TL;DR
How many people are guilty?
3
Who is guilty?
Donnie, Ouida and Terence.
Who is innocent?
Armandina, Connie, Ligia, Margit, Roy and Shizue.
1. Preliminaries
Since each person is either innocent or guilty and there are 9 people, so there is only $2^9 = 512$ possible assignments of innocent-or-guilty. Those are distributed in that way:
- 1 possibility of everybody being innocent.
- 9 possibilities of 1 guilty person.
- 36 possibilities of 2 guilty people.
- 84 possibilities of 3 guilty people.
- 126 possibilities of 4 guilty people.
- 126 possibilities of 5 guilty people.
- 84 possibilities of 6 guilty people.
- 36 possibilities of 7 guilty people.
- 9 possibilities of 8 guilty person.
- 1 possibility of everybody being guilty.
This is not hard to brute-force with a computer. However, the puzzle states no-computers. So, let's proceed only with pencil-and-paper logic.
2. Formalizing
Let's formalize the rules. True variables denotes innocent people, false variables denotes guilty people.
But how?
Let's observe that:
Nobody says that himself/herself is guilty, even if being an innocent telling a lie. So, we can neglect the main diagonal of the matrix to make things simpler. The main diagonal is all filled with 'I's.
Also:
If $X$ is guilty and tells that $Y_1$, $Y_2$ and $Y_3$ are guilty, then $Y_1$, $Y_2$ and $Y_3$ are all surely innocent. Then, we have a rule $\overline{X} \rightarrow Y_1 Y_2 Y_3$ (i.e. if $X$ is guilty, $Y_1$, $Y_2$ and $Y_3$ are innocent). Further, since sentences in the form $P \rightarrow Q$ can be expressed as $\overline{P} \lor Q$, so, $\overline{X} \rightarrow Y_1 Y_2 Y_3$ turns out into $X \lor Y_1 Y_2 Y_3$.
On the other hand...
If $X$ is innocent and tells something about $Y_1$, $Y_2$ and $Y_3$, we have that only one of those can be a lie (or none of them). Hence, we build a rule $X \rightarrow Y_1 Y_2 Y_3 \lor \overline{Y_1} Y_2 Y_3 \lor Y_1 \overline{Y_2} Y_3 \lor Y_1 Y_2 \overline{Y_3}$. This can be simplified to $\overline{X} \lor Y_1 Y_2 Y_3 \lor \overline{Y_1} Y_2 Y_3 \lor Y_1 \overline{Y_2} Y_3 \lor Y_1 Y_2 \overline{Y_3}$.
And of course:
If $X$ is guilty and states that $Y$ is innocent, we can't conclude anything from that. So this makes no rule at all.
Converting the board to rules:
$1.\;\overline{A} \lor M \lor \overline{M}$
$2.\;A \lor True$
$3.\;\overline{C} \lor LR \lor \overline{L}R \lor L\overline{R}$
$4.\;C \lor True$
$5.\;\overline{D} \lor \overline{CR}ST \lor C\overline{R}ST \lor \overline{C}RST \lor \overline{CRS}T \lor \overline{CR}S\overline{T}$
$6.\;D \lor CR$
$7.\;\overline{L} \lor \overline{D}MR \lor DMR \lor \overline{DM}R \lor \overline{D}M\overline{R}$
$8.\;L \lor D$
$9.\;\overline{M} \lor S \lor \overline{S}$
$10.\;M \lor True$
$11.\;\overline{O} \lor D\overline{L}R\overline{S} \lor \overline{DL}R\overline{S} \lor DLR\overline{S} \lor D\overline{LRS} \lor D\overline{L}RS$
$12.\;O \lor LS$
$13.\;\overline{R} \lor CMS \lor \overline{C}MS \lor C\overline{M}S \lor CM\overline{S}$
$14.\;R \lor True$
$15.\;\overline{S} \lor CM\overline{O} \lor \overline{C}M\overline{O} \lor C\overline{MO} \lor CMO$
$16.\;S \lor O$
$17.\;\overline{T} \lor \overline{AC}D\overline{M}OR \lor A\overline{C}D\overline{M}OR \lor \overline{A}CD\overline{M}OR \lor \overline{ACDM}OR \lor \overline{AC}DMOR \lor \overline{AC}D\overline{MO}R \lor \overline{AC}D\overline{M}O\overline{R}$
$18.\;T \lor ACM$
3. Simplifying the rules
Which rules are useless?
