United States v. Suarez

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

81,7(' 67$7(6 2) $0(5,&$ ; 3ODLQWLII$SSHOOHH    1R Y  !  52%(57 68$5(=  'HIHQGDQW$SSHOODQW  1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW 1Rn%HUQDUG$)ULHGPDQ'LVWULFWsXGJH $UJXHG1RYHPEHU 'HFLGHGDQG)LOHG$XJXVW %HIRUH.(,7+%2**6DQG&2/(&LUFXLWsXGJHV BBBBBBBBBBBBBBBBB &2816(/ $5*8('  &DUROH 0 6WDQ\DU 'HWURLW 0LFKLJDQ IRU $SSHOODQWsRQDWKDQ7XNHO$66,67$1781,7('67$7(6 $77251(<'HWURLW0LFKLJDQIRU$SSHOOHH21%5,() &DUROH 0 6WDQ\DU 'HWURLW 0LFKLJDQ IRU $SSHOODQW sRQDWKDQ 7XNHO $66,67$17 81,7(' 67$7(6 $77251(<'HWURLW0LFKLJDQIRU$SSHOOHH

  8QLWHG6WDWHVY6XDUH] 1R 1R 8QLWHG6WDWHVY6XDUH] 

%2**6sGHOLYHUHGWKHRSLQLRQRIWKHFRXUWZLWKUHVSHFW VSHFXODWLRQWKDWVKRXOGLQQRZD\LQIRUPRXUUHVROXWLRQRIDQ WR 3DUWV ,9  &2/( s SS  GHOLYHUHG D VHSDUDWH LVVXHWKDWLVVTXDUHO\JRYHUQHGE\FRQWUROOLQJDXWKRULW\ RSLQLRQDVWR3DUW9,LQZKLFK.(,7+sFRQFXUUHGZKLFK FRQVWLWXWHVWKHRSLQLRQRIWKHFRXUWDVWR3DUW9, 7KHPDMRULW\RIWKHDUJXPHQWRIIHUHGE\7DWXPDSSHDUV WR UHVW RQ sXVWLFH 6FDOLDjV FRQFXUUHQFH DQG RQ IXUWKHU BBBBBBBBBBBBBBBBB DQDO\VLVRIZKLFKMXVWLFHVLQ>+s,QFY1RUWKZHVWHUQ %HOO7HO&R86@DUHVWLOORQWKHFRXUW 23,1,21 6XFKDUJXPHQWVDUHLQDSSURSULDWH:KLOHZHXQGHUVWDQG BBBBBBBBBBBBBBBBB WKDWFKDQJHVLQ&RXUWSHUVRQQHOPD\DOWHUWKHRXWFRPHV RI6XSUHPH&RXUWFDVHVZHGRQRWVLWDVIRUWXQHWHOOHUV %2**6 &LUFXLW sXGJH  5REHUW 6XDUH] D IRUPHU SROLFH DWWHPSWLQJWRGLVFHUQWKHIXWXUHE\UHDGLQJWKHWHDOHDYHV RIILFHUZDVFRQYLFWHGE\DMXU\RIWZRYLRODWLRQVRI86& RI 6XSUHPH &RXUW DOLJQPHQWV  (DFK FDVH PXVW EH † D  $ IRU FRQYHUWLQJ SROLFH HYLGHQFH DQG YLFWLP UHYLHZHG RQ LWV PHULWV LQ OLJKW RI SUHFHGHQW QRW RQ UHVWLWXWLRQPRQH\WRKLVRZQEHQHILW+HZDVDFTXLWWHGRI VSHFXODWLRQ DERXW ZKDW WKH 6XSUHPH &RXUW PLJKW RU VHYHUDO RWKHU FKDUJHV PRVW QRWDEO\ EULEHU\ FRXQWV DQG PLJKWQRWGRLQWKHIXWXUHDVDUHVXOWRISHUVRQQHOVKLIWV GR]HQVRIRWKHUFKDUJHVPDLQO\KDYLQJWRGRZLWKYLRODWLRQV RIWKH7UDYHO$FWZHUHGLVPLVVHGSULRUWRWULDO6XDUH]ZDV &ROXPELD1DWXUDO5HV,QFY7DWXP)GQ VHQWHQFHG WR  PRQWKV LQ SULVRQ  6XDUH] DSSHDOV KLV WK&LU%RJJVsHPSKDVLVDGGHG7KXVXQWLODQG FRQYLFWLRQV RQ WKH JURXQGV WKDW KH ZDV SURVHFXWHG XQOHVVWKH6XSUHPH&RXUWHVWDEOLVKHVDQH[XVUHTXLUHPHQWZH YLQGLFWLYHO\WKDWWKHUHZDVDIDLOXUHWRVXSSUHVVDVWDWHPHQW DUH REOLJDWHG WR IROORZ WKH ODZ VHW IRUWK LQ 'DNRWD DQG WDNHQLQYLRODWLRQRIKLVULJKWWRFRXQVHODQGWKDWWKHDJHQF\ 9DOHQWLQH6HH/5/3URSVY3RUWDJH0HWUR+RXV$XWK IURPZKLFKKHVWROHKDVDQLQVXIILFLHQWFRQQHFWLRQZLWKWKH )GQWK&LUm,WLVWKHZHOOVHWWOHGODZ IHGHUDOJRYHUQPHQWWRILWZLWKLQWKHODQJXDJHRIWKHVWDWXWH RIWKLV&LUFXLWWKDWDSDQHORIWKLV&RXUWFDQQRWRYHUUXOHWKH XQGHU ZKLFK KH ZDV FKDUJHG  $V WR RQH RI WKH FRXQWV KH GHFLVLRQ RI DQRWKHU SDQHO  7KH SULRU GHFLVLRQ UHPDLQV FODLPVKHVKRXOGKDYHUHFHLYHGDGLUHFWHG YHUGLFWGXHWRD FRQWUROOLQJDXWKRULW\XQOHVVDQLQFRQVLVWHQWGHFLVLRQ RIWKH GHIHFWLYHLQGLFWPHQW)RUWKHUHDVRQVWKDWIROORZWKHFRXUW 8QLWHG 6WDWHV 6XSUHPH &RXUW UHTXLUHV PRGLILFDWLRQ RI WKH ZLOODIILUP6XDUH]jVFRQYLFWLRQV GHFLVLRQ RU WKLV &RXUW VLWWLQJ HQ EDQF RYHUUXOHV WKH SULRU GHFLVLRQlLQWHUQDOTXRWDWLRQPDUNVFLWDWLRQDQGDOWHUDWLRQ , RPLWWHG   , ZRXOG DFFRUGLQJO\ DIILUP WKH GLVWULFW FRXUWjV GLVSRVLWLRQRIWKLVLVVXH $WWKHWLPHRIKLVWULDO5REHUW6XDUH]ZDVD\HDUYHWHUDQ RIWKH'HDUERUQ3ROLFH'HSDUWPHQWm'3'lKROGLQJWKHUDQN RI 'HWHFWLYH 6HUJHDQW VLQFH   6XDUH] ZDV D EXQFR LQYHVWLJDWRUDQGVSHFLDOL]HGLQmWUDYHOLQJFULPLQDOJURXSVl ,QSDUWLFXODUKHFRQFHQWUDWHGRQSURSHUW\FULPHVSHUSHWUDWHG E\DQXPEHURIJURXSVRIPDLQO\5RPDQ\GHVFHQWNQRZQLQ  8QLWHG6WDWHVY6XDUH] 1R 1R 8QLWHG6WDWHVY6XDUH] 

/LNHZLVHLQ'DNRWDDQRWKHUSDQHORIWKLV&RXUWFRQIURQWHG FRPPRQSDUODQFHDV*\SVLHV+HEHFDPHZHOONQRZQIRU WKHTXHVWLRQRIZKHWKHUSURVHFXWLRQXQGHU86&† KLVH[SHUWLVHRQ*\SV\FULPHVHUYLQJDVDFRQVXOWDQWRQVXFK UHTXLUHVDVKRZLQJRIDQH[XVEHWZHHQWKHDOOHJHGFULPLQDO LVVXHVWKURXJKRXWWKH0LGZHVWDQG&DQDGD+HDSSHDUVWR PLVFRQGXFW DQG WKH IHGHUDO IXQGLQJ UHFHLYHG E\ WKH ORFDO KDYHEHHQWKHmSRLQWPDQlIRUWKLVW\SHRIFULPHLQ'HDUERUQ DJHQF\6HH)GDW,QUHVROYLQJWKLVTXHVWLRQZH ZKHUHKHZDVFUHGLWHGZLWKDVXEVWDQWLDOUHGXFWLRQRIFULPLQDO UHFRJQL]HGWKDWWKH6XSUHPH&RXUWKDGSUHYLRXVO\GHWHUPLQHG DFWLYLW\DQGWKHUHVROXWLRQRIQXPHURXVFDVHV WKDW QR GLUHFW QH[XV ZDV QHFHVVDU\ VHH 6DOLQDV Y 8QLWHG 6WDWHV86EXWVXJJHVWHGWKDWLWVGHFLVLRQ 6XDUH]jVWHFKQLTXHVLQYROYHGGHYHORSLQJDFORVHNQRZOHGJH OHIWXQDQVZHUHGWKHTXHVWLRQZKHWKHUVRPHFRQQHFWLRQZDV RIORFDO*\SV\IDPLOLHVDQGFRPPXQLW\LQFOXGLQJWKHXVHRI UHTXLUHG IRU SURSHU DSSOLFDWLRQ RI  86& †   :H LQIRUPDQWV+HZRXOGDOVRDSSDUHQWO\RIWHQVHHNUHVWLWXWLRQ QHYHUWKHOHVV GHFOLQHG WR UHDFK WKLV TXHVWLRQ DQG LQVWHDG IRUYLFWLPVRIIUDXGRUODUFHQ\IURPVXVSHFWHGSHUSHWUDWRUVRU UHLWHUDWHGRXUYLHZILUVWVHWIRUWKLQ9DOHQWLQHmWKDW86& WKHLUIDPLOLHVLQH[FKDQJHWKHYLFWLPVZRXOGDJUHHWRGURS †GRHVQRWUHTXLUHDQH[XVEHWZHHQWKHDOOHJHGEULEHVDQG FULPLQDOFKDUJHVHYHQLQFDVHVZKHUHUHVWLWXWLRQZDVOHVVWKDQ WKH IHGHUDO IXQGLQJ UHFHLYHG E\ >WKH UHFLSLHQW DJHQF\@l WRWDO2QHRI6XDUH]jVPDLQLQIRUPDQWVZDVDQH[FRQYLFW 'DNRWD)GDW NQRZQDV6WHYHm7XODl0LOOHUKLVFRGHIHQGDQWEHORZ7XOD 0LOOHUKDGDSSDUHQWO\FRQWDFWHG6XDUH]IURPSULVRQLQ/LPD 7KHGLVVHQWDUJXHVWKDWm'DNRWDKDVEHHQXQGHUPLQHGE\ 2KLRDQGLQIRUPHGKLPWKDWWKH*\SV\FRPPXQLW\RI'HWURLW )LVFKHUY8QLWHG6WDWHV86lDQWHDW ZDVOHDGHUOHVVDQGWKDW7XODZLVKHGWRWDNHLWRYHU([DFWO\ DQGFRQFOXGHVWKDWLQOLJKWRI)LVFKHUmLWLVQRORQJHUWHQDEOH ZKDW6XDUH]SURPLVHGWRGRIRU7XODDQGZDVSURPLVHGLQ WRKROGWRWKHSURSRVLWLRQWKDWQRFRQQHFWLRQZKDWVRHYHUQHHG UHWXUQ ZDV GLVSXWHG EHORZ EXW LV DQFLOODU\ WR WKLV DSSHDO H[LVWEHWZHHQWKHIHGHUDOO\SXQLVKHGFULPLQDOFRQGXFWDQGWKH $OWKRXJKWKHWHUPLVQRWXVHGEHORZLWDSSHDUV7XODZLVKHG IHGHUDOLQWHUHVWLQWKHSURJUDPVVXSSRUWHGE\WKHIXQGVXVHG WRDFTXLUHVRPHWKLQJOLNHWKHWUDGLWLRQDO*\SV\VWDWXVRImURP WR VDWLVI\ † El DQWH DW   , GLVDJUHH  $ FORVH EDURl&I0DUNVY&ODUNH)GWK&LU H[DPLQDWLRQRI)LVFKHUUHYHDOVDVWKHGLVVHQWLWVHOIFRQFHGHV GHVFULELQJVRPHIHDWXUHVRIWKLVUROH2QHWUDGLWLRQDO WKDWmWKHTXHVWLRQLQ)LVFKHUWXUQHGRQDVRPHZKDWGLIIHUHQW IXQFWLRQRIDURPEDURLVDVDQLQWHUPHGLDU\EHWZHHQD*\SV\ LVVXHRQZKHWKHUWRFKDUDFWHUL]HFHUWDLQIRUPVRIIHGHUDODLG DVµEHQHILWVjl$QWHDW,QGHHGWKH)LVFKHU&RXUWQHYHU DGGUHVVHGWKHSUHFLVHTXHVWLRQUDLVHGE\WKHLQVWDQWDSSHDO  LHZKHWKHUWKHDOOHJHGWKHIWRUEULEHU\PXVWWRXFKXSRQWKH 7KH WHUP m*\SV\l LV SHUKDSV VRPHZKDW LPSUHFLVH DQG LV GLVIDYRUHG E\ D QXPEHU RI VFKRODUV DQG 5RP DV PDQ\ IHHO LW EHDUV VRPH GHURJDWRU\ UHFLSLHQWDJHQF\jVIHGHUDOIXQGLQJ FRQQRWDWLRQV 6HH 8QLWHG 6WDWHV Y 0DUNV  ) 6XSS   (' 3D  GLVFXVVLQJ WKLV QRPHQFODWXUH SUREOHP 7R VRPH H[WHQW ,Q XUJLQJ D IHGHUDO QH[XV UHTXLUHPHQW WKH GLVVHQW UHOLHV SUHMXGLFH PD\ KDYH LQIHFWHG WKLV FDVH  GHIHQGDQWjV FRXQVHO FRPSODLQV XSRQ UHFHQW 6XSUHPH &RXUW IHGHUDOLVP MXULVSUXGHQFH DQG SROLFH WRRN mWKH ZRUG RI UXWKOHVV YLROHQW O\LQJ J\SV\ >VLF@ IHORQV RYHU WKDW sXVWLFH7KRPDVjVGLVVHQWLQ)LVFKHULQZKLFKsXVWLFH6FDOLD RI D \HDU YHWHUDQ RI WKH SROLFH IRUFHl 6XDUH] 5HSO\ %U DW  7R

MRLQHGWRVXJJHVWWKDWDPDMRULW\RIWKH&RXUWLIFRQIURQWHG WKH H[WHQW WKLV ELDV H[LVWHG KRZHYHU LW SUREDEO\ KHOSHG 6XDUH] E\ GLVFUHGLWLQJ WKH ZLWQHVVHV DJDLQVW KLP %HFDXVH WKH UHFRUG KHUH VSHDNV LQ ZLWKWKHLVVXHZRXOGUHTXLUHVRPHQH[XVEHFDXVHLWKDVLQ WHUPV RI *\SVLHV DQG WKH SHUVRQV LQYROYHG VHOILGHQWLI\ LQ WKLV ZD\ WKH UHFHQWFDVHVIDYRUHGFHUWDLQmMXULVGLFWLRQDOSUHUHTXLVLWHVIRU SDUWLFXODU 5RPDQL$PHULFDQV LQYROYHG LQ WKLV FDVH ZLOO EH UHIHUUHG WR DV IHGHUDOUHJXODWLRQRIORFDOFULPLQDOFRQGXFWl$QWHDW *\SVLHV Q$Q\VXFKVXJJHVWLRQKRZHYHURIZKDWDPDMRULW\RI  WKH6XSUHPH&RXUWPLJKWEHOLHYHLVQRWKLQJPRUHWKDQPHUH %HFDXVH WKHUH DUH QXPHURXV 0LOOHUV LQ WKLV FDVH LQFOXGLQJ DQRWKHU 6WHYH 0LOOHU WKLV QDPH LV XVHG  8QLWHG6WDWHVY6XDUH] 1R 1R 8QLWHG6WDWHVY6XDUH] 

