03a0042p.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
0$85,&( $ 0$621
3HWLWLRQHU$SSHOODQW
Y
%(77< 0,7&+(//
5HVSRQGHQW$SSHOOHH
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW7ROHGR
1R²'DYLG$.DW]'LVWULFW-XGJH
$UJXHG2FWREHU
'HFLGHGDQG)LOHG)HEUXDU\
%HIRUH%2**60225(DQG&/$<&LUFXLW-XGJHV
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' 'DYLG & 6WHEELQV &ROXPEXV 2KLR IRU
$SSHOODQW0DWWKHZ&+HOOPDQ$77251(<*(1(5$/¶6
2)),&( 2) 2+,2 &$3,7$/ &5,0(6 6(&7,21
&ROXPEXV 2KLR IRU $SSHOOHH 21 %5,() 'DYLG &
6WHEELQV&ROXPEXV2KLR&DURO:ULJKW&ROXPEXV2KLR
IRU $SSHOODQW 0DWWKHZ & +HOOPDQ &KDUOHV / :LOOH
$77251(<*(1(5$/¶62)),&(2)2+,2&$3,7$/
&5,0(66(&7,21&ROXPEXV2KLRIRU$SSHOOHH

-- 1 of 32 --

0DVRQY0LWFKHOO 1R
0225(-GHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK
&/$< - MRLQHG %2**6 - SS GHOLYHUHG D
VHSDUDWHGLVVHQWLQJRSLQLRQ
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
.$5(1 1(/621 0225( &LUFXLW -XGJH 3HWLWLRQHU
$SSHOODQW0DXULFH$OOHQ0DVRQ ³0DVRQ´ ZDVFRQYLFWHGE\
DQ2KLRMXU\RIDJJUDYDWHGIHORQ\PXUGHUUDSHDQGKDYLQJD
ZHDSRQZKLOHXQGHUGLVDELOLW\KHZDVDOVRIRXQGJXLOW\RIWKH
GHDWKSHQDOW\ VSHFLILFDWLRQ RI FRPPLWWLQJ PXUGHU LQ WKH
FRXUVH RI D UDSH DQG IXUWKHU VSHFLILFDWLRQV WKDW LQYROYHG
ILUHDUPVSULRUIHORQ\DQGSULRURIIHQVHRIYLROHQFH0DVRQ
ZDV VHQWHQFHG WR GHDWK 0DVRQ QRZ DSSHDOV WKH GLVWULFW
FRXUW¶VGHQLDORIKLVSHWLWLRQIRUDZULWRIKDEHDVFRUSXVDQG
KLV UHTXHVW IRU DQ HYLGHQWLDU\ KHDULQJ :H KDYH FDUHIXOO\
FRQVLGHUHG DOO RI WKH HLJKW FODLPV WKDW 0DVRQ UDLVHV DQG
$)),50WKHGLVWULFWFRXUW¶VGHFLVLRQWRGHQ\KDEHDVFRUSXV
UHOLHIEXWZLWKRQHLPSRUWDQWH[FHSWLRQ0DVRQFRQWHQGVWKDW
KH ZDV GHQLHG WKH HIIHFWLYH DVVLVWDQFH RI FRXQVHO DW WKH
VHQWHQFLQJ SKDVH %HFDXVH WKH UHFRUG DV LW QRZ VWDQGV LV
LQVXIILFLHQWIRUXVWRGHWHUPLQHZKHWKHUWKLVFODLPKDVPHULW
ZH5(0$1'WKLVFDVHWRWKHGLVWULFWFRXUWIRUDQHYLGHQWLDU\
KHDULQJRQWKLVRQHLVVXH
,%$&.*5281'
2Q )HEUXDU\ 5RELQ 'HQQLV ³5RELQ´ WKH
QLQHWHHQ\HDUROG ZLIH RI &KULV 'HQQLV ³&KULV´
GLVDSSHDUHG(DUOLHUWKDWGD\5RELQDQG&KULVKDGVRFLDOL]HG
ZLWK 0DVRQ DQG RWKHU IULHQGV DQG &KULV DQG 0DVRQ KDG
GLVFXVVHG WUDGLQJ &KULV¶V FDOLEHU &ROW )URQWLHU 6FRXW
UHYROYHUIRU0DVRQ¶VWHOHYLVLRQ7KHQH[WGD\5RELQZDV
UHSRUWHG DV PLVVLQJ WR WKH 8QLRQ &RXQW\ 6KHULII¶V
'HSDUWPHQWWKHUHSRUWVWDWHGWKDW0DVRQZDVWKHODVWSHUVRQ
VHHQZLWK5RELQ
1R 0DVRQY0LWFKHOO
OHDVWWREHWKHPRVWHIILFDFLRXVLQDFKLHYLQJGHIHQGDQW¶VJRDO
RIFRQWLQXHGOLIH
7KHIDFWWKDWDWULDOVWUDWHJ\GLGQRWZRUNGRHVQRWPDNHWKH
H[ DQWH GHFLVLRQ WR HPSOR\ LW XQGHU FLUFXPVWDQFHV ZKHUH
KDUGO\ DQ\ WULDO VWUDWHJLHV ZRXOG VHHP DWWUDFWLYH
FRQVWLWXWLRQDOO\ GHIHFWLYH ODZ\HULQJ *LYHQ WKH 6XSUHPH
&RXUW¶VDGPRQLVKPHQWVDJDLQVWXVLQJWKHSHQDOW\SKDVHDQG
WKH6L[WK$PHQGPHQWDVDOHYHULQGHDWKSHQDOW\FDVHVDQG
WKH VRXQG VWUDWHJLF UHDVRQV IRU WKH RPLVVLRQ RI 0DVRQ¶V
EDFNJURXQGE\KLVFRXQVHO,UHVSHFWIXOO\GLVVHQW

-- 2 of 32 --

0DVRQY0LWFKHOO 1R
$QWL7HUURULVP DQG (IIHFWLYH 'HDWK 3HQDOW\ $FW RI
³$('3$´ H[SOLFLWO\OLPLWVWKHFLUFXPVWDQFHVXQGHUZKLFK
DQHYLGHQWLDU\KHDULQJPD\EHJUDQWHGLQKDEHDVSURFHHGLQJV
6HH86&† H ,I0DVRQIDLOHGWRGHYHORSD
VXIILFLHQW ³IDFWXDO EDVLV RI D FODLP LQ 6WDWH FRXUW
SURFHHGLQJV´WKLVFRXUWPXVWGLVPLVVWKHFODLPDQGFDQQRW
RUGHUDQHYLGHQWLDU\KHDULQJXQOHVVWKHFODLPUHOLHVRQD³QHZ
UXOH RI FRQVWLWXWLRQDO ODZ PDGH UHWURDFWLYHO\ DSSOLFDEOH WR
FDVHVRQFROODWHUDOUHYLHZE\WKH6XSUHPH&RXUWWKDWZDV
SUHYLRXVO\XQDYDLODEOHRUDIDFWXDOSUHGLFDWHWKDWFRXOGQRW
KDYHEHHQSUHYLRXVO\GLVFRYHUHGWKURXJKWKHH[HUFLVHRIGXH
GLOLJHQFH´ 86& † H 1HLWKHU RI WKHVH
FRQGLWLRQVREWDLQLQWKLVFDVH7KLVFRXUWPDNHVFOHDUWKDW
0DVRQUDLVHGWKHVHDUJXPHQWVLQ2KLRVWDWHFRXUWV0DVRQ
DOVRKDGDQRSSRUWXQLW\WRLQWURGXFHH[WHQVLYHHYLGHQFHRI
ZKLFKKHVRPHZKDWDYDLOHGKLPVHOIUHJDUGLQJZKDWGHIHQVH
FRXQVHOFRXOGKDYHGRQH$Q\IDFWXDOGHILFLHQF\LQ0DVRQ¶V
FODLPWKDWSUHYHQWVXVIURPDFFHSWLQJLWPD\QRWEHFXUHGE\
D IHGHUDO FRXUW LQ KDEHDV SURFHHGLQJV ZKHQ WKHUH LV QR
HYLGHQFHLQWKHUHFRUGWKDW2KLRFRXUWVSUHYHQWHG0DVRQIURP
PDNLQJ D VXIILFLHQW IDFWXDO UHFRUG 7KLV FRXUW¶V FXUUHQW
UHPHG\RIRUGHULQJDQHYLGHQWLDU\KHDULQJLVLQYDOLGXQGHU
6HFWLRQ H RI$('3$
,URQLFDOO\LIFRXQVHO¶VWUXHDLPLVWRVHHWKDWKLVFOLHQW¶VOLIH
LVVSDUHGWKHPRVWHIIHFWLYHWDFWLFXQGHUFDVHVVXFKDVWKHRQH
WRGD\LVWRRPLWVRPHVWHSVRWKDWRXUFRXUWZLOOODWHUILQG
FRXQVHO ZDV QRW ³HIIHFWLYH´ &UHDWLYH KDEHDV FRXQVHO FDQ
FRQMXUHXSP\ULDGSRVVLEOHVFHQDULRVLQZKLFKDFODLPFDQ
QRZ EH PDGH WKDW VRPH LQIRUPDWLRQ ZRXOG VXUHO\ KDYH
FRQYLQFHG D MXU\ WR VSDUH WKH OLIH RI D KHLQRXV PXUGHUHU
ZLWKRXW KDYLQJ WR IDFH WKH DFWXDO FRQVHTXHQFH WKDW VXFK
LQIRUPDWLRQFRXOGHDVLO\KDYHEHHQLQHIIHFWLYHRUZRUVH,Q
IDFWLIWULDOFRXQVHOZHUHWRXVHWKH³NLWFKHQVLQN´DSSURDFK
VHHPLQJO\DGYDQFHGE\UHVSRQGHQW¶VFRXQVHODQGLQWURGXFH
HYHU\ VFUDS RI LQIRUPDWLRQ QRZ FODLPHG WR EH KHOSIXO
LQFOXGLQJ KLV EHFRPLQJ ³FHUWLILHG LQ +HDWLQJ DQG $LU
&RQGLWLRQLQJ´ VHH 0DVRQ¶V %U DW Q RQH FRXOG
SUREDEO\ILQGWKDWDSSURDFK³LQHIIHFWLYH´IRUGHSULYLQJWKH
GHIHQGDQWRIWKHDUJXPHQWWKDWKDVSURYHQLQWKLVFLUFXLWDW
1R 0DVRQY0LWFKHOO
$QRWKHU ZLWQHVV WHVWLILHG WR VHHLQJ D SHUVRQ ZKR ILW 0DVRQ¶V
GHVFULSWLRQ ZDONLQJ LQ WKH JHQHUDO DUHD DW WKDW WLPH
7\SH% EORRG ZDV ODWHU IRXQG RQ WKH VLGH RI D WHQQLV VKRH WKDW
0DVRQ ZDV ZHDULQJ RQ )HEUXDU\
2Q)HEUXDU\'HSXW\6KHULII-DFN/DXWHQVODJHU
³/DXWHQVODJHU´ UHFHLYHGDUHSRUWDERXWDQDEDQGRQHGFDULQ
D UXUDO DUHD RI 0DULRQ &RXQW\ 7ZR GD\V HDUOLHU
/DXWHQVODJHUKDGGULYHQWKURXJKWKDWDUHDDQGVHHQDEODFN
PDQZDONLQJZKRPKHODWHULGHQWLILHGDV0DVRQ&KHYURQ
VW\OHVKRHLPSUHVVLRQVVLPLODUWRWKRVHPDGHE\VKRHVWKDW
0DVRQDQG5RELQRZQHGZHUHIRXQGRQWKHRXWVLGHRIWKH
SDVVHQJHUGRRUDQGRQWKHSDVVHQJHU¶VVLGHRIWKHGDVK7\SH
%EORRG5RELQ¶VEORRGW\SHZDVIRXQGRQWKHLQVLGHRIWKH
SDVVHQJHUGRRU$VHWRINH\VLQFOXGLQJFDUNH\VWKDWILWD
&KU\VOHURZQHGE\0DVRQ¶VZLIHZDVRQWKHFDU¶VIURQW
SDVVHQJHUVHDW
$IHZKRXUVDIWHUWKLVGLVFRYHU\'HQQLV3RWWV ³3RWWV´ RI
WKH0DULRQ&RXQW\6KHULII¶V'HSDUWPHQWTXHVWLRQHG0DVRQ
DERXW5RELQ¶VGLVDSSHDUDQFH7KLVLQWHUYLHZWRRNSODFHDWWKH
GHWHFWLYH¶VRIILFHRIWKH6KHULII¶V'HSDUWPHQWDQGODVWHGIRU
HLJKWHHQPLQXWHV2Q)HEUXDU\IROORZLQJXSRQ
LQIRUPDWLRQIURPRWKHULQWHUYLHZV3RWWVTXHVWLRQHG0DVRQ
DJDLQ 7KH VHFRQG LQWHUYLHZ WRRN SODFH LQ D EDVHPHQW
LQWHUURJDWLRQURRPDQGODVWHGZLWKSDXVHVLQWKHTXHVWLRQLQJ
IRUIRXUKRXUV0DVRQDSSHDUVWRKDYHXQGHUVWRRGWKDWKHZDV
QRW XQGHU DUUHVW DW WKLV WLPH $IWHU WKH VHFRQG LQWHUYLHZ
0DVRQ¶V SDUROH RIILFHU WRRN KLP LQWR FXVWRG\ IRU D SDUROH
YLRODWLRQ
2Q)HEUXDU\5RELQ¶VERG\ZDVIRXQGLQVLGHDQ
DEDQGRQHG EXLOGLQJ WKDW ZDV ZLWKLQ HLJKWHHQ PLQXWHV¶
ZDONLQJGLVWDQFHIURPZKHUHKHUFDUKDGEHHQIRXQG6KH
ZDV O\LQJ IDFH GRZQ ZHDULQJ RQO\ D EUD KHU MHDQV DQG
XQGHUZHDUZHUHSXOOHGGRZQWRKHUDQNOHV5RELQ¶V7VKLUW
DQGFDUNH\VZHUHXQGHUKHUMDFNHWZKLFKZDVIRXQGHLJKW
IHHWIURPKHUERG\ZLWKEXUUVDQGGHEULVRQLW7KHDSSDUHQW
PXUGHUZHDSRQDEORRGVWDLQHGERDUGZLWKSURWUXGLQJQDLOV

-- 3 of 32 --

0DVRQY0LWFKHOO 1R
2Q 'HFHPEHU 0DVRQ ZDV UHLQGLFWHG RQ WKH VDPH FKDUJHV
EXW ZLWK D ILUHDUP VSHFLILFDWLRQ DGGHG WR HDFK RI WKH WKUHH FRXQWV
ZDVIRXQGWZHQW\IHHWIURPKHUERG\$QRWKHUSLHFHRIZRRG
IRXQGDWWKHVFHQHKDGVWUDQGVRIKDLUWKDWPDWFKHG5RELQ¶V
KDLU2Q)HEUXDU\GHWHFWLYHVIRXQGDVPDOOEORRG
VWDLQHGSLHFHRIPHWDODWWKHFULPHVFHQHZKLFKDILUHDUPV
H[DPLQHUODWHUFRQFOXGHGZDVLGHQWLFDOWRDJULSIUDPHIURP
DFDOLEHU&ROW)URQWLHU6FRXWUHYROYHUDQGZDVFRQVLVWHQW
ZLWKKDYLQJFRPHIURPWKHKDQGOHRIVXFKDUHYROYHU
2Q )HEUXDU\ SDWKRORJLVW 'U .HLWK 1RUWRQ
³1RUWRQ´ FRQGXFWHGDQDXWRSV\DQGFRQFOXGHGWKDW5RELQ
KDGGLHGDVDUHVXOWRIEOXQWIRUFHWUDXPDFDXVLQJPXOWLSOH
VNXOOIUDFWXUHV'U1RUWRQGHWHUPLQHGWKDWWKHEORRGVWDLQHG
ERDUGIRXQGDWWKHVFHQHDQGWKHEXWWRIDUHYROYHUFRXOGKDYH
FDXVHG 5RELQ¶V LQMXULHV 'U 1RUWRQ DOVR IRXQG VSHUP LQ
5RELQ¶VYDJLQDWKDW'1$H[SHUWVODWHUPDWFKHGWR0DVRQ¶V
'1$'1$PDWHULDOIURP5RELQ¶VXQGHUZHDUDOVRPDWFKHG
0DVRQ¶V'1$7KHH[SHUWVGLGQRWILQG'1$IURPDQ\RQH
RWKHUWKDQ5RELQDQG0DVRQ
2Q 6HSWHPEHU 0DVRQ ZDV FKDUJHG ZLWK
DJJUDYDWHGPXUGHUZLWKDGHDWKSHQDOW\VSHFLILFDWLRQWKDW
WKH PXUGHU RFFXUUHG GXULQJ WKH FRPPLVVLRQ RI D UDSH
UDSH ZLWK D SULRU DJJUDYDWHG IHORQ\ VSHFLILFDWLRQ DQG
KDYLQJDZHDSRQZKLOHXQGHUGLVDELOLW\ZLWKDQRIIHQVHRI
YLROHQFH VSHFLILFDWLRQ 0DVRQ SOHDGHG QRW JXLOW\ ,Q
2FWREHUWKHWULDOFRXUWIRXQG0DVRQWREHLQGLJHQWDQG
DSSRLQWHG /DZUHQFH $ :LQNILHOG ³:LQNILHOG´ RI
&ROXPEXV 2KLR DV OHDG FRXQVHO DQG 7HG , &RXOWHU RI
0DULRQ2KLRDVFRFRXQVHO
0DVRQ¶V DWWRUQH\V ILOHG QXPHURXV SUHWULDO PRWLRQV
LQFOXGLQJ D UHTXHVW IRU H[SHUW DVVLVWDQFH DQG D PRWLRQ WR
VXSSUHVVERWKRIZKLFKWKHWULDOFRXUWGHQLHGDIWHUKHDULQJ
RUDODUJXPHQW7KHZHHNEHIRUHWULDOGHIHQVHFRXQVHOPRYHG
IRUDFRQWLQXDQFHFODLPLQJWKDWWKH\QHHGHGPRUH WLPH WR
UHYLHZWKHSDJHVRIGRFXPHQWVWKDWWKHSURVHFXWRUKDG
GHOLYHUHGWRWKHPRQ0D\7KHWULDOFRXUWUHIXVHGWR
1R 0DVRQY0LWFKHOO
PRUHWKDQDQDVVHUWLRQ³7HVWLPRQ\WKDWVLPSO\SXW0DVRQ¶V
FKLOGKRRGLQWRFRQWH[WZLWKRXWPLVLQWHUSUHWLQJLWZRXOGQRW
KDYHEHHQWKHVXEMHFWWRWKHSURVHFXWRU¶VUHEXWWDOHYLGHQFH
ZKLFKPRVWO\FRQFHUQHG0DVRQ¶VFKDUDFWHU´6OLSRSDW
7KHFRXUW¶VFXUVRU\RSLQLRQRI2KLRHYLGHQFHODZQDUURZO\
FRQVWUXHVWKHWULDOFRXUW¶VH[SOLFLWUXOLQJRQWKLVPDWWHU6HH
7UDW7KHWULDOFRXUWLQGLFDWHGWKDWH[WUHPHO\GDPDJLQJ
HYLGHQFH FRXOG KDYH EHHQ LQWURGXFHG ³KDG WKH 'HIHQVH
HOHFWHG WR SURFHHG ZLWK D PRUH H[SDQVLYH PLWLJDWLRQ
VWUDWHJ\´-$DW0DVRQFRQFHGHVWKDW³>W@KHWULDOFRXUW
UXOHGWKDWVXFKHYLGHQFH´UHIHUULQJWRHYLGHQFHRI0DVRQ¶V
SDVWFULPLQDOEHKDYLRU³ZRXOGEHDGPLVVLEOH´0DVRQ¶V%U
DW'HIHQVHFRXQVHOXQGRXEWHGO\FRXOGKDYHSUHVHQWHGWKH
HYLGHQFH QRWZLWKVWDQGLQJ WKH WULDO FRXUW¶V GHWHUPLQDWLRQ
LQYLWLQJWKHLQWURGXFWLRQRI0DVRQ¶VSULRUFULPLQDOUHFRUGE\
WKH SURVHFXWLRQ DQG DSSHDOHG D GLVWULFW FRXUW GHFLVLRQ WR
DGPLW0DVRQ¶VQHJDWLYHKLVWRU\DVUHEXWWDOHYLGHQFH<HWZH
KDYH QHYHU KHOG WKDW GHIHQVH FRXQVHO LV FRQVWLWXWLRQDOO\
REOLJDWHGWRWDNHVXFKDULVNHVSHFLDOO\ZKHQWKHWULDOFRXUW¶V
UXOLQJLVIDUIURPFOHDUO\WKHDEXVHRIGLVFUHWLRQWKDWZRXOGEH
UHTXLUHGWRRYHUWXUQLWVHYLGHQWLDU\GHWHUPLQDWLRQ
,QGHHG WKH WULDO FRXUW¶V UXOLQJ PDNHV DPSOH VHQVH %\
UDLVLQJ WKH IDFWXDO TXHVWLRQ RI KLV EDFNJURXQG DQG SULRU
DFWLYLWLHVWKHGHIHQGDQWPDNHVKLVHQWLUHEDFNJURXQGUHOHYDQW
$IWHUDOOWKHPLWLJDWLRQFDVHZLWKWKLVHYLGHQFHZRXOGKDYH
EHHQWKDW0DVRQZDVDYLFWLPRIKLVSDUHQWV¶YLROHQFHDQG
GUXJ DFWLYLWLHV DQG WKDW WKLV VRUURZIXO FKLOGKRRG OHG DQ
RWKHUZLVHLQQRFHQWER\LQWRSHUVRQDOGUXJXVHDQGXOWLPDWHO\
WR FRPPLW D KRUULEO\ YLROHQW FULPH 7KH HYLGHQFH RI KLV
FULPLQDOUHFRUGZRXOGKDYHEHHQGLUHFWO\UHOHYDQWWRUHEXWWKLV
VWRU\ VKRZLQJ D \RXQJ PDQ IDU IURP LQQRFHQW ZKR KDV
HQJDJHGLQDFRQVLVWHQWFDPSDLJQRIYLROHQWFULPHLQFOXGLQJ
D UDSH HHULO\ VLPLODU WR WKDW IRU ZKLFK KH KDG MXVW EHHQ
FRQYLFWHG
)LQDOO\JLYHQWKHLQILUPLW\RIWKLVFRXUW¶VGHWHUPLQDWLRQ
UHJDUGLQJGHIHQVHFRXQVHO¶VSRWHQWLDOLQHIIHFWLYHQHVVWKHUHLV
HYHQOHVVOHJDOIRXQGDWLRQIRULWVGHFLVLRQWRUHPDQGWKLVFDVH
IRUDQHYLGHQWLDU\KHDULQJRQKLVLQHIIHFWLYHQHVVFODLP7KH

-- 4 of 32 --

0DVRQY0LWFKHOO 1R
,EHOLHYHWKDWFRXQVHO¶VGHFLVLRQQRWWRSUHVHQWHYLGHQFHRI
0DVRQ¶VFKLOGKRRGZDVUHDVRQDEOHRUWKDWDWWKHYHU\OHDVW
WKH2KLR6XSUHPH&RXUW¶VGHQLDORI0DVRQ¶VFODLPZDVQRW
DQXQUHDVRQDEOHDSSOLFDWLRQRI6WULFNODQGY:DVKLQJWRQ
86 DVLWPXVWEHIRUWKLVFRXUWWRRYHUWXUQLWV
GHFLVLRQ6HH86&† G 7KHFRXUWDVVXPHVWKDW
DQ\GHIHQVHFRXQVHOZKRZRXOGQRWKDYHSUHVHQWHGWKHGHWDLOV
RI0DVRQ¶VSDVWWRWKHMXU\ZRXOGKDYHEHHQHLWKHULQGLIIHUHQW
WRKLVFOLHQW¶VIDWHRULQFRPSHWHQW$VWKHFRXUWVWDWHV³+DG
WULDO FRXQVHO FRQGXFWHG DQ DGHTXDWH LQYHVWLJDWLRQ WKH MXU\
ZRXOGKDYHKHDUGVXEVWDQWLDOHYLGHQFHDERXWKRZGUXJXVH
DQGYLROHQFHSHUYDGHG0DVRQ¶VEDFNJURXQGDQGOLIHKLVWRU\´
6OLSRSDW
7RPHWKHUHFRUGLVFOHDUWKDWGHIHQVHFRXQVHOQRWRQO\ZDV
DZDUHRI0DVRQ¶VEDFNJURXQGEXWDOVRPDGHDUHDVRQDEOH
VWUDWHJLF GHFLVLRQ QRW WR SUHVHQW HYLGHQFH RI 0DVRQ¶V
EDFNJURXQGWRWKHMXU\'HIHQVHFRXQVHO¶VGHFLVLRQDGGUHVVHV
WKHIXQGDPHQWDOGLOHPPDIRUSHQDOW\SKDVHSUHVHQWDWLRQV7R
VRPHUHFRXQWLQJDFKLOGKRRGILOOHGZLWKGUXJXVHDQGFULPH
ZRXOG DURXVH V\PSDWK\ DQG SURYLGH DQ H[SODQDWLRQ IRU
RWKHUZLVHKHLQRXVO\YLROHQWFULPHVEXWWRRWKHUVLWZRXOGWHOO
DVWRU\RIZDVWHOLIHORQJPRUDOWXUSLWXGHDQGLQFRUULJLELOLW\
7KH RPLWWHG HYLGHQFH KHUH LV IDU OHVV PLWLJDWLQJ WKDQ WKH
UHOHYDQWHYLGHQFHLQ%HOOY&RQHWKDWWKHGHIHQGDQWKDGEHHQ
WUDXPDWL]HGGXULQJKRQRUDEOHPLOLWDU\VHUYLFHWRKLVFRXQWU\
WKHRPLVVLRQRIZKLFKWKH6XSUHPH&RXUWGHWHUPLQHGQRWWR
EH XQFRQVWLWXWLRQDOO\ LQHIIHFWLYH DVVLVWDQFH 7KH HYLGHQFH
RPLWWHGKHUHLVSRWHQWLDOO\DJJUDYDWLQJLQWKHPLQGVRIVRPH
MXURUVDQGLWVSUREDEOHHIIHFWLVDMXGJPHQWFDOOIRUFRXQVHOLQ
WKHFRQWH[WRIKLVXQGHUVWDQGLQJRIWKHMXU\¶VFRPSRVLWLRQ
'HIHQVHFRXQVHO¶VFKRLFHWRRPLW0DVRQ¶VEDFNJURXQGDQG
LW ZDV D FKRLFH LV D TXLQWHVVHQWLDO VWUDWHJLF GHFLVLRQ WKDW
FDQQRWIRUPWKHEDVLVRID6WULFNODQGFKDOOHQJH
7KLVFRXUWDOVRIODWO\VXJJHVWVWKDWWKLVSDUWLFXODUHYLGHQFH
RI0DVRQ¶VWURXEOHGFKLOGKRRGDQGHDUO\GUXJXVHZRXOGQRW
KDYHSHUPLWWHGWKHSURVHFXWLRQWRLQWURGXFHUHEXWWDOHYLGHQFH
UHJDUGLQJ0DVRQ¶VH[WHQVLYHYLROHQWDQGFRQWHPSRUDQHRXV
KLVWRU\RIFULPLQDODFWLYLW\7KHFRXUW¶VFODLPKHUHLVQRWKLQJ
1R 0DVRQY0LWFKHOO
JUDQWDFRQWLQXDQFHDQGWKUHDWHQHGWRUHPRYHGHIHQVHFRXQVHO
ZLWKRXWSD\LQJDQ\IHHV2Q0D\0DVRQSURFHHGHG
WR D WKUHHZHHNORQJ MXU\ WULDO KH ZDV IRXQG JXLOW\ RQ DOO
WKUHHFRXQWV
2Q-XQHWKHWULDOHQWHUHGWKHVHQWHQFLQJSKDVH
0DVRQ¶VPLWLJDWLRQFDVHFRQVLVWHGRIWKHWHVWLPRQ\RIVHYHQ
ZLWQHVVHV DQG 0DVRQ¶V XQVZRUQ VWDWHPHQW 2Q -XQH
WKH MXU\ UHFRPPHQGHG WKDW 0DVRQ EH VHQWHQFHG WR
GHDWK ZKLFK UHFRPPHQGDWLRQ WKH WULDO FRXUW DGRSWHG 2Q
$XJXVWWKHWULDOFRXUWKHDUGRUDODUJXPHQWRQDQG
WKHQGHQLHG0DVRQ¶VPRWLRQIRUDQHZWULDO
0DVRQWKHQILOHGDWLPHO\DSSHDOWRWKH&RXUWRI$SSHDOV
IRU WKH 7KLUG $SSHOODWH 'LVWULFW DVVHUWLQJ WZHQW\IRXU
DVVLJQPHQWVRIHUURU2Q'HFHPEHUWKH&RXUWRI
$SSHDOVDIILUPHGWKHWULDOFRXUW¶VMXGJPHQW6WDWHY0DVRQ
:/ DW 2KLR &W $SS 'HF
0DVRQWKHUHDIWHUILOHGDQRWLFHRIDSSHDODQGDEULHILQWKH
2KLR6XSUHPH&RXUW2Q-XQHWKH2KLR6XSUHPH
&RXUW DIILUPHG 0DVRQ¶V FRQYLFWLRQ DQG GHDWK VHQWHQFH RQ
GLUHFWDSSHDO6WDWHY0DVRQ1(G 2KLR

:KLOHKLVGLUHFWDSSHDOZDVSHQGLQJ0DVRQILOHGDVWDWH
FROODWHUDODWWDFNLQWKH&RXUW RI&RPPRQ3OHDVRI0DULRQ
&RXQW\DVVHUWLQJVHYHQDVVLJQPHQWVRIHUURU6WDWHY0DVRQ
:/DW 2KLR&W$SS-XQH 2Q
1RYHPEHUWKHFRXUWGHQLHGUHOLHIZLWKRXWKROGLQJ
DQHYLGHQWLDU\KHDULQJ,G0DVRQDSSHDOHGWKHGLVPLVVDORI
KLVSRVWFRQYLFWLRQSHWLWLRQWRWKH&RXUWRI$SSHDOVIRUWKH
7KLUG$SSHOODWH'LVWULFWZKLFKDIILUPHGWKHMXGJPHQWRIWKH
&RXUWRI&RPPRQ3OHDVRQ-XQH,GDW 0DVRQ
WKHQILOHGDWLPHO\DSSHDOWRWKH2KLR6XSUHPH&RXUWZKLFK
GLVPLVVHGWKHDSSHDORQ2FWREHUDVQRWLQYROYLQJ
DQ\VXEVWDQWLDOFRQVWLWXWLRQDOTXHVWLRQ
2Q -XO\ 0DVRQ ILOHG D SHWLWLRQ IRU D ZULW RI
KDEHDVFRUSXVSXUVXDQWWR86&†UDLVLQJWZHQW\
ILYHFKDOOHQJHVWRKLVFRQYLFWLRQDQGVHQWHQFH2Q0D\
WKHGLVWULFWFRXUWGHQLHG0DVRQ¶VKDEHDVSHWLWLRQDQG

