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
s$1,&( &28571(< ; 3ODLQWLII$SSHOODQW 1R Y ! /$1'$,5 75$163257 ,1& 'HIHQGDQW$SSHOOHH 1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW&ROXPEXV 1RnsRVHSK3.LQQHDU\'LVWULFWsXGJH $UJXHG)HEUXDU\ 'HFLGHGDQG)LOHG$XJXVW %HIRUH0(55,77%2**6DQG0225(&LUFXLW sXGJHV BBBBBBBBBBBBBBBBB &2816(/ $5*8(' 3DLJH $ 0DUWLQ 3$,*( $ 0$57,1 &2 /3$&ROXPEXV2KLRIRU$SSHOODQW0DU\(OOHQ)DLUILHOG 925<66$7(56(<0285 3($6(//3&ROXPEXV 2KLRIRU$SSHOOHH21%5,()3DLJH$0DUWLQ3$,*($ 0$57,1&2/3$&ROXPEXV2KLRIRU$SSHOODQW0DU\ (OOHQ )DLUILHOG 'RXJODV 5 0DWWKHZV 925<6 6$7(5 6(<0285 3($6(//3&ROXPEXV2KLRIRU$SSHOOHH
&RXUWQH\Y/DQGDLU7UDQVSRUW 1R
0(55,77sGHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK 0225( s MRLQHG %2**6 s SS GHOLYHUHG D VHSDUDWHRSLQLRQFRQFXUULQJLQSDUWDQGGLVVHQWLQJLQSDUW BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB 0(55,77&LUFXLWsXGJH,QWKLVVH[XDOKDUDVVPHQWFDVH EURXJKWE\SODLQWLIIsDQLFH&RXUWQH\LQGLYHUVLW\XQGHU2KLR ODZ WKHUH DUH IRXU LVVXHV RQ DSSHDO ZKHWKHU KHU HPSOR\HU /DQGDLU 7UDQVSRUW ,QF D WUXFNLQJ FRUSRUDWLRQ GLVFULPLQDWHG DJDLQVW KHU E\ FUHDWLQJ D KRVWLOH ZRUN HQYLURQPHQW DQG WKHQ UHWDOLDWHG DJDLQVW KHU IRU FRPSODLQLQJ DERXW WKH FRQGXFW ZKHWKHU GHIHQGDQWjV DFWLRQYLRODWHG2KLRjVSXEOLFSROLF\DJDLQVWGLVFULPLQDWLRQ DQG VH[XDO KDUDVVPHQW LQ WKH ZRUNSODFH DQG ZKHWKHU GHIHQGDQWjV DFWLRQV UHVXOWHG LQ LQWHQWLRQDO LQIOLFWLRQ RI HPRWLRQDO GLVWUHVV 7KH FRXUW EHORZ JUDQWHG VXPPDU\ MXGJPHQWIRUGHIHQGDQWRQDOOLVVXHV:HFRQFOXGHWKDWWKHUH LVDPDWHULDOGLVSXWHRIIDFWDVWRLVVXHVWZRDQGWKUHHDQG WKHUHIRUHUHYHUVHDQGUHPDQGIRUIXUWKHUSURFHHGLQJV ,)DFWV 'XHWRWKHSDUWLHVjGLVDJUHHPHQWRQZKDWWKHUHFRUGVKRZV ZH KDYH LQFOXGHG FLWDWLRQV WR VRXUFHV LQ WKH UHFRUG IURP ZKLFK ZH FRPSLOHG RXU VWDWHPHQW RI IDFWV 'XULQJ KHU HPSOR\PHQW ZLWK /DQGDLU SODLQWLII DOOHJHV WKDW VKH ZDV VXEMHFWHGWRDKRVWLOHZRUNHQYLURQPHQWEDVHGERWKXSRQWKH FRQGXFW RI VXSHUYLVRUV DQG WKH FRQGXFW RI WZR RWKHU WUXFN GULYHUV 9LUJLO 0L]QHU DQG sDPHV sDUUHWW ZKR ZHUH LQGHSHQGHQWFRQWUDFWRUVIRUGHIHQGDQW/DQGDLU+HUSUREOHPV EHJDQVKRUWO\DIWHUVKHEHJDQZRUNLQJIRU/DQGDLULQ0DUFK 6KH DOOHJHV WKDW RQ VHYHUDO RFFDVLRQV sDPHV sDUUHWW VWXFN KLV WRQJXH RXW DW KHU PDNLQJ VH[XDO JHVWXUHV DQG VXJJHVWHGWKDWSODLQWLIIVKRXOGULGHZLWKKLPLQKLVWUXFN,I VKHGLGVRsDUUHWWUHPDUNHGWKDWKHZRXOGKLUHVRPHRQHHOVH WRGRWKHGULYLQJEHFDXVHKHDQG&RXUWQH\ZRXOGEHmEXV\LQ WKHEDFNlRIWKHWUXFN&RXUWQH\'HSDWs$DW 1R &RXUWQH\Y/DQGDLU7UDQVSRUW
/HWWHUIURP&RXUWQH\WR+RZDUG=HURVNLRIDW s$ DW ,Q DGGLWLRQ GHIHQGDQWjV &ROXPEXV WHUPLQDO PDQDJHU DSSURDFKHG SODLQWLII HDUO\ LQ KHU HPSOR\PHQW WR LQIRUPKHUWKDWVKHZDVQRWDSSURSULDWHO\GUHVVHGDQGWKDWVKH ZDV GLVWUDFWLQJ RWKHU HPSOR\HHV E\ VKRZLQJ WRR PXFK FOHDYDJH&RXUWQH\$IIs$DW ,QUHVSRQVHWRWKHVHLQFLGHQWVSODLQWLIIZURWHDOHWWHUGDWHG 0D\ WR *HUDOG +RZDUG RQH RI /DQGDLUjV YLFH SUHVLGHQWV DQG &UDLJ =HURVNL ZKR UDQ WKH &ROXPEXV WHUPLQDO FRPSODLQLQJ WR WKHP DERXW WKH UHSULPDQG VKH UHFHLYHGDQGDmGRXEOHVWDQGDUGlVKHEHOLHYHGH[LVWHGLQWKH WUHDWPHQWRIPHQDQGZRPHQDWZRUN/HWWHUIURP&RXUWQH\ WR+RZDUG=HURVNLRIDWs$DW,QWKLVOHWWHU VKH FRPSODLQHG WKDW RIILFH SHUVRQQHO FRSLHG RIIHQVLYH DQG OHZGSLFWXUHVDVMRNHVIRUPDOHGULYHUVDQGDOVRFRPSODLQHG DERXWsDUUHWWjVRIIHQVLYHWRQJXHJHVWXUHVDQGUHPDUNVWKDWVKH