH \HDU
VWDWXWRU\PD[LPXPVHQWHQFHXQGHU† E ' IRUDSULRU
GUXJIHORQFRQYLFWHGRIDQRIIHQVHLQYROYLQJDQLQGHWHUPLQDWH
DPRXQW RI PDULMXDQD $JDLQ WKH SDQHO FKRVH WR IROORZ
)ORZDO DQG 5DPLUH] DQG GLG QRW GLVFXVV 3DJH RU 0XQR]
,QWHUHVWLQJO\6WUD\KRUQVWDWHVWKDW³>L@Q)ORZDOZHH[SODLQHG
WKDWHDFKSHQDOW\SURYLVLRQRI† E FRQVWLWXWHVDGLIIHUHQW
FULPHZLWKGLIIHUHQWHOHPHQWVLQFOXGLQJGUXJZHLJKWZKLFK
PXVWEHSURYHGEH\RQGDUHDVRQDEOHGRXEWZKHQVHQWHQFLQJ
DGHIHQGDQWLQH[FHVVRIWKHGHIDXOWVWDWXWRU\PD[LPXPVHW
RXWLQ† E & IRUDOOGUXJVH[FHSWPDULMXDQDRULQ
† E ' IRUPDULMXDQD´DQGWKDW³>R@XUVLVWHUFLUFXLWV
KDYHXQLIRUPO\DJUHHGZLWK´WKLVUXOH6WUD\KRUQ)G
DW HPSKDVLVDGGHG
2IFRXUVHLIWKLVZHUHWKHUXOHDQQRXQFHGLQ)ORZDORXU
VLVWHUFLUFXLWVZRXOGEHLQDJUHHPHQWDQGWKHVHQWHQFHDWLVVXH
LQ6WUD\KRUQZRXOGKDYHEHHQXSKHOGDVQRWLQH[FHVVRIWKH
GHIDXOW VWDWXWRU\ PD[LPXP IRXQG DW † E ' 7KH
6WUD\KRUQSDQHOTXLFNO\FRQILUPHGKRZHYHUWKDW)ORZDODQG
5DPLUH]JRDJRRGGHDOIDUWKHUHQFRPSDVVLQJDQ\FDVHLQ
ZKLFK D VHQWHQFLQJ FRXUW ILQGV ³DJJUDYDWLQJ IDFWRUV´ E\ D
SUHSRQGHUDQFHRIWKHHYLGHQFHWKDWWULJJHUD³KLJKHUSHQDOW\

-- 22 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
UHDVRQLQJKLVRSLQLRQLVLQWKHHQGRQO\DFRQFXUUHQFHDQG
QRW D UXOLQJ RI WKH &RXUW ² DQG HYHQ -XVWLFH 7KRPDV
UHFRJQL]HG WKDW KLV SURSRVHG UXOH ZRXOG UHTXLUH WKDW
0F0LOODQ EH RYHUWXUQHG ZKLOH WKH $SSUHQGL PDMRULW\
H[SUHVVO\ GHFOLQHG WR JR VR IDU $V VWDWHG E\ WKH )RXUWK
&LUFXLWLWLV³QRWRXUUROH´WRRYHUWXUQ0F0LOODQZKHUHWKH
6XSUHPH&RXUWKDVHOHFWHGQRWWRGRVR+DUULVVXSUD
)GDW)LQDOO\DQGPRVWVLJQLILFDQWO\)ORZDO¶VEURDG
UHDGLQJRI$SSUHQGLLVIODWO\DWRGGVZLWKRXUHDUOLHUGHFLVLRQ
LQ0XQR]LQZKLFKZHVTXDUHO\KHOGWKDW$SSUHQGLGLGQRW
DSSO\WRDVHQWHQFLQJMXGJH¶VILQGLQJVE\DSUHSRQGHUDQFHRI
WKHHYLGHQFHWKDWWULJJHUHGDQHOHYDWHGVHQWHQFLQJUDQJHVR
ORQJDVWKHUHVXOWLQJVHQWHQFHGLGQRWH[FHHGWKHPD[LPXP
DFKLHYDEOHDEVHQWWKHMXGJH¶VDGGLWLRQDOGHWHUPLQDWLRQV7KH
SDQHO LQ )ORZDO KDG QHLWKHU WKH DXWKRULW\ QRU WKH VWDWHG
LQWHQWLRQWRRYHUUXOH0XQR]EXWWKDWZDVWKHFOHDULPSRUWRI
LWVGHFLVLRQ
'HVSLWHLWVPDQ\IODZVDQGTXHVWLRQDEOHOHJLWLPDF\)ORZDO
KDVWDNHQRQDOLIHRILWVRZQLQWKLV&LUFXLWVSDZQLQJDOLQH
RI FDVHV SDUDOOHO WR EXW ZKROO\ LQFRQVLVWHQW ZLWK DQRWKHU
GLVWLQFWOLQHRIFDVHVIROORZLQJWKH³VWDWXWRU\PD[LPXP´UXOH
RI 0XQR] 3DJH DQG 5HEPDQQ 7KH PRVW SURPLQHQW
PHPEHUVRIWKH)ORZDOOLQHDQGWKHRQHVUHOLHGXSRQE\WKH
PDMRULW\KHUHDUHWKHGHFLVLRQVLQ8QLWHG6WDWHVY5DPLUH]
)G WK&LU DQG8QLWHG6WDWHVY6WUD\KRUQ
)G WK &LU ,Q 5DPLUH] DV KHUH WKH
GHIHQGDQWZDVFRQYLFWHGE\DMXU\RIFRQVSLUDF\WRGLVWULEXWH
FRFDLQH DQG WKH 'LVWULFW &RXUW LPSRVHG D PDQGDWRU\
PLQLPXP VHQWHQFH RI \HDUV¶ LPSULVRQPHQW XQGHU
† E $ XSRQILQGLQJWKDW L WKHGHIHQGDQWKDGDSULRU
IHORQ\ GUXJ FRQYLFWLRQ DQG LL WKH DPRXQW RI FRFDLQH
LQYROYHGLQWKHRIIHQVHH[FHHGHGNLORJUDPV7KHSDQHOGLG
QRWFLWH3DJHRU0XQR]EXWLQVWHDGIRXQG)ORZDOFRQWUROOLQJ
VWDWLQJ WKDW ³>D@JJUDYDWLQJ IDFWRUV RWKHU WKDQ D SULRU
FRQYLFWLRQ WKDW LQFUHDVH WKH SHQDOW\ IURP D QRQPDQGDWRU\
PLQLPXP VHQWHQFH WR D PDQGDWRU\ PLQLPXP VHQWHQFH RU
IURP D OHVVHU WR D JUHDWHU PLQLPXP VHQWHQFH DUH QRZ
HOHPHQWVRIWKHFULPHWREHFKDUJHGDQGSURYHQ´5DPLUH]
1R 8QLWHG6WDWHVY+XPSKUH\
UHODWLQJWRDSURVHFXWLRQXQGHU86&† FRQWLQXLQJ
FULPLQDOHQWHUSULVH DQGQRWXQGHU86&†DVLQWKH
LQVWDQWFDVH
E1XPEHURI&RQVSLUDFLHV
+XPSKUH\FRQWHQGVWKDWHYHQLIWKHLGHQWLW\RIKLVDOOHJHG
FRFRQVSLUDWRULVQRWDQHOHPHQWRIWKHRIIHQVHWKHGLVWULFW
FRXUW QHYHUWKHOHVV VKRXOG KDYH LQVWUXFWHG WKH MXU\ WR
GHWHUPLQHZKHWKHUWKHUHZHUHPXOWLSOHFRQVSLUDFLHVRURQO\
RQH +H UHDVRQV WKDW EHFDXVH (DWRQ ZDV QDPHG DV D FR
FRQVSLUDWRULQERWKFRQVSLUDF\FRXQWV &RXQWV2QHDQG7ZR
DQG WKH MXU\ ZDV QRW LQVWUXFWHG WR LGHQWLI\ VSHFLILFDOO\
+XPSKUH\¶V DOOHJHG FRFRQVSLUDWRU WKH MXU\ FRXOG KDYH
FRQFOXGHGWKDW+XPSKUH\FRQVSLUHGRQO\ZLWK(DWRQZKLFK
ZRXOGKDYHFRPSHOOHGLWWRFRQYLFW+XPSKUH\RIERWKFRXQWV
GHVSLWHWKHIDFWWKDW&RXQWV2QHDQG7ZRUHTXLUHGSURRIRI
WKHVDPHHOHPHQWVDQGUHOLHGRQWKHVDPHIDFWV6XFKDUHVXOW
+XPSKUH\VXJJHVWVZRXOGRIIHQGGXHSURFHVV
7KH*RYHUQPHQWPDLQWDLQVWKDW+XPSKUH\ZDVSURSHUO\
LQGLFWHGLQDFDVHLQYROYLQJPXOWLSOHFRQVSLUDFLHVDQGWKDWKH
ZDVQRWHQWLWOHGWRDQLQVWUXFWLRQRIWKHMXU\UHTXLULQJLWWR
GHWHUPLQH WKH QXPEHU RI FRQVSLUDFLHV $OWKRXJK WKH
LQGLFWPHQWGRHVQRWVRDOOHJHWKH*RYHUQPHQWDUJXHVWKDW
&RXQW 2QH FKDUJHG D ³KXE´ RU ³ZKHHO´ FRQVSLUDF\ ZLWK
+XPSKUH\ DV GUXJ VXSSOLHU SRVLWLRQHG DW WKH FHQWHU DQG
(DWRQDQGRWKHUPLGGOHPHQDVVSRNHVRIWKHZKHHO&RXQW
7ZR DFFRUGLQJ WR WKH *RYHUQPHQW FKDUJHG D FKDLQ
FRQVSLUDF\ZLWKQDUFRWLFVIORZLQJIURP+XPSKUH\WKURXJK
(DWRQ WR 0RUURZ DQG RWKHUV ZRUNLQJ GLUHFWO\ ZLWK (DWRQ
+XPSKUH\LQUHVSRQVHDUJXHVZLWKVRPHIRUFHWKDWLIKHZDV
LQYROYHGLQDKXEFRQVSLUDF\ZLWK(DWRQWKHQWKDWFRQVSLUDF\
QHFHVVDULO\LQFOXGHGDQ\FKDLQFRQVSLUDF\ZLWK(DWRQDQGKLV
EX\HUV HJ 0RUURZ DQG WKXV WKHUH H[LVWHG RQO\ RQH
FRQVSLUDF\
:H QRWH WKDW EHFDXVH +XPSKUH\ QHLWKHU UHTXHVWHG D
PXOWLSOH FRQVSLUDF\ LQVWUXFWLRQ QRU REMHFWHG WR WKH GLVWULFW
FRXUW¶VXVHRIDJHQHUDOLQVWUXFWLRQRQWKHODZRIFRQVSLUDF\
ZHUHYLHZWKLVFODLPIRUSODLQHUURU6HH8QLWHG6WDWHV Y

-- 23 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
0DFN)G WK&LU 7KH*RYHUQPHQW¶V
VXJJHVWLRQWKDW+XPSKUH\HQWHUHGLQWRDKXEFRQVSLUDF\ZLWK
(DWRQ DQG RWKHUV IRU FHUWDLQ WUDQVDFWLRQV RQO\ WR HQG WKDW
FRQVSLUDF\WRIRUPDQHZFKDLQFRQVSLUDF\WRVXSSO\GUXJV
IURP+XPSKUH\WR(DWRQWR0RUURZVHHPVGXELRXVDWEHVW
$VZHREVHUYHGLQ8QLWHG6WDWHVY*DLWDQ$FHYHGR³>W@KH
NH\ WR HVWDEOLVKLQJ ZKHWKHU GLVWLQFW VXEDJUHHPHQWV DUH
HQFRPSDVVHGZLWKLQRQHVLQJOHFRQVSLUDF\LVWRGHWHUPLQH
ZKHWKHUWKHGLIIHUHQWVXEJURXSVDUHDFWLQJLQIXUWKHUDQFHRI
RQH RYHUDUFKLQJ SODQ´ )G WK &LU
LQWHUQDOTXRWDWLRQPDUNVRPLWWHG TXRWLQJ8QLWHG6WDWHVY
*KD]DOHK)G WK&LU +HUHZLWKWKH
EHQHILW RI KLQGVLJKW LW VHHPV FOHDU WKDW WKHUH ZDV RQH
RYHUDUFKLQJ SODQ IRU +XPSKUH\ WR GLVWULEXWH QDUFRWLFV WR
(DWRQZKRZRXOGWKHQUHVHOOWKHPDWDSURILWWRWKLUGSDUWLHV
:KLOH D PXOWLSOH FRQVSLUDF\ LQVWUXFWLRQ OLNHO\ ZRXOG KDYH
UHPRYHGDQ\GRXEWFRQFHUQLQJWKHQXPEHURIFRQVSLUDFLHV
WKDWWKHMXU\IRXQGWREHDWLVVXHZHDUHXQFRQYLQFHGWKDW
VXFKDQLQVWUXFWLRQZDVUHTXLUHG
$OWKRXJK WKH SDUWLHV GR QRW UDLVH WKLV LVVXH DQ\ HUURU
DSSHDUV WR OLH QRW LQ WKH MXU\¶V LQVWUXFWLRQ EXW LQ WKH
LQGLFWPHQW¶V VHHPLQJO\ GXSOLFDWLYH FRXQWV DV &RXQW 2QH
FKDUJHVWKHVDPHFRQGXFWIRUWKHVDPHWLPHSHULRGDVWKDW
FKDUJHG LQ &RXQW 7ZR 7KDW WKH RYHUW DFWV RI &RXQW 2QH
IRFXVRQ+XPSKUH\DQGWKHRYHUWDFWVRI&RXQW7ZRIRFXVRQ
0RUURZGRHVQRWFKDQJHWKHIDFWWKDWERWKUHODWHWRWKHVDPH
FRQVSLUDF\ ,QGHHG WKH *RYHUQPHQW¶V FRQFHVVLRQ WKDW
³>&RXQW 2QH@ ZRXOG KDYH EHHQ WKH RQO\ GUXJ FRQVSLUDF\
FRXQW DV DJDLQVW +XPSKUH\ ZHUH LW QRW IRU WKH IDFW WKDW
+XPSKUH\ZDVMRLQHGDWWULDOE\'DU\O0RUURZ´VWUHQJWKHQV
RXU VXVSLFLRQ WKDW &RXQW 7ZR ZDV VXUSOXVDJH %HFDXVH
KRZHYHU +XPSKUH\ ZRXOG KDYH EHHQ VXEMHFW WR WKH VDPH
VWDWXWRU\DQG*XLGHOLQHVSHQDOWLHVLQHLWKHUFDVHZKHWKHUKH
ZDVFRQYLFWHGRI&RXQW2QHRU&RXQW7ZRRUERWKZHPXVW
FRQFOXGHWKDWDQ\HUURULQWKHGLVWULFWFRXUW¶VLQVWUXFWLRQRIWKH
MXU\ RU LQ WKH *RYHUQPHQW¶V LQGLFWPHQW RI +XPSKUH\ ZDV
KDUPOHVV
1R 8QLWHG6WDWHVY+XPSKUH\
,Q $JXD\R'HOJDGR DV LQ WKH FDVH EHIRUH XV WKH GHIHQGDQW ZDV
VHQWHQFHG WR D \HDU WHUP RI LPSULVRQPHQW 7KH (LJKWK &LUFXLW IRXQG
WKDW WKLV VHQWHQFH ZDV ³SHUPLVVLEOH XQGHU $SSUHQGL DQG 0F0LOODQ´
EHFDXVH LW IHOO ³ZLWKLQ WKH VWDWXWRU\ UDQJH DXWKRUL]HG E\ † E &
ZLWKRXW UHIHUHQFH WR GUXJ TXDQWLW\´ )G DW ,W LV LURQLF WKDW
$JXD\R'HOJDGR DV WUDQVIRUPHG WKURXJK LWV PLVUHDGLQJ E\ WKH SDQHO LQ
)ORZDO QRZ LV DQ LQGLUHFW SDUW RI WKH FKDLQ RI DXWKRULW\ LQ WKLV &LUFXLW IRU
D UHVXOW GLUHFWO\ RSSRVLWH WKDW UHDFKHG E\ WKH (LJKWK &LUFXLW XQGHU LGHQWLFDO
IDFWV
RFFDVLRQIRUDGRSWLQJVXFKDFRQVWUXFWLRQRI$SSUHQGLDVWKH
VHQWHQFHV LQ ERWK FDVHV YLRODWHG WKH QDUURZHU ³VWDWXWRU\
PD[LPXP´YDULDQWRI$SSUHQGL¶V³UXOH´
7KHUHDUHDQXPEHURIRWKHUIODZVDVZHOOLQWKHDQDO\VLV
WKURXJKZKLFKWKHSDQHOLQ)ORZDOVRXJKWWRVXSSRUWLWVEURDG
UHDGLQJ RI $SSUHQGL )LUVW WKURXJKRXW LWV GLVFXVVLRQ RI
PDQGDWRU\PLQLPXPVHQWHQFHVDQGWKHUHVXOWLQJGLPLQXWLRQ
RI D VHQWHQFLQJ FRXUW¶V GLVFUHWLRQ )ORZDO QHYHU RQFH
PHQWLRQV WKH 6XSUHPH &RXUW¶V FRQWUROOLQJ VWDWHPHQW RQ
PDQGDWRU\ PLQLPXPV LQ 0F0LOODQ QRU WKH ODQJXDJH LQ
$SSUHQGLH[SUHVVO\FRQILUPLQJWKDW0F0LOODQFRQWLQXHVWR
JRYHUQ LQ ³FDVHV WKDW GR QRW LQYROYH WKH LPSRVLWLRQ RI D
VHQWHQFH PRUH VHYHUH WKDQ WKH VWDWXWRU\ PD[LPXP IRU WKH
RIIHQVHHVWDEOLVKHGE\WKHMXU\¶VYHUGLFW´$SSUHQGL86
DWQ6&WDWQ1H[W)ORZDOPLVUHDGV
WKHSRVW$SSUHQGLGHFLVLRQVRIRWKHU&LUFXLWVFODLPLQJWKDW
WKH(LJKWK&LUFXLWKHOGLQ$JXD\R'HOJDGRVXSUDWKDW³LWLV
LPSURSHUIRUDMXGJHWRGHWHUPLQHDQ\IDFWVRWKHUWKDQDSULRU
FRQYLFWLRQWKDWZRXOGLQFUHDVHWKHSHQDOW\UDQJHEH\RQGWKDW
DSSOLFDEOHWRWKHFULPHIRUZKLFKWKHMXU\KDVFRQYLFWHGWKH
GHIHQGDQW´)ORZDO)GDWQ,QIDFW$JXD\R
'HOJDGRH[SUHVVO\UHMHFWVDSURSRVHGUHDGLQJRI$SSUHQGLDV
HQFRPSDVVLQJ PDQGDWRU\ PLQLPXP VHQWHQFHV UHFRJQL]LQJ
WKDW 0F0LOODQ SURYLGHV WKH ³JRYHUQLQJ FRQVWLWXWLRQDO
VWDQGDUG´RQWKLVLVVXH$JXD\R'HOJDGR)GDW

)XUWKHULWLVQRWHZRUWK\WKDW)ORZDOUHOLHVRQDQGTXRWHV
H[WHQVLYHO\IURP-XVWLFH7KRPDV¶VFRQFXUUHQFHLQ$SSUHQGL
:LWKRXWLQDQ\ZD\GHQ\LQJWKHIRUFHRI-XVWLFH7KRPDV¶V

