Vakilian v. Shaw

• Court: Court of Appeals for the Sixth Circuit
• Decided: July 2, 2003
• Docket: 01-2443
• Status: Published

Opinion

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21 3XUVXDQW WR 6L[WK &LUFXLW 5XOH   9DNLOLDQY6KDZHWDO 1RV (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU )LOH 1DPH DS %HIRUH6,/(5DQG0225(&LUFXLWsXGJHV0F.,1/(< 'LVWULFWsXGJH 81,7('67$7(6&28572)$33($/6 BBBBBBBBBBBBBBBBB )257+(6,;7+&,5&8,7 &2816(/ BBBBBBBBBBBBBBBBB $5*8('  0DUN ( 'RQQHOO\ 2)),&( 2) 7+( $77251(<*(1(5$//DQVLQJ0LFKLJDQIRU$SSHOODQW 6$ 9$.,/,$1$GPLQLVWUDWRU ; +XJK 0 'DYLV sU &2167,787,21$/ /,7,*$7,21 RIWKH(67$7( 2)  $662&,$7(6 'HWURLW 0LFKLJDQ IRU $SSHOOHH  21 %5,()  0DUN 6 0HDGRZV 2)),&( 2) 7+( 02+$00$' 0 9$.,/,$1 $77251(<*(1(5$//DQVLQJ0LFKLJDQIRU$SSHOODQW  1RV 0'  +XJK 0 'DYLV sU &2167,787,21$/ /,7,*$7,21 3ODLQWLII$SSHOOHH ! $662&,$7(6'HWURLW0LFKLJDQIRU$SSHOOHH  &URVV$SSHOODQW  BBBBBBBBBBBBBBBBB  Y  23,1,21  BBBBBBBBBBBBBBBBB :(6/(< 6+$:   6,/(5 &LUFXLW sXGJH  ,Q WKLV LQWHUORFXWRU\ DSSHDO 'HIHQGDQW$SSHOODQW  'HIHQGDQW :HVOH\ 6KDZ 6SHFLDO $JHQW IRU WKH 0LFKLJDQ &URVV$SSHOOHH  $WWRUQH\*HQHUDOjV2IILFHDSSHDOVWKHGLVWULFWFRXUWjVGHQLDO  RIDEVROXWHDQGTXDOLILHGLPPXQLW\UHJDUGLQJFODLPVEURXJKW 5,&+$5' / .2(1,*6.1(&+7  E\WKHHVWDWHRI'U0RKDPPDG09DNLOLDQSXUVXDQWWR 'HIHQGDQW$SSHOOHH  86& ††  DQG  IRU DOOHJHG YLRODWLRQV RI  9DNLOLDQjVFRQVWLWXWLRQDOULJKWVGXULQJWKHVWDWHjVLQYHVWLJDWLRQ 1 DQGSURVHFXWLRQRIKLPIRU0HGLFDLGIUDXG9DNLOLDQFURVV $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW DSSHDOV UHTXHVWLQJ WKDW ZH H[HUFLVH RXU SHQGHQW DSSHOODWH IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW$QQ$UERU MXULVGLFWLRQ WR UHYHUVH WKH GLVWULFW FRXUWjV RUGHU JUDQWLQJ 1Rn0DULDQQH2%DWWDQL'LVWULFWsXGJH VXPPDU\ MXGJPHQW LQ IDYRU RI 'HIHQGDQW 5LFKDUG .RHQLJVNQHFKW$VVLVWDQW$WWRUQH\*HQHUDOIRUWKH6WDWHRI $UJXHG2FWREHU 0LFKLJDQEDVHGRQDEVROXWHSURVHFXWRULDOLPPXQLW\)RUWKH UHDVRQV VWDWHG EHORZ ZH $)),50 WKH GHQLDO RI DEVROXWH 'HFLGHGDQG)LOHGsXO\ LPPXQLW\ WR 6KDZ  :H DOVR $)),50 LQ SDUW DQG 5(9(56(LQSDUWWKHGLVWULFWFRXUWjVGHFLVLRQGHQ\LQJKLP

7KH +RQRUDEOH sRVHSK + 0F.LQOH\ sU 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH :HVWHUQ 'LVWULFW RI .HQWXFN\ VLWWLQJ E\ GHVLJQDWLRQ