VKRXOGEHKLVGULYLQJSDUWQHUVRWKDWWKH\FRXOGKDYHDVH[XDO UHODWLRQVKLS/HWWHUIURP&RXUWQH\WR+RZDUG=HURVNLRI DWs$DW3ODLQWLIIHQGHGKHUOHWWHUE\VWDWLQJ m,jP QRW JRLQJ WR WDNH WKH KDUDVVPHQW IURP GULYHUV HWF DQ\PRUH,jPDJRRGDVVHWWRWKLVFRPSDQ\DQGKDYHDJRRG UHSXWDWLRQ DV IDU DV P\ MRE SHUIRUPDQFHl /HWWHU IURP &RXUWQH\WR+RZDUG=HURVNLRIDWs$DW1R DFWLRQZDVWDNHQE\GHIHQGDQW/DQGDLUDWWKLVWLPH 3ODLQWLIIDOVRDOOHJHVWKDWVKHH[SHULHQFHGKDUDVVPHQWIURP 9LUJLO0L]QHU,QKHUGHSRVLWLRQVKHGHVFULEHVDQRFFDVLRQ DOWKRXJKQRGDWHLVJLYHQZKHQVKHZDVZDONLQJZLWK0L]QHU DQG KHU SDUWQHU 6DP +HOEHU LQ D SDUNLQJ ORW DQG 0L]QHU DOOHJHGO\EXPSHGKLVZKROHERG\LQWRSODLQWLIIFRQWLQXDOO\ EXPSLQJKHUEUHDVW&RXUWQH\'HSDWs$DW ,WZDVQRWXQWLOODWHUWKDWSODLQWLIIIHOWWKDWKLVDFWLRQV ZHUHLQWHQWLRQDO&RXUWQH\'HSDWs$DW6KH GHVFULEHV DQRWKHU LQFLGHQW WKDW RFFXUUHG LQ sXO\ LQ ZKLFK0L]QHUDSSURDFKHGSODLQWLIIIURPEHKLQGDQGWULHGWR WRXFKKHUOHIWEUHDVW&RXUWQH\'HSDWs$DW $IWHUSODLQWLIIEDFNHGDZD\0L]QHUDVNHGm:KDWjVWKH PDWWHU"
ZKHQ SODLQWLII ZDV DORQH LQ WKH EUHDN URRP 0L]QHU MXGJPHQWRQWKLVUHFRUGWKDWFDQQRWEHHQRXJK2WKHUZLVH WXJJHG RQ KHU VKLUW DQG DVNHG LI VKH ZDV PDG DW KLP ZKHQ DQ HPSOR\HH KDV PDGH D FRPSODLQW WKDW KDV EHHQ &RXUWQH\'HSDWs$DW)LQDOO\SODLQWLII KDQGOHGVDWLVIDFWRULO\WKHFRPSDQ\PXVWWKHUHDIWHUWUHDWDQ\ DOVR DOOHJHV WKDW LQ 1RYHPEHU DW WKH &ROXPEXV SUREOHPZLWKWKDWHPSOR\HHLQDSDUWLFXODUO\WHQGHUIDVKLRQ WHUPLQDOLQWKHEUHDNURRP0L]QHUFUHSWXSEHKLQGKHUEOHZ OHVW D SDQHO VXFK DV RXUV ILQG WKDW WKH\ PXVW LQFXU JUHDW DLU LQ KHU HDU DQG ODXJKHG DW KHU 3ODLQWLII UHVSRQGHG E\ H[SHQVHDQGULVNHYHQJUHDWHUOLDELOLW\IRUWDNLQJDFWLRQZKHQ \HOOLQJm9LUJLOOHDYHPHWKHINDORQHl2WKHUGULYHUVLQWKH WKHUHLVQRWWKHVOLJKWHVWHYLGHQFHWKDWWKH\ZRXOGQRWKDYH URRP ODXJKHG DQG UHPDUNHG DORXG m*HWWLQJ NLQG RI WHVW\ WDNHQWKHVDPHDFWLRQDJDLQVWDQ\RWKHUHPSOR\HHZKRKDG DUHQjWZH"l&RXUWQH\'HSDWs$DW ZULWWHQLQWKHVDPHYHLQ 'XH WR WKH LQFLGHQWV RI KDUDVVPHQW DQG PDQDJHPHQWjV ,EHOLHYHWKLVUHVXOWLVQRWFRUUHFWXQGHURXUVWDQGDUGIRU DOOHJHG UHIXVDO WR DGGUHVV SODLQWLIIjV FRPSODLQWV SODLQWLII HYLGHQFHVXIILFLHQWWRGHIHDWVXPPDU\MXGJPHQWE\PDNLQJD KLUHG D ODZ\HU 2Q 'HFHPEHU SODLQWLIIjV FRXQVHO VKRZLQJRIDSUHWH[WDQG,WKHUHIRUHUHVSHFWIXOO\',66(17 ZURWH D OHWWHU WR WKH GHIHQGDQW PDQDJHPHQW LQ &ROXPEXV DVNLQJLWWRVWRSWKHKDUDVVPHQWRIKHUFOLHQW7KDWVDPHGD\ WKHWHUPLQDOPDQDJHURIGHIHQGDQWjV,QGLDQDSROLVWHUPLQDO 'DYH%OHYLQVZURWHSODLQWLIIDOHWWHU/HWWHUIURP%OHYLQVWR &RXUWQH\RIs$DW7KHOHWWHUVWDWHG $V,WROG\RX>GHIHQGDQW@LVFRPPLWWHGWRPDLQWDLQLQJ DQHQYLURQPHQWWKDWLVIUHHIURPDOOIRUPVRIKDUDVVPHQW LQFOXGLQJVH[XDOKDUDVVPHQW7KLVLVQRWDOZD\VHDV\WR GRLQWKHWUXFNLQJEXVLQHVV $V ZH GLVFXVVHG LW LV P\ LQWHQWLRQ WR FRQIURQW WKH LQGLYLGXDOVWKDW\RXLGHQWLILHGLQ\RXUOHWWHUDQGPDNH FHUWDLQWKDWWKH\XQGHUVWDQGWKDWWKLVW\SHRIEHKDYLRUZLOO QRW EH WROHUDWHG E\ >
Free access — add to your briefcase to read the full text and ask questions with AI
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
s$1,&( &28571(< ; 3ODLQWLII$SSHOODQW 1R Y ! /$1'$,5 75$163257 ,1& 'HIHQGDQW$SSHOOHH 1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW&ROXPEXV 1RnsRVHSK3.LQQHDU\'LVWULFWsXGJH $UJXHG)HEUXDU\ 'HFLGHGDQG)LOHG$XJXVW %HIRUH0(55,77%2**6DQG0225(&LUFXLW sXGJHV BBBBBBBBBBBBBBBBB &2816(/ $5*8(' 3DLJH $ 0DUWLQ 3$,*( $ 0$57,1 &2 /3$&ROXPEXV2KLRIRU$SSHOODQW0DU\(OOHQ)DLUILHOG 925<66$7(56(<0285 3($6(//3&ROXPEXV 2KLRIRU$SSHOOHH21%5,()3DLJH$0DUWLQ3$,*($ 0$57,1&2/3$&ROXPEXV2KLRIRU$SSHOODQW0DU\ (OOHQ )DLUILHOG 'RXJODV 5 0DWWKHZV 925<6 6$7(5 6(<0285 3($6(//3&ROXPEXV2KLRIRU$SSHOOHH
