United States v. Ware

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  !  6

7KH +RQRUDEOH 'DQ $ 3ROVWHU 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH 1RUWKHUQ 'LVWULFW RI 2KLR VLWWLQJ E\ GHVLJQDWLRQ

  8QLWHG6WDWHVY:DUH 1R

$SSHOOHH21%5,()&KDUOHV*:ULJKWsU&KDWWDQRRJD 7HQQHVVHH IRU $SSHOODQW  *DU\ +XPEOH $66,67$17 81,7('67$7(6$77251(<&KDWWDQRRJD7HQQHVVHH IRU$SSHOOHH BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB 521$/'/((*,/0$1&LUFXLWsXGJH6\OYHVWHU:DUH ZDVFRQYLFWHGRQWZRFRXQWVRIPDLOIUDXG+HDSSHDOVKLV FRQYLFWLRQ RQ RQH RI WKRVH FRXQWV DUJXLQJ WKDW WKH JRYHUQPHQWIDLOHGWRRIIHUVXIILFLHQWHYLGHQFHWRHVWDEOLVKKLV JXLOW  :DUH DOVR FRQWHQGV WKDW WKH GLVWULFW FRXUW HUUHG LQ RYHUVWDWLQJ WKH DPRXQW RI ORVV DWWULEXWDEOH WR KLP IRU VHQWHQFLQJ SXUSRVHV  )RU WKH UHDVRQV VHW IRUWK EHORZ ZH $)),50WKHMXGJPHQWRIWKHGLVWULFWFRXUW ,%$&.*5281' 7KLVFDVHDULVHVIURP:DUHj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††:DUHZDVQDPHG LQ IRXU RI WKHVH FRXQWV  &RXQW  FKDUJHG :DUH ZLWK PDLO IUDXGLQFRQQHFWLRQZLWKDQLQVXUDQFHDSSOLFDWLRQVXEPLWWHG WR WKH 6WDQGDUG /LIH DQG $FFLGHQW ,QVXUDQFH &RPSDQ\ 6WDQGDUG/LIH+HZDVFKDUJHGLQ&RXQWZLWKPDLOIUDXG DULVLQJIURPDQDSSOLFDWLRQIRULQVXUDQFHZLWKWKH0XWXDORI 1R 8QLWHG6WDWHVY:DUH 

2PDKD,QVXUDQFH&RPSDQ\0XWXDORI2PDKD&RXQWV DQG  DOOHJHG WKDW :DUH FRPPLWWHG KHDOWK FDUH IUDXG E\ ILOLQJIDOVHFODLPVZLWK6WDQGDUG/LIHDQG0XWXDORI2PDKD UHVSHFWLYHO\ 7KHFDVHDJDLQVW:DUHZDVWULHGWRDMXU\LQ6HSWHPEHURI ,QVXUDQFHDJHQWVIURPERWK6WDQGDUG/LIHDQG0XWXDO RI2PDKDWHVWLILHGRQEHKDOIRIWKHJRYHUQPHQW7KHVHDJHQWV VWDWHGWKDWWKH\KDGREWDLQHGKRVSLWDOLQGHPQLW\SROLFLHVIRU :DUHLQ7KH\IXUWKHUWHVWLILHGWKDWWKHDSSOLFDWLRQVIRU WKHVHSROLFLHVUHIOHFWHG:DUHj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  7KH GLVWULFWFRXUWFRQFOXGHGRWKHUZLVHDQGGHQLHGWKHPRWLRQ  8QLWHG6WDWHVY:DUH 1R 1R 8QLWHG6WDWHVY:DUH 

