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

Case 1:04-cv-01267-WYD

Document 60

Filed 07/26/2007

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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 $267 Million Distribution Fund ______________________________________________________________________________ Plaintiff Securities and Exchange Commission respectfully requests that the Court enter an Order for the Distribution Agent to disburse approximately $267 million in the Distribution Fund to investors who purchased Qwest's securities between July 27, 1999, and July 28, 2002. 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 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

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$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 June 10, 2005, the Court authorized Damasco & Associates, LLP as the

Tax Administrator for the Distribution Fund. 4. By order dated February 28, 2006, the Court approved the Commission's Distribution

Plan. The Court also 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. The Court ordered that the Distribution Agent allocate the Distribution Fund, less taxes and certain fees and expenses, to persons who submit a valid claim for distribution. The Court further ordered that the Distribution Agent print and mail checks to persons entitled to receive a distribution. The Court ordered all payments, other than the payment of fees for the court registry fee assessment, from the Distribution Fund be approved by the court in advance of payment. 5. 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.

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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 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.). 6. The Distribution Fund currently consists of approximately $267 million, less a reserve for

2007 anticipated taxes and fees and expenses of the Tax Administrator and Distribution Agent. In accordance with the Distribution Plan, the funds will be allocated pro rata to approximately 200,000 investors who purchased Qwest's securities between July 27, 1999, and July 28, 2002, and submitted valid claims. The mailing of the Distribution Fund checks, which is anticipated to begin on July 31, 2007, is expected to be completed within five days. See Declaration of Peter L. Crudo, attached as Exhibit A. 7. The Declaration has been reviewed by the undersigned Commission counsel who has no

objections. 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. WHEREFORE, the Commission requests that the Court enter the proposed Order filed which approves 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

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who purchased Qwest's securities between July 27, 1999, and July 28, 2002, and submitted valid claims. Dated: July 26, 2007 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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