00a0204p.06

7KH +RQRUDEOH 'HQLVH 3DJH +RRG 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
-2+1 -5 025*$1
'HIHQGDQW$SSHOODQW
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH:HVWHUQ'LVWULFWRI7HQQHVVHHDW-DFNVRQ
1R²-DPHV'7RGG'LVWULFW-XGJH
$UJXHG6HSWHPEHU
'HFLGHGDQG)LOHG-XQH
%HIRUH%$7&+(/'(5DQG*,/0$1&LUFXLW-XGJHV
+22''LVWULFW-XGJH
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' 6WHSKHQ % 6KDQNPDQ 2)),&( 2) 7+(
)('(5$/ 38%/,& '()(1'(5 )25 7+( :(67(51
',675,&7 2) 7(11(66(( 0HPSKLV 7HQQHVVHH IRU

-- 1 of 10 --

8QLWHG6WDWHVY0RUJDQ 1R
$SSHOODQW5LFKDUG/HLJK*ULQDOGV$66,67$1781,7('
67$7(6 $77251(< -DFNVRQ 7HQQHVVHH IRU $SSHOOHH
21 %5,() 6WHSKHQ % 6KDQNPDQ 2)),&( 2) 7+(
)('(5$/ 38%/,& '()(1'(5 )25 7+( :(67(51
',675,&7 2) 7(11(66(( 0HPSKLV 7HQQHVVHH IRU
$SSHOODQW5LFKDUG/HLJK*ULQDOGV$66,67$1781,7('
67$7(6$77251(<-DFNVRQ7HQQHVVHHIRU$SSHOOHH
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
'(1,6(3$*(+22''LVWULFW-XGJH'HIHQGDQW-RKQ
-50RUJDQDSSHDOVKLVMXU\FRQYLFWLRQIRUEHLQJDIHORQLQ
SRVVHVVLRQRIDILUHDUPLQYLRODWLRQRI86&† J
SRVVHVVLRQRIDQXQUHJLVWHUHGPDFKLQHJXQLQYLRODWLRQRI
86& † G DQG SRVVHVVLRQ RI D PDFKLQH JXQ LQ
YLRODWLRQRI86&† R 0RUJDQFODLPVWKHGLVWULFW
FRXUWVKRXOGKDYHDOORZHGKLPWRLQWURGXFHHYLGHQFHWKDWKLV
ULJKWV WR SRVVHVV ILUHDUPV ZHUH UHVWRUHG DQG VKRXOG KDYH
JLYHQDMXU\LQVWUXFWLRQRQHQWUDSPHQWE\HVWRSSHOEHFDXVH
KHFODLPVDSROLFHRIILFHUOHGKLPWREHOLHYHLWZDVOHJDOIRU
KLP WR SRVVHVV D ILUHDUP 0RUJDQ DOVR FODLPV WKHUH ZDV
LQVXIILFLHQW HYLGHQFH WR FRQYLFW KLP RI SRVVHVVLRQ RI D
PDFKLQH JXQ EHFDXVH KH GLG QRW NQRZ WKH ILUHDUP ZDV D
PDFKLQHJXQ)RUWKHUHDVRQVVHWIRUWKEHORZZH$)),50
WKHGLVWULFWFRXUWRQDOOWKUHHLVVXHV
,%$&.*5281'
$ 3URFHGXUDO+LVWRU\
0RUJDQZDVDUUHVWHGRQ2FWREHU2Q)HEUXDU\
D IHGHUDO JUDQG MXU\ LQ WKH :HVWHUQ 'LVWULFW RI
7HQQHVVHHLQGLFWHG0RUJDQRQIRXUFRXQWV FRQYLFWHGIHORQ
LQSRVVHVVLRQRIDILUHDUPLQYLRODWLRQRI86&† J
SRVVHVVLRQRIDQXQUHJLVWHUHGFKURPHVLOHQFHULQYLRODWLRQ
RI 86& † D SRVVHVVLRQ RI DQ XQUHJLVWHUHG
ILUHDUP LQ YLRODWLRQ RI 86& † G DQG
SRVVHVVLRQ RI D PDFKLQH JXQ LQ YLRODWLRQ RI 86&
1R 8QLWHG6WDWHVY0RUJDQ
ERRN YDOXH RI HYHQ WKRXJK KLV SXUFKDVH SULFH ZDV
*LYHQ0RUJDQ¶VVWDWXVDVDJXQHQWKXVLDVWDUDWLRQDO
MXU\FRXOGKDYHIRXQGKLVWHVWLPRQ\±WKDWKHGLGQRWLQVSHFW
WKH ZHDSRQ IRU D WKLUG VHOHFWRU VZLWFK RU RWKHU DXWRPDWLF
ZHDSRQLGHQWLILHUV±ODFNHGFUHGLELOLW\0RUJDQPDNHVPXFK
RIWKHIDFWWKDW$JHQW%DUQHWWDQGRWKHUDJHQWVGLGQRWNQRZ
LI WKH ILUHDUP ZDV DXWRPDWLF +RZHYHU WKH VWDQGDUG LV
ZKHWKHU 0RUJDQ NQHZ WKH ZHDSRQ ZDV DXWRPDWLF 7KH
HYLGHQFH ZDV VXIILFLHQW IRU D UHDVRQDEOH MXU\ WR ILQG WKDW
0RUJDQQRWRQO\KDGDZLGHUDQJHRINQRZOHGJHRIILUHDUPV
EXWDOVRNQHZWKHGLIIHUHQFHEHWZHHQDXWRPDWLFDQGVHPL
DXWRPDWLFZHDSRQVDQGNQHZWKDWEHFDXVHWKLV0$.KDG
WKUHH VHOHFWRU VZLWFKHV DQG FRXOG EH VROG DW D KLJKHU EOXH
ERRN SULFH WKDQ D VHPLDXWRPDWLF 0$. LW ZDV DQ
DXWRPDWLFZHDSRQ
9&21&/86,21
)RUWKHVHUHDVRQVZH$)),50WKHMXGJPHQWRIWKHGLVWULFW
FRXUW

