Mullis v. United States

Opinion

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21  0XOOLVY8QLWHG6WDWHV 1R 3XUVXDQW WR 6L[WK &LUFXLW 5XOH 

(/(&7521,& &,7$7,21  )(' $SS 3 WK &LU

&RQJUHVV LQWHQGHG WKDW IHGHUDO FRXUWV GHYRWH WKHLU MXGLFLDO )LOH 1DPH DS

UHVRXUFHV WR FRQVLGHUnRQ D PRUH OLPLWHG UHFRUG WKDQ WKDW EHIRUHWKH$7)nWKHZHLJKW\TXHVWLRQRIZKHWKHUDIHORQjV ILUHDUPULJKWVVKRXOGEHUHVWRUHG$FFRUGLQJO\ZHMRLQZLWK 81,7('67$7(6&28572)$33($/6 WKH6HFRQG)LIWK1LQWKDQG7HQWK&LUFXLWVLQFRQFOXGLQJ )257+(6,;7+&,5&8,7 WKDW&RQJUHVVWKURXJKLWVDSSURSULDWLRQVDFWKDVFKRVHQWRDW BBBBBBBBBBBBBBBBB OHDVW WHPSRUDULO\ VXVSHQG WKH RSHUDWLRQ RI † F LQ LWV HQWLUHW\WKHUHE\UHPRYLQJVXEMHFWPDWWHUMXULVGLFWLRQIURPWKH GLVWULFWFRXUW s$0(6 0,&+$(/ 08//,6 ; ,,, 3ODLQWLII$SSHOOHH   )RUWKHIRUHJRLQJUHDVRQVZH5(9(56(WKHGLVWULFWFRXUWjV  1R FRQFOXVLRQWKDWLWKDGVXEMHFWPDWWHUMXULVGLFWLRQWRFRQVLGHU Y  SODLQWLIIjVSHWLWLRQWRKDYHKLVILUHDUPULJKWVUHVWRUHGSXUVXDQW !  WR † F  :KLOH SODLQWLIIjV FRPSODLQW DOVR UHIHUV WR 81,7(' 67$7(6 2) $0(5,&$  UHVWRUDWLRQRIKLVFLYLOULJKWVLWLVFOHDUWKDWKLVULJKWWREHDU 'HIHQGDQW$SSHOODQW  DUPVLVWKHRQO\ULJKWVRXJKW7KHFDVHLVGLVPLVVHGIRUODFN 1 RIVXEMHFWPDWWHUMXULVGLFWLRQ $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH:HVWHUQ'LVWULFWRI7HQQHVVHHDW0HPSKLV 1RnsRQ3KLSSV0F&DOOD'LVWULFWsXGJH $UJXHG$XJXVW 'HFLGHGDQG)LOHG2FWREHU %HIRUH.(11('<DQG1255,6&LUFXLWsXGJHV.$7= 'LVWULFWsXGJH BBBBBBBBBBBBBBBBB FDVHV )RUWXQDWHO\ DQRWKHU GHFLVLRQ E\ WKH )LIWK &LUFXLW LQ &2816(/ >0F*LOO@ IRXQG WKDW FRQJUHVVLRQDO LQWHQW WR SURKLELW DQ\ )HGHUDO UHOLHIHLWKHU WKURXJK $7) RU WKH FRXUWVLV FOHDU 7KH )LIWK $5*8('  7KRPDV 0 %RQG\ 81,7(' 67$7(6 '(3$570(17 2) s867,&( &,9,/ ',9,6,21 &LUFXLW FRQFOXGHG WKDW FRQYLFWHG IHORQV DUH WKHUHIRUH QRW HOLJLEOH IRU MXGLFLDO UHYLHZ RI WKHLU UHOLHI DSSOLFDWLRQV *LYHQ WKLV FRQIOLFW LQ WKH FLUFXLW FRXUWV LW LV LPSRUWDQW WKDW :DVKLQJWRQ '& IRU $SSHOODQW  /HV sRQHV %85&+ ZH RQFH DJDLQ FODULI\ RXU RULJLQDO DQG VXVWDLQLQJ LQWHQWLRQ 7KH JRDO RI WKLV SURYLVLRQ KDV DOZD\V EHHQ WR SURKLELW FRQYLFWHG IHORQV IURP JHWWLQJ WKHLU JXQV EDFNZKHWKHU WKURXJK $7) RU WKH

FRXUWV ,W ZDV QHYHU RXU LQWHQWLRQ WR VKLIW WKH EXUGHQ WR WKH 7KH +RQRUDEOH 'DYLG $ .DW] 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH FRXUWV 1RUWKHUQ 'LVWULFW RI 2KLR VLWWLQJ E\ GHVLJQDWLRQ

