01a0154p.06

7KH +RQRUDEOH 6RORPRQ 2OLYHU -U 8QLWHG 6WDWHV 'LVWULFW -XGJH IRU
WKH 1RUWKHUQ 'LVWULFW RI 2KLR VLWWLQJ E\ GHVLJQDWLRQ

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
3XUVXDQW WR 6L[WK &LUFXLW 5XOH
(/(&7521,& &,7$7,21 )(' $SS 3 WK &LU
)LOH 1DPH DS
81,7('67$7(6&28572)$33($/6
)257+(6,;7+&,5&8,7
BBBBBBBBBBBBBBBBB
81,7(' 67$7(6 2) $0(5,&$
3ODLQWLII$SSHOOHH
Y
1$721<$ 7$08 &2%%
'HIHQGDQW$SSHOODQW
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH:HVWHUQ'LVWULFWRI7HQQHVVHHDW0HPSKLV
1R²-XOLD6*LEERQV'LVWULFW-XGJH
$UJXHG-DQXDU\
'HFLGHGDQG)LOHG0D\
%HIRUH0$57,1&KLHI-XGJH68+5+(,15,&+&LUFXLW
-XGJH2/,9(5'LVWULFW-XGJH
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' 5DQGDOO 3 6DON\ 7+( /$: 2)),&( 2)
5$1'$// 6$/.< 0HPSKLV 7HQQHVVHH IRU $SSHOODQW
7RQ\ 5 $UYLQ $66,67$17 81,7(' 67$7(6

-- 1 of 4 --

8QLWHG6WDWHVY&REE 1R
$77251(< 0HPSKLV 7HQQHVVHH IRU $SSHOOHH
21 %5,() 5DQGDOO 3 6DON\ 7+( /$: 2)),&( 2)
5$1'$// 6$/.< 0HPSKLV 7HQQHVVHH IRU $SSHOODQW
7RQ\ 5 $UYLQ $66,67$17 81,7(' 67$7(6
$77251(<0HPSKLV7HQQHVVHHIRU$SSHOOHH
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
2/,9(5 'LVWULFW -XGJH 'HIHQGDQW$SSHOODQW 1DWRQ\D
&REE ³&REE´ DSSHDOV KHU VHQWHQFH IRU GLVSRVLQJ RI D
ILUHDUP WR D FRQYLFWHG IHORQ LQ YLRODWLRQ RI 86&
† G &REE FODLPV WKDW WKH GLVWULFW FRXUW HUUHG LQ
HQKDQFLQJKHUVHQWHQFHXQGHU866*†. F % IRU
GLVSRVLQJ RI WKH ILUHDUP ZLWK NQRZOHGJH RU LQWHQW WKDW LW
ZRXOGEHXVHGWRFRPPLWPXUGHU)RUWKHUHDVRQVVHWIRUWK
EHORZZH$)),50WKHGLVWULFWFRXUW
,%$&.*5281'
&REE¶V ER\IULHQG FRGHIHQGDQW .HQQDWK +HQGHUVRQ
³+HQGHUVRQ´ ZDV FRQILQHG DW WKH )D\HWWH &RXQW\
7HQQHVVHH MDLO LQ WKH 6SULQJ RI ,Q 0DUFK RI
+HQGHUVRQEHJDQFDOOLQJ&REEWRDVNKHUWRJHWDJXQIRUKLP
(YHQWXDOO\&REEDJUHHGWKDWVKHZRXOGSURFXUHDJXQ IRU
+HQGHUVRQ IURP KHU IULHQG FRGHIHQGDQW -RKQQ\ *RROVE\
³*RROVE\´ &REE GHFLGHG WR JHW WKH JXQ IRU +HQGHUVRQ
EHFDXVH+HQGHUVRQFODLPHGKHKDGORFDWHGWKHPDQZKRKDG
UDSHG &REE¶V PRWKHU &REE EHOLHYHG WKDW +HQGHUVRQ ZDV
JRLQJWRJLYHWKHSLVWROWRKLVEURWKHUZKRZRXOGLQWXUQJLYH
LWWRVRPHRQHZKRZRXOGVKRRWWKHUDSLVW2Q$SULO
&REEERXJKWDFDOLEHUSLVWROIURP*RROVE\
7KHQH[WGD\$SULO&REEFRQFHDOHGWKHORDGHG
SLVWROLQVLGHKHUFORWKHVDQGVPXJJOHGLWLQWR+HQGHUVRQ
ZKLOH YLVLWLQJ KLP DW WKH )D\HWWH &RXQW\ -DLO 2Q 0D\
+HQGHUVRQ XVHG WKH SLVWRO WR VKRRW DQG NLOO 'HSXW\
:LOOLDP7%LVKRSZKHQ'HSXW\%LVKRSDWWHPSWHGWRSUHYHQW
+HQGHUVRQ IURP HVFDSLQJ IURP FXVWRG\ +HQGHUVRQ ZDV