 1RV 9DNLOLDQY6KDZHWDO   9DNLOLDQY6KDZHWDO 1RV

TXDOLILHG LPPXQLW\  :LWK UHVSHFW WR WKH FODLPV DJDLQVW $IWHUUHYLHZLQJWKLVHYLGHQFH.RHQLJVNQHFKWDXWKRUL]HGD .RHQLJVNQHFKW ZH FKRRVH WR H[HUFLVH RXU GLVFUHWLRQ WR FRPSODLQW DJDLQVW 9DNLOLDQ DORQJ ZLWK VHYHUDO RWKHU $)),50 WKH JUDQW RI VXPPDU\ MXGJPHQW RQ WKH )RXUWK SK\VLFLDQV FKDUJLQJ WKHP ZLWK PXOWLSOH YLRODWLRQV RI WKH $PHQGPHQWFODLPEXWGHFOLQHWRH[HUFLVHSHQGHQWDSSHOODWH 0LFKLJDQ)DOVH&ODLPV$FW0)&$ZKLFKPDNHVLWLOOHJDO MXULVGLFWLRQWRUHYLHZWKHGLVWULFWFRXUWjVJUDQWRIVXPPDU\ WRUHFHLYHDNLFNEDFNIRURUGHULQJWHVWVFRYHUHGE\0HGLFDLG MXGJPHQWWR.RHQLJVNQHFKWRQWKH†FODLP 6KDZWKHQWRRNWKHFRPSODLQWVWRWKHVWDWHGLVWULFWFRXUWIRU WKH SXUSRVH RI REWDLQLQJ DUUHVW ZDUUDQWV IRU DOO RI WKH %$&.*5281' SK\VLFLDQV  :KHQ WHVWLI\LQJ 6KDZ WROG WKH MXGJH WKDW 9DNLOLDQ mUHFHLYHG DGGLWLRQDO PRQH\ DERYH ZKDW KHjV )ROORZLQJWKHGLVPLVVDORIFULPLQDOFKDUJHV6$9DNLOLDQ VXSSRVHGWRJHWE\>RUGHULQJ@H[FHVVLYHDPRXQWVRIWHVWVl DGPLQLVWUDWRU RI WKH HVWDWH RI WKH ODWH 0RKDPPDG 0 DQGLQGLFDWHGWKDWm>W@KHUHZDVDJUHHPHQWEHWZHHQ>9DNLOLDQ@ 9DNLOLDQ0'VXHG.RHQLJVNQHFKWDQG6KDZVHHNLQJUHOLHI DQGWKHRZQHU'U%DLJWR>@SHUIRUPWKHVHVHUYLFHVDQGWKDW XQGHU86&††DQGIRUDOOHJHGYLRODWLRQV KH ZRXOG UHFHLYH PRQH\ IRU KLV VHUYLFHVl  9DNLOLDQ ZDV RI9DNLOLDQjVFLYLODQGFRQVWLWXWLRQDOULJKWVGXULQJWKHVWDWHjV VXEVHTXHQWO\FKDUJHGDQGERXQGRYHUIRUWULDO LQYHVWLJDWLRQDQGSURVHFXWLRQRIKLPIRU0HGLFDLGIUDXG7KH FRPSODLQWDOOHJHGWKDW.RHQLJVNQHFKWDQG6KDZFRQVSLUHGWR 2Q1RYHPEHUWKH:D\QH&RXQW\&LUFXLW&RXUW YLRODWH9DNLOLDQjV)RXUWKDQG)RXUWHHQWK$PHQGPHQWULJKWV UHYHUVHG WKH ILQGLQJ RI WKH GLVWULFW FRXUW DQG TXDVKHG WKH E\ SURVHFXWLQJ KLP ZLWKRXW SUREDEOH FDXVH DQG WKDW WKH LQIRUPDWLRQ  7KH 0LFKLJDQ &RXUW RI $SSHDOV XSKHOG WKH GHIHQGDQWVj DFWLRQV ZHUH PRWLYDWHG E\ DQLPXV WRZDUG GLVPLVVDO RI WKH FKDUJHV FLWLQJ D ODFN RI HYLGHQFH WKDW 9DNLOLDQEHFDXVHRIKLVHWKQLFLW\RUQDWLRQDORULJLQ 9DNLOLDQNQRZLQJO\UHFHLYHGDNLFNEDFNDQHFHVVDU\HOHPHQW RIWKHFKDUJH$WWKHWLPH6KDZWHVWLILHGEHIRUHWKHGLVWULFW ,Q  6KDZ ZDV DVVLJQHG WR D IHGHUDO WDVN IRUFH WR FRXUW WKH 0)&$ GLG QRW FRQWDLQ DQ HOHPHQW RI LQWHQW RU LQYHVWLJDWH 9DNLOLDQjV HPSOR\HU  m+HDOWK 6WRSl PHGLFDO NQRZOHGJH  +RZHYHU DIWHU 9DNLOLDQ ZDV FKDUJHG WKH FOLQLFV IRU VXVSHFWHG 0HGLFDLG IUDXG  7KH WDVN IRUFH 0LFKLJDQ&RXUWRI$SSHDOVUXOHGWKDWJHQHUDOLQWHQWZDVD H[HFXWHGVHDUFKZDUUDQWVIRUUHFRUGVDQGLQWHUYLHZHGVHYHUDO UHTXLUHPHQWXQGHUWKHVWDWXWH SDWLHQWV HPSOR\HHV DQG GRFWRUV DW DOO IRXU +HDOWK 6WRS ORFDWLRQV7KHLQYHVWLJDWLRQXOWLPDWHO\UHYHDOHGDV\VWHPRI 7KHHVWDWHVXEVHTXHQWO\ILOHGWKLVFLYLODFWLRQSXUVXDQWWR LOOHJDO NLFNEDFNV WR HPSOR\HHSK\VLFLDQV LQ WKH IRUP RI 86&†FODLPLQJWKDWWKHGHIHQGDQWVLQGLYLGXDOO\DQG PRQWKO\ERQXVHVWKDWZHUHEDVHGXSRQWKHQXPEHURIPHGLFDO DV SDUW RI D FRQVSLUDF\ YLRODWHG 9DNLOLDQjV )RXUWK WHVWVRUGHUHGE\WKHSK\VLFLDQV6HYHUDOSK\VLFLDQVDGPLWWHG $PHQGPHQWULJKWVE\DUUHVWLQJDQGSURVHFXWLQJKLPZLWKRXW WKDWWKH\ZLOOLQJO\SDUWLFLSDWHGLQWKHVFKHPH SUREDEOHFDXVH7KHWKHRU\RI9DNLOLDQjVFDVHLVWKDW6KDZ $OWKRXJK WKHUH ZDV QR GLUHFW HYLGHQFH VKRZLQJ WKDW 9DNLOLDQ NQHZ WKDW KH ZDV UHFHLYLQJ DQ LOOHJDO NLFNEDFN FLUFXPVWDQWLDO HYLGHQFH LPSOLFDWHG KLV SDUWLFLSDWLRQ LQ WKH  7KH 0)&$ SURYLGHV LQ UHOHYDQW SDUW m$ SHUVRQ ZKR VROLFLWV RIIHUV VFKHPH+LVHPSOR\PHQWFRQWUDFWFRQWDLQHGWKHVDPHERQXV RU UHFHLYHV D NLFNEDFN RU EULEH LQ FRQQHFWLRQ ZLWK WKH IXUQLVKLQJ RI JRRGV

SURYLVLRQDVVHYHUDOLQGLYLGXDOVZKRDGPLWWHGOLDELOLW\DQG RU VHUYLFHV IRU ZKLFK SD\PHQW LV RU PD\ EH PDGH LQ ZKROH RU LQ SDUW

UHFRUGVHVWDEOLVKHGWKDWKLVPRQWKO\ERQXVHVZHUHEDVHGXSRQ SXUVXDQW WR D SURJUDP HVWDEOLVKHG XQGHU $FW 1R  RI WKH 3XEOLF $FWV

WKHQXPEHURIPHGLFDOWHVWVKHRUGHUHGIRUKLVSDWLHQWV RI  > @ DV DPHQGHG ZKR PDNHV RU UHFHLYHV WKH SD\PHQW RU ZKR UHFHLYHV D UHEDWH RI D IHH RU FKDUJH IRU UHIHUULQJ DQ LQGLYLGXDO WR DQRWKHU SHUVRQ IRU WKH IXUQLVKLQJ RI WKH JRRGV DQG VHUYLFHV LV JXLOW\ RI D IHORQ\   l 0&/  1RV 9DNLOLDQY6KDZHWDO   9DNLOLDQY6KDZHWDO 1RV

