Chapman Co. vice president is charged in securities fraud


Federal prosecutors have filed stock fraud charges against a senior vice president of the Baltimore company once run by Nathan A. Chapman Jr., the pension fund manager convicted last year of defrauding the state retirement system of millions of dollars, the U.S. attorney's office said yesterday.

A federal grand jury in Baltimore returned an indictment against Daniel Baldwin Jr., 48, of Randallstown on June 14, charging him with securities fraud, providing false statements to the FBI and lying to a grand jury in the June 2000 public stock sale of Inc. The indictment was unsealed late Tuesday.

The criminal indictment could be the last in a sweeping investigation into financial transactions of companies run by Chapman, once one of the most prominent African-American financial leaders in Maryland with ties to the highest-ranking political officials in the state.

A spokeswoman for the U.S. attorney's office in Baltimore said her office does not foresee charging anyone else in the investigation.

"We waited on this case because the prosecution of Nathan Chapman took a lot more of our resources," said Vickie LeDuc, a spokesman for Maryland U.S. Attorney Allen F. Loucks. "The two cases are also different."

In a statement, Baldwin denied all of the charges, saying, "I take great pride and responsibility in advising my clients diligently, professionally and honestly."

Baldwin's arraignment has not been set in U.S. District Court in Baltimore, said his attorney, Nathaniel E. Jones.

Civil lawsuit

Baldwin and Chapman remain defendants in a civil lawsuit filed by the Securities and Exchange Commission.

Many of the criminal charges filed against Baldwin this week are similar to those lodged against Chapman, who had been hired by the state pension system to make investments.

The case against Chapman stemmed from the use of pension money to buy stock in his companies. As a result, prosecutors said, the retirement system lost virtually all of that money as the companies' value sank.

Chapman appeals

The jury that convicted Chapman last summer fixed the amount of the loss at more than $5 million. He is appealing the conviction.

In a deal with prosecutors announced this week, Chapman agreed to pay $215,000 in exchange for federal prosecutors dropping bank fraud charges left over from his public-corruption trial.

The 34-count indictment unsealed against Baldwin, a senior vice president and stockbroker at Chapman Co., alleges that Baldwin committed securities fraud by placing shares of eChapman stock into the accounts of his customers without their knowledge and without proper disclosure of the risks involved.

Other allegations

The indictment also alleges that Baldwin sometimes sold off clients' investments in other, less risky stocks or mutual funds without authorization to purchase eChapman stock.

When its stock opened for public trading June 20, 2000, eChapman lost more than 40 percent of its value in its first day of trading because of the lack of investor demand.

By the end of 2000, the stock was down 75 percent from its initial public offering price of $13 a share; it fell to pennies per share in the spring of 2002 and was eventually delisted from Nasdaq trading.

2002 interview

The indictment further charges that in responding to those allegations, Baldwin made false statements in a September 2002 interview with two FBI agents and testified falsely before a federal grand jury investigating eChapman in October 2002.

The maximum penalties for each count charging securities fraud are 20 years in prison and a $5 million fine. The maximum penalties for making false statements before a grand jury are five years in prison and a $250,000 fine.

Copyright © 2019, The Baltimore Sun, a Baltimore Sun Media Group publication | Place an Ad