-- 5 of 32 --

0DVRQY0LWFKHOO 1R
KLV PRWLRQ IRU DQ HYLGHQWLDU\ KHDULQJ RQ YDULRXV FODLPV
0DVRQ Y 0LWFKHOO ) 6XSS G 1' 2KLR
7KHGLVWULFWFRXUWVXEVHTXHQWO\JUDQWHGDFHUWLILFDWHRI
DSSHDODELOLW\DVWRDOOFODLPV7KLVWLPHO\DSSHDOIROORZHG
,,$1$/<6,6
:HUHYLHZGHQRYRWKHOHJDOFRQFOXVLRQVRIDGLVWULFWFRXUW
LQDKDEHDVSURFHHGLQJ0LW]HOY7DWH)G
WK&LU %HFDXVH0DVRQILOHGKLVKDEHDVSHWLWLRQRQ
-XO\ DIWHU WKH $QWLWHUURULVP DQG (IIHFWLYH 'HDWK
3HQDOW\$FWRI ³$('3$´ EHFDPHHIIHFWLYHWKLVFDVH
LVJRYHUQHGE\$('3$,G8QGHU$('3$¶VSURYLVLRQVZH
PD\QRWJUDQWDZULWRIKDEHDVFRUSXVIRUDQ\FODLPWKDWZDV
DGMXGLFDWHG RQ WKH PHULWV LQ VWDWH FRXUW XQOHVV WKH
DGMXGLFDWLRQ
UHVXOWHG LQ D GHFLVLRQ WKDW ZDV FRQWUDU\ WR RU
LQYROYHG DQ XQUHDVRQDEOH DSSOLFDWLRQ RI FOHDUO\
HVWDEOLVKHG )HGHUDO ODZ DV GHWHUPLQHG E\ WKH
6XSUHPH&RXUWRIWKH8QLWHG6WDWHVRU
UHVXOWHG LQ D GHFLVLRQ WKDW ZDV EDVHG RQ DQ
XQUHDVRQDEOHGHWHUPLQDWLRQRIWKHIDFWVLQOLJKWRI
WKHHYLGHQFHSUHVHQWHGLQWKH6WDWHFRXUWSURFHHGLQJ
86&† G ,QDGGLWLRQWKHILQGLQJVRIIDFW
PDGHE\DVWDWHFRXUWDUHSUHVXPHGWREHFRUUHFWDQGFDQEH
FRQWUDYHQHGRQO\LIWKHKDEHDVSHWLWLRQHUFDQVKRZE\FOHDU
DQGFRQYLQFLQJHYLGHQFHWKDWWKHVWDWHFRXUW¶VIDFWXDOILQGLQJV
ZHUH HUURQHRXV ,G † H 7KLV SUHVXPSWLRQ RI
FRUUHFWQHVVDOVRDSSOLHVWRWKHIDFWXDOILQGLQJVPDGHE\DVWDWH
DSSHOODWH FRXUW EDVHG RQ WKH VWDWH WULDO UHFRUG 6XPQHU Y
0DWD86
$('3$SURYLGHVWKHIROORZLQJVWDQGDUGIRUGHWHUPLQLQJ
ZKHWKHUDSHWLWLRQHULVHQWLWOHGWRDQHYLGHQWLDU\KHDULQJ
H ,IWKHDSSOLFDQWKDVIDLOHGWRGHYHORSWKHIDFWXDO
EDVLV RI D FODLP LQ 6WDWH FRXUW SURFHHGLQJV WKH
1R 0DVRQY0LWFKHOO
9LGHRWDSH'HSRVLWLRQRI'U5REHUW76SDUHDW30
$FFRUGLQJWR6SDUH0DVRQEHJDQH[WHQVLYHLQYROYHPHQWLQ
KLVSDUHQWV¶GUXJEXVLQHVVLQ³WKHPLGGOHHOHPHQWDU\JUDGHV´
DQGVWDUWHGXVLQJGUXJVUHJXODUO\³DERXWWKHVDPHWLPH´,G
DW306SDUHDOVRWHVWLILHGWKDW0DVRQVDLGWKDWKHKDG
EHHQUHJXODUO\EHDWHQE\KLVIDWKHU,ELG
6SDUHIXUWKHUWHVWLILHGDVWRVHYHUDO³H[KLELWVRIIHUHGIRU
PLWLJDWLRQSXUSRVHV´WKDWKHKDGUHYLHZHGLQWKHFRXUVHRIKLV
WUHDWPHQWRI0DVRQ7KHVHH[KLELWVZHUHLQWKHUHFRUGRIWKH
GHSRVLWLRQDQGLQFOXGHGVHYHUDOUHSRUWVIURPVRFLDOVHUYLFHV
DJHQFLHV WKDW LQFOXGHG H[WHQVLYH UHFRUGV RI GRPHVWLF DQG
FKLOGDEXVHLQ0DVRQ¶VKRPHDQGWKHGUXJVHHNLQJDFWLYLWLHV
RI0DVRQ¶VSDUHQWV7KHGHIHQGDQWZDVSUHVHQWGXULQJWKH
GHSRVLWLRQLGDW30DQGWKXVZRXOGKDYHEHHQDEOHWR
DGYLVHKLVDWWRUQH\RIDQ\DGGLWLRQDOPDWHULDOWKDWPLJKWKDYH
EHHQUHOHYDQW,QDQ\HYHQWWKHGHSRVLWLRQVKRZVWKDW'U
6SDUHZDVDZDUHRIDQGIXOO\UHODWHGWRFRXQVHOWKHJLVWRI
WKHPDWHULDORQ0DVRQ¶VEDFNJURXQGDVWRZKLFKWKHFRXUW
QRZDSSHDUVWREHXQFHUWDLQ
,Q VKRUW 6SDUH¶V GHSRVLWLRQ H[SOLFLWO\ FRYHUV DOO RI WKH
LQIRUPDWLRQ WR ZKLFK GHIHQVH FRXQVHO ZDV DOOHJHGO\ QRW
H[SRVHGGXHWRVKRGG\LQYHVWLJDWLRQLQWRPLWLJDWLQJHYLGHQFH
$FFRUGLQJO\ WKLV FDVH VHHPV LQGLVWLQJXLVKDEOH IURP SULRU
FDVHV LQ ZKLFK ZH KDYH GHQLHG FODLPV RI LQHIIHFWLYH
DVVLVWDQFHEDVHGRQDOOHJHGIDLOXUHWRLQYHVWLJDWHPLWLJDWLQJ
HYLGHQFH 6SHFLILFDOO\ WKH GHIHQGDQW KDV LGHQWLILHG QR
HYLGHQFHRIZKLFKGHIHQVHFRXQVHOZDVQRWDOUHDG\DZDUHDW
WKH WLPH RI WKH SHQDOW\ SKDVH SURFHHGLQJV 6HH %XHOO Y
0LWFKHOO)G WK&LU
7KH UHOHYDQW TXHVWLRQ LV WKH RQH WKDW WKLV FRXUW GHFOLQHV
WRGD\WRDQVZHUZKHWKHUGHIHQVHFRXQVHO¶VGHFLVLRQQRWWR
SUHVHQW FHUWDLQ HYLGHQFH RI WKH GUXJUHODWHG DFWLYLWLHV RI
0DVRQ¶VSDUHQWVRI0DVRQ¶VORQJKLVWRU\RIGUXJXVHDQGRI
WKH SK\VLFDO DEXVH WR ZKLFK 0DVRQ ZDV VXEMHFWHG ZDV D
UHDVRQDEOHVWUDWHJLFFKRLFHRIFRXQVHORUZDVZLWKLQWKHZLGH
UDQJH RI GHFLVLRQV WKDW FRQVWLWXWH FRQVWLWXWLRQDOO\ HIIHFWLYH
UHSUHVHQWDWLRQ

-- 6 of 32 --

0DVRQY0LWFKHOO 1R
7KH GHSRVLWLRQ ZDV FRQGXFWHG GXULQJ WKH JXLOW SKDVH RI WKH WULDO LQ
DQWLFLSDWLRQ RI 'U 6SDUH¶V SRWHQWLDO DEVHQFH IRU D SRVVLEOH SHQDOW\ SKDVH
7KH DFWXDO YLGHR WDSH RI WKH GHSRVLWLRQ RI 'U 6SDUH LV LQ RXU UHFRUG DV
UHFRUG HQWU\ LQ WKH GLVWULFW FRXUW UHIHUHQFHG DV $SSHQGL[ 9RO WR WKH
UHWXUQ RI ZULW E\ WKH UHVSRQGHQW UHFRUG HQWU\ 7KH YROXPH QXPEHU
DSSHDUV WR EH WKDW DVVLJQHG LQ WKH VWDWH WULDO FRXUW
DGHTXDF\ RI 0DVRQ¶V UHSUHVHQWDWLRQ ,QVWHDG WKH FRXUW
FRQWHQGVWKDWGHIHQVHFRXQVHOGLGQRWVXIILFLHQWO\LQYHVWLJDWH
0DVRQ¶V³KLVWRU\FKDUDFWHURUEDFNJURXQG´$FFRUGLQJWR
WKH FRXUW DQ\ LQYHVWLJDWLRQ ZRXOG KDYH UHYHDOHG 0DVRQ¶V
WUDXPDWLFFKLOGKRRGKLVOLYLQJZLWKSDUHQWVZKRZHUHGUXJ
GHDOHUVDQGXVHUVWKHUHJXODUEHDWLQJVWKDWKHUHFHLYHGIURP
KLVIDWKHUDQGWKHUHVXOWLQJGUXJDGGLFWLRQWKDW0DVRQKLPVHOI
GHYHORSHGIURPWKHDJHRIHOHYHQ7KHFRXUWVXJJHVWVWKDW
FRXQVHO¶VIDLOXUHWRSUHVHQWWKLVWDOHRIZRHWRWKHMXU\ZDVQRW
WKHUHVXOWRIDVWUDWHJLFFKRLFHLQWKHKHDWRIOLWLJDWLRQEXWD
ODFNRINQRZOHGJHUHJDUGLQJ0DVRQ¶VEDFNJURXQG7KHFRXUW
DUJXHV WKDW ³>K@DG WULDO FRXQVHO FRQGXFWHG DQ DGHTXDWH
LQYHVWLJDWLRQWKHMXU\ZRXOGKDYHKHDUGVXEVWDQWLDOHYLGHQFH
DERXW KRZ GUXJ XVH DQG YLROHQFH SHUYDGHG 0DVRQ¶V
EDFNJURXQG DQG OLIH KLVWRU\´ 6OLS RS DW HPSKDVLV
DGGHG ,QGHHG WKH FRXUW QRWHV 0DVRQ¶V SRVWFRQYLFWLRQ
WHVWLPRQ\ WKDW KH GLG QRW UHFDOO GHIHQVH FRXQVHO HYHU
LQWHUYLHZLQJKLPUHJDUGLQJKLVEDFNJURXQGPXFKOHVVWKDWRI
DQ\RIKLVIDPLO\PHPEHUV6OLSRSDW
7KH H[LVWLQJ UHFRUG LQ WKLV FDVH FRQWUDGLFWV WKH FRXUW¶V
ILQGLQJ WKDW GHIHQVH FRXQVHO KDG QR NQRZOHGJH RI WKHVH
SDUWLFXODUO\WUDJLFIHDWXUHVRI0DVRQ¶VEDFNJURXQG$VWKH
FRXUW LQGLFDWHG GHIHQVH FRXQVHO ZDV SURYLGHG ZLWK WKH
VHUYLFHVRI'U5REHUW76SDUHDSV\FKRORJLVWZKRH[DPLQHG
WKHGHIHQGDQWWRGHWHUPLQHDPRQJRWKHUWKLQJVKLVIXWXUH
GDQJHURXVQHVV6SDUHDOVRWRRNDQUHODWLYHO\H[WHQVLYHRUDO
KLVWRU\ IURP 0DVRQ 8QGHU GHSRVLWLRQ TXHVWLRQLQJ E\
GHIHQVHFRXQVHO6SDUHUHFRXQWHGHVVHQWLDOO\DOORIWKHIDFWV
WKDWDFFRUGLQJWRWKLVFRXUWZHUHQRWGLVFRYHUHGE\GHIHQVH
FRXQVHO6SDUHWHVWLILHGWKDW0DVRQWROGKLPWKDWKLVIDPLO\
OLIHZDV³UDWKHUXQXVXDO´ZLWKKLVSDUHQWVLQYROYHGLQ³GUXJ
UHODWHG DFWLYLWLHV DV ORQJ DV KH FRXOG UHPHPEHU´ 6HH
1R 0DVRQY0LWFKHOO
FRXUWVKDOOQRWKROGDQHYLGHQWLDU\KHDULQJRQWKH
FODLPXQOHVVWKHDSSOLFDQWVKRZVWKDW²
$ WKHFODLPUHOLHVRQ²
L D QHZ UXOH RI FRQVWLWXWLRQDO ODZ
PDGH UHWURDFWLYH WR FDVHV RQ
FROODWHUDO UHYLHZ E\ WKH 6XSUHPH
&RXUW WKDW ZDV SUHYLRXVO\
XQDYDLODEOHRU
LL D IDFWXDO SUHGLFDWH WKDW FRXOG QRW
KDYH EHHQ SUHYLRXVO\ GLVFRYHUHG
WKURXJK WKH H[HUFLVH RI GXH
GLOLJHQFHDQG
% WKH IDFWV XQGHUO\LQJ WKH FODLP ZRXOG EH
VXIILFLHQWWRHVWDEOLVKE\FOHDUDQGFRQYLQFLQJ
HYLGHQFHWKDWEXWIRUFRQVWLWXWLRQDOHUURUQR
UHDVRQDEOHIDFWILQGHUZRXOGKDYHIRXQGWKH
DSSOLFDQWJXLOW\RIWKHXQGHUO\LQJRIIHQVH
86&† H
,Q:LOOLDPVY7D\ORU86 WKH6XSUHPH
&RXUW LQWHUSUHWHG † G DV UHTXLULQJ D GLVWLQFWLRQ
EHWZHHQ GHFLVLRQV WKDW DUH ³FRQWUDU\ WR´ DQG WKRVH WKDW
LQYROYHDQ³XQUHDVRQDEOHDSSOLFDWLRQRI´FOHDUO\HVWDEOLVKHG
6XSUHPH&RXUWSUHFHGHQW,GDW$VWDWHFRXUWGHFLVLRQ
LV³FRQWUDU\WR´6XSUHPH&RXUWSUHFHGHQW³LIWKHVWDWHFRXUW
DUULYHV DW D FRQFOXVLRQ RSSRVLWH WR WKDW UHDFKHG E\ >WKH
6XSUHPH@&RXUWRQDTXHVWLRQRIODZ´RU³LIWKHVWDWHFRXUW
FRQIURQWVIDFWVWKDWDUHPDWHULDOO\LQGLVWLQJXLVKDEOHIURPD
UHOHYDQW6XSUHPH&RXUWSUHFHGHQW´DQGDUULYHVDWDGLIIHUHQW
UHVXOW ,G $ VWDWH FRXUW GHFLVLRQ LV DOVR ³FRQWUDU\ WR´
6XSUHPH&RXUWSUHFHGHQWLIWKHVWDWHFRXUW³DSSOLHVDUXOHWKDW
FRQWUDGLFWVWKHJRYHUQLQJODZVHWIRUWK´LQWKDWSUHFHGHQW,G
$ VWDWH FRXUW GHFLVLRQ LQYROYHV DQ ³XQUHDVRQDEOH
DSSOLFDWLRQRI´FOHDUO\HVWDEOLVKHG6XSUHPH&RXUWSUHFHGHQW
³LIWKHVWDWHFRXUWLGHQWLILHVWKHFRUUHFWJRYHUQLQJOHJDOUXOH

-- 7 of 32 --

0DVRQY0LWFKHOO 1R
IURP>WKH6XSUHPH@&RXUW¶VFDVHVEXWXQUHDVRQDEO\DSSOLHVLW
WRWKHIDFWVRIWKHSDUWLFXODUFDVH´,GDW
:H PD\ QRW RYHUWXUQ D VWDWH GHFLVLRQ VLPSO\ EHFDXVH ZH
FRQFOXGH WKDW WKH VWDWH FRXUW LQFRUUHFWO\ DSSOLHG 6XSUHPH
&RXUW SUHFHGHQW 7KH VWDWH FRXUW PXVW KDYH DSSOLHG WKH
UHOHYDQW 6XSUHPH &RXUW SUHFHGHQW LQ DQ REMHFWLYHO\
XQUHDVRQDEOHPDQQHU,GDW
,QUHYLHZLQJDVWDWHFRXUWGHFLVLRQXQGHU$('3$ZHPXVW
ORRNRQO\WRWKH6XSUHPH&RXUWKROGLQJVWKDWH[LVWHGDWWKH
WLPHRIWKHVWDWHFRXUW¶VGHFLVLRQ,GDW:HPD\QRW
EDVHRXUGHFLVLRQRQ6XSUHPH&RXUWGLFWDRUWKHGHFLVLRQVRI
WKHFRXUWVRIDSSHDOV6HHLG0LW]HO)GDW
$'HQLDORI([SHUW$VVLVWDQFH
7ULDO3KDVH
0DVRQ ILUVW DUJXHV WKDW WKH 2KLR 6XSUHPH &RXUW
XQUHDVRQDEO\ DSSOLHG FOHDUO\ HVWDEOLVKHG 6XSUHPH &RXUW
SUHFHGHQW LQ ³>S@UHPLVLQJ >DQ LQGLJHQW GHIHQGDQW@¶V
FRQVWLWXWLRQDO ULJKW WR H[SHUW DQG LQYHVWLJDWLYH DVVLVWDQFH
VROHO\ RQ WKH GLVFUHWLRQ RI WKH WULDO FRXUW ZLWKRXW IXUWKHU
UHYLHZ´ 3HWLWLRQHU¶V %U DW ,QGLJHQW SULVRQHUV DUH
FRQVWLWXWLRQDOO\ HQWLWOHG WR ³WKH EDVLF WRROV RI DQ DGHTXDWH
GHIHQVHRUDSSHDOZKHQWKRVHWRROVDUHDYDLODEOHIRUDSULFH
WRRWKHUSULVRQHUV´%ULWWY1RUWK&DUROLQD86
FLWLQJ*ULIILQ Y,OOLQRLV86
%RWK%ULWWDQG*ULIILQLQYROYHGUHTXHVWVIRUIUHHWUDQVFULSWVRI
WULDOSURFHHGLQJV6HH%ULWW86DW*ULIILQ86
DW 7KH 6XSUHPH &RXUW KDV DOVR KHOG WKDW SV\FKLDWULF
DVVLVWDQFH LV D EDVLF WRRO RI DQ DGHTXDWH GHIHQVH LQ WZR
JHQHUDOFLUFXPVWDQFHV ³ZKHQDGHIHQGDQWKDVPDGHD
SUHOLPLQDU\VKRZLQJWKDWKLVVDQLW\DWWKHWLPHRIWKHRIIHQVH
LV OLNHO\ WR EH D VLJQLILFDQW IDFWRU DW WULDO´ DQG ³LQ WKH
FRQWH[WRIDFDSLWDOVHQWHQFLQJSURFHHGLQJZKHQWKH6WDWH
SUHVHQWV SV\FKLDWULF HYLGHQFH RI WKH GHIHQGDQW¶V IXWXUH
GDQJHURXVQHVV´ $NH Y 2NODKRPD 86
2QDSSHDO0DVRQFODLPVWKDW$NHUHTXLUHG2KLRWR
SURYLGHKLPZLWKWKHIROORZLQJW\SHVRIH[SHUWDVVLVWDQFH
DVRLODQGGHEULVH[SHUWWRH[DPLQHWKHVRLOIRXQGRQWKH
1R 0DVRQY0LWFKHOO
WKDW&RQH¶VWULDODWWRUQH\SUHVHQWHGQRPLWLJDWLQJHYLGHQFHDW
DOODQGPDGHQRILQDODUJXPHQWKHGLGQRWHYHQDVNWKHMXU\
WRVSDUHKLVFOLHQW¶VOLIH´&RQHY%HOO)G
WK&LU 5\DQ- ,Q&RQHGHIHQVHFRXQVHOIDLOHGWR
FDOO D VLQJOH ZLWQHVV WR SUHVHQW PLWLJDWRU\ HYLGHQFH DQG
RIIHUHGQRFORVLQJVWDWHPHQWDOWKRXJKGHIHQVHFRXQVHOGLG
EULHIO\FURVVH[DPLQHVRPHRIWKHVWDWH¶VZLWQHVVHV&RQH
6&WDW1HYHUWKHOHVVWKH6XSUHPH&RXUWZLWK
RQO\RQHGLVVHQWKHOGWKDWGHIHQVHFRXQVHO¶VUHSUHVHQWDWLRQ
GXULQJ WKH SHQDOW\ SKDVH ZDV QRW XQFRQVWLWXWLRQDOO\
LQDGHTXDWHXQGHULWVVWDQGDUGLQ6WULFNODQGY:DVKLQJWRQ
86
'HWHUPLQLQJWKHEHVWWDFWLFIRUDSHQDOW\SKDVHSUHVHQWDWLRQ
LV H[WUHPHO\ GLIILFXOW LQ WKH ZDNH RI D MXU\¶V ILQGLQJ WKH
GHIHQGDQW JXLOW\ RI D KRUULEO\ EUXWDO DFW DFFRUGLQJ WR WKH
&RXUW&RQH6&WDW7KLVFRXUW¶VGHWHUPLQDWLRQ
WKDWDGHIHQVHFRXQVHO¶VIDLOXUHWRSUHVHQWDQ\DIILUPDWLYHFDVH
IRU PLWLJDWLRQ LQ WKH SHQDOW\ SKDVH ZDV XQFRQVWLWXWLRQDO
LQHIIHFWLYH UHSUHVHQWDWLRQ IDLOHG WR LQGXOJH WKH ³μVWURQJ
SUHVXPSWLRQ¶ WKDW FRXQVHO¶V FRQGXFW IDOOV ZLWKLQ WKH ZLGH
UDQJHRIUHDVRQDEOHSURIHVVLRQDODVVLVWDQFHEHFDXVHLWLVDOO
WRR HDV\ WR FRQFOXGH WKDW WKH SDUWLFXODU DFW RU RPLVVLRQ RI
FRXQVHOZDVXQUHDVRQDEOHLQWKHKDUVKOLJKWRIKLQGVLJKW´,G
DW6HHDOVR6WULFNODQG86DW
,QWKLVFDVHGHIHQVHFRXQVHOSUHVHQWHGDVLJQLILFDQWO\PRUH
UREXVW PLWLJDWRU\ FDVH WKDQ WKH FRXQVHO LQ &RQH 'HIHQVH
FRXQVHOFDOOHGWZRPHPEHUVRIWKHVKHULII¶VGHSDUWPHQWWR
FRPPHQWRQ0DVRQ¶VJRRGEHKDYLRUDVDSULVRQHU&RXQVHO
DOVRFDOOHG0DVRQ¶VPRWKHUKLVWZREURWKHUVKLVFRXVLQDQG
ILQDOO\KLVZLIHWRWHVWLI\UHJDUGLQJKRZPHDQLQJIXO0DVRQ
KDG EHHQ LQ WKHLU OLYHV DQG WR DVN WKH MXU\ WR VSDUH WKH
GHIHQGDQW¶VOLIH)LQDOO\0DVRQKLPVHOIWHVWLILHGDERXWWKH
DUWZRUN DQG SRHWU\ KH KDG FRPSRVHG LQ SULVRQ 8QOLNH
GHIHQVH FRXQVHO LQ &RQH 0DVRQ¶V FRXQVHO GHOLYHUHG DQ
H[WHQVLYHFORVLQJVWDWHPHQW
'HIHQVHFRXQVHO¶VSUHVHQWDWLRQLQWKHSHQDOW\SKDVHLVQRW
WKH SULQFLSDO WKUXVW RI WKH FRXUW¶V FRQFHUQ UHJDUGLQJ WKH

-- 8 of 32 --

0DVRQY0LWFKHOO 1R
BBBBBBBBBBBBBBB
',66(17
BBBBBBBBBBBBBBB
%2**6&LUFXLW-XGJHGLVVHQWLQJLQSDUW,ODUJHO\DJUHH
ZLWKWKHFRXUW¶VDQDO\VLVRI0DVRQ¶VDUJXPHQWVLQWKLVFDVH
,FDQQRWDJUHHKRZHYHUZLWKWKHFRXUW¶VGHFLVLRQWRUHPDQG
WKLVDFWLRQWRWKHGLVWULFWFRXUWIRUDQHYLGHQWLDU\KHDULQJRQ
WKH DGHTXDF\ RI 0DVRQ¶V FRXQVHO¶V LQYHVWLJDWLRQ DQG
SUHVHQWDWLRQRIHYLGHQFHLQPLWLJDWLRQGXULQJWKHVHQWHQFLQJ
SKDVHRI0DVRQ¶VWULDO7KHFRXUW¶VDFWLRQERWKLJQRUHVWKH
FOHDU6XSUHPH&RXUWSUHFHGHQWHVWDEOLVKLQJWKHVWDQGDUGVIRU
HYDOXDWLQJ WKH FRQVWLWXWLRQDOO\ UHTXLUHG HIIHFWLYHQHVV RI
GHIHQVHFRXQVHODQGFRQWUDYHQHVWKHVWDWXWRU\OLPLWDWLRQVRQ
RXU UHYLHZ RI VWDWH FRQYLFWLRQV WKURXJK KDEHDV FRUSXV
SURFHHGLQJV $FFRUGLQJO\ , UHVSHFWIXOO\ GLVVHQW IURP WKH
FRXUW¶V GHFLVLRQ WR UHYHUVH WKH GLVWULFW FRXUW¶V GHQLDO RI
0DVRQ¶VSHWLWLRQIRUDZULWRIKDEHDVFRUSXVDQGWRUHPDQG
IRUDQHYLGHQWLDU\KHDULQJRQIXUWKHUPLWLJDWRU\HYLGHQFHWKDW
GHIHQVHFRXQVHOFRXOGKDYHRIIHUHG
7KLV FRXUW KDV UHYHUVHG FDSLWDO VHQWHQFHV IRU IDLOXUH WR
SUHVHQWRUWRLQYHVWLJDWHPLWLJDWRU\HYLGHQFHRQQRIHZHUWKDQ
VHYHQRFFDVLRQV6HHHJ&ROHPDQY0LWFKHOO)G
WK&LU *UHHUY0LWFKHOO)G WK
&LU &RQHY%HOO)G WK&LU UHY¶G
6&W 6NDJJVY3DUNHU)G WK
&LU 5LFNPDQY%HOO)G WK&LU
$XVWLQY%HOO)G WK&LU *OHQQY7DWH
)G WK&LU 7KH6XSUHPH&RXUWLQWKH
FRXUVHRIUHYHUVLQJRQHVXFKGHFLVLRQRIWKLVFRXUWKDVPDGH
DEXQGDQWO\FOHDUWKHH[WUHPHO\KLJKVWDQGDUGWKDWPXVWEHPHW
IRU FRXQVHO¶V UHSUHVHQWDWLRQ LQ WKH SHQDOW\ SKDVH WR EH
FRQVLGHUHGFRQVWLWXWLRQDOO\LQDGHTXDWH7KH6XSUHPH&RXUW
LQ%HOOY&RQH6&W UHYHUVHGRQHLWHUDWLRQ
RIWKLVFRXUW¶VILQGLQJRILQDGHTXDF\RIFRXQVHOGXULQJWKH
SHQDOW\SKDVH,QRXU&RQHGHFLVLRQWKLVFRXUWREVHUYHGWKDW
FRXQVHO¶V SUHVHQWDWLRQ ZDV QRW RQO\ SRRU EXW D FRPSOHWH
DEGLFDWLRQRIWKHGHIHQVHDWWRUQH\¶VUROH³,WLVLQGLVSXWDEOH
1R 0DVRQY0LWFKHOO
FORWKLQJDQGVKRHVRI5RELQ0DVRQDQG&KULV DVKRH
SULQW H[SHUW WR LGHQWLI\ DQG FRPSDUH WKH SULQWV IRXQG LQ
5RELQ¶VFDUZLWKWKRVHPDGHE\WKHVKRHVRI0DVRQ5RELQ
DQG&KULV DPLWLJDWLRQLQYHVWLJDWLRQH[SHUWWRH[DPLQH
0DVRQ¶VEDFNJURXQGIRUSRWHQWLDOPLWLJDWLRQHYLGHQFHDQG
³DQLQGHSHQGHQWFRPSHWHQWIRUHQVLFPHQWDOKHDOWKH[SHUW´
WRKHOSGHIHQVHFRXQVHODWWKHVHQWHQFLQJSKDVH3HWLWLRQHU¶V
%UDW
,QWKLVFDVHWKH2KLR6XSUHPH&RXUWXQGHUVWRRG$NHWR
³UHTXLUH WKDW D FULPLQDO GHIHQGDQW EH SURYLGHG
>QRQSV\FKLDWULF@H[SHUWDVVLVWDQFHZKHQQHFHVVDU\WRSUHVHQW
DQDGHTXDWHGHIHQVH´0DVRQ1(GDW7KLVLV
FRQVLVWHQWZLWKWKHSULQFLSOHVXPPDUL]HGLQ$NHWKDW
0HDQLQJIXO DFFHVV WR MXVWLFH KDV EHHQ WKH FRQVLVWHQW
WKHPHRIWKHVHFDVHV:HUHFRJQL]HGORQJDJRWKDWPHUH
DFFHVVWRWKHFRXUWKRXVHGRRUVGRHVQRWE\LWVHOIDVVXUH
DSURSHUIXQFWLRQLQJRIWKHDGYHUVDU\SURFHVVDQGWKDWD
FULPLQDO WULDO LV IXQGDPHQWDOO\ XQIDLU LI WKH 6WDWH
SURFHHGVDJDLQVWDQLQGLJHQWGHIHQGDQWZLWKRXWPDNLQJ
FHUWDLQWKDWKHKDVDFFHVVWRWKHUDZPDWHULDOVLQWHJUDOWR
WKH EXLOGLQJ RI DQ HIIHFWLYH GHIHQVH 7KXV ZKLOH WKH
&RXUW KDV QRW KHOG WKDW D 6WDWH PXVW SXUFKDVH IRU WKH
LQGLJHQWGHIHQGDQWDOOWKHDVVLVWDQFHWKDWKLVZHDOWKLHU
FRXQWHUSDUW PLJKW EX\ LW KDV RIWHQ UHDIILUPHG WKDW
IXQGDPHQWDOIDLUQHVVHQWLWOHVLQGLJHQWGHIHQGDQWVWR³DQ
DGHTXDWHRSSRUWXQLW\WRSUHVHQWWKHLUFODLPVIDLUO\ZLWKLQ
WKHDGYHUVDU\V\VWHP´7RLPSOHPHQWWKLVSULQFLSOHZH
KDYH IRFXVHG RQ LGHQWLI\LQJ WKH ³EDVLF WRROV RI DQ
DGHTXDWHGHIHQVHRUDSSHDO´DQGZHKDYHUHTXLUHGWKDW
VXFKWRROVEHSURYLGHGWRWKRVHGHIHQGDQWVZKRFDQQRW
DIIRUGWRSD\IRUWKHP
$NH86DW LQWHUQDOFLWDWLRQVRPLWWHG 7KH2KLR
6XSUHPH&RXUWWKHQKHOGWKDWQRQSV\FKLDWULFH[SHUWDVVLVWDQFH
VKRXOGEHSURYLGHG³RQO\ZKHUHWKHWULDOFRXUWILQGVLQWKH
H[HUFLVHRIDVRXQGGLVFUHWLRQWKDWWKHGHIHQGDQWKDVPDGHD
SDUWLFXODUL]HGVKRZLQJ RIDUHDVRQDEOHSUREDELOLW\WKDWWKH
UHTXHVWHGH[SHUWZRXOGDLGLQKLVGHIHQVHDQG WKDWGHQLDO

