United States v. Jordon

U.S. Court of Appeals for the Sixth Circuit

United States v. Jordon

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$SSHOOHH  &URVV$SSHOODQW     1RV    Y !    $1721,2 %8516    $17+21< +$5'(1    s(520( +$5'(1  s5  DQG0,&+$(/   s25'21    'HIHQGDQWV$SSHOODQWV  &URVV$SSHOOHHV   1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH(DVWHUQ'LVWULFWRI.HQWXFN\DW&RYLQJWRQ 1R n:LOOLDP2%HUWHOVPDQ'LVWULFWsXGJH $UJXHGDQG6XEPLWWHG sXQH  'HFLGHGDQG)LOHG sXO\  %HIRUH &2/(DQG*,/0$1&LUFXLWsXGJHV 0,//6 'LVWULFWsXGJH

7KH +RQRUDEOH 5LFKDUG 0LOOV 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH &HQWUDO 'LVWULFW RI ,OOLQRLV VLWWLQJ E\ GHVLJQDWLRQ

  8QLWHG6WDWHVY 1RV  1RV  8QLWHG6WDWHVY  sRUGRQHWDO sRUGRQHWDO

BBBBBBBBBBBBBBBBB UHGXFWLRQV  $V D UHVXOW ZH UHYHUVH WKH PLQLPDOUROH UHGXFWLRQV DQG UHPDQG WKH FDVH IRU WKH SXUSRVH RI &2816(/ UHVHQWHQFLQJ$+DUGHQs+DUGHQDQGsRUGRQZLWKRXWVXFK DUHGXFWLRQ7KLVLVQRWWRVD\KRZHYHUWKDWDWZRRUWKUHH $5*8('   0LFKDHO / %R\ODQ /RXLVYLOOH .HQWXFN\ IRU OHYHOUHGXFWLRQIRUDPLQRUUROHXQGHU6HQWHQFLQJ*XLGHOLQHV $SSHOODQW LQ &DVH 1R   /DXUD . 9RRUKHHV † % ZRXOG QHFHVVDULO\ EH LQDSSURSULDWH RQ UHPDQG $66,67$1781,7('67$7(6$77251(<&RYLQJWRQ :KHWKHU WKH FRQGXFW RI WKHVH GHIHQGDQWV ILWV ZLWKLQ WKH .HQWXFN\IRU$SSHOOHHLQ&DVH1R21%5,() mPLQRU UROHl FULWHULD RI WKH 6HQWHQFLQJ *XLGHOLQHV LV QRW 0LFKDHO / %R\ODQ /RXLVYLOOH .HQWXFN\ 3DWULFN ) 1DVK SUHVHQWO\EHIRUHXV /H[LQJWRQ.HQWXFN\0HO\QGD:&RRN5HLFK6&+$' &22.,QGLDQ6SULQJV2KLR(G:7UDQWHU75$17(5 ,,,&21&/86,21 0(,(5)RUW7KRPDV.HQWXFN\IRU$SSHOODQWV/DXUD. 9RRUKHHV $66,67$17 81,7(' 67$7(6 $77251(< )RU DOO RI WKH UHDVRQV VHW IRUWK DERYH ZH $)),50 WKH &RYLQJWRQ.HQWXFN\&KDUOHV3:LVGRPsU$66,67$17 MXGJPHQWRIWKHGLVWULFWFRXUWZLWKUHVSHFWWRWKHFRQYLFWLRQV 81,7('67$7(6$77251(</H[LQJWRQ.HQWXFN\IRU RIDOOIRXUGHIHQGDQWVDQGWKHVHQWHQFHRI%XUQV5(9(56( $SSHOOHHV WKH PLQLPDOUROH UHGXFWLRQV IRU $ +DUGHQ s +DUGHQ DQG sRUGRQ DQG 5(0$1' WKH FDVH IRU WKH SXUSRVH RI BBBBBBBBBBBBBBBBB UHVHQWHQFLQJWKHVHWKUHHGHIHQGDQWVLQDPDQQHUFRQVLVWHQW ZLWKWKLVRSLQLRQ 23,1,21 BBBBBBBBBBBBBBBBB 521$/' /(( *,/0$1 &LUFXLW sXGJH  ,Q 0DUFK RI  D IHGHUDOFRXUW MXU\ IRXQG $QWRQLR %XUQV $QWKRQ\ +DUGHQ sHURPH +DUGHQ sU DQG 0LFKDHO sRUGRQ JXLOW\ RI FULPHV UHODWHG WR D FRQVSLUDF\ WR SRVVHVV DQG GLVWULEXWH FRFDLQH EDVH FUDFN FRFDLQH   7KH GHIHQGDQWV QRZ DSSHDO WKHLUFRQYLFWLRQVDQGVHQWHQFHV$OOIRXUGHIHQGDQWVDUJXH WKDWWKHHYLGHQFHDWWULDOZDVLQVXIILFLHQWWRVXSSRUWWKHMXU\jV YHUGLFW WKDW WKH GLVWULFW FRXUW DEXVHG LWV GLVFUHWLRQ LQ SHUPLWWLQJ WKH JRYHUQPHQW WR XVH D FRPSXWHUJHQHUDWHG m3RZHU3RLQWlSUHVHQWDWLRQGXULQJLWVRSHQLQJVWDWHPHQWDQG WKDW WKH\ ZHUH VHQWHQFHG LQ YLRODWLRQ RI $SSUHQGL Y 1HZ sHUVH\86  %XUQVDQGs+DUGHQFODLPWKDW WKHGLVWULFWFRXUWHUUHGLQGHQ\LQJWKHLUPRWLRQVWRVXSSUHVV HYLGHQFHJDWKHUHGGXULQJVHDUFKHVRI%XUQVjVFDUDQGPRWHO URRP  $ +DUGHQ s +DUGHQ DQG sRUGRQ DUJXH WKDW WKH GLVWULFWFRXUWHUUHGLQLWVGHWHUPLQDWLRQRIWKHDPRXQWRIGUXJV IRUZKLFKWKH\ZHUHKHOGUHVSRQVLEOHsRUGRQDOVRFODLPVWKDW WKHGLVWULFWFRXUWIDLOHGWRFRQVLGHUKLVPRWLRQIRUDGRZQZDUG  8QLWHG6WDWHVY 1RV  1RV  8QLWHG6WDWHVY  sRUGRQHWDO sRUGRQHWDO

XQGHUVWDQGLQJRIWKHVFRSHDQGVWUXFWXUHRIWKHHQWHUSULVHDQG GHSDUWXUHEDVHGXSRQKLVTXDOLILFDWLRQIRUDPLWLJDWLQJUROH RIWKHDFWLYLWLHVRIRWKHUVLVLQGLFDWLYHRIDUROHDVDPLQLPDO DGMXVWPHQW,QDGGLWLRQWKHJRYHUQPHQWFURVVDSSHDOVWKH SDUWLFLSDQWl,Gm7KHFXOSDELOLW\GHWHUPLQDWLRQLVKHDYLO\ GLVWULFWFRXUWjVGHFLVLRQWRJUDQW$+DUGHQs+DUGHQDQG GHSHQGHQWXSRQWKHIDFWVDQGWKHGHIHQGDQWKDVWKHEXUGHQRI sRUGRQ IRXUOHYHO VHQWHQFH UHGXFWLRQV IRU KDYLQJ SOD\HG D SURYLGLQJ PLWLJDWLQJ IDFWRUV E\ D SUHSRQGHUDQFH RI WKH PLQLPDOUROHLQWKHGUXJFRQVSLUDF\)RUWKHUHDVRQVVHWIRUWK HYLGHQFHl8QLWHG6WDWHVY3HUU\ )G WK&LU EHORZZH$)),50WKHMXGJPHQWRIWKHGLVWULFWFRXUWZLWK    LQWHUQDOTXRWDWLRQPDUNVDQGFLWDWLRQVRPLWWHG :H UHVSHFW WR WKH FRQYLFWLRQV RI DOO IRXU GHIHQGDQWV DQG WKH ZLOOUHYHUVHDGLVWULFWFRXUWjVILQGLQJUHJDUGLQJDGHIHQGDQWjV VHQWHQFHRI%XUQV5(9(56(WKHPLQLPDOUROHUHGXFWLRQV UROH LQ DQ RIIHQVH RQO\ LI ZH GHWHUPLQH WKDW WKH ILQGLQJ LV IRU$+DUGHQs+DUGHQDQGsRUGRQDQG5(0$1'WKHFDVH FOHDUO\HUURQHRXV,G IRUWKHSXUSRVHRIUHVHQWHQFLQJWKHVHWKUHHGHIHQGDQWV ,QFRQFOXGLQJWKDW$+DUGHQs+DUGHQDQGs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†   &RXQW  QRWGRRQWKHLURZQ%XWWKHGLVWULFWFRXUWjVFRQFOXVLRQWKDW SDUWLFLSDWLQJLQDFRQVSLUDF\WRGLVWULEXWH NLORJUDPVRI $+DUGHQs+DUGHQDQGsRUGRQKDGPLQLPDOUROHVGLVFRXQWV FRFDLQHEDVHLQYLRODWLRQRI86&† &RXQWV WKHVLJQLILFDQWERG\RIHYLGHQFHWKDWDOOWKUHHZHUHDZDUHRI DQG XVLQJDFRPPXQLFDWLRQVIDFLOLW\LQWKHFRPPLVVLRQRI WKH IXOO VFRSH RI %XUQVjV HQWHUSULVH DQG UHJXODUO\ DVVLVWHG DIHGHUDOFULPHLQYLRODWLRQRI86&† E &RXQW %XUQVLQSURFHVVLQJDQGVHOOLQJFUDFNFRFDLQHRQDGDLO\EDVLV DWWHPSWLQJWRSRVVHVVZLWKWKHLQWHQWWRGLVWULEXWHRXQFHV RIFRFDLQHEDVHLQYLRODWLRQRI86&† DQG&RXQW 7KH$SSOLFDWLRQ1RWHVWR†%SURYLGHWZRH[DPSOHVRI FRUUXSWO\DWWHPSWLQJWRSHUVXDGHDQGLQIOXHQFHDZLWQHVVLQ WKHW\SHRIFRQVSLUDWRUIRUZKRPDIRXUOHYHOPLQLPDOUROH DQRIILFLDOSURFHHGLQJLQYLRODWLRQRI86&† E   UHGXFWLRQ ZRXOG EH DSSURSULDWH  mVRPHRQH ZKR SOD\HG QR $+DUGHQs+DUGHQDQGsRUGRQZHUHHDFKIRXQGJXLOW\RQ RWKHUUROHLQDYHU\ODUJHGUXJVPXJJOLQJRSHUDWLRQWKDQWR &RXQWDQG$+DUGHQDQGsRUGRQZHUHDOVRFRQYLFWHGRQ RIIORDG SDUW RI D VLQJOH PDULKXDQD VKLSPHQW RU LQ D FDVH &RXQW  SRVVHVVLQJ ZLWK WKH LQWHQW WR GLVWULEXWH RQHKDOI ZKHUHDQLQGLYLGXDOZDVUHFUXLWHGDVDFRXULHUIRUDVLQJOH RXQFHRIFRFDLQHEDVHLQYLRODWLRQRI86&† D  VPXJJOLQJWUDQVDFWLRQLQYROYLQJDVPDOODPRXQWRIGUXJVl DQG&RXQW WUDYHOLQJLQLQWHUVWDWHFRPPHUFHWRFRPPLWDQ 866HQWHQFLQJ *XLGHOLQHV0DQXDO†%FPWQ,Q XQODZIXODFWLYLW\RUDLGLQJDQGDEHWWLQJWKHVDPHLQYLRODWLRQ FRQWUDVWWRWKHVHH[DPSOHVRIPLQLPDOUROHV$+DUGHQs RI86&†  D   +DUGHQDQGsRUGRQ HDFKFDUULHGGHOLYHUHGSDFNDJHGDQG VROGFUDFNFRFDLQHLQSDUWQHUVKLSZLWK%XUQVIRURYHUD\HDU ,QsXQHRI%XUQVZDVVHQWHQFHGWRFRQFXUUHQWWHUPV 7KHDFWLYLWLHVRIWKHVHWKUHHGHIHQGDQWVDUHVRPXFKJUHDWHULQ RIOLIHLQSULVRQRQ&RXQWVDQGDVZHOODVWRFRQFXUUHQW VFRSH DQG GXUDWLRQ WKDQ WKH RQHWLPH IXQFWLRQDU\ GXWLHV PRQWKVRQ&RXQWVDQGDQGFRQFXUUHQWPRQWKVRQ SRVLWHG LQ WKH $SSOLFDWLRQ 1RWHV WKDW WKH GLVWULFW FRXUW &RXQW &RXQWZDVGLVPLVVHGDJDLQVW%XUQVDIWHUWKHMXU\ FRPPLWWHG FOHDU HUURU ZKHQ LW JUDQWHG WKH IRXUOHYHO YHUGLFWEHFDXVHLWZDVFRQVLGHUHGDVDOHVVHULQFOXGHGRIIHQVH  8QLWHG6WDWHVY 1RV  1RV  8QLWHG6WDWHVY  sRUGRQHWDO sRUGRQHWDO

