Greer v. Mitchell

Opinion

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

3$8/ : *5((5 ; 3HWLWLRQHU$SSHOODQW    1R Y  !  %(77< 0,7&+(//:DUGHQ  5HVSRQGHQW$SSHOOHH  1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW&OHYHODQG 1RnsRKQ00DQRV'LVWULFWsXGJH $UJXHG2FWREHU 'HFLGHGDQG)LOHG6HSWHPEHU %HIRUH.(11('<1255,6DQG0225(&LUFXLW sXGJHV BBBBBBBBBBBBBBBBB &2816(/ $5*8('  5RJHU 0 6\QHQEHUJ 6<1(1%(5* 0$5(,1 &OHYHODQG 2KLR 0LFKDHO s %HQ]D &OHYHODQG 2KLRIRU$SSHOODQW0LFKDHO/&ROO\HU2)),&(2)7+( $77251(< *(1(5$/ 2) 2+,2 &OHYHODQG 2KLR IRU $SSHOOHH21%5,()5RJHU06\QHQEHUJ6<1(1%(5* 0$5(,1&OHYHODQG2KLR0LFKDHOs%HQ]D&OHYHODQG 2KLRIRU$SSHOODQW0LFKDHO/&ROO\HU2)),&(2)7+(

  *UHHUY0LWFKHOO 1R 1R *UHHUY0LWFKHOO 

$77251(< *(1(5$/ 2) 2+,2 &OHYHODQG 2KLR IRU KLQVXIILFLHQWQDUURZLQJ $SSHOOHH 3HWLWLRQHUDVVHUWVWKDWWKHXVHRIWKHXQGHUO\LQJFULPHLQ BBBBBBBBBBBBBBBBB WKLVFDVHDJJUDYDWHGUREEHU\DVDQDJJUDYDWLQJFLUFXPVWDQFH GRHVQRWmDFWWRQDUURZWKHFODVVRIPXUGHUVHOLJLEOHIRUWKH 23,1,21 GHDWKSHQDOW\l,QKLVYLHZLWLVZURQJWRDOORZWKHGHDWK BBBBBBBBBBBBBBBBB SHQDOW\ IRU IHORQ\ PXUGHU ZLWKRXW UHTXLULQJ DW OHDVW RQH DGGLWLRQDODJJUDYDWLQJIDFWRU $/$1(1255,6&LUFXLWsXGJH3DXO:*UHHUDSSHDOV IURPWKHGHQLDORIKLVSHWLWLRQIRUDZULWRIKDEHDVFRUSXVILOHG 6XFK VFKHPHV KDYH EHHQ XSKHOG KRZHYHU  6HH 7LVRQ SXUVXDQWWR86&†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jSHUIRUPDQFH 2Q7XHVGD\DIWHUQRRQsDQXDU\WKHERG\RI ZLWKUHVSHFWWRWKHSHQDOW\SKDVHRIWKHWULDOLQOLJKWRIWKH /RXLV$5RWKZDVGLVFRYHUHGRQKLVNLWFKHQIORRU,W IDFWRUVZHKDYHGLVFXVVHG7KHGLVWULFWFRXUWjVMXGJPHQWLQ ZDVGHWHUPLQHGWKDWKHKDGEHHQVWDEEHGRURWKHUZLVH DOORWKHUUHVSHFWVLVDIILUPHG ZRXQGHG WZHQW\WZR WLPHV VHYHUDO RI ZKLFK VWDE ZRXQGVSXQFWXUHGWKHOHIWOXQJDQGULJKWYHQWULFOHRIWKH KHDUW  7KH WLPH RI GHDWK ZDV HVWDEOLVKHG DV DSSUR[LPDWHO\ EHWZHHQ  SP 6XQGD\ QLJKW DQG DP0RQGD\PRUQLQJ7KHUHZDVQRVLJQRIDQ\ VWUXJJOHDQGLWZDVDSSDUHQWWKDW5RWKKDGEHHQVWDEEHG ZKLOHKHVDWDWKLVNLWFKHQWDEOH5RWK VKRPHKDGEHHQ WKRURXJKO\ VHDUFKHG %ORRGVWDLQV ZHUH DOVR IRXQG WKURXJKRXWWKHKRPH  *UHHUY0LWFKHOO 1R 1R *UHHUY0LWFKHOO 

MXVWLI\ GHDWK HYHQ WKRXJK GHIHQGDQW GLG QRW KDYH LQWHQW WR 3ROLFH RIILFHUV EHJDQ WR TXHVWLRQ 5RWKjV QHLJKERUV NLOO LQFOXGLQJ DSSHOODQW 3DXO : *UHHU  (YHQWXDOO\ WKHLU FDQYDVVLQJ HIIRUWV OHG EDFN WR DSSHOODQW  7KLV ZDV HSURRIRIPLWLJDWLRQ EHFDXVHDQHLJKERUKDGREVHUYHGWZRFXWVRQDSSHOODQWjV ILQJHUVRQ0RQGD\DIWHUQRRQ6LQFHWKHPXUGHUKDGEHHQ 3HWLWLRQHU QH[W REMHFWV WR WKH PDQQHU LQ ZKLFK WKH 2KLR FRPPLWWHGE\PHDQVRIDNQLIHLQYHVWLJDWRUVEHJDQWR VWDWXWH DOORZV ZHLJKLQJ RI WKH DJJUDYDWLQJ DQG PLWLJDWLQJ TXHVWLRQDSSHOODQWPRUHFORVHO\FRQFHUQLQJKLVZRXQGV FLUFXPVWDQFHVEHFDXVHLWGRHVmQRWUHTXLUHWKHVWDWHWRSURYH DQGKLVUHODWLRQVKLSWRWKHYLFWLP,WZDVHVWDEOLVKHGWKDW WKHDEVHQFHRIDQ\PLWLJDWLQJIDFWRUVRUWKDWGHDWKLVWKHRQO\ 5RWK KDG UHQWHG D KRPH WR DSSHOODQW ZKR ZDV DSSURSULDWHSHQDOW\l XQHPSOR\HGDQGDOORZHGKLPWRPDNHUHSDLUVLQOLHXRI SD\LQJ UHQW  $OVR 5RWK KDG GXULQJ WKH WLPH RI 7KH6XSUHPH&RXUWRQO\UHTXLUHVWKDWWKHVWDWXWRU\VFKHPH DSSHOODQWjV WHQDQF\ SURYLGHG LQWHU DOLD IRRG PRQH\ UHTXLUHV WKDW WKH DJJUDYDWLQJ FLUFXPVWDQFHV RXWZHLJK WKH DQGDKRWSODWHIRUDSSHOODQWDQGKLVJLUOIULHQG,WZDV PLWLJDWLQJRQHV6HH%O\VWRQHY3HQQV\OYDQLD86 HVWDEOLVKHG WKDW 5RWK ZDV FRQWHPSODWLQJ HYLFWLRQ RI  VFKHPH PDQGDWLQJ GHDWK SHQDOW\ LI MXU\ ILQGV RQH DSSHOODQW$IWHUKHDULQJDERXWFXWVRQDSSHOODQWjVILQJHUV DJJUDYDWLQJ FLUFXPVWDQFH DQG QR PLWLJDWLQJ FLUFXPVWDQFHV SROLFH UHTXHVWHG DSSHOODQW WR DFFRPSDQ\ WKHP WR WKH VDWLVILHVWKH(LJKWK$PHQGPHQW SROLFHVWDWLRQZKLFKKHGLG ISURSRUWLRQDOLW\UHYLHZ 3ROLFHZLWKWKHSHUPLVVLRQRIDSSHOODQWjVJLUOIULHQG SHUIRUPHGDVHDUFKRIWKHFRXSOHjVUHVLGHQFH7KHUHLQ $OWKRXJK SURSRUWLRQDOLW\ UHYLHZ LV QRW FRQVWLWXWLRQDOO\ SROLFHGLVFRYHUHGYDULRXVDUWLFOHVRIEORRG\FORWKLQJDQG UHTXLUHGRQFHDVWDWHDGRSWVVXFKDVFKHPHLWPXVWFRPSRUW D ZULVWZDWFK EHORQJLQJ WR WKH YLFWLP  (YHQWXDOO\ ZLWKGXHSURFHVV2KLRODZSURYLGHVWKDWWKH6XSUHPH&RXUW DSSHOODQWFRQIHVVHGWRKDYLQJJRQHWKURXJKWKHYLFWLPjV VKDOO mFRQVLGHU ZKHWKHU WKH VHQWHQFH LV H[FHVVLYH RU KRPHLQVHDUFKRIYDOXDEOHVEXWKHLQVLVWHGWKDWKHKDG GLVSURSRUWLRQDWH WR WKH SHQDOW\ LPSRVHG LQ VLPLODU FDVHVl QRW GRQH VR XQWLO 0RQGD\ PRUQLQJ ZKHQ 5RWK ZDV 2KLR5HY&RGH† DOUHDG\GHDG1HLJKERUVHVWDEOLVKHGWKDWDSSHOODQWKDG :HQRWHWKDWSHWLWLRQHUKDVQR(LJKWK$PHQGPHQWULJKWWR JRQHWRVHH5RWKDWDSSUR[LPDWHO\SPWKHQLJKW SURSRUWLRQDOLW\UHYLHZ&RHY%HOO)GWK RIWKHPXUGHU &LU   )XUWKHUPRUH WKH UHFRUG IDLOV WR VXSSRUW 2Q )HEUXDU\   DSSHOODQW ZDV LQGLFWHG RQ WKH SHWLWLRQHUjVFRQWHQWLRQ IROORZLQJ FKDUJHV RQH FRXQW RI DJJUDYDWHG PXUGHU LQ JLQWHUQDWLRQDOODZ YLRODWLRQRI5&$RQHFRXQWRIDJJUDYDWHG PXUGHULQYLRODWLRQRI5&%DQGRQHFRXQWRI 3HWLWLRQHU EHOLHYHV WKDW WKH GHDWK SHQDOW\ YLRODWHV WKH DJJUDYDWHGUREEHU\LQYLRODWLRQRI5&$  6XSUHPDF\ &ODXVH EHFDXVH WKH 8QLWHG 6WDWHV KDV VLJQHG 7KHVWDWHLQFOXGHGDQDJJUDYDWHGUREEHU\VSHFLILFDWLRQWR QXPHURXV LQWHUQDWLRQDO DJUHHPHQWV WKDW SURKLELW WKH GHDWK WKH VHFRQG PXUGHU FKDUJH SXUVXDQW WR 5& SHQDOW\ $  WKXV VHHNLQJ WKH GHDWK SHQDOW\ IRU WKH FULPH$SSHOODQWSOHGQRWJXLOW\DQGJDYHQRWLFHRIKLV 8QWLO WKH 8QLWHG 6WDWHV 6XSUHPH &RXUW KROGV WR WKH DOLELGHIHQVH)ROORZLQJDWULDORQWKHPHULWVDSSHOODQW FRQWUDU\ZHDUHFRPSHOOHGWRGHQ\UHOLHIRQWKLVJURXQG ZDVFRQYLFWHGRIDOOFRXQWVLQFOXGLQJWKHVSHFLILFDWLRQ  *UHHUY0LWFKHOO 1R 1R *UHHUY0LWFKHOO 

RQWKHVHFRQGFRXQW$WWKHVHQWHQFLQJSKDVHDSSHOODQW ,&RQVWLWXWLRQDOLW\RI2KLR'HDWK3HQDOW\6WDWXWH SUHVHQWHG HYLGHQFH LQ PLWLJDWLRQ  7KH MXU\ WKHUHXSRQ UHFRPPHQGHGWKDWDVHQWHQFHRIGHDWKEHLPSRVHG7KH 3HWLWLRQHUFKDOOHQJHVWKHFRQVWLWXWLRQDOLW\RIWKH2KLRGHDWK WULDO FRXUW WKHQ VHQWHQFHG DSSHOODQW WR GHDWK  %\ LWV SHQDOW\RQDQXPEHURIIURQWV RSLQLRQGDWHG0DUFKZKHUHLQLWFRQGXFWHGLWV LQGHSHQGHQW DQDO\VLV DQG UHYLHZ WKH FRXUW RI DSSHDOV DFUXHODQGXQXVXDOSXQLVKPHQW DIILUPHG ERWK WKH WULDO FRXUWjV MXGJPHQW RI FRQYLFWLRQ DQGWKHVHQWHQFHRIGHDWK +HILUVWDUJXHVLQDJHQHUDOZD\WKDWWKHGHDWKSHQDOW\LV FUXHODQGXQXVXDOEHFDXVHLWLVH[FHVVLYH7KH6XSUHPH&RXUW 6WDWHY*UHHU2KLR6WG1(G KDVUHMHFWHGWKLVFKDOOHQJH6HH*UHJJY*HRUJLD86 2KLR 