-- 2 of 10 --

8QLWHG6WDWHVY0RUJDQ 1R
$ 6WDQGDUGRI5HYLHZ
:HUHYLHZDFODLPRILQVXIILFLHQF\RIWKHHYLGHQFHLQWKH
OLJKWPRVWIDYRUDEOHWRWKHSURVHFXWLRQDQGPXVWGHWHUPLQH
ZKHWKHU DQ\ UDWLRQDO WULHU RI IDFW FRXOG KDYH IRXQG WKH
HVVHQWLDOHOHPHQWVRIWKHFULPHEH\RQGDUHDVRQDEOHGRXEW
8QLWHG6WDWHVY:ULJKW)G WK&LU
8QLWHG 6WDWHV Y %ODNHQH\ )G WK &LU
$UHYLHZLQJFRXUWPXVWUHYHUVHRQO\LIWKHUHFRUGDV
DZKROHLVQRWVXSSRUWHGE\VXEVWDQWLDOHYLGHQFH%ODNHQH\
)GDW
% $QDO\VLV
,Q 6WDSOHV Y 8QLWHG 6WDWHV 86 WKH
6XSUHPH&RXUWKHOGWKDWLQRUGHUIRUWKHJRYHUQPHQWWRSURYH
WKDWDGHIHQGDQWYLRODWHG86&† G WKHJRYHUQPHQW
PXVW VKRZ WKDW WKH GHIHQGDQW NQHZ RI WKH IHDWXUHV RI WKH
ILUHDUP WKDW EULQJ LW ZLWKLQ WKH SXUYLHZ RI WKH VWDWXWRU\
GHILQLWLRQRIDPDFKLQHJXQ
9LHZLQJ WKH HYLGHQFH LQ WKH OLJKW PRVW IDYRUDEOH WR WKH
SURVHFXWLRQ ZH FRQFOXGH WKDW VXIILFLHQW HYLGHQFH ZDV
SUHVHQWHGDWWULDOWRSHUPLWDUDWLRQDOWULHURIIDFWWRILQGWKH
HVVHQWLDOHOHPHQWVRIWKHFULPHRISRVVHVVLRQRIDPDFKLQH
JXQEH\RQGDUHDVRQDEOHGRXEW$JHQW&RRQH\WHVWLILHGWKDW
WKHILUHDUPKDGDWKLUGVHOHFWRUVZLWFKDQGRWKHULQVWDOODWLRQV
ZKLFK FRQYHUWHG WKH ILUHDUP LQWR DQ DXWRPDWLF ZHDSRQ
$OWKRXJK 0RUJDQ WHVWLILHG WKDW KH RQO\ KDG DYHUDJH
NQRZOHGJHRIILUHDUPVKHKDGEHHQWR9LHWQDPKDGVHHQ0
VDQGNQHZWKDWVRPHRIWKHPZHUHDXWRPDWLFEHFDXVHWKH\
KDG D WKLUG VHOHFWRU VZLWFK )URP WR 0RUJDQ
DYLGO\WUDGHGVROGDQGWRRNLQSDZQYDULRXVILUHDUPVDQG
KDGDSHUVRQDOFROOHFWLRQRIVL[W\WRHLJKW\ILUHDUPV0RUJDQ
NHSWDOHGJHURIWKHW\SHVRIZHDSRQVWKHLUSXUFKDVHSULFHV
DQGWKHLUEOXHERRNYDOXHV0RUJDQDGPLWWHGWKDWKHNQHZ
WKHGLIIHUHQFHEHWZHHQDVHPLDXWRPDWLFDQGDQDXWRPDWLF
ZHDSRQVSHFLILFDOO\VWDWLQJWKDWDVHPLDXWRPDWLFKDGWZR
VHOHFWRU VZLWFKHV ZKLOH DQ DXWRPDWLF KDG WKUHH $OWKRXJK
0RUJDQWHVWLILHGWKDWKHGLGQRWNQRZWKH0$.1RULQFR
ZDVDXWRPDWLFZKHQKHERXJKWLWKHZDVDEOHWRDVVHVVDEOXH
1R 8QLWHG6WDWHVY0RUJDQ
† R 7KHFDVHZDVWULHGWRDMXU\WKDWIRXQG0RUJDQ
JXLOW\RQ&RXQWVDQGEXWQRWJXLOW\RQ&RXQW7KH
FRXUWVHQWHQFHG0RUJDQWRIRUW\VL[PRQWKV¶LPSULVRQPHQW
IROORZHG E\ WZR \HDUV RI VXSHUYLVHG UHOHDVH 7KLV WLPHO\
DSSHDOIROORZHG
% )DFWXDO+LVWRU\
'XULQJWKHVXPPHURI6SHFLDO$JHQW-RH\+DOORIWKH
7UHDVXU\ 'HSDUWPHQW¶V %XUHDX RI $OFRKRO 7REDFFR DQG
)LUHDUPV $7) ORFDWHGLQ2[IRUG0LVVLVVLSSLDORQJZLWK
6SHFLDO$JHQW5REELH5RELQVRQLQWHUYLHZHG0RUJDQ7KH
DJHQWVEHFDPHDZDUHRI0RUJDQDIWHUWKH\WUDFHGDZHDSRQWR
KLP GXULQJ DQ LQYHVWLJDWLRQ FRQGXFWHG LQ +XQWVYLOOH
$ODEDPD:KHQDVNHG0RUJDQFODLPHGWKDWKHKDGQRSULRU
FRQYLFWLRQV0RUJDQVWDWHGWKDWKHZDVDUUHVWHGLQWKHODWH
VEXWWKHMXGJHWRRNFDUHRILW7KHRIILFHUVODWHUIRXQG
WKDW0RUJDQKDGSUHYLRXVO\EHHQFRQYLFWHGRIWKLUGGHJUHH
EXUJODU\RQ0DUFKDQGVHQWHQFHGWRWKUHH\HDUV¶
LPSULVRQPHQW
2Q -XO\ $JHQW +DOO LQ FRQMXQFWLRQ ZLWK WKH
$OFRUQ &RXQW\ 6KHULII¶V 'HSDUWPHQW LQ 0LVVLVVLSSL
WHOHSKRQHG 0RUJDQ DQG DVNHG WKDW KH FRPH LQ IRU DQ
LQWHUYLHZ$JHQW+DOODGYLVHG0RUJDQRIKLV0LUDQGDULJKWV
DQGWRRNKLVVWDWHPHQW$WVRPHSRLQWGXULQJWKHVWDWHPHQW
0RUJDQVDLG,ILJXUHGWKDWRQHGD\,ZRXOGJHWFDXJKWXS
ZLWKDQG,NQHZWKLVZDVDYLRODWLRQRIWKHODZ0RUJDQ
DGPLWWHGWKDWKHRZQHGDERXWVL[W\RQHILUHDUPV$JHQW+DOO
WROG0RUJDQWKDWLWZDVLOOHJDOIRUKLPWRSRVVHVVWKHJXQV
VXJJHVWHGWKDWKHJLYHWKHILUHDUPVWRHLWKHUDUHODWLYHRUKLV
DWWRUQH\DQGVDLGWKDWLWZRXOGEHLOOHJDOIRUKLPWRVHOOWKH
ILUHDUPV0RUJDQVWDWHGWKDWKHLQWHQGHGWRJLYHWKHILUHDUPV
WRKLVSDUHQWV
2Q2FWREHU6SHFLDO$JHQW-DFN%DUQHWWRIWKH$7)
DGYLVHG WKH 0F1DLU\ &RXQW\ 6KHULII¶V 'HSDUWPHQW WKDW KH
ZDVDVVLJQHGWRLQYHVWLJDWH0RUJDQ:KLOH$JHQW%DUQHWW
ZDV DW WKH 6KHULII¶V 'HSDUWPHQW 0RUJDQ WHOHSKRQHG WKH
RIILFH DQG UHTXHVWHG WR VSHDN WR KLP $JHQW %DUQHWW WROG
0RUJDQWKDWKHZDVXQGHULQYHVWLJDWLRQIRUILUHDUPVGHDOLQJ

