01a0112p.06

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
-$0(6 $ .,0(6
'HIHQGDQW$SSHOODQW
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH(DVWHUQ'LVWULFWRI7HQQHVVHHDW*UHHQHYLOOH
1R²7KRPDV*+XOO'LVWULFW-XGJH
$UJXHG'HFHPEHU
'HFLGHGDQG)LOHG$SULO
%HIRUH0(55,771(/621DQG%$7&+(/'(5
&LUFXLW-XGJHV
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' 1LNNL & 3LHUFH )('(5$/ '()(1'(5
6(59,&(6 2) ($67(51 7(11(66(( *UHHQHYLOOH
7HQQHVVHH IRU $SSHOODQW 6DUDK 5 6KXOWV $66,67$17
81,7('67$7(6$77251(<*UHHQHYLOOH7HQQHVVHHIRU
$SSHOOHH 21 %5,() 1LNNL & 3LHUFH )('(5$/
'()(1'(5 6(59,&(6 2) ($67(51 7(11(66((
*UHHQHYLOOH 7HQQHVVHH IRU $SSHOODQW 6DUDK 5 6KXOWV

-- 1 of 10 --

8QLWHG6WDWHVY.LPHV 1R
$66,67$1781,7('67$7(6$77251(<*UHHQHYLOOH
7HQQHVVHHIRU$SSHOOHH
1(/621-GHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK
%$7&+(/'(5 - MRLQHG 0(55,77 - SS
GHOLYHUHGDVHSDUDWHGLVVHQWLQJRSLQLRQ
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
'$9,' $ 1(/621 &LUFXLW -XGJH 7KLV LV DQ DSSHDO
IURPFULPLQDOFRQYLFWLRQVIRUDQDVVDXOWRQRIILFHUVRIWKH
'HSDUWPHQW RI 9HWHUDQV $IIDLUV D YLRODWLRQ RI 86&
† D DQGSRVVHVVLRQRQ9$SURSHUW\RIDNQLIHZLWK
D EODGH OHQJWK H[FHHGLQJ WKUHH LQFKHV 6XFK SRVVHVVLRQ
YLRODWHV D UXOH VHW IRUWK LQ &)5 † E DQG
YLRODWLRQRIWKDWUXOHLVDFULPHXQGHU86&† F
7KHGHIHQGDQWSUHVHQWVIRXUDVVLJQPHQWVRIHUURU WKDW
WKH GLVWULFW FRXUW HUUHG LQ IDLOLQJ WR VXSSUHVV HYLGHQFH
FRQVLVWLQJRIWZRNQLYHVIRXQGLQWKHGHIHQGDQW¶VYHKLFOH
WKDWWKHGLVWULFWFRXUWDEXVHGLWVGLVFUHWLRQLQH[FOXGLQJ
SURIIHUHGH[SHUWWHVWLPRQ\FRQFHUQLQJWKHGHIHQGDQW¶VPHQWDO
FRQGLWLRQ WKDW WKH HYLGHQFH SUHVHQWHG DW WULDO ZDV
LQVXIILFLHQWWRVXVWDLQDFRQYLFWLRQDQG WKDWWKHGLVWULFW
FRXUWDEXVHGLWVGLVFUHWLRQLQGHQ\LQJUHTXHVWVIRUDVSHFLDO
YHUGLFWIRUPDQGDMXU\LQVWUXFWLRQRQXQDQLPLW\
3HUKDSV WKH PRVW VLJQLILFDQW LVVXH LV WKH VHFRQG ZKLFK
WXUQVRQWKHTXHVWLRQZKHWKHUDVVDXOWLQJDIHGHUDORIILFHULVD
³JHQHUDOLQWHQWFULPH´RUD³VSHFLILFLQWHQWFULPH´7KLVKDV
KHUHWRIRUHEHHQDQRSHQTXHVWLRQLQRXUFLUFXLW
-RLQLQJ WKH PDMRULW\ RI FLUFXLWV WKDW KDYH H[SUHVVHG DQ
RSLQLRQRQWKHPDWWHUZHFRQFOXGHDVGLGWKHGLVWULFWFRXUW
WKDW DVVDXOW RQ D IHGHUDO RIILFHU LV D JHQHUDO LQWHQW FULPH
'LPLQLVKHGPHQWDOFDSDFLW\LVQRWDGHIHQVHWRVXFKDFULPH
VR WKH GLVWULFW FRXUW GLG QRW HUU LQ GHFOLQLQJ WR UHFHLYH
HYLGHQFHRIWKHGHIHQGDQW¶VDOOHJHGO\GLPLQLVKHGFDSDFLW\
1R 8QLWHG6WDWHVY.LPHV
LQWHQW7KXVLWVHHPVWRPHWKDWWKHSUHFLVHPHQWDOVWDWHRIWKH
DFFXVHGEHFRPHVLPSRUWDQWLQVXFKDVVDXOWFDVHV
8S XQWLO WKH ODVW WZR GHFDGHV GXULQJ ZKLFK WKH IHGHUDO
FULPLQDO ODZ KDV EHFRPH LQFUHDVLQJO\ KDUVK DQG ULJLG WKH
SUHVXPSWLRQ ZDV LQ IDYRU RI D PHQV UHD UHTXLUHPHQW IRU
IHGHUDOFULPHV,Q'HQQLVY8QLWHG6WDWHV86
WKH6XSUHPH&RXUWVDLGWKDW³WKHH[LVWHQFHRIDPHQV
UHDLVWKHUXOHRIUDWKHUWKDQWKHH[FHSWLRQWRWKHSULQFLSOHV
RI$QJOR$PHULFDQFULPLQDOMXULVSUXGHQFH´:KDWHYHUZH
GHFLGH WR FDOO WKH PHQWDO HOHPHQW UHTXLUHG IRU D IHGHUDO
DVVDXOWZKHWKHU³JHQHUDO´³VSHFLILF´RURWKHUZLVHDGLVWLQFW
PHQWDOHOHPHQWUHTXLULQJVRPHGHOLEHUDWLRQDQGPRUHWKDQ
VLPSO\DQLQWHQWWRGRDQDFWPXVWEHSUHVHQW,WKHUHIRUH
DJUHHZLWKWKRVH&LUFXLWVZKLFKKDYHUHDFKHGWKHRSSRVLWH
UHVXOWIURPRXU&RXUWLQWKLVFDVH8QLWHG6WDWHVY6LPPRQGV
)G WK&LU 8QLWHG6WDWHVY7D\ORU
)G WK&LU 8QLWHG6WDWHVY&DUXDQD)G
VW&LU
, ZRXOG SHUPLW D GHIHQGDQW WR LQWURGXFH HYLGHQFH RI
GLPLQLVKHGFDSDFLW\WRIRUPWKHLQWHQWWRFRPPLWWKHIHGHUDO
DVVDXOW ,I ZH DJUHH WKDW D PHQWDO HOHPHQW LV UHTXLUHG WR
FRPPLWWKHFULPH²DVLWVHHPVWRPHZHPXVW²WKHQZH
VKRXOGSHUPLWDGHIHQGDQWWRVKRZWKDWKHGLGQRWSRVVHVVWKH
QHFHVVDU\VWDWHRIPLQG 2WKHUZLVHDVVDXOWDQGEDWWHU\LQ
IHGHUDO ODZ QRZ EHFRPHV D PLQGOHVV VWULFW OLDELOLW\ FULPH
FRQWUDU\WRLWVFRPPRQODZRULJLQDQGWKHHQOLJKWHQHGSROLF\
UHVSHFWLQJPHQVUHDIROORZHGLQIHGHUDOODZGXULQJPRVWRI
WKHODVWWZRFHQWXULHV+HQFHLI,FRUUHFWO\XQGHUVWDQGZKDW
RXU&RXUWKDVKHOGLQWKLVFDVH,GLVDJUHHDQGUHVSHFWIXOO\
GLVVHQW

