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 D S

81,7('67$7(6&28572)$33($/6 )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB

s$1( '2( ;  3ODLQWLII$SSHOOHH   1R Y  !  *$</( %2:/(6 5,&+$5'  .(03 521$/' 675$7721   'HIHQGDQWV$SSHOODQWV  $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW&LQFLQQDWL 1R n6DQGUD6%HFNZLWK'LVWULFWsXGJH $UJXHG 0D\ 'HFLGHGDQG)LOHG sXQH  %HIRUH .(11('<DQG'$8*+75(<&LUFXLWsXGJHV 0F.($*8('LVWULFWsXGJH BBBBBBBBBBBBBBBBB &2816(/ $5*8(' 7RGG50DUWL2)),&(2)7+($77251(< *(1(5$/ &255(&7,216 /,7,*$7,21 6(&7,21

7KH +RQRUDEOH 'DYLG : 0F.HDJXH 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH :HVWHUQ 'LVWULFW RI 0LFKLJDQ VLWWLQJ E\ GHVLJQDWLRQ

  'RHY%RZOHVHWDO 1R &ROXPEXV 2KLR IRU $SSHOODQWV  sHQQLIHU / %UDQFK /$8)0$1  *(5+$5'67(,1 &LQFLQQDWL 2KLR IRU $SSHOOHH21%5,() 7RGG50DUWL2)),&(2)7+( $77251(< *(1(5$/ &255(&7,216 /,7,*$7,21 6(&7,21 &ROXPEXV 2KLR IRU $SSHOODQWV  sHQQLIHU / %UDQFK $OSKRQVH $ *HUKDUGVWHLQ /$8)0$1 *(5+$5'67(,1&LQFLQQDWL2KLRIRU$SSHOOHH .(11('<sGHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK '$8*+75(<sMRLQHG0F.($*8('s SS  GHOLYHUHGDVHSDUDWHFRQFXUULQJRSLQLRQ BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB .(11('<&LUFXLWsXGJH3ODLQWLIIsDQH'RHDQLQPDWH DW WKH :DUUHQ &RUUHFWLRQDO ,QVWLWXWLRQ ILOHG VXLW XQGHU  86&† DJDLQVWSULVRQFRUUHFWLRQVRIILFHUVDOOHJLQJWKDW WKHGHIHQGDQWRIILFHUVIDLOHGWRSURWHFWKHUIURPDSK\VLFDO DWWDFN E\ DQRWKHU LQPDWH LQ YLRODWLRQ RI KHU (LJKWK $PHQGPHQW ULJKWV  7KH GLVWULFW FRXUW GHQLHG TXDOLILHG LPPXQLW\ WR GHIHQGDQWV %RZOHV .HPS DQG 6WUDWWRQ 'HIHQGDQWVQRZDSSHDOWKDWGHQLDO)RUWKHUHDVRQVVWDWHG EHORZZH UHYHUVH LQSDUWDQGGLVPLVVWKHFODLPVDVWRWKH UHPDLQLQJGHIHQGDQWVIRUODFNRIMXULVGLFWLRQ , 3ODLQWLIIsDQH'RHZDVDQLQPDWHLQWKHSURWHFWLYHFXVWRG\ 3&  XQLW RI WKH :DUUHQ &RUUHFWLRQDO ,QVWLWXWLRQ :&,  LQ 2KLR  3ODLQWLII KDG EHHQ GLDJQRVHG ZLWK D JHQGHU LGHQWLW\ GLVRUGHUDQGKDGIHPLQLQHFKDUDFWHULVWLFV3ODLQWLIIKDGWKH DSSHDUDQFHRIDZRPDQDQGGUHVVHGDVDZRPDQ3ODLQWLII ZDVELRORJLFDOO\PDOHKRZHYHUDQGWKXVZDVSODFHGLQDQ

