Republican U.S. Rep. Christopher Collins of western New York state was arrested Wednesday on charges he fed inside information he gleaned from sitting on the board of a biotechnology company to his son, helping themselves and others dodge hundreds of thousands of dollars in losses when bad news came out.
Collins, 68, is a staunch supporter of President Donald Trump who was among the first two sitting members of Congress to endorse his candidacy for the White House.
An indictment unsealed in Manhattan federal court charges Collins, the congressman’s son and the father of the son’s fiancee with conspiracy, securities fraud, wire fraud and making false statements to the FBI.
Prosecutors said the charges stem from Collins’ decision to share with his son insider information about Innate Immunotherapeutics Limited, a biotechnology company headquartered in Sydney, Australia, with offices in Auckland, New Zealand. Collins was the company’s largest shareholder, with nearly 17 percent of its shares, and sat on its board.
According to the indictment, Collins was attending the Congressional Picnic at the White House on June 22, 2017, when he received an email from the company’s chief executive saying that a trial of a drug the company developed to treat multiple sclerosis was a clinical failure. After a public announcement, the company’s stock price plunged 92 percent.
Collins responded to the email saying: “Wow. Makes no sense. How are these results even possible???” the indictment said.
The information was confidential but Collins “didn’t keep it secret,” U.S. Attorney Geoffrey Berman said at a news conference. “Instead, he decided to commit a crime.”
Within minutes of receiving the bad news, Collins used a phone to try to “reach his son six times in five minutes,” Berman said. “And then on the seventh attempt, he got through to his son and, as alleged in the indictment, he illegally relayed the results of that drug test so his son could trade on that information.”
The next morning, according to the indictment, Collins began selling his shares, unloading enough over a two-day period to avoid $570,900 in losses before the public announcement of the drug trial results.
Prosecutors said the son traded on the inside information and passed it to a third defendant, Stephen Zarsky. Their combined trades avoided over $768,000 in losses, authorities said. They said Zarsky traded on it and tipped off at least three others.
Collins, a conservative who was first elected in 2012 to represent parts of western New York between Buffalo and Rochester, has denied any wrongdoing. When the House Ethics Committee began investigating the stock trades a year ago, his spokeswoman called it a “partisan witch hunt.”
“We will answer the charges filed against Congressman Collins in court and will mount a vigorous defense to clear his good name,” his attorneys, Jonathan Barr and Jonathan New, said in a statement Wednesday. “It is notable that even the government does not allege that Congressman Collins traded a single share of Innate Therapeutics stock. We are confident he will be completely vindicated and exonerated.”
All three defendants were in federal custody Wednesday and were expected to make their initial court appearance in the afternoon.
Collins has a track record of publicly backing Trump, most recently calling for an end to Special Counsel Robert Mueller’s probe into campaign collusion and blaming the Obama administration for failing to push back on Russia.
“I share President Trump’s continued frustration as the left continues to try to nullify the 2016 Presidential election with claims of Russian interference,” he said.
On Wednesday, House Speaker Paul Ryan said he was removing Collins from the House Energy and Commerce Committee, calling insider trading “a clear violation of the public trust.”
In a written statement Wednesday, House Minority Leader Nancy Pelosi, D-Calif., said the charges against Collins “show the rampant culture of corruption and self-enrichment among Republicans in Washington today.”
Collins ran unopposed in the Republican primary and holds what’s largely considered a safe Republican seat in a state that went to Democratic nominee Hillary Clinton in 2016. He’s being challenged in November by Democrat Nate McMurray, a Grand Island, New York, town supervisor.
The advocacy group Public Citizen filed a request for an investigation of Collins’ stock dealings with the Office of Congressional Ethics and the Securities and Exchange Commission in January of 2017.
Tom Price, who was Trump’s first secretary of the Health and Human Services Department, also came under scrutiny for his purchases of Innate stock while he was a Republican member of Congress from Georgia.
Democrats made an issue of Price’s purchase at his Senate confirmation hearings in early 2017, after the Wall Street Journal reported that company officials had said Price was allowed to buy the stocks at a low price. Price, who bought around 400,000 shares of the stock, said he’d learned of the firm through Collins but said the price he received was available to any investor.
Price resigned as health secretary last September under criticism for taking pricey charter flights at taxpayers’ expense.
Republican Congressman Christopher Collins from New York Charged with Insider Trading