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

686$1 0(1&(5 DQG :$/7(5 ; 0(1&(5  3ODLQWLIIV$SSHOODQWV   1RV    Y !   35,1&(721 648$5(  $3$570(176D0LFKLJDQ  /LPLWHG/LDELOLW\&RUSRUDWLRQ  DQG&+8&. %$%&2&.   'HIHQGDQWV$SSHOOHHV   s$1( '2( 7$00< '2(DQG  6+(//< '2(  'HIHQGDQWV  1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW$QQ$UERU 1R n*HRUJH&6WHHK'LVWULFWsXGJH 6XEPLWWHG 6HSWHPEHU  'HFLGHGDQG)LOHG 2FWREHU

  0HQFHUHWDOY3ULQFHWRQ 1RV   6TXDUH$SDUWPHQWVHWDO

%HIRUH 0(55,77DQG*,/0$1&LUFXLWsXGJHV %(// 'LVWULFWsXGJH BBBBBBBBBBBBBBBBB &2816(/ 21%5,() &UHLJKWRQ9$GDPV%52:167$1/(< $662&,$7(6'HWURLW0LFKLJDQIRU$SSHOODQWV'DYLG% /DQGU\0LFKHOOH(0DWKLHX1(0,(572/$5,/$1'5< 0$==(2  s2+1621 )DUPLQJWRQ +LOOV 0LFKLJDQ IRU $SSHOOHHV BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB 0(55,77 &LUFXLW sXGJH  3ODLQWLIIV DUH D KXVEDQG DQG ZLIH RI GLIIHUHQW UDFHV  'HIHQGDQW 3ULQFHWRQ 6TXDUH $SDUWPHQWV LV D XQLW UHVLGHQWLDO FRPSOH[ LQ 7D\ORU 0LFKLJDQ  &ODLPLQJ YLRODWLRQV RI IHGHUDO DQG VWDWH IDLU KRXVLQJ ODZV SODLQWLIIV DOOHJH WKDW GHIHQGDQW GHQLHG WKHLU UHQWDODSSOLFDWLRQEHFDXVHRIWKHLULQWHUUDFLDOPDUULDJH7KH SDUWLHVUHTXHVWHGPHGLDWLRQ$PHGLDWLRQWULEXQDOIRXQGIRU WKHSODLQWLIIVZKRUHMHFWHGWKHDZDUG  $W WKHFORVHRIWKH SODLQWLIIVj FDVH GXULQJ D EHQFK WULDO WKH FRXUW JUDQWHG WKH GHIHQGDQWVj PRWLRQ IRU MXGJPHQW DV D PDWWHU RI ODZ  7KH FRXUWDOVRJUDQWHGPHGLDWLRQVDQFWLRQVDJDLQVWSODLQWLIIV7KH TXHVWLRQ SUHVHQWHG RQ DSSHDO LV ZKHWKHU WKH SODLQWLIIV HVWDEOLVKHGDSULPDIDFLHFDVHRIKRXVLQJGLVFULPLQDWLRQ:H DJUHHZLWKWKHGLVWULFWFRXUWWKDWSODLQWLIIVIDLOHGWRPHHWWKLV EXUGHQ$FFRUGLQJO\ZHPXVWDOVRGHFLGHZKHWKHUWKHDZDUG RIPHGLDWLRQVDQFWLRQVZDVSURSHU7KRXJKWKHVKLIWLQJRI DWWRUQH\IHHVLVDQH[FHSWLRQDOWRROWKHSDUWLHVKHUHVWLSXODWHG LWVXVH:HZLOOQRWGLVWXUEWKDWHOHFWLRQ