:DUH ODWHU DSSHDUHG IRU VHQWHQFLQJ DW ZKLFK WLPH KH WKDWKHSHUVRQDOO\REWDLQHG7KDW/RQJZRXOGH[SDQGWKHLU REMHFWHG WR WKH DPRXQW RI ORVV DWWULEXWHG WR KLP LQ WKH LQVXUDQFH IUDXG VFKHPH E\ REWDLQLQJ DGGLWLRQDO SROLFLHV LQ 3UHVHQWHQFH,QYHVWLJDWLRQ5HSRUW3657KH365FRQFOXGHG :DUHjVQDPHVKRXOGKDYHFRPHDVQRVXUSULVHWR:DUHZKR WKDW:DUHZDVUHVSRQVLEOHIRUDWRWDOORVVRIZKLFK GHVFULEHG /RQJ DV WKH GULYLQJ IRUFH EHKLQG WKHLU LOOHJDO ZDV WKH DPRXQW SDLG RQ FODLPV PDGH XQGHU DOO  RI WKH DFWLYLWLHV KRVSLWDOLQGHPQLW\SROLFLHVWKDWOLVWHG:DUHDVWKHLQVXUHG 3XUVXDQWWR8QLWHG6WDWHV6HQWHQFLQJ*XLGHOLQHV†)E )LQDOO\:DUHPDLQWDLQVWKDWWKH'RXEOHsHRSDUG\&ODXVHRI WKHORVVDWWULEXWHGWR:DUHOHGWRDIRXUSRLQWLQFUHDVHLQKLV WKH)LIWK$PHQGPHQWVKLHOGVKLP IURPWKHORVVDVVRFLDWHG EDVH RIIHQVH OHYHO  :DUH FKDOOHQJHG WKH ORVV FDOFXODWLRQ ZLWKWKHIDOVHFODLPVVXEPLWWHGWR6WDQGDUG/LIHDQG0XWXDO DUJXLQJWKDWWKHORVVUHVXOWHGIURPWKHIDOVHFODLPVILOHGE\ RI 2PDKD  +H SRLQWV RXW WKDW WKH MXU\ DFTXLWWHG KLP RI /RQJUDWKHUWKDQKLPVHOI DFWXDOO\VXEPLWWLQJWKHVHFODLPVDVRSSRVHGWRWKHPDLOIUDXG DULVLQJIURPKLVUROHLQDSSO\LQJIRUWKHXQGHUO\LQJSROLFLHV 7KHGLVWULFWFRXUWRYHUUXOHG:DUHjVREMHFWLRQ:DUHZDV %XWGRXEOHMHRSDUG\FRQFHUQVDUHJHQHUDOO\QRWLPSOLFDWHGDW WKHQVHQWHQFHGWRPRQWKVLQSULVRQRQ&RXQWVDQGWR WKHVHQWHQFLQJVWDJHEHFDXVHVHQWHQFLQJGHWHUPLQDWLRQVmGR UXQ FRQFXUUHQWO\  ,Q DGGLWLRQ WKH GLVWULFW FRXUW VHQWHQFHG QRWSODFHDGHIHQGDQWLQMHRSDUG\RIDQRIIHQVHl0RQJHY :DUHWRWKUHH\HDUVRIVXSHUYLVHGUHOHDVHRQHDFKFRXQWDOVR &DOLIRUQLD  86   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†)E WKDWWKHJRYHUQPHQWKDGRIIHUHGVXIILFLHQWHYLGHQFHWRVXSSRUW WKHMXU\jVJXLOW\YHUGLFWRQ&RXQWZKLFKFKDUJHG:DUH ,,,&21&/86,21 ZLWK PDLO IUDXG LQ FRQQHFWLRQ ZLWK DQ DSSOLFDWLRQ IRU LQVXUDQFHZLWK0XWXDORI2PDKD:HZLOOVXVWDLQDMXU\jV )RU DOO RI WKH UHDVRQV VHW IRUWK DERYH ZH $)),50 WKH JXLOW\YHUGLFWVRORQJDVmDIWHUYLHZLQJWKHHYLGHQFHLQWKH MXGJPHQWRIWKHGLVWULFWFRXUW OLJKWPRVWIDYRUDEOHWRWKHJRYHUQPHQWDQ\UDWLRQDOWULHURI IDFW FRXOG KDYH IRXQG WKH HOHPHQWV RI WKH FULPH EH\RQG D UHDVRQDEOHGRXEWl8QLWHG6WDWHVY%HGGRZ)G