1, 2, 4, 9, 10 and 14. They don't tell us anything at all because they are tautologic. I.E.: They reduce to $True$ without giving us any value to any variable; Every possible combination of values for their variables produces $True$ regardless of anything.
How can we start to combine rules?
Let's start by the rules of $X \lor Y$ and $\overline{X} \lor Z$. We can combine them into $Y \lor Z$.
So:
$19.\;\overline{CR}ST \lor C\overline{R}ST \lor \overline{C}RST \lor \overline{CRS}T \lor \overline{CR}S\overline{T} \lor CR$ (from 5 or 6)
$20.\;\overline{D}MR \lor DMR \lor \overline{DM}R \lor \overline{D}M\overline{R} \lor D$ (from 7 or 8)
$21.\;D\overline{L}R\overline{S} \lor \overline{DL}R\overline{S} \lor DLR\overline{S} \lor D\overline{LRS} \lor D\overline{L}RS \lor LS$ (from 11 or 12)
$22.\;CM\overline{O} \lor \overline{C}M\overline{O} \lor C\overline{MO} \lor CMO \lor O$ (from 15 or 16)
$23.\;\overline{AC}D\overline{M}OR \lor A\overline{C}D\overline{M}OR \lor \overline{A}CD\overline{M}OR \lor \overline{ACDM}OR \lor \overline{AC}DMOR \lor \overline{AC}D\overline{MO}R \lor \overline{AC}D\overline{M}O\overline{R} \lor ACM$ (from 17 or 18)
Simplifying those by using...
K-maps
Results in:
$24.\;CR \lor ST \lor \overline{CR}T$ (simplification of 19)
$25.\;D \lor M \lor R$ (simplification of 20)
$26.\;D\overline{L} \lor \overline{D}S \lor \overline{L}R\overline{S} \lor DRS$ (simplification of 21)
$27.\;C \lor M \lor O$ (simplification from 22)
$28.\;ACM \lor \overline{C}D\overline{M}OR \lor \overline{A}D\overline{M}OR \lor \overline{ACM}OR \lor \overline{AC}DOR \lor \overline{AC}D\overline{MO}R \lor \overline{AC}D\overline{M}O\overline{R}$ (simplification from 23. Ugh, 3D K-map needed because there are 6 variables)
The resulting board is:
$3.\;\overline{C} \lor LR \lor \overline{L}R \lor L\overline{R}$
$5.\;\overline{D} \lor \overline{CR}ST \lor C\overline{R}ST \lor \overline{C}RST \lor \overline{CRS}T \lor \overline{CR}S\overline{T}$
$6.\;D \lor CR$
$7.\;\overline{L} \lor \overline{D}MR \lor DMR \lor \overline{DM}R \lor \overline{D}M\overline{R}$
$8.\;L \lor D$
$11.\;\overline{O} \lor D\overline{L}R\overline{S} \lor \overline{DL}R\overline{S} \lor DLR\overline{S} \lor D\overline{LRS} \lor D\overline{L}RS$
$12.\;O \lor LS$
$13.\;\overline{R} \lor CMS \lor \overline{C}MS \lor C\overline{M}S \lor CM\overline{S}$
$15.\;\overline{S} \lor CM\overline{O} \lor \overline{C}M\overline{O} \lor C\overline{MO} \lor CMO$
$16.\;S \lor O$
$17.\;\overline{T} \lor \overline{AC}D\overline{M}OR \lor A\overline{C}D\overline{M}OR \lor \overline{A}CD\overline{M}OR \lor \overline{ACDM}OR \lor \overline{AC}DMOR \lor \overline{AC}D\overline{MO}R \lor \overline{AC}D\overline{M}O\overline{R}$
$18.\;T \lor ACM$
$24.\;CR \lor ST \lor \overline{CR}T$
$25.\;D \lor M \lor R$
$26.\;D\overline{L} \lor \overline{D}S \lor \overline{L}R\overline{S} \lor DRS$
$27.\;C \lor M \lor O$
$28.\;ACM \lor \overline{C}D\overline{M}OR \lor \overline{A}D\overline{M}OR \lor \overline{ACM}OR \lor \overline{AC}DOR \lor \overline{AC}D\overline{MO}R \lor \overline{AC}D\overline{M}O\overline{R}$
Improving from the previous board is hard because so far we ignored something:
The minimum number of guilty people is the correct.
