02a0355p.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$SSHOOHH
Y
<$<$ .21(
)(5$1%$ .(,7$
12+$ )2)$1$
'HIHQGDQWV$SSHOODQWV
;!

1
1RV

$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW)OLQW
1R²3DXO9*DGROD'LVWULFW-XGJH
$UJXHG$SULO
'HFLGHGDQG)LOHG2FWREHU
%HIRUH5<$1%2**6DQG&2/(&LUFXLW-XGJHV
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' 'DQLHO * 9DQ 1RUPDQ /DSHHU 0LFKLJDQ
7KRPDV 9 :LOKHOP :DWHUIRUG 0LFKLJDQ 1 & 'HGD\
/D5HQH /D5(1( .5,*(5 'HWURLW 0LFKLJDQ IRU
$SSHOODQWV 1DQF\ $ $EUDKDP $66,67$17 81,7('

-- 1 of 12 --

8QLWHG6WDWHVY
.RQHHWDO
1RV
67$7(6 $77251(< )OLQW 0LFKLJDQ IRU $SSHOOHH
21 %5,() 'DQLHO * 9DQ 1RUPDQ /DSHHU 0LFKLJDQ
7KRPDV 9 :LOKHOP :DWHUIRUG 0LFKLJDQ 1 & 'HGD\
/D5HQH /D5(1( .5,*(5 'HWURLW 0LFKLJDQ IRU
$SSHOODQWV 1DQF\ $ $EUDKDP $66,67$17 81,7('
67$7(6$77251(<)OLQW0LFKLJDQIRU$SSHOOHH
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
5<$1 &LUFXLW -XGJH <D\D .RQH DQG )HUDQED .HLWD
DSSHDOWKHLUFRQYLFWLRQVDQGVHQWHQFHVDIWHUDMXU\IRXQGWKHP
JXLOW\RIYLVDIUDXGE\HQWHULQJLQWRVKDPPDUULDJHVDQGILOLQJ
SHWLWLRQV IRU DGMXVWPHQW LQ VWDWXV YLVDV LQ YLRODWLRQ RI
86&†1RKD)RIDQDDSSHDOVKLVFRQYLFWLRQDQG
VHQWHQFHDIWHUDMXU\IRXQGKLPJXLOW\RIFRQVSLUDF\WRGHIUDXG
WKH 8QLWHG 6WDWHV E\ DUUDQJLQJ VKDP PDUULDJHV EHWZHHQ
IRUHLJQQDWLRQDOVDQG8QLWHG6WDWHVFLWL]HQVDQGVXEPLWWLQJ
IDOVH GRFXPHQWV DQG PDNLQJ IDOVH UHSUHVHQWDWLRQV WR WKH
,PPLJUDWLRQDQG1DWXUDOL]DWLRQ6HUYLFH ,16 LQYLRODWLRQRI
86&†)RUWKHIROORZLQJUHDVRQVZH$)),50WKH
GHIHQGDQWV¶FRQYLFWLRQVDQGVHQWHQFHV
,
%$&.*5281'
7KH GHIHQGDQWV UDQ DQGRU ZHUH LQYROYHG ZLWK D VKDP
PDUULDJH VFKHPH GHVLJQHG WR HYDGH SURYLVLRQV RI WKH
LPPLJUDWLRQODZVUHJDUGLQJUHVLGHQF\DQGFLWL]HQVKLSLQWKH
8QLWHG6WDWHV7KHOHDGHURIWKHFRQVSLUDF\1RKD)RIDQD
DUUDQJHG WKH PDUULDJHV DQG KLV FRQWDFW -RKQ 2OLYHU
SHUIRUPHGWKHZHGGLQJVLQ)LQGOD\2KLR
)RIDQDZRXOGUHFHLYHEHWZHHQDQGIURP
LQGLYLGXDOIRUHLJQQDWLRQDOVWRDUUDQJHDPDUULDJHWRD8QLWHG
6WDWHVFLWL]HQ)RIDQDZRXOGSD\WKHVH8QLWHG6WDWHVFLWL]HQV
EHWZHHQDQGIRUWKHZHGGLQJDQGDQDGGLWLRQDO

-- 2 of 12 --

8QLWHG6WDWHVY
.RQHHWDO
1RV
7KHUHZDVQRVWUXFWXUDOHUURULQWKLVFDVH:HFRQFOXGHWKDW
WKLV FDVH LV PRUH DNLQ WR /RYH *UDQW DQG 3ILQJVW WKDQ WR
0RUWLPHU$Q$UWLFOH,,,MXGJHZDVDYDLODEOHDQGSUHVLGHG
RYHUWKHFRQWHVWHGVWDJHVRIWULDOYLDVSHDNHUSKRQH7KLVLV
QRWWKHFDVHRIDMXGJHZKRFRPSOHWHO\DEGLFDWHGKLVMXGLFLDO
UHVSRQVLELOLWLHVDVLQ0RUWLPHUEXWUDWKHUWKHFDVHRIDMXGJH
ZKRSUHVLGHGWHOHSKRQLFDOO\DWLPSRUWDQWVWDJHVRIWKHWULDO
%HFDXVH)RIDQDKDVQRWGLUHFWHGRXUDWWHQWLRQWRDQ\SUHMXGLFH
WKDWRFFXUUHGDVDUHVXOWRIWKHWULDOMXGJH¶VDEVHQFHIURPWKH
FRXUWKRXVH ZH UHIXVH WR GLVWXUE KLV FRQYLFWLRQ RQ WKHVH
JURXQGV6HH/RYH)GDW
,,,
&21&/86,21
)RUWKHIRUHJRLQJUHDVRQVZH$)),50WKHGHIHQGDQWV¶
FRQYLFWLRQVDQGVHQWHQFHV
1RV 8QLWHG6WDWHVY
.RQHHWDO

DIWHUWKHLU,16LQWHUYLHZ)RIDQDSURYLGHGDGGLWLRQDO
DVVLVWDQFHE\ILOOLQJRXWDQ\QHFHVVDU\SDSHUZRUNDQGZRXOG
SD\ XS WR IRU DQ\RQH ZKR ZRXOG UHFUXLW RWKHU
SURVSHFWLYHVSRXVHVZLOOLQJWR³VSRQVRU´DIRUHLJQQDWLRQDO
2Q6HSWHPEHU<D\D.RQHDFLWL]HQRIWKH,YRU\
&RDVW PDUULHG%HYHUO\&ROOLQVD8QLWHG6WDWHVFLWL]HQLQ
)LQGOD\2KLR$IWHUZDUG.RQHVXEPLWWHG,16IRUP,
D SHWLWLRQ IRU DGMXVWPHQW LQ VWDWXV LQGLFDWLQJ WKDW KH KDG
QHYHU VRXJKW WR SURFXUH D YLVD E\ IUDXG RU ZLOOIXO
PLVUHSUHVHQWDWLRQRIDPDWHULDOIDFW
2Q-XO\)HUDQED.HLWDDFLWL]HQRI6LJLUL*XLQHD
PDUULHG7DVKD&ROHPDQD8QLWHG6WDWHVFLWL]HQLQ)LQGOD\
2KLR7KHUHDIWHU.HLWDVXEPLWWHG,16IRUP,LQGLFDWLQJ
WKDWKHZDVOLYLQJDW : <RUN$YH)OLQW0LFKLJDQ
&ROHPDQ¶VDGGUHVVDQGWKDWKHKDGQHYHUVRXJKWWRSURFXUH
DYLVDE\IUDXGRUZLOOIXOPLVUHSUHVHQWDWLRQRIDPDWHULDOIDFW
2Q1RYHPEHUWKHJRYHUQPHQWILOHGDQFRXQW
LQGLFWPHQWLQWKH8QLWHG6WDWHV'LVWULFW&RXUWIRUWKH(DVWHUQ
'LVWULFW RI 0LFKLJDQ DJDLQVW )RIDQD .RQH DQG RWKHU
GHIHQGDQWVFKDUJLQJFRQVSLUDF\WRGHIUDXGWKH8QLWHG6WDWHV
LQYLRODWLRQRI86&†7KHLQGLFWPHQWDOVRFKDUJHG
.RQHZLWKYLVDIUDXGLQYLRODWLRQRI86&†$
VXSHUVHGLQJLQGLFWPHQWZDVILOHGRQ'HFHPEHUWKDW
FKDUJHG .RQH DQG .HLWD ZLWK YLVD IUDXG LQ YLRODWLRQ RI
86&†DQG)RIDQDZLWKFRQVSLUDF\WRGHIUDXGWKH
8QLWHG 6WDWHV LQ YLRODWLRQ RI 86& † $OO WKUHH
GHIHQGDQWVHQWHUHGSOHDVRIQRWJXLOW\DQGWKHFDVHSURFHHGHG
WRWULDO
$WWKHFORVHRIWULDO.RQHDQG.HLWDVHSDUDWHO\PRYHGIRU
MXGJPHQWVRIDFTXLWWDOSXUVXDQWWR)HGHUDO5XOHRI&ULPLQDO
3URFHGXUH7KHFRXUWGHQLHGWKHVHPRWLRQV
7KH MXU\ IRXQG .RQH DQG .HLWD JXLOW\ RI YLVD IUDXG LQ
YLRODWLRQRI86&†DQGWKHGLVWULFWFRXUWVHQWHQFHG
ERWKGHIHQGDQWVWRWHUPVRIVL[PRQWKV¶LPSULVRQPHQWDQG
WZR\HDUVRIVXSHUYLVHGUHOHDVH7KHMXU\IRXQG)RIDQDJXLOW\

