UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

ADMINISTRATIVE PROCEEDING

File No. 3-17740

In the Matter of

 Augustine Capital Management, 

 LLC (F/K/A Augustine Capital

 Management, Inc.), John T. 

 Porter, and Thomas F.

 Duszynski, CPA,

 

Respondents.

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PROPOSED PLAN OF DISTRIBUTION

1. Purpose and Background. This Proposed Plan of Distribution (the “Plan”) has 

been developed pursuant to Rule 1101 of the Commission’s Rules on Fair Fund and 

Disgorgement Plans (“Rules”), 17 C.F.R. § 201.1101. The Plan proposes a distribution of the 

funds collected from Augustine Capital Management, LLC (f/k/a Augustine Capital 

Management, Inc.) (“ACM”), John T. Porter (“Porter”), and Thomas F. Duszynski, CPA 

(“Duszynski”) (collectively, the “Respondents”) to investors in the Augustine Fund, L.P. (the 

“Fund”), a private fund managed by Respondents. 

On December 20, 2016, the Securities and Exchange Commission (“Commission”) 

instituted proceedings pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 

1940 (“Advisers Act”), and Section 9(b) of the Investment Company Act of 1940 (“Investment 

Company Act”) against ACM; and pursuant to Sections 203(f) and 203(k) and Section 9(b) of 

the Investment Company Act against Porter and Duszynski.1 The Commission alleged, among 

other things, that Respondents J. Porter and Duszynski, together with Brian D. Porter, and ACM, 

in turn, acted as an investment adviser for the Fund. The Respondents caused the Fund to 

engage in conflicted transactions without disclosure to, or the consent of, the Fund’s investors. 

Respondents invested in and lent money to two entities in which the ACM owners had an 

interest. Respondents also lent an ACM owner, Duszynski, money to fund his investment in a 

business venture with other ACM owners that later failed, saddling the Fund and its investors 

with the resulting losses. Respondents also collected nearly $1 million in investor funds by 

charging the Fund for ACM’s expenses. Respondents also provided investors with account 

statements that did not accurately reflect the market value of the underlying investments. 

 

1 Advisers Act Rel. No. 4591 (Dec. 20, 2016).
2

On October 26, 2017, the Commission issued an Order Making Findings and Imposing 

Remedial Sanctions and a Cease-and-Desist Order Pursuant to 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 and Instituting Public Administrative Proceedings, and Imposing Sanctions Pursuant to 

Rule 102(e) of the Commission’s Rules of Practice as to Thomas F. Duszynski, CPA (the 

“Order”).2 The Order found, among other things, that Respondents caused the Fund to engage in 

conflicted transactions without disclosure to, or the consent of, the Fund’s investors; that the 

Respondents invested in and lent money to two entities in which the ACM owners had an interest

(the entities are FT Investing LLC, which resulted in a $120,000 loss3to investors, and FT 

Trading, LLC, where Respondents made a series of undocumented loans) and that Respondents 

also lent $250,000 to Duszynski to fund his investment in a business venture and that Duszynski 

defaulted on the loan; that Respondents used nearly $950,000 in investor funds to pay for ACM’s 

expenses; that Respondents unilaterally determined which investments were allocated to which 

investors rather than basing their determination on the time when those investments were made 

into the Fund as discussed in the Fund’s offering documentation; and that Respondents provided 

investors with account statements that did not accurately reflect the value of certain underlying 

investments, which were overly inflated as those investments were bankrupt or worthless 

investments , that resulted in investors overpaying advisory fees.

4

 In addition, the Fund made 

transfers to Porter totaling more than $373,000 even though Porter was not owed these amounts 

as either salary or a profit distribution and he did not have sufficient available cash in his account 

in the Fund to cover these withdrawals.

The Order requires the Respondents to cease and desist from committing or causing any 

violations and any future violations of Sections 206(1), 206(2), and 206(4) of the Investment 

Advisers Act of 1940 and Rule 206(4)-8 thereunder. The Order bars Porter and Duszynski from 

associating with any broker, dealer, investment adviser, municipal securities dealer, municipal 

advisor, transfer agent, or nationally recognized statistical rating organization, and prohibits 

Porter and Duszynski from serving or acting as an employee, officer, director, member of an 

advisory board, investment adviser or depositor of, or principal underwriter for, a registered 

investment company or affiliated person of such investment adviser, depositor, or principal 

underwriter, with the right to apply for reentry after three (3) years. The Order censures ACM 

and suspends Duszynski from appearing and practicing before the Commission as an accountant. 

