United States v. Daniel

• Court: Court of Appeals for the Sixth Circuit
• Decided: May 22, 2003
• Docket: 01-4077
• Status: Published

Opinion

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21 3XUVXDQW WR 6L[WK &LUFXLW 5XOH   8QLWHG6WDWHVY'DQLHO 1R (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU )LOH 1DPH DS 0HOLVVD : )ULHGPDQ $QWKRQ\ ) $QGHUVRQ 5RDQRNH 9LUJLQLD IRU $SSHOODQW  'DYLG $ 6LHUOHMD 81,7(' 67$7(6$77251(<&OHYHODQG2KLRIRU$SSHOOHH 81,7('67$7(6&28572)$33($/6 BBBBBBBBBBBBBBBBB )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB

81,7(' 67$7(6 2) $0(5,&$ ; s2+1 0 52*(56 &LUFXLW sXGJH  $ MXU\ FRQYLFWHG 3ODLQWLII$SSHOOHH  5DOSK0'DQLHOsUm'DQLHOlRIRQHFRXQWRIZLUHIUDXGLQ  YLRODWLRQRI86&†'DQLHOQRZDSSHDOVDUJXLQJ  1R WKDWWKHUHZDVLQVXIILFLHQWHYLGHQFHRIDmVFKHPHlWRGHIUDXG Y  RU RI KLV LQWHQW WR GHIUDXG RU RI D ZLUH FRPPXQLFDWLRQ LQ ! IXUWKHUDQFH RI WKH VFKHPH  'DQLHO DOVR FRQWHQGV WKDW WKH  GLVWULFW FRXUW HUUHG E\ UHIXVLQJ WR LQVWUXFW WKH MXU\ WKDW LW 5$/3+ 0 '$1,(/ s5  'HIHQGDQW$SSHOODQW  VKRXOG DFTXLW KLP LI LW KDG D UHDVRQDEOH GRXEW UHJDUGLQJ ZKHWKHU KH KDG LQWHQGHG WR UHSD\ WKH PRQH\  )LQGLQJ QR 1 PHULWWRKLVFODLPVZHDIILUP $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW&OHYHODQG )DFWV 1Rn3DWULFLD$*DXJKDQ'LVWULFWsXGJH 7KH IUDXG IRU ZKLFK 'DQLHO ZDV FRQYLFWHG FRQVLVWHG RI $UJXHG0DUFK XQDXWKRUL]HGWDNLQJRIFRPSDQ\PRQH\WRFRYHUPDUJLQFDOOV IURPKLVSHUVRQDOVWRFNEURNHUDQGPLVUHSUHVHQWLQJZKDWKH 'HFLGHGDQG)LOHG0D\ ZDVGRLQJWRNHHSIURPEHLQJTXHVWLRQHG'DQLHOFODLPVWKDW KHLQWHQGHGWRSD\WKHPRQH\EDFNZKHQDVKHKRSHGWKH %HIRUH&/$<DQG52*(56&LUFXLWsXGJHV&2))0$1 SULFHRIKLVVWRFNERXQFHGEDFNXSEXWWKDWGLGQRWKDSSHQ 'LVWULFWsXGJH ,Q  'DQLHO ZDV DQ RZQHU DQG RSHUDWRU RI %XVLQHVV BBBBBBBBBBBBBBBBB 0DQDJHPHQW 6HUYLFHV ,QF m%06l D SD\UROO VHUYLFHV FRPSDQ\ ORFDWHG LQ 5RDQRNH 9LUJLQLD  $ EXVLQHVV &2816(/ HPSOR\LQJ %06 ZRXOG VHQG %06 WKH OXPS VXP DPRXQW RZHGWRWKHEXVLQHVVjVHPSOR\HHVDIHZGD\VEHIRUHHDFK $5*8('0HOLVVD:)ULHGPDQ5RDQRNH9LUJLQLD IRU mSD\ GD\l  'XULQJ WKH WLPH EHWZHHQ DQ HPSOR\HUjV LQLWLDO $SSHOODQW  0DWWKHZ % .DOO 81,7(' 67$7(6 GHSRVLW DQG WKH HPSOR\HHVj VXEVHTXHQW ZLWKGUDZDOV %06 $77251(<&OHYHODQG2KLRIRU$SSHOOHH21%5,() ZRXOGGHSRVLWWKHPRQH\LQ&OLHQW$FFRXQW1Rm$FFRXQW 1R l DQG LQYHVW WKH PRQH\ LQ RYHUQLJKW LQYHVWPHQWVnWKRXJK RQO\ LQ LQYHVWPHQWV WKDW ZHUH VHFXUH

DQGFRQVHUYDWLYHEHFDXVHLWZDVLPSRUWDQWWKDWWKHFOLHQWVj 7KH +RQRUDEOH sHQQLIHU % &RIIPDQ 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH (DVWHUQ DQG :HVWHUQ 'LVWULFWV RI .HQWXFN\ VLWWLQJ E\ GHVLJQDWLRQ PRQH\EHDYDLODEOHZKHQLWZDVWLPHWRSD\LWRXW

 1R 8QLWHG6WDWHVY'DQLHO   8QLWHG6WDWHVY'DQLHO 1R