ZLWKLQWKHFRQWLQXLQJFULPLQDOHQWHUSULVHFRXQW$+DUGHQ FRFDLQH:LWKVXFKDQH[WHQVLYHLQYROYHPHQWLQ%XUQVjVGUXJ UHFHLYHGDVHQWHQFHRIFRQFXUUHQWPRQWKVLQSULVRQRQ RSHUDWLRQLWZDVUHDVRQDEO\IRUHVHHDEOHWRWKHVHGHIHQGDQWV &RXQWVDQGDQGFRQFXUUHQWPRQWKVRQ&RXQWs ERWKWKDWWKHFRQVSLUDF\LQYROYHGRYHUNLORJUDPVRIFUDFN +DUGHQ UHFHLYHG D VHQWHQFH RI  PRQWKV LQ SULVRQ RQ FRFDLQH DQG WKDW WKHLU DFWLRQV ZHUH IXUWKHULQJ WKDW MRLQWO\ &RXQWsRUGRQZDVVHQWHQFHGWRFRQFXUUHQWPRQWKVLQ XQGHUWDNHQFULPLQDODFWLYLW\7KHGLVWULFWFRXUWWKHUHIRUHGLG SULVRQRQ&RXQWVDQGDQGFRQFXUUHQWPRQWKVRQ&RXQW QRW FOHDUO\ HUU LQ GHWHUPLQLQJ WKDW WKHVH GHIHQGDQWV ZHUH $+DUGHQs+DUGHQDQGsRUGRQDOVRUHFHLYHGILYH\HDUV UHVSRQVLEOHIRUDWOHDVWNLORJUDPVRIFUDFNFRFDLQH RIVXSHUYLVHGUHOHDVH,QFDOFXODWLQJWKHLURIIHQVHOHYHOVWKH GLVWULFWFRXUWJUDQWHG$+DUGHQs+DUGHQDQGsRUGRQIRXU  'HQLDORIsRUGRQjVPRWLRQIRUDGRZQZDUGGHSDUWXUH OHYHO UHGXFWLRQV IRU KDYLQJ SOD\HG D PLQLPDO UROH LQ WKH FRQVSLUDF\SXUVXDQWWR8QLWHG6WDWHV6HQWHQFLQJ*XLGHOLQHV $ GLVWULFW FRXUWjV GHFLVLRQ QRW WR JUDQW D GRZQZDUG †% D 7KHVHDSSHDOVIROORZHG GHSDUWXUH LV JHQHUDOO\ QRW UHYLHZDEOH  8QLWHG 6WDWHV Y 3LFNHWW )G WK&LU  &RQWUDU\WR % )DFWVUHODWLQJWR&RXQWVDQG sRUGRQjVFRQWHQWLRQWKHGLVWULFWFRXUWFRQVLGHUHGDQGUHMHFWHG sRUGRQjVPRWLRQIRUDGRZQZDUGGHSDUWXUHSXUVXDQWWR8QLWHG 0RVWRIWKHHYLGHQFHDJDLQVW%XUQVDQGKLVFRGHIHQGDQWV 6WDWHV 6HQWHQFLQJ *XLGHOLQHV † '  sRUGRQjV FRXQVHO FDPHIURPWKHWHVWLPRQ\RIZLWQHVVHVZKRDIWHUWKHLUDUUHVWV UDLVHG WKH LVVXH LQ WKH VHQWHQFLQJ FROORTX\ E\ DVNLQJ WKH RQ GUXJ FKDUJHV FRRSHUDWHG ZLWK WKH JRYHUQPHQW LQ LWV GLVWULFWFRXUWWRFRQVLGHUIDFWVWKDWDOOHJHGO\VKRZHGsRUGRQjV LQYHVWLJDWLRQ LQWR %XUQVjV VXVSHFWHG GUXJWUDIILFNLQJ OHVVHUFXOSDELOLW\5DWKHUWKDQJUDQWWKHGRZQZDUGGHSDUWXUH DFWLYLWLHV(DFKRIWKHVHZLWQHVVHVLQFOXGLQJ0DU\%DNHU WKH FRXUW UHSOLHG WKDW LW KDG DOUHDG\ WDNHQ WKRVH IDFWV LQWR &DURO%DOGZLQ3DXO*UHHQ/HH.HHQH&KULV3RUWHU/DUU\ DFFRXQW ZKHQ LW JDYH sRUGRQ D IRXUOHYHO UHGXFWLRQ IRU 7UXMLOOR DQG sDPLH :DONHU WHVWLILHG DW WULDO WKDW %XUQV mPLQLPDO SDUWLFLSDWLRQl LQ WKH FRQVSLUDF\  %HFDXVH WKLV VXSSOLHGFUDFNFRFDLQHWRWKHPVHOYHVRURWKHUVDQGWKDW$ UXOLQJ LV QRW UHYLHZDEOH LQ OLJKW RI WKH GLVWULFW FRXUWjV +DUGHQ s +DUGHQ RU sRUGRQ GURYH RU RWKHUZLVH DVVLVWHG FRQVLGHUDWLRQRIWKHUHTXHVWRQWKHPHULWVsRUGRQjVDSSHDORI %XUQV %HWZHHQ 1RYHPEHU RI   DQG sDQXDU\ RI   WKLVLVVXHLVWRQRDYDLO %XUQV GLVWULEXWHG PXOWLSOH NLORJUDPV RI FUDFN FRFDLQH SHU ZHHNZLWKWKHKHOSRIKLVFRGHIHQGDQWVDVZHOODV3DXO*UHHQ ' 7KH JRYHUQPHQWjV FURVVDSSHDO RI WKH IRXUOHYHO /HH .HHQH (XJHQH :HVW 7LR :HVW DQG %XUQVjV WKHQ PLQLPDOUROH UHGXFWLRQ IRU $ +DUGHQ s +DUGHQ JLUOIULHQGm7LDl%XUQV$+DUGHQDQGsRUGRQZHUHDGXOWVDW DQGsRUGRQ DOO WLPHV GXULQJ WKLV SHULRG EXW s +DUGHQ GLG QRW WXUQ  \HDUVROGXQWLO0DUFK  7KH JRYHUQPHQW FRQWHQGV LQ LWV FURVVDSSHDO WKDW WKH GLVWULFW FRXUW HUUHG LQ JUDQWLQJ $ +DUGHQ s +DUGHQ DQG 'XULQJWKHVXPPHURI $+DUGHQs+DUGHQsRUGRQ sRUGRQ D VHQWHQFLQJ UHGXFWLRQ EDVHG XSRQ WKHLU DOOHJHGO\ DQGRQRFFDVLRQ(XJHQH:HVWZHLJKHGDQGSDFNDJHGFUDFN mPLQLPDO UROHl LQ WKH GUXJWUDIILFNLQJ FRQVSLUDF\  $ FRFDLQH DW %DNHUjV &RYLQJWRQ .HQWXFN\ DSDUWPHQW  7KH PLQLPDOUROHUHGXFWLRQmLVLQWHQGHGWRFRYHUGHIHQGDQWVZKR XVXDOSUDFWLFHZDVIRU$+DUGHQs+DUGHQDQGsRUGRQWR DUHSODLQO\DPRQJWKHOHDVWFXOSDEOHRIWKRVHLQYROYHGLQWKH SURFHVVWKHFUDFNFRFDLQHZKLOH%XUQVZDWFKHG$WWLPHV$ FRQGXFW RI D JURXSl  86 6HQWHQFLQJ *XLGHOLQHV 0DQXDO +DUGHQSURFHVVHGLWDORQH$IWHUWKHGUXJVZHUHSDFNDJHG † % FPW Q  ,Q GHWHUPLQLQJ D GHIHQGDQWjV OHYHO RI %XUQVVHQWs+DUGHQRUsRUGRQWREULQJ EX\HUV WR%DNHUjV FXOSDELOLW\ mWKH GHIHQGDQWjV ODFN RI NQRZOHGJH RU  8QLWHG6WDWHVY 1RV  1RV  8QLWHG6WDWHVY  sRUGRQHWDO sRUGRQHWDO

UHFHLYHGRQ&RXQWDQ\$SSUHQGLHUURUE\WKHGLVWULFWFRXUW DSDUWPHQW WR PDNH SXUFKDVHV  $ +DUGHQ s +DUGHQ DQG LQ GHWHUPLQLQJ WKH DPRXQW RI GUXJV IRU ZKLFK %XUQV ZDV sRUGRQDVZHOODV(XJHQHDQG7LR:HVWVROGFUDFNFRFDLQH UHVSRQVLEOHZLWKUHJDUGWR&RXQWLVDOVRKDUPOHVV,G XQGHU%XUQVjVGLUHFWLRQ%DNHUDOVRSXUFKDVHGFUDFNFRFDLQH IURP%XUQVWKURXJKs+DUGHQDQGFDUULHGFUDFNFRFDLQHIRU $PRXQWRIGUXJVIRUZKLFK$+DUGHQs+DUGHQ %XUQVs+DUGHQsRUGRQDQG(XJHQH:HVWXQWLOKHUDUUHVWRQ DQGsRUGRQZHUHUHVSRQVLEOHRQ&RXQW GUXJFKDUJHVLQ6HSWHPEHURI 'XULQJDYLVLWWR%XUQV LQ&LQFLQQDWLLQ'HFHPEHURI %DNHUREVHUYHG%XUQV$ $+DUGHQs+DUGHQDQGsRUGRQHDFKFKDOOHQJHWKHGLVWULFW +DUGHQ s +DUGHQ (XJHQH :HVW DQG 7LR :HVW EX\ DQG FRXUWjV ILQGLQJ WKDW WKHLU UROH LQ WKH FRQVSLUDF\ LQYROYHG SURFHVVFUDFNFRFDLQHDVZHOODVGLVFXVVFUDFNFRFDLQHVDOHV UHVSRQVLELOLW\IRUDWOHDVWNLORJUDPVRIFUDFNFRFDLQH:H ZLOOUHYHUVHDVHQWHQFLQJFRXUWjVGUXJTXDQWLW\GHWHUPLQDWLRQ %DOGZLQ PHW %XUQV LQ sDQXDU\ RI   ZKHQ %XUQV RQO\ LI ZH FRQFOXGH WKDW WKH GHWHUPLQDWLRQ LV FOHDUO\ GHOLYHUHGFUDFNFRFDLQHWRWKHDSDUWPHQWRI3RUWHU%DOGZLQjV HUURQHRXV8QLWHG6WDWHVY2ZXVX )G  WK ER\IULHQG6KHZDVSUHVHQWRQVHYHUDOVXEVHTXHQWRFFDVLRQV &LU    m$ ILQGLQJ LV FOHDUO\ HUURQHRXV ZKHQ WKH ZKHQ %XUQV DFFRPSDQLHG E\ s +DUGHQ GHOLYHUHG FUDFN UHYLHZLQJFRXUWRQWKHHQWLUHHYLGHQFHLVOHIWZLWKWKHGHILQLWH FRFDLQHWR3RUWHUs+DUGHQVRPHWLPHVGHOLYHUHGWKHFUDFN DQG ILUP FRQYLFWLRQ WKDW D PLVWDNH KDV EHHQ FRPPLWWHGl FRFDLQHDORQHDVGLG%XUQVjVJLUOIULHQGm7LDl$IWHU%DOGZLQ +HLJKWV&RPPXQLW\&RQJUHVVY+LOOWRS5HDOW\,QF)G ZDVDUUHVWHGLQ0DUFKRI IRUGLVWULEXWLQJFUDFNFRFDLQH   WK &LU     m>7@KH WHVW LV ZKHWKHU WKHUH LV WKDWKHUER\IULHQG3RUWHUKDGSXUFKDVHGIURP%XUQV%XUQV HYLGHQFHLQWKHUHFRUGWRVXSSRUWWKHORZHUFRXUWjVILQGLQJ SRVWHG%DOGZLQjVERQG DQGZKHWKHULWVFRQVWUXFWLRQRIWKDWHYLGHQFHLVDUHDVRQDEOH RQHl,G 3RUWHU ZDV DOVR DUUHVWHG LQ 0DUFK RI   IRU WKH SRVVHVVLRQRIFUDFNFRFDLQH+HEHJDQEX\LQJFUDFNFRFDLQH m$FRFRQVSLUDWRULVQRWQHFHVVDULO\UHVSRQVLEOHIRUWKHWRWDO IURP%XUQVLQ'HFHPEHURI DQGGLGVRDSSUR[LPDWHO\ DPRXQWRIFRFDLQHLQYROYHGLQWKHFRQVSLUDF\IRUWKHSXUSRVHV HYHU\RWKHUGD\XQWLOKLVDUUHVW3RUWHUOLNH%DOGZLQWHVWLILHG RIHVWDEOLVKLQJKLVEDVHRIIHQVHOHYHO5DWKHUDSDUWLFLSDQWLV WKDW s +DUGHQ XVXDOO\ DFFRPSDQLHG %XUQV ZKHQ %XUQV UHVSRQVLEOH IRU RWKHU FRQVSLUDWRUVj FRQGXFW RQO\ LI WKDW GHOLYHUHGWKHFUDFNFRFDLQH7KHWKUHHJUDPVRIFUDFNFRFDLQH FRQGXFWZDVUHDVRQDEO\IRUHVHHDEOHWRKLPDQGLQIXUWKHUDQFH WKDW3RUWHUVROGWRDQXQGHUFRYHUSROLFHRIILFHUZKHQKHZDV RIWKHH[HFXWLRQRIWKHMRLQWO\XQGHUWDNHQFULPLQDODFWLYLW\l DUUHVWHGFDPHIURP%XUQV$IWHU3RUWHUZDVVXESRHQDHGWR 8QLWHG6WDWHVYsHQNLQV)G WK&LU  WHVWLI\LQWKHIHGHUDOJUDQGMXU\LQYHVWLJDWLRQ%XUQVWROGKLP 866HQWHQFLQJ*XLGHOLQHV0DQXDO†%FPWQ$V WRGHQ\SXUFKDVLQJFUDFNFRFDLQHIURPKLPDQGWRWHOOWKH VHWIRUWKDERYHLQ3DUW,%WKHUHZDVDPSOHHYLGHQFHDWWULDO JUDQGMXU\WKDWWKH\NQHZHDFKRWKHURQO\EHFDXVHWKH\SOD\HG WKDW $ +DUGHQs+DUGHQDQGsRUGRQZHUHLQYROYHGRQD EDVNHWEDOOWRJHWKHU GDLO\ EDVLV LQ D FRQVSLUDF\ LQYROYLQJ RYHU WZR GR]HQ NLORJUDPVRIFUDFNFRFDLQH7KH\GURYH%XUQVWRKLVGUXJ *UHHQ SXUFKDVHG FUDFN FRFDLQH IURP %XUQV ZKLFK KH GHDOVDVVLVWHGLQSURFHVVLQJDQGVHOOLQJWKHFUDFNFRFDLQHDQG ZRXOGWKHQUHVHOOIURP2FWREHURI XQWLOWKHVSULQJRI FDUULHG PRQH\ EDFN DQG IRUWK EHWZHHQ %XUQV DQG KLV  s+DUGHQDQGsRUGRQZHUHREVHUYHGE\*UHHQFDUU\LQJ FXVWRPHUV.HHQHWHVWLILHGWKDWRYHUDILYHPRQWKSHULRG DQGVHOOLQJFUDFNFRFDLQHGXULQJWKLVSHULRGRIWLPH,QWKH HDFK RI WKHVH GHIHQGDQWV DVVLVWHG ZLWK PRUH WKDQ RQH VSULQJRI *UHHQSDLG$+DUGHQIRUVHOOLQJWZR WUDQVDFWLRQLQYROYLQJWKHZHHNO\VDOHRIDNLORJUDPRIFUDFN JUDPVRIFUDFNFRFDLQHRQ*UHHQjVEHKDOI  8QLWHG6WDWHVY 1RV  1RV  8QLWHG6WDWHVY  sRUGRQHWDO sRUGRQHWDO