-- 9 of 32 --

0DVRQY0LWFKHOO 1R
RIWKHUHTXHVWHGH[SHUWDVVLVWDQFHZRXOGUHVXOWLQDQXQIDLU
WULDO´,GDW
:HDUHQRWSHUVXDGHGWKDWWKH2KLR6XSUHPH&RXUWDSSOLHG
$NH LQ DQ REMHFWLYHO\ XQUHDVRQDEOH PDQQHU ,Q $NH WKH
6XSUHPH&RXUWZHLJKHGWKUHHIDFWRUVLQGHWHUPLQLQJZKHWKHU
DFFHVV WR FRPSHWHQW SV\FKLDWULF DVVLVWDQFH ZDV UHTXLUHG
³WKHSULYDWHLQWHUHVWWKDWZLOOEHDIIHFWHGE\WKHDFWLRQRI
WKH6WDWH´ ³WKHJRYHUQPHQWDOLQWHUHVWWKDWZLOOEHDIIHFWHG
LI WKH VDIHJXDUG LV WR EH SURYLGHG´ DQG ³WKH SUREDEOH
YDOXHRIWKHDGGLWLRQDORUVXEVWLWXWHSURFHGXUDOVDIHJXDUGVWKDW
DUHVRXJKWDQGWKHULVNRIDQHUURQHRXVGHSULYDWLRQRIWKH
DIIHFWHGLQWHUHVWLIWKRVHVDIHJXDUGVDUHQRWSURYLGHG´$NH
86DW,QWKLVFDVHWKH2KLR6XSUHPH&RXUWVLPSO\
VWDWHGWKDWWULDOFRXUWVKDYHGLVFUHWLRQLQHYDOXDWLQJWKHWKLUG
IDFWRU:HGRQRWEHOLHYHWKDWWKLVDSSOLFDWLRQRI$NHZDV
REMHFWLYHO\XQUHDVRQDEOH7KHUHIRUHERXQGDVZHDUHE\WKH
GLFWDWHV RI $('3$ ZH KROG WKDW 0DVRQ LV QRW HQWLWOHG WR
KDEHDVUHOLHIRQWKLVFODLP
6HQWHQFLQJ3KDVH
(YHQLIKLVVDQLW\ZHUHQRWDVLJQLILFDQWLVVXHGXULQJWKH
WULDODQLQGLJHQWGHIHQGDQWRQWULDOIRUKLVOLIHKDVWKHULJKWWR
SV\FKLDWULFRUSV\FKRORJLFDODVVLVWDQFHGXULQJWKHVHQWHQFLQJ
SKDVH³ZKHQWKH6WDWHSUHVHQWVSV\FKLDWULFHYLGHQFHRIWKH
GHIHQGDQW¶V IXWXUH GDQJHURXVQHVV´ $NH 86 DW
6NDJJVY3DUNHU)G WK&LU FHUW
GHQLHG6&W 7KH 6WDWHRI2KLRGLGQRW
SUHVHQWVXFKHYLGHQFHLQWKLVFDVH7KHUHIRUH0DVRQGLGQRW
KDYHDFOHDUO\HVWDEOLVKHGULJKWWRDQ\SV\FKLDWULFDVVLVWDQFH
DWVHQWHQFLQJ5HJDUGOHVVRIWKHIDFWWKDWKHZDVQRWHQWLWOHG
WRVXFKDVVLVWDQFH0DVRQDOOHJHVWKDWWKHSV\FKLDWULVWWKDWWKH
WULDOFRXUWGLGSURYLGHZDVLQDGHTXDWH+RZHYHUZHKDYH
SUHYLRXVO\ UHDG $NH QDUURZO\ KROGLQJ WKDW WKH LVVXH LV
ZKHWKHUDGHIHQGDQWKDG³DFFHVVWRDFRPSHWHQWSV\FKLDWULVW
LQSUHSDUDWLRQRIKLVGHIHQVH´6NDJJV)GDWQ
LQWHUQDOTXRWDWLRQPDUNVRPLWWHG DQGQRWZKHWKHUWKHH[SHUW
ZDVLQIDFWFRPSHWHQW,GDW:HGLGQRWHLQ6NDJJVWKDW
WKH IDLOXUH RI GHIHQVH FRXQVHO WR HQJDJH D FRPSHWHQW
1R 0DVRQY0LWFKHOO
WULDO FRXUW WKHQ JDYH WKH $OOHQ FKDUJH $OWKRXJK WKH
IRUHSHUVRQLQLWLDOO\GLVPLVVHGWKHSRVVLELOLW\RIDXQDQLPRXV
DJUHHPHQW ZH QRWH WKDW KLV VXEVHTXHQW GLVFXVVLRQ RI WKH
VXSSOHPHQWDOLQVWUXFWLRQZLWKWKHMXU\ZDVIROORZHGE\DOPRVW
IRXUPRUHKRXUVRIMXU\GHOLEHUDWLRQLQVWHDGRIKLVUHWXUQWR
WKHWULDOFRXUWZLWKDFRQILUPDWLRQRIWKHMXU\¶VLQDELOLW\WR
UHDFKDXQDQLPRXVGHFLVLRQ7KLVIDFWSHUVXDGHVXVWKDWWKH
WULDOFRXUWGLGQRWHUULQJLYLQJDQ$OOHQFKDUJH
:HDOVREHOLHYHWKDWWKHMXU\ZDVQRWFRHUFHGLQWRUHWXUQLQJ
D XQDQLPRXV GHDWK VHQWHQFH )LUVW WKH WULDO FRXUW¶V
LQVWUXFWLRQVGLGQRWUHTXLUHWKHMXU\WRUHMHFWWKHGHDWKSHQDOW\
XQDQLPRXVO\EHIRUHFRQVLGHULQJWKHOLIHVHQWHQFHV,QGHHG
WKH FRQWHQW RI WKH MXU\¶V QRWH ² ZKLFK LQGLFDWHG ODFN RI
XQDQLPLW\ ³RQ DQ\ RQH RI WKH VHQWHQFLQJ RSWLRQV´ -$ DW
²VWURQJO\VXJJHVWVWKDWWKHMXU\GLVFXVVHGWKHWKUHH
SRVVLEOHYHUGLFWVDWWKHVDPHWLPH0RUHRYHUWKHWULDOFRXUW
GLG QRW LQVWUXFW WKH MXU\ WR FRQWLQXH GHOLEHUDWLRQV EXW WR
GLVFXVVZKHWKHULWFRXOGGRVR)LQDOO\WKHMXU\GHOLEHUDWHG
IRUPRUHWKDQWKUHHKRXUVDIWHUWKHWULDOFRXUWJDYHWKH$OOHQ
FKDUJH7KH/RZHQILHOGMXU\GHOLEHUDWHGIRURQO\WKLUW\PRUH
PLQXWHV*LYHQWKHVHFLUFXPVWDQFHVZHFRQFOXGHWKDWWKH
WULDOFRXUW¶VVXSSOHPHQWDOLQVWUXFWLRQZDVQRWLPSHUPLVVLEO\
FRHUFLYH:HWKHUHIRUHGHQ\KDEHDVUHOLHIZLWKUHVSHFWWRWKLV
FODLP
,,,&21&/86,21
)RUWKHIRUHJRLQJUHDVRQVZH$)),50WKHGLVWULFWFRXUW¶V
GHQLDORI0DVRQ¶VSHWLWLRQIRUDZULWRIKDEHDVFRUSXVZLWK
UHVSHFW WR KLV FRQYLFWLRQ EXW 5(0$1' WKH FDVH IRU DQ
HYLGHQWLDU\ KHDULQJ UHJDUGLQJ WKH FODLP RI LQHIIHFWLYH
DVVLVWDQFH RI FRXQVHO DW VHQWHQFLQJ DQG IRU IXUWKHU
SURFHHGLQJVFRQVLVWHQWZLWKWKLVRSLQLRQ

-- 10 of 32 --

0DVRQY0LWFKHOO 1R
,Q 6WDWH Y +RZDUG 1(G 2KLR WKH 2KLR
6XSUHPH &RXUW VWURQJO\ FULWLFL]HG WKH ³WUDGLWLRQDO´ $OOHQ FKDUJH IRU
SODFLQJ VXFK HPSKDVLV RQ WKH MXU\¶V UHDFKLQJ D GHFLVLRQ ,G DW
$FFRUGLQJ WR WKH +RZDUG FRXUW D WUDGLWLRQDO $OOHQ FKDUJH HVVHQWLDOO\
SUHVVXUHV GLVVHQWLQJ MXURUV WR FKDQJH WKHLU PLQGV DQG WKXV ³VXEWO\ FKDQJHV
WKH UHTXLUHPHQW WKDW WKH MXU\ YHUGLFW EH XQDQLPRXV WR RQH PRUH FORVHO\
UHVHPEOLQJ PDMRULW\ UXOH´ ,G 7KH 2KLR 6XSUHPH &RXUW WKXV SURSRVHG
D VXSSOHPHQWDO LQVWUXFWLRQ WKDW LW EHOLHYHG ZRXOG UHVXOW LQ WKH ³HYHQ
KDQGHG WUHDWPHQW RI DOO MXURUV´ ,G DW 0XFK RI WKH VXSSOHPHQWDO
LQVWUXFWLRQ LQ WKLV FDVH IROORZV WKH SURSRVHG +RZDUG FKDUJH YHUEDWLP
,QGHHG WKH WULDO FRXUW VFUXSXORXVO\ PDLQWDLQHG LWV QHXWUDOLW\ E\ DGGUHVVLQJ
WKH MXURUV DV ³MXURUV´ -$ DW UDWKHU WKDQ GLVWLQJXLVKLQJ EHWZHHQ
³>M@XURUV IRU DFTXLWWDO´ DQG ³MXURUV IRU FRQYLFWLRQ´ DV WKH +RZDUG FRXUW
KDG GRQH +RZDUG 1(G DW
0DVRQ1(GDW7KH2KLR6XSUHPH&RXUWWKHQ
UHLWHUDWHG LWV DSSURYDO RI ³XVLQJ VXSSOHPHQWDO LQVWUXFWLRQV
XUJLQJ MXURUV WR FRQWLQXH GHOLEHUDWLRQV WR WU\ WR UHDFK D
XQDQLPRXVSHQDOW\YHUGLFW´DQGVSHFLILFDOO\VWDWHGWKDWVXFK
LQVWUXFWLRQV LQ D GHDWK SHQDOW\ FDVH ZRXOG QRW YLRODWH GXH
SURFHVV ,G FLWLQJ /RZHQILHOG 1RWLQJ WKDW /RZHQILHOG
³H[SUHVVO\DSSURYHGWKHXVHRI$OOHQFKDUJHVLQFDSLWDOFDVHV´
WKHGLVWULFWFRXUWFRQFOXGHGWKDWWKHWULDOFRXUWGLGQRWHUULQ
JLYLQJ³DVLQJOH$OOHQFKDUJH´0DVRQ)6XSSGDW
8QGHU $('3$ WKH VFRSH RI RXU UHYLHZ LV OLPLWHG WR
GHWHUPLQLQJZKHWKHUDVWDWHFRXUW¶VGHFLVLRQVDUH³FRQWUDU\WR
RULQYROYHGDQXQUHDVRQDEOHDSSOLFDWLRQRIFOHDUO\HVWDEOLVKHG
)HGHUDOODZ´86&† G %HFDXVHYLRODWLRQVRI
VWDWHODZDUHQRWZLWKLQRXUSXUYLHZZHZLOOUHYLHZ0DVRQ¶V
$OOHQ FODLP RQO\ WR GHWHUPLQH ZKHWKHU WKH WULDO FRXUW¶V
VXSSOHPHQWDO LQVWUXFWLRQ ZDV FRHUFLYH ³LQ LWV FRQWH[W DQG
XQGHUDOOWKHFLUFXPVWDQFHV´-HQNLQV86DW:H
KROG WKDW WKH $OOHQ FKDUJH ZDV QRW VR FRHUFLYH DV WR GHQ\
0DVRQKLVGXHSURFHVVULJKWV
$VDSUHOLPLQDU\PDWWHUZHDJUHHZLWKWKH2KLR6XSUHPH
&RXUW WKDW WKH MXU\ ZDV QRW ³LUUHFRQFLODEO\ GHDGORFNHG´
0DVRQ1(GDW7KHMXURUVLQWKLVFDVHVLPSO\
VWDWHGWKDWWKH\ZHUH³XQDEOHWRUHDFKDXQDQLPRXVGHFLVLRQ
RQDQ\RQHRIWKHVHQWHQFLQJRSWLRQV´-$DWDQGWKH
1R 0DVRQY0LWFKHOO
7KH 6WDWH RI 2KLR FRQWHQGV WKDW YDULRXV VXESDUWV RI 0DVRQ¶V
LQHIIHFWLYH DVVLVWDQFH FODLP ZHUH QRW UDLVHG RQ GLUHFW DSSHDO DQG WKXV ZHUH
SURFHGXUDOO\ GHIDXOWHG 5HVSRQGHQW¶V %U DW 0DVRQ UHSOLHV WKDW KH
UDLVHG WKHVH LVVXHV WR WKH 2KLR 6XSUHPH &RXUW LQ KLV EULHI )LQDO 5HSO\
%U DW VHH DOVR -$ DW FRQWLQXDQFH H[SHUW
DVVLVWDQFH VXSSUHVVLRQ PRWLRQ MXU\ VHOHFWLRQ 7KH
SUREOHP DULVHV EHFDXVH 0DVRQ ILOHG KLV SHWLWLRQ IRU SRVWFRQYLFWLRQ UHOLHI
ZKLOH KLV GLUHFW DSSHDO ZDV SHQGLQJ %HFDXVH WKH WULDO FRXUW IRXQG
0DVRQ¶V LQHIIHFWLYH DVVLVWDQFH FODLPV WR EH EDUUHG E\ UHV MXGLFDWD EHIRUH
WKH 2KLR FRXUWV KDG GHFLGHG KLV GLUHFW DSSHDO DQG EHFDXVH WKH 2KLR
6XSUHPH &RXUW HYHQWXDOO\ DGGUHVVHG WKH PHULWV RI 0DVRQ¶V LQHIIHFWLYH
DVVLVWDQFH FODLPV ZH GR QRW ILQG SURFHGXUDO GHIDXOW DQG ZLOO UHYLHZ
ZKHWKHU WKH VWDWH FRXUWV¶ DGMXGLFDWLRQ ZDV FRQWUDU\ WR RU LQYROYHG DQ
XQUHDVRQDEOH DSSOLFDWLRQ RI 6WULFNODQG DQG LWV SURJHQ\
SV\FKLDWULVW ZRXOG EH UHOHYDQW LQ GHWHUPLQLQJ ZKHWKHU D
GHIHQGDQWUHFHLYHGLQHIIHFWLYHDVVLVWDQFHRIFRXQVHO,GDW
Q:LWKUHVSHFWWR0DVRQ¶V$NHFODLPKRZHYHUZH
FRQFOXGH WKDW 6XSUHPH &RXUW SUHFHGHQW KDV QRW FOHDUO\
HVWDEOLVKHGDGHIHQGDQW¶VULJKWWRPRUHWKDQPHUHDFFHVVWR
FRPSHWHQWSV\FKLDWULFDVVLVWDQFH
%,QHIIHFWLYH$VVLVWDQFHRI&RXQVHO
0DVRQDUJXHVWKDWWKH2KLR6XSUHPH&RXUWXQUHDVRQDEO\
DSSOLHGFOHDUO\HVWDEOLVKHGIHGHUDOODZLQFRQFOXGLQJWKDWKH
ZDV QRW GHSULYHG RI KLV FRQVWLWXWLRQDO ULJKW WR HIIHFWLYH
DVVLVWDQFH RI FRXQVHO 7R HVWDEOLVK WKDW FRXQVHO DIIRUGHG
LQHIIHFWLYH DVVLVWDQFH D SHWLWLRQHU PXVW VKRZ WKDW KLV
DWWRUQH\¶V SHUIRUPDQFH ZDV GHILFLHQW IDOOLQJ EHORZ DQ
REMHFWLYHVWDQGDUGRIUHDVRQDEOHQHVVDQGWKDWVXFKGHILFLHQF\
SUHMXGLFHGKLVGHIHQVH6WULFNODQGY:DVKLQJWRQ86
7KHREMHFWLYHVWDQGDUGRIUHDVRQDEOHQHVVLV
DKLJKO\GHIHUHQWLDORQHDQGLQFOXGHV³DVWURQJSUHVXPSWLRQ
WKDW FRXQVHO¶V FRQGXFW IDOOV ZLWKLQ WKH ZLGH UDQJH RI
UHDVRQDEOHSURIHVVLRQDODVVLVWDQFH´,GDW8QLWHG6WDWHV
Y 3LHUFH )G WK &LU SODFLQJ WKH
EXUGHQ RQ WKH GHIHQGDQW WR GHPRQVWUDWH D FRQVWLWXWLRQDO
YLRODWLRQ FHUWGHQLHG86 7RVDWLVI\WKH
SUHMXGLFHUHTXLUHPHQWDGHIHQGDQW³PXVWVKRZWKDWWKHUHLV
DUHDVRQDEOHSUREDELOLW\WKDWEXWIRUFRXQVHO¶VXQSURIHVVLRQDO

-- 11 of 32 --

0DVRQY0LWFKHOO 1R
HUURUVWKHUHVXOWRIWKHSURFHHGLQJZRXOGKDYHEHHQGLIIHUHQW
$ UHDVRQDEOH SUREDELOLW\ LV D SUREDELOLW\ VXIILFLHQW WR
XQGHUPLQHFRQILGHQFHLQWKHRXWFRPH´:LOOLDPV86
DW TXRWLQJ6WULFNODQG86DW ³7KHHVVHQFHRI
DQ LQHIIHFWLYHDVVLVWDQFH FODLP LV WKDW FRXQVHO¶V
XQSURIHVVLRQDOHUURUVVRXSVHWWKHDGYHUVDULDOEDODQFHEHWZHHQ
GHIHQVHDQGSURVHFXWLRQWKDWWKHWULDOZDVUHQGHUHGXQIDLUDQG
WKHYHUGLFWUHQGHUHGVXVSHFW´.LPPHOPDQY0RUULVRQ
86
7ULDO3KDVH
0DVRQ FODLPV WKDW KLV DWWRUQH\V SURYLGHG LQHIIHFWLYH
DVVLVWDQFH EHIRUH WULDO LQ WKH IROORZLQJ DUHDV FRXQVHO
IDLOHGWRREWDLQFHUWDLQH[SHUWDQGLQYHVWLJDWLYHDVVLVWDQFH
FRXQVHO IDLOHG WR REWDLQ WKH VXSSUHVVLRQ RI 0DVRQ¶V
VWDWHPHQWV WR WKH SROLFH GXULQJ WKH )HEUXDU\ DQG
LQWHUYLHZV FRXQVHOIDLOHGWRREWDLQDFRQWLQXDQFHDQG
OHDGFRXQVHOZDVDEVHQWGXULQJSDUWVRIMXU\VHOHFWLRQ+H
DOVRFODLPVWKDWKHUHFHLYHGLQHIIHFWLYHDVVLVWDQFHGXULQJWKH
WULDOGXHWRGHIHQVHFRXQVHO¶VIDLOXUHWRSUHSDUHDGHTXDWHO\
6SHFLILFDOO\KHDUJXHVWKDWGHIHQVHFRXQVHO ³IDLO>HG@WR
SURYLGHDQ\JXLGDQFHRUGLUHFWLRQWRWKHMXU\LQ>KLV@RSHQLQJ
VWDWHPHQW´DQG³IDLO>HG@WRREMHFWWRLQIODPPDWRU\SRUWLRQVRI
WKH VWDWH¶V RSHQLQJ VWDWHPHQW´ ³IDLOHG WR GHYHORS DQG
FRPPXQLFDWH D WKHRU\ RI GHIHQVH DQG KRZ VXFK D WKHRU\
UHODWHGWRPLWLJDWLRQ´ ³IDLOHGWRHIIHFWLYHO\OLWLJDWHWKH
VWDWH¶VIDLOXUHWRUHYHDOH[FXOSDWRU\HYLGHQFH´ EHKDYHGLQ
DQRYHUO\DJJUHVVLYHPDQQHUDQG IDLOHGWRREMHFWWRWKH
SURVHFXWRU¶VEODWDQWPLVFRQGXFW3HWLWLRQHU¶V%UDW
:HILUVWREVHUYHWKDW0DVRQ¶VDWWRUQH\VKDGFORVHWRHLJKW
PRQWKVWRSUHSDUHIRUWKHWULDOGXULQJZKLFKWLPHWKH\ILOHG
PRUHWKDQILIW\SUHWULDOPRWLRQVDQGDUJXHGDWVHYHUDOSUHWULDO
KHDULQJV0DVRQ1(GDW0DVRQ¶VLQHIIHFWLYH
DVVLVWDQFHFODLPWKHUHIRUHUHODWHVWRGHIHQVHFRXQVHO¶VIDLOXUH
WR DFKLHYH VXEVWDQWLYH UHVXOWV UDWKHU WKDQ D IDLOXUH WR ILOH
SURFHGXUDOPRWLRQV&IHJ2OGHQY8QLWHG6WDWHV
)G WK &LU +RZHYHU 6WULFNODQG¶V
REMHFWLYHVWDQGDUGRIUHDVRQDEOHQHVVGRHVQRWUHTXLUHODZ\HUV
1R 0DVRQY0LWFKHOO
0U0F*XLUH <HV
7KH&RXUW 7DNHWKHMXU\SOHDVH
-$ DW 'HIHQVH FRXQVHO REMHFWHG WR WKH
VXSSOHPHQWDOLQVWUXFWLRQ7KHMXU\FRQWLQXHGWRGHOLEHUDWH
XQWLO SP ZKHQ LW EURNH IRU WKH HYHQLQJ 7KH MXU\
UHWXUQHGWRLWVGHOLEHUDWLRQVDWDPRQ:HGQHVGD\-XQH
$IWHU ILIWHHQ PLQXWHV WKH MXU\ UHWXUQHG D
XQDQLPRXV UHFRPPHQGDWLRQ WKDW 0DVRQ EH VHQWHQFHG WR
GHDWK 7KHWULDOFRXUWWKHQSROOHGWKHMXU\DQGHDFKMXURU
LQGLFDWHGDJUHHPHQWZLWKWKDWVHQWHQFH
0DVRQDUJXHVWKDWWKHWULDOFRXUW¶V$OOHQFKDUJHIRUFHGD
GHDGORFNHGMXU\WRFRQWLQXHGHOLEHUDWLRQLQYLRODWLRQRIKLV
FRQVWLWXWLRQDOULJKWVDQGFRQWUDU\WR2KLRODZ7KH6WDWHRI
2KLRFODLPVWKDWWKH$OOHQFKDUJHZDVQRWXQGXO\FRHUFLYH
)XUWKHUPRUHLWFRQWHQGVWKDW2KLRODZGLGQRWSUHFOXGHWKH
VXSSOHPHQWDOLQVWUXFWLRQDQGWKDWDQ\YLRODWLRQRIVWDWHODZ
FRXOGQRWSURSHUO\EHUDLVHGLQDKDEHDVSHWLWLRQ
,QHYDOXDWLQJWKH$OOHQFKDUJHWKH2KLR 6XSUHPH&RXUW
ILUVWWXUQHGWR6WDWHY6SULQJHU1(G 2KLR
ZKLFK UHTXLUHV D WULDO FRXUW WR LPSRVH DQ DSSURSULDWH OLIH
VHQWHQFHLQWKHHYHQWRIDQ³LUUHFRQFLODEO\GHDGORFNHG´MXU\
,GDW7KHVWDWHVXSUHPHFRXUWH[SODLQHG
1RH[DFWOLQHFDQEHGUDZQDVWRKRZORQJDMXU\PXVW
GHOLEHUDWHLQWKHSHQDOW\SKDVHEHIRUHDWULDOFRXUWVKRXOG
LQVWUXFWWKHMXU\WROLPLWLWVHOIWRWKHOLIHVHQWHQFHRSWLRQV
RUWDNHWKHFDVHDZD\IURPWKHMXU\DVGRQHLQ6SULQJHU
(DFK FDVH PXVW EH GHFLGHG EDVHG XSRQ WKH SDUWLFXODU
FLUFXPVWDQFHV+HUHDIWHURQO\IRXUDQGRQHKDOIKRXUV
RI GHOLEHUDWLRQV WKH WULDO FRXUW DFWHG DSSURSULDWHO\ E\
JLYLQJDPRGLILHG+RZDUGFKDUJH>LWVHOIDPRGLILHG$OOHQ
FKDUJH@7KHFLUFXPVWDQFHVVKRZWKDWWKHMXU\ZDVQRW
LUUHFRQFLODEO\ GHDGORFNHG DQG WKH PRGLILHG +RZDUG
FKDUJHGLGQRWFRHUFHDGHDWKYHUGLFW

-- 12 of 32 --

0DVRQY0LWFKHOO 1R
<RX VKDOO UHFRPPHQG WKH VHQWHQFH RI GHDWK LI \RX
XQDQLPRXVO\DOOWZHOYHMXURUVILQGE\SURRIEH\RQGD
UHDVRQDEOH GRXEW WKDW WKH DJJUDYDWLQJ FLUFXPVWDQFHV
RXWZHLJKWKHPLWLJDWLQJIDFWRUV
,I \RX GR QRW VR ILQG \RX VKDOO XQDQLPRXVO\ DOO
WZHOYH UHFRPPHQG HLWKHU D OLIH VHQWHQFH ZLWK SDUROH
HOLJLELOLW\DIWHUVHUYLQJWZHQW\\HDUVRILPSULVRQPHQWRU
DOLIHVHQWHQFHZLWKSDUROHHOLJLELOLW\DIWHUVHUYLQJWKLUW\
\HDUVRILPSULVRQPHQW
-$DW7KHWULDOFRXUWWKHQUHDGWKHWKUHHYHUGLFWIRUPV
WKDWWKHMXU\ZRXOGFRQVLGHUZLWKWKHH[SUHVVLQVWUXFWLRQWKDW
WKHMXU\QRWDWWDFKVLJQLILFDQFHWRWKHRUGHULQZKLFKWKHIRUPV
ZHUH UHDG 7KH ILUVW YHUGLFW IRUP UHFRPPHQGHG D GHDWK
VHQWHQFHWKHVHFRQGUHFRPPHQGHGDOLIHVHQWHQFHZLWKSDUROH
HOLJLELOLW\DIWHUWZHQW\\HDUVDQGWKHWKLUGUHFRPPHQGHGDOLIH
VHQWHQFHZLWKSDUROHHOLJLELOLW\DIWHUWKLUW\\HDUV7KHMXU\
EHJDQLWVGHOLEHUDWLRQLQWKHSHQDOW\SKDVHRIWKHWULDODW
SPRQ0RQGD\-XQHDQGEURNHIRUWKHHYHQLQJDW
SP7KHMXU\UHWXUQHGWRWKHFRXUWKRXVHWRFRQWLQXH
GHOLEHUDWLRQVDWDPRQ7XHVGD\-XQH$IWHU
DOXQFKEUHDNIURPQRRQWRSPWKHMXU\LQIRUPHG
WKH WULDO FRXUW WKDW LW ZDV ³XQDEOH WR UHDFK D XQDQLPRXV
GHFLVLRQRQDQ\RQHRIWKHVHQWHQFLQJRSWLRQV´-$DW
$IWHUJLYLQJWKHMXU\DVWDQGDUG$OOHQFKDUJHWKHWULDOFRXUW
HQJDJHGLQWKHIROORZLQJFROORTX\ZLWKWKHMXU\IRUHPDQ
7KH&RXUW ,VWKHUHDSRVVLELOLW\0U0F*XLUHWKDW
DIWHU DQ DGGLWLRQDO SHULRG RI WLPH \RX
PD\ UHDFK DQ DJUHHPHQW" $QG WKLV
LQVWUXFWLRQ WKDW , KDYH JLYHQ \RX DQG
FRQVLGHULQJ WKDW ZLWK WKH UHVW RI WKH
LQVWUXFWLRQV"
0U0F*XLUH 1R
7KH&RXUW :RXOG \RX ZLVK WR UHWXUQ WR WKHMXU\
URRPDQGGLVFXVVLWWKLVLQVWUXFWLRQZLWK
WKHMXURUVDQGWKHQUHWXUQDQGUHVSRQGWR
WKDWTXHVWLRQ"
1R 0DVRQY0LWFKHOO
WREHSHUIHFW%HFDXVHGHIHQVHFRXQVHODGYRFDWHGZLWKYLJRU
RQ 0DVRQ¶V EHKDOI ZH KROG WKDW 0DVRQ GLG QRW UHFHLYH
LQHIIHFWLYH DVVLVWDQFH ZLWK UHVSHFW WR WKH ILOLQJ RI YDULRXV
SURFHGXUDOPRWLRQV$VIRUWKHIDFWWKDW:LQNILHOGZDVDEVHQW
GXULQJSDUWVRIMXU\VHOHFWLRQZHDJUHHZLWKWKHGLVWULFWFRXUW
WKDW WKLV DUJXPHQW LV QRW FRPSHOOLQJ EHFDXVH 0DVRQ
FRQVHQWHG WR WKH DEVHQFHV ³DQG FRFRXQVHO FRQGXFWHG DQ
HIIHFWLYHYRLUGLUH´GXULQJWKDWWLPH0DVRQ)6XSSG
DW
0DVRQ¶VDUJXPHQWWKDWGHIHQVHFRXQVHOIDLOHGWRSUHSDUH
DGHTXDWHO\IRUWKHWULDOLVVRPHZKDWVWURQJHUEXWWKHUHFRUG
GRHV QRW FRQWDLQ D JUHDW GHDO RI LQIRUPDWLRQ RQ WKLV LVVXH
/HDGFRXQVHO:LQNILHOGDSSDUHQWO\DFNQRZOHGJHGDVODWHDV
D ZHHN RU WZR EHIRUH WKH WULDO WKDW KH KDG QRW SHUVRQDOO\
LQWHUYLHZHGDQ\RIWKHZLWQHVVHVIRUHLWKHUSKDVHRIWKHWULDO
-$DW +HDG$IIDWˆ +HDOVRGHFODUHGOHVVWKDQD
ZHHNEHIRUHWKHWULDOVWDUWHGWKDW³LWZRXOGEHJUHDWHUURUIRU
>KLP@WRFRQWLQXH´-$DWEHFDXVHKHZDVQRWSUHSDUHG
WRJRIRUZDUGDQG³>FRXOGQRW@GRVRLQJRRGFRQVFLHQFHDQG
XQGHUWKHSURIHVVLRQDOVWDQGDUGVRIWKHFRGHRIUHVSRQVLELOLW\
WR>KLV@FOLHQW´-$DW&RFRXQVHOVWDWHGWKDWKHKDG
SUHSDUHGKLVSDUWRIWKHFDVHEXWWKDWKHFRXOGQRWJRIRUZDUG
ZLWKRXW:LQNILHOG$WWKLVSRLQWWKHWULDOFRXUWGLVWUXVWLQJ
GHIHQVH FRXQVHO¶V PRWLYHV DVNHG :LQNILHOG ZKHWKHU KH
ZDQWHG WR ZLWKGUDZ :KHQ :LQNILHOG DQVZHUHG WKDW KH
³G>LG@Q¶W FDUH WR ZLWKGUDZ´ WKH WULDO FRXUW VWDWHG LWV
ZLOOLQJQHVVWRUHPRYH:LQNILHOGDQGLPSRVHVDQFWLRQVE\QRW
SD\LQJDQ\IHHV-$DW$IWHUDWKLUW\PLQXWHFRQIHUHQFH
ZLWK 0DVRQ DQG FRFRXQVHO :LQNILHOG LQIRUPHG WKH WULDO
FRXUWWKDWKHZRXOGVWD\RQWKHFDVH7UDW
$OWKRXJKZHDFNQRZOHGJHWKDWDWWRUQH\V¶FRQFHUQVDERXW
FRPSHQVDWLRQ PD\ DGYHUVHO\ DIIHFW WKHLU UHSUHVHQWDWLRQ RI
FOLHQWVZHDUHQRWSHUVXDGHGWKDW:LQNILHOG¶VSHUIRUPDQFHLQ
WKLVFDVHZDVVRGHILFLHQWDVWREHREMHFWLYHO\XQUHDVRQDEOH
&I 5LFNPDQ Y %HOO )G WK &LU
KROGLQJ WKDW GHIHQVH FRXQVHO ZKRVH SUHSDUDWLRQ IRU WULDO
FRQVLVWHG VROHO\ RI VL[WHHQ KRXUV RI LQWHUYLHZV ZLWK WKH
GHIHQGDQW³WRWDO>O\@IDLO>HG@WRDFWLYHO\DGYRFDWHKLVFOLHQW¶V