,Q $XJXVW RI  %06 ZDV SXUFKDVHG E\ &HQWXU\ FRQWUDYHQLQJWKHSROLF\RILQYHVWLQJ$FFRXQW1RjVIXQGV %XVLQHVV6HUYLFHV,QFm&%,=lDKROGLQJFRPSDQ\HQJDJHG FRQVHUYDWLYHO\ LQ WKH EXVLQHVV RI DFTXLULQJ DFFRXQWLQJ DQG SD\UROO PDQDJHPHQW FRUSRUDWLRQV  %06 ZDV UHQDPHG &HQWXU\ 'DQLHOSURFHHGHGWREX\PRUH&%,=VWRFNRQPDUJLQDQG 3D\UROO,QFm&HQWXU\l'DQLHOZDVOHIWLQSODFHWRFRQWLQXH DV &%,= VWRFN GHFOLQHG VWHDGLO\ WKURXJK  DQG  KLVIRUPHUGXWLHVDQG&HQWXU\DSSDUHQWO\NHSWXVLQJ$FFRXQW 'DYHQSRUW LVVXHG D VHULHV RI PDUJLQ FDOOV  2Q 0DUFK  1RDVLWKDGSUHYLRXVO\,QH[FKDQJHIRUKLVRZQHUVKLS  'DQLHO DSSURDFKHG sHQQLIHU 'XII ZKR KDG UHFHQWO\ LQWHUHVWLQ&HQWXU\'DQLHOUHFHLYHGVKDUHVRI&%,= UHSODFHG6W/DZUHQFHDV&HQWXU\jVFRQWUROOHUDQGDVNHGIRU VWRFNZRUWKDSSUR[LPDWHO\PLOOLRQ DEODQNFKHFNIURP$FFRXQW1R'XIIJDYHKLPDFKHFN ZLWKRXWDVNLQJZKDWLWZDVIRUDQG'DQLHOXVHGLWWRGHSRVLW 'DQLHOSODFHGKLV&%,=VKDUHVLQDPDUJLQDFFRXQWZLWK  LQWR KLV 'DYHQSRUW DFFRXQW  &HQWXU\jV YLFH 'DYHQSRUW &Rm'DYHQSRUWlDQLQYHVWPHQWILUP8QGHU SUHVLGHQW*HRII'XNHKHDUGDERXWWKHFKHFNIURP'XIIDQG WKHWHUPVRIWKLVDFFRXQW'DQLHOFRXOGSXUFKDVHDGGLWLRQDO LQTXLUHG DERXW LW ZLWK 'DQLHO  'DQLHO VWRFNRUZLWKGUDZFDVKIURP'DYHQSRUWRQFUHGLWXVLQJDV H[SODLQHGnIDOVHO\nWKDW KH KDG LQYHVWHG LW DV D FRUSRUDWH FROODWHUDOKLVHTXLW\LQKLVH[LVWLQJLQYHVWPHQWVPDQDJHGE\ LQYHVWPHQWRQ&HQWXU\jVEHKDOI 'DYHQSRUW  :KHQ WKH YDOXH RI 'DQLHOjV HTXLW\ LQ KLV LQYHVWPHQWVIHOOEHORZDFHUWDLQOHYHOnDVZRXOGKDSSHQLIWKH ,Q sXO\ RI  'DQLHO ZLWKGUHZ  IURP KLV YDOXHRIKLVVWRFNGHFOLQHGnWKHQ'DYHQSRUWZRXOGVHQGKLP 'DYHQSRUW DFFRXQW DQG GHSRVLWHG LW ZLWK &HQWXU\ DV DmPDUJLQFDOOlUHTXLULQJKLPWRUHSDLUKLVHTXLW\E\HLWKHU UHSD\PHQWRIKLVLQLWLDOORDQ7KLVSD\PHQWFRYHUHG VHOOLQJWKHVWRFNRUE\SD\LQJFDVKLQWRKLVDFFRXQW'DQLHO RQO\RIWKHDFFUXHGLQWHUHVWDQG'XIIVHQWKLPDQHPDLO NHSWKLV&%,=VWRFNDQGERXJKWPRUH&%,=VWRFNRQPDUJLQ DVNLQJ ZKHQ KH ZRXOG UHSD\ WKH UHVW RI WKH LQWHUHVW  ,Q UHVSRQVH'DQLHOjVHPDLOVDLGWKLVZRXOGEHmQRSUREOHP, %HJLQQLQJ LQ 2FWREHU RI  WKH YDOXH RI &%,= VWRFN ZLOOJLYH\RXWKDWDWDODWHUGDWHZKHQ,SD\RIIWKHRWKHUl EHJDQ WR IDOO DQG 'DYHQSRUW LVVXHG 'DQLHO D PDUJLQ FDOO 'DQLHO7ULDO([KLELW1R ,QVWHDG RI VHOOLQJ KLV &%,= VWRFN 'DQLHO DSSURDFKHG &HQWXU\jVFRQWUROOHU5REHUW6W/DZUHQFHDQGKDGKLPGUDZ 2Q6HSWHPEHU'DQLHOKDG&RQWUROOHU'XIIZULWH DFKHFNSD\DEOHWR'DQLHOIRUIURP$FFRXQW1R D FKHFN WR KLP IRU  IURP $FFRXQW 1R   +H 7KHORDQZDVOLVWHGRQ&HQWXU\jV,QYHVWPHQW:RUNVKHHWDVDQ H[SODLQHG WR 'XII WKDW KH ZDV KDYLQJ &HQWXU\ LQYHVW ZLWK LQYHVWPHQWIURP$FFRXQW1RDQGWKHDFFRXQWVUHFHLYDEOH 'DYHQSRUWLQVXFKDQRGGPDQQHUnZULWLQJDFKHFNRXWWR FROXPQ OLVWHG LQWHUHVW DFFUXHG RQ WKH ORDQ  7KRXJK &%,= KLPDQGWKHQZULWLQJDFKHFNWR'DYHQSRUWIURPKLVSHUVRQDO KHDGTXDUWHUVFRXOGKDYHIRXQGWKHORDQDPRXQWOLVWHGLQWKH DFFRXQWUDWKHUWKDQVLPSO\KDYLQJ&HQWXU\VHQGDFKHFNWR ILQDQFLDO VWDWHPHQWV VXEPLWWHG E\ &HQWXU\ WKH ODWWHUjV 'DYHQSRUWnEHFDXVHGXHWRKLVSHUVRQDOUHODWLRQVKLSZLWKKLV PRQWKO\DQG\HDUO\VWDWHPHQWVZRXOGQRWRUGLQDULO\DQGGLG EURNHUDW'DYHQSRUWKHFRXOGJHWDEHWWHULQWHUHVWUDWH7KLV QRW VSHFLI\ ZLWK ZKRP WKH PRQH\ ZDV LQYHVWHG  7KH ZDVIDOVHEXW'XIIWUXVWHG'DQLHODQGZDVFRQWHQWZLWKWKLV PRQWKO\VWDWHPHQWVGLGOLVWWKHLQWHUHVWDFFUXHGRQWKHORDQDV H[SODQDWLRQ LQFRPHWR&HQWXU\EXW'DQLHOjVQDPHZDVQRWOLVWHGDQGRQO\ KLV LQLWLDOVnm50'lnZHUH SODFHG QH[W WR WKH HQWU\  6W &HQWXU\9LFH3UHVLGHQW'XNHKRZHYHUZDVQRWVDWLVILHG /DZUHQFHDVNHGQRTXHVWLRQVDERXWWKLVORDQ6W/DZUHQFH 'XNH KDG EHHQ XQGHU WKH LPSUHVVLRQ WKDW &HQWXU\ ZDV KDGVRPHSHUVRQDODFTXDLQWDQFHZLWK'DQLHOjVILQDQFHVDQG LQYHVWLQJGLUHFWO\ZLWK'DYHQSRUWDQGKDGEHHQZDLWLQJLQ NQHZ WKDW KH ZDV ZHOORII VR KH GLG QRW VHH WKH ORDQ DV YDLQ IRU 'DYHQSRUW WR VHQG &HQWXU\ WKH UHJXODU ILQDQFLDO VWDWHPHQWV  $IWHU WKH 6HSWHPEHU  FKHFN ZDV LVVXHG KH 1R 8QLWHG6WDWHVY'DQLHO   8QLWHG6WDWHVY'DQLHO 1R

