Garth Peterson Sentencing Memo

7/31/2019 Garth Peterson Sentencing Memo

1/56

Case 1:12-cr-00224-JBW Document 17 Filed 08/10/12 Page 1 of 56 PageID #: 76


2/56

L

7$%/(2)&217(176

3UHOLPLQDU\6WDWHPHQW 6WDWHPHQWRI)DFWV

2IIHQVH&RQGXFW &RRSHUDWLRQZLWKWKH*RYHUQPHQW 3HUVRQDO+LVWRU\

D &KLOGKRRGDQG5HODWLRQVKLSZLWK+LV3DUHQWVE (GXFDWLRQF 0DUULDJHDQG)DPLO\G :RUN+LVWRU\

'LVFXVVLRQ 7KH6HFWLRQD)DFWRUV0LOLWDWHLQ)DYRURID%HORZ

*XLGHOLQH6HQWHQFHD 7KH1DWXUHDQG&LUFXPVWDQFHVRIWKH2IIHQVHDQGWKH

&KDUDFWHULVWLFVRIWKH'HIHQGDQWL 3HWHUVRQV1HHGWR%HLQ6LQJDSRUHWR5DLVH+LV

&KLOGUHQ LL 3HWHUVRQV1HHGWR3URYLGH6XSSRUWWR+LV)DPLO\LLL &RRSHUDWLRQ

Y &XOWXUDO&RQWH[WE 6HFWLRQD)DFWRUV

L 3XQLVKPHQW3HWHUVRQ+DV6XIIHUHGLL /RZ3UREDELOLW\RI5HFLGLYLVP

F 7KH.LQGVRI6HQWHQFHV$YDLODEOH



3/56

LL

G 7KH6HQWHQFLQJ5DQJHLQ*XLGHOLQHVH 7KH1HHGWR$YRLG8QZDUUDQWHG'LVSDULWLHVI 5HVWLWXWLRQ

&RQFOXVLRQ



4/56

LLL

7$%/(2)$87+25,7,(6

3DJHV

&$6(6

*DOOY8QLWHG6WDWHV86

.RRQY8QLWHG6WDWHV86

5LWDY8QLWHG6WDWHV866WHYHQV-FRQFXUULQJ

6LPRQY8QLWHG6WDWHV)6XSSG('1


5/56

LY

8QLWHG6WDWHVY0DFN1R&5:/('1


6/56

Y

866*(

866*+

866*+

866*.

866*.

27+(5$87+25,7,(6

&KLOGUHQRI,QFDUFHUDWHG3DUHQWV3URMHFW5HSRUWWRWKH2UHJRQ/HJLVODWXUHRQ6HQDWH%LOO

'RXJ0F9D\9LQFHQW6FKLUDOGL-DVRQ=LHGHQEHUJ-XVWLFH3ROLF\,QVWLWXWH7UHDWPHQWRU,QFDUFHUDWLRQ1DWLRQDODQG6WDWH)LQGLQJVRQWKH(IILFDF\RI&RVW6DYLQJVRI'UXJ7UHDWPHQW9HUVXV,PSULVRQPHQW

