Chapman Jurors Convict on 23 of 32 Charges

August 12, 2004 ( - A federal court jury on Thursday convicted a former money manager for the State of Maryland pension system on 23 fraud counts relating to his use of retirement system funds to revive the stock price of his sagging company.

A jury of five women and seven men acquitted Nathan Chapman Jr., 46, on seven counts; they couldn’t reach a decision on two others, according to an Associated Press report. Jurors deliberated for six days before asking US. District Judge William Quarles for “advice” on charges on which they could not agree (See  Chapman Jurors Seek Verdict ‘Advice’ ) and then delivering their verdicts early on the seventh day. Chapman will remain free until his November 1 sentencing.

Chapman had been charged in a sweeping, 32-count indictment with mail fraud, wire fraud, securities fraud and other crimes relating to involvement with the pension fund and his political connections to former Maryland Governor Parris Glendening. Glendening, who appointed Chapman to the University System of Maryland Board of Regents, was not accused of wrongdoing.

At one point, 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. Chapman was a prominent black investment banker who said he wanted to use his companies to help minorities enter the financial world.

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.

“He did it because he could. He did it because he didn’t think anybody would stop him,” US Attorney Thomas DiBiagio told reporters outside the downtown Baltimore federal courthouse. “He was wrong. And today the jury told him he was wrong.”

Among the charges against Chapman: ripping off his own companies of more than $500,000 in “business development” checks, partly to pay for extramarital affairs.

Chapman was found guilty of making false statements on his 2000 and 2001 tax returns, but acquitted of making false statements on his 1997 returns; the jury couldn’t reach a decision on the charges concerning his 1998 or 1999 returns.

In arguing the fraud part of the case, prosecutors displayed trading records to show that Chapman pressured Alan Bond, who later pleaded guilty to swindling other clients, to use Maryland pension funds to buy stock in a Chapman company for more than it was worth.

Jurors acquitted Chapman of corrupting a pension trustee, Debra Humphries, one of the mistresses he allegedly showered with thousands of dollars, gifts and a Hawaiian vacation. Humphries testified during the trial that the relationship made her uncomfortable when Chapman asked to manage an additional $100 million of Maryland’s retirement funds in 2001. She said she felt “boxed” in, but didn’t recuse herself from the matter. She testified she didn’t tell anyone about the relationship because she was embarrassed (See Chapman’s Mistress Takes the Stand ).

Glendening’s name frequently came up during the trial, which lasted nearly two months. Defense attorneys argued Chapman was a “consolation-prize prosecution” after investigators failed to make a public corruption case against Glendening. Prosecutors denied the claim.