-- 2 of 10 --

8QLWHG6WDWHVY.LPHV 1R
BBBBBBBBBBBBBB
',66(17
BBBBBBBBBBBBBB
0(55,77&LUFXLW-XGJHGLVVHQWLQJ,WVHHPVWRPHWKDW
LQGHWHUPLQLQJWKHLQWHQWUHTXLUHPHQWRUHOHPHQWRIPHQVUHD
IRU DVVDXOWLQJ D IHGHUDO RIILFHU ZH VKRXOG UHWXUQ WR WKH
FRPPRQ ODZ FULPH RI DVVDXOW IRU HQOLJKWHQPHQW DQG
GHWHUPLQH ZKHWKHU DVVDXOW DQG EDWWHU\ DW FRPPRQ ODZ
UHTXLUHGDVSHFLILFPHQWDOVWDWHDEVHQWZKLFKWKHUHZRXOGEH
QRFULPH$WFRPPRQODZ
7KH YLROHQFH RU IRUFH DWWHPSWHG RU GRQH PXVW EH
XQODZIXO$FFRUGLQJO\LWZRXOGQRWEHDQDVVDXOWQRUDQ
DVVDXOWDQGEDWWHU\LIWKHIRUFHLVMXVWLILDEOHLQSXUVXDQFH
RI ODZIXO SXEOLF RU GRPHVWLF DXWKRULW\ HJ ZKHUH DQ
RIILFHUPDNHVDODZIXODUUHVWRUDSDUHQWRUWHDFKHU
PRGHUDWHO\ FRUUHFWV KLV FKLOG RU SXSLO RU ZKHUH LW LV
DSSOLHG LQ QHFHVVDU\ DQG UHDVRQDEOH GHIHQVH RI RQH¶V
SHUVRQRUSURSHUW\
&RQVHQWRIWKHSHUVRQDJDLQVWRUXSRQZKRPWKHYLROHQFH
LVDWWHPSWHGRULQIOLFWHGLVDGHIHQVHLIWKHFRQVHQWLV
YDOLG
&ODUNDQG0DUVKDOO&ULPHV WKHG
&HUWDLQO\PRUHFRQVFLRXVQHVVRIZURQJGRLQJWKDQVLPSO\
DQLQWHQWWRGRDQDFWLVQHFHVVDU\IRUWKHFULPH7KHFULPHRI
DVVDXOW QRUPDOO\ UHTXLUHV D IRUP RI JXLOW\ NQRZOHGJH ²
ZKHWKHUZHFDOOLWVFLHQWHUPDOLFHVSHFLILFLQWHQWRUJLYHLW
VRPHRWKHUODEHO3UHVXPDEO\DODZHQIRUFHPHQWRIILFHUZKR
DVVDXOWV D IHGHUDO RIILFHU ZKR LV UHVLVWLQJ DUUHVW ZRXOG QRW
KDYHWKHUHTXLVLWHLQWHQWWRGRKDUPWRDQRWKHUWRTXDOLI\DVD
FULPH XQGHU WKH IHGHUDO VWDWXWH $ GRFWRU ZKR RWKHUZLVH
DVVDXOWVVXFKDQRIILFLDOE\DPSXWDWLQJKLVIRRWZLWKFRQVHQW
ZRXOG QRW KDYH WKH UHTXLVLWH VWDWH RI PLQG 3URWHFWLRQ RI
KRPH DQG IDPLO\ IURP D IHGHUDO RIILFLDO ZKR LV LOOHJDOO\
EUHDNLQJ DQG HQWHULQJ ZRXOG QRW JLYH ULVH WR WKH UHTXLVLWH
1R 8QLWHG6WDWHVY.LPHV
$FFRUGLQJO\DQGEHFDXVHZHILQGQRQHRIWKHGHIHQGDQW¶V
UHPDLQLQJDVVLJQPHQWVRIHUURUSHUVXDVLYHZHVKDOODIILUPWKH
FRQYLFWLRQV
,
7KH GHIHQGDQW -DPHV .LPHV LV D YHWHUDQ RI WKH ZDU LQ
9LHWQDP,Q-XO\RIDIWHUH[SHULHQFLQJV\PSWRPVRI
GHSUHVVLRQ DQG SRVWWUDXPDWLF VWUHVV GLVRUGHU KH VRXJKW
WUHDWPHQW DW WKH 9$ 0HGLFDO &HQWHU DW 0RXQWDLQ +RPH
7HQQHVVHH
$SV\FKRORJ\LQWHUQDWWKH0HGLFDO&HQWHUDZRPDQQDPHG
&KULVWLQH*HUHW\FRQGXFWHGFRXQVHOLQJVHVVLRQVZLWK0U
.LPHVRQDZHHNO\EDVLV$WDVHVVLRQKHOGRQ0DUFK
0U .LPHV DFNQRZOHGJHG WKRXJKWV RI VXLFLGH 0V
*HUHW\FRQFOXGHGWKDWKHGLGQRWSRVHDQLPPHGLDWHGDQJHUWR
KLPVHOIRURWKHUVVRUDWKHUWKDQKDYLQJKLPDGPLWWHGWRWKH
KRVSLWDOVKHSURSRVHGD³YHUEDOVDIHW\FRQWUDFW´0U.LPHV
DFFHSWHGSURPLVLQJWKDWLIKHZHUHDERXWWRKXUWKLPVHOIRU
RWKHUVKHZRXOGLPPHGLDWHO\FDOO0V*HUHW\RUFRPHWRWKH
9$0HGLFDO&HQWHUHPHUJHQF\URRP
)ROORZLQJ WKH 0DUFK VHVVLRQ 0U .LPHV DSSDUHQWO\
PRYHG RXW RI KLV KRPH DQG EHJDQ OLYLQJ LQ KLV WUXFN $W
DSSUR[LPDWHO\ QRRQ RQ 0DUFK WZR 9$ SROLFH
RIILFHUV&UDLJ'RXJKHUW\DQG3DPHOD(QVRUREVHUYHGWKH
GHIHQGDQW¶VWUXFNZLWKDEODQNHWRYHUWKHZLQGVKLHOGSDUNHG
LQDEDFNFRUQHURIWKH0HGLFDO&HQWHUSDUNLQJORW6HHLQJ
PRYHPHQWLQVLGHWKHWUXFN2IILFHU'RXJKHUW\NQRFNHGRQWKH
ZLQGRZDVNHG0U.LPHVZKDWKHZDVGRLQJDQGRIIHUHG
DVVLVWDQFH
0U.LPHVJRWRXWRIWKHWUXFNDQGVODPPHGWKHGRRU+H
WKHQEHJDQ\HOOLQJDWWKHRIILFHUVVFUHDPLQJWKDWKHKDGGRQH
QRWKLQJ ZURQJDQGWKDWKHZDQWHGWRJRWRWKHHPHUJHQF\
URRP
2IILFHU'RXJKHUW\DSSURDFKHGWKHGHIHQGDQWDQGSODFHGDQ
RSHQKDQGRQKLVVKRXOGHULQDQDWWHPSWWRFDOPKLP$Q
DOWHUFDWLRQHQVXHGDQGERWK0U.LPHVDQGWKHWZRRIILFHUV

-- 3 of 10 --

8QLWHG6WDWHVY.LPHV 1R
³:KLOH WKLV &RXUW KDV QRW \HW DGGUHVVHG WKH TXHVWLRQ´ RXU )DUURZ
RSLQLRQ REVHUYHG ³RWKHU FRXUWV KDYH FRQFOXGHG WKDW † D VHWV IRUWK
D μJHQHUDO LQWHQW¶ UDWKHU WKDQ D μVSHFLILF LQWHQW FULPH¶ 7R HVWDEOLVK
IHOOWRWKHJURXQG'XULQJWKHVWUXJJOH0U.LPHVDWWHPSWHG
WR UHPRYH 2IILFHU 'RXJKHUW\¶V JXQ IURP LWV KROVWHU 0U
.LPHV ZDV WKHQ KDQGFXIIHG DQG WDNHQ WR WKH 9$ SROLFH
VWDWLRQ
7KHUH 0U .LPHV ZDV TXHVWLRQHG E\ 9$ 2IILFHU .HQ
:DUUHQ ,Q WKH FRXUVH RI WKH TXHVWLRQLQJ 0U .LPHV
PHQWLRQHGWKDWKHKDGVRPHWRROVLQKLVWUXFNDQGZDQWHGWKH
YHKLFOHWREHVHFXUHG2IILFHU:DUUHQZDVJLYHQWKHNH\VWR
WKHWUXFNVRWKDWWKLVFRXOGEHGRQH
2IILFHU:DUUHQWXUQHGWKHNH\VRYHUWR2IILFHU(QVRUDQG
WROGKHUWRUHWXUQWRWKHKRVSLWDODQGFRQGXFWDVHDUFKRIWKH
WUXFN6KHGLGVR7KHVHDUFKGLVFORVHGDED\RQHWRQWKH
IORRUERDUG DQG D ILOHW NQLIH RQ D VHDW FXVKLRQ %RWK
LPSOHPHQWVKDGEODGHVRYHUWKUHHLQFKHVORQJ2IILFHU(QVRU
UHPRYHG WKH NQLYHV IURP WKH WUXFN EHIRUH WKH YHKLFOH ZDV
LPSRXQGHGDQGWRZHGDZD\
0U .LPHV ZDV LQGLFWHG D PRQWK ODWHU DQG WKH FDVH
XOWLPDWHO\ZHQWWRWULDO$VSDUWRIKLVGHIHQVH0U.LPHV
VRXJKWWRLQWURGXFHPHGLFDOHYLGHQFHUHJDUGLQJKLVWUHDWPHQW
IRUGHSUHVVLRQDQGSRVWWUDXPDWLFVWUHVVGLVRUGHU0U.LPHV¶
PHGLFDOH[SHUWVZHUHSUHSDUHGWRWHVWLI\WKDWZKHQ2IILFHU
'RXJKHUW\WRXFKHGKLP0U.LPHVFRXOGKDYHH[SHULHQFHG
D³K\SHUVWDUWOHGUHDFWLRQ´WKDWUREEHGKLPRIWKHDELOLW\WR
FRQWURO KLV DFWLRQV 7KH GHIHQGDQW¶V WKHRU\ ZDV WKDW WKLV
SUHYHQWHGKLPIURPIRUPLQJWKHQHFHVVDU\PHQVUHDWRYLRODWH
86&† D
7KH GLVWULFW FRXUW UXOHG WKH SURIIHUHG WHVWLPRQ\
LQDGPLVVLEOHRQWZRJURXQGV)LUVWDQVZHULQJDTXHVWLRQOHIW
RSHQE\WKLVFRXUWLQ8QLWHG6WDWHVY)DUURZ)G
WK&LU WKHGLVWULFWFRXUWKHOGWKDWDQDVVDXOW RQ D
IHGHUDORIILFHULQYLRODWLRQRI†LVDJHQHUDOLQWHQWFULPH
DV WR ZKLFK GLPLQLVKHG FDSDFLW\ LV QRW D GHIHQVH ,Q WKH
1R 8QLWHG6WDWHVY.LPHV
$VSHFLILFXQDQLPLW\LQVWUXFWLRQLVRUGLQDULO\XQQHFHVVDU\
XQOHVV ³ D FRXQW LV H[WUHPHO\ FRPSOH[ WKHUH LV
YDULDQFH EHWZHHQ WKH LQGLFWPHQW DQG WKH SURRI DW WULDO RU
WKHUHLVDWDQJLEOHULVNRIMXU\FRQIXVLRQ´8QLWHG6WDWHV
Y 6DQGHUVRQ )G WK &LU FLWLQJ
8QLWHG 6WDWHV Y 'XQFDQ )G WK
&LU $GHIHQGDQWFKDUJHGZLWKYLRODWLQJ†LVQRW
HQWLWOHG WR D VSHFLILF XQDQLPLW\ LQVWUXFWLRQ XQOHVV WKH
GHIHQGDQW¶V FRQGXFW FRQVWLWXWHG ³WZR VHSDUDWH DQG GLVWLQFW
RIIHQVHV´QRWPHUHO\³WZRSKDVHVRIDVLQJOHDVVDXOW´8QLWHG
6WDWHVY+RRG)G WK&LU TXRWLQJ
8QLWHG 6WDWHV Y 6HJLHQ )G WK &LU
1RQHRIWKHVHFRQGLWLRQVZDVPHWLQWKHFDVHDWEDU
WKHUHZDVQRLQVWUXFWLRQDOHUURUDQGREYLRXVO\QRHUURULQQRW
UHTXLULQJDVSHFLDOYHUGLFW $VWRWKHODWWHUSRLQWZHQRWH
DOVRWKDWWKLVFRXUWKDVREVHUYHGWKDW³>L@QJHQHUDOVSHFLDO
YHUGLFW IRUPV DUH QRW IDYRUHG DQG μPD\ LQ IDFW EH PRUH
SURGXFWLYH RI FRQIXVLRQ WKDQ FODULW\¶´ 8QLWHG 6WDWHV Y
:LOVRQ )G WK &LU TXRWLQJ $
0RRUH V)HGHUDO3UDFWLFHDQG3URFHGXUH† DW
$)),50('

-- 4 of 10 --

8QLWHG6WDWHVY.LPHV 1R
WKH NQLYHV LQ HYLGHQFH 2XU UHVROXWLRQ RI WKH HYLGHQWLDU\
TXHVWLRQGLVSRVHVRIWKLVEUDQFKRIWKHLQVXIILFLHQF\FODLP
' 6SHFLDO9HUGLFW)RUPVDQG,QVWUXFWLRQVRQ8QDQLPLW\
'XULQJ KLV WULDO 0U .LPHV SRLQWV RXW WKH JRYHUQPHQW
SUHVHQWHG HYLGHQFH DV WR DOO VL[ PRGDOLWLHV DVVDXOWLQJ
UHVLVWLQJRSSRVLQJLPSHGLQJLQWLPLGDWLQJDQGLQWHUIHULQJ
E\ZKLFKDGHIHQGDQWFDQYLRODWH† D ,WIROORZV0U
.LPHVDVVHUWVWKDWWKHMXU\VKRXOGKDYHEHHQWROGLWFRXOG
FRQYLFWKLPRQO\LIWKHMXURUVZHUHXQDQLPRXVRQZKLFKW\SH
RIFRQGXFWRFFXUUHG±DQGWKHDOOHJHGXQDQLPLW\UHTXLUHPHQW
VKRXOG KDYH EHHQ WHVWHG KH VXJJHVWV E\ D VSHFLDO YHUGLFW
IRUP
³7KH WULDO FRXUW LV μYHVWHG ZLWK EURDG GLVFUHWLRQ LQ
IRUPXODWLQJ LWV FKDUJH DQG ZLOO QRW EH UHYHUVHG XQOHVV WKH
FKDUJHIDLOVDFFXUDWHO\WRUHIOHFWWKHODZ¶´8QLWHG6WDWHVY
%XVDFFD)G WK&LU FLWDWLRQRPLWWHG
$FFRUGLQJO\MXU\LQVWUXFWLRQVDUHUHYLHZHGIRUDQDEXVHRI
GLVFUHWLRQ6HH8QLWHG6WDWHVY+RRG)G WK
&LU $QGWKHWULDOFRXUW¶VLQVWUXFWLRQVVKRXOGEHUHDG
³DVDZKROHWRGHWHUPLQHZKHWKHUWKH\IDLUO\DQGDGHTXDWHO\
VXEPLWWHG WKH LVVXHV DQG DSSOLFDEOH ODZ WR WKH MXU\´ 6HH
8QLWHG 6WDWHV Y :LOOLDPV )G WK &LU

:HFRQFOXGHWKDWWKHLQVWUXFWLRQVLQWKHFDVHDWEDUZHUH
DGHTXDWHDVJLYHQ7KHMXU\ZDVWROGWKDWLQHQDFWLQJ†
³&RQJUHVVFUHDWHGDVLQJOHFULPHRIKDUPLQJRUWKUHDWHQLQJD
IHGHUDORIILFLDODQGVSHFLILHGVL[ZD\V E\ZKLFKWKHFULPH
FRXOGEHFRPPLWWHG1RZSURRIEH\RQGDUHDVRQDEOHGRXEW
RIDQ\RIWKHVHVL[PHWKRGVZLOOVXSSRUWDILQGLQJRIJXLOWLQ
UHJDUG WR WKLV FULPH´ 7KH MXU\ ZDV DOVR WROG ³1RZ \RXU
YHUGLFWZKHWKHULW¶VJXLOW\RUQRWJXLOW\PXVWEHXQDQLPRXV
7RILQGWKHGHIHQGDQWJXLOW\HYHU\RQHRI\RXPXVWDJUHHWKDW
WKHJRYHUQPHQWKDVRYHUFRPHWKHSUHVXPSWLRQRILQQRFHQFH
ZLWKHYLGHQFHWKDWSURYHVKLVJXLOWEH\RQGDUHDVRQDEOHGRXEW
(LWKHUZD\JXLOW\RUQRWJXLOW\\RXUYHUGLFWPXVWEH
XQDQLPRXV´7KHVHLQVWUXFWLRQVZHUHVXIILFLHQWWRDSSULVHWKH
MXU\RIWKHDSSOLFDEOHODZ
1R 8QLWHG6WDWHVY.LPHV
JHQHUDO LQWHQW WKH *RYHUQPHQW QHHG QRW VKRZ WKDW WKH GHIHQGDQW LQWHQGHG
WR LQMXUH D IHGHUDO RIILFHU EXW RQO\ μWKH NQRZLQJ FRPPLVVLRQ RI DQ DFW
WKDW WKH ODZ PDNHV D FULPH¶´ ,G DW Q FLWDWLRQV RPLWWHG
DOWHUQDWLYH WKH GLVWULFW FRXUW KHOG WKH SURIIHUHG WHVWLPRQ\
LQDGPLVVLEOHXQGHU5XOH E )HG5(YLGLQVRIDUDVWKH
ZLWQHVVHVSURSRVHGWRH[SUHVVDQRSLQLRQWKDWWKHGHIHQGDQW
ODFNHGWKHUHTXLVLWHPHQVUHD
'HSULYHGRIKLVGLPLQLVKHGFDSDFLW\GHIHQVH0U.LPHV
IHOOEDFNRQDFODLPRIVHOIGHIHQVHKHPDLQWDLQHGWKDWKHZDV
VLPSO\ UHVSRQGLQJ WR D XVH RI H[FHVVLYH IRUFH E\ 2IILFHU
'RXJKHUW\7KHMXU\UHMHFWHGWKLVFODLPDQGIRXQG0U.LPHV
JXLOW\RQERWKFRXQWVRIWKHLQGLFWPHQW7KHGLVWULFWFRXUW
VHQWHQFHG KLP WR SD\ D ILQH DQG VHUYH WZR \HDUV RI
SUREDWLRQRQWKHDVVDXOWFRXQW7KHFRXUWVHQWHQFHGKLPWR
³WLPHVHUYHG´ WKHIRXUGD\VKHKDGVSHQWLQWKHORFDOMDLO RQ
WKHZHDSRQVFRXQW
,,
$ 0RWLRQWR6XSSUHVVWKH.QLYHV
3ULRUWRWULDOWKHGHIHQGDQWPRYHGIRUVXSSUHVVLRQRIWKH
NQLYHVRQWKHJURXQGWKDWWKHZDUUDQWOHVVVHDUFKLQZKLFK
WKH\KDGEHHQGLVFRYHUHGYLRODWHGWKH)RXUWK$PHQGPHQW$
PDJLVWUDWHMXGJHDJUHHGWKDWWKHUHKDGEHHQDYLRODWLRQRIWKH
)RXUWK $PHQGPHQW DQG WKLV ZRXOG QRUPDOO\ KDYH EHHQ
VXIILFLHQWWRWULJJHUWKHH[FOXVLRQDU\UXOHDGRSWHGLQ0DSSY
2KLR 86 7KH PDJLVWUDWH IXUWKHU
FRQFOXGHGKRZHYHUWKDWWKHNQLYHVZHUHDGPLVVLEOHXQGHU
WKH³LQHYLWDEOHGLVFRYHU\´H[FHSWLRQWRWKHH[FOXVLRQDU\UXOH
7KH PDJLVWUDWH¶V FRQFOXVLRQV ZHUH DGRSWHG E\ WKH GLVWULFW
MXGJH
1HLWKHUWKHPDJLVWUDWHQRUWKHGLVWULFWMXGJHDGGUHVVHGWKH
REYLRXVSRVVLELOLW\WKDWWKHVHDUFKZDVFRQVHQVXDO7KLVLVVXH
KDVQRWEHHQEULHIHGRUDUJXHGRQDSSHDO)RUSXUSRVHVRIWKLV
RSLQLRQWKHQZHVKDOODVVXPHZLWKRXWVRGHFLGLQJWKDWD
YLRODWLRQ RI WKH )RXUWK $PHQGPHQW GLG RFFXU 6XFK D

-- 5 of 10 --

8QLWHG6WDWHVY.LPHV 1R
YLRODWLRQZRXOGUHTXLUHVXSSUHVVLRQRIWKHNQLYHVXQOHVVWKH\
ZHUHGHVWLQHGWRKDYHEHHQGLVFRYHUHG±ODZIXOO\±LQDQ\
HYHQW
³7KH LQHYLWDEOH GLVFRYHU\ GRFWULQH DQ H[FHSWLRQ WR WKH
H[FOXVLRQDU\UXOHDOORZVXQODZIXOO\REWDLQHGHYLGHQFHWREH
DGPLWWHG DW WULDO LI WKH JRYHUQPHQW FDQ SURYH E\
SUHSRQGHUDQFHWKDWWKHHYLGHQFHLQHYLWDEO\ZRXOGKDYHEHHQ
DFTXLUHGWKURXJKODZIXOPHDQV´8QLWHG6WDWHVY.HQQHG\
)G WK&LU FLWLQJ1L[Y:LOOLDPV
86 3URRI RI LQHYLWDEOH GLVFRYHU\
³LQYROYHV QR VSHFXODWLYH HOHPHQWV EXW IRFXVHV RQ
GHPRQVWUDWHGKLVWRULFDOIDFWVFDSDEOHRIUHDG\YHULILFDWLRQRU
LPSHDFKPHQW´1L[86DWQ³7KHH[FHSWLRQ
UHTXLUHVWKHFRXUWWRGHWHUPLQHYLHZLQJDIIDLUVDVWKH\
H[LVWHGDWWKHLQVWDQWEHIRUHWKHXQODZIXOVHDUFKZKDWZRXOG
KDYH KDSSHQHG KDG WKH XQODZIXO VHDUFK QHYHU RFFXUUHG´
8QLWHG6WDWHVY(QJ)G G&LU FHUW
GHQLHG86
9LHZLQJ WKH VLWXDWLRQ DV LW H[LVWHG MXVW EHIRUH 2IILFHU
(QVRU¶VVHDUFKZHWKLQNLWFOHDUWKDWWKHJRYHUQPHQWKDVPHW
LWV EXUGHQ RI GHPRQVWUDWLQJ WKDW WKH HYLGHQFH ZRXOG
LQHYLWDEO\ KDYH EHHQ GLVFRYHUHG WKURXJK ODZIXO PHDQV
(VWDEOLVKHGSROLF\FDOOHGIRUWKHUHPRYDORIYHKLFOHVSDUNHG
RQ9$SURSHUW\DQGQRWEHORQJLQJWRSDWLHQWVRUYLVLWRUV
7KDWVXFKDSROLF\LVFRQVLVWHQWZLWKOHJLWLPDWHSXEOLFVDIHW\
DQGFRPPXQLW\FDUHWDNLQJSXUSRVHVLVEH\RQGTXHVWLRQ6HH
6RXWK'DNRWDY2SSHUPDQ86 +HUH
WKH JRYHUQPHQW KDV VKRZQ ZLWKRXW FRQWUDGLFWLRQ WKDW WKH
KRVSLWDO SDUNLQJ ORW ZDV QRW D VHFXUH SODFH DQG WKDW WKH
LQWHJULW\ RI WKH WUXFN FRXOG QRW EH HQVXUHG WKHUH 7KH
JRYHUQPHQWKDVIXUWKHUVKRZQDJDLQZLWKRXWFRQWUDGLFWLRQ
WKDW OHDYLQJ WKH WUXFN LQ WKH SDUNLQJ VSDFH IRU DQ
XQGHWHUPLQHG SHULRG RI WLPH ZRXOG KDYH PHDQW GHQLDO RI
DFFHVVWRWKHSDUNLQJVSDFHE\RWKHUYLVLWRUV
(VWDEOLVKHG9$SROLF\DOVRSUHVFULEHGDQLQYHQWRU\VHDUFK
SULRUWRUHPRYDORIDYHKLFOH2IILFHU1RUZRRGWHVWLILHGWKDW
WKH SXUSRVH RI FRQGXFWLQJ VXFK D VHDUFK ZDV WR SURWHFW
1R 8QLWHG6WDWHVY.LPHV
RIILFLDO VWLOO ZRXOG EH LPSHGHG LQ WKH SHUIRUPDQFH RI KLV
RIILFLDOGXWLHV´8QLWHG6WDWHVY-HQQLQJV)6XSS
0'3D
,QVXPZHFRQFOXGHWKDWWKHFULPHHVWDEOLVKHGLQ86&
† D LVDJHQHUDOLQWHQWFULPHDVWRZKLFKHYLGHQFHRI
GLPLQLVKHG FDSDFLW\ LV QRW DGPLVVLEOH 7KLV FRQFOXVLRQ
REYLDWHV DQ\ QHHG IRU XV WR DGGUHVV WKH GLVWULFW FRXUW¶V
DOWHUQDWLYHKROGLQJZKLFKZDVWKDWDGPLVVLRQRIWKHSURIIHUHG
HYLGHQFHZDVSUHFOXGHGE\5XOH E )HG5(YLG
& 6XIILFLHQF\RIWKH(YLGHQFH
7KHGHIHQGDQWPDLQWDLQVWKDWWKHHYLGHQFHRIIHUHGDWWULDO
ZDVLQVXIILFLHQWWRVXSSRUWDFRQYLFWLRQRQHLWKHUFRXQWRIWKH
LQGLFWPHQW,QUHYLHZLQJWKHVXIILFLHQF\RIWKHHYLGHQFHIRU
D FULPLQDO FRQYLFWLRQ WKLV FRXUW PXVW GHWHUPLQH ZKHWKHU
WDNLQJ WKH HYLGHQFH LQ WKH OLJKW PRVW IDYRUDEOH WR WKH
SURVHFXWLRQDQ\UDWLRQDOWULHURIIDFWFRXOGKDYHIRXQGWKH
HVVHQWLDOHOHPHQWVRIWKHFULPHEH\RQGDUHDVRQDEOHGRXEW
6HH-DFNVRQY9LUJLQLD86 8QLWHG
6WDWHVY5XVVHOO)G WK&LU
$V WR WKH ILUVW FRXQW ZKLFK FKDUJHG KLP ZLWK IRUFLEO\
DVVDXOWLQJ 9$ SROLFH RIILFHUV LQ YLRODWLRQ RI 86&
† D 0U.LPHVDUJXHVWKDWWKHHYLGHQFHVKRZHGKH
ZDVGHIHQGLQJKLPVHOIDJDLQVWDQH[FHVVLYHXVHRIIRUFHE\
2IILFHU 'RXJKHUW\ 7KH RQO\ HYLGHQFH VXSSRUWLQJ WKLV
FRQWHQWLRQZDVWKHWHVWLPRQ\RI%XUW&ORQLQJHUDUHWLUHG)%,
DJHQWZKRRSLQHGWKDW2IILFHU'RXJKHUW\KDGXVHGH[FHVVLYH
IRUFHE\SODFLQJKLVKDQGRQWKHGHIHQGDQW¶VVKRXOGHU7KLV
WHVWLPRQ\ ZDV UHEXWWHG E\ )%, $JHQW /DQH 5XVKLQJ ZKR
H[SUHVVHG WKH RSLQLRQ WKDW 2IILFHU 'RXJKHUW\ DFWHG
DSSURSULDWHO\([DPLQLQJWKHFRQIOLFWLQJHYLGHQFHLQWKHOLJKW
PRVWIDYRUDEOHWRWKHSURVHFXWLRQZHVHHQRUHDVRQZK\D
UDWLRQDOWULHURIIDFWFRXOGQRWKDYHFKRVHQWRDFFHSW$JHQW
5XVKLQJ¶VWHVWLPRQ\DQGUHMHFW0U&ORQLQJHU¶V
$VWRWKHFRXQWUHODWLQJWRWKHNQLIHSRVVHVVLRQ0U.LPHV
DUJXHV VLPSO\ WKDW WKHUH ZRXOG KDYH EHHQ QR HYLGHQFH WR
VXSSRUWDFRQYLFWLRQEXWIRUWKHDOOHJHGO\LPSURSHUUHFHLSWRI

