Two Philadelphia men have agreed to pay the Securities and Exchange Commission $6.8 million after cheating their families and friends out of their investments, the SEC announced Wednesday.

William B. Fretz Jr. and John “Jack” P. Freeman orchestrated the fraud through their unregistered advisor, Covenant Capital Management Partners LP, and the private equity fund they managed, Covenant Partners LP, the SEC says. Investors will receive the money that is collected by the SEC.

Fretz and Freeman sold partnership interests in the fund to family and friends, but rather than investing the money as promised, they used the money for themselves and for a failing business they controlled. They paid themselves $600,000 in performance fees they did not earn, and used fund assets to repay personal obligations, the civil complaint says.

Without admitting or denying the SEC’s findings, the respondents agreed to pay $5.4 million of allegedly ill-gotten gains and prejudgment interest of $353,582. Fretz and Freeman also agreed to be permanently barred from the securities industry and to pay civil penalties of $500,000 each.