UNITED STATES OF AMERICA

Before the 

SECURITIES AND EXCHANGE COMMISSION

ADMINISTRATIVE PROCEEDING

File No. 3-16652 

In the Matter of

MICHAEL S. WILSON, CPA and

COTTERMAN-WILSON, CPAs, INC.

Respondents. 

PLAN OF DISTRIBUTION

ADMINISTRATIVE PROCEEDING

File No. 3-16892

In the Matter of

JAMES T. BUDDEN AND 

ALEXANDER W. BUDDEN,

Respondents.

I. OVERVIEW

1. The U.S. Securities and Exchange Commission’s (“SEC” or “Commission”) Division of 

Enforcement (“Division”) has developed this plan of distribution (“Distribution Plan”) pursuant 

to Rule 1101 of the Commission’s Rules on Fair Fund and Disgorgement Plans (“Rules”), 17 

C.F.R. § 201.1101. As described more specifically below, the funds in the above-captioned

proceedings will be transferred, pursuant to Rule 1102(a) of the Rules, 17 C.F.R. § 201.1102(a),

to a court-appointed receiver (“Receiver”) in the related Commission action, Securities and
2

Exchange Commission v. Cowgill, No. 2:14-CV-396 (S.D. Ohio) (the “District Court Action”), 

for distribution to injured investors who were defrauded by Douglas E. Cowgill’s (“Cowgill” or 

“Defendant”) while he served as President and Chief Compliance Office (“CCO”) of

Professional Investment Management, Inc. (“PIM”), an investment adviser registered with the 

Commission. The distribution will be in accordance with the Receiver’s procedure for valuation 

of the PIM accounts, approved by the Court on September 21, 2015 in the District Court action

(“Receiver’s Plan”).

1 Rule 1102(a) provides, in relevant part, that “[s]ubject to such conditions 

as the Commission . . . shall deem appropriate, a plan for the administration of a Fair Fund or a 

disgorgement fund may provide for payment of funds . . . to a court-appointed receiver in any 

case pending in federal . . . court against a respondent or any other person based upon a 

complaint alleging violations arising from the same or substantially similar facts as those alleged 

in the Commission's order instituting proceedings.”

As discussed in Section II below, the District Court Action against Cowgill for his 

securities law violations arises from the same facts as those at issue in the above-captioned 

proceedings and spans the same time period in compliance with Rule 1102(a). A distribution 

pursuant to the Receiver’s Plan will benefit the same investors injured as a result of Cowgill’s 

misconduct and be more cost-effective and timely than if the Commission were to undertake its 

own distribution of the funds; this is because, among other reasons, doing so would eliminate the 

duplication of work already done by the Receiver.

2 Based on these factors, the Division has 

concluded transferring the Fair Funds established in the Commission’s above-captioned 

proceedings pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended by the 

 1

 See Docket No. 58; see also, Docket No. 69 in the District Court Action. 2

 Due to PIM’s poor record-keeping and the nature of the misappropriation of funds, the Receiver spent a 

substantial amount of time determining which investors were injured and developing an appropriate methodology 

for compensating the injured investors. By transferring the funds to the Receiver, the Commission staff would be 

able to leverage this work.
3

Dodd-Frank Act of 2010, 15 U.S.C. § 7246 (the “Fair Funds”) and distributing them pursuant to 

the Receiver’s Plan in the District Court Action meets the requirements of Rule 1102(a) and is 

fair and reasonable under the circumstances.

3

II. FACTUAL AND PROCEDURAL BACKGROUND

A. The SEC’s District Court Action

2. The SEC filed a complaint against PIM, a Columbus, Ohio based investment 

adviser, and its President and CCO, Cowgill, under seal on April 29, 2014, which alleged, among 

other things, a shortfall in a money market fund account managed by PIM.4 PIM managed

approximately $120 million in assets for fifteen (15) retirement plans (“Retirement Plans”).5

PIM was registered with the SEC as an investment adviser from 1978 until September 30, 2013

and then again from June 24, 2014 until April 27, 2016.