RQ WKH DGYLFH RI .RHQLJVNQHFKW NQRZLQJO\ JDYH IDOVH RU s85,6',&7,21 PLVOHDGLQJ WHVWLPRQ\ WR WKH MXGJH LQ RUGHU WR GHPRQVWUDWH SUREDEOH FDXVH IRU DQ DUUHVW ZDUUDQW  7KH FRPSODLQW DOVR $QDSSHDOIURPWKHGHQLDORITXDOLILHGLPPXQLW\PD\EH DOOHJHV WKDW WKH GHIHQGDQWVj DFWLRQV ZHUH PRWLYDWHG E\ UHYLHZHGRQLQWHUORFXWRU\DSSHDOXQGHU0LWFKHOOY)RUV\WK QDWLRQDO RULJLQ GLVFULPLQDWLRQ DQG WKH GHIHQGDQWV DUH 86WRWKHH[WHQWWKDWLWUDLVHVTXHVWLRQVRI WKHUHIRUHOLDEOHXQGHU86&†IRUFRQVSLULQJWR ODZ'LFNHUVRQY0F&OHOODQ)GWK&LU GHSULYH9DNLOLDQRIHTXDOSURWHFWLRQRIWKHODZ6SHFLILFDOO\ 0L[HGTXHVWLRQVRIODZDQGIDFWDUHWUHDWHGDVOHJDO WKHHVWDWHDUJXHVWKDW9DNLOLDQDQ$PHULFDQFLWL]HQZKRZDV TXHVWLRQVIRUSXUSRVHVRIRXUUHYLHZ6HH:LOODPVY0HKUD ERUQLQ,UDQZDVVXEMHFWHGWRGLVFULPLQDWRU\WUHDWPHQWZKHQ  )G   WK &LU  HQ EDQF  'HQLDOV RI WKHWDVNIRUFHFKRVHQRWWRLQWHUYLHZKLPDVWKH\GLGRWKHU TXDOLILHG LPPXQLW\ KRZHYHU FDQQRW EH UHYLHZHG WR WKH SRWHQWLDO$QJOR$PHULFDQVXVSHFWVGHVSLWHNQRZLQJWKDWQRW H[WHQWWKDWWKHGHIHQGDQWVHHNVWRFKDOOHQJHWKHGLVWULFWFRXUWjV DOO GRFWRUVZKRUHFHLYHGWKHERQXVZHUHDZDUHWKDWLWZDV GHWHUPLQDWLRQ WKDW WKH HYLGHQFH ZDV VXIILFLHQW WR SHUPLW D GHULYHGIURPLOOHJDOPHDQV7KHHVWDWHDOVRFLWHVHYLGHQFH SDUWLFXODUILQGLQJRIIDFWsRKQVRQYsRQHV86 WKDW WHQ IRUHLJQERUQ $VLDQ SK\VLFLDQV DQG RQH sHZLVK    7KHUHIRUH ZH KDYH MXULVGLFWLRQ WR FRQVLGHU $PHULFDQ SK\VLFLDQ ZHUH SURVHFXWHG ZKHUHDV WKUHH ZKLWH ZKHWKHU WKH SODLQWLIIjV YHUVLRQ RI IDFWV GHPRQVWUDWHV D $PHULFDQ QRQsHZLVK SK\VLFLDQV ZKR DGPLWWHG WR YLRODWLRQRIFOHDUO\HVWDEOLVKHGULJKWVXQGHUWKH)RXUWKDQG SDUWLFLSDWLRQLQWKHLOOHJDOVFKHPHZHUHQRW )RXUWHHQWK$PHQGPHQWV .RHQLJVNQHFKWDQG6KDZILOHGDPRWLRQWRGLVPLVVDQGIRU 67$1'$5'2)5(9,(: VXPPDU\MXGJPHQWZLWKVXSSRUWLQJDIILGDYLWV9DNLOLDQILOHG D UHVSRQVH VXSSRUWHG E\ GRFXPHQWDWLRQ REWDLQHG IURP WKH :HUHYLHZWKHGLVWULFWFRXUWjVGHFLVLRQWRGHQ\DPRWLRQIRU HDUOLHU FULPLQDO FDVH  7KH GLVWULFW FRXUW JUDQWHG VXPPDU\ VXPPDU\ MXGJPHQW EDVHG RQ TXDOLILHG LPPXQLW\ GH QRYR MXGJPHQWWR.RHQLJVNQHFKWRQDOOIHGHUDOFODLPVEDVHGXSRQ 6WHPOHU Y &LW\ RI )ORUHQFH  )G   WK &LU DEVROXWHLPPXQLW\,WGHFOLQHGWRJUDQWLPPXQLW\WR6KDZ %HFDXVHWKHGLVWULFWFRXUWFRQVLGHUHGPDWWHUVRXWVLGH KRZHYHU RQ JURXQGV WKDW D IDFWXDO GLVSXWH UHPDLQHG DV WR WKH SOHDGLQJV LQ UHQGHULQJ LWV GHFLVLRQ RQ WKH GHIHQGDQWjV ZKHWKHUKHDFWHGZLWKLQWHQWRUGLVFULPLQDWRU\DQLPXV PRWLRQWRGLVPLVVDQGIRUVXPPDU\MXGJPHQWWKHGHFLVLRQ ZLOOEHWUHDWHGDVRQHIRUVXPPDU\MXGJPHQW6HH+LJJDVRQ Y 6WHSKHQV  )G   WK &LU  FLWLQJ 6DOHSKSRXU Y 8QLY RI 7HQQ  )G   WK &LU   86& †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j PRWLRQ WR GLVPLVV DQG GDPDJHV RFFDVLRQHG E\ VXFK LQMXU\ RU GHSULYDWLRQ DJDLQVW DQ\ IRU VXPPDU\ MXGJPHQW 7KHUHIRUH ZH ZLOO WUHDW WKH GLVWULFW FRXUWjV UXOLQJ RQH RU PRUH RI WKH FRQVSLUDWRUV DV RQH IRU VXPPDU\ MXGJPHQW EDVHG RQ TXDOLILHG LPPXQLW\ 1RV 9DNLOLDQY6KDZHWDO   9DNLOLDQY6KDZHWDO 1RV

FRPPLWWHGDFWVWKDWZRXOGYLRODWHDFOHDUO\HVWDEOLVKHGULJKW DFFRUGHGWHVWLI\LQJZLWQHVVHVWRDSROLFHRIILFHUZKRJDYH WKHQVXPPDU\ MXGJPHQWLVLPSURSHU3RHY+D\GRQ SHUMXUHG WHVWLPRQ\ DW D FULPLQDO WULDO  7KH XQGHUO\LQJ )GWK&LU UDWLRQDOHRIWKHGHFLVLRQZDVWKDWWKHRIILFHUIXQFWLRQHGDVDQ RUGLQDU\ZLWQHVVVXEMHFWWRWKHDGYHUVDU\SURFHVVLQKHUHQWLQ ',6&866,21 DWULDO,QWKLVFDVHKRZHYHU6KDZWHVWLILHGDWDQH[SDUWH SURFHHGLQJZKHUHKLVDFWLRQVZHUHWKDWRIDmFRPSODLQLQJ $$EVROXWH,PPXQLW\IRU6KDZ ZLWQHVVl UDWKHU WKDQ D mWHVWLI\LQJ ZLWQHVVl  %HFDXVH D FRPSODLQLQJZLWQHVVLVQRWSURWHFWHGE\DEVROXWHLPPXQLW\ 6KDZFRQWHQGVWKDWWKHGLVWULFWFRXUWHUUHGLQGHQ\LQJKLV QHLWKHULV6KDZ6HH.DOLQDY)OHWFKHU86 FODLPWRDEVROXWHLPPXQLW\+HDUJXHVWKDWHYHQDVVXPLQJ ,UHODQG)GDW$FFRUGLQJO\ZHKROG KH NQRZLQJO\ PDGH IDOVH VWDWHPHQWV WR WKH MXGJH KH LV WKDWWKHGLVWULFWFRXUWGLGQRWHUULQGHQ\LQJ6KDZjVFODLPWR QHYHUWKHOHVVHQWLWOHGWRDEVROXWHLPPXQLW\IRUIXQFWLRQLQJDV DEVROXWHLPPXQLW\IURPGDPDJHV DQRIILFLDOZKRSHUIRUPVDFULWLFDOUROHLQWKHMXGLFLDOSURFHVV $OWHUQDWLYHO\ 6KDZ DVVHUWV WKDW KH LV HQWLWOHG WR DEVROXWH % 4XDOLILHGLPPXQLW\IRU6KDZ LPPXQLW\IRUWHVWLI\LQJDVDZLWQHVV:HGLVDJUHH :HQRZWXUQWRWKHTXHVWLRQRIZKHWKHU6KDZLVHQWLWOHGWR 7KLVFRXUWKDVSUHYLRXVO\KHOGWKDWZKHUHDQLQYHVWLJDWRU TXDOLILHG LPPXQLW\ ZLWK UHVSHFW WR 9DNLOLDQjV )RXUWK DQG WHVWLILHVWRWKHIDFWXDOEDVLVRIDFULPLQDOFRPSODLQWEHIRUHD )RXUWHHQWK$PHQGPHQWFODLPV4XDOLILHGLPPXQLW\VKLHOGV MXGLFLDORIILFHUKHLVHQWLWOHGWRTXDOLILHGLPPXQLW\RQO\,Q JRYHUQPHQWRIILFLDOVDFWLQJZLWKLQWKHVFRSHRIWKHLURIILFLDO ,UHODQGY7XQLVZHGHFOLQHGWRH[WHQGDEVROXWHLPPXQLW\WR GXWLHVIURPFLYLOOLDELOLW\LQVRIDUDVWKHLUFRQGXFWGRHVQRW DQLQYHVWLJDWRUZKRVZRUHRXWDQDUUHVWZDUUDQWDQGH[SOLFLWO\ YLRODWHFOHDUO\HVWDEOLVKHGULJKWVRIZKLFKDUHDVRQDEOHSHUVRQ UHMHFWHG WKH DUJXPHQW WKDW WKH RIILFHUjV DFWLRQV ZHUH ZRXOGKDYHNQRZQ+DUORZY)LW]JHUDOG86 DQDORJRXV WR WKRVH RI D SURVHFXWRU DQG WKXV ZDUUDQWHG 7KHSXUSRVHRIWKHTXDOLILHGLPPXQLW\GHIHQVHLV FRPSOHWHLPPXQLW\IURPVXLW)GWK&LU WRSURWHFWSXEOLFRIILFLDOVmIURPXQGXHLQWHUIHUHQFHZLWKWKHLU UHMHFWLQJWKH7HQWK&LUFXLWjVUHDVRQLQJLQ5REHUWVY GXWLHV DQG IURP SRWHQWLDOO\ GLVDEOLQJ WKUHDWV RI OLDELOLW\l .OLQJ  )G  WK &LU  ZKLFK KHOG WKDW DQ %ODNHY:ULJKW)GWK&LUTXRWLQJ LQYHVWLJDWRUZDVDEVROXWHO\LPPXQHIURPVXLWIRUVZHDULQJ +DUORZ86DW7KXVZKHWKHUDQRIILFLDOLVHQWLWOHG RXWDFULPLQDOFRPSODLQWEHIRUHDMXGJHRQJURXQGVWKDWKLV WRTXDOLILHGLPPXQLW\LVDWKUHVKROGTXHVWLRQWREHUHVROYHG DFWLRQV ZHUH DQDORJRXV WR WKRVH RI D SURVHFXWRU  :H DWWKHHDUOLHVWSRVVLEOHSRLQWLQWKHSURFHHGLQJV6HH+DUORZ UHDVRQHG WKDW IRU LPPXQLW\ SXUSRVHV mWKH DFWLRQ RI DQ 86DW µRIILFHU DSSO\LQJ IRU D ZDUUDQW  ZKLOH D YLWDO SDUW RI WKH DGPLQLVWUDWLRQRIFULPLQDOMXVWLFHLVIXUWKHUUHPRYHGIURPWKH ,Q GHWHUPLQLQJ DQ RIILFHUjV HQWLWOHPHQW WR TXDOLILHG MXGLFLDO SKDVH RI FULPLQDO SURFHHGLQJV WKDQ WKH DFW RI D LPPXQLW\ZHIROORZDWZRVWHSLQTXLU\6DXFLHUY.DW] SURVHFXWRULQVHHNLQJDQLQGLFWPHQWjl,GDWTXRWLQJ 86     )LUVW WDNHQ LQ WKH OLJKW PRVW 0DOOH\Y%ULJJV86 7KXV6KDZ IDYRUDEOHWRWKHSODLQWLIIZHGHFLGHZKHWKHUWKHIDFWVDOOHJHG LV QRW HQWLWOHG WR DEVROXWH LPPXQLW\ IRU KLV UROH LQ WKH VKRZWKHRIILFHUjVFRQGXFWYLRODWHGDFRQVWLWXWLRQDOULJKW,G LVVXDQFHRIWKHDUUHVWZDUUDQW DW,IQRFRQVWLWXWLRQDOULJKWZRXOGKDYHEHHQYLRODWHG ZHUHWKHSODLQWLIIjVDOOHJDWLRQVHVWDEOLVKHGWKHUHLVQRQHHG 1RULV6KDZHQWLWOHGWRDEVROXWHLPPXQLW\DVDWHVWLI\LQJ IRUIXUWKHULQTXLU\LQWRLPPXQLW\,IDYLRODWLRQFDQEHPDGH ZLWQHVV  ,Q %ULVFRH Y /DKXH  86   WKH 6XSUHPH &RXUW H[WHQGHG DEVROXWH LPPXQLW\ QRUPDOO\ 1RV 9DNLOLDQY6KDZHWDO   9DNLOLDQY6KDZHWDO 1RV