&RXUWQH\Y/DQGDLU7UDQVSRUW 1R
0(55,77sGHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK 0225( s MRLQHG %2**6 s SS GHOLYHUHG D VHSDUDWHRSLQLRQFRQFXUULQJLQSDUWDQGGLVVHQWLQJLQSDUW BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB 0(55,77&LUFXLWsXGJH,QWKLVVH[XDOKDUDVVPHQWFDVH EURXJKWE\SODLQWLIIsDQLFH&RXUWQH\LQGLYHUVLW\XQGHU2KLR ODZ WKHUH DUH IRXU LVVXHV RQ DSSHDO ZKHWKHU KHU HPSOR\HU /DQGDLU 7UDQVSRUW ,QF D WUXFNLQJ FRUSRUDWLRQ GLVFULPLQDWHG DJDLQVW KHU E\ FUHDWLQJ D KRVWLOH ZRUN HQYLURQPHQW DQG WKHQ UHWDOLDWHG DJDLQVW KHU IRU FRPSODLQLQJ DERXW WKH FRQGXFW ZKHWKHU GHIHQGDQWjV DFWLRQYLRODWHG2KLRjVSXEOLFSROLF\DJDLQVWGLVFULPLQDWLRQ DQG VH[XDO KDUDVVPHQW LQ WKH ZRUNSODFH DQG ZKHWKHU GHIHQGDQWjV DFWLRQV UHVXOWHG LQ LQWHQWLRQDO LQIOLFWLRQ RI HPRWLRQDO GLVWUHVV 7KH FRXUW EHORZ JUDQWHG VXPPDU\ MXGJPHQWIRUGHIHQGDQWRQDOOLVVXHV:HFRQFOXGHWKDWWKHUH LVDPDWHULDOGLVSXWHRIIDFWDVWRLVVXHVWZRDQGWKUHHDQG WKHUHIRUHUHYHUVHDQGUHPDQGIRUIXUWKHUSURFHHGLQJV ,)DFWV 'XHWRWKHSDUWLHVjGLVDJUHHPHQWRQZKDWWKHUHFRUGVKRZV ZH KDYH LQFOXGHG FLWDWLRQV WR VRXUFHV LQ WKH UHFRUG IURP ZKLFK ZH FRPSLOHG RXU VWDWHPHQW RI IDFWV 'XULQJ KHU HPSOR\PHQW ZLWK /DQGDLU SODLQWLII DOOHJHV WKDW VKH ZDV VXEMHFWHGWRDKRVWLOHZRUNHQYLURQPHQWEDVHGERWKXSRQWKH FRQGXFW RI VXSHUYLVRUV DQG WKH FRQGXFW RI WZR RWKHU WUXFN GULYHUV 9LUJLO 0L]QHU DQG sDPHV sDUUHWW ZKR ZHUH LQGHSHQGHQWFRQWUDFWRUVIRUGHIHQGDQW/DQGDLU+HUSUREOHPV EHJDQVKRUWO\DIWHUVKHEHJDQZRUNLQJIRU/DQGDLULQ0DUFK 6KH DOOHJHV WKDW RQ VHYHUDO RFFDVLRQV sDPHV sDUUHWW VWXFN KLV WRQJXH RXW DW KHU PDNLQJ VH[XDO JHVWXUHV DQG VXJJHVWHGWKDWSODLQWLIIVKRXOGULGHZLWKKLPLQKLVWUXFN,I VKHGLGVRsDUUHWWUHPDUNHGWKDWKHZRXOGKLUHVRPHRQHHOVH WRGRWKHGULYLQJEHFDXVHKHDQG&RXUWQH\ZRXOGEHmEXV\LQ WKHEDFNlRIWKHWUXFN&RXUWQH\'HSDWs$DW 1R &RXUWQH\Y/DQGDLU7UDQVSRUW
/HWWHUIURP&RXUWQH\WR+RZDUG=HURVNLRIDW s$ DW ,Q DGGLWLRQ GHIHQGDQWjV &ROXPEXV WHUPLQDO PDQDJHU DSSURDFKHG SODLQWLII HDUO\ LQ KHU HPSOR\PHQW WR LQIRUPKHUWKDWVKHZDVQRWDSSURSULDWHO\GUHVVHGDQGWKDWVKH ZDV GLVWUDFWLQJ RWKHU HPSOR\HHV E\ VKRZLQJ WRR PXFK FOHDYDJH&RXUWQH\$IIs$DW ,QUHVSRQVHWRWKHVHLQFLGHQWVSODLQWLIIZURWHDOHWWHUGDWHG 0D\ WR *HUDOG +RZDUG RQH RI /DQGDLUjV YLFH SUHVLGHQWV DQG &UDLJ =HURVNL ZKR UDQ WKH &ROXPEXV WHUPLQDO FRPSODLQLQJ WR WKHP DERXW WKH UHSULPDQG VKH UHFHLYHGDQGDmGRXEOHVWDQGDUGlVKHEHOLHYHGH[LVWHGLQWKH WUHDWPHQWRIPHQDQGZRPHQDWZRUN/HWWHUIURP&RXUWQH\ WR+RZDUG=HURVNLRIDWs$DW,QWKLVOHWWHU VKH FRPSODLQHG WKDW RIILFH SHUVRQQHO FRSLHG RIIHQVLYH DQG OHZGSLFWXUHVDVMRNHVIRUPDOHGULYHUVDQGDOVRFRPSODLQHG DERXWsDUUHWWjVRIIHQVLYHWRQJXHJHVWXUHVDQGUHPDUNVWKDWVKH VKRXOGEHKLVGULYLQJSDUWQHUVRWKDWWKH\FRXOGKDYHDVH[XDO UHODWLRQVKLS/HWWHUIURP&RXUWQH\WR+RZDUG=HURVNLRI DWs$DW3ODLQWLIIHQGHGKHUOHWWHUE\VWDWLQJ m,jP QRW JRLQJ WR WDNH WKH KDUDVVPHQW IURP GULYHUV HWF DQ\PRUH,jPDJRRGDVVHWWRWKLVFRPSDQ\DQGKDYHDJRRG UHSXWDWLRQ DV IDU DV P\ MRE SHUIRUPDQFHl /HWWHU IURP &RXUWQH\WR+RZDUG=HURVNLRIDWs$DW1R DFWLRQZDVWDNHQE\GHIHQGDQW/DQGDLUDWWKLVWLPH 