FRPPXQLW\DQGWKHDXWKRULWLHV$SSDUHQWO\LQDQDWWHPSWWR BBBBBBBBBBBBBBBB DVVXPHWKLVUROHLWVHHPVWKDW7XODZRXOGIRUDIHHDVVLVW 6XDUH]LQLGHQWLI\LQJDQGORFDWLQJVXVSHFWVDQGLQQHJRWLDWLQJ 23,1,21 UHVWLWXWLRQDJUHHPHQWV$VDUHVXOWYLFWLPVZRXOGJHWVRPH BBBBBBBBBBBBBBBB RIWKHLUPRQH\EDFN6XDUH]ZRXOGVROYHWKHFDVHWKH*\SVLHV ZRXOGVWD\RXWRIMDLODQG7XODZRXOGPDNHVRPHPRQH\DV 5*8<&2/(s5&LUFXLWsXGJHZULWLQJIRUWKH&RXUWDV ZHOODVGHPRQVWUDWHKLVFDSDFLW\WRHLWKHULQYRNHWKHSRZHURI WR3DUW9,DQGFRQFXUULQJLQWKHUHPDLQGHURIWKHPDMRULW\ WKH6WDWHRI0LFKLJDQRUWRSURWHFWmKLVlSHRSOHDJDLQVWLW RSLQLRQ:HUHZHZULWLQJRQDFOHDQVODWH,OLNHWKHGLVVHQW PLJKWZHOODJUHHWKDWSURSHUDSSOLFDWLRQRI86&† ,QsXO\DOOHJDWLRQVEHJDQFLUFXODWLQJWRWKH'HWURLW UHTXLUHV D PLQLPDO QH[XV EHWZHHQ WKH DOOHJHG FULPLQDO )%,WKDW6XDUH]ZDVVHHNLQJSHUVRQDOILQDQFLDOEHQHILWIURP DFWLYLW\ DQG WKH IHGHUDO IXQGLQJ UHFHLYHG SXUVXDQW WR WKDW KLV V\VWHP RI mFRPPXQLW\ SROLFLQJl  6SHFLILFDOO\ WKH VWDWXWH:HDUHQRWKRZHYHUDVDUHYLHZRIRXUGHFLVLRQVLQ &KLFDJR  3ROLFH 'HSDUWPHQW KDG EHHQ LQIRUPHG E\ ORFDO 8QLWHG6WDWHVY9DOHQWLQH)GWK&LUDQG *\SVLHVWKDW6XDUH]ZRXOGWDNHFDUHRIFDVHVIRUDIHHDOVR 8QLWHG6WDWHVY'DNRWD)GWK&LUPDNHV DPHPEHURIWKHH[WHQGHG0LOOHUIDPLO\LQ7ROHGRWROGWKH FOHDU  7KXV ZKLOH , FRQFXU LQ 3DUWV , WKURXJK 9 , ZULWH )%,6XDUH]ZDVVHHNLQJPRQH\IURPWKHPE\WKUHDWHQLQJWR VHSDUDWHO\WRUHJLVWHUP\GLVDJUHHPHQWZLWKWKHGLVVHQWLQ3DUW SURSHUO\FKDUJHVHYHUDO0LOOHUVZLWKD'HWURLWDUHDEXUJODU\ 9,EHFDXVH,EHOLHYHLWGLVUHJDUGVWKHZHOOHVWDEOLVKHGODZRI $ORQJZLWKOHQLHQF\ZLWKUHJDUGWRWKLVSDUWLFXODUFULPHD WKLV&LUFXLW QXPEHURIWKHVH0LOOHUVLQD3HQQV\OYDQLDMDLODWWKHWLPH KRSHGIRUIDYRUDEOHWUHDWPHQWLQH[FKDQJHIRUEULQJLQJGRZQ ,Q9DOHQWLQHDGHIHQGDQWFKDOOHQJHGKHUFRQYLFWLRQVXQGHU 6XDUH]  7KH\ PDGH QXPHURXV DOOHJDWLRQV RI FRUUXSWLRQ 86&†DUJXLQJLQSDUWWKDWEHFDXVHWKHIXQGVVKH DJDLQVWWKHGHIHQGDQWLQFOXGLQJDFODLPWKDWKHZRXOGUHPRYH ZDV FRQYLFWHG RI PLVDSSURSULDWLQJ ZHUH HQWLUHO\ ORFDO LQ ZDUUDQWVIURPWKHHOHFWURQLF/DZ(QIRUFHPHQW,QIRUPDWLRQ VRXUFH DQG LQ QR ZD\ FRQQHFWHG WR D IHGHUDO SURJUDP KHU 1HWZRUN /(,1 DQG 1DWLRQDO &ULPH ,QIRUPDWLRQ &HQWHU SURVHFXWLRQDQGFRQYLFWLRQYLRODWHGWKHVWDWXWHDQGRIIHQGHG 1&,& V\VWHPV IRU D SULFH  7KH )%, EHJDQ D SXEOLF WUDGLWLRQDOQRWLRQVRIIHGHUDOLVP6HH)GDW6KH FRUUXSWLRQ LQYHVWLJDWLRQ DQG LQGXFHG 1DQF\ 0LOOHU WKH UHDVRQHG WKDW D PHUH FRLQFLGHQFH WKDW WKH FLW\ DJHQF\ IRU PRWKHUDQGJUDQGPRWKHURIVHYHUDORIWKHLQGLYLGXDOVEHLQJ ZKLFKVKHZRUNHGUHFHLYHG†TXDOLI\LQJIHGHUDOIXQGLQJ WKUHDWHQHGoDQGWKHFKLHIQHJRWLDWRURISD\PHQWVWR6XDUH] ZDVZLWKRXWPRUHLQVXIILFLHQWWRVZHHSZLWKLQWKHVFRSHRI o WR ZHDU D ZLUH GXULQJ KHU PHHWLQJV ZLWK WKH GHWHFWLYH DIHGHUDOVWDWXWHEHKDYLRUWKDWLQQRZD\WRXFKHGXSRQIHGHUDO %DVHGRQWKHUHVXOWVRIWKLVLQLWLDOLQYHVWLJDWLRQ6XDUH]ZDV IXQGV  6HH LG  :H UHMHFWHG 9DOHQWLQHjV DUJXPHQW DIWHU D FKDUJHG ZLWK FRQVSLUDF\ WR H[WRUW  86& †   FDUHIXOUHYLHZRIWKHVWDWXWRU\ODQJXDJHDQGWKHOHJLVODWLYH 86&††DQGDUUHVWHGRQ2FWREHU KLVWRU\XQGHUO\LQJ86&†ILQGLQJWKDWmWKHVWDWXWH GRHVQRWUHTXLUHWKHJRYHUQPHQWWRGHPRQVWUDWHWKHIHGHUDO 7KHIRFXVRIWKH)%,jVLQTXLU\ZDVLQLWLDOO\RQLVVXHVRI FKDUDFWHURIWKHVWROHQSURSHUW\lDQGFRQFOXGLQJWKDWm>W@KH EULEHU\  7KH ILUVW VLQJOHFRXQW LQGLFWPHQW DJDLQVW 6XDUH] VWDWXWH DGGUHVVHV WKH UHODWLRQVKLS EHWZHHQ WKH IHGHUDO FKDUJHG KLP ZLWK D EULEHU\ YLRODWLRQ RI  86& JRYHUQPHQW DQG WKH ORFDO JRYHUQPHQW IURP ZKLFK WKH †D  %(VVHQWLDOO\WKHWKHRU\RIWKH)%,DSSHDUVWR SURSHUW\ZDVVWROHQQRWWKHUHODWLRQVKLSEHWZHHQWKHIHGHUDO KDYH EHHQ WKDW ZKLOH 6XDUH] ZRXOG VRPHWLPHV SDUWLDOO\ JRYHUQPHQWDQGWKHFRQYHUWHGSURSHUW\l,GDW FRPSHQVDWH YLFWLPV ZLWK WKH PRQH\ KH UHFHLYHG KH VRPHWLPHVZRXOGQRWDQGZRXOGRIWHQLQDQ\HYHQWWDNHD  8QLWHG6WDWHVY6XDUH] 1R 1R 8QLWHG6WDWHVY6XDUH] 

FKDUDFWHUL]DWLRQ   7KH EHVW UHDGLQJ RI WKH )LVFKHU DQG VXEVWDQWLDO mFXWl IRU KLPVHOI LQ H[FKDQJH IRU DOORZLQJ 6DOLQDVFDVHVVHHPVWREHWKDWWKH6XSUHPH&RXUWGRHVQRW FULPLQDOV WR UHPDLQ DW ODUJH  +LV ILQDQFLDO DQG SHUVRQDO ZDQW WKLV LQWHUSUHWDWLRQ WR WDNH KROG  'HVSLWH WKH UHODWLRQVKLSZLWK7XODZDVWKRXJKWWRKDYHHYROYHGIURPRQH JRYHUQPHQWjVSHUKDSVWDFWLFDODGPLVVLRQWKDWKHUHWKHUHLV RIGHWHFWLYHLQIRUPDQWWRWKDWRISDUWQHUVLQFULPH QRSRVVLEOHFRQQHFWLRQWRIHGHUDOIXQGVDQHZWULDODSSHDUVWR EHWKHSURSHUUHPHG\,Q=ZLFNWKH7KLUG&LUFXLWUHIXVHGWR 6XDUH]jV QHHG IRU PRQH\ KDG LQFUHDVHG EHFDXVH RI KLV HQWHUDMXGJPHQWRIDFTXLWWDOZKHUHWKHUHZDVDQDEVHQFHRI JURZLQJJDPEOLQJDGGLFWLRQKHZRXOGRIWHQFURVVWKHERUGHU WULDOSURRIRIIHGHUDOLQWHUHVWDQGYHU\OLWWOHUHFRUGHYLGHQFH LQWR&DQDGDWRJDPEOHDZD\WKHZRUNGD\DW&DVLQR:LQGVRU RIRQH6HH)GDW,QVWHDGLWUHPDQGHGIRUDQHZ ZLWKGUDZLQJVXEVWDQWLDOVXPVIURPWKHFDVLQRjV$707XOD WULDO  ,Q WKLV RI FRXUVH , DP PLQGIXO WKDW EHFDXVH RI WKH IUHTXHQWO\DFFRPSDQLHG6XDUH]RQWKHVHMDXQWV8OWLPDWHO\ XQLTXH QDWXUH RI WKLV FDVH ZLWQHVVHV ZRXOG EH SHFXOLDUO\ 6XDUH]ZDVQHYHUFRQYLFWHGRIWKHEULEHU\FKDUJHV+RZHYHU XQDYDLODEOHKRZHYHUWKHSULPDU\HYLGHQFHRQZKLFK6XDUH] GXULQJWKHFRXUVHRIWKHLULQYHVWLJDWLRQWKH)%,XQFRYHUHG ZDVFRQYLFWHGZDVGRFXPHQWDU\DQGZRXOGSUHVHQWUHODWLYHO\ RWKHU VXVSLFLRXV DVSHFWV RI 6XDUH]jV GHDOLQJV ZLWK WKH OLWWOH GLIILFXOW\ WR UHFRQVWUXFW  *LYHQ 6XDUH]jV RZQ *\SVLHV DQG IURP WKHVH FRPH 6XDUH]jV WZR FRQYLFWLRQV DGPLVVLRQV WKH FRQFOXVLRQ WKDW KH VWROH LV KDUGO\ FXUUHQWO\RQDSSHDO FRQWURYHUWHG7KHJRYHUQPHQWjVPDLQEXUGHQLILWFKRVHWR SURFHHGZRXOGEHWRVKRZDYDOLGIHGHUDOLQWHUHVWLQ6XDUH]jV ,Q0D\DQGsXQH6XDUH]KDG LQIRUPHGWKH:D\QH FRQYHUVLRQVE\DQLQTXLU\LQWRWKHmVWUXFWXUHRSHUDWLRQDQG &RXQW\3URVHFXWRUWKDWKHFRXOGLGHQWLI\WKHSHUSHWUDWRUVRID SXUSRVHlRIIHGHUDOO\IXQGHGSURJUDPVDQGDGHWHUPLQDWLRQ VHULHVRIXWLOLW\UHSDLUPDQDQGURRILQJUHSDLUVFDPV6XDUH] RI ZKHWKHU WKHLU LQWHJULW\ ZDV XQGHUPLQHG E\ FULPLQDO DOVR LGHQWLILHG WKH ORFDWLRQ RI WKH FULPLQDO SURFHHGV DQG FRQGXFWIRUZKLFK6XDUH]KDVQRWDOUHDG\EHHQDFTXLWWHG SDUWLFLSDWHGLQDMRLQWUDLGDWm7KH3V\FKLF6WXGLRlYDULRXV SDZQ VKRSV DQG D VDIHW\ GHSRVLW ER[ DW &RPHULFD  7KH 9,, PDWHULDOVHL]HGSULPDULO\FRQVLVWHGRIMHZHOU\VRPHUHDO VRPHIDOVHVRPHEHORQJLQJWRYLFWLPVVRPHEHORQJLQJWRWKH )RUWKHUHDVRQVJLYHQDERYHLQ3DUWV,9ZHILQG6XDUH]jV *\SVLHV ZKR IOHG WKH LPSHQGLQJ UDLG  6XDUH] DFTXLUHG YDULRXVSURFHGXUDOFODLPVWREHZLWKRXWPHULW%HFDXVHP\ FXVWRG\RIWKLVMHZHOU\YDOXHGDWRYHUDQGNHSWLW FROOHDJXHV DOVR ILQG 6XDUH]jV IHGHUDOQH[XV FODLP IRUDQH[WHQGHGSHULRGRIWLPHLQDSROLFHHYLGHQFHORFNHUWR LQVXIILFLHQWO\ SHUVXDVLYH 6XDUH]jV FRQYLFWLRQV DUH ZKLFKKHKDGH[FOXVLYHDFFHVV6XDUH]FODLPHGKHZDVJRLQJ $)),50('DUHVXOWIURPZKLFK,UHVSHFWIXOO\GLVVHQWIRUWKH WRUHWXUQWKHLWHPVWRWKHLUWUXHRZQHUVDQGDSSDUHQWO\GLGVR UHDVRQVJLYHQLQ3DUW9, ZLWKUHVSHFWWRVRPHRIWKHSLHFHV6XDUH]DWWKH3ROLFH 'HSDUWPHQWj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