-- 3 of 12 --

8QLWHG6WDWHVY
.RQHHWDO
1RV
RI FRQVSLUDF\ WR GHIUDXG WKH 8QLWHG 6WDWHV LQ YLRODWLRQ RI
86&†DQGWKHGLVWULFWFRXUWVHQWHQFHG)RIDQDWR
PRQWKV¶ LPSULVRQPHQW DQG WZR \HDUV RI VXSHUYLVHG
UHOHDVH
$OOWKUHHGHIHQGDQWVILOHGWLPHO\DSSHDOVUDLVLQJLQWRWDO
ILYHLVVXHVIRURXUUHYLHZ
,,
$1$/<6,6
$
0RWLRQVIRU-XGJPHQWRI$FTXLWWDO
.RQHDQG.HLWDFRQWHQGWKDWWKHGLVWULFWFRXUWHUUHGZKHQ
LWGHQLHGWKHLUPRWLRQVIRUMXGJPHQWRIDFTXLWWDOSXUVXDQWWR
)HGHUDO5XOHRI&ULPLQDO3URFHGXUH
:H UHYLHZ GH QRYR D GLVWULFW FRXUW¶V UHIXVDO WR JUDQW D
PRWLRQIRUMXGJPHQWRIDFTXLWWDO8QLWHG6WDWHVY.HHWRQ
)G WK &LU 7KH UHOHYDQW LQTXLU\ ³LV
ZKHWKHU DIWHU YLHZLQJ WKH HYLGHQFH LQ WKH OLJKW PRVW
IDYRUDEOHWRWKHSURVHFXWLRQDQ\UDWLRQDOWULHURIIDFWFRXOG
KDYH IRXQG WKH HVVHQWLDO HOHPHQWV RI WKH FULPH EH\RQG D
UHDVRQDEOHGRXEW´-DFNVRQY9LUJLQLD86
7KLVUXOHDSSOLHVZKHWKHUWKHHYLGHQFHLVGLUHFWRU
FLUFXPVWDQWLDO 8QLWHG 6WDWHV Y 6WRQH )G
WK &LU 0RUHRYHU ³>L@W LV QRW QHFHVVDU\ WKDW
FLUFXPVWDQWLDOHYLGHQFHUHPRYHHYHU\UHDVRQDEOHK\SRWKHVLV
H[FHSWWKDWRIJXLOW´,G
7RFRQYLFWIRUYLVDIUDXGLQYLRODWLRQRI86&†
WKHJRYHUQPHQWPXVWSURYHWKDW WKHGHIHQGDQWPDGHD
IDOVH VWDWHPHQW XQGHU SHQDOW\ RI SHUMXU\ ZLWK UHVSHFW WR D
PDWHULDOIDFW WKHVWDWHPHQWZDVPDGHLQDQDSSOLFDWLRQ
DIILGDYLWRURWKHUGRFXPHQWUHTXLUHGE\WKHLPPLJUDWLRQODZV
RU UHJXODWLRQV DQG WKH GHIHQGDQW PDGH WKH VWDWHPHQW
NQRZLQJWKDWLWZDVIDOVH86&† D
1RV 8QLWHG6WDWHVY
.RQHHWDO

WKDWLQRUGHUWRSUHYDLO)RIDQDLVUHTXLUHGWRVKRZWKDWWKH
SURFHGXUHVXVHGUHVXOWHGLQDFWXDOSUHMXGLFH
,Q/RYHWKH)RXUWK&LUFXLWFRQVLGHUHGZKHWKHUDMXGJH¶V
DEVHQFHIURPWKHFRXUWURRPGXULQJGHIHQVHFRXQVHO¶VFORVLQJ
DUJXPHQWVUHVXOWHGLQVWUXFWXUDOHUURU7KHFRXUWUHDVRQHG
³:KLOH DEVHQW IURP WKH FRXUWURRP GXULQJ SRUWLRQV RI WKH
FORVLQJDUJXPHQWWKHGLVWULFWMXGJHZDVLQKLVFKDPEHUVDQG
DYDLODEOHWRH[HUFLVHKLVGLVFUHWLRQZLWKUHVSHFWWRREMHFWLRQV
PDGHE\HLWKHUVLGH´/RYH)GDW%HFDXVHWKH
GHIHQGDQWV GLG QRW REMHFW EHORZ DQG GLG QRW SRLQW WR DQ\
VSHFLILFFRPPHQWVPDGHGXULQJWKHGLVWULFWMXGJH¶VDEVHQFH
WKDWDIIHFWHGWKHWULDO¶VIDLUQHVVWKH6HFRQG&LUFXLWVXVWDLQHG
WKHMXGJPHQWVRIFRQYLFWLRQ,G
,Q *UDQW WKH 6HFRQG &LUFXLW FRQVLGHUHG ZKHWKHU D WULDO
MXGJH¶VDEVHQFHIURPWKHFRXUWURRPGXULQJWKHUHDGEDFNRI
ZLWQHVVWHVWLPRQ\YLRODWHGWKHGHIHQGDQW¶VULJKWWRDIDLUWULDO
7KH6HFRQG&LUFXLWFRQFOXGHG³:KLOHZHGRQRWHQFRXUDJH
WULDO MXGJHV WR DEVHQW WKHPVHOYHV IURP WKH EHQFK DQG
UHFRJQL]H WKDW DEVHQFH XQGHU PDQ\ FLUFXPVWDQFHV ZRXOG
LQYROYH HUURU SUDFWLFDO GLVWLQFWLRQV PXVW EH REVHUYHG´
*UDQW)GDW LQWHUQDOFLWDWLRQVRPLWWHG 7KHFRXUW
FRQFOXGHG WKDW DEVHQW D VKRZLQJ RI SUHMXGLFH QR HUURU
H[LVWHG,G
)LQDOO\LQ3ILQJVWWKH6HFRQG&LUFXLWFRQVLGHUHGZKHWKHU
D WULDO MXGJH¶V DEVHQFH IURP WKH FRXUWKRXVH GXULQJ MXU\
GHOLEHUDWLRQVZKLOHKHZDVGHOLYHULQJDVSHHFKDWWKH)LIWK
&LUFXLW -XGLFLDO &RQIHUHQFH FRQVWLWXWHG UHYHUVLEOH HUURU
:KLOH DZD\ WKH WULDO MXGJH UHPDLQHG LQ FRQVWDQW
FRPPXQLFDWLRQZLWKKLVODZFOHUNYLDWHOHSKRQHUHJDUGLQJDQ\
MXU\TXHVWLRQV 3ILQJVW)GDW 7KH FRXUWKHOG
³:KLOHWKHSUDFWLFHLVQRWWREHHQFRXUDJHGZHFDQQRWVD\LQ
WKLVGD\DQGDJHRIPRGHUQFRPPXQLFDWLRQDQGWUDQVSRUWDWLRQ
LWLVUHYHUVLEOHHUURUIRUWKHWULDOFRXUWQRWWREHSK\VLFDOO\
SUHVHQWDWWKHFRXUWKRXVHGXULQJGHOLEHUDWLRQVIRUDUHDVRQDEO\
VKRUWSHULRGZLWKRXWVRPHVKRZLQJRIVSHFLILFSUHMXGLFHWRD
GHIHQGDQW´,GDW HPSKDVLVDGGHG

