From the AP

Friday July 30, 2004
Attorneys make closing arguments in pension case
by The Associated Press

BALTIMORE (AP) - A former money manager for the state pension system abused the trust of thousands of Maryland retirees by using their money for his benefit, a federal prosecutor told jurors Thursday during his closing arguments in a fraud case.

"You don't get to use the assets of the system for your own benefit," Assistant U.S. Attorney Craig Wolff told jurors, adding later: "This is a mess, ladies and gentlemen."

But Nathan A. Chapman Jr.'s attorney contended his client's conduct was "a far, far cry from a scheme to defraud." William Martin argued that the government created a "convoluted theory" of wrongdoing to "see what sticks" after failing to make a public corruption case against former Gov. Parris Glendening, who appointed Chapman to the state university system's Board of Regents.

"They're out to get Mr. Chapman," Martin said.

Chapman, 46, is accused of mail fraud, wire fraud, securities fraud and other crimes in the use of retirement system funds to boost his ailing company's stock price. 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 managed more than $100 million in funds for the retirement system. He managed funds from 1996 until its trustees fired him in January 2002.

Wolff told jurors that Chapman was repeatedly cautioned about potential conflicts of interest when he invested pension funds into his company.

"There was a scheme to defraud here," Wolff told jurors, who have often heard testimony about complex business transactions during the six-week trial in U.S. District Court in Baltimore.

Chapman failed to notify public officials that he was investing retirees' money in his eChapman.com company, even though he was required to do so.

"Mr. Chapman knew that it had real problems," Wolff said, referring to the struggling company. "He went ahead with it anyway."

Martin argued his client believed in the company and hoped to enhance opportunities for minorities to enter the financial world. Instead, Chapman was the target of an "embarrassing and relentless effort by the FBI" to bring charges, Martin said.

Earlier this week, an FBI agent testified that two former employees of Chapman told the FBI they gave Glendening illegal campaign contributions during his 1994 campaign for governor. Although the FBI never concluded that Glendening was aware of the donations, investigators explored the "straw campaign contributions" as a motivation of conduct by Chapman.

Glendening's name has popped up dozens of time during the trial, as defense attorneys have argued that federal investigators were probing conduct by the former governor but had to settle for prosecuting Chapman. Prosecutors have denied the claim.

If convicted, Chapman could go to prison for a decade or more.

Jurors were scheduled to begin deliberations Monday.

I do not know about you, the reader, but this could be applied to Oregon too.