The Respondents also were ordered to pay, jointly and severally, disgorgement of $685,514.73 

and prejudgment interest of $42,791.38. The Order further required ACM, Porter, and 

Duszynski to pay civil money penalties in the amount of $150,000.00, $75,000.00, and 

$50,000.00, respectively. The Order created a Fair Fund, pursuant Section 308(a) of the 

Sarbanes-Oxley Act of 2002, as amended, for the funds paid by the Respondents (the “Fair 

Fund”).

 

2

 Advisers Act Rel. No. 4800 (Oct. 26, 2017).

3 According to investigative staff, Respondents had invested $500,000 in FT Investing, LLC, which then invested in 

PIPEs (Private Investment in Public Equity). Because the PIPEs did not perform well, Respondents liquidated the 

investments in FT Investing, LLC.

4 Respondents ultimately reimbursed the funds for the loans made to FT Trading and Duszynski and thus there is no 

investor harm attributed to those loans in the Plan.
3

In accordance with the Order, the Respondents have paid a total of $1,003,306.11 in 

disgorgement, prejudgment interest, and civil money penalties to the Commission. 

The Fair Fund is subject to the continuing jurisdiction and control of the Commission and 

the Fair Fund is currently on deposit in a Commission designated interest-bearing account at the 

United States Department of Treasury (“U.S. Treasury”) Bureau of Fiscal Services (“BFS”). 

Other than potential interest income from the BFS investment, the Commission does not 

anticipate that the Fair Fund will receive any additional funds. If any additional funds are 

received, those funds will be sent to the U.S. Treasury and not distributed at the discretion of the 

Fund Administrator. All BFS fees will be paid by the Fair Fund. The Plan is subject to approval 

by the Commission, and the Commission retains jurisdiction over the implementation of the 

Plan.

Under the Plan, the Fair Fund, plus accumulated interest and earnings thereon, less any 

reserve for taxes, fees or other expenses of administering the Plan (the “Net Fair Fund”), will be 

distributed to Eligible Investors, as defined below, as set forth in paragraph 8 below. 

2. Tax Administrator. The Commission has appointed Miller Kaplan Arase LLP 

as the tax administrator (“Tax Administrator”) of the Fair Fund,5pursuant to Omnibus Order 

Directing the Appointment of Tax Administrator in Administrative Proceedings that 

Establish Distribution Funds.6 The Fund Administrator will cooperate with the Tax 

Administrator in providing information necessary to accomplish income tax compliance and 

any other work ordered to the Tax Administrator by the Commission staff. The Tax 

Administrator will be compensated for all reasonable costs and expenses from the Fair Fund 

in accordance with its Revised 2017-2018 Engagement Letter Agreement with the 

Commission. The Fair Fund’s taxes will be paid out of the Fair Fund.

3. Fund Administrator. Michael S. Lim, attorney adviser in the Commission’s 

Division of Enforcement’s Office of Distributions, is the proposed administrator of the Fair Fund 

(the “Fund Administrator”). As a Commission employee, the Fund Administrator receives no 

compensation from the Fair Fund for his services in administering the Fair Fund. In accordance 

with Rule 1105(c) of the Rules, 17 C.F.R. § 201.1105(c), no bond is required since the Fund 

Administrator is a Commission employee. In carrying out his duties, the Fund Administrator 

may be assisted by other Commission staff acting under his supervision. 

The Fund Administrator will, among other things: oversee the administration of the Fair 

Fund, obtain mailing information for the Eligible Investors, distribute money from the assets of 

the Fair Fund in accordance with the Plan, resolve disputes, prepare a final accounting with 

assistance from the Tax Administrator, and provide the Tax Administrator with funds to pay tax 

liabilities and tax compliance fees and costs. The Fund Administrator may be removed at any 

time by order of the Commission or hearing officer.

 

5

 Exchange Act Rel. No. 82330 (Dec. 14, 2017).