*DU\6WHLQ6HQWHQFLQJRI,QGLYLGXDOVLQ)&3$&DVHV%XVLQHVV&ULPHV%XOOHWLQ9RO1R-DQ

*UHJRU\0/LSSHU)RUHLJQ&RUUXSW3UDFWLFHV$FWDQGWKH(OXVLYH4XHVWLRQRI,QWHQW$P&ULP/5HY

.DWKOHHQ=5XVVHOOHWDO&KLOGUHQRI,QFDUFHUDWHG3DUHQWV

1LFROH


7/56

3UHOLPLQDU\6WDWHPHQW

:HUHVSHFWIXOO\VXEPLWWKLVPHPRUDQGXPRQEHKDOIRI'HIHQGDQW*DUWK3HWHUVRQVHHNLQJ

DPLWLJDWHGVHQWHQFHSXUVXDQWWR6HFWLRQDRI7LWOHRIWKH8QLWHG6WDWHV&RGH)RUWKH

IROORZLQJUHDVRQVZHXUJHWKH&RXUWWRLPSRVHDVHQWHQFHZLWKQRRUPLQLPDOLQFDUFHUDWLRQDQG

ZLWKDQ\SUREDWLRQRUQRQLQFDUFHUDWLRQSRUWLRQRI3HWHUVRQVVHQWHQFHWREHVHUYHGLQ6LQJDSRUH

:HVXEPLWWKDWDVHQWHQFHZHOOEHORZWKDWUHFRPPHQGHGE\WKH8QLWHG6WDWHV6HQWHQFLQJ

*XLGHOLQHVLVDSSURSULDWHKHUHIRUDYDULHW\RIUHDVRQVEHFDXVH3HWHUVRQKDVVKRZQKLV

FRPPLWPHQWWRUHKDELOLWDWHKLPVHOIE\FRRSHUDWLQJZLWKWKH*RYHUQPHQWVLQYHVWLJDWLRQLQWRKLV

FRQGXFWE\SOHDGLQJJXLOW\DQGE\OLYLQJDODZDELGLQJOLIHIRUWKHQHDUO\IRXU\HDUVVLQFHWKH

LQYHVWLJDWLRQLQWRKLVFRQGXFWEHJDQEHFDXVHDQ\VHQWHQFHRILQFDUFHUDWLRQRURWKHUVHQWHQFH

UHTXLULQJKLPWREHDZD\IURP6LQJDSRUHIRUDVLJQLILFDQWSHULRGRIWLPHZRXOGEHXQXVXDOO\

KDUGRQKLPDQGKLVZLIHDQGWZR\RXQJFKLOGUHQLQ6LQJDSRUHZKRZRXOGEHXQDEOHWRVHHKLP

LIKHZHUHLQFDUFHUDWHGLQWKH8QLWHG6WDWHVDQGZKRUHO\RQKLPIRUILQDQFLDODQGHPRWLRQDO

VXSSRUWDQGEHFDXVHKHKDVDOUHDG\VXIIHUHGHQRUPRXVO\E\UHDVRQRIKLVRIIHQVHDQGWKH

UHVXOWLQJORVVRIKLVFDUHHUDQGILQDQFLDOVWDELOLW\DQGKLVSDLQIXOVHWWOHPHQWZLWKWKH6HFXULWLHV

DQG([FKDQJH&RPPLVVLRQ6(&ZKLFKLQFOXGHGDSHUPDQHQWEDURQDVVRFLDWLQJZLWK

ILQDQFLDORUJDQL]DWLRQVUHJXODWHGE\WKH6(&

6WDWHPHQWRI)DFWV

2IIHQVH&RQGXFW2Q$SULO3HWHUVRQSOHGJXLOW\WRDFRQVSLUDF\WRHYDGHWKHLQWHUQDODFFRXQWLQJ

FRQWUROVRIDSXEOLFFRPSDQ\EHIRUH


8/56

,QVWHDGLWVROGVKDUHVWRDQHQWLW\FRQWUROOHGE\3HWHUVRQ3HWHUVRQVFRFRQVSLUDWRUDQGD

&KLQHVHRIILFLDO

3ULRUWR3HWHUVRQZDVFORVHIULHQGVZLWKDPDQZKRZDVWKHKHDGRI


9/56

KLPWRUHWDLQLW)URPWR3HWHUVRQZRUNHGIRU0RUJDQ6WDQOH\LQDJURXSWKDWPDGH

UHDOHVWDWHLQYHVWPHQWVLQ&KLQD

$IWHUKHMRLQHG0RUJDQ6WDQOH\DQGZDVHQFRXUDJHGE\KLVERVVWRLGHQWLI\LQYHVWPHQW

RSSRUWXQLWLHVLQ&KLQD3HWHUVRQSURSRVHGWR0RUJDQ6WDQOH\WKDWLWVKRXOGLQYHVWLQWKH6LWH

GHYHORSPHQWSURMHFWDVZHOO0RUJDQ6WDQOH\GHFLGHGWRGRVRDQGLQYHVWHGPLOOLRQIRU

RIWKH6LWHGHYHORSPHQWSURMHFW:KHQ0RUJDQ6WDQOH\PDGHWKDWLQYHVWPHQWLWFDOOHG

WKHLQYHVWPHQW3URMHFW:DOO\0RUJDQ6WDQOH\FRPSOHWHGLWVLQYHVWPHQWLQ3URMHFW:DOO\LQ

D\HDUDIWHU3HWHUVRQKDGMRLQHGWKHILUP

$IWHU0RUJDQ6WDQOH\LQYHVWHGLQ3URMHFW:DOO\WKHJURXSRIRZQHUVLQFOXGLQJ3HWHUVRQ

DQG0RUJDQ6WDQOH\EHJDQVHOOLQJRIIDVVHWVGHYHORSHGRQ6LWHDQGUHWXUQLQJFDSLWDOWRWKH

LQYHVWRUV8OWLPDWHO\RQO\RQHEXLOGLQJZDVOHIWWKHIXOOVHUYLFHDSDUWPHQWEXLOGLQJ7KH

RZQHUVGHFLGHGWRVHOOLW$Q$XVWUDOLDQEDQN0DFTXDULHHQWHUHGLQWRQHJRWLDWLRQVWREX\WKH

EXLOGLQJEXWWKRVHQHJRWLDWLRQVIDLOHG0RUJDQ6WDQOH\WKHQGHFLGHGWRSXUFKDVHWKHVHUYLFHG

DSDUWPHQWEXLOGLQJIURPWKHFRQVRUWLXPRIRZQHUVEHFRPLQJDRZQHURIWKHEXLOGLQJ

LQVWHDGRIDRZQHU7KH\FDOOHGWKDWLQYHVWPHQWEX\LQJWKHIXOOVHUYLFHDSDUWPHQW

EXLOGLQJIURP3URMHFW:DOO\3URMHFW&DYLW\

0RUJDQ6WDQOH\VGHVLUHWREHFRPHWKHRZQHURI3URMHFW&DYLW\ZRXOGIRUFH

3HWHUVRQWRVHOOKLVPRWKHUVKROGLQJLQWKHUHDOHVWDWHLQYHVWPHQWVLQFHWKHLQYHVWPHQWLQ6LWH

ZDVDQRZQHURIWKHVHUYLFHGDSDUWPHQWEXLOGLQJ3HWHUVRQGLGQRWZDQWWRGRVRDQGDVNHGKLV

ERVVDW0RUJDQ6WDQOH\=DLQ)DQF\LIKHFRXOGUHPDLQDQLQYHVWRULQWKHEXLOGLQJ)DQF\WROG

KLPWKDWKHVKRXOGQRWHYHQUDLVHWKHLGHDWRRWKHUVDW0RUJDQ6WDQOH\EHFDXVHLWZRXOGQRWEH

0RUJDQ6WDQOH\SXUFKDVHGWKHLQYHVWPHQWIRUWKHVDPHSHUVKDUHSULFHDVWKHLQLWLDOLQYHVWRUVHYHQWKRXJKLWLQYHVWHGD\HDUODWHU



10/56

ZHOOUHFHLYHGDQG3HWHUVRQGURSSHGLW0RUJDQ6WDQOH\ERXJKW3URMHFW&DYLW\LQ7KH

&KLQHVH2IILFLDOKHOSHGHQVXUHWKDW0RUJDQ6WDQOH\ZDVDEOHWREX\WKHEXLOGLQJ

3HWHUVRQZDVIUXVWUDWHGWKDWKHKDGEHHQIRUFHGWROLTXLGDWHWKHLQYHVWPHQWKHKDGPDGH

IRUKLVPRWKHUVRKHGHFLGHGWRVHHNDVHOIKHOSUHPHG\WRVHFUHWO\EX\EDFNLQWR3URMHFW&DYLW\

DWWKHVDPHSULFHDWZKLFKKHZDVIRUFHGWRVHOO7RGRWKLVWZR\HDUVODWHULQHDUO\

3HWHUVRQHQFRXUDJHG0RUJDQ6WDQOH\WRVHOODLQWHUHVWLQ3URMHFW&DYLW\WRDQHQWLW\FDOOHG

$VLDVSKHUHDWWKHSULFH0RUJDQ6WDQOH\KDGSDLGIRUWKHLQYHVWPHQWLQ3HWHUVRQDORQJ

ZLWKDQRWKHUSHUVRQPLVUHSUHVHQWHGWRRWKHUVDW0RUJDQ6WDQOH\WKDW$VLDVSKHUHZDVRZQHGE\


11/56

WKHVDOHWR$VLDVSKHUHZDVFRQVXPPDWHGDQGWKH&KLQHVH2IILFLDOKLVFRFRQVSLUDWRUDQG

3HWHUVRQEHFDPHLQYHVWRUVLQ3URMHFW&DYLW\

3HWHUVRQNQRZVWKDWZKDWKHGLGZDVZURQJ+HFRQWDFWHGWKH*RYHUQPHQWWKURXJK

FRXQVHOVKRUWO\DIWHUOHDUQLQJRILWVLQYHVWLJDWLRQDQGXOWLPDWHO\DIWHUFRRSHUDWLQJZLWKWKHERWK

WKH6(&DQGWKH'2-IRURYHUWZR\HDUVSOHGJXLOW\EHIRUH


12/56

,QGHHGKHKDVIHZFRQWDFWVLQWKH8QLWHG

6WDWHVKDYLQJVSHQWPRVWRIKLVOLIHDEURDGDQGKDGQRUHDVRQWREHLQWKH8QLWHG6WDWHVRWKHU

WKDQWRKHOSWKH*RYHUQPHQW+HDSSHDUHGDWWKH*RYHUQPHQWVUHTXHVWDQGDQVZHUHGDOO

TXHVWLRQVSRVHGWRKLPIRUDWRWDORIDSSUR[LPDWHO\KRXUV$OWKRXJKKLVPHPRU\ZDV

KLQGHUHGE\KLVODFNRIDFFHVVWRWKHHQRUPRXVUHFRUGRIHPDLOVDQGRWKHUGRFXPHQWV

KHZDVVLQFHUHLQKLVGHVLUHWRKHOSWKH*RYHUQPHQWDQGZH

EHOLHYHWKDWKLVUHVSRQVHVZHUHRIYDOXHWRWKH*RYHUQPHQW

)XUWKHUDQLPSRUWDQWSDUWRI3HWHUVRQVHIIRUWWRDVVLVWWKH*RYHUQPHQWZDVKLVSURYLVLRQ

RIGRFXPHQWV+HSURYLGHGKLVRZQILQDQFLDOUHFRUGVVRPHRIZKLFKKHKDGQRWNHSWDQGZKLFK

UHTXLUHGVLJQLILFDQWHIIRUWRQKLVSDUWWRREWDLQDQGFRPSLOHPDQ\RIZKLFKZRXOGKDYHEHHQ

GLIILFXOWRULPSRVVLEOHIRUWKH*RYHUQPHQWWRREWDLQEHFDXVHWKH\ZHUHORFDWHGLQIRUHLJQ

MXULVGLFWLRQV+HSURYLGHGKLVWD[UHWXUQVVLQFH+HDOVRDQVZHUHGPDQ\URXQGVRI

TXHVWLRQVIURPWKH6(&WRKHOSLWVDWWRUQH\VDQDO\]HDQGXQGHUVWDQGWKHGRFXPHQWVKHSURYLGHG

3URYLGLQJWKLVDVVLVWDQFHKDVEHHQERWKWLPHFRQVXPLQJDQGH[SHQVLYHIRU3HWHUVRQ

+HKDVDVVLVWHGWKH*RYHUQPHQWVLQYHVWLJDWLRQLQDQXPEHURIRWKHUZD\V+HVLJQHG

WZRWROOLQJDJUHHPHQWVZLWKWKH*RYHUQPHQWDQGDQRWKHUZLWKWKH6(&WRDOORZWKHPWRFRQWLQXH

WKHLULQYHVWLJDWLRQVZLWKRXWULVNLQJWKHVWDWXWHRIOLPLWDWLRQVH[SLULQJ+HKDVLQGLFDWHGWKDWKHLV

ZLOOLQJWRWHVWLI\IRUWKH*RYHUQPHQWLIDVNHG)LQDOO\3HWHUVRQLVYROXQWDULO\VXUUHQGHULQJ

KLPVHOIIURPDIRUHLJQFRXQWU\DYRLGLQJWKHQHHGIRUWKH*RYHUQPHQWWRH[WUDGLWHKLP

7KH*RYHUQPHQWKDVUHFRJQL]HGWKHYDOXHRIWKHFRRSHUDWLRQWKDW3HWHUVRQKDVSURYLGHG

WRWKH6(&,QOLHXRIFULPLQDOIRUIHLWXUH3HWHUVRQVSOHDDJUHHPHQWFDOOVIRUKLPWRFRRSHUDWH

ZLWKWKH6(&VHIIRUWVWRIRUIHLWDVVHWVWKDWZHUHSURFHHGVIURP3HWHUVRQVRIIHQVH3HWHUVRQKDV



13/56

VHWWOHGZLWKWKH6(&SDLGLQFDVKDQGFRQYLQFHGKLVPRWKHUWRIRUIHLWKHULQWHUHVWLQ

WKH&DYLW\LQYHVWPHQW7KLVRQHURXVVHWWOHPHQWFDOFXODWHGRQWKHEDVLVRI3HWHUVRQVDELOLW\WR

SD\KDVOHIWKLPDQGKLVIDPLO\ZLWKDYHU\XQFHUWDLQIXWXUH+HLVFRRSHUDWLQJZLWKWKHUHFHLYHU

ZKRZDVDSSRLQWHGWRWUDQVIHUKLVLQWHUHVWLQ&DYLW\WRWKH6(&

3HUVRQDO+LVWRU\D &KLOGKRRGDQG5HODWLRQVKLSZLWK+LV3DUHQWV

3HWHUVRQDJHZDVERUQLQ'RZQH\&DOLIRUQLD+HZDVUDLVHGZLWKKLVROGHUVLVWHU

E\KLVPRWKHU DQG'RURWK\DZRPDQKHFRQVLGHUHGWREHDNLQWRDQDGRSWHG

JUDQGPRWKHUDIWHUKLVSDUHQWVGLYRUFHG6HH([K$/HWWHUIURP*DUWK3HWHUVRQ([K%

/HWWHUIURP 3HWHUVRQVVLVWHU*URZLQJXSWKHGHDUHVWSHUVRQWR*DUWKDQG,

ZDVRXUDGRSWHGJUDQGPRWKHU'RURWK\([K&/HWWHUIURP 3HWHUVRQVZLIH

*DUWKZDVYHU\FORVHWR'RURWK\DQGWKH\VKDUHGDYHU\VSHFLDOUHODWLRQVKLS

7KHGHWDLOVRI3HWHUVRQVSHUVRQDOKLVWRU\DUHVHWIRUWKLQ([KV$/HWWHUIURP*DUWK3HWHUVRQDQG%/HWWHUIURP

3HWHUVRQVVLVWHU



14/56

3HWHUVRQVIDPLO\ZDVQRWSDUWLFXODUO\ZHDOWK\ZKLOHKHZDVJURZLQJXS ZRUNHG

DVHFRQGMREDQGUHQWHGURRPVLQWKHLUKRXVHWRERDUGHUV

7KURXJKKLV6LQJDSRUHDQIULHQGVKHOHDUQHG$VLDQ

FXVWRPVDQGFXOWXUHDVZHOODVVHYHUDO$VLDQODQJXDJHV3HWHUVRQZDVDZHOOEHKDYHGFKLOG6HH

([K'/HWWHUIURP 3HWHUVRQVPRWKHUSURYLGLQJWKDW3HWHUVRQZDVWKH

PRGHOVRQZKRGLGHUUDQGVDQGURXWLQHFKRUHVDQGVWD\HGKRPHRQ)ULGD\QLJKWVWRNHHS

'RURWK\RUPHFRPSDQ\

+LVIDWKHUGLHG

DWDJHLQ,G

E (GXFDWLRQ3HWHUVRQUHWXUQHGWRWKH8QLWHG6WDWHVWRDWWHQG&RUQHOO8QLYHUVLW\DQGJUDGXDWHGFXP

ODXGHLQZLWKD%DFKHORURI$UWVLQ(FRQRPLFVDQG$VLDQ6WXGLHV3HWHUVRQJUDGXDWHGIURP

WKH8QLYHUVLW\RI&KLFDJREXVLQHVVVFKRROLQ

F 0DUULDJHDQG)DPLO\3HWHUVRQDQGKLVZLIH PDUULHGLQ7KH\KDYHWZRFKLOGUHQ

DQG



15/56

ZDVERUQMXVWEHIRUH0RUJDQ6WDQOH\LQIRUPHG3HWHUVRQWKDWKHZDVXQGHU

LQYHVWLJDWLRQ3HWHUVRQVSHQWVLJQLILFDQWWLPHDZD\IURP ZKHQKHZDV\RXQJWRFRRSHUDWH

ZLWKWKH*RYHUQPHQWLQWKH8QLWHG6WDWHV

3HWHUVRQKDVVSHQWWKHODVWVHYHUDO\HDUVERQGLQJZLWKKLVFKLOGUHQ+LVZLIHFRQVLGHUV

WKLVWKHRQO\EOHVVLQJWREHFRXQWHGRXWRIWKLVRUGHDO,GVWDWLQJWKDWWKHLUGDXJKWHULVDEOH

WRUHFLWHWKHQDPHVRI5RPDQHPSHURUVLQFKURQRORJLFDORUGHUWKDQNVWRKHUGDGZKRVSHQGV

WLPHHYHU\QLJKWZLWKKHU+LVIULHQGV ZURWHDERXWKRZ3HWHUVRQLV

GHHSO\LQYROYHGLQKLVFKLOGUHQVHGXFDWLRQWHDFKLQJKLVWKUHH\HDUROGVRQWRUHDGDQGGR

VLPSOHPDWK7KH\DOVRQRWHGWKDWDSULVRQVHQWHQFHZRXOGEHDYHU\VLJQLILFDQWORVVWRKLV

ZLIHDQGFKLOGUHQ6HH([K(+LVQLHFH ZURWHDERXWKRZ3HWHUVRQWULHVWRPDNH

KLVGDXJKWHUVKRPHZRUNLQWRDIXQJDPHDQGFRRNVIRUWKHIDPLO\([K)

3HWHUVRQLVLQWLPDWHO\LQYROYHGLQWKHOLYHVRIKLVH[WHQGHGIDPLO\+LVQHSKHZ

ZURWHWRWKH&RXUWDERXWKRZKLVOLIHKDVEHHQGHILQHGE\*DUWKZLWK3HWHUVRQ

LQVSLULQJKLPWRVWXG\DEURDGDQGJHWLQYROYHGLQDFRPPXQLW\VHUYLFHSURMHFWLQ3HUX3HWHUVRQ

SXVKHG WRVWXG\KDUGDQGVXFFHHGLQVFKRRODQGSDLGIRU WRVWXG\6SDQLVKLQ6SDLQ

DQG0H[LFRDQGKHOSHGWRSD\IRUKLVFROOHJHWXLWLRQ([K* KLVQLHFHGHVFULEHGKRZVKH

KDVVHHQKLPDFWZLWKNLQGQHVVDQGJHQHURVLW\DQGKRZKHLVYHU\ORYHGE\KLVIDPLO\([K

)6KHGHVFULEHGKRZ3HWHUVRQSDLGIRU>'RURWK\V@QXUVLQJKRPHIRUWZR\HDUVVRWKDWVKH

FRXOGEHQHDUWR> @IDPLO\LQ&DOLIRUQLDZKHUHWKH\OLYHGDWWKHWLPH,G+LVVLVWHU

GHVFULEHVKRZWKLVDVVLVWDQFHUHOLHYHGXVRIWKHEXUGHQRIUHO\LQJRQSXEOLFDVVLVWDQFHDQG

0HGLFDLG([K%+LVPRWKHUZURWHDERXWKRZKHSURYLGHGFDUHWRERWKKHUDQGKLV

JUDQGIDWKHULQDQGPDGHVXUH>WKH\@ZHUHJLYHQWKHEHVWFDUHSRVVLEOH([K'