  0XOOLVY8QLWHG6WDWHV 1R 1R 0XOOLVY8QLWHG6WDWHV 

3257(5 s2+16210HPSKLV7HQQHVVHHIRU$SSHOOHH YLROHQWFULPH7KHUHIRUHWKH&RPPLWWHHKDVLQFOXGHG 21 %5,()  7KRPDV 0 %RQG\ 81,7(' 67$7(6 ODQJXDJHLQWKHELOOZKLFKSURKLELWVWKHXVHRIIXQGVIRU '(3$570(17 2) s867,&( &,9,/ ',9,6,21 $7)WRLQYHVWLJDWHDQGDFWXSRQDSSOLFDWLRQVIURPUHOLHI :DVKLQJWRQ'&IRU$SSHOODQW/HVsRQHV:s0LFKDHO IURP)HGHUDOILUHDUPVGLVDELOLWLHV &RG\ 6XVDQ 0 &ODUN %85&+ 3257(5  s2+1621 0HPSKLV7HQQHVVHHIRU$SSHOOHH 65HS1RQG&RQJG6HVVDFFRUG6 5HS 1R  G &RQJ VW 6HVV   BBBBBBBBBBBBBBBBB H[SODLQLQJWKDWLWZDVLPSRVLQJDEDQRQ$7)LQYHVWLJDWLRQV EHFDXVH D GHFLVLRQ WR JUDQW UHOLHI mFRXOG KDYH GHYDVWDWLQJ 23,1,21 FRQVHTXHQFHVIRULQQRFHQWFLWL]HQVLIWKHZURQJGHFLVLRQLV BBBBBBBBBBBBBBBBB PDGHl,QVWHDG&RQJUHVVGHWHUPLQHGWKDWWKH$7)jVVFDUFH UHVRXUFHVmZRXOGEHEHWWHUXWLOL]HGlRQPRUHSUHVVLQJPDWWHUV .(11('<&LUFXLWsXGJH7KH8QLWHG6WDWHVDSSHDOVWKH VXFKDVmFUDFN>LQJ@GRZQRQYLROHQWFULPHl65HS1R GLVWULFW FRXUWjV RUGHU JUDQWLQJ SODLQWLIIjV SHWLWLRQ IRU WKH G&RQJVW6HVV65HS1R UHPRYDORIWKHILUHDUPVGLVDELOLWLHV LPSRVHGRQKLPE\ G&RQJG6HVVo,QUHHQDFWLQJWKHEDQIRU 86& †  J   7KH %XUHDX RI $OFRKRO 7REDFFR WKH IRXUWK FRQVHFXWLYH \HDU &RQJUHVV UHHPSKDVL]HG WKLV )LUHDUPVm$7)lLVWKHRQO\DJHQF\DXWKRUL]HGWRJUDQWUHOLHI SRLQW VWDWLQJ mWKRVH ZKR FRPPLW IHORQLHV VKRXOG QRW EH IURPILUHDUPVGLVDELOLWLHVXQGHU†F&RQJUHVVLQLWVODVW DOORZHG WR KDYH WKHLU ULJKW WR RZQ D ILUHDUP UHVWRUHG    HLJKW DSSURSULDWLRQV DFWV KDV SURKLELWHG WKH $7) IURP 7KHUH LV QR UHDVRQ WR VSHQG WKH *RYHUQPHQWjV WLPH RU H[SHQGLQJIXQGVWRSURFHVVDSSOLFDWLRQVIRUWKHUHPRYDORI WD[SD\HUjVPRQH\WRUHVWRUHDFRQYLFWHGIHORQjVULJKWWRRZQ ILUHDUPGLVDELOLWLHV7KHGLVWULFWFRXUWKHOGWKDWGXHWRWKH DILUHDUPl+55HS1RWK&RQJVW6HVV LQDELOLW\RIWKH$7)WRDFWLWKDGVXEMHFWPDWWHUMXULVGLFWLRQ *LYHQWKLVKLVWRU\LWLVXQUHDVRQDEOHWREHOLHYHWKDW XQGHU†FWRJUDQWUHOLHIIURPWKHGLVDELOLW\DQGUHVWRUHG SODLQWLIIjV ULJKW WR SRVVHVV ILUHDUPV DQG DPPXQLWLRQ  7KH JRYHUQPHQW DVVHUWV WKDW WKH GLVWULFW FRXUW ODFNHG VXEMHFW  PDWWHU MXULVGLFWLRQ WR FRQVLGHU SODLQWLIIjV SHWLWLRQ IRU WKH 6HH DOVR  &RQJ 5HF 6  2FW   VWDWHPHQW RI 6HQ UHVWRUDWLRQRIILUHDUPULJKWVXQGHU86&†F)RU 6LPRQ ,Q WKH FRQWH[W RI WKH  YHUVLRQ RI WKH $SSURSULDWLRQV $FW

WKHUHDVRQVGHWDLOHGEHORZZHDJUHHDQGUHYHUVHWKHMXGJPHQW 6HQDWRU 6LPRQ ZKR DORQJ ZLWK 6HQDWRU /DXWHQEHUJ SURSRVHG WKH SURYLVLRQ EDUULQJ WKH $7) IURP SURFHVVLQJ DSSOLFDWLRQV IRU WKH UHPRYDO RIWKHGLVWULFWFRXUWDQGGLVPLVVWKHFDVH RI ILUHDUPV GLVDELOLWLHV LQ DQG DGYRFDWHG LWV LQFOXVLRQ LQ HDFK IROORZLQJ \HDU VWDWHG DV IROORZV , ,Q >5LFH @ WKH 7KLUG &LUFXLW &RXUW RI $SSHDOV IRXQG WKDW WKH FXUUHQW IXQGLQJ SURKLELWLRQ GRHV QRW PDNH FOHDU FRQJUHVVLRQDO ,QsDPHV0LFKDHO0XOOLVmSODLQWLIIlSOHGJXLOW\WR LQWHQW WR EDU DOO DYHQXHV RI UHOLHI IRU FRQYLFWHG IHORQV %\ WKHLU