5HSUHVHQWHGE\QHZFRXQVHOSHWLWLRQHUDSSHDOHGWR2KLRjV EDUELWUDU\DSSOLFDWLRQ 1LQWK 'LVWULFW &RXUW RI $SSHDOV UDLVLQJ WZHQW\IRXU DVVLJQPHQWV RI HUURU  2Q 0DUFK   WKH &RXUW RI 3HWLWLRQHUQH[WDWWDFNVWKHDUELWUDU\PDQQHULQZKLFKWKH $SSHDOVXSKHOGSHWLWLRQHUjVFRQYLFWLRQDQGVHQWHQFH6WDWHY GHDWKSHQDOW\LVDSSOLHG$PRQJRWKHUWKLQJVKHQRWHVWKDW *UHHU1R:/2KLR&W$SS0DU  UDFHVHHPVWRSOD\DSDUWLQLWVDSSOLFDWLRQSRLQWLQJWRWKH 7KH2KLR6XSUHPH&RXUWDIILUPHG6WDWHY*UHHU GLVSURSRUWLRQDWHQXPEHURI$IULFDQ$PHULFDQVRQGHDWKURZ 2KLR6WG1(G2KLRUHKjJGHQLHG  2KLR 6W G   1(G  2KLR  FHUW :HGHQ\SHWLWLRQHUKDEHDVUHOLHIRQWKLVFODLPEHFDXVHKH GHQLHG86 KDVIDLOHGWRGHPRQVWUDWHDFRQVWLWXWLRQDOO\VLJQLILFDQWULVNRI UDFLDOELDVDIIHFWLQJWKH2KLRFDSLWDOVHQWHQFLQJSURFHVV 2Q1RYHPEHUSHWLWLRQHUILOHGDSHWLWLRQIRUSRVW FRQYLFWLRQUHOLHISXUVXDQWWR2KLR5HY&RGH†7KH FQRWOHDVWUHVWULFWLYHSXQLVKPHQW WULDO FRXUW GHQLHG WKH SHWLWLRQ LQ D RQHSDJH MRXUQDO HQWU\ 3HWLWLRQHUFRQWHQGVWKDW WKHGHDWKSHQDOW\mLVQHLWKHUWKH EDVHGXSRQWKHGRFWULQHRIUHVMXGLFDWDsRXUQDO(QWU\sXQH OHDVWUHVWULFWLYHQRUDQHIIHFWLYHPHDQVRIGHWHUUHQFHl s$DW7KH&RXUWRI$SSHDOVUHYHUVHGDQG UHPDQGHG KRZHYHU LQ RUGHU WR DIIRUG WKH WULDO FRXUW WKH 7KHLPSRVLWLRQRIWKHGHDWKSHQDOW\KDVEHHQFRQVLVWHQWO\ RSSRUWXQLW\WRLVVXHDPRUHGHWDLOHGRSLQLRQ6WDWHY*UHHU XSKHOGE\WKH6XSUHPH&RXUW8QWLOWKH&RXUWKROGVWRWKH 1R:/2KLR&W$SS)HE FRQWUDU\ZHDUHERXQGE\LWVGHFLVLRQV 7KH 2KLR 6XSUHPH &RXUW VXEVHTXHQWO\ GHFOLQHG WR DFFHSW MXULVGLFWLRQ6WDWHY*UHHU2KLR6WG1(G GIDLOXUHWRUHTXLUHLQWHQWWRNLOO 2KLRXQSXEOLVKHGWDEOHGHFLVLRQ 3HWLWLRQHU DUJXHV WKDW 2KLRjV GHDWK SHQDOW\ VFKHPH LV 2Q sXQH   WKH FRXUW RI FRPPRQ SOHDV FRPSOLHG GHIHFWLYHEHFDXVHLWGRHVQRWUHTXLUHSURRIWKDWDGHIHQGDQW ZLWKWKHGLUHFWLYHRIWKH&RXUWRI$SSHDOVRQFHDJDLQGHQ\LQJ KDGDmFRQVFLRXVGHVLUHWRNLOOl7KH6XSUHPH&RXUWKDVKHOG UHOLHI RQ DOO JURXQGV ODUJHO\ EDVHG XSRQ LWV ILQGLQJ RI UHV WKDWVXFKDFRQVFLRXVGHVLUHWRNLOOLVQRWUHTXLUHGLQRUGHUWR MXGLFDWD)LQGLQJVDQG2UGHUsXQHs$DW LPSRVHWKHGHDWKSHQDOW\6HH7LVRQY$UL]RQD86 7KH&RXUWRI$SSHDOVDIILUPHG6WDWHY*UHHU1R   PDMRU SDUWLFLSDWLRQ LQ WKH IHORQ\ FRPPLWWHG :/2KLR&W$SS2FW7KH2KLR FRPELQHGZLWKUHFNOHVVLQGLIIHUHQFHWRKXPDQOLIHHQRXJKWR 6XSUHPH&RXUWGHFOLQHGWRDFFHSWMXULVGLFWLRQ6WDWHY*UHHU  *UHHUY0LWFKHOO 1R 1R *UHHUY0LWFKHOO 

WKH VWDWH WULDO FRXUWjV HYLGHQWLDU\ UXOLQJV DUH QRW  2KLR 6W G   1(G  2KLR  FRJQL]DEOHLQDIHGHUDOKDEHDVH[FHSWZKHQWKHYLRODWLRQ XQSXEOLVKHGWDEOHGHFLVLRQ RIDVWDWHjVHYLGHQWLDU\UXOHKDVUHVXOWHGLQWKHGHQLDORI IXQGDPHQWDOIDLUQHVVWKHUHE\YLRODWLQJGXHSURFHVV 3HWLWLRQHU WKHQ ILOHG DQ DSSOLFDWLRQ IRU GHOD\HG FRQVLGHUDWLRQSXUVXDQWWR6WDWHY0XUQDKDQ2KLR6WG  1(G2KLRZKLFKDOOHJHGLQWHUDOLD WKDWDSSHOODWHFRXQVHOKDGUHQGHUHGLQHIIHFWLYHDVVLVWDQFHE\ *UHHUDVVHUWVWKDWWKHH[FOXVLRQGHQLHGKLPKLVULJKWRI IDLOLQJ WR UDLVH WKLUW\IRXU DVVLJQPHQWV RI HUURU RQ GLUHFW GXHSURFHVV\HWKHKDVQRWFRQYLQFHGWKLV&RXUWWKDWWKH DSSHDO  7KH &RXUW RI $SSHDOV GHQLHG WKH DSSOLFDWLRQ H[FOXVLRQZDVLQYLRODWLRQRI2KLRjVHYLGHQWLDU\UXOHVQRU FRQFOXGLQJWKDWSHWLWLRQHUKDGIDLOHGWRPHHWWKHKLJKVWDQGDUG KDVKHDUWLFXODWHGKRZWKHH[FOXVLRQRIWKHVWDWHPHQWZDV UHTXLUHG E\ 6WULFNODQG Y :DVKLQJWRQ  86   SUHMXGLFLDOWRKLPE\VKRZLQJKRZWKHRXWFRPHRIKLV IRUFODLPVRILQHIIHFWLYHDVVLVWDQFH6WDWHY*UHHU WULDO RU VHQWHQFLQJ ZRXOG KDYH EHHQ DIIHFWHG E\ WKH 1R2KLR&W$SS)HEXQUHSRUWHGsRXUQDO LQFOXVLRQRIWKHVWDWHPHQW (QWU\ s$ DW   7KH 2KLR 6XSUHPH &RXUW DIILUPHG 6WDWHY*UHHU2KLR6WG1(G2KLR 0HPRUDQGXP RI 2SLQLRQ $XJ   DW  s$ DW  XQSXEOLVKHG WDEOH GHFLVLRQ  DQG WKH 8QLWHG 6WDWHV  6XSUHPH&RXUWGHQLHGFHUWLRUDUL0RQWJRPHU\Y2KLR 86 3HWLWLRQHU FRQWHQGV WKDW WKH DGPLVVLELOLW\ RI KHDUVD\ WHVWLPRQ\ mLV DQ LVVXH RI FRQVWLWXWLRQDO GLPHQVLRQl  ,Q $IWHU H[KDXVWLQJ KLV VWDWHFRXUW DYHQXHV RI UHGUHVV VXSSRUWKHFLWHVDQXQSXEOLVKHGRUGHURIWKLVFRXUWWKDWRQO\ SHWLWLRQHULQLWLDWHGWKHKDEHDVFRUSXVSURFHHGLQJQRZEHIRUH LQFLGHQWDOO\LQYROYHVDKHDUVD\LVVXHDQGFHUWDLQO\GRHVQRW XV RQ 'HFHPEHU   UDLVLQJ WZHQW\HLJKW JURXQGV IRU VWDQG IRU WKH SURSRVLWLRQ DGYDQFHG E\ SHWLWLRQHU 3DULV Y UHOLHI  7KH GLVWULFW FRXUW GHQLHG WKH SHWLWLRQ RQ $XJXVW  7XUQHU 1R   :/  WK &LU 0D\   DQG WKHUHDIWHU GHQLHG D PRWLRQ WR DOWHU RU DPHQG WKH RUGHUKROGLQJWKDWGHIHQGDQWKDGHVWDEOLVKHGFDXVHDQG MXGJPHQW SUHMXGLFH IRU IDLOXUH WR FRPSO\ ZLWK DQ 2KLR UXOH RI SURFHGXUH ,, 3HWLWLRQHU DOVR DUJXHV WKDW m>W@KH WULDO FRXUWjV GLVSDUDWH $6WDQGDUGRI5HYLHZ WUHDWPHQWRI0U5RWKjVVWDWHPHQWVZDVVRXQIDLUDQGELDVHG DVWRGHQ\0U*UHHUKLVULJKWRIGXHSURFHVVDVJXDUDQWHHGE\ 7KLVFRXUWUHYLHZVDGLVWULFWFRXUWjVOHJDOFRQFOXVLRQVLQD WKH)LIWKDQG)RXUWHHQWK$PHQGPHQWVl+RZHYHUDVDOUHDG\ KDEHDVSURFHHGLQJGHQRYRDQGLWVIDFWXDOILQGLQJVIRUFOHDU QRWHG KLV RQO\ H[DPSOHV RI WKLV ELDV DUH FXOOHG IURP WKH HUURU6HH/XFDVY2j'HD)GWK&LU WHVWLPRQ\RI0UV0DORQH %HFDXVHSHWLWLRQHUILOHGKLVKDEHDVSHWLWLRQRQ'HFHPEHU UHYLHZRIWKHVWDWHFRXUWjVGHFLVLRQLVJRYHUQHGE\WKH :HDIILUPWKHGLVWULFWFRXUW VWDQGDUGVVHWIRUWKLQWKH$QWLWHUURULVPDQG(IIHFWLYH'HDWK 3HQDOW\ $FW RI  3XE / 1R   6WDW  $('3$6HH/LQGKY0XUSK\86 +DUSVWHUY2KLR)GWK&LU $VDPHQGHG86&†GSURYLGHVDVIROORZV  *UHHUY0LWFKHOO 1R 1R *UHHUY0LWFKHOO 

G$QDSSOLFDWLRQIRUDZULWRIKDEHDVFRUSXVRQEHKDOI WRZQ/RFN\RXUGRRUVWRQLJKWDQGLI5LFNFRPHVRYHU RIDSHUVRQLQFXVWRG\SXUVXDQWWRWKHMXGJPHQWRID6WDWH ,jPJRLQJWRKDYHWRNLOOKLPl FRXUWVKDOOQRWEHJUDQWHGZLWKUHVSHFWWRDQ\FODLPWKDW ZDVDGMXGLFDWHGRQWKHPHULWVLQ6WDWHFRXUWXQOHVVWKH  DGMXGLFDWLRQRIWKHFODLP 2XUSRVLWLRQLVWKDWWKDWWHVWLPRQ\LIHOLFLWHGIURPWKLV  UHVXOWHG LQ D GHFLVLRQ WKDW ZDV FRQWUDU\ WR RU ZLWQHVVJRHVWRVKRZWKDW5RWKZDVDIUDLGRIVRPHRQH LQYROYHG DQ XQUHDVRQDEOH DSSOLFDWLRQ RI FOHDUO\ RWKHUWKDQ3DXO*UHHUKHZDVVSHFLILFDOO\DIUDLGRI5LFN HVWDEOLVKHG )HGHUDO ODZ DV GHWHUPLQHG E\ WKH ZKRHYHU5LFNZDVDQGKHZDVVRFRQFHUQHGDERXWWKH 6XSUHPH&RXUWRIWKH8QLWHG6WDWHVRU SUHVHQFHRI5LFNWKDWKHH[SUHVVHGWKDWLQWHUPVRIWHOOLQJ DQHLJKERUWREHZHDU\>VLF@RI5LFNEHLQJEDFNLQWRZQ  UHVXOWHG LQ D GHFLVLRQ WKDW ZDV EDVHG XSRQ DQ XQUHDVRQDEOHGHWHUPLQDWLRQRIWKHIDFWVLQOLJKWRI 7KHSURVHFXWLRQFRQWHQGHGWKDWDGPLVVLRQRIWKHVWDWHPHQW WKHHYLGHQFHSUHVHQWHGLQWKH6WDWHFRXUWSURFHHGLQJ FRQVWLWXWHGKHDUVD\7KHFRXUWDJUHHGWHOOLQJGHIHQVHFRXQVHO m,I\RXNQRZWKHUHDUHSHRSOH>ZKRZHUHLQGHEWWR5RWK@ 86&†G,Q:LOOLDPVY7D\ORU86 EULQJWKHPLQl WKH&RXUWH[SODLQHGWKHHIIHFWRIWKLVVHFWLRQLQWKHVH WHUPV %HIRUHWKH2KLR6XSUHPH&RXUWSHWLWLRQHUKDGFRQWHQGHG WKDWWKHVWDWHPHQWm5LFNLVEDFNLQWRZQlIHOOXQGHU2KLR ,QVXP†G SODFHVDQHZFRQVWUDLQWRQWKH 5XOHRI(YLGHQFHZKLFKSURYLGHVDKHDUVD\H[FHSWLRQ SRZHURIDIHGHUDOKDEHDVFRXUWWRJUDQWDVWDWHSULVRQHUjV IRUVWDWHPHQWVWKDWVKRZDQmH[LVWLQJPHQWDOHPRWLRQDORU DSSOLFDWLRQIRUDZULWRIKDEHDVFRUSXVZLWKUHVSHFWWR SK\VLFDOFRQGLWLRQl7KH&RXUWUHMHFWHGWKLVDUJXPHQW FODLPVDGMXGLFDWHGRQWKHPHULWVLQVWDWHFRXUW8QGHU † G  WKH ZULW PD\ LVVXH RQO\ LI RQH RI WKH 7KHGHFHGHQWVLPSO\GRHVQRWVWDWHWKDWKHZDVDIUDLGRI IROORZLQJ WZR FRQGLWLRQV LV VDWLVILHG  WKH VWDWHFRXUW DQ\RQH,QVRIDUDVWKHUHPD\EH GHULYDWLYHLQIHUHQFHV DGMXGLFDWLRQUHVXOWHGLQDGHFLVLRQWKDWmZDVFRQWUDU\ IDYRUDEOH WR DSSHOODQW LW PXVW EH DGPLWWHG WKDW WKH\ WRFOHDUO\HVWDEOLVKHG)HGHUDOODZDVGHWHUPLQHGE\ ZRXOGUHTXLUHWKHMXU\WRVSHFXODWHDQGQRWPHUHO\LQIHU WKH 6XSUHPH &RXUW RI WKH 8QLWHG 6WDWHVl RU 6LQFHDSSHOODQWGLGQRWSUHVHQWKLVGHIHQVHXSRQWKHEDVLV mLQYROYHGDQXQUHDVRQDEOHDSSOLFDWLRQRIFOHDUO\ WKDW 5LFN 0F0LOODQ NLOOHG WKH GHFHGHQW LW FDQQRW EH HVWDEOLVKHG)HGHUDOODZDVGHWHUPLQHGE\WKH6XSUHPH FRQWHQGHGWKDWWKHVWDWHPHQWVZHUHDQ\WKLQJRWKHUWKDQ &RXUW RI WKH 8QLWHG 6WDWHVl  8QGHU WKH mFRQWUDU\ WRl LUUHOHYDQWSRVVHVVLQJDSRWHQWLDOIRUPLVOHDGLQJWKHMXU\ FODXVHDIHGHUDOKDEHDVFRXUWPD\JUDQWWKHZULWLIWKH VWDWH FRXUW DUULYHV DW D FRQFOXVLRQ RSSRVLWH WR WKDW *UHHU2KLR6WGDW1(GDW UHDFKHGE\WKLV&RXUWRQDTXHVWLRQRIODZRULIWKHVWDWH FRXUWGHFLGHVDFDVHGLIIHUHQWO\WKDQWKLV&RXUWKDVRQD 7KH GLVWULFW FRXUW OLNHZLVH UHMHFWHG SHWLWLRQHUjV FODLP VHW RI PDWHULDOO\ LQGLVWLQJXLVKDEOH IDFWV 8QGHU WKH DOWKRXJK RQ VRPHZKDW GLIIHUHQW JURXQGV JLYHQ WKH KDEHDV mXQUHDVRQDEOHDSSOLFDWLRQlFODXVHDIHGHUDOKDEHDVFRXUW FRQWH[W PD\JUDQWWKHZULWLIWKHVWDWHFRXUWLGHQWLILHVWKHFRUUHFW JRYHUQLQJOHJDOSULQFLSOHIURPWKLV&RXUWjVGHFLVLRQVEXW ,WLVDORQJVWDQGLQJSULQFLSOHWKDWIHGHUDOFRXUWVDUHWR XQUHDVRQDEO\ DSSOLHV WKDW SULQFLSOH WR WKH IDFWV RI WKH JLYHGHIHUHQFHWRVWDWHWULDOFRXUWGHFLVLRQVUHJDUGLQJWKH SULVRQHUjVFDVH DSSOLFDWLRQRIVWDWHODZ6SHFLILFDOO\FODLPVEDVHGXSRQ  *UHHUY0LWFKHOO 1R 1R *UHHUY0LWFKHOO 