3ODLQWLIIDOVRDOOHJHVWKDWVKHH[SHULHQFHGKDUDVVPHQWIURP 9LUJLO0L]QHU,QKHUGHSRVLWLRQVKHGHVFULEHVDQRFFDVLRQ DOWKRXJKQRGDWHLVJLYHQZKHQVKHZDVZDONLQJZLWK0L]QHU DQG KHU SDUWQHU 6DP +HOEHU LQ D SDUNLQJ ORW DQG 0L]QHU DOOHJHGO\EXPSHGKLVZKROHERG\LQWRSODLQWLIIFRQWLQXDOO\ EXPSLQJKHUEUHDVW&RXUWQH\'HSDWs$DW ,WZDVQRWXQWLOODWHUWKDWSODLQWLIIIHOWWKDWKLVDFWLRQV ZHUHLQWHQWLRQDO&RXUWQH\'HSDWs$DW6KH GHVFULEHV DQRWKHU LQFLGHQW WKDW RFFXUUHG LQ sXO\ LQ ZKLFK0L]QHUDSSURDFKHGSODLQWLIIIURPEHKLQGDQGWULHGWR WRXFKKHUOHIWEUHDVW&RXUWQH\'HSDWs$DW $IWHUSODLQWLIIEDFNHGDZD\0L]QHUDVNHGm:KDWjVWKH PDWWHU"
ZKHQ SODLQWLII ZDV DORQH LQ WKH EUHDN URRP 0L]QHU MXGJPHQWRQWKLVUHFRUGWKDWFDQQRWEHHQRXJK2WKHUZLVH WXJJHG RQ KHU VKLUW DQG DVNHG LI VKH ZDV PDG DW KLP ZKHQ DQ HPSOR\HH KDV PDGH D FRPSODLQW WKDW KDV EHHQ &RXUWQH\'HSDWs$DW)LQDOO\SODLQWLII KDQGOHGVDWLVIDFWRULO\WKHFRPSDQ\PXVWWKHUHDIWHUWUHDWDQ\ DOVR DOOHJHV WKDW LQ 1RYHPEHU DW WKH &ROXPEXV SUREOHPZLWKWKDWHPSOR\HHLQDSDUWLFXODUO\WHQGHUIDVKLRQ WHUPLQDOLQWKHEUHDNURRP0L]QHUFUHSWXSEHKLQGKHUEOHZ OHVW D SDQHO VXFK DV RXUV ILQG WKDW WKH\ PXVW LQFXU JUHDW DLU LQ KHU HDU DQG ODXJKHG DW KHU 3ODLQWLII UHVSRQGHG E\ H[SHQVHDQGULVNHYHQJUHDWHUOLDELOLW\IRUWDNLQJDFWLRQZKHQ \HOOLQJm9LUJLOOHDYHPHWKHINDORQHl2WKHUGULYHUVLQWKH WKHUHLVQRWWKHVOLJKWHVWHYLGHQFHWKDWWKH\ZRXOGQRWKDYH URRP ODXJKHG DQG UHPDUNHG DORXG m*HWWLQJ NLQG RI WHVW\ WDNHQWKHVDPHDFWLRQDJDLQVWDQ\RWKHUHPSOR\HHZKRKDG DUHQjWZH"l&RXUWQH\'HSDWs$DW ZULWWHQLQWKHVDPHYHLQ 'XH WR WKH LQFLGHQWV RI KDUDVVPHQW DQG PDQDJHPHQWjV ,EHOLHYHWKLVUHVXOWLVQRWFRUUHFWXQGHURXUVWDQGDUGIRU DOOHJHG UHIXVDO WR DGGUHVV SODLQWLIIjV FRPSODLQWV SODLQWLII HYLGHQFHVXIILFLHQWWRGHIHDWVXPPDU\MXGJPHQWE\PDNLQJD KLUHG D ODZ\HU 2Q 'HFHPEHU SODLQWLIIjV FRXQVHO VKRZLQJRIDSUHWH[WDQG,WKHUHIRUHUHVSHFWIXOO\',66(17 ZURWH D OHWWHU WR WKH GHIHQGDQW PDQDJHPHQW LQ &ROXPEXV DVNLQJLWWRVWRSWKHKDUDVVPHQWRIKHUFOLHQW7KDWVDPHGD\ WKHWHUPLQDOPDQDJHURIGHIHQGDQWjV,QGLDQDSROLVWHUPLQDO 'DYH%OHYLQVZURWHSODLQWLIIDOHWWHU/HWWHUIURP%OHYLQVWR &RXUWQH\RIs$DW7KHOHWWHUVWDWHG $V,WROG\RX>GHIHQGDQW@LVFRPPLWWHGWRPDLQWDLQLQJ DQHQYLURQPHQWWKDWLVIUHHIURPDOOIRUPVRIKDUDVVPHQW LQFOXGLQJVH[XDOKDUDVVPHQW7KLVLVQRWDOZD\VHDV\WR GRLQWKHWUXFNLQJEXVLQHVV $V ZH GLVFXVVHG LW LV P\ LQWHQWLRQ WR FRQIURQW WKH LQGLYLGXDOVWKDW\RXLGHQWLILHGLQ\RXUOHWWHUDQGPDNH FHUWDLQWKDWWKH\XQGHUVWDQGWKDWWKLVW\SHRIEHKDYLRUZLOO QRW EH WROHUDWHG E\ >GHIHQGDQW@ 'XULQJ WRGD\jV WHOHSKRQH FRQYHUVDWLRQ , DVNHG \RX LI WKHUH ZHUH DQ\ RWKHULQGLYLGXDOVDQG\RXLQGLFDWHGWKDWWKHUHZHUHQRW $IWHU,KDYHWKHRSSRUWXQLW\WRWDONWRWKHVHLQGLYLGXDOV ,ZLOOEHEDFNLQWRXFKZLWK\RX,QWKHPHDQWLPHSOHDVH FRQWDFW PH LPPHGLDWHO\ LI WKHUH DUH DQ\ RWKHU LVVXHV UHODWHG WR WKLV VLWXDWLRQ WKDW \RX ZLVK WR EULQJ WR RXU DWWHQWLRQ/HWWHUIURP%OHYLQVWR&RXUWQH\RI s$DW 2Q 'HFHPEHU GHIHQGDQW /DQGDLU UHOHDVHG D PHPRUDQGXP WR DOO RZQHURSHUDWRUV DERXW /DQGDLUjV FRPPLWPHQWWRDKDUDVVPHQWIUHHHQYLURQPHQW0HPIURP 4XHHQ:RRGVWR2ZQHU2SHUDWRUVRIs$DW &RXUWQH\Y/DQGDLU7UDQVSRUW 1R 1R &RXUWQH\Y/DQGDLU7UDQVSRUW
