02a0216p.06

7KH +RQRUDEOH 5LFKDUG 0LOOV 6HQLRU 8QLWHG 6WDWHV 'LVWULFW -XGJH
IRU WKH &HQWUDO 'LVWULFW RI ,OOLQRLV 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
&+$1,7$ )$50(5
3ODLQWLII$SSHOODQW
Y
&/(9(/$1' 38%/,& 32:(5
DQG&,7< 2) &/(9(/$1'
'HIHQGDQWV$SSHOOHHV
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW&OHYHODQG
1R²3DWULFLD$*DXJKDQ'LVWULFW-XGJH
6XEPLWWHG-XQH
'HFLGHGDQG)LOHG-XQH
%HIRUH&2/(DQG*,/0$1&LUFXLW-XGJHV0,//6
6HQLRU'LVWULFW-XGJH

-- 1 of 10 --

)DUPHUY&OHYHODQG
3XEOLF3RZHUHWDO
1R
BBBBBBBBBBBBBBBBB
&2816(/
21%5,()-RVH0*RQ]DOH]&,7<2)&/(9(/$1'
/$:'(3$570(172)),&(2)',5(&7252)/$:
&OHYHODQG2KLRIRU$SSHOOHHV&KDQLWD)DUPHU&OHYHODQG
2KLRSURVH
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
521$/'/((*,/0$1&LUFXLW-XGJH&KDQLWD)DUPHU
EURXJKWWKLVODZVXLWDJDLQVWKHUHPSOR\HUV&OHYHODQG3XEOLF
3RZHU &33 DQG WKH &LW\ RI &OHYHODQG DOOHJLQJ D
YLRODWLRQRIKHU)LUVW$PHQGPHQWULJKWV WKHFRPPLVVLRQ
RIDSXEOLFSROLF\WRUW UDFLDODQGJHQGHUGLVFULPLQDWLRQ
WKH H[LVWHQFH RI D KRVWLOH ZRUN HQYLURQPHQW DQG
UHWDOLDWLRQ IROORZLQJ KHU FRPSODLQWV DERXW WKH SXUSRUWHG
GLVFULPLQDWLRQ 7KH GLVWULFW FRXUW JUDQWHG WKH GHIHQGDQWV¶
PRWLRQIRUVXPPDU\MXGJPHQWZLWKUHVSHFWWR)DUPHU¶VILUVW
IRXUFODLPVEXWDOORZHGKHUUHWDOLDWLRQFODLPWRSURFHHGWR
WULDO$WWULDOWKHMXU\UHWXUQHGDXQDQLPRXVYHUGLFWLQIDYRU
RI WKH GHIHQGDQWV )RU WKH UHDVRQV VHW IRUWK EHORZ ZH
$)),50WKHMXGJPHQWRIWKHGLVWULFWFRXUW
,%$&.*5281'
$ )DFWXDOEDFNJURXQG
)DUPHUDQ$IULFDQ$PHULFDQZRPDQEHJDQZRUNLQJIRU
&33DVD3HUVRQQHO$GPLQLVWUDWRULQ6HSWHPEHURI+HU
LQLWLDOUHVSRQVLELOLWLHVLQFOXGHGPDQDJLQJWKHSHUVRQQHODQG
SD\UROO XQLW VXSHUYLVLQJ VWDII UHYLHZLQJ SHUIRUPDQFH
HYDOXDWLRQVFRQGXFWLQJGLVFLSOLQDU\KHDULQJVDQGVHUYLQJDV
WKHFRQWDFWSHUVRQIRU&33¶V*$7(SURJUDP QRZFDOOHGWKH
(PSOR\HH$VVLVWDQFH3URJUDP ZKLFKSURYLGHVVXSSRUWWR
HPSOR\HHVIDFLQJSV\FKRORJLFDOPDULWDORURWKHUHPRWLRQDO

-- 2 of 10 --

)DUPHUY&OHYHODQG
3XEOLF3RZHUHWDO
1R
,,,&21&/86,21
)RU DOO RI WKH UHDVRQV VHW IRUWK DERYH ZH $)),50 WKH
MXGJPHQWRIWKHGLVWULFWFRXUW
1R )DUPHUY&OHYHODQG
3XEOLF3RZHUHWDO

SUREOHPV 6KH ZDV DOVR LQYROYHG LQ IRUPXODWLQJ SROLFLHV
UHJDUGLQJ KXPDQ UHVRXUFHV HPSOR\HH UHFUXLWPHQW DQG
EHQHILWVDQGFRPSOLDQFHZLWKIHGHUDOHPSOR\PHQWDQGODERU
ODZV
:LWKLQDIHZ\HDUVKRZHYHUZRUNUHODWHGSUREOHPVEHJDQ
WRGHYHORS)DUPHUZDVVXVSHQGHGRQVHYHUDORFFDVLRQVIRU
FRQGXFWXQEHFRPLQJDQHPSOR\HHLQWKHSXEOLFVHUYLFH,Q
WKH ILUVW GLVFLSOLQDU\ DFWLRQ &33 &RPPLVVLRQHU 1DJDK
5DPDGDQVXVSHQGHG)DUPHUIRUWKUHHGD\VLQ-XQHRI
7KLVVXVSHQVLRQZDVLQUHVSRQVHWRDSK\VLFDODOWHUFDWLRQWKDW
)DUPHUKDGZLWKRQHRIKHUFRZRUNHUVDQGDVHFXULW\RIILFHU
LQ&33¶VSXEOLFVSDFHRQ0D\
)DUPHU¶VVHFRQGVXVSHQVLRQRFFXUUHGLQ'HFHPEHURI
7KLV WHQGD\ VXVSHQVLRQ ZDV WKH UHVXOW RI DQ LQFLGHQW WKDW
RFFXUUHGRQ1RYHPEHUZKHQ)DUPHUFRQIURQWHGD
FRZRUNHU DQG LQWHUUXSWHG 5DPDGDQ E\ VKRXWLQJ DW WKH
FRPPLVVLRQHULQ&33¶VSXEOLFVSDFH
+HUWKLUGVXVSHQVLRQWRRNSODFHRQ$XJXVW7KLV
GLVFLSOLQDU\DFWLRQDRQHGD\VXVSHQVLRQZLWKRXWSD\ZDVWKH
UHVXOWRIDQDOWHUFDWLRQWKDWRFFXUUHGHDUOLHUWKDWPRQWKZKHQ
)DUPHUDJDLQDUJXHGZLWKDFRZRUNHULQ&33¶VSXEOLFVSDFH
)DUPHU¶VZRUNUHVSRQVLELOLWLHVJUDGXDOO\FKDQJHGRYHUWKH
FRXUVHRIKHUHPSOR\PHQWZLWK&337KHILUVWPRGLILFDWLRQ
RFFXUUHGLQ0D\RIZKHQVHYHUDORIKHUGXWLHVZHUH
DVVLJQHGWRDQRWKHUHPSOR\HH$SSUR[LPDWHO\WZR\HDUVODWHU
LQ0DUFKRI5DPDGDQUHSULPDQGHG)DUPHUIRUDOWHULQJ
D FRZRUNHU¶V SD\UROO UHFRUGV 6HYHUDO PRQWKV DIWHU WKH
UHSULPDQGDQRWKHUHPSOR\HHEHFDPHWKHFRQWDFWSHUVRQIRU
DOOSD\UROODQGSHUVRQQHOPDWWHUV)DUPHUVWRSSHGUHFHLYLQJ
LQWHURIILFHFRUUHVSRQGHQFHUHJDUGLQJODERUUHODWLRQVDURXQG
WKHVDPHWLPH7KHQH[WGHFUHDVHLQ)DUPHU¶VUHVSRQVLELOLWLHV
RFFXUUHGLQ'HFHPEHURIZKHQ5DPDGDQWUDQVIHUUHG
PRUHRIWKHGXWLHVWKDW)DUPHUKDGSUHYLRXVO\SHUIRUPHGWR
DQRWKHU HPSOR\HH ZKR EHFDPH D 3HUVRQQHO $GPLQLVWUDWRU
)LQDOO\)DUPHU¶VUROH DVWKHFRQWDFWSHUVRQIRUWKH*$7(

