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Prison Time for Congressman Who Leaked Stock Info at White House

A federal judge gave a two-year prison sentence Friday to former Congressman Christopher Collins, three months after the New York Republican pleaded guilty to an inside-trading scheme involving his son.

MANHATTAN (CN) — A federal judge gave a two-year prison sentence Friday to former Congressman Christopher Collins, three months after the New York Republican pleaded guilty to an inside-trading scheme involving his son.

Before his October conviction, the 69-year-old Collins represented the reliably red 27th District in western New York since 2013 and had a decade-long position on the board of the Australian biotechnology company Innate Immunotherapeutics.

Prosecutors alleged that 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 with seven calls to his son, Cameron, and photographers working at during the annual Congressional Picnic snapped a picture of at least one of those illegal tips from the White House lawn.

As one of the Innate’s largest shareholders, Collins took a $16.7 million loss on his end. Prosecutors alleged that 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. 

His son Cameron meanwhile unloaded 1.39 million shares of Innate before a 90% dip when the news became public, avoiding more than $570,000 losses, while Stephen Zarsky, the father of Cameron’s then-fiancée, avoided $143,000 in losses. 

Prosecutors noted that together the Collins men were worth $35 million when they acted on the inside information. Cameron and Zarsky pleaded guilty as well in October.

Collins sobbed Friday as he asked U.S. District Judge Vernon Broderick to show mercy when sentencing Cameron next week.

“What I have done has marked me for life," Collins said, noting he moved from his district to Florida after the shattering of his reputation.

“I cannot face my constituents," he added.

Citing age, contrition and charitable works, attorneys for ex-Congressman Collins asked that he serve no prison time and instead receive probation with home confinement, extensive community service, and the imposition of a substantial fine.

They said Collins has already paid dearly for his crimes by resigning from Congress in disgrace.

"Chris comes before the court humbled, penitent, and remorseful," defense attorney Jonathan New wrote in a sentencing submission. "The public humiliation will follow Chris and mar him for the rest of his life."

Federal prosecutors, on the other hand, requested a term of nearly five years for Collins, who had been one of President Donald Trump's earliest supporters.

At the sentencing hearing Friday, Assistant U.S. Attorney Max Nicholas rejected defense arguments that the insider trading was an emotional crime or moment of weakness.

“That’s just a straight-up financial decision from individuals who did not have a financial need,” Nicholas said Friday. “It was totally gratuitous,” he added.

Prosecutors also point to the initial claim that Collins’ son and Zarsky made their well-timed trades not because of inside info but because they had been spooked by a temporary halt in the trading of the stock.

Further undercutting the ex-congressman’s claims of remorse, the government noted that he continued to court public trust while campaigning in the 2018 re-election race that he won after his arrest and then continued to serve.

The probation office recommended a sentence of a year and a day.

A New York native and Obama appointee, Judge Broderick ordered 26-month sentence, well below the guideline range of 46 to 57 months. 

Expressing the need for general deterrent against insider trading crimes, Broderick recited a quote from fellow U.S. District Judge Jed Rakoff, his colleague at the Southern District, in the 2012 sentencing of Goldman Sachs board member Rajat Gupta.

“As people have come to understand that insider trading is not only a sophisticated form of cheating but also a fundamental breach of trust and confidence, they have increasingly internalized their revulsion for its commission," Broderick said Friday afternoon. "While no defendant should be made a martyr to public passion, meaningful punishment is still necessary to reaffirm society’s deep-seated need to see justice triumphant.”

U.S. Attorney Geoffrey Berman applauded the outcome Friday. "Lawmakers bear the profound privilege and responsibility of writing and passing laws, but equally as important, the absolute obligation of following them," Berman said in a statement following the sentencing.

"Collins’ hubris is a stark reminder that the people of New York can and should demand more from their elected officials, and that no matter how powerful, no lawmaker is above the law," he added.

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Categories / Criminal, Politics, Securities

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