UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 85536 / April 5, 2019

ADMINISTRATIVE PROCEEDING 

File No. 3-16829

In the Matter of

WILLIAM B. FRETZ, JR., JOHN P. 

FREEMAN, COVENANT CAPITAL 

MANAGEMENT PARTNERS, L.P., 

AND COVENANT PARTNERS, L.P., 

Respondents.

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CORRECTED ORDER DIRECTING 

SECOND DISBURSEMENT 

On September 23, 2015, the United States Securities and Exchange Commission 

(“Commission”) issued an Order Instituting Administrative and Cease-and-Desist Proceedings 

Pursuant to Section 8A of the Securities Act of 1933, Sections 15(b) and 21C of the Securities 

Exchange Act of 1934, Sections 203(e), 203(f), and 203(k) of the Investment Advisers Act of 

1940, and Section 9(b) of the Investment Company Act of 1940, Making Findings, and Imposing 

Remedial Sanctions and a Cease-and-Desist Order (the “Administrative Order”)1 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 Respondents consented to the Administrative Order without admitting or 

denying the findings, except as to jurisdiction. In the Administrative Order, the Commission 

found that, from 1999 through 2014, Fretz and Freeman raised approximately $7.3 million 

through the sale of Covenant partnership interests (the “Fund”) to 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. 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 10b-5 

thereunder; and, 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 

 1 Securities Act Rel. No. 9925 (Sept. 23, 2015).
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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. 

On September 19, 2014, Covenant filed for protection under Chapter 7 of the United 

States Bankruptcy Code (the “Bankruptcy Proceeding”) and the Commission filed a protective 

proof of claim.2

 By Order entered on December 2, 2015, the Bankruptcy Court granted the 

Commission an allowed general unsecured claim of $5,830,510, representing disgorgement of 

$5,476,928 and prejudgment interest of $353,582 (the “Allowed Claim”).3

 By Order dated 

November 16, 2016, the Bankruptcy Court approved the interim distribution of $2,391,807.89 to 

the Commission on the Allowed Claim (the “First Interim Distribution”).

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 By Order dated 

January 10, 2019, the Bankruptcy Court approved the interim distribution of another 

$338,230.49 to the Commission on the Allowed Claim (the “Second Interim Distribution”).

5

 

On April 6, 2017, the Commission issued a Notice of Proposed Plan of Distribution and 

Opportunity for Comment6 pursuant to Rule 1103 of the Commission’s Rules on Fair Funds and 

Disgorgement Plans.

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 The Notice advised persons they could obtain a copy of the proposed plan 

of distribution (“Distribution Plan”) by submitting a written request to the Commission. The 

Notice also advised that all persons desiring to comment on the Distribution Plan could submit 

their comments, in writing, no later than May 6, 2017. No comments were received by the 

Commission in response to the Notice. On May 18, 2017, the Commission issued an Order 

Approving Plan of Distribution.

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The Distribution Plan provides for the distribution of the Net Distribution Fund9 on a pro 

rata basis to certain harmed investors identified by the Commission staff from the records of the 

Trustee, records provided to the Commission staff by Covenant, or records obtained through the 

Plan Notice process. 

On October 12, 2017, the Commission issued an Order directing the disbursement of the 

First Interim Distribution plus accrued interest pursuant to the Distribution Plan.10 Pursuant to 

that Order, the Commission disbursed $2,391,403.87 to harmed investors. 

 2 Covenant Partners, L.P., Case No. 14-17568-SR (Bankr. E.D. Pa.). 3 Bankruptcy Proceeding, Dkt. No. 109. 4 Bankruptcy Proceeding, Dkt. No. 185. 5 Bankruptcy Proceeding, Dkt. No. 233. 6

 Exchange Act Rel. No. 80392 (Apr. 6, 2017). 7

 17 C.F.R. § 201.1103. 8

 Exchange Act Rel. No. 80711 (May 18, 2017). 9

 All capitalized terms used but not herein defined shall have the same meanings ascribed to them in the 

Distribution Plan.

10 Order Directing Disbursement, Exchange Act Rel. No. 81858 (Oct. 12, 2017).
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The Fund Administrator, an SEC employee, now seeks to distribute the Second Interim 

Distribution, less a reserve for taxes, fees, and expenses, in accordance with the Distribution Plan 

and has directed preparation of an electronic payment file in a Commission-approved format for 

submission to the United States Treasury’s Bureau of the Fiscal Service to disburse the Net 

Distribution Fund in the amount of $337,082.08.

Accordingly, it is hereby ORDERED that the Commission staff shall disburse 

$337,082.08 to harmed investors pursuant to the Distribution Plan. 

By the Commission. 

Vanessa A. Countryman

Acting Secretary