Rep. Chris Collins (R-N.Y.) charged with insider trading, federal prosecutors announce
Collins’s son, Cameron Collins, and Stephen Zarsky, the father of Cameron Collins’s fiancee, were also charged.
The indictment, secured by the U.S. attorney in Manhattan, is related to Collins’s relationship with Innate Immunotherapeutics, an Australian biotech company that was developing a treatment for multiple sclerosis. Collins was the company’s largest shareholder and on its board of directors, giving him access to confidential corporate information.
The congressman illegally shared with his son bad news about a drug trial the company had been anticipating before it was announced publicly, according to prosecutors. Cameron Collins traded on the information and passed the news along to Zarsky. The trades allowed Cameron Collins and Zarsky to avoid $768,000 in losses, according to the indictment.
“Collins, who, by virtue of his office, helps write the laws of this country, acted as if the law did not apply to him,” U.S. Attorney Geoffrey S. Berman said at a news conference.
Collins, his son and Zarsky appeared before a federal judge in Manhattan on Wednesday afternoon. Each was to be released on $500,000 bond. They were ordered to turn over their passports and any firearms.
Collins, wearing a dark suit and white button-down shirt open at the collar, sat next to his attorney when asked by the judge how he would plea. He responded, “I plead not guilty.”
Cameron Collins and Zarsky also pleaded not guilty. The hearing lasted less than 20 minutes.
The next court hearing for all three men was set for Oct. 11.
In an earlier statement, attorneys representing the congressman said they “will mount a vigorous defense to clear his good name.” The statement said: “It is notable that even the government does not allege that Congressman Collins traded a single share of Innate Therapeutics stocks. We are confident he will be completely vindicated and exonerated."
Collins faces multiple counts of securities and wire fraud and is also accused of lying to the FBI. The congressman turned himself in to the FBI on Wednesday morning.
“Here’s a better inside tip for those who think they can play by different rules: Access to this kind of information carries with it a significant responsibility, especially for those who hold a position of trust in our society. Act honorably and in accordance with the law, and do not lie to a special agent of the FBI,” said FBI Assistant Director-in-charge William F. Sweeney Jr.
The Securities and Exchange Commission filed similar charges against Collins, his son and Zarsky on Wednesday.
House Speaker Paul D. Ryan (R-Wis.) announced that Collins would be subject to an investigation by the House Ethics Committee and would be removed from the House Energy and Commerce Committee.
“While his guilt or innocence is a question for the courts to settle, the allegations against Rep. Collins demand a prompt and thorough investigation by the House Ethics Committee,” Ryan said. “Insider trading is a clear violation of the public trust. Until this matter is settled, Rep. Collins will not be serving on the House Energy and Commerce Committee.”
Rep. Christopher Collins (R-N.Y.) was the first member of Congress to endorse Trump, and now faces criminal charges of insider trading.
Before Wednesday’s indictment, Collins was already under scrutiny for his role in promoting Innate Immunotherapeutics, a small Australian companies that was developing a new therapy for multiple sclerosis. Collins served on the company’s board of directors and was its largest shareholder, according to the indictment.
In October, the Office of Congressional Ethics found “substantial reason to believe” that Collins violated federal law and House rules by meeting with government researchers in his congressional capacity allegedly to benefit the firm. The office also said that he shared private information about the firm to solicit investors among friends, family and other lawmakers.
Among those who invested in Innate were House Republicans, including Reps. Markwayne Mullin (Okla.), John Culberson (Tex.), Doug Lamborn (Colo.) and Billy Long (Mo.), as well as former congressman Tom Price of Georgia, who went on to serve as Secretary of Health and Human Services before resigning under fire for his use of private air travel.
According to the indictment, while at the June 2017 congressional picnic at the White House, Collins received an email from Innate Immunotherapeutics' CEO alerting the company’s board that an eagerly anticipated drug trial had been a failure. Minutes later, Collins responded to the email: “Wow. Makes no sense. How are these results even possible???”
Almost immediately, Collins tried to get in contact with his son, who owned millions of shares of the company’s stock, according to the indictment. Within a few minutes, Collins and his son called each other six times before connecting and talking for six minutes. During that last call, Collins told Cameron Collins, his son, about the failed drug trial, according to indictment, which cites phone and bank records as well texts.
Over the next few days, Cameron Collins told others, including Stephen Zarsky, the father of Cameron Collins’s fiancee, about the bad news and advised them to sell their shares. They were all able to avoid significant losses before the news became public and the company’s stock price fell more than 90 percent, prosecutors allege.
“Here’s a better inside tip for those who think they can play by different rules: Access to this kind of information carries with it a significant responsibility, especially for those who hold a position of trust in our society. Act honorably and in accordance with the law, and do not lie to a special agent of the FBI,” said FBI Assistant Director-in-charge William F. Sweeney Jr.
The elder Collins is accused of lying to the FBI as part of the indictment. Cameron Collins and Zarsky were also charged on multiple counts of securities and wire fraud and pleaded not guilty. The three men each face at least five years in prison, legal experts said,
They were released on $500,000 bond each and ordered to give up their passports and firearms.
The Securities and Exchange Commission also filed similar charges against the three men.
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