Chapman case goes to jury in U.S. court

Closing arguments heard in seven-week fraud trial

`The best show in town'

July 30, 2004|By Michael Dresser | Michael Dresser,SUN STAFF

Nathan A. Chapman Jr.'s defense lawyer urged jurors yesterday to clear the Baltimore investment banker of fraud charges, accusing the U.S. attorney's office of concocting criminal charges in its zeal to build a case leading to former Gov. Parris N. Glendening.

Prosecutors, meanwhile, insisted they had produced ample evidence to convict Chapman in what they called a financial fraud case rather than a public corruption matter.

"This case richly deserves to be in a criminal courtroom," said assistant U.S. attorney Jefferson M. Gray.

Both sides presented closing arguments before a crowded courtroom after a nearly seven-week trial that Gray called "the best show in town over the past couple of months."

Late in the day, U.S. District Judge William D. Quarles Jr. put the case in the hands of the jury, which will begin deliberations Monday.

Chapman, 46, is charged with 32 counts of fraud and false statements in connection with his management of funds for the Maryland state employee pension system and his use of money from the coffers of his publicly traded companies.

The government contends that Chapman's approval of the use of pensioners' money to buy shares in his companies amounted to a scheme to defraud his clients.

The pension system, which covers teachers, police officers and state workers, lost nearly $5 million on those investments.

Prosecutors also say Chapman cheated his shareholders by taking more than $500,000 in "business development" checks from his company and using the money for personal purposes, including gifts to women.

The case is one of the most high-profile white-collar cases brought by U.S. Attorney Thomas M. DiBiagio.

Since it started June 14, the trial has moved from dry inspections of stock trading records to details of Chapman's extramarital affairs to accusations of a political witch hunt.

Defense attorney William R. Martin took direct aim at the government's decision to bring criminal charges, arguing that Chapman's alleged infractions should have been left to the Securities and Exchange Commission.

"Has the government shown you anything beyond a civil case?" Martin demanded. He noted that the SEC, which has also brought a case against Chapman, has the power to take his license, close his business and fine him -- but not to send him to jail.

The defense lawyer leveled his harshest criticism at FBI Special Agent Steven Quisenberry, who acknowledged on the stand that he had investigated the possibility that Chapman had used corporate funds for political donations.

"This was always a question of what can you tell me about this relationship with Governor Glendening," Martin charged. "They knew going in they wanted to do a political corruption case."

Martin derided Quisenberry's admitted effort to recruit political operative Julius Henson as an informant.

Henson testified last week that the FBI asked him to wear a wire as part of its efforts to develop public corruption cases.

"We don't know what al-Qaida was doing because we didn't have any snitches over there," Martin said. "And Agent Quisenberry was working hard here on the streets of Baltimore to develop snitches on politics."

Martin heaped scorn on the prosecution's decision to present a case detailing Chapman's alleged use of corporate funds to support women who testified they had sexual relationships with the married executive.

"The government wanted you to see this man at his worst," he said. "How do you do that? Bring in his mistresses."

He contended that the government failed to prove that Chapman had not spent more than $500,000 in "business development" checks for legitimate purposes.

He portrayed his client as a hard-driving "rainmaker" who habitually failed to get receipts for his business spending.

"He did not cross his T's and he did not dot his I's," Martin said. Chapman's approval of the use of pension funds to buy his company stock was not a scheme to defraud but at most a "breach of contract," Martin said.

He portrayed his client as a victim of Alan B. Bond, a New York money manager who bought stock in Chapman's companies using pension money entrusted to him by Chapman.

Bond, who was convicted in 2002 of defrauding the Maryland system and other clients, testified that he bought the shares under pressure from Chapman.

Assistant U.S. attorney Craig M. Wolff said jurors don't have to take Bond's word to convict Chapman. He said documents and other witnesses confirm Bond's account.

Chapman "devised these schemes. He executed these schemes. He did so willfully," Wolff said.

Prosecutors told the jury that the case is important for all pension fund participants and others who rely on professionals to manage their finances.

"Mr. Chapman participated in this fraud with the intent to defraud those clients," Wolff said. "He had to act in the best interests of his clients and he didn't do so."

Wolff disputed Martin's contention that the disclosure of Bond's purchase of Chapman stock in quarterly reports to the pension system showed his client had no criminal intent.

"It's not enough to just disclose this after the fact," he said.

Wolff also rejected Martin's criticism of the government's introduction of evidence about Chapman's mistresses.

He said the prosecution raised the matter only to show where the money from the business development checks went.

"This is not a case about sex," Wolff said.

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