DiBiagio's remarks spur motion in fraud case

Chapman prosecutors ask ban on e-mail references

July 20, 2004|By Michael Dresser | Michael Dresser,SUN STAFF

In the first fallout since U.S. Attorney Thomas M. DiBiagio was rebuked for e-mail messages urging more convictions of public officials, prosecutors in the federal fraud trial of investment banker Nathan A. Chapman moved yesterday to block any mention of their boss' statements to discredit their case.

Two assistant U.S. attorneys urged U.S. District Judge William D. Quarles to prevent Chapman's attorneys from telling the jury about DiBiagio's widely reported remarks exhorting aides to press forward on public corruption cases.

The move would bar any defense arguments questioning the government's motives for bringing its case against Chapman, a longtime political ally of former Gov. Parris N. Glendening.

"Any attempt to offer evidence, innuendo or argument concerning the government's conduct or motivation in bringing this or any other case is just a tactic calculated to divert attention from evidence of the defendant's guilt and a bid for jury nullification," the prosecutors argued.

Quarles has yet to announce a ruling on the motion.

Chapman's lead defense attorney, William R. "Billy" Martin, said he could not comment on the prosecutors' filing.

Motives questioned

The motion came as Chapman's lawyers began to present defense arguments after about a month-long prosecution case.

While cross-examining government witnesses, Chapman's attorneys have repeatedly suggested a political motive for bringing the charges. Time and again the defense questioned whether federal investigators were looking into Chapman's political connections and contributions - particularly those involving Glendening.

Last week, The Sun reported that in May, DiBiagio set a goal of three "front-page white collar/public corruption indictments" by Nov. 6.

The newspaper also reported that on July 1, DiBiagio stepped up the pressure on his assistants in an e-mail pointing to a series of federal indictments brought last month against city officials in Philadelphia.

"Why aren't we doing cases like this? Am I the only one embarrassed by the fact that this Office has not convicted an elected official of corruption since 1988?" Maryland's top federal prosecutor wrote.

DiBiagio subsequently sought to soften his remarks, but the disclosure of his comments brought a rebuke from the U.S. Justice Department.

Deputy Attorney General James B. Comey wrote a letter to DiBiagio on Friday telling him not to bring any future public corruption indictments without approval from Washington in order to protect the "credibility" of the U.S. attorney's office.

Assistant U.S. attorneys Jefferson M. Gray and Craig M. Wolff are seeking to prevent Martin from using DiBiagio's words as ammunition in the Chapman case.

"Even assuming that the Unites States Attorney has made a stated priority of [investigating] allegations of corruption involving elected public officials, this in no way extenuates or excuses Mr. Chapman's conduct," the prosecutors told Quarles. "This is primarily a corporate and securities fraud case."

Chapman, who managed money for the Maryland state pension fund, is charged with defrauding the system by instructing an investor he supervised to buy millions of dollars worth of stock in Chapman's own companies. Among other charges, he is also accused of looting hundreds of thousands of dollars from his own publicly traded companies.

Defense motion denied

Last week, Quarles denied a defense motion to throw out charges - ruling that on each count there is enough evidence to let the jury decide.

Prosecutors argued that the defense has "no legitimate reason" to link the case against Chapman with DiBiagio's comments - noting that two of the U.S. attorney's reported communications came after the Chapman trial began.

The U.S. attorney's office cited cases giving federal prosecutors broad discretion in bringing cases. The government motion said juries are entitled to acquit on any grounds they choose but that defense lawyers are not entitled to present a theory that prosecutors charged Chapman only because they couldn't indict "more prominent targets."

There was no public discussion of the motion in court yesterday, but prosecutors and defense attorneys spent long stretches of time in animated discussions with Quarles at the bench - interruptions that are routinely covered with recorded "white noise."

Chapman's lawyers managed to introduce a hint of suspicions about the government's case yesterday through the testimony of defense witness Robert L. Wallace, a former director of one of Chapman's companies.

`A bit concerned

Wallace, a published author who professed continuing admiration for Chapman, said that during the government's investigation he declined an invitation to be interviewed by the FBI.

"I was a bit concerned about the motives of the FBI," the Howard County entrepreneur said.

Wallace testified that a series of loans Chapman received from one of his companies - eventually totaling more than $1 million and still not repaid - were approved by the board because directors thought they were in the best interest of the business.

Supporting a main defense argument, Wallace said the board approved those loans only after consultation with lawyers. Prosecutors said such arguments are irrelevant because Chapman is not charged with crimes involving the loans.

"It is axiomatic that only relevant evidence is admissible," prosecutors wrote.

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