WK&LU8QLWHG6WDWHVY9DQQHUVRQ)G WK&LUVWDWLQJWKDWWKHGHIHQGDQWEHDUVD mKHDY\EXUGHQlLQVHHNLQJWRVHWDVLGHDMXU\jVYHUGLFWEDVHG XSRQWKHDOOHJHGLQVXIILFLHQF\RIWKHHYLGHQFHFLWDWLRQDQG LQWHUQDOTXRWDWLRQPDUNVRPLWWHG 7KH JRYHUQPHQW KRZHYHU DUJXHV WKDW WKH mFRQFXUUHQW VHQWHQFLQJGRFWULQHlLVDSSOLFDEOHDQGDOORZVXVWRDYRLGWKH  8QLWHG6WDWHVY:DUH 1R 1R 8QLWHG6WDWHVY:DUH 

ORVV KDG RWKHU PRUH SUR[LPDWH FDXVHV D GLVFUHWLRQDU\ QHHGWRUHYLHZ:DUHjVFKDOOHQJHWRKLVFRQYLFWLRQRQ&RXQW GRZQZDUG GHSDUWXUHnEXW QRW D PDQGDWRU\ µORVVj   7KLV GRFWULQH SURYLGHV WKDW mDQ DSSHOODWH FRXUW PD\ DGMXVWPHQWnPLJKWEHDSSURSULDWHl%XW:DUHQHYHUVRXJKW GHFOLQHWRKHDUDVXEVWDQWLYHFKDOOHQJHWRDFRQYLFWLRQZKHQ DGRZQZDUGGHSDUWXUHLQWKHSUHVHQWFDVHLQVWHDGFODLPLQJ WKH VHQWHQFH RQ WKH FKDOOHQJHG FRQYLFWLRQ LV EHLQJ VHUYHG WKDWQRQHRIWKHORVVZDVDWWULEXWDEOHWRKLPXQGHU FRQFXUUHQWO\ ZLWK DQ HTXDO RU ORQJHU VHQWHQFH RQ D YDOLG † )E  +H KDV WKHUHIRUH ZDLYHG DQ\ FODLP IRU D FRQYLFWLRQl'DOHY+DHEHUOLQ)GQWK GRZQZDUG GHSDUWXUH  8QLWHG 6WDWHV Y 6KDWWXFN  )G &LU7KHJRYHUQPHQWSRLQWVRXWWKDW:DUHDGPLWVKLV VW&LUKROGLQJWKDWWKHGHIHQGDQWZDLYHG JXLOWDVWR&RXQWRQZKLFKKHZDVJLYHQDVHQWHQFHHTXDO D FODLP IRU D GRZQZDUG GHSDUWXUH EDVHG XSRQ mPXOWLSOH WRWKHRQHKHUHFHLYHGRQ&RXQW%HFDXVHWKHGLVWULFWFRXUW FDXVDWLRQlE\IDLOLQJWRPDNHWKHFODLPLQWKHGLVWULFWFRXUW RUGHUHGWKHSHULRGVRILQFDUFHUDWLRQDQGVXSHUYLVHGUHOHDVHRQ &RXQWV  DQG  WR UXQ FRQFXUUHQWO\ WKH JRYHUQPHQW :DUHLVQRWDFRPSHOOLQJFDQGLGDWHIRUVXFKDGHSDUWXUHLQ PDLQWDLQVWKDWVHWWLQJDVLGH:DUHjVFRQYLFWLRQRQ&RXQW DQ\HYHQW+HDQGKLVFRGHIHQGDQWVH[HFXWHGDIUDXGXOHQW ZRXOGKDYHQRFRQVHTXHQFH7KHJRYHUQPHQWWKXVXUJHVXV VFKHPH WKDW FDXVHG D WRWDO ORVV RI RYHU  PLOOLRQ  7KH WRUHIUDLQIURPFRQVLGHULQJWKHPHULWVRI:DUHjVFKDOOHQJHWR  ORVV DWWULEXWHG WR :DUH WKHUHIRUH GRHV QRW KLVFRQYLFWLRQRQ&RXQW mRYHUVWDWHl WKH VHULRXVQHVV RI KLV FULPLQDO FRQGXFW  86 6HQWHQFLQJ *XLGHOLQHV 0DQXDO † ) FRPPHQW Q 7KLVDUJXPHQWZRXOGEHSHUVXDVLYHZHUHLWQRWIRUWKHIDFW