Congressman Loses Millions In Fraud Scheme For Second Time In His Life

AP

For the second time in his life, Rep. Alan Grayson (D-FL) has lost millions to fraud.

Grayson was recently named in federal court papers in the case against William Dean Chapman, a Virginia man who was sentenced Friday to 12 years in prison. Chapman pleaded guilty in May to a scheme that cheated Grayson and about 120 other people out of more than $35 million, The Associated Press reported on Monday.

Grayson — who has been named one of the 50 richest members of Congress — personally lost $18 million to Chapman, according to the AP.

Believe it or not, it’s the second time this kind of thing has happened to Grayson — in 2009, he won a $34 million judgment in a lawsuit against a company whose business plan was similar to Chapman’s.

Chapman’s scheme involved clients handing over stocks as collateral for loans from his company, Alexander Capital Markets. If the stocks did well, customers were supposed to repay Chapman with interest and would then get the stocks back at their increased value. But court papers say Chapman sold the stocks and had no way to repay clients if their stocks did well.

The court papers do not suggest Grayson was anything but a victim in the scheme, according to the AP. His stocks performed “astronomically well” after he turned them over the Chapman, the AP reported, and lawyers for Chapman argued they did so well they undid Chapman’s scheme.

“If they had not sold the collateral, it all would have worked,” Grayson told the AP.

Grayson was named in two court documents, despite procedures to protect victims’ privacy.

“I think that’s unfortunate,” Grayson said. “They should have been more careful, should have used my initials throughout rather than using my name.”

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Eric Lach is a reporter for TPM. From 2010 to 2011, he was a news writer in charge of the website?s front page. He has previously written for The Daily, NewYorker.com, GlobalPost and other publications. He can be reached at ericl@talkingpointsmemo.com
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