-- 3 of 10 --

)DUPHUY&OHYHODQG
3XEOLF3RZHUHWDO
1R
SURJUDPWHUPLQDWHGLQ-XQHRIZKHQDGLIIHUHQWSHUVRQ
ZDVDVVLJQHGWKDWGXW\
7KH SHUIRUPDQFH HYDOXDWLRQV WKDW )DUPHU UHFHLYHG IRU
DQGIRU²WKHRQO\UHYLHZVWKDWDSSHDULQWKH
UHFRUG²JDYHKHUUDWLQJVRIDQGUHVSHFWLYHO\$
VFRUH RI ZDV WKH KLJKHVW SRVVLEOH UDWLQJ 7KH
HYDOXDWLRQLQGLFDWHGWKDW)DUPHU¶VUHVSRQVLELOLWLHVKDGEHHQ
UHGXFHGDVDUHVXOWRIKHUIDLOXUHWRPDQDJHWKHSHUVRQQHODUHD
HIILFLHQWO\DQGHIIHFWLYHO\
)DUPHUH[SUHVVHGLQWHUHVWLQWUDQVIHUULQJWRDQRWKHU&LW\
GHSDUWPHQWLQ$XJXVWRI6KHVXEVHTXHQWO\DSSOLHGIRU
HLJKW SRVLWLRQV ZLWK WKH &LW\ LQ ODWH $XJXVW DQG HDUO\
6HSWHPEHURIWKDW\HDU1RQHRIWKHDSSOLFDWLRQVUHVXOWHGLQ
)DUPHU EHLQJ RIIHUHG D QHZ MRE 'XULQJ WKH RSHQ
DSSOLFDWLRQV SHULRG RI 0DUFK WR )DUPHU DJDLQ
VRXJKW WR REWDLQ D GLIIHUHQW SRVLWLRQ E\ VXEPLWWLQJ
DSSOLFDWLRQVIRUHLJKWMRERSHQLQJVZLWKLQ&33)DUPHURQFH
PRUHZDVQRWRIIHUHGDQHZSRVLWLRQ
,QUHVSRQVHWRKHUVXVSHQVLRQVWKHUHGXFWLRQLQKHUGXWLHV
KHU QHJDWLYH SHUIRUPDQFH HYDOXDWLRQV DQG WKH YDULRXV
FRQIURQWDWLRQVWKDWVKHKDGKDGZLWKKHUVXSHULRUV)DUPHU
ILOHGFKDUJHVRIGLVFULPLQDWLRQZLWKWKH(TXDO(PSOR\PHQW
2SSRUWXQLWLHV &RPPLVVLRQ ((2& RQ VHYHQ GLIIHUHQW
RFFDVLRQVEHWZHHQ'HFHPEHURIDQG-DQXDU\RI
6KHDOVRFRPSODLQHGDERXWKHUWUHDWPHQWLQYDULRXVLQWHUQDO
JULHYDQFHSURFHHGLQJVWKDWVKHVXEPLWWHGWR&33RIILFLDOVDQG
WRWKH&LW\¶V'HSDUWPHQWRI3HUVRQQHODQG+XPDQ5HVRXUFHV
'LYLVLRQRI(TXDO(PSOR\PHQW2SSRUWXQLW\'HVSLWHWKHVH
YDULRXV FKDUJHV DQG JULHYDQFHV )DUPHU FRQWLQXHV WR EH
HPSOR\HGE\&33DVD3HUVRQQHO$GPLQLVWUDWRU
% 3URFHGXUDOEDFNJURXQG
7KLVODZVXLWZDVILOHGLQWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH1RUWKHUQ'LVWULFWRI2KLRLQ$SULORI)DUPHU¶V
FRPSODLQWDVDPHQGHGFRQWDLQVILYHFDXVHVRIDFWLRQ+HU
ILUVWFRXQWEURXJKWXQGHU86&†DOOHJHVWKDWWKH
1R )DUPHUY&OHYHODQG
3XEOLF3RZHUHWDO

$FWLRQDEOH KDUDVVPHQW H[LVWV LI ³WKH ZRUNSODFH LV
SHUPHDWHG ZLWK GLVFULPLQDWRU\ LQWLPLGDWLRQ ULGLFXOH DQG
LQVXOWWKDWLVVXIILFLHQWO\VHYHUHRUSHUYDVLYHWRDOWHUWKH
FRQGLWLRQVRIWKHYLFWLP¶VHPSOR\PHQWDQGFUHDWHDQDEXVLYH
ZRUNLQJHQYLURQPHQW´+DUULVY)RUNOLIW6\V,QF
86 LQWHUQDO TXRWDWLRQ PDUNV DQG FLWDWLRQ
RPLWWHG %XWDVWKHHOHPHQWVRIDSULPDIDFLHFDVHLQGLFDWH
D UDFLDO RU VH[XDO KRVWLOH ZRUN HQYLURQPHQW FODLP LV
FRJQL]DEOH RQO\ LI WKH SXUSRUWHG KDUDVVPHQW YLHZHG LQ
FRQMXQFWLRQZLWKDOORIWKHFLUFXPVWDQFHVRFFXUUHGEHFDXVH
RIWKHHPSOR\HH¶VUDFHRUJHQGHU-DFNVRQY4XDQH[&RUS
)G WK&LU UHFRJQL]LQJWKHQHFHVVLW\
RI FRQVLGHULQJ WKH ³WRWDOLW\ RI WKH FLUFXPVWDQFHV´ DQG
H[SODLQLQJWKDW³HYHQWKRXJKDFHUWDLQDFWLRQPD\QRWKDYH
EHHQ VSHFLILFDOO\ UDFLDO LQ QDWXUH LW PD\ FRQWULEXWH WR WKH
SODLQWLII¶VSURRIRIDKRVWLOHZRUNHQYLURQPHQWLILWZRXOGQRW
KDYHRFFXUUHGEXWIRUWKHIDFWWKDWWKHSODLQWLIIZDV$IULFDQ
$PHULFDQ´ :LOOLDPV )G DW ³$Q\ XQHTXDO
WUHDWPHQWRIWKHHPSOR\HHWKDWZRXOGQRWRFFXUEXWIRUWKH
HPSOR\HH¶VJHQGHUPD\LIVXIILFLHQWO\ VHYHUHRUSHUYDVLYH
XQGHUWKH+DUULVVWDQGDUGFRQVWLWXWHDKRVWLOHHQYLURQPHQWLQ
YLRODWLRQRI7LWOH9,,´
:HDJUHHZLWKWKHGLVWULFWFRXUW¶VFRQFOXVLRQWKDW)DUPHU
IDLOHGWRUDLVHDJHQXLQHLVVXHRIPDWHULDOIDFWUHJDUGLQJKHU
KRVWLOHZRUNHQYLURQPHQWFODLP6KHKDVQRWSRLQWHGWRDQ\
UHPDUNVRUDFWLRQVLQGLFDWLQJDQ\FRQVLGHUDWLRQRIKHUUDFHRU
JHQGHU1RUKDVVKHVKRZQWKDWRWKHU$IULFDQ$PHULFDQVRU
ZRPHQ ZHUH H[SRVHG WR XQZHOFRPH UDFLDO RU VH[XDO
KDUDVVPHQW&I-DFNVRQ)GDW KROGLQJWKDWWKH
GLVWULFW FRXUW HUUHG LQ DWWDFKLQJ QR VLJQLILFDQFH WR WKH
GLVFULPLQDWRU\ FRPPHQWV WKDW KDG EHHQ PDGH WR RWKHU
$IULFDQ$PHULFDQ HPSOR\HHV HYHQ LI QRW GLUHFWHG DW WKH
SODLQWLII $VDUHVXOWZHFRQFOXGHWKDW)DUPHUKDVIDLOHGWR
SUHVHQWDSULPDIDFLHFODLPRIDKRVWLOHZRUNHQYLURQPHQW
EDVHGXSRQKHUUDFHRUJHQGHU7KHGLVWULFWFRXUWWKHUHIRUH
GLGQRWHUULQJUDQWLQJVXPPDU\MXGJPHQWWRWKHGHIHQGDQWV
ZLWKUHVSHFWWRWKLVFODLP

