Nathan A. Chapman Jr., who has been accused of illegally investing more than $5 million of Maryland’s state pension funds into his own company, last week pled not guilty to 39 counts of   securities fraud, conspiracy, and mail fraud.    Chapman, 45, the former chairman of the University System of Maryland’s Board of Regents, has also been accused of diverting $437,000 from his eChapman firm and two predecessor firms, both publicly held, starting in 1998.

Relationship Questions

The  indictment , filed late last Month, says the money paid for jewelry, a BMW motorcycle, trips and other gifts, and financial support for at least three women with whom he had intimate relations.   One of those women was a company vice president and another was former pension trustee Debra B. Humphries, who became a state pension trustee in 1997 after Chapman pushed former Maryland Governor Parris Glendening to appoint her to the 14-member board, according to the indictment (see  “Relationships” Entangle Maryland Pension Fund ).

Humphries was charged in a separate indictment with a single count of perjury, accused of failing to disclose to a federal grand jury that Chapman had given her $46,000 in money and gifts.   Humphries resigned from the pension board June 16 in a letter noting personal reasons.

Minority Positions

In his first public comments since the indictments, the longtime ally of former Governor Glendening praised God and thanked his wife for supporting him. Chapman also invoked civil rights leader Martin Luther King Jr. in promising that he would continue to aid minority-owned businesses, according to the Baltimore Sun.  

“As a child, I heard the call of the Rev. Dr. Martin Luther King for people to help other people. I still hear it,” Chapman said, reading from a statement on the steps of US District Court in Baltimore, according to the report.   Chapman said his business had overcome “the worst stock market since the Depression … record bankruptcies, two wars, and the tragedy of Sept. 11. We will overcome this as well.”

Assistant US Attorney Jefferson M. Gray requested in court that Chapman be required to notify authorities if he plans to travel out of state or overseas, although Gray also acknowledged that Chapman “is obviously a man who has long-standing ties to the community and significant business interests here.”   However, that request was denied, while Chapman was released on an unsecured $1 million bond. No trial date was set, but attorneys in the case were expected to discuss a trial schedule next week.

Representing Chapman is the Washington law firm Patton Boggs LLP, including Lanny J. Davis, the former White House special counsel under President Bill Clinton.   Thursday Davis launched a campaign aimed at convincing the public that Chapman has been wrongly charged.

Davis declined to address specific questions about the alleged fraud scheme but defended Chapman's role as a money manager for the retirement fund, noting that the $4.7 million in losses ascribed to Chapman amount to just two-hundredths of 1% of the retirement system's $29.1 billion in assets in 2001, according to the Sun.   Asked about the accusations that Chapman had affairs with various women, Davis said any comments on personal issues would be inappropriate.

"When all the evidence is in, Mr. Chapman will be found by a jury of his peers to be innocent," Davis said.

"I only ask everyone to remember that the government has unjustly accused many people in the headlines, only for those people to be found totally innocent after they had their day in court," Chapman told reporters. "I know with all my heart that will be the outcome for me."