VHDUFKZDUUDQWDWKLVKRXVHWXUQHGXSWKLVMHZHOU\mWKHVHDUFK PLQLPDOIHGHUDOQH[XVLVDQHFHVVDU\HOHPHQWRI86& ZDUUDQWHYLGHQFHlLQDORFNHGEULHIFDVH †LQRUGHUWRPDLQWDLQWKHFRQVWLWXWLRQDOLW\RIWKHVWDWXWH 6HH 6DQWRSLHWUR  )G DW  LQWHUSUHWLQJ 6DOLQDV  $W VRPH SRLQW 6XDUH] EHFDPH LQYROYHG LQ VHOOLQJ WKH 86DW&I8QLWHG6WDWHVY&RUS)GWK VHDUFKZDUUDQWHYLGHQFHWR*\SVLHVXQFRQQHFWHGZLWKWKHUDLG &LU  UHMHFWLQJ ZLWK UHJDUG WR  86& PDLQO\DQRWKHU6WHYH0LOOHUZKRFDOOVKLPVHOIm&KR&KRlD † D  % D FODLP RI IDFLDO XQFRQVWLWXWLRQDOLW\ EXW ZLWQHVV LQ WKLV FDVH IURP &KLFDJR DQG E\ SDZQLQJ LW LQ ILQGLQJ D PHDQLQJIXO MXULVGLFWLRQDO UHTXLUHPHQW ZDV XQFRQQHFWHG SDZQ VKRSV  7KH HDUOLHVW UHFRYHUHG SDZQ FRQVWLWXWLRQDOO\UHTXLUHGDQGWKDWWKLVMXULVGLFWLRQDOHOHPHQW UHFHLSWVKRZLQJ6XDUH]UHFHLYLQJPRQH\EDVHGRQKLVSOHGJH KDGQRWEHHQVDWLVILHGDVWRFULPLQDOGHIHQGDQW*LYHQWKH RIVHDUFKZDUUDQWHYLGHQFHLVGDWHG)HEUXDU\7KH IDFWVDVWKH\KDYHEHHQSUHVHQWHGWRXVLWZRXOGDSSHDUWKLV WRWDO DPRXQW RI FRQYHUVLRQ H[FHHGHG  D SRLQW QRW HOHPHQW LV QRW VDWLVILHG LQGLFDWLQJ 6XDUH] LV SUREDEO\ FRQWHVWHG:KHQLQHDUO\sXO\RQHRIWKHSDZQVKRSV LQQRFHQWXQGHUWKHDERYHFRQVWUXFWLRQRI86&† WKDW KDG KDG PDWHULDO VHL]HG DWWHPSWHG WR UHFRYHU VRPH $OWKRXJKZHKDYHUHMHFWHGDVDEDVLVIRUUHOLHIWKHLGHDWKDW MHZHOU\ 6XDUH] KDG DOUHDG\ WUDQVIHUUHG KH DSSDUHQWO\ WKH*RYHUQPHQWZDVmRXWWRJHWl6XDUH]KHLVFXUUHQWO\LQ SXUFKDVHG VLPLODUORRNLQJ EXW FKHDSHU UHSODFHPHQWV  7KH IHGHUDOSULVRQIRUDFWVRIPDOIHDVDQFHLQZKLFKWKHIHGHUDO FRQYHUVLRQ RI WKH VHDUFK ZDUUDQW HYLGHQFH UHVXOWHG LQ D JRYHUQPHQW KDV DSSDUHQWO\ QR FRQVWLWXWLRQDO LQWHUHVW FRQYLFWLRQXQGHU86&†D  $6XDUH]FODLPV $OORZLQJKLPWRUHPDLQWKHUHZKLOHODUJHO\EHOLHYLQJWKDWKLV WKDWDWZRUVWKHFRQYHUWHGWKHMHZHOU\ODWHURQQRWZKHQKH SURVHFXWLRQ o IRU WKH SDUWLFXODU RIIHQVHV RI ZKLFK KH ZDV DVVXPHGFRQWURORYHULWDQGSXWLWLQWKHHYLGHQFHORFNHUDV FRQYLFWHG o ZDV EH\RQG WKH SRZHU RI &RQJUHVV ZRXOG WKH LQGLFWPHQW UHDGV WKLV KH GHHPV WR KDYH UHQGHUHG KLV FHUWDLQO\VHHPWRFDOOLQWRTXHVWLRQWKHIDLUQHVVRIWKHMXGLFLDO FRQYLFWLRQLQYDOLGDVEHLQJXQVXSSRUWHGE\WKHHYLGHQFH SURFHVV 3XEOLFLW\ DERXW 6XDUH]jV DUUHVW DOVR EURXJKW WR OLJKW WKH 7R VXVWDLQ 6XDUH]jV FRQYLFWLRQ ZRXOG PDNH †  D VWRU\RI0U6WDQOH\sDNXV]HZVNL0UsDNXV]HZVNLZDVDQ JHQHUDOL]HG mDQWLFRUUXSWLRQ VWDWXWH XQGHU WKH VSHQGLQJ HOGHUO\'HWURLWDUHDPDQZKRKDGEHHQEHIULHQGHGE\D\RXQJ SRZHUl0F&RUPDFN)6XSSGDWFULWLFL]LQJWKLV *\SV\ZRPDQQDPHG$QQ0RUJDQsDNXV]HZVNLKDGEHHQ LQYHLJOHGE\0RUJDQWRZLWKGUDZIURPKLVEDQNDFFRXQWVRPH ZLWKZKLFK0V0RUJDQVXEVHTXHQWO\DEVFRQGHG sDNXV]HZVNLjVVRQLQODZILOHGDFRPSODLQWDQGWKHFDVHZDV  %XW VHH 0RUJDQ   )G DW  %\H s FRQFXUULQJ UHMHFWLQJ DVVLJQHGWR6XDUH]6XDUH]FRQWDFWHG0RUJDQDQGFODLPHG LQ GLFWD WKH DGGLWLRQ RI D mµQH[XVj HOHPHQW    WR UHVXVFLWDWH † l WKHYLFWLPZRXOGVHWWOHIRUSOXVWR6XDUH] EHFDXVH m&RQJUHVV ODFNV WKH SRZHU XQGHU WKH 6SHQGLQJ &ODXVH WR HQDFW

+HWKHQWROGsDNXV]HZVNLKHFRXOGJHWKLPKDOIKLVPRQH\ FULPLQDO ODZV JRYHUQLQJ WKLUGSDUW\ FRQGXFWl 7KHUH LV QRWKLQJ LQ

EDFN   0RUJDQ JDYH VHYHUDO FDVKLHUjV FKHFNV WR 6DOLQDV )LVFKHU RU RU FXUUHQW 6SHQGLQJ &ODXVH MXULVSUXGHQFH WKDW VXJJHVWV sXGJH %\HjV YLHZ FRPPDQGV D PDMRULW\ RQ WKH 6XSUHPH &RXUW %\ 6XDUH]PDGHRXWWRsDNXV]HZVNL6XDUH]GHOLYHUHG FRQWUDVW WKHUH LV FRQVLGHUDEOH HYLGHQFH WKDW D PRUH OLPLWHG VNHSWLFLVP RI ZRUWKRIWKHVHUHFHLYLQJDUHFHLSWIURPsDNXV]HZVNLZKLFKKH &RQJUHVVLRQDO SRZHU RQH ZKLFK FRQVWLWXWLRQDOO\ LQWHUSRODWHV D QH[XV DOWHUHG WR  DQG VKRZHG WR 0RUJDQ  6XDUH] WKHQ UHTXLUHPHQW LQWR †  KDV PDMRULW\ VXSSRUW RQ WKH 6XSUHPH &RXUW FDVKHG DW OHDVW RQH RI WKHVH FKHFNV IRU  E\ IRUJLQJ 6LQFH WKLV HYLGHQFH VXUHO\ GHULYHV LQ SDUW IURP )LVFKHU  , DP SX]]OHG ZK\

sDNXV]HZVNLjV QDPH DV DQ HQGRUVHPHQW LQ EODQN DQG WKLV FDVH GRHV QRW FDOO LQWR TXHVWLRQ FHUWDLQ DVSHFWV RI 'DNRWD  3XW PRUH VLPSO\ KDG 'DNRWD EHHQ GHFLGHG DIWHU )LVFKHU DV ZHOO DV DIWHU 6DOLQDV  FRQYHUWLQJWKHFDVKWRKLVRZQXVH7KLVEHKDYLRUUHVXOWHGLQ ZRXOG LW KDYH VR HDVLO\ VWXFN ZLWK WKH KROGLQJ RI 9DOHQWLQH " 2QO\ LI ZH WKHVHFRQGFRQYLFWLRQXQGHU86&†D  $ FDQ FRQILGHQWO\ DQVZHU LQ WKH DIILUPDWLYH VKRXOG ZH WUHDW LW DV ELQGLQJ DQG JLYHQ 'DNRWDjV RZQ ODQJXDJH , ODFN WKDW FRQILGHQFH  8QLWHG6WDWHVY6XDUH] 1R 1R 8QLWHG6WDWHVY6XDUH] 

IHGHUDOFRQQHFWLRQEHWZHHQKLVFRQYHUVLRQDQGIHGHUDOIXQGV %RWKWKLVFRQYLFWLRQDQGWKHRQHDERYHDUHSUHPLVHGRQWKH KLVFODLPPLJKWZHOOIDLOEHFDXVHWKHIDFWEDVHGLQTXLU\KDV LGHD WKDW 6XDUH] WRRN SURSHUW\ HYLGHQFH DQG UHVWLWXWLRQ QRW EHHQ GRQH DQG WKH HUURU LI DQ\ PLJKW QRW EH SODLQ SD\PHQWV IURP WKH 'HDUERUQ 3ROLFH 'HSDUWPHQW DQ +RZHYHU LI WKH HUURU LV GHHPHG WKH DEVHQFH RI DQ\ RUJDQL]DWLRQ UHFHLYLQJ  IHGHUDO IXQGV IRU LWV '$5( MXULVGLFWLRQDOVKRZLQJRIVRPHDOEHLWPLQLPDODQGLQGLUHFW SURJUDP6XDUH]GLGQRWFKDOOHQJHWKLVFRQQHFWLRQEHORZEXW FRQQHFWLRQEHWZHHQ6XDUH]jVFULPHVDQGIHGHUDOIXQGVZKLFK QRZFODLPVRQFRQVWLWXWLRQDODQGVWDWXWRU\JURXQGVWKDWKLV QRZ DSSHDUV UHTXLUHG DV D PDWWHU RI IHGHUDOLVP WKHQ LW RIIHQVHVKDYHWRRWHQXRXVDUHODWLRQVKLSWRWKHPRQH\RIWKH DSSHDUVWKDWDQHUURUKDVRFFXUUHGXQGHUFXUUHQWODZDQG 8QLWHG6WDWHVWRVXSSRUWDIHGHUDOFKDUJHXQGHU† WKDWWKHHUURULVSODLQ7KH6XSUHPH&RXUWKDVUHMHFWHGWKH EODQNHW DSSOLFDWLRQ RI †  WR DOO FULPLQDO FRQGXFW E\ 7KHH[SDQGHGLQTXLU\DQGWKHIDLOXUHRISOHDQHJRWLDWLRQV UHFLSLHQW RUJDQL]DWLRQV LQ )LVFKHU DQG WKH ZHLJKW RI SRVW KDGUHVXOWHGLQDQH[SDQGHGVXSHUVHGLQJLQGLFWPHQWILOHGRQ 6DOLQDV DSSHOODWH DXWKRULW\ KDV UHFRJQL]HG WKH QHHG IRU D 0D\$ORQJZLWKWKHDERYHPHQWLRQHGFRQYHUVLRQV FRQQHFWLRQ&UXFLDOO\HYHQRXUGHFLVLRQLQ'DNRWDVXJJHVWHG DQG WKH RULJLQDO EULEHU\ FKDUJHV WKH JRYHUQPHQW DOOHJHG WKH SRVVLELOLW\ WKDW VXFK D UHTXLUHPHQW ZDV ZDLWLQJ WR EH VHYHQPRQH\ODXQGHULQJFRXQWVEDVHGRQ6XDUH]jVWXUQLQJWKH GHOLQHDWHG E\ IXUWKHU FDVHODZ  $OWKRXJK P\ EURWKHUV MHZHOU\LQWRSDZQVKRSFDVKEDQNIUDXGEDVHGRQWKHIRUJHG GLVDJUHH,ZRXOGILQG'DNRWDDVXIILFLHQWO\mRSHQUXOLQJlLQ HQGRUVHPHQWRI0RUJDQjVFDVKLHUFKHFNDQGYLRODWLRQV FRQWUDVWWRWKHHDUOLHUDQGOHVVHTXLYRFDO9DOHQWLQHWKDWZH RIWKH7UDYHO$FW86&†EDVHGRQKLVZLWKGUDZDOV DUHQRORQJHUERXQGE\LWVKROGLQJRImQRQH[XVUHTXLUHPHQWl IURP $70V LQ &DQDGD  ,Q DGGLWLRQ KLV &DQDGLDQ WULSV LQOLJKWRI)LVFKHU EURXJKWDQRWKHUFKDUJHRIPLVDSSURSULDWLQJKLVRZQVHUYLFHV DQG WKH XVH RI KLV SROLFH YHKLFOH  7KH JRYHUQPHQW ODWHU 7KLV EHFRPHV SDUWLFXODUO\ UHOHYDQW EHFDXVH WKH 8QLWHG GLVPLVVHG WKH 7UDYHO $FW YLRODWLRQV DQG DPHQGHG WKH 6WDWHVLQDQLQWHUHVWLQJJDPELWFODLPVm>W@KHUHLVQRWHYHQDQ VXSHUVHGLQJLQGLFWPHQWDFFRUGLQJO\RQ1RYHPEHU DQDO\WLFDODSSURDFKE\ZKLFKIHGHUDOIXQGVFRXOGEHWUDFHGWR 7KHGHIHQGDQWSRLQWVWRWKHVHDGGLWLRQDOFKDUJHVDVHYLGHQFH WKHWUDQVDFWLRQVDWLVVXHLQWKLVFDVHm*RYjW%UDW RISURVHFXWRULDOYLQGLFWLYHQHVVDJDLQVWKLP +\SRWKHWLFDOO\WKHSRWHQWLDOILQDQFLDOOLDELOLW\RIWKH'3'IRU 6XDUH]jVFRQYHUVLRQVPLJKWKDYHKDGVRPHVRUWRILPSDFWRQ 3UHWULDO 6XDUH] DWWHPSWHG XQVXFFHVVIXOO\ WR VXSSUHVV WKH LQWHJULW\ RU RSHUDWLRQ RI WKH '$5( SURJUDP WKLV VWDWHPHQWVKHPDGHDWWKHWLPHRIKLVDUUHVW:KHQKHZDV VKRZLQJRIFRXUVHLVTXLWHXQOLNHO\(VSHFLDOO\JLYHQWKH ILUVWFRQIURQWHGE\WKH)%,DWWKH'HDUERUQ3ROLFH6WDWLRQRQ JRYHUQPHQWjV DGPLVVLRQV KHUH RQ DSSHDO WKHUH LV D VWURQJ 2FWREHU    6XDUH] ZDV RIIHUHG DVVLVWDQFH E\ WKH SRVVLELOLW\WKDW6XDUH]ZRXOGZLQDQ\VXFKLQTXLU\LQWRQH[XV SUHVLGHQW RI WKH ORFDO SROLFH XQLRQ &RUSRUDO +XFN  +XFN ZLWK WKH SURVHFXWLRQ XQDEOH WR VKRZ KRZ KLV DFWV KDYH LQIRUPHG6XDUH]WKDWKHZDVJHWWLQJDSROLFHXQLRQODZ\HUIRU DIIHFWHGWKHLQWHJULW\RIWKH'$5(SURJUDP7KHUHIRUHWKH KLP6XDUH]VDLGm2ND\l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m