-- 4 of 10 --

)DUPHUY&OHYHODQG
3XEOLF3RZHUHWDO
1R
GLGQRWHUULQJUDQWLQJVXPPDU\MXGJPHQWWRWKHGHIHQGDQWV
ZLWKUHVSHFWWR)DUPHU¶VGLVFULPLQDWLRQFODLPV
( +RVWLOHZRUNHQYLURQPHQW
7KHILQDOFODLPWKDWZDVGLVPLVVHGLQWKHGLVWULFWFRXUW¶V
SDUWLDOJUDQWRIVXPPDU\MXGJPHQWLV)DUPHU¶VDOOHJDWLRQWKDW
WKH GHIHQGDQWV FUHDWHG D KRVWLOH ZRUN HQYLURQPHQW 7R
VXSSRUW WKLV FODLP )DUPHU¶V FRPSODLQW DOOHJHV WKDW WKH
GHIHQGDQWV UHVWULFWHG KHU DFFHVV WR QHFHVVDU\ LQIRUPDWLRQ
JDYH KHU FRQIOLFWLQJ DQG YDJXH SHUIRUPDQFH REMHFWLYHV
LJQRUHGKHUUHTXHVWVIRUFODULILFDWLRQRIKHUWDUJHWHGJRDOVDQG
SUHSDUHGSHUIRUPDQFHHYDOXDWLRQVEDVHGXSRQH[SHFWDWLRQV
WKDWKDGQRWEHHQGLVFXVVHGZLWKKHU)DUPHU¶VUHVSRQVHWR
WKH GHIHQGDQWV¶ PRWLRQ IRU VXPPDU\ MXGJPHQW LQFOXGHV
VHYHUDO DGGLWLRQDO EDVHV IRU KHU KRVWLOH ZRUN HQYLURQPHQW
FODLP LQFOXGLQJ KHU FRQWHQWLRQ WKDW VKH ZDV VXEMHFWHG WR
KRVWLOLW\ DQG UHWDOLDWLRQ SK\VLFDOO\ LVRODWHG IURP KHU
FRZRUNHUVDQGGLVFLSOLQHGIRUDFWLRQVWKDWVKHGLGQRWWDNH
6KHDOVRDUJXHGWKDWWKHGHIHQGDQWVUHIXVHGWRUHVSRQGWRKHU
UHTXHVWVIRUSURPRWLRQVDQGWUDQVIHUVDQGWKDWDQXPEHURI
KHU UHVSRQVLELOLWLHV ZHUH SHUIRUPHG E\ RWKHU HPSOR\HHV
ZLWKRXWKHUNQRZOHGJH
$QHPSOR\HHDVVHUWLQJDYLRODWLRQRI7LWOH9,,EDVHGXSRQ
DKRVWLOHZRUNHQYLURQPHQWPXVWHVWDEOLVKWKDW VKHZDVD
PHPEHU RI D SURWHFWHG JURXS VKH ZDV VXEMHFWHG WR
XQZHOFRPHKDUDVVPHQW WKHKDUDVVPHQWZDVEDVHGXSRQ
WKH HPSOR\HH¶V SURWHFWHG VWDWXV VXFK DV UDFH RU JHQGHU
WKHKDUDVVPHQWDIIHFWHGDWHUPFRQGLWLRQRUSULYLOHJHRI
HPSOR\PHQW DQG WKH GHIHQGDQW NQHZ RU VKRXOG KDYH
NQRZQ DERXW WKH KDUDVVLQJ FRQGXFW EXW IDLOHG WR WDNH DQ\
FRUUHFWLYH RUSUHYHQWLYHDFWLRQV:LOOLDPVY*HQ0RWRUV
&RUS)G WK&LU GLVFXVVLQJWKH
UHTXLUHPHQWVIRUSURYLQJDKRVWLOHZRUNHQYLURQPHQWFODLP
EDVHGXSRQJHQGHU 0RRUHY.8.$:HOGLQJ6\V 5RERW
&RUS)G WK&LU VHWWLQJIRUWK
WKH HOHPHQWVRIDSULPDIDFLHFDVHIRUDFODLPRIDKRVWLOH
ZRUNHQYLURQPHQWEDVHGXSRQUDFH
1R )DUPHUY&OHYHODQG
3XEOLF3RZHUHWDO

GHIHQGDQWV YLRODWHG KHU )LUVW $PHQGPHQW ULJKWV E\ WDNLQJ
KRVWLOH DQG UHWDOLDWRU\ DFWLRQV DJDLQVW KHU EHFDXVH RI KHU
VWDWHPHQWVDFFXVLQJ&33RISROLWLFDOQHSRWLVP7KHVHFRQG
FRXQWDOOHJHVWKDWWKHGHIHQGDQWVFRPPLWWHGDSXEOLFSROLF\
WRUWEHFDXVHWKH\IDLOHGWRDGKHUHWRWKHVWDWXWHVUXOHVDQG
UHJXODWLRQVJRYHUQLQJWKH&LYLO6HUYLFH6\VWHPLQ2KLRDVD
UHVXOWRIWKHLUSXUSRUWHGSROLWLFDOQHSRWLVP)DUPHU¶VILQDO
WKUHHFRXQWVDOOHJHWKDWWKHGHIHQGDQWVYLRODWHG7LWOH9,,RI
WKH&LYLO5LJKWV$FWRIE\ GLVFULPLQDWLQJDJDLQVWKHU
RQWKHEDVLVRIUDFHDQGJHQGHU UHWDOLDWLQJDJDLQVWKHUIRU
ILOLQJ FKDUJHV RI GLVFULPLQDWLRQ ZLWK WKH ((2& DQG
FUHDWLQJDKRVWLOHZRUNHQYLURQPHQW
7KH GHIHQGDQWV ILOHG D PRWLRQ IRU VXPPDU\ MXGJPHQW
SXUVXDQWWR5XOHRIWKH)HGHUDO5XOHVRI&LYLO3URFHGXUH
LQ-XQHRI)RXUPRQWKVODWHUWKHGLVWULFWFRXUWSDUWLDOO\
JUDQWHGWKHGHIHQGDQWV¶PRWLRQ7KHFRXUWFRQFOXGHGWKDW
)DUPHUKDGQRWHQJDJHGLQVSHHFKWKDWLVSURWHFWHGE\WKH
)LUVW $PHQGPHQW KHU SXEOLFSROLF\ WRUW FODLP IDLOHG
EHFDXVHLWZDVSUHPLVHGXSRQWKHVDPHIDFWVDQGLQYROYHGWKH
VDPHHOHPHQWVDVKHU)LUVW$PHQGPHQWFODLP VKHZDV
XQDEOH WR HVWDEOLVK D SULPD IDFLH FDVH RI UDFLDO RU JHQGHU
GLVFULPLQDWLRQEHFDXVH)DUPHUKDGQRWSUHVHQWHGDJHQXLQH
LVVXHRIPDWHULDOIDFWDVWRZKHWKHUVKHZDVTXDOLILHGIRUDQ\
RIWKHSRVLWLRQVWKDWVKHVRXJKWDQG )DUPHU¶VKRVWLOHZRUN
HQYLURQPHQW FODLP IDLOHG EHFDXVH VKH GLG QRW SUHVHQW DQ\
HYLGHQFH RI KDUDVVPHQW EDVHG XSRQ UDFH RU JHQGHU :LWK
UHVSHFW WR )DUPHU¶V UHWDOLDWLRQ FODLP KRZHYHU WKH FRXUW
FRQFOXGHGWKDWJHQXLQHLVVXHVRIPDWHULDOIDFWUHPDLQHGDVWR
ZKHWKHU WKH DGYHUVH HPSOR\PHQW DFWLRQV WKDW )DUPHU
H[SHULHQFHG FRQVWLWXWHG UHWDOLDWLRQ IRU KHU GHFLVLRQ WR ILOH
FKDUJHVRIGLVFULPLQDWLRQZLWKWKH((2&7KHGLVWULFWFRXUW
WKHUHIRUH GHQLHG WKH GHIHQGDQWV¶ PRWLRQ IRU VXPPDU\
MXGJPHQWUHJDUGLQJ)DUPHU¶VUHWDOLDWLRQFODLP
$VDFRQVHTXHQFHRIWKHGLVWULFWFRXUW¶VVXPPDU\MXGJPHQW
RUGHU )DUPHU¶V UHWDOLDWLRQ FODLP SURFHHGHG WR WULDO LQ
1RYHPEHURI7KHMXU\UHWXUQHGDXQDQLPRXVYHUGLFWLQ
IDYRURIWKHGHIHQGDQWVWKHSURSULHW\RIZKLFKLVQRWEHLQJ