-- 4 of 12 --

8QLWHG6WDWHVY
.RQHHWDO
1RV
YHUGLFWZDVWDNHQDQGZKHQWKHMXU\ZDVSROOHGUHVXOWHGLQ
VWUXFWXUDOHUURUWKHUHE\GHQ\LQJ)RIDQDWKHULJKWWRDIDLUWULDO
$IWHUWKHMXURUVUHWLUHGWRGHOLEHUDWH8QLWHG6WDWHV'LVWULFW
-XGJH 3DXO *DGROD ZKR SUHVLGHG RYHU WKH WULDO LQ )OLQW
0LFKLJDQGHSDUWHGWKHFRXUWKRXVHWRDWWHQGWKH6L[WK&LUFXLW
-XGLFLDO&RQIHUHQFHLQ&LQFLQQDWL2KLR%HFDXVHWKHWULDO
ZDVQRWFRPSOHWHGEHIRUHKHZDVUHTXLUHGWROHDYHIRUWKH
FRQIHUHQFH-XGJH*DGRODDUUDQJHGIRU8QLWHG6WDWHV'LVWULFW
-XGJH%HUQDUG)ULHGPDQWRKDQGOHMXU\TXHVWLRQVWKDWPLJKW
DULVH GXULQJ GHOLEHUDWLRQV DQG WR UHFHLYH WKH YHUGLFW YLD
VSHDNHUSKRQH IURP -XGJH )ULHGPDQ¶V 'HWURLW FKDPEHUV
1HLWKHUSDUW\REMHFWHGWRWKLVDUUDQJHPHQW2Q-XQH
-XGJH)ULHGPDQWRRNWKHYHUGLFWDQGSROOHGWKHMXURUVZKR
XQDQLPRXVO\IRXQGGHIHQGDQW)RIDQDJXLOW\RIFRQVSLUDF\WR
GHIUDXGWKH8QLWHG6WDWHVLQYLRODWLRQRI86&†
)RIDQDXUJHVXVWRFRQVLGHUWKH7KLUG&LUFXLW¶VGHFLVLRQLQ
8QLWHG6WDWHVY0RUWLPHU)G G&LU DQG
WR FRQFOXGH WKDW WKH SURFHGXUHV XVHG FRQVWLWXWHG VWUXFWXUDO
HUURU WKDW LV D ³GHIHFW>@ LQ WKH FRQVWLWXWLRQ RI WKH WULDO
PHFKDQLVP ZKLFK GHI>LHV@ DQDO\VLV E\ μKDUPOHVVHUURU¶
VWDQGDUGV´$UL]RQDY)XOPLQDQWH86
,Q 0RUWLPHU WKH WULDO MXGJH DEVHQWHG KLPVHOI GXULQJ WKH
GHIHQVH FRXQVHO¶V VXPPDWLRQ DQG FRQVHTXHQWO\ ZDV
XQDYDLODEOH WR UXOH RQ WKH SURVHFXWLRQ¶V REMHFWLRQV
0RUWLPHU)GDW)LQGLQJVWUXFWXUDOHUURUWKH7KLUG
&LUFXLW UHDVRQHG ³$ WULDO FRQVLVWV RI D FRQWHVW EHWZHHQ
OLWLJDQWV EHIRUH D MXGJH :KHQ WKH MXGJH LV DEVHQW DW D
μFULWLFDOVWDJH¶WKHIRUXPLVGHVWUR\HG´,G FLWLQJ*RPH]Y
8QLWHG6WDWHV86
7KHJRYHUQPHQWRQWKHRWKHUKDQGXUJHVXVWRFRQVLGHU
8QLWHG6WDWHVY/RYH)G WK&LU 8QLWHG
6WDWHVY*UDQW)G G&LU DQG8QLWHG6WDWHV
Y3ILQJVW)G G&LU DQGWRFRQFOXGHWKDW
EHFDXVH DQ $UWLFOH ,,, MXGJH PDLQWDLQHG FRQWURO RYHU WKH
SURFHHGLQJVE\WHOHSKRQHVWUXFWXUDOHUURUGLGQRWRFFXUDQG
1RV 8QLWHG6WDWHVY
.RQHHWDO


<D\D.RQH
.RQHFRQWHQGVWKDWRQKLV,16SHWLWLRQIRUDGMXVWPHQWLQ
VWDWXVKHWUXWKIXOO\VWDWHGWKDWKHZDVQRWVHHNLQJWRSURFXUH
DYLVDE\IUDXGRUZLOOIXOPLVUHSUHVHQWDWLRQ7KHJRYHUQPHQW
FRQWHQGVWKDW.RQHDWWHPSWHGWRSURFXUHDYLVDE\ZD\RID
VKDPPDUULDJH
:HDUHSHUVXDGHGE\WKHIROORZLQJHYLGHQFHWKDWWKHGLVWULFW
FRXUWGLGQRWHUUZKHQLWGHQLHG.RQH¶VPRWLRQIRUMXGJPHQW
RI DFTXLWWDO %HYHUO\ &ROOLQV¶V WHVWLPRQ\ WKDW VKH ZDV
UHFUXLWHGWRSDUWLFLSDWHLQ)RIDQD¶VPDUULDJHVKDPVFKHPHDQG
SURPLVHGDWRWDORIWRPDUU\.RQH&ROOLQV¶VWHVWLPRQ\
WKDWVKHKDGVSHQWOHVVWKDQRQHKRXUZLWK.RQHSULRUWRWKHLU
PDUULDJHLQ6HSWHPEHUDQGWHVWLPRQ\LQGLFDWLQJWKDW
DIWHU WKH 2KLR ZHGGLQJ FHUHPRQ\ WKH JURXS UHWXUQHG WR
0LFKLJDQDQG&ROOLQVUHFHLYHGDSDUWLDOSD\PHQWZDV
GURSSHGRIIDWKHUKRXVHDQGVSHQWKHUZHGGLQJQLJKWDORQH
$OWKRXJK&ROOLQVDGPLWWHGWRKDYLQJVH[XDOUHODWLRQVRQRQH
RFFDVLRQZLWK.RQHVKHDFNQRZOHGJHGWKDWWKH\QHYHUOLYHG
WRJHWKHU $GGLWLRQDOO\ .RQH¶V HPSOR\PHQW UHFRUGV
FRUURERUDWHWKDWKHPDLQWDLQHGDVHSDUDWHUHVLGHQFHLQ1HZ
<RUNDIWHUWKHPDUULDJH$OVRDIWHUWKHPDUULDJH.RQHGLG
QRWSURYLGHILQDQFLDODVVLVWDQFHWR&ROOLQVRWKHUWKDQKH
OHIW LQ D MRLQW EDQN DFFRXQW *DLO -RKQVRQ ZKR PDUULHG
0RKDPHG%DPEDRQWKHVDPHGD\WKDW.RQHPDUULHG&ROOLQV
FRUURERUDWHG&ROOLQV¶VVWRU\0RUHRYHU0RKDPHG%DPED
1¶*XDQRXKR %DPED DQG 0DPDGRX &DPDUD WHVWLILHG WKDW
.RQH WROG WKHP WKDW )RIDQD KDG DUUDQJHG KLV PDUULDJH WR
&ROOLQV IRU DQG WKDW EHFDXVH RI SRWHQWLDO SUREOHPV
ZLWKKLV,16SDSHUZRUNKHPRYHGIURP1HZ<RUNEDFNWR
0LFKLJDQ
:KHQYLHZLQJWKHHYLGHQFHLQDOLJKWPRVWIDYRUDEOHWRWKH
JRYHUQPHQW ZH FRQFOXGH WKDW WKH JRYHUQPHQW PHW WKH
VWDQGDUGDVVHWIRUWKLQ-DFNVRQ-DFNVRQ86DW

-- 5 of 12 --

8QLWHG6WDWHVY
.RQHHWDO
1RV
7KHGLVWULFWFRXUWGLGQRWHUUZKHQLWUHIXVHGWRJUDQW.RQH¶V
PRWLRQIRUMXGJPHQWRIDFTXLWWDO

)HUDQED.HLWD
.HLWDFRQWHQGVWKDWWKHDOOHJHGO\IUDXGXOHQWVWDWHPHQWOLVWHG
RQKLV,DSSOLFDWLRQIRUVWDWXVDVDSHUPDQHQWUHVLGHQW
WKDWKHZDVOLYLQJDW:<RUN$YH)OLQW0LFKLJDQ ZDV
QRWDPDWHULDOIDFWDQGWKHUHIRUHWKHGLVWULFWFRXUWHUUHGZKHQ
LW GHQLHG KLV PRWLRQ IRU MXGJPHQW RI DFTXLWWDO SXUVXDQW WR
)HGHUDO5XOHRI&ULPLQDO3URFHGXUH
7KH SDUWLHV DJUHH WKDW PDWHULDOLW\ LQ WKH FRQWH[W RI D
6HFWLRQSURVHFXWLRQLVGHILQHGDV³DQDWXUDOWHQGHQF\WR
LQIOXHQFHRU>@FDSDE>LOLW\@RILQIOXHQFLQJWKHGHFLVLRQRIWKH
GHFLVLRQPDNLQJERG\WRZKLFKLWZDVDGGUHVVHG´.XQJ\VY
8QLWHG6WDWHV86 LQWHUQDOTXRWDWLRQ
PDUNV DQG FLWDWLRQV RPLWWHG 8QGHU D VHW RI YLUWXDOO\
LQGLVWLQJXLVKDEOH IDFWV WKH )LIWK &LUFXLW GHWHUPLQHG WKDW
OLVWLQJDIUDXGXOHQWDGGUHVVRQDGHIHQGDQW¶V,SHWLWLRQ
ZDVDPDWHULDOIDFWEHFDXVH³LWZDVFDSDEOHRIDIIHFWLQJWKH
IXQFWLRQLQJRIDJRYHUQPHQWDODJHQF\LQWKLVFDVHWKH,16´
8QLWHG 6WDWHV Y $O.XUQD )G WK &LU

