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

Case 1:01-cv-00645-JLK

Document 136

Filed 09/21/2006

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Civil Action No. 01-CV-0645-JLK

SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. KENNETH ROY WEARE, a/k/a ROY WEAVER, J & K GLOBAL MARKETING CORPORATION, and AAA-AUCTION.COM, INC., Defendants.

UNOPPOSED MOTION TO DISBURSE FUNDS TO PAY TAX OBLIGATIONS AND TAX ADMINISTRATOR'S FEES

The SEC files this unopposed motion requesting that the court enter an order directing the Clerk of the Court to pay $29,500 from the Distribution Fund currently held in this case to the "Damasco & Associates, Trust Account," for payment of taxes due for the second and third quarters of 2006. The SEC also requests that the court enter an order directing the Clerk of the Court to pay $3,000 form the Distribution Fund currently held in this case to "Damasco & Associates" for payment of the Tax Administrator's fees for preparing and filing the 2004 and 2005 qualified settlement fund tax returns. Pursuant to D.C.Colo.LCivR 7.1 A, SEC counsel has consulted with counsel for the Receiver, who has no objection to this motion and the payment of taxes from the Distribution Fund. In support of the motion, the SEC presents the following information. The SEC

deposited into the registry of the court funds it has collected of $803,728.49, and $2,916,365.58

Case 1:01-cv-00645-JLK

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which are to be applied against the disgorgement that Weare was ordered to pay by the Court. These funds were deposited into interest bearing accounts, accounts numbered 1:01-CV-000645 and 1:01-CV-000645-1, under the case name designation "SEC v. Kenneth Roy Weare, et al." (collectively "the Distribution Fund"). The Distribution Fund constitutes a Qualified Settlement Fund (QSF) under Section 468B(g) of the Internal Revenue Code (IRC), 26 U.S.C. § 468B(g), and related regulations, 26 C.F.R. §§ 1.468B-1 through 1.468B-5. By order dated January 18, 2006, the Court appointed Damasco & Associates as Tax Administrator to administer 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 QSF, and is to be compensated for the tax services provided. For the second quarter of 2006, the Tax Administrator has determined that the Distribution Fund owes federal taxes of $15,400 for the two accounts listed above. For the third quarter of 2006, the Tax Administrator has determined that the Distribution Fund owes federal taxes of $14,100 for the two accounts listed above. The total tax liability is $29,500. See Declaration of Tax Administrator, previously submitted with motion for disbursement of funds [Docket entry 132]. To enable timely payment of the taxes, the SEC requests that the payment be made on or before September 29, 2006. The Tax Administrator will file the appropriate federal and state tax returns when the tax obligations are paid. Damasco and Associates has also submitted a declaration and invoice for services rendered in preparing and filing the 2004 and 2005 qualified settlement fund tax returns, which is consistent with the fees set in the Order appointing the Tax Administrator. See Declaration of Tax Administrator, previously submitted with motion for disbursement of funds [Docket entry 133]. Undersigned SEC counsel has reviewed the declarations of Tax Administrator and has no objections to the payment of these amounts. 2

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Therefore, counsel for the SEC respectfully requests that the court order the Clerk of the Court to pay $29,500 from the Distribution Fund currently held in this case to the "Damasco & Associates, Trust Account," for payment of taxes due for the second and third quarters of 2006. The SEC requests that the court order the Clerk of the Court to pay the $29,500 from the interest earned in the Fund before using the principal. Counsel for the SEC also respectfully requests that court order the Clerk of the Court to pay $3,000 from the Distribution Fund currently held in this case to "Damasco & Associates" for payment of the Tax Administrator's fees for preparing and filing the 2004 and 2005 qualified settlement fund tax returns, and that the Clerk be directed to pay these funds first from the interest earned in the Fund before using the principal. Counsel for the SEC will provide the means to send these funds to the Tax Administrator by Federal Express courier. DATED: September 21, 2006 Respectfully submitted,

s/Leslie J. Hughes Leslie J. Hughes Counsel for Plaintiff Securities and Exchange Commission 1801 California Street, Suite 1500 Denver, CO 80202 (303) 844-1000 Switchboard (303) 844-1068 Facsimile Email: [email protected]

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CERTIFICATE OF SERVICE

I hereby certify that on September 21, 2006, a true and correct copy of the foregoing EX PARTE MOTION TO DISBURSE FUNDS TO PAY TAX OBLIGATIONS OF DISTRIBUTION FUND and PROPOSED ORDER was mailed postage pre-paid, to the following addresses: Kenneth Weare 84168-198 FCI Terminal Island Federal Correctional Institution 1299 Seaside Avenue Terminal Island, CA 90731 (Individually and as agent for J&K Global Marketing and AAA-Auction.com) John Paul Anderson Patton MacPhee & Associates, Inc. 1775 Sherman Street, Suite 2900 Denver, CO 80203 (Receiver)

s/Leslie J. Hughes Leslie J. Hughes Counsel for Plaintiff Securities and Exchange Commission 1801 California Street, Suite 1500 Denver, CO 80202 (303) 844-1000 Switchboard (303) 844-1068 Facsimile Email: [email protected]