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

Case 1:04-cv-01267-WYD

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Filed 03/13/2007

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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. ______________________________________________________________________________ UNOPPOSED MOTION TO DISBURSE FUNDS TO PAY TAX AND TAX ADMINISTRATOR FEES ______________________________________________________________________________

The Securities and Exchange Commission respectfully requests that the Court enter an Order for the Distribution Agent to disburse funds to pay certain tax obligations and fees of the Distribution Fund in this case. 1. The Commission has filed five 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 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.

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2.

The settled actions include the following: SEC v. Cruciotti, Civil Action No. 04-D-1267

(MJW)(Cruciotti paid $200,000 in disgorgement plus prejudgment interest and $150,000 in civil penalties); SEC v. Qwest, Civil Action No. 04-02179-WYD (Qwest paid $1 in disgorgement and $250,000,000 in civil penalties); SEC v. Hoaglund, Civil Action No. 05-00482-OES (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 (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. 05-00480-MSK (Gregory M. Casey paid $1,390,344 in disgorgement plus prejudgment interest and $250,000 in civil penalties). 3. In addition, Robin 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 and $5,547.67 in prejudgment interest into the Distribution Fund in October 2006. 4. By order dated June 8, 2005, the Court appointed Damasco & Associates to fulfill the tax

obligations of the Distribution Fund. Pursuant to that Order, the Tax Administrator is required to pay taxes in a manner consistent with treatment of the Distribution Fund as a Qualified Settlement Fund, and is to be compensated for the tax services provided. 5. 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

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Distribution Agent is required to pay taxes and fees to the Tax Administrator as authorized by this Court. 6. For the tax year ended December 31, 2006, the Tax Administrator has determined that the

Distribution Fund should make a federal income tax payment in the amount of $130,354 for its year end income tax payment due March 15, 2007. The funds shall be distributed from the earnings of the Distribution Fund. See Declaration of Tax Administrator attached as Exhibit A. 7. For the tax year ended December 31, 2006, the Tax Administrator has incurred fees of

$4,055.44 for tax services provided to the Distribution Fund. The funds shall be distributed from the earnings of the Distribution Fund. See Declaration of Tax Administrator attached as Exhibit B. 8. The Declarations have been reviewed by the undersigned Commission counsel who has

no objections. 9. The Commission has provided copies of this Motion and proposed Order to counsel for

all defendants who have paid monies into the Distribution Fund. The Commission 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 its request to pay taxes.

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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: March 13, 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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