Appeal in pension fraud suit is lost

December 09, 2006|By Matthew Dolan | Matthew Dolan,Sun reporter

Former pension fund manager Nathan A. Chapman Jr. lost his appeal of a 2004 stock fraud conviction yesterday but won the right to be sentenced again under a decision that could shave at least a year off his prison sentence.

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 state pension money to buy stock in his companies and prop up their 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.

Yesterday, the Court of Appeals for the 4th Circuit ruled in an unpublished opinion that Chapman was not entitled to a new trial.

The panel of three judges led by William B. Traxler Jr. rejected Chapman's arguments that prosecutors improperly struck African-American women from the jury that convicted him. They also dismissed his contention that Chapman was harmed when the trial judge allowed certain government witnesses to testify, while barring other expert witnesses offered by the defense.

Finally, the judges found little or no merit in the accusations of prosecutorial misconduct that Chapman's lawyers lodged against the federal agents and prosecutors.

However, the federal appeals court based in Richmond, Va., ruled that Chapman was improperly sentenced.

Because of U.S. Supreme Court decisions handed down since the Chapman conviction, the trial judge in the case should have stayed within a federal sentencing guideline range of five years and three months to 6 1/2 years in prison for the principal charge in the former pension manager's conviction, the judges ruled.

It was unclear yesterday when U.S. District Judge William D. Quarles would hold a hearing on the issue.

Maryland U.S. Attorney Rod J. Rosenstein said that he believes that the appeals court ruling will still allow prosecutors to seek a 90-month sentence for Chapman. A message left for Chapman's lawyer, William "Billy" Martin, was not returned yesterday.

In a separate part of the case heard after his jury conviction, Chapman pleaded guilty to fraud charges left over from his federal trial and agreed to a restitution order of $40,000.

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