7KH +RQRUDEOH 5REHUW +ROPHV %HOO 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH :HVWHUQ 'LVWULFW RI 0LFKLJDQ VLWWLQJ E\ GHVLJQDWLRQ  0HQFHUHWDOY3ULQFHWRQ 1RV   1RV   0HQFHUHWDOY3ULQFHWRQ  6TXDUH$SDUWPHQWVHWDO 6TXDUH$SDUWPHQWVHWDO

VXFK DV WKH XVH RI VDQFWLRQV DQG WKH ELQGLQJ HIIHFW RI WKH , SURFHHGLQJV(' 0,&+ 5 F  7KHSDUWLHVKHUHGLG VR7KH\FRXOGKDYHPRGLILHGWKHSURFHGXUDOUXOHV7KH\GLG 6XVDQ 0HQFHU LV ZKLWH DQG :DOWHU 0HQFHU LV $IULFDQ QRWLQVWHDGDGRSWLQJWKHVWDWHFRXUWUXOHVLQWKHLUHQWLUHW\DV $PHULFDQ7KH\PDUULHGLQ %\ WKHFRXSOHKDG WKHGHIDXOWPHGLDWLRQVFKHPH8QOLNH7LHGHOWKHWULDOFRXUW VHSDUDWHG0U0HQFHUZDVOLYLQJLQDVSDFHPDLQWDLQHGE\ KHUHGLGQRWUHO\RQLWVmLQKHUHQWSRZHUlWRJUDQWPHGLDWLRQ KLVPRWKHUjVFKXUFKDQG0UV0HQFHUZDVOLYLQJZLWKKHU VDQFWLRQV  7KH WULDO FRXUW ZDV LQVWHDG DXWKRUL]HG E\ WKH PRWKHU7KHFRXSOHVRXJKWWRUHFRQFLOHDQGUHQWWRJHWKHULQ FRQVHQWRIWKHSDUWLHV$FFRUGLQJO\WKHGLVWULFWFRXUWUHIXVHG GHIHQGDQWjV DSDUWPHQW FRPSOH[  0U 0HQFHU PHW ZLWK WRUHYLVHWKHSDUWLHVjFKRVHQPHGLDWLRQVWUDWHJ\RQWKHEDVLV GHIHQGDQW&KDUOHV%DEFRFNRZQHURIWKHDSDUWPHQWFRPSOH[ RIWKHGHIHQGDQWVjLQFRPHRUWKHMXGJPHQWREWDLQHG1HLWKHU DQGREWDLQHGDQDSSOLFDWLRQ0U%DEFRFNWROGSODLQWLIIWR ZLOOZH FRPSOHWHWKHDSSOLFDWLRQDQGIXUQLVKSURRIRILQFRPH0U 0HQFHUUHWXUQHGIRUDVHFRQGDSSOLFDWLRQDIWHUORVLQJWKHILUVW )RUWKHIRUHJRLQJUHDVRQVZHDIILUPWKHGLVWULFWFRXUW +LVZLIHGLGQRWDFFRPSDQ\KLPLQWRGHIHQGDQWjVRIILFHRQ HLWKHU RFFDVLRQ  0U 0HQFHU GRHV QRW DOOHJH WKDW 0U %DEFRFN GLVFULPLQDWHG DJDLQVW KLP GXULQJ WKHVH LQLWLDO PHHWLQJV  $FFRUGLQJ WR SODLQWLII GHIHQGDQW KDG EHHQ mVRPHZKDWIULHQGO\l7ULDO7Us$  ,Q0DUFK ERWKSODLQWLIIVUHWXUQHGZLWKDFRPSOHWHG DSSOLFDWLRQLGHQWLILFDWLRQDQGSD\FKHFNVWXEV$FFRUGLQJWR WKHSODLQWLIIV0U0HQFHUHQWHUHGWKHGHIHQGDQWjVRIILFHILUVW mDQGWKHQP\ZLIHFDPHLQORRNHGDURXQGWKHUHDQG,WROG KLP>0U%DEFRFN@ZHZHUHWRJHWKHUDQGWKHQH[WWKLQJ\RX