.HHQHRQHRI%XUQVjVODUJHVWGLVWULEXWRUVSXUFKDVHGILYH VHQWHQFHGWRWHUPVRILPSULVRQPHQWWKDWDUHOHVVWKDQWKH WRVL[RXQFHVRIFUDFNFRFDLQHIURP%XUQVRQDGDLO\EDVLVRU \HDU PD[LPXP VHQWHQFH WKH\ IDFHG ZLWKRXW UHJDUG WR WKH DSSUR[LPDWHO\RQHNLORJUDPRIFUDFNFRFDLQHHDFKZHHNIURP DPRXQW RI FUDFN FRFDLQH IRU ZKLFK WKH\ ZHUH KHOG $SULORI XQWLOKLVDUUHVWRQGUXJFKDUJHVLQ6HSWHPEHURI UHVSRQVLEOH7KHLUVHQWHQFHVRQ&RXQWDUHWKHUHIRUHYDOLG WKDW \HDU  ,Q WRWDO .HHQH ERXJKW DW OHDVW  NLORJUDPV RI XQGHUWKHSUH$SSUHQGLFDVHRI0F0LOODQY3HQQV\OYDQLD FUDFN FRFDLQH IURP %XUQV IRU ZKLFK .HHQH SDLG EHWZHHQ  86        KROGLQJ WKDW D VWDWH QHHG QRW DQGSHUNLORJUDP.HHQHDOVRVDZsRUGRQ SURYHEH\RQGDUHDVRQDEOHGRXEWIDFWVWKDWZKLOHXQQHFHVVDU\ VHOOFUDFNFRFDLQHDWOHDVWDGR]HQWLPHV%XUQVZKROLYHGLQ WRSURYHWKHHOHPHQWVRIWKHFKDUJHGRIIHQVHGRDIIHFWWKH &OLIWRQ2KLRW\SLFDOO\WUDYHOHGZLWK$+DUGHQs+DUGHQ GHJUHH RI FXOSDELOLW\ WR EH FRQVLGHUHG LQ GHWHUPLQLQJ WKH sRUGRQRU*UHHQWRPDNHFUDFNFRFDLQHGHOLYHULHVWR.HHQHjV VHYHULW\RIWKHSXQLVKPHQW $SSUHQGL86DWQ UHVLGHQFHLQ&RYLQJWRQ.HQWXFN\%XUQVUDUHO\SRVVHVVHG m:HGRQRWRYHUUXOH0F0LOODQ:HOLPLWLWVKROGLQJWRFDVHV WKHGUXJVKLPVHOI LQVWHDGKHKDGHLWKHU$+DUGHQs+DUGHQ WKDWGRQRWLQYROYHWKHLPSRVLWLRQRIDVHQWHQFHPRUHVHYHUH RUsRUGRQFDUU\WKHPRQKLVEHKDOI WKDQWKHVWDWXWRU\PD[LPXPIRUWKHRIIHQVHHVWDEOLVKHGE\WKH MXU\jVYHUGLFWl  7UXMLOORERXJKWLQWRWDODSSUR[LPDWHO\WZRNLORJUDPVRI FUDFNFRFDLQHIURP%XUQVEHWZHHQ0D\DQG$XJXVWRI  7KH VHQWHQFHV WKDW $ +DUGHQ s +DUGHQ DQG sRUGRQ +HREVHUYHGWKDWs+DUGHQRUsRUGRQW\SLFDOO\GHOLYHUHGWKH UHFHLYHG RQ &RXQWV  DQG  UXQ FRQFXUUHQWO\ ZLWK WKHLU FUDFNFRFDLQHWRKLPRQ%XUQVjVEHKDOI VHQWHQFHVRQ&RXQWDQGGRQRWDGGDQ\OHQJWKWRWKHRYHUDOO WHUPVRILPSULVRQPHQW$Q\$SSUHQGLHUURUWKDWWKHGLVWULFW :DONHUUHFHLYHGGHOLYHULHVRIFUDFNFRFDLQHRQFHRUWZLFH FRXUW PLJKW KDYH FRPPLWWHG LQ GHWHUPLQLQJ WKH DPRXQW RI DZHHNIRUZKLFK%XUQVUHFHLYHGSHURXQFHIURP  GUXJV DSSOLFDEOH WR &RXQWV  DQG  LV WKHUHIRUH KDUPOHVV XQWLO :DONHUjV DUUHVW LQ 0D\ RI   IRU SRVVHVVLQJ FUDFN EHFDXVHLWZRXOGQRWDIIHFWWKHGHIHQGDQWVjVXEVWDQWLDOULJKWV FRFDLQHWKDWKHKDGERXJKWIURP%XUQV$FFRUGLQJWR:DONHU 8QLWHG6WDWHVY5LYHUD)G G&LU WKHVH GHOLYHULHV ZHUH PDGH E\ HLWKHU %XUQV s +DUGHQ RU SHU FXULDP  KROGLQJ WKDW EHFDXVH WKH GHIHQGDQWjV OLIH sRUGRQ VHQWHQFH IRU KDYLQJ HQJDJHG LQ D FRQWLQXLQJ FULPLQDO HQWHUSULVHZDVZLWKLQWKHVWDWXWRU\PD[LPXPIRUWKDWRIIHQVH & )DFWVUHODWLQJWR&RXQWVDQG DQ\$SSUHQGLHUURULQWKHLPSRVLWLRQRIFRQFXUUHQWVHQWHQFHV RQRWKHUFRXQWVZRXOGEHKDUPOHVV  :KLOHLQFDUFHUDWHGDQGDZDLWLQJWKHWULDORIKLVFDVH.HHQH DJUHHGWRFRRSHUDWHZLWKWKHJRYHUQPHQWE\FRQWDFWLQJ%XUQV %XUQVjV $SSUHQGL DUJXPHQW VXIIHUV IURP WKH VDPH LQDQDWWHPSWWRGLVSRVHRIDQDPRXQWRIFUDFNFRFDLQHWKDW GHILFLHQF\DVWKRVHRIKLVFRGHIHQGDQWV7KHOLIHVHQWHQFHWKDW .HHQHKDGKLGGHQDWKLVUHVLGHQFH.HHQHFDOOHG%XUQVIURP %XUQVUHFHLYHGRQ&RXQW HQJDJLQJLQDFRQWLQXLQJFULPLQDO WKH GHWHQWLRQ FHQWHU RQ sDQXDU\     'XULQJ WKH HQWHUSULVH LVZLWKLQWKHVWDWXWRU\PD[LPXPIRUWKDWRIIHQVH UHFRUGHGFRQYHUVDWLRQ.HHQHDJUHHGWRUHWXUQWR%XUQV ZLWKRXWUHJDUGWRWKHDPRXQWRIGUXJVLQYROYHG86& RXQFHVRIFUDFNFRFDLQHWKDW%XUQVKDGSURYLGHGKLPSULRUWR † D $VDUHVXOW%XUQVjVVHQWHQFHRQ&RXQWGRHVQRW .HHQHjVDUUHVW%XUQVWROG.HHQHWKDWKHZRXOGSLFNXSWKH YLRODWH$SSUHQGL5LYHUD)GDW)XUWKHUPRUH GUXJV IURP .HHQHjV DVVRFLDWH DQ XQGHUFRYHU DJHQW WKDW EHFDXVH WKH OLIH VHQWHQFH WKDW %XUQV UHFHLYHG RQ &RXQW  HYHQLQJ DV SD\PHQW IRU D  GHEW WKDW .HHQH RZHG DWWHPSWLQJWRSRVVHVVZLWKWKHLQWHQWWRGLVWULEXWHRXQFHV %XUQV RIFUDFNFRFDLQH UXQVFRQFXUUHQWO\ZLWKWKHVHQWHQFHWKDWKH  8QLWHG6WDWHVY 1RV  1RV  8QLWHG6WDWHVY  sRUGRQHWDO sRUGRQHWDO

%XW $SSUHQGL mLV QRW WULJJHUHGl ZKHUH WKH GHIHQGDQW 'XULQJ D VHFRQG UHFRUGHG WHOHSKRQH FDOO 2IILFHU 6WHYH UHFHLYHV D WHUP RI LPSULVRQPHQW ZLWKLQ WKH VWDWXWRU\ (OOLVRQ SRVHG DV .HHQHjV EURWKHULQODZ &KDUOHV  (OOLVRQ PD[LPXP WKDW ZRXOG KDYH DSSOLHG HYHQ ZLWKRXW WKH DJUHHGWRGHOLYHUWKHRXQFHVRIFUDFNFRFDLQHWR%XUQVQHDU HQKDQFLQJIDFWRU VXFKDVWKHGUXJDPRXQW 8QLWHG6WDWHVY D 7DFR %HOO UHVWDXUDQW LQ &RYLQJWRQ  %XUQV DUULYHG DW WKH &RUUDGR  )G   WK &LU   KROGLQJ WKDW PHHWLQJSODFHPLQXWHVHDUO\ZKHUHWKHSROLFHZKRZHUH $SSUHQGLGLGQRWDSSO\ZKHUHWKHGHIHQGDQWVjVHQWHQFHVZHUH VWDWLRQHG QHDUE\ REVHUYHG KLP FRQGXFWLQJ FRXQWHU HQKDQFHG EDVHG RQ D IDFW WKDW WKH MXGJH IRXQG E\ D VXUYHLOODQFH:KHQ%XUQVVSRWWHGWKHSROLFHSUHVHQFHKHOHIW SUHSRQGHUDQFH RI WKH HYLGHQFH EHFDXVH HYHQ ZLWK WKH WKHDUHDDQGVNLSSHGWKHPHHWLQJ$IWHUWKHPHHWLQJWLPHKDG HQKDQFHPHQWWKHVHQWHQFHVLPSRVHGZHUHEHORZWKHVWDWXWRU\ SDVVHG(OOLVRQFDOOHG%XUQVDJDLQ%XUQVDFFXVHG.HHQHRI PD[LPXP IRU WKH FRQYLFWLRQV HVWDEOLVKHG E\ WKH MXU\jV mWU\LQjWRVHWPHXSl(OOLVRQWROG%XUQVWKDWKHZDVJRLQJWR YHUGLFW 1RUGRHV$SSUHQGLDSSO\ZKHUHDIDFWQRWIRXQGE\ mWKURZ WKH V LQ WKH ULYHUl WR ZKLFK %XUQV UHVSRQGHG WKHMXU\LQFUHDVHVWKHORZHUOLPLWRIWKHVHQWHQFLQJUDQJHDV mWKURZWKHVlEXWWKHQFODLPHGWKDWKHGLGQRWNQRZZKDW ORQJDVWKHVHQWHQFHDFWXDOO\LPSRVHGLVOHVVWKDQWKHXSSHU (OOLVRQZDVWDONLQJDERXW%XUQVDOVRGHQLHGNQRZLQJDQ\RQH OLPLWRIWKHUDQJH8QLWHG6WDWHVY+DUULV6&WBB QDPHG&KDUOHVDQGDEUXSWO\KXQJXSDIWHUVD\LQJmWHOO\RXU 86BB86/(;,6     KROGLQJWKDWD EXGGLHV,VDLGKLl IDFWWKDWLQFUHDVHVWKHORZHUOLPLWRIWKHVHQWHQFLQJUDQJHEXW QRW WKH XSSHU OLPLW QHHG QRW EH IRXQG E\ WKH MXU\ XQGHU ' )DFWVUHODWLQJWR&RXQW $SSUHQGLEHFDXVHm>W@KH)LIWKDQG6L[WK$PHQGPHQWVHQVXUH WKDWWKHGHIHQGDQWmZLOOQHYHUJHWPRUHSXQLVKPHQWWKDQKH :DONHUFDOOHG%XUQVRQ)HEUXDU\  DIWHU:DONHUKDG EDUJDLQHGIRUZKHQKHGLGWKHFULPHEXWWKH\GRQRWSURPLVH EHHQVHUYHGZLWKDVXESRHQDWRWHVWLI\EHIRUHWKHJUDQGMXU\ WKDW KH ZLOO UHFHLYH DQ\WKLQJ OHVV WKDQ WKDWl  LQWHUQDO LQYHVWLJDWLQJ %XUQV DQG KDG DJUHHG WR FRRSHUDWH ZLWK WKH TXRWDWLRQPDUNVDQGFLWDWLRQRPLWWHG  HPSKDVLVLQRULJLQDO  JRYHUQPHQW'XULQJWKHUHFRUGHGFRQYHUVDWLRQ:DONHUDVNHG %XUQVZKDWKHVKRXOGVD\LIKHZDVDVNHGDERXWKLVVXSSOLHUV $+DUGHQs+DUGHQDQGsRUGRQZHUHHDFKFRQYLFWHGRQ EHIRUHWKHJUDQGMXU\%XUQVWROGKLPWRVD\IDOVHO\ m<RX &RXQW FRQVSLUDF\WRSRVVHVVZLWKWKHLQWHQWWRGLVWULEXWH ZDVQjWJHWWLQJQRQHIURPPH0HDQG$QWRQLR%XUQVMXVW FRFDLQHEDVHLQYLRODWLRQRI86&† 7KHSHQDOWLHV JUHZXSWRJHWKHUZHoZHSOD\VSRUWVWRJHWKHUDQGKHGRQjW IRUDYLRODWLRQRI†DUHGHWHUPLQHGSXUVXDQWWR86& GHDOQRGUXJV,QHYHUNQHZKLPWRGHDOQRGUXJV7KDWZKDW †ZKLFKSURYLGHVLQSHUWLQHQWSDUWWKDWm>L@QWKHFDVHRI \RXWHOOWKHPl%XUQVDOVRWROG:DONHUWRWHOOWKHJUDQGMXU\ DFRQWUROOHGVXEVWDQFHLQVFKHGXOH,RU,,VXFKSHUVRQ WKDW.HHQHQRW%XUQVZDV:DONHUjVVRXUFHRIFUDFNFRFDLQH VKDOOEHVHQWHQFHGWRDWHUPRILPSULVRQPHQWRIQRWPRUHWKDQ :DONHUODWHUDVVXUHG%XUQVWKDWKHKDGOLHGWRWKHJUDQGMXU\ \HDUVl86&† E  & 6FKHGXOH,,LQFOXGHV DV%XUQVKDGXUJHG FUDFNFRFDLQH&)5†$VDUHVXOWDGHIHQGDQW FRQYLFWHG RI FRQVSLULQJ WR GLVWULEXWH DQ\ TXDQWLW\ RI FUDFN ( )DFWVUHODWLQJWR&RXQWVDQG WKHm1HZSRUWEDU FRFDLQH QR PDWWHU KRZ ORZ LV VXEMHFW WR D PD[LPXP LQFLGHQWl VHQWHQFHRI\HDUVLQSULVRQ86&† E  &  ,QDQLQFLGHQWLQYROYLQJWZRRI%XUQVjVFRGHIHQGDQWVEXW 2IWKHWKUHHGHIHQGDQWVVHQWHQFHGRQ&RXQW$+DUGHQ QRW%XUQVKLPVHOI5\DQ/OR\GZKRZDVFRRSHUDWLQJZLWKWKH UHFHLYHGWKHORQJHVWVHQWHQFHnPRQWKVnZKLFKLVOHVV ORFDOSROLFHFRQWDFWHG*UHHQLQsDQXDU\RI LQRUGHUWR WKDQ\HDUV$+DUGHQs+DUGHQDQGsRUGRQZHUHWKXV EX\FUDFNFRFDLQH$OWKRXJK*UHHQGLGQRWKDYHDQ\FUDFN  8QLWHG6WDWHVY 1RV  1RV  8QLWHG6WDWHVY  sRUGRQHWDO sRUGRQHWDO