7KH IDFW WKDW .HLWD¶V DSSOLFDWLRQ ZDV LQFRPSOHWH LV
LPPDWHULDO WR ZKHWKHU KH YLRODWHG 86& † D
1RZKHUH GRHV WKH VWDWXWH UHTXLUH WKDW WKH DJHQF\ DFWXDOO\
PDNHDGHWHUPLQDWLRQEDVHGRQWKHIUDXGXOHQWPLVVWDWHPHQWV
UDWKHUWKHVWDWHPHQWQHHGRQO\EHFDSDEOHRILQIOXHQFLQJWKH
GHFLVLRQPDNLQJ ERG\ KHUH WKH ,16 &OHDUO\ .HLWD¶V
VWDWHPHQW WKDW KH ZDV OLYLQJ DW D FHUWDLQ DGGUHVV ZLWK KLV
³ZLIH´ 7DVKD &ROHPDQ LV PDWHULDO WR WKH ,16¶V
GHWHUPLQDWLRQRIZKHWKHUWRJUDQW.HLWDSHUPDQHQWUHVLGHQFH
VWDWXV EDVHG RQ D OHJLWLPDWH PDUULDJH WR D 8QLWHG 6WDWHV
FLWL]HQ
1RV 8QLWHG6WDWHVY
.RQHHWDO

7HVWLPRQ\IURP-HUUHOO:\QQWKDW-HVVLH:\QQ
WROGKLPKHZDVJHWWLQJSDLGWRJHWPDUULHGDQG
³IRUFLWL]HQVKLS´DQG
7HVWLPRQ\ IURP 0RKDPHG %DPED WKDW
³IULHQGV´KDGSRLQWHG1RKD)RIDQDRXWWRKLP
DVDSHUVRQZKRFRXOGJHWKLPDZLIH
5HJUHWWDEO\WKHGLVWULFWFRXUWGLGQRWPDNHVSHFLILFILQGLQJV
WR VXSSRUW KRZ LQ LWV YLHZ WKH JRYHUQPHQW KDG PHW LWV
EXUGHQ DV WR HDFK RI WKH 5XOH G ( HOHPHQWV ZLWK
UHVSHFWWRHDFKRIWKHFRQWHVWHGVWDWHPHQWV:KLOHZHKDYH
QRWKHUHWRIRUHPDQGDWHGDSDUWLFXODUGHJUHHRIVSHFLILFLW\ZLWK
UHVSHFWWRWKH(QULJKWILQGLQJVLQ&XUUR)GDWZH
KHOG ³WKDW D PHUH FRQFOXVRU\ VWDWHPHQW ZLOO QRW DOZD\V
VXIILFH´ZKHQWKHJRYHUQPHQWKDVQRWPHWLWVEXUGHQRISURRI
2XU UHYLHZ RI WKH UHFRUG GRHV QRW VDWLVI\ XV WKDW WKH
JRYHUQPHQWFDUULHGLWVEXUGHQZLWKUHVSHFWWRSURYLQJHDFKRI
WKH(QULJKWHOHPHQWVZLWKUHVSHFWWRVRPHRIWKHFKDOOHQJHG
WHVWLPRQ\ ,Q IDFW PRVW LI QRW DOO RI WKH FKDOOHQJHG
VWDWHPHQWVDUHPDGHE\QRQFRQVSLUDWRULDOGHFODUDQWVDQGDUH
FRQVHTXHQWO\ FOHDUO\ LQDGPLVVLEOH XQGHU G ( ,Q
DGGLWLRQ ZH DUH QRW VDWLVILHG WKDW DOO RI WKH FKDOOHQJHG
VWDWHPHQWV ZHUH PDGH ³LQ IXUWKHUDQFH´ RI WKH FRQVSLUDF\
DOOHJHG
1HYHUWKHOHVV ZH DUH VDWLVILHG WKDW WKH UHFRUG FRQWDLQV
RYHUZKHOPLQJ HYLGHQFH RI )RIDQD¶V JXLOW LQFOXGLQJ WKH
GLUHFWXQLPSHDFKHGQRQKHDUVD\WHVWLPRQ\RIVRPHRIKLV
FRFRQVSLUDWRUV 7KHUHIRUH WR WKH H[WHQW WKH GLVWULFW FRXUW
DEXVHGLWVGLVFUHWLRQLQLWVXOWLPDWHGHWHUPLQDWLRQWRDGPLWWKH
VWDWHPHQWVDQ\UHVXOWLQJHUURUZDVKDUPOHVV
(
7ULDO-XGJH¶V3K\VLFDO$EVHQFH6WUXFWXUDO(UURU
)RIDQD FRQWHQGV WKDW WKH WULDO MXGJH¶V DEVHQFH IURP WKH
FRXUWKRXVHGXULQJMXU\GHOLEHUDWLRQVDWWKHWLPHWKHMXU\¶V

-- 6 of 12 --

8QLWHG6WDWHVY
.RQHHWDO
1RV
IXUWKHUDQFHRIWKHDOOHJHGFRQVSLUDF\DQGDVDFRQVHTXHQFH
WKHVWDWHPHQWVGRQRWILWXQGHUWKHFRFRQVSLUDWRUH[FHSWLRQWR
WKHKHDUVD\UXOH
7HVWLPRQ\ IURP -R\FH 0XOOLQV WKDW -HUUHOO
:\QQWROGKHUWKDWKHZDVSDLGPRQH\WRPDUU\
0DWLDQJXH.DPDUD
7HVWLPRQ\ IURP .HLVKD -DFNVRQ WKDW KHU
KXVEDQG +DPLGRX.DQWH WROGKHUWKDWWKH,16
ZDVFKHFNLQJRQWKHPDUULDJHVDERXWFRYHULQJ
XSWKHLUIUDXGDQGDERXWKRZVKHZRXOGWHVWLI\
LIFDOOHG
7HVWLPRQ\IURP0DPDGRX&DPDUDWKDW0RU\
%DPEDWROGKLPKHSDLG1RKD)RIDQDWRPDNH
KLVPDUULDJHDUUDQJHPHQWV
7HVWLPRQ\IURP0DPDGRX&DPDUDWKDW/DVVLQH
6RXPDKRURWROGKLPKHSDLG1RKD)RIDQDWR
PDNHKLVPDUULDJHDUUDQJHPHQWV
7HVWLPRQ\IURP0DPDGRX&DPDUDWKDW0RXVVD
6RPDKRUR WROG KLP KH SDLG 1RKD )RIDQD WR
PDNHKLVPDUULDJHDUUDQJHPHQWV
7HVWLPRQ\ IURP 7DPDUD 0DORQH WKDWDQ
XQLGHQWLILHGEULGHWROGKHUWKDW³ZH¶UHJHWWLQJ
SDLGWRJHWPDUULHGDQGVWXII´
7HVWLPRQ\ IURP 1¶*XDQRXKR %DPED WKDW
0DPDGRX'LDE\WROGKLPWKDWERWKKHDQGKLV
FRXVLQ <D\D 'LDE\ SDLG 1RKD )RIDQD WR
DUUDQJHPDUULDJHV
7HVWLPRQ\ IURP 1¶*XDQRXKR %DPED WKDW
+DPLGRX.DQWHWROGKLPWKDWKHKDGSDLG1RKD
)RIDQDWRDUUDQJHKLVPDUULDJH
1RV 8QLWHG6WDWHVY
.RQHHWDO

:H FRQFOXGH WKDW WKH GLVWULFW FRXUW GLG QRW HUU ZKHQ LW
GHQLHG.HLWD¶VPRWLRQIRUMXGJPHQWRIDFTXLWWDOEHFDXVHWKH
VWDWHPHQWRQKLV,DSSOLFDWLRQIRUVWDWXVDVDSHUPDQHQW
UHVLGHQW²WKDW KH ZDV OLYLQJ DW : <RUN $YH )OLQW
0LFKLJDQ²ZDV D PDWHULDO IDFW WKDW KDG WKH FDSDELOLW\ RI
DIIHFWLQJ WKH GHFLVLRQ RI WKH ,16 LQ JUDQWLQJ .HLWD¶V
SHUPDQHQWUHVLGHQFHVWDWXV
%
-XU\,QVWUXFWLRQRQ0DWHULDOLW\
.HLWDFRQWHQGVWKDWWKHGLVWULFWFRXUWFRPPLWWHGUHYHUVLEOH
HUURUZKHQLWUHIXVHGWRVXSSOHPHQWWKHMXU\LQVWUXFWLRQRQ
PDWHULDOLW\ WR LQFOXGH D VWDWHPHQW WKDW WKH JRYHUQPHQW
PDLQWDLQHGWKHEXUGHQRISURRI
7KLVFRXUWUHYLHZVDMXU\LQVWUXFWLRQWRGHWHUPLQHZKHWKHU
LWZDVDFRUUHFWLQWHUSUHWDWLRQRIWKHUHOHYDQWODZ%DUQHVY
2ZHQV&RUQLQJ)LEHUJODV&RUS)G WK&LU
,I WKH WULDO FRXUW¶V LQWHUSUHWDWLRQ RI WKH ODZ ZDV
HUURQHRXV RXU UHYLHZ IRFXVHV RQ ZKHWKHU WKH HUURQHRXV
LQWHUSUHWDWLRQ ZDV SUHMXGLFLDO ,G :H ZLOO UHYHUVH D MXU\
YHUGLFW RQO\ ZKHQ WKH MXU\ LQVWUXFWLRQV ³DV D ZKROH DUH
FRQIXVLQJPLVOHDGLQJDQGSUHMXGLFLDO´,G
.HLWD DVNV XV WR FRQVLGHU ZKHWKHU WKH GHILQLWLRQ RI
PDWHULDOLW\JLYHQWRWKHMXU\LPSHUPLVVLEO\VKLIWHGWKHEXUGHQ
WR.HLWDWRSURYHDGLVTXDOLI\LQJIDFWWKXVUHTXLULQJUHYHUVDO
RI KLV FRQYLFWLRQ DQG VHQWHQFH 7KH GLVWULFW FRXUW GHILQHG
PDWHULDOLW\DV
$ VWDWHPHQW RU UHSUHVHQWDWLRQ >WKDW@ KDV D QDWXUDO
WHQGHQF\ WR LQIOXHQFH RU LV FDSDEOH RI LQIOXHQFLQJ D
GHFLVLRQRUDFWLRQRIWKHIHGHUDODJHQF\7REHPDWHULDO
LWLVQRWQHFHVVDU\WKDWWKHVWDWHPHQWRUUHSUHVHQWDWLRQLQ
IDFWLQIOXHQFHGRUGHFHLYHG
.HLWDFRQWHQGVWKDWWKHGLVWULFWFRXUWHUUHGZKHQLWGLGQRWDGG
WKHIROORZLQJODQJXDJHWRLWVPDWHULDOLW\GHILQLWLRQ