RSLQLRQ RI WKH WULDO FRXUW LV FRPSOHWHO\ GHYRLG RI DQ\ 86DW2j&RQQRUsVHHDOVR0DFKDFHNY UHIHUHQFHWRVXFKUHSRUW$FFRUGLQJO\WKHUHKDVEHHQQR +RIEDXHU)GWK&LUFHUWGHQLHG VKRZLQJ WKDW WKH SUHSDUHG YLFWLP LPSDFW VWDWHPHQW 6&W SOD\HGDQ\SDUWLQWKHVHQWHQFLQJGHOLEHUDWLRQVRIHLWKHU MXGJHRUMXU\6WDWHY3RVW2KLR6WG )XUWKHUPRUHXQGHUWKH$('3$WKHGLVWULFWFRXUWPD\RQO\   1(G    7KXV WKH WULDO FRXUW KROG DQ HYLGHQWLDU\ KHDULQJ XQGHU WKH IROORZLQJ SUHVXPDEO\ FRQVLGHUHG RQO\ WKDW HYLGHQFH ZKLFK ZDV FLUFXPVWDQFHV UHOHYDQWSUREDWLYHDQGFRPSHWHQWRQWKHLVVXH,GDW 1(GDW ,QDSURFHHGLQJLQVWLWXWHGE\DQDSSOLFDWLRQIRUD ZULWRIKDEHDVFRUSXVE\DSHUVRQLQFXVWRG\SXUVXDQWWR *UHHU2KLR6WGDW1(GDWIRRWQRWH WKHMXGJPHQWRID6WDWHFRXUWDGHWHUPLQDWLRQRIDIDFWXDO DGGHG7KHGLVWULFWFRXUWREVHUYHGWKDWEHFDXVHWKH2KLR LVVXH PDGH E\ D 6WDWH FRXUW VKDOO EH SUHVXPHG WR EH 6XSUHPH&RXUWIRXQGWKDWUHVMXGLFDWDEDUUHGFRQVLGHUDWLRQRI FRUUHFW7KHDSSOLFDQWVKDOOKDYHWKHEXUGHQRIUHEXWWLQJ WKHLVVXHLWVFRQVLGHUDWLRQZDVRXWVLGHWKHVFRSHRIIHGHUDO WKHSUHVXPSWLRQRIFRUUHFWQHVVE\FOHDUDQGFRQYLQFLQJ KDEHDVUHYLHZ HYLGHQFH :HDIILUPWKHGLVWULFWFRXUW ,IWKHDSSOLFDQWKDVIDLOHGWRGHYHORSWKHIDFWXDO EDVLVRIDFODLPLQ6WDWHFRXUWSURFHHGLQJVWKHFRXUWVKDOO ++HDUVD\ QRWKROGDQHYLGHQWLDU\KHDULQJRQWKHFODLPXQOHVVWKH DSSOLFDQWVKRZVWKDW 3HWLWLRQHUFODLPVWKDWFHUWDLQRIWKHWULDOFRXUWjVUXOLQJVRQ KHDUVD\REMHFWLRQVZHUHVLJQLILFDQWHQRXJKWRLPSOLFDWHWKH $WKHFODLPUHOLHVRQ &RQIURQWDWLRQ&ODXVH7KHVHREMHFWLRQVRFFXUUHGGXULQJWKH WHVWLPRQ\RI0UV0DORQHDQHLJKERUZLWKZKRP0U5RWK L D QHZ UXOH RI FRQVWLWXWLRQDO ODZ PDGH KDGGLQHGRQWKHHYHQLQJRIKLVPXUGHU UHWURDFWLYH WR FDVHV RQ FROODWHUDO UHYLHZ E\ WKH 6XSUHPH&RXUWWKDWZDVSUHYLRXVO\XQDYDLODEOHRU 7KHSURVHFXWLRQHOLFLWHGIURP0UV0DORQHWKDW0U5RWK LQWHQGHG WR HYLFW SHWLWLRQHU  +RZHYHU D UHYLHZ RI WKH LLDIDFWXDOSUHGLFDWHWKDWFRXOGQRWKDYHEHHQ UHOHYDQW SRUWLRQ RI WKH WUDQVFULSW UHYHDOV WKDW DOWKRXJK WKH SUHYLRXVO\GLVFRYHUHGWKURXJKWKHH[HUFLVHRIGXH WULDO FRXUW RYHUUXOHG WKH REMHFWLRQ 0UV 0DORQH ZDV GLOLJHQFHDQG LQVWUXFWHGWKDWKHUWHVWLPRQ\PXVWmEHRI\RXURZQSHUVRQDO NQRZOHGJHl %WKHIDFWVXQGHUO\LQJWKHFODLPZRXOGEHVXIILFLHQW WRHVWDEOLVKE\FOHDUDQGFRQYLQFLQJHYLGHQFHWKDWEXWIRU 6HFRQGGXULQJDFRQIHUHQFHLQFKDPEHUVGHIHQVHFRXQVHO FRQVWLWXWLRQDOHUURUQRUHDVRQDEOHIDFWILQGHUZRXOGKDYH LQGLFDWHG WKDW WKH\ ZLVKHG WR SXUVXH WKH IROORZLQJ OLQH RI IRXQGWKHDSSOLFDQWJXLOW\RIWKHXQGHUO\LQJRIIHQVH LQTXLU\ 86&†H:LWKWKHVHSUHFHSWVLQPLQGZHWXUQWR :H NQRZ WKDW 5LWD 0DORQH PDGH D VWDWHPHQW WR DQ WKHYH[LQJGRFWULQHRISURFHGXUDOGHIDXOW LQYHVWLJDWLQJRIILFHUZKHUHLQVKHVWDWHGWKDWVKHNQHZRQ WKHWKoVKHKDGDFRQYHUVDWLRQZLWK5RWKDQG5RWK WROG KHU TXRWH ZRUGV WR WKLV HIIHFW m5LFN LV EDFN LQ  *UHHUY0LWFKHOO 1R 1R *UHHUY0LWFKHOO 

%3URFHGXUDO'HIDXOW LLQVWUXFWLRQVWKDWWKHWULDOFRXUWVKRXOGKDYHJLYHQ $VZLWKYLUWXDOO\DOOFDSLWDOFDVHVSHWLWLRQHUFKDOOHQJHVWKH 3HWLWLRQHUFRQFOXGHVE\DUJXLQJWKDWWKHWULDOFRXUWIDLOHGWR GLVWULFWFRXUWj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0DXSLQ Y 6PLWK  )G   WK &LU   7KLV FRXUWjV 3HWLWLRQHU FRQWHQGV WKDW WKH WULDO FRXUW UHFHLYHG D YLFWLP 0DXSLQGHFLVLRQVHWVRXWIRXULQTXLULHVWKDWDGLVWULFWFRXUW LPSDFWVWDWHPHQWLQYLRODWLRQRIWKH(LJKWK$PHQGPHQW%XW VKRXOGPDNHZKHQWKHVWDWHDUJXHVWKDWDKDEHDVFODLPKDV VHH 3D\QH Y 7HQQHVVHH  86   RYHUUXOLQJ EHHQ GHIDXOWHG E\ SHWLWLRQHUjV IDLOXUH WR REVHUYH D VWDWH HDUOLHUSUHFHGHQWDQGKROGLQJWKDWYLFWLPLPSDFWVWDWHPHQWV SURFHGXUDOUXOH)LUVWWKHFRXUWPXVWGHWHUPLQHZKHWKHUWKHUH FDQSOD\DUROHLQWKHVHQWHQFLQJSKDVHRIDFDSLWDOWULDO7KLV LV VXFK D SURFHGXUDO UXOH WKDW LV DSSOLFDEOH WR WKH FODLP DW VWDWHPHQWZDVQHYHUVKRZQWRWKHMXU\DQGQRZKHUHGRHVWKH LVVXHDQGZKHWKHUWKHSHWLWLRQHUGLGLQIDFWIDLOWRIROORZLW WULDO FRXUW UHIHU WR LW DV SOD\LQJ D UROH LQ WKH LPSRVLWLRQ RI 0DXSLQ  )G DW   6HFRQG WKH FRXUW PXVW GHFLGH SHWLWLRQHUjVVHQWHQFH ZKHWKHU WKH VWDWH FRXUWV DFWXDOO\ HQIRUFHG LWV SURFHGXUDO VDQFWLRQ,G7KLUGWKHFRXUWPXVWGHFLGHZKHWKHUWKHVWDWHjV 3HWLWLRQHUILUVWUDLVHGWKLVLVVXHLQKLVGLUHFWDSSHDOWRWKH SURFHGXUDO IRUIHLWXUH LV DQ mDGHTXDWH DQG LQGHSHQGHQWl 2KLR 6XSUHPH &RXUW ZKLFK UHMHFWHG WKH FODLP IRU WKHVH JURXQGRQZKLFKWKHVWDWHFDQUHO\WRIRUHFORVHUHYLHZRID UHDVRQV IHGHUDO FRQVWLWXWLRQDO FODLP  m7KLV TXHVWLRQ ZLOO XVXDOO\ LQYROYHDQH[DPLQDWLRQRIWKHOHJLWLPDWHVWDWHLQWHUHVWVEHKLQG $SSHOODQW DOVRDVVHUWVLQSURSRVLWLRQRIODZQXPEHU WKH SURFHGXUDO UXOH LQ OLJKW RI WKH IHGHUDO LQWHUHVW LQ ILIWHHQWKDWDYLFWLPLPSDFWVWDWHPHQWZDVXWLOL]HGLQWKH FRQVLGHULQJIHGHUDOFODLPVl,G$QGIRXUWKWKHSHWLWLRQHU WULDOFRXUWjVVHQWHQFLQJFRQVLGHUDWLRQVLQYLRODWLRQRIWKH PXVWGHPRQVWUDWHFRQVLVWHQWZLWK:DLQZULJKWY6\NHV UHFHQWSURQRXQFHPHQWFRQWDLQHGLQ%RRWKY0DU\ODQG 86WKDWWKHUHZDVmFDXVHlIRUKLPWRQHJOHFWWKH 866&W/(GG SURFHGXUDO UXOH DQG WKDW KH ZDV DFWXDOO\ SUHMXGLFHG E\ WKH 7KLVSURSRVLWLRQRIODZZDVQHLWKHUEULHIHGQRUDUJXHG DOOHJHGFRQVWLWXWLRQDOHUURU,GVHHDOVR6FRWWY0LWFKHOO EHIRUHWKHFRXUWRIDSSHDOV,WLVDFFRUGLQJO\ZDLYHGDQG  )G   WK &LU FHUW GHQLHG  6&W  RXUFRQVLGHUDWLRQWKHUHRILVEDUUHGE\WKHGRFWULQHRIUHV  MXGLFDWD

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

HV\PSDWK\LQVWUXFWLRQ UHDVRQDEOHMXURUZRXOGKDYHIRXQGKLPJXLOW\RIWKHFULPHRU LIWKHFRQVWLWXWLRQDOHUURURFFXUUHGGXULQJWKHSHQDOW\SKDVHRI 7KHFRXUWDOVRWROGWKHMXU\mZ@KHWKHU D VWDWH FRXUW UHVWHG LWV KROGLQJ RQ SURFHGXUDO GHIDXOW VR DV WR EDU IHGHUDO KDEHDV UHYLHZ LV D JXQDQLPLW\LQVWUXFWLRQ TXHVWLRQRIODZWKDWZHUHYLHZGHQRYRl&RPEVY&R\OH  )G   WK &LU FHUW GHQLHG  6&W  3HWLWLRQHUDUJXHVWKDWWKHWULDOFRXUWLPSOLHGWKDWWKHMXU\ :HORRNWRWKHODVWH[SODLQHGVWDWHFRXUWMXGJPHQW PXVWEHXQDQLPRXVZKHQLPSRVLQJDOLIHVHQWHQFHZKHQLQ ZKHQDQVZHULQJWKLVTXHVWLRQ,GFLWLQJ