6

 Exchange Act Rel. No. 81057 (June 30, 2017).
4

4. Qualified Settlement Fund. The Fair 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.

5. No claims-made process. The Fair Fund is not being distributed according to a 

claims-made process, so the procedures for providing notice and for making and approving 

claims are not applicable.

6. Definitions. The following definitions apply to the terms as used in the Plan: 

(a) Distribution Payment is the payment made to an Eligible Investor in accordance 

with this Plan. 

(b) Eligible Investor is any Investor who suffered a Net Harm Amount, pursuant to 

the methodology herein, and who is not (i) an Unresponsive Investor, (ii) one of the 

Respondents, or (iii) an entity controlled by any of the Respondents.

(c) Fair Fund is comprised of the disgorgement, prejudgment interest, and civil 

penalties paid by the Respondents in the captioned matter.

(d) Investor refers to an investor in the Fund from January 1, 2012 to December 31, 

2015. 

(e) NAV refers to Net Asset Value.

(f) Net Fair Fund is the Fair Fund, plus accumulated interest earned thereon, less 

taxes and the fees and expenses of administering the Plan. 

(g) Net Harm Amount is the sum of each Investor’s NAV Expense Amount, 

Inflation Expense Amount, Porter Withdrawal Amount, and FT Investing LLC Amount (as 

defined in paragraph 8 below). 

(h) Unresponsive Investor is (i) any Investor from whom information is sought in 

the Plan Notice and/or directly by the Fund Administrator, and who does not timely provide that 

information; or (ii) any Investor who the Fund Administrator cannot locate through reasonable 

efforts. For purposes of this Plan, locating Investors through the use of commercial databases 

regularly available to the Fund Administrator constitutes “reasonable efforts.” 

7. Specification of Eligible Investors. The Fund Administrator will distribute the Net 

Fair Fund to those Eligible Investors that have been harmed by the conduct described in the 

Order. Based on information obtained during the Commission’s investigation, Commission staff 

has identified forty-five (45) Eligible Investors. 
5

8. Methodology for Determining Distribution Payments. The Fund Administrator 

determined the amount to be distributed to each potentially Eligible Investor by using 

information collected by Commission staff to calculate each affected Investor’s Net Harm 

Amount. An Investor’s Net Harm Amount is calculated as the sum of each Investor’s FT 

Investing LLC Amount, Inflation Expense Amount, NAV Expense Amount, and/or Porter 

Withdrawal Amount: 

(a) An Investor’s FT Investing LLC Amount is an Investor’s investment amount in 

FT Investing LLC, less any amounts paid to the Investor in connection with the liquidation. If an 

Investor’s FT Investing LLC Amount is less than zero, it will be deemed to be zero.

(b) An Investor’s Inflation Expense Amount is an Investor’s share, based on an 

Investor’s holdings in a quarter relative to the total size of the Fund in that quarter, of the 

quarterly additional expenses caused by the overstatement of the Fund’s NAV due to ACMs’ 

failure to write off bankrupt and worthless investments. If an Investor’s Inflation Expense 

Amount is less than zero, it will be deemed to be zero.

(c) An Investor’s NAV Expense Amount is an Investor’s share, based on an 

Investor’s holdings in a quarter relative to the total size of the Fund in that quarter, of the 

quarterly expenses paid by the Investor in excess of 1% of the Fund’s NAV. If an Investor’s 

NAV Expense Amount is less than zero, it will be deemed to be zero.

(d) An Investor’s Porter Withdrawal Amount is an Investor’s share, based on the 

Investor’s holdings in each quarter relative to the total size of the Fund in that quarter, of the 

improper withdrawals made by Porter in each quarter of 2012 and 2013 in excess of the 

$175,000 per year that he was entitled to receive as his salary. If an Investor’s Porter 

Withdrawal Amount is less than or equal to zero, it will be deemed to be zero.

Eligible Investors who suffered a Net Harm Amount will receive a Distribution Payment. 

Because the total of all the Eligible Investors’ Net Harm Amounts is less than the Net Fair Fund, 

the Fund Administrator anticipates the Fair Fund will be able to pay each Eligible Investor their 

Net Harm Amount in full, plus reasonable interest.7

Based on this methodology, there are approximately forty-five (45) Eligible Investors 

identified to receive Distribution Payments, if not deemed an Unresponsive Investor. The 

distribution will total approximately $898,689.35, and the Distribution Payments are intended to 

fully compensate each investor’s harm. 

