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New York Congressman Arrested On Insider Trading Charges

Chris Collins.
Chris Collins. Photo Credit: File

A Republican Congressman from New York has been indicted on charges that claim he used insider information about a biotechnology company to make stock trades.

Chris Collins, who represents a district in western New York was charged - along with his son, Cameron and Cameron's fiancée's father, Stephen Zarsky - with a host of charges, including conspiracy, securities fraud, wire fraud, and making false statements to the FBI, according to an indictment released on Wednesday.

Collins, 68, had been under investigation by the Office of Congressional Ethics for his connection to Innate Immunotherapeutics in Australia. He allegedly took inside information, offered it to his son, who then passed it on to a third party. It is alleged that the three avoided nearly $750,000 in losses as a result of the inside information.

Collins was the first U.S. Congressman to endorse Donald Trump during the 2016 presidential campaign and has been one of Trump's most vocal supporters.

Collins was attending the Congressional Picnic at the White House in June 2017 when he received an email from the company that a potentially lucrative experimental drug had failed, potentially costing him money, the indictment said. Minutes later, Collins allegedly called his son, who sold their shares in the company.

The day after Collins’ son sold their Innate Immunotherapeutic stock, the news of the failed drug test was made public and the stock price plummeted. Collins later allegedly took steps to conceal his involvement in the sale of the stock. Each of the three suspects allegedly lied to investigators in an attempt to cover up their roles in the scheme.

"Congressman Collins, who, by virtue of his office, helps write the laws of this country, acted as if the law did not apply to him," said United States Attorney for the Southern District, Geoffrey Berman, at a noon press conference. "These charges are a reminder that this is a nation of laws, and everyone stands equal before the bar of justice.

"The charges demonstrate again that no matter what the alleged crime, or who allegedly committed it, we stand dedicated to the pursuit of justice, without fear or favor.”

FBI Assistant Director-in-Charge William Sweeney, Jr. said that "access to this kind of information carries with it a significant responsibility, especially for those who hold a position of trust in our society."

“Congressman Christopher Collins sat on Innate Immunotherapeutics’ Board of Directors for a period of more than three years, spanning the run-up to the company’s clinical drug trial announcement in 2017. When he received confidential information that the drug had failed its trial, he tipped off investors with whom he shared a personal relationship, as we allege.

"Congressman Collins thought to give his family and friends a heads-up about material, nonpublic information would benefit them in the long run, but 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.”

Each of the three men has been charged with conspiracy to commit securities fraud, conspiracy to commit wire fraud, wire fraud, making false statements and two counts of securities fraud. The Collins' each also face three additional counts of securities fraud. If convicted, they will face decades in prison.

In a statement, attorneys representing Collins said he “will have more to say on the issue later today.”

"We will answer the charges filed against Congressman Collins in Court and will mount a vigorous defense to clear his good name.  It is notable that even the government does not allege that Congressman Collins traded a single share of Innate Therapeutics stock.   We are confident he will be completely vindicated and exonerated.

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