DVNHG'DQLHODERXWWKHVWDWXVRIWKHVHLQYHVWPHQWVDQG'DQLHO IRUZDUGHGWR&%,=KHDGTXDUWHUV'DQLHOUHSDLGRI JDYH KLP WKH VDPH EHWWHULQWHUHVWUDWH H[SODQDWLRQ KH KDG WKHPRQH\RQ'HFHPEHUEXWWKLVDORQJZLWKKLV JLYHQWR'XII'XNHVNHSWLFDOVHQW'DQLHODQHPDLOWKHQH[W SD\PHQWVPDGHWKHSUHYLRXVVXPPHUZDVDOOKHHYHUUHSDLG GD\ REVHUYLQJ WKDW WKRXJK LW ZDV ILQH WR LQYHVW &HQWXU\jV $FFRXQW1RPRQH\ZLWK'DYHQSRUWLILWZDVVDIHLWZDV :LWKUHJDUGWRWKHILQDOFKHFNPHQWLRQHGDERYHIRU QRW SHUPLVVLEOH WR SXW WKLV FOLHQW PRQH\ WR SHUVRQDO XVH PLOOLRQ'DQLHOPDGHDSRLQWRIILQGLQJRXWZKHQ'XNHZRXOG $FFRUGLQJ WR 'XNH 'DQLHO mZDV XSVHW ZLWK P\ (PDLOl EHOHDYLQJDQGLWZDVGXULQJ'XNHjVDEVHQFHWKDW'DQLHOKDG EHFDXVHmKHIHOWOLNH,ZDVDFFXVLQJKLPRIGRLQJVRPHWKLQJ 'XII ZULWH WKLV FKHFNnWKH ODUJHVW RI DOO  :KHQ 'XNH ZURQJlsRLQW$SSHQGL[ms$lDWo,QVXEVHTXHQW QHYHUWKHOHVVOHDUQHGRIWKHZLWKGUDZDODQGFRQIURQWHG'DQLHO FRQYHUVDWLRQV 'DQLHO DGPLWWHG WKDW KH KDG LQYHVWHG WKH 'XNHZDVUHEXIIHGDQGLQ'XNHjVZRUGV'DQLHOmJRWDOLWWOH PRQH\LQ&%,=VWRFNIRUSHUVRQDOSXUSRVHVEXWJDYH'XNH ELWXSVHWDQGVDLGWKDWKHGLGQjWKDYHWRDVNP\SHUPLVVLRQWR WKHDWWKDWWLPHXQWUXHH[SODQDWLRQWKDWKHZDVDQmLQVLGHUl GRDGDPQHGWKLQJls$DW DQGFRXOGQRWVHOOWKHVWRFN ,Q 0DUFK RI  'XNHnFRQFHUQHG WKDW  PLOOLRQ :KHQ'XNHDVNHG'DQLHOLIKHKDGSHUPLVVLRQWRWDNHRXW PLVVLQJIURP$FFRXQW1RPLJKWFDXVHFOLHQWVjSD\FKHFNV WKHVH ORDQV 'DQLHO WROG 'XNH WKDW WKH SHRSOH DW &%,= WRERXQFHnDVNHG'DQLHOWRUHWXUQWKHPRQH\$VRI$SULO KHDGTXDUWHUVmGLGQjWZDQWWRNQRZWKHGHWDLOVlEXWWKH\KDG  &HQWXU\jV QHW HTXLW\ ZDV  PLOOLRQ  'DQLHO WROG DXWKRUL]HG KLP mWR GR ZKDWHYHU KH QHHGHG WR GR WR NHHS 'XNH KH GLG QRW KDYH WKH PRQH\  $ IHZ GD\V ODWHU DV VRXQGVHOOLQJWKHFRPSDQ\VWRFNls$DWnDSSDUHQWO\ &HQWXU\jVPDQDJHPHQWGLVFXVVHGWKHLPSOHPHQWDWLRQRILWV PHDQLQJWKDWKHVKRXOGGRZKDWHYHUZDVQHFHVVDU\WRPHHW QHZFRPSXWHUL]HGDFFRXQWLQJV\VWHP'DQLHOWROG'XNHWRSXW KLVPDUJLQFDOOVDQGNHHS'DYHQSRUWIURPVHOOLQJKLV&%,= DOO RI &HQWXU\jV ERRNV RQ WKH V\VWHP H[FHSW $FFRXQW 1R VWRFN'XNHSHUVLVWLQJDVNHGZKDW&%,=jV&)2&KDUOHV nWKHUHE\SUHYHQWLQJWKHORDQVGUDZQDJDLQVWWKDWDFFRXQW +DPPZRXOGVD\DERXWLWLI'XNHFDOOHGKLP'DQLHOUHSOLHG IURPEHLQJDYDLODEOHIRU&%,=jVSHUXVDODVWKH\ZRXOGKDYH m><@RXGRZKDW\RXZDQWWRGREXWWKH\VDLGWKH\GLGQjWZDQW EHHQLIWKDWDFFRXQWKDGEHHQRQWKHV\VWHP WRNQRZWKHGHWDLOVls$DW7KRXJKGLVVDWLVILHG'XNH OHWPDWWHUVUHVWWKHUHDQGDJUHHGZLWK'DQLHOjVUHTXHVWQRWWR $V D UHVXOW RI WKHVH HYHQWV 'XNH FRQIURQWHG 'DQLHO RQ WHOO DQ\RQH HOVH DERXW WKH ORDQV EXW 'XNH GLG VXFFHHG LQ $SULO   DVNLQJ IRU ZULWWHQ SURRI WKDW &%,= KDG JHWWLQJ 'DQLHO WR VLJQ D  SURPLVVRU\ QRWH IRU WKH DXWKRUL]HG'DQLHOjVZLWKGUDZDOV'DQLHORIIHUHGWRSXWXS DPRXQWVRZLQJDWWKDWWLPH FROODWHUDOIRUWKHORDQVDQGDJUHHGWRKDYH&%,=VHQGZULWWHQ DXWKRUL]DWLRQ'DQLHOFDOOHG&%,=&)2+DPPWKHVDPHGD\ 'XNHjVLQTXLU\GLGQRWHQGWKHZLWKGUDZDOVKRZHYHU$V +DPP WHVWLILHG WKDW 'DQLHO OHG KLP WR EHOLHYH WKDW 'DQLHO WKHYDOXHRI&%,=jVVWRFNFRQWLQXHGWRIDOO'DQLHOFRQWLQXLQJ QHHGHGDOHWWHUYHULI\LQJWKDWKHZDVHPSOR\HGE\&HQWXU\IRU WRSXUFKDVH&%,=VWRFNQHYHUWKHOHVV'DQLHOKDG&RQWUROOHU SXUSRVHVRIDORDQ'DQLHOGLGQRWPDNHLWFOHDUKRZHYHU 'XIILVVXHKLPHLJKWPRUHFKHFNVIURP$FFRXQW1RDV WKDWWKHORDQZDVIURP&HQWXU\LWVHOIDQG+DPPnDVVXPLQJ IROORZV  RQ 2FWREHU    RQ WKDWWKHORDQZDVIURPVRPHRWKHURUJDQL]DWLRQnWROG'DQLHO 1RYHPEHURQ'HFHPEHU WRGUDIWWKHOHWWHUDQGVHQGLWWRKLPIRUDVLJQDWXUH RQ 'HFHPEHU    RQ sDQXDU\   RQsDQXDU\RQsDQXDU\ /DWHU WKH VDPH GD\ 'DQLHO VHQW D ID[ WR +DPP ZKLFK DQG  RQ )HEUXDU\    'DQLHO VLJQHG +DPPjVDVVLVWDQWW\SHGXSYHUEDWLPRQ&%,=OHWWHUKHDG,W SURPLVVRU\QRWHVIRUHDFKWKRXJKQRQHRIWKHVHQRWHVZDV ZDVDGGUHVVHGWR&HQWXU\DQGUHDGm,jYHEHHQDGYLVHGE\ >5DOSK@ 'DQLHO FRQFHUQLQJ WKH ORDQ PDGH WR KLP IRU  1R 8QLWHG6WDWHVY'DQLHO   8QLWHG6WDWHVY'DQLHO 1R

PLOOLRQSOXVDFFUXHGLQWHUHVWls$DW$IWHUUHDGLQJWKH 7KHMXU\IRXQG'DQLHOJXLOW\RIYLRODWLQJ86&† OHWWHU +DPP UHDOL]HG WKDW 'DQLHO KDG WDNHQ WKH ORDQ IURP ZKLFKSURYLGHVWKDW &HQWXU\LWVHOIDQGLPPHGLDWHO\UHVROYHGQRWWRVLJQLWVLQFH &%,=GLGQRWRUGLQDULO\DOORZHPSOR\HHVWRERUURZPRQH\ >Z@KRHYHUKDYLQJGHYLVHGDQ\VFKHPHRUDUWLILFHWR ZLWKRXW SULRU DXWKRUL]DWLRQ DQG 'DQLHO KDG QR VXFK GHIUDXGRUIRUREWDLQLQJPRQH\RUSURSHUW\E\PHDQVRI DXWKRUL]DWLRQ+DPPGLGQRWID[WKHOHWWHUEDFNDQGZKHQ IDOVH RU IUDXGXOHQW SUHWHQVHV UHSUHVHQWDWLRQV RU 'DQLHOFDOOHGODWHUWKDWGD\DVNLQJDERXWLW+DPPnXQVXUH SURPLVHVWUDQVPLWVRUFDXVHVWREHWUDQVPLWWHGE\PHDQV ZKDWWRGRnWROG'DQLHOWKDWmWKLVFRXOGEHDQLVVXHls$DW RI ZLUH    LQ LQWHUVWDWH RU IRUHLJQ FRPPHUFH DQ\  ZULWLQJVIRUWKHSXUSRVHRIH[HFXWLQJVXFKVFKHPHRU DUWLILFHVKDOOEHILQHGXQGHUWKLVWLWOHRULPSULVRQHG +DPPGLVFXVVHGWKHVLWXDWLRQZLWK&%,=3UHVLGHQW*ULVNR ZKRLQWXUQWDONHGZLWK'DQLHOWKHQH[WGD\$FFRUGLQJWR 7RFRQYLFWDGHIHQGDQWRIZLUHIUDXGWKHJRYHUQPHQWPXVW *ULVNR'DQLHOZDVYHU\QHUYRXVDVNHGZKDWKHFRXOGGRmWR SURYHmDVFKHPHRUDUWLILFHWRGHIUDXGXVHRILQWHUVWDWH PDNHWKLVWKLQJJRDZD\lDQGWROG*ULVNRKHFRXOGQRWUHSD\ ZLUH FRPPXQLFDWLRQV LQ IXUWKHUDQFH RI WKH VFKHPH DQG WKHPRQH\s$DW LQWHQWWRGHSULYHDYLFWLPRIPRQH\RUSURSHUW\l8QLWHG 6WDWHV Y 3ULQFH  )G  o WK &LU  2Q)HEUXDU\'DQLHOZDVFKDUJHGZLWKRQHFRXQW IRRWQRWHRPLWWHG RIZLUHIUDXGLQYLRODWLRQRI86&†$MXU\IRXQG KLPJXLOW\DQGWKHGLVWULFWFRXUWGHQLHG'DQLHOjVPRWLRQIRU $ 6FKHPHWR'HIUDXG DFTXLWWDO7KHFRXUWVHQWHQFHG'DQLHOWRPRQWKVLQSULVRQ IROORZHGE\WZR\HDUVRIVXSHUYLVHGUHOHDVHDQGRUGHUHGKLP 7KHJRYHUQPHQWSURYHGDVFKHPHWRGHIUDXGE\SUHVHQWLQJ WRSD\UHVWLWXWLRQWR&HQWXU\LQWKHDPRXQWRI VXIILFLHQWHYLGHQFHRIVHYHUDOPDWHULDOPLVUHSUHVHQWDWLRQVm$ VFKHPHWRGHIUDXGLQFOXGHVDQ\SODQRUFRXUVHRIDFWLRQE\ $QDO\VLV ZKLFKVRPHRQHLQWHQGVWRGHSULYHDQRWKHUE\GHFHSWLRQRI PRQH\nGHSULYHDQRWKHUE\GHFHSWLRQRIPRQH\RUSURSHUW\ ,6XIILFLHQF\RI(YLGHQFHWR&RQYLFW'DQLHORI:LUH E\PHDQVRIIDOVHRUIUDXGXOHQWSUHWHQVHVUHSUHVHQWDWLRQVRU )UDXG SURPLVHVl8QLWHG6WDWHVY*ROG8QOLPLWHG,QF)G WK&LUUHFLWLQJDQLQVWUXFWLRQJLYHQWRWKH m7KHUHOHYDQWTXHVWLRQLQGHWHUPLQLQJWKHVXIILFLHQF\RIWKH MXU\  m>7@KH VFKHPH WR GHIUDXG HOHPHQW UHTXLUHG XQGHU HYLGHQFHWRVXSSRUWDJXLOW\YHUGLFWLVZKHWKHUµDIWHUYLHZLQJ WKHHYLGHQFHLQWKHOLJKWPRVWIDYRUDEOHWRWKHSURVHFXWLRQ DQ\ UDWLRQDO WULHU RI IDFW FRXOG KDYH IRXQG WKH HVVHQWLDO  HOHPHQWVRIWKHFULPHEH\RQGDUHDVRQDEOHGRXEWjl8QLWHG :H QRWH WKDW FDVHV FRQVWUXLQJ PDLO IUDXG FDQ EH XVHG LQ DQDO\]LQJ