NQRZKLVZKROHDWWLWXGHMXVWFKDQJHGl7ULDO7Us$  $FFRUGLQJWR0U%DEFRFNKHURXWLQHO\H[DPLQHVWKHUHQWDO DSSOLFDWLRQSURRIRILQFRPHDQGSULRUODQGORUGUHIHUHQFHVRI DOOSRWHQWLDOWHQDQWV7ULDO7Us$+HDOVRDSSOLHV DQLQFRPHUHTXLUHPHQWWKDWDWOHDVWRQHWHQDQWjVQHWSD\HTXDO WKUHH WLPHV WKH UHQW  7KLV SROLF\ LV QRW GRFXPHQWHG EXW GHIHQGDQWWHVWLILHGWKDWKHGHYLVHGWKHIRUPXODDERXW\HDUV DJRDVmDJHQHUDOUXOHRIWKXPEl7ULDO7Us$$V SDUWRIWKDWSROLF\GHIHQGDQWGRHVQRWFRPELQHWKHLQFRPHRI WZRVSRXVHVWRVDWLVI\WKHILQDQFLDOUHTXLUHPHQW$WWULDOKH H[SODLQHGWKDWZHUHDFRXSOHWRVHSDUDWHRQHWHQDQWjVLQFRPH ZRXOGEHRWKHUZLVHLQVXIILFLHQW7ULDO7U s$7KH 0HQFHUVGRQRWUHFDOOWKDWGHIHQGDQWLQIRUPHGWKHPRIDQ\ LQFRPHUHTXLUHPHQWV  0HQFHUHWDOY3ULQFHWRQ 1RV   1RV   0HQFHUHWDOY3ULQFHWRQ 6TXDUH$SDUWPHQWVHWDO 6TXDUH$SDUWPHQWVHWDO

$IWHUSODLQWLIIVKDGSUHVHQWHGWKHLUFRPSOHWHGDSSOLFDWLRQ SODLQWLIIVUHMHFWHGDRIIHUE\GHIHQGDQWVDQGDIDYRUDEOH GHIHQGDQW UHYLHZHG WKHLU SURRI RI LQFRPH  7KH 0HQFHUVj  PHGLDWLRQ HYDOXDWLRQ  2UGHU *UDQWLQJ 0HGLDWLRQ DSSOLFDWLRQLQGLFDWHGWKDWWKH\GLGQRWKDYHDEDQNDFFRXQW 6DQFWLRQVDWs$7KHFRXUWSURSHUO\IRXQGWKDWSODLQWLIIV s$,WDOVRLQGLFDWHGWKDW0U0HQFHUKDGEHHQZRUNLQJ KDGDPSOHRSSRUWXQLW\WRFDOFXODWHWKHFRVWVDQGEHQHILWVRID DWKLVFXUUHQWMREIRUIRXUZHHNV7KHSODLQWLIIVOLVWHGWKHLU WULDO7KHLUSURWHVWRIWKHGHIHQGDQWVjUHODWLYHZHDOWKFDQQRW PRQWKO\JURVVLQFRPHDV0UV0HQFHUjVSD\FKHFN QRZUHYLVLWWKDWFDOFXOXV VWXELQGLFDWHGDJURVVLQFRPHRI PRQWKO\s$ 0U 0HQFHUjV JURVV SD\ ZDV    PRQWKO\  7KHLU QHW 3ODLQWLIIVDOVRFODLPWKDWPHGLDWLRQVDQFWLRQVGLVFRXUDJH PRQWKO\ LQFRPHV ZHUH   DQG  UHVSHFWLYHO\ SDUWLHVIURPSXUVXLQJOHJLWLPDWHFODLPVWRWULDOXQGHUFXWWLQJ 7KH\ VRXJKW D WZREHGURRP DSDUWPHQW ZKRVH UHQW 0U WKHSXUSRVHDQGSROLF\RIFLYLOULJKWVODZV7KLVSRLQWLVZHOO 0HQFHUUHFDOOHGWREHSHUPRQWKEXWGHIHQGDQWVWDWHG WDNHQ  :H KDYH SUHYLRXVO\ UHFRJQL]HG