Sex, power and big money will be on the docket as Baltimore investment banker Nathan A. Chapman Jr. goes on trial this week on federal fraud charges that could send him to prison for a decade or more.
Chapman, a symbol of African-American business success during the 1990s, is charged with defrauding the Maryland state pension system and his own investment companies at a time when he served as chairman of the state university system's Board of Regents.
Unless it is short-circuited by a last-minute plea agreement, the case will be the highest-profile white-collar prosecution brought to trial by U.S. Attorney Thomas M. DiBiagio. The well-connected Chapman was in charge of hundreds of millions of dollars of state employee retirement funds.
The trial, expected to take about eight weeks, could delve into intimate details of the personal life of a man who once dreamed of creating what he called a "black Merrill Lynch." Court officials have summoned 450 potential jurors for lawyers to select from - a process scheduled to start today.
That jury will decide if Chapman, 46, defrauded the pension system by arranging for Alan B. Bond, a New York money manager who worked under his direction, to invest state pension money in Chapman's companies.
Bond - at least in the eyes of the defense team - will be the prosecution's key witness. Chapman's attorneys have filed a motion stating that Bond, a former television personality who is serving a 12-year prison term for defrauding the Maryland system and other victims, has agreed to testify for the government against Chapman.
The pension system absorbed a loss of about $5 million on its investment in eChapman.com. The company's stock was virtually worthless by the time the pension board discovered it was in the plan's portfolio. The disclosure in February 2002 that Chapman was under investigation shook public confidence in the retirement system's management.
Management reforms
The Chapman scandal, together with staggering investment losses in 2001 and 2002, forced trustees to adopt management reforms for a system that provides pensions for almost 100,000 retired state employees, teachers and law enforcement officers. It also prompted the General Assembly to adopt legislation restructuring the board of trustees.
One trustee during the Chapman years was Debra B. Humphries. Among topics that could come up in the trial is why former Gov. Parris N. Glendening appointed the little-known securities firm employee to the pension board in 1997.