1DQF\ 0LOOHU DQG PDWWHUV VXUURXQGLQJ WKH FULPLQDO RWKHU mH[FHSWLRQDO FDVHV RU SDUWLFXODU FLUFXPVWDQFHVl LQYHVWLJDWLRQ RI KHU UHODWLYHV  +H ODWHU PRYHG WR H[FOXGH &KHVQH\)GDW*HQHUDOO\WKHTXHVWLRQPXVWEH WKHVHVWDWHPHQWVDVKDYLQJEHHQWDNHQLQYLRODWLRQRIKLVULJKW DSXUHO\OHJDORQHWKDWKDVEHHQIXOO\EULHIHGE\ERWKSDUWLHV WRFRXQVHO7KHGLVWULFWFRXUWUXOHG6XDUH]KDGQRWDVVHUWHG 6HH LELG 8QLWHG 6WDWHV Y 5HDO 3URSHUW\ .QRZQ DQG KLVULJKWWRFRXQVHODQGGHQLHGWKHPRWLRQ+HDSSHDOVWKLV 1XPEHUHGDV60DLQ6W1HZ/H[LQJWRQ2KLR)G GHQLDO   WK &LU   ,W LV DOVR LPSRUWDQW WKDW WKH PDWWHUEHRQHWKDWWKHDSSHOODQWGLGQRWKDYHDYDLODEOHWRKLP /DWHURQLQ2FWREHU6XDUH]DQGKLVXQLRQDWWRUQH\ EHORZ6HH&KHVQH\)GDW60DLQ6W)G &UDYHQVDSSDUHQWO\LQWKHKRSHVRIDUHVROXWLRQRIKLVFDVH DW  %XW VHH +D\HV  )G DW  UHYLHZLQJ HQJDJHGLQDKRXUGHEULHILQJRQ6XDUH]jVDFWLYLWLHVDVD &RQIURQWDWLRQ&ODXVHFODLPWKDWFRXOGKDYHEHHQUDLVHGEXW FULPLQDOLQYHVWLJDWRU7KLVSURIIHUZDVPDGHXQGHUDJUDQWRI ZDVQRW,IWKHFODLPLVDFFHSWHGIRUUHYLHZLWDSSHDUVWKDW OLPLWHGLPPXQLW\LQSODFHRIDKHDULQJSXUVXDQWWR.DVWLJDU SODLQHUURUDQDO\VLVZLOODSSO\6HH+D\HV)GDW Y8QLWHG6WDWHV867KHJRYHUQPHQWjVXVH mDVVXPLQJ WKDW WKH DSSURSULDWH VWDQGDUG RI UHYLHZ LV WKH RI6XDUH]jVLQIRUPDWLRQZDVJRYHUQHGE\DQDJUHHPHQWVLJQHG µSODLQHUURUjVWDQGDUGRI5XOHEl E\DOOSDUWLHV$OWKRXJKWKHLQIRUPDWLRQFRXOGEHGLVFORVHGWR WKHFRXUWRUSUREDWLRQGHSDUWPHQWLWZDVQRWWREHXVHGWR , ZRXOG H[HUFLVH RXU GLVFUHWLRQ WR FRQVLGHU 6XDUH]jV DIIHFW 6XDUH]jV VHQWHQFH  7KLV SURIIHU DSSHDUV WR EH WKH DUJXPHQW%RWKSDUWLHVKDYHEULHIHGWKLVLVVXHDQGLWLVRU VRXUFHRIPDQ\FRORUIXOGHWDLOVLQWKHSUHVHQWHQFHUHSRUWRI FDQEHWDNHQDVDSXUHO\OHJDOTXHVWLRQ$OWKRXJKLWFRXOG WKH VHDPLHU VLGH RI 5RPDQ\ OLIH LQ 'HDUERUQ UHYROYLQJ WKHRUHWLFDOO\KDYHEHHQUDLVHGEHORZE\]HDORXVFRXQVHOWKH DURXQG WKH YDULRXV DOOHJHG VFKHPHV RI 7XOD KLV ZLIH DQG OHJDOODQGVFDSHKDVFKDQJHGVLJQLILFDQWO\LQ6XDUH]jVIDYRU RWKHUV   ,Q WKHVH VWRULHV 6XDUH] SOD\V DQ DPELJXRXV UROH VLQFH WKH WLPH RI WKH WULDO ZLWK JRYHUQLQJ DXWKRULW\ EHLQJ UHVROYLQJFULPLQDOFRPSODLQWVZKLOHDOOHJHGO\JHWWLQJDmSLHFH DYDLODEOHRQO\VLQFHWKHGHFLVLRQLQ)LVFKHULQ0D\DQG RIWKHDFWLRQl7KLVPDWHULDOLQWKH365LVVWDWHGXQGHUWKH VWURQJ SHUVXDVLYH DXWKRULW\ RQO\ VLQFH =ZLFN LQ 'HFHPEHU FDWHJRU\mRIIHQVHEHKDYLRUQRWSDUWRIUHOHYDQWFRQGXFWlDQG 9DOHQWLQHJRYHUQHGWKH6L[WK&LUFXLWGXULQJ6XDUH]jV ZDV QRW XVHG LQ VHQWHQFLQJ WKH GHIHQGDQW  %HORZ 6XDUH] WULDODQGWKHFU\SWLFUHPDUNVLQ6DOLQDVUHJDUGLQJQH[XVZHUH FRQWHVWHG WKH XVH RI WKLV LQIRUPDWLRQ DV QRQHWKHOHVV LQ LQVXIILFLHQW WR DEURJDWH REYLRXVO\ LWV FRQFOXVLRQ WKDW QR YLRODWLRQRIWKHSURIIHUDJUHHPHQWVLQFHLWVXSSRVHGO\ELDVHG UHODWLRQVKLSQHHGEHVKRZQ7KXV6XDUH]jVGHIDXOWFDQEH WKHSUHVHQWHQFHZULWHUDJDLQVWKLP+LVFODLPZDVGHQLHG VHHQDVPLQLPDO&I0D\KHZY$OOVXS)G DQGKHDSSDUHQWO\GRHVQRWQRZGLUHFWO\UHDVVHUWLWDOWKRXJK WK&LUKROGLQJFLYLOOLWLJDQWVH[FXVHGIURPIDLOXUHWR KH FODLPV LW LV IXUWKHU HYLGHQFH RI SURVHFXWRULDO DVVHUW D QHZ VWDWXWH ZKHQ WKDW VWDWXWH ZDV HQDFWHG DIWHU YLQGLFWLYHQHVV VXPPDU\MXGJPHQWZDVHQWHUHGDJDLQVWWKHPDQGRQO\HLJKW GD\VSULRUWRWKHGLVWULFWjVRUGHUUHMHFWLQJWKHLUPRWLRQWRDOWHU $WWULDO6XDUH]ZDVDFTXLWWHGRIDOOFKDUJHVVDYHWKHWZR RUDPHQGMXGJPHQW FKDUJHVRIXQODZIXOFRQYHUVLRQGHWDLOHGDERYH+LVVHQWHQFH $ SODLQ HUURU H[LVWV ZKHQ D  DQ HUURU RFFXUUHG LQ WKH GLVWULFWFRXUWEWKHHUURUZDVSODLQFWKHHUURUDIIHFWHGWKH  GHIHQGDQW V VXEVWDQWLDO ULJKWV DQG G WKH HUURU mVHULRXVO\ )RU LQVWDQFH WKH SUHVHQWHQFH UHSRUW GHVFULEHV D IUDXG LQ ZKLFK YLFWLPV DUH WROG WKDW PRQH\ LV WKH URRW RI DOO HYLO DQG EHFDXVH WKHLU PRQH\ DIIHFWHGWKHIDLUQHVVLQWHJULW\RUSXEOLFUHSXWDWLRQRIMXGLFLDO LV JHQHUDWLQJ QHJDWLYH YLEUDWLRQV WKDW FXUVH WKHLU OLIH LW PXVW EH JLYHQ WR SURFHHGLQJVl8QLWHG6WDWHVY2ZXVX)GWK WKH mSV\FKLFl WR EH SUD\HG RYHU DQG FOHDQVHG 7KH FDVK LV KRZHYHU QRW &LU,I6XDUH]jVFODLPLVWKDWWKHUHLVDQLQVXIILFLHQW UHWXUQHG 7KLV SDUWLFXODU IUDXG KDV EHHQ SHUSHWUDWHG VLQFH PHGLHYDO WLPHV  8QLWHG6WDWHVY6XDUH] 1R 1R 8QLWHG6WDWHVY6XDUH] 

IHGHUDOSURJUDP>RWKHUZLVH@†ZRXOGFULPLQDOL]HURXWLQH ZDV HQKDQFHG IRU DEXVH RI SXEOLF WUXVW WKH SUHVHQFH RI D DFWV RI IUDXG RU EULEHU\>@l D UHVXOW KH EHOLHYHG WKDW WKH YXOQHUDEOHYLFWLP0UsDNXV]HZVNLWKHYDOXHRIWKHLWHPV PDMRULW\ZRXOGILQGXQFRQVWLWXWLRQDO,GDWQ7KRPDV LQYROYHGDQGKLVPRUHWKDQPLQLPDOSODQQLQJ1RQHRIWKHVH sGLVVHQWLQJHPSKDVLVLQRULJLQDO*LYHQ)LVFKHULWLVQR VHQWHQFLQJGHFLVLRQVDUHDSSHDOHGKHUH7KHWRWDORIIHQVHOHYHO ORQJHUWHQDEOHWRKROGWRWKHSURSRVLWLRQWKDWQRFRQQHFWLRQ ZDVDQG6XDUH]ZDVVHQWHQFHGDWWKHWRSRIWKHUHVXOWLQJ ZKDWVRHYHU QHHG H[LVW EHWZHHQ WKH IHGHUDOO\ SXQLVKHG UDQJH  PRQWKV LQ SULVRQ IRU HDFK FRXQW VHUYHG FULPLQDO FRQGXFW DQG WKH IHGHUDO LQWHUHVW LQ WKH SURJUDPV FRQFXUUHQWO\7XOD0LOOHUSOHGJXLOW\WRDEULEHU\FRXQWDQG VXSSRUWHGE\WKHIXQGVXVHGWRVDWLVI\†E UHFHLYHG D GRZQZDUG GHSDUWXUH XQGHU 866* † . UHVXOWLQJLQDVHQWHQFHRIPRQWKV 6XDUH]GLGQRWUDLVHWKHVHIHGHUDOLVPFRQFHUQVLQWKHWULDO FRXUW1RUPDOO\WKLVZRXOGSUHFOXGHDSSHOODWHFRQVLGHUDWLRQ ,, RI WKH LVVXH )RVWHU Y %DULORZ  )G   WK &LU +RZHYHUWKLVUXOHLVRQHRISUXGHQFHQRWMXULVGLFWLRQ 6WDQGDUGRI5HYLHZ DQGWKHFRXUWKDVGLVFUHWLRQWRH[DPLQHWKHLVVXHXQGHUFHUWDLQ FRQGLWLRQV8QLWHG6WDWHVY+D\HV)GWK $VWRZKHWKHUWKHUHZDVDVXIILFLHQF\RIHYLGHQFHRQWKH &LU8QLWHG6WDWHVY&KHVQH\)G FRQYHUVLRQRIWKHVHDUFKZDUUDQWHYLGHQFHZHDVVHVVZKHWKHU WK&LUFRQVWLWXWLRQDOFODLPXQGHU&RPPHUFH&ODXVH mDIWHUYLHZLQJWKHHYLGHQFHLQWKHOLJKWPRVWIDYRUDEOHWRWKH KHOGUHYLHZDEOHDOWKRXJKGHIHQGDQWKDGQRWUDLVHGLWEHORZ SURVHFXWLRQDQ\UDWLRQDOWULHURIIDFWFRXOGKDYHIRXQGWKH 8QGHU )HG 5 &ULP 3 E m>S@ODLQ HUURUV RU GHIHFWV HVVHQWLDOHOHPHQWVRIWKHFULPHEH\RQGDUHDVRQDEOHGRXEWl DIIHFWLQJVXEVWDQWLDOULJKWVPD\EHQRWLFHGDOWKRXJKWKH\ZHUH sDFNVRQY9LUJLQLD86HPSKDVLVLQ QRWEURXJKWWRWKHDWWHQWLRQRIWKHFRXUWl7KHGLVFUHWLRQRI RULJLQDO  ,Q FRQVLGHULQJ WKH HYLGHQFH ZH DOORZ WKH WKH DSSHOODWH FRXUW PD\ EH H[HUFLVHG ZKHQ WKH EDU DJDLQVW JRYHUQPHQW WKH EHQHILW RI DOO UHDVRQDEOH LQIHUHQFHV DQG UHYLHZZRXOGSURGXFHDmSODLQPLVFDUULDJHRIMXVWLFHlRULQ UHIUDLQ IURP LQGHSHQGHQWO\ MXGJLQJ WKH ZHLJKW RI WKH HYLGHQFH6HH8QLWHG6WDWHVY:HOFK)GWK &LU  2Q D EURDGHU OHYHO WKHUH KDV EHHQ FORVHU VFUXWLQ\ UHFHQWO\ RI WKH MXULVGLFWLRQDO SUHUHTXLVLWHV IRU IHGHUDO UHJXODWLRQ RI ORFDO FULPLQDO 7KHGHIHQGDQWDJUHHVWKDWWKHVWDQGDUGIRUWKHUHYLHZRID FRQGXFW 6HH8QLWHG 6WDWHV Y /RSH]  86    8QLWHG GLVWULFWFRXUWjVGHQLDORIDPRWLRQWRGLVPLVVDQLQGLFWPHQWRQ 6WDWHV Y 0RUULVRQ  86    8QOLNH WKH VWDWXWHV DW JURXQGV RI SURVHFXWRULDO YLQGLFWLYHQHVV LV IRU DEXVH RI LVVXH LQ /RSH] DQG 0RUULVRQ  86& †  LV EDVHG RQ WKH 6SHQGLQJ GLVFUHWLRQEDVHGRQVLPLODUSURVHFXWRULDOPLVFRQGXFWFDVHV &ODXVH UDWKHU WKDQ WKH &RPPHUFH &ODXVH RI WKH &RQVWLWXWLRQ ,QWKHSDVWZHKDYHDOVRDGYHUWHGWRWKHmFOHDUO\HUURQHRXVl 1RQHWKHOHVV WKH IHGHUDOLVP FRQFHUQV DUH HTXDOO\ SUHVHQW EHFDXVH WKH UHVHUYDWLRQ RI D mJHQHUDOL]HG SROLFH SRZHU WR WKH 6WDWHV LV GHHSO\ VWDQGDUG LQ HYDOXDWLQJ WKH GLVWULFW FRXUWjV ILQGLQJ RI QR LQJUDLQHG LQ RXU FRQVWLWXWLRQDO KLVWRU\l 0RUULVRQ  86 DW  ,W YLQGLFWLYHQHVV6HH8QLWHG6WDWHVY6DPPRQV)G ZRXOG EH TXLWH SUREOHPDWLF ZHUH &RQJUHVV WR EH DEOH WR HYDGH WK&LUmGHIHQGDQWKDVQRWGLUHFWHGRXUDWWHQWLRQ FRQVWLWXWLRQDO UHVWULFWLRQV RQ LWV FULPLQDO ODZPDNLQJ DXWKRULW\ RYHU ORFDO WRDQ\WKLQJRQWKHUHFRUGWKDWZRXOGFDXVHXVWRTXHVWLRQWKH RIILFLDOV WKURXJK PHDQV RI WKH 6SHQGLQJ &ODXVH 6HH *HRUJH ' %URZQ GLVWULFW FRXUW V ILQGLQJV PXFK OHVV ILQG WKHP FOHDUO\ 6WHDOWK 6WDWXWH  &RUUXSWLRQ WKH 6SHQGLQJ 3RZHU DQG WKH 5LVH RI  86& †   1 %# ' / 5'    HUURQHRXVl  :HUHYLHZIRUFOHDUHUURUDUHIXVDOWRVXSSUHVVHYLGHQFH $OWKRXJK KLV RULJLQDO EULHI RQ DSSHDO FODLPHG KH KDG GRQH VR LQ D SUHWULDO PRWLRQ KLV FRXQVHO QRZ DGPLWV WKLV GLG QRW RFFXU 6XDUH] 5HSO\ EDVHG RQ D FODLPHG FRQVWLWXWLRQDO YLRODWLRQ m:KHQ %U DW  FRQVLGHULQJWKHGLVWULFWFRXUW VUXOLQJRQDPRWLRQWRVXSSUHVV  8QLWHG6WDWHVY6XDUH] 1R 1R 8QLWHG6WDWHVY6XDUH] 

