WASHINGTON -- Rep. Alan Grayson (D-Fla.), who was revealed this week to have been scammed out of $18 million, said he's glad justice found a way to work its will in his case, but wondered why it's so rare.
William Chapman was sentenced Friday to 12 years in federal prison for cheating more than 100 people out of more than $35 million, which he used to fund high-end Virginia living that included, naturally, a Ferrari and a Lamborghini.
"Turns out I bought that car," Grayson said.
"The system actually is capable of incarcerating someone for more than a decade when the system determines there was fraud," Grayson reflected. "You just wonder why it doesn't happen more often, since the fraud is so widespread."
Grayson, in an interview with The Huffington Post, noted that his loss to Chapman occurred before he became a congressman, meaning that his recent financial disclosure reports -- showing him to be worth many tens of millions of dollars -- are still accurate. "I'm not in rough shape because I don't put all my eggs in one basket," he said.
Losing the investment still stung, he said, but many people became desperate after the 2008 financial crash and little has been done to prosecute those responsible.
"If you look back at the crash of 2008, that was a situation where millions and millions of Americans lost trillions of dollars," Grayson said. "I'm pleased the perpetrator in my case was brought to justice, but why haven't all of those perpetrators out there with their liar loans and the rest of it -- why haven't they been brought to justice?"
Grayson made his first fortune when his telecom company, IDT Corp., sold stock to the public in 1996 when he was president and owned a substantial portion. In his arrangement with Chapman, Grayson turned over roughly $10 million in stock to Alexander Capital Markets in exchange for a loan equal to 90 percent of that amount. That enabled Grayson to reinvest the money, essentially allowing him two investments instead of one. It would work as long as his returns on the borrowed money covered the interest he owed Chapman.
Alexander Capital Markets was supposed to hold Grayson's stock as collateral, but Chapman sold the securities of Grayson and others instead, Grayson said. Chapman failed to hedge or make other provisions to guard against a rise in the market. The market rose, and Chapman's firm blew up.
Grayson, for his part, was able to keep the loan, since Chapman no longer had the collateral, and he may still recoup some of the lost money from Chapman's assets.
"A good part of the $18 million represents the appreciation, but that's mine as much as anything," Grayson said. "I invest to make money, so if the money is not there, that defeats the purpose."
Grayson applauded federal prosecutors for collaring Chapman.
"I'm glad that they took the time and trouble to make this one one where justice was served," he said. "Let's face it, there doesn't seem to be much of an appetite to take on the hard cases."