-- 3 of 10 --

8QLWHG6WDWHVY0RUJDQ 1R
DQG 0RUJDQ DVNHG LI KH FRXOG FRPH GRZQ DQG WDON WR WKH
DJHQW:KHQ0RUJDQDUULYHGKHDQG$JHQW%DUQHWWZHQWLQWR
DFRQIHUHQFHURRPWRWDON0RUJDQDGPLWWHGWKDWKHKDGD
SULRUFRQYLFWLRQDQGWKDWKHFXUUHQWO\SRVVHVVHGILUHDUPVLQ
KLVKRPH0RUJDQVWDWHGWKDWKHKDGSUHYLRXVO\VSRNHQZLWK
$JHQW-RH\+DOO0RUJDQDGPLWWHGWKDW$JHQW+DOOWROGKLP
WRJHWULGRIWKHZHDSRQVEXWH[SODLQHGWKDWKHHQMR\HGJRLQJ
WRJXQVKRZVJRLQJWRIOHDPDUNHWVDQGEX\LQJVHOOLQJDQG
WUDGLQJJXQV0RUJDQLQGLFDWHGWKDWKHKDGUHFHQWO\VROGDQG
SXUFKDVHGDQXPEHURIJXQVHYHQDIWHUWDONLQJWR$JHQW+DOO
:KHQ0RUJDQDVNHG$JHQW%DUQHWWKRZKHFRXOGJHWULGRI
WKHJXQV$JHQW%DUQHWWUHSOLHGWKDWKHFRXOGJLYHWKHPWRD
UHODWLYH EXW KH FRXOG QRW KDYH DFFHVV WR WKHP 0RUJDQ
FRQVHQWHGWRDVHDUFKRIKLVKRPHZKHUH$JHQW%DUQHWWIRXQG
ILIW\HLJKWILUHDUPVORFDWHGWKURXJKRXWKLVUHVLGHQFH
-XVW EHIRUH WKH VHDUFK ZDV FRQFOXGHG WKH DJHQWDVNHG
0RUJDQ LI KH KDG D VLOHQFHU DQG KH UHSOLHG WKDW KH KDG D
VXSSUHVVRU7KHDJHQWODWHUUHFRYHUHGDVLOHQFHUZKLFKZDV
O\LQJXQGHUDKDWRQWRSRIDFKHVWRIGUDZHUV$JHQW%DUQHWW
DOVRDVNHGZKHWKHU0RUJDQKDGDQ\PDFKLQHJXQVEHFDXVHKH
KDG UHFHLYHG LQIRUPDWLRQ WKDW 0RUJDQ KDG D 0$.
PDFKLQHJXQ0RUJDQLQVLVWHGWKDWKHGLGQRW
'XULQJ WKH VHDUFK $JHQW %DUQHWW IRXQG D ULIOH WKDW KH
VXVSHFWHGWREHDQLOOHJDOILUHDUP7KHDJHQWWHVWLILHGWKDWKH
ZDVQRWFHUWDLQLIWKHILUHDUPZDVDPDFKLQHJXQVLQFHKHZDV
QRWDILUHDUPVH[SHUWDQGWKHZHDSRQZDVLQWZRSDUWVZKHQ
KHIRXQGLW$7)6SHFLDO$JHQW7KRPDV/HVQDNVHQWWKH
SLHFHVRIWKHILUHDUPWRDODERUDWRU\LQ:DVKLQJWRQ'&IRU
LQVSHFWLRQ$JHQW/HVQDNWHVWLILHGDWWULDOWKDWKHDQGRWKHU
DJHQWVKDGQRGHILQLWLYHRSLQLRQDVWRZKHWKHUWKHILUHDUPZDV
DXWRPDWLF$WWULDO0LFKDHO&RRQH\DILUHDUPVHQIRUFHPHQW
RIILFHU ZLWK WKH $7) LGHQWLILHG WKH ILUHDUP DV D 0$.
6SRUWHU2IILFHU&RRQH\WHVWLILHGWKDWKHUHFHLYHGWKHILUHDUP
LQIRXUSDUWVDQGWKDWWKHILUHDUPZDVPDGHLQ&KLQDDVD
VHPLDXWRPDWLFZHDSRQEXWKDGEHHQFRQYHUWHGWRDXWRPDWLF
E\ LQVWDOOLQJ DPRQJ RWKHU WKLQJV DQ DXWRPDWLF VHDU DQG D
WKLUGVHOHFWRUSRVLWLRQ2IILFHU&RRQH\WHVWILUHGWKHILUHDUP
DQGGHWHUPLQHGWKDWLWZDVDQDXWRPDWLFZHDSRQ$IWHUWKH
1R 8QLWHG6WDWHVY0RUJDQ
FKDUJHDQGLVVRLPSRUWDQWWKDWIDLOXUHWRJLYHLWVXEVWDQWLDOO\
LPSDLUVWKHGHIHQVH8QLWHG6WDWHVY6DVVDN)G
WK&LU
% $QDO\VLV
,QRUGHUWRSURYHWKHGHIHQVHRIHQWUDSPHQWE\HVWRSSHOD
GHIHQGDQWPXVWVKRZWKDW DJRYHUQPHQWDJHQWDQQRXQFHG
WKDWWKHFKDUJHGFRQGXFWZDVOHJDO WKHGHIHQGDQWUHOLHGRQ
WKHDJHQW¶VDQQRXQFHPHQW WKHGHIHQGDQW¶VUHOLDQFHZDV
UHDVRQDEOHDQG JLYHQWKHGHIHQGDQW¶VUHOLDQFHSURVHFXWLRQ
ZRXOGEHXQIDLU8QLWHG6WDWHVY/HYLQ)G
WK&LU
7KH GLVWULFW FRXUW GLG QRW HUU LQ UHIXVLQJ WR JLYH DQ
LQVWUXFWLRQRQHQWUDSPHQWE\HVWRSSHO1RJRYHUQPHQWDJHQW
WROG0RUJDQKDYLQJWKHVWDWXVRIDFRQYLFWHGIHORQWKDWKH
FRXOG OHJDOO\ SRVVHVV D ILUHDUP 2Q WKH FRQWUDU\ LW LV
XQGLVSXWHGWKDW$JHQW+DOOWROG0RUJDQWKDWLWZDVLOOHJDOIRU
KLPWRSRVVHVVRUVHOOWKHJXQV$JHQW+DOOWHVWLILHGWKDWKH
WROG0RUJDQWKDWDVDFRQYLFWHGIHORQKHFRXOGQRWSRVVHVV
JXQVDQGWROG0RUJDQWRJLYHDQGQRWVHOOWKHILUHDUPVWRD
UHODWLYHRUKLVDWWRUQH\$JHQW%DUQHWWWHVWLILHGWKDW0RUJDQ
DGPLWWHG WKDW $JHQW +DOO DGYLVHG KLP WR JHW ULG RI WKH
ILUHDUPV0RUJDQ¶VIRUPHUILDQFHpWHVWLILHGWKDWKHWROGKHU
WKDW$JHQW+DOOKDGDGYLVHGKLPWRJHWULGRIWKHILUHDUPV
EHFDXVH LW ZDV LOOHJDO IRU KLP WR SRVVHVV WKHP 0RUJDQ
KLPVHOIWHVWLILHGWRWKHVDPH7KHGLVWULFWFRXUWGLGQRWHUULQ
ILQGLQJWKDWWKHILUVWHOHPHQWZDVQRWPHWDQGDFFRUGLQJO\
0RUJDQZDVQRWHQWLWOHGWRWKHLQVWUXFWLRQRQHQWUDSPHQWE\
HVWRSSHO
,968)),&,(1&<2)(9,'(1&(2)3266(66,21
2)0$&+,1(*81
$VKLVILQDODVVLJQPHQWRIHUURU0RUJDQDUJXHVWKDWWKHUH
ZDVLQVXIILFLHQWHYLGHQFHWRFRQYLFWKLPRISRVVHVVLRQRIDQ
XQUHJLVWHUHGPDFKLQHJXQLQYLRODWLRQRI86&† G
DQGSRVVHVVLRQRIDPDFKLQHJXQLQYLRODWLRQRI86&
† R EHFDXVHKHGLGQRWNQRZWKDWWKHILUHDUPZDVDQ
DXWRPDWLFZHDSRQ

-- 4 of 10 --

8QLWHG6WDWHVY0RUJDQ 1R
0RUJDQ¶VEXUJODU\FRQYLFWLRQLVDFULPHSXQLVKDEOH
E\PRUHWKDQRQH\HDU0RUJDQKDGKLVFLYLOULJKWVUHVWRUHG
LQDIWHUKHSRVVHVVHGWKHILUHDUPVRQ2FWREHU
%HFDXVH WKH EXUJODU\ FRQYLFWLRQ ZDV D ILUHDUPV
GLVDEOLQJRIIHQVHRQWKHGD\WKDWKHSRVVHVVHGWKHILUHDUPWKH
GLVWULFW FRXUW FRUUHFWO\ FRQFOXGHG WKDW 0RUJDQ¶V SRVW
LQGLFWPHQWUHVWRUDWLRQRIFLYLOULJKWVZDVLPPDWHULDOWRKLV
FKDUJHRIEHLQJDIHORQLQSRVVHVVLRQRIDILUHDUP
,,,(175$30(17%<(67233(/
$WWKHFORVHRIHYLGHQFH0RUJDQDUJXHGWKDWWKHGLVWULFW
FRXUW VKRXOG LQVWUXFW WKH MXU\ RQ WKH OHJDO GHIHQVH RI
HQWUDSPHQWE\HVWRSSHO0RUJDQFODLPHGWKDW$JHQW+DOO
WROG0RUJDQWRGLVSRVHRIWKHILUHDUPVEXWQHLWKHUJDYHKLP
DWLPHOLPLWQRUFKHFNHGWRPDNH VXUH KHGLVSRVHGRIWKH
ZHDSRQVDQGWKHUHIRUHWKHMXU\VKRXOGKDYHGHFLGHGZKHWKHU
LQNHHSLQJWKHZHDSRQVKHUHOLHGRQWKHVWDWHPHQWRI$JHQW
+DOO7KHGLVWULFWFRXUWGHQLHGWKHUHTXHVWILQGLQJWKDWLQ
RUGHUWREHHQWLWOHGWRWKHLQVWUXFWLRQ0RUJDQZDVUHTXLUHGWR
SUHVHQWHYLGHQFHWKDWDJRYHUQPHQWDJHQWKDGWROGKLPWKDWDQ
DFWLRQZDVOHJDO0RUJDQKRZHYHUSUHVHQWHGQRHYLGHQFH
WKDWDQ\RQHWROGKLPWKDWKLVSRVVHVVLRQRIWKHILUHDUPVZDV
OHJDO,QIDFW0RUJDQ¶VRZQWHVWLPRQ\PDGHLWFOHDUWKDWWKH
DJHQWVKDGWROGKLPMXVWWKHRSSRVLWH
$ 6WDQGDUGRI5HYLHZ
$GLVWULFWFRXUWPXVWJUDQWDQLQVWUXFWLRQRQWKHGHIHQGDQW¶V
WKHRU\ RI WKH FDVH LI WKH WKHRU\ KDV VRPH VXSSRUW LQ WKH
HYLGHQFH DQG WKH ODZ 8QLWHG 6WDWHV Y 'XQFDQ )G
WK&LU 8QLWHG6WDWHVY*DUQHU
)G WK&LU $QLQVWUXFWLRQZKLFKODFNV
HYLGHQWLDU\VXSSRUWRULVEDVHGRQVSHFXODWLRQVKRXOGQRWEH
JLYHQ 8QLWHG 6WDWHV Y /LQGR )G WK &LU
7KHSURSRVHGLQVWUXFWLRQPXVWDGHTXDWHO\VXEPLWWKH
LVVXHVDQGDSSOLFDEOHODZWRWKHMXU\8QLWHG6WDWHVY%URZQ
)G WK&LU :KHQUHYLHZLQJ D
GLVWULFW FRXUW¶V GHFLVLRQ QRW WR JLYH D MXU\ LQVWUXFWLRQ WKH
UHYLHZLQJFRXUWPXVWUHYHUVHRQO\LILWILQGVWKDWWKHSURSRVHG
LQVWUXFWLRQ LV FRUUHFW LV QRW VXEVWDQWLDOO\ FRYHUHG E\ WKH
1R 8QLWHG6WDWHVY0RUJDQ
ODEUHSRUWRQWKHILUHDUPZDVUHFHLYHG0RUJDQZDVLQGLFWHG
IRUSRVVHVVLRQRIDPDFKLQHJXQ
&\QWKLD(UYLQZKRKDGEHHQHQJDJHGWRPDUU\0RUJDQ
SULRUWRKLVDUUHVWLQ2FWREHUWHVWLILHGDWWULDOWKDWKHKDG
VHYHUDOILUHDUPVLQKLVKRXVH0V(UYLQVWDWHGWKDW0RUJDQ
WROGKHUWKDWDQ$7)DJHQWKDGWROGKLPWKDWLWZDVLOOHJDOIRU
KLPWRKDYHILUHDUPVEHFDXVHKHZDVDFRQYLFWHGIHORQDQG
WKDWKHFRXOGQRWVHOOWKHILUHDUPVEXWFRXOGJLYHWKHPWRKLV
SDUHQWV$IWHUWKHFRQYHUVDWLRQZLWKWKH$7)DJHQW0RUJDQ
ERXJKWDWOHDVWRQHILUHDUP0RUJDQWROG0V(UYLQWKDWKH
QHHGHGWRJHWULGRID0DJRUD0$.RUVRPHWKLQJ
OLNHWKDWEHFDXVHKHZDVQRWVXSSRVHGWRKDYHLWEXWVKHGLG
QRWNQRZLI0RUJDQGLVSRVHGRILW
0RUJDQDOVRWHVWLILHGDWWULDO0RUJDQVWDWHGWKDWKHZDV
FRQYLFWHGIRUDEXUJODU\DQGSDUROHGDURXQG+H
EHJDQ SXUFKDVLQJ ZHDSRQV LQ DQG KDG ERXJKW HLJKW\
ILUHDUPVE\-XO\0RUJDQNHSWDOHGJHUOLVWLQJWKHVHULDO
QXPEHUVWKHSXUFKDVHSULFHDQGWKHEOXHERRNYDOXHRIKLV
SXUFKDVHV:KHQ0RUJDQILUVWVSRNHZLWK$JHQW+DOOKHWROG
WKHDJHQWWKDWKHKDGILUHDUPVDQGWKHDJHQWWROGKLPWRJHW
ULGRIWKHPDQGQRWWREX\DQ\PRUH0RUJDQFODLPVWKDWLQ
-XO\ $JHQW +DOO DJDLQ WROG KLP QRW WR SRVVHVV WKH
ILUHDUPVDQGVWDWHGWKDWKH>$JHQW+DOO@FRXOGFRPHRXWDQG
WDNHWKHPWKHQEXWKHZDVQ WJRLQJWREHQRKRUVH VEXWWDERXW
LW DQG IRU PH >0RUJDQ@ WR MXVW JHW ULG RI WKHP 0RUJDQ
EHJDQVHOOLQJWKHJXQVWRRWKHUFROOHFWRUVDQGNHSWDUHFRUGRI
WKHWUDQVDFWLRQVLQKLVOHGJHU0RUJDQWHVWLILHGWKDWKHKDGQR
FRQWDFWZLWKODZHQIRUFHPHQWDJDLQXQWLO2FWREHU
ZKHQKHJDYHFRQVHQWIRU$JHQW%DUQHWWWRVHDUFKKLVKRPH
%\WKLVWLPH0RUJDQKDGVL[W\ILUHDUPVZKLFKKHKDGQRW
GLVSRVHG RI EHFDXVH KH KDG WRR PXFK PRQH\ LQYHVWHG LQ
WKHPDQGEHFDXVHKHKDGUHOLHGRQWKHVWDWHPHQWRI$JHQW
+DOO0RUJDQFODLPVWKDWDIWHUWKHVHDUFKWKHDJHQWVOHIWWZR
RI WKH ILUHDUPV VR KH WRRN WKHP WR KLV IDWKHU¶V KRXVH
0RUJDQPDLQWDLQVWKDWKHWKRXJKWKHFRXOGSRVVHVVILUHDUPV
VHYHQ\HDUVDIWHUKHVHUYHGKLVVHQWHQFH

-- 5 of 10 --

8QLWHG6WDWHVY0RUJDQ 1R
$W WULDO WKH *RYHUQPHQW FODLPHG WKDW LW KDG ILOHG D ZULWWHQ PRWLRQ
LQ OLPLQH 0RUJDQ LQGLFDWHG WKDW KH GLG QRW UHFHLYH D ILOHG VWDPSHG FRS\
DQG WKH GLVWULFW FRXUW VWDWHG WKDW LW GLG QRW UHFHLYH D FRS\ DW DOO 7KH
GLVWULFW FRXUW WKHQ FRQVLGHUHG WKH PRWLRQ DV DQ RUDO PRWLRQ
-XGJH %ODFNZRRG LV D &LUFXLW &RXUW -XGJH RI 0F1DLU\ &RXQW\
7HQQHVVHH 7KH *RYHUQPHQW QRWHG WKDW LW GLG QRW NQRZ ZKHWKHU -XGJH
%ODFNZRRG NQHZ RI WKH SHQGLQJ LQGLFWPHQW EHIRUH WKH FRXUW UHVWRUHG
0RUJDQ¶V FLYLO ULJKWV
0RUJDQ WHVWLILHG WKDW KH ERXJKW WKH 0$. 1RULQFR
&KLQHVHULIOHDWDIOHDPDUNHWDQGWKDWLWZDVGLVPDQWOHGZKHQ
KHERXJKWLWDQGGLGQRWKDYHWKHLQQHUZRUNLQJV$VSDUWRI
DSDFNDJHGHDO0RUJDQUHFHLYHGRWKHUSDUWVDPPXQLWLRQDQG
VFRSHV0RUJDQSDLGDWRWDOSULFHRIEXWDGPLWWHGWKDW
QR1RULQFRVKDGWKDWEOXHERRNYDOXH+HSODQQHGWRVHOOWKH
ILUHDUP IRU 0RUJDQ LQVLVWHG WKDW KH GLG QRW IXOO\
LQVSHFWWKHZHDSRQGLGQRWNQRZLWZDVIXOO\DXWRPDWLFKDG
QRW DGMXVWHG LW WR EH DXWRPDWLF DQG QHYHU DVVHPEOHG WKH
ILUHDUP0RUJDQVWDWHGKHRQO\KDGDYHUDJHNQRZOHGJHRI
ILUHDUPVEXWVXEPLWWHGWKDWKHNQHZWKHGLIIHUHQFHEHWZHHQ
DVHPLDXWRPDWLFDQGDQDXWRPDWLFZHDSRQ6SHFLILFDOO\KH
WHVWLILHG WKDW D VHPLDXWRPDWLF KDG WZR VHOHFWRU VZLWFKHV
ZKLOHDQDXWRPDWLFKDGWKUHH0RUJDQNQHZWKDWDQ0
KDGDWKLUGVHOHFWRUVZLWFKDQGWKDWVRPHRIWKHPZHUHIXOO\
DXWRPDWLF
,,)(/21,13266(66,21
2QWKHGD\RIWULDOWKH*RYHUQPHQWPDGHDQRUDOPRWLRQLQ
OLPLQHWRSUHFOXGH0RUJDQIURPLQWURGXFLQJHYLGHQFHWKDW
DIWHUKLVLQGLFWPHQW&LUFXLW&RXUW-XGJH.HUU\%ODFNZRRG
UHVWRUHGKLVFLYLOULJKWV7KH*RYHUQPHQWDUJXHGWKDWEHFDXVH
0RUJDQSRVVHVVHGWKHZHDSRQVLQ2FWREHUEHIRUHKH
KDGKLVULJKWVUHVWRUHGLQ)HEUXDU\WKHUHVWRUDWLRQKDG
QREHDULQJRQWKHFDVH0RUJDQFLWHGWZRIHGHUDOFDVHVWKDW
LQGLFDWHGWKHHYLGHQFHVKRXOGQRWEHSUHVHQWHGEXWDUJXHG
WKDWWKHVHFDVHVZHUHGHFLGHGEHIRUHWKHHIIHFWLYHGDWHRIWKH
VWDWXWHXQGHUZKLFKKHZDVLQGLFWHG0RUJDQWKHQDUJXHGWKDW
WKHVWDWXWHZDVFOHDUDQGXQDPELJXRXVDQGWKDWQRWKLQJLQWKH
1R 8QLWHG6WDWHVY0RUJDQ
LVUHOLHYHGRIKLVGLVDELOLW\E\VRPHDIILUPDWLYHDFWLRQVXFK
DVDTXDOLI\LQJSDUGRQ/HZLV86DW7KH
UXOH RI OHQLW\ GRHV QRW DSSO\ EHFDXVH WKH VWDWXWH LV
XQDPELJXRXV,WLVWKHVWDWXVRIWKHGHIHQGDQWRQWKHGDWHKH
SRVVHVVHG WKH ILUHDUP DV DOOHJHG LQ WKH LQGLFWPHQW WKDW
FRQWUROVZKHWKHURUQRWKHKDVYLRODWHGWKHVWDWXWHQRWKLV
ODWHUVWDWXVDIWHUKLVFLYLOULJKWVKDYHEHHQUHVWRUHG
7KH VWDWXWRU\ VWUXFWXUH RI † IXUWKHU LQGLFDWHV WKDW
&RQJUHVVLQWHQGHGWRHVWDEOLVKDFODVVRILQGLYLGXDOVZKRDUH
SUHVXPSWLYHO\GDQJHURXVDQGGLGQRWOLPLWWKHFODVVWRWKRVH
ZKRDUHYDOLGO\FRQYLFWHGRUHYHQLQGLFWHG6HH/HZLV
86DW6HHHJ86&† Q :HVW6XSS
SURKLELWLQJSRVVHVVLRQRIDILUHDUPE\RQHLQGLFWHGIRUD
FULPHSXQLVKDEOHE\LPSULVRQPHQWIRUDWHUPH[FHHGLQJRQH
\HDU
/HJLVODWLYH KLVWRU\ FLWHG LQ .DKRH DOVR VXSSRUWV WKLV
ILQGLQJ 6HFWLRQ D ZDV VSHFLILFDOO\ DPHQGHG WR
RYHUUXOH'LFNHUVRQDQG7KUDOOZLWKWKHUHVXOWEHLQJWKDWD
VWDWH IHORQ\ FRQYLFWLRQ ZRXOG QR ORQJHU EH D GLVDEOLQJ
FLUFXPVWDQFHDIWHUWKHFRQYLFWLRQZDVVHWDVLGHH[SXQJHGRU
SDUGRQHGRUWKHGHIHQGDQW¶VFLYLOULJKWVZHUHUHVWRUHGLQVWDWH
FRXUW 6HH .DKRH )G DW 1RWKLQJ LQ WKH
DPHQGPHQWRUWKHOHJLVODWLYHKLVWRU\SXUSRUWVWRRYHUUXOHRU
HYHQPRGLI\/HZLV&RQJUHVVZDVFHUWDLQO\DZDUHRI/HZLV
EXWLWGLGQRWDWWHPSWWRDPHQGWKHODQJXDJHRIWKHVWDWXWHWR
SURKLELWDFRXUWIURPXVLQJDSRVWLQGLFWPHQWH[SXQFWLRQRU
UHVWRUDWLRQ RI FLYLO ULJKWV DV D SUHGLFDWH RIIHQVH IRU D
SRVVHVVLRQRIILUHDUPVFKDUJH7KH/HZLVGHFLVLRQUHPDLQV
JRRGODZDQGLVFRQWUROOLQJLQWKLVFDVH
:H DOVR QRWH WKDW LQ DOO RI WKH FDVHV FLWHG KHUHLQ WKH
SUHGLFDWH FRQYLFWLRQV ZHUH UXOHG LQYDOLG 0RUJDQ¶V
FRQYLFWLRQZDVQRWUXOHGLQYDOLGEXWUDWKHUKLVFLYLOULJKWV
ZHUHUHVWRUHG1HYHUWKHOHVVQRWKLQJLQWKHFDVHODZFLWHGQRU
LQWKHOHJLVODWLYHKLVWRU\LQGLFDWHVWKDW&RQJUHVVLQWHQGHGWKH
UHVWRUDWLRQ RI FLYLO ULJKWV WR KDYH D GLIIHUHQW HIIHFW WKDQ
H[SXQFWLRQRUSDUGRQIRUSXUSRVHVRI† D

