Maryland pension plan called safe, despite problems

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BALTIMORE (AP) -- Maryland's $25 billion state employee pension plan remains strong, despite the indictments of former money manager Nathan Chapman Jr. and a trustee who resigned last week, the new chief executive of the plan said.

Thomas Lee, executive director of the State Retirement Agency, said the pension board will send out letters to the plan's 250,000 members next week.

"The benefits are safe, and we all understand the very important fiduciary responsibility we all have," said Mr. Lee, who has been on the job about a month.

Mr. Chapman was charged Thursday with fraudulently investing more than $5 million of state pension funds in his own company in a 39-count federal indictment. It said he defrauded the pension system as he managed investments for the fund, looted his own companies and used the money for gifts to women with whom he had intimate relationships.

Debra Humphries, who resigned as trustee June 16, was accused in a separate indictment of perjury for lying to a grand jury about $46,000 in payments from Mr. Chapman.

Mr. Lee said the pension system's letter will go out under the signatures of Comptroller William Donald Schaefer and state Treasurer Nancy K. Kopp, who are chairman and vice chairman of the system. Neither Mrs. Kopp nor Mr. Schaefer could be reached for comment on the indictments.

Mr. Lee noted that several steps to reform the system have been taken since the pension trustees fired Mr. Chapman in January 2002 for allowing funds entrusted to him to be used to purchase stock in his companies.

The trustees hired an independent consultant to help guide investment decisions and hired another firm to conduct a "fiduciary audit" of the board itself. The trustees also made key personnel changes, forcing out former Executive Director Peter Vaughn and former Chief Investment Officer Carol Boykin.

The charges against Mr. Chapman raised questions about whether he will continue his service on the state university system's Board of Regents, to which he was appointed by former Gov. Parris N. Glendening.

Mr. Chapman's term ends in 2005.

Greg Massoni, press secretary to Gov. Robert L. Ehrlich Jr., said Friday that he hopes Mr. Chapman will "do the right thing" and step down.