- The Washington Times - Monday, March 25, 2002

BALTIMORE (AP) Maryland's retirement fund may lose more than $4 million because the state pension board's former investment firm bought $5.1 million in stock in the firm's parent company, records show.
Two money managers for Chapman Capital Management bought 395,000 shares of stock in eChapman.com for $13 a share, according to state records obtained by the Baltimore Sun. Pension board trustees were told the price may have been more than market value.
The stock is now worth 17 cents a share.
The purchase occurred in June 2000 when the Baltimore company first sold its shares to outside investors. Shares began trading five days later on the stock market. The investment represented a third of eChapman.com's 1.26 million shares on the market.
The initial public offering raised $16.4 million for the company, records show.
Nathan Chapman Jr., Chapman Capital's chief executive and chairman of the University System of Maryland board of regents, owned up to 65 percent of eChapman.com before the IPO.
The state pension board fired Mr. Chapman's firm in January after learning that the Securities and Exchange Commission was investigating the investment. Mr. Chapman's company managed about $175 million of the state's $27 billion in assets.
The panel at the time also reported that it ended 2001 with $28.4 billion in assets, down 12.8 percent over the past 12 months.
Mr. Chapman says managers he hired had been using state pension money to buy his companies' stock since 1998 and that pension system officials knew about the investments.
"I discussed the position with clients at various times including the state of Maryland retirement system and no client ever had an issue with it," Mr. Chapman says.
Allen Bond, the controller of one of Mr. Chapman's money managers, was under federal indictment on unrelated fraud charges at the time of the transactions.
The other fund manager, Zevenbergen Capital of Seattle, sold 10,000 shares of eChapman.com stock at $7.64 a share on the first day of public trading and the rest at $6.87 in August 2000. The purchases cost the state $115,225 of its $260,000 investment.
Mr. Bond was not available for comment, and officials at Zevenbergen Capital declined to discuss the trades, the Sun reports.

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