,WFRXOGLJQRUHWKHOHWWHUEXWNHHSLWLQWKHILOH7KLVZRXOG 'HIHQGDQW VWDWHV WKDW WKH WLPLQJ RI WKH PHPRUDQGXP ZDV EHDOPRVWDVEDGIRUWKHFRPSDQ\,WPD\EHDVDGIDFWRIOLIH GHVLJQHG WR DGGUHVV SODLQWLIIjV FRPSODLQWV RI VH[XDO EXWLIVKHZHUHWREHLQDQDFFLGHQWKRZHYHUEODPHOHVVO\WKH KDUDVVPHQW:RRGV'HSDWs$DW OHWWHUZRXOGEHGLVFRYHUDEOHDQGWKHUHZRXOGDYHU\JRRG FKDQFHWKDWVRPHRWKHUFRXUWZRXOGDOORZLWWREHVKRZQWRD )URPWKHUHFRUGLWDSSHDUVWKDWIXUWKHUKDUDVVPHQWIURP MXU\ DV HYLGHQFH RI JURVV QHJOLJHQFH ZLOOIXO DQG ZDQWRQ 0L]QHU RU sDUUHWW FHDVHG 7KHQ RQ sDQXDU\ ZKLOH DFWLYLW\ UHFNOHVVQHVV RU RWKHU SULQFLSOHV WKDW FDQ OHDG WR SODLQWLIIDQG+HOEHUZHUHLQ&ROXPEXVZDLWLQJWRPDNHWKHLU HQRUPRXVSXQLWLYHGDPDJHV UXQGHIHQGDQW/DQGDLULQIRUPHGSODLQWLIIDQG+HOEHUWKDWWKH\ ZHUHQRWWRUHWXUQWR6HDWWOHEHFDXVHPDQDJHPHQWKDGGHFLGHG ,WFRXOGKDYHLQYHVWLJDWHGIXUWKHUoDSSDUHQWO\WKHFRXUWj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sHIIUH\ :RRGV YLFH SUHVLGHQW RI RSHUDWLRQV IRU /DQGDLU 1RZPDWWHUVDUHWZLFHDVEDGIURPDOLDELOLW\VWDQGSRLQW FRPSODLQLQJRIWKHFKDQJH:RRGVUHVSRQGHGE\DWHOHSKRQH EHFDXVHLWFDQEHVDLGWKDWWKHFRPSDQ\NQHZ&RXUWQH\jV FRQIHUHQFHZLWKSODLQWLIIDQG+HOEHULQZKLFKKHJDYHWKHP DWWLWXGH ZDV VXIILFLHQWO\ GDQJHURXV WKDW LW VKRXOG WKH RSWLRQ RI EHFRPLQJ ,QGLDQDSROLVEDVHG GULYHUV DQG LQYHVWLJDWH o mDQG WKH\ VWLOO GLG QRWKLQJl $Q\ WRUW NHHSLQJWKHURXWHWR6HDWWOH ODZ\HUZRXOGORYHWRKDYHVXFKDFRPSDQ\DFWLRQLQKHU WULDOELQGHU 2Q sDQXDU\ SODLQWLII ZURWH D OHWWHU WR 'DYH %OHYLQV WKH ,QGLDQDSROLV WHUPLQDO PDQDJHU SURWHVWLQJ WKH $OWHUQDWLYHO\DIWHUKHDULQJ&RXUWQH\jVH[SODQDWLRQV WUHDWPHQW VKH DQG +HOEHU UHFHLYHG WKH ZHHN HDUOLHU DQG ZKLFKPLJKWRUPLJKWQRWKDYHEHHQDVDQRG\QHDVKHU LQGLFDWHGWKDWVKHEHOLHYHGWKHWUHDWPHQWE\GHIHQGDQWZDV DIILGDYLWVXJJHVWVWKHFRPSDQ\PLJKWVWLOOKDYHILUHGKHU UHWDOLDWRU\ LQ QDWXUH /HWWHU IURP &RXUWQH\ WR %OHYLQV RI %XWQRZWKH\jYHKHDUGKHUVLGHDQGVWLOOILUHGKHUVRWKHLU DW s$ DW $IWHU GHWDLOLQJ WKH URXWH SURVSHFWV RI GHIHDWLQJ D GLVFULPLQDWLRQ RU UHWDOLDWLRQ FKDQJHSODLQWLIIZURWHLQSDUW FODLPPD\QRZEHHYHQEOHDNHU 0DNHV \RX ZRQGHU LI DOO WKH VR FDOOHG 7KH WUXFNLQJ FRPSDQ\ PD\ QRW KDYH EHHQ WKH PRVW PLVXQGHUVWDQGLQJVZHUHQjWUHWDOLDWLRQRUSD\EDFN VHQVLWLYHHPSOR\HULQWKHFRXQWU\0D\EHLQDZRUOGZLWKD EHWWHUWRUWV\VWHPDFRPSDQ\ZRXOGQRWIHHOREOLJHGWRWDNH VXFKDFRPPXQLFDWLRQVRVHULRXVO\%XWZKDWHYLGHQFHLV WKHUH WKDW WKH FRPSDQ\ GLG QRW WDNH VHULRXVO\ GLVWXUEHG RU 7KH>UH@LVQRZD\\RXFRXOGXQGHUVWDQGRUWKDW,FRXOG WKUHDWHQLQJFRPPXQLFDWLRQVIURPDQ\RILWVGULYHUV"7KHUH EHJ>L@QWRFRQYH\WKH$QJHU5DJHRU+RVWLOLW\DORQJ LVQRQH2UWKDWWKHFRPSDQ\DFWLRQZDVLQDQ\ZD\UHODWHG ZLWKWKH+HDGDFKHVXSVHWVWRPDFKV,jYHEHHQGHDOLQJ WR WKH SUHYLRXV KDUDVVPHQW FRPSODLQW ZKLFK WKH FRPSDQ\ ZLWK>VLF@ KDQGOHG H[DFWO\ DV ZH ZRXOG KRSH D UHVSRQVLEOH HPSOR\HU ZRXOG$JDLQQRQHRWKHUWKDQWKHSUR[LPLW\LQWLPH,QP\ &RXUWQH\Y/DQGDLU7UDQVSRUW 1R 1R &RXUWQH\Y/DQGDLU7UDQVSRUW
1RWWRPHQWLRQWKH5HVHQWPHQW,IHHOWRZDUGV/DQGDLU 7KLVZDVRYHUDPRQWKDIWHUKHUHIIHFWLYHFRPSODLQWDERXW 0DQDJHPHQW KHU WUHDWPHQW DQG DOVR PRUH WKDQ D PRQWK DIWHU HIIHFWLYH DFWLRQZDVWDNHQDQGKDUDVVPHQWFHDVHG,WZDVDOVRPRUH VLF@ JODG WKH\ GULYH IRU WKDQDZHHNDIWHUVKHKDGEHHQDVVXUHGWKDWVKHFRXOGUHWDLQ RZQHURS>HUDWRU@V KHU SUHIHUUHG UXQ WR 6HDWWOH VR ORQJ DV WKDW EXVLQHVV ZDV DYDLODEOH WR WKH FRPSDQ\ 7KH FRPSDQ\ LQ QR ZD\ :HOO WKHUHjV RQH LPSRUWDQW WKLQJ \RX DOO VHHP WR HQFRXUDJHGGHPDQGHGRUVWLPXODWHGWKHVHQGLQJRIWKHOHWWHU IRUJHW ,j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mP\DWWLWXGHWRZDUGVP\MREDQGP\SHUVRQDO