-- 24 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
)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
$SSUHQGL WKH SDQHO FRQFOXGHG WKDW LW KDG DGRSWHG WKH
SULQFLSOH VHW IRUWK LQ WKH 6XSUHPH &RXUW¶V SULRU -RQHV
GHFLVLRQ QDPHO\ WKDW ³DQ\ IDFW RWKHU WKDQ D SULRU
FRQYLFWLRQ WKDWLQFUHDVHVWKHPD[LPXPSHQDOW\IRUDFULPH
PXVWEHFKDUJHGLQDQLQGLFWPHQWVXEPLWWHGWRDMXU\DQG
SURYHQEH\RQGDUHDVRQDEOHGRXEW´)ORZDO)GDW
TXRWLQJ-RQHV86DWQ6&WDWQ
VHH DOVR )ORZDO )G DW TXRWLQJ $SSUHQGL¶V
³LQFUHDVH>@EH\RQGWKHSUHVFULEHGVWDWXWRU\PD[LPXP´
YDULDQW RI LWV UXOLQJ 7KH SDQHO WKHQ DGGUHVVHG 5HEPDQQ
DOEHLW LQ D IRRWQRWH DQG UHFRJQL]HG WKDW WKH GLVSRVLWLYH
IHDWXUH RI WKDW FDVH ZDV WKH VHQWHQFLQJ FRXUW¶V IDFWXDO
GHWHUPLQDWLRQE\DSUHSRQGHUDQFHRIWKHHYLGHQFHZKLFKKDG
³VLJQLILFDQWO\ LPSDFW>HG@ WKH PD[LPXP SHQDOW\´ )ORZDO
)G DW Q 6HHPLQJO\ WKHQ WKH SDQHO ZDV
KHDGHGWRZDUGDFRQILUPDWLRQRI6L[WK&LUFXLWSUHFHGHQWWKDW
$SSUHQGLLPSOLFDWHVRQO\VHQWHQFLQJPD[LPXPV
$WWKLVSRLQWKRZHYHU)ORZDOWDNHVDQXQH[SHFWHG DQG
XQZDUUDQWHG WXUQ $IWHU DOO WKLV GLVFXVVLRQ RI VHQWHQFLQJ
PD[LPXPVWKH&RXUWVWDWHGWKDW$SSUHQGLZDVYLRODWHGLQWKH
FDVHEHIRUHLWEHFDXVH³DILQGLQJDVWRWKHZHLJKWRIWKHGUXJV
GHWHUPLQHGWKHUDQJHRISHQDOWLHVWKDWZRXOGDSSO\WR>WKH
GHIHQGDQW@´ DQG EHFDXVH WKH VHQWHQFLQJ MXGJH¶V
³GHWHUPLQDWLRQ HIIHFWLYHO\ OLPLWHG WKH UDQJH RI DSSOLFDEOH
SHQDOWLHV´E\UHPRYLQJ³DQ\GLVFUHWLRQLQWHUPVRILPSRVLQJ
DVKRUWHUVHQWHQFH´WKDQOLIHLPSULVRQPHQW)GDW
5HPDUNDEO\ WKH SDQHO FODLPHG WKDW LWV KROGLQJ
³UHDIILUP>HG@WKHORJLFRI5HEPDQQDIDFWWKDWLQFUHDVHVWKH
DSSOLFDEOHVWDWXWRU\SHQDOW\UDQJHIRUDSDUWLFXODUFULPHPXVW
EHSURYHGEH\RQGDUHDVRQDEOHGRXEWWRWKHWULHURIIDFW´
)G DW Q $V GLVFXVVHG HDUOLHU KRZHYHU QHLWKHU
5HEPDQQ¶V³ORJLF´QRUPRUHLPSRUWDQWO\LWVH[SUHVVKROGLQJ
SURYLGHVDQ\DXWKRULW\IRUDEURDG³VHQWHQFLQJUDQJH´YLHZRI
$SSUHQGL,QIDFWQHLWKHU)ORZDOQRU5HEPDQQSURYLGHGWKH
1R 8QLWHG6WDWHVY+XPSKUH\
F'UXJ7\SH'HWHUPLQDWLRQ
+XPSKUH\DUJXHVWKDWWKHGLVWULFWFRXUWHUUHGE\IDLOLQJWR
LQVWUXFWWKHMXU\WRUHWXUQDVSHFLDOYHUGLFWRQWKHGUXJW\SHIRU
ZKLFK KH ZDV FULPLQDOO\ UHVSRQVLEOH +H PDLQWDLQV WKDW
ZKHUHDVKHUHDGHIHQGDQWLVFKDUJHGZLWKDPXOWLSOHGUXJ
FRQVSLUDF\IRUZKLFKWKHPD[LPXPVWDWXWRU\SHQDOW\IRUHDFK
GUXJLVGLIIHUHQWDQGDMXU\UHWXUQVRQO\DJHQHUDOYHUGLFWRI
JXLOW\WKDWGHIHQGDQWLVHQWLWOHGWREHVHQWHQFHGXQGHUWKH
OHVVHUVWDWXWRU\SHQDOW\7KLVLVSDUWLFXODUO\VRLQKLVFDVH
+XPSKUH\ FRQWHQGV EHFDXVH WKHUH ZDV HYLGHQFH WKDW KH
GLVWULEXWHGRQVHSDUDWHRFFDVLRQVERWKSRZGHUFRFDLQHDQG
FUDFNFRFDLQH
:HUHMHFW+XPSKUH\¶VDUJXPHQWWKDWKHZDVHQWLWOHGWRD
VSHFLDOYHUGLFW6HH2OGHQY8QLWHG6WDWHV)G
WK&LU ILQGLQJQRHQWLWOHPHQWWRDVSHFLDOYHUGLFW
EHFDXVH 86& † D JRYHUQV WKH GLVWULEXWLRQ RI
³FRQWUROOHGVXEVWDQFHV´DQGZKHUHDVKHUHWKHGUXJVDWLVVXH
DUHERWKSURVFULEHGFRQWUROOHGVXEVWDQFHV :HIXUWKHUQRWH
WKDWKLVUHOLDQFHRQ8QLWHG6WDWHVY'DOH)G
WK&LU LVPLVSODFHG$VZHQRWHGLQ8QLWHG6WDWHV
Y1HXKDXVVHU³'DOHJRYHUQVLQFDVHVZKHUHDMXU\¶VJHQHUDO
YHUGLFW LV DPELJXRXV VXFK WKDW LW FDQQRW EH GHWHUPLQHG
ZKHWKHUWKHMXURUVXQDQLPRXVO\DJUHHGDVWRRQHRUDQRWKHURI
WKHPXOWLSOHGUXJVDOOHJHGO\LQYROYHGLQDFRQVSLUDF\´
)G WK&LU :KLOHZHUHFRJQL]HWKDWWKH
MXU\¶V JHQHUDO YHUGLFW LQ WKLV FDVH ZDV DPELJXRXV ZH
FRQFOXGHWKDWDQ\HUURUZDVKDUPOHVV8QOLNH+XPSKUH\WKH
GHIHQGDQWV LQ 'DOH DQG 1HXKDXVVHU ZHUH FKDUJHG ZLWK
FRQVSLULQJ WR GLVWULEXWH FRFDLQH RU FUDFN FRFDLQH DQG
PDULMXDQDFRQWUROOHGVXEVWDQFHVVXEMHFWWRGLIIHUHQWVWDWXWRU\
SURYLVLRQV DQG IRU ZKLFK GLIIHUHQW SHQDOW\ UDQJHV DUH
DYDLODEOH+HUHVLJQLILFDQWO\UHJDUGOHVVRIZKHWKHUDMXU\
GHWHUPLQHG WKDW +XPSKUH\ FRQVSLUHG WR GLVWULEXWH FUDFN
FRFDLQHSRZGHUFRFDLQHRUERWKKHVWLOOZRXOGKDYHEHHQ

-- 25 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
7KLV FRQFOXVLRQ DOVR UHQGHUV PRRW +XPSKUH\¶V RWKHU DOOHJDWLRQ WKDW
WKH GLVWULFW FRXUW GLG QRW ILQG E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW KH
VROG FUDFN DQG QRW VRPH RWKHU W\SH RI FRFDLQH $V GLVFXVVHG LQ 3DUW ,,,'
EHORZ EHFDXVH +XPSKUH\¶V VHQWHQFH YLRODWHV $SSUHQGL XSRQ UHPDQG
+XPSKUH\ FDQQRW EH VHQWHQFHG XQGHU DQ\ SURYLVLRQ RWKHU WKDQ †
E & ZKLFK GRHV QRW UHTXLUH D IDFWXDO ILQGLQJ RI DQ\ SDUWLFXODU
VFKHGXOH , RU ,, FRQWUROOHG VXEVWDQFH
VXEMHFWWRVHQWHQFLQJXQGHU† E & DQGVXEMHFWWRWKH
VDPHVWDWXWRU\SHQDOW\
''UXJ4XDQWLW\'HWHUPLQDWLRQ$SSUHQGL
:LWKUHVSHFWWRMXU\LQVWUXFWLRQV+XPSKUH\PDNHVDIRXUWK
DUJXPHQW WKDW WKH GLVWULFW FRXUW YLRODWHG WKH 6XSUHPH
&RXUW¶V GHFLVLRQ LQ $SSUHQGL Y 1HZ -HUVH\ E\ IDLOLQJ WR
LQVWUXFWWKHMXU\WRILQGGUXJTXDQWLWLHVEH\RQGDUHDVRQDEOH
GRXEW%HFDXVHRIWKHFRPSOH[LW\RIWKLVLVVXHDQGEHFDXVH
ZH XOWLPDWHO\ ILQG WKLV FODLP PHULWRULRXV ZH UHYLHZ WKLV
DVVLJQPHQWRIHUURUVHSDUDWHO\
6WDQGDUGRI5HYLHZ
2XUILUVWWDVNLQHYDOXDWLQJ+XPSKUH\¶V$SSUHQGLFKDOOHQJH
LVWRGHWHUPLQHWKHDSSURSULDWHVWDQGDUGRIUHYLHZ+XPSKUH\
ZDVVHQWHQFHGLQSULRUWR$SSUHQGLDQGRQO\PDGHD
IRUPDO $SSUHQGL REMHFWLRQ LQ KLV DSSHOODWH EULHI LQ
%HFDXVHKLVDSSHDOZDVSHQGLQJDWWKHWLPH$SSUHQGLZDV
GHFLGHG+XPSKUH\LVHQWLWOHGWRUHWURDFWLYHDSSOLFDWLRQRID
QHZUXOHRIFULPLQDOSURVHFXWLRQ*ULIILWKY.HQWXFN\
86 :KHUHDGHIHQGDQWUDLVHVDFRJQL]DEOH
$SSUHQGLFKDOOHQJHLQGLVWULFWFRXUWDQGUDLVHVLWDJDLQRQ
DSSHDOZHUHYLHZWKH$SSUHQGLLVVXHGHQRYR6HH8QLWHG
6WDWHVY6WUD\KRUQ)G WK&LU ,I
KRZHYHUDGHIHQGDQWIDLOVWRUDLVHWKHLVVXH LQ WKHGLVWULFW
FRXUW RU DEDQGRQV LW RQ DSSHDO ZH UHYLHZ IRU SODLQ HUURU
RQO\6HH8QLWHG6WDWHVY*UDKDP)G WK
&LU KROGLQJWKDWDFRXUWPD\QRWLFH$SSUHQGLHUURUV
VXDVSRQWHXQGHUSODLQHUURUUHYLHZHYHQLIWKHLVVXHLVQRW
1R 8QLWHG6WDWHVY+XPSKUH\
'HVSLWH WKLV $SSUHQGL YLRODWLRQ WKH *RYHUQPHQW DUJXHG WKDW WKH
GHIHQGDQW¶V VHQWHQFH FRXOG EH XSKHOG DV ZLWKLQ WKH UDQJH VHW IRUWK LQ
† E % WHQ \HDUV WR OLIH LQ OLJKW RI WKH GHIHQGDQW¶V DGPLVVLRQ WR
D TXDQWLW\ RI FRFDLQH MXVW XQGHU NLORJUDPV 7KH SDQHO LQ )ORZDO UHMHFWHG
WKLV DUJXPHQW ZLWKRXW HYHU VWDWLQJ WKH VWDQGDUG RI UHYLHZ WKDW JRYHUQHG
LWV FRQVLGHUDWLRQ 7KLV DGGLWLRQDO GHIHFW LQ )ORZDO LV GLVFXVVHG EHORZ
WKHSULRUUXOLQJVLQ&RUUDGRDQG5HEPDQQ²KDGPDQLIHVWO\
HVWDEOLVKHGDVWKHODZRIWKLV&LUFXLWWKDW$SSUHQGLDGGUHVVHV
RQO\VHQWHQFLQJPD[LPXPV:KDWLVPRUHWKHPDMRULW\LV
DEOHWRLGHQWLI\DOLQHRI6L[WK&LUFXLWFDVHVLQVXSSRUWRILWV
FRQFOXVLRQ 7R IXOO\ DSSUHFLDWH WKH KDYRF WKHVH ODWWHU
GHFLVLRQVKDYHZUHDNHGZLWKWKHSULQFLSOHRIVWDUHGHFLVLV
DQGWKHFKDRWLFVWDWHRIRXUSRVW$SSUHQGLODZLQWKHZDNHRI
WKHVH UXOLQJV D EULHI KLVWRU\ RI WKH ZD\ZDUG MRXUQH\ LV LQ
RUGHU
7KHWURXEOHEHJDQLQ8QLWHG6WDWHVY)ORZDO)G
WK&LU ZKLFKZDVGHFLGHGDIWHU3DJHDQG0XQR]EXW
PHQWLRQVQHLWKHU,Q)ORZDOWKHGHIHQGDQWZDVFRQYLFWHGE\
DMXU\RISRVVHVVLRQZLWKLQWHQWWRGLVWULEXWHFRFDLQHDQGWKH
'LVWULFW&RXUWIRXQGDWVHQWHQFLQJWKDWWKLVRIIHQVHLQYROYHG
PRUH WKDQ NLORJUDPV RI FRFDLQH WULJJHULQJ WKH HOHYDWHG
VHQWHQFLQJUDQJHIRXQGDW† D $ 0RUHRYHULQOLJKW
RI WKH GHIHQGDQW¶V WZR SULRU IHORQ\ FRQYLFWLRQV IRU GUXJ
RIIHQVHV KH ZDV VXEMHFW WR PDQGDWRU\ OLIH LPSULVRQPHQW
XQGHU † D $ DQG WKH 'LVWULFW &RXUW LPSRVHG WKLV
VHQWHQFH7KHSDQHOQHHGQRWKDYHORRNHGDQ\IXUWKHUWKDQ
3DJH²RUHYHQ5HEPDQQZKLFK)ORZDOGRHVFLWH²WRILQG
WKDW WKLV VHQWHQFH YLRODWHG $SSUHQGL ,Q SDUWLFXODU WKH
GHIHQGDQW¶V OLIH VHQWHQFH H[FHHGHG WKH PD[LPXP \HDU
WHUP RI LPSULVRQPHQW KH IDFHG XQGHU † E & DV D
SULRUGUXJIHORQZKRVHODWHVWRIIHQVHDVGHWHUPLQHGVROHO\E\
WKH MXU\¶V YHUGLFW LQYROYHG DQ LQGHWHUPLQDWH DPRXQW RI
FRFDLQH
1RWZLWKVWDQGLQJWKLVUHDGLO\GLVFHUQLEOHRXWFRPHXQGHUWKLV
&LUFXLW¶VRZQSRVW$SSUHQGLSUHFHGHQWVWKHSDQHOLQ)ORZDO
GHHPHGLWQHFHVVDU\WRLQWHUSUHW$SSUHQGLDQHZ,WVDQDO\VLV
XQIRUWXQDWHO\LVDQ\WKLQJEXWFOHDU)LUVWXSRQUHYLHZLQJ

-- 26 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
7KH WKLUG FKDUJH RI FRQVSLUDF\ ZDV GLVPLVVHG EHIRUH WULDO
7KLV UDQJH EHFRPHV \HDUV WR OLIH LPSULVRQPHQW LI DV LV WKH FDVH
KHUH D GHIHQGDQW SUHYLRXVO\ KDV EHHQ FRQYLFWHG RI D IHORQ\ GUXJ RIIHQVH
6HH 86& † E $ 7KH PDMRULW\ KROGV DQG , DJUHH WKDW
'HIHQGDQW¶V FKDOOHQJH WR KLV SULRU FRQYLFWLRQ LV ZLWKRXW PHULW
,Q IDFW WKLV VWDWXWRU\ PD[LPXP LQFUHDVHV WR \HDUV ZKHUH DV KHUH
WKH GHIHQGDQW KDV D SULRU FRQYLFWLRQ IRU D IHORQ\ GUXJ RIIHQVH 6HH
86& † E & 7KXV 'HIHQGDQW¶V \HDU VHQWHQFH DFWXDOO\ LV
ZHOO EHORZ WKH VWDWXWRU\ PD[LPXP HYHQ ZKHQ GUXJ TXDQWLWLHV DUH RPLWWHG
IURP WKH GHWHUPLQDWLRQ
FKDUJHG'HIHQGDQW$SSHOODQW0RQWHO+XPSKUH\DQGVHYHUDO
FR'HIHQGDQWVZLWKWKUHHFRXQWVRIFRQVSLULQJWRGLVWULEXWH
DQGWRSRVVHVVZLWKLQWHQWWRGLVWULEXWHD³GHWHFWDEOHDPRXQW´
RIFRFDLQHDQGRUFRFDLQHEDVH FUDFN VHH-$DW
DVZHOODVRWKHURIIHQVHV7KHMXU\UHWXUQHGDJXLOW\
YHUGLFWRQWZRRIWKHWKUHHFRQVSLUDF\FRXQWVEXWGLGQRW
GHWHUPLQHWKHTXDQWLWLHVRIGUXJVFKDUJHDEOHWR'HIHQGDQWLQ
FRQQHFWLRQ ZLWK WKHVH GUXJ RIIHQVHV ,QVWHDG WKH 'LVWULFW
&RXUW GHWHUPLQHG DW VHQWHQFLQJ WKDW 'HIHQGDQW ZDV
DFFRXQWDEOH IRU DW OHDVW EXW OHVV WKDQ NLORJUDPV RI
FRFDLQHUHVXOWLQJLQDEDVHRIIHQVHOHYHORIXQGHUWKH86
6HQWHQFLQJ *XLGHOLQHV DQG WULJJHULQJ WKH HQKDQFHG
VHQWHQFLQJUDQJHRI\HDUVWROLIHLPSULVRQPHQWXQGHU
86& † E $ IRU GUXJ RIIHQVHV LQYROYLQJ
NLORJUDPV RU PRUH RI FRFDLQH ,Q WKH HQG KRZHYHU
'HIHQGDQW ZDV VHQWHQFHG WR D WHUP RI \HDUV¶
LPSULVRQPHQWZKLFKDVQRWHGLQ3DJHGRHVQRWH[FHHGWKH
\HDU PD[LPXP VHW IRUWK LQ † E & IRU GUXJ
RIIHQVHV LQYROYLQJ DQ LQGHWHUPLQDWH DPRXQW RI FRFDLQH
8QGHU3DJHDQG0XQR]WKHQ'HIHQGDQW¶VVHQWHQFHGRHVQRW
YLRODWHWKHUXOHRI$SSUHQGL
7KH PDMRULW\ UHFRJQL]HV DV PXFK DOEHLW ZLWKRXW FLWLQJ
3DJH3UREOHPDWLFDOO\KRZHYHUWKHPDMRULW\JRHVRQWRKROG
WKDW 'HIHQGDQW¶V VHQWHQFH YLRODWHV D VHFRQG ³UXOH´ RI
$SSUHQGL RQH ZKLFK LPSOLFDWHV VHQWHQFLQJ UDQJHV HYHQ
WKRXJKRXUGHFLVLRQVLQ3DJHDQG0XQR]²QRWWRPHQWLRQ
1R 8QLWHG6WDWHVY+XPSKUH\
UDLVHGRQDSSHDOE\WKHGHIHQGDQW VHHDOVR8QLWHG6WDWHVY
.LQJ)G WK&LU
,Q KLV ZULWWHQ REMHFWLRQV WR WKH SUHVHQWHQFH UHSRUW
+XPSKUH\¶VODZ\HUVWDWHG
7R ILQG +XPSKUH\ JXLOW\ RI FRQVSLUDF\ DOO WKH MXU\
QHHGHGWRILQGZDVWKDWWKHUHZDVDQDJUHHPHQWDVWRDW
OHDVWRQHVDOHRIFRFDLQH$OWKRXJKWKHMXU\IRXQGWKDWD
FRQVSLUDF\H[LVWHGWKHUHLVQREDVLVWRJDWKHUIURPWKH
MXU\¶V YHUGLFW WKDW LW EHOLHYHG (DWRQ¶V NLORJUDP
HVWLPDWH WR EH DFFXUDWH RU WKDW LW HYHQ EHOLHYHG WKDW
PXOWLSOH VDOHV EHWZHHQ (DWRQ DQG +XPSKUH\ DFWXDOO\
WRRN SODFH 7KHUHIRUH DV D UHVXOW RI WKH ODFN RI
VXIILFLHQWFUHGLELOLW\UHJDUGLQJ(DWRQ¶VWHVWLPRQ\DVWR
WKHDPRXQWRIFRFDLQHWUDQVDFWHG'HIHQGDQW+XPSKUH\
VXJJHVWVWKH&RXUWUHMHFWWKHUHFRPPHQGDWLRQVWDWHGLQ
WKH 365 DV WR WKH UHOHYDQW FRQGXFW LQ &RXQW ,, DQG
LQVWHDGDGRSWWKHPLQLPXPDPRXQWZKLFKWKHMXU\PXVW
KDYHQHFHVVDULO\IRXQGWRVXSSRUWLWVYHUGLFWRIJXLOW\
VSHFLILFDOO\NLORJUDPRIFRFDLQHZKLFKFRQVWLWXWHV
WKHORZHVWDPRXQWRIFRFDLQHSXUFKDVHGE\(DWRQGXULQJ
DJLYHQVDOH
-$DW
+HFRQWLQXHVLQWKHZULWWHQREMHFWLRQVVWDWLQJ
$VZLWK(DWRQWKHRQO\WKLQJZHFDQEHVXUHRIZLWK
UHJDUGVWR&URPLW\¶VWHVWLPRQ\LVWKDWWKHMXU\IRXQGWKDW
DQDJUHHPHQWGLGH[LVWWRSXUFKDVHFRFDLQH$VWKHUHLV
LQVXIILFLHQW HYLGHQFH WR VXSSRUW DQ DPRXQW RI FRFDLQH
KLJKHU WKDQ WKDW ZKLFK WKH MXU\ PXVW QHFHVVDULO\ KDYH
IRXQG WR VXSSRUW +XPSKUH\¶V FRQYLFWLRQ 'HIHQGDQW
UHTXHVWVWKDWWKH&RXUWUHMHFWWKH365¶VUHFRPPHQGDWLRQ
UHJDUGLQJ UHOHYDQW FRQGXFW DQG WKDW WKH &RXUW LQVWHDG
KROG+XPSKUH\DFFRXQWDEOHLQ&RXQWIRUWKHVDOHRIò
NLORJUDP RI SRZGHU FRFDLQH ± D TXDQWLW\ ZKLFK
UHSUHVHQWV WKH PLQLPXP DPRXQW ZKLFK &URPLW\
LQGLFDWHGKHKDGSXUFKDVHGIURP+XPSKUH\

-- 27 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
-$DW
$WWKHVHQWHQFLQJFROORTX\+XPSKUH\¶VDWWRUQH\UHLWHUDWHG
KLVREMHFWLRQVDQGPDGHWKHIROORZLQJUHTXHVW
,IWKH&RXUWILQGVDVZHZRXOGDVNWKH&RXUWWRGR
WKDWWKHWRWDOUHOHYDQWFRQGXFWLVOHVVWKDQILYHNLORVLW
ZRXOGEHDWHQ\HDUPDQGDWRU\VHQWHQFHDQG,ZRXOGDVN
WKH&RXUWWRFRQVLGHUWKDWWKLVLVD±WKLVLVWHQ\HDUVRID
PDQ¶V OLIH SHUKDSV PRUH XQGHU WKH JXLGHOLQH
FDOFXODWLRQVPD\EHDVPXFKDV\HDUVRIDPDQ¶VOLIH
WKDW¶V JRLQJ WR EH GHFLGHG E\ WKH WHVWLPRQ\ RI WKHVH
LQGLYLGXDOV >(DWRQ DQG &URPLW\@ $QG WKH WHVWLPRQ\
VLPSO\ZKLOHLWPD\KDYHEHHQHQRXJKLWPD\KDYHEHHQ
HQRXJKWRDMXU\WRVD\FOHDUO\WKHUHZDVDQDJUHHPHQW
SHUKDSV DQ RQJRLQJ DJUHHPHQW IRU D FHUWDLQ SHULRG RI
WLPH EHWZHHQ 0U +XPSKUH\ DQG 0U &URPLW\ LQ RQH
FRXQWDQG0U+XPSKUH\DQG0U(DWRQLQDQRWKHUFRXQW
WRGLVWULEXWHFRFDLQHWKDW¶VDOOWKHMXU\KDGWREHOLHYH
EH\RQGDUHDVRQDEOHGRXEWZDVWKDWWKHUHZDVVXFKDQ
DJUHHPHQW>@ >7@KH\ GLGQ¶W HYHQ KDYH WR EHOLHYH D
WUDQVDFWLRQWRRNSODFH
7KH RQO\ FRRSHUDWLRQ >VLF@ WKDW H[LVWHG IRU WKHLU
WHVWLPRQ\ZHUHFHUWDLQWDSHVDQGFHUWDLQSKRQHFDOOVEXW
WKH\GRQ¶WFRUURERUDWHWKLVZKROHDPRXQWRIGUXJVWKH
*RYHUQPHQW¶VWU\LQJWRSXWLQWRSOD\KHUHDWVHQWHQFLQJ