In the view of the Commission staff and the Fund Administrator, this methodology 

constitutes a fair and reasonable allocation of the Fair Fund. It is anticipated that there will be 

one (1) distribution to the Eligible Investors. 

 

7

“Reasonable interest” is calculated using the short-term Applicable Federal Rate, compounded quarterly from the 

end of each calendar quarter in which an Eligible Investor suffered losses through March 31, 2019.
6

9. Procedures for Locating and Notifying Eligible Investors. Based on information 

obtained by the Commission staff during its investigation and the review and analysis of 

applicable records, the Fund Administrator has identified forty-five (45) Eligible Investors. 

Within thirty (30) days of the Commission’s approval of the Plan, the Fund Administrator will 

send each Eligible Investor a notice by electronic mail, United States Postal Service, or other 

mail delivery service regarding the Commission’s approval of the Plan, including as appropriate, 

a statement characterizing the distribution, a proposed distribution payment and how the 

payment was calculated, a link to the Plan on the Commission’s website and instructions for 

requesting a copy of the Plan, the number assigned to that Eligible Investor, a description of the 

tax information reporting and other related tax matters, specification of the information required 

by the Fund Administrator, and the contact information of the Fund Administrator to contact 

with questions regarding the distribution (the “Plan Notice”). Eligible Investors must provide the 

information requested in the Plan Notice, as instructed therein, to maintain their status as an 

Eligible Investor.

The Fund Administrator will coordinate with the Tax Administrator to request contact 

and other information from each Eligible Investor that is needed to accomplish the distribution in 

accordance with applicable tax requirements relating to the Fair Fund, including compliance with 

the Foreign Account Tax Compliance Act (“FATCA”). 

Eligible Investors will be asked to confirm the Distribution Payment amount or provide 

documentation if they disagree with the calculated Distribution Payment amount. The Fund 

Administrator must receive a written communication detailing the dispute along with any 

supporting documentation. This can be done by setting forth in detail the basis for the objection, 

including at the end of the statement (if true) the phrase: “I declare under penalty of perjury that 

the foregoing is true and correct,” and signing and dating the document. All objections 

submitted pursuant to this paragraph must be postmarked within sixty (60) days of approval of 

the Plan and be in accordance with the instructions set forth in the Plan Notice, and must include 

current contact information, including a telephone number and (if applicable) an electronic mail 

address for the objecting person. The Fund Administrator will investigate the dispute, and such 

investigation will include a review of the written dispute as well as any supporting 

documentation. Within ninety (90) days of receipt of the written dispute, the Fund Administrator 

will notify the Eligible Investor of his resolution of the dispute, which shall be final.

10. Procedures to Request Plan Notice. A person who does not receive 

correspondence from the Fund Administrator and believes that he or she should have received 

correspondence after becoming aware of the Plan must submit documentation to the Fund 

Administrator in order to establish that the person is in fact an Eligible Investor. Such 

documentation must be submitted by receipted mail to the address below:
7

Michael Lim

Attorney Adviser

United States Securities and Exchange Commission

Trial Unit-Office of Distributions

100 F St, NE Mail Stop 5876

Washington, DC 20549

11. Returned Mail and Unresponsive Investors. If correspondence is returned as 

undeliverable within sixty (60) days of approval of the Plan, the Fund Administrator will make 

all reasonable efforts to ascertain an Eligible Investor’s correct address. If a new address is 

ascertained, the Fund Administrator will resend the correspondence to the Eligible Investor’s 

new address within thirty (30) days of receipt of the returned correspondence. If the 

correspondence is returned again, the Eligible Investor will be deemed an Unresponsive Investor 

and will be removed from the distribution. 

If an Eligible Investor fails to provide to the Fund Administrator all information 

requested in the Plan Notice within sixty (60) days of approval of the Plan, the Fund 

Administrator shall make two (2) attempts to contact the Eligible Investor telephonically or by 

email. If an Eligible Investor fails to respond to the Fund Administrator’s contact attempts 

within seven (7) days of the Fund Administrator’s last contact attempt, such Eligible Investor 

will be deemed an Unresponsive Investor and will not be eligible for a distribution under the 

Plan. Any Distribution Payment preliminarily allocated to that Investor will be returned to the

United States Treasury. 