-- 5 of 10 --

)DUPHUY&OHYHODQG
3XEOLF3RZHUHWDO
1R
FKDOOHQJHGRQDSSHDO7KLVWLPHO\DSSHDOLQVWHDGFRQWHVWVDOO
DVSHFWV RI WKH GLVWULFW FRXUW¶V RUGHU WKDW JUDQWHG VXPPDU\
MXGJPHQWLQIDYRURIWKHGHIHQGDQWV
,,$1$/<6,6
$ 6WDQGDUGRIUHYLHZ
$GLVWULFWFRXUW¶VJUDQWRIVXPPDU\MXGJPHQWLVUHYLHZHG
GHQRYR+ROORZD\Y%UXVK)G WK&LU
6XPPDU\MXGJPHQWLVSURSHUZKHUHQRJHQXLQHLVVXH
RI PDWHULDO IDFW H[LVWV DQG WKH PRYLQJ SDUW\ LV HQWLWOHG WR
MXGJPHQW DV D PDWWHU RI ODZ )HG 5 &LY 3 F ,Q
FRQVLGHULQJVXFKDPRWLRQWKHFRXUWPXVWYLHZWKHHYLGHQFH
DQGGUDZDOOUHDVRQDEOHLQIHUHQFHVLQIDYRURIWKHQRQPRYLQJ
SDUW\0DWVXVKLWD(OHF,QGXV&RY=HQLWK5DGLR&RUS
86 7KH FHQWUDO LVVXH LV ³ZKHWKHU WKH
HYLGHQFH SUHVHQWV D VXIILFLHQW GLVDJUHHPHQW WR UHTXLUH
VXEPLVVLRQWRDMXU\RUZKHWKHULWLVVRRQHVLGHGWKDWRQH
SDUW\PXVWSUHYDLODVDPDWWHURIODZ´$QGHUVRQY/LEHUW\
/REE\,QF86
% )LUVW$PHQGPHQWFODLP
)DUPHU¶VILUVWFDXVHRIDFWLRQDOOHJHVWKDWWKHGHIHQGDQWV
UHWDOLDWHG DJDLQVW KHU DQG UHPRYHG PDQ\ RI KHU MRE
UHVSRQVLELOLWLHV EHFDXVH VKH DFFXVHG WKHP RI HQJDJLQJ LQ
SROLWLFDO SDWURQDJH XQIDLU PDQDJHPHQW DQG YLRODWLRQV RI
IHGHUDO ODZ 7R VXSSRUW KHU FODLP )DUPHU LGHQWLILHV WZR
LQVWDQFHVRIZKDWVKHFRQWHQGVZDVSURWHFWHGVSHHFK,QRQH
RI WKHVH LQVWDQFHV VKH DYHUV WKDW &RPPLVVLRQHU 5DPDGDQ
DVNHGKHUWRGHQ\DOLJKWGXW\SRVLWLRQWRDSUHJQDQWHPSOR\HH
ZKRZDVKDYLQJGLIILFXOWLHVSHUIRUPLQJKHU UHJXODUGXWLHV
)DUPHUFODLPVLQKHUDIILGDYLWWKDWVKHWROG5DPDGDQWKDWVXFK
RSHQLQJV ZHUH DYDLODEOH EXW WKDW KH WROG KHU WR GHQ\ WKH
SUHJQDQWHPSOR\HH¶VUHTXHVWDQ\ZD\,QKHUUHVSRQVHWRWKH
GHIHQGDQWV¶PRWLRQIRUVXPPDU\MXGJPHQW)DUPHUDGGVWKDW
VKHFRQIURQWHG5DPDGDQDERXWWKHLOOHJDOLW\RIWKLVDFWLRQDQG
WKDW KH VXEVHTXHQWO\ EHFDPH DQJU\ DQG XSVHW ZLWK KHU
)DUPHU¶VDIILGDYLWKRZHYHUGRHVQRWVXSSRUWKHUFRQWHQWLRQ
1R )DUPHUY&OHYHODQG
3XEOLF3RZHUHWDO

)DUPHULVDPHPEHURIWZRSURWHFWHGJURXSV7KH\FRQWHQG
KRZHYHUWKDW)DUPHUIDLOHGWRVDWLVI\DQ\RIWKHUHPDLQLQJ
HOHPHQWVRIWKHSULPDIDFLHFDVH
,QJUDQWLQJWKHGHIHQGDQWV¶PRWLRQIRUVXPPDU\MXGJPHQW
ZLWKUHVSHFWWR)DUPHU¶VGLVFULPLQDWLRQFODLPVWKHGLVWULFW
FRXUW DVVXPHG IRU WKH SXUSRVH RI LWV DQDO\VLV WKDW )DUPHU
FRPSOLHGZLWKWKHUHTXLUHGDSSOLFDWLRQSURFHGXUHVIRUHDFKRI
WKH SRVLWLRQV VKH VRXJKW 7KH FRXUW WKHQ FRQFOXGHG WKDW
)DUPHU IDLOHG WR SUHVHQW DQ\ HYLGHQFH WR VXSSRUW KHU
FRQWHQWLRQWKDWVKHZDVTXDOLILHGIRUWKHSURPRWLRQV$VWKH
GLVWULFW FRXUW QRWHG )DUPHU LGHQWLILHG WKH VSHFLILHG
TXDOLILFDWLRQVIRURQO\WZRRIWKHSRVLWLRQVLQTXHVWLRQ²WKDW
RI /DERU 5HODWLRQV 0DQDJHU DQG RI $VVLVWDQW 'LUHFWRU RI
3XEOLF 8WLOLWLHV 7KH SUHUHTXLVLWHV IRU WKRVH SRVLWLRQV
KRZHYHUDSSHDUHGRQXQDXWKHQWLFDWHGGRFXPHQWVDQGWKHUH
ZDVQRLQGLFDWLRQWKDWWKHPLQLPXPTXDOLILFDWLRQVOLVWHGRQ
WKRVH GRFXPHQWV ZHUH FRPSUHKHQVLYH ,Q IDFW RQH RI WKH
GRFXPHQWV ZDV DQ LQWHUQDO SHUVRQQHO IRUP LQGLFDWLQJ WKDW
DQRWKHU SHUVRQ KDG EHHQ DSSURYHG IRU WKH SRVLWLRQ RI
$VVLVWDQW 'LUHFWRU RI 3XEOLF 8WLOLWLHV 7KH QRWLFH RI WKH
RSHQLQJ IRU WKH RWKHU SRVLWLRQ WKDW RI /DERU 5HODWLRQV
0DQDJHUDSSHDUHGRQDMRESRVWLQJEXWLWVSHFLILHGWKDWWKH
DSSOLFDQW ZRXOG QHHG WR KDYH ILYH \HDUV RI H[SHULHQFH
PDQDJLQJ ODERU UHODWLRQV IRU D ODUJH SXEOLF HPSOR\HU RU
HTXLYDOHQW H[SHULHQFH DQG IDPLOLDULW\ ZLWK WKH JULHYDQFH
SURFHVV)DUPHUGLGQRWSUHVHQWDQ\HYLGHQFHWKDWVKHPHW
WKRVHUHTXLUHPHQWV
7KHDEVHQFHRIDQ\DXWKHQWLFDWHGMRESRVWLQJVVHWWLQJIRUWK
WKHPLQLPXPUHTXLUHPHQWVIRUWKHYDULRXVSRVLWLRQVSUHYHQWV
XV IURP EHLQJ DEOH WR HYDOXDWH WKH PHULWV RI )DUPHU¶V
FRQWHQWLRQWKDWVKHZDVTXDOLILHGIRUHDFKRIWKHSRVLWLRQV
:HWKHUHIRUHDJUHHZLWKWKHGLVWULFWFRXUW¶VFRQFOXVLRQWKDW
)DUPHU KDV IDLOHG WR HVWDEOLVK D SULPD IDFLH FDVH RI
GLVFULPLQDWLRQEDVHGXSRQUDFHRUJHQGHUEHFDXVHVKHGLGQRW
SUHVHQW HYLGHQFH WKDW VKH ZDV TXDOLILHG IRU DQ\ RI WKH
SRVLWLRQVWRZKLFKVKHDSSOLHG$VDUHVXOWWKHGLVWULFWFRXUW

