Rep. Chris Collins, R-N.Y. was arrested Wednesday morning on federal insider trading charges, law enforcement officials said.
An indictment obtained from a federal grand jury relates to Australian biotech company Innate Immunotherapeutics, on which Collins served as a board member.
The indictment alleges Collins scrambled to call his son from the White House lawn and tell him non-public information about a failed drug trial in which they both owned shares.
Collins' son, Cameron Collins, as well as the father of his fiancee, Stephen Zarsky, were also charged, according to the court filing.
The Republican representative from upstate New York, President Donald Trump's earliest backer in Congress, felt an almost immediate political fallout in the wake of the charges.
In June 2017, according to the indictment, Collins passed nonpublic information about Innate's drug trial results to his son in order to help him "make timely trades in Innate stock and tip others."
His son then traded on that inside information and passed it to Zarsky, along with numerous unnamed co-conspirators, "so that they could utilize the information for the same purpose," according to the indictment.
Zarsky, too, allegedly traded on the inside knowledge and passed it along to yet more unnamed co-conspirators.
In total, the three defendants avoided "over $768,000 in losses that they would have otherwise incurred" had they sold their stock after the information was made public, according to the indictment.
In a statement to CNBC, attorneys for Collins vowed to "mount a vigorous defense to clear his good name."
They added: "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."
The lawyers said Collins will have more to say on the indictment later on Wednesday.
Cameron Collins' attorney, Rebecca Ricigliano, said, "We look forward to addressing these charges in court, and will not be commenting on this case outside of the courtroom."
An attorney for Zarsky told CNBC they had no comment at this time.
Collins was Trump's first supporter in Congress, and was reportedly a member of his transition team after the 2016 presidential election. The 27th congressional district in New York, which Collins currently represents, voted for Trump at a higher level than any other district in the state in 2016.
The indictment related to Innate draws new attention to an ex-Trump administration official: former U.S. Health and Human Services Secretary Tom Price, who was grilled by lawmakers during his confirmation hearings in January 2017 about a tip on the company he allegedly received from Collins.
Price resigned last September following an embarrassing series of news stories detailing his use of pricey commercial and charter jet travel during his brief tenure as HHS chief.
HHS' Office of Inspector General last month said the department should try to recoup at least $341,000 that Price had wasted on the flights. Just one out of the 21 such flights he took met all federal requirements, the watchdog said in a report.
A spokesman for Price told CNBC, "Dr. Price addressed his ownership of Innate Immunotherapeutics stock during his confirmation hearings for HHS Secretary and sold any stock he held in February 2017." The spokesman declined to respond to CNBC's questions about whether Price has been contacted by the DOJ in relation to this case, or if he has hired attorneys.
Separately, a source close to Price told CNBC that the former HHS secretary was not questioned by investigators from the Southern District of New York.
Collins had already been being probed by the Office of Congressional Ethics, which found in October 2017 that "there is a substantial reason to believe that Representative Collins shared material nonpublic information in the purchase of Innate stock." The committee recommended further review, and the House Ethics Committee was investigating Collins on the heels of that recommendation.
The defendants are accused of multiple counts of securities fraud, as well as one count of wire fraud, one count of conspiracy to commit wire fraud and one count each of making false statements.
The GOP congressman reportedly surrendered to federal agents in Manhattan on Wednesday morning. He is expected to appear in federal court in lower Manhattan later today. The U.S. attorney for the SDNY is expected to detail the charges in a press conference at noon.
Representative Chris Collins, the first member of Congress to support Donald Trump for president, has been indicted on charges of insider trading.
Mr Collins, a three-term Republican from New York, was arrested by the FBI on Wednesday morning and indicted on multiple counts of securities fraud, as well as charges related to wire fraud and making false statements.
The congressman's son, Cameron, was also charged, along with Stephen Zarsky, the father of his fiancee. The charges were announced in a grand jury indictment unsealed on Wednesday.
Attorneys for Mr Collins said they would mount a "vigorous" court defence in order to "clear his good name".
"It is notable that even the government does not allege that Congressman Collins traded a single share of Innate Therapeutics stock," Jonathan Barr and Jonathan New of BakerHostetler said in a statement. "We are confident he will be completely vindicated and exonerated."
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The charges stem from Mr Collin's service on the board of directors for Innate Immunotherapeutics, an Australian biotechnology company in which he held a nearly 17 per cent stake. Mr Collins is charged with passing internal information about the company to his son, who allegedly used it to make "timely trades" and tip off others – including Mr Zarsky.