 sDQH 'RH LV D SVHXGRQ\P 7KH SODLQWLII KDV WKH DSSHDUDQFH RI D ZRPDQ DQG D IHPDOH QDPH EXW LV ELRORJLFDOO\ PDOH %HFDXVH SODLQWLII KDV D IHPDOH SVHXGRQ\P ZH ZLOO UHIHU WR SODLQWLII KHUH DV mVKHl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sXO\ )UH]]HOODVVDXOWHGSODLQWLIIE\SXQFKLQJ SODLQWLII LQ WKH EDFN RI WKH KHDG DV SODLQWLII ZDONHG E\ )UH]]HOOjVFHOO7KHQH[WPRUQLQJsXO\SODLQWLIIUHSRUWHG WKHLQFLGHQWWRGHIHQGDQW.HPSDQG7RP6FKZHLW]HUDFDVH PDQDJHU LQ WKH 3& XQLW  3ODLQWLII VSRNH ZLWK .HPS DQG 6FKZHLW]HUDJDLQWKDWGD\UHJDUGLQJWKHVLWXDWLRQ3ODLQWLII DOOHJHVWKDWVKHH[SOLFLWO\GHWDLOHGWKHSK\VLFDOQDWXUHRIWKH DWWDFNLQFOXGLQJWKHIDFWWKDW)UH]]HOOKLWKHURQWKHEDFNRI WKHKHDGDQGWKUHDWHQHGWRNLOOKHU s$   'HIHQGDQW .HPSVWDWHVKRZHYHUWKDWKHGLGQRWXQGHUVWDQGWKHLQFLGHQW WR KDYH LQFOXGHG DQ\ SK\VLFDO YLROHQFH DQG WKDW SODLQWLII RIIHUHGRQO\YDJXHDOOHJDWLRQVWKDW)UH]]HOOZDVVWDQGLQJLQ KLV GRRUZD\ KDUDVVLQJ SODLQWLII s$   'HIHQGDQW .HPSDQG6FKZHLW]HUHDFKVSRNHZLWK)UH]]HOOZDUQLQJKLP WRVWD\DZD\IURPSODLQWLIIDQGWROGRWKHUFRUUHFWLRQVRIILFHUV WKDW)UH]]HOOZDVSURKLELWHGIURPEHLQJQHDUSODLQWLII s$  .HPSLQIRUPHGVWDIIPHPEHUVDUULYLQJIRUDQHZVKLIW RI WKH FRQIOLFW DQG WKH QHHG WR PRQLWRU )UH]]HOO  $W DSSUR[LPDWHO\SPDVGHIHQGDQW.HPSjVVKLIWZDVHQGLQJ .HPSUHSRUWHGWKHVLWXDWLRQWRGHIHQGDQW5RQDOG6WUDWWRQWKH FDSWDLQZKRZRXOGVXSHUYLVHDOORSHUDWLRQVDW:&,GXULQJWKH QH[W VKLIW  7KHUH LV VRPH IDFWXDO TXHVWLRQ DV WR ZKHWKHU .HPS VSHFLILHG WKH QDPHV RI WKH LQPDWHV LQYROYHG ZKHQ GLVFXVVLQJ WKH LQFLGHQW ZLWK 6WUDWWRQ s$   'HIHQGDQW 6WUDWWRQ DVNHG GHIHQGDQW .HPS ZKHWKHU WKH LQPDWHVVKRXOGEHIRUPDOO\VHJUHJDWHGEXW.HPSDQVZHUHG WKDWVHJUHJDWLRQZDVQRWQHFHVVDU\ s$  'RHY%RZOHVHWDO 1R 1R 'RHY%RZOHVHWDO  $WDSSUR[LPDWHO\ SPRQsXO\)UH]]HOOHQWHUHG WKLVPHDQWDQLQPDWHRQFHOOLVRODWLRQVKRXOGEHHVFRUWHGE\ SODLQWLIIjVFHOOZKLOHWKHRWKHU3&XQLWLQPDWHVZHUHDWGLQQHU DQRIILFHUZKHQHYHUKHOHDYHVKLVFHOO s$ )UH]]HOO DVVDXOWHG SODLQWLII DQG WKUHDWHQHG WR NLOO KHU 'HIHQGDQW*D\OH%RZOHVWKHOLQHFRUUHFWLRQVRIILFHURQGXW\ %RZOHVWHVWLILHGWKDWVKHJDYH)UH]]HOOSHUPLVVLRQWRJHWD DW WKH WLPH FDXJKW )UH]]HOO DQG ZURWH D FRQGXFW UHSRUW PRSWRFOHDQKLVFHOO s$ ,WLVXQGLVSXWHGWKDWVKHGLG FKDUJLQJ)UH]]HOOZLWKGLVREH\LQJWKHRUGHUWRVWD\DZD\IURP QRW HVFRUW KLP WR RU IURP KLV FHOO s$    $OWKRXJK SODLQWLII  %RZOHV ZKR KDG EHJXQ KHU DIWHUQRRQ VKLIW E\ %RZOHVWHVWLILHGWKDWVKHKDGYLVXDOFRQWDFWZLWK)UH]]HOODW FRQIHUULQJ ZLWK RWKHU RIILFHUV DERXW WKH VLWXDWLRQ ORFNHG DOO WLPHV LG  KHU IDLOXUH WR HVFRUW KLP PD\ KDYH YLRODWHG )UH]]HOOLQKLVFHOODQGLQLWLDWHGSURFHHGLQJVWRKDYH)UH]]HOO SULVRQ SROLF\ DQG DUJXDEO\ H[KLELWHG D GHOLEHUDWH