John Sherman Jumper, a former broker, was sentenced for embezzling $5.7 million from the pension benefit plan for employees of Snowshoe Refractories, a fire brick manufacturer based in Pennsylvania.
Jumper, who will serve 78 months in prison followed by three years of supervised release, was also ordered to pay restitution of $2.4 million, reflecting partial financial recoveries obtained by Snowshoe Refractories.
According to United States Attorney John Gurganus, 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.
He reportedly 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 in personal loans, and to cover his personal legal fees.
In addition, he received a personal interest in the businesses purchased with the embezzled funds, and his broker-dealer, Alluvion Securities in Memphis, received more than $1 million in fees from the sale of the Arkansas tubing plant.
The indictment stated that the Snow Shoe Refractories employee pension plan had roughly 129 active and retired employees. When the alleged $5.7 million embezzlement began, the pension plan assets were worth approximately $9.8 million.
Jumper has been the subject of civil and regulatory sanctions obtained by the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
In November 2018, a federal district judge in the Western District of Tennessee granted the SEC’s motion for default judgment against him. He was permanently enjoining him from violating securities laws and ordered to disgorge $5.7 million, representing profits gained as a result of the fraudulent conduct, together with prejudgment interest of $726,800.
In February 2017, Jumper was permanently barred by FINRA, 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, and the United States Securities and Exchange Commission. Assistant U.S. Attorney George Rocktashel prosecuted the case.