A grand jury indictment alleges the men avoided more than $768,000 in losses by trading on nonpublic information about the company's failed drug trial. Stock in the company dropped 92 per cent after the failed trial was announced, according to CBS.
Mr Collins was reportedly arrested without incident on Wednesday, and was expected to appear in a Manhattan court that afternoon. The case is being prosecuted by the office of the US attorney for the Southern District of New York.
The congressman's connection to the Australian biotechnology company have been under investigation by the Office of Congressional Ethics since last year. According to the indictment, Mr Collins passed information to his son, rather than making the trades himself, to avoid arousing suspicion from the congressional oversight body.
When the investigation was first announced, Mr Collins dismissed it as a "partisan witch hunt".
“They can’t beat me at the ballot box, so they’re trying to beat me with political accusations that are absurd on their face,” he said in September.
The congressman was one of the president's most vocal supporters on the campaign trail, and spoke at the Republican National Convention where Mr Trump was selected as the party's nominee. After the 2016 election, Mr Collins served as a kind of liaison for Mr Trump with his fellow legislators, according to the New York Times.
Mr Collins is up for re-election in the November midterms. He was widely expected to win the race, according to the local Niagara Gazette, after far out-fundraising his Democratic opponent.
Washington (CNN) Federal prosecutors in New York on Wednesday charged New York Republican Rep. Chris Collins, his son and another man with 13 counts of securities fraud, wire fraud and false statements stemming from an alleged insider trading scheme centered on an Australian pharmaceutical company.
Collins, who was the first sitting member of Congress to endorse Donald Trump's presidential bid , surrendered Wednesday morning at his attorney's office in Manhattan, according to the FBI.
Prosecutors at the US Attorney's Office for the Southern District of New York alleged in an indictment that Collins and the other defendants used nonpublic information about the results of a drug trial to trade on the stock of the pharmaceutical company, Innate Immunotherapeutics Limited, of which Collins was a board member.
That allowed them, prosecutors allege, to avoid more than $768,000 in losses they would have incurred if they had traded the stock after the drug trial results became public.
Collins "placed his family and friends above the public good," said US Attorney Geoffrey Berman at a news conference Wednesday in New York City. Berman also stated Collins "cheated our markets and our justice system."
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A New York Republican Congress member who bragged about turning his friends and acquaintances into millionaires — and was one of President Trump’s earliest and biggest supporters — was just arrested for insider trading.
Rep. Chris Collins, along with his son Cameron Collins and the father of his son’s fiancée, Stephen Zarsky, was arrested by FBI agents early Wednesday morning, according to NBC News. The case is centered on the Australia-based pharmaceutical company Innate Immunotherapeutics, a company in which Collins is currently the No. 2 shareholder. At one point, he held more than $45 million in Innate stock.
According to the federal government’s indictment, Collins shared non-public information about Innate — specifically, about negative results resulting from Innate’s clinical trials — with his son, who then passed that information along to Zarsky. The federal government alleges that by doing so, Collins, his son, and Zarsky were able to avoid nearly $800,000 in potential losses.
Collins’s connections with Innate Immunotherapeutics are well-known, with the Daily Beast reporting in 2017 that Collins had had close ties with the company since 2005. He encouraged many of his Republican colleagues to buy Innate stock, including former Health and Human Services Secretary Tom Price (in fact, claims of insider trading were leveled against Price during his confirmation hearing). According to Business Insider in June 2017:
Price bought shares of the company in 2015 and 2016 while still a member of the House, representing Georgia. At least four of Collins’ Republican House colleagues followed suit, buying into Innate in January when the company traded at an all-time high of about $1.20 per share. Collins’ chief of staff, Michael Hook, is among Innate’s top 20 shareholders, as are two of the congressman’s children. “I talk about it at every turn, just like you talk about your kids hitting a home run and your daughter getting into law school,” Collins told The Hill ...
He even bragged publicly, and in front of reporters, about how many of his friends, colleagues, and donors he had made wealthy by recommending they invest in Innate.
OH in the speaker's lobby: 'Do you know how many millionaires I've made in Buffalo the past few months?' -@RepChrisCollins on his cellphone — Mike DeBonis (@mikedebonis) January 10, 2017
Collins was the first member of Congress to endorse Donald Trump, doing so on February 24, 2016, and he served as the congressional liaison to the Trump transition team.
In response to the federal government’s indictment, Collins’s lawyers released a statement Wednesday morning saying, “We are confident he will be completely vindicated and exonerated.”
Read the indictment below:
