BALTIMORE — An investment banker with links to former Maryland Gov. Parris N. Glendening pleaded not guilty yesterday to charges he defrauded the state pension system and his own companies, using part of the money to lavish gifts on women.
“Our company has had to overcome the worst stock market since the Depression …, two wars and the tragedy of September 11,” Nathan Chapman Jr. said outside the federal courthouse, reading from a prepared statement. “We will overcome this.”
After entering the plea, Mr. Chapman was released on a $1 million unsecured bond. A trial date wasn’t set.
Mr. Chapman, former chairman of the state university system’s Board of Regents, has been charged with fraudulently investing more than $5 million of state pension funds in his own company.
Assistant U.S. Attorney Jefferson Gray declined to comment after the arraignment. The 39-count indictment made public last week included mail fraud, wire fraud, securities fraud and conspiracy charges.
U.S. Attorney Thomas DiBiagio has said Mr. Chapman also “looted” $437,000 from three companies he ran and spent the money on women with whom he had “intimate relations.”
Former pension board trustee Debra Humphries has been charged in a separate indictment with perjury for lying to a grand jury investigating gifts and payments Mr. Chapman was said to have given her.
Miss Humphries resigned from the board last month, citing personal reasons.
Mr. Chapman gave one of the women $246,000 in cash and gifts, including a car and a motorcycle, prosecutors said. He also gave Miss Humphries $46,000 in cash and gifts.
Mr. Chapman and his attorney, Lanny Davis, declined to comment when asked about specific charges in the indictment.
“The government has unjustly accused many people in the headlines, only to have them found innocent in the courts,” Mr. Chapman said. “I believe in my heart that will be the case for me.”
Mr. Chapman, 45, managed between $87 million and $259 million of the state’s $29 billion pension system before he was fired.
The system, which is responsible for the pensions of more than 250,000 teachers, police officers, firefighters and other government workers, lost $4.7 million before Mr. Chapman’s investment firm was liquidated, Mr. DiBiagio said.
Mr. Chapman invested money for the pension fund from 1996 until he was fired in January 2002, after trustees learned of a Securities and Exchange Commission investigation. Mr. Chapman also resigned last year as chairman of the state university system’s Board of Regents, although he continues as a member.
Mr. Chapman is a friend and political supporter of Mr. Glendening’s.
Mr. Glendening named Mr. Chapman to the Board of Regents and successfully pushed for his selection as chairman.
Prosecutors said Mr. Chapman pressured one of his pension fund submanagers to invest more than $5 million in Mr. Chapman’s online investment company, EChapman.com — now called EChapman Inc. — in an attempt to boost the fledgling firm during an initial public offering (IPO).
Prosecutors said the investment was a breach of duty and the pension fund immediately lost $1 million as a result.
Mr. Davis said his client wouldn’t have been indicted had the IPO increased in value, rather than declined.
“Mr. Chapman is an innocent man, despite a one-sided accusation [by the government],” Mr. Davis said. “We believe it is wrong to indict someone for erroneous investment advice.”