Chapman Fraud Trial Winds Down

July 30, 2004 ( - A former money manager for the Maryland state pension system abused the trust of thousands of retirees by using their money for his benefit, a federal prosecutor charged in his closing arguments in a high-profile pension fraud case.

“You don’t get to use the assets of the system for your own benefit,” Assistant US Attorney Craig Wolff told jurors, the Associated Press reported as Nathan Chapman Jr., trial wound down.

Despite prosecutors’ allegation, Chapman attorney contended his client’s conduct was “a far, far cry from a scheme to defraud.” William Martin argued that the government created a “convoluted theory” of wrongdoing to “see what sticks” after failing to make a public corruption case against former Maryland Governor Parris Glendening, who appointed Chapman to the state university system’s Board of Regents. “They’re out to get Mr. Chapman,” Martin charged, according to the AP.

Chapman, 46, is accused of mail fraud, wire fraud, securities fraud and other crimes in the use of retirement system funds to boost his ailing company’s stock price (See  Chapman Pleads Not Guilty in Maryland Fraud Case  ). The $29 billion retirement system, which is responsible for the pensions of more than 250,000 teachers, police officers, firefighters and other government workers, lost nearly $5 million in the transactions.

Chapman managed more than $100 million in funds for the retirement system. He managed funds from 1996 until its trustees fired him in January 2002.

Wolff told jurors that Chapman was repeatedly warned about potential conflicts of interest when he invested pension funds into his company. “There was a scheme to defraud here,” Wolff told jurors, who have often heard testimony about complex business transactions during the six-week trial in US District Court in Baltimore.

If convicted, Chapman could go be sentenced to 10 years or more in prison. Jurors were scheduled to begin deliberations Monday.