6 PIM had custody of investor assets 

through various omnibus securities and cash accounts. 

3. According to the complaint, unsealed on May 2, 2014, account statements sent to 

clients stated that PIM held a total of approximately $7.7 million in a money market fund when 

in fact the omnibus account holding these investments held less than $7 million. The SEC further 

 3 Consistent with the approach used by district courts when considering whether to approve a distribution plan, the 

Commission’s objective is to distribute the Fair Funds in a fair and reasonable manner, taking into account relevant 

facts and circumstances. See Official Committee of Unsecured Creditors of WorldCom, Inc. v. SEC, 467 F.3d 73, 82 

(2d Cir. 2006), citing SEC v. Wang, 944 F.2d 80, 88 (2d Cir. 1991). In Wang, the court held that “unless the consent 

decree specifically provides otherwise once the district court satisfies itself that the distribution of proceeds in a 

proposed SEC disgorgement plan is fair and reasonable, its review is at an end.” Id. at 85 (citing SEC v. Certain 

Unknown Purchasers of the Common Stock and Call Options for the Common Stock of Santa Fe Int'l Corp., 817 

F.2d 1018, 1021 (2d Cir.1987)). 4 See Docket No. 2 in the District Court Action. 5 The Retirement Plans had approximately 300 participants collectively, who in turn, owned approximately 400 

individual retirement accounts.

6 Cowgill signed and filed with the Commission a Form ADV-W on behalf of PIM after receiving a telephone call 

from Commission staff inquiring about PIM’s failure to file a form ADV-E for several years. The Receiver reregistered PIM with the Commission for purposes of administering the PIM estate during the pendency of the 

litigation. On April 27, 2016, the Commission accepted PIM’s offer of settlement, submitted by the Receiver, and 

simultaneously entered an order revoking PIM’s registration as an investment adviser (Advisers Act Rel.4378

(Apr. 26, 2016)).
4

alleged that Cowgill attempted to disguise this shortfall and avoid detection by providing

falsified account records to the SEC staff, and moving money between accounts.

4. The complaint alleged that PIM and Cowgill violated Section 10(b) of the 

Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder, and Sections

206(1) and 206(2) of the Investment Advisers Act of 1940 (“Advisers Act”) when Cowgill 

misappropriated funds. In addition, the complaint alleged that PIM violated, and Cowgill aided 

and abetted PIM’s violations of Sections 203(a) and 206(4) of the Advisers Act and Rule 

206(4)-2 thereunder. 

5. On April 30, 2014, the Court issued a temporary restraining order and imposed an 

asset freeze to protect client assets.7 On May 15, 2014, the Court entered an order of preliminary 

injunction against PIM and Cowgill and a separate order, by consent, appointing a Receiver for 

the estate of PIM. 8

6. The Commission filed an amended complaint on August 7, 2014 that included 

additional counts against Cowgill and PIM.

9

7. The Court entered a bifurcated judgment by consent against Cowgill on August 

21, 2014 as to all counts (leaving the issue of the amount, if any, of penalties, disgorgement, and 

prejudgment interest unresolved). On December 22, 2015, the Court entered a final judgment by 

consent against Cowgill, which required him to pay a total of $1,787,757.84, consisting of 

$840,574.42 in disgorgement, $106,609 in prejudgment interest, and $840,574.42 as a civil 

 7 See Docket No. 9 in the District Court Action, see also, Litigation Release No. 22985 (May 5, 2014). 8 See Docket No. 23 in the District Court Action. The court-appointed receiver, Michael O’Grady, has since passed 

away and David Kopech of Kopech & O’Grady, LLC, has replaced him.

9

 The amended complaint included additional allegations of violations of Section 207 of the Advisers Act by PIM 

and Cowgill, and alleged PIM violated, and Cowgill aided and abetted PIM’s violations of Sections 203(a) and 

204(a) of the Advisers Act and Rules 204-2 and 206(4)-7 thereunder. See Docket No. 35 in the District Court 

Action.
5

penalty.10 On April 15, 2016, the Court entered a final judgment, granting permanent injunctive 

relief as to PIM.

