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Congressman Chris Collins, a New York Republican, Is Charged With Insider Trading New York Congressman Chris Collins Is Charged With Insider Trading
(35 minutes later)
Representative Chris Collins, a New York Republican who was one of President Trump’s earliest and most vocal supporters, was charged with insider trading on Wednesday. He was accused of tipping off his son and others to sell stock in an Australian pharmaceutical company before the results of one of its failed drug tests became public, federal prosecutors said. Representative Chris Collins was at the Congressional Picnic on the South Lawn of the White House last summer when he received an unexpected email from the head of a drug company in which he was heavily invested. The company’s only product — an experimental treatment for multiple sclerosis — had just failed a do-or-die scientific trial.
The charges against Mr. Collins stem from his involvement with Innate Immunotherapeutics Limited, a drug maker based in Sydney, Australia, whose primary business was the research and development of a medication designed to treat a form of multiple sclerosis, according to an indictment. What Mr. Collins did next, in an apparent state of panic, forms the core of a federal indictment for insider trading and lying to federal agents that was unsealed on Wednesday in New York. Federal prosecutors charged Mr. Collins with brazenly using his private information about the company to help his son and others avoid financial disaster.
Mr. Collins, 68, was attending the Congressional Picnic at the White House in June 2017 when he received a private email from the company’s chief executive that a test for a potentially lucrative experimental drug had failed, the indictment said. Fifteen minutes later, the congressman, who sat on the firm’s board of directors and was one of its largest shareholders, called his son, Cameron Collins, who sold his shares in the company, avoiding losses of more than $570,000, the indictment said. Mr. Collins did not sell his own shares, the indictment said. The charges against Mr. Collins, a New York Republican who was one of President Trump’s earliest and most ardent supporters, stem from his involvement with Innate Immunotherapeutics Limited, a small drug maker based in Australia, which had no approved drugs but several well-placed allies in the capital.
As laid out in a federal indictment, Mr. Collins engaged in brazen acts of insider trading, starting with an email from the company’s chief executive that the firm’s sole product had failed its scientific trials. That led to panicked phone calls to his son, Cameron Collins, prosecutors said, and ultimately to the sale of more than a million shares of the company’s stock before news of the failure became public. The sell-off spared Mr. Collins and his son more than $570,000 in losses, the indictment said. Within minutes of learning about the company’s unsuccessful test, Mr. Collins frantically called his son, Cameron Collins, who, in the days that followed, sold off his stock, avoiding losses of more than $570,000, prosecutors said.
The case, which was brought by the United States attorney’s office in Manhattan, cast what could be a long shadow in the House. At least five Republican lawmakers were shareholders in Innate Immunotherapeutics at the time of the Collins family sell-off. And it raised a more fundamental question: How could a member of Congress, sitting on the House committee with jurisdiction over health care companies be on the board of an Australian pharmaceutical maker and its largest shareholder? Brought to court by the United States attorney’s office in Manhattan, the indictment cast what could be a long shadow in the House. At least five Republican lawmakers were shareholders in Innate Immunotherapeutics at the time of the Collins family sell-off, according to financial disclosures. Mr. Collins’ case has also raised ethical questions about the propriety of a member of Congress, sitting on the House committee with jurisdiction over health care companies, being not only the largest shareholder of an Australian drug maker, but also a member of its board.
Hours after the charges were announced, the speaker of the House, Paul Ryan, stripped Mr. Collins of his seat on the Energy and Commerce Committee and called for the House Ethics Committee to look into the allegations. “Insider trading is a clear violation of the public trust,” Mr. Ryan said in a statement. Shortly after the charges were announced, the speaker of the House, Paul Ryan, stripped Mr. Collins of his seat on the Energy and Commerce Committee and called for the House Ethics Committee to look into the allegations. “Insider trading is a clear violation of the public trust,” Mr. Ryan said in a statement.
“We will answer the charges filed against Congressman Collins in court and will mount a vigorous defense to clear his good name,” Mr. Collins’ lawyers, Jonathan Barr and Jonathan New, said in statement. “It is notable that even the government does not allege that Congressman Collins traded a single share” of the company’s stock. Mr. Collin’s lawyers, Jonathan Barr and Jonathan New, said in a statement that the congressman had not traded a single share of his own stock after learning of the failed trial. “We will answer the charges filed against Congressman Collins in court and will mount a vigorous defense to clear his good name,” they said.