$QG , ZRXOG DVN WKH &RXUW WKDW ± WR DSSO\ SHUKDSV D
KLJKHU VWDQGDUG WR WKH W\SH RI UHOHYDQW FRQGXFW
ZKDWHYHU\RXZDQWWRFDOOLWLQWKLVFDVH$QGLILW
GRHV WKDW LW ZLOO ILQG WKH *RYHUQPHQW¶V QRW PHW LWV
EXUGHQ DQG LW ZLOO LPSRVH D PDQGDWRU\ PLQLPXP
VHQWHQFHEDVHGRQDTXDQWLW\RIOHVVWKDQILYHNLORVDQGD
JXLGHOLQHVHQWHQFHEDVHGXSRQWKDWVDPHTXDQWLW\
-$DW
+XPSKUH\ FRXOG QRW KDYH NQRZQ DW WKH WLPH RI KLV
VHQWHQFLQJ WKDW $SSUHQGL ZRXOG EH GHFLGHG D \HDU ODWHU
1HYHUWKHOHVV+XPSKUH\REMHFWHGDWWKHVHQWHQFLQJKHDULQJWR
1R 8QLWHG6WDWHVY+XPSKUH\
>,@Q WKH SUHVHQW FDVH GHIHQGDQW¶V VHQWHQFH LV LQYDOLG
XQGHU$SSUHQGLRQO\LIWKHGLVWULFWFRXUW¶VILQGLQJWKDW
GHIHQGDQW FRQVSLUHG WR GLVWULEXWH PHWKDPSKHWDPLQH
UHVXOWHGLQGHIHQGDQWUHFHLYLQJDVHQWHQFHLQH[FHVVRI
WKH PD[LPXP VWDWXWRU\ SHQDOW\ IRU FRQVSLUDF\ WR
GLVWULEXWH FRFDLQH WKH FULPH WR ZKLFK GHIHQGDQW SOHG
JXLOW\
7KLVFDVHLQYROYHVJUDPVRIFRFDLQHDQG
JUDPV RI HLWKHU DPSKHWDPLQH R>U@ PHWKDPSKHWDPLQH
7LWOH 86& † SURYLGHV WKDW WKH SHQDOW\ IRU
FRQVSLUDF\WRGLVWULEXWHDQ\GUXJZLOOEHLGHQWLFDOWRWKH
SHQDOWLHV IRU GLVWULEXWLRQ 8QGHU 86&
† E & WKHVWDWXWRU\SHQDOW\IRUGLVWULEXWLRQRI
JUDPVRIFRFDLQHUDQJHVIURP]HURWRWZHQW\\HDUV
LPSULVRQPHQW7KHVWDWXWRU\SHQDOW\IRUGLVWULEXWLRQRI
JUDPV RI PHWKDPSKHWDPLQH XQGHU 86&
† E % LVILYHWRIRUW\\HDUVLPSULVRQPHQW7KH
VWDWXWRU\ SHQDOW\ IRU GLVWULEXWLRQ RI JUDPV RI
DPSKHWDPLQHD6FKHGXOH,,GUXJLV]HURWRWZHQW\\HDUV
XQGHU86&† E & 'HIHQGDQWSOHGJXLOW\
WRFRQVSLUDF\WRGHOLYHUWKHVSHFLILHGDPRXQWRIFRFDLQH
)RUWKHFRFDLQHDORQHWKHVWDWXWHDXWKRUL]HVDPD[LPXP
VHQWHQFH RI WZHQW\ \HDUV 'HIHQGDQW ZDV DFWXDOO\
VHQWHQFHGWRVHUYHPRQWKVDSSUR[LPDWHO\WHQ\HDUV
'HIHQGDQW¶V VHQWHQFH GLG QRW H[FHHG WKH VWDWXWRU\
PD[LPXPIRUWKHSRUWLRQRIWKHLQGLFWPHQWWRZKLFKKH
YDOLGO\SOHGJXLOW\7KHVHQWHQFLQJMXGJH¶VGHWHUPLQDWLRQ
E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW GHIHQGDQW
FRQVSLUHG WR GLVWULEXWH PHWKDPSKHWDPLQH UDWKHU WKDQ
DPSKHWDPLQH GLG QRW LQFUHDVH KLV SHQDOW\ EH\RQG WKH
SUHVFULEHG VWDWXWRU\ PD[LPXP IRU FRQVSLUDF\ WR
GLVWULEXWHJUDPVRIFRFDLQH7KXVWKH$SSUHQGL
UXOLQJ LV QRW DSSOLFDEOH KHUH DQG GRHV QRW LPSDFW
GHIHQGDQW¶VVHQWHQFH
)GDW HPSKDVLVDGGHG IRRWQRWHRPLWWHG
7KHDERYHTXRWHGSDVVDJHVIURP3DJHDQG0XQR]FRXOGEH
UHSHDWHGYHUEDWLPLQWKLVFDVH7KHVXSHUVHGLQJLQGLFWPHQW

-- 28 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
1HYHUWKHOHVV DV GLVFXVVHG EHORZ ZH XSKHOG WKH VHQWHQFHV RI WKUHH
RI WKH IRXU GHIHQGDQWV XQGHU WKH ³SODLQ HUURU´ VWDQGDUG RI UHYLHZ ³VLQFH
DEVHQW WKH >$SSUHQGL@ HUURU WKHLU VHQWHQFHV ZRXOG KDYH EHHQ WKH VDPH DV
WKRVH ZKLFK ZHUH LPSRVHG´ )G DW
RI GUXJV IRU ZKLFK HDFK GHIHQGDQW ZDV DFFRXQWDEOH
%DVHG RQ WKLV GUXJ TXDQWLW\ GHWHUPLQDWLRQ HDFK
GHIHQGDQW ZDV VHQWHQFHG WR D WHUP RI LPSULVRQPHQW
H[FHHGLQJ WKH \HDU PD[LPXP VHW IRUWK LQ
† E & +RZHYHUDVLQVWUXFWHGLQ$SSUHQGLD
GHIHQGDQWPD\QRWEHH[SRVHGWRDJUHDWHUSXQLVKPHQW
WKDQWKDWDXWKRUL]HGE\WKHMXU\¶VJXLOW\YHUGLFW7KHMXU\
PHUHO\IRXQGWKDWGHIHQGDQWVFRQVSLUHGWRGLVWULEXWHDQG
SRVVHVVWRGLVWULEXWHVRPHXQGHWHUPLQHGDPRXQWRIFUDFN
FRFDLQH$VVXFKGHIHQGDQWVFDQQRWEHVXEMHFWHGWRWKH
KLJKHUSHQDOWLHVXQGHU† D $ RU % 5DWKHUWKH
PD[LPXPVHQWHQFHWKDWPD\EHLPSRVHGRQWKLVFRXQWLV
\HDUVSXUVXDQWWR† E &
)GDW%HFDXVHHDFKRIWKHGHIHQGDQWVLQ3DJHZDV
VHQWHQFHGWRDWHUPRILPSULVRQPHQWLQH[FHVVRI\HDUVZH
KHOGWKDW$SSUHQGLKDGEHHQYLRODWHG
:HDSSOLHGWKLVVDPHUXOHDIRXUWKWLPHLQ8QLWHG6WDWHVY
0XQR] )G WK &LU D FDVH ZKHUH LQ
FRQWUDVWWR3DJHWKHGHIHQGDQW¶VVHQWHQFHGLGQRWH[FHHGWKH
GHIDXOW\HDUPD[LPXPXQGHU† E & 'HIHQGDQW
=DIHULQR0XQR]SOHGJXLOW\WRDVLQJOHFRXQWRIFRQVSLUDF\WR
GLVWULEXWH FRFDLQH DQG PHWKDPSKHWDPLQH EXW ³ZLWK WKH
H[SOLFLW UHVHUYDWLRQ WKDW KH GLG QRW DGPLW WR FRQVSLULQJ WR
GHOLYHUPHWKDPSKHWDPLQHEXWRQO\DGPLWWHGWRWKHFRFDLQH
DQGDPSKHWDPLQHWKDWZDVDFWXDOO\GHOLYHUHG´0XQR]
)GDW7KH'LVWULFW&RXUWWKHQLPSRVHGDPRQWK
VHQWHQFH³EDVHGLQSDUWRQKLVFRQFOXVLRQWKDWGHIHQGDQWGLG
FRQVSLUHWRGLVWULEXWHPHWKDPSKHWDPLQH´)GDW
:HUHFRJQL]HGWKDWWKLVGHWHUPLQDWLRQE\DSUHSRQGHUDQFHRI
WKH HYLGHQFH WULJJHUHG DQ HQKDQFHG VWDWXWRU\ VHQWHQFLQJ
UDQJH ERWK PLQLPXP DQG PD[LPXP EXW QHYHUWKHOHVV
IROORZHG&RUUDGRLQFRQFOXGLQJWKDWWKHUXOHRI$SSUHQGLKDG
QRWEHHQYLRODWHG
1R 8QLWHG6WDWHVY+XPSKUH\
,QGHHG ZH EHOLHYH WRR KLJK D KXUGOH IRU GH QRYR UHYLHZ ZLOO UDLVH
WKH VSHFWHU RI GHIHQGDQW¶V FRXQVHO ³PDNLQJ D ORQJ DQG YLUWXDOO\ XVHOHVV
ODXQGU\ OLVW RI REMHFWLRQV WR UXOLQJV WKDW ZHUH SODLQO\ VXSSRUWHG E\
H[LVWLQJ SUHFHGHQW´ -RKQVRQ Y 8QLWHG 6WDWHV 86
LQ RUGHU WR SUHVHUYH WKH LVVXH IRU DSSHDO $OWKRXJK WKH -RKQVRQ GHFLVLRQ
FRQFHUQHG WKH WLPLQJ RI SODLQ HUURU ZKHWKHU DQ HUURU PXVW EH SODLQ DW WKH
WLPH RI WULDO RU DW WKH WLPH RI DSSHOODWH FRQVLGHUDWLRQ ZH EHOLHYH WKDW
VLPLODU FRQFHUQV DULVH LQ WKH SUHVHUYDWLRQ RI GH QRYR UHYLHZ
ERWKWKHDPRXQWRIGUXJVDWWULEXWHGWRKLPDQGWKHVWDQGDUGRI
SURRI UHTXLUHG WR VXSSRUW WKDW DPRXQW +H UHLWHUDWHG WKLV
REMHFWLRQDVDIRUPDO$SSUHQGLREMHFWLRQRQDSSHDO
7KHGLVVHQWGLVPLVVHVWKHVHSDVVDJHVIURPWKHUHFRUG DV
PHUH ³IDFWXDO FKDOOHQJHV´ WR WKH GUXJ TXDQWLW\
UHFRPPHQGDWLRQV LQ WKH SUHVHQWHQFH UHSRUW 7KH GLVVHQW
FKDUJHVWKDWDEVHQWVRPH VSHFLILFFKDOOHQJHWRWKHGLVWULFW
FRXUW¶VDXWKRULW\WRILQGGUXJDPRXQWVE\DSUHSRQGHUDQFHRI
WKHHYLGHQFHZHPD\UHYLHZ+XPSKUH\¶V$SSUHQGLFKDOOHQJH
IRUSODLQHUURURQO\
:HGLVDJUHH7KHSUHVHUYDWLRQRIDFRQVWLWXWLRQDOULJKWLV
QRWDSDUORUJDPH'HIHQGDQWVVKRXOGQRWEHUHTXLUHGRQ
SHQDOW\RIIRUIHLWXUHWRJXHVVQRWRQO\ZKLFKVXEVWDQWLDOULJKW
ZLOOEHLPSDFWHGE\DSHQGLQJ6XSUHPH&RXUWGHFLVLRQEXW
DOVRZKLFKSUHFLVHVHTXHQFHRIZRUGVZLOOEHQHFHVVDU\WR
SUHVHUYHWKDWULJKWRQDSSHDO1HLWKHUGRZHILQGWKH)HGHUDO
5XOHVRI&ULPLQDO3URFHGXUHRUSUHFHGHQWWRUHTXLUHVXFKD
VWDQGDUG
5XOHRIWKH)HGHUDO5XOHVRI&ULPLQDO3URFHGXUHVWDWHV
([FHSWLRQV WR UXOLQJV RU RUGHUV RI WKH FRXUW DUH
XQQHFHVVDU\DQGIRUDOOSXUSRVHVIRUZKLFKDQH[FHSWLRQ
KDVKHUHWRIRUHEHHQQHFHVVDU\LWLVVXIILFLHQWWKDWDSDUW\
DWWKHWLPHWKHUXOLQJRURUGHURIWKHFRXUWLVPDGHRU
VRXJKWPDNHVNQRZQWRWKHFRXUWWKHDFWLRQZKLFKWKDW
SDUW\GHVLUHVWKHFRXUWWRWDNHRUWKDWSDUW\¶VREMHFWLRQWR
WKHDFWLRQRIWKHFRXUWDQGWKHJURXQGVWKHUHIRUEXWLID
SDUW\KDVQRRSSRUWXQLW\WRREMHFWWRDUXOLQJRURUGHUWKH

-- 29 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
DEVHQFHRIDQREMHFWLRQGRHVQRWWKHUHDIWHUSUHMXGLFHWKDW
SDUW\
:HDJUHHZLWKWKH6HFRQG&LUFXLWWKDW³>7@RFRPPXQLFDWH
WKH μQDWXUH¶ RI D FODLP D SDUW\ GRHV QRW KDYH WR SUHVHQW
SUHFLVHRUGHWDLOHGOHJDODUJXPHQWV´8QLWHG6WDWHVY6SUHL
)G G&LU LQWHUQDOTXRWDWLRQPDUNV
RPLWWHG $OOWKDWLVUHTXLUHGLVWKDWWKHSDUW\³PDNH>@NQRZQ
WRWKHFRXUWWKHDFWLRQZKLFKWKDWSDUW\GHVLUHVWKHFRXUWWR
WDNHRUWKDWSDUW\¶VREMHFWLRQWRWKHDFWLRQRIWKHFRXUWDQGWKH
JURXQGVWKHUHIRU´)HG5&ULP 3FI&RROY8QLWHG
6WDWHV86Q QRWLQJWKDWDGHIHQVH
REMHFWLRQWRMXU\LQVWUXFWLRQVZKLOHQRWD³PRGHORIFODULW\´
ZDVVXIILFLHQWWRSUHVHUYHWKHREMHFWLRQRQDSSHDO 7RROHY
%D[WHU +HDOWKFDUH &RUS )G WK &LU
KROGLQJ WKDW DQ REMHFWLRQ DV WR ³IRXQGDWLRQ´ RI
HYLGHQFH VXIILFLHQW WR SUHVHUYH D 'DXEHUW REMHFWLRQ RQ
DSSHDO
+XPSKUH\¶VDWWRUQH\PD\KDYHFRQFHGHGWKDWXQGHUWKHQ
FXUUHQWODZLWZDVZLWKLQWKHGLVWULFWFRXUW¶VDXWKRULW\WRILQG
GUXJ TXDQWLWLHV XVLQJ WKH SUHSRQGHUDQFH RI WKH HYLGHQFH
VWDQGDUG QHYHUWKHOHVV LW LV DSSDUHQW IURP WKH UHFRUG WKDW
+XPSKUH\¶V DWWRUQH\ FKDOOHQJHG WKH SURSULHW\ RI WKDW
VWDQGDUG $OWKRXJK +XPSKUH\¶V DWWRUQH\ DUWLFXODWHG KLV
REMHFWLRQRQWKHEDVLVRIVXIILFLHQF\RIWKHHYLGHQFHKHXUJHG
WKHGLVWULFWFRXUWWRFRQVLGHURQO\WKRVHIDFWVWKDWZHUHSURYHG
WR D MXU\ EH\RQG D UHDVRQDEOH GRXEW 7KH GLVWULFW FRXUW
LPSOLFLWO\DFNQRZOHGJHGWKHREMHFWLRQGXULQJWKHVHQWHQFLQJ
FROORTX\VWDWLQJ
7KLV&RXUWILQGVE\DSUHSRQGHUDQFHRIWKHHYLGHQFHWKDW
WKH TXDQWLW\ RI GUXJV WKDW LV UHDVRQDEO\ IRUHVHHDEOH LQ
IXUWKHUDQFHRIWKHMRLQWO\XQGHUWDNHQFULPLQDODFWLYLW\LV
DWOHDVWEXWOHVVWKDQNLORJUDPVRIFRFDLQH
7KH 'HIHQGDQW¶V DUJXPHQW JRHV GLUHFWO\ WR WKH
FUHGLELOLW\ RI (DWRQ DQG &URPLW\ %DVLFDOO\ WKH
DUJXPHQWLVWKH\DUHQRWUHOLDEOHDQGFDQQRWEHEHOLHYHG
$OWKRXJKWKHMXU\LQWKLVFDVHZDVQRWFDOOHGXSRQWR
1R 8QLWHG6WDWHVY+XPSKUH\
VHQWHQFLQJUDQJHRI\HDUVWROLIHDQGDQDFWXDOVHQWHQFHRI
\HDUVDQGPRQWKV8SRQUHYLHZLQJ$SSUHQGLZHVWDWHG
WKDW³>R@XUGXW\LQOLJKWRIWKLVFOHDUGLFWDWHIURPWKH&RXUW
LVWRH[DPLQHZKHWKHUWKHVHQWHQFLQJIDFWRULQWKLVFDVHZDV
D IDFWXDO GHWHUPLQDWLRQ DQG ZKHWKHU WKDW GHWHUPLQDWLRQ
LQFUHDVHGWKHPD[LPXPSHQDOW\IRUWKHFULPHFKDUJHGLQWKH
LQGLFWPHQW´)GDW%HFDXVHWKH'LVWULFW&RXUW¶V
IDFWXDOILQGLQJDWVHQWHQFLQJKDG³LQFUHDVH>G@WKHPD[LPXP
SHQDOW\WRZKLFK>WKHGHIHQGDQW@ZDVH[SRVHG´ZHKHOGWKDW
WKLVZDVDQ³HOHPHQW>@RIWKHRIIHQVHZKLFKPXVWEHSURYHQ
EH\RQG D UHDVRQDEOH GRXEW´ DQG ZH UHPDQGHG IRU D
UHGHWHUPLQDWLRQRIWKLVTXHVWLRQXQGHUWKHSURSHUVWDQGDUGRI
SURRI)GDW
0RUH WR WKH SRLQW RI WKH SUHVHQW DSSHDO ZH UHDFKHG WKH
VDPHFRQFOXVLRQLQ8QLWHG6WDWHVY3DJH)G
WK&LU DFDVHZKLFKOLNHWKLVRQHLQYROYHGD
FKDOOHQJH WR WKH VHQWHQFLQJ FRXUW¶V GHWHUPLQDWLRQ RI GUXJ
TXDQWLW\E\DSUHSRQGHUDQFHRIWKHHYLGHQFHIROORZLQJDMXU\
FRQYLFWLRQ RQ D GUXJ FRQVSLUDF\ FKDUJH $IWHU H[DPLQLQJ
$SSUHQGLDQG5HEPDQQZHVWDWHG
7KH&RXUWILQGVWKHSULQFLSOHVVHWIRUWKLQ$SSUHQGL
DSSOLFDEOH WR GHIHQGDQWV¶ FDVHV ,Q FRXQW RQH RI WKH
LQGLFWPHQWGHIHQGDQWVZHUHFKDUJHGZLWKFRQVSLUDF\WR
GLVWULEXWHDQGSRVVHVVZLWKWKHLQWHQWWRGLVWULEXWHFUDFN
FRFDLQH 7KHUH LV QR PHQWLRQ RI TXDQWLW\ LQ WKH
LQGLFWPHQW DQG WKH MXU\ PDGH QR ILQGLQJV UHJDUGLQJ
TXDQWLW\ 3XUVXDQW WR WKH SURYLVLRQV RI > 86&@
†WKHTXDQWLW\RIGUXJVLVDIDFWXDOGHWHUPLQDWLRQ
WKDWVLJQLILFDQWO\LPSDFWVWKHVHQWHQFHLPSRVHG6HFWLRQ
E & SURYLGHV IRU D PD[LPXP SHQDOW\ RI
\HDUVXQOHVVWKHFULPHLQYROYHVDTXDQWLW\RIGUXJVDVVHW
IRUWK LQ VXEVHFWLRQV $ RU % 7KHVH VXEVHFWLRQV
SURYLGHIRUDPD[LPXPSHQDOW\RI\HDUVLIWKHFULPH
LQYROYHG JUDPV RU PRUH RI FUDFN FRFDLQH VHH
† E % DQG D PD[LPXP SHQDOW\ RI OLIH
LPSULVRQPHQWLIWKHFULPHLQYROYHGJUDPVRUPRUHRI
FUDFN FRFDLQH VHH † E $ 7KH GLVWULFW MXGJH
IRXQGE\DSUHSRQGHUDQFHRIWKHHYLGHQFHWKHTXDQWLW\