WRSQRWFK EXW ZKHWKHU KH RU VKH IXQFWLRQHG DW WKH OHYHO IRUWKHSURSRVLWLRQWKDWWKH6WDWHFDQQRWVHHNWRPLQLPL]HWKH UHTXLUHGE\WKH6L[WK$PHQGPHQW MXU\jV VHQVH RI UHVSRQVLELOLW\ IRU GHWHUPLQLQJ WKH DSSURSULDWHQHVVRIGHDWK+RZHYHUDVGLVFXVVHGHDUOLHUWKH :HDSSO\DWZRSDUWWHVWWRGHWHUPLQHZKHWKHUDFULPLQDO WULDOFRXUWjVLQVWUXFWLRQUHSUHVHQWVDFRUUHFWVWDWHPHQWRI2KLR GHIHQGDQW ZDV GHQLHG HIIHFWLYH DVVLVWDQFH RI FRXQVHO ODZ )LUVWZHDVFHUWDLQZKHWKHUFRXQVHOjVSHUIRUPDQFHZDV SURIHVVLRQDOO\GHILFLHQWVHFRQGZHGHWHUPLQHZKHWKHU FUHDVRQDEOHGRXEW WKH GHILFLHQW SHUIRUPDQFH SUHMXGLFHG WKH GHIHQGDQWjV FRQVWLWXWLRQDOLQWHUHVWV6HH6WULFNODQGY:DVKLQJWRQ 3HWLWLRQHU FRQWHQGV WKDW E\ LQVWUXFWLQJ WKH MXURUV RQ  86    6&W   /(GG  UHDVRQDEOH GRXEW LQ WKH SHQDOW\ SKDVH WKH WULDO FRXUW 5LFNPDQY%HOO)GWK&LU mHVWDEOLVKHGDQXQFRQVWLWXWLRQDOSUHVXPSWLRQRIWKHSURSULHW\  *UDYOH\ Y 0LOOV  )G   WK &LU RI WKH GHDWK VHQWHQFHl EHFDXVH WKH MXU\ KDG DOUHDG\ IRXQG  SHWLWLRQHUJXLOW\EH\RQGDUHDVRQDEOHGRXEWDWWKHJXLOWSKDVH 2QFHDJDLQQRREMHFWLRQZDVPDGHDWWULDO ,Q DVVHVVLQJ FRXQVHOjV SHUIRUPDQFH ZH LQTXLUH ZKHWKHUmFRXQVHOjVUHSUHVHQWDWLRQIHOOEHORZDQREMHFWLYH 7KLVLVVXHKDVEHHQSURFHGXUDOO\GHIDXOWHG VWDQGDUGRIUHDVRQDEOHQHVVlDVPHDVXUHGE\mSUHYDLOLQJ SURIHVVLRQDOQRUPVl5LFNPDQ)GDWTXRWLQJ GRXWZHLJK 6WULFNODQG86DW6&W7KLV REMHFWLYHUHDVRQDEOHQHVVVWDQGDUGHQFRPSDVVHVVWUDWHJLF 7KH FRXUW DOVR LQVWUXFWHG WKH MXU\ RQ KRZ WR mZHLJKl OLWLJDWLRQ FKRLFHV WKDW VLPSO\ IDLO WR EHDU IUXLW 6HH DJJUDYDWLQJDQGPLWLJDWLQJIDFWRUV 6WULFNODQG86DW6&W7RHVWDEOLVK SUHMXGLFH D GHIHQGDQW PXVW GHPRQVWUDWH D UHDVRQDEOH 2XWZHLJK7RRXWZHLJKPHDQVWRZHLJKPRUHWKDQWREH SUREDELOLW\WKDWmEXWIRUFRXQVHOjVXQSURIHVVLRQDOHUURUV PRUHLPSRUWDQWWKDQ7KHH[LVWHQFHRIPLWLJDWLQJIDFWRUV WKHUHVXOWRIWKHSURFHHGLQJZRXOGKDYHEHHQGLIIHUHQWl GRHV QRW SUHFOXGH RU SUHYHQW WKH GHDWK VHQWHQFH LI WKH 5LFNPDQ)GDWTXRWLQJ6WULFNODQG86 DJJUDYDWLQJ FLUFXPVWDQFHV RXWZHLJK WKH PLWLJDWLQJ DW6&W IDFWRUV

2OGHQY8QLWHG6WDWHV)GWK&LU ,W LV WKH TXDOLW\ RI WKH HYLGHQFH WKDW PXVW EH JLYHQ SULPDU\ FRQVLGHUDWLRQ E\ \RX  7KH TXDOLW\ RI WKH %HIRUH ORRNLQJ DW WKH PHULWV RI SHWLWLRQHUj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

ELQVWUXFWLRQRQWKHIW UHVMXGLFDWDLVDSURSHUEDVLVIRUGLVPLVVLQJGHIHQGDQWjV SHWLWLRQIRUSRVWFRQYLFWLRQUHOLHI 3HWLWLRQHUIHHOVWKDWWKHWULDOFRXUWVKRXOGKDYHLQVWUXFWHG WKHMXU\RQWKHIWDVDQDOWHUQDWLYHWRDJJUDYDWHGUREEHU\7KH 6WDWH Y &ROH  2KLR 6W G   1(G   UHFRUGUHYHDOVWKDWQRUHTXHVWIRUWKLVLQVWUXFWLRQZDVPDGHE\ V\OODEXV,QWKHSUHVHQWFDVHDSSHOODWHFRXQVHOIDLOHGWRUDLVH FRXQVHODQGWKH2KLR6XSUHPH&RXUWWKHUHIRUHUHYLHZHGIRU WKH LQHIIHFWLYH DVVLVWDQFH RI WULDO FRXQVHO RQ GLUHFW DSSHDO SODLQHUURUDQGIRXQGQRQH*UHHU2KLR6WGDW 7KHLVVXHZDVILUVWUDLVHGE\FRXQVHOLQDSHWLWLRQIRUSRVW 1(GDW FRQYLFWLRQUHOLHI7KHWULDOFRXUWDQG&RXUWRI$SSHDOVHDFK KHOGWKDWWKHFODLPZDVEDUUHGE\WKHGRFWULQHRIUHVMXGLFDWD :HDIILUPEDVHGXSRQWKHUHDVRQLQJRIWKH2KLR6XSUHPH EHFDXVHSHWLWLRQHUKDGQRWUDLVHGKLVFODLPRQGLUHFWDSSHDO &RXUW 6HH'HFLVLRQDQG(QWU\2KLR&W$SS1RDW s$ DW   7KH GLVWULFW FRXUW DJUHHG ZLWK WKLV 3HQDOW\3KDVH,QVWUXFWLRQV UHDVRQLQJ0HPRUDQGXPRI2SLQLRQ$XJXVWDW s$DW DEXUGHQRISURRILQVWUXFWLRQ 7KHGLVWULFWFRXUWj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jVSHUVRQDOKLVWRU\ 7KH'HIHQGDQWVKDOOKDYHWKHEXUGHQRIJRLQJIRUZDUG DQGFKDUDFWHULQDIDYRUDEOHFRQWH[W/DUU\'HKXVDQH[SHUW ZLWK HYLGHQFH RI DQ\ IDFWRUV LQ PLWLJDWLRQ RI WKH ZKR ZRXOG KDYH GLVSXWHG WKH VWDWHjV HYLGHQFH UHJDUGLQJ LPSRVLWLRQRIWKHVHQWHQFHRIGHDWK EORRG\ IRRWSULQWV IRXQG QHDU WKH YLFWLPjV ERG\ sDPHV (LVHQEHUJ D SV\FKRORJLVW ZKR ZRXOG KDYH WHVWLILHG 1RREMHFWLRQZDVPDGHE\FRXQVHO1RWRQO\GRZHILQGQR FRQFHUQLQJWKHVKRUWFRPLQJVRIWULDOFRXQVHOVjSUHSDUDWLRQIRU HUURUZLWKWKLVLQVWUXFWLRQLWKDVEHHQSURFHGXUDOO\GHIDXOWHG PLWLJDWLRQWULDOFRXQVHOZKRLQGLFDWHWKDWWKHLUQRWHVUHYHDO WKDWFHUWDLQMXURUVH[FXVHGE\WKHSURVHFXWLRQZHUHEODFNDQG EQRQELQGLQJQDWXUHRIMXU\UHFRPPHQGDWLRQ DMXURUZKRVWDWHVWKDWHYLGHQFHRISHWLWLRQHUjVEDFNJURXQG ZRXOGKDYHmEHHQKHOSIXODQGPD\KDYHDIIHFWHGWKHMXU\jV 3HWLWLRQHU REMHFWV WR WKLV LQVWUXFWLRQ m$ MXU\ GHFLVLRQl UHFRPPHQGDWLRQ WR WKH &RXUW WKDW WKH GHDWK SHQDOW\ EH LPSRVHGLVMXVWWKDWDUHFRPPHQGDWLRQDQGLWLVQRWELQGLQJ XSRQWKH&RXUW7KHILQDOGHFLVLRQDVWRZKHWKHUWKHGHDWK SHQDOW\VKDOOEHLPSRVHGXSRQWKH'HIHQGDQWUHVWVXSRQWKH  &RXUWl3HWLWLRQHUFRQWHQGVWKDWWKLVLQVWUXFWLRQUXQVDIRXORI 7KH SRVWFRQYLFWLRQ SHWLWLRQ ZDV ILOHG E\ 6FRWW sHOHQ DQ DVVLVWDQW

&DOGZHOOY0LVVLVVLSSL86ZKLFKVWDQGV VWDWH SXEOLF GHIHQGHU ZKR KDG DVVXPHG WKH UHSUHVHQWDWLRQ RI SHWLWLRQHU IURP FRXUWDSSRLQWHG DSSHOODWH FRXQVHO  *UHHUY0LWFKHOO 1R 1R *UHHUY0LWFKHOO 

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mXQPLVWDNDEO\ 7KHJLVWRI*UHHUjVFODLPLVWKDWKLVUHSUHVHQWDWLRQZDV FOHDUl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 6WDWHY*UHHU1R:/2KLR&W$SS 1RWKLQJLQ:LWWVXSSRUWVSHWLWLRQHUjVSRVLWLRQWKDWWKHFRXUW 2FW   s$ DW  FLWDWLRQV RPLWWHG PXVWSUHFLVHO\SKUDVHLWVLQVWUXFWLRQVWRDSRWHQWLDOMXURUWR $OWKRXJKFRXQVHOFRXOGFHUWDLQO\KDYHUDLVHGDQLQHIIHFWLYH LQFOXGHWKHZRUGmFRQVLGHUl,QRXUYLHZWKHFRXUWIROORZHG DVVLVWDQFH RI FRXQVHO FODLP RQ GLUHFW DSSHDO WKH SUHFLVH WKHFRUUHFWVWDQGDUGLWDWWHPSWHGWRGLVFHUQGXULQJYRLUGLUH DUJXPHQWVDGYDQFHGLQKLVSHWLWLRQIRUSRVWFRQYLFWLRQUHOLHI ZKHWKHUDSURVSHFWLYHMXURUFRXOGIROORZWKHODZZLWKUHVSHFW UHTXLUHVLJQLILFDQWVXSSOHPHQWDWLRQRIWKHWULDOFRXUWUHFRUG WRWKHGHDWKSHQDOW\ 7KH 2KLR &RXUW RI $SSHDOV UHOLHV RQ D VLQJOH XQUHSRUWHG FDVH6WDWHY:D\QH:/2KLR&W$SS6HSW )sXU\,QVWUXFWLRQV WRVXSSRUWLWVVWDWHPHQWWKDWmHYLGHQFHLVQRWRXWVLGH WKH UHFRUG VLPSO\ EHFDXVH LW ZDV QRW UDLVHG LQ WKH RULJLQDO 3HWLWLRQHUUDLVHVQXPHURXVFKDOOHQJHVWRMXU\LQVWUXFWLRQV SURFHHGLQJl