So let's try with...
4. The trivial case
Zero!
This leads to:
All the variables being truth. We can assign false to any clause with an $\overline{X}$.
But...
$17.\;\overline{T} \lor \overline{AC}D\overline{M}OR \lor A\overline{C}D\overline{M}OR \lor \overline{A}CD\overline{M}OR \lor \overline{ACDM}OR \lor \overline{AC}DMOR \lor \overline{AC}D\overline{MO}R \lor \overline{AC}D\overline{M}O\overline{R}$
I.e:
No clause of that is free from a $\overline{X}$. This would be false if nobody is guilty. So zero isn't our number. The reason is simple: Terence accused three people, so it is impossible that he is innocent and didn't told two or more lies.
This, was the most probable outcome anyway, so let's move on...
5. Not so trivial
So let's try exactly one guilty person.
Which means:
Assign false to any clause with some $\overline{XY}$.
Then if we:
Check out to what 17 is reduced.
We get that:
$29.\;\overline{T}$ (reducting from 17 assuming only one variable might be false).
Whoa! This seems to solve the case. But...
This is incompatible with 5, which would then reduce to false.
What happened is that:
Terence is accusing three people, which is incompatible with he being innocent and having only one guilty person. However, Donnie is also accusing two other different people and at least one of them should be guilty. Either way, there would be too much people lieing.
That is unfortunate, so move on.
6. Getting hard
We try as the number of guilty people:
2
So...
Discard everything with a $\overline{XYZ}$.
The resulting board is them simplified to:
$3.\;\overline{C} \lor LR \lor \overline{L}R \lor L\overline{R}$
$5b.\;\overline{D} \lor \overline{CR}ST \lor C\overline{R}ST \lor \overline{C}RST$
$6.\;D \lor CR$
$7.\;\overline{L} \lor \overline{D}MR \lor DMR \lor \overline{DM}R \lor \overline{D}M\overline{R}$
$8.\;L \lor D$
$11b.\;\overline{O} \lor D\overline{L}R\overline{S} \lor DLR\overline{S} \lor D\overline{L}RS$
$12.\;O \lor LS$
$13.\;\overline{R} \lor CMS \lor \overline{C}MS \lor C\overline{M}S \lor CM\overline{S}$
$15.\;\overline{S} \lor CM\overline{O} \lor \overline{C}M\overline{O} \lor C\overline{MO} \lor CMO$
$16.\;S \lor O$
$17b.\;\overline{T} \lor A\overline{C}D\overline{M}OR \lor \overline{A}CD\overline{M}OR \lor \overline{AC}DMOR$
$18.\;T \lor ACM$
$24.\;CR \lor ST \lor \overline{CR}T$
$25.\;D \lor M \lor R$
$26.\;D\overline{L} \lor \overline{D}S \lor \overline{L}R\overline{S} \lor DRS$
$27.\;C \lor M \lor O$
$28b.\;ACM \lor \overline{C}D\overline{M}OR \lor \overline{A}D\overline{M}OR \lor \overline{AC}DOR$
I.e, only those rules changed:
11, 17 and 28.
We have 36 possibilities for that (as stated in the preliminaries), how to sort them out?
Let's suppose that T is guilty and eliminate all the clauses with two guilty people that are not T or with T being innocent.
Why?
He already busted the previous guess. Also, he is the person who most both accuses and absolves other people, so he is a good heuristic.
Then:
$5c.\;\overline{D}$ (from 5b)
This give us our other guilty person! Is that fine?