16/56

3HWHUVRQKDVDOVREHHQJHQHURXVZLWKRWKHUV$V ZURWH3HWHUVRQ

KHOSHGWZRIULHQGVLQ&KLQDDSSO\WRVWXG\LQWKH8QLWHG6WDWHVDQGSDLGWKHLUWXLWLRQDQGOLYLQJ

H[SHQVHV6HH([K+

G :RUN+LVWRU\3HWHUVRQKDVZRUNHGQHDUO\FRQWLQXRXVO\VLQFHJUDGXDWLQJIURPFROOHJH6HH([K$

/HWWHUIURP*DUWK3HWHUVRQ

,Q3HWHUVRQMRLQHG0RUJDQ6WDQOH\V+RQJ.RQJRIILFHDVDQ$VVRFLDWH3HWHUVRQ

ZDVLQVWUXPHQWDOLQKHOSLQJ0RUJDQ6WDQOH\JURZWKH+RQJ.RQJRIILFHDQGODWHULQLQ

RSHQLQJWKH6KDQJKDLRIILFHIRU0RUJDQ6WDQOH\$FFRUGLQJWRKLVFROOHDJXH

*DUWKEXLOWWKH0RUJDQ6WDQOH\6KDQJKDLRIILFHIURPVFUDWFKDQGHPSOR\HGRYHUSHRSOH

ZLWKLQWKUHH\HDUVPDQDJLQJUHDOHVWDWHSURMHFWVDQG86'ELOOLRQRIWRWDOHTXLW\([K

,)URPKLVILUVW\HDUZLWK0RUJDQ6WDQOH\3HWHUVRQEURXJKWGHDOVWR0RUJDQ6WDQOH\6HH([K

-/HWWHUIURP 3HWHUVRQVFROOHDJXHDW0RUJDQ6WDQOH\H[SODLQLQJWKDWIURP

WR>W@KHRYHUZKHOPLQJPDMRULW\RI>&KLQHVHUHDOHVWDWHLQYHVWPHQWVE\0RUJDQ

6WDQOH\@ZHUHSHUVRQDOO\VRXUFHGDQGDFWLYHO\JXLGHGWRFORVLQJE\0U3HWHUVRQ3HWHUVRQV

KDUGZRUNEULQJLQJLQYHVWPHQWEDQNLQJEXVLQHVVWRWKH&KLQDRIILFHRI0RUJDQ6WDQOH\

FRQWULEXWHGWRWKHILUPUHFHLYLQJWKHWRSDZDUGE\(XURPRQH\DW(XURPRQH\V5HDO(VWDWH

$ZDUGVIRU,QYHVWPHQW0DQDJHPHQWLQ&KLQD ZKRZRUNHGDW0RUJDQ

6WDQOH\ZLWK3HWHUVRQH[SODLQHGWKDW3HWHUVRQKHOSHGSXW0RUJDQ6WDQOH\RQWKHPDSLQWHUPV

RIWKHSURSHUW\GHYHORSHU,32VSDFH([K+ OLVWHGDQXPEHURIFRPSDQLHVWKDW

3HWHUVRQZDVDEOHWRSHUVXDGHWRGRLQLWLDOSXEOLFRIIHULQJVZLWK0RUJDQ6WDQOH\,G%DVHGRQ

KLVVXFFHVVHVKHZDVSURPRWHGWR9LFH3UHVLGHQWDIWHUWZR\HDUV+HZDVSURPRWHGWKHQH[W

5HIHUHQFHWRWKLVDZDUGLVPDGHRQ0RUJDQ6WDQOH\VZHEVLWHDWKWWSZZZPRUJDQVWDQOH\FRPDERXWDZDUGVDUWLFOHVHHHIGGDIHEHDIHIKWPO



17/56

\HDUWR([HFXWLYH'LUHFWRU7ZR\HDUVODWHUKHZDVSURPRWHGWR0DQDJLQJ'LUHFWRU2YHUDOOKH

EURXJKWLQDERXWQLQHWHHQGHDOVGXULQJKLVVL[\HDUVDW0RUJDQ6WDQOH\0DQ\RIWKHVHGHDOV

KDYHQRWEHHQVROGVRWKHSURILWVWR0RUJDQ6WDQOH\FDQQRWEHDFFXUDWHO\HVWLPDWHGDWWKLVSRLQW

7KHDPRXQWRIFDSLWDOWKDW0RUJDQ6WDQOH\SXWLQWR3HWHUVRQPDQDJHGGHDOVRYHUELOOLRQ

VSHDNVWRWKHFRPSDQ\VUHOLDQFHRQKLPDVDVRXUFHIRUEXVLQHVV([K,/HWWHUIURP

ZKRZRUNHGDW0RUJDQ6WDQOH\ZLWK3HWHUVRQZURWHWKDW3HWHUVRQ

LQWURGXFHGJRRGSDUWQHUVDQGLQYHVWPHQWRSSRUWXQLWLHVWR0RUJDQ6WDQOH\DQGPDGHPDQ\

VXFFHVVIXOLQYHVWPHQWVWKDWPDGH0RUJDQ6WDQOH\DQG0RUJDQ6WDQOH\VUHDOHVWDWHIXQGV

LQYHVWRUVDQLQFUHGLEOHDPRXQWRIPRQH\ ([K+ GHVFULEHV3HWHUVRQV

FRQWULEXWLRQWRWKH0RUJDQ6WDQOH\EXVLQHVVDVKHOSLQJEXLOG0RUJDQ6WDQOH\VUHDOHVWDWH

EXVLQHVVLQ&KLQDIURPQRWKLQJWRDKXJHVXFFHVV,GVHHDOVR([K./HWWHUIURP

*DUWKKDGVLJQLILFDQWDFKLHYHPHQWVDVDUHDOHVWDWHLQYHVWRUDQGEDQNHULQ&KLQD

,WLVUHDVRQDEO\FRPPRQNQRZOHGJHLQWKH&KLQDUHDOHVWDWHPDUNHWWKDWLQWKHVSDFHRIMXVWDIHZ

\HDUV3HWHUVRQZDVLQVWUXPHQWDOLQHYROYLQJ0RUJDQ6WDQOH\IURPVRPHZKDWRIDQRQSOD\HULQ

WKLVPDUNHWLQWRWKHOHDGLQJEDQNHUIRU&KLQHVHUHDOHVWDWHILUPVDVZHOODVWKHOHDGLQJIRUHLJQ

UHDOHVWDWHLQYHVWRULQ&KLQD



18/56

'LVFXVVLRQ

$VGLVFXVVHGPRUHEHORZWKHUHDUHDQXPEHURIIDFWRUVWKDWZHEHOLHYHVXSSRUWRXU

UHTXHVWIRUDSUREDWLRQDU\VHQWHQFHIRU3HWHUVRQ

,QFDUFHUDWLRQLQWKH8QLWHG6WDWHVZLOOEHHVSHFLDOO\KDUGRQ3HWHUVRQDQGKLVIDPLO\

3HWHUVRQVIDPLO\OLYHVLQ6LQJDSRUHDQGKLV\RXQJFKLOGUHQZLOOEHVHSDUDWHGIURPKLPGXULQJ

DQ\SHULRGRILQFDUFHUDWLRQ7KH\VLPSO\GRQRWKDYHWKHILQDQFLDOPHDQVWRFRPHWRWKH8QLWHG

6WDWHVWRYLVLWKLP,WLVYLUWXDOO\FHUWDLQWKDWKHZLOOQRWVHHKLVZLIHRUFKLOGUHQGXULQJDQ\

SHULRGRILQFDUFHUDWLRQ2IFRXUVHDQ\SHULRGWKDW3HWHUVRQLVRXWRIWKHZRUNIRUFHZLOO

H[DFHUEDWHWKDWDOUHDG\GHYDVWDWLQJHIIHFWRIWKHILQDQFLDOFLUFXPVWDQFHVDQGXQFHUWDLQIXWXUHKH

DQGKLVIDPLO\QRZIDFH

)XUWKHU3HWHUVRQVDFFHSWDQFHRIUHVSRQVLELOLW\IRUKLVRIIHQVHDQGKLVH[SUHVVLRQVRI

UHPRUVHDUHZHOOEH\RQGWKHQRUPDO+HFDPHIURPRYHUVHDVWRFRRSHUDWHZLWKWKH

*RYHUQPHQWVLQYHVWLJDWLRQDQGXOWLPDWHO\ZDLYHGKLVWULDOULJKWVWRSOHDGJXLOW\+HKDVOLYHGD

ODZDELGLQJOLIHVLQFHWKHLQYHVWLJDWLRQLQWRKLVFRQGXFWEHJDQ3HWHUVRQLVRYHUIRUW\DQG

XQOLNHO\WRUHRIIHQG



19/56

3HWHUVRQVDFWLRQVDUHPLWLJDWHGZKHQYLHZHGLQWKHSURSHUFXOWXUDOFRQWH[WDV

GLVFXVVHGEHORZ

0RUHRYHU3HWHUVRQKDVDOUHDG\VXIIHUHGVHYHUHSXQLVKPHQWIRUKLVRIIHQVHLQDQXPEHU

RIZD\VLQFOXGLQJKDYLQJKLVILQDQFLDOVHFXULW\HYLVFHUDWHGEHLQJEDUUHGIURPZRUNLQKLV

SURIHVVLRQEHFRPLQJQHDUO\XQHPSOR\DEOHDQGVSHQGLQJWKHODVWWKUHHSOXV\HDUVZDLWLQJIRU

UHVROXWLRQRIWKLVPDWWHU%DVHGRQWKH6HFWLRQDIDFWRUVZHUHVSHFWIXOO\VXEPLWWKDWD

VHQWHQFHZLWKRXWLQFDUFHUDWLRQLVPRVWDSSURSULDWHDQGZRXOGEHVWVHUYHWKHLQWHUHVWVRIMXVWLFH

7KH6HFWLRQD)DFWRUV0LOLWDWHLQ)DYRURID%HORZ*XLGHOLQH6HQWHQFH$VLQGLFDWHGLQ3HWHUVRQVSOHDDJUHHPHQWWKH*RYHUQPHQWKDVDJUHHGWKDWWKHJXLGHOLQHV

