UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 80711 / May 18, 2017 

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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ORDER APPROVING PLAN OF 

DISTRIBUTION

On September 23, 2015, the 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”)1against 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 ordered the Respondents, jointly and severally, to pay 

 

1

Securities Act Rel. No. 9925 (Sept. 23, 2015).
2

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.

4

 A distribution fund has been created for this 

distribution, and any additional payments of disgorgement and prejudgment interest received 

from the Bankruptcy Proceeding or otherwise received from the Respondents, plus any interest 

earned on those funds (the “Distribution Fund”). 

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

and Opportunity for Comment (“Notice”)5pursuant to Rule 1103 of the Commission’s Rules on 

Fair Fund and Disgorgement Plans (“Rules”).

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 The Notice advised all interested persons that 

they may obtain a copy of the proposed plan of distribution (“Distribution Plan”) from the 

Commission’s public website at http://www.sec.gov/litigation/fairfundlist.htm or by submitting a 

written request to Catherine E. Pappas, Senior Advisor, United States Securities and Exchange 

Commission, One Penn Center, 1617 JFK Blvd., Ste. 520, Philadelphia, PA 19103. 

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

could submit their comments, in writing, no later than thirty (30) days from the date of the

Notice: (1) to the Office of the Secretary, United States Securities and Exchange Commission, 

100 F Street, NE, Washington, DC 20549-1090; (2) by using the Commission’s Internet 

comment form (http://www.sec.gov/litigation/admin.shtml); or, (3) by sending an email to 

rule-comments@sec.gov. The Commission received no comments on the Distribution Plan 

during the comment period.

As of May 11, 2017, the Distribution Fund is comprised of $2,394,731.10 in 

disgorgement and prejudgment interest paid by, or collected from, the Respondents, plus accrued 

interest. The Distribution Plan provides for the distribution of the Net Distribution Fund7on a 

pro rata basis to certain harmed investors, to be 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. The Distribution Plan provides for one or more 

subsequent distributions, if additional funds are received and it is determined feasible to make 

one or more subsequent distributions in accordance with the Distribution Plan.

 

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

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

6

 17 C.F.R. § 201.1103.

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

Distribution Plan.
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The Division of Enforcement now requests that the Commission approve the Distribution 

Plan.

Accordingly, it is hereby ORDERED, pursuant to Rule 1104 of the Rules,

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that the 

Distribution Plan is approved.

For the Commission, by its Secretary, pursuant to delegated authority. 

Brent J. Fields

Secretary 

 

8

 17 C.F.R. § 201.1104.