OLIHKDVJRQHLQWKHWRLOHWlDQGFRQFOXGLQJZLWKWKHTXRWHG 6LQFHUHO\sDQLFH&RXUWQH\ WKUHDW,WWKHQDGGVWKHQRWDWLRQWKDWVKHORVWDOORIKHUPHDW ZKHQVKHIRXQGWKHHOHFWULFLW\DQGKHDWRXWDQGWUHHVIHOOHGDW KHUKRXVHZKHQVKHUHWXUQHGIURPWKHKROLGD\UXQ ,jYH KHOG P\ WRQJXH IRU DOPRVW D \HDU 12 0RUH 7KH TXHVWLRQ IRU RXU GHWHUPLQDWLRQ DQG WKH TXHVWLRQ RQ /HWWHUIURP&RXUWQH\WR%OHYLQVRIDWs$ ZKLFK,SDUWFRPSDQ\ZLWKP\FROOHDJXHVLVZKHWKHUWKHUHLV DW VXIILFLHQW HYLGHQFH WR FRQYLQFH D UHDVRQDEOH MXU\ WKDW %OHYLQVIRUZDUGHGWKHOHWWHUWR:RRGVDQGDIWHUUHDGLQJWKH /DQGDLUjV UHDFWLRQ WR WKLV OHWWHU ZDV VLPSO\ D SUHWH[W IRU OHWWHU :RRGV WHUPLQDWHG SODLQWLIIjV HPSOR\PHQW :RRGV GLVFULPLQDWLRQ(YHQLIWKHFRPSDQ\jVDFWLRQZDVLOODGYLVHG VWDWHG LQ DQ DIILGDYLW WKDW KH mEHFDPH FRQFHUQHG DERXW RU RYHUO\ FDXWLRXV LW FDQQRW EH VXEMHFWHG WR D WULDO RQ WKLV >SODLQWLIIjV@ FRPSHWHQFH WR GULYH >GHIHQGDQW@jV WUXFNVl LVVXHXQOHVVWKHUHLVDGHTXDWHHYLGHQFHRISUHWH[W :RRGV$IIs$DW3ODLQWLIIRSHUDWHGVHPLWUXFNV &RQVLGHUWKHFRPSDQ\jVRSWLRQV ZHLJKLQJ SRXQGV RQ SXEOLF URDGZD\V DQG :RRGV FRQFOXGHGWKDWSODLQWLIISRVHGDSRWHQWLDOULVNWRWKHJHQHUDO ,WFRXOGGHVWUR\&RXUWQH\jVOHWWHUDQGFRQVLGHUWKHPDWWHUV SXEOLF:RRGV$IIs$DW$GGLWLRQDOO\ UHVROYHGDVLQGHHG WKH\DSSHDUWRKDYHEHHQ7KLVZRXOG :RRGVVWDWHGWKDWKHEHFDPHFRQFHUQHGWKDWHYHQLISODLQWLII KDYH EHHQ YHU\ LOODGYLVHG 7KH FRPSDQ\ ZDV FHUWDLQO\ GLG QRW SRVH D ULVN WR WKH JHQHUDO SXEOLF DQ\ DFFLGHQW FRUUHFW LQ EHOLHYLQJ WKDW LI VKH ZHUH LQ DQ DFFLGHQW DQG LQYROYLQJWKHSODLQWLIIFRXOGUHVXOWLQOLDELOLW\LIDQLQMXUHG WHVWLILHG WKDW VKH VHQW VXFK D OHWWHU LW FRXOG KDYH FDXVHG SDUW\REWDLQHGWKHsDQXDU\OHWWHULQSODLQWLIIjVSHUVRQDOILOH FDWDVWURSKLFOLDELOLW\IRUWKHFRPSDQ\ :RRGV$IIs$DW:RRGVWHOHSKRQHGSODLQWLIIDQG &RXUWQH\Y/DQGDLU7UDQVSRUW 1R 1R &RXUWQH\Y/DQGDLU7UDQVSRUW
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB LQIRUPHGKHUWKDWEDVHGXSRQKHUOHWWHUKHUmFRPSHWHQF\DV DGULYHUWRWKHFRPSDQ\DQGWKHSXEOLFZHUHDWULVNl:RRGV &21&855,1*,13$57',66(17,1*,13$57 $IIs$DW:RRGVFRQWHQGHGWKDWSODLQWLIIjVHDUOLHU BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB FRPSODLQWV RI VH[XDO KDUDVVPHQW DQG UHWDOLDWLRQ KDG QR EHDULQJ RQ KLV GHFLVLRQ :RRGV $II s$ DW %2**6&LUFXLWsXGJHFRQFXUULQJLQSDUWDQGGLVVHQWLQJ )ROORZLQJKHUWHUPLQDWLRQSODLQWLIIILOHGWKLVODZVXLW LQSDUW7KHFRXUWjVRSLQLRQFRUUHFWO\VHWVRXWWKHIDFWVDQG WKHDSSOLFDEOHODZLQWKLVFDVH,FRQFXULQDOORIWKHRSLQLRQ ,,6H[XDO+DUDVVPHQW H[FHSWSDUWV,,,DQG,9FRQFHUQLQJWKHSODLQWLIIjVUHWDOLDWLRQ FODLP XQGHU 2KLR GLVFULPLQDWLRQ ODZ DQG KHU FODLP IRU 3ODLQWLII EULQJV KHU FODLP IRU VH[XDO KDUDVVPHQW GXH WR ZURQJIXOGLVFKDUJHDVDQ2KLRSXEOLFSROLF\WRUW KRVWLOH ZRUN HQYLURQPHQW XQGHU 2KLR 5HYLVHG &RGH ZKLFKVWDWHVWKDWLWLVDQXQODZIXOGLVFULPLQDWRU\ $V WKH RSLQLRQ ZHOO GHVFULEHV s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jVUHDFWLRQ WRDQSDJHKDQGZULWWHQOHWWHU&RXUWQH\VHQWWR%OHYLQVWKH 6H[XDO KDUDVVPHQW FODLPV XQGHU 2KLR 5HYLVHG &RGH ,QGLDQDSROLVWHUPLQDOPDQDJHURQsDQXDU\ DUH VXEMHFW WR WKH VDPH VWDQGDUGV DSSOLFDEOH WR IHGHUDOKDUDVVPHQWFODLPVEURXJKWXQGHU7LWOH9,,6HH/LWWOH )RUHVW0HG&WUY2KLR&LYLO5LJKWV&RPPjQ1(G 2KLRFLWLQJ3OXPEHUV 6WHDPILWWHUVsRLQW $SSUHQWLFHVKLS &RPP Y 2KLR &LYLO 5LJKWV &RPPjQ 7KHUH ZHUH DSSDUHQWO\ WZR VRXUFHV RI IULFWLRQ &RXUWQH\jV KDQGZULWWHQ OHWWHU FRPSODLQV RI QRW EHLQJ JLYHQ D m&RFD&RODl ORDG RQ 1(G2KLR )RUKRVWLOHZRUNHQYLURQPHQW sDQXDU\ ZKLFK ZRXOG KDYH ILOOHG LQ VRPH WLPH EHIRUH WKH QRUPDO UXQ FDVHVFRXUWVGLVWLQJXLVKEHWZHHQKDUDVVPHQWE\VXSHUYLVRUV EDFN WR 6HDWWOH ZRXOG KDYH EHJXQ RQ 6XQGD\ sDQXDU\ $SSDUHQWO\ WKLV RUPDQDJHPHQWDQGKDUDVVPHQWE\FRZRUNHUV6HH)HQWRQ UXQ ZKLFK ZDV QRW D UHJXODU UXQ IRU &RXUWQH\ ZDV JLYHQ WR DQRWKHU GULYHU Y +L6$1 )G WK &LU 3LHUFH Y ZKR FRXOG XVH LW WR JHW KRPH &RPPRQZHDOWK/LIH,QV&R)GWK&LU 7KH FRQWURYHUV\ RYHU WKH SURMHFWHG DQG QHYHU LPSOHPHQWHG FKDQJH LQ WKH UHJXODU &ROXPEXV6HDWWOH UXQ ZDV DSSDUHQWO\ UHVROYHG DOPRVW 3ODLQWLII&RXUWQH\DOOHJHVERWKNLQGVLQWKLVFDVH LPPHGLDWHO\ &RXUWQH\ DGPLWV LQ KHU GHSRVLWLRQ WKDW VKH UHFHLYHG D OHWWHU GDWHG sDQXDU\ HYHQ EHIRUH WKH UHJXODU UXQ EDFN WR 6HDWWOH ZRXOG KDYH )LUVWZHZLOODGGUHVVSODLQWLIIj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sDQXDU\ DQG SDUDJUDSK RI KHU LQDSSURSULDWHDWWLUHLQWKHZRUNSODFH$PDQDJHUjVZDUQLQJ DIILGDYLW LV WR WKH VDPH HIIHFW ZLWKRXWPRUHWKDWSODLQWLIIjVFORWKLQJLVLQDSSURSULDWHLQWKH &RXUWQH\Y/DQGDLU7UDQVSRUW 1R 1R &RXUWQH\Y/DQGDLU7UDQVSRUW
ZRUNSODFHLVQRWVH[XDOKDUDVVPHQW3ODLQWLIIIDLOVWRVKRZ 1(G2KLRTXRWLQJ+3HUULWW WKDWWKHWHUPLQDOPDQDJHUjVFRPPHQWVZHUHDQ\WKLQJPRUH 7KH)XWXUHRI:URQJIXO'LVFKDUJH&ODLPV:KHUH'RHV WKDQDOHJLWLPDWHFRQFHUQUHJDUGLQJDSSURSULDWHGUHVVLQWKH (PSOR\HU6HOI,QWHUHVW/LH"8&,1/5(9 ZRUNSODFH 3ODLQWLIIDOVRHUUVLQFODLPLQJWKDWPDQDJHPHQWj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jV GLVFKDUJH )RU WKH :HFRQFOXGHG UHDVRQVVWDWHGLQVHFWLRQ,,,DERYHSODLQWLIIKDVSUHVHQWHGD JHQXLQH LVVXH RI PDWHULDO IDFW DV WR ZKHWKHU VKH ZDV ,Q%XUOLQJWRQ,QGXVWULHVY(OOHUWK86 GLVFKDUJHGIRUKHUFRPSODLQWVRIVH[XDOKDUDVVPHQWRUIRUKHU 6&W /(GG WKH SXUSRUWHGLQFRPSHWHQFHDQGLQVWDELOLW\DQGGHIHQGDQWjVIHDU 6XSUHPH&RXUWDJDLQKHOGWKDWDQHPSOR\HUjVOLDELOLW\LQ RIOLDELOLW\:HWKHUHIRUHUHYHUVHWKHGLVWULFWFRXUWjVJUDQWRI VH[XDO KDUDVVPHQW FDVHV LV JRYHUQHG E\ FRPPRQ ODZ VXPPDU\MXGJPHQWRQWKLVLVVXH DJHQF\SULQFLSOHVDQGVSHFLILFDOO\DGRSWHGVHFWLRQ RIWKH5HVWDWHPHQW6HFRQGRI$JHQF\DVVHWWLQJRXWWKH 9,QWHQWLRQDO,QIOLFWLRQRI(PRWLRQDO'LVWUHVV JRYHUQLQJSULQFLSOHV /DVW DV WR SODLQWLIIjV FDXVH RI DFWLRQ IRU LQWHQWLRQDO $PDVWHULVQRWVXEMHFWWROLDELOLW\IRUWKHWRUWVRI LQIOLFWLRQRIHPRWLRQDOGLVWUHVVZHDJUHHZLWKWKHFRXUWEHORZ KLV VHUYDQWV DFWLQJ RXWVLGH WKH VFRSH RI WKHLU DQGILQGWKDWSODLQWLIIKDVIDLOHGWRSUHVHQWVXIILFLHQWHYLGHQFH HPSOR\PHQWXQOHVV DVDPDWWHURIODZWRFUHDWHDQLVVXHRIPDWHULDOIDFWWRVXVWDLQ KHUFODLP:HWKXVDIILUPWKHJUDQWRIVXPPDU\MXGJPHQWIRU D WKH PDVWHU LQWHQGHG WKH FRQGXFW RU WKH GHIHQGDQW RQ SODLQWLIIjV FODLP RI LQWHQWLRQDO LQIOLFWLRQ RI FRQVHTXHQFHVRU HPRWLRQDOGLVWUHVV E WKHPDVWHUZDVQHJOLJHQWRUUHFNOHVVRU F WKHFRQGXFWYLRODWHGDQRQGHOHJDEOHGXW\RI $IWHUUHYLHZRIWKHUHFRUGEHORZZHUHYHUVHWKHJUDQWRI WKHPDVWHURU VXPPDU\MXGJPHQWIRUWKHGHIHQGDQWRQSODLQWLIIjVFODLPVRI UHWDOLDWLRQDQGWKHSXEOLFSROLF\WRUWRIZURQJIXOGLVFKDUJH G WKH VHUYDQW SXUSRUWHG WR DFW RU WR VSHDN RQ DQG UHPDQG WKRVH FODLPV WR WKH GLVWULFW FRXUW IRU EHKDOIRIWKHSULQFLSDODQGWKHUHZDVUHOLDQFHXSRQ GHWHUPLQDWLRQE\DIDFWILQGHU:HDIILUPVXPPDU\MXGJPHQW DSSDUHQWDXWKRULW\RUKHZDVDLGHGLQDFFRPSOLVKLQJ IRUWKHGHIHQGDQWRQSODLQWLIIjVFODLPRIVH[XDOGLVFULPLQDWLRQ WKHWRUWE\WKHH[LVWHQFHRIWKHDJHQF\UHODWLRQ E\FUHDWLRQRIDKRVWLOHZRUNHQYLURQPHQWDQGKHUFODLPRI LQWHQWLRQDOLQIOLFWLRQRIHPRWLRQDOGLVWUHVV &RXUWQH\Y/DQGDLU7UDQVSRUW 1R 1R &RXUWQH\Y/DQGDLU7UDQVSRUW