-- 30 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
7KH '& &LUFXLW DSSDUHQWO\ KDV QRW VTXDUHO\ DGGUHVVHG WKH
DSSOLFDWLRQ RI $SSUHQGL WR VWDWXWRU\ VHQWHQFLQJ UDQJHV EXW KDV KHOG ZLWK
UHJDUG WR VHQWHQFLQJ HQKDQFHPHQWV XQGHU WKH 86 6HQWHQFLQJ *XLGHOLQHV
WKDW ³$SSUHQGL GRHV QRW DSSO\ WR VHQWHQFLQJ ILQGLQJV WKDW HOHYDWH D
GHIHQGDQW¶V VHQWHQFH ZLWKLQ WKH DSSOLFDEOH VWDWXWRU\ OLPLWV´ 8QLWHG 6WDWHV
Y )LHOGV )G '& &LU
PD[LPXPVHQWHQFHEH\RQGWKHVWDWXWRU\UDQJHDXWKRUL]HGE\
WKHMXU\¶VYHUGLFW´
0RUHLPSRUWDQWO\RXURZQ&LUFXLWLPPHGLDWHO\DGRSWHGWKH
³VWDWXWRU\PD[LPXP´LQWHUSUHWDWLRQRI$SSUHQGL,QRXUYHU\
ILUVWSRVW$SSUHQGLGHFLVLRQ8QLWHG6WDWHVY&RUUDGR
)G WK&LU ZHFRQIURQWHGDFDVHLQ
ZKLFKWKHGHIHQGDQWV¶VHQWHQFHVIRUD5,&2FRQVSLUDF\ZHUH
EDVHGLQSDUWXSRQWKH'LVWULFW&RXUW¶VILQGLQJWKDWDPXUGHU
SORWZDVRQHRIWKHREMHFWVRIWKLVFRQVSLUDF\EXWWKHMXU\¶V
JHQHUDOYHUGLFWGLGQRWLQGLFDWHZKHWKHULWKDGUHDFKHGWKLV
VDPHIDFWXDOFRQFOXVLRQ'HVSLWHWKHVHQWHQFLQJLPSOLFDWLRQV
RIWKH'LVWULFW&RXUW¶VIDFWILQGLQJXQGHUDSUHSRQGHUDQFHRI
WKHHYLGHQFHVWDQGDUGZHIRXQGQRYLRODWLRQRI$SSUHQGL
,QWKLVFDVH>WKHGHIHQGDQWV@IDFHGDPD[LPXPVHQWHQFH
RI WZHQW\ \HDUV RQ WKH 5,&2 FRQVSLUDF\ FRXQWV
GLVUHJDUGLQJWKHPXUGHUFRQVSLUDF\%HFDXVHWKHGLVWULFW
FRXUWGLGQRWVHQWHQFHHLWKHUGHIHQGDQWWRDWHUPRIPRUH
WKDQWZHQW\\HDUVRQWKH5,&2FRXQWV$SSUHQGLLVQRW
WULJJHUHGDQGWKHH[LVWHQFHRIDPXUGHUFRQVSLUDF\GLG
QRWKDYHWREHGHFLGHGE\DMXU\XQGHUWKHUHDVRQDEOH
GRXEWVWDQGDUG
)GDW FLWDWLRQRPLWWHG
6RRQ WKHUHDIWHU ZH FRQVLGHUHG $SSUHQGL DW OHQJWK DQG
DJDLQIRXQGWKDWLWDGGUHVVHGPD[LPXPSHQDOWLHV,Q8QLWHG
6WDWHVY5HEPDQQ)G WK&LU WKH
GHIHQGDQWSOHGJXLOW\WRKHURLQGLVWULEXWLRQDQRIIHQVHZLWK
DPD[LPXPVHQWHQFHRI\HDUVEXWWKH'LVWULFW&RXUWIRXQG
DW VHQWHQFLQJ E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW D
GHDWKKDGUHVXOWHGIURPWKLVGLVWULEXWLRQOHDGLQJWRDVWDWXWRU\
1R 8QLWHG6WDWHVY+XPSKUH\
GHWHUPLQH TXDQWLW\ RI FRFDLQH RU FUDFN WKH MXU\ ZDV
FDOOHGXSRQWRSDVVRQWKHFUHGLELOLW\RIWKHZLWQHVVHV

-$DW HPSKDVLVDGGHG
7KHGLVVHQWHPSKDWLFDOO\FLWHV8QLWHG6WDWHVY3DJH
)G WK &LU DV IRUHFORVLQJ GH QRYR UHYLHZ
XQOHVVWKHGHIHQGDQWH[SUHVVO\FKDOOHQJHVWKHGLVWULFWFRXUW¶V
DXWKRULW\ WR GHWHUPLQH GUXJ TXDQWLWLHV +RZHYHU VXFK D
IRUPDOREMHFWLRQUHTXLUHPHQWLJQRUHVWKHIDFWWKDW$SSUHQGL
ZDVGHFLGHGXSRQERWKWKH6L[WK$PHQGPHQWMXU\DQGQRWLFH
SURYLVLRQV DQG WKH 'XH 3URFHVV &ODXVHV RI WKH )LIWK DQG
)RXUWHHQWK$PHQGPHQWV6HH$SSUHQGL86DW ³$W
VWDNHLQWKLVFDVHDUHFRQVWLWXWLRQDOSURWHFWLRQVRIVXUSDVVLQJ
LPSRUWDQFH WKH SURVFULSWLRQ RI DQ\ GHSULYDWLRQ RI OLEHUW\
ZLWKRXW GXH SURFHVV RI ODZ DQG WKH JXDUDQWHH WKDW LQ DOO
FULPLQDOSURVHFXWLRQVWKHDFFXVHGVKDOOHQMR\WKHULJKWWRD
VSHHG\ DQG SXEOLF WULDO E\ DQ LPSDUWLDO MXU\´ HPSKDVLV
DGGHG LQWHUQDOTXRWDWLRQPDUNVDQGFLWDWLRQVRPLWWHG 7KH
'XH3URFHVV&ODXVH³SURWHFWVWKHDFFXVHGDJDLQVWFRQYLFWLRQ
H[FHSWXSRQSURRIEH\RQGDUHDVRQDEOHGRXEWRIHYHU\IDFW
QHFHVVDU\WRFRQVWLWXWHWKHFULPHZLWKZKLFKKHLVFKDUJHG´
,QUH:LQVKLS86 $OWKRXJKUHODWHG
WKH 6L[WK $PHQGPHQW ULJKW WR WULDO E\ MXU\ DQG WKH GXH
SURFHVVULJKWWREHFRQYLFWHGE\HYLGHQFHEH\RQGDUHDVRQDEOH
GRXEW DUH LQGHSHQGHQW OHJDO HQWLWOHPHQWV 6HH $SRGDFD Y
2UHJRQ86 ³:HDUHTXLWHVXUH
WKDW WKH 6L[WK $PHQGPHQW LWVHOI KDV QHYHU EHHQ KHOG WR
UHTXLUHSURRIEH\RQGDUHDVRQDEOHGRXEWLQFULPLQDOFDVHV
7KH UHDVRQDEOHGRXEW VWDQGDUG GHYHORSHG VHSDUDWHO\ IURP
ERWKWKHMXU\WULDODQGWKHXQDQLPRXVYHUGLFW´ ,QIDFWZH
FRQILUPHGWKLVSRLQWLQ8QLWHG6WDWHVY5HEPDQQ)G
WK&LU ZKHQZHIRXQGWKDWDGHIHQGDQWZKRKDG
ZDLYHGKHUULJKWWRDWULDOE\MXU\³GLGQRWZDLYHWKHULJKWWR
KDYHDFRXUWGHFLGHDQ\UHPDLQLQJHOHPHQWVRIWKHRIIHQVH
EH\RQGDUHDVRQDEOHGRXEW´,GDW
7KHSUHVHUYDWLRQRIDFRQVWLWXWLRQDOREMHFWLRQVKRXOGQRW
UHVW RQ PDJLF ZRUGV LW VXIILFHV WKDW WKH GLVWULFW FRXUW EH
DSSULVHGRIWKHREMHFWLRQDQGRIIHUHGDQRSSRUWXQLW\WRFRUUHFW

-- 31 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
7KH GLVVHQW DEVWUDFWV RQH OLQH IURP WKDW RSLQLRQ ³'HIHQGDQWV
IDLOHG WR REMHFW WR WKH GLVWULFW MXGJH PDNLQJ WKH GHWHUPLQDWLRQ RI GUXJ
TXDQWLWLHV´ 3DJH )G DW DV SURRI WKDW 3DJH UHTXLUHV D VSHFLILF
REMHFWLRQ WR WKH MXGJH¶V DXWKRULW\ 7KLV LV DW EHVW D ZHDN IRUP RI WKH
IDPLOLDU PD[LP LQFOXVLR XQLXV HVW H[FOXVLR DOWHULXV ³WKH LQFOXVLRQ RI RQH
LV WKH H[FOXVLRQ RI WKH RWKHU´ (7KH GLVVHQW¶V FLWDWLRQ WR 8QLWHG 6WDWHV Y
1HXKDXVVHU )G WK &LU LV PHUHO\ DQRWKHU H[DPSOH RI
LW+XPSKUH\¶VDWWRUQH\QHYHUIRUPHGWKHZRUGV³$SSUHQGL´
EXWZHILQGWKHVXEVWDQFHRIKLVREMHFWLRQWRWKHGUXJTXDQWLW\
GHWHUPLQDWLRQFRPELQHGZLWKKLVREMHFWLRQWRWKHVWDQGDUGRI
HYLGHQFHWREHXVHGVXIILFLHQWWRQRWLI\WKHGLVWULFWFRXUWRI
WKHEDVLVIRUWKHREMHFWLRQDQGVXIILFLHQWWRSUHVHUYHWKHLVVXH
IRUGHQRYRUHYLHZRQDSSHDO6HH6WUD\KRUQ)GDW
³$OWKRXJK >WKH GHIHQGDQW@ GLG QRW XWWHU WKH ZRUGV μGXH
SURFHVV¶DWHLWKHU>WKHSOHDRUVHQWHQFLQJKHDULQJ@KHPDGHLW
ZHOONQRZQWKDWKHGLVSXWHGWKHGLVWULFWFRXUW¶VIDFWXDOILQGLQJ
ZLWKUHVSHFWWRGUXJTXDQWLW\´ 8QLWHG6WDWHVY6WRNHV
)G WK&LU ILQGLQJWKH$SSUHQGLLVVXH
SUHVHUYHG IRU KDUPOHVV HUURU UHYLHZ ZKHUH D GHIHQGDQW
REMHFWHGWRMXU\LQVWUXFWLRQVWKDWDOORZHGFRQYLFWLRQIRUDQ\
³PHDVXUDEOH DPRXQW´ RI GUXJV UDWKHU WKDQ WKH LQGLFWHG
DPRXQW 8QLWHG6WDWHVY0F&XOOLJDQ)G G
&LU KROGLQJ WKDW ZKHUH D MXU\¶V ILQGLQJ ILW WKH
GHILQLWLRQRIRQHFULPHDQGQRWDQRWKHUDQGWKHGHIHQGDQW
DUJXHGWKDWKHVKRXOGEHVHQWHQFHGXQGHUWKHFRUUHFWVWDWXWRU\
PD[LPXP ³LQWRQDWLRQ RI WKH ZRUG μ$SSUHQGL¶ LV
XQQHFHVVDU\´WRSUHVHUYHWKHLVVXHIRUDSSHDO
)XUWKHUPRUH3DJHFDQEHGLVWLQJXLVKHG,Q3DJHZHIRXQG
WKDWGHIHQGDQWVZKRUDLVHGWKHLU$SSUHQGLFKDOOHQJHIRUWKH
ILUVWWLPHRQDSSHDOZHUHHQWLWOHGRQO\WRSODLQHUURUUHYLHZRI
WKHLUFODLPV,GDW&RQWUDU\WRWKHGLVVHQW¶VHIIRUWWR
ZUHQFK HYHU\ RXQFH RI LQIHUHQFH IURP WKDW FDVH KRZHYHU
QRWKLQJLQ3DJHLQGLFDWHVZKDWW\SHRIREMHFWLRQLIDQ\
WKHGHIHQGDQWVUHJLVWHUHGLQWKHGLVWULFWFRXUW3DJHPD\KDYH
DGGUHVVHGWKHVWDQGDUGRIUHYLHZDSSOLFDEOHZKHQDSDUW\IDLOV
WRREMHFWLQWKHGLVWULFWFRXUWEXW3DJHRIIHUVQRJXLGDQFHDV
WRZKDWW\SHRIREMHFWLRQLVVXIILFLHQWWRSUHVHUYHDQ$SSUHQGL
FKDOOHQJHRQDSSHDO
1R 8QLWHG6WDWHVY+XPSKUH\
³$SSUHQGL KDV QR DSSOLFDWLRQ KHUH´ DV LW ³GHDOW ZLWK WKH
FRQVLGHUDWLRQRIIDFWVLQVHQWHQFLQJHQKDQFHPHQWEH\RQGWKH
VWDWXWRU\PD[LPXP´ZKLOH³>L@QWKHLQVWDQWFDVHWKHVHQWHQFH
LPSRVHG ZDV EHORZ WKH VWDWXWRU\ PD[LPXP´ 8QLWHG
6WDWHV Y :LOOLDPV )G WK &LU
³>:@KHQDGHIHQGDQWLVVHQWHQFHGWRDWHUPRILPSULVRQPHQW
ZLWKLQWKHVWDWXWRU\PD[LPXPIRUWKHFULPHRIZKLFKKHZDV
FRQYLFWHG$SSUHQGLLVEHVLGHWKHSRLQW´ LQWHUQDOTXRWDWLRQV
DQGFLWDWLRQRPLWWHG 8QLWHG6WDWHVY%DOWDV)G
VW &LU ³7KH UXOH LQ $SSUHQGL RQO\ DSSOLHV LQ
VLWXDWLRQV ZKHUH WKH MXGJHPDGH IDFWXDO GHWHUPLQDWLRQ
LQFUHDVHV WKH PD[LPXP VHQWHQFH EH\RQG WKH VWDWXWRU\
PD[LPXP DQG QRW LQ VLWXDWLRQV ZKHUH WKH 'HIHQGDQW V
SRWHQWLDOH[SRVXUHLVLQFUHDVHGZLWKLQWKHVWDWXWRU\UDQJH´
8QLWHG6WDWHVY:LOOLDPV)G G&LU
³>7@KRXJKWKH'LVWULFW&RXUW¶VILQGLQJUHJDUGLQJWKHDPRXQW
RI GUXJV VXEVWDQWLDOO\ LQFUHDVHG WKH SRVVLEOH VWDWXWRU\
PD[LPXPVHQWHQFHXQGHU86&† E ZHKROGWKDW
$SSUHQGL LV QRW DSSOLFDEOH WR >WKH GHIHQGDQW¶V@ VHQWHQFH
EHFDXVHWKHVHQWHQFHDFWXDOO\LPSRVHGZDVZHOOXQGHUWKH
RULJLQDOVWDWXWRU\PD[LPXPRI\HDUV´ 8QLWHG6WDWHVY
+LVKDZ)G WK&LU ³>$@VORQJDV
WKH GHIHQGDQW¶V VHQWHQFH IDOOV ZLWKLQ WKH PD[LPXP
HVWDEOLVKHG E\ VWDWXWH $SSUHQGL GRHV QRW IRUHFORVH
FRQVLGHUDWLRQ RI GUXJ TXDQWLWLHV EH\RQG WKH RIIHQVH RI
FRQYLFWLRQ´ 8QLWHG6WDWHVY.HLWK)G WK
&LU KROGLQJWKDWEHFDXVHWKHGHIHQGDQW¶V³VHQWHQFHGLG
QRWH[FHHGWKHPD[LPXPVHQWHQFHRIWKLUW\\HDUVXQGHU>
86&@† E & WKHRIIHQVHHVWDEOLVKHGE\WKHMXU\¶V
YHUGLFW LW GRHV QRW UXQ DIRXO RI $SSUHQGL¶V FRQVWLWXWLRQDO
OLPLWDWLRQV´ 8QLWHG6WDWHVY5RJHUV)G
WK &LU ³$SSO\LQJ $SSUHQGL¶V FRQVWLWXWLRQDO
SULQFLSOHWRVHFWLRQFDVHVLWLVFOHDUWKDWWKHSULQFLSOHLV
YLRODWHGLIDGHIHQGDQWLVVHQWHQFHGWRDJUHDWHUVHQWHQFHWKDQ
WKHVWDWXWRU\PD[LPXPEDVHGXSRQWKHTXDQWLW\RIGUXJVLI
VXFKTXDQWLW\LVGHWHUPLQHGE\WKHVHQWHQFLQJMXGJHUDWKHU
WKDQWKHWULDOMXU\´ 8QLWHG6WDWHVY$JXD\R'HOJDGR
)G WK&LU ³7KHUXOHRI$SSUHQGLRQO\
DSSOLHVZKHUHWKHQRQMXU\IDFWXDOGHWHUPLQDWLRQLQFUHDVHVWKH

-- 32 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
PDMRULW\¶V VWDQGDUG E\ HVWDEOLVKLQJ DQ HOHYDWHG VWDWXWRU\
PD[LPXP IRU D FROOHFWLRQ RI SUHYLRXVO\ VHSDUDWH DQG
VHSDUDWHO\SXQLVKDEOH RIIHQVHVDQGWKHQGHILQLQJDYDULHW\RI
VHQWHQFLQJIDFWRUVIRXQGE\WKHMXGJHE\DSUHSRQGHUDQFHRI
WKH HYLGHQFH WKDW ZRXOG PRUH VSHFLILFDOO\ GHWHUPLQH D
GHIHQGDQW¶V VHQWHQFH ZLWKLQ WKLV H[SDQGHG VWDWXWRU\ UDQJH
6HH86DW6&WDW 2¶&RQQRU-
FRQFXUULQJ 7HOOLQJO\WKH&RXUWGLGQRWGHQ\WKDWVXFKD
VFKHPH ZRXOG SDVV FRQVWLWXWLRQDO PXVWHU EXW LQVWHDG
FRQFHGHG WKDW ³D 6WDWH FRXOG K\SRWKHWLFDOO\ XQGHUWDNH WR
UHYLVH LWV HQWLUH FULPLQDO FRGH LQ WKH PDQQHU WKH GLVVHQW
VXJJHVWV²H[WHQGLQJDOOVWDWXWRU\PD[LPXPVHQWHQFHVWRIRU
H[DPSOH\HDUVDQGJLYLQJMXGJHVJXLGHGGLVFUHWLRQDVWR
DIHZVSHFLDOO\VHOHFWHGIDFWRUVZLWKLQWKDWUDQJH´86
DWQ6&WDWQ1HYHUWKHOHVVWKH&RXUW
GLVPLVVHG WKLV SRVVLELOLW\ DV ³UHPRWH´ EHFDXVH ³>D@PRQJ
RWKHU UHDVRQV VWUXFWXUDO GHPRFUDWLF FRQVWUDLQWV H[LVW WR
GLVFRXUDJH OHJLVODWXUHV IURP HQDFWLQJ SHQDO VWDWXWHV WKDW
H[SRVHHYHU\GHIHQGDQWFRQYLFWHGRIIRUH[DPSOHZHDSRQV
SRVVHVVLRQWRDPD[LPXPVHQWHQFHH[FHHGLQJWKDWZKLFKLV
LQWKHOHJLVODWXUH¶VMXGJPHQWJHQHUDOO\ SURSRUWLRQDOWRWKH
FULPH´86DWQ6&WDWQ
$OORIWKLVLVFRPSHOOLQJHYLGHQFHWKDWWKHUXOHRI$SSUHQGL
LPSOLFDWHV RQO\ VHQWHQFLQJ PD[LPXPV DQG QRW VHQWHQFLQJ
UDQJHVJHQHUDOO\)XUWKHUDVQRWHGHDFKDQGHYHU\RQHRIRXU
VLVWHU&LUFXLWVWKDWKDVDGGUHVVHGWKHTXHVWLRQ²LQDOOWHQRI
WKHHOHYHQRWKHU&LUFXLWV²KDVDUULYHGDWWKLVFRQFOXVLRQ
6HH8QLWHG6WDWHVY+DUULV)G WK&LU
³:KLOHWKH6XSUHPH&RXUWPD\FHUWDLQO\RYHUUXOH0F0LOODQ
LQWKHIXWXUHDQGDSSO\$SSUHQGLWRDQ\IDFWRUWKDWLQFUHDVHV
WKHPLQLPXPVHQWHQFHRU³UDQJH´RISXQLVKPHQWUDWKHUWKDQ
RQO\ WKH PD[LPXP SXQLVKPHQW WKDW LV QRW RXU UROH´
FLWDWLRQVRPLWWHG 8QLWHG6WDWHVY:KLWH)G
G&LU ³>:@HUHDG>$SSUHQGL@WRDSSO\RQO\ZKHQD
VHQWHQFLQJFRXUW¶VILQGLQJVLQFUHDVHWKHSHQDOW\IDFHGE\WKH
GHIHQGDQWDERYHWKHVWDWXWRU\PD[LPXPIRUDJLYHQFRXQW
DQG QRW ZKHQ WKH\ PHUHO\ DIIHFW WKH OHQJWK RI D VHQWHQFH
ZLWKLQ WKH VWDWXWRU\ UDQJH´ 8QLWHG 6WDWHV Y *DUFLD
6DQFKH])G WK&LU ILQGLQJWKDW
1R 8QLWHG6WDWHVY+XPSKUH\
WKLV LQFOXVLR DUJXPHQW %XW DV WKH 'LVWULFW RI &ROXPELD &LUFXLW KDV
ZLVHO\ QRWHG ³>W@KH PD[LP¶V IRUFH LQ SDUWLFXODU VLWXDWLRQV GHSHQGV
HQWLUHO\ RQ FRQWH[W ZKHWKHU RU QRW WKH GUDIWVPHQ¶V PHQWLRQ RI RQH WKLQJ
GRHV UHDOO\ QHFHVVDULO\ RU DW OHDVW UHDVRQDEO\ LPSO\ WKH SUHFOXVLRQ RI
DOWHUQDWLYHV´ 6KRRN Y '& )LQ 5HVSRQVLELOLW\ 0JPW $VVLVWDQFH
$XWK )G '& &LU *LYHQ WKDW WKH UHFRUG LQ 3DJH
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
LQWHUSUHWLQJ ZH GR QRW DJUHH WKDW LW LV UHDVRQDEOH WR DVVXPH WKDW WKH 3DJH
FRXUW LQWHQGHG WR QDUURZ VR VHYHUHO\ WKH IRUP RI D FRJQL]DEOH $SSUHQGL
REMHFWLRQ
7KH GLVVHQW¶V UHOLDQFH RQ -RKQVRQ Y 8QLWHG 6WDWHV LV HUURQHRXV IRU
D VLPLODU UHDVRQ -RKQVRQ GLG QRW LQGLFDWH ZKHWKHU WKH GHIHQGDQW UDLVHG
DQ REMHFWLRQ LQ WKH GLVWULFW FRXUW -RKQVRQ RQO\ QRWHV WKDW WKH GHIHQGDQW
KHUVHOI LQVLVWHG WKDW WKH GLVWULFW FRXUW FRPPLW WKH HUURU 86 DW
0RUHRYHU -RKQVRQ FDQ EH GLVWLQJXLVKHG IURP WKH SUHVHQW FDVH
EHFDXVH +XPSKUH\ FOHDUO\ REMHFWHG WR WKH HYLGHQWLDU\ VWDQGDUG WR EH XVHG
D OHJDO HQWLWOHPHQW VHSDUDWH IURP WKH ULJKW WR D MXU\ &I 5HEPDQQ
)G DW
,QGHHGWKHILUVWVXFKFDVHLQRXU&LUFXLWWRDGGUHVVZKHWKHU
DQREMHFWLRQWRWKHTXDQWLW\RIGUXJVDWWULEXWHGWRDGHIHQGDQW
LVVXIILFLHQWWRSUHVHUYHWKH$SSUHQGLHUURULVRXURSLQLRQLQ
6WUD\KRUQZKLFKKHOGWKDWLWZDVVXIILFLHQW6HH6WUD\KRUQ
)GDW7KHGLVVHQWLVFRUUHFWWKDWVHYHUDORIRXU
VLVWHUFLUFXLWVKDYHDGRSWHGDGLIIHUHQWDSSURDFKDQGKDYH
KHOGWKDWIDFWXDOFKDOOHQJHVWRWKHFDOFXODWLRQRIGUXJDPRXQWV
LQWKHGLVWULFWFRXUWE\LWVHOIPD\EHLQVXIILFLHQWWRSUHVHUYH
WKH $SSUHQGL LVVXH RQ DSSHDO 6HH HJ 8QLWHG 6WDWHV Y
&DQGHODULR)G WK&LU VWDWLQJ
WKDW³>D@GHIHQGDQW¶VREMHFWLRQWRWKHTXDQWLW\RIGUXJVWKDW
WKH *RYHUQPHQW DWWULEXWHV WR KLP LV QRW RQ LWV RZQ D
FRQVWLWXWLRQDO REMHFWLRQ´ FHUW GHQLHG 6&W
+RZHYHULWLVE\QRPHDQVFOHDUWKDWWKLVUDWLRQDOHLV
FRQVLVWHQWO\DSSOLHG6HH8QLWHG6WDWHVY9D]TXH])G
G&LU DSSO\LQJSODLQHUURUUHYLHZEHFDXVHWKH
GHIHQGDQWGLGQRW³FRQWHVWWKHGUXJTXDQWLW\HYLGHQFHDWDQ\
VWDJHRIWKHSURFHHGLQJV´ HPSKDVLVDGGHG
,Q DQ\ HYHQW QRWZLWKVWDQGLQJ WKH ELQGLQJ HIIHFW RI
6WUD\KRUQ HYHQ XQGHUDPRUHULJRURXVUHTXLUHPHQWIRUDQ
REMHFWLRQLWLVSODLQWKDW+XPSKUH\SUHVHUYHGWKH$SSUHQGL

