UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 81858 / October 12, 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.

:

:

:

:

:

:

:

:

:

ORDER DIRECTING 

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”)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, 

 

1

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

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.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. 

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

Opportunity for Comment5pursuant to Rule 1103 of the Commission’s Rules on Fair Funds and 

Disgorgement Plans.

6

 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 Distribution7.

 The Distribution Plan provides for the distribution of the Net Distribution Fund8on 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. The Distribution Plan provides that the Fund Administrator will 

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

submission to the United States Treasury’s Bureau of the Fiscal Service. The Fund 

Administrator, an SEC employee, 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 $2,391,403.87. 

 

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.

7

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

8

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

Distribution Plan.
3

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

$2,391,403.87 to harmed investors pursuant to the Distribution Plan. 

By the Commission. 

Brent J. Fields

Secretary