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  • Writer's pictureDonald V. Watkins

Nathan A. Chapman, Jr.: The Victim of Rogue Prosecutors in a Rigged System

Updated: Sep 6, 2022

By Donald V. Watkins

©Copyrighted and Published on July 2, 2018; Republished January 29, 2021

[Author's Note: I am republishing this article as a final tribute to Nathan Chapman, who died on January 17, 2021 from a long battle with cancer. Nate was one of my mentors, best friends, and role models in business. He was also a truly great American. As you can see from the article, Nate was also an early victim of a ruthless COINTELPRO U.S. Attorney in Baltimore who had to be fired by the Department of Justice for targeting successful black businessmen and popular white Democrats for criminal investigations and prosecutions solely for political reasons. Unfortunately, this U.S. Attorney, who was a Republican presidential appointee and unqualified political hack, was not fired until after he had ruined Nate's businesses and career. I loved Nate like a brother and will respect his positive contributions to humanity until the day I die. Nate's obituary and home going program ]

I first met Nathan A. Chapman, Jr., in 1984. He is a living symbol of hope for so many inner city youths who do not see a viable way out of the street life to achieve their dreams.

Nate grew up in the inner city. He went from the housing projects of Baltimore to the top of the World Trade Center on the Inner Harbor through grit, intellect, perseverance, and hard work.

Nate was an honorably discharged Air Force veteran who attended and graduated from the University of Maryland (Baltimore County) in two and a half years with a degree in Economics. Nate was the student government president during his senior year.

In 1983, Nate became a Certified Public Accountant in Maryland and worked for Peat, Marwick, and Mitchell. Subsequently, Nate decided to pursue a career in investment banking and joined Alex Brown and Sons as an investment associate. At Alex Brown, Nate built a successful investment portfolio for individual and corporate clients.

In 1984, I was a trial lawyer in Montgomery, Alabama who had won a record-breaking $4.1 million jury verdict in a personal injury case for a comatose client and his wife. After the verdict was paid, I nominated Nate to the court as the most capable and qualified investment banker to manage the cash award for my comatose client. Nate became the first court-approved African-American investment banker to manage a multi-million dollar financial estate for an individual client in Alabama. Nate managed this asset portfolio exceptionally well for nearly two decades.

In 1986, Nate founded The Chapman Company, his own investment banking firm. Alex Brown and Sons was one of the original shareholders in the firm, along with several friends. I was an original board member and shareholder of the firm.

Nate managed my personal funds, as well as the funds of my deceased brother, Dr. Levi Watkins, Jr. Levi was a heart surgeon at Johns Hopkins Hospital who achieved international acclaim for performing the first surgical procedure for the implantable defibrillator.

I also introduced Nate to scores of government, corporate, and individual clients in and around America. His financial advisory services were rendered to these clients in an outstanding manner.

In 1987, Nate founded Chapman Capital Management, an investment advisory and management company. Along the way, Nate became the first African-American and one of a small number of investment bankers nationwide to obtain all four “principal” designations in the financial advisory services industry.

During the course of my service on the board of The Chapman Company, we became the first African-Americans to take four companies public on a listed American stock exchange: (a) DEM, Inc. (NASDAQ Symbol: DEMI); (b) Chapman Holdings (NASDAQ Symbol: CMAN); (c) Chapman Capital Management Holdings (NASDAQ Symbol: CMGT); and eChapman Holdings (NASDAQ Symbol: EMAN). Our corporate offices occupied the top floor of the World Trade Center in Baltimore.

In 1995, Maryland Governor Parris Glendening appointed Nate to the University System of Maryland Board of Regents. During his second five-year term, Nate was elected by the other Regents to serve as Chairman of the Board. He was the first African-American and youngest chairman in the history of the board.

A Friend, Mentor and Hero

Apart from his unprecedented professional success in listing four minority-owned financial entities on NASDAQ and underwriting these transactions in the process, Nate has also distinguished himself in his personal life. Throughout the time I have known Nate, he has been a mentor to scores of minority students who sought to enter the financial services industry. Nate sponsored many of these students through the award of numerous academic scholarships.

Nate also helped young entrepreneurs launch their businesses and was a constant source of knowledge, inspiration, and support for these business owners during the development phase of their businesses.

In 1999, Nate helped me organize and launch Alamerica Bank in Birmingham, Alabama, which opened as a full service commercial bank in January 2000. Alamerica’s bank charter was the first and only one issued by the Alabama Banking Department to a majority black ownership group. Alamerica Bank is one of only nineteen black-owned banks in America. The Bank never sought or received federal “bailout” money during the Great Recession of 2008. We have never been required to “recapitalize” Alamerica Bank. We have never participated in the symbolic “window dressing” programs that the FDIC claims it offers to minority-owned financial institutions.

Alamerica Bank’s call report for December 31, 2017, showed total assets of $35 million, with $6.3 million in capital. Alamerica’s Tier 1 Leverage Ratio was 16.7%; its Tier 1 Capital Ratio was 18.8%; and its Total Capital Ratio was 21.1%. Alamerica’s regulatory capital ratios exceeded the 13.3% national average and were among the best in the banking industry.

Yet, Alamerica Bank catches more hell from state and federal regulators than any bank in Alabama. My experiences with Nate helped me to understand why this is the case.

