Former Tennessee Securities Broker-Dealer Sentenced To 78 Months’ Imprisonment For Embezzling $5.7 Million From Employee Pension Benefit Plan

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FILE PHOTO: Signage is seen at the United States Department of Justice headquarters in Washington, D.C.

WILLIAMSPORT – The United States Attorney’s Office for the Middle District of Pennsylvania announced that a former securities broker based in Memphis, Tennessee, John Sherman Jumper, age 56, of Eads, Tennessee, was sentenced to 78 months’ imprisonment to be followed by three years on supervised release by Chief District Court Judge Matthew W. Brann, for embezzling $5.7 million from the pension benefit plan for employees of Snowshoe Refractories, a fire brick manufacturer located in Clarence, Centre County, Pennsylvania.  Chief Judge Brann also ordered Jumper to pay restitution to the pension plan in the amount of $2,426,550, reflecting partial financial recoveries obtained by Snowshoe Refractories on behalf of the plan.

 

According to United States Attorney John C. Gurganus, on April 9, 2021, Jumper forged signatures on fraudulent documents that purportedly authorized him to transfer funds from the pension plan on three separate occasions between March 2015 through April 2016.  Jumper used the embezzled funds to make unauthorized loans and investments for the purchase of a tubing plant in Arkansas and three other business, to pay off $1.2 million of his personal loans, and to cover his personal legal fees. In addition, Jumper received a personal interest in the businesses purchased with the embezzled pension funds, and his securities company, Alluvion Securities in Memphis, received over $1 million in fees from the sale of the Arkansas tubing plant.

 

The indictment stated that the Snow Shoe Refractories Employee Pension Plan for Hourly Employees included about 129 active and retired employees.  At the time the alleged $5.7 million embezzlement began, the pension plan assets were worth approximately $9.8 million. 

 

As a result of his fraudulent misappropriation of pension funds, Jumper has been the subject of civil and regulatory sanctions obtained by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), a private corporation that acts as a self-regulatory organization for member brokerage firms and exchange markets.  On November 1, 2018, a federal district judge in the Western District of Tennessee granted the SEC’s motion for default judgment against Jumper, and the court there entered a final judgment as to Jumper and his companies and businesses. The final judgment permanently enjoined Jumper from violating securities laws and ordered that he disgorge $5,700,000, representing profits gained as a result of the fraudulent conduct, together with prejudgment interest in the amount of $726,758.79.  On February 3, 2017, FINRA permanently barred him, with his consent, based on allegations that he misappropriated funds from the Snowshoe pension plan for his personal use and to infuse capital into his member firm, Alluvion Securities.

 

The case was investigated by the Federal Bureau of Investigation, with the assistance of the Employee Benefits Services Administration of the United States Department of Labor, the Financial Industry Regulatory Authority (FINRA), and the United States Securities and Exchange Commission. Assistant U.S. Attorney George J. Rocktashel prosecuted the case.

 

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