FRFDLQHDWWKHWLPHKHQHJRWLDWHGDGHDORQsRUGRQjVEHKDOI LQVWUXFWLRQ WKH GHIHQGDQWjV ULJKW WR D IDLU WULDO LV IRUZLWKWKHGUXJVWREHGHOLYHUHGDWWKH6DUDWRJD%DULQ FRPSURPLVHG8QLWHG6WDWHVY+D\ZRRG)G 1HZSRUW.HQWXFN\ODWHUWKDWGD\*UHHQWROG$+DUGHQWKDW  WK&LU FLWLQJ8QLWHG6WDWHVY*DUFLD5RVD KH QHHGHG WR JR WR WKH EDU WR FRQVXPDWH D GUXJ GHDO $ )G    VW &LU    YDFDWHG LQ SDUW RQ RWKHU +DUGHQDJUHHGWRGULYHsRUGRQ*UHHQDQG(XJHQH:HVWWR JURXQGV  KROGLQJWKDWWKHSUHMXGLFLDOHIIHFWRIWKHDGPLVVLRQ WKHEDU:KHQWKH\DUULYHGDWWKHEDU$+DUGHQDQGsRUGRQ RIWKHGHIHQGDQWjVSULRUEDGDFWVZDVVRVHYHUHWKDWLWFRXOG VWD\HGLQWKHFDUZKLOH*UHHQDQG:HVWZHQWLQWRFRPSOHWH QRWmEHUHPHGLHGPHUHO\WKURXJKDOLPLWLQJLQVWUXFWLRQl  WKHVDOH*UHHQVROG/OR\GWKHFUDFNFRFDLQHIRUEXW PRPHQWVODWHU:HVWUREEHG/OR\GDWJXQSRLQW/OR\GHVFDSHG ,QWKHSUHVHQWFDVHKRZHYHUWKHSRWHQWLDOSUHMXGLFLDOHIIHFW WRDSROLFHVXUYHLOODQFHYHKLFOHDQG*UHHQDQG:HVWUDQWR RI WKH VOLGHV ZDV QRW VR JUHDW DV WR RYHUZKHOP WKH MXU\jV WKHLUFDU7KHSROLFHVWRSSHGWKHFDUDV$+DUGHQDWWHPSWHG DELOLW\WRIROORZWKHFRXUWjVLQVWUXFWLRQVQRWWRFRQVLGHUWKH WRGULYHDZD\,QWKHFDURIILFHUVIRXQGLQFDVKDQGD RSHQLQJ VWDWHPHQWV DV HYLGHQFH  0RUHRYHU JLYHQ WKH ILUHDUPXQGHU$+DUGHQjVVHDWDQGLQDGGLWLRQDOFDVK RYHUZKHOPLQJ HYLGHQFH RI WKH GHIHQGDQWVj JXLOW SUHVHQWHG LQWKHJORYHFRPSDUWPHQW$+DUGHQWROG7RQ\:DOORQHRI GXULQJ WKH VXEVHTXHQW QLQH GD\V RI WULDO DQ\ HUURU LQ WKHDUUHVWLQJRIILFHUVWKDWKHKDGEHHQSDLGWRGULYHWKHRWKHUV SHUPLWWLQJWKHVOLGHVWREHVKRZQGXULQJWKHJRYHUQPHQWjV WRGRDGUXJGHDODQGWKDWKHKDGGULYHQRQRWKHUVXFKGHDOV RSHQLQJVWDWHPHQWZDVKDUPOHVV ) )DFWVUHODWLQJWR%XUQVjVDQGs+DUGHQjVPRWLRQVWR & 6HQWHQFLQJ VXSSUHVVHYLGHQFH  $SSUHQGL 2Q0DUFK WKH1HZSRUW.HQWXFN\SROLFHVWRSSHG %XUQVjV FDU DIWHU %DOGZLQ LQIRUPHG WKHP WKDW %XUQV ZDV $OO IRXU RI WKH GHIHQGDQWV DUJXH WKDW WKH GLVWULFW FRXUW GULYLQJZLWKRXWDYDOLGGULYHUjVOLFHQVH:KHQ%XUQVZKR YLRODWHG WKHLU ULJKWV XQGHU WKH 6L[WK DQG )RXUWHHQWK ZDVGULYLQJDORQHSURGXFHGDIDNH2KLRGULYHUjVOLFHQVHWKH $PHQGPHQWVE\QRWUHTXLULQJWKHMXU\GHWHUPLQHEH\RQGD RIILFHUV DUUHVWHG KLP IRU SRVVHVVLQJ D IRUJHG LQVWUXPHQW UHDVRQDEOHGRXEWWKHDPRXQWRIFUDFNFRFDLQHIRUZKLFKWKH\ %XUQV ZDV KDQGFXIIHG DQG UHDG KLV 0LUDQGD ULJKWV ZHUHEHLQJKHOGUHVSRQVLEOHZLWKWKHMXGJHLQVWHDGPDNLQJ )ROORZLQJKLVDUUHVWWKHRIILFHUVVHDUFKHG%XUQVjVFDU7KH WKDWGHWHUPLQDWLRQDWVHQWHQFLQJXVLQJDSUHSRQGHUDQFHRIWKH PDJLVWUDWH MXGJH IRXQG WKDW %XUQV KDG FRQVHQWHG WR WKH HYLGHQFHVWDQGDUG7KH\FRQWHQGWKDWWKHFDVHRI$SSUHQGLY VHDUFKEDVHGXSRQWKHWHVWLPRQ\RIWKHRIILFHUVRQWKHVFHQH 1HZsHUVH\86  VXSSRUWVWKHLUSRVLWLRQ,Q ,QWKHSDVVHQJHUFRPSDUWPHQWWKHRIILFHUVIRXQGWZRRIs $SSUHQGLWKH6XSUHPH&RXUWKHOGWKDWm>R@WKHUWKDQWKHIDFW +DUGHQjV SD\FKHFNV DQG D SLHFH RI SDSHU VKRZLQJ HLJKW RIDSULRUFRQYLFWLRQDQ\IDFWWKDWLQFUHDVHVWKHSHQDOW\IRUD QDPHV SDLUHG ZLWK GROODU DPRXQWV  7KH RIILFHUV DOVR FULPH EH\RQG WKH SUHVFULEHG VWDWXWRU\ PD[LPXP PXVW EH FRQILVFDWHGWKDWWKH\IRXQGRQ%XUQVjVSHUVRQ%XUQV VXEPLWWHGWRDMXU\DQGSURYHGEH\RQGDUHDVRQDEOHGRXEWl LQDQHIIRUWWRGLVVXDGHWKHRIILFHUVIURPVXVSHFWLQJWKDWKH ,GDW $SSUHQGLIXUWKHUKHOGWKDWm>L@WLVXQFRQVWLWXWLRQDO ZDV GHDOLQJ GUXJV LQYLWHG WKHP WR VHDUFK WKH KRWHO URRP IRUDOHJLVODWXUHWRUHPRYHIURPWKHMXU\WKHDVVHVVPHQWRI ZKHUH KH DQG sRUGRQ ZHUH VWD\LQJ  $IWHU NQRFNLQJ DQG IDFWVWKDWLQFUHDVHWKHSUHVFULEHGUDQJHRISHQDOWLHVWRZKLFK DQQRXQFLQJ WKHLU SUHVHQFH WKH RIILFHUV XVHG WKH NH\ WKDW D FULPLQDO GHIHQGDQW LV H[SRVHGl ,G  LQWHUQDO TXRWDWLRQ %XUQVKDGSURYLGHGWRHQWHUWKHURRPZKHUHWKH\IRXQGs PDUNVDQGFLWDWLRQRPLWWHG   8QLWHG6WDWHVY 1RV  1RV  8QLWHG6WDWHVY sRUGRQHWDO sRUGRQHWDO

