Facing Criminal Charges, Integral's Chairman Resigns

Steven R. Chamberlain resigned yesterday as chief executive and chairman of Integral Systems Inc., the Lanham-based satellite systems and software company said, after months of controversy over pending criminal charges against him.

Even though he had signaled his intention to retire as recently as last week, Chamberlain's resignation was abrupt, and took effect at 5 p.m. yesterday. His successors include Peter J. Gaffney, the chief operating officer, who took over as chief executive, and director R. Doss McComas, who was tapped as chairman.

Integral did not give a reason for Chamberlain's resignation, which was announced in a filing with the Securities and Exchange Commission. But in an e-mail to employees posted on a Internet message board, Chamberlain said he did not want "my publicity/legal problems to affect the company any further." The letter, which was verified by a company employee, also said, "Please don't be sad for me."

A Howard County grand jury has indicted Chamberlain on two felony charges of sexual offenses involving a minor. The grand jury issued the sealed indictment in January, and it was made public in February when Chamberlain received the criminal summons. Chamberlain has maintained his innocence. His trial is scheduled to start July 24 in Howard County Circuit Court.

The allegations led longtime director Bonnie K. Wachtel to write a letter to the company detailing what she describes as corporate governance lapses at the firm, including the fact that Chamberlain failed to promptly notify the board when less serious misdemeanor charges involving the same minor were filed against him in June.

In her letter, filed with the SEC, Wachtel declined to run for reelection to the board and urged the company to sell itself, something that the company's largest shareholder, New York-based Mellon HBV Alternative Strategies LLC, also advocates. Under pressure from the majority of its shareholders, the board has promised to explore that option.

Chamberlain said in his e-mail that he "will remain active" in the company's search for a buyer.

Integral Systems could not be reached for comment yesterday evening, nor could its new investment bank, BB&T Capital Markets/Windsor Group, which is working on the possible sale. William F. "Mickey" Harley III, chief executive of Mellon HBV, declined comment.

Wachtel, who is no longer a board member, said she does not believe Chamberlain was forced out.

"I have no doubt Steve resigned voluntarily," Wachtel said. "I never wanted to see him step down from the board, and I'm grateful for the opportunity to have worked with him for the past 17 years."

Chamberlain, in his e-mail, said he stepped aside in part "so that Pete Gaffney gets a shot as CEO." Chamberlain said he's been meaning to retire for a while and "it took years to find someone crazy enough to take the job!" He emphasized, "I'm not leaving," but stepping aside.

The subject line of the e-mail: "Au Revoir (not)."