Ex-Congressman Pleads Guilty in Insider-Trading Case
(Bloomberg) -- Chris Collins pleaded guilty to insider-trading charges just hours after his resignation from Congress took effect, completing a stunning downfall for the first U.S. Representative to endorse Donald Trump for president.
A Republican from western New York, Collins was charged last year with tipping his son, Cameron, to negative results from a clinical trial by Innate Immunotherapeutics Ltd., an Australian biotechnology company on whose board he sat. That let Cameron and other family members dump their shares and avoid losses when the stock fell, according to the government.
Collins, 69, sent a letter of resignation to House Speaker Nancy Pelosi Monday, and it took effect today. His departure may help the Republican Party, with the Cook Political Report, a nonpartisan election tracker, shifting his district from “Lean Republican” to “Solid Republican.”
Democrats may also use the case as they build their argument against the GOP in the 2020 election. Prosecutors said it was the first case in which insider-trading charges were brought against a sitting member of Congress.
“Christopher Collins helped write the laws of this country, but he acted as if the law did not apply to him,” U.S. Attorney Geoffrey Berman said. “Today’s plea is a reminder that all citizens stand equal before the law in our criminal justice system.”
Collins entered the plea under a deal with prosecutors, who agreed to recommend he serve a sentence of 46 months to 57 months. His son and Stephen Zarsky, the father of Cameron’s fiancee, are scheduled to change their pleas on Thursday. The three were scheduled to go to trial on Feb. 3. Collins is scheduled to be sentenced on Jan. 17.
Prosecutors claimed Collins got news about negative results in a clinical trial for a drug being developed by Innate Immunotherapeutics to treat a form of multiple sclerosis in an email from the company’s chief executive officer. Collins was at an event on the South Lawn of the White House at the time and tipped off his son.
His son passed the news to his girlfriend, his girlfriend’s mother, Zarsky and a friend, prosecutors said. In the four days before the negative drug news was announced, they and others sold more than 1.78 million Innate shares, avoiding losses of about $768,000, according to prosecutors.
In court, Collins said he was on board of Innate for more than a decade and was hopeful about the prospects for the multiple sclerosis drug, saying he “strongly believed” it was going to succeed. But when he found out the trial had failed, he said he was “shocked” and “devastated.”
In a “very emotional state,” he said, he called his son and informed him of the failure, knowing he was an investor and would trade on the news. He also admitted to lying to FBI agents when they came to his home in a surprise visit.
“I knew that this information would not be public for several days and when it was made public it would be devastating,” Collins said in court. He declined to speak to reporters after the hearing.
U.S. District Judge Vernon Broderick earlier this month denied Collins’s request to review materials he said would show that investigators breached a constitutional provision limiting official inquiries into legislative matters. Collins had moved to appeal the ruling, claiming that evidence seizures violated the Speech or Debate Clause -- which protects members of Congress from arrest and prosecution based on their political views -- before deciding to change his plea and resign.
There are no constitutional provisions or House rules that require a member to forfeit his or her seat after a felony conviction, but Collins, who had been stripped of his committee assignments, would no longer have been able to vote in Congress.
The charges against Collins, and separate campaign-corruption charges against California Republican Congressman Duncan Hunter last year, were greeted last year with a snarky response from the president on Twitter.
Collins represented a district of suburban and rural areas outside Buffalo and Rochester in western New York. Under the shadow of the indictment, he won a narrow reelection last year against Nate McMurray, a Democratic town supervisor of Grand Island, New York.
Collins’s plea comes as Hunter faces a trial on the charges to which he pleaded not guilty. He’s accused of using campaign funds to entertain several women he had affairs with, pay for a family vacation to Italy and finance tuition for his children at private schools. His wife pleaded guilty in June and agreed to cooperate with prosecutors.
The case is U.S. v. Collins, 18-cr-567, U.S. District Court, Southern District of New York (Manhattan).
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