UDQJHWKDWDSSOLHVWR3HWHUVRQVFRQGXFWLVWRPRQWKVDQGWKDWWKHPD[LPXPIRUWKLV

RIIHQVHLVPRQWKVHIIHFWLYHO\PDNLQJWKHVHQWHQFLQJUDQJHWRPRQWKV7KHJXLGHOLQH

UDQJHLVDGYLVRU\DQGWKH&RXUWLVDOVRREOLJDWHGWRFRQVLGHUWKHIDFWRUVVHWIRUWKLQ86&

DLQRUGHUWRFUDIWDQDSSURSULDWHVHQWHQFH6HH*DOOY8QLWHG6WDWHV86

H[SODLQLQJWKDWWKHFRXUWPXVWFRQVLGHUDOORIWKHDIDFWRUVWRGHWHUPLQHZKHWKHU

WKH\VXSSRUWWKHVHQWHQFHUHTXHVWHGE\DSDUW\DQGWKHFRXUWPD\QRWSUHVXPHWKDWWKH

*XLGHOLQHVUDQJHLVUHDVRQDEOH5LWDY8QLWHG6WDWHV866WHYHQV-

FRQFXUULQJQRWLQJWKDWSRVW%RRNHUVHQWHQFLQJFRXUWV>DUH@REOLJDWHGWRFRQVLGHUWKHYDULRXV

IDFWRUVGHOLQHDWHGLQ86&DLQFOXGLQJWKHQRZDGYLVRU\*XLGHOLQHVUDQJH

6HFWLRQDUHTXLUHVWKDWWKH&RXUWLPSRVHDVHQWHQFHVXIILFLHQWEXWQRWJUHDWHUWKDQ

7KHVHIDFWRUVDUHWKHQDWXUHDQGFLUFXPVWDQFHVRIWKHRIIHQVHDQGWKHKLVWRU\DQGFKDUDFWHULVWLFVRIWKHGHIHQGDQWWKHQHHGIRUWKHVHQWHQFHLPSRVHG$WRUHIOHFWWKHVHULRXVQHVVRIWKHRIIHQVHWRSURPRWHUHVSHFWIRUWKHODZDQGWRSURYLGHMXVWSXQLVKPHQWIRUWKHRIIHQVH%WRDIIRUGDGHTXDWHGHWHUUHQFHWRFULPLQDOFRQGXFW&WRSURWHFWWKHSXEOLFIURPIXUWKHUFULPHVRIWKHGHIHQGDQWDQG'WRSURYLGHWKHGHIHQGDQWZLWKQHHGHGHGXFDWLRQDORUYRFDWLRQDOWUDLQLQJPHGLFDOFDUHRURWKHUFRUUHFWLRQDOWUHDWPHQWLQWKHPRVWHIIHFWLYHPDQQHUWKHNLQGVRIVHQWHQFHVDYDLODEOHWKHNLQGVRIVHQWHQFHDQGWKHVHQWHQFLQJUDQJHHVWDEOLVKHGIRU$WKHDSSOLFDEOHFDWHJRU\RIRIIHQVHFRPPLWWHGE\WKHDSSOLFDEOHFDWHJRU\RIGHIHQGDQWDVVHWIRUWKLQWKH>6HQWHQFLQJ*XLGHOLQHV@DQ\SHUWLQHQWSROLF\VWDWHPHQW>LQWKH6HQWHQFLQJ*XLGHOLQHV@WKHQHHGWRDYRLGXQZDUUDQWHGVHQWHQFHGLVSDULWLHVDPRQJGHIHQGDQWVZLWKVLPLODUUHFRUGVZKRKDYHEHHQIRXQGJXLOW\RIVLPLODUFRQGXFWDQGWKHQHHGWRSURYLGHUHVWLWXWLRQWRDQ\YLFWLPVRIWKHRIIHQVH86&D



20/56

QHFHVVDU\WRFRPSO\ZLWKWKHSXUSRVHVVHWIRUWKLQWKDWVHFWLRQ6HH8QLWHG6WDWHVY&XOO

)6XSSG(':LVGHVFULELQJWKHVXIILFLHQWEXWQRWJUHDWHUWKDQ

QHFHVVDU\FODXVHLQDDVWKHSDUVLPRQ\SURYLVLRQZKLFKUHTXLUHVWKHFRXUWWRLPSRVH

WKHOHDVWVHYHUHVHQWHQFHQHFHVVDU\WRVDWLVI\WKHIRXUSXUSRVHVRIVHQWHQFLQJSXQLVKPHQW

GHWHUUHQFHSURWHFWLRQRIWKHSXEOLFDQGUHKDELOLWDWLRQVHHDOVR8QLWHG6WDWHVY0HQ\ZHDWKHU

)GWK&LUXSKROGLQJDQHLJKWOHYHOGHSDUWXUHIRUHPEH]]OHPHQWRI

LQOLJKWRIEURDGHUSRVW%RRNHUGLVFUHWLRQWRZHLJKDPXOWLWXGHRIIDFWRUVSUHYLRXVO\GHHPHG

QRWRUGLQDULO\UHOHYDQW

D 7KH1DWXUHDQG&LUFXPVWDQFHVRIWKH2IIHQVHDQGWKH&KDUDFWHULVWLFVRIWKH'HIHQGDQW

6HFWLRQDLQVWUXFWVFRXUWVWRFRQVLGHUWKHQDWXUHDQGFLUFXPVWDQFHVRIWKH

RIIHQVHDQGWKHKLVWRU\DQGFKDUDFWHULVWLFVRIWKHGHIHQGDQWZKHQFUDIWLQJDVHQWHQFH:HDVN

WKH&RXUWWRFRQVLGHUWKHEHORZIDFWRUVXQGHU6HFWLRQD

L 3HWHUVRQV1HHGWR%HLQ6LQJDSRUHWR5DLVH+LV&KLOGUHQ3HWHUVRQKDVDFORVHUHODWLRQVKLSZLWKKLVWZRFKLOGUHQ+HFDUHVIRUWKHPDQGVSHQGV

WLPHWHDFKLQJWKHPHYHU\GD\7KHORQJHUKHLVLPSULVRQHGWKHPRUHKHZLOOPLVVRIWKHLUHDUO\

GHYHORSPHQW3HWHUVRQVPRWKHUZURWH,FDQQRWLPDJLQHWKHWUDXPDWKHVHFKLOGUHQZRXOG

HQGXUHLIKHZHUHDEVHQWIURPWKHLUOLYHVIRUDQH[WHQGHGSHULRG([K'

3HWHUVRQVLPSULVRQPHQWZLOOEHDSDUWLFXODUEXUGHQRQKLVUHODWLRQVKLSZLWKKLV

FKLOGUHQVLQFHWKH\OLYHDEURDG7KH\OLNHO\ZLOOQRWEHDEOHWRDIIRUGWRYLVLWKLPHYHQRQFH

ZKLOHKHLVLQMDLOJLYHQWKHGLVWDQFHDQGKLVIDPLO\VODFNRILQFRPHZKLOHKHLVLQMDLO,WZLOOEH

GLIILFXOWIRUWKHPWRHYHQWDONE\SKRQHVLQFH6LQJDSRUHVWLPH]RQHLVWZHOYHKRXUVGLIIHUHQW



21/56

IURPWKH(DVW&RDVWRIWKH8QLWHG6WDWHV$OVRSULVRQHUVFDQRQO\PDNHFROOHFWSKRQHFDOOVDQG

FROOHFWSKRQHFDOOVWR6LQJDSRUHZLOOEHSURKLELWLYHO\H[SHQVLYH

7KHEUXQWRIWKLVEXUGHQZLOOEHERUQE\3HWHUVRQVLQQRFHQWFKLOGUHQ&KLOGUHQRI

LQFDUFHUDWHGSDUHQWVVXIIHUHPRWLRQDODQGSV\FKRORJLFDOHIIHFWVGXULQJWKHSHULRGRI

LQFDUFHUDWLRQ6HH&KLOGUHQRI,QFDUFHUDWHG3DUHQWV3URMHFW5HSRUWWRWKH2UHJRQ/HJLVODWXUHRQ

6HQDWH%LOODW,QGHHGFKLOGUHQZKRDUHDEOHWRYLVLWWKHLUSDUHQWVLQSULVRQGXULQJ

WKHWLPHRILPSULVRQPHQWIDUHEHWWHUWKDQWKRVHZKRFDQQRW6HH.DWKOHHQ=5XVVHOOHWDO

&KLOGUHQRI,QFDUFHUDWHG3DUHQWV8QIRUWXQDWHO\WKDWRSWLRQLVQRWUHDOLVWLFDOO\

DYDLODEOHWR3HWHUVRQVFKLOGUHQ

&KLOGUHQW\SLFDOO\H[KLELWEHKDYLRUDOSUREOHPVZKLOHDSDUHQWLVLQFDUFHUDWHG6HH5RVV

'3DUNH.$OLVRQ&ODUNH6WHZDUW(IIHFWVRI3DUHQWDO,QFDUFHUDWLRQRQ2@YHURIWKHFKLOGUHQRILQFDUFHUDWHGSDUHQWVKDGVFKRROSUREOHPVVXFKDVSRRU

JUDGHVRULQVWDQFHVRIDJJUHVVLRQ7KLVUHVXOWLVOLNHO\KHUH3HWHUVRQVZLIHQRWHGLQ

KHUOHWWHUWRWKH&RXUWWKDWWKHLUGDXJKWHUVWDUWHGKDYLQJEHKDYLRUDOSUREOHPVLQVFKRROZKLOH

3HWHUVRQZDVLQWKH8QLWHG6WDWHVFRRSHUDWLQJZLWKWKH*RYHUQPHQW6HH([K&3DUNHDQG

&ODUNH6WHZDUWDOVRQRWHWKDWDQLPSRUWDQWGHWHUPLQDQWRIFKLOGUHQVDGMXVWPHQWWRWKHLUSDUHQW

EHLQJLQSULVRQLVUHJXODUFRQWDFWZLWKWKHLQFDUFHUDWHGSDUHQW5RVV'3DUNH.$OLVRQ

&ODUNH6WHZDUW(IIHFWVRI3DUHQWDO,QFDUFHUDWLRQRQ


22/56

&RPSOH[5HODWLRQVKLSQRWLQJWKDWWKHSHUVLVWHQWUHPRYDORISHUVRQVIURPWKH

FRPPXQLW\WRSULVRQKDVDGHVWDELOL]LQJHIIHFWWKDWKDVEHHQGHPRQVWUDWHGWRIUD\IDPLO\DQG

FRPPXQLW\ERQGVSDUWLFXODUO\ZKHQSULVRQHUVDUHLQFDUFHUDWHGLQIDFLOLWLHVKXQGUHGVRI

PLOHVIURPWKHLUKRPHV

$OWKRXJKIDPLO\FLUFXPVWDQFHVDUHDGLVFRXUDJHGIDFWRUXQGHUWKHVHQWHQFLQJJXLGHOLQHV

FRXUWVPD\FRQVLGHUWKHPSRVW%RRNHU6HH8QLWHG6WDWHVY$LWRUR)GQVW

&LU0HQ\ZHDWKHU)GDW>$@IWHU%RRNHUFRXUWVFDQMXVWLI\FRQVLGHUDWLRQRI

IDPLO\UHVSRQVLELOLWLHVDQDVSHFWRIWKHGHIHQGDQWVKLVWRU\DQGFKDUDFWHULVWLFV86&

D'LVWULFWFRXUWVQRZKDYHWKHGLVFUHWLRQWRZHLJKDPXOWLWXGHRIPLWLJDWLQJDQG

DJJUDYDWLQJIDFWRUVWKDWH[LVWHGDWWKHWLPHRIPDQGDWRU\*XLGHOLQHVVHQWHQFLQJEXWZHUH

GHHPHGQRWRUGLQDULO\UHOHYDQWVXFKDVIDPLO\WLHVDQGUHVSRQVLELOLWLHVHOOLSVHVIRRWQRWHV

DQGTXRWDWLRQPDUNVRPLWWHG6XFKFRQVLGHUDWLRQLVFDOOHGIRUKHUHEHFDXVH3HWHUVRQVIDPLO\

FLUFXPVWDQFHVDUHH[WUDRUGLQDU\DQHDUWRWDODEVHQFHRIFRPPXQLFDWLRQZLOORFFXUEHWZHHQKLP

DQGKLV\RXQJFKLOGUHQ

3RVW%RRNHUFRXUWVUHJXODUO\FRQVLGHUGHIHQGDQWVIDPLO\FLUFXPVWDQFHVZKHQVHWWLQJDQ

DSSURSULDWHVHQWHQFHXQGHU6HFWLRQD6HHHJ8QLWHG6WDWHVY0XQR]1DYD)G

WK&LUDIILUPLQJEHORZJXLGHOLQHVVHQWHQFHRID\HDUDQGDGD\ZKLFKZDV

EDVHGLQSDUWRQWKHIDFWWKDWWKHGHIHQGDQWUDLVHGKLVHLJKW\HDUROGVRQDVDVLQJOHIDWKHUDQG

FDUHGIRUKLVHOGHUO\SDUHQWVZKRKDGVHULRXVPHGLFDOSUREOHPV8QLWHG6WDWHVY+XVHLQ

)GWK&LUDIILUPLQJDRQHGD\VHQWHQFHEHORZWKHWRPRQWK

JXLGHOLQHVUDQJHZKLFKZDVEDVHGLQSDUWRQWKHGHIHQGDQWVQHHGWRFDUHIRUKHUDLOLQJIDWKHU

7KLVSXEOLFDWLRQLVDYDLODEOHDWKWWSZZZVHQWHQFLQJSURMHFWRUJGRFSXEOLFDWLRQVLQFBLDQGFBFRPSOH[SGI6HH866*+>)@DPLO\WLHVDQGUHVSRQVLELOLWLHVDUHQRWRUGLQDULO\UHOHYDQWLQGHWHUPLQLQJZKHWKHUDGHSDUWXUHPD\EHZDUUDQWHG.RRQY8QLWHG6WDWHV86'LVFRXUDJHGIDFWRUVDUHWKRVHQRWRUGLQDULO\UHOHYDQWWRWKHGHWHUPLQDWLRQRIZKHWKHUDVHQWHQFHVKRXOGEHRXWVLGHWKHDSSOLFDEOHJXLGHOLQHUDQJHTXRWDWLRQPDUNVRPLWWHG