-- 7 of 12 --

8QLWHG6WDWHVY
.RQHHWDO
1RV
>7@KHSURVHFXWRUKDVWKHEXUGHQRISURYLQJPDWHULDOLW\
EH\RQGDUHDVRQDEOHGRXEWDQGWKHGHIHQGDQWGRHVQRW
KDYHWRVKRZWKDWWKHVWDWHPHQWVRUUHSUHVHQWDWLRQVFRXOG
>QRW@KDYHLQIOXHQFHGWKHGHFLVLRQRUDFWLRQRIWKHIHGHUDO
DJHQF\
7R VXSSRUW WKH DSSOLFDWLRQ RI WKLV VXSSOHPHQWDO ODQJXDJH
.HLWDUHOLHVRQWZR6XSUHPH&RXUWGHFLVLRQV8QLWHG6WDWHV
Y*DXGLQ86 DQG.XQJ\VY8QLWHG6WDWHV
86
.HLWDDVNVWKLVFRXUWWRUHDG*DXGLQDQG.XQJ\VWRJHWKHUWR
PHDQ WKDW LQ WKH FULPLQDO VHWWLQJ D MXU\ LQVWUXFWLRQ RQ
PDWHULDOLW\PXVWLQGLFDWHWKDWWKHJRYHUQPHQWKDVWKHEXUGHQ
RISURRIDQGWKDWWKHEXUGHQGRHVQRWVKLIWWRWKHGHIHQGDQWWR
VKRZWKDWWKHVWDWHPHQWVRUUHSUHVHQWDWLRQVFRXOGQRWKDYH
LQIOXHQFHGWKHGHFLVLRQRUDFWLRQRIWKHIHGHUDODJHQF\.HLWD
UHOLHV RQ -XVWLFH 6WHYHQV¶V FRQFXUULQJ RSLQLRQ LQ
.XQJ\V²WKDW WKH GHILQLWLRQ RI PDWHULDOLW\ VLPLODU WR WKH
GHILQLWLRQXVHGKHUHLPSHUPLVVLEO\VKLIWVWKHEXUGHQWRWKH
GHIHQGDQWWRUHEXWWKHH[LVWHQFHRIDGLVTXDOLI\LQJIDFW)LUVW
ZHQRWHWKDW-XVWLFH6WHYHQV¶VFRQFXUULQJRSLQLRQGRHVQRW
UHSUHVHQW WKH PDMRULW\ KROGLQJ .XQJ\V 86 DW
6HFRQGZHUHDG*DXGLQWRKROGPHUHO\WKDWZKHQPDWHULDOLW\
LVDQHOHPHQWRIWKHFKDUJHGRIIHQVHWKHLVVXHRIPDWHULDOLW\
PXVWEHVXEPLWWHGWRWKHMXU\*DXGLQ86DW
1RWKLQJ LQ *DXGLQ VXJJHVWV WKDW WKH PDWHULDOLW\ GHILQLWLRQ
JLYHQLQWKDWFDVHLPSHUPLVVLEO\VKLIWVWKHEXUGHQRISURRIWR
WKH GHIHQGDQW ,QWHUHVWLQJO\ LQ 8QLWHG 6WDWHV Y %ODVLQL
/OXEHUDV)G VW&LU WKH)LUVW&LUFXLW
KHOG WKDW D GLVWULFW FRXUW¶V FRPSOHWH IDLOXUH WR GHILQH
PDWHULDOLW\GLGQRWUHVXOWLQSODLQHUURU,G
$V WR WKLV FDVH ZH KROG WKDW WKH GLVWULFW FRXUW SURSHUO\
VXEPLWWHGWKHLVVXHRIPDWHULDOLW\WRWKHMXU\DVUHTXLUHGE\
*DXGLQ3ULRUWRJLYLQJWKHPDWHULDOLW\LQVWUXFWLRQWKHGLVWULFW
FRXUW UHPLQGHG WKH MXU\ ³\RX PXVW EH FRQYLQFHG WKDW WKH
*RYHUQPHQWKDVSURYHGHDFKDQGHYHU\RQHRIWKHIROORZLQJ
HOHPHQWV EH\RQG D UHDVRQDEOH GRXEW ,I \RX KDYH D
1RV 8QLWHG6WDWHVY
.RQHHWDO

VWDWHPHQWVZHUHQRWVKRZQWRKDYHEHHQPDGHLQIXUWKHUDQFH
RIWKHFRQVSLUDF\
$ VWDWHPHQW LV QRW KHDUVD\ LI ³>W@KH VWDWHPHQW LV RIIHUHG
DJDLQVWDSDUW\DQGLVDVWDWHPHQWE\DFRFRQVSLUDWRURID
SDUW\ >PDGH@ GXULQJ WKH FRXUVH DQG LQ IXUWKHUDQFH RI WKH
FRQVSLUDF\´)(' 5 (9,' G ( $SDUW\DWWHPSWLQJ
WRRIIHUWKHVWDWHPHQWRIDFRFRQVSLUDWRUPXVWVKRZWKDW
DFRQVSLUDF\H[LVWHG WKHGHIHQGDQWZDVDPHPEHURIWKH
FRQVSLUDF\DQG WKHFRFRQVSLUDWRU¶VVWDWHPHQWZDVPDGH
LQWKHFRXUVHDQGLQIXUWKHUDQFHRIWKHFRQVSLUDF\6HH8QLWHG
6WDWHVY(QULJKW)G Q WK&LU
:KHWKHU WKH RIIHULQJ SDUW\ KDV PHW WKLV EXUGHQ LV D
SUHOLPLQDU\TXHVWLRQRIIDFWIRUWKHWULDOMXGJHDQGLVUHYLHZHG
IRUFOHDUHUURU8QLWHG6WDWHVY%UHLWNUHXW])G
WK&LU VHH)(' 5 (9,' D $WULDOMXGJH
PD\ KRZHYHU FRQGLWLRQDOO\ DGPLW DOOHJHG FRFRQVSLUDWRU
VWDWHPHQWV VXEMHFW WR D ODWHU GHWHUPLQDWLRQ RI WKHLU
DGPLVVLELOLW\7KHXOWLPDWH G ( UXOLQJLVUHYLHZHG
IRUDQDEXVHRIGLVFUHWLRQ8QLWHG6WDWHVY&XUUR)G
WK&LU RYHUUXOHGRQRWKHUJURXQGV8QLWHG
6WDWHVY*RPH]/HPRV)G WK&LU
'XULQJWKHWHVWLPRQ\RI-R\FH0XOOLQV²RQHRIWKHLQLWLDO
JRYHUQPHQWZLWQHVVHV²GHIHQVHFRXQVHOPDGHZKDWKHFDOOHG
³D VWDQGLQJ REMHFWLRQ´ WR 0XOOLQV¶V KHDUVD\ WHVWLPRQ\
DQWLFLSDWLQJ WKDW WKH JRYHUQPHQW ZRXOG IDLO WR SURYH WKH
UHTXLUHG(QULJKWHOHPHQWVZLWKUHJDUGWRFHUWDLQSRUWLRQVRI
0XOOLQV¶VWHVWLPRQ\DQGVLPLODUWHVWLPRQ\FRXQVHODQWLFLSDWHG
ZRXOGEHIRUWKFRPLQJIURPRWKHUJRYHUQPHQWZLWQHVVHV7KH
GLVWULFWFRXUWFRQGLWLRQDOO\DGPLWWHGWKHFRQWHVWHGVWDWHPHQWV
VXEMHFWWRDODWHUGHWHUPLQDWLRQRIWKHLUDGPLVVLELOLW\$WWKH
FORVH RI SURRIV WKH GLVWULFW FRXUW FRQFOXGHG ³E\ D
SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW >WKH (QULJKW@ HOHPHQWV
KDYHEHHQVDWLVILHGLQWKLVFDVH´
2QDSSHDO)RIDQDDUJXHVWKDWWKHGLVWULFWFRXUWDEXVHGLWV
GLVFUHWLRQ ZKHQ LW DGPLWWHG WKH IROORZLQJ WHQ VWDWHPHQWV
EHFDXVHWKHVWDWHPHQWVZHUHQRWVKRZQWRKDYHEHHQPDGHLQ

