September 26, 2002|By Michael Dresser and William Patalon III | Michael Dresser and William Patalon III,SUN STAFF
She said she did not learn that pension system money was involved until January, when staff attorneys learned that the SEC was probing the purchases of Chapman stock.
Boykin wrote in the memo that when the she received a report from Chapman on Oct. 11, detailing the investments made by his sub-managers, she delegated the job of analyzing it to her staff. She said she didn't follow up because she was instructed not to continue looking into Chapman's dealings with Bond because the SEC was investigating the matter.
Joseph M. Coale, the pension system's spokesman, said the instruction to Boykin to curb her investigation came from Vaughn, but was misinterpreted. Coale said Vaughn did not intend to limit Boykin's inquiries into the use of state pension funds.
Meanwhile, Boykin's contention that she didn't learn until January about Bond's use of pension funds to invest in Chapman's company was contradicted by one of her employees.
In an e-mail Feb. 28, Boykin subordinate Art Lynch told her he noticed Bond's purchases of eChapman.com stock when Chapman's report arrived the previous October. He insisted that he discussed the matter with Boykin at that time.
"I do not have any recollection of this," Boykin wrote in her memo to Vaughn.
Chapman was incredulous when told of Boykin's claim that she thought he was talking about a personal investment by Bond. He said Boykin asked him if Bond had invested in eChapman.com's IPO - a question Chapman says he took as a reference to state pension money.
"That's incredible," Chapman said of Boykin's statement. "I wasn't talking about Bond's personal portfolio. I have no knowledge of that."
If Boykin had taken action when Chapman spoke to her in August 2001, the pension system still would have absorbed a large loss. By then, stock in his company was trading at about $2 a share, and the state would have been constrained from selling it before making a public announcement that likely would have driven down the price even further.
But more timely action might have cut the state's losses by hundreds of thousands of dollars.
Coale admitted the record does not reflect well on the pension system's performance.
"Our internal communications should have been better and must improve," he said. "Fortunately the funds involved have not been significant in the context of the fund's total assets."