-- 2 of 4 --

8QLWHG6WDWHVY&REE 1R
2I FRXUVH KDG GHDWK QRW UHVXOWHG † . E ZRXOG KDYH DSSOLHG
WR &REE¶V FRQGXFW
FRPPLWWHG´ $OWKRXJK WKH &XWOHU DQG &XPPLQJV FRXUWV
ZHUHGLVFXVVLQJ†. E WKHFRPPHQWDU\WR†.
PDNHVLWFOHDUWKDWWKHZRUG³DQRWKHU´LVXVHGLQWKHVDPH
PDQQHULQVHFWLRQV†. E DQG†. F % 6HH
866*†.FPWQ
$W WKH WLPH WKDW &REE WUDQVIHUUHG WKH SLVWRO WR
+HQGHUVRQVKHKDGNQRZOHGJHRULQWHQWWKDWLWZRXOGEHXVHG
RUSRVVHVVHGLQFRQQHFWLRQZLWK³DQRWKHURIIHQVH´ZLWKLQWKH
PHDQLQJRI†. F % WKHVKRRWLQJRIWKHLQGLYLGXDO
ZKRUDSHGKHUPRWKHU'HDWKUHVXOWHGIURPWKHXVHRIWKH
SLVWRO7KXV&REE¶VFRQGXFWSUHFLVHO\ILWVWKHODQJXDJHRI
†. F % 8QGHUWKHODQJXDJHRI†. F LWLV
LUUHOHYDQWWKDWWKHSLVWROZDVQRWXVHGDV&REELQWHQGHGEXW
LQVWHDGZDVXVHGE\+HQGHUVRQWRVKRRWWKHMDLOGHSXW\7KH
GLVWULFWFRXUWZDVWKXVFRUUHFWWRHQKDQFH&REE¶VVHQWHQFH
XQGHU†. F % UDWKHUWKDQXQGHU†. E
,9&21&/86,21
)RUWKHIRUHJRLQJUHDVRQVZH$)),50WKHMXGJPHQWRIWKH
GLVWULFWFRXUW
1R 8QLWHG6WDWHVY&REE
FDSWXUHGDVKRUWWLPHDIWHUWKHVKRRWLQJDQGHVFDSHWKH
SLVWROZDVVWLOOLQKLVSRVVHVVLRQ7KHSLVWROZDVWUDFHGWR
&REEZKRFRQIHVVHGKHULQYROYHPHQW:KHQVKHZDVVKRZQ
DSKRWRJUDSKRIWKHJXQVKHDGPLWWHGWKDWLWZDVWKHRQHVKH
JDYHWR+HQGHUVRQ
2Q $XJXVW WKH )HGHUDO *UDQG -XU\ IRU WKH
:HVWHUQ'LVWULFWRI7HQQHVVHHUHWXUQHGDWZHQW\IRXUFRXQW
LQGLFWPHQWDJDLQVW&REEDQGHLJKWFRGHIHQGDQWV&REEZDV
QDPHG LQ &RXQWV DQG RI WKH LQGLFWPHQW &RXQW
FKDUJHGKHUZLWKFRQVSLUDF\LQYLRODWLRQRI86&†
&RXQW FKDUJHG KHU ZLWK GLVSRVLQJ RI DPPXQLWLRQ WR D
FRQYLFWHG IHORQ LQ YLRODWLRQ RI 86& † G DQG
&RXQW FKDUJHG KHU ZLWK GLVSRVLQJ RI D ILUHDUP WR D
FRQYLFWHGIHORQDOVRLQYLRODWLRQRI† G
2Q$XJXVW&REESOHGJXLOW\WR&RXQWRIWKH
LQGLFWPHQWSXUVXDQWWRDSOHDDJUHHPHQW$IWHUDVHQWHQFLQJ
KHDULQJRQ6HSWHPEHUWKHGLVWULFWFRXUWVHQWHQFHG
&REEWRDPRQWKSULVRQWHUP7KLVDSSHDOIROORZHG
,,67$1'$5'2)5(9,(:
:HUHYLHZDGLVWULFWFRXUW¶VIDFWXDOILQGLQJVLQFRQQHFWLRQ
ZLWK VHQWHQFLQJ XQGHU D GHIHUHQWLDO ³FOHDUO\ HUURQHRXV´
VWDQGDUG8QLWHG6WDWHVY/DWRXI)G WK&LU
+RZHYHU WKLV FRXUW UHYLHZV GH QRYR WKH GLVWULFW
FRXUW¶V LQWHUSUHWDWLRQ DQG DSSOLFDWLRQ RI WKH VHQWHQFLQJ
JXLGHOLQHV8QLWHG6WDWHVY6LYLOV)G WK
&LU
,,,',6&866,21
&REE¶V FODLP RI VHQWHQFLQJ HUURU IRFXVHV RQ WKH GLVWULFW
FRXUW¶V DSSOLFDWLRQ RI 866* † . F D FURVV
UHIHUHQFHVHFWLRQ7KLVVHFWLRQSURYLGHVLQSHUWLQHQWSDUW
,I WKH GHIHQGDQW XVHG RU SRVVHVVHG DQ\ ILUHDUP RU
DPPXQLWLRQ LQ FRQQHFWLRQ ZLWK WKH FRPPLVVLRQ RU
DWWHPSWHGFRPPLVVLRQRIDQRWKHURIIHQVHRUSRVVHVVHG
RUWUDQVIHUUHGDILUHDUPRUDPPXQLWLRQZLWKNQRZOHGJH