-- 6 of 10 --

8QLWHG6WDWHVY.LPHV 1R
KLVGLPLQLVKHGPHQWDOFDSDFLW\7KHILUVWSDUDJUDSKRI
86&† D EHJLQVWKXV
³:KRHYHU E\ IRUFH DQG YLROHQFH RU E\ LQWLPLGDWLRQ
WDNHVRUDWWHPSWVWRWDNHIURPWKHSHUVRQRUSUHVHQFHRI
DQRWKHURUREWDLQVRUDWWHPSWVWRREWDLQE\H[WRUWLRQDQ\
SURSHUW\RUPRQH\RUDQ\RWKHUWKLQJRIYDOXHEHORQJLQJ
WR RU LQ WKH FDUH FXVWRG\ FRQWURO PDQDJHPHQW RU
SRVVHVVLRQRIDQ\EDQNFUHGLWXQLRQRUDQ\VDYLQJVDQG
ORDQDVVRFLDWLRQ´
,QFRQWUDVWWKHVHFRQGSDUDJUDSKEHJLQVWKXV
³:KRHYHUHQWHUVRUDWWHPSWVWRHQWHUDQ\EDQNFUHGLW
XQLRQ RU DQ\ VDYLQJV DQG ORDQ DVVRFLDWLRQ RU DQ\
EXLOGLQJXVHGLQZKROHRULQSDUWDVDEDQNFUHGLWXQLRQ
RU DV D VDYLQJV DQG ORDQ DVVRFLDWLRQ ZLWK LQWHQW WR
FRPPLWLQVXFKEDQNFUHGLWXQLRQRULQVXFKVDYLQJVDQG
ORDQDVVRFLDWLRQRUEXLOGLQJRUSDUWWKHUHRIVRXVHGDQ\
IHORQ\DIIHFWLQJVXFKEDQNFUHGLWXQLRQRUVXFKVDYLQJV
DQGORDQDVVRFLDWLRQDQGLQYLRODWLRQRIDQ\VWDWXWHRIWKH
8QLWHG6WDWHVRUDQ\ODUFHQ\´ (PSKDVLVVXSSOLHG
%DVHGRQWKHGLIIHULQJODQJXDJHLQWKHWZRSDUDJUDSKVZH
XSKHOG WKH GLVWULFW FRXUW¶V HYLGHQWLDU\ UXOLQJ EHFDXVH
³&RQJUHVVVKRZHGμFDUHIXOGUDIWVPDQVKLS¶E\LQFOXGLQJDQ
LQWHQWUHTXLUHPHQWLQWKHVHFRQGSDUDJUDSKEXWQRWWKHILUVW
SDUDJUDSKRI† D ZHKROGWKDWWKHILUVWSDUDJUDSKRI
† D GHVFULEHV D JHQHUDO LQWHQW FULPH´ *RQ\HD
)GDW &LWDWLRQVRPLWWHG
&RQVLGHUDWLRQRIWKHRYHUDOOSXUSRVHRI† D DOVR
VXSSRUWVWKHFRQFOXVLRQWKDWWKHVWDWXWHVHWVIRUWKDJHQHUDO
LQWHQWFULPH,QHQDFWLQJWKLVVHFWLRQDVWKH6XSUHPH&RXUW
KDVUHFRJQL]HG³&RQJUHVVLQWHQGHGWRSURWHFWERWKIHGHUDO
RIILFHUVDQGIHGHUDOIXQFWLRQVDQGIXUWKHUDQFHRIWKHRQH
SROLF\ DGYDQFHV WKH RWKHU´ )HROD 86 DW
&DWHJRUL]LQJ† D DVDJHQHUDOLQWHQWFULPHIXUWKHUVWKH
FRQJUHVVLRQDOREMHFWLYH³,IDSHUVRQDFWVLQDPDQQHUZKLFK
LV DVVDXOWLYH WRZDUG D IHGHUDO RIILFLDO ZLWKRXW VSHFLILFDOO\
LQWHQGLQJKDUPRUWKHDSSUHKHQVLRQRILPPLQHQWKDUPWKH
1R 8QLWHG6WDWHVY.LPHV
SHUVRQDOSURSHUW\LQVLGHWKH YHKLFOHZKLOHLWZDVLQSROLFH
FXVWRG\DQGWRSURWHFWWKH9$IURPFODLPVRIORVWRUVWROHQ
SURSHUW\8QGHU2SSHUPDQDVHDUFKFRQGXFWHGIRUVXFKD
SXUSRVHPHHWVWKHFRQVWLWXWLRQDOWHVWRIUHDVRQDEOHQHVV
)LQDOO\WKHPDJLVWUDWHIRXQGWKDWWKHNQLYHVZHUHLQSODLQ
VLJKWZKHQ2IILFHU(QVRUHQWHUHGWKHWUXFN7KLVILQGLQJZDV
QRWFOHDUO\HUURQHRXV$FFHSWLQJLWDVWUXHZHFRQFOXGHWKDW
LIWKHNQLYHVKDGQRWDOUHDG\EHHQUHPRYHGE\2IILFHU(QVRU
WKH\ZRXOGLQHYLWDEO\KDYHEHHQGLVFRYHUHGLQDQLQYHQWRU\
VHDUFK FRQGXFWHG LQ FRQQHFWLRQ ZLWK WKH UHPRYDO RI WKH
YHKLFOH3URRIWKDWFRQWUDEDQGZRXOGKDYHEHHQGHWHFWHGLQ
³DQLQYHQWRU\VHDUFKWKDWZRXOGLQHYLWDEO\IROORZVHL]XUHRI
D FDU´ LV VXIILFLHQW WR LQYRNH WKH LQHYLWDEOH GLVFRYHU\
H[FHSWLRQWRWKHH[FOXVLRQDU\UXOH6HH.HQQHG\)GDW

