Convicted insider trader Dennis B. Levine can’t...

Convicted insider trader Dennis B. Levine can’t pay his $12.2 million tax bill with the money he made through illegal activities, a federal judge has ruled. Instead, said U.S. District Judge Richard Owen, the money should go to compensate defrauded investors. Owen rejected motions by Levine and convicted co-conspirator Robert Wilkis to pay off their tax liabilities with disgorged profits now in the hands of the government. Owen also rejected the Securities and Exchange Commission’s proposed plan for distributing the $12.8 million disgorged by Levine and the $3.4 million Wilkis has relinquished. The pair wanted their federal tax bills--$12.2 million for Levine and more than $2.8 million for Wilkis -- to take precedence over investor claims. Lawyers for both Levine and Wilkis said they would appeal the ruling.