UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
File No. 3-11246
In the Matter of
Freedom Financial, Inc.
Freedom Track, Inc.
Freedom Financial Group, Inc.
Associated Investment Management, Inc.
Jon Patrick Pierce
Gary L. Winn,
PROPOSED PLAN OF DISGORGEMENT DISTRIBUTION AS TO RESPONDENT ASSOCIATED INVESTMENT MANAGEMENT, INC.
On May 20, 2004, the Commission ordered Respondent Associated Investment Management, Inc. (“AIM”), pursuant to Section 21C of the Securities Exchange Act of 1934 (“Exchange Act”) and Section 203(k) of the Investment Advisers Act of 1940 (“Advisers Act”), to cease and desist from committing or causing any violations and any future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1), (2) and (4) and 207 of the Advisers Act and Rule 206(4)-1(a)(5) thereunder. The Commission further ordered that AIM pay disgorgement of $150,000 plus prejudgment interest, but that payment of all but $26,223 of such amount be waived based upon AIM’s sworn representations in its Statement of Financial Condition and other documents submitted to the Commission. The Commission further ordered that such disgorgement be distributed pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002 (“Fair Fund distribution”). The Commission further ordered that the Division submit a plan of distribution in accordance with Rule 1101 et seq. of the Commission’s Rules of Practice. On March 2, 2005, AIM paid the disgorgement proceeds to the Office of Financial Management, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, VA 22312. Such funds will be held by the Office of Financial Management pending approval of this plan of distribution.
The Division of Enforcement (“Division”) submits the following Plan of Disgorgement Distribution (“Distribution Plan”) pursuant to Rule 1101 of the Commission’s Rules of Practice, 17 C.F.R. § 201.1101. Lieben, Whitted, Houghton, Slowiaczek & Cavanagh, P.C., counsel to respondent AIM, has no objection to the plan. The Distribution Plan generally provides for distribution of the disgorgement proceeds to investors in AIM who contributed reimbursed insurance premiums into a fund to be used toward the purchase of an insurance policy for AIM’s Insured Risk Program, and who have not previously been reimbursed for such contributions by AIM. These funds, which were held in a segregated account by AIM, constitute the assets which are being disgorged by AIM.
- "Claimants" shall mean the holders of accounts in AIM’s Insured Risk Program during the period January 1, 2001 through December 31, 2001 who contributed premiums reimbursed under an AIM insurance policy into a segregated fund maintained by AIM, and who have not previously been reimbursed for such payments. The Division of Enforcement estimates that there are approximately seventy (70) claimants.
- “Eligible Claim” shall mean a claim that is verified by documentation provided by AIM. Due to the limited amount of proceeds available for distribution in the Disgorgement Fund, the Administrator will rely on a list of eligible claimants provided by counsel to AIM.
- “Contributions” shall mean all sums contributed by claimants derived from refunded insurance premiums relating to an insurance policy for the AIM Insured Risk Management Program
- "Disgorgement Fund" shall mean the total disgorgement, prejudgment interest and post-judgment interest paid by AIM.
- "Distributions" shall mean the payments to be made to Claimants as approved by the Commission.
ALLOCATION OF THE DISGORGEMENT FUND
- An eligible Claimant’s "Distribution" shall consist of a pro-rata share of the disgorgement fund, based upon each Claimant’s original contribution to the Disgorgement Fund. Within ten days after the approval of this Plan of Distribution, Lieben, Whitted, Houghton, Slowiaczek & Cavanagh, P.C., counsel to respondent AIM, shall provide to the Administrator all available records not previously submitted which identify eligible claimants, the amount of their original contribution to the Disgorgement Fund, and the basis for their claims.
DISTRIBUTION OF THE DISGORGEMENT FUND
- Within 45 days after approval of this Distribution Plan, the Administrator shall seek an order of the Commission distributing the Disgorgement Fund.
APPOINTMENT AND DUTIES OF ADMINISTRATOR
- Due to the small size of the Disgorgement Fund, and to insure the maximum payout to Claimants, the Division proposes that Julie K. Lutz, a Trial Counsel in the Central Regional Office, be appointed Administrator of the Disgorgement Fund.
- The Administrator shall carry out the duties specified by this Distribution Plan. In carrying out her duties, the Administrator may be assisted by other Commission staff acting under her supervision.
- It is not anticipated that the funds in the Disgorgement Fund will be invested pending distribution, and the Administrator therefore will not be required to file any forms or reports under the Internal Revenue Code. If it is determined that the Administrator must make any such filing, the Administrator will use the services of Damasco & Associates for such filing.
- Upon approval of the Distribution Plan by the Commission, the Administrator shall use reasonable efforts to locate the current addresses of Eligible Claimants. If the addresses for Claimants provided by counsel to respondent AIM are no longer current, use of commercial computer databases regularly available to the Division shall constitute reasonable efforts to obtain the Claimants' addresses. The Administrator will send to Claimants a letter identifying the Administrator’s determination of the pro rata share due to each Claimant. Claimants shall have two weeks following the date of the letter to advise the Administrator of any objections to the Administrator’s calculation of the Claimant’s pro-rata share. The Administrator shall consider all objections raised by Claimants before making a final recommendation to the Commission for an order of distribution.
- The Administrator will submit to the Commission a recommendation as to the payment of eligible claims and request the Commission to direct the Office of Financial Management to issue the distribution checks to Eligible Claimants. Any funds not disbursed as part of the Distribution Plan will be paid to the United States Treasury.
- Following the issuance of the distribution checks, the Administrator shall file a final report to the Commission on the status of the distribution, including an accounting of all monies received in connection with the administration of the Distribution Plan. It is not anticipated that any additional monies will be earned or that any expenses will be incurred by the Disgorgement Fund. The report shall also set forth the distributions made pursuant to the Distribution Plan, identify any Claimants not located, describe the efforts made to locate such Claimants, and describe the Administrator's performance of any other duties. At the time of filing of the final report, the Administrator will request that the disgorgement fund will be terminated.
- Pursuant to Rule 1105(d) of the Commission's Rules of Practice, 17 C.F.R. § 201.1105(d), the Administrator shall receive no compensation, other than her regular salary as an employee of the Commission, for her services in administering the Disgorgement Fund.