-- 8 of 12 --

8QLWHG6WDWHVY
.RQHHWDO
1RV
MXVWLILHGRUQRWWKH\ZRXOGUHDOL]HDEHQHILWIURPWHVWLI\LQJ
IRUWKHJRYHUQPHQW
7KH GLVWULFW FRXUW ZDV JLYHQ YHU\ OLWWOH KHOS E\ GHIHQVH
FRXQVHOLQXQGHUVWDQGLQJFRXQVHO¶VLPSHDFKPHQWWKHRU\DQG
ZDV JLYHQ QR KHOS DW DOO E\ WKH $VVLVWDQW 8QLWHG 6WDWHV
$WWRUQH\ZKRDSSDUHQWO\WKRXJKWFRXQVHO¶VLPSHDFKPHQWZDV
IRU EDG FKDUDFWHU SULRU FRQYLFWLRQ UDWKHU WKDQ IRU ELDV
+RZHYHU ZHOO DUWLFXODWHG RU QRW GHIHQVH FRXQVHO ZDV
DWWHPSWLQJ WR VKRZ WKDW WKH ZLWQHVVHV KDG DW PRVW DQ
H[SHFWDWLRQDQGDWOHDVWDKRSHRIODWHUIDYRUDEOHWUHDWPHQW
E\WKHJRYHUQPHQWZLWKUHVSHFWWRWKHLURZQFULPLQDOWURXEOHV
$OWKRXJKWKHIRUFHRIWKLVVRUWRILPSHDFKPHQW²WRVKRZELDV
EDVHGXSRQDQH[SHFWDWLRQRIODWHUIDYRUDEOHWUHDWPHQWE\WKH
JRYHUQPHQW²LV H[WUHPHO\ ZHDN LW LV QHYHUWKHOHVV D
OHJLWLPDWHUDWLRQDOHIRULPSHDFKPHQWRQFURVVH[DPLQDWLRQ
7KDWKDYLQJEHHQVDLGZHWKLQNGHIHQVHFRXQVHOKDGWKH
EXUGHQRIPDNLQJFOHDUWRWKHWULDOFRXUWLQDQDUWLFXODWHDQG
SODLQO\VWDWHGIDVKLRQWKHQDWXUHDQGSXUSRVHRIKLVFURVV
H[DPLQDWLRQDQGWKDWKHIDLOHGWRGRVR&RQVHTXHQWO\ZH
FDQQRWFRQFOXGHWKDWWKHGLVWULFWFRXUWDEXVHGLWVGLVFUHWLRQLQ
IDLOLQJWRXQGHUVWDQGWKHGHIHQVHFRXQVHO¶VUDWKHUDEVWUXVHDQG
SRRUO\H[SODLQHGLPSHDFKPHQWWKHRU\0RUHRYHUJLYHQWKH
RYHUZKHOPLQJZHLJKWRIWKHGLUHFWHYLGHQFHRI)RIDQD¶VJXLOW
ZH WKLQN WKDW WKH GLVWULFW FRXUW¶V IDLOXUH WR SHUPLW WKHVH
ZLWQHVVHVWRDFNQRZOHGJH²LILQGHHGWKH\ZRXOGKDYH²WKDW
WKH\ H[SHFWHG IDYRUDEOH WUHDWPHQW IURP WKH JRYHUQPHQW
DOWKRXJK QRQH ZDV SURPLVHG ZRXOG KDYH EHHQ RI VXFK
PLQLPDO EHQHILW WR WKH GHIHQGDQW WKDW WKH GLVWULFW FRXUW¶V
UXOLQJVSUHFOXGLQJVXFKLPSHDFKPHQWGLGQRWUHVXOWLQDQ\
XQIDLUSUHMXGLFH
'
$GPLVVLELOLW\RI&RFRQVSLUDWRU6WDWHPHQWV
)RIDQDFRQWHQGVWKDWWKHWULDOFRXUWFRPPLWWHGUHYHUVLEOH
HUURU ZKHQ LW DGPLWWHG WHQ KHDUVD\ VWDWHPHQWV SXUVXDQW WR
)HGHUDO 5XOH RI (YLGHQFH G ( EHFDXVH WKH
1RV 8QLWHG6WDWHVY
.RQHHWDO

UHDVRQDEOHGRXEWDERXWDQ\RQHRIWKHVHHOHPHQWVWKHQ\RX
PXVWILQGWKHGHIHQGDQW>@QRWJXLOW\RIWKHVHFKDUJHV´7KH
FRXUW WKHQ SURFHHGHG WR GHILQH PDWHULDOLW\ YHUEDWLP IURP
2¶0$//(< )('(5$/ -85< 35$&7,&( $1' ,16758&7,21
† WK HG DQG LQ DFFRUG ZLWK WKH 6XSUHPH
&RXUW¶VPDQGDWHLQ.XQJ\V7KHGLVWULFWFRXUWUHPLQGHGWKH
MXU\ ERWK EHIRUH LW JDYH WKH PDWHULDOLW\ LQVWUXFWLRQ DQG RQ
VHYHUDORFFDVLRQVGXULQJWKHMXU\FKDUJHWKDWWKHJRYHUQPHQW
PDLQWDLQHGWKHEXUGHQRISURRI.HLWD¶VUHOLDQFHRQ*DXGLQ
DQG.XQJ\VLVPLVSODFHGLQWKDW*DXGLQPHUHO\VWDQGVIRUWKH
SURSRVLWLRQWKDWZKHQPDWHULDOLW\LVDQHOHPHQWRIWKHRIIHQVH
LWPXVWEHVXEPLWWHGWRWKHMXU\-XVWLFH6WHYHQV¶VFRQFHUQV
LQ.XQJ\VWKDWWKH&RXUW¶VGHILQLWLRQLPSHUPLVVLEO\VKLIWVWKH
EXUGHQWRWKHGHIHQGDQWWRUHEXWWKHH[LVWHQFHRIDSUHVXPHG
GLVTXDOLI\LQJIDFWGLGQRWJDUQHUDPDMRULW\
)RUWKHVHUHDVRQVZHFRQFOXGHWKDWWKHGLVWULFWFRXUW¶VMXU\
LQVWUXFWLRQ UHJDUGLQJ PDWHULDOLW\ IDLUO\ DQG DGHTXDWHO\
VXEPLWWHGWKHLVVXHVDQGDSSOLFDEOHODZWRWKHMXU\
&
/LPLWDWLRQRI&URVV([DPLQDWLRQVRQ%LDV
)RIDQDFRQWHQGVWKDWWKHGLVWULFWFRXUWDEXVHGLWVGLVFUHWLRQ
ZKHQLWOLPLWHGWKHFURVVH[DPLQDWLRQRIFHUWDLQSURVHFXWLRQ
ZLWQHVVHVDVWRZKHWKHUWKH\KDGDQH[SHFWDWLRQRIIDYRUDEOH
WUHDWPHQW IURP WKH JRYHUQPHQW LQ H[FKDQJH IRU WKHLU
WHVWLPRQLHV 7KH JRYHUQPHQW GLVDJUHHV FRQWHQGLQJ ILUVW
)RIDQD GLG QRW SURSHUO\ SUHVHUYH WKLV LVVXH IRU UHYLHZ
VHFRQGDQ\OLPLWDWLRQRQWKHZLWQHVVHV¶WHVWLPRQ\ZDVQRWDQ
DEXVHRIGLVFUHWLRQDQGILQDOO\HYHQLIWKHFRXUWDEXVHGLWV
GLVFUHWLRQDQ\HUURULQWKLVUHJDUGZDVKDUPOHVV
:KHQDWULDOFRXUWOLPLWVWKHVFRSHRIFURVVH[DPLQDWLRQ
WKLV FRXUW UHYLHZV WKDW GHWHUPLQDWLRQ IRU DQ DEXVH RI
GLVFUHWLRQ6WHYHQVY%RUGHQNLUFKHU)G WK
&LU ,QDVVHVVLQJZKHWKHUWKHGLVWULFWFRXUWDEXVHGLWV
GLVFUHWLRQDUHYLHZLQJFRXUWPXVWGHFLGH³μZKHWKHU>GHVSLWH
WKHOLPLWDWLRQRIFURVVH[DPLQDWLRQ@WKHMXU\ZDVRWKHUZLVH