VWDWLQJWKDWDmGRZQZDUGGHSDUWXUHPD\EHZDUUDQWHGlZKHUH WKDW WKH GLVWULFW FRXUW RUGHUHG :DUH WR SD\ D  VSHFLDO WKH WRWDO GROODU ORVV WKDW UHVXOWV IURP WKH RIIHQVH mPD\ DVVHVVPHQWIRUHDFKFRXQWRIFRQYLFWLRQ,Q5D\Y8QLWHG RYHUVWDWHWKHVHULRXVQHVVRIWKHRIIHQVHl 6WDWHV86SHUFXULDPWKH6XSUHPH &RXUW KHOG WKDW WKH FRQFXUUHQW VHQWHQFLQJ GRFWULQH LV :DUHDOVRDUJXHVWKDWKHVXEPLWWHGDSSOLFDWLRQVIRURQO\ LQDSSOLFDEOHZKHUHDGHIHQGDQWPXVWSD\DQDVVHVVPHQWRQ RIWKHLQVXUDQFHSROLFLHVREWDLQHGLQKLVQDPHZLWK/RQJ HDFKFRXQWRIFRQYLFWLRQ$FFRUGLQJO\ZHPXVWFRQVLGHUWKH EHLQJVROHO\UHVSRQVLEOHIRUVXEPLWWLQJDSSOLFDWLRQVIRUWKH PHULWVRI:DUHjVFKDOOHQJHWRKLVFRQYLFWLRQ8QLWHG6WDWHV UHPDLQLQJSROLFLHV+HWKXVFRQWHQGVWKDWHYHQLIKHPXVW Y:DGH)GWK&LUUHIXVLQJWRDSSO\ EHDUUHVSRQVLELOLW\IRUWKHIDOVHFODLPVILOHGE\/RQJRQO\WKH WKH FRQFXUUHQW VHQWHQFLQJ GRFWULQH ZKHUH WKH GLVWULFW FRXUW ORVVDULVLQJIURPWKHFODLPVILOHGXQGHUWKHSROLFLHVWKDWKH LPSRVHG D  VSHFLDO DVVHVVPHQW RQ HDFK RI WKH WZHQW\ SHUVRQDOO\REWDLQHGLVDWWULEXWDEOHWRKLP FRXQWVIRUZKLFKWKHGHIHQGDQWZDVFRQYLFWHG 7KLV DUJXPHQW ODFNV PHULW  $OWKRXJK :DUH FODLPV WKDW 7XUQLQJQRZWRWKHMXU\jVJXLOW\YHUGLFWRQ&RXQW:DUH /RQJ REWDLQHG  RI WKH  LQVXUDQFH SROLFLHV RQ ZKLFK FRQWHQGV WKDW WKH JRYHUQPHQW IDLOHG WR SURYH EH\RQG D IUDXGXOHQWFODLPVZHUHODWHUILOHG:DUHEHDUVUHVSRQVLELOLW\ UHDVRQDEOH GRXEW WKDW KH VXEPLWWHG D IDOVH LQVXUDQFH IRU /RQJjV FRQGXFW SXUVXDQW WR 8QLWHG 6WDWHV 6HQWHQFLQJ DSSOLFDWLRQWR0XWXDORI2PDKD:DUHDFNQRZOHGJHVWKDW *XLGHOLQHV†%D  %7KLVVHFWLRQSURYLGHVWKDWIRU 0XWXDORI2PDKDUHFHLYHGDIDOVHDSSOLFDWLRQLQKLVQDPHEXW VHQWHQFLQJ SXUSRVHV D GHIHQGDQW LV DFFRXQWDEOH IRU mDOO KH PDLQWDLQV WKDW /RQJ IRUJHG KLV VLJQDWXUH RQ WKDW UHDVRQDEO\IRUVHHDEOHDFWVRIRWKHUVLQIXUWKHUDQFHRI>D@ DSSOLFDWLRQ MRLQWO\XQGHUWDNHQFULPLQDODFWLYLW\l:DUHGRHVQRWGLVSXWH WKDWKHDQG/RQJDFWHGWRJHWKHULQREWDLQLQJYDULRXVLQVXUDQFH 7RSURYHWKDW:DUHFRPSOHWHGDQGSHUVRQDOO\VLJQHGWKH SROLFLHV XQGHU IDOVH SUHWHQVHV  +H DFNQRZOHGJHV IRU 0XWXDO RI 2PDKD LQVXUDQFH DSSOLFDWLRQ WKH JRYHUQPHQW LQVWDQFHWKDW/RQJSDLGDOORIWKHSUHPLXPVRQWKHSROLFLHV RIIHUHGWKHWHVWLPRQ\RI0LWFK:LOVRQ:LOVRQDQLQVXUDQFH  8QLWHG6WDWHVY:DUH 1R 1R 8QLWHG6WDWHVY:DUH 