WH[W WKH SUHVHQWDWLRQ ZDV SHUPLVVLEOH  7KH MXU\ ZDV +DUGHQO\LQJRQWKHEHG,QWKHURRPWKHRIILFHUVIRXQGWZR LQVWUXFWHGEHIRUHWKHRSHQLQJVWDWHPHQWVWKDWWKHVWDWHPHQWV SODVWLFEDJVZLWKFRFDLQHUHVLGXH ZHUHQRWHYLGHQFHDSRLQWWKDWWKHFRXUWUHLWHUDWHGLQLWVILQDO LQVWUXFWLRQV 2QsXO\ WZR&RYLQJWRQ.HQWXFN\SROLFHRIILFHUV UHVSRQGHGWRDUHSRUWRIVHHLQJDMXYHQLOHmPDOHEODFN $QRSHQLQJVWDWHPHQWLVGHVLJQHGWRDOORZHDFKSDUW\WR ZHDULQJDOOUHGFORWKHVDUPHGZLWKDODUJHUHYROYHUlLQDQ SUHVHQWDQREMHFWLYHRYHUYLHZRIWKHHYLGHQFHLQWHQGHGWREH DUHDQRWRULRXVIRUGUXJWUDIILFNLQJDFWLYLW\8SRQDUULYLQJDW LQWURGXFHGDWWULDO8QLWHG6WDWHVY%URFNLQJWRQ )G WKHVFHQHRQHRIWKHRIILFHUVQRWLFHGDSHUVRQDSSHDULQJWRILW  WK&LU  ,WLVQRWDSSURSULDWHIRUDSURVHFXWRU WKLVGHVFULSWLRQ%XUQVs+DUGHQsRUGRQ GUHVVHGLQDUHG WR mXVH WKH RSHQLQJ VWDWHPHQW WR SRLVRQ WKH MXU\jV PLQG VKLUW DQG*UHHQXSRQVHHLQJWKHRIILFHUVJRWLQWRDFDUWKDW DJDLQVWWKHGHIHQGDQWRUWRUHFLWHLWHPVRIKLJKO\TXHVWLRQDEOH ZDVUHJLVWHUHGWR%XUQVXQGHUDILFWLWLRXVQDPHDQGLGHQWLILHG HYLGHQFHl  ,G LQWHUQDO TXRWDWLRQ PDUNV DQG FLWDWLRQV E\ WKH SROLFH GLVSDWFKHU DV D YHKLFOH SUHYLRXVO\ DVVRFLDWHG RPLWWHG  ZLWKGUXJDFWLYLW\7KHRIILFHUVVWRSSHGWKHFDUDQGDVWKH\ DSSURDFKHGUHFRJQL]HGs+DUGHQDVWKHGULYHUs+DUGHQGLG m$SSHOODWH FRXUWV UHYLHZ D GLVWULFW MXGJHjV FRQGXFW RI D QRWKDYHDGULYHUjVOLFHQVHZKLFKWKHGLVSDWFKHUFRQILUPHG WULDOLQFOXGLQJWKHFRQGXFWRIRSHQLQJVWDWHPHQWIRUDEXVHRI ZKLOH WKH RIILFHUV ZHUH RQ WKH VFHQH  7KH RIILFHUV WKHQ GLVFUHWLRQl  &R[ Y 7UHDGZD\  )G   WK &LU DUUHVWHGs+DUGHQIRUGULYLQJZLWKRXWDOLFHQVHDQGRUGHUHG     :H ZLOO ILQG DQ DEXVH RI GLVFUHWLRQ RQO\ XSRQ D HYHU\RQHLQWKHFDUWRNHHSWKHLUKDQGVRQWKHVHDWVLQIURQWRI mGHILQLWHDQGILUPFRQYLFWLRQWKDWWKHWULDOFRXUWFRPPLWWHGD WKHPDVWKHRIILFHUVORRNHGIRUZHDSRQV*UHHQKRZHYHU FOHDUHUURURIMXGJPHQWl&LQFLQQDWL,QV&RY%\HUV NHSWKLVKDQGRQWKHEDFNVHDWVRDVWRSDUWLDOO\FRYHUDSODVWLF )G   WK &LU    TXRWLQJ /RJDQ Y 'D\WRQ EDJZKLFK XSRQLQVSHFWLRQFRQWDLQHGJUDPVRIFUDFN +XGVRQ &RUS  )G     WK &LU    FRFDLQH7KHRIILFHUVSURFHHGHGWRFRQGXFWDIXOOVHDUFKRI )XUWKHUPRUHHYHQLIWKHGLVWULFWFRXUWHUUHGLQDOORZLQJWKH WKHFDUDQGLWVRFFXSDQWV7KH\IRXQGLQWKHJORYH 3RZHU3RLQWSUHVHQWDWLRQUHYHUVDOZRXOGEHZDUUDQWHGRQO\ FRPSDUWPHQWDKDQGJXQDQGDPPXQLWLRQLQWKHWUXQNDQG LIWKHSUHVHQWDWLRQjVHIIHFWRQWKHGHIHQGDQWVZDVSUHMXGLFLDO DQGDSDJHURQs+DUGHQjVSHUVRQ )HG 5 &ULP 3  D   7KDW LV WKH RSHQLQJ VWDWHPHQW SUHVHQWDWLRQPXVWKDYHDIIHFWHGWKHGHIHQGDQWVjVXEVWDQWLDO ,,$1$/<6,6 ULJKWV,G $ 6XIILFLHQF\RIWKHHYLGHQFH $OWKRXJK WKH SKRWRJUDSKV RI ODUJH DPRXQWV RI FUDFN FRFDLQHDQGWKHILVWIXOVRIPRQH\PLJKWKDYHFRQIXVHGWKH ,QGHWHUPLQLQJZKHWKHUWKHHYLGHQFHSUHVHQWHGDWWULDOLV MXU\DVWRWKHDFWXDODPRXQWVRIGUXJVRUPRQH\DWLVVXHLQWKH VXIILFLHQWWRVXSSRUWDFRQYLFWLRQm>W@KHUHOHYDQWTXHVWLRQLV FDVHZHSUHVXPHWKDWWKHGLVWULFWFRXUWjVLQVWUXFWLRQVDJDLQVW ZKHWKHU DIWHU YLHZLQJ WKH HYLGHQFH LQ WKH OLJKW PRVW YLHZLQJWKHRSHQLQJVWDWHPHQWVDVHYLGHQFHFXUHGDQ\KDUP IDYRUDEOHWRWKHSURVHFXWLRQDQ\UDWLRQDOWULHURIIDFWFRXOG WKDWPLJKWKDYHEHHQFDXVHG8QLWHG6WDWHVY1HXKDXVVHU KDYH IRXQG WKH HVVHQWLDO HOHPHQWV RI WKH FULPH EH\RQG D )G  WK&LU  H[SODLQLQJWKDWDMXU\LV UHDVRQDEOHGRXEWl8QLWHG6WDWHVY.HOO\)G SUHVXPHG WR KDYH IROORZHG D FOHDU LQVWUXFWLRQ   7KH WK &LU   HPSKDVLV LQ RULJLQDO  LQWHUQDO TXRWDWLRQ SUHVXPSWLRQ LV RYHUFRPH RQO\ ZKHUH HYLGHQFH KDV EHHQ PDUNVDQGFLWDWLRQRPLWWHG $OOUHDVRQDEOHLQIHUHQFHVDUH DGPLWWHG WKDW LV VR SUHMXGLFLDO WKDW HYHQ ZLWK D OLPLWLQJ WR  EH  GUDZQ LQ WKH JRYHUQPHQWjV IDYRU ,G  0RUHRYHU  8QLWHG6WDWHVY 1RV  1RV  8QLWHG6WDWHVY  sRUGRQHWDO sRUGRQHWDO

m>V@XIILFLHQF\RIWKHHYLGHQFHDSSHDOVDUHµQRSODFHIRU PLJKWEHLQWKHFDU7KH\ZHUHWKHUHIRUHMXVWLILHGLQVHDUFKLQJ DUJXPHQWV UHJDUGLQJ D JRYHUQPHQW ZLWQHVVjV ODFN RI WKHFDUEH\RQGWKHSDVVHQJHUFRPSDUWPHQW FUHGLELOLW\jl8QLWHG6WDWHVY+HUQDQGH])G  WK&LU  FLWDWLRQVRPLWWHG  s +DUGHQjV PRWLRQ WR VXSSUHVV WKH HYLGHQFH IRXQG LQ %XUQVjVPRWHOURRPRQ0DUFK ZDVOLNHZLVHSURSHUO\  &RXQW FRQWLQXLQJFULPLQDOHQWHUSULVH GHQLHGEHFDXVH%XUQVKDGmFRPPRQDXWKRULW\RUFRQWUROl RYHUWKHURRPWKDWDOORZHGKLPWRFRQVHQWWRDVHDUFK7KH m,QRUGHUWRFRQYLFWDGHIHQGDQWRIHQJDJLQJLQDFRQWLQXLQJ 6XSUHPH&RXUWKDVGHILQHGmFRPPRQDXWKRULW\RUFRQWUROl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l8QLWHG6WDWHVY$YHU\)G  FRQFHSW RI mFRPPRQ DXWKRULW\ RU FRQWUROl HQDEOHV D  WK&LU  86&† F %XUQVDUJXHVWKDW FRRFFXSDQWVXFKDV%XUQVWRFRQVHQWWRDVHDUFKLIWKDWSDUW\ WKHJRYHUQPHQWIDLOHGWRRIIHUVXIILFLHQWHYLGHQFHWRHVWDEOLVK KDVWKHULJKWWRXVHRUSRVVHVVWKHSURSHUW\%XUQVUHQWHGWKH DQ\RIWKHVHHOHPHQWV URRPKDGDNH\DQGZDVWKHVROHUHJLVWHUHGRFFXSDQW+H WKHUHIRUH KDG WKH ULJKW WR XVH RU SRVVHVV WKH URRP DQG WKH 5HJDUGLQJWKHILUVWWZRHOHPHQWVWKHWHVWLPRQ\RI%DNHU DELOLW\ WR FRQVHQW WR D VHDUFK UHJDUGOHVV RI s +DUGHQjV %DOGZLQ*UHHQ.HHQH3RUWHU7UXMLOORDQG:DONHUSURYLGHG SUHVHQFHWKHUH RYHUZKHOPLQJHYLGHQFHWKDW%XUQVGLVWULEXWHGFUDFNFRFDLQH DVSDUWRIDFRQWLQXLQJVHULHVRIWKUHHRUPRUHRIIHQVHV)URP  7KH3RZHU3RLQWSUHVHQWDWLRQ .HHQHjVWHVWLPRQ\DORQHWKHMXU\KHDUGWKDW%XUQVVROGFUDFN FRFDLQHWRKLPRQDGDLO\EDVLVIURP$SULORI WKURXJK 7KHGHIHQGDQWVQH[WDUJXHWKDWWKHGLVWULFWFRXUWHUUHGLQ 6HSWHPEHU RI WKDW \HDU DPRXQWLQJ WR DSSUR[LPDWHO\ RQH SHUPLWWLQJWKHJRYHUQPHQWRYHUWKHWKHLUREMHFWLRQWRXVHD NLORJUDPRIFUDFNFRFDLQHSHUZHHN7KHMXU\DOVRKHDUGWKDW 3RZHU3RLQWVOLGHSUHVHQWDWLRQLQWKHJRYHUQPHQWjVRSHQLQJ %XUQVVROGFUDFNFRFDLQHWR%DOGZLQ*UHHQ3RUWHU7UXMLOOR VWDWHPHQW:KLOHWKH86$WWRUQH\VSRNHYDULRXVGUDZLQJV DQG:DONHUIURPODWH XQWLOHDUO\ (DFKRIWKHVH SKRWRJUDSKVLFRQVDQGWH[WDSSHDUHGRQDVFUHHQ6RPHRI GR]HQVRIWUDQVDFWLRQVFRQVWLWXWHGDVHSDUDWHYLRODWLRQRI WKHLPDJHVGHSLFWHGLWHPVWKDWZHUHQRWLQWHQGHGWREHFRPH 86&† HYLGHQFH LQ WKH FDVH PRVW QRWDEO\ SKRWRJUDSKV RI D ODUJH DPRXQWRIFUDFNFRFDLQHDQGILVWIXOVRIPRQH\3ULRUWRWULDO )DFHGZLWKWKLVYROXPHRIHYLGHQFH%XUQVDUJXHVWKDWWKH WKHJRYHUQPHQWKDGDGYLVHGWKHGHIHQGDQWVRILWVLQWHQWLRQWR LQGLFWPHQWZDVFRQVWLWXWLRQDOO\GHIHFWLYHEHFDXVHLWGLGQRW XVH WKLV SUHVHQWDWLRQ GXULQJ LWV RSHQLQJ VWDWHPHQW DQG DOOHJHWKUHHVSHFLILFGUXJWUDQVDFWLRQVDVIRUPLQJWKHEDVLVIRU SURYLGHGWKHPZLWKFRSLHVRIHDFKVOLGH$IWHUYLHZLQJWKH WKH mFRQWLQXLQJ VHULHVl HOHPHQW  %XW m>D@Q LQGLFWPHQW SUHVHQWDWLRQ WKH GLVWULFW FRXUW UXOHG WKDW DV ORQJ DV WKHUH ZRXOGEHHYLGHQFHDERXWHDFKLPDJHWKDWDSSHDUHGZLWKWKH  8QLWHG6WDWHVY 1RV  1RV  8QLWHG6WDWHVY  sRUGRQHWDO sRUGRQHWDO