-- 9 of 12 --

8QLWHG6WDWHVY
.RQHHWDO
1RV
LQ SRVVHVVLRQ RI VXIILFLHQW LQIRUPDWLRQ WR PDNH D
³GLVFULPLQDWLQJDSSUDLVDO´RIDZLWQHVV¶PRWLYHVDQGELDV¶´
,G TXRWLQJ8QLWHG6WDWHVY7RXFKVWRQH)G
WK&LU ,ILWLVGHWHUPLQHGWKDWWKHWULDOFRXUWDEXVHG
LWV GLVFUHWLRQ WKH UHYLHZLQJ ³FRXUW PXVW WKHQ FRQVLGHU
ZKHWKHU WKH FRQVWLWXWLRQDO HUURU LV KDUPOHVV EH\RQG D
UHDVRQDEOHGRXEW´,G FLWLQJ&KDSPDQY&DOLIRUQLD
86 +DUPOHVV HUURU LV ³>D@Q\ HUURU GHIHFW
LUUHJXODULW\ RU YDULDQFH ZKLFK GRHV QRW DIIHFW VXEVWDQWLDO
ULJKWV´)HG5&ULP3 D
7KH6L[WK$PHQGPHQWWRWKH8QLWHG6WDWHV&RQVWLWXWLRQ
SURYLGHVWKDWDFULPLQDOGHIHQGDQWKDVWKHULJKWWRFRQIURQW
ZLWQHVVHV DJDLQVW KLP 86 &2167 DPHQG 9, 'DYLV Y
$ODVND 86 :H UHFRJQL]H
KRZHYHUWKDWDWULDOFRXUWPD\LQLWVVRXQGGLVFUHWLRQOLPLW
WKHVFRSHRIFURVVH[DPLQDWLRQ%RUGHQNLUFKHU)GDW
,Q$OIRUG Y8QLWHG6WDWHV86 WKH
8QLWHG 6WDWHV 6XSUHPH &RXUW KHOG WKDW D FRXUW PD\ QRW
KRZHYHUOLPLWFURVVH[DPLQDWLRQZKLFKWHQGVWRSURYHWKDW
D ZLWQHVV¶V ³WHVWLPRQ\ >LV@ ELDVHG EHFDXVH JLYHQ XQGHU
SURPLVHRUH[SHFWDWLRQRILPPXQLW\´,GDW HPSKDVLV
DGGHG 7KH 6L[WK &LUFXLW KDV GHYHORSHG D OLQH RI FDVHV
DSSO\LQJ WKH UXOH VHW IRUWK LQ $OIRUG 6HH HJ :ULJKW Y
'DOOPDQ)G WK&LU %RUGHQNLUFKHU
)GDW7RXFKVWRQH)GDW8QLWHG6WDWHV
Y/HMD)G WK&LU
:H EHJLQ E\ GHWHUPLQLQJ ZKHWKHU )RIDQD DGHTXDWHO\
SUHVHUYHG WKLV LVVXH IRU UHYLHZ )RIDQD FRQWHQGV WKDW WKH
GLVWULFWMXGJHVWDWHGWKDWDQREMHFWLRQIRURQHGHIHQGDQWZRXOG
EH WUHDWHG DV DQ REMHFWLRQ IRU DOO RI WKH GHIHQGDQWV
&RQVHTXHQWO\)RIDQDGLGQRWPDNHDQ\VHSDUDWHREMHFWLRQWR
WKHWULDOFRXUW¶VUXOLQJVOLPLWLQJ)RIDQD¶VFURVVH[DPLQDWLRQ
RI VHYHUDO ZLWQHVVHV IRU ELDV VSHFLILFDOO\ UHJDUGLQJ WKHLU
H[SHFWDWLRQRIIDYRUDEOHWUHDWPHQWE\WKHJRYHUQPHQW,QRXU
YLHZWKHWULDOFRXUW¶VVWDWHPHQWWRZKLFK)RIDQDUHIHUVLQQR
ZD\ LPSOLHV WKDW DQ REMHFWLRQ ZLWK UHVSHFW WR RQH ZLWQHVV
ZRXOGEHWUHDWHGWKHVDPHIRUDQRWKHUZLWQHVV,QRUGHUWR
1RV 8QLWHG6WDWHVY
.RQHHWDO

>'()(1'$17¶6 &2816(/@ ,W ZRXOG EH P\
SRVLWLRQ <RXU +RQRU WKDW DFWLRQV VSHDN ORXGHU WKDQ
ZRUGV$QGLIWKHVH
7+(&2857,¶PVRUU\EXWWKDW¶VQRWDSSURSULDWH
>'()(1'$17¶6&2816(/@2ND\7KDQN\RX
<RXU+RQRU
:KLOHWKHUHLVVHULRXVTXHVWLRQZKHWKHU)RIDQD¶VDWWRUQH\
DGHTXDWHO\ LQIRUPHG WKH WULDO MXGJH RI KLV SXUSRVH IRU
SXUVXLQJ WKLV OLQH RI TXHVWLRQLQJ GXULQJ WKH FURVV
H[DPLQDWLRQV RI 3DJH DQG -DFNVRQ ZH FRQFOXGH WKDW WKH
UHFRUGVKRZVWKDWWKHDWWRUQH\ZDVDWWHPSWLQJWRLPSHDFKWKH
ZLWQHVVHVE\VKRZLQJELDVVSHFLILFDOO\ZKHWKHUWKHZLWQHVVHV
H[SHFWHGWKDWLIWKH\FRRSHUDWHGZLWKWKHJRYHUQPHQWWKH\
ZRXOGQRWEHLQGLFWHGDQGRUFKDUJHGIRUWKHLUSDUWLFLSDWLRQLQ
WKHFRQVSLUDF\
,WDSSHDUVWRXVWKDW)RIDQD¶VDWWRUQH\DQGWKHWULDOFRXUW
ZHUH³DVVKLSVSDVVLQJLQWKHQLJKW´LQWKDWWKHDWWRUQH\¶V
REMHFWLRQZDVEDVHGRQRQHWKHRU\RILPSHDFKPHQWDQGWKH
WULDOFRXUW¶VXQGHUVWDQGLQJZDVWKDWFRXQVHOZDVSXUVXLQJD
GLIIHUHQWWKHRU\RILPSHDFKPHQW
$VEHVWZHFDQGHWHUPLQHQRZWKDWZHKDYHWKHEHQHILWRI
DSSHOODWHEULHILQJDQGFODULI\LQJRUDODUJXPHQWWKHSXUSRVHRI
FRXQVHO¶VFURVVH[DPLQDWLRQDOWKRXJKSRRUO\H[SODLQHGWRWKH
GLVWULFW FRXUW ZDV WR LQTXLUH ZKHWKHU WKH JRYHUQPHQW
ZLWQHVVHVXQGHUVWRRGWKDWLIWKH\WHVWLILHGDVWKHJRYHUQPHQW
ZLVKHGWKH\ZRXOGQRWODWHUEHLQGLFWHGRUFKDUJHGIRUWKHLU
RZQFULPLQDODFWLYLW\&RXQVHOZDVQRWLQTXLULQJZKHWKHUWKH
JRYHUQPHQWKDGPDGHDQ\H[SOLFLWSURPLVHVWRWKHZLWQHVVHV
MXVWLI\LQJ VXFK XQGHUVWDQGLQJ UDWKHU KH ZDQWHG WR OHDUQ
ZKHWKHU GHVSLWH WKH DEVHQFH RI DQ\ H[SOLFLW SURPLVH RI
IDYRUDEOHWUHDWPHQWE\WKHJRYHUQPHQWWKHZLWQHVVHVPHUHO\
E\WHVWLI\LQJIDYRUDEO\WRWKHJRYHUQPHQWXQGHUVWRRGWKH\
ZRXOGEHJLYHQVRPHUHZDUG7KHLQTXLU\WKHQZDVZKHWKHU
WKHZLWQHVVHV¶VWDWHRIPLQGZDVWKDWWKH\EHOLHYHGZKHWKHU

