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 The loss was confirmed by Lauren Doney, communications director of
Grayson's office in Washington, D.C., who said the firm in question
"sold the congressman's collateral without his permission."
The head of the firm, William Dean Chapman, was sentenced to a
lengthy prison term by a federal court judge in Alexandria,
Virginia, last week for defrauding scores of investors of more than
$35 million.
Prosecutors said Chapman and his company, Alexander Capital Markets,
sold stocks and other securities belonging to Grayson without his
knowledge or consent, at a time when they should have been held as
collateral.
"Basically, his (Grayson's) investments performed very well, but
when it came time for the defendant to pay him what he had earned,
the defendant did not pay him the full amount," Doney told Reuters
by email.
"Because the defendant sold it (the collateral), it wasn't there to
return to the congressman when his loans matured," Doney added.
Grayson himself could not be reached for immediate comment and it
was not immediately clear how much, if any, of the $18 million the
congressman lost were so-called "paper gains" in investments that he
was simply never able to collect on.
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The term refers to unrealized gains, or losses, on securities held
in a portfolio based on a comparison of the current market price to
the original cost.
At one point, in his defense, Chapman argued that he recalled paying
Grayson about $10 million as a result of the transactions that he
entered into with the congressman.
He also acknowledged, however, that the financial crisis had driven
Alexander Capital Markets into insolvency by April 2008.
Grayson, 55, is best known for some of his more incendiary comments
about Republicans. He recently likened the Tea Party to the Ku Klux
Klan, saying it was the "home of bigotry and discrimination in
America today."
(Reporting by Tom Brown; editing by Jackie Frank)
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