-- 13 of 32 --

0DVRQY0LWFKHOO 1R
FDXVH´ *URVHFORVHY%HOO)G WK&LU
GHVFULELQJ GHIHQVH FRXQVHO¶V ³IDLOXUH WR KDYH DQ\
GHIHQVH WKHRU\ ZKDWVRHYHU´ DQG ³IDLOXUH WR FRQGXFW DQ\
PHDQLQJIXODGYHUVDULDOFKDOOHQJH´DV³HVSHFLDOO\DSSDOOLQJ´
FHUWGHQLHG86 )LUVWGHVSLWH:LQNILHOG¶V
SURWHVWDWLRQV WKH WRWDOLW\ RI WKH FLUFXPVWDQFHV GRHV QRW
VXJJHVW WKDW GHIHQVH FRXQVHO ZDV XQSUHSDUHG IRU WKH WULDO
SKDVH8QOLNHWKH³FRPSOHWHODFNRISUHWULDOSUHSDUDWLRQ´WKDW
WKH.LPPHOPDQ&RXUWGHFULHG86DW:LQNILHOG
DQGFRFRXQVHOILOHGQXPHURXVSUHWULDOPRWLRQVDQGDUJXHG
VHYHUDOSUHWULDOKHDULQJV$OWKRXJKDWWRUQH\VFDQDOZD\VGR
PRUH LQ SUHSDUDWLRQ IRU D WULDO ZH FDQQRW FRQFOXGH WKDW
0DVRQ¶VDWWRUQH\VGLGQRWSUHSDUHHQRXJK
6HFRQGZHDUHQRWSHUVXDGHGWKDWWKHDFWVDQGRPLVVLRQVRI
GHIHQVHFRXQVHOWKDW0DVRQLGHQWLILHVDVHYLQFLQJDODFNRI
UHDVRQDEOHSURIHVVLRQDOMXGJPHQWLQIDFWYLRODWHGSUHYDLOLQJ
SURIHVVLRQDOQRUPV:HKDYHUHDGWKHRSHQLQJVWDWHPHQWVRI
ERWK WKH SURVHFXWLRQ DQG WKH GHIHQVH DQG GLVDJUHH ZLWK
0DVRQ¶VFKDUDFWHUL]DWLRQVRIWKHP:HFDQQRWLGHQWLI\DQ\
³LQIODPPDWRU\ SRUWLRQV´ RI WKH SURVHFXWRU¶V VWDWHPHQW
3HWLWLRQHU¶V%UDWFRQYHUVHO\ZHFRQFOXGHWKDWGHIHQVH
FRXQVHO SURYLGHG DGHTXDWH JXLGDQFH WR WKH MXU\ E\ FOHDUO\
DUWLFXODWLQJWKHWKHRU\WKDW&KULVUDWKHUWKDQ0DVRQVKRXOGEH
RQWULDOIRU5RELQ¶VPXUGHU0DVRQ¶V%UDG\GHULYHGFODLPRI
LQHIIHFWLYHDVVLVWDQFHLVVLPSO\WRRVXPPDU\IRUXVWRUHYLHZ
$V IRU WKH GHSLFWLRQ RI GHIHQVH FRXQVHO DV DEXVLYH DQG
DUJXPHQWDWLYH ZH UHFRJQL]H WKDW WKH UHFRUG UHYHDOV
FRQVLGHUDEOHDQLPRVLW\EHWZHHQWKHSURVHFXWRUDQGGHIHQVH
FRXQVHOEXWIDLOWRVHHKRZWKHODWWHU¶VDGYRFDF\SUHMXGLFHG
0DVRQ¶V GHIHQVH )LQDOO\ DQ\ IDLOXUH WR REMHFW WR
SURVHFXWRULDO PLVFRQGXFW GLG QRW FRQVWLWXWH LQHIIHFWLYH
DVVLVWDQFHRIFRXQVHOEHFDXVHDVGLVFXVVHGEHORZZHGRQRW
EHOLHYHWKDWWKHSURVHFXWRUDFWHGLPSURSHUO\:HWKHUHIRUH
GHQ\KDEHDVUHOLHIZLWKUHVSHFWWRWKLVFODLP
6HQWHQFLQJ3KDVH
8QGHUWKH(LJKWK$PHQGPHQWWKHMXU\LQDFDSLWDOFDVH
PD\ ³QRW EH SUHFOXGHG IURP FRQVLGHULQJ DV D PLWLJDWLQJ
1R 0DVRQY0LWFKHOO
,Q /RZHQILHOG WKH MXU\ UHTXHVWHG DGGLWLRQDO LQVWUXFWLRQV DIWHU LW
EHFDPH XQDEOH WR UHDFK D GHFLVLRQ RQ WKH VHFRQG GD\ RI GHOLEHUDWLRQV
86 DW 7KH WULDO FRXUW WKHQ DVNHG WKH LQGLYLGXDO MXURUV WR DQVZHU
LQ ZULWLQJ ZKHWKHU ³IXUWKHU GHOLEHUDWLRQV ZRXOG EH KHOSIXO LQ REWDLQLQJ D
YHUGLFW´ ,G (LJKW MXURUV UHVSRQGHG LQ WKH DIILUPDWLYH ,G $IWHU GHQ\LQJ
D GHIHQVH PRWLRQ IRU D PLVWULDO WKH WULDO FRXUW GLUHFWHG WKH MXU\ WR UHWXUQ
WR WKH FRXUWURRP IRU IXUWKHU LQVWUXFWLRQV ,G $W WKLV WLPH WKH MXU\ JDYH
WKH WULDO FRXUW D QHZ QRWH WKDW VWDWHG WKDW VRPH RI WKH MXURUV KDG
PLVXQGHUVWRRG KLV RULJLQDO TXHVWLRQ ,G 7KH WULDO FRXUW SROOHG WKH
LQGLYLGXDO MXURUV DJDLQ EXW DVNHG ZKHWKHU WKH\ IHOW WKDW ³DQ\ IXUWKHU
GHOLEHUDWLRQV ZLOO HQDEOH \RX WR DUULYH DW D YHUGLFW"´ ,G (OHYHQ MXURUV
UHVSRQGHG LQ WKH DIILUPDWLYH ,G DW 7KH WULDO FRXUW WKHQ JDYH WKH MXU\
DQ $OOHQ FKDUJH ,G 7KLUW\ PLQXWHV ODWHU WKH MXU\ UHWXUQHG D VHQWHQFH RI
GHDWK ,G 7KH 6XSUHPH &RXUW KHOG WKDW WKH SROOLQJ RI WKH MXU\ DQG WKH
VXSSOHPHQWDO LQVWUXFWLRQ ZHUH QRW FRHUFLYH DV WR YLRODWH WKH SHWLWLRQHU¶V
FRQVWLWXWLRQDO ULJKWV ,G DW
FRQVLGHUDWLRQRIUHVLGXDOGRXEWGXULQJWKHVHQWHQFLQJSKDVH
,GDW Q SOXUDOLW\RSLQLRQ LGDW 2¶&RQQRU
-FRQFXUULQJLQWKHMXGJPHQW VHHDOVR3HQU\Y/\QDXJK
86 %HFDXVH6XSUHPH&RXUWSUHFHGHQW
FOHDUO\ HVWDEOLVKHV WKDW 0DVRQ FDQQRW VXSSRUW KLV UHVLGXDO
GRXEWDUJXPHQWZHGHQ\KDEHDVUHOLHIZLWKUHVSHFWWRWKLV
FODLP
)DLOXUHWR5HPRYHWKH'HDWK6HQWHQFHIURPWKH-XU\
,Q$OOHQY8QLWHG6WDWHV86 WKH6XSUHPH
&RXUW KHOG WKDW WKH WULDO FRXUW GLG QRW HUU LQ JLYLQJ D
VXSSOHPHQWDO LQVWUXFWLRQ WR D GHDGORFNHG MXU\ ,G DW
7KHFRQVWLWXWLRQDOLW\RIDQ$OOHQFKDUJHVRPHWLPHVUHIHUUHG
WR DV D ³G\QDPLWH´ FKDUJH WXUQV RQ ZKHWKHU WKH FKDUJH LQ
TXHVWLRQZDV³FRHUFLYH´/RZHQILHOGY3KHOSV86
$Q $OOHQ FKDUJH PXVW EH UHYLHZHG ³LQ LWV
FRQWH[WDQGXQGHUDOOWKHFLUFXPVWDQFHV´,GDW TXRWLQJ
-HQNLQV Y 8QLWHG 6WDWHV 86 SHU
FXULDP 0DVRQDUJXHVWKDWWKHWULDOFRXUW¶VVXSSOHPHQWDO
LQVWUXFWLRQWRWKHMXU\GXULQJLWVGHOLEHUDWLRQVDWWKHSHQDOW\
SKDVHRIWKHWULDOZDVDQLPSURSHU$OOHQFKDUJH
7KHWULDOFRXUWJDYHWKHIROORZLQJSUHOLPLQDU\LQVWUXFWLRQWR
WKHMXU\

-- 14 of 32 --

0DVRQY0LWFKHOO 1R
³PLWLJDWLQJFLUFXPVWDQFHV´DV³FLUFXPVWDQFHVQRWFRQVWLWXWLQJ
MXVWLILFDWLRQRUH[FXVHIRUWKHRIIHQVHLQTXHVWLRQEXWZKLFK
LQIDLUQHVVDQGPHUF\PD\EHFRQVLGHUHGDVH[WHQXDWLQJRU
UHGXFLQJWKHGHJUHHRIPRUDOFXOSDELOLW\RUSXQLVKPHQW´LG
DW LQWHUQDO TXRWDWLRQ PDUNV RPLWWHG WKH TXHVWLRQ
EHIRUHWKH6XSUHPH&RXUWZDVZKHWKHUDVHQWHQFHRIGHDWKIRU
WKH FULPH RI UDSH ZDV FUXHO DQG XQXVXDO SXQLVKPHQW
SURKLELWHGE\WKH(LJKWK$PHQGPHQW,GDW,QGHHGWKH
WULDOFRXUWJDYHWKHLQVWUXFWLRQSXUVXDQWWRVWDWHVWDWXWH,GDW
&RNHUWKHUHIRUHSURYLGHVQRVXSSRUWIRUWKHGXHSURFHVV
FODLPWKDW0DVRQPXVWVXFFHVVIXOO\PDNHIRUXVWRUHYLHZD
FKDOOHQJHGMXU\LQVWUXFWLRQ
0DVRQ DOVR FRQWHQGV WKDW ³WKH MXU\¶V GLVFUHWLRQ ZDV QRW
VXIILFLHQWO\ JXLGHG XQGHU *UHJJ Y *HRUJLD 86
´3HWLWLRQHU¶V%UDW*UHJJKRZHYHUVLPSO\
UHFRPPHQGHGWKDWMXULHVLQGHDWKSHQDOW\FDVHVEH³DSSULVHG
RIWKHLQIRUPDWLRQUHOHYDQWWRWKHLPSRVLWLRQRI>WKHGHDWK@
VHQWHQFHDQGSURYLGHGZLWKVWDQGDUGVWRJXLGHLWVXVHRIWKH
LQIRUPDWLRQ´ *UHJJ 86 DW 7KH WULDO FRXUW
SURYLGHGVXFKJXLGDQFHLQWKLVFDVHLWLQVWUXFWHGWKHMXU\RI
LWVGXW\WRZHLJKDJJUDYDWLQJFLUFXPVWDQFHVDJDLQVWPLWLJDWLQJ
IDFWRUVWKHODWWHU³LQFOXGLQJEXWQRWOLPLWHGWRWKHQDWXUHDQG
FLUFXPVWDQFHVRIWKHRIIHQVHDQGWKHKLVWRU\FKDUDFWHUDQG
EDFNJURXQGRIWKH'HIHQGDQWDQGDQ\RWKHUIDFWRUVWKDWDUH
UHOHYDQW WR WKH LVVXH RI ZKHWKHU WKH 'HIHQGDQW VKRXOG EH
VHQWHQFHGWRGHDWK´-$DW:HDJUHHZLWKWKH2KLR
6XSUHPH&RXUWWKDW³WKHLQVWUXFWLRQVFRQVLGHUHGDVDZKROH
DGHTXDWHO\ JXLGHG WKH MXU\ DQG GLG QRW UHVWULFW LWV
FRQVLGHUDWLRQRIPLWLJDWLQJHYLGHQFH´0DVRQ1(GDW
:H WKHUHIRUH GHQ\ KDEHDV UHOLHI ZLWK UHVSHFW WR WKLV
FODLP
)DLOXUHWR,QVWUXFWRQ5HVLGXDO'RXEW
0DVRQDUJXHVWKDWKHZDVGHQLHGGXHSURFHVVE\WKHWULDO
FRXUW¶V UHIXVDO WR JLYH D SURSRVHG LQVWUXFWLRQ RQ UHVLGXDO
GRXEW ,Q )UDQNOLQ Y /\QDXJK 86 D
PDMRULW\RIWKH6XSUHPH&RXUWDJUHHGWKDWFDSLWDOGHIHQGDQWV
GR QRW KDYH D FRQVWLWXWLRQDO ULJKW WR GHPDQG MXU\
1R 0DVRQY0LWFKHOO
$V 0DVRQ QRWHV GHIHQVH FRXQVHO GLG QRW LQTXLUH DERXW 0DVRQ¶V
LQYROYHPHQW LQ VDYLQJ D IHOORZ LQPDWH IURP DWWHPSWHG VXLFLGH
IDFWRUDQ\DVSHFWRIDGHIHQGDQW¶VFKDUDFWHURUUHFRUGDQGDQ\
RIWKHFLUFXPVWDQFHVRIWKHRIIHQVHWKDWWKHGHIHQGDQWSURIIHUV
DVDEDVLVIRUDVHQWHQFHOHVVWKDQGHDWK´/RFNHWWY2KLR
86 2KLRODZWKXVSURYLGHVWKDWRQFH
WKHSURVHFXWLRQKDVSURYHQRQHRUPRUHVWDWXWRU\DJJUDYDWLQJ
FLUFXPVWDQFHV EH\RQG D UHDVRQDEOH GRXEW WKH MXU\ PXVW
ZHLJKWKHDJJUDYDWLQJFLUFXPVWDQFH V DJDLQVWWKHHYLGHQFHLQ
PLWLJDWLRQ EHIRUH LPSRVLQJ D GHDWK VHQWHQFH 2+,2 5(9
&2'( $11† % -XULHVPD\FRQVLGHUDVPLWLJDWLQJ
HYLGHQFH ³WKH KLVWRU\ FKDUDFWHU DQG EDFNJURXQG RI WKH
RIIHQGHU´FHUWDLQVSHFLILHGIDFWRUVDQG³>D@Q\RWKHUIDFWRUV
WKDWDUHUHOHYDQWWRWKHLVVXHRIZKHWKHUWKHRIIHQGHUVKRXOGEH
VHQWHQFHGWRGHDWK´,G0RUHRYHUDGHIHQGDQWLVHQWLWOHGWR
³JUHDW ODWLWXGH´ LQ SUHVHQWLQJ HYLGHQFH RI DQ\ DQG DOO
PLWLJDWLQJIDFWRUV,G† &
7KHVROHDJJUDYDWLQJFLUFXPVWDQFHLQWKLVFDVHZDVWKHUDSH
6HH2+,2 5(9 &2'( $11† $ :KHQWKHWULDO
FRXUWFRQYHQHGWKHSHQDOW\SKDVHRI0DVRQ¶VWULDORQ-XQH
GHIHQVH FRXQVHO RIIHUHG WKH WHVWLPRQ\ RI VHYHQ
ZLWQHVVHVDVZHOODV0DVRQ¶VXQVZRUQWHVWLPRQ\EXWGLGQRW
LQTXLUH LQWR PLWLJDWLQJ HYLGHQFH 7KH ILUVW WZR ZLWQHVVHV
ZHUHGHSXW\VKHULIIVIURPWKH0DULRQ&RXQW\-DLOZKRVWDWHG
WKDW 0DVRQ KDG QRW EHHQ D SUREOHP SULVRQHU 'HIHQVH
FRXQVHOWKHQFDOOHGIRXUPHPEHUVRI0DVRQ¶VIDPLO\*LYHQ
QRPRUHGLUHFWLRQWKDQWRVSHDNRQ0DVRQ¶VEHKDOI0DVRQ¶V
PRWKHUEURWKHUVLVWHUDQGFRXVLQVLPSO\DVNHGWKHMXU\QRW
WRUHFRPPHQGWKHGHDWKSHQDOW\
'HIHQVHFRXQVHO¶VGLUHFWH[DPLQDWLRQRI0DVRQ¶VZLIH7HUUL
³7HUUL´ ZDVDOPRVWDVSHUIXQFWRU\$VNHGZKHWKHUVKHKDG
DQ\WKLQJWRWHOOWKH MXU\7HUULPDGHDQHPRWLRQDOSOHDIRU
PHUF\&RXQVHOWKHQDVNHG7HUULWRLGHQWLI\DIHZSLFWXUHV
WKDW0DVRQKDGGUDZQIRUKHU2QFURVVH[DPLQDWLRQWKH
SURVHFXWRU TXHVWLRQHG 7HUUL DERXW 0DVRQ¶V DUW DQG KLV
DFWLYLWLHV RQ WKH GD\ WKDW 5RELQ GLVDSSHDUHG 5HGLUHFW

-- 15 of 32 --

0DVRQY0LWFKHOO 1R
UHFURVVDQGIXUWKHUUHGLUHFWH[DPLQDWLRQFRQFHUQHG7HUUL¶V
LQWHUYLHZZLWKWKHSROLFH'HIHQVHFRXQVHOGLGQRWTXHVWLRQ
7HUULDJDLQDERXWPLWLJDWLQJHYLGHQFH
0DVRQKLPVHOIVSRNHDVWKHODVWPLWLJDWLQJZLWQHVV,QKLV
XQVZRUQVWDWHPHQWKHGHFODUHGKLVLQQRFHQFHDQGUHTXHVWHG
WKDW WKH MXU\ ³JLYH PH WKH FKDQFH WR WDNH LW WKURXJK WKH
$SSHDOV&RXUWV´-$DW'HIHQVHFRXQVHOTXHVWLRQHG
0DVRQDERXWKLVGUDZLQJVDQGWKHQUHVWHG7KHSURVHFXWRU
RIIHUHGQRHYLGHQFHLQUHEXWWDOEXWHPSKDVL]HGGXULQJKLV
FORVLQJDUJXPHQWWKDWGHIHQVHFRXQVHOKDGQRWSUHVHQWHGDQ\
PLWLJDWLQJ HYLGHQFH DERXW 0DVRQ¶V KLVWRU\ FKDUDFWHU RU
EDFNJURXQG
D)DLOXUHWR,QYHVWLJDWHRUWR3UHSDUH:LWQHVVHV
0DVRQ DUJXHV WKDW GHIHQVH FRXQVHO UHQGHUHG LQHIIHFWLYH
DVVLVWDQFHE\IDLOLQJWRFRQGXFWDQLQGHSHQGHQWDQGWKRURXJK
LQYHVWLJDWLRQRIKLVOLIHKLVWRU\DQGSV\FKRORJLFDOEDFNJURXQG
ZKHQ KLV IDPLO\ PHPEHUV ZHUH DYDLODEOH IRU LQWHUYLHZV
WKHUHE\ IRUHFORVLQJ WKH GLVFRYHU\ RI SRWHQWLDO PLWLJDWLQJ
HYLGHQFH +H DOVR FRQWHQGV WKDW GHIHQVH FRXQVHO¶V
SHUIRUPDQFH LQ SUHSDULQJ 0DVRQ¶V IDPLO\ PHPEHUV EHIRUH
FDOOLQJ WKHP DV PLWLJDWLRQ ZLWQHVVHV ZDV FRQVWLWXWLRQDOO\
GHILFLHQW
,QH[DPLQLQJ0DVRQ¶VFODLPRILQHIIHFWLYHDVVLVWDQFHDWWKH
VHQWHQFLQJVWDJHWKH2KLR6XSUHPH&RXUWLQIHUUHGIURPWKH
UHFRUG³WKDWGHIHQVHFRXQVHOKDGYROXPLQRXVUHFRUGVDERXW
>0DVRQ¶V@KLVWRU\DQGEDFNJURXQG´DQGQRWHGWKDW³>F@RXQVHO
SUHSDUHG WZHOYH H[KLELWV GRFXPHQWLQJ DVSHFWV RI 0DVRQ¶V
FKLOGKRRGVXFKDVUHSRUWVWKDWKHZDVEHDWHQE\KLVIDWKHUDQG
UHOHDVHGE\KLVSDUHQWVWRMXYHQLOHDXWKRULWLHVDVZHOODVHDUO\
SV\FKRORJLFDO HYDOXDWLRQV EXW GLG QRW SUHVHQW WKHP WR WKH
MXU\´0DVRQ1(GDW7KHGLVWULFWFRXUWVLPLODUO\
GHHPHG PHULWOHVV 0DVRQ¶V FODLP ³WKDW KLV WULDO FRXQVHO
LPSURSHUO\ IDLOHG WR LQYHVWLJDWH SRVVLEOH SV\FKRVRFLDO
PLWLJDWLQJ IDFWRUV WKDW FRXOG KDYH VSDUHG KLP WKH GHDWK
SHQDOW\´0DVRQ)6XSSGDW
1R 0DVRQY0LWFKHOO
8QGHU %XFKDQDQ Y $QJHORQH 86 WKH VWDQGDUG
IRU UHYLHZLQJ MXU\ LQVWUXFWLRQV IURP WKH VHOHFWLRQ SKDVH RI D FDSLWDO
VHQWHQFLQJ SURFHVV LV ³ZKHWKHU WKHUH LV D UHDVRQDEOH OLNHOLKRRG WKDW WKH
MXU\ KDV DSSOLHG WKH FKDOOHQJHG LQVWUXFWLRQ LQ D ZD\ WKDW SUHYHQWV WKH
FRQVLGHUDWLRQ RI FRQVWLWXWLRQDOO\ UHOHYDQW HYLGHQFH´ ,G DW TXRWLQJ
%R\GH Y &DOLIRUQLD 86 7KH 6XSUHPH &RXUW KDV
WKXV KHOG WKDW WKH (LJKWK DQG )RXUWHHQWK $PHQGPHQWV GR QRW UHTXLUH D
WULDO FRXUW WR JLYH D VSHFLILF LQVWUXFWLRQ RQ PLWLJDWLQJ HYLGHQFH PXFK OHVV
GHILQH ZKDW LW PHDQV ,G DW KROGLQJ WKDW D MXU\ LQVWUXFWLRQ WR EDVH
WKH GHFLVLRQ RQ ³DOO WKH HYLGHQFH´ ZDV FRQVWLWXWLRQDOO\ VXIILFLHQW EHFDXVH
LW ³DIIRUGHG MXURUV DQ RSSRUWXQLW\ WR FRQVLGHU PLWLJDWLQJ HYLGHQFH´ 7KH
RQO\ FRQVWLWXWLRQDO UHTXLUHPHQW LV WKDW WKH LQVWUXFWLRQV GR QRW SUHFOXGH D
FDSLWDO MXU\ IURP FRQVLGHULQJ PLWLJDWLQJ HYLGHQFH ,G DW VHH DOVR
:HHNV Y $QJHORQH 86
:H QRWH WKDW WKH LQVWUXFWLRQ FKDOOHQJHG LQ WKLV FDVH FRPSOLHG ZLWK WKH
%XFKDQDQ PDQGDWH WKDW D WULDO FRXUW VKRXOG QRW UHVWULFW D MXU\¶V
FRQVLGHUDWLRQ RI PLWLJDWLQJ HYLGHQFH +RZHYHU %XFKDQDQ LV QRW
FRQWUROOLQJ EHFDXVH LW ZDV GHFLGHG WKUHH DQG D KDOI \HDUV DIWHU 0DVRQ¶V
FRQYLFWLRQ DQG XQGHU $('3$ 6XSUHPH &RXUW SUHFHGHQW PXVW EH LQ
H[LVWHQFH SULRU WR D FRQYLFWLRQ WR FRQWURO D KDEHDV FRXUW¶V DQDO\VLV 6HH
:LOOLDPV )G DW
UHYLHZHUURUVRQLQVWUXFWLRQVDUHQRWUHYLHZDEOHXQOHVVWKH\
GHSULYHDGHIHQGDQWRIFRQVWLWXWLRQDOGXHSURFHVV´*DOOY
3DUNHU)G WK&LU FHUWGHQLHG
86 7KH TXHVWLRQ EHIRUH XV LV ³ZKHWKHU WKH DLOLQJ
LQVWUXFWLRQ E\ LWVHOI VR LQIHFWHG WKH HQWLUH WULDO WKDW WKH
UHVXOWLQJ FRQYLFWLRQ YLRODWHV GXH SURFHVV´ (VWHOOH Y
0F*XLUH86 TXRWLQJ&XSSY1DXJKWHQ
86
)DLOXUHWR'HILQH0LWLJDWLRQ
0DVRQFRPSODLQVWKDWWKHWULDOFRXUWIDLOHGWRH[SODLQWKH
PHDQLQJRI³PLWLJDWLRQ´RU³PLWLJDWLQJIDFWRU´OHDYLQJWKH
MXU\³WRVSHFXODWHWKURXJKRXWWKHWULDODVWRZKDWLWZDVWKH\
ZHUHVXSSRVHGWREHFRQVLGHULQJ´3HWLWLRQHU¶V%UDW
:HQRWHDVDQLQLWLDOPDWWHUWKDWFRQWUDU\WR0DVRQ¶VFODLPV
WKH6XSUHPH&RXUWSUHFHGHQWWKDWH[LVWHGSULRUWR0DVRQ¶V
FRQYLFWLRQGLGQRWFOHDUO\HVWDEOLVKDGHIHQGDQW¶VGXHSURFHVV
ULJKWWRDMXU\LQVWUXFWLRQRQWKHGHILQLWLRQRIPLWLJDWLRQ
0DVRQ¶VUHOLDQFHRQ&RNHUY*HRUJLD86
LVXQDYDLOLQJ$OWKRXJKWKHWULDOFRXUWLQWKDWFDVHGLGGHILQH

-- 16 of 32 --

0DVRQY0LWFKHOO 1R
([WULQVLF(YLGHQFH
7KLVFDVHLQYROYHVDQRXWRIFRXUWLQYHVWLJDWLRQVLPLODUWR
WKHRQHLQ'RDQLQZKLFKDMXURUSXWOLSVWLFNRQKHUDUPWR
VLPXODWHDEUXLVHDQGWKHQGHWHUPLQHGWKDWVXFKDEUXLVHFRXOG
EHVHHQLQDGDUNHQHGURRP'RDQ)GDW,QWKLV
FDVH MXURU 0DU\ 'RZQV ³'RZQV´ GLVDVVHPEOHG KHU
KXVEDQG¶VUHYROYHUWRVHHZKHWKHUWKHJULSORRNHGOLNHWKHRQH
VKRZQ LQ FRXUW 7KH MXURU VWDWHG WKDW VKH FRQGXFWHG WKLV
H[SHULPHQW DQG LQIRUPHG RWKHU MXURUV DIWHU WKH MXU\ KDG
UHWXUQHGDJXLOW\YHUGLFW+RZHYHU%HFNKROWZKRGLGQRW
SDUWLFLSDWH LQ WKH MXU\¶V GHOLEHUDWLRQV WHVWLILHG WKDW 'RZQV
UHSRUWHGKHUUHVXOWVGXULQJWKHWULDO7KHWULDOFRXUWIRXQGWKDW
'RZQV¶VDFWLRQV³GLGQRWLQIOXHQFHWKHYHUGLFWLQWKLVFDVH
DQGDVVXFK>0DVRQ@ZDVQRWSUHMXGLFHGE\WKLVFRQGXFW´
-$DW
:H UHYLHZ FRQVWLWXWLRQDO HUURUV DW WULDO VXFK DV 6L[WK
$PHQGPHQW YLRODWLRQV XQGHU D KDUPOHVV HUURU VWDQGDUG
%UHFKWY$EUDKDPVRQ86 'RDQ
)GDW7KHKDEHDVSHWLWLRQHUPXVWVKRZWKDWWKHWULDO
HUURU ³KDG VXEVWDQWLDO DQG LQMXULRXV HIIHFW RU LQIOXHQFH LQ
GHWHUPLQLQJ WKH MXU\¶V YHUGLFW´ 'RDQ )G DW
TXRWLQJ %UHFKW 86 DW $OWKRXJK 'RZQV¶V
SUHVHQWDWLRQ RI KHU RXWRIFRXUW ILQGLQJV PD\ KDYH EHHQ
FRQVWLWXWLRQDO HUURU 0DVRQ FDQQRW GHPRQVWUDWH WKDW LW
VXEVWDQWLDOO\DIIHFWHGRULQIOXHQFHGWKHMXU\¶VYHUGLFW7KH
HYLGHQFHDWWULDOZDVPRUHH[WHQVLYHWKDQWKHJXQJULSWKDW
ZDVWKHVXEMHFWRI'RZQV¶VH[SHULPHQWLQIDFWWKHDOOHJHG
PXUGHUZHDSRQZDVWKHZRRGHQERDUGZLWKQDLOVDWWDFKHGWR
LW:HWKHUHIRUHGHQ\KDEHDVUHOLHIZLWKUHVSHFWWRWKLVFODLP
+6HQWHQFLQJ3KDVH,QVWUXFWLRQV
0DVRQFODLPVWKDWWKHWULDOFRXUW¶VLQVWUXFWLRQVWRWKHMXU\
OHGWR³DQXQUHOLDEOHVHQWHQFLQJGHWHUPLQDWLRQ´3HWLWLRQHU¶V
%U DW 6SHFLILFDOO\ KH DUJXHV WKDW WKH WULDO FRXUW
FRPPLWWHG FRQVWLWXWLRQDO HUURU E\ IDLOLQJ WR GHILQH
³PLWLJDWLRQ´RU³PLWLJDWLQJIDFWRU´ UHIXVLQJWRLQVWUXFWWKH
MXU\RQUHVLGXDOGRXEWDQG IDLOLQJWRUHPRYHWKHGHDWK
VHQWHQFH IURP DQ DOOHJHGO\ GHDGORFNHG MXU\ ³2Q KDEHDV
1R 0DVRQY0LWFKHOO
0XFKKDVEHHQPDGHLQWKLVFDVHRIWKHWZHOYHH[KLELWVWKDW
GHIHQVHFRXQVHOSUHSDUHGLQFRQMXQFWLRQZLWKWKHYLGHRWDSHG
GHSRVLWLRQRI'U-RVHSK76SDUH ³6SDUH´ WKHSV\FKLDWULVW
DSSRLQWHG E\ WKH WULDO FRXUW WR DVVLVW WKH GHIHQVH ZLWK WKH
PLWLJDWLRQSKDVH7KHPHUHH[LVWHQFHRIPLWLJDWLRQH[KLELWV
KRZHYHU LV QRW FRQFOXVLYH EHFDXVH WKH TXHVWLRQ XQGHU
6WULFNODQG LV ZKHWKHU GHIHQVH FRXQVHO¶V LQYHVWLJDWLRQ LQWR
SRWHQWLDOPLWLJDWLRQHYLGHQFHZDVFRQVWLWXWLRQDOO\DGHTXDWH
>6@WUDWHJLFFKRLFHVPDGHDIWHUWKRURXJKLQYHVWLJDWLRQRI
ODZDQGIDFWVUHOHYDQWWRSODXVLEOHRSWLRQVDUHYLUWXDOO\
XQFKDOOHQJHDEOH DQG VWUDWHJLF FKRLFHV PDGH DIWHU OHVV
WKDQFRPSOHWHLQYHVWLJDWLRQDUHUHDVRQDEOHSUHFLVHO\WR
WKHH[WHQWWKDWUHDVRQDEOHSURIHVVLRQDOMXGJPHQWVVXSSRUW
WKHOLPLWDWLRQVRQLQYHVWLJDWLRQ,QRWKHUZRUGVFRXQVHO
KDVDGXW\WRPDNHUHDVRQDEOHLQYHVWLJDWLRQVRUWRPDNH
DUHDVRQDEOHGHFLVLRQWKDWPDNHVSDUWLFXODULQYHVWLJDWLRQV
XQQHFHVVDU\ ,Q DQ\ LQHIIHFWLYHQHVV FDVH D SDUWLFXODU
GHFLVLRQQRWWRLQYHVWLJDWHPXVWEHGLUHFWO\DVVHVVHGIRU
UHDVRQDEOHQHVVLQDOOWKHFLUFXPVWDQFHVDSSO\LQJDKHDY\
PHDVXUHRIGHIHUHQFHWRFRXQVHO¶VMXGJPHQWV