ZHUHYLHZWKHGLVWULFWFRXUW VIDFWXDOILQGLQJVIRUFOHDUHUURU VHHl 'DNRWD LQ GLVWLQFWLRQ WR 6DQWRSLHWUR 3KLOOLSV DQG 7KHUHYLHZLQJFRXUWLVWRUHYLHZWKHHYLGHQFHLQWKHOLJKW =ZLFN PRVWOLNHO\WRVXSSRUWWKHGLVWULFWFRXUW VGHFLVLRQl8QLWHG 6WDWHV Y 5RDUN  )G  WK &LU  FLWDWLRQ 0RUH UHOHYDQW IRU WKH FDVH DW KDQG WKH 6XSUHPH &RXUW RPLWWHG7KHGLVWULFWFRXUW VFRQFOXVLRQVRIODZDUHUHYLHZHG ZKLOHQRWUHVROYLQJDOOGRXEWVKDVUHFHQWO\VLQFHEULHIVZHUH GHQRYR6HHLELG ILOHGLQWKLVFDVHJLYHQPHUHDVRQWREHOLHYHWKDWWKHEURDGHU KROGLQJRI'DNRWDKDVEHHQXQGHUPLQHGE\)LVFKHUY8QLWHG 1RUPDOO\ EHFDXVH 6XDUH]jV FKDOOHQJH WR WKH 6WDWHV86)LVFKHUKDGGHIUDXGHGWKH:HVW FRQVWLWXWLRQDOLW\ RI WKH DSSOLFDWLRQ RI †  LQYROYHV 9LUJLQLD +HDOWK $XWKRULW\ D SDUWLFLSDQW LQ WKH 0HGLFDUH TXHVWLRQV RI ODZ RXU UHYLHZ ZRXOG EH GH QRYR  $ SURJUDP  7KH &RXUW XSKHOG KLV FRQYLFWLRQ XQGHU FRQVWLWXWLRQDO FKDOOHQJH WR D VWDWXWH LV D TXHVWLRQ RI ODZ † D  $ EXW mZLWKRXW HQGRUVLQJ WKH *RYHUQPHQWjV ZKLFKWKLVFRXUWUHYLHZVGHQRYR8QLWHG6WDWHVY6PLWK EURDGHUSRVLWLRQlWKDWWKHUHFHLSWRIIHGHUDOIXQGVDORQHZDV )GWK&LU7KLVLVDOVRRXUVWDQGDUGLI HQRXJK WR VDWLVI\ WKH GHILQLWLRQ RI mEHQHILWVl  ,G DW  6XDUH]jV FKDOOHQJH LV LQWHUSUHWHG DV LQYROYLQJ VWDWXWRU\ :KLOH KROGLQJ WKDW WKH m*RYHUQPHQW KDV D OHJLWLPDWH DQG FRQVWUXFWLRQ6HH8QLWHG6WDWHVY:XOLJHU)G VLJQLILFDQW LQWHUHVW LQ SURKLELWLQJ ILQDQFLDO IUDXG RU DFWV RI  WK &LU   +RZHYHU m>G@XH UHVSHFW IRU WKH EULEHU\ EHLQJ SHUSHWUDWHG XSRQ 0HGLFDUH SURYLGHUVlLG DW GHFLVLRQVRIDFRRUGLQDWHEUDQFKRI*RYHUQPHQWGHPDQGVWKDW WKH&RXUWH[SOLFLWO\QRWHGWKDWm>R@XUGLVFXVVLRQVKRXOG ZHLQYDOLGDWHDFRQJUHVVLRQDOHQDFWPHQWRQO\XSRQDSODLQ QRWEHWDNHQWRVXJJHVWWKDWIHGHUDOIXQGVGLVEXUVHGXQGHUDQ VKRZLQJ WKDW &RQJUHVV KDV H[FHHGHG LWV FRQVWLWXWLRQDO DVVLVWDQFH SURJUDP ZLOO UHVXOW LQ FRYHUDJH RI DOO UHFLSLHQW ERXQGVl  8QLWHG 6WDWHV Y 0RUULVRQ  86   IUDXGXQGHU†El,GDWVWDWLQJWKLVmZRXOGWXUQ   0RUHRYHU EHFDXVH WKH LVVXH ZDV QRW UDLVHG DQG DOPRVWHYHU\DFWRIIUDXGRUEULEHU\LQWRDIHGHUDORIIHQVH FRQVLGHUHGEHORZRXULQTXLU\LVIRUSODLQHUURU6HH8QLWHG XSVHWWLQJWKHSURSHUIHGHUDOEDODQFHl7KH&RXUWWKHQZHQW 6WDWHVY+D\HV)GWK&LU RQ WR UHFRPPHQG D IDFWEDVHG LQTXLU\ LQWR WKH mSURJUDPjV VWUXFWXUHRSHUDWLRQDQGSXUSRVHlWRGHWHUPLQHZKHWKHUWKH ,,, FULPLQDOFRQGXFWSRVHGDWKUHDWWRWKHLQWHJULW\RIWKHIHGHUDO SURJUDP,GDW,ILWGRHVSRVHVXFKDWKUHDWDVZDV 6XIILFLHQF\RI(YLGHQFHIRU&RQYHUVLRQRIWKH6HDUFK IRXQGZLWKGHIHQGDQW)LVFKHUjVFRQGXFWWKHQWKHVWDWXWHPD\ :DUUDQW(YLGHQFH EHDSSOLHGFRQVWLWXWLRQDOO\UHJDUGOHVVRIZKHWKHUWKHIHGHUDO IXQGVDUHDIIHFWHGGLUHFWO\ 7KHVHFRQGFRXQWRIWKHDPHQGHGVXSHUVHGLQJLQGLFWPHQW XQGHUZKLFK6XDUH]ZDVFRQYLFWHGRIFRQYHUWLQJWKHMHZHOU\ $GPLWWHGO\WKHTXHVWLRQLQ)LVFKHUWXUQHGRQDVRPHZKDW WDNHQIURPm7KH3V\FKLF6WXGLRlUHDGVDVIROORZVLQUHOHYDQW GLIIHUHQWLVVXHRQZKHWKHUWRFKDUDFWHUL]HFHUWDLQIRUPVRI SDUWm,QRUDERXWsXQHVDLGGDWHEHLQJDSSUR[LPDWH IHGHUDODLGDVmEHQHILWVl+RZHYHUWKH)LVFKHUPDMRULW\jV 'HIHQGDQWFDXVHG,QYHVWLJDWRU)UDQFLV+HDQH\WRWXUQ ODQJXDJH UHJDUGLQJ WKH QHHG WR UHVSHFW WKH SURSHU EDODQFH RYHUWKH6HDUFK:DUUDQW(YLGHQFHE\WHOOLQJ+HDQH\WKDW EHWZHHQ VWDWH DQG IHGHUDO VRYHUHLJQV PDNHV FOHDU WKHLU 68$5(=ZRXOGUHWXUQWKH6HDUFK:DUUDQW(YLGHQFHWRLWV FRQVWLWXWLRQDOFRQFHUQVZLWKDEURDGUHDGLQJRI†$V WUXHRZQHUV%\WDNLQJSRVVHVVLRQRIWKH6HDUFK:DUUDQW sXVWLFH7KRPDVZKRDUJXHGZLWKsXVWLFH6FDOLDIRUDQHYHQ (YLGHQFHLQWKDWPDQQHU'HIHQGDQW68$5(=FRQYHUWHGLWWR QDUURZHUGHILQLWLRQRImEHQHILWVlSRLQWHGRXWMXULVGLFWLRQDO KLVRZQXVHLQWKDWKHQHYHUXVHGLWQRULQWHQGHGWRXVHLWDV UHVWULFWLRQV DUH UHTXLUHG WR mHQVXUH WKDW LQ HDFK FDVH WKH HYLGHQFHQRUGLGKHHYHULQWHQGWRUHWXUQLWRUDWWHPSWWR H[HUFLVHRIIHGHUDOSRZHULVUHODWHGWRWKHIHGHUDOLQWHUHVWLQD UHWXUQLWWRWKHWUXHRZQHUVl6XDUH]RIFRXUVHPDLQWDLQVWKDW  8QLWHG6WDWHVY6XDUH] 1R 1R 8QLWHG6WDWHVY6XDUH] 

GHIHQGDQWjV RIIHQVH FRQGXFWl  7KH 6HFRQG &LUFXLW ZKLOH WKLVLQGLFWPHQW LVQRWWUXHVLQFHKHZDVMXVWGRLQJKLVMRE DIILUPLQJ D FRQYLFWLRQ VWDWHG WKDW WKH VWDWXWH ZDV GXULQJsXQHDOWKRXJKODWHURQKHVWDUWHGVWHDOLQJSLHFHV FRQVWLWXWLRQDODVDSSOLHGRQO\EHFDXVHWKHEULEHZDVmµDWKUHDW RI WKH MHZHOU\  $W WKH FORVH RI WKH HYLGHQFH WKH MXU\ ZDV WRWKHLQWHJULW\DQGSURSHURSHUDWLRQRIWKHIHGHUDOSURJUDPjl LQVWUXFWHGRQFRQYHUVLRQm&RQYHUVLRQGLIIHUVIURPVWHDOLQJ 8QLWHG6WDWHVY6DQWRSLHWUR)GQG&LU LQWKDWRQHZKRJDLQVSRVVHVVLRQRISURSHUW\E\WDNLQJLWIURP TXRWLQJ 6DOLQDV  6DQWRSLHWUR LPSOLHG WKDW WKHUH ZDV D DQRWKHU VWHDOV ZKLOH RQH ZKR FRPHV LQWR SRVVHVVLRQ RI IHGHUDOLQWHUHVWUHTXLUHPHQWVWDWLQJWKDWLWmZRXOGQRWSHUPLW SURSHUW\E\ODZIXOPHDQVEXWDIWHUZDUGVH[HUFLVHVWKHULJKWV WKH*RYHUQPHQWWRXVHVHFWLRQD  %WRSURVHFXWHD RI RZQHUVKLS WR WKH H[FOXVLRQ RI WKH RZQHUjV ULJKWV DQG EULEH SDLG WR D FLW\jV PHDW LQVSHFWRU LQ FRQQHFWLRQ ZLWK D ZLWKRXW WKH RZQHUjV DXWKRUL]DWLRQ FRPPLWV FRQYHUVLRQl VXEVWDQWLDO WUDQVDFWLRQ MXVW EHFDXVH WKH FLW\jV SDUNV 7KHUHZDVQRLQVWUXFWLRQDVWRZKHQWKHFULPLQDOLQWHQWPXVW GHSDUWPHQWKDGUHFHLYHGDIHGHUDOJUDQWRIl,ELG KDYHEHHQSUHVHQWLQRUGHUWRVXVWDLQWKHFKDUJH 7KH)LIWK&LUFXLWIRUPXODWHGLWVmMXULVGLFWLRQDOlUHVWULFWLRQ 6XDUH]jV FKDOOHQJH WR KLV FRQYLFWLRQ RQ WKLV FRXQW LV RQDVOLJKWO\GLIIHUHQWSULQFLSOHEXWZLWKVLPLODUUHVXOWVE\ VRPHZKDW VFDWWHUVKRW EXW VHHPV WR EH WKDW WKHUH ZDV DVVHVVLQJWKHH[WHQWWRZKLFKWKHGHIHQGDQWLVDQmDJHQWlZLWK LQVXIILFLHQWHYLGHQFHIRUDUDWLRQDOMXU\WRFRQYLFWXQGHUHLWKHU UHJDUG WR IHGHUDO IXQGV DQG IRFXVLQJ RQ mKRZ WKH GHVFULSWLRQ RI WKH FRQYHUVLRQ LQ WKH LQGLFWPHQW RU WKH RUJDQL]DWLRQDOO\UHPRYHGWKHHPSOR\HHLVIURPWKHSDUWLFXODU FRQYHUVLRQGHVFULEHGE\WKHMXU\LQVWUXFWLRQV$OWHUQDWLYHO\ DJHQF\WKDWDGPLQLVWHUVWKHIHGHUDOSURJUDPl8QLWHG6WDWHV KHFODLPVWKDWLIDMXU\FRXOGKDYHIRXQGWKDWKLVEHKDYLRUZDV Y3KLOOLSV)GWK&LU6LPLODUWRWKH FULPLQDOXQGHUWKHMXU\LQVWUXFWLRQVWKHMXU\LQVWUXFWLRQVZHUH 6HFRQGDQG7KLUG&LUFXLWVLWFRQFOXGHGWKDWmDOWKRXJKWKH DWVXIILFLHQWYDULDQFHIURPWKHLQGLFWPHQWDVWRFRQVWLWXWHDQ FRQGXFWSURKLELWHGE\VHFWLRQQHHGQRWDFWXDOO\DIIHFWWKH LPSHUPLVVLEOHFRQVWUXFWLYHDPHQGPHQW IHGHUDO IXQGV UHFHLYHG E\ WKH DJHQF\ WKHUH PXVW EH VRPH QH[XVEHWZHHQWKHFULPLQDOFRQGXFWDQGWKHDJHQF\UHFHLYLQJ (YDOXDWLQJRQO\WKHLQGLFWPHQW LWVHOI6XDUH]jVDUJXPHQW IHGHUDO DVVLVWDQFHl ,G DW  FLWDWLRQ RPLWWHG HVVHQWLDOO\ FODLPV WKDW FULPLQDO LQWHQW PXVW H[LVW DW WKH FKDUDFWHUL]LQJWKHSRVLWLRQVRIWKH6HFRQGDQG7KLUG&LUFXLW PRPHQWRIDQDFWIRUWKDWDFWWREHSXQLVKDEOHDQGWKDWWKH DVEHLQJLQmDVLPLODUYHLQl FRXUWLVFRQILQHGE\WKHLQGLFWPHQWWRORRNDWWKHVLQJOHDFWRI WDNLQJWKHSURSHUW\IURP'HWHFWLYH+HDQH\DQGSXWWLQJLWLQDQ 7KH=ZLFNFRXUWVHHPHGWRGLVDJUHHZLWKRXUSRVW6DOLQDV HYLGHQFHORFNHU,WLVWUXHWKDWWKHLQGLFWPHQWFDQEHUHDGDV KROGLQJ LQ 'DNRWD VHH  )G DW  DOWKRXJK WKLV DVVHUWLQJ WKDW WKH SURVHFXWHG DFW RI FRQYHUVLRQ WRRN SODFH GLVDJUHHPHQW ZDV RQO\ SDUWLDO  'DNRWD VSHDNV RI QRW ZKHQ6XDUH]DOOHJHGO\OLHGWR+HDQH\LQRUGHUWRJHWFRQWURO UHTXLULQJDmGLUHFWlOLQNEXWJRHVRQWRVWDWHWKDWmWKHQDWXUH RU ODZIXO SRVVHVVLRQ RI WKH SURSHUW\ ZLWK KLV NQRZLQJ RI DQ\ QHFHVVDU\ FRQQHFWLRQ LV OHIW XQDQVZHUHGl E\ WKH FRQYHUVLRQEHLQJHVVHQWLDOO\DODUFHQ\E\WULFN.LQJY3HDU 6XSUHPH&RXUW)GDW+RZHYHU'DNRWDZHQWRQ (QJ5HS&U&DV5HVGLVFXVVHGLQ WRVWDWHPRUHEURDGO\WKDWmWKHGLVWULFWFRXUWFRUUHFWO\UXOHG %HOOY8QLWHG6WDWHV86 :KHUHWKH WKDW86&†GRHVQRWUHTXLUHDQH[XVEHWZHHQWKH FULPLQDOLQWHQWWRVWHDOLVDEVHQWWKHDFWLVQRWFULPLQDOXQGHU DOOHJHG EULEHV DQG WKH IHGHUDO IXQGLQJ UHFHLYHG E\ >WKH WKHIHGHUDOODZRISURSHUW\FULPH6HH0RUULVVHWWHY8QLWHG DJHQF\@l,ELG7KLVKDVEHHQFLWHGDVEHLQJLQRSSRVLWLRQWR 6WDWHV868QLWHG6WDWHVY%HVV WKHFRQFOXVLRQVRIRXUVLVWHUFLUFXLWV 6HH8QLWHG6WDWHVY )G    Q WK &LU  LQWHUSUHWLQJ SDUDOOHO 0RUJDQ  )G   WK &LU  FLWLQJ mEXW SURYLVLRQRI86&†  8QLWHG6WDWHVY6XDUH] 1R 1R 8QLWHG6WDWHVY6XDUH] 