LQWHUFHGHLQWKLVVLWXDWLRQGHSULYHG0U*UHHURIDIDLUMXU\ 'HVSLWH WKHVH UHVHUYDWLRQV WKH SURFHGXUDO GHIDXOW UXOH WULDOl GHOLQHDWHG E\ 3HUU\ DQG &ROH LV D PDWWHU RI VWDWH ODZ *HQHUDOO\DIHGHUDOKDEHDVFRXUWVLWWLQJLQUHYLHZRIDVWDWH 7KLVFODLPZDVOLNHZLVHSURFHGXUDOO\GHIDXOWHG FRXUW MXGJPHQW VKRXOG QRW VHFRQG JXHVV D VWDWH FRXUWjV GHFLVLRQFRQFHUQLQJPDWWHUVRIVWDWHODZ*DOOY3DUNHU TXHVWLRQLQJRIMXURUVDERXWGHDWKSHQDOW\ )G   WK &LU  m3ULQFLSOHV RI FRPLW\ DQG ILQDOLW\HTXDOO\FRPPDQGWKDWDKDEHDVFRXUWFDQQRWUHYLVLW ,Q H[SODLQLQJ WKH GXW\ RI WKH MXU\ LQ D FDSLWDO FDVH WR D DVWDWHFRXUWjVLQWHUSUHWDWLRQRIVWDWHODZDQGLQSDUWLFXODU SURVSHFWLYHMXURUWKHWULDOFRXUWSRVHGWKLVTXHVWLRQ LQVWUXFWWKDWDKDEHDVFRXUWDFFHSWWKHLQWHUSUHWDWLRQRIVWDWH ODZ E\ WKH KLJKHVW VWDWH FRXUW RQ D SHWLWLRQHUjV GLUHFW >,@IWKHMXU\ILQGVWKH6WDWHGLGSURYHEH\RQGDUHDVRQDEOH DSSHDOl1HYHUWKHOHVVZKHQWKHUHFRUGUHYHDOVWKDWWKHVWDWH GRXEW WKH DJJUDYDWLQJ IDFWRUV RXWZHLJK WKH PLWLJDWLQJ FRXUWjV UHOLDQFH XSRQ LWV RZQ UXOH RI SURFHGXUDO GHIDXOW LV IDFWRUV\RXZLOOWKHQEHUHTXLUHGWRUHFRPPHQGWRWKH PLVSODFHG ZH DUH UHOXFWDQW WR FRQFOXGH FDWHJRULFDOO\ WKDW &RXUWWKDWWKH'HIHQGDQWUHFHLYHWKHGHDWKVHQWHQFH IHGHUDOKDEHDVUHYLHZRIWKHSXUSRUWHGO\GHIDXOWHGFODLPLV ,I\RXILQG\RXUVHOILQWKDWVLWXDWLRQFRXOG\RXPDNH SUHFOXGHG$VH[SODLQHGEHORZKRZHYHUZHQHHGQRWGHFLGH VXFK D UHFRPPHQGDWLRQ WR WKH &RXUW"  7KDW WKHH[WHQWWRZKLFKLIDQ\IHGHUDOFRXUWVPD\UHDFKWKHPHULWV UHFRPPHQGDWLRQ EHLQJ FRXOG \RX PDNH WKH RIFRQVWLWXWLRQDOFODLPVWKDWDVWDWHFRXUWLPSURSHUO\IRXQGWR UHFRPPHQGDWLRQ WKDW WKH 'HIHQGDQW UHFHLYH WKH GHDWK EH SURFHGXUDOO\ GHIDXOWHG EHFDXVH SHWLWLRQHUjV LQHIIHFWLYH SHQDOW\" DVVLVWDQFHRIDSSHOODWHFRXQVHOFODLPQHFHVVDULO\IRUFHVXVWR UHYLHZWKHSHUIRUPDQFHRIWULDOFRXQVHO 3HWLWLRQHU FRQWHQGV WKDW WKH FRXUW PLVVWDWHV WKH VWDQGDUG %,QHIIHFWLYH$VVLVWDQFHRI$SSHOODWH&RXQVHO ZKLFKVKRXOGEHZKHWKHUDMXURUZRXOGFRQVLGHULPSRVLQJWKH GHDWKSHQDOW\2WKHUMXURUVZHUHOLNHZLVHH[FXVHGIRUFDXVH $VWKHGLVWULFWFRXUWUHFRJQL]HGKRZHYHUSHWLWLRQHUj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jV SHUIRUPDQFH ZDV UHTXLUHG LQ RUGHU WR GHWHUPLQH VWDQGDUGLVZKHWKHUWKHMXURUjVYLHZVZRXOGmSUHYHQWRU ZKHWKHU DSSHOODWH FRXQVHO KDG EHHQ FRQVWLWXWLRQDOO\ VXEVWDQWLDOO\LPSDLUWKHSHUIRUPDQFHRIKLVGXWLHVDVD LQHIIHFWLYH0DSHV)GDW MXURULQDFFRUGDQFHZLWKKLVLQVWUXFWLRQVDQGKLVRDWKl )RU WKDW OLPLWHG UHDVRQ ZH QRZ WXUQ WR SHWLWLRQHUjV :H QRWH WKDW LQ DGGLWLRQ WR GLVSHQVLQJ ZLWK DOOHJDWLRQV WKDW KLV WULDO FRXQVHO UHQGHUHG FRQVWLWXWLRQDOO\ :LWKHUVSRRQjVUHIHUHQFHWRmDXWRPDWLFlGHFLVLRQPDNLQJ LQHIIHFWLYHDVVLVWDQFH,IWULDOFRXQVHOSHUIRUPHGDGHTXDWHO\ WKLVVWDQGDUGOLNHZLVHGRHVQRWUHTXLUHWKDWDMXURUjVELDV RXU LQTXLU\ LV DW DQ HQG E\ GHILQLWLRQ DSSHOODWH FRXQVHO EHSURYHGZLWKmXQPLVWDNDEOHFODULW\l7KLVLVEHFDXVH  *UHHUY0LWFKHOO 1R 1R *UHHUY0LWFKHOO 

FDQQRWEHLQHIIHFWLYHIRUDIDLOXUHWRUDLVHDQLVVXHWKDWODFNV 'HIHQVHFRXQVHODVNHGIRUWKHFRXUWWRUHVHUYHUXOLQJXQWLOWKH PHULW MXURUFRXOGDVFHUWDLQZKHWKHUVRPHRQHFRXOGUHSODFHKHU7KH FRXUWGHFOLQHGKRZHYHUDQGH[FXVHGWKHMXURUIRUFDXVH *LYHQWKHH[LJHQFLHVDQGFRPSOH[LW\RIFDSLWDOFDVHVLWLV OLNHO\ WKDW HYHQ H[SHULHQFHG WULDO FRXQVHO ZLOO FRPPLW 7KHVHFRQGMXURU%HYHUO\3HRSOHVSUHVHQWHGDQRWHIURP RYHUVLJKWV2IFRXUVHHUURUVRIWDFWLFVRURPLVVLRQGRQRW D GRFWRU VWDWLQJ m6KH  LV VXIIHULQJ ZLWK K\SHUWHQVLRQ DQG QHFHVVDULO\ PHDQ WKDW FRXQVHO KDV IXQFWLRQHG LQ D VKRXOGQRWEHDVNHGWRVHUYHDVDVSHFLDOMXURUDWWKLVWLPH FRQVWLWXWLRQDOO\GHILFLHQWPDQQHUm>,@WLVDOOWRRHDV\IRUD EHFDXVHRIKHUSK\VLFDOFRQGLWLRQl0UV3HRSOHjVZRUNHG FRXUW H[DPLQLQJ FRXQVHOjV GHIHQVH DIWHU LW KDV SURYHG IRUWKHGRFWRUZKRSURYLGHGWKHOHWWHU7KHWULDOFRXUWQRWHG XQVXFFHVVIXOWRFRQFOXGHWKDWDSDUWLFXODUDFWRURPLVVLRQRI RQ WKH UHFRUG WKDW WKH GRFWRU FDOOHG WKH FRXUW DQG mZDV FRXQVHO ZDV XQUHDVRQDEOHl  6WULFNODQG  86 DW  FRQFHUQHG WKDW WKH RIILFH LV QRW UXQQLQJ DV VPRRWKO\ DV KH ,QVWHDGWKLV&RXUWPXVWGHWHUPLQHZKHWKHUFRXQVHOPDGHD ZRXOGSUHIHULWLQ0V3HRSOHjVDEVHQFHl mUHDVRQDEOH GHFLVLRQ WKDW PDNHV SDUWLFXODU LQYHVWLJDWLRQ XQQHFHVVDU\l,GDW 'HIHQVHFRXQVHOTXHVWLRQHG0UV3HRSOHVZKRFRQFHGHG WKDWVKHZDVXQGHUDORWRIVWUHVVDWZRUN6KHDOVRDGPLWWHG 3HWLWLRQHUDOOHJHVWKDWWULDOFRXQVHOFRPPLWWHGVHULRXVHUURUV WKDWVKHZRXOGSUHIHUQRWWRVHUYHIRUERWKKHDOWKDQGUHOLJLRXV GXULQJ WKH JXLOW SKDVH RI KLV WULDO  7KHVH DOOHJHG HUURUV UHDVRQV m, MXVW GRQjW IHHO WKDW , VKRXOG EH LQ MXGJPHQW RI LQFOXGH IDLOXUH WR  FRQWDFW SURVSHFWLYH SURVHFXWLRQ VRPHRQHHOVHUHJDUGOHVVRIWKHFULPHl ZLWQHVVHVLQYHVWLJDWHDOOHJDWLRQVWKDWWKHYLFWLPZDVDIUDLG RIDPDQQDPHGm5LFNlREWDLQDQH[SHUWWRFKDOOHQJHWKH 7KHSURVHFXWRUQRWHGWKDWWKHFRXUWKDGDOUHDG\H[FXVHG FRQFOXVLRQVRIWKHFRURQHUGHWHUPLQHZKHWKHUSHWLWLRQHUjV WZRRWKHUMXURUVIRUK\SHUWHQVLRQ2YHUGHIHQVHFRXQVHOjV DOLEL o WKDW KH ZDV ZDWFKLQJ WKH PRYLH m&KLOGUHQ RI WKH REMHFWLRQWKHFRXUWH[FXVHGWKHMXURUIRUPHGLFDOUHDVRQV &RUQl RQ WHOHYLVLRQ o ZDV FUHGLEOH  FRPPXQLFDWH DGHTXDWHO\ZLWKSHWLWLRQHUREMHFWWRWKHFRQGXFWRIYRLU ,QSHWLWLRQHUjVYLHZm*LYHQWKHWUHDWPHQWRIZKLWHMXURUV GLUH  REMHFW WR SURVHFXWRULDO PLVFRQGXFW  UHTXHVW DQ WKHRQO\ORJLFDOH[SODQDWLRQIRUWKHH[FXVDORI0UV5H\QROGV LQVWUXFWLRQIRUWKHOHVVHULQFOXGHGRIIHQVHRIWKHIWREMHFW DQG0UV3HRSOHVLVWKHLUUDFHRUJHQGHUl WRYDULRXVMXU\LQVWUXFWLRQVDQG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jV PDQ\ UHFHQW GHFLVLRQV YDFDWLQJ GHDWK VHQWHQFHV GXH WR  )G  WK &LU LQHIIHFWLYH DVVLVWDQFH 6HH HJ 6NDJJV Y 3DUNHU 3HWLWLRQHU REMHFWV WR WKH IDFW WKDW WKH MXU\ FRPPLVVLRQHU  $EGXUj5DKPDQ Y %HOO  )G   WK &LU  H[FXVHGDSRWHQWLDOMXURUEHIRUHWKHFRXUWRUFRXQVHOKDGDQ GLVVHQW &DUWHU Y %HOO  )G  WK &LU  %\UG Y &ROOLQV RSSRUWXQLW\ WR TXHVWLRQ KLP EDVHG XSRQ D OHWWHU IURP DQ  )G   WK &LU  GLVVHQW FHUW GHQLHG  6&W  HPSOR\HU  (YHQ WKRXJK WKLV SURVSHFWLYH MXURUjV UDFH LV  0DSHV VXSUD 5LFNPDQ Y %HOO  )G  WK &LU  XQNQRZQSHWLWLRQHUFRQWHQGVWKDWmWKHWULDOFRXUWjVIDLOXUHWR *URVHFORVH Y %HOO  )G  WK &LU  $XVWLQ Y %HOO  )G  WK &LU  *OHQQ Y 7DWH  )G  WK &LU   *UHHUY0LWFKHOO 1R 1R *UHHUY0LWFKHOO 

SHWLWLRQHUZDVDOORZHGWRLQWURGXFHSHUVRQDOFKDUDFWHULVWLFVLQ 7KHVH DUJXPHQWV QHHG QRW GHWDLQ XV ORQJ EHFDXVH HYHQ PLWLJDWLRQ GRHV QRW PHDQ WKDW WKH SURVHFXWLRQ PD\ QRW DVVXPLQJ WKDW WULDO FRXQVHO ZDV QRW UHDVRQDEO\ HIIHFWLYH mVWURQJO\DQGIRUFHIXOO\DUJXHWKDWVXFKPHUF\QHHGQRWEH SHWLWLRQHU FDQQRW HVWDEOLVK SUHMXGLFH  7KHUH LV DOPRVW QR H[WHQGHG DQG WKDW WKH MXU\ VKRXOG QRW EH URXVHG WR D FKDQFH WKDW WKH YHUGLFW ZRXOG KDYH EHHQ GLIIHUHQW EXW IRU V\PSDWKHWLFUHDFWLRQl,G FRXQVHOjVDOOHJHGO\GHIHFWLYHSHUIRUPDQFHVLQFHHYLGHQFHRI JXLOW ZDV RYHUZKHOPLQJ  ,Q OLJKW RI WKH IDFWV LQWURGXFHG ,QRXUYLHZWKH2KLR6XSUHPH&RXUWFRUUHFWO\UHVROYHGWKLV GXULQJ WULDO ZH FRQFOXGH WKDW WKHUH LV QR UHDVRQDEOH LVVXH:HDIILUPWKHGHQLDORIUHOLHI SUREDELOLW\ WKDW GLIIHUHQW DFWLRQV RU D GLIIHUHQW VWUDWHJ\ E\ FRXQVHOFRXOGKDYHDOWHUHGWKHYHUGLFW GLPSURSHUFKDUDFWHUL]DWLRQRIPLWLJDWLQJIDFWRUV 7KDWVDLGFRXQVHOjVSHUIRUPDQFHGXULQJWKHSHQDOW\SKDVH 'XULQJWULDOGHIHQVHFRXQVHOLQWURGXFHGHYLGHQFHRIWKUHH SUHVHQWVDPXFKFORVHUTXHVWLRQWKDWZLOOUHTXLUHUHPDQGWR PLWLJDWLQJ IDFWRUV OLVWHG LQ 2KLR 5HY &RGH † %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,Q*OHQQDQRWKHU2KLRFDSLWDOFDVH DQGFDSULFLRXVPDQQHU WKLVFRXUWYDFDWHGWKHGHDWKVHQWHQFHEDVHGXSRQLQHIIHFWLYH DVVLVWDQFHRIFRXQVHOGXULQJWKHSHQDOW\SKDVH 7KLVFRQWHQWLRQLVZLWKRXWPHULW $OWKRXJK ERWK RI *OHQQjV FRXUWDSSRLQWHG ODZ\HUV (s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mWKH VWDJH RI WKH SURFHHGLQJV ZKHUH SUHVHQWHGDOHWWHUIURPWKHH[HFXWLYHGLUHFWRURIWKH<:&$ FRXQVHOFDQGRKLVRUKHUFOLHQWWKHPRVWJRRGl.XEDW WR WKH FRXUW VWDWLQJ m6DUDK 5H\QROGV LV DVVXPLQJ D QHZ Y7KLHUHW)GWK&LUFHUWGHQLHG DVVLJQPHQWZLWKWKH&HQWUDO<:&$DVRIsXQH7KH 866&W/(GG\HW DVVLJQPHQW LV H[WUHPHO\ HVVHQWLDO WR WKH <:&$jV *OHQQjV FRXQVHO IDLOHG WR PDNH DQ\ VLJQLILFDQW DSSURDFKLQJGRZQWRZQUHORFDWLRQl7KHFRXUWILUVWPDGHVXUH SUHSDUDWLRQV IRU WKH VHQWHQFLQJ SKDVH XQWLO DIWHU WKH WKDW WKHUH ZDV QR RQH HOVH WR KDQGOH KHU UHVSRQVLELOLWLHV FRQFOXVLRQ RI WKH JXLOW SKDVH  7KLV LQDFWLRQ ZDV  *UHHUY0LWFKHOO 1R 1R *UHHUY0LWFKHOO 