$11b.\;\overline{O} \lor D\overline{L}R\overline{S} \lor DLR\overline{S} \lor D\overline{L}RS$
Oops. This tell us that:
At least one third guilty person would be needed among O, L and S.
Hence:
Having two guilty people with T being one of them leads to a contradiction. Hence, if there are indeed exactly two guilty people, T is not one of them.
Applying that to our board:
By replacing every T with true.
We note that:
5 and 17b were simplified. 18 and 24 became tautologic. The board now have only 8 variables instead of 9.
Then:
$3.\;\overline{C} \lor LR \lor \overline{L}R \lor L\overline{R}$
$5c.\;\overline{D} \lor \overline{CR}S \lor C\overline{R}S \lor \overline{C}RS$
$6.\;D \lor CR$
$7.\;\overline{L} \lor \overline{D}MR \lor DMR \lor \overline{DM}R \lor \overline{D}M\overline{R}$
$8.\;L \lor D$
$11b.\;\overline{O} \lor D\overline{L}R\overline{S} \lor DLR\overline{S} \lor D\overline{L}RS$
$12.\;O \lor LS$
$13.\;\overline{R} \lor CMS \lor \overline{C}MS \lor C\overline{M}S \lor CM\overline{S}$
$15.\;\overline{S} \lor CM\overline{O} \lor \overline{C}M\overline{O} \lor C\overline{MO} \lor CMO$
$16.\;S \lor O$
$17c.\;A\overline{C}D\overline{M}OR \lor \overline{A}CD\overline{M}OR \lor \overline{AC}DMOR$
$25.\;D \lor M \lor R$
$26.\;D\overline{L} \lor \overline{D}S \lor \overline{L}R\overline{S} \lor DRS$
$27.\;C \lor M \lor O$
$28b.\;ACM \lor \overline{C}D\overline{M}OR \lor \overline{A}D\overline{M}OR \lor \overline{AC}DOR$
We can simplify:
$17c.\;DOR \land (A\overline{CM} \lor \overline{A}C\overline{M} \lor \overline{AC}M)$
Hence:
If we are in the right path, D, O and R are all innocent. The board now have only 5 variables.
If we are in the right track, we are pretty close solving this:
$5d.\overline{C}S$
$7d.\;\overline{L} \lor M$
$11b.\;\overline{LS} \lor L\overline{S} \lor \overline{L}S$
$13d.\;CMS \lor \overline{C}MS \lor C\overline{M}S \lor CM\overline{S}$
$15d.\;\overline{S} \lor CM$
$17d.\;A\overline{CM} \lor \overline{A}C\overline{M} \lor \overline{AC}M$
$26d.\;\overline{L} \lor \overline{LS} \lor S$
$28d.\;ACM \lor \overline{CM} \lor \overline{AM} \lor \overline{AC}$
Whoa, this says that:
5d says that C is guilty and S is yet another innocent!
But:
15d says that either S is guilty or C is innocent (together with M). Darn, this is a contradiction.
Conclusion:
2 is not the number of guilty people. Let's try 3.
7. Even harder
Let's grab the board from the end of part 3 again:
$3.\;\overline{C} \lor LR \lor \overline{L}R \lor L\overline{R}$
$5.\;\overline{D} \lor \overline{CR}ST \lor C\overline{R}ST \lor \overline{C}RST \lor \overline{CRS}T \lor \overline{CR}S\overline{T}$
$6.\;D \lor CR$
$7.\;\overline{L} \lor \overline{D}MR \lor DMR \lor \overline{DM}R \lor \overline{D}M\overline{R}$
$8.\;L \lor D$
$11.\;\overline{O} \lor D\overline{L}R\overline{S} \lor \overline{DL}R\overline{S} \lor DLR\overline{S} \lor D\overline{LRS} \lor D\overline{L}RS$
$12.\;O \lor LS$
$13.\;\overline{R} \lor CMS \lor \overline{C}MS \lor C\overline{M}S \lor CM\overline{S}$
$15.\;\overline{S} \lor CM\overline{O} \lor \overline{C}M\overline{O} \lor C\overline{MO} \lor CMO$
$16.\;S \lor O$
$17.\;\overline{T} \lor \overline{AC}D\overline{M}OR \lor A\overline{C}D\overline{M}OR \lor \overline{A}CD\overline{M}OR \lor \overline{ACDM}OR \lor \overline{AC}DMOR \lor \overline{AC}D\overline{MO}R \lor \overline{AC}D\overline{M}O\overline{R}$
$18.\;T \lor ACM$
$24.\;CR \lor ST \lor \overline{CR}T$
$25.\;D \lor M \lor R$
$26.\;D\overline{L} \lor \overline{D}S \lor \overline{L}R\overline{S} \lor DRS$
$27.\;C \lor M \lor O$
$28.\;ACM \lor \overline{C}D\overline{M}OR \lor \overline{A}D\overline{M}OR \lor \overline{ACM}OR \lor \overline{AC}DOR \lor \overline{AC}D\overline{MO}R \lor \overline{AC}D\overline{M}O\overline{R}$
There are a few places which have 4 guilty people.