+HQFH 6XDUH] ZRXOG QHHG WR VKRZ DW D PLQLPXP WKDW QRWFRQVLGHUZKHWKHUWKHVWDWXWHUHTXLUHVVRPHRWKHUNLQGRI WKHUHZDVLQVXIILFLHQWHYLGHQFHIRUDUHDVRQDEOHMXU\WRILQGKH FRQQHFWLRQ EHWZHHQ D EULEH DQG WKH H[SHQGLWXUH RI IHGHUDO ZDV GHFHLYLQJ +HDQH\ DERXW KLV SODQV LQ WKH 6SULQJ  IXQGVl86DW6HHDOVRLGDWm:KDWHYHU 3UREDEO\ WKH LQGLFWPHQW FRXOG EH UHDG DV EHLQJ VRPHZKDW PLJKW EH VDLG DERXW † D  %jV DSSOLFDWLRQ LQ RWKHU RYHUJHQHUDOLQVXJJHVWLQJWKDW6XDUH]SODQQHGWRVWHDODOORI FDVHV WKH DSSOLFDWLRQ RI † D  % WR 6DOLQDV GLG QRW WKH MHZHOU\  *LYHQ WKH HYLGHQFH RQ KLV ODWHU EHKDYLRU DQG H[WHQGIHGHUDOSRZHUEH\RQGLWVSURSHUERXQGVl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†D )6XSSG UHFRUGV$OORIWKLVEHKDYLRUFORVHO\SUR[LPDWHWRKLVLQLWLDO DW7KH0DOGHQSROLFHIRUFHUHFHLYHG'$5(IXQGVRI WDNLQJRIWKHSURSHUW\VKRZVDVXVSLFLRXVGHVLUHRQWKHSDUW DQGLQRWKHUIHGHUDOIXQGVIRUFRPPXQLW\ RI6XDUH]WRDYRLGRIILFLDOVXSHUYLVLRQDQGWUDFNLQJRIZKDW SROLFLQJ DQG RWKHU SURJUDPV  6HH LG DW   7KH GLVWULFW KHGLGZLWKWKHVHYDOXDEOHV7KLVSURYLGHVDEULGJHEHWZHHQ FRXUWIRXQGWKDWWKHUHZDVmOLWWOHRUQRUHODWLRQVKLSEHWZHHQ KLVXQGLVSXWHGODWHUVDOHVDQGSDZQVRIVRPHMHZHOU\DQGKLV WKHEULEHU\DQGWKHIHGHUDOSURJUDPFRQIHUULQJMXULVGLFWLRQl LQLWLDODFTXLVLWLRQIURP+HDQH\DQGDUHDVRQDEOHMXU\FRXOG ,GDW,WGLVPLVVHGWKHFKDUJHVKROGLQJWKDWVRPHVRUWRI KDYHFRQFOXGHGWKDWWKHLQWHQWWRJHWVRPHWKLQJIRUKLPVHOILI FRQQHFWLRQDOWKRXJKLWQHHGQRWEHGLUHFWZDVUHTXLUHGIRU SRVVLEOHZDVSUHVHQWDWWKHHDUOLHUWLPH WKHVWDWXWHWREHFRQVWLWXWLRQDODVDSSOLHG6HHLGDW,Q VRUXOLQJWKH0F&RUPDFNFRXUWLQWHUSUHWHG6DOLQDVDVKDYLQJ 7KHGHIHQGDQWUDLVHVWZRSRLQWVWRUHEXWWKHVHVXVSLFLRQV mLQWLPDWHGDVRWKHUFRXUWVDQGVFKRODUVKDYHGRQHWKDWDQ\ )LUVWKHQRWHVWKDWKHFDUULHGRXWD'3'RUGHUHGDSSUDLVDORI RWKHU LQWHUSUHWDWLRQ RI †  RQH WKDW GRHV QRW UHTXLUH D WKHMHZHOU\VHL]HGLQWKHUDLG6HFRQGKHQRWHVWKDWKHDOZD\V IHGHUDOFRQQHFWLRQDWDOOFRXOGZHOOEHXQFRQVWLWXWLRQDOl mVHFXUHGl WKH SURSHUW\  1HLWKHU RI WKHVH SRLQWV PDNHV ,GDW XQUHDVRQDEOH D MXU\ ILQGLQJ RI FULPLQDO LQWHQW EH\RQG D UHDVRQDEOHGRXEW,I6XDUH]ZDVFRQVLGHULQJZKDWWRFRQYHUW 6LQFH6XDUH]ZDVFRQYLFWHGDWOHDVWWKUHHFLUFXLWVKDYHDOVR KHQHHGHGDQDFFXUDWHDSSUDLVDODVPXFKLIQRWPRUHWKDQGLG LQGLFDWHG WKDW VRPH HIIHFW RI WKH FRUUXSWLRQ RQ IHGHUDO WKH'3',IKHZDVWUHDWLQJWKHSURSHUW\DVKLVRZQLWZDV LQWHUHVWVPXVWEHVKRZQ7KH7KLUG&LUFXLWLQDQH[WHQVLYHO\ RQO\ ORJLFDO WKDW KH ZRXOG NHHS WUDFN RI LW o LQGHHG D UHDVRQHG RSLQLRQ YDFDWHG WKH EULEHU\ FRQYLFWLRQ RI D UHDVRQDEOH LQWHUSUHWDWLRQ RI 6XDUH]jV VFKHPH LV WKDW LW 7RZQVKLS&RPPLVVLRQHUZKHUHKLVLQIOXHQFHSHGGOLQJKDGQR LQYROYHGNHHSLQJEHWWHUWUDFNRIWKHMHZHOU\WKDQGLGWKH'3' FRQQHFWLRQ WR WRZQVKLS SURMHFWV IXQGHG E\ WKH IHGHUDO oDQGWKDWKHZRXOGSUHYHQWRWKHUSHRSOHIURPVWHDOLQJLW JRYHUQPHQW8QLWHG6WDWHVY=ZLFN)GG &LUVWDWLQJWKDWmZHKROGWKDW†UHTXLUHVWKDWWKH JRYHUQPHQW SURYH D IHGHUDO LQWHUHVW LV LPSOLFDWHG E\ WKH  8QLWHG6WDWHVY6XDUH] 1R 1R 8QLWHG6WDWHVY6XDUH] 

EDVLV WKH VWDWXWH DOVR UHTXLUHV WKDW WKH mRUJDQL]DWLRQ (YHQLIRQHZHUHWRDUJXHWKDWXQGHUWKHPRVWFRQVWULFWHG JRYHUQPHQWRUDJHQF\>LQYROYHG@UHFHLYHVLQDQ\RQH\HDU YLHZRIWKHLQGLFWPHQWDUDWLRQDOMXU\FRXOGQRWKDYHIDLOHGWR SHULRGEHQHILWVLQH[FHVVRIXQGHUD)HGHUDOSURJUDP ILQG UHDVRQDEOH GRXEW RI 6XDUH]jV LQLWLDO FULPLQDO LQWHQW D LQYROYLQJ D JUDQW FRQWUDFW VXEVLG\ ORDQ JXDUDQWHH UDWLRQDO MXU\ FHUWDLQO\ FRXOG KDYH IDLOHG WR ILQG UHDVRQDEOH LQVXUDQFH RU RWKHU IRUP RI )HGHUDO DVVLVWDQFHl  86& GRXEW XQGHU WKH FKDUJH DV LQWHUSUHWHG GXULQJ WKH MXU\ †E6XDUH]DOVRGRHVQRWFRQWHVWWKDWWKHDJHQF\IRU LQVWUXFWLRQV ZKLFK ZHUH D SHUPLVVLEOH YDULDQFH IURP WKH ZKLFKKHZRUNHGWKH'HDUERUQ3ROLFH'HSDUWPHQWUHFHLYHG RULJLQDOLQGLFWPHQW&RQYHUVLRQDVXVHGLQWKHVWDWXWHDQG  GXULQJ WKH UHOHYDQW SHULRG DQG WKDW WKH ODUJHU GHYHORSHGLQWKHMXU\LQVWUXFWLRQVLVDEURDGHUFRQFHSWXQGHU HQFRPSDVVLQJ HQWLW\ WKH &LW\ RI 'HDUERUQ UHFHLYHG WKH IHGHUDO FULPLQDO ODZ WKDQ LV ODUFHQ\ LQ WKDW LW UHDFKHV VLJQLILFDQWO\PRUHPRQH\ EHKDYLRU ZKHUH mLQLWLDO SRVVHVVLRQ E\ WKH FRQYHUWHU ZDV HQWLUHO\ODZIXOl0RUULVVHWWH86DW,WLVFHUWDLQO\ 6XDUH]jVDUJXPHQWLVUDWKHUWKDWWKHSURSHUW\KHWRRNGRHV DUJXDEOHWKDW6XDUH]LVEHWWHURUPRUHFHUWDLQO\FKDUDFWHUL]HG QRWEHDUDQ\UHODWLRQVKLSZKDWVRHYHUWRWKHIHGHUDOPRQH\WKH DV DQ HPEH]]OHU  %\ XVLQJ WKH WHUP mFRQYHUVLRQl ZLWKRXW '3'UHFHLYHGDQGWKHUHIRUHWKHVWDWXWHVKRXOGQRWDSSO\WRKLV OLPLWLQJLWWRDSDUWLFXODUPRPHQWWKHMXU\LQVWUXFWLRQVDQGWKH DFWV ,Q KLV UHSO\ EULHI KH FODULILHV WKDW WKLV FODLP LV D HYLGHQFH SUHVHQWHG E\ WKH SURVHFXWLRQ HQFRPSDVVHG WKLV FRQVWLWXWLRQDO RQH 6XDUH] 5HSO\ %U DW  SUHVXPDEO\ SRVVLELOLW\  *LYHQ WKH WHVWLPRQ\ RI &KR&KR 0LOOHU WKH EHFDXVHKHDUJXHVWKDWWKHH[WHQVLRQRIIHGHUDOMXULVGLFWLRQ GRFXPHQWDU\SURRIRIWKHSDZQVOLSVJLYLQJPRQH\WR6XDUH] RYHU DFWV VXFK DV 6XDUH]jV ZRXOG H[FHHG WKH SRZHU RI IRUKLVSOHGJHVRISROLFHHYLGHQFHDQGWKHRWKHUSURRIEURXJKW &RQJUHVV&I8QLWHG6WDWHVY0F&RUPDFN)6XSSG IRUZDUGDWWULDOKLVmNQRZLQJFRQYHUVLRQlRIWKHMHZHOU\DW '0DVVFLWHGE\6XDUH]GLVPLVVLQJLQGLFWPHQW VRPH SRLQW LV DPSO\ VXSSRUWHG DQG LV LQGHHG KDUGO\ XQGHU86&†RQWKHVHJURXQGV FRQWHVWHG7KHTXHVWLRQLVLQVWHDGZKHWKHUWKHXVHE\WKHMXU\ RIWKLVVWDQGDUGFRQVWLWXWHVDFRQVWUXFWLYHDPHQGPHQWRIWKH 7KH6XSUHPH&RXUWjVSRVLWLRQRQWKHDELOLW\RI86& LQGLFWPHQWXQIDLUWR6XDUH] †WRUHDFKDOOFRUUXSWLRQLQORFDODQGVWDWHDJHQFLHVWKH mIHGHUDOUHFLSLHQWlLVQRWDOWRJHWKHUFOHDU$GHIHQGDQWXQGHU :H KDYH DUWLFXODWHG D WZRSDUW WHVW IRU ILQGLQJ D 86&†QHHGQRWEHVKRZQWRKDYHDFWXDOO\VWROHQ FRQVWUXFWLYHDPHQGPHQWUHTXLULQJUHYHUVDORIDFRQYLFWLRQ DQ\RIWKHIHGHUDOIXQGVJLYHQWRWKHmIHGHUDOUHFLSLHQWlRU D YDULDQFH EHWZHHQ LQGLFWPHQW DQG MXU\ LQVWUXFWLRQV DQG HYHQ WKDW KLV PDOIHDVDQFH DIIHFWHG WKRVH IHGHUDO IXQGV SUHMXGLFHWRDVXEVWDQWLDOULJKWRIWKHGHIHQGDQW8QLWHG6WDWHV 8QLWHG6WDWHVY6DOLQDV86UHMHFWLQJ Y3ULQFH)GWK&LU$VLQ3ULQFH DFRQVWLWXWLRQDOFODLPDJDLQVW†DVJHQHUDOO\H[FHHGLQJ GHIHQGDQWDSSHDUVWRKDYHGHPRQVWUDWHGWKHH[LVWHQFHRID WKHOLPLWVRIIHGHUDOSRZHU:HKDYHGHVFULEHGWKHVWDWXWHDV YDULDQFH7KHLQGLFWPHQWPDNHVPXFKRI6XDUH]jVGHFHSWLRQ UHTXLULQJmQRUHODWLRQVKLSlEHWZHHQWKHVWROHQSURSHUW\DQG RI+HDQH\DVFRQVWLWXWLQJWKHDFWRIFRQYHUVLRQZKLOHWKHMXU\ WKHIHGHUDOIXQGVRIWKHUHFLSLHQW8QLWHG6WDWHVY9DOHQWLQH LQVWUXFWLRQVPDNHQRWKLQJRILW0RUHRYHUGHIHQGDQWPDNHV )GWK&LUDQGPRUHUHFHQWO\DV DSODXVLEOHFODLPWKDWLWZDVWRWKHSURVHFXWLRQjVDGYDQWDJHWR UHTXLULQJmQRGLUHFWOLQNl8QLWHG6WDWHVY'DNRWD)G SXVK WKH DFW RI FRQYHUVLRQ EDFN WR WKH HDUOLHVW SRVVLEOH   WK &LU   +RZHYHU 6DOLQDV OHIW RSHQ WKH PRPHQW)RUWKHPRQH\ODXQGHULQJFKDUJHVWKHSURVHFXWLRQ SRVVLELOLW\WKDWVRPHFRQQHFWLRQZRXOGEHUHTXLUHGm:HQHHG QHHGHGWRVKRZWZRDFWVRIWKHIWDQGWKHQRIDQDWWHPSWWR FRQFHDOWKHSURFHHGVRIWKHWKHIWWKURXJKSDZQLQJKHQFHLW LVQRWXQUHDVRQDEOHWRWKLQNWKDWWKHSURVHFXWLRQLQWHQWLRQDOO\ LQGLFWHG RQ DQ mHDUO\ FRQYHUVLRQl WKHRU\ UDWKHU WKDQ RQH ZKHUH PRQH\ LQWHQGHG IRU JRYHUQPHQW ZDV QRW \HW JRYHUQPHQW SURSHUW\  8QLWHG6WDWHVY6XDUH] 1R 1R 8QLWHG6WDWHVY6XDUH] 

ZKLFKZRXOGKDYHHQFRPSDVVHGWKHREYLRXVFRQYHUVLRQDWWKH QHFHVVDULO\ KDYH XQGHUVWRRG WKLV DV GHIHUULQJ DOO SROLFH PRPHQW6XDUH]SDZQHGWKHMHZHOU\ TXHVWLRQVXQWLODUULYDO$UHDVRQDEOHSROLFHRIILFHUFRXOGKDYH LQWHUSUHWHGWKHHYHQWVWRPHDQWKDW6XDUH]KDGQRW\HWPDGH +RZHYHUDOVRDVLQ3ULQFHWKLVYDULDQFHGLGQRWDIIHFWWKH DFKRLFHDVWRZKHWKHUWRGHDOZLWKSROLFHH[FOXVLYHO\WKURXJK VXEVWDQWLDO ULJKWV RI WKH GHIHQGDQW DQG VR GRHV QRW DOORZ FRXQVHO UHYHUVDORIWKHFRQYLFWLRQ7KHmNH\TXHVWLRQlDV3ULQFHVDZ LWZDVZKHWKHUWKHMXU\LQVWUXFWLRQDQGHYLGHQFHLQWURGXFHG )XUWKHUPRUH HYHQ LI DQ HUURU ZHUH IRXQG LW ZRXOG EH DQRWKHUFULPHRUDQmDOWHUQDWLYHPHWKRG>@E\ZKLFKWKHRQH KDUPOHVVEHFDXVHWKHHYLGHQFH6XDUH]JDYHRQKLVORQJULGH FULPH    FRXOG KDYH EHHQ FRPPLWWHGl  )G DW  ZLWKWKH)%,UHODWHGSULPDULO\WRKLVEULEHU\FKDUJHDQGKLV XSKROGLQJ LQVWUXFWLRQ GHVFULELQJ DOWHUQDWLYH PHWKRG IRU GHDOLQJVZLWK1DQF\0LOOHULWDSSDUHQWO\KDGQRWKLQJWRGR PRQH\ODXQGHULQJ6HHDOVR0DUWLQY.DVVXONH)G ZLWK WKH VHDUFK ZDUUDQW HYLGHQFH WR VD\ QRWKLQJ RI WK&LUXSKROGLQJLQVWUXFWLRQGHVFULELQJ sDNXV]HZVNLjVFKHFNV,IWKHUHZDVDQHUURUWKHHIIHFWRIWKLV DOWHUQDWLYH PHWKRG IRU UDSH  6XDUH] ZDV FKDUJHG ZLWK HUURULVMXGJHGE\ORRNLQJDWZKDWHIIHFWWKHZURQJO\LQFOXGHG NQRZLQJFRQYHUVLRQRIWKHMHZHOU\DQGWKHLQGLFWPHQWJDYH HYLGHQFHmKDGRUUHDVRQDEO\PD\EHWDNHQWRKDYHKDGlRQWKH QRWLFH WR ERWK WKH WULDO FRXUW DQG WR KLP RI WKH FKDUJH KH MXU\jVGHFLVLRQ.\JHU)GDW7KHHYLGHQFHZDV IDFHG6HH3ULQFH)GDW7KHLQGLFWPHQWFODLPV XQUHODWHGWRWKHFRQYLFWLRQVKHUHDSSHDOHGDQGVRFRXOGKDYH m68$5(= FRQYHUWHG LWl DQG WKH VWDWXWH SXQLVKHV KH ZKR KDGQRHIIHFWRQWKHP6LQFH WKH MXU\DFTXLWWHG6XDUH]RI mHPEH]]OHV VWHDOV REWDLQV E\ IUDXG RU RWKHUZLVH ZLWKRXW EULEHU\ WKH\ DSSHDU WR KDYH JLYHQ VRPH FUHGHQFH WR KLV DXWKRULW\NQRZLQJO\FRQYHUWVlVKRZLQJDVQRWHGDERYH YHUVLRQRIWKHHYHQWVVXUURXQGLQJWKHEULEHU\FKDUJH7KHUH WKDW WKH ODQJXDJH RI FRQYHUVLRQ FRYHUV D PXOWLWXGH RI LVQRVLJQWKDWKLVVWDWHPHQWVWDNHQLQWKH)%,FUXLVHUZHUH RIIHQVHV LQFOXGLQJ HPEH]]OHPHQW &I  86& JHQHUDOO\VRGDPDJLQJWRKLPDVWRKDYHKDGDmVXEVWDQWLDO †D  $$OWKRXJKWKHLQGLFWPHQWLQGHHGVXJJHVWVD DQG LQMXULRXV HIIHFW RU LQIOXHQFH LQ GHWHUPLQLQJ WKH MXU\jV PHWKRGE\ZKLFKWKLVFRQYHUVLRQKDSSHQHGQHLWKHULWQRUWKH YHUGLFWlLELGRQ6XDUH]jVRWKHUFKDUJHV+LVFRQYHUVLRQ VWDWXWHFRQILQHVLWVHOIWRSXQLVKLQJDODUFHQ\E\WULFN7KH FRQYLFWLRQVDSSHDUWRKDYHEHHQEDVHGRQFOHDUGRFXPHQWDU\ MXU\ LQVWUXFWLRQV E\ GHVFULELQJ FRQYHUVLRQ JHQHUDOO\ PD\ HYLGHQFHRIKLVPLVGHHGVWUDFLQJWKHPLVDSSURSULDWLRQRIWKH KDYH RSHQHG XS WKH SRVVLELOLW\ LQ WKH MXU\jV PLQG WKDW WKH SURFHHGVRIWKHSURSHUW\FRQYHUWHG FRQYHUVLRQ ZDV DFFRPSOLVKHG E\ VRPHWKLQJ PRUH DNLQ WR HPEH]]OHPHQW,WLVHYHQDUJXDEOHWKDWWKH\GLGILQGWKLVZDV 9, ZKDW6XDUH]GLGVLQFHKHZDVDFTXLWWHGRIPRQH\ODXQGHULQJ %XWXQGHUWKHVWDWXWHHPEH]]OHPHQWLVQRWDFULPHDOWHUQDWLYH /DFNRID6XIILFLHQW1H[XV8QGHU†WR)HGHUDO)XQGV WRWKHRQHFKDUJHGEXWVLPSO\DQRWKHURIDQXPEHURIW\SHV RINQRZLQJFRQYHUVLRQ$OWKRXJKDVGLVFXVVHGDERYHDMXU\ 7KHVWDWXWHXQGHUZKLFK6XDUH]ZDVFRQYLFWHGUHTXLUHVWKDW FRXOGKDYHIRXQGWKHHYLGHQFHVXIILFLHQWXQGHUHLWKHUWKHRU\ WKH SURSHUW\ FRQYHUWHG ZDV XQGHU WKH mFDUH FXVWRG\ RU 6XDUH]jVGHIHQVHZRXOGQRWXQGHURXUFDVHODZKDYHEHHQ FRQWUROlRIDORFDOJRYHUQPHQWDJHQF\86&†D SUHMXGLFHGE\WKHYDULDQFH 6XDUH]GRHVQRWFRQWHVWWKDWWKHVHDUFKZDUUDQWHYLGHQFHDQG sDNXV]HZVNLjVFKHFNVZHUHVXFKSURSHUW\$VDMXULVGLFWLRQDO

