Republican Rep. Chris Collins of New York, who was Donald Trump’s leading supporter on Capitol Hill during the 2016 election, has vowed to stay on the ballot for his re-election as he vowed the insider trading charges against him ‘meritless’.
‘After today, I will not address any issues related to Innate Immunotherapeutics outside of the courtroom,’ Collins told a press conference on Wednesday, referring to the Australian company at the center of this scandal. ‘I will remain on the ballot, running for re-election this November.’
Collins has been charged with 13 counts of alleged securities fraud, wire fraud, false statements, the Justice Department announced Wednesday.
He faces insider trading charges along with his son, Cameron Collins, and Stephen Zarsky, the father of Cameron Collins’ fiancée.
He has surrendered to the FBI. All three have been released on a $500,000 bond and had to surround their passports. Additionally, Collins had to turn over his diplomatic passport he carries as a member of Congress.
The lawmaker is charged with passing insider information to his son so Cameron Collins ‘could make timely trades in Innate stock and tip others,’ according to the indictment.
New York congressman Chris Collins told a Wednesday press conference in Buffalo that he would fight the charges against him and stay on the ballot for his re-election
Footage captured Rep. Collins, circled in red, on the phone on the White House South Lawn during the time frame prosecutors charge he was talking to his son about the stock
Collins, who was the first member of Congress to endorse Trump, touted his ties to the president.
And reporters overheard him near the House floor earlier this year talking on the phone about how he’d created millionaires in Buffalo, The Washington Post reported.
‘He placed his family and friends above the public good,’ said Geoffrey Berman, U.S. Attorney Southern District of New York, at a press conference on Wednesday.
The case is related to Australian biotech company Innate Immunotherapeutics, where Collins holds almost 17 percent in stock.
Innate’s primary work was on a drug to help suffers of multiple sclerosis.
That drug, MIS416, had the potential for billions in profit because of a lack of treatment for the disease.
It failed its drug trial, however, and in June of 2017, Collins suffered a paper loss of $16.7 million when the company’s stock tanked 92 percent largely due to that incident.
The CEO of Innate had emailed stock holders – including Collins – on June 22 to inform them of the failed drug trial, writing ‘I have bad news to report.’
Video courtesy of WROC-TV
The email noted the drug tests showed ‘no clinically meaningful or statistically significant differences’ in the outcomes between MIS416 and a placebo.
Collins was attending the Congressional Picnic at the White House when he receive the message, according to the indictment, and responded: ‘Wow. Makes no sense. How are these results even possible???’
He called his son within 15 minutes of receiving the email with six missed phone calls between the two before they connected.
According to the timeline in the indictment, Innate’s CEO sent the email to the company’s board of directors, which included Rep. Collins, at 6:55 pm. Collins responded from his location at the White House at 7:10 pm.
Rep. Collins is under federal indictment in New York for insider trading and leaves a court house in Manhattan on Wednesday
He then tried to contact his son six times between 7:11 pm and 7:16 pm when they finally connected.
The elder Collins was unable to trade his Innate stock for ‘practical and technical reasons,’ the indictment states, as he was under investigation by the Office of Congressional Ethics for his ownership of the shares and because the shares he owned were held under the Australian stock exchange, which has already placed a hold on sales of Innate stock.
But Cameron Collins could sell the stock he owned in the company. The next morning Cameron called his brokerage firm at 7:42 am and traded over 16,000 shares in stock. Later that day he placed 17 additional orders to sell Innate stock.
Federal investigators showed there were multiple calls between the two Collins during this time period.
In total, Cameron Collins sold almost 1.4 million shares in Innate stock between June 23 and June 26, when Innate publicly announced its drug had failed in the testing stage.
Rep. Chris Collins was one of President Trump’s biggest supporters on Capitol Hill, he’s seen here at the Congressional Picnic at the White House with Trump and first lady Melania Trump
Rep. Collins was at the Congressional Picnic at the White House when he got an email from the company CEO that sparked the investigation; Collins posted pictures from the even to his instagram page; he’s seen here with Vice President Pence and Karen Pence
Cameron Collins also met with Zarsky during that time period. Zarsky sold his shares – avoiding $145,000 in losses – and contacted relatives who owned stock in the company.
According to the indictment, the trades the younger Collins engaged in proceeded the public release of the negative drug trial and ‘were timed to avoid losses that they would have suffered once that news became public.’
The three men – the two Collins and Zarksy – avoided $768,000 in losses with those trades, the government alleges.
Rep. Collins also issued statements to the press during that time to cover up the stock sales, the indictment charges.
Separately the Securities and Exchange Commission levied insider trading charges against the three men.