>:@KDWLQYHVWLJDWLRQGHFLVLRQVDUHUHDVRQDEOHGHSHQGV
FULWLFDOO\ RQ >WKH LQIRUPDWLRQ WKDW WKH GHIHQGDQW
VXSSOLHV@)RUH[DPSOHZKHQWKHIDFWVWKDWVXSSRUWD
FHUWDLQSRWHQWLDOOLQHRIGHIHQVHDUHJHQHUDOO\NQRZQWR
FRXQVHOEHFDXVHRIZKDWWKHGHIHQGDQWKDVVDLGWKHQHHG
IRUIXUWKHULQYHVWLJDWLRQPD\EHFRQVLGHUDEO\GLPLQLVKHG
RU HOLPLQDWHG DOWRJHWKHU $QG ZKHQ D GHIHQGDQW KDV
JLYHQ FRXQVHO UHDVRQ WR EHOLHYH WKDW SXUVXLQJ FHUWDLQ
LQYHVWLJDWLRQV ZRXOG EH IUXLWOHVV RU HYHQ KDUPIXO
FRXQVHO¶VIDLOXUHWRSXUVXHWKRVHLQYHVWLJDWLRQVPD\QRW
ODWHU EH FKDOOHQJHG DV XQUHDVRQDEOH ,Q VKRUW LQTXLU\
LQWRFRXQVHO¶VFRQYHUVDWLRQVZLWKWKHGHIHQGDQWPD\EH
FULWLFDOWRDSURSHUDVVHVVPHQWRIFRXQVHO¶VLQYHVWLJDWLRQ
GHFLVLRQV
6WULFNODQG86DW:HKDYHSUHYLRXVO\KHOGWKDW
WKH FRPSOHWH IDLOXUH WR LQYHVWLJDWH PLWLJDWLQJ HYLGHQFH
FRQVWLWXWHVLQHIIHFWLYHDVVLVWDQFHRIFRXQVHO6HH$XVWLQY

-- 17 of 32 --

0DVRQY0LWFKHOO 1R
-XGJH %RJJV VXJJHVWV WKDW 0DVRQ GRHV QRW PHHW WKH UHTXLUHPHQWV
IRU DQ HYLGHQWLDU\ KHDULQJ DV ODLG RXW LQ 86& † H $OWKRXJK
VXEVHFWLRQ H ¶V FRQGLWLRQV DUH LQGHHG RQHURXV ³RQO\ D SULVRQHU ZKR
KDV QHJOHFWHG KLV ULJKWV LQ VWDWH FRXUW QHHG VDWLVI\ WKHVH FRQGLWLRQV´
0LFKDHO :LOOLDPV Y 7D\ORU 86 ,Q GHWHUPLQLQJ
ZKHWKHU † H DSSOLHV WKH TXHVWLRQ LV QRW ZKHWKHU WKH SHWLWLRQHU
KDV VXFFHHGHG LQ GHYHORSLQJ WKH UHFRUG EXW ZKHWKHU WKH SHWLWLRQHU KDV
%HOO)G WK&LU FHUWGHQLHG86
DQG86 FI6FRWWY0LWFKHOO
)G WK&LU ³:LWKRXWHIIHFWLYHUHVHDUFKLQWRWKH
DYDLODEOH PLWLJDWLQJ WHVWLPRQ\ RI FRXUVH LW ZRXOG EH
LPSRVVLEOHIRUWKHODZ\HUVWRKDYHPDGHDQLQIRUPHGGHFLVLRQ
HLWKHUZD\´ FHUWGHQLHG86 :HKDYH
DOVR HPSKDVL]HG WKH LPSRUWDQFH RI DQ LQGHSHQGHQW
LQYHVWLJDWLRQ³7KHVROHVRXUFHRIPLWLJDWLQJIDFWRUVFDQQRW
SURSHUO\ EH WKDW LQIRUPDWLRQ ZKLFK >D@ GHIHQGDQW PD\
YROXQWHHU FRXQVHO PXVW PDNH VRPH HIIRUW DW LQGHSHQGHQW
LQYHVWLJDWLRQLQRUGHUWRPDNHDUHDVRQHGLQIRUPHGGHFLVLRQ
DVWRWKHLUXWLOLW\´&DUWHUY%HOO)G WK&LU

7KHUHFRUGEHIRUHXVLVLQDGHTXDWHIRUDPHDQLQJIXOUHYLHZ
RI0DVRQ¶VFODLPRILQHIIHFWLYHDVVLVWDQFHRIFRXQVHO:H
UHFRJQL]HWKDWWKH6WULFNODQG&RXUWGLUHFWHGVWDWHFRXUWV³WR
DQDO\]HHIIHFWLYHQHVVEDVHGRQWKHWKHQSUHYDLOLQJQRUPVDQG
FRXQVHO¶V SHUVSHFWLYH DW WKH WLPH´ :LOOLDPV Y &R\OH
)G WK &LU ZKLFK HQWDLOV D ³KLJKO\
GHIHUHQWLDO´VWDQGDUG6WULFNODQG86DW+RZHYHU
LQRUGHUIRUXVWRHYDOXDWHZKHWKHUGHIHQVHFRXQVHOUHQGHUHG
FRQVWLWXWLRQDOO\LQHIIHFWLYHDVVLVWDQFHDWVHQWHQFLQJZHPXVW
NQRZPRUHDERXWWKHH[WHQWRIFRXQVHO¶VLQYHVWLJDWLRQDQG
SUHSDUDWLRQ RI PLWLJDWLQJ HYLGHQFH 7KHUH LV D VLJQLILFDQW
OLNHOLKRRGWKDWGHIHQVHFRXQVHODFWHGXQUHDVRQDEO\LQIDLOLQJ
WR FRQGXFW DQ LQGHSHQGHQW DQG WKRURXJK LQYHVWLJDWLRQ RI
0DVRQ¶VEDFNJURXQG%HFDXVHWKHUHFRUGDVLWQRZVWDQGV
UHIOHFWVGLVSXWHVDERXWGHIHQVHFRXQVHO¶VSHUIRUPDQFHZLWK
UHVSHFWWRWKHVHQWHQFLQJSKDVHRI0DVRQ¶VWULDOZHUHPDQG
WKHFDVHWRWKHGLVWULFWFRXUWIRUDQHYLGHQWLDU\KHDULQJRQWKLV
LVVXH
1R 0DVRQY0LWFKHOO
DQG,IHOWWKDWSHRSOHZHUHPDNLQJ²LIWKH\ZHUHMXGJLQJ²
PDNLQJMXGJPHQWDOFRPPHQWVRIWKDWVRUWKRZFRXOGWKH\
IDLUO\MXGJHWKHFDVH"´-$DW%HFNKROWKRZHYHUGLG
QRWSDUWLFLSDWHLQWKHMXU\¶VGHOLEHUDWLRQV%HFDXVH0DVRQ
GRHVQRWRIIHUDQ\HYLGHQFHRWKHUWKDQWKDWZKLFKWKHWULDO
FRXUW KDG DW WKH WLPH LW PDGH LWV IDFWXDO ILQGLQJ ZH GHQ\
KDEHDVUHOLHIZLWKUHVSHFWWRWKLVFODLP
3UHVXPSWLRQRI*XLOW
0DVRQDOOHJHVWKDWMXURU5XVVHOO/'HQQLVH[SUHVVHGEHOLHI
LQ0DVRQ¶VJXLOWEHIRUHIRUPDOGHOLEHUDWLRQVEHJDQ:KHQ
TXHVWLRQHGDERXWVXFKDVWDWHPHQWWKHMXURUDFNQRZOHGJHG
VD\LQJ ³0D\EH KH¶V SOHDGLQJ JXLOW\´ -$ DW EXW
WHVWLILHGWKDWKH³UHDOO\KDGQ¶WIRUPHGDQRSLQLRQ,WZDV
MXVW ZLVKIXO WKLQNLQJ EHFDXVH LW ZDV ODWH LQ WKH GD\ DQG
HYHU\ERG\ZDVWLUHG´-$DW7KHWULDOFRXUWIRXQG³QR
VXEVWDQWLDOHYLGHQFHWKDWDQ\MXURUPDGHDQ\FRPPHQWGXULQJ
WKHWULDOZKLFKGHPRQVWUDWHGWKDWKHRUVKHKDGIDLOHGWRNHHS
DQRSHQPLQGVRDVWREHDEOHWRIDLUO\GHFLGHWKHHYLGHQFHLQ
WKLV FDVH´ -$ DW $EVHQW FOHDU DQG FRQYLQFLQJ
HYLGHQFHWRWKHFRQWUDU\ZHPXVWGHIHUWRWKHVWDWHFRXUW¶V
IDFWXDOILQGLQJDQGWKHUHIRUHGHQ\KDEHDVUHOLHIZLWKUHVSHFW
WRWKLVFODLP
6OHHSLQJ'XULQJ7ULDO
0DVRQ DOOHJHV WKDW MXURU :DQGD 6WUDXE ³6WUDXE´ IHOO
DVOHHSGXULQJWKHWULDO7KHUHFRUGLVXQFOHDUDVWRZKHWKHUWKH
MXURU VOHSW GXULQJ SURFHHGLQJV LQ WKH FRXUWURRP RU GXULQJ
EUHDNVLQWKHMXU\URRP+RZHYHU6WUDXEDYHUUHGWKDWVKH
³ZDVDZDNHDQGDWWHQWLYHGXULQJDOOSURFHHGLQJVRIWKHWULDO´
-$DW 6WUDXE$IIDWˆ 7KHWULDOFRXUWPDGHWKH
VDPHILQGLQJZLWKUHVSHFWWRDOOWZHOYHMXURUV$EVHQWFOHDU
DQGFRQYLQFLQJHYLGHQFHWRWKHFRQWUDU\ZHPXVWGHIHUWRWKH
VWDWHFRXUW¶VIDFWXDOILQGLQJDQGWKHUHIRUHGHQ\KDEHDVUHOLHI
ZLWKUHVSHFWWRWKLVFODLP

-- 18 of 32 --

0DVRQY0LWFKHOO 1R
$OWHUQDWH MXURU 0DU\ %HFNKROW WHVWLILHG WR MXURUV¶ FRPPHQWV GXULQJ
WKH WULDO WKDW ³DOO EODFN SHRSOH GLG ZDV GULQN DQG SDUW\ DQG GR EHHU UXQV´
-$ DW
0DVRQ DSSDUHQWO\ ZHDUV D ³GHZ UDJ´ RU EDQGDQD RQ D GDLO\ EDVLV
-$ DW -XURU .DWK\ +DQH\ WHVWLILHG WKDW D MXURU PDGH ³UDFLVW UHPDUNV
DQG >WDONHG@ LQ D MLYH PDQQHU´ DERXW ³GHZ UDJV´ DV ZHOO DV ULGLFXOHG
0DVRQ¶V VSHHFK -$ DW -XURU -DVRQ 0DKDIIH\ ³0DKDIIH\´
WHVWLILHG WKDW WKH VDPH MXURU KDG ³VDLG KH KDG WR JR JHW KLV GHZ UDJ FDXVH
KH GRHVQ¶W KDYH D KDW KH MXVW KDV D GHZ UDJ´ -$ DW +RZHYHU
0DKDIIH\ GLG QRW FKDUDFWHUL]H WKH FRPPHQW DV ³UDFLDO´ -$ DW
7KH SURVHFXWRU DQG GHIHQVH FRXQVHO REWDLQHG WKHVH DIILGDYLWV
ZLWKRXW FRQVXOWLQJ WKH WULDO FRXUW 7KH MRLQW DSSHQGL[ FRQWDLQV WKH
DIILGDYLWV RI WHQ MXURUV ZKR GHQLHG SDUWLFLSDWLQJ LQ RU REVHUYLQJ DQ\
UDFLVP
LPSDLU 0DVRQ¶V DELOLW\ WR UHFHLYH D IDLU WULDO :H PXVW
SUHVXPH WKDW WKH WULDO FRXUW¶V IDFWXDO GHWHUPLQDWLRQV DUH
FRUUHFWXQOHVV0DVRQUHEXWVWKDWSUHVXPSWLRQZLWKFOHDUDQG
FRQYLQFLQJHYLGHQFH
5DFLDO6OXUV
0DVRQDUJXHVWKDWKHZDVGHQLHGDIDLUWULDOEHFDXVHRIWKH
UDFLDOSUHMXGLFHRIDQDOOZKLWHMXU\ZKLFKPDQLIHVWHGLWVHOI
WKURXJK JHQHUDOL]DWLRQV DERXW UDFH DQG WKH XVH RI EODFN
VODQJ ,QGLYLGXDO MXURUV ZHUH GLVWXUEHG E\ WKH UDFLVW
FRPPHQWVEXWDSSDUHQWO\GLGQRWXQGHUVWDQGWKDWWKH\FRXOG
GR DQ\WKLQJ DERXW LW $IWHU UHYLHZLQJ WKH DIILGDYLWV RI DOO
WZHOYHMXURUVDQGKHDULQJWHVWLPRQ\IURPWKHFRXUWEDLOLII
WKUHHMXURUVDQGDQDOWHUQDWHMXURUWKHWULDOFRXUWIRXQGWKDW
³>D@WQRWLPHGXULQJWKHWULDOGLGDQ\RIWKHMXURUVSDUWLFLSDWH
LQDQ\DFWVRIUDFLVPZKLFKFRXOGKDYHLPSDLUHG>0DVRQ¶V@
DELOLW\WRUHFHLYHDIDLUWULDO´-$DW
7KHTXHVWLRQ RQ KDEHDVLVZKHWKHU0DVRQFDQUHEXWWKH
SUHVXPSWLRQWKDWWKHVWDWHFRXUW¶VIDFWXDOILQGLQJVDUHFRUUHFW
$OWHUQDWHMXURU0DU\%HFNKROW ³%HFNKROW´ WHVWLILHGWKDWWKH
UDFLVWFRPPHQWVLQKHURSLQLRQFRXOGKDYHYLRODWHG0DVRQ¶V
ULJKWWRDIDLUWULDO³,IHOWLWZDVXQIDLU,IHOWLWZDVZURQJ
1R 0DVRQY0LWFKHOO
GLOLJHQWO\ DWWHPSWHG WR GR VR 6HH 0 :LOOLDPV 86 DW ³>$@
IDLOXUH WR GHYHORS WKH IDFWXDO EDVLV RI D FODLP LV QRW HVWDEOLVKHG XQOHVV
WKHUH LV ODFN RI GLOLJHQFH RU VRPH JUHDWHU IDXOW DWWULEXWDEOH WR WKH SULVRQHU
RU WKH SULVRQHU¶V FRXQVHO´ 0DVRQ KHUH KDV EHHQ VXIILFLHQWO\ GLOLJHQW
DV WKH 6XSUHPH &RXUW H[SODLQHG ³'LOLJHQFH ZLOO UHTXLUH LQ WKH XVXDO FDVH
WKDW WKH SULVRQHU DW D PLQLPXP VHHN DQ HYLGHQWLDU\ KHDULQJ LQ VWDWH FRXUW
LQ WKH PDQQHU SUHVFULEHG E\ VWDWH ODZ´ ,G DW 0DVRQ UHTXHVWHG DQG
ZDV GHQLHG D KHDULQJ LQ VWDWH FRXUW DQG KDV DFWLYHO\ VRXJKW WR H[SDQG WKH
UHFRUG :H VHH QR ODFN RI GLOLJHQFH VR ZH GR QRW DSSO\ † H
7KH WULDO FRXUW ODWHU DXWKRUL]HG LQGHSHQGHQW ODERUDWRU\ WHVWLQJ RQ D
VDPSOH RI WKH IHWXV WKDW 5RELQ ZDV FDUU\LQJ DW WKH WLPH RI KHU PXUGHU DQG
LQGHSHQGHQW EORRG WHVWLQJ RI WKH EORRG IRXQG RQ 0DVRQ¶V VKRH -$ DW

:HEHJLQRXUDQDO\VLVRI0DVRQ¶VLQHIIHFWLYHDVVLVWDQFH
FODLPE\UHYLHZLQJWKHLQYHVWLJDWLRQWKDWDSSDUHQWO\GLGWDNH
SODFH,QWKHIDOORIVRRQDIWHU0DVRQZDVFKDUJHGZLWK
WKH UDSH DQG DJJUDYDWHG PXUGHU RI 5RELQ WKH WULDO FRXUW
LVVXHGDQRUGHUDSSRLQWLQJDQLQYHVWLJDWRUIRUWKHGHIHQVHDQG
DXWKRUL]LQJ LQGHSHQGHQW '1$ WHVWLQJ -$ DW
$FFRUGLQJWRWKH2KLR6XSUHPH&RXUW
7KH GHIHQVH WHDP RI WZR ODZ\HUV DQG DQ LQYHVWLJDWRU
ORRNHGIXOO\LQWR0DVRQ¶VEDFNJURXQG0RUHRYHUWKH
VWDWHKDGFROOHFWHGDQGUHOHDVHGWRWKHGHIHQVHLQ-DQXDU\
YROXPLQRXVUHFRUGVFRQFHUQLQJ0DVRQLQFOXGLQJ
UHFRUGVDERXWKLVODVWQLQH\HDUVLQDQGRXWRISULVRQDV
ZHOODVVFKRROUHFRUGVDQGMXYHQLOHLQFDUFHUDWLRQV
0DVRQ1(GDW7KHUHFRUGKRZHYHUVXJJHVWV
WKDWWKHLQYHVWLJDWRU¶VDVVLJQPHQWZDVOLPLWHGWRLQWHUYLHZLQJ
ZLWQHVVHVDQGWDNLQJPHDVXUHPHQWVDWWKHFULPHVFHQH7UDW
%HFDXVH WKH FDVH DJDLQVW 0DVRQ ZDV EDVHG RQ
FLUFXPVWDQWLDO HYLGHQFH ZH LQIHU IURP WKH UHFRUG WKDW WKH
ZLWQHVVLQWHUYLHZVZHUHSULPDULO\DERXWWKHIDFWVVXUURXQGLQJ
5RELQ¶V GLVDSSHDUDQFH DQG PXUGHU 'HIHQVH FRXQVHO
LQGLFDWHGDVPXFKZKHQWKHWULDOFRXUWDVNHGZK\DPLWLJDWLRQ
H[SHUW ZDV QHFHVVDU\ JLYHQ WKH DSSRLQWPHQW RI DQ
LQYHVWLJDWRU7UDW)XUWKHUPRUH0DVRQDYHUUHGWKDWKLV
FRQYHUVDWLRQVZLWKGHIHQVHFRXQVHODQGWKHLQYHVWLJDWRU³ZHUH

-- 19 of 32 --

0DVRQY0LWFKHOO 1R
/HDG FRXQVHO DFNQRZOHGJHG OHVV WKDQ D ZHHN EHIRUH WKH WULDO EHJDQ
³WKDW KH KDG QRW SHUVRQDOO\ LQWHUYLHZHG DQ\ RI WKH ZLWQHVVHV IRU HLWKHU
SKDVH RI WKH WULDO´ -$ DW +HDG $II DW ˆˆ 0RUHRYHU
FRXQVHO DSSDUHQWO\ QHYHU VWXGLHG 0DVRQ¶V ³SV\FKRORJLFDO RU
HQYLURQPHQWDO KLVWRU\´ DQG IDLOHG WR SUHSDUH WKH ³VRFLDO KLVWRU\´ WKDW
ZRXOG KDYH KXPDQL]HG 0DVRQ EHIRUH WKH MXU\ -$ DW 6FKXPDFKHU
$II DW ˆˆ & (
$OWKRXJK WKH WULDO FRXUW RUGHUHG WKH UHWHQWLRQ RI WKHVH H[KLELWV DV
SDUW RI WKH UHFRUG WKH H[KLELWV DUH QRW LQ WKH UHFRUG EHIRUH XV
DOPRVW H[FOXVLYHO\ DERXW WULDO SKDVH LVVXHV ² FRQFHUQLQJ
ZLWQHVVHVP\ZKHUHDERXWV&KULV'HQQLVDQGRWKHUWKHRULHV
RIZKRKDGNLOOHG5RELQ'HQQLV´0DXULFH$0DVRQ$IIDW
ˆ 0DVRQ¶V IDPLO\ PHPEHUV ZHUH DOVR QRW LQWHUYLHZHG
DERXW0DVRQ¶VEDFNJURXQG-$DW 7HUUL$0DVRQ
$IIDWˆ -$DW -DPHV0LFKDHO0DVRQ$IIDWˆ
-$DW 0LRVKL0DVRQ$IIDWˆˆ
$VIRUWKHGRFXPHQWVREWDLQHGGXULQJGLVFRYHU\WKHWULDO
FRXUWIRXQGWKDWGHIHQVHFRXQVHO³KDGLQWKHLUSRVVHVVLRQDQG
KDG UHYLHZHG SULRU WR WULDO RYHU SDJHV RI
FRPSUHKHQVLYHUHFRUGVDQGGRFXPHQWVUHJDUGLQJ>0DVRQ@¶V
VRFLDO KLVWRU\ LQFOXGLQJ UHFRUGV IURP WKH 0DULRQ &LW\
6FKRROV 0DULRQ $UHD &RXQVHOLQJ &HQWHU 0DULRQ &RXQW\
&KLOGUHQ¶V 6HUYLFHV 0DULRQ &RXQW\ $GXOW 3UREDWLRQ
'HSDUWPHQW $GXOW 3DUROH $XWKRULW\ DQG 2KLR 'HSW RI
5HKDELOLWDWLRQDQG&RUUHFWLRQV´6WDWHY0DVRQ1R&5
VOLSRSDW 2KLR&W&RP3O1RY
1RQHRIWKHVHGRFXPHQWVLVLQWKHUHFRUGEHIRUHXV
,Q0D\EHIRUHWKLVFDVHZHQWWRWULDOWKHWULDOFRXUW
DSSRLQWHG'U6SDUHDQGDIRUHQVLFSDWKRORJLVWWRDVVLVWWKH
GHIHQVH-$DW'U6SDUHWKHQH[DPLQHG0DVRQDQG
SUHSDUHGD ILYHSDJHSV\FKLDWULFUHSRUW-$DW2Q
-XQHGXULQJWKHWULDOGHIHQVHFRXQVHOGHSRVHG'U
6SDUHRQYLGHRWDSHXVLQJWZHOYHPLWLJDWLRQH[KLELWV7KHVH
H[KLELWVDFFRUGLQJWRWKHUHFRUGDVLWVWDQGVDSSHDUWRKDYH
EHHQ EDVHG ODUJHO\ RQ WKH GLVFRYHU\ SURYLGHG E\ WKH
SURVHFXWLRQWRGHIHQVHFRXQVHO$VQRWHGDERYHGHIHQVH
1R 0DVRQY0LWFKHOO
*-XURU%LDV0LVFRQGXFW
7KH6L[WKDQG)RXUWHHQWK$PHQGPHQWVWRWKH&RQVWLWXWLRQ
JXDUDQWHHDFULPLQDOGHIHQGDQWWKHULJKWWRDQLPSDUWLDOMXU\
0RUJDQY,OOLQRLV86 8QGHUFOHDUO\
HVWDEOLVKHG 6XSUHPH &RXUW SUHFHGHQW D GHIHQGDQW ZKR
DOOHJHVLPSOLHGMXURUELDVLVHQWLWOHGWRDKHDULQJLQZKLFKKH
KDV³WKHRSSRUWXQLW\WRSURYHDFWXDOELDV´6PLWKY3KLOOLSV
86 'HQQLVY8QLWHG6WDWHV86
+RZHYHU SXUVXDQW WR 2KLR 5XOH RI
(YLGHQFH % HYLGHQFH RI VWDWHPHQWV PDGH GXULQJ WKH
FRXUVH RI MXU\ GHOLEHUDWLRQV LV QRW DGPLVVLEOH D UXOH LQ
NHHSLQJZLWKWKHJHQHUDOWKHRU\WKDWMXURUVDUHLQFRPSHWHQW
ZLWQHVVHVRIWKHLURZQPLVFRQGXFW$MXURUPD\WHVWLI\DERXW
³H[WUDQHRXVSUHMXGLFLDOLQIRUPDWLRQ´RU³RXWVLGHLQIOXHQFH´
,G:HUHFHQWO\KHOGWKDWWKH2KLRFRXUWV¶DSSOLFDWLRQRIWKLV
VWDWXWH WR GLVSRVH RI ELDVHG MXU\ FODLPV YLRODWHG FOHDUO\
HVWDEOLVKHG 6XSUHPH &RXUW SUHFHGHQW WKDW UHFRJQL]HV WKH
IXQGDPHQWDOLPSRUWDQFHRIDGHIHQGDQW¶VFRQVWLWXWLRQDOULJKW
WRDIDLUWULDO'RDQY%ULJDQR)G WK&LU
,Q'RDQZHFRQFOXGHGWKDWDMXURU¶VSUHVHQWDWLRQRI
DQRXWRIFRXUWH[SHULPHQWWRRWKHUMXURUVZDVFRQVWLWXWLRQDO
HUURUEXWWKDWWKLVHUURUZDVKDUPOHVV,GDW
,QWKLVFDVH0DVRQDOOHJHVWKDWMXURUELDVRUPLVFRQGXFW
UHVXOWHG ZKHQ YDULRXV MXURUV PDGH UDFLDO VOXUV
SUHVXPHG 0DVRQ¶V JXLOW VOHSW GXULQJ WULDO DQG
FRQGXFWHG DQG WKHQ SUHVHQWHG DQ RXWRIFRXUW
LQYHVWLJDWLRQ7KHILUVWWKUHHLQYROYHLQWHUQDOLQIOXHQFHVDQG
XQGHU 7DQQHU Y 8QLWHG 6WDWHV 86
WHVWLPRQ\RQWKRVHVXEMHFWVVKRXOGKDYHEHHQEDUUHGE\WKH
HYLGHQWLDU\ UXOH SURKLELWLQJ MXURU LPSHDFKPHQW RI D MXU\
YHUGLFW,GDWFI8QLWHG6WDWHVY/RJDQ)G
Q WK &LU UHFRJQL]LQJ WKH GLIIHUHQFH LQ KRZ WKH
'RDQDQG/RJDQSDQHOVIUDPHGWKHLVVXH FHUWGHQLHG
86 +RZHYHU XQGHU 'RDQ WKH TXHVWLRQ LV
ZKHWKHU 0DVRQ UHFHLYHG D IDLU WULDO 0DVRQ GLG KDYH DQ
RSSRUWXQLW\WRSURYHDFWXDOELDVZKHQWKHWULDOFRXUWKHDUG
RUDODUJXPHQWVRQKLVPRWLRQIRUDQHZWULDO7KHWULDOFRXUW
GHQLHGWKHPRWLRQILQGLQJWKDWWKHMXURUV¶FRQGXFWGLGQRW

-- 20 of 32 --

0DVRQY0LWFKHOO 1R
LPSURSHUO\ 0DVRQ 1(G DW 0DVRQ KDV WKXV
ZDLYHGWKHULJKWWRIHGHUDOKDEHDVUHYLHZRQDOOEXWRQHRIKLV
SURVHFXWRULDOPLVFRQGXFWFODLPVXQOHVVKHFDQGHPRQVWUDWH
FDXVHDQGSUHMXGLFHRUPDNH³DVKRZLQJRIDIXQGDPHQWDO
PLVFDUULDJH RI MXVWLFH´ +LQNOH )G DW TXRWLQJ
6LPSVRQ)GDW
0DVRQ DUJXHV WKDW ³WKH SURVHFXWRU HQJDJHG LQ RQJRLQJ
PLVFRQGXFW´ GXULQJ FURVVH[DPLQDWLRQ E\ ³DWWDFNLQJ
FRXQVHO¶V GHIHQVH VWUDWHJLHV>@ RYHU ZKLFK 0DVRQ KDG QR
FRQWURO´3HWLWLRQHU¶V%UDW2QHRIWKHSURVHFXWRU¶V
TXHVWLRQVFRQFHUQHG0DVRQ¶VH[WUDPDULWDOUHODWLRQVKLSZLWK
5RELQ³,VWKDWWKHVDPHUHDVRQWKDWZKHQWKLVFDVHVWDUWHGLQ
RUGHUWRFRQWHVWWKH'1$UHVXOWV\RXKDG\RXUDWWRUQH\VGR
LQGHSHQGHQWWHVWLQJWRVHHLIRXU'1$UHVXOWVZHUHULJKW"´
-$DW'HIHQVHFRXQVHOUDLVHGDQREMHFWLRQZKLFKWKH
WULDOFRXUWRYHUUXOHG:HDJUHHZLWKWKHGLVWULFWFRXUWWKDWWKLV
TXHVWLRQ ZDV QRW LPSURSHU 7KH FUHGLELOLW\ RI D FULPLQDO
GHIHQGDQWZKRWHVWLILHVPD\EHLPSHDFKHGOLNHWKDWRIDQ\
RWKHUZLWQHVV*UHHU)GDW7KHTXHVWLRQDERXW
0DVRQ¶V UHDVRQ IRU FRQGXFWLQJ LQGHSHQGHQW '1$ WHVWLQJ
IROORZHG KLV WHVWLPRQ\ DERXW D VWDWHPHQW WR WKH SROLFH LQ
ZKLFKKHGHQLHGNQRZLQJ5RELQRUHYHUEHLQJDORQHZLWKKHU
7KH SURVHFXWRU ZDV WKXV LPSHDFKLQJ 0DVRQ E\ VKRZLQJ
LQFRQVLVWHQFLHVEHWZHHQKLVSUHWULDOVWDWHPHQWWRWKHSROLFH
DQGKLVWHVWLPRQ\DWWULDO
0DVRQDUJXHVRQDSSHDOWKDWDQRWKHUTXHVWLRQSHUWDLQLQJWR
KLVIDLOXUHWRSURGXFHUHFRUGVWKDWVKRZHGKLVHPSOR\PHQWDW
WKH ORFDO IHVWLYDO ZKHUH KH PHW 5RELQ GHPRQVWUDWHV
PLVFRQGXFWDVGRWKHSURVHFXWRU¶V³ULGLFXO>LQJ@HDFKRIWKH
GHIHQVHWKHRULHV´GXULQJKLVFORVLQJDUJXPHQWIRUWKHOLDELOLW\
SKDVH3HWLWLRQHU¶V%UDWDQGKLVFORVLQJDUJXPHQWIRU
WKHSHQDOW\SKDVH:HILUVWQRWHWKDWGHIHQVHFRXQVHOPDGHQR
FRQWHPSRUDQHRXV REMHFWLRQV 7KH 2KLR 6XSUHPH &RXUW
UHYLHZHG IRU SODLQ HUURU 0DVRQ 1(G DW WKXV
EDUULQJIHGHUDOKDEHDVUHYLHZDEVHQWDVKRZLQJRIFDXVHDQG
SUHMXGLFH:HDUHQRWSHUVXDGHGWKDW0DVRQKDVVKRZQFDXVH
DQGSUHMXGLFHWRH[FXVHWKHSURFHGXUDOGHIDXOWDQGWKHUHIRUH
GHQ\KDEHDVUHOLHIZLWKUHVSHFWWRWKLVFODLP
1R 0DVRQY0LWFKHOO
7KLV IDFW GLVWLQJXLVKHV WKLV FDVH IURP 0DUWLQ Y 0LWFKHOO 1RV
:/ WK &LU )HE ZKHUH ZH
UHFHQWO\ GHQLHG KDEHDV UHOLHI RQ D VLPLODU FODLP EHFDXVH WKH SHWLWLRQHU KDG
QRW VKRZQ ZKDW SRWHQWLDO PLWLJDWLQJ ZLWQHVVHV ³ZRXOG KDYH WHVWLILHG WR
RU KRZ VXFK WHVWLPRQ\ FRXOG KDYH DLGHG KLP DW VHQWHQFLQJ´ ,G DW
FI %XHOO Y 0LWFKHOO )G WK &LU 7KH WHVWLPRQ\ LQ
WKLV FDVH FRQFHUQHG 0DVRQ¶V WURXEOHG FKLOGKRRG DV GHVFULEHG EHORZ
ZKLFK ZRXOG KDYH DLGHG KLP DW VHQWHQFLQJ EHFDXVH LW GLG QRW JLYH WKH
SURVHFXWRU WKH VDPH RSSRUWXQLW\ IRU UHEXWWDO WKDW HYLGHQFH DERXW JRRG
FKDUDFWHU RU UHKDELOLWDWLRQ SRWHQWLDO FRXOG KDYH
$IILGDYLWV ZHUH VXEPLWWHG E\ -DPHV )UHGHULFN &UDWHV
³&UDWHV´ D PLWLJDWLRQ VSHFLDOLVW ZKR ZDV UHWDLQHG E\ SRVWFRQYLFWLRQ
FRXQVHO DQG ZKR LQWHUYLHZHG 0DVRQ¶V PRWKHU EHIRUH KHU GHDWK 'U
-HIIUH\ / 6PDOOGRQ ³6PDOOGRQ´ D SV\FKRORJLVW 0DVRQ¶V IDWKHU DQG
0DVRQ¶V VLVWHU
FRXQVHO DSSDUHQWO\ QHYHU LQWHUYLHZHG DQ\RQH LQFOXGLQJ
0DVRQKLPVHOIDERXWSRVVLEOHPLWLJDWLQJDVSHFWVRI0DVRQ¶V
EDFNJURXQGHYHQWKRXJKYDULRXVIDPLO\PHPEHUVZHUHUHDG\
DQGZLOOLQJWRGLVFXVVKLVOLIHKLVWRU\
$OWKRXJKWKH2KLR6XSUHPH&RXUWGLGQRWPDNHDQH[SOLFLW
ILQGLQJ DERXW WKH H[WHQW RI GHIHQVH FRXQVHO¶V LQGHSHQGHQW
LQYHVWLJDWLRQ RI PLWLJDWLQJ HYLGHQFH LW GLG FRQFOXGH WKDW
GHIHQVH FRXQVHO LQ FKRRVLQJ QRW WR SUHVHQW ZKDWHYHU
PLWLJDWLQJHYLGHQFHZDVNQRZQPDGHDVWUDWHJLFGHFLVLRQWR
IRUHFORVH WKH VWDWH IURP LQWURGXFLQJ QHJDWLYH HYLGHQFH LQ
UHEXWWDO 0DVRQ 1(G DW 8QGHU 6WULFNODQG
KRZHYHU FRXUWV PXVW ILUVW GHWHUPLQH ZKHWKHU GHIHQVH
FRXQVHO¶VLQYHVWLJDWLRQGHFLVLRQVZHUHUHDVRQDEOH2QO\WKHQ
PD\ WKH\ UHMHFW D GHIHQGDQW¶V FKDOOHQJH WR DQ\ GHFLVLRQ
FKDUDFWHUL]HGDVVWUDWHJLFE\GHIHQVHFRXQVHO
+DGWULDOFRXQVHOFRQGXFWHGDQDGHTXDWHLQYHVWLJDWLRQWKH
MXU\ZRXOGKDYHKHDUGVXEVWDQWLDOHYLGHQFHDERXWKRZGUXJ
XVH DQG YLROHQFH SHUYDGHG 0DVRQ¶V EDFNJURXQG DQG OLIH
KLVWRU\)URPWKHUHFRUGEHIRUHXVZHKDYHOHDUQHGWKDW
0DVRQ¶VDOFRKROLFSDUHQWVZHUHKHDY\PDULMXDQDXVHUVDQG
GUXJGHDOHUVIURPWKHWLPH0DVRQZDVIRXURUILYH\HDUVROG
,QGHHG0DVRQ¶VPRWKHUDGPLWWHG³WKDWIRUWKHPDMRULW\RI

