MANHATTAN (CN) — A week after former Congressman Christopher Collins received a two-year sentence for insider trading, the son Collins tipped to an expected stock plunge was sentenced Thursday to probation.
Granting his request for a noncustodial sentence this afternoon, U.S. District Judge Vernon Broderick told 27-year-old Cameron Collins that, while he was not absolved of his criminal involvement in the inside-trading scheme, “none of it would have happened but for your father’s decision to pick up the phone.”
“I do not adhere to idiom that the sins of the father are visited upon the children, or in this case the son,” Broderick said at the conclusion of the 90-minute hearing.
Cameron sniffled before the judge while he tried to explain his state of mind.
“I can only say I was more scared then than I’ve ever been, except for maybe right now,” Collins said. “I didn’t do the right thing and I’ll have to live with that forever.”
In addition to five years probation, Cameron faces a $150,000 fine and 500 hours community service involving some assistance to the poor and the homeless.
Before his October plea deal, the elder Collins was elected in 2013 to represent the reliably Republican 27th District in western New York and had a decade-long position on the board of the Australian biotechnology company Innate Immunotherapeutics.
Prosecutors alleged that Congressman Collins received an email from Innate’s CEO on June 22, 2017, that said trials of the company’s new drug MIS416 had been “a total failure.”
Collins immediately passed on the bad news to Cameron, then age 24, making one of seven calls from an event on the White House lawn.
Cameron in turn reached out to his fiancée Lauren Zarsky and her parents, Stephen and Dorothy Zarsky, along with an unnamed friend, according to a federal indictment.
As one of the Innate’s largest shareholders, the elder Collins took a $16.7 million loss on his end. Prosecutors alleged that Christopher 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.
Cameron meanwhile unloaded 1.39 million shares of Innate before a 90% dip when the news became public, avoiding more than $570,000 losses. Stephen Zarsky, the father-in-law, avoided $143,000 in losses through the tip.
Collins said in court Thursday that his father “wholeheartedly” believed in Innate and was “shattered and defeated” when the company’s drug failed.
In his “misguided” state, Cameron said he thought that selling the shares might “offer my father some relief and make him feel better about the failed trial.”
He also said he had hoped to use the proceeds from his sales of Innate stock to buy a condo for him and his fiancée, and that he now regrets tipping her parents to also sell the shares they had bought on his recommendation.
Prosecutors noted that together the Collins men were worth $35 million when they acted on the inside information.
Cameron Collins and Zarsky pleaded guilty in October.
“Probation in and of itself is punishment,” Cameron’s attorney Thomas Hanusik said at the sentencing hearing Thursday.
Federal prosecutors had requested a guideline sentence of imprisonment, no greater than the 26-month sentence the judge ordered last week for Chris Collins, whom the government found to be “the most culpable individual here.”
Probation officers recommended a sentence of six months imprisonment for the younger Collins’ role in the scheme.
Reprising a rumination from last week’s sentencing of the elder Collins, Judge Broderick again invoked an order from fellow his colleague at the Southern District, U.S. District Judge Jed Rakoff, in consideration of the 2012 sentencing of Goldman Sachs board member Rajat Gupta.
“When this sort of crime occurs, it does impact the people’s confidence in the financial market,” Broderick said Thursday afternoon about social consequences of insider trading and need for general deterrents.
Judge Broderick, a New York native and Obama appointee, will sentence Stephen Zarsky, the third defendant of the scheme, on Friday afternoon.
Prosecutors alleged that Zarsky traded on the inside information and used it to tip three more individuals not named in the superseding indictment.