IDOVLI\LQJWUDYHOH[SHQVHVLQFRQQHFWLRQZLWKKLVEXVLQHVVLQ UHDVRQLQJ VLQFH $7) LV XQDEOH WR FRQVLGHU DSSOLFDWLRQV IRU UHOLHI IHORQV DUH HQWLWOHG WR DVN WKH FRXUWV WR UHYLHZ WKHLU YLRODWLRQRI86&†ZKLFKFDUULHVDPD[LPXPWHUP DSSOLFDWLRQV RILPSULVRQPHQWRIILYH\HDUV$VDFRQVHTXHQFHSODLQWLII 7KLV PLVJXLGHG GHFLVLRQ FRXOG IORRG WKH FRXUWV ZLWK IHORQV ZDVSURKLELWHGIURPSRVVHVVLQJILUHDUPVE\86&† VHHNLQJ WKH UHVWRUDWLRQ RI WKHLU JXQ ULJKWV HIIHFWLYHO\ VKLIWLQJ J  ZKLFK SURYLGHV LQ UHOHYDQW SDUW WKDW m>L@W VKDOO EH IURP $7) WR WKH FRXUWV WKH EXUGHQ RI FRQVLGHULQJ WKHVH XQODZIXOIRUDQ\SHUVRQZKRKDVEHHQFRQYLFWHGLQDQ\ DSSOLFDWLRQV ,QVWHDG RI ZDVWLQJ WD[SD\HU PRQH\ DQG WKH WLPH RI $7) DJHQWV ZKLFK FRXOG EH PXFK EHWWHU VSHQW RQ LPSRUWDQW ODZ FRXUW RI D FULPH SXQLVKDEOH E\ LPSULVRQPHQW IRU D WHUP HQIRUFHPHQW HIIRUWV  ZH ZRXOG QRZ EH ZDVWLQJ FRXUW UHVRXUFHV H[FHHGLQJ RQH \HDU    WR SRVVHVV DQ\ ILUHDUP RU DQG GLVWUDFWLQJ WKH FRXUWV IURP FRQVLGHUDWLRQ RI VHULRXV FULPLQDO  0XOOLVY8QLWHG6WDWHV 1R 1R 0XOOLVY8QLWHG6WDWHV 