-- 21 of 32 --

0DVRQY0LWFKHOO 1R
>0DVRQ@¶VOLIHWKHIDPLO\KRPHZDVDμGUXJKRXVH¶´-$DW
&UDWHV$IIDWˆ6 )RXU\HDUVODWHU0DVRQEHJDQWR
H[SHULPHQWZLWKGUXJVVWHDOLQJPDULMXDQDDQGSLOOVIURPKLV
SDUHQWV¶VXSSO\IRUKLVRZQXVHE\DJHHOHYHQKHKDGEHFRPH
D VLJQLILFDQW XVHU KLPVHOI $ERXW WKLV WLPH 0DVRQ
DFFRPSDQLHGKLVIDWKHURQWULSVRXWRIVWDWHWREX\GUXJV%\
DJHIRXUWHHQ0DVRQEHJDQWRXVHGUXJVZLWKKLVSDUHQWVKH
DOVR UDQ DZD\ IURP KRPH ,Q DGGLWLRQ WR GUXJV YLROHQFH
RYHUUDQ WKH 0DVRQ KRXVHKROG 0DVRQ¶V SDUHQWV VWUXJJOHG
WKURXJKUHSHDWHGERXWVRIGRPHVWLFYLROHQFHLQIURQWRIWKHLU
FKLOGUHQWKH\DOVREHDW0DVRQRQDUHJXODUEDVLVIRUVWHDOLQJ
WKHLUGUXJVDQGIRUWKHPLVFRQGXFWRIKLVVLEOLQJVIRUZKLFK
KHZDVEODPHG
+DYLQJUHFHLYHGRIILFLDOGRFXPHQWVIURPWKHSURVHFXWLRQ
GXULQJGLVFRYHU\WULDOFRXQVHODSSHDUVWRKDYHEHHQDZDUHRI
VRPHRIWKLVHYLGHQFH0LWLJDWLRQ([KLELWIRUH[DPSOH
DSSDUHQWO\ FRQFHUQHG 0DVRQ¶V GUXJ XVH DV D WHHQDJHU VHH
0DVRQ1R&5VOLSRSDWEXWQRWKLVVLJQLILFDQW
XVHDWDPXFKHDUOLHUDJH:HHPSKDVL]HWKDWWKHGLVFRYHU\
GRFXPHQWVE\WKHLU YHU\QDWXUHRQO\FRQFHUQHGWKH0DVRQ
IDPLO\¶VOLPLWHGFRQWDFWVZLWKWKHDXWKRULWLHV)RUH[DPSOH
DUHFRUGIURP0DULRQ&RXQW\&KLOGUHQ¶V6HUYLFHVLQGLFDWHV
WKDW 0DVRQ¶V IDWKHU ZDV FKDUJHG ZLWK DVVDXOW LQ IRU
EHDWLQJ0DVRQ-$DW &UDWHV$IIDWˆ: 7KLV
FKDUJHKRZHYHUVWHPPHGIURPDPLVVLQJSHUVRQUHSRUWWKDW
0DVRQ¶VIDWKHUKLPVHOIILOHGZLWKWKHSROLFH0DVRQKDGUXQ
DZD\ ZKLOH EHLQJ GLVFLSOLQHG -$ DW -DPHV
0LFKDHO0DVRQ$IIDWˆ 7KHDXWKRULWLHVGRQRWDSSHDU
WR KDYH EHHQ DZDUH RI WKH UHJXODU ZKLSSLQJV WKDW 0DVRQ
VXIIHUHG )XUWKHUPRUH 0DVRQ¶V PRWKHU QHYHU UHSRUWHG
HSLVRGHVRIGRPHVWLFDEXVHWRWKHSROLFHEHFDXVHLWZDV³D
QRQRLQRXUIDPLO\WRFDOOWKHFRSV>:@HGLGQ¶WZDQW
WKHPDURXQG´-$DW &UDWHV$IIDWˆ+ 0DVRQ¶V
PRWKHUDOVRGLGQRWJRWRWKHKRVSLWDOZKHUHVRFLDOVHUYLFHV
PD\ KDYH LQWHUYHQHG DQG GRFXPHQWHG WKH 0DVRQ IDPLO\¶V
SOLJKW
7KHUHIRUHWKHGRFXPHQWVSURYLGHGE\WKHSURVHFXWLRQWR
GHIHQVHFRXQVHOFRXOGQRWKDYHFRQWDLQHGDQ\WKLQJFORVHWR
1R 0DVRQY0LWFKHOO
UHTXLUHUHYHUVDO%R\OHY0LOOLRQ)G WK&LU
:HKDYHSUHYLRXVO\LGHQWLILHGIRXUIDFWRUVWKDWDUH
UHOHYDQWLQDQDO\]LQJDFODLPRISURVHFXWRULDOPLVFRQGXFW
,Q HYHU\ FDVH ZH FRQVLGHU WKH GHJUHH WR ZKLFK WKH
UHPDUNVFRPSODLQHGRIKDYHDWHQGHQF\WRPLVOHDGWKH
MXU\ DQG WR SUHMXGLFH WKH DFFXVHG ZKHWKHU WKH\ DUH
LVRODWHGRUH[WHQVLYHZKHWKHUWKH\ZHUHGHOLEHUDWHO\RU
DFFLGHQWDOO\SODFHGEHIRUHWKHMXU\>@DQGWKHVWUHQJWKRI
WKHFRPSHWHQWSURRIWRHVWDEOLVKWKHJXLOWRIWKHDFFXVHG
+LOOY%ULJDQR)G WK&LU TXRWDWLRQ
RPLWWHG :HUHYLHZDSURVHFXWRULDOPLVFRQGXFWFODLPIRU
KDUPOHVVHUURU,G
:H ILUVW QRWH RXU SUHYLRXV KROGLQJ ³WKDW 2KLR¶V
FRQWHPSRUDQHRXVREMHFWLRQUXOHFRQVWLWXWHVDQDGHTXDWHDQG
LQGHSHQGHQW VWDWH JURXQG WKDW EDUV IHGHUDO KDEHDV UHYLHZ
DEVHQWDVKRZLQJRIFDXVHDQGSUHMXGLFH´+LQNOHY5DQGOH
)G WK&LU ³0RUHRYHUZHYLHZD
VWDWH DSSHOODWH FRXUW¶V UHYLHZ IRU SODLQ HUURU DV WKH
HQIRUFHPHQWRIDSURFHGXUDOGHIDXOW´,G³,QGHWHUPLQLQJ
ZKHWKHUVWDWHFRXUWVKDYHUHOLHGRQDSURFHGXUDOUXOHWREDU
UHYLHZRIDFODLPZHORRNWRWKHODVWUHDVRQHGRSLQLRQRIWKH
VWDWHFRXUWVDQGSUHVXPHWKDWODWHU FRXUWV HQIRUFHGWKHEDU
LQVWHDGRIUHMHFWLQJWKHGHIDXOWHGFODLPRQLWVPHULWV´,G
FLWLQJ<OVWY1XQQHPDNHU86
0DVRQ SUHVHQWHG QXPHURXV FODLPV RI SURVHFXWRULDO
PLVFRQGXFW WR WKH GLVWULFW FRXUW ZKLFK IRXQG WKHP WR EH
SURFHGXUDOO\ EDUUHG 0DVRQ ) 6XSS G DW
'HIHQVHFRXQVHOIDLOHGWRPDNHFRQWHPSRUDQHRXVREMHFWLRQV
WRPRVWRIWKHDOOHJHGLQVWDQFHVRISURVHFXWRULDOPLVFRQGXFW
7KHUHIRUH LQ WKH ODVW UHDVRQHG RSLQLRQ E\ D VWDWH FRXUW
UHYLHZLQJWKHVHFODLPVWKH2KLR6XSUHPH&RXUWH[SUHVVO\
HQIRUFHG 2KLR¶V FRQWHPSRUDQHRXV REMHFWLRQ UXOH DQG
UHYLHZHGIRUSODLQHUURU0DVRQ1(GDW
'HIHQVH FRXQVHO GLG REMHFW WR D TXHVWLRQ DERXW '1$
WHVWLQJ $GGUHVVLQJ WKLV FODLP RQ WKH PHULWV WKH 2KLR
6XSUHPH &RXUW KHOG WKDW WKH SURVHFXWRU KDG QRW DFWHG

-- 22 of 32 --

0DVRQY0LWFKHOO 1R
WULDOFRXUWKDGDOORZHG0DVRQ³WRSUHVHQWVRPHHYLGHQFHWKDW
WHQGHG WR VKRZ WKH FULPLQDO SURSHQVLW\ RI &KULV 'HQQLV´
LQFOXGLQJWHVWLPRQ\DERXWWZRLQFLGHQWVZKHQ&KULVVWUXFN
5RELQLQWKHIDFH,G
:HUHFHQWO\FRQVLGHUHGWKH&RQIURQWDWLRQ&ODXVHLQ%RJJV
Y&ROOLQV)G WK&LU FHUWGHQLHG
86 $OWKRXJKWKDWFDVHZDVGHFLGHGXQGHUSUH
$('3$ VWDQGDUGV LW LV VWLOO LQVWUXFWLYH 7KH %RJJV FRXUW
QRWHGWKDWFRXUWVKDGIRXQG&RQIURQWDWLRQ&ODXVHYLRODWLRQV
ZKHQGHIHQVHFRXQVHOKDGDGYDQFHG³DQDUWLFXODWHGWKHRU\
WKDWDZLWQHVVKDGDPRWLYHWRIDEULFDWH´,GDW7KH
UHFRUGLQWKLVFDVHWRWKHH[WHQWWKDW0DVRQ¶VDWWRUQH\VEDVHG
WKHGHIHQVHRQUHVLGXDOGRXEWRQO\EDUHO\VXJJHVWVWKDWWKH\
SXUVXHG D ELDV WKHRU\ DW WULDO 7KH WULDO FRXUW FRQVLVWHQWO\
IUDPHGWKHTXHVWLRQDVRQHRISURSHQVLW\DQGGHIHQVHFRXQVHO
GLGQRWVXJJHVWRWKHUZLVH:HWKXVFRQFOXGHWKDW0DVRQKDV
IDLOHG WR VKRZ WKDW WKH 2KLR 6XSUHPH &RXUW XQUHDVRQDEO\
DSSOLHG FOHDUO\ HVWDEOLVKHG 6XSUHPH &RXUW SUHFHGHQW LQ
XSKROGLQJWKHWULDOFRXUW¶VH[FOXVLRQRIFHUWDLQHYLGHQFHRI
&KULV¶VYLROHQFH
)3URVHFXWRULDO0LVFRQGXFW
0DVRQ DUJXHV WKDW ³>W@KURXJKRXW WKH WULDO DQG SHQDOW\
SKDVHV WKH SURVHFXWRU HQJDJHG LQ HJUHJLRXV PLVFRQGXFW
GHVLJQHGWRSUHMXGLFH0DVRQDQGWRLQIODPHWKHSDVVLRQVRI
WKHMXU\WKXVGHSULYLQJ0DVRQRIGXHSURFHVVDQGDIDLUWULDO´
3HWLWLRQHU¶V %U DW 7KH UHOHYDQW TXHVWLRQ LQ FDVHV RI
DOOHJHGSURVHFXWRULDOPLVFRQGXFWLV³ZKHWKHUWKHSURVHFXWRUV¶
FRPPHQWVμVRLQIHFWHGWKHWULDOZLWKXQIDLUQHVVDVWRPDNHWKH
UHVXOWLQJ FRQYLFWLRQ D GHQLDO RI GXH SURFHVV¶´ 'DUGHQ Y
:DLQZULJKW86 TXRWLQJ'RQQHOO\Y
'H&KULVWRIRUR 86 ³>7@KH
PLVFRQGXFW PXVW EH VR SURQRXQFHG DQG SHUVLVWHQW WKDW LW
SHUPHDWHVWKHHQWLUHDWPRVSKHUHRIWKHWULDORUVR JURVVDV
SUREDEO\WRSUHMXGLFHWKHGHIHQGDQW´6LPSVRQY-RQHV
)G WK&LU LQWHUQDOTXRWDWLRQPDUNVDQG
FLWDWLRQ RPLWWHG $ FODLPDQW PXVW HVWDEOLVK WKDW WKH
FKDOOHQJHGVWDWHPHQWZDVERWKLPSURSHUDQGVRIODJUDQWDVWR
1R 0DVRQY0LWFKHOO
&RQWUDU\ WR WKH GLVVHQW¶V DQDO\VLV WKH SUREOHP KHUH LV QRW WKDW
GHIHQVH FRXQVHO KDG QR NQRZOHGJH RI 0DVRQ¶V EDFNJURXQG EXW WKDW DIWHU
UHFHLYLQJ D OLPLWHG DPRXQW RI WKDW LQIRUPDWLRQ LQ PDWHULDOV SURYLGHG E\
WKH SURVHFXWLRQ GHIHQVH FRXQVHO PD\ QRW KDYH DGHTXDWHO\ LQYHVWLJDWHG WKH
PDWWHU IXUWKHU WKHPVHOYHV 2XU FRQFHUQ LV WKDW WKH OLPLWHG LQIRUPDWLRQ
REWDLQHG E\ GHIHQVH FRXQVHO GLG QRW GLVFKDUJH FRXQVHO¶V GXW\ WR
LQYHVWLJDWH EXW WULJJHUHG WKH GXW\ WR LQYHVWLJDWH
:H ILQG LQH[SOLFDEOH WKH DSSDUHQW IDLOXUH RI WULDO FRXQVHO WR
LQYHVWLJDWH PLWLJDWLQJ HYLGHQFH LQ WKLV FDVH )RXU PRQWKV EHIRUH WULDO WKH
WULDO FRXUW KHDUG RUDO DUJXPHQW RQ GHIHQVH FRXQVHO¶V UHTXHVW IRU YDULRXV
H[SHUWV LQFOXGLQJ ³D PLWLJDWLRQ H[SHUW WHDP RI 3V\FKRORJLVW 6RFLDO
:RUNHU DQG 0LWLJDWLRQ ([SHUW´ 7U DW 'HIHQVH FRXQVHO FDOOHG 'DOH
$ %DLFK ³%DLFK´ WKHQ DQ DVVLVWDQW SXEOLF GHIHQGHU IRU WKH 6WDWH RI
2KLR WR WHVWLI\ DERXW D GHIHQGDQW¶V QHHG IRU PLWLJDWLRQ H[SHUWV %DLFK
GHVFULEHG WKH PLWLJDWLRQ H[SHUW¶V UHVSRQVLELOLWLHV DV IROORZV
2QH VLJQLILFDQW UROH RI WKH PLWLJDWLRQ H[SHUW LV WR LQWHUYLHZ
0U 0DVRQ DERXW KLV EDFNJURXQG DQG WKHQ JR RXW WR LQWHUYLHZ
IDPLO\ PHPEHUV IULHQGV DFTXDLQWDQFHV ,Q DGGLWLRQ LW¶V
LPSRUWDQW IRU WKH PLWLJDWLRQ H[SHUW WR JDWKHU UHFRUGV WKDW PD\ EH
H[LVWLQJ UHODWHG WR 0U 0DVRQ , KDYH QR LGHD DERXW 0U
0DVRQ¶V EDFNJURXQG EXW WKHUH PD\ EH VRPH JRYHUQPHQWDO
UHFRUGV UHODWHG WR KLP WKDW ZRXOG EH KHOSIXO WR WKH GHIHQVH +LV
VFKRRO UHFRUGV DQG ZRUN UHFRUGV PD\ EH LPSRUWDQW IRU WKH
PLWLJDWLRQ SKDVH
6R LQ D VHQVH WKH PLWLJDWLRQ H[SHUW LV WKH RQH WKDW JRHV RXW
WKHDPRXQWRIPLWLJDWLQJHYLGHQFHWKDWFRXOGKDYHEHHQDQG
ODWHU ZDV REWDLQHG LQ DQ LQGHSHQGHQW DQG WKRURXJK
LQYHVWLJDWLRQ,QGHHGZHILQGLWSDUWLFXODUO\WHOOLQJWKDWQRW
HYHQWKHWULDOFRXUWUHIHUUHGWRDQ\NQRZOHGJHRQWKHSDUWRI
WULDOFRXQVHODERXW0DVRQ¶VWURXEOHGFKLOGKRRGRUWKHH[WHQW
WRZKLFKGUXJVDQGYLROHQFHUDYDJHG0DVRQDQGKLVIDPLO\
:HEHOLHYHWKDWLWZDVMXVWWKLVHYLGHQFHZKLFKGLGQRWHQWHU
WKHUHFRUGXQWLOWKHSRVWFRQYLFWLRQVWDJHWKDWZDV0DVRQ¶V
EHVWKRSH$VZHREVHUYHGLQ0DSHVY&R\OH)G
WK&LU FHUWGHQLHG86 WKHLQIRUPDWLRQ
DERXW0DVRQ¶VEDFNJURXQGPD\DPRXQWWROLWWOHPRUHWKDQ
³VOLPHYLGHQFHRIPLWLJDWLRQEXWLWLVVRPHWKLQJ$QGZKDW
LV PRVW LPSRUWDQW LW ZDV >KLV@ RQO\ VKLHOG IURP D GHDWK
VHQWHQFH´,GDW<HWWULDOFRXQVHOGRHVQRWDSSHDUWR
KDYH PDGH DQ\ LQGHSHQGHQW HIIRUW WR LQYHVWLJDWH WKH
SDUWLFXODUVRI0DVRQ¶VKLVWRU\FKDUDFWHURUEDFNJURXQG

-- 23 of 32 --

0DVRQY0LWFKHOO 1R
DQG FRQGXFWV D FRPSOHWH IDPLO\ DQG SHUVRQDO EDFNJURXQG
LQYHVWLJDWLRQ RQ WKH DFFXVHG
7U DW 7ULDO FRXQVHO XQGHUVWRRG WKDW UHO\LQJ RQ WKH GRFXPHQWV
SURGXFHG E\ WKH SURVHFXWLRQ ZDV LQDGHTXDWH EHFDXVH LQWHUYLHZV VWLOO KDG
WR EH WDNHQ RI 0DVRQ DQG WKH ³VLJQLILFDQW RWKHUV LQ KLV OLIH´ DQG WKH
SURVHFXWLRQ FRXOG KDYH PLVVHG VRPH UHFRUGV 7U DW 7KH
SURVHFXWRU DUJXHG WKDW GHIHQVH FRXQVHO KDG EHHQ SURYLGHG ZLWK DOO
DYDLODEOH UHFRUGV DQG WKDW 0DVRQ ZDV IXOO\ DEOH WR DVVLVW LQ KLV GHIHQVH
7U DW *LYHQ GHIHQVH FRXQVHO¶V XQGHUVWDQGLQJ RI WKH QHHG
IRU IXUWKHU LQYHVWLJDWLRQ ZH VWURQJO\ EHOLHYH WKDW FRXQVHO PD\ KDYH
DIIRUGHG 0DVRQ LQHIIHFWLYH DVVLVWDQFH E\ XQUHDVRQDEO\ GHFLGLQJ QRW WR
LQYHVWLJDWH :H OHDYH LW WR WKH GLVWULFW FRXUW LQ WKH ILUVW LQVWDQFH WR
GHWHUPLQH DIWHU KROGLQJ DQ HYLGHQWLDU\ KHDULQJ ZKHWKHU WKH SHUIRUPDQFH
RI GHIHQVH FRXQVHO LQ WKLV FDVH IDLOHG WR PHHW WKH FRQVWLWXWLRQDO PLQLPXP
7KHDOOHJHGIDLOXUHRIGHIHQVHFRXQVHOWRSUHSDUH0DVRQ¶V
IDPLO\ PHPEHUV IRU WKHLU WHVWLPRQ\ DW VHQWHQFLQJ IXUWKHU
GHPRQVWUDWHV WKDW FRXQVHO FRQGXFWHG DQ LQDGHTXDWH
LQYHVWLJDWLRQRIPLWLJDWLQJHYLGHQFH
7ULDO FRXQVHO¶V IDLOXUH WR FRQGXFW DQ LQGHSHQGHQW DQG
WKRURXJK LQYHVWLJDWLRQ PD\ KDYH KDPSHUHG WKHLU DELOLW\ WR
PDNH VWUDWHJLF GHFLVLRQV DW VHQWHQFLQJ LW PD\ DOVR KDYH
DIIHFWHGWKHLUDELOLW\WRJLYHFRPSHWHQWDGYLFHWR0DVRQDERXW
WKH PHDQLQJ RI PLWLJDWLRQ HYLGHQFH DQG WKH DYDLODELOLW\ RI
SRVVLEOHPLWLJDWLRQVWUDWHJLHV,QGHHGDFFRUGLQJWR0DVRQ
WULDOFRXQVHOGLGQRWRIIHUDQ\VXFKDGYLFH
1HLWKHU RI P\ ODZ\HUV HYHU H[SODLQHG WR PH ZKDW WKH
PLWLJDWLRQWULDOLVRUZKDWLWZDVLQWHQGHGWRSURYH,KDG
QRNQRZOHGJHWKDWPLWLJDWLRQZDVLQWHQGHGWRVDYHP\
OLIHRUWKDWWKLVZDVWREHWKHRQO\RSSRUWXQLW\IRUPHWR
GHPRQVWUDWHWRWKHMXU\ZK\,VKRXOGQRWEHJLYHQWKH
GHDWKSHQDOW\
0DXULFH$0DVRQ$IIDWˆ7KHHYLGHQFHLQPLWLJDWLRQ
WKDWZDVVRUHDGLO\DYDLODEOHLQWKLVFDVHRIIHUHGDQDUJXDEO\
UHDVRQDEOH SUREDELOLW\ RI ³KXPDQL]>LQJ 0DVRQ@ EHIRUH WKH
MXU\VXFKWKDWDWOHDVWRQHMXURUFRXOGKDYHIRXQGKHGLGQRW
GHVHUYHWKHGHDWKSHQDOW\´&DUWHU)GDW%HFDXVH
ZHFDQQRWGHWHUPLQHIURPWKHUHFRUGEHIRUHXVZKHWKHUWKH
2KLR6XSUHPH&RXUWDSSOLHG6WULFNODQGXQUHDVRQDEO\E\QRW
1R 0DVRQY0LWFKHOO
0DVRQ0DVRQZDVDOORZHGWRSUHVHQWHYLGHQFHRIDQGWR
FURVVH[DPLQH&KULVDERXW&KULV¶VKHDY\GULQNLQJDQGYLROHQW
WHQGHQFLHV LQFOXGLQJ WZR LQFLGHQWV RI ZLIHEHDWLQJ 6HH
0DVRQ)6XSSGDW7KHWULDOFRXUWDOVRSHUPLWWHG
GHIHQVHFRXQVHOWRSUHVHQWHYLGHQFHRIDQGWRFURVVH[DPLQH
&KULVDERXWDQDOOHJHGWKUHDWWRNLOO5RELQRQWKHGD\WKDWVKH
GLVDSSHDUHG7KHMXU\DOVROHDUQHGRQERWKGLUHFWDQGFURVV
H[DPLQDWLRQ RI &KULV WKDW 5RELQ KDG PDGH KLP WKH
EHQHILFLDU\RIKHUOLIHLQVXUDQFHSROLF\+RZHYHUWKHWULDO
FRXUWUXOHGWKDWHYLGHQFHDERXW&KULV¶VKLVWRU\RIDVVDXOWVZDV
LQDGPLVVLEOHEHFDXVHLWZDVSURIIHUHGE\0DVRQRQO\IRUWKH
SXUSRVHRIVKRZLQJWKDW&KULVDFWHGLQFRQIRUPLW\ZLWKWKH
SULRUDFWVDQGZDVWKHUHIRUHOLNHO\WRKDYHPXUGHUHG5RELQ
0DVRQ¶VILUVW&RQIURQWDWLRQ&ODXVH DUJXPHQWDSSHDUVWR
KDYH EHHQ WKDW WKH HYLGHQFH VKRXOG EH DGPLWWHG WR SURYH
LGHQWLW\'HIHQVHFRXQVHODOOHJHGWKDW&KULVKDGSUHYLRXVO\
EHDWHQDSHUVRQDQG³OHIW>WKDWSHUVRQ@IRUGHDGLQDILHOG´
-$DWMXVWDV5RELQZDVOHIWLQDQDEDQGRQHGUXUDODUHD
+RZHYHUKHDOVRDUJXHGLQWKHDOWHUQDWLYHWKDW&KULV¶VYLROHQW
DFWVVKRXOGEHDGPLWWHG³QRWDVVSHFLILFLQVWDQFHVWRLPSHDFK
FUHGLELOLW\EXWWRVKRZSRVVLELOLW\RILQWHQWPRWLYH>DQG@
VLPLODUPRGXVRSHUDQGL´-$DW)LQDOO\GHIHQVH
FRXQVHO ZDQWHG WR LPSHDFK &KULV¶V FUHGLELOLW\ E\ VKRZLQJ
³RWKHU LQFRQVLVWHQFLHV DQG ZKDW ZH EHOLHYH WR EH XQWUXWKV
DQGRUOLHV´-$DWVHHDOVR-$DW FRQWHQGLQJ
GXULQJRSHQLQJDUJXPHQWWKDW³&KULV'HQQLVKDVOLHGDERXW
FHUWDLQDVSHFWVRIWKLVFDVHIURPWKHYHU\EHJLQQLQJ´ %XWVHH
-$DW DUJXLQJLQ0DVRQ¶VEULHIWRWKH2KLR6XSUHPH
&RXUWWKDW³>W@KHMXU\ZDVQRWEHLQJDVNHGWRFRQVLGHUWKLV
HYLGHQFHDVLPSHDFKLQJ´
1HLWKHU WKH 2KLR 6XSUHPH &RXUW QRU WKH GLVWULFW FRXUW
H[DPLQHG 0DVRQ¶V &RQIURQWDWLRQ &ODXVH FODLP DV VXFK
KROGLQJLQVWHDGWKDWWKHHYLGHQFHZDVQRWDGPLVVLEOHXQGHU
2KLR 5XOH RI (YLGHQFH $ ZKLFK EDUV WKH XVH RI
SURSHQVLW\WRSURYHFRQGXFW7KH2KLR6XSUHPH&RXUWILUVW
UHMHFWHG0DVRQ¶VDUJXPHQWWKDW5XOHVKRXOGQRWDSSO\WR
&KULVEHFDXVHKHZDVDZLWQHVVUDWKHUWKDQDGHIHQGDQWRQ
WULDO0DVRQ1(GDW,WWKHQREVHUYHGWKDWWKH

-- 24 of 32 --

0DVRQY0LWFKHOO 1R
FRQVWUDLQWKHULJKWWRSUHVHQWHYLGHQFH0DVRQFODLPVWKDWKLV
ULJKWWRDIDLUWULDOVKRXOGFRQWURO
,Q &KDPEHUV Y 0LVVLVVLSSL 86 WKH
6XSUHPH &RXUW SURFODLPHG WKDW ³>I@HZ ULJKWV DUH PRUH
IXQGDPHQWDOWKDQWKDWRIDQDFFXVHGWRSUHVHQWZLWQHVVHVLQ
KLVRZQGHIHQVH´,GDW7KHULJKWWRSUHVHQWZLWQHVVHV
KRZHYHULVQRWDEVROXWH³,QWKHH[HUFLVHRIWKLVULJKWWKH
DFFXVHG DV LV UHTXLUHG RI WKH 6WDWH PXVW FRPSO\ ZLWK
HVWDEOLVKHG UXOHV RI SURFHGXUH DQG HYLGHQFH GHVLJQHG WR
DVVXUH ERWK IDLUQHVV DQG UHOLDELOLW\ LQ WKH DVFHUWDLQPHQW RI
JXLOWDQGLQQRFHQFH´,G0DVRQGRHVQRWDUJXHWKDWWKH2KLR
UXOHEDUULQJHYLGHQFHRISULRUEDGDFWVLVXQIDLURUXQUHOLDEOH
,QVWHDG 0DVRQ FRQWHQGV WKDW WKLV UXOH¶V SURWHFWLRQ VKRXOG
H[WHQG WR GHIHQGDQWV EXW QRW WR ZLWQHVVHV :H DUH QRW
SHUVXDGHG WKDW DQ\ VXFK SURSRVLWLRQ LV FOHDUO\ HVWDEOLVKHG
IHGHUDO ODZ DV GHWHUPLQHG E\ WKH 6XSUHPH &RXUW DQG
WKHUHIRUHGHFOLQHWRJUDQWKDEHDVUHOLHIRQWKLVJURXQG
0DVRQ DOVR DUJXHV WKDW HYLGHQFH RI &KULV¶V YLROHQW
WHQGHQFLHV ZDV DGPLVVLEOH WR VKRZ KLV ELDV RU PRWLYH LQ
WHVWLI\LQJ IRU WKH SURVHFXWLRQ 7KH 6XSUHPH &RXUW KDV
UHFRJQL]HG D GHIHQGDQW¶V FRQVWLWXWLRQDO ULJKW WR WHVW WKH
FUHGLELOLW\RIZLWQHVVHVWKURXJKFURVVH[DPLQDWLRQ6HH'DYLV
Y$ODVND86 VHHDOVR&KDPEHUV
86DW)RUELGGLQJLQTXLU\LQWRDZLWQHVV¶VELDVFDQ
YLRODWHWKH&RQIURQWDWLRQ&ODXVH'HODZDUHY9DQ$UVGDOO
86 +RZHYHUDWULDOFRXUWUHWDLQV
GLVFUHWLRQWROLPLWWKHVFRSHRIFURVVH[DPLQDWLRQEDVHGRQ
FRQFHUQV VXFK DV ³KDUDVVPHQW SUHMXGLFH FRQIXVLRQ RI WKH
LVVXHVWKHZLWQHVV¶>V@VDIHW\RULQWHUURJDWLRQWKDWLVUHSHWLWLYH
RU RQO\ PDUJLQDOO\ UHOHYDQW´ ,G DW ,Q VKRUW WKH
&RQIURQWDWLRQ &ODXVH JXDUDQWHHV RQO\ ³DQ RSSRUWXQLW\ IRU
HIIHFWLYH FURVVH[DPLQDWLRQ QRW FURVVH[DPLQDWLRQ WKDW LV
HIIHFWLYHLQZKDWHYHUZD\DQGWRZKDWHYHUH[WHQWWKHGHIHQVH
PLJKWZLVK´'HODZDUHY)HQVWHUHU86
,QWKLVFDVH0DVRQ¶VGHIHQVHDWWULDOZDVWKDW&KULVKDG
PXUGHUHG 5RELQ ,W ZDV WKXV LQ 0DVRQ¶V LQWHUHVW WR
GHPRQVWUDWH &KULV¶V ELDV DQG PRWLYH IRU WHVWLI\LQJ DJDLQVW
1R 0DVRQY0LWFKHOO
H[DPLQLQJ WKH H[WHQW RI WULDO FRXQVHO¶V LQYHVWLJDWLRQ LQWR
PLWLJDWLQJHYLGHQFHZHUHPDQGWKHFDVHWRWKHGLVWULFWFRXUW
ZLWKWKHLQVWUXFWLRQWRKROGDQHYLGHQWLDU\KHDULQJRQ0DVRQ¶V
FODLPRILQHIIHFWLYHDVVLVWDQFHDWWKHVHQWHQFLQJSKDVHRIKLV
WULDO
E)DLOXUHWR3UHVHQW0LWLJDWLQJ(YLGHQFH
1H[W 0DVRQ FKDOOHQJHV GHIHQVH FRXQVHO¶V GHFLVLRQ WR
SUHVHQWDOLPLWHGPLWLJDWLRQFDVHZKHQWKHUHFRUGDVLWVWDQGV
EHIRUHXVLQGLFDWHVWKDW0DVRQJUHZXSLQDG\VIXQFWLRQDO
IDPLO\DQGZDVUHSHDWHGO\H[SRVHGWRYLROHQFHDQGGUXJXVH
IURP FKLOGKRRG OHDGLQJ WR HPRWLRQDO DQG SV\FKRORJLFDO
SUREOHPV:HKDYHQRWHGDERYHWKDWPXFKRIWKLVHYLGHQFH
GRHVQRWDSSHDUWRKDYHEHHQNQRZQWRWULDOFRXQVHOGXHWR
WKHLUDOOHJHGIDLOXUHWRFRQGXFWDQLQGHSHQGHQWDQGWKRURXJK
LQYHVWLJDWLRQ RI SRWHQWLDO PLWLJDWLQJ HYLGHQFH 0DVRQ
FRQWHQGVKRZHYHUWKDWKHZRXOGQRWKDYHUHFHLYHGWKHGHDWK
SHQDOW\IURPDQ\MXU\WKDWKHDUGZKDWPLWLJDWLQJHYLGHQFHZDV
DYDLODEOH
%\WKHWLPHRIVHQWHQFLQJGHIHQVHFRXQVHOKDGGHSRVHG'U
6SDUH DQG SUHSDUHG WKH WZHOYH PLWLJDWLRQ H[KLELWV 7KH\
RULJLQDOO\ SODQQHG WR RIIHU DV PLWLJDWLQJ HYLGHQFH WKH
WHVWLPRQ\RI'U6SDUHZKRFRQFOXGHGEDVHGRQ0DVRQ¶V
SDVWFRQGXFWWKDW0DVRQZDVXQOLNHO\WREHDUHSHDWYLROHQW
RIIHQGHU'HIHQVHFRXQVHOXOWLPDWHO\GHFLGHGQRWWRSUHVHQW
WKLVHYLGHQFHZKLFKDFFRUGLQJWRWKHSURVHFXWRUZDVRPLWWHG
LQRUGHUWRIRUHFORVHUHEXWWDOHYLGHQFHDERXW0DVRQ¶VKLVWRU\
RIYLROHQWFRQGXFWDOOHJHGO\LQFOXGLQJUDSHEUDQGLVKLQJD
JXQUHVLVWLQJDUUHVWDQGEXUJODU\/HDGFRXQVHOLQIRUPHGWKH
WULDOFRXUWWKDWWKHGHFLVLRQQRWWRSUHVHQWPLWLJDWLRQHYLGHQFH
ZDVVWUDWHJLF
:HKDYHWKHFRQVLGHUDWLRQRI0DXULFH0DVRQ¶VOLIH\RX
NQRZKHUHWRGD\DQGVRPHVWUDWHJLHVWKDWZHFDOFXODWHG
DQGGHVLJQHGWRSURFXU>H@DQGDFKLHYHDOLIHYHUGLFWHYHQ
ZLWKWKHGHFLVLRQWKDWZDVUHQGHUHGE\WKHMXU\:HDUH
QRWLQWHUHVWHGLQEULQJLQJXSFHUWDLQWKLQJVRURSHQLQJWKH
GRRUIRUFHUWDLQWKLQJVWKDWWKH3URVHFXWLRQKDVHYLGHQFH
DJUHDWGHVLUHWREULQJEHIRUHWKHMXU\

-- 25 of 32 --

0DVRQY0LWFKHOO 1R
-$DW
7KH 2KLR 6XSUHPH &RXUW KHOG WKDW GHIHQVH FRXQVHO¶V
SHUIRUPDQFHDWWKHVHQWHQFLQJVWDJHZDVQRWGHILFLHQWEHFDXVH
³WKHUHFRUGV>VKRZHG@SULRULQYROYHPHQWVZLWKWKHFULPLQDO
DQGMXYHQLOHMXVWLFHV\VWHPVDQGRWKHUXQIDYRUDEOHPDWWHUV
0DVRQ FRXOG QRW KDYH SUHVHQWHG HYLGHQFH DV WR KLV JRRG
FKDUDFWHU DQG UHKDELOLWDWLRQ SRWHQWLDO ZLWKRXW ULVNLQJ WKH
LQWURGXFWLRQRIQHJDWLYHHYLGHQFHE\WKHVWDWHLQUHEXWWDO´LW
DOVRFRQFOXGHGWKDW0DVRQKDGQRWVKRZQSUHMXGLFH0DVRQ
1(GDW7KHGLVWULFWFRXUWIRFXVHGPRUHGLUHFWO\
RQWKH³SRVVLEOHPLWLJDWLQJHIIHFWVRI>0DVRQ¶V@XQIRUWXQDWH
FKLOGKRRG´0DVRQ)6XSSGDWEXWUHDFKHGWKH
VDPHFRQFOXVLRQ
>0DVRQ@ KDV QRW VXJJHVWHG WKH H[LVWHQFH RI DQ\
PLWLJDWLQJIDFWRUWKDWLVQRWRYHUZKHOPLQJO\QHJDWHGE\
KLVKLVWRU\RIYLROHQWFULPLQDOFRQGXFWLQFOXGLQJDSULRU
UDSHDQGILUHDUPVRIIHQVHVPXOWLSOHSDUROHYLRODWLRQV
DQG PXOWLSOH GUXJ RIIHQVHV VWUHWFKLQJ DV IDU EDFN DV
HOHPHQWDU\VFKRRO>0DVRQ@¶VFRXQVHO¶VVWUDWHJ\RIQRW
SUHVHQWLQJ PLWLJDWLQJ WHVWLPRQ\ LQ RUGHU WR NHHS
>0DVRQ@¶VH[WHQVLYHFULPLQDOKLVWRU\IURPWKHMXU\ZDV
REMHFWLYHO\ UHDVRQDEOH 1RU KDV >0DVRQ@ VKRZQ
SUHMXGLFH RQ WKLV UHFRUG 0DVRQ FDQQRW VKRZ D
UHDVRQDEOHOLNHOLKRRGWKDWDQ\MXURUZKRZDVDSSULVHGRI
>0DVRQ@¶VFRPSOHWHSV\FKRVRFLDOKLVWRU\² LQFOXGLQJ
KLVSULRUFULPLQDOUHFRUG²ZRXOGQRWKDYHYRWHGIRUWKH
GHDWKSHQDOW\
,GDW LQWHUQDOFLWDWLRQRPLWWHG
,Q UHMHFWLQJ 0DVRQ¶V FODLP RI LQHIIHFWLYH DVVLVWDQFH DW
VHQWHQFLQJWKHGLVWULFWFRXUWUHOLHGRQ6FRWWLQZKLFKZHKHOG
WKDW GHIHQVH FRXQVHO¶V GHFLVLRQ QRW WR SUHVHQW PLWLJDWLQJ
HYLGHQFHZDVUHDVRQDEOHLQOLJKWRIWKHSHWLWLRQHU¶VH[WHQVLYH
FULPLQDO KLVWRU\ ZKLFK LQFOXGHG ³FRPPLVVLRQ RI UREEHU\
DVVDXOW NLGQDSLQJ DQG RWKHU YLROHQW DFWV XSRQ LQQRFHQW
FLWL]HQV´6FRWW)GDW7KHSRWHQWLDOPLWLJDWLQJ
HYLGHQFHLQWKDWFDVHDVIRXQGE\WKHVWDWHFRXUWDIWHUDSRVW
FRQYLFWLRQHYLGHQWLDU\KHDULQJFRQVLVWHGRIWHVWLPRQ\DERXW
1R 0DVRQY0LWFKHOO
YROXQWDULO\DJUHHGWRDQVZHUWKHSROLFH¶VTXHVWLRQV0DVRQ
KDV QRW GHPRQVWUDWHG WKDW WKLV GHWHUPLQDWLRQ ZDV DQ
XQUHDVRQDEOHDSSOLFDWLRQRIIHGHUDOFRQVWLWXWLRQDOODZWRWKH
IDFWVRIKLVFDVH:HWKXVGHQ\0DVRQKDEHDVFRUSXVUHOLHI
ZLWKUHVSHFWWRWKLVFODLP
³$Q\VWDWHPHQWJLYHQIUHHO\DQGYROXQWDULO\ZLWKRXWDQ\
FRPSHOOLQJLQIOXHQFHVLVRIFRXUVHDGPLVVLEOHLQHYLGHQFH´
0LUDQGD 86 DW 7KH 2KLR FRXUWV IRXQG WKDW
0DVRQ¶VVWDWHPHQWVZHUHYROXQWDU\0DVRQ1(GDW
%HFDXVH0DVRQKDVQRWSUHVHQWHGFOHDUDQGFRQYLQFLQJ
HYLGHQFHWRWKHFRQWUDU\ZHGHIHUWRWKHVWDWHFRXUWV¶IDFWXDO
ILQGLQJDQGKROGWKDWWKHLUDSSOLFDWLRQRI0LUDQGDZDVQRW
REMHFWLYHO\XQUHDVRQDEOH
(5LJKWWR&RQIURQW:LWQHVVHVDQGWR3UHVHQWD'HIHQVH
0DVRQ DUJXHV WKDW WKH WULDO FRXUW YLRODWHG KLV ULJKW WR
FRQIURQWWKHSURVHFXWLRQ¶VZLWQHVVHVDQGWRSUHVHQWDGHIHQVH
E\UHVWULFWLQJFURVVH[DPLQDWLRQRI&KULVZKRKDGDKLVWRU\
RIYLROHQWDVVDXOWVRQ5RELQDQGRWKHUV0DVRQDVVHUWVWKDW
WKH2KLR6XSUHPH&RXUW¶VGHFLVLRQWRXSKROGWKHWULDOFRXUW¶V
H[FOXVLRQRIWKLVHYLGHQFHZDVDQXQUHDVRQDEOHDSSOLFDWLRQRI
WKHIROORZLQJSULQFLSOHVIURP:DVKLQJWRQY7H[DV86

7KHULJKWWRRIIHUWKHWHVWLPRQ\RIZLWQHVVHVDQGWR
FRPSHOWKHLUDWWHQGDQFHLIQHFHVVDU\LVLQSODLQWHUPV
WKH ULJKW WR SUHVHQW D GHIHQVH WKH ULJKW WR SUHVHQW WKH
GHIHQGDQW¶V YHUVLRQ RI WKH IDFWV DV ZHOO DV WKH
SURVHFXWLRQ¶VWRWKHMXU\VRLWPD\GHFLGHZKHUHWKHWUXWK
OLHV -XVW DV DQ DFFXVHG KDV WKH ULJKW WR FRQIURQW WKH
SURVHFXWLRQ¶VZLWQHVVHVIRUWKHSXUSRVHRIFKDOOHQJLQJ
WKHLU WHVWLPRQ\ KH KDV WKH ULJKW WR SUHVHQW KLV RZQ
ZLWQHVVHV WR HVWDEOLVK D GHIHQVH 7KLV ULJKW LV D
IXQGDPHQWDOHOHPHQWRIGXHSURFHVVRIODZ
,GDW7KH6WDWHRI2KLRGRHVQRWGLVSXWHWKDWDGHIHQGDQW
PD\RIIHUHYLGHQFHWRVKRZWKDWDWKLUGSDUW\FRPPLWWHGWKH
FULPHEXWLWFRQWHQGVWKDWUXOHVRISURFHGXUHDQGHYLGHQFH

-- 26 of 32 --

0DVRQY0LWFKHOO 1R
0DVRQ QRWHV WKDW 3RWWV GURYH KLP IURP KLV KRPH WR WKH 6KHULII¶V
2IILFH LQ DQ XQPDUNHG SROLFH FDU ZLWK GRRUV WKDW FRXOG QRW EH XQORFNHG
E\ SDVVHQJHUV
SRLQWVWRWKHIROORZLQJIDFWRUV KHZDVWKHVROHVXVSHFWLQ
WKHLQYHVWLJDWLRQ KHZDVWUDQVSRUWHGE\FDUWRWKHSROLFH
VWDWLRQ IRU TXHVWLRQLQJ ³SUHFOXGLQJ KLV DELOLW\ WR OHDYH
ZLWKRXWWKHRIILFHUV>¶@SHUPLVVLRQDQGZLOOLQJQHVVWRGULYH
KLPKRPH´ KHZDVTXHVWLRQHGDWWKHSROLFHVWDWLRQDQG
³LQWHUURJDWHG IRU IRXU KRXUV LQ DQ LQFUHDVLQJO\ KRVWLOH
VHWWLQJ ´ KH ZDV ³OLHG WR E\ WKH RIILFHUV UHJDUGLQJ
H\HZLWQHVVHV>¶@SODFLQJ0DVRQDWWKHFULPHVFHQH´ KHZDV
³UHSHDWHGO\ WROG KH ZDV QRW XQGHU DUUHVW HYHQ WKRXJK KLV
SDUROHRIILFHUVWRRGUHDG\WRLPPHGLDWHO\DUUHVWKLPDVVRRQ
DV WKH LQWHUURJDWLRQFHDVHG´DQG KHZDVDUUHVWHGIRUD
SDUROH YLRODWLRQ DIWHU WKH )HEUXDU\ LQWHUURJDWLRQ
3HWLWLRQHU¶V%UDW
+RZHYHU ZH DJUHH ZLWK WKH 6WDWH RI 2KLR WKDW WKHVH
FLUFXPVWDQFHVGRQRWGHPRQVWUDWHWKHIXQFWLRQDOHTXLYDOHQWRI
DQ DUUHVW 0DVRQ¶V ILUVW DUJXPHQW LV XQDYDLOLQJ 6HH
6WDQVEXU\86DW ³>$@QRIILFHU¶VVXEMHFWLYHDQG
XQGLVFORVHG YLHZ FRQFHUQLQJ ZKHWKHU WKH SHUVRQ EHLQJ
LQWHUURJDWHG LV D VXVSHFW LV LUUHOHYDQW WR WKH DVVHVVPHQW
ZKHWKHUWKHSHUVRQLVLQFXVWRG\´ :HGHHPWKHPRGHLQ
ZKLFK0DVRQZDVWUDQVSRUWHGIRUTXHVWLRQLQJWREHLUUHOHYDQW
EHFDXVH0DVRQKLPVHOIDGPLWVWKDWKH³YROXQWDULO\FDPHWR
WKHSROLFHVWDWLRQWZLFH´3HWLWLRQHU¶V%UDW7KHIDFW
WKDW0DVRQZDVTXHVWLRQHGLQD³FRHUFLYHHQYLURQPHQW´VXFK
DVDSROLFHVWDWLRQGRHVQRWQHFHVVDULO\FRQVWLWXWHFXVWRGLDO
LQWHUURJDWLRQ0DWKLDVRQ86DW8QLWHG6WDWHVY
6DOYR)G WK&LU FHUWGHQLHG86
0LUDQGDUHTXLUHVDVLJQLILFDQWGHSULYDWLRQRI
IUHHGRP 7KH SRVVLELOLW\ WKDW 0DVRQ PD\ QRW KDYH EHHQ
DZDUH RI WKH FRQVHTXHQFHV RI KLV SDUWLFLSDWLRQ LQ WKH
LQWHUYLHZV GRHV QRW PHDQ WKDW KH ZDV LQ FXVWRG\ 6HH
%HKHOHU86DWQ0DVRQZDVUHSHDWHGO\WROG
WKDWKHZDVIUHHWROHDYHZKHQKHZLVKHG7KHVWDWHFRXUWV
FRQFOXGHG WKDW 0DVRQ ZDV QRW LQ FXVWRG\ DW WKH WLPH RI
TXHVWLRQLQJ EHFDXVH KH ZDV QRW XQGHU DUUHVW DQG KH
1R 0DVRQY0LWFKHOO
WKHSHWLWLRQHU¶V³SHUVRQDOOR\DOW\WRKLVVLEOLQJVJLUOIULHQG
DQG FKLOGUHQ DQG DQ H[FHHGLQJO\ YLROHQW HQYLURQPHQW
WKURXJKRXWKLVXSEULQJLQJ´,G,QVWHDGRI SUHVVLQJWKRVH
SRLQWVGHIHQVHFRXQVHOFKRVHDVWUDWHJ\RIUHVLGXDOGRXEWDQG
RQO\SUHVHQWHGWKHSHWLWLRQHU¶VXQVZRUQVWDWHPHQW,G
:HUHFRJQL]HWKHIDFWXDOVLPLODULWLHVEHWZHHQ6FRWWDQGWKLV
FDVH+RZHYHUDIWHUWKH6XSUHPH&RXUWGHFLGHG:LOOLDPV
ZHTXHVWLRQHGZKHWKHUWKHKROGLQJLQ6FRWWVKRXOGEHOLPLWHG
³WRWKHQDUURZIDFWVRIDIHGHUDOFRXUWFRQWHPSODWLQJDKDEHDV
SHWLWLRQ DIWHU D VWDWH FRXUW KDV FRQGXFWHG DQ HYLGHQWLDU\
KHDULQJ DQG PDGH D ILQGLQJ RI IDFW WKDW KDG PLWLJDWLQJ
HYLGHQFH EHHQ LQWURGXFHG WKH GHIHQGDQW¶V UHFHQW FULPLQDO
KLVWRU\ZRXOGKDYHEHHQSUHVHQWHGWRWKHMXU\LQUHEXWWDO´
&DUWHU)GDWQ$VZHKDYHQRWHGDERYHQR
VWDWH RU IHGHUDO FRXUW KDV KHOG DQ HYLGHQWLDU\ KHDULQJ RQ
0DVRQ¶VLQHIIHFWLYHDVVLVWDQFHFODLP:HWKHUHIRUHEHOLHYH
WKDW6FRWWLVOHVVUHOHYDQWWKDQLWPLJKWRWKHUZLVHEH
%DVHG RQ WKH UHFRUG EHIRUH XV ZH DJUHH ZLWK WKH 2KLR
6XSUHPH &RXUW WKDW GHIHQVH FRXQVHO H[HUFLVHG UHDVRQDEOH
SURIHVVLRQDOMXGJPHQWLQGHFLGLQJQRWWRSUHVHQWPLWLJDWLQJ
HYLGHQFHDERXW0DVRQ¶V³JRRGFKDUDFWHUDQGUHKDELOLWDWLRQ
SRWHQWLDO´0DVRQ1(GDWEXWZHUHLWHUDWHWKDW
FRXQVHOPD\KDYHUHQGHUHGLQHIIHFWLYHDVVLVWDQFHLQIDLOLQJWR
LQYHVWLJDWH DQG WKXV EHLQJ XQDEOH WR SUHVHQW SRWHQWLDO
PLWLJDWLQJHYLGHQFHDERXW0DVRQ¶VEDFNJURXQG:HEHJLQE\
QRWLQJWKDWZHKDYHSUHYLRXVO\GHHPHGWKHIDLOXUHWRSUHVHQW
PLWLJDWLQJ HYLGHQFH ZKHQ LW ZDV DYDLODEOH WR EH ³DQ
DEGLFDWLRQ RI DGYRFDF\´ UDWKHU WKDQ D VWUDWHJLF GHFLVLRQ
$XVWLQ)GDW7KLVKROGLQJKRZHYHUQHFHVVDULO\
UHTXLUHV DQ LQTXLU\ LQWR WKH PLWLJDWLQJ HYLGHQFH WKDW ZDV
DYDLODEOHDWWKHWLPHRIVHQWHQFLQJ
$V GLVFXVVHG DERYH WULDO FRXQVHO¶V SUHSDUDWLRQ IRU
VHQWHQFLQJ DSSHDUV WR KDYH EHHQ OLPLWHG WR UHYLHZLQJ WKH
GRFXPHQWV WKDW WKH SURVHFXWLRQ GLVFORVHG WR WKHP DQG
GHSRVLQJ'U6SDUHZKRWULHG³WRGHWHUPLQHPLWLJDWLRQ´DQG
³WRDWWHPSWWRGHWHUPLQHWKHOLNHOLKRRGRI>0DVRQ@EHLQJD
UHSHDWYLROHQWRIIHQGHUDQGRUKLVSRWHQWLDOIRUUHKDELOLWDWLRQ´

-- 27 of 32 --

0DVRQY0LWFKHOO 1R
6PDOOGRQ$IIDWˆˆ'U6SDUHFRQFOXGHGKLVUHSRUWWR
GHIHQVH FRXQVHO E\ SUHGLFWLQJ 0DVRQ¶V IXWXUH EHKDYLRU
³%DVHGRQWKHDYDLODEOHHYLGHQFH0U0DVRQLVQRWOLNHO\WR
EHDUHSHDWYLROHQWRIIHQGHUXQGHURUGLQDU\FLUFXPVWDQFHV
>+LV@ SDWWHUQ LV WKDW RI DYRLGDQFH DQG UXQQLQJ DZD\ DV
RSSRVHG WR DJJUHVVLYH YLROHQFH´ 6PDOOGRQ $II DW ˆ
7KHUHIRUH WKH PLWLJDWLQJ HYLGHQFH DYDLODEOH WR GHIHQVH
FRXQVHODWVHQWHQFLQJFRQFHUQHG0DVRQ¶VLQWHUDFWLRQVZLWK
WKHVWDWHDQG'U6SDUH¶VDVVHVVPHQWRI0DVRQ¶VFKDUDFWHU
,QGLVPLVVLQJ0DVRQ¶VSHWLWLRQIRUSRVWFRQYLFWLRQUHOLHI
WKH WULDO FRXUW UHIHUUHG WR WKH WZHOYH PLWLJDWLRQ H[KLELWV LQ
ILQGLQJWKDW³>W@KHHYLGHQFHUHJDUGLQJ>0DVRQ¶V@EDFNJURXQG
ZKLFKKHQRZFRQWHQGVVKRXOGKDYHEHHQ LQWURGXFHGZDV
FRQVLGHUHGE\'HIHQVH&RXQVHO´0DVRQ1R&5
VOLSRSDW7KHWULDOFRXUWWKHQOLVWHGWKHIROORZLQJHYLGHQFH
WKDWWKHSURVHFXWLRQFRXOGKDYHLQWURGXFHGLQUHEXWWDO
$ 7KDW >0DVRQ@ KDG PXOWLSOH MXYHQLOH RIIHQVHV DQG
ZDVFRPPLWWHGWRWKH2KLR<RXWK&RPPLVVLRQDVD
MXYHQLOH 0LWLJDWLRQ([KLELWV
% 7KDWDVDQDGXOWKHKDGEHHQLQDQGRXWRISULVRQDQG
WKDWZKLOHRQSDUROHKHFRPPLWWHGPXOWLSOHSDUROH
YLRODWLRQV 0LWLJDWLRQ([KLELWV
& 7KDW>0DVRQ@KDGEHHQDGUXJXVHUVLQFHDJHDQG
ZDVDOVRDGUXJGHDOHU 0LWLJDWLRQ([KLELW
' >7KDW 0DVRQ@ HQJDJHG LQ RWKHU YLROHQW FRQGXFW
LQFOXGLQJ WKUHDWHQLQJ KLV H[JLUOIULHQG ZLWK D JXQ
0LWLJDWLRQ ([KLELWV 'HSRVLWLRQ RI 'U
6SDUH
( 7KDWKHOSZDVRIIHUHGWR>0DVRQ@DWDQHDUO\DJH
LQFOXGLQJ FRXQVHOLQJ LQ ZKLFK KH UHIXVHG WR
SDUWLFLSDWH 0LWLJDWLRQ([KLELW
) 7KDWKHUDSHG'DQLHOOH0LOOHURQ2FWREHU
'U6SDUHGHSRVLWLRQ
* 7KDW GXULQJ WKH WHQ \HDUV SULRU WR UDSLQJ DQG
PXUGHULQJ5RELQ'HQQLV>0DVRQ@KDGVSHQWDOOEXW
PRQWKV LQ SULVRQ ZKLFK LQFOXGHG KLV SDUROH
EHLQJ YLRODWHG RQ IRXU VHSDUDWH RFFDVLRQV
GHSRVLWLRQRI'U6SDUH
1R 0DVRQY0LWFKHOO
0DVRQ DOVR LQGLFDWHG WKDW KH KDG WR OHDYH LQ RUGHU WR SD\ D XWLOLW\
ELOO
WKHSROLFHVXVSHFW´&DOLIRUQLDY%HKHOHU86
SHUFXULDP TXRWLQJ0DWKLDVRQ86DW
³>7@KHRQO\UHOHYDQWLQTXLU\LVKRZDUHDVRQDEOHPDQ
LQ WKH VXVSHFW¶V SRVLWLRQ ZRXOG KDYH XQGHUVWRRG KLV
VLWXDWLRQ´%HUNHPHUY0F&DUW\86
,QWKLVFDVH3RWWVTXHVWLRQHG0DVRQWZLFHDERXW5RELQ¶V
GLVDSSHDUDQFH7KHILUVWLQWHUURJDWLRQZKLFKWRRNSODFHLQ
WKH HDUO\ DIWHUQRRQ RI )HEUXDU\ DW WKH 6KHULII¶V
2IILFH ZDV UHFRUGHG RQ DXGLRWDSH DQG ODVWHG HLJKWHHQ
PLQXWHV$WWKHKHDULQJRQ0DVRQ¶VPRWLRQWRVXSSUHVVWKH
VWDWHPHQWVPDGHDWWKLVLQWHUURJDWLRQDQGWKHLQWHUURJDWLRQ
WKDWIROORZHG3RWWVGHVFULEHG0DVRQDV³UHDOFRRSHUDWLYH´
DQGWHVWLILHGWKDW0DVRQWROGKLP³WRFRPHEDFNE\´LIKH
QHHGHGDQ\WKLQJHOVH-$DW0DVRQDJUHHGWKDWKH
PDGHD³YROXQWDU\FKRLFH´WRDQVZHU3RWWV¶VTXHVWLRQVDERXW
5RELQ-$DW
7KHVHFRQGLQWHUURJDWLRQWRRNSODFHRQ)HEUXDU\
LQDQLQWHUURJDWLRQURRPORFDWHGLQWKHEDVHPHQWRI&LW\+DOO
7KLVLQWHUYLHZZDVDOVRUHFRUGHGEXWLWODVWHGIRUDOPRVWIRXU
KRXUV0DVRQZDVQRWIRUPDOO\DUUHVWHGRUWROGWKDWKHFRXOG
QRWOHDYH+HDVNHGZKHWKHUKHZDVXQGHUDUUHVWVRPHWLPH
DIWHUSPDQGZDVWROGWKDWKHZDVQRW0DVRQODWHU
WHVWLILHGWKDWKLVPRELOLW\ZDVKDPSHUHGE\EHLQJTXHVWLRQHG
LQWKHEDVHPHQW+HDOVRWHVWLILHGWKDWKHDVNHGWKHSROLFHWR
WDNH KLP EDFN KRPH DQG WR WHUPLQDWH WKH LQWHUYLHZ
+RZHYHU KH DFNQRZOHGJHG RQ FURVVH[DPLQDWLRQ WKDW KH
FRXOGKDYHJRWWHQRXWRIWKHLQWHUURJDWLRQURRP$IWHUWKLV
LQWHUYLHZ0DVRQ¶VSDUROHRIILFHUWRRN0DVRQLQWRFXVWRG\IRU
YLRODWLQJWKHFRQGLWLRQVRIKLVSDUROH3RWWVWKHQJDYH0DVRQ
KLV0LUDQGDZDUQLQJV7KHLQWHUYLHZHQGHG ZKHQ0DVRQ
UHIXVHGWRZDLYHKLV0LUDQGDULJKWVDQGUHTXHVWHGDODZ\HU
0DVRQDUJXHVWKDWKHZDVLQFXVWRG\GXULQJWKHLQWHUYLHZV
RI)HEUXDU\DQGDQGWKDWKLVVWDWHPHQWVWRWKHSROLFH
VKRXOGFRQVHTXHQWO\QRWKDYHEHHQDGPLWWHGDWWULDO0DVRQ