RXW RQ D IDYRUDEOH YLHZ RI WKH SODLQWLIIjV VXEPLVVLRQV ZH IDOVHLQIRUPDWLRQXVHGWRSURFXUHDVHDUFKZDUUDQWZDVDNH\ QH[WDVNZKHWKHUWKHULJKWZDVFOHDUO\HVWDEOLVKHG,G LVVXHLQGHFLGLQJZKHWKHUWRJUDQWTXDOLILHGLPPXQLW\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jV)RXUWK$PHQGPHQWULJKWVZHUHYLRODWHG TXHVWLRQRImZKHWKHUWKHMXGLFLDORIILFHULVVXLQJWKHZDUUDQW ZRXOGKDYHGRQHVRHYHQZLWKRXWWKHNQRZLQJO\RUUHFNOHVVO\ 7KH )RXUWK $PHQGPHQW UHTXLUHV WKDW DUUHVW ZDUUDQWV EH IDOVHVWDWHPHQWLVRQHIRUWKHMXU\lTXDOLILHGLPPXQLW\ZDV LVVXHG RQO\ XSRQ D VKRZLQJ RI SUREDEOH FDXVH  *UHHQH Y QRW DW LVVXH  ,G DW   :KHUH TXDOLILHG LPPXQLW\ LV 5HHYHV)GWK&LU,QDFLYLOULJKWV DVVHUWHGWKHLVVXHRISUREDEOHFDXVHLVRQHIRUWKHFRXUWVLQFH FDVHLQYHVWLJDWRUVDUHHQWLWOHGWRUHO\RQDMXGLFLDOO\VHFXUHG mWKH HQWLWOHPHQW LV LPPXQLW\ IURP VXLW UDWKHU WKDQ D PHUH DUUHVW ZDUUDQW DV VDWLVIDFWRU\ HYLGHQFH RI SUREDEOH FDXVH GHIHQVHWROLDELOLW\l+XQWHUY%U\DQW86 RU %URV,QFY:DOVK1R:/DW  LQYHVWLJDWRU@ FDQQRW UHO\ RQ D MXGLFLDO GHWHUPLQDWLRQ RI QWK&LU2FWXQSXEOLVKHGRSLQLRQm,WLVFOHDU SUREDEOH FDXVH LI WKDW RIILFHU NQRZLQJO\ PDNHV IDOVH WKDWLQ+LOODVLQ