SODFHGLQFHOOLVRODWLRQ'HIHQGDQW6WUDWWRQZDVXOWLPDWHO\ LQGLIIHUHQFHWRSODLQWLIIjVVDIHW\$FFRUGLQJO\,DJUHHZLWK UHVSRQVLEOHIRUGHWHUPLQLQJZKHUHWRSXWDQLQPDWHLQQHHGRI WKH PDMRULW\ WKDW ZH FDQQRW KROG DV D PDWWHU RI ODZ WKDW GLVFLSOLQH7KHWKUHHRSWLRQVZHUH   LQWKHVHJUHJDWLRQXQLW GHIHQGDQW%RZOHVLVHQWLWOHGWRTXDOLILHGLPPXQLW\  LQWKH3&XQLWjVVHJUHJDWLRQFHOOVRU  LQWKHLQPDWHj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jVUHVSRQVHZDVWRDQ\ZDUQLQJ)UH]]HOO UHWXUQHGWRKLVFHOOZLWKRXWLQFLGHQW/DWHU)UH]]HOODVNHG DQRWKHUFRUUHFWLRQVRIILFHULIKHFRXOG OHDYHKLVFHOOWRJHW VRPHLFH7KHRIILFHUVDLG\HVDQG)UH]]HOOUHWULHYHGWKHLFH DQGUHWXUQHGWRKLVFHOOZLWKRXWLQFLGHQW$IHZPLQXWHVODWHU )UH]]HOODVNHGGHIHQGDQW%RZOHVLIKHFRXOGOHDYHKLVFHOOWR JHWDPRS%RZOHVVDLG\HVDQG)UH]]HOOOHIWWRUHWULHYHWKH PRS$FFRUGLQJWRWKHZULWWHQFHOOLVRODWLRQSROLF\REWDLQLQJ DPRSWRFOHDQDFHOOLVQRWRQHRIWKHSHUPLVVLEOHUHDVRQVIRU DQLQPDWHRQFHOOLVRODWLRQWROHDYHKLVFHOO s$ 2Q KLV ZD\ EDFN WR KLV FHOO )UH]]HOO SDVVHG SODLQWLIIjV FHOO RSHQHGWKHGRRUWRSODLQWLIIjVFHOOZKLFKZDVQRWORFNHGDQG HQWHUHG SODLQWLIIjV FHOO  )UH]]HOO EHJDQ DVVDXOWLQJ SODLQWLII ZLWKWKHPRSKDQGOH'HIHQGDQW%RZOHVKDGEHHQPRQLWRULQJ )UH]]HOODQGUXVKHGWRWKHFHOOEXWVKHZDVXQDEOHWRVWRSWKH DVVDXOW DORQH  6KH FDOOHG IRU DVVLVWDQFH DQG )UH]]HOO ZDV XOWLPDWHO\VXEGXHGEXWQRWEHIRUHSODLQWLIIVXIIHUHGLQMXU\  'RHY%RZOHVHWDO 1R 1R 'RHY%RZOHVHWDO  IRU m&HOO 5HVWULFWLRQl V\QRQ\PRXV ZLWK m&HOO ,VRODWLRQl $IWHUWKLVILQDODVVDXOW)UH]]HOOZDVUHPRYHGIURPWKH3& s$ VSHFLILFDOO\IRUEDGHLWVXVHLQWKLVW\SHRIVLWXDWLRQ XQLWDQGWDNHQWRWKHVHJUHJDWLRQXQLW m7KLVW\SHRIUHVWULFWLRQ>FHOOLVRODWLRQ@ZLOOQRWEHXVHGLQ LQVWDQFHVZKHUHWKHLQPDWHKDVDFWHGLQDYLROHQWRUDVVDXOWLYH 3ODLQWLIIEURXJKWD† FODLPDJDLQVW$QWKRQ\%ULJDQR PDQQHUl s$ WKHZDUGHQRIWKHSULVRQ5LFKDUG.HPSWKHPDQDJHURIWKH 3&XQLW5RQDOG6WUDWWRQWKHVKLIWVXSHUYLVRURQGXW\ZKHQ 'XULQJKLVGHSRVLWLRQWKHQ'HSXW\:DUGHQ0DFNWHVWLILHG WKHDVVDXOWRFFXUUHGDQG*D\OH%RZOHVWKHFRUUHFWLRQRIILFHU WKDWDYLROHQWRUDVVDXOWLYHLQPDWHVKRXOGQRWEHSODFHGLQFHOO RQ GXW\ LQ SODLQWLIIjV XQLW ZKHQ WKH DVVDXOW RFFXUUHG LVRODWLRQ EXW UDWKHU VHJUHJDWLRQ s$    3ODLQWLIIjV 'HIHQGDQWVPRYHGIRUVXPPDU\MXGJPHQWDUJXLQJWKDWWKH\ FRXQVHOWKHQVSHFLILFDOO\DVNHG0DFNDERXWWKHLPSDFWLIDQ\ ZHUH HQWLWOHG WR TXDOLILHG LPPXQLW\  7KH GLVWULFW FRXUW RQVDIHW\ XOWLPDWHO\HQWHUHGMXGJPHQWLQIDYRURIGHIHQGDQW%ULJDQR