Rep. Alan Grayson, the Florida Democrat known for his colorful and controversial commentary on Republicans, was the victim of a fraudulent stock scheme run by a Virginia man in which he lost $18 million, the Associated Press reports.
Grayson was one of 120 people who invested with William Dean Chapman, who was running the scheme. People would give Chapman their stocks, and in exchange, Chapman would give them loans worth up to 90 percent of the stocks values. If the stocks did well, clients would repay the loans with interest and get their stocks back. If the stocks lost money, they would keep their loaned money and Chapman would keep the stocks.
But instead, Chapman was selling the stocks and using the money for his personal luxury, buying things like a Ferrari, a Lamborghini and a home that was worth $3 million, leaving him no money to pay back investors. He defrauded investors out of over $35 million total, and, on Friday, he was sentenced to 12 years in jail.
“That’s why [Chapman] is going to prison for a long, long time,” Grayson told the AP. “At least in the end, some kind of justice was served.”
Grayson’s name was not supposed to be made public in the court proceedings, in which the AP says he is referred to by his initials, but his name appears twice — something Grayson said he thought was “unfortunate.”
“They should have been more careful, should have used my initials throughout rather than using my name,” he said.
Grayson is the 21st wealthiest member of Congress, according to Roll Call, with a net worth of $16.69 million. He reportedly has a serious knack for stocks, which was what ultimately brought down Chapman’s scheme. The value of the $9.35 million worth of stocks in Grayson’s portfolio held by Chapman increased by 147 percent in 2007 alone.
“Because the return on A.G.’s commodities investments were so astronomical, ACM could not meet its obligations under the loan agreements,” Whitney Minter, the lawyer for the defense, wrote in court documents.
It is the second time the congressman has been the victim of a fraudulent investment scheme: He won $34 million after suing Derivium Capital, a company running pretty much the same scheme as Chapman. Grayson told the AP he invested with Chapman before he invested with Derivium, and hence he did not yet have any reason to view the investment as suspect.