Administration December 11, 2006

Chapman Loses MD Pension Fraud Appeal

December 11, 2006 (PLANSPONSOR.com) - A federal appellate court has denied a request from former Maryland pension fund manager Nathan Chapman Jr. to overturn his 2004 stock fraud conviction.

Reported by

Fred Schneyer

However the 4 ^th US Circuit Court of Appeals ruled that Chapman was improperly sentenced and granted him the right to be sentenced again under a decision that could shave at least a year off his pending 7½-year prison term, according to the Baltimore Sun.

Chapman, 49, ofColumbia, was accused of using state pension money to buy stock in his companies to prop up their value – a move that went sour when the stock value plummeted and the retirement system lost virtually all of that money (See Chapman Jurors Convict on 23 of 32 Charges ). The jury that convicted Chapman in August 2004 fixed the amount of the loss at more than $5 million (See Chapman Gets Jail Time, $5M Fine in Pension Fraud Case ).

In upholding the conviction, the 4 ^th Circuit appellate panel threw out Chapman’s arguments:

that prosecutors improperly dismissed African-American women from the jury,
that Chapman was harmed when the trial judge allowed certain government witnesses to testify, while barring other expert defense witnesses, and
that prosecutors and federal agents committed misconduct.

On the sentencing issue, the appellate judges ruled that because of US Supreme Court decisions handed down since the Chapman conviction, US District Judge William Quarles should have stayed within a federal sentencing guideline range of five years and three months to 6 1/2 years in prison for the principal charge.

Maryland US Attorney Rod Rosenstein told the Sun he believes the appeals court ruling will still allow prosecutors to seek a 90-month sentence for Chapman.