7KH GHIHQGDQW FRQWHQGV WKDW WKH LQHYLWDEOH GLVFRYHU\
GRFWULQH VKRXOG QRW EH DSSOLHG LQ WKLV FDVH EHFDXVH 9$
SROLFHRIILFHUVKDGWRRPXFKGLVFUHWLRQLQGHFLGLQJZKHWKHU
WRLPSRXQGWKHWUXFNDQGFRQGXFWDQLQYHQWRU\VHDUFK,QWKLV
FRQQHFWLRQ0U.LPHVSRLQWVRXWWKDWRQVRPHRFFDVLRQVWKH
9$ SHUPLWWHG IDPLO\ PHPEHUV RU IULHQGV WR UHPRYH D
YHKLFOHLILWVRZQHURURSHUDWRUZDVXQDEOHWRGRVR7KH
GHIHQGDQWDOVRFRPSODLQVWKDWD9$RIILFHUFRQGXFWLQJDQ
LQYHQWRU\VHDUFKKDVGLVFUHWLRQWRUHIUDLQIURPUHFRUGLQJWKH
SUHVHQFHRILWHPVQRWFRQVLGHUHGYDOXDEOH
7KHGHIHQGDQW¶VDUJXPHQWVDUHQRWSHUVXDVLYH'LVFUHWLRQ
DVWRLPSRXQGPHQWLVSHUPLVVLEOH³VRORQJDVWKDWGLVFUHWLRQ
LVH[HUFLVHGDFFRUGLQJWRVWDQGDUGFULWHULDDQGRQWKHEDVLVRI
VRPHWKLQJ RWKHU WKDQ VXVSLFLRQ RI HYLGHQFH RI FULPLQDO
DFWLYLW\´&RORUDGRY%HUWLQH86
+HUHDVZHJDWKHU9$SROLFHVRPHWLPHVSHUPLWWHGYHKLFOHV
WREHSLFNHGXSE\DGULYHU¶VIULHQGVDQGUHODWLRQVLIWKH\ZHUH
DOUHDG\SUHVHQWRULIWKHGULYHUFRXOGFRQWDFWWKHPDQGJHW
WKHPWRFRPHWRWKHIDFLOLW\SURPSWO\0U.LPHVVXJJHVWV
WKDW UDWKHU WKDQ WRZLQJ KLV WUXFN WKH RIILFHUV VKRXOG KDYH
WDNHQLWXSRQWKHPVHOYHVWRFDOOKLVZLIHDQGDVNKHUWRJHWWKH

-- 7 of 10 --

8QLWHG6WDWHVY.LPHV 1R
YHKLFOH+HFLWHVQRDXWKRULW\FRPSHOOLQJVXFKDFRQFOXVLRQ
DQGZHDUHDZDUHRIQRQH
$V WR WKH FRPSUHKHQVLYHQHVV RI WKH LQYHQWRU\ OLVW DQ
RIILFHU¶VXVHRIGLVFUHWLRQLQLPSOHPHQWLQJDJHQF\JXLGHOLQHV
UHJDUGLQJ WKH FRQGXFW RI DQ LQYHQWRU\ VHDUFK GRHV QRW
QHFHVVDULO\YLRODWHWKH)RXUWK$PHQGPHQW6HH)ORULGDY
:HOOV 86 ³>,@Q IRUELGGLQJ XQFDQDOL]HG
GLVFUHWLRQWRSROLFHRIILFHUVFRQGXFWLQJLQYHQWRU\VHDUFKHV
WKHUHLVQRUHDVRQWRLQVLVWWKDWWKH\EHFRQGXFWHGLQDWRWDOO\
PHFKDQLFDOμDOORUQRWKLQJ¶IDVKLRQ´ 7KH9$¶VSROLF\RI
OLVWLQJRQO\³YDOXDEOH´LWHPVLVQRWLPSHUPLVVLEOHDQGQHLWKHU
LVDPHDVXUHRIIOH[LELOLW\UHJDUGLQJWKHLPSOHPHQWDWLRQRI
WKDWSROLF\7KHSRVWGLVFRYHU\OLVWLQJRILWHPVGLVFRYHUHGLQ
D VHDUFK PRUHRYHU KDV QR SHUWLQHQW FRQQHFWLRQ WR WKH
GLVFRYHU\LWVHOI
0U.LPHVLPSOLHVWKDWWKHGHFLVLRQWRLPSRXQGWKHWUXFN
DQGFRQGXFWDQLQYHQWRU\VHDUFKLQWKHFDVHDWEDUZDVVLPSO\
D SUHWH[W IRU VDQLWL]LQJ WKH SUHVXPSWLYHO\ LOOHJDO VHDUFK
FRQGXFWHGHDUOLHU7KHUHFRUGGRHVQRWFRPSHODILQGLQJRI
SUHWH[W DQG WKH GLVWULFW FRXUW PDGH QR VXFK ILQGLQJ 7KH
)RXUWK $PHQGPHQW SHUPLWV LPSRXQGPHQW GHFLVLRQV DQG
LQYHQWRU\VHDUFKHVWKDWDUHREMHFWLYHO\MXVWLILDEOHPRUHRYHU
UHJDUGOHVV RI DQ RIILFHU¶V VXEMHFWLYH LQWHQW 6HH :KUHQ Y
8QLWHG 6WDWHV 86 7KH
LPSRXQGPHQWLQYHQWRU\ GHFLVLRQ LQ WKH FDVH DW EDU ZDV
REMHFWLYHO\MXVWLILDEOHDQGWKHWULDOFRXUW¶VDSSOLFDWLRQRIWKH
LQHYLWDEOHGLVFRYHU\GRFWULQHZDVHQWLUHO\SURSHU
% ([FOXVLRQRI([SHUW7HVWLPRQ\±*HQHUDOYV6SHFLILF
,QWHQW
7KHGLVWULFWFRXUW¶VGHFLVLRQQRWWRUHFHLYHWKHWHVWLPRQ\RI
PHGLFDOH[SHUWVZKRZRXOGKDYHVXJJHVWHGWKDWWKHGHIHQGDQW
ODFNHG FRQWURO RYHU KLV DFWLRQV VWHPPHG LQ SDUW IURP WKH
FRXUW¶VYLHZWKDWWKHFULPHGHILQHGLQ86&† D
LVDJHQHUDOLQWHQWFULPHDVWRZKLFKGLPLQLVKHGFDSDFLW\LV
QRWDGHIHQVH6HH8QLWHG6WDWHVY*RQ\HD)G
WK &LU KROGLQJ WKDW GLPLQLVKHG FDSDFLW\ LV D
GHIHQVHRQO\WRVSHFLILFLQWHQWFULPHV 0U.LPHVFRQWHQGV
1R 8QLWHG6WDWHVY.LPHV
7KLVTXHVWLRQLVDSSDUHQWO\RQHRIILUVWLPSUHVVLRQIRUXV
)RXU RI RXU VLVWHU FLUFXLWV KRZHYHU KDYH IRXQG WKDW QR
DGGLWLRQDOSXUSRVHQHHGEHVKRZQXQGHU† D WKHVH
FLUFXLWV KDYH KHOG WKDW WKH VWDWXWH FUHDWHV D JHQHUDO LQWHQW
FULPHZLWKUHVSHFWWRZKLFKHYLGHQFHRIGLPLQLVKHGFDSDFLW\
LVQRWDGPLVVLEOH6HH8QLWHG6WDWHVY5LFNHWWV)G
WK&LU 8QLWHG6WDWHVY.OHLQEDUW)G
'&&LU 8QLWHG6WDWHVY2DNLH)G
WK&LU DQG8QLWHG6WDWHVY-LP)G
WK&LU FHUWGHQLHG86 7KUHHRWKHU
FLUFXLWV±ZLWKRXWPXFKDQDO\VLVLWLVIDLUWRVD\±VHHPWR
KDYH UHDFKHG WKH RSSRVLWH UHVXOW 6HH 8QLWHG 6WDWHV Y
6LPPRQGV)G WK&LU FHUWGHQLHG
86 8QLWHG6WDWHVY7D\ORU)G
WK&LU DQG8QLWHG6WDWHVY&DUXDQD)G
VW&LU
,Q VLGLQJ ZLWK WKH FLUFXLWV WKDW KDYH UHDG † D DV
GHILQLQJ D JHQHUDO LQWHQW FULPH ZH DUH JXLGHG ILUVW DQG
IRUHPRVWE\WKHIDFWWKDW† D FRQWDLQVQRODQJXDJH
VXJJHVWLQJWKDWVSHFLILFLQWHQWPXVWEHVKRZQ,WLVSODLQIURP
DQH[DPLQDWLRQRIRWKHUIHGHUDOVWDWXWHVWKDW&RQJUHVVLVIXOO\
FRJQL]DQW RI WKH JHQHUDO LQWHQWVSHFLILF LQWHQW GLFKRWRP\
:KHQLWLQWHQGVWRFUHDWHDVSHFLILFLQWHQWFULPH&RQJUHVV
H[SOLFLWO\VD\VVR6HHIRUH[DPSOH86&† D
ZKLFKSURYLGHVWKDW³DVVDXOWZLWKLQWHQWWRFRPPLWPXUGHU´LQ
WKHVSHFLDOPDULWLPHDQGWHUULWRULDOMXULVGLFWLRQRIWKH8QLWHG
6WDWHVLVDFULPHSXQLVKDEOHE\XSWR\HDUVLPSULVRQPHQW
(PSKDVLVVXSSOLHG 8QGHU86&† D VLPLODUO\
³>D@VVDXOWZLWKDGDQJHURXVZHDSRQZLWKLQWHQWWRGRERGLO\
KDUP DQG ZLWKRXW MXVW FDXVH RU H[FXVH ´ LV PDGH
SXQLVKDEOH E\ XS WR \HDUV LPSULVRQPHQW (PSKDVLV
VXSSOLHG
2XU SUHFHGHQWV JLYH GXH FRQVLGHUDWLRQ WR WKH DELOLW\ RI
&RQJUHVVWRGLVWLQJXLVKEHWZHHQJHQHUDOLQWHQWDQGVSHFLILF
LQWHQW&RQVLGHU*RQ\HDZKHUHWKHWULDOFRXUWEHOLHYLQJWKDW
EDQNUREEHU\LQYLRODWLRQRIWKHILUVWSDUDJUDSKRI86&
† D LV D JHQHUDO LQWHQW FULPH KDG GHFOLQHG WR OHW D
GHIHQGDQWFKDUJHGXQGHUWKDWSDUDJUDSKSUHVHQWHYLGHQFHRI