DQGGLGQRWUHDFKWKHTXHVWLRQRITXDOLILHGLPPXQLW\DVWR 4 $QGLWjVQRWVDIHIRUWKHRWKHULQPDWHVDQGRWKHUVWDII KLP  7KH GLVWULFW FRXUW GHQLHG TXDOLILHG LPPXQLW\ WR WR KDYH DQ >DVVDXOWLYH@ LQPDWH SODFHG MXVW LQ FHOO GHIHQGDQWV.HPS6WUDWWRQDQG%RZOHVVWDWLQJWKDWLWFRXOG LVRODWLRQ" QRW FRQFOXGH DV D PDWWHU RI ODZ WKDW WKH GHIHQGDQWV ZHUH HQWLWOHGWRTXDOLILHGLPPXQLW\'HIHQGDQWVDSSHOODQWV.HPS $ 7KDWZRXOGEHP\DVVXPSWLRQ\HV 6WUDWWRQ DQG %RZOHV QRZ DSSHDO DOOHJLQJ WKDW WKH GLVWULFW FRXUWHUUHGLQQRWJUDQWLQJWKHPTXDOLILHGLPPXQLW\)RUWKH s$    :KLOH ERWK .HPS DQG WKHQ:DUGHQ %ULJDQR UHDVRQV VWDWHG EHORZ ZH JUDQW TXDOLILHG LPPXQLW\ WR WHVWLILHGLQWKHLUGHSRVLWLRQVWKDWFHOOLVRODWLRQPD\KDYHEHHQ GHIHQGDQW6WUDWWRQEXWZHFRQFOXGHWKDWWKLVFRXUWGRHVQRW WKHDSSURSULDWHUHVSRQVH s$  DJHQXLQHLVVXH KDYH MXULVGLFWLRQ WR UHYLHZ WKH GLVWULFW FRXUWjV GHQLDO RI RI PDWHULDO IDFW H[LVWV ZKLFK SUHFOXGHV UHYLHZ RI .HPSjV TXDOLILHGLPPXQLW\WRGHIHQGDQWV.HPSDQG%RZOHV TXDOLILHGLPPXQLW\FODLP ,, 7KH SULVRQ SROLF\ DOVR UHTXLUHV WKDW DQ LQPDWH RQ FHOO LVRODWLRQmZLOOEHHVFRUWHGWRKLVSRGDQGORFNHGLQKLVFHOO 'HIHQGDQWV DUJXH WKDW WKH GLVWULFW FRXUW HUUHG LQ GHQ\LQJ XQWLOKHDUGE\WKHXQLWKHDULQJRIILFHU(DFKLQPDWHSODFHG WKHPTXDOLILHGLPPXQLW\IURPSODLQWLIIjVFODLPV4XDOLILHG RQFHOOUHVWULFWLRQZLOOQRWOHDYHWKHFHOOIRUDQ\UHDVRQRWKHU LPPXQLW\LVDQDIILUPDWLYHGHIHQVHWRD† FODLPDJDLQVW WKDQl YDULRXV OLVWHG DFWLYLWLHV s$   HPSKDVLV LQ DSXEOLFRIILFLDO7KH6L[WK&LUFXLWKDVH[SODLQHGWKDWLQRUGHU RULJLQDO   ,QWHUSUHWLQJ WKLV SURYLVLRQ 0DFN H[SODLQHG WKDW IRUDFRXUWWRGHQ\TXDOLILHGLPPXQLW\WRD† GHIHQGDQW WKH SODLQWLII mPXVW HVWDEOLVK WKDW >GHIHQGDQWjV@ FRQGXFW YLRODWHGDIHGHUDOULJKWVRFOHDUO\HVWDEOLVKHGWKDWDQ\RIILFLDO  LQKLVSRVLWLRQZRXOGKDYHXQGHUVWRRGWKDWKHZDVXQGHUDQ 7KHQ'HSXW\ :DUGHQ 0DFN FRXOG QRW UHFDOO GXULQJ KLV GHSRVLWLRQ ZKHWKHU WKH SROLF\ VWDWHPHQW LQFOXGHG LQ WKH sRLQW $SSHQGL[ ZDV LQ HIIHFW DIILUPDWLYHGXW\WRUHIUDLQIURPVXFKFRQGXFWl0F&ORXGY DW WKH WLPH RI WKH DWWDFN s$  +RZHYHU WKHQ:DUGHQ %ULJDQR 7HVWD )G WK&LU   FLWLQJ:DVKLQJWRQ ZKRVH VLJQDWXUH LV DIIL[HG DW WKH HQG RI WKH SROLF\ VWDWHPHQW WHVWLILHG WKDW WKH SROLF\ VWDWHPHQW DSSHDUHG WR EH WKH RQH LQ HIIHFW DW WKDW WLPH s$ Y1HZVRP )G   WK&LU  'HIHQGDQWV   KHUHDUJXHWKDWWKH\DUHHQWLWOHGWRTXDOLILHGLPPXQLW\RQWZR LQGHSHQGHQWJURXQGV)LUVWGHIHQGDQWVDUJXHWKDWSODLQWLII  $W WKH WLPH RI WKH DWWDFN 0DFN