-- 33 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
HUURULQWKHGLVWULFWFRXUW6HH&DQGHODULR)GDW
LQGLFDWLQJWKDWDGHIHQGDQWZKRREMHFWVWRWKHSUHSRQGHUDQFH
RIHYLGHQFHVWDQGDUGIRUGUXJTXDQWLW\FDOFXODWLRQVSUHVHUYHV
WKH $SSUHQGL FKDOOHQJH IRU DSSHDO FI 8QLWHG 6WDWHV Y
%XFNODQG )G WK &LU DSSO\LQJ
SODLQHUURUEHFDXVHWKHGHIHQGDQWGLGQRWREMHFWWRWKHGLVWULFW
FRXUW¶VXVHRIWKHSUHSRQGHUDQFHRIWKHHYLGHQFHVWDQGDUGIRU
GHWHUPLQLQJGUXJTXDQWLW\
+DYLQJGHWHUPLQHGWKDWGHQRYRUHYLHZJRYHUQVWKLVDSSHDO
ZHSURFHHGWRWKHPHULWVRIWKHFKDOOHQJH
$QDO\VLV
+XPSKUH\DUJXHVWKDWWKHTXDQWLW\RIGUXJVDWWULEXWDEOHWR
KLP DV UHOHYDQW FRQGXFW LV DQ HOHPHQW RI WKH RIIHQVH WKDW
VKRXOG SURSHUO\ KDYH EHHQ VXEPLWWHG WR WKH MXU\ IRU
GHWHUPLQDWLRQEH\RQGDUHDVRQDEOHGRXEW7KHIDLOXUHRIWKH
MXU\WRPDNHVXFKDILQGLQJKHVXEPLWVYLRODWHGWKH6XSUHPH
&RXUW¶VGHFLVLRQLQ$SSUHQGLDQGUHTXLUHVUHVHQWHQFLQJ7KH
FRQVHTXHQFHRIWKLVDOOHJHGYLRODWLRQ+XPSKUH\PDLQWDLQV
LVWKDWKHZDVVXEMHFWHGWRDQLQFUHDVHGSHQDOW\IRUFRQGXFW
QRW FKDUJHG LQ WKH LQGLFWPHQW EDVHG RQ WKH GLVWULFW FRXUW¶V
ILQGLQJ E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW KH ZDV
UHVSRQVLEOH IRU NLORJUDPV RI FRFDLQH $W RUDO
DUJXPHQWWKH*RYHUQPHQWFRQFHGHGWKDWWKHGLVWULFWFRXUW¶V
VHQWHQFLQJRI+XPSKUH\RIIHQGHG$SSUHQGLDVFRQVWUXHGE\
RXUGHFLVLRQLQ8QLWHG6WDWHVY5DPLUH])G WK
&LU $VRXUGLVFXVVLRQEHORZUHYHDOVZHWRRFRQFOXGH
WKDW+XPSKUH\KDVGHPRQVWUDWHGDQ$SSUHQGLYLRODWLRQWKDW
UHTXLUHVXVWRYDFDWHKLVVHQWHQFHDQGUHPDQGWKLVFDVHIRU
UHVHQWHQFLQJ
7KH6XSUHPH&RXUWLQ$SSUHQGLKHOGWKDW³>R@WKHUWKDQWKH
IDFWRIDSULRUFRQYLFWLRQDQ\IDFWWKDWLQFUHDVHVWKHSHQDOW\
IRUDFULPHEH\RQGWKHSUHVFULEHGVWDWXWRU\PD[LPXPPXVWEH
VXEPLWWHGWRDMXU\DQGSURYHGEH\RQGDUHDVRQDEOHGRXEW´
86DW$OWKRXJK+XPSKUH\ZDVLQGLFWHGIRUDQG
FRQYLFWHGRIYLRODWLRQVRI86&† D DQG†
E $ WKHMXU\¶VIDLOXUHWRGHWHUPLQHEH\RQGDUHDVRQDEOH
GRXEWWKHTXDQWLW\RIGUXJVIRUZKLFK+XPSKUH\VKRXOGEH
1R 8QLWHG6WDWHVY+XPSKUH\
1RGRXEWDGHIHQGDQWFRXOGXQGHUVXFKDVFKHPHILQG
KLPVHOIVHQWHQFHGWRWKHVDPHWHUPWRZKLFKKHFRXOG
KDYH EHHQ VHQWHQFHG DEVHQW WKH PDQGDWRU\ PLQLPXP
7KH UDQJH IRU KLV XQGHUO\LQJ FULPH FRXOG EH WR
\HDUVZLWKWKHPDQGDWRU\PLQLPXPRI\HDUVDQGKH
FRXOGEHVHQWHQFHGWR 2IFRXUVHDVLPLODUVFHQDULRLV
SRVVLEOHZLWKDQLQFUHDVHGPD[LPXP %XWLWLVHTXDOO\
WUXH WKDW KLV H[SHFWHG SXQLVKPHQW KDV LQFUHDVHG DV D
UHVXOWRIWKHQDUURZHGUDQJHDQGWKDWWKHSURVHFXWLRQLV
HPSRZHUHG E\ LQYRNLQJ WKH PDQGDWRU\ PLQLPXP WR
UHTXLUHWKHMXGJHWRLPSRVHDKLJKHUSXQLVKPHQWWKDQKH
PLJKW ZLVK 7KH PDQGDWRU\ PLQLPXP HQWLWOHV WKH
JRYHUQPHQWWRPRUHWKDQLWZRXOGRWKHUZLVHEHHQWLWOHG
WR \HDUV UDWKHU WKDQ WR DQG WKH ULVN RI D
VHQWHQFH EHORZ 7KXV WKH IDFW WULJJHULQJ WKH
PDQGDWRU\PLQLPXPLVSDUWRIWKHSXQLVKPHQWVRXJKWWR
EHLQIOLFWHGLWXQGRXEWHGO\HQWHUVLQWRWKHSXQLVKPHQWVR
DVWRDJJUDYDWHLWDQGLVDQDFWWRZKLFKWKHODZDIIL[HV
SXQLVKPHQW)XUWKHULWLVOLNHO\WKDWWKHFKDQJHLQ
WKH UDQJH DYDLODEOH WR WKH MXGJH DIIHFWV KLV FKRLFH RI
VHQWHQFH )LQDOO\ LQ QXPHURXV FDVHV WKH
DJJUDYDWLQJIDFWUDLVHGWKHZKROHUDQJH²ERWKWKHWRS
DQGERWWRP7KRVHFRXUWVLQKROGLQJWKDWVXFKDIDFWZDV
DQHOHPHQWGLGQRWERWKHUZLWKDQ\GLVWLQFWLRQEHWZHHQ
FKDQJHV LQ WKH PD[LPXP DQG WKH PLQLPXP :KDW
PDWWHUHG ZDV VLPSO\ WKH RYHUDOO LQFUHDVH LQ WKH
SXQLVKPHQWSURYLGHGE\ODZ
86 DW 6 &W DW
7KRPDV-FRQFXUULQJ LQWHUQDOTXRWDWLRQVZLWKDOWHUDWLRQV
DQGFLWDWLRQVRPLWWHG 3ODLQO\-XVWLFH7KRPDVZRXOGQRW
KDYH GHHPHG LW QHFHVVDU\ WR DGYRFDWH D ³EURDGHU UXOH´
HQFRPSDVVLQJ ZKROH VHQWHQFLQJ UDQJHV DQG QRW MXVW
PD[LPXPV LI WKH PDMRULW\ KDG DOUHDG\ DGRSWHG VXFK D
VWDQGDUG
$SSUHQGL¶V OLPLWDWLRQ WR VWDWXWRU\ PD[LPXPV LV IXUWKHU
FRQILUPHGE\WKHPDMRULW\¶VUHVSRQVHWR-XVWLFH2¶&RQQRU¶V
VXJJHVWLRQ WKDW LWV KROGLQJ ³UHVWV RQ D PHDQLQJOHVV
IRUPDOLVP´VLQFHDOHJLVODWXUHVHHPLQJO\FRXOGVDWLVI\WKH

-- 34 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
VHQWHQFHZKLFKPD\EHLPSRVHGZLWKLQWKHVWDWXWRU\SODQ´
86DW6&WDW IRRWQRWHRPLWWHG
-XVWLFH2¶&RQQRULQVLVWHGLQKHU$SSUHQGLGLVVHQWWKDW³LW
LVLQFXPEHQWRQWKH&RXUWWRDGPLWWKDWLWLVRYHUUXOLQJ
0F0LOODQ´$SSUHQGL86DW6&WDW
2¶&RQQRU - GLVVHQWLQJ ,Q UHVSRQVH WKH $SSUHQGL
PDMRULW\HPSKDVL]HGWKDW³>Z@HGRQRWRYHUUXOH0F0LOODQ´
86DWQ6&WDWQ5DWKHUWKH
&RXUWVWDWHGWKDW³>Z@HOLPLW>0F0LOODQ¶V@KROGLQJWRFDVHV
WKDWGRQRWLQYROYHWKHLPSRVLWLRQRIDVHQWHQFHPRUHVHYHUH
WKDQWKHVWDWXWRU\PD[LPXPIRUWKHRIIHQVHHVWDEOLVKHGE\WKH
MXU\¶V YHUGLFW ² D OLPLWDWLRQ LGHQWLILHG LQ WKH 0F0LOODQ
RSLQLRQLWVHOI´86DWQ6&WDWQ
7KXV$SSUHQGLDQG0F0LOODQUHDGLQWDQGHPSODLQO\ZRXOG
SHUPLWDVHQWHQFLQJMXGJHWRILQGE\DSUHSRQGHUDQFHRIWKH
HYLGHQFHIDFWVZKLFKLQFUHDVHWKHPLQLPXPSHQDOW\IDFHGE\
DGHIHQGDQWVRORQJDVWKHMXGJH¶VILQGLQJVGRQRWOHDGWRWKH
LPSRVLWLRQRIDVHQWHQFHEH\RQGWKHVWDWXWRU\PD[LPXPIRU
WKH RIIHQVH HVWDEOLVKHG E\ WKH MXU\¶V YHUGLFW DORQH 7KLV
FRPSOHWHO\EHOLHVWKHEURDG³DOWHUWKHUDQJH´LQWHUSUHWDWLRQRI
WKHUXOHRI$SSUHQGL
7KHUHDUHRWKHULQGLFDWLRQVZLWKLQ$SSUHQGLLWVHOIWKDWWKH
PDMRULW\GLGQRWDGRSWVXFKDVZHHSLQJUXOH)RUH[DPSOH
-XVWLFH7KRPDV¶VFRQFXUUHQFHGRHVHQGRUVHVRPHWKLQJDNLQ
WRWKH³DOWHUWKHUDQJH´VWDQGDUGLQOLJKWRIKLV³YLHZWKDWWKH
&RQVWLWXWLRQUHTXLUHVDEURDGHUUXOHWKDQWKH&RXUWDGRSWV´
86DW6&WDW 7KRPDV-FRQFXUULQJ
6SHFLILFDOO\-XVWLFH7KRPDVRSLQHGWKDW³DμFULPH¶LQFOXGHV
HYHU\IDFWWKDWLVE\ODZDEDVLVIRULPSRVLQJRULQFUHDVLQJ
SXQLVKPHQW LQ FRQWUDVW ZLWK D IDFW WKDW PLWLJDWHV
SXQLVKPHQW ´86DW6&WDW 7KRPDV
-FRQFXUULQJ -XVWLFH7KRPDVREVHUYHGWKDWWKHHIIHFWRIKLV
SURSRVHG UXOH XSRQ WKH FRQWLQXLQJ YLWDOLW\ RI 0F0LOODQ
³VKRXOGEHSODLQHQRXJK´EXWKHWKHQZHQWRQWRH[SODLQWKDW
WKLVUXOHZRXOGUHDFKDQGLQYDOLGDWH³WKH0F0LOODQVLWXDWLRQ
RI D PDQGDWRU\ PLQLPXP VHQWHQFH´ EDVHG XSRQ D MXGJH¶V
ILQGLQJVE\DSUHSRQGHUDQFHRIWKHHYLGHQFH
1R 8QLWHG6WDWHVY+XPSKUH\
KHOGUHVSRQVLEOHSURSHUO\UHTXLUHGKLPWREHVHQWHQFHGRQO\
XQGHU86&† E & 6HH5DPLUH])GDW
6HFWLRQ E & SURYLGHVIRUDPD[LPXPSHQDOW\
RIWZHQW\\HDUVH[FHSWZKHUHDVKHUHDGHIHQGDQWKDVDSULRU
IHORQ\GUXJFRQYLFWLRQLQZKLFKFDVHDGHIHQGDQWLVVXEMHFW
WR D WKLUW\\HDU PD[LPXP VWDWXWRU\ SHQDOW\ %HFDXVH WKH
GLVWULFWFRXUW¶VWZHQW\\HDUVHQWHQFHGLGQRWH[FHHGWKHWKLUW\
\HDU PD[LPXP VWDWXWRU\ SHQDOW\ RQ WKLV EDVLV DORQH
+XPSKUH\FDQVWDWHQRHUURU
2XU $SSUHQGL DQDO\VLV KRZHYHU GRHV QRW HQG ZLWK D
ILQGLQJ WKDW +XPSKUH\¶V VHQWHQFH GLG QRW H[FHHG WKH
SUHVFULEHGVWDWXWRU\PD[LPXPSHQDOW\DVDGHIHQGDQWPD\
QHYHUWKHOHVV VWDWH DQ $SSUHQGL YLRODWLRQ ZKHUH KH FDQ
GHPRQVWUDWH WKDW WKH GLVWULFW FRXUW¶V IDFWXDO GHWHUPLQDWLRQ
UHVXOWHG LQ DQ LQFUHDVH RI WKH UDQJH RI VWDWXWRU\ SHQDOWLHV
DSSOLFDEOHWRWKHGHIHQGDQWIRUSXUSRVHVRIVHQWHQFLQJ&I
$SSUHQGL 86 DW ³>,@W LV XQFRQVWLWXWLRQDO IRU D
OHJLVODWXUHWRUHPRYHIURPWKHMXU\WKHDVVHVVPHQWRIIDFWV
WKDW LQFUHDVH WKH SUHVFULEHG UDQJH RI SHQDOWLHV WR ZKLFK D
FULPLQDOGHIHQGDQWLVH[SRVHG´ FLWDWLRQRPLWWHG :HKDYH
UHFRJQL]HGWKDWVXFKDYLRODWLRQPD\EHVWDWHGZKHQDGLVWULFW
FRXUW¶VGUXJTXDQWLW\GHWHUPLQDWLRQVXEMHFWVDGHIHQGDQWWRD
PDQGDWRU\PLQLPXPWHUPRILPSULVRQPHQWZKLFKZRXOGQRW
KDYHEHHQWULJJHUHGEXWIRUWKHGLVWULFWFRXUW¶VILQGLQJV
,Q 8QLWHG 6WDWHV Y )ORZDO ZH YDFDWHG WKH GHIHQGDQW¶V
PDQGDWRU\ VHQWHQFH RI OLIH LPSULVRQPHQW ZLWKRXW WKH
SRVVLELOLW\RISDUROHDQGUHPDQGHGIRUUHVHQWHQFLQJZKHUHWKH
GLVWULFW FRXUW¶V GUXJ TXDQWLW\ ILQGLQJ DORQH UHQGHUHG WKH
GHIHQGDQWLQHOLJLEOHIRUDQRQPDQGDWRU\PLQLPXPVHQWHQFH
REVHUYLQJWKDW
7KLVGLIIHUHQFH>EHWZHHQSRVVLEOHSHQDOWLHV@LVVLJQLILFDQW
LQWKLVFDVHEHFDXVHWKHWULDOMXGJH¶VGHWHUPLQDWLRQRIWKH
ZHLJKWRIWKHGUXJVWRRNDZD\DQ\GLVFUHWLRQLQWHUPVRI
LPSRVLQJ D VKRUWHU VHQWHQFH ,W LV QRW D IRUHJRQH
FRQFOXVLRQ WKDW WKH WULDO MXGJH ZRXOG KDYH VHQWHQFHG
)ORZDOWROLIHZLWKRXWWKHSRVVLELOLW\RIUHOHDVHLIDMXU\
KDGGHWHUPLQHGWKHGUXJVZHLJKHGNLORJUDPV,Q

-- 35 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
IDFWLIWKHMXU\KDGGHWHUPLQHGWKDWWKHGUXJVZHLJKHG
OHVVWKDQJUDPVDOLIHVHQWHQFHZRXOGQRWKDYHHYHQ
EHHQ DQ RSWLRQ XQGHU 86& † E & 7KH
MXGJH¶V GHWHUPLQDWLRQ HIIHFWLYHO\ OLPLWHG WKH UDQJH RI
DSSOLFDEOH SHQDOWLHV DQG GHSULYHG )ORZDO RI WKH
RSSRUWXQLW\ WR UHFHLYH OHVV WKDQ OLIH LPSULVRQPHQW
ZLWKRXWWKHSRVVLELOLW\RIUHOHDVH
)G WK&LU
/LNHZLVHLQ5DPLUH]ZHYDFDWHGWKHGHIHQGDQW¶VWZHQW\
\HDUPDQGDWRU\VHQWHQFHXQGHU† E $ DQGUHPDQGHG
KLV FDVH IRU UHVHQWHQFLQJ ZKHUH WKH DSSOLFDEOH VWDWXWRU\
SHQDOW\ ZDV GHWHUPLQHG H[FOXVLYHO\ E\ WKH GLVWULFW FRXUW¶V
GUXJTXDQWLW\ILQGLQJ7KHUHZHREVHUYHGWKDW³>D@JJUDYDWLQJ
IDFWRUVRWKHUWKDQDSULRUFRQYLFWLRQWKDWLQFUHDVHWKHSHQDOW\
IURP D QRQPDQGDWRU\ PLQLPXP VHQWHQFH WR D PDQGDWRU\
PLQLPXPVHQWHQFHRUIURPDOHVVHUWRDJUHDWHUPLQLPXP
VHQWHQFHDUHQRZHOHPHQWVRIWKHFULPHWREHFKDUJHGDQG
SURYHG´5DPLUH])GDW7KHIDLOXUHRIWKHMXU\
WRGHWHUPLQHEH\RQGDUHDVRQDEOHGRXEWWKHTXDQWLW\RIGUXJV
IRU ZKLFK 5DPLUH] ZDV FULPLQDOO\ UHVSRQVLEOH ZKHUH WKH
*RYHUQPHQWKDGQHLWKHUFKDUJHGQRUVRXJKWWRSURYHWRWKH
MXU\ D GUXJ TXDQWLW\ VXIILFLHQW WR WULJJHU D PDQGDWRU\
PLQLPXP VHQWHQFH ZH FRQFOXGHG UHTXLUHG KLP WR EH
VHQWHQFHGXQGHU† E &
,Q 8QLWHG 6WDWHV Y 6WUD\KRUQ ZH DJDLQ YDFDWHG D
GHIHQGDQW¶VVHQWHQFHDQGUHPDQGHGKLVFDVHIRUUHVHQWHQFLQJ
DIWHUDGLVWULFWFRXUW¶VDWWULEXWLRQRISRXQGVRIPDULMXDQD
WRWKHGHIHQGDQWUHVXOWHGLQDWHQ\HDUPDQGDWRU\PLQLPXP
VHQWHQFHXQGHU† E % 6LJQLILFDQWWRWKLVFDVHWKH
LQGLFWPHQW LQ 6WUD\KRUQ OLNH WKRVH DW LVVXH LQ )ORZDO DQG
5DPLUH]IDLOHGWRVSHFLI\WKHTXDQWLW\RIGUXJVIRUZKLFKWKH
*RYHUQPHQW VRXJKW WR KROG WKH GHIHQGDQW FULPLQDOO\
UHVSRQVLEOH ,Q VHWWLQJ DVLGH 6WUD\KRUQ¶V VHQWHQFH ZH
REVHUYHGWKDW
8QGHU5DPLUH]LIWKHJRYHUQPHQWVHHNVWRFRQYLFWDQG
VHQWHQFH6WUD\KRUQXQGHU† E % IRUFRQVSLUDF\
WRSRVVHVVPRUHWKDQNLORJUDPVRIPDULMXDQDLWPXVW
1R 8QLWHG6WDWHVY+XPSKUH\
SURYHG EH\RQG D UHDVRQDEOH GRXEW RQO\ LI WKDW IDFW DV D
IRUPDOPDWWHUH[WHQGVWKHUDQJHRISXQLVKPHQWEH\RQGWKH
SUHVFULEHG VWDWXWRU\ PD[LPXP´ RU LL ³WKH &RQVWLWXWLRQ
UHTXLUHVWKDWDIDFWEHVXEPLWWHGWRDMXU\DQGSURYHGEH\RQG
D UHDVRQDEOH GRXEW LI LW DV D IRUPDO PDWWHU LQFUHDVHV WKH
UDQJH RI SXQLVKPHQW EH\RQG WKDW ZKLFK FRXOG OHJDOO\ EH
LPSRVHGDEVHQWWKDWIDFW´86DW6&WDW
2¶&RQQRU - GLVVHQWLQJ )LQDOO\ WKH &RXUW¶V
LQLWLDO VWDWHPHQW RI LWV KROGLQJ FRXOG EH FRQVWUXHG DV D
FRQVWLWXWLRQDOFRPPDQGWKDWDGHIHQGDQW¶VDFWXDOVHQWHQFH
QRWH[FHHGWKHSUHVFULEHGVWDWXWRU\PD[LPXPIRUWKHRIIHQVH
HVWDEOLVKHGE\WKHMXU\¶VYHUGLFW
:KLOHDOORIWKHVHUHDGLQJV DQGSHUKDSVPRUH HQMR\VRPH
GHJUHHRIVXSSRUWLQWKHEUXWHWH[WRIWKH$SSUHQGLGHFLVLRQ
WKHUH LV DPSOH UHDVRQ WR UHMHFW WKH EURDGHVW RI WKHVH
LQWHUSUHWDWLRQV ² LH WKDW IDFWV ZKLFK DOWHU WKH UDQJH RI
SHQDOWLHVPXVWEHSURYHGWRDMXU\EH\RQGDUHDVRQDEOHGRXEW
0RVWVLJQLILFDQWO\ZHNQRZWKDWWKH6XSUHPH&RXUWGLGQRW
LQWHQGWKLVUHVXOWLQ$SSUHQGLEHFDXVHLWH[SUHVVO\GHFOLQHG
WRRYHUWXUQDSULRUGHFLVLRQ0F0LOODQY3HQQV\OYDQLD
866&W ZKLFKLVGLDPHWULFDOO\DW
RGGVZLWKWKLVH[SDQVLYHUHDGLQJ,Q0F0LOODQWKH&RXUW
UHMHFWHG GXH SURFHVV DQG 6L[WK $PHQGPHQW FKDOOHQJHV WR
3HQQV\OYDQLD¶V0DQGDWRU\0LQLPXP6HQWHQFLQJ$FWXQGHU
ZKLFK³DQ\RQHFRQYLFWHGRIFHUWDLQHQXPHUDWHGIHORQLHVLV
VXEMHFW WR D PDQGDWRU\ PLQLPXP VHQWHQFH RI ILYH \HDUV¶
LPSULVRQPHQW LI WKH VHQWHQFLQJ MXGJH ILQGV E\ D
SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW WKH SHUVRQ μYLVLEO\
SRVVHVVHGDILUHDUP¶GXULQJWKHFRPPLVVLRQRIWKHRIIHQVH´
0F0LOODQ86DW6&WDW,QVRUXOLQJ
WKH &RXUW REVHUYHG WKDW HDFK RI WKH HQXPHUDWHG IHORQ\
RIIHQVHVFDUULHGDPD[LPXPVHQWHQFHRIDWOHDVW\HDUVDQG
WKDW WKH PDQGDWRU\ PLQLPXP VWDWXWH GLG QRW DOWHU WKHVH
PD[LPXPSHQDOWLHV86DW6&WDW
,QVWHDGWKH3HQQV\OYDQLDODZ³RSHUDWH>G@VROHO\WROLPLWWKH
VHQWHQFLQJFRXUW¶VGLVFUHWLRQLQVHOHFWLQJDSHQDOW\ZLWKLQWKH
UDQJHDOUHDG\DYDLODEOHWRLWZLWKRXWWKHVSHFLDOILQGLQJRI
YLVLEOHSRVVHVVLRQRIDILUHDUP´DQG³μXS>SHG@WKHDQWH¶IRU
WKH GHIHQGDQW RQO\ E\ UDLVLQJ WR ILYH \HDUV WKH PLQLPXP

-- 36 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
UXOHVIRUWKHFRQGXFWRIFULPLQDOSURVHFXWLRQV,ZLOOGLVFXVV
HDFKRIWKHVHSRLQWVLQWXUQ
)LUVW LW XQIRUWXQDWHO\ LV WUXH WKDW $SSUHQGL¶V FHQWUDO
³KROGLQJ´ LV VWDWHG LQ GLIIHUHQW ZD\V ,QGHHG WKH YHU\
SDUDJUDSK LQ ZKLFK WKH PDMRULW\ DQQRXQFHV LWV FRQFOXVLRQ
LQFOXGHVWZRYDULDQWVRI³WKHUXOH´RI$SSUHQGL
,QVXPRXUUHH[DPLQDWLRQRIRXUFDVHVLQWKLVDUHDDQG
RIWKHKLVWRU\XSRQZKLFKWKH\UHO\FRQILUPVWKHRSLQLRQ
WKDWZHH[SUHVVHGLQ-RQHV>Y8QLWHG6WDWHV86
6&W @2WKHUWKDQWKHIDFWRID
SULRUFRQYLFWLRQDQ\IDFWWKDWLQFUHDVHVWKHSHQDOW\IRUD
FULPHEH\RQGWKHSUHVFULEHGVWDWXWRU\PD[LPXPPXVWEH
VXEPLWWHG WR D MXU\ DQG SURYHG EH\RQG D UHDVRQDEOH
GRXEW:LWKWKDWH[FHSWLRQZHHQGRUVHWKHVWDWHPHQWRI
WKHUXOHVHWIRUWKLQWKHFRQFXUULQJRSLQLRQVLQWKDWFDVH
³>,@WLVXQFRQVWLWXWLRQDOIRUDOHJLVODWXUHWRUHPRYHIURP
WKH MXU\ WKH DVVHVVPHQW RI IDFWV WKDW LQFUHDVH WKH
SUHVFULEHG UDQJH RI SHQDOWLHV WR ZKLFK D FULPLQDO
GHIHQGDQWLVH[SRVHG,WLVHTXDOO\FOHDUWKDWVXFKIDFWV
PXVWEHHVWDEOLVKHGE\SURRIEH\RQGDUHDVRQDEOHGRXEW´
86 DW 6&W RSLQLRQ RI
6WHYHQV- VHHDOVRLGDW6&W RSLQLRQ
RI6FDOLD-
$SSUHQGL86DW6&WDW IRRWQRWH
RPLWWHG
$V REVHUYHG LQ -XVWLFH 2¶&RQQRU¶V GLVVHQW WKHVH WZR
IRUPXODWLRQVVHHPWRHPEUDFHDYDULHW\RIGLIIHUHQW³UXOHV´
)LUVWE\HQGRUVLQJWKHVWDWHPHQWVLQWKHFRQFXUULQJRSLQLRQV
LQ -RQHV ³WKH &RXUW DSSHDUV WR KROG WKDW DQ\ IDFW WKDW
LQFUHDVHVRUDOWHUVWKHUDQJHRISHQDOWLHVWRZKLFKDGHIHQGDQW
LVH[SRVHG²ZKLFKE\GHILQLWLRQPXVWLQFOXGHLQFUHDVHVRU
DOWHUDWLRQVWRHLWKHUWKHPLQLPXPRUPD[LPXPSHQDOWLHV²
PXVWEHSURYHGWRDMXU\EH\RQGDUHDVRQDEOHGRXEW´
86DW6&WDW 2¶&RQQRU-GLVVHQWLQJ
-XVWLFH 2¶&RQQRU WKHQ VXJJHVWV WZR IXUWKHU ³SODXVLEOH
LQWHUSUHWDWLRQV´ RI WKH PDMRULW\¶V KROGLQJ L ³WKH
&RQVWLWXWLRQUHTXLUHVWKDWDIDFWEHVXEPLWWHGWRDMXU\DQG
1R 8QLWHG6WDWHVY+XPSKUH\
7KH UHFRUG UHDGV DV IROORZV
7+( &2857 7KLV &RXUW GRHV LQ IDFW DFFHSW WKH
ILQGLQJV DQG JXLGHOLQH DSSOLFDWLRQV FRQWDLQHG LQ WKH
SUHVHQWHQFH LQYHVWLJDWLRQ UHSRUW ZLWK WKH H[FHSWLRQ
WKDW WKLV &RXUW ZLOO QRW DIIRUG D WZROHYHO HQKDQFHPHQW
IRU WKH JXQ 7KHUHIRUH ZH DUH ORRNLQJ DW D FULPLQDO
KLVWRU\ FDWHJRU\ RI D WRWDO RIIHQVH OHYHO RI ZKLFK
DFFRUGLQJ WR WKH JXLGHOLQH LPSULVRQPHQW UDQJH ZH¶UH
ORRNLQJ DW WR PRQWKV +RZHYHU ZH DUH LQ IDFW
ORRNLQJ DW D PDQGDWRU\ PLQLPXP RI PRQWKV
-$ DW
LQGLFWKLPDSSURSULDWHO\DQGWKHQSURYHWKHHOHPHQWVRI
WKDWRIIHQVHEH\RQGDUHDVRQDEOHGRXEW2WKHUZLVHWKH
JRYHUQPHQWPD\LQGLFWDGHIHQGDQWXQGHUWKHSURYLVLRQ
ZLWKWKHORZHVWVWDWXWRU\PD[LPXPVHQWHQFHDQGWKHQDV
LQWKLVFDVHUHO\RQUHOHYDQWFRQGXFWILQGLQJVWRDFKLHYH
ZKDWLWRWKHUZLVHPLJKWQRWLIKHOGWRDKLJKHUEXUGHQRI
SURRI QDPHO\ D VHQWHQFH XQGHU D VHSDUDWH RIIHQVH¶V
HQKDQFHGSHQDOW\SURYLVLRQ
)GDW
&RQVLVWHQW ZLWK RXU KROGLQJV LQ )ORZDO 5DPLUH] DQG
6WUD\KRUQZHILQGWKDWWKHGLVWULFWFRXUWYLRODWHG$SSUHQGL
ZKHQLWVHQWHQFHG+XPSKUH\WRDPDQGDWRU\VHQWHQFHRI
PRQWKV $OWKRXJK WKH GLVWULFW FRXUW SURSHUO\ IRXQG WKDW
+XPSKUH\ZDVVXEMHFWWRD*XLGHOLQHVVHQWHQFLQJUDQJHRI
WRPRQWKVLWQHYHUWKHOHVVHUURQHRXVO\EHOLHYHGWKDW
LW ZDV UHTXLUHG WR VHQWHQFH +XPSKUH\ WR D PDQGDWRU\
PLQLPXP VHQWHQFH RI PRQWKV DV SURYLGHG IRU LQ
† E $ :HUHFRJQL]HWKDW5DPLUH]DQG6WUD\KRUQ
DUH GLVWLQJXLVKDEOH LQDVPXFK DV WKRVH FDVHV LQYROYHG
VLWXDWLRQV LQ ZKLFK WKH VWDWXWRU\ PDQGDWRU\ PLQLPXP
LPSRVHG ZDV HTXLYDOHQW WR WKH VWDWXWRU\ PD[LPXP
+XPSKUH\ E\ FRQWUDVW ZDV VHQWHQFHG WR D WZHQW\\HDU
PDQGDWRU\PLQLPXPVHQWHQFHXQGHU† E $ GHVSLWH
WKH IDFW WKDW KH VKRXOG KDYH EHHQ VHQWHQFHG XQGHU

-- 37 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
† E & ZKLFK SURYLGHV IRU D WKLUW\\HDU VWDWXWRU\
PD[LPXPSHQDOW\
$ FORVH LQVSHFWLRQ RI )ORZDO 5DPLUH] DQG 6WUD\KRUQ
UHYHDOV WKDW VXFK D GLVWLQFWLRQ LV RI QR FRQVHTXHQFH 7KH
UDWLRQDOHXQGHUO\LQJHDFKRIWKHVHSDQHO¶VGHFLVLRQVZDVQRW
WKDWWKHPDQGDWRU\PLQLPXPVHQWHQFHRIRQHSURYLVLRQZDV
OHVVWKDQRUHTXDOWRWKHVWDWXWRU\PD[LPXPRIDQRWKHUEXWD
FRQFHUQ WKDW WKH GLVWULFW FRXUW ZDV FRPSHOOHG WR LVVXH D
VHQWHQFHWKDWEXWIRULWVGUXJTXDQWLW\GHWHUPLQDWLRQLWZRXOG
QRWKDYHEHHQREOLJDWHG RUHYHQSHUPLWWHG WRLPSRVH6HH
6WUD\KRUQ )G DW ³,W PDWWHUV QRW DFFRUGLQJ WR
5DPLUH]WKDWWKHVWDWXWRU\PD[LPXPIRU† E ' LV
HTXLYDOHQW WR WKH VWDWXWRU\ PDQGDWRU\ PLQLPXP IRU
† E % ´ 5DPLUH])GDW QRWLQJWKDWWKH
GLIIHUHQFH EHWZHHQ D VWDWXWRU\ PD[LPXP SHQDOW\ DQG D
PDQGDWRU\PLQLPXPSHQDOW\RIWKHVDPHOHQJWKLVVLJQLILFDQW
EHFDXVHWKHWULDOMXGJH¶VGHWHUPLQDWLRQRIWKHZHLJKWRIWKH
GUXJV ³WRRN DZD\ DQ\ GLVFUHWLRQ LQ WHUPV RI LPSRVLQJ D
VKRUWHUVHQWHQFH´ TXRWLQJ)ORZDO)GDW
,QGHHGWKHGLVWULFWFRXUWLQWKHLQVWDQWFDVHHYHQLILWKDG
EHHQVRLQFOLQHGZRXOGQRWKDYHVHQWHQFHG+XPSKUH\WR
PRQWKV WKH ORZ HQG RI WKH *XLGHOLQHV VHQWHQFLQJ UDQJH
EHFDXVHLWEHOLHYHGWKDWWKHWZHQW\\HDUVWDWXWRU\PDQGDWRU\
PLQLPXPVHQWHQFHVHWIRUWKLQ† E $ UHPRYHGLWV
DXWKRULW\ WR GR VR ,W LV SUHFLVHO\ WKLV VLWXDWLRQ WKDW ZH
FRQIURQWHGLQ)ORZDO5DPLUH]DQG6WUD\KRUQDQGWKDWZH
FRQFOXGHGRIIHQGHGWKHUXOHRI$SSUHQGL7KHMXU\LQWKLV
FDVHVKRXOGKDYHGHWHUPLQHGEH\RQGDUHDVRQDEOHGRXEWWKH
TXDQWLW\ RI GUXJV IRU ZKLFK +XPSKUH\ ZDV FULPLQDOO\
UHVSRQVLEOH ,Q WKH DEVHQFH RI VXFK D ILQGLQJ WKH GLVWULFW
FRXUWFRQVLVWHQWZLWKRXUKROGLQJLQ5DPLUH]SURSHUO\VKRXOG
KDYHVHQWHQFHG+XPSKUH\XQGHU† E & ZKLFKVHWV
IRUWKDWKLUW\\HDUHQKDQFHGVWDWXWRU\PD[LPXPSHQDOW\DQG
VLJQLILFDQWO\QRPDQGDWRU\PLQLPXPWHUPRILPSULVRQPHQW
ZKHUHDVKHUHQRGHDWKRUVHULRXVERGLO\LQMXU\KDVUHVXOWHG
IURP XVH RI WKH VXEVWDQFH :H DFFRUGLQJO\ YDFDWH
+XPSKUH\¶V VHQWHQFH DQG UHPDQG WKLV FDVH WR SHUPLW WKH
1R 8QLWHG6WDWHVY+XPSKUH\
D GH QRYR VWDQGDUG WKDW DSSOLHV XQLTXHO\ WR VXFK FODLPV
UHJDUGOHVV RI ZKHWKHU WKH\ ZHUH UDLVHG EHIRUH WKH 'LVWULFW
&RXUW
,Q UHVROYLQJ WKH $SSUHQGL FKDOOHQJH LQ WKLV FDVH WKH
PDMRULW\ IROORZV WKHVH ODWWHU SDQHOV ERWK LQ WKHLU VWUDLQHG
UHDGLQJRI$SSUHQGLDQGLQWKHLUDSSOLFDWLRQRIDQLPSURSHU
VWDQGDUG RI UHYLHZ $FFRUGLQJO\ ZKLOH , FRQFXU LQ WKH
UHPDLQGHURIWKHPDMRULW\¶VGHFLVLRQ,GLVVHQWIURPLWVUXOLQJ
WKDWWKLVFDVHEHUHPDQGHGIRUUHVHQWHQFLQJ
,
$V LQGLFDWHG DERYH , KDYH WZR SULQFLSDO FRQFHUQV ZLWK
HOHPHQWVRIWKLV&LUFXLW¶VSRVW$SSUHQGLMXULVSUXGHQFH)LUVW
ZKLOH DV -XVWLFH 2¶&RQQRU DSWO\ REVHUYHG WKH $SSUHQGL
PDMRULW\VWDWHGVHYHUDOIRUPXODWLRQVRILWVUXOLQJZKLFKDUH
VRPHZKDWLQWHQVLRQZLWKHDFKRWKHULWLVLQFXPEHQWXSRQXV
QHYHUWKHOHVVWRDGRSWDQGDGKHUHWRRQHRIWKHVHIRUPXODWLRQV
DVWKHODZRIWKLV&LUFXLW,QVWHDGZHOLNHWKHPDMRULW\LQ
$SSUHQGLKDYHHQGRUVHGVHYHUDOGLIIHUHQWDQGLQFRQVLVWHQW
VWDWHPHQWVRI³WKHUXOH´RI$SSUHQGL7REHVXUHLI$SSUHQGL
LWVHOILVDPELJXRXVWKHUHLVOLWWOHZHFDQGRWRRYHUFRPHWKLV
SUREOHP<HW,EHOLHYHDQGRXUVLVWHU&LUFXLWVFRQFXUWKDW
DQ\ SRWHQWLDO DPELJXLW\ LV FXUHG E\ UHDGLQJ $SSUHQGL
DORQJVLGHWKHZKROHRI6XSUHPH&RXUWSUHFHGHQWLQWKHDUHD
RI VHQWHQFLQJ , VXEPLW WKDW WKH FRQVWUXFWLRQ RI $SSUHQGL
DGRSWHGLQVRPHRIRXUFDVHVLQFOXGLQJE\WKHPDMRULW\KHUH
FDQQRWEHVTXDUHGZLWKWKLVERG\RIODZ
6HFRQG JLYHQ WKH TXHVWLRQV WKDW LQHYLWDEO\ KDYH DULVHQ
DERXW WKH UHWURDFWLYH DSSOLFDWLRQ RI $SSUHQGL WR VHQWHQFHV
LPSRVHG SULRU WR WKDW GHFLVLRQ ZH PXVW EH FOHDU LQ
HVWDEOLVKLQJWKHVWDQGDUGRIUHYLHZWKDWZLOOJRYHUQ$SSUHQGL
FKDOOHQJHV DW WKH YDULRXV VWDJHV RI FULPLQDO SURFHHGLQJV
6RPH RI RXU GHFLVLRQV KRZHYHU GR QRW HYHQ DGGUHVV WKH
SURSHUVWDQGDUGRIUHYLHZDQGRWKHUVOLNHWKHPDMRULW\UXOLQJ
KHUH DUH DW RGGV ZLWK WKH JRYHUQLQJ )HGHUDO 5XOHV RI
&ULPLQDO3URFHGXUH6XSUHPH&RXUWSUHFHGHQWDQGRXUPDQ\
SULRUGHFLVLRQVLQZKLFKZHKDYHDSSOLHGQHZO\DQQRXQFHG

