The US Attorney for the District of Maryland said Chapman, the former chairman of the University System of Maryland’s Board of Regents, was indicted on 39 counts, including securities fraud, conspiracy, and mail fraud, according to Reuters. Chapman was not arrested and is expected to be arraigned on July 3, according to the report.
He and three other associates at his firm, eChapman Inc., a Baltimore-based brokerage and investment adviser, were also sued by the Securities and Exchange Commission (SEC) on civil charges ranging from manipulation of eChapman’s stock to filing false and misleading financial statements with the SEC.
The SEC charged that in late 1999, Chapman, a prominent African-American money manager with close ties to former Maryland governor Parris Glendening, created eChapman to take advantage of the expanding influence of the Internet to provide online financial services.
However, the firm fell on hard times, and in an effort to rescue the failing initial public offering, Chapman and fellow executives at the company engaged in various schemes that authorities said ultimately cost investors millions of dollars. Among other actions, Chapman allegedly invested more than $5 million of state pension money to buy eChapman shares (see Bad Investment Could Cost MD Millions ).
According to the report, investigators also said Chapman took more than $437,000 from three companies he ran to pay for gifts, trips, and financial support to various women – one of which authorities alleged was Debra Humphries, a trustee of the state pension system, which provides retirement benefits to Maryland state employees such as teachers, officers, and firemen (see Feds Probe Deeper Into MD Pension Investments ).
The 14-member board of trustees oversees the 40 investment managers who invest the retirement funds. Chapman, 45, is linked in the case to Alan Bond, the money manager who earlier this year was sentenced to more than 12 years in prison for cheating pension funds and taking kickbacks.
If convicted, Chapman could be required to pay restitution in the amounts lost by the pension system and other clients, as well as going to jail.