ZDV 'HSXW\ :DUGHQ RI 2SHUDWLRQV FDQQRWVXIILFLHQWO\GHPRQVWUDWHWKHDOOHJHG(LJKW$PHQGPHQW DW WKH :DUUHQ SULVRQ +H ZDV SURPRWHG WR :DUGHQ LQ 6HSWHPEHU   YLRODWLRQ EHFDXVH GHIHQGDQWV ZHUH QRW mGHOLEHUDWHO\ s$    'RHY%RZOHVHWDO 1R 1R 'RHY%RZOHVHWDO  LQGLIIHUHQWl XQGHU WKH VWDQGDUG RXWOLQHG LQ )DUPHU Y BBBBBBBBBBBBBBBBBBBB %UHQQDQ  86      'HIHQGDQWV DUJXH DOWHUQDWLYHO\WKDWWKH\GLGQRWYLRODWHmFOHDUO\HVWDEOLVKHGODZl &21&855(1&( UHJDUGLQJWKHGDQJHURILQPDWHRQLQPDWHSULVRQYLROHQFH BBBBBBBBBBBBBBBBBBBB 3ODLQWLIIDSSHOOHH DUJXHV WKDW WKLV FRXUW GRHV QRW KDYH 0F.($*8('LVWULFWsXGJHFRQFXUULQJ,DJUHHZLWKWKH MXULVGLFWLRQWRFRQVLGHUWKLVDSSHDOEHFDXVHWKHSDUWLHVKDYH PDMRULW\ WKDW JHQXLQH LVVXHV RI PDWHULDO IDFW H[LVW ZKLFK QRWVWLSXODWHGWRDOORIWKHIDFWV3ODLQWLIIFLWHVsRKQVRQY SUHFOXGH UHYLHZ RI WKH TXDOLILHG LPPXQLW\ FODLPV RI sRQHV  86     IRU WKH SURSRVLWLRQ WKDW GHIHQGDQWV.HPSDQG%RZOHVsRKQVRQYsRQHV86 GHIHQGDQWVj IDLOXUH WR FRQFHGH WKH IDFWV PRVW IDYRUDEOH WR      , ZULWH VHSDUDWHO\ RQO\ WR KLJKOLJKW FHUWDLQ SODLQWLIIGLYHVWVWKLVFRXUWRIMXULVGLFWLRQ$OWKRXJKSODLQWLII PDWWHUVUHJDUGLQJWKHVXIILFLHQF\RIWKHGHIHQGDQWVjUHVSRQVHV LVFRUUHFWWKDWWKLVFRXUWGRHVQRWKDYHMXULVGLFWLRQWRKHDUDQ SULRUWRWKHVHFRQGsXO\ DWWDFNDJDLQVWSODLQWLII LQWHUORFXWRU\DSSHDORIWKHLVVXHRITXDOLILHGLPPXQLW\LIWKH LVVXH LQYROYHV D GLVSXWHG TXHVWLRQ RI IDFW LW LV RQO\ WKH $VH[SODLQHGLQWKHPDMRULW\RSLQLRQGHIHQGDQWVDGPLWIRU PDWHULDOIDFWVZKLFKPXVWEHXQGLVSXWHG,QsRQHVWKH&RXUW SXUSRVHVRIWKLVLQWHUORFXWRU\DSSHDOWKDWWKH\KDGNQRZOHGJH H[SODLQHGWKDW RIWKHULVNVWRSODLQWLIISRVHGE\LQPDWH)UH]]HOO7KH\DUJXH LQVWHDG WKDW WKH XQGLVSXWHG DFWLRQV WKH\ WRRN LQ UHVSRQVH :H QRZ FRQVLGHU WKH DSSHDODELOLW\ RI D SRUWLRQ RI D VKRZDVDPDWWHURIODZWKDWWKH\GLGQRWDFWZLWKGHOLEHUDWH GLVWULFW FRXUW V VXPPDU\ MXGJPHQW RUGHU WKDW WKRXJK LQGLIIHUHQFH WR SODLQWLIIjV VDIHW\ LQ YLRODWLRQ RI WKH (LJKWK HQWHUHGLQDTXDOLILHGLPPXQLW\FDVHGHWHUPLQHVRQO\ $PHQGPHQW)DUPHUY%UHQQDQ86    DTXHVWLRQRIHYLGHQFHVXIILFLHQF\LHZKLFKIDFWVD SDUW\PD\RUPD\QRWEHDEOHWRSURYHDWWULDO7KLVNLQG ,QKLV,QFLGHQW5HSRUWGDWHGsXO\ .HPSQRWHGWKDW RIRUGHUZHFRQFOXGHLVQRWDSSHDODEOH EHIRUHKHOHIWWKHSULVRQRQsXO\WK SULRUWRWKHWZRDWWDFNV RQSODLQWLIIWKDWGD\ KHPHW ,GDW7KH6L[WK&LUFXLWKDVH[SODLQHGKRZHYHUWKDW LQWHUORFXWRU\DSSHDOLVDSSURSULDWHLImGHVSLWHWKHIDFWWKDWWKH ZLWK&2%UDQKDPDQG&2%ROHV>VLF@DQGUHOD\HGWR