-- 38 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
7KH VXEVHTXHQW FDVH ODZ LQ WKLV DQG RWKHU &LUFXLWV FRQILUPV WKLV
IRUHFDVW %\ P\ FRXQW LQ WKH 6L[WK &LUFXLW DORQH ZH KDYH FLWHG $SSUHQGL
LQ SXEOLVKHG RSLQLRQV DQG RSLQLRQV RYHUDOO LQ WKH QLQHWHHQ
PRQWKV VLQFH WKDW FDVH ZDV GHFLGHG
%\WKHVHGHFLVLRQVRXU&LUFXLWKDVUHDOL]HGWKHIHDUVRIWKH
GLVVHQWHUV LQ $SSUHQGL -XVWLFH 2¶&RQQRU LQ SDUWLFXODU
ZDUQHGWKDWWKH&RXUW¶VRSLQLRQZRXOGKDYHDQ³XQVHWWOLQJ
HIIHFWRQVHQWHQFLQJFRQGXFWHGXQGHUFXUUHQWIHGHUDODQGVWDWH
GHWHUPLQDWHVHQWHQFLQJ VFKHPHV´ DQG WKDW ³WKH &RXUW¶V
GHFLVLRQWKUHDWHQVWRXQOHDVKDIORRGRISHWLWLRQVE\FRQYLFWHG
GHIHQGDQWVVHHNLQJWRLQYDOLGDWHWKHLUVHQWHQFHVLQZKROHRU
LQ SDUW´ 86 DW 6 &W DW
2¶&RQQRU-GLVVHQWLQJ 7KLVFRQFHUQGLGQRWUHVWVROHO\
XSRQGLVDJUHHPHQWZLWKWKHUXOHDQQRXQFHGE\WKHPDMRULW\
EXWZDVEDVHGLQSDUWXSRQWKH³VHYHUDOIRUPXODWLRQV´WKURXJK
ZKLFKWKHPDMRULW\DQQRXQFHGLWVUXOLQJOHDYLQJWKHORZHU
FRXUWV ³LQ D VWDWH RI OLPER´ UHJDUGLQJ WKH WUXH VFRSH RI
$SSUHQGL86DW6&WDW
2¶&RQQRU-GLVVHQWLQJ
2WKHU &LUFXLWV WR WKHLU FUHGLW KDYH UHFRJQL]HG EXW
GRZQSOD\HG WKH ³DODUPV VRXQGHG E\ WKH GLVVHQWHUV´ LQ
$SSUHQGLILQGLQJFHUWDLQJXLGHSRVWVLQWKHPDMRULW\RSLQLRQ
DQG LQ UHODWHG 6XSUHPH &RXUW SUHFHGHQWV WKDW SRLQW
XQPLVWDNDEO\WRZDUGDQDUURZUHDGLQJRIWKDWGHFLVLRQ6HH
HJ 8QLWHG 6WDWHV Y *DUFLD )G G &LU
8QLWHG6WDWHVY0HVKDFN)G Q
WK &LU :H WRR TXLFNO\ DGRSWHG WKLV QDUURZ
FRQVWUXFWLRQ LQ RXU LQLWLDO SRVW$SSUHQGL FDVHV 6HH HJ
8QLWHG6WDWHVY0XQR])G WK&LU
8QLWHG6WDWHVY3DJH)G WK&LU
8QLWHG6WDWHVY5HEPDQQ)G WK&LU
$KDQGIXORIVXEVHTXHQWSDQHOVKRZHYHUVHL]HGXSRQ
$SSUHQGL¶V³VHYHUDOIRUPXODWLRQV´RILWVUXOH²DQGLQRQH
HVSHFLDOO\XQIRUWXQDWHLQVWDQFHUHOLHGXSRQDFRQFXUUHQFHWKDW
GHFLGHGO\ODFNHGWKHVXSSRUWRIDPDMRULW\RIWKH$SSUHQGL
&RXUW²DVDQLQYLWDWLRQWRHPEUDFHDPXFKEURDGHUUHDGLQJ
7KHVHVDPHSDQHOVHLWKHUIDLOHGWRDGGUHVVWKHSURSHUVWDQGDUG
RIUHYLHZIRU$SSUHQGLFKDOOHQJHVRUFXWRXWRIZKROHFORWK
1R 8QLWHG6WDWHVY+XPSKUH\
8QOLNH WKH SUHVHQW FDVH WKH GHIHQGDQWV LQ .LQJ KDG QRW SUHVHUYHG
WKH HUURU )G DW 8VLQJ WKH SODLQ HUURU VWDQGDUG RI UHYLHZ WKLV
&RXUW KHOG WKDW WKH HUURU WKRXJK SODLQ ZDV QRW UHYHUVLEOH EHFDXVH LW ZDV
QRW SUHMXGLFLDO 6HH LG DW
GLVWULFW FRXUW DQ RSSRUWXQLW\ WR UHVHQWHQFH KLP ZLWKLQ WKH
DSSURSULDWH*XLGHOLQHVVHQWHQFLQJUDQJH
7KLV&RXUW¶VUHFHQWGHFLVLRQVLQ8QLWHG6WDWHVY.LQJDQG
8QLWHG6WDWHVY*DUFLD)G WK&LU ERWK
VXSSRUW DQG OLPLW RXU KROGLQJ WRGD\ .LQJ SUHVHQWV IDFWV
DQDORJRXVWRWKHFDVHDWEDU,Q.LQJWZRGHIHQGDQWVZHUH
FRQYLFWHG E\ D MXU\ DQG VHQWHQFHG XQGHU WKH RYHUODSSLQJ
SURYLVLRQV RI 86& † IRU PHWKDPSKHWDPLQH
WUDIILFNLQJ LQ QHLWKHU LQVWDQFH ZHUH WKH GUXJ DPRXQWV
VSHFLILHGLQWKHLQGLFWPHQWRUVXEPLWWHGWRWKHMXU\2QHRI
WKHGHIHQGDQWVZDVDSULRUIHORQDQGWKXVIDFHGEHWZHHQ]HUR
DQG WKLUW\ \HDUV RI LPSULVRQPHQW IRU WUDIILFNLQJ LQ DQ\
GHWHFWLEOHDPRXQWRIGUXJVXQGHU† E & +HIDFHGD
PD[LPXPUDQJHRIWZHQW\\HDUVWROLIHIRUSRVVHVVLQJILIW\
JUDPVRUPRUHRIPHWKDPSKHWDPLQHXQGHU† E $
7KHGLVWULFWMXGJHIRXQGWKHGHIHQGDQWUHVSRQVLEOHIRUPRUH
WKDQ JUDPV EXW OHVV WKDQ RQH NLORJUDP RI
PHWKDPSKHWDPLQHDQGVHQWHQFHGKLPWRPRQWKV WZHQW\
\HDUV RILPSULVRQPHQWDQGWHQ\HDUVRIVXSHUYLVHGUHOHDVH
$VLQWKHSUHVHQWFDVHWKH*RYHUQPHQWLQ.LQJDGPLWWHGDW
RUDODUJXPHQWWKDWWKHGLVWULFWFRXUWKDGHUUHGXQGHU5DPLUH]
.LQJ)GDW7KLV&RXUWDJUHHGDQGIRXQGWKDWWKH
GLVWULFWFRXUWKDGHUUHGEHFDXVHWKHGLVWULFWMXGJH¶VILQGLQJ
DQG PDQGDWRU\ PLQLPXP VHQWHQFH RI WZHQW\ \HDUV KDG
LQFUHDVHG WKH SUHVFULEHG UDQJH RI SHQDOWLHV WR ZKLFK WKH
GHIHQGDQWZDVH[SRVHG,GDW FLWLQJ5DPLUH]
)GDW
+RZHYHU LQ WKH YHU\ VDPH FDVH WKLV &RXUW IRXQG QR
$SSUHQGL YLRODWLRQ ZKHUH WKH RWKHU GHIHQGDQW¶V VHQWHQFH
XQGHU WKH *XLGHOLQHV H[FHHGHG EXW GLG QRW HTXDO WKH
PDQGDWRU\ PLQLPXP RI † E $ \HW VWLOO UHPDLQHG
ZLWKLQWKHVWDWXWRU\PD[LPXPRI† E & /LNHWKH
ILUVW GHIHQGDQW WKH VHFRQG GHIHQGDQW ZDV IRXQG E\ D

-- 39 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
SUHSRQGHUDQFHRIWKHHYLGHQFHWRKDYHWUDIILFNHGLQEHWZHHQ
JUDPVDQGRQHNLORJUDPRIPHWKDPSKHWDPLQH%HFDXVH
KHKDGQRSULRUFRQYLFWLRQVKHZDVH[SRVHGWRDPDQGDWRU\
PLQLPXP RI WHQ \HDUV DQG D PD[LPXP RI OLIH XQGHU
† E $ :LWKQRDPRXQWVSHFLILFDWLRQKHZRXOGKDYH
IDFHGQRPLQLPXPDQGDPD[LPXPRIWZHQW\\HDUVXQGHU
† E & 7KLVVHFRQGGHIHQGDQWZDVVHQWHQFHGWR
PRQWKV WZHOYH\HDUVDQGVHYHQPRQWKV 5HO\LQJXSRQWKLV
&RXUW¶VGHFLVLRQLQ8QLWHG6WDWHVY*DUFLDZHIRXQGWKDWWKH
GLVWULFWFRXUWKDGQRWHUUHGEHFDXVHWKHWZHOYH\HDUVDQGVHYHQ
PRQWKV RI LPSULVRQPHQW ZKLOH LW H[FHHGHG WKH WHQ\HDU
PDQGDWRU\PLQLPXPRI† E $ GLGQRWHTXDOWKHWHQ
\HDUPLQLPXPRIWKHVDPHSURYLVLRQ6HH.LQJ)GDW

:KLOHWKLVUHVXOWVHHPVDQRPDORXVLWLVGLFWDWHGE\DSULRU
UXOLQJ ,Q 8QLWHG 6WDWHV Y *DUFLD ZKLFK .LQJ FLWHG WKH
LQGLFWPHQWGLGQRWVSHFLI\DTXDQWLW\RIGUXJV$WDOORFXWLRQ
WKH GHIHQGDQW H[SOLFLWO\ DGPLWWHG WR RQO\ DQ DPRXQW RI
PDULMXDQD WKDW FDUULHG D ILYH WR IRUW\\HDU VHQWHQFH XQGHU
† E % 8VLQJ WKH SUHSRQGHUDQFH RI WKH HYLGHQFH
VWDQGDUG WKH GLVWULFW MXGJH IRXQG WKDW WKH GHIHQGDQW KDG
SRVVHVVHG HQRXJK GUXJV WR VHQWHQFH KLP WR D UDQJH RI WHQ
\HDUVWROLIHXQGHU† E $ 7KHMXGJHVHQWHQFHGWKH
GHIHQGDQW XQGHU WKH *XLGHOLQHV WR HOHYHQ \HDUV DQG WKUHH
PRQWKV $OWKRXJK WKH VHQWHQFH H[FHHGHG WKH ILYH\HDU
PLQLPXP XQGHU † E % DV ZHOO DV WKH WHQ\HDU
PLQLPXPRI† E $ WKLV&RXUWIRXQGQR$SSUHQGL
YLRODWLRQEHFDXVHWKHVHQWHQFHLPSRVHGHOHYHQ\HDUVDQG
WKUHHPRQWKVZDVLQH[FHVVRIEXWQRW³DWWKHERWWRPRIWKH
KLJKHUVWDWXWRU\UDQJH´*DUFLD)GDW%HFDXVHWKH
VHQWHQFH GLG QRW HTXDO WKH VWDWXWRU\ PLQLPXP ³QRWKLQJ
LQGLFDWH>G@WKDWWKHGLVWULFWFRXUWWKRXJKWLWVHOIFRQVWUDLQHGE\
DVSHFLILFVWDWXWHWRLPSRVHWKHVHQWHQFHLWGLG´,G
$IWHU *DUFLD DQG .LQJ ZH DUH OHIW ZLWK DQ LQRUGLQDWHO\
FRPSOLFDWHG$SSUHQGLGRFWULQH$OWKRXJKLWLVREYLRXVWKDW
WKHOLPLWDWLRQVSODFHGXSRQ5DPLUH]OHDGWRSHFXOLDUUHVXOWV
ZHDUHFRQVWUDLQHGE\WKHSULQFLSOHRIVWDUHGHFLVLVWRDELGHE\
WKRVH GHFLVLRQV 6HH 6DOPL Y 6HF¶\ RI +HDOWK +XPDQ
1R 8QLWHG6WDWHVY+XPSKUH\
VXFKFODLPVGHQRYRHYHQZKHUHDVKHUHDGHIHQGDQWKDVQRW
UHPRWHO\ UDLVHG DQ $SSUHQGL FKDOOHQJH EHIRUH WKH 'LVWULFW
&RXUWEXWWRWKHFRQWUDU\KDVH[SOLFLWO\DFNQRZOHGJHGDW
VHQWHQFLQJ WKDW WKH SUH$SSUHQGL VWDWH RI DIIDLUV VWLOO
JRYHUQHG $JDLQ WKHUH LV 6L[WK &LUFXLW DXWKRULW\ IRU WKH
PDMRULW\¶V SRVLWLRQ ² EXW DJDLQ WKHUH LV SULRU FRPSHWLQJ
DXWKRULW\QHYHURYHUUXOHGDQGVWLOOIROORZHGZKLFKGLFWDWHV
WKDW ZH DSSO\ SODLQ HUURU UHYLHZ XQGHU WKH FLUFXPVWDQFHV
SUHVHQWHG KHUH $V ³WLHEUHDNHUV´ , DJDLQ ZRXOG SRLQW WR
XQDQLPLW\ DPRQJ WKH RWKHU &LUFXLWV WKDW WKH SODLQ HUURU
VWDQGDUG VKRXOG JRYHUQ SOXV PRUH LPSRUWDQWO\ GLUHFW
6XSUHPH&RXUWSUHFHGHQWDSSO\LQJSODLQHUURUUHYLHZXQGHU
OHJDOO\ LQGLVWLQJXLVKDEOH FLUFXPVWDQFHV ² D UXOLQJ ZKLFK
SODLQO\WUXPSVDQ\LQWUDFLUFXLWFRQIOLFW
$GPLWWHGO\WKLVSDQHOFDQQRWVLQJOHKDQGHGO\XQUDYHOWKH
FRQXQGUXPRIWKLV&LUFXLW¶VSRVW$SSUHQGLODZ7KHPDMRULW\
WRLWVFUHGLWFHUWDLQO\WULHVWRGRVRLQGHHG,PXVWFRQIHVVD
JUXGJLQJDGPLUDWLRQIRULWVKHUFXOHDQHIIRUWWRKDUPRQL]HD
ERG\RIODZWKDWLWFKDUDFWHUL]HV²FKDULWDEO\LQP\YLHZ²
DV³LQRUGLQDWHO\FRPSOLFDWHG´ 0DMRULW\2SDW DQGDV
GHI\LQJ³IRUPDOORJLF´ LGDWQ 7KHPDMRULW\¶VHIIRUW
KRZHYHUIDLOVWRDVVXDJHP\IXQGDPHQWDOFRQFHUQWKDWOLNH
FDVHVDUHEHLQJGHFLGHGGLIIHUHQWO\²DQGWKDWWKLVFDVHLQ
SDUWLFXODU LV DSSDUHQWO\ JRYHUQHG E\ WZR GLVWLQFW OLQHV RI
SXEOLVKHG SUHFHGHQW WKDW GLFWDWH WZR GLIIHUHQW RXWFRPHV
8QGHUWKHVHFLUFXPVWDQFHV , EHOLHYHWKDWZHDUHERXQGWR
IROORZWKLV&LUFXLW¶VILUVWFOHDUDQGXQPLVWDNDEOHVWDWHPHQW
RIWKHUXOHRI$SSUHQGLLQLWVLQLWLDOHIIRUWVWRFRQVWUXHWKDW
GHFLVLRQ,QVWHDGWKHPDMRULW\HOHFWVWRIROORZDODWHU DQG
FRQWUDU\ OLQH RI FDVHV WKHUHE\ EUHDWKLQJ QHZ OLIH LQWR
GHFLVLRQVRITXHVWLRQDEOHSHGLJUHH$VD'LVWULFW-XGJHZKR
PXVW DSSO\ $SSUHQGL LQ WKH ILUVW LQVWDQFH , DP HVSHFLDOO\
WURXEOHGE\WKLV&LUFXLW¶VIDLOXUHWRHQGRUVHDVLQJOH³UXOH´RI
$SSUHQGLLQLWVGHFLVLRQVE\WKHKRSHOHVVMXPEOHWKDWLQVWHDG
SUHVHQWV LWVHOI DV WKH ³SUHFHGHQW´ RI WKLV &RXUW RQ WKLV
TXHVWLRQDQGE\WKHKDYRFWKLVVWDWHRIDIIDLUVSOD\VZLWKDQ\
SULQFLSOHG DWWHPSW WR DGKHUH WR WKH FDUGLQDO UXOH RI VWDUH
GHFLVLV

-- 40 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
&21&855,1*,13$57',66(17,1*,13$57
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
526(1'LVWULFW-XGJHFRQFXUULQJLQSDUWDQGGLVVHQWLQJ
LQSDUW,FRQFXULQDOOEXW3DUW,,,VHFWLRQ'RIWKH&RXUW¶V
GHFLVLRQ+RZHYHU,UHVSHFWIXOO\GLVVHQWIURPWKHPDMRULW\¶V
GHWHUPLQDWLRQ WKDW WKLV FDVH EH UHPDQGHG IRU UHVHQWHQFLQJ
XQGHUWKHDXWKRULW\RI$SSUHQGLY1HZ-HUVH\86
6&W 7KLVUXOLQJLQP\YLHZMRLQVWKH
ZURQJ VLGH LQ DQ LQWUDFLUFXLW GHEDWH DV WR WKH SURSHU
FRQVWUXFWLRQRI$SSUHQGL7REHVXUHWKHUHLV6L[WK&LUFXLW
DXWKRULW\IRUWKHSRVLWLRQWDNHQE\WKHPDMRULW\²EXWWKLVLV
SUHFLVHO\WKHSUREOHPEHFDXVHWKHUHDOVRLVDXWKRULW\IRUWKH
QDUURZHU YLHZ , DGYRFDWH D SULRU VHULHV RI FDVHV ZKLFK
FRQWLQXH WR EH IROORZHG DQG KDYH QHYHU EHHQ RYHUUXOHG
6XEVHTXHQWSDQHOVLQFOXGLQJWKLVRQHDUHERXQGWRIROORZ
WKHVHLQLWLDOSRVW$SSUHQGLGHFLVLRQVE\WKHGRFWULQHRIVWDUH
GHFLVLV E\ RXU &LUFXLW UXOH HPERG\LQJ WKLV SULQFLSOH VHH
6L[WK&LUFXLW5XOH F DQGE\RXUH[SUHVVUHFRJQLWLRQWKDW
³ZKHQDODWHUGHFLVLRQRIWKLVFRXUWFRQIOLFWVZLWKRQHRIRXU
SULRUSXEOLVKHGGHFLVLRQVZHDUHVWLOOERXQGE\WKHKROGLQJRI
WKHHDUOLHUFDVH´'DUUDKY&LW\RI2DN3DUN)G
WK &LU ,I DQ\ DGGLWLRQDO ³WLHEUHDNHUV´ ZHUH
QHHGHG,ZRXOGVXJJHVWWZRILUVWWKDWWKHFDVHVIROORZHGE\
WKH PDMRULW\ HVSRXVH D VZHHSLQJ FRQVWUXFWLRQ RI $SSUHQGL
ZKLFKLVDWRGGVZLWKDQ\WHQDEOHUHDGLQJRIWKDWFDVHDQG
VHFRQGWKDWWKLVEURDGUHDGLQJKDVEHHQUHMHFWHGE\DOOWHQ
RWKHU&LUFXLWVWKDWKDYHFRQVLGHUHGWKHTXHVWLRQOHDYLQJRXU
&LUFXLWDVDQDFNQRZOHGJHG³PLQRULW\RIRQH´RQWKLVSRLQW
6HH8QLWHG6WDWHVY+LOO)G WK&LU
7KHPDMRULW\LQP\YLHZWKHQH[DFHUEDWHVWKHSUREOHPE\
IROORZLQJDQRWKHUVHWRI6L[WK&LUFXLWGHFLVLRQVZKLFKFRQIHU
VSHFLDOVWDWXVRQ$SSUHQGLFODLPVH[HPSWLQJWKHPIURPWKH
XVXDOUXOHRIZDLYHUWKDWLVDEHGURFNSULQFLSOHRIDSSHOODWH
ODZQDPHO\WKDWDQREMHFWLRQLVIRUIHLWHGDQGKHQFHVXEMHFW
RQO\WRSODLQHUURUUHYLHZLIQRWWLPHO\DVVHUWHGEHIRUHWKH
WULDOFRXUW,QVWHDGWKHPDMRULW\KROGVWKDWZHVKRXOGUHYLHZ
1R 8QLWHG6WDWHVY+XPSKUH\
6HUYV)G WK&LU ,WLVDOVRDSSDUHQW
WKDWPXFKRIRXUFXUUHQW$SSUHQGLMXULVSUXGHQFHDVLWUHODWHV
WRPDQGDWRU\PLQLPXPVUHVWVXSRQZKDWZDVLQWKHPLQGRI
WKHGLVWULFWMXGJHZKHQVKHVHQWHQFHGWKHGHIHQGDQW8QGHU
RXUFXUUHQWGRFWULQHDGLVWULFWMXGJHPD\VHQWHQFHDGHIHQGDQW
WRDWHUPRILPSULVRQPHQWZKLFKH[FHHGVEXWGRHVQRWHTXDO
WKHPDQGDWRU\PLQLPXPRIDKLJKHUSHQDOW\UDQJHZLWKRXW
FRQFHUQWKDWVXFKDVHQWHQFHZLOOUDLVHDQLQIHUHQFHWKDWVKH
IHOW KHUVHOI FRQVWUDLQHG E\ WKH PDQGDWRU\ PLQLPXP 6HH
*DUFLD)GDW+RZHYHULIHYLGHQFHLQWKHUHFRUG
LQGLFDWHV WKDW WKH MXGJH WKRXJKW KHUVHOI FRQVWUDLQHG WR
VHQWHQFHWKHGHIHQGDQWZLWKLQWKHKLJKHUVWDWXWRU\UDQJHVXFK
HYLGHQFHZLOOGHPRQVWUDWHDSRWHQWLDO$SSUHQGLYLRODWLRQ6HH
6WUD\KRUQ)GDW$SHQDOW\ZKLFKH[DFWO\HTXDOV
WKH ERWWRP RI WKH KLJKHU UDQJH LV SUREDWLYH RI VXFK D
SHUFHSWLRQRIFRQVWUDLQW6HH8QLWHG6WDWHVY6WDIIRUG
)GQ WK&LU
:HDQWLFLSDWHWKDWWKLV$SSUHQGLFDFRSKRQ\VRRQZLOOEH
KDUPRQL]HG E\ WKH 6XSUHPH &RXUW 6HH +DUULV Y 8QLWHG
6WDWHV 1R :/ 'HF
JUDQWLQJ FHUWLRUDUL RQ WKH TXHVWLRQ RI ZKHWKHU IDFWXDO
ILQGLQJV WKDW UHVXOW LQ DQ LQFUHDVHG PDQGDWRU\ PLQLPXP
VHQWHQFHPXVWEHDOOHJHGLQDQLQGLFWPHQWDQGSURYHGEH\RQG
DUHDVRQDEOHGRXEW ,QWKHPHDQWLPHZHDUHFDOOHGXSRQWR
GHFLGHFDVHVLQFRQIRUPLW\ZLWKWKHODZ:KLOHZHUHFRJQL]H
WKHIUXVWUDWLRQH[SUHVVHGLQWKHGLVVHQWZHILQGLWVVXJJHVWHG
UHVROXWLRQWRWKLVFDVHZDQWLQJERWKDVDSUDFWLFDOPDWWHUDQG
DVDPDWWHURIMXULVSUXGHQFH
7KH GLVVHQW¶V DUJXPHQW UHOLHV RQ WZR LQWHUGHSHQGHQW
DVVXPSWLRQVILUVWWKDWRXUSUHFHGHQWLQWKLVDUHDLVQRWMXVW
FRPSOH[ EXW IXQGDPHQWDOO\ LUUHFRQFLODEOH VHFRQG WKDW
EHFDXVHLWLVLUUHFRQFLODEOHZHDUHIUHHWRLJQRUHVRPHFDVHV
LQ IDYRU RI RWKHUV 1HLWKHU RI WKHVH DVVXPSWLRQV FDQ
ZLWKVWDQG VFUXWLQ\ $V WKH GLVVHQW DFNQRZOHGJHV WKH
6XSUHPH &RXUW¶V $SSUHQGL GHFLVLRQ RIIHUV PRUH WKDQ RQH
IRUPXODWLRQ RI WKH WHVW ± RQH WKDW DSSHDUV WR VXSSRUW D
³VWDWXWRU\ PD[LPXP´ UXOH DQG DQRWKHU WKDW DSSHDUV WR
VXSSRUWDQ³LQFUHDVHGUDQJH´UXOH1HYHUWKHOHVVWKHGLVVHQW