-- 10 of 12 --

8QLWHG6WDWHVY
.RQHHWDO
1RV
PDWWHUWKDWFRXOGJRWRKHUFUHGLELOLW\%XW,GRQ¶WVHHWKH
SXUSRVHRISXUVXLQJWKLVPDWWHUIUDQNO\
(PSKDVLVDGGHG
E.HLVKD-DFNVRQ
7KHUHOHYDQWFROORTX\GXULQJ-DFNVRQ¶VFURVVH[DPLQDWLRQ
LVDVIROORZV
4 0V -DFNVRQ GR \RX KDYH GLG WKH *RYHUQPHQW
PDNHDQ\NLQGRISURPLVHVWR\RXLQFRQQHFWLRQZLWK
\RXUFRRSHUDWLRQ"
$ 1R
4 %XW\RXKDYHQ¶WEHHQFKDUJHGKDYH\RX"
>3526(&8725@<RXU+RQRU,¶PJRLQJWRREMHFW
DJDLQ6DPHOLQHRITXHVWLRQLQJDVZLWKWKHODVWZLWQHVV
>'()(1'$17¶6&2816(/@<RXU+RQRUPD\
,UHVSRQG"
7+(&2857<HV
>'()(1'$17¶6 &2816(/@ 2ND\ ,W¶V P\
SRVLWLRQWKDWWKHDJUHHPHQWGRHVQ¶WKDYHWREHLQZULWLQJ
7KHDJUHHPHQWGRHVQ¶WKDYHWREHHYHQYHUEDOO\VWDWHG
$Q DJUHHPHQW E\ DFWLRQV FDQ EH DV VWURQJ DV DQ
DJUHHPHQWLQZRUGV
7+(&28572K,GRQ¶W,GRQ¶WWKLQNVRWKHUH
QRQR7KHUHKDVWREHDQDJUHHPHQW<RX¶UHDVNLQJ
ZKHWKHUWKH*RYHUQPHQWKDVSURPLVHGKHUVRPHWKLQJRU
WKHUH KDV EHHQ DQ DJUHHPHQW QRW WR FKDUJH KHU 7KH\
FDQ¶WWKHDJUHHPHQWFDQ¶WEHMXVWRXWRIWKLQDLU
1RV 8QLWHG6WDWHVY
.RQHHWDO

SUHVHUYHDQLVVXHIRUDSSHDOWKHUHIRUH)RIDQD¶VDWWRUQH\ZDV
REOLJDWHG WR REMHFW HDFK WLPH WKH WULDO MXGJH OLPLWHG WKH
DWWRUQH\¶VHIIRUWVWRFURVVH[DPLQHDSDUWLFXODUZLWQHVV$
FROORTX\EHWZHHQ)RIDQD¶VDWWRUQH\DQGWKHFRXUWLOOXVWUDWHV
WKLVSRLQW7KHFRXUWVWDWHG³,¶PQRWJRLQJWRUHFRJQL]HD
VWDQGLQJ REMHFWLRQ WR WKLV VLWXDWLRQ :H¶OO WUHDW HDFK
VLWXDWLRQDVLWDULVHV´
1RWZLWKVWDQGLQJ RXU UHYLHZRIWKHUHFRUGLQGLFDWHVWKDW
)RIDQD¶V DWWRUQH\ GLG UDLVH VSHFLILF REMHFWLRQV GXULQJ WKH
FURVVH[DPLQDWLRQV RI WKUHH SURVHFXWLRQ ZLWQHVVHV -R\FH
0XOOLQV0RQLFD3DJHDQG.HLVKD-DFNVRQ:HOLPLWRXU
UHYLHZWRZKHWKHUWKHGLVWULFWFRXUWDEXVHGLWVGLVFUHWLRQZKHQ
LWOLPLWHGWKHFURVVH[DPLQDWLRQVRIWKHVHWKUHHZLWQHVVHV

-R\FH0XOOLQV
7KHUHOHYDQWFROORTX\GXULQJ0XOOLQV¶VFURVVH[DPLQDWLRQ
VWDWHG
4 2ND\1RZZHUH\RXHYHULQGLFWHGIRUWKH
>3526(&8725@<RXU+RQRU,¶PJRLQJWRREMHFW
WKLVLVLUUHOHYDQW
7+(&2857:KDW¶VWKHUHOHYDQFHRIWKDW"
>'()(1'$17¶6&2816(/@<RXU+RQRU,GRQ¶W
NQRZLILW¶VLUUHOHYDQWRUQRW,WPD\JRWRKHUPRWLYDWLRQ
RU ELDV RU WHVWLI\LQJ LQ WKLV FDVH LI VKH ZDV SURPLVHG
VRPHWKLQJ RQ WKDW FDVH WKDW VKH ZRXOG QRW KDYH EHHQ
SURVHFXWHGRQFOHDUO\WKLVLQGLFDWHGKHULQYROYHPHQWLQ
WKHUH
>3526(&8725@7KH*RYHUQPHQWKDVLQGLFDWHG
WKDWWKLVZLWQHVVKDVEHHQSURPLVHGLPPXQLW\DQGWKDW
VKHZDVSDLGPRQH\DVDFRQILGHQWLDOLQIRUPDQWLQERWK
LQYHVWLJDWLRQV7KHIDFWWKDWVKHPD\KDYHKDGEHHQ

-- 11 of 12 --

8QLWHG6WDWHVY
.RQHHWDO
1RV
FKDUJHG LQ WKH SDVW LV LUUHOHYDQW &KDUJHV DUH QRW
DSSURSULDWHTXHVWLRQV
7+(&2857,¶OOVXVWDLQWKHREMHFWLRQ6KHKDV
WHVWLILHGWKDWVKHKDVEHHQSURPLVHGLPPXQLW\DQGWKDW
VKHDOVRUHFHLYHGVRPHFRPSHQVDWLRQ
:LWKUHVSHFWWR0XOOLQVZHFRQFOXGHWKHWULDOFRXUWGLGQRW
DEXVH LWV GLVFUHWLRQ LQ OLPLWLQJ )RIDQD¶V DWWRUQH\¶V FURVV
H[DPLQDWLRQ EHFDXVH WKH MXU\ SRVVHVVHG VXIILFLHQW
LQIRUPDWLRQ²WKDW0XOOLQVKDGEHHQJLYHQLPPXQLW\DQGKDG
EHHQSDLGFRPSHQVDWLRQLQH[FKDQJHIRUKHUWHVWLPRQ\²WR
PDNHD³GLVFULPLQDWLQJDSSUDLVDO´RI0XOOLQV¶VPRWLYHVDQG
ELDV%RUGHQNLUFKHU)GDW

0RQLFD3DJH .HLVKD-DFNVRQ
D0RQLFD3DJH
7KHUHOHYDQWFROORTX\GXULQJ3DJH¶VFURVVH[DPLQDWLRQLV
DVIROORZV
4 0V3DJHKDYHDQ\KDYHDQ\SURPLVHVEHHQPDGH
WR\RXLQFRQQHFWLRQZLWK\RXUWHVWLPRQ\WRGD\RU\RXU
FRRSHUDWLRQ"

4 'LGWKH*RYHUQPHQWSURPLVH\RXDQ\WKLQJ"
$ 1R
4 +DYH\RXQRZ\RX¶UH>VLF@XQGHUVWDQGLQJKDYH
LVLW\RXUXQGHUVWDQGLQJWKDWLI\RXFRRSHUDWHZLWKWKH
*RYHUQPHQWWKH\ZLOOQRWEHFKDUJLQJ\RXLQFRQQHFWLRQ
ZLWKWKLVPDUULDJH"
$ 1R
1RV 8QLWHG6WDWHVY
.RQHHWDO

4 7KDW¶VQRW\RXUXQGHUVWDQGLQJ"
$ 1R
>3526(&8725@2EMHFWLRQ<RXU+RQRUVKH¶V
WKLVKDVEHHQDVNHGDQGDQVZHUHG6KHVDLGWKHUHZHUH
QRSURPLVHVPDGHWRKHU
7+( &2857 6KH¶V DQVZHUHG \RXU TXHVWLRQ ,
EHOLHYH
4 'R\RXWKLQNWKDW\RXZLOOEHFKDUJHG"
>3526(&8725@ <RXU +RQRU REMHFWLRQ 6KH
FDQQRWDQWLFLSDWHZKDWWKH*RYHUQPHQW¶VJRLQJWRGR
>'()(1'$17¶6&2816(/@<RXU+RQRU,WKLQN
KHUXQGHUVWDQGLQJLVLPSRUWDQW
>3526(&8725@$QGKHUXQGHUVWDQGLQJ>LV@<RXU
+RQRUWKDWWKHUHDUHQRSURPLVHVIURPWKH*RYHUQPHQW
LQH[FKDQJHIRUKHUWHVWLPRQ\
7+( &2857 , WKRXJKW VKH DQVZHUHG \RXU
TXHVWLRQ6KHVDLGWKDWVKHKDVQ¶WEHHQVKHKDVQ¶WEHHQ
PDGHDQ\SURPLVHV
>'()(1'$17¶6&2816(/@&DQ,DVNKHULIVKH
KDVEHHQFKDUJHG"
>3526(&8725@ <RXU +RQRU ,¶P JRLQJ WR
FRQWLQXHWKLVREMHFWLRQ&KDUJHVDUHLQDSSURSULDWH
>'()(1'$17¶6&2816(/@<RXU+RQRU
>3526(&8725@6KH¶VWHVWLILHGDERXWKHUSULRU
FRQYLFWLRQV
7+( &2857 <HDK WKH FKDUJH ZRXOG RQO\ EH
UHOHYDQWLIVKH¶GEHHQFRQYLFWHGDQGWKHQLWZRXOGEHD

-- 12 of 12 --