-- 6 of 10 --

8QLWHG6WDWHVY0RUJDQ 1R
VLPLODUSURYLVLRQZLWKUHVSHFWWRSDUGRQVLQ86&
DSSUHODWLQJWRSRVVHVVLRQRIILUHDUPVEXWWKURXJK
RYHUVLJKWGRHVQRWLQFOXGHDQ\FRQIRUPLQJSURYLVLRQLQ
86& GHDOLQJ ZLWK WKHLU SXUFKDVH RU UHFHLSW
7KLV RYHUVLJKW ZKLFK UHVXOWHG LQ D UXOLQJ WKDW D VWDWH
SDUGRQGRHVQRWSHUPLWDSDUGRQHGFLWL]HQWRUHFHLYHRU
SXUFKDVHDILUHDUPGHVSLWHWKHH[SUHVVSURYLVLRQLQWKH
SDUGRQWKDWKHPD\SRVVHVVLWZRXOGEHFRUUHFWHG,QWKH
HYHQWWKDWWKHRIILFLDOJUDQWLQJWKHSDUGRQUHVWRUDWLRQRI
ULJKWVRUH[SXQJHPHQWRIUHFRUGGRHVQRWLQWHQGWKDWLW
UHVWRUH WKH ULJKW WR ILUHDUP RZQHUVKLS WKLV SURYLVLRQ
KRQRUVWKDWLQWHQWDVH[SUHVVO\SURYLGHGLQWKHRUGHURU
SDUGRQ
.DKRH)GDW TXRWLQJ65HS1RDW
IRRWQRWHRPLWWHG 7KH)RXUWK&LUFXLWUHDVRQHG
WKDWLQDGGLWLRQWRWKHIDFWWKDWWKH6HQDWH5HSRUWQHLWKHUFLWHG
/HZLVQRUGLVFXVVHGLWVDSSOLFDWLRQWKHDPHQGHGODQJXDJHRI
† D GRHVQRWFRQWUDGLFWWKHKROGLQJRI/HZLVDQG
WKHUHIRUH/HZLVUHPDLQVFRQWUROOLQJ)GDW
7KH.DKRHFRXUWDOVRFRQVLGHUHGDQGGLVDJUHHGZLWKWKH
)LUVW&LUFXLW¶VGHFLVLRQLQ3HWWLIRUG7KH.DKRHFRXUWQRWHG
WKDWWKH3HWWLIRUGFRXUWIDLOHGWRDQDO\]HRUHYHQFLWH/HZLVRU
WKHOHJLVODWLYHKLVWRU\RIWKHDPHQGPHQWWR† D
7KHFRXUWFULWLFL]HG3HWWLIRUGIRUUHO\LQJRQWKHUXOHRIOHQLW\
EHFDXVH WKH VWDWXWH FRQWDLQHG QR JULHYRXV DPELJXLW\ RU
XQFHUWDLQW\.DKRH)GDW FLWLQJ&KDSPDQY
8QLWHG6WDWHV86 TXRWLQJ+XGGOHVWRQ
Y8QLWHG6WDWHV86 0RVNDOY8QLWHG
6WDWHV86
$OWKRXJK0RUJDQXUJHVWKLVFRXUWWRDGRSWWKHUHDVRQLQJRI
3HWWLIRUG WKH UDWLRQDOH RI .DKRH LV PRUH SHUVXDVLYH 7KH
SODLQODQJXDJHRI† D KDVKDGFLYLOULJKWVUHVWRUHG
PHDQVWKDWRQFHDGHIHQGDQW¶VFLYLOULJKWVKDYHEHHQUHVWRUHG
WKDWFRQYLFWLRQIRUZKLFKKHORVWKLVFLYLOULJKWVFDQQRORQJHU
EH XVHG DV D SUHGLFDWH RIIHQVH XQGHU † J 6DLG
FRQYHUVHO\ DV LQ /HZLV D IHORQ\ FRQYLFWLRQ LPSRVHV D
ILUHDUPGLVDELOLW\XQWLOWKHFRQYLFWLRQLVYDFDWHGRUWKHIHORQ
1R 8QLWHG6WDWHVY0RUJDQ
VWDWXWH SUHFOXGHG KLP IURP LQWURGXFLQJ WKH SRVWDUUHVW
UHVWRUDWLRQRIULJKWV HYLGHQFH 0RUJDQ DUJXHG LQ WKH
DOWHUQDWLYHWKDWLIWKHVWDWXWHZDVDPELJXRXVWKHQWKHUXOHRI
OHQLW\ LQ FULPLQDO FDVHV UHTXLUHG WKDW WKH HYLGHQFH RI
UHVWRUDWLRQEHLQWURGXFHG7KHGLVWULFWFRXUWDJUHHGZLWKWKH
*RYHUQPHQWDQGLVVXHGWKHIROORZLQJUXOLQJIURPWKHEHQFK
LIWKHH[SXQJHPHQWRUWKHUHVWRUDWLRQRIULJKWVKDG
RFFXUUHGSULRUWRWKHGDWHRIWKLVRIIHQVH,WKLQNLWZRXOG
EHFOHDUO\UHOHYDQW%XWVLQFHWKHUHVWRUDWLRQRIULJKWV
RFFXUUHGPRQWKVDIWHUWKHGDWHDOOHJHGLQWKLVLQGLFWPHQW
LW¶VP\MXGJPHQWRUP\UXOLQJWKDWLW¶VQRWUHOHYDQWWR
WKH FULPH FKDUJHG LQ WKLV FDVH DQG ,¶OO JUDQW WKH
JRYHUQPHQW VPRWLRQLQOLPLQHDQGSURKLELWLQWURGXFWLRQ
RIWKHSHWLWLRQDQGWKHRUGHUUHVWRULQJULJKWV
,W¶VDQLQWHUHVWLQJTXHVWLRQEXWLWVHHPVWRPHWKDWLW
ZDVWKHVWDWXVRIWKHGHIHQGDQWRQWKHGDWHDOOHJHGLQWKH
LQGLFWPHQWWKDWFRXQWVDVWRZKHWKHURUQRWKH¶VYLRODWHG
WKHVWDWXWHUDWKHUWKDQKLVODWHUHVWDEOLVKPHQW
$ 6WDQGDUGRI5HYLHZ
$GLVWULFWFRXUW¶VVWDWXWRU\FRQVWUXFWLRQLVDTXHVWLRQRIODZ
ZKLFKWKLVFRXUWUHYLHZVGHQRYR8QLWHG6WDWHVY6WHSKHQV
)G WK&LU 8QLWHG6WDWHVY%URZQ
)G WK&LU ,QUH*ULJJV)G
WK&LU
% $QDO\VLV
7KH VWDWXWH ZKLFK SURKLELWV D FRQYLFWHG IHORQ IURP
SRVVHVVLQJILUHDUPVSURYLGHV
J ,WVKDOOEHXQODZIXOIRUDQ\SHUVRQ
ZKRKDVEHHQFRQYLFWHGLQDQ\FRXUWRID
FULPHSXQLVKDEOHE\LPSULVRQPHQWIRUDWHUP
H[FHHGLQJRQH\HDU