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mHQGXS KDUDVVPHQW FDVHV DQG WKHUHIRUH GRHV QRW UHTXLUH D KXUWLQJVRPHRQHlDQGQHYHURQFHDVNHGIRUDQH[SODQDWLRQRI VKRZLQJ RI QHJOLJHQFH RU UHFNOHVV FRQGXFW XQGHU KHUVWDWHPHQW:HILQGWKLVRPLVVLRQWREHHYLGHQFHRIDQ VXEVHFWLRQ E LQ RUGHU WR EULQJ WKH FDVH ZLWKLQ WKH LQWHQW WR JHW ULG RI SODLQWLII EHFDXVH RI KHU FRPSODLQWV VXSHUYLVRU VVFRSHRIHPSOR\PHQW+HQFHWKH&RXUW 3ODLQWLIIj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j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jV GLVPLVVDO ZDV PRWLYDWHG E\ FRQGXFW NQHZRUVKRXOGKDYHNQRZQ UHODWHGWRWKHSXEOLFSROLF\DQG )HQWRQ)GDW,QWKLVFDVHMXVWDVLQ)HQWRQDQG WKHHPSOR\HUODFNHGDQRYHUULGLQJOHJLWLPDWHEXVLQHVV %ODQNHQVKLSSODLQWLIIPXVWVKRZWKDWWKHGHIHQGDQWNQHZRU MXVWLILFDWLRQIRUWKHGLVPLVVDO6HH&ROOLQVY5L]NDQD VKRXOG KDYH NQRZQ RI WKH KDUDVVPHQW DQG IDLOHG WR WDNH &RXUWQH\Y/DQGDLU7UDQVSRUW 1R 1R &RXUWQH\Y/DQGDLU7UDQVSRUW
DSSURSULDWHUHPHGLDODFWLRQ6HHLG7KHUHFRUGVKRZVWKDW /DQGDLUjVDQWLKDUDVVPHQWSROLF\:LWKWKLVDFWLRQWKHUHFRUG GHIHQGDQWWRRNUHPHGLDODFWLRQLQ'HFHPEHUWRDGGUHVV VKRZVWKDWDOOKDUDVVPHQWFHDVHG:HDJUHHZLWKWKHFRXUW SODLQWLIIjVDOOHJDWLRQVE\LVVXLQJDPHPRUDQGXPWRDOORZQHU EHORZWKDWWDNLQJWKHHYLGHQFHLQWKHOLJKWPRVWIDYRUDEOHWR RSHUDWRUV UHLWHUDWLQJ /DQGDLUjV KDUDVVPHQW IUHH ZRUN SODLQWLII WKH GHIHQGDQWjV FRQGXFW ZDV QRW QHJOLJHQW RU HQYLURQPHQWSROLF\DWZKLFKSRLQWDOOKDUDVVPHQWWRZDUGV LQGLIIHUHQWWRSODLQWLIIj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sDUUHWWjVDQG0L]QHUjVKDUDVVPHQW3ODLQWLIIEHJLQV HPSOR\PHQWDFWLRQDQGDFDXVDOOLQNH[LVWHGEHWZHHQWKH KHU0D\OHWWHUE\GHIHQGLQJKHUVHOIDQGFRPSODLQLQJDERXW SURWHFWHGDFWLYLW\DQGWKHDGYHUVHDFWLRQ6HH&KDQGOHUY DGRXEOHVWDQGDUGVKHSHUFHLYHGDVDUHVXOWRIWKHUHSULPDQG (PSLUH &KHP ,QF 1(G 2KLR &W $SS VKHUHFHLYHGUHJDUGLQJPRUHDSSURSULDWHZRUNFORWKLQJ6KH FLWLQJs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jVUHDVRQIRUKHUWHUPLQDWLRQ'HIHQGDQW ZKLFK VKH FRPSLOHG WKUHH ORJJHG HQWULHV GHVFULELQJ PRUH DUJXHVWKDWLWGLGQRWWHUPLQDWHSODLQWLIIEHFDXVHRIKHUVH[XDO VH[XDOUHIHUHQFHVGLUHFWHGWRZDUGVKHUEXWDJDLQQHYHUDVNHG KDUDVVPHQWFRPSODLQWVEXWPDLQWDLQVWKDWLWILUHGSODLQWLIIIRU GHIHQGDQW WR DGGUHVV WKH SUREOHP $JDLQ EHFDXVH WKLV UHPDUNVPDGHLQKHUsDQXDU\OHWWHUWRPDQDJHPHQW FRUUHVSRQGHQFHLVOHVVWKDQFOHDUDVWRLWVSXUSRVHLWGRHVQRW 3RUWLRQVRIWKHOHWWHUGHIHQGDQWDUJXHVVKRZWKDWSODLQWLII FRQVWLWXWHQRWLFHWRGHIHQGDQW,WZDVQRWXQWLO'HFHPEHU ZDV QRW LQ D VWDEOH IUDPH RI PLQG m, QHHG WR KDYH WKLV ZKHQ GHIHQGDQW UHFHLYHG WKH ODZ\HUjV OHWWHU DVNLQJ SUREOHPWDNHQFDUHRIEHIRU>VLF@LWJHWVRXWRIKDQGDQG,HQG GHIHQGDQWWRVWRSWKHKDUDVVPHQWWKDWGHIHQGDQWKDGQRWLFHRI XSKXUWLQJVRPHRQHl/HWWHUIURP&RXUWQH\WR%OHYLQVRI WKHKDUDVVPHQW7KDWVDPHGD\GHIHQGDQWWHOHSKRQHGSODLQWLII DWs$DW'HIHQGDQWDUJXHVWKDWLWLQWHUSUHWHG WR GLVFXVV KHU FRPSODLQWV DQG VHQW D OHWWHU WR KHU GHWDLOLQJ WKHOHWWHUDVLQGLFDWLQJWKDWWKHSODLQWLIIZDVQRWILWWRGULYH WKHLUFRQYHUVDWLRQ,WZDVDWWKLVSRLQWWKDWGHIHQGDQWLVVXHG DQGWKDWVKHSRVHGDSRWHQWLDOULVNWRWKHSXEOLFEHFDXVHVKH WKH PHPRUDQGXP WR DOO RZQHURSHUDWRUV UHHPSKDVL]LQJ GURYH D ODUJH KHDY\ WUXFN WKDW FRXOG LQMXUH RWKHUV RQ WKH