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For Immediate Release
June 26, 2003
Contact: Sean Caine, 410-576-6357
scaine@oag.state.md.us

NATHAN CHAPMAN CHARGED WITH SECURITIES FRAUD

Attorney General J. Joseph Curran, Jr. announced today that his Securities Division charged Nathan A. Chapman, Jr., his affiliated firm eChapman, Inc., his brokerage and investment advisory firms, and two associates with investment fraud. The Maryland Securities Commissioner filed two complaints today. One seeks a permanent injunction barring Chapman, Earl Bravo, Daniel Baldwin, The Chapman Company, Chapman Capital Management, Inc. and eChapman from transacting securities or conducting investment advisory business in Maryland; restitution to investors who were the victims of their fraudulent scheme; and civil monetary penalties. [See complaint.]The Securities Division also filed an administrative case seeking to revoke the licenses of Chapman, Bravo, Baldwin and The Chapman Company.

According to the complaints, in June 2000, Chapman initiated a public offering of eChapman, the holding company for his investment advisory and brokerage businesses. Chapman went forward with the public offering of his company's stock even though the market was not favorable and the firm did not have buyers for the entire offering. At the onset of the offering when it was apparent that there were insufficient buyers, Chapman, with the assistance of Bravo and Baldwin, sold the stock to unwitting and unsophisticated retail clients. Chapman also used his investment advisory firm to dump close to one-third of the stock offering on that firm's client – a pension trust fund whose largest participant was the Maryland State Retirement and Pension System. The firm overcharged the client for a substantial portion of that sale.

The complaints allege that Chapman was the majority owner of each of the companies and had a personal financial stake in making the initial public offering a success. He did not tell the pension fund or many of the retail brokerage clients that he was placing stock in their accounts and did not disclose his personal financial interest.

Curran's Securities Division cooperated with the federal Securities and Exchange Commission and the United States Attorney's Office in investigating these matters. The Securities and Exchange Commission and the United States Attorney's Office also filed cases today, charging Chapman with both civil and criminal fraud.

Curran urges anyone who has a complaint arising out of a purchase of eChapman stock to call the Securities Division of his office at 410-576-6360. Curran reminded investors to call the Securities Division if they have questions about their investment adviser, broker and securities. Even when an investment program looks reasonable, and friends and family trust the promoter, it's better to take a few minutes to verify the status of the promoters.

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