6WDWHVY&ODUN)GWK&LUTXRWLQJ ZLUH IUDXG 6HH &DUSHQWHU Y 8QLWHG 6WDWHV  86   Q  m7KH PDLO DQG ZLUH IUDXG VWDWXWHV VKDUH WKH VDPH ODQJXDJH LQ UHOHYDQW sDFNVRQY9LUJLQLD86 $GHIHQGDQW SDUW DQG DFFRUGLQJO\ ZH DSSO\ WKH VDPH DQDO\VLV WR ERWK VHWV RI RIIHQVHV EULQJLQJ VXFK D FKDOOHQJH EHDUV D mYHU\ KHDY\ EXUGHQl KHUHl 8QLWHG 6WDWHV Y 0LOOV  )G   WK &LU  m7KH 8QLWHG6WDWHVY9DQQHUVRQ)GWK&LU 6XSUHPH &RXUW KDV VDLG WKDW EHFDXVH WKH PDLO DQG ZLUH IUDXG VWDWXWHV TXRWLQJ8QLWHG6WDWHVY6RWR)GG&LU VKDUH WKH VDPH ODQJXDJH LQ UHOHYDQW SDUW WKH VDPH DQDO\VLV DSSOLHV WR   HDFK 7KH SDUWLHV LQ WKHLU EULHIV DQG ZH LQ WKLV RSLQLRQ DFFRUGLQJO\ UHO\ XSRQ ERWK PDLO IUDXG DQG ZLUH IUDXG FDVHV WR LQIRUP RXU UHVROXWLRQ RI WKLV DSSHDOl LQWHUQDO FLWDWLRQV RPLWWHG VHH DOVR 8QLWHG 6WDWHV Y 0HUNOLQJHU  )G   WK &LU  DQDO\]LQJ PDLO DQG ZLUH 1R 8QLWHG6WDWHVY'DQLHO   8QLWHG6WDWHVY'DQLHO 1R

>86&@†LVQRWGHILQHGDFFRUGLQJWRDWHFKQLFDO ZLUHIUDXGVWDWXWHVLQFRUSRUDWHGWKHFRPPRQODZUHTXLUHPHQW VWDQGDUG7KHVWDQGDUGLVDµUHIOHFWLRQRIPRUDOXSULJKWQHVV RI PDWHULDOLW\   86 DW   ,Q GRLQJ VR WKH &RXUW RI IXQGDPHQWDO KRQHVW\ IDLU SOD\ DQG ULJKW GHDOLQJ LQ WKH H[SOLFLWO\UHMHFWHGWKHDUJXPHQWWKDWDPDWHULDOLW\UHTXLUHPHQW JHQHUDODQGEXVLQHVVOLIHRIPHPEHUVRIVRFLHW\jl8QLWHG LQFOXGHGDUHOLDQFHUHTXLUHPHQW 6WDWHV Y 9DQ '\NH  )G   WK &LU  TXRWLQJ8QLWHG6WDWHVY%UXFH)GWK WKH*RYHUQPHQWLVFRUUHFWWKDWWKHIUDXGVWDWXWHVGLGQRW &LU  LQFRUSRUDWHDOOWKHHOHPHQWVRIFRPPRQODZIUDXG7KH FRPPRQODZUHTXLUHPHQWVRImMXVWLILDEOHUHOLDQFHlDQG ,WLVFOHDUWKDWDVDQHOHPHQWRIWKHmVFKHPHRUDUWLILFHWR mGDPDJHVl IRU H[DPSOH SODLQO\ KDYH QR SODFH LQ WKH GHIUDXGl UHTXLUHPHQW WKH JRYHUQPHQW PXVW SURYH WKDW WKH IHGHUDO IUDXG VWDWXWHV  %\ SURKLELWLQJ WKH mVFKHPH WR GHIHQGDQW VDLG VRPHWKLQJ PDWHULDOO\ IDOVH  6HH 1HGHU Y GHIUDXGlUDWKHUWKDQWKHFRPSOHWHGIUDXGWKHHOHPHQWV 8QLWHG6WDWHV86$WRUDODUJXPHQWLQWKH RI UHOLDQFH DQG GDPDJH ZRXOG FOHDUO\ EH LQFRQVLVWHQW SUHVHQWFDVHKRZHYHU'DQLHOjVFRXQVHOLQGLFDWHGWKDWIRUD ZLWK WKH VWDWXWHV &RQJUHVV HQDFWHG  %XW ZKLOH WKH PLVUHSUHVHQWDWLRQWREHPDWHULDOWKHIUDXGYLFWLPPXVWKDYH ODQJXDJHRIWKHIUDXGVWDWXWHVLVLQFRPSDWLEOHZLWKWKHVH DFWXDOO\UHOLHGRQLW2YHUWKH\HDUVZHKDYHVDLGLQGLFWXP UHTXLUHPHQWV WKH *RYHUQPHQW KDV IDLOHG WR VKRZ WKDW LQ RSLQLRQV PDNLQJ WKH GLIIHUHQW SRLQW WKDW PDLO IUDXG WKLV ODQJXDJH LV LQFRQVLVWHQW ZLWK D PDWHULDOLW\ UHTXLUHVSURRIRILQWHQWWKDWPDLOIUDXGUHTXLUHVGHFHSWLRQ UHTXLUHPHQW mZKLFK DFFRPSOLVKHV WKH HQG GHVLJQHGl  6HH (SVWHLQ Y 8QLWHG 6WDWHV  )G   WK &LU  8QLWHG 86DWoFLWDWLRQVRPLWWHGHPSKDVLVLQRULJLQDO 6WDWHVY/LFKRWD)GWK&LU$P(DJOH $FWXDOUHOLDQFHLVWKXVmSODLQO\lQRWUHTXLUHGLQRUGHUIRUWKH &UHGLW&RUSY*DVNLQV)GWK&LU JRYHUQPHQWWRHVWDEOLVKWKDWDPLVUHSUHVHQWDWLRQZDVPDWHULDO 8QLWHG 6WDWHV Y )URVW  )G   WK &LU  $QGLQ8QLWHG6WDWHVY6FKLOOLQJ)GWK&LU $UHDVRQDEOHMXU\FRXOGKDYHIRXQGWKDW'DQLHONQRZLQJO\ ZHIRXQGWKDWWKHJRYHUQPHQWKDGSURYLGHGVXIILFLHQW PDGHVHYHUDOPDWHULDOPLVUHSUHVHQWDWLRQVZKLFKLVWRVD\WKDW HYLGHQFHWKDWWKHGHIHQGDQWjVIUDXGKDGDFFRPSOLVKHGWKHHQG KHPDGHVHYHUDODVVHUWLRQVKHNQHZZHUHIDOVHDQGWKDWZRXOG GHVLJQHG%XWQRQHRIWKRVHFDVHVDFWXDOO\KHOGWKDWDPDLORU KDYHDIIHFWHGDUHDVRQDEOHSHUVRQjVDFWLRQVLQWKHVLWXDWLRQ ZLUHIUDXGFRQYLFWLRQZRXOGQRWVWDQGZLWKRXWVXFKHYLGHQFH )LUVW KH WROG &RQWUROOHU 'XII  WKDW KH ZDV PDNLQJ 2QWKHFRQWUDU\ZHKDYHKHOGIODWO\WKDWmUHOLDQFHLVQRWDQ LQYHVWPHQWVRQEHKDOIRI&HQWXU\DQGWKDWLQSXWWLQJWKH HOHPHQWRIPDLORUZLUHIUDXGl8QLWHG6WDWHVY0HUNOLQJHU PRQH\LQWRKLVRZQDFFRXQWKHZDVREWDLQLQJDVSHFLDOUDWH )GWK&LUm>7@KHPDLODQGZLUHIUDXG $ UHDVRQDEOH MXU\ FRXOG KDYH IRXQG WKDW 'DQLHO NQHZ WKDW VWDWXWHV GR QRW UHTXLUH SURRI WKDW WKH LQWHQGHG YLFWLP ZDV ERWK RI WKHVH WKLQJV ZHUH QRW WUXH DQG WKDW KH PDGH WKH DFWXDOO\GHIUDXGHGWKHDFWXDOVXFFHVVRIDVFKHPHWRGHIUDXG VWDWHPHQWVVR'XIIZRXOGOHWKLPWDNHWKHPRQH\6HFRQG LVQRWDQHOHPHQWRIHLWKHU†RU†l DIWHUWKHILUVWORDQ'DQLHOIDOVHO\WROG&HQWXU\9LFH3UHVLGHQW 'XNH WKDW WKH ORDQ ZDV D FRUSRUDWH LQYHVWPHQW PDGH RQ 7KH6XSUHPH&RXUWjVPRUHUHFHQWGHFLVLRQLQ1HGHUVXSUD &HQWXU\jVEHKDOI7KLVFDOPHG'XNHjVFRQFHUQVIRUVHYHUDO PDNHVLWHYHQFOHDUHUWKDWDFWXDOUHOLDQFHLVQRWUHTXLUHGIRU PRQWKVDQGLWZDVRQO\DIWHUWKHWKLUGORDQWKDW'XNHLQTXLUHG PDLORUZLUHIUDXG,Q1HGHUWKH&RXUWKHOGWKDWWKHPDLODQG IXUWKHUDQGOHDUQHGWKHWUXWK7KLUGHYHQZKHQ'DQLHOGLG DGPLWWKDWWKHORDQZDVIRUSHUVRQDOUHDVRQVKHPDGHWKUHH PRUH UHSUHVHQWDWLRQV WKDW D UHDVRQDEOH MXU\ FRXOG KDYH GHHPHGIDOVHDQGPDWHULDOWKDW&%,=KDGDXWKRUL]HGWKH IUDXG WRJHWKHU 1R 8QLWHG6WDWHVY'DQLHO   8QLWHG6WDWHVY'DQLHO 1R

ZLWKGUDZDOVWKDW&%,=ZDQWHGQRGHWDLOVDQGWKDWDW EHOLJKWO\RYHUWXUQHGl8QLWHG6WDWHVY+RSNLQV)G RQH SRLQW KH ZDV OHJDOO\ SUHFOXGHG IURP VHOOLQJ KLV &%,= WK&LU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m1RWVXUSULVLQJO\ZHKDYHIRXQG FRQWLQXDOO\'DQLHONQHZWKDW&HQWXU\jVSROLF\ZDVWRLQYHVW QRFDVHVVXJJHVWLQJWKDWWKHPLVUHSUHVHQWDWLRQPXVWDFWXDOO\ WKRVHIXQGVFRQVHUYDWLYHO\LQRYHUQLJKWLQYHVWPHQWVLWZDV SUHFHGHWKHWUDQVIHURIPRQH\RUSURSHUW\WRWKHSHUSHWUDWRULQ QRW&%,=jVSROLF\WRDOORZHPSOR\HHVWRWDNHRXWSHUVRQDO RUGHU WR YLRODWH WKH PDLO IUDXG VWDWXWH  6XFK D WLPLQJ ORDQV IURP FOLHQW IXQGV DQG D MXU\ FRXOG UHDVRQDEO\ KDYH UHTXLUHPHQWZRXOGFRQWUDGLFWWKHEURDGUHDGLQJDIIRUGHGLWV EHOLHYHGWKDW'DQLHONQHZWKLV'DQLHOKDGUHDVRQWREHOLHYH SURYLVLRQVl:HFRQFOXGHWKDWWKLVDUJXPHQWIDLOVDQGWKDW WKDW &HQWXU\ 9LFH3UHVLGHQW 'XNH ZRXOG SXW D VWRS WR WKH WKHJRYHUQPHQWSUHVHQWHGVXIILFLHQWHYLGHQFHRIQRWRQO\RQH XQDXWKRUL]HGORDQVLIKHNQHZWKHWUXWK'DQLHOZDLWHGXQWLO EXWVHYHUDOPDWHULDOPLVUHSUHVHQWDWLRQV 'XNHZDVRXWRIWRZQWRWDNHWKHPLOOLRQORDQ'DQLHO EHKDYHG VXVSLFLRXVO\ ZLWK &%,= &)2 +DPP DQG D MXU\ % ,QWHQWWR'HIUDXG FRXOGFRQFOXGHIURP&%,=3UHVLGHQW*ULVNRjVWHVWLPRQ\WKDW LQKLVFRQYHUVDWLRQZLWK'DQLHOWKHODWWHUVSRNHDQGEHKDYHG 7KHJRYHUQPHQWVKRZHGWKDW'DQLHODOVRKDGWKHUHTXLVLWH OLNHVRPHRQHZKRNQHZKHZDVJXLOW\ LQWHQWWRGHIUDXGE\SUHVHQWLQJVXIILFLHQWHYLGHQFHWKDW'DQLHO