-- 3 of 4 --

8QLWHG6WDWHVY&REE 1R
RULQWHQWWKDWLWZRXOGEHXVHGRUSRVVHVVHGLQFRQQHFWLRQ
ZLWKDQRWKHURIIHQVHDSSO\
% LI GHDWK UHVXOWHG WKH PRVW DQDORJRXV RIIHQVH
JXLGHOLQH IURP &KDSWHU 7ZR 3DUW $ 6XESDUW
+RPLFLGH LIWKHUHVXOWLQJRIIHQVHOHYHOLVJUHDWHUWKDQ
WKDWGHWHUPLQHGDERYH
$GRSWLQJ WKH ILQGLQJV RI &REE¶V SUHVHQWHQFH LQYHVWLJDWLRQ
UHSRUWZKLFKFRQFOXGHGWKDW&REEJDYHWKHJXQWR+HQGHUVRQ
VR WKDW LW FRXOG HYHQWXDOO\ EH XVHG WR VKRRW KHU PRWKHU¶V
UDSLVWWKHGLVWULFWFRXUWFURVVUHIHUHQFHGWR866*†$
WKH ILUVW GHJUHH PXUGHU *XLGHOLQH ZKLFK FDUULHV D EDVH
RIIHQVH OHYHO RI $IWHU D WKUHHSRLQW UHGXFWLRQ IRU
DFFHSWDQFH RI UHVSRQVLELOLW\ &REE¶V RIIHQVH OHYHO ZDV
:LWKDFULPLQDOKLVWRU\FDWHJRU\RI,KHUJXLGHOLQHVHQWHQFH
UDQJHZDVPRQWKV+RZHYHUSXUVXDQWWR866*
†* D &REEZDVVHQWHQFHGWRDUHVWULFWHGUDQJHRI
PRQWKVWKHVWDWXWRU\PD[LPXPIRU86&† G
&REE QRZ DVVHUWV WKDW WKH GLVWULFW FRXUW VKRXOG KDYH
VHQWHQFHGKHUSXUVXDQWWR†. % ZKLFKSURYLGHV
,I WKH GHIHQGDQW XVHG RU SRVVHVVHG DQ\ ILUHDUP RU
DPPXQLWLRQLQFRQQHFWLRQZLWKDQRWKHUIHORQ\RIIHQVH
RUSRVVHVVHGRUWUDQVIHUUHGDQ\ILUHDUPRUDPPXQLWLRQ
ZLWKNQRZOHGJHLQWHQWRUUHDVRQWREHOLHYHWKDWLWZRXOG
EHXVHGRUSRVVHVVHGLQFRQQHFWLRQZLWKDQRWKHUIHORQ\
RIIHQVH LQFUHDVH E\ OHYHOV ,I WKH UHVXOWLQJ RIIHQVH
OHYHOLVOHVVWKDQOHYHOLQFUHDVHWROHYHO
&REE DUJXHV WKDW † . F % GRHV QRW DSSO\ WR KHU
EHFDXVHVKHGLGQRWKDYH³NQRZOHGJHRULQWHQW´WKDW'HSXW\
%LVKRSZRXOGEHNLOOHGEHFDXVHVKHWKRXJKWWKHJXQVKHJDYH
+HQGHUVRQZDVJRLQJWREHXVHGWRVKRRWKHUPRWKHU¶VUDSLVW
$FFRUGLQJWR&REEZKHUHDGHIHQGDQWNQRZVRULQWHQGVWKDW
DILUHDUPLVJRLQJWREHXVHGLQFRQQHFWLRQZLWKDVSHFLILF
RIIHQVH RWKHU WKDQ WKH RQH LQ FRQQHFWLRQ ZLWK ZKLFK LW LV
DFWXDOO\XVHGWKHFURVVUHIHUHQFHFDQQRWEHDSSOLHGEHFDXVH
WKHGHIHQGDQW¶VLQWHQWFDQQRWEHWUDQVIHUUHGIURPRQHRIIHQVH
WRDQRWKHU6KHDVVHUWVWKDWLQVXFKDVLWXDWLRQ†. E
