www.baltimoresun.com/news/maryland/bs-md-chapman-release-20111229,0,4794512.story

baltimoresun.com

Nathan Chapman set for release

Figure at center of pension scandal imprisoned 41/2 years

By Michael Dresser, The Baltimore Sun

5:53 PM EST, December 29, 2011

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Nathan A. Chapman Jr., the once-prominent money manager whose fraudulent investments in his own companies caused a scandal for Maryland's public employee pension system, is scheduled to be released from federal custody Friday after serving 41/2 years.

Chapman, convicted by a federal jury in 2004 on 23 counts of fraud and filing false tax returns, was most recently assigned to an undisclosed halfway house run out of Annapolis Junction, according to a Bureau of Prisons website.

The Baltimore Sun sent a letter to Chapman inviting him to be interviewed in connection with his release, but he did not respond. The lawyer who represented him at the time of his trial, Billy Martin, said he is no longer in contact with his former client.

Chapman, now 54, burst onto the Maryland business scene in the 1980s as the dynamic founder of an investment company and one of a handful of African-American chief executives in the industry. Tall, handsome and charismatic, he moved easily in financial and political circles and became a significant campaign fundraiser for then-Gov. Parris N. Glendening, who appointed him chairman of the University System of Maryland's Board of Regents.

He became a money manager for Maryland's pension system, which administers retirement benefits for state employees, public school teachers and law enforcement officers. In that role, Chapman was able to arrange public investment in his own troubled companies, causing an estimated loss for the system of $6 million.

It was revealed at his trial that Chapman had a secret ally on the pension system's board of trustees. At his recommendation, Glendening appointed a woman to the board who admitted in court that she had been Chapman's mistress and accepted valuable gifts from him at the same time she was advocating policies favorable to her married lover.

Chapman was indicted in June 2003 and convicted in August 2004. In addition to charges involving the Maryland pension system, prosecutors showed that Chapman looted his companies and spent shareholders' money on luxuries and payments to several mistresses, including pension board member Debra B. Humphries. Humphries eventually resigned from the board, pleaded guilty to perjury and testified against Chapman as part of a bargain with prosecutors.

The Chapman scandal led to an overhaul of the pension board, a purge of its top executives and new policies tightening the system's oversight of its investments. Articles in The Baltimore Sun showing that trustees had ignored warning signs about Chapman prompted the General Assembly to pass reform legislation changing the board's membership.

Chapman initially was sentenced to seven years in prison, but he appealed and won an order that the judge reconsider his sentence. U.S. District Judge William D. Quarles then gave Chapman a sentence of more than five years and ordered him to report to prison in June 2007 — delaying incarceration so Chapman could finish a semester at divinity school at Howard University. The judge said Chapman was a "different person" from the man he sentenced more than two years before but that he could not overlook the former financier's criminal conduct.

At the time of his resentencing, Chapman described the events leading to his conviction as "an isolated incident."

"I'm not going to allow it to be the last word on my life," he said.

michael.dresser@baltsun.com