Former trustee admits to perjury

THE BALTIMORE SUN

Former state pension trustee Debra B. Humphries admitted yesterday that she lied to a grand jury out of embarrassment about losing her job and becoming financially dependent on money manager Nathan A. Chapman Jr.

Humphries, who served on the state pension board from 1997 until this June, pleaded guilty to a single count of perjury in a 20-minute proceeding at U.S. District Court in Baltimore.

Under a plea agreement with the U.S. attorney's office, the 45-year-old Bowie woman is expected to testify at Chapman's trial next year. Chapman faces federal fraud charges stemming from his investments on behalf of the state pension system.

Chapman was indicted June 26 along with Humphries, who acknowledged having a romantic relationship with the money manager while serving as a pension trustee.

In that position, Humphries had a fiduciary duty to oversee Chapman's investments of retirees' money. She also would have been privy to confidential information the trustees discussed behind closed doors.

Prosecutors revealed yesterday that Humphries could have avoided prosecution entirely -- despite the many legal issues raised by her relationship with Chapman -- had she been candid with the grand jury about the degree of her dependence. She had been granted immunity from prosecution after telling federal agents about the relationship and her acceptance of undisclosed gifts.

Humphries, dressed in a conservative black suit and black-and-white blouse, spoke in a soft voice as she answered a series of questions by Judge William D. Quarles Jr.

But when Quarles asked whether she was making her plea because she was in fact guilty, she answered with a firm "yes."

Neither she nor her attorney, Christopher B. Mead of Washington, would comment after the proceeding. An employee of the Chapman Co. said Chapman, who has asserted his innocence, was out of the office and could not be reached. His lawyer, William R. "Billy" Martin, was unavailable for comment.

The maximum sentence for the offense Humphries committed is five years in prison and three years of supervised probation, along with a fine of $250,000. But under federal sentencing guidelines her penalty could be significantly less.

Vickie E. LeDuc, spokeswoman for U.S. Attorney Thomas M. DiBiagio, said it would be hard to estimate the likely sentence because so many factors would apply, including Humphries' degree of cooperation as a witness.

At Mead's request, prosecutors agreed to defer Humphries' sentencing date until after she has finished testifying at the trials for which she might be called as a witness. She remains free without bail.

In pleading guilty, Humphries agreed with a statement of facts presented by assistant U.S. Attorney Jefferson M. Gray.

The prosecutor told the court that Humphries began a romantic relationship with Chapman -- who was and still is married -- in 1996.

Gray told Quarles that Chapman, who by then was managing about $100 million on behalf of the pension system, persuaded then-Gov. Parris N. Glendening in 1997 to appoint Humphries to the board.

Gray said Humphries, a money manager at Hughes Capital Management Inc. in Washington, left that job in the late spring or summer of 1998.

While she was unemployed, and for several months after she found a new job in March 1999, Humphries accepted cash payments from Chapman roughly equal to her take-home salary, according to the statement. The payments amounted to roughly $46,000, the prosecutor said.

Gray said Chapman, 45, also gave Humphries gifts of clothing, jewelry and a vacation in Hawaii. The prosecutor said that, as a trustee, Humphries failed to make required disclosures of the gifts.

According to the statement, Humphries broke off the romantic relationship in mid-1999 but continued to see Chapman socially.

When Humphries was interviewed by FBI agents in January, she admitted to the intimate relationship with Chapman, according to prosecutors. But while testifying before the grand jury in March under a grant of immunity, Humphries told three lies, according to the statement.

Gray said the lies involved the amount of cash Chapman paid her, how long she was unemployed and when the payments ended. According to the statement, when prosecutors confronted her later with evidence that her statements were false, Humphries at first denied but later admitted her perjury.

Prosecutors said she explained "she had been embarrassed about the loss of her job, her resulting period of unemployment, and her need to rely on Mr. Chapman for financial support."

Humphries could become an important witness at Chapman's trial because some of the 39 counts he faces concern their relationship.

Chapman faces charges that he defrauded the $26.7 billion state pension fund, which provides benefits to 93,000 retirees, by arranging for the use of retirement system money to purchase stock in his companies. He is also accused of looting firms he controls.

Joseph M. Coale, a spokesman for the pension system, said it would be inappropriate to comment on Humphries' plea.

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