8. On December 23, 2015, the Court authorized the Receiver to distribute funds

under PIM’s control in accordance with the Receiver’s Plan and to dissolve PIM.11

9. In developing the Receiver’s Plan, the Receiver took into account the 

circumstances under which Cowgill proceeded with his fraudulent action. The majority of PIM’s 

holdings consisted of funds belonging to the fifteen (15) Retirement Plans that PIM had pooled 

together in omnibus securities accounts.

12 Cowgill received money from the different Retirement 

Plans for investment, typically comingled the funds in a PIM checking account, and then 

transferred the Retirement Plans’ funds to, among other places, omnibus securities accounts. 

Cowgill also stole client funds, by directing transfers to his own personal accounts and Cowgill 

hid his theft by misrepresenting the value of the client holdings on statements PIM issued to the 

Retirement Plan participants. Because the investment funds were co-mingled before being 

diverted by Cowgill, the Receiver determined it was practically impossible to determine the 

specific amount of money that Cowgill stole from each Retirement Plan.

10. Therefore, in the Receiver’s Plan approved by the court, the Receiver calculated 

the difference between the amount of the total investment funds under management control 

reported by PIM for each of the Retirement Plans, based on PIM’s records, and the actual 

amount of investment funds under PIM’s control on the benchmark date of June 30, 2014. 

 10 As of July 12, 2016, Cowgill has paid $18,937.25 of the $1,787,757.84 judgment. See Docket No. 103 in District 

Court Action.

11 See Docket No. 70 in District Court Action. 12 PIM also provided investment advisory services to approximately 20 to 25 individuals for their own after tax 

(non-retirement plan) accounts; however, these individual accounts were not consolidated into the omnibus accounts 

from which Cowgill stole money. Only the fifteen Retirement Plans in the omnibus account suffered a loss because 

of Cowgill’s fraud. 
6

11. Once the total amount of the losses was determined, the Receiver was able to 

allocate losses to each Retirement Plan based on each Retirement Plan’s percentage of cash 

holdings and cash equivalents, and this methodology was approved by the Court. Thus, if 

Retirement Plan A’s share of cash holdings and cash equivalents was 20%, it was allocated 20% 

of the total losses. It was left up to each Retirement Plan’s Trustees to allocate its share of the 

distributed funds among participants.13

B. Administrative Proceedings

12. On June 25, 2015, the Commission issued an Order Instituting Public 

Administrative and Cease-and-Desist Proceedings Pursuant to Section 4C of the Securities 

Exchange Act of 1934, Section 203(k) of the Investment Advisers Act of 1940, and Rule 102(e) 

of the Commission’s Rules of Practice, Making Findings, and Imposing Remedial Sanctions and 

a Cease-and-Desist Order (“Accounting Firm Order”) 14 against Michael S. Wilson, CPA

(“Wilson”) and Cotterman-Wilson CPAs, Inc., a Columbus, Ohio based accounting firm 

(“Cotterman-Wilson”) (collectively “Accounting Firm Respondents”). The allegations in the 

Accounting Firm Order arose out of the Accounting Firm Respondents’ failure to complete or 

withdraw from surprise examinations of PIM pursuant to Section 206(4) of the Advisers Act and 

Rule 206(4)-2 thereunder (the “Custody Rule”)

15 in 2009, 2010, and 2011.16 The Accounting 

Firm Respondents consented, without admitting or denying the allegations, to findings that they

caused PIM's violations of Section 206(4) of the Advisers Act and Rule 206(4)-2 thereunder in 

 13 Because PIM contracted with the Retirement Plans and not the individual participants in the Retirement Plans, the 

Retirement Plan Trustees, who are fiduciaries, were free to allocate the losses within each Retirement Plan under the 

authority provided by each Retirement Plan’s rules and regulations.

14 Exchange Act Rel. No. 75298 (June 25, 2015) (Administrative Proceeding File No. 3-16652). 15 17 C.F.R. § 275.206(4)-2, the Custody Rule, sets forth certain requirements for any investment adviser registered 

with the Commission who has custody of client funds or securities. 