EHFDXVHZHPXVWDOVRGHWHUPLQHZKHWKHUWKHIDOVHVWDWHPHQWV  †&ODLP ZHUHPDWHULDOWRWKHILQGLQJRISUREDEOHFDXVH 9DNLOLDQDOVRPDLQWDLQVWKDW6KDZLVOLDEOHXQGHU† $WWKHWLPH6KDZWHVWLILHGEHIRUHWKHMXGJH0LFKLJDQODZ IRUFRQVSLULQJWRGHSULYHKLPRIHTXDOSURWHFWLRQRIWKHODZ GLGQRWUHTXLUHWKHJRYHUQPHQWWRSURYHWKDWDQLQGLYLGXDO 7RVWDWHDFODLPXQGHU†DSODLQWLIIPXVWDOOHJHmD FKDUJHG ZLWK 0HGLFDLG IUDXG LQWHQGHG WR UHFHLYH RU KDG FRQVSLUDF\IRUWKHSXUSRVHRIGHSULYLQJHLWKHUGLUHFWO\RU NQRZOHGJH RI WKH NLFNEDFN  7KH 0)&$ FRQWDLQHG QR LQGLUHFWO\ DQ\ SHUVRQ RU FODVV RI SHUVRQV RI WKH HTXDO HOHPHQW RI VFLHQWHU DQG KDG EHHQ LQWHUSUHWHG WR SURKLELW SURWHFWLRQRIWKHODZVRURIHTXDOSULYLOHJHVRULPPXQLWLHVRI UHIHUUDOIHHVRUNLFNEDFNVHYHQIRUPHGLFDOO\QHFHVVDU\WHVWV WKH ODZV  DQ DFW LQ IXUWKHUDQFH RI WKH FRQVSLUDF\ ,W ZDV QRW XQWLO WHQ PRQWKV DIWHU 9DNLOLDQjV DUUHVW WKDW WKH  ZKHUHE\ D SHUVRQ LV HLWKHU LQMXUHG LQ KLV SHUVRQ RU 0LFKLJDQ&RXUWRI$SSHDOVUXOHGWKDWDVKRZLQJRIJHQHUDO SURSHUW\RUGHSULYHGRIDQ\ULJKWRUSULYLOHJHRIDFLWL]HQRI LQWHQWZDVUHTXLUHGXQGHUWKHVWDWXWH6HH3HRSOHY0RWRU WKH8QLWHG6WDWHVl8QLWHG%KGRI& sY6FRWW86 &LW\ +RVS DQG 6XUJLFDO 6XSSO\  1:G       7KH DFWV ZKLFK DUH DOOHJHG WR KDYH 0LFK $SS   7KXV WKHUH ZDV QR UHTXLUHPHQW WKDW GHSULYHGWKHSODLQWLIIRIHTXDOSURWHFWLRQPXVWEHWKHUHVXOWRI 6KDZ RIIHU SURRI RI NQRZOHGJH RU XQQHFHVVDU\ WHVWLQJ LQ FODVVEDVHGGLVFULPLQDWLRQ6HH1HZHOOY%URZQ)G RUGHUWRHVWDEOLVKSUREDEOHFDXVH WK&LU 7KHUHPDLQLQJTXHVWLRQLVZKHWKHUWKHDFFXUDWHSRUWLRQVRI 2QDSSHDO6KDZDUJXHVWKDW9DNLOLDQKDVIDLOHGWRSXWIRUWK 6KDZjV WHVWLPRQ\ VXIILFH WR HVWDEOLVK SUREDEOH FDXVH  ,Q VXIILFLHQW HYLGHQFH WR VXSSRUW D IDFWXDO ILQGLQJ WKDW D DGGLWLRQWRWKHIDOVHVWDWHPHQWV6KDZWHVWLILHGWKDW9DNLOLDQ FRQVSLUDF\ H[LVWHG DQG WKDW KH ZDV PRWLYDWHG E\ mUHFHLYHGDGGLWLRQDOPRQH\DERYHZKDWKHLVVXSSRVHGWRJHWl GLVFULPLQDWRU\ DQLPXV  %HFDXVH WKLV LV DQ LQWHUORFXWRU\ DQGWKDWmUHFRUGVZHUHNHSWHDFKPRQWKRQWKHDPRXQWRIWHVWV DSSHDO EDVHG RQ TXDOLILHG LPPXQLW\ ZH FDQQRW FRQVLGHU WKDWWKH\>WKHGRFWRUV@ZHUHSHUIRUPLQJDQGDVHSDUDWHFKHFN ZKHWKHU9DNLOLDQjVHYLGHQFHLVVXIILFLHQWWRSUHVHQWDJHQXLQH ZDVZULWWHQWRWKHVHGRFWRUVIRUWKHVHVHUYLFHVl,QGHHGWKH LVVXH IRU WULDO DV WR WKH XQGHUO\LQJ IDFWXDO HOHPHQWV RI KLV HYLGHQFHHVWDEOLVKHGWKDW9DNLOLDQUHFHLYHGDERQXVEDVHGRQ FODLP2XUMXULVGLFWLRQLVOLPLWHGWRSXUHO\OHJDOTXHVWLRQV WKHQXPEHURIWHVWVKHRUGHUHGDQGWKHWDVNIRUFHGLVFRYHUHG DQGWKHUHIRUHZHODFNMXULVGLFWLRQWRUHYLHZDGLVWULFWFRXUWjV D ZLGHUDQJLQJ VFKHPH WR FRYHU XS WKH LOOHJDO NLFNEDFNV ILQGLQJ WKDW 9DNLOLDQ KDV SUHVHQWHG VXIILFLHQW HYLGHQFH WR 7KLVWHVWLPRQ\ZKLOHLQVXIILFLHQWWREULQJFKDUJHVXQGHUWKH SURFHHGWRGLVFRYHU\ 6HH)DUP/DERU2UJ&RPPY2KLR FXUUHQWLQWHUSUHWDWLRQRIWKHVWDWXWHZDVVXIILFLHQWWRHVWDEOLVK 6WDWH+LJKZD\3DWURO)GWK&LU SUREDEOH FDXVH DW WKH WLPH FKDUJHV ZHUH ILOHG DJDLQVW FLWLQJsRKQVRQ86DW 9DNLOLDQ )RUSXUSRVHVRITXDOLILHGLPPXQLW\DQDO\VLVWKHUHLVOLWWOH ,QVXPPDU\WKHGLVWULFWFRXUWHUUHGLQKROGLQJWKDWWKHUH GRXEWWKDWWKUHHRIWKHIRXUHOHPHQWVDUHVDWLVILHG9DNLOLDQ ZHUHJHQXLQHLVVXHVRIPDWHULDOIDFWRQWKH†%HFDXVH DOOHJHVWKDW6KDZDQG.RHQLJVNQHFKWDVPHPEHUVRIWKHWDVN 6KDZjV UHPDLQLQJ WHVWLPRQ\ ZDV VXIILFLHQW WR HVWDEOLVK IRUFH DFWHG LQ FRQFHUW WR YLRODWH KLV FRQVWLWXWLRQDO ULJKWV SUREDEOH FDXVH WKH MXGJH ZRXOG KDYH LVVXHG WKH ZDUUDQW DFFRUGLQJWRDQDJUHHGXSRQSODQ7KHFRPSODLQWDOVRVHWV ZKHWKHU RU QRW WKHUH KDG EHHQ IDOVH WHVWLPRQ\  7KHUHIRUH 6KDZ LV HQWLWOHG WR TXDOLILHG LPPXQLW\ RQ WKH )RXUWK $PHQGPHQW FODLPV RI XQODZIXO DUUHVW DQG PDOLFLRXV  :KLOH ZH GHFOLQH WR DGGUHVV WKH VXIILFLHQF\ RI 9DNLOLDQjV HYLGHQFH SURVHFXWLRQ ZH QRWH WKDW 6KDZ PD\ PDNH WKLV FKDOOHQJH EHIRUH WKH GLVWULFW FRXUW RQ UHPDQG 1RV 9DNLOLDQY6KDZHWDO   9DNLOLDQY6KDZHWDO 1RV