REMHFWLYHO\ XQUHDVRQDEOH  m7R VDYH WKH GLIILFXOW DQG 0DSHV  )G  DW  DOEHLW LQ WKH FRQWH[W RI D WLPHFRQVXPLQJWDVNRIDVVHPEOLQJPLWLJDWLRQZLWQHVVHV FKDOOHQJHGMXU\LQVWUXFWLRQ XQWLO DIWHU WKH MXU\jV YHUGLFW LQ WKH JXLOW SKDVH DOPRVW LQVXUHVWKDWZLWQHVVHVZLOOQRWEHDYDLODEOHl%ODQFRY 7KHGLVWULFWFRXUWLVDIILUPHG 6LQJOHWDU\)GWK&LUFHUW GHQLHG866&W/(GG FV\PSDWK\  7KHSURVHFXWRUDOVRDVNHGWKHMXU\WRVHWDVLGHV\PSDWK\LQ  UHDFKLQJDGHFLVLRQ

7KHUHDVRQIRUWKHSDXFLW\RIPLWLJDWLRQHYLGHQFHDV :KDW\RXKDYHWREHFDUHIXORIODGLHVDQGJHQWOHPHQ ZH KDYH VDLG ZDV ODFN RI SUHSDUDWLRQ RQ WKH SDUW RI DQGsXGJH6SLFHUZLOOLQVWUXFW\RXRQWKLVWKDW\RXGRQRW *OHQQjVODZ\HUV7KHODZ\HUVPDGHQRV\VWHPDWLFHIIRUW GHFLGHWKLVFDVHEDVHGRQELDVV\PSDWK\RUSUHMXGLFH WRDFTXDLQWWKHPVHOYHVZLWKWKHLUFOLHQWjVVRFLDOKLVWRU\ 7KH\QHYHUVSRNHWRDQ\RIKLVQXPHURXVEURWKHUVDQG ,QRWKHUZRUGVLI\RXJRLQWRWKHMXU\URRPDQG\RX VLVWHUV7KH\QHYHUH[DPLQHGKLVVFKRROUHFRUGV7KH\ IHHO VRUU\ IRU 3DXO *UHHU EHFDXVH KH KDV DQ DOFRKRO QHYHU H[DPLQHG KLV PHGLFDO UHFRUGV LQFOXGLQJ DQ SUREOHP\RXIHHOVRUU\IRU3DXO*UHHUEHFDXVHKHKDV HPHUJHQF\URRPUHFRUGSUHSDUHGDIWHUKHFROODSVHGLQ ERUGHUOLQHLQWHOOLJHQFHRU\RXIHHOVRUU\IRU3DXO*UHHU FRXUW RQH GD\ RU UHFRUGV RI PHQWDO KHDOWK FRXQVHOLQJ EHFDXVHKHKDGVRPDQ\FKLOGUHQLQKLVIDPLO\RUWKDWKH WKH\ NQHZ KH KDG UHFHLYHG  7KH\ QHYHU WDONHG WR KLV RQO\ZHQWWRDFHUWDLQOHYHORIHGXFDWLRQLI\RXIHHOVRUU\ SUREDWLRQ RIILFHU RU H[DPLQHG WKH SUREDWLRQ RIILFHUjV IRUKLPWKDWLVQjWPLWLJDWLRQ UHFRUGV  $QG DOWKRXJK WKH\ DUUDQJHG IRU WHVWV VRPH PRQWKVEHIRUHWKHVWDUWRIWKHWULDOWRGHWHUPLQHZKHWKHU 2IFRXUVHLWLVD[LRPDWLFWKDWDMXU\FDQQRWEHSUHFOXGHGIURP KHZDVFRPSHWHQWWRVWDQGWULDOWKH\ZDLWHGXQWLODIWHUKH FRQVLGHULQJYLUWXDOO\DQ\DVSHFWRIGHIHQGDQWjVFKDUDFWHULQ KDGEHHQIRXQGJXLOW\EHIRUHWDNLQJWKHLUILUVWVWHSRU PLWLJDWLRQ  6HH (GGLQJV Y 2NODKRPD  86   PLVVWHSDVZHVKDOOH[SODLQSUHVHQWO\WRZDUGDUUDQJLQJ WKHVHQWHQFHULQFDSLWDOFDVHVPXVWEHSHUPLWWHGWR IRU H[SHUW ZLWQHVVHV ZKR PLJKW KDYH SUHVHQWHG FRQVLGHU DQ\ UHOHYDQW PLWLJDWLQJ IDFWRU FLWLQJ /RFNHWW Y PLWLJDWLQJ HYLGHQFH RQ sRKQ *OHQQjV LPSDLUHG EUDLQ 2KLR86  IXQFWLRQ 2QFHDJDLQRXUUHFHQWGHFLVLRQLQ0DSHVFRPHVFORVHWR ,GDW$VDOUHDG\QRWHG WKLV FRXUWKDVYDFDWHGD SUHVHQWLQJWKLVLVVXH,QWKDWFDVHGHIHQGDQWKDGDVNHGIRUD QXPEHU RI GHDWK VHQWHQFHV LQ UHFHQW \HDUV EDVHG XSRQ mPHUFLIXOGLVFUHWLRQlLQVWUXFWLRQ:HQRWHGKRZHYHUWKDW LQDGHTXDWHSHQDOW\SKDVHSUHSDUDWLRQE\WULDOFRXQVHO6HH WKH6XSUHPH&RXUWKDGXSKHOGDQLQVWUXFWLRQWRWKHHIIHFWWKDW HJ &DUWHU Y %HOO  )G   WK &LU  WKHMXU\VKRXOGQRWEHVZD\HGE\mPHUHVHQWLPHQWFRQMHFWXUH m:KLOH ZH XQGHUVWDQG WKH JUHDW EXUGHQV RQ DSSRLQWHG V\PSDWK\ SDVVLRQ SUHMXGLFH SXEOLF RSLQLRQ RU SXEOLF FRXQVHOLQFDSLWDOFDVHVDQGWKHRIWHQOLPLWHGILQDQFLDOVXSSRUW IHHOLQJl  0DSHV  )G  DW   FLWLQJ &DOLIRUQLD Y WKH\UHFHLYHIRULQYHVWLJDWLRQDQGGLVFRYHU\MXVWLFHUHTXLUHV %URZQ86/(GG  WKDWFRXQVHOPXVWGRPRUHWKDQDSSHDULQFRXUWRUDUJXHWRWKH 7KH 2KLR 6XSUHPH &RXUW UHMHFWHG SHWLWLRQHUjV FODLP MXU\l *URVVFORVH Y %HOO  )G   WK &LU EHFDXVHmV\PSDWK\DORQHLVQRWDPLWLJDWLQJIDFWRUl*UHHU  IDLOXUH WR SUHSDUH DGHTXDWHO\ IRU PLWLJDWLRQ  IRXU  2KLR 6W G DW   1(G DW   sXVW EHFDXVH  *UHHUY0LWFKHOO 1R 1R *UHHUY0LWFKHOO 

$V>WKHRWKHUSURVHFXWRU@WROG\RXZHGRQRWVHHNWKH ZLWQHVVHV$XVWLQY%HOO)GWK&LU GHDWKSHQDOW\OLJKWO\:HGRQjWIULYRORXVO\FRPHLQWRD YDFDWLQJ VHQWHQFH EHFDXVH GHIHQVH FRXQVHO GLG QRW FRXUWURRPDVNLQJIRUWKDWSHQDOW\ UHDVRQDEO\ LQYHVWLJDWH WKH IDFWV RI WKH FDVH RU UHDVRQDEO\ GHWHUPLQH WKDW DQ LQYHVWLJDWLRQ ZDV QRW QHFHVVDU\ 7KH2KLR6XSUHPH&RXUWFRQVLGHUHGSHWLWLRQHUjVDUJXPHQWV )XUWKHUPRUH ODVW WHUP WKH 6XSUHPH &RXUW IRXQG FRXQVHO DQG FRQFOXGHG m>:@KDWHYHU UHVLGXDO HUURU LQKHUHV LQ WKH FRQVWLWXWLRQDOO\LQHIIHFWLYHIRUIDLOLQJWRORRNLQWRGHIHQGDQWjV PDNLQJRIWKHVWDWHPHQWVDWLVVXHLWZRXOGDSSHDUWKDWVXFK mQLJKWPDULVKFKLOGKRRGlDQGPHQWDOOLPLWDWLRQVLQSUHSDUDWLRQ HUURU ZDV KDUPOHVVl  *UHHU  2KLR 6W G DW   IRUPLWLJDWLRQ:LOOLDPV86DW 1(GDW7KHGLVWULFWFRXUWOLNHZLVHFRQFOXGHGm*LYHQ WKH ODUJHO\ XQGLVSXWHG HYLGHQFH VXSSRUWLQJ *UHHUjV $WWDFKHGWRWKHSHWLWLRQIRUSRVWFRQYLFWLRQUHOLHIZDVDQ FRQYLFWLRQWKLV&RXUWFDQQRWILQGWKDWWKHFXPXODWLYHHIIHFW DIILGDYLW E\ sDPHV (LVHQEHUJ D SV\FKRORJLVW ZKR KDV RIWKHWZRLVVXHVVRLQIHFWHG*UHHUjVWULDOZLWKXQIDLUQHVVDV FRQVXOWHGLQQXPHURXVFULPLQDOFDVHVLQFOXGLQJVRPHIRUW\ WRUHVXOWLQDGHQLDORIKLVGXHSURFHVVULJKWVl0HPRUDQGXP FDSLWDO FDVHV  +H UHYLHZHG SHWLWLRQHUjV ILOH DQG LGHQWLILHG RI2SLQLRQ$XJDWs$DW VHYHUDODUHDVRILQDGHTXDWHSUHSDUDWLRQIDLOXUHWRLQWHUYLHZ IDPLO\PHPEHUVIDLOXUHWRUHYLHZVFKRROUHFRUGVWKDWZRXOG :HDIILUPWKHGLVWULFWFRXUW UHIOHFW SHWLWLRQHUjV LQWHOOHFWXDO GHYHORSPHQW DQG IDLOXUH WR FDOODQ\PHQWDOKHDOWKH[SHUWV E FRPPHQW WKDW MXU\jV GHFLVLRQ RQ GHDWK RQO\ D UHFRPPHQGDWLRQ )XUWKHUPRUHLQKLVGHSRVLWLRQWULDOFRXQVHO5REHUW%DNHU FRQFHGHGWKDWSUHSDUDWLRQIRUWKHPLWLJDWLRQSKDVHEHJDQDIWHU 'XULQJ FORVLQJ DUJXPHQWV WKH SURVHFXWRU VWDWHG mLH GHFLVLRQ RQ DQG VDYH 3DXOjV OLIH     +H KDG D WRXJK OLIH DQG ZDV GHDWK@ LV UHYLHZDEOH    WKH GHFLVLRQ \RX UHQGHU LV GLVDGYDQWDJHGl  1RQHWKHOHVV GHIHQVH FRXQVHO GLG QRW DXWRPDWLFDOO\UHYLHZDEOHE\WKH6XSUHPH&RXUWl,GDW FRQVLGHUUHTXHVWLQJDSSRLQWPHQWRIDSV\FKRORJLVWEXWLQVWHDG +RZHYHULQWKHFDVHEHIRUHXVWKHSURVHFXWRUjVFRPPHQW UHOLHG XSRQ WKH GRFWRU ZKR ZDV KHOSLQJ WR SUHSDUH WKH UHSUHVHQWVDFRUUHFWVWDWHPHQWRI2KLRODZ6HH2KLR5HY SUREDWLRQUHSRUW$VKLVWHVWLPRQ\UHYHDOV%DNHUKDGOLWWOH &RGH†' 2QGLUHFWDSSHDOWKH2KLR6XSUHPH JUDVSRIWKHGHWDLOVRISHWLWLRQHUjVOLIH,QVWHDGKHUHOLHGXSRQ &RXUW KHOG WKDW WKLV GLVWLQFWLRQ FRUUHFWO\ GLVSRVHG RI WKH WKHSUHVHQWHQFHLQYHVWLJDWLRQZKLFKKHKRSHGmZRXOGEH &DOGZHOOFODLP*UHHU2KLR6WGDW1(GDW KHOSIXO LQ VHQWHQFLQJ  0RVW RI LW WXUQHG RXW WR EH 0RUHRYHUWKLVFRXUWUHFHQWO\UHMHFWHGDVLPLODUFODLPLQ GHWULPHQWDOl  0RUHRYHU WKLV UHOLDQFH RQ WKH VWDWHjV SV\FKRORJLVW ZDV PLVSODFHG  $V 'U .DWKOHHQ 3 6WDIIRUG  *UHHUY0LWFKHOO 1R 1R *UHHUY0LWFKHOO 

