Former fund manager pleads guilty to fraud

Chapman sentenced on charges remaining from 2003 federal case

October 03, 2006|By Matthew Dolan | Matthew Dolan,Sun reporter

Former pension fund manager Nathan A. Chapman Jr. pleaded guilty yesterday to fraud charges left over from his federal trial two years ago and was sentenced to a year of probation and ordered to pay $40,000 in restitution.

During an appearance before U.S. District Judge William D. Quarles in Baltimore, Chapman admitted that he submitted false documentation to buy more than $1 million worth of real estate.

"This is an appropriate result to resolve these charges that originally were joined with the earlier case, for which Mr. Chapman will serve 90 months in federal prison," Maryland U.S. Attorney Rod J. Rosenstein said in a statement yesterday.

In 2003, federal prosecutors brought charges against Chapman, once a star investor and friend to Maryland's political elite.

Chapman, 49, of Columbia, was accused of using of state pension money to buy stock in his companies and prop up its value. But when the companies' value plummeted, prosecutors said, the retirement system lost virtually all of that money.

The jury that convicted Chapman in August 2004 fixed the amount of the loss at more than $5 million. A judge later sentenced him to 7 1/2 years in prison, but he has remained free pending his appeal.

To resolve some of the charges that had been separated from the original trial, Chapman originally agreed to pay $215,000 in exchange for federal prosecutors dropping bank fraud charges left over from his public-corruption trial. But prosecutors said that Chapman failed to pay, prompting them to bring new charges.

Yesterday's restitution figure represented a compromise lowered in part, officials said, by Chapman's poor personal finances and his $200,000 payment in taxes.

According to court documents submitted yesterday, the charges stemmed from a house purchased by Chapman and his wife, Valerie, on Brighton Dam Road in Clarksville in July 1999.

The property, which included an adjoining 6-acre lot, cost $1.15 million.

As part of the mortgage application process, the Chapmans were required to fill out an application listing their assets and debts.

According to court papers, Nathan Chapman lied, saying he had sold stock in his company in order to raise the additional funds required to cover the down payment and settlement charges on the home. Instead, he used money from one of his companies, prosecutors said.

To satisfy the bank's request for documentary confirmation of his claim that he had raised the cash for the down payment and settlement charges by selling stock in his company, Chapman sent the back doctored documents showing he had sold his personal stock, according to court papers.

After Chapman pleaded guilty, the government yesterday agreed to lift a lien it had placed against a home owned by Valerie Chapman, who is terminally ill. The Chapmans are divorced.

Chapman has helped pay for his ex-wife's medical care and the care of their three daughters, his lawyers said. Federal prosecutors were aware of the family's plight and sought to separate her from the case, according to court papers.

Chapman and his lawyer, William "Billy" Martin, could not be reached for comment yesterday.

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