1R 8QLWHG6WDWHVY&REE
VKRXOGEHDSSOLHGEHFDXVHWKHGHIHQGDQWRQO\KDV³UHDVRQWR
EHOLHYH´ WKDW WKH ILUHDUP ZLOO EH XVHG LQ FRQQHFWLRQ ZLWK
DQRWKHUIHORQ\RIIHQVH
&REE¶VUHDGLQJRI†. F % LVLQFRQVLVWHQWZLWKWKH
SODLQODQJXDJHRIWKHVWDWXWH6HQWHQFLQJJXLGHOLQHVVKRXOGEH
UHDGDVWKH\DUHZULWWHQ8QLWHG6WDWHVY1XQH])G
VW&LU $VZULWWHQ†. F % IRFXVHVRQ
DGHIHQGDQW¶VVWDWHRIPLQGZLWKUHVSHFWWRVRPHRWKHURIIHQVH
JHQHUDOO\UDWKHUWKDQRQKLVRUKHUVWDWHRIPLQGZLWKUHVSHFW
WRVRPHVSHFLILFRIIHQVH6HH866*†.FPWQ
³$VXVHGLQVXEVHFWLRQV E DQG F μDQRWKHUIHORQ\
RIIHQVH¶ DQG μDQRWKHU RIIHQVH¶ UHIHU WR RIIHQVHV RWKHU WKDQ
H[SORVLYHVRUILUHDUPVSRVVHVVLRQRUWUDIILFNLQJRIIHQVHV´
,IWKHGHIHQGDQWKDVWKHUHTXLVLWHVWDWHRIPLQGZLWKUHVSHFWWR
WKDWJHQHUDORIIHQVHDQGGHDWKUHVXOWVWKHQ†. F %
LV DSSOLFDEOH &REE¶V LQWHUSUHWDWLRQ RI † . F %
ZKLFKZRXOGEDUDSSOLFDWLRQRIWKHVHFWLRQLIWKHRIIHQVHWKDW
FDXVHVWKHGHDWKLVQRWWKHVSHFLILFRIIHQVHWKDWWKHGHIHQGDQW
KDGNQRZOHGJHRIRULQWHQGHGUHTXLUHVWRRQDUURZDUHDGLQJ
RI WKH VHFWLRQ )RU H[DPSOH WKH )RXUWK &LUFXLW KDG WKH
IROORZLQJ WR VD\ DERXW WKH PHDQLQJ RI ³DQRWKHU IHORQ\
RIIHQVH´DVXVHGLQ†. E
:KLOH DSSHOODQW DUJXHV WKDW WKH VHFWLRQ UHTXLUHV
NQRZOHGJHRIVRPHVSHFLILFRIIHQVHWKHXVHRIWKHZRUG
³DQRWKHU´DVWKHVROHPRGLILHURI³IHORQ\RIIHQVH´GRHV
QRWFRPPDQGVXFKDQDUURZUHDGLQJ$VXVHGLQWKLV
FRQWH[W³DQRWKHU´PHUHO\PHDQV³DGGLWLRQDORQHPRUH´
:KLOHDSSHOODQWZRXOGOLNHWKHVHFWLRQWRUHDG³DQRWKHU
VSHFLILFIHORQ\RIIHQVH´LWGRHVQRW
8QLWHG 6WDWHV Y &XWOHU )G WK &LU
FLWDWLRQVRPLWWHG HPSKDVLVLQRULJLQDO 6HHDOVR8QLWHG
6WDWHVY&XPPLQJV1R:/DW WK
&LU0DU ³:HKROGWKDWDVHFWLRQ. E
HQKDQFHPHQWLVDSSURSULDWHZKHQWKHGHIHQGDQWKDGUHDVRQWR
EHOLHYHWKHWUDQVIHUUHGILUHDUPZRXOGEHXVHGLQFRQQHFWLRQ
ZLWKDQ\IHORQ\ZLWKRXWUHJDUGWRZKHWKHUWKHGHIHQGDQWKDG
UHDVRQ WR NQRZ ZKLFK SDUWLFXODU IHORQ\ PLJKW EH

-- 4 of 4 --