According to a federal indictment, Innate Immunotherapeutics’ chief executive, Simon Wilkinson, sent the email to the company’s board of directors, including Mr. Collins, at 6:55 p.m. on June 22, 2017, explaining that the test for the drug, known in its trial stage as MIS416, had failed. Mr. Collins said in an email to supporters he would remain on the ballot for re-election in the 27th Congressional District in Western New York.
In a dramatic scene described in court papers, Mr. Collins, 68, was attending the clubby annual picnic at the White House on June 22, 2017, when he received an email from the company’s chief executive, Simon Wilkinson, saying there was “extremely bad news to report”: Innate Immunotherapeutics’s all-important clinical test for its new drug, MIS416, had failed.
Fifteen minutes later, still at the picnic, Mr. Collins answered Mr. Wilkinson, prosecutors said. “Wow. Makes no sense. How are these results even possible???,” he wrote Over the next five minutes, phone records included in the indictment show, Mr. Collins called his son, missing him six times before they had a brief conversation. Prosecutors claim that in that conversation he told his son about the unsuccessful drug trial.
The following morning, the indictment said, Cameron Collins placed an online order with his brokerage firm, selling more than 16,500 shares of Innate Immunotherapeutic stock. Over the next few days, Mr. Collins, 25, placed 53 more sell orders and passed the tip to others, including his fiancée, Lauren Zarsky, and Ms. Zarsky’s father, Stephen Zarsky, 66.
Cameron Collins and Mr. Zarsky were also charged with insider trading and lying to investigations. Acting on the tip from Cameron Collins, Mr. Zarsky avoided about $144,000 in losses. Mr. Zarsky’s wife, daughter and brother also dumped their stock before it dropped in price, though they were not charged, the indictment said.
Mr. Collins pleaded not guilty in federal court in Manhattan on Wednesday and was released on a promise he would produce a $500,000 bond within two weeks. He said nothing as he left the courthouse and climbed into a black S.U.V. His son and Mr. Zarsky also pleaded not guilty and were given similar bail packages.
On June 27, 2017, the day after Cameron Collins made his last trades, news of the failed drug test became public and the company’s stock plummeted by more than 90 percent. The congressman did not sell his any of own stock, prosecutors said, because he was already under investigation by the Congressional Ethics Office.
[Read our January 2017 report on Innate Immunotherapies and its allies in Washington.][Read our January 2017 report on Innate Immunotherapies and its allies in Washington.]
Mr. Collins, prosecutors say, was attending the Congressional Picnic at the White House at the time. Fifteen minutes later, the indictment said, he wrote back to Mr. Wilkinson, saying, “Wow. Makes no sense. How are these results even possible???” At a news conference on Wednesday announcing the indictment, the United States attorney in Manhattan, Geoffrey S. Berman, who was appointed by Mr. Trump, said that Mr. Collins later lied to federal agents investigating the case. “Congressman Collins, who by virtue of his office helps write the laws of our nation, acted as if the law did not apply to him,” Mr. Berman said.
Phone records included in the indictment show that Mr. Collins immediately called his son, missing him six times before they had a brief conversation. Prosecutors contend that it was during that conversation that Mr. Collins told his son about the failed drug test. The following morning, at 7:42 a.m., the indictment said, Cameron Collins placed an online order with his brokerage firm, selling more than 16,500 shares of Innate Immunotherapeutic stock. Prosecutors also said that Mr. Collins took other steps to hide his involvement in the stock sale. For example, they said, on June 28, 2017, one of his staff members issued a statement to the media, denying he had personally sold any shares and asserting that his son had only sold shares after a halt on its trading had been lifted, a move that had caused him “substantial financial loss.” Prosecutors claimed the statement was “written in a manner designed to mislead the public.”
Later that day, prosecutors said, Cameron Collins, 25, placed 17 more orders to sell the stock. Three days later, he placed an additional 36 sell orders. He also passed the tip on to others including his fiancée, who was not named in the indictment, and his fiancée’s father, Stephen Zarsky, 66, who was also charged. Mr. Collins was the first member of Congress to endorse Donald Trump, in February 2016, and that decision transformed him from a backbench member to one of the few lawmakers to have a strong relationship with the president after Mr. Trump won the White House that November.