-- 6 of 10 --

)DUPHUY&OHYHODQG
3XEOLF3RZHUHWDO
1R
' 5DFHDQGJHQGHUGLVFULPLQDWLRQ
)DUPHU QH[W DOOHJHV WKDW WKH GHIHQGDQWV GLVFULPLQDWHG
DJDLQVWKHURQWKHEDVLVRIKHUUDFHDQGJHQGHULQYLRODWLRQRI
7LWOH9,,RIWKH&LYLO5LJKWV$FWRI86&†H
E\UHIXVLQJWRSURPRWHKHUWRDQ\RIWKHSRVLWLRQVIRUZKLFK
VKH DSSOLHG ,Q RUGHU WR HVWDEOLVK D 7LWOH 9,, HPSOR\PHQW
GLVFULPLQDWLRQ FODLP D SODLQWLII PXVW HLWKHU SUHVHQW GLUHFW
HYLGHQFH RI GLVFULPLQDWLRQ RU LQWURGXFH FLUFXPVWDQWLDO
HYLGHQFH WKDW ZRXOG DOORZ DQ LQIHUHQFH RI GLVFULPLQDWRU\
WUHDWPHQW-RKQVRQY8QLYRI&LQFLQQDWL)G
WK &LU VHWWLQJ IRUWK WKH UHTXLUHPHQWV IRU UDFLDO
GLVFULPLQDWLRQ FODLPV )DUPHU GLG QRW RIIHU DQ\ GLUHFW
HYLGHQFHRIGLVFULPLQDWLRQ$VDUHVXOWWKHEXUGHQVKLIWLQJ
DSSURDFKILUVWVHWIRUWKLQ0F'RQQHOO'RXJODV&RUSRUDWLRQY
*UHHQ 86 DQG ODWHU UHILQHG E\ 7H[DV
'HSDUWPHQWRI&RPPXQLW\$IIDLUVY%XUGLQH86
DSSOLHVWRWKHSUHVHQWFDVH-RKQVRQ)GDW
8QGHU WKH 0F'RQQHOO 'RXJODV IUDPHZRUN WKH SODLQWLII
IDFHVWKHLQLWLDOEXUGHQRISUHVHQWLQJDSULPDIDFLHFDVHRI
GLVFULPLQDWLRQ,G7KHHVWDEOLVKPHQWRIDSULPDIDFLHFDVH
FUHDWHV D UHEXWWDEOH SUHVXPSWLRQ RI GLVFULPLQDWLRQ DQG
UHTXLUHV WKH GHIHQGDQW WR ³DUWLFXODWH VRPH OHJLWLPDWH
QRQGLVFULPLQDWRU\UHDVRQ´IRUWDNLQJWKHFKDOOHQJHGDFWLRQ
,GDW LQWHUQDOTXRWDWLRQPDUNVRPLWWHG ,IWKHGHIHQGDQW
LVDEOHWRVDWLVI\WKLVEXUGHQWKHSODLQWLIIPXVWWKHQ³SURYH
WKDW WKH SURIHUUHG UHDVRQ ZDV DFWXDOO\ D SUHWH[W WR KLGH
XQODZIXOGLVFULPLQDWLRQ´,G
$SULPDIDFLHFDVHRIGLVFULPLQDWLRQEDVHGXSRQDIDLOXUH
WRSURPRWHUHTXLUHVWKHSODLQWLIIWRSURYHWKDW VKHZDVD
PHPEHU RI D SURWHFWHG JURXS VKH DSSOLHG IRU DQG ZDV
TXDOLILHGIRUWKHGHVLUHGSRVLWLRQ VKHZDVFRQVLGHUHGIRU
DQGGHQLHGWKHSURPRWLRQDQG WKHSRVLWLRQUHPDLQHGRSHQ
DIWHUKHUUHMHFWLRQRUZHQWWRDOHVVTXDOLILHGDSSOLFDQWZKR
ZDVQRWDPHPEHURIWKHSURWHFWHGJURXS5RKY/DNHVKRUH
(VWDWHV ,QF )G WK &LU 7KH
GHIHQGDQWV FRQFHGH WKDW DV DQ $IULFDQ$PHULFDQ ZRPDQ
1R )DUPHUY&OHYHODQG
3XEOLF3RZHUHWDO

WKDWVKHFRQIURQWHG5DPDGDQRUWKDWKHEHFDPHDQJU\ZLWK
KHU
7KH VHFRQG LQVWDQFH WKDW )DUPHU UHOLHV XSRQ LQYROYHV D
JULHYDQFHWKDWVKHILOHGZLWKWKH&LYLO6HUYLFH&RPPLVVLRQLQ
'HFHPEHURIDOOHJLQJWKDW&RPPLVVLRQHUV0DMHUDQG
5DPDGDQYLRODWHG&OHYHODQG¶VFKDUWHUE\QRWSUHSDULQJDQG
DGPLQLVWHULQJFLYLOVHUYLFHH[DPLQDWLRQVIRUQRQEDUJDLQLQJ
XQLWSRVLWLRQV$FFRUGLQJWR)DUPHU¶VJULHYDQFHWKLVDFWLRQ
DGYHUVHO\LPSDFWHG$IULFDQ$PHULFDQIHPDOHHPSOR\HHVVXFK
DVKHUVHOIEHFDXVHLWGHQLHGWKHPRSSRUWXQLWLHVIRUSURPRWLRQ
7KHGLVWULFWFRXUWFRQFOXGHGWKDWQHLWKHURIWKHVHLQVWDQFHV
LQYROYHGFRQVWLWXWLRQDOO\SURWHFWHGVSHHFKEHFDXVH)DUPHU
ZDVQRWDGGUHVVLQJPDWWHUVRISXEOLFFRQFHUQ,QVWHDGWKH
FRXUWGHWHUPLQHGWKDW)DUPHUWKURXJKWKHVHVWDWHPHQWVZDV
VLPSO\ FDUU\LQJ RXW KHU GXWLHV DV D SXEOLF HPSOR\HH DQG
VHHNLQJWRDGYDQFHKHURZQFDUHHUUHVSHFWLYHO\
$SODLQWLIIDOOHJLQJXQFRQVWLWXWLRQDOUHWDOLDWLRQLQYLRODWLRQ
RI WKH )LUVW $PHQGPHQW¶V JXDUDQWHH RI IUHHGRP RI VSHHFK
PXVWHVWDEOLVKWKUHHHOHPHQWV
WKDWWKHSODLQWLIIZDVHQJDJHGLQDFRQVWLWXWLRQDOO\
SURWHFWHGDFWLYLW\ WKDWWKHGHIHQGDQW¶VDGYHUVHDFWLRQ
FDXVHGWKHSODLQWLIIWRVXIIHUDQLQMXU\WKDWZRXOGOLNHO\
FKLOODSHUVRQRIRUGLQDU\ILUPQHVVIURPFRQWLQXLQJWR
HQJDJHLQWKDWDFWLYLW\DQG WKDWWKHDGYHUVHDFWLRQ
ZDV PRWLYDWHG DW OHDVW LQ SDUW DV D UHVSRQVH WR WKH
H[HUFLVHRIWKHSODLQWLII¶VFRQVWLWXWLRQDOULJKWV
%ORFKY5LEDU)G WK&LU
7R GHWHUPLQH ZKHWKHU D SXEOLF HPSOR\HH¶V VSHHFK LV
HQWLWOHG WR FRQVWLWXWLRQDO SURWHFWLRQ ZH DSSO\ D WZRSDUW
LQTXLU\'DPEURWY&HQW0LFK8QLY)G
WK&LU QRWLQJWKDWWKH6XSUHPH&RXUWKDVHVWDEOLVKHG
D³WZRVWHSDQDO\VLVIRUGHWHUPLQLQJZKHQWKHGLVFKDUJHRID
SXEOLFHPSOR\HHYLRODWHVWKH)LUVW$PHQGPHQW´ )LUVWWKH
SODLQWLIIPXVWHVWDEOLVKWKDWKLVRUKHUVSHHFKZDVUHODWHGWRD

