Sampson Pearson Jr., Formerly of Northwestern Mutual Investment Services, Accused of Defrauding Clients

Northwestern Mutual was fined $350k for failing to prevent Pearson from transferring client funds into his personal account.

The Sonn Law Group is investigating allegations that Sampson Pearson Jr. committed fraud. If you or a family member has suffered losses investing, we want to discuss your case. Please contact us today for a free review of your case.

Sampson Pearson Jr. (CRD#: 4159298) was a registered broker with Northwestern Mutual Investment Services from March 2001 until March 2017. Northwestern Mutual was recently fined $350,000 for failing to prevent Pearson from diverting hundreds of thousands of dollars from customer accounts into his own while he was a broker.

Pearson has since been charged in federal court with mail fraud, aggravated identity theft, and filing false tax returns based on his alleged involvement in a scheme to defraud clients of Northwestern Mutual by taking money from their annuities.

According to Pearson’s indictment charges, Pearson directed Northwestern mutual to, “deposit the proceeds of the fraudulently obtained loans into an account he secretly controlled and then used the funds to pay personal expenses and fund his lifestyle.” 

After a customer noticed a discrepancy in her loan records, she notified Northwestern Mutual, who launched an investigation into Pearson’s activities. Without admitting or denying FINRA’s findings, Northwestern Mutual accepted the fine in an agreement with FINRA. 

The brokerage “did not have a reasonable supervisory system to review and monitor transfers of customer funds to third-party accounts and outside entities,” the agreement stated. “Consequently, (Northwestern Mutual Investments) failed to detect that [Pearson] made 23 transfers totaling $473,496 to his own bank account, the same bank account where he received his firm commissions.” Northwestern Mutual Investments has since “taken steps to detect similar conduct in the future,” Northwestern Mutual said in its statement.

Pearson has thirteen disclosures on his BrokerCheck report.

October 2017 Customer Dispute

• Status: Settled
• Allegations: “The customer signed an affidavit attesting that the former representative forged the customer’s signature on a Variable Annuity Surrender form and misappropriated the surrender proceeds of $34,855.28.”
• Damage Amount Requested: $34,855.28

October 2017 Customer Dispute

• Status: Closed-No Action
• Allegations: “Customer alleging representative misappropriated funds from her variable annuity.”
• Damage Amount Requested: $8,000.00
  

August 2017 Customer Dispute

• Status: Settled
• Allegations: “The customer alleged that the representative misappropriated funds from a variable life insurance policy and two variable annuity contracts.”
• Damage Amount Requested: $304,699.18
• Settlement Amount: $304,699.18

August 2017 Customer Dispute

• Status: Settled
• Allegations: “The client alleged and signed an affidavit stating that while she did authorize two withdrawals from her variable annuity, she did not sign the Annuity Distribution Request forms for these distributions. In addition another distribution was taken without her authorization or signature. Except for one payment of $15,000.00 the client indicated she did not receive the proceeds from the variable annuity distributions. She is alleging forgery and misappropriation of funds.”
• Damage Amount Requested: $77,036.00
• Settlement Amount: $118,581.13

June 2017 Regulatory Judgment

• Status: Final
• Initiated By: FINRA
• Allegations: “Respondent Pearson failed to respond to FINRA request for information.”
• Resolution: Letter
• Sanctions: Bar
• Registration Capacities Affected: All Capacities
• Duration: Indefinite
• Start Date: 6/2/2014
• Regulator Statement: “Pursuant to FINRA Rule 9552(h) and in accordance with FINRA’s Notice of Suspension and Suspension from Association letters dated June 19, 2017 and July 13, 2017 respectively, on September 22, 2017, Pearson is barred from association with any FINRA member in all capacities. Respondent failed to request termination of his suspension within three months of the date of the Notice of Suspension; therefore, he is automatically barred from association with any FINRA member in all capacities.”

June 2017 Customer Dispute

• Status: Settled
• Allegations: “The client alleged that the registered representative took a total of 8 unauthorized policy loans from the client’s variable and non-variable insurance policies for which the client did not give consent nor did he receive the loan proceeds. The client also alleged the representative forged the client’s signature on the policy loan forms, and deposited the proceeds into a bank account under the representative’s name. Alleges forgery and misappropriation of funds.”
• Damage Amount Requested: $34,144.65
• Settlement Amount: $41,471.33

May 2017 Customer Dispute

• Status: Settled
• Allegations: “The client alleged that three unauthorized policy loans were taken from her variable life insurance contract; she was not aware of the loans nor did she receive any loan proceeds. Client also alleged she gave the representative funds to invest in a company that she later learned was fictitious. Alleges misappropriation and forgery.”
• Damage Amount Requested: $26,924.00
• Settlement Amount: $27,643.78

May 2017 Customer Dispute

• Status: Settled
• Allegations: “The client alleged and signed an affidavit stating that the signatures on two distribution requests from her variable annuity were not hers, nor did she authorize the distributions, and she did not receive proceeds from the distributions. Alleges forgery and misappropriation of funds.”
• Damage Amount Requested: $26,691.96
• Settlement Amount: $27,072.01

May 2017 Customer Dispute

• Status: Settled
• Allegations: “The client alleged and signed an affidavit stating that the signatures on two distribution requests from his variable annuity were not hers, nor did he authorize the distributions, and he did not receive proceeds from the distributions. Alleges forgery and misappropriation of funds.”
• Damage Amount Requested: $63,806.65
• Settlement Amount: $7,831.65

May 2017 Customer Dispute

• Status: Settled
• Allegations: “The client alleged and signed an affidavit stating that the signatures on two distribution requests from his variable annuity were not hers, nor did he authorize the distributions, and he did not receive proceeds from the distributions. Alleges forgery and misappropriation of funds.”
• Damage Amount Requested: $97,703.05
• Settlement Amount: $97,295.40

May 2017 Customer Dispute

• Status: Settled
• Allegations: “The client alleged that the registered representative took a total of 15 unauthorized policy loans from the client’s non-variable insurance policy for which the client did not give consent nor did he receive the loan proceeds. The client also alleged the representative forged the client’s signature on the policy loan forms and deposited the proceeds into a bank account under the representative’s name. Alleges forgery and misappropriation of funds.”
• Damage Amount Requested: $155,166.92
• Settlement Amount: $156,866.13

April 2017 Customer Dispute

• Status: Settled
• Allegations: “A client contacted the Firm questioning the loan balance of her non-variable life insurance policy. Upon being informed that several policy loans were taken from the policy, the client stated that she never authorized the loans. The client also stated that she had never held an account at the bank where the policy loans were deposited, which the Firm identified as the former registered representative’s bank account.”
• Damage Amount Requested: $5,000.00
• Settlement Amount: $169,465.34

March 2014 Judgment/Lien

• Judgment/Lien Amount: $27,714.41
• Judgment/Lien Type: Tax
• Broker Comment: “Tax lien for tax years ending 12/31/2008, 2009, 2010 and 2012.”

Contact Us Today

The Sonn Law Group is currently investigating allegations that Sampson Pearson Jr. committed fraud.  We represent investors in claims against negligent brokers and brokerage firms. If you or your loved one experienced investment losses, we are here to help. For a free consultation, please call us now at 866-827-3202 or complete our contact form.