Free Motion for Disbursement of Funds - District Court of Colorado - Colorado

Case 1:04-cv-01267-WYD

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Filed 04/15/2008

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Civil Action No. 04-cv-01267-WYD-MJW

SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. AUGUSTINE M. CRUCIOTTI, Defendant. ______________________________________________________________________________ Plaintiff Securities and Exchange Commission's Unopposed Motion to Disburse Funds to Pay Distribution Agent Expenses ______________________________________________________________________________

Plaintiff Securities and Exchange Commission respectfully requests that the Court enter an Order for the Distribution Agent to disburse funds to pay certain expenses incurred by the Distribution Agent in connection with this case. 1. The Commission has filed six settled actions in this District Court arising from the

Commission's financial fraud investigation of Qwest Communications International Inc. ("Qwest") that have resulted in funds being deposited in a Fair Fund pursuant to Section 308 of the Sarbanes-Oxley Act of 2002 for future distribution to aggrieved investors (the "Distribution Fund"). The first five settling defendants paid all amounts in the Distribution Fund to the Clerk

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of the Court, who then deposited the funds with the Court Registry Investment System ("CRIS") in an interest bearing account. 2. The first five settled actions are: SEC v. Augustine M. Cruciotti, Civil Action No. 04-D-

1267 (MJW) (D. Colo.) (Cruciotti paid $200,000 in disgorgement plus prejudgment interest and $150,000 in civil penalties); SEC v. Qwest, Civil Action No. 04-02179-WYD (D. Colo.) (Qwest paid $1 in disgorgement and $250,000,000 in civil penalties); SEC v. Roger B. Hoaglund, Civil Action No. 05-00482-OES (D. Colo.) (Hoaglund paid $200,000 in disgorgement plus prejudgment interest and $100,000 in civil penalties); SEC v. William L. Eveleth, Civil Action No. 05-00481-RPM (D. Colo.) (Eveleth paid $35,575 in disgorgement plus prejudgment interest and $75,000 in civil penalties); and SEC v. Joseph P. Nacchio, et al., Civil Action No. 05-00480MSK (D. Colo.) (Gregory M. Casey paid $1,390,344 in disgorgement plus prejudgment interest and $250,000 in civil penalties). 3. By order dated February 28, 2006, the Court appointed Gilardi & Co., LLC as

Distribution Agent of the Distribution Fund and ordered the Distribution Fund transferred from the court CRIS account to an account controlled by Gilardi at Bank of the West, in the name of SEC v. Qwest Communications Settlement Fund, Account Number 756-013215. The Court ordered that the Distribution Agent shall be paid its reasonable fees and costs from the Distribution Fund, provided the Commission has no objection to the fees and the Court approves the fees upon motion by the Commission. 4. Robin S. Szeliga, Qwest's former chief financial officer, pled guilty to one felony count

of insider trading relating to her role in the Qwest fraud and was sentenced in July 2006. U.S. v. Szeliga, 05-CR-234 (D. Colo.) As a result, Szeliga paid $125,000 in restitution plus prejudgment interest into the Distribution Fund in October 2006. Szeliga also settled with the

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Commission in May 2007 and paid $327,052 in disgorgement plus prejudgment interest and $250,000 in civil penalties to the account controlled by the Commission's Distribution Agent. SEC v. Joseph P. Nacchio, et al., Civil Action No. 05-00480-MSK (D. Colo.). 5. By Order dated August 1, 2007, the Court approved the distribution of the Distribution

Fund, less a reserve for 2007 anticipated taxes and fees and expenses of the Tax Administrator and Distribution Agent, to Qwest investors who purchased Qwest's securities between July 27, 1999, and July 28, 2002, and submitted valid claims. 6. In connection with distributing the Fair Fund to Fair Fund participants, Gilardi provided

services and incurred certain expenses for the period May 22, 2007, through March 10, 2008, in the amount of $349,008.00. The funds shall be distributed from the earnings of the Distribution Fund. See Declaration of Stacey N. Witchel attached as Exhibit A. 7. The Declaration has been reviewed by the undersigned Commission counsel who has no

objection. 8. Commission counsel has provided copies of this Motion and proposed Order to counsel

for all defendants who have paid monies into the Distribution Fund. Commission counsel asked counsel for those defendants to communicate any objection to this Motion to the Commission's undersigned counsel. At the time of filing this Motion, counsel for the Commission has not received any objections to this Motion.

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WHEREFORE, for all the foregoing reasons, the Commission respectfully requests that this Court enter the attached proposed Order and grant such other relief as it deems just and proper. Dated: April 15, 2008 Respectfully submitted,

s/ Mary S. Brady Mary S. Brady Securities and Exchange Commission 1801 California Street, Suite 1500 Denver, CO 80202 Phone: (303) 844-1000 Fax: (303) 844-1010 E-mail: [email protected] Attorney for Plaintiff

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