WKDW IHHVKLIWLQJ ZDV   $SSO\LQJ GHIHQGDQWjV LQFRPH UHTXLUHPHQW PHFKDQLVPV DUH PLJKW\ OHYHUV WR EH XVHG RQO\ VSDULQJO\ WKUHH WLPHV WKH ORZHU ILJXUH LV  PRUH WKDQ HLWKHU 7LHGHOY1RUWKZHVWHUQ0LFKLJDQ&ROOHJH)G WK SODLQWLIIPDGHVLQJO\0U0HQFHUWROGGHIHQGDQWWKDWKHZDV &LU  7KDWLVZK\WKHm$PHULFDQUXOHlEURDGO\DSSOLHV DOVRUHFHLYLQJ6RFLDO6HFXULW\'LVDELOLW\,QFRPH'HIHQGDQW LQIHGHUDOFRXUWVZKHUHE\mDEVHQWH[SUHVVVWDWXWRU\ODQJXDJH UHSOLHGWKDWKHGLGQRWFRQVLGHUWKLVLQWKHLQFRPHUHTXLUHPHQW RUDQHQIRUFHDEOHFRQWUDFWOLWLJDQWVSD\WKHLURZQDWWRUQH\Vj EHFDXVHLWZDVQRWJDUQLVKDEOH7ULDO7U s$ IHHVl  ,G DW  TXRWLQJ $O\HVND 3LSH /LQH 6HUY &R Y :LOGHUQHVV6RFj\86   ,Q7LHGHOD 'HIHQGDQW DOVR H[DPLQHG SODLQWLIIVj LGHQWLILFDWLRQ  0U GLVWULFWFRXUWRUGHUHGVXDVSRQWHWKDWDSURGXFWOLDELOLW\DFWLRQ 0HQFHU GLG QRW KDYH D GULYHUjV OLFHQFH  +LV LGHQWLILFDWLRQ EHKHDUGLQPHGLDWLRQ7KHPHGLDWLRQSDQHOIRXQGIRUWKH FDUGOLVWHGWZRDGGUHVVHVRQHRQWKHIURQWDQGDQRWKHURQWKH GHIHQGDQWVLQLWVHYDOXDWLRQZKLFKWKHSODLQWLIIUHMHFWHG7ULDO EDFN  0UV 0HQFHUjV OLFHQFH LQGLFDWHG D WKLUG DGGUHVV FRPPHQFHGDQGWKHMXU\DOVRIRXQGIRUWKHGHIHQGDQW7KH 3ODLQWLIIV WROG GHIHQGDQW WKDW WKH\ ZHUH VHSDUDWHG  7KHLU ORFDOUXOHVDOORZHGIRUDQDZDUGRIDWWRUQH\IHHVDVSDUWRILWV DSSOLFDWLRQ OLVWHG D IRXUWK DGGUHVV D XQLW RSHUDWHG E\ WKH SUHWULDO PHGLDWLRQ SODQ  'HIHQGDQW PRYHG IRU PHGLDWLRQ FKXUFKRI0U0HQFHUjVPRWKHU0U0HQFHUWROGGHIHQGDQW VDQFWLRQVDQGZDVJUDQWHGWULDOH[SHQVHVDQGDWWRUQH\VIHHV WKDW WKLV ZDV SODLQWLIIVj SUHVHQW DGGUHVV  $IWHU GHIHQGDQW IRU 2QDSSHDOWKLV&RXUWUHYHUVHGWKDWDZDUG UHYLHZHG WKHVH DGGUHVVHV KH H[SUHVVHG KLV GRXEW DV WR KROGLQJmDGLVWULFWFRXUWLVQRWHPSRZHUHGWRHQDFWDORFDOUXOH ZKHWKHU0U0HQFHUKDGHYHUVLJQHGDOHDVHEHIRUH$WWULDO JLYLQJLWVHOIWKHDXWKRULW\WRDZDUGDWWRUQH\VjIHHVl,GDW  0U0HQFHUWHVWLILHGWKDWKHKDGQHYHUVLJQHGDOHDVHEHIRUH PHHWLQJZLWKGHIHQGDQW7ULDO7Us$ 