Let's cut those.
So:
$3.\;\overline{C} \lor LR \lor \overline{L}R \lor L\overline{R}$
$5.\;\overline{D} \lor \overline{CR}ST \lor C\overline{R}ST \lor \overline{C}RST \lor \overline{CRS}T \lor \overline{CR}S\overline{T}$
$6.\;D \lor CR$
$7.\;\overline{L} \lor \overline{D}MR \lor DMR \lor \overline{DM}R \lor \overline{D}M\overline{R}$
$8.\;L \lor D$
$11.\;\overline{O} \lor D\overline{L}R\overline{S} \lor \overline{DL}R\overline{S} \lor DLR\overline{S} \lor D\overline{LRS} \lor D\overline{L}RS$
$12.\;O \lor LS$
$13.\;\overline{R} \lor CMS \lor \overline{C}MS \lor C\overline{M}S \lor CM\overline{S}$
$15.\;\overline{S} \lor CM\overline{O} \lor \overline{C}M\overline{O} \lor C\overline{MO} \lor CMO$
$16.\;S \lor O$
$17e.\;\overline{T} \lor \overline{AC}D\overline{M}OR \lor A\overline{C}D\overline{M}OR \lor \overline{A}CD\overline{M}OR \lor \overline{AC}DMOR$
$18.\;T \lor ACM$
$24.\;CR \lor ST \lor \overline{CR}T$
$25.\;D \lor M \lor R$
$26.\;D\overline{L} \lor \overline{D}S \lor \overline{L}R\overline{S} \lor DRS$
$27.\;C \lor M \lor O$
$28.\;ACM \lor \overline{C}D\overline{M}OR \lor \overline{A}D\overline{M}OR \lor \overline{ACM}OR \lor \overline{AC}DOR$
We have 84 possibilities. So, let's presume that:
T is innocent.
For the same reason as mentioned above.
$3.\;\overline{C} \lor LR \lor \overline{L}R \lor L\overline{R}$
$5f.\;\overline{D} \lor \overline{CR}S \lor C\overline{R}S \lor \overline{C}RS \lor \overline{CRS}$
$6.\;D \lor CR$
$7.\;\overline{L} \lor \overline{D}MR \lor DMR \lor \overline{DM}R \lor \overline{D}M\overline{R}$
$8.\;L \lor D$
$11.\;\overline{O} \lor D\overline{L}R\overline{S} \lor \overline{DL}R\overline{S} \lor DLR\overline{S} \lor D\overline{LRS} \lor D\overline{L}RS$
$12.\;O \lor LS$
$13.\;\overline{R} \lor CMS \lor \overline{C}MS \lor C\overline{M}S \lor CM\overline{S}$
$15.\;\overline{S} \lor CM\overline{O} \lor \overline{C}M\overline{O} \lor C\overline{MO} \lor CMO$
$16.\;S \lor O$
$17f.\;\overline{AC}D\overline{M}OR \lor A\overline{C}D\overline{M}OR \lor \overline{A}CD\overline{M}OR \lor \overline{AC}DMOR$
$25.\;D \lor M \lor R$
$26.\;D\overline{L} \lor \overline{D}S \lor \overline{L}R\overline{S} \lor DRS$
$27.\;C \lor M \lor O$
$28.\;ACM \lor \overline{C}D\overline{M}OR \lor \overline{A}D\overline{M}OR \lor \overline{ACM}OR \lor \overline{AC}DOR$
We can:
Simplify 17f to:
$17f.\;DOR \land (\overline{ACM} \lor A\overline{CM} \lor \overline{A}C\overline{M} \lor \overline{AC}M)$
So:
D, O and R would also be innocent.
