Federal prosecutors have filed insider trading charges against Republican Congressman Chris Collins, who was arrested and is scheduled to appear in federal court in Manhattan.
The lawmaker from New York, one of the first members of Congress to support then-candidate Donald Trump during the 2016 presidential election, turned himself in to the Federal Bureau of Investigation early Wednesday.
The U.S. Attorney's Office in the Southern District of New York charged Collins in connection with an alleged insider trading scheme involving his investments in the Australian biotech company Innate Immunotherapeutics Ltd.
Earlier this year, an Office of Congressional Ethics report said Collins may have committed a federal crime by disclosing proprietary information about the company with investors, including his son, who was also charged. The office voted unanimously to send the case to the House Ethics Committee.
His son, Cameron Collins, allegedly passed the information to another alleged conspirator, Stephen Zarsky, the father of the junior Collins' fiancee.
The three men are charged with conspiracy, wire fraud, securities fraud and making false statements to the FBI. They also face civil charges by the U.S. Securities and Exchange Commission.
Collins served on the company's board and owned 16.8 percent of the company's stock. His son was also a "substantial" shareholder, prosecutors said.
Indictment details
The indictment says Collins allegedly learned in an email from Innate's chief executive that a trial for a multiple sclerosis drug had failed. Collins then disclosed the information to his son, who passed it on to his fiancee, Zarsky and a friend. Zarsky tipped off his brother, his sister and a friend, the indictment said.
"Congressman Christopher Collins is charged with insider trading and lying to the FBI, as are his son, Cameron Collins and Stephen Zarsky, the father of Cameron's fiancee," U.S. Attorney Geoffrey Berman said. "Representative Collins, who, by virtue of his office, helps write the laws of this country, acted as if the law did not apply to him."
The indictment also says Collins did not trade his own Innate stock, which lost millions of dollars in value, maintaining he was "virtually precluded" from doing so due, in part, to the fact he already faced a congressional ethics investigation related to his Innate holdings. Prosecutors said, however, others avoided nearly $770,000 in losses as a result of the information.
Collins' attorneys said in a statement they "will mount a vigorous defense to clear his good name" and added, "It is notable that even the government does not allege that Congressman Collins traded a single share of Innate Therapeutics stock."
Midterm elections
House Republican leader Paul Ryan said the allegations against Collins "demand a prompt and thorough investigation by the House Ethics Committee" and added that Collins would no longer serve on the House Energy and Commerce Committee "until this matter is settled."
Collins is running for re-election in November and has raised more than $1.3 million dollars for his re-election bid, according to a filing with the Federal Election Commission.
The three-term congressman represents a largely Republican district that most political analysts believed would not be ripe for a Democratic takeover in the November midterm elections.
Zarsky attorney Amanda Bassen declined to comment, and lawyers for Cameron Collins could not be immediately reached.
Innate, which is based in Sydney, also did not immediately respond to requests for comment.