WHQGHQF\WRZDUGYLROHQFHRUXVHRIGUXJVDQGDOFRKRO7KHVH DPPXQLWLRQl  3ODLQWLII ZKR LV DSSDUHQWO\ DQ DYLG KXQWHU LQVWLWXWLRQDO GLVDGYDQWDJHV PDNH LW KLJKO\ XQOLNHO\ WKDW VRXJKWWRUHPRYHWKHILUHDUPUHVWULFWLRQVLPSRVHGRQKLPE\ &RQJUHVV LQWHQGHG GLVWULFW FRXUW WR UHYLHZ DQ DSSOLFDQWV †J $FFRUGLQJO\SODLQWLIIREWDLQHGOHJDOFRXQVHO GDQJHURXVQHVVWRVRFLHW\LQWKHILUVWLQVWDQFH1RUZRXOGWKH DQGLQ2FWREHU RI UHTXHVWHGDQDSSOLFDWLRQIURPWKH FRVWVWRWKHFRXUWVLQPDNLQJDQLQYHVWLJDWLRQEHOHVVWKDQWKH $7) IRU UHOLHI IURP KLV ILUHDUPV GLVDELOLWLHV SXUVXDQW WR FRVWV WR WKH $7)  7KH\ PLJKW ZHOO EH JUHDWHU VLQFH WKHUH 86&†F7KH$7)UHVSRQGHGWKDWLWZDVXQDEOHWR ZRXOGEHQRLQYHVWLJDWLRQRUWHVWLPRQ\E\WUDLQHGDJHQWVIRU HYHQ SURYLGH SODLQWLII ZLWK DQ DSSOLFDWLRQ GXH WR ODQJXDJH WKHFRXUWWRUHO\RQ &RQJUHVVLQVHUWHGLQDQDSSURSULDWLRQVDFWZKLFKIRUEDGWKH $7)IURPXVLQJDQ\DSSURSULDWHGIXQGVWRHYDOXDWHRUSURFHVV )LQDOO\ WKH OHJLVODWLYH KLVWRU\ RQO\ VHUYHV WR IXUWKHU VXFKDSSOLFDWLRQV UHLQIRUFH WKH FRQFOXVLRQ WKDW &RQJUHVV GLG QRW LQWHQG WR PRGLI\ † F WR SHUPLW GH QRYR MXGLFLDO UHYLHZ RI 8QGHWHUUHG SODLQWLII ILOHG DQ DFWLRQ LQ WKH GLVWULFW FRXUW DSSOLFDWLRQVIRUWKHUHLQVWDWHPHQWRIILUHDUPSULYLOHJHV$V VHHNLQJWKHUHVWRUDWLRQRIKLVFLYLOULJKWVRULQWKHDOWHUQDWLYH REVHUYHGLQ0F*LOO)GDWLQDUHSRUWWRWKH6HQDWH WKHUHPRYDORIKLVIHGHUDOILUHDUPGLVDELOLW\XQGHU†F WKH$SSURSULDWLRQV&RPPLWWHHH[SODLQHGZK\LWILUVWZLWKKHOG 7KHGLVWULFWFRXUWGHQLHGSODLQWLIIjVSHWLWLRQZLWKRXWSUHMXGLFH IXQGV LQ WKH  $SSURSULDWLRQV $FW IRU $7) DFWLRQ RQ VWDWLQJ WKDW SODLQWLII PXVW ILUVW H[KDXVW KLV DGPLQLVWUDWLYH DSSOLFDWLRQVIRU†FUHOLHI UHPHGLHV E\ VXEPLWWLQJ DQ DSSOLFDWLRQ PDGH SXUVXDQW WR †FWRWKH$7)DWOHDVWWZR\HDUVDIWHUWKHWHUPLQDWLRQRI $IWHU $7) DJHQWV VSHQG PDQ\ KRXUV LQYHVWLJDWLQJ D KLVSUREDWLRQ3ODLQWLIIDJDLQZURWHWKH$7)RQ2FWREHU SDUWLFXODU DSSOLFDQW>@ WKH\ PXVW GHWHUPLQH ZKHWKHU RU DQGZDVDJDLQWROGWKDWWKHDJHQF\ZDVQRWDFFHSWLQJ QRWWKDWDSSOLFDQWLVVWLOODGDQJHUWRSXEOLFVDIHW\7KLV DSSOLFDWLRQV LVDYHU\GLIILFXOWDQGVXEMHFWLYHWDVNZKLFKFRXOGKDYH GHYDVWDWLQJ FRQVHTXHQFHV IRU LQQRFHQW FLWL]HQV LI WKH ,Q sDQXDU\ RI  SODLQWLII ILOHG WKLV DFWLRQ IRU WKH ZURQJGHFLVLRQLVPDGH7KH&RPPLWWHHEHOLHYHVWKDW UHVWRUDWLRQRIKLVFLYLOULJKWVRULQWKHDOWHUQDWLYHIRUUHPRYDO WKH DSSUR[LPDWHO\  PDQ\HDUV VSHQW DQQXDOO\ WR RIKLVIHGHUDOILUHDUPGLVDELOLW\7KH8QLWHG6WDWHVDUJXHG LQYHVWLJDWH DQG DFW XSRQ WKHVH LQYHVWLJDWLRQV DQG WKDW WKH GLVWULFW FRXUW ZDV ZLWKRXW MXULVGLFWLRQ WR FRQVLGHU DSSOLFDWLRQVZRXOGEHEHWWHUXWLOL]HGWRFUDFNGRZQRQ SODLQWLIIjVUHTXHVW7KHGLVWULFWFRXUWGLVDJUHHGFRQFOXGLQJ WKDW&RQJUHVVjDSSURSULDWLRQVDFWVGLGQRWVXVSHQGWKHMXGLFLDO UHOLHIDYDLODEOHXQGHU†F7KHFRXUWUHIHUUHGWKHPHULWV  RI SODLQWLIIjV SHWLWLRQ WR D PDJLVWUDWH MXGJH mWR GHYHORS D 7KH 8QLWHG 6WDWHV HPSKDVL]HG WKLV SRLQW LQ LWV 0RWLRQ IRU UHFRUG PDNH DQ\ IDFWXDO ILQGLQJV DQG PDNH D 5HFRQVLGHUDWLRQ EHIRUH WKH GLVWULFW FRXUW SRLQWLQJ RXW WKDW LQ FRQQHFWLRQ UHFRPPHQGDWLRQ    UHJDUGLQJ WKH UHOLHI VRXJKWl  7KH ZLWK LWV LQYHVWLJDWLRQ $7) ZRXOG LQWHUYLHZ WKH DSSOLFDQW WKH OLVWHG FKDUDFWHU UHIHUHQFHV LQGHSHQGHQWO\ GHYHORSHG UHIHUHQFHV HPSOR\HUV PDJLVWUDWH MXGJH UHYLHZHG WKH 3UHVHQWHQFH ,QYHVWLJDWLRQ PHPEHUV RI WKH FRPPXQLW\ DQG QHLJKERUKRRG ZKHUH WKH DSSOLFDQW OLYHV 5HSRUWSUHSDUHGLQDWWKHWLPHRISODLQWLIIjVFRQYLFWLRQ WKH DSSOLFDQWjV SUREDWLRQ RIILFHUV DQG RWKHU ODZ HQIRUFHPHQW RIILFHUV OHWWHUV DQG UHFRPPHQGDWLRQV IURP ILYH XQUHODWHG SHUVRQV 7KH $7) ZRXOG DOVR FRQGXFW D ODZ HQIRUFHPHQW UHFRUGV FKHFN %DVHG RQ VXSSOLHG E\ SODLQWLII DQG FRQVXOWHG ZLWK WKH SUREDWLRQ DOO RI WKLV DFFXPXODWHG LQIRUPDWLRQ WKH $7) ZRXOG GHWHUPLQH ZKHWKHU RU GHSDUWPHQW WR GHWHUPLQH LI SODLQWLII KDG DQ\ LQWHUYHQLQJ QRW UHOLHI VKRXOG EH JUDQWHG EDVHG RQ SXEOLF VDIHW\ DQG SXEOLF LQWHUHVW FRQFHUQV 6HH HJ 6PLWK Y %UDG\  ) 6XSS  o (' FULPLQDO DFWLYLW\  $IWHU FRQVLGHULQJ WKLV LQIRUPDWLRQ WKH :LV  GHVFULELQJ WKH LQYHVWLJDWLRQV WKH $7) FRQGXFWHG SXUVXDQW WR PDJLVWUDWH MXGJH FRQFOXGHG WKDW SODLQWLII ZDV QRW OLNHO\ WR † F  &OHDUO\ WKLV PD\ UHVXOW LQ D YHU\ GLIIHUHQW SLFWXUH WKDQ WKDW JOHDQHG VROHO\ IURP LQIRUPDWLRQ KDQG VHOHFWHG E\ DQ DSSOLFDQW  0XOOLVY8QLWHG6WDWHV 1R 1R 0XOOLVY8QLWHG6WDWHV 

