June 26, 2003
Sean Caine, 410-576-6357
CHAPMAN CHARGED WITH SECURITIES FRAUD
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.
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.
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.
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.
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.