7KLVFDVHLVGLIIHUHQW+HUHSODLQWLIIVUHTXHVWHGWKDWWKHLU FODLPEHUHIHUUHGWRPHGLDWLRQ6WLSXODWHG5HTIRU0HGLDWLRQ $IWHU H[DPLQLQJ SODLQWLIIVj DSSOLFDWLRQ DQG SURRI RI DW s$   7KH GLVWULFW FRXUW PHGLDWLRQ UXOH VWDWHV WKDW LQFRPHGHIHQGDQWWROGWKHPWKDWKHZDVORRNLQJIRUVWDEOH SURFHHGLQJVDUHWREHFRQGXFWHGDFFRUGLQJWR0,&+ &7 5 WHQDQWVDQGWKDWWKH\DSSHDUHGXQVWDEOH7ULDO7Us$ (' 0,&+ 5 D ,QWKHLUUHTXHVWIRUPHGLDWLRQ   $W WULDO GHIHQGDQW H[SODLQHG WKDW KLV HYDOXDWLRQ RI VLJQHGE\FRXQVHOWKHSDUWLHVDJUHHGWREHERXQGE\WKHVWDWH ILQDQFLDOVWDELOLW\ZDVEDVHGRQmMREDQGLQFRPHl7ULDO7U PHGLDWLRQ UXOHV LQFOXGLQJ mVDQFWLRQV UHODWLQJ WR FRVWV DQG  s$   $FFRUGLQJ WR SODLQWLIIV 0U %DEFRFN WKHQ DWWRUQH\VIHHVSURYLGHGE\VXFK UXOHl6WLSXODWHG5HTIRU SODFHGWKHDSSOLFDWLRQLQDGUDZHUDQGEHJDQKHOSLQJDQRWKHU 0HGLDWLRQ DW s$   <HW WKH ORFDO UXOH LV SHUPLVVLYH DSSOLFDQW DOORZLQJSDUWLHVWRVWLSXODWHWRWKHVSHFLILFWRROVRIPHGLDWLRQ  0HQFHUHWDOY3ULQFHWRQ 1RV   1RV   0HQFHUHWDOY3ULQFHWRQ  6TXDUH$SDUWPHQWVHWDO 6TXDUH$SDUWPHQWVHWDO

WKH 8QLWHG 6WDWHV 'LVWULFW &RXUW IRU WKH (DVWHUQ 'LVWULFW RI 7KH0HQFHUVFODLPWKDWGHIHQGDQWGHQLHGWKHLUDSSOLFDWLRQ 0LFKLJDQDOORZSDUWLHVWRVWLSXODWHWKHSURFHGXUDOUXOHVIRU EDVHGRQWKHLULQWHUUDFLDOPDUULDJH0U0HQFHUWHVWLILHGWKDW PHGLDWLRQ(' 0,&+ 5 F  ,QWKHLUUHTXHVWSDUWLHV GHIHQGDQWjV mZKROH DWWLWXGH MXVW FKDQJHGl ZKHQ SODLQWLIIV DJUHHG WR EH ERXQG E\ WKH PHGLDWLRQ VFKHPH RI 0LFKLJDQ HQWHUHGWKHUHQWDORIILFHWRJHWKHU7ULDO7Us$ 0UV &RXUW 5XOH  H[SUHVVO\ VWLSXODWLQJ WKH SURYLVLRQV IRU 0HQFHUGHVFULEHGGHIHQGDQWjVGHPHDQRUGXULQJWKHLUPHHWLQJ VDQFWLRQVDQGDWWRUQH\IHHV6WLSXODWHG5HTIRU0HGLDWLRQDW DVmUXGHlDVZHOODVmFRQGHVFHQGLQJDQGQDVW\l7ULDO7U s$7KH:D\QH&RXQW\0HGLDWLRQ7ULEXQDOXQDQLPRXVO\ s$$FFRUGLQJWR0UV0HQFHUGHIHQGDQWVDLGKH HYDOXDWHGWKHFDVHIRULQIDYRURISODLQWLIIV0HGLDWLRQ UHTXLUHGVWDEOHWHQDQWVEHFDXVHWKHUHZDVmULIIUDIIlWKHQOLYLQJ (YDOXDWLRQDWs$7KHSODLQWLIIVUHMHFWHGWKLVDZDUG LQWKHFRPSOH[7ULDO7Us$$WWULDOKRZHYHU 7KHLUFDVHSURFHHGHGWRDEHQFKWULDOZKHUHWKHWULDOMXGJH 0UV0HQFHUWHVWLILHGVKHKDGmQRLGHDlKRZWKDWFRPPHQW JUDQWHGGHIHQGDQWVjPRWLRQIRUMXGJPHQWDVDPDWWHURIODZ UHODWHGWRWKHP7ULDO7Us$ 7KH GHIHQGDQWV WKHQ PRYHG IRU PHGLDWLRQ VDQFWLRQV XQGHU 0,&+ &7 5 2 LQFOXGLQJFRVWVDQGDWWRUQH\IHHVLQ ,Q $SULO   0U 0HQFHU FRQWDFWHG WKH )DLU +RXVLQJ WKHDPRXQWRI7KHWULDOFRXUWJUDQWHGWKHPRWLRQ &HQWHU RI 0HWURSROLWDQ 'HWURLW  7KH &HQWHU GLVSDWFKHG EXW GHFUHDVHG WKH KRXUO\ UDWH FKDUJHG IRU DWWRUQH\ IHHV VHYHUDOmWHVWHUVlWRHYDOXDWHGHIHQGDQWjVWUHDWPHQWRIUHQWDO DZDUGLQJ WKH GHIHQGDQWV   2UGHU *UDQWLQJ DSSOLFDQWV,Q0DUFK SODLQWLIIVEURXJKWWKLVFLYLOULJKWV 0HGLDWLRQ 6DQFWLRQV DW s$   3ODLQWLIIV QRZ DSSHDO WKH DFWLRQFODLPLQJYLRODWLRQVRI86&††  DQG SURSULHW\RIWKHVDQFWLRQV7KH\GRQRWKRZHYHUTXHVWLRQ HWVHTDVZHOODV0LFKLJDQIDLUKRXVLQJSURYLVLRQVDW WKH DPRXQW DZDUGHG RU WKH DSSOLFDELOLW\ RI WKH PHGLDWLRQ 0,&+ &203 /$:6†HWVHT'XULQJDEHQFKWULDO UXOHV WKHFRXUWJUDQWHGGHIHQGDQWVjPRWLRQIRUMXGJPHQWDVDPDWWHU RIODZRQDOOFODLPV:HDIILUP 3ODLQWLIIVjILUVWFODLPWKDWWKHHFRQRPLFGLVSDULW\EHWZHHQ WKHSDUWLHVPDNHVWKHDZDUGXQMXVW1HLWKHUWKHVWDWHQRUWKH )HGHUDO IDLU KRXVLQJ ODZ SURKLELWV XVLQJ LPSHUPLVVLEOH GLVWULFWFRXUWUXOHVRQPHGLDWLRQFRQWHPSODWHDQLQTXLU\LQWR FULWHULD VXFK DV UDFH FRORU RU IDPLOLDO VWDWXV LQ UHDO HVWDWH KDUGVKLSKRZHYHU0LFKLJDQFRXUWVZLOOJHQHUDOO\XSKROGDQ WUDQVDFWLRQV   86& †  D   2WKHU IHGHUDO DQWL DZDUGRIDWWRUQH\IHHVXQGHUWKHVWDWHPHGLDWLRQUXOHVXQOHVV GLVFULPLQDWLRQODZVFRQILUPWKDWFLWL]HQVVKRXOGHQMR\HTXDO WKHGHFLVLRQLVmJURVVO\YLRODWLYHRIIDFWDQGORJLFl0LFKLJDQ ULJKWVWROHDVHSURSHUW\DQGHQWHUFRQWUDFWVZLWKRXWUHJDUGWR %DVLF3URSHUW\,QV$VVjQY+DFNHUW)XUQLWXUH'LVWULE&R UDFH RU FRORU   