Broker pleads guilty to fraud charge

Nathan Chapman employee, along with Chapman himself, facing SEC civil suit for investments


Five years ago, Daniel Baldwin Jr. worked as a securities broker at Chapman Co. in Baltimore. Under the guidance of prominent pension fund manager Nathan Chapman, he advised hundreds of clients and bought and sold stocks on their behalf.

In federal court yesterday, he admitted that he also purchased stocks for customers without their knowledge.

Baldwin, 49, of Randallstown, pleaded guilty to one count of securities fraud for buying hundreds of thousands of dollars worth of shares for a start-up company run by his boss, Inc.

Prosecutors estimated Baldwin's clients suffered losses of between $200,000 and $300,000 when the stock became worthless.

When he was asked about his activities by FBI agents and a grand jury, Baldwin lied, saying that all of his clients knew that he had invested their money in the eChapman stock lost more than 40 percent of its value in its first day of trading in June 2000 because of the lack of investor demand.

By the end of 2000, the stock was down 75 percent from its initial public offering price of $13 a share; it fell to pennies per share in the spring of 2002 and was eventually delisted from Nasdaq trading.

At the time he was charged in a 35-count indictment in June, Baldwin denied all of the charges, saying in a statement at the time, "I take great pride and responsibility in advising my clients diligently, professionally and honestly."

Yesterday, he answered questions only with "yes" and "no" before U.S. District Judge J. Frederick Motz. Baldwin's sentencing is scheduled for Jan. 10.

Baldwin and Chapman remain defendants in a civil lawsuit filed by the Securities and Exchange Commission. Many of the criminal charges filed against Baldwin were similar to those filed against Chapman, who had been hired by the state pension system to make investments.

The case against Chapman stemmed from the use of pension money to buy stock in his companies. As a result, prosecutors said, the retirement system lost virtually all of that money as the companies' value sank.

The jury that convicted Chapman in August 2004 fixed the amount of the loss at more than $5 million. He is appealing the conviction.

Chapman had agreed to pay $215,000 in exchange for federal prosecutors dropping bank fraud charges left over from his public-corruption trial. But prosecutors said recently that Chapman failed to pay, prompting them to bring him back to trial, now scheduled for October 2006.

"I am confident and hopeful that with a payment of the agreed funds, we'll be able to resolve this matter," William R. "Billy" Martin, Chapman's criminal defense attorney, said this week.

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