SEC Accuses Former Broker of $5.7M Pension Plan Fraud

The US Securities and Exchange Commission is accusing John S. Jumper, a Tennessee businessman and ex-broker, of stealing about $5.7M from the pension plan of Snow Shoe Refractories, LLC, a Pennsylvania company. Now, the commission wants disgorgement of ill-gotten gains with interest, injunctive relief, and penalties.

According to the regulator’s complaint, three times, between 3/2015 and 2/2016, Jumper stole money from the Snow Shoe Refractories, LLC Pension Plan for Hourly Employees by forging documents that supposedly showed he had authority over the fund’s money. He then allegedly used the funds to “capitalize” several businesses to which he had some ties, including, in some cases, ownership. These companies, Alluvion Securities, Speedee Brakes, American Investment Funds II, Thousand Hills Capital, and Evertone Records, have been named relief defendants in the SEC’s pension plan fraud case. The regulator contends that they have no “legitimate claim” on the pension fund’s monies.

Jumper previously worked as a registered representative at a number of brokerage firms for almost two decades. He was the CEO, owner, and registered representative of Alluvion Securities. He also was an investment adviser and President of Alluvion Investments.

Jumper, who helped facilitate the sale of Snow Shoe Refractories for $8.2M, made a $250K commission from that deal. Soon after, in 2007, he allegedly started forging the documents that would allow him to move assets from the company’s pension plan that was at one bank to another financial institution even though he had no authority over the plan. He didn’t even have an official position at Snow Shoe.

In 2015, he stole $3M from the pension plan and gave a number of business associates wanting to acquire American Tubing Arkansas, LLC access to the funds so they could finance the purchase. In exchange, reports JDSupra, the” group executed a 10-year promissory note at 8% in favor of the pension fund.” Meantime, Jumper’s brokerage firm received a 3% transaction fee, which was about $540K, as well as an ongoing monthly fee of $40K for “monitoring.” That same year, Jumper allegedly took $2M from the pension fund by using forged documents that named him a “successor trustee” to the AIF II, which was a trust he set up. The plan was given a note stating a “deferred 8% per annum” over a decade.

In 2016, after Snow Shoe Refractories’ new owner asked about the $5M in transfers, Jumper responded that the money had been invested in promissory notes. He then allegedly moved another $700K to the AIF II, once again for a promissory note.

The U.S. Attorney’s Office for the Middle District of Pennsylvania has filed a parallel criminal case against Jumper.

When pension plan fraud occurs, it is not just the plan owner that suffers. Employees who have their hard-earned money in the fund can also sustain losses. At Shepherd smith Edwards and Kantas, LTD LLP, we represent pension funds that have been the victim of fraud in fighting to recoup their investment losses. Contact us today so that we can help you determine whether you have grounds for a broker fraud case. We also work with individuals who have sustained losses because the fund or plan they invested in was the victim of fraud.

Read the Complaint (PDF)

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