NEW YORK >> Republican U.S. Rep. Christopher Collins of western New York state was arrested today on charges he fed inside information he gleaned from sitting on the board of a biotechnology company to his son, helping family and friends 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.
He pleaded not guilty to an indictment unsealed in Manhattan federal court. The indictment 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.
Collins responded to the email saying: “Wow. Makes no sense. How are these results even possible???” the indictment said. It said he then called his son, Cameron, and, after several missed calls, they spoke for more than six minutes.
The next morning, according to the indictment, Cameron Collins began selling his shares, unloading enough over a two-day period to avoid $570,900 in losses before a public announcement of the drug trial results. After the announcement, the company’s stock price plunged 92 percent.
Prosecutors said the son passed the information 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.
U.S. Attorney Geoffrey S. Berman told a news conference that Collins was supposed to keep the trial results secret.
“Instead, he decided to commit a crime,” he said. “Representative Collins, who, by virtue of his office, helps write the laws of this country, acted as if the law did not apply to him.”
Collins, a conservative first elected in 2012 to represent parts of western New York between Buffalo and Rochester, has denied 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 today. “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 expected to be freed on $500,000 bail today after they pleaded not guilty.
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.
House Speaker Paul Ryan today 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 today, 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.”
Buffalo Mayor Byron Brown, a Democrat, called on Collins to resign.
Collins ran unopposed in the Republican primary and holds what’s largely considered a safe Republican seat in a state that went to Democratic presidential nominee Hillary Clinton in 2016. He’s being challenged in November by Democrat Nate McMurray.
McMurray told reporters today at a western New York union hall that Collins has brought shame to the region but he stopped short of saying he should resign.
“That’s his decision to make. I’ll leave it up to him but I know what I would do if I was in his place,” said McMurray, the town supervisor in the Buffalo suburb of Grand Island.
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 about 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.