MANHATTAN (CN) – New York Republican Congressman and early Trump supporter Chris Collins was charged Wednesday with securities fraud, wire fraud and false statements for tipping friends and family with inside information.
Representing the 27th District of New York, Collins was the first sitting member of Congress to endorse Trump’s presidential bid. The FBI says the 68-year-old surrendered this morning at his attorney’s office in Manhattan.
Signed by U.S. Attorney Geoffrey Berman, the 30-page indictment levels fraud charges against Collins relating to insider trading of securities of Innate Immunotherapeutics, an Australian biotechnology company on whose board of directors Collins served.
“These charges are a reminder that this is a nation of laws and that everybody stands equal before the bar of justice,” Berman said at the beginning of the noon press conference Wednesday.
“The crime that he committed was to tip his son Cameron so that Cameron and few select others could trade on the news while the investing public remained in the dark,” continued Berman. “First he tipped his son to confidential corporate information at the expense of regular investors and then he lied about it to law enforcement to cover it up.”
A resident of Clarence, New York, the GOP congressman is also accused in the indictment of later made false statements to an FBI agent during April 2018 investigation.
The indictment also says Collins made false statements to an FBI agent during April 2018 investigation.
Also charged in the indictment are Collins’ son, Cameron Collins, and Stephen Zarsky, who is the father of the son’s fiancee. Cameron Collins, 25, is described as a resident of Morristown, New Jersey. Zarsky, 66, lives in Summit, New Jersey.
All three pleaded not guilty this afternoon in a 20-minute presentment before U.S. District Judge Vernon Broderick.
According to information presented at the press conference, Stephen Zarsky avoided $143,000 in losses, while Cameron avoided more than $570,000 losses after he sold 1.39 million shares of Innate.
Berman at the press conference explained what he referred to as the “tipping chain” of the flow of illegal trading information beginning on June 22, 2017.
That’s the day Collins received an email from Innate’s CEO that said trials of Innate’s main drug MIS416 had been “a total failure.” Collins immediately made seven calls to his son, Cameron, to pass on the bad news, prosecutors say.
After Innate publicly announced the failure of the drug trials, the company’s stock price plummeted 92 percent on the first trading day following the disclosure.
As one of the company’s largest shareholders, Collins took a $16.7 million loss on his end.
CBS reports they have a photo of Collins making one of those seven calls to Cameron that June evening during the White House Congressional Picnic.
NEW: @CBSNews has footage of @RepChrisCollins speaking on his phone at last summer's White House Congressional Picnic. Taken at approximately 7:17 pm; according to the indictment, Collins called his son Cameron at 7:16 pm and they spoke for 6:08 min. pic.twitter.com/5r5rYuq6os
— Sara Cook (@saraecook) August 8, 2018
Berman explained that Chris Collins did not trade on his own stock for personal and technical reasons, including that he was already under investigation regarding innate by the Office of Congressional Ethics and instead tipped his son, who then tipped friends and family, who ultimately avoided more than $768,000 in losses.
In July 2017, the Office of Congressional Ethics transmitted a referral to the Committee on Ethics of the United States House of Representatives regarding Collins, according to a report that intimated he may have shared material nonpublic information in the purchase of Innate stock.
Berman elaborated: “The crime that he committed was to tip his son, Cameron, so that Cameron and few select others could trade on the news while the investing public remained in the dark.”
“His son, Cameron, sold; Cameron’s fiancee sold; the father of the fiancee, Zarksy sold; Mr. Zarsky’s wife sold; other friends and relatives sold — all because Congressman Collins violated his duty to keep Innate’s information secret,” Berman exclaimed.
Aside from the three co-defendants, the indictment includes six unnamed co-conspirators — a group made up of friends and family who received the inside tips from Christopher Collins and Cameron Collins and sold their stock.
Berman noted at the press conference that another friend attempted to sell the shares but was unable to make the transaction.
Berman thanked investigators from the FBI’s New York Field Office and the SEC’s Division of Enforcement.
Berman denied any allegation of using a wiretap in the investigation when pressed by reporters.
Attorneys representing Christopher Collins did not immediately respond to requests for comment Wednesday afternoon.