12. Distribution Timing. The Fund Administrator will use his best efforts to start the 

Commission disbursement approval process within one hundred fifty (150) days of the Plan’s 

approval. 

13. Validation and Approval of Disbursement of the Fair Fund. The Fair Fund 

distribution to Eligible Investors will be implemented by the Commission and disbursed through 

BFS. Checks will be mailed or distribution payments will be electronically transferred to each 

Eligible Investor as instructed by the Fund Administrator. The Fund Administrator will compile 

the payee information and prepare a payment file in a Commission-approved format for 

submission to BFS. Consistent with Rule 1101(b)(6) of the Rules, 17 C.F.R. § 201.1101(b)(6)

the Fund Administrator will obtain an order from the Commission to disburse the Fair Fund. 

14. Uncashed Checks. The Fund Administrator will work with BFS to obtain 

information about uncashed checks, any returned items due to non-delivery, insufficient 

addresses, and/or other deficiencies. The Fund Administrator will use best efforts to obtain 

additional information sufficient to reissue and/or re-send the uncashed checks. The Fund 

Administrator also is responsible for accounting for all payments. Checks issued by BFS will 

state on their face that they are valid for one (1) year. The amount of all uncashed checks will be 

sent to the U.S. Treasury as residual. 
8

15. Amendments and Procedural Deadline Extensions. The Fund Administrator will 

take reasonable and appropriate steps to distribute the Net Fair Fund according to the Plan. If 

there are any changes to the Plan that are determined to be material by the Fund Administrator 

and Commission staff, Commission approval is required prior to implementation by amending 

the Plan. For good cause shown, the Fund Administrator may extend any of the procedural dates 

set forth in the Plan if agreed upon by the Commission staff.

16. Residual Account. A residual account within the Fair Fund is established for any 

amounts remaining after distribution of the Net Fair Fund to Eligible Investors under the Plan. 

The residual account may include funds reserved for future taxes and related expenses, 

distributions from checks that have not been cashed, from checks that were not delivered or from 

funds returned to the Commission, tax refunds for overpayment or for waiver of IRS penalties. 

All funds remaining in the residual account will be transferred to the U.S. Treasury after the final 

accounting is approved by the Commission. 

17. Accountings. Upon final distribution to Eligible Investors and the payment of all 

taxes, fees, and expenses, the Fund Administrator will submit a final accounting for approval by 

the Commission prior to termination of the Fair Fund and the discharge of the Fund 

Administrator. No interim accountings will be submitted.

18. Termination of the Fair Fund. Upon final distribution of the Net Fair Fund to 

Eligible Investors, the Fund Administrator shall make arrangement for the final payment of taxes 

and Tax Administrator fees and shall submit a final accounting to the Commission. The Fair 

Fund shall be eligible for termination after all of the following have occurred: (a) a final 

accounting, in the Commission’s standard accounting format, has been submitted by the Fund 

Administrator, and has been approved by the Commission; and, (b) all taxes and fees and

expenses have been paid. When the Commission has approved the final accounting, the 

Commission staff shall seek an order from the Commission to approve the: (a) transfer of the 

residual and any funds returned to the Fair Fund in the future to the U.S. Treasury; (b) 

termination of the Fair Fund; and (c) discharge of the Fund Administrator. 

19. Notice of the Proposed Plan of Distribution and Opportunity for Comment. 

Notice of the Proposed Plan of Distribution and Opportunity for Comment (the “Notice”) will be 

published on the Commission website at http://www.sec.gov/litigation/fairfundlist.htm. Any 

person wishing to comment on the Plan must do so in writing by submitting their comments to 

the Commission within thirty (30) days of the date of the Notice: (a) to the Office of the 

Secretary, United States Securities and Exchange Commission, 100 F Street, NE, Washington, 

DC 20549-1090; (b) by using the Commission’s Internet comment form 

(http://www.sec.gov/litigation/admin.shtml); or (c) by sending an e-mail to rulecomments@sec.gov. Comments submitted by email or via the Commission’s website should 

include “Administrative Proceeding File No. 3-17740” in the subject line. Comments received 

will be publicly available. Persons should only submit comments that they wish to make publicly 

available.