16 PIM engaged Cotterman-Wilson to perform the required surprise examinations from 1999 to 2011, as required by 

the Custody Rule, but the Accounting Firm Respondents failed to complete the surprise examinations or to withdraw 

from the surprise examinations for these years, and thus, caused PIM to violate the Custody Rule for each of those 

years. 
7

2009, 2010, and 2011, and engaged in improper professional conduct within the meaning of 

Section 4C(a)(2) of the Exchange Act and Rule 102(e)(1)(ii) of the Commission’s Rules of 

Practice in connection with the surprise examinations from 2009 through 2011. Wilson was 

ordered to pay a $50,000 civil money penalty and Cotterman-Wilson was ordered to pay a

$25,000 civil money penalty, $10,868 in disgorgement, and $1,029 in prejudgment interest. The 

Accounting Firm Respondents paid the Commission, as ordered, on June 26, 2015.

13. On October 13, 2015, the Commission issued an Order Instituting Administrative 

and Cease-and-Desist Proceedings Pursuant to Sections 203(f) and 203(k) of the Investment 

Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions and a Cease-andDesist Order (“PIM Owner Order”) against James T. Budden and Alexander W. Budden, the 

former principal owners of PIM (collectively “PIM Owner Respondents”).

17 The PIM Owner 

Respondents consented, without admitting or denying the allegations, to findings that they failed 

reasonably to supervise Cowgill within the meaning of Sections 203(e)(6) of the Advisers Act

with a view to preventing and detecting Cowgill’s violations of Section 10(b) of the Exchange 

Act and Rule 10b-5 thereunder, and Sections 203(a), 204(a), 206(1), 206(2), 206(4), and 207 of 

the Advisers Act and Rules 204-2, 206(4)-2, and 206(4)-7 thereunder;

18 caused PIM’s violations 

of Section 206(4) of the Advisers Act and Rule 206(4)-7 (the “Compliance Rule”);

19 and, James 

 17 Advisers Act Rel. No. 4225 (Oct.13, 2015) (Administrative Proceeding File No. 3-16892). 18 Cowgill violated several antifraud provisions of the federal securities laws by misappropriating more than 

$840,000 in client assets.

19 Rule 206(4)-7, 17 C.F.R. § 275.206(4)-7,the Compliance Rule imposes certain requirements on registered 

investment advisers, including adopting and implementing written policies and procedures to prevent violations of 

the Advisers Act. PIM Owner Respondents failed to adopt or implement any policies or procedures for supervising 

Cowgill; instead the PIM Owner Respondents merely assumed, without confirming, that Cowgill performed his 

responsibilities in compliance of the federal securities laws. Further, PIM Owner Respondents did not ensure that 

PIM established policies or procedures to prevent client assets from being misappropriated via checks or wire 

transfers or to ensure that client statements were reviewed for accuracy. Additionally, after the PIM Owner 

Respondents designated Cowgill as the CCO, they provided no funding, training or resources to support Cowgill in 

the CCO role. Furthermore, the PIM Owner Respondents had participated in annual compliance reviews with 

Cowgill in earlier years and, therefore, knew or should have known that Cowgill stopped performing compliance 
8

T. Budden caused PIM’s violations of Section 206(4) of the Advisers Act and Rule 206(4)-2 

thereunder (the Custody Rule).

20 James T. Budden was ordered to pay a $125,000 civil money 

penalty and Alexander W. Budden was ordered to pay a $75,000 civil money penalty. The PIM 

Owner Respondents paid the Commission, as ordered, on October 14, 2015.

14. Fair Funds were created by the Commission pursuant to Section 308(a) of the 

Sarbanes-Oxley Act of 2002, as amended, in each of the above-captioned matters to distribute 

any disgorgement, prejudgment interest, and penalty payments received to injured investors.

21

The combined total of the two Fair Funds is $286,897.