LQWHQGHG WR GHSULYH &HQWXU\ RI PRQH\ HYHQ LI RQO\ LQ WKH 'DQLHOFRQWHQGVWKDWWKHLQWHQWPXVWEHWRLQMXUHRUKDUP VKRUWWHUP WKHYLFWLPDQGDUJXHVWKDWEHFDXVHWKHMXU\FRXOGKDYHIRXQG WKDWKHSODQQHGWRUHSD\WKHORDQVWKDWKHEHOLHYHGLQ 7RFRQYLFWDGHIHQGDQWRIZLUHIUDXGWKHJRYHUQPHQWPXVW JRRG IDLWK WKDW KH ZDV DFWLQJ LQ &%,=jV EHVW LQWHUHVW DQG SURYHVSHFLILFLQWHQWZKLFKPHDQV WKDWKHDOVREHOLHYHGWKDWDOORZLQJKLV&%,=VWRFNWREH VROG ZRXOG KDUP &%,=j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m$ VFKHPH WR GHIUDXG ZRXOGQRWRWKHUZLVHGRDEVHQWWKHPLVUHSUHVHQWDWLRQRU LQFOXGHV DQ\ SODQ RU FRXUVH RI DFWLRQ E\ ZKLFK VRPHRQH RPLVVLRQ LQWHQGV WR GHSULYH DQRWKHU E\ GHFHSWLRQ RI PRQH\>@l HPSKDVLVDGGHG +RUPDQY8QLWHG6WDWHV) 8QLWHG6WDWHVY'H6DQWLV)GWK&LU WK&LUQRWLQJWKDWWKHLQWHQWLQPDLOIUDXGmPXVWEH m,WPXVWDOVREHERUQHLQPLQGWKDWWKHTXHVWLRQRILQWHQWLV WRLQMXUHZKLFKGRXEWOHVVPD\EHLQIHUUHGZKHQWKHVFKHPH JHQHUDOO\FRQVLGHUHGWREHRQHRIIDFWWREHUHVROYHGE\WKH KDVVXFKHIIHFWDVDQHFHVVDU\UHVXOWRIFDUU\LQJLWRXWlVHH WULHURIWKHIDFWVDQGWKHGHWHUPLQDWLRQWKHUHRIVKRXOGQRW 1R 8QLWHG6WDWHVY'DQLHO   8QLWHG6WDWHVY'DQLHO 1R

DOVR8QLWHG6WDWHVY6WDUU)GG&LU HPSOR\HG mIRU WKH SXUSRVH RI H[HFXWLQJ VXFK VFKHPH RU m$OWKRXJKWKHJRYHUQPHQWLVQRWUHTXLUHGWRSURYHDFWXDO DUWLILFHl   86& †   7KLV PHDQV WKDW WKH LQMXU\ LW PXVW DW D PLQLPXP SURYH WKDW GHIHQGDQWV FRPPXQLFDWLRQPXVWEHVXIILFLHQWO\ UHODWHGWRWKHVFKHPH FRQWHPSODWHG VRPH DFWXDO KDUP RU LQMXU\ WR WKHLU YLFWLPV ZKLFK LV WR VD\ WKDW mWKH VFKHPHjV FRPSOHWLRQ RU WKH 2QO\DVKRZLQJRILQWHQGHGKDUPZLOOVDWLVI\WKHHOHPHQWRI SUHYHQWLRQRILWVGHWHFWLRQPXVWKDYHGHSHQGHGLQVRPHZD\ IUDXGXOHQW LQWHQWl HPSKDVLV RPLWWHG   'DQLHO KRZHYHU RQWKHFKDUJHGPDLOLQJl8QLWHG6WDWHVY&DVWLOH)G ZRXOG KDYH XV WDNH WKH ZRUGV mKDUPl DQG mGHSULYHl LQ D WK&LU7KH6XSUHPH&RXUWKDVKHOGWKDW JUDQG VHQVH  7KDW LV WKRXJK KH DGPLWWHGO\ LQWHQGHG WR m>P@DLOLQJVRFFXUULQJDIWHUUHFHLSWRIWKHJRRGVREWDLQHGE\ GHSULYH &HQWXU\ DQG &%,= RI PRQH\ LQ WKH VKRUWWHUP E\ IUDXGDUHZLWKLQWKHVWDWXWHLIWKH\µZHUHGHVLJQHGWROXOOWKH WDNLQJLPSURSHUORDQVKHGLGVRLQKRSHVRIEHQHILWWLQJWKHP YLFWLPVLQWRDIDOVHVHQVHRIVHFXULW\SRVWSRQHWKHLUXOWLPDWH LQWKHORQJWHUPE\UHSD\LQJWKHORDQVDQGUHWDLQLQJWKHVWRFN FRPSODLQW WR WKH DXWKRULWLHV DQG WKHUHIRUH PDNH WKH DQGFRQVHTXHQWO\KHLQWHQGHGQHLWKHUWRKDUPWKHEXVLQHVVHV DSSUHKHQVLRQRIWKHGHIHQGDQWVOHVVOLNHO\WKDQLIQRPDLOLQJV QRU GHSULYH WKHP RI PRQH\  %XW QHLWKHU ODZ QRU SROLF\ KDG WDNHQ SODFHjl  8QLWHG 6WDWHV Y /DQH  86  VXSSRUWV WKLV DSSURDFK ZKLFK ZRXOG KDYH WKH MXU\ ORRN oTXRWLQJ8QLWHG6WDWHVY0D]H86 EH\RQGKLVEDGFRQGXFWWRKLVRYHUDOOPRWLYHV,WLVVXIILFLHQW  7KLVmOXOOLQJWKHRU\lDSSOLHVWRERWKPDLODQG WKDWWKHGHIHQGDQWE\PDWHULDOPLVUHSUHVHQWDWLRQVLQWHQGVWKH ZLUHIUDXG8QLWHG6WDWHVY*ULIILWK)GWK YLFWLPWRDFFHSWDVXEVWDQWLDOULVNWKDWRWKHUZLVHZRXOGQRW &LU KDYHEHHQWDNHQ6HH8QLWHG6WDWHVY%HQQ\)G WK&LUKROGLQJLQUHJDUGWREDQNIUDXGWKDW 'DQLHO DUJXHV WKDW WKH OXOOLQJ WKHRU\ LV LQDSSRVLWH KHUH m>Z@KLOH DQ KRQHVW JRRGIDLWK EHOLHI LQ WKH WUXWK RI WKH EHFDXVHKLVZLUHFRPPXQLFDWLRQnWKHOHWWHUKHID[HGWR&%,= PLVUHSUHVHQWDWLRQVPD\QHJDWHLQWHQWWRGHIUDXGDJRRGIDLWK &)2 +DPPnGLG QRW LQ IDFW OXOO DQ\RQHjV FRQFHUQV EXW EHOLHIWKDWWKHYLFWLPZLOOEHUHSDLGDQGZLOOVXVWDLQQRORVVLV UDWKHU UHYHDOHG KLV DFWLYLWLHV DQG OHG WR KLV H[SRVXUH QR GHIHQVH DW DOOl8QLWHG 6WDWHV Y )LVFKO  )G  1HYHUWKHOHVVWKH6XSUHPH&RXUWKDVUHMHFWHGWKHDUJXPHQW oWK&LUXSKROGLQJDPDLOIUDXGFRQYLFWLRQ WKDWmPDLOLQJVWKDWVRPHGD\PD\FRQWULEXWHWRWKHXQFRYHULQJ HYHQ WKRXJK WKH GHIHQGDQWjV UHFHLSW RI D NLFNEDFN LQ RIDIUDXGXOHQWVFKHPHFDQQRWVXSSO\WKHPDLOLQJHOHPHQWRI FRQQHFWLRQZLWKDVWDWHFRQWUDFWGLGQRWFDXVHDPRQH\ORVVWR WKH PDLO IUDXG RIIHQVHl H[SODLQLQJ WKDW m>W@KH UHOHYDQW WKH6WDWHRI0LFKLJDQZKHUHWKH6WDWHZRXOGKDYHFDQFHOOHG TXHVWLRQ DW DOO WLPHV LV ZKHWKHU WKH PDLOLQJ LV SDUW RI WKH WKH FRQWUDFW LI LW KDG NQRZQ DERXW WKH VFKHPH  7KH H[HFXWLRQRIWKHVFKHPHDVFRQFHLYHGE\WKHSHUSHWUDWRUDW JRYHUQPHQW KDG RQO\ WR HVWDEOLVK WKDW 'DQLHO LQWHQGHG WR WKH WLPH UHJDUGOHVV RI ZKHWKHU WKH PDLOLQJ ODWHU WKURXJK GHSULYH&HQWXU\RIPRQH\LQWKHVKRUWWHUPDQGLWSUHVHQWHG KLQGVLJKW PD\ SURYH WR KDYH EHHQ FRXQWHUSURGXFWLYH DQG VXIILFLHQWHYLGHQFHIRUWKHMXU\VRWRILQG UHWXUQ WR KDXQW WKH SHUSHWUDWRU RI WKH IUDXGl  6FKPXFN Y 8QLWHG6WDWHV86HPSKDVLVDGGHG & 8VH RI DQ ,QWHUVWDWH (OHFWURQLF &RPPXQLFDWLRQ LQ ,Q WKLV FDVH ZH VLPLODUO\ ILQG WKDW WKH UHOHYDQW LQTXLU\ LV )XUWKHUDQFHRIWKH6FKHPH ZKHWKHU 'DQLHO LQWHQGHG WKH OHWWHU WR OXOO FRQFHUQV DQG LW PDWWHUV QRW WKDW WKH OHWWHU WXUQHG RXW WR KDYH WKH RSSRVLWH 7KHJRYHUQPHQWDOVRSURYLGHGVXIILFLHQWHYLGHQFHRIWKH HIIHFW$QGWKHUHZDVVXEVWDQWLDOHYLGHQFHIURPZKLFKWKH XVHRIDQLQWHUVWDWHHOHFWURQLFFRPPXQLFDWLRQLQIXUWKHUDQFH MXU\ FRXOG KDYH IRXQG WKDW VXFK ZDV KLV LQWHQW JLYHQ WKDW RIWKHVFKHPHWRGHIUDXGn'DQLHOjVDWWHPSWE\ID[WRHOLFLWD 'DQLHOID[HGWKHOHWWHULQUHVSRQVHWR'XNHjVWKUHDWWRH[SRVH OHWWHUWKDWZRXOGDSSDUHQWO\DXWKRUL]HKLVDFWLRQV7KHZLUH WKHVFKHPHXQOHVV'DQLHOSURYLGHGZULWWHQDXWKRUL]DWLRQ:H IUDXG VWDWXWH UHTXLUHV WKDW WKH ZLUH FRPPXQLFDWLRQ EH FRQFOXGHWKDW'DQLHOjVDUJXPHQWIDLOV 1R 8QLWHG6WDWHVY'DQLHO 

,,'DQLHOjV3URSRVHGsXU\,QVWUXFWLRQ 'DQLHODUJXHVWKDWWKHGLVWULFWFRXUWVKRXOGKDYHLQVWUXFWHG WKHMXU\WKDWm>L@I\RXKDYHDUHDVRQDEOHGRXEWDVWRZKHWKHU 0U'DQLHOERUURZHGWKHIXQGVLQWHQGLQJWRUHSD\WKHPWKHQ \RXPXVWILQGWKDWKHGLGQRWKDYHWKHLQWHQWWRGHIUDXGDQG \RXPXVWILQGKLPQRWJXLOW\l'DQLHO%UDWo&RQWUDU\ WR'DQLHOjVDUJXPHQWWKHGLVWULFWFRXUWGLGQRWHUULQUHIXVLQJ WRJLYHWKLVLQVWUXFWLRQ :H PD\ UHYHUVH D GLVWULFW FRXUWjV UHIXVDO WR GHOLYHU D UHTXHVWHGMXU\LQVWUXFWLRQRQO\ mLI WKDWLQVWUXFWLRQLVµD FRUUHFWVWDWHPHQWRIWKHODZQRWVXEVWDQWLDOO\FRYHUHGE\ WKHFKDUJHDFWXDOO\GHOLYHUHGWRWKHMXU\DQGFRQFHUQVD SRLQW VR LPSRUWDQW LQ WKH WULDO WKDW WKH IDLOXUH WR JLYH LW VXEVWDQWLDOO\LPSDLUVWKHGHIHQGDQWjVGHIHQVHjl8QLWHG6WDWHV Y0DFN)GWK&LUTXRWLQJ8QLWHG 6WDWHV Y :LOOLDPV  )G   WK &LU   'DQLHOjVDUJXPHQWIRXQGHUVRQWKHILUVWHOHPHQW$VZHQRWHG DERYHDJRRGIDLWKLQWHQWWRUHSD\GRHVQRWQHJDWHDQLQWHQW WRGHIUDXG'DQLHOjVSURIIHUHGLQVWUXFWLRQZDVDQLQFRUUHFW VWDWHPHQWRIWKHODZDQGFRQVHTXHQWO\WKLVFODLPWRRIDLOV &RQFOXVLRQ )LQGLQJ QR PHULW WR 'DQLHOjV FODLPV ZH $)),50 WKH MXGJPHQWRIWKHGLVWULFWFRXUW