23/56

8QLWHG6WDWHVY$QGHUVRQ)$SS[WK&LUSHUFXULDPXQSXEOLVKHG

RSLQLRQDIILUPLQJVHQWHQFHRIKRPHFRQILQHPHQWDQGSUREDWLRQEHORZWKHJXLGHOLQHVUDQJHRI

WRPRQWKVIRUDQRYHU\HDUROGGHIHQGDQWZKRVXSSRUWHGKLVFROOHJHDJHGFKLOGUHQ

ZKRORVWKLVKLJKSD\LQJMREDQGDOVRUHORFDWHGWRILQGHPSOR\PHQW7KLV&RXUWKDVDOVRWDNHQ

DGHIHQGDQWVIDPLO\FLUFXPVWDQFHVLQWRDFFRXQWZKHQVHQWHQFLQJXQGHU6HFWLRQD6HH

8QLWHG6WDWHVY0DUVK)6XSSG('1


24/56

UHVWDXUDQWVLQ6LQJDSRUHZLWK 6HH([K//HWWHUIURP

'LUHFWRURI*UDQ'DYH\VDUHVWDXUDQWFRPSDQ\LQ6LQJDSRUH ZURWHWKDWKHLV

FRQVLGHULQJDMRLQWYHQWXUHZLWK3HWHUVRQWRIXOILOO3HWHUVRQVYLVLRQ,G

7KLV&RXUWUHJXODUO\UHFRJQL]HVWKHLPSRUWDQFHRIDOORZLQJGHIHQGDQWVWRSURYLGHIRU

WKHLUIDPLOLHVZKHQFUDIWLQJVHQWHQFHV6HHHJ8QLWHG6WDWHVY$ULVWL]DEDO1R&5

:/DW('1


25/56

DVHQWHQFLQJMXGJHVKRXOGWDNHXQGHUDGYLVHPHQWWKHFRQWHQWLRQWKDWDGHIHQGDQWPDGH

HIIRUWVWRFRRSHUDWHHYHQLIWKRVHHIIRUWVGLGQRW\LHOGD*RYHUQPHQWPRWLRQIRUDGRZQZDUG

GHSDUWXUHSXUVXDQWWR866*.8QLWHG6WDWHVY/D]HQE\)G

WK&LUUHPDQGLQJIRUUHVHQWHQFLQJZKHUHWKHGLVWULFWFRXUWDPRQJRWKHUWKLQJVIDLOHG

WRFRQVLGHUWKHGHIHQGDQWVFRRSHUDWLRQZLWKWKHJRYHUQPHQWLQWKHDEVHQFHRID6HFWLRQ.

PRWLRQ8QLWHG6WDWHVY2FKRD5DPRV1R&5:/DW(':LV

FRQVLGHULQJGHIHQGDQWVFRRSHUDWLRQZLWKWKHJRYHUQPHQWDVHYLGHQFHRIGHIHQGDQWV

SRVLWLYHFKDUDFWHUDQGDFFHSWDQFHRIUHVSRQVLELOLW\XQGHU6HFWLRQDEH\RQG>DQDFFHSWDQFH

RIUHVSRQVLELOLW\@UHGXFWLRQXQGHU6HFWLRQ(LQWKHDEVHQFHRID6HFWLRQ.PRWLRQIURPWKH

SURVHFXWLRQ



26/56

Y &XOWXUDO&RQWH[W3HWHUVRQFRPPLWWHGDQ)&3$RIIHQVHZLWKRXWVWHSSLQJIRRWLQWKH8QLWHG6WDWHVZKLOH

ZRUNLQJIRUD&KLQHVHVXEVLGLDU\RID8QLWHG6WDWHVFRPSDQ\3HWHUVRQVWHQXRXVFRQQHFWLRQ

ZLWKWKH8QLWHG6WDWHVGHVSLWHEHLQJD8QLWHG6WDWHVFLWL]HQPDNHVWKLVFDVHYHU\XQXVXDODQG

PDNHV&KLQHVHFXOWXUDOFRQVLGHUDWLRQVUHOHYDQW

3HWHUVRQDGPLWWHGDWKLVSOHDKHDULQJWKDWKHKHOSHGWKH&KLQHVH2IILFLDOWRLQYHVW

SHUVRQDOO\LQD0RUJDQ6WDQOH\LQYHVWPHQWDWDEHQHILFLDOSULFHDQGWKDWE\PLVOHDGLQJ0RUJDQ

6WDQOH\DERXWWKLVIDFWZLWKDQRWKHUSHUVRQKHFRQVSLUHGWRYLRODWHWKH)&3$7KH&KLQHVH

2IILFLDOZDVDFORVHIULHQGRI3HWHUVRQVLQPDQ\ZD\VDIDWKHUILJXUHWRKLPDQG3HWHUVRQ

KHOSHGKLPLQRUGHUWRUHSD\WKHKHOSWKDWWKH&KLQHVH2IILFLDOKDGJLYHQKLPWKURXJKKLVFDUHHU

7KLVW\SHRIIDYRULVFDOOHGJXDQ[LLQ&KLQDDWHUPWKDWGHVFULEHVWKHH[FKDQJHRIJLIWVRU

IDYRUVLQDSURIHVVLRQDOVHWWLQJ*XDQ[LLVWKHWUDGLWLRQDOZD\WKDWEXVLQHVVUHODWLRQVKLSVDUH



27/56

GHYHORSHGLQ&KLQD6HH*UHJRU\0/LSSHU)RUHLJQ&RUUXSW3UDFWLFHV$FWDQGWKH(OXVLYH

4XHVWLRQRI,QWHQW$P&ULP/5HY7KHDUWLFOHH[SODLQVWKDW

GLIIHUHQWFXOWXUHVKDYHGLIIHUHQWXQGHUVWDQGLQJVRIZKDWFRQVWLWXWHVDJLIWDVRSSRVHGWRDFRUUXSWLQJEULEH7RWDNHRQHH[DPSOHLQ&KLQDWKHH[FKDQJHRIJLIWVIDYRUVDQGEDQTXHWVLVFULWLFDOWRWKHGHYHORSPHQWRIUHODWLRQVKLSVRUFRQQHFWLRQVNQRZQDVJXDQ[L7KHVHFRQQHFWLRQVDUHFRQVLGHUHGWREHWKHVLQJOHPRVWLPSRUWDQWIDFWRUIRUVXFFHVVLQ&KLQD

,GLQWHUQDOTXRWDWLRQVDQGHPSKDVLVRPLWWHG$QRWKHUDUWLFOHH[SODLQVWKDW

>Z@LWKRXWJXDQ[LDFFRPSOLVKLQJDQ\WKLQJLQ&KLQDLVYLUWXDOO\LPSRVVLEOH7RGHYHORSJXDQ[LWKH&KLQHVHUHFLSURFDWHJLYLQJJLIWVDQGGRLQJIDYRUV7KH

UHFLSURFLW\DQGPXWXDOREOLJDWLRQDVSHFWVRIJXDQ[LLQFUHDVHWKHFKDQFHVWKDWD&KLQHVHVXEVLGLDU\ZLOOFRPPLW)&3$YLRODWLRQV

1LFROH


28/56

WLPHWKDW3HWHUVRQZRUNHGDW0RUJDQ6WDQOH\E\VD\LQJWKDWGRLQJEXVLQHVVLQ&KLQDZDVLQLWV

LQIDQF\VWDJHVUXOHVZHUHIHZHQIRUFHPHQWZDVDPELJXRXVDQGLQGHFLVLYH7KH$PHULFDQ

YDOXHVRIULJKWDQGZURQJZHUHDQGDUHQRWSUDFWLFHGLQ&KLQDLQWKHVDPHPDQQHUDVLQ

$PHULFD([K.