86& ††      0LFKLJDQ KDV 1:G 0LFK&W$SS  ,QIDFWWKHUHLV HQDFWHG DQ DQDORJRXV IDLU KRXVLQJ SURYLVLRQ WKH (OOLRWW VWDWH DXWKRULW\ WR VXJJHVW WKDW WKH DZDUG RI PHGLDWLRQ /DUVHQ &LYLO 5LJKWV $FW RQ ZKLFK SODLQWLIIV UHO\  0,&+ VDQFWLRQV XQGHU 0,&+ &7 5  LV PDQGDWRU\ QRW &203 /$:6 †   ,Q LQWHUSUHWLQJ 0LFKLJDQjV IDLU GLVFUHWLRQDU\H[FHSWLQQDUURZFLUFXPVWDQFHV*UHDW/DNHV KRXVLQJODZZHUHIHUWRLWVIHGHUDOFRXQWHUSDUWIRUJXLGDQFH *DV7UDQVPLVVLRQ/WG3DUWQHUVKLSY0DUNHO1:G sDFNVRQ Y :KLWHKRXVH 1R &9'7   86  0LFK&W$SS  7KH0LFKLJDQUXOHGRHVDOORZ 'LVW/(;,6DW  ('0LFK1RY  ,Q WKH FRXUW WR UHIXVH FRVWV LQ WKH mLQWHUHVWV RI MXVWLFHl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

WKLVWHVWWRIDLUKRXVLQJFODLPVE\UHTXLULQJWKHSODLQWLIIWR SROLFLHVDORQHGLGQRWLQGLFDWHWKDWKLVKRXVLQJGHFLVLRQVZHUH ILUVWHVWDEOLVKDSULPDIDFLHFDVHRIGLVFULPLQDWLRQ7KHQLQ EDVHGRQUDFH7KLVFRQFOXVLRQLVQRWFOHDUO\HUURQHRXV UHVSRQVH WKH GHIHQGDQW PXVW RIIHU D OHJLWLPDWH QRQGLVFULPLQDWRU\ UHDVRQ IRU  WKH KRXVLQJ GHFLVLRQ PDGH 1RU GLG WKH WULDO FRXUW LQIHU GLVFULPLQDWLRQ IURP 0U )LQDOO\WKHSODLQWLIIPXVWVKRZWKDWWKHSURIIHUHGUHDVRQLVD %DEFRFNjVWUHDWPHQWRIWKHmWHVWHUVlIURPWKH)DLU+RXVLQJ SUHWH[WWKDWPDVNVGLVFULPLQDWLRQ6HOGHQY8QLWHG6WDWHV &HQWHU  'HIHQGDQWjV UHMHFWLRQ RI SODLQWLIIV DV WHQDQWV ZDV 'HSj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j ZDV UHMHFWHG DQG   WKDW WKH KRXVLQJ RU UHQWDO SURSHUW\ HYLGHQFH QR ZHLJKW DQG WKLV FRQFOXVLRQ LV QRW FOHDUO\ UHPDLQHGDYDLODEOHWKHUHDIWHU,GDW %HLQJmTXDOLILHGWR HUURQHRXV UHQWl KDV EHHQ GHILQHG DV mUHDG\ DQG DEOH WR DFFHSW GHIHQGDQWVj RIIHU WR UHQW RU EX\l  6FKDQ] Y 9LOODJH :KHWKHUGHIHQGDQWZDVEUXVTXHGLVPLVVLYHRUmFKDQJHG $SDUWPHQWV )6XSS ('0LFK  ,Q KLVDWWLWXGHlXSRQUHDOL]LQJWKDWWKHFRXSOHZDVLQWHUUDFLDOZDV 6FKDQ]SODLQWLIIFODLPHGWKDWKHZDVGHQLHGDQDSDUWPHQWGXH D