- The Washington Times - Monday, November 1, 2004

BALTIMORE — Former pension fund manager Nathan Chapman Jr. was sentenced to 7 years in prison and ordered to pay more than $5 million restitution yesterday on charges that he defrauded the state retirement system and looted his own investment company.

Chapman, a former chairman of the state university system Board of Regents, told U.S. District Judge William Quarles he never intended to defraud anyone.

“I look forward to the other side of this, I have to, and with this crucifixion there will be a resurrection,” Chapman told the judge.

The prison term is the same imposed last year in Baltimore in the highly publicized fraud case involving John Rusnak, a rogue currency trader who pleaded guilty to losing $691 million for the former Allfirst Financial Inc.

Chapman’s crimes cost the state pension system more than $5 million.

Prosecutors had sought a sentence between 121 and 151 months. The defense had asked for 41 months.

Before sentencing, Judge Quarles said Chapman had “many wonderful, admirable qualities” and that he admired Chapman’s previous contributions to society.

But, he added, Chapman’s conduct “shakes confidence” in public trust and contributes to cynicism.

“And that’s a significant loss,” Judge Quarles said.

William Martin, Chapman’s attorney, said he filed a notice of appeal with the 4th U.S. Circuit Court of Appeals in Richmond. He said there were complex legal issues relating to jury selection and fiduciary responsibility. Mr. Martin also filed a motion to allow Chapman to remain free pending appeal.

After sentencing, Mr. Martin said he tried to convince the judge that Chapman didn’t deserve the same sentence as Rusnak because the amount of money lost wasn’t nearly as high.

“While it clearly is a crime of which he is convicted, this is not the case that the government has made it out to be,” Mr. Martin said.

Chapman, a 46-year-old investment banker, had been charged in a sweeping, 32-count indictment with mail fraud, wire fraud, securities fraud and other crimes relating to his use of state retirement system funds to revive the stock price of his sagging company.

In August, a jury found him guilty of 23 counts, including stealing from his own companies by using “business development” checks, partly to pay for affairs with several women. Prosecutors accused Chapman of looting more than $500,000, but jurors did not reach a unanimous decision on the amount.

He also was convicted of defrauding shareholders in his companies.

The $29 billion retirement system, which is responsible for the pensions of more than 250,000 teachers, police officers, firefighters and other government workers, lost nearly $5 million in the transactions.

Chapman was a prominent black investment banker who said he wanted to use his companies to help minorities enter the financial world.

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