UHJDUGLQJWKHVXVSHFWHGFULPLQDODFWLYLW\DQGDFXUVRU\VHDUFK FKDUJLQJD>FRQWLQXLQJFULPLQDOHQWHUSULVH@LVVXIILFLHQWIRU IRUZHDSRQVWRSURWHFWWKHRIILFHUjVVDIHW\7HUU\ 86DW FRQVWLWXWLRQDOSXUSRVHVLILWDUWLFXODWHVLQVWDWXWRU\ODQJXDJH  WKHHOHPHQWVRIWKHYLRODWLRQl8QLWHG6WDWHVY/HKGHU5LYDV  )G    WK &LU    LQWHUQDO TXRWDWLRQ ,Q WKH SUHVHQW FDVH WKH FDU WKDW s +DUGHQ ZDV GULYLQJ PDUNV DQG FLWDWLRQ RPLWWHG  DOWHUDWLRQ LQ RULJLQDO   7KH RZQHG E\ %XUQV  ZDV SXOOHG RYHU EHFDXVH WKH RIILFHUV LQGLFWPHQW FKDUJHG DOO RI WKH HVVHQWLDO HOHPHQWV RI WKH REVHUYHGLWOHDYLQJDQDUHDQRWRULRXVIRUGUXJDFWLYLW\DQG FRQWLQXLQJFULPLQDOHQWHUSULVHRIIHQVHDQGPDGHFOHDUWKDWWKH EHFDXVH LW ZDV FDUU\LQJ D EODFN PDOH GUHVVHG LQ UHG ZKR JRYHUQPHQWLQWHQGHGWRSURYHDFRQVSLUDF\WKDWLQFOXGHGDW DSSHDUHGWRILWWKHGHVFULSWLRQRIDQLQGLYLGXDOUHSRUWHGWREH OHDVWWKUHHGUXJYLRODWLRQVIURP1RYHPEHURI WRsDQXDU\ D MXYHQLOH EUDQGLVKLQJ D ODUJH UHYROYHU  ,W LV LOOHJDO LQ RI    (DFK RI WKH XQFKDUJHG SUHGLFDWH DFWV RFFXUUHG .HQWXFN\IRUDMXYHQLOHWREUDQGLVKDILUHDUP.\5HY6WDW GXULQJWKHSHULRGVSHFLILHGLQWKHFKDUJH%XUQVZDVJLYHQ $QQ† 0LFKLH 7KLVLQIRUPDWLRQFRPELQHG DGYDQFHQRWLFHRIWKHDFWVDQGWKHQDPHVRIWKHZLWQHVVHVZKR ZLWKWKHGLVSDWFKHUjVUHSRUWWKDWWKHFDUKDGEHHQLQYROYHGLQ ZRXOGWHVWLI\DJDLQVWKLP$VDUHVXOWWKHLQGLFWPHQWZDVQRW GUXJWUDIILFNLQJDQGZDVLQDQDUHDNQRZQIRUVXFKDFWLYLW\ GHIHFWLYH SURYLGHGWKHRIILFHUVZLWKDUHDVRQDEOHVXVSLFLRQRIFULPLQDO DFWLYLW\VXIILFLHQWWRMXVWLI\WKHVWRS %XUQVDOVRFODLPVWKDWWKHMXU\ZDVQRWSURSHUO\LQVWUXFWHG UHJDUGLQJ WKH FRQWLQXLQJFULPLQDOHQWHUSULVH FKDUJH  m>$@ 2QFH WKH FDU ZDV VWRSSHG WKH IDFW WKDW RQH RI WKH MXU\ LQ D IHGHUDO FULPLQDO FDVH EURXJKW XQGHU †  PXVW SDVVHQJHUVZDVWKRXJKWWRKDYHDJXQSURYLGHGWKHRIILFHUV XQDQLPRXVO\ DJUHH QRW RQO\ WKDW WKH GHIHQGDQW FRPPLWWHG ZLWKDUHDVRQDEOHVXVSLFLRQWREHOLHYHWKDWDZHDSRQPLJKWEH VRPH µFRQWLQXLQJ VHULHV RI YLRODWLRQVj EXW DOVR WKDW WKH SUHVHQW  7KH RIILFHUV ZHUH WKHUHIRUH HQWLWOHG WR FRQGXFW D GHIHQGDQW FRPPLWWHG HDFK RI WKH LQGLYLGXDO µYLRODWLRQVj OLPLWHGVHDUFKIRUZHDSRQVXQGHU7HUU\7KHVHL]XUHRIWKH QHFHVVDU\WRPDNHXSWKDWµFRQWLQXLQJVHULHVjl5LFKDUGVRQ EDJRIFUDFNFRFDLQHWKDWZDVSDUWLDOO\FRQFHDOHGE\*UHHQjV Y8QLWHG6WDWHV86   KROGLQJWKDW KDQGLQWKHEDFNVHDWZDVMXVWLILHGEHFDXVHWKHEDJZDVVHHQ WKHGLVWULFWFRXUWHUUHGLQLQVWUXFWLQJWKHMXU\WKDWm>\@RXGR LQSODLQYLHZ,IWKHSROLFHGLVFRYHUFRQWUDEDQGLQSODLQYLHZ QRWKDYHWRDJUHHDVWRWKHSDUWLFXODUWKUHHRUPRUHIHGHUDO GXULQJDOHJLWLPDWH7HUU\VHDUFKRIDQDXWRPRELOHWKH)RXUWK QDUFRWLFVRIIHQVHVFRPPLWWHGE\WKHGHIHQGDQWl  $PHQGPHQWGRHVQRWUHTXLUHWKHPWRLJQRUHLW8QLWHG6WDWHV Y:DONHU)G WK&LU ,QVWHDGVXFK ,Q WKH SUHVHQW FDVH WKH MXU\ ZDV LQVWUXFWHG WKDW LW PXVW DQLWHPPD\EHVHL]HGZLWKRXWDZDUUDQW,GDW  mXQDQLPRXVO\ DJUHH WR DW OHDVW WKUHH UHODWHG YLRODWLRQV XQGHUO\LQJWKLVFRQWLQXLQJFULPLQDOHQWHUSULVHFKDUJHl7KH 7KHILUHDUPDQGDPPXQLWLRQIRXQGLQWKHWUXQNRIWKHFDU LQVWUXFWLRQWKXVVWDQGVLQFRQWUDVWWRWKHLQFRUUHFWODQJXDJHLQ ZHUH DOVR SURSHUO\ VHL]HG  $Q RIILFHU PD\ FRQGXFW D 5LFKDUGVRQWRWKHHIIHFWWKDWWKHMXU\QHHGQRWDJUHHDVWRWKH ZDUUDQWOHVV VHDUFK RI HYHU\ SDUW RI D OHJLWLPDWHO\ VWRSSHG SDUWLFXODU WKUHH RIIHQVHV  5DWKHU E\ UHTXLULQJ WKH MXU\ WR YHKLFOH LQFOXGLQJ WKH WUXQN DQG DOO FRQWDLQHUV LI WKHUH LV XQDQLPRXVO\DJUHHWRmDWOHDVWWKUHHUHODWHGYLRODWLRQVlWKH SUREDEOH FDXVH WR EHOLHYH WKDW WKH YHKLFOH FRQWDLQV LQVWUXFWLRQDWLVVXHSURSHUO\PDGHFOHDUWRWKHMXU\WKDWLWPXVW FRQWUDEDQG8QLWHG6WDWHVY5RVV86     XQDQLPRXVO\ILQGWKDW%XUQVFRPPLWWHGWKHVDPHWKUHH RU 2QFHWKHEDJRIFUDFNFRFDLQHZDVIRXQGLQSODLQYLHZWKH PRUH YLRODWLRQV RIILFHUVKDGSUREDEOHFDXVHWREHOLHYHWKDWRWKHUFRQWUDEDQG  8QLWHG6WDWHVY 1RV  1RV  8QLWHG6WDWHVY  sRUGRQHWDO sRUGRQHWDO

5HJDUGLQJ HOHPHQWV WKUHH DQG IRXU WKH HYLGHQFH DW WULDO RIILFHUV UHJDUGLQJ WKH FDOP DQG FRUGLDO QDWXUH RI WKH ZDVDJDLQRYHUZKHOPLQJ%DNHUjVWHVWLPRQ\DORQHSURYLGHG LQWHUDFWLRQ ZLWK %XUQV LV XQFRQWURYHUWHG DQG WKH WDSHG HYLGHQFHWKDWIRXUSHRSOHn$+DUGHQs+DUGHQsRUGRQDQG SRUWLRQVRIWKHFRQYHUVDWLRQLQZKLFK%XUQVFRQVHQWHGWRWKH (XJHQH :HVWnSDFNDJHG DQG VROG FUDFN FRFDLQH XQGHU ODWHUPRWHOVHDUFKVXSSRUWVWKDWWHVWLPRQ\$VDUHVXOWWKH %XUQVjVGLUHFWLRQDQGWKDWDILIWK7LR:HVWDOVRVROGFUDFN JRYHUQPHQWPHWLWVEXUGHQRISURYLQJE\DSUHSRQGHUDQFHRI IRU %XUQV  6KH IXUWKHU WHVWLILHG WKDW %XUQV VXSHUYLVHG $ WKHHYLGHQFHWKDWYROXQWDU\FRQVHQWZDVREWDLQHGIURP%XUQV +DUGHQ s +DUGHQ sRUGRQ DQG (XJHQH :HVW ZKLOH WKH\ ZHLJKHG DQG SDFNDJHG FUDFN FRFDLQH DW %DNHUjV DSDUWPHQW 7KHIXUWKHUVHDUFKRI%XUQVjVPRWHOURRPZDVDOVRMXVWLILHG GXULQJWKHVXPPHURI %DOGZLQWHVWLILHGWKDWDVL[WK E\ KLV FRQVHQW  $ UHFRUGLQJ ZDV PDGH ZLWK %XUQVjV LQGLYLGXDO%XUQVjVJLUOIULHQGm7LDlDOVRGHOLYHUHGFUDFNRQ DSSURYDOE\RQHRIWKHDUUHVWLQJRIILFHUVRIWKHSRUWLRQRIWKH %XUQVjVEHKDOI.HHQHVWDWHGWKDWLQDGGLWLRQWR$+DUGHQ FRQYHUVDWLRQLQZKLFK%XUQVJDYHKLVFRQVHQWWRVHDUFKWKH s +DUGHQ DQG sRUGRQ %XUQV WUDYHOHG ZLWK D VHYHQWK PRWHOURRP,QWKDWH[FKDQJH%XUQVHQJDJHGLQDIULHQGO\ FRFRQVSLUDWRU*UHHQWRPDNHFUDFNFRFDLQHGHOLYHULHV)URP FRQYHUVDWLRQDQGWKHUHLVQRKLQWWKDWKHZDVFRHUFHGLQDQ\ WKLVHYLGHQFHDQGWKHWHVWLPRQ\RIDOOWKHRWKHUZLWQHVVHVWKH ZD\$OWKRXJK%XUQVZDVKDQGFXIIHG EHFDXVHRIKLVDUUHVW MXU\ FRXOG UHDVRQDEO\ FRQFOXGH WKDW %XUQV FRPPLWWHG WKH IRUWKHIDNHGULYHUjVOLFHQVH ZKHQKHOHGWKHRIILFHUVWRWKH VHULHVRIRIIHQVHVLQFRQFHUWZLWKILYHRUPRUHLQGLYLGXDOVWKDW URRP DQG SHUPLWWHG WKHP WR XVH KLV NH\ WR RSHQ WKH GRRU KHRUJDQL]HGVXSHUYLVHGRUPDQDJHG %XUQVj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jV FRQVHQW ZDV :KHQ%XUQVSRVWHG:DONHUjVERQG%XUQVVKRZHG:DONHU LQYROXQWDU\7KHWZRSODVWLFEDJVIRXQGLQWKHPRWHOURRP LQFDVK:DONHUSDLG%XUQVSHURXQFHIRUFUDFN ZHUHWKHUHIRUHVHL]HGSXUVXDQWWRDYDOLGVHDUFK FRFDLQHGHOLYHUHGWR:DONHUDWOHDVWRQFHDZHHNIURPODWH  XQWLO0D\RI %DNHUWHVWLILHGWKDW%XUQVZRUHQLFH 7XUQLQJ QH[W WR s +DUGHQjV PRWLRQ WR VXSSUHVV WKH FORWKLQJDQGMHZHOU\DQGHYHQWKRXJKKHGLGQRWKDYHDMRE HYLGHQFHIRXQGLQWKHFDUWKDWKHZDVGULYLQJRQsXO\  RZQHG WZR FDUV VHYHUDO FHOO SKRQHV DQG D SDJHU %XUQV WKLVVWRSGLIIHUVIURPWKH0DUFK LQFLGHQWEHFDXVHLW ERXJKW MHZHOU\ DQG RWKHU JLIWV IRU RQH RI KLV JLUOIULHQGV ZDVQRWEDVHGXSRQSUREDEOHFDXVHWREHOLHYHWKDWDWUDIILF &DVVLH0F.QLJKWDQGSDLGFDVKIRUWKHERQGVRI%DOGZLQDQG YLRODWLRQ KDG RFFXUUHG  ,QVWHDG WKH VWRS ZDV PDGH WR :DONHU7KHMXU\FRXOGKDYHIRXQGEDVHGRQWKLVHYLGHQFH LQYHVWLJDWHDQRQWUDIILFUHODWHGFULPHm>7@KHSROLFHFDQVWRS WKDW %XUQV GHULYHG VXEVWDQWLDO LQFRPH IURP KLV FRQWLQXLQJ DQGEULHIO\GHWDLQDSHUVRQIRULQYHVWLJDWLYHSXUSRVHVLIWKH FULPLQDODFWLYLW\ RIILFHUKDV D UHDVRQDEOHVXVSLFLRQVXSSRUWHGE\DUWLFXODEOH IDFWVWKDWFULPLQDODFWLYLW\µPD\EHDIRRWjHYHQLIWKHRIILFHU ODFNVSUREDEOHFDXVHl8QLWHG6WDWHVY6RNRORZ 86     TXRWLQJ 7HUU\ Y 2KLR   86      6XFKDQLQYHVWLJDWLYHVWRSKRZHYHULVOLPLWHGWRTXHVWLRQLQJ  8QLWHG6WDWHVY 1RV  1RV  8QLWHG6WDWHVY  sRUGRQHWDO sRUGRQHWDO