IRUWK VHYHUDO DFWV WDNHQ LQ IXUWKHUDQFH RI WKH FRQVSLUDF\ 1RWZLWKVWDQGLQJWKLVFRQFOXVLRQ6KDZQHYHUWKHOHVVDVVHUWV LQFOXGLQJ6KDZjVDQG.RHQLJVNQHFKWjVIDLOXUHWRLQWHUYLHZ WKDWVXPPDU\MXGJPHQWLVDSSURSULDWHLQOLJKWRIKLVDIILGDYLW 9DNLOLDQ GXULQJ WKHLU LQYHVWLJDWLRQ DQG WKHLU GHFLVLRQ WR LQ VXSSRUW RI KLV PRWLRQ WR GLVPLVV DQG IRU VXPPDU\ H[HFXWHDFULPLQDOFRPSODLQWDQGZDUUDQWDJDLQVW9DNLOLDQ MXGJPHQW  %RWK 6KDZ DQG .RHQLJVNQHFKW VXEPLWWHG 7KHVHDFWVDFFRUGLQJWR9DNLOLDQGHSULYHGKLPRIKLVULJKWV DIILGDYLWV VWDWLQJ WKDW 9DNLOLDQjV HWKQLFLW\ ZDV QRW D SULYLOHJHVDQGLPPXQLWLHVXQGHUWKH&RQVWLWXWLRQEHFDXVHWKH FRQVLGHUDWLRQLQWKHGHFLVLRQWRLQYHVWLJDWHRUEULQJFKDUJHV GHFLVLRQWRFKDUJHKLPDIRUHLJQERUQDQGHWKQLFPLQRULW\ DJDLQVWKLP6KDZjVDIILGDYLWDOVRH[SODLQVWKDWKHWHVWLILHG GRFWRUZKLOHIDLOLQJWRFKDUJH$PHULFDQERUQ$QJORGRFWRUV WUXWKIXOO\GXULQJWKHSUHOLPLQDU\H[DPWKDWKHZDVXQDZDUH GHSULYHGKLPRIKLVULJKWWRHTXDOSURWHFWLRQRIWKHODZV RIWKHHWKQLFEDFNJURXQGRIWKHFULPLQDOGHIHQGDQWV9DNLOLDQ GLG QRW VXEPLW DGGLWLRQDO HYLGHQFH FRQWURYHUWLQJ 6KDZjV 7KH FULWLFDO LVVXH LV ZKHWKHU 9DNLOLDQ FDQ HVWDEOLVK WKDW VWDWHPHQWVWKDWKHODFNHGGLVFULPLQDWRU\DQLPXV 6KDZjV DFWLRQ ZDV PRWLYHG E\ mVRPH UDFLDO RU SHUKDSV RWKHUZLVH FODVVEDVHG LQYLGLRXVO\ GLVFULPLQDWRU\ DQLPXVl :KLOHDQXQFRQWURYHUWHGDIILGDYLWIUHTXHQWO\HVWDEOLVKHVWKH *ULIILQ Y %UHFNHQULGJH  86     6KDZ DEVHQFH RI D JHQXLQH LVVXH IRU WULDO WKH PHUH IDFW WKDW FRQWHQGVWKDW9DNLOLDQKDVIDLOHGWRPDNHRXWDYLRODWLRQRI mDIILGDYLWVILOHGLQVXSSRUWRIDPRWLRQIRUVXPPDU\MXGJPHQW FOHDUO\HVWDEOLVKHGODZEHFDXVHWKHGHIHQGDQWVLQWKHFULPLQDO DUH QRW FRQWURYHUWHG GRHV QRW QHFHVVDULO\ UHTXLUH LWV EHLQJ DFWLRQ GR QRW VKDUH D FRPPRQ FKDUDFWHULVWLF WKDW FUHDWHV D JUDQWHGl)LW]NHY6KDSSHOO)GWK VLQJOHmFODVVl7KHGHIHQGDQWVLQWKHFULPLQDOPDWWHUZHUHQRW &LUm:KHUHWKHHYLGHQWLDU\PDWWHULQVXSSRUWRIWKH RI WKH VDPH HWKQLFLW\ QRU ZHUH DOO RI WKHP IRUHLJQWUDLQHG PRWLRQ GRHV QRW HVWDEOLVK WKH DEVHQFH RI D JHQXLQH LVVXH SK\VLFLDQV VXPPDU\ MXGJPHQW PXVW EH GHQLHG HYHQ LI QR RSSRVLQJ HYLGHQWLDU\ PDWWHU LV SUHVHQWHGl  )HG 5 &LY 3 H $OWKRXJK m>D@ FODVV SURWHFWHG E\ VHFWLRQ  PXVW $GYLVRU\&RPPLWWHH1RWHV$PHQGPHQW7KHUHIRUH SRVVHVVWKHFKDUDFWHULVWLFVRIDGLVFUHWHDQGLQVXODUPLQRULW\ WRVDWLVI\KLVmEXUGHQRIVKRZLQJWKHDEVHQFHRIDQ\JHQXLQH VXFKDVUDFHQDWLRQDORULJLQRUJHQGHUl+DYHUVWLFN(QWHUV LVVXH DV WR DOO RI WKH PDWHULDO IDFWVl 6KDZ mPXVW PDNH D ,QF Y )LQ )HG &UHGLW ,QF  )G   WK &LU VKRZLQJWKDWLVTXLWHFOHDUZKDWWKHWUXWKLVDQGWKDWH[FOXGHV WKHODZGRHVQRWUHTXLUHDSODLQWLIIWRVKRZWKDWKHRU DQ\ UHDO GRXEW DV WR WKH H[LVWHQFH RI DQ\ JHQXLQH LVVXH RI VKHLVDPHPEHURIWKHVDPHSURWHFWHGFODVVDVRWKHUVZKR PDWHULDOIDFWl)LW]NH)GDWQ PD\ EH LQ D SRVLWLRQ LQGHSHQGHQWO\ WR DOOHJH D †  YLRODWLRQ7KXV9DNLOLDQQHHGQRWDOOHJHWKDWKHDQGWKHRWKHU 6HFWLRQGHIHQGDQWVFDQQRWHVWDEOLVKWKHDEVHQFHRID FULPLQDOGHIHQGDQWVVKDUHDFRPPRQKHULWDJH,WLVVXIILFLHQW JHQXLQH LVVXH RI PDWHULDO IDFW VLPSO\ E\ GLVDYRZLQJ DQ\ WKDW 9DNLOLDQ HVWDEOLVKHV IDFWV WHQGLQJ WR VKRZ WKDW 6KDZ NQRZOHGJHRIWKHGLVFULPLQDWRU\FKDUDFWHULVWLFDWLVVXH,Q SRVVHVVHG GLVFULPLQDWRU\ LQWHQW DQG WKDW KH SURVHFXWHG 5HHVHY&LW\RI6RXWKILHOG1R:/DW 9DNLOLDQEXWQRWDVLPLODUO\VLWXDWHGZKLWHSK\VLFLDQ6HH  WK &LU $XJ   ZH HPSOR\HG WKH 0F'RQQHOO HJ)DUP/DERU2UJ&RPP)GDWm$FODLPDQW 'RXJODVEXUGHQVKLIWLQJIUDPHZRUNLQWKHFRQWH[WRID† FDQGHPRQVWUDWHGLVFULPLQDWRU\HIIHFWE\QDPLQJDVLPLODUO\ FODLPDOOHJLQJGLVFULPLQDWLRQ1RWLQJWKDWWKH6XSUHPH&RXUW VLWXDWHGLQGLYLGXDOZKRZDVQRWLQYHVWLJDWHGRUWKURXJKWKH DSSOLHV WKLV EXUGHQ VKLIWLQJ DQDO\VLV WR HPSOR\PHQW XVH RI VWDWLVWLFDO RU RWKHU HYLGHQFH ZKLFK µDGGUHVV>HV@ WKH GLVFULPLQDWLRQODZVXLWVEURXJKWXQGHU86&†WKLV FUXFLDO TXHVWLRQ RI ZKHWKHU RQH FODVV LV EHLQJ WUHDWHG FRXUWUHDVRQHGWKDWWKHVFKHPHVKRXOGDOVRDSSO\WR† GLIIHUHQWO\ IURP DQRWKHU FODVV WKDW LV RWKHUZLVH VLPLODUO\ VXLWVIRUGLVFULPLQDWLRQRXWVLGHWKHHPSOR\PHQWFRQWH[W VLWXDWHGlFLWDWLRQRPLWWHG 1RV 9DNLOLDQY6KDZHWDO   9DNLOLDQY6KDZHWDO 1RV