HQGDQJHUSXEOLFVDIHW\DQGWKDWJUDQWLQJSODLQWLIIjVUHTXHVWHG PLVFDUULDJHRIMXVWLFHLWGRHVQRWSHUPLWDGLVWULFWFRXUWWR UHOLHIZDVQRWFRQWUDU\WRSXEOLFLQWHUHVW FRQGXFWDGHQRYRUHYLHZRIDQ$7)GHQLDO,QIDFWHYHU\ FLUFXLWWRDGGUHVVWKHPDWWHUKDVFRQFOXGHGWKDWDGLVWULFWFRXUW 7KHGLVWULFWFRXUWUHYLHZHGWKHPDJLVWUDWHMXGJHjV5HSRUW VKRXOGRQO\UHYLHZ$7)GHQLDOVWRGHWHUPLQHLIWKHGHFLVLRQ DQG5HFRPPHQGDWLRQDQGIRXQGWKDWWKHPDJLVWUDWHMXGJHKDG ZDVDUELWUDU\DQGFDSULFLRXV6HH%DJDGRQDVY$7))G DGHTXDWHO\FRQVLGHUHGDOOIDFWRUVRWKHUWKDQSODLQWLIIjVPHQWDO   WK &LU  %UDGOH\ Y $7)  )G  KHDOWK$FFRUGLQJO\WKHGLVWULFWFRXUWUHTXLUHG SODLQWLIIWR WK&LU.LWFKHQVY$7))G VXEPLW WR DQ H[DPLQDWLRQ E\ D SV\FKRORJLVW  7KH GLVWULFW WK&LUVHHDOVR'XQODSY$7)1R FRXUW WKHQ UHIHUUHG FRQVLGHUDWLRQ RI WKH UHVXOWLQJ PHQWDO  :/  WK &LU 0DU   XQSXEOLVKHG KHDOWKUHSRUWWRWKHPDJLVWUDWHMXGJHZKRDJDLQFRQFOXGHG 7KXV ZH FRQFOXGH IURP WKH SODLQ WH[W RI † F WKDW WKDW SODLQWLIIjV ILUHDUP GLVDELOLW\ VKRXOG EH UHPRYHG  7KH &RQJUHVV VXVSHQGHG WKH SURYLVLRQ LQ LWV HQWLUHW\ ZKHQ LW GLVWULFW FRXUW DFFHSWHG WKH PDJLVWUDWH MXGJHjV 5HSRUW DQG SURKLELWHGWKH$7)IURPWDNLQJDQ\DFWLRQRQDSSOLFDWLRQV 5HFRPPHQGDWLRQ DQG RUGHUHG WKH UHPRYDO RI SODLQWLIIjV PDGHSXUVXDQWWR†FDVWKHVWDWXWHPDNHVQRSURYLVLRQ ILUHDUPGLVDELOLWLHVSXUVXDQWWR†F7KH8QLWHG6WDWHV IRUGHQRYRUHYLHZE\DGLVWULFWFRXUW6HH0F+XJKY5XELQ EURXJKWWKLVWLPHO\DSSHDO 1R   :/  DW o G &LU sXO\  %XUWFK)GDW ,, (YHQLIWKHUHZHUHDQ\GRXEWFRQFHUQLQJ&RQJUHVVjLQWHQW 7KH 8QLWHG 6WDWHV FRQWHQGV WKDW WKH ODQJXDJH DQG WKHSUDFWLFDOLWLHVRIFRQGXFWLQJWKHUHTXLVLWHLQYHVWLJDWLRQRQO\ OHJLVODWLYHKLVWRU\RI†FDQG&RQJUHVVjVDSSURSULDWLRQV VHUYHWRUHLQIRUFHWKHFRQFOXVLRQWKDW&RQJUHVVLQWHQGHGWR DFWV VKRZ WKDW LQ ZLWKGUDZLQJ IXQGLQJ IURP $7) VXVSHQG†FjVRSHUDWLRQ$VWKH8QLWHG6WDWHVDUJXHV LQYHVWLJDWLRQVXQGHU†F&RQJUHVVPHDQWWRVXVSHQGWKH WKHRQO\ZD\WRUHOLDEO\GHWHUPLQHZKHWKHUDFRQYLFWHGIHORQ SURYLVLRQjVRSHUDWLRQLQLWVHQWLUHW\:HUHYLHZWKHGLVWULFW PD\VDIHO\EHHQWUXVWHGZLWKDILUHDUPSXUVXDQWWR†FLV FRXUWjV GHWHUPLQDWLRQ RI LWV VXEMHFW PDWWHU MXULVGLFWLRQ GH WRFRQGXFWH[WHQVLYHILHOGLQYHVWLJDWLRQVLQFOXGLQJLQWHUYLHZV QRYR6HHHJ0LFKLJDQ3HDWY(QYLURQPHQWDO3URWHFWLRQ RIIDPLO\IULHQGVQHLJKERUVDQGFRZRUNHUV:KLOHGLVWULFW $JHQF\)GWK&LU FRXUWVDUHZHOOHTXLSSHGWRPDNHFUHGLELOLW\MXGJPHQWVDQG IDFWXDOGHWHUPLQDWLRQVWKH\DUHZLWKRXWWKHWRROVQHFHVVDU\WR :HEHJLQDVLQDOOFDVHVRIVWDWXWRU\LQWHUSUHWDWLRQZLWKWKH FRQGXFWDV\VWHPDWLFLQTXLU\LQWRDQDSSOLFDQWjVEDFNJURXQG ODQJXDJH RI WKH VWDWXWH LWVHOI  6HFWLRQ F DOORZV WKH $QDSSOLFDQWZLOOOLNHO\SURYLGHWKHGLVWULFWFRXUWRQO\ZLWK 6HFUHWDU\ RI WKH 7UHDVXU\ WR JUDQW UHOLHI IURP WKH ILUHDUP FRQWDFWVZKRZLOOVXSSO\SRVLWLYHLQIRUPDWLRQFRQFHUQLQJWKH GLVDELOLWLHVLPSRVHGE\†JVWDWLQJ DSSOLFDQWj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jV GLVDELOLW\DQGWKHDSSOLFDQW VUHFRUGDQGUHSXWDWLRQDUH VXFK WKDW WKH DSSOLFDQW ZLOO QRW EH OLNHO\ WR DFW LQ D PDQQHUGDQJHURXVWRSXEOLFVDIHW\DQGWKDWWKHJUDQWLQJ RIWKHUHOLHIZRXOGQRWEHFRQWUDU\WRWKHSXEOLFLQWHUHVW  0XOOLVY8QLWHG6WDWHV 1R 1R 0XOOLVY8QLWHG6WDWHV 

