NEW YORK — Federal prosecutors charged Rep. Chris Collins (R-N.Y.), President Trump’s first congressional supporter, with insider trading on Wednesday, alleging the New York Republican schemed with his son to avoid significant losses on a biotechnology investment.
Collins was at a congressional picnic at the White House last year when he learned that Innate Immunotherapeutics, an Australian biotechnology company, had received bad news about an important drug trial. Collins frantically attempted to reach his son, Cameron Collins, whom he tipped off to the confidential corporate information days before it would be made public, according to prosecutors. Cameron Collins and several others used the information to avoid more than $700,000 in losses, they said.
Collins “helps write the laws of this country,” said Geoffrey S. Berman, the U.S. attorney for the Southern District of New York. But Collins “acted as if the law did not apply to him.”
Collins turned himself in to the FBI at 7 a.m. Wednesday morning and then appeared in a Manhattan federal court in the afternoon wearing a dark suit and white button-down shirt open at the collar. He spoke only briefly during the nearly 20-minute hearing, telling the judge: “I plead not guilty.”
Hours after he was released on $500,000 bond, Collins called the charges against him “meritless” and said he would stay on the ballot in November. “I look forward to being fully vindicated and exonerated,” Collins said at a brief news conference in Buffalo. “I will mount a vigorous defense to clear my name.”
The charges could turn into a headache for several House Republicans who invested in Innate Immunotherapeutics at Collins’s encouragement. Prosecutors did not allege in the indictment that Collins tipped off any of his colleagues in Congress about the failed drug trial before it was made public, but Democrats pounced on the charges and said those lawmakers would have to answer tough questions about their investments in Innate.
“The American people deserve better than the GOP’s corruption, cronyism and incompetence,” House Minority Leader Nancy Pelosi (D-Calif.) said.
House Speaker Paul D. Ryan (R-Wis.) removed Collins from the House Energy and Commerce Committee and called for a “prompt and thorough” investigation by the House Ethics Committee. “His guilt or innocence is a question for the courts to settle,” Ryan said.
The charges against Collins gave new fodder to Democrats, who are seeking to run against congressional Republicans in part on an anti-corruption platform ahead of November’s midterm elections. Collins, 68, was an early backer of Trump and has been one of the president’s most ardent and outspoken supporters in the House, sometimes boasting of his ties to Trump.
He has represented New York’s 27th Congressional District, which encompasses suburban and rural areas stretching east of the Buffalo metropolitan area, since 2013.
In November, Collins faces Democrat Nate McMurray, a local official in the Buffalo suburb of Grand Island, in his re-election campaign. McMurray’s campaign had just under $82,000 in the bank at the end of June, compared with Collins’s $1.3 million war chest, and few congressional forecasters had put the race on the national radar before Wednesday. But after news of the charges broke, the Cook Political Report shifted the race from solid Republican to likely Republican.
McMurray told reporters that his campaign “probably raised more this morning than we have in the whole race” before Collins was charged.
“If this wouldn’t have come out, he may have well just coasted in,” McMurray said at a news conference. “Now it’s time for us to ask ourselves: Is this the type of leadership we want?”
But it is far from certain that Democrats will be able to capitalize on the charges by unseating Collins — his district is a Republican stronghold that supported Trump by a wide margin in the presidential election. Also, other lawmakers have won reelection despite facing criminal charges. In November 2014, Rep. Michael Grimm (R-N.Y.) won reelection despite a federal indictment on charges of fraud and perjury. Grimm later resigned his seat and pleaded guilty to felony tax fraud.
Before Wednesday’s indictment, Collins was already under scrutiny for his role in promoting Innate Immunotherapeutics, a small Australian company that was developing a new therapy for multiple sclerosis. Collins served on the company’s board of directors and was its largest shareholder, according to the indictment.
In October, the Office of Congressional Ethics found “substantial reason to believe” that Collins violated federal law and House rules by meeting with government researchers in his congressional capacity allegedly to benefit the firm. The office also said that he shared private information about the firm to solicit investors among friends, family and other lawmakers.
Among those who invested in Innate were House Republicans, including Reps. Markwayne Mullin (Okla.), John Abney Culberson (Tex.), Doug Lamborn (Colo.) and Billy Long (Mo.), as well as former congressman Tom Price of Georgia, who went on to serve as Secretary of Health and Human Services before resigning under fire for his use of private air travel.
According to the indictment, while at the June 2017 congressional picnic at the White House, Collins received an email from Innate Immunotherapeutics' chief executive alerting the company’s board that an eagerly anticipated drug trial had been a failure. Minutes later, Collins responded to the email: “Wow. Makes no sense. How are these results even possible???”
Almost immediately, Collins tried to get in contact with his son, who owned millions of shares of the company’s stock, according to the indictment. Within a few minutes, Collins and his son called each other six times before connecting and talking for six minutes. During that last call, Collins told Cameron Collins, his son, about the failed drug trial, according to the indictment, which cites phone and bank records as well as texts.
Over the next few days, Cameron Collins told others, including Stephen Zarsky, the father of Cameron Collins’s fiancee, about the bad news and advised them to sell their shares. They were all able to avoid significant losses before the news became public and the company’s stock price fell more than 90 percent, prosecutors allege.
“Here’s a better inside tip for those who think they can play by different rules: Access to this kind of information carries with it a significant responsibility, especially for those who hold a position of trust in our society. Act honorably and in accordance with the law, and do not lie to a special agent of the FBI,” said William F. Sweeney Jr., assistant director in charge of the FBI’s New York field office.
The elder Collins is accused of lying to the FBI as part of the indictment. Cameron Collins and Zarsky were also charged on multiple counts of securities and wire fraud and pleaded not guilty. The three men each face at least five years in prison, legal experts said.
They were released on $500,000 bond each and ordered to give up their passports and firearms.
The Securities and Exchange Commission also filed similar charges against the three men.
Erica Werner contributed to this report.