Glendening said to lobby for Chapman

Pension board ex-trustee testifies about governor

Request of $100 million

Pilot says his vote sought to give more to Chapman

July 14, 2004|By Michael Dresser | Michael Dresser,SUN STAFF

Former Gov. Parris N. Glendening lobbied a board member of the Maryland retirement system to increase the amount of money the state pension fund was investing with longtime political ally Nathan A. Chapman Jr., the trustee testified yesterday.

Glendening's intervention came in 2001, at a time when a top aide had informed the governor that Chapman's investment performance was lagging, according to testimony at Chapman's trial in U.S. District Court on federal fraud charges.

The testimony by G. Bruce Harrison, a former Maryland State Police pilot who served on the board from 1997 until last year, was the strongest evidence so far of high-level pressure to give special treatment to Chapman.

The revelation came on a day when a former Glendening Cabinet secretary testified about her effort to aid Chapman at the suggestion of Major F. Riddick Jr., then the governor's chief of staff.

T. Eloise Foster, state budget secretary from 2000 to 2003, called the effort an attempt to increase the participation of minority-run money managers in state investments.

Late in the day, the jury also heard former trustee Debra B. Humphries testify that she conducted a three-year affair with Chapman - and received more than $46,000 in cash payments from him - at a time when she was serving on the pension board and Chapman was managing money for the system.

Humphries' testimony is to continue today.

`Profoundly troubling'

Ellyn L. Brown, a former state securities commissioner, said that while there might not be a law prohibiting a governor from lobbying a pension trustee to help an individual money manager, it's "profoundly troubling."

"We don't need a rule to know it doesn't sound right, it doesn't smell right, it doesn't feel right. It makes your stomach hurt," she said.

Sen. Edward J. Kasemeyer, co-chairman of the General Assembly's Joint Pension Committee, said that if such lobbying isn't illegal, it is unethical.

"Obviously it's inappropriate if it occurred and it shouldn't have happened," the Howard County Democrat said.

Neither Glendening nor Riddick returned calls seeking a comment.

$5 million fraud

Chapman is charged with defrauding the Maryland pension system out of almost $5 million in an alleged scheme under which he is said to have instructed a money manager who worked for him to buy shares in the public offerings of Chapman's companies. The Baltimore investment banker is also accused of looting his own public companies.

Harrison said Glendening approached him personally after he had flown the governor to an event in Rhode Island on Aug. 3, 2001.

Harrison said Glendening told him fellow trustees Humphries and Frank Casula would offer a motion in the Investment Committee to give more money to Chapman to invest on behalf of the pension fund beneficiaries.

Political allies

According to Harrison, Glendening expressed the hope that the pilot could support the increased allotment for Chapman, his hand-picked chairman of the state university system's Board of Regents and a former campaign fund-raiser.

Under cross-examination, Harrison said the governor did not engage in any "arm-twisting" to get his vote.

At the time, Glendening was still considered a likely candidate to become chancellor of the university system after his gubernatorial term expired in 2003 - a decision in which Chapman would have had an important voice. The former governor didn't take himself out of the running for that post until December of that year.

No vote occurred

Harrison said the question of allocating more money to Chapman never came to a vote. He said that less than a week later Alan B. Bond, the money manager who purchased millions of dollars of Chapman stock with pension fund money, was indicted for the second time on federal fraud charges.

Casula, then mayor of Laurel, died of cancer that October.

Foster, the former budget secretary, said she was enlisted to help Chapman get more money for his investment fund in spring 2001 by Riddick, who was then nearing the end of six years as Glendening's chief of staff.

Riddick told her that Chapman was interested in managing more money for the system and said that "there was interest in helping him." She said Riddick advised her to have dinner with Chapman along with two other pension trustees - Humphries and the late Arthur N. Caple Jr.

Seeking more

Foster said she didn't actually meet with Chapman until July 16, 2001, three days after an Investment Committee meeting at which the idea of providing more money to Chapman received a chilly reception.

Chapman expressed interest in receiving more money for his fund, which employed "sub-managers" such as Bond to choose specific stocks, Foster said.

"He indicated the governor was willing to help him," she added. She did not recall the amount Chapman was seeking, but pension system records say he asked for $100 million.

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