-- 7 of 10 --

)DUPHUY&OHYHODQG
3XEOLF3RZHUHWDO
1R
PDWWHURISXEOLFFRQFHUQ&RQQLFNY0\HUV86
H[SODLQLQJ WKDW GHWHUPLQLQJ ZKHWKHU DQ
HPSOR\HH¶VVSHHFKSHUWDLQVWRDPDWWHURISXEOLFFRQFHUQLV
WKH WKUHVKROG TXHVWLRQ LQ HYDOXDWLQJ D SODLQWLII¶V )LUVW
$PHQGPHQW UHWDOLDWLRQ FODLP 7KLV VWHS RI WKH DQDO\VLV
SUHVHQWVDSXUHO\OHJDOTXHVWLRQ,GDWQ ³7KHLQTXLU\
LQWRWKHSURWHFWHGVWDWXVRIVSHHFKLVRQHRIODZQRWIDFW´
7KHVHFRQGVWDJHRIWKHLQTXLU\ZKLFKRFFXUVRQO\LIWKH
VSHHFK LQ TXHVWLRQ LQYROYHG D PDWWHU RI SXEOLF FRQFHUQ
UHTXLUHVEDODQFLQJWKHSODLQWLII¶VIUHHVSHHFKLQWHUHVWVDJDLQVW
WKHJRYHUQPHQW¶VLQWHUHVWVDVDQHPSOR\HU,GDW
H[SODLQLQJWKDWLIDSODLQWLII¶VVSHHFKGRHVQRWSHUWDLQWRD
PDWWHU RI SXEOLF FRQFHUQ ³LW LV XQQHFHVVDU\ IRU XV WR
VFUXWLQL]HWKHUHDVRQVIRUKHUGLVFKDUJH´ 3LFNHULQJY%GRI
(GXF86 ³7KHSUREOHPLQDQ\FDVH
LV WR DUULYH DW D EDODQFH EHWZHHQ WKH LQWHUHVWV RI WKH
>HPSOR\HH@ DV D FLWL]HQ LQ FRPPHQWLQJ XSRQ PDWWHUV RI
SXEOLFFRQFHUQDQGWKHLQWHUHVWRIWKH6WDWHDVDQHPSOR\HU
LQSURPRWLQJWKHHIILFLHQF\RIWKHSXEOLFVHUYLFHVLWSHUIRUPV
WKURXJKLWVHPSOR\HHV´
,Q &RQQLFN WKH 6XSUHPH &RXUW H[SODLQHG WKDW VSHHFK
WRXFKHVXSRQPDWWHUVRISXEOLFFRQFHUQZKHUHLWFDQ³EHIDLUO\
FRQVLGHUHG DV UHODWLQJ WR DQ\ PDWWHU RI SROLWLFDO VRFLDO RU
RWKHUFRQFHUQWRWKHFRPPXQLW\´&RQQLFN86DW
³:KHWKHUDQHPSOR\HH¶VVSHHFKDGGUHVVHVDPDWWHURI
SXEOLFFRQFHUQPXVWEHGHWHUPLQHGE\WKHFRQWHQWIRUPDQG
FRQWH[W RI D JLYHQ VWDWHPHQW DV UHYHDOHG E\ WKH ZKROH
UHFRUG´ ,G DW IRRWQRWH RPLWWHG 7KHVH
FRQVLGHUDWLRQV GLIIHUHQWLDWH EHWZHHQ DQ HPSOR\HH¶V VSHHFK
WKDWWRXFKHVXSRQPDWWHUVRISXEOLFFRQFHUQDQGVSHHFKWKDW
LVRISDUWLFXODULQWHUHVWRQO\WRWKHVSHDNHU7KHODWWHUXQOLNH
WKH IRUPHU FDQQRW IRUP WKH EDVLV RI D )LUVW $PHQGPHQW
UHWDOLDWLRQ ODZVXLW ,G DW ³:H KROG WKDW ZKHQ D
SXEOLF HPSOR\HH VSHDNV QRW DV D FLWL]HQ XSRQ PDWWHUV RI
SXEOLFFRQFHUQEXWLQVWHDGDVDQHPSOR\HHXSRQPDWWHUVRQO\
RISHUVRQDOLQWHUHVWDEVHQWWKHPRVWXQXVXDOFLUFXPVWDQFHV
DIHGHUDOFRXUWLVQRWWKHDSSURSULDWHIRUXPLQZKLFKWRUHYLHZ
1R )DUPHUY&OHYHODQG
3XEOLF3RZHUHWDO

& 2KLRSXEOLFSROLF\WRUW
)DUPHU¶VVHFRQGFDXVHRIDFWLRQDOOHJHVWKDW&33YLRODWHG
2KLRSXEOLFSROLF\EHFDXVHLWHQJDJHGLQSROLWLFDOQHSRWLVP
&33¶VDFWLRQV)DUPHUFRQWHQGVZHUHLQGLUHFWFRQWUDYHQWLRQ
RI WKH VWDWXWHV UXOHV DQG UHJXODWLRQV JRYHUQLQJ WKH &LYLO
6HUYLFH6\VWHPLQ2KLR,QDGGUHVVLQJWKLVFRQWHQWLRQWKH
GLVWULFW FRXUW QRWHG WKDW )DUPHU UHOLHG XSRQ WKH VDPH
DUJXPHQWVLQVXSSRUWRIERWKKHU)LUVW$PHQGPHQWDQGKHU
SXEOLFSROLF\ WRUW FODLPV EHFDXVH ERWK FRQWDLQ LGHQWLFDO
HOHPHQWV 7KH GLVWULFW FRXUW WKHUHIRUH FRQFOXGHG WKDW WKH
GHIHQGDQWVZHUHHQWLWOHGWRVXPPDU\MXGJPHQWRQ)DUPHU¶V
SXEOLFSROLF\WRUWFODLPIRUWKHVDPHUHDVRQVWKDWVXPPDU\
MXGJPHQW DV WR )DUPHU¶V )LUVW $PHQGPHQW FODLP ZDV
DSSURSULDWH 2XU GH QRYR UHYLHZ UHYHDOV QR HUURUV LQ WKH
GLVWULFWFRXUW¶VDQDO\VLV
2QDSSHDO)DUPHUGRHVQRWFKDOOHQJHWKHGLVWULFWFRXUW¶V
UHDVRQLQJWKDWKHU)LUVW$PHQGPHQWDQGSXEOLFSROLF\WRUW
FODLPV ERWK LQYROYHG WKH VDPH HOHPHQWV 1RU GRHV VKH
FRQWHQGWKDWGLIIHUHQWIDFWVVXSSRUWWKHVHWZRFODLPV,QVWHDG
)DUPHU TXRWHV IURP DQ 2KLR VWDWHFRXUW FDVH LQ ZKLFK WKH
FRXUWGLVFXVVHGWKHVWDWXWRU\UHTXLUHPHQWVIRU2KLR¶V&LYLO
6HUYLFH6\VWHP7KLVH[SRVLWLRQRI2KLRODZSURYLGHVQR
VXSSRUW IRU )DUPHU¶V SXEOLFSROLF\ WRUW FODLP KRZHYHU
EHFDXVH VKH GRHV QRW SRLQW WR DQ\ IDFWV VKRZLQJ WKDW WKH
GHIHQGDQWV YLRODWHG WKH SHUWLQHQW OHJLVODWLRQ )RU WKHVH
UHDVRQVZHFRQFOXGHWKDWVKHKDVIDLOHGWRSUHVHQWDYLDEOH
SXEOLFSROLF\WRUWFODLP7KHGLVWULFWFRXUWWKHUHIRUHGLGQRW
HUU LQ JUDQWLQJ VXPPDU\ MXGJPHQW WR WKH GHIHQGDQWV RQ
)DUPHU¶VVHFRQGFDXVHRIDFWLRQ