-- 8 of 10 --

8QLWHG6WDWHVY.LPHV 1R
7KH WHUP ³IRUFLEO\´ KDV EHHQ GHILQHG WR PHDQ PDNLQJ ³VXFK D WKUHDW
RU GLVSOD\ RI SK\VLFDO DJJUHVVLRQ DV WR LQVSLUH IHDU RI SDLQ ERGLO\
KDUP RU GHDWK´ 6HH 8QLWHG 6WDWHV Y :DONHU )G G
&LU
EHIDFHGVHSDUDWHO\ZLWKUHVSHFWWRHDFKPDWHULDOHOHPHQWRI
WKHFULPH´ &LWDWLRQVRPLWWHG 6HFWLRQ D FRQWDLQV
IRXUGLVWLQFWHOHPHQWVWKHJRYHUQPHQWPXVWVKRZWKDWWKH
GHIHQGDQW IRUFLEO\ DVVDXOWHG UHVLVWHG RSSRVHG
LPSHGHGLQWLPLGDWHGRULQWHUIHUHGZLWK DIHGHUDORIILFHU
LQWKHSHUIRUPDQFHRIKLVGXWLHV)HRODPDNHVFOHDUWKDW
DWOHDVWDVWRWKHODWWHUWZRHOHPHQWVRQO\JHQHUDOLQWHQWLV
QHHGHG 7KH GHIHQGDQW QHHG KDYH QR VSHFLDO SXUSRVH WR
DVVDXOWDIHGHUDORIILFHULQWKHSHUIRUPDQFHRIKLVGXWLHVLWLV
HQRXJKWKDWWKHGHIHQGDQWLQWHQGVWRDVVDXOWVRPHRQH)HROD
PD\OHDYHURRPIRUDUJXPHQWKRZHYHUDVWRZKDWPHQWDO
VWDWHLVUHTXLUHGLQFRQQHFWLRQZLWKWKHILUVWWZRHOHPHQWV
+HUHWKHGHIHQGDQWIRFXVHVRQWKH³IRUFLEO\´HOHPHQWRI
† D FRQWHQGLQJWKDWLWVLQFOXVLRQUHTXLUHVDVKRZLQJ
RI³LQWHQWGHOLEHUDWLRQDQGYROXQWDULQHVV´(YHQWRVKRZ
JHQHUDOLQWHQWKRZHYHU³WKH*RYHUQPHQWPXVWSURYHEH\RQG
DUHDVRQDEOHGRXEWWKDWWKHGHIHQGDQWNQRZLQJO\FRQVFLRXVO\
DQG YROXQWDULO\ FRPPLWWHG DQ DFW ZKLFK WKH ODZ PDNHV D
FULPH´.OHLQEDUW)GDW HPSKDVLVDGGHG :KDW
VHWVJHQHUDOLQWHQWDSDUWIURPVSHFLILFLQWHQWLVWKDW³JHQHUDO
LQWHQW PD\ EH LQIHUUHG IURP WKH GRLQJ RI WKH DFW´ ,G ,Q
FRQWUDVWVSHFLILFLQWHQWUHTXLUHVDVKRZLQJRI³EDGSXUSRVH´
,GDWQ6HHDOVR*RQ\HD)GDW KROGLQJ
WKDWWRYLRODWHDVSHFLILFLQWHQWVWDWXWHWKHGHIHQGDQWPXVWDFW
³ZLWKWKHSXUSRVHRIYLRODWLQJWKHODZ´
7KHTXHVWLRQZLWKZKLFKZHDUHOHIWLVWKLVIRUDYLRODWLRQ
RI† D WRRFFXULVLWVXIILFLHQWIRUDGHIHQGDQWWRDFW
UHJDUGOHVVRIWKHUHDVRQIRUWKHDFWLRQLQVXFKDZD\DVWR
DVVDXOWUHVLVWRSSRVHLPSHGHLQWLPLGDWHRULQWHUIHUHZLWKD
IHGHUDORIILFHULQWKHSHUIRUPDQFHRIKLVGXWLHVRULVLWDOVR
QHFHVVDU\IRUWKHGHIHQGDQWWRKDYHDVSHFLILF³EDG´SXUSRVH"
1R 8QLWHG6WDWHVY.LPHV
86& † SURYLGHV
³ D $IILUPDWLYH GHIHQVH ± ,W LV DQ DIILUPDWLYH GHIHQVH WR D SURVHFXWLRQ
XQGHU DQ\ )HGHUDO VWDWXWH WKDW DW WKH WLPH RI WKH FRPPLVVLRQ RI WKH DFWV
FRQVWLWXWLQJ WKH RIIHQVH WKH GHIHQGDQW DV D UHVXOW RI D VHYHUH PHQWDO
GLVHDVH RU GHIHFW ZDV XQDEOH WR DSSUHFLDWH WKH QDWXUH DQG TXDOLW\ RU WKH
ZURQJIXOQHVV RI KLV DFWV 0HQWDO GLVHDVH RU GHIHFW GRHV QRW RWKHUZLVH
FRQVWLWXWH D GHIHQVH
E %XUGHQ RI SURRI ± 7KH GHIHQGDQW KDV WKH EXUGHQ RI SURYLQJ WKH
GHIHQVH RI LQVDQLW\ E\ FOHDU DQG FRQYLQFLQJ HYLGHQFH´
WKDWHYLGHQFHRIKLVGLPLQLVKHGFDSDFLW\VKRXOGKDYHEHHQ
DGPLWWHGEHFDXVHKLVDVVDXOWRQWKHRIILFHUVZDVQRWDFULPH
XQGHU† D DEVHQWVSHFLILFLQWHQW
,WLVLPSRUWDQWLQWKLVFRQQHFWLRQWRGLVWLQJXLVKEHWZHHQWZR
GLIIHUHQWW\SHVRIPHQWDOGHIHFWGHIHQVH7KHILUVWVRPHWLPHV
FDOOHGWKH³GLPLQLVKHGUHVSRQVLELOLW\´GHIHQVHDSSOLHVZKHUH
WKHGHIHQGDQW¶VPHQWDOFRQGLWLRQ³FRPSOHWHO\DEVROYHVKLPRI
FULPLQDOUHVSRQVLELOLW\UHJDUGOHVVRIZKHWKHURUQRWJXLOWFDQ
EHSURYHQ´86Y)D]]LQL)G WK&LU FHUW
GHQLHG86 7KHVHFRQGRIWHQUHIHUUHGWRDV
WKH ³GLPLQLVKHG FDSDFLW\´ GHIHQVH DSSOLHV ³ZKHUH WKH
GHIHQGDQWFODLPVRQO\WKDWKLVPHQWDOFRQGLWLRQLVVXFKWKDWKH
RUVKHFDQQRWDWWDLQWKHFXOSDEOHVWDWHRIPLQGUHTXLUHGE\WKH
GHILQLWLRQRIWKHFULPH´)D]]LQL)GDW
,QZLWKSDVVDJHRIWKH,QVDQLW\'HIHQVH5HIRUP$FW
86& † &RQJUHVV LPSOLHGO\ SODFHG VLJQLILFDQW
UHVWULFWLRQVRQWKHXVHRIPHQWDOGHIHFWHYLGHQFH7KHVWDWXWH
PDNHVLQVDQLW\DGHIHQVHEXWUHTXLUHVWKHGHIHQGDQWWRVDWLVI\
WKH0¶1DJKWHQVWDQGDUG±LHWKHGHIHQGDQWPXVWVKRZE\
FOHDU DQG FRQYLQFLQJ HYLGHQFH WKDW KH ZDV ³XQDEOH WR
DSSUHFLDWHWKHQDWXUHDQGTXDOLW\RUWKHZURQJIXOQHVVRIKLV
DFWV´6HFWLRQIXUWKHUSURYLGHVWKDW³>P@HQWDOGLVHDVHRU
GHIHFWGRHVQRWRWKHUZLVHFRQVWLWXWHDGHIHQVH´
/LNHRWKHUFRXUWV±VHH8QLWHG6WDWHVY7ZLQH)G
WK&LU DQG8QLWHG6WDWHVY3RKORW
)G G &LU FHUW GHQLHG 86