$PHQGPHQWnVXEMHFWRQO\WRDIHZVSHFLILFDOO\HVWDEOLVKHG  &RXQW FRQVSLUDF\ DQGZHOOGHOLQHDWHGH[FHSWLRQVl7KRPSVRQY/RXLVLDQD 86       FLWDWLRQ RPLWWHG   1RQH RI WKH ,QRUGHUWRHVWDEOLVKDFRQVSLUDF\XQGHU86&† VHDUFKHV RU VHL]XUHV DW LVVXH ZHUH GRQH ZLWK SULRU MXGLFLDO mWKHJRYHUQPHQWPXVWSURYHWKHH[LVWHQFHRIDQDJUHHPHQWWR SHUPLVVLRQ$VDUHVXOWWKH\PXVWEHMXVWLILHGXQGHURQHRI YLRODWH WKH GUXJ ODZV DQG WKDW HDFK FRQVSLUDWRU NQHZ RI WKHH[FHSWLRQVWRWKHSUHVXPSWLRQRISHUVHXQUHDVRQDEOHQHVV LQWHQGHGWRMRLQDQGSDUWLFLSDWHGLQWKHFRQVSLUDF\l8QLWHG LQRUGHUWREHVXVWDLQDEOH 6WDWHVY*DLWDQ$FHYHGR)G WK&LU  FLWDWLRQ RPLWWHG   (DFK GHIHQGDQW mQHHG QRW KDYH KDG 7XUQLQJILUVWWR%XUQVjVPRWLRQmWKHGHFLVLRQWRVWRSDQ NQRZOHGJHRIHYHU\SKDVHRIWKHFRQVSLUDF\WRKDYHLQWHQGHG DXWRPRELOH LV UHDVRQDEOH ZKHUH WKH SROLFH KDYH SUREDEOH WR IDFLOLWDWH WKH FRPPRQ VFKHPHl  ,G  KROGLQJ WKDW WKH FDXVHWREHOLHYHWKDWDWUDIILFYLRODWLRQKDVRFFXUUHGl:KUHQ HYLGHQFHRIFRQVSLUDF\DJDLQVWWKHGHIHQGDQWZDVVXIILFLHQW Y8QLWHG6WDWHV86   7KHRIILFHUZKR EHFDXVHKHNQHZWKDWKLVFULPLQDOFRQGXFWZDVFRQQHFWHGLQ VWRSSHG%XUQVKDGWKHQHFHVVDU\SUREDEOHFDXVHRQ0DUFK VRPHZD\WRWKHVXFFHVVRIWKHFROOHFWLYHYHQWXUH    EHFDXVH %DOGZLQ ZKR NQHZ %XUQV SHUVRQDOO\ KDG GHVFULEHG%XUQVjVFDUWRWKHSROLFHDQGKDGLQIRUPHGWKHP )URP WKH WHVWLPRQ\ RI %DNHU %DOGZLQ *UHHQ .HHQH WKDW%XUQVGLGQRWKDYHDYDOLGGULYHUjVOLFHQVH 3RUWHU 7UXMLOOR DQG :DONHU WKH MXU\ ZDV SUHVHQWHG ZLWK DPSOH HYLGHQFH WKDW $ +DUGHQ s +DUGHQ DQG sRUGRQ %XUQVjVFRQVHQWMXVWLILHGWKHVXEVHTXHQWVHDUFKRIKLVFDU SRVVHVVHGDQGGLVWULEXWHGFUDFNFRFDLQHLQFRQFHUWZLWK%XUQV m$VHDUFKPD\EHFRQGXFWHGZLWKRXWDZDUUDQWLIDSHUVRQ DQG RQH DQRWKHU  7KHVH ZLWQHVVHV GHVFULEHG DV VHW IRUWK ZLWKDSULYDF\LQWHUHVWLQWKHLWHPWREHVHDUFKHGJLYHVIUHH DERYHLQ3DUW,%DFRQVLVWHQWPHWKRGRIRSHUDWLRQZKHUHE\ DQGYROXQWDU\FRQVHQWl8QLWHG6WDWHVY5LDVFRV6XDUH] %XUQVDQGKLVFRGHIHQGDQWVFRQVSLUHGWRSRVVHVVVHOODQG )G   WK &LU     m,W LV WKH *RYHUQPHQWjV SDFNDJHWKHGUXJV7KHFODLPVRI$+DUGHQs+DUGHQDQG EXUGHQE\DSUHSRQGHUDQFHRIWKHHYLGHQFHWRVKRZWKURXJK sRUGRQWKDWWKH\ZHUHLQQRFHQWO\DVVRFLDWHGZLWK%XUQVDUH µFOHDU DQG SRVLWLYH WHVWLPRQ\j WKDW YDOLG FRQVHQW ZDV WKXVFRQWUDGLFWHGE\VXEVWDQWLDOHYLGHQFHDWWULDO REWDLQHGl,G7KHPDJLVWUDWHMXGJHZHLJKHGWKHWHVWLPRQ\ RIWKHRIILFHUVRQWKHVFHQHDJDLQVWWKHWHVWLPRQ\RI%XUQV s+DUGHQZKREHFDPHDQDGXOWRQ0DUFK DOVR DQGIRXQGWKDWWKHFRQVLVWHQF\RIWKHRIILFHUVjUHFROOHFWLRQRI DUJXHVWKDWWKHJRYHUQPHQWIDLOHGWRSURYHWKDWKHUDWLILHGKLV %XUQVjV FRQVHQW ZDV PRUH FUHGLEOH WKDQ %XUQVjV mPRUH PHPEHUVKLSLQWKHFRQVSLUDF\DIWHUKHEHFDPHDQDGXOWm$ DUJXPHQWDWLYHWKDQHDUQHVWlVWDWHPHQWVWRWKHFRQWUDU\DQG GHIHQGDQW ZKR HQWHUV D FRQVSLUDF\ SULRU WR KLV HLJKWHHQWK FRQFOXGHGWKDW%XUQVKDGLQIDFWDOORZHGWKHRIILFHUVWRVHDUFK ELUWKGD\ FDQ EH WULHG DV DQ DGXOW LI KH FRQWLQXHV LQ WKH KLVFDULQDQHIIRUWWRGLVVXDGHWKHPIURPVXVSHFWLQJWKDWKH FRQVSLUDF\DIWHUWKDWWLPHl8QLWHG6WDWHVY2GRP)G ZDV GHDOLQJ GUXJV  %XUQV KDV SURYLGHG XV QR UHDVRQ WR    WK&LU  7KHFRQVSLUDF\DOOHJHGO\H[LVWHG FRQFOXGHWKDWWKHPDJLVWUDWHjVIDFWXDOILQGLQJLQWKLVUHJDUG IURP1RYHPEHURI WKURXJKsDQXDU\ s+DUGHQ ZDVFOHDUO\HUURQHRXV DUJXHV WKDW WKH RQO\ HYLGHQFH RI KLV SDUWLFLSDWLRQ LQ WKH DOOHJHGFRQVSLUDF\DIWHUKHEHFDPHDQDGXOWZDVDVDUHVXOWRI 7KH UHPDLQLQJ LVVXH LV ZKHWKHU WKH FRQVHQW ZDV JLYHQ WKHsXO\ VWRSRI%XUQVjVFDUZKLFKs+DUGHQDUJXHV YROXQWDULO\RUZKHWKHULWZDVWKHUHVXOWRIFRHUFLRQ:HmZLOO ZDVZLWKRXWSUREDEOHFDXVHDQGWKHUHIRUHLQYLRODWLRQRIWKH GHWHUPLQHZKHWKHUFRQVHQWLVIUHHDQGYROXQWDU\E\H[DPLQLQJ )RXUWK$PHQGPHQW WKHWRWDOLW\RIWKHFLUFXPVWDQFHVl,G7KHWHVWLPRQ\RIWKH  8QLWHG6WDWHVY 1RV  1RV  8QLWHG6WDWHVY  sRUGRQHWDO sRUGRQHWDO

7KHDGPLVVLELOLW\RIWKHHYLGHQFHDULVLQJIURPWKHsXO\ IHGHUDOFULPLQDOWULDOVDQGJUDQGMXU\VHVVLRQVl8QLWHG6WDWHV  LQFLGHQWLVGLVFXVVHGEHORZLQ3DUW,,%(YHQLIs Y /DUD  )G   VW &LU    7KDW %XUQV +DUGHQjV PRWLRQ WR VXSSUHVV ZHUH JUDQWHG KRZHYHU WKH LQWHQGHGWRLQIOXHQFH:DONHUjVWHVWLPRQ\LVVKRZQE\WKHIDFW HYLGHQFHRIKLVSDUWLFLSDWLRQLQWKHFRQVSLUDF\DIWHUKHEHFDPH WKDWWKHLGHDIRU:DONHUWROLHFDPHVROHO\IURP%XUQVDQG DQ DGXOW LV DV SOHQWLIXO DV WKDW RI KLV FRQGXFW DV D PLQRU WKH\GLVFXVVHGWKHIDFWWKDW:DONHUZRXOGVRRQEHWHVWLI\LQJ 7UXMLOOR REVHUYHG WKDW s +DUGHQ GURYH %XUQV WR VHOO FUDFN EHIRUHWKHJUDQGMXU\ FRFDLQH WR 7UXMLOOR DQG s +DUGHQ DOVR PDGH GHOLYHULHV WR 7UXMLOORRQKLVRZQ%DNHUVDLGWKDWDIWHU0DUFKRI s % (YLGHQWLDU\LVVXHV +DUGHQ SRVVHVVHG FUDFN FRFDLQH LQ KHU DSDUWPHQW DVVLVWHG %XUQVLQILQGLQJDQGVHOOLQJFUDFNFRFDLQHWRFXVWRPHUVDQG  %XUQVjVDQGs+DUGHQjVPRWLRQVWRVXSSUHVV VROG FUDFN FRFDLQH WR %DNHU XQWLO VKH ZDV DUUHVWHG LQ 6HSWHPEHURI 6KHDOVRVDZs+DUGHQSRVVHVVFUDFN %XUQVVRXJKWWRVXSSUHVVWKHHYLGHQFHIRXQGLQKLVFDUDQG FRFDLQH DW %XUQVjV UHVLGHQFH LQ 1RYHPEHU RI   DV GLG PRWHOURRPRQ0DUFK s+DUGHQVRXJKWWRVXSSUHVV *UHHQ2QWKHEDVLVRIWKHDERYHHYLGHQFHWKHMXU\FRXOG WKH HYLGHQFH IRXQG LQ %XUQVjV PRWHO URRP ZKHUH KH ZDV UHDVRQDEO\ KDYH FRQFOXGHG WKDW s +DUGHQ UDWLILHG KLV VWD\LQJ DW WKH WLPH RI WKH 0DUFK  VHDUFK DV ZHOO DV WKH SDUWLFLSDWLRQLQWKHFRQVSLUDF\DIWHUKHEHFDPHDQDGXOW LWHPV WDNHQ IURP %XUQVjV FDU RQ sXO\    ZKLFK s +DUGHQZDVGULYLQJDWWKHWLPHLWZDVVWRSSHGDQGVHDUFKHG  &RXQW SRVVHVVLQJZLWKWKHLQWHQWWRGLVWULEXWHRQH ,QUHYLHZLQJDGLVWULFWFRXUWjVUXOLQJRQDPRWLRQWRVXSSUHVV KDOIRXQFHRIFUDFNFRFDLQH HYLGHQFHZHDSSO\WKHmFOHDUO\HUURQHRXVlVWDQGDUGWRWKH GLVWULFW FRXUWjV IDFWXDO ILQGLQJV DQG UHYLHZ LWV OHJDO $+DUGHQjVDQGsRUGRQjVDUJXPHQWWKDWWKHHYLGHQFHZDV FRQFOXVLRQV GH QRYR  8QLWHG 6WDWHV Y 5REHUWV  )G LQVXIILFLHQWWRSURYHWKHHOHPHQWVRIDYLRODWLRQRI86&   WK&LU  $FFRUGLQJO\ZHUHYLHZGHQRYR †  D  nWKDW WKH\   NQRZLQJO\ SRVVHVVHG RQHKDOI WKHGLVWULFWFRXUWjVOHJDOFRQFOXVLRQWKDWQHLWKHU%XUQVjVQRUs RXQFHRIFUDFNFRFDLQH  ZLWKWKHLQWHQWWRGLVWULEXWHWKH +DUGHQjV )RXUWK $PHQGPHQW ULJKWV ZHUH YLRODWHG LQ WKH VDPHnLVUHIXWHGE\WKHUHFRUGVHWIRUWKDERYHLQ 3DUW ,( VHDUFKHV FRQFHUQLQJWKH1HZSRUWEDULQFLGHQW  sRUGRQVXSSOLHGWKH FUDFNFRFDLQHWKDW*UHHQVROGWR5\DQ/OR\G:LWKGUXJVLQ 7KH )RXUWK $PHQGPHQW JXDUDQWHHV m>W@KH ULJKW RI WKH WKHFDU$+DUGHQGURYH*UHHQWRWKHVLWHRIWKHGHDO$ SHRSOH WR EH VHFXUH LQ WKHLU SHUVRQV KRXVHV SDSHUV DQG +DUGHQjVSULRUNQRZOHGJHRIWKHWULSjVSXUSRVHZDVVKRZQE\ HIIHFWV DJDLQVW XQUHDVRQDEOH VHDUFKHV DQG VHL]XUHVl  86 WKHIDFWWKDW*UHHQWROGKLPWKDWKHQHHGHGWRJRWRWKHEDUWR &RQVW DPHQG ,9  ,Q RUGHU WR VXFFHHG RQ D PRWLRQ WR FRQVXPPDWHDGUXJGHDODVZHOODV$+DUGHQjVDGPLVVLRQ VXSSUHVV WKH PRYDQW PXVW VKRZ WKDW mKH PDQLIHVWHG D WKDW KH KDG EHHQ SDLG WR GULYH WR WKH 1HZSRUW EDU IURP VXEMHFWLYH H[SHFWDWLRQ RI SULYDF\ LQ WKH REMHFW RI WKH &LQFLQQDWLIRUWKDWSXUSRVH FKDOOHQJHGVHDUFKlDQGWKDWmVRFLHW\LVSUHSDUHGWRUHFRJQL]H WKDWH[SHFWDWLRQDVOHJLWLPDWHl8QLWHG6WDWHVY6DQJLQHWR  &RXQW WUDYHOLQJLQLQWHUVWDWHFRPPHUFHWRFRPPLW 0LUDQGD   )G   WK &LU    FLWDWLRQ DQXQODZIXODFWRUDLGLQJDQGDEHWWLQJWKHVDPH RPLWWHG 6HDUFKHVRUVHL]XUHVWKDWERWKLQWUXGHXSRQVXFK OHJLWLPDWHH[SHFWDWLRQVRISULYDF\DQGDUHmFRQGXFWHGRXWVLGH &RXQW  RI WKH LQGLFWPHQW FKDUJHG WKDW $ +DUGHQ DQG WKH MXGLFLDO SURFHVV ZLWKRXW SULRU DSSURYDO E\ MXGJH RU sRUGRQYLRODWHGWKH7UDYHO$FW86&†  D  7KH PDJLVWUDWH DUH SHU VH XQUHDVRQDEOH XQGHU WKH )RXUWK  8QLWHG6WDWHVY 1RV  1RV  8QLWHG6WDWHVY  sRUGRQHWDO sRUGRQHWDO

