Florida Democratic Rep. Alan Grayson—one of the richest people in Congress—was a victim of fraud that cost him $18 million, court documents show. On Friday, William Dean Chapman was sentenced to 12 years in prison over the scheme, which cost 120 investors some $35 million. After investors provided their stocks as loan collateral, Chapman would pass up to 90% of the stock's value to them. Customers could keep the money if the stocks did poorly, but if they did well, they were required to pay the money back, along with interest, the AP reports.
At that point, Chapman would, in theory, return the stocks to the investor. Instead, however, he sold the stocks, which fueled a luxury lifestyle. If stocks ended up doing well, Chapman's company, Alexander Capital Markets, couldn't meet its obligations. Grayson's stocks soared, according to court papers; a portfolio of $9.35 million climbed to $23 million over the course of 2007. "Because the return on (Grayson's) commodities investments were so astronomical, ACM could not meet its obligations under the loan agreements," wrote a defense lawyer. But "if they had not sold the collateral, it all would have worked," says Grayson, who previously won $34 million in a lawsuit over a separate fraud case, the AP notes.