-- 8 of 10 --

)DUPHUY&OHYHODQG
3XEOLF3RZHUHWDO
1R
:KHUH)DUPHUIDOWHUVKRZHYHULVLQHVWDEOLVKLQJWKHILQDO
HOHPHQWRID)LUVW$PHQGPHQWUHWDOLDWLRQFODLP7KLVHOHPHQW
FRQVLVWVRIHYLGHQFH³WKDWWKHDGYHUVHDFWLRQZDVPRWLYDWHGDW
OHDVWLQSDUWDVDUHVSRQVHWRWKHH[HUFLVHRIWKHSODLQWLII¶V
FRQVWLWXWLRQDOULJKWV´%ORFK)GDW7RVDWLVI\WKLV
FDXVDWLRQ UHTXLUHPHQW )DUPHU PXVW ³SRLQW WR VSHFLILF
QRQFRQFOXVRU\DOOHJDWLRQVUHDVRQDEO\OLQNLQJKHUVSHHFKWR
HPSOR\HU GLVFLSOLQH´ %DLOH\ )G DW LQWHUQDO
TXRWDWLRQ PDUNV RPLWWHG 7KH IDFW WKDW DQ DGYHUVH
HPSOR\PHQWDFWLRQRFFXUUHGDIWHUWKHH[HUFLVHRIIUHHVSHHFK
ZLWKRXW PRUH LV LQVXIILFLHQW WR HVWDEOLVK WKH OLQN WKDW LV
FHQWUDOWRD)LUVW$PHQGPHQWUHWDOLDWLRQFODLP,GDW
³>:@KHQ RSSRVLQJ D PRWLRQ IRU VXPPDU\ MXGJPHQW WKH
QRQPRYLQJ SDUW\ PD\ QRW UHO\ RQ WKH PHUH IDFW WKDW DQ
DGYHUVHHPSOR\PHQWDFWLRQIROORZHGVSHHFKWKDWWKHHPSOR\HU
ZRXOGKDYHOLNHGWRSUHYHQW5DWKHUWKHHPSOR\HHPXVWOLQN
WKHVSHHFKLQTXHVWLRQWRWKHGHIHQGDQW¶VGHFLVLRQWRGLVPLVV
KHU´ LQWHUQDOFLWDWLRQRPLWWHG
$SSO\LQJ WKHVH FRQVLGHUDWLRQV WR WKH SUHVHQW FDVH ZH
FRQFOXGHWKDW)DUPHUKDVIDLOHGWRSUHVHQWDQ\HYLGHQFHWKDW
ZRXOGVXSSRUWDILQGLQJWKDWKHUVSHHFKZDVDVXEVWDQWLDORU
PRWLYDWLQJIDFWRULQWKHGHIHQGDQWV¶GHFLVLRQWRGLPLQLVKKHU
MRE UHVSRQVLELOLWLHV 7KH XQFRQWURYHUWHG HYLGHQFH LQVWHDG
VXJJHVWV WKDW KHU GXWLHV ZHUH DOWHUHG EHFDXVH VKH ZDV QRW
SHUIRUPLQJWKHPDGHTXDWHO\DQGZDVUHSHDWHGO\LQYROYHGLQ
FRQIURQWDWLRQVZLWKKHUVXSHUYLVRUVDQGFRZRUNHUV$OWKRXJK
KHU JULHYDQFH SUHFHGHG VHYHUDO UHGXFWLRQV LQ KHU
UHVSRQVLELOLWLHV WKLV WHPSRUDO FRQQHFWLRQ DORQH DV QRWHG
DERYHLVLQVXIILFLHQWWRFUHDWHDJHQXLQHLVVXHRIPDWHULDOIDFW
ZLWK UHVSHFW WR WKH FDXVDWLRQ UHTXLUHPHQW )DUPHU KDV
WKHUHIRUHIDLOHGWRHVWDEOLVKDQHVVHQWLDOHOHPHQWRIKHU)LUVW
$PHQGPHQWUHWDOLDWLRQFODLP,GDW FRQFOXGLQJWKDW
EHFDXVH %DLOH\ IDLOHG WR SUHVHQW DQ\ HYLGHQFH WKDW ZRXOG
DOORZDUHDVRQDEOHMXURUWRILQGWKDWVKHZDVWHUPLQDWHGGXH
WR KHU VSHHFK WKH GLVWULFW FRXUW SURSHUO\ JUDQWHG VXPPDU\
MXGJPHQW LQ IDYRU RI WKH GHIHQGDQWV 7KH GLVWULFW FRXUW
WKHUHIRUHGLGQRW HUU LQJUDQWLQJVXPPDU\MXGJPHQWWRWKH
GHIHQGDQWVRQ)DUPHU¶V)LUVW$PHQGPHQWFODLP
1R )DUPHUY&OHYHODQG
3XEOLF3RZHUHWDO

WKHZLVGRPRIDSHUVRQQHOGHFLVLRQWDNHQE\DSXEOLFDJHQF\
DOOHJHGO\LQUHDFWLRQWRWKHHPSOR\HH¶VEHKDYLRU´
$FFRUGLQJWRWKHGHIHQGDQWVQHLWKHURIWKHVSHHFKLQFLGHQWV
WKDW)DUPHULGHQWLILHGPHHWVWKH&RQQLFNWHVW:LWKUHVSHFW
WR )DUPHU¶V DOOHJDWLRQV UHJDUGLQJ WKH LQVWUXFWLRQV WKDW
&RPPLVVLRQHU 5DPDGDQ JDYH KHU WR GHQ\ D OLJKWGXW\
SRVLWLRQWRDSUHJQDQWHPSOR\HHWKHGHIHQGDQWVDUJXHWKDW
)DUPHU ZDV VLPSO\ SHUIRUPLQJ KHU GXWLHV DV D 3HUVRQQHO
$GPLQLVWUDWRUQRWDGGUHVVLQJDPDWWHURISXEOLFFRQFHUQ7KH
GHIHQGDQWVVLPLODUO\FRQWHQGWKDWWKHJULHYDQFHWKDW)DUPHU
ILOHGZLWKWKH&LYLO6HUYLFH&RPPLVVLRQLVQRWSURWHFWHGE\
WKH )LUVW $PHQGPHQW EDVHG XSRQ WKHLU DUJXPHQW WKDW
)DUPHU¶VVROHPRWLYDWLRQLQVXEPLWWLQJLWZDVWRSUHVHQWKHU
SHUVRQDOFRQFHUQVDERXWXQIDLUZRUNLQJFRQGLWLRQVDQGDERXW
KHULQDELOLW\WRREWDLQDSURPRWLRQ
$VQRWHGDERYHZHPXVWFRQVLGHU³WKHFRQWHQWIRUPDQG
FRQWH[W´ RI WKHVH VWDWHPHQWV WR GHWHUPLQH ZKHWKHU WKH\
WRXFKHGXSRQPDWWHUVRISXEOLFFRQFHUQ&RQQLFN86
DW$SSO\LQJWKHVHIDFWRUVWR)DUPHU¶VHQFRXQWHUZLWK
&RPPLVVLRQHU5DPDGDQUHJDUGLQJWKHDYDLODELOLW\RIOLJKW
GXW\SRVLWLRQVDW&33ZHQRWHWKDWWKHUHFRUGEHIRUHXVGRHV
QRWVXSSRUW)DUPHU¶VFRQWHQWLRQWKDWVKHFRQIURQWHG5DPDGDQ
DERXWWKHLOOHJDOLW\RIKLVDFWLRQVRUWKDWKHEHFDPHXSVHWZLWK
KHUDVDUHVXOWRIKHUFKDOOHQJLQJKLVLQVWUXFWLRQV,QVWHDG
)DUPHU¶VDIILGDYLWVLPSO\DYHUVWKDWVKHWROG5DPDGDQWKDW
OLJKWGXW\ SRVLWLRQV ZHUH DYDLODEOH EXW WKDW KH WROG KHU WR
GHQ\WKHHPSOR\HH¶VUHTXHVWIRUVXFKDQRSHQLQJ
7KLVVFHQDULRHYHQZKHQYLHZHGPRVWIDYRUDEO\WR)DUPHU
GRHV QRW VXSSRUW WKH FRQFOXVLRQ WKDW )DUPHU¶V SXUSRVH RU
LQWHQWZDVWRDOHUW5DPDGDQWKDW&33ZDVIDLOLQJWRDELGHE\
UHOHYDQWODZVRUWKDWVKHZDVFKDOOHQJLQJWKHOHJDOLW\RIKLV
GLUHFWLYH,QVWHDGVKHDSSHDUVWRKDYHPDGHKHUFRPPHQWV
VROHO\LQKHUUROHDVD3HUVRQQHO$GPLQLVWUDWRU)DUPHUWRRN
QRDFWLRQIROORZLQJKHUH[FKDQJHZLWK5DPDGDQWKDWZRXOG
VXSSRUW WKH FRQFOXVLRQ WKDW VKH ZDV FRQFHUQHG ZLWK RU
WURXEOHGE\KLVLQVWUXFWLRQV:KHQDQDO\]HGLQWKLVFRQWH[W