GLVWULFWFRXUWWKRXJKWWKHUHZHUHGLVSXWHGLVVXHVRI>IDFW@>WKH WKHPP\FRQFHUQVDERXWWKLVVLWXDWLRQDQGWROGERWKWKDW FRXUWFRQFOXGHVWKDW@UHJDUGOHVVRIWKHIDFWXDOGLVSXWH LI WKH\ VDZ )UL]]HOO >VLF@ DWWHPSWLQJ WR JHW HYHQ QHDU WKHSODLQWLIIV>GR@QRWKDYHDYDOLGFODLPl0F&ORXG )G >SODLQWLII@ WKDW WKH\ VKRXOG FRQWDFW D VKLIW VXSHUYLVRU DW7KLVFRXUWKDVKHOGWKDWmUHJDUGOHVVRIWKHGLVWULFW LPPHGLDQWO\>VLF@DQGKDYH)UL]]HOO>VLF@SODFHGRQ&HOO FRXUWjV UHDVRQV IRU GHQ\LQJ TXDOLILHG LPPXQLW\ ZH PD\ ,VRODWLRQZKLFKZRXOGSUHYHQWDQ\IXUWKHUSUREOHPVXQWLO H[HUFLVHMXULVGLFWLRQRYHU>GHIHQGDQWjV@DSSHDOWRWKHH[WHQW ,UHWXUQHGRQWKHWK WKDWLWUDLVHVTXHVWLRQVRIODZl'LFNHUVRQY0F&OHOODQ )G WK&LU   s$    $W ILUVW EOXVK WKLV LQVWUXFWLRQ DSSHDUV WR EH D UHDVRQDEOHLQWHUPHGLDWHUHVSRQVHWRWKHVLWXDWLRQ+RZHYHU 3URYLGHGWKDWWKHUHDUHQRGLVSXWHGLVVXHVRIPDWHULDOIDFW WKHSULVRQSROLF\RXWOLQLQJWKHUHTXLUHPHQWVDQGSURFHGXUHV SUHFOXGLQJMXULVGLFWLRQTXDOLILHGLPPXQLW\PXVWEHJUDQWHG E\WKLVFRXUWLIDVDPDWWHURIODZGHIHQGDQWVjFRQGXFWGLG QRWYLRODWHDFOHDUO\HVWDEOLVKHGFRQVWLWXWLRQDOULJKW7KHULJKW RIDQLQPDWHWREHSURWHFWHGIURPDQDWWDFNE\DIHOORZLQPDWH ZDVZHOOHVWDEOLVKHGDWWKHWLPHWKHHYHQWVLQTXHVWLRQWRRN  'RHY%RZOHVHWDO 1R 1R 'RHY%RZOHVHWDO  UHJDUGLQJ %RZOHVj UHDFWLRQ WR )UH]]HOOjV ILQDO DVVDXOW RQ SODFH:HOOEHIRUHWKHWLPHRIWKHVHHYHQWVWKLVFRXUWVWDWHG SODLQWLII LQ SODLQWLIIjV FHOO  'HIHQGDQWV DUJXH WKDW %RZOHV LQ:DONHUY1RUULV )G  WK&LU  WKDW LQWHUMHFWHG KHUVHOI EHWZHHQ )UH]]HOO DQG SODLQWLII DQG XVHG IRUFHDJDLQVW)UH]]HOOZKLOHSODLQWLIIDUJXHVWKDWWKHUHFRUG 7KH HLJKWK DPHQGPHQW ZKLFK SURKLELWV LQIOLFWLRQ RI GRHVQRWVXSSRUWWKLVGHVFULSWLRQDQGWKDWLQIDFW%RZOHVZDV mFUXHO DQG XQXVXDO SXQLVKPHQWl HQFRPSDVVHV WKH SK\VLFDOO\LQFDSDEOHRIFRQWUROOLQJ)UH]]HOODQGEDFNHGDZD\ SURVFULSWLRQRImGHOLEHUDWHLQGLIIHUHQFHl WRWKHVHULRXV IURPWKHILJKW7KHVHGLIIHUHQFHVDUHIDFWXDOGLVSXWHV$MXU\ QHHGVRISULVRQHUV2QVHYHUDORFFDVLRQVZHKDYH PD\ ILQG WKDW %RZOHV ZDV VLPSO\ QHJOLJHQW LQ SHUPLWWLQJ KHOG WKDW mGHOLEHUDWH LQGLIIHUHQFHl RI FRQVWLWXWLRQDO )UH]]HOOWRZDONE\SODLQWLIIjVFHOOWRUHWULHYHWKHPRSRUD PDJQLWXGHPD\RFFXUZKHQSULVRQJXDUGVIDLOWRSURWHFW MXU\PD\ILQGWKDWJLYHQDOORIWKHIDFWVDVGHWHUPLQHGDWWULDO RQHLQPDWHIURPDQDWWDFNE\DQRWKHU %RZOHVj FRQGXFW ZDV QRW D UHDVRQDEOH UHVSRQVH WR WKH DGPLWWHGO\NQRZQULVNWRSODLQWLII%HFDXVH%RZOHVj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jV 