-- 7 of 10 --

8QLWHG6WDWHVY0RUJDQ 1R
WR VKLS RU WUDQVSRUW LQ LQWHUVWDWH RU IRUHLJQ
FRPPHUFHRUSRVVHVVLQRUDIIHFWLQJFRPPHUFH
DQ\ILUHDUPRUDPPXQLWLRQRUWRUHFHLYHDQ\
ILUHDUPRUDPPXQLWLRQZKLFKKDVEHHQVKLSSHG
RU WUDQVSRUWHG LQ LQWHUVWDWH RU IRUHLJQ
FRPPHUFH
86& † J 7KH SKUDVH FULPH SXQLVKDEOH E\
LPSULVRQPHQWIRUDWHUPH[FHHGLQJRQH\HDULVGHILQHGDV
IROORZV
:KDWFRQVWLWXWHVDFRQYLFWLRQRIVXFKDFULPHVKDOOEH
GHWHUPLQHGLQDFFRUGDQFHZLWKWKHODZRIWKHMXULVGLFWLRQ
LQZKLFKWKHSURFHHGLQJVZHUHKHOG$Q\FRQYLFWLRQ
ZKLFK KDVEHHQH[SXQJHGRUVHWDVLGHRUIRUZKLFKD
SHUVRQKDVEHHQSDUGRQHGRUKDVKDGFLYLOULJKWVUHVWRUHG
VKDOOQRWEHFRQVLGHUHGDFRQYLFWLRQIRUSXUSRVHVRIWKLV
FKDSWHUXQOHVVVXFKSDUGRQH[SXQJHPHQWRUUHVWRUDWLRQ
RIFLYLOULJKWVH[SUHVVO\SURYLGHVWKDWWKHSHUVRQPD\QRW
VKLSWUDQVSRUWSRVVHVVRUUHFHLYHILUHDUPV
86&† D
7KH SDUWLHV GR QRW GLVSXWH WKDW 0RUJDQ¶V EXUJODU\
FRQYLFWLRQLVDFULPHSXQLVKDEOHE\LPSULVRQPHQWIRUPRUH
WKDQ RQH \HDU 0RUJDQ FRQWHQGV WKDW SXUVXDQW WR WKH
H[FHSWLRQSURYLGHGLQ† D KLVEXUJODU\FRQYLFWLRQLV
QR ORQJHU D FRQYLFWLRQ IRU WKH SXUSRVHV RI † J
EHFDXVHKLVFLYLOULJKWVKDYHEHHQUHVWRUHG
,Q/HZLVY8QLWHG6WDWHV86 DFDVHFLWHG
E\0RUJDQWKH6XSUHPH&RXUWDGGUHVVHGWKHLVVXHRIZKHWKHU
D VWDWH IHORQ\ FRQYLFWLRQ ZKLFK ZDV VXEMHFW WR FROODWHUDO
DWWDFNXQGHU*LGHRQY:DLQZULJKW86 EXW
QRW\HWRYHUWXUQHGRU SDUGRQHGFRXOGVHUYHDVDSUHGLFDWH
RIIHQVHXQGHU86&DSS† D 6XSS,9
7KDWVWDWXWHSURVFULEHGWKHSRVVHVVLRQRIDILUHDUPE\DQ\
SHUVRQZKRKDVEHHQFRQYLFWHGE\DFRXUWRIWKH8QLWHG
6WDWHVRURID6WDWHRIDIHORQ\/HZLV86DW
Q7KH6XSUHPH&RXUWKHOG>WKHVWDWXWH¶V@SODLQPHDQLQJ
LV WKDW WKH IDFW RI D IHORQ\ FRQYLFWLRQ LPSRVHV D ILUHDUP
1R 8QLWHG6WDWHVY0RUJDQ
7KH&RXUWIXUWKHUIRXQGWKDWXVLQJDQLQYDOLGFRQYLFWLRQWR
SURKLELWDGHIHQGDQWIURPFDUU\LQJDILUHDUPGLGQRWYLRODWH
WKHHTXDOSURWHFWLRQJXDUDQWHHRIWKH'XH3URFHVV&ODXVHRI
WKH)LIWK$PHQGPHQWEHFDXVHWKHUHZDVDUDWLRQDOEDVLVWR
EHOLHYH WKDW D IHORQ\ FRQYLFWLRQ HYHQ LI LQYDOLG ZDV DQ
DGHTXDWHEDVLVRQZKLFKWRSURKLELWILUHDUPSRVVHVVLRQ,GDW
7KH&RXUWDOVRIRXQGWKDWLWZDVQRWLQFRQVLVWHQWWR
KROG WKDW D ODWHU LQYDOLGDWHG FRQYLFWLRQ FDQ EH D SUHGLFDWH
RIIHQVHIRUSXUSRVHVRI† D ZKLOHKROGLQJWKDWVXFK
FRQYLFWLRQFDQQRWEHXVHGIRURWKHUSXUSRVHV,GDW
FRQWUDVWLQJWKHILUHDUPVFDVHZLWK/RSHUY%HWR86
ZLWQHVVLPSHDFKPHQW 8QLWHG6WDWHVY7XFNHU
86 VHQWHQFHHQKDQFHPHQW DQG%XUJHWWY
7H[DV 86 UHFLGLYLVW VWDWXWH 7KH
6XSUHPH&RXUWUHDVRQHG
,QHDFKRIWKRVHFDVHV>/RSHU%XUJHWWDQG7XFNHU@WKLV
&RXUWIRXQGWKDWWKHVXEVHTXHQWFRQYLFWLRQRUVHQWHQFH
YLRODWHGWKH6L[WK$PHQGPHQWEHFDXVHLWGHSHQGHGXSRQ
WKH UHOLDELOLW\ RI D SDVW XQFRXQVHOHG FRQYLFWLRQ 7KH
IHGHUDOJXQODZVKRZHYHUIRFXVQRWRQUHOLDELOLW\EXW
RQWKHPHUHIDFWRIFRQYLFWLRQRUHYHQLQGLFWPHQW LQ
RUGHUWRNHHSILUHDUPVDZD\IURPSRWHQWLDOO\GDQJHURXV
SHUVRQV &RQJUHVV¶ MXGJPHQW WKDW D FRQYLFWHG IHORQ
HYHQRQHZKRVHFRQYLFWLRQZDVDOOHJHGO\XQFRXQVHOHG
LVDPRQJWKHFODVVRISHUVRQVZKRVKRXOGEHGLVDEOHG
IURP GHDOLQJ LQ RU SRVVHVVLQJ ILUHDUPV EHFDXVH RI
SRWHQWLDOGDQJHURXVQHVVLVUDWLRQDO
,GDW7KH&RXUWUHHPSKDVL]HGWKDWDFRQYLFWHGIHORQ
PD\FKDOOHQJHWKHYDOLGLW\RIDSULRUFRQYLFWLRQRURWKHUZLVH
UHPRYHKLVGLVDELOLW\EHIRUHREWDLQLQJDILUHDUP,G
$IWHUDQDO\]LQJ/HZLVWKH)RXUWK&LUFXLWLQ.DKRHQRWHG
WKDWWKH6HQDWH5HSRUWRQWKHDPHQGPHQWVSDVVHGDIWHU
WKH GHFLVLRQV LQ /HZLV 'LFNHUVRQ DQG 7KUDOO VSHFLILFDOO\
FLWHG'LFNHUVRQDQG7KUDOODQGSURYLGHGWKDW† D
ZRXOGH[FOXGHIURPVXFKFRQYLFWLRQVDQ\IRUZKLFKD
SHUVRQKDVUHFHLYHGDSDUGRQFLYLOULJKWVUHVWRUDWLRQRU
H[SXQJHPHQWRIWKHUHFRUG([LVWLQJODZLQFRUSRUDWHVD

