Ex-securities broker admits misappropriating $5.7 million from a Pa. firm’s pension plan
WILLIAMSPORT — A former securities broker in Tennessee has admitted emailing false and forged documents as part of a scheme that misappropriated $5.7 million from the pension plan of a Centre County business.
John Sherman Jumper, 55, of Memphis, pleaded guilty Friday in U.S. Middle District Court to a charge of wire fraud.
The government has set the loss from the scheme at $2.7 million because the pension plan for hourly workers at Snow Shoe Refractories of Clarence was repaid $3 million.
The charge to which Jumper pleaded guilty involved an email he sent to the pension plan’s unidentified actuary in Harrisburg that contained false and fraudulent information.
He admitted falsely representing himself as a vice president of the refractory business that manufactures and sells fireclay and high alumina refractory brick and related products.
Jumper owned Alluvion Securities in Memphis, which he voluntarily closed. He told Judge Matthew W. Brann he has lost all his professional licenses.
His link to Snow Shoe, according to court documents, was to encourage a friend and United Methodist minister Brett Blair to acquire Premier Refractories Inc. in 2004.
Blair, with Brian Porterfield, also a United Methodist minister, formed BBBP Acquisition, which bought Premier in February 2007 and renamed it Snow Shoe. Jumper was paid $250,000 for facilitating the purchase.
Assistant U.S. Attorney George J. Rocktashel gave this synopsis of the scheme in which Jumper arranged for three transfers of pension plan funds:
The money went into accounts controlled by him, used by him and other investors to acquire a tubing plant in Arkansas, purchase several small businesses and pay down $1.2 million of his personal debt.
He held financial interests in the acquired businesses and he received over a $1 million in fees through Alluvion in connection with the purchase of the tubing business.
Beginning in 2007 and continuing through 2012, Jumper forged the signature of Blair, the majority owner of Snow Shoe, on a number of documents that purported to give him authority to approve the transfer of pension plan assets.
Although Jumper was widely viewed as Snow Shoe’s point of contact with Merrill Lynch, the plan’s trustee, neither Blair, minority owner Porterfield or any other officer or shareholder had granted him authority to transfer funds from the plan.
In March 2015, Jumper, without Blair’s knowledge, put together a deal with other investors through Alluvion to acquire a refrigeration tubing manufacturer in Arkansas.
That month he caused the transfer of $3 million from the pension plan with about $2.27 million going to the purchase of assets and $725,364 for operating capital.
For the rest of 2015, the new entity, American Tubing Arkansas paid $1,040,500 in fees to Alluvion Securities that in turn made periodic payments to Jumper.
American Tubing paid interest payments on the $3 million until it was acquired by another entity and pension plan was repaid in full as part of the purchase agreement.
In November 2015, Jumper used forged documents to transfer another $2 million to pay off a $1.2 million personal loan, purchase small businesses called Speedee Brakes, Thousand Hills Capital and Evertone Records and to pay legal fees and penalties that had been imposed by securities regulators.
This time he forged the signatures of Blair and Porterfield, represented he was a director and vice president of Snow Shoe and that a bank had been appointed custodian of the transferred pension funds.
In February 2016, Jumper again used forged corporate documents to show Snow Shoe directors authorized the transfer of $700,000 from the pension fund to accounts for the three small businesses.
The scheme began to unravel in February 2018 with the actuary in Harrisburg inquired about the three pension plan transfers.
His response concealed the $5.7 million in transfers that were used to purchase businesses and to pay off Jumper’s personal debts.
Jumper, who remains free pending sentencing, will be required to make full restitution under the plea agreement.
Charges of embezzlement, theft and making false statements are to be dismissed at sentencing, the date of which has not been set.
Jumper, who has a court-appointed attorney because he claims to have no income, also is defendant in a related federal suit that has been on hold pending the outcome of the criminal case.
Snow Shoe, as administrator for the pension plan for hourly workers, seeks to recoup all losses attributed to Jumper.
The plan was worth about approximately $9.8 million about the time Jumper was communicating with Merrill Lynch about the $3 million transfer, the civil suit states.