In the Matter of William B. Fretz, Jr., et al.
Admin. Proc. File No. 3-16829

On September 23, 2015, the Commission issued and simultaneously settled proceedings (the “Order”) against William B. Fretz, Jr. (“Fretz”), John P. Freeman (“Freeman”), Covenant Capital Management Partners, L.P. (“CCMP”), and Covenant Partners, L.P. (“Covenant”) (collectively, the “Respondents”). The Commission found that Fretz and Freeman orchestrated an offering fraud and investment advisory fraud through sales of partnership interests in Covenant and the operation of its adviser, CCMP, which Fretz and Freeman controlled. The Commission found that, from 1999 through 2014, Fretz and Freeman raised approximately $7.3 million through the sale of Covenant partnership interests more than 50 limited partners by misrepresenting to investors that Covenant would primarily invest in direct marketing companies, only pay the adviser performance fees if certain conditions were met, and that Fretz and Freeman would act as fiduciaries in the best interests of the fund. The Commission found that, instead, Fretz and Freeman, through CCMP, used the majority of Covenant investor funds for their own purposes and benefit, in breach of their fiduciary duties. As a result, the Commission found that Fretz, Freeman, and CCMP willfully violated, and Covenant violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10(b)-5 thereunder; and, that Fretz, Freeman, and CCMP willfully violated Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The Commission ordered the Respondents, jointly and severally, to pay disgorgement of $5,476,928 and prejudgment interest of $353,582, and Fretz and Freeman to each pay civil penalties of $500,000. See Commission’s Release No. 33-9925.

A distribution fund has been created for any payments of disgorgement and prejudgment interest received from or on the behalf of the Respondents (the “Distribution Fund”). On December 8, 2016, $2,391,807.89, an interim distribution from a related bankruptcy proceeding, was deposited into the Distribution Fund. Covenant Partners, L.P., Case No. 14-17568-sr (Bankr., E.D. Pa.).

On December 8, 2016, the Commission issued an order appointing Damasco & Associates LLP as the Tax Administrator for the Distribution Fund. See Commission’s Release No. 34-79511.

On April 6, 2017, the Commission published a notice of the proposed plan of distribution and opportunity for comment, along with the proposed plan of distribution. The notice provides the public with 30 days, until May 8, 2017, to submit their comments on the proposed plan of distribution. See the Commission's Notice: Release No. 34-80392, and the Proposed Plan of Distribution.

On May 18, 2017, the Commission issued an order that approved the plan of distribution (“Plan”) and appointed Catherine E. Pappas, a Commission employee, as the Fund Administrator of the Distribution Fund.  See the Commission’s order: Release No. 34-80711 and the Plan.

On October 12, 2017, the Commission issued an order directing the disbursement of $2,391,403.87 from the Distribution Fund to eligible investors in accordance with the Plan. See the Commission’s order: Release No. 34-81858.

For more information, please contact the Commission:

Catherine E. Pappas
Senior Adviser
Telephone No.: (215) 597-0657
Email: pappasc@sec.gov