Hence:
$5g.\;\overline{C}S$
$7g.\;\overline{L} \lor M$
$8g.\;L$
$11g.\;\overline{LS} \lor L\overline{S}$
$12g.\;LS$
$13g.\;CMS \lor \overline{C}MS \lor C\overline{M}S \lor CM\overline{S}$
$15g.\;\overline{S} \lor CM$
$17g.\;\overline{ACM} \lor A\overline{CM} \lor \overline{A}C\overline{M} \lor \overline{AC}M$
$26g.\;\overline{L} \lor \overline{LS} \lor S$
$28g.\;ACM \lor \overline{CM} \lor \overline{AM} \lor \overline{AC}$
It states that:
12g says that L and S are innocent. But 11g says that L must be guilty. Contradiction!
So:
If we have 3 guilty people, T must be one of them.
Backtracking that:
$3.\;\overline{C} \lor LR \lor \overline{L}R \lor L\overline{R}$
$5h.\;\overline{D} \lor \overline{CR}S$
$6.\;D \lor CR$
$7.\;\overline{L} \lor \overline{D}MR \lor DMR \lor \overline{DM}R \lor \overline{D}M\overline{R}$
$8.\;L \lor D$
$11.\;\overline{O} \lor D\overline{L}R\overline{S} \lor \overline{DL}R\overline{S} \lor DLR\overline{S} \lor D\overline{LRS} \lor D\overline{L}RS$
$12.\;O \lor LS$
$13.\;\overline{R} \lor CMS \lor \overline{C}MS \lor C\overline{M}S \lor CM\overline{S}$
$15.\;\overline{S} \lor CM\overline{O} \lor \overline{C}M\overline{O} \lor C\overline{MO} \lor CMO$
$16.\;S \lor O$
$18h.\;ACM$
$24h.\;CR$
$25.\;D \lor M \lor R$
$26.\;D\overline{L} \lor \overline{D}S \lor \overline{L}R\overline{S} \lor DRS$
$27.\;C \lor M \lor O$
$28.\;ACM \lor \overline{C}D\overline{M}OR \lor \overline{A}D\overline{M}OR \lor \overline{ACM}OR \lor \overline{AC}DOR$
Now, we have only:
A, C, M and R are innocent (by 18f and 24f). So, we have only 4 variables and 6 possibilities left. And exactly 2 of those variables are false (guilty) and exactly 2 are true (innocent).
So, applying substitution, eliminating tautologies and eliminating clauses with too much innocent or too much guilty people, we get:
$5i.\;\overline{D}$
$8.\;L \lor D$
$11i.\;\overline{O} \lor D\overline{LS} \lor DL\overline{S} \lor D\overline{L}S$
$12.\;O \lor LS$
$16.\;S \lor O$
$26.\;D\overline{L} \lor \overline{D}S \lor \overline{L}R\overline{S}$
It says that:
D is our second guilty person (5i). Only 3 variables left!
Then:
$8j.\;L$
$11j.\;\overline{O}$
$12.\;O \lor LS$
$16.\;S \lor O$
$26j.\;S \lor \overline{L}R\overline{S}$
And then:
L is innocent and O is our third guilty. Only one variable left!
Now:
$12k.\;S$
$16k.\;S$
$26k.\;S$
So:
I.E. The three remaining expressions converged into saying that S is also innocent and not to some contradiction.
This means that:
The puzzle is solved!
8. Puzzle solved
How many people are guilty?
3
Who is guilty?
Donnie, Ouida and Terence.
Who is innocent?
Armandina, Connie, Ligia, Margit, Roy and Shizue.