FOR FURTHER INFORMATION CONTACT
AUSA VICKIE E. LEDUC at 410-209-4885
October 2, 2006
FOR IMMEDIATE RELEASE
NATHAN CHAPMAN PLEADS GUILTY
TO CONDUCTING A FINANCIAL TRANSACTION
WITH FUNDS RESULTING FROM A FRAUDULENT LOAN APPLICATION
BALTIMORE, Maryland - Nathan A. Chapman, Jr., age 49, of Columbia, Maryland, pleaded guilty today to conducting a financial transaction with funds resulting from another criminal offense, specifically, making false statements on a loan application in connection with his July 1999 purchase of a house and six acres of land in Clarksville, Maryland.
Chapman and his former wife Valerie Chapman also agreed to surrender approximately $40,000 in funds resulting from the transaction that have been frozen since March 2004, announced United States Attorney for the District of Maryland Rod J. Rosenstein. U.S. District Judge William D. Quarles, Jr. also sentenced Chapman to one years’ probation in addition to the 90 months to which he was sentenced on related charges in November, 2004.
United States Attorney Rod J. Rosenstein said, "This is an appropriate result to resolve these charges that originally were joined with the earlier case, for which Mr. Chapman will serve 90 months in federal prison."
Today’s guilty plea resolves the outstanding charges from the second superseding indictment (Counts 31 - 33), which were severed from Chapman’s 2004 trial. In that case, Chapman was convicted in connection with schemes to defraud the State Retirement & Pension System of Maryland (“the State Pension System”), the Bankers Trust Company Pension System, shareholders in his companies and the public, and sentenced to 90 months in prison.
According to the statement of facts from today’s guilty plea, in late July 1999, Chapman and his wife Valerie purchased a house located at 13125 Brighton Dam Road, Clarksville, Maryland and an adjoining unimproved 5.99-acre lot for $1,150,000. Chapman then applied for a $920,000 mortgage on the property at Sandy Spring National Bank (SSNB). Chapman made two false statements in connection with his loan application. First, he advised SSNB’s loan officers that he would raise the $242,000 necessary to pay the balance of the down payment and the settlement costs by selling stock he owned in one of two financial services companies that Chapman had founded. Second, in listing his personal liabilities, Chapman did not disclose that over the previous 18 months, he had borrowed $723,527 from his two publicly held companies for various personal purposes. There is no evidence that Valerie Chapman was personally aware of either of these false statements.
Rather than selling stock he owned in one of the Chapman companies to raise the remaining $242,000 he needed for the down payment and closing costs, Chapman instead transferred money from an account owned by Chapman Capital Management Holdings, Inc. To cover up the fact that he had borrowed these funds from the assets of Chapman Capital Management Holdings, Chapman caused a fake “Transaction Confirmation” to be supplied to SSNB, fraudulently representing that he had sold 39,525 shares of stock in Chapman Holdings, Inc. on July 23, 1999.
In early April 2003, the Chapmans sold the residence at Brighton Dam Road for $1,160,000 and the adjoining lot for $440,000 – a total of $1.6 million. On June 25, 2003, Chapman was indicted federally on charges of wire fraud, mail fraud, investment advisory fraud and making false statements to a government agency. Chapman was informed of the indictment the following day.
Shortly after Chapman’s indictment, on June 27 and July 7, 2003, the Chapmans received two checks, totaling $587,548.68, constituting their net share of the proceeds resulting from sale of the residence on Brighton Dam Road and the adjoining land. Because Chapman originally obtained the house and property by means of the loan application fraud, these funds constituted proceeds of a criminal offense. The Chapmans endorsed both checks and deposited them into an account established solely in Valerie Chapman’s name at Bank of America in Columbia in early July, 2003. Valerie Chapman then used the money to purchase a residence located at 6017 Misty Arch Run in Columbia, Maryland; obtain a $10,000 Certificate of Deposit (CD) at Bank of America; open a money market account at Bank of America with a deposit of $38,995; and pay $200,000 in taxes that the Chapmans owed to the federal and state governments on amended joint tax returns that Chapman had filed in October 2002 after learning of the federal investigation. The house, CD, and bank account were all titled solely in Valerie Chapman’s name. The Chapmans have subsequently divorced.
Once the roughly $40,000 in the frozen accounts are transferred to the Registry of the District Court, the government will request that these funds be used towards the remaining outstanding restitution obligation imposed in United States v. Daniel Baldwin, JFM-05-0284 (D. Md.), another case involving criminal conduct by one of Chapman’s subordinates, or for other purposes of restitution as the Court may direct. In return, the United States has agreed to lift the lien it has against the residence at 6017 Misty Arch Run, Columbia, Maryland that Valerie Chapman acquired with funds resulting from the sale of the Brighton Dam Road house, and the government will not further pursue a forfeiture against that residence.
Chapman’s appeal from his criminal convictions in the previous trial was argued before the United States Court of Appeals for the Fourth Circuit on September 20, 2006. A decision in that matter is pending.
United States Attorney Rod J. Rosenstein thanked the Federal Bureau of Investigation, the Internal Revenue Service - Criminal Investigation Division, and the United States Attorney’s Office for their investigative work in this matter. Mr. Rosenstein also praised Assistant United States Attorney Jefferson M. Gray, who prosecuted the case.
This page last modifiedOctober 2, 2006