GHFLVLRQVSHUPLWWHGE\86&† $DQGWKHUHOHYDQW $Q\SHUVRQZKRVHDSSOLFDWLRQIRUUHOLHIIURPGLVDELOLWLHV OHJLVODWLYH KLVWRU\ FRQFOXGLQJ WKDW LW ZDV mDZDUH RI QR LVGHQLHGE\WKH6HFUHWDU\PD\ILOHDSHWLWLRQZLWKWKH DOFKHP\ FDSDEOH RI WUDQVIRUPLQJ UHYLHZ RI WKH $7)jV 8QLWHG6WDWHVGLVWULFWFRXUWIRUWKHGLVWULFWLQZKLFKKH GHFLVLRQ XQGHU †  LQWR WKH UHOLHI WKH SODLQWLII UHVLGHVIRUDMXGLFLDOUHYLHZRIVXFKGHQLDO7KHFRXUW VHHNVnSOHQDU\DGMXGLFDWLRQRIKLVDSSOLFDWLRQE\WKHGLVWULFW PD\ LQ LWV GLVFUHWLRQ DGPLW DGGLWLRQDO HYLGHQFH ZKHUH FRXUWl,GDW  IDLOXUHWRGRVRZRXOGUHVXOWLQDPLVFDUULDJHRIMXVWLFH  :H DJUHH ZLWK WKH 6HFRQG &LUFXLW WKDW WKH VWDWXH FRQWHPSODWHVMXGLFLDOUHYLHZRIWKHGLVFUHWLRQH[HUFLVHGE\WKH 86&†F7KH6HFUHWDU\RIWKH7UHDVXU\GHOHJDWHG 6HFUHWDU\LQGHQ\LQJDQDSSOLFDWLRQQRWLQGHSHQGHQWMXGLFLDO DXWKRULW\WRGHWHUPLQHZKHWKHUWKHJUDQWLQJRIUHOLHIZRXOGEH GLVFUHWLRQH[HUFLVHGLQDGHQRYRUHYLHZRIDQDSSOLFDWLRQ$V FRQWUDU\WRWKHSXEOLFLQWHUHVWWRWKH$7)ZKLFKFRQGXFWHG WKH 0F+XJK FRXUW HPSKDVL]HG † F VWDWHV WKDW m>D@Q\ WKHQHFHVVDU\EDFNJURXQGFKHFNVDQGLQYHVWLJDWLRQV6HH SHUVRQZKRVHDSSOLFDWLRQIRUUHOLHIIURPGLVDELOLWLHVLVGHQLHG &)5†+RZHYHUIRUHDFKILVFDO\HDUVLQFH E\WKH6HFUHWDU\PD\ILOHDSHWLWLRQZLWKWKH8QLWHG 6WDWHV &RQJUHVVKDVHQDFWHGDQDSSURSULDWLRQVELOOZKLFKVWDWHVWKDW GLVWULFWFRXUWIRUWKHGLVWULFWLQZKLFKKHUHVLGHVIRUDMXGLFLDO mQRQHRIWKHIXQGVDSSURSULDWHGKHUHLQVKDOOEHDYDLODEOHWR UHYLHZRIVXFKGHQLDOl86&†FHPSKDVLVDGGHG LQYHVWLJDWHRUDFWXSRQDSSOLFDWLRQVIRUUHOLHIIURP)HGHUDO ,W LV WUXH WKDW &RQJUHVV KDV QRW VSHFLILFDOO\ DGGUHVVHG WKH ILUHDUPV GLVDELOLWLHV XQGHU  86& † Fl  $V D MXGLFLDU\ LQ DQ\ RI WKH DSSURSULDWLRQV DFWV GHDOLQJ ZLWK FRQVHTXHQFH WKH $7) LV HIIHFWLYHO\ SURKLELWHG IURP † F  +RZHYHU E\ SURKLELWLQJ WKH $7) IURP XVLQJ SURFHVVLQJDSSOLFDWLRQVIRUUHOLHIXQGHU†F DSSURSULDWHG IXQGV WR SURFHVV DSSOLFDWLRQV &RQJUHVV KDV FRQVWUDLQHG WKH $7) IURP LVVXLQJ WKH W\SH RI GHQLDOV &RQJUHVV WKURXJK DSSURSULDWLRQV DFWV KDV WKH SRZHU WR PHQWLRQHGLQWKHVWDWXWH2QHFRXOGDUJXHWKDWE\UHIXVLQJWR VXVSHQG DPHQG RU UHSHDO D VWDWXWH VR ORQJ DV LW GRHV VR SURFHVVDSSOLFDWLRQVWKH$7)LVHIIHFWLYHO\GHQ\LQJUHOLHI FOHDUO\6HH5REHUWVRQY6HDWWOH$XGXERQ6RF86 KRZHYHUWKHUHPHG\LQVXFK D VLWXDWLRQLVQRWUHYLHZE\D 6&W/(GG8QLWHG IHGHUDOFRXUW5DWKHUDVWKH8QLWHG6WDWHVSRLQWVRXWXQGHU 6WDWHVY'LFNHUVRQ866&W  86& †  D FRXUW UHYLHZLQJ DJHQF\ DFWLRQV LV RQO\ DXWKRUL]HGWRFRPSHODJHQF\DFWLRQXQODZIXOO\ZLWKKHOG RUXQUHDVRQDEO\GHOD\HGRULQYDOLGDWHDJHQF\DFWLRQVDQG  $00 7UHDVXU\ 3RVWDO 6HUYLFH DQG *HQHUDO *RYHUQPHQW ILQGLQJV WKDW DUH XQODZIXO  *LYHQ &RQJUHVVjV H[SOLFLW $SSURSULDWLRQV $FW  3XE / 1R   6WDW   LQVWUXFWLRQWKDWWKH$7)VKRXOGQRWVSHQGDQ\DSSURSULDWHG 7UHDVXU\ 3RVWDO 6HUYLFH DQG *HQHUDO *RYHUQPHQW $SSURSULDWLRQV $FW IXQGV WR SURFHVV DSSOLFDWLRQV IRU WKH UHPRYDO RU ILUHDUP  3XE / 1R   6WDW   7UHDVXU\ 3RVWDO 6HUYLFH DQG *HQHUDO *RYHUQPHQW $SSURSULDWLRQV $FW  3XE / 1R GLVDELOLWLHV  SODLQWLII FRXOG KDUGO\ DUJXH WKDW WKH $7) KDV   6WDW    7UHDVXU\ 3RVWDO 6HUYLFH DQG DFWHG XQODZIXOO\ RU XQUHDVRQDEO\ LQ IDLOLQJ WR SURFHVV KLV *HQHUDO *RYHUQPHQW $SSURSULDWLRQV $FW  3XE / 1R   DSSOLFDWLRQ  %HFDXVH &RQJUHVV FOHDUO\ KDV WKH SRZHU WR 6WDW    7UHDVXU\ 3RVWDO 6HUYLFH DQG *HQHUDO SUHYHQW WKH $7) IURP DFWLQJ RQ DQ\ DSSOLFDWLRQV PDGH *RYHUQPHQW $SSURSULDWLRQV $FW  3XE / 1R   6WDW SXUVXDQWWR†FLILWFKRRVHVWKHUHLVQRDJHQF\DFWLRQ    7UHDVXU\ 3RVWDO 6HUYLFH DQG *HQHUDO *RYHUQPHQW

