Republican from upstate New York alleged to have traded on insider information from Australian drugs firm for financial gain
Christopher Collins, an upstate New York politician and the first member of Congress to endorse Donald Trump, has been indicted on insider trading charges.
Collins, a Republican from the Buffalo area who is up for re-election this fall, was charged with conspiracy, wire fraud and other offenses in an indictment announced on Wednesday.
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Collins’ seat was considered vulnerable even before the charges were announced, and he was targeted in a push by Andrew Cuomo, the governor, and other New York Democrats seeking to unseat him as the party looks to take control of the House of Representatives in November’s midterm elections.
The congressman’s son, Cameron, and Stephen Zarsky, the father of Cameron’s fiancee, were also charged in the scheme.
Prosecutors say that Collins improperly traded on inside information from the Australian drug company Innate Immunotherapeutics Limited, on whose board he served.
The firm’s stock plunged by more than 92% after it was revealed that a multiple sclerosis drug it was developing had failed trials.
Collins found out about the failed drug trial before it became public – getting an email about the results while attending the congressional picnic at the White House last year, the indictment alleges.
He quickly called his son to tip him off, federal prosecutors from the southern district of New York said. Cameron Collins in turn allegedly tipped off Zarsky and others.
The group avoided $768,000 in losses by selling off stock early because of the illicit tip, prosecutors say.
Collins was already under investigation at the time by the Office of Congressional Ethics for his dealing with Innate, and did not sell off his own stock in the company, according to the indictment.
“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, according to the Associated Press.
“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.”
Collins, who was first elected in 2012, threw his support behind Trump in February 2016, becoming the first Congressional Republican to endorse the future president.
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 and charged with 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:
Republican Rep. Chris Collins' arrest and indictment on insider trading charges Wednesday suddenly makes his safe red congressional district a lot more interesting in November's midterm elections.
The New York 27th District, lodged between Buffalo and Rochester in the western part of the state, has grown more Republican since Collins first won it narrowly in 2012. The area backed President Donald Trump by nearly 25 percentage points in 2016, while Collins breezed to re-election with about 67 percent of the vote.
The stain of the insider trading accusations quickly makes the district more competitive — although it still favors Republicans. Regardless, the GOP cannot afford another contested seat in the state as it fights to stop Democrats from winning the 23 Republican-held seats the party needs to take a House majority.
Nonpartisan election analysis sites Cook Political Report and Sabato's Crystal Ball moved their ratings for the district to "likely" Republican from "solid" "safe" Republican, respectively, on Wednesday. A scandal can cause a 10- to 12-percentage-point swing and Collins' arrest is "perhaps on the more severe side," tweeted Nate Silver, data guru and editor in chief of analytics site FiveThirtyEight.
Collins pleaded not guilty to the charges on Wednesday. In an email to supporters earlier in the day, the representative said his "focus is to defeat these charges in court" and that he will "not address any issues related" to the accusations outside of the courtroom, according to New York Times reporter Shane Goldmacher. Collins stressed that he does not plan to abandon his re-election bid as of now.
"As I fight to clear my name, rest assured that I will continue to work hard for the people of the 27th Congressional District of New York while remaining on the ballot for reelection this November," he wrote.
Collins appears likely to stay on the ballot: relevant periods to give up a party nomination have passed, according to the New York State Board of Elections. The deadline for a special election under New York law has also passed.
Liberals seized on the news of Collins' arrest almost immediately. The New York Working Families Party started to raise money for the Democratic candidate in the race, Grand Island Town Supervisor Nate McMurray. The party said, "We can defeat this corrupt Trump Republican and win this seat in November." Collins was Trump's first supporter in Congress during the 2016 campaign.
The Democratic Congressional Campaign Committee also contended that "this seat is firmly in play for Democrats."
On the other side of the aisle, the GOP indicated that it was taking the matter seriously. House Speaker Paul Ryan, R-Wis., called for a "prompt and thorough" investigation into the allegations and removed Collins from the House Energy and Commerce Committee.
"Insider trading is a clear violation of the public trust," Ryan said in a statement.
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."
Later on Wednesday, Collins issued a statement sharing the "very bad news" with his supporters while vowing to continue his re-election fight for the 2018 midterms in November, according to a New York Times reporter.
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.