0F'RQQHOO'RXJODVDQGLWVSURJHQ\UHIOHFWWKHIDFWWKDW $WWKHWLPHRI9DNLOLDQjVDUUHVWWKLVFLUFXLWUHFRJQL]HGWKDW GLUHFW HYLGHQFH LV RIWHQ XQDYDLODEOH LQ GLVFULPLQDWLRQ mWKHHQIRUFHPHQWRIDQRWKHUZLVHYDOLGODZFDQEHDPHDQVRI FDVHV>$@GLVFULPLQDWLRQSODLQWLIIFDQQRWQHFHVVDULO\ YLRODWLQJFRQVWLWXWLRQDOULJKWVE\LQYLGLRXVGLVFULPLQDWLRQl RIIHU GLUHFW WHVWLPRQ\ WKDW KLV UHMHFWLRQ GHPRWLRQ )XWHUQLFNY6XPSWHU7RZQVKLS)GWK&LU WHUPLQDWLRQ RU GHQLDO ZDV GXH WR XQODZIXO VHH DOVR 6WHPOHU  )G DW  8QLWHG 6WDWHV Y GLVFULPLQDWLRQ  0F'RQQHOO 'RXJODV WKXV VHUYHV D $QGHUVRQ)GWK&LU 0RUHRYHUDQ GLVFRYHU\OLNH IXQFWLRQ  DV ORQJ DV D SODLQWLII FDQ RIILFHUjVUHDVRQDEOHEHOLHIWKDWSUREDEOHFDXVHH[LVWVIRUDUUHVW HVWDEOLVKDSULPDIDFLHFDVHWKHGHIHQGDQWLVUHTXLUHG GRHV QRW DIIHFW WKH DYDLODELOLW\ RI D VHSDUDWH VHOHFWLYH WRSURYHDQH[SODQDWLRQRILWVDFWLRQV HQIRUFHPHQW FODLP XQGHU WKH (TXDO 3URWHFWLRQ &ODXVH 6WHPOHU)GQRWLQJWKDWLQ:KUHQY8QLWHG6WDWHV ,GVHHDOVR0LWFKHOOY7ROHGR+RVS)GWK  86   WKH 6XSUHPH &RXUW FRQILUPHG WKH &LUH[SODLQLQJWKDWWKH0F'RQQHOO'RXJODVIRUPXOD DYDLODELOLW\RIDQHTXDOSURWHFWLRQFODLPGHVSLWHWKHH[LVWHQFH DUWLFXODWHV WKH HYLGHQWLDU\ IUDPHZRUN IRU GLVFULPLQDWLRQ RISUREDEOHFDXVH7KXVLWVHHPVFOHDUWRXVWKDWDWWKHWLPH FODLPVEURXJKWXQGHU†$VDFRQVHTXHQFH6KDZPXVW 6KDZ VZRUH RXW WKH DUUHVW ZDUUDQWV VHOHFWLYH HQIRUFHPHQW GRPRUHWKDQGHQ\DQ\GLVFULPLQDWRU\DQLPXVRQKLVSDUW EHFDXVHRIUDFHHWKQLFLW\QDWLRQDOLW\RUUHOLJLRQZDVJURXQGV IRUUHOLHI +DYLQJ GHWHUPLQHG WKDW WKH IDFWV DOOHJHG LQ 9DNLOLDQjV FRPSODLQW ZRXOG LI SURYHQ HVWDEOLVK DQ HTXDO SURWHFWLRQ $OWKRXJKLQYHVWLJDWRUVKDYHFRQVLGHUDEOHGLVFUHWLRQDVWR YLRODWLRQ ZH PXVW QRZ DVN ZKHWKHU WKH ULJKW ZDV FOHDUO\ KRZ WKH\ FRQGXFW LQYHVWLJDWLRQV DQG HQIRUFH WKH ODZ D HVWDEOLVKHGDWWKHWLPHRI6KDZjVDFWLRQ,QGHFLGLQJZKHWKHU UHDVRQDEOHRIILFHULQ6KDZjVSRVLWLRQZRXOGKDYHUHFRJQL]HG DULJKWZDVFOHDUO\HVWDEOLVKHGDFRXUWVKRXOGFRQVLGHUmWKH WKDWVHOHFWLYHHQIRUFHPHQWRQWKHEDVLVRIDVXVSHFWjVUDFHRU VSHFLILFFRQWH[WRIWKHFDVHlQRWZKHWKHUWKHULJKWZDVFOHDUO\ HWKQLFLW\ LV XQFRQVWLWXWLRQDO  $FFRUGLQJ WR 9DNLOLDQjV HVWDEOLVKHGmDVDEURDGJHQHUDOSURSRVLWLRQl6DXFLHU FRPSODLQW 6KDZ KDG UHDVRQ WR VXVSHFW WKDW DOO VHYHQWHHQ 86 DW   m>7@KH UHOHYDQW GLVSRVLWLYH LQTXLU\ LQ SK\VLFLDQV ZKR ZRUNHG DW +HDOWK 6WRS FOLQLFV PLJKW KDYH GHWHUPLQLQJZKHWKHUDULJKWLVFOHDUO\HVWDEOLVKHGLVZKHWKHU EHHQLQYROYHGLQWKHLOOHJDOVFKHPHWRVRPHGHJUHH,IDV LWZRXOGEHFOHDUWRDUHDVRQDEOHRIILFHUWKDWWKHFRQGXFWZDV 9DNLOLDQDOOHJHG6KDZKDGFRPSDUDEOHHYLGHQFHDJDLQVWIRXU XQODZIXOLQWKHVLWXDWLRQKHFRQIURQWHGl,GFLWLQJ:LOVRQ SK\VLFLDQV9DNLOLDQ DQ ,UDQLDQERUQ SK\VLFLDQ DQG WKUHH Y/D\QH86  $QJOR$PHULFDQSK\VLFLDQVDQGGHFLGHGWRFKDUJHKLPDQG QRWWRFKDUJHWKH$QJOR$PHULFDQVEHFDXVHRIWKHLUUHVSHFWLYH UDFHVRUHWKQLFLW\VXUHO\WKHFLUFXPVWDQFHVZHUHVXFKWKDWD  UHDVRQDEOHRIILFHULQ6KDZjVSRVLWLRQZRXOGUHFRJQL]HWKDW 7KH UHFRUG GRHV UHIOHFW WKDW 6KDZ DGYDQFHG D QRQGLVFULPLQDWRU\ UHDVRQ IRU SURVHFXWLQJ 9DNLOLDQ EXW QRW WKH $QJOR SK\VLFLDQV 6KDZjV WKLVVHOHFWLYHHQIRUFHPHQWRIWKHODZZDVXQFRQVWLWXWLRQDO WHVWLPRQ\ VXJJHVWV WKDW KH EHOLHYHG WKDW VRPH RI WKH $PHULFDQERUQ 7KHUHIRUH6KDZLVQRWHQWLWOHGWRTXDOLILHGLPPXQLW\ZLWK SK\VLFLDQV VKRXOG KDYH EHHQ FKDUJHG LQDVPXFK DV WKH\ ZHUH NQRZQ WR UHVSHFWWR9DNLOLDQjV†FODLP KDYH SDUWLFLSDWHG LQ WKH IUDXGXOHQW VFKHPH EXW WKDW WKHVH LQGLYLGXDOV ZHUH QRW XOWLPDWHO\ FKDUJHG EHFDXVH WKH VWDWXWH RI OLPLWDWLRQV KDG UXQ ,Q & 3HQGHQWsXULVGLFWLRQ UHVSRQVH 9DNLOLDQ DUJXHV WKDW WKLV UHDVRQ LV SUHWH[W FLWLQJ WKH IDFW WKDW RQH RI WKH $QJOR SK\VLFLDQV DGPLWWHG WR UHFHLYLQJ D ERQXV FKHFN GXULQJ WKH VWDWXWH RI OLPLWDWLRQV SHULRG $JDLQ EHFDXVH WKLV FDVH LV EHIRUH XV RQ ,QKLVFURVVDSSHDO9DNLOLDQUHTXHVWVWKDWZHH[HUFLVHRXU LQWHUORFXWRU\ DSSHDO ZH PXVW YLHZ WKH IDFWV LQ WKH OLJKW PRVW IDYRUDEOH WR SHQGHQWDSSHOODWHMXULVGLFWLRQWRUHYHUVHWKHGLVWULFWFRXUWjV WKH SODLQWLII 7KHUHIRUH ZH PXVW DVVXPH IRU TXDOLILHG LPPXQLW\ RUGHUJUDQWLQJVXPPDU\MXGJPHQWLQIDYRURI.RHQLJVNQHFKW SXUSRVHV RQO\ WKDW 9DNLOLDQ KDV HVWDEOLVKHG D FRQVWLWXWLRQDO YLRODWLRQ 1RV 9DNLOLDQY6KDZHWDO   9DNLOLDQY6KDZHWDO 1RV