Promoting Equitable Educational Funding

Nate personally advised me while I served as the lead counsel for the black plaintiffs (from 1984 to 1994) in the decades-long lawsuit against the State of Alabama, its governor, and Alabama’s historically white colleges and universities to end Alabama’s racially dual system of higher education. Nate’s strategic thinking, extensive financial background, and sound professional advice enabled the plaintiffs to win an unprecedented $500 million in educational enhancement funding (above and beyond the regular state appropriations) for Alabama State University (“ASU”) and Alabama A&M University, the state’s two historically black four-year universities. Nate rendered these services on a pro bono basis.

Nate also gave ASU the blueprint for achieving a category “A” Wall Street credit rating, which made it possible for the University to borrow money for new facilities and campus expansion without the permission of state officials who had perpetuated the challenged racially dual system of higher education.

Chapman’s sound financial and educational advice (as the former chairman of the University System of Maryland Board of Regents) laid the groundwork for ASU to achieve Level Six accreditation from the Southern Association of Colleges and Schools. This is the highest level of accreditation for a university in Alabama and was previously enjoyed only by the University of Alabama and Auburn University. Again, Nate did not charge ASU any money for his advice and guidance.

U.S.A. v. Nathan A. Chapman, Jr.

In 2002, Thomas M. DiBiagio, a George Bush-appointed U.S. Attorney in Baltimore, commenced a series of politically motivated criminal investigations. These investigations focused on (a) then-Lt. Gov. Kathleen Kennedy Townsend, a Democrat, at the height of a tight 2002 gubernatorial contest that she lost to Republican gubernatorial nominee Robert L. Ehrlich, Jr., and (b) the Baltimore City Council, whose members were Democrats.

In July 2004, DiBiagio sent a memo urging his federal prosecutors to obtain "Three 'Front-Page' White Collar/Public Corruption Indictments" before Nov. 6, four days after the presidential election. This was rogue prosecutorial conduct, plain and simple. The Justice Department forced DiBiagio out of office in early 2005.

In a 2007 New York Times interview, Deputy Attorney General David Margolis acknowledged for the first time that he asked for DiBiagio’s resignation because "[a] reasonable person could have concluded that he was trying to affect the outcome of an election, and we just can't have that."

Nate’s high-profile status with Maryland’s Democratic power players brought him squarely within the ambit of DiBiagio’s politically-motivated criminal investigation. Prosecutors were sure that Nate had “dirt” on several Democratic politicians. When Nate informed them that he had no incriminating information on any “target” or “subject” of their investigation, they turned on him in a nasty and vindictive way.

Working with a willing and equally culpable Securities and Exchange Commission, rogue federal prosecutors simply manufactured a criminal case of wire, mail, and investment advisory fraud against Nate that centered on executive loans that The Chapman Company made to Nate, which were board approved and collateralized by his shares of stock in the company. Prosecutors supported their trumped-up case by twisting and distorting factual scenarios on otherwise lawful conduct in order to please Thomas DiBiagio and achieve his goal of destroying a key supporter of Democratic candidates.

Prosecutors sanitized their rogue conduct by forum shopping Nate's criminal case until they landed in the courtroom of a black federal judge who was molded in the ingratiating mindset of U.S. Supreme Court Justice Clarence Thomas. This judge made sure Nate was properly railroaded.

The criminal case of U.S.A v. Nathan A. Chapman, Jr., ended the Chapman companies as an ongoing business enterprises and sent Nate to prison for 63 months. I was called as a witness in the case by both the prosecution and the defense. Based upon my interaction with them, the prosecutors had no interest in hearing the truth -- before, during, or after the trial.

Nate's case also involved several financial transactions between affiliated parties (i.e., the Domestic Emerging Markets-Minority Equity Trust and the designated sub-advisors). Based upon Federal Reserve Board Regulation W, which governs affiliated transactions for regulated financial institutions, the transactions for which Chapman was charged and convicted were entirely proper and legal at the time and are legal today.

Regulations similar in nature to Regulation W were issued by agencies like the Securities and Exchange Commission and state and federal bank chartering organizations. Chapman’s conduct would have been legal under these regulations, as well.

Nate’s conviction resulted from a politically-motivated prosecution by rogue prosecutors who operated with impunity in a rigged system. The prosecutors did not care about the board's approval of the executive loans in question, Regulation W, or anything else, except pleasing DiBiagio. They were clearly on a DiBiagio-inspired political “hit” mission to destroy Nate Chapman and the financial services companies he had built, at any cost.

Lt. Gov. Kathleen Kennedy Townsend and the Baltimore City Council members were never prosecuted on any public corruption charges arising from DiBiagio's investigation. Nate was the only victim of Thomas DiBiagio's rogue prosecutorial misconduct.

Nate lost all of his professional licenses and his standing in the financial community, while the rogue prosecutors in his case moved on to other careers. To this day, Thomas DiBiagio and his rogue prosecutors have never been held accountable for what they did to Nate.


I have worked all over the world with the most sophisticated and respected financial experts on the planet. Nate is in this class of professionals. What makes Nate different from his peers is the degree to which he has given back to his community in time, resources, and mentorship. This is where he stands alone.

Having desegregated the University of Alabama’s Law School in 1970, I know trailblazers when I meet them. Nate is a trailblazer. He literally transformed the educational, business, and financial landscape for blacks in America. Thousands of African-Americans and scores of black institutions across the nation are measurably better off today because of Nate Chapman’s relentless work in business, higher education, and finance.

Nate's criminal case will go down in history as one of the greatest tragedies in the federal criminal justice system. Throughout it all, the rogue prosecutors were never able to strip Nate of his intellect, humility, dignity, self-respect, or positive impact on American society.

Nate remains a close friend, mentor, and one of my real life heroes.

PHOTO: Nathan A. Chapman, Jr.

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