-- 8 of 10 --

8QLWHG6WDWHVY0RUJDQ 1R
7KH.DKRHFRXUWEHJDQE\JLYLQJDQH[WHQVLYHDQDO\VLVRI
/HZLVDQGXOWLPDWHO\GHWHUPLQHGWKDW/HZLVZDVVWLOOJRRGODZ
QRWZLWKVWDQGLQJWKHDPHQGPHQWRI† D 7KHFRXUW
UHDVRQHG WKDW LQ /HZLV WKH 6XSUHPH &RXUW IRXQG WKDW WKH
VZHHSLQJODQJXDJHRI† D ZDVXQDPELJXRXVO\DLPHG
DW DQ\ SHUVRQ ZKR KDG EHHQ FRQYLFWHG RI D IHORQ\ DQG D
GLVDEOLQJFRQYLFWLRQWKRXJKODWHUIRXQGXQFRQVWLWXWLRQDOGLG
QRWDOWHUWKHIDFWWKDWWKHGHIHQGDQWKDGEHHQFRQYLFWHGDWWKH
WLPH KH SRVVHVVHG WKH ILUHDUP .DKRH )G DW
FLWLQJ /HZLV 86 DW 7KH 6XSUHPH &RXUW LQ
/HZLVIRXQGSHUVXDVLYHWKDWXQOLNHRWKHUIHGHUDOSURYLVLRQV
ZKLFKH[SOLFLWO\SHUPLWDGHIHQGDQWWRFKDOOHQJHE\ZD\RI
GHIHQVH WKH YDOLGLW\ RU FRQVWLWXWLRQDOLW\ RI WKH SUHGLFDWH
IHORQ\† D GLGQRWLQFOXGHDQH[FHSWLRQIRUWKRVH
ZKRVHRXWVWDQGLQJIHORQ\FRQYLFWLRQXOWLPDWHO\PLJKWWXUQ
RXW WR EH LQYDOLG IRU DQ\ UHDVRQ /HZLV 86 DW
.DKRH)GDW7KH/HZLV&RXUWQRWHGWKDW†
ZDVHQDFWHGFRQWHPSRUDQHRXVO\ZLWK†† J DQG K DV
SDUWRIWKH2PQLEXV&ULPH&RQWURODQG6DIH6WUHHWV$FWRI
VWDWLQJ
$FWXDOO\ZLWKUHJDUGWRWKHVWDWXWRU\TXHVWLRQDWLVVXH
KHUHZHGHWHFWOLWWOHVLJQLILFDQWGLIIHUHQFHEHWZHHQ7LWOH
,9>† J DQG K @DQG7LWOH9,,>†@(DFKVHHNV
WRNHHSDILUHDUPDZD\IURPDQ\SHUVRQZKRKDV
EHHQFRQYLFWHGRIDIHORQ\DOWKRXJKWKHGHILQLWLRQRI
IHORQ\GLIIHUVVRPHZKDWLQWKHUHVSHFWLYHVWDWXWHV%XW
WROLPLWWKHVFRSHRI†† J DQG K WRDYDOLGO\
FRQYLFWHG IHORQ ZRXOG EH DW RGGV ZLWK WKH VWDWXWRU\
VFKHPHDVDZKROH7KRVHVHFWLRQVLPSRVHDGLVDELOLW\
QRWRQO\RQDFRQYLFWHGIHORQEXWDOVRRQDSHUVRQXQGHU
DIHORQ\LQGLFWPHQWHYHQLIWKDWSHUVRQVXEVHTXHQWO\LV
DFTXLWWHGRIWKHIHORQ\FKDUJH6LQFHWKHIDFWRIPHUH
LQGLFWPHQW LV D GLVDEOLQJ FLUFXPVWDQFH D IRUWLRUL WKH
PXFKPRUHVLJQLILFDQWIDFWRIFRQYLFWLRQPXVWGHSULYH
WKHSHUVRQRIDULJKWWRDILUHDUP
/HZLV 86 DW 7KH 6XSUHPH &RXUW XQOLNH WKH
3HWWLIRUG FRXUW GLG QRW DSSO\ WKH UXOH RI OHQLW\ EHFDXVH LW
FRQFOXGHGWKDWWKHVWDWXWHZDVXQDPELJXRXV6HHLGDW
1R 8QLWHG6WDWHVY0RUJDQ
GLVDELOLW\ XQWLO WKH FRQYLFWLRQ LV YDFDWHG RU WKH IHORQ LV
UHOLHYHGRIKLVGLVDELOLW\E\VRPHDIILUPDWLYHDFWLRQVXFKDV
DTXDOLI\LQJSDUGRQ,GDW
$IWHU /HZLV WKH 6XSUHPH &RXUW KDG WKH RSSRUWXQLW\ WR
GHFLGH'LFNHUVRQY1HZ%DQQHU,QVWLWXWH,QF86
,Q'LFNHUVRQWKH&RXUWFRQVLGHUHGZKHWKHUDVWDWH
FRQYLFWLRQZKLFKKDGEHHQH[SXQJHGXQGHUVWDWHODZSULRUWR
WKH LQGLYLGXDO¶V SRVVHVVLRQ RI D ILUHDUP FRXOG VHUYH DV D
SUHGLFDWHRIIHQVHIRUDILUHDUPVGLVDELOLW\XQGHUWKHIHGHUDO
VWDWXWH 86& † J 7KH &RXUW KHOG WKDW
QRWZLWKVWDQGLQJ WKDW WKH VWDWH FRXUW FRQYLFWLRQ KDG EHHQ
H[SXQJHGEHIRUHWKHSRVVHVVLRQRIWKHILUHDUPRFFXUUHGWKH
VWDWHFRQYLFWLRQUHPDLQHGDSUHGLFDWHFRQYLFWLRQIRUSXUSRVHV
RI † J 'LFNHUVRQ 86 DW 6HH DOVR
7KUDOOY:ROIH)G WK&LU ILQGLQJWKH
VDPH &LWLQJ/HZLVWKH&RXUWH[SODLQHGH[SXQFWLRQXQGHU
VWDWHODZGRHVQRWDOWHUWKHKLVWRULFDOIDFWRIWKHFRQYLFWLRQ
DVGRHVSRVLWLYHRUμDIILUPDWLYHDFWLRQ¶>(@[SXQFWLRQ
GRHVQRWDOWHUWKHOHJDOLW\RIWKHSUHYLRXVFRQYLFWLRQDQGGRHV
QRW VLJQLI\ WKDW WKH GHIHQGDQW LV LQQRFHQW RI WKH FULPH WR
ZKLFKKHSOHDGHGJXLOW\'LFNHUVRQ86DW FLWLQJ
/HZLV86DW
0RUJDQDOVRFLWHV8QLWHG6WDWHVY&DEUHUD)G
WK&LU ZKHUHWKH(OHYHQWK&LUFXLWKHOGWKDWXQGHU
/HZLVDGHIHQGDQW VVWDWHFRQYLFWLRQFRXOGEHXVHGWRFRQYLFW
KLPRIEHLQJDIHORQLQSRVVHVVLRQRIDILUHDUPEHFDXVHWKH
SUHGLFDWHFRQYLFWLRQZDVQRWYDFDWHGSULRUWRKLVSRVVHVVLQJ
WKHZHDSRQDQGLQDQ\HYHQWXQGHU'LFNHUVRQWKHRIIHQVH
FRXOGEHXVHGHYHQLILWKDGEHHQYDFDWHGXQGHUVWDWHODZSULRU
WRWKHSRVVHVVLRQRIWKHILUHDUP
0RUJDQDJUHHVWKDWLI/HZLV'LFNHUVRQ7KUDOORU&DEUHUD
DUHDSSOLFDEOHWKHQKLV EXUJODU\FRQYLFWLRQFRXOGEH
XVHG DV D SUHGLFDWH RIIHQVH IRU IHORQ LQ SRVVHVVLRQ RI D
ILUHDUP DQG KLV FRQYLFWLRQ ZRXOG VWDQG 0RUJDQ DUJXHV
KRZHYHUWKDW† D ZDVDPHQGHGLQLQUHVSRQVH
WR'LFNHUVRQDQG7KUDOO7KHHIIHFWRIWKHDPHQGPHQWZDVWR
PDNHWKHODZRIWKHVWDWHRIWKHSUHGLFDWHFRQYLFWLRQUDWKHU