 7KLV UHPRYHV DQ\ DUJXPHQW KH PLJKW KDYH WKDW WKH SURSHUW\ LV QRW SRWHQWLDOO\ XQGHU MXULVGLFWLRQ RI WKH VWDWXWH 6HH 8QLWHG 6WDWHV Y .OLQJOHU  )G   SDUDOOHO VWDWXWH RI  86& † KHOG LQDSSOLFDEOH  8QLWHG6WDWHVY6XDUH] 1R 1R 8QLWHG6WDWHVY6XDUH] 

2QWKHRWKHUKDQG6XDUH]QHYHUWROGWKHSROLFHGLUHFWO\RI ,9 KLVmGHVLUHWRGHDOZLWKWKHSROLFHRQO\WKURXJKFRXQVHOl,Q WKLVUHVSHFWKLVFDVHLVVLPLODUWRWKDWRI'RKHUW\'RKHUW\ 3URVHFXWRULDO9LQGLFWLYHQHVV LQIRUPHG WKH )%, WKDW KLV PRWKHU ZDV JRLQJ WR UHWDLQ DQ DWWRUQH\IRUKLPEXWKHQHYHULQYRNHGKLVULJKWWRFRXQVHO :HKDYHKHOGWKDWLQRUGHUWRVKRZYLQGLFWLYHSURVHFXWLRQ 'RKHUW\)GDW7KHPHUHIDFWWKDWWKHJRYHUQPHQW WKHUH PXVW EH  H[HUFLVH RI D SURWHFWHG ULJKW  D LVDZDUHWKDWDVXVSHFWKDVDQDWWRUQH\RULVVRRQWRKDYHRQH SURVHFXWRULDO VWDNH LQ WKH H[HUFLVH RI WKDW ULJKW GRHV QRW XQDPELJXRXVO\ DVVHUW WKH VXVSHFWjV ULJKW WR GHDO  XQUHDVRQDEOHQHVV RI WKH SURVHFXWRUjV FRQGXFW  WKH H[FOXVLYHO\ ZLWK WKH SROLFH GXULQJ FXVWRGLDO LQWHUURJDWLRQ LQWHQWWRSXQLVKWKHGHIHQGDQWIRUH[HUFLVHRIWKHSURWHFWHG 6HH 0F1HLO  86 DW   &I 8QLWHG 6WDWHV Y ULJKW6HH1DWjO(QJjJ &RQWUDFWLQJ&RY+HUPDQ 7KRPSVRQ)GG&LU,WLVDOVRUHOHYDQW )GWK&LU3UHVXPDEO\LIWKHILUVWWKUHH WRQRWHWKDWWKH)%,FRXOGKDYHH[SHFWHG6JW6XDUH]WRNQRZ HOHPHQWV DUH SUHVHQW WKLV PD\ KHOS HVWDEOLVK JURXQGV WR ZKDWKHZDVGRLQJZKHQKHVLJQHGWKH0LUDQGDZDLYHUIRUP EHOLHYH WKH IRXUWK LV SUHVHQW WKDW WKHUH LV WKH UHTXLUHG DQGZKHQKHGHFLGHGWRmFOHDUWKLVXSlE\UHVSRQGLQJWRWKH mUHDOLVWLFOLNHOLKRRGRIYLQGLFWLYHQHVVlZKLFKWKHJRYHUQPHQW )%,jV LQTXLU\ UHJDUGLQJ ZKHWKHU KH ZDQWHG WR WDON  ,I ZRXOGKDYHWRUHEXW6HH%UDJDQY3RLQGH[WHU)G 6XDUH]jV m2.l FDQ EH FRQVWUXHG DV DPELJXRXV WKHQ WKH WK&LUFLWLQJ8QLWHG6WDWHVY$QGUHZV LQWHUURJDWLRQ ZDV SURSHU   $OWKRXJK SRLQWLQJ RXW WKDW LW )GWK&LUHQEDQF 6LQFH$QGUHZV SHUKDSVZRXOGKDYHEHHQEHWWHUSROLFHSUDFWLFHWRKDYHDVNHG UHPDLQV JRRG ODZ LQ WKH 6L[WK &LUFXLW SURVHFXWRULDO mZRXOG\RXOLNHWRWDONWRXVZLWKRXWFRXQVHOlLQVWHDGRIDV YLQGLFWLYHQHVV FDQ SRWHQWLDOO\ EH IRXQG LQ WKH SUHWULDO KDSSHQHG VLPSO\ m>Z@RXOG \RX OLNH WR WDON WR XVl WKH DGGLWLRQRIFKDUJHVIROORZLQJSUHWULDODVVHUWLRQVRISURWHFWHG 6XSUHPH&RXUWKDVGHFOLQHGWRUHTXLUHVXFKFODULILFDWLRQmLI ULJKWV)GDW+RZHYHULIWKHFKDUJHVDUHEURXJKW WKHVXVSHFW VVWDWHPHQWLVQRWDQXQDPELJXRXVRUXQHTXLYRFDO VLPSO\DVWKHUHVXOWRIIDLOXUHRIWKHSOHDEDUJDLQLQJSURFHVV UHTXHVWIRUFRXQVHOWKHRIILFHUVKDYHQRREOLJDWLRQWRVWRS WKH\DUHQRWYLQGLFWLYH,GDWIROORZLQJ%RUGHQNLUFKHU TXHVWLRQLQJKLPl'DYLV86DW Y+D\HV86ILQGLQJQRWYLQGLFWLYHD VXSHUVHGLQJLQGLFWPHQWEULQJLQJDGGLWLRQDOFKDUJHVILOHGDIWHU :H DJUHH ZLWK WKH GLVWULFW FRXUW WKDW 6XDUH]jV PHUH DIDLOXUHRISOHDEDUJDLQLQJ  DFNQRZOHGJPHQWRI+XFNjVDFWLRQVLVQRWDQmXQHTXLYRFDO UHTXHVW IRU FRXQVHOl  7KH FDVHV IROORZLQJ (GZDUGV ,QRUGHUWRVDWLVI\WKHILUVWHOHPHQWRIWKLVWHVW6XDUH]PXVW UHSHDWHGO\ UHIHU WR WKH QHHG IRU WKH VXVSHFW WR PDNH VRPH WKHUHIRUHVKRZPRUHWKDQWKDWKHFKRVHQRWWRDFFHSWDSOHD DIILUPDWLYHmVWDWHPHQWlRUmUHTXHVWlZKRVHRUGLQDU\PHDQLQJ EDUJDLQRQEULEHU\WKHRQO\FKDUJHKHIDFHGDWWKDWSRLQWDQG VKRZVKLVGHVLUHWRGHDOZLWKWKHSROLFHWKURXJKFRXQVHO6HH LQVWHDGFKRVHWRDVVHUWKLVULJKWWRWULDO$OWKRXJKWKHULJKWWR 0F1HLO86DWGLUHFWLQJDWWHQWLRQDWWKHmRUGLQDU\ D WULDO E\ D MXU\ RI RQHjV SHHUV LV D KLJKO\ SURWHFWHG ULJKW PHDQLQJlRIVXVSHFWjVVWDWHPHQW%R\OHVY)ROW])G DVVHUWLQJWKLVULJKWE\UHMHFWLQJDSOHDEDUJDLQLVQRWHQRXJK WK&LUXVLQJWKLVUXOH'DYLVGLUHFWVXV WRSURYLGHHYLGHQFHRIDQLPSURSHUPRWLYHRQWKHSDUWRIWKH WR ORRN DW ZKHWKHU mD UHDVRQDEOH SROLFH RIILFHU LQ WKH SURVHFXWLRQ6XDUH]FODLPVKHZDVSODQQLQJWRILOHPRWLRQV FLUFXPVWDQFHVZRXOGXQGHUVWDQGWKHVWDWHPHQWWREHDUHTXHVW WRVXSSUHVVKLVVWDWHPHQWDQGWRGLVPLVVWKHFKDUJHDQGWKDW IRU DQ DWWRUQH\l   86 DW   7KH )%, FRXOG KDYH WKHVH SURYLGHG WKH PRWLYDWLRQ IRU WKH DGGLWLRQ RI RWKHU XQGHUVWRRG6XDUH]jVm2.lWRLQGLFDWHWKDWKHZDVDZDUHWKDW FKDUJHVWKXVDOORZLQJKLPWRIDOOLQWRWKHDPELWRI$QGUHZV WKHUHZDVJRLQJWREHFRXQVHOSUHVHQWZKHQKHDUULYHGDW)%, ZKHUHWKHGHIHQGDQWVjDSSHDORIDEDLOGHQLDOPD\KDYHEHHQ KHDGTXDUWHUV EXW D UHDVRQDEOH SROLFH RIILFHU ZRXOG QRW EHKLQG DXJPHQWDWLRQ RI WKH FKDUJHV DJDLQVW WKHP6HH   8QLWHG6WDWHVY6XDUH] 1R 1R 8QLWHG6WDWHVY6XDUH] 

)G DW  Q  6LQFH 6XDUH] KDG D ULJKW WR ILOH WKHVH 9 PRWLRQV DUJXDEO\ KH KDV VDWLVILHG WKH ILUVW HOHPHQW RI KLV FODLP )LIWK$PHQGPHQW5LJKWWR&RXQVHO +RZHYHU 6XDUH] FDQQRW VKRZ WKH SURVHFXWLRQ KDG DQ\ $IWHUDGHIHQGDQWKDVUHTXHVWHGWKHDVVLVWDQFHRIFRXQVHO SDUWLFXODUmVWDNHlLQSUHYHQWLQJWKHDVVHUWLRQRIWKHVHULJKWV FXVWRGLDOLQWHUURJDWLRQFDQQRWEHLQLWLDWHGE\WKHSROLFHWKH 7KHVHPRWLRQVZHUHQRWSDUWLFXODUO\H[FHSWLRQDOLQWKHFRXUVH DGPLVVLRQ RI VWDWHPHQWV WDNHQ LQ YLRODWLRQ RI WKLV UXOH LV RIWKHWULDOmDGHIHQGDQWEHIRUHWULDOLVH[SHFWHGWRLQYRNH XQFRQVWLWXWLRQDO6HH(GZDUGVY$UL]RQD86 SURFHGXUDOULJKWVWKDWLQHYLWDEO\LPSRVHVRPHµEXUGHQjRQWKH .\JHUY&DUOWRQ)GWK&LU SURVHFXWRUl8QLWHG6WDWHVY*RRGZLQ86 +RZHYHUWKHUHTXHVWIRUDVVLVWDQFHPXVWEHXQDPELJXRXVWR   m,W LV XQUHDOLVWLF WR DVVXPH WKDW D SURVHFXWRUjV WULJJHUWKLVSURWHFWLRQ6HH'DYLVY8QLWHG6WDWHV86 SUREDEOHUHVSRQVHWRVXFKPRWLRQVLVWRVHHNWRSHQDOL]HDQG 0RUHRYHUWKHUHTXHVWFDQQRWEHIRUMXVWDQ\ WRGHWHUl,ELG,Q$QGUHZVWKHJRYHUQPHQWFRXOGKDYHKDG VRUW RI DVVLVWDQFH EXW IRU mWKH SDUWLFXODU VRUW RI ODZ\HUO\ DQLQGHSHQGHQWVWDNHSURWHFWLQJLWVZLWQHVVIURPGHIHQGDQWVj DVVLVWDQFH WKDW LV WKH VXEMHFW RI 0LUDQGDl  0F1HLO Y SRWHQWLDO UHWDOLDWLRQ ZHUH WKH GHIHQGDQWV UHOHDVHG LQ :LVFRQVLQ866HHDOVR8QLWHG6WDWHV DXJPHQWLQJWKHFKDUJHVWRDVVXUHWKHGHIHQGDQWVZRXOGQRWEH Y 'RKHUW\  )G   WK &LU  SDUWLDOO\ UHOHDVHGRQEDLOTXLWHDSDUWIURPWKHEXUGHQRIOLWLJDWLQJWKH DEURJDWHGRQRWKHUJURXQGV7H[DVY&REE6&W PRWLRQ  ,Q WKH SUHFHGHQW RQ ZKLFK $QGUHZV H[WHQVLYHO\  Q   7KLV VRUW RI DVVLVWDQFH XQGHU WKH )LIWK UHOLHG %ODFNOHGJH Y 3HUU\  86   WKH $PHQGPHQWKDVEHHQGHVFULEHGDVLQGLFDWLQJWKHVXVSHFWjV SURVHFXWLRQFRXOGKDYHEHHQDWWHPSWLQJWRDYRLGWKHEXUGHQ mGHVLUH WR GHDO ZLWK WKH SROLFH RQO\ WKURXJK FRXQVHOl RIDFRPSOHWHUHWULDORIWKHFDVH+HUHWKHDGGLWLRQDOEXUGHQ (GZDUGV86DW'RKHUW\)GDW RQ WKH SURVHFXWLRQ IURP WKH PRWLRQV LQ SURSRUWLRQ WR WKH EXUGHQIRUWKHXSFRPLQJWULDOLWVHOILVUDWKHUPLQLPDO7KLV 6XDUH]FODLPVKLVVWDWHPHQWVPDGHLQWKH)%,FUXLVHULQWKH WHQGVWRVKRZWKDWWKHUHDOmJDLQlWKHSURVHFXWLRQVRXJKWZDV DIWHUQRRQ RI 2FWREHU   ZHUH WDNHQ LQ YLRODWLRQ RI DYRLGLQJWKHWULDOQRWWKHPRWLRQVDQFLOODU\WRWKHWULDODQG (GZDUGV7KHLQWHUURJDWLRQZDVLQLWLDWHGE\WKH)%,DQGWKH DYRLGDQFHRIWULDODVDSURVHFXWRULDOVWDNHLVLPSOLFLWLQWKH ILUVWTXHVWLRQWKH\DVNHGm'R\RXZDQWWRWDON"lDOWKRXJK SOHD EDUJDLQLQJ SURFHVV DQG WKHUHIRUH H[HPSW XQGHU JLYLQJ 6XDUH] DQ RSWLRQ ZDV QRW REYLRXVO\ D FODULI\LQJ %RUGHQNLUFKHUIURPEHLQJKHOGYLQGLFWLYH TXHVWLRQ DERXW 6XDUH]jV HTXLYRFDO DVVHUWLRQ RI ULJKW DV SHUPLWWHG E\ 'DYLV  6HH  86 DW   7KH )%, 6XDUH]LVDOVRXQDEOHWRVKRZWKDWWKHGLVWULFWFRXUWDEXVHG RIILFHUVLQWKHFDURUDWOHDVWVRPHRIWKHPNQHZGHIHQGDQW LWV GLVFUHWLRQ LQ ILQGLQJ WKH SURVHFXWRUjV DFWLRQV QRW KDG mRND\HGl UHSUHVHQWDWLRQ E\ WKH XQLRQ DWWRUQH\ IRU KLV XQUHDVRQDEOHDWOHDVWDVWRWKHFKDUJHVRQZKLFK6XDUH]ZDV LQWHUURJDWLRQRQWKHVHSDUWLFXODUPDWWHUVDW)%,KHDGTXDUWHUV FRQYLFWHG  )LUVW WKH PHUH SUHVHQFH RI D VXSHUVHGLQJ LQGLFWPHQWEULQJLQJDGGLWLRQDOFKDUJHVLVQRWVXIILFLHQWWREH SUHVXPSWLYHO\XQUHDVRQDEOH6HH*RRGZLQ86DW 6HHDOVR8QLWHG6WDWHVY:HOOV)GWK&LU   XSKROGLQJ VXSHUVHGLQJ LQGLFWPHQW  *HQHUDOO\ D 7KH GLVWULFW FRXUW DVVXPHG WKDW /W 6WUXW] RI ,QWHUQDO $IIDLUV KHDUG +XFNjV RIIHU RI DQ DWWRUQH\ LQVLGH WKH '3' 7KLV NQRZOHGJH ZRXOG SRWHQWLDOO\ YLQGLFWLYH VXSHUVHGLQJ LQGLFWPHQW PXVW DGG QRUPDOO\ EH LPSXWHG WR RWKHU VWDWH DFWRUV HYHQ WKRXJK WKH\ FODLPHG WR QRW DGGLWLRQDOFKDUJHVRUVXEVWLWXWHPRUHVHYHUHFKDUJHVEDVHGRQ KDYH KHDUG WKH RIIHU DW WKDW SRLQW 7KH GLVWULFW FRXUW DOVR IRXQG WKDW WKHVDPHFRQGXFWFKDUJHGOHVVKHDYLO\LQWKHILUVWLQGLFWPHQW 6XDUH] GLG LQGHHG VD\ m2.l EXW IRXQG WKDW WKLV GLG QRW FRQVWLWXWH H[SUHVVO\ DVNLQJ IRU DQ DWWRUQH\  8QLWHG6WDWHVY6XDUH] 1R 1R 8QLWHG6WDWHVY6XDUH] 

