Humphries plays down Chapman gifts' effect

But ex-pension trustee concedes their affair caused conflict of interest

July 15, 2004|By Michael Dresser | Michael Dresser,SUN STAFF

Debra B. Humphries, a former Maryland pension board trustee who carried on a secret three-year romance with Nathan A. Chapman Jr. while he managed money for the retirement system, testified yesterday that his lavish gifts and $46,000 in cash payments did not buy her vote on the board.

Nevertheless, the former trustee said she was aware from the beginning that the relationship created a conflict of interest. She said she felt she was "in a box" in 2001 when Chapman sought her help to obtain an additional $100 million to invest for the pension system.

Humphries, 46, finished her long-awaited testimony as prosecutors wrapped up their federal fraud case against Chapman, a Baltimore investment banker and former chairman of the state university system's Board of Regents. The defense is expected to begin presenting its case Monday.

Among other charges, Chapman is accused of fraudulently depriving the state pension system of the honest services of Humphries, who served on the board from 1997 until last year.

Also yesterday, an FBI agent testified that an obstruction-of-justice investigation related to Chapman's company is being conducted, but prosecutors said Chapman was not a target. The investigation was prompted by a former Chapman employee, who said she was threatened after going to the Securities and Exchange Commission with complaints about the company's business practices, Special Agent Steven Quisenberry said.

Humphries was indicted along with Chapman last year and later pleaded guilty to a single count of lying to a grand jury about the amount of support Chapman provided her during a period of unemployment in 1998-1999.

"From a personal standpoint and from a professional standpoint, I was embarrassed that I had to rely on him ... for my financial support," Humphries told the jury.

The former trustee acknowledged that she was wrong not to list the gifts Chapman gave her - including diamond jewelry and a Hawaiian vacation - on her required state disclosure form. But she said it was not the gifts she tried to conceal but her affair with a married man with business before the board.

Humphries' account veered between self-justification and contrition as she testified before U.S. District Judge William D. Quarles, who will sentence her for perjury after the Chapman trial.

In testimony Tuesday, Humphries said she was appointed to the board by Gov. Parris N. Glendening on the recommendation of Chapman in 1997 - shortly after the start of their affair. There was no testimony that Glendening, who also named Chapman to the Board of Regents, knew of the relationship.

Under a gentle cross-examination by defense lawyer William R. "Billy" Martin, Humphries said that during their affair from 1996 to 1999, Chapman never pressed her to vote his way. She said his cash payments and gifts reflected their intimate relationship rather than her position on the pension board.

Humphries also told the jury that she and Chapman never entered into a criminal scheme. In what could be a critical advantage for the defense, she said Chapman would have had no way of knowing she lied on her financial disclosures.

Chapman is charged with defrauding the pension system by instructing an investment adviser who worked for him to use state pension money to invest in Chapman's companies. Two counts of mail fraud involve disclosures Humphries sent to the State Ethics Commission.

Humphries said she tried to "compartmentalize" her relationship with Chapman and her duties to more than 95,000 retired state employees, schoolteachers and police officers who depend on the pension system. But she acknowledged that she should have disclosed the relationship to her fellow trustees.

"I felt conflicted, and it became more and more difficult to be objective and compartmentalize this," she said.

With her soft voice and demure appearance, Humphries appeared to be a woman who could evoke sympathy despite her acknowledged ethical lapses. She testified that she has been unemployed since her indictment last July and that she can no longer find work in the financial services industry.

In his cross-examination, Martin portrayed her as a woman singled out for vengeful prosecution because of a "fib." Humphries appeared to embrace the characterization during cross-examination, but she reversed herself when questioned by prosecutor Jefferson M. Gray.

Her testimony that she received only about $1,000 in gifts from Chapman was a lie, Humphries admitted.

Under Gray's questioning, Humphries said she lied after being given immunity on all other possible charges and after being warned that the only way she could get into trouble was by committing perjury.

Returning to Chapman's defense, Martin quizzed Humphries about questions raised by prosecutors about Chapman's ties to Glendening.

"They wanted to go after the governor, didn't they?" said Martin, drawing an objection from Gray. After Quarles overruled the prosecutor, Humphries told jurors that the investigators asked a lot of questions about Chapman's political contributions and connections.

Despite her conflict of interest, Humphries maintained that she always voted in what she thought was the best interest of pension plan beneficiaries.

"I always did my best to do a good job," she said.

Sun staff writer Stephanie Hanes contributed to this article.

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