-- 9 of 10 --

)DUPHUY&OHYHODQG
3XEOLF3RZHUHWDO
1R
)DUPHU¶V VSHHFK DSSHDUV WR EH D URXWLQH PDWWHU ZLWKLQ WKH
JHQHUDO VFRSH RI KHU GXWLHV DV D &33 HPSOR\HH QRW D
VWDWHPHQWWRXFKLQJXSRQDVXEMHFWRIJHQHUDOSXEOLFFRQFHUQ
'DPEURW)GDW H[DPLQLQJ³WKHSRLQWRIWKH
VSHHFKLQTXHVWLRQ´³WRZKDWSXUSRVHWKHHPSOR\HHVSRNH´
³WKHLQWHQWRIWKHVSHHFK´DQG³WKHFRPPXQLFDWLYHSXUSRVH
RI WKH VSHDNHU´ WR GHWHUPLQH WKDW WKH HPSOR\HH¶V XVH RI D
UDFLDOHSLWKHWGLGQRWWRXFKXSRQDPDWWHURISXEOLFFRQFHUQ
LQWHUQDOTXRWDWLRQPDUNVHPSKDVLVDQGFLWDWLRQRPLWWHG
7KH RWKHU DOOHJHG LQFLGHQW LQYROYLQJ )DUPHU¶V &LYLO
6HUYLFH&RPPLVVLRQJULHYDQFHLVDPXFKFORVHUFDOO'HVSLWH
WKHGHIHQGDQWV¶IRFXVRQ)DUPHU¶VPRWLYDWLRQUHJDUGLQJWKLV
JULHYDQFHWKH\IDLOWRUHFRJQL]HWKDWLWPLJKWEHYLHZHGDV
³PL[HGVSHHFK´LQYROYLQJERWKSHUVRQDODQGSXEOLFPDWWHUV
%RQQHOO Y /RUHQ]R )G WK &LU
UHFRJQL]LQJ WKDW WKH )LUVW $PHQGPHQW SURWHFWV VSHHFK
LQYROYLQJ ³PL[HGTXHVWLRQVRISULYDWHDQGSXEOLFFRQFHUQ
ZKHUHWKHHPSOR\HHLVVSHDNLQJERWKDVDFLWL]HQDVZHOODVDQ
HPSOR\HH´ )DUPHU¶V FRPSODLQW DERXW KHU IDLOXUH WR EH
SURPRWHGZKLFKZDVWKHIRFXVRIWKHGLVWULFWFRXUW¶VDQDO\VLV
FRQVWLWXWHVDPDWWHURISHUVRQDOLQWHUHVW%XWKHUDOOHJDWLRQ
WKDWWKH&RPPLVVLRQHUVZHUHYLRODWLQJWKH&OHYHODQGFKDUWHU
ZLWKDQLQWHQWWRGHQ\$IULFDQ$PHULFDQIHPDOHHPSOR\HHV
WKHRSSRUWXQLWLHVIRUSURPRWLRQVLIWUXHDUJXDEO\FRXOGDIIHFW
PDQ\RWKHUHPSOR\HHVDQGWKHUHIRUHWRXFKXSRQPDWWHUVRI
SXEOLFFRQFHUQ,GDW ³>$@OWKRXJKDVSHFWVRI3ODLQWLII¶V
VSHHFK LQYROYH PDWWHUV RI SHUVRQDO LQWHUHVW ZKHUH KH LV
VSHDNLQJUHJDUGLQJDSHUVRQDOJULHYDQFHDVDQHPSOR\HHKLV
VSHHFK DOVR LQYROYHV PDWWHUV RI SXEOLF LQWHUHVW VXFK WKDW
3ODLQWLII LV VSHDNLQJ DV D FRQFHUQHG FLWL]HQ´ 3HUU\ Y
0F*LQQLV )G WK &LU ³%HFDXVH
3HUU\¶VVSHHFKVHUYHGWRHQVXUHWKDWWKH>VWDWHDJHQF\@ZDV
RSHUDWLQJLQDFFRUGDQFHZLWKWKHODZLWFRQFHUQVWKH
PRVWSXEOLFRIPDWWHUV´
,I ZH ZHUH WR GHFLGH WKDW HLWKHU RI )DUPHU¶V VSHHFK
LQFLGHQWV ZDV HQWLWOHG WR )LUVW $PHQGPHQW SURWHFWLRQ ZH
ZRXOGSURFHHGWRHQJDJHLQWKH3LFNHULQJEDODQFLQJWHVWDQG
1R )DUPHUY&OHYHODQG
3XEOLF3RZHUHWDO

ZHLJK)DUPHU¶VIUHHVSHHFKLQWHUHVWVDJDLQVWWKHGHIHQGDQWV¶
LQWHUHVWV DV DQ HPSOR\HU %XW WKH UHFRUG EHIRUH XV ZRXOG
PDNHLWGLIILFXOWLIQRWLPSRVVLEOHWRSHUIRUPWKLVLQTXLU\
EHFDXVHQHLWKHU)DUPHUQRUWKHGHIHQGDQWVKDYHDUWLFXODWHG
WKHLUFRPSHWLQJLQWHUHVWV5DWKHUWKDQK\SRWKHVL]LQJDERXW
ZKDW WKHLU UHVSHFWLYH LQWHUHVWV PLJKW EH ZH ZLOO DVVXPH
ZLWKRXW GHFLGLQJ WKDW )DUPHU HQJDJHG LQ FRQVWLWXWLRQDOO\
SURWHFWHG DFWLYLW\ ZKHQ VKH ILOHG KHU &LYLO 6HUYLFH
&RPPLVVLRQJULHYDQFH7KLVDVVXPSWLRQGRHVQRWSUHMXGLFH
HLWKHUSDUW\EHFDXVHDVWKHVXEVHTXHQWGLVFXVVLRQLQGLFDWHV
)DUPHU KDV IDLOHG WR HVWDEOLVK D SULPD IDFLH FDVH RI )LUVW
$PHQGPHQWUHWDOLDWLRQ6HH%DLOH\Y)OR\G&RXQW\%GRI
(GXF)G WK&LU DVVXPLQJWKDWWKH
SODLQWLII¶V VSHHFK ZDV HQWLWOHG WR FRQVWLWXWLRQDO SURWHFWLRQ
EHFDXVHWKHUHVROXWLRQRIWKHFDVHGHSHQGHGXSRQZKHWKHUKHU
VSHHFK ZDV D ³VXEVWDQWLDO´ RU ³PRWLYDWLQJ´ IDFWRU LQ KHU
HPSOR\HU¶VGHFLVLRQWRWHUPLQDWHKHUHPSOR\PHQW
$V QRWHG DERYH WKH VHFRQG HOHPHQW LQ D FODLP RI )LUVW
$PHQGPHQWUHWDOLDWLRQUHTXLUHVWKHSODLQWLIIWRHVWDEOLVK³WKDW
WKHGHIHQGDQW¶VDGYHUVHDFWLRQFDXVHGWKHSODLQWLIIWRVXIIHUDQ
LQMXU\WKDWZRXOGOLNHO\FKLOODSHUVRQRIRUGLQDU\ILUPQHVV
IURPFRQWLQXLQJWRHQJDJHLQWKDW>FRQVWLWXWLRQDOO\SURWHFWHG@
DFWLYLW\´%ORFKY5LEDU)G WK&LU
7KH DGYHUVH DFWLRQV LGHQWLILHG E\ )DUPHU LQYROYH WKH
UHGXFWLRQLQKHUMREUHVSRQVLELOLWLHV,QGLVFXVVLQJ)DUPHU¶V
UHWDOLDWLRQFODLPWKHGLVWULFWFRXUWQRWHGWKDWWKHVHDOWHUDWLRQV
³UHGXFHGKHUIURPDVXSHUYLVRUOHYHOHPSOR\HHHQJDJHGLQ
PDQDJHPHQWSROLF\PDNLQJ>@DQGRYHUVLJKWRISHUVRQQHOWR
DQ HPSOR\HH ZKR HQJDJHV PHUHO\ LQ FOHULFDO DQG WUDLQLQJ
WDVNV´ :H EHOLHYH WKDW WKHVH FKDQJHV LQ KHU GXWLHV
FRQVWLWXWHGLQMXULHVWKDWZRXOGGLVVXDGHDQRUGLQDU\SHUVRQ
IURPFRQWLQXLQJWRHQJDJHLQVSHHFKUHJDUGLQJWKHDOOHJHG
YLRODWLRQV RI WKH &OHYHODQG FKDUWHU RU DQWLGLVFULPLQDWLRQ
OHJLVODWLRQ6PLWKY)UXLQ)GQ WK&LU
UHFRJQL]LQJWKDW³HYHQPLQRUIRUPVRIUHWDOLDWLRQFDQ
VXSSRUWD)LUVW$PHQGPHQWFODLPIRUWKH\PD\KDYHMXVWDV
PXFK RI D FKLOOLQJ HIIHFW RQ VSHHFK DV PRUH GUDVWLF
PHDVXUHV´

-- 10 of 10 --