WHVWLILHGm,OHWWKHsXGJHNQRZWKDW,ZRXOGKDYHWRWDNHD $QG,JXDUDQWHH\RXODGLHVDQGJHQWOHPHQLIWKDWZDV YHU\ OLPLWHG UROH DQG EH DEOH WR DGGUHVV RQO\ WKH RQH LQFRUUHFWLIWKDWZDVDGLVSXWDEOHRSLQLRQWKHVHGHIHQVH PLWLJDWLQJIDFWRUZKLFKZDVVLPLODUWRWKHVDQLW\VWDQGDUG DWWRUQH\VZRXOGKDYHKDGDQRWKHUH[SHUWRUWZRRUWKUHH DQGWKDWWKDWZRXOGKDYHWREHWKHUROHWKDW,ZRXOGWDNHLQWKH RUIRXUWHVWLI\LQWKLVFDVHDQGWHOO\RXWKDWDQGWKHUHLV PDWWHUl  6KH ZHQW RQ WR WHVWLI\ WKDW GHIHQVH FRXQVHO ZDV QRWRQHWKDWFDPHIRUZDUG DZDUHRIKHUOLPLWHGUROH $FFRUGLQJ WR SHWLWLRQHU WKLV FRPPHQWDU\ XQODZIXOO\ 'XULQJ KLV GHSRVLWLRQ %DNHU DOVR VWDWHG m:H KDG EHHQ DWWHPSWHGWRVKLIWWKHEXUGHQRISURRIWRKLP DIWHU3DXOIRUVRPHWLPHWRSURYLGHXVZLWKIDPLO\UHODWLYHV SHRSOHWKDWZRXOGEHRIVRPHEHQHILWWRKLPDQGKHQHYHU 7KLVFLUFXLWKDVH[SOLFLWO\KHOGWKDWm,IDGHIHQGDQWWHVWLILHV JDYHXVDQ\LQIRUPDWLRQDERXWSHRSOHl+RZHYHUKHZHQWRQ DSURVHFXWRUPD\DWWDFNKLVFUHGLELOLW\WRWKHVDPHH[WHQW WRLQGLFDWHWKDWKHNQHZVHYHUDOWKLQJVWKDWPHULWHGIXUWKHU DV DQ\ RWKHU ZLWQHVVl 8QLWHG 6WDWHV Y )UDQFLV  )G LQYHVWLJDWLRQ WKDW DV D \RXQJVWHU SHWLWLRQHU KDG VHHQ KLV   WK &LU  FLWLQJ FDVHV  2I FRXUVH VXFK IDWKHU PXUGHUHG EHIRUH KLV RZQ H\HV WKDW KH KDG PDQ\ FRPPHQWDU\PXVWEHVXSSRUWHGE\UHDVRQDEOHLQIHUHQFHVIURP EURWKHUVDQGVLVWHUVWKDWKHKDGEHHQLQFDUFHUDWHGDVD\RXWK WKH UHFRUG DQG QRW VLPSO\ UHSUHVHQW WKH SURVHFXWRUjV RZQ WKDWKHKDGEHHQLQIRVWHUFDUHWKDWKHVKRWDFRXVLQDWDJH RSLQLRQ  ,G  +HUH WKHUH LV QR GLVSXWH WKDW SHWLWLRQHUjV DQGWKDWKHZDVDOFRKROLF1RQHRIWKHVHOHDGVDSSHDUVWR WHVWLPRQ\FKDQJHG+HQFHWKHmFKDPHOHRQlFRPPHQWIHOO KDYHEHHQSXUVXHGZLWKDQ\WKLQJDSSURDFKLQJYLJRU$VWKLV ZLWKLQWKHERXQGVRISHUPLVVLEOHFRPPHQW FRXUWKDVREVHUYHG :KLOHWKHSURVHFXWRUjVUHPDUNFRQFHUQLQJSHWLWLRQHUjVODFN &HUWDLQO\WULDOFRXQVHOPXVWFRPPLWDVHULRXVHUURUWR RIDQH[SHUWWRUHIXWHWKHFRURQHUjVWHVWLPRQ\PD\KDYHEHHQ EHMXGJHGXQFRQVWLWXWLRQDOO\LQHIIHFWLYH+RZHYHUZKHQ LOODGYLVHG RQH FDQQRW VD\ WKDW mWKH LPSURSULHW\ ZDV VR DFOLHQWIDFHVWKHSURVSHFWRIEHLQJSXWWRGHDWKXQOHVV IODJUDQW WKDW LW UHTXLUH>V@ UHYHUVDO EHFDXVH RQO\ D QHZ WULDO FRXQVHO REWDLQV DQG SUHVHQWV VRPHWKLQJ LQ PLWLJDWLRQ FRXOGFRUUHFWWKHHUURUl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

RQGLUHFWDSSHDODQGWKHGLVWULFWFRXUWFRQFOXGHGDVKDGWKH WKHILUVWVL[PLWLJDWLQJIDFWRUVKDVDQ\UHOHYDQFH:HILQG FRXUWVRI2KLRWKDWLWKDGEHHQSURFHGXUDOO\GHIDXOWHG VXFK HYLGHQFH FRPSOHWHO\ RYHUVKDGRZHG E\ WKH GHPRQVWUDWHGDJJUDYDWLQJFLUFXPVWDQFH0RUHRYHUZH :HDIILUPEDVHGXSRQSURFHGXUDOGHIDXOW QRWH WKDW QRWKLQJ LQ DSSHOODQWjV KLVWRU\ RU EDFNJURXQG LQGLFDWHVWKDWWKHVHQWHQFHVDUHRWKHUWKDQDSSURSULDWH LPSURSHUFORVLQJDUJXPHQWLQJXLOWSKDVH *UHHU  2KLR 6W G DW   1(G DW  'XULQJKHUFORVLQJDUJXPHQWLQWKHJXLOWSKDVHRIWKHWULDO )XUWKHUPRUH 'U 6WDIIRUGj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mRQO\LQVRIDUDVLW RXUGHFLVLRQZRXOGQRWEHDOWHUHG$PRQJRWKHUWKLQJVWKH EHDUV RQ WKH TXHVWLRQ ZKHWKHU DSSHOODWH FRXQVHO ZDV SURVHFXWRUWROGWKHMXU\ XQFRQVWLWXWLRQDOO\LQHIIHFWLYHLQIDLOLQJWRUDLVHLWl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mVLJQLILFDQW DQG REYLRXVl" 3HWLWLRQHU FRQWHQGV WKLV DUJXPHQW ZDV LPSURSHU  +H DOVR ILQGVIDXOWZLWKWKHIROORZLQJFRPPHQWDU\RQWKHFRURQHUjV  :DV WKHUH DUJXDEO\ FRQWUDU\ DXWKRULW\ RQ WKH WHVWLPRQ\ RPLWWHGLVVXHV" 'U&R[WHVWLILHGLQWKLVFDVH+HLVDQH[SHUWZLWQHVV  :HUH WKH RPLWWHG LVVXHV FOHDUO\ VWURQJHU WKDQ DQG LQ WKLV FDVH DQ H[FHSWLRQDO H[SHUW ZLWQHVV  +LV WKRVHSUHVHQWHG" WHVWLPRQ\ZDVoDQG\RXVDZKLPKHUHRQWKHZLWQHVV VWDQGVD\LWDQGGHPRQVWUDWHLWoWKDWWKHFXWVILUVWRIDOO  :HUHWKHRPLWWHGLVVXHVREMHFWHGWRDWWULDO" ZHUHFDXVHGE\DNQLIHQRWE\JODVV  :HUHWKHWULDOFRXUWjVUXOLQJVVXEMHFWWRGHIHUHQFH  RQDSSHDO"  *UHHUY0LWFKHOO 1R 1R *UHHUY0LWFKHOO 

 'LG DSSHOODWH FRXQVHO WHVWLI\ LQ D FROODWHUDO WDQWDPRXQWWRDGXHSURFHVVYLRODWLRQ6HH*DOOY3DUNHU SURFHHGLQJ DV WR KLV DSSHDO VWUDWHJ\ DQG LI VR )GWK&LU ZHUHWKHMXVWLILFDWLRQVUHDVRQDEOH" ,QRUGHUWRHVWDEOLVKLPSURSHUXVHRISHUHPSWRU\FKDOOHQJHV  :KDWZDVDSSHOODWHFRXQVHOjVOHYHORIH[SHULHQFH D GHIHQGDQW PXVW ILUVW PDNH RXW D SULPD IDFLH FDVH ZKLFK DQGH[SHUWLVH" LQYROYHVVKRZLQJWKDWKHLVDPHPEHURIDFRJQL]DEOHUDFLDO JURXSDQGWKDWWKHSURVHFXWRUKDVXVHGSHUHPSWRU\FKDOOHQJHV  'LGWKHSHWLWLRQHUDQGDSSHOODWHFRXQVHOPHHWDQG WR UHPRYH PHPEHUV RI GHIHQGDQWjV UDFH IURP WKH YHQLUH JRRYHUSRVVLEOHLVVXHV" 2QFHWKLVVKRZLQJKDVEHHQPDGHWKHSURVHFXWRUPXVWRIIHU D UDFHQHXWUDO H[SODQDWLRQ IRU FKDOOHQJLQJ WKH MXURUV mWKH  ,V WKHUH HYLGHQFH WKDW FRXQVHO UHYLHZHG DOO WKH JRYHUQPHQWjV SURIIHUHG UHDVRQ QHHG QRW EH SDUWLFXODUO\ IDFWV" SHUVXDVLYHRUHYHQSODXVLEOHVRORQJDVLWLVQHXWUDOl+DUULV )GDW7KHFRXUWWKHQGHFLGHVZKHWKHUGHIHQGDQW  :HUH WKH RPLWWHG LVVXHV GHDOW ZLWK LQ RWKHU KDV SURYHQ WKDW UDFLDO DQLPXV PRWLYDWHG WKH XVH RI WKH DVVLJQPHQWVRIHUURU" SHUHPSWRU\FKDOOHQJH,QWKLVFDVHWKHSURVHFXWRUZDVQHYHU DIIRUGHGWKHRSSRUWXQLW\WRSURYLGHDUDFHQHXWUDOH[SODQDWLRQ  :DVWKHGHFLVLRQWRRPLWDQLVVXHDQXQUHDVRQDEOH EHFDXVHGHIHQVHFRXQVHOGLGQRWREMHFWWRVSHFLILFVWULNHV RQH ZKLFK RQO\ DQ LQFRPSHWHQW DWWRUQH\ ZRXOG DGRSW" :HDIILUPWKHGLVWULFWFRXUWjVFRQFOXVLRQWKDWWKLVLVVXHKDV EHHQSURFHGXUDOO\GHIDXOWHGEHFDXVHLWZDVQRWUDLVHGXSRQ 0DQLIHVWO\WKLVOLVWLVQRWH[KDXVWLYHDQGQHLWKHUPXVW GLUHFWDSSHDO:KLOHSHWLWLRQHUVHHNVWRHYDGHWKLVUHVXOWE\ LW SURGXFH D FRUUHFW mVFRUHl ZH RIIHU WKHVH LQTXLULHV UDLVLQJ WKH LVVXH LQ WKH FRQWH[W RI LQHIIHFWLYH DVVLVWDQFH RI PHUHO\DVPDWWHUVWREHFRQVLGHUHG DSSHOODWHFRXQVHOZHGHFOLQHKLVLQYLWDWLRQ7KHWULDOUHFRUG 0DSHV)GDWFLWDWLRQVRPLWWHG,QRXUYLHZ ZRXOG QRW FDXVH FRPSHWHQW DSSHOODWH FRXQVHO WR FRQVLGHU JLYHQ WKH UHFRUG WKH LQHIIHFWLYH DVVLVWDQFH RI WULDO FRXQVHO UDLVLQJD%DWVRQFKDOOHQJHDQGHYHQLIFRXQVHOKDGWKHEHQHILW SUHVHQWHGDmVLJQLILFDQWDQGREYLRXVlFODLPWKDWDFRPSHWHQW RIWKHLQIRUPDWLRQGHYHORSHGGXULQJVXEVHTXHQWSURFHHGLQJV DWWRUQH\LQDFDSLWDOFDVHZRXOGDOPRVWFHUWDLQO\SUHVHQWRQ RXU UHYLHZ RI WKRVH PDWHULDOV FRQYLQFHV XV WKDW DSSHOODWH DSSHDO:KLOHDSSHOODWHDWWRUQH\VVKRXOGDOZD\VDWWHPSWWR FRXQVHOjV GHFLVLRQ QRW WR UDLVH WKH %DWVRQ LVVXH  IHOO ZHOO ZLQQRZRXWWKHLUEHVWLVVXHVIRUSUHVHQWDWLRQWRWKHFRXUWVLQ ZLWKLQ WKH UDQJH RI HIIHFWLYH DVVLVWDQFH DV GHILQHG E\ D FDSLWDO FDVH ZKLFK E\ GHILQLWLRQ LQYROYHV WKH XOWLPDWH 6WULFNODQG VRFLHWDOVDQFWLRQDSSHOODWHDWWRUQH\VPXVWHUURQWKHVLGHRI  XVH RI SHUHPSWRULHV WR VWULNH MXURUV ZKR H[SUHVVHG LQFOXVLRQSDUWLFXODUO\ZKHQDVKHUHWKHUHDSSHDUWRH[LVWD KHVLWDWLRQDERXWGHDWKSHQDOW\ VLJQLILFDQWQXPEHURIIDFWVWRVXSSRUWWKHFODLP 7KHQH[WDOOHJHGLQVWDQFHRImSURVHFXWRULDOPLVFRQGXFWlLV ,Q DGGLWLRQ WR WKH UHODWLYH VWUHQJWK RI WKH LQHIIHFWLYH WKHVWDWHjVGHFLVLRQWRXVHSHUHPSWRU\FKDOOHQJHVWRH[FXVH DVVLVWDQFH FODLP VHYHUDO RWKHU RI WKH IDFWRUV VXJJHVWHG E\ WZRMXURUVZKRH[SUHVVHGKHVLWDWLRQDERXWLPSRVLQJWKHGHDWK 0DSHVIDYRUSHWLWLRQHUjVSRVLWLRQ)LUVWWKHOHJDOYLDELOLW\RI SHQDOW\%RWKPHQLQGLFDWHGGXULQJYRLUGLUHWKDWWKH\FRXOG DQLQHIIHFWLYHDVVLVWDQFHFODLPKDGEHHQILUPO\HVWDEOLVKHGE\ IROORZ WKH FRXUWjV LQVWUXFWLRQV EXW WKDW WKH\ IHOW WKH GHDWK 6WULFNODQG  6HFRQG DW WKH WLPH RI WKH GLUHFW DSSHDO WULDO SHQDOW\VKRXOGEHXVHGVSDULQJO\7KLVLVVXHZDVQRWUDLVHG FRXQVHOKDGQRWWHVWLILHGLQDFROODWHUDOSURFHHGLQJFRQFHUQLQJ  *UHHUY0LWFKHOO 1R 1R *UHHUY0LWFKHOO 