EHRYHUZKHOPHGE\WKHOHQJWK\LQGLFWPHQWSDGGHGZLWKZHDN 6HH$QGUHZV)GDW:KHUHE\FRQWUDVWWKHUHZHUH FKDUJHV DQG EHFRPH ELDVHG DJDLQVW D GHIHQGDQW DOWKRXJK PXOWLSOHFULPLQDODFWVWKHDGGLWLRQRIIXUWKHUFKDUJHVLVPRUH FLWLQJ QR SUHFHGHQW IRU WKLV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jV ILUVW FRQYHUVLRQ FRXQW DQG KLV PRQH\ LQVWDQFHDUHPHULWOHVV7KHDJUHHPHQWKHVLJQHGDOORZHGWKH ODXQGHULQJFRXQWVZHUHQRWGLVFRYHUHGXQWLODIWHUKLVDUUHVW SUREDWLRQRIILFHWRKHDUWKHPDWHULDO7KHDJUHHPHQWIRUEDGH (YLGHQFH RI KLV WULSV WR :LQGVRU DQG RI KLV VFKHPH ZLWK LWIURPEHLQJXVHGLQVHQWHQFLQJ6XDUH]DQGLWZDVQRWQRU sDNXV]HZVNLjV UHVWLWXWLRQ ZHUH DOVR GLVFRYHUHG ODWHU ZDVLWXVHGDVDEDVLVIRUIXUWKHUSURVHFXWLRQZKLFKPHDQWLQ $OWKRXJKDVLJQLILFDQWDPRXQWRIWKHSK\VLFDOHYLGHQFHZDV HIIHFW WKDW 6XDUH] JRW RII VFRWIUHH IRU D JRRG GHDO RI GLVFRYHUHG SULRU WR 6XDUH]jV LQGLFWPHQW RQ 1RYHPEHU  VXVSLFLRXVDFWLYLW\6LQFHWKHGHIHQGDQWDGPLWVWKLVm.DVWLJDU WKHJRYHUQPHQWSODXVLEO\FODLPVWKDWLWQHHGHGWLPHWR LVVXHlWRKDYHEHHQmHIIHFWLYHO\PRRWHGl6XDUH]%UDW XQUDYHOWKHWDQJOHGUHODWLRQVDPRQJ6XDUH]WKH*\SVLHVDQG KHKDVLQHIIHFWDEDQGRQHGWKLVFODLP SURSHUW\ LQ WKH SXWDWLYH FDUH RI WKH 'HDUERUQ 3ROLFH 'HSDUWPHQW 8OWLPDWHO\LQDYLHZUHLWHUDWHGDWRUDODUJXPHQW6XDUH] WULHVWRVKRHKRUQDOOKLVFRPSODLQWVWKHQHZLQGLFWPHQWVWKH 'HIHQGDQWGRHVQRWFRQWHVWWKDWDVXSHUVHGLQJLQGLFWPHQW XVHRIKLVSURIIHUDQGWKHWDNLQJRIKLVVWDWHPHQWRXWVLGHWKH EULQJLQJDGGLWLRQDOFKDUJHVZDVDSSURSULDWHoWKHTXHVWLRQLV SUHVHQFHRIFRXQVHOGLVFXVVHGLQIUDLQWRDVKRZLQJWKDWKH ZKHQLWZDVEURXJKWDQGZKDWLWFRQWDLQHG,WVHHPVDSSDUHQW ZDVSURVHFXWHGmYLQGLFWLYHO\lE\ZKLFK6XDUH]DSSHDUVWR WKDWWKHJRYHUQPHQWZDVKROGLQJVRPHFKDUJHVLQDEH\DQFHDV PHDQWKH8QLWHG6WDWHVZDVmRXWWRJHWKLPlRUOLNHGKLPOHVV DQLQGXFHPHQWGXULQJSOHDEDUJDLQLQJ$VGHIHQGDQWDGPLWV WKDQ 8QLWHG 6WDWHV $WWRUQH\V DQG WKH )%, QRUPDOO\ OLNH mSURVHFXWRUV ZHUH WKUHDWHQLQJ WKLV GHIHQGDQW ZLWK µPRQH\ FULPLQDO GHIHQGDQWV RU FRUUXSW SROLFHPHQ  %XW WKLV LV DOO ODXQGHULQJjGXULQJQHJRWLDWLRQVl6XDUH]%UDW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jVPRWLRQWRGLVPLVVWKHVHFKDUJHVDUHZHOO PRQH\ ODXQGHULQJ FKDUJHV ZHUH QRQIULYRORXV DQG EULQJLQJ WKHP ZDV SOHG0RUHRYHUXQGHUVRPHFLUFXPVWDQFHVRQHFDQLPDJLQH ZLWKLQ WKH SURVHFXWRUjV GLVFUHWLRQ  8QLWHG6WDWHVY6XDUH] 1R 1R 8QLWHG6WDWHVY6XDUH] 

DFULPLQDOXVLQJIRUHLJQ$70VWRGLVWULEXWHFULPLQDOSURFHHGV *RYjW %U DW  D SDJH ODWHU WKH JRYHUQPHQW PRUH VXUUHSWLWLRXVO\ DQG WKHQ FRQFHDOLQJ WKHP IXUWKHU WKURXJK IRUWKULJKWO\WHOOVXVm7KHVXEVHTXHQWGLVPLVVDORIWKH7UDYHO JDPEOLQJ WUDQVDFWLRQV  6HH  86& † D   2QH $FWFRXQWVZDVEDVHGRQRQHIDFWRQO\oWKHGLVWULFWFRXUWjV FRXOG DOWHUQDWHO\ JLYH FUHGHQFH WR 6XDUH]jV FODLP WKDW KLV GHQLDORIWKHPRWLRQWRGLVPLVVWKHIRUPHU&RXQW JDPEOLQJZDVVLPSO\DFRQVHTXHQFHRIKLVDGGLFWLRQDQGWKDW ZKLFK HQVXUHG WKDW HYLGHQFH RI GHIHQGDQWjV :LQGVRU LWV RQO\ FRQQHFWLRQ ZLWK KLV FRQYHUVLRQV ZDV WKDW WKH JDPEOLQJ ZRXOG EH DGPLVVLEOHl *RYjW %U DW   7KLV WKRXVDQGV RI GROODUV RI ORVVHV KH VXVWDLQHG DW WKH FDVLQR PLJKWZHOOUDLVHVXVSLFLRQVDERXWWKHUHDVRQDEOHQHVVRIWKH FUHDWHGDILQDQFLDOKROHWKDWKHWULHGWRILOOZLWKWKHSURSHUW\ JRYHUQPHQWjVFRQGXFWDWOHDVWDVWRWKHVHFKDUJHV XQGHU FDUH RI WKH SROLFH  6LQFH WKH FRQFHUQ RI D YLQGLFWLYHQHVVFKDUJHLVZLWKWKHPRWLYHRIWKHSURVHFXWLRQ 7KH GHIHQGDQWjV PDLQ SURWHFWLRQ DJDLQVW WKH EULQJLQJ RI WKHTXHVWLRQKHUHLVZKDWWKHHYLGHQFHWHQGVWRVKRZDERXWWKH XQIRXQGHG FULPLQDO FKDUJHV KRZHYHU LV WKURXJK WKH SURVHFXWLRQjVEHOLHI LQVWLWXWLRQRIWKHJUDQGMXU\6HH8QLWHG6WDWHVY3RZHOO )GWK&LU8QLWHG6WDWHVY&DODQGUD $FFRUGLQJWRWKHJRYHUQPHQWjVEULHILWVPRWLYHZDVQRQ 86     7KH 7UDYHO $FW FKDUJHV ZHUH DOO UHWDOLDWRU\DOWKRXJKLWLVFDQGLGWKDWWKH7UDYHO$FWFKDUJHV VXEPLWWHGDQGDSSURYHGE\WKHJUDQGMXU\DQGGHIHQGDQWGRHV ZHUHVRPHZKDWSHULSKHUDOEHLQJEURXJKWLWVHHPVZLWKWKH QRW DOOHJH WKLV JUDQG MXU\ ZDV PDQLSXODWHG RU RWKHUZLVH SULPDU\SXUSRVHRISURYLGLQJDQDYHQXHIRUWKHSUHVHQWDWLRQ SUHMXGLFHGDJDLQVWKLP6LQFHWKHLQGLFWPHQWZDVUHWXUQHG RIHYLGHQFHDERXW6XDUH]jVJDPEOLQJ$OWKRXJKFODLPLQJ WKHVHFKDUJHVDUHSUHVXPHGWRKDYHUHVWHGRQSUREDEOHFDXVH WKDWWKHmJRYHUQPHQWZDVSUHSDUHGWRSURYHlWKHHOHPHQWVRI DQG WKXV WKHLU IXUWKHU SURVHFXWLRQ LV ZLWKLQ SURVHFXWRULDO WKH7UDYHO$FWRIIHQVHV*RYjW%UDWLWJRHVRQWRDGPLW GLVFUHWLRQDEVHQWDUHWDOLDWRU\PRWLYH,WPD\ZHOOEHWKDWWKH WKDWEHFDXVHLWZDVQRWVXUHWKHWKHIWRIHPSOR\HHVHUYLFHV SURVHFXWLRQFRQVLGHUHGWKHHYLGHQFHZDVOLNHO\WREHUDWKHU FODLPZDVmOHJDOO\YLDEOHlLWmEURXJKWERWKVHULHVRIFKDUJHV ZHDNDQGEURXJKWWKHVHFKDUJHVSULPDULO\IRUWKHLUSRVVLEOH UHODWLQJWRWKH:LQGVRUJDPEOLQJWULSVLQRUGHUWRGHPRQVWUDWH HIIHFWRQWKHRWKHUmFRUHlFKDUJHV+RZHYHUGHIHQGDQWSRLQWV WR WKH MXU\ WKH PRWLYH IRU GHIHQGDQWjV DOOHJHG EULEHU\ DQG WRQRFDVHWKDWIRUELGVWKHJRYHUQPHQWjVWULDOVWUDWHJ\ FRQYHUVLRQRISURSHUW\FKDUJHGLQ&RXQWVDQGl*RYjW%U DW:KHQWKHFKDUJHDOOHJLQJ6XDUH]KDGVWROHQKLVRZQ (YHQLIWKHSURVHFXWLRQjVFRQGXFWLQUHJDUGWRWKH7UDYHO VHUYLFHVVXUYLYHGWKHPRWLRQWRGLVPLVVmWKHJRYHUQPHQWQR $FW FKDUJHV ZHUH WKRXJKW XQUHDVRQDEOH DQG WKH RWKHU ORQJHU QHHGHG WKH 7UDYHO $FW FKDUJHV &RXQWV  WKURXJK UHTXLUHPHQWVIRUYLQGLFWLYHQHVVZHUHPHWDQGQRWUHEXWWHG  LQ RUGHU WR GHPRQVWUDWH WR WKH MXU\ WKH PRWLYH IRU WKH QRUPDO UHPHG\ LV WR mEDU WKH DXJPHQWHG FKDUJHl GHIHQGDQWjVDOOHJHGEULEHU\DQGFRQYHUVLRQLHKLVJDPEOLQJ $QGUHZV)GDW6LQFHWKHVHFKDUJHVQHYHUHYHQ LQ:LQGVRUl*RYjW%UDW ZHUHEURXJKWWRWULDOWKLVZRXOGEHPHDQLQJOHVVGHIHQGDQW QRZKHUHDUJXHVWKHFKDUJHVRQZKLFKKHZDVFRQYLFWHGZHUH 7KH JRYHUQPHQW FLWHV WKH FRUUHFW VWDQGDUG IURP YLQGLFWLYHO\EURXJKW6XDUH]IXUWKHUDUJXHVWKDWDMXU\FRXOG %RUGHQNLUFKHUWKDWmVRORQJDVWKHSURVHFXWRUKDVSUREDEOH FDXVH WR EHOLHYH WKDW WKH DFFXVHG FRPPLWWHG DQ RIIHQVH GHILQHGE\VWDWXWHWKHGHFLVLRQZKHWKHURUQRWWRSURVHFXWH  DQGZKDWFKDUJHWRILOHRUEULQJEHIRUHDJUDQGMXU\JHQHUDOO\ 'HIHQGDQW GRHV FODLP YLQGLFWLYHQHVV ZLWK UHJDUG WR DOO WKH FKDUJHV

UHVWVHQWLUHO\KLVGLVFUHWLRQl86DW$OWKRXJKLW RQ ZKLFK KH ZDV DFTXLWWHG VXFK DV PRQH\ ODXQGHULQJ +RZHYHU KLV DUJXPHQW RQ WKH PHULWV RI WKH PRQH\ ODXQGHULQJ FRXQWV GHSHQGV RQ SLRXVO\ FODLPV WR KDYH GURSSHG WKH FKDUJHV mLQ RUGHU WR XQTXHVWLRQLQJ DFFHSWDQFH RI KLV YLHZ WKDW WKHUH FRXOG QHYHU KDYH EHHQ VKRUWHQ WKH MXU\ LQVWUXFWLRQV DQG WKH MXU\jV GHOLEHUDWLRQVl FRQYHUVLRQ ZKHQ KH ILUVW WRRN WKH MHZHOU\ DQG WKDW FRQYHUVLRQ FRXOG RQO\ KDYH KDSSHQHG LQ WKH SDZQ VKRS :H UHMHFWHG WKLV DERYH DQG WKXV WKH