-- 28 of 32 --

0DVRQY0LWFKHOO 1R
'0LUDQGD9LRODWLRQ
6LQFH 0LUDQGD Y $UL]RQD 86 FRXUWV
KDYH SURWHFWHG D GHIHQGDQW¶V SULYLOHJH DJDLQVW VHOI
LQFULPLQDWLRQE\VXSSUHVVLQJDQ\VWDWHPHQW³VWHPPLQJIURP
FXVWRGLDOLQWHUURJDWLRQRIWKHGHIHQGDQW´LIWKHSROLFHIDLOHGWR
FRPSO\ZLWKFHUWDLQSURFHGXUDOVDIHJXDUGV,GDW$W
WULDOWKHSURVHFXWLRQLQWURGXFHGVWDWHPHQWVWKDW0DVRQKDG
PDGHWRWKHSROLFHGXULQJLQWHUYLHZVRQ)HEUXDU\DQG
0DVRQ FRQWHQGV WKDW WKH WULDO FRXUW VKRXOG KDYH
VXSSUHVVHGWKHVHVWDWHPHQWVEHFDXVHWKH\ZHUHPDGHZKLOHKH
ZDVLQFXVWRG\DQGEHIRUHKHUHFHLYHGDQ\0LUDQGDZDUQLQJV
7KH 2KLR 6XSUHPH &RXUW GLVDJUHHG FRQFOXGLQJ IURP WKH
FLUFXPVWDQFHVRIWKH)HEUXDU\LQWHUYLHZVWKDW0DVRQZDVQRW
LQFXVWRG\GXULQJKLVLQWHUURJDWLRQDQGWKDWKHKDGPDGHWKH
VWDWHPHQWVYROXQWDULO\0DVRQ1(GDW%HFDXVH
WKH VWDWH FRXUW FRUUHFWO\ LQYRNHG 0LUDQGD LQ WKLV FDVH ZH
UHYLHZ LWV GHFLVLRQ XQGHU WKH ³XQUHDVRQDEOH DSSOLFDWLRQ´
SURQJRI† G VSHFLILFDOO\ZKHWKHULWVDSSOLFDWLRQRI
WKH OHJDO SULQFLSOHV ZDV ³REMHFWLYHO\ XQUHDVRQDEOH´
:LOOLDPV86DW:HPXVWSUHVXPHWKDWWKHVWDWH
FRXUW¶VIDFWXDOILQGLQJVDUHFRUUHFWXQOHVV0DVRQRIIHUVFOHDU
DQGFRQYLQFLQJHYLGHQFHWRUHEXWWKLVSUHVXPSWLRQ86&
† H
7KH 0LUDQGD &RXUW GHILQHG FXVWRGLDO LQWHUURJDWLRQ DV
³TXHVWLRQLQJ LQLWLDWHG E\ ODZ HQIRUFHPHQW RIILFHUV DIWHU D
SHUVRQKDVEHHQWDNHQLQWRFXVWRG\RURWKHUZLVHGHSULYHGRI
KLVIUHHGRPRIDFWLRQLQDQ\VLJQLILFDQWZD\´0LUDQGD
86 DW $ VXVSHFW LV ³LQ FXVWRG\´ IRU SXUSRVHV RI
UHFHLYLQJ 0LUDQGD SURWHFWLRQ LI WKHUH KDV EHHQ D ³IRUPDO
DUUHVW RU UHVWUDLQW RQ IUHHGRP RI PRYHPHQW´ 2UHJRQ Y
0DWKLDVRQ 86 ³>7@KH LQLWLDO
GHWHUPLQDWLRQ RI FXVWRG\ GHSHQGV RQ WKH REMHFWLYH
FLUFXPVWDQFHV RI WKH LQWHUURJDWLRQ QRW RQ WKH VXEMHFWLYH
YLHZV KDUERUHG E\ HLWKHU WKH LQWHUURJDWLQJ RIILFHUV RU WKH
SHUVRQEHLQJTXHVWLRQHG´6WDQVEXU\Y&DOLIRUQLD86
SHU FXULDP 0LUDQGD ZDUQLQJV DUH QRW
UHTXLUHG³VLPSO\EHFDXVHWKHTXHVWLRQLQJWDNHVSODFHLQWKH
VWDWLRQKRXVHRUEHFDXVHWKHTXHVWLRQHGSHUVRQLVRQHZKRP
1R 0DVRQY0LWFKHOO
,GDW7KH2KLR6XSUHPH&RXUWGHWHUPLQHGWKDWGHIHQVH
FRXQVHOUHDVRQDEO\FKRVHQRWWRSUHVHQWPLWLJDWLQJHYLGHQFH
DERXW0DVRQ¶V³JRRGFKDUDFWHUDQGUHKDELOLWDWLRQSRWHQWLDO´
EHFDXVH WKH\ GLG QRW ZDQW WR UXQ WKH ULVN RI WKLV QHJDWLYH
UHEXWWDO HYLGHQFH 0DVRQ 1(G DW 7KH VWDWH
VXSUHPH FRXUW GLG QRW H[SOLFLWO\ EDVH LWV FRQFOXVLRQ DERXW
GHIHQVHFRXQVHO¶VVWUDWHJLFPRWLYDWLRQVRQZKHWKHUVWDWHODZ
ZRXOGKDYHDOORZHGWKHSURVHFXWRUWRXVHDOORIWKHQHJDWLYH
HYLGHQFHOLVWHGDERYH&IHJ6WDWHY+HQQHVV1(G
2KLR OLPLWLQJDSURVHFXWRU¶VULJKWWR³UHEXW
IDOVH RU LQFRPSOHWH VWDWHPHQWV UHJDUGLQJ WKH GHIHQGDQW¶V
FULPLQDOUHFRUGWRWKRVHLQVWDQFHVZKHUHWKHGHIHQVHRIIHUV
DVSHFLILFDVVHUWLRQE\DPLWLJDWLRQZLWQHVVRUE\GHIHQGDQW
WKDWPLVUHSUHVHQWVWKHGHIHQGDQW¶VSULRUFULPLQDOKLVWRU\´
%HFDXVHVWDWHODZJRYHUQVWKHVFRSHRIUHEXWWDOHYLGHQFHZH
DV D IHGHUDO KDEHDV FRXUW ZLOO DFFHSW WKH 2KLR 6XSUHPH
&RXUW¶VLQWHUSUHWDWLRQRIVWDWHODZ6HH*UHHUY0LWFKHOO
)G WK&LU FHUWGHQLHG²86²
6 &W 0DU +RZHYHU ZH REVHUYH RQFH
DJDLQ WKDW WKLV UHDVRQLQJ GRHV QRW DSSO\ WR PLWLJDWLQJ
HYLGHQFHDERXW0DVRQ¶VEDFNJURXQGDQGOLIHKLVWRU\ZKLFK
WULDOFRXQVHOGLGQRWLQYHVWLJDWHDQGWKXVKDGQRRSSRUWXQLW\
WRSUHVHQWDWVHQWHQFLQJ7HVWLPRQ\WKDWVLPSO\SXW0DVRQ¶V
FKLOGKRRGLQWRFRQWH[WZLWKRXWPLVUHSUHVHQWLQJLWZRXOGQRW
KDYHEHHQVXEMHFWWRWKHSURVHFXWRU¶VUHEXWWDOHYLGHQFHZKLFK
PRVWO\FRQFHUQHG0DVRQ¶VFKDUDFWHU
F,QDGHTXDWH3V\FKLDWULF$VVLVWDQFH
0DVRQ DUJXHV WKDW KH UHFHLYHG LQHIIHFWLYH DVVLVWDQFH RI
FRXQVHO DW VHQWHQFLQJ EHFDXVH KLV DWWRUQH\V DFFHGHG WR
LQDGHTXDWHSV\FKLDWULFDVVLVWDQFH6SHFLILFDOO\KHDUJXHVWKDW
'U 6SDUH WKH SV\FKLDWULVW ZKR H[DPLQHG KLP IRU WKH
VHQWHQFLQJSKDVHIDLOHGWRGHYHORSPLWLJDWLQJHYLGHQFHDQG
VKRXOGKDYHEHHQGLVTXDOLILHGGXHWRDFRQIOLFWRILQWHUHVWWKDW
VWHPPHGIURPKLVWUHDWPHQWRI0DVRQ¶VZLIH3HWLWLRQHU¶V%U
DW Q,Q6NDJJVZHKHOGWKDWFRXQVHO¶VXVHRI DQ
LQFRPSHWHQW SV\FKLDWULF H[SHUW DW VHQWHQFLQJ FRQVWLWXWHG
LQHIIHFWLYHDVVLVWDQFHRIFRXQVHO6NDJJV)GDW
+RZHYHU WKH GHIHQGDQW LQ 6NDJJV ZDV SURWHFWHG E\ $NH

-- 29 of 32 --

0DVRQY0LWFKHOO 1R
EHFDXVHKHKDGFODLPHGLQVDQLW\DVDGHIHQVHDWWULDO,GDW
0DVRQ¶V GHIHQVH UHVWHG RQ UHVLGXDO GRXEW DQG WKH
DUJXPHQWWKDW&KULVKDGPXUGHUHG5RELQWKHUHIRUH0DVRQ
ZDV QRW HQWLWOHG WR SV\FKLDWULF DVVLVWDQFH GXULQJ WKH
VHQWHQFLQJSKDVHXQGHU$NH0RUHRYHUWKHWZRFDVHVFDQEH
GLVWLQJXLVKHG EHFDXVH GHIHQVH FRXQVHO GLG QRW SUHVHQW DQ\
H[SHUW SV\FKLDWULF HYLGHQFH LQ WKLV FDVH &I LG DW
KROGLQJ WKDW GHIHQVH FRXQVHO UHQGHUHG FRQVWLWXWLRQDOO\
LQHIIHFWLYHDVVLVWDQFHE\³IDLO>LQJ@WRLQYHVWLJDWHDQGSUHVHQW
PHDQLQJIXOPLWLJDWLQJHYLGHQFH´DQG³XV>LQJ@DQLQFRPSHWHQW
DQG IUDXGXOHQW μSV\FKRORJLVW¶ DV WKH FHQWUDO PLWLJDWLRQ
ZLWQHVV´
+RZHYHUDFFRUGLQJWRWKHUHFRUGEHIRUHXVDFRPSHWHQW
SV\FKLDWULFH[SHUWZRXOGKDYH³FRQGXFW>HG@DZLGHUDQJLQJ
YHU\ WKRURXJK LQTXLU\ LQWR 0U 0DVRQ¶V SV\FKRVRFLDO
EDFNJURXQG´6PDOOGRQ$IIDWˆ6XFKDQLQTXLU\ZRXOG
QRGRXEWKDYHDPHOLRUDWHGWKHSUHMXGLFLDOHIIHFWVRIGHIHQVH
FRXQVHO¶VDOOHJHGIDLOXUHWRLQYHVWLJDWH0DVRQ¶VOLIHKLVWRU\
7KHUHIRUH DOWKRXJK 0DVRQ ZDV QRW HQWLWOHG WR SV\FKLDWULF
DVVLVWDQFH XQGHU $NH KH PD\ VWLOO KDYH DQ LQHIIHFWLYH
DVVLVWDQFH FODLP IRU WKH GHILFLHQW SHUIRUPDQFH RI GHIHQVH
FRXQVHOLQDSSDUHQWO\UHO\LQJRQ'U6SDUHIRUDQLQGHSHQGHQW
LQYHVWLJDWLRQLQWRPLWLJDWLQJHYLGHQFH
0DVRQSXUVXHGKLVLQHIIHFWLYHDVVLVWDQFHRIFRXQVHOFODLP
ZLWKGLOLJHQFHUDLVLQJLWLQDOORIKLVSOHDGLQJV+HKDV\HWWR
UHFHLYHKLVUHTXHVWIRUDQHYLGHQWLDU\KHDULQJ:HWKHUHIRUH
UHPDQGWKLVFDVHWRWKHGLVWULFWFRXUWZLWKLQVWUXFWLRQVWRKROG
DQHYLGHQWLDU\KHDULQJDQGWRGHWHUPLQHLQOLJKWRIWKHIDFWRUV
WKDW ZH KDYH GLVFXVVHG ZKHWKHU GHIHQVH FRXQVHO UHQGHUHG
FRQVWLWXWLRQDOO\ LQHIIHFWLYH DVVLVWDQFH ZLWK UHVSHFW WR WKH
VHQWHQFLQJSKDVHRI0DVRQ¶VWULDO
&%UDG\9LRODWLRQ
$IWHU%UDG\Y0DU\ODQG86 DSURVHFXWRU
ZKRVXSSUHVVHVHYLGHQFHWKDWLVERWKIDYRUDEOHWRDGHIHQGDQW
DQG³PDWHULDOHLWKHUWRJXLOWRUWRSXQLVKPHQW´YLRODWHVGXH
SURFHVV ³LUUHVSHFWLYH RI WKH JRRG IDLWK RU EDG IDLWK RI WKH
SURVHFXWLRQ´,GDW7KH%UDG\UXOHHQFRPSDVVHVERWK
1R 0DVRQY0LWFKHOO
:H DJUHH ZLWK WKH GLVWULFW FRXUW WKDW 0DVRQ ZDV QRW
SUHMXGLFHGE\WKHQRQGLVFORVXUHRI+D\GHQ¶VQRWHV%RWKWKH
<RXQJVWHVWLILHGDW0DVRQ¶VWULDOWKDWRQWKHQLJKWRI5RELQ¶V
GLVDSSHDUDQFH&KULVKDGVWDWHGKLVLQWHQWLRQWRNLOOKHULIKH
IRXQG KHU 0RUHRYHU GHIHQVH FRXQVHO FURVVH[DPLQHG
0LFKDHO<RXQJDERXW&KULV¶VWKUHDWV&DURO\Q<RXQJDOVR
WHVWLILHG RQ GLUHFW DQG FURVVH[DPLQDWLRQ DERXW 5RELQ¶V
+DUOH\'DYLGVRQVKLUWV$VIRUWKHVLJKWLQJRI5RELQRQWKH
QLJKWRIKHUGLVDSSHDUDQFH&DURO\Q<RXQJWHVWLILHGWKDWVKH
EHOLHYHGWKDWVKHKDGVHHQ5RELQEHWZHHQDQGSP
EXWVWDWHGWKDWVKHKDGQRWZRUQKHUJODVVHVDQGFRXOGQRWEH
FHUWDLQDERXWZKHWKHUVKHKDGDFWXDOO\VHHQ5RELQLQWKHFDU
&KULVKLPVHOIWHVWLILHGRQERWKGLUHFWDQGFURVVH[DPLQDWLRQ
DERXWEHLQJWKHEHQHILFLDU\RI5RELQ¶VOLIHLQVXUDQFHSROLF\
,QOLJKWRIWKHGLUHFWDQGFURVVH[DPLQDWLRQRIWKH<RXQJVZH
DJUHHZLWKWKHGLVWULFWFRXUW¶VFRQFOXVLRQWKDW+D\GHQ¶VQRWHV
GRQRWSUHVHQWDUHDVRQDEOHSUREDELOLW\RIDGLIIHUHQWUHVXOWDW
WULDO
)LQDOO\0DVRQFODLPVWKDWKHVXIIHUHGSUHMXGLFHDVDUHVXOW
RIWKHSURVHFXWLRQ¶VIDLOXUHWRGLVFORVHSUHWULDOVWDWHPHQWVRI
VHYHQZLWQHVVHVLQFOXGLQJWKH<RXQJVDQG&KULV$FFRUGLQJ
WR0DVRQDOORIWKHVHZLWQHVVHVKDGVHHQ5RELQRQWKHGD\RI
KHUGLVDSSHDUDQFHDQGDOO³KDGJLYHQGLIIHUHQWYHUVLRQVRIWKH
IDFWV VXUURXQGLQJ WKH GHDWK RI 5RELQ 'HQQLV >WKDW@ ZHUH
LPSHDFKLQJDVZHOODVH[FXOSDWRU\DQGZHUHUHTXLUHGWREH
GLVFORVHGE\WKHVWDWH´3HWLWLRQHU¶V%UDW:HDUHXQDEOH
WRILQGWKHH[LVWHQFHRIDQ\VXFKGRFXPHQWVLQWKHUHFRUG:H
DOVRDJUHHZLWKWKHGLVWULFWFRXUW¶VREVHUYDWLRQWKDWGHIHQVH
FRXQVHO³FURVVH[DPLQHGHDFKRIWKHOLVWHGZLWQHVVHVLQGHWDLO
DQGIUHTXHQWO\XVHGSUHWULDOVWDWHPHQWVIURPWKRVHZLWQHVVHV
IRULPSHDFKPHQWSXUSRVHV´0DVRQ)6XSSGDW
%HFDXVH0DVRQIDLOHGWRLQGLFDWHWKHH[LVWHQFHRUORFDWLRQRI
WKHVH VWDWHPHQWV ZH FRQFOXGH WKDW KH KDV EHHQ XQDEOH WR
VKRZSUHMXGLFHIURPWKHLUQRQGLVFORVXUHDQGWKDWKHKDVIDLOHG
WR RYHUFRPH KLV SURFHGXUDO GHIDXOW SUHFOXGLQJ KLP IURP
DVVHUWLQJD%UDG\YLRODWLRQEHIRUHXV

-- 30 of 32 --

0DVRQY0LWFKHOO 1R
0DVRQ DOVR DVVHUWV WKDW KH VXIIHUHG SUHMXGLFH GXH WR WKH
QRQGLVFORVXUHRIQRWHV WKDW+D\GHQWRRNZKLOHFRQGXFWLQJ
WHOHSKRQHLQWHUYLHZVRIWKH<RXQJVVKRUWO\EHIRUH0DVRQ¶V
WULDO EHJDQ 7KH GLVWULFW FRXUW VXPPDUL]HG WKHVH QRWHV DV
IROORZV
'XULQJ+D\GHQ¶VFRQYHUVDWLRQVZLWKWKH<RXQJVERWK
0LFKDHO DQG &DURO\Q <RXQJ LQGLFDWHG WKDW WKH\ KDG
PRYHGIURP2KLRWR6RXWK&DUROLQDEHFDXVHWKH\ZHUH
UHFHLYLQJ WKUHDWHQLQJ OHWWHUV DQG WHOHSKRQH FDOOV IURP
XQNQRZQSHRSOHLQFRQQHFWLRQZLWKWKHWULDO0LFKDHO
<RXQJ WROG &DSWDLQ +D\GHQ WKDW ZKHQ &KULV 'HQQLV
ZRNHXSODWHLQWKHHYHQLQJRQ)HEUXDU\KHZDV
DQJU\ WKDW 5RELQ 'HQQLV ZDV QRW WKHUH DQG VDLG KH
ZRXOGNLOOKHUZKHQKHIRXQGKHU&DURO\Q<RXQJVDLG
VKHWKRXJKWVKHKDGVHHQVHYHUDOKRXUVDIWHU'HQQLVZDV
ODVWVHHQDOLYHWKH+DUOH\'DYLGVRQ7VKLUW'HQQLVZDV
ZHDULQJDWWKHWLPHRIWKHPXUGHU&DURO\Q<RXQJVDLG
VKHWKRXJKWVKHKDGVHHQ5RELQ'HQQLVULGLQJLQDFDURQ
WKHHYHQLQJRI)HEUXDU\VHYHUDOKRXUVDIWHUWKH
SURVHFXWLRQ DUJXHG WKDW >0DVRQ@ NLOOHG 'HQQLV %RWK
<RXQJVH[SUHVVHGFRQFHUQVWKDW&KULV'HQQLVPLJKWKDYH
NLOOHGKLVZLIHLQRUGHUWRJDLQWKHSURFHHGVRIKHUOLIH
LQVXUDQFH
0DVRQ)6XSSGDW0DVRQFRQWHQGVWKDWWKHVH
VWDWHPHQWVZHUH QHFHVVDU\WRKLVGHIHQVHWKHRU\WKDW&KULV
PXUGHUHGKLVZLIH7KHGLVWULFWFRXUW¶VUHYLHZRIWKHWULDO
WUDQVFULSW KRZHYHU UHVXOWHG LQ D ILQGLQJ WKDW ³WKH UHFRUG
GHPRQVWUDWHVFRQFOXVLYHO\WKDW>0DVRQ@QRWRQO\KDGDFFHVV
WREXWDFWXDOO\DWWHPSWHGWRSURIIHUDWWULDOHYHU\SLHFHRI
H[FXOSDWRU\HYLGHQFHKHQRZDOOHJHVKHZDVXQIDLUO\GHSULYHG
RI E\ WKH VWDWH¶V IDLOXUH WR GLVFORVH &DSWDLQ +D\GHQ¶V
WHOHSKRQHFRQYHUVDWLRQVZLWK0LFKDHODQG&DURO\Q<RXQJ´
,G DW %HFDXVH WKH GLUHFW DQG FURVVH[DPLQDWLRQ RI
ZLWQHVVHVLPSDUWHGWKHVXEVWDQFHRIWKHVHFRQYHUVDWLRQVWKH
GLVWULFW FRXUW FRQFOXGHG WKDW WKH GLVFORVXUH RI WKH QRWHV
WKHPVHOYHVZRXOGQRWKDYHFUHDWHGDUHDVRQDEOHSUREDELOLW\
RIDGLIIHUHQWYHUGLFW,G
1R 0DVRQY0LWFKHOO
H[FXOSDWRU\ DQG LPSHDFKPHQW HYLGHQFH 8QLWHG 6WDWHV Y
%DJOH\ 86 )DYRUDEOH HYLGHQFH LV
PDWHULDOXQGHU%UDG\³RQO\LIWKHUHLVDUHDVRQDEOHSUREDELOLW\
WKDWKDGWKHHYLGHQFHEHHQGLVFORVHGWRWKHGHIHQVHWKHUHVXOW
RIWKHSURFHHGLQJZRXOGKDYHEHHQGLIIHUHQW´,GDW$
UHDVRQDEOHSUREDELOLW\LVRQHWKDWLV³VXIILFLHQWWRXQGHUPLQH
FRQILGHQFHLQWKHRXWFRPH´RIWKHWULDO,G³7KHTXHVWLRQLV
QRWZKHWKHUWKHGHIHQGDQWZRXOGPRUHOLNHO\WKDQQRWKDYH
UHFHLYHGDGLIIHUHQWYHUGLFWZLWKWKHHYLGHQFHEXWZKHWKHULQ
LWV DEVHQFH KH UHFHLYHG D IDLU WULDO XQGHUVWRRG DV D WULDO
UHVXOWLQJLQDYHUGLFWZRUWK\RIFRQILGHQFH´.\OHVY:KLWOH\
86
0DVRQGLGQRWUDLVHD%UDG\FODLPRQGLUHFWDSSHDOEXWKH
GLGUDLVHRQHDVKLVWKLUGJURXQGIRUUHOLHILQKLVVWDWHSRVW
FRQYLFWLRQSHWLWLRQ7KHVWDWHWULDOFRXUWIRXQGWKDWWKH%UDG\
FODLPZDVEDUUHGE\UHVMXGLFDWD7KH2KLR&RXUWRI$SSHDOV
KHOG WKDW ³QHDUO\ DOO RI WKH >%UDG\@ FODLPV VHW IRUWK LQ
>0DVRQ¶V@ SHWLWLRQ ZHUH RU VKRXOG KDYH EHHQ>@ UDLVHG RQ
GLUHFW DSSHDO IURP KLV FRQYLFWLRQ´ DQG WKHQ UXOHG DJDLQVW
0DVRQRQWKHPHULWV0DVRQ:/DW 7KH
GLVWULFWFRXUWIRXQGWKDW0DVRQZDVLQSURFHGXUDOGHIDXOWRQ
WKH %UDG\ FODLPV KDG QRW VKRZQ FDXVH RU SUHMXGLFH DQG
FRXOG QRW PDNH RXW D WUXH %UDG\ YLRODWLRQ 0DVRQ )
6XSSGDW
,Q&ROHPDQY0LWFKHOO)G WK&LU ZH
UHLWHUDWHGWKDWWKHDSSOLFDWLRQRIUHVMXGLFDWDXQGHU2KLRODZ
³LV DQ DGHTXDWH DQG LQGHSHQGHQW VWDWH JURXQG MXVWLI\LQJ
IRUHFORVXUHRIFRQVWLWXWLRQDOFODLPVLQKDEHDV´,GDW
FLWLQJ5XVWY=HQW)G WK&LU DQG5LJJLQV
Y 0F0DFNLQ )G WK &LU +RZHYHU
IHGHUDO KDEHDV UHOLHI LV DYDLODEOH IRU FRQVWLWXWLRQDO FODLPV
GHIDXOWHGLQVWDWHFRXUWLIDSHWLWLRQHUGHPRQVWUDWHVFDXVHDQG
SUHMXGLFH*UD\Y1HWKHUODQG86
0DVRQDWWHPSWVWRGLVSXWHWKHGLVWULFWFRXUW¶VILQGLQJWKDW
WKH %UDG\ FODLPV ZHUH SURFHGXUDOO\ GHIDXOWHG EXW KLV
DUJXPHQWVHVVHQWLDOO\SRLQWWRFDXVH)LUVWFLWLQJ$PDGHRY
=DQW86 0DVRQVXJJHVWVWKDW³WKH>VWDWH¶V@

-- 31 of 32 --

0DVRQY0LWFKHOO 1R
YHU\ DFW RI ZLWKKROGLQJ WKH HYLGHQFH LQ WKH ILUVW SODFH
HVWDEOLVKHV μFDXVH¶ IRU DQ\ DOOHJHG SURFHGXUDO GHIDXOW´
3HWLWLRQHU¶V%UDW6HFRQGKHDUJXHVWKDW³WKHIDFWWKDWWKH
GRFXPHQWVZHUHQRWDYDLODEOHXQWLOVWDWHSRVWFRQYLFWLRQDJDLQ
HVWDEOLVKHV DGHTXDWH μFDXVH¶ IRU DQ\ DOOHJHG GHIDXOW $
SHWLWLRQHULVQRWUHTXLUHGWRUDLVHRQGLUHFWDSSHDOFODLPVIRU
ZKLFKKHODFNVDEDVLVLQIDFWHVSHFLDOO\ZKHUHWKHVWDWHKDV
DFWXDOO\FRQFHDOHGWKHIDFWV´3HWLWLRQHU¶V%UDW LQWHUQDO
FLWDWLRQRPLWWHG +RZHYHUDVWKHGLVWULFWFRXUWQRWHG0DVRQ
KDV QRW VKRZQ ZK\ WKH EDVLV IRU D %UDG\ FODLP ZDV QRW
DYDLODEOHRQGLUHFWDSSHDO&RQFOXVRU\VWDWHPHQWVDERXWVWDWH
FRQFHDOPHQWZLOOQRWVXSSRUWDILQGLQJRIFDXVH$PDGHR
86DW ³>7@KHH[LVWHQFHRIFDXVHIRUDSURFHGXUDO
GHIDXOWPXVWRUGLQDULO\WXUQRQZKHWKHUWKHSULVRQHUFDQVKRZ
WKDWVRPHREMHFWLYHIDFWRUH[WHUQDOWRWKHGHIHQVHLPSHGHG
FRXQVHO¶VHIIRUWVWRFRPSO\ZLWKWKH6WDWH¶VSURFHGXUDOUXOH´
TXRWLQJ0XUUD\Y&DUULHU86
(YHQDVVXPLQJWKDW0DVRQGLGKDYHFDXVHIRUIDLOLQJWR
UDLVH KLV %UDG\ DUJXPHQWV RQ GLUHFW DSSHDO ZH DUH QRW
SHUVXDGHG WKDW KH FDQ VKRZ SUHMXGLFH 7R REWDLQ UHOLHI
0DVRQ ³PXVW FRQYLQFH XV WKDW μWKHUH LV D UHDVRQDEOH
SUREDELOLW\¶ WKDW WKH UHVXOW RI WKH WULDO ZRXOG KDYH EHHQ
GLIIHUHQWLIWKHVXSSUHVVHGGRFXPHQWVKDGEHHQGLVFORVHGWR
WKHGHIHQVH´6WULFNOHUY*UHHQH86
,QH[DPLQLQJWKHVXSSUHVVHGHYLGHQFHZHPXVWDVN³ZKHWKHU
WKHIDYRUDEOHHYLGHQFHFRXOGUHDVRQDEO\EHWDNHQWRSXWWKH
ZKROH FDVH LQ VXFK D GLIIHUHQW OLJKW DV WR XQGHUPLQH
FRQILGHQFHLQWKHYHUGLFW´,GDW TXRWDWLRQRPLWWHG
:H FRQFOXGH WKDW ZH FDQQRW DQVZHU WKLV TXHVWLRQ LQ WKH
DIILUPDWLYH
0DVRQGHVFULEHVWKUHHJHQHUDOFDWHJRULHVRIHYLGHQFHWKDW
ZDVDOOHJHGO\ZLWKKHOGIURPKLVGHIHQVH VWDWHPHQWVPDGH
E\ 5REHUW 5RGHIIHU ³5RGHIIHU´ WR SROLFH DQG PHGLFDO
SHUVRQQHO WKDW KH KDG EHHQ SUHVHQW DW 5RELQ¶V PXUGHU
H[FXOSDWRU\ VWDWHPHQWV PDGH E\ 0LFKDHO DQG &DURO\Q
<RXQJ IULHQGV RI WKH 'HQQLVHV WR &DSWDLQ $O +D\GHQ
³+D\GHQ´ ZKRLQWHUYLHZHGWKHPWKUHHGD\VEHIRUHWKHMXU\
ZDV LPSDQHOHG DQG SUHWULDO VWDWHPHQWV RI YDULRXV
1R 0DVRQY0LWFKHOO
ZLWQHVVHV WKDW ZHUH DOOHJHGO\ LQFRQVLVWHQW ZLWK WKHLU
WHVWLPRQ\DWWULDO7KHGLVWULFWFRXUWUHYLHZHGWKHUHFRUGDQG
GHWHUPLQHGWKDWWKHUHZDVQRUHDVRQDEOHSUREDELOLW\WKDWWKH
GLVFORVXUH RI WKHVH VWDWHPHQWV ZRXOG KDYH SURGXFHG D
GLIIHUHQWUHVXOWDWWULDO0DVRQ)6XSSGDW:H
DJUHH
5RGHIIHUZDVDUUHVWHGRQ)HEUXDU\IRXUGD\VDIWHU
WKHGLVFRYHU\RI5RELQ¶VERG\IRUVWHDOLQJZKLVNH\IURPD
FRQYHQLHQFHVWRUH$WWKHWLPHRIKLVDUUHVW5RGHIIHUZDV
ERWKLQWR[LFDWHGDQGVXLFLGDOKHKDGDSSDUHQWO\FRQVXPHG
WKUHHTXDUWHUVRIDILIWKRIZKLVNH\DQGVHYHQVOHHSLQJSLOOV
6RRQDIWHUPDNLQJWKHDUUHVWWKHSROLFHWUDQVSRUWHG5RGHIIHU
WR0DULRQ*HQHUDO+RVSLWDOIRUDPHGLFDOHYDOXDWLRQ:KLOH
EHLQJH[DPLQHG5RGHIIHULQGLFDWHGWRWKHDUUHVWLQJRIILFHU
WKDW KH KDG LQIRUPDWLRQ DERXW 5RELQ¶V GHDWK ZKLFK KH
LQWLPDWHGZDV³VDWDQLFUHODWHG´-$DW5RGHIIHUVWDWHG
WKDW5RELQKDGEHHQRUGHUHGWRJHWRXWRIKHUFDUKLWLQWKH
EDFNRIWKHKHDGDQGWKHQ³KXQJE\KHUQHFNZLWKDODUJHORJ
FKDLQ´ -$ DW $V WKH GLVWULFW FRXUW QRWHG WKLV
GHVFULSWLRQ RI 5RELQ¶V LQMXULHV ZDV LQFRQVLVWHQW ZLWK KHU
DFWXDOLQMXULHV0DVRQ)6XSSGDW
$IWHUUHYLHZLQJ5RGHIIHU¶VVWDWHPHQWVDQGWKHVXUURXQGLQJ
FLUFXPVWDQFHV WKH GLVWULFW FRXUW FRQFOXGHG WKDW ³LW VWUDLQV
FUHGLELOLW\SDVWWKHEUHDNLQJSRLQWWRVXJJHVWWKDWWKHUHLVD
UHDVRQDEOH SUREDELOLW\ 5RGHIIHU¶V HYLGHQFH ZRXOG KDYH
SURGXFHGDGLIIHUHQWYHUGLFW´0DVRQ)6XSSGDW
0DVRQ FRQWHQGV WKDW WKH GLVWULFW FRXUW¶V GLVPLVVDO RI
5RGHIIHU¶V VWDWHPHQWV DPRXQWHG WR ³DQ LPSHUPLVVLEOH
FUHGLELOLW\GHWHUPLQDWLRQWKDWLVQRWVXSSRUWHGE\WKHHYLGHQFH
DQG>@PRUHLPSRUWDQWO\LVQRWDIDFWRUSURSHUO\FRQVLGHUHGLQ
DQDO\]LQJ D %UDG\ YLRODWLRQ´ 3HWLWLRQHU¶V %U DW :H
GLVDJUHH%DJOH\LQVWUXFWVFRXUWVWRUHPHG\D%UDG\YLRODWLRQ
RQO\ LI WKH XQGLVFORVHG HYLGHQFH SUHVHQWV D UHDVRQDEOH
SUREDELOLW\RIDGLIIHUHQWUHVXOWDWWULDO%DJOH\86DW
,WZDVWKXVSURSHUIRUWKHGLVWULFWFRXUWWRFRQVLGHUWKH
FLUFXPVWDQFHVRI5RGHIIHU¶VVWDWHPHQWV

-- 32 of 32 --