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

Case 1:04-cv-01267-WYD

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Filed 08/25/2005

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO : : : Plaintiff, : : vs. : : Augustine M. Cruciotti, : : Defendant. : ____________________________________: Securities and Exchange Commission,

Civil Action No. 04-D-1267(MJW)

MOTION TO DISBURSE FUNDS TO PAY TAX

The Securities and Exchange Commission respectfully requests that the Court enter an Order for the Clerk of the Court to disburse funds on deposit with the registry of the Court to pay certain tax obligations of the Distribution Fund in this case. 1. To date, the Commission has filed four 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, account number 1:04-CV-001267, under the case name designation "SEC v. Augustine M. Cruciotti." 2. First, by order dated June 21, 2004, the Court entered Final Judgment as to Defendant

Augustine M. Cruciotti pursuant to Rule 54(b) of the Federal Rules of Civil Procedure. Pursuant to the Final Judgment, on June 23, 2004, defendant Cruciotti paid a $150,000 penalty into the

Case 1:04-cv-01267-WYD

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Distribution Fund. Pursuant to the Final Judgment, on July 27, 2004, defendant Cruciotti paid a total of $204,967 in disgorgement and prejudgment interest into the Distribution Fund. 3. Second, by order dated December 3, 2004, the Court entered Final Judgment as to

Defendant Qwest (04-D-2179) pursuant to Rule 54(b) of the Federal Rules of Civil Procedure. Pursuant to the Final Judgment, on December 6, 2004, defendant Qwest paid a total of $125,000,001 in disgorgement and penalty into the Distribution Fund. Pursuant to the Final Judgment, on December 31, 2005, defendant Qwest will pay an additional $125,000,000 in penalty to the Distribution Fund. 4. Third, by order dated March 17, 2005, the Court entered Final Judgment as to Defendant

Roger B. Hoaglund (05-N-482) pursuant to Rule 54(b) of the Federal Rules of Civil Procedure. Pursuant to the Final Judgment, on March 18, 2005, defendant Hoaglund paid a total of $164,325 in disgorgement, penalty and prejudgment interest into the Distribution Fund. Pursuant to the Final Judgment, on March 11, 2006, defendant Hoaglund will pay an additional $164,325 of disgorgement, penalty and prejudgment interest to the Distribution Fund. 5. Fourth, by order dated April 28, 2005, the Court entered Final Judgment as to Defendant

William L. Eveleth (05-M-481) pursuant to Rule 54(b) of the Federal Rules of Civil Procedure. Pursuant to the Final Judgment, on May 12, 2005, defendant Eveleth paid a total of $29,597.25 of disgorgement, penalty and prejudgment interest to the Distribution Fund. Pursuant to the Final Judgment, on each of the following days, August 27, 2005, December 25, 2005, and April 24, 2006, defendant Eveleth will pay an additional $29,597.25 of disgorgement, penalty and prejudgment interest to the Distribution Fund. 6. By order dated June 8, 2005, the Court entered an order appointing Damasco &

Associates to fulfill the tax obligations of the Distribution Fund. Pursuant to that Order, the Tax

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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. 7. For the 2004 tax year, the Tax Administrator has determined that the Distribution Fund

should make a federal income tax payment in the amount of $40,042 and related penalties and interest not to exceed $12,000, to be calculated by the Tax Administrator, for its annual income tax payment due March 15, 2005. The funds shall be distributed from the earnings of the Distribution Fund. See Declaration of Tax Administrator attached as Exhibit A. 8. The Tax Administrator will notify the Commission of the amounts due related to

penalties and interest, not to exceed $12,000. The Commission will submit an affidavit to the Court Financial Supervisor verifying the exact amount of penalties and interest and requesting the Financial Supervisor to release the funds to the Tax Administrator. The funds shall be distributed from the earnings of the Distribution Fund. 9. The Declaration had been reviewed by the undersigned Commission counsel who has no

objections. 10. 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: August 25, 2005 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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