IRUDIHGHUDOFRXUWWRFRPSHORUUHYLHZ $SSURSULDWLRQV $FW  3XE / 1R   6WDW    7UHDVXU\ 3RVWDO 6HUYLFH DQG *HQHUDO *RYHUQPHQW $SSURSULDWLRQV $FW  3XE / 1R   6WDW   )XUWKHU ZKLOH WKH VWDWXWH SHUPLWV GLVWULFW FRXUWV WR  7UHDVXU\ 3RVWDO 6HUYLFH DQG *HQHUDO *RYHUQPHQW VXSSOHPHQW WKH UHFRUG EHIRUH LW LI QHFHVVDU\ WR SUHYHQW D $SSURSULDWLRQV $FW  3XE / 1R   6WDW     0XOOLVY8QLWHG6WDWHV 1R 1R 0XOOLVY8QLWHG6WDWHV 

/(G7KHGLVWULFWFRXUWUHFRJQL]HGWKLVIDFW FRQVWLWXWLRQDOUHVWUDLQWVLWFRXOGSUHFOXGHMXGLFLDOUHYLHZRI DQGSODLQWLIIGRHVQRWDUJXHWRWKHFRQWUDU\7KHTXHVWLRQWKDW DGPLQLVWUDWLYHDFWLRQ6HH5LFH)GDW+RZHYHUWKH PXVW EH DQVZHUHG WKHQ LV ZKDW ZDV &RQJUHVVj LQWHQW LQ FRXUW REVHUYHG WKDW LQ RUGHU WR GR VR &RQJUHVVj LQWHQWLRQ SUHFOXGLQJWKH$7)IURPVSHQGLQJIXQGVRQLQYHVWLJDWLQJRU PXVWEHFOHDUO\VWDWHG6HHLG:LWKOLWWOHH[SODQDWLRQWKH DFWLQJ XSRQ DSSOLFDWLRQV IRU UHOLHI XQGHU † F  6HH FRXUW VWDWHG WKDW LW GLG QRW EHOLHYH WKDW &RQJUHVVj 'LFNHUVRQ86DWo6&WoUHYLHZLQJ DSSURSULDWLRQDFWVHYLQFHGDFOHDULQWHQWWRUHSHDO†FRU DQDSSURSULDWLRQVDFWDQGWKHUHOHYDQWOHJLVODWLYHKLVWRU\WR WR SUHFOXGH IHGHUDO FRXUWV IURP H[HUFLVLQJ MXULVGLFWLRQ WR DVFHUWDLQ&RQJUHVVjVLQWHQW8QLWHG6WDWHVY0LWFKHOO UHYLHZ $7) GHQLDOV RI UHOLHI IURP IHGHUDO ILUHDUPV 86    6 &W    / (G   GLVDELOLWLHV6HHLG DQDO\]LQJWKHHIIHFWVRIDQDSSURSULDWLRQVDFWDQGVWDWLQJWKDW m>W@KHZKROHTXHVWLRQGHSHQGVRQWKHLQWHQWLRQRI&RQJUHVV 7KH RWKHU IRXU FLUFXLWV ZKLFK KDYH H[DPLQHG WKH LVVXH DVH[SUHVVHGLQWKHVWDWXWHVl FRQFOXGHGWKDW&RQJUHVVjDSSURSULDWLRQDFWVUHQGHUHGIHGHUDO FRXUWVZLWKRXWVXEMHFWPDWWHUMXULVGLFWLRQWRFRQVLGHUSHWLWLRQV 3ODLQWLII GRHV QRW GLVSXWH WKDW WKURXJK LWV DSSURSULDWLRQV IRU WKH UHVWRUDWLRQ RI ILUHDUPV † F SHWLWLRQV  6HH PHDVXUHV&RQJUHVVLQWHQGHGWRVXVSHQGDOOUHOLHIDYDLODEOH 0F+XJK:/DW 2ZHQ)GDW%XUWFK WKURXJKWKH$7)+RZHYHUSODLQWLIIDVVHUWVWKDWLQGRLQJVR )GDW0F*LOO)GDW7KH6HFRQG&LUFXLW &RQJUHVV OHIW WKH MXGLFLDU\jV UROH XQWRXFKHG  7KH GLVWULFW LVWKHPRVWUHFHQWFRXUWRIDSSHDOVWRH[DPLQHWKHLVVXHRIWKH FRXUW DJUHHG ZLWK SODLQWLIIjV DUJXPHQW DQG FRQFOXGHG WKDW VXEMHFWPDWWHUMXULVGLFWLRQFRQIHUUHGE\†FDGGUHVVLQJ &RQJUHVVKDGIDLOHGWRVKRZDFOHDULQWHQWWRUHSHDO†F WKHTXHVWLRQLQ0F+XJKY5XELQ1RWLQJWKDWWKHSODLQWLIIjV LQ LWV HQWLUHW\ RU WR SUHFOXGH MXGLFLDO UHYLHZ RI WKH $7)jV DSSOLFDWLRQ KDG QHYHU EHHQ GHQLHG E\ WKH $7) WKH FRXUW mUHIXVDOlWRJUDQWUHOLHIIURPILUHDUPGLVDELOLWLHV REVHUYHG WKDW m>W@KH IHGHUDO GLVWULFW FRXUWV DUH QR PRUH HPSRZHUHG WKDQ LV WKH $7) WR UHYLHZ LQGLYLGXDOVj :KLOHLWLVDQLVVXHRIILUVWLPSUHVVLRQLQWKLVFLUFXLWWKH DSSOLFDWLRQV IRU UHOLHI IURP IHGHUDO ILUHDUPV GLVDELOLWLHV TXHVWLRQ RI ZKHWKHU GLVWULFW FRXUWV UHWDLQ VXEMHFW PDWWHU 6HFWLRQFPDNHVDQDJHQF\µGHQLDOjRIDQDSSOLFDWLRQD MXULVGLFWLRQWRFRQVLGHUDSODLQWLIIjVSHWLWLRQIRUUHOLHIXQGHU SUHGLFDWHWRGLVWULFWFRXUWMXULVGLFWLRQDQGQRVXFKGHQLDOKDV †FKDVEHHQDGGUHVVHGE\VHYHUDORWKHUFLUFXLWV6HH EHHQLVVXHGKHUHl,GDW $SSO\LQJWKHUXOHWKDW&RQJUHVV 0F+XJKY5XELQ1R:/G&LU KDVDOORFDWHGLQLWLDOUHYLHZWRDQDGPLQLVWUDWLYHERG\ZKHUH sXO\2ZHQY0DJDZ)GWK&LU VXFKLQWHQWLVIDLUO\GLVFHUQLEOHLQWKHVWDWXWRU\VFKHPHVHHLG  %XUWFK Y 8QLWHG 6WDWHV 'HSW RI WKH 7UHDVXU\  FLWLQJ DQG TXRWLQJ 7KXQGHU %DVLQ &RDO &R Y 5HLFK  )GWK&LU8QLWHG6WDWHVY0F*LOO)G 866&W/(GG WKH WK&LU5LFHY8QLWHG6WDWHV)GG&LU FRXUW KHOG WKDW &RQJUHVV KDG PDGH VXFK DQ DOORFDWLRQ  ,W   $OWKRXJK WKH FLUFXLWV KDYH XVHG VOLJKWO\ GLIIHUHQW SRLQWHG RXW WKDW  VHFWLRQ F GRHV QRW JUDQW UHDVRQLQJWKHRQO\FRXUWWRFRQFOXGHWKDWWKHGLVWULFWFRXUW IUHHVWDQGLQJUHOLHIEXWUDWKHUUHTXLUHVDSHUVRQWRDSSO\WRWKH UHWDLQVVXEMHFWPDWWHUMXULVGLFWLRQLVWKH7KLUG&LUFXLWLQ5LFH 6HFUHWDU\ ZKR PD\ JUDQW VXFK UHOLHI  WKH VWDQGDUG IRU WKHFDVHSULPDULO\UHOLHGRQE\WKHGLVWULFWFRXUWLQWKHFDVHDW JUDQWLQJ UHOLHI LV ZRUGHG VR EURDGO\ DV WR FRQQRWH EDU DGPLQLVWUDWLYH DJHQF\ GHFLVLRQ PDNLQJ  VHFWLRQ F RQO\SHUPLWVGLVWULFWFRXUWVWRFRQVLGHUQHZHYLGHQFHZKHUH ,Q5LFHWKHHDUOLHVWFLUFXLWFDVHWKHFRXUWUHFRJQL]HGWKDW IDLOXUHWRGRVRZRXOGUHVXOWLQDPLVFDUULDJHRIMXVWLFH7KH &RQJUHVVFRXOGXVHDSSURSULDWLRQVDFWVWRDPHQGRUUHSHDO FRXUW WKHQ FRQVLGHUHG WKH VWUXFWXUH RI WKH VWDWXWH DQG VXEVWDQWLYH OHJLVODWLRQ DQG IXUWKHU WKDW VXEMHFW WR DSSURSULDWLRQVDFWVWKHVFRSHRIMXGLFLDO UHYLHZRIDJHQF\