15. Rule 1102(a) permits a plan of distribution for payment of funds recovered in 

Commission actions to be transferred to a court-appointed receiver in federal cases where the 

complaint alleges violations from the same or substantially similar facts and span the same time 

period. In the District Court Action, Cowgill was charged with defrauding the Retirement Plans 

and their investors by embezzling monies from PIM omnibus accounts and attempting to 

disguise this shortfall and avoiding detection by providing falsified account records to the 

Commission staff, and moving money between accounts. He also violated the securities laws by 

failing to carry out his compliance responsibilities. In the administrative proceeding against the 

PIM Owner Respondents, the allegations were that by failing to supervise Cowgill, or to take 

steps to ensure that PIM was complying with the federal securities laws or that Cowgill carried 

 

reviews after 2007, but took no steps to ensure that Cowgill or anyone else at PIM resumed conducting such reviews

at least annually after 2007. 20 Among other things, James T. Budden delegated the responsibility to Cowgill in 2009 to engage an independent 

accountant on behalf of PIM to conduct annual surprise examinations and to file the Form ADV-E in connection 

with the annual surprise examination, as required by the Custody Rule, but did not follow up with Cowgill to ensure 

Cowgill had fulfilled his responsibility. When the PIM Owner Respondents learned of Cowgill’s failure to complete 

annual surprise examinations or to file the required Form ADV-E, they did not take any disciplinary action against 

Cowgill, but instead they each executed a stock purchase agreement in which they agreed to sell their interests in 

PIM to Cowgill. 21 Administrative Proceeding File No. 3-16652 (June 25, 2015) and Administrative Proceeding File No. 3-16892 

(October 13, 2015).
9

out his responsibilities as PIM’s CCO, PIM Owner Respondents permitted the fraud and the 

other securities law violations to continue unabated, thus injuring the same investors. Similarly,

the administrative proceeding against the Accounting Firm Respondents alleged that because 

PIM, a registered investment adviser, had custody of client assets held in three omnibus accounts 

and was required by the Custody Rule to engage an independent public accountant to conduct 

annual surprise examinations to verify those assets, the Accounting Firm Respondents’ failure to 

complete the surprise examinations or to withdraw from the surprise examinations caused PIM to 

violate the federal securities laws. In addition, the Accounting Firm Respondents were charged 

with engaging in improper professional conduct and violating other securities laws in connection 

with its representation of PIM. Had the Accounting Firm Respondents performed their duties 

properly, Cowgill’s fraud may have been prevented. As a result, the same investors harmed by 

Cowgill’s conduct were further harmed by the conduct of the Accounting Firm Respondents.

III. TRANSFER OF THE FAIR FUNDS TO THE DISTRICT COURT ACTION

16. Following Commission approval of the Distribution Plan, the Commission staff 

will take the necessary steps to obtain a Commission order transferring the Fair Funds described 

in paragraph 14 to the District Court Action.

17. The Receiver has agreed to distribute the Fair Funds, totaling approximately 

$286,897, to the Retirement Plans. 22 The Fair Funds will be distributed using the same 

methodology for distribution contained in the Receiver’s Plan.

18. The Receiver’s costs of administering the Fair Funds will be paid from the Fair 

Funds. The Receiver has agreed to be responsible for all tax compliance and reporting 

 22 The Receiver has also agreed to distribute any funds disgorged by Cowgill or obtained by the Commission 

collection efforts during the time the receivership is open.
10

obligations. All tax obligations, including fees and expenses of tax preparation, will be paid from 

the Fair Funds. 

19. It is anticipated that the entirety of the Fair Funds will be distributed to the 

Retirement Plans by the Receiver. In the event that any portion of the Fair Funds is not 

distributed to the Retirement Plans, the Receiver has agreed to return any remaining funds to the 

Commission.

20. The Receiver has agreed to submit a final report and accounting for the 

disbursement of the Fair Funds to the Court in the District Court Action. When the Court has 

approved the final report and accounting and any remaining funds have been returned to the 

Commission, the Commission staff will arrange for the transfer of any remaining amounts to the 

U.S. Treasury.