On June 27, 2017, the day after Cameron Collins made his last trades selling Innate Immunotherapeutic stock, news of its failed drug test became public and the stock plummeted by more than 90 percent.
Prosecutors said that Representative Collins took steps to hide his involvement in the sale of the stock. For example, on June 28, 2017, one of his staff members issued a statement denying he had personally sold any shares and asserting his son had only sold shares after a halt on the trading of the stock had been lifted, a move that caused him “substantial financial loss.” Prosecutors said that the statement was “written in a manner designed to mislead the public.”
Mr. Collins was the first member of Congress to endorse Donald Trump, in February 2016, and that decision transformed him from a backbench member to one of the few lawmakers with any kind of relationship with the president after Mr. Trump won the White House that November.
Early in the Trump administration, he served as an informal liaison for the White House to Capitol Hill and would brag about how the president would call him on his cellphone unannounced.Early in the Trump administration, he served as an informal liaison for the White House to Capitol Hill and would brag about how the president would call him on his cellphone unannounced.
His endorsement also helped make Mr. Collins a fixture on cable television, with numerous appearances on the CNN program of Chris Cuomo. There was a winking irony to those appearances, as Mr. Collins had long feuded with the host’s brother, Andrew M. Cuomo, the Democratic governor of New York. Mr. Collins said last year of the elder Mr. Cuomo, “You can’t believe anything this governor says.” The endorsement also helped make Mr. Collins a fixture on cable television, with numerous appearances on the CNN program of Chris Cuomo. There was a winking irony to those appearances, as Mr. Collins had long feuded with the host’s brother, Andrew M. Cuomo, the Democratic governor of New York. Mr. Collins said last year of the elder Mr. Cuomo, “You can’t believe anything this governor says.”
Mr. Cuomo pushed for his lieutenant governor, Kathy Hochul, to run against Mr. Collins this year instead of seeking re-election but Ms. Hochul has said she prefers her current role. Mr. Cuomo pushed for his lieutenant governor, Kathy Hochul, to run against Mr. Collins this year instead of seeking re-election but Ms. Hochul has said she prefers her current role. Mr. Collins had defeated Ms. Hochul when he first won the Buffalo-area seat in 2012. The 27th district is one of New York’s most conservative; it is where Mr. Trump won his highest percentage of vote in the state, with nearly 60 percent.
Mr. Collins first won the Buffalo-area seat in 2012, defeating Ms. Hochul. The 27th district is one of New York’s most conservative; it is where Mr. Trump won his highest percentage of votes in the state, with nearly 60 percent. Aside from owning nearly 17 percent of Innate Immunotherapeutic’s stock, Mr. Collins was also a major booster for the company among his colleagues in Washington.
Tom Price, the former congressman and health and human services secretary, faced scrutiny for his investments in Innate stock, which he purchased after Mr. Collins introduced him to the company. While he was serving as a congressman, Mr. Price was one of 20 American investors who received a privileged offer to buy the stock at a discount, The Wall Street Journal reported.
The Wall Street Journal also reported that Mr. Price more than tripled his investment when he sold his shares for $325,000 in February 2017, a divestment he was obligated to make once he was named health secretary.
Five other Republican congressmen also purchased stock in Innate Immunotherapies in January 2017, around the time Mr. Price’s investments were drawing criticism: John Culberson of Texas; Mike Conaway of Texas; Doug Lamborn of Colorado; Billy Long of Missouri, and Markwayne Mullin of Oklahoma. Two of those representatives, Mr. Long and Mr. Mullin, serve with Mr. Collins on the health subcommittee of the House’s Energy and Commerce Committee.
Virginia Canter, the chief ethics counsel for Citizens for Responsibility and Ethics in Washington, said Mr. Collins’ role in the company had always been a troubling conflict of interest.
“From a common sense perspective, what are you doing holding this kind of stock?” Ms. Canter said. “Members of Congress have no business serving the public interest at the same time they are serving on the board of directors of publicly traded companies. It’s a direct conflict of interest.”