Securities And Exchange Commission v. Leslie et al

MOTION for Disbursement of Funds to Pay Tax Obligations for Tax Year 2007

N.D. Cal.March 11, 2008

PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S MOTION TO DISBURSE FUNDS TO PAY TAX OBLIGATIONS SEC v. MARK LESLIE, et al., Civil Action No. C 07-3444 -JF 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RICHARD HONG (Trial Counsel) (Admitted in New York) SCOTT W. FRIESTAD MELISSA A. ROBERTSON JEFFREY B. FINNELL THOMAS D. MANGANELLO Attorneys for Plaintiff SECURITIES AND EXCHANGE COMMISSION 100 F Street, N.E. Washington, DC 20549-4010 Telephone: (202) 551-4431 (Hong) Facsimile: (202) 772-9246 e-mail: hongr@sec.gov UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION SECURITIES AND EXCHANGE COMMISSION, Plaintiff, vs. MARK LESLIE, et al., Defendants. Civil Action No. C 07-3444 JF PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S MOTION TO DISBURSE FUNDS TO PAY TAX BLIGATIONS O The Securities and Exchange Commission (“SEC”) respectfully requests the Court to 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 fund under this Court’s jurisdiction in this action. On August 3, 2007, the Court entered final judgments against defendants Michael M. Cully and Douglas S. Newton pursuant to Rule 54(b) of the Federal Rules of Civil Procedure. Pursuant to the final judgments, defendant Michael M. Cully paid a total of $216,470.67 of disgorgement and Case 5:07-cv-03444-JF Document 57 Filed 03/11/2008 Page 1 of 3 PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S MOTION TO DISBURSE FUNDS TO PAY TAX OBLIGATIONS SEC v. MARK LESLIE, et al., Civil Action No. C 07-3444 -JF 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 penalty to the Clerk of the Court and defendant Douglas S. Newton paid a total of $62,263.36 of disgorgement and penalty to the Clerk of this Court (the “Settlement Fund”). The Settlement Fund was thereafter deposited in an interest-bearing account under the case name designation “SEC v. Mark Leslie, et al.” The Settlement Fund constitutes a Qualified Settlement Fund (“QSF”) 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. On October 26, 2007, the Court entered an order appointing Damasco & Associates (“Damasco”) as Tax Administrator to fulfill the obligations of the Settlement Fund. Pursuant to that order, Damasco is required to pay taxes in a manner consistent with the treatment of the Settlement Fund as a QSF and is to be compensated for the tax services provided. As set forth in the attached Declaration of Jude P. Damasco (Exhibit 1), Damasco has determined that the Settlement Fund owes $980 in tax liability for the tax year 2007. Because Damasco has informed the SEC that the payment is due March 17, 2008, the SEC respectfully requests expedited consideration of this motion. For the foregoing reasons, the SEC respectfully requests that this Court enter the attached proposed Order and grant such other relief as it deems just and proper. Dated: March 11, 2008 Respectfully submitted, /s/ Richard Hong Richard Hong Assistant Chief Litigation Counsel UNITED STATES SECURITIES AND EXCHANGE COMMISSION 100 F Street, N.E. Washington, DC 20549-4010 Phone: (202) 551-4431 (Hong) Fax: (202) 772-9244 Email: hongr@sec.gov Case 5:07-cv-03444-JF Document 57 Filed 03/11/2008 Page 2 of 3 PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S MOTION TO DISBURSE FUNDS TO PAY TAX OBLIGATIONS SEC v. MARK LESLIE, et al., Civil Action No. C 07-3444 -JF 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 CERTIFICATE OF SERVICE I, Richard Hong, counsel for Plaintiff Securities and Exchange Commission, hereby certify that I have this day, March 11, 2008, caused a copy of the foregoing Plaintiff Securities and Exchange Commission’s Motion to Disburse Funds to Pay Tax Obligations to be served by electronic mail and by first-class mail to the following: Counsel for Mark Leslie Counsel for Paul Sallaberry William P. Keane, Esq. and Douglas Newton Farella Braun & Martel LLP Jahan Raissi, Esq. Russ Building / 235 Montgomery Street Shartsis, Friese & Ginsburg, LLP San Francisco, CA 94104 18th Floor, One Maritime Plaza San Francisco, CA 94111 Counsel for Kenneth E. Lonchar Susan Resley, Esq. Counsel for Michael M. Cully Orrick, Herrington & Sutcliffe, LLP John L. Williams, Esq. 1000 Marsh Road Manchester, Williams & Seibert Menlo Park, CA 94025-1015 125 S. Market Street Suite 1100 San Jose, CA 95113 _____/s/_Richard Hong_____ Richard Hong Counsel for Plaintiff SEC Case 5:07-cv-03444-JF Document 57 Filed 03/11/2008 Page 3 of 3