DJHQWWHVWLILHGWKDWKHSURFHVVHGDQDSSOLFDWLRQIRUD0XWXDO RIPRQHWDU\ORVVFDXVHGE\KLVIUDXGXOHQWFRQGXFW:HZLOO RI 2PDKD KRVSLWDO LQGHPQLW\ SROLF\ WKDW ERUH :DUHjV VHWDVLGHDGLVWULFWFRXUWjVIDFWXDOILQGLQJZLWKUHJDUGWRWKH VLJQDWXUH  $OWKRXJK KH FRQFHGHG WKDW KH FRXOG QRW UHFDOO DPRXQWRIORVVDWWULEXWHGWRDGHIHQGDQWXQGHU†)ERQO\ SHUVRQDOO\PHHWLQJZLWK:DUHGXULQJWKHDSSOLFDWLRQSURFHVV LIZHFRQFOXGHWKDWWKHILQGLQJLVFOHDUO\HUURQHRXV8QLWHG ZKLFKRFFXUUHGDSSUR[LPDWHO\IRXU\HDUVSULRUWR:DUHjVWULDO 6WDWHVY(OOHUEHH)GWK&LU$IDFWXDO :LOVRQ QHYHUWKHOHVV H[SODLQHG WKDW LW LV KLV mVWDQGDUG ILQGLQJLVFOHDUO\HUURQHRXVZKHUHDOWKRXJKWKHUHLVHYLGHQFH SURFHGXUHl WR PHHW ZLWK HYHU\ LQVXUDQFH DSSOLFDQW  +H WR VXSSRUW WKDW ILQGLQJ mWKH UHYLHZLQJ FRXUW RQ WKH HQWLUH WHVWLILHG WKDW GXULQJ VXFK D PHHWLQJ KH DVNV WKH DSSOLFDQW HYLGHQFHLVOHIWZLWKWKHGHILQLWHDQGILUPFRQYLFWLRQWKDWD HDFKRIWKHTXHVWLRQVRQWKHLQVXUDQFHDSSOLFDWLRQILOOVLQWKH PLVWDNHKDVEHHQFRPPLWWHGl8QLWHG6WDWHVY8QLWHG6WDWHV DQVZHUV JLYHQ E\ WKH DSSOLFDQW DQG WKHQ ZLWQHVVHV WKH *\SVXP&R86 DSSOLFDQWjVVLJQDWXUH:LOVRQIXUWKHUVWDWHGWKDWKHKDGQR UHDVRQ WR EHOLHYH WKDW WKLV VWDQGDUG SURFHGXUH ZDV QRW 7KH GLVWULFW FRXUW FRQFOXGHG WKDW WKH 365 FRUUHFWO\ KHOG IROORZHGZLWKUHJDUGWR:DUHjVDSSOLFDWLRQ :DUHDFFRXQWDEOHIRUDORVVRIWKHWRWDODPRXQWSDLG RQIDOVHFODLPVPDGHXQGHUWKHKRVSLWDOLQGHPQLW\SROLFLHV :DUHDUJXHVWKDW:LOVRQjVWHVWLPRQ\ ZDV LQVXIILFLHQWWR WKDW OLVWHG :DUH DV WKH LQVXUHG  7KLV ORVV FDOFXODWLRQ ZDV SURYHWKDWKHVXEPLWWHGWKHDSSOLFDWLRQWR0XWXDORI2PDKD FRQVHUYDWLYHLQWKHGLVWULFWFRXUWjVYLHZEHFDXVHWKHRYHUDOO :HGLVDJUHH:LOVRQWHVWLILHGWKDWKHURXWLQHO\ LQWHUYLHZV VFKHPHH[HFXWHGE\:DUHDQGKLVFRGHIHQGDQWVFDXVHGDWRWDO LQVXUDQFH DSSOLFDQWV DQG REVHUYHV WKHP VLJQ WKHLU ORVVRIPRUHWKDQPLOOLRQ:DUHQHYHUWKHOHVVFKDOOHQJHV