-- 9 of 10 --

8QLWHG6WDWHVY.LPHV 1R
±ZHKDYHFRQWLQXHGWRSHUPLWWKHLQWURGXFWLRQRI
HYLGHQFHRIGLPLQLVKHGFDSDFLW\IRUWKHSXUSRVHRIQHJDWLQJ
WKHPHQVUHDHOHPHQWRIFHUWDLQFULPHV6HH8QLWHG6WDWHVY
1HZPDQ)G WK&LU FHUWGHQLHG
86 ,QVRGRLQJKRZHYHUZHKDYHDGKHUHGWR
WKHYLHZWKDW³GLPLQLVKHGFDSDFLW\PD\EHXVHGRQO\WRQHJDWH
WKHPHQVUHDRIDVSHFLILFLQWHQWFULPH´*RQ\HD)GDW
HPSKDVLVDGGHG
+HUHWKHGHIHQGDQWSURIIHUHGH[SHUWSV\FKLDWULFWHVWLPRQ\
WHQGLQJ WR VKRZ WKDW KLV SV\FKRORJLFDO SUREOHPV OHIW KLP
XQDEOH WR FRQWURO KLV DFWLRQV GXULQJ WKH DOWHUFDWLRQ ZLWK
2IILFHUV 'RXJKHUW\ DQG (QVRU 2Q LWV IDFH WKH SURIIHUHG
WHVWLPRQ\ PLJKW KDYH VHHPHG GHVLJQHG WR HVWDEOLVK WKH
IRXQGDWLRQIRUDQLQVDQLW\GHIHQVH7KHGHIHQGDQWFKRVHQRW
WRSXUVXHDQLQVDQLW\GHIHQVHKRZHYHURIIHULQJWKHWHVWLPRQ\
RQO\ WR ³QHJDWH WKH PHQWDO VWDWHV UHTXLUHG IRU WKH RIIHQVH
´
7KH GLIIHUHQFH LV PRUH WKDQ VHPDQWLF +DG 0U .LPHV
HOHFWHGWRSXUVXHDQLQVDQLW\GHIHQVH86&†ZRXOG
KDYH DVVLJQHG KLP WKH EXUGHQ RI SURYLQJ E\ FOHDU DQG
FRQYLQFLQJHYLGHQFHWKDWKHZDVLQIDFWLQVDQHDWWKHWLPHRI
WKH DOWHUFDWLRQ 8QGHU D WKHRU\ RI GLPLQLVKHG FDSDFLW\
KRZHYHUWKHWHVWLPRQ\LIDGPLVVLEOHQHHGRQO\KDYHFDVWD
UHDVRQDEOHGRXEWRQWKHJRYHUQPHQW¶VSURRIWKDW0U.LPHV
KDGWKHQHFHVVDU\PHQVUHD
$VZHKDYHVDLGHYLGHQFHRIGLPLQLVKHGFDSDFLW\PD\EH
XVHGWRQHJDWHWKHPHQVUHDRIVSHFLILFLQWHQWFULPHVRQO\
0U .LPHV¶ SURIIHUHG WHVWLPRQ\ ZDV RQO\ DGPLVVLEOH
WKHUHIRUHLI† D UHTXLUHVDVKRZLQJRIVSHFLILFLQWHQW
7KHGLVWULFWFRXUWKHOGWKDWLWGRHVQRW
7KH GLIIHUHQFH EHWZHHQ D VSHFLILF LQWHQW FULPH DQG D
JHQHUDOLQWHQWFULPHZDVVSHOOHGRXWLQ*RQ\HDZKHUHZH
H[SODLQHGWKDW³DVSHFLILFLQWHQWFULPHLVRQHWKDWUHTXLUHVD
GHIHQGDQWWRGRPRUHWKDQNQRZLQJO\DFWLQYLRODWLRQRIWKH
ODZ 7KH GHIHQGDQW PXVW DOVR DFW ZLWK WKH SXUSRVH RI
YLRODWLQJWKHODZ7KHYLRODWLRQRIDJHQHUDOLQWHQWVWDWXWHE\
FRQWUDVWUHTXLUHVRQO\WKDWDGHIHQGDQWμLQWHQGWRGRWKHDFW
1R 8QLWHG6WDWHVY.LPHV
6HH DOVR 8QLWHG 6WDWHV Y %RRQH )G WK &LU D
GHFLVLRQ DIILUPLQJ WKH FRQYLFWLRQ RI D PDQ DFFXVHG RI YLRODWLQJ 86&
† E\ NQRFNLQJ GRZQ D MXGJH RI WKLV FRXUW DQG VQDWFKLQJ KHU SXUVH DV
VKH ZDV ZDONLQJ WR WKH FRXUWKRXVH RQ D 6XQGD\ HYHQLQJ WR FRPSOHWH KHU
SUHSDUDWLRQV IRU 0RQGD\¶V RUDO DUJXPHQWV 0U %RRQH ZDV REYLRXVO\
XQDZDUH WKDW KLV YLFWLP ZDV D IHGHUDO MXGJH VR KH FRXOG KDYH KDG QR
VSHFLILF LQWHQW WR DVVDXOW D MXGLFLDO RIILFHU ± EXW DV WKH FRXUW LPSOLFLWO\
KHOG D VKRZLQJ RI VSHFLILF LQWHQW ZDV QRW UHTXLUHG %RRQH¶V JHQHUDO
LQWHQW WR FRPPLW DQ DVVDXOW ZDV VXIILFLHQW
WKDW WKH ODZ SURVFULEHV¶´ )G DW &LWDWLRQV
RPLWWHG ,QRWKHUZRUGV³DJHQHUDOLQWHQWFULPHUHTXLUHVWKH
NQRZLQJFRPPLVVLRQRIDQDFWWKDWWKHODZPDNHVDFULPH$
VSHFLILF LQWHQW FULPH UHTXLUHV DGGLWLRQDO μEDG SXUSRVH¶´
8QLWHG6WDWHVY.OHLQEDUW)G '&&LU
Q FLWDWLRQVRPLWWHG
6HFWLRQ D SURYLGHVDVIROORZV³:KRHYHUIRUFLEO\
DVVDXOWVUHVLVWVRSSRVHVLPSHGHVLQWLPLGDWHVRULQWHUIHUHV
ZLWKDQ\>IHGHUDORIILFHURUDJHQF\HPSOR\HH@ZKLOHHQJDJHG
LQRURQDFFRXQWRIWKHSHUIRUPDQFHRIRIILFLDOGXWLHVVKDOO
EHILQHGXQGHUWKLVWLWOHRULPSULVRQHG´7KHUHZDVD
WLPHZKHQWKLVODQJXDJHZRXOGKDYHOHIWQRSRVVLEOHURRPIRU
GRXEWWKDWRQO\JHQHUDOLQWHQWZDVUHTXLUHG6HH8QLWHG6WDWHV
Y)HROD86 ZKHUHWKH6XSUHPH&RXUW
GHFODUHGWKDW
³LQ RUGHU WR HIIHFWXDWH WKH FRQJUHVVLRQDO SXUSRVH RI
DFFRUGLQJ PD[LPXP SURWHFWLRQ WR IHGHUDO RIILFHUV E\
PDNLQJSURVHFXWLRQIRUDVVDXOWVXSRQWKHPFRJQL]DEOHLQ
WKH IHGHUDO FRXUWV † FDQQRW EH FRQVWUXHG DV
HPERG\LQJDQXQH[SUHVVHGUHTXLUHPHQWWKDWDQDVVDLODQW
EHDZDUHWKDWKLVYLFWLPLVDIHGHUDORIILFHU$OOWKDWWKH
VWDWXWHUHTXLUHVLVDQLQWHQWWRDVVDXOWQRWDQLQWHQWWR
DVVDXOWDIHGHUDORIILFHU´,G
,Q 8QLWHG 6WDWHV Y %DLOH\ 86
KRZHYHUWKH6XSUHPH&RXUWKHOGWKDWLQGHWHUPLQLQJZKHWKHU
DQRIIHQVHLVDJHQHUDOLQWHQWFULPHRUDVSHFLILFLQWHQWFULPH
³FOHDU DQDO\VLV UHTXLUHV WKDW WKH TXHVWLRQ RI WKH NLQG RI
FXOSDELOLW\UHTXLUHGWRHVWDEOLVKWKHFRPPLVVLRQRIDQRIIHQVH

-- 10 of 10 --