WHVWLPRQ\ UHJDUGLQJ %XUQVjV H[WHQVLYH GUXJ GLVWULEXWLRQ 7UDYHO$FWKDVWKUHHHOHPHQWV   WKDWWKHGHIHQGDQWmWUDYHOV DFWLYLWLHVWKHMXU\FRXOGDOVRUHDVRQDEO\KDYHFRQFOXGHGWKDW LQ LQWHUVWDWH RU IRUHLJQ FRPPHUFHl   mZLWK LQWHQW WR    %XUQVLQWHQGHGQRWRQO\WRSRVVHVVWKHRXQFHVRIFUDFN SURPRWH PDQDJH HVWDEOLVK FDUU\ RQ RU IDFLOLWDWH WKH FRFDLQHEXWDOVRWRGLVWULEXWHWKHP SURPRWLRQPDQDJHPHQWHVWDEOLVKPHQWRUFDUU\LQJRQRIDQ\ XQODZIXO DFWLYLW\l DQG   WKDW WKH GHIHQGDQW mWKHUHDIWHU %XUQVjV QHJRWLDWLRQV WR SRVVHVV WKH GUXJV GXULQJ WKH SHUIRUPV RU DWWHPSWV WR SHUIRUPl DQ DFW RI SURPRWLRQ UHFRUGHG FRQYHUVDWLRQ ZLWK .HHQH DQG WKH ILUVW UHFRUGHG PDQDJHPHQWHVWDEOLVKPHQWRUFDUU\LQJRQRIDQ\XQODZIXO FRQYHUVDWLRQZLWKXQGHUFRYHUDJHQW(OOLVRQDOVRFRQVWLWXWHG DFWLYLW\   86& †   D     sRUGRQ DUJXHV WKDW WKH DVXEVWDQWLDOVWHSWRZDUGWKHFRPSOHWLRQRIWKHRIIHQVH,G JRYHUQPHQWIDLOHGWRRIIHUSURRIRIWKHWKLUGHOHPHQWnWKDWDQ m>:@H KROG WKDW ZKHQ D GHIHQGDQW HQJDJHV LQ DFWLYH RYHUWDFWRFFXUUHGDIWHUKHKDGWUDYHOHGDFURVVVWDWHOLQHVIURP QHJRWLDWLRQV WR SXUFKDVH GUXJV KH KDV FRPPLWWHG WKH 2KLRWR.HQWXFN\ µVXEVWDQWLDOVWHSjWRZDUGVWKHFULPHRISRVVHVVLRQUHTXLUHGWR FRQYLFWKLPRIDWWHPSWHGSRVVHVVLRQl 7KHDFWRIJRLQJWR ,Q VXSSRUW RI WKLV DUJXPHQW sRUGRQ FRQWHQGV WKDW KLV WKH7DFR%HOOUHVWDXUDQWPLQXWHVDKHDGRIWKHDJUHHGXSRQ FRQGXFWZDVVLPLODUWRWKDWRIWKHGHIHQGDQWLQ8QLWHG6WDWHV PHHWLQJWLPHIRUWKHGUXJWUDQVIHUZDVDVHFRQGVXEVWDQWLDO Y=ROLFRIIHU )G G&LU  ZKRZDVKHOG VWHSWRZDUGWKHFRPSOHWLRQRIWKHRIIHQVHHYHQWKRXJKWKH QRWWRKDYHYLRODWHGWKH7UDYHO$FWZKHQKHWUDYHOHGIURP SROLFHSUHVHQFHLQWKHYLFLQLW\OHGKLPWRVNLSWKHPHHWLQJ )ORULGD WR 3HQQV\OYDQLD LQ RUGHU WR FROOHFW D GUXJ GHEW m$GHIHQGDQWPD\EHIRXQGWRKDYHWDNHQDµVXEVWDQWLDOVWHSj =ROLFRIIHUZDVDUUHVWHGXSRQHQWHULQJWKH+DUULVEXUJDLUSRUW IRUWKHSXUSRVHRIDQDWWHPSWFRQYLFWLRQHYHQWKRXJKKHRU WHUPLQDO EHIRUH KH KDG FRPPLWWHG DQ RYHUW DFW LQ VKHKDVIDLOHGWRJDLQSRVVHVVLRQRIGUXJVRUµVKDPjGUXJVl 3HQQV\OYDQLDs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mWRVD\WKDWWKHJRYHUQPHQWPXVW %XUQVjV FKDOOHQJH RI KLV FRQYLFWLRQ IRU DWWHPSWLQJ WR SURYH WKDW WKH GHIHQGDQW FRPPLWWHG DQ LOOHJDO DFW DIWHU WKH SHUVXDGH:DONHUWROLHEHIRUHWKHJUDQGMXU\LVDOVRZLWKRXW WUDYHOlEXWRQO\WKDWmDSODLQUHDGLQJRIWKHVWDWXWHVKRZVWKDW PHULW,QRUGHUWRSURYHWKLVFKDUJHWKHJRYHUQPHQWPXVW LWPXVWSURYHVRPHFRQGXFWDIWHUWKHWUDYHOLQIXUWKHUDQFHRI HVWDEOLVKWKDW%XUQVDWWHPSWHGWR  FRUUXSWO\SHUVXDGH  D WKHXQODZIXODFWLYLW\l,G HPSKDVLVDGGHG  LQWHUQDOFLWDWLRQ ZLWQHVVLQDQRIILFLDOIHGHUDOSURFHHGLQJ  ZLWKWKHLQWHQWWR RPLWWHG  LQIOXHQFHWKDWZLWQHVVjVWHVWLPRQ\86&† E   7KHIDFWVIXOO\VXSSRUWWKHMXU\jVYHUGLFWRQWKLVFRXQW%XUQV 8QOLNHWKHGHIHQGDQWLQ=ROLFRIIHUZKRZDVDUUHVWHGEHIRUH DWWHPSWHGWRmFRUUXSWO\SHUVXDGHl:DONHUE\XUJLQJKLPWROLH KHPHWZLWKDQ\DVVRFLDWHVLQ3HQQV\OYDQLDRUGLGDQ\WKLQJ DERXWWKHEDVLVRIWKHLUUHODWLRQVKLSWRGHQ\WKDW:DONHUNQHZ HOVHWKHUHLQUHODWLRQWRKLVLQWHQGHGFULPHsRUGRQFRPPLWWHG %XUQV DV D GUXJ GHDOHU DQG WR GLVFODLP WKDW %XUQV ZDV DQRYHUWDFWDIWHUKLVWUDYHOWR.HQWXFN\LQIXUWKHUDQFHRIWKH :DONHUjVVRXUFHRIFUDFNFRFDLQH:DONHUZDVDZLWQHVVLQDQ XQODZIXODFWLYLW\*UHHQjVWHVWLPRQ\SURYLGHGHYLGHQFHWKDW mRIILFLDOSURFHHGLQJlEHFDXVHWKDWWHUPmHQFRPSDVVHVERWK sRUGRQZLWKIXOONQRZOHGJHRI*UHHQjVSXUSRVHGLVWULEXWHG  8QLWHG6WDWHVY 1RV  1RV  8QLWHG6WDWHVY  sRUGRQHWDO sRUGRQHWDO

WKHGUXJVWR*UHHQLQ2KLRVRWKDWKHFRXOGVHOOWKHPWR/OR\G EHFDXVH WKH GLVWULFW FRXUW GHQLHG KLV UHTXHVW IRU D MXU\ LQ.HQWXFN\sRUGRQWKHQWUDYHOHGWR.HQWXFN\LQRUGHUWR LQVWUXFWLRQ RQ KLV HQWUDSPHQW GHIHQVH  $ GHIHQGDQW mLV FRPSOHWHWKHGHDO,Q.HQWXFN\ZLWKsRUGRQZDLWLQJLQWKH HQWLWOHG WR DQ HQWUDSPHQW LQVWUXFWLRQ ZKHQHYHU WKHUH LV FDU*UHHQWUDQVIHUUHGWKHGUXJVWR/OR\GLQWKH6DUDWRJD%DU VXIILFLHQWHYLGHQFHIURPZKLFKDUHDVRQDEOHMXU\FRXOGILQG DQG/OR\GSDLG*UHHQLQUHWXUQEHIRUHWKHSROLFHVWHSSHGLQ HQWUDSPHQWl8QLWHG6WDWHVY.KDOLO )G WK %\DVVRFLDWLQJZLWK*UHHQLQ.HQWXFN\DQGE\UHPDLQLQJLQ &LU  LQWHUQDOTXRWDWLRQPDUNVRPLWWHG 7ZRHOHPHQWV WKHFDUWKDW*UHHQLQWHQGHGWRXVHWROHDYHWKHVFHQHRIWKH PXVW EH VKRZQ WR HVWDEOLVK D YDOLG HQWUDSPHQW GHIHQVH GUXJVDOHDWWKH1HZSRUWEDUsRUGRQSODFHGKLPVHOILQWKH m   JRYHUQPHQW LQGXFHPHQW RI WKH FULPH DQG   ODFN RI SRVLWLRQWR  UHFHLYHLPPHGLDWHSD\PHQWIURP*UHHQDIWHU SUHGLVSRVLWLRQRQWKHSDUWRIWKHGHIHQGDQWWRHQJDJHLQWKH WKHVDOHLQ.HQWXFN\  SURYLGHVXUYHLOODQFHVXSSRUWDQG FULPLQDO DFWLYLW\l  ,G  m:KHUH WKH HYLGHQFH FOHDUO\ DQG   SK\VLFDOO\ DLG *UHHQ VKRXOG DQ\ GDQJHU DULVH  7KXV XQHTXLYRFDOO\ HVWDEOLVKHV WKDW >WKH GHIHQGDQW@ ZDV sRUGRQ DFWHG ZKLOH LQ .HQWXFN\ LQ IXUWKHUDQFH RI WKH SUHGLVSRVHG WKH GLVWULFW FRXUW LV MXVWLILHG LQ GHQ\LQJ DQ LQWHQGHGXQODZIXODFWWKHUH$VDUHVXOWWKHMXU\KDGEHIRUH HQWUDSPHQWLQVWUXFWLRQl,GDW LQWHUQDOTXRWDWLRQPDUNV LWVXIILFLHQWHYLGHQFHWRFRQYLFWsRUGRQXQGHUWKH7UDYHO$FW RPLWWHG  DOWHUDWLRQLQRULJLQDO %HFDXVHWKHHYLGHQFHUHFLWHG DERYHLQ3DUW,%UHJDUGLQJ%XUQVjVDFWLYLWLHVLQ ILUPO\  &RXQWVDQG XVLQJDFRPPXQLFDWLRQVIDFLOLW\ HVWDEOLVKHVKLVSUHGLVSRVLWLRQWRWUDIILFLQFUDFNFRFDLQHEHIRUH LQWKHFRPPLVVLRQRIDIHGHUDOFULPH WKHUHFRUGHGFDOOIURP.HHQHLQsDQXDU\RI WKHGLVWULFW FRXUW GLG QRW HUU LQ GHQ\LQJ %XUQVjV UHTXHVW IRU WKH %XUQVjVFODLPWKDWWKHHYLGHQFHZDVLQVXIILFLHQWWRVXSSRUW HQWUDSPHQWLQVWUXFWLRQ KLVFRQYLFWLRQVRQ&RXQWVDQGDOVRIDLOVLQOLJKWRIWKH IDFWVVHWIRUWKDERYHLQ3DUW,&7RSURYHDYLRODWLRQRI  &RXQW    DWWHPSWLQJ WR SRVVHVV ZLWK WKHLQWHQWWR 86&† E WKHJRYHUQPHQWPXVWHVWDEOLVKWKDW%XUQV GLVWULEXWHRXQFHVRIFUDFNFRFDLQH   mNQRZLQJO\ DQG LQWHQWLRQDOO\ XVHG D FRPPXQLFDWLRQV IDFLOLW\l   mWR IDFLOLWDWH WKH FRPPLVVLRQ RI D >IHGHUDO@ m)RUDQLQGLYLGXDOWREHFRQYLFWHGRIDQDWWHPSWFULPHWKH QDUFRWLFVFULPHl8QLWHG6WDWHVY0HUWLOXV)G JRYHUQPHQWPXVWGHPRQVWUDWHDGHIHQGDQWjVLQWHQWWRFRPPLW  WK&LU   WKHSURVFULEHGFULPLQDOFRQGXFWWRJHWKHUZLWKWKHFRPPLVVLRQ RI DQ RYHUW DFW WKDW FRQVWLWXWHV D VXEVWDQWLDO VWHS WRZDUGV %XUQV XVHG WKH WHOHSKRQH WR QHJRWLDWH KLV UHFHLSW RI  FRPPLVVLRQ RI WKH SURVFULEHG FULPLQDO DFWLYLW\l  8QLWHG RXQFHVRIFUDFNFRFDLQHDVSD\PHQWIRUDGHEWGXULQJ 6WDWHVY%LOGHUEHFN)G   WK&LU $ WKHUHFRUGHGFDOOZLWK.HHQHDQGWKHILUVWUHFRUGHGFDOOZLWK mVXEVWDQWLDO VWHSl LV GHILQHG DV mFRQGXFW VWURQJO\ XQGHUFRYHU DJHQW (OOLVRQ RQ sDQXDU\     %HFDXVH FRUURERUDWLYH RI WKH ILUPQHVV RI WKH GHIHQGDQWjV FULPLQDO %XUQVREYLRXVO\NQHZWKDWKHZDVXVLQJWKHWHOHSKRQHDQG LQWHQWl,G FLWDWLRQRPLWWHG  EHFDXVH WKH NQRZLQJ RU LQWHQWLRQDO SRVVHVVLRQ RI FUDFN FRFDLQH LV D IHGHUDO FULPH XQGHU  86& †  ERWK 7KHJRYHUQPHQWSURYLGHGWKHMXU\ZLWKVXEVWDQWLDOHYLGHQFH HOHPHQWV RI WKH JRYHUQPHQWjV FDVH ZHUH VXIILFLHQWO\ RI%XUQVjVVSHFLILFLQWHQWWRSRVVHVVWKHRXQFHVRIFUDFN HVWDEOLVKHGWRHQDEOHWKHMXU\WRFRQYLFW FRFDLQHWKURXJKWKHUHFRUGHGFRQYHUVDWLRQZLWK.HHQH,Q WKDWFRQYHUVDWLRQ%XUQVFOHDUO\H[SUHVVHGKLVGHVLUHWRDFFHSW %XW%XUQVDUJXHVWKDWHYHQLIWKHHYLGHQFHZDVRWKHUZLVH WKHGUXJVDVSD\PHQWIRU.HHQHjVGHEWWR%XUQV%DVHGRQWKH VXIILFLHQW RQ WKLV FRXQW KLV FRQYLFWLRQ VKRXOG EH YDFDWHG ODUJH TXDQWLW\ LQYROYHG LQ WKLV WUDQVDFWLRQ DV ZHOO DV WKH

Reference

Status
Published