-- 9 of 10 --

8QLWHG6WDWHVY0RUJDQ 1R
WKDQIHGHUDOODZGHWHUPLQDWLYHRIZKHWKHUDGHIHQGDQW¶VFLYLO
ULJKWVKDGEHHQUHVWRUHG6HH&DURQY8QLWHG6WDWHV
86 $OWKRXJKQRWH[SOLFLWO\DUJXHG
0RUJDQ¶VFODLPLVWKDW&RQJUHVVOHJLVODWLYHO\DEURJDWHG/HZLV
ZKHQLWDPHQGHG† D
0RUJDQXUJHVWKLVFRXUWWRDGRSWWKHUDWLRQDOHRI8QLWHG
6WDWHVY3HWWLIRUG)G VW&LU ,Q3HWWLIRUG
WKH GHIHQGDQW ZDV FRQYLFWHG LQ RI EHLQJ D IHORQ LQ
SRVVHVVLRQRIDILUHDUPLQYLRODWLRQRI86&† J
DQGVHQWHQFHGWRILIWHHQ\HDUVSXUVXDQWWRWKH$UPHG&DUHHU
&ULPLQDO$FW $&&$ 86&† H 3HWWLIRUG
)G DW 7KH $&&$ SURYLGHV D PDQGDWRU\ PLQLPXP
ILIWHHQ\HDUVHQWHQFHIRUDGHIHQGDQWFRQYLFWHGRIYLRODWLQJ
† J ZKRKDVWKUHHSUHYLRXVFRQYLFWLRQVE\DQ\FRXUW
UHIHUUHGWRLQVHFWLRQ J RIWKLVWLWOHIRUDYLROHQWIHORQ\
RUDVHULRXVGUXJRIIHQVHRUERWKFRPPLWWHGRQRFFDVLRQV
GLIIHUHQWIURPRQHDQRWKHU86&† H %HFDXVH
WKH $&&$ UHIHUHQFHV † J LW LQFRUSRUDWHV WKH
GHILQLWLRQ RI † D IRU D FULPH SXQLVKDEOH E\
LPSULVRQPHQWIRUDWHUPH[FHHGLQJRQH\HDU7KHGHIHQGDQW
LQ3HWWLIRUGKDGQLQHSULRUFRQYLFWLRQV3HWWLIRUG)GDW
,QHLJKWRIWKHQLQHFRQYLFWLRQVZHUHYDFDWHGRQ
WKHEDVLVWKDWWKHGHIHQGDQWGLGQRWNQRZLQJO\DQGYROXQWDULO\
HQWHULQWRKLVJXLOW\SOHDV,G7KHGHIHQGDQWVRXJKWKDEHDV
UHOLHIXQGHU86&†EHFDXVHKHQRORQJHUKDGWKH
PLQLPXPWKUHHSUHYLRXVFRQYLFWLRQVUHTXLUHGWRHQKDQFHKLV
VHQWHQFH ,G 7KH GLVWULFW FRXUW JUDQWHG KDEHDV UHOLHI DQG
UHVHQWHQFHGWKHGHIHQGDQWWRIRXUDQGRQHKDOI\HDUV,G7KH
)LUVW&LUFXLWDIILUPHG
$VDQLQLWLDOPDWWHUWKH)LUVW&LUFXLWSRLQWHGRXWWKDWLQ
&XVWLVY8QLWHG6WDWHV86 WKH6XSUHPH
&RXUW KHOG WKDW DOWKRXJK D GHIHQGDQW FRXOG QRW PDNH D
FROODWHUDO DWWDFN RQ VWDWH FRQYLFWLRQV GXULQJ D IHGHUDO
VHQWHQFLQJHQKDQFHPHQWKHDULQJWKHGHIHQGDQWFRXOGDWWDFN
WKHVWDWHFRQYLFWLRQVLQVWDWHFRXUWRURQKDEHDVUHYLHZDQG
WKHQUHDSSO\WRIHGHUDOFRXUWWRUHRSHQWKHVHQWHQFHZKLFKZDV
HQKDQFHG E\ WKH VXFFHVVIXOO\ DWWDFNHG VWDWH FRQYLFWLRQV
3HWWLIRUG)GDW7KHFRXUWWKHQUHMHFWHGWKH
1R 8QLWHG6WDWHVY0RUJDQ
JRYHUQPHQW¶V DUJXPHQW WKDW WKH ODQJXDJH RI † D
KDVEHHQH[SXQJHGDQGKDVEHHQSDUGRQHGLQGLFDWH>V@
WKDWRQO\SDVWRIIHQVHVYDFDWHGSULRUWRWKHIHGHUDOSURFHHGLQJ
PD\ EH GLVFRXQWHG E\ WKH FRXUW LQ HIIHFW HWFKLQJ WKH
GHIHQGDQW V FULPLQDO KLVWRU\ UHFRUG LQ VWRQH DV RI WKDW
PRPHQW,GDW7KHFRXUWEHOLHYHGWKDWWKHODQJXDJH
UHDGHTXDOO\ZHOOLIDSSOLHGWRFRQYLFWLRQVH[SXQJHGHWF
VXEVHTXHQWWRWKHIHGHUDOVHQWHQFLQJ,G7KHFRXUWWKHQ
DSSOLHGWKHUXOHRIOHQLW\DQGKHOGWKDWXQGHU† D D
FRQYLFWLRQ YDFDWHG DIWHU D VHQWHQFH HQKDQFHPHQW KDV EHHQ
LPSRVHG GRHV QRW FRQVWLWXWH D FULPH SXQLVKDEOH E\
LPSULVRQPHQWIRUDWHUPH[FHHGLQJRQH\HDU,G7KHFRXUW
VWDWHG
$QGZLWKWKHSURFHGXUDOUXOHDQQRXQFHGLQ&XVWLVWKDWLW
LV RQO\ DIWHU VHQWHQFH WKDW D GHIHQGDQW PD\ DWWDFN WKH
FRQYLFWLRQVWKDWFRQWULEXWHGWRLWZKDWVHQVHZRXOGLW
PDNHWRVD\WKDWKHPD\DWWDFNSUHVHQWHQFHFRQYLFWLRQV
EXW QRW RQH ZKRVH IODZ GLG QRW DSSHDU XQWLO DIWHU WKH
IHGHUDOVHQWHQFH"2EYLRXVO\WKLVLVWKHVLWXDWLRQHYHU\
WLPHLWLVGHIHQGDQWZKRHVWDEOLVKHVWKHIODZ
,G
0RUJDQQRWHVWKDWWKH)RXUWK&LUFXLWFDPHWRWKHRSSRVLWH
FRQFOXVLRQLQ8QLWHG6WDWHVY.DKRH)G WK&LU
EXWDUJXHVWKDW3HWWLIRUGPRUHDFFXUDWHO\LQWHUSUHWVWKH
EURDGODQJXDJHRI† D ,Q.DKRHWKHGHIHQGDQWSOHG
JXLOW\WRFDUU\LQJDILUHDUPLQUHODWLRQWRDGUXJWUDIILFNLQJ
RIIHQVH LQ 0DUFK DQG ZKLOH RXW RQ EDLO SHQGLQJ KLV
VHQWHQFLQJKHSRVVHVVHGDILUHDUP.DKRH)GDW
%DVHGRQWKHVHFRQGSRVVHVVLRQWKHGHIHQGDQWZDVFRQYLFWHG
DVEHLQJDIHORQLQSRVVHVVLRQRIDILUHDUPZLWKWKH0DUFK
RIIHQVHVHUYLQJDVWKHSUHGLFDWHRIIHQVH,G7KH0DUFK
RIIHQVHZDVYDFDWHGSXUVXDQWWR%DLOH\Y8QLWHG6WDWHV
86 ZKLFKKHOGWKDWDILUHDUPPXVWKDYH
EHHQ DFWLYHO\ HPSOR\HG WR VDWLVI\ WKH XVH SURQJ RI
† F ,G7KHGHIHQGDQWVRXJKWKDEHDVUHOLHIZKLFK
WKH GLVWULFW FRXUW GHQLHG FLWLQJ /HZLV 86 7KH
)RXUWK&LUFXLWDIILUPHG

-- 10 of 10 --