DSSOLFDWLRQV7KHMXU\FRXOGKDYHUHDVRQDEO\LQIHUUHGIURP WKHORVVDWWULEXWHGWRKLPXQGHU†)EDUJXLQJWKDWKH WKLVWHVWLPRQ\WKDW:LOVRQIROORZHGKLVVWDQGDUGSURFHGXUHLQ ZDVQRWGLUHFWO\UHVSRQVLEOHIRUDQ\ORVV SURFHVVLQJ:DUHjVDSSOLFDWLRQDQGWKDW:DUHWKHUHIRUHVLJQHG WKHDSSOLFDWLRQ6HH)HG5(YLGm(YLGHQFHRIWKHKDELW 6SHFLILFDOO\ :DUH PDLQWDLQV WKDW WKH ORVV DW LVVXH ZDV RIDSHUVRQRURIWKHURXWLQHSUDFWLFHRIDQRUJDQL]DWLRQLV FDXVHGSULPDULO\E\/RQJZKRILOHGDOORIWKHIDOVHFODLPV UHOHYDQW WR SURYH WKDW WKH FRQGXFW RI WKH SHUVRQ RU PDGHXQGHUWKHSROLFLHV%XW:DUHDFNQRZOHGJHVWKDWKLV RUJDQL]DWLRQRQDSDUWLFXODURFFDVLRQZDVLQFRQIRUPLW\ZLWK FRQGXFWZDVDmIDFWXDOSUHUHTXLVLWHlWRWKHORVV+LVFRXQVHO WKHKDELWRUURXWLQHSUDFWLFHl8QLWHG6WDWHVY&ROOLQV1R LQ IDFW FRQFHGHG GXULQJ WKH VHQWHQFLQJ KHDULQJ WKDW mLI   :/  DW  WK &LU 'HF   >:DUH@ KDG QRW ILOOHG RXW WKRVH DSSOLFDWLRQV DQG EHHQ XQSXEOLVKHG WDEOH GHFLVLRQ VWDWLQJ WKDW 5XOH  KDELW DFFHSWHG    WKH ORVV ZRXOG QRW KDYH RFFXUUHGl  :DUHjV HYLGHQFH mPD\ HVWDEOLVK >D GHIHQGDQWjV@ JXLOW EH\RQG D FRQWHQWLRQWKXVERLOVGRZQWRWKHDUJXPHQWWKDW/RQJLVPRUH UHDVRQDEOHGRXEWl UHVSRQVLEOHIRUWKHORVVWKDQKHLV )RUWKHUHDVRQVVHWIRUWKDERYHZHKROGWKDWWKHGLVWULFW /RVV LV DWWULEXWDEOH WR D GHIHQGDQW XQGHU † )E FRXUW FRUUHFWO\ GHWHUPLQHG WKDW WKH MXU\jV JXLOW\ YHUGLFW RQ KRZHYHUHYHQZKHUHWKHUHDUHRWKHUPRUHGLUHFWFDXVHVIRU &RXQWLVVXSSRUWHGE\VXIILFLHQWHYLGHQFH WKDWORVV8QLWHG6WDWHVY5HHGHU)GVW&LU m$Q\SRUWLRQRIWKHWRWDOORVVVXVWDLQHGE\WKHYLFWLP % $WWULEXWLRQRIORVV DV D FRQVHTXHQFH RI IDFWRUV H[WUDQHRXV WR WKH GHIHQGDQWjV FULPLQDOFRQGXFWLVQRWGHGXFWHGIURPWRWDOµYLFWLPORVVjSULRU :DUHQH[WFODLPVWKDWWKHGLVWULFWFRXUWHUUHGLQFDOFXODWLQJ WRWKHGHWHUPLQDWLRQRIWKHDSSOLFDEOHJXLGHOLQHVHQWHQFLQJ WKH DPRXQW RI ORVV DWWULEXWDEOH WR KLP SXUVXDQW WR 8QLWHG UDQJHSXUVXDQWWR†866*)E l8QLWHG6WDWHVY 6WDWHV 6HQWHQFLQJ *XLGHOLQHV † )E D VHFWLRQ WKDW .RSS)GG&LUm7RWKHH[WHQWDFWXDO LQFUHDVHVDGHIHQGDQWjVRIIHQVHOHYHOEDVHGXSRQWKHDPRXQW