PDWWHU RI UHFROOHFWLRQ IRU WKH ZLWQHVVHV DQG D PDWWHU RI WRKLVPHQWDOGLVDELOLW\7KHFRXUWIRXQGKRZHYHUWKDWWKH FUHGLELOLW\ IRU WKH WULDO FRXUW  7KH FRXUW IRXQG WKDW DQ\ GHIHQGDQWKDGmMXVWLILDEOHEXVLQHVVUHDVRQVlIRUUHMHFWLQJWKH mFKDQJHLQDWWLWXGHlFRLQFLGHGZLWKGHIHQGDQWjVUHYLHZRIWKH DSSOLFDWLRQ,GDW 7KDWSODLQWLIIGLGQRWKDYHDMREDWWKH FRPSOHWHGDSSOLFDWLRQDQGSURRIRILQFRPH7ULDO7U WLPH RI WKH DSSOLFDWLRQ ZDV UHFHLYLQJ LQDGHTXDWH 6RFLDO s$7KLVLVVXSSRUWHGE\WKHHYLGHQFH 6HFXULW\'LVDELOLW\%HQHILWVDQGGLGQRWPHHWWKHDSDUWPHQW RZQHUjVLQFRPHIRUPXODDVWRFUHGLWZRUWKLQHVV :HDIILUPWKHMXGJPHQWIRUGHIHQGDQWV3ODLQWLIIVGLGQRW HVWDEOLVKDSULPDIDFLHFDVHRIKRXVLQJGLVFULPLQDWLRQ7KH 7KH WULDO FRXUW LQ WKLV FDVH OLNHZLVH FRQFOXGHG WKDW mQR 0HQFHUVZHUHQRWILQDQFLDOO\TXDOLILHGWRUHQWDFFRUGLQJWR UHDVRQDEOHODQGORUGZRXOGKDYHVHULRXVO\HQWHUWDLQHGHQWHULQJ GHIHQGDQWjV SROLFLHV  7KH\ GLG QRW VKRZ WKDW GHIHQGDQWjV LQWRDOHDVHDUUDQJHPHQWlZLWKSODLQWLIIV7ULDO7U LQFRPH UHTXLUHPHQWV ZHUH ERUQ RI ELDV RU  LQFRQVLVWHQWO\ s$7KHUHFRUGVXSSRUWVWKDWWKHSODLQWLIIVODFNHG DSSOLHG  7KH FRXUW FRXOG KDYH UHDVRQDEO\ IRXQG WKDW VWHDG\UHQWDOKLVWRU\DQGWKDWWKHLUDSSOLFDWLRQLQWHUYLHZZLWK GHIHQGDQWZDVPDNLQJDMXGJPHQWRQO\DVWRULVNDQGQRWDV GHIHQGDQW UHYHDOHG IRXU GLIIHUHQW DGGUHVVHV  7KH 0HQFHUV WRUDFH DOVR IDLOHG WR PHHW WKH GHIHQGDQWjV LQFRPH IRUPXOD $FFRUGLQJ WR 0U %DEFRFN WKLV IRUPXODnDV ZHOO DV KLV ,, UHIXVDOWRFRPELQHPDULWDOLQFRPHRUDFFHSW6RFLDO6HFXULW\ 'LVDELOLW\ ,QFRPHnZHUH SROLFLHV RI ORQJ VWDQGLQJ  7KH ,Q DIILUPLQJ MXGJPHQW IRU WKH GHIHQGDQWV ZH PXVW DOVR SODLQWLIIV GLG QRW VKRZ WKDW WKHVH ZHUH DSSOLHG LQ D GHFLGH ZKHWKHU PHGLDWLRQ VDQFWLRQV DUH SURSHU DJDLQVW GLVFULPLQDWRU\IDVKLRQ7KHWULDOFRXUWIRXQGWKDWGHIHQGDQWjV SODLQWLIIV,Q)HEUXDU\ WKHSDUWLHVUHTXHVWHGPHGLDWLRQ 6WLSXODWHG5HTIRU0HGLDWLRQDWs$7KHORFDOUXOHVRI