The SEC also named Cameron Collins’ fiancee – the daughter of Stephen Zarsky – and her mother, who were referred to in the Justice Department indictment but not named.
Charges were settled with Lauren Zarsky, Cameron Collins’ girlfriend, and her mother, Dorothy Zarsky, for ‘trading on the basis of material, nonpublic information,’ the SEC said in a statement.
The two women ‘consented to the entry of final judgments without admitting or denying the charges that they sold their shares of Innate based on tips they received from Cameron Collins,’ the statement read.
Lauren Zarsky agreed to disgorge her ill-gotten gains of $19,440, plus prejudgment interest of $839, and pay a civil penalty of $19,440. A CPA, she also agreed to be suspended from appearing or practicing before the SEC as an accountant, which includes not participating in the financial reporting or audits of public companies. She can apply for reinstatement in five years.
Dorothy Zarsky agreed to disgorge her ill-gotten gains of $22,600, plus prejudgment interest of $975, and pay a civil penalty of $22,600.
According to the indictment, Lauren Zarsky, referred to as CC-1, had bought 40,464 shares of Innate earlier in June. On June 23, at 9:37 am, she ordered her brokerage firm to sell all of them. This allowed her to avoid loses of $19,440.
On the night of June 22, Cameron Collins and Lauren Zarsky drove to the home of Stpehen Zarsky and his wife, Dorothy, who is referred to as CC-2 in the federal indictment.
At 9:17 pm Lauren sent a text to her mother saying ‘we’re here.’
There, Cameron told the Zarskys the MIS416 drug test had failed and that he intended to sell his Innate share but ‘he would allow Zarsky and CC-2 to sell their Innate shares first so as to avoid depressing Innate’s stock price with his own sales beforehand.’
Dorothy Zarsky called her brokerage firm at 9:34 pm that night to sell her shares. One of the firm’s representatives walked her through the process, allowing her to place an online order to sell 30,250 of her 50,000 shares of Innate on the Australian Stock Exchange before trading for that company was halted. She sold her U.S. shares the following morning, avoiding a loss of $22,600.
Stephen Zarsky placed a sale order on his shares at 7:52 am on the morning of June 23.
Attorneys for Rep. Collins said in a statement to CNN that they ‘will answer the charges filed against Congressman Collins in Court and will mount a vigorous defense to clear his good name.’
‘It is notable that even the government does not allege that Congressman Collins traded a single share of Innate (Immunotherapeutics) stock. We are confident he will be completely vindicated and exonerated,’ the statement noted.
House Speaker Paul Ryan called for a ‘prompt and thorough’ investigation by the ethics committee.
‘Until this matter is settled, Rep. Collins will no longer be serving on the House Energy and Commerce Committee,’ the speaker said in a statement.
According to Rep. Collin’s 2016 financial disclosure report, he held a stake in Innate valued between $25 million and $50 million at that time.
Four other Republican House members — Reps. Markwayne Mullin of Oklahoma, Billy Long of Missouri, Mike Conaway of Texas, and Doug Lamborn of Colorado — owned stock in the company.
Tom Price, the congressman turned Health and Human Service Secretary, also owned stock in Innate.
Mullin’s office told the DailyMail.com that the congressman learned of Innate when it became ‘a newsworthy topic.’ He decided to invest in Innate ‘only after doing his own personal research of the company.’
Berman, the U.S. attorney, would not say whether other members of Congress were under investigation, saying only that it was ‘not an aspect of this indictment.’
The non-partisan Office of Congressional Ethics investigated Collins’ stock in the company and whether it was a conflict of interest with his work on Capitol Hill.
In July, the House Ethics Committee announced it was reviewing Collins’ stock ownership.
‘There is a substantial reason to believe that Representative Collins shared material nonpublic information in the purchase of Innate stock, in violation of House rules, standards of conduct, and federal law,’ according to the Office of Congressional Ethics released last fall.
After Collins became a member of Congress in 2013, he began working on the 21st Century Cures Act.
That legislation, which became law last year, includes a provision Collins authored that speeds the drug approval process for companies like Innate.
But he argued there is no conflict of interest between his investment in the firm – which gives him about a 17 percent ownership stake in the company – and his work on the measure because Innate didn’t have any business before the federal government.
His office also argued the company answers to Australian and New Zealand regulators and American authorities.
Collins has insisted his shares in Innate are about saving the lives of people with multiple sclerosis, not making money.
‘What we’ve done and what we are doing is life changing and life-saving for potentially millions,’ he told the Rochester Democrat and Chronicle last year. ‘I’m so proud of what this company is doing and without me, it wouldn’t exist. When they write my epitaph, it’s going to say Innate Immunotherapeutics, saving millions of lives. It’s not going to be member of Congress.’