,QWKHFRQWH[WRILOOHJDOUHHQWU\FDVHVFRXUWVKDYHUHFRJQL]HGWKHUHOHYDQFHRIFXOWXUDO

FRQWH[WWRVHQWHQFLQJFRQVLGHUDWLRQV,QWKRVHFDVHVFRXUWVKDYHKHOGWKDW>F@XOWXUDO

DVVLPLODWLRQPD\EHUHOHYDQWWRWKHFKDUDFWHURIDGHIHQGDQWLQVRIDUDV>WKHGHIHQGDQWV@

FXOSDELOLW\PLJKWEHOHVVHQHGLI>WKHGHIHQGDQWV@PRWLYHVZHUHIDPLOLDORUFXOWXUDOUDWKHUWKDQ

HFRQRPLF8QLWHG6WDWHVY7RGG)6XSSG0'$ODFLWLQJWR

8QLWHG6WDWHVY/LSPDQ)GWK&LUKROGLQJWKDWDVHQWHQFLQJFRXUW

PD\GHSDUWRQWKHEDVLVRIFXOWXUDODVVLPLODWLRQLILWILQGVWKDWWKHGHIHQGDQWVFLUFXPVWDQFHV

UHPRYHKLVFDVHIURPWKHKHDUWODQGRIFDVHVJRYHUQHGE\WKHUHOHYDQWLQGLYLGXDOJXLGHOLQHVDQG

WKH*XLGHOLQHVDVDZKROH7KRXJK3HWHUVRQVPRWLYDWLRQVZHUHSDUWLDOO\HFRQRPLFKLV

PRWLYDWLRQIRULQFOXGLQJWKH&KLQHVH2IILFLDOLQWKHWUDQVDFWLRQZDVDOVRFXOWXUDO3HWHUVRQIHOW

WKDWLWZDVDQRUPDODQGH[SHFWHGSDUWRIGRLQJEXVLQHVVLQ&KLQDWRWUDGHIDYRUVZLWKEXVLQHVV

SDUWQHUV

,QDGGLWLRQWRKHOSLQJWKH&KLQHVH2IILFLDOWRLQYHVWSHUVRQDOO\LQD0RUJDQ6WDQOH\

LQYHVWPHQWDWDEHQHILFLDOSULFH3HWHUVRQDOVRFRQVSLUHGWRYLRODWHWKH)&3$E\PLVOHDGLQJ

0RUJDQ6WDQOH\DERXWWKHIDFWWKDWKHLQYHVWHGKLVPRWKHUVPRQH\LQ$VLDVSKHUH3HWHUVRQZDV

IUXVWUDWHGWKDWKHKDGEHHQIRUFHGWROLTXLGDWHWKHLQYHVWPHQWKHKDGPDGHIRUKLVPRWKHUDQG

DFWHGLQSDUWDVDPLVJXLGHGVHOIKHOSUHPHG\WKDWLVVHFUHWO\EX\LQJEDFNLQWR3URMHFW&DYLW\DW

WKHVDPHSULFHDWZKLFKKHZDVIRUFHGWRVHOOLQRUGHUWRUHVWRUHKLVPRWKHUVLQYHVWPHQWLQ6LWH



29/56

&RXUWVFRQVLGHUGHIHQGDQWVPRWLYHVZKHQVHWWLQJWKHDSSURSULDWHVHQWHQFHXQGHU6HFWLRQ

D5DQXP)6XSSGDWKROGLQJWKDWWKHGHIHQGDQWVFXOSDELOLW\ZDVPLWLJDWHG

LQWKDWKHGLGQRWDFWIRUSHUVRQDOJDLQRUIRULPSURSHUSHUVRQDOJDLQRIDQRWKHUDFFRUG8QLWHG

6WDWHVY3HUDOWD(VSLQR]D)6XSSG(':LV0RWLYHLVDUHOHYDQW

VHQWHQFLQJFRQVLGHUDWLRQ:HDVNWKH&RXUWWRFRQVLGHU3HWHUVRQVPRWLYHVDQGWKHFXOWXUDO

FRQWH[WRI3HWHUVRQVFULPHZKHQVHQWHQFLQJKLP

E 6HFWLRQD)DFWRUV1H[W6HFWLRQDLQVWUXFWVWKHVHQWHQFLQJFRXUWWRFRQVLGHUWKHQHHGIRUWKH

VHQWHQFHLPSRVHGWRUHIOHFWWKHVHULRXVQHVVRIWKHRIIHQVHWRSURPRWHUHVSHFWIRUWKHODZDQGWR

SURYLGHMXVWSXQLVKPHQWIRUWKHRIIHQVHWRDIIRUGDGHTXDWHGHWHUUHQFHWRFULPLQDOFRQGXFWWR

SURWHFWWKHSXEOLFIURPIXUWKHUFULPHVRIWKHGHIHQGDQWDQGWRSURYLGHWKHGHIHQGDQWZLWKQHHGHG

HGXFDWLRQDORUYRFDWLRQDOWUDLQLQJPHGLFDOFDUHRURWKHUFRUUHFWLRQDOWUHDWPHQWLQWKHPRVW

HIIHFWLYHPDQQHU:HFRQWHQGWKDWDOORIWKHVHIDFWRUVKDYHEHHQDQGFDQEHVDWLVILHGZLWKD

EHORZJXLGHOLQHVVHQWHQFH$VDGGUHVVHGEHORZWKHUHLVDORZULVNWKDW3HWHUVRQZLOOFRPPLW

DQRWKHUFULPH:HEHOLHYHWKDWJLYHQWKHSXQLVKPHQWWKDWKHKDVDOUHDG\HQGXUHGDQRQ

LQFDUFHUDWRU\VHQWHQFHZLOOERWKSURYLGHMXVWSXQLVKPHQWIRUWKHRIIHQVHDQGDIIRUGDGHTXDWH

GHWHUUHQFHWRRWKHUVZKRFRQWHPSODWHFRPPLWWLQJVLPLODUFRQGXFW

L 3XQLVKPHQW3HWHUVRQ+DV6XIIHUHG3HWHUVRQKDVDOUHDG\VXIIHUHGJUHDWO\DVDUHVXOWRIKLVFRQGXFWLQWKLVPDWWHU

+HKDVVXIIHUHGHQRUPRXVO\ILQDQFLDOO\+HORVWKLVMREDW0RUJDQ6WDQOH\KLVEHQHILWV

KLVFDVKERQXVIRUZKLFKZRXOGKDYHEHHQFRQVHUYDWLYHO\DURXQGIRU

DORQHDQGKLVLQYHVWPHQWERQXVZKLFKKHZDVWROGZDVZRUWKVHYHUDOPLOOLRQGROODUVLQ

+HVHWWOHGZLWKWKH6(&DQGIRUIHLWHGDQGWKHLQWHUHVWLQWKH&DYLW\LQYHVWPHQWZKLFK

LVZRUWKDSSUR[LPDWHO\PLOOLRQOHDYLQJKLPZLWKDQHWZRUWKRI QRUHDO



30/56

HVWDWHQRRWKHUVDYLQJVRUSHQVLRQVDQGDZLIHDQGWZRFKLOGUHQWRVXSSRUW6HH([K&/HWWHU

IURP

,QDGGLWLRQLQFRQQHFWLRQZLWKKLVVHWWOHPHQWZLWKWKH6(&3HWHUVRQ

DJUHHGWREHEDUUHGIURPDVVRFLDWLQJZLWKILQDQFLDORUJDQL]DWLRQVUHJXODWHGE\WKH6(&7KLV

&RXUWKDVUHFRJQL]HGWKDWLWLVSXQLVKPHQWWREHEDUUHGIURPZRUNLQ\RXUFKRVHQSURIHVVLRQ

8QLWHG6WDWHVY0DFN1R&5:/DW('17@KHLPSDFWRID

IHORQ\FRQYLFWLRQPD\ODVWDOLIHWLPHDQGHYHQDVKRUWSHULRGRILQFDUFHUDWLRQKDVEHHQVKRZQWR

DIIHFWSHRSOHVHDUQLQJVDQGDELOLW\WRJHWDMREWREHSDUHQWVDQGWREHFRPHSURGXFWLYHSDUWVRI



31/56

WKHLUFRPPXQLWLHV'RXJ0F9D\9LQFHQW6FKLUDOGL-DVRQ=LHGHQEHUJ-XVWLFH3ROLF\

,QVWLWXWH7UHDWPHQWRU,QFDUFHUDWLRQ1DWLRQDODQG6WDWH)LQGLQJVRQWKH(IILFDF\RI&RVW

6DYLQJVRI'UXJ7UHDWPHQW9HUVXV,PSULVRQPHQW

6LQFH1RYHPEHUZKHQKHDGPLWWHGWR0RUJDQ6WDQOH\DWWRUQH\VWKDWKHKDG

YLRODWHG0RUJDQ6WDQOH\UXOHVKHKDVEHHQOLYLQJKLVOLIHRQSDXVHZDLWLQJIRUWKHGLVSRVLWLRQRI

DQ\LQYHVWLJDWLRQDJDLQVWKLP+HDOVRVSHQWDFRQVLGHUDEOHWLPHDZD\IURPKLVIDPLO\LQWKH

8QLWHG6WDWHVLQDQHIIRUWWRDVVLVWWKH*RYHUQPHQWVLQYHVWLJDWLRQ7KRXJKWHFKQLFDOO\IUHHDW

WKDWWLPHKLVGHVLUHWRFRRSHUDWHZLWKWKHJRYHUQPHQWUHTXLUHGWKDWKHUHPDLQDZD\IURPKLV

IDPLO\3HWHUVRQPDGHFOHDUWRWKH*RYHUQPHQWWKDWKHZDVDQ[LRXVWRSXWWKLVFKDSWHURIKLVOLIH

EHKLQGKLPVRWKDWKHFDQPRYHRQ

2YHUWKHQHDUO\IRXU\HDUVWKDWKDYHHODSVHGVLQFHKHZDVILUHGIURP0RUJDQ6WDQOH\KH

KDVEHHQWHFKQLFDOO\IUHHEXWKHKDVEHHQLQDVWDWHRIFRQVWDQWZDLWLQJQRWNQRZLQJKRZKLV

FDVHZRXOGEHUHVROYHG,QGHHGWKHVWUHVVRIWKHLQYHVWLJDWLRQ

VHHDOVR([K0

/HWWHUIURP 'XULQJWKLVWLPHKHUHOLYHGKLVPLVWDNHVDJDLQDQGDJDLQ

'XULQJWKLVSHULRGKH

KDVEHHQXQDEOHWRILQGDMREWKDWKHFRXOGFRPPLWWRNQRZLQJWKDWKHPD\KDYHWRVHUYHD

SULVRQVHQWHQFHLQWKH8QLWHG6WDWHV)RUWKHHQWLUHWLPHKHH[SHFWHGWKDWKLVFDVHZRXOGEH

FRQFOXGHGVKRUWO\7KHZDLWLQJKDVEHHQH[WUHPHO\VWUHVVIXODQGGUDLQLQJIRUERWK3HWHUVRQDQG

KLVIDPLO\7KHVWUHVVDGHIHQGDQWVXIIHUVDVDUHVXOWRISURVHFXWLRQFDQEHDIDFWRUFRQVLGHUHGLQ

7KLVSXEOLFDWLRQLVDYDLODEOHDWKWWSZZZMXVWLFHSROLF\RUJLPDJHVXSORDGB5(3B0'7UHDWPHQWRU,QFDUFHUDWLRQB$&'3SGI



32/56

VHQWHQFLQJ)RUH[DPSOHWKHFRXUWLQ8QLWHG6WDWHVY*DUGHOOLQL)G

'&&LUFRQVLGHUHGZKHWKHUWKHGLVWULFWFRXUWVVHQWHQFHRISUREDWLRQZDVXQUHDVRQDEOH

XQGHU%RRNHU7KH'&&LUFXLWDIILUPHGWKHSUREDWLRQDU\VHQWHQFHILQGLQJWKDWLWZDVQRWDQ

DEXVHRIGLVFUHWLRQWRVHQWHQFHDGHIHQGDQWWRSUREDWLRQZKHUHWKHGHIHQGDQWKDGFRRSHUDWHGZLWK

DXWKRULWLHVDFFHSWHGUHVSRQVLELOLW\IRUKLVFULPHVDQGVXIIHUHGVXEVWDQWLDOO\GXHWRKLV

SURVHFXWLRQDVVKRZQE\WKHIDFWWKDWKHZDVWUHDWHGIRUGHSUHVVLRQGXHWRWKHVWUHVVRIWKH

LQYHVWLJDWLRQ,GLQWHUQDOTXRWDWLRQVRPLWWHG

,WLVDSSURSULDWHIRUWKH&RXUWWRFRQVLGHUKRZ3HWHUVRQKDVDOUHDG\EHHQSXQLVKHG6HH

8QLWHG6WDWHVY6DPDUDV)6XSSG(':LVQRWLQJWKDWZKHUH

GHIHQGDQWZDVFRQYLFWHGRIIUDXGDEHORZJXLGHOLQHVHQWHQFHZDVZDUUDQWHGLQSDUWEHFDXVHDV

DFRQVHTXHQFHRIKLVFRQYLFWLRQDQGVHQWHQFHGHIHQGDQWORVWDJRRGSXEOLFVHFWRUMREDQRWKHU

IDFWRUQRWFRQVLGHUHGE\WKHJXLGHOLQHV5DQXP)6XSSGDWVHQWHQFLQJGHIHQGDQW

WRDEHORZJXLGHOLQHVVHQWHQFHZKHUHGHIHQGDQWVFRQYLFWLRQKDGVLJQLILFDQWFROODWHUDOHIIHFWVRQ

KLPLQFOXGLQJEHLQJXQDEOHWRZRUNLQEDQNLQJDJDLQ8QLWHG6WDWHVY5HGHPDQQ)

6XSSG(':LVVHQWHQFLQJGHIHQGDQWWRDEHORZJXLGHOLQHVVHQWHQFH

ZKHUHGHIHQGDQWVXIIHUHGFROODWHUDOFRQVHTXHQFHVIURPFRQGXFWLQFOXGLQJORVVRIKLVEXVLQHVV

DQGSD\PHQWRIILQHVLQUHODWHGFLYLOHQIRUFHPHQWDFWLRQDQGDJUHHPHQWWRUHOHYDQWEDUV

:HDVNWKDWWKH&RXUWVHQWHQFH3HWHUVRQWRSUREDWLRQLQUHFRJQLWLRQRIWKHIDFWWKDWKHKDV

DOUHDG\EHHQSXQLVKHGIRUKLVFULPH

LL /RZ3UREDELOLW\RI5HFLGLYLVP3HWHUVRQVFLUFXPVWDQFHVLQFOXGLQJKLVDJHDQGDEVHQFHRISULRUFULPLQDOKLVWRU\

LQGLFDWHDORZSUREDELOLW\RIUHFLGLYLVP

3HWHUVRQLV\HDUVROG&RXUWVKDYHUHFRJQL]HGWKDWWKHULVNRIUHRIIHQGLQJJRHVGRZQ

IRUROGHUGHIHQGDQWV$FFRUGLQJO\FRXUWVKDYHLPSRVHGEHORZJXLGHOLQHVVHQWHQFHVIRU



33/56

GHIHQGDQWVRYHUIRUW\6HHHJ8QLWHG6WDWHVY+HUQDQGH]1R&5:/

DW6'1


34/56

5RZH1R&5:/DW('1


35/56

7KHFRXUWPD\EXWLVQRWUHTXLUHGWRRUGHUWKHGHIHQGDQWVHUYHDWHUPRIVXSHUYLVHG

UHOHDVHXSWRWKUHH\HDUVORQJDIWHUDQ\WHUPRILPSULVRQPHQWWKDWLVRUGHUHG:HDVNWKDWWKH

&RXUWQRWLPSRVHDWHUPRIVXSHUYLVHGUHOHDVHLILWFKRRVHVWRLPSRVHDWHUPRILPSULVRQPHQW

XQGHUWKHXQLTXHIDFWVRIWKLVFDVHLQZKLFKWKHGHIHQGDQWVIDPLO\OLYHVDEURDGDQGKHKDVQR

LQWHQWLRQRIZRUNLQJLQWKH8QLWHG6WDWHVDIWHUKHFRPSOHWHVZKDWHYHUWHUPRILPSULVRQPHQWWKH

&RXUWRUGHUV

,QWKHDOWHUQDWLYHLIWKH&RXUWFKRRVHVWRLPSRVHDWHUPRIVXSHUYLVHGUHOHDVHDIWHUWKH

GHIHQGDQWVWHUPRILPSULVRQPHQWZHDVNWKDWWKH&RXUWVHWWKHFRQGLWLRQVRIWKHVXSHUYLVHG

UHOHDVHVRWKDW3HWHUVRQVHUYHLWLQ6LQJDSRUH+LVZLIHDQGFKLOGUHQOLYHLQ6LQJDSRUH+H

LQWHQGVWRZRUNLQ6LQJDSRUHZKHQHYHUKHLVDOORZHGWRUHWXUQ+HKDVOLPLWHGFRQWDFWVLQWKH

8QLWHG6WDWHV

7KH&RXUWKDVWKHDXWKRULW\LILWFKRRVHVWRVHWDWHUPRIVXSHUYLVHGUHOHDVHWRVHWWKH

FRQGLWLRQVVRWKDW3HWHUVRQFRXOGUHWXUQWR6LQJDSRUHWROLYHZLWKKLVIDPLO\ZKHQKHFRPSOHWHV

ZKDWHYHUWHUPRILPSULVRQPHQWLVLPSRVHG6HFWLRQGSURYLGHVFHUWDLQFRQGLWLRQVWKDW

PXVWEHLQFOXGHGLQDWHUPRIVXSHUYLVHGUHOHDVH1RQHRIWKHPDQGDWRU\FRQGLWLRQVRIDWHUPRI

VXSHUYLVHGUHOHDVHXQGHU86&GUHTXLUHWKHGHIHQGDQWWREHLQWKH8QLWHG6WDWHV

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

SULVRQVHQWHQFHRYHUD\HDU7KLVGLUHFWLYHLVRQO\DSSOLFDEOHLIWKH&RXUWFKRRVHVWRVHQWHQFH3HWHUVRQWRPRUHWKDQD\HDULQSULVRQ0RUHRYHUWKLVGLUHFWLYHOLNHWKHUHVWRIWKHJXLGHOLQHVLVPHUHO\DGYLVRU\6HH8QLWHG6WDWHV6HQWHQFLQJ&RPPLVVLRQ)HGHUDO2IIHQGHUV6HQWHQFHGWR6XSHUYLVHG5HOHDVHQGLVFXVVLQJWKHQDUURZOLVWRIFULPHVQRWUHOHYDQWKHUHWKDWUHTXLUHPDQGDWRU\VXSHUYLVHGUHOHDVH



36/56

:HWKHUHIRUHDVNWKDWWKH&RXUWSHUPLW3HWHUVRQWRVHUYHDQ\WHUPRIVXSHUYLVHGUHOHDVHLQ

6LQJDSRUHDQGWRVHWWKHFRQGLWLRQVRIDQ\WHUPRIVXSHUYLVHGUHOHDVHDFFRUGLQJO\

6HYHUDOFDVHVFRQILUPRXUYLHZWKDWWKH&RXUWKDVDXWKRULW\WRDOORZDGHIHQGDQWWRVHUYH

DWHUPRIVXSHUYLVHGUHOHDVHLQDQRWKHUFRXQWU\,QGHHGWKLV&RXUWKDVRUGHUHGWKDWVXSHUYLVHG

UHOHDVHEHVHUYHGLQDGLIIHUHQWFRXQWU\6HH8QLWHG6WDWHVY'HOJDGR)6XSS

('1V@LQFHGHIHQGDQWZLOOEHGHSRUWHGWKHILYH\HDUSHULRGRI

VXSHUYLVHGUHOHDVHQHHGQRWEHVHUYHGLQWKLVFRXQWU\2WKHUFRXUWVKDYHFRPHWRWKHVDPH

FRQFOXVLRQ8QLWHG6WDWHVY3XJOLHVH)GWK&LUKROGLQJWKDWWKHODZ

SURYLGHVQRGLUHFWLPSHGLPHQWWRDXWKRUL]LQJDSHUVRQRQVXSHUYLVHGUHOHDVHWROHDYHWKH8QLWHG

6WDWHVLIWKHVXSHUYLVLRQWKHMXGJHEHOLHYHVLVQHFHVVDU\FDQEHHQIRUFHGDEURDG

,WLVFOHDUWKDWWKH&RXUWKDVDQGKDVSUHYLRXVO\H[HUFLVHGWKHDXWKRULW\WRVHW

FRQGLWLRQVRIVXSHUYLVHGUHOHDVHWRDOORZDGHIHQGDQWWROLYHDEURDGGXULQJVXSHUYLVHGUHOHDVH

7KLVFDVHSUHVHQWVWKHDSSURSULDWHIDFWRUVIRUWKH&RXUWWRFKRRVHWRH[HUFLVHLWVGLVFUHWLRQLQWKLV

ZD\$FFRUGLQJO\ZHDVNWKH&RXUWWRHLWKHUGHFOLQHWRRUGHUDWHUPRIVXSHUYLVHGUHOHDVHRUWR

VHWWKHFRQGLWLRQVRIWKHVXSHUYLVHGUHOHDVHWHUPVXFKWKDW3HWHUVRQFDQVHUYHLWLQ6LQJDSRUHZLWK

KLVIDPLO\

G 7KH6HQWHQFLQJ5DQJHLQ*XLGHOLQHV7KH&RXUWLVGLUHFWHGE\6HFWLRQDWRFRQVLGHUWKHVHQWHQFLQJUDQJHXQGHUWKH

6HQWHQFLQJ*XLGHOLQHV7KH*RYHUQPHQWKDVFDOFXODWHG3HWHUVRQV6HQWHQFLQJ*XLGHOLQHVUDQJH

WREHWRPRQWKVFDSSHGDWPRQWKVEDVHGRQDWRWDORIIHQVHOHYHORI(LJKWHHQSRLQWV

RIWKHRIIHQVHOHYHODUHGULYHQE\WKHORVVFDOFXODWLRQ

7KHDPRXQWRIWKHORVVGULYHVWKH

JXLGHOLQHVUDQJH

:HDJUHHZLWKWKH*RYHUQPHQWWKDWWKHORVVLVSURSHUO\FDOFXODWHGDVEHWZHHQPLOOLRQDQGPLOOLRQXQGHUWKHGLUHFWLYHVLQWKHVHQWHQFLQJJXLGHOLQHV



37/56

7KHDJUHHGXSRQORVVDPRXQWKHUHLVEDVHGRQWKHDPRXQWRIPRQH\0RUJDQ6WDQOH\

ZRXOGKDYHPDGHRQWKHSRUWLRQRIWKH&DYLW\LQYHVWPHQWWKDWLWVROGWR$VLDVSKHUHKDGLW

UHWDLQHGWKDWSRUWLRQRIWKH&DYLW\LQYHVWPHQW%XW0RUJDQ6WDQOH\ZDVZLOOLQJWRVHOODSRUWLRQ

RIWKH&DYLW\LQYHVWPHQW,WMXVWZDVZLOOLQJWRVHOOLWWRDGLIIHUHQWSDUW\WKDQLWVROGWR%\

VHOOLQJWRWKHZURQJSDUW\0RUJDQ6WDQOH\ZDVQRWUREEHGRIWKHDVVHWLQWKHWUDGLWLRQDOZD\

7KHORVVDPRXQWLVEDVHGRQDPDUNHWFDOFXODWLRQGRQHLQ7KHDPRXQWRIORVV

GHSHQGVRQWKHRYHUDOOPDUNHWIRUUHDOHVWDWHLQ&KLQDDQGWKXVUHIOHFWVDGHJUHHRIDUELWUDULQHVV

6HH6PLUORFNY8QLWHG6WDWHV1R&9:/6'1W@KHUHPD\EH

FDVHVLQZKLFKWKHRIIHQVHOHYHOGHWHUPLQHGXQGHUWKLVJXLGHOLQHVXEVWDQWLDOO\RYHUVWDWHVWKH

VHULRXVQHVVRIWKHRIIHQVH7KLVQRWHKDVXQGHUJRQHUHYLVLRQVRYHUWKH\HDUVDQGSUHYLRXV

YHUVLRQVLQGLFDWHGWKDW>Z@KHUHWKHORVVGHWHUPLQHGDERYHVLJQLILFDQWO\XQGHUVWDWHVRURYHUVWDWHV

WKHVHULRXVQHVVRIWKHGHIHQGDQWVFRQGXFWDQXSZDUGRUGRZQZDUGGHSDUWXUHPD\EH

ZDUUDQWHG866*)FPWQE7KLVFKDQJHZDVRQHRIVW\OHUDWKHUWKDQ

VXEVWDQFH8QLWHG6WDWHVY5RHQ)6XSSG(':LV:HDVNWKDWWKH



38/56

&RXUWFRQVLGHUWKHIDFWWKDW3HWHUVRQVJXLGHOLQHUDQJHLVSULPDULO\GULYHQE\DORVVILJXUHWKDWLV

VRPHZKDWDUELWUDU\ZKHQVHWWLQJ3HWHUVRQVVHQWHQFH

H 7KH1HHGWR$YRLG8QZDUUDQWHG'LVSDULWLHV6HFWLRQDLQVWUXFWVWKH&RXUWWRFRQVLGHUWKHQHHGWRDYRLGXQZDUUDQWHG

VHQWHQFHGLVSDULWLHVDPRQJGHIHQGDQWVZLWKVLPLODUUHFRUGVZKRKDYHEHHQIRXQGJXLOW\RI

VLPLODUFRQGXFWGXULQJVHQWHQFLQJ,QDQDUWLFOHSXEOLVKHGLQ%XVLQHVV&ULPHV%XOOHWLQ*DU\

6WHLQREVHUYHGWKDWWKHUHLVDJURZLQJULIWEHWZHHQWKHYLHZVRIWKH'2-DQGWKHFRXUWVDVWRWKH

DSSURSULDWHVHQWHQFHVIRULQGLYLGXDOYLRODWRUVLQ)&3$FDVHVDQGWKDWUHFHQWVHQWHQFLQJ

GHFLVLRQVKDYHQRWVXSSRUWHGSURVHFXWRUVHIIRUWVWRREWDLQOHQJWK\SULVRQVHQWHQFHVIRU)&3$

YLRODWRUV*DU\6WHLQ6HQWHQFLQJRI,QGLYLGXDOVLQ)&3$&DVHV%XVLQHVV&ULPHV%XOOHWLQ9RO

1R-DQ6WHLQOLVWHGDVHULHVRIUHFHQWFDVHVDQGIRXQGWKDWFRXUWVKDGLPSRVHG

VHQWHQFHVDPRXQWLQJWRURXJKO\RUOHVVRIWKHJRYHUQPHQWVUHFRPPHQGHGVHQWHQFH,G

6WHLQIRXQGWKDWLQ)&3$FDVHVD*XLGHOLQHVVHQWHQFHLVWKHH[FHSWLRQUDWKHUWKDQWKHQRUP

DQGWKDWSRVW%RRNHURIGHIHQGDQWVZKRKDYHEHHQVHQWHQFHGIRU)&3$YLRODWLRQVKDYH

UHFHLYHGEHORZJXLGHOLQHVVHQWHQFHV,G:HDVNWKH&RXUWWRVHQWHQFH3HWHUVRQWRDEHORZ

JXLGHOLQHVVHQWHQFHWRDYRLGFUHDWLQJDQXQZDUUDQWHGGLVSDULW\ZLWKRWKHUGHIHQGDQWVVHQWHQFHG

IRU)&3$YLRODWLRQV

I 5HVWLWXWLRQ)LQDOO\6HFWLRQDGLUHFWVWKH&RXUWWRFRQVLGHUWKHQHHGWRSURYLGHUHVWLWXWLRQ

WRDQ\YLFWLPVRIWKHRIIHQVH,QWKLVFDVHWKHRQO\SRVVLEOHYLFWLP0RUJDQ6WDQOH\KDV

ZDLYHGUHVWLWXWLRQ8QGHUWKH0DQGDWRU\9LFWLP5HVWLWXWLRQ$FWRI095$WKH

SXUSRVHRIUHVWLWXWLRQKDVVKLIWHGDZD\IURPSXQLVKPHQWWRDPHDQVRIUHSDLULQJWKHYLFWLPV

ORVVHV6HHHJ8QLWHG6WDWHVY$JXLUUH*RQ]DOH])GVW&LU7KH

095$VFKDQJHVUHIOHFWDIXQGDPHQWDOVKLIWLQWKHSXUSRVHRIUHVWLWXWLRQDZD\IURPLWVVWULFWO\



39/56

SHQDORULJLQVWKHQHZUHVWLWXWLRQVFKHPHLVQRWPHUHO\DPHDQVRISXQLVKPHQWDQGUHKDELOLWDWLRQ

EXWDQDWWHPSWWRSURYLGHWKRVHZKRVXIIHUWKHFRQVHTXHQFHVRIFULPHZLWKVRPHPHDQVRI

UHFRXSLQJWKHSHUVRQDODQGILQDQFLDOORVVHVLQWHUQDOTXRWDWLRQPDUNVDQGDOWHUDWLRQVRPLWWHG

6LQFH0RUJDQ6WDQOH\KDVH[SUHVVHGWKDWLWLVXQLQWHUHVWHGLQUHVWLWXWLRQWKHUHLVQRQHHGIRU

UHVWLWXWLRQLQWKLVFDVH6HHHJ8QLWHG6WDWHVY3ODFHQVLR1R&5:/

DW6')OD-XQHUHSRUWDQGUHFRPPHQGDWLRQDGRSWHG1R&5

:/6')OD0D\%HFDXVHUHVWLWXWLRQLVIRUYLFWLPVDQGQR

YLFWLPUHVSRQGHGWRWKHJRYHUQPHQWVRXWUHDFKDWWHPSWV,UHVSHFWIXOO\UHFRPPHQGWKDWWKH

'LVWULFW&RXUWRUGHU125(67,787,217RWKHH[WHQWWKDWUHVWLWXWLRQFDQDFWDVDQ

DGGLWLRQDOIRUPRISXQLVKPHQWWKHUHLVQRQHHGIRUDGGLWLRQDOPRQHWDU\SXQLVKPHQWLQWKLVFDVH

7KH6(&KDVVHWWOHGZLWK3HWHUVRQDQGKDVOHIWKLPZLWKOLWWOHWROLYHRQ7KDWDPRXQWLVEHLQJ

XVHGWRVXSSRUWKLVZLIHDQGFKLOGUHQ3HWHUVRQKDVQRWEHHQOHIWZLWKDQ\SURFHHGVRIKLVFULPH

7KH&RXUWKDVWKHDXWKRULW\WRLPSRVHDFULPLQDOILQH8QGHUWKHDGYLVRU\JXLGHOLQHV

>W@KHFRXUWVKDOOLPSRVHDILQHLQDOOFDVHVH[FHSWZKHUHWKHGHIHQGDQWHVWDEOLVKHVWKDWKHLV

XQDEOHWRSD\DQGLVQRWOLNHO\WREHFRPHDEOHWRSD\DQ\ILQH866*(D,QVHWWLQJ

WKHDPRXQWRIWKHFULPLQDOILQHWKH6HQWHQFLQJ*XLGHOLQHVDOVRGLUHFWWKH&RXUWWRFRQVLGHUWKH

EXUGHQWKDWWKHILQHSODFHVRQWKHGHIHQGDQWDQGKLVGHSHQGHQWVUHODWLYHWRDOWHUQDWLYH

SXQLVKPHQWVDQGDQ\FROODWHUDOFRQVHTXHQFHVRIFRQYLFWLRQLQFOXGLQJFLYLOREOLJDWLRQVDULVLQJ

IURPWKHGHIHQGDQWVFRQGXFW866*(G+HUHEHFDXVHRI3HWHUVRQV

VHWWOHPHQWZLWKWKH6(&DFROODWHUDOFRQVHTXHQFHRIKLVFRQGXFWWKHEXUGHQRIDILQHRQKLVZLIH

DQGFKLOGUHQLVJUHDW3HWHUVRQVIDPLO\QHHGVWKHPRQH\OHIWRYHUDIWHUKLVVHWWOHPHQWZLWKWKH

6(&WRSD\UHJXODUOLYLQJH[SHQVHV$FFRUGLQJO\ZHDVNWKDWWKH&RXUWZDLYHDQ\ILQHLQWKLV

7KH*RYHUQPHQWKDVZDLYHGIRUIHLWXUHEDVHGRQ3HWHUVRQVVHWWOHPHQWZLWKWKH6(&



40/56



41/56

(;+,%,7$



42/56

5('$&7('Case 1:12-cr-00224-JBW Document 17 Filed 08/10/12 Page 42 of 56 PageID #: 117


43/56

5('$&7('



44/56

5('$&7('



45/56



46/56



47/56

(;+,%,7%



48/56



49/56



50/56

(;+,%,7&



51/56

7KH+RQRUDEOH-DFN%:HLQVWHLQ8QLWHG6WDWHV'LVWULFW-XGJH

8QLWHG6WDWHV'LVWULFW&RXUW

(DVWHUQ'LVWULFWRI1HZ


52/56

SOD\ELQJRWRJHWKHUZLWKKHUDQGWKHUHVWRIWKHIRONVDWWKHKRPH7KHSHRSOHDWWKHKRPHZHUHDOZD\V

VRHQYLRXVRI'RURWK\:KHQRXUGDXJKWHU ZDVERUQLQLQ+RQJ.RQJWKHILUVWSHUVRQ

*DUWKFDOOHGWRLQIRUPZDV'RURWK\6KHZDVDOUHDG\RQKHUGHDWKEHGDWWKDWSRLQWDQGVDGO\SDVVHGDZD\DFRXSOHRIGD\VODWHU'RURWK\VGHDWKZDVDKXJHEORZWR*DUWKDQGZLWKWKHDUULYDORI DW

WKHVDPHWLPHKHZDVRQDUROOHUFRDVWHUULGHHPRWLRQDOO\LPDJLQHEHLQJDQHZIDWKHUDQGORVLQJKLVEHORYHG'RURWK\DWWKHVDPHWLPH*DUWKUXVKHGEDFNWR&DOLIRUQLDIRU'RURWK\VIXQHUDOWKHGD\DQG,JRWGLVFKDUJHGIURPKRVSLWDO7KDWZDVKDUGIRUPHDWWKHWLPHEXW,XQGHUVWDQGWKDWKHQHHGHGWR

EHWKHUHIRUWKHIXQHUDO

*DUWKKDVDOZD\VEHHQDYHU\JHQHURXVWKRXJKWIXODQGIDPLO\RULHQWHGPDQ'XULQJRXUWLPHLQ

&KLFDJRDQG+RQJ.RQJKHZRXOGDVNPHZKHQZDVWKHODVWWLPH,VSRNHWRP\IDPLO\DQGZRXOG

UHPLQGPHWRFDOOWKHP+HSDLGIRUP\IDPLO\WRFRPHYLVLWXVLQ+RQJ.RQJDQG6KDQJKDLDIHZWLPHVDQGKHGLGWKHVDPHIRUKLVIDPLO\



53/56

,QWKHODVW\HDUDQGDKDOI*DUWKKDVPDGHVLJQLILFDQW

SURJUHVV:HKDYHFRPHWRNQRZ*RGDQGDWWHQGFKXUFKUHJXODUO\DQGWKDWKDVKHOSHGXVFRSH*DUWKKDVEHFRPHLQGLVSHQVDEOHDURXQGWKHKRXVHKHOSLQJZLWKWKHODXQGU\DQGFRRNLQJIRUWKHIDPLO\+H

KDVPDGHXSIRUORVWWLPHERQGLQJUHDOO\ZHOOZLWKRXUVRQZKROLNHKLVVLVWHUKDVEHFRPHYHU\

DWWDFKHGWRKLVGDG+HZDQWVWREHZLWKKLVGDGDOOWKHWLPHDQGZLOOVRPHWLPHVHYHQSURWHVWZKHQ*DUWKVWHSVDZD\IRUFLJDUHWWHEUHDNV

,IWKHUHLVDQ\EOHVVLQJWREHFRXQWHGRXWRIWKLVRUGHDOLWLVWKHTXDOLW\WLPHWKDWZHJHWWRVSHQG

WRJHWKHUDVDIDPLO\%HFDXVHRI*DUWKVSUHVHQFHRXUWZRFKLOGUHQKDYHEHQHILWHGIURPKDYLQJDIDWKHU

ILJXUHDWKRPH2XUHLJKW\HDUROGGDXJKWHUZKROLNHKHUIDWKHUHQMR\VKLVWRU\LVDEOHWRUHFLWHWKHQDPHVRI5RPDQHPSHURUVLQFKURQRORJLFDORUGHUWKDQNVWRKHUGDGZKRVSHQGVWLPHHYHU\QLJKWZLWKKHUWDONLQJDERXW5RPDQRU(J\SWLDQKLVWRU\EHIRUHVKHJRHVWREHG2XUVRQLVDOVRDEOHWRUHDGVKRUW

VWRU\ERRNVRQKLVRZQGRVLPSOHDGGLWLRQDQGVSHOOWKHQDPHVRIPDQ\RI6LQJDSRUHVVXEZD\

VWDWLRQVQRWEDGIRUVRPHRQHZKRLVWKUHHDQGDKDOI$JDLQWKHFUHGLWJRHVWR*DUWKZKRVSHQGVTXDOLW\WLPHHQJDJLQJKLPDQGLQWHUDFWLQJZLWKKLPDQGWHDFKLQJKLPSKRQLFVVSHOOLQJDQGQXPEHUVLQ

DIXQZD\*DUWKDOVRKDVVWDUWHGZRUNLQJRXWUHJXODUO\DWWKHJ\PDQGKDVORVWRYHUWKLUW\SRXQGV+H

ZRUNVRXWDWWKHJ\PDQGGRHV%LEOHVWXG\HYHU\ZHHNGD\WRJHWKHUZLWKDIULHQGIURPFKXUFK7KLVWUXO\KDVEHQHILWHG*DUWK

$VDUHVXOWRIWKLVLQYHVWLJDWLRQLQWR*DUWKVPLVFRQGXFWZHKDYHVXIIHUHGILQDQFLDOO\



54/56



55/56

(;+,%,7'



56/56


Garth Peterson Sentencing Memo

Documents

Transcript of Garth Peterson Sentencing Memo