-- 41 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
$V D PDWWHU RI IRUPDO ORJLF ODQJXDJH LQ 0XQR] FRXOG EH FRQVWUXHG
WR H[FOXGH DQ\ $SSUHQGL YLRODWLRQ XQOHVV WKH GLVWULFW FRXUW¶V ILQGLQJ
UHVXOWHG LQ D GHIHQGDQW UHFHLYLQJ D VHQWHQFH LQ H[FHVV RI WKH PD[LPXP
VWDWXWRU\ SHQDOW\ 6XFK IRUPDOLVP KRZHYHU ZRXOG LQHYLWDEO\ OHDG WR
DEVXUG UHVXOWV )RU H[DPSOH LI D GLVWULFW FRXUW LVVXHG D VHQWHQFH EHORZ WKH
PDQGDWRU\ PD[LPXP XVLQJ WKH UHDVRQDEOH GRXEW VWDQGDUG EXW GLG VR DIWHU
KDYLQJ SHUHPSWRULO\ GLVPLVVHG WKH MXU\ WKHUH ZRXOG EH OLWWOH TXHVWLRQ WKDW
D FRQVWLWXWLRQDO YLRODWLRQ KDG RFFXUUHG <HW VXFK D FDVH ZRXOG EH
H[FOXGHG IURP $SSUHQGL FRQVLGHUDWLRQ E\ WKH VWULFW ORJLF RI 0XQR] :H
FDQQRW EHOLHYH WKH 3DJH FRXUW ZRXOG KDYH LQWHQGHG VXFK D UHVXOW $V RQH
MXULVW QRWHG ³$ IRUPDO ORJLF ZKLFK UHDVRQV IURP SUHFHGHQW DORQH
VRPHWLPHV LQVXODWHV WKH PLQG DJDLQVW WKH RYHUZKHOPLQJ ORJLF RI UHDOLW\´
.OLQJHQEHUJ Y &LW\ RI 5DOHLJK 6( 1& &ODUNVRQ
- GLVVHQWLQJ
7KH GLVVHQW DWWHPSWV WR IDVKLRQ 5DPLUH] DV D XVXUSHU RI 0XQR] EXW
LWV DUJXPHQW LJQRUHV WKH LQWHUYHQLQJ GHFLVLRQ LQ )ORZDO .H\ WR RXU
GHFLVLRQ LQ )ORZDO ZDV WKH IDFW WKDW ³WKH WULDO MXGJH¶V GHWHUPLQDWLRQ RI WKH
ZHLJKW RI WKH GUXJV WRRN DZD\ DQ\ GLVFUHWLRQ LQ WHUPV RI LPSRVLQJ D
IDXOWVWKLV&RXUWIRUIDLOLQJWRDGKHUHWRZKDWLWGHVFULEHVDVD
³VWDWXWRU\PD[LPXP´LQWHUSUHWDWLRQRI$SSUHQGL7KHGLVVHQW
H[WUDFWV IURP RXU GHFLVLRQV LQ 8QLWHG 6WDWHV Y 3DJH DQG
8QLWHG6WDWHVY0XQR])G WK&LU DPRQJ
RWKHUVDQH[FOXVLYH³VWDWXWRU\PD[LPXP´LQWHUSUHWDWLRQRI
$SSUHQGL$VZLWKWKHVWDQGDUGRIUHYLHZKRZHYHUQRQHRI
WKHVHGHFLVLRQVSUHFOXGHDFRPSDQLRQ³LQFUHDVHGUDQJH´UXOH
WKDW ZRXOG FRYHU PDQGDWRU\ PLQLPXPV 3DJH KHOG WKDW
$SSUHQGLKDGEHHQYLRODWHGEHFDXVHWKHVHQWHQFHH[FHHGHG
WKHVWDWXWRU\PD[LPXP±LWVDLGQRWKLQJDERXW$SSUHQGL¶V
DSSOLFDWLRQ WR PDQGDWRU\ PLQLPXPV 0XQR] KHOG WKDW
$SSUHQGL KDG QRW EHHQ YLRODWHG ZKHUH D VHQWHQFH GLG QRW
H[FHHGWKHVWDWXWRU\PD[LPXP EXWDJDLQZHFDQQRWLQIHU
IURP0XQR]WKDWWKHSDQHOLQWHQGHGWRHQGRUVHDQH[FOXVLYH
³PD[LPXPRQO\´UXOH7KHGLVVHQWDUJXHVWKDWRXUGHFLVLRQ
LQ)ORZDOZKLFKZDVDFWXDOO\DUJXHGEHIRUH0XQR]EXW
GHFLGHGWZRZHHNVDIWHUZDUGWRRNDQ³XQZDUUDQWHG´WXUQ
IURPWKH³PD[LPXPRQO\´UXOHRI 3DJHDQG0XQR]%XW
WKHUHLVQRWKLQJIXQGDPHQWDOO\LUUHFRQFLODEOHDERXW$SSUHQGL
SURWHFWLQJ D GHIHQGDQW IURP D VHQWHQFH WKDW H[FHHGV WKH
VWDWXWRU\PD[LPXPDQGDVHQWHQFHWKDWLQFUHDVHVWKHUDQJHRI
SHQDOWLHVE\UDLVLQJWKHPDQGDWRU\PLQLPXP&DVHVVKRXOG
1R 8QLWHG6WDWHVY+XPSKUH\
DFNQRZOHGJPHQWWKDWWKH\KDGEHHQXVHGWRIXUWKHUKLVGUXJ
VHOOLQJDFWLYLWLHV/LNHZLVH&URPLW\DGUXJGHDOHUZLWKDQ
HYHQPRUHH[WHQVLYHRSHUDWLRQWKDQ(DWRQ¶VHQWHUHGLQWRD
SOHD DJUHHPHQW ZLWK WKH *RYHUQPHQW LQ H[FKDQJH IRU KLV
WHVWLPRQ\ ZKLFK UHVXOWHG LQ D VHQWHQFH RI PRQWKV
LPSULVRQPHQW ZLWKDWZHOYHPRQWKUHGXFWLRQIRUFRPSOHWLRQ
RIDGUXJWUHDWPHQWSURJUDP WREHVHUYHGDWDORZVHFXULW\
IDFLOLW\ZKHUHKLVEURWKHULVDOVRKRXVHGDQGZKLFKLVOHVVWKDQ
WZRKRXUVIURPKLVIDPLO\DQGIULHQGVLQ&OHYHODQG
+XPSKUH\UHDVRQVWKDWLIKHKDGRIIHUHG(DWRQDQG&URPLW\
VRPHWKLQJRIYDOXHLQH[FKDQJHIRUWKHLUIDYRUDEOHWHVWLPRQ\
KH ZRXOG KDYH EHHQ VXEMHFW WR LQGLFWPHQW IRU EULELQJ D
ZLWQHVVSXUVXDQWWR86&† F VRZK\WKHQVKRXOG
WKH*RYHUQPHQWEHDOORZHGWRGRWKDWZKLFKLIGRQHE\D
SULYDWH FLWL]HQ FRXOG UHVXOW LQ FULPLQDO SURVHFXWLRQ +LV
FODLPLVIRUHFORVHGE\RXUGHFLVLRQLQ8QLWHG6WDWHVY:DUH
LQ ZKLFK ZH KHOG WKDW IHGHUDO SURVHFXWRUV DUH EH\RQG WKH
VFRSHRI86&† F )G WK
&LU
$OVR ZLWKRXW PHULW LV +XPSKUH\¶V DUJXPHQW WKDW WKH
*RYHUQPHQW¶V XVH RI (DWRQ¶V DQG &URPLW\¶V WHVWLPRQ\
YLRODWHG 'LVFLSOLQDU\ 5XOH & RI WKH 2KLR &RGH RI
3URIHVVLRQDO5HVSRQVLELOLW\ZKLFKSURYLGHVWKDW³>D@ODZ\HU
VKDOOQRWSD\RIIHUWRSD\RUDFTXLHVFHLQWKHSD\PHQWRI
FRPSHQVDWLRQWRDZLWQHVVFRQWLQJHQWXSRQWKHFRQWHQWRIKLV
WHVWLPRQ\RUWKHRXWFRPHRIWKHFDVH´+HFLWHVQRDXWKRULW\
DQG ZH KDYH IRXQG QRQH IRU WKH SURSRVLWLRQ WKDW D SOHD
DJUHHPHQWLVEDUUHGE\'5 & :HDFFRUGLQJO\ILQGQR
HUURU
,9&21&/86,21
)RUWKHIRUHJRLQJUHDVRQVZH$)),50WKHMXGJPHQWRI
WKHGLVWULFWFRXUWRQDOOFODLPVEXW9$&$7(+XPSKUH\¶V
VHQWHQFH DQG 5(0$1' WKLV FDVH WR WKH GLVWULFW FRXUW IRU
UHVHQWHQFLQJ

-- 42 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
DUHUDLVHGIRUWKHILUVWWLPHRQDSSHDOXQOHVV³WKHUHFRUGLV
DGHTXDWHWRDVVHVVWKHPHULWVRIWKHGHIHQGDQW¶VDOOHJDWLRQV´
6HH8QLWHG6WDWHVY+LOO)G WK&LU ,Q
H[SODLQLQJWKHEDVLVIRUVXFKDSUDFWLFHZHKDYHREVHUYHG
7KLVUXOHVWHPVIURPWKHIDFWWKDWDILQGLQJRISUHMXGLFH
LVDSUHUHTXLVLWHWRDFODLPIRULQHIIHFWLYHDVVLVWDQFHRI
FRXQVHODQGDSSHOODWHFRXUWVDUHQRWHTXLSSHGWRUHVROYH
IDFWXDO LVVXHV $V D UHVXOW RXU FRXUW KDV URXWLQHO\
FRQFOXGHG WKDW VXFK FODLPV DUH EHVW EURXJKW E\ D
GHIHQGDQW LQ D SRVWFRQYLFWLRQ SURFHHGLQJ XQGHU
86&†VRWKDWWKHSDUWLHVFDQGHYHORSDQDGHTXDWH
UHFRUGRQWKHLVVXH
8QLWHG6WDWHVY$JXZD)G WK&LU
LQWHUQDOTXRWDWLRQPDUNVDQGFLWDWLRQVRPLWWHG
:HEHOLHYHVXFKDSUDFWLFHLVSDUWLFXODUO\DSSURSULDWHLQWKLV
FDVHZKHUHWKHUHFRUGEHIRUHXVLVLQDGHTXDWHO\GHYHORSHGWR
SHUPLWXVWRUHVROYHWKHGLIILFXOWDQGIDFWLQWHQVLYHTXHVWLRQV
FRQFHUQLQJ ZKHWKHU +XPSKUH\ FDQ HVWDEOLVK WKH UHTXLVLWH
SUHMXGLFH VWHPPLQJ IURP WKH DOOHJHG GHILFLHQFLHV RI KLV
FRXQVHO
)3OHD$JUHHPHQWV
6WDQGDUGRI5HYLHZ
:HUHYLHZDGLVWULFWFRXUW¶VDGPLVVLRQRIWHVWLPRQ\DQG
RWKHUHYLGHQFHDWWULDOIRUDQDEXVHRIGLVFUHWLRQ6HH8QLWHG
6WDWHVY/RJDQ)G WK&LU
$QDO\VLV
+XPSKUH\VXEPLWVWKDWKHZDVFRQYLFWHGRQWKHEDVLVRIWKH
SXUFKDVHGWHVWLPRQ\RI(DWRQDQG&URPLW\6SHFLILFDOO\LQ
H[FKDQJHIRUWHVWLPRQ\DJDLQVW+XPSKUH\WKH*RYHUQPHQW
HQWHUHGLQWRDSOHDDJUHHPHQWZLWK(DWRQDPDMRUGUXJGHDOHU
ZKLFKUHVXOWHGLQ(DWRQ¶VUHFHLSWRIDVHQWHQFHRIILIW\PRQWKV
LPSULVRQPHQW DQG ZKLFK SHUPLWWHG KLP WR PDLQWDLQ
SRVVHVVLRQ RI WZR KRPHV DQG WKUHH FDUV GHVSLWH KLV
1R 8QLWHG6WDWHVY+XPSKUH\
VKRUWHU VHQWHQFH´ )G DW ,Q 5DPLUH] ZH KHOG $SSUHQGL ZDV
YLRODWHG EHFDXVH WKH WULDO MXGJH ZDV FRQYLQFHG WKDW KLV GUXJ TXDQWLW\
ILQGLQJ KDG WDNHQ DZD\ KLV GLVFUHWLRQ WR VHQWHQFH WKH GHIHQGDQW EHORZ D
PDQGDWRU\ PLQLPXP RI OLIH LPSULVRQPHQW 6HH 5DPLUH] )G DW
FI *DUFLD )G DW %\ FRQWUDVW 0XQR] QHYHU FRQVLGHUHG
ZKHWKHU WKH MXGJH WKRXJKW WKDW KLV GLVFUHWLRQ ZDV FRQVWUDLQHG E\ D
PDQGDWRU\ PLQLPXP DQG WKHUH LV QRWKLQJ LQ WKH FDVH WR VKRZ WKDW KH
SHUFHLYHG KLPVHOI WR EH FRQVWUDLQHG %HFDXVH 5DPLUH] GHPRQVWUDWHG
HYLGHQFH RI FRQVWUDLQW DQG 0XQR] FRQWDLQV QR HYLGHQFH RI FRQVWUDLQW LW
LV HUURQHRXV WR FODLP WKDW WKH\ DUH EDVHG RQ ³OHJDOO\ LQGLVWLQJXLVKDEOH
IDFWV´
EHFRQVWUXHGDVWRDYRLGLQWUDFLUFXLWFRQIOLFWVQRWWRFUHDWH
WKHP&IHJ+DOHY$UL]RQD)G WK
&LU QRWLQJWKDWIRUSUXGHQWLDOUHDVRQVDFRXUWDYRLGV
XQQHFHVVDU\FRQIOLFWVZLWKRWKHUFLUFXLWV
1HYHUWKHOHVVWKHGLVVHQWLQVLVWVWKDW)ORZDODQGLWVSURJHQ\
KDYHVSDZQHGD³OLQHRIFDVHVSDUDOOHOWREXWDWRGGVZLWK
DQRWKHU GLVWLQFW OLQH RI FDVHV IROORZLQJ WKH μVWDWXWRU\
PD[LPXP¶ UXOH RI 0XQR] 3DJH DQG 5HEPDQQ´ 7KLV
FRQFHSW RI D ³SDUDOOHO SUHFHGHQW´ LV QRWKLQJ PRUH WKDQ D
EXJEHDU1HDUO\HYHU\FDVHWKHGLVVHQWPDUVKDOVWRSURYHWKH
H[LVWHQFH RI WKLV ³SDUDOOHO SUHFHGHQW´ LV DQ XQSXEOLVKHG
GHFLVLRQZLWKQRELQGLQJHIIHFW6HHWK&LU58QLWHG
6WDWHV Y (QQHQJD )G WK &LU
XQSXEOLVKHG GHFLVLRQV DUH QRW FRQWUROOLQJ SUHFHGHQW
6DODPDOHNLVY&RPP¶URI6RF6HF)G WK&LU
VDPH 2QWKHFRQWUDU\DVGHPRQVWUDWHGLQ.LQJDQG
*DUFLDDERYHHYHQWKRVHSDQHOVWKDWKDYHIRXQGQR$SSUHQGL
HUURUZLWKUHVSHFWWRPDQGDWRU\PLQLPXPVKDYHEHHQERXQG
E\WKHSULQFLSOHRIVWDUHGHFLVLVWRDFNQRZOHGJHRUGLVWLQJXLVK
)ORZDO6WUD\KRUQRU5DPLUH]6HHHJ.LQJ)GDW
8QLWHG6WDWHVY/DVWHU)G WK&LU
6WDIIRUG)GDWQ*DUFLD)GDW
,W LV D[LRPDWLF WKDW D FRXUW RI DSSHDOV PXVW IROORZ WKH
SUHFHGHQW RI SULRU SDQHOV ZLWKLQ LWV RZQ FLUFXLW 6HH HJ
)',& Y $EUDKDP )G WK &LU
8QLWHG 6WDWHV Y +RJDQ )G WK &LU
6DOPL)GDW,QUH3HQQ&HQWUDO7UDQVS

-- 43 of 44 --

8QLWHG6WDWHVY+XPSKUH\ 1R
&R)G G&LU 'RHY&KDUOHVWRQ$UHD
0HG&WU)G WK&LU 8QLWHG6WDWHV
Y2OLYDUHV9HJD)G G&LU VHHDOVR
WK&LU5 F <HWWKHGLVVHQWLQYLWHVXVWREHOLHYHWKDW
WKHSULQFLSOHRIVWDUHGHFLVLVREOLJHVXVWRELIXUFDWHRXUSRVW
$SSUHQGLMXULVSUXGHQFHLQWRD³ILUVW´OLQHRIFDVHVZKLFKZH
PXVW IROORZ DQG D ³VHFRQG´ OLQH RI FDVHV ZKLFK ZH DUH
SUHVXPDEO\ IUHHWRLJQRUH(YHQLIZHZHUHWRDJUHHZLWK
WKHGLVVHQWDQGEHOLHYH)ORZDODQGLWVSURJHQ\WRKDYHEHHQ
GHFLGHGZURQJO\ZHFDQQRWFRQGRQHWKHVXJJHVWLRQWKDWZH
DUHDWOLEHUW\VLPSO\WRRYHUORRNWKHVHGHFLVLRQV6HHHJ
6DOPL )G DW ³7KH SULRU GHFLVLRQ UHPDLQV
FRQWUROOLQJDXWKRULW\XQOHVVDQLQFRQVLVWHQWGHFLVLRQRIWKH
8QLWHG 6WDWHV 6XSUHPH &RXUW UHTXLUHV PRGLILFDWLRQ RI WKH
GHFLVLRQ RU WKLV &RXUW VLWWLQJ HQ EDQF RYHUUXOHV WKH SULRU
GHFLVLRQ´ 5DPLUH])GDW 6LOHU-FRQFXUULQJ
H[SUHVVLQJ GRXEW WKDW $SSUHQGL UHDFKHV PDQGDWRU\
PLQLPXPVEXWFRQFXUULQJLQWKHGHFLVLRQEHFDXVHWKHSDQHO
FRXOGQRWRYHUUXOH)ORZDO 'DYLVY(VWHOOH)G
WK &LU ³2QH SDQHO RI WKLV &RXUW FDQQRW
GLVUHJDUGWKHSUHFHGHQWVHWE\DSULRUSDQHOHYHQWKRXJKLW
FRQFHLYHVHUURULQWKHSUHFHGHQW´ HPSKDVLVDGGHG
8OWLPDWHO\ZHDUHXQVXUHRIKRZWKHGLVVHQWZRXOGGHFLGH
WKHVXEVWDQWLYH$SSUHQGLFODLPLQWKLVFDVH7KHGLVVHQWXUJHV
WKLV&RXUWWRFRQVLGHUHQEDQFUHYLHZ5HTXHVWIRUHQEDQF
UHYLHZ LV FHUWDLQO\ WKH SUHURJDWLYH RI DQ\ PHPEHU RI WKLV
&RXUWWK&LU5EXWHQEDQFUHYLHZLVXVHOHVVLQKHOSLQJ
XV GHFLGH WKLV FDVH 7KH GLVVHQW SURSRVHV D ³WLH EUHDNHU´
GRFWULQH WKDW ZRXOG DOORZ XV WR UHDFK WKURXJK )ORZDO
6WUD\KRUQDQG5DPLUH]DVLIWKH\ZHUHVRPHW\SHRIMXGLFLDO
SKDQWDVPDQGUHO\RQ3DJH%XWWKLVVXJJHVWLRQYLRODWHVWKH
YHU\SULQFLSOHRIVWDUHGHFLVLVWKHGLVVHQWZLVKHVWRFKDPSLRQ
0RUHRYHUDV.LQJDQG*DUFLDGHPRQVWUDWHWKLV&RXUWKDV
DOUHDG\UHMHFWHGVXFKDVWUDWHJ\RSWLQJWRGLVWLQJXLVKSULRU
FDVHVUDWKHUWKDQWRGLVUHJDUGWKHP:KLOHZHV\PSDWKL]H
ZLWKWKHGLVVHQW¶VIUXVWUDWLRQZLWKWKHGRFWULQH3DJH0XQR]
)ORZDO6WUD\KRUQDQG5DPLUH]DOOFRQVWLWXWHWKHFRUSXVRI
$SSUHQGLMXULVSUXGHQFHLQRXU&LUFXLW,WLVFOHDUIURPDOORI
WKH SUHFHGHQW LQ RXU &LUFXLW WKDW +XPSKUH\¶V VHQWHQFH
1R 8QLWHG6WDWHVY+XPSKUH\
LPSOLFDWHVWKHFXUUHQW³PDQGDWRU\PLQLPXP´SURWHFWLRQVRI
RXUMXULVSUXGHQFH,QGHHGDVQRWHGEHIRUHWKH*RYHUQPHQW
DGPLWWHGDVPXFKLQRUDODUJXPHQW,WLVHTXDOO\FOHDUWKDW
+XPSKUH\¶VVHQWHQFHZDVLQHUURUDQGWKDWKHLVHQWLWOHGWR
KDYHKLVVHQWHQFHYDFDWHGDQGUHPDQGHG7KHGLVVHQWPD\
GHVSDLUEXWWKLVLVWKHODZRIWKH&LUFXLWDQGRXUGXW\LVWR
GHFLGHWKLVFDVHDFFRUGLQJWRWKHODZ
(,QHIIHFWLYH$VVLVWDQFHRI&RXQVHO
6WDQGDUGRI5HYLHZ
:HUHYLHZGHQRYRDGHIHQGDQW¶VFODLPWKDWKHZDVGHQLHG
WKHHIIHFWLYHDVVLVWDQFHRIFRXQVHO6HH6LPVY/LYHVD\
)G WK&LU
$QDO\VLV
+XPSKUH\FRQWHQGVWKDWLQIRXUUHVSHFWVWKHSHUIRUPDQFH
RIKLVFRXQVHO'DYLG'XGOH\IHOOEHORZWKDWUHTXLUHGE\WKH
6L[WK $PHQGPHQW )LUVW DV GLVFXVVHG DERYH LQ 3DUW
,,,%E 'XGOH\ IDLOHG WR UDLVH D WLPHO\ FKDOOHQJH WR WKH
*RYHUQPHQW¶VDOOHJHGO\GLVFULPLQDWRU\XVHRILWVSHUHPSWRU\
FKDOOHQJHVWRH[FOXGHWZR$IULFDQ$PHULFDQVIURPWKHMXU\
6HFRQG DV GLVFXVVHG DERYH DW 3DUW ,,,%D +XPSKUH\
FRQWHQGVWKDW'XGOH\¶VRSHUDWLRQXQGHUDFRQIOLFWRILQWHUHVW
FRQVWLWXWHGSHUVHLQHIIHFWLYHDVVLVWDQFH7KLUG'XGOH\PDGH
QRDUJXPHQWDQGSUHVHQWHGQRPLWLJDWLRQHYLGHQFHLQVXSSRUW
RIDGRZQZDUGGHSDUWXUH)LQDOO\'XGOH\IDLOHGWRREMHFWWR
WKH *RYHUQPHQW¶V LPSURSHU ³XQH[SODLQHG ZHDOWK´
DUJXPHQW WKH*RYHUQPHQW¶VPLVXVHRIWD[UHWXUQVDQG
,56 WHVWLPRQ\ WKH *RYHUQPHQW¶V LPSURSHU DUJXPHQWV
FRQFHUQLQJ ³SHUVRQDO XVH´ GUXJ TXDQWLWLHV WKH
*RYHUQPHQW¶V LPSURSHU DUJXPHQW FRQFHUQLQJ LWV EHOLHI LQ
+XPSKUH\¶V JXLOW WKH *RYHUQPHQW¶V GLVFULPLQDWRU\
H[HUFLVHRISHUHPSWRU\FKDOOHQJHVDQG WKHGLVWULFWFRXUW¶V
XVHRIGHILFLHQWMXU\LQVWUXFWLRQV
%HFDXVH LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO FODLPV DUH
FXVWRPDULO\WKHVXEMHFWRID86&†SRVWFRQYLFWLRQ
SURFHHGLQJZHJHQHUDOO\GHFOLQHWRUHYLHZWKRVHFODLPVWKDW

-- 44 of 44 --