,QRUGHUWRH[HUFLVHSHQGHQWMXULVGLFWLRQRYHUDQLVVXHWKDWLV FULPLQDOSURFHVV2XUDQDO\VLVDGGUHVVHVRQO\ZKHWKHUWKH QRWLQGHSHQGHQWO\DSSHDODEOHWKHLVVXHPXVWEHmLQH[WULFDEO\ IDFWVZKHQYLHZHGLQWKHOLJKWPRVWIDYRUDEOHWR9DNLOLDQ LQWHUWZLQHGlZLWKWKHLVVXHRITXDOLILHGLPPXQLW\%UHQQDQ HVWDEOLVK D YLRODWLRQ RI D FOHDUO\ HVWDEOLVKHG ULJKW  7KXV Y7RZQVKLSRI1RUWKYLOOH)GWK&LU EHFDXVHDQHTXDOSURWHFWLRQYLRODWLRQPD\YHU\ZHOOH[LVWDQG LQWHUSUHWLQJGLFWXPLQ6ZLQWY&KDPEHUV&RXQW\&RPPjQ RXUUHVROXWLRQRIWKHDSSHDODEOHLVVXHKDVQREHDULQJRQWKH  86   mDV DOORZLQJ SHQGHQW DSSHOODWH TXHVWLRQRIDEVROXWHLPPXQLW\6KDZjVDSSHDOLQWKLVFDVHLV MXULVGLFWLRQZKHUHWKHDSSHDODEOHDQGQRQDSSHDODEOHLVVXHV QRWmLQH[WULFDEO\LQWHUWZLQHGlZLWKWKHHTXDOSURWHFWLRQFODLP DUHµLQH[WULFDEO\LQWHUWZLQHGjl7KLVFLUFXLWKDVLQWHUSUHWHG DJDLQVW.RHQLJVNQHFKW$FFRUGLQJO\ZHGHFOLQHWRUHYLHZ mLQH[WULFDEO\LQWHUWZLQHGlWRPHDQWKDWWKHUHVROXWLRQRIWKH WKH GLVWULFW FRXUWjV GHFLVLRQ WR JUDQW VXPPDU\ MXGJPHQW WR DSSHDODEOHLVVXHmQHFHVVDULO\DQGXQDYRLGDEO\lGHFLGHVWKH .RHQLJVNQHFKWRQWKLVFODLP QRQDSSHDODEOHLVVXH,G &21&/86,21 7KH UHVROXWLRQ RI WKH )RXUWK $PHQGPHQW FODLP DJDLQVW 6KDZ SHUPLWV XV WR H[HUFLVH RXU GLVFUHWLRQ WR UHYLHZ WKH )RU WKH UHDVRQV VWDWHG DERYH ZH $)),50 WKH GLVWULFW GLVWULFWFRXUWjVGHWHUPLQDWLRQRI.RHQLJVNQHFKWjVOLDELOLW\RQ FRXUWjVGHQLDORIDEVROXWHLPPXQLW\WR6KDZLQKLVLQGLYLGXDO WKLVLVVXH9DNLOLDQDOOHJHGWKDWERWKGHIHQGDQWVFRQVSLUHGWR FDSDFLW\:HDOVR5(9(56(WKHGLVWULFWFRXUWjVGHQLDORI YLRODWH KLV )RXUWK $PHQGPHQW ULJKWV  2XU ILQGLQJ WKDW TXDOLILHG LPPXQLW\ RQ WKH )RXUWK $PHQGPHQW FODLP DQG SUREDEOH FDXVH H[LVWHG IRU 9DNLOLDQjV DUUHVW KRZHYHU $)),50 WKH GLVWULFW FRXUWjV GHQLDO RI TXDOLILHG LPPXQLW\ SUHFOXGHV XV IURP ILQGLQJ WKDW .RHQLJVNQHFKWjV DOOHJHG ZLWKUHVSHFWWRWKH†FODLPDQG5(0$1'WKLVFDVHIRU DFWLRQVDVDSURVHFXWRUDPRXQWHGWRDFRQVWLWXWLRQDOYLRODWLRQ IXUWKHU SURFHHGLQJV  :LWK UHVSHFW WR WKH FODLPV DJDLQVW 6HHLGH[HUFLVLQJSHQGHQWMXULVGLFWLRQWRUHYHUVHVXPPDU\ .RHQLJVNQHFKW ZH FKRRVH WR H[HUFLVH RXU GLVFUHWLRQ WR MXGJPHQW LQ IDYRU RI WKH SODLQWLII RQ KLV FODLP ZKHUH ZH $)),50 WKH JUDQW RI VXPPDU\ MXGJPHQW RQ WKH )RXUWK IRXQGQRFRQVWLWXWLRQDOYLRODWLRQLQRXUTXDOLILHGLPPXQLW\ $PHQGPHQWFODLPEXWGHFOLQHWRH[HUFLVHSHQGHQWDSSHOODWH DQDO\VLVVHHDOVR0DWWR[Y&LW\RI)RUHVW3DUN)G MXULVGLFWLRQWRUHYLHZWKHGLVWULFWFRXUWjVJUDQWRIVXPPDU\ WK&LUILQGLQJLWDSSURSULDWHWRUHVROYH MXGJPHQWWR.RHQLJVNQHFKWRQWKH†FODLP DSHQGHQWFODLPDJDLQVWWKHFLW\JRYHUQPHQWZKHUHWKHUHKDG EHHQQRFRQVWLWXWLRQDOYLRODWLRQE\FLW\RIILFLDOV,QRWKHU ZRUGV WKH GHWHUPLQDWLRQ WKDW QR FRQVWLWXWLRQDO YLRODWLRQ RFFXUUHG QHFHVVDULO\ DQG XQDYRLGDEO\ UHVROYHV 9DNLOLDQjV )RXUWK $PHQGPHQW FODLP DJDLQVW .RHQLJVNQHFKW  :H WKHUHIRUH DIILUP WKDW JUDQW RI VXPPDU\ MXGJPHQW WR .RHQLJVNQHFKWRQWKLVFODLP +RZHYHUKDYLQJFRQFOXGHGWKDW9DNLOLDQjVDOOHJDWLRQVLI SURYHQ WUXH FRQVWLWXWH D YLRODWLRQ RI KLV HTXDO SURWHFWLRQ ULJKWV ZH FDQQRW H[HUFLVH SHQGHQW MXULVGLFWLRQ RYHU WKH †FODLPDJDLQVW.RHQLJVNQHFKW7KHGLVWULFWFRXUW JUDQWHG VXPPDU\ MXGJPHQW LQ IDYRU RI .RHQLJVNQHFKW ILQGLQJWKDWKHZDVHQWLWOHGWRDEVROXWHLPPXQLW\EHFDXVHKLV DFWVZHUHLQWLPDWHO\ERXQGXSZLWKWKHMXGLFLDOSKDVHRIWKH