A Florida Democrat was one of the victims of a scheme involving a Reston, Virginia-based firm that offers loans to customers in exchange for securities that are posted as collateral. The office of US Representative Alan Grayson released a statement on Monday that he lost around USD18 in the loan scheme. Communications director Lauren Doney confirmed that the firm had sold the congressman's securities used as collateral without informing him.

Reuters said in a report that William Dean Chapman, who heads Alexander Capital Markets, was already sentenced to a long prison term in Alexandria, Virginia last week by a federal court judge. Chapman was charged for defrauding investors of over USD35 million.

Prosecutors said the firm and Chapman divested stocks and other securities that Grayson owned without his expressed permission during the time that they were used as a collateral for the funds the firm loaned to Grayson.

Doney told Reuters in an email, "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. Because the defendant sold it (the collateral), it wasn't there to return to the congressman when his loans matured."

When Reuters attempted to contact Grayson about the claim, the US congressman himself could not be reached for comment immediately and it was not clear as to how much of the USD18 million were the paper gains of Grayson that he was not able to collect. The news agency defined paper gains as to unrealized losses or gains on securities that are held in a portfolio, of which its original cost is compared to the currency market price.

Chapman, in his defense at one point, said he remembered paying Grayson around USD10 million due to the transactions he had with the US congressman. On the other hand, Chapman said the financial crisis drove Alexander Capital Markets to be insolvent by April 2008.