8QGHUWKHWHVWZHDGRSWWRGD\DQG(LJKWK$PHQGPHQW GHQLDORITXDOLILHGLPPXQLW\DVWRGHIHQGDQW6WUDWWRQ:H FODLPDQW QHHG QRW VKRZ WKDW D SULVRQ RIILFLDO DFWHG RU IXUWKHU ILQG WKDW ZH GR QRW KDYH MXULVGLFWLRQ WR UHYLHZ WKH IDLOHGWRDFWEHOLHYLQJWKDWKDUPDFWXDOO\ZRXOGEHIDOODQ FODLPVRIGHIHQGDQWV.HPSDQG%RZOHV7KRVHFODLPVDUH LQPDWH LWLVHQRXJKWKDWWKHRIILFLDODFWHGRUIDLOHGWRDFW WKHUHIRUHGLVPLVVHG GHVSLWHKLVNQRZOHGJHRIDVXEVWDQWLDOULVNRIKDUP  >%XW@SULVRQRIILFLDOVZKRDFWXDOO\NQHZRIDVXEVWDQWLDO ULVNWRLQPDWHKHDOWKRUVDIHW\PD\EHIRXQGIUHHIURP OLDELOLW\LIWKH\UHVSRQGHGUHDVRQDEO\WRWKHULVNHYHQLI WKHKDUPXOWLPDWHO\ZDVQRWDYHUWHG )DUPHU  86 DW   7KH &RXUW HVWDEOLVKHG D VWDQGDUGRImVXEMHFWLYHUHFNOHVVQHVVDVXVHGLQWKHFULPLQDO ODZlDVWKHWHVWIRUGHOLEHUDWHLQGLIIHUHQFHXQGHUWKH(LJKWK $PHQGPHQW,GDW 7RWKHH[WHQWWKDWWKHUHDUHQR GLVSXWHGLVVXHVRIPDWHULDOIDFWZLWKUHJDUGWRDQ\GHIHQGDQWjV FODLPV  ZH FDQ UHYLHZ WKDW GHIHQGDQWj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jV WRRNVWHSVVXIILFLHQWIRUWKHFRXUWWRKROGDVDPDWWHURIODZ GHFLVLRQ  ,Q SDUWLFXODU .HPS DUJXHV WKDW SODLQWLII RIIHUHG WKDWKHZDVQRWmGHOLEHUDWHO\LQGLIIHUHQWlWRWKHULVNRIGDQJHU RQO\YDJXHFRPSODLQWVWKDW)UH]]HOOZDVKDUDVVLQJSODLQWLII WR SODLQWLII  'HIHQGDQW 6WUDWWRQ ZDV DZDUH RI WKH GDQJHU IURP)UH]]HOOjVRZQFHOOGRRUZD\DQGWKDWSODLQWLIIQHYHUVDLG SRVHGE\)UH]]HOODQGWRRNVWHSVWRDGGUHVVWKDWGDQJHU,WLV WKDW )UH]]HOO SK\VLFDOO\ DVVDXOWHG RU WKUHDWHQHG WR NLOO KHU XQGLVSXWHGWKDW6WUDWWRQFRQIHUUHGZLWK.HPSEHIRUH.HPS s$  'HIHQGDQW.HPSDUJXHVWKDWKHXQGHUVWRRGWKH OHIW KLV VKLIW  $W WKDW SRLQW 6WUDWWRQjV RQO\ LQIRUPDWLRQ LQFLGHQWWRKDYH LQYROYHGRQO\PLQRUKDUDVVPHQWWKXVQRW UHJDUGLQJ )UH]]HOO DQG SODLQWLII FDPH IURP .HPS ZKR GHVHUYLQJRIDQRUGHULVRODWLQJ)UH]]HOO,QFRQWUDVWSODLQWLII UHSRUWHG WKDW )UH]]HOO KDG mKDUDVVHGl SODLQWLII EXW GLG QRW VWDWHVWKDWVKHWROG6FKZHLW]HUVSHFLILFDOO\DERXWWKHSK\VLFDO LQGLFDWHWKDWDQ\SK\VLFDODWWDFNKDGRFFXUUHG,QDGGLWLRQ DWWDFNDQGWKUHDWVDQGWKDWGHIHQGDQW.HPSWROGSODLQWLIIWKDW ZKHQ6WUDWWRQDVNHGLIVHJUHJDWLRQZDVDSSURSULDWH.HPS 6FKZHLW]HUmDOUHDG\WROGPHlDOORIWKHGHWDLOV s$ DQVZHUHG WKDW LW ZDV QRW  :H FDQQRW ILQG WKDW GHIHQGDQW ,QDGGLWLRQWKHUHDSSHDUVWREHDIDFWXDOGLVSXWHLQWKHUHFRUG 6WUDWWRQZDVUHTXLUHGWRRYHUULGHWKHMXGJPHQWRIWKHRIILFHU DVWRZKHWKHUGHIHQGDQW.HPSLGHQWLILHGSODLQWLIIDQG)UH]]HOO ZKR KDG EHHQ KDQGOLQJ WKH VLWXDWLRQ GLUHFWO\ SDUWLFXODUO\ E\ QDPH WR GHIHQGDQW 6WUDWWRQ RU RQO\ LQGLFDWHG WKDW DQ ZKHQ KH ZDV QRW JLYHQ DQ\ LQIRUPDWLRQ WR LQGLFDWH WKH LQFLGHQWEHWZHHQWZRXQLGHQWLILHGLQPDWHVKDGRFFXUUHG s$ H[LVWHQFHRIDSK\VLFDOWKUHDWWRSODLQWLII$IWHUWKH SP     ,I GHIHQGDQW .HPS GLG QRW QDPH WKH SDUWLHV LQFLGHQW RQ sXO\  LQ ZKLFK )UH]]HOO JUDEEHG SODLQWLII LQ LQYROYHG D UHDVRQDEOH MXU\ FRXOG FRQFOXGH WKDW GHIHQGDQW SODLQWLIIjVFHOO6WUDWWRQGLGWDNHIXUWKHUDFWLRQWRVHJUHJDWHWKH .HPSjV HIIRUWV WR SURWHFW SODLQWLII ZHUH QRW VXIILFLHQW DQG WZRLQPDWHVE\DSSURYLQJFHOOLVRODWLRQIRU)UH]]HOO$VRQH ZHUHDSUR[LPDWHFDXVHRIWKHVHFRQGDVVDXOW7KXVZHPDNH RI WKUHH SRVVLEOH FKRLFHV IRU VHJUHJDWLQJ )UH]]HOO IURP QR VXEVWDQWLYH ILQGLQJ DV WR WKH VXIILFLHQF\ RI GHIHQGDQW SODLQWLII6WUDWWRQjVFKRLFHRIFHOOLVRODWLRQZDVQRWDUHFNOHVV .HPSjVDFWLRQV:HUXOHRQO\WKDWZHDUHSUHFOXGHGIURP DSSURDFKWRNHHSLQJ)UH]]HOODZD\IURPSODLQWLII$OWKRXJK UHYLHZLQJGHIHQGDQW.HPSjVFODLPEHFDXVHJHQXLQHLVVXHVRI XOWLPDWHO\WKDWVROXWLRQZDVQRWVXIILFLHQWWRSURWHFWSODLQWLII PDWHULDOIDFWDUHLQGLVSXWH 6WUDWWRQFRXOGQRWUHDVRQDEO\KDYHIRUHVHHQWKDWRWKHURIILFHUV ZRXOGSHUPLW)UH]]HOOWROHDYHKLVFHOODIWHUWKHFHOOLVRODWLRQ )LQDOO\ZHFRQFOXGHOLNHZLVHWKDWWKHUHDUHJHQXLQHLVVXHV KDGEHHQLPSRVHG%HFDXVHSODLQWLIIGRHVQRWGLVSXWHDQ\RI RIPDWHULDOIDFWZKLFKSUHFOXGHUHYLHZRIGHIHQGDQW%RZOHVj WKH IDFWV UHOLHG XSRQ KHUH ZH FRQFOXGH WKDW WKLV FRXUW KDV FODLP  3ODLQWLII SRLQWV WR VHYHUDO GLVSXWHG IDFWV UHJDUGLQJ MXULVGLFWLRQWRUHYLHZGHIHQGDQW6WUDWWRQjVFODLPDQGWKDWWKH GHIHQGDQW%RZOHVDVHYLGHQFHWKDWWKLVFRXUWODFNVMXULVGLFWLRQ GLVWULFW FRXUW HUUHG LQ QRW JUDQWLQJ TXDOLILHG LPPXQLW\ WR WRKHDUWKLVDSSHDO 3OjV%U  ,QSDUWLFXODUSODLQWLII GHIHQGDQW6WUDWWRQ DUJXHVWKDWWKHSDUWLHVKDYHRIIHUHGFRQIOLFWLQJVWRULHVDVWR ZKHWKHU GHIHQGDQW %RZOHV ZDV GHOLEHUDWHO\ LQGLIIHUHQW WR :HFDQQRWKROGKRZHYHUWKDWDVDPDWWHURIODZGHIHQGDQW SODLQWLIIjVVDIHW\ZKHQVKHOHW)UH]]HOORXWWRJRWRWKHVKRZHU .HPSLVHQWLWOHGWRTXDOLILHGLPPXQLW\5DWKHUZHFRQFOXGH DVWRZKHWKHU%RZOHVWROGSODLQWLIIWKDW)UH]]HOOZDVRXWRIKLV WKDWWKHUHDUHJHQXLQHLVVXHVRIPDWHULDOIDFWZKLFKSUHFOXGH FHOODQGDVWRSODLQWLIIjVUHDFWLRQLIDQGZKHQ%RZOHVWROG UHYLHZRIWKLVFODLP,WLVXQGLVSXWHGWKDW.HPSGLVFXVVHGWKH SODLQWLIIWKDW)UH]]HOOZDVRXWRIKLVFHOO,QDGGLWLRQSODLQWLII sXO\LQFLGHQWZLWKSODLQWLIIRQsXO\VSHFLILFDOO\RUGHUHG SRLQWV WR GLIIHUHQFHV LQ WKH IDFWV RIIHUHG E\ WKH SDUWLHV