Free Motion to Deposit Funds - District Court of Colorado - Colorado

Case 1:01-cv-00645-JLK

Document 134

Filed 08/30/2006

Page 1 of 3

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Civil Action No. 01-K-0645

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. SEC MOTION TO DEPOSIT AAA-AUCTION.COM'S FUNDS INTO REGISTRY OF THE COURT Plaintiff Securities and Exchange Commission (SEC) requests that the Court enter an order directing the First Bank of Colorado to pay into the registry of the court all the funds it is holding that are in the account or accounts of AAA-Auction.com, Inc. In support of its motion, the SEC submits the following information. On April 10, 2001, the SEC filed a civil injunctive action against AAA-Auction.com and the other defendants alleging that they had engaged in securities fraud. The SEC obtained a temporary restraining order which included an asset freeze. The SEC sent a copy of the temporary restraining order and asset freeze to First Bank of Colorado which held an account of AAA-Auction.com. The asset freeze was continued in the preliminary injunction that was entered on May 17, 2001. The Court entered a final judgment on January 15, 2002, which enjoined AAA-Auction.com from further violations of the anti-fraud provisions of the federal securities laws and ordered defendants AAA-Auction.com and Kenneth Roy Weare jointly and

Case 1:01-cv-00645-JLK

Document 134

Filed 08/30/2006

Page 2 of 3

severally to pay disgorgement of $623,250 and prejudgment interest of $142,724.40. The final judgment also provided that the assets of the defendants remain frozen until the judgment is satisfied. To date, AAA-Auction.com has not paid any funds into the registry of the court to satisfy the judgment. The SEC has recovered $803,728.49 from the bank account of J&K Global Marketing in Grenada and $2,916,343.98 from the bank account of Kenneth Weare in Luxembourg. These sums are substantially less than the $6,278,334.91 in disgorgement and $486,648.02 that Weare and J&K Global Marketing were ordered to disgorge jointly and severally. First Bank of Colorado is currently holding funds in an account of AAAAuction.com. Based on these facts, the SEC respectfully requests that the Court direct First Bank of Colorado to pay the funds held in the account or accounts of AAA-Auction.com, Inc. into the registry of the court to be deposited into an interest bearing account under the case name, SEC v. Kenneth Roy Weare, et al., case no. 01-CV-0645-JLK. These funds should be considered part of the Distribution Fund already created in this case and considered part of the same Qualified Settlement Fund under Section 468B (g) of the Internal Revenue Code, 26 U.S.C. § 468B (g), and related regulations, 26 C.F.R. §§ 1.468B-1 through 1.468B-5 . These funds together with any interest and income earned thereon shall be held in the interest bearing account until further order of the Court. In accordance with 28 U.S.C. § 1914 and the guidelines set by the Director of the Administrative Office of the United States Courts, the Clerk should be directed to deduct from the income earned on the money in the Fund a fee equal to ten percent of the income earned

2

Case 1:01-cv-00645-JLK

Document 134

Filed 08/30/2006

Page 3 of 3

on the Fund. These funds should be considered part of the money that the Receiver will distribute to the investors. Dated this 30th day of August, 2006.

s/ Leslie Hendrickson Hughes Leslie Hendrickson Hughes (Colo. 15043) Securities and Exchange Commission 1801 California Street, Suite 1500 Denver, Colorado 80202-2656 Telephone (303) 844-1086

CERTIFICATE OF SERVICE The undersigned hereby certifies that a true and correct copy of the foregoing SEC'S MOTION TO DEPOSIT AAA-AUCTION.COM FUNDS INTO REGISTRY OF THE COURT AND PROPOSED ORDER were mailed postage pre-paid, addressed as follows this 30th day of August 2006. 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 Hendrickson Hughes

3