ULJKW WR FRXQVHO ZKHQ PRXQWLQJ FROODWHUDO DWWDFNV XSRQ WULDOVWUDWHJ\7KLUGQHLWKHURISHWLWLRQHUjVDSSHOODWHDWWRUQH\V FRQYLFWLRQVLQVWDWHFRXUW KDGHYHUSUHSDUHGDGHDWKSHQDOW\DSSHDO$QGIRXUWKWKH RPLWWHG LVVXHV ZHUH QRW GHDOW ZLWK LQ WKH FRQWH[W RI RWKHU :H DIILUP WKDW LVVXH EDVHG XSRQ WKH UHDVRQLQJ RI WKH DVVLJQPHQWVRIHUURU GLVWULFWFRXUW ,QWKHFDVHEHIRUHXVDSSHOODWHFRXQVHOVjIDLOXUHWRUDLVH '3URVHFXWRULDO0LVFRQGXFW LQHIIHFWLYHDVVLVWDQFHRQGLUHFWDSSHDOLVIXUWKHUFRPSOLFDWHG E\ SHWLWLRQHUjV DOOHJDWLRQ RI FRQIOLFW  5REHUW %DNHU DQG 3HWLWLRQHU UDLVHV D QXPEHU RI LVVXHV XQGHU WKH UXEULF RI 5REHUW/RZHU\DFWHGDVFRXUWDSSRLQWHGWULDOFRXQVHO$IWHU SURVHFXWRULDOPLVFRQGXFW WKHYHUGLFW%DNHUDQG/RZHU\ZHUHUHSODFHGE\WZRRWKHU DWWRUQH\V3HWHU&DKRRQDQG5LFKDUG.DVD\1HZFRXQVHO %DWVRQFKDOOHQJH ILOHG WKHLU DSSHOODWH EULHI RQ 0DUFK    2QH PRQWK ODWHUZKLOHWKHDSSHDOZDVVWLOOSHQGLQJ3HWHU&DKRRQMRLQHG $OWKRXJK QRW SURVHFXWRULDO PLVFRQGXFW LQ WKH WUDGLWLRQDO %DNHUjVILUP,QSHWLWLRQHUjVH\HVWKLVYLRODWHGKLVULJKWWR VHQVHSHWLWLRQHUFRQWHQGVWKDWWKHGHFLVLRQRIWKHSURVHFXWRU XQFRQIOLFWHGFRXQVHO WRXVHSHUHPSWRU\FKDOOHQJHVWRH[FXVHWKUHHSRWHQWLDOEODFN MXURUVUDQDIRXORI%DWVRQY.HQWXFN\86 :KLOHWKHFRXUWVEHORZIRXQGWKDWWKHVHFLUFXPVWDQFHVGLG 7KHUH DUH ZHDNQHVVHV LQ WKLV DUJXPHQW KRZHYHU  )LUVW QRW JLYH ULVH WR D FRQIOLFW WKLV FRXUW KDV UHFHQWO\ LVVXHG D GHIHQVHFRXQVHOPDGHQRFRQWHPSRUDQHRXVREMHFWLRQWRWKH GHFLVLRQ &RPEV Y &R\OH  )G  WK &LU FHUW VWULNHV6HFRQGGHIHQVHFRXQVHOWHVWLILHGDWDVXEVHTXHQW GHQLHG6&WWKDWLQYROYHVDVLPLODUFODLP GHSRVLWLRQWKDWKHGLGQRWSHUFHLYHWKDWWKHVWULNHVZHUHEDVHG ,QWKDWFDSLWDOFDVHSHWLWLRQHUKDGWZRDWWRUQH\VRQDSSHDO RQUDFLDODQLPXV7KLUGFRXQVHOGLGQRWUDLVHWKLVLVVXHRQ RQHRIZKRPKDGUHSUHVHQWHGKLPDWWULDO$VKHUHDSSHOODWH GLUHFWDSSHDOUHVXOWLQJLQSURFHGXUDOGHIDXOWXQGHUWKH3HUU\ FRXQVHOIDLOHGWRUDLVHFHUWDLQLQHIIHFWLYHDVVLVWDQFHRIWULDO UXOHGLVFXVVHGHDUOLHU$QGIRXUWKWKHUHLVQRWKLQJLQWKH FRXQVHO FODLPV RQ GLUHFW DSSHDO  +H VRXJKW WR DYRLG UHFRUGWRVXJJHVWWKDWWKHDOOHJHGLQDSSURSULDWHSURVHFXWRULDO SURFHGXUDO GHIDXOW E\ DUJXLQJ WKDW EHFDXVH KH ZDV QRW FRQGXFWUHQGHUHGWKHWULDOIXQGDPHQWDOO\XQIDLUWRDGHJUHH UHSUHVHQWHGE\mXQFRQIOLFWHGlFRXQVHORQGLUHFWDSSHDOWKH UXOHHQXQFLDWHGLQ&ROHGLGQRWDSSO\WRKLP:HDJUHHGDQG H[SODLQHGRXUGHFLVLRQLQWKHVHWHUPV  %HFDXVH WKHUH LV DPELJXLW\ VXUURXQGLQJ WKH LVVXH DQG +H GLG KRZHYHU PDNH D PRWLRQ SULRU WR YRLU GLUH DVNLQJ WKH FRXUW WR UHTXLUH WKH VWDWH WR SURYLGH D UHDVRQ HDFK WLPH LW XVHG D SHUHPSWRU\ WR EHFDXVH WKH 6WDWH FDQQRW SRLQW WR D FDVH ILUPO\ VWULNH D EODFN MXURU 7KH SURVHFXWRU UHSOLHG WKDW WKH 2KLR FRGH LPSRVHG HVWDEOLVKLQJ DV RI WKH WLPH RI &RPEVjV DSSHDO WKDW QR VXFK UHTXLUHPHQW DQG WR GR VR mZRXOG ZKROO\ EOXU WKH GLVWLQFWLRQ LQHIIHFWLYHQHVVFODLPVPXVWEHEURXJKWRQGLUHFWDSSHDO EHWZHHQ D FKDOOHQJH IRU FDXVH DQG D SHUHPSWRU\ FKDOOHQJHl 7KH WULDO ZKHQWULDOFRXQVHODOVRVHUYHVDVFRFRXQVHORQDSSHDO FRXUW RYHUUXOHG GHIHQVH FRXQVHOjV PRWLRQ EDVHG XSRQ 2KLR 5HY &RGH ZHDUHXQDEOHWRFRQFOXGHWKDWDILUPO\HVWDEOLVKHGVWDWH †  DQG 2KLR &ULPLQDO 5XOH  7KH WULDO RFFXUUHG RQH \HDU EHIRUH SURFHGXUDOUXOHH[LVWHG,QGHHGDWWKHWLPHRI&RPEVjV DSSHDOZDVILOHGLWZRXOGKDYHEHHQHQWLUHO\UHDVRQDEOH WKH %DWVRQ GHFLVLRQ

 WRFRQFOXGHWKDW&RPEVjVQHZFRXQVHOGLGQRWPHHWWKH 7KH MXU\ ZDV FRPSULVHG RI WHQ ZKLWHV DQG WZR EODFNV +RZHYHU VLPSO\ EHFDXVH EODFNV DUH XOWLPDWHO\ VHDWHG RQ D MXU\ GRHV QRW SUHFOXGH &ROH VWDQGDUG RI EHLQJ mLQ QR ZD\ HQMRLQHG IURP D %DWVRQ FKDOOHQJH 8QLWHG 6WDWHV Y +DUULV  )G   WK &LU DVVHUWLQJWKHLQHIIHFWLYHQHVVRIDSSHOODQWjVWULDOFRXQVHOl   *UHHUY0LWFKHOO 1R 1R *UHHUY0LWFKHOO 

&ROH1(GDWDQGWKXVWKDWUHVMXGLFDWDZRXOG 8QGHUWKHRSHQLQJFODXVHRI† H DIDLOXUHWR QRWDSSO\ GHYHORS WKH IDFWXDO EDVLV RI D FODLP LV QRW HVWDEOLVKHG XQOHVVWKHUHLVODFNRIGLOLJHQFHRUVRPHJUHDWHUIDXOW &RPEV  )G DW   2EYLRXVO\ &RPEV LV IDFWXDOO\ DWWULEXWDEOHWRWKHSULVRQHURUWKHSULVRQHUjVFRXQVHO GLVWLQJXLVKDEOHIURPRXUFDVHEHFDXVHQHLWKHURISHWLWLRQHUjV WZRDSSHOODWHDWWRUQH\VUHSUHVHQWHGKLPDWWULDO:HWKHUHIRUH :LOOLDPV86DW)XUWKHUPRUHm>W@KHTXHVWLRQLV GHFOLQHWRH[WHQG&RPEVWRWKHVLWXDWLRQEHIRUHXVVRDVWR QRWZKHWKHUWKHIDFWVFRXOGKDYHEHHQGLVFRYHUHGEXWLQVWHDG H[FXVHWKHSURFHGXUDOGHIDXOWRIKLVLQHIIHFWLYHDVVLVWDQFHRI ZKHWKHUWKHSULVRQHUZDVGLOLJHQWLQKLVHIIRUWVl,GDW WULDOFRXQVHOFODLP1HYHUWKHOHVVWKHUHPRWHSRVVLELOLW\WKDW DSSHOODWHFRXQVHOPLJKWKDYHIHOWFRQVWUDLQHGLQUDLVLQJWKDW ,Q WKH FDVH EHIRUH XV SHWLWLRQHU SXUVXHG KLV LQHIIHFWLYH FODLPFRXSOHGZLWKWKHFRQFHUQVDOUHDG\GLVFXVVHGFRXQVHO DVVLVWDQFHRIDSSHOODWHFRXQVHOFODLPZLWKSURSHUGLOLJHQFH FDXWLRQZLWKUHVSHFWWRSHWLWLRQHUjVLQHIIHFWLYHDVVLVWDQFHRI UDLVLQJLWILUVWDOEHLWSUHPDWXUHO\LQKLVSHWLWLRQIRUSRVW DSSHOODWHFRXQVHOFODLP FRQYLFWLRQ UHOLHI DQG WKHQ LQ KLV PRWLRQ IRU GHOD\HG UHFRQVLGHUDWLRQ  %RWK RI WKHVH SOHDGLQJV UHTXHVWHG DQ 7KH2KLR&RXUWRI$SSHDOVjRSLQLRQGHQ\LQJSHWLWLRQHUjV HYLGHQWLDU\KHDULQJZKLFKZDVQHYHUDIIRUGHGE\WKH2KLR LQHIIHFWLYH DVVLVWDQFH RI DSSHOODWH FRXQVHO FODLP SURYLGHV FRXUWV  &RQVLVWHQW ZLWK :LOOLDPV Y 7D\ORU WKHUHIRUH ZH VFDQWVXEVWDQWLYHUHDVRQLQJ FRQFOXGHWKDWSHWLWLRQHULVQRWSUHFOXGHGIURPDQHYLGHQWLDU\ KHDULQJDVKHH[HUFLVHGWKHQHFHVVDU\GLOLJHQFHLQDWWHPSWLQJ $SSHOODQW KDV QRW PHW WKH VWDQGDUG VHW IRUWK LQ WRHVWDEOLVKWKHIDFWXDOUHFRUGLQVWDWHFRXUW 6WULFNODQGY:DVKLQJWRQ86WR HVWDEOLVK LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO  )URP WKH $FFRUGLQJO\ ZH UHPDQG WKLV PDWWHU WR WKH GLVWULFW FRXUW UHFRUGZHFDQQRWILQGWKDWWKHDSSHOODQWZDVLQDQ\ZD\ ZLWKLQVWUXFWLRQVWRDFFRUGSHWLWLRQHUDQHYLGHQWLDU\KHDULQJ SUHMXGLFHGE\DSSHOODWHFRXQVHOjVSHUIRUPDQFHWKDWLV LQ ZKLFK WR HVWDEOLVK ZKHWKHU DSSHOODWH FRXQVHO UHQGHUHG WKDW KLV FRQYLFWLRQ ZRXOG KDYH EHHQ VHW DVLGH E\ WKLV FRQVWLWXWLRQDOO\ LQHIIHFWLYH DVVLVWDQFH ZLWK UHVSHFW WR WKH &RXUW SHQDOW\SKDVHRISHWLWLRQHUjVWULDO 6WDWH Y *UHHU 1R  2KLR &W $SS )HE   &2KLRjV3RVW&RQYLFWLRQ6FKHPH XQUHSRUWHG sRXUQDO (QWU\ DW  s$ DW  )XUWKHUPRUH SHWLWLRQHU  ZDV QRW DIIRUGHG DQ HYLGHQWLDU\ 3HWLWLRQHU FRQWHQGV WKDW 2KLRjV SRVWFRQYLFWLRQ VFKHPH KHDULQJWRGHYHORSKLVLQHIIHFWLYHDVVLVWDQFHRIFRXQVHOFODLP IDLOVWRSURYLGHGHIHQGDQWVDQDGHTXDWHFRUUHFWLYHSURFHVVIRU E\HLWKHUVWDWHFRXUWVRUWKHGLVWULFWFRXUW:HDUHRIFRXUVH UHYLHZLQJFODLPVRIFRQVWLWXWLRQDOYLRODWLRQV PLQGIXO WKDW WKH $('3$  86& † H SHUPLWV D GLVWULFWFRXUWWRKROGDQHYLGHQWLDU\KHDULQJRQO\LQOLPLWHG 7KHGLVWULFWFRXUWFRQFOXGHGWKDWKDEHDVFRUSXVFDQQRWEH FLUFXPVWDQFHV  6HH  86& † H   +RZHYHU LQ XVHG WR PRXQW FKDOOHQJHV WR D VWDWHjV VFKHPH RI SRVW :LOOLDPVWKH6XSUHPH&RXUWH[SODLQHGWKHVHOLPLWDWLRQVLQD FRQYLFWLRQUHOLHIUHO\LQJXSRQ.LUE\Y'XWWRQ)G PDQQHUWKDWZHUHDGWRIDYRUDQHYLGHQWLDU\KHDULQJLQWKLV WK&LUKDEHDVFRUSXVLVQRWWKHSURSHUPHDQVE\ FDVH&RQFHUQLQJWKHVWDWXWHjVFRPPDQGWKDWQRHYLGHQWLDU\ ZKLFK SULVRQHUV VKRXOG FKDOOHQJH HUURUV RU GHILFLHQFLHV LQ KHDULQJVKDOORFFXUZKHQDSHWLWLRQHUKDVmIDLOHGWRGHYHORS VWDWHSRVWFRQYLFWLRQSURFHHGLQJV0RUHRYHUWKH6XSUHPH WKHIDFWXDOEDVLVRIDFODLPlWKH&RXUWRIIHUHGWKHIROORZLQJ &RXUWKDVKHOGWKDWVWDWHVKDYHQRFRQVWLWXWLRQDOREOLJDWLRQWR LQWHUSUHWDWLRQ SURYLGH SRVWFRQYLFWLRQ UHPHGLHV  6HH 3HQQV\OYDQLD Y )LQOH\86WKHUHLVQRFRQVWLWXWLRQDO