Nathan A. Chapman Jr. agreed yesterday to pay $215,000 in exchange for federal prosecutors dropping bank fraud charges left over after his public corruption trial last year.
Chapman, 47, was convicted by a jury in U.S. District Court last summer on 23 counts that included defrauding the state's pension system, stealing from his own companies and lying on tax returns. He was sentenced in November to 7 1/2 years in prison and is free pending appeal.
The former star investor, who had hobnobbed with Maryland's financial and political elite, also was ordered to pay more than $5 million in restitution.
The three charges settled yesterday, which were related to the purchase and selling of a home, are not connected to the other allegations and had been separated from that case by a federal judge before last year's trial.
It remained unclear how Chapman will be able to pay his latest court-ordered debt. According to court papers, he hasn't been able to pay at least one of his attorneys for a year.
Lawyer Eric A. Kuwana received permission last week from a federal judge to drop Chapman as a client, saying that his client was uncommunicative and delinquent in paying legal expenses stemming from a civil lawsuit brought by the Securities and Exchange Commission.
Yesterday, however, his criminal defense attorney insisted that Chapman would not have agreed to the deal with federal prosecutors unless he intended to keep up his end of the bargain.
"Mr. Chapman is confident that between now and the 60 days agreed to in the settlement, he will be able to raise those funds," said William "Billy" Martin, his counsel at last year's criminal trial. "He understands that raising those funds saves his family's home."
Chapman, once one of the country's top African-American investors, advanced with the support of former Gov. Parris N. Glendening to become the chairman of the University System of Maryland's Board of Regents.
Prosecutors have said that Chapman used the pension system, a portion of which he was in charge of managing, to illegally prop up the stock of his struggling company. Defense attorneys argued that Chapman did not personally benefit from shareholders' losses and should not be penalized as if he had.
Martin would not say whether Chapman is working, but he did say that he is no longer employed as an investment banker.
Before the trial last summer, U.S. District Judge William D. Quarles laid aside three bank fraud charges connected to the purchase and sale of Chapman's former residence at 13125 Brighton Dam Road in Clarksville in July 1999.
Chapman agreed to pay the government $215,000 in settlement of the government's forfeiture claims against a house at 6017 Misty Arch Run in Columbia, which was purchased by his then-wife, Valerie Chapman, using proceeds from the Brighton Dam Road home.
Federal prosecutors argued that those proceeds had come from Chapman's illegal loan activity and therefore could be seized by authorities.
Under the deferred prosecution deal reached with the U.S. attorney's office, Chapman agreed to pay the amount to settle forfeiture claims within the next 60 days. He admitted to wrongdoing, but he did not enter a plea.
If he fails to pay, federal prosecutors can revive the criminal case and use his admissions against him at trial.
Chapman and his terminally ill wife divorced this year, but he continues to help pay for her medical care and the care of their three daughters, his lawyers said. Federal prosecutors were aware of the family's plight and sought to separate her from the case, according to court papers.
"He was the sole obligee on these loans; and the United States has no information that suggests that Mrs. Valerie Chapman was aware of any of these loans or their terms when she signed the home mortgage loan application," wrote Assistant U.S. Attorney Jefferson M. Gray to Chapman's lawyers Thursday.